I. Overview of events

On February 20, 07 shares announced the "Progress announcement on the intention to acquire 100% stake in Madagascar Central African Resources Holdings Co., Ltd." as well as its mineral resources pre-survey report (334). Ten niobium-tantalum (uranium) mineralized bodies have been preliminarily delineated in the whole region. It is predicted that the amount of niobium-tantalum-uranium resources is 34.75 million tons, including Nb2O576440 tons, Ta2O512508 tons and U17373 tons, reaching the scale of large deposits.

II. Analysis and judgment

In view of the fact that there are many and good mineralized bodies in the exploration area, and the average depth of the 10 exploration mineralized bodies is only about 17.4 meters, it is a high probability event to increase reserves in the future.

The four pre-survey areas have many mineralized bodies and good mineralization, favorable ore-forming conditions and good prospecting prospects. Among them, Ta and Nb are abnormal, with large area, clear concentration zoning, large and regular concentration center area. In view of the fact that the average exploration depth of the 10 mineralized bodies is only 17.4 meters (the shallowest 4 meters, the deepest 45 meters), the future reserve increase is a high probability event.

Tantalum, niobium and uranium pre-survey resources are conservatively estimated that the reasonable market value of the corresponding company is about 7.6 billion yuan-the corresponding stock price is 33 yuan.

The result of this pre-survey is Nb2O576440 tons, Ta2O512508 tons and U17373 tons. According to the average selling price since 2009, the mineral value is calculated to be Nb2O523 billion yuan (the average period price is 300000 yuan / t, the highest price is 425000 yuan / t, and the lowest price is 175000 yuan), Ta20526.6 billion yuan (the average period price is 2.125 million yuan / t, the highest price is 2.5 million yuan / t, and the lowest price is 1.75 billion yuan), and U14 billion yuan (the average period price is 800, 000 yuan / t). The total value of mineral resources is about 63.6 billion yuan, in view of the 334 pre-prospecting, according to the geological professional mineral source probability analysis of about 50%, so the corresponding reasonable value is about 31.8 billion yuan. Using the cash discount method to analyze the reasonable market value of the above mineral resources is about 7.5 billion yuan. Assuming that the mining in the next 15 years, the discount rate is 10%, then the discount coefficient is 0.24, and the reasonable evaluation value before the corresponding is 7.6 billion yuan (i.e. 318-0.24).

Tantalum, niobium and uranium are indispensable varieties for the development of high-end equipment manufacturing in China in the future.

Among them, uranium is a shortage of mineral resources in China's nuclear development, which is of great significance. Tantalum and niobium is an indispensable addition element in aerospace, military equipment, advanced communication base station capacitors, automobile lightweight, marine steel structure manufacturing materials. For example, 22% of tantalum is used in aerospace and military industry, 24% is used in computers and high-end communication base stations, while niobium plays an irreplaceable role in military steel, oil and gas pipe network steel, marine steel structure and automobile lightweight.

14.55 yuan per share to major shareholders and titanium concentrate underwriting to form a performance safety margin and demonstrate confidence, 500000 tons EPS is expected to reach 0.71 yuan

According to the terms of the underwriting contract, we conservatively estimate the freight volume in the second half of the year at more than 100000 tons and optimistically estimate 30-400000 tons. According to the report, the net profit of per ton ilmenite is about 320 yuan, and the conservative estimate of 2012EPS is about 0.18 yuan. If 500000 tons of underwriting is realized in 2013 and the net profit reaches 400 yuan per ton, EPS is expected to reach 0.71 yuan (assuming the fixed increase is completed).

Third, profit forecast and investment suggestions

If the acquisition is completed, the current value of 7.6 billion yuan of minerals and underwriting titanium ore formed 0.71 yuan EPS can effectively support the stock price. Give a "highly recommended" rating.

Fourth, risk hints: 1, the contract is forced to be cancelled; 2, the extension of exploration rights and mining rights cannot be obtained; 3.