Copper and gold production continues to grow. Copper: 2024Q1-Q3 achieved 0.789 million tons of mineral copper, +4.7%; among them, Serbia's Zijin Mining/Serbia's Zijin Copper achieved mineral copper production of 0.131/0.091 million tons, +26%/+31%, achieving overproduction; Kamoa Copper (equity) /Kolwezi copper mine achieved 0.135/0.067 million tons of mineral copper, respectively. The decline in production is mainly due to unstable electricity supply in the Democratic Republic of the Congo (Gold). The decline in production is mainly due to unstable electricity supply in the Democratic Republic of the Congo (Gold). Stable electricity supply is achieved through measures such as construction of hydropower plants and photovoltaic power plants. Gold: 2024Q1-Q3 achieved 54.3 tons of mineral gold, +8.3% year over year; among them, Colombia's Buritica/Guyana Aurora/Australia's Norton Jintian/Longnan Zijin achieved 7.5/3.0/6.0/5.4 tons of mineral gold, which was +24%/+40%/+29%/+20% year over year, respectively, contributing to the increase in major mineral gold.

The Akyem gold mine in Ghana is acquired, and the gold project is the next step. On October 9, 2024, Jinyuan International, a subsidiary of the company, plans to invest 1 billion US dollars to acquire 100% interest in Newmont's Akyem gold mine project in Ghana. The Akyem gold mine is one of the largest gold mines in Ghana. Commercial production began in October 2013. The mine and plant are running stably, the equipment is in good condition, using conventional carbon immersion technology, the plant design and processing capacity is 8.5 million tons/year, and a net profit of 0.128 billion US dollars was achieved in 2023. Gold production from 2021 to 2023 was 11.9 tons, 13.1 tons, and 9.2 tons, respectively.

The production cost control effect is remarkable. The sales costs of the company's products mainly include mining, mineral processing, smelting, mineral concentrate procurement, ore transportation costs, raw material consumption, power, salary and fixed asset depreciation. The cost control effect of 2024Q1-Q3 company is remarkable. The production cost of gold concentrate/copper concentrate/electrolytic copper/zinc produced in mines was -0.5%/-4.2%/-13.1%/-5.3% compared to the same period, mainly due to the company's obvious scale effect on the raw material procurement side and lean management.

The cost side has declined steadily. The 2024Q1-Q3 company's sales/management/finance expense ratio was 3.44%, -0.17pct year on year; of these, the Q3 sales/management/finance expense ratio was 3.50%, or -0.32pct year on year. The company's cost side has declined, mainly due to factors such as falling labor costs, which reflect the continuous results of the company's lean management.

The leverage ratio decreased while ROE increased. At the end of 2024Q3, the company's balance ratio was 55.4%, -3.64pct year-on-year, -1.27pct, and continued to decline since 2023Q4; the company's long/short-term loans were 69.8/23.9 billion yuan, -1.4/-2.3 billion yuan, respectively; the 2024Q3 company's net operating cash flow was 15.7 billion yuan, +61.5% YoY, +27.6%;, at the end of 2024 Q3, the company's ROE was 18.2%, yoy + 2.50pct. The company's ROE increased at the same time as the leverage ratio declined, and the operation showed a high-quality development trend.

Investment advice: We thoroughly analyzed the company's report for the first three quarters of 2024. The company's copper and gold production achieved continuous growth, and independent exploration advantages were remarkable. The acquisition of Akyem Gold Mine in Ghana increased the amount of gold resources. At the same time, production costs and cost side control were better. Financial leverage decreased while ROE increased. The company's high-quality growth is beneficial to long-term development. We maintain the company's profit forecast for 2024-2026. We expect the company's net profit to be 31.4/36/41 billion yuan in 2024-2026, respectively, maintaining a “buy” rating.

Risk warning: downstream demand falls short of expectations; supply exceeds expectations; release exceeds expectations; Fed tightening exceeds expectations.