...October 9, 2020 HONG KONG (S&P Global Ratings) Oct. 9, 2020--S&P Global Ratings today said Shandong Gold Group Co. Ltd.'s (SDG; ###-/Stable/--) proposed acquisition of Hengxing Gold Holding Co. Ltd. (HXG) shows it is taking small steps to meet its ambitious expansion goals. The China-based company targets to be a top-five gold producer globally by 2025. We believe the small scale and all-share consideration nature of this deal shows SDG's desire to control leverage as it pursues growth. SDG gains access to the region of Xinjiang for the first time with the HXG acquisition. HXG's 2.7 tons in mined gold output in 2019 represented 6% of SDG's total. HXG had gold reserves of 39.8 tons as of June 30, 2020, modest compared with SDG's total of 1,900 tons. Therefore, we expect SDG to remain focused on the Shandong province. The company targets a mined gold output of 80 tons in 2025, nearly double its current production. We believe this would be achieved mainly through acquisitions, and HXG is SDG's...
