Gold mining giant Zhaojin Mining Industry Co is planning to sell shares of up to US$48 million to four investors before its formal listing in Hong Kong, sources close to the deal said yesterday.

The Shandong Province company is expected to retain 14.8 to 17.8 per cent of its IPO for four potential investors - the China fund run by Kuwait's Global Investment House, Africa's biggest lender Standard Bank, Hong Kong property firm Great Eagle and tobacco tycoon and Sing Tao News chairman Charles Ho.

"Each of the investors will get about US$10 million to US$12 million in shares," one of the sources said.

Zhaojin, preparing for a US$270-million IPO, is expected to formally begin its marketing road show on November 20.

The retail part of the company's Hong Kong offering will run from November 24 to 29 and its final pricing and trading debut is scheduled for December 2 and 8, respectively.

Factors such as concerns over inflation, uncertainty of the US dollar, worries over US trade and current account imbalances and geopolitical tensions pushed up gold prices to a multi-decades highs in the first half of 2006. Gold peaked in mid-May at US$730 an ounce, and closed at US$618.2 an ounce on Thursday.

As such, gold mining companies, for long accepted as safe bets, have drawn an increasing number of investors.

The shares of the mainland's second largest gold mining company, Zijin, surged 178 per cent this year. Mainland gold smelter and producer Lingbao Gold, which too is listed in Hong Kong, reported that its shares soared 127 per cent above its January offer price.

Underwriters peg Zhaojin's fair value at 17 to 24 times its 2007 earnings, versus 25 times for Zijin and 17.3 times for Lingbao.

UBS, one of the Zhaojin's sponsors, expects the average price of gold this year to be about US$700 per ounce.

The company's other sponsor Cazenove Asia expects a lower average price for the precious metal, though.

With a demand for 270 tons, or 6 per cent of the world's total, China is the world's third-largest gold consumer. India and the United States are the top two.

The World Gold Council expects China's share of gold consumption to rise to 20 per cent on the back of the country's increasing purchasing power.

In 2005, China was the world's fourth largest gold producer with 7.2 million ounces, or 9 per cent of global gold output. China's gold reserves, however, only accounted for 1.4 per cent of its foreign reserves in June 2005, which is much lower than the global average 9.5 per cent.