Given China's desire to expand overseasI doubt we have anything to worry about with SVM. China will not do anything to foriegn companies when its own home grown companies are looking to expand overseas. Not to meantion the buyout potential for other properties I own. SEE ARTICLE BELOW:
China's second-largest gold miner, Zijin Mining Group, aims to start investing billions of yuan from this year on overseas gold and copper projects to propel future growth, after racking up a 70% leap in 2005 earnings.
The Hong Kong-listed firm, which has been relying on resources at home to maintain growth, is now counting on investment abroad to power growth in the years ahead, Zijin's top executive told Reuters on Thursday.
"We're looking to invest in world-class projects, each with an investment amount of several billion yuan," Chairman Chen Jinghe said in an interview." Zijin, benefiting from gold prices at 25-year peaks, has set targets this year to produce nearly 91% more gold at 1,2-million ounces and about 61% more copper at 32 000 t.
"We should make some progress this year. Going overseas is extremely important to us. We lack experience, but we will actively and cautiously explore opportunities," Chen said.
Chinese firms are increasingly setting their sights beyond the home market, hoping to spend some of the cash accumulated from years of breakneck growth.
On Wednesday, Zijin reported a 68,5% jump in 2005 net profit to 703,6-million yuan as it produced 61% more gold and fetched higher prices for the yellow metal.
Zijin, which has budgeted a capital spending plan of up to 1-billion yuan this year, will consider listing in China or seeking further funding in Hong Kong if needed, Chen said, adding there were no concrete plans to do so at present.
Shares in Zijin rallied 9,8% to end the day at an all-time high of HK$5,60. The stock had gained nearly 50% in the three months ended Wednesday.
Investors like Zijin because it's a pure China gold play and a low-cost player. Its overall costs stood at $203 per ounce in 2005, versus larger rival Zhongjing Gold at $276/oz.
Global peer Newmont Mining Corp. racked up costs of about $322/oz, while Barrick Gold Corp. weighed in at $338/oz, Zijin said.
Following its recent rally, Zijin stock now looks pricy, trading at 40,5 times forward earnings versus Newmont's 36 times and Barrick's 27 times, according to Reuters Estimates.
Chen said the company has a string of projects in the pipeline.
Yulong Copper, of which Zijin holds 39%, will begin producing copper from a mine on the Tibetan plateau in the second half of 2007. That mine is set to produce 30 000 t of copper annually, with a first phase of 10 000 t a year coming on stream next year.
Yulong Copper's Tibet mine is estimated to have the largest copper reserves in China.
Chen said Zijin was still studying a plan to build a 100 000-t/y copper smelter. It started the study last year.
"Previously, there were no restrictions. There are now," Chen said, referring to fresh criteria imposed on new smelters in Beijing's effort to cool investments in the resource-intensive industry.
New requirements include a size of at least 100 000 t of copper production a year and stable supply of ore.
Zijin, which starts hedging copper this year, is also looking into a plan to build a smelter at its 30 000-t/y copper mine in Xinjiang, he said.
"About 70% of our growth comes from acquiring assets, which will remain important to us in future," he said.