Oct 22 2010
Sterling Group Ventures, Inc. (OTCBB:SGGV)(FRANKFURT:GD7) has advised that it has signed two agreements dated October 18, 2010 with Chenxi County Hongyu Mining Co. Ltd. and its shareholders relating to the Gaoping phosphate mine located in Chenxi County, Hunan Province, China and other phosphate resources located in Hunan.
Hongyu holds a business license and a mining permit on the Property which is in effect until November 10, 2014 and covers 42.5 hectares encompassing the Property, a sedimentary phosphate type deposit. The mining permit allows initial production up to 100,000 tonnes phosphate ore per year. The Property holds 58.16 million tonnes of phosphate resources with a grade of 19.8% P2O5 based on a geological report estimated by Hunan Chemical Geological Exploration Institute. So far, Hongyu has paid resource fees to Chinese government for 3.13 million tonnes of phosphate resources.
The Agreements also require an investment company to be incorporated in Hong Kong (the "Investment Company") which will be owned 20% by the Hongyu Shareholders and 80% by Sterling. The Investment Company will acquire 90% of Hongyu. Upon completion of this acquisition, Hongyu will become a Hong Kong / China joint venture company and within five business days of the approval of such joint venture company by the appropriate Chinese authorities, Sterling will pay RMB two million Yuan to the Hongyu Shareholders. During the acquisition phase, Sterling will ensure that Hongyu's assets retain a minimum value of RMB five million Yuan. At any time when requested by Sterling, the Hongyu Shareholders agree to sell their 20% interest in the Investment Company to Sterling for the issuance of ten million common shares of Sterling's capital stock to them all subject to the rules and requirements of the US regulatory bodies bearing jurisdiction.
Under the terms of the Agreements, Sterling agrees to put the phosphate Property into production and finance the building of a phosphate processing plant on the Property together with other facilities required for a mining operation thereon.
Source: Sterling Group Ventures, Inc.