7 billion acquisition of Canadian giants! Chinese enterprises won the largest independent gold mine in Colombia

category:Finance
 7 billion acquisition of Canadian giants! Chinese enterprises won the largest independent gold mine in Colombia


Zijin mining was worried on December 3, Reuters reported that four employees of mainland gold had been killed in Colombia, which caused concern of a senior executive of Zijin mining, who worried that Zijin Mining didnt know enough about the local mining industry and said that he had no experience in Colombia.

However, it is worth mentioning that this is not the first overseas acquisition of Zijin mining. The company once purchased the Congo (gold) copper mine project with 2.5 billion yuan. As of last year, the total copper resource of the mine has increased from 24 million tons at the time of acquisition to 42.49 million tons, nearly doubling.

Zijin mining plans to purchase the gold map of the mainland with 7.03 billion yuan: official announcement of Zijin Mining

On December 2, Zijin Mining announced that it would issue an agreement to purchase 203 million shares and shares to be diluted issued by mainland gold in cash by a subsidiary of Jinshan (Hong Kong) International Mining Co., Ltd., a wholly-owned overseas subsidiary, of C $5.50 per share (about 29.62 yuan, US $4.14). This transaction will acquire 100% of the equity of mainland gold, with a transaction amount of about C $1.33 billion (about RMB 7.03 billion, US $1 billion).

Zijin Mining said that the transaction has been unanimously approved by the special committee of independent directors and the board of directors of continental gold, and that Newmont gold, the largest shareholder of continental gold (now holding about 19.9% of the equity), and its directors and executives (now holding about 1.6% of the equity) will vote for the acquisition at the general meeting of special shareholders.

In addition, Zijin Mining will also subscribe convertible bonds of mainland gold with an amount of US $50 million, mainly for mine construction.

Mainland gold, headquartered in Canada, has been listed in Canada and the United States, mainly engaged in exploration, development, acquisition and evaluation of gold resources in Colombia. According to reports, the companys core asset is the 100% equity of wulitika gold mine, which will become the largest independent gold mine in Colombia after being completed and put into operation.

The map of gold mines in mainland China: the official website of gold in mainland China

Colombia is known as the country of gold in South America. The nearby Andes are rich in gold. Lake guada vita, near the capital, San Francisco, is said to be the center of the Golden State. The location of the wulitika gold mine project is located in the north of the Andes, near medell u00ed n, Colombias second largest city, and not far from Bogot u00e1.

Figure: Mainland gold official website

Zijin said the acquisition will increase the companys gold and silver reserves and generate strong profits and cash flow.

According to the announcement, the gold reserves of Zijin Mining will exceed 2000 tons after the completion of this acquisition, increasing the gold output of the mine by about 20% (up to the post production). At present, the beneficiation plant construction of wulitika gold mine project has been completed by 88%, and it is expected to be completed and put into operation in the first quarter of 2020.

The proved + controlled gold resources of the gold mine are 165.47 tons and 653.17 tons of silver.

Resource map of wulitika gold mine: official announcement of Zijin Mining

It is worth noting that the acquisition is worth about 7.03 billion yuan, accounting for 17.38% of Zijin Minings audited net assets attributable to the parent in 2018.

Zijin Mining is listed in Hong Kong H-share and Shanghai A-share. It is one of the largest listed companies in the market value of gold stocks and the leader of the domestic gold industry. The companys gold, copper and zinc metal reserves and mineral resources are among the top three in the domestic mining industry, with asset scale and sales revenue exceeding 100 billion yuan. Zijin Minings acquisition has enough support.

At the end of November, Zijin Mining also completed the refinancing project with the scale of 8 billion yuan, with 2.346 billion a shares newly issued, becoming the largest public offering project in the market in eight years.

However, there are many uncertainties in the acquisition. For example, the gold project of continental gold is not fully completed, and the company has not yet made profits and is in a state of loss for years. From 2017 to the first September of 2019, the accumulated net profit of gold in mainland China lost 69.393 million US dollars, about 490 million yuan.

Main financial situation of gold in mainland China: official announcement of Zijin Mining

Whether the transaction can be successfully completed cannot be determined. If the acquisition is not completed, both parties need to bear a separation fee of US $35 million in accordance with the agreement.

At the same time, Zijin said that if the gold price fluctuates significantly in the future, it will bring greater uncertainty to the profitability of the project, which will affect the value of gold in the mainland.

For most of this year, the price of spot gold has been on the upward track, rising about 22% to $1556 from the low of $1276 at the beginning of the year, but the current price of gold has been revised back.

Trend chart of gold price: tradingview

In addition, the Financial Times reported on December 3 that despite Colombias rich mineral resources, there has been little exploration in the country, and buretica is seen as a key test of large-scale underground mining. The project is not without problems. Last year, gunmen killed four employees in two attacks.

Zijin Mining has no experience in Colombia, we have had some accidents in the past obviously, Reuters reported Wednesday, citing a senior gold executive in mainland Canada. Last year, four employees were killed in just one month.. Any major safety incident on a project will be considered a major adverse change, the executive said.

It is worth mentioning that in recent years, Zijin Mining has been making a large-scale acquisition and frequently launched overseas M & A programs. In 2015, Zijin Mining purchased one of the world-class copper mines, Congo kamoa copper mine, with a 49.5% stake and half of the equity reserves of copper mine with a total of 2.5 billion yuan. In February 2018, Zijin Mining announced that the total copper resources of the copper mine increased from 24 million tons at the time of acquisition to 42.49 million tons. The current copper price (Cu0) is about 47000 yuan / ton.

At the beginning of this year, Zijin Mining purchased 100% of nevsun Resources Ltd., a Canadian mining company, for about $1.4 billion. The Financial Times said the acquisition was in the context of accelerated consolidation of the gold industry. The report quoted analysts as saying that the gold industry has ushered in a new wave of M & A since Barrick gold bought Rand gold resources for $6 billion last year and Newmont mining bought Canadian gold Corp for $10 billion in January. Source: Wang Xiaowu NF, editor in charge of observer network

At the beginning of this year, Zijin Mining purchased 100% of nevsun Resources Ltd., a Canadian mining company, for about $1.4 billion.

The Financial Times said the acquisition was in the context of accelerated consolidation of the gold industry.

The report quoted analysts as saying that the gold industry has ushered in a new wave of M & A since Barrick gold bought Rand gold resources for $6 billion last year and Newmont mining bought Canadian gold Corp for $10 billion in January.