Zijin Mining's profits exceed 50 billion yuan, intensifying its "resource craving syndrome." Two major concerns remain unresolved in the massive acquisitions.

How will the nearly 90 billion in intangible asset impairment risk affect the company’s future?

Interface News Reporter | Guo Jingjing

After achieving a record profit of over 50 billion yuan, Zijin Mining (601899.SH) has launched a new round of “money-burning” to acquire mines.

Immediately following the annual report, the company’s Zijin Gold (Group) Co., Ltd. announced it would invest a total of 18.258 billion yuan to acquire control of the listed company Chifeng Gold (600988.SH).

This transaction will be carried out in two parts: first, an investment of 10.006 billion yuan to acquire 242 million A-shares of Chifeng Gold, and second, an investment of 8.252 billion yuan to subscribe to 311 million H-shares issued by Chifeng Gold in a private placement. Upon completion, along with the existing 0.99% stake, Zijin Mining will become the controlling shareholder of Chifeng Gold with a 25.85% stake, while the original actual controller, Li Jinyang, will cash out.

This marks the second large-scale acquisition by Zijin Mining this year. At the end of January, the company announced plans to invest 28 billion yuan to acquire Canadian United Gold, which holds multiple gold mine assets in Africa.

As a result, by the first three months of 2026, Zijin Mining plans to allocate 46.258 billion yuan for mine acquisitions, surpassing 70% of its cash balance of 65.577 billion yuan as of December 31, 2025.

In recent years, Zijin Mining’s acquisitions both domestically and internationally have noticeably accelerated. According to rough statistics from Interface News, since 2020, the company has invested a total of 125.455 billion yuan in acquiring the equity of listed companies or purchasing mines, which accounts for 85.24% of its total net profit attributable to shareholders of 147.171 billion yuan from 2020 to 2025.

While investing heavily to secure domestic and international mineral resources, Zijin Mining’s intangible assets have risen continuously from 24.163 billion yuan at the end of 2019 to 88.167 billion yuan at the end of 2025.

“The mergers and acquisitions of Zijin Mining align with the resource logic of mining companies, but the pace and pricing are indeed noteworthy. Attention should be paid to the impairment sensitivity caused by high intangible assets,” said Yu Yao, an assistant professor at Beijing Jiaotong University’s School of Economics and Management, to Interface News. He pointed out that in addition to the high costs and operational integration risks during the initial phase of new mining acquisitions, the book value of mining rights is based on long-term assumptions of gold and copper prices. “If prices remain low, these assets will face significant impairment pressure, directly impacting the profit and loss statement.”

Behind the Best Performance Ever: The Intensifying “Resource Hunger”

Since 2025, over 10 billion acquisitions have been made in succession—Zijin Mining’s “resource hunger” has intensified.

Behind this may be not only the drive to sprint towards the goal of becoming a “world-class international mining group,” but also the pressure on the new management team to perform following a historic profit exceeding 50 billion yuan.

On December 31, 2025, 69-year-old Zijin Mining founder Chen Jinghe will retire. In that year, the company’s revenue reached 349.079 billion yuan, a year-on-year increase of 14.96%; net profit attributable to shareholders was 51.777 billion yuan, a year-on-year increase of 61.55%; and the gross profit margin increased to 27.73%.

“The net profit growth rate significantly exceeds the revenue growth rate, indicating that Zijin Mining’s profit growth primarily comes from improved core business profitability, rather than mere scale expansion,” Yu Yao told Interface News.

This is mainly due to the significant rise in gold and copper prices. In 2025, the annual increase in London copper (LME copper) reached 62.8% and 44%, with gold, copper, and other mineral products contributing over 70% of Zijin Mining’s revenue: its mineral gold and copper increased by 22.77% and 1.56% year-on-year to 90 tons and 1.09 million tons, respectively, with gold and copper revenues accounting for approximately 190 billion yuan and 100 billion yuan, or 44.43% and 27.62% of total revenue.

Zijin Mining’s performance over the past year has led to higher expectations from investors and the market for the new management team, including Zou Laichang.

According to plans, in 2026, Zijin Mining’s production targets are: mineral gold, mineral copper, mineral silver, equivalent lithium carbonate, mineral zinc (lead), and mineral molybdenum of 105 tons, 1.2 million tons, 520 tons, 120,000 tons, 400,000 tons, and 15,000 tons, respectively; except for silver, production of gold, copper, silver, lithium, and molybdenum is expected to increase by 16.67%, 10.09%, 18.45%, 370.59%, and 30.43%, respectively, compared to 2025.

