Ask AI · Why does Zijin Mining keep going big with acquisitions when gold prices are falling?

01、Plan to take control of Chifeng Gold

On March 23, the international gold price witnessed a rare event. Within one day, London gold prices repeatedly broke through 4500 US dollars, 4400 US dollars, 4300 US dollars, 4200 US dollars, and 4100 US dollars. Although London gold prices rebounded to 4407 US dollars/ounce at the close that day, the price had fallen for 4 consecutive trading days, with a total decline of 12%.

Just as international gold prices were sharply dropping, on March 23 gold giant Zijin Mining announced a major acquisition: the company plans to spend 18.258 billion yuan to acquire control of Chifeng Gold.

This transaction is divided into two steps: first, Zijin Mining’s wholly owned subsidiary “Zijin Gold” will transfer 242 million shares of A-shares to be purchased at a price of 41.36 yuan per share from Chifeng Gold’s former controlling shareholders; this step will cost 10.006 billion yuan. Then, at a price of 30.19 HK dollars per share, Zijin will subscribe for 311 million shares of Chifeng Gold’s H-shares, which is about 8.252 billion yuan in RMB terms.

After adding the 19 million shares of Chifeng Gold it already held, once the transaction is completed, Zijin Mining will hold a total of 25.85% of Chifeng Gold’s shares, becoming its controlling shareholder; the six producing gold mines and one polymetallic mine under Chifeng Gold, as well as its gold assets in West Africa and Southeast Asia, will be formally incorporated into Zijin Mining’s global resource map.

With the courage to put 18.258 billion yuan into this acquisition, Zijin’s confidence comes from its exceptional performance in 2025. The financial report shows that Zijin Mining’s full-year revenue was 349.1 billion yuan, up 15% year over year; the net profit attributable to shareholders was 51.8 billion yuan, up 62% year over year, setting a historical record.

Behind the impressive financials is a double increase in both volume and price for Zijin Mining’s main mineral products such as gold and copper. Over the past year, gold and copper have gone through an epic rally. London gold closed 2025 at 4318 US dollars/ounce, up sharply 64% from the start of the year; London copper (LME copper) also rose 42% for the full year, with the year-end price reaching 12496 US dollars/ton. As gold and copper mine products—the company’s core business—together contributed more than 70% of revenue, the price tailwind has pushed Zijin Mining’s profitability higher.

More importantly, Zijin Mining’s production also increased along with it. The financial report shows that in 2025 the company produced 90 tons of mine gold, up 22.77% year over year; produced 1.09 million tons of mine copper, up 1.56% year over year. With gold and copper as the dual engine of its two main businesses, Zijin Mining is reaping abundant returns. “The reason for changes in revenue is mainly an increase in sales volume and price increases,” Zijin Mining wrote in its financial report.

Back to this 18.258 billion yuan acquisition—its significance to Zijin Mining is substantial. The financial report shows that in 2025 Chifeng Gold produced 14.51 tons of gold and generated revenue of 12.6 billion yuan, up 40% year over year; net profit attributable to shareholders was 3.082 billion yuan, up 74.7% year over year. In addition to increasing Zijin Mining’s gold production on top of the merger year, it is also beneficial for consolidating Zijin Mining’s position as a global leader in gold.

The key point is that Chifeng Gold’s mines are mainly located in West Africa and Southeast Asia—regions that complement Zijin Mining’s existing assets. This makes Zijin Mining’s global gold layout more complete.

Before this acquisition, on January 26 this year, Zijin Mining released an announcement stating that its controlling subsidiary, Zijin Gold International, plans to invest 5.5 billion Canadian dollars (about 28 billion yuan) to fully acquire the entire equity interest of the listed gold mining company “United Gold” in Toronto and New York, and bring the four gold mines under United Gold into its fold.

