Are China's Mininng Resources Undervalued?

 

Why does China Mining Resources have been on the throne of "dark horse stocks"?

When Ganfeng Lithium, Rongjie Shares, Tianqi Lithium, and Shengxin Lithium were calling the wind and rain in the secondary market and constantly setting new highs, many investors exclaimed: China Mining Resources is also an undervalued dark horse stock

 

Refer Solar Power in India

 

The reason why China Mining Resources was previously buried in the lithium battery sector is because its main business is the cesium rubidium salt business, followed by the lithium salt business. For example, based on the 2021 mid-year report, the revenue of cesium rubidium salt is more than 400 million yuan. 

Accounting for 46.13% of revenue, lithium salt business accounted for more than 200 million yuan, accounting for 25.3% of revenue. However, in recent years, China Mining Resources has been expanding its efforts in the lithium battery sector and intends to vigorously develop the lithium salt business.

 

How to describe the scarcity value of lithium ore? 

As an example, in September 2021, Pilbara, Australia’s main lithium mining company, conducted the second spodumene concentrate auction on the BMX electronic platform. The final price was US$2240/ton. The first auction was at the end of July. The auction price was $1,250/ton, an amazing increase. 

In September 2021, the average domestic market spot price of battery-grade lithium carbonate has exceeded 150,000 yuan/ton.

 

On October 15, 2021, China Mining Resources closed at 55.99 yuan per share, with a market value of 18.074 billion yuan.

 

What are the highlights of the undervalued dark horse stock of China Mining Resources, and what are the big moves? 

Let's explore it together.

I. Multi-mining in hand, cesium salt and lithium salt dual main business

1. One is that its own lithium mine will be put into operation within this year

In March 2019, China Mining Resources spent US$130 million to purchase the underlying assets held by Cabot Corporation and its wholly-owned subsidiary Cabot G.B., a company listed on the NYSE, namely the three subsidiaries of Tanco, CSF Inc and CSF Limited. 100% shares. Among them, Tanco is a wholly-owned Canadian subsidiary of Cabot, which has a mine containing lithium resources.

 

At present, China Mining Resources already holds 100% of the Tanco mine. 

The spodumene mine in the mining area is planned to be put into operation in September 2021. 

The raw ore production scale is 120,000 tons/year, and the reserves of unmined lithium ore resources: Li2O average grade 3.146 % Of the ore volume is 2.0834.5 million tons, which can extract 65536.27 tons of Li2O metal. 

The average Li2O grade is 1.852% of the ore volume is 2.5193.5 million tons, and the volume of Li2O metal can be extracted is 46663.23 tons.

 

At present, China Mineral Resources has a total of 95 mining rights of various types, including 37 mining rights, 44 prospecting rights, 13 surface leases, and 1 quarry mining right. The distribution of mining rights is: 

There are currently 57 mining rights in Canada, including 3 mining rights, 40 prospecting rights, 13 surface leases, and 1 quarry mining rights.

7 existing mining rights in Zambia, of which There are 3 mining rights and 4 prospecting rights. There are currently 31 mining rights in Zimbabwe.

 

The other part is to obtain the underwriting rights of some products of the Arcadia lithium mine project.

 

China Mineral Resources's shareholding company Prospect Resources Australia announced in July 2021 that the company's interest in the Arcadia lithium mine project has increased by 17% to 87%. 

Its mines have excellent lithium resource reserves. The sum of recoverable and pre-mined reserves is 37.4 million tons, of which the average grade of lithium oxide is 1.22%, which can produce about 1.13 million tons of lithium carbonate.

 

Previously, China Mining Resources signed an agreement with Australian PSC to obtain the underwriting rights for some products of the Arcadia lithium mine project, underwriting the project's 280,000 tons of spodumene concentrate and 784,000 tons of lapisite concentrate, the future of Arcadia lithium mine It is expected to become a stable source of raw materials for the company. 

Prospect Resources recently formally delivered the first batch of permeate feldspar concentrate samples to China Mineral Resources. The trial production of permeate feldspar concentrate will undergo independent quality certification and laboratory analysis, and it is expected to be completed before December 31, 2021. 

he product qualification certification process of the spodumene concentrate and the preparation of spodumene concentrate samples to meet customer needs.

 

 

With a large number of mines, it is still the core competitiveness of China Mining Resources. Because of mines, the top of the industry chain is locked, and it can be calm. As long as the downstream boom is in place, there is no worry about making money.

 

2. The expansion of lithium fluoride and lithium carbonate has been approved and is in the process of expansion

China Mining Resources has carried out a technological transformation and expansion of the battery-grade lithium fluoride production line. 

The technological transformation project has been approved by the environmental assessment in July 2021. It is planned to reach production within the year. By then, the company's lithium fluoride production capacity will be increased from 3000 tons/year to 6000 Tons/year, will further expand the market share, and has successfully entered the Tesla supply chain system.

 

It is worth mentioning that the battery-grade lithium fluoride produced by China Mining Resources uses a process to purify industrial-grade lithium carbonate to high-purity lithium carbonate, and then use hydrogen fluoride to transform it into battery-grade lithium fluoride. This process is the company’s first Invented and obtained a patent for invention. 

