China’s Zijin wins over Canadian miner Continental Gold with US$1 billion cash offer

Cash is king and will be hard to top by a rival bidder, according to the head of Continental Gold, which agreed to a C$1.37 billion (US$1 billion) takeover offer from China’s largest listed producer of mined gold.

Continental’s shares rose as much as 11 per cent in Toronto on Monday after the offer from Fujian-based Zijin Mining Group was announced. That is in contrast to Kirkland Lake Gold, whose shares plunged 17 per cent on November 25 after it made an all-stock US$3.7 billion takeover bid for Detour Gold.

“Cash bids are very rare in the gold mining space and we delivered one,” Ari Sussman, chief executive officer of Toronto-based Continental, said in a phone interview on Monday. Only a handful of gold miners would be able to pull it off, he said.

The deal is the latest in a flurry of consolidation in the mining industry. Barrick Gold took over Randgold Resources, and Newmont Mining acquired Goldcorp last year, and smaller miners are hurrying to keep up and stay in the game.

Speculation has long-brewed that Continental was a takeover target. Sussman said he started shopping the company after Newmont’s acquisition of Goldcorp in January, figuring that Newmont, which owns 18.4 per cent of Continental, would have its hands full with Goldcorp and be looking to get rid of noncore assets.

Zijin will pay C$5.50 a share for Continental and said Newmont was supportive, according to a statement. The deal will give Zijin control of Continental’s Buritica gold project in Colombia, which is currently being developed. Continental share were trading at C$5.36 at 1.55pm in Toronto, up almost 10 per cent.