On December 27, the Financial Association reported (Journalist: Zeng Chuchu) that Sinomine Resource Group (002738.SZ), primarily engaged in lithium battery New energy Fund materials business, announced two subsidiary investment plans today, involving Copper and Other Metals, with a proposed investment scale exceeding 5.7 billion yuan.

Tonight, Sinomine Resource Group announced that its controlling subsidiary Sinomine Kitumba Minerals Company Limited (referred to as "Kitumba") will invest in the construction of the Kitumba Copper Mine Mining, Selection, and Smelting Joint Project located in Zambia, with the mining and selection project designed scale of 3.5 million tons of raw ore per year and a smelting project design capacity of 0.06 million tons of cathode Copper per year. The planned total investment amount is 0.563 billion dollars (approximately 4.109 billion yuan), of which the construction investment is 0.506 billion dollars, funded by Kitumba's own funds and self-raised funds. Sinomine Resource Group holds 65% of Kitumba through its wholly-owned subsidiary Afmin.

The announcement disclosed that the project construction includes mining operations, mineral processing, smelting, tailings storage, and all production systems and supporting facilities. The entire Infrastructure period for the project is 1.5 years, plus an additional 0.5 years for preliminary preparations, with an expected completion and production start date by the end of 2026.

Sinomine Resource Group stated in the announcement that according to the "Feasibility Study Report" issued by the third-party professional institution Mining Technology Group Co., Ltd. in November 2024, concerning the Kitumba Copper Mine Project, the open-pit mining area of the Kitumba Copper Mine has a designed utilization of Copper ore resources amounting to 36.06 million tons, with a Copper metal amount of 0.621 million tons and an average Copper grade of 1.72%; low-grade Copper ore resources that can undergo heap leaching recovery totaling 12.14 million tons, with a Copper metal amount of 0.0545 million tons and an average Copper grade of 0.45%; the total recoverable Copper metal amount is 0.6755 million tons.

Sinomine Resource Group believes that using the technological plan selected in the "Feasibility Study Report" and projected price levels (referencing the LME Copper price trends over the past three years, Copper estimated at 8,500 dollars/t, and sulfuric acid at 120 dollars/t), upon reaching production, the project is expected to generate an average annual sales revenue of 0.429 billion dollars (approximately 3.131 billion yuan), with the average annual total profit of 0.156 billion dollars (approximately 1.139 billion yuan). The project's post-tax financial internal rate of return is 25.21%, with a net present value of 0.503 billion dollars at a 10% discount rate, and an investment recovery period of 5.10 years (including the construction period).

Sinomine Resource Group has also reached an agreement with shareholder Chifupu, who holds 35% of Kitumba, wherein the funding for the project's construction phase will first be raised by Kitumba through bank loans and obtaining advance financing through product guaranteed sales, with the remaining required construction funds under 0.3 billion dollars (including 0.3 billion dollars), Afmin and Chifupu will provide shareholder loans for the project in proportion to the project’s construction progress according to a (95%:5%) ratio. For the remaining construction funds exceeding 0.3 billion dollars, Afmin and Chifupu will provide shareholder loans according to their respective shareholding ratio in Kitumba (65%:35%) simultaneously based on the project's construction progress.

In fact, Sinomine Resource Group has been laying out Copper mines for many years, but there has been no income from Copper in products accounting for more than 10% of revenue in annual reports. This year, the pace of advancing in Copper mining has clearly accelerated.

In March of this year, Sinomine Resource Group announced the acquisition of the Kitumba Copper Mine, and in July, it announced the completion of the acquisition of 65% equity of Kitumba at a transaction price of 58.5 million USD. Tonight, it announced the mining plan for this copper mine.

At the same time, in the 2023 annual report, the company listed copper mining resources as a major Business Sector and mentioned that it would 'increase the development efforts of copper mining resources to provide new growth points for the company's long-term development.' It explicitly disclosed the strategic goals for the copper business: striving to achieve 0.05 million tons/year of integrated extraction, selection, and metallurgy layout by 2025; aiming to acquire new high-quality copper mining resources within two years.

The rapid layout of the 'new growth points' may be due to the continuous decline in prices of the main lithium battery New energy Fund raw materials business in the past two years. In the third quarter of this year, Sinomine Resource Group's net income excluding non-recurring items was -29.5158 million yuan. As of the first half of this year, the revenue from the development and utilization of lithium battery New energy Fund raw materials accounted for 65.69%, and the revenue from this business decreased by 41.01% year-on-year.

On the same day, it was announced that the company's subsidiary Sinomine Tsumeb Smelter (Propritary) Limited intends to invest in the construction of a 0.2 million tons/year multi-metal comprehensive recycling project, with an estimated total investment of 0.223 billion USD (approximately 1.628 billion yuan). The main raw materials for the project are germanium-rich, gallium-rich, zinc-rich slags owned by the Tsumeb smelter, with a designed processing scale of 0.2 million tons/year (dry base).

The project funding sources include the Tsumeb smelter's own funds, self-raised funds, etc. Sinomine Resource Group indirectly holds 98% of Tsumeb Smelter.

Although Sinomine Resource Group does not wholly own the two main project companies mentioned above, the total investment funds for these two major projects exceed 5.7 billion yuan. The third quarter report disclosed that Sinomine Resource Group's cash funds amount to 2.558 billion yuan.