One of China’s biggest gold miners, Zijin Mining Group Co Ltd., has struck a $1.3 billion deal to buy Canadian miner Continental Gold. The deal will give Zijin control over Continental’s Buriticá mine in Colombia that is due to begin producing gold next year. The project is considered one of the world’s largest and highest-grade gold mines that should have the capacity to produce 300,000 ounces of gold a year. Newmont Goldcorp, which owns 20 percent of Continental, is supporting the deal.
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The Chinese miner has been on an acquisition spree. Earlier in 2019, Zijin closed its purchase of miner Nevsun Resources, and the Chinese company also has taken a 47 percent stake in a the Porgera gold mine in Papua New Guinea.
China, home to the world’s biggest consumer gold market, mines 11 percent of all annual gold production. The Chinese government has been aggressively buying gold as it tries to diversify its reserves away from dollar-backed assets.
The Buriticá mine has tremendous potential with indicated gold reserves of 165 metric tons and “inferred” reserves (meaning anticipated, but not confirmed) of 187 tons. It is considered an important test for large-scale underground mining in Columbia. But there have been security problems for Continental. Last year, gunmen killed one mining employee near Buriticá, and three others at another exploration site. Zijin is weary of such risks and has inserted clauses in the buyout that could cause the deal to fall apart. “If a major security incident happened at any project, it would be considered a material adverse change and they would have an out if they wanted to,” Continental Chief Financial Officer told Reuters.
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