By 2028, Zijin Mining’s production targets are planned to be: mineral gold, mineral copper, mineral silver, equivalent lithium carbonate, mineral zinc (lead), and mineral molybdenum of 130-140 tons, 1.5-1.6 million tons, 600-700 tons, 270,000-320,000 tons, 400,000-450,000 tons, and 25,000-35,000 tons.

The company’s vision target outline released in February 2026 shows that by 2028, its production of copper and gold mining products will enter the top three globally (from 4th and 5th in 2025); by 2035, the company aims to fully establish itself as a “green, high-tech, world-class international mining group,” with some indicators reaching the top position globally.

As of December 31, 2025, Zijin Mining’s inventory of gold, copper, zinc, and silver at its mines was 1.47 tons, 1.1343 million tons, 7,484 tons, and 6.61 tons, respectively; confirmed reserves and credible reserves were: copper 5.661 million tons, gold 1,996 tons, zinc (lead) 782,000 tons, silver 3,231 tons, lithium (LCE) 797,000 tons. Compared with the vision planning, these figures are somewhat insufficient.

In the past two years, Zijin Mining’s acquisition of mines has noticeably accelerated, especially for gold. Rough statistics from Interface News indicate that since 2020, the company has already invested over 84 billion yuan or is about to acquire gold mine assets, accounting for more than 67% of its total acquisitions during these years.

“From a historical perspective, prices of commodities like gold and copper are at relatively high levels, but looking ahead, due to changes in global governance order, excessive issuance of fiat currency, and demand growth driven by new industrial revolutions, gold and copper prices still have a positive outlook,” said Lin Hongfu, Vice Chairman and President of Zijin Mining, at a performance briefing on March 23.

Zijin Mining’s recently announced acquisition of Chifeng Gold, established in 1998 and listed on the Shanghai Stock Exchange main board in 2004, operates six gold mines and one polymetallic mine, with business covering countries and regions such as China, Southeast Asia, and West Africa. As of December 31, 2025, the company had consolidated resources of gold, copper, zinc (lead), molybdenum, and rare earths amounting to 583 tons, 59,000 tons, 56,000 tons, 8,000 tons, and 6,000 tons, respectively; its gold production target for 2026 is set at 14.7 tons.

In 2025, Chifeng Gold also achieved its best performance ever: operating income increased by 40.03% year-on-year to 12.639 billion yuan, and net profit attributable to shareholders increased by 74.7% year-on-year to 3.082 billion yuan; among them, mineral gold revenue was 11.339 billion yuan, accounting for nearly 90%, with a gross profit of 6.6 billion yuan, accounting for 100%. That year, the Laos Vientiane Mining and Ghana Wassah Mining contributed over 70% of the company’s revenue.

Ye Jianjun, a precious metals analyst at Business Society, pointed out to Interface News that the industry has entered an “era of giant consolidation,” with leading companies expanding through mergers and acquisitions to enhance industry pricing power. “After Zijin Mining acquires Chifeng Gold, the total gold output will exceed 105 tons, approaching the 2026 target, further consolidating its position among the top five gold mining companies globally.”

Another aspect to note is that in 2025, Zijin Mining’s lithium sector, which was heavily invested in since 2021, achieved a breakthrough with an equivalent lithium carbonate production of 25,500 tons. Major projects, including the Lagocuo salt lake in Tibet, the 3Q salt lake in Argentina, and the Xiangyuan hard rock lithium mine in Hunan, were successively completed and produced. In 2026, the company plans for an equivalent lithium carbonate production of 120,000 tons, a year-on-year increase of 370%, which will become its fastest-growing product.

Additionally, Lin Hongfu stated that the company will also focus on rare metals with moderate scale and high price elasticity; in selecting targets, the focus will be on scarcity, appropriate scale, and alignment with future industrial demand.

“Diversification will become a development trend for industry leaders. When one mineral type fluctuates, other types can hedge risks, smooth performance, and stabilize cash flow,” Ye Jianjun pointed out to Interface News. Besides opening up new growth curves, this diversified layout’s core is to mitigate cyclical risks and seize opportunities from the new energy revolution, creating a balanced growth product structure.

Concerns: Is the Timing for Acquisitions Appropriate? What to do with nearly 90 billion in intangible assets?

“If the management is eager to achieve production targets through acquisitions, it may lead to insufficiently prudent assessments of acquisition prices or underestimations of integration difficulties. This is also an area that investors need to observe closely,” Yu Yao told Interface News.

