On the evening of September 16, London gold continued its upward momentum, breaking through $3,700 per ounce to reach a new historical high, marking the first time spot gold crossed the $3,700 threshold. At this sensitive moment when gold prices are being constantly redefined, Zijin Mining Group Company Limited (601899.SH) swiftly pushed its "international gold mining assets" toward the capital market.

According to the latest information from the Hong Kong Stock Exchange, Zijin Mining Group Company Limited plans to spin off its international gold mining business, Zijin Gold International Limited (hereinafter referred to as "Zijin Gold International"), for listing, having passed the listing hearing at the Hong Kong Stock Exchange on September 14. This means Zijin Gold International is about to enter the IPO process.

Market sources close to the transaction revealed that Zijin Gold International's fundraising target was originally set at $1 billion, subsequently raised twice to $2 billion, and then to $3 billion.

The source continued: "Gold asset valuations are rising with expectations, and capital markets are willing to pay premium prices for resource companies. The IPO is expected to launch as early as this week, with trading to commence within the month."

According to its prospectus, the fundraising will primarily be used for global gold mining resource acquisitions, enhancing existing mine capacity, and expanding exploration scope. Capital is targeting growth sources, aiming to establish more comprehensive upstream control, with Morgan Stanley and CITIC Securities serving as joint sponsors for the listing.

If Zijin Gold International successfully lists, it could become the second-largest IPO project in Hong Kong this year after CATL, and potentially the most significant financing operation in the gold sector on the Hong Kong Stock Exchange in recent years.

For capital markets, this represents not only a significant push for gold stocks but also a renewed battle over asset valuation anchors in the struggle for resource pricing power.

**Walking the Tightrope Between Risk and Opportunity: Risks Behind Gold Mining Capitalization**

Against the backdrop of gold prices continuously reaching historical highs, Zijin Mining Group Company Limited's announcement to spin off its gold division for listing is undoubtedly a strategically significant move in capital markets.

Since announcing the spin-off plan on May 1, the gold division, which contributes 40% of Zijin Mining Group Company Limited's revenue, has not only remained unaffected by the spin-off news but has recorded continuous gains for over four months. On September 12, it reached a historical high of 26.35 yuan per share, with total market capitalization exceeding 660 billion yuan.

As of the close on September 17, ZIJIN MINING's stock price was 25.07 yuan per share, up over 43.5% from the opening price of 17.47 yuan per share on the first trading day after the spin-off announcement (May 6). This year, its Hong Kong stock price achieved a maximum gain of 121.66%.

However, this surge is not purely a rational market response, but rather reflects capital market enthusiasm under the halo of gold as a safe-haven asset.

The aforementioned source indicated that compared to the A-share IPO in 2003 and H-share listing in 2008, this spin-off emphasizes "asset restructuring."

"The previous two IPOs were starting points for group financing and internationalization, while this time, through separate valuation of the gold business, the multi-metal discount of the parent company is stripped away, thereby improving overall market value management efficiency." The source further analyzed that, combined with market information, the current target valuation could exceed $30 billion.

Wong Lap Chung from Wise International Capital told reporters that the core driver behind Zijin Gold International's high-valuation IPO comes from gold's safe-haven logic.

"International instability (Federal Reserve high interest rates, geopolitical conflicts, US dollar credit pressure) pushed gold prices up from $1,800-2,400 per ounce starting in 2023, with 2024 average prices up 12% year-over-year. Under market conditions, gold mining companies receive higher capitalization rates, allowing Zijin Mining Group Company Limited's gold spin-off to be priced separately and receive scarcity premiums," Wong said.

He further analyzed that the parent company ZIJIN MINING's valuation is significantly affected by copper, lithium, and other cyclical factors, with price-to-earnings ratios consistently maintained at 7-10 times. If the gold business operates independently, referencing international mining companies (such as Barrick Gold, Newmont), it could achieve 12-15 times EBITDA valuation.

The scale of this spin-off by Zijin Mining Group Company Limited is evident, with eight gold mines worldwide being packaged into Zijin Gold International. These mines are primarily distributed in South America, Oceania, Central Asia, and Africa, regions rich in gold resources, giving it a significant position in global gold production.

According to the prospectus, Zijin Gold International's gold reserves and production have entered the global top ten, with 2024 production reaching 1.3 million ounces (40.4 tons) and gold reserves of 27.5 million ounces (856.0 tons).

With rising gold prices, Zijin Gold International's revenue and net profit have shown strong growth. From 2022-2024, revenues were $1.818 billion, $2.262 billion, and $2.990 billion respectively, with a compound annual growth rate of 28.2%; net profit attributable to shareholders was $183 million, $230 million, and $481 million respectively; gross margins were 34.1%, 26.2%, and 37.9% respectively.

In the first half of this year, influenced by continued gold price increases, Zijin Gold International's performance maintained its upward trajectory. Prospectus data shows that in the first half, the average selling price of gold from its mines reached $3,085 per ounce, an increase of $905 compared to the same period, achieving revenue of $1.996 billion, up 42.36% year-over-year, with gold sales revenue accounting for 97.9% of total revenue, and gross margin increasing to 46.5%.

