Shares of Huati Lighting Technology took a hit, plunging by the daily limit, as the Chinese urban lighting services provider decided to abandon its plan to acquire a lithium mine in Mozambique.
Huati’s stock (SHA: 603679) slumped by 10 percent to CNY14.13 (USD2) following the announcement.
The Sichuan province-based company cited an inability to reach agreement with the target company, Kyushu Resources, on key terms of mine development as the primary reason for terminating the acquisition plan, which was announced less than a month ago.
On December 26 last year, Huati revealed that one of its units intended to pay USD3 million for an 85 percent stake in Kyushu.
However, challenges in reaching a consensus on crucial aspects led to the abrupt decision to withdraw from the deal.
Additionally, Huati mentioned the ongoing downward trend in lithium prices as another factor influencing its decision.
Despite projecting potential annual revenue of USD103.6 million with a profit of USD45.6 million last month, the prevailing market conditions prompted a reconsideration.
The withdrawal from the agreement was mutually agreed upon after consultation, and neither party is obligated to compensate for the setback.
