Management of Golden China Resources (GCX-T, GCX-A) has thrown its full support behind a friendly takeover offer by Sino Gold Mining (SGX-A).
Sino Gold is offering one Sino Gold share for every four and a half Golden China common shares. The takeover agreement values Golden China at about $73 million.
The proposed transaction is a 48% premium to the 10-day TSX volume-weighted average price leading up to the announcement.
If the deal goes through, Golden China shareholders would collectively hold a 6.5% interest in Sino Gold.
Golden Chinas principal asset is the advanced Beyinhar exploration project in Inner Mongolia. Golden China had said it would develop a 100,000 oz. gold production base at Beyinhar 325 km northeast of the capital city, Hohhot.
In January, Golden China announced Beyinhar had a combined measured and indicated resource of 17.6 million tonnes, grading 0.84 gram per tonne gold, containing 475,000 ounces, and an inferred resource of 7.5 million tonnes at 0.54 gram per tonne gold for 130,000 ounces.
All of Golden Chinas key assets are located within the three areas in which Sino Gold already has significant activity and capacity.
In addition to Beyinhar, Golden China owns 70% of the Nibao gold project in southern Chinas Guizhou province, 99.5% of the BioGold facility located in Shandong province, and a minority interest in the Gold Ridge mine in the Solomon Islands.
The Nibao deposit contains a National Instrument 43-101-compliant inferred resource of 6.52 million tonnes grading 1.46 grams gold per tonne (305,000 oz.) near surface. The mine is expected to commence development in 2008 following a feasibility study this year.
Sydney-based Sino Gold was the first foreign-owned gold company to secure a mining licence from the Chinese government for its Jinfeng gold mine in Chinas southern Guizhou province. It also owns 95% of the White Mountain project in Jilin Province, in northeastern China.
The news sent Golden Chinas shares up 3.88%, or 0.04 per share, to close at $1.07 a piece, on a trading volume of 248,450.
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