Zijin Mining's 2023 annual report: copper and gold sales continued to grow, and capital expenditure hit a record high

Every reporter: Zhao Li Nan Every editor: Liang Xiao

On March 22, Zijin Mining (SH601899, share price 15.39 yuan, market value 405.2 billion yuan) released its 2023 annual report.

In 2023, Zijin Mining's operating income will be approximately RMB293.4 billion, an increase of 8.54% year-on-year, and its net profit attributable to shareholders of listed companies will be approximately RMB21.12 billion, an increase of 5.38% year-on-year.

The reporter of "Daily Economic News" noticed that although Zijin Mining's profit growth rate in 2023 is not high, its return on equity (ROE) will still remain high, at 21.43% in 2023, a year-on-year decrease of 3.86 percentage points. At the same time, Zijin Mining's capital expenditure in 2023 also hit a record high.

In 2023, Zijin Mining's copper and gold sales continued to grow.

"In 2023, the company's mines will produce more than 1 million tons of copper and 68 tons of gold, with an average annual compound growth rate of about 30% copper and more than 15% gold since 2020, making it the only company among the world's top 15 mining companies to achieve production guidance for the actual output of copper mines for three consecutive years. Zijin Mining said.

In addition, Chairman Chen Jinghe said in the annual report that in the face of world uncertainty and currency flooding, gold is the "ballast stone" of financial security. The company owns a number of world-class gold assets such as the Rosbell Gold Mine in Suriname and the Buritica Gold Mine in Colombia, and the Pogra Gold Mine in Papua New Guinea, one of the world's top ten gold mines, has resumed production, and the construction of a number of medium-sized gold mines will achieve sustained and rapid growth in gold production.

Copper-gold sales continued to grow

From the perspective of gross profit, Zijin Mining's gross profit in 2023 will be about 46.4 billion yuan. Among them, copper and gold are still the absolute main forces, contributing about 22.6 billion yuan and 12.2 billion yuan of gross profit respectively.

Data source: Zijin Mining's 2023 annual report, drawn by reporters

At the same time, the "other" business also contributed about 10.9 billion yuan of gross profit to Zijin Mining. Regarding the composition of "other" business, Zijin Mining said: "Other sales revenue mainly includes silver smelting of 3.108 billion yuan, copper pipe 883 million yuan, copper strip 1.467 billion yuan, lead concentrate 540 million yuan, molybdenum concentrate 2.389 billion yuan, gold products 3.205 billion yuan, etc., and other products, intermediate business, service business and other business 45.656 billion yuan." ”

In 2023, Zijin Mining sold about 66,700 kilograms of mine-produced gold, up 9.68% year-on-year, and min-produced copper sold about 810,000 tons, up 9.75% year-on-year.

In terms of price, in 2023, the unit price of gold ingots from Zijin Mining will be 433.09 yuan/gram, a year-on-year increase of 12.28%, and the sales unit price of gold concentrate will be 378.60 yuan/gram, a year-on-year increase of 6.76%. In terms of copper production, the unit price of copper concentrate was 49,400 yuan/ton, a year-on-year increase of 3.95%, the unit price of electrowinning copper was 56,400 yuan/ton, a year-on-year increase of 1.89%, and the unit price of electrolytic copper was 59,600 yuan/ton, a year-on-year decrease of 6.28%.

It is worth noting that due to rising costs, the gross profit margin of Zijin Mining's mine-produced gold and mine-produced copper has declined to a certain extent. Overall, however, gross margins remained high in both businesses.

Zijin Mining said that more than 50% of the company's copper and gold resources and more than 90% of its zinc (lead) resources are obtained through independent exploration, and the unit exploration cost is significantly lower than that of its global peers.

Since 2020, the average M&A cost of resources has been about US$50/ton for copper and US$70/oz for gold, which is significantly lower than the average M&A level of US$200/t for copper and US$80/oz for gold in the same period. Zijin Mining said.

M&A momentum continues unabated

In 2023, Zijin Mining's "cash paid for the purchase and construction of fixed assets, intangible assets and other long-term assets" reached a record high of about 30.4 billion yuan.

Behind such a large capital expenditure is Zijin Mining's global thirst for high-quality mines. "Relying on the economic thinking of the mining industry and its excellent professional analysis and decision-making capabilities, Zijin's global resource allocation has been efficiently implemented, and the world-class resources and actual production capacity have been significantly cultivated. Zijin Mining said.

Zijin Mining said that it will complete the delivery of the Rosbel Gold Mine in Suriname and the Hamagotai Copper-Gold Mine in Mongolia in early 2023, of which the Rosbel Gold Mine is one of the world's largest gold mines with the largest transaction scale and the best transaction cost in 2023. Invited to lead the exploration and development of the northeast greenfield of the world-class Manono lithium mine in the Democratic Republic of the Congo (DRC), the geological exploration is being closely promoted, and all drilling in the first mining area has been completed, revealing that the scale and mineralization of the ore body meet the design expectations.

"In early 2024, it signed a subscription agreement with Solaris of Canada to subscribe for its 15% shares, and Solaris holds 100% of the world-class Vallincha porphyry copper mine in Ecuador, and the resource estimate as of April 2022 shows that the project has metal resources of 6.18 million tons of copper, 280,000 tons of molybdenum and 63 tons of gold, and has significant potential for prospecting and increasing reserves. Zijin Mining said.

In China, in 2023, Zijin Mining completed the acquisition of 48.59% equity interest in Junuo Copper Mine in Angren County, Tibet, with new equity resources (including reserves) of 1.4278 million tons of copper, 27,800 tons of molybdenum and 456 tons of silver, and completed the remaining 34% equity interest in Xiangyuan Hard Rock Lithium Mine in Daoxian County, 20% equity interest in Yajiang Cuola Spodumene Mine, and 49% equity interest in Beizhan Iron Mine.

"Mineral resources are the core assets of a mining company. Zijin Mining has a strong resource base, with attributable resources of about 75 million tons of copper, about 3,000 tons of gold, more than 10 million tons of zinc (lead), about 15,000 tons of silver, and more than 13 million tons of lithium carbonate equivalent. Chen Jinghe said.

Chen Jinghe said that relying on the support of world-class resources, the company plans to produce 1.11 million tons of mineral copper, 73.5 tons of gold, 470,000 tons of zinc (lead) and 25,000 tons of equivalent lithium carbonate in 2024. At present, a new "five-year plan" is being prepared, and strive to achieve the strategic goal of "a first-class international mining group with green and high-tech" ahead of schedule.

National Business Daily