The iron ore trader Prosperity Mineral Holdings (PMH) has seen a sharp rise in its stock price after clarifying the reasons for a 15.8m pound investment.
In February the firm announced it was spending the money on acquiring a 5% stake in a company called All Wealthy Capital, (AWC), a holder of iron ore assets in Malaysia.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Prosperity, now under pressure to explain the transaction, says AWC is planning a so called "liquidity event" within two years of the deal, which will mean either a public listing or it being taken over by a listed company. Obviously being a shareholder ahead of a listing may be good news for PMH.
The rationale for the deal is further strengthened, says PMH, by the "imperative" of having a reliable supply of iron ore. By taking a stake in AWC, Prosperity says it will be "guaranteed" 9.5m metric tonnes over ten years at a price which is calculated at 95% of the going rate.
Prosperity has also stated that the total value of AWC is $500m.
Shares in Prosperity Mineral Holdings had gained 6% by 10:37.
BS
-
‘I’ve had my heat pump for a year - have I saved money?’Ruth Emery’s air source heat pump has turned one. Has she saved on her energy bills over the past 12 months, and could the £7,500 grant be under threat in the upcoming Autumn Budget?
-
MoneyWeek news quiz: Which G7 nation has the most generous state pension?The chancellor “set the context” for the Budget on 26 November this week, and November's Premium Bonds winners were confirmed. The state pension also made headlines. How closely have you been following the news?
