China Nonferrous Metal Industry's Foreign Engineering and Construction said it would set up a joint venture to mine lead and zinc in Inner Mongolia with a total investment of up to 2.3 billion yuan.
The company will pay 998 million yuan in cash to take a 52.3 per cent stake in the venture, while the Chifeng city government of Inner Mongolia would contribute the rights and assets of Baiyinnuo'er lead and zinc mine for a 47.7 per cent stake.
The venture, which will have a registered capital of 1.908 billion yuan, plans to invest 1.5 billion yuan in building a smelter with an annual capacity of 100,000 tonnes of zinc and 500 million yuan to build a 100,000 tonne-per-year lead smelter using metal resources in the Baiyinnuo'er mine.
The venture may also invest 300 million yuan in building a 4,000-tonne per day ore selecting facility, depending on the resources and technical situation.
Baiyinnuo'er lead and zinc mine, which covers an area of 16.8 square kilometres near Chifeng, has a reserve of 1.07 million tonnes.
The mine produced 9,000 tonnes of lead concentrate and 27,000 tonnes of zinc concentrate last year.
China Nonferrous Metal said initial investment of the Chifeng project was estimated at between 300 million yuan and 400 million yuan which would be funded by internal resources. The remaining investment may be funded by new shares, it said.
China Nonferrous Metal, which went public in 1997, reported a net profit of 332 million yuan last year, more than double the 179 million yuan a year earlier.
Sales also more than doubled to 2.298 billion yuan last year from 1.035 billion yuan.
Its Shenzhen-listed shares fell 0.6 per cent, 19 fen, closing at 27.2 yuan yesterday after the announcement.
China Nonferrous Metal and the Chifeng government will invest in the new mine: Y2.3b