China’s Zijin acquires $1bn Ghana goldfield

China’s Zijin Mining Group is set to acquire the Akyem gold mine project in Ghana from US-based Newmont Corp for $1bn.

The transaction will see Zijin part with $900m in cash upon closure, and an additional $100m upon the satisfaction of certain conditions. The deal, which is expected to close in the fourth quarter, involves Zijin’s subsidiary, Gold Source International, acquiring a Newmont subsidiary that owns the Akyem project.

Akyem’s open pit mine held 34.6 tons of reserves as of December, according to a filing by Zijin to the Hong Kong Stock Exchange. The company revealed that it plans to commence underground operations at the mine from 2028, which will extend its life to 2042 and yield about 5.8 tons of gold annually.

Zijin disclosed that some Ghanaian entities have expressed an interest in acquiring a minority stake in the asset, and that the company is open to exploring potential transactions.

“After study, the company believes that under current and anticipated future gold price conditions, the project’s resources and reserves have significant potential,” Zijin stated.

This acquisition is part of Zijin’s aggressive expansion strategy to bolster its resource base and meet ambitious production targets. The company aims to increase its mined output of gold from 68 tons in 2023 to 85 tons by 2025, and 110 tons by 2028.

Newmont reaffirms Ghanian presence

Newmont noted in a statement that the decision to divest the Akyem gold mine project was driven by the company’s commitment to return capital to investors.

“We believe the proposed transaction results in the greatest overall value for Newmont shareholders and is the best strategic fit for Akyem. We are confident that Akyem will continue to thrive under new ownership with long-term benefits for local stakeholders and surrounding communities,” said Tom Palmer, Newmont’s President and CEO.

Palmer noted that, despite the divestiture, Newmont remains committed to its operations in Ghana, highlighting its investment of $950m to $1.05bn of development capital in the Ahafo North gold mining project in the Ahafo region.

“The successful completion of this transaction will strengthen our confidence in Ghana as a favorable mining jurisdiction, and Newmont will continue to support the growth and development of the region, including our development of Ahafo North,” he stated.

Gold rallies

Gold prices have surged more than 28% year to date and the precious metal is currently trading near record highs. This rally has been driven by optimism over US interest rate cuts, strong central bank purchases, and robust buying from Asia. Additionally, heightened geopolitical risks and uncertainty ahead of the US election in November have strengthened gold’s appeal as a safe-haven asset.

Rising gold prices are a boon for Africa’s top producers, such as Ghana, where gold exports generated $9.5bn in revenue in 2022, accounting for 48% of export earnings and 13% of GDP.

With gold prices set to remain elevated amid falling interest rates and rising geopolitical tensions, experts at Afreximbank’s research unit caution that policymakers in African gold-producing countries need to take measures to prevent the current rally from fuelling informal and illegal mining activities.

“Informal and illegal commodity mining are prevalent in several gold-producing countries, which tend to limit government revenues and export earnings. Rising gold prices fuel these activities,” the experts noted.