As the 10-week sideways consolidation continues to build a floor in the gold price just below multi-year resistance at $1800, Chinese global gold miners are making all-cash offers for small-cap juniors at large premiums. This recent wave of Chinese deals for junior firms has come while government lock-downs are systematically being lifted in select mining jurisdictions.
After Chinese firm Zijin Mining Group Co., Ltd. completed the takeover of Canadian miner Continental Gold Inc for C$1.3 billion in early March, Shandong Gold Mining, one of China’s biggest gold producers, entered into an agreement to acquire Toronto-listed TMAC Resources (TMR.TO) for around C$230 million on May 8th.
But the deal will be among the first pored over by Ottawa after it announced in April that it would bring “enhanced scrutiny” to bear on acquisitions by foreign state-owned investors in a period where the COVID-19 pandemic has driven down the value of companies.
Then last week, Zijin nixed a growing bidding war amongst Canadian based firms to acquire Guyana Goldfields (GUY.TO) for C$323 million, bringing an end to a protracted takeover battle for the Canada-listed junior gold miner.
Toronto-based Guyana Goldfields announced on June 3rd that it had received a binding proposal from an unnamed overseas-based miner to acquire the company, valuing it around 35% higher than a previously accepted offer from Silvercorp Metals (SVM.TO).
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