Tuesday, June 24, 2008

China National Gold wins deposit with $318 mln bid

China National Gold Group, China's largest gold producer has won a bid for exploration rights. The bid of 2.18 billion yuan entitles China national Gold Group to explore to China's largest gold deposit according to a company source. The gold mining operation beat out the parent companies of Shandong Gold-Mining Co., Zijin Mining Group Co and Zhaojin Mining Industry Co in a two-day bidding that started on Wednesday.
"The China National Gold Group offered the highest bid, and it was also ahead of other bidders in areas such as governance and technology," one of the sources said.
China's gold mining rules give the owner of a deposit's exploration rights priority in obtaining mining rights.
With spot gold prices on the rise, doubling from january of 2006 to a record $1,030.80 per ounce on March 17 this year, miners are being encouraged to secure more reserves to boost profits. The spot gold price was around $910 on Friday.
The terms of the government-arranged bid state that Jinchuan Group Ltd will pay 40 percent of the bid amount to the winner and will help to develop the deposit. China National Gold Group is expected to receive about 870 million yuan from Jinchuan under this provision. A joint venture is expected to be formed for the gold project, after which they will determine the total amount to be invested.
The gold deposit, in Yangshan in southern Gansu province, has proven reserves of 308 tonnes, making it the largest Carlin-type deposit in Asia and the sixth-largest in the world.
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