Yunnan Copper responded to measures addressing the significant decline in smelting processing fees. Last year, it produced 1.206 million mt of copper cathode and 12.71 mt of gold.

The investor relations activity record of Yunnan Copper on March 26, 2025 (Series 1 of the 2024 Annual Report Interpretation Meeting) shows:

1. The company's 2024 operating performance

In 2024, Yunnan Copper adhered to the leadership of the Party, continued to strive, and advanced resolutely, fully implementing the decisions and deployments of the company's Party Committee and Board of Directors. Despite unfavorable factors such as a significant decline in TC and the shutdown of old equipment at Southwest Copper, the company maintained a stable operating trend. The company produced 1.206 million mt of copper cathode, 12.71 mt of gold, 348.99 mt of silver, and 4.8286 million mt of sulphuric acid throughout the year. By the end of 2024, the company's total assets amounted to 43.557 billion yuan, with an asset-liability ratio of 57.66%. The company achieved operating revenue of 178.012 billion yuan, a total profit of 2.316 billion yuan, and a net profit attributable to the publicly listed firm of 1.265 billion yuan, with a basic earnings per share of 0.6312 yuan. The company plans to distribute a cash dividend of 2.4 yuan per 10 shares (tax included) to all shareholders, without converting capital reserve into share capital.

2. Q&A Session

1. What is the progress of the relocation project of the company's Southwest Copper branch?

Yunnan Copper responded: The electrolysis system of the Southwest Copper relocation and upgrading project commenced load testing at the end of June 2024, and the pyrometallurgy system entered the load testing phase in mid-October 2024, successfully producing copper anode. As of now, the overall project of the Southwest Copper relocation and upgrading has been fully completed and is currently in the load testing phase. This project is conducive to optimizing the company's smelting layout and production processes, achieving efficient comprehensive utilisation of resources, reducing production costs, and enhancing the company's overall competitiveness, aligning with the company's needs for green, low-carbon, large-scale, short-process, low-cost, and digital-intelligent development.

2. How does the company plan to dispose of the assets of the Wangjiaqiao plant of Southwest Copper?

Yunnan Copper responded: The old equipment of Southwest Copper began an orderly shutdown on December 30, 2023, and the assets of the Wangjiaqiao plant are currently idle. To revitalize the assets, the company publicly listed part of the fixed assets and inventory of the Wangjiaqiao plant of Southwest Copper on the Guangdong United Property Rights Exchange Center on December 17, 2024, with an assessed value of 239.5048 million yuan and a listing price of 239.86 million yuan. After the bidding organized by the Guangdong United Property Rights Exchange Center, the final transaction price from the intended buyer was 447 million yuan, corresponding to the company's asset transaction price of 446.7424 million yuan. This asset transfer is expected to increase the company's 2025 net profit by approximately 182 million yuan, subject to the final audit results by the law firm.

3. What progress has the company made in resource acquisition in 2024?

Yunnan Copper responded: The company attaches great importance to the replacement of mine resources, increasing capital investment in comprehensive geological research and deep and peripheral prospecting in various mining areas. In 2024, the company invested 65 million yuan in exploration, conducting multiple mineral exploration activities and deep and peripheral prospecting, adding 91,800 mt of inferred and above copper resource metal content, achieving the annual target, and realizing annual reserve increases exceeding mine output consumption for four consecutive years. By the end of 2024, the company held 964 million mt of copper ore resources, 3.6509 million mt of copper resource metal content, with an average copper grade of 0.38%, of which Diqing Nonferrous held 846 million mt of copper ore resources, 2.8037 million mt of copper resource metal content, with an average copper grade of 0.33%.

4. What measures has the company taken to address the recent fluctuations in processing fees?

Yunnan Copper responded: The company uses long-term contracts and spot modes for processing fees, with imported copper concentrates settled via TC/RC, employing annual and quarterly negotiations. As one of the larger copper concentrate purchasers in China, the company has maintained good long-term stable cooperative relationships with major suppliers and actively negotiates with copper concentrate suppliers to stabilize long-term contract supply, ensuring orderly production.

