China National Gold Group Corp, owner of the nation's third-biggest gold mining company, is seeking an initial public offering in its base-metals unit to fund expansion.

The share sale could be in Hong Kong or on the mainland, General Manager Sun Zhaoxue told reporters in Beijing last Friday. He didn't say when a share sale may take place.

China's economy has grown at an average 10 percent annual pace over the past five years, spurring demand for metals used to make cars, buildings and appliances. China National Gold is also seeking overseas acquisitions, Sun said.

"The company will increase production of copper, lead, zinc and molybdenum, along with gold," Sun said.

The firm has gold reserves of 1,046 metric tons, 817 tons of silver, 3.8 million tons of copper, 598,000 tons of molybdenum, and 850,000 tons of lead and zinc, Sun said.

China National Gold and partner Jinchuan Group Ltd in July won a tender to develop the country's largest gold project. The Yangshan mine, in Gansu Province, has estimated reserves of 308 tons, more than twice as much as Zijinshan mine, the largest producing-bullion project in the country, according to Bloomberg News.

China National Gold will inject the Yangshan project into its Zhongjin Gold Corp unit when the "time is right," Sun said. The firm expects to complete a feasibility study on the mine by the end of the year, and take three years to build the project, he said.

China's demand for gold gained 23 percent in 2007, as rising incomes spurred jewelry buying, making the nation the second-largest consumer. Bullion soared to a record in March, increasing competition for mines in China.

Chinese gold mining companies produced 129.1 tons of bullion in the first six months of the year, up 5.6 percent, Zhang Bingnan, vice chairman of China Gold Association, said.

(Shanghai Daily August 4, 2008)