• Sun
  • Dec 21, 2014
  • Updated: 5:00am

Zhaojin sets sights on Yangshan gold mine

PUBLISHED : Monday, 02 April, 2007, 12:00am
UPDATED : Monday, 02 April, 2007, 12:00am
 

Zhaojin Mining Industry, the mainland's second-largest gold miner in terms of reserves, will bid for the Yangshan Gold Mine in the northwest Gansu province when the government opens it for bidding in the second half, according to chairman Lu Dongshang.


'The bidding for the mining rights of Yangshan mine will be a good opportunity for us to expand outside our home base of Shandong and boost our gold reserves,' Mr Lu said in an interview.


Yangshan mine, the mainland's biggest gold mine, located at the 'golden triangle' in Sichuan, Gansu and Shaanxi provinces and first discovered by the People's Armed Police Force's gold exploration and production division in 2004, has confirmed total gold reserves of 258 tonnes.


As of June last year, Zhaojin had 130.5 tonnes of gold reserves in its five operating mines in Zhaoyuan district in Shandong.


Mr Lu said details of the bidding or valuation for the Yangshan mining right has not been worked out yet, although many bidders are expected.


Zhaojin, which has 31 exploration licences in the Zhaoyuan district, is in talks to buy or explore mines in the northeast, southwest and northwest regions to expand its production.


It has set up headquarters and project teams in the major prospecting regions, and has earmarked 500 million yuan for gold mine acquisitions.


Capital spending, including funds for mergers and acquisitions, could reach 800 million yuan to 1.2 billion yuan this year, Mr Lu said.


'Capital spending for the next few years will be quite demanding as we strive to increase our gold reserves and production scale,' he said, adding that next year's capital spending would at least be kept at this year's level.


Mr Lu said the mainland's fragmented gold industry had provided opportunities for mergers and acquisitions.


He remained confident that the company would emerge as one of the leaders in the ongoing industry consolidation.


China has about 1,000 gold mining companies, with the top five - Zijin Mining, China Gold Corp, Zhaojin, Shandong Gold Group, and Lingbao Gold - accounting for 40 per cent of the national gold production, more than 50 per cent of national gold reserves, and 83 per cent of the entire industry profit last year.


Zhaojin, which raised HK$2.5 billion in a Hong Kong initial public offering in December, aimed to boost gold production at a 15 per cent compound annual growth rate over the next few years and overtake Zijin Mining to become the country's biggest gold producer in terms of reserves, production volume and profit from gold sales, Mr Lu said.


Unlike Fujian-based Zijin, which has expanded into base metals, Zhaojin would remain as a 'pure gold play', he said.


'We believe that by focusing on our niche we will be doing a better job,' Mr Lu said, adding that management intended to maintain gold's contribution to total revenue at least at 80 per cent.


Zhaojin's shares slipped 0.13 per cent to HK$15.88 on Friday.


Shining hope


Zhaojin aims to be the mainland's biggest gold producer in a few years


Zhaojin's estimated gold reserves in five mines in tonnes 130


Yangshan mine's confirmed gold reserves in tonnes 258


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