Shandong Gold buys 50 per cent stake in Barrick mine for $1bn

 

 

The World’s largest precious metal producer, Barrick Gold, has agreed to sell a 50 per cent stake in one of its biggest mines to a state-backed Chinese company as part of a wider deal, for tapping material wealth elsewhere in South America.

Shandong Gold will pay $1bn for half of the Veladero mine in Argentina which can produce  830, 000 ounces of gold this year. Proceeds of the sale will be used to pay back debt and fund new investments.

The mining companies are not developing new mines and projects on their own, but are looking to spread the costs and risks through joint ventures.  Barrick’s massive cost overruns at Pascua-Lama one of the world’s largest underdeveloped gold and silver deposits as the company lost over $5bn of charges on the project. Shandong is an ideal partner to help us unlock the untapped mineral of the El Indio belt over the long term and generate more value from the Veladero mine, according to Barrick’s executive chairman, John Thornton.

Two years ago Barrick sold 50 per cent stake in its Porgera gold mine in Papua New Guinea to Zijin Mining, China’s largest miners. Shandong, listed in Shanghai with a market value of $9bn, produced 1.2m ounces of gold last year, from Sanshandao mine, which is 1.1km deep.

Mr Munk founded Barrick in 1983, growing the company from a junior producer with one mine into the global gold industry leader.

The Veladero mine, 4, 850 meters above sea level and  374 km north-west of the city of San Juan province of Argentina in the highly prospective Frontera district,  is one of the largest gold mines in the world.