Sino Gold seeks HK clearance for US$100m secondary listing

PUBLISHED : Friday, 05 January, 2007, 12:00am
UPDATED : Friday, 05 January, 2007, 12:00am

Sino Gold, an Australian-listed gold-mining company, plans to seek approval for a secondary listing of about US$100 million in Hong Kong on January 25, market sources said.

The company will then begin three weeks of pre-marketing and road shows with a trading date set for the week of February 19. Morgan Stanley is arranging the share sale.

Sino Gold, whose primary assets are in the mainland, operates the Jianchaling mine in Shaanxi province that is reaching the end of its productive life.

Production is planned to start this year at the four million ounce Jifeng mine in Guizhou province that is expected to become the second-largest gold mine in China, producing 180,000 ounces a year.

Other assets owned by the Sydney-based company include the White Mountain mine in Jilin province that is undergoing feasibility testing.

Shares of mainland gold-mining firms have been the favourite of investors because of high gold prices and growth potential.

The spot price of gold has doubled from the middle of 2002 and traded in New York at US$625.70 an ounce yesterday.

China's gold companies are also expanding into other metals such as copper and zinc as another catalyst to boost their revenue.

Zhaojin Mining Industry raised US$356 million from an initial public offering last month in Hong Kong, becoming the second-largest mainland gold miner by market value. Its shares have risen 23 per cent to close at HK$15.54 yesterday. They trade at 50 times expected earnings for last year.

'One of the challenges facing gold companies is increasing competitiveness as more gold companies are expanding, but at the same time gold mines in China are quite fully explored so their quality is declining,' said Michelle Leung, an analyst at Core Pacific-Yamaichi International.

'Many companies are seeking opportunities overseas but they face foreign countries that want to protect their own mines or sellers expecting an extremely high price.'

Sino Gold's Australian shares closed at A$6.65 yesterday, down 11.33 per cent from a 52-week high of A$7.50 on December 29.

Merrill Lynch owned 13.1 per cent of the company at the end of June last year while JP Morgan Chase held 6.2 per cent.

Sino Gold raised A$61 million (HK$372 million) in February when it sold 18.5 million shares through a share placement, which represented 12 per cent of the firm's enlarged share capital.