Zijin Mining Investment Analysis | March 11, 2026

Zijin trades at a 19x P/E ratio, while its global peers average 22–30x. The A-share market applies a discount to Zijin. If benchmarked against Freeport-McMoRan’s 29x P/E, Zijin theoretically has ~50% room for valuation re-rating. However, I do not recommend this approach—largest bubbles often hide behind the grandest narratives. In investing, it is better to err on the side of conservatism and preserve ample margin of safety. 4.4 Where are the concerns? Its P/B ratio stands at 5.9x—relatively high. While high P/B ratios are justifiable for mining firms—mineral resources are recorded on balance sheets at historical cost, far below their true economic value—a P/B of 5.9 nonetheless feels uncomfortable. The dividend yield is ~2%, relatively low. Zijin follows a growth-stock logic, not an income-stock one. If you seek dividends, Zijin is unsuitable for you. V. Valuation Anchors Under Three Scenarios Investing must avoid arbitrary target-price guesses. Below are three scenario-based valuations: Conservative Scenario Copper price falls to USD 9,500/ton; gold price to USD 4,500/oz. → Estimated 2026 net profit: ~RMB 50 billion; applying 15x P/E → Fair share price: RMB 28 Neutral Scenario Copper price holds at USD 11,000/ton; gold price at USD 5,000/oz. → Estimated 2026 net profit: ~RMB 62 billion; applying 17x P/E → Fair share price: RMB 40 Optimistic Scenario Copper price surges to USD 12,500/ton; gold price to USD 5,500/oz. → Estimated 2026 net profit may exceed RMB 80 billion; applying 18x P/E → Fair share price: RMB 54 Note: The optimistic scenario is not intended for chasing rallies—it helps identify the “ceiling.” VI. Buy/Sell Plan (Personal indicators—reference only, not investment advice) Buy Plan Tier Price Range Position Size Rationale Observation Position ~RMB 37 5% Prevents missing out; small position for tracking First Tier Below RMB 35 Build up to 1/3 Implies ~17x P/E on 2025 earnings—value begins to emerge Second Tier Below RMB 33 Increase to 2/3 Implies ~16x P/E—enters value zone Third Tier Below RMB 30 Full allocation Implies <15x P/E—this level is akin to “picking up gold” Maximum total position size: 15–20%. Even the best stock should never be fully allocated—cyclical stocks’ volatility can shake your confidence to its core. Profit-Taking Plan • First target: RMB 45 → ~17x P/E on 2026 earnings; sell half upon reaching • Second target: RMB 54 → Upper bound of optimistic scenario; hold remainder contingent on copper price trajectory • Profit-taking principle: Upon hitting target, ask yourself three questions: Did you devise a meticulous exit plan beforehand? Did you strictly adhere to it? Do you have better alternatives post-exit? Stop-Loss Level RMB 28—non-negotiable. RMB 28 corresponds to ~14x P/E on 2025 earnings. A break below this level would signal either fundamental doubt in copper’s long-term outlook or an unforeseen black swan event. At that point, do not attempt to catch a falling knife—exit first. VII. Risk Warnings (Must-read section) 1. Copper price collapse risk: A hard global economic landing could push copper prices below USD 9,000/ton. Cyclical stocks suffer most when cycles reverse. 2. Management transition risk: Chen Jinghe—the “godfather” of China’s mining industry—has led Zijin for decades. Whether the new leadership team can sustain his strategic vision and execution capability remains uncertain and requires at least 1–2 years of observation. 3. Geopolitical risk: Mines in the DRC and Serbia remain vulnerable to political interference at any time. 4. Market style risk: Should A-shares pivot toward low-P/B, high-dividend stocks, Zijin—with its 5.9x P/B and 2% dividend yield—may be temporarily sidelined by the market.

Zijin Mining Investment Analysis Notes

Analysis Date: May 17, 2026 Data Sources: 2025 Annual Report (disclosed March 20, 2026), 2026 Q1 Report (disclosed April 21, 2026), company website, World Gold Council, International Copper Association (ICSG), and cross-validated research reports from multiple brokerages Dimension I: Economic Moat Analysis 1) Pricing Power / Brand / Patents — Intangible Assets Conclusion: No consumer-level pricing power, but possesses a ‘resource exclusivity + technological barrier’ type of intangible asset. • Brand: As a B2B mining company, Zijin sells standardized commodities—gold bars, cathode copper, zinc ingots—at exchange-determined prices, lacking consumer-facing pricing power like Moutai or Hermès. However, Zijin-branded gold bars are registered delivery brands on the Shanghai Gold Exchange and Shanghai Futures Exchange, and Zijin is also an LBMA (London Bullion Market Association) approved delivery participant. Its electrolytic copper and zinc ingots are registered brands on both the Shanghai Futures Exchange and the LME—these certifications constitute meaningful entry barriers. • Patents: The company holds core technologies for low-grade ore development and patented bioleaching processes—its “secret sauce.” Globally, very few miners can economically extract gold ore grading below 0.3 g/t or copper ore below 0.3%; Zijin leverages its proprietary heap leaching and bioleaching technologies to transform “waste rock” into “treasure”—a genuine technology-based moat. • Mining Rights / Resource Rights: This is Zijin’s most critical intangible asset. As of end-2025: • Gold resources: 4,610 tonnes (proven + probable reserves: 1,996 tonnes), representing ~46% of China’s total gold resources; • Copper resources: 10.968 million tonnes (proven + probable reserves: 5.661 million tonnes), exceeding China’s national copper reserves; • Lithium resources: 18.83 million tonnes LCE (proven + probable reserves: 7.97 million tonnes), ~55% of China’s lithium resources; • Molybdenum resources: 499,000 tonnes; • Silver: 31,940 tonnes. High-quality mining rights are non-renewable and irreplaceable—the strongest source of moat. 2) Switching Costs Conclusion: Narrow moat—not a core source of competitive advantage. • Commodity switching costs are inherently minimal—copper is copper, gold is gold; customers can easily switch suppliers. • Yet Zijin’s long-term supply agreements (with traders such as Trafigura and major domestic smelters), plus its exchange-registered delivery brand status, impose some friction on downstream customers. Switching entails rebuilding quality trust, logistics infrastructure, and credit relationships. • Overall assessment: Switching-cost moat is narrow—not Zijin’s core competitive advantage. 3) Core Business & Profit Contribution Conclusion: Dual-core (gold & copper); mineral products drive profits. 2025 Annual Report Data: Product Revenue Share (2025) Gross Profit Share (2025) Gold Business ~48% ~32% Copper Business ~28% ~43% Zinc (Lead) Business ~4% ~4% Lithium Business ~1% ~2% Others (silver/iron/molybdenum, etc.) ~19% ~19% 2026 Q1 Mineral Product Gross Margins (significantly higher than 2025 Q1): Product 2026 Q1 Gross Margin 2025 Q1 Gross Margin YoY Change

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