Shandong Gold Mining Co., Ltd.

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Shandong Gold Mining Co., Ltd. , you should at once hand this circular to the purchaser(s) or the transferee(s) or to the bank, licensed securities dealer, registered institution in securities or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or transferee(s).

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

==> picture [64 x 69] intentionally omitted <==

SHANDONG GOLD MINING CO., LTD. 山東黃金礦業股份有限公司

(a joint stock company incorporated in the People’s Republic of China with limited liability)

(Stock Code: 1787)

MAJOR TRANSACTION ACQUISITION OF SHARES IN THE TARGET COMPANY AND NOTICE OF 2023 THIRD EXTRAORDINARY GENERAL MEETING

A notice convening the 2023 third extraordinary general meeting (the “ EGM ”) of Shandong Gold Mining Co., Ltd. (the “ Company ”) to be held at the conference room of the Company, No. 2503, Jingshi Road, Licheng District, Jinan, Shandong Province, the PRC at 10:00 a.m. on Friday, 30 June 2023 is set out on pages VIII-1 to VIII-2 of this circular.

The proxy form for use in connection with the EGM is enclosed herewith. The proxy form is also published on the website of The Stock Exchange of Hong Kong Limited (www.hkexnews.hk) and the Company’s website (http://www.sdhjgf.com.cn).

Any shareholder(s) of the Company (the “ Shareholders ”) entitled to attend and vote at the EGM is entitled to appoint one or more proxies to attend and vote on his behalf. A proxy need not be a shareholder of the Company. If you intend to appoint a proxy to attend the EGM and vote on your behalf, you are requested to complete the accompanying proxy form in accordance with the instructions printed thereon and return it by hand, by post or by facsimile to the Company’s H share registrar, Tricor Investor Services Limited at 17/F, Far East Finance Centre, 16 Harcourt Road, Hong Kong (for H Shareholders only) as soon as possible and in any event not later than 24 hours before the time appointed for the holding of the EGM or any adjournment thereof (as the case may be) (i.e. before 10:00 a.m. on Thursday, 29 June 2023). Completion and return of the proxy form will not preclude you from attending and voting at the EGM or any adjournment hereof should you so wish.

15 June 2023

CONTENTS

			Page
DEFINITIONS . . . . .		. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE		BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
APPENDIX I	—	FINANCIAL INFORMATION OF THE GROUP . . . . . . . . . . . . . .	I-1
APPENDIX II	—	FINANCIAL INFORMATION OF THE TARGET COMPANY . . .	II-1
APPENDIX III	—	MANAGEMENT DISCUSSION AND ANALYSIS ON
		THE TARGET COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	III-1
APPENDIX IV	—	PRO FORMA FINANCIAL INFORMATION OF
		THE ENLARGED GROUP . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	IV-1
APPENDIX V	—	COMPETENT PERSON’S REPORT . . . . . . . . . . . . . . . . . . . . . . .	V-1
APPENDIX VI	—	VALUATION REPORT OF THE TARGET COMPANY . . . . . . . . .	VI-1
APPENDIX VII	—	GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VII-1
APPENDIX VIII	—	NOTICE OF 2023 THIRD EXTRAORDINARY
		GENERAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .VIII-1

— i —

DEFINITIONS

In this circular, the following terms and expressions shall have the following meanings unless the context otherwise requires:

“A Share(s)”

the domestic share(s) issued by the Company to domestic investors with a nominal value of RMB1.00 each, which are listed on the SSE;

“A Shareholder(s)” holder(s) of A Shares;
“Acquisition” or “Transaction” the acquisition of the Sale Shares by the Company from the Vendors, as contemplated under the Share Transfer Agreement and the Supplemental Agreement;
“Articles of Association” the articles of association of the Company, as amended from time to time;
“Board” the board of Directors;
“BAW” BAW Mineral Partners Limited (寶萬礦產有限公司), the Competent Person;
“China Yintai” China Yintai Holdings Co., Ltd. (中國銀泰投資有限公司), a limited liability company established in the PRC on 18 June 1985 and is indirectly owned as to 92.5% by Mr. Shen;
“Company” or “Shandong Gold” Shandong Gold Mining Co., Ltd. (山東黃金礦業股份有限公司), a joint stock company incorporated in the PRC under the laws of the People’s Republic of China with limited liability on 31 January 2000, the H Shares and A Shares of which are listed on the Main Board of the Hong Kong Stock Exchange (Stock Code: 1787) and the SSE (Stock Code: 600547) respectively;
“Competent Person” a person that satisfies Rules 18.21 and 18.22 of the Hong Kong Listing Rules;
“Competent Person’s Report”
the competent person’s report prepared by BAW Mineral Partners Limited in compliance with the requirements of Chapter 18 of the Hong Kong Listing Rules;
“Completion”

completion of the Acquisition;

“Consideration”

the consideration of RMB12,760,000,000 payable by the Company to the Vendors in relation to the Acquisition;

“controlling shareholder(s)”

has the meaning ascribed thereto under the Hong Kong Listing Rules;

— 1 —

DEFINITIONS

“Director(s)” director(s) of the Company; “EGM” the 2023 third extraordinary general meeting of the Company to be held at 10:00 a.m. on Friday, 30 June 2023 at the conference room of the Company, No. 2503, Jingshi Road, Licheng District, Jinan, Shandong Province, the PRC; “Enlarged Group” the enlarged Group immediately after Completion; “Escrow Account” the escrow account opened, maintained and operated in accordance with the escrow agreement entered into among China Yintai, the Company and Bank of China, and the account is opened in the name of the Company;

“Group” the Company and its subsidiaries;

“H Share(s)” the overseas-listed foreign invested share(s) in the Company’s share capital, with a nominal value of RMB1.00 each, which are listed on the Hong Kong Stock Exchange;

“H Shareholder(s)” holder(s) of H Shares;

“Hong Kong” the Hong Kong Special Administrative Region of the PRC; “Hong Kong Listing Rules” the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, as amended, supplemented or otherwise modified from time to time;

“Hong Kong Stock Exchange” The Stock Exchange of Hong Kong Limited;
“Independent Third Party(ies)”

the third party(ies) independent of the Company and its connected person(s) (as defined in the Hong Kong Listing Rules);

“Latest Practicable Date”

11 June 2023, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein;
“Mr. Shen”
Mr. Shen Guojun (沈國軍), the ultimate beneficial owner of China Yintai and an Independent Third Party;

“PRC”

the People’s Republic of China which, for the purpose of this circular, shall exclude Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan;

“RMB”

Renminbi, the lawful currency of the PRC;

— 2 —

DEFINITIONS

“Sale Shares” an aggregate of 581,181,068 shares of the Target Company, representing approximately 20.93% of its issued shares as at the date of the Supplemental Agreement;
“SDG Group” Shandong Gold Group Co. and its subsidiaries; “SDG Group Co.” Shandong Gold Group Co., Ltd. (山東黃金集團有限公司), a limited liability company established in the PRC on 16 July 1996, and is held as to approximately 70% by Shandong SASAC, approximately 20% by Shandong Guohui Investment Co., Ltd. (山東國惠投資有限公司) and approximately 10% by Shandong Social Security Fund Committee (山東省社會保障基金理事會);
“SFO” the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong), as amended, supplemented or otherwise modified from time to time;
“Shanghai Stock Exchange” Shanghai Stock Exchange (上海證券交易所);
“Shareholder(s)” A Shareholders and H Shareholders of the Company;
“Share Transfer Agreement”
the share transfer agreement entered into between the Company and the Vendors on 9 December 2022 for the Acquisition;
“Shenzhen Stock Exchange” Shenzhen Stock Exchange (深圳證券交易所);
“Supplemental Agreement” the agreement supplemental to the Share Transfer Agreement entered into between the Company and the Vendors on 19 January 2023 in relation to the Acquisition;
“Target Company” or “Yintai Gold” Yintai Gold Co., Ltd. (銀泰黃金股份有限公司), a joint stock company established in the PRC with limited liability on 18 June 1999, the shares of which are listed on the Shenzhen Stock Exchange (Stock Code: 000975);
“Valuation Report”
the valuation report prepared by BAW Mineral Partners Limited in compliance with the requirements of Chapter 18 of the Hong Kong Listing Rules;
“Vendors”

China Yintai and Mr. Shen; and

“%”

per cent.

— 3 —

LETTER FROM THE BOARD

==> picture [64 x 70] intentionally omitted <==

SHANDONG GOLD MINING CO., LTD. 山東黃金礦業股份有限公司

(a joint stock company incorporated in the People’s Republic of China with limited liability)

(Stock Code: 1787)

Executive Directors:

Mr. Liu Qin (Vice-chairman) Mr. Wang Shuhai Mr. Tang Qi

Non-executive Directors:

Mr. Li Hang (Chairman) Mr. Wang Lijun Ms. Wang Xiaoling

Independent Non-executive Directors:

Mr. Wang Yunmin Mr. Liew Fui Kiang Ms. Zhao Feng

Registered office and headquarters in the PRC: No. 2503, Jingshi Road Licheng District Jinan, Shandong Province The PRC

Principal place of business in Hong Kong:

Rooms 4003-4006 China Resources Building No. 26 Harbour Road Wanchai Hong Kong

15 June 2023

To the Shareholders

Dear Sir or Madam,

MAJOR TRANSACTION ACQUISITION OF SHARES IN THE TARGET COMPANY AND NOTICE OF 2023 THIRD EXTRAORDINARY GENERAL MEETING

1. INTRODUCTION

On behalf of the Board, I invite you to attend the EGM to be held at the conference room of the Company, No. 2503, Jingshi Road, Licheng District, Jinan, Shandong Province, the PRC at 10:00 a.m. on Friday, 30 June 2023. The purpose of this circular is to issue the notice of EGM and provide you with all reasonably necessary information to enable you to make an informed decision as to the resolution to be proposed at the EGM.

— 4 —

LETTER FROM THE BOARD

2. THE ACQUISITION

Reference is made to the announcement of the Company dated 11 December 2022 in relation to the entering into the Share Transfer Agreement by the Company for the proposed acquisition of approximately 20.93% of the issued shares in the Target Company.

Reference is also made to the announcement of the Company dated 19 January 2023 in relation to the entering into the Supplemental Agreement by the Company for the Acquisition.

The Supplemental Agreement

The principal terms of the Supplemental Agreement are summarised as follows:

Date: 19 January 2023 Parties: (1) The Company; (2) China Yintai; and (3) Mr. Shen

To the best of the Director’s knowledge, information and belief, having made all reasonable enquiries, each of China Yintai and Mr. Shen is an Independent Third Party.

Asset to be acquired

401,060,950 shares and 180,120,118 shares of the Target Company are held by China Yintai and Mr. Shen, respectively, totalling 581,181,068 shares and representing approximately 20.93% of the issued shares of the Target Company.

As of 19 January 2023, the details of shares in the Target Company held by China Yintai and Mr. Shen and the pledge thereover are as follows:

	Account
	opening	Number of	The nature	Number of		Guarantee	Term of
Transferor	business hall	shares	of shares	shares pledged	Pledgee	amount	pledge
		(share)				(RMB)
China Yintai	GF Securities Beijing	102,831,395	Tradable shares	22,624,000	GF Securities	96,390,000.00	22 July 2022 –
	Fuchengmen South						23 May 2023
	Street Sales
	Department
China Yintai	Zhongtai Securities Jinan	84,000,000	Tradable shares	44,230,000	Zhongtai Securities	190,000,000.00	29 September 2022 –
	Erhuan East Road						29 September 2023
	Sales Department

— 5 —

LETTER FROM THE BOARD

	Account
	opening	Number of	The nature	Number of		Guarantee	Term of
Transferor	business hall	shares	of shares	shares pledged	Pledgee	amount	pledge
		(share)				(RMB)
China Yintai	Huatai Securities Beijing	77,189,888	Tradable shares	52,800,000	Huatai Tou Rong Lian	218,500,000.00	21 April 2022 –
	Branch Business				Xiang No. 1 Single		21 April 2023
	Department				Asset Management
					Plan
					(華泰投融聯享1號單一
					資產管理計劃)
China Yintai	CSC Beijing North 4th	22,450,000	Tradable shares	17,000,000	CSC Financial	70,000,000.00	27 July 2022 –
	Ring Road East						27 July 2023
	Securities Sales
	Department
China Yintai	CITIC Securities Beijing	76,500,000	Tradable shares	53,390,000	CITIC Securities	209,000,000.00	17 January 2022 –
	Hujialou Securities						17 January 2023
	Sales Department						19 January 2022 –
							19 January 2023
China Yintai	Shenwan Hongyuan	38,089,667	Tradable shares	–
	Securities Shenyang
	Ningshan Middle Road
	Sales Department
Shen Guojun	GF Securities Beijing	20,120,118	Tradable shares	–
	Lugu Road Sales
	Department
Shen Guojun	Zhongtai Securities Jinan	86,000,000	Tradable shares	44,400,000	Zhongtai Securities	190,000,000.00	1 December 2022 –
	Huizhan West Road						1 December 2023
	Securities Sales
	Department
Shen Guojun	CITIC Securities Beijing	20,000,000	Tradable shares	10,239,900	CITIC Securities	40,640,000.00	17 January 2022 –
	East 3rd Ring Road						17 January 2023
	Sales Department
Shen Guojun	Guotai Junan Securities	54,000,000	Tradable shares	19,300,000	Guotai Junan Securities	100,000,000.00	1 December 2022 –
	Shenzhen Huarong						1 December 2023
	Building Securities
	Sales Department

— 6 —

LETTER FROM THE BOARD

Consideration

Transfer price

The Company, China Yintai and Mr. Shen have, after further negotiations, agreed that the transfer price of the Sale Shares is approximately RMB21.96 per share.

The total Consideration payable by the Company is RMB12,760,000,000, of which the share transfer price payable to China Yintai is RMB8,805,410,230 and the share transfer price payable to Mr. Shen is RMB3,954,589,770.

Payment

The Consideration of RMB12,760,000,000 shall be payable in cash by the Company in five instalments to the Vendors in the following manners:

(i) RMB3,828,000,000, including earnest money [Note] , shall be deposited by the Company into the Escrow Account of both parties, and the payment shall be specially used for the purpose of the settlement of creditors’ rights secured by the share pledge of the Target Company and the settlement of the financing debts of China Yintai to GF Securities arising from its margin financing and securities lending with GF Securities, and out of which 20% of the Consideration shall be used as deposit, within five (5) working days after the approval by the competent state-owned assets supervision and administration authorities relevant to the Company and the signing of the Supplemental Agreement. If there is still any remaining amount in the Escrow Account after the completion of the release of pledge registration with China Securities Depository and Clearing Corporation Limited, the Company agreed to cooperate with the arrangement of transfer of the remaining amount in the Escrow Account to the bank account(s) designated by the Vendors within the next one (1) working day after receiving written notice from the Vendors;
(ii) RMB2,552,000,000 shall be paid by the Company directly to the bank account(s) designated by the Vendors within five (5) working days after all provisions contained in the Share Transfer Agreement and the Supplemental Agreement having become effective, the Vendors having completed the pledge over all the Sale Shares to the Company, and the completion of procedures for registration with China Securities Depository and Clearing Corporation Limited of the pledge;
(iii) RMB5,104,000,000 shall be paid by the Company to the bank account(s) designated by the Vendors within five (5) working days after the completion of registration of the transfer of Sale Shares;

Note:

As of the signing date of the Supplemental Agreement, the Company has paid the earnest money of RMB1 billion to the Escrow Account. The earnest money will be converted into a part of the consideration for the first instalment after the approval by the competent state-owned assets supervision and administration authorities relevant to the Company.

— 7 —

LETTER FROM THE BOARD

(iv) RMB1,076,000,000 shall be paid by the Company to the bank account(s) designated by the Vendors within five (5) working days after the completion of change in board and supervisory committee composition of the Target Company pursuant to the Share Transfer Agreement, and the transfer of materials such as important licenses of the Target Company to the Company pursuant to the Supplemental Agreement; and
(v) RMB200,000,000 shall be paid by the Company to the bank account(s) designated by the Vendors within five (5) working days after six months after the completion of change in board and supervisory committee composition of the Target Company pursuant to the Share Transfer Agreement or announcement of the 2023 interim report of the Target Company, whichever is earlier.

The Consideration will be funded by the self-raised funds and internal funds of the Company: (i) no less than 40% of the Consideration will be funded with the Company’s own funds; and (ii) no more than 60% of the Consideration will be funded by bank loans. The Company has obtained the bank’s approval regarding bank loans as at the Latest Practicable Date.

Evaluation and pricing of the transaction

(I) Pricing and Basis thereof

The Consideration is based on the share trading price of Yintai Gold, and based on the Company’s due diligence on Yintai Gold, after having fully considered Yintai Gold’s resource reserves, production and operation conditions, prospecting prospects, and transaction of control rights and other factors. After full negotiation between both parties to the transaction, the final pricing is RMB12,760,000,000.

(II) Reasonability Analysis on Pricing

The Transaction does not involve connected transactions, and the transaction price is finally determined by both parties to the transaction who are independent to and not related with each other through repeated negotiations in an environment of fair market competition. The pricing method of the Transaction is in line with the principle of fairness and reasonableness.

The Consideration for the Transaction is RMB12,760,000,000, which represents a premium rate of approximately 48% over the average share trading price of Yintai Gold for the previous 20 days up to 2 December 2022, the day before the announcement on suspension of trading of Yintai Gold. Such premium level includes the control premium, and the premium paid after considering Yintai Gold’s resource reserves, development prospects and potential future synergies. The pricing of the Transaction is reasonable, specific analysis of which is as follows:

(1) Abundant mineral resource reserves of the Target Company

Yintai Gold’s metal mines are all large-scale and high-grade mines. As at the end of 2021, the total resources of Yintai Gold in aggregate, including surface

— 8 —

LETTER FROM THE BOARD

depositories, amounted to 101,941,700 tonnes of ore, 170.452 tonnes of gold metal, 7,154.06 tonnes of silver metal, 1,076,400 tonnes of lead + zinc metals, 63,500 tonnes of copper metal and 18,200 tonnes of tin metal (certain of the above reserves have not yet been reviewed). After full on-site due diligence, Shandong Gold believes that Yintai Gold’s existing mine surroundings and deep areas have great prospecting prospects, and will further increase resource reserves in the future. The Transaction would help Shandong Gold expand its layout in the gold industry and further improve its resource reserves and operating efficiency.

(2) Acquiring control over the Target Company

Upon completion of the Transaction, Shandong Gold will become the controlling shareholder of Yintai Gold. This would help the both listed companies complement each other’s strengths, play a synergistic effect, promote the overall improvement of the listed companies’ development quality, and open up a new space for Shandong Gold’s quality development. Through the Acquisition, Shandong Gold will strengthen industrial synergy with Yintai Gold, expand Shandong Gold’s asset scale, optimize its capital structure, and enhance its comprehensive ranking and market influence in the market. The Transaction is of great significance for Shandong Gold to realize the “dually-driven model” development of resource and capital and promote the quality development.

(3) Strategic synergy

Shandong Gold, in line with the concept of “resource priority”, continues to build core competitive advantages and increase resource reserves, by means of continuous enhanced efforts on exploration internally, and active resource mergers and acquisitions externally. Gold mines of Heihe Yintai (黑河銀泰), Jilin Banmiaozi (吉林板廟子) and Yunnan Huasheng (雲南華盛) of Yintai Gold are located in Heilongjiang, Jilin and Yunnan, respectively; these three provinces are rich in gold and non-ferrous metal resources. Through this merger and acquisition, Shandong Gold can realize the strategic layout of resources in the southwest and northeast regions from scratch and from a point to an area. By building new development bases for gold and non-ferrous metal mineral resources, Shandong Gold will greatly improve the competitiveness of major mineralization areas outside Shandong Province, enhance the capability against risks, and bring a stronger strategic synergy.

(4) Broad prospects for development

According to the China Gold Association, Yintai Gold ranks top ten among the listed gold enterprises in China in terms of gold mine production volume, indicating a strong market influence. The Acquisition will give full play to the core function of Shandong Gold as a capital operation platform to further build up the gold industry cluster in Shandong Province, and strengthen and expand the gold enterprises under Shandong Province. The Acquisition will further enhance the scale of Shandong Gold’s principal business, improve the capacities of resource acquisition, management and operation, and accelerate the realization of the strategic goal to become a world-class gold mining enterprise.

— 9 —

LETTER FROM THE BOARD

The valuation conclusions of the Target Company in Appendix VI to this circular is an objective assessment of the Target Company’s mining rights by BAW Mineral Partners Limited based on the current operating conditions and plans of the Target Company, and then arriving at the fair market value of the Target Company. However, when evaluating the fairness and reasonableness of the Consideration for the Transaction, the Company also considered the following factors in addition to the above-mentioned fair market value: (1) the price of the Target Company’s shares publicly traded on the Shenzhen Stock Exchange, which is the minimum opportunity cost of the counterparty; (2) the scarcity of the Target Company; (3) the control premium of the Target Company; (4) the strategic synergy between the Target Company and the Company; (5) the broader development prospects of the Target Company and other factors.

(1) The price of the Target Company’s shares publicly traded on the Shenzhen Stock Exchange

The Target Company is a public company listed on the Shenzhen Stock Exchange, and the trading price of its shares in the open market reflects the fair value of the Target Company to a certain extent. In addition, since the counterparty can freely trade its shares in the secondary market under the conditions of compliance with relevant laws and regulations, it can be seen that the trading price in the secondary market is also the minimum opportunity cost for the counterparty to transfer the corresponding shares. Therefore, in the absence of restrictions on the relevant shares, in a fair market transaction, the consideration for the Transaction will theoretically not be lower than the trading price of the Target Company’s shares in the secondary market.

(2) The scarcity of mineral resources of the Target Company

The metal mines under the Target Company are all large-scale and high-grade mines, which have a certain degree of scarcity. After sufficient on-site due diligence, Shandong Gold believes that the surrounding and deep areas of the Target Company’s existing mines have great prospecting prospects, and will further increase resource reserves in the future. It can be seen that the value of mineral scarcity of the Target Company has not been reflected in the valuation conclusions of the Target Company shown in Appendix VI to this circular.

(3) The purpose of the Transaction is to obtain control over the Target Company

Upon completion of the Transaction, the Company will become the controlling shareholder of the Target Company. This would help the both listed companies complement each other’s strengths, play a synergistic effect, promote the overall improvement of the listed companies’ development quality, and open up a new space for the Company’s quality development. Through the Acquisition, the Company will strengthen industrial synergy with the Target Company, expand the Company’s asset scale, optimize its capital structure, and enhance its comprehensive ranking and market influence in the market. The Transaction is of great significance for the Company to realize the “dually-driven model” development of resource and capital and promote the quality development. It can be seen that the value of the Company’s obtaining of control rights of the Target Company has not yet been reflected in the valuation conclusions of the Target Company shown in Appendix VI to this circular.

— 10 —

LETTER FROM THE BOARD

(4) Strategic synergy between the Company and the Target Company

Shandong Gold, in line with the concept of “resource priority”, continues to build upstream core competitive advantages and increase resource reserves, by means of continuous enhanced efforts on exploration internally, and active resource mergers and acquisitions externally. Gold mines of Heihe Yintai (黑河銀泰), Jilin Banmiaozi (吉林板廟子) and Yunnan Huasheng (雲南華盛) of the Target Company are located in Heilongjiang, Jilin and Yunnan, respectively; these three provinces are rich in gold and non-ferrous metal resources. Through this merger and acquisition, Shandong Gold can realize the strategic layout of resources in the southwest and northeast regions from scratch and from a point to an area. By building new development bases for gold and non-ferrous metal mineral resources, Shandong Gold will greatly improve the competitiveness of major mineralization areas outside Shandong Province, enhance the capability against risks, and bring a stronger strategic synergy. Since the valuation conclusions shown in Appendix VI to this circular are based on the Target Company’s current operating conditions and assumptions of planning, it can be seen that the Company’s strategic synergy value relevant to the Target Company has not been reflected in the above valuation conclusions.

(5) The broader prospects for development of the Target Company

According to the China Gold Association, the Target Company ranks among the top 10 listed gold enterprises in China in terms of gold mine production volume, indicating a strong market influence. The Acquisition will give full play to the core function of Shandong Gold as a capital operation platform to further build up the gold industry cluster in Shandong Province, and strengthen and expand the gold enterprises under Shandong Province. The Acquisition will further enhance the scale of Shandong Gold’s principal business, improve the capacities of resource acquisition, management and operation, and accelerate the realization of the strategic goal to become a world-class gold mining enterprise. The Target Company will also gain broader prospects for development. It can be seen that the value increase of market influence and prospects for development of the Target Company has not yet been reflected in the valuation conclusions shown in Appendix VI to this circular.

After in-depth due diligence and analysis by the Company’s relevant property experts and based on the consideration of the above value factors, the Company believes that the Target Company has an investment value that is significantly higher than its fair market value. Based on the investment value of the Target Company, the Company has determined the Consideration for the Transaction after repeated negotiations with independent and unrelated counterparties under the environment of fair market competition. Therefore, the determination of Consideration complies with the principle of fairness and reasonableness.

— 11 —

LETTER FROM THE BOARD

(III) Goodwill Expected to Be Formed in the Transaction and Warning of Future Impairment Risks

Upon the Company’s acquisition of approximately 20.93% equity interest of Yintai Gold, a large amount of goodwill may be formed in the Company’s consolidated balance sheet, but it can only be determined after the evaluation of consideration allocation in accordance with the Accounting Standards for Business Enterprises. The goodwill formed in the Transaction will not be amortized and will be subject to impairment testing at the end of each year in the future.

If Yintai Gold does not operate well in the future, the Company will be exposed to the risk of goodwill impairment, which would adversely affect the Company’s current profit or loss. As Yintai Gold operates in the precious and non-ferrous metals mining industry and the metal trading industry, its business performance is greatly affected by the price fluctuations of precious and non-ferrous metals. In the future, Yintai Gold will adhere to the development strategy of focusing on precious metals and simultaneously developing high-quality non-ferrous metals. In the medium and long term, the prices of precious and non-ferrous metals will be affected by domestic macroeconomic trends, which will further increase the uncertainty of Yintai Gold’s future operating performance. After the Transaction, full attention should be paid to the potential risk of goodwill impairment.

Effectiveness of the Terms of the Agreements

The terms of the Share Transfer Agreement in relation to “The consideration percentage for the first instalment and the Vendors’ internal distribution of the consideration and other payments for the equity transfer price”, “No Solicitation or Negotiation”, “Confidentiality”, “Effectiveness” and “Other Terms” shall become effective upon signing, provided that the other terms of the Share Transfer Agreement shall become effective upon signing by the parties and subject to the satisfaction of the following conditions precedent:

(a) approval by the general meeting of the Company, and approval by the Hong Kong Stock Exchange; and
(b) approval by the competent state-owned assets supervision and administration authorities relevant to the Company.

The terms of the Supplemental Agreement in relation to “General Plan of the Transaction”, “Payment of the Share Transfer Price for the First Instalment”, “No Solicitation or Negotiation”, “Effectiveness” and “Other Terms” shall become effective upon signing, provided that the other terms of the Supplemental Agreement shall become effective together with the Share Transfer Agreement upon signing by the parties and subject to the satisfaction of all the effective conditions set forth above in the Share Transfer Agreement.

Both parties shall be entitled to inform the other party to terminate the Share Transfer Agreement and the Supplemental Agreement without any responsibility of default, and the Vendors shall cooperate to release the joint supervision of the Escrow Account within five (5) working days and return to the Company the Consideration paid within ninety (90) days upon termination of the

— 12 —

LETTER FROM THE BOARD

Share Transfer Agreement and the Supplemental Agreement, in the event that (i) the Acquisition has not been approved by the Hong Kong Stock Exchange, and/or the Acquisition has not been approved by the competent state-owned assets supervision and administration authorities relevant to the Company; and/or (ii) the State Administration of Market Regulation has not approved or has forbidden the concentration of operators involved in the Acquisition or the conditions attached to the Acquisition in case of conditional approval will cause the failure of the Acquisition to achieve its contractual purpose.

None of the above conditions precedent can be waived by any party to the Transaction. As at the Latest Practicable Date, condition precedent (b) has been satisfied.

Completion

China Yintai and Mr. Shen shall, upon all the terms of the Share Transfer Agreement and the Supplemental Agreement taking effect, and the following conditions being proven to be satisfied:

(i) all of the Sale Shares have been released from pledge, and there is no restriction on transfer (except for the shares pledged by the Vendors to the Company in accordance with the Share Transfer Agreement and the Supplemental Agreement);
(ii) the State Administration for Market Regulation has issued a decision or consent document on the anti-monopoly review of the concentration of operators not to implement further review or not to prohibit the concentration of operators involved in the Transaction;
(iii) the Company has paid RMB2,552,000,000 as the second instalment pursuant to the Supplemental Agreement; and
(iv) the documents and materials submitted to the Shenzhen Stock Exchange have been prepared,

submit compliance confirmation application documents to the Shenzhen Stock Exchange for the Transaction within three (3) working days, and then report to the Shenzhen Stock Exchange for consent and approval in respect of the Transaction. The Company shall promptly cooperate with China Yintai and Mr. Shen in submitting relevant application documents (including but not limited to the provision of relevant documents upon request of the Shenzhen Stock Exchange in respect of the issuance of documents agreeing to the transfer of the Sale Shares pledged by China Yintai and Mr. Shen to the Company in accordance with the Share Transfer Agreement and the Supplemental Agreement).

Within five (5) working days from the day following the date of obtaining the compliance confirmation opinion of the Shenzhen Stock Exchange, China Yintai and Mr. Shen shall facilitate China Securities Depository and Clearing Corporation Limited to transfer and register all the Sale Shares to the Company’s A-share securities account, for which the Company shall provide reasonable and necessary assistance and cooperation in a timely manner. Completion of the Acquisition shall take place upon transfer and registration of all of the Sale Shares by China Securities Depository and Clearing Corporation Limited to the Company’s A-share securities account. Upon completion of the registration of the transfer, the Company shall acquire and enjoy all shareholders’ rights of the Sale Shares.

— 13 —

LETTER FROM THE BOARD

None of the above conditions precedent can be waived by any party to the Transaction. As at the Latest Practicable Date, conditions precedent (i) and (ii) above have been satisfied.

Upon completion of the Acquisition, the Company will hold approximately 20.93% of the issued shares of the Target Company and become its controlling shareholder. The financial results of the Target Company will be consolidated into the consolidated financial statements of the Group.

The Company’s control over the Target Company can be achieved at three levels: the general meeting’s level, the board of directors’ level and the management’s level:

(1) The General Meeting’s Level

Through the transaction, the Company will acquire approximately 20.93% of the issued shares of the Target Company, directly owning 20.93% of the voting rights at the general meeting of the Target Company, and becoming the largest shareholder of the Target Company, which is able to have a substantial impact on the passing of resolutions of the general meeting of the Target Company. In addition, the Company does not rule out the possibility of further increasing its shareholdings in the Target Company through the secondary market, agreement transfer, subscription for new shares issued by the Target Company and other methods, thereby expanding the Company’s voting rights at the Target Company’s general meeting and increasing its control.

(2) The Board of Directors’ Level

The parties have agreed in the Share Transfer Agreement and the Supplemental Agreement that “the transferor shall take all reasonable and necessary actions to assist the transferee to achieve the following objectives: provided that the board of directors of the Target Company consists of nine members and the supervisory committee of the Target Company consists of three members, no less than five directors shall be nominated/recommended by the Company and so elected, and no less than one supervisor shall be nominated/recommended by the Company and so elected. Therefore, the Company will have a majority of directorships on the board of directors of the Target Company upon Completion and will be able to exercise substantial influence on the passing of resolutions of the board of directors of the Target Company.

In addition, according to article 110 of the current articles of association of the Target Company, the chairman and vice-chairman shall be elected by over half of the total number of directors. Therefore, the Company will have the right to decide the candidates for the chairman and vice-chairman of the Target Company upon Completion.

(3) Management level

According to article 123 of the current articles of association of the Target Company, the Target Company shall have one general manager, who shall be appointed or dismissed by the board of directors. Senior management of the Target Company includes the general manager, deputy general manager, chief financial officer, board secretary and chief engineer. According to article 117 of the current articles of association of the Target

— 14 —

LETTER FROM THE BOARD

Company, the quorum of a meeting of the board of directors shall consist of more than one half of all directors. A resolution of the board of directors shall be passed by more than half of all directors. When voting on the resolutions of the board of directors, each director shall have one vote. Therefore, upon Completion, the Company will have the right to decide the candidates for the general manager, deputy general manager and other senior management of the Target Company, and then decide the daily production, operation and management of the Target Company.

Information of the Relevant Parties

The Company

The Company was established by its promoters with approval from the Shandong Province Economic System Reform Commission (山東省經濟體制改革委員會) and the People’s Government of Shandong Province (山東省人民政府) in January 2000. The Company is an integrated gold company listed on the Shanghai Stock Exchange and the Hong Kong Stock Exchange since 2003 and 2018, respectively and engaged in gold exploration, mining, processing, smelting and sales. It is one of the largest gold producers listed domestically and/or in Hong Kong that operates in the PRC, controlling and operating more than 10 gold mines with operation primarily located in Shandong Province. The Company has gradually expanded its business into the Inner Mongolia Autonomous Region, Gansu Province, Xinjiang Uyghur Autonomous Region and Fujian Province and Argentina, South America and Ghana, Africa.

China Yintai

China Yintai is a limited liability company established in the PRC, which is principally engaged in custody, restructuring and operation of asset; investment, development and operation of agriculture, forestry, animal husbandry and fishery; investment, development and operation of high-tech industries; development and sale of hygiene products and labour protective products; investment and operation of commercial department store retail. As at the Latest Practicable Date, China Yintai is indirectly held as to 92.5% by Mr. Shen.

Mr. Shen

Mr. Shen Guojun (沈國軍) is the ultimate beneficial owner of China Yintai and an Independent Third Party.

Information of the Target Company

The Target Company is a joint stock company established in the PRC with limited liability and listed on the Shenzhen Stock Exchange (stock code: 000975). It is principally engaged in precious metal and non-ferrous metal mining and processing and trading of metal. As at the Latest Practicable Date, the Target Company is owned as to 14.44% by China Yintai, which is ultimately owned by Mr. Shen, and 6.49% by Mr. Shen.

— 15 —

LETTER FROM THE BOARD

The audited consolidated net profit (before and after taxation) for the financial years ended 31 December 2021 and 2022 of the Target Company prepared under the China Accounting Standards for Business Enterprises are set out below:

			For the	year ended
			31 December
			2022	2021
			(audited)	(audited)
			RMB	RMB
Net	profit	before taxation	1,609,102,196.36	1,844,617,072.24
Net	profit	after taxation	1,244,248,930.25	1,421,709,251.71

The audited consolidated net asset of the Target Company as at 31 December 2022 amounted to approximately RMB12.68 billion. The net asset value per share attributable to the owners of the parent company of the Target Company as at 31 December 2022 amounted to approximately RMB3.93. The net asset value per share attributable to the owners of the parent company of the Target Company as at 30 September 2022 amounted to approximately RMB3.87.

When assessing the fairness and rationality of the Consideration, the Company has fully taken into account that the net asset per share attributable to the owners of the parent company of the Target Company as at the end of the third quarter of 2022 was only RMB3.87, which is lower than the Consideration for the Acquisition. However, considering that the Target Company is a public company listed on the Shenzhen Stock Exchange, the Company also made reference to the average share price of the Target Company, i.e. the average closing price of approximately RMB14.83 for the previous 20 days up to 2 December 2022 (the day before trading halt of the Target Company for announcement of the Acquisition). The average share price of the Target Company is much higher than its net asset per share, which is because the carrying net asset of the Target Company reflects the historical cost or revaluation cost of the Target Company, which cannot reasonably and timely reflect its future profitability. Therefore, when determining the Consideration, the Company has additionally made reference to the share price performance of the Target Company in the secondary market. The Company believes that the share price in the publicly traded secondary market is closer to the fair value of the Target Company than the carrying net asset.

In addition, on the basis of the equity transaction price in the secondary market, the Company also considered the scarcity of the Target Company, the control premium, strategic synergy and the investment value endowed by the improvement of prospects for development of the Target Company (please refer to pages 10 to 11 of this circular for details). Based on the investment value of the Target Company, the Company has determined the Consideration after repeated negotiations with independent and unrelated counterparties under the environment of fair market competition. Therefore, the pricing of the Acquisition is fair and reasonable.

— 16 —

LETTER FROM THE BOARD

Based on the information publicly available, the following table sets out the shareholding structure of the Target Company (i) as at 31 March 2023; and (ii) immediately upon Completion (assuming no other changes to the issued share capital and shareholders and their respective shareholdings of the Target Company from 31 March 2023 to the Completion):

			Immediately upon	Immediately upon
Shareholders	As at 31	March 2023	Completion
	Number of	Approximate	Number of	Approximate
	shares	percentage	shares	percentage
The Company	–	–	581,181,068	20.93
China Yintai	401,060,950	14.44	–	–
Wang Shui (王水)	385,993,343	13.90	385,993,343	13.90
Mr. Shen	180,120,118	6.49	–	–
Cheng Shaoliang (程少良)	138,387,110	4.98	138,387,110	4.98
China Construction Bank Corporation –
Huaxia Energy Innovative Share Securities
Investment Fund (中國建設銀行股份
有限公司－華夏能源革新股票型證券
投資基金)	68,926,375	2.48	68,926,375	2.48
China Construction Bank Corporation –
Huatai PineBridge Fuli Flexible
Configuration Mixed Securities Investment
Fund (中國建設銀行股份有限公司－華泰
柏瑞富利靈活配置混合型證券投資基金)	53,662,676	1.93	53,662,676	1.93
Hong Kong Securities Clearing Company
Limited	51,896,687	1.87	51,896,687	1.87
Shanghai Baohu Investment Management
Center (Limited Partnership) (上海趵虎
投資管理中心（有限合夥）)	49,325,389	1.78	49,325,389	1.78
China Industrial and Commercial Bank of
China – Huaxia Core Manufacturing
Mixed Securities Investment Fund
(中國工商銀行股份有限公司－華夏核心
製造混合型證券投資基金)	30,112,017	1.08	30,112,017	1.08
He Yan (何艷)	28,650,900	1.03	28,650,900	1.03
Others	1,388,636,700	50.02	1,388,636,700	50.02
Total	2,776,772,265	100.00	2,776,772,265	100.00

— 17 —

LETTER FROM THE BOARD

Summary of the major mining assets held by the Target Company

(I) Banmiaozi Project

The following tables set out the details of the operational licences and permits of Banmiaozi Project:

Mining Licence

Mining License Holder	Jilin Banmiaozi Mining Co., Ltd.
Name of Property	Jilin Banmiaozi
License Type	Mining
License ID	C1000002011044110112056
Area (km2)	2.0514
Elevation (m)	From 750 m to -200 m
Permitted Production Capacity	800 ktpa
Type of Commodities	Gold
Mining Method	Underground
Valid Period	13 April 2021 to 13 December 2025

Exploration Licence

License Type	Exploration
License ID	T22000020080504010000429
Area (km2)	0.0811
Valid Period	26 April 2022 – 26 April 2024

— 18 —

LETTER FROM THE BOARD

Business Licence

Property	Business License No	Issue Date	Permitted Activities
Jilin Banmiaozi	912206017536172674	09 February 2022	Exploration, Mining,
			Processing and Sales
	_Safety Production _	Permit
	Safety Production
Property	Permit No	Issue Date	Expiry Date
Jilin Banmiaozi	(2020) DXB5132	03 March 2022	06 December 2023
	_Safety Product Permit (Tailing _	Storage Facilities)
	Safety Production
Property	Permit No	Issue Date	Expiry Date
Jilin Banmiaozi	(2022) WKBY0025	20 October 2022	19 October 2025

Water Use Permit

				Water Supply	Water Use
Property	Water Use Permit No	Issue Date	Expiry Date	Source	Allocation (m3)
Jilin Banmiaozi	C220602G2022-0027	22 April 2022	21 April 2027	Groundwater	1.4879 Million

Gold mines of Jilin Banmiaozi are located in Jilin; the province is rich in gold and non-ferrous metal resources. The underground mine is accessed via declines, and the decline transports the ore, waste rock, personnel and materials.

— 19 —

LETTER FROM THE BOARD

The most recent resource estimate of Banmiaozi Jinying gold mine provided for review was carried out by the Geology and Mineral Exploration and Development Bureau of Jilin Province in December 2018. The resource estimation report “Resource & Reserve Estimation Report (2018) for Baishan Jinying Gold Mine” was dated 31 December 2018. Wireframing and Ordinary Krigin-grade interpolation were used to build a block model at that time. Annual internal grade estimate and mining depletion were updated to Block Model based on the production data during the period from 2019 to 2022. The resource estimate and technical report were reviewed by BAW, which was prepared by Banmiaozi Jinying gold mine based on a 1.0 g/t AU cut-off grade, which was used for the Banmiaozi Jinying gold mine site. The table below sets out the summary of Banmiaozi Jinying gold mine mineral resources at a 1.0 g/t AU cut-off as at 31 December 2022:

			Au Grade	Gold
Cut-off	CAT	TONNES(kt)	(g/t)	Metal (kg)
	Measured	4,584	4.03	18,480
	Indicated	482	3.62	1,746
1.0 g/t Au	Total Measured + Indicated	5,067	3.99	20,226
	Inferred	1,675	3.72	6,233
	Total	6,742	3.92	26,459

The table below sets out the Baimiaozi Jinying gold mine mineral reserve at a 2.0 g/t Au cut-off as at 31 December 2022:

				Gold
		TONNES	Au Grade	Metal
Cut-off	CAT	(kt)	(g/t)	(koz)	Note
	Proven	3,672	4.08	14,999
2.0 g/t Au	Probable	341	3.94	1,343
	Total	4,013	4.07	16,342

(II) Dachaidan Project

The Dachaidan Gold Project (the “ Dachaidan Project ”) is located approximately 75 km northwest of the town of Dachaidan, under the jurisdiction of Dachaidan town in Haixi Mongolian and Tibetan Autonomous Prefecture, Qinghai Province.

— 20 —

LETTER FROM THE BOARD

The following tables set out the details of the operational licences and permits of Dachaidan Project:

Mining Licences

	Mining License Holder	Mining License Holder	Qinghai Dachaidan Mining Co.,	Qinghai Dachaidan Mining Co.,	Ltd.	Qinghai Dachaidan Mining Co., Ltd.	Qinghai Dachaidan Mining Co., Ltd.
	Name of Property		Tanjianshan Au	Mining Area		Qinglonggou Au Mining Area
			(“Tanjianshan”)			(“Qinglonggou”)
	License Type		Mining			Mining
	License ID		C1000002011104120120032			C1000002010044120060797
	Area (km2)		1.03			3.89
	Elevation (m)		From 750 m to -200 m			From 750 m to -200 m
	Permitted Production Capacity		600 ktpa			400 ktpa
	Type of Commodities		Gold			Gold
	Mining Method		Open Pit Mine			Open Pit Mine
	Valid Period		17 June 2011 to 17 June 2023			05 January 2023 to 05 September 2028
			Exploration Licences
License Type	Exploration	Exploration	Exploration	Exploration	Exploration	Exploration	Exploration
License ID	T6300002	T6300002	T6300002	T6300002	T6300002	T6300002	T6300002
	01801401	02108401	00804401	00804401	02203405	00804401	02202401
	0054584	0056482	0000385	0000384	0056745	0000382	0056718
Area (km2)	12.73	8.05	1.2	17.74	3.89	2.90	63.05
Valid Period	22 March 2021 to	19 August 2021	19 August 2021 –	19 August 2021 –	17 March 2022 – 17 February 2022 –		17 February 2022 –
	15 October 2025	to 15 October 2025	18 August 2023	23 June 2026	16 March 2027 16 February 2024		19 June 2026

— 21 —

LETTER FROM THE BOARD

The table below sets out the mine operation status:

Mine Operation status Qinglonggou North Underground Qinglonggou South Underground Qinglonggou Gold 323 South Open pit Tanjianshan Previously: open pit Currently: underground Xijinggou Open pit

The most recent resource estimate of Dachaidan gold mine provided for the review was carried out by Qinghai Dachaidan Mining Limited as at 31 December 2022. Internal block-grade modelling was done for the deposit by an onsite geologist. As an internal estimate, Wireframing, Block grade simulation, pit design and mining depletion data were provided and reviewed by BAW. Capping, assay compositing, varigraphy modelling and grade interpolation parameters were not provided. Visual check, statistical and IDW2 grade simulation was performed by BAW for reviewing. The current resource estimate by Dachaidan is based on the 1.0 g/t Au cut-off, which was given by Dachaidan. The MRE presented in the table below has been depleted by all mining and developments works as at 31 December 2022:

			Au grade	Gold Metal
Site	CAT	TONNES(kt)	(g/t)	(kg)	Note
Jinlonggou Pit 3	Measured	–	–	–	OP &
	Indicated	2,754	3.78	10,399	PIT20221231
	M+I	2,754	3.78	10,399
	Inferred	1,190	3.04	3,615
	Total	3,944	3.55	14,015
Qinglonggou M2	Measured	–	–	–	OP
	Indicated	346	7.64	2,646	PIT20221231 &
	M+I	346	7.64	2,646	Mined Stope
	Inferred	186	6.23	1,159
	Total	532	7.15	3,805
Qinglonggou South	Measured	–	–	–
	Indicated	–	–	–
	M+I	–	–	–
	Inferred	427	6.21	2,650
	Total	427	6.21	2,650

— 22 —

LETTER FROM THE BOARD

			Au grade	Gold Metal
Site	CAT	TONNES(kt)	(g/t)	(kg)	Note
Qinglonggou M3	Measured	–	–	–	Mined Stope
	Indicated	613	3.81	2,335
	M+I	613	3.81	2,335
	Inferred	266	2.93	780
	Total	879	3.55	3,115
Qinglonggou North Deep East	Measured	–	–	–
	Indicated	–	–	–
	M+I	–	–	–
	Inferred	383	5.13	1,964
	Total	383	5.13	1,964
Qinglonggou North Deep West	Measured	–	–	–
	Indicated	–	–	–
	M+I	–	–	–
	Inferred	1,356	2.69	3,644
	Total	1,356	2.69	3,644
Xijinggou	Measured	–	–	–
	Indicated	2,700	4.08	11,014
	M+I	2,700	4.08	11,014
	Inferred	1,506	4.24	6,380
	Total	4,206	4.14	17,394
Qinglonggou East	Measured	–	–	–
	Indicated	1,738	8.11	14,095
	M+I	1,738	8.11	14,095
	Inferred	529	7.62	4,029
	Total	2,267	7.99	18,124
Stockpile	Measured	1,314	5.21	6,850
	Indicated	–	–	–
	M+I	1,314	5.21	6,850
	Inferred	–	–	–
	Total	1,314	5.21	6,850
Total	Measured	1,314	5.21	6,850
	Indicated	8,151	4.97	40,489
	M+I	9,465	5.00	47,339
	Inferred	5,843	4.15	24,221
	Total	15,308	4.67	71,561

The Mineral Resource estimates are reported following the JORC 2012 Definition Standards for Mineral Resources & Mineral Reserves.
The effective date for the Mineral Resource estimates is 31 December 2022.

