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Archive for July 31st, 2011

Gold, Nonferrous Metal, Nonferrous Metals Prices

July 31, 2011

HSBC receives approval to join China’s gold futures market

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HSBC Bank (China) Co announced on Friday that it has been approved as a member of the Shanghai Futures Exchange, becoming the first overseas bank to engage in China’s gold futures market.

“China is an important producer, user and investor of gold. The access granted for China’s gold futures market is a welcome addition to our existing gold spot trading business with the Shanghai Gold Exchange, and reinforces HSBC’s leadership in the global precious metals market,” said David Liao, managing director and head of Global Markets at HSBC China.

“We look forward to playing a greater contributing role in the development of China’s fledgling gold market, where we see vast growth potential,” Liao added.
HSBC China was one of the first overseas banks to become a member of the Shanghai Gold Exchange in February 2008, and the first overseas bank to obtain approval to start gold trading in June 2008.

The approval “reflects the opening up of China’s futures market,” Wu Jian’gang, researcher at the CEIBS Lujiazui International Finance Research Center, told the Global Times on Sunday.

“Gold is not quite closely related to industrial production, so introduction of foreign companies would not create a big, unmanageable impact on China’s commodity market,” Wu noted.

Gold futures should be in tune with the foreign exchange reform and opening of the financial market, so it is appropriate to open the gold futures market first in the process of foreign exchange reform and yuan internationalization, he added.

“The country would intensify efforts in the futures market, including reducing rates and increasing the liquidity and diversity of investors and agents. The opening up of gold futures is just a start and in the future, not only institutions, but also advanced global technologies and experiences will be introduced,” said Wu.

China is the largest gold producer in the world, with the output increasing to a record high of 340.88 tons in 2010, data from China Gold Association shows.

Gold, Nonferrous Metal, Nonferrous Metals Prices

Australia’s Norton Gold sees China’s Zijin increasing stake

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Australian miner Norton Gold Fields expects its top shareholder, China’s Zijin Mining , to lift its stake to 19.9 percent, using Norton to expand offshore, Norton’s chief executive said.

Zijin, China’s top gold producer, last week agreed to invest $30 million in Norton, buying shares to lift its holding in the company to just under 17 percent.

Norton Chief Executive Andre Labuschagne said he plans to meet Zijin executives in the next few weeks to discuss what their longer term intentions are.

“All indications are we are the Australian arm for potential growth,” Labuschagne told reporters late on Sunday.

Labuschagne told two reporters separately that he expects Zijin will want to raise its stake to 19.9 percent, the threshold above which an investor would have to make a full takeover for the company if it wanted to increase its stake further.

Norton sees Zijin as a useful partner as it has expertise in the heap leaching process of extracting gold.

Norton Gold is considering developing its Navajo Chief lode using by heap leaching, alongside several other expansion opportunities on its tenements spanning 700 square kilometres in the gold belt around Kalgoorlie.

Zijin agreed to buy its stake for A$0.20 a share, a 14 percent discount to the stocks price on Monday.

The company’s shares have been languishing relative to its peers as it has an A$80 million debt load, compared to others who have no debt.

The share sale to Zijin will allow it to cut debt to A$50 million, and its recent sale of coal tenements in Queensland and the planned sale of its Mount Morgan mining leases in Queensland will cut debt to below $30 million by March 2013, if not sooner.

Once its balance sheet is strong enough Labuschagne is keen to get into merger activity which is sweeping the gold sector, and sees Norton as a predator rather than target.

“If I can help it, I’ll do it,” he said, adding that Norton would look at takeover opportunities in Australia and offshore.

“I feel disappointed we can’t at this stage participate in that consolidation process because of where the share price is.”

Metal News, Nonferrous Metal, Nonferrous Metals Prices

China Nonferrous Metal increases stake in Terramin

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China Nonferrous Metal Industry’s Foreign Engineering and Construction Co said on Monday that it would increase its stake in Australian miner Terramin Australia Ltd in a deal worth 32.35 million yuan ($5 million).

Terramin will sell 12.3 million shares to China Nonferrous Metal at A$0.37 ($0.406) apiece in a private placement that would increase the holdings of the Chinese developer of non-ferrous metal resources to 19.86 percent from 14.38 percent, according to a statement to the Shenzhen Stock Exchange.

Terramin will use the share sale proceeds to develop two zinc and lead mining projects, the statement said.

Terramin posted a loss of A$9.875 million last year and its assets totalled A$147 million.

Chinese companies have been eager to secure supply of raw materials through overseas acquisitions to meet rising domestic demand in the world’s fastest-growing major economy. ($1 = 6.437 Yuan) ($1 = 0.910 Australian Dollars)