Plans to raise £30m through gold shares
Sep 29 2007 by Chris Knox, The Journal
THE gold mining company launched by North-East entrepreneur Karl Watkin hopes to raise £30m by placing more than 25 million of its shares on the stock market.
Aim-listed China Goldmines plans to use the money to develop the eight mines it acquired last month in the Guanzhuang area of China and will create 1,000 jobs.
Mr Watkin said the business, registered at a Newcastle address, will be using a significant proportion of the money to ensure the mines comply with European health and safety regulations.
Shares are priced at 120p and, following the approval of exiting shareholders, will begin trading on October 23. They follow the placing of 900,000 shares in the business in August to help fund the purchase of the mines as part of the Guanzhuang Gold Project, which the company says will increase its gold production from the current 25,000 to 150,000 ounces a year.
Mr Watkin said: “This is a massive investment for us and will create a significant number of jobs. It will also help improve conditions within our new mines and ensure that the business achieves significant growth as a result.
“The gold price is at an all time high at $731 per ounce and we want to capitalise on this as soon as we can.”
In July, China Goldmines said it was on target to find up to 10 times more gold in China than it had anticipated. According to Mr Watkin’s estimation, the gold in the ground in China is worth between £30 and £50 an ounce, meaning the eventual haul from the company’s 10 mines could be worth anything up to £520m.
The company, which is registered at Sandgate House on Newcastle’s Quayside, listed on Aim in February 2006 as a gold resource company. Its main focus is the development of gold projects in the Hunan province in China.
Mr Watkin has a number of other business interests including Middlesbrough-based bio-diesel firm D1 Oils, which he co-founded in 2000, and is currently backing Viridion, a company based near Newcastle Airport that markets artificial grass products to home owners.
D1 Oils has recently signed an agreement with scientists at Dutch firm Keygene NV to research the molecular genetics of the Jatropha Curcas oilseed tree. The tree grows in tropical regions and produces inedible vegetable oil that can be refined into high quality bio-diesel, as it is in Middlesbrough.
However, Mr Watkin’s plans to increase D1 Oil’s involvement with the bio-diesel industry have run into difficulties due to the double subsidy placed on the import of the fuel.
The entrepreneur recently visited the US to attend the Clinton Global Initiative event, where he called for the removal of the double subsidy and for global governments to work closer together to help develop the bio-diesel marketplace.
