Gold Mining M&A Amid High Gold Price Volatility: Zijin Mining's 18.2 Billion Yuan Acquisition of Chifeng Gold Shakes Stock Prices

Gold prices are high, and active trading isn’t just in physical gold but also includes gold mining companies. On March 23, it was announced that Zijin Mining (601899) plans to acquire control of Chifeng Gold (600988), with a total transaction value equivalent to 18.258 billion yuan.

Benefiting from last year’s gold bull market, both companies achieved record-high performance and stock prices recently. However, as gold prices become more volatile, mining company stocks are also fluctuating, and Zijin Mining’s ongoing acquisition strategy will face tests.

On the day of the transaction announcement, London gold spot prices briefly fell by as much as 3.85%, approaching the $4,300 level. By the time of this report, both companies’ stock prices had declined; Chifeng Gold’s A-shares hit the daily limit down, and H-shares dropped about 24%.

Over 18.2 billion yuan in acquisitions

The deal was completed through equity transfers of A-shares and a targeted issuance of H-shares. After the transactions are finalized, combined with the stocks Zijin Mining currently holds, Zijin will own a total of 572 million shares of Chifeng Gold, accounting for approximately 25.85% of its total shares after the issuance. Zijin will gain control of Chifeng Gold and consolidate its financials.

For the A-share portion, Zijin Gold plans to acquire 242 million shares of Chifeng Gold held by controlling shareholder Li Jinyang and his concerted parties Zhejiang Hanfeng at 41.36 yuan per share, totaling 10.006 billion yuan, representing 12.73% of Chifeng Gold’s total share capital. The purchase price of 41.36 yuan per share is a 1.3% premium over Chifeng Gold’s pre-trading suspension closing price.

For the H-share portion, Zijin plans to subscribe to 311 million H-shares of Chifeng Gold at 30.19 HKD per share, with a total subscription amount of 9.386 billion HKD (about 8.252 billion yuan). The price of 30.19 HKD per share is approximately 83% of the six-month average price of Chifeng Gold’s H-shares before suspension.

Chifeng Gold stated that the funds raised will be used for its overseas operations, including but not limited to building new power plants, exploration projects in deep and peripheral areas, shaft and tunnel construction, equipment and machinery purchases, upgrades and expansions of existing processing plants, transitioning from open-pit to underground mining, and further expansion of other mines; acquiring large, high-quality mining assets; and general corporate purposes.

Both Zijin Mining and Chifeng Gold focus on gold mining as their core business. Last year, both companies achieved record-high performance. Zijin Mining produced 90 tons of gold in 2025, a 23% increase year-over-year, ranking among the top global miners in growth rate; the same year, Chifeng Gold produced 14.5 tons of gold.

Regarding this transaction, Zijin Mining stated that gold resources are inherently scarce, with limited large-scale high-quality gold resources worldwide. To continuously strengthen its leading position in the gold sector, Zijin aims to build a differentiated listing platform to precisely target gold resources at different levels, scales, and regions, which will help enhance its overall ability to integrate gold resources.

Acquisition strategy faces challenges

Last year, the gold market experienced a historic bull run driven by safe-haven demand and diversified asset allocation. The London spot gold price increased by 62.9% from the beginning of the year, hitting multiple record highs with 53 new highs throughout the year. Market activity surged, with global gold demand reaching $555 billion, up 45% year-over-year; gold ETF holdings increased by 801 tons, setting a record for net inflows; and sales of gold bars and coins reached a 12-year high.

Active trading isn’t limited to gold itself but also includes gold mining companies. After years of stable markets, M&A activity in the gold sector has significantly increased. Led by Chinese mining companies like Zijin Mining, gold mining M&A has become one of the most active phases in nearly a decade after 2025.

FactSet data shows that in 2025, mergers and acquisitions in the precious metals sector totaled $31 billion, a 4% increase year-over-year, with 84 deals completed—up 42% in number. This reflects increased activity in mid-sized transactions. Financing was also strong, with precious metals miners raising a total of $14.5 billion in 2025, far exceeding the $4.6 billion raised in 2024.

In 2025, Zijin Mining completed acquisitions and deliveries of two large producing gold mines abroad: the Akyem Gold Mine in Ghana and the Requado Gold Mine in Kazakhstan, contributing significantly to its gold expansion last year. Early 2026, Zijin Gold International, a subsidiary of Zijin Mining, paid 28 billion yuan to acquire all issued common shares of United Gold, which is expected to increase its gold production to 25 tons by 2029.

Zijin Mining believes that the advantage of the acquisition model is that the company can leverage lower acquisition costs to expand project resources, effectively diversify investment risks, and improve asset securitization. Additionally, relying on its own technology and management systems, Zijin can deeply empower invested enterprises, fully unlock their resource potential, reshape their market valuation, and achieve good investment returns.

It is worth noting that entering 2026, gold price volatility has increased significantly. Since the beginning of the year, the London spot gold price has fluctuated with a range of 26%, with a 16% decline in March alone and a single-month fluctuation of 21%. Against this backdrop, stock prices of gold mining companies have also become more volatile, which may test Zijin’s acquisition strategy. For example, Zijin’s stock price hit a record high of 44.94 yuan per share in January but then declined steadily; Chifeng Gold’s stock reached a record high in January but then fell nearly 30%, though since March, its daily average stock price remains at historic highs.

On the day of the transaction announcement, London gold spot prices briefly fell by 3.85%, approaching the $4,300 level. Zijin Mining and Chifeng Gold’s stocks both opened lower that morning; by the time of this report, Chifeng Gold’s A-shares hit the daily limit down, and H-shares dropped about 24%.