RNS Release - PMMC Enters into Iron Ore Agency Agreement

15 November 2011

Prosperity Minerals Holdings Limited

 ("Prosperity" or "the Company")

PMMC, a subsidiary of Prosperity, enters into Iron Ore Agency Agreement

Prosperity Minerals Holdings Limited ("PMHL.L") is an iron ore operator serving the People's Republic of China ("PRC") and a real estate owner and developer in the same market. It is also an investor in two PRC cement manufacturers.

We are pleased to announce that a wholly-owned subsidiary of the Company, Prosperity Materials Macao Commercial Offshore Limited ("PMMC"), and Jiangsu Prosperity Steel Co. Limited ("Jiangsu Steel") signed an iron ore agency agreement on 15 November 2011 ("the Agreement").

Under the Agreement, PMMC will supply up to 1.81 million tonnes of iron ore to Jiangsu Steel over a 14 month period, with a cap of 130,000 tonnes to the end of 2011 and 1.68 million tonnes in 2012. 

PMMC will also provide Jiangsu Steel with a range of administrative services, including the handling of shipping documents and liaising with payment banks.  For these services, Jiangsu Steel will pay PMMC a commission of US$2 (£1.25) per dry metric tonne of iron ore plus a handling charge ("the LC handling charge") of US$2 per dry tonne of iron ore if the letter of credit in relation to shipment includes payment terms of 90 days. The amount of commission and LC handling charge are subject to certain caps, as explained below, and the Agreement is entered into in the ordinary course of business of the Company.

Implications under the AIM Rules

On 11 May 2011, the Company announced that PMMC entered into an offtake agreement (the "Nanjing Agreement") with Nanjing Iron and Steel Group International Trade Co., Limited and Gracewise Pte Limited ("Gracewise"), which is indirectly 58% owned by Mr David Wong, Chairman and CEO of the Company. In addition, Jiangsu Steel is indirectly 47.5% owned by Mr David Wong and his associates.

The transactions under the Nanjing Agreement and the Agreement are with the same related party and are of a similar nature. This means that the Company is required to aggregate these transactions under Rule 16 of the AIM Rules for the purposes of determining whether or not PMMC has entered into a related party transaction under Rule 13 of the AIM Rules.  However, the transactions under the Agreement, when aggregated with the transactions under the Nanjing Agreement, do not constitute a related party transaction under AIM Rule 13 as they do not exceed 5% of any of the class tests under the AIM Rules.

The Directors of the Company (other than Mr Wong) believe that the Agreement is in the interests of the Company.

Implications under the Hong Kong Listing Rules

The Company's controlling shareholder, Prosperity International Holdings (H.K.) Limited ("PIHL"), is listed on the Hong Kong Stock Exchange and under the Hong Kong Listing Rules, the Agreement is subject to the approval of PIHL's independent shareholders. This also includes caps on both commission and the LC landing charge as follows: US$ 2,173,600 from the date of the Agreement to 31 March 2012; and US$ 5,790,400 from 1 April 2012 to 31 December 2012. 

Further enquiries:

Prosperity Minerals Holdings Limited                                      +852 3187 2618

Patrick Li

Neelke Kruger-Logan

Citigate Dewe Rogerson                                         &# 160;                +44 (0) 20 7638 9571

Martin Jackson

Kate Lehane

Daniel Stewart & Company plc                                          ;       +44 (0) 20 7776 6550

Corporate Finance: Paul Shackleton, Noelle Greenaway

Corporate Broking: Martin Lampshire

Notes to Editors:

Prosperity (AIM: PMHL) is:

 - an iron ore operator serving the PRC;

 - a specialised real estate owner and developer in the same market; and

 - an investor in two cement plants, also in the PRC.

Prosperity's iron ore business has been operating since 1992 and sources iron ore, for shipment and use in the PRC, from major international iron ore producers in South Africa, Brazil and Australia, as well as from South East Asia, Thailand and Malaysia in particular. The majority of the Company's iron ore is sold to large steel manufacturers in the PRC. In the fiscal years ended 31 March 2010 and 2011, Prosperity shipped 7.9 million tonnes and 6.3 million tonnes of iron ore respectively. In December 2010, Prosperity acquired a 35% effective interest in a Brazilian mining operation which owns approximately 602 square kilometres of exploration rights and 3.01 square kilometres of mining concession in the State of Ceara. The first shipment of 51,000 tonnes was made in March 2011.

Prosperity has operated a real estate investment and development division since February 2010 which is focused on creating a portfolio of PRC property and development assets with good upside potential and manageable risk. The Company has entered into a number of agreements with its partners to develop recreational, commercial and residential projects in Guangzhou City and Changzhou City in the southern PRC and Hangzhou City in the east. Prosperity also acquired interests in an existing commercial building in Guangzhou which is the largest city in the southern PRC and the third largest in the Country (after Beijing and Shanghai). It has a population in excess of 12 million people and is located in the Pearl River Delta, the foremost economic zone in the southern PRC.

In April 2010, Prosperity disposed of its cement business in the PRC but retained its 33.06% interest in Anhui Chaodong Cement Company Limited (ACC). ACC is located in Anhui Province in the eastern PRC. The designed sellable output capacity of ACC is 5.1 million tonnes of cement and clinker per annum. On 1 September 2010, Prosperity acquired a 25% equity interest in Liaoning Changqing in Liaoning Province, in the northern PRC. Liaoning Changqing completed construction of a new 2 million tonnes per annum cement and clinker production line in April 2010 and normal production commenced on 2 July 2010. Following the completion of a share issuance in August 2011, Prosperity's interest in Liaoning Changqing was diluted to 16.11%.

The PRC is the World's second largest economy (behind the US) and the biggest buyer of iron ore; it is also the largest producer and consumer of cement.