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Chinese group red flags Rs7,92billion deal with Mauritius-based Lithium miner

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Chinese group red flags Rs7,92billion deal with Mauritius-based Lithium miner

The board of directors of Chinese miner, Sinomine Resource Group Co, Ltd (SRGCL) has written to its Hong Kong subsidiary raising concerns over purchasing Bikita Minerals, a Mauritius-headquartered lithium miner operating in Zimbabwe.

Through its Hong Kong listed unit, the firm announced two weeks ago that it will be buying 100% shareholding in African Metals Management Services and Southern African Metals and Minerals, the firms that control 74% shareholding in Bikita Minerals.

According to the Zimbabwe Independent, the deal is worth US$180 million (Rs7.92billion).

The newspaper added that, on January 29, SRGCL’s wholly owned subsidiary, Sinomine (Hong Kong) Rare Metals Resources announced a ‘share and debt sale agreement’ to acquire the assets.

However, SRGCL has reportedly expressed concerns over Bikita’s negative financial health and has sought explanations to justify the rationality in the payment terms it had set out to acquire Bikita.

“Another concern raised was that Bikita had failed to get Reserve Bank of Zimbabwe approval to restructure in preparation of the share and debt sale agreement,”it said.

The approval is needed as the transaction involves foreign currency.

SRGCL also wanted its subsidiary to explain how the share and debt sale agreement would be affected as the governments of China, Zimbabwe and Mauritius must approve the deal.

“Please explain your company’s reports to relevant government agencies in China, Mauritius and Zimbabwe. Fulfill the necessary filing, approval procedures and obtain access to the Chinese government…to remind of relevant risks,” SRGCL said.

The deal is still subject to approvals by the three governments.

Estimates have put Bikita’s lithium ore reserves at 29,4 million tonnes, according to NewZwire.

However, should the proposed purchase go through, Chinese investors would effectively control most of Zimbabwe’s lithium reserves, during a period when some countries have moved to classify the resource as a strategic mineral where foreign interests may either be limited or excluded.

This comes as SRGCL is the second Chinese state entity after, Zhejiang Huayou Cobalt Company Ltd, to buy Zimbabwe’s strategic lithium reserves.

Huayou reportedly acquired 100% shares of the Australian Stock Exchange listed lithium miner, Prospect Resources, for US$422 million last December, in a deal that effectively reshaped the country’s lithium mining landscape.

Original article at Zimbabwe Independent

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The information and opinions expressed in our published works are those of authors/sources believed to be reliable. NewsMoris makes no representations as to accuracy, completeness, suitability, or validity of any information expressed.