Molybdenum and copper deep processing project everything is ready, only waiting for environmental assessment. The molybdenum-copper polymetallic deep processing project with a total investment of 10.5 billion yuan has been approved by the shareholders' meeting, and relevant procedures and filing documents such as project filing, safety review and energy conservation review have been obtained, and the ground can be broken after approval by the state environmental protection department. After announcing the intention of the molybdenum and copper project on November 19 last year, it took ten months and finally took a substantial step forward as scheduled.

The molybdenum and copper project was implemented in stages, and the effect of supply and release was weakened. Considering the possible impact of the total construction scale of 40, 000 tons of molybdenum and 400000 tons of copper / year on the supply of the industry, as well as the practical difficulties in the process of construction, such as financial pressure and the guarantee of ore resources, the company divides the molybdenum and copper project into two phases: the first phase (expected construction period is 2 years) is 25000 tons of ferromolybdenum and 7516 tons of molybdenum trioxide and 200000 tons of copper per year. The second phase will add another 30, 000 tons of high-purity molybdenum trioxide and 200000 tons of copper per year, and the construction scale of the first and second phases of copper will be appropriately adjusted according to the situation of resource guarantee.

The solvency is relatively strong and the capital structure is relatively reasonable. The first phase of the project requires a long-term loan of 5.03 billion yuan, and the second phase requires a new long-term loan of 1.34 billion yuan, with an annual interest rate of 6.40%. The loan repayment method is as follows: the loan grace period is 3 years, with the same amount of principal repayment and interest payment for 7 years. The sources of funds for repaying the loans are: undistributed profits, depreciation charges and amortization charges that can be used for repayment. According to the company's preliminary estimate, the reserve rate of interest at the end of the loan repayment period is about 10.52, indicating that the guarantee degree of interest payment of the project is high; the reserve rate of debt service at the end of the loan repayment period is 5.52, indicating that the guarantee degree of principal and interest service of the project is high. According to the feasibility study report, the asset-liability ratio in the first year of project production is 72.99%. The asset-liability ratio gradually decreases with the decrease of long-term loans. When the long-term loans are repaid in the 13th year, the project asset-liability ratio tends to be stable, and the asset-liability ratio at the end of the calculation period is 21.70%.

The protection of molybdenum and copper raw materials should be carefree, and pay attention to the development progress of Tianren Mining Industry. The announcement said that the ore raw material plan of the project mainly comes from the related party Sichuan (Hongda) Group's own mines and other strategic partners, of which 40, 000 tons of molybdenum metal is planned to come from related party's own mines and other strategic partners, 50% of the 400000 tons of copper metal is planned from domestic related parties' own mines and other strategic partners, and 50% of the plans come from overseas strategic partners. We believe that under the reality that the raw materials of domestic copper smelters are highly dependent on imports, the company relies on related parties' own mines and increasing copper ore imports or realistic actions. therefore, the development progress of the Pangpu Mo-Cu polymetallic deposit owned by Tianren Mining, which is controlled by HTC Group, deserves close attention.

Layout of vanadium and titanium downstream development, intended for vanadium and titanium upstream resources. The comprehensive development and utilization project of vanadium titanium magnetite in Honggenan mining area of Sichuan Vanadium and Titanium Resources Development Company, a holding subsidiary, has been put on record by Panzhihua Development and Reform Commission. The specific construction contents include: 100000 tons / year of high-grade rutile titanium dioxide, 50, 000 tons / year of high-grade titanium materials and titanium alloys, 10, 000 tons / year of vanadium pentoxide, 9100 tons / year of chromium trioxide, 200 tons / year of electric cobalt, 240 tons / year of nickel sulfate, 1850 tons / year of copper sulfate. 7.76t / a metal gallium, 200000 t / a centrifugal casting pipe, 200000 t / a precision casting, 1.078 million t / a vanadium billet. The total investment is 18.32 billion yuan, including 12.825 billion yuan in domestic loans and 5.497 billion yuan in self-raised funds. The project also needs to prepare and evaluate the feasibility study, environmental assessment, safety assessment, resource utilization and other special reports, and the acquisition of mining rights can not be carried out until the above work is completed and the relevant conditions are in place. Public data show that Honggenan mining area accounts for 28.73% of the total reserves of Panzhihua vanadium-titanium magnetite resources, ranking first in the city. Its rich vanadium-titanium magnetite resources extend the industry chain of vanadium-titanium products and provide a good resource base for the development of deep processing of vanadium-titanium products, which may also be the company's real intention.

Maintain the "overweight" rating. Under the assumption of 18500 yuan, 18700 yuan and 19000 yuan per ton of zinc in 2011-13, we predict that the EPS in 2011-13 will be 0.47,0.12,0.38 yuan respectively. The company's resource value provides a high margin of safety, while the ice-breaking of molybdenum-copper projects and the promotion of vanadium-titanium projects will enhance the company's financing needs. The transfer of real estate business has cleared the obstacles to its refinancing, and the reduction of major shareholders has come to an end. In the future, due to the consideration of reducing related party transactions, the early unsuccessful asset restructuring is expected to be strengthened.

Risk hint: the molybdenum-copper project still needs environmental assessment approval, the company's financial pressure increases under tightening expectations, the comprehensive development project of vanadium and titanium resources still needs to be approved by many links, and there is still great uncertainty about the acquisition of mining rights.