However, Zijin Gold International's profitability has not been smooth sailing. Although rising gold prices brought revenue growth, high mining costs still constrain profits.

According to independent mining and geological consultant SRK Consulting China's report, Zijin Gold International's gold mining costs in 2024 were $1,581 per ounce, while the average gold selling price in the same period was only $2,310 per ounce, with mining operating costs accounting for nearly 70% of sales revenue.

Fortunately, cost erosion of profits has been gradually offset by rising gold prices. Prospectus data shows that in the first half, Zijin Gold International's operating costs decreased to $1,165.72 per ounce, with cost-to-revenue ratio dropping to 37.78%.

Additionally, risks faced by Zijin Gold International are not limited to costs. Overseas mine operational risks, illegal mining activities, and land disputes may pose significant challenges to future operations. Particularly in politically and economically unstable regions, such as gold theft incidents at Colombian mines, highlighting uncontrollable risks in mining operations.

Zijin Gold International has disclosed in its prospectus that some mines face illegal mining and land disputes, which may bring uncertainty to future operations.

**Spin-off as Value Release and Liquidity Game**

With gold prices rising at a favorable time, Zijin Mining Group Company Limited's choice to launch its gold business spin-off plan at this moment undoubtedly hit the right timing. However, beneath improving performance, the company still faces tight liquidity reality, with "high growth, high pressure" coexisting on its balance sheet.

Zijin Gold International is the gold business platform that ZIJIN MINING plans to spin off, focusing on gold mining, smelting, and sales. According to disclosure standards, its financials use independent accounting, only including core operational indicators of gold business, such as production, AISC (All-In Sustaining Cost), and sales revenue, excluding copper, lithium, and other metal businesses.

A well-known securities researcher analyzed that this "pure gold entity" setup is clearly designed to cater to capital market premium expectations for gold assets.

Looking at parent company ZIJIN MINING, as a large comprehensive mining group, its business spans gold, copper, lithium, zinc, silver, molybdenum, and other minerals, with financial disclosure based on consolidated statements, affected by various commodity price fluctuations and capital expenditure progress.

"From a capital story perspective, the separation of Zijin Gold International makes gold business valuation anchors clearer and helps weaken the market impression of 'diluted valuation' for the parent company," the researcher said.

Under the current backdrop of rising global risk-aversion sentiment, the gold sector is becoming a hot target for capital. Companies like Shandong Gold and Chifeng Jilong's price-to-earnings ratios have rapidly increased, with the precious metals industry's overall dynamic P/E ratio average once reaching 52.67 times, far higher than ZIJIN MINING's current level of only 12.82 times.

Benefiting from surging gold and copper prices, ZIJIN MINING achieved significant growth in its 2025 half-year results.

On August 26, ZIJIN MINING disclosed interim results showing first-half revenue of 167.7 billion yuan and net profit attributable to shareholders of 23.29 billion yuan, up 11.5% and 54.4% year-over-year respectively; second-quarter growth was even more significant, with single-quarter net profit up 48.8% year-over-year and 29.1% quarter-over-quarter.

Net profit growth was primarily driven by "volume and price increases" in gold and copper, with overall gross profit up 11.024 billion yuan year-over-year, and gross margin improving 3.38 percentage points to 23.75% compared to the same period last year. However, taxes, expenses, and minority shareholders' interests combined reduced profits by nearly 6.3 billion yuan, indicating a less "light" profit structure.

Despite seemingly impressive financial figures in recent years, they have not masked ZIJIN MINING's liquidity pressure reality. In fiscal 2024, its cash and cash equivalents were 31.691 billion yuan, up nearly 72% year-over-year, but short-term borrowings and current portions of non-current liabilities totaled 48.74 billion yuan, significantly higher than available funds, while long-term borrowings reached 61.452 billion yuan.

Therefore, to alleviate liquidity constraints, ZIJIN MINING chose rapid fundraising in Hong Kong stocks in June 2024, primarily to repay high-interest US dollar bonds.

Taking a longer view, its asset-liability ratio has risen from 53.91% in 2019 to 59.66% in 2023, and despite falling back in 2024, it rose again to 56.36% as of the first half of 2025. This calculation shows ZIJIN MINING has effectively doubled its leverage. Even if management is confident about future profitability, continued leverage increases will inevitably amplify operational risks.

ZIJIN MINING's interim report shows that due to increased M&A projects and ongoing construction projects, overall debt scale continues to climb, with total borrowings increasing by 13.47 billion yuan quarter-over-quarter to 100.11 billion yuan in Q2 2025 alone.

"(Independent listing of the gold division) represents both seizing the financing window and establishing multi-tier capital platforms after spin-off," Wong further indicated that the spun-off Zijin Gold International can independently borrow and distribute dividends, helping attract long-term capital from sovereign funds and commodity funds; it also leaves room for potential future capital operations in copper, lithium, and other sectors for the parent company.

Whether this spin-off game can continue receiving market premiums remains to be seen. The valuation ceiling also, to some extent, foreshadows potential risk exposure.

For ZIJIN MINING, spinning off the gold business is a choice, but the core issue behind it remains how to find a balance between capital logic and industrial returns.