COLOMBIA – In the latest mega-deal sweeping the gold sector, Zijin Mining Group is buying Continental Gold for $1.4 billion in cash.
The cash-rich Chinese gold miner is on an acquisition spree. In early November it said it would buy copper-gold assets in Serbia from Freeport McMoRan for up to US$390 million, and it bought Nevsun Resources for US$1.86 billion just over a year ago.
The Continental purchase will increase Zijin’s gold reserves to more than 2,000 tonnes it said.
“Continental’s 100%-owned Buritica project in Antioquia, Columbia, is one of the largest and highest grade gold projects in the world and represents a highly complementary addition to Zijin’s international asset portfolio,” Zijin Chairman Chen Jinhe said in a statement.
Buritica is expected to pour gold in the first half of 2020, with average annual production of 250,000 oz. gold over 14 years at all-in sustaining costs of roughly US$600 per oz.
Chen also noted that Continental “holds a sizeable and highly prospective land package in Colombia that, combined with the Buritica project, provides Zijin with the leading position in an emerging world-class gold producing region.”
Under the all-cash deal, Zijin will pay $5.50 for each share of Continental—a 29% premium over the Canadian junior’s 20-day volume-weighted average price.
Newmont Goldcorp has agreed to sell its 19.9% stake in Continental to Zijin for US$260 million.
Directors and senior management holding about 1.6% of Continental’s shares have also entered into voting and support agreements with Zijin, one of China’s largest gold producers.
Continental discovered Buritica next to a gold-rich mountain in the Andes, about 72 km from Medellin, Colombia’s second-largest city, in 2008.
The Zijin transaction is one of many M&A deals this year, following Kirkland Lake Gold’s proposed $4.9 billion acquisition of Detour Gold in late November and the US$6.5 billion merger of Barrick Gold and Randgold Resources and Newmont’s US$10 billion acquisition of Goldcorp.
At presstime in Toronto, Continental’s shares were up 10% or 49¢ to $5.36 with 18 million shares traded.
The company has a market cap of $1.1 billion.
This story originally appeared on www.NorthernMiner.com.