(Yicai Global) Dec. 12 -- Shandong Gold Mining, China's biggest producer of the precious metal, said it will take a majority stake in smaller rival Yintai Gold for CNY13 billion (USD1.9 billion). The shares of both companies fell.

Shandong Gold [SHA: 600547] closed down 6.3 percent at CNY19.29 (USD2.77) in Shanghai today, while its Hong Kong-listed shares [HKG: 1787] fell 4.7 percent to HKD14.60 (USD1.88). Meanwhile, Yintai Gold [SHE: 000975] dropped 7.3 percent to finish at CNY12.13, after opening up 9.3 percent.

State-owned Shandong Gold will buy a 20.9 percent stake in Yintai Gold from China Yintai Holdings and its controlling shareholder Shen Guojun for CNY22.38 a share, a 71 percent premium on its closing price of CNY13.09 on Dec. 5, when trading in the stock was suspended, the two firms said yesterday.

The final transaction price will be decided through consultation after completing due diligence, the companies said. The deal also needs to be approved by China’s state-owned asset management authorities as well as the State Council's anti-monopoly body, Shandong Gold added.

Shandong Gold has more than 2,600 tons of gold mine resources, of which 500 tons are overseas, while Yintai Gold has about 170 tons, according to information the pair published earlier.

Editor: Martin Kadiev