Zijin Mining (2899.HK) Multimetal Production Surge and Price Optimism: Can It Support the 100 Billion Profit Target?

• Comprehensive Judgment
  : Under neutral-to-optimistic metal price assumptions, the
  2026 target of 100 billion yuan in net profit attributable to the parent company has high feasibility
  , mainly supported by substantial multimetal production release, cost and tax advantages, and incremental contributions from associated metals.
• Key Assumptions
  : Copper and lithium prices remain stable or rise; gold and silver do not fall significantly; mineral production costs are controlled steadily; exchange rate and geopolitical risks are manageable.
• Core Verification Points
  :
  1. Capacity Delivery
     : Key projects such as Julong Copper Mine Phase II, Kakula Copper Mine, Juno Copper Mine, and Haiyu Gold Mine are commissioned on schedule and ramp up to full production;
  2. Price Environment
     : Key metals like copper and lithium remain strong or rise moderately;
  3. Expenses and Taxes
     : Effective tax rate remains low (e.g., tax incentives for projects like Tibet Julong continue);
  4. Operational Efficiency
     : Technical transformations and expansions proceed as scheduled, with unit consumption and recovery rates continuously optimized.

: Factors such as global economic growth slowdown leading to industrial metal demand and price declines, geopolitical disturbances, projects failing to start production as expected, cost overruns, and exchange rate fluctuations may impact profits.

1. Clear and Significant Production Plan
   • Market information shows that production is expected to surge across the board in 2026: approximately 1.26 million tons of copper (+14.5%), about 110 tons of gold (+22.2%), around 610 tons of silver (+35.6%), and roughly 130,000 tons of lithium (+490%) [1][4].
   • Key projects include: Julong Copper Mine Phase II, Kakula Copper Mine, Juno Copper Mine, Haiyu Gold Mine, RGM Copper-Gold Mine, Lianghu Lithium Mine, Suriname Expansion, Bisha and Urad Hou技改 and expansion projects [1][4].
   • Gold production growth comes from new commissioning and ramping up (e.g., Haiyu Gold Mine, Porgera restart, Shuiyindong expansion, Suriname, etc.), while copper/silver/lithium growth comes from capacity release and technical transformation [1][4].

2. Overall Favorable Multimetal Price Environment
   • Copper: Structural support from green energy and electrification demand, combined with financial attributes and supply constraints; the market generally holds a bullish view on medium-to-long-term copper prices.
   • Gold and Silver: Macroeconomic uncertainty, central bank gold purchases, and interest rate cut expectations underpin prices; the “no bearish” assumption is relatively robust.
   • Lithium: Supply-side consolidation and downstream new energy demand recovery; expected to be “bullish”, but volatility still needs dynamic tracking.
   • Associated products (molybdenum, tungsten, sulfuric acid, etc.) also contribute incrementally and saw significant price increases in 2025 (e.g., tungsten prices rose more than 2x this year, molybdenum prices remained high) [1][4].

3. Obvious Cost and Tax Advantages
   • Tibet Julong Copper Mine enjoys a low effective tax rate (about 9% mentioned in the market), and the Serbia project has a tax rate of about 15%, significantly lower than the general corporate income tax rate, which helps improve net profit margin [1][4].
   • The company’s bulk purchasing and operational synergy, self-owned power plants and logistics systems, and application of automated and digital mines all reduce unit costs.
   • Associated metal and sulfuric acid by-product income further improve comprehensive cash flow [1][4].

4. Financial Health and Execution Capability
   • ROE (TTM) is about 30.6%, net profit margin about 13.9%, gross profit margin about 20.1%, showing strong profitability [0].
   • The 2025 net profit attributable to parent company guidance is 55-56 billion yuan, laying the foundation for the 2026 target; the 2026 production surge is based on this base [1][4].
   • The company’s past project commissioning records and execution rhythm are evaluated by the market as “very strong execution capability” [4].

5. External Environment and Market Sentiment
   • Commodity and energy sectors have recently outperformed the broader market, reflecting capital preference for resources and cyclical assets [0].
   • Hong Kong stock market resource stocks and high-dividend assets are highly concerned; as a weight leader, Zijin has liquidity premium.

Note: The following is a simplified calculation framework based on public market information to understand the sensitivity of profit targets to core variables, not formal model conclusions. Key assumptions are only for illustrative purposes and do not constitute investment advice.

