Lundins, Zijin Mining agree on $62M investment in Predictive Discovery

Predictive Discovery (ASX: PDI) said the Lundin family, their associates and Zijin Mining agreed to invest about A$69.2 million ($62 million) to help the Australian miner press ahead with development of a major gold project in West Africa. Shares rose.

The Lundins plan to invest about A$45.1 million to acquire a 6.5% stake, Predictive said Tuesday in a statement. Zijin, meanwhile, will pay A$24.1 million for a 3.5% interest.

Proceeds will be used to prepare a definitive feasibility study of the Bankan gold project in Guinea, which is expected in the second half of this year, Predictive said. The investments will also help advance environmental and social programs, continue regional exploration and conduct selected early development activities. Pre-production capital costs are estimated at US$456 million, Predictive said.

‘Vote of confidence’

“(The financing) highlights Predictive’s sought-after status,” SCP Resource Finance analyst Justin Chan wrote in a note to clients. The investment “is a major vote of confidence which increases the chances for a competitive M&A process, especially given Bankan’s globally rare combination of size and grade.”

Perseus Mining (TSX: PRU; ASX: PRU) is Predictive’s biggest shareholder, with a stake of 19.9% as of the end of 2024. New York-based BlackRock controlled 14.1%.

The Lundins and Zijin are already the largest shareholders of Montage Gold (TSX: MAU), which is developing the fully permitted Kone Gold Project in Cote d’Ivoire. The Lundins own 19.9% of Montage, compared with Zijin’s 9.9% stake.

“With strong supportive shareholders in the Lundin Group and Zijin, this is likely to create some competitive tension from an M&A perspective,” BMO Capital Markets analyst Raj Ray said in a note to clients. “That will be positive for Predictive’s shareholders.”

Predictive shares jumped 13% to A30¢ apiece in Sydney on Tuesday, giving the company a market capitalization of A$705.3 million. The stock has gained 50% in the past year.

Tier-1 status

Bankan, which hosts about 3 million oz. in probable reserves (57.7 million tonnes grading 1.64 grams gold per tonne), could produce 270,000 oz. per year. Predictive describes the project as West Africa’s next tier-1 gold mine.

Guinea’s environment ministry last month approved the Bankan project’s environmental and social impact assessment. It also issued a certificate of environmental compliance.

Predictive will have a cash balance of A$98 million once the investment has been completed.

“This capital raise provides a strong financial platform for PDI to accelerate the Bankan Gold Project,” Predictive’s managing director, Andrew Pardey, said in the statement. “PDI will be fully funded through to a development decision and will also be able to conduct selected early works and continue our regional exploration programs.”

The Lundins own stakes in several public companies that focus on the minerals, metals, renewables and energy sectors. They include Lundin Mining (TSX: LUN) and Faraday Copper (TSX: FDY).