The mining and smelting of zinc-lead ore is the main business of the company.

Fankou lead-Zinc Mine, Guangxi Zhongjin Lingnan Mining Company and Pelia Company of Australia are responsible for the mining and mineral processing of lead-zinc ore. Shaoguan smelter and Danxia smelter directly under the company are responsible for smelting lead and zinc concentrates into lead ingots, zinc ingots and zinc products (hot-dip galvanizing and other zinc alloys). The two major production links are implemented by the above-mentioned enterprises respectively, relatively independent of each other.

By the end of the 2022 annual report, the company has formed an annual metal production capacity of 300000 tons for zinc and lead mining and 420000 tons for zinc and lead smelting.

In 2022, the mining production of zinc and lead metal was stable as a whole, and the smelting output increased compared with the same period last year. In 2022, the company produced 274000 tons of lead and zinc metal concentrate, a slight decline of 4.5 per cent compared with the same period last year. Among them, domestic mining enterprises produced 181700 tons of lead and zinc concentrate metal, an increase of 5.15 percent over the same period last year; foreign mining enterprises produced 92300 tons of lead and zinc concentrate metal. In smelting, the company's smelting enterprises produced 355100 tons of lead and zinc products in 2022, a substantial increase of 23.62 percent over the same period last year.

The resource reserves are abundant, and the exploration and reserve increase is smooth.

By the end of 2022, the company's mines have retained metal resources of 6.93 million tons of zinc, 3.26 million tons of lead, 6012 tons of silver, 1.26 million tons of copper, 20807 tons of cobalt, 66 tons of gold and 92400 tons of nickel.

The exploration work of the company achieved results in 2022. In 2022, Fankou Mine carried out the first phase of integrated reserve verification, with 1.4473 million tons of new lead and zinc ore, 118902 tons of lead metal and 171831 tons of zinc metal in the gap between mining certificate and exploration right.

In addition, the company successfully delisted the two metal ore exploration rights granted by the Department of Natural Resources of Guangdong Province, "General Survey of Yaotou Copper polymetallic Mine, Yangchun City, Guangdong Province" and "General Survey of Wanhou Copper-Silver-lead-Zinc polymetallic Mine, Wujiang District, Shaoguan City, Guangdong Province".

Continuously develop the copper industry chain and create a new growth pole

In 2022, the company participated in the restructuring investment of 20 companies, including Fangyuan Nonferrous, and obtained the smelting target of 700000 tons of cathode copper per year.

As of the first quarterly report of 2023, the company has formally taken over the restructuring enterprise and sent a management team to fully lead the production and operation management of copper smelting related enterprises (Lufang Metals, Fangyuan Nonferrous, Fangtai Recycling and Fangyuan Technology). The company also included copper smelting related enterprises in the scope of consolidated statements during the first quarterly report period of 2023.

According to the company's 2022 annual report, the company plans to complete the smelting production of 400000 tons of cathode copper in 2023.

Profit forecast

Due to the company's new cathode copper smelting plate in 2023, the company's revenue is expected to grow significantly in 2023. It is predicted that the revenue of the company from 2023 to 2024 is 756.91 yuan, 758.91 yuan and 76.291 billion yuan respectively, and the return net profit is 16.46,17.26 yuan and 1.837 billion yuan respectively, and the current stock price corresponding to PE is 10.6,10.1,9.5 times respectively.

Risk hint

1) the cost of the company's lead-zinc mine has increased significantly; 2) the company's lead-zinc mine output has dropped sharply; 3) the lead-zinc metal price has dropped sharply; 4) the cathode copper cost of the company has risen sharply; 5) the company's performance has fallen short of expectations.