Tip by Tom Winnifrith on investment website T1PS.com on 07.10.04 :
"In the mining world, Caledon Resources raced ahead by 0.75p to 5.125p after website t1ps.com upgraded its stance from "hold" to "strong speculative buy." Last time this website tipped Caledon the shares more than trebled in three months before members were advised to sell half their holdings so guaranteeing a three figure return. The website argues that the risk/reward trade-off now looks more attractive than ever and suggests that corporate activity within the subsector (Chinese gold explorers) is about to explode"
http://www.caledonresources.com//
Trades over 300,000 Shares are delayed in reporting by 1 Hour.


On fundamentals ALL exploration companies without resources can be said to be overpriced. The only assets they have which can have a hard-and-fast value assigned to them are their bank balances.
People invest in explorers because they believe that the projects/management/geo team have the potential to develop valuable mineral deposits. The share price usually reflects the market's opinion about this potential.
In the fulness of time, if Caledon discover deposits which can be proved up to contain a couple of million ounces, those that bought at 5p or even 15p will be seen to have been correct (or fortunate!) in their assessment of risk/reward.
Some details below from the recent WHI broker note on Palladex, I am not suggesting for a moment that anyone go buy Palladex this is just for comparative data where you will see the value of a company compared to it's in-situ gold.
Point is where will CDN be once they show one project is as big as they and we hope by giving an estimate by end of 2004 ?

Caledon Overview:
Caledon Resources PLC is a public company listed on the Alternative Investment Market of The London Stock Exchange (trading symbol: "CDN"). Its mission is to become the leading gold exploration company in “The Golden Triangle” of Southern China

Caledon has assembled a multi-talented, technically oriented management team - one of few with in-depth knowledge and experience in China. All members have over 15 years experience in evaluating hundreds of East Asian sediment hosted disseminated gold deposits
Advanced stage gold exploration focussed on under-explored producing gold mines in China - Exploration active on four advanced stage gold projects: Hengxian, Gaolong, Badu and Mojiang
Caledon’s primary focus: Sediment Hosted, Disseminated Gold Deposits (“Carlin-type”). Quoted from the United States Geological Survey (USGS Open-File Report 02–131): “It is likely that many of the Carlin-type Au ore districts in China, when fully developed, could have resource potential comparable to the multi-1,000-tonne Au resource in northernNevada.”

Corporate Summary
Caledon Resources PLC is a public company listed on the Alternative Investment Market of The London Stock Exchange (trading symbol: "CDN") and has been domiciled in the UK since February 2003. The Company’s primary focus is to enhance shareholder value through the opportunistic evaluation of fertile under-explored gold districts, resulting in the exploration, discovery and development of world-class gold ore bodies. The Company is currently focused on project evaluations and exploration for sediment hosted disseminated (“Carlin-type”) gold deposits situated in Southern China, although other styles of mineralisation are being assessed if they have multi-million ounce potential.

Caledon’s principal area of focus is Guangxi Province where it has negotiated joint ventures with The Geological Survey of Guangxi and is in the process of forming additional joint ventures with the Chinese National Gold Corporation.

Caledon has signed a joint venture agreement covering the Longtoushan Gold mine and 350 sq km’s of surrounding tenements in Guangxi Province as well as joint venture agreement covering various exploration areas under the control of The Geological Survey of Guangxi.

In addition, advanced exploration property acquisitions and joint ventures are being evaluated in Guangxi with The Chinese National Guangxi Gold Corporation and other joint ventures are under negotiation in Yunnan and Guizhou Provinces.

In order to exploit this opportunity, Caledon has assembled a team of geologists whose main focus over the past 15 years has been to identify and evaluate gold occurrences and deposits throughout South East Asia on behalf of several major mining companies.

Of the 300 plus gold occurrences and districts identified and screened over the years by Caledon’s team, five distinct gold districts have emerged as top-priority ranked targets, based on their geological similarities with the multi-million ounce gold districts found in the State of Nevada, U.S.A (“Carlin-districts”). The USGS has identified the so called “Golden Triangle”, consisting of the provinces in which the Company is focused (Guangxi, Guizhou and Yunna), as having similar style mineralisation to the Carlin deposits in Nevada.

