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China's Zijin Mining agrees to buy Canada's Continental Gold for about $1 bln

Credit: REUTERS/BOBBY YIP

Zijin Mining Group Co Ltd, one of China's biggest gold miners, has signed an agreement to buy Canadian miner Continental Gold Inc, saying the purchase would increase its gold reserves and boost cash flow and profit.

By Min Zhang and Dominique Patton

BEIJING, Dec 2 (Reuters) - Zijin Mining Group Co Ltd 601899.SS2899.HK, one of China's biggest gold miners, has signed an agreement to buy Canadian miner Continental Gold Inc CNL.TO, saying the purchase would increase its gold reserves and boost cash flow and profit.

The acquisition, which will cost around C$1.33 billion ($999.92 million) in cash, aims to secure Continental Gold's flagship Buriticá gold project for Zijin, the Chinese company said in a filing to the Shanghai Stock Exchange.

The Buriticá gold project has measured and indicated gold reserves of 165.47 tonnes and an inferred reserve of 187.24 tonnes, Zijin said in the filing.

Zijin expects its gold reserves to exceed 2,000 tonnes after the purchase, with output eventually increasing by about 20%. It added that it expects the Buriticá gold project to generate "robust" profit and cash flow after becoming operational in 2020.

The deal is, however, restricted by external conditions and faces uncertainty, Zijin said, without giving further details.

Monday's announcement comes after Zijin said in early November it would buy partner Freeport McMoran Inc's copper-gold assets in Serbia for up to $390 million, in an effort to boost its resources of both metals.

($1 = 1.3301 Canadian dollars)

(Reporting by Min Zhang and Dominique Patton; Editing by Kirsten Donovan)

((min.zhang@thomsonreuters.com; (8610) 5669-2105;))

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