Shandong Gold Mining to buy parents mines

Shandong Gold Mining to buy parents mines

Shandong Gold Mining has approved the sale of as many as 100 million yuan-denominated shares to buy five mines from its parent, Shandong Gold Mining Group.

The company, the second-largest listed miner of the metal in China, will sell the stock to ten investors, including its parent, which will buy at least half of the shares on offer, the company said in an exchange filing on Saturday. The sale price was not given.

The purchase is expected to more than double Shandong Gold’s profit and production this year, said the company, which is based in Jinan, Shandong Province. Gold prices in New York increased 23 percent last year, touching a 26-year high in May, as investors sought a hedge against rising inflation.

“The quality of the mines is good and the purchase will strongly boost Shandong’s profit and gold reserves,” said Peng Bo, an analyst in Shenzhen at Ping An Securities. Peng said Monday that she expects Shandong Gold shares to rise to 59 yuan, if gold prices hit $700 an ounce this year.

The purchase of the gold mines will increase the company’s gold reserves by 88 tons and gold output by 8,234 kilograms, or about 18,150 pounds, a year, the company said in August. Shandong Gold produced 5,000 kilograms of gold in 2005.

A board meeting Thursday approved the share sale plan, the company’s statement said.

Gold for immediate delivery rose as much as $1.20, or 0.2 percent, to $636.60 an ounce, the highest since Jan. 3. It traded at $635.50 Monday.

Drug maker IPO planned

Wuyi International Pharmaceutical, a Chinese maker of respiratory drugs, said it plans to raise as much as 801.3 million Hong Kong dollars, or $103 million, from an initial public offering.

Wuyi plans sell 445.15 million shares in Hong Kong priced from 1.20 dollars to 1.80 dollars each, said the company, which is based in Fujian Province.

The company is raising money to help finance factory expansion and development of new drugs as spending on medicines rises in mainland China. Medical costs accounted for 7.4 percent of average urban household spending in 2004, up from 1 percent nine years earlier, Wuyi said, citing the China Statistical Yearbook. Trading of Wuyi’s shares is expected to start Feb. 1. Credit Suisse Group and UBS are arranging the sale.

The company may sell an additional 66.8 million shares under an over-allotment option, Wuyi said. The final offering price is expected to be set Thursday and no later than Friday, it said.

Source: www.iht.com

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