occurrences
On May 29, the company issued an announcement. The company successfully obtained the Sanshandao gold mine mining license of Shandong Gold Mining (Laizhou) Co., Ltd. issued by the Shandong Provincial Department of Natural Resources, integrating the original mining rights of the Sanshandao Gold Mine with the prospecting rights of the Xiling Gold Mine into a single mining right.
reviews
Resource integration is progressing steadily, and gold resources have increased dramatically. By the end of 2023, the company (excluding Yintai Gold) had 1431.30 tons of gold resources, and the amount of gold metal that had been assessed and filed within the Xiling Gold Mine prospecting rights was 592.19 tons. Only considering the increase in resources brought by Xiling Gold Mine, the company (excluding Yintai Gold) had gold resources reaching 2023.49 tons, and gold resources increased dramatically.
With the combined development and utilization of mineral rights, self-produced gold production is expected to rise to the next level. In 2023, the Sanshan Island gold mine produced 5.77 tons of gold. According to the company's plan, the Xiling Gold Mine prospecting rights will be integrated with the existing mining rights at the Sanshandao Gold Mine, a wholly-owned subsidiary of the company, into new mining rights and unified development and utilization. The planned production scale is 3.3 million tons/year, and the gold output is 13.386 tons during the normal production year. At present, the company has obtained the original mining rights of the Sanshan Island Gold Mine and the mining license after the integration of the Xiling Gold Mine prospecting rights. In the next step, the company will actively promote project construction related work in the integrated Sanshandao Gold Mine area. It is expected that as project construction gradually progresses, the company's own gold production will increase again.
High-quality gold mines are expected to reduce the cost of self-produced gold production and free up room for performance improvement.
According to the Xiling Gold Mine Prospecting Rights Assessment Report, the average grade of gold within the Xiling Gold Prospecting Rights is 4.04g/t, higher than the average grade of 1.72g/t of the Company's gold resources at the end of 2023 (excluding Yintai Gold). After integration, the total cost of gold per unit in the normal production year of mineral rights was about 113.30 yuan/gram, and the operating cost per unit of gold was about 95.91 yuan/gram, which is significantly lower than the company's 2023 production cost of 230 yuan/gram per unit of self-produced gold, significantly reducing the production cost of self-produced gold and increasing the profit margin of self-production.
There is still room for growth in the market value of tons of resources. According to our estimates, after the acquisition of Xiling Gold Mine was completed, based on the latest market value of 119.7 billion yuan on May 29, the market value of the company's tonne equity gold resources (vertically comparable) was only 62 million yuan/ton, and the market value of ton equity resources (horizontally comparable) was only 55 million yuan/ton. Compared with the average market value of the company's largest equity resources in 2017-2022 of 103 million yuan/ton and the average market value of comparable company's latest tonne equity resources of 147 million yuan/ton, there is plenty of room for improvement.
Profit forecasting & investment ratings
The company's revenue for 24-26 is estimated to be 770/859/92.1 billion yuan, with net profit attributable to mother of 37.97/60.34/7.174 billion yuan, EPS of 0.85/1.35/1.60 yuan respectively, and corresponding PE 34.54/21.73/18.28 times, respectively. Maintain a “buy” rating.
Risk warning
Gold price fluctuation risk; project construction falling short of expectations; safety and environmental management risk.