(Yicai) Dec. 16 -- CMOC Group, the world’s top cobalt producer, said it plans to acquire four gold mines in Brazil for as much as USD1 billion, as the Chinese nonferrous metals giant moves to ramp up gold production amid record high prices.

CMOC will fully purchase the Aurizona and RDM gold mines as well as the Bahia integrated mining area, which includes the Fazenda and Santa Luz mines, from Canada’s Equinox Gold, the Luoyang-based firm announced yesterday. The deals will lift CMOC’s gold output to about eight tons a year.

The deal entails an initial cash payment of USD900 million to Vancouver-based Equinox and sales commissions, payable one year after completion, of up to USD115 million, CMOC said. Brazil has rich gold resources and enjoys relative geopolitical stability, it added.

The takeover comes just five months after CMOC forked out USD419 million for another South American mine, Ecuador’s Cangrejos project, as the Chinese company moves to expand its gold mining footprint on the continent.

CMOC’s shares [SHA: 603993] closed down 2.4 percent at CNY17.50 (USD2.48) each in Shanghai today, though the stock has still gained 163 percent so far this year. In Hong Kong, its stock [HKG: 3993] fell 1.3 percent to HKD18.04 (USD2.32), bringing the year-to-date gain to 244 percent. The broader market also fell.

Aurizona, located in Maranhão state in northeastern Brazil, is expected to produce between 70,000 and 90,000 ounces of gold this year, with the potential to reach 160,000 oz. in the future. RDM in southeastern Minas Gerais state is forecast to output between 50,000 and 60,000 oz. this year, while the Bahia complex in the country’s east should deliver 125,000 to 145,000 oz., the filing showed.

CMOC, which mainly deals in copper, cobalt, molybdenum and tungsten, is in the midst of transforming itself into a more diversified mining group, Li Zeming, investment director at Atta Capital, told Yicai. As copper accounts for a rising share of revenue, adding gold assets will help diversify its product mix, he said.

Gold prices are at historic highs, and while short-term volatility is possible, downside risks over the medium- to long-term appear limited amid waning confidence in the US dollar and as central banks continue to stock up on the precious metal, Li noted.

Spot gold prices have surged more than 60 percent so far this year, hitting a record high of USD4,381.48 per oz. on Oct. 20. As of 3 p.m. Beijing time today, gold was trading at about USD4,289 an oz.

For the January to September, CMOC’s net profit soared 73 percent from a year earlier to CNY14.3 billion (USD2 billion), a record for the period, even though revenue fell 6 percent to CNY145.5 billion (USD20.7 billion).

Editors: Dou Shicong, Kim Taylor