How is the integration of the luxury management team? What other high-growth catalysts are there? Luoyang Molybdenum Industry's latest response

Domestically, mining giant Luoyang Luanchuan Molybdenum Group Co., Ltd. (hereinafter referred to as “Luoyang Molybdenum,” SH.603993/HK.03993) has seen revenue exceed 1.01B yuan for two consecutive years, and the net profit attributable to listed company shareholders has also continued to break its historical best record for five consecutive years. In 2025, it crossed the 20 billion-yuan mark for the first time. The driving factors behind this are the rising prices of key metals from its main products—such as copper, cobalt, and molybdenum—together with the continuous ramp-up of capacity after the acquisition of the two copper-cobalt “twin stars,” TFM and KFM, in the Democratic Republic of the Congo.

After two consecutive years of rapid growth in attributable net profit at a rate of more than 50%, what comes next for Luoyang Molybdenum? At an earnings briefing held on the afternoon of March 30, Luoyang Molybdenum released its relevant growth path to the outside world. After the briefing, the major sell-side institutions collectively and significantly raised their earnings expectations; the net profit forecast for 2026 is above 31 billion yuan, with the highest estimate exceeding 37 billion yuan. This means that, compared with the year-on-year increase in 2025, the company will need to keep growth at 50% or higher.

On the afternoon of March 30, Luoyang Molybdenum held its 2025 annual results briefing. Figure: Pengpai News reporter He Liping

Continuing to seek copper and gold acquisitions, and also benefiting small metals

“On a short-term basis, the four Brazilian gold mines are relatively stable.” At the earnings briefing, Peng Xuhui, President and CEO of Luoyang Molybdenum, said that the company has already sent a very complete production technology team from within China to empower the production efficiency and production costs of its Brazilian gold mine projects.

In the past 2025, Luoyang Molybdenum proposed “multiple product types, multiple countries, multiple stages,” focusing its acquisition strategy on the two poles of “copper + gold,” while stepping up investments to launch its gold resource layout. The Brazilian gold mines were one of Luoyang Molybdenum’s two gold-project acquisition deals last year. On December 15, 2025, the company announced it would acquire three producing gold assets in Brazil under Canadian listed company Equinox Gold Corp. for US$741.1k. Just under 40 days later, on January 23 of this year, Luoyang Molybdenum completed the transaction closing.

This producing project can quickly contribute production and profit to Luoyang Molybdenum. In 2026, the company expects an annualized output of 6–8 tons. In the company’s previously released 2026 production guidance, gold was also included in the product lineup for the first time, with a clear full-year gold output target of 6–8 tons in 2026.

Peng Xuhui also noted that, for gold, the significant capacity contribution still mainly depends on the Ecuador project. This is the first acquisition after Luoyang Molybdenum announced the start of its gold layout. It is also the first time in many years that Luoyang Molybdenum has returned to the global mining M&A stage. In April 2025, the company said it would acquire all shares of Lumina Gold for C$581 million (about RMB 3.0 billion), with the core target being the Cangrejos gold mine project in Ecuador.

However, this project is currently in early-stage planning. According to preliminary plans, it is expected to reach commercial production in 2028, with an annual output of about 11.5 tons of gold. This also means that Luoyang Molybdenum’s total gold production capacity could break through the 20-ton mark around 2028.

For copper—which will be the main driver of profit contributions—Luoyang Molybdenum has no clear plan for additional capacity expansion in 2026. However, at the earnings briefing, the company emphasized its ability to realize capacity and its further potential for increasing recoverable output from the copper mine “twin stars” in the Democratic Republic of the Congo.

In 2025, Luoyang Molybdenum’s copper output reached 741.1k metric tons, up 13.99% year over year, placing it among the world’s top ten copper producers. Total sales for the year were 730.2k metric tons, up 5.90% year over year. Combined with price increases, copper operating revenue rose 31.63% year over year to 730.2k yuan, contributing 27% of total operating revenue.

