Allied Gold (TSX:AAUC,NYSE:AAUC) and Zijin Gold International (HKEX:2259,OTCPL:ZJNGF) have abandoned a previously announced US$4 billion takeover agreement amid cross-border regulatory hurdles, pivoting instead to a C$416.64 million private placement that grants Zijin a 9.2 percent stake in the Canadian producer.
The change ended an arrangement that would have seen Zijin acquire all outstanding Allied shares, with the companies attributing the collapse to “broader external factors applicable to cross-border transactions of this scale.”
To maintain its exposure to Allied’s African asset portfolio, Zijin announced the purchase of 12.8 million common shares of the company at C$32.55 each. The deal closed on August 10.
Market observers cited Chinese regulatory friction as the primary obstacle to the outright acquisition. Research firm H&P Advisory identified approval from China’s National Development and Reform Commission as the main hurdle.
Despite the takeover collapse, analysts view the C$416.64 million equity injection as a balance sheet stabilizer that supplements Allied’s end-of-June cash position of US$192.2 million.
H&P raised its valuation for Allied at a 104 percent premium.
The valuation upgrade incorporates a revised mine plan at the Bonikro project that extends operations to 2036, pushing its estimated asset value from US$365 million to US$949 million.
Operationally, Allied delivered second quarter gold production of 97,400 ounces, aligning with estimates, while generating revenue of US$366.3 million and EBITDA of US$165 million.
Allied will deploy the fresh capital to accelerate growth initiatives across its portfolio. Immediate focus rests on the Kurmuk project in Ethiopia, where operations are slated to begin this August with first gold expected weeks later.
H&P projects that Kurmuk will produce 130,000 ounces in 2026, eventually scaling to 240,000 ounces annually at an all-in sustaining cost of US$1,100 per ounce.
Proceeds will also fund the phased expansion of the Sadiola mine in Mali, which accounts for US$1.5 billion of the company’s operational net asset value, and production increases at the CDI complex in Côte d’Ivoire.
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Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.
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