China's Jiangxi Copper receives $213 million loan from parent following 18% stake buy in Canadian miner
Jiangxi is prevented from buying more than a 20 per cent interest in First Quantum as it receives 1.5 billion yuan loan from its parent
State-backed Jiangxi Copper Co, one of China’s biggest copper producers, will receive 1.5 billion yuan ($213.10m, £162m,€192m) in “financial assistance” from its parent to repay loans and cut financing costs, the company said.
The support from Jiangxi Copper Corp, the miner’s largest shareholder, comes after Jiangxi Copper said it would pay $1.1 billion for an 18 per cent stake in Canadian miner First Quantum Minerals, to be partly funded by a syndicated loan of up to $700 million.
Jiangxi is prevented from buying more than a 20 per cent interest in First Quantum under a standstill agreement reached in October.
Shares of Canada’s First Quantum Minerals Ltd rose as much as 5 per cent to its highest since May on Monday after Jiangxi Copper agreed to become the miner’s largest shareholder.
The financial assistance “can only be used by the company to supplement its working capital or repay bank loans,” Jiangxi Copper said, and if otherwise needs written consent by the parent.
The interest rate for the financial assistance agreement due in June 2020 is 2.35 per cent.
With exception of the latest loan, Jiangxi Copper has received seven rounds of financial assistance totalling 4.9 billion yuan from its parent since June with the interest rate on the latest loan its lowest so far.
Jiangxi Copper Group is located in Guixi, Jiangxi Province with its main business including non-ferrous metal mines, smelting and rolling of non-metallic ore and non-ferrous metal products, contracting overseas non-ferrous metal smelting industry, engineering and overseas international bidding projects.
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