The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement,makes no reprentation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.
CHINA NICKEL RESOURCES HOLDINGS COMPANY LIMITEDbe happy
中國鎳資源控股有限公司
(Incorporated in the Cayman Islands with limited liability)
(Stock Code:2889)
ANNOUNCEMENT
in respect of new developments in the Group’s business
and operations since30June2007
This is an announcement made by the Company pursuant to Rule13.09of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.
Since30June2007,there have been new developments in the Group’s business and operations.Details of which are t out below:
Recent Developments since30June2007
The Company is continuing its strategy of increasing shareholders value through the expansion of steel production capacity and developing process that capture the full value of its ferro-nickel ore sourced from Indonesia.
Expansion Projects
尺子的英文
As disclod in the Company’s2007interim report,the Group plans to increa its production capacity in the PRC and Indonesia.
The Group is currently expanding its stainless steel production capacity in the PRC by200,000tonne
s to500,000tonnes,which is expected to be completed by the end of2007.The propod increa in production capacity will be achieved by expanding its melting capacity in the PRC to three million tonnes through the potential construction of a new plant.This plant is targeted for completion in2009 (subject to regulatory approvals)with a preliminary capital cost estimate of RMB1billion.Until this additional melting capacity is added,the Group may lea or acquire additional melting capacity to utili the additional stainless steel production capacity.
In addition,the Group also intends to build a new steel plant in Indonesia to melt approximately one million tonnes of iron ore concentrate per annum,reprenting a steel production capacity of approximately600,000tonnes per annum at a preliminary estimated capital cost of RMB500million. This will allow the Group to leverage its proximity to iron ore offtake in Indonesia and to access the South East Asia and Middle East markets.
The incread steel making capacity in both the PRC and Indonesia will provide the Group with additional scale and allow it to further u its experti to increa profits.
mauryThe Group plans to build a processing facility in Indonesia to parate iron,nickel and cobalt from the ore.This facility will utili technology licend from a PRC institute to extract full value from the ore
奥普拉 温弗瑞by extracting iron concentrate and nickel and cobalt by-products.The preliminary estimated capital cost of the project is RMB800million.The facility is projected by the Group to be completed in2009.The Group has licend from a rearch institute bad in the PRC the u of ore processing technology to parate iron concentrate and,through a subquent direct hydrometallurgical process,intermediate nickel sulphate from ferro-nickel ore,with cobalt sulphide as a by-product.The Group intends to u the iron concentrate produced from its ore processing facility as feedstock for the Group’s propod 600,000tonnes per annum steel plant in Indonesia.The ore processing facility is estimated to treat two million tonnes of raw iron ore to produce one million tonnes of iron concentrate(60per cent.Fe),plus an intermediate nickel by-product(12,000tonnes contained Ni per annum)and an intermediate cobalt by-product(840tonnes contained Co per annum).The u of iron concentrate will increa the efficiency and reduce production and capital costs of the Indonesia steel plant,with significant savings in the consumption of coke.
The Group intends to ship the intermediate nickel sulphate product from the Group’s ore processing facility in Indonesia to the PRC for further processing into refined nickel metal at the30,000tonne per annum nickel refinery that the Company propos to construct in Henan Province at a preliminary estimated capital cost of RMB300million.The refined nickel metal produced in the nickel refinery will
be ud as feedstock at its Gongyi steel operations for stainless steel production.The production of refined nickel will maximi the value extracted from the Company’s ferro-nickel ore source and reduce the input costs for the Company’s stainless steel production.The total production cost of nickel metal is expected to be significantly less than the current spot market price of nickel and this process will minimi the Company’s exposure to nickel price volatility and result in improved margin and profitability.The cobalt sulphide by-product produced from the ore processing facility will be sold to domestic and/or international buyers providing significant additional revenue for the Company.
Feasibility studies for the propod Indonesian steel plant ore processing facility and the propod nickel refinery facility in Henan Province have not yet been completed.
The Group’s objective is to expand its product portfolio into the midstream and downstream high value-added steel products such as nickel-bad gear and bearing steel and300ries stainless steel as well as other nickel bad steel products beginning in2008.A full and diversified product range will enable the Group to reali higher profit margins and to offer a wider range of products to meet the growing requirements of customers.
Nickel Prices
High nickel prices in the first half of2007helped to increa profits from the sale of stainless steel ba metal.However,the Group delayed sales of its stainless steel ba material in July and August of 2007due to a decline in the prevailing nickel market price and stockpiled stainless steel ba metal.As a result,total sales of steel products for the first two months of the cond half of2007were significantly less than sales in prior months of the year.The nickel price incread during September 2007and the Group has recommenced sales of its stainless steel ba material and it expects to ll most of its stockpiled product by the end of2007.
Inteco Technical Service Agreement
In November2007,the Group signed a framework agreement with an Austrian company,Inteco Special Melting Technologies(‘‘Inteco’’).Under the terms of this agreement,Inteco will cond technical experts to the Group’s plants to provide technical assistance,quality control,and production improvements.The cost of such experti will be determined when the relevant condees and specific projects have been identified.
Risks Associated with the Group’s Expansion Projects
The Group’s failure to execute its expansion projects successfully may have an adver effect its res
ults of operations and financial condition
The Group’s expansion projects,to the extent that they proceed,will require substantial capital expenditure.The Indonesian projects have an estimated capital expenditure of RMB1.3billion plus RMB200million working capital,and the PRC smelting plant RMB1billion.All estimated capital costs,construction schedules,production capacities and operating performance are preliminary estimates which may be subject to further material adjustments and feasibility studies for such projects have not yet been completed.The actual capital costs,construction schedules,production capacities and operating performance in relation to each of the facilities described above may vary materially from the Group’s preliminary estimates which could have a material adver effect on the Group’s results of operations and financial results.
