Recently, spot gold prices rose to $2,261.29 an ounce, and COMEX gold futures rose to a record high of $2,281.8 an ounce.
Gold prices at gold sales terminals such as Chow Tai Fook, Chow Sang Sang and Luk Fook Jewellery continued to rise. On April 2, the price of pure gold has exceeded 693 yuan/gram, and the price has risen strongly.
In 2023, the national gold consumption was 1,089.69 tonnes, an increase of 8.78% compared to the same period in 2022. Gold has both financial and consumer attributes, and has a strong growth logic, and is favored by consumers as a global pricing asset, and is the main force of online sales growth.
The boom in the gold consumption industry and the continuous rise in gold prices have driven the growth of related companies in the industrial chain.
In 2023, the domestic raw gold output of mainland China will be 375.155 tons, a year-on-year increase of 0.84%, of which 297.258 tons of gold will be completed from gold minerals and 77.897 tons of non-ferrous by-product gold.
Today, let's take a look at Chifeng Gold, an upstream gold mining company.
Chifeng Gold's main business is gold and non-ferrous metal mining and dressing business.
According to the data, in 2023, Chifeng Gold's revenue will be 7.221 billion yuan, an increase of 15.23% year-on-year, and its net profit will be 804 million yuan, an increase of 78.21% year-on-year. The increase in the company's performance is mainly related to the increase in gold production and prices.
The company's main business is based on the original gold mining and sales business, and the comprehensive recycling of resources is added, including the comprehensive recycling of non-ferrous metal resources and the dismantling of waste electrical appliances and electronic products, which brings new profit growth points to the company.
From the perspective of performance contribution, gold is still the core business of Chifeng Gold. In 2023, the company's mineral gold revenue will account for 87.55% and profit will account for 95.93%.
Compared with other companies in the same industry, Chifeng Gold's business profits account for the largest proportion, higher than that of Sichuan Gold, Shandong Gold and other enterprises, so that Chifeng Gold's performance can more fully benefit from the rise in gold prices.
Chifeng Gold's profitability has been further improved, and the ROE of ROE has grown rapidly. In 2023, the company's ROE will reach 14.61%, a year-on-year increase of 56.09%, second only to Sichuan Gold in the same industry.
For the gold mining industry, the products of each company are the same, there is no comparison, the main focus is on the mineral reserves and mining costs, and whether it can achieve volume increase and cost reduction at the same time.
First, in terms of mineral reserves
At present, Chifeng Gold has eight mines at home and abroad, namely Wulong Mining, Jilong Mining Zhushanzi Gold Mine, Huatai Mining Honghuagou Gold Mine, Jintai Mining Xidengping Gold Mine, Vientiane Mining Saipan Gold and Copper Mine, Venus Vasalopa, Hanfeng Mining Lishan Mine and Hanfeng Mining Dongfeng Mine.
Among them, Chifeng Gold's Wulong Mining, Jilong Mining's Zhushanzi Gold Mine, Jinxing Vasala, Huatai Mining's Honghuagou Gold Mine and Jintai Mining's Xidengping Gold Mine are gold mines, while Vientiane Mining's Saipan Gold and Copper Mine, Hanfeng Mining's Lishan Mine and Hanfeng Mining's Dongfeng Mine are polymetallic mines.
As of the end of 2023, Chifeng Gold has a total ore volume of 270.54 million tons and a gold ore volume of 127.23 million tons. Among them, the company's subordinate domestic gold mining enterprises have 19.43 million tons of gold ore, 15 million tons of overseas gold ore in Saipan, Laos, and 92.8 million tons of gold ore in Ghana's Venus Vaasa Gold Mine.
In 2023, Chifeng Gold will complete 14.35 tons of mineral gold, a year-on-year increase of 5.79%. The company's overseas gold mines produced 11.03 tons of gold in 2023, a year-on-year decrease of 2.0%, mainly due to the catastrophic flood disaster in the third quarter of 2023, which had a greater impact on high-grade mining production. However, benefiting from the improvement of beneficiation capacity of domestic mines, the company's domestic gold mines will produce 3.32 tons of gold in 2023, a year-on-year increase of 43.1%.
