Jinduicheng, ally trump rival bid for Yukon Zinc

PUBLISHED : Friday, 02 May, 2008, 12:00am
UPDATED : Friday, 02 May, 2008, 12:00am

Jinduicheng Molybdenum Group, the largest producer of a metal used to make steel, and a partner have offered US$98.9 million for Canadian mining company Yukon Zinc, trumping a rival offer.

Xian-based Jinduicheng and a fund called Northwest Non Ferrous International Investment offered 22 Canadian cents (HK$1.70) a share for the company after Yukon had agreed to a 19.8 Canadian cents a share offer from Griffin Mining.

Griffin said yesterday it would not raise its offer that valued the company at a 43 per cent premium to the 17 Canadian cents its shares traded at on April 22.

It closed at 21 Canadian cents on Wednesday.

Yukon's Canadian mines contain zinc, gold, copper, silver and lead. The company also owns a 60 per cent stake in a mine in China.

Jinduicheng raised 8.9 billion yuan (HK$9.92 billion) from a massively oversubscribed initial public offering last month. Its shares leapt 36 per cent on their first day of trading.

Mainland companies are becoming more aggressive as they scour the globe to acquire the resources the nation needs to continue fuelling its rapid economic growth.

The value of this year's 65 cross-border merger and acquisition deals announced by Chinese companies up until last week is worth almost US$25 billion, just short of the record-breaking US$29.8 billion in deals for all of last year, according to Thomson Financial.

Aluminum Corp of China in January paid US$14.05 billion for a 9 per cent stake in Rio Tinto, the third-largest mining company in the world. It was the largest overseas acquisition by a Chinese company.

And resource-rich Australia has been particularly attractive to the Chinese, although this interest has prompted Prime Minster Kevin Rudd's government to tighten its scrutiny of such deals.

Executives in the European Union and the United States see Chinese and other Asian companies as prime competitors for merger and acquisition deals, according to a survey released last month sponsored by market risk consultancy Kroll, insurance broker Marsh and human resources consultancy Mercer.