Speculating on "injection" Candidates for JIN

A takeover candidate referred to me by reader Zhiwen Shen, and referenced in the Tibet huatarDragon Mining Development Chinese-language web site, is the A M mine, known as Jaima in Chinese. This is a Tibetan Chinese copper-moly mine, originally expected to ramp up to full production by the end of 1Q10. It has provided technical support to the Jinshan CSH mine site. A relationship already exists.

Acquisition concepts include something called "injection". An interesting link is to Ivanhoe Mines' massive Oyu Tolgoi copper-gold project in neighbouring Mongolia, where Jinshan has a significant Mongolian acquisition and development partner. As reported (see Toronto Star April 7/10), the Canadian company appears to be preparing for a possible takeover bid. The key share block that secured China Gold's control of Jinshan originally came from Ivanhoe and the proceeds were reported at the time to be importantly used to support Ivanhoe's Oyu Tolgoi development. It will be interesting to see if CNG could be involved in such a takeover bid and attempt to close the Oyu Tolgoi/Jinshan circle.

Further in the strategic background is the Pakistani gold property (referred to in an earlier blog) originally being prepared for development by Canadian giant Barrick Gold with a latin-American partner. In January, Barrick's rights to this property were reported to be reconsidered or suspended. Chinese sources already active in the area were believed to be discussing the matter with the Pakistani state officials involved. The partially-developed property, on which as much as US$200 million may have been spent, could be seen as a fit into CNG's (and therefore Jinshan's) international mandate.

At first glance, these large projects are of greater scale than a company like Jinshan might hope to achieve. But the future China International Gold & Metals (a guess at the upcoming new name) has an impressive board, management team and partners with deep pockets. Until more of the story unfolds, I would not automatically rule out any of the above.

More on JIN

In the wake of the Khandaker list, the market moved up abruptly and may even have been helped by some short covering on today's Easter Monday AM spike. We scaled out modestly starting at $6.20 through to $6.50. At midday writing, it had left a new high of $6.60. We have since replaced the portion sold earlier in the day just over $6.00.

Because there are at least a couple of announcements in the pipeline, coupled with the renewed strength in gold that we expected but finally set up Saturday Apr 3 with the clever 2-step process to defuse the China-US dispute over pricing the yuan, we are not changing our present stategy. The US does not interfere with China policy on Taiwan and Tibet, China helps with Russia and Iran, so by June we will see a new currency policy in place that leaves both sides with face intact.

In our view risk remains to the upside which explains why we are trading around a position, but not changing the position itself at this stage. The stock is now set for very strong support action as announcements arrive on name change, property acquistion, production success and wider stock listing. These are among the early preparations for a pricing level when a secondary offering is made in conjunction with that listing.

Since what I write is merely my analysis, not knowledge, the sequence and timing of events remains unknown. However, the course has been set, the wind is filling the sail and the ship is now moving forward.