Zijin Mining 2899

[eauyong]

SHANGHAI (Dow Jones)--Zijin Mining Group Co. (601899.SH) said it applied to have its shares suspended from trading in Shanghai on Monday because it is in talks to acquire another company.

It said in a statement it will disclose the relevant information in a timely manner.

Source; Michelle Ng, Dow Jones Newswires

[winston]

Zijin vows to improve after watchdog rap

Zijin Mining Group (2899), criticized by the mainland regulator for poor corporate governance, said it would make up for its shortcomings.

The mining firm informed both the Shanghai and Hong Kong stock exchanges yesterday that the Fujian branch of the China Securities Regulatory Commission deemed it to have breached regulations over the board of directors' records, information disclosures, financial and accounting policies as well as fund-raising

The criticism came after an earlier onsite inspection by the regulator, Zijin said.

"Most of the problems mentioned in the [regulator's] letter concerned issues in 2008. Although there were some improvements this year, it's definitely not good news for its share price in the long run," said China International Capital Corp analyst Luo Wei.

"It could affect investors' confidence, as they might wonder if there are other management problems."

According to the regulator, several transaction figures disclosed in Zijin's 2008 annual report were not consistent with actual figures. The company said they were accounting and proofreading mistakes that will be rectified in this year's report.

Zijin closed 1.6 percent lower at HK$7.59 yesterday.

Source; SOPHIE HE, The Standard HK

http://www.thestandard.com.hk/news_deta ... 91230&fc=4

[winston]

Not vested. From Phillips:-


Risks

Global economy recovers without obvious inflation and gold price goes down significantly;
Smelting may make pollution and increase the cost;
Resources tax policy appears and taxation burden rises for gold miners.


Valuation

Based on Zijin Mining`s sustainable growth and increasing gold price, we expect its turnover of FY09 and FY10 of RMB 20.7 billion and RMB25.6 billion, increase of 27% and 23% respectively, net profit of RMB4.4 billion and RMB5.5 billion, increase of 44% and 24% y/y respectively; and EPS of RMB0.31 and RMB0.38.

Regarding valuation, Zijin has obvious value premium to HSI in most of its records, especially in 2006-2007, its premium peaked with 200% with average PE of 30x.

At present, the circumstance is better for gold than in 2006-2007. Given increasing gold price and growth expectation of this company, we give it 30x PE of FY09 and 12-m TP of HK$10.38, rating Buy.

[winston]

Not vested. So do you use PE to value a gold company ?

DJ MARKET TALK:Taifook Tips Zijin Valuation Undemanding,Rates Buy

1436 [Dow Jones] STOCK CALL: Taifook thinks Zijin's (2899.HK) valuation undemanding, as it's trading below its 5-year historical average P/E of above 40X.

"Zijin's stock price has been lagging against its peers for some time and we think the share price has yet to truly reflect Zijin as the largest gold mining company in China in terms of reserves and production capacity." Keeps at Buy, keeps target at HK$11.10. Stock down 0.4% at HK$8.00


Source: Dow Jones Newswire

[winston]

Not vested. From Phillips:-

Risk

Global economy recovers free of inflation and gold price drops sharply;
The smelting may cause pollution and increase the cost burden;
The tax burden may increase because the resource tax policy may be implemented at a larger scale;
Its acquisitions are suffocated;
The stock market keeps the call-back trend.


Recommending buying for low valuation level

Based on Zijin Mining's sustainable growth and increasing gold price, we expect its turnover of FY10 and FY11 of RMB 25.5 billion and RMB30.8 billion, increase by 26% and 20% respectively, net profit of RMB4.9 billion and RMB6.2 billion, increase by 38% and 26% y/y respectively; and EPS of RMB0.34 and RMB0.42.

Regarding valuation, Zijin Mining has obvious value premium to HSI in most of its records, with average premium about 100%, especially in 2006-2007, its premium peaked with 200%. The Company's average P/E is 28.8X.

At present, because of the slumping of the stock market, Zijin Mining's value premium holds at a low level, which may prove its valuation is more attractive. Considering the increase of gold price and growth expectation of the Company, we give it 20x P/E of FY10 and 12-m TP of HK$7.64, rating Buy.

[winston]

Not vested.

DJ MARKET TALK:Zijin Down 8.8%;Poor Corporate Governance Eyed -GC

1150 [Dow Jones] Zijin Mining (2899.HK) down 8.8% at HK$5.09, on trade resumption, after setting fresh year-to-date low of HK$5.08 while psychological HK$5.00 likely an immediate cap, after news wastewater leak from copper mine at Fujian, China owned by company has contaminated river.

