Zijin axes expected gold output after losing PNG mine

Zijin Mining, China’s No.1 gold producer and second largest copper miner, has revised down its gold production guidance for 2020 after Papua New Guinea (PNG) refused to extend the mining lease for the Porgera mine it operates with Barrick Gold (TSX: ABX) (NYSE: GOLD). 

Zijin had forecast gold production for the year of 44 tonnes, rising to 42-47 tonnes in 2021 and 49-54 tonnes in 2022.

Following PNG’s decision, the miner now expects to maintain gold production levels in 2020 “about the same as” last year’s, when it churned out 40.8 tonnes of gold.

The gold producer said it planned to speed up the upgrade and construction of its Longnan Zijin project in China and boost production at other mines in its portfolio in order to offset the loss of Porgera.

Zijin’s share of the mine’s gold production in 2019 was 8.827 tonnes.

The company also said its joint venture with Barrick would “pursue all legal avenues” to fight PNG’s move and “to protect its legitimate interests and recover any damages.”

Looking into acquisitions

Since the mining lease for Porgera expired in August last year, Barrick led attempts to renew it, but faced backlash from landowners and residents over what they claimed were negative social, environmental and economic impacts from the mine.

Negotiations were complicated further by a split among the landowners.

The manager of Porgera, Barrick Niugini Limited, applied for a permit extension in June 2017 that would have renewed its rights for 20 years and had been engaging with the government on the matter since then, Barrick said on Friday.

In response to a request from PNG’s Prime Minister James Marape, the world’s second largest gold miner proposed in 2019 a benefit-sharing arrangement. The deal would have delivered more than half the economic benefits to PNG stakeholders, including the government, for 20 years, according to Barrick.

Zijin, which has a portfolio of producing and developing assets in its home country, Australia, Russia, Mongolia, Serbia and Kyrgyzstan among other countries, said it would pay attention to market opportunities and consider mine acquisitions to boost output.

from MINING.COM https://ift.tt/2KCvfPp