Adding the spending of 18.258 billion yuan for this acquisition alone, in less than one quarter of 2026, Zijin Mining plans to allocate more than 46.2 billion yuan for acquisitions. According to incomplete statistics, from 2020 to 2025, the money Zijin Mining spent on buying mines and purchasing equity at home and abroad totaled 65 billion yuan. If you include these two new acquisitions in 2026, then since 2020 the total amount Zijin Mining has spent on acquisitions will reach 1100 billion yuan.

02、“Unfazed” by short-term gold price declines

It is worth noting that while Zijin Mining was making big moves in acquisitions and setting new performance highs, the company’s share price still fell from the stage high of 44.94 yuan on January 29 this year to around 30.58 yuan on March 23, a drop of 31.95%.

With the outlook looking all good for Zijin Mining, why did the stock price undergo a major adjustment?

This is also related to the pullback in gold and copper prices. Since February this year, affected by multiple factors, prices for precious metals such as gold and copper have collectively weakened.

After the London spot gold price hit a historical high of 5598.7 US dollars/ounce on January 29, it began to decline steadily. As of March 23, London gold was quoted at 4407.35 US dollars/ounce, down 21.28% cumulatively from the January 29 peak.

Copper is also not doing well. After London copper (LME copper) set a historical high of 14527.5 US dollars/ton on January 29, by March 23 the price had fallen to 12221.0 US dollars/ton, a decline of 15.88%.

Zijin Mining, whose core base is gold and copper, may face a considerable impact from this drop. The financial report shows that the combined mine gold and mine copper account for more than 70% of Zijin Mining’s revenue. Since gold and copper are so important to Zijin Mining, weakness in their prices will naturally have a negative impact on the company’s future performance and stock price.

Although the gold price is facing continued pullbacks, at the earnings briefing, Zijin Mining’s vice chairman and president Lin Hongfu said he was not worried. He stated, “From the short-term perspective, gold prices will experience dramatic fluctuations; but in the long run, issues such as the global governance order and the over-issuance of credit currency have not been fundamentally resolved. Therefore, based on this judgment, the logic that gold maintains high prices or will move higher further has not changed—this is also an important consideration in our investment and acquisition decisions.”

For a long time, the valuation of resource-based companies like Zijin Mining has been anchored within the framework of cyclical stocks, and the valuation level has consistently fluctuated around 20 times. Even if 2025 performance hit historical highs, its valuation level did not show a substantive breakthrough. This is because compared with growth stocks such as new energy and technology, cyclical stocks’ valuations depend more on the prices of core products and the industry cycle trend; therefore, under market expectations of a downturn in gold and copper prices, Zijin Mining’s valuation cannot naturally improve.

Although Zijin Mining’s share price is under pressure, the company has still rolled out generous cash dividends and a share repurchase plan: it plans to distribute 3.8 yuan in cash for every 10 shares, and together with the interim dividends already completed, the total annual dividend amount will reach 15.95 billion yuan. Meanwhile, Zijin Mining announced on March 21 that it plans to use 1.5 billion to 2.5 billion yuan of its own funds to repurchase A-share stock, with a repurchase price not exceeding 41.5 yuan per share.

In addition, at the earnings briefing held on March 23, new chairman Zou Laichang—who will take over on January 1, 2026 from Chen Jinghe—said: considering factors such as the company’s scale of profitability, cash flow situation, and the stage it is in, the company will gradually increase the proportion of cash dividends.

03、New stories are already on the way

As of the end of 2025, Zijin Mining has more than 30 large- and super-large-scale mineral resource development bases in 17 countries, both in China and overseas, including 6 large- and super-large-scale gold mine development bases. Zijin Mining’s business is no longer limited to gold and copper.

As early as 2021, Zijin Mining’s former chairman Chen Jinghe began laying out large-scale lithium resource plans, and also set up wholly owned subsidiaries such as Hunan Zijin Lithium Co., Ltd. to focus on lithium mine development; the company’s development strategy has also upgraded from the “gold and copper dual-engine” approach to building a new growth momentum for lithium resources on the basis of gold and copper, attempting to form a “gold, copper, and lithium” three-engine driving new pattern.

