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Magontec (ASX: MGL) is selling its interest in the Henan Keweier Alloy Materials (HNKWE) joint venture entity ahead of a series of strategic relationships and joint ventures to be implemented in coming weeks.
Consideration for the sale is equal to the lesser of $2.1 million and the Australian dollar equivalent of 45% of the net interests associated with the existing joint venture partners.
The purchase price is due to be paid on or before December 31, 2013.
HNKWE will repay the loan outstanding to Magontec in respect of working capital provided to the joint venture, with $1.6 million of the total $1.81 million loan to be repaid by the end of August 2012.
The balance of the loan will be incorporated into the amount due under a Share Purchase Agreement.
Magontec’s focus is on the manufacture of magnesium alloys and the development and commercialisation of magnesium alloy technology.
Selling its interest in HNKWE will allow the company to focus on new initiatives which are designed to address global sourcing and manufacturing requirements.
Magontec will continue to engage HNKWE on a contract basis to supply alloy.
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