UPDATE 1-Ivanhoe sells stake in Jinshan to China National
Thu Apr 10, 2008 9:21am EDT
reuters.com
OTTAWA (Reuters) - Ivanhoe Mines Ltd (IVN.TO: Quote, Profile, Research) said on Thursday it will sell its 42 percent controlling stake in Jinshan Gold Mines Inc (JIN.TO: Quote, Profile, Research) to gold mining conglomerate China National Gold Group Corp.
Ivanhoe said the deal, worth about C$217.7 million ($213.4 million) and expected to close on May 10, is the first step toward forming a strategic partnership with China National to focus on gold and copper exploration and mine development in China.
China National will acquire Ivanhoe's 67.5 million common shares in Vancouver, British Columbia-based Jinshan for C$3.1115 apiece and a Jinshan promissory note of C$7.5 million with accrued interest. Ivanhoe said it will record a gain from the sale in its second quarter.
Under the arrangement, subject to Chinese government approval and Canadian regulatory filings, Ivanhoe will retain warrants to purchase up to 1.5 million common shares in gold producer Jinshan at C$2.50 up to June 2009.
"A substantial portion of the proceeds of this asset sale will be dedicated to advancing Ivanhoe Mines' significant and advanced gold and copper exploration ventures across China," said Ivanhoe Executive Chairman Robert Friedland in a statement.
Jinshan's CSH mine in Inner Mongolia has produced 33,280 ounces of gold since production began in July 2007 and is ramping to annual output of 120,000 ounces annually.
Formed in 1979, China National is the largest gold producer in China, with over 65 mines, Ivanhoe said. It produces about 20 percent of China's total gold output and controls more than 30 percent of known gold reserves there. China Gold also controls Zhongjin Gold (600489.SS: Quote, Profile, Research).
($1=$1.02 Canadian)
(Reporting by Susan Taylor; editing by Renato Andrade) |
