What Will Zijin’s Gold Spin-off Look Like?
More details about the proposed Hong Kong-listed gold miner
Chinese diversified major Zijin Mining Group (SH: 601899) has moved one step closer to demerging its offshore gold business.
Zijin is one of the world’s largest mining companies and currently produces copper, gold, zinc, lead, silver, lithium, iron ore, molybdenum, tungsten and cobalt.
The company has previously stated its goal is to produce 100-110 tonnes of gold by 2028, up from 72.9t last year.
Zijin first announced the spin-off in April, with Zijin Gold International (ZGI) to hold all of Zijin’s overseas gold assets, with the parent company to retain the domestic gold business.
Zijin shareholders last week approved the spin-off and ZGI has made an application to list on the Hong Kong Stock Exchange.
“The timing of the proposed spin-off and listing coincides with the upward cycle of gold prices, which is beneficial for promoting the revaluation of the company’s gold assets,” Zijin said.
According to Bloomberg, ZGI will seek to raise US$1.5-2 billion in the initial public offering.
Zijin expects to retain an 85% stake in ZGI.
Last week, fellow Chinese miner Shandong Gold Mining Co (HK: 1797) is pursuing a Hong Kong listing of its subsidiary Shanjin International Gold Co.
ZGI’s business
ZGI will hold 100% stakes in Norton Gold Fields in Australia, the Aurora gold mine in Guyana and newly acquired Akyem gold mine in Ghana, majority stakes in the Rosebel mine in Suriname, Jilau/Taror mines in Tajikistan, Buritica mine in Colombia and Taldybulak/Levoberezhny gold mine in Kyrgyzstan, and a minority interest in the Porgera mine in Papua New Guinea.
Last year, the mines produced 42.2t, or 1.48 million ounces, of gold.
The production profile of the business would put it slightly behind Northern Star Resources (ASX: NST) and on par with Harmony Gold Mining Company (JSE: HAR).
The subsidiary had total assets worth RMB 39.18 billion (US$5.5 billion) at the end of 2024.
The business generated revenue of RMB 21.26 billion (US$3 billion) last year and recorded a net profit of RMB 4.45 billion (US$620 million).
Already growing
On Monday, Zijin announced its eighth gold deal since 2020 with the US$1.2 billion acquisition of the Raygorodok gold mine in Kazakhstan.
Last year, the mine produced 6t, or 211,644oz, of gold at cash costs of US$796 an ounce.
The open pit operation is expected to run until 2040, based on the current mine plan, with average annual production of 5.5t of gold.
The company said preliminary research by its technical team had indicated the potential to double the throughput of the plant to 10 million tonnes per annum.
Raygorodok will become part of the ZGI spin-off.
Zijin said the deal would “significantly enhance the asset scale, profit level and global industry position of Zijin Gold International, and promote the listing and offering of Zijin Gold International in the international capital market”.