Zijin Gold International Co.’s ZIJMF $5.5-billion planned acquisition of Allied Gold Corp. AAUC-T is in jeopardy, with China dragging its feet on approving the transaction, Allied chief executive Peter Marrone told The Globe and Mail.
In January, Zijin Gold offered $44 a share in cash for Toronto-based Allied, which at the time represented an all-time high for the stock.
The deal promptly won approval from Canada and other international jurisdictions, but it has yet to get the nod from authorities in China. Other matters crucial for closing the deal, including security and streaming arrangements, capital investments and lending agreements, have also been tricky to nail down, Mr. Marrone said in an interview Tuesday afternoon.
“We need the concurrence of lenders, and in jurisdictions such as Canada, where you’ve got a very understandable process relating to registration of security, that’s comparatively easy,” he said. “But in some jurisdictions that don’t have that experience, don’t have those laws, it requires considerably more effort.”
Previously, the company had hoped to close the transaction by July 29, but it’s now clear that timeline will not be met.
“It seems as if it will take a considerably longer period of time to get to a point where the deal could close,” Mr. Marrone said.
Mr. Marrone, who is also chairman of Allied, said his company and Zijin Gold are in talks and looking at various options to keep the transaction alive, but he conceded that terminating the deal is a possibility.
Allied Gold operates mines in Mali and Ivory Coast, producing about 375,000 ounces of gold a year, and is soon starting up a new mine in Ethiopia. The company went public in 2023 with Mr. Marrone investing about $50-million of his own money into it.
Other possible outcomes include a renegotiation of the acquisition price with a later target closing date, or an entirely new transaction with Zijin taking a stake in Allied Gold, as opposed to buying it outright.
“We’d like to continue an association with the company, because it may very well be that they can provide us with something that’s beneficial,” Mr. Marrone said.
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Previously, Mr. Marrone served as executive chairman of Yamana Gold Inc., which he founded in 2003. He oversaw the sale of Yamana to Agnico Eagle Mines Ltd. and Pan American Silver Corp. for US$4.8-billion in 2023.
Zijin Gold trades on the Hong Kong Stock Exchange and is controlled by Zijin Mining Group Co. Ltd., which is partly state-owned.
The company did not respond to a request for comment.
If the deal ends up getting renegotiated, Allied will be looking for a higher valuation, Mr. Marrone said. That’s because its Kurmuk mine in Ethiopia, due to start production within the next month or so, will materially add to its production.
“We’re literally on the cusp of a complete change of the company with the startup of operations in Ethiopia with our Kurmuk mine,” he said.
Allied in May said it expects Kurmuk to produce an average of 290,000 ounces of gold a year over its first four years.