Sino Looks For Other Opportunities In China

Sydney Morning Herald

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's chief executive, Jake Klein, observed yesterday that the market value of all Western gold explorers in China had fallen to $US250 million ($375 million), compared to $US1.2 billion in March.

"That does present opportunities for an organisation like ours," he said. "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 the month of September.

The company has nearly completed construction at its $US62.5 million White Mountain mine in north-east China and has begun a pre-feasibility 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 a Goldman Sachs JBWere analyst, Ian Preston.

As for Eastern Dragon, Mr Klein described the project as "a sizzler" and said construction should begin by early 2010.

But Mr Klein was less optimistic about the Beyinhar project, also in northern China. He said Beyinhar, which has a grade of only 0.7 grams per tonne, could be divested, probably to a domestic Chinese group.

He said it would not make a huge contribution to a company the size of Sino and there were sizeable risks involved.

Sino shares closed 25c lower at $3.40 yesterday, a fall in line with other gold stocks.

© 2008 Sydney Morning Herald

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