In-depth Analysis of Shandong Gold's Veladero Gold Mine Expansion Plan

Veladero Gold Mine is a joint venture between Shandong Gold and Barrick Mining, located in San Juan Province, Argentina. It is currently one of Argentina’s largest gold export operation bases [1]. The mine has been in continuous operation for 20 years and is a pillar of San Juan Province’s economy [2].

According to the latest information, the joint venture partners have submitted an expansion plan application worth $400 million, hoping to get approval through Argentina’s government’s Large Investment Incentive Regime (RIGI) [1]. The application has now exceeded the standard 45-day approval period, and there is a risk that the “existing project expansion” may be rejected [4][6].

• Current Production Level
  : Veladero Gold Mine is expected to produce 190,000-220,000 ounces of gold in 2025 [2]
• Expansion Increment
  : Plans to add 1.6 million ounces of gold production
• Production Growth Rate
  : After the expansion is completed, the cumulative gold production of the mine will increase significantly, equivalent to 7-8 times the current annual output

The most critical incentive measure is the reduction of the income tax rate from 35% to 25%, which will significantly enhance the project’s profitability:

(assuming a gold price of $4,200 per ounce):

• Before Expansion
  : Calculated at a 35% tax rate, the net profit per ounce is approximately $2,730
• After Expansion
  : Calculated at a 25% tax rate, the net profit per ounce increases to approximately $3,150
• Tax Burden Reduction
  : Each ounce of gold can increase net profit by approximately $420, a growth rate of 15.4%

The RIGI framework also provides preferential policies such as foreign exchange and tariffs [1], which will:

• Reduce the cost of imported equipment and materials
• Simplify foreign exchange controls and facilitate capital repatriation
• Improve the overall cash conversion efficiency of the project

According to Shandong Gold’s latest financial data [0]:

• Current stock price: $35.11 per share, market capitalization: $161.85 billion
• Revenue for the first three quarters of 2025: $8.379 billion (25.94B +30.83B +27.02B)

:

• Calculated based on the新增1.6 million ounces of production and $4,200 per ounce gold price
• Annual新增 revenue is approximately $6.72 billion
• It will account for more than 20% of Shandong Gold’s current annual revenue

Considering the 10-percentage-point reduction in tax rate and economies of scale, the net profit margin of the expansion project is expected to increase significantly, contributing greatly to Shandong Gold’s overall profit growth.

• Deepening International Layout
  : Further strengthen its position in the American market
• Establishment of Cost Advantage
  : The policy preferences provided by RIGI will enable the project to have long-term competitiveness
• Technology Cooperation Platform
  : Cooperation with Barrick Mining will improve Shandong Gold’s operational level

The current application has exceeded the 45-day approval period, and there is a risk of rejection [4][6]. The Argentine government may set stricter review standards for the “existing project expansion” category.

Even if approved, there are still uncertainties about the specific implementation effect of the policy and the actual relaxation degree of the exchange rate control policy.

Although the current gold price remains at a high level of around $4,200 [7], analysis shows that there may be a 10%-20% adjustment in the first half of 2026 [7], which will affect the actual收益 of the project.

Analysts remain optimistic about the gold outlook:

• JPMorgan
  : Q4 2026 target price of $5,055 per ounce [8]
• Goldman Sachs
  : Maintains end-2026 target price of $4,900 per ounce [8]
• Bank of America
  : Expects to possibly hit the $6,000 mark next year [8]

If the expansion plan is approved, it will significantly enhance Shandong Gold’s growth and profitability:

• Production Growth
  : The新增 production is an important supplement to the current total production
• Profit Enhancement
  : Tax incentives are directly converted into net profit growth
• Valuation Reconstruction
  : The increase in the proportion of international projects helps the valuation system to align with international peers

If Shandong Gold’s $400 million expansion plan for Veladero Gold Mine is approved by RIGI, it will have a major positive impact on the company:

1. Significant Production Growth
   : The新增1.6 million ounces of production will significantly increase the company’s total gold production
2. Enhanced Profitability
   : The reduction of the income tax rate from 35% to 25% will directly increase the project’s net profit margin by more than 15%
3. Strengthened Strategic Position
   : Further strengthen the layout in Argentina, an important gold-producing region

:

• Pay close attention to the approval progress of the RIGI application
• Evaluate the stability of Argentina’s policy environment
• Judge the actual收益 level of the project based on the gold price trend

This expansion plan represents an important overseas growth opportunity for Shandong Gold, and successful approval will become an important growth engine for the company in the next few years.

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[0] Jinling API Data - Shandong Gold (600547.SS) Company Profile and Financial Data
[1] Panorama Minero - “RIGI: Veladero Submits Application Valued at Around US$400 Million”
[2] Panorama Minero - “Two Decades of the Country’s Largest Gold-Exporting Operation”
[4] Xueqiu - “Shandong Gold’s $400 Million Expansion Plan for Veladero Gold Mine and Argentina’s Large Investment Incentive Regime (RIGI)”
[6] Panorama Minero - “Latest News gold” (information about the 45-day approval period)
[7] Sina Finance - “2026 Global Gold Price Trend Outlook”
[8] Mitrade - “Gold Future Price Trend Analysis: What to Expect for Gold Prices in 2025?”