Chinese gold miner Zijin to buy Canadian miner Continental Gold
In a deal worth $1.33 billion, Zijin Mining Group Co. Ltd. has agreed to buy Canadian miner Continental Gold in an effort to increase its gold and copper reserves and bolster both cash flow and profits, reports Bloomberg News.
Zijin will pay $5.50 per share in cash for Continental Gold Inc., a premium of 13 percent to Continental’s closing share price on Nov. 29, as the Chinese miner focuses on securing the Canadian company’s flagship Buritica gold project.
According to the Financial Post, the Colombia-based Buritica Mine, which is still in the development stage, has measured and indicated gold reserves of 165 t (182 st) and an inferred reserve of 187 t (206 st), Zijin said. Buritica, whose high-grade ore and generous output estimates make it a rare find, is shaping up as a key test for the future of large-scale underground mining in Colombia.
Output at Zijin Mountain, China’s top gold mine for which the company is named, has continued to drop because of depleting resources.
Bloomberg News cites constant speculation about gold mining acquisitions after a number of deals rocked the industry in the past year including Newmont Mining Corp.’s acquisition of Goldcorp Inc. and Barrick Gold Corp.’s takeover of Randgold Resources Ltd. The two combinations created companies that dwarf the rest of the industry and mean that smaller miners feel the need to consolidate if they want to stay relevant to shareholders.
Continental chief executive Ari Sussman explained that the project is expected to reach production next year and the “timing is right for Continental to sell to a more experienced mine operator.”
Monday’s announcement comes after Zijin said in early November it would buy partner Freeport-McMoran Inc.’s copper-gold assets in Serbia for up to $390 million.