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The largest gold mining in China, Zijin, is expanding to the ‘transmission’ of precious metals in an attempt to ensure more supply of bullion at a time of the prices shot.
Transmission is a type of mining financing in which an investor makes a payment to a mine in exchange for a part of future production. The managing director of the Zijin investment subsidiary said that his new transmission fund, the first of a Chinese mining company, is looking to make agreements in Africa and South America, and wants to deploy between $ 200 million and $ 400 million this year.
“We are trying to find undervalued quality resources,” said Lisa Liu, Gold Mountains Managing Director Asset Management, a Zijin subsidiary based in Hong Kong headquarters. “We are really optimistic in gold prices,” he added.
Gold prices have increased 27 percent this year, repeatedly establishing new records to the maximum, since investors have sought safe refuge assets amid agitation caused by the United States commercial policy.
Zijin Mining Group, backed by the State, which is in double list in Hong Kong and Shanghai, is the sixth largest gold producer in the world, as well as an important producer of copper, zinc and lithium.
The market capitalization company of $ 68 billion has been in an international expansion campaign in recent years.
It has bets in copper and gold mines ranging from Serbia to Colombia, Australia and the Democratic Republic of the Congo, and recently invested in lithium with a project in Argentina.
Its asset management unit was established in 2013 and administers more than $ 5 billion. The unit made its first transmission agreement last year and says that the financing model offers “very attractive” performance rates, if gold prices remain high, while mitigating some of the risks that a mine operates directly operating.
The gold mining industry has been invested in new projects, said Liu, expressing concern for long -term supply due to the decrease in gold concentrations in the mineral.
“The under investment has been a big problem … It is really difficult to find quality projects,” said Liu, who is a background geologist.
“The quality of the gold mines … everyone is decreasing,” he added, but said that Zijin’s experience in mining gave him an advantage over other serpentines, an industry traditionally dominated by Canadian groups.
The gold mines have a shorter reserve life than those of base metals, non -precious metals such as copper and zinc, said Michael Widmer, head of metal research in Bofa. “Miners are constantly in the business of having to replace reservations,” he said.
In October, Zijin associated with the Wheaton Priceus Metals transmission specialist in a financing agreement of $ 825 million for a mine in Ivory Coast, directed by Montage Gold. They provided $ 125mn in financing and $ 75mn for a gold current.
In April they also committed $ 25 million to a Gold Stream agreement with Tonguan Gold that involves a gold mine in Gansu province, Central China.
Throughout the world, gold mining companies are struggling with exhausted and minor minerals, a problem facing copper miners.
Last year, the Global Gold Production reached a record, according to data from the Metals Focus consultant, and another record is expected to reach this year.
