Top Biz News

CNGG seeks more mines

By Hou Qingyang (China Daily)
Updated: 2010-01-14 07:57

China National Gold Group Corp (CNGG), the country's second largest gold producer, will transfer several gold mines as assets to its Canadian subsidiary Jinshan Gold Mines this year and acquire more mining assets abroad through Jinshan.

Song Xin, vice-president of CNGG, told China Daily yesterday that the company was in talks to buy several gold mines overseas, but declined to give details.

"Our target investment destinations include neighbors such as Russia and Mongolia, as well as North America, Australia and Africa," said Song. "Jinshan will serve as an overseas investment platform, because as a company listed on the Toronto stock exchange, it has easier access to foreign investors and mining assets."

CNGG prefers low risk and mature projects in terms of foreign investment. "We are only interested in operating mines, and will not get involved in grassroots risk exploration projects," said Wu Zhanming, capital operation manager at the group.

CNGG added 92.4 tons of new resources to its 1,200 tons of gold reserves in 2009, entrenching its position as the country's largest gold reserves holder. It produced 123.19 tons of gold last year, up 37 percent from 2008.

Song said the company would further increase its gold reserves and output in 2010 and overseas investment would be an important contributing factor to business growth.

The company will focus on gold mining to take advantage of rising gold prices. In the meantime, it will tap into mining other metals, including copper, silver and zinc, as a hedge against the risk of gold price fluctuations.

"In the long term, the price of gold is positive, but in the short term it might see ups and downs," said Song. "We are looking into other nonferrous metals, but we decided not to enter the aluminum mining sector."

Bullion gained more than 50 percent in 2009 from $801 an ounce in January to $1,226 an ounce in December, as the weakened dollar drove demand for precious metals as alternative assets.

CNGG's copper reserves grew 824,000 tons in 2009 to reach 6 million tons. "As for copper, we will not invest in refining unless we can be self-sufficient in copper ores," said Song.

In a statement released last December, Jinshan said it was actively discussing gold and other precious metals projects in Russia and Mongolia with partners.