Financial Services Association, April 29 (Reporter Liang Xiangcai) Thanks to the release of production capacity from TFM and KFM in the Democratic Republic of the Congo (DRC), the Q1 net profit of Luoyang Molybdenum Industry (603993.SH) increased more than fivefold over the same period last year. A relevant person from the company told the Financial Federation reporter that the two major copper-cobalt mines in the Democratic Republic of the Congo (DRC) both set records for the highest production in history in a single quarter.

This evening, Luoyang Molybdenum Industry released its quarterly report. The company achieved revenue of 46.121 billion yuan in Q1 this year, up 4.15% year on year; net profit to mother was 2,072 billion yuan, up 553.28% year on year; after deducting non-net profit of 2,091 billion yuan, an increase of 3082.87% year on year.

Regarding the reason for the change in performance, Luoyang Molybdenum Industry stated in its financial report that in the first quarter of this year, along with the TFM hybrid project, production and sales of the company's copper and cobalt products increased; at the same time, the company continued to improve lean management. Overall costs decreased compared to the same period last year, and profits increased year-on-year.

In terms of production, Luoyang Molybdenum's two major copper-cobalt mines in the Democratic Republic of the Congo (DRC) contributed significantly. Q1 copper production from these two major mines was 147,500 tons, up 122.86% year on year; cobalt production was 252,000 tons, up 392.23% year on year.

Looking at sales, the company's Q1 copper sales volume was 125,500 tons, up 43.61 times year on year; cobalt sales were 24,300 tons, up 23.87 times year on year.

In fact, the deeper reason behind Luoyang Molybdenum's impressive Q1 performance is, on the one hand, being dragged down by the “equity issue”, and the company's performance base for the first quarter of last year was low; on the other hand, after the “equity issue” was resolved, production capacity of the two major copper-cobalt mines was released this year.

In August 2021, the company announced the adoption of an investment bill for the TFM copper-cobalt mixed mine project. This production expansion plan led to a dispute with the Democratic Republic of the Congo (DRC) over the TFM copper-cobalt mine equity fund. The two sides reached an agreement in April 2023. In May of that year, the Democratic Republic of the Congo (DRC) liberalized export restrictions, and copper and cobalt products previously stranded in the region left Hong Kong for sale one after another.

A relevant person from the company told the Financial Federation reporter that the three production lines of the TFM hybrid mine were fully completed in March 2024. Currently, TFM has a total of 5 production lines, with a copper production capacity of 450,000 tons/year and a cobalt production capacity of 37,000 tons/year. Based on this calculation, TFM ranks among the top ten copper mines and the second largest cobalt mine in the world.

Earlier, the Financial Services Association reporter learned from the company that the KFM mine was put into operation in the second quarter of 2023. The company still had some inventory in the Democratic Republic of the Congo (DRC) last year. At the time, the company expected to digest all early inventory around the first quarter of 2024, and then gradually enter a state of normalized production and sales.

It is worth noting that according to the copper production guidelines announced by Luoyang Molybdenum Industry in 2024, the company's copper production is expected to increase by about 100,000 to 150,000 tons this year.

In addition, Sun Ruiwen, president of Luoyang Molybdenum Industry, said in a letter to shareholders last month that the company proposed a new round of copper capacity expansion plans, which will advance the development of TFM Phase III and KFM Phase II, and achieve the goal of producing 800,000 to 1 million tons of copper per year in 2028, but the company has not announced a more detailed production expansion plan.