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How About The Gold Content Of Jinxin Mining Industry

2021/4/13 7:01:00 22

CoreMining AreaGiant PandaGold Content

Kangding Jinxin mining Tourism Co., Ltd. (hereinafter referred to as Jinxin mining) recently released the performance report, once again let the market see the performance flexibility of small mining enterprises. In the first half of 2020, the company realized a revenue of 34.7776 million yuan and a net profit of 8.1286 million yuan, with a year-on-year decrease of more than 50%. By the end of 2020, the company's performance has been reversed, with annual revenue of 213 million yuan, a year-on-year increase of 10.41%, and the net profit attributable to shareholders of listed companies was 79.4595 million yuan, an increase of 5.15% over the same period of last year.

Although there is the word "tourism" in the full name of Jinxin mining company, in fact, the main business of Jinxin mining is not related to tourism. Its main business is gold mining, refining and sales, and its main product is gold.

For many years, Jinxin mining is still a small mining enterprise.

Jinxin mining has been listed on the new third board. The company plans to take two gold exploration projects such as Kangding gold mine (extension) detailed survey in Kangding city and the demand for supplementary working capital to enter the A-share main board market. The proposed fund-raising amount is more than 430 million yuan, equivalent to the total assets of the company in mid-2020.

At present, Jinxin mining has five mines with a production scale of less than 60000 tons / year, all of which are small mines. 2019 is the peak year of the company's output, and the output of synthetic gold is only 600 kg.

Compared with CICC gold, Shandong gold, Zijin Mining and other industry giants, Jinxin mining's share in China's gold market is very small, and its performance is greatly affected by the fluctuation of international gold price. It is worth noting that the two core mines of the company are involved in the buffer protection area of Sichuan Giant Panda Habitat natural heritage, and it is still uncertain when it can be renewed. In addition, the gold mine of the company is much higher than that of the peers.

Small mining enterprises with 100 employees

According to the prospectus, there are as many as 9 controlling shareholders and actual controllers of Jinxin mining, holding 56.1866 million shares in total, accounting for 46.57% of the total share capital before the issuance, which is the joint actual controller.

Contrary to many actual controllers, Jinxin mining has no more than 100 employees. In 2019, the number of employees is only 113. In the first half of 2020, the company only has 1 marketing staff, 2 purchasing staff, 25 management personnel and 65 production personnel.

In the first half of 2020, the company only paid social insurance for 66 employees and housing provident fund for 72 employees. The proportion of uninsured employees exceeded 40%.

Jinxin mining said that the company is located in the remote Ganzi Tibetan area, concentrated contiguous poverty-stricken areas, and more employees come from rural areas and other places, so they choose to pay new rural cooperative medical system, pay by themselves in other places or voluntarily give up paying social insurance or housing accumulation fund.

However, the 21st century economic report reporter consulted the judicial document website and found that in 2018, Jinxin mining industry was judged by the court to pay more than 800000 yuan for work-related injury compensation because it did not sign a labor contract with Li Jun, a former employee, and paid social insurance.

Relatively rare is that, as a mining company with 20 years' experience, Jinxin mining industry did not have any sales and R & D expenses during the reporting period. The company's operation followed the market and lacked product pricing power and technology research and development capacity.

During the reporting period, Jinxin mining's customers were only China Banknote Great Wall precious metal, Sichuan Tianze precious metal and Shenzhen emerald gold. In the past two years, the company only sold quality gold to two customers of China Banknote Great Wall precious metal and Shenzhen emerald gold.

From 2017 to the first half of 2020, the company's total gold output did not increase significantly. However, thanks to the sharp rise in gold prices in recent two years, the company's revenue has increased year by year.

Jinxin mining said that at present, the company's gold sales are not difficult, but it is still facing market risks caused by adverse changes in the demand of main customers. The trading price of the company's quality gold is closely related to the gold price, and the gold production enterprises have no pricing ability to sell gold. In the future, if the gold price fluctuates substantially, it may have an adverse impact on the company's operating performance.

