JCHX: Subsidiary Signs a $21.5 Million Zambia Mine Engineering Contract

JCHX Mining Management Co., Ltd. announced on the evening of March 25 that its wholly-owned subsidiary, JCHX Mining Construction Zambia Limited, recently reached an agreement with Mopani Copper Mine Plc on the infrastructure and support engineering for the Mufulira Mine in Zambia. The main details are as follows:

Project and Agreement Overview

1. Project Name: Infrastructure and Support Engineering for the Mufulira Mine of Mopani Copper Mine Plc 2. Project Location: Mufulira Mining Area, Zambia

3. Scope of Work: Includes the construction of the 500ml-430ml ramp, 1,507ml-1,530ml ramp, 1,530ml-1,630ml conveyor ramp, 1,630ml main crusher access tunnel, 1,630ml crusher chamber, 1,507ml workshop, and 1,557ml pump room.

4. Contract Duration: 28 months, starting from January 30, 2025.

5. Contract Price: This is a unit price contract, with an estimated total value of approximately $21.5 million (excluding VAT), subject to final verification based on actual completed work and settlement.

6. Contract Parties

Owner: Mopani Copper Mine Plc. There is no affiliation between the company, its subsidiaries, and Mopani Copper Mine Plc.

Contractor: JCHX Mining Construction Zambia Limited, a wholly-owned subsidiary of the company.

Regarding the impact of the contract on the listed company, JCHX stated: 1. The above contract is part of the company's routine operations and will have a certain impact on the company's performance, promoting future business development. 2. The transaction follows fair and just market pricing principles, does not harm the interests of the listed company or its shareholders, and aligns with the company's actual operational development needs. 3. The execution of the above contract will not affect the company's business independence, nor will it create dependency on the counterparty.

JCHX previously released a monthly summary of investor relations activities on March 3, 2025, which showed:

1. Investment and Construction Status of the Lonshi Copper Mine East Area

JCHX responded: On January 19, 2025, the company announced the "Announcement on the Investment and Construction of the Lonshi Copper Mine East Area Mining and Beneficiation Project" and the "Feasibility Study for the Lonshi Copper Mine East Area Mining and Beneficiation Project in the DRC," disclosing details on the mining method, production scale, infrastructure plan, service life, investment estimation, and economic benefits.

The east area is designed for underground mining with a planned mining scale of 2.5-3.5 million mt/year, a construction period of 4.5 years, and full production achieved in the 4th year, with a total service life of 12 years. To balance the service life of the east and west areas, the west area will gradually reduce production as the east area comes online, with a combined maximum ore output of 4.5 million mt/year. After full production, the combined annual copper metal output of the east and west areas will be approximately 100,000 mt.

This investment still requires approval/filing from government departments or authorized agencies, including but not limited to the DRC and Chinese governments or their authorized departments, and there is still some uncertainty regarding related matters.

2. Lubambe Copper Mine Project Status

JCHX responded: According to the "Feasibility Study for the Lubambe Copper Mine Mining and Beneficiation Project in Zambia" released by the company in January 2024, the company will carry out technological transformation of the entire mine system from 2024 to 2026, enabling the mine to achieve full production. Specific details on mine resources, technological transformation plans, and economic benefit analysis can be found in the feasibility study.

After taking over the Lubambe Copper Mine on June 19, 2024, the company began a comprehensive review of the mine's systems and conducted research on identified technical issues.

The company released the "Announcement on the Completion of the Lubambe Copper Mine Transaction" in July 2024, completing the equity transfer and acquiring 80% of LCML's shares.

3. Progress of the San Matias Project in Colombia

JCHX responded: The feasibility study for the Alacran copper-gold-silver mine in the San Matias project has been completed, and the environmental impact assessment has been submitted to the National Environmental Licensing Authority (ANLA) of Colombia for approval. The project has not yet entered the construction phase and will proceed only after the EIA is approved.

4. Does the fluctuation of resource varieties and their prices affect the pricing of mining services?

JCHX responded: The pricing model for mining services is cost-plus, based on the resource endowment and technical difficulty of mining projects, with reference to industry-standard operational efficiency and costs. Generally, it is not linked to the prices of mineral resources.

5. What are the company's core competencies?

JCHX responded: The comprehensive capabilities of a mining service provider directly impact the operational results and profitability of a mine, so owners are very cautious in selecting service providers. The company has deep expertise in the mining service industry, accumulating rich experience in R&D, construction technology, backfilling technology, deep resource development, equipment and maintenance integration, and project management. By systematically applying these capabilities and experiences, the company ensures safe, high-quality, and rapid mine commissioning, shortens construction cycles, and saves construction investment, which are the core competencies of the company as a mining service provider. The company has also gained widespread recognition from owners for its excellent execution and service quality, building a strong reputation in the industry.

