Citigroup has released a research report stating that Zijin Gold International (02259), an 85%-owned subsidiary of Zijin Mining (02899), has signed an agreement to acquire 100% of Allied Gold for a total cash consideration of C$5.5 billion (approximately RMB 28 billion). The bank forecasts the company's total gold production will reach 11.7 to 12.4 tonnes in 2025 and further increase to 25 tonnes by 2029, following the expansion of the Sadiola project and the commencement of operations at the Kurmuk project. Given the current high gold price environment, Citigroup views the acquisition price as attractive. The firm maintains Zijin Mining as its top sector pick, with a target price of HK$39 and a "Buy" rating.
Citigroup anticipates that acquiring the already operational gold mine will enhance Zijin's gold production volume and profitability. At current gold prices, the acquisition cost is considered appealing. However, this transaction remains subject to approval from Allied Gold's shareholders, the Ontario Superior Court of Justice in Canada, and key regulatory clearances, including those from Canadian and Chinese regulators.
The report also expresses confidence that this acquisition further demonstrates Zijin Mining's commitment to developing its gold asset portfolio through Zijin Gold International.
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