Zijin Gold price jumps nearly 70% on Hong Kong debut amid heated gold market

The international unit of a Chinese mining giant has raised almost HK$25 billion (US$3.22 billion), taking the crown as the second-largest Initial Public Offering in Hong Kong, and achieved a robust first-day performance on Tuesday amid a rising gold market.

Priced at its IPO price of HK$71.59, Zijin Gold International(Zijin Gold), a subsidiary of Zijin Mining Group Co., Limited(Zijin Mining), saw a 68.5% jump to close at HK$120.6, after opening at HK$111.50 and reaching an intraday high of HK$123.

Trading under code 02259, Zijin Gold sold 349 million shares globally during its IPO, with 90% of the shares allocated to international investors. The city’s investors received a 10% allocation of the total, resulting in a 240.7 times oversubscription, according to the firm’s allocation result announced on Monday. 

The Hang Seng Index added 0.87% to 26,855.56 as of market close.

“In the Hong Kong capital market, pure-play-play gold mining  mining listed companies are relatively scarce,” wrote Tang Yan, a risk director of Sunflower Investment, a Shanghai-based asset manager, in a written reply to the reporter. She added that what makes the company an attractive choice this scarcity for investors makes the company an attractive choice seeking gold exposure for investors seeking gold exposure.

With a total of 29 cornerstone investors committing HK$12.47 billion (approximately US$1.6 billion), the company received solid support from prominent asset managers and investment giants, including GIC Private Limited, BlackRock, Schroders, UBS AM Singapore, Fidelity Hong Kong, and Millennium Management.

The funds raised by the gold miner are primarily planned for the acquisition of the Raygorodok Gold Mine in Kazakhstan and the upgrade and construction of existing mines, accounting for aboutabout 33.4% and 50.1% respectively.

Kenny Wen, Executive Committee Member of the Hong Kong Society of Financial Analysts, said that the sharp rise in Zijin Gold’s shares was strongly related to the rising gold prices, driven by heightened market demand for safe-haven assets.

“Overall, I think there is still room for gold prices to rise,” he said. He added that investors buying at this stage face higher risks, since many of the favourable factors have already been priced in.

As Zijin Mining’s wholly owned subsidiary, Zijin Gold achieved a compound annual growth rate of  61.9% in net profit attributable to shareholders from 2022 to 2024, as shown in its prospectus.

Tang mentioned that, following its listing, Zijin Gold International is expected to be included in major indices such as the Hang Seng Composite Index after a period of time, which would trigger passive allocation demand from index funds. 

“Investors still need to pay attention to risk factors such as the potential decline in gold prices, overseas operational risks, production and project progress falling short of expectations, and rising costs,” she added.