To date, five highly ranked areas in Guangxi Province have been identified by Caledon’s team. Applications for mineral titles have been submitted on all five districts and joint ventures are being negotiated where applicable.

Recognising the need for foreign mining investment, in parallel with China’s entry into the World Trade Organisation, the country has adopted a number of sweeping changes that have recently been enacted in their mining legislation. In the country’s bid to attract foreign investment and mend the fractured structure of their mining industry, the Chinese government, through powers delegated to the provinces, allows foreign ownership of up to 90% in mineral titles and producing gold assets. In addition, various tax incentives exist to help foreign gold explorers and producers.

Perhaps the most relevant change recently enacted in China, involves the evolution towards complete transparency within the Chinese gold markets. Companies can now buy and sell gold on the Shanghai Gold Exchange, which quotes gold prices in line with the London Gold Fix rates. Additional mechanisms are currently in place to allow for repatriation of profits from Chinese-based, foreign-operated gold mining operations. Further enhancements are expected within the year.

The group now has all of the key primary ingredients in place in order to position the group for maximum returns.

Those key ingredients are:

highly experienced, South East Asia based technical management with proven exploration abilities,
acquisition / title lock on a number of properties hosting potential multi-million ounce disseminated gold deposits, and
an appropriate amount of financing in place allowing the group to conduct a meaningful first-pass exploration program within these districts.
Given the sweeping changes that China’s mining law has recently undergone, Caledon is well positioned to maximise gold exploration opportunities that exist in the country.

It is likely that many of the Carlin-type Au ore districts in China, when fully developed, could have resource potential comparable to the multi-1,000-tonne Au resource in northern Nevada.”

These are not my words, but the words of the US Geographical Survey or the (USGS). To read there full report on Carlin Deposits you need to go to the link -
http://geopubs.wr.usgs.gov/open-file/of02-131/OF02-131.pdf

The Projects
Hengxian Gold Mine - The Hengxian project is a classic example of a sediment
hosted disseminated gold system ("Carlin-type"), with considerable exploration
potential. At Hengxian, gold is being mined in a north-east trending zone
measuring up to 3 kilometres long and up to 800 metres wide. Gold occurs in
steeply dipping, high grade feeder structures (> 4.5 g/t gold avg.), feeding
flat-lying moderate grade (1-4 g/t avg.) stratiform zones. To date, at least
four sub parallel feeder structures have been defined. The gold mineralisation
occurs on a major regional structure that can be traced for more than ten
kilometres away from the existing workings. Access and infrastructure in the
area is excellent - Hengxian is a two hours drive from Caledon's office base
situated in the Guangxi Provincial capital, Nanning.

Previous exploration has been almost entirely focused on shallow oxide zones.
Gold resources at Hengxian are reported to be 310,000 ounces (Inferred category)
grading approximately 4.6 g/t gold - with those resources having been defined by
only a limited amount of shallow focused drilling, concentrated on the surface
oxide zones (0-60 m depth). Exploration to date has only been focused on a small
- 2.5 kilometre long - portion of the entire 10 kilometre long structure,
initiated on obvious outcropping oxidised sulphides.

Summary results from drilling conducted on Hengxian Hill by Caledon's minority
partners, Taifu Mining, defining the near surface limits of the deposit, include
the following:

Section Hole Number Depth (m) Intercept (m) Grade g/t Au
44 ZK 14 13 50.6 2.02
435 ZK 4351 25 10.1 8.0
ZK 4351 49 14.5 5.03
43 ZK 432 45 41.4 6.44
ZK 5 49 31.0 8.8
ZK 19 102 27.0 4.0
425 ZK 251 50 42.5 3.91
ZK 4255 103 29.1 6.93
ZK 4252 72 12.8 6.16
ZK 4252 90 18.6 4.02
415 ZK 152 42 20.7 3.0
ZK153 65 13.9 4.68
41 ZK 16 10 11.1 3.79
ZK 411 33 24.6 4.0

Intervals between known areas of higher grade mineralisation carry significant
disseminated gold mineralisation, typical of such gold deposits. For example,
drill hole ZK19 reported a 27 metre wide interval grading 4.0 g/t gold,
occurring within a much wider down-hole interval reporting a width of 133 metres
grading 3.24 g/t Au.

