Hong Kong and Australia-listed Sino Gold Mining has agreed to pay A$80.7 million (HK$531.44 million) in stock to buy out Golden China Resources in an effort to strengthen its position on the mainland.
Sino Gold would offer one Australia-listed share for every 4.5 Golden China shares, the two companies said in a joint statement. The Golden China board had given the offer unanimous support, Sino Gold said.
The offer values Toronto-based Golden China at A$1.42 a share based on the A$6.40 closing price of Sino Gold shares in Sydney on Friday, or a 51 per cent premium to Golden China's last trading price of 85 Canadian cents (HK$6.29) in Toronto on the same day.
Sino Gold, which explores, develops and mines gold on the mainland, said the proposed acquisition would complement its operations.
'Golden China's key assets are all within the three areas in which Sino Gold already has significant activity and capacity. This acquisition will further consolidate Sino Gold's position as the leading foreign gold company in China,' said Sino Gold chief executive Jake Klein.
Golden China's principal asset is a 95 per cent stake in the Beyinhar exploration project in Inner Mongolia, which is expected to start commercial production in early 2009 with an annual production capacity of 100,000 ounces.
It also has a 70 per cent stake in the Nibao exploration project in Guizhou province, and a gold smelting and processing plant in Shandong province.
