Dubai Group announced today that it intends to acquire up to 18 per cent stake in Citigold Corporation Limited (Citigold).

The placement will make Dubai Group, the leading diversified financial services company of Dubai Holding, a strategic investor on Citigold’s share register.

The investment, which was made through its subsidiary Dubai Ventures Group, marks Dubai Group’s entry into the Australian market.

Financial details of the deal were not announced.

However, the deal is worth A$35 million, according to a report in The Australian newspaper. It will be raised through a staged securities placement to Dubai Group. An initial placement of 50 million shares at 20c a share will be followed by a convertible loan for $15 million and options to acquire shares by investing a further $10 million. The convertible loans and options are exercisable at 26c a share, the report said.

Citigold, listed on the Australian Stock Exchange (ASX) and the Dubai International Financial Exchange (DIFX), is a gold mining company with an estimated 10 million ounces in ore deposits, producing gold from Australia's richest goldfield at Charters Towers in North Eastern Australia. The capital injection is expected to add significant strength to its production capabilities and thereby boost gold production in the future, said a statement.

Abdulhakeem Kamkar, CEO of Dubai Ventures Group, said: “This transaction reflects our long-term view on gold and Citigold’s ability to enhance shareholder value by ramping up production to 250,000 ounces per annum by 2011. We are delighted to add Citigold to our portfolio and complete our first deal in Australia.

“Gold, like oil, continues to play a significant role in the global economy as a fundamental backbone of the financial services sector and a key safe haven commodity. We believe Citigold provides us an opportunity to tap into a potentially lucrative niche segment in the commodities sector, which we look forward to exploring together.”

Mark Lynch, managing director of Citigold, said: “Citigold welcomes Dubai Ventures Group onto its share register and its investment in the company endorses the long term value and potential of Citigold and its 10 million ounce gold deposit at Charters Towers.”

Citigold's global vision included a long term strategy centred around the world's largest physical gold trading centre of Dubai. This strategy resulted in the listing of Citigold shares on the Dubai stock exchange in early 2007.

Dubai Ventures Group creates and manages a diversified and rapidly expanding portfolio of direct and indirect investments in the emerging markets of Asia and the Middle East. It focuses on investments in the capital markets, real estate and industrial sectors of the world’s most promising economies. –TradeArabia News Service