(Yicai Global) Nov. 7 -- China’s largest gold producer Zijin Mining Group plans to buy a 20 percent stake in its peer Zhaojin Mining Industry for about HKD4.4 billion (USD560 million). The news boosted the pair’s stocks.

Zijin Mining will acquire 654 million shares in Zhaojin Mining for HKD6.72 (86 US cents) apiece and become its second largest shareholder, the Longyan, Fujian province-based company announced yesterday.

Zhaojin Mining owned 23 gold mines, two copper mines, three smelters in China, and some gold mining interests in Ecuador and Canada as of the end of June. In the first half of the year, it achieved a net profit of CNY107.8 million (USD14.99 million) and revenue of CNY3.5 billion (USD487 million).

The deal can help the two companies to achieve synergy and improve operational quality and management efficiency, Zijin Mining noted.

Zijin Mining [HK: 2899] closed up 10.3 percent at HKD8.92 today. Its Shanghai-listed shares [SHA: 601899] closed 8.7 percent up at CNY9.09 (USD1.26). Zhaojin Mining’s stock [HK: 1818] surged 9.7 percent to HKD7.50.

Shandong Zhaojin Group, under the Zhaoyuan municipal government, will remain the largest shareholder of Zhaojin Mining with a 37.2 percent stake after the transaction. Shanghai Yuyuan Tourist Mart, controlled by renowned businessman Guo Guangchang, will cut its shareholding ratio to 1.3 percent.

Editor: Futura Costaglione