Zhongjin Gold: Inner Mongolia Mining's Wunugetushan Copper-Molybdenum Mine Tailings Pond Heightening and Expansion Project Approved for Normal Production Continuation

On March 31, Zijin Mining Group announced that its subsidiary, China Gold Group Inner Mongolia Mining Co., Ltd., currently has Phase I and Phase II tailings ponds with a total designed capacity of 276.77 million m³ (Phase I: 51.58 million m³, Phase II: 225.19 million m³) and a designed crest elevation of 810 meters. As of now, the crest elevations of both Phase I and Phase II tailings ponds have reached the final designed elevation of 810 meters. Due to delays in land acquisition and preliminary procedures for the proposed Phase III tailings pond project, which cannot be constructed in the short term, it is necessary to increase the height and capacity of the existing tailings ponds to ensure uninterrupted production at Inner Mongolia Mining. The total investment for the project is 29.4872 billion yuan, including fixed asset investment of 16.7212 billion yuan, comprising engineering costs of 13.881185 billion yuan and other expenses of 2.840015 billion yuan (including land acquisition costs of 942.709 million yuan). The production period investment totals 12.766 billion yuan, funded by the company itself. The construction period is 5 months. Zijin Mining stated in the announcement that the company held the 28th meeting of the 7th Board of Directors on March 31, 2025, with all 8 directors in attendance. The meeting approved the proposal for the heightening and capacity expansion project of the Wunugetushan Copper-Molybdenum Mine tailings pond in Inner Mongolia Mining. The project aims to increase the tailings pond's elevation to 840 meters, raising it by 30 meters and adding a total capacity of approximately 78.73 million m³ (effective capacity: 70.86 million m³). The maximum dam height will be 124 meters (east main dam), and the total capacity of the Phase II tailings pond after expansion will be 303.92 million m³. The tailings pond will be classified as a second-class facility and will serve the mine for 3.5 years. The expanded tailings pond will be enclosed by dams on the east, south, west, and north sides, forming a flat-type tailings pond. All side dams will be raised to the final crest elevation of 840 meters using the centerline waste rock embankment method. New drainage facilities will adopt the "waste rock dock + spillway" form. Regarding the impact of the investment on the listed company, Zijin Mining stated that the project has a construction period of 5 months and a service period of 3.5 years. Fixed asset depreciation will be calculated using the straight-line method, with a depreciation period of 4 years for surface buildings and structures and 4 years for machinery and equipment. The design and construction investment will form intangible assets and other assets with an amortization period of 4 years. The estimated total annual cost at full production is 790.37 million yuan, including annual depreciation of 372.84 million yuan, annual amortization of 45.19 million yuan, and annual depreciation for maintenance operations of 372.34 million yuan. The unit cost per ton of tailings is 26.99 yuan/mt. In the stock market, Zijin Mining experienced a decline on April 1 after three consecutive days of gains, closing down 1.42% at 13.87 yuan per share. An investor asked on the investor interaction platform about the copper ore grade of the company's copper mines and why the gross margin is low, inquiring if there is room for improvement in processes, equipment, or workflows. Zijin Mining responded on March 25 that the copper ore grade is disclosed in the annual report under "Basic Information of Captive Mines." In 2023, the gross margin of the company's copper mines was 57%. Another investor asked about the Shaling Gold Mine project, inquiring when it will commence production in 2025, the expected gold production this year, and the annual gold production at full capacity. Zijin Mining responded on March 12 that the Shaling Gold Mine will organize construction works reasonably in 2025, actively conduct mining tests, continuously optimize engineering design, accelerate shaft equipment installation, closely monitor equipment procurement, and focus on surface construction and water inflow management. According to the production design, the Shaling Gold Mine will produce approximately 10 mt of gold annually at full capacity. As Zijin Mining has not yet released its full-year 2024 results, its Q3 2024 report showed that the company achieved revenue of 46.045 billion yuan in the first three quarters, up 1.08% YoY, with net profit attributable to shareholders of 2.643 billion yuan, up 27.55% YoY, and adjusted net profit of 2.618 billion yuan, up 24.84% YoY. Zijin Mining attributed the increase in adjusted net profit to rising gold and copper prices. In the first three quarters of 2024, the company produced 13,046.29 kg of gold and 6.21 mt of copper. Recently, gold prices have repeatedly hit record highs, benefiting many gold mining stocks. It is reported that the surge in gold prices has driven South African mining stocks to their best monthly performance on record, shielding the country's benchmark index from global market volatility. The South African Mining Index rose 33% in March, the largest monthly increase on record. (As of 15:14 on April 1, COMEX gold and SHFE gold price trends) Many institutions remain optimistic about the future performance of gold prices. CITIC Securities' research report noted that recent record highs in gold prices were driven by overseas recession trading and tariff panic trading. Considering factors such as inflation, growth, tariffs, and geopolitics, the current gold rally is far from over. From Q2 to mid-year, overseas markets may continue to see stagflation trading as a main theme, benefiting gold, while the impact of tariffs and geopolitical conflicts on gold is not yet over. Before uncertainty accumulates and is released, these factors will continue to drive gold. From a capital perspective, the influence of gold bulls on the current trend of gold has reached a historical high, but trading volume and enthusiasm have not yet reached the "most crowded" range, leaving room for further position increases. Based on current fundamental and capital data, we expect the gold rally may continue this year. Goldman Sachs raised its year-end 2025 gold price forecast from $3,100/oz to $3,300/oz, with a forecast range of $3,250-$3,520/oz. Medium-term gold price risks remain skewed to the upside, and in a tail-risk scenario, gold prices could exceed $4,200/oz by the end of 2025. Large Asian central bank buyers may continue to rapidly purchase gold over the next 3 to 6 years to reach their estimated potential gold reserve target range. Citi Research expects ETF and other physical investments to drive gold prices to $3,200/oz within the next three months. However, some analysts are pessimistic. Morningstar analyst Jon Mills warned that gold prices could fall to $1,820/oz over the next five years, a 38% drop from current levels, erasing gains from the past year. Mills attributed the downward pressure on gold prices to three main reasons: increased market supply, waning central bank gold purchases, and slowing demand. For more macro and fundamental news affecting precious metals, please join the 2025 SMM (6th) Silver Industry Chain Innovation Conference.