BofA-Zijin Mining(H A) Strong copper gold prices promising gold volume growth through Zijin Gold Intl-20250725

Strong copper & gold prices

After President Trump announced 50% tariff on imported copper, copper price slightlyretreated yet continued hiking afterwards with YTD average copper price at US$9,469/t,+4% YoY. Our global commodity team estimates FY25 copper price at US$9,557/t, +4%YoY, implying 2H25 copper price at US$9,634/t, +2% HoH, given that demand isexpected to remain strong in 2H with China grid investment and mine supply to keeptight with Kakula suspension, the Freeport Indonesia smelter fire and declining oregrades across major Chilean operations. On gold side, YTD gold price at US$3,111/oz,+39% YoY. Our global commodity team estimates FY25 gold price at US$3,356/oz,+41% YoY, implying 2H25 gold price at US$3,625/oz, +17% HoH, driven by rising USbudget deficits, higher rates volatility, and a falling USD.

Expect 1.07-1.08mnt copper output in 2025E

In the basic materials tour in early July, management guided higher copper/gold costs in2025, led by higher royalties under skyrocketing gold prices. Nevertheless, the companyhas remained confident on achieving better margins from higher copper/gold price. OnKakula suspension, the company expects copper production in 2025 to range between1.07-1.08mnt (vs. 1.15mnt previously), broadly in line with 2024 levels. The companywas uncertain about the mine achieving 600kt output guidance in 2026. Despite near-term production disruptions, Zijin has remained optimistic about the long-term potentialof Kamoa-Kakula, given the sheer scale of its copper resources (see details: Tourtakeaways: Anti-involution impact on cement/steel; aluminum/copper still tight). We cutFY25E NPAT by 2% on FX estimate update but lift FY26/27E by 1%/5% on gold costcontrol driven by economies of scale. We therefore raise the H/A-share PO by 13% toHKD26/RMB26 from HKD23/RMB23, applying DCF valuation with WACC at 8%(unchanged), but roll forward by half year. We reiterate Buy, given: 1) strong gold/copperprices; 2) prospect of gold volume growth; 3) solid cost control; and 4) an undemandingvaluation vs global peers.