Zijin Mining (601899)： The acquisition of the gold plate of the Continental Gold Company further boosts
Zijin Mining (601899): The acquisition of the gold plate of the Continental Gold Company further boosts
The event Zijin Mining announced that it plans to acquire 100% of the issued shares of Continental Gold (TSX: CNL) in cash for a total consideration of 13.300 million Canadian 杭州桑拿网 dollars (RMB 70.300 million), a 13% premium over the closing price of the underlying December 1.In this transaction, Zijin also subscribed to a US $ 50 million convertible bond issued by Continental Gold to support the construction of the mine.The source of funds for this acquisition is mainly self-raised by the company and will be jointly invested by financial investors.The transaction has not yet been approved by the Continental Gold Shareholders’ General Meeting and other relevant institutions. The core assets of the review target are world-class high-grade large-scale gold mines.Continental’s core asset is 100% equity in Colombia’s Buritica Gold Mine.The mine proved + controlled + preliminary gold resources of 353 tons, grade 9.3 g / ton, which is higher than the average global gold mine grade.4 grams / ton, confirmed + additional 杭州桑拿 reserves of 115 tons, grade 8.4 grams / ton.Continental Gold is expected to be completed and put into production in the first quarter of 2020, with an average annual gold production of 8 in the first 5 years.8 tons, producing 15 silver.4 tons. The average annual output of gold within the service life of the first phase of the project is 14 years.8 tons, producing 14.5 tons. The purchase price is reasonable.Continental Gold has not yet achieved profitability, and may now respond.6 times 2020 P / E (market consensus expectations) and 5.7 times P / B (termination of 3Q19 net assets), the purchase price corresponds to 19.9 times 2020 P / E and 6.4x P / B.The amount of gold resources purchased is priced at US $ 88 per ounce, which lies in a reasonable range of comparable transactions of US $ 50-100 per exchange rate.The total maintenance cost of the Buri Tika gold mine is only US $ 604 / ton (excluding the initial construction cost of US $ 492 / ton), which is less than the global average annual maintenance cost of gold mines in 2018 of US $ 897 / ton. The project’s future profitability and cashFlow budget. Acquisition of Zijin’s gold resources and output.As of the end of 2018, the company’s gold resource reserves (scheduled domestically) were 1,728 tons, and the company guided 39 tons of mineral gold in 2019.After the completion of the acquisition, the company’s gold resource reserves will exceed 2,000 tons. After the Buritica gold mine reaches full capacity, it is expected to increase the company’s mineral gold output by more than 20%. The acquisition may increase the company’s financial leverage.As of 3Q19, the company’s asset-liability ratio was 59%, and its net debt ratio was 88%.After the completion of the A-share issuance replacement Nevsun merger and acquisition is expected to be completed, we expect the asset-liability ratio and net debt ratio to drop to 53% and 61%.Assuming the company completes the acquisition of this completely bankruptcy debt financing, the company’s asset-liability ratio and net debt ratio may rise to 56% and 77%. The gold sector is helping.In 2021, the two copper mines of the company’s Kakula and Timok belt mines were put into production, but before the acquisition of mainland gold, the company’s gold output lacked growth points.We believe that the acquisition will add support to the gold sector and bring the company closer to its goal of producing 50 tons of mineral gold per year, but the company still needs to face operational challenges in the initial stage of mine operation. The progress of risk trading was less than expected; the issue of the Buri Tika gold mine community has caused the price of gold to fall sharply.