Damo: Tibet copper mine is expected to be the key driving force for Zijin Mining's (02899) growth target price of HK$61

The Zhitong Finance App learned that Damo released a research report saying that Zijin Mining (02899, 601899.SH)'s Julong Copper Mine in Tibet is still a key driving force for the company's growth. The bank currently targets a target price of HK$61 and an “increase” rating. With the gradual commissioning of the second phase of the project, copper production is expected to reach 300,000 to 310,000 tons this year, and further increase to 310,000 to 320,000 tons next year.

In terms of costs, costs rose 13% year on year in the first half of this year, reflecting a shift from outsourcing to self-employment, including increases in equipment, vehicles, and labor costs, which are partly one-time. The bank expects costs to improve starting next year. As the second phase of production expansion progresses, the mine uses electric trucks and enhanced automation, and the number of drivers and transportation costs are expected to drop. Furthermore, the Tibetan government is discussing raising the tax rate on mineral resources, but even if the worst-case scenario is estimated, the impact on company costs is only about 1 billion to 1.5 billion yuan.

Overall, management indicated that the Group's copper production this year was 1.09 million to 1.2 million tons. The Dragon and Dragon projects will support growth next year, while Xiongcun is expected to contribute from 2028; Serbia will provide room for a longer period of upside. Management also anticipates that copper's contribution to the Group will increase over time.