China's Chihong Zinc drops $1.45 bln share placement

SHANGHAI (Reuters) - Yunnan Chihong Zinc and Germanium Co Ltd (600497.SS), a medium-sized base metal smelter, said on Friday that it had cancelled a 10 billion yuan ($1.45 billion) share placement due to falling metal prices and a slumping stock market.

The company had announced in April that it planned to buy 40 percent of Yunnan Jinding Zinc, a small-sized smelter located in its home province of Yunnan, by issuing shares worth 10 billion yuan to Jinding's four state-owned parents.

But international zinc prices MZN3 have halved since April, while the benchmark Shanghai Composite Index .SSEC has fallen by almost 40 percent, beaten back by the global financial crisis.

Chihong said in a statement that it would follow the movements of base metal prices and equity prices while continuing to liaise with related parties, and would consider the share placement again when conditions improve.

Previously, Sichuan Hongda Co (600331.SS), a maker of zinc oxide and other chemicals, cancelled a 2 billion yuan share placement in exchange for a 9 percent stake in Jinding because of poor market conditions.

($1=6.881 Yuan)

(Reporting by Alfred Cang; Editing by Jonathan Hopfner)