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赤峰黄金(600988):布局老挝稀土资源 开拓新的业绩增长

Chifeng Gold (600988): Laying out rare earth resources in Laos to develop new performance growth

國聯證券 ·  Mar 6

Incidents:

The holding subsidiary of the company, Chijinxia Tungsten and its wholly-owned subsidiary CHIXIA Laos signed an “Equity Transfer Agreement” with China Investment Real Estate on 2024/3/4. CHIXIA Laos plans to acquire 90% of the shares of China Investment (Laos) Mining Wholly Owned Co., Ltd. (“Target Company”) held by China Investment Real Estate in cash and debt, which paid a share transfer of US$6.2765 million to repay the target company's related party loans of US$126.865 million, for a total consideration of US$189.630 million.

Laos rare earth project launched, laying out medium and heavy rare earth resources

The target company's “Mengkang Rare Earth Mine in Xieng Khouang Province, Laos” project is a medium to heavy rare earth mine. Amount of resources held: 101 million tons of ore, 25,500 tons of rare earth oxides, with an average grade of 0.025%; of these, the amount of ore within the scope of test mining certificates/prospecting rights was 5520/46.26 million tons, respectively, and the amount of rare earth oxide was 1.53/102,000 tons, respectively, and the average product was 0.028%/0.022%, respectively. The design and production scale of the project is to mine 3,675 tons/year of mixed rare earth oxides per year. The product plan is mixed rare earth oxide, TREO ≥ 92%. According to the company's announcement, it is initially anticipated that the mine will be able to complete infrastructure construction and put into operation 40 days after handover (within 3 days after signing this agreement).

The supply of heavy rare earths was tightened in 24, and prices are expected to stabilize and recover in 23 due to factors such as weakening demand and increased overseas imports, which led to a significant decline in prices of medium and heavy rare earth products. As of 2024/3/5, the average price of dysprosium oxide/terbium oxide/holmium oxide was 180/526/403,000 yuan/ton, respectively, down 8.63%/52.4%/37.81% year-on-year, respectively. Judging from the total rare earth mining control index, the mid-heavy rare earth products index remained unchanged in 2019-2023; in the first batch of rare earth mining total control indicators in 2024, the index for medium and heavy rare earth products was 10.14 million tons, a decrease of 794 tons from the first batch of targets in 2023, which is the first reduction in recent years. The supply of medium to heavy rare earths has been tightened, and prices are expected to recover steadily.

The company joined forces with Xiamen Tungsten Industry to promote the establishment of a joint venture between the Lao Rare Earth Resources Development Company and Xiamen Tungsten Industry in 2022. The company holds 51% of the shares and the Xiamen Tungsten Industry holds 49% of the shares; the aim is to make full use of the advantages of both parties to create a platform for cooperative development of rare earth resources and promote the green and efficient development of rare earth resources in Laos. As a key joint venture project in Laos, the Mengkang rare earth project not only guarantees the acquisition of considerable rare earth resources and economic value, but also provides a platform and opportunity for further resource development and integration in Laos.

Profit forecasting and investment advice

We expect the company's net profit to be 782/1,166/ 1,706 million yuan in 2023-2025, respectively, up 73.40%/49.09%/46.32% year-on-year; EPS will be 0.47/0.70/1.03 yuan respectively. We gave Chifeng Gold 24 times PE in 24 years, with a target price of 16.86 yuan, maintaining a “buy” rating.

Risk warning: The Federal Reserve's monetary policy position exceeds expectations; risk of large fluctuations in metal prices; project progress falling short of expectations; environmental protection and production safety risks; risk of exchange rate fluctuations; and geopolitical risk.

The translation is provided by third-party software.


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