Acquisitions in the PRC

Charltons is experienced in advising on acquisitions in the PRC and on disposals of mining assets by Chinese mining state-owned Enterprises ("SOEs"). Common types of acquisition transactions in the PRC include direct equity acquisitions, offshore / indirect acquisition and asset acquisitions... More: Acquisitions in the PRC 

M&A transactions in the mining sector

To carry out a successful M&A transaction in the mining sector, it is important to understand what distinguishes mining assets from other types of assets and to understand the laws underlying mining title and rights in the relevant jurisdiction. Some of the common ways of acquiring mining assets are: asset purchase, share purchase, farm-in arrangements and auction sale... More: M&A transactions in the mining sector

Sponsors’ coordination of experts and third party advisers in Hong Kong listings

The distinction between expert reports and non-expert sections is important because the SFC has taken a two-pronged approach as to the disclosure standard and level of due diligence a sponsor is expected to perform with respect to expert reports and non-expert sections... Read more: Sponsors’ coordination of experts and third party advisers in Hong Kong listings

Role of sponsor responsible and executive officers in Hong Kong

It is the responsibility of the sponsor's management to ensure that principals appointed by the firm meet the criteria required in the Sponsor Guidelines. In order to qualify as a principal, an individual must be a responsible officer or executive officer of the sponsor firm and satisfy one of the eligibility criteria... Read more: Role of sponsor responsible and executive officers in  Hong Kong

SFC licensing and on-going compliance in Hong Kong

Sponsors must be licensed or registered for "Type 6" regulated activity under the Hong Kong Securities and Futures Ordinance (SFO). In addition, they must meet the eligibility criteria prescribed in the Securities and Futures Commission's (SFC's) Additional Fit and Proper Guidelines for Corporations and Authorised Financial Institutions applying or continuing to act as Sponsors and Compliance Advisers (Sponsor Guidelines) in order to be permitted to undertake sponsor work as part of their Type 6 regulated activity... Read more: SFC licensing and on-going compliance in Hong Kong

Sponsor’s Due Diligence Guidelines in Hong Kong

Charltons has played a coordinating role in the recent initiative of Hong Kong sponsors to develop due diligence guidelines for the purpose of promoting standards in the conduct of due diligence in respect of new Hong Kong IPOs, particularly relevant to Chinese companies, with a view to maintaining the integrity of the Hong Kong market and assuring the quality of information disclosed in IPO prospectuses... Read more: Sponsor’s Due Diligence Guidelines in Hong Kong

Due diligence in Hong Kong listings

A significant part of the responsibilities of a sponsor is the due diligence work that it undertakes with respect to a listing applicant. This due diligence exercise is crucial to enable the sponsor to gain knowledge and understanding of the applicant and satisfy itself that the applicant complies with the Hong Kong Stock Exchange (HKEx) Listing Rules (Listing Rules), and that the prospectus contains sufficient disclosure for investors…… Read more : Due diligence in Hong Kong listings

Sponsor’s due diligence declarations as part of a Hong Kong listing

Sponsor’s due diligence declarations as part of a Hong Kong listing 
Under the rules of the Hong Kong Stock Exchange, at the time of issue of a listing document, a sponsor is required to conduct reasonable due diligence inquiries in order to make a declaration to the HKEx……

Preparing a Hong Kong listing document (prospectus)

Preparing a Hong Kong listing document (prospectus) 
A sponsor must oversee and be closely involved in the preparation of the listing document. The sponsor must ensure that, at the time of issue of a listing document, after reasonable due diligence, it has reasonable grounds to believe and does believe that the listing document contains sufficient particulars and information to enable a reasonable person to form a valid and justifiable opinion of the shares, financial condition and profitability of the listing applicant……
http://charltonsnaturalresources.com/en/listing-process/publication-and-circulation-of-the-prospectus 

A guide to sponsor’s independence in Hong Kong listings

A guide to sponsor’s independence in Hong Kong listings 
Under the Hong Kong Stock Exchange Listing Rules (HKEx Listing Rules), at least one sponsor must be independent of the new listing applicant. TheHKEx Listing Rules sets out a number of independence tests, relating to shares in the applicant held by the sponsor group and its directors and certain other persons, debts due from the applicant and its controlling shareholder(s) to the sponsor group, and business relationships between the applicant and sponsor group and its directors and certain employees……http://charltonsnaturalresources.com/en/listing-process/application-for-listing

Appointing a sponsor to advise on listings in Hong Kong

Appointing a sponsor to advise on listings in Hong Kong
A sponsor should ensure that it is appointed sufficiently in advance of the expected listing application date so that it has adequate time to undertake the work necessary to meet its obligations and responsibilities under the various Securities and Futures Commission (SFC) codes governing sponsors' work and the Hong Kong Stock Exchange Listing Rules (HKEx Listing Rules)……
http://charltonsnaturalresources.com/en/listing-process/listing-steps

