(Yicai Global) Oct. 13 -- Chinese gold miner Zijin Mining Group is paying CNY3.9 billion (USD554 million) for a 30 percent stake in the owner of China’s biggest gold mine.

Zijin will become the second-biggest shareholder in Shandong Ruiyin Mining Industry after the purchase, the Fujian province-based company said yesterday. Zhaojin Mining Industry remains the biggest stakeholder with 63.8 percent equity.

The Haiyu Gold Mine, located in the sea to the north of Sanshan Island, off Laizhou, eastern Shandong province, is the biggest single gold mine to be discovered in China in recent years. It has 562 tons of gold reserves with an average grade of 4.2 grams a ton, according to Zhaojin Mining’s annual report.

Once up and running, the mine will produce as much as 20 tons of gold a year, Longyan, southeastern Fujian province-based Zijin said in its announcement. The acquisition will boost its gold reserves by around 169 tons.

As an ultra deep seabed mine, the Haiyu Gold Mine is difficult to exploit. Ruiyin is investing CNY6 billion (USD834 million) to build a mining and dressing project for the mine that is scheduled to be finished by 2025. So far, it has invested around CNY1.4 billion.

The purchase will be welcome news to Ruiyin, which logged zero revenue last year and losses of CNY68.6 million (USD9.5 million), according to its latest annual report. The Tai’an, Shandong province-based firm had total assets of CNY4.1 billion as of the end of last year.

The news did little to motivate investors. Zijin’s mainland shares [SHA:601899] closed down 1.8 percent at CNY7.84 (USD1.10) today. In Hong Kong, the stock [HKG:2899] sank 2.1 percent to finish the day at HKD7.62 (USD1).

Editor: Kim Taylor