Some significant news on the gold front today.
Sino Gold (SGX), an Australian gold producer with a focus on China, announced today that it has acquired a 72% stake in a gold and silver deposit in northern China for approximately $170 million, making it the company's fourth potential gold mine in the country.
Sino Gold CEO Jake Klein said the company has been pursuing the Eastern Dragon Deposit in the Heilongjiang Province for several years, and are pleased to acquire the high grade and potentially low-cost mine.
"We believe this acquisition will add significant shareholder value and reinforces our first mover position in a country that is likely to become the world's largest gold producer this year."
The company said it hoped to produce 80,000 to 120,000 ounces of gold per annum plus significant silver production from the project.
"This acquisition provides Sino Gold a clear path to more than 500,000 ounces of low-cost production from four quality operations."
Sino plans to raise $170 million via a private placement to pay for the stake and for other projects.
Its shares were in a trading halt pending completion of the placement.
"The district has demonstrable potential for additional epithermal gold deposits and this acquisition complements our adjacent Sanjianfang Joint Venture."
Sino Gold in August agreed to buy gold explorer Golden China Resources Corp. for A$80.7 million.
Golden China's Beyinhar project is located in Inner Mongolia.
Sino Gold began production at its Jinfeng mine, the second biggest gold mine in China and located in the southern Guizhou province, earlier this year and is scheduled to start commercial production at a second mine, White Mountain, in early 2009.
Also on the yellow metal, Lihir Gold (LGL) fell today after it said it has cut its 2007 production forecast by 7% to 700,000 ounces due to unplanned maintenance shutdowns.
This is the second downgrade in three months.
In October, Lihir lowered its production forecasts to 750,000 ounces from 800,000-830,000 ounces as a result of a strike in September.
"Despite these temporary setbacks, Lihir Gold remains on track to achieve record production in 2007," the company said in a statement.
"This will be followed by another record in 2008, due to a full year's operation of the floatation circuit which remains on schedule for the second half of the year."
CEO Arthur Hood said the company is expecting strong improvements in operational cashflows in 2008 and beyond on improved efficiencies, planned expansions and elimination of all hedging earlier this year.
Lihir said a recently commissioned oxygen plant has experienced a compressor failure and was unlikely to be back on line before the New Year.
Sino Gold closed flat at $6.75, while Lihir fell by 4.62% or 18 cents to finish down at $3.72.