— 23 —

LETTER FROM THE BOARD

Mineral Resource estimates account for mining depletion up to and including 31 December 2022.
A cut-off value at 1.0 g/t Au was used for Dachaidan open pit deposit.
Applicable rounding has been applied to the stated tonnages, grades, and metal content to reflect the level of accuracy and precision of the estimate.

The following table sets out the Dachaidan mineral reserve blocks at a 2.0 g/t Au cut-off as at 31 December 2022:

			Au grade	Gold Metal
Site	CAT	TONNES(kt)	(g/t)	(kg)	Note
Jinlonggou Pit 3	Proved	–	–	–	OP &
	Probable	1,975	4.16	8,212	PIT20221231
	Total	1,975	4.16	8,212
Qinglonggou M2	Proved	–	–	–	OP
	Probable	343	6.91	2,371	PIT20221231 &
	Total	343	6.91	2,371	Mined Stope
Qinglonggou South	Proved	–	–	–
	Probable	–	–	–
	Total	–	–	–
Qinglonggou M3	Proved	–	–	–	Mined Stope
	Probable	472	4.01	1,894
	Total	472	4.01	1,894
Qinglonggou North Deep East	Proved	–	–	–
	Probable	–	–	–
	Total	–	–	–
Qinglonggou North Deep West	Proved	–	–	–
	Probable	–	–	–
	Total	–	–	–
Xijinggou	Proved	–	–	–
	Probable	2,035	4.38	8,918
	Total	2,035	4.38	8,918
Qinglonggou East	Proved	–	–	–
	Probable	1,684	7.49	12,609
	Total	1,684	7.49	12,609
Stockpile	Proved	1,314	5.21	6,850
	Probable	–	–	–
	Total	1,314	5.21	6,850
TOTAL	Proved	1,314	5.21	6,850
	Probable	6,509	5.22	34,005
	Total	7,823	5.22	40,855

— 24 —

LETTER FROM THE BOARD

(III) Heihe Project

The Dong’an Gold Deposit (the “ Heihe Project ” or the “ Dong’an Project ”) is located in the southeast region of Heilongjiang Province, China, approximately 45 km from Xunke County and 145 km from Heihe City. Harbin, the capital city of Heilongjiang Province, lies around 427 km to the southwest. The Project falls under the administrative jurisdiction of Xinxing Township in Xunke County and is situated approximately 15 km south of the China-Russia border.

The following tables set out the details of the operational licences and permits of Heihe Project:

Mining Licence

Mining License Holder Heihe Yintai Mining Development Co., Ltd. Name of Property The Dong’an Gold Deposit License Type Mining License ID C1000002016044210142237 Area (km[2] ) 0.1386 Elevation (m) From 280 m to -100 m Permitted Production Capacity 375.0 ktpa Type of Commodities Gold and Silver Mining Method Underground/Open Pit Mine Valid Period 18 May 2016 to 18 May 2033

Business Licence

Property Business License No Issue Date Permitted Activities Heihe Yintai Mining 91231100663888397E 22 August 2019 Mining, Exploration, Development Co., Ltd. processing and Sales Safety Production Permit Property Safety Production Permit No Issue Date Expiry Date Heihe Yintai Mining 2020 HH3739 06 May 2021 10 September 2023 Development Co., Ltd.

Safety Production Permit (Tailing Storage Facilities)

Property Safety Production Permit No Issue Date Expiry Date Heihe Yintai Mining 2022 007 25 November 2020 24 November 2023 Development Co., Ltd.

— 25 —

LETTER FROM THE BOARD

Gold mines of Heihe Yintai Mining Development Co., Ltd. are located in Heilongjiang; the province is rich in gold and non-ferrous metal resources. The Dong’an Gold Mine was open-pit mining in the early stage and the open-pit mining ended in June 2019. In July 2020, underground mining began. The underground mine is accessed via decline. The underground ore is directly loaded onto a 20 t haul truck and transported to the surface through the decline.

The most recent resource estimate of the Heihe Dong’an gold mine provided for review was carried out by Rock Mining Development Co., Ltd in April 2017. The resource estimate technical report “Resource & Reserve Estimation Report (2017) for Dong’an Gold Mine” was dated 31 December 2016. Inverse Distance Power was conducted based on varigraphy modelling using Geovia Surpac 6.6, and grade interpolation was used to build a block model at that time. Annual Internal grade estimate and mining depletion were updated to Wireframing and Block Model based on production data from 2017 to 2022. The latest resource estimate and technical report were reviewed by BAW. The current resource estimate by Dong’an is based on a 1.0 g/t Au cut-off, which was used for onsite mining. The table below sets out the summary of Dong’an mineral resources at a 1.0 g/t Au cut-off as at 31 December 2022:

				Gold		Silver
		TONNES	Au grade	Metal	Ag grade	Metal
Cut-off	CAT	(kt)	(g/t)	(kg)	(g/t)	(kg)
	Measured	1,393	6.57	9,144	71.17	99,132
	Indicated	160	2.59	414	58.18	9,292
1.0 g/t Au	M+I	1,553	6.16	9,558	69.84	108,424
	Inferred	80	2.40	191	65.82	5,235
	Total	1,632	5.97	9,749	69.64	113,659
	Measured	214	3.27	700	76	16,320
	Indicated	–	–	–	–	–
Stockpile	M+I	214	3.27	700	76	16,320
	Inferred	–	–	–	–	–
	Total	214	3.27	700	76	16,320
	Measured	1,607	6.13	9,844	71.84	115,452
	Indicated	160	2.59	414	58.08	9,292
Total	M+I	1,767	5.81	10,258	70.60	124,744
	Inferred	80	2.39	191	65.44	5,235
	Total	1,846	5.66	10,449	70.41	129,979

Notes:

The Mineral Resource estimates are reported following the JORC 2012 Definition Standards for Mineral Resources & Mineral Reserves.
The effective date for the Mineral Resource estimates is 31 December 2022.
Mineral Resource estimates account for mining depletion up to and including 31 December 2022.
A cut-off value at 1.0 g/t Au was used for Dong’an underground mining.
Applicable rounding has been applied to the stated tonnages, grades, and metal content to reflect the level of accuracy and precision of the estimate.

— 26 —

LETTER FROM THE BOARD

The table below sets out the Dong’an mineral reserve at a 3.0 g/t Au cut-off as at 31 December 2022:

				Gold
		TONNES	Au Grade	Metal	Au Grade	Ag Metal
Cut-off	CAT	(kt)	(g/t)	(kg)	(g/t)	(kg)
	Proven	1,141	7.15	8,160	72.00	82,177
3.0 g/t Au	Probable	44	3.84	169	91.33	4,022
	Total	1,185	7.03	8,329	72.72	86,199
	Proven	214	3.27	700	76	16,320
Stockpile	Probable	–	–	–	–	–
	Total	214	3.27	700	76	16,320
	Proven	1,355	6.54	8,860	72.69	98,497
Total	Probable	44	3.84	169	91.33	4,022
	Total	1,399	6.45	9,029	73.28	102,519

(IV) Yulong Project

The following tables set out the details of the operational licences and permits of Yulong Project:

Mining Licences

Mining License Holder Inner Mongolia Yulong Mining Co., Ltd. Inner Mongolia Yulong Mining Co., Ltd. Name of Property Huaaobaote Ag-Pb Mining Area Huaaobaote Mountain Pb-Zn-Ag Mining (“Huaaobaote”) Area (“Huaaobaote Mountain”) License Type Mining Mining License ID C1500002011024210112496 C1500002012054210125299 Area (km[2] ) 1.7093 1.0269 Elevation (m) From 1,030 m to 400 m From 1,030 m to -473 m Permitted Production Capacity (kt) 1,000 250 Type of Commodities Silver, Lead and Zinc Silver, Lead and Zinc Mining Method Underground Underground Valid Period From 11 November 2012 From 16 May 2020 to 16 May 2023 to 11 November 2037

— 27 —

LETTER FROM THE BOARD

Exploration Licence

License Type Exploration	Exploration	Exploration		Exploration	Exploration	Exploration
License ID T1525002022054050056825 T1525002022054050056826		T1525002008043010006893		T1525002008043010006891
Area (km2) 1.68	0.05	1.51		2.42
Valid Period 18 May 2022 –	18 May 2022 –	From 21 January 2022 to		From		21 January 2022 to
17 May 2027	17 May 2027	20 January	2024		20	January 2024
	Exploration Licence – Expired
License Type	Exploration		Exploration
License ID	T1525002009123010037416		T1525002009114010036050
Area (km2)	15.42		21.76
Valid Period	From 09 November 2020	to	From 09 November 2020 to
	08 November 2022		08 November 2022
	Safety Production Permit
Property	Safety Production Permit No		Issue Date			Expiry Date
Inner Mongolia Yulong Mining (2021) 001822			17 May 2022			24 June 2024
Co., Ltd.
Inner Mongolia Yulong Mining (2020) 006377			17 May 2022			19 August 2023
Co., Ltd.
Safety Production Permit (Tailing Storage Facilities)
Property	Safety Production Permit No		Issue Date			Expiry Date
Inner Mongolia Yulong Mining (2020) 00648			16 August 2022			15 August 2025
Co., Ltd.
	Water Use Permits
	Water Use		Water Supply			Water Use
Property	Permit No Issue Date	Expiry Date Source				Allocation (m3)
Inner Mongolia Yulong	S1520496514689 25 December	31 December Groundwater				934,800
Mining Co., Ltd.	2017	2022

Yulong Mining Company, a subsidiary of Yintai Gold, is located in West Ujimqin Banner, Inner Mongolia.

— 28 —

LETTER FROM THE BOARD

The mine uses the main double-skip shaft and auxiliary shafts to access the underground. The main shaft is for ore lifting and the auxiliary shafts are for personnel and materials. The current main mining areas are No. I1 and No. II2 ore bodies.

The most recent resource estimate of Yulong West Ujimqin Banner Huaaobaote Pb-Ag-Zn mine provided for the review was carried out by Inner Mongolia Yulong Mining Co., Ltd. in January 2023. The resource estimate technical report “Annual Reserve Report (2022) for Huaaobaote Pb-Ag-Zn Mine” was dated 31 December 2022. Geological block grade modelling was used to estimate the resource at that time. The resource estimate and technical report were reviewed by BAW. The current resource estimate by Huaaobaote is based on 0.8 g/t Pb equivalent cut-off grade. The following table sets out the summary of Huaaobaote mineral resources at a 0.8 g/t Pb equivalent cut-off as at 31 December 2022:

								Silver				Gold
		TONNES	Pb grade	Pb Metal	Zn grade	Zn Metal	Ag grade	Metal	Cu grade	Copper	Au grade	Metal
Site	CAT	(kt)	(%)	(t)	(%)	(t)	(g/t)	(kg)	(%)	Metal (t)	(g/t)	(kg)
	Measured	–	–	–	–	–	–	–	–	–
	Indicated	4,926	0.64	31,740	1.30	64,070	66.16	325,895	0.16	777
Huaaobaote Mountain	M+I	4,926	0.64	31,740	1.30	64,070	66.16	325,895	0.16	777
	Inferred	3,547	0.79	28,140	1.44	51,079	79.60	282,315	0.02	614
	Total	8,472	0.71	59,879	1.36	115,149	71.79	608,210	0.02	1,391
	Measured	1,013	3.51	35,603	3.53	35,731	265.55	269,000	–	–
	Indicated	10,321	1.19	122,563	1.86	191,830	113.85	1,175,000	–	–
Huaaobaote	M+I	11,334	1.40	158,166	2.01	227,561	127.40	1,444,000	–	–
	Inferred	12,627	1.42	179,031	2.05	258,996	154.19	1,947,000	–	–
	Total	23,961	1.41	337,197	2.03	486,557	141.52	3,391,000	–	–
	Measured	–	–	–	–	–	–	–	–	–
	Indicated	219	1.15	2,527	2.03	4,455	136.82	30,023	–	–
1038 Height	M+I	219	1.15	2,527	2.03	4,455	136.82	30,023	–	–
	Inferred	384	1.15	4,416	2.19	8,431	125.20	48,117	–	–
	Total	604	1.15	6,943	2.13	12,886	129.43	78,140	–	–
	Measured	–	–	–	–	–	–	–	–	–
	Indicated	332	2.54	8,427	2.89	9,596	190.99	63,418	–	–
Nanshan	M+I	332	2.54	8,427	2.89	9,596	190.99	63,418	–	–
	Inferred	275	1.96	5,382	2.37	6,499	158.17	43,459	–	–
	Total	607	2.28	13,809	2.65	16,095	176.13	106,877	–	–
	Measured	–	–	–	–	–	–	–	–	–
	Indicated	12,057	0.56	67,573	1.65	198,951	73.22	882,877	0.32	38,600
1118 Height	M+I	12,057	0.56	67,573	1.65	198,951	73.22	882,877	0.32	38,600
	Inferred	10,942	0.56	61,391	1.89	206,916	82.60	903,837	0.44	47,825
	Total	23,000	0.56	128,964	1.76	405,867	77.68	1,786,715	3.76	86,424

— 29 —

LETTER FROM THE BOARD

								Silver				Gold
		TONNES	Pb grade	Pb Metal	Zn grade	Zn Metal	Ag grade	Metal	Cu grade	Copper	Au grade	Metal
Site	CAT	(kt)	(%)	(t)	(%)	(t)	(g/t)	(kg)	(%)	Metal (t)	(g/t)	(kg)
	Measured	318	–	–	–	–	183.41	58,324	–	–
	Indicated	588	0.08	490	0.13	790	208.47	122,578	–	–
Peripheral (Ⅱ) area	M+I	906	0.05	490	0.09	790	199.67	180,902	–	–
	Inferred	901	1.04	16,542	1.23	11,108	194.96	175,658	–	–	0.97	1753
	Total	1,807	0.54	9,816	0.66	21,386	197.32	356,560	–	–	0.97	1753
	Measured	1,331	2.67	35,603	2.68	35,731	245.92	327,324	–	–
	Indicated	28,443	0.82	233,320	1.65	469,693	91.40	2,599,791	1.38	39,376
Total	M+I	29,774	0.90	268,923	1.70	505,424	98.31	2,927,115	1.32	39,376
	Inferred	28,676	1.03	294,902	1.89	543,029	118.58	3,400,386	1.69	48,439
	Total	58,450	0.95	556,609	1.81	1,057,940	108.25	6,327,502	1.50	87,815

Notes:

The Mineral Resource estimates are reported following the JORC 2012 Definition Standards for Mineral Resources & Mineral Reserves.
The effective date for the Mineral Resource estimates is 31 December 2022.
Mineral Resource estimates account for mining depletion up to and including 31 December 2022.
A cut-off value at 0.8 g/t Pb equivalent was used for Huaaobaote underground mining.
Applicable rounding has been applied to the stated tonnages, grades, and metal content to reflect the level of accuracy and precision of the estimate.

The table sets out the summary of Yulong mineral reserve at an Eq Pb cut-off as at 31 December 2022:

				Pb	Pb	Zn	Zn	Ag	Silver	Cu	Copper
			TONNES	grade	Metal	grade	Metal	grade	Metal	grade	Metal
Site	Cut-off	CAT	(kt)	(%)	(t)	(%)	(t)	(g/t)	(kg)	(%)	(t)
		Proven	1,015	3.23	32,726	3.24	32,844	243.69	247,265	–	–
Huaaobaote	Eq Pb	Probable	10,338	1.09	112,660	1.71	176,330	104.48	1,080,060	–	–
		Total	11,353	1.28	145,386	1.84	209,174	116.92	1,327,325	–	–
		Proven	1,015	3.23	32,726	3.24	32,844	243.69	247,265	–	–
Total	Eq Pb	Probable	10,338	1.09	112,660	1.71	176,330	104.48	1,080,060
		Total	11,353	1.28	145,386	1.84	209,174	116.92	1,327,325

— 30 —

LETTER FROM THE BOARD

(V) Huasheng Project

The following tables set out the details of the operational licences and permits of Huasheng (Mangshi) Project:

Mining Licence Mining License Holder Mangshi Huasheng Gold Mine Development Co., Ltd. Name of Property the Huasheng Project License Type Mining License ID C5300001009114120045284 Area (km[2] ) 0.6338 Elevation (m) From 1,500 m to 1,100 m Permitted Production Capacity 100.00 ktpa Type of Commodities Gold Mining Method Underground/Open Pit Mine Valid Period 11 July 2015 to 11 July 2025

Business Licence

Property Business License No Issue Date Permitted Activities Mangshi Huasheng Gold Mine 91533103219105958F 11 September 2021 Mining and Processing Development Co., Ltd. Water Use Permit Water Use Water Supply Water Use Property Permit No Issue Date Expiry Date Source Allocation (m[3] ) Mangshi Huasheng Gold Mine DHMS2022053 06 June 2022 13 August 2027 Surface Water 3.00 Million Development Co., Ltd.

— 31 —

LETTER FROM THE BOARD

Gold mines of Yunnan Huasheng of Yintai Gold are located in Yunnan; the province is rich in gold and non-ferrous metal resources.

The mine operation was shut down in 2016, and no production operations have been carried out so far.

The most recent resource estimate of Huasheng gold mine provided for the review was carried out by Kunming Fulin Mining Co., Ltd as of 31 July 2022. The resource estimate technical report “Resource & Reserve Estimation Report (2022) for Mangshi Huasheng Gold Mine” was following Chinese Classifications for mineral resources and reserves based on polygon estimation. Block-grade modelling was also done for the deposit by Fulin group for future mining design. Wireframing, Block grade simulation, pit design and mining depletion data were provided and reviewed by BAW. As an internal estimate, Wireframing, Capping, assay compositing, varigraphy modelling and grade interpolation parameters were not provided. Visual check, statistical and IDW2 grade simulation was performed by BAW for reviewing.

An independent report and associated models were also provided which were built by SRK in 2016. Considering the significant changes in the dataset and loose control of the grade interpolation through the estimates, BAW believes that the Fulin model is more suitable for the deposit.

— 32 —

LETTER FROM THE BOARD

The current resource estimate by Huasheng is based on the 0.3 g/t Au cut-off, which was given by Huasheng. The following table sets out the summary of Huasheng mineral resources at a 0.3 g/t Au cut-off as at 31 December 2022:

							grade	Gold
Zone			CAT			TONNES(kt)	(g/t)	Metal (kg)
			Measured			2,932	1.99	5,850
			Indicated			7,401	1.96	14,477
MVB,	0.3	g/t	Measured	+	Indicated	10,334	1.97	20,327
			Inferred			7,374	1.21	8,901
			Total			17,708	1.65	29,228

Notes:

The Mineral Resource estimates are reported following the JORC 2012 Definition Standards for Mineral Resources & Mineral Reserves.
The effective date for the Mineral Resource estimates is 31 December 2022.
Mineral Resource estimates account for mining depletion up to and including 31 December 2022.
A cut-off value at 0.3 g/t Au was used for Huasheng open pit deposit.
Applicable rounding has been applied to the stated tonnages, grades, and metal content to reflect the level of accuracy and precision of the estimate.

The following table sets out the summary of Huasheng mineral reserves at a 0.5 g/t Au cut-off as at 31 December 2022:

		TONNES	Au grade	Gold
Cut-off	CAT	(kt)	(g/t)	Metal (kg)	Note
	Proven	2,621	2.15	5,626
0.5 g/t Au	Probable	6,283	2.19	13,775
	Total	8,903	2.18	19,401

Reasons for and Benefits of the Acquisition

(I) Continued improvement in industry competitiveness and brand influence

At present, in the context of “concentration at the top level” in the global gold market, high-quality gold resources are further gathered to leading companies in the industry. In recent years, along with further integration and merger by international gold conglomerates, domestic gold companies have also been increasing the pace of resource integration, merger and reorganization. Upon completion of the merger and acquisition, Shandong Gold and Yintai Gold, which are in the first echelon of China’s gold industry, have forged alliance to further strengthen Shandong Gold’s leading position in the domestic gold industry from various perspectives, such as asset scale, gold reserves and economic benefits, and effectively enhance Shandong Gold’s brand influence and industry reputation in the international gold market.

— 33 —

LETTER FROM THE BOARD

(II) Further increase in resource reserves

As at the end of 2021, the total resources of Yintai Gold in aggregate, including surface depositories, amounted to 101,941,700 tonnes of ore, 170.452 tonnes of gold metal, 7,154.06 tonnes of silver metal, 1,076,400 tonnes of lead + zinc metal, 63,500 tonnes of copper metal and 18,200 tonnes of tin metal (certain of the above reserves have not yet been reviewed). As at 30 June 2022, the five mining subsidiaries of Yintai Gold had a total of 15 exploration rights, with an exploration area of 159.63 square kilometers. Its main mines have advantageous conditions of large mining areas for producing non-ferrous metals and precious metals such as silver, copper, lead, zinc and gold, with great potential for prospection and very broad prospects for exploration. The Transaction can effectively leverage on the potential of Yintai Gold for exploration to increase reserves, further enhance Shandong Gold’s resource reserves, improve its ability of resource acquisition, expand the assets scale of Shandong Gold and accelerate the realization of the strategic goal to become a world-class gold mining enterprise.

(III) Significant increase in both gold production and non-ferrous metal production

From 2019 to 2021, the production from non-ferrous metal mining and beneficiation segment of Yintai Gold was 17,860.31 tonnes, 21,416.72 tonnes and 24,154.24 tonnes respectively, of which the production of alloyed gold was 6.10 tonnes, 6.11 tonnes and 7.21 tonnes respectively, representing a significant increase in both gold production and non-ferrous metal production. Yintai Gold is also a mining enterprise with high gross profit margin among gold mines in China. The Transaction would significantly increase the Company’s gold and non-ferrous metal production, and through effectively leveraging the potential of Yintai Gold to expand production and increase reserves, further push the concentration of domestic gold resources to leading enterprises through alliance between giants, expand the industrial economies of scale and better transform the resource advantage into economic advantage.

(IV) Further strengthening of the capacity of industrial and regional synergies

Qinghai Dachaidan Gold Mine (青海大柴旦金礦) of Yintai Gold is located in Haixi Prefecture, Qinghai, which enables it to form regional synergy with the mines, smelters and geological exploration entities of SDG Group Co., the controlling shareholder of Shandong Gold, in Qinghai and realizes complementary advantages. The alloyed gold produced by Yintai Gold can be smelted at the smelter of Qinghai Kunlun Gold Co., Ltd. (青海昆侖黃金有限公司) under SDG Group Co. nearby, realising synergy between gold production and smelting industries. Yulong Mining Company (玉龍礦業公司), a subsidiary of Yintai Gold, is located in West Ujimqin Banner, Inner Mongolia, in the proximity of XilinGol League Aerhada Mining Co., Ltd. (錫林郭勒盟阿爾哈達礦業有限公司), XilinGol League Baiyin Hubu Mining Co., Ltd. (錫林郭勒盟白音呼布礦業有限公司), Chifeng Shanjin Hongling Non-ferrous Mining Co., Ltd. (赤峰山金紅嶺有色礦業有限責任公司) and Chifeng Shanjin Gold Silver Lead Co., Ltd. (赤峰山金銀鉛有限公司) of SDG Group Co., which would realize the synergistic development of the regional lead-zinc-silver industry and build a non-ferrous mining base in Inner Mongolia. The lead concentrate (containing silver) and zinc concentrate (containing silver) produced by Yintai Gold can be smelted in the nearby smelter of Chifeng Shanjin Gold Silver Lead Company under SDG Group Co., reducing smelting costs and metal losses. In addition, Yintai Shenghong (銀泰盛鴻), the supply chain management company of Yintai Gold, is located in Shanghai, which would complement the

— 34 —

LETTER FROM THE BOARD

advantages of Shandong Gold Trading Centre (山東黃金交易中心), SD Gold Capital Management Co., Ltd. (山金金控資本管理有限公司) of Shandong Gold, and the trading company under SDG Group Co. to form regional synergy. The Transaction will strengthen the industrial and regional synergies between Shandong Gold and Yintai Gold, expand Shandong Gold’s asset scale, profitability and gold resource reserves, and enhance its comprehensive ranking and market influence in the market.

Impact of the Transaction on Yintai Gold’s Horizontal Competition

As at the Latest Practicable Date, major products of the Company are standard gold ingots and investment gold bars of various specifications, while major products of Yintai Gold are alloy gold (including silver), silver-containing lead concentrate and zinc concentrate. Yintai Gold’s alloy gold products need to be further refined before they can become standard gold. Yintai Gold’s alloy gold products are essentially the upstream products of standard gold produced by the Company. The major products of the Company are different from those of Yintai Gold. In terms of sales model, the major customer of the Company is the Shanghai Gold Exchange, while those of Yintai Gold are downstream gold smelters. There are large differences in major customers as both customers are at different industry chain links. In terms of resources of mineral rights, according to the mining rights and exploration rights currently held, the areas involved in the mineral rights of the Company and Yintai Gold are all independent mines, and there is no cross coverage. The Transaction is not expected to have a material adverse impact on the production and operation of Yintai Gold.

In compliance with the Measures for Management of Acquisition of Listed Companies (Revised in 2020) (上市公司收購管理辦法（2020年修訂）) issued by the China Securities Regulatory Commission (the “ CSRC ”) and in order to solve and avoid horizontal competition or potential horizontal competition between both parties, the Company undertakes as follows:

After the completion of the Acquisition, the Company and its related parties will have horizontal competition or potential horizontal competition with Yintai Gold. According to the requirements of current laws and regulations and relevant policies, the Company will, within five years from the date when the Company obtains the control of Yintai Gold, pursuant to the requirements of relevant securities regulatory authorities, and subject to the applicable laws and regulations and relevant regulatory rules then prevailing, actively coordinate the Company and its related parties to comprehensively use various methods, including but not limited to asset reorganization, business adjustment and entrusted management, and steadily promote the integration of related to solve the horizontal competition or potential horizontal competition problems.

— 35 —

LETTER FROM THE BOARD

The aforementioned solutions include but not limited to:

(1) Asset reorganization: Through assets purchase, asset replacement, asset transfer or other feasible reorganization methods in different ways permitted by relevant laws and regulations such as cash consideration or issuance of shares consideration, gradually sort out and reorganize the assets of the Company, related parties and Yintai Gold that have business overlaps to eliminate certain business overlap cases;
(2) Business adjustment: Sort out business boundaries and do its best to achieve differentiated operations, such as realizing business differentiation through asset transaction, business delineation, etc., including but not limited to differentiation in non-ferrous and precious metal products, types of mineral rights, industry classification, geographical location and other aspects;
(3) Entrusted management: By signing an entrustment agreement, one party entrusts the other party with full authority to manage the decision-making and management rights involved in the operation of certain related assets that have business overlaps;
(4) Other feasible solutions within the scope permitted by laws, regulations and relevant policies. The implementation of the above solutions is subject to the fulfillment of necessary review procedures of Yintai Gold and approval procedures of the securities regulatory authorities and relevant competent authorities in accordance with relevant laws and regulations.
In addition to the above, when the Company and related parties acquire business opportunities that may compete with Yintai Gold’s business, the Company will maintain Yintai Gold’s independent participation in market competition and support Yintai Gold to play its inherent advantages. The Company undertakes to continue to participate in market competition independently with Yintai Gold based on the principles of openness, fairness and justice, and will not harm the interests of Yintai Gold and its minority shareholders;
The Company warrants to strictly abide by the laws and regulations as well as Yintai Gold’s articles of association and relevant management rules, and not to seek illegitimate interests by taking advantage of its control over Yintai Gold, thereby harming the rights and interests of other minority shareholders of Yintai Gold;
The Company has the ability to fulfill and will strictly fulfill the above undertakings. There is no major performance risk, and the performance of the above undertakings will not cause losses to the listed company and its relevant shareholders;
The above undertakings are irrevocable, and they will continue to be valid during the period when the Company has control over Yintai Gold. In the event of a violation of the above undertakings which causes a damage to the rights and interests of Yintai Gold, the Company is willing to bear the corresponding liability for damages.

— 36 —

LETTER FROM THE BOARD

In addition, SDG Group Co., the controlling shareholder of the Company, and some other enterprises controlled by it have certain overlaps with some businesses of Yintai Gold, and there are cases of horizontal competition or potential horizontal competition with Yintai Gold. After the Company obtains control of Yintai Gold, and subject to maintaining the stability of Yintai Gold’s existing production and operation business, SDG Group Co. plans to inject its high-quality non-ferrous metal sector assets into Yintai Gold provided that the asset quality meets relevant regulations of the China Securities Regulatory Commission. SDG Group Co. will regulate the horizontal competition and potential horizontal competition with Yintai Gold in the non-ferrous metal business, which in turn would provide support for the development of Yintai Gold. In order to actively avoid the horizontal competition and potential horizontal competition between SDG Group Co. and its related parties and Yintai Gold, SDG Group Co. has made the following undertakings:

After the completion of the Acquisition, in respect of the horizontal competition and potential horizontal competition between the SDG Group and its related parties and Yintai Gold, according to the requirements of current laws and regulations and relevant policies, the SDG Group will, within five years from the date when Shandong Gold obtains the control of Yintai Gold, pursuant to the requirements of relevant securities regulatory authorities, and subject to the applicable laws and regulations and relevant regulatory rules then prevailing, actively coordinate the SDG Group and its related parties to comprehensively use various methods, including but not limited to asset reorganization, business adjustment and entrusted management, in the principle of benefiting the development of Yintai Gold and safeguarding the interests of its shareholders, especially the interests of its minority shareholders, and steadily promote the integration of related businesses to solve the existing horizontal competition and potential horizontal competition problems.

The aforementioned solutions include but not limited to:

(1) Asset reorganization: Through assets purchase, asset replacement, asset transfer or other feasible reorganization methods in different ways permitted by relevant laws and regulations such as cash consideration or issuance of shares consideration, gradually inject the high-quality related business segments of the SDG Group that constitute horizontal competition and potential horizontal competition into the listed company subject to relevant regulations of the China Securities Regulatory Commission, and sort out and reorganize the assets of the SDG Group, related parties and Yintai Gold that have business overlaps to eliminate certain business overlap cases;
(2) Business adjustment: Sort out business boundaries and do its best to achieve differentiated operations, such as realizing business differentiation through asset transaction, business delineation, etc., including but not limited to differentiation in non-ferrous and precious metal products, types of mineral rights, industry classification, geographical location and other aspects;
(3) Entrusted management: By signing an entrustment agreement, one party entrusts the other party with full authority to manage the decision-making and management rights involved in the operation of certain related assets that have business overlaps;

— 37 —

LETTER FROM THE BOARD

(4) Other feasible solutions within the scope permitted by laws, regulations and relevant policies. The implementation of the above solutions is subject to the fulfillment of necessary review procedures of Yintai Gold and approval procedures of the securities regulatory authorities and relevant competent authorities in accordance with relevant laws and regulations.
In addition to the above, when the SDG Group and related parties acquire business opportunities that may compete with Yintai Gold’s business, the SDG Group will maintain Yintai Gold’s independent participation in market competition and support Yintai Gold to play its inherent advantages. The SDG Group undertakes to continue to participate in market competition independently with Yintai Gold based on the principles of openness, fairness and justice, and will not harm the interests of Yintai Gold and its minority shareholders;
The SDG Group warrants to strictly abide by the laws and regulations as well as Yintai Gold’s articles of association and relevant management rules, and not to seek illegitimate interests by taking advantage of its control over Yintai Gold, thereby harming the rights and interests of other minority shareholders of Yintai Gold;
The SDG Group will guide and supervise its subsidiaries to avoid horizontal competition with Yintai Gold, give priority to guaranteeing business acquisition opportunities of the listed company, and safeguard the legitimate interests of the listed company and minority shareholders;
The SDG Group has the ability to fulfill and will strictly fulfill the above undertakings. There is no major performance risk, and the performance of the above undertakings will not cause losses to the listed company and its relevant shareholders;
The above undertakings are irrevocable, and they will continue to be valid during the period when the SDG Group is the controlling shareholder of Shandong Gold and Shandong Gold has the control of Yintai Gold. In the event of a violation of the above undertakings which causes a damage to the rights and interests of Yintai Gold, the SDG Group is willing to bear the corresponding liability for damages.

Impact of the Transaction on Yintai Gold’s Related Party Transactions

During the period when the Company is the controlling shareholder of Yintai Gold, the Company undertakes as follows in order to regulate the potential related party transactions in the future:

(1) After the completion of the Transaction, the Company and its subsidiaries will not take advantage of their shareholder status and significant influence on Yintai Gold to seek from Yintai Gold and its subsidiaries to give the Company and its subsidiaries the right superiority over third parties in the market in terms of business cooperation and other aspects. The Company and its subsidiaries will not take advantage of their shareholder status and significant influence on Yintai Gold to seek the priority right to enter into transactions with Yintai Gold and its subsidiaries.

— 38 —

LETTER FROM THE BOARD

(2) The Company and its subsidiaries are prevented from illegally occupying the funds and assets of Yintai Gold and its subsidiaries, and under no circumstances shall Yintai Gold and its subsidiaries be required to provide the Company and its subsidiaries with guarantee of any kind in violation of regulations.
(3) After the completion of the Transaction, the Company and its subsidiaries will perform their obligations as shareholders of Yintai Gold in integrity and good faith, and try to avoid unreasonable related party transactions with Yintai Gold (including companies controlled by it). For related party transactions that cannot be avoided or exist for reasonable reasons, a standardized related party transaction agreement shall be signed with Yintai Gold in accordance with the law, and approval procedures shall be performed in accordance with relevant laws, regulations, rules, other regulatory documents and the articles of association of Yintai Gold. The price of related party transactions shall be determined based on the price of identical or similar transactions with an independent third party without connected relationship, so as to ensure the fairness of the price of such related party transactions. It warrants that the information disclosure obligation of related party transactions will be performed in accordance with relevant laws, regulations and the articles of association of Yintai Gold. It warrants not to take advantage of related party transactions to illegally transfer funds or profits of the listed company, or damage the interests of the listed company and non-connected shareholders.
(4) After the completion of the Transaction, the Company and its subsidiaries undertake to perform the obligation of abstaining from voting on such related party transactions involving the Company and its subsidiaries at the general meeting of Yintai Gold.
(5) After the completion of the Transaction, the Company and its subsidiaries warrant to attend the general meeting in accordance with Yintai Gold’s articles of association, equally exercise shareholder’s rights and undertake shareholder’s obligations, and not to use their shareholder status to seek illegitimate interests and damage the legitimate rights and interests of Yintai Gold and other shareholders.
(6) After the completion of the Transaction, unless the Company is no longer a shareholder of Yintai Gold, the above undertakings will always be valid. In the event of a violation of the above undertakings which causes losses to Yintai Gold and other shareholders, all losses shall be borne by the party that violates the undertakings.

Impact of the Transaction on the Independence of Yintai Gold

During the period when the Company is the controlling shareholder of Yintai Gold, the Company will ensure that it is independent from Yintai Gold in terms of personnel, assets, finance, organization and business. The specific undertakings are as follows:

(1) The Company warrants to keep separate from Yintai Gold in terms of assets, personnel, finance, organization and business, and strictly abides by relevant regulations of the China Securities Regulatory Commission on the independence of listed companies. The Company will not ride on its controlling position to violate

— 39 —

LETTER FROM THE BOARD

standardized operating procedures of Yintai Gold, interfere with its business decisions and damage the legitimate rights and interests of Yintai Gold and other shareholders. The Company and other subsidiaries under its control warrant not to occupy the funds of Yintai Gold and its controlled subsidiaries in any way;

(2) The above undertakings will continue to be valid during the period when the Company has control over Yintai Gold. If the Company fails to fulfill the above undertakings and causes losses to Yintai Gold accordingly, the Company will bear the corresponding liability for compensation.

In view of the above, the Directors are of the view that the terms of the Acquisition are on normal commercial terms and fair and reasonable, and the Acquisition is in the interests of the Company and the Shareholders as a whole.

Hong Kong Listing Rules Implications

As one or more of the applicable percentage ratios for the Acquisition is higher than 25% but all are less than 100%, the Acquisition constitutes a major transaction of the Company under Chapter 14 of the Hong Kong Listing Rules and is subject to reporting, announcement, circular and Shareholders’ approval requirements under Chapter 14 of the Hong Kong Listing Rules.

To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, no Shareholder has a material interest in the Acquisition. Therefore, no Shareholder is required to abstain from voting on the relevant resolution to be proposed at the EGM to approve the Acquisition and the transactions contemplated thereunder.

Financial Effects of the Acquisition

Upon completion of the Acquisition, the financial results of the Target Company will be consolidated into the consolidated financial statements of the Group. According to the unaudited pro forma financial information of the Enlarged Group as set out in Appendix IV to this circular, it is expected that upon Completion, the consolidated total assets of the Enlarged Group would increase from approximately RMB91,216.1 million to approximately RMB122,113.5 million and the consolidated total net liabilities of the Enlarged Group would increase from approximately RMB54,413.9 million to approximately RMB72,437.3 million. The consolidated net assets of the Enlarged Group would increase from approximately RMB36,802.2 million to approximately RMB49,676.2 million. The unaudited pro forma financial information was prepared based on the unaudited pro forma statement of assets and liabilities of the Enlarged Group as if the Acquisition had been completed on 31 December 2022.

The earnings of the Group upon completion of the Acquisition will include share of the profit and loss of the Target Company. The Target Company recorded net profit attributable to the owners of the parent company of approximately RMB1,242.5 million, RMB1,273.3 million and RMB1,124.5 million for the three years ended 31 December 2020, 2021 and 2022, respectively. The Directors believe that the Acquisition will broaden the Enlarged Group’s source of income.

— 40 —

LETTER FROM THE BOARD

For further details of the Target Company, please refer to Appendix II — Financial Information of the Target Company and Appendix III — Management Discussion and Analysis of the Target Company” to this circular.

Waiver from Strict Compliance with Rule 14.67(6)(a)(i) of the Hong Kong Listing Rules

The Company has applied and the Hong Kong Stock Exchange has granted the waiver from strict compliance with accountant’s report requirements under Rule 14.67(6)(a)(i) of the Hong Kong Listing Rules, on the grounds that:

i. the Target Company has been listed on the Shenzhen Stock Exchange (stock code: 000975) since 2000 and has been publishing financial information, including audited accounts, on a regular basis under the relevant regulatory requirements to enable investors to assess its business and financial position. Its financial disclosures are subject to the supervision by the Shenzhen Stock Exchange;
ii. the consolidated financial statements for each of the years ended 31 December 2020, 2021 and 2022 were prepared in accordance with China Accounting Standards for Business Enterprises (“ CASBE ”) and audited by Da Hua Certified Public Accountants (Special General Partnership) (大華會計師事務所（特殊普通合夥）) (“ Da Hua ”) in accordance with the Auditing Standards for Certified Public Accountants of China (中國註冊會計師審計準則). According to the Consultation Conclusions on Acceptance of Mainland Accounting and Auditing Standards and Mainland Audit Firms for Mainland Incorporated Companies Listed in Hong Kong published by the Stock Exchange in December 2010, PRC incorporated issuers listed in Hong Kong are allowed to prepare their financial statements in accordance with CASBE and PRC accounting firms approved by the Ministry of Finance of China (“ MOF ”) and CSRC are allowed to audit these financial statements prepared in accordance with CASBE. Da Hua is a member of the Moore Global network in the PRC with international recognition and reputation, and is one of the PRC accounting firms approved by the MOF and CSRC, as well as a registered Public Interest Entity auditor; and
iii. Da Hua had issued an unmodified opinion on the audited financial statements of the Target Company for each of the years ended 31 December 2020, 2021 and 2022. It would be unduly burdensome for the Company to engage an independent professional accountant to prepare an accountants’ report on the Target Company under the Company’s accounting policies, which complies with IFRS, as required by the relevant rules in light of the substantial cost and expenses estimated to be approximately RMB3.9 million. In addition, the preparation and auditing process of the financial information of the Target Company would take approximately three months. It would be time-consuming and therefore adversely affect the dispatch time of the circular of the Company.

The circular contains the following alternative disclosure for the Shareholders to enable them to assess the financial performance of the Target Company:

(a) the Target Company’s published audited consolidated financial statements for each of the years ended 31 December 2020, 2021 and 2022 which were prepared in accordance with CASBE;

— 41 —

LETTER FROM THE BOARD

(b) an explanation of the differences between the accounting policies of the Target Company under CASBE and the Company’s accounting policies under IFRS and a line-by-line reconciliation (the “ Reconciliation ”) of the consolidated statement of profit or loss and other comprehensive income and the consolidated statement of financial position for each of the years ended 31 December 2020, 2021 and 2022. The Company’s auditor has reported on the Reconciliation under Hong Kong Standard on Assurance Engagements 3000 (Revised); and
(c) additional information which is required for an accountants’ report under Chapter 4 of the Hong Kong Listing Rules but not disclosed in the financial statements of the Target Company.

Legal Proceedings and Compliance

As at the Latest Practicable Date, the Company was not aware of any legal claims or proceedings which may have a material adverse effect on the mining rights of the Target Company.

In addition, there are no land claims of material importance that may exist over the land on which exploration or mining activity of the Target Company will be carried out.

So far as the Directors are aware, the Target Company is in general compliance with all applicable environmental laws and regulations. Further, the Target Company has been in general compliance with the laws, regulations and permits, and requirements on payments to be made to the PRC government in respect of tax, royalties and other significant payments.

Environmental Responsibility

The Target Company and its subsidiaries (the “ Target Group ”) is required to comply with the following environmental laws and regulations, including the Environmental Protection Law of the People’s Republic of China 《中華人民共和國環境保護法》( ), the Law of the People’s Republic of China on the Prevention and Control of Environmental Noise Pollution (《中華人民共和國環境噪聲污染防治法》), the Law of the People’s Republic of China on the Prevention and Control of Water Pollution 《中華人民共和國水污染防治法》( ), the Law of the People’s Republic of China on the Prevention and Control of Air Pollution (《中華人民共和國大氣污染防治法》), the Law of the People’s Republic of China on the Prevention and Control of Solid Waste Pollution 《中華人民共和國固體廢物污染環境防治法》( ), the Law of the People’s Republic of China on Environmental Impact Assessment 《中華人民共和國環境影響評價法》( ), the Law of the People’s Republic of China on Soil and Water Conservation 《中華人民共和國水土保持法》( ), the Comprehensive Emission Standards for Air Pollutants 《大氣污染物綜合排放標準》( ), the Emission Standards for Air Pollutants from Boilers 《鍋爐大氣污染物排放標準》( ), the Emission Standards for Environmental Noise at Plant Boundaries of Industrial Enterprises 《工業企業廠界( 環境噪聲排放標準》), the Soil Environmental Quality Risk Control Standards for Soil Contamination of Construction Land 《土壤環境質量建設用地土壤污染風險管控標準》( ) and the Pollution Control Standards for Storage and Landfill of General Industrial Solid Waste (《一般工業固體廢物貯存和填埋污染控制標準》).

— 42 —

LETTER FROM THE BOARD

Each subsidiary of the Target Company has obtained a pollution discharge permit and discharges pollution in accordance with the requirements of the permit. In terms of the treatment of pollutants, (i) for wastewater: the production water of Heihe Yintai is collected during the tailings filtering process and returned directly to the processing site for recycling. The drained water from Qinghai Dachaidan mine is used for underground rock drilling operations, underground firefighting, dust removal at the drainage site after sedimentation in a high-level pond. The remaining mine drained water is transported by water tanker to the processing plant as production water for ore processing. All emissions from the workshop of Yulong Mining are tested by a third party and have to meet certain standards before being discharged into the tailings pond without external discharge. Jilin Banmiaozi adopts the in-depth treatment plan for mine well outflow, pursuant to which, the water quality of the treated mine well outflow can reach the requirements of the first-class discharge standard, and can achieve stable discharge up to the standard; and (ii) waste gas: each subsidiary has installed boilers and gold refining furnaces in accordance with atmospheric pollution control measures as required, and conducted regular monitoring to ensure the discharge of air pollutants up to the standard.

Others

Mining projects are subject to extensive laws, rules, and regulations imposed by the PRC government regarding environmental matters, such as the treatment of wastes and environmental rehabilitation. In particular, mining companies are required to establish a plan on the protection, control, and restorage of the geologic environment of a mine.

The Target Company has prepared a rehabilitation plan and stating that it seeks to adhere to its rehabilitation plan. The Target Group has made security deposits for restoration provisions and environmental governance. For details, please refer to Appendix II to this circular.

To the knowledge of the Directors, as of the Latest Practicable Date, the Target Group had not experienced any material impediment in complying with PRC laws and practices or dealing with the differences between national and local practice in the PRC. The Target Group also has certain personnel to deal with local governments and communities in order to ensure effective and timely responses to any unforeseen issues that may arise between the Target Group and other parties.

Impairment assessment of goodwill and intangible assets involved in the pro forma financial information of the Enlarged Group in Appendix IV of this circular

(1) Relevant provisions of international accounting standards
① Paragraph 9 of Hong Kong Accounting Standard 36 specifies that an entity shall assess at the end of each reporting period whether there is any indication that an asset may be impaired. If any such indication exists, the entity shall estimate the recoverable amount of the asset.
② Paragraph 8 of International Accounting Standards 36 — Impairment of Assets specifies that an asset is impaired when its carrying amount exceeds its recoverable amount.

— 43 —

LETTER FROM THE BOARD

③ Paragraph 12 of International Accounting Standards 36 — Impairment of Assets specifies that in assessing whether there is any indication that an asset may be impaired, an entity shall consider, as a minimum, the following indications:

“External sources of information

(a) there are observable indications that the asset’s value has declined during the period significantly more than would be expected as a result of the passage of time or normal use.
(b) significant changes with an adverse effect on the entity have taken place during the period, or will take place in the near future, in the technological, market, economic or legal environment in which the entity operates or in the market to which an asset is dedicated.
(c) market interest rates or other market rates of return on investments have increased during the period, and those increases are likely to affect the discount rate used in calculating an asset’s value in use and decrease the asset’s recoverable amount materially.
(d) the carrying amount of the net assets of the entity is more than its market capitalisation.

