Bloomberg News

China National Gold Said to Talk With Ivanhoe on DRC Copper Mine

March 13, 2014

China National Gold Group Corp. is in talks with Robert Friedland’s Ivanhoe (IVN) Mines Ltd. about buying a stake in a Democratic Republic of Congo copper project, people with knowledge of the matter said.

China’s largest gold producer may seek to acquire about 15 percent of Ivanhoe’s Kamoa project, said two of the people, who asked not to be identified as the talks are private. Ivanhoe is also considering selling a stake in itself, one person said. The Kamoa mine had a net present value of about $2.5 billion after taxes as of November, according to Ivanhoe’s website.

Chinese metal producers are seeking to take advantage of commodity price declines to buy assets overseas. The biggest global mining companies are selling their higher-cost projects and writing down asset values after almost $1 trillion of acquisitions in the sector over the past decade. China National Gold last year ended talks to acquire Barrick Gold Corp. (ABX:US)’s African unit.

Ivanhoe is also in discussions with other Chinese companies, one of the people said without identifying the parties. Wu Zhanming, a spokesman for China National Gold, declined to comment.

In an e-mailed response to questions, Ivanhoe said it’s in discussions to pick “one or more strategic partners to help finance the development of the Kamoa copper project.” The company declined to comment further.

The Kamoa project, about 270 kilometers (168 miles) west of the provincial capital of Lubumbashi, is 95 percent owned by Ivanhoe with the government owning the rest. The company said in November that the mine would cost about $1.4 billion to build and produce 300,000 tons a year of copper. The mine holds an indicated resource of 43.5 billion pounds of copper, according to Ivanhoe’s website.

Ivanhoe, valued at C$937 million ($846 million), also owns the Kipushi zinc and copper project in the DRC and Platreef platinum and copper project in South Africa.

To contact the reporters on this story: Thomas Biesheuvel in London at tbiesheuvel@bloomberg.net; Zijing Wu in Hong Kong at zwu17@bloomberg.net; Christopher Donville in Vancouver at cjdonville@bloomberg.net

To contact the editors responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net; John Viljoen at jviljoen@bloomberg.net Ben Scent


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