Jan. 13 (Bloomberg) -- Jinshan Gold Mines Inc, a Canadian metal producer, is seeking to acquire bullion projects outside of China as prices of the precious metal advance, its largest shareholder China National Gold Group Corp. said.

“We are interested in developed projects or assets that are in operation,” Wu Zhanming, manager in charge of capital operations at Beijing-based China National Gold, told reporters today. “We won’t acquire greenfield projects.”

Chinese-controlled companies bought iron ore, coal and metal assets last year to take advantage of lower valuations during the global recession and to feed demand in China. Bullion touched a record $1,226.56 an ounce on Dec. 3 as a weaker dollar drove investors to buy precious metals as alternative assets.

“We are positive on gold prices in the long term, but in the short term there might be some fluctuations,” China Gold Vice President Song Xin said at the same conference in Beijing.

Jinshan closed 3.8 percent lower at C$3.07 yesterday in Toronto trading. The stock surged 620 percent in 2009. Jinshan produces bullion from the Chang Shan Hao gold mine in China’s Inner Mongolia province, according to its Web site.

China, the world’s largest gold producer, may break records for both consumption and output in 2009 as jewelry demand soared and miners expand production, the China Gold Association said last November.

Rising Sales

China National Gold, which holds the most deposits of the precious metal in the country, increased sales by more than 40 percent in 2009 from a year ago, Song said. Production, including mined and refined metal, jumped 37 percent to 123.2 metric tons, he said.

The state-owned gold producer quadrupled reserves to 1,212 tons in 2009, from three years ago, according to a company statement. Barrick Gold Corp., the world’s biggest gold producer, has 138.5 million ounces (3,926 tons) of gold reserves in 2008, according to its Web site.

China National expects to boost its deposit at the Yangshan project by 80 tons if it obtains a permit from the local authorities, Song said. The Yangshan deposit, located in the western province of Gansu, may be the largest in Asia with a resource of 308 tons, or more than double the size of Zijin Mining Group Co.’s Zijinshan mine, the largest in production.

China Gold controls 6 million tons of copper reserves, 780,000 tons of molybdenum and 200 million tons of iron ore reserves in 2009, the company said in a statement.

--Xiao Yu. Editors: Tan Hwee Ann, Richard Dobson.

To contact the Bloomberg News Staff of this story: Xiao Yu in Beijing at yxiao@bloomberg.net.

Last Updated: January 13, 2010 03:29 EST