Tongling Nonferrous Metals Group Co said yesterday it proposes to collect up to 2.15 billion yuan (US$308 million) in a private placement to finance acquisitions and upgrade capacities.

Tongling, China's biggest copper smelter, said it will issue as many as 150 million additional shares to up to 10 institutional investors, including its parent Tongling Nonferrous Metals Group Holdings Co.

The stock will be priced at no less than 14.34 yuan apiece, or the average transaction price of the company's public shares in the 20 sessions before yesterday, Tongling said in a filing with the Shenzhen Stock Exchange.

The copper smelter plans to use 466.2 million yuan from the proceeds to buy a 35 percent stake in Xiamen Zijin Tongguan Investment Development Co from its parent, the statement said.

Xiamen Zijin owns an 89.9 percent stake in UK-based copper miner Monterrico Metals Plc, which owns operation rights in a copper and molybdenum mine in Peru, according to the statement.

The Peru project may bring about an annual net profit of about 1.4 billion yuan after it is put into operation in 2010, according to Shi Weiping, an Orient Securities Co analyst.

"But there are still risks whether the copper and molybdenum production can reach expected levels in Peru," Shi said.

Tongling said it will use 1.31 billion yuan from the raised capital to upgrade smelting capacities and start a copper foil project. It will also shore up working capital by 225 million yuan.

Shares of Tongling lost 3.35 percent to 17.01 yuan yesterday, compared with a 1.14-percent drop on the benchmark Shenzhen Component Index.

(Shanghai Daily May 7, 2008)