The steady increase in resource volume and new breakthroughs in overseas mines contribute to growth. ZHAOJIN MINING (01818) demonstrates resilience through stress testing.

The gold market since the beginning of this year is destined to leave a dramatic mark in the history of world finance. In just six months, gold has experienced a complete cycle characterized by geopolitical premium surge, energy inflation backlash, and suppression of monetary policy tightening expectations. After hitting a historic high of $5,595.44 per ounce in late January, London spot gold quickly turned downward due to disturbances such as the outbreak of the U.S.-Iran war, the closure of the Strait of Hormuz, and the rebound in inflation driven by rising oil prices. Subsequently, with Jerome Powell taking office as the Federal Reserve Chairman and the macroeconomic backdrop of financial markets pricing in interest rate hikes, gold prices fluctuated as they searched for a bottom, reverting to early-year levels by the end of June. Such an extreme market environment may actually serve as the best "test" to validate the fundamental value of companies. Recently, ZHAOJIN MINING (01818) disclosed its performance report for the first half of 2026. Despite being in a period of unprecedented gold price volatility, ZHAOJIN MINING demonstrated strong operational resilience. The companys financial report showed that during this period, ZHAOJIN MINING achieved revenue of 9.022 billion yuan and a net profit of 2.105 billion yuan, reflecting increases of 29.4% and 18.5% year-on-year, respectively. GMTEight believes that ZHAOJIN MININGs achievement of high-quality growth in key financial metrics, despite dramatic fluctuations in gold prices and a temporary decline in its own gold production, is commendable. Additionally, the long-term pricing logic of gold has not wavered, and ZHAOJIN MINING, possessing the largest single gold mine in the domestic sea area, is approaching the commencement of production in this mine. Its excellent resource advantages will inevitably expedite the transformation into tangible output and performance growth in the future. Overall Performance Steady Progress In the first half of 2026, ZHAOJIN MININGs core gold mining business generated revenue of 7.81 billion yuan, achieving a counter-trend growth of 26.7% despite various disturbances, including gold price fluctuations and the temporary stagnation of production capacity due to incidents affecting its mining operations. The profitability also showed considerable resilience, with ZHAOJIN MINING realizing a gross profit of 4.347 billion yuan in the first half, a year-on-year increase of 42.5%. 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 profit margin confirms that the benefits of rising gold prices have not been interrupted by short-term disturbances. During this period, ZHAOJIN MINING completed a total gold production of 12,526.34 kilograms, which includes 7,997.08 kilograms of mined gold and 4,529.26 kilograms of smelted and processed gold. In the context of a temporary decline in gold production, ZHAOJIN MINING actively sought to stabilize production and ensure supply through various measures to hedge against production cuts. For example, the company implemented a differentiated production stabilization and supplementary production plan termed one mine, one plan, focusing on revitalizing existing capacity, repairing production capabilities, and compensating for production shortfalls. Meanwhile, ZHAOJIN MINING's Double H strategy of half domestically and half internationally has started to yield results this year, with overseas gold production in the first half surging by 33.4% year-on-year. Taking ZHAOJIN MINING's key overseas investment, the Abuja mine, as an example, through optimizing production operations, streamlining production processes, and enhancing mining and processing efficiency, the mine achieved its goal of stable production and increased efficiency. Additionally, several core projects of ZHAOJIN MINING overseas, such as the expansion of Aodelan Mining, are progressing according to plan, which is expected to bring new increments in the future. While overseas production capacity contributes to increments, ZHAOJIN MINING is also focusing on longer-term resource continuity and capacity reserves. In the first half, the company continued to increase investments in mineral resource exploration, steadily enhancing the quality and scale of resource reserves. Specifically, significant breakthroughs were made in discovering thick ore bodies in the northern exploration area of the Dayin Gezhuang mine; notable successes were also achieved in exploration targeting at Jinwang Mining and Jinzhihua Mining. During the period, the company added 28.46 tons of gold metal through exploration, further solidifying its medium- to long-term resource foundation. In terms of external resource expansion, ZHAOJIN MINING adheres to a resource layout strategy that links both domestic and international efforts, completing the acquisition of exploration rights in the outskirts of Zhaojin Baiyun domestically, and winning the bidding for exploration rights in Ning Sun's home in Zhaoyuan, Shandong, continually enhancing its resource reserve capability. Prospects for Growth in Internal Dynamism under Long-Term Bull Market Reflecting on the drop in gold prices in the first half, it essentially stemmed from energy supply shocks caused by geopolitical conflicts, which exerted a temporary rate pressure on gold through a transmission chain of rising oil prices, inflation rebound, and heightened interest rate expectations, rather than a fundamental reversal in the long-term pricing logic of gold. Despite a temporary increase in the disturbance from news, the current medium- to long-term bottom for gold prices is primarily supported by long-term factors, including the weakening of the U.S. fiscal credit and global central bank gold purchases, which indicates that there is no solid basis for continued decline in gold prices. Currently, the U.S. federal deficit rate remains high, interest expenditures on debt have surpassed one trillion dollars, and term premiums have systematically increased, exacerbating the trend of weakening dollar credit in the long term. In this context, U.S. Treasury bonds and gold can almost be viewed as substitutes for reserve assets. The decreased attractiveness of U.S. Treasury bonds means that global central banks and stable funds like pensions will gradually increase their allocations to gold. Indeed, data shows that in the second quarter of 2026, global central banks net purchased 289 tons of gold, a significant rebound from approximately 57 tons in the first quarter; the People's Bank of China has also continuously increased its gold holdings over the past 21 months, adding about 14.9 tons and 19.9 tons in June and July, respectively. However, if we merely focus on gold prices, we have yet to touch on the most core aspects of ZHAOJIN MINING. What truly distinguishes ZHAOJIN from its peers is its continuous deep cultivation at the resource end and the accelerated realization of capacity reserves. On one hand, as previously mentioned, the company has made significant achievements in resource enhancement in the first half, with ZHAOJIN MINING persistently solidifying its resource base through both domestic and overseas markets; on the other hand, the company is also striving to accelerate the promotion of key projects in sea gold mining, aiming to create industry benchmark mines to expedite the deployment of new capacity with new projects and new infrastructure. It is believed that the output temporarily pressured by safety incidents in the first half represents short-term disturbances rather than long-term burdens for ZHAOJIN MINING. With the promotion of resumption after rectification, along with the continued ramp-up of domestic and overseas production capacities and the oncoming production window for the sea gold mine, ZHAOJIN MINING's output and performance will likely undergo a certain long-term growth. Reviewing the companys recent report card, ZHAOJIN MINING, under the dual pressure of dramatic fluctuations in gold prices and a temporary decline in production, has nonetheless validated its fundamental strength with a steady and progressive report. Looking ahead, considering that the long-term upward logic of gold remains robust and ZHAOJIN MININGs internal dynamism continues to accumulate, the companys performance elasticity and growth certainty are expected to resonate in the future. Positioned within the grand cycle of gold, ZHAOJIN MINING undoubtedly remains a core target that investors should closely track.