Acquired 65% of the Kitumba copper mine in Zambia. In March 2024, the company announced that it would acquire 50% of Momentum's Junction shares and Chifupu's 15% shares in Junction on a total basis of $58.5 million in cash. Junction's main asset is the Kitumba copper project in Zambia. After the transaction is completed, the company will hold a total of 65% interest in the Kitumba copper project.
The Kitumba copper project is currently awaiting development. It has 27.9 million tons of copper resources, 614,000 tons of copper metal, and an average grade of 2.20% copper. The mineral rights are valid from November 2014 to November 2039. The transaction increased the company's copper mineral resource reserves and provided a more adequate resource guarantee for the development of the company's copper resource mining industry.
The Tsumeb smelter was acquired to accelerate the development of copper resources. According to China Mining Resources's WeChat account, in March 2024, the company reached an agreement with DPM to acquire the Tsumeb smelter in Namibia. The subject of the acquisition was 98% of DPMTH's issued shares held by DPM, with a transaction consideration of 49 million US dollars in cash.
DPMTH's main asset is the Tsumeb smelter in Namibia. Tsumeb smelter is one of the few specialty smelters in the world that can handle complex concentrates such as high-arsenic copper concentrates. The smelter has mature technology, perfect infrastructure, and convenient transportation. The factory is connected to the Atlantic port Whale Cove by rail. Currently, the smelter's concentrate processing capacity is 260,000 tons/year, and the main products are crude copper and sulfuric acid.
Through technological upgrading, concentrate processing capacity is expected to be increased to 370,000 tons/year.
Continue to promote share repurchases, demonstrating management confidence. In September 2023, the company announced its intention to repurchase the company's shares. The repurchase amount is not less than 300 million yuan, no more than 500 million yuan, and the repurchase price is no more than 60 yuan/share. As of February 29, 2024, the company had repurchased approximately 8.255 million shares. The highest transaction price for the purchased shares was 39.19 yuan/share, the minimum transaction price was 31.19 yuan/share, and the total amount of capital used was about 300 million yuan.
Zimbabwe's Bikita lithium mine meets production standards. The company believes that with the 2 million tons/year lithium-permeable feldspar production line and the 2 million tons/year spodumene production line in the Bikita lithium mine in Zimbabwe meet production standards, the Bikita mine is expected to produce 300,000 tons of spodumene concentrate and 300,000 tons of lithium-permeable feldspar concentrate in 2024. In terms of smelting capacity, the company's high-purity lithium salt project with an annual output of 35,000 tons was completed and successfully put into trial production on November 16, 2023. Currently, the climbing situation is smooth. We believe that self-supplied lithium mines will help the company control lithium business costs.
Profit forecasting and ratings. The company is the core target of the entire lithium industry chain. It has Tanco and Bitika mining areas, and is rich in lithium resources. The acquisition of copper ore and copper smelting production capacity will open up a new growth curve for the company. We expect the company's 2023-2025 EPS to be 3.46, 3.06, and 5.15 yuan/share, respectively. Referring to the valuation level of comparable companies, the 2024 PE valuation is 14-16 times, corresponding to a reasonable value range of 42.84-48.96 yuan, and a “superior to the market” rating is given.
Risk warning. The acquisition of the Kitumba copper mine still requires approval/filing from relevant departments such as the Chinese government and the Zambian government. The company's progress in the construction of lithium and copper mines in Africa fell short of expectations.