Sino Gold To Look At Western Companies

The Age

Thursday October 23, 2008

JAMIE FREED

SINO Gold will consider applying its strong balance sheet to acquisitions to take advantage of recent falls in the market value of Western gold exploration companies in China.

Sino chief executive Jake Klein yesterday observed that the market value of all Western gold explorers in China had fallen to $US250million ($A362million), compared with $US1.2billion in March. "I will say we are focused on quality. But we are focused on delivering on that overall vision of building a substantial company in China."

Sino yesterday reported September-quarter production of 38,250 ounces at a cash cost of $US402 an ounce from its flagship Jinfeng mine, including a record 14,590 ounces at $US350 an ounce during September.

The company has nearly completed its new $US62.5million White Mountain mine in north-east China and has begun a prefeasibility study on the high-grade Eastern Dragon project in northern China.

"We see the successful delivery of the White Mountain project as the key catalyst for the stock, as it will reduce the operational risk which surrounds the stock, as Sino currently operates only one mine," said Goldman Sachs JBWere analyst Ian Preston. Mr Klein described Eastern Dragon as "a sizzler" and said it should begin construction by early 2010. But he said the northern Beyinhar project, with a grade of only 0.7grams per tonne, could be divested,most likely to a domestic group.

Sino shares closed 25 lower at $3.40 on a day when other gold stocks also declined. -- JAMIE FREED

© 2008 The Age

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