Incident: The company announced a major breakthrough in prospecting and storage. The company's Tibet Julong Copper Mine and Heilongjiang Tongshan Copper Mine added a total of 18.377 million tons of registered copper resources and 5.777 million tons of newly registered copper metal reserves, accounting for about 14.2% of China's copper reserves at the end of 2022.
Julong Mining Area: About 6.61 million tons of copper resources were added. The second phase of the renovation and expansion project is expected to achieve trial production in the first quarter of 2026. After the filing was completed, Julong identified a total of 25.88 million tons of copper resources, an increase of about 6.61 million tons over 23, about 2.5 times the amount of copper metal resources verified by the company during the merger and acquisition in 2020, and the storage increase effect was obvious; in addition, 1.02 million tons of molybdenum metal and 8,157 tons of silver metal were added as companion resources. Furthermore, the second phase of Dragon has also been fully launched. It is expected that trial production will be achieved in 26Q1. After completion and production, the annual mineral copper output will increase from 154,400 tons to about 30-350,000 tons in 23 years, the annual production of mineral molybdenum will increase from 50,000 tons to about 13,000 tons, and the annual mineral silver output will increase from 100 tons to 230 tons. The mine will also become the highest altitude, the lowest grade, and the largest world-class oversized copper mine in China. After the second phase is completed, the company is also expected to further plan the third phase of the project, which is expected to produce about 200 million tons of ore per year, making it the largest copper mine in the world, producing about 600,000 tons of copper per year.
Heilongjiang Tongshan Copper Mine: 3.651 million tons of copper resources were added, and underground mining of the No. II ore body is expected to be put into operation in 2024. Compared with the previous filing (1993), 3.651 million tons of copper resources have been added. Of these, the V ore body is a newly discovered porphyry-type blind ore, reaching 2.81 million tons. It is the only large-scale copper ore discovered in Northeast China in nearly 40 years. Additionally, 130,000 tons of molybdenum, 55 tons of gold, and 1104 tons of silver have been added as associated resources. Furthermore, underground mining of the Shallow II ore body in the Tongshan Copper Mine is already under construction. It is expected to be put into operation in 2024, with an annual extraction scale of 3 million tons, and an annual production of 12,000 tons of copper, 170 tons of molybdenum, 0.3 tons of gold, and 5 tons of silver after production.
Profit forecast: The company has strong independent research and prospecting capabilities. More than 50% of copper and gold resources and more than 90% of zinc (lead) resources are obtained through independent exploration, and the unit exploration cost is significantly lower than that of global peers. As key mineral projects progress in an orderly manner, we expect the company's EPS to be 1.12, 1.39, and 1.60 yuan respectively, and PE will be 16, 13, and 11 times, respectively, maintaining a “buy” rating.
Risk warning: Project progress falls short of expectations, capacity release falls short of expectations, metal price increases fall short of expectations