Wall Street reviews Zijin Mining's acquisition of a new gold mine: A key step toward the annual production target of 100 tons of gold.

Zijin Mining’s acquisition of Allied Gold for AUD 5.5 billion has received positive feedback from Wall Street investment banks. The deal is seen as a key move toward achieving the company’s goal of producing 100 tons of gold annually by 2030. Both Citi and Morgan Stanley believe that even with gold prices at a high level, the acquisition remains attractive in terms of valuation, and will provide Zijin with significant capacity growth and operational synergies.

According to Chasewind Trading Desk, Citi analyst Jack Shang’s team stated in a report published on January 26 that the purchase price equates to USD 365 per ounce of gold reserves and just USD 231 per ounce of gold resources. Citi noted: "Looking at current gold prices, this acquisition price is highly attractive." Citi reiterated its "Buy" rating for Zijin Mining and listed it as its sector top pick.

Morgan Stanley analyst Rachel L Zhang’s team released a report on the same day stating, with the expansion of acquired assets and new projects coming online, Allied Gold’s annual production will reach 25 tons by 2029, directly supporting Zijin’s goal of "100 tons/year gold output by 2030." Morgan Stanley highlighted that the successful completion of the transaction will be an important milestone for Zijin Mining.

The acquisition covers the Sadiola gold mine in Mali, the Bonikro and Agbaou gold mines in Côte d'Ivoire, and the Kurmuk project in Ethiopia. The deal is expected to close around May 2026, pending approval from Allied Gold’s shareholder meeting and regulatory authorities in Canada, China, and other countries.

Valuation Advantage Stands Out: "Cheap" Even at High Gold Prices

In its detailed report, Citi calculated the valuation levels for this acquisition. According to its analysis, Zijin’s acquisition price equates to USD 365 per ounce of gold reserves and just USD 231 per ounce of gold resources.

In comparison, while this valuation is higher than that of the previous acquisition of Brazilian gold assets by CMOC, it is still lower than Zijin's own cost for acquiring the Raygorodok project. Amidst the current global scarcity of high-quality gold mine assets, this valuation level allows Zijin ample safety margin for future profit realization.

Citi analysts believe this transaction is not just a simple scale expansion but a precise value arbitrage. In the context of high gold prices, Zijin Mining is still able to find attractive acquisition targets, demonstrating its sound judgment in the global mining M&A market.

Clear Pathway for Capacity Leap, 25 Tons Target for 2029

Citi estimates that Allied Gold's assets will produce 11.7 to 12.4 tons of gold in 2025. More notably is its potential for future growth. With the expansion of the Sadiola project and commissioning of the Kurmuk project, total output is expected to further increase to 25 tons by 2029.

Specifically, Sadiola Phase II is expected to begin production by the end of 2028, with an average annual output in the first four years reaching 12.4 tons. The Kurmuk project is expected to contribute production in the second half of 2026, with an initial average annual output of about 9 tons.

Morgan Stanley’s report notes this increment will directly help Zijin achieve its main goal for 2030, derived primarily from expansion of existing mines: "100 tons/year gold output." For investors seeking excess returns in the gold sector, these tangible increments form the foundation for Zijin Mining to maintain its industry-leading position.

Significant Geographical Synergies, African Map Takes Shape

Morgan Stanley particularly highlights the geographical synergy value of this acquisition. Allied Gold holds a total resource of 533 tons, and the location of its assets complements Zijin’s existing business in Africa.

Analysts note that the Sadiola gold mine in Mali and mines in Côte d'Ivoire are near Zijin’s Akyme gold mine in Ghana, and the Kurmuk project in Ethiopia is near Zijin’s Bisha project in Eritrea. Such geographic proximity is expected to provide Zijin with significant management synergies.

Besides scale expansion, improved operational efficiency is also noteworthy. Management points out that given current gold prices, the above projects’ resources and reserves still have potential to grow. Morgan Stanley specifically mentions that with the phase II expansion and the use of onsite generators, Sadiola’s all-in sustaining cost may drop from USD 2,067/oz in Q3 2025 to USD 1,200/oz.

Investment Banks Reiterate Optimism, International Expansion Continues

Based on the analysis above, Citi reiterates its "Buy" rating for Zijin Mining and lists it as sector top pick. Though the acquisition still awaits approval from Allied Gold’s shareholder meeting and multiple regulators in Canada, China, etc., with completion expected around May 2026, Citi believes this further demonstrates Zijin’s commitment to strengthening its gold portfolio through international expansion.

Morgan Stanley states in its report that successful completion of the transaction will be a milestone for Zijin Mining. For investors, this merger is not just an expansion of the balance sheet, but a dual bet on future gold prices and the company’s own operating capability. In a macro environment of persistent inflation expectations and complex geopolitics, the global acquisition journey of this Chinese mining giant may be just beginning.

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The above content is from Chasewind Trading Desk.

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