Luoyang Molybdenum's Q1 net profit surged 97% to 7.76 billion yuan, with gross margins of copper, cobalt, and tungsten all rising | Financial Report Highlights

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Luoyang Molybdenum Industry disclosed its first quarter report for 2026. The company achieved operating income of 66.4 billion yuan, a year-on-year increase of 44.34%; net profit attributable to the parent company was 7.76 billion yuan, up 96.65% year-on-year. Basic earnings per share increased from 0.18 yuan in the same period last year to 0.36 yuan, and weighted average return on net assets reached 9.06%, an increase of 3.57 percentage points year-on-year.

The performance growth mainly benefited from the rise in prices of main products and simultaneous increases in production and sales volumes. In the first quarter, copper production and sales volume increased by 10.15% and 47.11% year-on-year, respectively; due to a decrease in procurement costs for cobalt products, the gross profit margin reached 86.27%, about 25 percentage points higher than last year. In addition, the company completed the acquisition of four gold mines in Brazil in January this year, and the gold business was consolidated for the first time, contributing operating income of 1.2 billion yuan.

In terms of cash flow, the net cash flow generated from operating activities in the first quarter was 11.3 billion yuan, up 762% year-on-year, mainly driven by net inflows from basic metal trading business. The balance of monetary funds at the end of the period was close to 45 billion yuan, an increase of more than 11.3 billion yuan from the beginning of the year. The company also completed the issuance of $1.2 billion convertible bonds in the first quarter, long-term loans were reduced by nearly half, and the debt structure continued to be optimized.

Steady Growth in Copper Business Contributes 15.8 Billion, Cobalt Gross Margin Soars to 86%

Copper business remains Luoyang Molybdenum's core profit pillar. In the first quarter, the copper mining segment achieved operating income of 15.8 billion yuan, up 27.22% year-on-year, with a gross margin of 63.69%, up 8.48 percentage points. Performance growth mainly benefited from continued capacity release at Congo (DRC)'s TFM and KFM mines, and the dual boost of a higher average copper price.

Notably, the TFM product brand "TFM-1" was officially certified as LME Grade A in this quarter, meaning the company's copper products can participate in international nonferrous metal futures and spot market deliveries, enhancing product premium ability and global influence. In addition, TFM's mining licenses have been renewed with a validity of 15 years, eliminating regulatory uncertainty for continued production.

Cobalt is the most flexible segment of this quarter. Driven by a sharp recovery in cobalt prices, the company's cobalt business gross margin surged from about 61% last year to 86.27%, an increase of nearly 25 percentage points. Revenue fell 52% year-on-year, mainly due to strategically reducing sales volume (down 91.79% year-on-year); the company apparently reduced external sales during price lows and turned to stockpiling inventory, then optimized sales rhythm as prices rebounded. This "exchange volume for price" approach enabled the cobalt business to contribute 1.8 billion yuan in revenue and an impressive 1.55 billion yuan in gross profit with minimal shipment volume, fully demonstrating the company’s ability to manage market cycles.

Gold Mine Consolidation Contributes 1.2 Billion for the First Time, Molybdenum and Tungsten Profits Continue to Improve

On January 23, 2026, the company completed the acquisition of 100% equity in Aurizona Gold Mine, RDM Gold Mine, and Bahia Integrated Mining Area of Equinox Gold. Due to consolidation for only about two months, the gold mining segment contributed 1.2 billion yuan in revenue in the first quarter, produced 43,000 ounces of gold, and achieved a gross margin of 45.63%, demonstrating strong profitability.

As the full-quarter effect of the Brazilian gold mines is reflected in subsequent quarters and with the advancement of the company’s established gold production target, the gold business is expected to rapidly grow into the third largest source of profit after copper and cobalt, further enriching the company’s diversified layout in global key minerals. It should be noted that this acquisition is the main reason for a net cash outflow of 10.9 billion yuan from investment activities, but the company’s ample operating cash flow and proceeds from new bonds effectively offset this.

The domestic molybdenum and tungsten segment maintained stable operations. Molybdenum achieved operating income of 1.8 billion yuan, with gross margin rising from about 37% to 46.78%, an increase of 9.8 percentage points. Production fell slightly by 4.7%, with limited impact. Tungsten performed even better, with revenue near 2 billion yuan, operating costs increased significantly less than revenue, gross margin rose by 5.36 percentage points to 70.93%, and profitability markedly improved, mainly benefitting from the structural uptick in tungsten prices.

Zero-coupon Convertible Bonds Optimize Debt Costs, Exchange Rate Risk Becomes a Profit Variable

In the first quarter, the company, through overseas subsidiaries, issued $1.2 billion zero-coupon convertible bonds. The funds are reflected in other current liabilities (up 836% quarter-on-quarter to 9.1 billion yuan) and in inflows from financing activities. Meanwhile, long-term loans were cut by about 49% to 600 million yuan since the beginning of the year, showing a trend toward short-term, low-cost adjustment in interest-bearing debt structure.

Notably, other comprehensive income recorded -1.36 billion yuan in the first quarter, mainly due to foreign currency translation differences caused by exchange rate fluctuations of US dollars and Congolese francs against RMB; financial expenses increased 59% year-on-year, with exchange losses as the main factor. Given the highly internationalized nature of the company’s assets, exchange rate risk will continue to impact book equity and actual profits.

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