On the evening of November 6, Luoyang Molybdenum Co., a leading mining enterprise in mainland China, announced its plan to initiate a share buyback program worth between 1 billion to 2 billion yuan (RMB). As of the close on the same day, the company’s A-shares had dropped more than 50% from their peak earlier in the year.
Luoyang Molybdenum is primarily engaged in the mining, processing, and trading of non-ferrous metal resources, dealing with various minerals including copper, cobalt, gold, molybdenum, and tungsten.
According to a buyback report released that evening, the proposed plan has received approval from the board of directors and does not require further shareholder approval. The company intends to utilize its own funds or funds it raises independently to repurchase a portion of its A-shares from the market within three months following the board’s approval of the plan.
The buyback program stipulates that the repurchase price shall not exceed 22.78 yuan per share. Based on this upper price limit, the shares to be repurchased will constitute approximately 0.21% to 0.41% of the total share capital, with the final quantity determined by the actual buyback results.
The company stated that this repurchase initiative aims to “maintain the value of the company and protect shareholder interests.”
Shares bought back in this program can still be sold in the future. According to the plan, the company is allowed to sell these shares 12 months after announcing the buyback results and changes in shareholding. Should there be any remaining shares not sold within three years from the date of the announcement, they will be canceled after the necessary procedures are completed.
Reports from the Daily Economic News on November 6 indicated that the A-shares of Luoyang Molybdenum closed at 13.29 yuan that day, reflecting a single-day decline of 5.14%.
When adjusting for factors such as dividends, the stock hit an intraday high of 28.24 yuan on January 29 of this year. Compared to this peak, the closing price on November 6 represents a significant drop of 52.94%.
Since the beginning of the year, the stock has accumulated a decline of 32.27%.
In the third-quarter report previously released by the company, it was indicated that the operating revenue for the first three quarters of the year reached 207.29 billion yuan, marking a substantial increase of 42.48% compared to the same period last year. The net profit attributable to the company’s shareholders stood at 24.02 billion yuan, reflecting an increase of 68.21%.
The company cited three primary reasons for the growth in profit: a surge in sales volume and selling prices of copper products; rising prices for molybdenum and tungsten products; and the positive contributions from its gold mining operations in Brazil, which have also been incorporated into the company’s financial statements.
Despite the overall impressive revenue growth, the company’s net cash flow generated from operating activities was recorded at 13.47 billion yuan, representing a year-on-year decrease of 15.08%. The company attributed this decline primarily to an increased net cash outflow in its basic metal trading operations compared to the same period last year.