The cost of mineral gold drops as low as 123.1 yuan/gram, Shanjin International's "proactive volume control" smooths its performance

21st Century Business Herald Reporter Dong Peng

“Based on the overall market environment and the company’s strategic layout, the company adjusted its sales strategy for the fourth quarter…” In response to the abnormal decline in mineral gold sales in the fourth quarter, Shan Jin International explained on March 9 through the Shenzhen Stock Exchange Interactive Platform.

The previously released annual report shows that in the first three quarters of 2025, the company’s production and sales were basically balanced, with sales in the first and second quarters exceeding production, indicating strong shipping willingness. However, despite the mineral gold production increasing to 2 tons in the fourth quarter compared to the previous quarter, sales sharply declined to 1.13 tons.

Further comparison with historical data shows that Shan Jin International’s mineral gold inventory at the end of 2025 reached 1.03 tons, a nearly six-year high.

This is closely related to the company’s performance growth logic and may also be linked to the lack of capacity breakthroughs in recent years.

First, the rise in international gold prices is the core driver of Shan Jin International’s performance growth in 2025. Despite a decline in sales of its main product, mineral gold, the company maintained a low unit cost of just 123 yuan/gram and improved its gross profit margin to 81.6%, setting new records in revenue and profit.

Second, capacity bottlenecks have emerged over the past few years. Since 2021, Shan Jin International’s mineral gold sales have fluctuated between 7-8 tons, with no significant growth.

By increasing inventory and actively controlling volume, the company can generate more revenue and profit in 2026 and smooth out its performance growth.

Shan Jin International is the former Yintai Gold.

According to China Gold Association data, in 2024, the company’s mineral gold production ranked sixth among listed gold mining companies nationwide. It is also one of the gold mines with higher gross profit margins, achieving net profit ranked fourth among listed gold mining companies in 2024.

In fact, the company has two main business segments: non-ferrous metal mining and processing, and metal trading. Like other bulk commodity trading companies, metal trading generates high revenue but low profit, providing limited support to the company’s profit statement.

In contrast, the mining and processing business, although accounting for only 42% of revenue, provides 97% of Shan Jin International’s profits.

As of the end of 2025, Shan Jin International owns six mining companies, four of which have actual production—excluding Yulong Mining, Heihe Locke, Jilin Banmiaozi, and Qinghai Dachaikan are all gold mining companies.

This ensures that gold products dominate the company’s mineral product revenue composition.

According to the annual report, in 2025, Shan Jin International’s revenue from mineral end-products totaled 7.1 billion yuan, with mineral gold alone generating 5.5 billion yuan. Other income comes from lead-zinc concentrates containing silver, zinc concentrates, and mineral gold containing silver.

More importantly, Shan Jin International’s mineral gold products have industry-leading cost advantages.

For example, in 2025, the company’s unit cost for mineral gold was only 123.09 yuan/gram, and the unit cost after amortization was just 142.18 yuan/gram.

While costs slightly decreased, sales prices followed international gold prices higher.

In 2025, London spot gold prices broke through $3,000 and $4,000 per ounce, reaching a 64.6% increase for the year, attracting global attention.

Correspondingly, the Shanghai Gold Exchange’s spot gold prices also increased by nearly 44% for the year, and Shan Jin International’s mineral gold sales prices are referenced to this price.

Under domestic and international price transmission, Shan Jin International’s mineral gold sales price rose sharply from 549.6 yuan/gram in 2024 to 774.08 yuan/gram in 2025, a year-on-year increase of nearly 41%.

This further boosted the company’s mineral gold gross profit margin from 73.5% in 2024 to 81.6% in 2025.

With a significant expansion in profit margins, even with a sales volume control leading to a decline of over 10% in overall mineral gold sales in 2025, the gross profit from mineral gold still increased by over 1.2 billion yuan compared to the previous year.

The profit increase from these mineral gold products has been a decisive factor in boosting Shan Jin International’s profitability in 2025.

In that year, Shan Jin International achieved a total revenue of 17.1 billion yuan and a net profit attributable to parent company of 2.97 billion yuan, both hitting record highs since the company’s listing in 2000.

Past achievements are now set, but the future still holds many uncertainties.

How will Shan Jin International achieve steady growth in 2026 amid the significant volatility in international gold prices over the past two years?

Relying solely on the hope that international gold prices will stay above $5,000 per ounce is not reliable. The company needs to prepare other safeguard measures.

In the first two quarters of 2025, Shan Jin International’s mineral gold sales exceeded production. In the third quarter, sales and production were balanced overall. In the fourth quarter, production continued to increase, but sales dropped from 1.86 tons in the third quarter to 1.13 tons quarter-on-quarter.

The reduced sales volume was converted into inventory awaiting sale. By the end of 2025, the company’s mineral gold inventory reached 1.03 tons, a 90.74% year-on-year increase, and the highest in nearly six years since 2019.

Some sell-side institutions have described this as “stockpiling,” raising questions among investors eager to see the company’s performance materialize.

“Based on the overall market environment and the company’s strategic layout, Shan Jin International adjusted its sales strategy for the fourth quarter,” the company responded.

This adjustment may be influenced not only by expectations of higher gold prices in 2026 but also by the pace of capacity utilization and new capacity deployment.

Historical data shows that from 2021 to 2025, Shan Jin International’s gold and mineral gold production were 7.21 tons, 7.06 tons, 7.01 tons, 8.04 tons, and 7.6 tons respectively, indicating a bottleneck in overall capacity.

In 2025, although the company completed an equity acquisition of Western Yunnan Mining, its main purpose was to obtain exploration rights for the Dagangba gold mine in the region to increase resources and future project reserves. This is unlikely to bring short-term performance growth.

As for other gold mines under Shan Jin International, Huasheng Gold Mine has been shut down for a long time due to historical issues, with no clear restart timetable.

The company’s overseas key project, the Namibia Twin Hills, is expected to become the largest single gold mine and a major growth driver in the coming years. However, construction only started in 2025, with commissioning expected in the first half of 2027.

In other words, before the Twin Hills project comes into production, Shan Jin International lacks additional projects capable of boosting mineral gold output in the short term.

The company’s 2026 operating plan explicitly states: “Gold production of 7-8 tons, other metals not less than 2025 levels,” remaining roughly consistent with recent years.

Following the company’s proactive volume control in Q4 2025 and the clearer inventory release expectations for 2026, institutions have generally raised their profit forecasts for 2026.

Before the annual report release, sell-side analysts expected net profits between 3.9 billion and 4.2 billion yuan. After the release, forecasts were generally raised above 5 billion yuan, with some institutions even projecting over 6 billion yuan, giving the company a target price of 37.8 yuan and a “strong buy” rating.

However, as of the close on March 10, Shan Jin International’s latest share price had risen to 32.55 yuan.