Zhongjin Gold Corp said it has sold 1.98 billion yuan (US$277 million) worth of shares to China National Gold Group Corp to acquire parent assets amid expansion.

Zhongjin sold 53.7 million yuan-denominated A shares to state-owned China National at only 36.96 yuan each on Friday in a private share placement, the company said yesterday.

The issue price represents a 64 percent discount of Monday's closing price of 103 yuan.

The shares are subject to a 36-month lock-up period.

China National raised its stake in Zhongjin Gold to 56.42 percent from 48.06 percent after the transaction.

Zhongjin's second-largest shareholder, a fund under Penghua Fund Management Co, had its stake cut to 2.13 percent from 2.54 percent.

Zhongjin, the largest listed gold miner listed on the mainland, said it expected 2007 earnings to jump more than 50 percent on the back of soaring gold prices.

The assets acquired from the parent could raise its outfit and profit margins, the company said.

''The risks associated with gold price fluctuation can be expected to decline, given the company's increasing output and profit margins after the parent asset purchase,'' Zhongjin said.

It made the remarks in a filing to the Shanghai Stock Exchange.

The company will also issue up to 76.3 million A shares to raise as much as two billion yuan.

The two private placements were agreed last April and the issue price was based on the 20-day moving average.

This means institutional investors in the placement have already locked in a huge return as Zhongjin shares have since tripled.

(Shanghai Daily February 20, 2008)