China’s Zijin Mining to acquire Continental Gold in $1 billion deal

China’s largest gold producer Zijin Mining has agreed to buy Canadian miner Continental Gold for around US$1 billion, in the latest major deal to be struck in the gold sector this year.

State-owned Zijin made a cash offer of C$5.50 per share, which represents close to a 13% premium on Continental’s Friday close price.

The deal will give Zijin access to Continental’s main asset — the Buriticá gold project in Colombia. Buriticá is expected to begin operations next year and will produce 250,000 ounces of gold per annum over a 14-year mine life.

Zijin said the Continental acquisition will increase its total gold reserves to more than 2,000 tonnes and boost its output by nearly 20%.

“[Buriticá] 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,” said chairman Chen Jinghe in a statement.

In a separate statement, the world’s largest gold company Newmont Goldcorp said it would support Zijin’s bid by selling its 19.9% equity stake in the Canadian miner.

Zijin’s bid for Continental comes just a week after Canada’s Kirkland Lake Gold made a US$3.7 billion offer to buy Detour Gold.

A wave of large mergers and acquisitions have washed over the gold sector following the highly publicised multi-billion mergers of Barrick-Randgold and Newmont-Goldcorp earlier this year.