Chinese miner Shandong Gold Group is set to enter the Argentine mining industry by agreeing to take a 50% stake in the Veladero gold mine operated by Barrick Gold for $960m.

Through the transaction, the Canadian gold mining giant, Barrick is expected to benefit from the access to Shandong’s internal engineering, construction, and mining expertise.

Especially, it will tap into the underground mining expertise of the Chinese firm while getting access to its capital and equipment.

Shandong chairman Chen Yumin said: “Our goal is to build a long-term relationship with Barrick, and this agreement encapsulates exactly what we wanted to achieve.

“In this global economy, it is more important than ever to find international partners with a common vision for developing mines and generating prosperity in an environmentally and socially responsible manner.”

The cooperation agreement is said to be in line with Barrick’s plans to create partnerships which can yield long-term value for the company owners, government partners and community members.

Apart from partnering on the Veladero gold mine in Jinan, Shandong province, the companies will create a working group to explore the joint development of the suspended Pascua-Lama open pit mining project located in both Chile and Argentina.

The companies have also agreed to assess the scope for additional investments on the highly potential El Indio Gold Belt on the Argentina-Chile border, which is a house to a cluster of high-quality gold mines and projects including the Veladero, Alturas and Pascua-Lama deposits.

Barrick executive chairman John L. Thornton said: “Our ambition is to make Barrick a leading twenty-first-century company in any industry in any jurisdiction, and by definition, that means creating a distinctive, enduring, and trust-based relationship with China and China’s best companies.

“This agreement moves us down that path. Shandong is an ideal partner to help us unlock the untapped mineral wealth of the El Indio Belt over the long-term, while working with us to generate more value from the Veladero mine today.”

As far as the Veladero mine is concerned, a joint venture board comprising nominees from each company will oversee its operations post completion of the deal.

Also, both the mining companies plan to retain the present management team of the Veladero mine to ensure operational continuity.

Barrick will use the sale proceeds to bring down its debt and also in investments for further business growth.

The deal between the two companies is likely to close in the second quarter after meeting all the necessary conditions and approvals.

Image: Barrick Executive Chairman John L. Thornton (left) and Shandong Gold Chairman Chen Yumin (right) mark the signing of a strategic cooperation agreement between the two companies in Jinan, Shandong province, China on Thursday, April 6. Photo: courtesy of Barrick Gold Corporation.