(Yicai Global) Dec. 16 -- Chifeng Jilong Gold Mining will invest USD108.9 million in cash to buy a gold mine in Ghana to rapidly boost its reserves of high-quality auriferous minerals and expand its international business, it announced today.

Jilong Gold Mining’s wholly-owned Chijin International Hong Kong unit will take 100 percent of equity in Mensin Bibiani in southwestern Ghana from Australia’s Resolute Mining, Jilong said in a statement yesterday, adding the parties penned a share transfer agreement yesterday.

Shares [SHA:600988] of the company based in China's northern Inner Mongolia Autonomous Region traded 1.05 percent up at CNY17.38 (USD2.65) in midafternoon.

The USD108.9 million price includes the transactional costs of the target company’s various debts and pending litigation, per the statement.

The target Mensin Bibiani consists of three wholly owned subsidiaries, Mensin Gold Bibiani, Noble Mining Ghana and Drilling and Mining Services, of which Mensin Gold Bibiani holds the exploration and mining license for the Bibiani Gold Mine, which lies in the middle of Ghana's famed Sefwi-Bibiani gold-bearing belt and has a production history of over 100 years, with a seller-prepared feasibility study that projects production of 3 tons of gold per year upon its resumption.

Offline Mine

An authoritative reserve report estimates the mine still has 21.7 million tons of mineral resources grading 3.59 grams per ton gold, according to the statement.

The mine ceased production in May 2013 after a significant drop in gold prices then and has been idle for maintenance ever since, the statement added. Bibiani is a mature mine with well-developed infrastructure, including underground mine construction as well as a processing plant, and the cost of resuming mineral production is expected to be manageable, per the statement.

After the completion of this transaction, Jilong Gold Mining will enter West Africa, an internationally important gold-producing region, and own a gold mine in Africa's largest gold-producing country, the statement said.

The deal is subject to the approval of authorities in China, Australia and Ghana, the statement added.

Editor: Ben Armour, Xiao Yi