Companies: GGG   

Prospecting company Central China Goldfields intends to accelerate growth by buying producing Chinese mines.

Jeffrey Malaihollo, managing director of AIM-quoted Central China, says the company hopes to devote 2006 to confirming combined deposits of more than one-to-two million oz in the Chinese provinces of Sichuan and Hubei. But, with £1.4 million cash remaining from last March's £2 million funding and a potential £2.5 million coming soon from 8p warrants – if the share price moves – directors have decided to trawl among the local mining sector for attractive acquisitions, generating cash from current production.

Malaihollo and chairman Nigel Clark, former business development manager at mining giant Billiton, have the assistance of joint venture liaison manager Richard Shao, previously head of mineral processing at China University of Mining & Technology, in scouting the local terrain. This is currently characterised by a host of small-scale operators, though big quoted players, such as the Ziyin and Zhaoyuan groups, are already looking to expand outside China.

Malaihollo, head of research at small company investment group Loeb Aron, says Central China would even contemplate floating minority stakes in the companies it hopes to acquire on the Hong Kong market. The recent float there of Lingbao, China's second largest gold producer, was 1,200 times oversubscribed.

At present, Central China can earn 75 per cent of Snow Mountain in Sichuan, with an inferred 950,000 oz resource, by spending £4 million over six years, and argues there are several other tempting prospects in the same area. The company hopes to double a potential 200,000 oz gold resource at Baima in the same province and can also earn 70 per cent in Xiang Shui Tan in Hubei, with a possible 200,000 oz of high-grade gold and four million oz of silver, by spending £600,000 over three years.

Floated last March, Central China shares have been volatile, falling from 8p to 4.13p by June and recovering to 7.88p today, where they value the company at £4.1 million. The appeal is speculative.

Central China Goldfields	AIM	£2.91m	2.00p	-0.12p
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Other company articles:
Cost hope at Central China			14/10/2008
Drill progress at Central China			19/06/2008
In the Hot Seat			03/03/2008
Robert Tyerman’s Exploration Insights			07/02/2006
Central China on bid path			13/01/2006