CHINA – Sparton acquires majority stake in germanium project

Sparton Resources has acquired an 85% interest in Hua Jun Coal Industry (HJ), a private coal and germanium producer based in Yunnan Province, China.

Hua Jun is the second largest germanium concentrate producer in the Lincang area of Yunnan and also produces locally marketed thermal coal from one of its three operating coal mines in the area.

An agreement has been signed between the two private owners of Hua Jun and Sparton’s Wholly Owned Foreign Enterprise registered in Yunnan, the Yunnan Blue Bay Semiconductor Technology Co. The two private individuals who were the original owners of HJ will retain 8% and 7% share ownerships.

The HJ operations continue to be highly profitable. Since Sparton signed the initial share acquisition agreement the price for germanium metal has increased from about US$1250 per kg to over US$1400 per kg and demand continues to grow.

Based on the financial records for the past 5 months of operations HJ has been producing about 275kg per month of germanium concentrate valued at RMB 1.6 million. In addition it produces and sells thermal coal valued at around RMB 330,000 per month.

Sparton's consultants have reviewed the operations and are preparing recommendations to upgrade the efficiency of both the mining and germanium production activities. The company believes that the operations can be upgraded to significantly increase financial performance in the future.

Sparton is well on the way to becoming a profitable producer in the rapidly developing germanium market. The purchase of HJ, which already is a successful germanium operation with significant scope for expansion and value added technology, is expected to lead to other germanium related transactions to create added value for the company.

www.spartonres.ca

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