China Gold ramps up production on the mainland
Miner on lookout for acquisitions as it targets sevenfold increase in Tibet copper production
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China Gold International Resources, the overseas-listed flagship of the nation's largest gold producer China National Gold Group, plans to spend C$705.11 million (HK$5.51 billion) to expand the output of its copper mine in Tibet by sevenfold by 2015.
The Vancouver, Canada-based firm, listed in Toronto and Hong Kong, has also maintained its overseas asset acquisition efforts, despite not having clinched any deal in the past two years, said executive vice-president Jerry Xie Quan.
"Our research and due diligence work has never stopped," he said in an exclusive interview. "We have many targets in the pipeline, some of which are under negotiations," Xie said.
The company is China National Gold's exclusive acquisition vehicle overseas, and has previously acquired or operated overseas firms with assets in mainland China.
Any overseas assets considered by its board to be too big or too risky to be absorbed by China Gold International will first be bought by the parent and injected into the listed unit later.
China Gold International, formerly Canadian-run Jinshan Gold which operated the Chang Shan Hao gold mine near Baotou in the Inner Mongolia autonomous region, was taken over in 2008 by state-owned parent China National Gold, which now owns a 39 per cent stake. China Gold International subsequently took over the Jiama mine near Lhasa, Tibet, that produces copper, molybdenum, gold and silver.
The firm plans to spend C$212 million to double the Chang Shan Hao mine's annual output capacity to 260,000 ounces by late this year, and reach full production by early 2015. The mine will produce for 11 years.
China Gold International also plans to spend C$705 million to ramp up the Jiama mine's annual copper output capacity to 80,000 tonnes by early 2015 from a projected 11,522 tonnes last year.
The expansion will start after completion and approval of a final feasibility report. The firm plans to fund the expansion using HK$180 million of cash, and the remainder by borrowings from banks in Tibet.
China Gold International's gold output surpassed 138,000 ounces last year, ahead of its target of 130,000 to 135,000 ounces, Xie said. Its copper output is expected to reach the high end of its budget of 9,800 to 11,500 tonnes.