(Yicai) Feb. 19 -- Chifeng Jilong Gold Mining passed the Hong Kong stock exchange’s listing hearing yesterday, clearing the way for the gold miner to become the third Chinese gold stock to be listed both on the mainland and in Hong Kong.

Chifeng Gold intends to issue up to 338 million shares in Hong Kong, said the Inner Mongolia Autonomous Region-based company, which first announced its intention to go public in Hong Kong in June 2024. The funds raised will mainly be used to expand its business, to fund mergers and acquisitions and to supplement working capital.

When gold prices climb, gold mining firms tend to do well, an industry analyst told Yicai. However, as the company moves forward with its Hong Kong listing, Chifeng Gold will face a number of challenges, the person said. These include the impact of fluctuating gold prices, uncertainties related to overseas mineral resources, and its concentrated revenue structure, with over 89 percent of the firm’s revenue coming from gold.

Gold prices have already repeatedly hit new highs this year. On Feb. 11, the gold spot price in London reached USD2,942 per ounce, a historic high.

However, gold prices are affected by many factors, which are complex, variable, and difficult to predict, and this could impact the company’s earnings, the analyst said.

Chifeng Gold's net profit is expected to more than double last year from the year before thanks to a 27 percent jump in London gold prices over the period, soaring 115 percent to between CNY1.7 billion (USD238 million) and CNY1.8 billion.

But in 2015, when the London gold spot price plummeted 28 percent, the company’s net profit advanced just one percent to CNY231 million (USD31.7 million), which was only possible because the gold miner locked part of its profit through hedging.

Chifeng Gold's overseas operations account for a large share of its business mix. Almost 65.2 percent of the company’s assets came from its international business as of Sept. 30, 2024.

Chifeng Gold produces gold from six gold mines, of which four are in China, one is in Laos and one in Ghana. The Chinese mines have reserves of around 18.8 million tons of gold while the overseas ones should have 91.1 million tons, according to estimates made on Sept. 30 last year.

Chifeng Gold’s share price [SHA:600988] closed up 0.8 percent at CNY19.72 (USD2.70) today.

Editor: Kim Taylor