The operating performance of Zijin Mining continues to exceed expectations, and the three major copper projects will usher in a major breakthrough.

2021Q2 operating performance continues to achieve leapfrog growth the company issued a semi-annual performance pre-increase announcement: it is expected to achieve a net profit of 62-6.6 billion yuan in the first half of the year, an increase of 156.09% to 172.61% over the same period last year. The company's 2021Q1 realized a net profit of 2.5 billion yuan. Based on this, it is estimated that 2021Q2 will achieve a net profit of 37-4.1 billion yuan, an increase of 48% 64% in a quarter over the previous quarter, exceeding market expectations. We believe that the company's better-than-expected results are due to several factors: 1) the production of gold, copper and zinc in mineral products increased year-on-year; 2) the prices of metals such as copper and zinc rose sharply compared with the same period last year. The price of 2020Q3/Q4/2021Q1/ Q2Comex gold is 1817 US dollars / ounce for 1917 shock 1876 pound 1793 pound, the price of LME copper is 6519 shock 7278 pound 8507 pound 9690 / ton, and the price of zinc in Shanghai is 18967 / 20569 pound 20995 pound 22148 yuan / ton. 2021Q2 gold prices although some correction, but copper, zinc prices are strong.

Three major copper projects will be put into production one after another, and copper production and sales will be greatly increased in the second half of the year. The company's three major copper projects will be put into production one after another, and copper output is expected to increase significantly in the second half of the year compared with the first half of the year. 1) the first phase of the Camoa-Kakoula copper mine in the Democratic Republic of the Congo (DRC) has an annual capacity of 3.8 million tons of ore processed and put into production ahead of schedule, and copper concentrate production was officially launched on May 25. According to the annual production plan, it is expected to produce 8-95000 tons of copper metal in copper concentrate this year. 2) the mining and dressing project in the upper belt of the (Timok) copper gold mine in Peji, Serbia, has entered the trial production phase with the pilot production license of mineral processing facilities issued by the Serbian Ministry of Mines and Energy, and plans to complete all the work in the trial production phase and submit it to the Ministry of Mines for acceptance before September this year. 3) the first phase of the Qulong Copper Mine in Tibet is scheduled to be completed and put into operation by the end of the year, and the average annual output of copper is expected to be about 160000 tons after reaching production. The three major copper mining projects are all projects with huge capital expenditure invested by the company in the early stage, which is about to be harvested.

Risk hint: the construction progress of the project is not up to expectations, and the sales price of mineral products is not up to expectations.

Investment advice: maintain a "buy" rating. It is estimated that the company's revenue from 2020 to 2022 will be 1957 Universe 2113Universe 220.9 billion yuan, an increase of 14.1 percent over the same period last year. The year-on-year growth rate is 14.1 percent. The net profit of the parent company is 14.11 billion yuan, and the year-on-year growth rate is 116.8 percent. The diluted EPS is 0.54, 0.73, and 0.85 yuan, while the current share price is only 18 PE, 13 and 11X. Considering that the company is the core target of domestic non-ferrous listed companies, the mineral resources are abundant, the internationalization process is accelerating, and the medium-and long-term growth path is clear, it is expected to become one of the world's top international mining companies in the future and maintain the "buy" rating.

2021Q2 operating performance continues to achieve leapfrog growth the company issued a semi-annual performance pre-increase announcement: it is expected to achieve a net profit of 62-6.6 billion yuan in the first half of the year, an increase of 156.09% to 172.61% over the same period last year. The company's 2021Q1 realized a net profit of 2.5 billion yuan. Based on this, it is estimated that 2021Q2 will achieve a net profit of 37-4.1 billion yuan, an increase of 48% 64% in a quarter over the previous quarter, exceeding market expectations.

We believe that the company's better-than-expected performance is due to several factors:

1) Mineral products gold, copper and zinc output increased year on year 2021Q1 mineral gold output 11.18 tons, year-on-year + 5.95%, month-on-month + 2.26%; mineral copper 126800 tons, year-on-year + 10.36%, month-on-month + 14.58%; mineral zinc output 96300 tons, year-on-year + 11.91%, month-on-month-28.29%. 2021Q2 is expected to improve slightly on the basis of Q1.

2) the price of copper, zinc and other metals rose sharply compared with the same period last year. The core minerals of the company are gold, copper and zinc. The price of 2020Q3/Q4/2021Q1/Q2Comex gold is US $1817 / oz for 1917 shock 1876 pound 1793 pound, the price of LME copper is 6519 shock 7278 pound 8507max 9690 per ton, and the price of zinc in Shanghai is 18967 20569 pound 20995 pound 22148 yuan per ton respectively, and the price of Zinc in Shanghai is respectively 18967, 20569, and 20995, 22148 yuan per ton. 2021Q2 gold prices although there is a correction, but copper, zinc prices are strong. The company's three major copper mine projects will be put into production one after another, and copper production and sales will increase significantly in the second half of the year.

