(Yicai) Jan. 27 -- Shares of Zijin Gold International surged after the unit of China’s biggest mining group said it plans to acquire Canada's Allied Gold, which owns mines in Africa, for CAD5.5 billion (USD4 billion) amid a record-breaking rally in the precious metal’s price.

Zijin Gold [HKG: 2259] closed up 11.6 percent at HKD233 (USD29.87) per share in Hong Kong today, while Zijin Mining Group [SHA: 601899] ended 2.8 percent higher at CNY40.61 (USD5.84) in Shanghai.

Zijin Gold will buy all shares of Allied Gold for CAD44 (USD32) apiece, a premium of about 27 percent over its 30-day volume-weighted average price on the Toronto Stock Exchange as of market close on Jan. 23, the pair announced yesterday.

The deal, which is expected to be completed by April, also requires Zijin Gold to acquire the convertible bonds issued by Allied Gold worth about CAD300 million (USD219.3 million).

Allied Gold’s stock [TSX: AAUC; NYSE: AAUC] gained almost 4 percent to CAD43.40 in Toronto and USD31.60 in New York yesterday.

"Allied Gold has successfully assembled and advanced a portfolio of large-scale, long-life gold assets with compelling expansion potential,” said Zijin Gold Chairman Lin Hongfu. "The acquisition is consistent with our strategy of acquiring high-quality gold assets and expands our presence in Africa.”

Allied Gold produced 10.7 tons in 2023 and 11.1 tons in 2024, and that is expected to have climbed to between 11.7 tons and 12.4 tons last year. As of the end of 2024, it had 361 million tons of gold ore resources and 533 tons of gold resources with an average grade of 1.48 grams per ton.

Gold prices have powered higher over the past two years, culminating in a fresh all‑time high above USD5,100 per ounce yesterday, driven by strong investor demand, geopolitical uncertainty, and central bank buying.

Allied Gold has stakes of 80 percent and 65 percent, respectively, in the Sadiola and Korali-Sud mines in Mali, along with an 90 percent interest in the Bonikro and Hiré mines in Côte d’Ivoire. The firm also has an 85 percent stake in the Agbaou mine in the same country, owns all of the Kurmuk mine in Ethiopia, and holds four exploration licences across Côte d’Ivoire and Ethiopia.

The Kurmuk gold mine is scheduled to start production in the second half of this year. As the Ethiopian government is in charge of building the power transmission facilities from the power grid to the mine, it will be entitled to a 7 percent stake in the mine after it goes into production.

With the reconstruction and expansion project of the Sadiola and Kurmuk gold mines going into operation, Allied Gold's gold output will likely increase to 25 tons by 2029. Meanwhile, the Korali-Sud mine is approaching the end of its mining life.

All of Allied Gold's mines are big open-pit projects that are either in production or about to be put into operation, so they can contribute immediate production and profits to the new owner, Zijin Mining said, adding that, combined with its resource development and engineering capabilities, there is room for further improvement in the production and operation capacity of these mines.

Once the deal closes, following approval by Allied Gold's shareholders, the Superior Court of Ontario, and government agencies, Zijin Gold's asset base will expand to 12 large gold mines in 12 countries. This is expected to significantly enhance the company's asset scale, profitability, and position in the global industry, further consolidating its position and influence in the global gold industry, it noted.

Listed in Hong Kong last September, Zijin Gold integrates and operates Zijin Mining's overseas gold assets. Zijin Mining owns 85 percent of the unit.

Editor: Futura Costaglione