CHINA’S Zijin Gold International has abandoned its proposed takeover of Allied Gold, opting instead to take a $295m stake in the Canadian miner.
A combination of political headwinds and tightened regulations in China on outbound investments eventually put paid to the takeover which was first unveiled in January.
Allied Gold said on Wednesday there was “no reasonable likelihood that the conditions relating to completion of the transaction will be fulfilled by the outside date of July 29 … or within any reasonable time thereafter”.
The deadline for the deal, priced at $4bn, had been extended from May 29. At the time China’s National Development and Reform Commission had raised concerns about the premium Zijin was paying as well as the geopolitical risks of Allied’s exposure to Mali in West Africa.
Allied’s biggest mine by current output is Sadiola in Mali, a country that experienced violent attacks by separatist and jihadist rebels. The company is also developing Kurmuk, a mine in Ethiopia.
The gold price was also trading at about $5,000/oz at the time of the deal. The metal’s price was to continue increasing, to an all-time high of over $5,400/oz, but it has since cooled amid the US attacks on Iran.
In terms of today’s announcement, Zijin will subscribe for 12.8 million Allied common shares at a price of C$32.55 per share, representing the 30-day volume-weighted average price for Allied shares. The price Zijin is paying is below the C$44/share it had agreed to pay in the previous agreement to buy the company.
The $295m proceeds would be for Allied’s growth plans including the ramp up of Kurmuk and the phased expansion of Sadiola as well as additional exploration. On completion, Zijin will hold approximately 9.2% of the issued and outstanding common shares of Allied.
