From: Securities Daily, 26 Feb 2020
Mining Management Co., Ltd embraced a new source of economic growth. According to its announcement on 26 Feb 2020, PFS is in progress for SanMatias Copper-Gold-Silver Project in Columbia – the recently acquired asset for JCHX from Cordoba, while further prospecting work is expected from Cordoba, marking a big step for JCHX in terms of mining investment.It is noted that JCHX has been focused on mining services for over twenty years with remarkable achievements obtained in this sector, and it has made mining investment as one of its new strategies since listed in SSE. Through years of efforts, first breakthrough was made in 2019 when its investment in Guizhou Liangchahe Phosphate Mine completed, after which more steps were taken by investing in Dikulushi Copper Mine in DRC, and SanMatias Copper-Gold Project in Columbia. While maintaining a pioneering position in mining services market, JCHX is expecting more sources of economic growth by exploring opportunities globally as an investor.
Strengthened Cooperation with King of Prospector
In Nov 2019, JCHX signed a Subscription Agreement with Cordoba Minerals Corp for acquiring shares in SanMatias Copper-Gold Project in Columbia. Delivery was completed in Jan 2020.
According to the preliminary economic assessment on SanMatias Project released by Cordoba in Jul 2019, estimated gold reserve is approximately 972,800 oz (probable reserve 942,900 oz, inferred reserve 29,900 oz), equivalent to 30 tons; and silver reserve is appr. 9,072,500 oz (probable reserve 8,887,200 oz, inferred reserve 185,300 oz), equivalent to 282 tons.
The preliminary economic projection was also disclosed by Cordoba demonstrating an average net profit of USD 56 million per year, pre-tax NPV of USD 347 million and IRR of 26.8%, based on the assumption of Cu price @ 3.24 USD /lb, Au price @1,400 USD/oz, Ag price @ 17.75 USD/oz, and discount rate of 8%.
JCHX mentioned that a new model of “resources + operation” was applied when investing SanMatias Project, which is an upgrade to previous business model. According to the Subscription Agreement, JCHX has not only pre-emptive right in the disposal of equity or the issuance of additional shares, but also the priority to undertake the mine construction and mining operation services of the project, maximizing the benefit to its core business by M&A.
It is said that the beneficial owner of SanMatias Project is Mr. Robert Friedland, founder of Ivanhoe, a pioneer in global resources exploration, and often known as “King of Prospector”. Currently JCHX is undertaking mine construction and development works at Kamoa-Kakula Copper Mine in DRC – the largest in Africa and 4th largest copper asset in the world, a joint venture between Ivanhoe & Zijin Group and discovered by Ivanhoe in the first place. Mr. Robert Friedland speaks highly of JCHX’s capability and performance, based on which both parties expanded cooperation from mining service to co-investment, to give full play to mutual advantages and to build a top-notch project together.
New Source of Economic Growth
As for now JCHX acquired a new asset.
In May 2019, JCHX signed the Equity Transfer Agreement with Guizhou Kailin Group, and obtained 90% of shares in Guizhou Liangchahe Mining Co., Ltd, while Kailin holds 10% shares.
Guizhou Liangchahe Mining Co., Ltd owns the mining right of Liangchahe (South) Phosphate Mine in Kaiyang, Guizhou. It is estimated that average EBITDA is appr. RMB 80,852,400 post ramp-up, with Return of Investment (ROI) of 11.94%, profit and tax investment ratio of 19.65%. It was also mentioned that preliminary design is in progress for the project while approvals required for commencing the works is under preparation.
In Aug 2019, JCHX acquired Dikulushi Copper Mine (DRC) from Trafigura, a leading mining group. The concession of acquired asset covers 70 square kilometers, where JCHX shall continue exploration while restoring production. Delivery of the asset can be expected soon, once completed JCHX shall prepare a restoration plan according to which necessary arrangement and works shall be done to ensure a mobilization before then end of 2020 and a production recovery next year.
Despite of ups and downs in mining market, JCHX has always maintained a steady growth owing to its unique technical advantages and rich experience. With current contract value of more than RMB 8 billion, a continued growth can be expected for JCHX. Particularly JCHX witnessed leap-frog development in overseas market with revenue from overseas operations rising continuously in recent years, which is estimated to exceed 50% of total revenue in 2020.
With more than 20 years of front-line experience in mine construction, its technical capabilities and know-hows shall play a more important role in developing and operating its own assets. According to an insider, the unique advantages of JCHX will become more prominent and bring more competitiveness to its future development. By embarking on and going forward on its journey in resource investment, it is evident that new sources of economic growth are on the way, making JCHX a company full of potential.
