Mirador Mine Expansion Advances for Tongling Nonferrous Metals Group

Understanding the Mirador Copper Mine Project

The Mirador copper mine represents one of Tongling Nonferrous Metals Group's most strategic international mining assets, with the company holding a commanding 70% stake in the operation. Situated in Ecuador's mineral-rich terrain, this large-scale copper mining project contains substantial copper resources with an average grade of 0.49%, positioning it as a competitive operation in the global copper mining landscape.

As a cornerstone of Tongling's vertically integrated copper production chain, Mirador plays a crucial role in the company's international resource acquisition strategy, forming part of Tongling's broader ambition to secure reliable copper supplies in an increasingly competitive global market.

Current Production Capacity and Resource Base

Mirador contributes significantly to Tongling's self-produced copper concentrate volumes, helping to maintain stable input materials for the company's extensive smelting operations. The mine forms a vital component within Tongling's impressive resource portfolio, which collectively contains 7.2181 million metric tons (mt) of copper resource metal content.

Through its 70% ownership stake, Tongling retains approximately 4.56 million mt of copper resource metal content from the Mirador operation alone—representing nearly two-thirds of the company's total copper resources. This substantial resource base provides Tongling with long-term production security and strategic flexibility in the face of tightening global copper supply forecast.

Phase II Expansion Progress

According to Tongling Nonferrous Metals Group's recent investor communications on July 10, 2025, the Phase II expansion project at the Mirador copper mine is advancing according to schedule despite the challenging operating environment.

"The Mirador copper mine Phase II expansion project is progressing normally as planned," confirmed company representatives on the Investor Interaction Platform.

This positive trajectory comes despite previous challenges related to power supply in Ecuador, which had temporarily affected production volumes in earlier operational periods. The company's ability to maintain momentum on this strategic expansion highlights its operational resilience and commitment to growth.

Timeline for Commissioning

The company has announced a significant milestone in the expansion timeline, with heavy-load commissioning for the Phase II expansion scheduled for July 2025. This commissioning phase represents the critical final testing before the expanded facilities begin commercial production.

The timely progress of this expansion is particularly noteworthy given the complex logistical and operational challenges inherent in mining projects of this scale, especially in international jurisdictions where infrastructure limitations can often cause delays.

Expected Impact on Production Volumes

The Phase II expansion aligns perfectly with Tongling's ambitious 2025 production targets, which include plans to produce 194,900 mt of copper from self-produced copper concentrates—representing a substantial 26% increase compared to previous production levels.

This expansion is strategically timed to capitalize on projected surging copper demand driven by:

• Energy transition acceleration: Increasing copper intensity in renewable energy infrastructure
• Digital transformation: Surging demand from data center construction
• Electrification of transportation: Growing requirements from new energy vehicles (NEVs)

Industry analysts predict that the successful commissioning of Mirador's Phase II will significantly strengthen Tongling's competitive position in an increasingly tight global copper concentrate market.

Tongling Nonferrous Metals Group's Business Position

Company Profile and Production Capabilities

Tongling Nonferrous Metals Group operates as a fully integrated copper producer with operations spanning the entire value chain—from mining and smelting to processing and trading. The company's production capabilities are impressive by any standard:

• Annual copper cathode production capacity exceeding 1.7 million mt
• Electronic copper foil production capacity of 80,000 mt annually
• Significant output of precious metals by-products including gold and silver
• Production of industrial chemicals such as sulfuric acid

This integrated business model allows Tongling to capture value at multiple points in the copper production chain while maintaining better control over quality and supply security.

Recent Financial Performance

The company has demonstrated remarkably stable financial growth despite market volatility:

This consistent financial performance underscores Tongling's operational efficiency and strategic execution. The company has maintained profit growth despite challenges in the broader commodities market, demonstrating its resilience and strong market position.

Stock Performance and Investor Activity

Tongling's stock has shown positive momentum recently, with a 1.18% increase on July 11, 2025, closing at 3.42 yuan per share. This upward trend reflects growing investor confidence in the company's expansion strategy and operational execution.

The company has also been actively engaging in share repurchases, having bought back 29,505,500 shares (approximately 0.23% of total share capital) as of June 30, 2025. This repurchase activity suggests management's confidence in the company's intrinsic value and commitment to enhancing shareholder returns.

