Jchx Mining Management Co.Ltd(603979) (603979)
Event: on December 17, 2021, the company announced the completion and operation of the mining and beneficiation project of dikulushi copper mine in the Democratic Republic of the Congo. The mining and beneficiation project has completed all work during the construction period and officially entered the production stage on December 17. According to the production plan, dikulushi copper mine is expected to process about 150000 tons of ore and 10000 tons of copper metal per year in 2022.
Dikulushi copper mine will resume production in a short period of time, and the production time is in line with expectations. At the end of 2020, the company completed the delivery of mining rights and related assets of dikulushi copper mine with us $2.75 million as the transaction consideration, and then resumed the production of mining and beneficiation project. The production resumption period of the project is only 12 months: in the first half of 2021, the project continued to promote the early-stage on-site drainage, concentrator recovery, Congo workers’ training, geological survey and commissioning preparation. During the period, the book value of the project under construction of dikulushi copper mine resumed production increased by 58 million yuan to 81 million yuan; After entering the fourth quarter, the preparation work was basically completed. On October 22, the mine concentrator passed the full load test run of the whole process on the 3rd, and it was announced that it was officially put into operation on December 17. The overall production progress was in line with expectations.
The project is expected to bring copper production for 8 years and contribute to the year-on-year increment of performance in 2022. Dikulushi copper resources are about 80000 tons and 192 tons of silver, of which the copper grade of pe606 deposit is 6.31%. The annual output of copper metal is about 10000 tons in 2022, and the mining and beneficiation project is expected to steadily contribute to the output of copper metal in the next 8 years; Based on the calculation of the average spot settlement price of copper of US $928286 / ton in 2021, it is estimated that the revenue contributed by copper in 2022 will be about US $92.8286 million, equivalent to RMB 592 million (converted according to the real-time exchange rate). If the full cost of a single ton is US $4000, the project can contribute about 201 million yuan of net profit per year, accounting for 55.1% of the company’s net profit in 2020.
Dikulushi copper mine was put into operation and started the company’s resource business for the first time. The dual track operation of “mining clothing + resources” is getting better and better. Dikulushi copper mine is the first project put into operation among the company’s four mines, which is the first stop of the company’s “mining clothes + resources” business layout. The following three mines are expected to gradually develop: 1) lonshi copper mine: the company holds 100% equity, and the mining right resource is about 870000 tons of copper, with an average grade of 2.82%. It is expected to be completed and put into operation by the end of 2023, with an annual output of about 40000 tons of metal copper after reaching the production capacity, and the mining cycle under the existing resources is 20 years; 2) Guizhou Liangchahe Phosphate Mine: the company holds 90% equity, the mining right resources amount to 21.3341 million tons of phosphate ore, and the grade of phosphorus pentoxide reaches 32.5%. It can be directly sold as chemicals without beneficiation. It is expected to start construction at the end of 2021, be completed and put into operation in 2024, and the mining life is about 21 years; 3) Sanmatias: the controlling shareholder is Ivanhoe, and the company shares 19.995%. According to the preliminary economic assessment of Cordoba in July 2019, the existing copper controlled resources are 518300 tons, with an average grade of 0.45%. After the project is completed, the daily ore processing capacity can reach 16000 tons, corresponding to the company’s equity output of about 4200 tons of copper metal.
Investment suggestion: the company’s mining service business is expected to maintain long-term growth after successfully exploring the overseas market, and its existing resources are expected to gradually realize the mineral value in the next three years. We expect that the company’s net profit attributable to the parent company from 2021 to 2023 will reach 468 million, 818 million and 1135 million yuan, corresponding to pe2.7 billion yuan 5. 15.7 and 11.3 times, maintaining the “buy” rating.
Risk tips: overseas political and economic environment risks; Resource risk; External collaboration risk; Market risk; Exchange rate fluctuation risk; Risk of performance not meeting expectations.
