As the coronavirus pandemic significantly impaired economies around the world and seeded uncertainty and volatility in global equity markets, it appears that gold prices are one of the few to come out on top. Since the beginning of the year, gold prices have increased by approximately 35%, given that the commodity’s stability as a store of value has increased its demand.
As such, Canada’s sizeable amount of gold reserves have caught the attention of international miners. Some of the smaller gold producers in Canada are being bought up by Chinese miners, for a price that hinders any other otherwise competitive offers. Zijin Mining Group Co. Ltd, has recently purchased Guyana Goldfields (TSX: GUY) for a deal valuation of approximately $323 million, despite facing competition from other bidders.
Silvercorp Metals (TSX: SVM) initially offered Guyana a price of $0.60 per share, which was then followed by a rival offering from Gran Colombia Gold Corp (TSX: GCM) for a price of $0.90 per share. Sensing the competition, Silvercorp increased its offer to $1.30 per share. However, neither of the companies were any match for Zijin Mining, who ultimately offered Guyana $1.85 for each of its shares.
This is not the only Canadian gold mining company Zijin Mining has purchased. Back in December, the Chinese gold miner bought Continental Gold Inc for a cash payment of $1.37 billion. As the uncertainty in global markets continues, especially with the potential threat of a second wave of COVID-19 looming ahead, it will not be surprising to see more international companies take interest in Canada’s gold production.
Information for this briefing was found via Bloomberg. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.