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Chinese Oil Company Buys 35% Stake In Armenian Mining Firm

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  • Chinese Oil Company Buys 35% Stake In Armenian Mining Firm

    CHINESE OIL COMPANY BUYS 35% STAKE IN ARMENIAN MINING FIRM

    Asbarez
    Wednesday, January 12th, 2011

    YEREVAN (Stockopedia news)-Hong Kong based Fortune Oil has acquired
    a 35% stake in a company that owns three iron ore mines in Armenia.

    Wednesday's deal will see the London-listed group pay $24 million for
    a 35% equity interest in Bounty Resources Armenia Ltd, which owns mines
    with proven, probable and inferred reserves of 1,832 million tons.

    Fortune has the option to increase this holding to 50% for an
    additional $16 million investment. Bounty's first mine, Hrazdan,
    contains high quality iron ore at 40% iron concentration and is
    expected to be profitable in 2014.

    The move follows a decision by Fortune last November to diversify
    its established gas production and oil processing operations. Under
    a new strategy it is planning to capitalize on the demand for energy
    and resources in China by investing in high growth commodities such
    as oil, gas, coal, iron ore, copper and other metals, in countries,
    which are close to China.

    "We are extremely pleased to have begun implementing our new
    Resources Strategy with our investment in these three iron ore mines
    in Armenia," said Fortune's chief executive Tee Kiam Poon. "The
    ever growing demand for resources in China, in addition to these
    mines containing a significant amount of reserves, makes this a very
    exciting opportunity. This is truly a "step-change" for the company
    and its shareholders. We look forward to this acquisition making a
    positive contribution in years to come."

    Shares in Fortune rose by 9.5% to 11.5p Wednesday morning on news
    that it had acquired Bounty Resources. Fortune shares hovered between
    6 points and 8 points for much of 2010 before jumping as high as
    12.5 points in December. That was triggered by news of promising
    drilling results from its Liulin coalbed methane project in China
    and a restructuring of its natural gas business, which could free up
    funds for further investment totaling £24.2m.

    China is the world's largest importer of iron ore, with imports
    accounting for 60% of China's total iron ore consumption in 2010.

    Between 2000-2010, China's iron ore imports increased from 69 million
    tons to 619 million tons. It is expected that the country's iron ore
    imports will increase to approximately 712 million tons in 2011.




    From: A. Papazian
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