Shanjin International files for listing on the Hong Kong Stock Exchange. The metal trading business, with a profit margin of only 1.4%, accounts for nearly 60% of the revenue.

China Daily Economic News reporter | Cai Ding　　China Daily Economic News editor | Wei Guanhong

The Shenzhen Stock Exchange main-board listed company Shanjin International (SZ000975) has recently submitted its listing application documents to the Hong Kong Stock Exchange again. Citic Securities, CICC, and UBS Group are serving as joint sponsors. The prospectus (draft version, the same applies below) shows that, as of the end of 2025, Shanjin International’s gold resource amounted to 280.9 tons. Its all-in sustaining cost for gold in 2025 was $902.3 per ounce, placing it in the top 10% globally along the all-in sustaining cost curve for gold mining.

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A reporter from China Daily Economic News (hereinafter referred to as the China Daily Economic News reporter) has found that Shanjin International has multiple risks in its revenue structure, compliance of its domestic and overseas mines, and core project technical validation.

For example, in 2025, 58.4% of Shanjin International’s revenue came from its metal trading business, whose gross margin was only 1.4%. At the same time, the company’s domestic mines have repeatedly seen mining volumes exceeding the scale specified by their mining permits. In addition, the core asset, the Mankong Huasheng gold mine, has been shut down for 10 years and still has not obtained approval for a change to its mining rights. Moreover, its existing mining areas face the challenge of declining selected grades, and the overseas Osino Resources Corp. (hereinafter referred to as Osino) project acquired more recently also faces multiple overdue risks.

High share of revenue from the metal trading business

The prospectus shows that, over the past three years, Shanjin International’s revenue has exhibited rapid growth. However, the core driver of this revenue scale increase is not the gold mining business with high profit margins, but rather the metal trading business with relatively smaller profit margins. In 2023, 2024, and 2025 (hereinafter referred to as the reporting period), the company’s total revenue was RMB 8.095 billion, RMB 13.580 billion, and RMB 17.090 billion, respectively.

In terms of revenue structure, Shanjin International’s metal trading business revenue share has risen year by year and has already taken the leading position in the company’s revenue.

Specifically, in 2023, the revenue from the metal trading business was RMB 3.539 billion, accounting for 43.7% of total revenue. By 2024, revenue from this business grew to RMB 7.728 billion, and its share increased to 56.9%. In 2025, metal trading business revenue further rose to RMB 9.979 billion, making up as much as 58.4% of total revenue.

Meanwhile, the profitability of this business differs significantly from that of the mining business. The prospectus discloses that, during the reporting period, the gross margins of the trading business were 0.1%, 1.1%, and 1.4%, respectively. Taking 2025 as an example, trading revenue of RMB 9.979 billion contributed gross profit of RMB 138 million. By contrast, in 2025, the company’s mining business revenue was RMB 7.112 billion, with a gross margin of 74.7%.

Due to the expansion of the share of low-gross-margin trading business, the company’s overall gross margin has been diluted. In 2025, the company’s overall gross margin was 31.9%, lower than 32% in 2023.

The core mines previously had cases of “over-mining”

According to the prospectus, regarding the compliance of mine operations, in the past Shanjin International had instances where mining volume exceeded the scale specified in its mining permits. Although the company assessed the risk of being ordered to suspend production as low, the prospectus acknowledges that relevant regulatory authorities may hold different views.

In terms of asset quality and restart progress, the Mankong Huasheng gold mine of Shanjin International carries uncertainty risk. The prospectus shows that Mankong Huasheng is a Carlin-type large gold mine. As of the end of 2025, it held approximately 28.5 tons of gold resources and 24.4 tons of gold reserves. However, the mine’s mining operations were already stopped in 2016, and the shutdown period has lasted 10 years. Currently, the project’s restart still faces administrative approval obstacles, and in the prospectus the company states that as of the time of filing, Mankong Huasheng still has a major risk that it may ultimately be unable to obtain approval for the registration of the mineral resources report and for the change of mining rights.

