Wall Street investment banks have responded positively to Zijin Mining's A$5.5 billion acquisition of Allied Gold, viewing the deal as a pivotal move toward achieving its 2030 target of 100 tons of annual gold production. Both Citigroup and Morgan Stanley believe that, even at current elevated gold prices, the acquisition offers attractive valuation and will deliver significant production growth and operational synergies for Zijin.
According to analysis, a Citigroup team led by analyst Jack Shang noted in a January 26 report that the acquisition price equates to $365 per ounce of gold reserves and a mere $231 per ounce of gold resources. Citigroup stated plainly: "At the current gold price, this acquisition price is highly attractive." The bank reaffirmed its "Buy" rating on Zijin Mining and listed it as a top pick in the sector.
In a report released the same day, a Morgan Stanley team led by analyst Rachel L Zhang indicated that with the expansion of the acquired assets and the commissioning of new projects, Allied Gold's annual production is expected to reach 25 tons by 2029. This would directly support Zijin in achieving its "100 tons per annum gold production target" by 2030. Morgan Stanley emphasized that the successful completion of the transaction would represent a significant milestone for Zijin Mining.
The acquisition includes the Sadiola gold mine in Mali, the Bonikro and Agbaou gold mines in Côte d'Ivoire, and the Kurmuk project in Ethiopia. It is expected to be finalized around May 2026, pending approval from Allied Gold's shareholders and regulatory bodies in Canada, China, and several other countries.
The valuation advantage is prominent, appearing "cheap" even at high gold prices. The Citigroup team provided a detailed calculation of the acquisition's valuation in their report. Their analysis shows that Zijin's purchase price translates to $365 per ounce of gold reserves and just $231 per ounce of gold resources.
While this valuation level is higher than the price paid by CMOC for its acquisition of Brazilian gold assets, it remains lower than Zijin's own cost of acquiring the Raygorodok project. Against the backdrop of global scarcity in high-quality gold mining assets, this valuation provides ample safety margin for Zijin's future profit realization.
Citigroup analysts believe this transaction is not merely an expansion in scale but a precise value arbitrage. The fact that Zijin Mining can still identify attractive acquisition targets in the current high gold price environment demonstrates its discernment in the global mining M&A market.
The path to a production surge is clear, with a target of 25 tons by 2029. Citigroup forecasts that the assets under Allied Gold will achieve gold production of 11.7 to 12.4 tons in 2025. More notably, the future growth potential is significant. With the expansion of the Sadiola project and the commissioning of the Kurmuk project, total production is expected to increase further to 25 tons by 2029.
Specifically, the Sadiola Phase II project is anticipated to commence production by the end of 2028, with an average annual output of 12.4 tons over its first four years. The Kurmuk project is expected to contribute to production capacity in the second half of 2026, with an initial average annual output of approximately 9 tons.
Morgan Stanley pointed out in its report that this incremental production will directly assist Zijin in achieving its "100 tons per annum gold production target" by 2030, which is primarily expected to come from expansions at existing mines. For investors seeking alpha in the gold sector, these tangible increments form the foundation of Zijin Mining's ability to maintain its industry leadership.
Significant geographical synergies emerge as the African footprint takes shape. The Morgan Stanley team paid particular attention to the geographical synergies of this acquisition. Allied Gold boasts total resources of 533 tons, and the location of its assets complements Zijin's existing African operations.
Analysts noted that the Sadiola gold mine in Mali and the mines in Côte d'Ivoire are near Zijin's Akyme gold mine in Ghana, while the Kurmuk project in Ethiopia is close to Zijin's Bisha project in Eritrea. This geographical proximity is expected to yield significant management synergies for Zijin.
Beyond scale expansion, the potential for operational efficiency improvements is also noteworthy. Management indicated that, based on current gold prices, there is still potential for growth in the resources and reserves of the aforementioned projects. Morgan Stanley specifically mentioned that with the Phase II expansion and the deployment of its own generator sets, Sadiola's all-in sustaining costs could potentially decrease from $2,067 per ounce in Q3 2025 to $1,200 per ounce.
Investment banks reiterate bullish stance as international expansion continues. Based on the above analysis, Citigroup reaffirmed its "Buy" rating on Zijin Mining and listed it as a top sector pick. Although the acquisition still requires approval from Allied Gold's shareholders and regulators in Canada, China, and other countries, with an expected completion date around May 2026, Citigroup views this as further confirmation of Zijin's commitment to strengthening its gold portfolio through international expansion.
Morgan Stanley stated plainly in its report that the successful completion of the deal would be a major milestone for Zijin Mining. For investors, Zijin's acquisition is not just an expansion of its balance sheet but a dual bet on future gold prices and its own operational capabilities. In a macroeconomic environment characterized by persistent inflation expectations and complex geopolitics, this Chinese mining giant's global shopping spree may have only just begun.
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