Assessing Zhaojin Mining's Q3 Performance and Strategic Position in China's Gold Sector for Long-Term Buy Potential

Zhaojin Mining Industry Company Limited (ZHAOF) has emerged as a pivotal player in China's gold sector, with its Q3 2025 performance underscoring both its operational resilience and strategic foresight. For investors evaluating long-term buy potential, the company's ability to balance revenue growth with cost management-amid a volatile commodities landscape-offers compelling insights.

Q3 2025 Financial Highlights: Strong Revenue and Margins

According to Yahoo Finance, Zhaojin Mining reported total revenue of 13.9 billion CNY for the period ending December 31, 2024, with production costs amounting to 8.3 billion CNY, resulting in a gross profit of 5.6 billion CNY. This translates to a gross margin of approximately 40.3%, aligning with Fitch Ratings' projection that the company's EBITDA margin will remain above 40% through 2027. Notably, the firm's Q3 2025 adjusted net profit surged 36% quarter-on-quarter to 570 million RMB, driven by contributions from the Iron Top Abuja gold mine and improved cost efficiency.

The company's operating expenses, however, rose to 1.57 billion CNY, reflecting increased exploration and administrative costs. Despite this, Zhaojin's net income attributable to common stockholders reached 2.34 billion CNY for the trailing twelve months (TTM), demonstrating robust profitability (Yahoo Finance).

Operational Strength: Production Growth and Cost Efficiency

Zhaojin's operational performance in 2025 has been equally impressive. The company's total gold output for the first half of 2025 reached 14,288 kilograms (459,000 ounces), an 8.42% year-on-year increase, with mined gold contributing 10,236 kilograms-a 13.8% YoY rise (Fitch Ratings). While specific Q3 production figures remain undisclosed, the trajectory suggests a continuation of this momentum.

A critical driver of long-term growth is the Haiyu Gold Mine, in which Zhaojin holds a 70% stake. Scheduled to begin production in 2025, the mine is projected to generate 15–20 tons of gold annually at a low all-in cost of 120 RMB per gram (Fitch Ratings). This asset, combined with the company's existing low-cost operations, positions Zhaojin to capitalize on sustained high gold prices, which have been buoyed by geopolitical tensions and safe-haven demand (Fitch Ratings).

Strategic Position in China's Gold Sector

Zhaojin's strategic positioning is further reinforced by its focus on gold extraction and smelting, which accounts for 88% of its total revenue (Fitch Ratings). The company's ability to maintain a high EBITDA margin-despite rising production costs from deeper mining-reflects disciplined cost management. Fitch Ratings attributes this resilience to Zhaojin's operational scale and diversification, which mitigate risks associated with input price volatility (Fitch Ratings).

However, challenges persist. A 293% year-on-year increase in "other expenses" and impairment losses of 711 million yuan in Q3 2025 highlight the need for continued operational rigor (Fitch Ratings). These costs, while non-recurring in nature, underscore the importance of monitoring capital allocation and project execution.

Long-Term Buy Potential: Balancing Risks and Rewards

For long-term investors, Zhaojin Mining presents a compelling case. The company's projected 25–26 tons of gold output in 2025-a significant jump from the 17–18 tons in 2024-signals a strategic shift toward higher production volumes, according to a S&P Global disclosure. Coupled with the Haiyu Gold Mine's low-cost profile, this expansion could drive earnings growth even in a subdued gold price environment.

Yet, the investment thesis hinges on Zhaojin's ability to sustain its EBITDA margin above 40% amid rising operational costs. As noted by S&P Global Ratings, deeper mining and higher input costs remain key risks. Investors should also monitor the company's debt levels and its capacity to fund capital expenditures without diluting shareholder value.

Conclusion

Zhaojin Mining's Q3 2025 performance-marked by strong revenue growth, margin resilience, and production expansion-cements its status as a leader in China's gold sector. While near-term challenges exist, the company's strategic investments, such as the Haiyu Gold Mine, position it to deliver outsized returns over the next five years. For investors with a long-term horizon, Zhaojin offers a rare combination of commodity price exposure, operational efficiency, and growth potential-making it a worthy candidate for a diversified portfolio.