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(USGovernment-News.Com, August 21, 2012 ) San Francisco, CA - China National Gold is facing soaring demand for gold at home. The demand is being driven by China’s increasing affluence; gold is being used for jewelry production and some investors are using it as a hedge against inflation as well.
China Gold is leading a drive to meet this demand by going offshore to purchase the African unit of Barrick Gold. Barrick Gold is the world’s number one producer of gold.
If the merger between China National and African Barrick Gold takes place, it will be the biggest investment in Africa by China since the takeover of Kalahari Minerals and Extract Resources earlier this year. China Guangdong Nuclear Power Corporation successfully bid $3.37 billion for the uranium producer and its partner.
A full bid for African Barrick could be worth over 2.4 billion pounds ($3.78 billion USD) based on a 40% premium on its closing price on the London stock market as of August 16 2012. If China National purchases 30% of the voting interest of African Barrick, they will then be required to make a bid for the entire company.
If the deal is successful, it will be the biggest deal ever entered into by China National Gold. Since African Barrick is Tanzania’s largest gold producer, the takeover would also increase China National Gold reserves by a third.
China National Gold bills itself as China’s top gold company. They have 1,565 tons (or 50.3 million ounces) in their gold reserves as of June 2012. China Gold is also an active gold mining company, having mined 1 million ounces of gold in 2011, compared with the 688,000 ounces produced by African Barrick.
China National has stated that their goal in the second half of 2012 is to complete mergers and acquire major projects. They also want to ensure that key products that are currently under construction will be able to be completed. They also plan on moving into the mining and production of non-ferrous metals as well as doubling their production of mined gold to 2 million ounces by 2015.
China National Gold’s takeover bid follows the successful takeover of Australian gold producer Norton Gold Fields by Zijin Mining Group. Zijin built up a 17% stake in Norton before launching their takeover attempt. The deal is set to close next week, and Norton is valued at AUD$215 million (USD $225.70 million).
China is the world’s top producer of gold, and they saw demand for gold in the first half of 2012 rise by 2.8% (on an annual basis). 400 tons of gold (12.8 million ounces) were demanded by gold consumers in 2012, even with a 7% drop in second-quarter demand. They are expected to become the world's top gold consumer on an annual basis this year.
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