Zijin Mining sees gold in IPO for international arm

The company hopes to take advantage of record gold prices to raise big money from a separate listing for its overseas business mining the precious metal

Key Takeaways:

• Zijin Mining has announced a plan to spin off its overseas gold assets, which account for nearly 70% of its total gold production
• Revenue from the company’s gold mining business represented around half of its total last year

By Lee Shih Ta

Stocks may be fine in normal times, but in turbulent times like now – plagued by geopolitical tensions, inflationary pressure and falling interest rates – gold is glowing more by the day as an investor safe haven. That’s lit a fire under the precious metal, whose price surged to a record high of $3,500 per ounce in April, up more than 30% year-to-date, becoming an investor favorite lately.

As that happens, leading Chinese gold producer Zijin Mining Group Co. Ltd. (2899.HK; 601899.SH) has announced plans to milk its offshore gold assets by separately listing them in a Hong Kong company. Such a plan would see it reorganize its assets by moving several major gold mines in South America, Central Asia and Oceania into its Zijin Gold International Inc. subsidiary, which would get listed through an IPO. It’s a classic case of “striking while the iron is hot,” by taking advantage of the recent upswing in gold prices.

Zijin said the move would accelerate its internationalization, strengthen its capital management efficiency and enhance its capacity for offshore financing and M&A. After the spinoff, Zijin Mining will continue to control Zijin Gold International, and will consolidate the latter’s financials into its own statements.

Booming business

Gold is a major contributor to both Zijin Mining’s revenue and profits. Its 2024 annual financial report shows that gold was the company’s biggest revenue spinner last year, accounting for 49.64% of its total revenue.

Gold contributed 30.07% of the company’s gross profit for the year, significantly higher than the contribution by other metals in its portfolio. Its total gold output last year reached 72.94 tons, up 7.7% year-on-year. Around 65.5% of its gold production came from overseas mines, including the Buriticá gold mine in Colombia, the Norton gold fields in Australia and the Rosebel gold mines in Suriname.

Zijin also leads in terms of its gold-production capacity and size of its gold reserves. It produced 72.94 tons of gold last year, up 7.7% year-on-year, bringing the compound annual growth rate for its gold output to 12% over the past five years. It mined 19.07 tons of gold in the first quarter of this year, up 13% year-on-year. And it raised its target output for the whole year to 85 tons, up 16% from last year.

Data from the China Gold Association shows China produced 298.4 tons of gold in 2024, with Zijin accounting for 24% of that. The company’s gold reserves reached 3,483.7 tons by the end of last year, ranking it sixth in the world on that basis.

As is often the case for miners when their commodity prices rise, booming gold prices provided a lift for Zijin’s business last year – especially on its bottom line. Its revenue rose 3.5% year-on-year to 303.64 billion yuan, while its net profit jumped 51.76% to a record 32.05 billion yuan, well ahead of the 27% rise in global gold prices during the year. The gross margin for its mining products jumped to 57.97%, up 8.88 percentage points from last year, as the company reaped bigger profits for each ounce of gold it mined due to rising prices.

The growth continued in the first quarter of 2025, when the company reported its revenue rose 5.5% year-on-year to 78.93 billion yuan. Its net profit jumped 62.39% to 10.17 billion yuan, marking the first time breaking through the 10 billion yuan mark. Global gold prices rose about 20% during the period, cresting at the $3,500 record high in late April.

Investor appeal of overseas mines

From a strategic perspective, the international asset spinoff is not just an attempt at asset re-rating, but also a forward-looking move for Zijin’s capital management over the longer run. Once its separate listing is complete, Zijin Gold International will be able to act as Zijin Mining’s primary platform for gold resource acquisition and overseas capital management, which will help reduce the parent’s financial burden and geopolitical risk exposure.

A Hong Kong IPO would also allow the newly listed international company to benchmark itself against industry leaders such as Newmont (NEM.US) and Barrick Gold (GOLD.US), in a bid to gain a better valuation than its parent. As an independent entity, Zijin Gold International would have a very strong asset base, accounting for close to 70% of its parent’s total gold output, which could justify such a strong potential valuation.

South America is one of Zijin’s fastest-growing gold-producing regions, accounting for around 30% of the company’s total gold output last year from four gold mines that generated 21.6 tons of the precious metal. A successful spinoff and separate listing would allow Zijin Gold International to become a pure gold play, and an attractive component stock for the world’s many gold ETFs and index funds.

High investor hopes are reflected in Zijin Mining’s stock. On the day of the spinoff announcement, the company’s Shanghai- and Hong Kong-listed shares rose 1.7% and 1.3%, respectively, signaling optimism on the initiative. Many see the move as a way to attract more investors looking for pure gold plays, while a high valuation for the new company could also help to lift Zijin Mining’s own stock.

At the end of the day, executing the spinoff as gold prices are surging looks smart not only from a capital management perspective, but also as a way to better navigate competition for global resources in a changing geopolitical landscape. For investors, Zijin Gold International’s separate listing will open up a new channel for investment in China’s overseas gold resources, which might lead to higher valuations for its gold mining assets, as well as better engagement with international capital.

To subscribe to Bamboo Works weekly free newsletter, click here