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Gold/Mining/Energy : Mining News of Note -- Ignore unavailable to you. Want to Upgrade?

To: LoneClone who wrote (18041)	4/18/2008 9:00:52 PM
From: LoneClone	Read Replies (1) \| Respond to of 192884

Jinshan, China National Gold discuss proposed acquisition benefits mineweb.com Oyu Tolgoi project agreement delays have forced Ivanhoe Mines to speed up its decision to spin off its non-core asset of Jinshan Gold mines. Nevertheless, both China National Gold and Jinshan Gold believe they will mutually benefit from their proposed merger. Author: Dorothy Kosich Posted: Friday , 18 Apr 2008 RENO, NV - Vancouver's Jinshan Gold Mines and China National Gold Group of Beijing hope to gain mutual advantages in their proposed merger including bringing western technology to China National Gold's 64 operations, while giving Jinshan a much larger portfolio of assets to look at in China. In a joint press conference Thursday from both Beijing and Vancouver, Ivanhoe Mines and Jinshan officials advised shareholders that accepting China National Gold's Cdn$3.115 share offer for Ivanhoe's 42% stake (a US$214 million cash-and-share deal) would eventually yield strong financial benefits for shareholders in the future. Currently, Jinshan shares are held 42% by Ivanhoe, 20 % by institutional investors and 37% by retail investors. The company has a market cap of US$450 million with a share price of Cdn$2.80. Jinshan shares closed at Cdn$2.72 Thursday on the TSX. Although it is the nation's largest gold producer, contributing 20% of China's gold production, China National Gold owns relatively small mines. The largest gold mine yields 70,000 ounces of gold annually, a minor producer by western major gold company standards. The rest of its assets average 20,000 ounces. China National Gold Group President Sun Zhanxue told analysts, investors and journalists on Thursday's conference call that, like coal and other minerals and metals, China's gold miners are being urged by the government to consolidate their operations. In an effort to consolidate its numerous operations, Sun said the company has signed agreements with 10 provinces to consolidate resources. Jinshan President and CEO Jay Chmelauska said that while his company has no plans to acquire any Chinese mines from China Gold, "We believe that out of 65 mines there are some that could be further explored and operated to a western standard." China gold has 30% of the known gold reserves in China, along with a large exploration portfolio. A member of the World Gold Council, China Gold is the only Chinese gold company authorized to sell forward on world markets. Sun said China National Gold would hope to gain further capitalization to modernize and expand its gold output and, hopefully, use Jinshan as a future platform for international mergers. Unlike slow-moving state-run mining companies, China Gold is considered a "very aggressive company," managed by "people who can successfully build mines in China to international standards," Chmelauska said. What Ivanhoe and China Gold officials did not discuss in Thursday's conference call is Ivanhoe's need to deal with losses caused by delays in completing an agreement with the Mongolian government to start production at the massive Oyu Tolgoi copper and gold project. During Thursday's conference call, Jinshan officials made it clear that their company is not considered a core asset of Ivanhoe. Rio Tinto, Ivanhoe's partner in the Mongolian venture is frustrated by the failure to reach an agreement. At an investment forum in London last week, Oyu Tolgoi Managing Director Keith Marshall said, "Everything is stalled and we would like to see some progress." He added that it costs $1 million a day to keep the wheels turning at the project. Raymond Gouldie, an analyst at Salman Partners, told Bloomberg that the Jinshan transaction gives Ivanhoe "more staying power with the Oyu Tolgoi project, where an investment agreement leading to commencement could be as much as a year away." However, the Mongolia Web News last week quoted government officials who said they expect the agreement to begin mining Oyu Tolgoi could be finalized within weeks. One of the key revisions to an earlier agreement raises Mongolia's share in the project from the 34% previously agreement upon to 51%. Mining officials also believe the mineral deposits are 44% richer than previously believed. Gold deposits may be as high as 45.2 million ounces while copper could be as much as 79 billion pounds, if measured, indicated and inferred resources are combined. Meanwhile, Jinshan hopes to complete an expansion study this year to possibly increase production at its flagship Chang Shan Hao gold mine from 120,000 to 160,000-180,000 ounces annually. The company also plans to have a reserve update for its Southwest Zone as well as a resource update based on 11,000 meters of drilling conducted in 2007. Jinshan also planned to conduct a preliminary assessment and infill and extension drilling at its Dagiangou gold property in southern Gansu Province.