US Precious Metals (fka USPR)

[Adrock]

Looks like China wants gold and is willing to pay:

http://online.wsj.com/articles/chinas-shandong-zhaojin-hunting-for-global-gold-assets-1413958482
China’s Shandong Zhaojin Hunting for Global Gold Assets
ENLARGE
Shandong Zhaojin Group is planning to acquire gold-mining assets both domestically and overseas. Bloomberg News
By
Chuin-Wei Yap
Updated Oct. 22, 2014 7:02 a.m. ET
TIANJIN, China—Shandong Zhaojin Group Co., one of China’s largest gold producers, is in talks to acquire gold-mining assets in North America and Australia, Chairman Lu Dongshang said on Wednesday.
The state-controlled ingot producer, which has a listed unit in Hong Kong, is in variously advanced and preliminary stages of discussions with potential targets, Mr. Lu said on the sidelines of an industry conference. He declined to disclose the identities of the targets.
Even as gold prices have fallen 10% this year because of low inflationary pressures and a stronger dollar, Chinese gold producers have continued to scour the world for mining assets, betting that resilient longer-term domestic demand will underpin their investments.
China consumes about 1,176 metric tons of gold a year but produces only 428 tons, leaving considerable room for imports, according to the China Gold Association. Gold imports are tightly controlled by the government, with only a handful of banks and state-owned gold producers permitted to undertake shipments.
While an avid buyer of domestic assets, Zhaojin has lagged behind larger Chinese rivals like China National Gold Corp., Zijin Mining Group Co. and Shandong Gold Group Co. in pursuing foreign acquisitions.
Despite recently failed talks to acquire Ivanhoe Mines Ltd. ’s African properties, China National Gold said earlier this year that it was still on the hunt for global assets, and was exploring partnerships with Barrick Gold Corp.
Zijin’s $223 million takeover of Australia’s Norton Gold Fields Ltd. in 2012 gave Chinese state-owned gold miners one of their most significant successes in securing offshore assets, paving the way for more Chinese ventures abroad to try to plug output shortfalls in resource-scarce China.
Shandong Gold failed in its $1 billion bid for Brazil’s Jaguar Mining Inc. in 2011, but successfully took a $238 million stake in Australia’s Focus Minerals Ltd. the following year.
Chinese gold consumption and output last year reached record levels as the country overtook India as the world’s top bullion consumer, despite 2013 being a lackluster year for the precious metal’s prices. The World Gold Council is projecting relatively flat demand growth this year.
Shandong Zhaojin’s Mr. Lu said foreign acquisition targets would have to yield at least five grams of gold per metric ton mined as a basic criterion, while domestic acquisitions must produce at least two grams per ton. He said that is because foreign mines tend to have far higher costs of production.
Overseas asset targets would also have to have gold deposit reserves of 50 tons “at the very least,” he added.
Shandong Zhaojin said it is intent on shoring up its market share at home. “We’re also considering domestic assets for consolidation,” Mr. Lu said.
Write to Chuin-Wei Yap at [e-mail]