6. What is the upstream and downstream relationship and outsourcing level of the company's mining service business?

JCHX responded: A mine goes through stages from exploration, planning and design, construction, mining production, beneficiation, to smelting. The company's traditional strengths lie in the construction and mining stages. Exploration is mostly conducted by specialized exploration companies, while planning, design, construction, and mining production have a high level of outsourcing (except for open-pit mining), and beneficiation and smelting have a lower level of outsourcing.

7. Target Customer Selection for Mining Services

JCHX responded: The company targets "large markets, large owners, and large projects," serving "strong owners and well-known mines." After years of market development, the company has formed a stable customer base represented by central state-owned enterprises, local state-owned enterprises, publicly listed firms, and internationally renowned mining companies.

8. Views on Future Copper Price Trends

JCHX responded: From 2024 and in the near future, with the decline in global copper mine grades and sustained low capital expenditures, copper supply is expected to be constrained. Meanwhile, global new energy sectors and infrastructure construction in some emerging markets may generate sustained demand for copper. The interaction of these factors will support the medium and long-term trend of copper prices.

9. Progress in Mechanization and Unmanned Mining

JCHX responded: The company is a pioneer in advocating for mechanized operations of underground trackless equipment, replacing manual labor with mechanized production and reducing underground operations through automated control, implementing the safety concept of "no people, no danger; fewer people, less danger," improving operational efficiency, and addressing labor shortages caused by declining demographic dividends.

In terms of underground unmanned intelligent mining, the company aligns with industry trends, placing significant emphasis on the R&D of intelligent mining systems and continuously optimizing and improving the intelligent control systems for underground loaders.

10. Are there plans to acquire more mines?

JCHX responded: At this stage, we believe that increasing reserves through exploration is a more economical way to acquire resources. In the long term, we will focus on copper and precious metals, with project scales matching the company's size.

JCHX announced on the evening of February 19 that the company recently signed a contract with Hainan Mining Co., Ltd. for the 2025 mining production work. Contract Price: This is a comprehensive unit price contract, with an estimated total value of approximately 129.2 million yuan, subject to final verification based on actual completed work and settlement.

JCHX announced on the evening of January 20 that, based on preliminary financial estimates, the company expects to achieve a net profit attributable to shareholders of 1.53 billion yuan to 1.62 billion yuan in 2024, an increase of 498.7727 million yuan to 588.7727 million yuan YoY, up 48.37% to 57.09%. The company expects to achieve a net profit attributable to shareholders after deducting non-recurring gains and losses of 1.5187 billion yuan to 1.6087 billion yuan in 2024, an increase of 490.6337 million yuan to 580.6337 million yuan YoY, up 47.72% to 56.48%. The company's performance increase is mainly attributed to the development of mining resources and the improvement of production efficiency in various mining projects.

A research report by Minsheng Securities pointed out: The company released the "Feasibility Study for the Lonshi Copper Mine East Area Mining and Beneficiation Project in the DRC" and the "Announcement on the Investment and Construction of the Lonshi Copper Mine East Area Mining and Beneficiation Project." The east area has identified resources of 1.0395 million mt, and the Lonshi Mine's copper resources have reached 1.89 million mt. The west area is currently at full production, and the Lonshi Mine will achieve an annual copper output of 100,000 mt in the future. The total investment is $751 million, with a construction period of 4.5 years, and full production will be achieved in the 4th year after the mine is operational. The full cost in the east area feasibility study is $4,949/mt (metal content), and the actual cost is expected to be lower. Key highlights: ① The mining service sector is steadily growing, with high-margin overseas business expanding continuously, and its revenue share is increasing. ② Resource-side performance is expected to continue to materialize. As the Lonshi Mine west area ramps up to full production, D Mine sales return to normal, and Guizhou phosphate ore production increases, the company's resource side is entering a phase of volume growth. Additionally, the exploration rights for the Lonshi Mine, the subsequent development and construction of the San Matias project, and the technological transformation of the Lubambe Copper Mine all have significant potential, indicating strong growth prospects for the company. Investment recommendation: Driven by both mining services and resource development, the resource side is entering a phase of rapid development. Risk warnings: Decline in prices of major products such as copper, slowdown in mining service growth, geopolitical risks, etc.