Gold sellers show a 50kg ingot in Nanjing, Jiangsu province. Gold has risen 26 percent this year, set for a 10th consecutive annual gain. Liu Li / for China Daily

Yinfu Gold Corp, a Chinese gold exploration and mining company, plans to sell shares in Hong Kong to fund acquisitions and investments on the mainland and Southeast Asia.

Yinfu will sell the shares in the second half of 2011 after it completes its transfer to the Nasdaq Stock Market from the OTC Bulletin Board in New York, Chairman Wilson Huang said in a phone interview from Hong Kong, where the company is based. 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 consecutive annual gain, as the sovereign debt crisis in Europe and so-called quantitative easing in the US hurt currencies. IPOs in Hong Kong may raise HK$400 billion ($51 billion) next year, according to a December 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 US cents, or 30 percent, to 70 US cents a share when last traded on December 22 on the OTC Bulletin Board stock market. It has gained 56 percent since trading began January 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 metric 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 on the mainland. 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 December 3 in Shanghai.

"The appeal of gold will continue," Huang said. "Chinese banks are promoting gold products and Chinese have a traditional love for gold. Government measures to cool the property market have also boosted gold demand as an alternative investment."

Mainland's gold imports jumped almost fivefold in the 10 months to October, Shen Xiangrong, Chairman of Shanghai Gold Exchange said on December 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

(HK Edition 12/25/2010 page2)