David Ebner

Vancouver — From Saturday's Globe and Mail Published on Friday, Sep. 17, 2010 6:11PM EDT Last updated on Friday, Sep. 17, 2010 6:28PM EDT

China’s Jinchuan Group Ltd. is buying Vancouver-based junior copper-gold explorer Continental Minerals Corp. (KMK-X2.580.2812.17%) for $432-million, the latest in a long string of investments by Chinese companies in Canadian-developed assets.

Continental, traded on the TSX Venture Exchange, was formed in 2001, one of a dozen ventures led by Vancouver’s privately held Hunter Dickinson Inc., a successful mine developer whose others plays include Taseko Mines Ltd. (TKO-T4.44-0.04-0.89%) and Northern Dynasty Minerals Ltd. (NDM-T7.93-0.01-0.13%)

From 2004 to 2006, Continental spent $10-million (U.S.) to gain a majority stake in the Xietongmen copper-gold project in Tibet, and in late 2006 took full control in a merger with another small firm. Construction could begin next summer with operations starting in 2013.

While Taseko and Northern Dynasty have greater market capitalizations than Continental, the deal is the largest asset sale Hunter Dickinson has pulled off in its 25-year history.

Ronald Thiessen, chief executive officer of Hunter Dickinson and co-chairman of Continental, said China’s appetite for resources is aggressive.

“It’s nothing short of voracious,” said Mr. Thiessen in an interview on Friday.

The Continental deal is just one more move in China’s quest to acquire resources around the world to help feed its economic growth.

Howard Balloch, a former Canadian ambassador to China who runs a Beijing-based investment bank, said at a coal conference last Tuesday that securing resources around the world is the No. 1 element of China’s foreign policy.

“If a country has resources, they care,” said Mr. Balloch.

China Investment Corp.– the country’s $200-billion sovereign wealth fund – has been one of the most active players. This year it struck a $1.25-billion (Canadian) deal to develop a heavy oil asset owned by Penn West Petroleum. It put $1.5-billion into coal-copper miner Teck Resources Ltd. in 2009 and has invested in Kinross Gold Corp. and Potash Corp. of Saskatchewan Inc.

Among the largest deals was state-owned Sinopec’s $4.65-billion (U.S.) purchase last spring of a 9-per-cent stake in oil sands miner Syncrude Canada Ltd.

And as Potash Corp. looks for a richer deal to trump BHP Billiton Ltd.’s hostile $38.6-billion bid, Chinese chemical conglomerate Sinochem Group is working to enlist financial support for a bid.

Not every deal has been successful. As China has eased the pace of its acquisition spree in recent months, the country’s utility giant State Grid International Development Ltd. pulled out of a $1-billion deal with Quadra FNX Ltd. to develop copper projects in Chile.

Jinchuan, China’s largest nickel and cobalt miner, is offering $2.60 (Canadian) a share for Continental, whose stock closed up 12 per cent on Friday at $2.58 on the TSX Venture Exchange.

In 2007, the stock traded around $2 before steadily drifting lower through 2008. In the depths of the financial crisis and recession it hit a low of about 50 cents.

Continental struggled to fend out hostile suitors as its stock bounced along its low ebb, companies that included Jinchuan. Last fall, Continental signed on Zijin Mining, China’s largest gold producer and third-largest copper producer, in a $25-million private placement for 15 per cent of the company.

Shareholders are expected to vote on the Jinchuan deal in November. A special cash payment of 10 cents a share is also part of the deal.