Zijin buys Allied Gold stake after $4B deal collapses

Zijin Gold’s planned $4 billion (C$5.5 billion) acquisition of Allied Gold (TSX, NYSE: AAUC) has collapsed after Chinese regulators failed to approve the transaction before the deadline, leaving the state-backed miner with a 9.2% stake instead.

Allied shares plunged 18% to C$24.19 Wednesday morning in Toronto after the companies said they had mutually agreed to let today’s deadline expire because there was “no reasonable likelihood” the remaining closing conditions would be satisfied within the foreseeable future. The stock’s decline values the Canadian gold miner at about C$3.1 billion ($2.2 billion). In New York, Allied dropped 17% to $17.26.

While the deal secured approvals in Canada and other international jurisdictions, it remained stalled in China. Other outstanding issues, including security and streaming arrangements, capital investments and lending agreements, also remained unresolved.

The collapse ends what would have been one of this year’s largest gold mining acquisitions. Zijin, which is indirectly owned by the Chinese government, offered $44 a share in cash for the Toronto-based miner in January, valuing Allied at about $4 billion and marking an all-time high for its stock. Instead, Zijin on Wednesday agreed to buy about 12.8 million newly issued Allied shares at C$32.55 each in a private placement worth about $295 million — a transaction expected to close on or about Aug. 10.

The failed takeover underscores the growing challenges facing large cross-border mining transactions as geopolitical tensions and regulatory scrutiny increasingly complicate deals involving Chinese buyers. The financing nevertheless provides Allied with fresh capital as it ramps up production across Africa.

Growth plans

Allied said it will use the proceeds to complete and ramp up the Kurmuk mine in Ethiopia, expand the Sadiola mine in Mali, increase production at its Côte d’Ivoire operations and fund exploration across its portfolio.

Toronto-based Allied operates gold mines in Mali and Côte d’Ivoire that produce about 375,000 oz. of gold annually and is preparing to begin production at Kurmuk. It went public in 2023, with executive chairman Peter Marrone investing about $50 million of his own money.

Marrone founded Yamana Gold in 2003 and later oversaw its $4.8 billion sale to Agnico Eagle Mines (TSX, NYSE: AEM) and Pan American Silver (TSX, NYSE: PAAS) in 2023.