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Hengxing Gold Holding Company Limited Initiates Arbitration Against Trio China Ltd

2015-04-03 21:01
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XIAMEN, China, April 3, 2015 /PRNewswire/ -- Hengxing Gold Holding Company Limited ("Hengxing Gold" or the "Company") (HKEx: 2303) announced on April 1, 2015 that the Xiamen Arbitration Commission (the "XMAC") has accepted the arbitration application of Xinjiang Gold Mountain Mining Co., Ltd (a wholly owned subsidiary of the Company), against Trio China Ltd ("Trio China", a subsidiary of The Weir Group PLC).

The Company and Trio China entered into the Gold Mountain Mine Crushing System Purchase Agreement (the "Purchase Agreement") dated December 2, 2010 whereby the Company agreed to purchase from Trio China machinery and equipment which forms the overall crushing system of the gold mine the Company operates in the Xinjiang region of China. Trio China has undertaken to the Company that the crushing system must fulfil certain acceptance criteria and performance measures, which have not been not met during the production period and according to the terms of the Purchase Agreement, Trio China is liable to replace the equipment at its own cost and ensure the acceptance criteria are fully achieved. Furthermore it shall compensate the Company for the losses incurred during such production period.

After several failed negotiation attempts to address the performance issues that have arisen as a result of the equipment, the Company has no choice but to exercise its contractual right in the contract to resolve the disputes through the XMAC and has accordingly filed the arbitration application to the XMAC against Trio China. As stipulated in the contract, XMAC arbitration results will have a legal binding effect on both parties. The XMAC recognised the arbitration on March 31, 2015 and a date for the arbitration hearing is to be scheduled.

In the arbitration application submitted to the XMAC, the Company has engaged its legal advisers in seeking to demand Trio China compensation for losses and damages totalling RMB46,213,900, including (1) RMB11,530,000 refund of partial purchase price; (2) RMB15,453,900 compensation on cost of wearable components; and (3) RMB19,230,000 production losses. XMAC recognised the arbitration on 31 March 2015.

The Company will make a further announcement to update the market as and when appropriate should there be any major development in the arbitration mentioned above.

The Company believes these events will not lead to any material impact to the business operation of the gold mine and plans on releasing its first quarter production updates of 2015 soon.

About the Weir Group PLC and Trio China

The Weir Group PLC is a global engineering solution provider, which focuses on designing, manufacturing and supplying products and engineering services for the minerals, oil & gas, and power & industrial markets. Trio China is a manufacturer of crushing, vibrating, washing, and conveying equipment for the aggregate, mining, recycling, and mineral industries. On 15 October 2014, the Weir Group PLC announced that they have entered into agreement to acquire Trio China.

About Hengxing Gold Holding Company Limited (HKEx: 2303)

Hengxing Gold is an emerging gold mining company in China and currently operating the largest gold mine in Xinjiang, with 3.2 million ounce of gold resources and 2.2 million ounce of gold reserves. It aims to achieve the full processing capacity in 2015 then expects to produce average 78,000 ounce of gold per annum for over 20-year mine life. Hengxing Gold's growth strategy is to operate multiple gold mines cost efficiently and grow its resources base by making acquisitions that will bring additional value to its shareholders.

For more information, please visit www.hxgoldholding.com.

Contact Information:

Hengxing Gold Holding Company Limited
CHEN Ying
Corporate Affairs Manager
+86 (592) 2969521
hxgold@xmhxgroup.com

Source: Hengxing Gold Holding Company Limited

Related stocks: HongKong:2303

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