Citic Resources Gains Most in 8 Years in Hong Kong

By Winnie Zhu

Nov. 3 (Bloomberg) -- Citic Resources Holdings Ltd., a Chinese metal producer turned oil supplier, rose the most in more than eight years in Hong Kong trading after saying one of its units may be involved in a transaction.

The shares surged as much as 65 percent to HK$0.94, the biggest gain since March 10, 2000 and the steepest increase among the 201 members on the Hang Seng Composite Index. Brian Luk, a Hong Kong-based company spokesman, said Citic Resources isn't aware of any reason for the share-price movement.

Citic Resources didn't give details on the possible transaction in a statement to the Hong Kong stock exchange on Oct. 31, while Luk declined to elaborate. The company said in a statement today at the request of the stock exchange that ``discussions are at an advanced stage'' involving one of its units and will issue an announcement as and when appropriate.

``The transaction might be about the sale of its manganese unit or an increase in its stake in Australian assets,'' Wang Aochao, an oil analyst with UOB Kay Hian Ltd., said by telephone in Shanghai.

Citic Resources said in September it plans to spin off its manganese unit to boost the capital it needs for expansion as the company focuses on its energy business. Profit jumped almost fourfold in the first half as oil output increased while prices soared to records.

The company's stake in Citic Dameng Holdings Ltd. will drop to below 50 percent after the proposed listing, from 80 percent, Citic Resources said on Sept. 7.

The Hong Kong-based company increased its stake in MacArthur Coal Ltd. to more than 20 percent, becoming the Australian coal producer's biggest shareholder, MacArthur said in July.

Citic Pacific

Wang said the possible transaction wouldn't be related to sister company Citic Pacific Ltd., which halted trading of its shares in Hong Kong on Oct. 31 pending a statement. Citic Pacific is being investigated by Hong Kong's Securities and Futures Commission after predicting a HK$15.5 billion ($2 billion) loss from unauthorized currency bets.

The company bet the Australian dollar would rise, incurring losses after the currency tumbled 30 percent against its U.S. counterpart from a 25-year high reached in July. Citic Pacific bought leveraged currency contracts to fund an A$1.6 billion ($1.1 billion) iron ore mine in Australia, it said Oct. 20.

Citic Pacific and Citic Resources are units of Citic Group, China's largest state-owned investment company.

Citic Resources traded at HK$0.85 at 3:14 p.m. local time, while the Hang Seng Index climbed 3.9 percent to 14,524.5.

To contact the reporters on this story: Winnie Zhu in Shanghai at wzu4@bloomberg.net