Prosperity Minerals

Prosperity is a cement manufacturer and iron ore trading group serving customers in the People's Republic of China.

Company Statement

Cement Operations (Read More About These Projects)

Prosperity's footprint in China

A - Yingde Dragon Mountain Cement Company Limited

Yingde Dragon Mountain Cement Company Limited ("YDM") was formed in 2003 to manufacture cement and clinker for sale in the PRC. Prosperity Materials (International) Limited ("Prosperity Materials"), a company owned and controlled by David Wong, acquired a 25 per cent interest in YDM in 2004.

The Company's subsidiary, Prosperity Cement Investment Limited ("Prosperity Cement"), signed an agreement on 25 January 2006 to acquire a 25 per cent interest in YDM from Prosperity Materials. Prosperity Cement signed a further agreement on 25 February 2006 to acquire the outstanding 75 per cent interest in YDM. YDM was registered as an FIE on 20 March 2006. Having obtained the requisite PRC Government approvals, Prosperity Cement was registered as the sole owner of YDM on 13 April 2006.

B - Prosperity Conch Cement Company Limited

In order to capitalise on the strong demand for cement in Guangdong Province, Prosperity Conch Cement Company Limited ("PCC"), decided to build a modern suspension pre-heater cement production plant adjacent to the YDM plant. PCC plant was to produce high quality clinker and cement for sale in Guangdong Province of the PRC. The Group was offered the opportunity to invest in PCC alongside Anhui Conch.

C - Anhui Chaodong Cement Company Limited

In June 2006, Prosperity entered into an agreement to acquire a 40 per cent interest in Anhui Chaodong Cement Co. Limited ("ACC"). ACC is a public company listed and traded on the Shanghai Stock Exchange of the PRC under the listing code: 600318.

ACC has a current designed saleable capacity of 4.2 million tonnes pa with expansion plans to increase that to 7 million tonnes pa by the end of 2011.

D - Guangzhou K. Wah Nanfang Cement Company Limited ("Guangzhou Nanfang")

In April 2008, Prosperity's wholly-owned subsidiary, Way Zone Limited, acquired a 80 per cent interest in Star Home Limited, a Hong Kong incorporated company, from High Regards Investment Limited* ("the Vendor") for a consideration of RMB38 million (approximately $5.3 million). Star Home Limited owns 50 per cent of Guangzhou K. Wah Nanfang Cement Company Limited ("Guangzhou Nanfang") which owns a cement grinding facility in Guangzhou City.

Prosperity has a 40 per cent indirect interest in Guangzhou Nanfang, the Vendor holds a 10 per cent interest and the other 50 per cent interest is held by a local partner.

Prosperity has been brought in to improve Guangzhou Nanfang's performance and has appointed a new management team to run it.

E - Yunnan Kungang & K. Wah Cement Construction Materials Co. Limited ("Anning")

Prosperity's wholly-owned subsidiary, Prime York Limited ("PYL"), a company incorporated in Hong Kong, has signed two Capital Increase and Share Purchase Agreements ("the Yunnan Agreements"), with, in each case, China Kunming Iron and Steel Holding Limited ("CKISHL") and Hong Kong Forecharm Investments Limited* ("HKFIL").

In accordance with the terms of the Yunnan Agreements, PYL was to invest in a 30 per cent interest in Yunnan Kungang & K. Wah Cement Construction Materials Co. Limited ("Anning") which owns a new modern suspension pre-heater cement and clinker production plant.

Prosperity successfully completed the acquisition of a 30 per cent interest Anning in May 2008.

F - Baoshan Kungang & K. Wah Cement Construction Materials Co. Limited ("Baoshan")

In accordance with the terms of the Yunnan Agreements, PYL was invest in a 30 per cent interest in Baoshan Kungang & K. Wah Cement Construction Materials Co. Limited ("Baoshan") which owns a new modern suspension pre-heater cement and clinker production plant.

Prosperity successfully completed the acquisition of a 30 per cent interest Baoshan in July 2008.

G - Greenfield Project in Chongqing Municipal City

Prosperity plans to take a 100 per cent interest in a greenfield cement and clinker project in Chongqing Municipal City. Chongqing is located next to Sichuan Province where the devastating earthquake caused so much destruction in May 2008. The project was approved by the local government as part of the government's efforts to rebuild the province.

H - Greenfield Project in Denta City, Liaoning Province

The Company plans to invest in a 55 per cent interest in a greenfield cement and clinker project in Dengta City, which is situated near Shenyang, the capital city of Liaoning Province. The total investment is to be around RMB550 million (approximately USD77 million), of which Prosperity's share of the investment is expected to be in the order of RMB302.5 million (USD42 million). Prosperity's partner in this project is a local partner.

All the necessary governmental approvals were obtained in May 2008.

The planned capacity is 2 million tonnes of cement and clinker per annum with production expected to be commissioned before the end of 2011.

I - Greenfield Project in Guiyang City, Guizhou Province

Prosperity plans to take a 100 per cent interest in a greenfield cement and clinker project in Guiyang City, the capital of Guizhou Province, for an investment of RMB550 million (approximately USD77 million).

The Cement Manufacturing Process

The Residual Heat Electricity Generation System (RHE)

Iron Ore Business

The Group's iron ore trading business has sourced, marketed and delivered iron ore to customers in the PRC since 1992. Management has developed strong relationships with the steel manufacturers that purchase most of its products.

The Group intends to develop an integrated chain of iron ore supplies and is investigating opportunities to acquire and develop iron ore resources to enable Prosperity to increase its market share and complement the iron ore supply that it has under its long-term contracts.

In the financial year ended 31 March 2008 the Group's iron ore trading business supplied 3.6 million tonnes of iron ore to customers in the PRC and generated segment results of $17.3 million.

Prosperity successfully diversified its iron ore supply from the traditional long distance suppliers in Brazil and South Africa to shorter distance suppliers in South-East Asia. The Company's first shipment from Thailand was completed in January 2006 and since then Prosperity has also sourced iron ore from Malaysia and Indonesia. (Read More)

Management

The Board

David Wong - Chairman and Chief Executive Officer

Patrick Siu Ming Li - Executive Director and the Chief Financial Officer

Johannes Petrus Mulder - Executive Director

Jian Ping Wu - Executive Director and the President of the cement plant owned and operated by the Group's subsidiary, Yingde Dragon Mountain

Non-Executive Directors

John Robertson

Anthony Williams

Sandy Chun-Kwan Chim

Ben Ren Liu

Michael Kim Hung Yuen

Yu Lin Zhao

Major Shareholders

Number of shares in issue 132,554,333

Number of shares not in public hands 71,046,497

Major shareholders

Prosperity Minerals Group Limited 48,519,230 36.60%
Artemis Investment Management Limited 13,085,135 10.14%
Universities Superannuation Scheme Limited 4,309,906 3.34%
Max Start Holdings Limited 2,751,468 2.08%
Max Will Profits Limited 2,751,468 2.08%

David Wong, co-founder of the Group and Chairman and Chief Executive Officer of the Company, holds a 65 per cent interest in Prosperity Minerals Group Limited, Max Start Holdings Limited and Max Will Profits Limited, giving him an indirect interest in 35,114,408 ordinary shares of the Company. He also directly holds 16,407,030 ordinary shares of the Company. In total he holds a combined direct and indirect interest in 51,521,438 ordinary shares of the Company, representing a 38.87 per cent of the issued share capital.

Updated from Prosperity Minerals' website 31.03.09