After being out of production for a decade, the mineral resource industry has seen a resurgence of interestOn February 19, Anning Co., Ltd. announced its acquisition of 100% equity in Jingzhi MineralsFollowing this announcement, the company’s stock price immediately reached its trading limit on the very next day.
At the heart of Jingzhi Minerals is the Xiaoxiao mining site, notably located next to Anning’s core mining operation at the Panjiatian siteThis relationship is not without its complications; in 2017, during Anning’s pursuit of an IPO, both entities found themselves embroiled in a legal battle regarding a road usage fee totaling just 240,000 yuanThe backdrop of this acquisition opportunity comes as Jingzhi Minerals and its affiliates face bankruptcy restructuring amid ongoing operational challenges.
However, the acquisition process took an unexpected turn when Yingsheng Industrial intervened, securing the restructuring investment qualification of Jingzhi Minerals at a staggering price of 6.5 billion yuan, significantly higher than what Anning originally anticipatedReports from Daily Economic News reveal that Wang Deliang, who holds a 70% stake in Yingsheng, is the father of Wang Zelong, who currently controls China Nuclear Titanium Dioxide Co., LtdIn a twist of fate, Anning would ultimately regather the entirety of Jingzhi Minerals’ shares through the Wang family.
Accompanying this acquisition strategy, Anning has been accelerating its integrated strategyOn the same day of the acquisition announcement, Anning signed a credit agreement worth 25 billion yuan with two banks to fund mineral resource mergers and acquisitions as well as development projects.
Anning Co
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Embraces Lost Mining Opportunity
In the evening of February 19, Anning Co. confirmed its intention to acquire 100% equity of Panzhihua Jingzhi Mineral Co., Ltd. through a cash paymentThe next day, Anning’s stock opened strongly, hitting its upper limit and closing at 32.59 yuan per share, thereby placing the company's market value at around 15.3 billion yuan.
Jingzhi Minerals has significant corporate backing, with Wang Zelong and Wenzhou Yingsheng Industrial holding 70.02% and 29.98% of shares, respectivelyJingzhi Minerals owns two wholly-owned subsidiaries: Hongxin Industrial Trade Co., Ltd., and Panzhihua Liyu Mining Co., Ltd.
Both Jingzhi Minerals and its subsidiaries, Hongxin and Liyu, are currently undergoing substantial merger integration and restructuringAs of now, Anning does not have a concrete plan for this acquisitionIf completed, Jingzhi Minerals, along with its subsidiaries, will be incorporated as wholly owned entities of Anning Co.
A noteworthy fact is that Wang Zelong, the major shareholder of Jingzhi, is also the ultimate controller of China Nuclear Titanium Dioxide CoAs of September 2024, Wang Zelong possesses a direct stake of 33.45% in China Nuclear Titanium DioxideFurthermore, the actual controller of Yingsheng, Wang Deliang, has familial ties with Wang Zelong as his father, and both have previously appeared among the top ten shareholders of China Nuclear Titanium Dioxide.
Anning Co. has a long-standing connection with Jingzhi MineralsThe primary asset of Jingzhi is the mining rights to the Xiaoxiao ore site, which is adjacent to Anning's Panjiatian mine.
The genesis of their intertwined fate goes back to 2017 when Anning was in the process of listing and faced legal confrontations with Jingzhi
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According to the prospectus, Anning had invested in building the Anpan Highway between Provincial Road 204 and the Panjiatian mine, necessary for its operationsSince 2002, vehicles of Jingzhi have utilized this road and committed to paying Anning an annual fee of 200,000 yuanHowever, Jingzhi fell behind, managing to pay only until the end of 2004. The outstanding fees from 2005 to 2017 total 2.4 million yuan.
Eventually, according to the Tianyancha App, Anning withdrew this lawsuit by August 2017 and bore a processing fee of 13,000 yuan.
The three companies Anning seeks to acquire include Jingzhi Minerals, which holds mining rights; Hongxin, which is primarily focused on titanium selection equipment and tailings storage; and Liyu, concentrated on iron selection equipmentTogether, they represent an integrated system for the extraction and processing of iron and titanium ore, with interlinked production lines supporting a comprehensive production cycle.
Nevertheless, fortunes can shift perilously; as per reports from the Huairi Municipal People's Court, the original mining rights’ reserves at Jingzhi have nearly depletedDue to delays in securing new mining rights, Jingzhi has remained inactive since 2015, adversely impacting Hongxin and Liyu, which operate as associated processing plants and have also ceased operations, becoming substantially insolvent.
Anning’s ambitions to acquire Jingzhi began to take shape in 2022. Announcing a collaboration with the Revitalization Fund and Silk Road Fund, Anning sought to form an investment consortium to participate in the restructuring recruitment for Jingzhi Minerals and HongxinAnning aimed to maximize the value of the respective mining rights through comprehensive integration.
In November 2023, the bidding for the restructuring investment qualification of Jingzhi and its associated companies commenced with a starting price of 1.738 billion yuan
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Ultimately, it was Yingsheng Industrial, one of Jingzhi’s current investors, who secured the bid for 6.508 billion yuan, astonishingly marking a premium rate of 274.4%. Anning Co. disclosed a determination that the maximum value concerning the asset did not surpass 6.5 billion yuan, causing them to withdraw from the bidding process.
Expansion Phase: Signing Billion-Yuan Banking Credit for Resource Acquisition
Anning Co. chiefly engages in the mining, washing, and sale of vanadium-titanium magnetite, focusing on products such as titanium concentrate and vanadium-titanium iron concentrateThe company went public on the Shenzhen Stock Exchange’s SME board in April 2020 and became the first public company from the Panzhihua regionControlled by Luo Yangyong, who, along with his investment firm Chengdu Zidong Co., Ltd., stock ownership totals 72.071%, Luo features on the Hurun Global Rich List with a personal fortune approximating 9.5 billion yuan.
For the third quarter of 2024, Anning reported revenues of approximately 1.359 billion yuan, with a net profit attributable to its parent company of around 683 million yuan during the same period.
Currently, China's titanium resources are predominantly based on vanadium-titanium magnetite, mostly found in the Panxi region, with smaller quantities in areas like Chengde, Hebei and Hanzhong, ShaanxiThe five major mining zones within the Panxi region house nearly ten billion tons of resources, with Anning's most crucial asset being located in the Panjiatian area.
Over the past couple of years, Anning has frequently reiterated its strategic goals of horizontal mergers for resource acquisition, vertical industry chain expansions, and establishing itself as an integrated mining entity
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