Analysis of RIGI Approval's Impact on Shandong Gold's Profitability & Valuation, and Overseas Mining Risks

1. Profitability Driven by Production and Taxation
   : The expansion and commissioning of the Veladero gold mine will add approximately 1.6 million ounces of gold production capacity for the company over the entire mining cycle, contributing more than USD 4 billion in revenue at the current global gold price (estimated at USD 1,900 per ounce), significantly enhancing the company’s scale effect on the gold supply side. If RIGI is officially implemented, the company can enjoy a package of preferential policies such as a reduction in corporate income tax rate from 35% to 25%, exemption from export tariffs and foreign exchange restrictions, plus a 30-year policy stability period, providing a clear policy guarantee for cash flow in the coming decades [1][2].

2. Cash Flow and Valuation Reset
   : Currently, the company’s TTM P/E ratio is about 35x, P/B ratio is 5.3x, net profit margin is only 4.9%, and operating leverage needs to be optimized; although cash flow was once negative, the new gold sales and after-tax net income after the project is put into operation should effectively drive EPS and free cash flow. If about 70% of the NPV of the expansion project reaches an IRR >10%, it can fully support the current EV/OCF 15x valuation and provide a new growth anchor for market expectations [0].

3. Prudent Valuation Path
   : Investors can use scenario analysis: if the approval is successful and the capital payback period is within 6 years, the overall DCF valuation can increase by 10%-15%; conversely, if the review is extended or no preferential policies are obtained, it needs to return to the conventional level based on a 35% tax rate and restrictive foreign exchange conditions. Sensitivity tables can be used to simulate changes in gold prices (USD 1,800/1,900/2,000), tax rates (25%/30%/35%), and discount rates to evaluate the elasticity of profitability and valuation.

1. Institutional Commitment vs. Actual Implementation
   : RIGI is an incentive mechanism established by Argentina to attract large-scale strategic projects, promising tax reductions, export/foreign exchange facilitation, and 30-year stability guarantees, which in principle significantly improve project cash flow. However, the application for the Veladero project has now exceeded the standard 45-day approval period, indicating that there are still administrative delays or supplementary document situations in the early stage of system implementation; investors must be alert to the rhythm difference between policy commitments and actual implementation [1][2].

2. Macroeconomic Environment and Currency Risks
   : Although Argentina’s economy is striving to stabilize (e.g., the central bank signed a USD 20 billion foreign exchange stability agreement with the United States in 2025, and inflation fell from 117.8% in 2024 to 22%), the exchange rate is still affected by political cycles and fiscal pressure; local currency depreciation or capital controls may cause difficulties in profit repatriation, which could erode USD-denominated earnings. It is recommended to hedge such risks by locking in USD sales settlements, establishing overseas reinvestment pools, and external exchange rate hedging mechanisms [3].

3. Sovereign and Political Risks
   : Mining projects often face challenges such as resource nationalism, environmental community protests, and administrative re-reviews; investors should pay attention to the government’s actual execution capacity during the RIGI approval process, coordination between local and central governments, and whether environmental, social, and governance (ESG) conditions are attached. If approval is delayed or policy boundaries are redefined, policy exit/re-negotiation clauses need to be established in advance to limit negative impacts.

4. Investor Response Framework
   :
   • Phased Capital Investment
     : Link phased capital expenditures to milestones (e.g., allocate additional funds after obtaining the RIGI approval document) to avoid one-time exposure.
   • Multi-dimensional Due Diligence and Intelligence Updates
     : Continuously track new fiscal/mining regulatory policies in Argentina, communicate regularly with officials or partners, and adjust project models in a timely manner.
   • Scenario-based Returns and Risk Compensation
     : Model cash flows before and after RIGI implementation separately, and include potential policy risks in the required rate of return or risk premium.
   • Portfolio Strategy
     : Include the Veladero project in the “policy window” proportion of the portfolio, and complement the domestic and other regional business structures to diversify single-country risks.

• If RIGI is finally approved, the project will gain significant cash flow acceleration from tax rate and foreign exchange facilitation, and provide substantial support to Shandong Gold’s overall valuation system (especially P/E and EV/OCF); long-term profitability can be improved multiple times after the release of new production [0][1][2].
• During the approval waiting period, it is necessary to closely monitor the official approval progress and relevant policy prompts, set early warning lines for Argentina’s macroeconomic/exchange rate changes, and prevent institutional risks through phased investment, risk sensitivity adjustment, and other methods [3].
• Investors may consider gradually increasing positions along with policy news: participate with a smaller position before approval; once the investment incentive is confirmed and the RIGI compliance documents are completed, increase the position and re-evaluate the valuation multiple; if the approval is further delayed, consider using other assets to hedge the Argentina risk exposure.

If you need further in-depth financial modeling (DCF/sensitivity), policy variable simulation, or comparison with other gold stocks, you may consider enabling the deep research mode to obtain richer brokerage database and chart support.

[0] 金灵API数据
[1] Lundin Mining - “Vicuña Corp. Applies for RIGI PEELP in Argentina” (https://lundinmining.com/news/vicuna-corp-applies-for-rigi-peelp-in-argentina-123221/)
[2] Discovery Alert - “Argentina Lithium Mining Investments: RIGI Framework Guide” (https://discoveryalert.com.au/argentina-lithium-investment-unique-advantages-2025/)
[3] 台湾经济部国际贸易署 - “Argentina(Argentine Republic)經貿檔” (https://www.trade.gov.tw/Files/PageFile/805004/8050040o03j20251124113840.pdf)