Zijin Gold International Plans IPO, To Raise $3.2 Billion

China’s mining giant Zijin Gold International, is keen to make the most of bullish sentiment for the precious metal, is aiming to raise $3.2 billion in a Hong Kong IPO that is set to be the city’s largest in four years, a Reuters report said on Friday.

Adding to a strong recovery for Hong Kong’s equity capital market, the offering could garner as much as $3.7 billion at a valuation of $24.6 billion if an overallotment of shares is fully exercised.

Gold, which tends to perform well during periods of uncertainty and in low-interest rate environments, has gained nearly 39% so far this year.

“A $24 billion market cap for Zijin Gold is reasonable. This is a total bull market for gold plays. Momentum is strong. You have long-only support,” said David Blennerhassett, a strategist of Ballingal Investment Advisors, who publishes on SmartKarma, in a Friday research note.

The report said that Zijin Gold, a wholly owned unit of China’s Zijin Mining that operates all of the group’s gold mines outside China, is selling 349 million shares at $9.21 apiece.

The trading is set to commence September 29. The number of offered shares in Hoing Kong is 31.9 million while the remaining will be for international offer shares, the company’s prospectus showed on Friday.

The offering would be the largest IPO in Hong Kong since JD Logistics’ May 2021 float which raised $3.6 billion as Hong Kong has seen total funds raised from new listings reach $18.5 billion so far this year, exceeding 2024’s full-year figure of $11.3 billion, Dealogic data showed.

If the overallotment is exercised it would be the largest since Kuaishou Technology raised $6.2 billion in January 2021. Booming demand for Chinese AI and tech stocks has seen a raft of Chinese companies listed in the mainland also sell shares in Hong Kong, the report said.

Funds to Upgrade Existing Mines

Zijin Gold said in the prospectus that it is planning to use the proceeds over the next five years to upgrade existing mines. The company expects global gold demand to grow steadily at a compound annual growth rate of 3.2% from 2024 to 2030.

Cornerstone investors have subscribed to about $1.6 billion worth of shares, according to the prospectus. A wholly owned unit of industry peer Zhaojin Mining has subscribed to $30 million worth of shares.

Singapore wealth fund GIC and private equity firm Hillhouse will each buy $150 million worth of shares while asset managers BlackRock and Schroders will each take $120 million worth.

Zijin holds Interest in eight gold mines located in gold-rich regions across Central Asia, South America, Oceania and Africa, and they include the Tajikistan Jilau/Taror Gold Mines, Kyrgyzstan Taldybulak Levoberezhny Gold Mine, Australia Norton Gold Mine, Guyana Aurora Gold Mine, Colombia Buritica´ Gold Mine (through Colombia Entrustment Arrangement), Suriname Rosebel Gold Mine, Ghana Akyem Gold Mine and PNG Porgera Gold Mine.

Among these gold mines, Zijin controls and operates seven gold mines and hold a minority interest in the PNG Porgera Gold Mine.