Strategic Initiatives Beyond Mining

Research and Development Focus

Tongling is strategically investing in technological innovation across several high-value areas that position the company at the forefront of copper-based advanced materials:

• Development of high-conductivity copper strips with composite phase reinforcement specifically engineered for integrated circuits
• Production of high-end lithium battery copper foil products with various specifications to meet evolving energy storage needs
• Capability to refine and produce specialty metals such as rhenium, which commands premium pricing in aerospace and other high-tech applications
• Recovery and high-value utilization of selenium, tellurium, and other rare and dispersed metals that can significantly enhance profitability

This R&D focus demonstrates Tongling's commitment to moving up the value chain beyond traditional mining and smelting operations.

Expansion into Advanced Materials

The company is aggressively positioning itself in the advanced materials sector through several key initiatives:

• Battery Materials: Production of specialized copper foil for lithium batteries, serving as current collectors for negative electrodes—a critical component in the rapidly growing energy storage market
• High-Performance Products: Development of HVLP series copper foils and high-temperature-resistant oxygen-free copper strips for demanding electronic applications
• Next-Generation Solutions: Manufacturing of specialized copper foil with mesh-like three-dimensional structures specifically designed for solid-state and semi-solid-state batteries—technologies widely considered to be the future of energy storage
• Ultra-Pure Materials: Production of high-purity metals, including 6N-grade high-purity tellurium (99.9999% purity) and high-purity indium for semiconductor applications

"Solid-state batteries still use copper foil as the negative electrode current collector," noted company representatives in a May 30, 2025 investor communication, highlighting the continuing relevance of Tongling's expertise even as battery technologies evolve.

Green and Smart Manufacturing

Tongling is advancing its manufacturing capabilities through flagship projects like the Green and Smart Copper-Based New Material Industrial Park, which includes the Jinxin Copper Industry branch company. This integrated project incorporates cutting-edge automation, environmental controls, and energy efficiency measures.

The industrial park represents a significant leap forward in sustainable copper production, with:

• Advanced emissions control systems that significantly reduce environmental impact
• Intelligent production management systems that optimize energy and resource utilization
• Integrated waste heat recovery systems that enhance overall energy efficiency
• Circular economy principles applied to maximize material recovery and minimize waste

Once fully commissioned, this facility is expected to contribute substantially to Tongling's copper cathode production while setting new standards for environmental performance in the industry.

Market Trends Affecting Tongling's Business Strategy

Copper Market Dynamics

The company has identified several key market trends that are fundamentally reshaping the copper industry landscape:

• Long-term demand growth: A sustained upward trajectory for copper demand driven by the dual forces of global energy transformation and accelerating AI development
• New consumption drivers: Increasing copper intensity in data center construction (power transmission, storage, and cooling systems), renewable energy infrastructure, and new energy vehicles
• Supply constraints: Tightening global supply of copper concentrates resulting from declining ore grades at existing mines, resource constraints for new projects, and geopolitical factors affecting mining regions
• Margin pressure: Downward pressure on treatment and refining charges (TC/RCs) for imported ore, impacting smelter profitability across the industry

These trends collectively point to a potentially favorable copper price forecast for producers with secure access to concentrate supplies—precisely the position Tongling is strengthening through the Mirador expansion.

Industry Competition Landscape

Tongling faces several competitive challenges in the current market environment:

• Resource competition: Intensified competition among smelters for limited copper concentrate supplies, particularly affecting companies without integrated mining operations
• Margin compression: Pressure on profit margins due to declining treatment and refining charges while energy and environmental compliance costs rise
• Quality requirements: Industry-wide trend toward higher quality standards and specifications for copper products used in high-tech applications
• Capacity dynamics: Disorderly competition and capacity expansion within the domestic Chinese market creating potential oversupply in certain product categories

These competitive pressures underscore the strategic importance of Tongling's vertically integrated model and its focus on higher-value copper products.

Strategic Response to Market Conditions

In response to these challenging market conditions, Tongling has implemented several strategic initiatives:

• Price risk management: Comprehensive measures to address copper price fluctuations and processing fee declines through hedging and strategic procurement
• Operational excellence: Scientific organization of production and operations to maximize efficiency and minimize costs
• Productivity enhancement: Implementation of targeted activities focused on increasing production yields and improving operational efficiency across all facilities
• Resource security: Continued investment in gold and copper exploration to expand the resource base, with 76.5 million yuan invested in 2024 resulting in the addition of 60,000 mt of copper resources

This multi-faceted approach demonstrates Tongling's proactive management of both market opportunities and challenges.

Production Targets for 2025

Comprehensive Production Goals

Tongling has established ambitious yet achievable production targets across its product portfolio for 2025:

These targets represent significant growth compared to 2024 production volumes, particularly in self-produced copper concentrates where the 26% increase hinges substantially on the successful commissioning of the Mirador Phase II expansion.

