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Zijin Mining Group Co. (2899), China’s biggest gold producer by value, plans to set up an overseas financing “platform” for its foreign assets, Chairman Chen Jinghe said.
“We’ll transfer our foreign assets, including the Kyrgyzstan project, gradually into the new platform at a proper time,” Chen said, without elaborating. “We may seek a dual listing of these assets.”
Chen plans to spend as much as 10 billion yuan ($1.6 billion) a year on expansion and acquisitions as global economic growth concerns reduce valuations, he said in November. China is set to displace India as the biggest gold user this year amid demand for jewelry and investments, the producer-funded World Gold Council said.
The company yesterday posted an 18 percent increase in full-year profit as increasing gold demand drove prices higher. Zijin may spend 12.4 billion yuan, including 5.5 billion yuan on buying gold mines and companies, mainly overseas, Chen said.
The company said in November it will pay $228 million to China’s Jinchuan Group Ltd. for a 45 percent stake in Gold Eagle, which controls a gold and copper project in Tibet. Zijin owns stakes in Australia’s Norton Gold Fields and Altynken LLC, a company based in Kazakhstan with access to a gold mine in Kyrgyzstan.
Zijin plans to produce 30 metric tons of gold, 100,000 tons of copper and 125 tons of silver this year. Overseas projects may start operations as early as this year and generate “big” profits in about two years, he said.
Zijin fell 2.3 percent to HK$3.04 in Hong Kong as of 2:58 p.m. The Hang Seng (11) Index dropped 1.6 percent. The stock trades at 7.35 times estimated 2012 earnings, compared with 8.53 times for Barrick Gold Corp. (ABX) and 17.77 for Goldcorp Inc. (GG), according to data compiled by Bloomberg.
“Zijin has become the world’s cheapest gold stock,” Chen said. A toxic spill in 2010 at the Zijinshan gold and copper mine, its biggest, dragged the share price lower, he said.
Zijin spilled 2.4 million gallons of acidic waste from the mine in Fujian province in July 2010, polluting the Ting river and poisoning enough fish to feed 72,000 people for a year. The company disclosed the leak after nine days and was forced to shut the copper unit.
The plant has been upgraded and may resume production in the second half of this year, after government approval that’s expected in May, Chen said.
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