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China's Zijin cuts 2020 gold output target after Porgera mine snub

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04/27/2020 | 09:03am EDT
The company logo of Zijin Mining Group Co Ltd, China's biggest listed gold producer, is displayed at a news conference following its annual results in Hong Kong

China's Zijin Mining on Monday revised down its gold production target for 2020 after Papua New Guinea (PNG) refused to extend the mining lease at the Porgera mine it operates with Barrick Gold Corp.

Zijin, which produced 40.8 tonnes of mined gold in 2019, was previously targeting output of 44 tonnes this year, rising to 42-47 tonnes in 2021 and 49-54 tonnes in 2022.

However, following the PNG decision, Zijin said in a filing it would strive to "maintain the mine-produced gold production volume in 2020 about the same as that of 2019" by speeding up the upgrade and construction of the Longnan Zijin project in China and other mines in its portfolio that were already producing.

The Porgera snub ended months of uncertainty after the lease for the project expired in August but Zijin said its joint venture with Barrick would "pursue all legal avenues to protect its legitimate interests and recover any damages."

Zijin's share of Porgera production in 2019 was 8.827 tonnes.

Zijin said it would "proactively seek lawful and reasonable solutions" to the impasse, the filing to the Hong Kong stock exchange said, warning that a prolonged outage at the mine would "cause losses to all the stakeholders."

Zijin, which has mines in countries including Colombia, Serbia and Australia, said it expected its gold production to maintain "satisfactory growth in the future."

It said it would pay attention to market opportunities and consider acquisitions of producing assets to boost output.

Zijin's shares closed down 4.9% in Hong Kong on Monday and fell 9.2% in Shanghai.

(Reporting by Tom Daly; Editing by Edmund Blair)

Stocks mentioned in the article
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GOLD 0.01% 1943.724787 Delayed Quote.29.01%
LINE CORPORATION 0.00% 5410 End-of-day quote.1.12%
SEEK LIMITED 0.10% 19.55 End-of-day quote.-13.30%
SHANGHAI A INDEX 1.19% 3521.9954 Real-time Quote.10.20%
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