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Chinese Company in Talks to Buy One of Indonesia's Largest Gold Mines

1 Jun 2018 8:22 am
By Julie Steinberg and P.R. Venkat 

A Chinese mining-exploration company is in advanced discussions to acquire an Indonesian gold and silver mine for around $1.5 billion, according to people familiar with the matter.

Pengxin International Mining Co.'s deal for the Martabe gold mine, one of Indonesia's largest, hasn't been finalized, but a $1.5 billion price tag would represent a doubling in its value from two years ago.

Shares of Pengxin, which is listed in Shanghai, have been suspended from trading since mid-April pending a "major asset restructuring," according to a regulatory filing. The Shanghai-based company disclosed on May 22 plans to take over a company that owns the Indonesian mine, without providing financial details.

Pengxin is a subsidiary of Shanghai Pengxin Group, a closely held Chinese conglomerate that has businesses spanning mining, real-estate development, agriculture and high-tech investment.

The Martabe mine is in western Sumatra and has an area of about 600 square miles. It was last acquired in March 2016 for $775 million by a consortium of investors including Australian private-equity firm EMR Capital, Farallon Capital and three Indonesian tycoons. The mine's previous owner was G-Resources Group Ltd., a Hong Kong-listed resources company that bought it for $220 million during the global financial crisis.

A press release about the deal in 2016 said the mine had gold reserves of 7.4 million ounces and 69 million ounces of silver reserves. It also said it had an annual production capacity of 250,000 ounces of gold and 2 million to 3 million ounces of silver.

A spokeswoman for Martabe said it has been approached by some companies and that it is open to having talks with buyers. A spokeswoman for EMR Capital declined to comment.

Gold prices have tumbled in recent weeks and in mid-May fell below $1,300 a troy ounce for the first time since December. Prices of the safe-haven asset have been affected by the stronger dollar and rising bond yields.

Stella Yifan Xie and I-Made Sentana contributed to this article.

Write to Julie Steinberg at julie.steinberg@wsj.com and P.R. Venkat at venkat.pr@wsj.com
 

(END) Dow Jones Newswires

June 01, 2018 04:22 ET (08:22 GMT)

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