Key investment points: Acquire 100% of the shares of Tibet Junlong Mining Co., Ltd. to expand mining resources and strengthen competitive barriers. On July 11, the company announced the acquisition of 100% of the shares of Tibet Junlong Mining Co., Ltd. involving mining rights. The purchase amount was 380 million yuan, to be paid with own capital and special loans. The target company, Junlong Mining, has high-quality lead-zinc mineral resources in the Lhasa region. Among them, the detailed exploration rights for the Dizhi Lead Polymetallic Mine are located in Nima Jiangre Township, Mozhugongka County, Lhasa City, with a survey area of 2.98 square kilometers. As of September 30, 2015, the district had obtained a total of 3.6971 million tons of Pb+Zn (332+333) ore, 4562 million tons of metal, 11.68% of Pb, 0.66% of Zn, and 12.34% of Pb+Zn. In addition, the existing mines and belts of Junlong Mining within the mining area still have great prospecting potential, and the potential development value is high. The mining rights of Junlong Mining are expected to be obtained before June 30, 2018, and production will begin in June 2019. The mining capacity is 110,000 tons in 2019, the mining capacity is 150,000 tons in 2020, and the mining capacity is 200,000 tons in 2021. The design capacity will be reached in 2022 and beyond, that is, 250,000 tons of ore will be mined every year. Based on the existing proven reserves, it is expected to be mined for 15 years. The relevant mineral resources and exploration qualifications of Junlong Mining will directly expand the reserve resources of the precious banking industry and strengthen the company's competitive advantage. The industrial chain is extended upstream to reduce the risk of raw material prices and form synergy with existing mining resources. Through this transaction: 1) The company was able to further extend the silver smelting industry chain to the exploration, mining and beneficiation business of upstream lead-zinc ore, greatly increasing the reserves of lead-zinc mineral resources, and mitigating the impact of upstream raw material price fluctuations on the company's smelting business; 2) Junlong Mining is closely linked to the geographical location of the company's holding subsidiary Tibet Gold and Mining. The company is expected to complement gold and mining companies, giving full play to scale and synergy, consolidating the company's upstream and downstream integrated industrial chain foundation, improving the company's ability to withstand risks and build resistance to risks Integrated silver production and deep processing Competitiveness. Therefore, we believe that this transaction can effectively enhance the company's comprehensive strength in the development of the non-ferrous metals industry, enhance its ability to withstand risks, and feed back the comprehensive competitiveness of silver production and deep processing. Profit forecast. The company's point of view, 1) Silver production is increasing year by year. In the future, it is expected to become the company with the largest silver production in the world and is in a leading position in the industry. 2) The industrial chain continues to expand. The upstream segment acquires mines, and the downstream segment lays out silver deep processing products to achieve the layout of the entire silver industry chain. 3) Introduce employee shareholding, demonstrating the company's confidence and fully mobilizing the enthusiasm and cohesion of core employees. We expect the company's 2017-2019 EPS to be 0.59 yuan, 0.75 yuan, and 0.95 yuan, respectively. Referring to the same industry, Yintai Resources unanimously expected PE of 45 times in 2017. We gave the company 45 times PE in 2017, with a target price of 26.55 yuan to maintain the “buy” rating. Risk warning. There is a risk that the price of non-ferrous metals will decline, and future performance is uncertain.