5. Since Q4 2024, smelting processing fees have significantly declined. What measures has the company taken?

Yunnan Copper responded: On one hand, the company strategically focuses on "digital-intelligent transformation, expanding resources, refining mines, optimizing smelting, solidifying recycling (copper), and detailing rare and scattered (metals)", increasing the extraction of urban mines and rare and scattered metals. On the other hand, in 2025, the company will focus on extreme operational priorities, driving high-quality development, promoting cost reduction, and enhancing efficiency. After several years of cost reduction and quality improvement, the company's main products have a certain level of cost competitiveness. Additionally, the company increases the profit contribution of by-products such as sulphuric acid, selenium, tellurium, platinum, palladium, and rhenium, enhancing the company's overall competitiveness.

6. Noting the significant R&D investment disclosed in the company's annual report, what achievements have been made in technological innovation and digital-intelligent construction?

Yunnan Copper responded: In terms of technological innovation, the company continues to increase R&D investment, improve technology plan management, strengthen technology project layout, focus on key common issues and forward-looking technology needs in the industry, accelerate the R&D of strategic emerging industry technologies, and organized 294 technology projects throughout the year, including 2 national key R&D plan projects, 9 provincial major projects, and 2 provincial expert workstation projects, with R&D investment of 2.707 billion yuan. The research content covers geology, mining, mineral processing, smelting, and other major fields, as well as comprehensive resource recovery, safety, and environmental protection, focusing on green and low-carbon technologies, comprehensive resource recovery technologies, high-value product technologies, and intelligent manufacturing technologies. The R&D results provide technical support for enhancing capacity, production, reducing energy consumption and costs, optimizing indicators, expanding benefits, and reducing production and operation risks, with overall key technical indicators significantly improved.

In terms of digital-intelligent construction, the company's Southwest Copper smart factory benchmark project is steadily progressing, completing the construction of 22 typical intelligent equipment scenarios; the Yimen Copper smart factory demonstration project has been completed; AI-enabled intelligent batching effectively enhances the adaptability of domestic mines. The smart mine demonstration project has made significant progress, with the Diqing Nonferrous smart mine demonstration project steadily advancing, achieving unmanned operation of 14 underground loaders, AI-enabled belt foreign object recognition improving belt transportation safety, ensuring underground ore supply capacity, and effectively reducing downtime loss risks.

7. Is there a plan for the major shareholder to inject resources?

Yunnan Copper responded: In January 2022, Yunnan Copper Group signed a equity trusteeship agreement with the company, entrusting the company with the management of 40% of the equity of Liangshan Mining; in November 2023, to better benefit the company's development and further protect the interests of the company and all shareholders, Yunnan Copper Group extended the relevant commitments, "subject to compliance with relevant laws and regulations, CSRC regulations, and relevant normative documents, the work of injecting the equity of Liangshan Mining Co., Ltd. held by Yunnan Copper will be initiated before November 29, 2026," with the remaining commitment items unchanged.

In June 2023, China Copper signed a equity trusteeship agreement with the company, entrusting the company with the management of 100% of the equity of Zhongkuang International, to fulfill commitments, avoid competition between Zhongkuang International and the company, and protect the interests of the company and shareholders, especially minority shareholders.

Yunnan Copper introduced the company's main businesses in the 2024 annual report: The company's main businesses cover copper exploration, mining, smelting, extraction and processing of precious and rare metals, sulphur chemical industry, and trade, making it an important production base for copper, gold, silver, and sulphur chemical products in China, establishing a relatively complete industry chain in copper and related non-ferrous metals, and being a copper enterprise with deep industry accumulation. The company's main products include copper cathode, gold, silver, industrial sulphuric acid, molybdenum, platinum, palladium, selenium, tellurium, and rhenium, with a copper cathode capacity of 1.4 million mt/year. The company's main products are produced according to international standards, operating effectively under the international ISO9001 quality management system, ensuring strict quality control. The company's main product, copper cathode, is widely used in electrical, light industry, machinery manufacturing, construction, and national defense; gold and silver are used in finance, jewelry, and electronic materials; industrial sulphuric acid is used as raw material for chemical products and other national economic sectors. The company's "Tiefeng" brand copper cathode is registered on the Shanghai Futures Exchange and the London Metal Exchange, the "Tiefeng" brand gold is registered on the Shanghai Gold Exchange and the Shanghai Futures Exchange, and the "Tiefeng" brand silver is registered on the Shanghai Gold Exchange, the Shanghai Futures Exchange, and the London Bullion Market Association.

