On January 20, JCHX's stock price rose slightly. As of 10:47 a.m. on November 20, JCHX increased by 0.12%, closing at 41.02 yuan per share.
On the evening of January 19, JCHX announced its plan to invest in the construction of the Lonshi (Longxi) Copper Mine East Zone Mining and Processing Project in the DRC, with a total estimated investment of $751 million. The project will be implemented by the company's wholly-owned subsidiary, Sabwe, with a planned construction period of 4.5 years. After completion, the project is expected to produce approximately 100,000 mt of copper metal annually. The construction investment is $604 million, with construction period interest of $77.23 million and working capital of $70.42 million. The funding sources are planned as 30% self-financing and 70% bank loans.
Regarding mineral resources, JCHX announced that the Lonshi West Zone is already in normal production with relevant technical parameters available. When verifying industrial indicators for the East Zone, data from the West Zone was referenced and combined with the East Zone's design technical plan. The marginal grade for the East Zone was determined to be TCu 2.00%. Due to the deeper burial of the East Zone ore body compared to the West Zone, higher drainage volume, and increased mining costs, the marginal grade of the East Zone is significantly higher than the West Zone's verified marginal grade of TCu 0.80%. Based on the marginal grade of TCu 2.00%, the East Zone has identified TM+KZ+TD ore reserves of 26.048 million mt, with copper metal content of 1.0395 million mt and an average grade of 3.99%. Among these, proven ore reserves are 4.522 million mt, with copper metal content of 151,247 mt and an average grade of 3.34%; controlled ore reserves are 13.212 million mt, with copper metal content of 586,705 mt and an average grade of 4.44%; inferred ore reserves are 8.314 million mt, with copper metal content of 301,533 mt and an average grade of 3.63%. Proven metal content accounts for 14.55%, while proven + controlled metal content accounts for 70.99%. For detailed resource results, see Table 2-1. Additionally, as the ore body is not closed at depth, future resource increases are possible.
Regarding the project development background, JCHX's announcement stated: China's copper resources are in short supply and currently in a development phase. With the steady and rapid growth of the national economy, copper metal demand has been increasing annually, with approximately 75% of copper metal imported each year to meet domestic demand. The DRC is a country rich in copper and cobalt resources. At this stage, the DRC government encourages and supports foreign enterprises to invest in developing its mineral resources to drive industrial construction, increase tax revenue, and boost employment. The Lonshi Copper Mine area has relatively convenient infrastructure, such as electricity and transportation, and high copper ore grades, offering good economic value. In response to the national "Going Global" strategy, JCHX Mining Management Co., Ltd. acquired the mining rights assets of Sabwe Mining Sarl through an overseas company to develop the Lonshi Copper Mine and secure copper resources, aligning with China's industrial policies. The Lonshi Copper Mine West Zone Mining and Smelting Project was completed and put into operation in September 2023, with a construction scale of 1.7 million t/a.
JCHX also announced the significance of the project development: (1) The project construction helps to quickly unlock regional resource potential, fully utilize existing production and living facilities, optimize corporate asset allocation, and bring good economic benefits to the company. (2) The project construction meets the needs of China's national economic development, facilitates the utilization of two markets and two resources, accelerates and expands the development and utilization of overseas strategic resources, and promotes China's sustainable economic development. (3) The project aligns with China's industrial policies and the adjustment and revitalization plan for the non-ferrous metals industry. (4) It boosts China's export of electromechanical equipment, drives the export of Chinese technology and labor, and promotes China's economic development and structural adjustment. If necessary, copper products can be sold back to China, enhancing the reserve of important strategic resources and supporting economic construction. (5) It increases fiscal revenue for the DRC, provides employment opportunities for local residents, and drives local economic development. (6) It enhances mutual understanding and trust between China and the DRC, strengthening friendly relations and economic cooperation.
In the feasibility study announcement for the Lonshi Copper Mine East Zone Mining and Processing Project in the DRC, JCHX mentioned that the project's financial internal rate of return is 21.91%, with an estimated average annual total profit of $212 million. It should be noted that the project investment is subject to government approval and faces risks in political, economic, and market aspects.
On the evening of December 10, 2024, JCHX announced its plan to acquire a 51% stake in Australia's Terra Mining Pty Ltd from DAI RUI for 1 Australian dollar. Terra Mining Pty Ltd primarily engages in open-pit mining drilling, blasting, loading, transportation, crushing, and mining design and development. If the transaction is successfully completed, Terra Mining will become a controlling subsidiary of the company.
On the evening of December 5, 2024, JCHX announced that it had conducted geological exploration work on the Lonshi Copper Mine owned by its wholly-owned subsidiary Sabwe Mining Sarl in the DRC. The Lonshi Copper Mine is divided into West and East Zones based on ore body distribution characteristics. As of October 31, 2024, the East Zone had identified (proven + controlled + inferred) ore reserves of 26.048 million mt, with copper metal content of 1.04 million mt and an average copper grade of 3.99%. Among these, proven copper metal content is 150,000 mt, accounting for 14.55%; controlled copper metal content is 590,000 mt, accounting for 56.44%; inferred copper metal content is 300,000 mt; proven + controlled copper metal content accounts for 70.99%.
As JCHX has not yet released its full-year 2024 performance, the company's previously disclosed Q3 2024 report showed that in the first three quarters of 2024, it achieved revenue of 6.971 billion yuan, up 31.23% YoY; net profit attributable to shareholders of the publicly listed firm was 1.093 billion yuan, up 53.96% YoY; net profit attributable to shareholders of the publicly listed firm after deducting non-recurring gains and losses was 1.087 billion yuan, up 54.81% YoY.
JCHX stated that the increase in revenue and net profit was due to the growth in mining service business revenue and the sale of mineral products.
Guolian Securities released its 2025 annual investment strategy for the non-ferrous metals industry, analyzing that fund allocation in the non-ferrous metals sector from Q1 to Q3 2024 was 6.04%/6.11%/5.41%, respectively, reaching historical highs. Among these, copper, aluminum, and gold sectors saw significant increases in institutional allocation, with Q3 2024 holdings valued at 38.455 billion yuan, 17.885 billion yuan, and 17.34 billion yuan, respectively. For copper: ore supply tightness is transferring to the smelting side, supporting further increases in copper prices. In the short term, copper ore supply is continuously disrupted by power shortages and production accidents in major production areas. In the medium and long-term, declining resource grades and insufficient mining capital expenditure constrain copper ore supply. Global copper concentrate production is expected to reach 22.79 million mt, 23.19 million mt, and 23.7 million mt in 2024, 2025, and 2026, respectively (up 430,000 mt, 400,000 mt, and 510,000 mt YoY). The increase in ore supply is far smaller than the increase in smelting capacity. In 2025, long-term contract prices for copper concentrate smelting and processing fees are expected to drop significantly, potentially leading to substantial production cuts at smelters. Ore supply tightness is gradually transferring to the smelting side. From 2025 to 2026, the global refined copper supply surplus is expected to narrow continuously and turn into a shortage, supporting further increases in copper prices.
On November 17, Huayuan Securities released a research report, assigning an "overweight" rating to JCHX. The main reasons for the rating include: (1) A leader in mining services, with resource business expansion unlocking growth potential; (2) Steady growth in mining service operations, providing a solid profit base; (3) Focus on mining resources, achieving growth both domestically and internationally. Risk warnings: risks of project progress falling short of expectations; risks of metal prices declining more than expected; risks of safety production; risks of geopolitical issues.