Internal sources of information

(e) evidence is available of obsolescence or physical damage of an asset.
(f) significant changes with an adverse effect on the entity have taken place during the period, or are expected to take place in the near future, in the extent to which, or manner in which, an asset is used or is expected to be used. These changes include the asset becoming idle, plans to discontinue or restructure the operation to which an asset belongs, plans to dispose of an asset before the previously expected date, and reassessing the useful life of an asset as finite rather than indefinite.
(g) evidence is available from internal reporting that indicates that the economic performance of an asset is, or will be, worse than expected. Dividend is from a subsidiary, joint venture or associate
(h) for an investment in a subsidiary, joint venture or associate, the investor recognises a dividend from the investment and evidence is available indicating that:
(i) the carrying amount of the investment in the separate financial statements exceeds the carrying amount in the consolidated financial statements of the investee’s net assets, including associated goodwill; or
(ii) the dividend exceeds the total comprehensive profit and loss of the subsidiary, joint venture or associate in the period the dividend is declared.”

— 44 —

LETTER FROM THE BOARD

④ Paragraph 15 of International Accounting Standards 36 — Impairment of Assets specifies that “as indicated in paragraph 10, this standard requires an intangible asset with an indefinite useful life or not yet available for use and goodwill to be tested for impairment, at least annually. Apart from when the requirements in paragraph 10 apply, the concept of materiality applies in identifying whether the recoverable amount of an asset needs to be estimated. For example, if previous calculations show that an asset’s recoverable amount is significantly greater than its carrying amount, the entity need not re-estimate the asset’s recoverable amount if no events have occurred that would eliminate that difference. Similarly, previous analysis may show that the asset’s recoverable amount is not sensitive to one (or more) of the indications listed in paragraph 12.”
⑤ Paragraphs 18-57 of International Accounting Standard 36 - Impairment of Assets set out the requirements for measuring recoverable amount. Where:

Paragraph 18 of the standard specifies that this standard defines recoverable amount as the higher of an asset’s or cash-generating unit’s fair value less costs of disposal and its value in use.

Paragraph 19 of the standard specifies that it is not always necessary to determine both an asset’s fair value less costs of disposal and its value in use. If either of these amounts exceeds the asset’s carrying amount, the asset is not impaired and it is not necessary to estimate the other amount.

Paragraph 20 of the standard specifies that it may be possible to measure fair value less costs of disposal, even if there is not a quoted price in an active market for an identical asset. However, sometimes it will not be possible to measure fair value less costs of disposal because there is no basis for making a reliable estimate of the price at which an orderly transaction to sell the asset would take place between market participants at the measurement date under current market conditions. In this case, the entity may use the asset’s value in use as its recoverable amount.

(2) Management’s relevant assessment
(a) Judgment on the carrying amount of goodwill and intangible assets expected to be newly recognized in the Transaction

On 9 December 2022 and 19 January 2023, the Company entered into the Share Transfer Agreement and the Supplemental Agreement with the Vendors, respectively, pursuant to which the Company intends to acquire 20.93% of the shares of the Target Company held by the Vendors in aggregate. If the Acquisition is successfully completed, the Company will become the controlling shareholder of the Target Company. Since the Company and the Target Company are not ultimately controlled by the same party before and after the Acquisition, the Acquisition is regarded as a business combination not under common control. According to the Company’s accounting policy, the assets and liabilities of the Target Company are consolidated using the fair value of the Target Company.

— 45 —

LETTER FROM THE BOARD

The cash consideration to be settled by the Company for the acquisition of 20.93% of the Target Company’s shares held by the Vendors is RMB12,760,000,000. When preparing the unaudited pro forma consolidated balance sheet of the Enlarged Group, assuming that the Acquisition had been completed on 31 December 2022, the fair value of the book assets and liabilities of the Target Company is evaluated according to this pro forma, and the value of the assets and liabilities in the original consolidated statement is adjusted, and the amount of goodwill arising from this pro forma adjustment is recognized as RMB9,776,490,000. Meanwhile, the new intangible assets arising from the pro forma consolidation is RMB96,446,180,000.

(b) Judgment on the carrying amount of goodwill and intangible assets expected to be newly recognized in the Transaction
(i) The pricing of the Transaction is fair and reasonable

Based on the investment value of the Target Company, the Company determined the consideration for the Transaction through multiple negotiations with independent and unrelated parties under the environment of fair market competition. Therefore, the management of the Company believes that the pricing of the Transaction is fair and reasonable.

(ii) There are no indications of impairment for newly recognized goodwill and intangible assets in the Transaction

Since the date of signing the Share Transfer Agreement on 9 December 2022 and the date of signing the Supplemental Agreement on 19 January 2023 between both parties to the Transaction are very similar to the date of the balance sheet on 31 December 2022, there are no major changes in the Target Company’s operating conditions as well as internal and external operating environments, and also due to factors such as increased global economic uncertainty, the Fed’s interest rate hike policy and increased investor demand for gold, gold prices will continue to rise in 2023.

Therefore, the management of the Company believes, after assessment, that the newly recognized goodwill and intangible assets in the Transaction do not have indications of impairment of assets as stated in paragraph 12 of International Accounting Standards 36 - Impairment of Assets.

(iii) In the Transaction, the recoverable amount of newly recognized goodwill and intangible assets is treated as the carrying amount presented in the pro forma statement, and there is no impairment of relevant assets

During the preparation of the pro forma consolidated statements of the Enlarged Group, the assets and liabilities of the Target Company are consolidated using the fair value of the Target Company according to the Company’s accounting policy. As the carrying amount of intangible assets presented in the pro forma statement is the fair value, there is no impairment on the carrying amount of newly recognized intangible assets.

— 46 —

LETTER FROM THE BOARD

Since the pricing of the Transaction is fair and reasonable, the recoverable amount of asset underlying the equity of the Target Company is measured at the transaction price under the Equity Transfer Agreement signed by both parties, the goodwill arising from this pro forma adjustment is recognized, and such amount is equal to the carrying amount of the asset, there is no impairment of the goodwill asset. According to the relevant provisions of paragraph 19 of the above-mentioned asset impairment standard, since the goodwill is not impaired, it is not necessary to estimate the recoverable amount of assets based on the cash of the Target Company’s expected future cash flows generated from its assets.

To sum up, based on the analysis of events happened and changes occurred after the latest calculation of the recoverable amount, the possibility determined in the current period that the recoverable amount of the asset is less than its carrying amount is extremely low. Therefore, the management of the Company believes that in respect of the pro forma financial information, there is no impairment of the newly recognized goodwill and intangible assets in the Transaction.

SHINEWING (HK) CPA Limited, the reporting accountants for the Transaction, agrees with the above assessment and analysis of the Company. The Company’s auditors will use consistent accounting policies and key assumptions to assess the Target Company’s impairment of assets when the Company prepares its future financial statements (such as the Company’s interim or annual results in future).

Although the Company’s management has not made any provision for the impairment of goodwill in respect of the pro forma financial information this time, if the future operating conditions of the Target Company fail to meet expectations, the Enlarged Group will face the risk of impairment of goodwill, which may reduce the profitability of the Enlarged Group. Investors are advised to pay full attention to the risk of impairment of goodwill.

3. EGM

The EGM is to be held at the conference room of the Company, No. 2503, Jingshi Road, Licheng District, Jinan, Shandong Province, the PRC at 10:00 a.m. on Friday, 30 June 2023. The notice of the EGM is set out in Appendix VIII to this circular.

Any Shareholder entitled to attend and vote at the EGM is entitled to appoint one or more proxies to attend and vote on his behalf. A proxy need not be a Shareholder. If you intend to appoint a proxy to attend the EGM and vote on your behalf, you are requested to complete the accompanying proxy form in accordance with the instructions printed thereon and return it, by hand, by post or by facsimile, to the Company’s H share registrar, Tricor Investor Services Limited, at 17/F, Far East Finance Centre, 16 Harcourt Road, Hong Kong (for H Shareholders only) as soon as possible and in any event not later than 24 hours before the time appointed for the holding of the EGM or any adjournment thereof (as the case may be) (i.e. before 10:00 a.m. on Thursday, 29 June 2023). Completion and return of the proxy form will not preclude you from attending and voting at the EGM or any adjournment thereof should you so wish.

— 47 —

LETTER FROM THE BOARD

4. CLOSURE OF REGISTER OF MEMBERS

For the purpose of ascertaining the Shareholders who are entitled to attend and vote at the EGM, the register of members of H shares will be closed from Tuesday, 27 June 2023 to Friday, 30 June 2023 (both days inclusive), during which period no transfers of H shares will be effected. H shareholders whose names appear on the H share register of members of the Company at the close of business on Monday, 26 June 2023 are entitled to attend and vote at the EGM.

In order to qualify to attend and vote at the EGM, all transfer instruments accompanied by the relevant share certificates must be lodged by H Shareholders with the Company’s H Share Registrar, namely, Tricor Investor Services Limited at 17/F, Far East Finance Centre, 16 Harcourt Road, Hong Kong no later than 4:30 p.m. on Monday, 26 June 2023.

5. VOTING

Pursuant to Rule 13.39(4) of the Hong Kong Listing Rules and Article 119 of the Articles of Association, unless the chairman makes a decision in the spirit of honesty and credibility and agrees that the resolutions on relevant procedures or administrative matters shall be voted on by show of hands, voting for a general meeting shall be held by ballot.

Pursuant to Article 111 of the Articles of Association, Shareholders (including proxies) shall exercise their voting rights according to the number of voting shares they represent, with one vote for each share. Pursuant to Article 120 of the Articles of Association, on a poll taken at a meeting, a Shareholder (including proxy) entitled to two or more votes need not cast all his votes in the same way.

6. RECOMMENDATION

The Board considers that the proposed resolution at the EGM is fair and reasonable and in the best interests of the Company and its Shareholders as a whole. Accordingly, the Directors recommend the Shareholders to vote in favour of the resolution to be proposed at the EGM.

7. GENERAL INFORMATION

Your attention is drawn to the information set out in the appendices to this circular.

Yours faithfully, By Order of the Board Shandong Gold Mining Co., Ltd. Li Hang

Chairman

— 48 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. FINANCIAL INFORMATION OF THE GROUP

The audited consolidated financial statements of the Company for the years ended 31 December 2020, 2021 and 2022 together with the relevant notes can be found in the respective annual reports of the Company, which have been published on both the website of the Hong Kong Stock Exchange (http://www.hkexnews.hk) and the website of the Company (http://www.sdhjgf.com.cn).

i. annual report of the Company for the year ended 31 December 2020 at https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0429/2021042900579.pdf;
ii. annual report of the Company for the year ended 31 December 2021 at https://www1.hkexnews.hk/listedco/listconews/sehk/2022/0428/2022042803171.pdf;
iii. annual report of the Company for the year ended ended 31 December 2022 at https://www1.hkexnews.hk/listedco/listconews/sehk/2023/0426/2023042601316.pdf.

2. STATEMENT OF INDEBTEDNESS

(i) Borrowings

The total carrying amount of the borrowings outstanding as at 30 April 2023 was as follows:

Short term bank loans, unsecured and unguaranteed Short term bank loans, unsecured and guaranteed Long term bank loans, unsecured and unguaranteed Long term bank loans, unsecured and guaranteed Corporate bonds, unsecured Borrowings from related party, unsecured Borrowings from third parties, unsecured	RMB’000 7,216,373 2,236,452 12,348,143 4,673,700 2,018,107 797,036 12,600
	29,302,411

(ii) Financial liabilities at fair value through profit or loss

At the close of business on 30 April 2023, being the latest practicable date for the purpose of this statement of indebtedness prior to the printing of this circular, the Enlarged Group had entered gold leasing contracts for short-term financing. The carrying amount of the gold leasing contracts outstanding was approximately RMB9,245,611,000.

— I-1 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(iii) Lease liabilities

At the close of business on 30 April 2023, being the latest practicable date for the purpose of this statement of indebtedness prior to the printing of this circular, the carrying amount of the lease liabilities of the Enlarged Group was approximately RMB251,904,000.

Contingent liabilities

The Enlarged Group is a defendant in certain litigation matters arising in the ordinary course of business. Although the outcome of such litigation has not yet been decided, management believes that any liabilities incurred will not have a material adverse effect on the financial condition or results of operations of the Enlarged Group.

At the close of business on 30 April 2023, the Veladero Mine held by Minera Andina del Sol. SRL experienced several environmental incidents as set out below:

(a) Release of cyanide-bearing process solution incident in 2015 – the failure of a valve on a leach pad pipeline at the Veladero Mine resulted in the release of cyanide-bearing process solution into a nearby waterway through a diversion channel gate that was open at the time of the incident;
(b) Release of crushed-ore saturated with process solution incident in 2016 – ice rolled down the slope of the leach pad damaged a pipe carrying process solution, and caused some material to leave the leach pad; and
(c) Release of gold-bearing process solution incident in 2017 – the monitoring system at the Veladero Mine detected a rupture of a pipe carrying gold-bearing process solution on the leach pad.

As at 31 December 2021 and 2022, MAS was involved in several ongoing administrative and civil proceedings with respect to the above-mentioned environmental incidents. In assessing loss contingencies, the directors of the Company have evaluated the legal proceedings and determined that no amounts should be made for any potential liabilities or asset impairment relating to the aforesaid legal proceedings as an amount cannot be reasonably estimated.

YTSH Supply Chain Management Co., Ltd (Yintai Gold Co.,Ltd’s non-wholly owned subsidiary) and Ningbo Yintai Yongheng Trading Co., Ltd (YTSH Supply Chain Management Co., Ltd’s wholly-owned subsidiary) stored aluminum ingots with a total weight of 3,016 tons in the warehouse of Nanchu Warehousing Management Group Co., Ltd. (Shanghai Branch). On 31 May 2022, it was found that the goods were missing when taking inventory and picking up the goods, and the total amount of inventory was RMB66.94 million. At present, Yintai Gold Co., Ltd has filed a lawsuit against the warehouse, but no judgment has yet been made.

— I-2 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Tian Guolong and Ye Youtang, the individual shareholders of Gansu Xihe Zhongbao Mining Co., Ltd. (a holding subsidiary of Shandong Gold Mining Co., Ltd), filed an arbitration with the Beijing Arbitration Commission for the payment of the final payment for the equity transfer in accordance with the relevant provisions of the equity transfer agreement signed with Shandong Gold, which involved equity transfer principal of RMB36.18 million. The case was heard on 18 May 2023, but the Beijing Arbitration Commission has not yet made an arbitration award.

The Enlarged Group has evaluated the legal proceedings with the assistance from its external legal counsel and no provision has been made for any potential liabilities or asset impairment relating to the aforesaid legal proceedings. Other than those as disclosed above, the Enlarged Group did not have any other significant pending litigation which may result in a significant loss to the Enlarged Group.

Other than those disclosed above and the Enlarged Group’s internal liabilities, the Enlarged Group had no outstanding liabilities issued and outstanding or authorized or created in other way but not issued as at the close of business on 30 April 2023, debt securities, term loans, other borrowings and liabilities of a borrowing nature, including bank overdrafts, material contingent liabilities and outstanding guarantees.

The directors of the Company confirm that there has not been any material change in the liabilities and contingent liabilities of the Enlarged Group from 30 April 2023 up to the date of the circular.

3. SUFFICIENCY OF WORKING CAPITAL

Taking into account the financial resources (including the internal resources and the present available facilities) of the Enlarged Group (and taking into account the Acquisition) and the effect of the Acquisition, the Directors are of the opinion that the working capital available to the Enlarged Group (and taking into account the Acquisition) is sufficient for the Enlarged Group’s requirements for at least 12 months from the date of publication of the circular.

4. FINANCIAL AND TRADING PROSPECTS OF THE ENLARGED GROUP

In 2023, the Group will accelerate the construction of a world-class gold base in Jiaodong region leveraging on the mining rights resources covering “Jiaojia Resource Belt, Xincheng Resource Belt and Sanshandao Resource Belt” and relying on the six major segments of mining, refining, circular economy, intelligent mine, ecological mine and industrial synergies. The mining segment will take intelligence and high efficiency, intrinsic safety, seabed deep wells, green ecology and humanistic harmony as the construction themes, and with Jiaojia mining area, Xincheng mining area and Sanshandao mining area as the core areas, strive to build a leader in green and intelligent mining of large-scale deep wells, world-class “intelligent mining” and “ecological mining”. The Group will vigorously promote the construction of major projects, comprehensively optimize and improve the level of project construction, operation management, technological innovation, safety and environmental protection, and build a world-class mining enterprise with global competitiveness.

— I-3 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

In the future, Yintai Gold will strengthen the management of its existing main mines, implement the policy of paying equal attention to production and technological transformation, improve the efficiency of mining and processing, and enhance the ore processing capacity to ensure stable and upturn performance and lay a solid foundation for its growth and expansion. It will increase production and exploration efforts within the scope of existing mining rights, and strive to realize that the amount of newly added resources can make up for or exceed production consumption. At the same time, Yintai Gold will increase capital investment and exploration efforts for existing prospecting rights, and turn the prospecting stage into a mining and production stage as soon as possible to obtain more resources and increase mineral resource reserves for the sustainable development of Yintai Gold. In addition, Yintai Gold will make reasonable use of capital, technology and other advantages to continue to explore mineral resource projects with a relatively high safety margin in the field of mineral resources, especially some high-quality precious metal projects, increase the intensity of mineral resource acquisition, and broaden project investment channels, carry out various forms of cooperation with high-quality mines at home and abroad through mergers and acquisitions, reorganization and joint operation.

As mentioned above, after the completion of this merger and acquisition, the strong alliance between the Group which is in the first echelon of China’s gold industry and Yintai Gold in the aspects of asset scale, gold reserves and economic benefits, will surely further establish the Group’s leading position in the domestic gold industry, which in turn will effectively enhance the brand influence and industry reputation of the Group in the international gold market. This transaction can greatly increase the Group’s gold production and non-ferrous metal production. By effectively leveraging on the potential of Yintai Gold to increase production and reserves and with strong alliance, the Group will further realize the concentration of domestic gold resources in leading enterprises, increase the scale effect of the industry, and better transform resource advantages into economic advantages.

— I-4 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

1. ACCOUNTS OF THE TARGET GROUP

Set out below are (i) the audited consolidated financial statements of the Target Group for the financial year ended 31 December 2020 prepared in accordance with the China Accounting Standards for Business Enterprises and audited by Da Hua Certified Public Accountants (Special General Partnership); (ii) the audited consolidated financial statements of the Target Group for the financial year ended 31 December 2021 prepared in accordance with the China Accounting Standards for Business Enterprises and audited by Da Hua Certified Public Accountants (Special General Partnership); and (iii) the audited consolidated financial statements of the Target Group for the financial year ended 31 December 2022 prepared in accordance with the China Accounting Standards for Business Enterprises (“ CAS ”) and audited by Da Hua Certified Public Accountants (Special General Partnership) (collectively, the “ Target Group Historical Track Record Accounts ”), which have been published by the Target Company on the website of the Shenzhen Stock Exchange. The Target Group Historical Track Record Accounts are prepared in Chinese without official English version. Accordingly, an English version is prepared for reference only. In case of any inconsistency, the Chinese version shall prevail.

(i) The audited consolidated financial statements of the Target Group for the financial year ended 31 December 2020 prepared in accordance with CAS and audited by Da Hua Certified Public Accountants (Special General Partnership).

I. AUDIT REPORT

Type of audit opinion Standard unqualified opinion Signing date of audit report 29 March 2021 Name of auditor Da Hua Certified Public Accountants (Special General Partnership) Number of audit report Da Hua Shen Zi [2021] No.004451 Name of certified public Hui Zengqiang, Wang Zebin accountants

Text of the Audit Report

AUDIT REPORT

Da Hua Shen Zi [2021] No.004451

All shareholders of Yintai Gold Co., Ltd.:

I. Audit Opinion

We have audited the financial statements of Yintai Gold Co., Ltd. (hereinafter referred to as Yintai Gold), including the consolidated and parent company balance sheet on 31 December 2020, consolidated and parent company income statement, consolidated and parent company cash flow statement, consolidated and parent company statement of changes in shareholders’ equity, and notes to relevant financial statements for 2020.

— II-1 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

In our opinion, the attached financial statements have been prepared in accordance with the Accounting Standards for Business Enterprises in all material respects, and fairly reflect the consolidated and parent company financial position of Yintai Gold on 31 December 2020 and the consolidated and parent company operating results and cash flows in 2020.

II. The Basis for Forming the Audit Opinion

We have carried out the audit work in accordance with the provisions of the Auditing Standards for Certified Public Accountants of China. The “Responsibilities of the Certified Public Accountant for the Audit of the Financial Statements” section of the auditor report further sets out our responsibilities under these Standards. In accordance with the China Code of Ethics for Certified Public Accountants, we are independent from Yintai Gold and have fulfilled other responsibilities in terms of professional ethics. We believe that the audit evidence we have obtained is sufficient and appropriate, providing a basis for issuing an audit opinion.

III. Key Audit Matters

Key audit matters are matters that we consider to be the most important in the audit of the financial statements in the current period based on our professional judgment. These matters are addressed in the context of the audit of the financial statements taken as a whole and the formation of an audit opinion, and we do not express an opinion on these matters separately.

We have identified the following matters as key audit matters that need to be communicated in the audit report:

Revenue recognition;
Fixed assets and intangible assets;
Impairment of goodwill.

— II-2 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(I) Revenue recognition

1. Description of matter

As stated in the accounting policies described in “IV. Significant Accounting Policies and Accounting Estimates (xxx)” and “VI. Note 39 to the Main Items of the Consolidated Financial Statements” in the notes to the financial statements, revenue from the main operations of Yintai Gold was RMB7,903 million in 2020, an increase of 53.62% over the same period of the previous year. Given that operating revenue is one of the key performance indicators for Yintai Gold, we have identified revenue recognition as a key audit matter.

2. Audit response

Our important audit procedures for revenue recognition include:

(1) Understand and evaluate the effectiveness of Yintai Gold’s design and implementation of internal control over sales and collection;
(2) Understand whether there are significant changes in the accounting policies for revenue recognition by examining agreements and contracts signed with major customers, and evaluate the appropriateness of the accounting policies for revenue recognition;
(3) Perform analytical procedures for fluctuations in revenue and gross margin of major products;
(4) Letter to major customers to confirm the sales amount and the receivables balance at the end of the period in 2020, and implement alternative audit procedures for customers who have not responded;
(5) Select samples from the recorded revenue transactions, and randomly check the supporting documents related to revenue, including sales contracts or agreements, sales invoices, delivery orders, settlement documents, etc.;
(6) Carry out a cut-off test on operating revenue to confirm whether the income is recorded in the correct accounting period;
(7) Review the adequacy and completeness of relevant disclosures in the notes to the financial statements.

Based on the audit work performed, we believe that the principles and methods adopted by the management in revenue recognition are reasonable.

— II-3 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(II) Fixed assets and intangible assets

1. Description of matter

As stated in the accounting policies described in “IV. Significant Accounting Policies and Accounting Estimates (xx) and (xxiii)” and “VI. Notes 11 and 13 to the Main Items of the Consolidated Financial Statements” in the notes to the financial statements, as of 31 December 2020, the total carrying value of Yintai Gold’s fixed assets was RMB2,783 million, and the total carrying value of intangible assets was RMB5,318 million, accounting for a significant proportion of the total consolidated assets, and Yintai Gold is an asset-heavy company with a large scale, quantity and type of assets, therefore, we think this matter is a key audit matter.

2. Audit response

Our important audit procedures for fixed assets and intangible assets include:

(1) Understand and evaluate the effectiveness of the internal control design and implementation of Yintai Gold’s fixed assets and intangible assets;
(2) Check the original basis for the formation of the original value of fixed assets and intangible assets;
(3) Understand the assumptions and methods used in the depreciation and amortization model, and review the accuracy of the accrual and allocation of depreciation and amortization expenses;
(4) Check the ownership certificates of fixed assets and intangible assets to determine whether they are owned or controlled by the audited unit;
(5) Check the increase and decrease of fixed assets and intangible assets, and obtain relevant details for verification;
(6) In order to confirm the existence of fixed assets, a physical inventory procedure was carried out for the fixed assets, and a two-way check was carried out between the physical objects and the ledger;
(7) Check whether there is indication of impairment in fixed assets and intangible assets, and check whether the identification of asset groups is appropriate;
(8) Review the adequacy and completeness of relevant disclosures in the notes to the financial statements.

Based on the audit work performed, we believe that the accounting principles and methods adopted by the management for fixed assets and intangible assets are reasonable.

— II-4 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(III) Impairment of goodwill

1. Description of matter

As stated in the accounting policies described in “IV. Significant Accounting Policies and Accounting Estimates (xxv)” and “VI. Note 14 to the Main Items of the Consolidated Financial Statements” in the notes to the financial statements, as of 31 December 2020, the total carrying value of Yintai Gold’s goodwill was RMB452 million, and the corresponding impairment provision balance was RMB0.00.

The management assesses the possible impairment of goodwill every year. The impairment assessment is an estimate of the value in use of goodwill based on the discounted cash flow projections prepared. The preparation of discounted cash flow projections involves the application of significant judgement and estimates and the determination of the risk-adjusted discount rate applied is subject to inherent uncertainties and may be influenced by management’s preferences.

Due to the inherent uncertainty involved in the forecasted impairment of goodwill and discounted future cash flows, as well as the risk of management’s preference in the selection of assumptions and estimates, we consider this matter to be a key audit matter.

2. Audit response

Our important audit procedures for goodwill impairment include:

(1) We evaluate and tested the effectiveness of the design and implementation of the internal control related to the goodwill impairment test, including the adoption of key assumptions and the review and approval of impairment accrual amount;
(2) Evaluate the appropriateness of the valuation method used by the management when making cash flow projections by reference to industry practices;
(3) Recalculate the discount rate based on the market data of comparable companies in the industry, and compare our calculation results with those adopted by the management when calculating the present value of estimated future cash flows, to evaluate the discount rate used in calculating the present value of estimated future cash flows;
(4) Analyze the cash flow by comparing historical data and forecast data to evaluate the reliability and historical accuracy of the management’s forecasting process.
(5) Review the adequacy and completeness of relevant disclosures in the notes to the financial statements.

— II-5 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Based on the audit work performed, we believe that the management’s judgments and estimates on goodwill impairment are reasonable.

IV. Other Information

The management of Yintai Gold is responsible for other information. Other information includes that covered in Yintai Gold’s 2020 Annual Report, but excludes the financial statements and our audit report.

Our audit opinion on the financial statements does not cover the other information, nor do we express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, to consider whether the other information is materially inconsistent with, or appears to be materially misstated in, the financial statements or the circumstances of which we become aware in the course of our audit.

If, based on the work we have performed, we determine that there is a material misstatement of the other information, we shall report that fact. In this regard, we have nothing to report.

V. Management and Governance’s Responsibilities for the Financial Statements

The management of Yintai Gold is responsible for preparing financial statements in accordance with the Accounting Standards for Business Enterprises to achieve a fair presentation, and designing, implementing and maintaining necessary internal controls, so that the financial statements are free from material misstatement, whether due to fraud or error.

When preparing the financial statements, the management of Yintai Gold is responsible for assessing Yintai Gold’s ability to continue as a going concern, disclosing matters related to going concern (if applicable), and using the going concern assumption, unless management plans to liquidate Yintai Gold, terminate operations, or have no other realistic options.

The governance is responsible for overseeing the financial reporting process of Yintai Gold.

— II-6 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

VI. Responsibilities of Certified Public Accountants for the Audit of Financial Statements

Our goal is to obtain reasonable assurance as to whether the financial statements as a whole are free from material misstatement due to fraud or error, and to issue an audit report containing audit opinions. Reasonable assurance is a high level of assurance, but it does not guarantee that an audit performed in accordance with auditing standards will always detect a material misstatement when it exists. Misstatements, which may result from fraud or error, are generally considered material if they, individually or in the aggregate, could reasonably be expected to affect the economic decisions that users of financial statements make based on the financial statements.

In the process of performing audit work in accordance with auditing standards, we exercise professional judgment and maintain professional skepticism. At the same time, we also perform the following tasks:

Identify and assess the risks of material misstatement of the financial statements due to fraud or error, design and implement audit procedures to address these risks, and obtain adequate and appropriate audit evidence as the basis for issuing an audit opinion. Since fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls, the risk of not detecting a material misstatement resulting from fraud is higher than the risk of not detecting a material misstatement resulting from error.
Understand the internal controls relevant to auditing in order to design appropriate audit procedures, but not for the purpose of expressing an opinion on the effectiveness of internal controls.
Evaluate the appropriateness of management’s selection of accounting policies and the rationality of accounting estimates and related disclosures.
Conclude on the appropriateness of management’s use of the going concern assumption. At the same time, based on the audit evidence obtained, a conclusion is reached as to whether there is a material uncertainty regarding the matters or circumstances that may cast significant doubt on the ability of Yintai Gold to continue as a going concern. If we conclude that a material uncertainty exists, auditing standards require that we draw the attention of users of the report to the relevant disclosures in the financial statements in the audit report; if the disclosures are inadequate, we should express a non-unqualified opinion. Our conclusions are based on the information available up to the date of the audit report. However, future matters or circumstances may cause Yintai Gold to be unable to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, and evaluate whether the financial statements fairly reflect relevant transactions and matters.
Obtain sufficient and appropriate audit evidence regarding the financial information of entities or business activities in Yintai Gold to express an opinion on the financial statements. We are responsible for guiding, supervising and performing group audits. We accept sole responsibility for our audit opinion.

— II-7 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

We communicate with governance on matters such as the planned audit scope, timing and significant audit findings, including communication of internal control weaknesses of concern identified during our audit.

We also provide a statement to governance on having complied with ethical requirements relating to independence and communicate with governance on all relationships and other matters that may reasonably be perceived to affect our independence, as well as related precautions, if applicable.

From the matters communicated with governance, we determine which matters are most significant to the audit of the financial statements for the period and therefore constitute key audit matters. We describe these matters in our audit report, except where laws and regulations prohibit their public disclosure or, in rare circumstances, we determine that a matter should not be communicated in the audit report if there is a reasonable expectation that the negative consequences of communicating the matter in the audit report outweigh the benefits in the public interest.

Da Hua Certified Public Accountants Certificate Public Accountant Hui Zengqiang (Special General Partnership) registered in China: Beijing, China (Project Partner) Certificate Public Accountant Wang Zebin registered in China:

29 March 2021

— II-8 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

II. FINANCIAL STATEMENTS

The statement in the financial notes is presented in RMB

1. Consolidated Balance Sheet

Prepared by: Yintai Gold Co., Ltd.

Item Current assets: Monetary capital Clearing settlement funds Loans to other banks Financial assets held for trading Derivative financial assets Notes receivable Accounts receivable Receivables financing Prepayments Premiums receivable Reinsurance accounts receivable Reinsurance contract reserve receivable Other receivables Including: Interests receivable Dividends receivable Financial assets held under resale agreements Inventories Contract assets Assets held for sale Non-current assets due within one year Other current assets Total current assets	31 December 2020 482,679,148.39 1,535,264,849.67 99,865,745.36 48,269,866.25 26,885,087.34 20,886,951.58 1,026,982,033.15 693,121,505.30 3,933,955,187.04 - - - - - - - - - - - - - -	Unit: RMB 31 December 2019 311,060,538.57 501,201,536.40 136,388,500.71 40,045,700.78 23,837,821.75 13,513,479.73 1,064,917,555.82 70,059,644.21
		2,161,024,777.97 - - - - - - -- - - - - - -

— II-9 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Item

31 December 2020 31 December 2019

Non-current assets:

on-current assets:
Loans and advances Debt investments Other debt investments Long-term receivables Long-term equity investments Other equity instrument investments Other non-current financial assets Investment properties Fixed assets Construction in progress Productive biological assets Oil and gas assets Right-of-use assets Intangible assets Development expenses Goodwill Long-term deferred expenses Deferred income tax assets Other non-current assets tal non-current assets tal assets	55,803,885.24 2,783,312,677.63 200,415,684.70 5,318,458,341.50 452,365,699.74 26,510,372.05 80,300,961.89 55,632,960.05 8,972,800,582.80 - - - - - - - - - - - - - - 12,906,755,769.84	4,082,900.00 25,803,885.24 2,527,186,463.13 472,194,944.49 5,460,381,600.77 452,365,699.74 30,259,112.72 107,491,791.48 645,002,524.19
		9,724,768,921.76 - - - - - - - - - - - - - -
		11,885,793,699.73

Total non-current assets

Total assets

— II-10 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Item Current liabilities: Short-term borrowings Borrowing from central bank Loans from other banks Financial liabilities held for trading Derivative financial liabilities Bills payable Accounts payable Advances received Contract liabilities Proceeds from sale of repurchase financial assets Deposits from clients and placements from other banks Deposit for agency security transaction Deposit for agency security underwriting Staff remuneration payables Taxes payable Other payables Including: Interests payable Dividends payable Handling fees and commission payable Reinsurance accounts payable Liabilities held for sale Non-current liabilities due within one year Other current liabilities Total current liabilities Non-current liabilities: Provision for insurance contracts Long-term borrowings Bonds payable Including: Preference shares Perpetual bonds Lease liabilities Long-term payables Long-term staff remuneration payables Accrued liabilities Deferred income Deferred income tax liabilities Other non-current liabilities Total non-current liabilities Total liabilities	31 December 2020 179,194,662.50 447,518,000.00 122,152,655.48 9,918,998.44 11,138,631.36 48,874,301.36 140,184,775.87 203,427,908.82 6,781,376.00 1,448,022.08 1,170,639,331.91 - - - - - - - - - - - - - - 234,929,916.67 20,344,128.00 45,283,429.64 444,600.00 354,563,348.18 14,248,463.35 669,813,885.84 - - - - - - - - - - - - - - 1,840,453,217.75	31 December 2019 296,014,423.33 260,000,000.00 203,797,598.88 27,668,010.07 49,692,721.98 65,241,656.39 159,146,283.75 8,476,720.00
		1,070,037,414.40 - - - - - - - - - - - - - - 234,929,916.67 25,430,160.00 36,579,567.93 478,800.00 392,858,942.29 14,248,463.35
		704,525,850.24 - - - - - - - - - - - - - -
		1,774,563,264.64

— II-11 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Item

31 December 2020 31 December 2019

Owners’ equity:

Owners’ equity:
Share capital Other equity instruments Including: Preference shares Perpetual bonds Capital reserve Less: Treasury shares Other comprehensive income Special reserve Surplus reserve General risk reserve Undistributed profit Total equity attributable to the owners of the parent company Non-controlling interest Total owners’ equity Total liabilities and owners’ equity	2,776,722,265.00 4,431,280,488.30 -6,400,461.01 5,346,480.89 438,886,250.88 2,244,198,862.94 9,890,033,887.00 1,176,268,665.09 11,066,302,552.09 - - - - - - - - - - - - - - 12,906,755,769.84	1,983,373,047.00 5,225,129,078.87 -25,390,064.89 27,226,568.71 430,418,353.66 1,406,894,608.22
		9,047,651,591.57 1,063,578,843.52
		10,111,230,435.09 - - - - - - - - - - - - - -
		11,885,793,699.73

Legal Representative: Principal in charge of accounting: Head of the Accounting Department: Yang Haifei Wang Xuan Cui Jingchun

— II-12 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

2. Balance Sheet of the Parent Company

Item Current assets: Monetary capital Financial assets held for trading Derivative financial assets Notes receivable Accounts receivable Receivables financing Prepayments Other receivables Including: Interests receivable Dividends receivable Inventories Contract assets Assets held for sale Non-current assets due within one year Other current assets Total current assets Non-current assets: Debt investments Other debt investments Long-term receivables Long-term equity investments Other equity instrument investments Other non-current financial assets Investment properties Fixed assets Construction in progress Productive biological assets Oil and gas assets Right-of-use assets Intangible assets Development expenses Goodwill Long-term deferred expenses Deferred income tax assets Other non-current assets Total non-current assets Total assets	31 December 2020 7,328,002.01 431,000,000.00 713,903.78 668,761,290.64 665,444,103.52 1,773,247,299.95 - - - - - - - - - - - - - - 7,535,036,559.55 42,000,000.00 980,491.80 1,655,775.83 85,077.05 7,579,757,904.23 - - - - - - - - - - - - - - 9,353,005,204.18	Unit: RMB 31 December 2019 50,568,085.63 101,000,000.00 1,497,032.30 1,336,023,281.79 12,853.57
		1,489,101,253.29 - - - - - - - - - - - - - - 7,535,036,559.55 12,000,000.00 1,580,293.26 1,936,831.30 19,381,930.08 600,000,000.00
		8,169,935,614.19 - - - - - - - - - - - - - -
		9,659,036,867.48

— II-13 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Item

31 December 2020 31 December 2019

Current liabilities:

Short-term borrowings Financial liabilities held for trading Derivative financial liabilities Bills payable 318,282.93 149,688.83 Accounts payable Advances received Contract liabilities Staff remuneration payables 2,169,851.45 2,757,693.59 Taxes payable 10,083,669.45 2,539,487.42 Other payables 240,675.46 902,262.98 Including: Interests payable Dividends payable Liabilities held for sale Non-current liabilities due within one year Other current liabilities current liabilities 12,812,479.29 6,349,132.82 - - - - - - - - - - - - - - - - - - - - - - - - - - - - Non-current liabilities: Long-term borrowings 234,929,916.67 234,929,916.67

Total current liabilities

Non-current liabilities:

Long-term borrowings Bonds payable Including: Preference shares Perpetual bonds Lease liabilities Long-term payables Long-term staff remuneration payables Accrued liabilities Deferred income Deferred income tax liabilities Other non-current liabilities

Total non-current liabilities

Total liabilities

234,929,916.67 234,929,916.67 - - - - - - - - - - - - - - - - - - - - - - - - - - - - 247,742,395.96 241,279,049.49

— II-14 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Item

Owners’ equity:

Share capital Other equity instruments Including: Preference shares Perpetual bonds Capital reserve Less: Treasury shares Other comprehensive income Special reserve Surplus reserve Undistributed profit

Total owners’ equity

Total liabilities and owners’ equity

31 December 2020 2,776,722,265.00 4,431,733,687.79 748.10 425,611,996.58 1,471,194,110.75 9,105,262,808.22 - - - - - - - - - - - - - - 9,353,005,204.18	31 December 2019 1,983,373,047.00 5,225,582,278.36 748.10 417,144,099.36 1,791,657,645.17
	9,417,757,817.99 - - - - - - - - - - - - - -
	9,659,036,867.48

— II-15 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

3. Consolidated Statement of Income

			Unit: RMB
Item		2020	2019
I.	Total operating revenue	7,905,802,338.95	5,148,950,653.26
	Including: Operating revenue	7,905,802,338.95	5,148,950,653.26
	Interest income
	Premium earned
	Handling fees and commission income
II.	Total operating cost	6,241,476,027.45	3,981,672,188.19
	Including: Operating cost	5,747,473,473.73	3,594,022,517.54
	Interest expenses
	Handling fees and commission expenses
	Surrender value
	Net payment of insurance claims
	Net provision of insurance liability
	contract reserve
	Premium bonus expenses
	Reinsurance expenses
	Taxes and surcharges	189,900,185.98	101,104,527.60
	Selling expenses	3,822,550.75	2,512,958.10
	Administrative expenses	256,613,664.72	255,531,048.93
	R&D expenses
	Financial expenses	43,666,152.27	28,501,136.02
	Including: Interest expenses	42,193,580.61	29,297,524.57
	Interest income	1,029,909.86	4,432,044.25
	Add: Other revenue	6,567,007.72	1,491,701.00
	Investment income (loss is represented by “-”)	88,920,111.18	27,123,433.79
	Including: Investment income from associates
	and joint ventures
	Gains from derecognition of
	financial assets measured at
	amortized cost
	Gains from foreign exchange (loss is
	represented by “-”)
	Gains from net exposure to hedging (loss is
	represented by “-”)
	Gain on changes in fair value (loss is
	represented by “-”)	-8,792,960.06	-3,019,269.16
	Impairment loss of credit (loss is represented
	by “-”)	-1,194,993.39	-839,333.47
	Impairment loss of assets (loss is represented
	by “-”)
	Gains from disposal of assets (loss is
	represented by “-”)	-1,890,453.55	94,500.55

— II-16 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Item			2020	2019
III.	Operating profit (loss is represented by “-”)		1,747,935,023.40	1,192,129,497.78
	Add: Non-operating revenue		73,086,301.14	8,939,601.37
	Less: Non-operating expenses		59,949,682.33	23,894,688.31
IV.	Total profit (total loss is represented by “-”)		1,761,071,642.21	1,177,174,410.84
	Less: Income tax expense		394,953,966.00	221,722,993.29
V.	Net profit (net loss is represented by “-”)		1,366,117,676.21	955,451,417.55
	(I)	Classified by continuity of operations
		1. Net profit from continuing operations (net
		loss is represented by “-”)	1,366,117,676.21	955,451,417.55
		2. Net profit from discontinued operations (net
		loss is represented by “-”)
	(II)	Classified by ownership
		1. Net profit attributable to shareholders of the
		parent company	1,242,446,761.34	864,165,428.85
		2. Profit or loss attributable to non-controlling
		interests	123,670,914.87	91,285,988.70
VI.	Net other comprehensive income after tax		20,370,318.61	-27,358,332.68
	Net other comprehensive income after tax
	attributable to owners of the parent company		18,989,603.88	-25,295,344.29
	(I)	Other comprehensive income not reclassified to
		profit or loss
		1. Changes arising on remeasurement of
		defined benefit plans
		2. Other comprehensive income accounted for
		using the equity method that cannot be
		reclassified to profit or loss
		3. Changes in fair value of investments in other
		equity instruments
		4. Changes in fair value of own credit risk of
		the company
		5. Others
	(II)	Other comprehensive income to be reclassified
		to profit or loss	18,989,603.88	-25,295,344.29
		1. Other comprehensive income accounted for
		using the equity method that may be
		reclassified to profit or loss
		2. Changes in fair value of other debt
		investments
		3. Amount of financial assets reclassified into
		other comprehensive income
		4. Provisions for credit impairment of other
		debt investments
		5. Reserve for cash flow hedging	25,221,422.70	-25,385,329.95

— II-17 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Item		2020	2019
	6. Exchange differences on translation of
	financial statements in foreign currency	-6,231,818.82	89,985.66
	7. Others
	Net other comprehensive income after tax
	attributable to non-controlling interest	1,380,714.73	-2,062,988.39
VII.	Total comprehensive income	1,386,487,994.82	928,093,084.87
	Total comprehensive income attributable to owners
	of the parent company	1,261,436,365.22	838,870,084.56
	Total comprehensive income attributable to
	non-controlling interests	125,051,629.60	89,223,000.31
VIII.	Earnings per share:
	(I) Basic earnings per share	0.4475	0.3136
	(II) Diluted earnings per share	0.4475	0.3136
Legal Representative: Principal in charge of accounting:		Head of the Accounting Department:
	Yang Haifei Wang Xuan	Cui	Jingchun

— II-18 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

4. Income Statement of the Parent Company

				Unit: RMB
Item			2020	2019
I.	Operating revenue		0.00	0.00
	Less:	Operating cost	0.00	0.00
		Taxes and surcharges	375,997.91	432,109.36
		Selling expenses
		Administrative expenses	55,461,920.92	51,300,320.53
		R&D expenses
		Financial expenses	-33,300,874.42	-75,254,809.32
		Including: Interest expenses	14,304,500.00	14,265,416.67
		Interest income	47,637,995.27	89,538,746.58
	Add:	Other revenue	3,326,698.87	164,085.72
		Investment income (loss is represented by “-”)	62,942,715.11	1,763,490,481.64
		Including: Investment income from associates
		and joint ventures
		Gains from derecognition of financial assets
		measured at amortized cost (loss is
		represented by “-”)
		Gains from net exposure to hedging (loss is
		represented by “-”)
		Gain on changes in fair value (loss is
		represented by “-”)
		Impairment loss of credit (loss is represented
		by “-”)	-169,344.10	-67,677.45
		Impairment loss of assets (loss is represented
		by “-”)
		Gains from disposal of assets (loss is
		represented by “-”)
II.	Operating profit (loss is represented by “-”)		43,563,025.47	1,787,109,269.34
	Add:	Non-operating revenue	71,343,396.40
	Less:	Non-operating expenses		21,400.00
III.	Total	profit (total loss is represented by “-”)	114,906,421.87	1,787,087,869.34
	Less:	Income tax expense	30,227,449.67	12,051,436.99
IV.	Net profit (net loss is represented by “-”)		84,678,972.20	1,775,036,432.35
	(I) Net profit from continuing operations (net loss
	is represented by “-”)		84,678,972.20	1,775,036,432.35
	(II) Net profit from discontinued operations (net
	loss is represented by “-”)

— II-19 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

2020

2019

Item

V. Net other comprehensive income after tax

(I) Other comprehensive income not reclassified to
profit or loss
Changes arising on remeasurement of defined benefit plans
Other comprehensive income accounted for using the equity method that cannot be reclassified to profit or loss
Changes in fair value of investments in other equity instruments
Changes in fair value of own credit risk of the company
Others
(II) Other comprehensive income to be reclassified to profit or loss
Other comprehensive income accounted for using the equity method that may be
reclassified to profit or loss
Changes in fair value of other debt investments
Amount of financial assets reclassified into other comprehensive income
Provisions for credit impairment of other debt investments
Reserve for cash flow hedging
Exchange differences on translation of financial statements in foreign currency
Others

VI. Total comprehensive income

84,678,972.20 1,775,036,432.35

VII. Earnings per share:

(I) Basic earnings per share
(II) Diluted earnings per share

— II-20 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

5. Consolidated Statement of Cash Flows

Unit: RMB

Item I. Cash flows from operating activities: Cash received from sales of goods and provision of services Net increase in deposits from clients and placements from other banks Net increase in borrowings from central bank Net increase in loans from other financial institutions Cash received from premiums of original insurance contracts Net cash received from reinsurance business Net increase in deposits from policyholders and investments Cash received from interest, handling fees and commissions Net increase in loans from other banks Net increase in repurchases business fund Net cash received from agency security transaction Receipt of tax rebates Other cash received relating to operating activities Sub-total of cash inflow from operating activities Cash paid for goods purchased and services rendered Net increase in loans and advances to customers Net increase in placements with central bank and other banks Cash paid for claims on original insurance contracts Net increase in loans to other banks Cash payment for interest, handling fees and commissions Cash payment for premium bonus Cash paid to and on behalf of staff Taxes paid Other cash paid relating to operating activities Sub-total of cash outflow from operating activities Net cash flows generated from operating activities	2020 8,638,076,155.36 18,158,893.77 8,656,235,049.13 - - - - - - - - - - - - - - 5,264,752,257.08 217,834,530.29 602,330,298.16 144,615,605.20 6,229,532,690.73 - - - - - - - - - - - - - - 2,426,702,358.40 - - - - - - - - - - - - - -	2019 5,768,691,956.89 26,336,037.28
		5,795,027,994.17 - - - - - - - - - - - - - - 3,807,357,121.57 209,734,248.20 559,730,828.43 71,992,778.94
		4,648,814,977.14 - - - - - - - - - - - - - -
		1,146,213,017.03 - - - - - - - - - - - - - -

