CHINA'S lead gold and copper producer, Zijin Mining Group, said it would invest nearly US$409 million in two mining deals to boost reserves.

Zijin said in a statement filed to the Hong Kong Stock Exchange today it had agreed to buy a 45 percent stake in Gold Eagle Mining Investment, which owns the Xietongmen copper and gold project in Tibet from Jinchuan Group for US$228 million.

"The basic facilities can fulfill the mining requirements. The cooperation with Jinchuan Group will enhance our risk resistance ability in the development of the mine," Zijin said. Jinchuan is China's top nickel producer.

In a separate deal, the company has agreed to pay A$175 million (US$181 million) for a gold project in Gansu Province from Australia's Warrior Advance Pty Ltd and Dragon Mountain Gold Ltd.

The two acquisitions will increase Zijin's gold reserves by 49.5 percent to 1,121 tons and its copper deposits by 20.6 percent to 12.76 million tons, GF Securities analyst Xiao Zheng wrote in a note.

Xiao, however, said it was too early to assess when the two acquisitions would contribute to Zijin's production and earnings, because infrastructure construction on both projects were still under way.

The Tibet project especially posed risks and required larger investment, he said, citing high latitude, adverse climate and environmental conditions, he said.

Fujian Province-based Zijin, hit by a number of pollution and accident scandals earlier, is on a spending spree to take advantage of mining valuations driven down by the slowing global economy.

The analyst said Zijin was paying about 14.6 million yuan per ton for the gold mine in the Tibet deal and 9.6 million yuan in the Gansu purchase, both of which represented relatively low prices compared with other domestic projects.

Source:Shanghaidaily