Australian PLC Siburan to acquire China Automobile shares for RM60m

PETALING JAYA: Australian firm Siburan Resources Ltd has entered into a heads of agreement to acquire 100 million shares of China Automobile Parts Holdings Ltd from its majority shareholder Guotai International Holding Ltd at 60 sen per share or RM60 million.
Siburan will be a substantial shareholder with a 16.67% stake in China Automobile upon completion of the acquisition.
China Automobile is a manufacturer of chassis components listed on the Main Market of Bursa Malaysia.
"I am very pleased that we are able to participate in this very exciting phase of the company's journey with this opportunity to take up a strategic investment in China Automobile at a significant discount of 15.5% to its net tangible assets," Siburan managing director Noel Ong Kok Jin said in a statement last Friday.
According to Siburan, the acquisition is a strategic move to gain a presence in China via China Automobile with the potential to open doors to major players in the tungsten industry and potential end-user/off-takers to participate in its Kirwan Tungsten project in New Zealand.
"We believe our fleet, namely Australian PLC Siburan, Malaysia PLC China Automobile and the main land China vendor would produce a significant tripartite synergies effect from all the three countries," said China Automobile managing director Li Guo Qing.
The three companies expect to share resources, network, contacts, expertise, experiences, technology and know-how, with the most significant synergistic effect being the exploitation of Siburan's flagship mineral deposit in the Kirwan Tungsten project.
China Automobile plans to import the mineral from its new substantial shareholders, Siburan, for processing in China.
The current production facilities of China Automobile are able to manufacture harden quality oil and gas equipment, such as ground drill and it hopes to penetrate the international oil and gas industry with the product.
The acquisition would also enable China Automobile to leverage on Siburan's marketing network and contacts to penetrate Australian auto parts market in Sydney, Melbourne, Perth and Brisbane.
"At the same time, China Automobile can diversify into mining exploration in Malaysia by sharing Siburan mining expertise in Malaysia's potential mining areas," said Li.
The synergy will also enable Siburan to explore mining opportunities in China via the China Automobile's network and contacts in mainland China.
"Once the synergy of our new armada is realised and reflected at the bottom line, China Automobile would be able to reward its shareholders," Li added.
Besides the Kirwan Tungsten project, Siburan intends to continue identifying prospective mineral projects with the view to developing the company into a mineral producer. It currently has two active projects in which exploration activities are focused on in the coming months.
In addition to the two active projects, the company is also reviewing other projects while commodity prices are low and vendors are more willing to transact projects.
Siburan aims to establish Kirwan as the largest tungsten mine outside China and seeks to establish a joint ore reserves committee resource for the project in the coming months.
This will be established with a series of drilling to outline the extent of the mineralisation. The company intends to initiate logistical and drilling preparation within the next three months.