ZIJIN Gold International, the Hong Kong listed firm, is to buy African miner Allied Gold in a C$5.5bn cash deal, the companies announced on Monday.
Zijin, a unit of Zijin Mining, will pay a price of C$44 per Allied share. Allied’s board had agreed to accept the offer, said CEO Peter Marrone. Allied has operating gold assets in Mali and the Ivory Coast and is developing a new project in Ethiopia called Kurmuk.
The cash offer from Zijin Gold represents a premium of about 27% over Allied’s 30-day average price as of market closing on January 23, the company said.
“The announced transaction provides a highly attractive all-cash oer for Allied Gold at what represents an all-time high for the company’s share price,” said Marrone. He added the decision to sell is the result of a strategic review dating to 2024 in which the firm looked at possible other combinations and joint ventures.
These discussions included “potential transformative business combinations, ranging from mid-tier development and producing companies in Africa to diversied international precious metal producers,” he said.
The acquisition will add three mines to Zijin’s portfolio that were expected to produce up to 400,000 ounces of gold last year, said Bloomberg News. Sadiola in Mali accounts for about half of that total. Zijin Mining already has multiple projects in Africa including copper and lithium assets in the Democratic Republic of Congo and a gold mine in Ghana, it said.
Zijin Mining has quickly become one of the world’s largest producers of gold and copper. Zijin Gold’s offer for Allied Gold requires the support of two-thirds of voting shareholders. Allied has the right to make a “fiduciary out” allowing it to accept a “superior proposal”. However, a break fee of C$220m is applicable in certain circumstances, the company said.
Zijin’s offer comes on the day gold ripped past $5,000/oz. “We have passed another threshold, just much faster than I thought we would,” Michael Haigh, analyst at Société Générale told the Financial Times.
“People are price insensitive to gold now, as they expect this momentum to continue,” he added. Global “uncertainty levels are high”, he said, pointing to recent events in Venezuela, Greenland and Iran as factors that had driven investors to traditional haven assets, such as bullion.
Gold has risen 18% so far this month, putting bullion on course for its strongest month in more than 40 years.
