NAR plans to acquire two Mongolia iron mines

Iron ore reserves are expected to be 79,000,000 tonnes to maximise synergy and enhance shareholders’ value.

North Asia Resources Holdings Limited (“NAR” or the “Company”) has announced that Company has entered into the Framework Agreement for the acquisition of the entire equity interest in Taishen Development LLC (“Taishen”) at a consideration of RMB170 million (equivalent to approximately HK$195.5 million) on 29 July, 2010. Taishen possesses a mining permit and an exploration permit for two iron ore mines located in Dundgobi Province, Mongolia and in Dornogobi Province, Mongolia respectively (the “Mines”), according to a NAR report.

As advised by the vendor, Inner Mongolia Taishen Mining Co., Ltd, the Mines are located approximately 60km and 35km respectively from the train station of Choir Govisumber aimag (the “Choir Train Station”) in Mongolia. The Mine, under the mining permit which was issued by the Mongolia authority for thirty years from 22 February 2007, has an estimated amount of not less than 79,000,000 tonnes of iron ore reserves. The total consideration is to be settled with an initial deposit of US$2.2 million (equivalent to approximately HK$17 million) and a remaining balance of RMB155 million (equivalent to approximately HK$178 million) in cash. The funding for the cash consideration will be satisfied from the internal resources of the Group and possible fund raising and/or bank financing.

"Mining has become NAR’s core business after the completion of the previous acquisition of mining business in Mongolia. We are pleased to gain this favorable opportunity of acquiring two additional iron ore mines in Mongolia. Through the robust rising global demand for natural resources including iron ores, the Company plans to create considerable synergies in the competitive advantages of the existing iron mining business and this exciting opportunity.

"The board believes that overall cost can be saved by benefiting from lower transportation cost and operational synergy. Moreover, this acquisition will broaden the Group’s income stream, without requiring significant capital investment and at a reasonable consideration. While the management is focused on operations of its existing alluvial gold and iron mines, the Company is intent on aggressively building its business in Mongolia. It is a golden opportunity for the Company to consolidate iron ore mines which offer synergies and operational efficiencies in line with its strategy to become a leading iron player in Mongolia" remarked Mr. Joseph King, Chairman of NAR.