Gaolong Gold Mine - Gold has been actively mined at Gaolong by Caledon's
minority partners, Guangxi Tianlin Gaolong Gold Mine Ltd Co for over 10 years.
At Gaolong, surface and limited underground mining can be traced in a
semi-continuous manner over a strike length in excess of three kilometres, with
mining widths averaging 10 to 30 m, to a maximum of 60 m wide.

The Gaolong mine itself is ranked in the top two gold producers in the province
and has been cited by the United States Geological Survey (USGS) as having
distinct similarities to the 15+ million ounce Betze ore body situated in
Northern Nevada, USA (USGS OP 02-131).
Results from past drilling performed at shallow depths immediately adjacent to
zones being mined by the Chinese at Gaolong, are a testament to the bulk minable
nature of the Gaolong ore bodies themselves (i.e. Section #30 - 4.1 g/t over
10.8 m, 3.2 g/t over 33.4 m, 4.7 g/t / 31.3 m). The immediate extensions of
these open-ended zones will form the focus of gold exploration to be undertaken
in 2004.
In the 4th Quarter, 2003, Caledon reported results from a preliminary channel
sampling program at Gaolong, as part of the effort to identify drill targets on
the project. The following is a summary of results from this initiative:

Channel # Sampled Width Gold Grade
Channel 1 44 meters 2.5 g/t
Channel 2 10 meters 3.9 g/t
Channel 3 14 meters 2.4 g/t
Channel 4 28 meters 2.7 g/t
Channel 5 22 meters 2.3 g/t
Channel 6 12 meters 3.3 g/t

Badu Gold Mine - Small scale mining is in progress at the Badu Mine, situated 12
kilometres North East of the Gaolong mine. The Badu mining and exploration
tenements are included within the Gaolong master agreement. The GTGGML's
open-pit mining operations at Badu can be traced in a semi-continuous manner for
over four kilometres along strike, with mining widths averaging 20 to 40 m. Gold
is recovered in the heap leaching of oxide ores, with average head grades of 1
to 2 g/t gold. Caledon is aware of only 1-2 shallow drill holes having being
completed over the entire four kilometre strike length.

Mojiang Gold Mine - A letter of intent has been signed regarding Mojiang Gold
mine. Active mining has been underway at Mojiang since the late 1970s by the
Mojiang Mining Limited Company. The mining at Mojiang was based on reserves of
32 tonnes of gold (>900,000 oz) at a grade of 4-6 g/t Au. At present, the
majority of the gold mining operation is focused on gold production from open
pits and underground mining, with plant head grades consistently reporting above
4 g/t gold. To date, approximately 70% of the initial reserves have been mined.
At Mojiang, individual veins, averaging up to 12 metres wide, have been shown to
host grades in excess of 15 g/t. Individual veins sometimes exhibit bonanza
grades (in-excess of 30 g/t gold), typical of such systems. The veins are hosted
in sediments and acid volcanics, near the contact between thrusted Cambrian
sediments and metamorphosed ultra-mafic volcanics belonging to a regional scale
ophiolite complex, within the Red River Suture Zone.
Examples of diamond drill intercepts at Mojiang highlighted from the earlier
Chinese work include:

Section # Drill Hole Mineralised Intercept
Section 50 DDHZ50-6 41.62m @ 3.34 g/t
Section 51 DDHZ51-16 28.22m @ 4.89g/t
Section 52 DDHZ52-10 53.98m @ 2.72g/t
Section 40 DDHZ93-1 7.93m @ 13.67g/t
Section 40 DDHZ93-1A 8.39m @ 9.00g/t
Section 40 DDHZ94-3 12.35m @ 15.05g/t

Contact Information
London Office
18 Upper Brook Street
London W1K 7PU
United Kingdom
Tel: + 44 20 7318 5780
Fax: + 44 20 7318 5781
Stephen Dattels - Chairman
sdattels@caledonresources.com

Donal Douglas - Deputy Chairman
ddouglas@caledonresources.com
George Salamis - Managing Director
gsalamis@caledonresources.com
Manish Kotecha - Company Secretary
mkotecha@caledonresources.com

Some talk that CDN and JV/Merger news maybe out soon ....according to UKAnalyst web site.

