Citi stated that the acquisition price amounts to $365 per ounce of gold reserves and only $231 per ounce of gold resources, which is highly attractive given the current gold price. Morgan Stanley believes that with the expansion of acquired assets and the commissioning of new projects, Allied Gold's annual production will reach 25 tons by 2029, directly supporting Zijin in achieving its goal of "100 tons/year gold production by 2030."
$ZIJIN MINING (02899.HK)$for AUD 5.5 billion$Allied Gold (AAUC.US)$has received positive evaluations from Wall Street investment banks, and this deal is seen as a critical step towards achieving its goal of producing 100 tons of gold annually by 2030. Both Citi and Morgan Stanley believe that even at high gold prices, the acquisition remains valuation-attractive and will bring significant capacity increases and operational synergies to Zijin Mining.
In a report released on January 26 by Citi analyst Jack Shang's team, it was noted that the acquisition price equates to USD 365 per ounce of gold reserves and only USD 231 per ounce of gold resources. Citi explicitly stated: "At current gold prices, this acquisition price is highly attractive." Citi reiterated its "Buy" rating for Zijin Mining and named it as the top pick in the industry.
In a report issued the same day by Morgan Stanley analyst Rachel L Zhang’s team, it was stated that with the expansion of acquired assets and the commissioning of new projects,$Allied Gold (AAUC.US)$annual production will reach 25 tons by 2029, which will directly support Zijin in achieving its '100 tons/year gold production target' by 2030. Morgan Stanley emphasized that the successful completion of this transaction will be an important milestone for Zijin Mining.
This acquisition includes the Sadiola gold mine in Mali, the Bonikro and Agbaou gold mines in Côte d'Ivoire, and the Kurmuk project in Ethiopia, with completion expected around May 2026, subject to approval from Allied Gold’s shareholders' meeting and regulatory authorities in Canada, China, and other countries.
Valuation advantage stands out, appearing 'cheap' even amid high gold prices.
Citi’s team provided a detailed calculation of the valuation level of this acquisition in their report. According to their analysis,$ZIJIN MINING (02899.HK)$the acquisition cost is equivalent to USD 365 per ounce of gold reserves and only USD 231 per ounce of gold resources.
By comparison, while this valuation is higher than Luoyang Molybdenum’s acquisition cost for Brazilian gold assets, it remains lower than Zijin’s own acquisition cost for the Raygorodok project. Against the backdrop of global scarcity of high-quality gold mine assets, this valuation provides sufficient safety margin for Zijin’s future profitability.
Citi analysts believe that this transaction is not merely a scale expansion but rather a precise value arbitrage. Despite elevated gold prices, Zijin Mining has managed to find an attractive acquisition target, showcasing its judgment in the global mining M&A market.
A clear path to capacity growth, with a 2029 target of 25 tons.
Citi expects$Allied Gold (AAUC.US)$that the assets under its portfolio will produce between 11.7 and 12.4 tons of gold in 2025. More noteworthy is their future growth potential. With the expansion of the Sadiola project and the commencement of the Kurmuk project, total production is expected to increase further to 25 tons by 2029.
Specifically, the Phase II project of Sadiola is expected to commence production by the end of 2028, with an average annual output of 12.4 tons in the first four years. The Kurmuk project is projected to contribute capacity as early as the second half of 2026, with an initial average annual output of approximately 9 tons.
Morgan Stanley pointed out in its report that this increase will directly contribute to$ZIJIN MINING (02899.HK)$Achieving the '100 tons/year gold production target' primarily from expansions of existing mines by 2030. For investors seeking excess returns in the gold sector, these tangible increments form the basis of Zijin Mining's confidence in maintaining its leading position in the industry.
Significant geographic synergies, shaping Africa’s strategic map
The Morgan Stanley team placed particular emphasis on the geopolitical synergy value of this acquisition.$Allied Gold (AAUC.US)$With a total resource volume of 533 tons, its assets are complementary to Zijin's existing operations in Africa.
Analysts pointed out that the Sadiola gold mine in Mali and the Côte d'Ivoire mining areas are close to Zijin Mining’s Akyme gold mine in Ghana, while the Kurmuk project in Ethiopia is near Zijin Mining’s Bisha project in Eritrea. This geographic proximity is expected to bring significant management synergies to Zijin Mining.
In addition to scale expansion, the potential for operational efficiency improvements is also noteworthy. Management indicated that, based on current gold prices, the resources and reserves of the above projects still have growth potential. Morgan Stanley specifically mentioned that with the completion of Phase II expansion and the commissioning of its own power generation units, the all-in sustaining cost of the Sadiola project could decrease from USD 2,067 per ounce in the third quarter of 2025 to USD 1,200 per ounce.
Investment banks reaffirm positive outlook as internationalization strategy advances
Based on the above analysis, Citi reaffirmed its 'Buy' rating for$ZIJIN MINING (02899.HK)$and listed it as the top pick in the industry. Although the acquisition still requires approval from Allied Gold's shareholders' meeting and regulatory authorities in multiple countries such as Canada and China, with an expected completion time around May 2026, Citi believes this once again demonstrates Zijin's commitment to expanding and strengthening its gold portfolio through internationalization.
Morgan Stanley stated in its report that the successful completion of this transaction will be a significant milestone for Zijin Mining. For investors, this acquisition represents not only an expansion of Zijin Mining’s balance sheet but also a dual bet on future gold prices and its operational capabilities. Amid persisting inflation expectations and complex geopolitical dynamics, this Chinese mining giant’s global shopping spree may have only just begun.
Editor/Melody