Chinese state-owned gold companies are going after some of the most troubled gold companies in Canada, betting that their deep pockets, cheaper access to capital and long time horizons will pay off.
In the past few months, Zijin Mining Group Co. Ltd. proposed a $323-million acquisition of Guyana Goldfields Inc., and Shandong Gold Mining Co. Ltd. offered to buy TMAC Resources Inc. for $207.4-million.
Both Toronto-based companies are among the most beaten-down assets in the Canadian gold sector, with Guyana long grappling with grade problems at its Aurora mine and TMAC struggling for years with an underperforming mill at its Doris mine in the Arctic.
“It has been a pattern,” Barry Allan, analyst with Laurentian Bank Securities Inc., said of the Chinese targeting the problem children of the Canadian gold mining sector. “Certainly the Chinese like deep value.”
The Chinese companies can afford to take their time betting on companies such as TMAC and Guyana Goldfields.
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