Factors Affecting Production Outlook

Several critical factors may influence the company's ability to achieve these ambitious production targets:

• Mirador commissioning: The timely and successful commissioning of the Mirador Phase II expansion in July 2025
• Industrial park ramp-up: Smooth ramp-up of production at the Green and Smart Copper-Based New Material Industrial Park
• Power stability: Lasting resolution of previous power supply challenges in Ecuador that had affected Mirador operations
• Market conditions: Evolving dynamics affecting treatment and refining charges for concentrate processing and overall metal prices
• Operational execution: Effective implementation of productivity and efficiency measures across all production facilities

Industry analysts note that while these targets are ambitious, Tongling's track record of operational execution and strategic investment positions the company well to achieve them.

Analyst Perspectives on Tongling's Prospects

Investment Recommendations

On May 12, 2025, Huayuan Securities issued a comprehensive research report on Tongling Nonferrous Metals Group with a "buy" rating, highlighting several key factors supporting a positive outlook:

• Production recovery: Expected rebound from previous power shortages at the Mirador operation that had temporarily constrained output
• Volume growth: Projected 26% increase in self-produced copper for 2025, enhancing profit margins through vertical integration
• Non-recurring charges: Previous impact of asset impairment losses (680 million yuan) unlikely to recur, providing a cleaner earnings comparison

This positive analyst sentiment reflects growing investor confidence in Tongling's strategic positioning and operational trajectory.

Risk Factors Identified

The Huayuan Securities report also highlighted potential risk factors that investors should consider when evaluating Tongling:

• Legal challenges: Litigation risks related to the smelting net equity gold of the China Railway Construction Tongguan subsidiary, which could impact financial results if unfavorably resolved
• Price volatility: Vulnerability to unexpected declines in metal prices, particularly given the company's significant exposure to copper price movements
• Project execution: Risks associated with major expansion projects including the Mirador Phase II and the Green and Smart Industrial Park, where delays or cost overruns could affect expected returns

These balanced risk assessments provide investors with a more complete picture of Tongling's copper investment outlook.

FAQ: Tongling Nonferrous Metals Group and the Mirador Expansion

How does the Mirador mine fit into Tongling's overall resource strategy?

The Mirador copper mine represents a cornerstone of Tongling's international resource acquisition strategy, providing significant copper resources with an average grade of 0.49%. The company's 70% stake in the operation contributes 4.56 million mt of copper resource metal content to Tongling's total resource base of 7.2181 million mt.

This substantial resource position helps insulate Tongling from the increasingly competitive global copper concentrate market, where tightening supplies have pressured treatment and refining charges. By securing long-term access to copper resources through direct ownership, Tongling strengthens its vertically integrated business model and enhances long-term profitability.

What challenges has the Mirador operation faced previously?

According to company reports, the Mirador operation has previously experienced challenges related to power supply in Ecuador, which affected production volumes. These challenges highlight the operational risks inherent in international mining operations, particularly in regions where infrastructure development may lag behind mining development.

Despite these challenges, the company has maintained progress on the Phase II expansion project, demonstrating effective risk management and operational resilience. The scheduled July 2025 commissioning suggests that power supply issues have been adequately addressed to support expanded production.

How is Tongling positioned in the copper foil market for new energy applications?

Tongling has developed specialized copper foil products for lithium battery applications through its subsidiary, Anhui Tongguan Copper Foil Group. These products include high-tensile-strength copper foils and three-dimensional structured copper foils suitable for next-generation battery technologies, positioning the company to capitalize on growth in the energy storage sector.

The company's expertise extends to copper foil applications in both conventional lithium-ion batteries and next-generation solid-state battery technologies. As noted in a May 30, 2025 investor communication, "Solid-state batteries still use copper foil as the negative electrode current collector," ensuring Tongling's continued relevance as battery technologies evolve.

What is driving the increased demand for copper according to Tongling?

Tongling identifies three main drivers for copper demand growth:

1. Data center construction: Requiring substantial quantities of copper for power transmission, storage, and cooling systems—a trend accelerated by AI development
2. Renewable energy infrastructure: Including wind power, photovoltaics, and energy storage systems, all of which have higher copper intensity than conventional power generation
3. New energy vehicles: The rapid development of electric vehicles, which require 3-4 times more copper than conventional internal combustion engine vehicles

These structural demand drivers are expected to sustain long-term growth in copper consumption, potentially outpacing supply additions and creating a favorable pricing environment for well-positioned producers like Tongling.

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