Zijin secures 10b yuan in financing
Zijin Mining Group, the largest mainland gold miner by market value, has signed a 10 billion yuan global project financing deal with Bank of China, shortly after announcing a possible tie-up with Australia's Midas Resources to develop a mainland mine.
The financing deal, which precedes an imminent A-share issue on the mainland approved by regulators, came as gold traded close to its historic high, encouraging miners to speed up project development.
The deal will facilitate the mining company's forays into overseas markets as well as domestic developments.
Zijin has mining investments in Mongolia, Myanmar, Russia, South Africa and Vietnam.
Last Friday, Zijin signed a memorandum of understanding with Perth-based Midas to form a joint venture to develop the Fuxing copper project in Hami, Xinjiang autonomous region, it said yesterday in a statement filed with Hong Kong Exchanges and Clearing.
Midas will undertake due diligence in the two months following the memorandum's signing, and may spend US$200,000 exploring the project within a year.
Should Midas continue with the project, a joint venture company will be formed, with Zijin contributing US$3.5 million worth of mining rights and Midas US$1.3 million in cash.
Midas will have a 30 per cent interest in the venture, with the right to acquire a further 20 per cent by spending an additional US$2 million on exploration over three years.
Midas could subsequently acquire a further 20 per cent by completing a definitive feasibility study and submitting geological reports on its exploration.
However, Zijin will have the right to buy 30 per cent from Midas, reducing the latter's stake to 40 per cent.
Analysts remained bullish on the price of gold. Goldman Sachs last Thursday raised its forecast for this year to US$910 an ounce from US$800. On Tuesday, Credit Suisse upgraded its forecast to US$950 from US$700, Reuters reported.
Spot market gold traded at around US$885 an ounce in early London trade yesterday, compared with its historic high of US$914 reached earlier this year.
