Zhongjin Gold Co Ltd, China's flagship gold miner, became the first listed company in the nation's gold industry after it launched an initial public offering (IPO) yesterday in Shanghai.

The company yesterday issued 100 million shares at a price of 4.05 yuan (US$0.49) per share on the Shanghai Stock Exchange.

The IPO earned 388 million yuan (US$46.7 million) in proceeds for the company, excluding issuance expenses.

China Galaxy Securities Co Ltd was lead underwriter of the IPO.

The company, based in North China's Tianjin Municipality, had total assets of 742 million yuan (US$89.4 million) by March.

Zhongjin reported a net profit of 9.88 million yuan (US$1.19 million) during the first quarter of this year.

The move represents the first substantial step towards the market-driven reform of China's State-controlled and fragmented gold industry.

"The move is part of our efforts to build Zhongjin into a top brand in China's gold industry,'' said Song Xin, company chairman.

Zhongjin will produce more than 20 tons of gold this year, accounting for 10 per cent of China's total gold output, Song said.

China's gold output reached 88.1 tons during the first half of this year, official statistics showed.

"Listings are badly needed for Chinese gold mining firms, as a new fund-raising channel in the deregulation of the domestic gold market and to improve their outmoded internal operation,'' said Liu Shan'en, an analyst with the Beijing Gold Economics Research Centre.

Four other major gold mining firms in East China's Shandong and Fujian provinces are also seeking domestic listings, according to industry sources.

China started to deregulating its gold market at the end of last year when it opened a national gold exchange in Shanghai.

Zhongjin is one of the 108 trading members limited to spot gold transactions in the gold exchange.

Chinese gold mining firms had to sell all of their products to the People's Bank of China, the central bank, in the past under the government's tight control.

Prices on the gold exchange, the benchmark on the domestic gold market, are fluctuating with changes on world markets.

Zhongjin officials said the company will acquire and merge with a host of smaller domestic gold mining firms to grow rapidly after its listing.

The company plans to nearly triple its total assets to 2 billion yuan (US$240 million).

At present, there are around 1,200-odd gold mining firms in China.

Under a five-year industry plan, the government hopes to form 12 internationally competitive gold conglomerates by 2005.

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