"While the details of production halt are still unclear, likely fines and compensation arising from the incident are not confirmed. We believe the incident will cause tremendous selling pressure on Zijin," says GuocoCapital.

Adds, news undoubtedly bringing negative publicity to Zijin and raises investors' doubt on its corporate governance, especially after company only disclosed incident 9 days after it took place.

Downgrades stock to Sell vs Buy, cuts target to HK$4.90 (12X FY10 P/E) vs HK$7.36, as "we believe that investors will avoid the stock amid company's poor corporate governance."


Source: Dow Jones Newswire

[winston]

Not vested. Anymore room to short ?

Zijin plunges to 15-month low

Wednesday, July 14, 2010

Zijin Mining (2899) shares hit a 15-month low after the firm shut a mainland copper smelter that leaked acidic water, killing marine life.

After trading resumed yesterday, shares of the mainland's largest gold producer dived as much as 13.4 percent before closing 12.2 percent lower at HK$4.90.

President and vice chairman Luo Yingnan admitted the smelter's design was defective and the firm had initially underestimated the severity of the leakage.

Zijin's Zijinshan plant in Fujian province, which produces 12,800 tonnes of copper a year, will stop production indefinitely and undergo a revamp. It is likely to pay a penalty and compensation to local fishermen after the Ting River was polluted, Bloomberg reported.

China International Capital estimates Zijin will have to pay downstream fish farmers 22.7 million yuan (HK$26.04 million). It could lose 369 million yuan in income in lost production.

These moves will reduce earnings by 1 fen per share.

Bank of America Merrill Lynch expects the decrease to be 2 fen apiece and slashed its target price by 37 percent to HK$5.07. DEREK YIU AND KATHERINE NG


http://www.thestandard.com.hk/news_deta ... 00714&fc=4

[winston]

May not be wise to catch this falling knife ...

Zijin shares slide on probe by Sophie He

Friday, July 16, 2010

Mainland gold producer Zijin Mining Group (2899) has confirmed it is being investigated by the China Securities Regulatory Commission over an acid leak which killed tonnes of fish in a river and reservoir in Fujian province.

Zijin shares plunged as much as 3.6 percent yesterday, closing down 3.4 percent at HK$4.82 - a record low.

Analysts said the incident could cost Zijin a fine of more than 500 million yuan (HK$572 million), accounting for more than 10 percent of its net profit this year.

CLSA analyst Richard Leung put the stock on "underperform" from "buy" and slashed its target price by 37 percent to HK$5.

Zijin said it received a notice on Wednesday from the Fujian Regulatory Bureau, the industry watchdog, calling for an explanation of the leak in a waste water pond at its Zijinshan copper mine.

The miner is alleged to have caused a major fish kill at a river and reservoir after the acid leakage on July 3.

On Monday it had blamed heavy rains for the leakage, but said yesterday it "will fully cooperate with the [regulator]."

Leung at CLSA said the total penalty and clean-up costs could be as much as 541 million yuan and its Zijinshan copper mine could be permanently shut.

"The fine and reduced production will cost 14.2 percent of Zijin's net profit this year and 21 percent next year," said Leung.

http://www.thestandard.com.hk/news_deta ... 00716&fc=8

[winston]

Everyday that I'm not shorting, it drops further ...

DJ MARKET TALK: Zijin Off 3.9%; Still Not A Buying Opportunity-MS

1059 [Dow Jones] Zijin Mining (2899.HK) down 3.9% at HK$4.63, extending recent falls (down 13.6% week-to-yesterday), as news on river contamination remains overhang to shares due to concerns over production halt's impact on earnings, and potential costs of penalty with China's securities regulator looking into company's disclosure of incident.

Morgan Stanley notes, while Zijin's shares appear to have over-corrected, as "they seem to price in a permanent closedown of the Zijinshan copper mine." But adds, this doesn't present a buying opportunity.

"Historical environmental issues suggest a potentially longer government investigation, and much higher compensation than currently management suggested." Cuts target to HK$5.00 vs HK$6.60, with house also trimming FY10 EPS forecast to CNY0.36 vs CNY0.38. Keeps Equalweight.

Source: Dow Jones Newswire

[winston]

Not vested.

Fujian to Pursue Legal Action Over Zijin Mine Leak, Xinhua Says

July 17 (Bloomberg) -- Fujian province will pursue legal action against Zijin Mining Group Co. over pollution by its copper mine in the region, the Xinhua News Agency reported, citing a July 16 decision by the local government.

The mine will remain shut pending review by regulators, and Zijing must protect the interests of the people affected, Xinhua reported.