Key Takeaways:
Zijin Mining Group Co. (2899.HK) reported that first-quarter net profit nearly doubled, surging 97.5% to a record 20.1 billion yuan as the company capitalized on soaring metal prices and sharply higher production.
Morgan Stanley, which viewed the results as in line with expectations, maintained its "Overweight" rating on the stock with a price target of HKD55. The bank noted that unit production costs for gold and copper declined 5.8% and 3.4% quarter-over-quarter, respectively, citing operational improvements and currency effects.
The historic rally in gold was a primary engine for the quarter's performance, supported by a significant ramp-up in the company's new lithium business.
The results underscore how rising commodity prices and strategic expansion into battery metals are reshaping Zijin's profit structure. The company's overall gross margin climbed from 22.89% to 36.33% year-over-year, reflecting a massive price dividend.
The gold segment was the largest contributor to profit growth. Mined gold production increased 23% year-over-year to 23,497 kilograms, benefiting from contributions from newly acquired mines in Ghana and Kazakhstan. The average selling price for the company's gold ingots rose by more than 64% to 1,089.04 yuan per gram, expanding the gross margin for mine-produced gold from 52.91% to 69.60%. Silver margins were even more dramatic, leaping to 85.59% on surging prices.
The most significant operational change came from the lithium segment, which management now positions as its "third pillar" after copper and gold. Lithium carbonate equivalent production exploded by more than 10 times compared to the prior year, reaching 16,229 tonnes. The segment achieved a high gross margin of 61.44%, a sharp recovery from just 24.59% in the previous quarter, driven by higher prices and a more favorable product mix from its salt lake assets. Zijin plans to reach 270,000–320,000 tonnes of lithium carbonate equivalent production by 2028.
The copper segment saw a production decline to 259,214 tonnes from 287,571 tonnes a year earlier, mainly due to a 50% drop in equity production from the Kamoa-Kakula mine. However, rising copper prices helped offset the lower volume, with the gross margin on copper concentrates improving to 70.84%. The company's balance sheet remains robust, with cash and cash equivalents swelling to 90.3 billion yuan, providing a strong foundation for future M&A and capital expenditures.
The strong earnings and successful ramp-up of its lithium division signal that Zijin's strategic pivot is delivering significant returns. Investors will be watching for continued execution on its ambitious lithium expansion plans and the performance of its copper assets in the coming quarters.
This article is for informational purposes only and does not constitute investment advice.
