China’s Zijin Mining to buy Allied Gold for $5.8 billion in growth push

A Zijin Mining Group subsidiary has agreed to buy Allied Gold, which owns gold mines in Africa, for $C5.5 billion ($5.8b) in the latest step in the Chinese company’s rapid growth.

Zijin has quickly become one of the world’s largest producers of gold and copper. Allied has producing gold assets in Mali and the Ivory Coast, and is developing a project in Ethiopia. The deal is among the largest acquisitions of a Canadian-registered mining company by a Chinese investor.

The cash offer from Hong Kong-listed Zijin Gold International represents a premium of about 27 per cent over Allied’s 30-day average price as of the January 23 market close, the Canadian company said in a Monday statement. The transaction was announced on the day bullion breached $US5000 an ounce for the first time, continuing a breakneck rally as global upheaval sparks demand for a haven.

The acquisition will add three operating mines to Zijin’s portfolio that were expected to produce up to 400,000oz of gold last year. Sadiola in Mali accounts for about half of that total. Zijin already has multiple projects in Africa, including major copper and lithium assets in the Democratic Republic of Congo and a gold mine in Ghana.

Kurmuk — which will be Ethiopia’s first industrial-scale gold mine — and Sadiola “are generational assets which we expect to provide multi-decade production”, Zijin Gold chairman Hongfu Lin said in the statement.

Zijin — which is China’s biggest mining company and listed its overseas gold unit in September — said this month it plans to step up acquisitions globally, eyeing opportunities in gold and copper in particular. The firm is targeting double-digit growth this year for output of both metals, which have notched a series of all-time highs in recent months.

Canada has tightened rules around foreign deals in mining, including limiting state-owned entities from buying stakes or doing takeovers of critical minerals assets under its Investment Canada Act.

Canada blocked a plan by China’s Shandong Gold Mining to acquire TMAC Resources in 2020, citing national security concerns over a deal for a gold mine operation in the country’s north. But other Chinese deals involving gold firms with assets outside Canada have been approved, including Osino Resources’ takeover by Shanjin International Gold in 2024.

The deal is subject to approvals by Allied shareholders and Canada, along with competition and regulatory approvals in various jurisdictions including China.

Bloomberg