Guosen Securities has released a research report initiating coverage on Zijin Gold International (02259) with an "Outperform" rating. The report states that the company inherits the competitive advantages of its parent, Zijin Mining Group, in the mining sector, with a deep focus on overseas gold resources. It highlights that a strategy of low-cost acquisitions combined with technological empowerment positions the company for strong future growth. The main viewpoints from Guosen Securities are as follows.
Zijin Gold International is a globally leading gold mining company formed through the consolidation of all of Zijin Mining Group's overseas gold mines. It has inherited Zijin Mining's management expertise in the exploration, development, and operation of low-grade, hard-to-process resources, establishing itself as a top-tier, market-oriented gold producer. The company is primarily engaged in the exploration, mining, processing, smelting, refining, and sales of gold.
Currently, the company holds interests in nine gold mines located in gold-rich regions such as Central Asia, South America, Oceania, and Africa. These include the ZGC/Taror Gold Mine in Tajikistan, the Zuoan Gold Mine in Kyrgyzstan, the Norton Gold Fields in Australia, the Aurora Gold Mine in Guyana, the Buriticá Gold Mine in Colombia (via a Colombian trust arrangement), the Rosebel Gold Mine in Suriname, the Akyem Gold Mine in Ghana, the Reko Diq Gold Mine in Kazakhstan, and the Porgera Gold Mine in Papua New Guinea. By adapting its operational model to the unique characteristics of each mine and continuously improving resource development and operational efficiency, the company has successfully secured a leading position in the global gold mining industry.
The company boasts abundant gold reserves and demonstrates strong future growth potential through low-cost acquisitions and technological empowerment. As of the end of 2024, the company's gold reserves were approximately 856 tons, ranking ninth globally. Zijin Gold International excels at developing low-grade, refractory gold resources. As gold prices rise, the company plans to reassess its mine resources, re-evaluate technical renovation and development plans, fully utilize low-grade resources, extend mine lifespans, and enhance overall mine value.
From 2022 to 2024, the company's gold production achieved a compound annual growth rate (CAGR) of 21.4%. This growth stemmed from both the acquisition of new mines and technical upgrades and expansions at existing operations. Furthermore, based on projections, the company's gold production CAGR from 2025 to 2027 is expected to remain above 15%, sustaining a rapid growth trajectory.
The company has planned a series of construction and expansion projects within its existing mining areas to boost production capacity and resource conversion. These include: 1) At the ZGC/Taror Gold Mine in Tajikistan, ongoing development of comprehensive utilization technologies for difficult-to-process ores, including mixed oxide and sulfide ores, and continuous optimization of the beneficiation process; 2) At the Norton Gold Fields in Australia, accelerated progress on key projects, including the Phase II of the Binduli North heap leach pad, an upgrade of the Paddington processing plant to handle refractory ores, and the development of new underground mines, aiming to increase annual processing capacity from 9 million tons to 11 million tons; 3) At the Aurora Gold Mine in Guyana, plans to gradually commission the first phase of the underground mining project in 2025 and fully achieve the targeted annual capacity of 3.3 million tons from the processing plant upgrade; 4) At the Buriticá Gold Mine in Colombia, expectations to increase daily mining and processing capacity from 4,000 tons to 5,000 tons, raise annual mining capacity by 320,000 tons of ore, and achieve an annual mining and processing target of 1.65 million tons of ore, significantly enhancing production capacity; 5) At the Rosebel Gold Mine in Suriname, ongoing studies to increase the integrated annual processing capacity of the current plant from 10 million tons of ore to 11-13 million tons, thereby boosting mine output; 6) At the Akyem Gold Mine in Ghana, plans to deepen the processing plant technical renovation, increasing annual processing capacity from 7.6 million tons to 12 million tons of ore, substantially raising gold production.
The medium to long-term bullish thesis for gold remains intact, with a positive outlook on a sustained bull market. By 2025, the cumulative increase in the gold price had exceeded 65%, marking the best performance since 1979. Looking ahead to 2026, Guosen Securities believes the global gold bull market is likely to continue. One supporting factor is that the U.S. Federal Reserve is highly probable to remain in a rate-cutting cycle during 2026, with market consensus anticipating 2-3 additional rate cuts. Furthermore, the upcoming change in the Fed Chair is expected to maintain a relatively dovish policy outlook. On another front, the long-term drivers of a decline in U.S. dollar credibility and continued central bank gold buying remain unchanged. Coupled with the potential for another U.S. federal government shutdown, the confluence of these factors is expected to further propel gold prices upward.
Key risks include potential delays in project construction timelines and the possibility of mineral product sales prices falling short of expectations.
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