[ET Net News Agency, 6 December 2019] S&P Global Ratings today placed the long-term
issuer credit rating on Zijin Mining Group Co. Ltd. (02899) and issue rating on the
company's guaranteed U.S. dollar-denominated senior unsecured notes on CreditWatch with
negative implications.
The agency aims to resolve the CreditWatch within the next 90 days, in which time it
expects clarity on whether Zijin's proposed acquisition of Continental Gold will go
through.
S&P expects that Zijin's leverage will be materially elevated from S&P's base-case
assumption, should the acquisition of Continental Gold Inc. (Continental Gold) go through.
It anticipates that Zijin's debt-to-EBITDA ratio will increase to 3.4x-3.6x in 2020 and
remain above 3.0x in 2021 if this acquisition is carried out.
Zijin will spend more than RMB5 billion for the acquisition and subsequent investment in
2020. The funds cover acquiring about 70% of Continental Gold's equity, buying back
Continental Gold's existing US$75 million convertible bond, and additional capital
spending before Continental Gold's Buritica gold mine production starts in mid-2020. S&P
also factored in RMB3 billion of Continental Gold debt that will be replaced by Zijin's
own debt financing at the completion of the acquisition. (KL)