RE: Why is Sinosteel so important to his stock?Hope the following brings clarity to the queston (copy of the LOI NR included.)
For the sake of clarity I use the word “subsidiary” for the JV between Sinosteel and DIaT for the four “uranium” properties.
Why is Sinosteel so important to his stock?
Sinosteel is important as they will be 50% stakeholders in the four properties (uranium related) and this will:
- Inject fresh capital into DIT (the uranium component (lets call it a subsidiary)
- Partner in the exploration, development and production in all four properties.
- Insures that DIT has a customer base for “uranium” (China of course).
- Will share in all cost
- As partners, in this subsidiary, Sinosteel and Ditem will equally share in cost and revenues.
In terms of a subsidiary, the financial and accounting accounts will be clearly identified as separate to that of Ditem although they will be integrated into its financial statements.
Will this dilute shareholder equity?
NO! Because the land and other assets of the four properties and the investment capital received from Sinosteel will be transferred into the subsidiary. In terms of the Balance sheet the short term assets (investment capital from Sinosteel) + the value of the long term assets (properties) = Shareholders equity and the appropriate adjustments made to Ditem Balance Sheet. In all it will be but a financial reflection of the JV.
Will the accretive value be decreased?
NO, because as explained, there will be no impact in terms of the integrated financial statements.
This because the adjustments made to Ditem’s financial statements will be (equally) recorded under the subsidiary to reflect the JV.
As the subsidiary generates revenues both JV partners will share equally as per the LOI.
When will the agreement be formalize?
A news release to this effect should be issued shortly to confirm this but I believe, although we know that the LOI is now in effect an informal agreement if will be formalized by Chinese government officials during the China Mining show in November. Therefore it is not a question of if but rather when it will be signed.
LOI (source: Sedar) https://www.sedar.com/DisplayCompanyDocuments.do?lang=EN&issuerNo=00008171
2008/08-12 - NR English (PDF)
Ditem Explorations DIT TSX-Vx
SINOSTEEL AND DITEM SIGN LOI FORJOINT EXPLORATION ACTIVITES IN CANADA
Montreal – April 14th 2008 – Ditem Explorations (DIT : TSX-Vx) is pleased to announce that it has signed a Letter of Intent with Sinosteel Mining Company Ltd, a wholly owned subsidiary of Sinosteel Corporation, (hereinafter Sinosteel) establishing the conditions for joint venture agreements on Ditem exploration properties and projects in Canada. The LOI is subject to regulatory approval. This LOI is subsequent to the signing of a Memorandum of Understanding (see January 7th 2008 press release) with Sinosteel.
The LOI, subject to Joint Venture Agreements, outlines the creation of a joint-operating committee responsible for exploration and development programs on Ditem’s uranium properties in Saskatchewan (Athabasca Basin) and Quebec (Otish Mountains Basin), amounts to be paid by Sinosteel for the acquisition of a 50% interest in specific Ditem properties, the purchase by Sinosteel of an initial interest of Ditem shares and various other provisions for continued development. The LOI will be completed by Joint Venture Exploration Agreements specific to each of the properties. Sinosteel and Ditem will undertake to complete the first Joint Venture Agreement, which is to be signed within 90 days of the signing of the present LOI.
Ditem Chairman and CEO Raymond Savoie said “This first LOI sets out the framework for the initial collaboration between Sinosteel and Ditem on exploration and development. We believe that the ability and experience of Sinosteel combined with Ditem activities in Canada will generate very several successful projects in the near future.”
The LOI was signed in Beijing on the 11th of April in the presence of government representatives This is believed to be the first uranium joint venture exploration and development program between a Chinese and a Canadian company for Canadian properties.
Sinosteel Mining Company Ltd, a subsidiary of Sinosteel Corporation, is responsible for several mining operations and mining interests of Sinosteel in China and in several other countries including notably a uranium mine in Australia. Sinosteel is an important mining and related business company, mainly engaged in developing and processing metallurgical mineral resources.
Company information may be obtained at www.sinosteel.com.