Zhongjin to buy into Shaanxi miner’s gold
Zhongjin Gold Corp plans to spend 900 million yuan (US$127 million) to buy 90 percent of a Shaanxi Province-based miner to expand its resource reserves, it said yesterday.
Zhongjin, China’s biggest listed gold miner, is to buy the stake in Shaanxi Jiusheng Mining Investment Management Co from two existing shareholders. The purchase will give it mining rights at a deposit with gold resources of 81,048 kilograms, valued at 1.11 billion yuan as of last October, Zhongjin said.
“It is the second step for Zhongjin (after its recent stock sale),” said Yang Hongjie, a Haitong Securities Co analyst. “The current gold price will shore up the firm’s profitability.”
Zhongjin sold 1.98 billion yuan of shares to its parent China National Gold Group Corp last month to acquire assets for expansion. China National raised its stake in Zhongjin from 48.06 percent to 56.42 percent. Zhongjin expected 2007 earnings, due on April 23, to jump more than 50 percent from2006.
Gold for immediate delivery reached a record US$992.05 an ounce on Thursday. Shares of Zhonjin lost 1.39 percent to 115.82 yuan while the Shanghai Composite Index also eased 1.39 percent.
Yang expected the company to chart earnings per share of 2.24 yuan in 2008, compared to an estimated 0.70 yuan for last year, and set a six-month target price of 160 yuan.
Tags: gold