Copper and gold, as metals with outstanding performance in the market, have always attracted much attention from the market. The performance report and performance briefing of Zijin Mining, a mining giant that owns copper and gold, have also attracted much attention.
Zijin Mining has received the attention of 5 brokerage research reports in the past month
As of 13:12 pm on March 27, Zijin Mining's share price was 15.79 yuan per share, up 1.67%. After experiencing record high gold prices and high copper prices, Zijin Mining hit a new high of 16.16 yuan per share since its listing on March 18.
After Zijin Mining announced its performance in 2023, five securities firms have released research reports on Zijin Mining in the past month. Goldman Sachs also raised Zijin Mining’s target price for Hong Kong stocks.
Debon Securities issued a research report on March 27, saying that it gave Zijin Mining a buy rating. The reasons for the rating mainly include: 1) Event: the company released its 2023 annual report; 2) Copper production using ore exceeded one million tons, and the output of major products increased across the board; 3) Metal prices divergence intensified, with copper and gold rising, and zinc prices falling significantly. Risk warning: Prices of gold, copper, lead, zinc, lithium and other metals have fallen sharply; renovation and expansion projects have failed to meet expectations, resulting in lower-than-expected output; exchange rate fluctuation risks.
Huafu Securities released a research report on March 25, giving Zijin Mining a buy rating. The main reasons for the rating include: 1) In 2023, the increase in mineral product production led to annual performance growth;2) The company's existing planned projects will bring at least 450,000 tons of copper and 30 tons of gold in production. Risk warning: Copper, gold and zinc prices are lower than expected, production capacity release is lower than expected, and overseas policies change.
Minsheng Securities issued a research report on March 25, saying that it gave Zijin Mining a recommendation rating. The reasons for the rating mainly include: 1) Event: The company released its 2023 annual report; 2) The company's main product output plan in 2024; 3) Core highlights: The three major copper mining clusters continue to bloom, and the lithium-molybdenum strategic metal sector creates a new growth curve. Risk warning: Project progress is less than expected, prices of copper, gold, lithium and other metals have fallen, geopolitical risks, exchange rate risks, etc.
Guosen Securities issued a research report on March 25, saying that it gave Zijin Mining a buy rating. The main reasons for the rating include: 1) The company released the core mineral product output target for 2024, while maintaining the core mineral product output guidance for 2025; 2) The global metal mining industry is facing changes and restructuring, and the company is striving to reach a new level in terms of scale and strength; 3) The company's new project construction is progressing in an orderly manner, and the rapid increase in the focus on new energy and new materials. Risk warning: The project construction progress does not meet expectations, and the sales price of mineral products does not meet expectations.
Huafu Securities issued a research report on March 20, saying that it gave Zijin Mining a buy rating and a target price of 20.48 yuan. The main reasons for the rating include: 1) From a resource perspective, Zijin Mining’s valuation is low and its flexibility is high; 2) From a cost perspective, Zijin Mining is on the left side of the cost curve and has a dominant profit per ton; 3) From a valuation perspective, Zijin Mining’s valuation is low; 4) Key assumptions of investment requirements; 5) Our perspective that is different from the market; 6) Catalytic factors for stock price increases. Risk warning: Copper and gold prices are lower than expected, production capacity release is lower than expected, and there are risks of changes in overseas policies.
In addition to the research reports from five brokerages, Goldman Sachs raised the target price of Zijin Mining from HK$17.5 to HK$19 on March 25, maintaining a "buy" rating and raising the group's profit forecast for this year and next by 3% to 9%.
The upward trend in overseas costs will be effectively curbed from 2024, which is promoting cost reduction and process improvement of lithium projects.
Zijin Mining held its 2023 performance briefing on March 25.
Chen Jinghe, chairman of Zijin Mining, said at the 2023 annual performance briefing on March 25 that starting from 2023, the company will attach great importance to overseas operations and management. Starting from 2024, the company's rising overseas cost trend will be effectively curbed. In recent years, the unit costs and ore costs of almost all mining companies in the world have increased, and the increase has been rapid, reaching about 20%. The costs of Zijin Mining are also on the rise. Through cost control in 2023, the company's costs have begun to decline domestically, while the rising cost trend of overseas enterprises has not been fundamentally curbed. Therefore, the company's gold and copper output increased significantly in 2023, but profits did not increase simultaneously.
Zijin Mining President Zou Laichang said at the 2023 annual performance briefing on March 25 that the company will unswervingly promote the development of the lithium industry. Recently, the company has been making every effort to reduce project construction costs and research and improve project process technology.
