The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

By Ka Sing Chan

HONG KONG, March 24 (Reuters Breakingviews) - Buying growth in a bull market is risky, even more so in gold. China's biggest miner, the $116 billion Zijin Mining Group 601899.SS, said on Monday that its subsidiary is taking control of a local rival just months after buying Canada’s Allied Gold AAUC.TO for $4 billion. Record demand for the metal has fuelled the buying binge. But increasingly scarce targets and the recent wobble in bullion prices will put its ultra-acquisitive strategy to test.

Zijin Gold 2259.HK will spend roughly 18.3 billion yuan, or $2.6 billion, to become the largest shareholder of Chifeng Jilong Gold Mining 600988.SS, whose shares trade in Hong Kong and Shanghai. The deal values the target's enterprise at $10.3 billion, or $595 per ounce for Chifeng's total gold reserves as of end-December, Breakingviews calculates. That is far above previous Zijin acquisitions, according to estimates from Citi analysts, including the $365 per ounce Zijin paid for Allied Gold's reserves just two months earlier.

Soaring bullion prices are one factor, but the higher valuation also reflects how scarce viable targets have become. Zijin’s management told analysts on Monday that overseas opportunities are getting harder to find amid rising geopolitical tensions. Domestically, the few major gold miners left are mostly state‑backed, and unlikely sellers.

That probably won't deter China's most acquisitive group from trying though, so long as the price of gold remains high. Zijin's 2025 net profit doubled while free cash flow more than tripled to $1.8 billion and is forecast to hit $3.7 billion this year, per analyst estimates on LSEG. That, plus the $3.6 billion in cash and cash equivalents as of December, should help finance its M&A binge that has totalled $6.6 billion in a span of two months.

All this holds only so long as the ultra‑bullish gold market has legs. Bullion surged nearly 40% in the last three months of 2025 but has already surrendered almost half those gains this year, as higher energy prices from the war in Iran fuel concerns that interest rates will stay higher for longer, denting demand for the non-yielding metal. The company is nearing its M&A limits.

CONTEXT NEWS

China's Zijin Mining on March 23 said its subsidiary, Zijin Gold, will take control of Shanghai and Hong Kong-listed Chifeng Jilong Gold Mining in a deal worth 18.3 billion yuan ($2.6 billion). As part of the deal, Zijin Gold will acquire 242 million A-shares from Chifeng's controlling shareholders at 41.36 yuan per share. The buyer will also subscribe to 311 million new H-shares issued by Chifeng at HK$30.19 per share.

After the deal, Zijin Gold will own a 25.6% stake in Chifeng and become its largest shareholder.

Zijin Gold raised $3.6 billion in a Hong Kong IPO in September. In January it announced a $4 billion takeover on Canada’s Allied Gold.

(Editing by Robyn Mak; Production by Aditya Srivastav)

((For previous columns by the author, Reuters customers can click on CHAN/ KaSing.Chan@thomsonreuters.com))