Morgan Stanley: Zijin Mining's acquisition of Joint Gold helps achieve the annual production target of 100 tons

Morgan Stanley's research report indicates that Zijin Mining (02899.HK) plans to acquire 100% equity of Allied Gold Corporation (AAUC.US) for a total cash consideration of CAD 5.5 billion. Allied Gold aims to achieve an annual production of 11.7 to 12.4 tons by 2025; after the expansion of its Sadiola project is completed and the new Kurmuk project is put into production, the annual output is expected to reach 25 tons by 2029.

Regarding operational improvement potential, management stated that after the second phase of the Sadiola project expansion and the operation of self-generated power units, the all-in sustaining cost could be reduced from USD 2,067 per ounce in the third quarter of last year to USD 1,200. Additionally, both the Sadiola and Kurmuk projects of Allied Gold are located near Zijin Mining's projects, which can bring about synergies in management.

The firm believes that if the transaction is successful, it will become an important milestone for Zijin Mining and help it achieve its goal of an annual gold production of 100 tons by 2030; it currently sets a target price of HKD 46.1 and a "Buy" rating