Ahead of a planned listing of its international unit on the Hong Kong stock exchange, Zijin Mining, a leading Chinese gold and copper miner, has agreed to acquire a project in Kazakhstan for $1.2 billion.
In a significant announcement to the Hong Kong bourse on Monday, the company articulated a strategic vision aimed at dramatically bolstering its position within the global gold mining industry.
Bolstering gold reserves
This ambitious initiative, centered around a newly disclosed deal, is projected to substantially augment both its gold reserves and its annual production output, South China Morning Post said in a report.
Zijin Mining explicitly stated its intention to ascend from its current sixth-place ranking among the world’s leading gold producers, a position it held last year, to a coveted spot within the top three by the year 2028.
The upward trajectory is directly attributable to the expected benefits of the recently agreed-upon transaction, which is anticipated to unlock significant new gold resources and operational efficiencies.
The successful integration of these new assets and capabilities is considered a cornerstone of the company’s long-term growth strategy, positioning it for enhanced market leadership and sustained profitability in the coming years.
Raygorodok project and market impact
Additionally, the company stated that the agreement would “significantly improve Zijin Gold International’s asset scale, profit margins, and global industry standing,” while also facilitating its listing and share offering in the international capital market.
Zijin Mining had announced in May its intention to increase its annual output of gold. The target for 2028 is set at 100 to 110 tonnes, representing a 36-50% increase from 2024 levels.
Furthermore, the company had announced two months ago its intention to reorganise and list its overseas gold mining assets under Zijin Gold International, a company founded in 2007.
This strategic move aims to enhance shareholder value through asset revaluation.
Zijin Gold International, through a firm it owns, has acquired the Raygorodok gold mine project from Kazakhstan-based Cantech for $1.2 billion.
The mine project is based in northern Kazakhstan.
As of the end of last year, the project reported net assets of $291 million, a net profit of $202 million, and revenue of $473 million.
The mine’s initial development plan projected an economic ore reserve of 94.9 million tonnes, based on a gold price of $1,750 per ounce.
With an average extraction ratio of one gram of gold per tonne of ore, the mine’s facilities could produce approximately 100.6 tonnes of gold.
Gold prices to support expansion
Zijin Mining said:
Under the current gold price environment, there is clear potential to increase resources and reserves and expand production capacity by optimising the pit design at a higher gold price assumption.
Last year, Zijin Mining had produced 73 tonnes of gold. The mine itself produced six tonnes of gold at a cost of $796 per ounce, excluding non-cash expenses such as asset depreciation.
Zijin reported that the London Bullion Market Association’s spot market gold price experienced its most significant annual growth since 2010, surging by 26% throughout 2024.
On Monday, spot gold rebounded to $3,301 per ounce after falling to a one-month low last week.
This year, gold purchases by global investors, including central banks, have further increased.
This surge is attributed to gold’s role as a safe haven amidst uncertain US trade policies, as reported by State Street Global Advisors on June 5.
Resource Capital Funds, a US private equity firm, owns Cantech, which is 65% owned by V Group International, one of Kazakhstan’s largest equity investment firms.
Zijin was expected to complete its acquisition of the Kazakhstan project by the end of September.
Gold mines owned by Zijin Mining are located in Australia, Colombia, Ghana, Guyana, Kyrgyzstan, Papua New Guinea, Peru, Serbia, Suriname, and Tajikistan.
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