Looking again at our graph for the last 6 months and you may well see a significant reason behind the madness that co-incides precisely with our fall.........Up till December 2003 we were flying high - our decline began in January - a slow and steady fall. Now something else happened in January, a holder of "seed stock" started to sell and sell and sell (circa 10m) - to their dis-credit - CDN did not pursue this seller - even though it is likely that the 3% rule was breached. To make matters worse - Watson island took up the "selling" mantle - the rest (so far!) is history. It is also important to note that the first seller dumped their stock even before our horse had left the starting block - so stories of them hearing "rumours" as to CDN's prospects are highly inflated indeed! No, to me, these people pledged to keep hold of their holdings to CDN - and for whatever reason, they broke this pledge - and whilst they banked their profits - we lost!!! THEY are the only true "insiders" here and whilst it is infuriating, it does not touch nor derail the potential of CDN to find and exploit large gold deposits in China!!!

Now, thats were my research has led me and I will repeat that I do expect a marked upturn in our fortunes once Watson Island are out (and that is getting nearer by the day!). To me 2 out of 3 on a first sweep (with more to come) is worth a punt (well worth it!). I always try to add some substance to my posts and I hope that at least this explains my logic (18m of seed stock sells - WILL affect a share price!).

The guardian reported the shares were held back despite an upbeat drilling report. It was suggested that this was due to 4m shares being sold by a founder shareholder and that the price was expected to rise once a home had been found for them.It was further suggested that the directors would buy 2m of these......

Good news if there is any substance to this...directors buying no less!

Further to that the reason they have been dumping is simply because it was a sub 1p holding, they are building a huge development and need the money for funding, there was also reports of a distressed seller that got burnt on the commodity markets.

Also loughtoushan turned out to be not commercially viable but that still gives CDN 4 others that are/could be.

Guardian reported 13th May that the drilling report on 11 May 2004 failed to lift the price due to 4m shares being put up for sale by a founding holder.It continued that the price was expected to rise once a home had been found for the shares and suggested that the directors would purchase 2m from the seller.

Good news if the directors are putting their money where there mouth is.....

Summary

Longtoushan disappointing - but at least a sensible decision. They've listened to Dr Drill and will go no further.

Hengxian looks encouraging - good intersections and reasonable grades.

Gaolong trenching results are also encouraging - but again, it's only the drill that can tell.

Remember that most exploration projects prove uneconomic or fail in some other way. Salamis reckons he will get at least one hit out of the current 5, with one project to BFS by the end of 2005. Any more than one would be a bonus, IMO.

UK-Analyst on 13 May 2004 !!!!

As we predicted here a couple of days ago, Chinese gold explorer Caledon admitted that its Longtoushan prospect was a non-runner but served up some very promising - albeit delayed - drill results from Hengxian and insisted that it could be commercial. Incidentally we stand by our story on 48 hours ago that Caledon is also in early stage discussions about a possible merger with another Chinese explorer but the company has not 'fessed up to that yet. The shares added 0.5p to 5.5p

Also 'The Times' website on 13 May 2004:

"Caledon Resources, the AIM- listed gold vehicle focused on China, bounced p to 5p on a drilling update. Dealers also suggest that Watson Island Development, which recently offloaded eight million shares, is nearing the end of its selling."

http://business.timesonline.co.uk/article/0,,8211-1108020,00.html

CDN still undervalued at 11.74m !

11,740,000 divided by Gold at 225 per oz equals a NAV of only 52,177 oz !!!!

Yet we are close to proving many Miilions of ounces !