— II-21 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Item II. Cash flows generated from investment activities: Cash received from disposal of investments Cash received from gains in investments Net cash received from disposal of fixed assets, intangible assets and other long-term assets Net cash received from disposal of subsidiaries and other operating entities Other cash received relating to investment activities Sub-total of cash inflow from investment activities Cash paid for purchase of fixed assets, intangible assets and other long-term assets Cash paid for investment Net increase in pledged loans Net cash paid for acquiring subsidiaries and other operating entities Other cash paid relating to investment activities Sub-total of cash outflow from investment activities Net cash flows generated from investment activities	2020 8,075,045,406.06 26,165,936.94 84,100.00 63,552,189.72 8,164,847,632.72 - - - - - - - - - - - - - - 603,620,657.39 9,093,567,096.28 1,329,800.00 9,698,517,553.67 - - - - - - - - - - - - - - -1,533,669,920.95 - - - - - - - - - - - - - -	2019 7,710,173,690.96 29,311,070.14 198,934.00
		7,739,683,695.10 - - - - - - - - - - - - - - 636,933,972.31 8,168,995,133.37
		8,805,929,105.68 - - - - - - - - - - - - - -
		-1,066,245,410.58 - - - - - - - - - - - - - -

— II-22 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Item III. Cash flows from financing activities: Proceeds received from investments Including: Proceeds received by subsidiaries from minority interests’ investment Cash received from borrowings Other cash received relating to financing activities Sub-total of cash inflow from financing activities Cash paid for repayment of debts Cash payments for dividend and profit distribution or interest repayment Including: Dividend and profit paid by subsidiaries to minority interests Other cash paid relating to financing activities Sub-total of cash outflow from financing activities Net cash flows generated from financing activities IV. Effect on cash and cash equivalents due to changes in foreign exchange rates V. Net increase in cash and cash equivalents Add: Balance of cash and cash equivalents at the beginning of the period VI. Balance of cash and cash equivalents at the end of the period	2020 8,207,100.00 8,207,100.00 229,000,000.00 606,585,284.32 843,792,384.32 - - - - - - - - - - - - - - 345,748,590.00 445,008,409.62 22,852,467.33 787,054,622.72 1,577,811,622.34 - - - - - - - - - - - - - - -734,019,238.02 - - - - - - - - - - - - - - -5,180,269.88 - - - - - - - - - - - - - - 153,832,929.55 291,271,671.97 445,104,601.52	2019 295,748,590.00 415,629,045.05
		711,377,635.05 - - - - - - - - - - - - - - 25,000,000.00 435,178,125.42 25,944,782.11 160,249,927.69
		620,428,053.11 - - - - - - - - - - - - - -
		90,949,581.94 - - - - - - - - - - - - - - 488,814.98 - - - - - - - - - - - - - -
		171,406,003.37 119,865,668.60
		291,271,671.97

— II-23 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

6. Statement of Cash Flows of the Parent Company

Item I. Cash flows generated from operating activities: Cash received from sales of goods and provision of services Receipt of tax rebates Other cash received relating to operating activities Sub-total of cash inflow from operating activities Cash paid for goods purchased and services rendered Cash paid to and on behalf of staff Taxes paid Other cash paid relating to operating activities Sub-total of cash outflow from operating activities Net cash flows generated from operating activities II. Cash flows generated from investment activities: Cash received from disposal of investments Cash received from gains in investments Net cash received from disposal of fixed assets, intangible assets and other long-term assets Net cash received from disposal of subsidiaries and other operating entities Other cash received relating to investment activities Sub-total of cash inflow from investment activities	2020 5,552,123.12 5,552,123.12 - - - - - - - - - - - - - - 31,427,145.36 9,587,939.27 26,381,527.54 67,396,612.17 - - - - - - - - - - - - - - -61,844,489.05 - - - - - - - - - - - - - - 2,346,000,000.00 9,085,491.00 1,382,045,544.75 3,737,131,035.75 - - - - - - - - - - - - - -	Unit: RMB 2019 2,841,427.64
		2,841,427.64 - - - - - - - - - - - - - - 29,390,681.45 1,778,267.37 20,875,775.44
		52,044,724.26 - - - - - - - - - - - - - -
		-49,203,296.62 - - - - - - - - - - - - - - 3,210,181,814.91 76,323,874.39 1,345,297,019.57
		4,631,802,708.87 - - - - - - - - - - - - - -

— II-24 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Item Cash paid for purchase of fixed assets, intangible assets and other long-term assets Cash paid for investment Net cash paid for acquiring subsidiaries and other operating entities Other cash paid relating to investment activities Sub-total of cash outflow from investment activities Net cash flows generated from investment activities III. Cash flows generated from financing activities: Proceeds received from investments Cash received from borrowings Other cash received relating to financing activities Sub-total of cash inflow from financing activities Cash paid for repayment of debts Cash payments for dividend and profit distribution or interest repayment Other cash paid relating to financing activities Sub-total of cash outflow from financing activities Net cash flows generated from financing activities IV. Effect on cash and cash equivalents due to changes in foreign exchange rates V. Net increase in cash and cash equivalents Add: Balance of cash and cash equivalents at the beginning of the period VI. Balance of cash and cash equivalents at the end of the period	2020 18,186.00 2,706,000,000.00 601,000,000.00 3,307,018,186.00 - - - - - - - - - - - - - - 430,112,849.75 - - - - - - - - - - - - - - - - - - - - - - - - - - - - 410,979,109.40 529,334.92 411,508,444.32 - - - - - - - - - - - - - - -411,508,444.32 - - - - - - - - - - - - - - -43,240,083.62 50,568,085.63 7,328,002.01	2019 4,999.00 3,442,800,320.00 874,000,000.00
		4,316,805,319.00 - - - - - - - - - - - - - -
		314,997,389.87 - - - - - - - - - - - - - - 213,710,757.05
		213,710,757.05 - - - - - - - - - - - - - - 25,000,000.00 407,234,938.56 386,254.88
		432,621,193.44 - - - - - - - - - - - - - -
		-218,910,436.39 - - - - - - - - - - - - - - 46,883,656.86 3,684,428.77
		50,568,085.63

— II-25 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

			Non-	controlling Total owners’	interest equity		1,063,578,843.52 10,111,230,435.09									1,063,578,843.52 10,111,230,435.09				112,689,821.57 955,072,117.00	125,051,629.60 1,386,487,994.82		8,207,100.00 8,207,100.00		8,207,100.00 8,207,100.00
					Others Sub-total		9,047,651,591.57									9,047,651,591.57				842,382,295.43	1,261,436,365.22
				General risk Undistributed	reserve profit		1,406,894,608.22									1,406,894,608.22				837,304,254.72	1,242,446,761.34
	2020	Equity attributable to the owners of the parent company	Other	Capital Less: Treasury comprehensive Special Surplus	reserve shares income reserve reserve Others		5,225,129,078.87 -25,390,064.89 27,226,568.71 430,418,353.66									5,225,129,078.87 -25,390,064.89 27,226,568.71 430,418,353.66				-793,848,590.57 18,989,603.88 -21,880,087.82 8,467,897.22	18,989,603.88
Current Amount			Other equity instruments	Preference Perpetual	Items Share capital shares bonds	I. Balance at the end of previous	year 1,983,373,047.00	Add: Changes in accounting	policy	Prior-period error	correction	Merger of enterprises	under common control	Others	II. Balance at the beginning of the	current year 1,983,373,047.00	III. Amount of	increase/decrease/change in	the current year (decrease is	represented by “-”) 793,349,218.00	(I) Total comprehensive income	(II) Contribution and reduction	of capital by owners	1. Ordinary shares	contributed by owners

— II-26 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

			Total owners’	equity								-410,579,356.72						-410,579,356.72
		Non-	controlling	interest								-13,904,747.32						-13,904,747.32
				Sub-total								-396,674,609.40						-396,674,609.40
				Others
			Undistributed	profit								-405,142,506.62		-8,467,897.22				-396,674,609.40
			General risk	reserve
2020	Equity attributable to the owners of the parent company	Other	Capital Less: Treasury comprehensive Special Surplus	reserve shares income reserve reserve								8,467,897.22		8,467,897.22							-793,349,218.00			-793,349,218.00
				Others
		Other equity instruments	Preference Perpetual	shares bonds
				Share capital																	793,349,218.00			793,349,218.00
				Items	2. Capital contributed by	other equity instrument	holders	3. Amount included in	owners’ equity in share	payment	4. Others	(III) Profit distribution	1. Withdrawal of surplus	reserves	2. Withdrawal of general	risk reserve	3. Distributions to owners	(or shareholders)	4. Others	(IV) Carry-forward of owners’	equity	1. Conversion of capital	reserves to increase	capital (or share capital)	2. Conversion of surplus	reserves to increase	capital (or share capital)	3. Making up of losses by	surplus reserves	4. Carry-forward of retained	earnings from changes in	defined benefit plans

— II-27 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

		Non-	controlling Total owners’	interest equity					-6,664,160.71 -28,544,248.53	2,816,014.33 25,597,580.25	-9,480,175.04 -54,141,828.78	-499,372.57		1,176,268,665.09 11,066,302,552.09
				Others Sub-total					-21,880,087.82	22,781,565.92	-44,661,653.74	-499,372.57		9,890,033,887.00
			General risk Undistributed	reserve profit										2,244,198,862.94
2020	Equity attributable to the owners of the parent company	Other	Capital Less: Treasury comprehensive Special Surplus	reserve shares income reserve reserve Others					-21,880,087.82	22,781,565.92	-44,661,653.74	-499,372.57		4,431,280,488.30 -6,400,461.01 5,346,480.89 438,886,250.88
		Other equity instruments	Preference Perpetual	shares bonds
				Items Share capital	5. Carry-forward of retained	earnings from other	comprehensive income	6. Others	(V) Special reserves	1. Current withdrawal	2. Current use	(VI) Others	IV. Balance at the end of the current	period 2,776,722,265.00

— II-28 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

			Non-controlling Total owners’	interest equity		1,053,769,978.29 9,394,221,570.47									1,053,769,978.29 9,394,221,570.47				9,808,865.23 717,008,864.62	89,223,000.31 928,093,084.87		-69,362,002.38 -14,000,000.00
				Others Sub-total		8,340,451,592.18									8,340,451,592.18				707,199,999.39	838,870,084.56		55,362,002.38
			General risk Undistributed	reserve profit		1,111,825,131.01									1,111,825,131.01				295,069,477.21	864,165,428.85
2019	Equity attributable to the owners of the parent company	Other	Less: Treasury comprehensive	Capital reserve shares income Special reserve Surplus reserve Others		5,175,304,418.12 218,861,843.80 -94,720.60 35,990,850.03 252,914,710.42									5,175,304,418.12 218,861,843.80 -94,720.60 35,990,850.03 252,914,710.42				49,824,660.75 -218,861,843.80 -25,295,344.29 -8,764,281.32 177,503,643.24	-25,295,344.29		55,362,002.38
		Other equity instruments	Preference Perpetual	shares bonds
				Items Share capital	I. Balance at the end of previous	year 1,983,373,047.00	Add: Changes in accounting	policy	Prior-period error	correction	Merger of enterprises	under common control	Others	II. Balance at the beginning of the	current year 1,983,373,047.00	III. Amount of	increase/decrease/change in	the current year (decrease is	represented by “-”)	(I) Total comprehensive income	(II) Contribution and reduction	of capital by owners	1. Ordinary shares	contributed by owners	2. Capital contributed by	other equity instrument	holders

— II-29 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

			Total owners’	equity				-14,000,000.00	-399,581,968.40						-399,581,968.40
			Non-controlling	interest				-69,362,002.38	-7,989,660.00						-7,989,660.00
				Sub-total				55,362,002.38	-391,592,308.40						-391,592,308.40
				Others
			Undistributed	profit					-569,095,951.64		-177,503,643.24				-391,592,308.40
			General risk	reserve
2019	Equity attributable to the owners of the parent company	Other	Less: Treasury comprehensive	Capital reserve shares income Special reserve Surplus reserve				55,362,002.38	177,503,643.24		177,503,643.24
				Others
		Other equity instruments	Preference Perpetual	shares bonds
				Share capital
				Items	3. Amount included in	owners’ equity in share	payment	4. Others	(III) Profit distribution	1. Withdrawal of surplus	reserves	2. Withdrawal of general	risk reserve	3. Distributions to owners	(or shareholders)	4. Others	(IV) Carry-forward of owners’	equity	1. Conversion of capital	reserves to increase	capital (or share capital)	2. Conversion of surplus	reserves to increase	capital (or share capital)	3. Making up of losses by	surplus reserves	4. Carry-forward of retained	earnings from changes in	defined benefit plans	5. Carry-forward of retained	earnings from other	comprehensive income

— II-30 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

			Non-controlling Total owners’	interest equity		-2,062,472.70 -10,826,754.02	1,901,545.42 17,515,953.26	-3,964,018.12 -28,342,707.28	213,324,502.17		1,063,578,843.52 10,111,230,435.09
				Others Sub-total		-8,764,281.32	15,614,407.84	-24,378,689.16	213,324,502.17		9,047,651,591.57
			General risk Undistributed	reserve profit							1,406,894,608.22
2019	Equity attributable to the owners of the parent company	Other	Less: Treasury comprehensive	Capital reserve shares income Special reserve Surplus reserve Others		-8,764,281.32	15,614,407.84	-24,378,689.16	-5,537,341.63 -218,861,843.80		5,225,129,078.87 -25,390,064.89 27,226,568.71 430,418,353.66
		Other equity instruments	Preference Perpetual	shares bonds
				Share capital							1,983,373,047.00
				Items	6. Others	(V) Special reserves	1. Current withdrawal	2. Current use	(VI) Others	IV. Balance at the end of the current	period

— II-31 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

				Total	Others owners’ equity	9,417,757,817.99					9,417,757,817.99			-312,495,009.77	84,678,972.20
				Undistributed	profit	1,791,657,645.17					1,791,657,645.17			-320,463,534.42	84,678,972.20
					Surplus reserve	417,144,099.36					417,144,099.36			8,467,897.22
					Special reserve
8. *Statement of Changes in Shareholders’ Equity of the Parent Company*	Current amount	2020	Other equity instruments Other	Less: Treasury comprehensive Preference Perpetual	Items Share capital Capital reserve shares income shares bonds Others	I. Balance at the end of previous year 1,983,373,047.00 5,225,582,278.36 748.10	Add: Changes in accounting policy	Prior-period error correction	Others	II. Balance at the beginning of the current	year 1,983,373,047.00 5,225,582,278.36 748.10	III.Amount of increase/decrease/change	in the current year (decrease is	represented by “-”) 793,349,218.00 -793,848,590.57	(I) Total comprehensive income	(II) Contribution and reduction of	capital by owners	1. Ordinary shares contributed by	owners	2. Capital contributed by other	equity instrument holders	3. Amount included in owners’	equity in share payment	4. Others

— II-32 —

APPENDIX II FINANCIAL INFORMATION OF THE TARGET COMPANY

		Total	owners’ equity	-396,674,609.40			-396,674,609.40																					-499,372.57		9,105,262,808.22
			Others
		Undistributed	profit	-405,142,506.62	-8,467,897.22		-396,674,609.40																							1,471,194,110.75
			Surplus reserve	8,467,897.22	8,467,897.22																									425,611,996.58
			Special reserve
	Other	comprehensive	income																											748.10
2020		Less: Treasury	shares
			Capital reserve						-793,349,218.00			-793,349,218.00																-499,372.57		4,431,733,687.79
			Others
	Other equity instruments	Preference Perpetual	shares bonds
			Share capital						793,349,218.00			793,349,218.00																		2,776,722,265.00
			Items	(III) Profit distribution	1. Withdrawal of surplus reserves	2. Distributions to owners (or	shareholders)	3. Others	(IV) Carry-forward of owners’ equity	1. Conversion of capital reserves	to increase capital (or share	capital)	2. Conversion of surplus reserves	to increase capital (or share	capital)	3. Making up of losses by surplus	reserves	4. Carry-forward of retained	earnings from changes in	defined benefit plans	5. Carry-forward of retained	earnings from other	comprehensive income	6. Others	(V) Special reserves	1. Current withdrawal	2. Current use	(VI) Others	IV. Balance at the end of the current	period

— II-33 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

		Total	Others owners’ equity	7,820,989,191.87					7,820,989,191.87			1,596,768,626.12	1,775,036,432.35
		Undistributed	Surplus reserve profit	239,640,456.12 585,717,164.46					239,640,456.12 585,717,164.46			177,503,643.24 1,205,940,480.71	1,775,036,432.35
			Special reserve
	Other	comprehensive	income	748.10					748.10
2019		Less: Treasury	shares	218,861,843.80					218,861,843.80
			Capital reserve	5,231,119,619.99					5,231,119,619.99			-218,861,843.80
			Others									-5,537,341.63
	Other equity instruments	Preference	shares Perpetual bonds
			Share capital	1,983,373,047.00					1,983,373,047.00
			Items	I. Balance at the end of previous year	Add: Changes in accounting policy	Prior-period error correction	Others	II. Balance at the beginning of the current	year	III.Amount of increase/decrease/change in	the current year (decrease is represented	by “-”)	(I) Total comprehensive income	(II) Contribution and reduction of	capital by owners	1. Ordinary shares contributed by	owners	2. Capital contributed by other	equity instrument holders	3. Amount included in owners’	equity in share payment	4. Others

— II-34 —

APPENDIX II FINANCIAL INFORMATION OF THE TARGET COMPANY

— II-35 —

APPENDIX II FINANCIAL INFORMATION OF THE TARGET COMPANY

III. BASIC INFORMATION OF THE COMPANY

(I) Company Profile

Company name: Yintai Gold Co., Ltd.

Abbreviation of the Yintai Gold. company:

Registered address: Harato Street, Balagalgaole Town, West Ujimqin Banner, XilinGol League, Inner Mongolia Autonomous Region.

Office address:

Rooms 5103/5104, Block C, Yintai Center, No. 2 Jianguomenwai Street, Chaoyang District, Beijing.

Registered capital: RMB2,776,722,265.

Unified social credit 911525007116525588. code:

Legal representative: Yang Haifei.

Business scope:

Investment and management of geological exploration, mining and beneficiation and smelting of gold and non-ferrous metals; processing and sales of by-products of gold and non-ferrous metal production; storage and sale of raw materials, fuels and equipment for the production of gold and non-ferrous metals; research and development and consulting services for gold and non-ferrous metal production technology and equipment; production, processing and wholesale of high purity gold products; purchase and sale of mineral products, precious metals and their products, metal materials and their products; leasing of metal materials and their products and precious metals; engaging in import and export of goods and technology.

(II) History of the Company

Yintai Gold Co., Ltd. (hereinafter referred to as the “ company ”) was formerly known as “Chongqing Wujiang Power Co., Ltd. (重慶烏江電力股份有限公司) (the company’s securities are abbreviated as Wujiang Power)”, “Southern Science City Development Co., Ltd. (南方科學城發展股份有限公司) (the company’s securities are abbreviated as Science City)”, “Yintai Resources Co., Ltd. (銀泰資源股份有限公司)”(the company’s securities are abbreviated as Yintai Resources).”

— II-36 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Approved by Chongqing Municipal People’s Government (Yu Fu [1999] No. 90) on 20 May 1999, Chongqing Wujiang Electric Power Group Company (重慶烏江電力集團公司) (“ Wujiang Electric Power Group ”), as the main initiator, jointly sponsored the establishment of Wujiang Electric Power with Chongqing Qianjiang County Xiaonanhai (Group) Company (重慶市黔江縣小南海（集團）公司), Chongqing Qianjiang Development Zone Hydropower Engineering and Construction Installation Company (重慶市黔江開發區水電工程建築安裝公司), Chongqing Qianjiang Development Zone Hydropower Material Supply and Marketing Company (重慶市黔江開發區水電物資供銷公司) and Chongqing Wujiang Manganese Industry (Group) Co., Ltd. (重慶烏江錳業（集團）有限責任公司).

On 18 June 1999, Wujiang Power was registered with Chongqing Administration for Industry and Commerce, with a total share capital of 105,000,000 shares, and was approved by the China Securities Regulatory Commission (Zheng Jian Fa Xing Zi [2000] No. 40) to publicly issued 80,000,000 ordinary shares (A shares) to the public in 2000, including 32,000,000 shares allocated to strategic investors and 48,000,000 domestic listed and outstanding shares. The shares were listed on the Shenzhen Stock Exchange on 8 June 2000 with the stock code “000975”.

The “Resolution on the Plan for Converting Interim Reserve Fund into Share Capital in 2001” was considered and approved at the 2001 first extraordinary general meeting of the company. Based on the company’s total share capital of 185,000,000 shares on 30 June 2001, 6 shares were converted from capital reserves for every 10 shares, and a total of 111,000,000 shares were converted. The company’s total share capital increased to 296,000,000 shares after the conversion.

On 18 March 2002, Wujiang Electric Power Group, the largest shareholder of the company, signed the “Share Transfer Agreement” with Guangzhou-Kaide Holdings Company Limited (“ Guangzhou Financial Holding ”), and Wujiang Electric Power Group transferred 157,465,400 state-owned legal person shares held by it to Guangzhou Financial Holding, accounting for 53.20% of the company’s total share capital. The transfer was approved by Chongqing Municipal People’s Government (Yu Fu [2002] No. 90), Ministry of Finance (Cai Qi [2002] No. 216 ), and CSRC (Zheng Jian Han [2002] No. 264 ).

In September 2002, the company’s name was changed from “Chongqing Wujiang Power Co., Ltd.” to “Southern Science City Development Co., Ltd.” by resolution of the second extraordinary general meeting of 2002, and the business license of enterprise legal person Yu Zhi No. 5000001801901 was renewed on 23 September 2002. The abbreviation of the company’s securities was changed from “Wujiang Power” to “Science City” with effect from 10 October 2002, with the same stock code (000975) as approved by China Securities Depository and Clearing Corporation.

On 10 May 2004, the company held the 2003 annual general meeting, considered and approved the proposal to increase the company’s share capital in 2003. Based on the company’s total share capital of 296,000,000 shares at the end of 2003, 8 shares were converted from capital reserves for every 10 shares, and a total of 236,800,000 shares were converted. The company’s share capital increased to 532,800,000 shares after the conversion.

— II-37 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

On 21 November 2005, Guangzhou Financial Holdings and China Yintai Holdings Co., Ltd. (“ China Yintai ”) signed the “Share Transfer Agreement”, transferring 24.40% of the company’s state shares held by it to China Yintai. On 3 August 2006, a supplementary agreement was signed and the transfer of shares was changed to 29.90%. On 1 March 2007, it was approved by the SASAC, and on 10 September 2007, it was approved by the CSRC. After the completion of the equity transfer, China Yintai holds 159,307,200 shares of the company, accounting for 29.90% of the company’s total share capital, and became the company’s largest shareholder.

On 15 October 2007, the company held the 2007 second extraordinary general meeting, and considered and approved the Shareholding Reform Plan. The company’s non-outstanding shares were reduced to 6.254 shares for every 10 shares. At the same time, according to the relevant agreement between China Yintai and Guangzhou Financial Holdings, the share reduction arrangement corresponding to the transfer of the shares held by China Yintai to Guangzhou Financial Holdings was executed by Guangzhou Financial Holdings on its behalf. After the share reduction, the company converted 3.485 shares for every 10 shares to all shareholders after the share reduction from the capital reserve. At the same time, the company distributed 1.3635 bonus shares and cash dividends of RMB0.1515 (including tax) for every 10 shares to all shareholders after the share reduction with undistributed profits. After the plan was implemented on 24 January 2008, the company’s total share capital was changed from 532,800,000 shares to 622,925,700 shares, and the non-outstanding shares held by the original non-outstanding shareholders were changed to outstanding shares with limited selling conditions. This share capital change has been verified by Zhongxi Certified Public Accountants Co., Ltd., and Zhong Xi Yan Zi (2007) No. 02017 and No. 02018 capital verification reports have been issued. Accordingly, the company went through the industrial and commercial change registration procedures, and the registered capital was changed from RMB532,800,000 to RMB622,925,700.

On 16 July 2010, the company renewed its No.440101000118286 enterprise legal person business license with the Guangzhou Administration for Industry and Commerce, and its registered address was changed to A501, No. 11 Caipin Road, Science City, Guangzhou Development Zone.

On 10 March 2011, the commitments made by China Yintai, Guangzhou Financial Holdings and Chongqing Xinyu Investment (Group) Company Limited (“ Chongqing Xinyu ”) in the announcement of the implementation of the shareholding reform plan were fulfilled and the corresponding shares were unlocked and can be transferred in the market.

On 4 January 2012 and 9 January 2012, China Yintai reduced its shareholding in the company by a total of 21,827,400 shares through block trading, after which China Yintai held 214,719,900 shares of the company, representing 34.47% of the total share capital, and remained the largest shareholder of the company.

— II-38 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

approving the major assets reorganization of the company and the issuance of 197,987,769 shares to Hou Renfeng, 198,018,132 shares to Wang Shui and 16,638,143 shares to Li Honglei to purchase related assets, and approving the company’s non-public issue of not more than 50 million new shares to raise supporting funds for this share issue to purchase assets. On 11 January 2013, Zhongxi Certified Public Accountants Co., Ltd. issued a capital verification report (Zhong Xi Yan Zi [2013] No. 02001), in which the company actually received the new registered capital (share capital) of RMB412,644,044.00 from Hou Renfeng, Wang Shui and Li Honglei, who contributed their equity interests in Inner Mongolia Yulong Mining Co., Ltd. (內蒙古玉龍礦業股份有限公司) (“Yulong Mining”) and received an additional registered capital (share capital) of RMB50,000,000.00 from China Yintai in the form of monetary capital, resulting in a total of 462,644,044 new shares.

On 24 January 2013, the newly issued shares subject to trading moratorium of the company were listed on the Shenzhen Stock Exchange. Upon completion of this issuance, the total share capital of the company was changed from 622,925,697 shares to 1,085,569,741 shares. China Yintai held 264,719,900 shares of the company, representing 24.39% of the total share capital, and remained the largest shareholder of the company. Upon completion of the reorganization, the company’s main business changed from hotel and catering services to the mining, processing and sale of silver, lead and zinc and other non-ferrous metal ores.

On 28 February 2013, the company held its 2012 annual general meeting, which considered and passed the Resolution on the Change of Company Name, whereby the name of the company was changed from “Southern Science City Development Co., Ltd.” to “Yintai Resources Co., Ltd.”. The Chinese abbreviation was changed from “科學城” to “銀泰資源”, and a new business license was obtained on 19 March 2013.

On 10 December 2014, China Yintai and Mr. Cheng Shaoliang signed the Share Transfer Agreement, whereby China Yintai transferred 25% of its shares in the company, i.e. 66,179,974 shares (of which 12,500,000 shares were shares subject to trading moratorium), to Mr. Cheng Shaoliang. Upon completion of the transfer, China Yintai held 198,539,922 shares of the company, representing 18.289% of the total share capital, and remained the largest shareholder of the company.

On 3 June 2015, the company held the 2015 second extraordinary general meeting, and considered and approved the Resolution on the Change of the Company’s Registered Address, and changed the registered address to Haratu Street, Balagalgaol Town, West Ujumqin Banner, Xilingol League, Inner Mongolia Autonomous Region.

On 3 August 2015, the 2015 third extraordinary general meeting of the company considered and approved the Resolution on the Repurchase of Shares through Centralized Bidding Trading. During the period from 24 August 2015 to 27 August 2015, 3,953,671 shares of the company, representing 0.36% of the total share capital, were repurchased for a total amount of RMB45,780,900. On 22 September 2015, the cancellation procedures were completed at the Shenzhen Branch of the China Securities Depository Corporation. Accordingly, the registered capital of the company was changed from RMB1,085,569,741 to RMB1,081,616,070.

— II-39 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

From 27 August 2015 to 14 September 2015, China Yintai increased its shareholding in the company by a total of 4,068,726 shares through the centralized bidding trading system, after which it held 202,608,648 shares of the company, representing 18.73% of the total share capital of the company, and remained the largest shareholder of the company.

From March to May 2017, Shen Guojun, the de facto controller of the company, increased his shareholding in the company by 13,675,318 shares. China Yintai, the controlling shareholder of the company, and Shen Guojun, the de facto controller, together held 216,283,966 shares of the company, representing 19.99% of the total share capital of the company in aggregate. In summary, this increase in shareholding did not affect the listing status of the company.

On 25 December 2017, the company’s major asset reorganization was approved and obtained the Reply on Approving Yintai Resources Co., Ltd. to Issue Shares to Shen Guojun and Other Parties to Purchase Assets (《關於核准銀泰資源股份有限公司向沈國軍等發行股份購買資產的批覆》) (Zheng Jian Xu Ke [2017] No. 2365) from the CSRC to issue shares to eight counterparties, including Shen Guojun, to purchase 89.38% equity interest in Shanghai Shengwei. All counterparties completed the transfer procedures in respect of their shares in Shanghai Shengwei on 10 January 2018. As approved by the Shenzhen Stock Exchange, the additional shares were listed on 26 January 2018. The company completed the title transfer procedures for the above-mentioned shares and Shanghai Shengwei became its wholly-owned subsidiary, which has been included in the scope of consolidated statements since then. Pursuant to the above-mentioned approval of the CSRC, the company issued 72,319,201 shares to Shen Guojun, 62,344,139 shares to Shanghai Lanju Enterprise Management Center (Limited Partnership) (上海瀾聚企業管理中心（有限合夥）), 49,875,311 shares to Shanghai Baohu Investment Management Center (Limited Partnership) (上海趵虎投資管理中心（有限合夥）), 33,250,207 shares to Shanghai Wenwu Enterprise Management Center (Limited Partnership) (上海溫悟企業管理中心（有限合夥）), 32,252,701 shares to Cheng Shaoliang, 30,174,563 shares to Shanghai Chaomeng Enterprise Management Center (Limited Partnership) (上海巢盟企業管理中心（有限合夥 )), 29,925,187 shares to Gongqingcheng Runda Investment Management Partnership (Limited Partnership) (共青城潤達投資管理合夥企業（有限合夥）) and 24,937,655 shares to Wang Shui to purchase the relevant assets at a par value of RMB1 per share and an issue price of RMB12.03 per share, increasing the registered capital by RMB335,078,964. After the issue, the registered capital and share capital of the company increased from RMB1,081,616,070 to RMB1,416,695,034. This change in share capital was verified by Zhongxi Certified Public Accountants (Special General Partnership), which issued the capital verification report of Zhong Xi Yan Zi (2018) No. 0001. The company accordingly went through the business change registration procedures, and the registered capital was changed from RMB1,081,616,070 to RMB1,416,695,034.

On 17 May 2018, the general meeting of the company considered and approved the Resolution on Profit Distribution Plan for 2017.On 1 June 2018, the company completed the implementation of the aforesaid profit distribution plan by converting 4 shares for every 10 shares to all shareholders from capital reserve, and the total share capital of the company after the conversion was 1,983,373,047 shares. After the change, the registered capital and share capital of the company increased from RMB1,416,695,034 to RMB1,983,373,047.

— II-40 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

On 3 September 2018, China Yintai increased its shareholding in the company by 2,820,000 shares through the centralized bidding trading system of the Shenzhen Stock Exchange. After this increase, China Yintai held 286,472,107 shares of the company, representing 14.44% of the total share capital of the company. Shen Guojun, the de facto controller of the company, and China Yintai, the controlling shareholder of the company, were parties acting in concert. After this increase, Shen Guojun and China Yintai held 20.51% equity interest in aggregate in the company. In summary, this increase in shareholding did not affect the listing status of the company.

On 17 September 2018, Mr. Shen Guojun increased his shareholding in the company by 3,400,000 shares through the centralized bidding trading system of the Shenzhen Stock Exchange. After this increase, Mr. Shen Guojun held 123,792,327 shares of the company, representing 6.24% of the total share capital of the company. Mr. Shen Guojun, the de facto controller of the company, and China Yintai, the controlling shareholder of the company, were parties acting in concert. After this increase, Mr. Shen Guojun and China Yintai held 20.68% equity interest in aggregate in the company. In summary, this increase in shareholding did not affect the listing status of the company.

On 6 December 2018 and 7 December 2018, Mr. Shen Guojun his shareholding in the company by 4,864,900 shares in total through the centralized bidding trading system of the Shenzhen Stock Exchange. After this increase, Mr. Shen Guojun held 128,657,227 shares of the company, representing 6.49% of the total share capital of the company. Mr. Shen Guojun, the de facto controller of the company, and China Yintai, the controlling shareholder of the company, were parties acting in concert. After this increase, Mr. Shen Guojun and China Yintai held 20.93% equity interest in aggregate in the company. In summary, this increase in shareholding did not affect the listing status of the company.

On 19 September 2019, the company held the 2019 first extraordinary general meeting, which considered and passed the Resolution on the Change of the Full Name of the Company and the Abbreviation of the Securities, whereby the name of the company was changed from Yintai Resources Co., Ltd. to Yintai Gold Co., Ltd., and the Chinese abbreviation was changed from “銀泰資源” to “銀泰黃金”, and a new business license was obtained.

On 15 September 2020, the company held the 2020 first extraordinary general meeting, which considered and passed the resolution on the proposed capitalization of the company’s capital reserve for the interim period of 2020, whereby the company converted 4 shares for every 10 shares from the capital reserve on the basis of 1,983,373,047 shares, and the amount of the conversion was RMB793,349,218.00, and the total share capital of the company after the conversion was 2,776,722,265 shares.

— II-41 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(III) Scope of consolidated financial statements

As of 31 December 2020, the subsidiaries within the scope of the company’s consolidated financial statements were as follows:

Name of subsidiary

Abbreviation of subsidiary

Shanghai Shengwei Mining Investment Co., Ltd. (上海 Shanghai Shengwei 盛蔚礦業投資有限公司) Sino Gold Tenya (HK) Limited Sino Gold Hong Kong Rockmining Group Company Limited (HK) Rockmining Hong Heihe Yintai Mining Development Co., Ltd. (黑河銀泰 Heihe Yintai 礦業開發有限責任公司) Qinghai Dachaidan Mining Co., Ltd. (青海大柴旦礦業 Qinghai Dachaidan 有限公司) Inner Mongolia Yulong Mining Co., Ltd. (內蒙古玉龍 Yulong Mining 礦業股份有限公司) Inner Mongolia Yulong Technology Testing Service Yulong Technology Co., Ltd. (內蒙古玉龍技術檢測服務有限公司) Testing Jilin Banmiaozi Mining Co., Ltd. (吉林板廟子礦業 Jilin Banmiaozi 有限公司) Jilin Yintai Shengxin Mining Co., Ltd. (吉林銀泰盛鑫 Yintai Shengxin 礦業有限公司) Sino Gold BMZ Limited Sino Gold BMZ Jilin Jincheng Mining Co., Ltd. (吉林金誠礦業有限 Jincheng Mining 公司) Yintai Shenghong Supply Chain Management Co., Yintai Shenghong Ltd. (銀泰盛鴻供應鏈管理有限公司) Ningbo Yintai Yongheng Trading Co., Ltd. (寧波銀泰 Yongheng Trading 永亨貿易有限公司) Yintai Shenghong Singapore Co., Ltd. (銀泰盛鴻 Shenghong Singapore 新加坡有限公司)

Sino Gold Hong Kong Rockmining Hong Kong Heihe Yintai

For details on the scope of the consolidated financial statements for the current period and its changes, please refer to “VIII. CHANGES IN THE SCOPE OF CONSOLIDATION” and “IX. EQUITY IN OTHER ENTITIES” in this section.

(4) Approval and publication of financial statements

These financial statements have been approved for publication by the company’s board of directors on 29 March 2021.

— II-42 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

IV. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

1. Basis of preparation

The company prepares the financial statements based on the actual transactions and events, and in accordance with the Accounting Standards for Business Enterprises – Basic Standards and Specific Enterprise Accounting Standards, Guidelines for the Application of Accounting Standards for Business Enterprises, Interpretations of Accounting Standards for Business Enterprises and other relevant provisions (hereinafter collectively referred to as “ Accounting Standards for Business Enterprises ”) issued by the Ministry of Finance, and on this basis, in combination with the provisions of the China Securities Regulatory Commission’s Regulation on the Information Disclosure of Companies Offering Securities to the Public No.15 – General Provisions on Financial Reporting (Revised in 2014).

2. Going concern

The company evaluated its ability to continue as a going concern for a period of 12 months from the end of the reporting period and found no events or circumstances that cast significant doubt on its ability to continue as a going concern. Accordingly, the financial statements have been prepared on the going concern assumption.

— II-43 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES

The company is required to comply with the disclosure requirements of the Industry Information Disclosure Guidelines No. 2 of the Shenzhen Stock Exchange - Listed Companies Engaging in Solid Mineral Resources-related Business”

Specific Accounting Policies and Accounting Estimates Indication

The following disclosures have covered the specific accounting policies and accounting estimates formulated by the company based on the actual production and operation characteristics. For details, please refer to “V.20. Fixed assets” and “V.23. Intangible assets”, “V.30. Revenue”, “V.34. Other significant accounting policies and accounting estimates”.

1. Statement of compliance with Accounting Standards for Business Enterprises

The financial statements prepared by the company meet the requirements of the Accounting Standards for Business Enterprises and give a true and complete view of the company’s financial position, operating results, cash flows and other relevant information during the reporting period.

2. Accounting period

An accounting period is from 1 January to 31 December of each calendar year.

3. Business cycle

The company’s business cycle is 12 months.

4. Functional currency

Renminbi is adopted as the functional currency for recording.

5. Accounting treatments of business combinations involving entities under common control and entities not under common control

(1) If the terms, conditions and economic effects of transactions for the purpose of realizing business combination in phases, fall in the following one or more situations, multiple transactions shall be regarded as a package transaction for accounting treatment
- ① These transactions were entered into at the same time or after considering the effects of each other;
- ② Only when regarding these transactions as a whole, can it achieve a complete business result;

— II-44 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

③ The occurrence of one transaction depends on the occurrence of at least one other transaction;
④ A transaction is not economical when treated alone, but is economical when considered with other transactions.

(2) Business combinations involving entities under common control

If there is any contingent consideration required to be recognized as estimated obligations or assets, capital reserve (capital or share premium) is adjusted by the difference between the amount of such estimated obligations or assets and the amount of settlement of subsequent contingent consideration; where the capital reserve is insufficient, the retained earnings are adjusted.

For business combination finally realized through several transactions, in case of a package transaction, those transactions are accounted as one transaction to acquire the control; in case of no package transaction, on the date of acquisition of the control, the capital reserve is adjusted by the difference between the initial investment cost of long-term equity investment and the sum of the book value before the combination and the book value of the new payment consideration for further acquisition of shares on the date of combination; where the capital reserve is insufficient, the retained earnings are adjusted. For the equity investment held before the date of combination, the other comprehensive income measured and recognized under the equity method or financial instrument recognition and measurement standards are not accounted until the accounting treatment for the disposal of relevant assets or liabilities of the investee is adopted the same for the disposal of such equity investment; changes in the owners’ equity other than the net losses and profits, other comprehensive income and profit distribution in the net assets of the investee that is recognized under the equity method, are not accounted, until disposal of such investment is transferred to current profit and losses.

(3) Business combinations involving entities not under common control

— II-45 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

to the company. At the same time when the following conditions are met, the company generally believes that the transfer of control rights has been achieved:

① The business combination contract or agreement has been approved by the internal authority of the company.
② The business combination matters, which need to be approved by the relevant competent departments of the state, has been approved.
③ The necessary procedures for the transfer of property rights have been completed.
④ The company has paid most of the combined price and has the ability and plan to pay the remaining amount.
⑤ The company has actually controlled the financial and operating policies of the acquiree and enjoyed corresponding benefits and assumed corresponding risks.

On the date of acquisition, when there is any difference between the fair values and book values of the assets provided and liabilities incurred or borne by the company as combination considerations, such differences shall be charged to profit and loss for the period.

Goodwill is recognized when the combination cost paid by the company is higher than the share of the fair value of the identifiable net assets in the acquiree obtained through the combination. When the combination cost paid is lower than the fair value of the share of the fair value of the identifiable net assets in the acquiree obtained through the combination, such difference shall be recognized in profit or loss for the period after review.

In a business combination involving entities not under common control that is realized in phases through multiple exchange transactions, in case of a package transaction, it should be accounted with all transactions as the one to acquire the control; in case of non-package transaction, it should be accounted under equity method: the equity investment held before the date of combination, the sum of the book value of the equity investment held by the acquiree before the date of acquisition and the cost of new investment on the date of acquisition are recognized as the initial investment cost of such investment; due to the other comprehensive income accounted and recognized under equity method, the equity investment held before the date of acquisition is accounted on the same basis as used for disposal of relevant assets or liabilities of the investee when disposal of such investment. Where the equity investment held before the date of combination is accounted according to the recognition and measurement criteria for financial instruments, the sum of the fair value of such equity investment on the date of combination and the new

— II-46 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

investment cost are accounted as the initial investment cost on the date of combination. The difference between the fair value of the original equity and its book value and the accumulative changes originally included in the other comprehensive income are transferred to current investment income on the date of combination.

(4) Relevant expenses in relation to combination

The intermediary expenses such as audit, legal services, appraisal and consultation and other directly related expenses occurred for the purpose of business combination are credited in profit or loss in the period when they incurred; trading fees for issue of equity securities for business combination can be deducted from equity if they are directly attributable to equity transactions.

6. Preparation of consolidated financial statements

(1) Scope of consolidation

The scope of consolidation of the consolidated financial statements of the company is determined on the basis of control. All subsidiaries (including individual entities controlled by the company) are included in the consolidated financial statements.

(2) Procedures of consolidation

The consolidated financial statements shall be prepared by the company based on the financial statements of the company and its subsidiaries and other relevant information. In preparing the consolidated financial statements, the company regards the whole business group as an accounting entity, and reflects the overall financial position, operating results and cash flow of the business group in accordance with the recognition, measurement and presentation requirements of relevant accounting standards for business enterprises and unified accounting policies.

All subsidiaries within the scope of consolidation of the consolidated financial statements shall adopt accounting policies and financial period consistent with the company. When there is any inconsistency on the accounting policies or financial period adopted by the subsidiaries and the company, the financial statements of subsidiaries are adjusted according to the accounting policies or financial period adopted by the company as necessary.

When consolidating the financial statements, the effects on the consolidated balance sheets, consolidated incomes statements, consolidated cash flow statements and consolidated statements of changes in shareholders’ equity due to internal transactions between the company and its subsidiaries and among the subsidiaries shall be offset. For the consolidated financial statements of the business group, when there is divergence in the recognition of

— II-47 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

a single transaction by the company and its subsidiaries, the business group’s position shall be taken up for adjustment on such transaction.

The owners’ equity, the minority interest on net profit or loss for the period and comprehensive income should be separately disclosed under owners’ equity in the consolidated balance sheet, and net profit and comprehensive income in the consolidated income statement. When loss for the period attributable to minority shareholders of a subsidiary exceeds the initial share of owners’ equity in the subsidiary owned by such minority shareholders, the excess amount shall still be deducted against shareholders’ equity.

For a subsidiary acquired through a business combination under the same control, adjustments are made to its financial statements based on the carrying amount of its assets and liabilities (including goodwill resulting from the acquisition of the subsidiary by the ultimate control party) in the financial statements of the ultimate control party.

For subsidiaries acquired through business combinations not under the same control, adjustments are made to their financial statements based on the fair value of net identifiable assets at the date of acquisition.

① Addition of subsidiary or business

During the reporting period, initial amount in the consolidated balance sheets is adjusted for the addition of new subsidiaries and businesses due to business combinations involving entities under common control. The income, expenses and profits of the subsidiaries from the beginning of the consolidation to the end of the reporting period are included in the consolidated income statements, and the cash flows of the subsidiaries and the businesses from the beginning of the consolidation to the end of the reporting period are included in the consolidated cash flow statements. At the same time, those relevant items of comparison of financial statements are adjusted as if the consolidated reporting entity has existed since the date of establishment of control by the ultimate control party.

For exercising control over investee under common control due to the addition of investment, it shall consider those entities consolidated since the date of control began and adjust the existing conditions. For the equity investment held before obtaining the control of the combined party, between the later of the date of those equity held originally or the date of both parties under common control to combination date, those identifiable profit or loss, other comprehensive income and other change in net assets, shall be separately charged to initial amount of the comparative statements or the profit and loss of the period.

— II-48 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

During the reporting period, initial amount in the consolidated balance sheets is not adjusted for the addition of new subsidiaries or businesses due to business combinations involving entities not under common control. The income, expenses and profits of the subsidiaries from the date of acquisition to the end of the reporting period are included in the consolidated income statements, and the cash flows of the subsidiaries and businesses from the date of acquisition to the end of the reporting period are included in the consolidated cash flow statements.

For exercising control over investee not under common control due to addition of investment, those equity held before acquisition date is subject to re-measurement using fair value. Differences between fair value and book value is charged to investment income for the period. For movement in owners’ equity other than other comprehensive income and ex-dividend profit or loss, other comprehensive income and distributable profits, equity held before acquisition date which was measured under equity method; and relevant other comprehensive income and movement in other owners’ equity were changed to the profit or loss of the financial period of the acquisition date, but except other comprehensive income occurred due to movement of net assets and liabilities under the remeasurement of defined benefit plan by the investor.

② Disposal of subsidiary or business

1) General treatments

During the reporting period, for disposal of subsidiaries or businesses by the company, the income, expenses and profits of the subsidiaries from the beginning of the period to the date of disposal are included in the consolidated income statements, and the cash flows of the subsidiaries or businesses from the beginning of the period to the date of disposal are included in the consolidated cash flow statements.

