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Canadian Mining Stocks: China Gold buys part of Jinshan Gold Mines

Posted April 17, 2008

“Last week it was announced that China’s largest state-owned gold mining company, the imaginatively-named China Gold, had bought a 42% position in the company. Why have the Chinese done this? And what is the significance for Jinshan?” — Dominic Frisby

by Dominic Frisby

Baltimore & London – (TFN): Well, I said immediate upside potential, but I didn’t realise it would be that immediate. My goodness.

Last week I recommended the Canada-listed Pan African (PAF: CVE) at $2.25 as a junior mining play on Madagascar. It’s virtually doubled since.

This week it was announced that their Madagascan assets are being taken over at $4 a share – for which you’ll get cash - while their other Southern African assets are being rolled into a new company, for which you’ll get a share.

If you bought, and I hope some of you did, you can treat yourself to a new frock.

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Pan African’s story shows the enormous possibilities that lie in the junior mining sector, even in this bear market. But the takeover, which came from Asia Thai Mining, has wider implications, which I’ll come to in a moment. You can’t argue with a quick profit, but, given the breadth and depth of Pan African’s assets, I think Asia Thai have got themselves a bargain.

Canadian Gold Mining Stocks: Tiny Chinese-Canadian mining stock

Meanwhile, Jinshan (JIN: TSE), another junior mining company I have been recommending (and which I own shares in myself), has had some exciting news, which also has enormous wider ramifications.

Jinshan is a Toronto Stock Exchange-listed gold producer in China (find out more about Jinshan and our recommendation). After several years of exploration and development, its mine finally went into production last summer. By the end of this year it should be producing at a rate of just over 100,000 ounces a year at a cash cost of between $350 and $400 per ounce. It’s a very nice little junior mining story, thank you very much.

Then last week it was announced that China’s largest state-owned gold mining company, the imaginatively-named China Gold, had bought a 42% position in the company.

Why have the Chinese done this? And what is the significance for Jinshan? Read on to learn more.

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Posted by Dominic Frisby · Filed Under Gold and Resources 

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