After a decade of inactivity, the mining sector is witnessing a resurgence, notably sparked by Anning Co.’s recent announcement regarding the acquisition of a 100% stake in Jingzhi Mineral Resources on February 19. This news instantly boosted Anning’s stock price, which hit the limit up on the next trading day.
The Jingzhi Mineral Resources, pivotal for its core asset, the Xiaohuiqing iron mine, is strategically located near Anning's primary mining operation at the Panjiatian siteThe two companies had previously clashed legally over a road usage fee that amounted to 240,000 Yuan when Anning was preparing for its initial public offering in 2017. Following a crisis in 2022, Jingzhi Mineral Resources and its affiliated companies underwent bankruptcy restructuring, prompting Anning to seek this acquisition as a means of integrating neighboring mineral resources.
However, competition arose when Ying Sheng Industrial entered the fray, securing the restructuring investment rights to Jingzhi at a surprising bid that exceeded Anning’s expectations, totaling 6.5 billion YuanMedia reports indicate that Wang Deliang, who controls 70% of Ying Sheng, is the father of Wang Zelong, the actual controller of China Nuclear Titanium Dioxide, marking the acquisition's complex familial tiesAs events unfold, Anning Co. is set to reclaim full ownership of Jingzhi Mineral Resources from Wang Deliang and his son.
On the same day, Anning accelerated its integration strategy by signing credit agreements worth 25 billion Yuan with two banks, which aim to support the funding needs for mining acquisitions and development.
In the evening of February 19, Anning Co. disclosed its cash payment terms to acquire the entirety of the Panzi City Jingzhi Mineral Resources Co., Ltd. (referred to as "Jingzhi Mineral"). The next day, the stock opened at the limit up and closed at 32.59 Yuan per share, giving Anning a market capitalization of about 15.3 billion Yuan.
Currently, Jingzhi Mineral Resources stakes are held predominantly by the Wang family, with Wang Zelong owning 70.02% and Ying Sheng Industrial holding 29.98%. Two wholly-owned subsidiaries of Jingzhi, Hongxin Industrial Co., Ltd. and Liyu Mining Co., Ltd., also figure into the acquisition's umbrella.
Notably, Jingzhi Mineral Resources and its subsidiaries remain entangled in the bankruptcy restructuring process, and no concrete acquisition plans have been established by Anning yet.
Wang Zelong, Jingzhi's largest shareholder, is also the controlling figure of China Nuclear Titanium Dioxide, possessing 33.45% of its shares as of September 2024. Reports suggest that Wang Deliang, who heads Ying Sheng Industrial, has previously appeared as one of the top shareholders in China Nuclear Titanium, indicating a web of interconnected interests in the mining industry.
This recent acquisition marks a lengthy relationship between Anning and Jingzhi Mineral
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The heart of their linking assets lies in the mining rights of the Xiaohuiqing site, which abuts Anning’s Panjiatian mine.
When Anning sought to list publicly in 2017, it was encumbered with ongoing legal disputes involving Jingzhi MineralAs laid out in the prospectus, Anning had invested in constructing a road, the Anpan Highway, to facilitate mining operations, which Jingzhi’s vehicles had been using since 2002. Although Jingzhi promised Anning an annual road usage fee of 200,000 Yuan, they only covered the fees up until the end of 2004, leaving a debt of 2.4 million Yuan unpaid from 2005 to 2017.
Ultimately, as evidenced by the Tianyancha App, Anning withdrew the lawsuit in August 2017, incurring a mere 13,000 Yuan in case filing fees.
Among the three companies that Anning aims to acquire, Jingzhi Mineral holds mining rights while Hongxin’s primary asset consists of titanium separation equipment and tailing ponds, with Liyu focusing on iron separation equipmentTogether, these three companies form an integrated mining and processing system encompassing the extraction of raw materials, refining of iron and titanium concentrates, and tailings management, creating a cohesive system for the mining and processing of vanadium-titanium magnetite.
However, the fortunes of Jingzhi Mineral have fluctuated significantlyAs per reports from the Huili City People's Court, resources within the existing mining rights have nearly depleted, and the acquisition of new rights has been delayed, leaving Jingzhi Mineral idle since 2015. Consequently, its affiliated companies, Hongxin and Liyu, have also ceased operations, suffering severe financial instability.
Anning's intentions to secure Jingzhi Mineral have been apparent since 2022. That November, the company disclosed plans to collaborate with investment entities like the Reconstruction Fund and the Silk Road Fund to enter the restructuring bidding process for Jingzhi Mineral and Hongxin Industrial, with aspirations of maximizing resource values through streamlined development.
In November 2023, bids for the restructuring investment rights of Jingzhi Mineral and its affiliates were publicly auctioned, commencing at 1.738 billion Yuan
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Ultimately, Ying Sheng Industrial emerged victorious with a bid of 6.508 billion Yuan, a remarkable premium of 274.4%. Anning stated that it assessed the maximum value of the assets to be below 6.5 billion Yuan, which led them to refrain from further bidding.
Currently in a phase of strategic expansion, Anning is also focusing on securing financial supportAnning Co. specializes in the mining, washing, and sale of vanadium-titanium magnetite, with its principal products being titanium concentrates and vanadium-titanium iron concentratesAnning went public on the SME board of the Shenzhen Stock Exchange in April 2020, being the first listed company from the Panzhihua regionThe controlling figure, Luo Yangyong, through Chengdu Zidong Investment Co. and personal shares, holds a substantial 72.071% stake in Anning.
For the first three quarters of 2024, Anning reported revenues of approximately 1.359 billion Yuan and a net profit attributable to shareholders of roughly 683 million Yuan.
China’s titanium resources are largely concentrated in the vanadium-titanium magnetite of the Panzhihua area, with additional smaller deposits located in regions such as Chengde in Hebei and Hanzhong in ShaanxiThe Panzhihua and Panjiatian mining districts collectively hold nearly 10 billion tons of resources, with Anning’s principal resources found in Panjiatian.
In recent years, Anning has frequently articulated goals centered around "horizontal mergers for resources, vertical extension of the industrial chain, and creating an integrated materials enterprise." With Jingzhi Mineral included in the fold, Anning anticipates the ability to produce an additional 2.6 million tons of mineral resources per year, projecting an enhancement in the company's resource reserves, operational scale, market share, and profitability.
As of the end of Q3 2024, Anning's debt-to-asset ratio stood impressively low at 17.8%, with no long-term interest-bearing debts on the books and short-term liabilities kept within 600 million Yuan
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