Obtaining approval for a change to mining rights is a prerequisite for renewing the work safety production license in order to resume full-scale operations. The relevant licensing procedures involve completing and obtaining approval for reserve verification reports, expanding the designated mining scope, and having the mine mining plan and ecological restoration plan reviewed and approved by relevant competent authorities. There are uncertainties at each stage in terms of timing and approval outcomes. Shanjin International warns that it does not guarantee that Mankong Huasheng will be able to obtain the mining license within the expected timetable or ultimately obtain it. This could adversely affect the company’s reconstruction progress, restart plan, and overall business prospects.

A China Daily Economic News reporter notes that, in addition to the absence of administrative licenses and permits, Mankong Huasheng gold mine also has a validation gap in selection, beneficiation, and smelting technology. Reports from qualified persons show that “the hard-to-treat characteristics of primary ores (low cyanide leaching recovery rate of 21.62%) indicate that the metallurgical performance of the ore deposit may differ and requires specific regional testing.” The prospectus also shows that the currently planned processing process adopts a heap leaching method for low-grade oxide ore heaps, with an expected recovery rate of 70.93%.

The technical report indicates that the expected recovery rates of heap leaching and cyanidation appear optimistic in the absence of pilot-scale verification testing. In addition, the direct cyanidation recovery rate for sulfide ores is relatively low, and the upgrade effect of flotation is limited (concentrate grade 14.73 grams/ton), highlighting its difficult-to-treat characteristics.

Existing mining areas face declining grades

Technical and operational risks also exist in the company’s other existing assets. In the Heihe Luoke mining area, reports from qualified persons reveal the risk of a decline in selected grades. The selected grade in this mining area is facing the challenge of falling from 15.38 grams per ton to 4.88 grams per ton. Such a decline in grade will affect the project’s economic viability and increase the unit processing cost per ounce of gold.

On the overseas asset side, Shanjin International also faces challenges related to local compliance and the continuity of ownership rights. In 2024, Shanjin International wholly acquired Osino, thereby obtaining the Twin Mountains gold mine project located in Namibia. The project is positioned as a core overseas asset with an expected annual gold output of up to 5.1 tons after production starts, and is expected to be completed and commence production in 2027. However, reports from qualified persons disclose that although Osino holds a mining permit corresponding to the Twin Mountains main mining area, among its 18 exploration rights, multiple have expired in 2024 or 2025.

The prospectus discloses that Namibia’s regulatory authorities are increasingly placing emphasis on mine reclamation work during operations and after mine closure. Although the current Mineral Law allows the government to incorporate mine reclamation and closure responsibilities into the conditions of permits, the regulatory framework is moving toward more detailed and specific standards. A national mine closure framework is being developed with the aim of standardizing the requirements for final mine closure, including the preparation of reclamation plans and financial assurance clauses covering closure costs. The company must set aside financial reserves for such reclamation activities. If reclamation responsibilities or other environmental conditions are not fulfilled, the company may face enforcement actions. Regulatory authorities have the power to issue compliance orders or stop-work orders, impose administrative fines, and, in cases of serious violations, revoke environmental permits or mining permits.

In addition, the prospectus shows that, through the purchase of new mining assets, the company has increased its goodwill level on the balance sheet to a certain extent. Such goodwill represents a premium in which the paid amount exceeds the fair value of identifiable net assets, calculated based on the expected future cash flows of the acquired business. However, if the production timetable of these newly acquired mines cannot proceed as planned, there is a risk of impairment losses. Such risks may come from regulatory delays, technical or geological challenges, or adverse market conditions. If operating cash costs or total production costs exceed expectations, or if the mine performs poorly in terms of output or profitability, the company expects that cash flows may be insufficient. In such circumstances, it could have a negative impact on Shanjin International’s financial performance.

Regarding the low gross margin rate of the company’s trading business and issues such as “over-mining” at core mines, on the morning of March 30, a China Daily Economic News reporter sent interview questions to Shanjin International’s securities department. As of the time of publication, the company had not responded.

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