Press Mention : Daily Mail Newspaper on 12 May 2004

Caledon Resources was also in demand, up 0 1/2p at 5 1/2p after an upbeat drilling report, saying results from drilling and surface results from three of its active gold projects are consistent with its forecasts.

http://www.thisismoney.com/20040512/nm78140.html

11 May 2004.

LONDON (AFX) - Caledon Resources PLC said drilling and surface sampling results from its gold projects in the Guangxi Province, Southern China, are consistent with its previous forecasts.

"Despite the numerous delays encountered, sample preparation and shipping set-backs, the poor drilling conditions and access problems encountered on some areas of our projects, we are satisfied with this initial round of results," said managing director George Salamis.

"In most cases, they meet or exceed our expectations as first pass exploration results," he added.

The company plans to begin an aggressive Phase-2 follow-up drill program at its Hengxian project after encouraging drill assays.

While, initial sampling results at the company's Gaolong gold project joint venture, situated in North-western Guangxi Province, have been "highly encouraging" and Caledon is planning to accelerate the start of drilling at the project.

writes legendary bear raider Evil Knievil ....

I remain long of gold stocks. Historically gold has tracked oil and if the cause of oil spiking is political chaos I expect a flight to the safety of my beloved precious metal. Moreover if the idiots Bush, Blair and whichever crook runs Europe these days (they are all crooks, just the faces change) insist on printing more and more of their paper currencies it seems pretty obvious that their value will go down. That is basic economics for you. Gold is not being mined in ever larger quantities - indeed the reverse is true - and thus it remains a cracking hedge against inflation. I don't care whether gold goes to 350 dollars next or 390 dollars. Mark my words: in due course it will be heading back towards 500 dollars an ounce as the chaos unfolds. At that stage my portfolio of gold shares will soar.

The story so far ....
----------------------------------------------------------------------------
CDN listed ....
April 23, 2003
Caledon Resources, An Explorer For Gold In China, Listed On AIM Over Easter.

A fair bit of attention has focussed on exploration companies operating in China of late. Australia has Sino Gold, Canada Southwestern Resources and London Griffin Mining. All have their individual stories, but it is no exaggeration to say that two years ago the general concensus among investors would have been that they were mad to even consider the country. Griffin certainly found the going very hard with its Caijiaying project which was based on zinc at the time. Since then gold has taken over from zinc as the target and China should be on every investors’ radar screen. After all it is one of the biggest economies in the world and last year it attracted more foreign direct investment than the US.

Now a company called Caledon Resources has appeared on the scene It listed on AIM just before Easter and attracted little attention as it involved a reverse of a company called Blackwatch into a bombed out IT company with a listing called Finelot which attempted to sell fine art on the internet. Around 1.25 million was raised by brokers Williams de Broe via an open offer at 1p per share and the shares are now trading at 3.38p which gives a market capitalisation just north of 6 million. As usual with small companies on AIM the market makers are making little attempt to live up to their title with a spread of around 20 per cent with the shares bid at 3p an offered at 3.75p. One of the biggest shareholders is Dragon Capital run by the Welsh wizard Tony Williams and it was he who brought in as chairman Stephen Dattels.

Dattels built up quite a reputation for the role he played in equity and debt financings while an executive director of Barrick in the 80s. Since then he has been involved in a number of successful deals including the sale of International Gold Resources to Ashanti and is well known in mining finance circles in Canada. Another of the founding directors is Paul Ingram, a geologist who was previously managing director of Australian listed Menzies Gold and has a lot of experience exploring for gold in the Far East. A third director is geologist George Salamis who is on the board of Canadian listed Apac Minerals which recently signed a joint venture with two local companies on the Nibao gold project near the border between Quizhou and Yunnan in South China.