Performance indicators hit a record high, with net profit increasing by 5.38% in 2023
Zijin Mining's 2023 performance report shows: operating income in 2023 was approximately 293.403 billion yuan, a year-on-year increase of 8.54%; net profit attributable to shareholders of listed companies was approximately 21.119 billion yuan, a year-on-year increase of 5.38%; basic earnings per share was 0.8 yuan, a year-on-year increase of 5.26%. The company's annual profit distribution plan for 2023 is: it plans to distribute 2 yuan (including tax) to all shareholders for every 10 shares. As for the reason for the increase in operating income, Zijin Mining said that it was mainly due to the increase in sales volume. The group's comprehensive gross profit margin was 15.81%. If smelting and processing products are excluded, the gross profit margin of mineral products was 49.09%, a year-on-year decrease of 5.20 percentage points. The main reason for the decrease in gross profit margin of mineral products is the increase in costs.
Zijin Mining explained its main business by industry, product, and region: About 79% of the company's operating income came from customers in mainland China, of which 32.27% came from the Shanghai Gold Exchange. Therefore, it is impossible to segment customers by region within the country.
In 2023, both copper and gold output ranked first among domestic listed mining companies, with 1.0073 million tons of copper produced with ore and 67.7 tons of gold produced with ore.
Zijin Mining's 2023 annual report shows that in 2023, major economic indicators, mineral product resources, and output increased, ranking first in China and among the top 10 in the world. It produced 1.0073 million tons of copper using ore, 67.73 tons of gold using ore, 467,000 tons of zinc (lead) using ore, and 412 tons of silver using ore, a year-on-year increase of 11.13%, 20.17%, 2.89%, and 4.09% respectively. The equivalent of lithium carbonate increased 2,903 tons.
►Copper
In 2023, the company achieved a historic breakthrough in copper production using ore, becoming the only mining company in China and Asia with copper production using ore exceeding one million tons, ranking among the top five in the world. During the reporting period, the company's mines produced 1,007,290 tons of copper, a year-on-year increase of 11.13%; the company's smelting output was 724,550 tons of copper, a year-on-year increase of 4.88% (the same period last year: 690,849 tons). According to data from the China Nonferrous Metals Industry Association, China's mines’ output of copper was 1.619 million tons in 2023, and the company's output was equivalent to about 62% of China's total. During the reporting period, the sales revenue of the copper business accounted for 25.21% of the operating revenue during the reporting period (after elimination), and the gross profit accounted for 47.19% of the group's gross profit.
►Gold
Zijin Mining said: In 2023, the company's gold resources and production capacity ranked first among major listed mining companies in China and Asia, and among the top ten in the world. In 2023, the year-on-year growth exceeded 20%, and the growth rate ranked among the top gold companies in the world. During the reporting period, the company's mines produced 67,726 kilograms (2,177,426 ounces) of gold, a year-on-year increase of 20.17% (same period last year: 56,361 kilograms) ; smelting, processing and trading gold was 249,519 kilograms (8,022,215 ounces), a year-on-year decrease of 3.49% (same period last year: 258,550 kilograms). According to data from the China Gold Association, China's mines’ gold output was 297.3 tons in 2023, and the company's mine gold output was equivalent to about 23% of China's total. During the reporting period, gold business sales revenue accounted for 42.09% of the operating revenue during the reporting period (after elimination), and gross profit accounted for 25.35% of the group's gross profit. (1 ounce = 31.1035 grams)
►Zinc (lead)
Zijin Mining's 2023 annual report shows that the company is China's first, Asia's second, and the world's top four zinc producer using ore, with significant low-grade zinc (lead) mine development and profitability. During the reporting period, the company's zinc (lead) sector's production capacity maintained growth, and Zijin Zinc's production expansion and technological transformation reached full capacity. During the reporting period, the company's mines produced zinc concentrate containing 421,852 tons of zinc, a year-on-year increase of 2.24%; smelted 333,081 tons of zinc ingots, a year-on-year increase of 4.59%. The lead concentrate produced contained 45,174 tons of lead, a year-on-year increase of 9.32%. During the reporting period, the sales revenue of the zinc (lead) business accounted for 3.54% of the operating revenue during the reporting period (after elimination), and the gross profit accounted for 3.38% of the group's gross profit.
►Lithium
Zijin Mining's 2023 annual report shows that the company has world-class lithium resource reserves and plans to develop a lithium carbonate production capacity of 120,000-150,000 tons equivalent by 2025. In the future, it will become one of the most influential lithium companies in the world. During the reporting period, the company produced 2,903 tons of equivalent lithium carbonate. The company's lithium project acquisition and operating costs are generally low. It has established a "lithium industry leadership group" to focus on tracking and researching the lithium market conditions, and correspondingly adjust and optimize construction planning and layout, process cost optimization and financing and trade, etc., to improve the lithium sector's ability to resist risks.
►Silver, iron, molybdenum, tungsten, cobalt, sulphuric acid, etc.