When the company loses control on the investee due to partial disposal of equity investment or otherwise, the remaining invested equity after disposal is re-measured based on the fair value at the date when control was lost. The difference between the sum of consideration received from disposal of equity and the fair value of the remaining equity, less the share of net assets calculated on a continuing basis starting from the date of acquisition or consolidation based on the original shareholding ratio and goodwill, shall be recognized as the investment gain for the period when control was lost. Other comprehensive income and ex-dividend profit or loss, other comprehensive income and distributable profits associated with equity investment in the

— II-49 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

former subsidiary shall be transferred to investment gain upon the loss of control, but except other comprehensive income occurred due to movement of net assets and liabilities under the remeasurement of defined benefit plan by the investor.

2) Piecemeal disposal of subsidiary

Through piecemeal disposals of equity of subsidiary until loss of control, normally those transactions would be accounted as a package of transactions if those arrangements and conditions and economic impacts of disposal transactions fulfilled one or more of the following situations:

A. Such transactions are occurred together or made under considerations of mutual impacts;
B. A complete business consequence could only be made under such series of transactions;
C. The occurrence of a transaction is dependent on occurrence of at least one transaction;
D. One transaction itself is not economical itself, but when considered together with other transactions would become economical.

Transactions for partly disposal of subsidiary until losing control which is considered as a package of transactions, the company treats this as one transaction under accounting treatment; however, the difference between each transaction proceeds and the net asset value of that disposal, is firstly treated as other comprehensive income and then charged together to profit or loss for the period until the control of subsidiary is lost.

Transactions for partly disposal of subsidiary until losing control which is not considered as a package of transactions, before the loss of control, the company treats it as the same as transactions for not losing control and treats as general disposal under accounting treatment when the control of subsidiary is lost.

③ Acquisition of minority interest of subsidiary

For the difference between the long-term equity investment newly obtained by the company due to the purchase of minority equity and the share of net assets of subsidiaries continuously calculated from the purchase date (or combination date) according to the newly increased shareholding ratio, the difference would be adjusted to the share premium of capital reserve in the consolidated balance sheet. If the share premium is insufficient, charge to the retained profits.

— II-50 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

④ Partly disposal of equity investment in subsidiaries without losing control

Under the situation the difference between the proceeds from disposal of subsidiary without losing control and the attributable net assets value of the subsidiary continuously calculated from the acquisition date or combination date, the difference would be adjusted to the share premium of capital reserve in the consolidated balance sheet. If the share premium is insufficient, the retained profits shall be adjusted.

7. Classification of joint arrangements and accounting treatment for joint operations

(1) Classification of joint venture arrangements

The company classifies the joint venture arrangements into joint venture and joint operation according to the structure, legal form of joint venture arrangement, the terms agreed in the arrangement, other relevant matters and situations.

Any joint venture arrangement that is not achieved by a separate entity shall be classified as a joint operation. Any joint venture arrangement that is achieved by a separate entity shall be generally classified as a joint venture. But if a joint venture arrangement is conclusively proved to meet any of the following conditions and meets the provisions of relevant laws and regulations, it shall be classified as joint operation:

① Its legal form shows the joint ventures enjoy rights to and assume obligations for relevant assets and liabilities respectively in the arrangement.
② The contract terms of the joint venture arrangement stipulate that the joint ventures enjoy rights to and assume obligations for relevant assets and liabilities respectively in the arrangement.
③ Other relevant facts and situations show that the joint ventures enjoy rights to and assume obligations for relevant assets and liabilities respectively in the arrangement. For example, the joint ventures enjoy almost all output related to the arrangement and repayment of liabilities in the arrangement consecutively relies on the joint ventures’ supports.

— II-51 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(2) Accounting treatment for joint operations

The company recognizes the following items related to its share of benefits in the joint operation and conducts accounting treatment in accordance with relevant accounting standards for business enterprises:

① assets it solely holds and its share of jointly-held assets based on its percentage;
② liabilities it solely assumes and its share of jointly-assumed liabilities based on its percentage;
③ incomes from sale of output enjoyed by it from the joint operation;
④ incomes from sale of output from the joint operation based on its percentage; and
⑤ separate costs and costs for the joint operation based on its percentage.

When the company invests or sells assets and others in or to the joint operation (except for assets that constitute business), only that part of profits or losses from the transaction attributable to other participants to the joint operation shall be recognized before such assets and others are sold by the joint operation to a third party. If the invested or sold assets are of impairment loss subject to the Accounting Standards for Business Enterprises No.8 – Assets Impairment and other provisions, the company shall recognize such loss in full.

When the company purchases assets and others from the joint operation (except for assets that constitute business), only that part of profits or losses from the transaction attributable to other participants to the joint operation shall be recognized before such assets and others are sold to a third party. If the purchased assets are of impairment loss subject to the Accounting Standards for Business Enterprises No.8 – Assets Impairment and other provisions, the company shall recognize its part of such loss based on its percentage.

If the company has no joint control over a joint operation, but enjoys and assumes relevant assets and liabilities of the joint operation, it shall conduct accounting treatment in accordance with aforesaid principle; or it shall do the same in accordance with relevant accounting standards for business enterprises.

— II-52 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

8. Determination criteria for cash and cash equivalents

In preparing cash flow statements, the company’s cash on hand and deposits that can be readily utilized for payment are recognized as cash. Investments that satisfy four conditions, namely short duration (normally means maturity within three months from the purchase date), high liquidity, readily convertible into known amount of cash and minimal risk of value change, are recognized as cash equivalents.

9. Foreign currency businesses and translation of foreign currency statements

(1) Foreign currency businesses

Foreign currency business transaction are recognized at the beginning and translated into Renminbi using the spot exchange rate prevailing on the date when transaction occurred.

Balance of monetary items in foreign currency are translated using the spot exchange rate prevailing on the balance sheet date, and the exchange differences arising therefrom are recognized in profit or loss for the period, except for special foreign currency loans related to acquisition and construction of assets that satisfy capitalization requirements, whose exchange differences are accounted for using principles on capitalization of loan expenses. Non-monetary items in foreign currency measured at historical cost are translated using the spot exchange rate prevailing on the date when transaction occurred and its functional currency shall remain unchanged.

Non-monetary items in foreign currency carried at fair value are translated using the spot exchange rate prevailing on the date when such fair value was determined, and any exchange difference arising therefrom is recognized in profit or loss for the period. In case of non-monetary items in foreign currency available for sales, the exchange difference arising therefrom is included in the other comprehensive income.

(2) Translation of foreign currency financial statements

Items of assets and liabilities in the balance sheet are translated using the spot exchange rate prevailing at the balance sheet date. Items in the owners’ equity, except for “undistributed profits”, are translated using the spot exchange rate prevailing at the time of occurrence. Items of income and expenses in the income statement are translated using the spot exchange rate prevailing at the date of transaction. The foreign currency translation difference arisen as a result of the above currency translation is included in the other comprehensive income.

— II-53 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

other comprehensive income to profit or loss for the period; when disposing of partial overseas equity investment or due to other reasons causing decrease in holding ratio of overseas operation but not losing control, the foreign currency translation difference attributable for disposed is transferred to minority interests but not profit or loss for the period. In occasion disposal of equity interest in foreign associate or joint operation, the foreign currency translation difference attributable to the portion disposed of is transferred to profit or loss for the period.

10. Financial instruments

A financial asset or financial liability is recognized when the company becomes a party to a contract for a financial instrument.

The effective interest method is the method of calculating the amortized cost of a financial asset or financial liability and of allocating interest income or interest expense over each accounting period.

The effective interest rate is the rate used to discount the estimated future cash flows of a financial asset or financial liability over its expected life to the carrying amount of the financial asset or the amortized cost of the financial liability. In determining the effective interest rate, the expected cash flows are estimated taking into account all contractual terms of the financial asset or financial liability (e.g, prepayment, extension, call option or other similar option, etc.), but without taking into account the expected credit losses.

The amortized cost of a financial asset or financial liability is the amount initially recognized for that financial asset or financial liability less the principal repaid, plus or minus the cumulative amortization of the difference between the amount initially recognized and the amount at maturity using the effective interest method, less the cumulative loss allowance (for financial assets only).

(1) Classification and measurement of financial assets

Based on the business model of the financial assets under management and the contractual cash flow characteristics of the financial assets, the company classifies the financial assets into the following three categories:

① Financial assets measured in amortized cost.
② Financial assets at fair value through other comprehensive income.
③ Financial assets at fair value through profit or loss.

Financial assets are measured at fair value on initial recognition, but trade or bills receivables arising from the sale of goods or services, etc., that do not contain a significant financing component or do not consider a financing component for more than one year are initially measured at the transaction price.

— II-54 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

For financial assets measured at fair value through profit or loss, transaction costs are charged directly to profit or loss, and transaction costs relating to other types of financial assets are charged to the amount initially recognized.

Subsequent measurement of financial assets depends on their classification, and all affected related financial assets are reclassified when and only when the company changes its business model for managing financial assets.

① Classified as financial assets measured in amortized cost

A financial asset is classified as a financial asset measured in amortized cost if the contractual terms of the financial asset specify that the cash flows that arise at a particular date are solely payments of principal and interest based on the amount of the principal outstanding and the financial asset is managed in a business model that aims to collect the contractual cash flows. The company’s financial assets classified as measured in amortized cost include monetary funds, bills and trade receivables, other receivables, debt investments and long-term receivables etc. Debt investments and long-term receivables due within 1 year (inclusive) at the balance sheet date are included in the non-current assets due within 1 year; debt investments with maturities of no more than 1 year (inclusive) at acquisition are included in other current assets.

Interest income is recognized by the company using the effective interest method for these financial assets and subsequently measured at amortized cost. Gains or losses arising from impairment or derecognition or modification are included in the profit or loss of the current period. Interest income is determined by multiplying the carrying amount of a financial asset by the effective interest rate, except for the following:

1) For financial assets that have been acquired or originated for credit impairment, the company calculates and determines the interest income based on the amortized cost and credit-adjusted effective interest rate of the financial assets from initial recognition.
2) For financial assets that have not been credit-impaired but become credit-impaired in subsequent periods, the company calculates and determines the interest income based on the amortized cost and effective interest rate of the financial assets in subsequent periods. If the financial instrument is no longer credit-impaired due to an improvement in its credit risk in a subsequent period, the company calculates and determines interest income by

— II-55 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

multiplying the effective interest rate by the carrying amount of the financial asset.

② Financial assets classified as at fair value through other comprehensive income

A financial asset is classified by the company as a financial asset at fair value through other comprehensive income if the contractual terms of the financial asset stipulate that the cash flows generated at a particular date are solely payments of principal and interest based on the amount of the principal outstanding and the financial asset is managed in a business model that aims at both collecting the contractual cash flows and selling the financial asset.

The company recognizes interest income on these financial assets using the effective interest method. Changes in fair value are included in other comprehensive income, except for interest income, impairment losses and exchange differences, which are recognized in profit or loss for the period. When the financial asset is derecognized, the cumulative gain or loss previously recognized in other comprehensive income is transferred from other comprehensive income to profit or loss for the current period.

Bills and receivables at fair value through other comprehensive income are presented as receivables financing and other such financial assets are presented as other debt investments, in which: other debt investments that fall due within one year from the balance sheet date are presented as non-current assets that fall due within one year and other debt investments that have an original maturity of less than one year are presented as other current assets.

③ Financial assets designated as at fair value through other comprehensive income

On initial recognition, the company may irrevocably designate an investment in a non-trading equity instrument as a financial asset at fair value through other comprehensive income on a single financial asset basis.

Changes in the fair value of these financial assets are included in other comprehensive income and no impairment allowance is required. When the financial asset is derecognized, the cumulative gain or loss previously recognized in other comprehensive income is transferred from other comprehensive income to retained earnings. Dividend income is recognized and credited to profit or loss for the period in which the company holds the investment in the equity instrument when the company’s right to receive dividends has been established, it is probable that economic benefits associated with the dividend will flow

— II-56 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

to the company and the amount of the dividend can be measured reliably. The company’s investment in these financial assets is reported in other equity instruments.

An investment in an equity instrument is a financial asset that is measured at fair value through profit or loss if one of the following conditions is met: the financial asset is acquired primarily for immediate sale; it is part of a centrally managed portfolio of identifiable financial asset instruments at initial recognition and there is objective evidence that a short-term profit model actually exists in the near term; it is a derivative instrument (other than derivatives that meet the definition of a financial guarantee contract and are designated as valid hedging instruments).

④ Financial assets classified as at fair value through profit or loss

Financial assets that do not meet the criteria for being classified as either amortized cost-based or fair value through other comprehensive income or designated as fair value through other comprehensive income are classified as financial assets at fair value through profit or loss.

The company applies fair value to subsequent measurement of these financial assets and records the gain or loss arising from the change in fair value and dividend and interest income related to these financial assets in the profit or loss of the current period.

The company presents these financial assets under the items of financial assets held for trading and other non-current financial assets based on their liquidity.

⑤ Financial assets designated as at fair value through profit or loss

At initial recognition, in order to eliminate or significantly reduce accounting mismatches, the company may irrevocably designate a financial asset as a financial asset at fair value through profit or loss on a single financial asset basis.

Where the hybrid contract contains one or more embedded derivatives and the host contract does not belong to the above financial assets, the company may designate the whole as a financial instrument at fair value through profit or loss, except for the following:

1) Embedded derivatives do not materially change the cash flows of the hybrid contract.
2) When initially determining whether a similar hybrid contract needs to be split, it is almost clear without analysis

— II-57 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

that the embedded derivatives it contains should not be split. Where an embedded prepayment option for a loan allows the holder to prepay the loan at an amount close to amortized cost, the prepayment option does not need to be split.

The company presents these financial assets under the items of financial assets held for trading and other non-current financial assets based on their liquidity.

(2) Classification and measurement of financial liabilities

The company classifies a financial instrument, or a component thereof, as a financial liability or an equity instrument on initial recognition based on the contractual terms of the financial instrument issued and the economic substance reflected therein, rather than solely in legal form, in combination with the definitions of a financial liability and an equity instrument. Financial liabilities are classified on initial recognition as financial liabilities at fair value through profit or loss, other financial liabilities, and derivatives designated as effective hedging instruments.

Financial liabilities are measured at fair value on initial recognition. For financial liabilities measured at fair value through profit or loss, the related transaction costs are charged directly to profit or loss; For other types of financial liabilities, the related transaction costs are included in the amount initially recognized.

Subsequent measurement of financial liabilities depends on their classification:

① Financial liabilities measured at fair value through profit or loss

Such financial liabilities include financial liabilities held for trading (including derivatives that are financial liabilities) and financial liabilities designated at fair value through profit or loss on initial recognition.

— II-58 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

derivative instrument, except for those that are designated as effective hedging instruments and those that meet financial guarantee contracts. Financial liabilities held for trading (including derivatives that are financial liabilities) are subsequently measured at fair value and all changes in fair value are included in profit or loss for the period, except for those relating to hedge accounting.

At initial recognition, in order to provide more relevant accounting information, the company irrevocably designates a financial liability that meets one of the following conditions as a financial liability at fair value through profit or loss:

1) Accounting mismatches can be eliminated or significantly reduced.
2) The management and performance evaluation of a portfolio of financial liabilities or a portfolio of financial assets and financial liabilities on a fair value basis, in accordance with the corporate risk management or investment strategy as set out in the official written documents, and reporting to key management personnel within the enterprise on this basis.

The company subsequently measures these financial liabilities at fair value, except for changes in fair value arising from changes in the company’s own credit risk, which are included in other comprehensive income, other changes in fair value are included in the profit or loss of the current period. The company accounts for all changes in fair value (including the amount of the effect of changes in its own credit risk) in profit or loss for the current period, unless such changes in fair value through other comprehensive income would cause or enlarge an accounting mismatch in profit or loss.

② Other financial liabilities

The company classifies financial liabilities as financial liabilities measured in amortized cost, which are subsequently measured in accordance with amortized cost using the effective interest method, and gains or losses arising from derecognition or amortization are included in profit or loss for the period, except for the following:

1) Financial liabilities at fair value through profit or loss.
2) Financial liabilities arising from the transfer of a financial asset that does not meet the conditions for derecognition or continues to be involved in the transferred financial asset.

— II-59 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

3) Financial guarantee contracts that do not fall under the first two categories of this article, and loan commitments that do not fall under category 1) of this article for loans at below-market interest rates.

A financial guarantee contract is a contract that requires an issuer to pay a specific amount to a contract holder that has suffered a loss when a particular debtor fails to pay its debt in accordance with the terms of the original or modified debt instrument when due. Financial guarantee contracts that are not financial liabilities designated at fair value through profit or loss are measured after initial recognition at the higher of the loss allowance amount and the amount initially recognized less accumulated amortization over the guarantee period.

(3) Derecognition of financial assets and financial liabilities
① A financial asset is derecognized when one of the following conditions is met, i.e, it is written off from its account and balance sheet:
- 1) The contractual right to receive the cash flows from the financial asset is terminated.
- 2) The financial asset has been transferred and the transfer meets the requirements for derecognition of the financial asset.
② Conditions for derecognition of financial liabilities

A financial liability (or a portion of a financial liability) is derecognized if the current obligation of the financial liability (or portion of a financial liability) has been discharged.

Where an agreement is entered into between the company and the lender to replace the original financial liability by assuming the new financial liability and the contractual terms of the new financial liability and the original financial liability are materially different, or the contractual terms of the original financial liability (or a portion thereof) are materially modified, the original financial liability is derecognized and a new financial liability is simultaneously recognized, and the difference between the carrying amount and the consideration paid (including the non-cash assets transferred out or the liabilities assumed) is included in the profit or loss of the current period.

— II-60 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

derecognition portion as a proportion of the fair value of the financial liability as a whole at the date of repurchase. The difference between the carrying amount allocated to the derecognized portion and the consideration paid, including the non-cash assets transferred out or liabilities assumed, is included in the current profit or loss.

(4) The basis for recognition and measurement of financial asset transfers

When a transfer of financial assets occurs, the company assesses the extent of the risks and rewards of retaining ownership of the financial assets and deals with each of the following:

① Where substantially all the risks and rewards of ownership of a financial asset are transferred, the financial asset is derecognized and the rights and obligations arising or retained in the transfer are recognized separately as assets or liabilities.
② A financial asset is recognized if it retains substantially all the risks and rewards of ownership.
③ Where substantially all the risks and rewards of ownership of a financial asset have not been transferred or retained (i.e, other than those in ① and ② of this article), they are dealt with in the following circumstances, depending on whether they retain control over the financial asset:
1) Where control over the financial asset is not retained, the financial asset is derecognized and the rights and obligations arising or retained in the transfer are recognized separately as assets or liabilities.
2) Where control over the financial asset is retained, the financial asset continues to be recognized to the extent that it continues to be involved in the transferred financial asset and the related liability is recognized accordingly. The extent to which the company continues to be involved in the transferred financial asset is the extent to which the company is exposed to risks or rewards from changes in the value of the transferred financial asset.

In determining whether the transfer of financial assets meets the above conditions for derecognition of financial assets, the principle of substance over form is adopted. The company classifies the transfer of financial assets into overall transfer and partial transfer of financial assets.

① Where the overall transfer of a financial asset satisfies the derecognition condition, the difference between the following two amounts is included in the current profit or loss:

— II-61 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

1) The carrying amount of the transferred financial asset at the date of derecognition.
2) The sum of the consideration received for the transfer of a financial asset and the amount of the corresponding derecognized portion of the cumulative change in fair value that would have been credited directly to other comprehensive income (the financial asset involved in the transfer is a financial asset measured at fair value with the change in other comprehensive income).
② Where a financial asset is partially transferred and the transferred portion as a whole satisfies the derecognition condition, the carrying amount of the financial asset as a whole before the transfer is apportioned between the derecognition portion and the continuing recognition portion (in which case, the retained service asset shall be regarded as a part of the continuing recognition of the financial asset) based on the relative fair value on the transfer date, and the difference between the following two amounts is included in the current profit or loss:
1) The carrying amount of the derecognized portion at the date of derecognition.
2) The sum of the consideration received for the derecognition component and the amount of the corresponding derecognition component of the cumulative change in fair value originally included in other comprehensive income (the financial asset involved in the transfer is a financial asset measured at fair value with its change included in other comprehensive income).

Where the transfer of a financial asset does not meet the conditions for derecognition, the financial asset is continued to be recognized and the consideration received is recognized as a financial liability.

(5) Determination of fair value of financial assets and financial liabilities

A financial asset or financial liability that has an active market is determined at its fair value based on quoted prices in the active market, unless the financial asset has a shelf life that is specific to the asset itself. Financial assets that are restricted for sale against the asset itself are determined at quoted prices in active markets, net of the amount of compensation required by market participants to assume the risk of not selling the financial asset in the open market for a specified period of time. Quoted prices in active markets include quoted prices for related assets or liabilities that are readily and regularly available from exchanges, dealers, brokers, industry groups, pricing

— II-62 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

agencies or regulators, etc, and that represent actual and recurring market transactions on a fair trading basis.

Financial assets acquired or derived initially, or financial liabilities assumed, are determined on the basis of market transaction prices.

Financial assets or financial liabilities that do not have an active market are valued at fair value using valuation techniques. In making the valuation, the company uses valuation techniques that are appropriate in the circumstances and supported by sufficient available data and other information to select inputs that are consistent with the characteristics of the asset or liability that market participants consider in the transaction of the underlying asset or liability, and to the extent possible, gives preference to the relevant observable inputs. Unobservable inputs are used when the relevant observable inputs are not available or are not practicable to obtain.

(6) Impairment of financial instruments

The company performs impairment accounting and recognizes loss allowances on the basis of expected credit losses (ECLs) for financial assets classified as measured at amortized cost, financial assets classified as measured at fair value through other comprehensive income and financial guarantee contracts.

Expected credit losses are the weighted average of the credit losses on financial instruments weighted by the risk of default. Credit losses represent the difference between all contractual cash flows receivable under the contract and all cash flows expected to be received, discounted at the company’s original effective interest rate, being the present value of all cash shortfalls. Among them, credit-impaired financial assets purchased or originated by the company shall be discounted at the credit-adjusted effective interest rate of the financial assets.

For receivables arising from transactions governed by revenue standards, the company applies the simplified measurement method to measure the loss allowance at an amount equal to lifetime ECLs.

For financial assets that have been purchased or originated for credit impairment, only the cumulative change in expected credit losses over the lifetime after initial recognition is recognized as a loss allowance at the balance sheet date. At each balance sheet date, the amount of the change in ECLs over the lifetime is credited to profit or loss as an impairment loss or gain. Favorable changes in ECLs are recognized as impairment gains even if the lifetime ECLs determined at the balance sheet date are less than the amount of ECLs reflected in the estimated cash flows at initial recognition.

For financial assets other than those that have undergone credit impairment using the simplified measurement method and purchases or

— II-63 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

origination described above, the company assesses at each balance sheet date whether the credit risk of the relevant financial instrument has increased significantly since initial recognition and measures its loss allowance, recognizes ECLs and changes therein separately as follows:

① If the credit risk of the financial instrument has not increased significantly since initial recognition and is in stage 1, the loss allowance is measured at an amount equal to the expected credit loss of the financial instrument over the next 12 months and interest income is calculated based on the carrying amount and the effective interest rate.
② If the credit risk of the financial instrument has increased significantly since initial recognition but no credit impairment has occurred, it is in stage 2, the loss allowance is measured at an amount equal to the expected credit loss over the lifetime of the financial instrument, and interest income is calculated based on the carrying amount and the effective interest rate.
③ If the financial instrument has been credit-impaired since initial recognition, it is in stage 3, the company measures its loss allowance at an amount equal to the expected credit losses over the lifetime of the financial instrument and calculates interest income at amortized cost and effective interest rates.

The amount by which the credit loss allowance for a financial instrument is increased or reversed is credited to profit or loss as an impairment loss or gain. Except for financial assets classified as at fair value through other comprehensive income, credit loss allowance is made against the carrying amount of the financial asset. For financial assets classified as at fair value through other comprehensive income, the company recognizes its credit loss allowance in other comprehensive income and does not reduce the carrying amount of the financial asset as shown in the balance sheet.

If the company has measured the loss allowance at an amount equal to the expected credit losses over the lifetime of the financial instrument in the previous accounting period, but the financial instrument is no longer subject to a significant increase in credit risk since initial recognition, the company measures the loss allowance at an amount equal to the expected credit losses over the next 12 months at the balance sheet date of the current period, and the reversal amount of the loss allowance thus formed is included in the current profit or loss as an impairment gain.

① Significant increase in credit risk

The company uses available reasonable and supportable forward-looking information to determine whether the credit risk of a financial instrument has increased significantly since initial recognition

— II-64 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

by comparing the risk of a default occurring on the balance sheet date with the risk of a default occurring on the date of initial recognition. For financial guarantee contracts, the date on which the company becomes a party to an irrevocable commitment is the date of initial recognition when the company applies the impairment provision for financial instruments.

In assessing whether there has been a significant increase in credit risk, the company considers the following factors:

1) Whether there has been an actual or expected significant change in the operating results of the debtor;
2) Whether there has been a significant adverse change in the regulatory, economic or technological environment in which the debtor is located;
3) Whether there has been a significant change in the value of the collateral used as security for the debt or in the quality of the guarantees or credit enhancements provided by third parties that is expected to reduce the debtor’s economic incentive to pay within the contractual time limit or affect the probability of default;
4) Whether there has been a significant change in the expected performance and repayment behavior of the debtor;
5) Changes in the company’s credit management methods for financial instruments, etc.

At the balance sheet date, the company assumes that the credit risk on a financial instrument has not increased significantly since initial recognition if the company determines that the financial instrument has only low credit risk. A financial instrument is considered to have low credit risk if it has a low risk of default, the borrower has a strong ability to meet its contractual cash flow obligations in the short term, and even if there are adverse changes in the economic situation and operating environment over a longer period of time, it may not necessarily reduce the borrower’s ability to meet its contractual cash flow obligations.

② Financial assets with credit impairment

A financial asset is credit-impaired when one or more events that have a detrimental impact on the expected future cash flows of the financial asset have occurred. Evidence that a financial asset is credit-impaired includes the following observable information:

1) Significant financial difficulties of the issuer or the debtor;

— II-65 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

2) Breach of contract by the debtor, such as default or overdue payment of interest or principal, etc.;
3) A concession given by a creditor to the debtor that the debtor would not otherwise make for economic or contractual reasons relating to the debtor’s financial difficulties;
4) The debtor is likely to go bankrupt or undergo other financial restructuring;
5) The financial difficulty of the issuer or the debtor results in the disappearance of an active market for the financial asset;
6) A financial asset is purchased or originated at a significant discount that reflects the fact that a credit loss has occurred.

Credit impairment of financial assets may be caused by the joint action of multiple events, and may not be caused by separately identifiable events.

③ Determination of expected credit losses

The company assesses the ECLs for financial instruments individually and in combination, taking into account reasonable and supportable information about past events, current conditions and forecasts of future economic conditions in assessing the ECLs.

The company classifies financial instruments into different combinations based on common credit risk characteristics. Common credit risk characteristics adopted by the company include: type of financial instrument, credit risk rating, aging mix, overdue aging mix, contract settlement cycle, debtor’s industry, etc. See the accounting policies for the relevant financial instruments for the individual assessment criteria and the combined credit risk characteristics of the relevant financial instruments.

The company determines the ECLs for the relevant financial instruments as follows:

1) For financial assets, credit losses are the present value of the difference between the contractual cash flows that the company is expected to receive and the cash flows that it expects to receive.

— II-66 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

2) For financial guarantee contracts, credit losses are the present value of the difference between the expected payments to be made by the company to the contract holder for credit losses incurred by the contract holder, less the amount that the company expects to receive from the contract holder, the debtor or any other party.
3) For a financial asset that is credit-impaired at the balance sheet date but not purchased or originated from credit-impaired, credit loss is the difference between the carrying amount of the financial asset and the present value of the estimated future cash flows discounted at the original effective interest rate.

Factors reflected in the company’s measurement approach to ECL on finance instruments include: an unbiased probability-weighted average amount determined by evaluating a range of possible outcomes; the time value of money; reasonable and supportable information about past events, current conditions, and forecasts of future economic conditions that is available at the balance sheet date without undue additional cost or effort.

④ Write-down of financial assets

When the company no longer reasonably expects the contractual cash flows of a financial asset to be recovered in whole or in part, the carrying amount of the financial asset is written down directly. Such a write-down constitutes a derecognition of the relevant financial asset.

(7) Offset of financial assets and financial liabilities

Financial assets and financial liabilities are presented separately in the balance sheet and are not offset against each other. However, if the following conditions are met at the same time, the net amount after offsetting is shown in the balance sheet:

① The company has a legal right to set off the recognized amounts and such legal right is currently enforceable;
② The company plans to settle on a net basis, or to realize the financial asset and settle the financial liability simultaneously.

11. Bills receivable

See Note V.10.(6) Impairment of financial instruments for details of the method of determining and accounting for ECL on bills receivable.

— II-67 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

When it is not possible to assess sufficient evidence of ECLs at a reasonable cost at the individual instrument level, the company refers to historical credit loss experience, combines current conditions with its judgement of future economic conditions, and based on credit risk characteristics, divides the bills receivable into several combinations, and calculates ECL on a combination basis. The basis for determining the combination is as follows:

Basis for determination
Name of portfolio of portfolio Method of provision Bank acceptance Bank acceptance has a ECL is not recognized high credit rating, a with reference to short duration, low risk historical credit loss of default, and a strong experience, in ability to fulfill its combination with contractual cash flow current conditions and obligations in the short expectations of future term economic conditions
Trade acceptance Classification according ECL is measured with to common credit risk reference to historical characteristics credit loss experience, in combination with current conditions and expectations of future economic conditions

12. Accounts receivable

See Note V.10.(6) Impairment of financial instruments for details of the company’s method of determining and accounting for ECL on accounts receivable.

The company separately determines the credit loss of accounts receivable that have been credit-impaired after the initial recognition.

— II-68 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

When it is not possible to assess sufficient evidence of ECL at a reasonable cost at the level of a single instrument, the Company refers to historical credit loss experience, combines current conditions with judgement of future economic conditions, divides the accounts receivable into combinations based on credit risk characteristics, and calculates ECL on a combination basis. The basis for determining the combination is as follows:

	Basis for determination
Name of portfolio	of portfolio	Method of provision
Aging portfolio	Classification according	ECL is calculated based
	to common credit risk	on aging and ECL rates
	characteristics	over the lifetime
Related party	Receivables arising	ECL rate of the portfolio
portfolio	between related parties	is 0% based on default
	within the scope of	risk exposure and ECL
	consolidated	rates over the lifetime
	statements

13. Accounts receivable financing

See Note V.10.(6) Impairment of financial instruments for details of the company’s method of determining and accounting for ECL on accounts receivable financing.

14. Other receivables

See Note V.10.(6) Impairment of financial instruments for details of the company’s method of determining and accounting for ECL on other receivables.

The company separately recognises credit losses on other receivables for which credit impairment has occurred subsequent to initial recognition.

— II-69 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

When it is not possible to assess sufficient evidence of ECL at a reasonable cost at the level of a single instrument, the company calculates ECL on a portfolio basis by dividing other receivables into portfolios based on credit risk characteristics, with reference to historical credit loss experience, combining current conditions with judgement of future economic conditions. The basis for determining the combination is as follows:

Basis for determination Name of portfolio of portfolio Method of provision Aging portfolio Classification according ECL is calculated based to common credit risk on default risk characteristics exposure and ECL rates within the next 12 months or over the lifetime Related party Receivables arising ECL rate of the portfolio portfolio between related parties is 0% based on default within the scope of risk exposure and ECL consolidated rates within the next 12 statements months or over the lifetime

15. Inventories

(1) Classification of inventories

Inventories refer to the completed products or merchandize, semi-finished products under production process, and materials and items consumed during production or provision of labor services which are held for sale by the company over the course of ordinary activities. These mainly include raw materials, turnover materials, commissioned processing materials, work in progress, finished products (inventory goods), delivered goods, etc.

(2) Valuation of inventories

Inventories are initially measured at cost upon acquisition, which includes procurement costs, processing costs and other costs. The prices of inventories are calculated using weighted average method when they are taken or delivered.

(3) Determination criteria for the net realizable value of inventories and provision for inventory impairment

— II-70 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

value of stock in inventory (including finished products, inventory merchandize and materials for sale) that can be sold directly is determined using the estimated saleable price of such inventory deducted by the cost of sales and relevant taxation over the course of ordinary production and operation. The net realizable value of material in inventory that requires processing is determined using the estimated saleable price of the finished product deducted by the cost to completion, estimated cost of sales and relevant taxation over the course of ordinary production and operation. The net realizable value of inventory held for performance of sales contract or labor service contract is determined based on the contractual price; in case the amount of inventory held exceeds the contractual amount, the net realizable value of the excess portion of inventory is calculated using the normal saleable price.

Provision for impairment is made according to individual items of inventories at the end of the period; however, for inventories with large quantity and low unit price, the provision is made by categories; inventories of products that are produced and sold in the same region or with the same or similar purpose or usage and are difficult to be measured separately are combined for provision for impairment.

If the factors causing a previous write-off of inventory value has disappeared, the amount written-off is reversed and the amount provided for inventory impairment is reversed and recognized in profit or loss for the period.

(4) Inventory system

Perpetual inventory system is adopted.

(5) Amortization of low-value consumables and packaging
① Low-value consumables are amortized by one-time write-off;
② Packaging materials are amortized by one-time write-off;
③ Other supplementary materials are amortized by one-time write-off.

16. Contract assets

If the company has transferred the goods to the customer and has the right to receive consideration, and the right depends on factors other than the passage of time, it is recognized as a contract asset. The company’s unconditional (i.e. depends only on the passage of time) right to collect consideration from customers is listed separately as receivables.

For the determination method and accounting treatment method of the expected credit losses of the contract assets of the company, please refer to Impairment of financial instruments of Note V. 10.(6).

— II-71 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

17. Contract Cost

(1) Contract performance cost

The company recognises as an asset the cost of performing a contract that it incurs to perform the contract that is outside the scope of accounting standards for enterprises other than revenue standards and that simultaneously meets the following conditions:

① The cost is directly related to a current or expected contract, including direct labor, direct materials, manufacturing costs (or similar), costs that are clearly attributable to the customer, and other costs that are incurred solely as a result of the contract;
② The cost increases the resources that the enterprise will use to fulfill its performance obligations in the future;
③ The cost is expected to be recovered.

The asset is presented in inventory or other non-current assets based on whether the amortisation period at initial recognition exceeds a normal operating cycle.

(2) Contract acquisition cost

Incremental costs incurred by the company in obtaining a contract that are expected to be recovered are recognised as contract acquisition costs as an asset. Incremental costs are costs that the company would not have incurred without obtaining a contract, such as sales commissions. Where the amortisation period does not exceed one year, it is included in the current profit or loss when incurred.

(3) Amortization of contract costs

The above assets relating to contract costs are amortised at the point in time when the performance obligation is satisfied or in accordance with the progress of the performance obligation, on the same basis as the recognition of income from goods or services relating to the asset, and are included in the profit or loss of the current period.

(4) Impairment of contract costs

— II-72 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

assets and the cost estimated to be incurred for the transfer of the related commodities, the excess shall be provided for impairment and recognised as an asset impairment loss.

After the provision for impairment is made, if the difference between the above two items is higher than the carrying amount of the asset due to changes in the factors of impairment in previous periods, the original provision for impairment of the asset is reversed and included in the current profit or loss, but the carrying amount of the asset after the reversal does not exceed the carrying amount of the asset on the reversal date assuming no provision for impairment is made.

18. Other debt investments

See Note V.10.(6) Impairment of financial instruments for details of the method of determining and accounting for ECL on other debt investments.

19. Long-term equity investments

(1) Initial determination of investment costs
① For long-term equity investment formed by business combination, details of accounting policies are set out in Note V. 5. Accounting treatments of business combinations involving entities under common control and entities not under common control.
② Long-term equity investments obtained through other means

Initial investment costs of long-term equity investment obtained through cash payment is determined by the actual consideration paid. The initial investment cost consists of the expenses directly relevant to the obtainment of the long-term equity investment, taxes and other necessary expenses.

Initial investment costs of long-term equity investment obtained through issuance of equity securities is determined by the fair value of the equity securities issued; trading expenses incurred during insurance or acquisition of equity instrument that may be directly attributable to equity trade can be deducted from the equity.

The initial investment costs of long-term equity investment obtained in an exchange of non-monetary assets is determined using the fair value of the asset surrendered, provided that the asset received in exchange for non-monetary asset has a commercial substance and the fair value of both the asset received and the asset surrendered can be reliably measured, except there is definite evidence that the fair value of the asset received is more reliable; the initial investment costs of a long-term equity investment in a non-monetary asset exchange that cannot satisfy the above conditions is determined by the carrying amount of the asset surrendered and the amount of relevant taxation payable.

— II-73 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

The initial investment costs of a long-term equity investment obtained through debt restructuring is determined based on the fair value.

(2) Subsequent measurement and profit or loss recognition

① Cost method

The company adopts the cost method to record the long-term equity investment which is available for the investee to implement control, using consideration cost as the initial investment cost, and the subsequent additions and disposals would be adjusted to long-term equity investment cost.

Except for the price actually paid for obtaining the investment or the cash dividends or profits declared but not yet distributed which is included in the consideration, the company recognizes cash dividends or profits declared by the investee as current investment gains.

② Equity method

The company adopts the equity method for accounting of long-term equity investment in joint ventures and associates; where part of the equity investment of the investing party is indirectly held by venture capital institutions, mutual funds, trust companies or similar subjects including unit-linked insurance fund, the investment is measured at fair value, the changes in which are included in the profit and loss.

When the initial investment cost of the long-term equity investment exceeds the share of fair value in the net tangible assets in the investee, the initial investment cost of a long-term equity investment is not adjusted based on such difference. When the initial investment cost is lower than the share of fair value in the net tangible asset in the investee, such difference is recognized in profit or loss for the period.

After the company acquires a long-term equity investment, it shall, in accordance with its attributable share of the net profit or loss and other comprehensive income realized by the investee, recognize the investment income and other comprehensive income respectively and simultaneously adjust the carrying value of the long-term equity investment. The company shall, in the light of the profits or cash dividends that the investee declares to distribute, reduce the carrying value of the long-term equity investment correspondingly. As to any change in owners’ equity of the investee other than net profit or loss, other comprehensive income and profit distribution, the company shall adjust the carrying value of the long-term equity investment and include such change into the owners’ equity.

The company shall, based on the fair value of identifiable net assets of the investee when it obtains the investment, recognize its

— II-74 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

attributable share of the net profit or loss of the investee after it adjusts the net profit of the investee. The profit or loss of the unrealized internal transaction between the company and the associates, joint ventures be deducted with the part attributable to the company according to the proportion the company is entitled to, and the gains or losses on investment shall be recognized on such basis.

Recognition of loss in the investee by the company shall follow this order: firstly, reduce the carrying amount of the long-term equity investments; secondly, if the carrying amount of long-term equity investments is insufficient for such reduction, continue to recognize such investment loss to the extent of the carrying amount of the long-term equity net investment in the investee and reduce the carrying amount of long-term receivables. Finally, after the above treatment, if the company still bears additional obligations stipulated under the investment contract or agreement, the estimated obligations assumed are recognized as estimated liabilities and recognized in profit or loss for the period.

If the investee records a profit subsequently, after reducing the attributable loss that is not yet recognized, the treatment by the company shall be the reverse of the above order: reverse the carrying balance of estimated liabilities already recognized, restore the carrying amount that physically constitute the long-term interests and long-term equity investment in the investee, and recognize investment gain.

(3) Change of the accounting methods for long-term equity investments
① Change of measurement at fair value to accounting under equity method

Where the equity investment held by the company with no control, joint control or significant impact on the investee and that are accounted according to the financial instrument recognition and measurement criteria can place significant impact or carry out common control but cannot control the investee due to addition of investment, the sum of the fair value of the equity investment originally held determined subject to the Accounting Standards for Enterprises No. 22 – Recognition and Measurement of Financial Instruments and the new investment cost are determined to be the initial investment cost accounted under equity method.

If the previously held equity investment is classified as an available-for-sale financial asset, the difference between the fair value and the carrying amount, and the accumulated fair value changes previously recognised in other comprehensive income are transferred to the current gain or loss after being accounted for under the equity method.

— II-75 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

The carrying value of the long-term equity investment is adjusted by the difference between the fair value shares of the identifiable net assets of the investee on the date of additional investment determined by calculation of the new shareholding proportion after such additional investment and the initial investment cost under equity cost and is included in current non-operating income.

② Change of measurement at fair value or accounting under equity method to cost method

For the equity investment of the investee held by the company with no control, joint control or significant impact and accounted according to the financial instrument recognition and measurement criteria, or the long-term equity investment in associates or joint venture originally held that can be controlled due to addition of investment, the sum of the carrying value of the original equity investment and the cost of new investment is changed to be accounted under cost method and recognized as the initial investment cost when preparing individual financial statements.

The other comprehensive income recognized due to the adoption of equity method for the equity investment held before the date of acquisition shall be accounted on the same basis for the disposal of relevant assets or liabilities of the investee during the disposal of such investment.

Equity investment held before the date of acquisition shall be subject to Accounting Standards for Enterprises No. 22 – Recognition and Measurement of Financial Instruments and the accumulated fair value changes that were originally included in other comprehensive income shall be included in current profit or loss under cost method.

③ Change of accounting under equity method to measurement at fair value

Where the company losses common control or significant impact over the investee due to disposal of some of the equity investment, the remaining equity after disposal shall be subject to accounting under Accounting Standards for Enterprises No. 22 – Recognition and Measurement of Financial Instruments, and the difference between the fair value on the date when the common control or significant impact is lost and the carrying value is included in current profit or loss.

Other comprehensive income that is recognized previously for the equity investment due to adoption of the equity method shall be subject to accounting on the same basis for disposal of relevant assets or liabilities of the investee at the time when the equity method is ceased.

— II-76 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

④ Change of cost method to equity method

Where the company losses the control over the investee due to disposal of some of the equity investment, and the remaining equity after disposal can place common control or significant impact over investee, it should be changed to equity method in preparing individual financial statements and the remaining equity shall be adjusted as if the equity method is adopted at the acquisition.

⑤ Change of cost method into measurement at fair value

Where the company losses the control over the investee due to disposal of some of the equity investment, and the remaining equity after disposal cannot place common control or significant impact over investee, the accounting should be changed and become subject to Accounting Standards for Enterprises No. 22 – Recognition and Measurement of Financial Instruments, and the difference between the fair value on the date when the control is lost and the carrying value is included in current profit and loss.

(4) Disposal of long-term equity investment

When disposal of long-term equity investment, the difference between its carrying value and the payment actually acquired shall be included in the current profit or loss. When disposal of long-term equity investment measured by employing the equity method, accounting treatment of the portion previously included in other comprehensive income shall be made on the same basis as would be required if the investee had directly disposed of the assets or liabilities related thereto according to the corresponding proportion.

If the terms, conditions and economic effects of transactions in relation to the disposal of equity investments in subsidiaries, fall in the following one or more situations, multiple transactions shall be regarded as a package transaction for accounting treatment:

① these transactions were entered into at the same time or after considering the effects of each other;
② only when regarding these transactions as a whole, can it achieve a complete business result;
③ the occurrence of one transaction depends on the occurrence of at least one other transaction;
④ a transaction is not economical when treated alone, but is economical when considered with other transactions.

— II-77 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

When an entity loses control on its original subsidiary due to partial disposal of equity investment or otherwise, it does not belong to a package transaction, and the accounting treatment shall be differentiated by separate financial statements and consolidated financial statements:

① In separate financial statements for equity disposed, the difference between the carrying value and the actual payment is included in current profit or loss. Where the remaining equity after disposal can implement common control or place significant impact over the investee, the equity method is adopted for accounting treatment, and the remaining equity is adjusted as if the equity is adopted at the time of acquisition; where the remaining equity after disposal cannot implement common control or place significant impact over the investee, relevant provisions of Accounting Standards for Enterprises No. 22 – Recognition and Measurement of Financial Instruments shall be adopted for accounting, and the difference between the fair value on the date when the control is lost and the carrying value is included in current profit or loss.
② In consolidated financial statements, for the transactions before the loss of control over subsidiaries, the capital reserve (share premium) is adjusted by the difference between the price of disposal and the net asset shares of subsidiaries continuously calculated since the date of acquisition or combination corresponding to the long-term equity investment; where the capital reserve is insufficient, retained earnings are adjusted; at the time of loss of control over subsidiaries, the remaining equity are re-measured according to the fair value at the date of loss of control. The difference between the sum of the price acquired for disposal of equity and the fair value of the remaining equity less shares of net assets constantly calculated since the date of acquisition based on the original shareholding proportion is included in the investment income in the period when the control is lost and is written down to good will. Other comprehensive income related to original equity investment in the subsidiaries is transferred to current investment income at the time of loss of control.

If transactions in relation to the disposal of equity investments in subsidiaries until control is lost belong to a package transaction, each transaction shall be treated as a transaction for the disposal of equity investments in subsidiaries and the loss of control and the accounting treatment shall be differentiated by separate financial statements and consolidated financial statements:

① In separate financial statements, the difference between each disposal price before the loss of control and the carrying value of the long-term equity investment corresponding to the equity disposed is recognized as other comprehensive income; and shall be transferred to current profit or loss at the time of loss of control.

— II-78 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

② In consolidated financial statements, the difference between each disposal price before the loss of control and the share of net assets in the subsidiary corresponding to the disposal of investment is recognized as other comprehensive income, and shall be transferred to profit or loss for the period when control is lost.
(5) Criteria for determination of common control and significant impact

If the company collectively controls certain arrangement with the other participants as agreed, and the decisions on the activities that may have significant impact on the return of arrangement exit with consistent agreement from participants sharing the control power, then the company and the other participants are deemed to have common control over certain arrangement, which is joint venture arrangement.

Where the joint venture arrangement is realized through individual entity, it is judged according to relevant agreement that, when the company is entitled to rights over the net assets of such entity, the entity is a joint venture and adopts equity method for accounting treatment. If judged according to relevant agreement that, the company has no rights over the net assets of such entity, such entity is joint operation, and the company recognize the items in relation to the shares in the joint operation and adopts provisions of relevant accounting standards for accounting treatment.

Significant impact refers to the power of an investing party to participate in making decisions on the financial and operating policies of an invested entity, but not to control or jointly control together with other parties over the formulation of these policies. The company determines the significant impact on investee in one or more situations as follows after a comprehensive consideration of all facts and situations: ①dispatching representatives in the board of directors or similar power organ of the investee; ②participating in the formulation of the financial and operation policies of the investee; ③having significant deals with the investee; ④dispatching management personnel to the investee; and ⑤providing key technical data to investee.

