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BEIJING(Scrap Monster): The second-largest producer of the metal by reserves in mainland China, Shandong Gold Group , agreed to buy a 51 percent stake in Australia's Focus Minerals. The buying of stake for $227.5 million is to boost output and help meet high domestic demand.

Australia is the world's second-largest producer of the yellow metal, after China. Shandong is China's third largest gold producer by output.

During the past few years the Gold market of China, the second largest gold consumer in the world, has witnessed a high growth. This helped in fueling the price of gold to a record $1,920.30 an ounce in 2011 and spurring domestic producers to ramp up overseas mine acquisitions.

The Norton Gold Fields in Australia has been bought by Shanghai-listed Zijin Mining Group Co Ltd this year. China National Gold Group Corp, the country's largest gold miner has announced a potential $3.9 billion bid to acquire African Barrick Gold PLC (ABG.LN) in August.

For the Focus stake, Shandong Gold has agreed to pay 5 cents a share which is a 13.6 percent premium to the Coolgardie-based company's closing share price on Wednesday.

According to Focus Chief Executive Officer Campbell Baird, the investment by Shandong Gold will help the senior management of Focus to unlock the Company's growth potential at an accelerated pace. Only 4 percent of our landholding has so far been explored.

The miner Focus has tenement holdings of 1,650 square kilometres ,4.3 million ounces of gold resources and our producing mines in Coolgardie and Laverton in the eastern goldfields region of Western Australia.

The deal is subject to Chinese and Australian regulatory approvals, as well as the approval of Focus shareholders. It is expected to be completed in early December.

China's mine production life is relatively short compared with other countries, according to the World Gold Council. With less than 5% reserves, China is holds one of the smallest percentages of global gold-mine reserves.