The specific steps are: industrial grade lithium carbonate→hydrogenation→pyrolysis→separation→high-purity lithium carbonate→transformation with hydrogen fluoride→separation→battery grade lithium fluoride.

 

Such a technical route has the characteristics of high recovery rate, low cost, coarse product particle size, uniform particle size, high purity and easy drying.

 

Battery-grade lithium fluoride is the raw material for the production of lithium hexafluorophosphate, and lithium hexafluorophosphate is the core component of the electrolyte. 

he electrolyte is an important component of lithium-ion power batteries and energy storage batteries. Therefore, as long as the downstream demand is determined, expand It is not difficult to taste the fruit after delivery.

 

3. 25,000 tons of high-end lithium salt has been put into production

China Mineral Resources now has 6000 tons/year industrial-grade lithium carbonate production capacity for battery-grade lithium carbonate and high-purity lithium carbonate. The process used to produce battery-grade lithium carbonate and high-purity lithium carbonate is improved on the basis of the carbonization decomposition method. It is obtained by carbonization, pyrolysis, separation and purification several times.

 

The newly built 25,000-ton/year battery-grade lithium hydroxide and battery-grade lithium carbonate production line has been successfully ignited and put into trial production operation on August 19, 2021, has passed the trial production audit, and completed the trial production filing and approval procedures. It will be put into operation in the third quarter and within the year. Achieve production.

 

Battery-grade lithium hydroxide and battery-grade lithium carbonate are upstream materials for preparing lithium-ion battery cathode materials, and their role and strategic significance are similar to the battery-grade lithium fluoride mentioned above.

 

At present, new energy vehicles are in a period of rapid development, stimulating the upstream demand for lithium fluoride, lithium carbonate, lithium hydroxide and other lithium salts to soar, and the price soars. China Mining Resources has seen this trend and is decisive. Put more horsepower on the lithium salt circuit.

 

4. The global scarce market for cesium rubidium salt has begun to open up and the demand has grown steadily, with huge potential.

As mentioned above, the high-quality spodumene stored in the Tanco mine controlled by the company provides raw material support for the company’s lithium salt processing business. 

The only mine in production with pollucite as the main ore, the pollucite produced by it is of high grade and has high economic mining value.

 

China Mineral Resources is currently a leading enterprise in the field of cesium rubidium salt fine chemical industry and the most complete manufacturer in the global cesium industry chain. The company is the world’s main supplier of rubidium salt products, and has the ability to mine, process and produce cesium garnet products. And the ability to provide products and technical services, cesium salt products, mainly including cesium carbonate, cesium sulfate, cesium nitrate, cesium hydroxide, cesium iodide and cesium formate, are mainly used in medical medicine, aerospace, 5G communications and other fields.

 

Especially in terms of cesium formate, China Mineral Resources is the only producer and supplier of cesium formate in the world. Cesium formate is mainly used in the petroleum and natural gas industry. It is used as a drilling fluid and completion fluid in the drilling and completion of high-temperature and high-pressure oil and gas wells, and has broad application prospects.

 

II. Performance release enters a clear period

On October 10, 2021, China Mining Resources released a performance forecast. It is estimated that the net profit attributable to the parent in the first three quarters of 2021 will be 285 million to 305 million yuan, a year-on-year increase of 183.5% to 203.4%; basic earnings per share are 0.8948 yuan to 0.9576 yuan .

 

The interim report shows that in the first half of 2021, China Mining Resources' operating income was approximately 874 million yuan, an increase of 68.51% year-on-year.

The net profit attributable to the parent was approximately 173 million yuan, an increase of 130.82% year-on-year. Basic earnings per share were RMB 0.5473, an increase of 102.78% year-on-year.

 

Whether it is year-on-year or quarter-on-quarter, one of the main reasons for the rapid growth in net profit in the first three quarters is that the market demand for new energy and new materials has increased significantly, product prices have risen, and sales have increased. 

The company’s main products cesium salt business and lithium salt business Revenue has increased significantly over the same period last year, and the company's profitability has improved.　

 

The average prices of cesium carbonate and cesium sulfate in the third quarter of 2021 were 8 million yuan/ton and 9.25 million yuan/ton, up 28% and 5.71% year-on-year respectively. Chinese domestic lithium fluoride prices rose from around 100,000 yuan/ton at the beginning of the year above 200,000 yuan/ton, the sales volume of lithium fluoride in the first half of the year was 3,000 tons. When it is upgraded to 6,000 tons, the performance will take off again.

 

The strong increase in the price of cesium salt and lithium salt has resulted in a substantial increase in the company’s main products, cesium salt business and lithium salt business income over the same period last year, and the profitability has increased significantly, which has become the main driving force supporting the company’s substantial growth during the reporting period. .

 

At present, Ganfeng Lithium, Rongjie, Tianqi Lithium, and Shengxin Lithium have skyrocketed in the secondary market and made all the limelight. China Mining Resources may be the next one.