Gold miner Acacia Mining Plc (ACAA.L) said on Friday it was in early talks about a possible merger with Canadian gold miner Endeavour Mining Corp (EDV.TO).
Acacia, which operates mines and exploration projects in Tanzania, Kenya, Burkina Faso and Mali, was responding to media reports.
The company added that there was no certainty of a deal.
Endeavour also confirmed preliminary discussions had taken place with Acacia.
Acacia had a market value of 1.72 billion pounds as of Jan. 12, while Endeavour had a market value of C$ 2.18 billion (£1.3 billion).
Endeavour bought True Gold Mining Inc TGM.V for about C$240 million in March, giving it access to a low-cost gold mine in Burkina Faso.
Gold prices are expected to rise in 2017 as geopolitics, deflationary pressure, more quantitative easing, negative interest rates, Brexit drive demand for the precious metal, which is seen as a safe haven.
(Reporting by Sanjeeban Sarkar in Bengaluru; Editing by Shounak Dasgupta and Sriraj Kalluvila)