BEIJING - Yinfu Gold Corp, a Chinese gold exploration and mining company, plans to sell shares in Hong Kong to fund acquisitions and investments on the Chinese mainland and in Southeast Asia.
Yinfu will sell the shares in the second half of 2011 after completing its transfer to the Nasdaq Stock Market from the OTC (on-the-counter) Bulletin Board, Chairman Wilson Huang said. He hasn't decided on the size of the offering in Hong Kong. Macquarie Group Ltd is the underwriter.
Gold has risen 26 percent this year, set for a 10th annual gain, as the sovereign debt crisis in Europe and so-called quantitative easing in the United States hurt currencies. Initial public offerings in Hong Kong may raise HK$400 billion ($51 billion) next year, according to a Dec 21 estimate by Ernst & Young LLP.
"We've been to Southeast Asia, including Cambodia, Indonesia and Thailand, to study gold projects, and next year, we'll go to Western Australia and talk with government departments on potential investment opportunities," Huang said.
Yinfu Gold fell 30 cents, or 30 percent, to 70 cents a share when last traded on Dec 22 on the OTC Bulletin Board stock market. It has gained 56 percent since trading began on Jan 20. The company applied to sell shares on the Nasdaq in September.
Yinfu Gold's mine in Penglai, in Shandong province, will start producing in February with a capacity of as much as 5,000 tons of gold ore a month, Huang said. It will be the company's first producing mine.
The company signed initial agreements in September to purchase the Gansu Zhaishang and Liaoning Maoling gold mines in China. The projects need further discussions to be completed.
Gold may peak between $1,600 and $1,615 an ounce in 2011 and may average above $1,400 for the entire year, Philip Klapwijk, chairman of GFMS Ltd, a London-based research company said on Dec 3 in Shanghai.
"The appeal of gold will continue," Huang said. "Chinese banks are promoting gold products and the Chinese people have a traditional love of gold. Government measures to cool the property market have also boosted gold demand as an alternative investment."
China's gold imports jumped almost fivefold in the nine months to October, Shen Xiangrong, chairman of Shanghai Gold Exchange said on Dec 2.
Yinfu Gold in April acquired a majority stake in Legarleon Precious Metals Ltd, a Hong Kong-based precious metals futures trader. Yinfu Gold will use trading by Legarleon to hedge its production, Huang said.
Bloomberg News
