TORONTO – TSX-listed China Gold International (CGI) has agreed to buy the Jiama copper mine in Tibet from shareholder China National Gold (CNG) and a second seller, Rapid Result Investments, for $742-million in shares.
The company is also planning a listing on the Hong Kong stock exchange, it said on Monday.
CNG owns just more than 39% of CGI, previously Jinshan Mining, and has said it plans to use the company as a vehicle for international growth.
To pay for the Jiama copper project, CGI will issue about 170,3-million shares to CNG and Rapid Result, at $4,36 a share.
CNG is the biggest gold producer in China, and owns 51% of the Jiama property, while Rapid Result holds the other 49%, CGI spokesperson Frank Lagiglia said on Monday.
The deal requires approval from other shareholders in CGI, the completion of the Hong Kong stock exchange listing, as well as Canadian and Chinese regulatory approvals.
Lagiglia said that the company expects to hold a shareholder vote in October, and will seek regulatory approvals before looking at a timeline for listing in Hong Kong.
“I would say probably it could happen end of November, December, but that's a guess.”
CNG and CGI also plan to sign a 'non-compete' agreement, which would give CGI the right to any international mineral properties sourced by CNG, the firm said, and CGI will also agree not to buy more gold and non-ferrous mineral properties in China.
The company's only producing operation at the moment is the CSH mine, located in Chinese Mongolia.
The Jiama deal has been public since September 2009, when what was then Jinshan said it entered into a memorandum of understanding to buy the project.
The Tibet property hosts a large copper/polymetallic deposit, which is being developed into a combined openpit and underground mining operation by current owner Skyland Mining.
It is in the first phase of development, which includes openpit infrastructure at the Tongqianshan open pit, ore processing facilities and and underground ore transportation system, and Skyland recently started up operations at the Tongqianshan pit.
Mining began at an initial rate of 3 000 t/d in late July, and will increase by another 6 000 t/d when operations start at the second pit, Niumatang, in early 2011.
Underground mining is scheduled to begin in 2012, at a rate of 3 000 t/d.
The mine will produce copper concentrate, molybdenum concentrate and lead concentrate, while gold and silver will be separated and smelted in downstream processing.
Total capital costs are estimated at about $400-million to achieve the full 12 000 t/d, of which some 56% has been spent.
As far as future acquisitions go, CGI's strategy will be guided by CNG, Lagiglia said.
The company will look mainly at gold assets, but will also consider base metals opportunities, he said.
“Generally, they are looking for advanced or production stage projects, at least 3-million ounces.”
Shares in CGI slipped 5,3% on Monday, to C$4,66 apiece by 15:26 in Toronto.
Source: miningweekly