Zijin Mining Group is launching an initial public offering (IPO) in Shanghai this week that could raise $1.4 billion, a move analysts believe signals Chinese regulators' confidence that the domestic market may stabilize after falling for months.

Hong Kong-listed Zijin, the mainland's second-largest gold miner, plans to issue as many as 1.5 billion new local currency A-shares, or 10.2 percent of its enlarged share capital, to fund expansion projects that mainly involve the mining and processing of gold and copper.

Its IPO shares will be the first major issue since a $3.1 billion mainland issue by China Railway Construction in February.

"It appears that regulators believe the market's recent volatility is basically over, and that it's the right time to allow major companies to proceed with their share offers," said senior stock analyst Chen Jinren at Huatai Securities in Nanjing.

"The market's positive response today may justify their judgment," he said, referring to a 4.45 percent jump in the benchmark Shanghai stock index on Monday.

The index has dropped 41 percent since its all-time peak in October, and it is down 32 percent so far this year.

Chen said he expects China's IPO market to revive this month, with more companies joining the pipeline, in addition to the five firms which have already announced IPO plans for the month.

In March, only one small company, Fujian Fujing Casttech, raised a tiny $53 million yuan in the mainland's primary market due to a slumping market hit by factors including fears over excess corporate refinancing and monetary tightening.

Zijin will start consulting investors about pricing the offer today, and it will take subscriptions on April 15 and 16. Money will be returned to unsuccessful applicants on April 18 and 21, the company said in a share-issue prospectus.

Thirty percent of the shares on offer will be earmarked for institutions and the rest for retail investors. The ratio may be shifted in favor of the retail tranche if demand proves strong.

Based on the HK$7.17 closing price of its Hong Kong-listed H- shares on Thursday, Zijin could raise up to HK$10.8 billion in the A-share offer. Friday was a public holiday.

Reuters

(HK Edition 04/08/2008 page2)