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China's Zijin plans $1.4 bil share placement to fund copper, gold projects in Congo, PNG

Hong Kong — Chinese gold and copper miner Zijin Mining plans to raise Yuan 9 billion ($1.4 billion) through private share placements in the Shanghai stock market to fund buying of assets in Congo and Papua New Guinea and for a mine development project in China, the company said late Wednesday.

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The miner told the Shanghai and Hong Kong stock exchanges that its board had approved a revised plan which would see the company issue and allot a maximum 2.66 billion A shares at a minimum Yuan 3.38/share to a few specific independent investors.

Of the total proceeds raised, Yuan 3.22 billion will be allocated to the development of the Kolwezi copper mine in Congo, central Africa, and loans provision to a Sino-Congolese joint venture company which owns the project.

Zijin has 51% in the joint venture company, called La Compagnie Miniere de Musonoie Global, through its subsidiary Jin Cheng Mining. Other partners in the joint venture are Congo's state mining company La Generale des Carrieres et des Mines (28%) and China's Zhejiang Huayou Cobalt (21%).



CONGO, PNG MINES DEVELOPMENT

Feasibility study conducted by the joint venture company supports development of an open pit mine at Kolwezi with semi-autogenous grinding and flotation facilities.

The project will have a designed capacity of producing 7,212 mt/year of copper concentrate (60% copper), 43,616 mt/year of blister copper (90% copper) and 8,203 mt of refined copper. The whole project is expected to take two-and-a-half years to develop, Zijin said.

Zijin also plans to fund the Yuan 2.52 billion Kamoa copper project in Congo.

The miner agreed in May this year to pay Vancouver-based Ivanhoe Mines $412 million for a 47.025% stake in the Kamoa project, of which the Chinese miner already has a 9.9% control.

The Kamoa project will be developed in two phases. The first phase, which is expected to take three years, involves developing 3 million mt/year of ore mining and milling capacity.

The second phase, which will also take three years, will involve construction of a 8 million mt/year flotation plant with production capacity of 300,000 mt/year of blister copper and 550,000 mt/year of sulfuric acid.

Another Yuan 1.82 billion of the share placement's proceeds has been earmarked for the Porgera gold mine development in Papua New Guinea.

Fujian-based Zijin reached a $298 million deal with Canadian gold producer Barrick Gold in May for a 47.5% interest in the Porgera project.

Porgera has been producing gold since 1990, and the mine has harvested a cumulative 18.81 million oz of gold as at end-2014. Barrick's share of gold production from the Porgera mine in 2014 was 493,000 oz.

The project still has a life of mine of more than 10 years, Zijin said.

ZIJINSHAN TO ADD 154,300 MT/YEAR COPPER CONC CAPACITY

The miner has allocated Yuan 444.2 million for construction of a flotation plant at the Zijinshan gold and copper mine in southern Fujian province.

The Zijinshan mine has two flotation plants with an ore handling capacity of 18,000 mt/day.

Zijin plans to build a 25,000 mt/day flotation plant at its flagship mine.

The project will need two years to build and will add nameplate production capacity of 154,300 mt/year of copper concentrate with 30,900 mt of copper contained.

The remainder of the proceeds will be reserved as Zijin's working capacity.

Zijin had proposed to raise Yuan 10 billion in August this year via private share placement, but decided to revise down the targeted amount in view of the subdued global economy.

While non-ferrous and precious metals prices have also stayed depressed on the back of the economic uncertainties, the Chinese miner takes advantage of the situation to snap up quality assets overseas to boost its resource stockpile and future production capabilities, according to Chinese newspaper reports.

Zijin still needs to seek approval from its shareholder and securities watchdog China Securities Regulatory Commission on its revised private share placement proposal. The proposal has a 12-month validity period.

--Winnie Lee, newsdesk@platts.com
--Edited by Haripriya Banerjee, haripriya.banerjee@platts.com