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Hong Kong-listed Zijin Gold International is snapping up Canada’s Allied Gold in an all-cash C$5.5bn (US$4bn) deal that underscores how record-high bullion prices are driving consolidation in the sector.
Allied, which has mines in Ethiopia, Mali and Côte d’Ivoire, welcomed the deal, which at C$44 a share represents a 27 per cent premium to Allied’s undisturbed 30-day average.
The transaction comes at a time when gold miners are inundated with cash owing to soaring bullion prices, leaving the sector facing choices about how to spend the windfall profits — which are also driving a wave of dealmaking.
For Zijin Gold, the transaction is the first major foray for the $70bn market-cap miner since its blockbuster public offering in Hong Kong last year.
“China is on an acquisition spree. And gold miners are making so much money, they need to spend it fast,” said John Meyer, an analyst at SP Angel.
Record gold prices, which surged to more than $5,100 a troy ounce on Monday, have driven a wave of deals across the sector — including Coeur Mining’s all-share combination with New Gold in November and Northern Star’s all-share purchase of De Grey Mining.
Unlike those scrip-based deals, however, Zijin’s acquisition is notable because it is all in cash and is entirely financed by its own balance sheet.
Allied, led by chair and chief executive Peter Marrone, had a market capitalisation of just C$1.3bn when it went public in Toronto in 2023.
Less than three years later, its value has more than quadrupled.
“This could be the high point of the gold boom,” said an industry executive familiar with the company.
The Toronto-headquartered company produced just under 400,000 ounces of gold last year, and is on the verge of commissioning the large Kurmuk mine in Ethiopia, which is expected to produce its first gold in the middle of this year.
The deal will generate a windfall of more than C$600mn for the two leading executives at the company, Marrone and founder Justin Dibb, according to FT calculations.
Marrone holds around 4.5 per cent of the shares, while Dibb holds around 7.8 per cent of the shares, according to S&P Capital IQ.
Completion of the deal will require approval from 66 per cent of Allied’s shareholders, as well as from Canadian regulators.
Zijin Gold, a subsidiary of Fujian-based Zijin Mining, is among the world’s largest gold companies. Its profits surged 233 per cent last year to $1.6bn, according to financial statements.
Lin Hongfu, chair of Zijin Gold, said the “acquisition is consistent with our strategy of acquiring high-quality gold assets and expands our presence in Africa”.
Marrone said the deal “provides a highly attractive all-cash offer for Allied Gold at what represents an all-time high for the company’s share price, crystallising significant and certain value for its shareholders”.