The precious metal market analyst of Northeast Securities told the 21st century economic report that the gold price stood at a high level last year, and the market was facing the pressure of callback. Recently, the gold price has been adjusted more than 10% from the high point, which will bring profit and loss to gold mining enterprises.

However, compared with the volatility of the main business, the greater risk comes from the fact that Jinxin mining, which is in the process of being listed, may face the risk of no gold to be mined. The mining right and exploration right related to the company's development fate have even appeared the risk of non renewal.

According to the prospectus, Jinxin mining has 5 gold mining rights and 3 exploration rights. According to the relevant provisions, the mining right holder shall go through the renewal registration procedures with the registration administration organ 30 days before the expiration of the mining license and prospecting license.

According to the prospectus, the mining rights of Zhulin gold mine and sanyuandong gold mine, which account for nearly 40% of Jinxin mining's production capacity, have expired, but the mining area involves the buffer zone of the protection scope of the world natural heritage protection plan of Sichuan Giant Panda Habitat (2008). The new mining capacity expansion procedures need to be renewed after Sichuan Forestry and grass Bureau completes the revision of Sichuan Giant Panda Habitat natural heritage protection planning.

In December 2020, Sichuan natural resources department returned the company's mining license renewal application documents on the grounds that Zhulin gold mine was involved in the Giant Panda World Heritage buffer zone, and sanyuandong gold mine was involved in the peripheral protection area of world heritage sites, respectively.

Due to the uncertainty of the renewal time of the company's mining license, the mining of Zhulin gold mine and sanyuandong gold mine has been suspended since January 2021. In addition, Jinxin mining's other two mining license extension procedures of Huangjinping gold mine and sandiao gold mine are also in the processing stage, and there are also uncertainties.

If the company fails to obtain the extension approval of the relevant mineral rights after the expiration of the license period of the mining right and exploration right, or fails to obtain the mining right of the mineral resources in the exploration operation area after the proven reserves in a certain area, it will have adverse impact on the future sustainable operation.

In the prospectus, Jinxin mining claimed that the company had carried out the procedures in accordance with relevant laws and regulations, and the original competent department of World Heritage in Sichuan Province had approved the construction of Zhulin gold mine and sanyuandong gold mine, and Ganzi forestry and grass Bureau and Kangding forestry and grass bureau had issued relevant instructions, and would apply to delimit the two mining areas into the world natural heritage buffer zone of Sichuan Giant Panda habitat The scope of the natural heritage buffer zone of Sichuan Giant Panda habitat will not be a substantial obstacle to the application for long-term mining license after capacity expansion.

In this regard, the 21st century economic reporter has repeatedly verified the progress of Jinxin mining, but the company's telephone has not been able to get in touch.

Extremely high gold grade

Throughout the operation of Jinxin mining, the company's biggest operating bright spot is the gold ore grade of the head gold mining enterprise. The grade of gold ore is the key factor affecting the unit cost and gross profit rate of gold products. Generally speaking, the higher the grade of gold ore, the lower the unit cost and the higher the gross profit rate.

According to the prospectus of Jinxin Mining Co., Ltd., the total amount of gold ore in the main mining areas under the jurisdiction of the company has been reviewed and filed by the natural resources management department, and the total amount of gold ore is about 9.55 tons. During the reporting period, the average grade of ore selected by the company is 7.83g/t, 7.85g/t, 7.12g/t and 5.20g/t. The ore grade and beneficiation recovery rate of the mine owned by the company are relatively high, and the comprehensive recovery rate is about 95%.

Jinxin mining's five major gold ore grades completely crush comparable listed companies in the same industry.

According to the public data, the average grade of gold ores from 2011 to the first half of 2014 is between 3.95-4.39 g / T. The raw ore grades of Shandong gold and Jinxin mining were only 1.81 g / T, 1.59 g / T, 1.53 g / T and 1.60 g / T, respectively. The average grade of recoverable reserves of Zijin Mining by 2019 is about 2.75g/t.

The grade of gold ore in Jinxin mining industry is almost twice to five times that of Listed Companies in the same industry. Small mining enterprises have high-grade gold ore, which also makes the gross profit rate of Jinxin mining industry higher than the average value of the industry all the year round in the report period. Is the "gold content" in it true?

