Expand and strengthen precious metals and accelerate the deployment of new energy sources. In the precious metals sector, the company has nearly 10,000 tons of silver reserves, an annual mining capacity of 1.98 million tons, and 4 proposed and ongoing projects. Considering the commissioning and construction period, we expect silver sales to reach 230/230/260 tons respectively in 22-24, with a reduced equity volume of 178/178/198 tons, a growth rate of 2%/0%/11%; in the new energy sector, the company will accelerate the deployment of new energy in the middle and upper reaches of new energy sources, using resource recovery as an entry point to further expand the urban mining sector.
Internal and external applications will consolidate the advantages of the precious metals business. In 2023, the company had 1.98 million tons of mining capacity and 4 proposed and ongoing projects. Among them, the Jinshan mining license completed continuous registration and received approval for integrated prospecting rights; Dongsheng Mining has obtained a mining license. Currently, preparations before mine construction are carried out, and will supply Yindu Mining after completion; Deyun Mining has received approval to define the scope of the mining area, and is currently preparing and reviewing development and utilization plans; Yindu Mining has obtained exploration licenses for the 1.43 square kilometer Bairendaba Yin Polymetallic Mine survey. The transfer is expected to increase the company's future silver production.
The company signed a cooperation agreement with Sylway to conduct in-depth cooperation in all aspects of exploration, mergers and acquisitions, and development of global mineral resources. The subsidiary of Sylway owns a number of mineral exploration and development projects, such as the Silver Sands Silver Mine, the Colanga Silver Gold Mine, and the Silver Needle Silver Gold Mine. Among them, Silver Sands has nearly 6,000 tons of silver metal, and exploration results in the northern region are impressive; the amount of Colanga Bank's resources is also expected to reach 10,000 tons. We believe that Sylway's high-quality resources are expected to help the company consolidate its resource advantages and stabilize Silver's leading position.
The ratio of gold to silver continues to be high, and the price-performance ratio of silver configurations has improved. We are optimistic about investment opportunities in the precious metals sector brought about by the marginal slowdown in the US monetary tightening policy in 23. On March 13, the gold to silver ratio reached 90.60. Referring to the average value of 66.92 since 2000, we expect that the rise in gold prices is expected to drive investment demand for other precious metals varieties, and the gold to silver ratio is expected to decline rapidly. Furthermore, demand for silver used in photovoltaics may support the price of silver. We expect the price of silver to reach 4720/5100/5,400 yuan/kg in 22-24.
Accelerate the midstream and upstream deployment of new energy sources. Jinye Environmental Protection has established a hazardous waste disposal capacity of 200,000 tons/year. The second phase of the project will develop production capacity for battery-grade nickel sulfate through wet refining. According to the company's 23-27 plan, the company will accelerate mergers and acquisitions of new energy mineral resources; carry out the purification of manganese sulfate monohydrate from Jinshan Mining to high-purity manganese sulfate in due course; focus on the industrialization process of perovskite and all-vanadium liquid flow batteries, and lay out new energy mineral resources.
Profit forecasting and valuation. The company's silver business accounts for a high share of gross profit, which will fully benefit from the rise in silver prices. We expect that in the next three years, as production expansion projects are gradually put into operation, the company will usher in a sharp rise in volume and price investment opportunities. We expect the company's EPS for 22-24 to be 0.66, 0.70, and 0.84 yuan/share, respectively. Referring to the valuation level of comparable companies, 30-32 times the PE valuation in 2023 was given, corresponding to a reasonable value range of 21.11-22.52 yuan/share, covering the “superior market” rating for the first time.
Risk warning: The expansion of production fell short of expectations; the Federal Reserve raised interest rates beyond expectations; the cost of raw materials rose.