CMU Fund seeks HK and mainland listings

PUBLISHED : Friday, 25 March, 2011, 12:00am
UPDATED : Friday, 25 March, 2011, 12:00am

China Mining United Fund (CMU Fund), the mainland's first private equity fund focusing on resources and mining, says it is preparing for listings in Hong Kong and on the mainland next year.

CMU chairman Zheng Zhi said assets in the potash, precious metals and new energy sectors could be included in the company's H- and A-share listings.

Established in 2009, Beijing-based CMU now has 200 million in US dollars and 700 million in yuan, provided by a group of Chinese coal-mine owners.

Zheng himself is also president of a Jilin-based company whose operations are mainly in real estate and mines exploration.

'We have several plans for the planned IPO,' he said. 'One is to find a listed company with gold production as a key business.'

He said CMU had acquired several gold mines and silver mines in the US and Mongolia, which provided the company with a platform aimed at going public. Last year, CMU bought five gold mines in China, all of which were expected to start producing this year and the next.

In two years, the fund has invested in more than 10 projects. Besides gold, it has potash projects in Brazil and Ethiopia.

'We are looking for new acquisition opportunities such as high-quality potash projects,' Zheng said.

Although the Hong Kong stock market is increasingly accepting of mining companies, some insiders think it unpractical for small projects or miners at the exploration stage to seek initial public listings here.

Gilbert Chan, president of Vancouver-headquartered NAI Interactive, a matchmaker between North American companies and Chinese capital, said he had increasingly focused on the resources sector. 'That is what China needs. We have seen how active the capital market was in the past two years,' Chan said.

He said his clients were mostly small or medium-sized miners for whom listing in Hong Kong was not a practical choice, although some were already listed in North America.

Chan said that compared with stock exchanges in Australia, Canada and Britain - bourses that natural resources companies traditionally favour - Hong Kong was still growing. 'For example, we need more industry analysts in this sector,' he said.

Hong Kong Exchanges and Clearing wants to build its strength in the resources sector to take advantage of the mainland's huge energy demand, but it needs to protect investors from risk.

Resources companies that cannot meet the three-year profit track record requirement to list on the main board will be allowed to list only if they have 'adequate economically exploitable reserves' backed up by expert opinion. They must also provide estimates of the time and investment needed to bring their projects into revenue-earning production.

Rich resources

CMU has gold and silver mines in the US and Mongolia, gold mines in China and potash assets in Brazil and Ethiopia

In two years, the number of projects the fund has invested in exceeds: 10