Zijin Mining's 2023 annual report shows that the company leads China in mineral silver production and is an important iron ore concentrate, molybdenum, cobalt ore and by-product sulphuric acid production enterprise in China. During the reporting period, 1,049,622 kilograms of silver were produced, a year-on-year decrease of 4.35%. Smelting by-product silver 637,628 kilograms, a year-on-year decrease of 9.11%; mine-produced silver 411,993 kilograms, a year-on-year increase of 4.09%. It produced 2.42 million tons of iron concentrate, a year-on-year decrease of 27.72%. The company’s mines produced 8,124 tons of molybdenum, 3,571 tons of tungsten, and 2,306 tons of cobalt; the by-product sulphuric acid output of copper, zinc and gold smelters was 3,370,367 tons, a year-on-year increase of 11.49%. During the reporting period, sales revenue from silver, iron ore and other products accounted for 29.16% of the operating revenue during the reporting period (after elimination), and gross profit accounted for 24.08% of the group's gross profit.
The retained resources are about 74.5565 million tons of copper, about 2997.53 tons of gold, and more than 10.6777 million tons of zinc (lead). The equivalent of lithium carbonate is 13.4659 million tons.
Zijin Mining’s annual report shows that as of December 31, 2023, the company retained proven, controlled and inferred resources (equity method): 74.5565 million tons of copper, 2,997.53 tons of gold, 10,677,700 tons of zinc (lead), 14,739.29 tons of silver,13,465,900 tons of lithium resources (equivalent to lithium carbonate); proven and credible reserves were: 33,398,100 tons of copper, accounting for 45% of the total resources; 1,148.49 tons of gold, accounting for 38% of the total; 4.6992 million tons of zinc (lead) , accounting for 44% of the total resources; silver 1,863.89 tons, accounting for 13% of the total resources (mainly associated minerals); 4.4265 million tons of lithium reserves (equivalent to lithium carbonate), accounting for 33% of the total resources.
Plans and Outlook for 2024
Strategy
Zijin Mining's 2023 annual report shows: During the reporting period, the company released the "Three-Year (2023-2025) Plan and 2030 Development Goal Outline", "Three-Year (2023-2025) Work Guidance", "Climate Change Action Plan" and " Zijin Cultural Concept System Revised Plan" and other development programmatic documents plan to build a "green high-tech first-class international mining group" by 2030 and a grand blueprint of "green high-tech super-first-class international mining group" by 2040. The company will strive to achieve the goal of "green high-tech first-class international mining group" two years in advance, that is, in 2028.
►The company’s main mineral product output plan in 2024
Zijin Mining's 2023 annual report shows that the main mineral product output plans for 2024 are: 1.11 million tons of copper, 73.5 tons of gold from ore, 470,000 tons of zinc (lead) from ore, 25,000 tons of equivalent lithium carbonate, 420 tons of silver from ore, and 9,000 tons of molybdenum from ore.
Zijin Mining said: The company anchors the 2025 strategic planning stage goals and the new "Five-Year Plan" growth goals, and strives to complete the production and operation plan indicators; it will conduct low-cost mergers and acquisitions and independent geological exploration globally in a timely manner, and give priority to mergers and acquisitions of super companies with global influence. Large-scale mines or mining companies strive to achieve continuous expansion of main mineral resources, production capacity and benefit scale.
The main products of copper and gold will maintain high yield and increase efficiency. Contribution of Julong Copper Mine Phase II and Juno Copper Mine, Kamoa Copper Mine Phase III and smelter, the lower ore belt of Čukaru Peki Copper-Gold Mine and JM Copper Mine; the Zijinshan copper-gold mine, Duobaoshan Copper, and Ashele Copper have achieved stable and high yields; they have accelerated the research and construction of caving mining projects and the release of production capacity.
Grasp the industry trend, vigorously control costs, and accurately determine the construction and operation methods of the "two lakes and two mines" lithium projects; the Daoxian hard rock lithium mine, Laguotso Salt Lake lithium mine, and the 3Q Salt Lake lithium mine are put into production in a timely manner, and the second phase of the construction is started. Promote the progress of exploration, development and supporting infrastructure in the northeastern part of the Manono Lithium Mine, and realize the realization of world-class lithium resources and efficiency improvement as soon as possible.
Increase the synergy of other minerals such as silver, zinc (lead), molybdenum, cobalt, iron, etc.; accelerate the construction and development of the single molybdenum mine with the world's largest reserves in Jinzhai, Anhui, and cooperate with the molybdenum resources of Julong Copper Mine and Duobaoshan Copper Mine to join forces, making the company the world's most important molybdenum production enterprise.