It was Bruce Harris, another geologist with twenty years of experience in gold exploration in the Far East who progressed, via Blackwatch, Caledon’s portfolio of Chinese projects to the present stage where a number of Memoranda of Understanding have been signed, approvals are pending and further negotiations are in progress. Bruce is fluent in several Asian languages which is a vital skill for any company trying to make its way in the Far East, and the other directors of Caledon bring data on several hundred prospects in China which have been identified over a 15 year period under the sponsorship of Cameco, Placer Dome, Barrick and others. The initial focus is on Carlin-type disseminated gold deposits on the China/Guangxi – Yougiang Rift zone which is not too far from Apac’s joint venture.

There are a number of reasons why China should now be a target for exploration companies. For a start it is the 4th biggest producer of gold, but most of its mines are small with average production of 16,000 ounces/year. This results from the constraints of local management rather than the size of the deposits and there are a lot of artisan miners scratching a living from alluvial gold and surface oxides. The government has now recognised that there is a need for foreign investment if the gold mining industry is to advance and precedents have been set for foreign ownership of Chinese gold projects with Sino Gold and Southwestern Resources following approvals of business, exploration and mining licences. Tax and VAT incentives have also been put in place and the transfer of power to the provinces has reduced bureaucracy.

Caledon is now going through the process of obtaining title to a number of projects and a flow of news will develop from the company as these progress. At the moment the company is not willing to identify them for fear that someone else might step in. The five areas covered by its MOUs all have potential to be multi million ounce deposits and once the approvals are given all will be revealed. They range from an existing mine being operated by the local geological entity where there are indications from artisanal mining that the mineralised zone extends 7 kms west and 3 kms east of the mine area to a historic mining area with 10 km long pyritic gold bearing sandstone/shale which may be 100 metres thick. It makes the mouth water, but investors should try not to get too far ahead of the game.
-------------------------------------------------------------------------------
Then ....

June 23, 2003
That Was The Week That Was…. In London , Australia and Canada

London was reasonably lively last week and the stream of juniors seeking listings on the AIM market continues unabated. Gold Mines of Algeria and Caledon listed in recent weeks and African Eagle and Cambrian Mining are expecting to gain promotion from Ofex To AIM before everyone disappears on summer holidays. Nothing much was heard from GMA when it listed and Caledon was fairly silent, but its shares have risen from 1p to 4.5p as confirmation of the allure that projects in China hold for investors.
----------------------------------------------------------------------------
Then ....

September 10, 2003
Many in the audience had been waiting to hear Steve Dattels, chairman of Caledon Resources which listed very successfully on AIM in May, discuss the pros and cons of exploring for gold in China. He is a good speaker and did not disappoint despite one or two hiccups with his slide show. Clearly he is a committed enthusiast for this massive country which is now opening its doors to westerners and kicked off with a quote from the United States Geological Survey “It is likely that many of the Carlin-type Au ore deposits in China, when fully developed, could have resource potential comparable to the multi-1,000- tonne Au resource in northern Nevada”
----------------------------------------------------------------------------
Then to sum up ....

The most spectacular share price performance among the AIM mining/exploration companies last year came from Caledon Resources (LSE:CDN) which did not even exist until March last year. It then raised money at 1p a share before gaining its AIM listing by backing in to a moribund IT company. At the close of trading on December 31 the Caledon shares were up by 1,300 percent to 14p.

Caledon is offering a combination of two presently fashionable factors - gold and China - and a good story that is being well promoted by Stephen Dattels, its executive chairman. Dattels is a Canadian lawyer well known in the mining sector because of his association with Barrick in that group's early days and later with International Gold Resources, sold to Ashanti in 1996.

Caledon is no overnight success story. Dattels raised 1.25m for Caledon last year after bringing together three geologists - Paul Ingram, Bruce Harris and George Salamis - who have been laying the ground work in Southern China for several years. At first they were working together for Cameco, the Canadian group, looking for "Carlin type" gold deposits in east Asia. Cameco eventually became disenchanted, particularly after the Bre-X scandal gave gold exploration a bad image in Canada, but also by the way the Chinese were using bureaucracy to block foreign investment in mining. Now the geologists' perseverance appears to be paying off as Caledon has been able to sign joint ventures with Chinese groups following changes in China's mining laws.

