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Chinese gold miners have been flocking to offshore capital markets to raise funds, fueled by the precious metal’s bullish outlook as prices soar to record highs.
Chinese state-owned Shandong Gold Group is the latest miner looking to cash in on the rally in gold. It is currently seeking to raise as much as $600 million in loans, after having already issued two bonds totaling $400 million last month, Bloomberg News reported.
Meanwhile, another unit of Shandong Gold, Shanjin International Gold Co., is mulling a potential Hong Kong listing, following the footsteps of Fujian-based Zijin Mining Group Co., which is planning to list its overseas gold business.
The rise in Chinese gold miners’ thirst for capital is correlated to the surge in the precious metal’s price, which has soared to successive record highs this year. Despite some retreat in recent months, demand for the bullion continues to be supported by safe-haven demand amid an escalating conflict in the Middle East, ongoing trade tensions and central bank buying.
Coincidentally, Shandong Gold Group’s funding frenzy mirrors a spate of similar transactions globally. In May, London-based gold producer Endeavour Mining Plc priced a $500 million bond, while Johannesburg-headquartered Gold Fields Ltd. issued $750 million fixed-rated notes.
The group’s Hong Kong subsidiary, Shandong Gold Mining (Hong Kong) Co., is in the market for a $200 million syndicated loan. It is also close to wrapping up a separate shorter-term facility, the size of which could be increased to $400 million from an initial $300 million, according to people familiar with the matter.
With its latest fundraising exercise, Shandong Gold seeks to enhance its debt structure and extend the maturity of its existing borrowings, the people said, who asked not to be identified discussing private matters. Proceeds from the latest loans will be used to refinance the group’s short-term facilities, which were raised to support its overseas expansions and for general corporate purposes, they added.
Shandong Gold Mining and its parent, Shandong Gold Group, didn’t immediately respond to emails seeking comment.
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