In addition, Chifeng Gold's mines are still promoting production expansion.
In 2023, important projects under construction, such as the extension of the western tailings pond of Vientiane Mining, the stubborn rock crushing line, the PP3 upgrade (to increase the water treatment capacity), and the underground drainage pumping station, will be implemented as planned.
Vaasa Venus introduced engineering contractors to improve the efficiency of the tunnelling project and open up new ramps.
The new 180,000 tons of gold ore beneficiation expansion project in Jilong has completed the civil works of the main plant such as washing, and is expected to be completed in June 2024 and enter the trial production stage.
It can be seen that Chifeng Gold still has a very broad gold mining space in the future.
Second, in terms of mining costs
In gold mining, cost reduction is very important, and the level of cost directly affects the profit margin of the enterprise.
The level of technology plays a very important role in reducing costs, and the cost of the same gold mine will be different for different technologies. Chifeng Gold attaches great importance to R&D investment, and in 2023, the company will invest 51.7525 million yuan in R&D, a year-on-year increase of 87.16, mainly used for the upgrading of the mine production process of Keelung Mining and Wulong Mining.
The company's Saipan gold and copper mines in Laos and Vasa gold mines in Ghana have been in continuous and stable operation for more than 15 years, with international advanced mining production technology, and the recovery rate of Saipan ore beneficiation has increased by nearly 20% since the beginning of production.
In addition, the grade of gold is also one of the key factors affecting the size of the cost.
The overall taste of Chifeng gold mine is very good, especially the domestic Wulong Mining, Jilong Mining and Huatai Mining, the gold ore grade is 7.77g/t, 10.18g/t and 7.01g/t respectively, which are higher than the average level of domestic gold mines (generally 2-3g/t), and the overseas Lao Saipan gold ore grade is 3.7g/t, and the gold grade of Venus Vaasa gold ore is 3.43g/t, which is also relatively good.
As can be seen from Chifeng Gold's 2023 annual report, the total sustaining cost of domestic mineral gold is 198.81 yuan/gram. The cost of the company's foreign mineral gold is relatively large, with the total sustaining cost of Vientiane Mining's Saipan mine being 339.44 yuan/gram, and the total sustaining cost of Venus Vasalopa being 305.49 yuan/gram. (RMB 7.2355 per US dollar)
The higher cost of Chifeng Gold Saipan Mine is mainly due to the fact that Saipan Mine has gradually switched from open-pit mining to underground mining, which includes more depreciation and amortization, which has affected the profit release of Saipan to a certain extent. However, in the first half of 2023, Vientiane Mining's underground mining project has been gradually engaged in productive mining, and the impact of amortization on costs will become more and more limited, and costs have begun to decline compared to 2022.
The cost of the company's Vaasa mine is also gradually improving through gradual control and improvement of the mining model, and the total sustaining cost of mineral gold in 2023 will decrease by 12.7% year-on-year.
In addition, Chifeng Gold has also achieved cost reduction through a series of measures such as centralized procurement, streamlining personnel, and targeted mining potential mines. Chifeng Gold's cost reduction measures have achieved remarkable results, with a gross sales margin of 32.58% in 2023, a year-on-year increase of 13.76%, which is higher than most companies in the same industry, such as Yintai Gold and Shandong Gold.
The future of Chifeng Gold is still full of highlights.
Gold prices are negatively correlated with the U.S. dollar index, and in the context of the Federal Reserve's monetary policy to determine the turn, coupled with the recent intensification of geopolitical conflicts, as well as the continued demand for gold from many central banks around the world, gold prices will continue to maintain a trend upward, and companies with strong gold business concentrations like Chifeng Gold will benefit more from the rise in gold prices.
As a prominent company in the gold mining industry, 358 institutions have held positions as of the end of 2023. In the environment of continuous recovery of consumption, Chifeng Gold will benefit from a new round of gold price rise.
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