China’s Zijin Mining Group Co. Ltd. is buying Canada’s Continental Gold Inc. for $1.4-billion, the latest big deal in what has been a banner year for mergers and acquisitions in the Canadian gold-mining industry.
Ziijin is offering $5.50 a share in cash for Continental, a 13-per-cent premium over Friday’s closing price.
Toronto-based Continental owns the high-grade Buritica gold project in Colombia, which it intends to put into production next year.
The acquisition of Continental comes a week after Kirkland Lake Gold Ltd. reached a friendly agreement to buy Detour Gold Corp. for $4.9-billion. Earlier in the year, Barrick Gold Corp. acquired Randgold Resources Ltd. for US$6-billion, and Newmont Mining Corp. paid US$10-billion for Goldcorp Inc.
Shares in Continental rose by 10 per cent in early trading Monday on the Toronto Stock Exchange.
Newmont is Continental’s biggest shareholder and has agreed to tender its shares to Zijin. A number of other officers and directors with Continental have also entered into share-lockup agreements with Zijin.
The Buritica mine is expected to produce around 250,000 ounces of gold a year over a 14-year period. Buritica holds 3.7 million ounces of gold in reserves, at a grade of 8.4 grams a ton. Its all-in sustaining cost is projected to be US$600 an ounce – significantly lower than the industry average.
Over the past few years, Fujian-based Zijin has been making increasing inroads into the Canadian mining industry.
Last year, the company acquired Nevsun Resources Ltd. for $1.9-billion, beating out Canada’s Lundin Mining Corp., which had also tried to acquire the Vancouver-based copper miner.
Zijin also owns a 13.9-per-cent stake in Canadian copper miner Ivanhoe Mines Ltd. and is a joint-venture partner in Ivanhoe’s Kamoa-Kakula project in the Democratic Republic of the Congo.
In 2015, Zijin bought half of Barrick’s stake in the Porgera gold mine in Papua New Guinea; each holds a 47.5-per-cent interest in the mine.
Zijin may have to deal with increased security risks in Colombia. Last year, four of Continental’s employees were killed in two separate armed incidents in the country.
Canadian investors are grappling with an uptick in terrorist attacks in the vicinity of major mining sites abroad.
Last month, 39 people were killed after assailants, believed to be jihadi, ambushed a bus convoy carrying employees of Montreal-based Semafo Inc. about 40 kilometres from its biggest mine in Burkina Faso.
With a report from Reuters
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