20. Fixed assets

(1) Recognition conditions of fixed assets

Fixed assets refer to tangible assets held for the production of merchandize, provision of labor services, renting or operational management with useful life over one accounting year. Fixed assets are recognized when all of the following conditions are met:

① economic benefits related to such fixed assets are likely to flow into the enterprise;

— II-79 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

② costs of such fixed assets can be reliably measured.
(2) Initial measurement of fixed assets

The fixed assets of the company are initially measured at cost.

① The cost of the externally purchased fixed assets include the purchase price, the import duties, and the other expenditure direct attributable to such assets for such assets to be available for its intended use.
② The cost of a self-constructed fixed asset consists of all necessary expenses incurred for enabling the asset to be available for its intended use.
③ The cost invested to a fixed asset by the investor is determined according to the value agreed upon in the investment contract or agreement. Where the valued agreed upon in the said investment contract or agreement is unfair, the said cost will be determined according to the fair value of the asset.
④ Where the price for purchase of the fixed assets exceeds the deferred payment on normal credit terms with substantial financing nature, the cost is determined on the basis of the present value of the purchase price. The difference between the actual payment and the purchase price, besides being capitalized, shall be included in current profit or loss during the credit period.
(3) Subsequent measurement and disposal of fixed assets
① Depreciation of fixed assets

The depreciation of fixed assets is provided within the estimated useful life based on the value carried less the expected net residue. For fixed assets with impairment provided, the depreciation can be determined based on the carrying value less the provision for impairment in future period and the remaining useful life. No depreciation is provided for still in use but fully depreciated assets.

The fixed assets formed by special reserve expenditures shall be reduced by the cost of forming fixed assets and the accumulated depreciation of the same amount shall be confirmed. The fixed assets shall not be further depreciated in the future.

— II-80 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

of fixed assets are re-assessed at the end of the period, and corresponding adjustment is made when any difference from the originally estimated amount is found.

The depreciation method, period of depreciation and annual depreciation ratio of different categories of fixed assets are as follows:

			Annual
	Period of	Residual	depreciation
Method of depreciation	depreciation	value ratio	ratio
Average year method	20-50	5	1.90-4.75
Average year method	5-10	5	9.50-19.00
Units-of-production
method
Average year method	5	5	19.00
Average year method	3-5	5	19.00-31.67

② Subsequent expenses of fixed assets

For subsequent expenses in relation to fixed assets, those that comply with the recognition criteria for fixed assets are included in the costs of fixed assets; those that do not are included in current profit or loss at the time of incurrence.

③ Disposal of fixed assets

A fixed asset is derecognized when the disposal or expected use or disposal of such fixed asset cannot create any economic benefits. The disposal income from sale, transfer, retirement or damage of fixed assets is recognized in profit or loss for the period after deducting its carrying amount and relevant taxation.

(4) Basis of recognition, valuation and depreciation of fixed assets acquired under finance leases

Fixed assets leased to the company are recognised as finance leased assets when one or more of the following criteria are met:

① The lease transfers ownership of the asset to the company by the end of the lease term.

— II-81 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

② The company has the option to purchase the asset at a price which is expected to be sufficiently lower than the fair value at the date the option becomes exercisable and, at the inception of the lease, it is reasonably certain that the option will be exercised.
③ The lease term is for the major part of the economic life of the asset, even if the title is not transferred.
④ At the inception of the lease, the present value of the minimum lease payments amounts to at least substantially all of the fair value of the leased asset.
⑤ The leased assets are of a specialised nature such that only the company can use them without major modifications being made.

Fixed assets leased under finance leases are carried at the lower of the fair value of the leased asset and the present value of the minimum lease payments at the inception date of the lease. The minimum lease payments are recorded as a long-term payable, with the difference being an unrecognised financing expense. Initial direct costs incurred in the course of negotiating and signing leases, such as handling fees, legal fees, travel expenses and stamp duty attributable to the leases, are included in the value of the leased assets. Unrecognised finance expenses are apportioned over the lease term using the effective interest method.

The company adopts the same depreciation policy as its self-owned fixed assets to accrue the depreciation of fixed assets acquired under finance leases. Where it is reasonably certain that ownership of the leased assets will be obtained at the end of the lease term, depreciation is provided over the useful life of the leased assets. Where it is not reasonably certain that ownership of the leased assets will be obtained at the end of the lease term, depreciation is provided over the shorter of the lease term and the useful life of the leased assets.

21. Constructions in progress

The company is required to comply with the disclosure requirements of the Shenzhen Stock Exchange Industry Information Disclosure Guidelines No. 2 – Listed Companies Engaged in Solid Mineral Resources Related Business

(1) Initial determination of construction in progress

The self-constructed constructions in progress of the company are measured at actual cost, which consist of the necessary expenses required for bringing such constructions to the expected useable conditions including the cost of construction materials, labor costs, relevant taxes and fees paid, borrowing expenses to be capitalized and indirect costs to be apportioned.

— II-82 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(2) Criteria and timing for conversion of construction in progress into fixed assets

The total expenditure incurred before the construction in progress project is constructed to reach the intended usable condition shall be recorded as the carrying value of the fixed assets. For the construction in progress built which has reached the intended usable condition, but has not yet completed the final accounts, since the date of reaching expected use condition, according to the project budget, cost or actual project costs, it shall be converted into fixed assets at the estimated value, and fixed assets shall be depreciated in accordance with the depreciation policy of the company for fixed assets. After the completion of the final accounts, the original estimated value shall be adjusted according to the actual cost, but the original depreciation amount shall not be adjusted.

22. Borrowing expenses

(1) Principles of recognizing capitalization of borrowing expenses

The borrowing expenses of the company directly attributable to the construction or production of an asset meeting capitalization conditions are capitalized and recognized in relevant asset costs; other borrowing expenses are recognized as expenses based on the amount incurred and recognized in profit or loss for the period.

An asset that meets the capitalization conditions refers to fixed assets, real estate investments and inventories that require a considerable amount of time for construction or production to reach the expected usable or saleable condition.

Borrowing expenses are capitalized when all of the following conditions are met:

① the asset expense has occurred, which includes expenses in the form of cash paid, non-monetary asset transferred or interest-bearing obligations assumed for the construction or product of an asset that meets capitalization conditions;
② the borrowing expenses have occurred;
③ the necessary construction or production activities for bringing the asset to the expected usable or saleable conditions have started.

— II-83 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(2) Capitalization period of borrowing expenses

Capitalization period refers to the time starting from the borrowing expenses are capitalized to the time capitalization is stopped, except for the period which capitalization of borrowing expenses is suspended. When the construction or production of an asset meeting capitalization conditions has reached expected useful or saleable conditions, the capitalization of borrowing expenses is stopped.

When a portion of the construction or production of an asset meeting capitalization conditions has completed and can be used individually, the capitalization of borrowing expenses of such portion of asset is stopped.

When portions of the construction or production of an asset have been completed but will only become useful or saleable after the entire asset is completed, the capitalization of borrowing expenses is stopped when the entire asset is completed.

(3) Suspension of capitalization period

Capitalization of borrowing expenses is suspended when any abnormal interruption continues for over three months during the construction or production of an asset that meets capitalization conditions. If such interruption is a necessary procedure for the construction or production of the asset that meets capitalization conditions, the borrowing expenses are continued to be capitalized. The borrowing expenses incurred during the interruption are recognized as profit or loss for the period, and capitalization of borrowing expenses continues when the construction or production activities of the asset resumes.

(4) Calculation of capitalized amount of borrowing expenses

Interest expenses of special loans (net of interest income from unutilized loans deposited in bank or investment gain earned from temporary investment) and supplementary expenses incurred for the construction or production of asset that meets capitalization conditions before the asset reaches expected useable or saleable condition are capitalized.

The interest amount that should be capitalized on normal borrowings is calculated based on the weighted average of expenses of the aggregate asset exceeding the expenses of the portion of special loan multiplied by the capitalization ratio of the normal borrowings utilized. Capitalization ratio is calculated based on normal weighted average interest rate.

When there is discount or premium in the loan, the discount or premium to be amortized in each accounting period is determined using effective interest method and the interest amount for each period is adjusted.

— II-84 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

23. Intangible assets

Intangible assets refer to the identifiable non-monetary assets owned or controlled by the company which have no physical form, including patent rights, non-patent technologies, trademark rights, copyrights, land use rights, geological achievements (mining rights), exploration and development expenditures and others.

(1) Initial measurement of intangible assets

The cost of externally purchased intangible assets includes the purchase price, relevant taxation and other expenses directly attributable to bringing the asset to expected usage. If payment for the price of intangible assets purchased is delayed beyond normal credit conditions and is in fact financing in nature, the cost of the intangible asset is determined based on the present value of the purchase price.

For intangible asset obtained through debt restructuring for offsetting the debt of the debtor, the entry value of the intangible asset is determined based on its fair value, and the difference between the carrying amount of the restructured debt and the fair value of the intangible asset used for offsetting the debt is recognized in profit or loss for the period.

The entry value of intangible asset received in an exchange for non-monetary asset is based on the fair value of the asset surrendered, provided that the asset received in exchange for non-monetary asset has a commercial substance and the fair value of both the asset received and the asset surrendered can be reliably measured, except there is definite evidence that the fair value of the asset received is more reliable; for exchange of non-monetary asset that cannot satisfy the above conditions, the cost of the intangible asset received is based on the carrying amount of the asset surrendered and the amount of relevant taxation payable, and no profit or loss is recognized.

For intangible asset obtained through business absorption or combination of entities under common control, the entry value is determined by the carrying amount of the combined party; for intangible asset obtained through business absorption or merger of entities not under common control, the entry value is determined by the fair value of the intangible asset.

The cost of an internally developed intangible asset include: the materials consumed in developing the intangible asset, labor costs, registration fees, amortization of other patented rights and licensed rights used during the development process, interest expenses meeting capitalization conditions, and other direct costs for bringing the intangible asset to expected usage.

— II-85 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(2) Subsequent measurement of intangible assets

The company determines the useful life of intangible assets on acquisition, which are classified as intangible assets with limited useful life and indefinite useful life.

1) Intangible assets with a limited useful life

Intangible assets with a limited useful life are amortised using straight line method over the term during which they bring economic benefits to the company. The company’s geological achievements (mining rights) are amortised under the production method from the commencement of mining at the relevant mine.

The estimated useful life and basis for the intangible assets with a limited life are as follows:

Item	Estimated useful life	Basis
Land use right	7-50 years	Title certificate
Software	5-10 years	Benefit period

The useful life and amortisation method of intangible assets with limited life are re-assessed at the end of each period. If there are differences from the original estimates, corresponding adjustments are made.

2) Intangible assets with indefinite useful life

If the term of economic benefit the intangible asset can bring to the company cannot be estimated, it is deemed to be an intangible asset with indefinite life.

Intangible assets with indefinite useful life are not amortized during the holding period. The useful life of intangible assets with indefinite life is re-assessed at the end of each period. If it is re-assessed to remain indefinite at the end of the period, impairment tests shall be conducted during each accounting period.

24. Exploration and development expenses

Exploration and development expenses refer to expenses incurred in detailed investigation and exploration in geological exploration activities, with mining areas as accounting objects.

— II-86 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

In the process of detailed investigation and exploration, if the company determines that no economically recoverable reserves are found in the activity after the completion of drilling and pitting, it shall be directly expensed; if it is determined that the activity has found proved economically recoverable reserves, the exploration and development expenses incurred shall be capitalized.

Where it is not certain that the exploration activity has discovered proved economically recoverable reserves, it shall be temporarily capitalised upon completion. Capitalised expenses on exploration continues to be temporarily capitalised and is otherwise included in profit or loss for the period if the discovery of proved economically recoverable reserves is uncertain at the end of the duration of the mineral rights and the following conditions are met: (1) sufficient reserves have been found in the exploration, but whether they belong to the proved economically recoverable reserves shall be determined; the exploration also requires further exploration activities, which are in progress or clearly planned and will be implemented; (2) the management judges that there are exploration prospects and that the mining right can be renewed normally.

25. Impairment of long-term assets

The long-term assets mentioned in this item mainly include non-current non-financial assets such as fixed assets, construction in progress, intangible assets with a limited life, investment properties measured by cost model, and long-term equity investments in subsidiaries, joint ventures, and associates.

The company makes a judgment on whether there is any sign of possible long-term assets impairment on the balance sheet date. Where there is any evidence indicating a possible impairment of assets, the company shall, on the basis of single item assets, estimate the recoverable amount. Where it is difficult to do so, it shall determine the recoverable amount of the group assets on the basis of the asset group to which the asset belongs.

The estimate of the recoverable amount of the assets are determined at the higher of the net amount of the fair value less the disposal expenses and the present value of the estimated future cash flows.

Where the measurement result of the recoverable amount indicates that the recoverable amount of the long-term asset is lower than its carrying value, the carrying value of the asset shall be recorded down to the recoverable amount, and the reduced amount shall be recognized as the loss of asset impairment and be recorded as the profit or loss for the current period. Simultaneously, a provision for the asset impairment shall be made accordingly. Once the asset impairment loss is recognized, it will not be reversed for the value recovered in the subsequent periods.

After the loss of asset impairment has been recognized, the depreciation or amortization expenses of the impaired asset shall be adjusted accordingly in the future periods so as to amortize the post-adjustment carrying value of the asset systematically (deducting the expected net salvage value) within the residual service life of the asset.

— II-87 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

No matter whether there is any sign of possible assets impairment, the business reputation formed by the merger of enterprises and intangible assets with uncertain service lives shall be subject to impairment test every year.

In the impairment test of goodwill, the carrying value of goodwill would be apportioned to asset group or portfolio of asset group expected to benefit from the synergy effect of an enterprise merger. When taking an impairment test on the relevant asset group or portfolio of asset group containing goodwill, if there is a sign of impairment on the asset group or portfolio of asset group related to the goodwill, the company first calculates the recoverable amount after testing the asset group or portfolio of asset group which does not contain the goodwill for impairment, and then compares it with the related carrying value to recognise the corresponding impairment loss. Next, the company conducts an impairment test on the asset group or portfolio of asset group which contains the goodwill and compares the carrying value of the related asset group or portfolio of asset group (carrying value includes the share of goodwill) with the recoverable amount. If the recoverable amount of the related asset group or portfolio of asset group is lower than the carrying value, the company will recognise the impairment loss of goodwill.

26. Long-term deferred expenses

Long-term deferred expenses refer to expenses that have already been spent by the company, but shall be amortised in the current period and the future periods and the benefit period is over 1 year. Long-term deferred expenses are amortised on a straight-line basis over benefit period.

27. Contract Liability

Contract Liability refers to the company’s obligation to transfer goods to the customer for the consideration received or receivable.

28. Employee Remuneration

Employee remuneration refers to all kinds of remunerations and other relevant reimbursements made by the company to its employees in exchange for services of said employees or for termination of labor relation, including short-term employee remuneration, post-employment benefits, termination benefits and other long-term employee benefits.

(1) Accounting treatment of short-term remuneration

Short-term remuneration refers to the employee compensation other than post-employment benefits and termination benefits, which are required to be fully paid within 12 months upon the end of the annual reporting period when the employees provide relevant services. During the accounting period when the employees provide services, the company recognizes the short-term remuneration payable as liabilities and includes them into relevant asset costs and expenses according to benefits from the services provided by employees.

— II-88 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(2) Accounting treatment of post-employment benefits

Post-employment benefit refers to all kinds of remunerations and benefits other than short-term remuneration and termination benefits that are provided by the company after the retirement of the employees or termination of labor relation with enterprises in exchange for services provided by employees.

The post-employment benefits of the company are categorized as defined contribution plans and defined benefit plans.

The defined contribution plans under the post-employment benefits are mainly for the participation in the social basis endowment insurance and unemployment insurance organized and carried out by local labor and social guarantee authorities. During the accounting period when the employees provide services for the Company, the payable amount of defined contribution plans is recognized as liabilities and included in current profit or loss or relevant costs of assets.

The defined benefit plans under the post-employment benefits are mainly well-defined standard additional benefits paid to the retirees, living expenses paid for the bereaved family members of the deceased employees, etc. For the obligations undertaken in the defined benefit plans, independent actuaries shall use the expected cumulative welfare unit method to conduct actuarial calculations on the balance sheet date, and attribute the welfare obligations arising from the defined benefit plans to the period during which employees provide services, and include them in profit or loss for the period or related asset costs. Of them, unless other accounting standards require or allow employee benefits costs to be included in assets costs, service costs of the defined benefit plans and net interest on net liabilities or net assets of the defined benefit plans are included in the current profit and loss during the period in which they occur; changes arising from the remeasurement of net liabilities or net assets in the defined benefit plans are included in other comprehensive income during the period in which they occur, which is not allowed to be reversed to profit or loss in subsequent accounting periods.

(3) Accounting treatment of termination benefits

Termination benefit refers to indemnity provided by the company for employees for the purpose of terminating labor relation with the employees before the expiry of the labor contract or encouraging employees to accept downsizing voluntarily. When the earlier of the company cannot unilaterally withdraws the employment relations or cut-down proposals and the date of confirmation of relevant cost and expenses on paying termination benefits, those liabilities arising from the confirmed terminations is charged to profit or loss for the period.

— II-89 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(4) Accounting treatment of other long-term employee benefits

Other long-term employee benefits refer to all the employee compensations other than short-term remuneration, post-employment benefits and termination benefits.

For other long-term employee benefits qualified for defined contribution plans, during the accounting period when the employees provide services for the company, the amount payable is recognized as liabilities and included in current profit and loss or relevant asset cost.

29. Estimated liabilities

(1) Criteria for recognition of estimated liabilities

The company recognises an estimated liability when the obligations associated with the contingency simultaneously meet the following conditions:

The obligation is a present obligation of the company;

Fulfilment of this obligation is likely to result in outflow of economic benefits from the company;

The amount of the obligation can be measured reliably.

(2) Measurement of estimated liabilities

The company’s estimated liabilities are initially measured using the best estimate of the expenditure necessary to meet the relevant present obligations.

In determining the best estimate, the company considers factors such as risks, uncertainties and time value of money relating to contingencies. Where the effect on the time value of money is material, the best estimate is determined by discounting the related future cash outflows.

The best estimates are dealt with as follows:

Where there is a continuous range (or interval) of expenditures required and the probabilities of various outcomes within that range are the same, the best estimate is determined based on the median of that range, which is the average of the upper and lower amounts.

— II-90 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

amount; if the contingency involves more than one item, the best estimate is determined by calculating the various possible outcomes and the associated probabilities.

Where all or part of the expenses required by the company to settle the estimated liabilities are expected to be compensated by a third party, the amount of compensation is recognised separately as an asset when it is substantially certain that it will be received, and the amount of compensation recognised does not exceed the carrying amount of the estimated liabilities.

30. Revenue

The company’s revenue is mainly derived from the sale of commodities and metal trading.

(1) General principles for revenue recognition

The company recognises revenue at the transaction price allocated to a contractual performance obligation when the customer obtains control of the related goods or services.

A performance obligation is a contract whereby the company conveys a clearly identifiable good or service to a customer.

Obtaining control over the relevant commodity means being able to dominate the use of the commodity and obtain substantially all of the economic benefits therefrom.

The company assesses a contract at the commencement date of the contract, identifies each individual performance obligation contained in the contract, and determines whether each individual performance obligation is performed within a time period or at a point in time. A performance obligation that is performed within a certain period of time if one of the following conditions is met, and the company recognises revenue over a period of time based on the performance schedule: ① the customer obtains and consumes the economic benefits brought about by the company’s performance while the company performs; ② the customer is able to control the goods under construction during the company’s performance; ③ commodities produced in the course of the company’s performance have an irreplaceable use and the company is entitled to payment for the performance completed to date accumulated throughout the contract period. Otherwise, the company recognises revenue at a point in time when the customer obtains control of the related goods or services.

— II-91 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

value of the goods transferred to the customer (the input method determines the performance progress based on the company’s inputs to fulfill the performance obligations). When the performance schedule cannot be reasonably determined, if the company expects to be compensated for the costs already incurred, revenue is recognised based on the amount of costs already incurred until the performance schedule can be reasonably determined.

(2) Specific method of revenue recognition

31. Government subsidies

(1) Classification

Government subsidies refer to monetary and non-monetary assets received from the government without compensation. According to the subsidy object stipulated in the documents of relevant government, government subsidies are divided into subsidies related to assets and subsidies related to revenue.

Government subsidies related to assets are obtained by the company for the purposes of constructing or forming long-term assets in other ways. Government subsidies related to revenue refer to the government subsidies other than those related to assets.

(2) Recognition of government subsidies

Where evidence shows that the company complies with relevant conditions of policies for financial supports and are expected to receive funds at the end of the period, the amount receivable is recognized as the government subsidies. Otherwise, the government subsidy is recognized upon receipt.

Government subsidies in the form of monetary assets are stated at the amount received or receivable. Government subsidies in the form of non-monetary assets are measured at fair value; if fair value cannot be reliably obtained, a nominal amount (RMB1) is used. Government subsidies that are measured at nominal amount shall be recognized in profit or loss for the period directly.

(3) Accounting treatment

The company determines whether a class of government subsidy business should be accounted for using the gross method or the net method

— II-92 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

based on the substance of the economic business. Generally, the company selects only one approach for same or similar government-subsidized business and applies that approach consistently to that business.

Government subsidies related to assets should be written down against the carrying amount of the related assets or recognised as deferred income. Government subsidies relating to assets that are recognised as deferred income are credited to profit or loss in a reasonable and systematic manner over the useful lives of the assets constructed or purchased.

Government subsidies related to revenue aimed at compensating for relevant expenses or losses to be incurred by the enterprise in subsequent periods are recognized as deferred income once received, and are recognized in the current profit or loss or offset against related costs in the periods when relevant expenses or losses are recognized. Government subsidies aimed at compensating for relevant expenses or losses the enterprise that are already incurred are directly included in the current profit or loss or offset against related costs once received.

Government subsidies related to daily activities of enterprises are included in other income or offset against related costs and expenses; government subsidies that are not related to daily activities of enterprises are included in non-operating income and expenditure.

The government subsidy related to the discount interest received from policy-related preferential loans offsets the relevant borrowing costs; if the policy-based preferential interest rate loan provided by the lending bank is obtained, the borrowing amount actually received shall be taken as the recording value of the borrowings, and borrowing cost should be calculated using the preferential interest rate according to the loan principal and the policy.

When it is required to return recognized government subsidy, the carrying amount of the relevant assets is written down on initial recognition, and the carrying amount of the assets is adjusted. If there is relevant balance of deferred income, it shall be written down to relevant book value of relevant deferred income, and the excess is included in current profit or loss; where there is no relevant deferred income, it shall be directly included in current profit or loss.

32. Deferred income tax assets / deferred income tax liabilities

Deferred income tax assets and deferred income tax liabilities are measured and recognized based on the difference (temporary difference) between the taxable base of assets and liabilities and book value. On the balance sheet date, the deferred income tax assets and deferred income tax liabilities are measured at the applicable tax rate during the period, when it is expected to recover such assets or repay such liabilities.

— II-93 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(1) Criteria for recognition of deferred income tax assets

The company recognizes deferred income tax assets arising from deductible temporary difference to the extent it is probably that future taxable amount will be available against which the deductible temporary difference can be utilized, and deductible losses and taxes can be carried forward to subsequent years. However, the deferred income tax assets arising from the initial recognition of assets or liabilities in transactions with the following features are not recognized: ① the transaction is not a business combination; or ② neither the accounting profit or the taxable income or deductible losses is affected when the transaction occurs.

For deductible temporary difference in relation to investment in the associates, corresponding deferred income tax assets are recognized in the following conditions: the temporary difference is probably reversed in a foreseeable future and it is likely that taxable income is obtained for deduction of the deductible temporary difference in the future.

(2) Criteria for recognition of deferred income tax liabilities

The company recognizes deferred income tax liabilities on the temporary difference between the taxable but not yet paid taxation in the current and previous periods, excluding:

① temporary difference arising from the initial recognition of goodwill;
② transactions or events arising from no business combination, and neither the accounting profit or the taxable income (or deductible losses) is affected when the transaction or event occurs;
③ for taxable temporary difference in relation to investment in subsidiaries or associates, the time for reversal of the difference can be controlled and the difference is probably not reversed in a foreseeable future.
(3) Deferred income tax assets and deferred income tax liabilities are presented net of offset when the following conditions are met:
① The enterprise has the legal right to settle the current income tax assets and current income tax liabilities on a net basis;
② Deferred income tax assets and deferred income tax liabilities are related to income taxes levied by the same tax administration department on the same taxable entity or different taxable entities, however, in the future period when each significant deferred income tax asset and deferred income tax liability are transferred back, the taxable entities involved intend to settle the current income tax assets and current income tax liabilities on a net basis or acquire assets and settle debts simultaneously.

— II-94 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

33. Leasing

If the terms of the lease substantially transfer to the lessee all the risks and rewards associated with ownership of the leased asset, the lease is a finance lease and other leases are operating leases.

(1) Accounting treatment of operating lease
① Operating lease assets

The lease fee paid by the company for leasing assets shall be amortized on a straight-line basis during the entire lease period without deducting the rent-free period, and included in current expenses. The initial direct expenses paid by the company related to the leasing transaction shall be included in the current expenses.

When the lessor of the asset assumes the lease-related expenses that should be borne by the company, the company deducts the part of the expenses from the total rental amount, and the deducted rental expenses are apportioned during the lease term and included in the current expenses.

② Operating leased assets

The lease fees received by the company for renting assets are apportioned on a straight-line basis over the entire lease term without deducting the rent-free period and are recognized as lease income. The initial direct expenses related to lease transactions paid by the company are included in the current expenses; if the amount is larger, they are capitalized and are recorded in the current period in stages on the same basis as the recognition of lease income during the entire lease period.

When the company assumes the lease-related expenses that should be borne by the lessee, the company deducts the expenses from the total amount of rental income and allocates the deducted rental expenses during the lease period.

(2) Accounting treatment of finance lease
① Assets acquired under financing leases: On the lease starting date, the company takes the lower of the fair value of the leased assets and the current value of the minimum lease payments as the entry value of the leased assets, and regards the minimum lease payments as the entry value of long-term payables and the difference as unrecognized financing expenses. For details of the basis for the identification, valuation and depreciation of the finance leased assets, see Note V. 20. Fixed assets.

— II-95 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

The company adopts the actual interest rate method to amortize the unrecognized financing expenses during the asset lease period and count it into financial expenses.

② Assets leased out under financing leases: The company recognizes the finance lease receivables on the lease starting date. The difference between the sum of the unguaranteed residual values and its current value is recognized as unrealized financing income. It is recognized as rental income over the period when rental is received in the future. The initial direct costs incurred by the company in relation to the lease transaction are included in the initial measurement of the finance lease receivable, and the amount of revenue recognized in the lease period is reduced.

34. Other important accounting policies and accounting estimates

  - (1) Hedge accounting

In order to reduce the impact of commodity price fluctuations in spot operations on the business, the company makes full use of hedging function of the financial derivatives market, and carries out daily accounting of the hedging business according to the provisions of the Accounting Standards for Business Enterprises No. 24 – Hedge Accounting. According to the hedging relationship, the company divides hedging into fair value hedging and cash flow hedging.

A. The hedge accounting method is applied for hedging instruments that meet the following conditions at the same time
① The hedging relationship consists only of qualified hedging instruments and hedged items.
② At the beginning of hedging, the company officially designated the hedging instrument and the hedged item, and prepared written documents on the hedging relationship, the risk management strategy and objectives of the hedging.
③ The hedging relationship meets the requirements for hedging effectiveness.

If the hedging meets the following conditions at the same time, the hedging relationship is deemed to meet the requirements of hedging effectiveness:

1) There is an economic relationship between the hedged item and the hedging instrument. The economic relationship makes changes in the

— II-96 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

opposite direction in the value of the hedging instrument and the hedged item due to their exposure to the same hedged risk.

  - 2) The effect of credit risk does not dominate the value changes arising from the economic relationship between the hedged item and the hedging instrument.

  - 3) The hedge ratio of the hedging relationship is equal to the ratio of the quantity of hedged items actually hedged by the company to the actual quantity of hedging instruments used to hedge them, which however does not reflect an imbalance in the relative weights of hedging items and hedging instruments, which will lead to ineffective hedging and may produce accounting results that are inconsistent with the objectives of hedge accounting.

B. Fair value hedge accounting
① Gain or loss from hedging instruments is included in profit and loss for the period. If the hedging instrument is used to hedge a non-trading equity instrument investment (or its component) that is measured at fair value through other comprehensive income, the gain or loss arising from the hedging instrument is included in other comprehensive income.
② The gain or loss of the hedged item due to the hedged risk exposure is included in profit or loss for the period, and the carrying amount of the recognized hedged item that is not measured at fair value is adjusted at the same time. If the hedged item is a financial asset (or its component) measured at fair value through other comprehensive income, the gain or loss arising from the hedged risk exposure is included in profit or loss for the period, and its carrying amount has been measured at fair value and no adjustment is required. If the hedged item is a non-trading equity instrument investment (or its component) that the company chooses to measure at fair value through other comprehensive income, the gain or loss arising from the hedged risk exposure is included in other comprehensive income, and its carrying amount has been measured at fair value and no adjustment is required.

— II-97 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

liability, and the related gain or loss is included in profit or loss for each respective period. When an asset is acquired or a liability is assumed for the performance of the firm commitment, the initially recognized amount of the asset or liability is adjusted to include the accumulated changes in the fair value of the hedged item that has been recognized.

③ If the hedged item is a financial instrument (or its component) measured at amortized cost, the adjustment to the carrying amount of the hedged item shall be amortized according to the actual interest rate recalculated on the date when the amortization starts, and included in profit or loss for the period. The amortization can start from the adjustment date, but not later than the time point of termination of the adjustment to hedging gain and loss on the hedged item. If the hedged item is a financial asset (or its component) measured at fair value through other comprehensive income, the accumulated hedging gain or loss recognized shall be amortized in the same way and included in profit or loss for the period, but the carrying amount of the financial asset (or its component) will not be adjusted.
C. Cash flow hedge accounting
① The part of gain or loss generated by the hedging instrument that is effective in hedging is included in other comprehensive income as the cash flow hedging reserve. The amount of cash flow hedging reserve shall be determined at the lower of absolute amounts of the following:
- 1) The cumulative gain or loss of the hedging instrument since the beginning of hedging;
- 2) The cumulative changes in the present value of estimated future cash flow of the hedged item since the beginning of hedging. The amount of cash flow hedge reserve included in other comprehensive income in each period is the change in cash flow hedging reserve for the period.
② The part of the gain or loss generated by the hedging instrument that is ineffective in hedging (that is, other gain or loss after deducting other comprehensive income) shall be included in profit or loss for the period.

— II-98 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

③ The amount of cash flow hedging reserve shall be accounted for in accordance with the following requirements:
- 1) The hedged item is an expected transaction, and the expected transaction causes the company to subsequently recognize a non-financial asset or non-financial liability, or the expected transaction of a non-financial asset or a non-financial liability forms a firm commitment applicable to fair value hedge accounting, the cash flow hedging reserve amount originally recognized in other comprehensive income shall be transferred out and included in the initially recognized amount of the asset or liability.
- 2) For cash flow hedges that are not involved in the previous requirement, during the same period when the hedged expected cash flow affects profit and loss, the cash flow hedging reserve amount originally recognized in other comprehensive income is transferred out and included in profit and loss for the period.
- 3) If the cash flow hedging reserve amount recognized in other comprehensive income is a loss, and all or part of the loss is not expected to be covered in future accounting periods, in such case, the part that is not expected to be covered will be transferred out from other comprehensive income and included in profit and loss for the period.
D. Termination of hedge accounting

In case of any of the following circumstances, the use of hedge accounting shall be terminated:

① The hedging relationship no longer satisfies the risk management objectives due to changes in risk management objectives.
② The hedging instrument has expired, been sold, terminated or exercised.
③ The economic relationship between the hedged item and the hedging instrument no longer exists, or the effect of credit risk begins to dominate the value changes arising

— II-99 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

from the economic relationship between the hedged item and the hedging instrument.

④ The hedging relationship no longer satisfies other conditions for applying the hedging accounting method stipulated in this standard. When the rebalancing of the hedging relationship is applicable, the enterprise should first consider the rebalancing of hedging relationship, and then evaluate whether the hedging relationship meets the conditions for applying the hedge accounting method stipulated in this standard.

The termination of hedge accounting may affect the whole or part of the hedging relationship, and when only a part of it is affected, the remaining unaffected part is still applicable to hedge accounting.

E. Fair value options for credit risk exposure

When a credit derivative at fair value through profit or loss is used to manage the credit risk exposure of a financial instrument (or its component), when the financial instrument (or its component) is initially recognized, in the subsequent measurement or before it is recognized, it is designated as a financial instrument measured at fair value through profit or loss for the period, and a written record is made also, but should meet the following conditions simultaneously:

① The subject of credit risk exposure of the financial instrument (such as the borrower or holder of the loan commitment) is consistent with that involved in credit derivative instrument;
② The repayment level of the financial instrument is consistent with that of the instruments to be delivered according to the terms of credit derivative instrument.

(2) Safety production fee

The safety production fee set aside by the company in accordance with national regulations is included in the cost of related products or profit and loss for the period, and is also recorded in the “special reserve” item. When using the set aside safety production fee, if it is an expensed expenditure, it shall be directly offset against the special reserve. If it forms a fixed asset, the expenditures incurred are collected under the “construction in progress” item, and it is recognized as a fixed asset when the project is completed and reaches the intended usable state. At the same time, the cost of forming the fixed asset is offset against the special reserve, and the accumulated depreciation of the same amount is recognized. The fixed assets will not be depreciated in the subsequent periods.

— II-100 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

The company’s provision standard for special reserve is: RMB5/ton for open-pit mines, RMB10/ton for underground mines, and RMB1.0-1.5/ton for tailings safety production fees.

(3) Treasury shares

According to the relevant provisions of the Company Law, if the company’s shares are repurchased, the amount actually paid should be regarded as treasury shares and registered for reference. If the shares repurchased are cancelled, the difference between the total face value of shares calculated as per the face value and number of the shares cancelled and the amount actually paid for repurchase should be used to write down the capital reserve. If the capital premium is insufficient for writing down, the retained earnings should be written down. If the repurchased shares used for equity incentives are equity-settled share-based payment, the amount determined based on actual exercise of options shall be written off against the cost of delivery of treasury shares and the accumulative amount of capital reserve (other capital reserves) in the vesting period, and the capital reserve (share premium) shall be adjusted according to the difference. If the repurchased shares used for employee stock ownership plan involves no share-based payment, the treasury shares will be directly offset when the price is received. If the enterprise holds treasury shares and then resells, all the considerations received will be recognized in equity to reduce the book value of treasury shares, and the capital reserve (share premium) shall be adjusted according to the difference. If the share premium is insufficient, the retained earnings should be written down.

The company shall comply with disclosure requirements of the Shenzhen Stock Exchange Industry Information Disclosure Guidelines No. 2 – Listed Companies Engaging in Solid Mineral Resources-related Business 《深圳證券交易所行業信息披露指引第( 2號－上市公司從事固體礦產資源相關業務》).

35. Changes in important accounting policies and accounting estimates

(1) Changes in important accounting policies
- ✔ Applicable □ N/A

Contents and reasons for changes in accounting policies

Approval procedure

Remark

The company has implemented the Accounting Standards for Business Enterprises No. 14 – Revenue revised by the Ministry of Finance in 2017 from 1 January 2020
Considered and approved by the board of directors and the board of supervisors on 21 February 2020

— II-101 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

The impact of implementing new revenue standard on the company:

The company has implemented the Accounting Standards for Business Enterprises No. 14 – Revenue 《企業會計準則第( 14號－收入》) revised by the Ministry of Finance in 2017 from 1 January 2020. For details of the revised accounting policies, please refer to Note V.30. Revenue.

According to transitional provisions of the new revenue standard, the amount of retained earnings and other related financial statements items at the beginning of the period of first implementation of the standard (1 January 2020) shall be adjusted against the accumulative impact of the first implementation of the standard, and the information for the comparable period will not be adjusted.

The implementation of the new revenue standard did not lead to major changes in the company’s revenue recognition method, and this change in accounting policy will not affect the relevant financial data for 2019.

(2) Changes in important accounting estimates
Applicable ✔ N/A
(3) Explanation on adjusting relevant financial statement items for the year of the first implementation of new revenue standard and new lease standard from 2020

Applicable

Is it necessary to adjust the balance sheet items at the beginning of the year

✔ Yes □ No

— II-102 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Consolidated Balance Sheet

Unit: RMB

Item Current assets: Monetary funds Settlement reserves funds Placements with banks and other financial institutions Financial assets held for trading Derivative financial assets Bills receivable Accounts receivable Receivables financing Prepayments Premiums receivable Reinsurance accounts receivable Reinsurance contract reserves receivable Other receivables Of which: Interest receivable Dividends receivable Financial assets purchased under agreements to resell Inventory Contract assets Assets held for sale Non-current assets due within one year Other current assets Total current assets	31 December 2019 311,060,538.57 501,201,536.40 136,388,500.71 40,045,700.78 23,837,821.75 13,513,479.73 1,064,917,555.82 70,059,644.21 2,161,024,777.97	1 January 2020 Adjustment 311,060,538.57 501,201,536.40 136,388,500.71 40,045,700.78 23,837,821.75 13,513,479.73 1,064,917,555.82 70,059,644.21 2,161,024,777.97

— II-103 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Item

31 December 2019 1 January 2020 Adjustment

Non-current assets: Loans and advances to customers Debt investment Other debt investments Long-term receivables Long-term equity investment Investment in other equity instruments Other non-current financial assets Investment property Fixed assets Construction in progress Productive biological assets Oil and gas assets Right-of-use asset Intangible assets Development expenditure Goodwill Long-term prepaid expenses Deferred income tax assets Other non-current assets Total non-current assets Total assets	4,082,900.00 25,803,885.24 2,527,186,463.13 472,194,944.49 5,460,381,600.77 452,365,699.74 30,259,112.72 107,491,791.48 645,002,524.19 9,724,768,921.76 11,885,793,699.73	4,082,900.00 25,803,885.24 2,527,186,463.13 472,194,944.49 5,460,381,600.77 452,365,699.74 30,259,112.72 107,491,791.48 645,002,524.19
		9,724,768,921.76

		11,885,793,699.73

— II-104 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Item Current liabilities: Short-term borrowing Borrowing from the central bank Placements from banks and other financial institutions Financial liabilities held for trading Derivative financial liabilities Bills payable Accounts payable Advance payment Contract liabilities Financial assets sold under repurchase agreements Receipts of deposits and deposits from other banks Brokerage for trading securities Amount paid for agency securities underwriting Employee remuneration payable Taxes payable Other payables Of which: Interest payable Dividends payable Fees and commissions payable Reinsurance accounts payables Liabilities held for sale Non-current liabilities due within one year Other current liabilities Total current liabilities	31 December 2019 296,014,423.33 260,000,000.00 203,797,598.88 27,668,010.07 49,692,721.98 65,241,656.39 159,146,283.75 8,476,720.00 1,070,037,414.40	1 January 2020 296,014,423.33 260,000,000.00 203,797,598.88 24,484,964.66 49,692,721.98 65,241,656.39 159,146,283.75 8,476,720.00 3,183,045.41 1,070,037,414.40	Adjustment -27,668,010.07 24,484,964.66 3,183,045.41

— II-105 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Item Non-current liabilities: Reserves for insurance contracts Long term borrowing Bonds payable Of which: Preferred shares Perpetual bonds Lease liability Long-term payables Long-term employee remuneration payable Estimated liabilities Deferred income Deferred income tax liabilities Other non-current liabilities Total non-current liabilities Total liabilities	31 December 2019 234,929,916.67 25,430,160.00 36,579,567.93 478,800.00 392,858,942.29 14,248,463.35 704,525,850.24 1,774,563,264.64	1 January 2020 Adjustment 234,929,916.67 25,430,160.00 36,579,567.93 478,800.00 392,858,942.29 14,248,463.35 704,525,850.24 1,774,563,264.64

— II-106 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Item Owners’ equity: Share capital Other equity instruments Of which: Preferred shares Perpetual bonds Capital reserve Less: Treasury shares Other comprehensive income Special reserve Surplus reserve Provision for general risk Undistributed profit Total equity attributable to owners of the parent company Minority interests Total owner’s equity Total liabilities and owner’s equity	31 December 2019 1,983,373,047.00 5,225,129,078.87 -25,390,064.89 27,226,568.71 430,418,353.66 1,406,894,608.22 9,047,651,591.57 1,063,578,843.52 10,111,230,435.09 11,885,793,699.73	1 January 2020 Adjustment 1,983,373,047.00 5,225,129,078.87 -25,390,064.89 27,226,568.71 430,418,353.66 1,406,894,608.22 9,047,651,591.57 1,063,578,843.52 10,111,230,435.09 11,885,793,699.73

Explanation of adjustments

— II-107 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Balance Sheet of the Parent Company

Unit: RMB

Item Current assets: Monetary funds Financial assets held for trading Derivative financial assets Notes receivable Accounts receivable Receivables financing Prepayments Other receivables Of which: Interest receivable Dividends receivable Inventory Contract assets Assets held for sale Non-current assets due within one year Other current assets Total current assets Non-current assets: Debt investment Other debt investment Long-term receivables Long-term equity investment Investment in other equity instruments Other non-current financial assets Investment property Fixed assets Construction in progress Productive biological assets Oil and gas assets Right-of-use assets Intangible assets Development expenditure Goodwill Long-term prepaid expenses Deferred tax assets Other non-current assets Total non-current assets Total assets	31 December 2019 50,568,085.63 101,000,000.00 1,497,032.30 1,336,023,281.79 12,853.57 1,489,101,253.29 7,535,036,559.55 12,000,000.00 1,580,293.26 1,936,831.30 19,381,930.08 600,000,000.00 8,169,935,614.19 9,659,036,867.48	1 January 2020 Adjustment 50,568,085.63 101,000,000.00 1,497,032.30 1,336,023,281.79 12,853.57 1,489,101,253.29 7,535,036,559.55 12,000,000.00 1,580,293.26 1,936,831.30 19,381,930.08 600,000,000.00 8,169,935,614.19 9,659,036,867.48

— II-108 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Item Current liabilities: Short-term borrowing Financial liabilities held for trading Derivative financial liabilities Bills payable Accounts payable Advance payment Contract liabilities Employee remuneration payable Taxes payable Other payables Of which: Interest payable Dividends payable Liabilities held for sale Non-current liabilities due within one year Liabilities Other current liabilities Total current liabilities Non-current liabilities: Long term borrowing Bonds payable Of which: Preferred shares Perpetual bonds Lease liability Long-term payables Long-term employee remuneration payable Estimated liabilities Deferred income Deferred income tax liabilities Other non-current liabilities Total non-current liabilities Total Liabilities	31 December 2019 149,688.83 2,757,693.59 2,539,487.42 902,262.98 6,349,132.82 234,929,916.67 234,929,916.67 241,279,049.49	1 January 2020 Adjustment 149,688.83 2,757,693.59 2,539,487.42 902,262.98 6,349,132.82 234,929,916.67 234,929,916.67 241,279,049.49

— II-109 —

APPENDIX II FINANCIAL INFORMATION OF THE TARGET COMPANY

Item 31 December 2019 1 January 2020 Adjustment Owners’ equity: Share capital 1,983,373,047.00 1,983,373,047.00 Other equity instruments Of which: Preferred shares Perpetual bonds Capital reserve 5,225,582,278.36 5,225,582,278.36 Less: Treasury shares Other comprehensive income 748.10 748.10 Special reserve Surplus reserve 417,144,099.36 417,144,099.36 Undistributed profit 1,791,657,645.17 1,791,657,645.17 Total owner’s equity 9,417,757,817.99 9,417,757,817.99 Total liabilities and owner’s equity 9,659,036,867.48 9,659,036,867.48

Total liabilities and owner’s equity

Explanation of adjustments

(4) Explanation on retroactively adjusting the comparative data in the prior period due to the first implementation of new revenue standard and new lease standard from 2020
Applicable ✔ N/A

— II-110 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

VI. TAXATION

1. Main Types of Taxes and Corresponding Rates

Tax type

VAT

Urban maintenance and construction tax Corporate income tax Education surcharge Local education fee surcharge Resource tax

Tax basis Tax rate Product sales revenue / 13%, 6%, 3% taxable service revenue VAT 1%-7% Taxable income 15%, 17%, 25% VAT 3% VAT 2%, 1% Sales revenue 5%, 4.5%, 4%, 3.5% for gold; 5%, 2.5%, 1.5% for silver; 6% for lead, zinc

Please make a disclosure if there are taxpayers with different corporate income tax rates

Name of taxpayer

Income tax rate

Yulong Mining, Qinghai Dachaidan Shenghong Singapore Other entities

15% 17% 25%

2. Tax Incentives

(1) Corporate income tax

According to the Notice on Tax Policy Issues Concerning the Deep Implementation of the Western Development Strategy jointly issued by the Ministry of Finance, the State Administration of Taxation, and the General Administration of Customs (Cai Shui [2011] No. 58), the Announcement of the State Administration of Taxation on Corporate Income Tax Issues Concerning the Deep Implementation of the Western Development Strategy (No. 12 of 2012 of the State Administration of Taxation) issued by the State Administration of Taxation on 6 April 2012, the corporate income tax can be paid at a reduced tax rate of 15%. The company’s subsidiary Yulong Mining and Qinghai Dachaidan were subject to the corporate income tax rate of 15% in 2020.

(2) VAT

According to the Notice on Gold Tax Policy Issues (Cai Shui [2002] No. 142) issued by the Ministry of Finance and the State Administration of Taxation, gold production and operation entities are exempt from VAT for sales of gold; member units of the Gold Exchange are exempted from VAT for selling standard gold through the Gold Exchange (holding the Gold Transaction Settlement Voucher issued by the Gold Exchange) without physical delivery; the VAT refund policy is implemented when physical delivery occurs, and urban maintenance and construction tax and education surcharges are exempted at the same time.

(3) Resource tax

— II-111 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Administration of Taxation, and the Jilin Provincial Department of Natural Resources, where an enterprise mines co-associated ore and the sales of co-associated ore and main mineral products are accounted for separately, the resource tax shall be reduced by 50% of the tax payable on the silver of co-associated ore.