Based on prior disclosures, one of the “twin stars,” the KFM Phase II project, is planned to enter production in 2027, which is expected to add an average annual copper production capacity of 100k metric tons. The TFM Phase III project is in the planning stage; Peng Xuhui said, “In the next 2–3 years, we will also carry out corresponding capacity expansions for TFM.”

In addition to adding capacity through expansion, Luoyang Molybdenum at the earnings briefing also mentioned continued optimization potential in its existing capacity. The company’s vice president and chief financial officer Chen Xingyao said, “Previously, the daily throughput of the five TFM production lines was 63k tons. Through technical upgrades at the front end, we can now actually reach 80k tons per day.” This is also one of the core factors in reducing costs for the project.

Luoyang Molybdenum’s target for 2026 copper-metal output is 0.76 million to 0.82 million tons. If the upper end of 0.82 million tons is achieved, it will continue to maintain double-digit growth. The company’s target for 2028 is to achieve one million-ton copper-metal output.

Beyond expecting “copper and gold to move together,” Luoyang Molybdenum also holds high expectations for its other small-metal product categories. “From the moment Luoyang Molybdenum was founded, small metals have been one of our genes,” the company’s Chairman and Chief Investment Officer Liu Jianfeng emphasized at the earnings briefing. Against the backdrop of broad gains in small-metal prices last year, Luoyang Molybdenum has been a beneficiary, and this is also a cornerstone for the company’s long-term development.

Under the positioning of associated precious metals, Liu Jianfeng disclosed that, under reasonable and appropriate circumstances, Luoyang Molybdenum would also seek independent small-metal mine project opportunities.

Worth noting is that, for mining companies, project M&A is an eternal topic. However, under the current environment where resources are priced at high levels and geopolitics is becoming increasingly complex, the difficulty of competing for new projects—whether through acquisition or procurement—has increased significantly.

Liu Jianfeng told reporters from Pengpai News (www.thepaper.cn) that, in terms of copper and gold acquisitions, the company’s “level of effort” is the same for both. As for the maturity of acquisition targets, he said, “We will consider multiple stages. Right now, we can only expand the scope a bit and then look for more favorable targets.” At the same time, he also said that for potential future acquisitions of copper mine projects, the company still leans more toward greenfield or projects under construction: “Premiums for producing projects are relatively high, and it is also difficult to find suitable targets.”

Luoyang Molybdenum’s board of directors also highlighted the importance of strategic acquisitions in its 2025 annual report, emphasizing that the essence of competition in mining is cost competition, and that 60% of the cost advantage is determined by resource endowment; strategic acquisitions decide the company’s lifeline and gene. This earnings briefing also clearly mentioned, “We will definitely look for comparatively higher-quality copper and gold mine resource assets, then absorb them and do a good job on the M&A.”

First response to the integration of the new executive team

It is also worth mentioning that at this earnings briefing, Peng Xuhui responded to concerns from the outside world about the integration of Luoyang Molybdenum’s new executive team.

In April 2025, Luoyang Molybdenum carried out a major “overhaul” of executives. The new management team was described as a “luxury team.” Among them is Liu Jianfeng, who has led numerous major cross-border M&A and resource integration projects, and has previously served as business director of China National Offshore Oil Corporation (CNOOC) and as Executive Director and Chief Financial Officer of Fosun International’s Rock Petroleum. Another member is Que Chaoyang, from Zijin Mining, another domestic mining titan, who serves as Executive Vice President and Chief Operating Officer; he has extensive experience in mining investment and acquisitions, exploration, project construction, and operations.

