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Its miners renew their mining rights denied higher gold prices Zijin mining industry was hit by a bolt from the blue
Apr 27,2020 13:46CST
On the evening of April 26, Zijin Mining announced that Bogla Gold Mine, one of the company's main sources of gold, had been refused by the local government to renew its mining rights.
The content below was translated by Tencent automatically for reference.

SMM4 27: 2020 capital market "black swan" flying, thunder constantly, with the continuous development of the epidemic situation in China, driving the development of the world economy, the foreign epidemic has been worsening, the international gold price has also risen, just when the gold price repeatedly hit new highs, Zijin Mining, a world-class mining group dominated by gold and basic metal mineral resources exploration and development, has exploded.

On the evening of April 26, Zijin Mining announced that Bogla Gold Mine, one of the company's main sources of gold, had been refused by the local government to renew its mining rights.

As soon as the news came out, the A-share Zijin Mining fell sharply at the beginning of trading on Monday, falling by the limit at one point in early trading.

In Zijin Mining announcement, the company in Papua New Guinea (hereinafter referred to as "PNG") Pogra gold project, did not obtain the PNG government special mining rights extension application. For this mine in 2019, the Bogla gold mine contributed 8.83 tons of mineral gold to the Zijin mining industry.

Bogla Gold Mine is the largest source of mineral gold in Zijin Mining, accounting for about 21% of the company's total mineral gold. Bogla Gold Mine is also the largest source of profit for the company's gold plate, so the shutdown of Bogla Gold Mine will have a great impact on the company's gold production. Zijin Mining said it would strive to produce the same amount of mineral gold in 2020 as the previous year.

The mining rights of the Bogla gold mine expired in August 2019, and according to the PNG National Court, the Bogla gold mine can continue to be produced until the PNG Government makes a decision to extend the mining rights.

Bogla Gold Mine is a world-class shallow hydrothermal gold mine. When Zijin Mining was acquired in 2015, it ranked 36th in the world in terms of gold production, and 65th out of 580 gold deposits in the world.

According to Zijin Mining 2019 report, Pogra metal reserves are 314.31 tons, recoverable reserves are 153 tons, the remaining mining life is 9 years of open mining and 11 years of ground mining. The grade is 4.22. During the reporting period, Zijin Mining produced 301292 kg of gold, an increase of 24.69% over the same period last year (same period last year: 241628 kg). Of this total, mineral gold was 40831 kg, up 11.87% from the same period last year (36497 kg in the same period last year).

Zijin Mining Gold sales accounted for 57.98% of the operating income for the reporting period in 2019 (after offsetting), and gross profit accounted for 30.94% of the Group's gross profit. In 2019, the operating income of the Bogla gold plate was 2.786 billion yuan, and the net profit was 527 million yuan.

Benefiting from the continued rise in gold prices in 2019, the company's gross profit margin on mineral gold reached 41.82%, up nearly 10 percentage points from 2018 and the highest level in nearly five years. In addition, the international gold price continues to rise in 2020. At the high point of the gold price, the loss of mining rights in Bogra Gold Mine has a great impact on the profits of the company.

Zijin Mining believes that the Bogla Gold Mine is an important economic source for the PNG government and Nga Province, and has an important impact on the employment of the national and provincial governments, landlords and communities, and that it is in line with the interests of all parties to realize the stable and sustainable operation of the mine. While taking into account the interests of all parties, the Company will actively seek legal and reasonable solutions. If the parties fail to reach a new agreement, the long shutdown of the mine will cause losses to all related parties. Fortunately, Zijin has recovered the full cost of its investment.

As soon as the matter came out, it disrupted the plan of the purple gold mine. In addition, Barrick (BNL), a joint venture of world gold giant Barrick in Papua New Guinea, also holds a 95 per cent stake in the Pogra gold mine project in Pogala, Paxinga province.

On 24 April, PNG Prime Minister Malape issued a statement saying that the Government had decided to reject, in accordance with the law, the application of Pogra Gold Mine operator BNL for a 20-year extension of the mining licence. The PNG government said it would form a national negotiating team to consult on follow-up matters.

According to BNL, the decision of the PNG Government not to grant an extension of the Bogla gold mining rights was without due process and violated the legal obligations of the PNG Government to BNL, and that the vast majority of the population and landowners in the area where the mines were located supported the extension of mining permits. BNL said it was willing to negotiate with the prime minister, central government, provincial government and landowners on the extension of mining rights, asking the government to reconsider its decision not to grant extension of mining rights and to seek a new cooperation plan.


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