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(Bloomberg) — Zijin Gold International Co.’s deal to acquire Canada’s Allied Gold Corp. has been scrapped, with the Chinese mining company opting instead to invest about $295 million in the African-focused gold producer.
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Zijin and Allied Gold terminated the deal after concluding there’s “no reasonable likelihood” that all conditions to close the C$5.5 billion ($3.9 billion) transaction would be done by a July 29 deadline, the companies said Wednesday in separate statements. While Allied Gold’s acquisition had been approved by Canada, the deal hadn’t yet secured approvals from China.
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US-listed shares of Allied Gold fell 17% in premarket trading in New York on Wednesday.
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The collapse of Zijin’s acquisition of Allied ends what would have been one of the largest takeovers of a Canadian mining company by a Chinese investor. The deadline for the deal had already been extended once against a backdrop of increasing headwinds, including rising geopolitical tensions, volatile metals markets and tighter Chinese scrutiny of outbound investment.
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Zijin’s new agreement with Allied Gold will see the Chinese firm buy 12.8 million shares of the Toronto-based company for C$32.55 apiece, marking a 10% premium to Tuesday’s closing price in Canada. Once completed, the investment will see Zijin Gold hold about 9.2% ofthe issued and outstanding common shares of Allied Gold, according to the companies.
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Zijin Gold is a unit of China’s Zijin Mining Group Co., one of the world’s most acquisitive miners. The group has expanded aggressively through deals in China, Africa and Latin America to become a leading global producer of gold and copper. Allied Gold operates gold mines in Mali, Ethiopia and the Ivory Coast.
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Mining companies have been grappling with a more challenging operating environment in Africa. In parts of the continent, some mineral-rich nations are demanding a greater share of the benefits generated by their natural resources, including higher-value employment and increased tax revenue. In Mali, foreign operators of some of the country’s largest gold mines have also become embroiled in disputes with the military-led government.
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—With assistance from Annie Lee, William Clowes and Manuel Baigorri.
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