Company overview
The company's main business is engaged in gold exploration, mining and processing in the Nordic region, and currently operates two production mines, Orivesi and Jokisivu, as well as a Vamala plant in Finland and a Svartlidengo plant in Sweden. The company's pre-production assets include the Finnish Kaapelinkulma project and the Swedish Fboliden project. The company's revenue comes mainly from the sale of gold ingots in the London gold and silver market through financial institutions, followed by the sale of gold concentrates to gold concentrate customers. In 2017, the company ranked ninth among the top 10 gold mining companies in Europe, accounting for about 1.9% of the European market share.
From 2015 to 2017, Dragon Resources Co., Ltd. had revenues of A $76.84 million, A $55.04 million and A $41.27 million, respectively, and net profits of A $2.56 million, A $5.36 million and A $0.58 million, respectively. The decrease in revenue is mainly due to a decrease in mineral production in production mines and a decline in gold sales.
Industry status and prospects
Global gold supply will decline and demand will rise. According to the Frost Sullivan report, global gold mine production increased slightly in 2017 and is expected to remain stable from 2018 to 2022. Due to the decline in gold recovery, the supply of gold will decline year by year after 2019. As gold is more and more widely used in the technology industry, global gold demand is expected to maintain the growth trend.
The gold mining industry in Finland and Sweden has great potential. Finland, Sweden and Turkey are the largest gold producers in Europe. Finland and Sweden together accounted for 36% of Europe's gold mining in 2017. Finland has found gold resources of about 300 tons, while some mining areas in Sweden contain large amounts of gold, which is sufficient to support long-term mining. As the current development and utilization rates of the two countries are relatively low, it is expected that the gold mining industry still has some potential in the future.
Advantages and opportunities
Rich experience in gold production and processing.
Weakness and risk
The life of mine resources is limited
The grade of each gold mine is different, the gross profit margin fluctuates greatly, and the profit is unstable.
Spot price of gold fluctuates frequently
Mining accidents, labor disputes and other risks.
Valuation
The company's IPO was priced at HK $2.03 and the price-to-earnings ratio could not be calculated due to the company's net profit loss in 2017. In terms of the company's net assets at the end of 2017, the 2017 market-to-net ratio corresponding to the IPO price is 1.53 times. At present, the larger gold mining stocks traded in the Hong Kong market are Zijin Mining Group 2899, Shandong Gold Mining 1787, Zhaojin Mining 1818, etc., with a price-to-book valuation of about 1.5 times, similar to the company's valuation, but considering the small size of the company, there should be a valuation discount. Comprehensive consideration, give Dragon Resources Co., Ltd. IPO special rating "4".