Six months later, Luoyang Molybdenum again disclosed an appointment: it hired Peng Xuhui, a senior executive in advanced manufacturing, as President and CEO. Peng Xuhui is 45 years old. Previously, he was Chairman of Deep Tianma A (000050.SZ), and he abruptly stepped down in June 2025. Peng Xuhui has a bachelor’s degree in applied physics from Hebei University of Technology, a master’s degree in theoretical physics, and a PhD in electronic and information from University of Electronic Science and Technology of China. He is a senior engineer, a Shanghai leading talent, a State Council special allowance expert, and a national model worker in labor for industrial and information technology systems. The announcement at the time introduced that Peng Xuhui’s employment experience in advanced manufacturing covers areas including product R&D, factory management, marketing, supply chain, and company operations. During his tenure as Chairman of Tianma Microelectronics, he led the listed company’s strategic planning, capital operations, and overall business management, and has extensive corporate management experience.

Since then, Luoyang Molybdenum said that with multiple industry elites joining successively, the core management team has already formed. In the next stage, it will proceed with management mechanism reforms, refined operational management, and other topics in an orderly manner according to the established strategy, with the goal of establishing a lean-operation production model, building a global platform-based organization, and driving a new round of rapid growth.

At the earnings briefing, Peng Xuhui said that, by this point in time, the integration process of the new executive team is “very smooth,” and “the results are relatively good.” Although there are different viewpoints, he emphasized that this is precisely what the “fresh blood” inevitably brings, and that it will trigger innovative ideas rather than negative effects.

Especially when talking about his own “cross-industry” move from manufacturing, he frankly said, “The gap is huge. (Display panels) is a very competitive industry, with competition at a white-hot level, so my first feeling is that mining is actually quite a happy business.” However, Peng Xuhui also said that mining has its own characteristics, clearly different from “making display panels,” because “with display panels, you only need technology and management—you can expand capacity by buying land, building factories, and buying equipment.”

The rules for “making a business bigger and stronger” in mining are not like that either. Peng Xuhui also emphasized, “Strategic acquisitions are very important; in the capability framework, their weight may be more than 60%.” Of course, he also proposed that beyond acquisitions, the remaining operations of a mining company can be treated as production and manufacturing: “you must consider production efficiency, stability, and cost, including the precision of operational plans. So I think it is connected in this regard as well.”

In its 2025 annual report, Luoyang Molybdenum’s board of directors also proposed the “622 model.” In addition to firmly building the above-mentioned 60% resource moat, cost competition has two other “20%” components: 20% depends on the project planning and construction level, and the other 20% is determined by daily operational management capability.

The board clearly stated that the company should proactively introduce genes from the advanced manufacturing industry, reshape the full production process in mining with a lean production philosophy, and ensure standardized, process-based, and intelligent management thinking runs through every stage of project planning, construction, and operations—across the entire value chain of exploration, mining, beneficiation, smelting, recycling, and trading.

Peng Xuhui also discussed a detail: last year, at Luoyang Molybdenum’s current main production base—in mines in Africa—he “stayed for 70 days.” He told Pengpai News reporters that production is carried out in Africa, and only by getting to the production front line can you truly understand the industry and the company’s specific business. Only by being on-site can problems be discovered and solved immediately. “For me as a ‘cross-industry’ person, ‘getting to the site’ is even more important.”

For Luoyang Molybdenum, to open the so-called “new era of non-simple linear expansion,” although the core executive team has taken shape, talent is still a bottleneck. Peng Xuhui also admitted, “To do the business well, resources are very important, capacity is very important, and money is also very important—but more important is people, so talent is the core.” And the talent bottleneck is also a challenge that companies inevitably face during rapid expansion.

Peng Xuhui said that in the short term, Luoyang Molybdenum will supplement talent through a “both internal and external” approach. That means, in addition to increasing internal talent cultivation, it will also widely issue “hero invitations” to attract excellent talent from both within and outside the industry to join. He expects that “it will take 3 years to gradually shift from external recruitment to internal cultivation as the primary approach.” He emphasized that, for now, one of Luoyang Molybdenum’s most important tasks in organizational management is to strengthen and upgrade the talent development system.

Pengpai News reporter He Liping