\u3000\u3000 Zijin Mining Group Company Limited(601899) (601899)
Event: on February 23, 2022, the company announced the capacity improvement plan of kamoa kakula copper mine. Based on the commissioning of phase II project in April this year, it is planned to increase the design capacity of phase I and phase II concentrators from the original total ore processing capacity of 7.6 million tons / year to 9.2 million tons / year, and the annual copper output from the original 400000 tons to more than 450000 tons, becoming the fourth largest copper producing mine in the world.
The progress of the project continues to exceed expectations. The second phase is advanced to April for commissioning with materials, and the third phase is advancing rapidly. ① The 3.8 million T / a concentrator of kamoa kakula copper mine phase I started the production of copper concentrate at the end of May 2021 and has successfully operated for more than 8 months. The actual capacity of the concentrator is more than 22% higher than the design capacity, and the copper recovery rate is more than 87%, exceeding the design index of 85.6%. ② The second phase of the 3.8 million T / a concentrator construction project completed about 93% of the project by the end of January and was nearly completed by the end of February. At present, the preliminary commissioning work is being promoted. The loaded commissioning and the production of the first batch of copper concentrate are planned to be carried out in April 2022, several months ahead of the guidance target for the second quarter of 2022 set at the beginning of the year. ③ The design and preliminary work of phase III expansion project of kamoa kakula copper mine are also advancing rapidly. The processing scale of the third concentrator is larger, and it is planned to be put into operation in the fourth quarter of 2024; The updated pre feasibility study of kamoa kakula copper mine will cover the phase III expansion plan, which is expected to be released in the third quarter of 2022; The construction of phase III also includes the design of a smelter with an annual output of 500000 tons of crude copper.
Make full use of existing facilities to expand production and control capital expenditure. This capacity increase will make full use of the existing facilities of phase I and phase II projects, invest about US $50 million, and transform some pipelines and equipment under the condition of continuous production. The planned construction period is 12 months, and it is expected to reach production in the second quarter of 2023.
The former CEO retired after success, and the new handsome has profound qualifications. Mark Fallon, the former CEO of kamoa copper, will retire after the second phase of commissioning. On February 23, 2022, Ryan weimeilun was appointed as the new general manager of kamoa copper, with a term of office effective from June 1, 2022. Mr. Wei Meilun has more than 32 years of experience in underground and open-pit mining. At the same time, Mr. Zhang Xingxun, an equally experienced Zijin executive, was appointed as the executive deputy general manager. It is expected that kamoa mine will continue to create brilliance under the leadership of two new leaders.
In 2022, several projects of the company will contribute to the output increment. In the copper sector, the three world-class copper mines will contribute a large increment in 2022, of which kamoa plans to produce 290000-340000 tons of copper. By the end of January 2022, the surface of kamoa kakula copper mine has stored more than 4.4 million tons of ore, with a copper grade of 4.61%. According to our calculation, under the assumption of copper price (including tax) of 65000 yuan / ton, kamoa kakula, Timok and Julong copper mines may contribute net profit attributable to the parent company of 2.53 billion yuan, 7.47 billion yuan and 1.65 billion yuan respectively in 2022. In the gold sector, the large-scale production of multiple projects is expected to increase the annual output of gold by 12 tons and complete the annual production capacity planning.
Investment suggestion: the company is ushering in a new era of performance and valuation. The output guidance of copper and gold in 2022 is significantly higher than that in 21 years. The superimposed copper and gold price is expected to remain high. We continue to be optimistic about the realization of the company’s “alpha logic”. Maintaining the previous profit forecast, it is expected that the company will realize net profit attributable to the parent company of 15.6 billion yuan, 25.4 billion yuan and 26.8 billion yuan from 2021 to 2023. The PE corresponding to the closing price on February 23 is 18x, 11x and 10x, maintaining the “recommended” rating.
Risk tip: the project progress is not as expected, the price of copper and gold falls, geopolitical risks, etc
