November 16 News Hong Kong-listed company CSC Mining has acquired two new copper projects in the middle of the year - 100% of Australia's Lady Annie and 70% of Peru's Mina Justa. And in the middle of April this year, Damon G, who had passed the banner of the company. Barber (hereinafter referred to as Damon) said in an interview with reporters that high-quality assets, excellent management team, and asset valuation are the key factors for Zhong Ke Mining to obtain a competitive advantage. At the same time, he expects copper prices will continue to rise in the future.
Reporter: Compared with Jiangxi Copper and other large-scale copper mining enterprises, how does China Scientific Mining gain an edge in competition?
Damon: CST has a strong competitive advantage in three areas: First, excellent assets and great potential for growth in the future; CST Mining's two copper assets are of high quality, including the Lady Annie project in Australia. It is expected that the first batch of copper will be produced at the end of this year. Peru’s Mina Justa project has more than 1 million tons of copper reserves and more than 3 million tons of copper. It is expected to start production in 2013 and the annual output will reach 110,000 tons. The second is that we have established an excellent management team in Australia and Peru and have been operating efficiently. The third is the advantage of asset valuation. It is believed that the current asset value of the two copper mines of China Ke Mining has not been fully reflected in the capital market. For example, the capital cost of the Mina Justa project is only about US$0.9 per pound, which is half lower than that of 17 other copper projects in Peru and the relative global average. The level is 40% lower.
In addition, we acquired Australia's Lady Annie project during the financial tsunami. Due to the financial difficulties of its former owners, we were able to successfully acquire at significantly lower prices than our peers. Equinox Minerals, a copper miner listed in Canada and Australia recently, has purchased Australia’s Citadel Resources Group for AUD1.25 billion (equivalent to approximately HK$9.53 billion). The acquisitions of two copper mines, Lady Annie and Mina Justa, by China Science and Mining amounted to approximately HK$920 million and approximately HK$1.9 billion, respectively, and it was solely a project of Lady Annie with a value of more than HK$4.57 billion.
Reporter: What do you think are the problems and challenges encountered in the operation of the company?
Damon: As a mining company in Hong Kong operating mining business abroad, we were strongly opposed by local residents when we were mining, so the biggest problem we face is how to harmonize and harmonize with the local community and achieve a win-win situation. At present, China Scientific Mining strongly supports the construction of local infrastructure, and sponsors many local activities so that residents can live and work in peace, thus enabling our mining activities to proceed smoothly.
Reporter: What do you think about the future trend of copper prices? How will the risk of future copper price fluctuations be dealt with?
Damon: There are two factors that affect copper prices. One is the trend of the dollar; the other is the supply and demand of copper. At present, the dollar is weak, copper supply has not grown, and the global demand for copper is rising. It is believed that with the acceleration of urbanization in China, China’s demand for copper will gradually increase. At present, the international copper price is around 8,000 US dollars per ton. It is expected that in the future, under the situation of short supply and continuous devaluation of the US dollar, copper prices will continue to climb. The recent decline in copper prices is only a short-term fluctuation.
The change in the price of copper is indeed a factor that creates risks for the company's earnings, but at the moment we do not plan to hedge it. In fact, at present, mining companies rarely achieve hedging by shorting short-term contracts or signing forward agreements. Without hedging, it is expected to increase the company's future profits. On the other hand, even if the price of copper is adjusted in the future, China Kejing Mining can still achieve considerable profits.
Reporter: Compared with Jiangxi Copper and other large-scale copper mining enterprises, how does China Scientific Mining gain an edge in competition?
Damon: CST has a strong competitive advantage in three areas: First, excellent assets and great potential for growth in the future; CST Mining's two copper assets are of high quality, including the Lady Annie project in Australia. It is expected that the first batch of copper will be produced at the end of this year. Peru’s Mina Justa project has more than 1 million tons of copper reserves and more than 3 million tons of copper. It is expected to start production in 2013 and the annual output will reach 110,000 tons. The second is that we have established an excellent management team in Australia and Peru and have been operating efficiently. The third is the advantage of asset valuation. It is believed that the current asset value of the two copper mines of China Ke Mining has not been fully reflected in the capital market. For example, the capital cost of the Mina Justa project is only about US$0.9 per pound, which is half lower than that of 17 other copper projects in Peru and the relative global average. The level is 40% lower.
In addition, we acquired Australia's Lady Annie project during the financial tsunami. Due to the financial difficulties of its former owners, we were able to successfully acquire at significantly lower prices than our peers. Equinox Minerals, a copper miner listed in Canada and Australia recently, has purchased Australia’s Citadel Resources Group for AUD1.25 billion (equivalent to approximately HK$9.53 billion). The acquisitions of two copper mines, Lady Annie and Mina Justa, by China Science and Mining amounted to approximately HK$920 million and approximately HK$1.9 billion, respectively, and it was solely a project of Lady Annie with a value of more than HK$4.57 billion.
Reporter: What do you think are the problems and challenges encountered in the operation of the company?
Damon: As a mining company in Hong Kong operating mining business abroad, we were strongly opposed by local residents when we were mining, so the biggest problem we face is how to harmonize and harmonize with the local community and achieve a win-win situation. At present, China Scientific Mining strongly supports the construction of local infrastructure, and sponsors many local activities so that residents can live and work in peace, thus enabling our mining activities to proceed smoothly.
Reporter: What do you think about the future trend of copper prices? How will the risk of future copper price fluctuations be dealt with?
Damon: There are two factors that affect copper prices. One is the trend of the dollar; the other is the supply and demand of copper. At present, the dollar is weak, copper supply has not grown, and the global demand for copper is rising. It is believed that with the acceleration of urbanization in China, China’s demand for copper will gradually increase. At present, the international copper price is around 8,000 US dollars per ton. It is expected that in the future, under the situation of short supply and continuous devaluation of the US dollar, copper prices will continue to climb. The recent decline in copper prices is only a short-term fluctuation.
The change in the price of copper is indeed a factor that creates risks for the company's earnings, but at the moment we do not plan to hedge it. In fact, at present, mining companies rarely achieve hedging by shorting short-term contracts or signing forward agreements. Without hedging, it is expected to increase the company's future profits. On the other hand, even if the price of copper is adjusted in the future, China Kejing Mining can still achieve considerable profits.
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