Core Viewpoint - The company focuses on global copper and zinc mining, excelling in overseas acquisitions and operations, with successful international cases expected to replicate. The main profit currently comes from copper mining, and with the Federal Reserve entering a rate-cutting cycle, the demand for copper driven by energy transition is expected to push copper prices upward. The company's three main mines are on a fast development track, with Las Bambas improving community relations and achieving production increases and cost reductions. The Kinsevere project is progressing well, and the Khoemacau expansion plan has been initiated with experienced local partners [1]. Company Overview - The company is an international mining firm specializing in copper and zinc extraction, serving as the primary overseas resource operation platform for China Minmetals Corporation. Since its transformation in 2010, the company has steadily grown through overseas mergers and acquisitions, successfully acquiring multiple mines such as OZ, Kinsevere, Las Bambas, and Khoemacau, all of which have become profitable. The successful international operations are expected to continue, positioning the company as a leading global resource firm [1]. Mining Overview - Las Bambas Mine (Peru): The copper grade increased from 0.5%-0.6% to 0.9% with the successful production of the second pit, Chalcobamba. Copper sales rose from 126,000 tons to 190,000 tons, and C1 costs decreased from $1.81 per pound to $1.06 per pound, leading to significant profit growth [2]. - Kinsevere Mine (Democratic Republic of Congo): The mine has excellent resource endowment, allowing for open-pit mining without blasting, with an average grade of 2%. The transition from oxide to sulfide ore is partially complete, but domestic power shortages in the DRC have affected production. Once fully operational, the project will have a capacity of 130,000 tons, with a significant reduction in C1 costs expected [2]. - Khoemacau Mine (Botswana): Current capacity is around 60,000 tons, with plans to reach 80,000 tons by 2028 and a long-term target of 200,000 tons. The company began collaborating with Jincheng Mining, which has extensive overseas mining experience, enhancing the certainty of the Khoemacau expansion [2]. Performance Forecast and Investment Recommendations - Based on the construction progress of the mines, copper sales are projected to be 520,000 tons, 535,000 tons, and 541,000 tons for 2025-2027, with corresponding equity amounts of 346,000 tons, 360,000 tons, and 364,000 tons. Assuming copper prices of $9,500 per ton, $10,000 per ton, and $10,500 per ton for 2025-2027, the company's net profit attributable to shareholders is expected to be $719 million, $782 million, and $859 million, respectively. The profit increase is mainly driven by rising copper prices, declining financial costs, and slight increases in production and sales [2]. Valuation - At an exchange rate of 7.78 HKD/USD, the company's profits for 2025-2027 are projected to be HKD 5.6 billion, HKD 6.08 billion, and HKD 6.68 billion, with corresponding P/E ratios of 12.1x, 11.1x, and 10.1x. Given the expected price increases for copper, the reasonable valuation for resource stocks is around 15-20x, indicating that the company's value is significantly undervalued, warranting an "overweight" rating [3].
五矿资源(1208.HK)深度报告：国际化运营典范 铜矿开采进入快车道