(Yicai Global) June 19 -- Shandong Gold Mining, China’s biggest producer of the precious metal, plans to buy Cardinal Resources, which owns gold mine resources in Ghana, for AUD321 million (USD221 million). Shares of the Australian company soared.

Shandong Gold has agreed to pay AUD0.60 (40 US cents) a share to acquire all of Cardinal’s outstanding equity for AUD309 million, the Jinan-based company said in a filing to the Shanghai Stock Exchange. It will also buy 26 million new shares of Cardinal at AUD0.46 each for a total of AUD12 million (USD8.25 million).

The board of Perth-based Cardinal is urging shareholders to accept the offer, which will require regulatory approval.

Cardinal owns the Namdini and Bolgatanga projects in northeastern Ghana and three gold mines in Subranum in the West African nation’s southwest. The Namdini project is expected to finish and go into production in 2023 when it will produce an average of 280,000 ounces of gold per year. The other two pits are still in the prospecting phase.

Cardinal’s stock price [ASX: CDV] surged 28 percent today to close at AUD0.60 (41 US cents), while shares of Shandong Gold [SHA: 600547] rose 0.6 percent to CNY35.29 (USD4.99) apiece.

Shandong Gold will acquire its first Ghana gold mining project through the deal, and this will help cement its position as a global producer. Further prospecting may find even more reserves in the target assets, the firm said.

The Chinese miner will acquire over 50 percent of Cardinal to gain control as a stepping-stone in its bid to achieve full ownership, it added.

Editor: Ben Armour