Zijin Mining Group Co may raise up to US$1.54 billion in its Shanghai share sale next week as the leading Chinese gold producer announced the initial public offering procedure yesterday.

The IPO launch came four months after Zijin won regulatory approval for the share sale late December, due to weak market conditions and technical adjustments, sources said.

Shanghai's key stock index has tumbled 30 percent this year in part because of heavy cash calls from an influx of new equity supply. And this has raised concerns Zijin's fund-raising efforts may be hurt.

"It should not be that bad as the market has been waiting for good-quality major IPOs a bit too long," said Wu Feng, an analyst at TX Investment Consulting. "The message to the market now is that large IPOs may not be that negative than large additional share placements."

Eager to start

Hong Kong-listed Zijin plans to issue as many as 1.5 billion new yuan-denominated A shares, or 10.24 percent of its enlarged share capital. The company starts price consultation today and will take subscriptions next Tuesday and Wednesday, it said in a statement filed to the Shanghai Stock Exchange. The issue price will be fixed next Thursday. Zijin didn't give a listing date but said it aimed to start trading as soon as possible after completing the IPO.

Thirty percent of offers will be earmarked to institutions and the rest for retail investors. But the retail portion could be increased if there are strong orders.

Fujian Province-based Zijin said it plans to use 4.92 billion yuan (US$702 million) from the IPO proceeds to fund acquisitions and projects involving mining and processing of gold and copper both home and abroad. The company's net profit rose 50 percent to 2.55 billion yuan last year on higher sales amid rising bullion prices.

Zijin's shares have a face value of 0.10 yuan each, compared with one yuan for other mainland-listed companies.

On expectation that Zijin's A shares would be actively pursued by investors, Zijin rose 11.6 percent to HK$8 (US$1.03) in Hong Kong trading yesterday. Based on the closing price, its Shanghai sale may raise up to 10.8 billion yuan.

(Shanghai Daily April 8, 2008)