The company established a “two-wheel drive” development strategy for gold+new energy and new materials and minerals. In 2022-2023, through a series of capital market operations, the company successfully completed the layout of gold and new energy materials minerals. The gold mine-related layout was mainly the Pazingo Gold Mine, which is 100% owned. The layout related to new energy materials includes the shareholding company Loufanggou Vanadium Mine in Shaanxi (67%), the Jiteng Mining (11.44%; the core asset is the Anquabe graphite mine), and Liaoyang Lighthouse Shuangli Silica Mining (35%), etc.
The Pacingo Gold Mine is a mature production mine, with plenty of room for exploration and storage, and strong profitability. At the end of 2022, the company acquired the Pacingo gold mine and successfully entered the gold mining industry. Resources: The prospecting rights and mining rights cover an area of 1,690 square kilometers and 63 square kilometers respectively, the amount of gold and metal is 63 tons, and the grade is as high as 5.8 g/t. Through continuous optimization of personnel, equipment, and production plans, the company has achieved remarkable results in reducing costs, increasing efficiency, improving quality, and expanding production. Production:
Ore mining production capacity was increased from 600,000 tons/year to 700,000 tons/year and production at full capacity, with an estimated annual output of 3 tons of gold. Profit: The operating cost per unit of 23H1 is about 220 yuan/gram, which is at a low level in the industry. The gold mining business contributed 230 million yuan to net profit in the first half of 2023, accounting for 88.2% of the company.
Projects such as vanadium mines, graphite mines, and silica mines are expected to enter the harvest period one after another in 2024-2025. 1) Vanadium mine project: The Loufanggou vanadium mine has V2O5 resources of about 500,000 tons. It is estimated that the full cost of one ton and the operating cost of a single ton after stabilizing production will be about 79,000 yuan and 620,000 yuan respectively. It is expected that trial production in 2025 will contribute about 2,888 tons, reaching 4814 tons after delivery. With the penetration of all-vanadium liquid flow batteries, it may bring a new performance growth curve to the company; 2) Graphite mine: Xiteng Mining's Ankube graphite mine has 46.1 million tons of graphite ore resources that meet JORC standards, with a mining capacity of 46.1 million tons and a mining capacity of 2,485 million tonnes, planning to design the annual processing capacity of raw ore More than 1 million tons, with an annual output of more than 60,000 tons of natural flake graphite concentrate, expected to be put into operation in 2025; 3) Shuangli Silica Mine: Project construction has entered a substantial stage. The groundbreaking ceremony for the first phase of the beneficiation plant was held in July 2023, with a design capacity of 500,000 tons/year. The main plant construction and equipment installation are expected to be completed by the end of November 2023, and production in March 2024.
First coverage, giving an investment rating of “Highly Recommended”. It is estimated that the net profit of the company from 2023-2025 will be 4.8, 580 million yuan, and 650 million yuan respectively, corresponding to PE 17, 14, and 13 times, respectively.
Risk warning: falling precious metal prices, accident risks in mine safety, poor progress of production projects, geopolitical risks, exchange rate fluctuation risks, etc.