China's Shandong Gold to buy Xinjiang-focused miner Hengxing
Shandong Gold Mining said on Wednesday it would buy Hengxing Gold Holding in an all-stock deal worth around HK$3-billion ($387-million) that gives it control of the Gold Mountain mine in China's Xinjiang region.
The purchase continues a prolific acquisition spree for state-run Shandong Gold in a year that has seen it agree to pay a sweetened A$565.6-million ($403-million) for Ghana-focused Cardinal Resources and C$230-million ($172-million) for Canada's TMAC Resources.
The Chinese miner will take Hong Kong-based Hengxing private after acquiring all the target's equity by issuing up to 159.48-million Hong Kong shares, or 3.68% of Shandong Gold's current share capital, according to a Shanghai Stock Exchange filing.
Trading in Shandong Gold's shares was suspended earlier on Wednesday at HK$19.08, implying it could pay the equivalent of HK$3.04 billion in stock for the acquisition.
Shareholders in Hengxing Gold, which has a market capitalisation of HK$3.45 billion according to Refinitiv Eikon data, will receive 0.172 Shandong Gold shares for every Hengxing share, the filing said.
Open pit mining at Gold Mountain, which lies around 500 km (311 miles) west of Xinjiang's capital Urumqi in China's far northwest, began in 2013 and the project has annual processing capacity of 5 million tonnes of ore.
The mine had 41.66 million tonnes of gold ore and 45,570.24 kg of gold metal content at the end of 2018, at an average grade of 1.09 grams per tonne of gold, Shandong Gold said.
The company added that its Hong Kong shares would resume trading on Oct. 5, while its Shanghai-listed shares will resume on Oct. 9 after the Golden Week holiday in China.
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