Today, Zijin Mining has formed a lithium resource matrix of “Two Lakes, Two Mines + Zangge synergy.” Specifically, it includes Argentina’s 3Q salt lake, Tibet’s Laga Co salt lake, Hunan’s Xiangyuan lithium mine, the Manono lithium mine in the Democratic Republic of the Congo, and—after holding controlling stakes in Zangge Mining—salt lake lithium mines under Zangge such as Mamu Co, Longmu Co, and Jietee Co, forming development synergies.

The financial report shows that the lithium resource quantity controlled by Zijin Mining exceeds 18.83 million tons; in 2025, lithium carbonate output was 2.55 million tons, which is 96 times higher than in 2024. Management set the 2026 target at 12 million tons, a sharp increase of 380% year over year. By 2028, it plans to achieve lithium carbonate equivalent production capacity of 270,000–320,000 tons, targeting the top 3–5 global lithium producers.

Although the lithium industry is still in a period of bottoming out, and although the lithium carbonate price has already moved away from its historical low, it is trading within a wide range in the 140,000–170,000 yuan/ton low-price area. However, it still has a fairly long recovery period ahead compared with 2022, when prices were often more than 500,000 yuan/ton. That said, leading companies in the lithium industry enjoy a clear growth-valuation premium.

An Oriental Securities research report shows that one of the lithium industry leaders, Tianqi Lithium, has a forecast price-to-earnings (P/E) ratio of 47x for 2026, while Zangge Mining and Salt Lake Co. are forecast at 23x and 22x respectively. By comparison, Zhejiang Securities’ forecast P/E ratio for Zijin Mining in 2026 is only 12x—meaning the valuation of lithium leaders is significantly higher than that of Zijin Mining, a traditional mining company. Although, based on the financial statements, Zijin Mining’s lithium business has not yet contributed actual revenue and profit, the growth value created by this valuation gap could become a new story for Zijin Mining.

This has also led many institutions to look favorably at Zijin Mining’s potential for “valuation re-rating.” In its research report dated January 28, Zhejiang Securities wrote: with the lithium price base bottoming and rebounding, the third growth curve is expected to continue contributing incremental gains, driving a significant increase in performance, and in the future it may achieve a valuation re-rating.

However, there are also cautious voices that insist Zijin Mining is essentially still a “cyclical stock” with gold and copper as its core assets. In a research report published on January 22, Huatai Securities believed that Zijin Mining’s value increase depends on both gold and copper rising in terms of quantity and price, and that its valuation is currently highly aligned with copper stocks—such as Luoyang Molybdenum and Western Mining—with a P/E ratio of around 21x. Only the gold business has room for a value re-assessment, and the report did not mention lithium-related businesses.

Regarding the future development of the lithium business, in his new year address on January 1, Zou Laichang mentioned: “Fully form a lithium segment with global competitiveness.” Lin Hongfu also mentioned at the earnings briefing: looking ahead to 2026, the reversal trend in lithium prices will start, and the lithium industry is evolving from paper oversupply to a tight-balance stance. On the demand side, strong support comes from new-energy vehicles, energy storage, and AI data centers. On the supply side, increment and risk coexist. He believes that in the long run, lithium demand growth is certain, and in 2030 it may exceed 3 million tons.

For the company’s overall future development, Zou Laichang stated in the financial report that it will focus on capacity expansion: in the company’s overall work guideline, it has added an “increasing production” dimension. The company will fully seize the market opportunity presented by current high metal prices, and strive to complete major incremental projects and achieve commissioning and full production “beyond expectations,” accelerating the release of capacity for its main mineral varieties, and nurturing a group of new key growth engines.

From stepping up M&A of gold mines to expanding the lithium business, Zijin Mining’s path of “increasing production” continues.

(The author is Zhou Xiaguan; the editor is Langming; image source is Visual China; this content is from Caijing Tianxia WEEKLY.)