Introduction

Jiaxin International Resources Investment Ltd., a tungsten mining company, is making headlines with its ambitions to launch an IPO, targeting dual listings in both Hong Kong and Kazakhstan. With plans to kick off commercial operations at its Boguty open-pit tungsten mine in Kazakhstan by the first quarter of 2025, the company is gearing up for a potentially lucrative phase in its growth trajectory.

Key Highlights

IPO Goals: Jiaxin aims to issue 125 million ordinary shares in Hong Kong, while also floating 1.3 million shares on Kazakhstan's stock exchange as part of its dual listing strategy.

Strategic Partnership: The firm boasts a robust public-private partnership, featuring entrepreneur Liu Liqiang and state-run mining giant Jiangxi Copper, both holding over 40% stake in the company. This unique alliance is poised to leverage Jiangxi Copper's significant resources while allowing for nimble decision-making through Liu’s entrepreneurial acumen.

Promotion of Tungsten Use: Tungsten, found in various applications from industrial equipment to light bulb filaments, is critical to numerous industries, and Jiaxin's operations will significantly contribute to China’s standing as the world's leading tungsten producer.

Risks and Management

Despite its forthcoming initial public offering (IPO) being managed by leading Chinese investment bank CICC, which is expected to draw between $50 million and $100 million, there are inherent risks. The Boguty project finds itself in Kazakhstan, a region recently shaken by significant political unrest, raising concerns about its stability.

About the Boguty Project

Jiaxin's Boguty tungsten mine is touted as not only the world's largest open-pit tungsten mine but also as the fourth largest overall. Initial mineral rights to the site date back to Soviet rule, with large tungsten deposits discovered as early as 1941. Following various developments, Jiaxin acquired the project in 2016 and has positioned it as a vital part of the Belt and Road Initiative, offering streamlined financing opportunities.

The mine is strategically located with favorable logistics: merely 180 km from Almaty and just 20 km from a railway that links Kazakhstan to China. With access to essential resources like water and electricity, Jiaxin minimizes supplementary infrastructure costs, which is a considerable benefit for project scalability.

Production Timeline and Economic Outlook

Having commenced trial operations at the end of 2024 with an initial yield of around 600,000 tons, Jiaxin anticipates ramping up its output to 3.3 million tons in 2025, eventually pushing close to 5 million tons annually by 2027. Expected revenue could skyrocket to approximately $1 billion if tungsten prices remain around $333 per ton, underscoring the economic potential imbued in the Boguty project.

However, the company's financial health presents a mixed bag. While its operational losses rose to HK$65 million in the first half of last year, it maintains a steady gearing ratio amid rising debt—from HK$557 million in 2022 to HK$1.6 billion—indicating a manageable level of leverage typical for emerging projects in the mining sector.

Political Risks and Management Outlook

The 2022 political unrest in Kazakhstan, spurred by rising fuel costs and public dissatisfaction with its autocratic government, serves as a stark reminder of the potential volatility in the region. While the unrest has quelled, ongoing reforms may not be enough to quell the underlying discontent, potentially posing risks for businesses operating there.

Conclusion

In conclusion, Jiaxin International’s IPO could be a game-changer, not just for the company but for the wider tungsten market. With its solid public-private partnership model and a focus on operational efficiency, it may well navigate the myriad risks and capitalize on the opportunities ahead, making it a noteworthy investment prospect for those looking to tap into the booming mining sector in Central Asia.