China's 2nd biggest gold miner pursues Australia's Focus as domestic demand augments
China's Shandong Gold Group has agreed to purchase 51% of Australian gold miner Focus Metals (ASX:FML) as Chinese appetite for the precious metal intensifies.
Reuters reports that Shandong Gold, China's second-largest gold miner in terms of reserve, will pay a $227.5 million consideration for Focus Minerals at a 13.6% premium to Wednesday's closing settlement.
China's appetite for gold has surged over the past several years, compelling domestic miners to more aggressively pursue overseas acquisitions. Zijin Mining Group obtained approval to take over Australia's Norton Gold Fields in July, while China National Gold Group Corp pursued a stake in African Barrick Gold PLC in August.
Focus has four active mines in Western Australia, with 1,650 square kilometres of tenement holdings and 4.3 million ounces of gold resources.
Focus hopes to use the proceeds from the sale to raise per annum production to half a million ounces of gold, with Focus chairman Don Taig saying in a press release that the investment will "unlock the potential of our large tenement holdings and resource base and lays the foundation for Focus to become a significant gold producer."
The purchase still remains subject to Focus shareholder approval and the approvals of both Chinese and Australian regulators.
The deal is expected to reach completion by early December.