CGN Mining : MAJOR TRANSACTION IN RELATION TO THE ACQUISITION OF 19.99% EQUITY INTEREST IN FISSION (in PDF)

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Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 01164)

MAJOR TRANSACTION IN RELATION TO THE ACQUISITION OF 19.99% EQUITY INTEREST IN FISSION

Sole Financial Adviser to the Company

THE ACQUISITION

Reference is made to the announcement of the Company dated 21 December 2015. The Board is pleased to announce that on 11 January 2016, the Company (as subscriber) and Fission (as issuer) entered into the Share Subscription Agreement, pursuant to which Fission has agreed to issue and the Company has agreed to subscribe for 96,736,540 common shares and plus an additional number of common shares that is equal to approximately 24.98% of the number of common share to be issued by Fission prior to the Completion of the Acquisition pursuant to the exercise of outstanding convertible securities of Fission, at a price of CDN$0.85 (equivalent to approximately HK$4.66) per common share and for a total consideration equal to the product of CDN$0.85 multiplied by the number of the Equity. The Subscription Price was determined upon arm's length negotiations between the Company and Fission with reference to the results of evaluation conducted by advisers and professionals engaged by the Company.

Following the Completion of the Acquisition, the Company will hold approximately 19.99% of the equity interest in Fission, and become the single largest shareholder of Fission. Fission will not become a subsidiary of the Company and its financial statements will not be consolidated into those of the Group.

The Directors are of the view that the terms of the Share Subscription Agreement are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

LISTING RULES IMPLICATIONS

As the highest applicable percentage ratio in respect of the Acquisition exceeds 25% but is less than 100%, the transaction contemplated under the Share Subscription Agreement will constitute a major transaction of the Company pursuant to Rule 14.06(3) of the Listing Rules and is therefore subject to the notification, announcement and Shareholders' approval requirements under the Listing Rules.

To the best of the Directors' knowledge, information and belief having made all reasonable enquiries, no Shareholder has any material interest in the Acquisition and no Shareholder is required to abstain from voting if the Company were to convene a general meeting for the approval of the Share Subscription Agreement. As such, the Share Subscription Agreement may be approved by written Shareholders' approval in accordance with Rule 14.44 of the Listing Rules. The Company intends to obtain written Shareholders' approval from China Uranium Development who holds 2,974,347,826 Shares, representing approximately 64.15% of the issued share capital of the Company as at the date of this announcement.

GENERAL

Pursuant to Rule 14.41(a) of the Listing Rules, a circular is to be despatched to the Shareholders on or before 13 January 2016. As the Company requires additional time to finalise the information to be included in the circular, it has applied to the Stock Exchange for, and has been granted with, a waiver from the strict compliance with Rule 14.41(a) of the Listing Rules and the time for the despatch of the circular has been extended to on or before 7 March 2016.

As Completion is subject to the fulfilment (or if applicable, waiver) of certain conditions precedent set out in the sub-section headed "2. The Share Subscription Agreement - 2.6 Conditions precedent" in this announcement, the Acquisition may or may not proceed. The issue of this announcement does not in any way imply that the transactions under the Share Subscription Agreement will be completed. As the Acquisition may or may not proceed, Shareholders and potential investors are advised to exercise caution when dealing in the shares of the Company.

1. INTRODUCTION

   
   

   Reference is made to the letter of intent entered into between the Company and Fission on 21 December 2015, details of which are announced in the announcement of the Company dated 21 December 2015. The Board is pleased to announce that, on 11 January 2016, the Company (as subscriber) and Fission (as issuer) entered into the Share Subscription Agreement, pursuant to which Fission has agreed to issue and the Company has agreed to subscribe for 96,736,540 common shares and plus an additional number of common shares that is equal to approximately 24.98% of the number of common share to be issued by Fission prior to the Completion of the Acquisition pursuant to the exercise of outstanding convertible securities of Fission, at a price of CDN$0.85 (equivalent to approximately HK$4.66) per common share and for a total consideration equal to the product of CDN$0.85 multiplied by the number of the Equity.

   At the date of this announcement, the Company and Fission also entered into the Off-take Agreement, pursuant to which the Company is entitled to acquire Off-take Quantity from Fission under the terms and conditions in the Off-take Agreement. Please see "3. Information of Fission -

   3.3 Off-take arrangement and undertaking given by Fission" in this announcement for details.

   
   

   Following the Completion of the Acquisition, the Company will hold approximately 19.99% of the equity interest in Fission, and become the single largest shareholder of Fission. Fission will not become a subsidiary of the Company and its financial statements will not be consolidated into those of the Group.

   
   

2. THE SHARE SUBSCRIPTION AGREEMENT

   
   

   The major terms of the Share Subscription Agreement are set out as follows:

   
   
3. Date

   
   

   11 January 2016

   
   

4. Parties

   
   

   Issuer: Fission Subscriber: the Company

   To the best of the Directors' knowledge, information and belief having made all reasonable enquiries, Fission and its ultimate beneficial owners are Independent Third Parties as at the date of the this announcement.

   
   

5. Assets to be acquired

   
   

   Pursuant to the Share Subscription Agreement, Fission has agreed to issue and the Company has agreed to subscribe for 96,736,540 common shares and plus an additional number of common shares that is equal to approximately 24.98% of the number of common share issued by Fission prior to the Completion of the Acquisition pursuant to the exercise of outstanding convertible securities of Fission by way of private placement.

   
   

   The Equity will be listed on the TSX upon its acceptance while it may not be traded for a period of four months plus one day from the Completion.

   Please refer to the section headed "3. Information on Fission" below in this announcement for further information.

   
   

   Following the Completion of the Acquisition, the Company will hold approximately 19.99% of the equity interest in Fission, and will become the single largest shareholder of Fission. Subject to certain conditions provided in the Share Subscription Agreement (including the Company maintaining a certain significant share ownership in Fission), the Company will be entitled to nominate up to two directors to the Fission's board of directors and will have anti-dilution rights in future equity financings of Fission. Fission will not become a subsidiary of the Company and its financial statements will not be consolidated into those of the Group.

   
   

6. Subscription Price

   
   

   The Subscription Price for the Acquisition is equal to the product of CDN$0.85 (equivalent to approximately HK$4.66) multiplied by the number of the Equity. The Subscription Price was determined upon arm's length negotiations between the Company and Fission with reference to the results of evaluation conducted by advisers and professionals engaged by the Company. For the purpose of determining the Subscription Price, the Company has (i) engaged independent technology adviser to review the major technology parameters of Fission; (ii) engaged independent financial adviser to appraise the value of Fission based on the parameters reviewed by the independent technology adviser; (iii) reviewed and estimated the major technology and financial parameters of Fission based on the Company's own proficiency; and (iv) evaluated the value of Fission based on the estimated supplies and demands, as well as the developing trend of the global natural uranium market.

   
   

7. Payment




The Company has paid an amount of CDN$3,000,000 (equivalent to approximately HK$16,440,000) to Fission's legal counsel to be held pursuant to the Escrow Agreement which will be released to Fission pursuant to the Escrow Agreement and Fission shall apply such deposit as partial satisfaction of the Subscription Price to be paid upon Completion.




The Subscription Price, less the deposit stated above, shall be paid by the Company at Completion to a separate and designated account of Fission by wire transfer or in any other manner agreed upon by the parties.




All of the Subscription Price will be funded by the Company by its internal resources taking into account the sufficiency of its working capital.