Zijin Mining released its 2023 annual report: the company achieved operating income of 293.403 billion yuan in 2023, up 8.54% year on year; net profit to mother of 21.119 billion yuan, up 5.38% year on year; net profit to mother after deducting non-recurring profit and loss of 21,617 billion yuan, an increase of 10.68% year on year.
Key points of investment
Product production has increased markedly. The mineral copper has surpassed the 1 million ton mark. Currently, the company is rich in mineral resources. Currently, the amount of shareholding resources is about 75 million tons of copper, 3,000 tons of gold, 10 million tons of zinc (lead), 15,000 tons of silver, and the equivalent amount of lithium carbonate exceeds 13 million tons. In 2023, the company achieved a historic breakthrough in copper, with output exceeding one million tons; production of mineral gold, zinc, lead, silver, sulfuric acid, etc. also increased markedly.
(1) The mine produced 1.073 million tons of copper, up 11.13% year on year; smelting produced 724,600 tons of copper, up 4.88% year on year. (2) Mining gold production was 67.73 tons, up 20.17% year on year; smelting, processing and trade gold was 249.52 tons, a decrease of 3.49% year on year. (3) Zinc concentrate produced in the mine contained 421,900 tons of zinc, an increase of 2.24% year on year; smelting produced 333,300 tons of zinc ingots, an increase of 4.59% year on year. Lead concentrates contained 45,200 tons of lead, an increase of 9.32% over the previous year. (4) The mine produced 411.99 tons of silver, a year-on-year increase of 4.09%; the by-product of smelting silver was 637.63 tons, a decrease of 9.11% year-on-year. The smelter produced 3.374 million tons of sulfuric acid as a by-product, an increase of 11.49% over the previous year.
Project construction progresses steadily to protect the company's performance
Copper: Serbia's two major copper mines will be fully renovated and expanded by 2025. At that time, copper production capacity is expected to reach 300,000 tons/year. The third phase of the Camoa copper mining project is expected to be completed and put into operation in Q2 2024. At that time, the production capacity will reach more than 600,000 tons/year; the 500,000 tons/year anode copper smelter is scheduled to be completed and put into operation in Q4 2024.
The second phase of Julong Copper's project is scheduled to be completed and put into operation by the end of 2025, and the annual mineral copper production after production will reach 30-350,000 tons.
Gold: The Rosebel mine will have a gold production capacity of 10 tons/year after production. The new Jinshan Gold Mine in Longnan Zijin has been completed and approved for safety facility design review and approval. It has now entered the trial production stage. The intelligent mining, selection, transformation and expansion project for the 6000 tons/day mine in Shanxi has been completed and put into operation. After production, 3-4 tons of mineral gold will be added every year. The 12,000 tons/day offshore gold mining project is scheduled to be put into operation in 2025, reaching about 15-20 tons of mineral gold per year after production.
Lithium: The first phase of Lagocuo Salt Lake has a lithium hydroxide production capacity of 20,000 tons/year. After the first and second phases are completed and put into operation, a lithium hydroxide production capacity of 4-5 million tons/year was formed. The first phase of the Xiangyuan hard rock lithium mine collection system of 300,000 tons/year has been completed, and the second phase of the 5 million tons/year harvesting system is progressing in an orderly manner. It is planned to be completed and put into operation in Q2 2025. The 3Q Salt Lake Phase I 20,000 tons/year lithium carbonate project has basically been completed, and the construction of the second phase 30,000 tons/year battery lithium carbonate project is progressing in an orderly manner. The company was invited to cooperate with Congo Mining Development Co., Ltd. to explore and develop a green space project in the northeastern part of the Manono lithium mine. It plans to complete the project construction within 2 years after the research possibilities and financing plan are determined.
Production will continue to increase in the future
In 2024, the company plans to produce 1.11 million tons of mineral copper, 73.5 tons of mineral gold, 470,000 tons of mineral zinc (lead), 420 tons of mineral silver, 25,000 tons of lithium carbonate equivalent, and 90,000 tons of mineral molybdenum; in 2025, it plans to produce 1.17 million tons of mineral copper, 90 tons of mineral gold, 480,000 tons of mineral zinc (lead), 450 tons of mineral silver, 120,000 tons of lithium carbonate equivalent, and 16,000 tons of mineral molybdenum.
Profit forecasting
We forecast that the company's revenue for 2024-2026 will be 3208.37, 3459.88, and 368.020 billion yuan, respectively, and net profit to mother will be 257.32, 321.87, and 35.814 billion yuan, respectively. The current stock price corresponding to PE is 17.2, 13.8, and 12.4 times, respectively.
The company's mineral copper production has broken through the one million ton mark. Production of copper, gold, lithium carbonate and other products will continue to grow in the future. Combined with the improvement in copper and gold prices, the diversified layout can be expected to grow. We expect the company's performance to continue to grow, so we maintain a “buy” investment rating.
Risk warning
1) Risk of drastic product price reduction; 2) Copper mine expansion and production fall short of expectations; 3) Gold mine expansion and production progress falls short of expectations; 4) lithium carbonate capacity construction progress falls short of expectations; 5) political risk of overseas mining; 6) risk of rising costs due to exchange rate fluctuations, etc.