According to the Decision of the Standing Committee of the People’s Congress of Heilongjiang Province on the Implementation of Authorized Matters of the Resource Tax Law promulgated by the Standing Committee of the People’s Congress of Heilongjiang Province, the resource tax shall be levied by taxpayers on the exploitation of co-associated ore and low-grade ore at a reduced rate of 50%, and the resource tax shall be exempted from the exploitation of tailings.

According to the Implementation Plan of Resource Tax Item Tax Rate and Preferential Policy of Qinghai Province jointly issued by Qinghai Provincial Department of Finance and Qinghai Provincial Tax Bureau of the State Administration of Taxation, where taxpayers mine and sell co-associated ore products, the sales of co-associated ore and main mineral products are accounted for separately, and the sales of co-associated ore products account for less than 20% (excluding) of the total sales of taxable mineral products in the current period, the resource tax shall be reduced by 50%.

VII. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS

1. Monetary Funds

Item Cash on hand Bank deposits Other monetary funds Total Including: Total amount deposited overseas Total amount of funds restricted for use due to mortgage, pledge or freezing	Closing balance 304,773.93 262,489,216.06 219,885,158.40 482,679,148.39 26,369,038.62 37,574,546.87	Unit: RMB Opening balance 699,154.43 274,823,796.86 35,537,587.28 311,060,538.57 3,579,570.61
		19,788,866.60

As of 31 December 2020, the company has no pledge or potential recovery risk. The breakdown of restricted monetary funds is as follows:

Item Environmental governance deposit Security deposit of futures companies Security deposit for bank acceptance ETC frozen funds Total	Closing balance 33,462,255.21 3,592,791.66 518,000.00 1,500.00 37,574,546.87	Opening balance 19,788,866.60
		19,788,866.60

— II-112 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Explanation:

Of the other monetary funds at the end of the period, RMB37,574,546.87 is restricted funds: RMB11,368,338.68 is the security deposit placed by the subsidiary Yulong Mining in the special account of Xilinhot Branch of the Bank of China according to the Supplementary Notice on Issues Related to the Registration of Mining Rights Concerning the Implementation of the Measures for the Administration of Deposit for Mining Geological Environment Improvement in the Inner Mongolia Autonomous Region (《關於執行〈內蒙古自治區礦山地質環境治理保證金管理辦法〉涉及採礦權登記有關問題的補充通知》)(Xi Guo Tu Zi Zi [2008] No. 143) issued by the West Ujimqin Banner Land and Resources Bureau; RMB11,142,119.12 is the environmental governance deposit placed in the bank by the subsidiary Qinghai Dachaidan; RMB5,808,537.81 is the geological environment protection deposit placed in the bank by the subsidiary Jilin Banmiaozi; RMB5,143,259.60 is the geological environment protection deposit placed in the bank by the subsidiary Heihe Yintai; RMB3,592,791.66 is the deposit placed by the subsidiary Shenghong Singapore in the futures company; RMB518,000.00 is the deposit for the bank acceptance bill placed in the bank by the subsidiary Yongheng Trading; RMB1,500.00 is the ETC frozen funds placed in the bank by the subsidiary Jilin Banmiaozi.

2. Financial Assets Held for Trading

Item Financial assets measured at fair value through profit or loss Of which: Wealth management products Total	Closing balance 1,535,264,849.67 1,535,264,849.67 1,535,264,849.67	Unit: RMB Opening balance 501,201,536.40 501,201,536.40
		501,201,536.40

Explanation: RMB447,000,000.00 in wealth management products is restricted assets, see Note 54 for details.

3. Derivative Financial Assets

Item Hedging instrument Derivative financial assets with no designated hedging relationship Total	Closing balance 70,246,083.57 29,619,661.79 99,865,745.36	Unit: RMB Opening balance 83,039,373.60 53,349,127.11
		136,388,500.71

— II-113 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

4. Accounts Receivable

(1) Disclosure by classification of accounts receivable

Unit: RMB

Opening balance Book balance Bad debt provision Amount Proportion Amount Proportion Carrying amount 42,153,369.24 100.00% 2,107,668.46 5.00% 40,045,700.78 42,153,369.24 100.00% 2,107,668.46 5.00% 40,045,700.78 42,153,369.24 100.00% 2,107,668.46 5.00% 40,045,700.78 basis: RMB2,540,519.28 Unit: RMB Closing balance	Opening balance Book balance Bad debt provision Amount Proportion Amount Proportion Carrying amount 42,153,369.24 100.00% 2,107,668.46 5.00% 40,045,700.78 42,153,369.24 100.00% 2,107,668.46 5.00% 40,045,700.78 42,153,369.24 100.00% 2,107,668.46 5.00% 40,045,700.78 basis: RMB2,540,519.28 Unit: RMB Closing balance
		Carrying amount 40,045,700.78 40,045,700.78
		40,045,700.78

Bad debt provision 2,540,519.28 2,540,519.28	Proportion 5.00%
	–

	Unit: RMB Book balance 50,810,385.53
	50,810,385.53

— II-114 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(2) Provision for, recovery or reversal of bad debts in the current period

Provision for bad debts in the current period:

Unit: RMB

Amount of change in the current period

Category Accounts receivable with provision for ECL on a group basis Total	Opening balance 2,107,668.46 2,107,668.46	Provision 432,993.49 432,993.49	Recovery or reversal Write off Others 142.67 142.67	Closing balance 2,540,519.28
				2,540,519.28

(3) Top five accounts receivable according to the closing balance collected by the debtor

Unit: RMB

Company name Henan Zhongyuan Gold Smelter Co., Ltd. (河南中原黃金冶煉廠有限責任公司) Shandong Hengbang Smelting Co., Ltd. (山東恒邦冶煉股份有限公司) Chifeng Shanjin Ruipeng Trading Co., Ltd. (赤峰山金瑞鵬貿易有限公司) Total	Closing balance of accounts receivable 36,921,476.63 13,792,117.80 96,791.10 50,810,385.53	Proportion to the total closing balance of accounts receivable Closing balance of provision for bad debts 72.67% 1,846,073.83 27.14% 689,605.89 0.19% 4,839.56 100.00%

— II-115 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

5. Advance Payment

(1) Breakdown of prepayments by aging

Unit: RMB

Aging Within 1 year 1 to 2 years 2 to 3 years Over 3 years Total	Closing balance Amount Proportion 26,038,337.56 96.85% 215,260.98 0.80% 47,818.64 0.18% 583,670.16 2.17% 26,885,087.34 –	Opening balance Amount Proportion 22,679,385.10 95.14% 509,051.77 2.14% 122,324.88 0.51% 527,060.00 2.21% 23,837,821.75 –	Opening balance Amount Proportion 22,679,385.10 95.14% 509,051.77 2.14% 122,324.88 0.51% 527,060.00 2.21% 23,837,821.75 –
			–

(2) Top five prepayments according to the closing balance collected by the debtor

Company name Wenzhou Tongye Construction Engineering Co., Ltd. (溫州通業建設工程有限公司) CITIC International Trading Co., Ltd. (中信國際商貿有限公司) State Grid Jilin Electric Power Co., Ltd. Baishan Power Supply Company (國網吉林省電力有限公司白山供電公司) Lanzhou Jinli Chemical Wool Textile Co., Ltd. (蘭州金利化工毛紡有限公司) Beijing Zhongan Huanyu Enterprise Management Consulting Co., Ltd. (北京中安寰宇企業管理諮詢有限公司) Total	Closing balance 8,954,844.79 6,161,656.54 5,944,259.99 625,000.00 550,000.00 22,235,761.32	Proportion of total prepayments Reasons for late settlement (%) 33.31 Cooperation project not completed 22.92 Purchase order not completed 22.11 Electricity needs to be paid in advance, billed once a month 2.32 Purchase order not completed 2.05 Purchase order not completed 82.71

— II-116 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

6. Other Receivables

Unit: RMB

Item

Other receivables

Total

Closing balance 20,886,951.58 20,886,951.58	Opening balance 13,513,479.73
	13,513,479.73

(1) Other receivables

1) Disclosure by aging

Unit: RMB

Aging Within 1 year 1–2 years 2–3 years 3–4 years 4–5 years Over 5 years Subtotal Less: Provision for bad debts Total	Closing balance 9,892,640.79 9,069,820.52 362,501.74 2,007,812.64 12,847.16 9,095,459.88 30,441,082.73 9,554,131.15 20,886,951.58	Opening balance 10,242,479.09 362,501.74 2,008,091.27 257,679.24 681,687.04 9,519,649.16 23,072,087.54 9,558,607.81
		13,513,479.73

2) Classification by the nature of payment

Unit: RMB

Nature of payment Current account Reserve fund Deposit and security deposit Advance payment Others Total	Closing balance 25,526,138.81 318,824.46 4,232,048.05 364,071.41 30,441,082.73	Opening balance 16,824,260.94 752,724.96 4,001,944.57 766,619.23 726,537.84
		23,072,087.54

— II-117 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

3) Disclosure by three stages of financial asset impairment

Unit: RMB

Item Stage I Stage II Stage III Total	Closing balance	Closing balance	Carrying amount 20,886,951.58 20,886,951.58	Opening balance	Opening balance
	Book balance 23,205,290.71 7,235,792.02 30,441,082.73	Bad debt provision 2,318,339.13 7,235,792.02 9,554,131.15		Book balance 15,312,383.95 7,759,703.59 23,072,087.54	Bad debt provision 1,798,904.22 7,759,703.59 9,558,607.81	Carrying amount 13,513,479.73
						13,513,479.73

4) Disclosure by category of provision for bad debts

Unit: RMB

Category Other receivables with provision for ECL on an individual basis Other receivables with provision for ECL on a group basis Including: Grouped by aging Total	Closing balance	Closing balance
	Book balance Amount Proportion (%) 7,235,792.02 23.77 23,205,290.71 76.23 23,205,290.71 76.23 30,441,082.73 100.00	Bad debt provision Amount Proportion (%) 7,235,792.02 100.00 2,318,339.13 9.99 2,318,339.13 9.99 9,554,131.15 31.39	Carrying amount 20,886,951.58 20,886,951.58
			20,886,951.58

— II-118 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Continued:

Unit: RMB

Opening balance

Category Other receivables with provision for ECL on an individual basis Other receivables with provision for ECL on a group basis Including: Grouped by aging Total	Book balance Amount Proportion (%) 7,759,703.59 33.63 15,312,383.95 66.37 15,312,383.95 66.37 23,072,087.54 100.00	Bad debt provision Amount Proportion (%) 7,759,703.59 100.00 1,798,904.22 11.75 1,798,904.22 11.75 9,558,607.81 41.43	Carrying amount 13,513,479.73 13,513,479.73
			13,513,479.73

5) Other receivables with provision for ECL on an individual basis

Unit: RMB

Closing balance

Company name West Ujimqin Banner Industrial Development Fund Management Office People’s Government Office of West Ujimqin Banner Baiyinhua Government of West Ujimqin Banner Beijing China Enterprise Appraisals Company Beijing Jingtian & Gongcheng Bayanhua Town Government of West Ujimqin Banner Bayanhua Town Bayan Hubo Gacha Others Total	Book balance 3,000,000.00 700,000.00 600,000.00 500,000.00 400,000.00 303,209.77 300,000.00 1,432,582.25 7,235,792.02	Bad debts proportion 3,000,000.00 700,000.00 600,000.00 500,000.00 400,000.00 303,209.77 300,000.00 1,432,582.25 7,235,792.02	Provision Reason for provision (%) 100.00 Expected unrecoverable 100.00 Expected unrecoverable 100.00 Expected unrecoverable 100.00 Expected unrecoverable 100.00 Expected unrecoverable 100.00 Expected unrecoverable 100.00 Expected unrecoverable 100.00 Expected unrecoverable 100.00

— II-119 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

6) Other receivables with provision for ECL on a group basis
① Grouped by aging

Unit: RMB

Aging Within 1 year 1–2 years 2–3 years 3–4 years 4–5 years Over 5 years Total	Closing balance	Closing balance
	Book balance 9,892,640.79 9,069,820.52 362,501.74 2,007,812.64 12,847.16 1,859,667.86 23,205,290.71	Bad debt provision Proportion (%) 494,632.04 5.00 453,491.02 5.00 36,250.19 10.00 401,562.52 20.00 2,569.43 20.00 929,833.93 50.00 2,318,339.13

7) Provision for bad debts of other receivables

Bad debt provision Opening balance Opening balance in the current period – Transfer to stage II – Transfer to stage III – Reversed from stage II – Reversed from stage I Provision made for the period Reversed in the period Closing balance	Stage I ECL over the next 12 months 1,798,904.22 -235,982.38 1,468,698.78 713,281.49 2,318,339.13	Stage II Lifetime ECL (non-credit impaired	Stage III Lifetime ECL (credit impaired) 7,759,703.59 235,982.38 235,982.37 995,876.32 7,235,792.02	Unit: RMB Total 9,558,607.81 1,704,681.15 1,709,157.81
				9,554,131.15

— II-120 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

8) Top five other receivables according to the closing balance collected by the debtor

Unit: RMB

Company name Nature of payment The First Geological and Mineral Exploration Brigade of Qinghai Province (青海省第一地質礦產勘查大隊) Current account Dachaidan Administrative Committee State-owned Assets Investment Operation Co., Ltd. (大柴旦行政委員會國有資產投資運營有限公司) Current account West Ujimqin Banner Industrial Development Fund Management Office (西烏珠穆沁旗工業發展基金管理辦公室) Current account Beijing Yintai Real Estate Co., Ltd. Security deposit Haixi Power Supply Company Security deposit Total	Closing balance Aging 8,451,421.06 Within 1 year, 1–2 years 8,451,421.06 Within 1 year, 1–2 years 3,000,000.00 Over 5 years 1,555,709.40 3–4 years 1,500,000.00 1–2 years, Over 5 years 22,958,551.52	Proportion to the closing balance of other receivables (%) 27.76 27.76 9.86 5.11 4.93 75.42	Closing balance of provision for bad debts 422,571.05 422,571.05 3,000,000.00 311,141.88 550,000.00
			4,706,283.98

— II-121 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

7. Inventory

(1) Classification of inventory

==> picture [455 x 240] intentionally omitted <==

----- Start of picture text -----

Unit: RMB
Closing balance Opening balance
Provision for Provision for
inventory inventory
decline or decline or
impairment impairment
provision for provision for
contract contract
performance Carrying performance Carrying
Item Book balance cost amount Book balance cost amount
Raw materials 133,829,155.22 1,699,419.29 132,129,735.93 126,540,085.43 1,699,419.29 124,840,666.14
Work in process 481,333,840.40 481,333,840.40 364,701,663.43 364,701,663.43
Inventory goods 413,518,456.82 413,518,456.82 575,375,226.25 575,375,226.25
Total 1,028,681,452.44 1,699,419.29 1,026,982,033.15 1,066,616,975.11 1,699,419.29 1,064,917,555.82
----- End of picture text -----

Explanation: RMB118,204,849.61 in inventory is restricted assets, see Note 54 for details.

(2) Provision for inventory decline and impairment provision for contract performance cost

Unit: RMB

Increased amount in the Decreased amount in the current period current period Opening Reversed or Closing Item balance Provision Others offset Others balance Raw materials 1,699,419.29 1,699,419.29 Total 1,699,419.29 1,699,419.29

— II-122 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

8. Other Current Assets

Unit: RMB

Item Deposit for and interest from acquisition of equity, etc. VAT credit Advanced income tax Others Total	Closing balance 664,637,057.82 26,691,379.85 1,275,495.80 517,571.83 693,121,505.30	Opening balance 53,859,545.81 15,098,485.84 1,101,612.56
		70,059,644.21

9. Long-term Receivables

Unit: RMB

Closing balance Opening balance Book Bad debt Carrying Book Bad debt Carrying Discount Item balance provision amount balance provision amount rate range Security deposit for land reclamation and ecological environment restoration 4,082,900.00 4,082,900.00 Total 4,082,900.00 4,082,900.00 –

— II-123 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

10. Investment in Other Equity Instruments

(1) Breakdown of investments in other equity instruments

Item Qinghai Kunlun Gold Co., Ltd. (青海昆侖黃金有限公司) Chifeng Herizeng Mining Development Co., Ltd. (赤峰市和日增礦業開發有限公司) Shanghai Sijin Enterprise Management Co., Ltd. (上海思晉企業管理有限公司) Jiaxing Xiyao Equity Investment Partnership (嘉興希耀股權投資合夥企業) Beijing Huaruineng Technology Development Co., Ltd. (北京華瑞能科技發展有限公司) Shanghai Yiyuan Real Estate Development Co., Ltd. (上海頤園房地產開發有限公司) Inner Mongolia Xing’an Copper and Zinc Smelting Co., Ltd. (內蒙古興安銅鋅冶煉有限公司) Total	Closing balance 12,000,000.00 1,803,885.24 12,000,000.00 30,000,000.00 0.00 0.00 0.00 55,803,885.24	Unit: RMB Opening balance 12,000,000.00 1,803,885.24 12,000,000.00 0.00 0.00 0.00
		25,803,885.24

— II-124 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(2) Investment in non-trading equity instruments

Unit: RMB

Item

				Amounts	Reasons for
Reasons for				transferred	transferring
designating to be				to retained	other
measured at fair				earnings	comprehensive
value through other	Dividend			from other	income to
comprehensive	income	Accumulated	Accumulated	comprehensive	retained
income	recognized	gains	losses	income	earnings

Qinghai Kunlun Gold Co., Ltd. Not for selling purposes Chifeng Herizeng Mining Not for selling Development Co., Ltd. purposes Shanghai Sijin Enterprise Not for selling Management Co., Ltd. purposes Jiaxing Xiyao Equity Investment Not for selling Partnership purposes Beijing Huaruineng Technology Not for selling Development Co., Ltd. purposes Shanghai Yiyuan Real Estate Not for selling Development Co., Ltd. purposes Inner Mongolia Xing’an Copper Not for selling and Zinc Smelting Co., Ltd. purposes

11. Fixed Assets

Unit: RMB

Item Fixed assets Total	Closing balance 2,783,312,677.63 2,783,312,677.63	Opening balance 2,527,186,463.13
		2,527,186,463.13

— II-125 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(1) Fixed assets

Unit: RMB

			Shaft		Office
	Houses and	Mechanical	engineering	Means of	equipment and
Item	buildings	equipment	assets	transport	others	Total
1. Original carrying amount:
1. Opening balance	1,616,148,114.70	1,415,581,316.42	1,732,405,521.90	69,041,831.03	31,723,911.96	4,864,900,696.01
2. Increased amount in the current period	375,481,050.94	103,947,750.31	77,658,002.57	5,315,221.28	6,238,472.28	568,640,497.38
(1) Purchase	3,269,043.87	30,510,563.50	4,726,583.50	5,315,221.28	1,179,893.71	45,001,305.86
(2) Transfer of construction in progress	358,296,299.85	73,437,186.81	72,931,419.07		5,058,578.57	509,723,484.30
(3) Other additions	13,915,707.22					13,915,707.22
3. Decreased amount in the current period	5,201,220.42	5,097,725.80	1,033,292.52	3,983,043.00	2,227,496.43	17,542,778.17
(1) Disposal or retirement	5,201,220.42	5,097,725.80	1,033,292.52	3,983,043.00	2,227,496.43	17,542,778.17
4. Closing balance	1,986,427,945.22	1,514,431,340.93	1,809,030,231.95	70,374,009.31	35,734,887.81	5,415,998,415.22
2. Accumulated depreciation
1. Opening balance	809,857,604.32	926,045,593.81	519,313,419.41	50,248,077.81	20,758,347.90	2,326,223,043.25
2. Increased amount in the current period	80,426,143.91	83,604,282.87	134,734,718.37	6,369,546.36	4,475,805.32	309,610,496.83
(1) Accrual	80,426,143.91	83,604,282.87	134,734,718.37	6,369,546.36	4,475,805.32	309,610,496.83
3. Decrease d amount in the current period	5,795,185.70	2,747,870.15	445,346.89	3,452,803.05	2,197,786.33	14,638,992.12
(1) Disposal or retirement	5,795,185.70	2,747,870.15	445,346.89	3,452,803.05	2,197,786.33	14,638,992.12
4. Closing balance	884,488,562.53	1,006,902,006.53	653,602,790.89	53,164,821.12	23,036,366.89	2,621,194,547.96
3. Provision for impairment
1. Opening balance	11,491,189.63					11,491,189.63
2. Increased amount in the current period
(1) Accrual
3. Decreased amount in the current period
(1) Disposal or retirement
4. Closing balance	11,491,189.63					11,491,189.63
IV. Carrying amount
1. Closing carrying amount	1,090,448,193.06	507,529,334.40	1,155,427,441.06	17,209,188.19	12,698,520.92	2,783,312,677.63
2. Opening carrying amount	794,799,320.75	489,535,722.61	1,213,092,102.49	18,793,753.22	10,965,564.06	2,527,186,463.13

— II-126 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(2) Fixed assets without title certificate

Unit: RMB

Item

Reasons for not completing Carrying amount the certificate of title

Heihe Yintai houses and buildings 37,247,420.68 Title certificate is in the process of application Yulong Mining houses and buildings 52,612,343.39 Title certificate is in the process of application

Total

89,859,764.07

12. Construction in Progress

Unit: RMB

Item Closing balance Opening balance Construction in progress 198,263,994.48 470,007,839.85 Engineer materials 2,151,690.22 2,187,104.64 Total 200,415,684.70 472,194,944.49

— II-127 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(1) Construction in progress

Unit: RMB

Project Jilin Banmiaozi shaft lane project Jilin Banmiaozi tailings pond expansion project Qinghai Dachaidan Qinglongtan underground engineering prospecting project Qinghai Dachaidan Xijinggou underground prospecting project Heihe Yintai phase II tailings pond project Heihe Yintai underground excavation project Heihe Yintai plant selection, reconstruction and expansion project Jilin Banmiaozi new gas station construction Qinghai Dachaidan Jinlonggou slope exploration engineering Heihe Yintai underground development engineering (phase II) Yulong Mining plant selection, reconstruction and expansion project Yulong Mining Huaaobaote moutain mine section comprehensive mining project Others Total	Closing balance	Carrying amount 130,736,609.41 1,163,566.83 19,428,872.04 11,796,662.23 16,523,858.21 7,923,732.07 6,764,267.56 1,686,492.24 2,239,933.89 198,263,994.48	Opening balance
	Book balance Provision for impairment 130,736,609.41 1,163,566.83 19,428,872.04 11,796,662.23 16,523,858.21 7,923,732.07 6,764,267.56 1,686,492.24 2,239,933.89 198,263,994.48		Book balance Provision for impairment 104,607,267.64 80,544,159.84 13,806,756.49 11,644,548.95 79,404,919.22 67,163,882.62 95,294,732.75 1,173,165.02 3,425,422.38 1,563,850.73 11,379,134.21 470,007,839.85	Carrying amount 104,607,267.64 80,544,159.84 13,806,756.49 11,644,548.95 79,404,919.22 67,163,882.62 95,294,732.75 1,173,165.02 3,425,422.38 1,563,850.73 11,379,134.21
				470,007,839.85

— II-128 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

				Sources of funds		Self-owned funds	Self-owned funds	Borrowing, self-owned	funds	Borrowing, self-owned	funds	Self-owned funds	Self-owned funds		Self-owned funds		Self-owned funds		Self-owned funds		Self-owned funds		Self-owned funds
	Current	interest	capitalization	rate
Including:	Capitalized	amount of	interest in the	current period
	Accumulated	amount of	interest	capitalized					1,670,600.00		12,300.00													1,682,900.00
			Project	progress	(%)	56.76	98.25		94.00		62.00	100.00	100.00		100.00		12.81		25.00		2.65		8.14
Proportion of	cumulative	project	investment to	budget	(%)	56.76	98.25		94.00		62.00	96.70	80.21		98.25		12.81		32.26		2.65		8.14
				Closing balance		130,736,609.41	1,163,566.83		19,428,872.04		11,796,662.23						16,523,858.21		7,923,732.07		6,764,267.56		1,686,492.24	196,024,060.59
	Other	decreased	amount in the	current period		41,400.00	38,100,148.90					100,137,388.04												138,278,936.94
Amount	transferred to	fixed assets in	the current	period		13,747,991.38	50,610,758.22		16,227,039.38			44,377,582.19	81,030,284.31		108,698,825.23									314,692,480.71
		Amount of	Increase in the	current period		39,918,733.15	9,330,314.11		21,849,154.93		152,113.28	65,110,051.01	13,866,401.69		13,404,092.48		16,523,858.21		7,923,732.07		3,338,845.18		122,641.51	191,539,937.62
			Opening	balance		104,607,267.64	80,544,159.84		13,806,756.49		11,644,548.95	79,404,919.22	67,163,882.62		95,294,732.75						3,425,422.38		1,563,850.73	457,455,540.62
				Budget		254,604,800.00	91,471,100.00		332,060,000.00		44,414,600.00	149,443,600.00	101,028,300.00		110,638,500.00		129,000,000.00		24,564,800.00		255,734,200.00		20,728,200.00	1,513,688,100.00
				Name of project		Jilin Banmiaozi shaft lane project	Jilin Banmiaozi tailings pond expansion project	Qinghai Dachaidan Qinglongtan underground	engineering prospecting project	Qinghai Dachaidan Xijinggou underground prospecting	project	Heihe Yintai phase II tailings pond project	Heihe Yintai underground excavation project	Heihe Yintai plant selection, reconstruction and	expansion project	Qinghai Dachaidan Jinlonggou slope exploration	engineering	Heihe Yintai underground development engineering	(phase II)	Yulong Mining plant selection, reconstruction and	expansion project	Yulong Mining Huaaobaote moutain mine section	comprehensive mining project	Total

— II-129 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(3) Engineering materials

Unit: RMB

Closing balance Opening balance

Item Steel Wood Others Total	Book balance Provision for impairment 1,814,014.28 33,202.23 304,473.71 2,151,690.22	Carrying amount 1,814,014.28 33,202.23 304,473.71 2,151,690.22	Book balance Provision for impairment 1,758,932.02 64,063.03 364,109.59 2,187,104.64	Carrying amount 1,758,932.02 64,063.03 364,109.59
				2,187,104.64

— II-130 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

13. Intangible Assets

(1) Intangible assets

Unit: RMB

	Geological	Geological
	exploration	achievements	Land use		Patented
Item	costs	(Mining rights)	rights	Software	technology	Total
1. Original carrying amount
1. Opening balance	780,687,040.37	5,865,951,380.19	343,171,854.93	16,242,695.04	30,000.00	7,006,082,970.53
2. Increased amount in the current period	71,590,449.49	34,380,294.22	137,957,536.94	158,000.00		244,086,280.65
(1) Purchase	63,281,041.04	4,500.00		158,000.00		63,443,541.04
(2) Increase for other reasons	8,309,408.45	34,375,794.22	137,957,536.94		180,642,739.61
3. Decreased amount in the current period	34,375,794.22			9,000.00		34,384,794.22
(1) Disposal				9,000.00		9,000.00
(2) Decrease for other reasons	34,375,794.22					34,375,794.22
4. Closing balance	817,901,695.64	5,900,331,674.41	481,129,391.87	16,391,695.04	30,000.00	7,215,784,456.96
2. Accumulated amortization
1. Opening balance		1,463,887,229.12	54,776,508.19	11,652,597.67	250.00	1,530,316,584.98
2. Increased amount in the current period		339,950,289.92	10,510,193.67	1,166,212.11	3,000.00	351,629,695.70
(1) Accrual		339,950,289.92	10,510,193.67	1,166,212.11	3,000.00	351,629,695.70
3. Decrease d amount in the current period				4,950.00		4,950.00
(1) Disposal				4,950.00		4,950.00
4. Closing balance		1,803,837,519.04	65,286,701.86	12,813,859.78	3,250.00	1,881,941,330.68
3. Provision for impairment
1. Opening balance			15,384,784.78			15,384,784.78
2. Increased amount in the current period
(1) Accrual
3. Decrease d amount in the current period
(1) Disposal
4. Closing balance			15,384,784.78			15,384,784.78
4. Carrying amount
1. Closing carrying amount	817,901,695.64	4,096,494,155.37	400,457,905.23	3,577,835.26	26,750.00	5,318,458,341.50
2. Beginning carrying amount	780,687,040.37	4,402,064,151.07	273,010,561.96	4,590,097.37	29,750.00	5,460,381,600.77

Explanation: The Banshigou exploration rights in the geological exploration costs amounting to RMB25,224,600 was invested by the 602nd Team of Jilin Provincial Nonferrous Metals Geological Survey Bureau, another shareholder of Jilin Jincheng Mining Co., Ltd. when it was established. In November 2020, Yintai Shengxin, the company’s controlling subsidiary, signed relevant agreements with Sino Gold BMZ and the 602nd Team, pursuant to which the prospecting rights have been transferred to Yintai Shengxin.

— II-131 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(2) Land use rights without title certificates

Unit: RMB

Reasons for not completing Item Carrying amount the certificate of title Land use right of Heihe Yintai 194,080,520.86 In progress Land use right of Jilin Banmiaozi 37,820,148.90 In progress Total 231,900,669.76

14. Goodwill

(1) Original carrying amount of goodwill

Unit: RMB

Name of investee or matters for goodwill to arise Sino Gold Hong Kong Jilin Banmiaozi Qinghai Dachaidan Total	Opening balance 93,902,442.61 130,557,523.84 227,905,733.29 452,365,699.74	Increase in the current period Arising from a business combination	Decrease in the current period Disposal	Closing balance 93,902,442.61 130,557,523.84 227,905,733.29
				452,365,699.74

(2) Provision for goodwill impairment

The company’s goodwill arose when the subsidiary Shanghai Shengwei merged with enterprises not under the common control. The goodwill obtained from the merger has been allocated to the asset group of Sino Gold Hong Kong, asset group combination of Jilin Banmiaozi, and asset group combination of Qinghai Dachaidan for impairment test. The management of the company accesses the possible impairment of goodwill every year. The impairment test of goodwill is performed by the company based on the future business plan of asset groups, historical data and other information to predict the future cash flow to test the recoverable amount of asset groups containing goodwill on the reporting date. After testing, as of 31 December 2020, the balance of provision for goodwill impairment was RMB0.00.

Asset group of Sino Gold Hong Kong: The goodwill of this asset group arose when Shanghai Shengwei purchased Sino Gold Hong Kong, Rock Hong Kong and

— II-132 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Heihe Yintai, which is consistent with the asset group determined on the purchase date. On 31 December 2020, the carrying amount of the asset group to which goodwill is attributable is RMB2,084,917,300, and the recoverable amount is recognized at the present value of estimated future cash flow, and no indication of impairment was found in the asset group related to goodwill after testing.

Asset group combination of Jilin Banmiaozi: The asset group combination is composed of Sino Gold BMZ, Jincheng Mining, and Jilin Banmiaozi. Compared with the date of purchase, Xiaoshiren prospecting rights and Lengjiagou prospecting rights in the original asset group combination have been cancelled, and the carrying amount of such prospecting rights is RMB31,942,000 (representing a relatively small proportion of the asset group combination on the original purchase date, about 2%), which has less impact on the asset group combination and goodwill testing. On 31 December 2020, the carrying amount of the asset group combination to which goodwill is attributable is RMB1,402,475,600, and the recoverable amount is recognized at the present value of estimated future cash flow and the fair value net the disposal expenses, and no indication of impairment was found in the asset group combination related to goodwill after testing.

Asset group combination of Qinghai Dachaidan: The goodwill of this asset group combination arose when Shanghai Shengwei purchased Qinghai Dachaidan, which is consistent with the asset group combination determined on the purchase date. On 31 December 2020, the carrying amount of the asset group combination to which goodwill is attributable is RMB1,197,141,200, and the recoverable amount is recognized at the present value of estimated future cash flow and the fair value net the disposal expenses, and no indication of impairment was found in the asset group combination related to goodwill after testing.

According to the restructuring agreement, the total net profit after deducting non-recurring profit and loss under the mineral rights assessment standard realized by the committed assets from 2017 to 2020 shall not be less than RMB1,805,294,900, and the total net profit after deducting non-recurring profit and loss under the mineral rights assessment standard realized by the committed assets from 2017 to 2020 is RMB3,188,776,200. As of 31 December 2020, the company has completed its profit commitment, which will not affect the results of the goodwill impairment test.

— II-133 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

15. Long-term Deferred Expenses

Unit: RMB

Item Highway outside the mining area Electric facilities supporting fee Asset maintenance expenditure Others Total	Opening balance 17,673,422.23 1,987,359.64 10,598,330.85 30,259,112.72	Amount of Increase in the current period 899,214.53 890,163.40 1,789,377.93	Amortization amount in the current period 251,034.90 974,052.14 3,583,718.78 482,312.78 5,291,118.60	Other reductions 247,000.00 247,000.00	Closing balance 17,422,387.33 1,013,307.50 7,913,826.60 160,850.62
					26,510,372.05

16. Deferred Income Tax Assets / Deferred Income Tax Liabilities

(1) Deferred income tax assets not offset

Unit: RMB

Item Provision for assets impairment Unrealized profit in intra-group transactions Deductible losses Depreciation and amortization Expensed exploration expenditures Estimated liabilities Accrued expenses Hedging instruments included in other comprehensive income Total	Closing balance Deductible temporary differences Deferred income tax assets 40,671,044.18 7,736,439.44 32,056,406.92 8,014,101.73 47,732,092.95 11,932,358.32 270,254,267.89 61,444,944.26 13,052,763.57 3,263,190.89 18,905,908.11 2,707,667.58 11,067,125.05 2,766,781.26 242,806.41 54,585.00 433,982,415.08 97,920,068.48	Opening balance	Opening balance
	Deductible temporary differences 40,671,044.18 32,056,406.92 47,732,092.95 270,254,267.89 13,052,763.57 18,905,908.11 11,067,125.05 242,806.41 433,982,415.08	Deductible temporary differences 40,241,669.97 33,348,317.44 109,664,400.19 290,757,978.04 13,052,763.57 24,101,553.26 10,973,993.00 34,075,365.00 556,216,040.47	Deferred income tax assets 7,614,243.83 8,337,079.36 27,416,100.05 65,791,655.78 3,263,190.89 4,187,204.27 2,743,498.25 6,617,048.25
			125,970,020.68

— II-134 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(2) Deferred income tax liabilities not offset

Unit: RMB

Item Appreciation of the combined asset valuation of enterprises not under the same control Capitalized exploration expenditure Depreciation and amortization Total	Closing balance Taxable temporary difference Deferred income tax liabilities 1,556,568,240.46 344,391,938.95 87,927,398.55 13,189,109.78 58,405,624.16 14,601,406.04 1,702,901,263.17 372,182,454.77	Opening balance	Opening balance
	Taxable temporary difference 1,556,568,240.46 87,927,398.55 58,405,624.16 1,702,901,263.17	Taxable temporary difference 1,735,153,547.87 111,885,575.38 42,553,782.55 1,889,592,905.80	Deferred income tax liabilities 383,915,889.54 16,782,836.30 10,638,445.65
			411,337,171.49

(3) Deferred tax assets or liabilities stated on a net basis after offset

							Unit: RMB
				Deferred	Closing balance	Deferred	Opening
				income tax	of deferred	income tax	balance of
				assets and	income tax	assets and	deferred income
				liabilities offset	assets or	liabilities offset	tax assets or
				at the end of the	liabilities after	at the beginning	liabilities after
Item				period	offset	of the period	offset
Deferred	income	tax	assets	17,619,106.59	80,300,961.89	18,478,229.20	107,491,791.48
Deferred	income	tax	liabilities	17,619,106.59	354,563,348.18	18,478,229.20	392,858,942.29

— II-135 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

17. Other Non-Current Assets

Unit: RMB

Item Advance payment for engineering equipment Deposit for equity purchase Advance payment of the security deposit for prospecting rights Total	Closing balance	Carrying amount 54,303,160.05 1,329,800.00 55,632,960.05	Opening balance
	Book balance Provision for impairment 54,303,160.05 1,329,800.00 55,632,960.05		Book balance Provision for impairment 45,002,524.19 600,000,000.00 645,002,524.19	Carrying amount 45,002,524.19 600,000,000.00
				645,002,524.19

Explanation: The security deposit for prospecting rights is paid in advance, the balance of which is frozen and supervised by three parties through a tripartite supervision agreement signed by Yintai Shengxin, the 602nd Team of Jilin Provincial Nonferrous Metals Geological Exploration Bureau and its account opening bank.

18. Short-term Borrowing

Unit: RMB

Item Borrowing guaranteed Interest payable not due Gold lease Total	Closing balance 179,000,000.00 194,662.50 179,194,662.50	Opening balance 200,000,000.00 265,833.33 95,748,590.00
		296,014,423.33

Explanation:

Qinghai Dachaidan, a subsidiary of the company, signed a loan contract with Dachaidan Sub-branch of China Construction Bank Co., Ltd. The loan amount of the contract is RMB180,000,000 for a term from 11 September 2020 to 11 September 2021.
On 3 December 2019, Heihe Yintai, a subsidiary of the company, signed the Gold Lease Contract and Oriented Gold Purchase Agreement with Heihe Branch of Industrial and Commercial Bank of China Co., Ltd., and Heihe Yintai shall not be responsible for the risk of gold price fluctuations during the gold lease period, and received funds of RMB95,748,590.00; the borrowing has been paid off in the current period.

— II-136 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

19. Bills Payable

Unit: RMB Type Closing balance Opening balance Bank acceptance 447,518,000.00 260,000,000.00 Total 447,518,000.00 260,000,000.00 20. Accounts Payable

Item Payment for engineering equipment Material payables Accounts payable Service charge payable Exploration fee Others Total	Closing balance 61,092,251.18 47,187,548.70 9,276,688.33 568,143.37 2,286,818.03 1,741,205.87 122,152,655.48	Unit: RMB Opening balance 134,275,475.60 29,183,795.42 9,666,760.73 1,019,404.30 26,742,453.66 2,909,709.17
		203,797,598.88

21. Advance payment

Unit: RMB

Item Advances on sales Total	Closing balance Opening balance 9,918,998.44 9,918,998.44

— II-137 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

22. Contract Liabilities

Unit: RMB

Item Advance receipt of merchandise sales Total	Closing balance 11,138,631.36 11,138,631.36	Opening balance 24,484,964.66
		24,484,964.66

23. Employee Salaries Payable

(1) Breakdown of employee salaries payable

Unit: RMB

Item 1. Short-term remuneration 2. Post-employment benefits – defined contribution plan 3. Dismissal benefits Total	Opening balance 48,813,805.88 878,916.10 49,692,721.98	Increase in the current period 220,362,434.76 6,959,842.79 381,366.85 227,703,644.40	Decrease in the current period 220,518,001.80 7,666,092.84 337,970.38 228,522,065.02	Closing balance 48,658,238.84 172,666.05 43,396.47
				48,874,301.36

— II-138 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(2) Breakdown of short-term remuneration

Unit: RMB

Item 1. Wages, bonuses, allowances and subsidy 2. Employee benefits 3. Social insurance premiums Of which: Medical insurance premiums Work injury insurance premiums Maternity insurance premiums 4. Housing provident fund 5. Trade union funds and employee education funds Total	Opening balance 34,770,011.03 -277,207.81 -398,977.42 93,537.23 28,232.38 133,555.21 14,187,447.45 48,813,805.88	Increase in the current period 187,942,659.77 10,213,184.65 8,833,629.68 8,217,995.79 457,899.84 157,734.05 10,148,608.15 3,224,352.51 220,362,434.76	Decrease in the current period 187,861,727.10 10,213,184.65 8,425,172.53 7,665,549.52 576,617.58 183,005.43 10,095,428.91 3,922,488.61 220,518,001.80	Closing balance 34,850,943.70 131,249.34 153,468.85 -25,180.51 2,961.00 186,734.45 13,489,311.35
				48,658,238.84

(3) Breakdown of defined contribution plan

Unit: RMB

Item 1. Basic endowment insurance 2. Unemployment insurance premium Total	Opening balance 823,023.36 55,892.74 878,916.10	Increase in the current period 6,673,634.63 286,208.16 6,959,842.79	Decrease in the current period 7,328,814.61 337,278.23 7,666,092.84	Closing balance 167,843.38 4,822.67
				172,666.05

— II-139 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

24. Taxes Payable

Unit: RMB

Item VAT Corporate income tax Personal income tax Urban maintenance and construction tax Education surcharge Local education surcharges Resource tax Stamp duty Environmental protection tax Other taxes Total	Closing balance 4,670,440.94 123,758,318.55 813,398.33 99,359.28 58,336.10 38,890.74 9,029,400.44 325,825.58 57,478.55 1,333,327.36 140,184,775.87	Opening balance 2,042,221.59 56,204,135.64 820,746.01 92,622.89 55,140.43 36,760.29 90.76 220,401.00 134,220.04 5,635,317.74
		65,241,656.39

25. Other Payables

Item Other payables Total	Closing balance 203,427,908.82 203,427,908.82	Unit: RMB Opening balance 159,146,283.75
		159,146,283.75

— II-140 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(1) Other Payables

1) Breakdown of other payables by the nature of payment

Unit: RMB

Item Current account Security deposit and deposit Payment for project Withholding payment Service charges Accrued expenses Advance payment Others Total	Closing balance 55,459.86 171,166,065.52 16,267,624.84 599,309.03 94,769.29 11,067,125.05 4,177,555.23 203,427,908.82	Opening balance 51,782.98 132,163,955.61 19,448,924.28 476,051.34 50,213.42 2,096,906.00 1,926,135.37 2,932,314.75
		159,146,283.75

2) Significant other payables aged more than 1 year

Unit: RMB

Item

Reasons for non-payment or
Closing balance carryover
China Huaye Science and Technology Group Co., Ltd. (中國華冶科工集團有限公司)
Wenzhou Tongye Construction Engineering Co., Ltd. (溫州通業建設工程有限公司)
The 8th Metallurgical Construction Group Company Limited Mine Engineering Branch (八冶建設集團有限公司礦山工程分公司)
Shandong Huaxin Mining Engineering Co., Ltd. Xiwuqi Branch (山東華鑫礦業工程有限公司西烏旗分公司)
Shandong Huaxin Mining Engineering Co., Ltd. Xiwuqi Guoliang Branch (山東華鑫礦業工程有限公司西烏旗國良分公司)
Inner Mongolia Jindui Mining Engineering Co., Ltd. (內蒙古金堆礦山工程有限公司)
13,683,242.08 Quality assurance deposit, not due for settlement
6,822,105.88 Quality assurance deposit, not due for settlement
4,338,150.62 Quality assurance deposit, not due for settlement
3,000,000.00 Quality assurance deposit, not due for settlement
3,000,000.00 Quality assurance deposit, not due for settlement
3,000,000.00 Quality assurance deposit, not due for settlement

Total

33,843,498.58

— II-141 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

26. Non-current Liabilities Due within One Year

Unit: RMB

Item Long-term payables due within one year Total *27.* *Other Current Liabilities* Item Tax on items to be offset Total *28.* *Long-term Borrowing*	Closing balance 6,781,376.00 6,781,376.00 Closing balance 1,448,022.08 1,448,022.08	Opening balance 8,476,720.00
		8,476,720.00

		Unit: RMB Opening balance 3,183,045.41
		3,183,045.41

Unit: RMB

Item Borrowing guaranteed Interest payable not due Total	Closing balance 234,500,000.00 429,916.67 234,929,916.67	Opening balance 234,500,000.00 429,916.67
		234,929,916.67

Explanation: In 2017, the company and Huaxin International Trust Co., Ltd. (華鑫國際信託有限公司) signed the Entrusted Loan Contract with a contract no. Huaxin Dan Xin Zi No. 2017795 - Loan. The contract loan amount is RMB234,500,000, and the loan period is from 9 November 2017 to 9 November 2022. China Yintai assumes joint and several liability guarantee for the contract.

— II-142 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

29. Long-term Payables

Unit: RMB

Item Long-term payables Total	Closing balance 20,344,128.00 20,344,128.00	Opening balance 25,430,160.00
		25,430,160.00

(1) Breakdown of long-term payables by the nature of payment

Item Mining rights transfer fees Less: Long-term payables due within one year Total	Closing balance 27,125,504.00 6,781,376.00 20,344,128.00	Unit: RMB Opening balance 33,906,880.00 8,476,720.00
		25,430,160.00

30. Estimated Liabilities

Unit: RMB

Closing Opening Item balance balance Causes Disposal fees 45,283,429.64 36,579,567.93 Estimated costs incurred in restoring the ecological environment of mining areas Total 45,283,429.64 36,579,567.93

— II-143 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

31. Deferred Income

Unit: RMB

Item Government subsidies Total	Opening balance 478,800.00 478,800.00	Increase in the current period	Decrease in the current period 34,200.00 34,200.00	Closing balance Causes 444,600.00 Financial allocation of tailings environment special funds for pollution control 444,600.00

Items involving government subsidies:

Unit: RMB

				Amount	Amount	Amount of
		Amount of		included in	included in	offsetting
		new subsidy		non-operating	other	costs and			Related to
			in the	revenue in	income in	expenses in			assets /
	Opening		current	the current	the current	the current	Other	Closing	related to
Liability item	balance		period	period	period	period	changes	balance	income
Government subsidies for tailings pond	478,800.00				34,200.00			444,600.00	Related to
environmental protection									assets

32. Other Non-Current Liabilities

Unit: RMB

Item Closing balance Opening balance Dividends payable by Jilin Banmiaozi to minority shareholders 14,248,463.35 14,248,463.35 Total 14,248,463.35 14,248,463.35

— II-144 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

33. Share Capital

Unit: RMB

Increase or decrease in this change (+, -)

Opening balance Issuance of new shares Bonus shares Conversion of capital reserve into share capital Total number of shares 1,983,373,047.00 793,349,218.00 *34.* *Capital Reserve* Item Opening balance Increase in the current period Capital premium (share capital premium) 5,225,129,078.87 Total 5,225,129,078.87	Others Subtotal Closing balance 793,349,218.00 2,776,722,265.00 Unit: RMB Decrease in the current period Closing balance 793,848,590.57 4,431,280,488.30 793,848,590.57 4,431,280,488.30	Others Subtotal Closing balance 793,349,218.00 2,776,722,265.00 Unit: RMB Decrease in the current period Closing balance 793,848,590.57 4,431,280,488.30 793,848,590.57 4,431,280,488.30	Closing balance 2,776,722,265.00

		4,431,280,488.30

Explanation: The share capital premium for the current period decreased by RMB793,848,590.57, of which RMB793,349,218.00 was converted to share capital.