The Group’s expansion plans are subject to a number of contingencies,including foreign exchange fluctuations,changes in laws and regulations,governmental action,delays in obtaining requisite permits or approvals,obtaining key raw material supplies and utility linkages,acquiring land,accidents,natural calamities,protests and other factors,many of which are beyond its control and may lead to cost and time overruns.There can be no assurance that the actual costs incurred,the production capacity added or time taken for implementation of the expansion plans will not vary fro
m the Group’s budgeted parameters.
The Group has not obtained all regulatory approvals required for the expansion of its production facilities
The Group will require various licences and approvals from central and regional governments of Indonesia and the PRC,as applicable,in order to build and operate the propod processing facilities and to expand its mills or construct new facilities.The licences include general corporate,capital investment,environmental,land utilisation and other licences.The Group has applied for,but has not yet received,the Chine regulatory approvals required for the propod expansion or construction,as the ca may be,of its steel and nickel processing facilities in the PRC,including approvals relating to land u.Similarly,the Group has not obtained the requisite Indonesian regulatory approvals for its propod ore processing and steel production facilities in Indonesia.There can be no assurance that the relevant government authorities will issue the official licences or approvals required by the Group within the anticipated timeframe or at all.Failure to obtain any of the licences and approvals may cau the Group to delay,modify or forego some or all aspects of its expansion plans and may cau bottlenecks in its production process.
The ferro-nickel ore processing technology licend by the Group is commercially unproven and successful application of the process technology cannot be guaranteed
The ferro-nickel ore processing technology licenced by the Group for the paration of iron,nickel and cobalt from ferro-nickel ore sourced from P.T.Yiwan Mining has not been tested on a pilot plant scale. The Group has not completed any independent verification of this technology.The Group cannot be certain that it will be able to apply the results of this ore processing technology successfully to the ferro-nickel ore as it expects,or to apply the technology on a commercial scale in an efficient and timely manner,if at all.As a result,should this facility fail or the licence agreement be terminated prior to the completion of the facility,the Company will have to source nickel supplied by the market at the spot price and be subject to greater cost exposure to nickel market price volatility.
New processing technologies are usually developed over veral years following detailed rearch, feasibility studies,trials and pilot plant operations.Such rearch and development is undertaken in order to minimi the risks associated with building a plant using a new technology on a commercial scale,and in particular the risk that the technology will not operate economically or at all on a commercial scale.However,the Company considers that it may lo market opportunities in undertaking detailed process such as feasibility studies and pilot plant operations,given the time re
quired.Therefore,the process that the Company may undertake prior to construction of the processing plant in Indonesia may be less comprehensive than other international operators.As a result, the risks associated with the development of the Indonesian processing plant may be greater than with other plants and there can be no assurance that if commercial operations start,they will be on time, within budget,at the requisite quality or economically viable.
blackmailThe Group does not have any prior experience in the development construction and operation of ore processing facilities in Indonesia or nickel refineries in the PRC
rarefactionThe development,construction and operation of the ferro-nickel ore processing facility in Indonesia and the nickel refinery in the PRC are outside of the Group’s existing business experience.There can be no assurance that the Group will not suffer unforeen construction and operational problems which may have an adver impact on the Group’s financial results.
The Group intends to rely on independent contractors to overe its capacity expansion strategy in Indonesia and the PRC.Contractors will be expected to apply their experti in relation to steel and nickel processing facilities to areas including procurement and installation of equipment and materials, application for necessary permits licences and approvals and recruitment of sufficient and
qualified staff.Failure by the contractors to perform any of their build-out obligations within the anticipated timeframe or at all could delay or prevent the Group’s capacity expansion and may require the Group to ek alternative contractors or to undertake the expansion activities internally,thereby delaying and potentially increasing the costs of expansion.The costs effects would be particularly significant in relation to capacity expansion in Indonesia,where the Group has limited or no experience with greenfield projects.
The above information will be disclod in an offering circular to be provided by the Company to investors in the Bonds in connection with the Bond Issue and such offering circular is only intended to be distributed to institutional investors.
DEFINITIONS
In this announcement,the following expressions shall have the meanings t out below unless the context requires otherwi:
‘‘Bond Issue’’issue of the Bonds
‘‘Bonds’’the Firm Bonds and the Optional Bonds
‘‘Company’’China Nickel Resources Holdings Company Limited,a company incorporated in the Cayman Islands with limited liability,the Shares of which are listed on
the main board of the Stock Exchange
‘‘Directors’’the directors of the Company
‘‘Firm Bonds’’the Zero Coupon Convertible Bonds due2012of an aggregate principal amount of HK$1,500million
‘‘Group’’the Company and its subsidiaries
‘‘HK$’’Hong Kong dollar,the lawful currency of the Hong Kong Special Administrative Region of the PRC
‘‘Optional Bonds’’the additional Zero Coupon Convertible Bonds due2012of an aggregate principal amount of HK$500million
‘‘PRC’’the People’s Republic of China中文名翻译成英文名
By order of the Board
China Nickel Resources Holdings Company Limited
Dong Shutong
look after
Chairman宋美龄演讲
Hong Kong,6December2007
As at the date of this announcement,the executive Directors are Mr.Dong Shutong,Mr.He Weiquan, Mr.Lau Hok Yuk,Mr.Song Wenzhou,Ms.Zhang Ming,Mr.Zhao Ping and Mr.Dong Chengzhe;the non-executive Director is Mr.Yang Tianjun;and the independent non-executive Directors are Mr.Bai Baohua,Mr.Huang Changhuai and Mr.Wong Chi Keung.
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