ZIJIN Mining Group Co. and Shandong Gold Mining Co. have held separate talks with Barrick Gold Corp. to buy a 50 percent stake in its Veladero gold mine in Argentina, according to sources with knowledge of the process.

    Veladero is one of Barrick’s five core mines. It is expected to produce between 580,000 and 640,000 ounces of gold this year.

    The high quality of the mine, production capacity and the prospect for geographical diversification have appealed to the two Chinese suitors, said three of the sources.

    Barrick, the world’s biggest gold miner, has not launched a formal sales process for Veladero and there is no certainty that the talks will result in a transaction, the sources said.

    A potential sale of a 50 percent stake could fetch Barrick more than US$1 billion, two of the sources said.

    “It’s a sensible thing to reduce risk, and bringing in a deep-pocketed partner can help,” said John Stephenson, president of Stephenson & Co. Capital Management, who acknowledged that it is very difficult to make a joint venture work “in the best of times.”

    “In a tighter operating environment with lower commodity prices, it’s important to keep a focus on costs. I think this is a positive move for Barrick,” he added.

    Last month, operations at Veladero were shut down for more than two weeks after a cyanide spill at the high-altitude mine. This was the second cyanide spill at the mine in a year.

    The deal would be the latest instance of Chinese companies investing in Latin America’s resource-rich commodities sector, partly to help meet domestic demand. Chinese investors have poured billions into Latin American acquisitions in recent years, buying into copper and iron ore miners, oil and gas concessions and power grids. (SD-Agencies)