According to China's mining enterprise license system, mining exploration and mining must be carried out according to the production capacity issued by the mining license, and should not be higher than the mining scale approved by the regulatory authorities. In recent years, Jinxin mining's mining capacity utilization rate has basically reached 100%, that is, the company's annual production capacity in the mining license of 77500 tons.

According to the company, during the reporting period, the company strictly abides by the laws and regulations related to mining rights, and there is no situation that the production capacity exceeds the certified capacity, and there is no situation that mining beyond the mining area or adopting destructive mining methods will cause damage to mineral resources.

However, the 21st century economic reporter checked the output of gold products and tailings treatment capacity, and found that the production data were quite different.

From 2018 to 2020, the original ore mining output of Jinxin mining industry is 77242.84 tons, 77488.21 tons and 86545.41 tons, and the capacity utilization rate is 99.67%, 99.98% and 82.03% respectively.

However, compared with the data in 2018 and 2019, it is not difficult to find that the production capacity of Jinxin Mining Co., Ltd. is almost the same in two years, the grade of ore selected is about 7g / T, and the comprehensive recovery rate of mineral processing is about 95%. However, there is a big difference in the production and sales of gold products in the two years. In 2018, the company sold 562.90kg of total gold, and in 2019, it was 602.80kg.

The discharge capacity of solid waste from mineral processing is even more significant. In 2018, the discharge of solid waste from mineral processing of the company was 100000 tons, while that in 2019 was 77739.96 tons, with a difference of more than 20000 tons between two years. Moreover, the tonnage of tailings discharged after refining of crude gold was significantly higher than the ore mining volume of the company.

Jinxin mining did not explain the difference, and only the company has a clear answer to whether there is excessive mining.

The accident caused many casualties

In the prospectus, Jinxin mining disclosed that in March 2020, Lihong project, the contractor of sanyuandong gold mine, caused a safety production accident in which two people died due to illegal operation of its workers. In May 2020, Kangding Emergency Management Bureau issued a "decision on administrative punishment" and imposed a fine of 60000 yuan due to the company's failure to timely discover the safety production problems in Lihong project and supervise the rectification.

In the process of gold mining and beneficiation, explosives, detonators and other civil explosives and hazardous chemicals such as sodium cyanide are needed. In the process of exploration, mineral processing and refining, accidents, mechanical failures or damages may also occur.

As a small mining enterprise, the mining and dressing project of Jinxin mining is outsourced, which outsources the labor-intensive shaft development and ore mining and dressing work to contractors, but the production safety and work quality of these contractors are difficult to guarantee.

According to the investigation by 21st century economic reporter, there have been many safety accidents in Jinxin mining industry, causing many casualties.

According to the judicial document network, on November 25, 2013, the roof of No. 20 mine of Jinxin mining industry fell off and caused a landslide. Two migrant workers, Liu Jucai and Meng Tianlu, were buried to death. After investigation, Kangding County Public Security Bureau identified it as a work safety accident. After the accident, Jinxin mining said it had paid 780000 yuan to Liu Jucai's family members and 890000 yuan to Meng Tianlu's family members, and filed a lawsuit with Yongcheng property insurance company in 2015 because of the accident compensation.

Dazhong Securities News reported that in 2020, a whistleblower posted on the Internet saying that Jinxin mining had a safety production liability accident that killed one person in 2005, and said that "the accident unit has not paid any personal damage compensation so far".

According to the informant, the above-mentioned accident was legally identified as a production safety accident by Ganzi State Administration of work safety in accordance with the document gan'anjian Zi (2006) No. 16, namely the reply of Ganzi State Administration of work safety on the investigation of the accident on July 11, 2005.

In the feedback of the prospectus, the CSRC focused on production safety and asked Jinxin mining to explain whether there are potential safety hazards in the company, whether it will affect the production and operation of the issuer, and whether there are violations of laws and regulations in production safety. But for the above accidents, Jinxin mining has not disclosed.

 

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