China Gold International acquires polymetallic mine in Tibet from largest shareholder
China Gold International Resources (TSX:CGG) has entered into an agreement to acquire the Jiama copper polymetallic property for approximately US$42.3 million. The property is currently held by CGG's largest shareholder China National Gold Group, and Rapid Result Investments.
CGG will pay for the transaction through the issuance of 170.25 million shares at a deemed price of C$4.36 per share. Shares in the company fell 6.5% to 4.60 per share on the size of the discount of the deemed price compared to the current share price.
The Jiama property is located in Tibet, and hosts a copper-polymetallic deposit being developed as an open pit and underground mine. The development will include two pits plus an underground mine that will accessed from two shafts that will support a 12,000 tonnes per day operation for approximately three decades.
Production will consist of copper concentrate, molybdenum concentrate and lead concentrate. Gold and silver will be separated and smelted in downstream processing.
The mine is expected to produce revenues of US$200-300 million per annum once at full production, and average annualised after tax cash flow of $100 million per year.
BD Asia calculated the after tax net present value of the discounted cash flow at US$777 million.
China Gold International Resources principal property is the CSH Gold Mine.
China National Gold Group Corporation, a Chinese state-owned enterprise owns approximately 39% of China Gold International Resources.
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