Ximei Resources Holding Limited Announces Discloseable Transaction: Acquisition of Right-of-Use Asset
Key Points and Transaction Summary
- Transaction Type: Discloseable transaction involving the acquisition of a right-of-use asset under HKFRS 16 Leases.
- Parties Involved: Ximei Leizhou (Project Company, an indirect non-wholly owned subsidiary of Ximei Resources Holding Limited) and Leizhou Infrastructure (Designated Company, a wholly state-owned enterprise established by Leizhou Government).
- Agreements Signed:
- Cooperation Framework Agreement (30 September 2022)
- First Supplemental Cooperation Framework Agreement (14 October 2022)
- Second Supplemental Cooperation Framework Agreement (31 March 2026)
- Delivery Confirmation (31 March 2026)
- Proposed Lease: Lease of factories, warehouses, and ancillary infrastructure for production of tantalum-niobium oxide, initially for eight years, later amended to three years starting from 20 October 2025.
- Proposed Option to Acquire: Ximei Leizhou granted an option to acquire the leased asset (land and infrastructure) at any time during the lease term, latest by three years after delivery (i.e., by 19 October 2028).
Financial Details and Impact
- Estimated Lease Payments: RMB69.8 million for three years (2025-2028).
- Estimated Exercise Price for Option to Acquire: RMB224.7 million.
- Right-of-Use Asset Value:
- Unaudited value as at 20 October 2025: RMB270.5 million
- Present value as at 31 December 2025 (2025 Annual Report): RMB268.0 million
- Increase in Leasehold Land and Factory Building: RMB29.6 million (lease), RMB238.4 million (option to acquire), total right-of-use asset increase of RMB268.0 million.
- Prepayment: RMB10 million paid by Ximei Leizhou, offsettable against first-year rent.
- Deposit: Six months’ rent, refundable without interest.
- Rent Confirmation: Actual rent not finalized; expected to be confirmed by end of 2026.
Shareholder Information and Price Sensitivity
- Listing Rules Compliance: Transaction qualifies as a discloseable transaction under Chapter 14 of HKEX Listing Rules (percentage ratios >5% but <25%). No shareholder approval required but announcement and reporting obligations apply.
- Remedial Actions:
- Delay in announcement due to Directors’ lack of awareness about the accounting treatment’s disclosure obligation.
- Company has now conducted a full review, issued internal memorandums, enhanced reporting procedures, and committed to consulting professional advisers for future notifiable transactions.
- Potential Share Price Impact:
- This transaction significantly increases the Group’s assets (leasehold land and factory buildings), which may strengthen the Group’s production capacity, market share, and competitiveness in the tantalum-niobium industry.
- Supported by Leizhou Government, this project is positioned to consolidate Ximei Resources’ industry leadership and maximize long-term shareholder value.
- Funding for the lease and option to acquire will be from internal resources, bank loans, or capital contributions. Any substantial changes in rent or asset values will be disclosed and may require further shareholder approval if thresholds are crossed.
- Shareholders should note the material increase in assets and production capacity, which may positively affect share valuation and investor sentiment.
Additional Details
- Premises: About 100,000 square metres in Leizhou Economic Development Zone.
- Purpose: R&D, production, and sales of high-performance tantalum-niobium oxide products.
- Right of First Refusal: Upon lease expiration, Ximei Leizhou has priority to renew lease under same terms.
- Condition Precedent: Lease begins upon completion, delivery, and acceptance of construction by Leizhou Infrastructure.
Disclaimer
This article is for informational purposes only and does not constitute investment advice. Investors should review official announcements and consult their financial advisers before making investment decisions. The information provided is based on unaudited figures and subject to change upon finalization of agreements and rent confirmation.
