CHIFENG JILONG GOLD MINING(600988)：INCREASES COPPER AND GOLD RESERVES IN LAOS MINING AREA; SALES VOLUME AND PRICES TO RISE

　　What's new　　Chifeng Jilong Gold Mining (Chifeng Gold) announced that it completed Phase I resource extraction work for its Sepon new discovery (SND) gold- copper project at end-June 2025. On August 7, the company issued a Joint Ore Reserves Committee (JORC)-compliant resource estimation report, marking an increase of 70.7t in its gold reserves and 0.33mnt in copper reserves. The estimate was prepared by the in-house exploration team of Lane Xang Minerals (a subsidiary) and independently reviewed by SRK Consulting.　　Comments　　SND gold-copper project discovered in the mining area likely to increase equity-based gold resources by 28%.　　Large estimated resources: According to the announcement, a total of 106.9t of gold equivalent metal (copper was converted to gold) was discovered in the mining area, which would increase the company’s equity-based gold resources by 28% to about 440t.　　Located in the south of the company’s Laos mining area, the SND gold-copper project is a porphyry-type gold-copper deposit. According to the announcement, this project reported mineral resources using a boundary grade of 0.40g/t gold equivalent - with approximately 93.7mnt of “indicated” level resources at an average grade of 0.57g/t gold and 0.27% copper; and 37.8mnt of “inferred” level resources at an average grade of 0.46g/t gold and 0.22% copper - totaling 0.13bnt of ore with a gold equivalent grade of 0.81g/t. This includes an estimated metal content of around 106.9t of gold equivalent (70.7t for gold metal and 33.2t for copper metal).　　Large potential for reserve expansion: According to the announcement, Chifeng Gold believes it is possible to increase the mineral resources of the SND deposit through deeper drilling, as the ore system remains open down-dip. Lane Xang Minerals plans to resume drilling after the rainy season ends, aiming to increase and upgrade mineral resources.　　High recovery rate for mineral beneficiation: The company announced that Lane Xang Minerals has conducted preliminary metallurgical tests on gold and copper ores of the SND project. Test results show that those medium-hardness ores are suitable for flotation. The combined gold recovery of flotation and cyanidation of flotation tailings could reach 88%, and copper recovery could reach 88.5%, according to the company announcement.　　Looking ahead, Chifeng Gold is making simultaneous efforts to increase gold mine output and reduce costs. Domestically, Chifeng Gold expects its subsidiary Wulong Mining’s ore-treatment to reach full capacity of 3,000t/day in 2025. The subsidiary Jilong Mining plans to increase its daily ore treatment capacity to 1,000t in 2025. The subsidiary Xidengping Gold Mining has secured a mining license for its Phase II project, with a designed gold capacity exceeding 1t/year.　　Internationally, at Chifeng Gold’s Sepon mine in Laos, exploration work in the adjacent deposits is progressing as scheduled to sustain gold production. We believe the SND gold-copper deposit discovered in the south likely will underpin future output growth. At Chifeng Gold’s Wassa mine in Ghana, we expect the restart of the dead man hill (DMH) pit to lift gold output, complemented by intensified drilling to upgrade resources and enhance production capacity.　　Successful listing on the main board of the Hong Kong Stock Exchange likely to fuel rapid growth. According to an announcement, Jilong Mining was listed on the main board of the Hong Kong Stock Exchange on March 10, 2025, with 40% of the proceeds raised to be used to acquire new mines. We believe the listing marks the company’s access to overseas financing channels, which could accelerate its M&A, facilitate metal reserve expansion, and further boost output.　　Financials and valuation　　We maintain our 2025 and 2026 earnings forecasts at Rmb2.99bn and Rmb3.19bn. The stock is trading at 16x 2025e and 15x 2026e P/E. We maintain an OUTPERFORM rating and our target price of Rmb35.21, implying 22x 2025e and 21x 2026e P/E, offering 38% upside.　　Risks　　Sharp fluctuations in product prices; disappointing progress of projects; overseas geopolitical risks. 【免责声明】本文仅代表第三方观点，不代表和讯网立场。投资者据此操作，风险请自担。

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