Gold mining sector continues to heat up as CMOC Group, traditionally a copper-focused miner, spreads its golden wings. Following its June acquisition of Ecuador's Fruta del Norte gold mine to enter the gold sector, CMOC announced another major move on December 15—a $1.015 billion deal to acquire South American gold assets from Canada's Equinox Gold (EQX). The acquisition is expected to add 8 tons of annual gold production post-transaction.
With gold prices repeatedly hitting historic highs in 2025, the premium-priced deal has raised investor concerns about "buying at the peak." CMOC responded by stating its long-term bullish outlook on gold's value, emphasizing that the acquisition would strengthen resource reserves and secure cash flow.
Industry experts note that while peak-price concerns are valid given current market conditions, companies can mitigate short-term risks through stable cash flow and routine hedging. They project gold prices in 2026 will likely continue rising, though at a slower pace.
**Expanding South American Gold Footprint** CMOC has been actively expanding in gold this year. After acquiring Ecuador's Fruta del Norte mine in June, the company now plans to purchase South American gold assets through its subsidiary. The deal involves acquiring 100% equity in LatAm Holdings and Luna Gold Corp., granting full ownership of the Aurizona and RDM gold mines plus the Bahia complex. At an exchange rate of 7.06, the total transaction exceeds 7.1 billion yuan.
The acquired mines are operational, with both target companies showing steady revenue and significantly higher net profits in 2025 compared to 2024. Combined revenue for 2024 and the first three quarters of 2025 reached approximately 4.145 billion yuan, with net profit at 1.013 billion yuan. As of September 30, 2025, their net assets stood at 3.814 billion yuan.
The transaction carries an 87% premium, which CMOC attributes to thorough due diligence and commercial negotiations. Payment terms include a $900 million upfront payment and up to $115 million tied to sales volume one year post-closure.
CMOC clarified that the base purchase price is $900 million, subject to adjustments based on the target assets' cash and working capital. Additional payments are triggered if CMOC sells over 200,000 ounces of gold within 12 months post-closure, capping at $115 million. The company reported robust operating cash flow of 32.387 billion yuan as of 2024.
While copper remains CMOC's core mining revenue driver (accounting for 65% of H1 2025 mining revenue at 25.718 billion yuan), the company emphasized strategic synergy. "This forms a gold asset portfolio in South America," CMOC stated, noting its operational experience in Brazil since 2016. The deal is expected to close in Q1 2026, adding 8 tons of gold production, with Ecuador's mine projected to start by 2029.
**Peak Price Concerns** Despite CMOC's 173.44% stock surge this year (market cap exceeding 370 billion yuan), market reaction to the acquisition was muted. Shares rose just 1.99% on December 15 and fell 2.4% the next day. Investors expressed concerns about buying gold assets at peak prices, given gold's 61.2% annual gain—its best performance since 1979.
Analysts acknowledge the validity of peak-price worries but highlight CMOC's strong cash flow and hedging strategies. "Short-term volatility is possible, but long-term demand from central banks and loose monetary policies support gold prices," said one expert. Others suggest focusing on long-term resource value rather than short-term price fluctuations.
CMOC has institutionalized hedging since 2021, covering copper, gold, and aluminum. In January 2025, it expanded hedging to include commodities, interest rates, and forex to stabilize against market risks.
Looking ahead, analysts expect 2026 gold prices to rise moderately. CMOC reaffirmed its confidence in gold's enduring value, stating the acquisition would enhance reserves and cash flow stability.
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