Zhongjin Gold: The Gross Margin of Mine Copper in 2023 Was 57%, and the Existing Operating Mines Are in a Stable Production State

Zhongjin Gold's stock price rose on March 25. As of the close on March 25, Zhongjin Gold increased by 1.73%, closing at 13.5 yuan per share.

An investor asked on the investor interaction platform: What is the grade of the copper ore from your company's copper mines? Why is the gross profit margin so low, and is there room for improvement in processes/equipment/procedures? On March 25, Zhongjin Gold responded on the investor interaction platform, The grade of the company's copper ore is disclosed in the "Basic Information of Captive Mines" section of the annual report. In 2023, the gross profit margin of the company's mine copper was 57%.

An investor asked on the investor interaction platform: "When will the Shaling Gold Mine project be put into production in 2025, and how much gold production can be expected this year? After reaching stable production, what will be the annual gold production of your company?" On March 12, Zhongjin Gold responded on the investor interaction platform, The Shaling Gold Mine will reasonably organize engineering construction in 2025, actively conduct mining tests, continuously optimize engineering design, rapidly advance shaft equipment installation, closely monitor equipment tender procurement, and fully promote surface construction, focusing on comprehensive water inflow management. According to the production design, the annual production of the Shaling Gold Mine will be approximately 10 mt after reaching full production.

Previously, when asked "An investor asked on the investor interaction platform: Does your company have any plans for capacity expansion and asset injection in 2025?" On February 19, Zhongjin Gold responded on the investor interaction platform that the company's existing operating mines are in a stable production state, and future production increases will come from exploration and reserve expansion, resource acquisitions, and the completion and operation of new projects. The company and its controlling shareholder have been actively promoting the injection of high-quality assets, injecting one when conditions are mature, and the company will promptly announce if it meets the information disclosure conditions.

Given that Zhongjin Gold has not yet released its full-year 2024 performance, a review of its 2024 Q3 report shows that the company achieved operating revenue of 46.045 billion yuan in the first three quarters, up 1.08% YoY; net profit attributable to the parent company was 2.643 billion yuan, up 27.55% YoY; and non-GAAP net profit was 2.618 billion yuan, up 24.84% YoY.

Regarding the reasons for the increase in non-GAAP net profit attributable to shareholders of the listed company, Zhongjin Gold stated that it was mainly affected by the rise in gold and copper prices. In the first three quarters of 2024, Zhongjin Gold produced 13,046.29 kg of mine gold and 6.21 mt of mine copper.

Hua'an Securities commented in its research report on the Q3 report: The prices of gold and copper increased YoY, while the volume of mine gold decreased but the price increased. Implementing the "Resource Lifeline" strategy, the company continues to advance key projects. In H1, the first phase of the deep resource mining project of Inner Mongolia Mining Co., Ltd. was put into use; currently, the construction of the Shaling Gold Mine project is progressing in an orderly manner, and the expansion project of the Anhui Taiping Qianchang Copper-Iron Mine is underway with mid-level tunnel and cutting engineering. The company has intensified geological exploration efforts in key domestic metallogenic belts, fully promoted the expansion of surrounding resources and deep prospecting, and continued to strengthen the integration of resources in the surrounding areas, with the resource volume of mines expected to continue to increase. Risk warnings: Significant fluctuations in gold and copper prices; mine production falling short of expectations; mine safety and environmental protection risks, etc.

Regarding the future trend of precious metals, many institutions have commented as follows:

CITIC Securities' research report pointed out that since 2025, the divergence between gold stock prices and commodity prices has mainly come from the disturbance of gold company performance and market doubts about the sustainability of gold price increases. We believe that with the concentrated commissioning of incremental projects in 2025, 2025 may become a "big year" for the performance of domestic gold companies. Overall loose liquidity, accelerated ETF inflows, and the long-term narrative of "de-dollarization" may verify the sustainability of gold prices fluctuating at highs. Based on this, we believe that gold stocks in 2025 have a solid logic for catch-up gains. It is recommended to select stocks from the perspective of production growth and performance elasticity.

ANZ raised its 0-3 month gold price forecast to $3,100/oz and its six-month forecast to $3,200/oz.

UBS became the latest institution to raise its gold price outlook, citing the increased likelihood of a prolonged global trade war. Analysts expect this situation to continue to drive investors to rush to buy the safe-haven asset gold. UBS analysts Wayne Gordon and Giovanni Staunovo stated in a report on Monday that as trade conflicts continue to escalate, gold's role as a store of value in uncertain times is becoming increasingly prominent, and the gold price is expected to reach $3,200/oz over the next four quarters, higher than the bank's previous forecast of $3,000/oz.

China Securities' research report stated that gold surged at the beginning of the year, driven by short-term pricing logic, catalyzed by tariff expectations and the risk of spot delivery in New York. In the short term, before tariffs are clarified, the volatility of futures and spot premiums may not completely stabilize, and cross-market arbitrage may still support gold prices. In the medium term, since 2022, gold prices have deviated from the two traditional frameworks of the US dollar and real interest rates. Especially in 2024, the traditional gold framework has clearly failed. Returning to the simple logic of supply and demand, the rise in gold prices in 2024 has been significantly driven by two demand factors, echoing the global macro situation. First, central bank gold purchases remain strong. This is the underlying reason for the step-up in the gold price center after 2022. The underlying clue is the game between major powers, with the footnote being geopolitical conflicts. Second, the expansion of private sector gold investment demand in Asia (especially China). The underlying clue is the effective demand in China in 2024. Looking ahead to 2025, the demand factors that boosted gold prices in 2024 will weaken in 2025, so we judge that 2024 is a "favorable period on a high platform" for gold, and gold prices in 2025 may move from a favorable period to a volatile period.

Goldman Sachs believes that the baseline forecast of $3,100/oz for gold prices at the end of 2025 has upside risks, and its forecast range of $3,100-3,300/oz also has upside potential.

For more information on the macro and fundamental factors affecting the precious metals market, welcome to participate in the 2025 SMM (6th) Silver Industry Chain Innovation Conference ~