1400, 1500, 1600... Just as the price of gold was soaring, rising from US $1400 per ounce to more than US $1600 in just three months, Zijin Mining announced on December 9 last year that the 7 billion merger and acquisition of a 100 percent stake in mainland gold was announced on the evening of March 5, Beijing time, and announced the completion of the equity delivery. So far, Zijin Mining's gold equity resource reserves reached 2130 tons, an increase of 12.88.

At this time, the main construction project of the core asset of the acquisition, Colombia's Vuritika gold mine, has been basically completed and has entered the stage of trial production. It is planned to go through the production process this month and produce the first batch of high-quality gold, which will bring rich profits and cash flow to Zijin Mining.

Early entry of management team

Wulitika gold mine is a world-class high-grade large-scale gold mine with 353 tons of gold resources, an average grade of 9.3g/ton, 1469 tons of silver and an average grade of 38.8g/ton. It has good mining conditions. At the same time, it has good prospects for prospecting in the deep and peripheral orebody, and has great potential for prospecting and increasing reserves. The project adopts underground mining, with a designed daily ore processing capacity of 3000 tons and an average annual gold output of about 7.8 tons after reaching production. The planned gold output in 2020 is about 4-5 tons.

The biggest attraction of this merger is that the ultra-high grade of the Buritika gold mine is very rare in the world, and it is a well-deserved world-class high-grade gold mine.

Data show that the average grade of primary gold ore in the world is only 1.19g/ton, and the grade of Zijinshan gold mine started by Zijin Mining is as low as 0.6g/ton, but the average grade of Wulitika gold mine has reached 9.3g/ton.

Surprisingly, in December 2019, Zijin Mining sent a management and technical backbone team of Wulitika Gold Mine in the name of the project observer team to participate in the delivery and project transition preparation in advance. The acquisition took only 3 months from the announcement to the completion of the delivery. The high efficiency can be called a global story, which fully confirms Zijin Mining's institutional advantages of efficient decision-making, and it is not difficult to understand, the kinetic energy of why Zijin Mining has been able to maintain a long-term lead on the road of internationalization in recent years.

Colombia is known as the "country of gold". This acquisition has boosted Zijin Mining's gold sector. In the context of the continued strength of gold, it is of great significance to the company's strategy.

Gold plate force growth

In the past five years, under the background of accelerating the reshuffle and integration of the global mining industry, Zijin Mining's overseas mergers and acquisitions have reached a dizzying level.

Since 2015, the mergers and acquisitions of projects such as Congo (DRC) Kolwezi Copper Mine, Kamoa-Kakula Copper Mine, Serbian Boll Copper Mine, Timok Copper and Gold Mine have made Zijin Mining's copper resource reserves in five years. From 15.43 million tons to 57.59 million tons, the company has become the top ten copper mining giants in the world.

However, the capital market is also paying attention. As a mining company that started with gold and took "gold and copper" as its core strategy, Zijin Mining's overseas achievements in recent years have mainly focused on the "copper" sector, while the mergers and acquisitions of overseas gold mines have been relatively silent.

The acquisition of the Wuritika gold mine, in response to the expectations of the capital markets. This is also another major gold project of Zijin Mining following the acquisition of the Pogra Gold Mine in Papua New Guinea in 2015. Zijin Mining has truly achieved geometric growth in copper mines, while overseas gold resource reserves and production have also achieved a new leap, surpassing the country. Become a new important growth pole.

In fact, in addition to Zijin Mining, a number of forward-looking and powerful Chinese gold enterprises have also tried overseas to participate in international mergers and acquisitions in recent years, but there is a lack of world-class high-quality projects in terms of reserve scale and output.

Zijin Mining is clearly taking a bigger step, with statistics showing 1296 tons of overseas gold equity resource reserves and 25 tons of overseas mineral gold in 2019.

Among them: Pogra gold mine equity gold production of about 8.4 tons, is still Zijin Mining's flagship project overseas; Australia's Norton Goldfield, Tajikistan's Zelavshan Gold Mine contributed more than 5.7 tons of gold production, Kyrgyzstan's Otongke Gold Mine gold production increased year by year, in 2019 to achieve 3.8 tons.

After the addition of the Buritika Gold Mine, Zijin Mining's overseas gold equity resource reserves will increase by 18.7% to 1539 tons. Coupled with the continuous release of the original production capacity, overseas equity mineral gold is expected to reach 28.5 tons in 2020, an increase of about 14%.

So far, Zijin Mining's gold and copper dual main business driving pattern has been further established. According to the company, this year has been designated as the "project construction year" to fully promote the transformation of resource advantages into economic benefits.

Strategic Opportunities for the Golden Country

As early as the end of December last year, as soon as the news of Zijin Mining's merger and acquisition was released, public opinion worried about Zijin's security in Colombia.

However, from the perspective of corporate strategists, Chen Jinghe, chairman of Zijin Mining, has his own opinion: "as a latecomer to the global mining market, the projects taken over by Chinese gold mining enterprises from overseas enterprises must have more or less problems, otherwise they will not be sold. If we do not scientifically analyze whether we can change the status quo through innovation, we will simply be deterred because others can't do it, you will miss a lot of development opportunities."

In fact, the social situation in Colombia is far less bad than outsiders think. Christopher Meyer, a well-known American investment observer, wrote in "Global Investment Travel: Investment Adventures Across Six Continents:

"In the past, security problems have plagued Colombia, but now the situation has greatly improved. The situation here is not much different from other cities I have visited around the world, and I have never felt uneasy. At night, restaurants and bars are overcrowded, the sky is illuminated by the lights of tall buildings, and there are bustling passers-by on the sidewalks. Although incidents of rebels endangering personal safety still occur, they are absolutely rare. In 2010, Colombia received about 2.6 million tourists, while in 2005, the official figure was 800000. In this way, Colombia has made considerable progress."

What new opportunities will the prestigious "Golden Country" bring to Zijin?

As far as the merger itself is concerned, in addition to the Wulitika gold mine, Zijin Mining has also obtained 13 mining rights and 10 prospecting rights of mainland gold in the Andean metallogenic belt, which means that there is a prospect of further thickening the resource base.

More importantly, Colombia is rich in mineral resources such as gold, silver and platinum, and is one of the world's famous gold-producing countries, but European and American countries occupy an absolute dominant position in South American gold production. Asian mining companies and South American local enterprises control fewer gold mining projects.

Zijin Mining's acquisition of the Buritika gold mine means opening a channel into Colombia and even South America, giving the company more opportunities and voice to cooperate with international mining companies and deeply participate in the country's mining development.

Website Editor: Gong Li