MELBOURNE Chinese firm Zhongrun Resources Investment Corp (000506.SZ) has agreed to buy a 42 percent stake in Noble Mineral Resources Ltd (NMG.AX) for A$85 million ($88 million), sending shares of the Australian gold miner soaring 25 percent.
The move by Zhongrun, a $1 billion company with major stakes in several Toronto- and London-listed mining companies, is the latest in a string of Chinese investments in gold miners.
Demand in China for bullion has jumped, with gold sought for jewelry and as an inflation hedge.
Noble Mineral said it planned to use the A$85 million raised to speed up the ramp-up of its Bibiani mine in Ghana to produce 150,000 ounces of gold a year, pay down debt and expand its resource base.
Zhongrun agreed to pay A$0.16 and A$0.18 a share for two sets of shares to be issued to two different arms of Zhongrun.
It also will be issued options over a further tranche of shares exercisable at A$0.23 a share, or A$55 million, which would increase the Chinese firm's stake to 51.6 percent if exercised.
The options are exercisable over a three-year period although the period was not specified.
The announcement sent Noble Mineral shares to A$0.15, though that was well short of a record A$0.805 the company's shares touched last year.
Zhongrun's move into Noble Mineral follows Shandong Gold Group's SDONGA.UL plan to buy a majority stake in Australia's Focus Minerals Ltd (FML.AX), Zijin Mining Group's (601899.SS) takeover of Norton Gold Fields in Australia. China National Gold Group Corp is also in talks to buy a stake in African Barrick Gold Plc ABGL.L.
Rothschild advised Noble Mineral on evaluating a range of proposals the company received to raise funding.
($1 = 0.9669 Australian dollars)
(Editing by Edwina Gibbs)