Zijin Gold International Co.'s proposed $5.5 billion (C$5.5 billion) acquisition of Allied Gold Corp. is facing significant hurdles as China's regulators are delaying approval. Allied Gold's CEO, Peter Marrone, confirmed the situation, indicating the deal is now in jeopardy. This delay has led to a widening of the deal spread, signaling reduced market confidence in the transaction's completion.
Despite the regulatory challenges in China, the acquisition has received strong support elsewhere. Allied Gold shareholders overwhelmingly approved the buyout, with 99.5% of votes cast in favor of the C$44 per share all-cash offer. Additionally, Ethiopian regulators have already approved the $4 billion sale, marking a positive step for the transaction in that region.
The proposed acquisition aimed to expand Zijin Mining's gold mining portfolio in Africa, adding three gold mines with an expected annual production of 400,000 ounces. Allied Gold operates mines in Mali and Côte d'Ivoire and has new projects under development in Ethiopia. The deal was seen as strategically important for Zijin, especially with rising gold prices enhancing miners' margins and cash flows.
Analysts have reacted to the developing situation. Stifel analyst Ingrid Rico and Canaccord analyst Carey MacRury had previously adjusted their ratings and price targets for Allied Gold reflecting the agreement. The regulatory scrutiny from China's National Development and Reform Commission stems from concerns regarding the premium Zijin is paying and the geopolitical risks associated with Allied's gold mine in Mali.
While an Allied spokesperson affirmed that both parties are diligently working towards closing the deal, emphasizing the strong industrial and commercial logic, the continued delay from Beijing creates significant uncertainty. The transaction, initially expected to close by late April 2026, is now prolonged, impacting market expectations and the deal's future.
