China's Top Gold Miners Spend Big on Mergers Amid Rising Prices

China's top gold miners have been actively expanding their resources in the first half of the year, taking advantage of rising gold prices to invest in mergers and acquisitions. According to data compiled by Yicai, the cumulative net profit of the top 10 Chinese mainland-listed gold mining firms exceeded CNY54 billion (USD8 billion) in the six months ended June 30.

Of the six companies that carried out M&As during this period, they invested over CNY30.8 billion in such operations. Nine of the above 10 gold miners reported growth in first-half earnings, with net profits of Zhaojin Mining Group, Western Region Gold, Humon Smelting, and Sichuan Gold doubling from the same period last year.

Zijin Mining Group was the Chinese mining firm that spent the most on M&As in the first half, investing about CNY21.6 billion, equal to 70 percent of the total. It bought a 26 percent stake in Chifeng Gold for CNY18.3 billion and a 72 percent stake in Gansu Northwest Gold for CNY2.4 billion (USD357.1 million), and acquired Lianrui Mining Industry for CNY900 million (USD133.9 million).

CMOC Group ranked second as it purchased four operating gold mines in Brazil for about CNY7.3 billion. Liu Tingyu, manager of Maxwealth Fund Management, noted that the core value of gold mining stocks lies in their operational leverage over gold prices.