China’s Zijin inks deals with two Canadian firms on the same day
Cecilia Jamasmie | May 26, 2015
Zijin Mining, one of China's largest mining groups, extended its global reach Tuesday by signing two separate and key agreements with Canadians Barrick Gold (TSX:ABX) and Ivanhoe Mines (TSX:IVN).
The deals will see Zijin help Barrick and Ivanhoe advance their respective projects in Papua New Guinea and the Democratic Republic of Congo.
- The Chinese miner is paying $298m for a joint venture with Barrick Gold where each company will own 47.5% of Porgera, a gold mine in Papua New Guinea.
- Under the $412 million deal with Ivanhoe Mines, Zijin will buy through its subsidiary, Gold Mountains International Mining Company Limited, a 49.5% stake in Ivanhoe’s subsidiary Kamoa Holding Limited, which currently owns 95% in the Democratic Republic of Congo (DRC) Kamoa copper project.
The most important aspect of today’s agreements is the fact that both aim to form long-term strategic partnerships to collaborate on further ventures
But perhaps the most important aspect of today’s agreements is the fact that both aim to form long-term strategic partnerships to collaborate on further ventures, opening new markets for all the firms involved.
Barrick’s Chairman John L. Thornton, couldn’t have summarized the significance of these deals better:
"A twenty-first century mining company with global reach and the intention to become an industry leader must, by definition, have a distinctive relationship with China," he said in today’s statement. “China has become both the largest producer and consumer of gold, and a major source of capital and expertise for the mines of the future.”
Zijin, which besides gold also produces copper and zinc, acquired in March a 10% ownership in Ivanhoe for about $85 million. At that time, Ivanhoe Executive Chairman Robert Friedland said the two companies were in “detailed, friendly discussions about the strategic co-development of our Kamoa copper discovery.”
According to a preliminary economic assessment, Kamoa’s first phase of development is estimated to cost about $1.4 billion. Ivanhoe said it has invested about $337 million to date on discovering and developing the project.