(Yicai Global) May 19 -- Shandong Gold Mining, one of China’s biggest producers of the precious metal, said its controlling shareholder has discovered the country’s largest gold deposit.

A unit of Shandong Gold Group recently found a deposit containing 580 tons of gold in the northwestern region of Shandong province, Shanghai-based Shandong Gold Mining announced late yesterday.

The average grade of gold from the newly discovered deposit at the Xiling mine in Laizhou is 4.26 grams per ton, making the find potentially worth more than CNY200 billion (USD28.4 billion), according to the local Qilu Evening News.

Shandong Gold Group vowed to inject Xiling mine’s prospecting rights into Shandong Gold Mining when the conditions for the transfer are met to avoid direct competition between the parent and its listed subsidiary, the latter noted.

But the discovery failed to boost Shandong Gold Mining’s shares [SHA: 600547], which closed 1.1 percent down at CNY24.58 (USD3.50) apiece today. The stock, however, rose more than 3 percent yesterday as the news of the discovery was leaked to the province’s local media before the official announcement by Shandong Gold Mining in after hours.

Shandong Gold produced 38.7 tons of gold last year, accounting for 13.1 percent of China’s total. The firm expects to produce no less than 39.6 tons this year.

Editor: Futura Costaglione