REGULATORS in China could derail Zijin Gold International’s proposed $4bn takeover of Allied Gold, casting doubt on the Hong Kong-listed firm’s first major deal since its IPO last autumn, according to a report by the Financial Times.
China’s National Development and Reform Commission has raised concerns about the premium Zijin is paying and the geopolitical risks surrounding Allied’s operations in Mali, said the newspaper citing people familiar with the regulator’s thinking.
The all-cash deal, struck in January at C$44 per share, was widely seen as a high point for gold-market exuberance after bullion hit records above $5,500 per ounce days after signing. Prices have since retreated to around $4,500/oz.
Allied’s biggest mine by current output is Sadiola in Mali, a country that experienced violent attacks by separatist and jihadist rebels in April. The military government has also arrested foreign mining executives and renegotiated contracts with Barrick Gold and Resolute Mining — a track record making Beijing reluctant to deepen Chinese exposure in the country.
The original deal deadline of May 29 has passed. Allied’s shares currently trade at C$34.73 apiece — well below the offer price — suggesting markets are pricing in a real possibility of collapse, said the Financial Times.
A spokesperson for Allied said both parties continued to work towards closing, citing strong commercial logic for the transaction.
Zijin Gold, a subsidiary of Fujian-based Zijin Mining with a $44bn market capitalisation, declined to comment, said the newspaper.