• Copper: Approximately 1.26 million tons (assuming LME/SHFE average price in the range of $10,000-$11,000/ton), net profit margin estimated at 10-15%.
• Gold: Approximately 110 tons (average price $2,000-$2,200/oz), net profit margin about 15-20%.- Silver: Approximately 610 tons (average price $25-$30/oz), net profit margin about 12-18%.- Lithium: Approximately 130,000 tons of LCE (average price $12,000-$15,000/ton), net profit margin in the range of 10-20% (large cost line differences).
• Associated products (molybdenum, tungsten, sulfuric acid, zinc, etc.): Contribute incremental profits (significant marginal improvement) [1][4].

• Comprehensive cash cost control is excellent; copper/gold C1/C3 costs are among the industry’s top tiers.
• Comprehensive effective tax rate is about 15-25% (tax incentives for Tibet/Serbia projects lower the center) [1][4].

• Optimistic
  : Copper price $11,000, gold $2,200, lithium $15,000, tax burden 15%, ideal unit cost control → profit significantly revised upward.
• Neutral
  : Copper price $10,000, gold $2,000, lithium $12,000, tax burden 20%, cost in line with planning → profit target supported.
• Cautious
  : Copper price $9,000, gold $1,800, lithium $10,000, tax burden 25%, cost slightly overrun → profit target under pressure but still acceptable for some deviations.

• Equity profit contribution from affiliated companies (Zangge, Longjing, Ivanhoe, Zhaojin, Wanguo, etc.) is rising.
• Non-recurring gains (equity disposal and floating profit realization) provide additional flexibility [1][4].

1. Price Risk
   : Weak global macroeconomics, lower-than-expected new energy demand, changes in supply-side release rhythm may affect copper, lithium and other price centers and volatility.
2. Project Risk
   : Construction and commissioning progress are constrained by multiple factors such as technology, environment, community, approval and logistics; any key node delay will affect production delivery.
3. Cost Risk
   : Inflation, rising energy and labor costs, supply chain disruptions, exchange rate fluctuations and other factors put pressure on unit costs.
4. Policy and Geopolitical Risks
   : Resource country policy changes, tax and royalty adjustments, geopolitical conflicts leading to supply chain disruptions.
5. Environmental Protection and Social Responsibility
   : Mine operations face pressure from environmental compliance and community relations, with potential fines, production suspension and reputation risks.

• Short-term
  : After a sharp rise in stock price, the technical side shows range-bound oscillation characteristics, with increased short-term volatility; pay attention to position management and retracement control [0].
• Medium-term
  : If the metal price environment and company capacity delivery meet expectations, the profit level increase in 2025-2026 is highly certain; focus on quarterly production and operating data disclosure verification.
• Long-term
  : The company’s global resource layout and cost advantages build an industry leader moat; key risks lie in commodity cycle fluctuations and project execution.

: Market data and financial indicators are from brokerage APIs; industry and project information are from web searches and relevant public materials of the company.

:

• East Money Wealth Post “Zijin’s Profit Exceeds 100 Billion Next Year” (including production planning, price assumptions, cost and tax advantages, associated product increments, etc.) [4] (https://caifuhao.eastmoney.com/news/20251224201824875922080)
• Jinling API: Real-time quotes, company overview, technical and financial data [0]
• Jinling API: Market index and sector performance data [0]

• Key Assumptions: LME copper price $10,000/ton, gold price $2,000/oz, lithium price $12,000/ton; comprehensive net profit margin 12-18%; effective tax rate about 20%.- Calculation Steps: Multiply each main metal production × average price × net profit margin, add associated products and affiliated contributions, deduct taxes and depreciation, roughly the central net profit attributable to parent company is close to 100 billion yuan, and moves up or down under scenarios.- Emphasis: Actual results are affected by multiple variables; this framework is only for understanding the sensitivity of profit targets to core variables (price, production, cost, tax rate) and does not constitute any investment advice.

Under neutral-to-optimistic assumptions (moderate rise in copper and lithium prices, stable gold and silver, projects commissioned as scheduled, tax incentives continued),

. Continuously tracking monthly/quarterly production data, key metal price trends, changes in company costs and tax policies, as well as macro and geopolitical risks are key to verifying and revising judgments.