Major Chinese state-owned miner Zijin Mining Group is poised to acquire Toronto-listed Allied Gold, which owns assets in three African countries.
The USD 4 billion deal comes as gold prices set fresh records. It also closely follows a summit between Canadian Prime Minister Mark Carney and Chinese President Xi Jinping in Beijing last month, when they reset strained relations but also drew the ire of US President Donald Trump.
Zijin said that its subsidiary Zijin Gold International is ready to purchase all issued shares in Allied Gold for CAD 44 (USD 32.3) apiece, subject to the approval of the latter’s shareholders. The offer is 5.4% above last week’s closing price and puts the total consideration at CAD 5.5 billion (USD 4 billion).
The Canadian company is 15.4% held by its management and directors, while London-based hedge fund Helikon Investments owns 15.2% and BlackRock holds 8.4%. Allied Gold’s shares jumped 4% on January 26 trading in Toronto, ending at CAD 43.4 (USD 31.8), closing the gap with Zijin’s offer price.
Likewise, Zijin Mining shares surged in Tuesday morning trading: In Hong Kong the shares jumped more than 7% to HKD 45.18 (USD 5.8), while in Shanghai they increased as much as 8% to RMB 42.68 (USD 6). Both stocks ended the day up slightly less than 3%, at HKD 43.4 (USD 5.6) and RMB 40.61 (USD 5.7), respectively.
Zijin Gold International, which is separately listed in Hong Kong, gained more than 19% to reach HKD 248.6 (USD 31.8) at one point in early trading, and ultimately closed 12% higher at HKD 233.6 (USD 30).
The crux of the deal for Zijin is to obtain a total of ten gold mine interests in Mali, Ivory Coast, and Ethiopia, including sites that will come on stream in coming years.
As of the end of 2024, Allied Gold owned 533 metric tons of gold resources. It produced 10.7 tons in 2023 and 11.1 tons in 2024, and it is estimated to have produced between 11.7 tons and 12.4 tons last year.
While certain mining assets are maturing, the Kurmuk Gold Mine in Ethiopia is expected to start production during the second half of this year. With upgrades and expansion of certain projects, annual gold output could increase to 25 tons by 2029, according to a joint filing by Zijin and Zijin Gold.
Zijin and Zijin Gold expect the overall investment payback period for the announced acquisition “will be short,” thus the “economic benefits are significant,” according to the companies’ two chairmen, the parent’s Zou Laichang and the subsidiary’s Lin Hongfu.
The pair stated that the latest acquisition “will efficiently strengthen the resource base and create operational services for Zijin Mining and Zijin Gold International in Africa.”
As the group already owns the Akyem Gold Mine in Ghana, a neighbor of Ivory Coast, they expect a “strong synergistic effect” that will “further enhance their development in the important gold mineralization belt in West Africa.” Meanwhile, the Kurmuk project, one of the four mines in Ethiopia, is close to Zijin Mining’s Bisha Zinc (Copper) Mine in Eritrea, which also promises “significant” synergies.
Upon completion of the deal, Zijin Gold will have control of 12 large-scale gold mines across 12 countries. This, according to the filing, will help the strategic state-owned parent to achieve a “leading position in the global gold industry.”
Lin of Zijin Gold stressed in a separate statement that the acquisition is “consistent with our strategy of acquiring high-quality gold assets and expands our presence in Africa.”
Peter Marrone, chairman and CEO of Allied Gold, said that he and the company’s board are in favor of Zijin’s buyout proposal and recommend that shareholders accept the deal, describing the all cash offer as “highly attractive.”
Other than Allied Gold’s shareholders, the deal requires approval from various authorities in Canada and China.
Jack Shang, Hong Kong-based analyst at Citi, said the acquisition would “enhance Zijin’s gold output and profitability,” while the price is “attractive” considering the value of the metal.
This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.