China National Gold Said to Weigh Investments in Ivanhoe Assets – by Zijing Wu (Bloomberg News – November 6, 2013)

China National Gold Group Corp. is considering investing in mines owned by Robert Friedland’s Ivanhoe Mines Ltd. (IVN), including the Platreef project in South Africa, a person with knowledge of the situation said.

China’s largest gold producer values the Platreef platinum and copper mine at about $1 billion, said the person, who asked not to be identified as the information is private.

State-owned China National Gold has also looked at other Ivanhoe projects located in the Democratic Republic of Congo and Gabon, though prefers more developed countries like South Africa, the person said. No terms for a purchase of the Platreef mine have been finalized, and China National Gold could instead consider buying a stake in Ivanhoe itself, the person said.

China National Gold, which ended talks in January to acquire Barrick Gold Corp. (ABX)’s African unit for about $2.3 billion, is also exploring opportunities to buy gold and copper assets in Canada and Australia, the person said.

Chinese metal producers are seeking to take advantage of commodity price declines to buy assets overseas. The biggest global mining companies are selling their higher-cost projects and writing down asset values after almost $1 trillion of acquisitions in the sector over the past decade.

Wu Zhanming, a spokesman for Beijing-based China National Gold, declined to comment, as did Bob Williamson, a spokesman for Ivanhoe.

Japanese Investment

The Wall Street Journal in September reported that China National Gold had talked to Ivanhoe about buying assets or a stake in the company. Ivanhoe said Sept. 23 that was in discussions with private and state-owned mining companies that had expressed interest in investing “both at the project and corporate levels.”

Ivanhoe owns 90 percent of the Platreef mine, located 280 kilometers (174 miles) northeast of Johannesburg, according to its website. A group of Japanese companies including Itochu Corp. (8001) spent $290 million in 2010 and 2011 to acquire a 10 percent stake in the project.

The Platreef project contains platinum, palladium, nickel, copper and gold resources, according to Ivanhoe’s website. The company, which changed its name in August from Ivanplats Ltd., has a market value of C$1.62 billion ($1.54 billion) after a 50 percent drop in its shares since the start of 2013.

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