China gold miner soars in HK
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HONG KONG, China (Reuters) -- Shares in Fujian Zijin Mining Industry Co Ltd have soared more than 70 percent on their Hong Kong market debut as investors pile into the gold miner.
The company, based in China's southeastern Fujian province, raised HK$1.15 billion ($147.4 million) in an initial public offering that was 744 times subscribed by retail investors, making it the most popular IPO in Hong Kong since 1997.
Zijin shares traded at HK$5.70 by late Tuesday afternoon, versus their offer price of HK$3.30 each.
Their debut was given added zing on news that South Africa's Gold Fields, the world's fourth-largest gold producer, had taken a 1.4 percent stake worth $7.7 million in the firm.
Gold Fields said it would also invest $500,000 in a venture with Zijin to explore and develop gold properties.
"A strategic partnership such as this one should give it momentum," said Ben Kwong, associate director at KGI Asia Securities. "Investors are hot for this kind of commodity play but a lot of trade is speculative," he added.
Recent China IPOs have drawn huge demand from investors eager for broader exposure to an economy growing at over eight percent a year. Small Hong Kong investors, emboldened by impressive first-day gains, have lined up outside banks to apply for shares.
Investors are also banking that firm gold prices, which are trading near eight-year highs, will boost Zijin's earnings.
China Life Insurance Co Ltd, the country's top life insurer, made its debut last week after raising $3.46 billion in the world's largest initial public offering this year.
Zijin, the first gold mining company to list in Hong Kong, plans to use proceeds from the IPO to acquire additional gold resources in the central and western parts of China.
The company aims to boost its annual gold production to 15 tonnes by 2008 from about 10 tonnes this year.
Zijin sold 348.3 million shares, or 27.5 percent of its enlarged share capital, at 15.6 times its forecast 2003 earnings on a fully-diluted basis.