Yunnan Chihong Zinc & Germanium Co., Ltd. (SHSE:600497) agreed to acquire 49% stake in Xinbarhu You Banner Rong Da Mining Limited Liability Company from Su Tingbao for CNY 2.8 billion in cash and stock on October 30, 2014. 76.5% of the transaction consideration will be paid through issuance of shares while the remaining 23.5% will be paid in cash. Under the terms of the deal, approximately 209.32 million shares will be issued as consideration. Su Tingbao shall not transfer the said shares for 12 months from completion date of the issuance. Upon completion of this transaction, Xinbarhu You Banner Rong Da Mining will be a wholly-owned subsidiary of Yunnan Chihong Zinc & Germanium. Yunnan Chihong intends to raise the matching fund through issuance of shares non-publicly to not more than 10 qualified specific investors, raising not more than CNY 667 million. The raised matching fund mainly will be used for the cash payment of the transaction. Of this amount, CNY 614.7 million will be paid to Su Tingbao as consideration. As of December 31, 2014, Xinbarhu You Banner Rong Da Mining Limited Liability Company had total assets of 1522.29 million, total owners equity of CNY 438.41 million, revenue of CNY 586.62 million, operating profit of CNY 83.56 million and net profit of CNY 54.42 million.

As of May 22, 2015, Yunnan Chihong Zinc & Germanium Co., Ltd. will now pay CNY 615.09 million in cash and issue 209.45 million shares at CNY 9.56 per share. Yunnan Chihong Zinc & Germanium will issue up to 270.29 million shares at CNY 9.56 per share through private placement to raise up to CNY 2.58 billion in total through placement. The proceeds will be used to pay cash in transaction and add working capital for Xinbarhu You Banner Rong Da Mining. As a result, Su Tingbao will hold 9.75% in Yunnan Chihong Zinc & Germanium.

The transaction is subject to shareholders of Yunnan Chihong Zinc & Germanium, China Securities Regulatory Commission and approvals from other institutions as required by law. The transaction was approved by Board of Directors of Yunnan Chihong Zinc & Germanium on November 21, 2014. As of May 28, 2015, the State-owned Assets Supervision and Administration Commission of Yunnan Province approved the transaction. The deal was approved by the shareholders of Yunnan Chihong Zinc on June 5, 2015. On September 8, 2015, Merger, Acquisition and Reorganization Examination Committee for Listed Companies of China Securities Regulatory Commission approved the transaction. As of October 30, 2015, the deal has been approved by CSRC. Yunnan Righteous Law Firm acted as legal advisor for Yunnan Chihong Zinc & Germanium Co Ltd. Changjiang Financing Services Co., Limited acted as the independent financial advisor to Yunnan Chihong Zinc & Germanium Co., Ltd. Ruihua Certified Public Accountants (Special General Partnership) acted as the accountants to Yunnan Chihong Zinc & Germanium Co., Ltd.