NiHAO Minerals Resources Int’l, Inc. (PSE: NI)

Business Profile

NiHAO MINERAL RESOURCES INTERNATIONAL, INC. (the “Company”) was incorporated in the Philippines and registered with the Securities and Exchange Commission as Summit Minerals, Inc. on July 9, 1975. On June 28, 2007, the Company changed its corporate name to “NiHAO Mineral Resources International, Inc.”

The Company is a mining company engaged in exploring, developing, and operating nickel properties. The Company aims to create an integrated mining company using its expertise in nickel exploration, access to processing technology, and the prospectivity of its projects. The Company’s vision is to become a leading nickel mining and processing company in the Philippines.

The Company has the following subsidiaries and associates:

The Company’s Subsidiaries: Mina Tierra Gracia, Inc., Bountiful Geomines, Inc., Oregalore, Inc., and Masbate 13 Philippines, Inc. were all not yet in commercial operations.

The Company has the following mining claims through its subsidiaries:

Oriental Vision Mining Philippines, Inc.

On March 24, 2010, the Company purchased from various shareholders 30% of Oriental Vision Mining Philippines, Inc. (ORVI) for a total consideration of P60 million. The Company had extended a total amount of P150.5 million to ORVI which is payable either in cash or equity for working capital requirements. As of March 31, 2011 P55.5 million is still outstanding.

ORVI is currently operating Palhi Nickel Project located in Dinagat Island. By the end of the year, ORVI expects to secure a reserve report compliant with the Philippine Mineral Reporting Code (PMRC). ORVI Management is now in talks with several interested parties on the possibility of setting up a value added processing facility for nickel ore.

ORVI has successfully shipped 711,242 MT of nickel ore in 2011 to various Chinese clients recognizing a net income of 13.86 million for the year which is 131.91% higher than 2010 earnings of P5.97 million.

ORVI has the following mining claims:

GNA resources International Limited

A joint venture corporation established on December 12, 2011 by the Company, AGP Industrial Corporation, and Glencore International AG pursuant to the Heads of Agreement signed on September 27, 2011.

Glencore shall contribute its expertise in marketing of nickel ores in the world market as well as its network of various institutions internationally. On the other hand, NiHAO and AGP shall utilize their expertise in mining, contracting and developing of mines in the Philippines and their knowledge of relevant Philippine laws, rules and regulations and issues.

As of March 31, 2012, GNA resources was not yet in commercial operations.

On March 5, 2012, the Company entered into a General Contractor Agreement (“Agreement”) with GEOGEN Corporation (GEOGEN) over the latter’s mineral property located in Dinapigue, Isabela.

Under the Agreement, GEOGEN shall perform the following:
a.   Pay NiHao an amount equivalent to 90% of the invoice of the nickel ore sold by GEOGEN to third parties.
b.   Pay the excise taxes on the nickel ore extracted
c.   Pay fees arising from the occupation and operation of the mineral property
d.   Pay royalties to indigenous people

NiHao is obliged to perform the following:
a.   Mining services
b.   Hauling services
c.   Barging, wharfage, arrastre and stevedoring services for the shipside loading of the nickel ore extracted
d.   Road and causeway maintenance services
e.   Environmental maintenance services
f.   Pay AGP for management fees
g.   Reimburse GEOGEN for infrastructure development costs

The Agreement shall take effect upon execution and continue for a term of 10 years.

Comments:

Currently, NiHao’s earnings source is only from its 30% interest in ORVI. Other possible earnings source for the company in the next 2 years will probably be from its Agreement with GEOGEN. In the best case scenario that NiHao will purchase 100% of its only earning subsidiary, ORVI, NiHao will only recognize an EPS of .028.

ORVI plans to develop over 30,000 hectares of gold and copper mineral claims within the vicinity of Tampakan Copper-Gold project. The projects to be developed are not mentioned but Malapatan, Glan and Alabel projects are the nearest mineral properties to Tampakan.

Sources:
1.   http://www.nihaomining.com
2.   NiHao SEC Form 17-A 2011, http://www.pse.com.ph/resource/disclosures/2012/pdf/NI_17A_Dec2011.pdf
3.   NiHao SEC Form 17-Q March 31, 2011, http://www.pse.com.ph/resource/disclosures/2012/pdf/NI_17Q_May2012.pdf

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