China Nonferrous Mining: Rising international copper prices and up YoY copper production from captive mines drive an expected 18% YoY increase in net profit for H1

China Nonferrous Mining Corporation Limited issued an earnings forecast on the evening of July 28. Based on a preliminary assessment by the Board of Directors using the Group's unaudited consolidated management accounts and currently available data, the Company expects its attributable profit to owners for the six months ended June 30, 2025 to be approximately $258 million, representing an increase of about 18% compared to the six months ended June 30, 2024. The Board anticipates that the primary reasons for the increase in attributable profit to owners for the six months ended June 30, 2025 are the rise in international copper prices and higher production from the Group's captive mines compared to the same period in 2024.This announcement is derived from the Board's preliminary evaluation based on the Company's unaudited consolidated management accounts and currently available data. The Company reminds investors that details of the interim results will be officially released by the end of August 2025.

Additionally, on July 23, China Nonferrous Mining Corporation announced on the Hong Kong Stock Exchange the temporary suspension of production at the Southeast Orebody of NFC Africa Mining Plc: a falling object incident occurred in the shaft of the Southeast Orebody operated by NFC Africa Mining Plc ("NFC Africa Mining"), a subsidiary of China Nonferrous Mining Corporation, resulting in the death of a Chinese employee of a subcontractor. In accordance with the safety regulations of the Zambia Mine Safety Department and the Group's safety management policies, production at the Southeast Orebody of NFC Africa Mining has been temporarily suspended since June 27, 2025, with an initial estimated downtime of approximately 90 days. After the expert team completes on-site inspections and evaluations, NFC Africa Mining will formulate rectification measures and determine the final suspension period in compliance with local regulations.

Regarding the basic information of the orebody, the announcement states that the Southeast Orebody is located in Zambia's Copperbelt Province and operated by NFC Africa Mining, with blister copper/copper anode as its primary products. The planned copper-in-concentrate production for the Southeast Orebody in 2025 was 52,600 mt. Concerning the impact of the suspension and countermeasures, China Nonferrous Mining stated in the announcement: based on preliminary calculations, the temporary suspension is expected to reduce the Group's 2025 captive mine copper production by approximately 14,500 mt, accounting for about 9% of the Group's annual planned production from captive mines.

China Nonferrous Mining further stated in the announcement: the Company is actively implementing measures to minimize the impact of the temporary suspension on its annual operations, including but not limited to: (1) enhancing safety management, cooperating with relevant authorities to investigate the incident, and promptly implementing rectifications to resume production as soon as possible; (2) strengthening operational controls, developing safe construction plans, and implementing all necessary safety measures; (3) adjusting production plans and optimizing resource allocation; and (4) revising annual copper production expectations as appropriate in compliance with laws and regulations. China Nonferrous Metals Mining Corporation (CNMC) stated that it would disclose the progress and related information of production resumptions in a timely manner in accordance with the listing rules. Due to uncertainties such as the results of the incident investigation and the implementation of response measures, the impact of the aforementioned production suspension is a preliminary estimate, and the actual situation may differ. Investors are advised to pay attention to investment risks.

According to the annual report for the year ended 2024 previously released by CNMC, the company achieved revenue of $3.817 billion in 2024, representing a 5.8% increase from $3.606 billion in 2023. Net profit was $558 million, a 46.2% increase from $381 million in 2023. The profit attributable to owners of the company was $399 million, a 43.6% increase. Basic earnings per share were approximately 10.34¢, an increase of approximately 2.91¢ from 7.43¢ in 2023. In the financial review, the cost of sales was $2.767 billion, a 1.4% increase from $2.729 billion in 2023, mainly due to an increase in sales of blister copper and copper anode, as well as a rise in international copper prices. Gross profit was $1.049 billion, with the gross profit margin increasing from 24.3% to 27.5%. The company effectively controlled distribution and selling expenses, which decreased to $8.7 million. In terms of business segments, the hydrometallurgy and smelting segments performed outstandingly. The external sales revenue of the hydrometallurgy segment was $1.094 billion, and that of the smelting segment was $2.722 billion. Overall, despite a decline in the production of copper cathode and cobalt hydroxide, the overall revenue growth remained significant, mainly due to the rise in copper prices and improved production efficiency.