Salamis, 36, who is Caledon's managing director, says that, in simple terms, the field programmes his company has initiated in China will be focused on mine site exploration in and around existing, active gold mines where "open ended" reserves and resources have already been identified by Caledon's Chinese partners. "In our view, this exploration plan constitutes the best and lowest risk strategy to increase shareholder value by paving the way to multi-million ounce gold discoveries."

Dattels says Caledon does not want to get into big gold mining projects on its own account but intends to sell on to companies with mining expertise at the appropriate time. It should also be pointed out that, even after the huge percentage rise in Caledon's share price, its market value is still only 33m.

CURRENT MARKET CAP ONLY 11.2 MILLION.

Sounds like phase 2 is planned and will start either immediately or very soon ....
---------------------------------------------------------
"Hengxian: first-pass drill results highlight broad zones of disseminated gold mineralisation - aggressive Phase-2 follow-up drill program is planned"

"In light of these encouraging drill assays, the Company will be following up this recently completed program with a second round of drilling - 2,500 metres is planned for Phase 2.
-----------------------------------------------------------
"Gaolong: Surface sampling continues to focus on high potential gold targets, with economic grades encountered over large widths and including localised high grades"

"The Company views these initial reconnaissance sampling results as highly encouraging - further indicating the gold potential of the Gaolong area. In light of these and other previously reported positive surface sampling results at Gaolong, the Company is planning to accelerate the commencement of drilling at the project"
-----------------------------------------------------------
"The positive information taken from this recent round of exploration will serve as the foundation for the aggressive follow-up drill programs in the months to come"
-----------------------------------------------------------

Hardly any volume today, but the MMs are paying a big premium to the bid for stock.

Real Price is 5.10-5.63 pence.

China's gold market posts shining growth
CHEN YAO,China Business Weekly staff
2004-05-18 07:10



For most Chinese, gold means more than a durable jewellery-making material and investment vehicle.

The lustrous, yellowish precious metal has long been a symbol of wealth, elegance, royalty and power.

"Chinese people simply feel gold is better when shopping for jewellery or when considering making investments,?said Zhang Yongtao, deputy secretary-general of the China Gold Association.

The "gold-is-better?mindset is the main reason for China's gigantic demand for gold, and the reason overseas producers are jumping into China's lucrative, fast-growing market, he said.

China's gold market is expected to experience robust growth this year, as international gold prices are rising and the country's top regulators are planning to slash import tariffs and the consumption tax on gold merchandise, industry experts said.

China is poised to lower, "by a large margin,?the gold import tax rate from 38 per cent, as the country is accelerating the opening of its gold market, Zhang told China Business Weekly.

China terminated, in April 2001, its tight control over the buying and selling prices of gold. The nation's first gold exchange, in Shanghai, opened in 2002.

The People's Bank of China (PBOC), the nation's central bank, lifted, in March, licensing restrictions related to gold processing, production, wholesaling and retailing.

PBOC officials said local and joint-venture gold jewellery makers no longer have to obtain permits from the central bank to start gold-related businesses.

China's top taxation authorities are considering eliminating the 5-per-cent consumption tax on gold ornaments, he said.

The country began charging the consumption tax on gold, at a rate of 10 per cent, in 1993, when gold was classified as a "luxury merchandise.?

In 1994, China readjusted the tax rate to 5 per cent to boost listless domestic demand as the international gold price tumbled.

"The 5-per-cent consumption tax should be abolished as soon as possible, as regulators no longer consider gold to be a luxury merchandise, and they are encouraging the hoarding of gold,?Zhang said.

Although tax cuts on gold imports would affect domestic gold prices in the short run, China's gold jewellery market would grow, Zhang predicted.

Anglo American Plc, the London-based mining giant, reported, earlier this year, the company's combined sales of platinum, gold and diamonds in China were worth approximately US$1 billion last year.

The firm predicted surging demand in China this year.

Chow Sang Sang, the Hong Kong-based jewellery retailer that entered the Chinese mainland's market in 1997, said it would welcome elimination of the tariffs.

About 40 per cent of the company's gold jewellery are foreign-brands.

