Jiama mine resumed production as scheduled, maintaining a “buy” rating

The company's main mine, the Jiama mine, resumed production as scheduled on May 30, '24. The total production guideline range for the company's Jiama mine and Changshan moat in '24 was 432-44,500 tons of copper and 4.62-4.91 tons of gold. According to Huatai Metals's “Inevitable Bumps and Bumps, Facing a Bright Future” (24-6-3), we are optimistic about the medium- to long-term copper and gold price trends, and based on the actual price trend since the beginning of '24, the 24-26 copper and gold price assumptions are expected to be US$1.71/3.23/474 million US dollars (previous value: US$1.25/4.39/US$433 million), respectively. Using the segmented valuation method, the company's copper and gold business accounted for 46%/54% of profits respectively. Copper and gold compared the company Wind unanimously anticipated PE 12.3/39.5X (24E). Considering that the company's profit sources were concentrated, the company was given a 30% valuation discount, that is, the copper and gold business were 8.6/27.7XPE (24E), corresponding to a target price of HK$65.36, maintaining the purchase rating.

The Jiama mine fully resumed production at the end of May 30. The ore processing capacity was 34,000 tons/day. After the Jiama mine stopped production on March 27, 23, the company made every effort to resume production and carried out a comprehensive restoration and safety assessment of the tailings depot. On December 15 of the same year, the mine resumed the first phase of selection, with an ore processing capacity of 6,000 tons/day (accounting for 12% of the original production capacity). In its annual report for the year 23 released on March 28, '24, the company expects to fully resume production in May '24. On May 31, '24, the company announced that with the approval of the Tibet Autonomous Region Government and relevant state departments, the Jiama Mine Phase II Plant will resume operation on May 30, '24, with an ore processing capacity of 34,000 tons/day (accounting for 68% of the original production capacity); at the same time, the Phase I plant stopped operating.

Since the resumption of production is in line with the expectations of the company's 23 annual report, we continue to use the 24-year production guidelines disclosed simultaneously in the 23 annual report, assuming that the Jiama mine produces 432-44,500 tons of copper and 132-141,000 tons of gold per year. In addition, the company is actively promoting the construction of the Phase III tailings depot. It is expected that 26H1 will be completed and put into operation.

Changshan Trench Mine completed slope treatment and resumed normal production

As of January 4, '24, slope maintenance work has been completed at the Changshan Trench mine, mining activities (mining, shipping, crushing and landfill) have returned to normal operating levels, and the company gave 24-year production guidelines of 3.3-3.5 tons. The full resumption of mining activities at Changshan Ditch has laid a solid foundation for strengthening the company's financial and production performance in '24. Furthermore, the mine is gradually approaching the end of the mine's life, and the company continues to evaluate the possibility of land mining.

Risk warning: The pace of production climbing at the Jiama mine fell short of expectations; the Federal Reserve cut interest rates slower than expected; high copper prices curbed copper consumption.