(Yicai) Sept. 24 -- Shares of Yankuang Energy Group rose after the Chinese coal miner said it plans to diversify its portfolio by buying a majority stake in an Australian firm focused on exploring and developing potash mines in Spain for USD376 million.

Yankuang Energy [SHA: 600188] rose 2.6 percent to CNY14.35 (USD2.04) a share as of lunch break in Shanghai today. Its Honk Kong-traded stock [HKG: 1171] jumped 4.8 percent to HKD10.02 (USD1.31). Highfield Resources [ASX: HFR] closed up 7.1 percent at 30 Australian cents (21 US cents) yesterday.

Yankuang Energy and two strategic investors have entered into binding equity subscription agreements with Highfield Resources, it announced yesterday. The new shares will be issued at 50 Australian cents, or a 64 percent premium on their closing price on Sept. 18.

Yankuang Energy will spend USD90 million on the new shares, while Beijing Energy International Holding will invest USD50 million and Singapore Taizhong Global Development USD30 million, the Jining-based firm added.

In addition, Yankuang Energy will subscribe to USD286 million worth of Highfield Resources' new shares through a combination of assets and shareholder loans from its subsidiary Yancoal Canada Resources, it said, adding that the unit owns the Southey potash mine in Canada, which is in the greenfield development stage. The deadline for asset delivery is March 31 next year.

The move will give Yankuang Energy control over the Muga potash project in Spain, marking its strategic shift towards multi-mineral development, the company pointed out. The proceeds from the deal will mainly finance the first phase of the Muga project and provide general working capital, it added.

After completing the deal, which is pending approval from Highfield Resources' shareholders and relevant regulatory bodies in China, Australia, Canada, and Spain, Yankuang Energy will hold most of the board seats in the Australian firm and appoint the management team. The shareholding ratio after the acquisition was not disclosed.

According to a separate announcement by Highfield Resources this morning, more external investors may participate in this private placement of shares. One investor has signed a non-binding equity subscription agreement for AUD20 million (USD13.7 million), with potential additional investments of up to AUD50 million from other investors.

Highfield Resources went public in Sydney in February 2012. Its core asset, the Muga project, has a planned annual potash production capacity of 1 million tonnes and will be built in two phases. According to the Joint Ore Reserve Committee Code, the project boasts proven and probable ore reserves of 104 million tonnes, with a potassium chloride grade of 16.1 percent.

Yankuang Energy and Highfield Resources inked a non-binding letter of intent in July, outlining plans for the Chinese firm to become the latter's largest shareholder and gain control through asset injection and by subscribing for new shares.

Yankuang Energy will gain access to high-quality potash resources in Spain after the latest deal with Highfield Resources, creating synergies with its existing Southey project, it noted. After completing both projects, its potash production capacity will reach 3.8 million tonnes a year, making it one of the top 10 global suppliers, it added.

Editor: Martin Kadiev