Overview of sponsor’s role in Hong Kong listings

Overview of sponsor’s role in Hong Kong listings

Every company applying to list on the Hong Kong Stock Exchange (HKEx) must appoint a sponsor to assist with its listing application. The sponsor's role is to guide and advise applicants through the IPO process, assess applicants' suitability for listing and ensure sufficient disclosure in the prospectus…http://charltonsnaturalresources.com/en/listing-process 

Mining Service Agreements

Mining Service Agreements   
The mining service agreement should include a full and accurate description of the principal's site and facilities, including mining areas and geology (maps should be included in the schedule to the agreement) and a description of the mining services. Mining services to be rendered under the agreement may include: Mining operations, Mineral handling, Haulage and loading, General service obligations, Safety management, Environmental management, Tailings management, Rehabilitation management, Mine water management……

http://www.charltonsnaturalresources.com/en/mining-service-agreements

Minerals Royalty Agreements

A minerals royalty agreement should include provisions relating to royalty obligations, royalty calculation and payment, royalty deductions (such as tax or other payments), interests and costs, royalty statements, continuing obligations, cessation of royalty, survival of royalty obligations, and where applicable perpetuity periods... http://www.charltonsnaturalresources.com/en/minerals-royalties

Farm Out/Farm In Agreements

Under farm-out / farm-in arrangements, third parties (the "Acquirer(s)") usually agree to acquire from one or more existing licensees / lessees ("Owner(s)), an interest (the "Earned Interest") in a production licence / lease and/or the associated operating agreement, for the consideration of carrying out specified work obligations ("Earning Obligation(s)"), known as the "earning-in" obligation……

http://www.charltonsnaturalresources.com/en/farm-out-in-agreements

Off-Takes and Connected Transactions

Off-Takes and Connected Transactions

The Hong Kong Stock Exchange rules seek to prevent connected persons of listed issuers from taking advantage of their positions. Connected transactions may be either one-off transactions (in the case of listed issuers) or continuing transactions (in the case of both listed issuers and new applicants). Different rules apply in each case. A listed issuer must, in respect of all connected transactions, enter into a written agreement with the relevant parties……http://www.charltonsnaturalresources.com/en/offtake-agreements/offtakes-connected-transactions

Off-Take/Take or Pay Agreements

Off-Take/Take or Pay Agreements                                                                                                        

As Off-Takes are typically negotiated far in advance of the construction of the mine plant and infrastructure they play an important role in the mineral company's ability to secure future financing. Having Off-Takes in place also lends credibility to a listing, which may impact the IPO share price……http://www.charltonsnaturalresources.com/en/offtake-agreements

Deeds Of Cross Charge/Deeds of Cross Covenant

Deeds Of Cross Charge/Deeds of Cross Covenant

JV parties may consider executing a deed of cross charge ("DCC") or a deed of cross covenant ("DCCV") to secure the performance of their obligations to each other under a JV agreement...

http://www.charltonsnaturalresources.com/en/joint-venture-agreements/cross-charge-covenant 

Dilution, Withdrawal/Exit, Assignment

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Dilution, Withdrawal/Exit, Assignment

The JV parties should agree in advance the circumstances where the dilution of a JV partner will be permitted. Due consideration should be given to the impact of the dilution on approved programmes and in particular the effect it will have on the respective on-going contributions of the JV partners. The interests and the contributions of the remaining non-diluted JV partners should be recalculated on a pro-rata basis to reflect their revised respective shares in the JV. The recalculation formulae should be agreed in advance and should be included as a schedule to the JV agreement. Provisions relating to the issuing of a dilution notice should also be included...
http://www.charltonsnaturalresources.com/en/joint-venture-agreements/dilution-withdrawal-assignment

Mining Joint Venture Agreements

                                                               

Mining Joint Venture Agreements

Joint venture ("JV") agreements are commonly used in connection with the exploration and development of mining sites by two or more joint venture partners.

Amongst other things, JV agreements typically include general provisions on the formation of the JV, its objects and scope and development, the respective rights, obligations and liabilities of the JV parties, covenants, warranties, the ownership of the JV property and assets, and the use of the JV property (for example whether or not a JV partner can use its interest to secure future finance, and whether or not there is to be a general prohibition against partition or encumbering of the JV property)...http://www.charltonsnaturalresources.com/en/joint-venture-agreements

Risk

    Risk

All equity positions involve certain risk exposure. The position of contractors who become     shareholders in the mining projects with which they are connected is somewhat unique in that their focus is not only on the successful delivery of project infrastructure but also in the longer term life of mine profitability of the project.

http://www.charltonsnaturalresources.com/en/epcm-epc-agreements/risk

Advising Contractors

Advising Contractors

Contractors should conduct thorough independent legal and financial due diligence to identify risks associated with a particular project as well as to gauge the rates and the expected timeframe for potential returns. Contractors should also be cognisant of the rights and obligations arising out of shareholder participation including how their equity investment will rank in the event of insolvency... http://www.charltonsnaturalresources.com/en/epcm-epc-agreements/advising-contractors