Many international gold jewellery makers, anticipating the possible tax rate cuts and coveting China's huge market potential, have been trying to partner with Chinese jewellery retailers in recent months, he said.

Jewellery sales in China have rocketed to 100 billion yuan (US$12.08 billion) from 100 million yuan (US$12.08 million) in the past two decades, as many well-off Chinese have adopted Western styles and fashions.

"The wedding season in China generally begins on May 1. That is one of the busiest days of the year for holding weddings. Overseas gold jewellers clearly hope to strengthen their foothold before that,?he added.

Gold ornaments ?which have become less popular in recent years as shoppers started buying items made of platinum, diamonds, pearls and jade ?still play an integral role in Chinese weddings: They are given as gifts to wish couples financial security.

China's jewellery market was virtually dominated by gold ornament sales from 1982 to 1991. Since 1992, however, jewellery made with other precious metals and stones have gained popularity.

China's gold output last year reached a record 200.6 tons. That was more than double the country's gold output, of 100 tons, in 1995.

China last year became the world's fourth-largest gold consumption market, even though the country's per capita consumption of the precious metal was 0.16 gram, much less than the world's average of 0.7 gram.

Gold prices in China will increase, as international gold prices continue to hover around US$420 per ounce, almost a 15-year high, said Gao Rukun, an expert with the China Gold Economic Research Centre.

The weak US dollar has helped boost China's trade of gold to other countries, while declining consumer confidence in the US economy and rising global oil prices are causing investors to turn to gold for stability, she said.

Gold prices began to rise in China after the nation opened the Shanghai Gold Exchange in 2002. Gold trading prices started at 83 yuan (US$10.03) per gram two years ago and have since reached 112 yuan (US$13.53) per gram.

That increase was more than 30 per cent.

Soaring gold prices have lured commercial banks, anxious to boost their intermediary businesses, and individuals, seeking alternative investment channels, into the market, Gao said.

Investment-oriented trading accounted for 40 per cent of the transactions last year in Shanghai's gold exchange. That was up 10 percentage points over 2002.

Bank of China, one of the country's largest State-owned lenders, recently launched its gold trading agency service, which is aimed at individual investors.

Some other major commercial banks plan to open similar businesses.

PBOC Governor Zhou Xiaochuan encouraged, earlier this year, the establishment of a gold futures trading platform so that gold production and processing enterprises could hedge their risks.

"Gold reserves at the two deposits are estimated at over 1,000 kg" !!!!


China Gets Licences to Produce Gold in Russian Far East
Source: BBC Monitoring Asia Pacific
Publication date: 2004-05-21


Text of report by Russian news agency ITAR-TASS
Birobidzhan, 21 May: (?Sinda) and Silin, two Chinese state-owned companies from Heilongjiang Province, have been issued licences to develop two gold deposits in the Jewish Autonomous Region.

Gold reserves at the two deposits are estimated at over 1,000 kg, the regional natural resources department told ITAR-TASS today.

Before starting gold production, Chinese specialists have to carry out thorough geological prospecting. The licences are valid for five years.

The estimated reserves of gold dust and metallic gold in the region total over 300 t, the department's chief geologist, Aleksandr Kuzin, has said

Gold soaring, at $US 385.70, up 7.60.

A very dull day...any idea what things we should look out for next week sue helen

Hi thesaurus,

A dull day maybe, but the price will not fall from these levels, which is more important at the moment as the price tries to go onto an upward trend. If you look at the indicators things are getting nicely poised, RSI is rising, MACD has gone positive, lower bollinger band is turning upwards after a long, long time.

Indicators are still turning positive thesaurus.

150,000 buy reported at 5.65 pence.
150,000 buy reported at 5.75 pence.

I expect a 100% gain from all my stock picks and this one is no exception. 8-9 pence should be reached by 19 June 2004.

An established support at 4.80 pence is firmly in place now which was not there prior to this week.

thanks for this information sue helen, seems promising. I didnt take todays dullness as future potential, just simply lack of patience on my part.....just out of interest other than CDN and CFP what are your other interests???