The company announced that it plans to acquire 20.87% of the shares in Wanguo Mining with its own capital of HK$377 million, becoming its second largest shareholder. It has now been reviewed and approved by the Board of Directors. Wanguo Mining is a Hong Kong-listed company. Its core assets are 100% of the shares of Yifeng Wanguo, 70% of Jinling Mining, and 51% of the shares of Tibet Yidi Mining. It has mineral rights related to the Xinzhuang Copper, Lead and Zinc Mine, Jinling Gold Mine, and the Lead and Silver Mine in the Walag Mining Area, respectively
It plans to acquire shares and become the second shareholder of Wanguo Mining, a Hong Kong-stock mining company: The company plans to acquire 170 million shares of Wanguo Mining with its own capital of HK$377 million (or the equivalent amount of RMB). The purchase price was converted to HK$2.18 per share. On the same day, the board of directors closed at HK$2.087 per share, reporting daily price of HK$2.2 per share; the first acquisition since Yi Zhujiang Copper: In June of last year, Jiangxi Copper obtained 29.99% of the company's shares and became the company's controlling shareholder. In November of this year, the shareholding ratio was increased to 44.48% through a fixed increase. Jiang Tong's global vision is expected to help broaden the company's acquisition channels for gold and mineral resources. This transaction plan is the first acquisition of mineral resources since Yi Zhujiang Copper.
The core assets of this acquisition include three mines. The Jinling Gold Mine has 109 tons of gold resources, and the average cash cost of the mine is 792 US dollars/ounce. The exploration potential is huge, and the grade of the surrounding ore body is high. The average grade is 2.62 g/ton, the resource volume is estimated at 10.89 million tons, and the calculated amount of gold resources is 29 tons.
The Xinzhuang copper-lead-zinc mine is currently in production and has been mined for 14 years. It has 67,000 tons of copper and metal reserves. The annual production of copper is about 3000 tons. Expansion is currently being planned.
The lead-silver mine in the Walag mining area has not yet been developed. Plans are under way to apply for a mining license, and it is in the research stage.
It has 1,937 tons of mineral silver resources.
According to Jiangxi Copper's 2020 semi-annual report, by the end of 2019, the gold 100% owned by Jiangxi Copper had identified resource reserves of about 281.5 tons and silver 8347.7 tons; the resources controlled by Jiangxi Copper in conjunction with other companies were about 52 tons of gold and metal resource reserves calculated in the calculation of the equity held by Jiangxi Copper.
Maintain a “Highly Recommended - A” investment rating. Net profit is expected to be 3.6/64/700 million yuan respectively in 2020-2022, corresponding to a price-earnings ratio of 41X/23X/21X. Jiangxi Copper positions the company as a platform for the gold sector, and we judge that future resource injections and mergers and acquisitions are likely to be high.
Risk warning: The risk that the construction and commissioning of projects under construction will fall short of expectations, risk of a sharp drop in the price of main products, production safety risks, risk of failure in non-public offerings, failure of equity mergers and acquisitions in Universal Mining, etc.