SMM News: the sensitivity of industrial capital is often ahead of the secondary market. Recently, precious metals represented by gold and cobalt prices have begun to rebound strongly or even reverse. Prior to this, some listed companies have foresight to buy minerals, when commodity prices fall below the cost of mining, mergers and acquisitions against the trend, which not only needs courage and foresight, but also needs strength and luck.
According to the statistics of the Shanghai Stock Exchange, since June, only two months, A-share listed companies mergers and acquisitions of mineral assets have occurred more than ten. If the timeline is lengthened, a group of foresight listed companies have already quietly hoarded mines at low levels, and now their resource reserves have risen in value as the metal price cycle reverses.
Jiangxi Copper: "Best bottom copy" Hengbang shares
Gold prices hit a record high on the 13th, with London gold reaching a peak of $1535.03 an ounce, one step closer to its 2011 high. In industrial capital, who copied the bottom of the gold price?
From 2019 to the present, Jiangxi copper industry is the most abundant in gold content. In March this year, the company invested 2.976 billion yuan to transfer 29.99 per cent of Hengbang shares and became a major shareholder in Hengbang shares. The latter is a listed company with gold reserves. Hengbang shares reported in 2018 disclosed that the company's proven gold reserves totaled about 112.01 tons, based on the latest gold price of about 346.8 yuan / gram, and Jiangxi Copper holding 29.99 per cent stake in Hengbang shares, Jiangxi Copper has an additional gold reserve of about 11.717 billion yuan.
Hengbang shares not only have ore, but also smelting level is good. According to Shen Wanhong Yuan Research Daily, the company has a special method of smelting gold to recover copper and rare metals, requires lower purity of raw materials, and the procurement cost of raw materials is 6% to 7% lower than that of its peers. If only special methods are considered to smelt gold, the gross profit margin of the business can reach 23% in 2018.
Today, Hengbang shares will become the development platform of the future gold plate of Jiangxi Copper, which is expected to be injected into the gold plate assets of Jiangxi Copper and its controlling shareholders. In this way, the bottleneck of Hengbang shares constrained by ore resources should be broken. Jiangxi Copper this time "A eat A" also left enough imagination space for the future.
Pengxin resources: the reserves of Oni gold deposit alone are worth 174 billion yuan
Unlike Jiangxi Copper, which accurately copied the bottom at the start of the gold price, Pengxin Resources copied the gold mine earlier and successfully acquired Oni Gold Mine, which is owned by major shareholders, at a cost of $15.1 billion in 2018.
It is disclosed that Ooni Gold Mine has reserves of 71.31 million tons of ore, 501.74 tons of gold and metal, with an average grade of 7.04 grams per ton. If all the gold metal volume of Oni Gold Mine is converted into RMB at the latest gold price, its metal reserves are worth as much as 174 billion yuan, which is about 35 billion yuan higher than when the company bought it (based on the company's daily gold price).
In addition, the company also owns the Huturu mine in the Democratic Republic of the Congo (DRC), with a metal inventory of 3.89 million tons, of which copper reserves are about 154000 tons and cobalt reserves are about 9400 tons.
In the nickel mine, Pengxin resources also have a layout. According to the company's annual report, the company has obtained high-quality nickel resources through investment in Clean TeQ. Clean TeQ's Sunrise Ni-Co-SC project is one of the few large Ni-Co deposits that can achieve mass production.
In July this year, Pengxin Resources paid another 204 million yuan for a 51 per cent stake in Xueyin Mining, which has proven and controlled 65.26 million tons of copper, zinc, tungsten, sulfur, iron and other recoverable ore reserves.
Shengtun Mining Industry: hoarding around intensively
Mining companies with the same appetite as Pengxin resources, as well as Shengtun Mining. In the past three years, the company has made a series of efforts to obtain nickel, copper, cobalt and other precious metal resources, and the company's metal reserves have increased significantly. According to incomplete statistics of the reporter, in 2016, for the purpose of receiving mines, the cumulative investment amount has reached nearly 2.2 billion yuan (excluding targeted additional projects). In addition, the company has also invested in a number of metal smelting projects in mineral-rich areas at home and abroad.
With the sharp fall in the price of non-ferrous metals in 2019, the company opened a large investment, in February this year, the company paid 546 million yuan to acquire a copper and cobalt mine in the Congo, adding 302000 tons of copper reserves and 42700 tons of cobalt. In August this year, the company invested another 1 billion yuan in nickel mining projects.
Spurred by news of the shutdown of the largest nickel mine in the Philippines, nickel prices hit their highest level since April 2018. The Youshan nickel industry, which is invested by Shengtun Mining, plans to invest in Indonesia to produce 34000 tons of nickel metal and high ice nickel project, with a total investment of US $407 million. According to the proportion of equity, the company invested US $145 million, equivalent to 1.024 billion yuan.
"the investment chain of the non-ferrous metals industry is dumbbell, and the costs and benefits of mining and deep processing are the greatest," said senior executives of some mining companies. "Mineral reserves do not necessarily mean that they can be fully exploited in the short term, but the reserves can reflect the value of the deposit to a certain extent, and it is also the potential value of the company."
The bottom of industrial capital is at the right time.
Heavy assets and dense funds are the common features of mining-related enterprises and are extremely sensitive to product prices. Therefore, it is very important to set foot on the right pace and prepare enough funds.
An executive of a listed mining company told reporters in detail the management thinking of large mining enterprises: "the company will first make a prediction of the industrial cycle, before the industrial trough comes, will appropriately reduce investment, and return the capital, when the tide of price reduction of major products hit, hold the initiative in their own hands."
On the other hand, those small-scale mining enterprises that touch the wrong cycle, in the face of low prices, when the shipping cycle is prolonged, capital is often difficult to turn around. Send charcoal in the snow, or take advantage of the fire? The company executives told reporters: "there is an invisible game between the industry, at this time to sell the company's equity, mineral resources, mining rights, and so on, sometimes not the original intention of the enterprise, and even some entrepreneurs are very reluctant to sell, but the trough is coming, survival is the way." However, for large enterprises with relatively abundant funds, the acquisition at this time will not only buy cheaply, the balance of negotiations will also be biased to their own side, and even package transactions will be carried out, and the inventory and mining rights of some of the underlying assets will also be transferred at a discount. "
According to the company executives, mining companies go through a cycle, is a big wave of sand, especially in recent years environmental verification has become more stringent, ore grade decline, to the mining, smelting costs of enterprises have brought no small impact, this cycle of the race is more brutal than ever. The future is that the remnant is king and the great is king.
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