Shandong to borrow $1.26B to buy half of Argentinian gold mine

$960 million deal was announced in April

Top Chinese gold producer Shandong Mining will have to arrange financing before unlocking its half of the Veladero mine in Argentina.

The precious metals miner said today it is seeking up to $1.26 billion in loans to fund the acquisition of a 50% stake in Barrick Gold's operation.

Reuters reports the loans are being sought from two Chinese state-owned banks, with $960 million to be put towards the acquisition and the remaining $300 million as working capital.

In April Canada’s Barrick Gold (TSX, NYSE:ABX), the world’s No.1 producer of the precious metal by value, sold a  50% stake in Veladero to Shandong Gold Group in a transaction worth $960 million.

As part of the deal, the Shandong province-based gold miner will help Barrick move forward with the long delayed Pascua-Lama gold, silver and copper project, straddling the border between Chile and Argentina.

Both companies will also evaluate additional investment opportunities in the area, known as the El Indio Gold Belt.

State-owned Shandong Gold Group is China's largest gold producer, both in terms of output and reserves.

In March Shandong said it discovered what is expected to be the largest gold mine in China, the Xiling gold mine in Shandong province. The company says the deposit has a deliverable gold resource of up to 550 tons after completion of exploration, according to a press release. That converts to 16.041 million troy ounces.