1. Focusing on the mining industry for more than 30 years, the Zijin spirit has created a global mining leader. Shanghang Mining, the predecessor of Zijin Mining, was founded in 1986 to develop and build the Zijinshan Gold Mine in 1993. The company pioneered a new mining engineering management model of “five rings of ore flow back to one”. After years of hard work and hard work, it has gradually developed into a global mining leader. Currently, it has important mining investment projects in 17 provinces (regions) in China and 15 overseas countries. By the end of 2023, the resources and reserves of Zijin mining were: 74.56 million tons of copper, 2998 tons of gold, 10.68 million tons of zinc (lead), 14,739 tons of silver, and 13.47 million tons of lithium resources (equivalent lithium carbonate).
2. In recent years, supply-side disturbances in copper ore have become more and more obvious, and gold prices have shown a negative correlation with US federal funds interest rates. In recent years, due to insufficient long-term capital expenditure for copper mines, the quality of existing mine resources has continued to decline, supply-side disturbances have had an increasingly obvious impact on prices, and insufficient supply of copper ore may become a long-term trend. The price of gold showed a strong negative correlation with the US federal funds rate, showed a certain positive correlation with the Standard & Poor's 500 Volatility Index (VIX Panic Index), and had obvious safe-haven properties.
Currently, the US federal funds rate is at an all-time high of 5.33%, and there is plenty of room for decline. We expect that as interest rates decline, gold is expected to start a new round of growth.
3. The company's production of major mineral products continues to increase, and lithium carbonate is expected to become an important supplement in 2025. The company's production of major mineral products continues to increase. The mineral copper and gold minerals will be 1.01 million tons and 68 tons respectively in 2023, and are expected to grow to 1.5-1.6 million tons and 100-110 tons in 2028. The company's main incremental projects include: Serbia's Chukalu-Peji Copper (Gold) Mine Lower Belt and Boer Copper Mine Technical Improvement and Expansion Project, Congo (DRC) Kamoa Copper Mine Phase III Mining and Selection Project, and Tibet Dragon Phase II Renovation and Expansion Project.
In terms of lithium resources, the company's total equivalent lithium carbonate production capacity is expected to reach 0.12-0.15 million tons by 2025, and it will strive to become one of the world's most important lithium producers in the next five years.
4. Profit forecast and investment suggestions: We expect the company's operating income for 2023-2025 to be 325.4/361.7/396 billion yuan, respectively, and net profit to mother of 31.4/36/41 billion yuan, respectively. The corresponding EPS is 1.19/1.37/1.56 yuan/share, respectively. We believe that as a leading global mining enterprise, the company has strong growth certainty and is expected to fully benefit from the high prosperity of the industry, cover for the first time, and give it a “buy” rating.
Risk warning: downstream demand falls short of expectations; supply exceeds expectations; release exceeds expectations; Fed tightening exceeds expectations.