Zijin buys US$1.2 billion Kazakhstan gold mine ahead of overseas unit’s Hong Kong listing
Zijin Mining, one of China’s largest miners of gold and copper, struck a deal to buy a project in Kazakhstan for US$1.2 billion ahead of a planned listing of its international unit on Hong Kong’s stock exchange.
In a statement to the Hong Kong bourse on Monday, the company said the deal would increase its gold reserves and output and help it become one of the world’s top three producers by 2028, up from sixth last year.
The deal would also “significantly enhance the asset scale, profit level and global industry position of Zijin Gold International and promote the listing and [share] offering of Zijin Gold International in the international capital market”, it added.
In May, it said it would seek an annual output target of 100 to 110 tonnes of the precious metal by 2028, up 36 to 50 per cent from 2024.
And two months ago, Zijin said it planned to reorganise its overseas gold mining assets under Zijin Gold International, which was established in 2007, and list it. The move would “create greater value” for shareholders through a revaluation of its assets, it said.
In its latest deal, a firm owned by Zijin Gold International agreed to buy the Raygorodok gold mine project for US$1.2 billion from Cantech, which is based in northern Kazakhstan. At the end of last year, the project had net assets of US$291 million and recorded a net profit of US$202 million on revenue of US$473 million.
Under the mine’s original development plan, at a gold price of US$1,750 per ounce, the project’s economic ore reserve stood at 94.9 million tonnes. At the mine’s average ratio of one gram of gold extracted from each tonne of ore, around 100.6 tonnes of the yellow metal could be produced from its facilities.
“Under the current gold price environment, there is clear potential to increase resources and reserves and expand production capacity by optimising the pit design at a higher gold price assumption,” Zijin Mining said.
The mine produced six tonnes of gold last year at a cost of US$796 per ounce, excluding non-cash expenses like asset depreciation. Zijin Mining produced 73 tonnes of gold last year.
Over the course of 2024, the London Bullion Market Association’s spot market gold price surged 26 per cent, its most substantial annual growth since 2010, Zijin said.
It has risen even more this year as global investors – including central banks – have bought gold as a safe haven amid uncertain US trade policies, State Street Global Advisors said on June 5. Spot gold fetched US$3,281.65 per ounce in early Asia trading on Monday.
The asset manager expected gold to stay above US$3,000 per ounce for the rest of the year, adding that it could test US$4,000 if global trade tariff tensions escalated, stoking inflation and weakening economic growth.
Zijin’s acquisition of the Kazakhstan project was expected to be completed by the end of September. Cantech is 65 per cent owned by V Group International, one of Kazakhstan’s largest equity investment firms, and is a unit of US private equity firm Resource Capital Funds.
The transaction is subject to regulatory approvals in China and Kazakhstan.
Zijin Mining owns gold mines in Colombia, Peru, Australia, Serbia, Tajikistan, Kyrgyzstan, Papua New Guinea, Ghana, Suriname and Guyana. Its shares fell 1.5 per cent to HK$20.20 at 1.02pm in Hong Kong after rising as much as 1.7 per cent.
Source: https://www.scmp.com/