In a research report commenting on CNMC, Kaiyuan Securities pointed out: Pioneering the African mining market, the forerunner has grown into a global high-quality copper producer: CNMC was the first Chinese enterprise to enter Africa for copper mine project development, focusing on the development of high-quality copper ore resources in Zambia and the DRC, as well as downstream copper smelting-related businesses. In 2024, the company achieved a copper production of 523,000 mt, including 286,000 mt of blister copper and copper anode, 126,000 mt of copper cathode, and 111,000 mt of copper products produced through toll processing. Among them, the total copper production from captive mines was 159,000 mt, corresponding to a copper ore self-sufficiency rate of 30.4%. Subsequently, with the production resumption of the company's captive mines and the commissioning of new projects, the company's copper ore self-sufficiency rate is expected to further increase and enhance the company's overall profitability. Multiple production resumption or new construction projects are accelerating, and the long-term captive copper capacity is expected to double: The company's reserve increase and resource development will enter a period of rapid development, with captive mines expected to double their copper capacity in the next five years. The main incremental projects include: (1) The drainage progress of the new Luansha mine project continues to advance, and it is expected to resume production and start production ramp-up in 2027. (2) Chambishi Hydrometallurgy Company is actively advancing the Samba copper mine mining and beneficiation project. The project is planned to complete investment decision-making and initiate construction in 2025, with an expected annual increase in copper capacity of approximately 20,000 mt. (3) The Western Ore Body Restoration Project of Kampofu Mining Company completed project approval in 2022 and is currently advancing resource assessment and pre-feasibility studies, with production expected to commence in 2028. The resource estimation for the Mensesa Ore Body Restoration Project has been completed, and feasibility studies are currently underway. The long-term contribution of incremental projects to copper capacity is expected to exceed 150,000 mt. Deepening copper smelting operations in Africa, an increase in self-sufficiency rates will enhance profitability: The company is deeply engaged in copper smelting operations in Zambia and DRC. Among them, the Chambishi Pyrometallurgy Smelter is one of the three major smelters in Zambia and the only large-scale overseas pyrometallurgy copper smelter in China. The Lualaba Copper Smelter is the first large-scale modern pyrometallurgy smelter in DRC, with an overall copper smelting capacity exceeding 500,000 mt. In the future, as the company's copper production from its captive mines increases, an increase in the self-sufficiency rate of copper mines is expected to further enhance overall profitability. Risk warnings: Risk of project progress not meeting expectations; Risk of policy changes; Risk of fluctuations in raw material prices.

When commenting on CNMC's 2024 annual report and 2025 Q1 report, Minsheng Securities stated: The net profit attributable to shareholders in 2024 reached a record high, primarily due to the rise in copper prices. In the first quarter of 2025, the company's net profit attributable to shareholders increased significantly both year-on-year and quarter-on-quarter, mainly due to the rise in copper prices and the normalization of copper production. Core highlights: ① Endogenous growth: CNMC Africa Mining, CNMC Luansha, and Chambishi Hydrometallurgy, subsidiaries of the company, will study and advance the following projects in the next 3-5 years: expansion of the Southeast Ore Body of Chambishi, the new mine of CNMC Luansha, the mining and beneficiation project of the Samba mine, the production resumption projects of the Western Ore Body of Kampofu and the MSESA Ore Body, with ample room for endogenous growth. ② External mergers and acquisitions: At the group level, to address horizontal competition issues, the DRC company and the Deziwa copper mine are expected to be injected into the publicly listed firm. ③ Rare high-dividend copper stock. Risk warnings: Continuous decline in smelting and processing fees, decline in copper prices, geopolitical risks.