Zijin Mining released its 2024 three-quarter report: the company achieved operating income of 79.98 billion yuan in the third quarter of 2024, up 7.11% year on year; net profit to mother 9.273 billion yuan, up 58.17% year on year; net profit to mother after deducting non-recurring profit and loss of 8.314 billion yuan, an increase of 49.75% year on year.

The first three quarters of 2024 achieved operating income of 230.396 billion yuan, an increase of 2.39% year on year; net profit to mother of 24.357 billion yuan, up 50.68% year on year; net profit to mother after deducting non-recurring profit and loss of 23.747 billion yuan, an increase of 56.16% year on year.

Key points of investment

Significant increase in performance, mainly due to sharp rise in production and sales prices of mineral copper, gold and other products

In terms of main mineral production in the first three quarters of 2024, the company's mine produced 0.7895 million tons of copper, +4.67%; of these, Kamoa Equity produced 0.1353 million tons of copper, -0.19% year on year; Tibet Yulong Equity produced 0.0276 million tons of copper, +49.00% year over year. The mine produced 54.27 tons of gold, +8.33% YoY. On a quarterly basis, mine copper production in the third quarter of 2024 was 0.2709 million tons, +3.39% year over year and +5.85% month over month. The mine produced 18.86 tons of gold in the third quarter, +6.24% year over year and +1.39% month on month.

Mine copper and gold sales increased in terms of sales volume and price compared to the same period last year. Mine copper sales in the first three quarters of 2024 were 0.6195 million tons, +2.30% year over year; mine gold sales were 50.92 tons, +3.38% year over year. In the first three quarters of 2024, the unit prices for copper concentrate, electrodeposited copper and electrolytic copper were 0.0561, 0.0637, and 0.0657 million yuan/ton, respectively, which was 13.36%, 12.29%, and 8.71% higher than the same period last year. In the first three quarters of 2024, the unit prices for gold ingots and gold concentrate were 516.83 and 485.88 yuan/gram, respectively, 20.35% and 29.73% higher than the same period last year.

In terms of cost, in the first three quarters of 2024, the unit sales costs of copper concentrate, copper electrodeposit and electrolytic copper were 0.0188, 0.0327, and 0.0357 million/ton, respectively, with changes of -4.16%, +5.49%, and -13.05% respectively over the same period last year. In the first three quarters of 2024, the unit sales costs of gold ingots and gold concentrate were 286.46 and 155.06 yuan/gram respectively, with changes of +1.32% and -0.54% respectively over the same period last year.

Acquisition of African gold mines, further expansion of the gold resource landscape

Jinyuan International Holdings Co., Ltd., a wholly-owned overseas subsidiary of the company, signed a “Share Acquisition Agreement” with Newmont Golden Ridgeltd, a wholly-owned subsidiary of Newmont, on October 9, 2024, Beijing time. Jinyuan International plans to invest 1 billion US dollars to acquire 100% of Newmont's shares in the target company. The target company owns 100% interest in the Akyem gold project in Ghana.

Akyem gold mining rights consist of two mining leases in the east and west. They are valid until January 2025, and all existing resources and production facilities are within the eastern mining rights. Currently, the mining lease renewal application was approved by the Ministry of Land and Natural Resources of Ghana in September 2024. The target company also holds four prospecting rights on the periphery of the Akyem gold mine. Three of them are adjacent to the Akyem mining area, and the four prospecting rights cover a total area of 79.59 square kilometers.

The mine has 54.4 tons of control gold resources, with an average grade of 3.36 g/ton. The reserves are 34.6 tons, and the average grade is 1.35 g/t. The mine began commercial production in October 2013, with a design processing capacity of 8.5 million tons/year. Gold production from 2021 to 2023 was 11.9 tons, 13.1 tons, and 9.2 tons, respectively. According to the plan, the mine will switch from open pit mining to underground mining by 2028, and the service period will end in 2042. The mine is expected to produce an average of 5.8 tons of gold per year during the entire life cycle of the mine.

Profit forecasting

As the copper and gold price center continues to rise, we raised the company's profit forecast. The company's revenue for 2024-2026 is estimated to be 3373.45, 3656.08, and 394.999 billion yuan, respectively, and net profit to mother is 335.18, 41.628, and 48.157 billion yuan, respectively. The PE corresponding to the current stock price is 14.2, 11.4, and 9.9 times, respectively. 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.