Zijin Acquires Controlling Stake in Smaller Rival Following Record Profit Result
Chinese major splashes US$2.65 billion on Chifeng Gold shares
Zijin Mining Group Co (SH: 601899) will buy a controlling stake in its smaller rival Chifeng Jilong Gold Mining Co (SH: 600988).
On Sunday, Zijin entered into a share transfer agreement with Li Jinyang and her company Zhejiang Hanfeng Venture Capital Partnership to acquire their entire 12.7% stake in Chifeng, comprising 242 million A shares at RMB41.36 per share, representing a 1.3% premium, for RMB10 billion.
Zijin also entered into the strategic investment agreement with Chifeng to subscribe for 311 million H shares at HK$30.19 per share for HK$9.38 billion.
The consideration for both transactions totalled RMB18.258 billion, or US$2.65 billion.
It will take Zijin’s stake in Chifeng from 19 million shares to 572 million shares, representing approximately 25.85% of the company.
Zijin said the acquisition aligned with its M&A strategy.
“At present, global geopolitical uncertainties are rising, with frequent regional conflicts,” the company said.
“Coupled with the rise of resource nationalism, the difficulty of acquiring overseas gold mine projects has increased. Constrained by resource endowments, premium domestic gold mine projects are relatively less and highly competitive.”
Zijin said it adhered to a “resources first” strategy.
“It has actively monitored M&A and restructuring 17 opportunities of premium listed peers globally in recent years,” it said.
“The advantages of this M&A model are that the company can reach more project resources at a lower acquisition cost, effectively diversify investment risks and enhance asset securitisation levels.”
Chifeng said it expected that having Zijin as a strategic investor could support operational improvement initiatives and, over time, enhance shareholder value.
“Zijin Group’s proven international execution track record and project development and operational capabilities are expected to strengthen the company’s execution discipline and long-term performance,” the company said.
Chifeng operates six gold mines and one polymetallic mine across China, Laos and Ghana, which produced 14.51 tonnes of gold and 6755t of copper cathode last year, generating revenue of RMB12.63 billion and a full-year profit of RMB3.08 billion, up 74.7% on the previous year.
Chifeng’s production and sales target for 2026 is 14.7t of gold and 11,000t of copper cathode.
Zijin said Chifeng’s operational and production capacity could have “room for improvement”.
Record results
On Sunday, Zijin reported full-year revenue of US$49.7 billion, up 15%, EBITDA of US$14.4 billion, up 60%, and a net attributable profit of a record US$7.4 billion, up 62%.
The board proposed a final cash dividend of RMB3.8 per 10 shares.
The company’s subsidiary Zijin Gold International Company (HK: 2259) reported 2025 revenue of US$5.38 billion, up 80% over 2024, with a compound annual growth rate of approximately 54% from 2023 to 2025, and a 233% increase in net profit to US$1.6 billion.
Zijin’s group production for 2025 was 2.89 million ounces of gold, up 22.8%, 1.09 million tonnes of copper, 400,000t of zinc and lead, 14.1Moz of silver and 25,500t of lithium carbonate.
Zijin chairman Zou Laichang said 2025 had been marked by “brilliant achievements”, including record output and profit, the acquisition of a controlling stake in Zangge Mining (SH: 000408) and the spin-out of Zijin Gold.
Zijin Gold subsequently announced the US$5.5 billion acquisition of Allied Gold Corporation (TSX: AACU) in January.
“The ‘Zijin series’ capital landscape is taking shape at an accelerated pace, and the company’s market capitalisation has advanced into the top three in the global metal mining industry,” he said.
“Looking ahead to the new year, a strong tailwind is behind us. Zijin Mining has embarked on a new journey to fully sprint towards the ‘leading’ goal.”
Guidance for 2026 is 3.38Moz of gold, 1.2Mt of copper, 400,000t of zinc and lead, 16.72Moz of silver and 120,000t of lithium carbonate.
Zijin is targeting production of 4.18-4.5Moz of gold, 1.5-1.6Mt of copper, 400,000-450,000t of zinc and lead, 19.3-22.5Moz of silver and 270,000-320,000t of lithium carbonate production in 2028.
It comes as Bloomberg reported a subsidiary of Zijin was looking to invest in tungsten, rare earths and uranium.
“We are looking to expand our position in tungsten and other strategic metals,” Lisa Liu, managing director and portfolio manager of Gold Mountains Asset Management, a wholly owned subsidiary of Zijin, said in an interview.
“If a major shareholder suddenly looks to offload a large stake, we can step in and absorb it immediately.”
Around 75% of Gold Mountains’ US$6 billion under management is in gold.
“Given all the uncertainty – whether it’s global conflicts or changes to monetary systems – there has to be an anchor for storing wealth. That anchor will inevitably be gold,” Liu said.