Wall Street comments on Zijin Mining acquiring a new gold mine: A key step towards the goal of producing 100 tons of gold annually

Zijin Mining's acquisition of Allied Gold for AUD 5.5 billion has received positive evaluations from Wall Street investment banks, and this deal is seen as a key step towards achieving its goal of an annual gold production of 100 tons by 2030. Citigroup and Morgan Stanley both believe that even at high gold prices, this acquisition remains attractive in terms of valuation and will bring significant capacity increases and operational synergies to Zijin.

According to the Chasing Wind Trading Desk, Citigroup analyst Jack Shang's team pointed out in a report released on January 26 that the acquisition price is equivalent to USD 365 per ounce of gold reserves and only USD 231 per ounce of gold resources. Citigroup stated, "Given the current gold prices, this acquisition price is extremely attractive." Citigroup reiterated its "Buy" rating on Zijin Mining and listed it as an industry favorite.

Morgan Stanley analyst Rachel L Zhang's team also released a report on the same day stating, "With the expansion of the acquired assets and the commissioning of new projects, Allied Gold's annual production will reach 25 tons by 2029, which will directly assist Zijin in achieving its '100 tons/year gold production target' by 2030." Morgan Stanley emphasized that the successful completion of the transaction will be an important milestone for Zijin Mining.

This acquisition covers the Sadiola gold mine in Mali, the Bonikro and Agbaou gold mines in Côte d'Ivoire, and the Kurmuk project in Ethiopia, which is expected to be completed around May 2026, pending approval from Allied Gold's shareholders and regulatory agencies in Canada, China, and other countries.

Valuation Advantage Highlighted, Still Appears "Cheap" at High Gold Prices

The Citigroup team detailed the valuation level of this acquisition in their report. According to their analysis, the acquisition price for Zijin is equivalent to USD 365 per ounce of gold reserves and only USD 231 per ounce of gold resources.

In comparison, this valuation level is higher than the price at which Luoyang Molybdenum acquired Brazilian gold assets, but still lower than Zijin's own cost for acquiring the Raygorodok project. In the current context of a global scarcity of quality gold mine assets, this valuation level provides a safety margin for Zijin's subsequent profit release.

Citigroup analysts believe that this transaction is not merely a scale expansion but a precise value arbitrage. At high gold prices, Zijin Mining is still able to find attractive acquisition targets, reflecting its judgment in the global mining M&A market.

Clear Path to Capacity Leap, 2029 Target of 25 Tons

Citigroup expects that the gold production of Allied Gold's assets will reach 11.7 to 12.4 tons in 2025. More importantly, its future growth potential is noteworthy. With the expansion of the Sadiola project and the commissioning of the Kurmuk project, total production is expected to further increase to 25 tons by 2029.

Specifically, the Sadiola Phase II project is expected to be commissioned by the end of 2028, with an average annual production of 12.4 tons over the first four years. The Kurmuk project is expected to contribute capacity in the second half of 2026, with an initial average annual production of about 9 tons Morgan Stanley pointed out in its report that this increment will directly assist Zijin in achieving its "100 tons/year gold production target" by 2030, primarily sourced from the expansion of existing mines. For investors seeking excess returns in the gold sector, these tangible increments provide Zijin Mining with the confidence to maintain its industry-leading position.

Significant Geographical Synergy, African Landscape Forming

The Morgan Stanley team particularly focuses on the geopolitical synergy value of this acquisition. Allied Gold boasts a total resource of 533 tons, and its asset locations complement Zijin's existing operations in Africa.

Analysts noted that the Sadiola gold mine in Mali and the Côte d'Ivoire mining area are adjacent to Zijin's Akyme gold mine in Ghana, while the Kurmuk project in Ethiopia is close to Zijin's Bisha project in Eritrea. This geographical proximity is expected to bring significant management synergies to Zijin.

In addition to scale expansion, the potential for improving operational efficiency is also noteworthy. Management pointed out that, based on current gold prices, the resources and reserves of the aforementioned projects still have growth potential. Morgan Stanley specifically mentioned that with the second phase of expansion and the use of self-owned power generation units, the all-in sustaining cost of the Sadiola project may decrease from USD 2,067/ounce in Q3 2025 to USD 1,200/ounce.

Investment Banks Reaffirm Optimism, International Layout Continues to Advance

Based on the above analysis, Citigroup reaffirmed its "Buy" rating on Zijin Mining and listed it as an industry favorite. Although the acquisition still requires approval from the Allied Gold shareholders' meeting and regulatory agencies in Canada, China, and other countries, with an expected completion time around May 2026, Citigroup believes this once again confirms Zijin's commitment to expanding and strengthening its gold portfolio through internationalization.

Morgan Stanley stated in its report that the successful completion of the transaction will be an important milestone for Zijin Mining. For investors, this acquisition is not only an expansion of the balance sheet but also a dual bet on future gold prices and its operational capabilities. In a macro environment where inflation expectations remain and geopolitical complexities persist, this Chinese mining giant's global shopping spree may just be beginning