Miner plans city's biggest IPO so far this year to boost output Real Gold, a gold miner in Inner Mongolia, plans to raise at least US$160 million from a Hong Kong listing in the middle of next month. It plans to spend the share-sale proceeds on an acquisition to boost its total production to compete with domestic rivals, sources said. The gold miner has hired Citigroup and Macquarie to handle the initial public offering, whose pre-marketing will kick off by the end of this week. The formal roadshow will get under way after the Lunar New Year, the sources said. The deal is expected to be the first sizeable share offering in Hong Kong this year, while two smaller offerings, Strong Petrochemical Holdings and Singyes Solar Technologies Holdings, which raised HK$250 million and HK$63 million, are scheduled to start trading on the local bourse today and tomorrow respectively. 'The deal size could reach US$200 million or even higher depending on investor response, after the company launched an investor education session for institutional investors,' market sources said. Citigroup and Macquarie declined to comment. Before the international roadshow, the two sponsors approached a few well-known Hong Kong investors to join the offering for anchor investors, and Credit Suisse invested under US$100 million. Real Gold engages in gold exploration and mining and has a high growth profile for a Chinese gold mining company and the lowest production costs compared with listed peers. Sources said Real Gold's production cost was less than US$250 an ounce, well below the global average of about US$400 an ounce, while Zhaojin Mining Industry and Zijin Mining Group are much closer to that global average. China surpassed South Africa as the world's biggest producer of gold in 2007 with an annual growth rate of 6.5 per cent since 2003. Gold production was expected to reach 300 tonnes last year, up 9.3 per cent from 276 tonnes a year earlier. 'People are looking for gold exposure because the United States is printing money to support its economy and many people expect this will lead to a weak US dollar and an inflationary environment,' said a fund manager. 'Physical gold is in short supply so people are swinging into gold mining companies because they know the gold reserves are there.' Zhaojin Mining hit HK$6.09 a share on January 5, against a bottom of HK$2.03 on October 27. Lingbao Gold and Sino Gold Mining also saw big falls in their prices but had risen 100 per cent in the last 12 to 14 weeks. 'Gold is somewhat unique among commodities because the price is where it was 12 months ago. The underlying commodity and the business are holding up nicely,' the fund manager said. 'You'd want to show the defensive angle around gold to investors.'