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DJ Chinese Gold Producer Zhaojin Plans HK IPO-Sources -2-(Comtex Business Via Thomson Dialog NewsEdge)Mar 21, 2006 (Dow Jones Commodities News Select via Comtex) --Shandong province accounted for 27.7% of the total output of 91.5 tons of gold in China between January and July last year, with Henan province ranked second with 15.5%, China's state-run Xinhua News Agency has reported. Zhaojin's share sale could raise at least US$500 million, Foo estimated, depending on what gold mining and smelting assets were included in the deal. After a two-decade bear market, gold has returned to favor as an asset class in the last year or so and on Feb. 2 hit a 25-year high of US$574.60 an ounce. It was trading at US$554.40 an ounce in London Tuesday. With gold's popularity, Zhaojin is likely to be able to price itself at a high valuation of up to 30 times earnings, Foo said. The size of the share sale and composition of the listed company has yet to be decided, one of the people familiar with the situation said. Another person familiar with the deal was a banker who said the analyst's estimate of a US$500 million price tag would be at the top end of potential prices and would depend on what assets are included in the IPO. The banker said the company's existing shareholders are a mix of state and private entities. Zhaojin plans to follow Fujian-based Zijin Mining Group Co. (2899.HK), which launched a hugely popular share sale in Hong Kong in December 2003, raising HK$1.15 billion, with the retail portion of the offer 744 times subscribed. The stock closed at HK$4.725 Tuesday, 43.2% above its HK$3.30 IPO price and is priced at 37.8 times expected 2005 earnings, according to Thomson Financial data. The company has yet to report 2005 profits. Zijin's peer Henan-based Lingbao Gold Co. (3330.HK) raised HK$861 million by selling 258.5 million shares at HK$3.33 each in January, with the IPO also sparking an enthusiastic response from investors. Its retail portion was 731 times subscribed. Lingbao's stock closed Tuesday at HK$4.45, 33.6% above its IPO price and 23.2 times the 2005 earnings that have been forecast by BOCI Research Ltd. -By Jon Ogden, Dow Jones Newswires; 852-2802-7002; [email protected] -Edited by David Riordan (END) Dow Jones Newswires 03-21-06 0645ET |