CGN MINING(1164.HK)：POTENTIAL LOSS IN 1H25E BUT RECOVERY IN 2H25E;EXPECT A SOLID TURNAROUND IN 2026E

Group 1 - CGN Mining is forecasted to report a net loss of approximately RMB68 million in 1H25 due to a one-off negative margin in the uranium trading business and a decrease in spot uranium prices affecting joint venture margins [1] - The earnings forecast for 2025 has been reduced by 47% to RMB260 million, reflecting the anticipated weak results in 1H25, but a recovery in margins is expected in 2H25 [1] - The new pricing mechanism for the off-take agreement with the parent company starting in 2026 is expected to significantly boost earnings growth due to a higher contract price [1] Group 2 - The fixed price for uranium in the new off-take agreement for 2026 is set at US$94.22 per pound, which is substantially higher than the US$61.78 per pound in 2023, with annual increments planned [2] - The proportion of fixed pricing in the off-take agreement will decrease from 40% to 30%, which is expected to reduce the mismatch between joint venture average selling price and off-take pricing [2] - Potential risk factors include further trading losses, a pullback in spot uranium prices, and a lack of improvement in sulphuric acid supply from Kazakhstan [2]