The agreement states:

• The acquisition price for the A-shares held by Li Jinyang and his concerted actors is 41.36 yuan/share, a premium of 1.32% over the closing price of 40.82 yuan/share on the last trading day before suspension on March 18.
• The company plans to subscribe to the H-shares issued by Chifeng Gold at a price of 30.19 HKD/share, approximately 83% of the average price of Chifeng Gold’s H-shares over the last sixty complete trading days before suspension, representing a discount of 28.26% compared to the closing price of 42.08 HKD/share before suspension.

The stock price of A-shares was about 56% higher than that of H-shares. Following the announcement of the acquisition, on the first trading day after resumption on March 23, Chifeng Gold’s A-shares hit the daily limit down, and H-shares fell over 25%, with the H-shares closing at 31.52 HKD/share, approaching the issuance price.

“In addition to market influences, the substantial discount in the H-shares issuance price in this transaction triggered panic selling among investors,” a market analyst in Hong Kong analyzed to Interface News.

Since February of this year, prices of precious metals such as gold and copper have collectively weakened, with London gold spot prices and London copper (LME copper) dropping by 21.28% and 15.88%, respectively, from their peaks on January 29 to March 23.

The stock prices of both Zijin Mining and Chifeng Gold have been affected. Zijin Mining’s stock price peaked at 44.94 yuan/share on January 29 but fell nearly 30% by March 23; Chifeng Gold’s A-shares rose to 51.5 yuan/share on January 29 but dropped nearly 22% by March 23, while H-shares fell over 30% from a high of 49.9 HKD/share on January 29 to March 23.

Zijin Mining stated that the acquisition of Chifeng Gold is its strategic move to seize the market window after the significant rise in gold prices and the subsequent short-term adjustment. The pricing of the transaction is prudent and reasonable.

“The price correction provides a rare ‘bargain’ window. After a 62.9% surge in gold prices in 2025, there was a subsequent correction of about 16% in March 2026, leading to a corresponding drop in the valuation of the target assets. The company’s timing allows it to effectively avoid ‘buying at a high’ and significantly reduce long-term acquisition costs,” Ye Jianjun told Interface News.

However, the rising mining costs associated with Chifeng Gold should be noted. In 2025, the company experienced a substantial increase in gold mining unit costs due to the cost escalation of overseas mines, particularly the Ghana Wassah gold mine. The overall all-in sustaining cost for gold mining increased by 32.52% year-on-year to 372.63 yuan/gram, while the all-in sustaining cost for the Wassah gold mine rose by 51.25% to 1,973 USD/ounce. Guolian Minsheng Securities pointed out that the decline in grade at the Wassah gold mine, coupled with an earlier rainy season, led to cost increases, and overall production fell short of expectations.

Zijin Mining’s costs have also risen. In 2025, the unit operating costs for its mineral gold, mineral copper, mineral zinc, and mineral silver increased year-on-year by 19.34%, 11.05%, 13.58%, and 14.72%, respectively. “This is mainly due to the decline in grade at key mines, increased transportation costs from deeper mining, and the front-loaded costs during the transition period of newly acquired enterprises,” said the company’s CFO Wu Honghui.

If the mining results or the effectiveness of the merger integration do not meet expectations, Zijin Mining’s continuously rising intangible assets could face impairment pressure. As of December 31, 2025, the company’s intangible assets amounted to approximately 88.167 billion yuan, an increase of 28.55% from 2024.

“Currently, goodwill is only 677 million yuan, but the scale of intangible assets is enormous, essentially functioning as ‘quasi-goodwill’ assets, and their impairment risk is more concerning than that of goodwill,” Yu Yao pointed out to Interface News. New mining acquisitions often face high initial costs and operational integration issues, “The book value of mining rights is based on long-term assumptions of gold and copper prices, and since 2026, gold prices have already seen a correction of over 10%. If prices remain low, these assets will face significant impairment pressure, directly impacting the profit and loss statement.”

With continuous large-scale acquisitions, Zijin Mining faces considerable “wallet” pressure. In less than three months this year, Zijin Mining has spent 46.258 billion yuan on acquisitions, accounting for 70.54% of its cash balance of 65.577 billion yuan as of December 31, 2025.

Financial reports indicate that as of last year-end, Zijin Mining had 9.985 billion yuan in trading financial assets, 714 million yuan in derivative financial assets, 9.437 billion yuan in notes receivable and accounts receivable, and 39.613 billion yuan in inventory (precious metals such as gold and copper or non-ferrous metals); total liabilities increased to 263.983 billion yuan, including current liabilities of 129.48 billion yuan and non-current liabilities due within one year of 25.993 billion yuan.