Allied Gold Sells Kurmuk Project To China’s Zijin

• Egyptian firm poised to earn USD 375mln from sale, Ethiopian gov’t likely to get nothing

Zijin Gold International is set to acquire Allied Gold Corp, the firm behind the Kurmuk Gold project in the Benishangul-Gumuz Regional State, in full, offering to buy all outstanding shares for 5.5 billion Canadian dollars (USD four billion).

Allied Gold, which is listed on the Toronto Stock Exchange (TSX) and the New York Stock Exchange (NYSE), announced the sale on Monday. Zijin Gold International is a subsidiary of China’s Zijin Mining conglomerate, and is listed on the Hong Kong Stock Exchange (HKEX).

The transaction is set to be finalized in April, according to the announcement, giving Zijin the rights to the Kurmuk project, which incorporates thousands of kilometer squares in Ashashire, Tsenge, Dul Mountain, Dish Mountain, and other nearby potentials, among others.

“Allied Gold has successfully assembled and advanced a portfolio of large-scale, long-life gold assets with compelling expansion potential. As the prospective new owners, we look forward to working with stakeholders in Ethiopia, Mali and Cote d’Ivoire to further advance these operations. Sadiola (Mali) and Kurmuk are generational assets which we expect to provide multi-decade production, complemented by the meaningful production from the CDI Complex. The acquisition is consistent with our strategy of acquiring high-quality gold assets and expands our presence in Africa,” said Hongfu Lin, Chairman of Zijin Gold.

Allied Gold also has projects in Côte d’Ivoire and Mali, where it is reportedly facing pressure from the new military government.

Kurmuk is thought to be one of the largest gold reserves in Ethiopia, and concessions to the site were previously owned by Egypt’s ASCOM.

ASCOM, a conglomerate with strong ties to the Egyptian government, sold 64.5 percent of its stake in Kurkmuk to Allied Gold in 2017. Again in 2023, ASCOM (through its wholly owned subsidiary APM Investment Holdings Limited (APM)), sold the remaining 35 percent stake in Kurmuk to Allied Gold, earning the Egyptian firm 2.6 billion Egyptian Pound at the time.

However, Allied was unable to settle the transaction cost of nearly USD 100 million to ASCOM, and the two eventually came to an agreement that would see ASCOM receive USD 65 million in installments between 2024 and 2027, and retain 11.5 million shares in Kurmuk.

This week’s announcement indicates that ASCOM stands to gain 44 Canadian dollars (USD 32.3) for each share, totaling 506 million Canadian dollars or nearly USD 375 million. This is apart from the installments that was set to end by 2027.

The total project cost of Kurmuk gold project was estimated at between USD300 million and USD500 million. Experts say ASCOM is now taking home money equal to the total project, without adding any value to the project after decades.

The National Service Projects Organization (NSPO), which is the Egyptian government’s military equipment manufacturer, owns a 20 percent stake in ASCOM, entitling it to a fifth of the proceeds from the sale to Zijin.

However, industry observers have doubts about whether the Ethiopian government will approve the transaction between Allied and Zijin. They note the government stands to gain nothing from the deal, and foresee that Zijin could face legal issues in attempting to take over the Kurmuk project on the ground. Allied Gold’s documents indicate Ethiopian government will get 7 percent stake from the Kurmuk project, only after the project starts melting gold. This means government gets nothing from this transaction, as this transaction is taking place before the completion of the project.

These insiders compare the deal to the saga involving Allana Potash, another Canadian-registered company that held a massive potash mining concession in the Afar region for several years. Allana, which was accused of tax evasion, was eventually sold to Israel Chemicals Ltd (ICL) in 2015 without the recognition of the Ethiopian government.

Allied’s surveys confirmed more than 60,000 tonnes of gold reserves in Kurmuk, according to company reports, and the firm was supposed to begin production in mid-2026 before the sale to Zinjin was announced. Whether it will affect the schedule remains to be seen.

In August, PM Abiy Ahmed (PhD) visited Kurmuk and hailed the project as an eye-opening and game-changer for Ethiopia’s gold export ambitions.

The sale to Zijin also coincides with historic gold prices, which surpassed the USD 5,000 mark for the first time this week.

Experts comment that Allied Gold’s decision to sell the Kurmuk project at such an opportune time is illogical.