CANADIAN FIRM SIGNS FIRST CHINA DEAL
Asia Minerals of Vancouver, Canada, has signed the first joint gold mining contract with China.
Under the $72 million agreement with Shandong Zhaoyuan Gold Industrial Group, a joint company will be formed to expand an existing mine. Asia Minerals will provide half the necessary funds; the Chinese company will pay for its half with gold assets.
The Chinese government announced three years ago it would permit limited foreign ownership of mining projects. But foreign companies found that negotiations with Chinese officials often bog down in red tape and conflicting regulations. In addition, all gold mining ventures must sell their entire output to the Central Bank of China for 90% of the international trading price. Even more discouraging, all bank payments are made in local currency, the renmimbi yuan, which is not convertible except through the Central Bank.
Why does Asia Minerals want to proceed with the project? President David Owen told the Asian Wall Street Journal he believes the project is economically viable even under such conditions. He also noted the “tremendous” potential because China has a lot of deposits that aren’t fully developed and many areas that haven’t even been prospected.
The mine expansion will be completed next year and will increase annual production from 13,000 ounces to 60,000 ounces.