[hot stocks] Oriental zirconium industry rose by the daily limit for two days in a row! Acceleration of resource development & continuous expansion of production capacity

Today, the eastern zirconium industry rose by the daily limit in the afternoon. Since the beginning of this week, the oriental zirconium industry has achieved two consecutive limit boards, and its share price has risen to a high in early August 2020. It is reported that on the evening of June 21, Oriental Zirconium Industry announcement disclosed two announcements to promote the Australian zirconium mine project: one is to restart the Mingrui zirconium industry Mindarie project; the other is to set up a joint venture with Hong Kong Baisheng Co., Ltd. to promote the progress of the WIM150 project.

"on the restart of Mingrui zirconium industry Mindarie project" notice pointed out that the name of the project is Australia Mingrui Zirconium Industry Co., Ltd. Mindarie Project (referred to as "Mingrui Zirconium Industry Mindarie Project"), the construction site is South Australia, and the investment budget is A $2000-26 million (equivalent to about RMB 97.26 million-126.44 million).

It is reported that Guangdong Oriental Zirconium Industry Technology Co., Ltd. entered the Australian mining market in 2009 and began to investigate. After screening all Australian zirconium and titanium resources, it locked in the Mindarie (Mingdali) project of AustralianZirconNL (Australian Zirconium Industry Co., Ltd., AZC)). The Mindarie project was put into production in 2006 and stopped production in 2008 during the international financial crisis. Oriental Zirconium completed the acquisition of the Mingdali project in October 2010 and formed a Mingrui zirconium industry team in early 2011 to restart the Mingdali project.

In 2012, the market price of zircon sand rose to $2500 / ton, but in 2015, the price of zircon sand fell to $9000.After completing the mining of the MindarieC vein, the primary plant needed to be moved to the Mercunda mining area several kilometers away, and the company decided that the project would go into a state of shutdown and maintenance according to the market conditions at that time. Mingrui zirconium industry meets the JORC (2012) standard total resources of 240 million tons, with an average grade of 3.1%. The average JORC standard reserves are 48 million tons, with an average grade of 3.7%.

The company points out that the Mindarie project of Mingrui Zirconium Industry has a solid foundation. Under the current coverage of mining rights, there are still 6 ore belts available for mining. Based on the annual output of 125000 tons of heavy minerals, the remaining exploitable life is 7-10 years. In the current market situation, after the resumption of the Mingrui zirconium industry Mindarie project, the estimated gross profit margin of the project will meet the conditions set by the company to restart the project.

The announcement on the establishment of a joint venture with Hong Kong Baisheng Co., Ltd. pointed out that in order to promote the progress of the WIM150 project, integrate effective overseas resources and broaden overseas financing channels, Guangdong Dongfang Zirconium Technology Co., Ltd. agreed to set up a joint venture subsidiary between Australia East Zirconium Resources Co., Ltd. and Hong Kong Baisheng Co., Ltd. Among them, Australia's East Zirconium holds a 20% stake in the newly established company, while Hong Kong Baisheng holds an 80% stake in the newly established company.

It is reported that Australian East Zirconium acquired 20 per cent of the WIM150 project from Austpac in November 2012 (another 50 per cent of the project is underwritten), and the remaining 80 per cent of the project is owned by Hong Kong Parkson. At present, the two sides are working together through a "non-corporate joint venture". After consultation between the two parties, it is proposed to invest with their respective rights and interests in the WIM150 project to jointly establish an independent legal person company and install the WIM150 project into the new company. The two parties will still hold 20% and 80% of the shares respectively in accordance with the interests agreed in the original joint venture contract, and East Zirconium Australia still has 50% of the product underwriting rights. After the establishment of the new company, the WIM150 mining project can be financed by introducing new investors, IPO listing, cooperative construction or loans, but it does not need to be funded by both existing joint ventures and finally put the project into production.

According to the announcement, the WIM150 zirconium-titanium ore project, located about 20 kilometers east of the town of Horsham, Victoria, Australia, is a large offshore zirconium-titanium ore resource (with a total resource of about 1.65 billion tons and an average heavy mineral grade of 3.7%). The orebody was discovered by CRA, the predecessor of Rio Tinto, while exploring for coal mines in the 1980s. There are several WIM type orebodies in the margin of Morri basin, among which WIM150 resources are large, orebody grade is high, stripping ratio is low, and adjacent infrastructure (adjacent to Horsham town, water, electricity and road facilities are complete), which is the most advantageous of all WIM type orebodies.

Western Securities believes that restarting the Mindarie project and promoting the progress of the WIM150 project will help the company obtain more zirconium ore resources from Australia, promote the adjustment of the company's industrial structure, and expand the economic benefits of the company's products. At present, zircon sand is at the bottom of long period. Long-term depressed prices limit industry capital expenditure, grade decline and resource depletion of major mining enterprises such as Iluka and RioTinto drive mining costs and production downward, zircon sand is in a new price upward cycle, and it is the right time for the company to accelerate the development of upstream resources.

In addition, on June 21, Oriental Zirconium Industry also issued a notice on investing in the establishment of a subsidiary company to build a high-purity ultra-fine zirconium silicate project with an annual output of 60,000 tons. It intends to set up a subsidiary company, Shantou Dongli New Materials Co., Ltd., with its own capital, with a planned investment amount of 200 million yuan. The company believes that the establishment of a subsidiary is in accordance with the needs of the company's operation and strategic development, which is conducive to invigorating the existing land resources, improving the efficiency of asset use, and cooperating with the company's plan to restart the Mindarie project of Mingrui Zirconium Industry Co., Ltd., digest the increased zircon supply, further promote the optimization and upgrading of the company's zirconium industry chain, improve the quality of the company's zirconium products, and enhance the company's profitability and core competitiveness Promote the sustainable development of enterprises.

Western Securities pointed out that at present, the company has a production capacity of 20, 000 tons / year of zirconium silicate, 50, 000 tons / year of zirconia chloride and 16000 tons / year of fused zirconium. The new project helps digest the increased supply of zircon sand while consolidating the company's leading position in the domestic zirconium industry.