Fitch downgrades Zijin

Fitch Ratings said it downgraded Zijin Mining Group Co., Ltd.’s long-term issuer default rating and senior unsecured rating to BB+ from BBB-. Fitch removed the ratings from rating watch negative.

“The rating actions follow Zijin’s completion of the acquisition of 50.1% of Tibet Julong Copper Co., Ltd. (Julong), which will increase Zijin’s net leverage to around 4x between 2020 and 2021, above the 2.5x level at which we would consider a negative rating action,” Fitch said in a press release.

Zijin is also acquiring Guyana Goldfields Inc. for C$323 million in cash. “Guyana’s mines are in production, and Zijin expects them to contribute 5-7 tons of gold production annually. We view Zijin’s aggressive acquisition strategy as credit-negative and a strain on its credit metrics, as several key assets Zijin has purchased require two to three years to develop, driving up leverage in the near term,” Fitch said.

The outlook is stable.

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