British Virgin Islands Business News

The analysis of the latest events in BVI and worldwide, affecting BVI business environment; facts and statistics on BVI International Business Companies involved in global business activities.

Friday, May 19, 2006

Delaware corporation will redomesticate to the British Virgin Islands prior business combination with China based oil and gas exploration company.

Real example of British Virgin Islands IBC use in international oil business.

Ivanhoe Energy Inc. and China Mineral Acquisition Corporation have signed an agreement for their business combination of Sunwing Energy Ltd., Ivanhoe Energy's China operating subsidiary, and a US public company China Mineral. The definitive agreement has been proposed and announced previously.

China Mineral is a Delaware corporation set up in March 2004 in order to identify and hold an operating business having operations in China. The company raised about USD 21 million (net) in an initial public offering in August 2004. It has only cash assets and no full-time employees and operating business. Really, like the simplest offshore company used for offshore holding.

Sunwing is the corporate flagship for Ivanhoe Energy's oil and gas exploration and production in China. Sunwing is one of the 1st foreign producers of light and sweet crude oil in China. It has been working in China for more than 10 years. One of its current projects is a project at Dagang with a 100% working interest in the Kongnan enhanced oil recovery (EOR). The Kongnan project is carried by Sunwing under a 30-year production-sharing contract with China National Petroleum Corporation (signed in 1997). Sunwing has recently signed a farmout agreement with Mitsubishi Gas Chemical Company, Inc., which acquired a 10% working interest in the Zitong block for USD 4 million, pending approval of government authorities in China. The senior management of Sunwing has more than 50-year experience in oil and gas operations in China and the Asia-Pacific region.

Ivanhoe Energy Inc. (IVAN) is an independent international company that deals with oil and gas exploration and development. The company's work is aimed at pursuing long-term growth in its reserve base and production using technologies. Its key technologies include state-of-the-art drilling and enhanced oil recovery (EOR) techniques, proprietary heavy oil upgrading process (HTL) as well as the conversion of natural gas to liquids (GTL). Ivanhoe Energy core operations are carried in the USA and China – with business development opportunities worldwide.

Ivanhoe Energy will own about 80 per cent of the new public company on a primary share basis. it is assumed that no China Mineral stockholders exercise conversion rights under its charter.

Just before the combination, China Mineral will redomesticate to the British Virgin Islands (BVI) as China Ivanhoe Energy Ltd. It will acquire 100 per cent of both issued and outstanding stock of Sunwing for shares of China Ivanhoe Energy, ordinary equity at USD 100 million, subject to working capital as well as long-term debt adjustments. Performance warrants and a contingent right on receiving additional shares that may provide an additional 14 per cent ownership interest (not including the exercise of outstanding warrants and options for China Mineral stock) will also be granted to Ivanhoe Energy by China Mineral.

What is required for the proposed business combination of Sunwing and China Mineral and the redomestication of China Mineral into the BVI is the approval of China Mineral stockholders. If the proposed business combination will be approved by China Mineral stockholders, it will be completed ASAP right after the special meeting – this will anyway happen before its charter requirement of August 30, 2006.

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