Heap leach project and a heap of related party loans drag Zijin Mining’s Norton Gold Fields into the red

The Australian arm of a Chinese mining giant failed to turn a profit last year thanks partly to mountains of debt owed to a connected entity.

Freshly filed accounts from gold producer Norton Gold Fields, the low-profile Australian subsidiary of Zijin Mining, reveal a bottom line loss of $44.3 million for 2023. This compares to a $18.1m profit in 2022.

Zijin is China’s largest non-coal mining company and Norton, which Zijin acquired in 2012, currently has two mining operations — both near Kalgoorlie.

Production increased from 176,854 ounces to 210,335oz and revenue was up from $438.4m to $561.1m, but expenses ballooned.

Norton’s borrowings with related party Gold Mountain International Mining jumped from $460.4m to $581.9 over the year, and interest payments on the debt nearly doubled from $11.4m to $21.6m.

Norton said the extra debt was used to fund its Binduli North heap leach project. Binduli was commissioned in July 2022 at a cost of $278m but only commenced commercial production in April 2023, according to the Norton financial report.

Costs for “maintenance” surging from $24.8m to $66.4m was another stand-out line item, as expenses rose across the board.

Despite this sharp rise in costs, a gold price repeatedly breaching record highs this year has put wind in the sails of Norton to churn out more ounces of the precious metal.

“As a result of the high gold price, Norton is seeking opportunities to upgrade our plants, and once the upgrades are completed, Norton aims to produce 240,000 ounces of gold annually,” a company spokesman told The West Australian last month.

The timeframe for the upgrades was not disclosed, but if completed over the next year or two a 240koz production profile is above the likes of Genesis Minerals and Capricorn Metals, and within 30koz to 60oz of mid-tier linchpin Ramelius Resources.

The Paddington mine and mill is Norton’s flagship operation, while Binduli’s existence revolves around processing low-grade ores through the heap leaching technique.

Beyond gold, Zijin has exposure to copper, zinc, lead, lithium and platinum group metals. North America and Antarctica are the only two continents Zijin does not have a mining presence in.

Zijin has a market value of approximately $99.3 billion.

Meanwhile, another major Chinese miner operating privately in WA also recently revealed it made a loss for 2023.

Karara Mining — a subsidiary of Chinese government-owned steel giant Ansteel Group — produced a net loss of $410.8m for 2023, according to accounts filed in August, surpassing the $238.3m written in red ink for 2022.

This was despite revenue ticking up marginally from $1.12 billion to $1.13b.

Like Norton, Karara’s financials are entangled in a complicated web of loans with its own parent company and associated entities. Borrowings from “related parties” expanded by $185.7m to $1.03b by the end of last year. Interest payments surged from $160.6m to $308.6m.

Karara owns a namesake magnetite mining project 220km east of Geraldton and has never made a taxable profit. Its accumulated losses stand at $6.75b, making it increasingly unlikely the company will ever have to fork out for income tax in Australia.