Inner Mongolia Dazhong Mining Co., Ltd. (hereinafter referred to as "Dazhong Mining" or "the Company") announced on April 18 that the company conducted a roadshow on April 17. At the event, Dazhong Mining revealed that as of December 31, 2023, the company's total assets were 14.057 billion yuan, an increase of 20.38% over the same period, total liabilities were 8.158 billion yuan, an increase of 59.50% over the same period, and the asset-liability ratio was 58.03%, an increase of 14.23% over the same period. The increase in liabilities was mainly due to the increase in liabilities due to the large investment in the purchase of the Gada lithium mine in 2023. In the future, with the commissioning of projects under construction, cash flow and profits will increase, and the asset-liability ratio will gradually decrease after the company repays part of the loans.
Screenshot of Dazhong Mining's announcement
Dazhong Mining introduced the basic situation of the company to investors. The company was established in 1999 with a registered capital of 1.508 billion yuan. The company was listed in 2021, with a market value of about 15 billion yuan, and its main business is iron ore mining and dressing, lithium ore mining and smelting. The company has two major iron ore bases in Inner Mongolia and Anhui, and has large reserves and cost advantages in independent iron ore mining and dressing enterprises. On April 10, 2023, the Company acquired the control of lithium-bearing polymetallic mineral resources in the Jijiaoshan Mining Area of Linwu County, Hunan Province through auction, and on August 13, 2023, the Company acquired the prospecting right of the Gada Lithium Mine in Sichuan Province for RMB 4.206 billion through auction.
From 2020 to 2023, the company's performance is good and growing steadily, and the net profit in 2023 will be 1.141 billion yuan, a year-on-year increase of 4.52%. As of the end of 2023, the company's total assets are 14.057 billion yuan, net assets are 5.898 billion yuan, and the asset-liability ratio is 58.03%, with a good asset-liability structure.
Since its listing, the company has actively rewarded shareholders and shared the operating results of the company's development with shareholders, and has paid two cash dividends: a semi-annual dividend of 603 million yuan in 2021 and an annual dividend of 447 million yuan in 2022. The cumulative cash dividend is 1.05 billion yuan.
In order to enhance investor confidence, the company has invested a total of 270 million yuan in cash to repurchase 21.2166 million shares of the company, accounting for 1.41% of the company's current total share capital.
Based on the company's management's confidence in the company's future development and high recognition of its value, Lin Pusheng, general manager, and Lin Puzheng, secretary of the board of directors, increased their holdings by 3,000,100 shares and 532,200 shares respectively from May to June 2023. At present, Lin Puzheng, secretary of the board of directors of the company, intends to continue to increase his holdings of the company's shares by no less than 30,160,432 shares, accounting for 2% of the company's total share capital.
In the future, the company will continue to consolidate the leading position of private iron ore enterprises and promote the production of lithium ore projects. At the same time, it actively pays attention to and acquires high-quality mineral resources at home and abroad, and expands resources to achieve sustainable development and enhance profitability.
Dazhong Mining replied that iron ore and lithium ore are both solid mines, and the mining and smelting technologies are similar, mainly as follows:
Mining: The company's mining design will take the lead in using shield machines to drill tunnels in the lithium industry to shorten the construction period. At the same time, the iron ore currently mined by the company is underground mines, and the underground environment is complex, resulting in much higher mining difficulty than open-pit mines. The company has been operating for many years, and now has mature experience in underground roadway construction, development, support, filling and other projects. Iron ore and lithium ore are both solid mines, and the mining process is ore mining, crushing and screening, and Hunan Jijiaoshan lithium mine is an open-pit mine, which is less difficult to mine, and Sichuan Jiada lithium mine is an underground mine, and the company has a mature mining mode.
Beneficiation: the company's wholly-owned subsidiary, Jin Risheng Mining Zhouyoufang Mine, is mica-containing iron ore, the company has rich experience in mineral processing after years of accumulation of technology research and development, and has the ability and technical reserves to select qualified mica from iron ore tailings. Linwu County lithium ore is a lepidolite ore, and Hunan Jijiaoshan lithium ore is an iron-bearing lepidolite mine, lithium ore beneficiation is to remove the impurities in the raw ore, the lepidolite is selected, the final product of beneficiation is lepidolite concentrate, so the lepidolite ore beneficiation technology is similar to the mica beneficiation technology of Jinrisheng Mining. The company is the first to use the strong magnetic pre-separation process to separate lepidolite fine powder, which can greatly reduce the cost. Sichuan Gada lithium ore is a spodumene mine, and the beneficiation process is mainly flotation, which is similar to the flotation process of Jinrisheng Mining Mine.
Smelting process: Lithium carbonate production is divided into pyrometry and wet section. Among them, the fire section is the guarantee of lithium carbonate production capacity, cost and comprehensive recovery rate. The production process of the fire section is batching, mixing, drying and roasting, and its key technology lies in the control of the temperature curve of the rotary kiln and the environmental protection requirements, and its principle is similar to the company's existing rotary kiln process for producing pellets.
Talking about the company's capital expenditure and financing arrangements for the construction of lithium mines in the future, Dazhong Mining revealed that the current investment in two major projects of Hunan Jijiaoshan Lithium Mine has been determined, namely: the first phase of the lithium carbonate project with an annual output of 20,000 tons, with a construction investment of 1,304,274,800 yuan, and the comprehensive recycling project of 12 million tons of lithium resources with an annual processing of 186,275.63 million yuan, with a total investment of 3,167,031,100 yuan. Sichuan Gada Lithium Mine is in the prospecting stage, and the company will issue a detailed mine development and utilization plan according to the final prospecting results, clarify the mining plan and construction scale, and then determine the investment amount. The above investment will be invested on a year-by-year basis according to the progress of the project.
Funds for future investments are mainly financed by cash flow generated by iron ore and bank loans. On the one hand, the company's iron ore business has matured and increased production year by year, which can generate stable cash flow every year, and the net operating cash flow will reach about 1.6 billion yuan in 2023. On the other hand, the company maintains friendly and cooperative relations with the surviving banks, and at the same time, the company also expands new cooperation in Hunan and Sichuan, negotiates financing business with banks, leasing companies and other financial institutions, and obtains new credit. The above-mentioned sources of funds can support the company's daily operation, technological transformation and expansion, and investment in the construction of lithium mining projects.
In terms of the company's assets and liabilities, Dazhong Mining said that as of December 31, 2023, the company's total assets were 14.057 billion yuan, an increase of 20.38% over the same period, total liabilities were 8.158 billion yuan, an increase of 59.50% over the same period, and the asset-liability ratio was 58.03%, an increase of 14.23% over the same period. The increase in liabilities was mainly due to the increase in liabilities due to the large investment in the purchase of the Gada lithium mine in 2023. In the future, with the commissioning of projects under construction, cash flow and profits will increase, and the asset-liability ratio will gradually decrease after the company repays part of the loans.
Regarding the pricing and sales model of the company's products, Dazhong Mining said that the price of the company's iron concentrate powder is based on the Platts index and futures prices combined with the average price of the sales area, and the sales model is mainly through the signing of annual long-term agreements to establish stable sales channels to maintain a good production and sales situation.
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Reviewer: Wang Bei