\u3000\u3000 Sinomine Resource Group Co.Ltd(002738) (002738)
Event overview: on February 8, the company announced that it plans to acquire two British Virgin Islands companies AMMS and Samm with us $180 million (about RMB 1.144 billion), indirectly acquiring the main equity of bikita lithium project in Zimbabwe. Bikita is implementing internal restructuring and share repurchase cancellation. If the final internal restructuring of bikita is approved by the government, the company will hold 99.05% equity and corresponding related creditor’s rights of bikita; If the final internal restructuring of bikita is approved by the government and the implementation of share repurchase and cancellation is completed, the company will hold 100% equity and corresponding related creditor’s rights of bikita.
Bikita lithium mine has convenient transportation, high resource grade and rich reserves. 1) Geographical location: bikita mine is connected with the capital, the capital of mazungo Province, Durban port in South Africa and Beira port in Mozambique by Expressway and railway, with convenient transportation and perfect infrastructure. 2) Resource endowment: according to the report of IRES, the total ore resources in bikita lithium mining area are 29.41 million tons, the average grade of Li2O is about 1.17%, and the Li2O resources are about 344000 tons. The tantalum mineral resources associated with sqi6 ore body are 8.4 million pounds of Ta2O5, and there are still many unverified LCT type (lithium cesium tantalum type) pegmatite rocks in the mining area, which has the potential to further expand the reserves of lithium cesium tantalum resources.
The products in progress are technical grade lithium concentrate and cesium garnet concentrate, and the production of chemical grade lithium concentrate may be rapidly expanded in the future. 1) The No. 1 mining right of the project (including shaft and sqi6 ore bodies) is currently in the mining stage, with a beneficiation capacity of 700000 tons / year (we estimate that it corresponds to about 70000 tons of technical lithium concentrate), and the main products are technical lithium concentrate (used in the field of glass ceramics) and cesium garnet concentrate. 2) After the acquisition, the company plans to expand the beneficiation capacity of 1.05 million tons / year (we estimate that it corresponds to about 105000-131000 tons of chemical grade lithium concentrate), which can be used to support the company’s lithium salt capacity in China. 3) As a lithium mine in production, bikita has mature surrounding supporting facilities, and the lithium project has the advantages of low capital expenditure and rapid production expansion compared with the lithium extraction capacity of salt lake. We believe that the project is expected to achieve production capacity quickly.
The lithium resource reserve is the next city, and the self-sufficiency rate of raw materials is further improved. 1) Smelting capacity: the company’s original capacity of 5000 tons of lithium carbonate, new capacity of 15000 tons of battery grade lithium hydroxide and 10000 tons of battery grade lithium carbonate have been put into trial production in August 2021. 2) Distribution of self owned resources: in order to support the expansion of lithium salt production capacity, the company actively carries out resource distribution. The existing mine Tanco has 112200 tons of Li2O reserves. After the completion of this transaction, 344000 tons of Li2O reserves can be further increased; In terms of production capacity, the concentrator with an annual capacity of 120000 tons of Tanco mine has been put into operation in October 21, and the feasibility study of open pit mining scheme and new concentrator with a processing capacity of 500000 tons / year is under way. 3) Underwriting resources: the company holds Arcadia 4 72% equity and the underwriting right of 280000 tons of spodumene concentrate (li2o6%) and 784000 tons of lithium permeable feldspar concentrate (li2o4%) can ensure the release of the capacity of the new production line. It is expected that the resource self-sufficiency rate can be further improved after bikita is put into operation in the future, so as to ensure the stable supply of raw materials in the medium and long term of lithium salt business, improve profitability and fully share the premium of lithium resources.
Investment suggestion: considering that the price of lithium salt may remain high, the self-sufficiency rate of lithium resources of the company will increase and the comprehensive cost is expected to be further reduced after bikita mine is put into operation, we raise the profit forecast of the company. It is expected that the company will realize net profit attributable to the parent company of 551 million yuan, 1507 million yuan and 2254 million yuan from 2021 to 2023, and the PE corresponding to the closing price on February 9 is 36 / 13 / 9x respectively, Maintain a “recommended” rating.
Risk tip: the sales volume of new energy vehicles is lower than expected, and the construction progress of self owned mine projects is lower than expected.