►Review and prospects for the market outlook
With regard to the industry situation, Zijin Mining stated in its 2023 annual report: In 2023, global nonferrous metal price differentiation intensified. Driven by factors such as geopolitical conflicts and rising expectations for a Federal Reserve interest rate cut, gold prices continued to be strong and hit a new record high. Copper prices were relatively strong due to continued strong demand for new energy sources and frequent supply disturbances; zinc prices were dragged down by the decline in traditional demand such as Chinese real estate, with prices falling significantly.
Gold: Zijin Mining stated in its annual report that geopolitical conflicts occurred frequently, global economic growth is sluggish, fiscal and monetary policies are “easing", and the demand for safe assets in major economies has increased significantly. IMF data shows that the average gold foreign exchange reserves of emerging economies is about 7%, which is far lower than the 17% of developed economies. At present, the proportion of emerging economies in the global economy continues to increase, and the scale of foreign exchange reserves has increased accordingly. Gold has become one of the main allocation directions for the central bank's incremental reserves, providing strong support for gold prices. In 2024, the Federal Reserve's monetary policy is likely to turn easy. There is uncertainty about the speed and extent of Fed interest rate cuts, and the "swing" of interest rate cuts will drive gold prices to fluctuate. If U.S. economic data continues to be strong, the possibility of a "soft landing" or "no landing" for the U.S. economy will increase, which may limit the room for gold prices to rise.
Copper: Zijin Mining believes in its annual report that the global monetary environment is turning easy, and the market expects that the Federal Reserve may cut interest rates in 2024. China's economic recovery has received two-way support from fiscal and monetary policies, and macroscopically defines a wide range for copper price fluctuations. From a fundamental perspective, the uncertainty of global copper concentrate supply is intensifying, technical operations are becoming more difficult, community conflicts tend to increase, and environmental and water resources issues are prominent. At the beginning of 2024, many of the world's leading mining companies lowered their production plans, which had an impact on the short-term market. The copper concentrate TCs index fell rapidly, and some smelters faced shortages of raw material supply. On the demand side, the dawn of emerging fields has emerged, while traditional fields still need to be stimulated. The energy transformation goal supports the rapid growth of power demand, driven by the demand for new quality productivity. New infrastructure projects are constantly being planned, but residential consumption is related Demand for traditional mainstays such as automobiles and real estate needs to increase; overseas related demand has fallen with the economic downturn in Europe and the United States. Overall, copper prices will still fluctuate widely in 2024. The main theme of trading comes from marginal adjustments caused by supply disruptions from overseas mines. At the same time, the domestic consumption rhythm and the shift in Federal Reserve policy constitute triggering events for copper price fluctuations. We should pay close attention to the LME on a micro level. and the change level of inventory in the previous period.
Zinc: Regarding zinc, Zijin Mining said: In 2024, due to the impact of low prices and inflationary pressures, mining-end profits may be further compressed. It is expected that high-cost mines will reduce and suspend production and projects under construction will be delayed in production. Global zinc concentrate supply On the tight side. Although some European smelters have resumed production and new domestic smelting capacity has been put into operation, the shortage of raw materials and insufficient processing fees mean that the increase in zinc ingot supply is expected to be relatively cautious. China's economy is on a stable and upward trend, and loose fiscal policies are helping to support infrastructure; under the interest rate cut cycle, overseas consumption margins have improved, and overall demand has further moderately recovered. The zinc market will still tend to be in a tight balance in 2024, and the costs of mining companies support the bottom of zinc prices. , zinc prices are expected to fluctuate and rise slightly.
Lithium: Regarding lithium, Zijin Mining said: 2023 will be a watershed year for the lithium industry. Lithium will transition from a "small metal" to a "big metal". Global demand will exceed 1 million tons and the output value will exceed 40 billion US dollars, surpassing industrial metals such as zinc. . As the price of lithium adjusts from a high of 600,000 yuan/ton to 100,000 yuan/ton, resource supply is gradually released, the midstream bubble of lithium batteries is squeezed, the demand for new energy vehicles stabilizes, and the lithium industry is rebalancing after experiencing extreme emotions. The long-term demand for lithium has ample momentum, and global lithium demand is expected to increase to more than 3 million tons by 2030. In the short term, the lithium market will enter a relatively stable period. Although the digital surplus on paper still exists, the self-regulation ability of this round of lithium supply is obviously strong. There are many high-quality lithium resource projects that have started to reduce or slow down production in advance to implement price guarantees. Therefore, this round of upstream capacity clearing cycle may be lengthened, and lithium prices will be highly sticky at the level of 100,000 yuan/ton. 2024 is a super election year in some countries around the world. The great power game over energy and metal resources may continue, which will put potential pressure on companies in the new energy industry chain. In this round of capacity clearance cycle, capabilities such as cost control and supply chain management will be particularly critical.
