Analysis of the Impact of Shandong Gold's Veladero Gold Mine RIGI Application on Overseas Business and Valuation

Based on the information I have collected, I will analyze the impact of the approval result of Shandong Gold’s Veladero Gold Mine RIGI application on its overseas business profitability and valuation from multiple dimensions.

Argentina’s Regime of Incentives for Large Investments (RIGI) was passed in July 2024 to attract foreign direct investment, providing 30 years of tax, customs, and foreign exchange stability guarantees for eight key industries [1]. The Veladero Gold Mine, a joint venture between Shandong Gold and Barrick Mining, submitted a RIGI application for its $400 million expansion project in August 2025. However, as of December 2025, the application has exceeded the standard 45-day approval period and has not yet been approved [1][2].

• Standard tax rate: 35%
• RIGI preferential tax rate: 25%
• Annual tax savings: Based on the project’s expected income, the 10% tax rate difference will be directly converted into profit

• The $400 million investment involves a large amount of equipment imports
• Tariff exemption will significantly reduce capital expenditure
• Expected investment cost savings: 5-8% (approximately $20-32 million)

• VAT can be paid via transferable tax credit certificates
• Financial transaction tax can be fully offset against income tax
• These measures will improve cash flow conditions

Under the RIGI regime, the proportion of export foreign exchange that can be freely converted is relaxed year by year:

• Year 2: 20%
• Year 3: 40%
• From Year 4 onwards: 100% [1]

This will bring three benefits to profitability:

1. Reduced exchange rate risk
   : Reduce currency conversion losses
2. Improved capital utilization efficiency
   : Enhance the flexibility of capital allocation
3. Lower financing costs
   : Improve foreign currency debt management

According to the investment plan, the $400 million expansion will:

• New storage and processing capacity: 892 million tons
• Increase gold production: 1.6 million ounces (2025-2028 period)
• Expected export revenue: $3.8 billion (by 2033) [1]

Based on the current gold price of approximately $2000 per ounce, the new production will bring about $3.2 billion in revenue. Even calculated at a 50% stake, Shandong Gold will gain $1.6 billion in incremental revenue.

Shandong Gold’s current market capitalization is RMB 166.79 billion, with a P/E ratio of 34.45 times, which is a relatively high valuation level in the gold industry [0]. The company’s stock price has risen 56.29% this year, reflecting the market’s expectations for its growth [0].

• A 10-percentage-point reduction in tax rate will directly increase free cash flow
• Relaxed foreign exchange controls reduce the country risk premium in the discount rate
• The combined effect may increase the project’s intrinsic value by 15-25%

• Companies that obtain RIGI qualification usually enjoy a policy premium
• The market may give a higher P/E multiple
• Expected valuation premium: 3-5 P/E points

If rejected due to “existing project expansion”, it will result in:

1. Opportunity cost
   : Loss of tax incentives, estimated annual profit reduction of 15-20%
2. Competitive disadvantage
   : Other projects with RIGI qualification will have cost advantages
3. Investment uncertainty
   : May affect subsequent overseas investment decisions

• Project NPV increase: +20-30%
• Annualized ROE increase: 2-3 percentage points
• Target valuation: 38-40 times P/E, with 15-20% upside potential for the stock price

• May obtain partial preferential policies
• Return on investment: 3-5 percentage points lower than originally planned
• Valuation impact: relatively mild

• Project return on investment decrease: 8-12 percentage points
• May re-evaluate the investment scale and timing
• Short-term stock price pressure: may pull back 10-15%

1. Short-term Strategy
   : Closely track the progress of RIGI approval; the approval result will be an important catalyst
2. Risk Control
   : Considering the approval uncertainty, it is recommended to control positions and wait for clear signals
3. Long-term Perspective
   : Even if this application is not approved, the Veladero Gold Mine, as Argentina’s largest gold mine, still has long-term value
4. Hedging Strategy
   : Gold price fluctuation risks can be hedged via tools like gold ETFs

The RIGI application result will be a key turning point for Shandong Gold’s overseas business development. Approval will significantly enhance the profitability and investment return of the Veladero Gold Mine, which is expected to support the company’s valuation to further rise; if the application is rejected, the economic feasibility of the project may need to be re-evaluated. Considering the importance of the project and the Argentine government’s policy tendency to attract foreign investment, we are cautiously optimistic about the RIGI approval, but investors still need to closely monitor the approval progress and manage risks properly.

[1] Barrick and Shandong Gold Jointly Seek $400 Million Investment to Promote Expansion of Argentina’s Veladero Gold Mine! - CMoney Researcher (August 15, 2025)
[2] Chinese Investors’ Layout in Argentina: Guide to Major Investment Promotion System and Tax Compliance - Lawshi (October 24, 2025)
[3] Shandong Gold (600547): A Leading Gold Company with Resource Endowment, Entering Another Asset Integration Harvest Period - Dongwu Securities Research Report
[4] Argentine Government Approves the 7th Investment Project under the “Regime of Incentives for Large Investments (RIGI)” - Taipei Economic and Cultural Office in Argentina
[5] Jinling API Data - Real-time Stock Prices, Financial Data and Market Analysis