When analyzing the company's core competitiveness, Yunnan Copper mentioned that good resource reserves are one of its core competencies: The company attaches great importance to the replacement of mine resources, increasing capital investment in comprehensive geological research and deep and peripheral prospecting in various mining areas. The company currently owns mines such as Pulang Copper Mine, Dahongshan Copper Mine, and Yangla Copper Mine, mainly distributed in the Sanjiang metallogenic belt, with good metallogenic geological conditions and further prospecting potential. In 2024, the company invested 65 million yuan in exploration, conducting multiple mineral exploration activities and deep and peripheral prospecting, adding 91,800 mt of inferred and above copper resource metal content, achieving the annual target, and realizing annual reserve increases exceeding mine output consumption for four consecutive years. By the end of 2024, the company held 964 million mt of copper ore resources, 3.6509 million mt of copper resource metal content, with an average copper grade of 0.38%, of which Diqing Nonferrous held 846 million mt of copper ore resources, 2.8037 million mt of copper resource metal content, with an average copper grade of 0.33%.

Regarding the company's future development outlook, it stated in the 2024 annual report: Yunnan Copper adheres to the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, deeply studies and implements the spirit of the 20th National Congress of the Communist Party of China and the Second and Third Plenary Sessions of the 20th Central Committee, upholds the leadership of the Party, strengthens Party building, focuses on "digital-intelligent transformation, expanding resources, refining mines, optimizing smelting, solidifying recycling (copper), and detailing rare and scattered (metals)", adheres to goal orientation, problem orientation, and result orientation, refines and implements production and operation, reform and development work, and makes new contributions to building a world-class excellent copper company. In 2025, the company will focus on key work, adhere to profit as the priority, production as the foundation, cost as the key, and safety as the first, ensure execution and implementation, fully complete annual goals and tasks, and high-quality complete the "14th Five-Year Plan" goals and tasks, laying a solid foundation for a good start to the "15th Five-Year Plan".

The 2025 financial budget plan announced by Yunnan Copper on March 26 shows: The company's main product production plan for 2025 is: The company expects to produce 54,600 mt of self-produced copper concentrate containing copper, 1.52 million mt of electrolytic copper, 16 mt of gold, 680 mt of silver, and 5.364 million mt of sulphuric acid. The 2025 investment plan is 1.617 billion yuan, including fixed asset investment, digital projects, and geological exploration projects.

In response to the significant decline in smelting processing fees, Yunnan Copper mentioned increasing the profit contribution of by-products such as sulphuric acid, selenium, tellurium, platinum, palladium, and rhenium.

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Recently, strong domestic and international demand has driven the price of smelting acid to rise steadily. Domestically, supported by "spring ploughing" and raw material costs, as of March 28 (week), the price of smelting acid (sulphuric acid) in Yunnan was reported at 750-810 yuan/mt, an increase of 95 yuan/mt from the previous week, a rise of 13.87%, at a relatively high level in recent years.Overseas market: According to SMM, overseas demand remains robust, with the current domestic smelting acid FOB average price reaching around $75/mt, and export prices have also risen to relatively high levels in recent years. Currently, both domestic and overseas sulphuric acid markets show strong demand, and the raw material sulphur price also provides solid cost support for sulphuric acid. Overall, the sulphuric acid industry remains optimistic, and domestic sulphuric acid prices may still have room for growth in the short term.

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