Ardent Mines can be next! This is another confirmation that Brazil is the future of gold mining!
SHANGHAI—State-owned Shandong Gold Group Co. of China has offered to purchase Brazilian gold miner Jaguar Mining Inc. for $1 billion, a person familiar with the matter said Wednesday.
The deal is the latest reminder of demand in China for the world's commodities. A deal in gold suggests that demand extends beyond resources China lacks, such as soybeans and iron ore, because China is the world's biggest gold producer.
Shandong Gold offered to pay $9.30 a share for Jaguar, or a 73% premium to the latter's closing price Tuesday on the New York Stock Exchange.
The person declined to provide further financial details.
Jaguar acknowledged in a news release Wednesday that it has received proposals to acquire the company in recent weeks and that its board of directors is exploring "alternatives to maximize shareholder value." Jaguar added that completion of a deal isn't assured.
China will likely post sharp increases in gold output and consumption this year, with domestic demand rising nearly 50%, China Gold Association President Sun Zhaoxue was quoted as saying in a report by the state-run Xinhua news agency earlier this month.
It is poised to produce 350 metric tons in 2011, up from 340.9 tons last year, Mr. Sun said in the Xinhua report.
Brazil and China have an active trading relationship, though it is sometimes testy.
China is a major importer of Brazilian soybeans but on occasion has blocked their sale, citing disease. It is the world's No. 1 importer of iron ore for making steel, but the Brazilian producer Vale SA has been criticized by Beijing authorities over its pricing strategy.
Most recently, Brazil has challenged China's exchange-rate policy at the World Trade Organization, arguing the yuan is artificially undervalued, making Chinese manufactured exports more competitive against Brazilian goods than they would be under a free-floating foreign-exchange system.
The fact China continues to buy in Brazil indicates Chinese companies' keen interest in securing resources and its ability to invest while the rest of the world is experiencing fiscal and monetary austerity.
The potential takeover also comes as a stronger dollar weighs on global gold prices. As the U.S. currency strengthens, gold futures denominated in dollars seem more expensive to investors who use foreign currencies.
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