Zijin seals 2 deals to add mine reserves
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Shanghai Daily, November 9, 2011
China's leading gold and copper producer Zijin Mining Group said it will invest nearly US$409 million in two mining deals to boost its reserves.
The miner had agreed to pay US$228 million to Jinchuan Group for a 45 percent stake in Gold Eagle Mining Investment, which owns the Xietongmen copper and gold project in Tibet, Zijin said in a statement filed to the Hong Kong stock exchange yesterday.
"The basic facilities can fulfill mining requirements. The cooperation with Jinchuan Group will enhance our resistance to risks as we develop the mine," Zijin said. Jinchuan is China's top nickel producer.
Separately, Fujian-based Zijin will pay A$175 million (US$181 million) to Australia's Warrior Advance Pty Ltd and Dragon Mountain Gold Ltd for a gold project in Gansu Province.
GF Securities analyst Xiao Zheng wrote in a note that the two acquisitions will increase Zijin's gold reserves by 49.5 percent to 1,121 tons and its copper deposits by 20.6 percent to 12.76 million tons.
Xiao, however, said it was too early to assess when the two acquisitions would contribute to Zijin's production and earnings because infrastructure construction in both projects were still continuing.
The Tibet project posed risks and needed a larger investment, he said, citing high altitude, climate and environmental conditions, he said.
Xiao said Zijin was paying about 14.6 million yuan per ton for the gold mine in the Tibet deal and 9.6 million yuan in the Gansu purchase, both relatively low prices compared with other domestic projects.
Zijin gained 5.87 percent yesterday to HK$3.79 (49 US cents) in Hong Kong.
