With a steady increase in resources and a rise in new breakthroughs in overseas mines, Zhaojin Mining (01818) passed the stress test with steady performance

The gold market this year is bound to leave a dramatic mark in world financial history. In just six months, gold experienced a complete transmission cycle of “rising geographical premiums, reversing energy inflation, and suppressing expectations of monetary policy austerity.” After reaching a record high of 5595.44 US dollars/ounce in late January, London's spot gold soon turned downward due to disturbing factors such as the outbreak of the US-Iran War, the closure of the Strait of Hormuz, and a rebound in inflation driven by rising oil prices. Since then, in the macro context of Walsh becoming the chairman of the Federal Reserve and the financial market pricing and interest rate hike, the price of gold fluctuated all the way to the bottom. By the end of June, it had fallen back to the level of the beginning of the year.

An extreme market environment may instead be the best “litmus test” for verifying the company's fundamental content. Recently, Zhaojin Mining (01818) disclosed its performance report for the first half of 2026. In the first half of the year, when the volatility of gold prices reached a new historical peak, Zhaojin Mining still showed full operational resilience. The company's financial report showed that during the period, Zhaojin Mining achieved revenue of 9.022 billion yuan and net profit of 2.05 billion yuan, an increase of 29.4% and 18.5%, respectively.

Zhitong Finance believes that against the backdrop of sharp fluctuations in gold prices and a phased decline in its own gold production, it is already remarkable that the long-term pricing logic of gold has not wavered; not to mention, the long-term pricing logic of gold has not wavered, yet Zhaojin Mining itself has the largest single gold mine in China. Currently, the offshore gold mine is getting closer to being put into operation. Its excellent resource endowment will surely accelerate into a real increase in production and performance in the future.

Overall performance is steady and progressing

In the first half of 2026, the gold mining business, the core main business of Zhaojin Mining, achieved revenue of 7.81 billion yuan. It still bucked the trend and grew 26.7% due to multiple factors such as fluctuations in gold prices, the phased stagnation of production capacity growth and contraction in the scale of output affected by the accident. The profit side also showed strong resilience. In the first half of the year, Zhaojin Mining achieved gross profit of 4.347 billion yuan, an increase of 42.5% over the previous year; the corresponding gross profit margin was 48.2%, up 4.5 percentage points from 43.7% in the same period last year. The significant improvement in gross margin confirms that the dividend transmission of upward gold prices has not been interrupted by short-term disturbances.

During the period, Zhaojin Mining completed a total gold output of 12,526.34 kg, including 7,997.08 kg of mineral gold and 4,529.26 kg of smelted and processed gold. Against the backdrop of a phased decline in gold production, Zhaojin Mining gave full play to its subjective activism, focusing on the goal of stabilizing production and supply and hedging the pressure to reduce production with multiple measures. For example, Zhaojin Mining has accurately formulated a “one mine, one policy” differentiated plan to stabilize production and replenish production, making every effort to revitalize existing production capacity, repair production capacity, and fill production gaps. At the same time, the results of Zhaojin Mining's “double H” strategy of “half domestic, half foreign” were also released centrally this year. In the first half of the year, Zhaojin Mining's overseas gold production surged 33.4% year-on-year. Take the Abuja gold mine, an important overseas location of Zhaojin Mining, as an example. By optimizing production and operation models, streamlining production processes, and improving the efficiency of mining and beneficiation operations, the high quality of the gold mine achieved the goal of stable production and efficiency. Additionally, it is worth mentioning that a number of core key projects of the Zhaojin mining industry located overseas, such as the expansion of Alderland Mining, are currently progressing in an orderly manner according to plan, and the future will inevitably bring new increases.

While overseas production capacity is increasing, Zhaojin Mining is also focusing on a longer cycle of resource continuity and production capacity reserves. In the first half of the year, the company continued to increase investment in mineral resource exploration, and the quality and scale of resource reserves were steadily improving. In terms of expansion, drilling in the northern part of the Dayingezhuang mining area discovered large ore bodies, achieving major breakthroughs in regional prospecting; prospecting results in target areas such as Jinwang Mining and Jinzhi Mining have been remarkable. During the period, the company added 28.46 tons of gold and metal to prospecting, further consolidating the medium- to long-term resource base. In terms of expanding external resources, Zhaojin Mining adheres to an internal and external resource layout strategy. The country completed the acquisition of prospecting rights in the periphery of Zhaojin Baiyun, and auctioned to obtain prospecting rights at Ningsunjia in Zhaoyuan City, Shandong Province, to continuously enhance its resource reserve capacity.

Under the trend of long bulls, the dynamic energy within the recruitment fund is expected to increase even more

The decline in gold prices in the first half of the year of trading was essentially an energy supply shock caused by the geographical conflict through a transmission chain of “rising oil prices, rebounding inflation, and rising expectations of interest rate hikes”, forming phased interest rate suppression on gold, rather than a fundamental reversal of the long-term pricing logic of gold.

Despite the gradual increase in disturbance in the news, the medium- to long-term bottom of the current gold price is mainly supported by long-term factors such as weakening US fiscal credit and global central bank gold purchases, which determines that the price of gold does not have a basis for continued decline. Currently, the US federal deficit rate remains high, interest expenses on debt have exceeded trillion US dollars, term premiums are systematically rising, and the trend of long-term weakening of US dollar credit is intensifying. In this context, US bonds and gold can almost be viewed as an alternative relationship for reserve assets. The decline in the attractiveness of US bonds means that stable funds such as global central banks and pensions will gradually increase their allocation of gold. This is also true. The data shows that the net purchase of global central banks in the second quarter of 2026 was 289 tons, a clear recovery from about 57 tons in the first quarter; the Central Bank of China increased its holdings for 21 consecutive months during gold price adjustments, increasing by about 14.9 tons and 19.9 tons in June and July, respectively.

However, if we only focus on the price of gold, it is far from touching the core point of interest of Zhaojin mining industry. What really distinguishes the company from its peers is its continuous deepening cultivation on the resource side and the accelerated implementation of production capacity reserves. On the one hand, as mentioned above, the company achieved great results in resource growth and storage in the first half of the year. Zhaojin Mining is continuing to consolidate its resource base under a two-pronged approach in domestic and overseas markets; on the other hand, the company is also focusing on speeding up key offshore gold mining projects, building industry benchmark mines with high standards, and accelerating the implementation of new production capacity as soon as possible with new projects and infrastructure. The author believes that the production volume, which was phased under pressure in the first half of the year due to safety incidents, was a short-term disturbance rather than a long-term drag for the Zhaojin mining industry. As the resumption of production progresses after the rectification is completed, compounding the continuous volume of production capacity at home and abroad and the gradual commissioning window for offshore gold mines, the production and performance of Zhaojin Mining will also experience a round of definite long-term growth in the future.

Looking back at the company's recent report card, under the double pressure of sharp fluctuations in gold prices and a phased decline in production in the first half of the year, Zhaojin Mining still used a steady and progressive report card to verify the fundamentals. Looking ahead, considering that the long-term upward logic of gold is still strong, and Zhaojin Mining's own endogenous momentum continues to accumulate, the company's performance flexibility and growth certainty are expected to resonate in the future. In the midst of a major gold cycle, the Zhaojin mining industry is undoubtedly still a core target worth continuing to focus on by investors.