According to the company's annual report plan: mineral gold is expected to be 53-56 tons in 2021, an increase of 30.86-38.27% over the same period last year; mineral copper 54-580000 tons, up 19.21-28.04% over the same period last year; mineral zinc (lead) 45-480000 tons, up 19.05-26.98% over the same period last year; mineral silver 240,300 tons, iron concentrate 350-3.8 million tons. The company expects to have a project construction (including technical transformation) investment expenditure plan of 18.3 billion yuan in 2021. The company's three major copper mine projects will be put into production one after another, and copper production is expected to increase significantly in the second half of the year compared with the first half of the year.

1) the Camoa-Kakoula copper mine in the Democratic Republic of the Congo (DRC) was put into production ahead of schedule on May 27 this year, and the company announced that the 3.8 million-ton ore concentrator of the first phase of the Camoa-Kakoula copper mine in the Democratic Republic of the Congo (DRC) was put into operation ahead of schedule, and copper concentrate production was officially started on May 25, 2021. According to the annual production plan, the Kamoa-Kakoula project is expected to produce 8-95000 tons of copper-bearing metal in copper concentrate this year, which will contribute 3.168-37620 tons of equity production this year according to Zijin Mining's 39.6% shareholding. In addition, the company also holds a 13.69% stake in Ivanhoe Minerals, with a total equity of about 45%. In April this year, the Kakoula section mined 357000 tons of ore with an average copper grade of 5.70 per cent, of which 121000 tons came from high-grade mining areas with a grade of 8.40 per cent. By the end of April, the surface raw ore pile had stored about 3 million tons of medium-and high-grade ore, with an average copper grade of about 4.74%. On May 20, the 3.8 million t / a concentrator used the first batch of ore for the commissioning of ball mills and other mineral processing equipment; from May 25, ores with a copper grade of about 5% to 6% were transported directly from the Kakoula mine to the concentrator for processing. The design capacity of the first phase of the Kamoa-Kakoula project is 7.6 million tons of ore per year, which will be built in stages according to each of the two sequences. after reaching production, the first sequence is expected to produce about 200000 tons of copper metal per year. The construction of the second series is currently in rapid progress and is expected to be completed and put into production in the third quarter of 2022. After the two sequences reach production, the annual output of the project is about 400000 tons of copper metal.

2) on June 17 this year, the company announced that the mining and separation project of the (Timok) upper belt of the Paiji Copper and Gold Mine in Serbia has recently received a pilot production license for mineral processing facilities issued by the Ministry of Mines and Energy of Serbia, and has entered the stage of trial production. The mining and dressing project of the upper ore belt of Chukalu-Peji Copper and Gold Mine in Serbia is designed to handle 3.3 million tons of ore per year, with an average annual output of 91000 tons of copper and 2.5 tons of gold. At present, the construction of the mineral processing facilities of the project has been completed, and all the work such as trial production operation, project cleaning and greening are being promoted. It is planned to complete all the work in the trial production phase and submit it to the Ministry of Mining for acceptance before September this year, so as to achieve a smooth transition from mine capital construction to production operation. The Paiji copper-gold deposit in Serbia is a super-large copper-gold deposit, which is divided into the upper ore belt and the lower ore belt. The resource reserves of the upper ore belt are 1.28 million tons of copper metal, with an average grade of 3%, 81 tons of gold metal with an average grade of 1.91g / ton, the first mining section is an ultra-high grade orebody, and the lower ore belt has resources of 14.3 million tons of copper metal with an average grade of 0.86%. The gold metal is 299t, with an average grade of 0.18g / ton.

3) the first phase of the Qulong Copper Mine project in Tibet is scheduled to be completed by the end of the year and the company will acquire a 50.1% stake in Julong Copper in Tibet in June 2020, leading the development of China's largest porphyry copper mine, with a copper metal volume of about 10.4 million tons @ 0.41%. At the same time, there are also a large number of low-grade copper and molybdenum resources in the porphyry. Julong Copper has Qulong copper polymetallic mine, Rongmucola copper polymetallic mine and Zhibula copper polymetallic mine. According to the plan, large-scale open-pit mining will be carried out in the Qulong copper mining area, which will be built in two phases. The first phase is scheduled to be completed and put into production by the end of 2021. After reaching production, the average annual output of copper is expected to be about 160000 tons. The second phase will be built at 300000 tons per day, with an annual output of 260000 tons.

Investment advice: maintain a "buy" rating. It is estimated that the company's revenue from 2020 to 2022 will be 1957 Universe 2209 billion yuan, a year-on-year increase of 14.1 percent, 8.0 percent, 192.3 / 22.47 billion yuan, and 116.8 percent, 16.8 percent, respectively. The diluted EPS is 0.54, 0.73 and 0.85 yuan, while the current share price is only 18x13x11x, corresponding to PE. Considering that the company is the core target of domestic non-ferrous listed companies, the mineral resources are abundant, the internationalization process is accelerating, and the medium-and long-term growth path is clear, it is expected to become one of the world's top international mining companies in the future and maintain the "buy" rating.