Jinshan Gold Mines (JIN-T, JINFF-O), a junior gold producer in China, is teaming up with Monnis International to explore for gold in neighbouring Mongolia.
Monnis International was set up in 1998 as Nissan Motor’s official distributor in Mongolia. Since then the company has diversified into geology, mining, energy, construction, international freight forwarding, foreign trade, automotive services, communications, banking and aviation.
The two companies have signed a memorandum of understanding in which Jinshan will have a 51% stake and Monnis a 49% stake in any projects they acquire.
Jinshan will control and manage the projects and believes the partnership will enable it to “build and grow strong business in Mongolia.”
Monnis has “really expanded their business into mining and with everything they have — communications, banking, construction and big transporation resources — we think it’s probably a natural progression and a very good fit for them,” Frank Lagiglia, Jinshan’s investor relations manager, said in an interview, adding he believes Monnis will help smooth the way for Jinshan in Mongolia.
Jinshan’s flagship project is the Chang Shan Hao (CSH) gold mine in China’s Inner Mongolia region, where it started producing gold in July 2007. In the third quarter of 2009 the mine achieved record production of 28,543 oz. gold.
China National Gold Corporation, the largest gold producer in China, owns about 41% of Jinshan’s shares.
In early December the Chinese state-owned mining giant offered a non-revolving US$40 million credit facility to the Vancouver-based company.
The credit facility is unsecured and carries an interest rate of 6% per year. Jinshan said it would use the loan to redeem outstanding promissory notes. The loan is repayable in full by December 2011.
Jinshan’s other properties in China include the Dadiangou project in Gansu province, and two exploration permits in the Eastern Xinjiang Uygur Autonomous Region in the northwestern corner of the country, known collectively as the Xinjiang project.
In mid-morning trading Dec. 31, Jinshan was trading at a 52-week high of $2.95 per share — well above its low of 34.7¢ per share it reached on Dec. 30, 2008.
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