Zijin Mining Seeks Two 'Major' Overseas Acquisitions

HONG KONG, Mar. 31 -- Zijin Mining Group Co., China's largest gold producer, said it will seek to complete one or two "major" overseas acquisitions this year to increase reserves, continuing an investment spree to tap growing metal demand.

The Fujian province-based company also wants to acquire "big" gold mines in China, it said in a statement to the Shanghai stock exchange today, without giving details.

Gold consumption in China may double in the next 10 years, boosting prices as supplies fail to keep pace with "insatiable appetite," the World Gold Council said March 29. Zijin in December agreed to pay A$545 million ($501 million) for Indophil Resources NL to gain a stake in Southeast Asia's largest untapped copper and gold deposit.

"The company will continue to follow the due diligence of key projects and engage in negotiations, seeking to sign pacts on one or two major acquisitions," Zijin said in its annual report released today.

Zijin, which also produces copper, silver and iron, dropped 1 percent to 8.17 yuan at 9:44 a.m. in Shanghai trading.

Net income rose to 3.5 billion yuan ($513 million) last year from a revised 3 billion yuan a year earlier, the company said today. That compares with the 4 billion yuan mean profit estimate compiled by Bloomberg from 16 analysts.

Rising Sales

Sales rose 23 percent to 20.96 billion yuan. The company will pay a dividend of 0.1 yuan a share.

Zijin Mining is planning to increase investments as it has "sufficient cash and low debt," Vice Chairman Lan Fusheng said Oct. 22. The company has spent $300 million in the past five years in eight overseas projects, and is looking at assets in Southeast Asia, Africa, Latin America and the Democratic Republic of Congo, he said.

Gold is on course for a decade of gains as the dollar weakened and demand for bullion as a store of value increased. The bullion climbed to a record $1,226.56 an ounce on Dec. 3. It traded at $1,105.75 an ounce at 9:22 a.m. Hong Kong time.

Zijin plans to boost gold mine production 1.5 percent to 31.1 tons in 2010 from 30.7 tons last year, it said in the statement. China produced 261 tons from its mines last year.

Chinese bullion demand from investors and the jewelry industry, which account for 80 percent of purchases in the country, reached 423 tons in 2009, according to the World Gold Council, a group representing producers.