— II-145 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

35. Other Comprehensive Income

Unit: RMB

Item Opening balance Other comprehensive income to be reclassified to profit or loss -25,390,064.89 Cash flow hedge reserve -25,385,329.95 Translation differences of foreign currency financial statements -4,734.94 Total other comprehensive income -25,390,064.89	Amount for the current period Amount before income tax in the current period Less: Transfer from other comprehensive income in the last period to profit or loss in the current period Less: Transfer from other comprehensive income in the last period to retained earnings in the current period Deduct: Income tax expense 26,932,781.86 6,562,463.25 33,857,025.00 6,562,463.25 -6,924,243.14 26,932,781.86 6,562,463.25	Amount for the current period Amount before income tax in the current period Less: Transfer from other comprehensive income in the last period to profit or loss in the current period Less: Transfer from other comprehensive income in the last period to retained earnings in the current period Deduct: Income tax expense 26,932,781.86 6,562,463.25 33,857,025.00 6,562,463.25 -6,924,243.14 26,932,781.86 6,562,463.25		Attributable to minority shareholders after tax 1,380,714.73 2,073,139.05 -692,424.32 1,380,714.73	Closing balance -6,400,461.01 -163,907.25 -6,236,553.76
		Deduct: Income tax expense 6,562,463.25 6,562,463.25 6,562,463.25	Attributable to the parent company after tax 18,989,603.88 25,221,422.70 -6,231,818.82 18,989,603.88
					-6,400,461.01

36. Special Reserve

Item Safety production fees Production maintenance fees Total	Opening balance 11,664,958.64 15,561,610.07 27,226,568.71	Increase in the current period 22,781,565.92 22,781,565.92	Decrease in the current period 29,100,043.67 15,561,610.07 44,661,653.74	Unit: RMB Closing balance 5,346,480.89
				5,346,480.89

— II-146 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

37. Surplus Reserve

Unit: RMB

Item Statutory surplus reserve Total	Opening balance 430,418,353.66 430,418,353.66	Increase in the current period 8,467,897.22 8,467,897.22	Decrease in the current period	Closing balance 438,886,250.88
				438,886,250.88

38. Undistributed Profit

		Unit: RMB
	For the current	For the last
Item	period	period
Undistributed profit at the end of the last period before
adjustment	1,406,894,608.22	1,111,825,131.01
Adjusted undistributed profit at the beginning of the
period	1,406,894,608.22	1,111,825,131.01
Add: Net profit attributable to owners of the parent
company in the current period	1,242,446,761.34	864,165,428.85
Less: Appropriation of statutory surplus reserve	8,467,897.22	177,503,643.24
Dividends payable on ordinary shares	396,674,609.40	391,592,308.40
Undistributed profit at the end of the period	2,244,198,862.94	1,406,894,608.22

39. Operating Revenue and Operating Costs

Unit: RMB

Item Main business Other businesses Total	Amount for the current period Revenue Costs 7,902,639,439.32 5,745,935,431.31 3,162,899.63 1,538,042.42 7,905,802,338.95 5,747,473,473.73	Amount for the last period	Amount for the last period
	Revenue 7,902,639,439.32 3,162,899.63 7,905,802,338.95	Revenue 5,144,292,083.50 4,658,569.76 5,148,950,653.26	Costs 3,590,528,586.92 3,493,930.62
			3,594,022,517.54

— II-147 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Revenue generated from the contract:

Contract classification

Amount for the current period

I. Market or customer type

Of which: Non-ferrous metal mining and processing 3,290,839,290.41 Metal commodity trading 4,611,800,148.91 Others 3,162,899.63

Total

7,905,802,338.95

Explanation: Information related to performance obligations: The company has signed a legal and valid purchase and sale contract with customers in the sales of mineral products, which stipulates the target product, delivery method, delivery period, pricing method, weighing and testing standards, collection and payment settlement method and the liability for breach of contract, etc., and the performance obligations and rights are clear. There are clear market-based prices and calculation methods for the selling price of the company’s products, and revenue is finally recognized after completion of product delivery, confirmation of test results and unit price and other performance obligations.

40. Taxes and Surcharges

Unit: RMB

Item Urban maintenance and construction tax Education surcharge Resource tax Property tax Land holding tax Vehicle usage tax Stamp duty Environmental protection tax Mineral resource compensation fee Others Total	Amount for the current period 4,081,849.62 4,081,926.93 124,897,349.56 3,008,370.23 3,675,328.94 232,372.83 3,046,367.58 177,905.27 44,827,577.77 1,871,137.25 189,900,185.98	Amount for the last period 2,716,760.40 2,739,862.54 84,558,432.37 2,718,423.27 3,443,803.26 261,044.79 2,765,611.69 399,570.00 1,501,019.28
		101,104,527.60

— II-148 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

41. Selling Expenses

Unit: RMB

Item Employee remuneration Storage fee Shipping fee Travel expenses Lab fees Depreciation Others Total	Amount for the current period 1,009,141.30 997,957.48 644,487.17 233,963.85 197,376.00 612,351.47 127,273.48 3,822,550.75	Amount for the last period 562,434.85 682,306.81 698,101.34 129,802.20 208,802.94 231,509.96
		2,512,958.10

42. Management Costs

Unit: RMB

Item Employee remuneration Depreciation and amortization Consulting and service fees Business hospitality Rental fees Office expenses Travel expenses Tax Maintenance fees Utility bill Downtime loss Insurance fees Vehicle and miscellaneous expenses Greening costs Heating costs Material consumption Others Total	Amount for the current period 126,604,317.62 34,356,710.95 10,718,631.05 8,098,640.23 6,904,043.30 2,525,236.40 4,101,447.21 5,575,111.02 1,834,991.51 4,265,528.08 6,511,564.59 1,118,544.50 3,535,591.78 2,108,477.82 6,630,305.92 9,734,863.17 21,989,659.57 256,613,664.72	Amount for the last period 116,520,073.43 29,379,884.24 8,037,439.73 9,855,561.35 7,269,288.68 2,025,060.96 5,548,277.25 4,905,865.78 1,069,065.07 1,331,909.62 37,428,086.02 800,943.33 3,921,362.41 1,310,778.83 2,407,728.51 23,719,723.72
		255,531,048.93

— II-149 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

43. Financial Expenses

Unit: RMB

Item Interest expense Less: Interest income Exchange gains and losses Bank charges Others Total	Amount for the current period 42,193,580.61 1,029,909.86 1,636,984.87 865,496.65 43,666,152.27	Amount for the last period 29,297,524.57 4,432,044.25 -219,026.69 2,770,426.52 1,084,255.87
		28,501,136.02

44. Other Gains

Unit: RMB

Other sources of income Multi-level capital market subsidies Enterprise transformation and upgrade subsidies Stabilizing job allowance Rewards for technology innovation Rewards for enterprises above designated size Special subsidies for scientific achievements Scientific research funding subsidies for high-tech enterprises Government subsidies for tailings pond environmental protection Rewards for safety production Refund of withholding fees Others Total	Amount for the current period 3,000,000.00 1,008,000.00 669,932.15 540,000.00 440,000.00 249,000.00 150,000.00 34,200.00 351,166.91 124,708.66 6,567,007.72	Amount for the last period 206,483.45 570,000.00 34,200.00 3,000.00 667,791.60 10,225.95
		1,491,701.00

— II-150 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

45. Investment Income

Unit: RMB

Item Investment income of wealth management products Investment income from disposal of derivative financial assets Interest income from acquisition of equity Others Total *46.* *Gains from Change in Fair Value* Source of gains from change in fair value Financial assets held for trading Including: Gains from change in fair value of derivative financial instruments Total *47.* *Credit Impairment Losses* Item Bad debt loss Total	Amount for the current period 35,219,154.17 -1,964,832.58 53,857,224.11 1,808,565.48 88,920,111.18 Amount for the current period -8,792,960.06 -8,792,960.06 -8,792,960.06 Amount for the current period -1,194,993.39 -1,194,993.39	Amount for the last period 27,457,216.31 2,580,362.66 -2,914,145.18
		27,123,433.79

		Unit: RMB Amount for the last period -3,019,269.16 -3,019,269.16
		-3,019,269.16

		Unit: RMB Amount for the last period -839,333.47
		-839,333.47

— II-151 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

48. Gains from disposal of assets

Source of gains on disposal of assets Gains or losses on disposal of fixed assets Total *49.* *Non-operating revenue*	Amount for the current period -1,890,453.55 -1,890,453.55	Unit: RMB Amount for the last period 94,500.55
		94,500.55

Unit: RMB

Item Compensation Forfeited income Gains on surplus Others Total	Amount for the current period 71,343,396.40 166,984.32 196.17 1,575,724.25 73,086,301.14	Amount for the last period 380,355.53 4,457.62 8,554,788.22 8,939,601.37	Amount included in the current non-recurring profit and loss 71,343,396.40 166,984.32 196.17 1,575,724.25
			73,086,301.14

50. Non-operating expenses

Unit: RMB

Item External donation Loss on damage and retirement of non-current assets Fines and late fees Others Total	Amount for the current period 11,083,703.50 2,687,356.72 45,352,163.28 826,458.83 59,949,682.33	Amount for the last period 1,276,376.67 21,838,768.47 200,851.77 578,691.40 23,894,688.31	Amount included in the current non-recurring profit and loss 11,083,703.50 2,687,356.72 45,352,163.28 826,458.83
			59,949,682.33

— II-152 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

51. Income Tax Expense

(1) Income tax expense table

Unit: RMB

Item Current income tax expense Deferred income tax expense Total	Amount for the current period 412,621,193.77 -17,667,227.77 394,953,966.00	Amount for the last period 269,739,394.70 -48,016,401.41
		221,722,993.29

(2) Adjustment process of accounting profit and income tax expense

	Unit: RMB
	Amount for the
Item	current period
Total profit	1,761,071,642.21
Income tax expense calculated at statutory / applicable tax rate	440,267,910.55
Effect of different tax rates applicable to subsidiaries	-75,905,794.68
Effect of adjusting income taxes for the prior period	-5,077,224.84
Impact on non-taxable income	-1,717,486.25
Effect of non-deductible costs, expenses and losses	7,799,868.56
Effect of using deductible losses of deferred income tax assets not recognized in
the prior period	587,091.01
Effect of deductible temporary differences or deductible losses of deferred
income tax assets not recognized in the current period	208,458.18
Effect of the restoration of fair value of consolidated subsidiaries	28,791,143.47
Income tax expense	394,953,966.00

— II-153 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

52. Cash Flow Statement Items

(1) Other cash received related to operating activities

Unit: RMB

Item Receipt of current account Interest income Government subsidies for daily business activities Security deposit received Others Total	Amount for the current period 3,499,388.27 1,029,909.86 6,056,932.15 5,631,359.52 1,941,303.97 18,158,893.77	Amount for the last period 1,959,961.25 4,432,044.25 779,483.45 17,659,059.40 1,505,488.93
		26,336,037.28

(2) Other cash paid related to operating activities

Unit: RMB

Item Payment of current account Security deposit Business hospitality Consulting and service fees Rental fees Travel expenses Maintenance fees Bank charges Office expenses Warehousing and shipping fees Environmental greening and water and soil conservation costs External donation Insurance fees Fines and late fees Material consumption Others Total	Amount for the current period 25,153,644.76 11,134,036.03 8,098,640.23 10,718,631.05 6,904,043.30 4,335,411.06 1,834,991.51 865,496.65 2,525,236.40 1,642,444.65 2,108,477.82 11,083,703.50 1,118,544.50 45,152,163.28 9,734,863.17 2,205,277.29 144,615,605.20	Amount for the last period 12,893,979.46 11,475,040.32 9,855,561.35 8,037,439.73 7,269,288.68 5,678,079.45 4,990,427.48 2,770,426.52 2,025,060.96 1,380,408.15 1,310,778.83 1,276,376.67 800,943.33 200,851.77 2,028,116.24
		71,992,778.94

— II-154 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(3) Other cash received related to investment activities Unit: RMB Amount for the Amount for the Item current period last period Compensation received 63,552,189.72 Total 63,552,189.72

(4) Other cash paid related to investment activities

Unit: RMB

Amount for the Amount for the Item current period last period Advance payment of deposit for prospecting rights 1,329,800.00 Total 1,329,800.00 (5) Other cash received related to financing activities

Unit: RMB

Item Warehouse receipt pledge offset security deposit Receipt of bill financing Total	Amount for the current period 199,585,284.32 407,000,000.00 606,585,284.32	Amount for the last period 201,918,288.00 213,710,757.05
		415,629,045.05

— II-155 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(6) Other cash paid related to financing activities

Unit: RMB

Item Repayment of bill financing and discount interest Warehouse receipt pledge offset security deposit Stamp duty and transfer fee for the employee stock ownership plan Share registration fee Total	Amount for the current period 613,687,253.60 172,838,035.10 529,334.02 787,054,622.72	Amount for the last period 7,289,444.44 152,574,228.37 386,254.88
		160,249,927.69

— II-156 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

53. Supplementary Information on the Cash Flow Statement

(1) Supplementary information on the cash flow statement

Unit: RMB

	Amount for the	Amount for the
Supplementary information	current period	last period
1. Reconciliation of net profit to cash flows from
operating activities:	–	–
Net profit	1,366,117,676.21	955,451,417.55
Add: Provision for impairment of assets	1,194,993.39	839,333.47
Depreciation of fixed assets, depreciation of oil
and gas assets and depreciation of productive
biological assets	309,610,496.83	248,706,753.62
Depreciation of right-of-use assets
Amortization of intangible assets	351,629,695.70	281,279,945.10
Amortization of long-term deferred expenses	5,291,118.60	6,075,769.31
Losses on disposal of fixed assets, intangible
assets and other long-term assets (gain
represented by “-”)	1,890,453.55	–94,500.55
Losses from retirement of fixed assets (gain
represented by “-”)	2,687,356.72	21,838,768.47
Losses from changes in fair value (gain
represented by “-”)	8,792,960.06	3,019,269.16
Financial expenses (gain represented by “-”)	42,193,580.61	29,297,524.57
Investment loss (gain represented by “-”)	-88,920,111.18	-27,123,433.79
Decrease in deferred income tax assets (increase
represented by “-”)	27,190,829.59	39,824,612.53
Increase in deferred income tax liabilities
(decrease represented by “-”)	-38,295,594.11	-87,841,013.94
Decrease in inventory (increase represented by
“-”)	37,935,522.67	-399,941,080.97
Decrease in operating receivable items (increase
represented by “-”)	-14,990,377.07	-211,805.33
Increase in operating payable items (decrease
represented by “-”)	454,039,524.92	92,083,971.34
Others	-39,665,768.09	-16,992,513.51
Net cash flows from operating activities	2,426,702,358.40	1,146,213,017.03
2. Significant investment and financing activities that do
not involve cash receipts and payments:	–	–
Conversion of debt into capital
Convertible corporate bonds due within one year
Finance leasing of fixed assets
3. Net changes in cash and cash equivalents:	–	–
Closing balance of cash	445,104,601.52	291,271,671.97
Less: Opening balance of cash	291,271,671.97	119,865,668.60
Add: Closing balance of cash equivalents
Less: Opening balance of cash equivalents
Net increase in cash and cash equivalents	153,832,929.55	171,406,003.37

— II-157 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(2) Composition of cash and cash equivalents

Unit: RMB

Item

Closing balance Opening balance

Cash Including: Cash on hand Bank deposits readily available for payment Other monetary funds readily available for payment
Closing balance of cash and cash equivalents
445,104,601.52 291,271,671.97 304,773.93 699,154.43
262,489,216.06 274,823,796.86 182,310,611.53 15,748,720.68 445,104,601.52 291,271,671.97

— II-158 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

54. Assets with Restricted Ownership or Use Rights

Unit: RMB

Item
Monetary funds
Inventory
Financial assets held
for trading
Other non-current
assets
Total

Closing
carrying
amount
Reasons for restriction
37,574,546.87
Of the other monetary funds at the end of the period,
RMB37,574,546.87
is
restricted
funds:
RMB11,368,338.68 is the security deposit placed by the
subsidiary Yulong Mining in the special account of
Xilinhot Branch of the Bank of China according to the
Supplementary
Notice
on
Issues
Related
to
the
Registration
of
Mining
Rights
Concerning
the
Implementation of the Measures for the Administration of
Deposit for Mining Geological Environment Improvement
in the Inner Mongolia Autonomous Region (《關於執行
〈內蒙古自治區礦山地質環境治理保證金管理辦法〉涉及
採礦權登記有關問題的補充通知》)(Xi Guo Tu Zi Zi
[2008] No. 143); RMB11,142,119.12 is the environmental
governance deposit placed in the bank by the subsidiary
Qinghai Dachaidan; RMB5,808,537.81 is the geological
environment protection deposit placed in the bank by the
subsidiary Jilin Banmiaozi; RMB5,143,259.60 is the
geological environment protection deposit placed in the
bank by the subsidiary Heihe Yintai; RMB3,592,791.66 is
the deposit placed by the subsidiary Shenghong Singapore
in the futures company; RMB518,000.00 is the deposit for
the bank acceptance bill placed in the bank by the
subsidiary Yongheng Trading; RMB1,500.00 is the ETC
frozen funds placed in the bank by the subsidiary Jilin
Banmiaozi.
118,204,849.61
In
the
closing
inventory
there
is
an
amount
of
RMB118,204,849.61 that has usage rights restricted: of
which RMB17,616,463.93 is the pledge made for the
financing
of
the
subsidiary
Yintai
Shenghong;
RMB100,588,385.68 is the pledge made for the trade
financing of the subsidiary Yongheng Trading.
447,000,000.00
The closing balance is a structured deposit, which is also
the security deposit for bank acceptance.
1,329,800.00
The security deposit for prospecting rights is paid in
advance, the balance of which is frozen and supervised by
three parties through a tripartite supervision agreement
signed by Yintai Shengxin, the 602nd Team of Jilin
Provincial Nonferrous Metals Geological Exploration
Bureau and its account opening bank.
604,109,196.48

— II-159 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

55. Monetary Items in Foreign Currency

(1) Monetary items in foreign currency

Unit: RMB

				Closing RMB
		Closing foreign		balance after
Item		currency balance	Translation rate	translation
Monetary	funds	–	–
Of which:	US dollar	4,149,152.15	6.5249	27,072,802.86
	Singapore dollar	14,598.95	4.9314	71,993.26

(2) Explanation of overseas operating entities, including for important overseas operating entities, the principal place of business overseas, recording currency and basis of choice, and if the recording currency changes, the reasons shall also be disclosed.
✔ Applicable □ N/A

Basis for adopting Name of overseas Registered place Reporting functional currency for subsidiary of business currency bookkeeping Yintai Shenghong Singapore Singapore US dollar Sales, purchases, financing Co., Ltd. and other operating activities are mainly denominated in US dollars

56. Hedging

Disclosure of hedging items and related hedging instruments by hedging type, qualitative and quantitative information on hedged risks:

Gold, silver, lead, zinc contained in the company’s products and silver, tin, nickel, aluminum, copper, etc. in the metal trade are basic products of trading varieties in precious metals and non-ferrous metals commodity futures markets. In order to reduce the impact of commodity price fluctuations in spot operations on the business, the company makes full use of hedging function of the financial derivatives market, and effectively controls the company’s operating risks according to the principle of synchronous futures and spots and complementary profit and loss between futures and spots.

All derivatives investments of the company including hedging have been submitted to the board of directors for review, and the Derivatives Investment Business Management System and the Hedging Business Management System have been formulated as the internal control and management system for derivatives investment business. These systems clearly stipulate the variety scale, source of funds, approval authority, decision-making procedures, authorization system, business process, risk management, information disclosure, etc. of the company’s derivatives investment business, which can effectively ensure the smooth progress of derivatives investment business, and effective control over its risks. The

— II-160 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

company’s existing self-owned capital size can support the required Security deposit and follow-up support funds for the company’s derivatives investment business.

According to the Accounting Standards for Business Enterprises No. 24 - Hedge Accounting, the daily accounting treatment of hedging business is carried out, and hedging is divided into fair value hedging and cash flow hedging.

Fair value hedging: The company is faced with large price fluctuations during metal trading activities, and manages the risk of commodity price changes through the futures contracts of futures exchanges for purchased commodity inventories or contracts for purchases and sales that have not yet been priced because it is worried that future inventory prices will fall and sales revenue will decline,. The company buys or sells a corresponding number of futures contracts in a certain proportion in the futures market, so as to stabilize the risk of price fluctuations for the company.

Cash flow hedging: For the mineral products that are expected to be sold, the company sells futures contracts for hedging because it is worried that the sales price will fall in the future and the cash income will decrease.

Hedging varieties Precious metal hedging Other non-ferrous metal hedging Total	Closing balance 47,303,728.16 22,942,355.41 70,246,083.57	Unit: RMB Opening balance 72,592,125.60 10,447,248.00
		83,039,373.60

— II-161 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

57. Government Subsidies

(1) Basic information on government subsidies

Unit: RMB

			Amount included
			in profit and loss
Type	Amount	Presentation item	for the period
Multi-level capital market
subsidies	3,000,000.00	Other income	3,000,000.00
Enterprise transformation and
upgrade subsidies	1,008,000.00	Other income	1,008,000.00
Stabilizing job allowance	669,932.15	Other income	669,932.15
Rewards for technology innovation	540,000.00	Other income	540,000.00
Special subsidies for scientific
achievements	249,000.00	Other income	249,000.00
Scientific research funding
subsidies for high-tech
enterprises	150,000.00	Other income	150,000.00
Rewards for enterprises above
designated size	440,000.00	Other income	440,000.00
Government subsidies for tailings
pond environmental protection	478,800.00	Deferred income	34,200.00

(2) Return of government subsidies

□ Applicable ✔ N/A

VIII. CHANGES IN THE SCOPE OF CONSOLIDATION

1. Changes in the Scope of Consolidation for Other reasons

Deregistration of subsidiaries in the period: In December 2020, the company deregistered its subsidiary Inner Mongolia Yulong Technology Inspection Service Co., Ltd. and completed the industrial and commercial deregistration on 28 January 2021.

In December 2019, the company liquidated its subsidiary Yintai Shengda Mining Investment and Development Co., Ltd. and completed the industrial and commercial deregistration on 22 January 2020.

Newly established subsidiaries in the period: On 18 September 2020, the company established a new subsidiary, namely Jilin Yintai Shengxin Mining Co., Ltd., with a shareholding ratio of 75%.

— II-162 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

IX. EQUITY IN OTHER ENTITIES

1. Equity in Subsidiaries

(1) Composition of the enterprise group

Name of subsidiary
Major place of
business
Place of
registration
Business nature
Yulong Mining
Inner Mongolia
Inner Mongolia
Xilingol League
Mining of silver, lead,
and zinc mines, sales
of mineral products
Yintai Shenghong
Shanghai
Shanghai
Free-Trade
Zone
Supply chain
management, etc.
Shenghong Singapore
Singapore
Singapore
supply chain
management, etc.
Yongheng Trading
Ningbo
Jiangbei District,
Ningbo City,
Zhejiang
Province
Trading services
Yulong Technology
Inspection
Inner Mongolia
Inner Mongolia
Xilingol League
Inspection technology
consulting services
Shanghai Shengwei
Shanghai
Shanghai
Controlling company
Sino Gold BMZ
Cayman Islands
Cayman Islands
Controlling company
Jilin Banmiaozi
Baishan City, Jilin
Province
Baishan City, Jilin
Province
Prospecting, mining and
smelting of gold mines,
sales of mineral
products
Jincheng Mining
Baishan City, Jilin
Province
Baishan City, Jilin
Province
Detailed survey of gold
and metal mines
Yintai Shengxin
Baishan City, Jilin
Province
Baishan City, Jilin
Province
Geological prospecting
Sino Gold Hong Kong
Hong Kong
Hong Kong
Controlling company
Rock Hong Kong
Hong Kong
Hong Kong
Controlling company
Heihe Yintai
Xunke County,
Heihe City,
Heilongjiang
Province
Xunke County,
Heihe City,
Heilongjiang
Province
Prospecting, mining and
smelting of gold mines,
sales of mineral
products
Qinghai Dachaidan
Haixi Prefecture,
Qinghai
Province
Haixi Prefecture,
Qinghai
Province
Prospecting, mining and
smelting of gold mines,
sales of mineral
products

Shareholding ratio
Method of
obtaining
Direct
Indirect
76.67%
Business
combination
90.00%
New
establishment
90.00%
New
establishment
90.00%
New
establishment
76.67%
New
establishment
100.00%
Business
combination
100.00%
Business
combination
95.00%
Business
combination
75.00%
Business
combination
75.00%
New
establishment
100.00%
Business
combination
100.00%
Business
combination
100.00%
Business
combination
90.00%
Business
combination

— II-163 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(2) Important non-wholly owned subsidiaries

Unit: RMB

			Dividends
		Profit and loss	declared for	Balance of
		attributable to	distribution to	minority
		minority	minority	shareholders’
	Minority	shareholders	shareholders	equity at the
	shareholding	in the current	in the current	end of the
Name of subsidiary	ratio	period	period	period
Yulong Mining	23.33%	57,522,453.21		942,463,123.90
Jilin Banmiaozi	5.00%	12,255,064.32		69,170,052.34
Qinghai Dachaidan	10.00%	52,108,563.05	13,904,747.32	132,791,528.22
Yintai Shenghong	10.00%	1,992,627.55		23,321,967.02

(3) Major financial information of important non-wholly owned subsidiaries

Unit: RMB

Closing balance Opening balance Current Non-current Current Non-current Total Current Non-current Current Non-current Total Name of subsidiary assets assets Total assets liabilities liabilities Liabilities assets assets Total assets liabilities liabilities Liabilities Yulong Mine Industry 475,881,890.63 3,698,011,714.10 4,173,893,604.73 125,395,823.66 8,828,762.03 134,224,585.69 189,945,531.95 3,726,394,737.55 3,916,340,269.50 86,920,800.02 7,728,623.92 94,649,423.94 Jilin board Miaozi 163,297,846.59 1,459,503,062.92 1,622,800,909.51 134,508,188.40 180,565,474.32 315,073,662.72 154,034,606.69 1,561,854,085.86 1,715,888,692.55 452,904,161.46 200,358,570.57 653,262,732.03 Qinghai University Chai Dan 438,623,500.64 1,224,044,484.99 1,662,667,985.63 280,317,469.22 298,174,005.57 578,491,474.79 529,657,967.00 1,216,317,520.89 1,745,975,487.89 319,650,978.90 621,395,677.34 941,046,656.24 – Intime Hung 1,232,783,090.89 4,081,060.20 1,236,864,151.09 1,003,621,536.99 1,003,621,536.99 978,327,610.08 634,779.60 978,962,389.68 753,607,904.12 753,607,904.12

Unit: RMB

		Amount for the	current period			Amount for	the last period
			Total	Cash flow			Total	Cash flow
			comprehensive	from			comprehensive	from
	Operating		income	operating	Operating		income	operating
Name of subsidiary	revenue	Net profit	Forehead	activities	revenue	Net profit	Forehead	activities
Yulong Mining	798,021,145.95	246,557,908.69	246,557,908.69	452,121,178.12	523,353,207.51	144,426,091.87	144,426,091.87	220,901,761.00
Jilin Banmiaozi	705,848,193.07	245,101,286.27	245,101,286.27	426,856,560.77	380,459,080.52	53,327,502.97	53,327,502.97	145,690,045.03
Qinghai Dachaidan	751,143,593.48	293,116,939.83	293,116,939.83	381,355,921.40	469,862,491.46	232,858,097.56	232,858,097.56	341,422,770.32
Yintai Shenghong	7,856,134,303.10	14,812,371.68	7,888,128.54	374,972,465.65	5,098,032,039.26	13,793,293.00	13,893,277.07	-125,989,922.80

Other explanations: The major financial information of the subsidiary is the amount after adjusting the individual financial statements based on the fair value of the company’s identifiable assets and liabilities on the purchase date when the consolidated statements are prepared.

— II-164 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

X. RISKS RELATED TO FINANCIAL INSTRUMENTS

The company’s main financial instruments include monetary funds, derivative financial assets, financial assets held for trading and borrowings, etc. The company also has various other financial assets and liabilities directly arising from operations, such as accounts receivable, bills payable and accounts payable.

The main risks caused by the company’s financial instruments are credit risk, liquidity risk and market risk.

1. Credit risk

Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The company is mainly exposed to customer’s credit risk arising from sales on credit. The company establishes a customer credit management system, and conducts a credit review of the counterparty in accordance with the relevant regulations and procedures of the company’s contract management measures before the transaction. The company only conducts transactions with approved and reputable customers, and makes sure that the counterparty is capable of performing relevant contract. In accordance with the company’s policies, if credit transactions are carried out with identified specific customers, the company will continuously monitor the balance of accounts receivable to ensure that the company is not exposed to major bad debt risks.

The company’s other financial assets include monetary funds and receivables and other receivables. The credit risk of these financial assets comes from the default of counterparties, and the maximum risk exposure is equal to the carrying amount of these instruments. The company is not exposed to the credit risk due to the provision of financial guarantees.

As of 31 December 2020, the book balance and expected credit impairment losses of relevant assets are as follows:

Item Financial assets held for trading Other current assets Derivative financial assets Accounts receivable Other receivables Total	Book balance 1,535,264,849.67 693,121,505.30 99,865,745.36 50,810,385.53 30,441,082.73 2,409,503,568.59	Unit: RMB Provision for impairment 2,540,519.28 9,554,131.15
		12,094,650.43

— II-165 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

2. Liquidity risk

Liquidity risk is the risk that the Company will encounter shortage of funds in meeting obligations that are settled by delivering cash or other financial assets.

It is the Company’s policy to ensure that it has sufficient cash to meet debt obligations as they fall due. Liquidity risk is centrally controlled by the Company’s financial department. The finance department will ensure that the company has sufficient funds to repay its debts under all reasonable forecasts through monitoring of cash balance, as well as rolling forecast of cash flows for the next 12 months.

As of 31 December 2020, the Company’s financial liabilities and off-balance-sheet guarantee items are presented at undiscounted contractual cash flow over the remaining maturity of contract as follows:

Unit: RMB

Item Short-term borrowing Bills payable Accounts payable Other payables Long term borrowing Long-term payables Non-current liabilities due within one year Total		Closing balance	Closing balance
	Within 1 year 179,194,662.50 447,518,000.00 96,983,839.48 145,578,336.09 6,781,376.00 876,056,214.07	1-3 years 19,167,067.68 51,815,467.28 234,929,916.67 13,562,752.00 319,475,203.63	Over 3 years 6,001,748.32 6,034,105.45 6,781,376.00 18,817,229.77	Total 179,194,662.50 447,518,000.00 122,152,655.48 203,427,908.82 234,929,916.67 20,344,128.00 6,781,376.00
				1,214,348,647.47

3. Market risk

Market risk refers to the risk of fluctuations in the fair value of financial instruments or future cash flows due to changes in market prices, including exchange rate risk, interest rate risk and other price risks.

(1) Exchange rate risk

Exchange rate risk refers to the risk of fluctuations in the fair value of financial instruments or future cash flows due to changes in foreign exchange rates. At present, the amount of the company’s foreign exchange assets is small, but the price risk will be affected by changes in the exchange rate.

— II-166 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

As of 31 December 2020, the amount of foreign currency financial assets and foreign currency financial liabilities held by the company converted into RMB is presented as follows:

Unit: RMB

Closing balance Singapore dollar Dollar-denominated -denominated Item item item Total Foreign currency financial assets: Monetary funds 27,072,802.86 71,993.26 27,144,796.12

Item

(2) Interest rate risk

Interest rate risk refers to the risk of fluctuations in the fair value of financial instruments or future cash flows due to changes in market interest rates. Since the company’s borrowings are at fixed interest rates, there is no risk of changes in RMB benchmark interest rates. In addition, the company purchases fixed-income or low-risk wealth management products in banks, which does not pursue high returns and are all short-term wealth management products, with low interest rate risk. There is basically no interest rate risk in the reverse repurchase of treasury bonds and the investment in monetary funds.

(3) Other price risks

The company’s other price risks mainly come from bulk metal trading prices. In order to stabilize the risk of price fluctuations, when conducting metal trading, the company generally purchases similar futures products in the futures market to avoid the risk of price fluctuations or hedges corresponding forward bulk metal purchase contracts. Since the financial derivatives market itself has certain systemic risks, it is necessary to make reasonable and effective predictions on price trends when conducting hedging operations. Once the price forecast deviates, it may affect the effect of hedging business.

XI. DISCLOSURE OF FAIR VALUE

1. Financial Instruments Measured at Fair Value

The company presented the carrying amount of financial instruments measured at fair value on 31 December 2020 according to three levels of fair value. When the fair value is classified into three levels as a whole, it is based on the lowest level among the three levels to which each important input used in fair value measurement belongs. The three levels are defined as follows:

Level 1: They are unadjusted quoted prices in active markets for identical assets or liabilities available at the date of measurement;

— II-167 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Level 2: They are direct or indirect observable inputs for the relevant asset or liability other than Level 1 inputs;

Level 2 input include: 1) quoted prices for similar assets or liabilities in active markets; 2) quoted prices for the identical or similar assets or liabilities in inactive markets; 3) other observable inputs excluding quoted price, such as interest rates and yield curves, implied volatility and credit spreads, etc. observable at commonly quoted intervals; 4) inputs that are evidenced in market, etc.

Level 3: They are unobservable inputs for the relevant asset or liability.

2. Fair Value Measurement at the End of the Period

(1) Continuous fair value measurement

Unit: RMB

Fair value at the end of the period

Item	Level 1	Level 2	Level 3	Total
Financial assets held for trading		1,535,264,849.67		1,535,264,849.67
Derivative financial assets	99,865,745.36			99,865,745.36
Investment in other equity
instruments			55,803,885.24	55,803,885.24

XII. RELATED PARTIES AND RELATED PARTY TRANSACTIONS

1. The Parent Company of the Enterprise

				Shareholding	Proportion of
				ratio of the	voting rights of
				parent	the parent
Name of the parent			Registered	company in the	company in the
company	Place of registration	Business nature	capital	enterprise	enterprise
China Yintai Holdings	Unit 404, 4th Floor,	Limited liability	RMB1,000,000,000	14.44%	14.44%
Co., Ltd.	Building 3, Yard 2,	company
	Jianguomenwai Street,
	Chaoyang District,
	Beijing

Explanation of the parent company of the enterprise

(1) The parent company of the company is China Yintai Holdings Co., Ltd., the scope of whose main business is asset custody, reorganization and operation; investment, development and operation of agriculture, forestry, animal husbandry and fishery; investment, development and operation of high-tech

— II-168 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

industries; research and development and sales of sanitary products and labor insurance products; investment and operation of commercial department store retailing.

(2) Shen Guojun holds 100% equity of Beijing Guojun Investment Co., Ltd. (北京國俊投資有限公司), which in turn holds 92.5% equity of China Yintai. As of the balance sheet date, Shen Guojun directly holds 6.49 % equity of Yintai Gold, and China Yintai holds 14.44 % equity of Yintai Gold. In view of the above, Shen Guojun and China Yintai jointly hold 20.93 % equity of Yintai Gold.

The ultimate controlling party of the enterprise is Shen Guojun.

2. Subsidiaries of the enterprise

For the details of subsidiaries of the enterprise, please refer to Note IX. Equity in Other Entities.

3. Other related party

Name of other related party

Relationship between other related parties and the company

Beijing Yintai Real Estate Co., Ltd. and its Property Management Branch

Same ultimate controller

4. Related transactions

(1) For subsidiaries that have a control relationship and have been included in the scope of the company’s consolidated financial statements, their mutual transactions and parent-subsidiary transactions have been offset.
(2) Related party transactions of purchase and sale of goods, provision and acceptance of services

Unit: RMB

transaction Amount for the Amount for the Related party content current period last period Beijing Yintai Real Estate Co., Ltd. Property services 585,851.22 538,437.82 Property Management Branch

Related party

— II-169 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(3) Related leases

The company as lessee:

Unit: RMB

Lease fees Lease fee Type of leased recognized in the recognized in the Name of lessor assets current period last period Beijing Yintai Real Estate Co., Ltd. Office building 5,432,636.00 5,926,512.00

(4) Related Guarantees

The company as the guaranteed party

Unit: RMB

Whether the guarantee Guarantee Guarantee Guarantee has been Guarantor amount start date expiry date fulfilled China Yintai Holdings Co., Ltd. 234,500,000.00 9 November 9 November No 2017 2024

(5) Remuneration of key management personnel

Unit: RMB

Amount for the Amount for the Item current period last period Remuneration of key management personnel 1,702.65 1,585.72

— II-170 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

5. Receivables and Payables of Related Parties

(1) Receivable items

Unit: RMB

		Closing	balance		Opening	balance
			Provision			Provision
		Book	for bad		Book	for bad
Item	Related party	balance		debts	balance	debts
Prepayments	Beijing Yintai Real Estate	518,569.80			1,037,139.60
	Co., Ltd.
Prepayments	Beijing Yintai Real Estate	52,618.39			88,165.64
	Co., Ltd. Management
	Branch
Other receivables	Beijing Yintai Real Estate	1,555,709.40	311,141.88		1,555,709.40	155,570.94
	Co., Ltd.
Other receivables	Beijing Yintai Real Estate	107,181.60	21,436.32		107,181.60	10,718.16
	Co., Ltd. Property
	Management Branch

XIII. COMMITMENTS AND CONTINGENCIES

1. Important Commitments

The company has no important commitments that need to be disclosed.

2. Contingencies

(1) Important contingencies existing on the balance sheet date

The company has no important contingencies that need to be disclosed.

XIV. EVENTS AFTER THE BALANCE SHEET DATE

1. Profit Distribution

According to the Resolution on Consideration of the Company’s Profit Distribution Plan for 2020 deliberated at the fourth meeting of the eighth session of the board of directors of the company, the proposed profit distribution plan for 2020 of the company is: based on the existing share capital of 2,776,722,265 shares, a cash dividend of RMB2.5 (tax included) will be distributed to all shareholders for every 10 shares, for a total of RMB694,180,566.25. The resolution still needs to be submitted to the company’s 2020 annual general meeting for consideration.

— II-171 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

2. Description of Other Events after the Balance Sheet Date

In December 2020, the company liquidated its subsidiary Yulong Technology Inspection, and completed the industrial and commercial deregistration in January 2021.

XV. OTHER IMPORTANT MATTERS

1. Other Important Transactions and Matters that Affect Investors’ Decision-Making

(1) Implementation of employee stock ownership plan

On 15 May 2019, the 2018 annual general meeting of the company reviewed and approved the resolution on the Company’s Phase I Employee Stock Ownership Plan (Draft) and other related resolutions. The employee stock ownership plan aims to establish and improve the benefit sharing mechanism between workers and owners, improve the cohesion of employees and the company’s competitiveness, and ensure the company’s long-term and stable development. The source of underlying stocks involved is the shares repurchased through the company’s special account for repurchase, and the purchase price of underlying stocks is the price adjusted by the company’s repurchase price after ex-rights and ex-dividend events. The total fund raised by the employee stock ownership plan is RMB213,710,800, for RMB1 each share, representing a total of 213,710,800 shares; the duration of the employee stock ownership plan is 24 months, commencing from the date when the company’s general meeting considers and approves the draft employee stock ownership plan; the lock-up period of underlying stocks is 12 months, commencing from the date when the company announces the transfer of the last batch of underlying stocks to the name of the employee stock ownership plan.

On 17 July 2019, the company received the Securities Transfer Registration Confirmation issued by China Securities Depository and Clearing Co., Ltd., and 25,411,505 shares of the company held in the company’s special account for repurchase were all transferred to the company’s phase I employee stock ownership plan in the form of non-trading transfer on 16 July 2019. On 20 July 2020, the company’s shares held by the company’s phase I employee stock ownership plan have been sold out.

(2) Major asset restructuring

On 25 September 2019, the company held the 16th meeting of the seventh session of the board of directors, and considered the relevant resolutions on the issue of shares to purchase assets. It is planned to purchase 83.75% of the equity of Guizhou Dingshengxin Mining Development Co., Ltd. (貴州鼎盛鑫礦業發展有限公司) from Dong Ying (董贏) and Bai Guanghui (柏光輝) by way of issuing shares and paying in cash. On the same day, the company signed relevant agreements with Dong Ying and Bai Guanghui such as the Supplementary Agreement to the Framework Agreement on Issue of Shares and Payment of Cash to Purchase Assets. Pursuant to the relevant agreements, the company paid Dong Ying and Bai Guanghui a total

— II-172 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

deposit of RMB600 million. On 18 October 2019, Dong Ying and Bai Guanghui, the counterparties to the transaction, gone through the pledge procedures for their 16.25% equity held in Guizhou Dingshengxin Mining Development Co., Ltd. upon payment by the company of RMB600 million as deposit.

Due to large differences between both parties on certain terms of the supplementary agreement, they could not reach a consensus and failed to sign the supplementary agreement. In order to effectively protect the interests of the company and all shareholders, on 19 May 2020, the company held the 25th meeting of the seventh session of the board of directors, and reviewed and approved the Resolution on Terminating Matters Related to Major Asset Restructuring, agreeing to terminate this major asset restructuring.

According to the relevant agreements, Dong Ying and Bai Guanghui should return the deposit and compensation for capital occupation to the company within three working days after the termination of this transaction. However, within three working days after the termination of this transaction, the company did not receive the deposit and compensation for capital occupation.

Therefore, in order to avoid damage to the legitimate rights and interests of the company, on 2 July 2020, the company submitted the Application for Arbitration to the Beijing Arbitration Commission with Dong Ying and Bai Guanghui as the respondent.

On 2 February 2021, the company received the Beijing Arbitration Commission Award [(2021) Jing Zhong Cai Zi No. 0309] issued by the Beijing Arbitration Commission.

As of 3 March 2021, the company received the deposit of RMB600 million returned by Dong Ying and Bai Guanghui, as well as the compensation for capital occupation until the repayment date, legal fees, and arbitration fees totaling RMB672,323,151.96. Dong Ying and Bai Guanghui have already fulfilled the repayment obligation determined in the Beijing Arbitration Commission Award [(2021) Jing Zhong Cai Zi No. 0309].

(3) Proceeds from the transfer of mining rights of Jilin Banmiaozi Mining Co., Ltd.

According to relevant provisions of the Interim Measures for the Administration of Collection of Proceeds from the Transfer of Mining Rights 《礦業( 權出讓收益徵收管理暫行辦法》) (Cai Zong [2017] No. 35) issued by the Ministry of Finance and the Ministry of Land and Resources, if the prospecting right obtained after submitting prior application been converted into the mining right, the proceeds from the transfer of mining right shall be collected based on the remaining resources reserves by way of transfer by agreement. According to the Assessment Report on Proceeds from the Transfer of Jinying Gold Mine Mining Rights of Jilin Banmiaozi Mining Co., Ltd. (Jilin Guodi Mining Rights Ping Bao Zi [2020] No. S080) issued by Jilin Guodi Mining Rights Evaluation Co., Ltd. (吉林國地礦業權評估有限公司), the appraised value of proceeds from the transfer of Jinying Gold Mine mining right of

— II-173 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Jilin Banmiaozi Mining Co., Ltd. is RMB227,878,300, and the work related to such proceeds from the transfer is being carried out in an orderly manner.

(4) Participate in the establishment of investment funds

On 20 August 20 20, the company held the 26th meeting of the seventh session of the board of directors, and reviewed and approved the Resolution on the Company’s Participation in the Establishment of Investment Funds. The company and 11 partners including Lianchu Runda Equity Investment Management Co., Ltd. (聯儲潤達股權投資管理有限公司) jointly established Jiaxing Xiyao Equity Investment Partnership (Limited Partnership) (嘉興希耀股權投資合夥企業（有限合夥）). The registered capital of the partnership established is RMB460,000,000, of which the company contributes RMB3,000,000 with its own funds as a limited partner, accounting for 6.52%. For details, please refer to the Announcement on Participating in the Establishment of Investment Funds disclosed on 21 August 2020 by the company on the website of CNINF and China Securities Journal, Shanghai Securities News and Securities Times.

On 21 September 2020, the company disclosed the Announcement on the Progress of Participating in the Establishment of Investment Funds. For details, please refer to the announcement disclosed by the company on the website of CNINF and China Securities Journal, Shanghai Securities News and Securities Times.

2. Guarantees Provided by the company for its Controlling Subsidiaries

Unit: RMB

				Whether the
	Guarantee	Guarantee		guarantee has
Guaranteed party	amount	start date	Guarantee expiry date	been fulfilled
Qinghai Dachaidan	179,000,000.00	25 September	Three years after the	No
		2020	expiration of the main
			contract debt performance
			period
Heihe Yintai	95,748,590.00	17 October	Two years after the	Yes
		2019	expiration of the precious
			metal lease term under the
			main contract
Yintai Shenghong	50,000,000.00	28 August 2020	Three years after the	Yes
			expiration of the main
			contract debt performance
			period

Explanation: Qinghai Dachaidan’s approved guarantee amount is RMB200 million, Heihe Yintai’s approved guarantee amount is RMB500 million; Yintai Shenghong’s approved guarantee amount is RMB100 million.

— II-174 —

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

XVI. NOTES TO MAIN ITEMS OF THE FINANCIAL STATEMENTS OF THE PARENT COMPANY

1. Other Receivables

Item

Other receivables

Total

Unit: RMB Closing balance Opening balance 668,761,290.64 1,336,023,281.79 668,761,290.64 1,336,023,281.79

(1) Other receivables

1) Disclosure by aging

Unit: RMB

Aging Closing balance Opening balance Within 1 year 533,549,410.07 1,334,497,604.89 1–2 years 133,855,547.77 2–3 years 1,693,391.00 3–4 years 1,693,391.00 4–5 years Over 5 years 3,250.00 3,250.00 Subtotal 669,101,598.84 1,336,194,245.89 Less: Provision for bad debts 340,308.20 170,964.10 Total 668,761,290.64 1,336,023,281.79

— II-175 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

2) Classification by the nature of payment

Unit: RMB

Nature of payment Current account Deposit and security deposit Others Total	Closing balance 667,404,857.84 1,696,641.00 100.00 669,101,598.84	Opening balance 1,334,497,604.89 1,696,641.00
		1,336,194,245.89

3) Disclosure by three stages of financial asset impairment

Unit: RMB

Item Stage I Stage II Stage III Total		Closing balance	Carrying amount 668,761,290.64 668,761,290.64		Opening balance
	Book balance 669,101,598.84 669,101,598.84	Bad debt provision 340,308.20 340,308.20		Book balance 1,336,194,245.89 1,336,194,245.89	Bad debt provision 170,964.10 170,964.10	Carrying amount 1,336,023,281.79
						1,336,023,281.79

4) Disclosure by category of methods of provision for bad debts

Unit: RMB

	Closing balance
Book balance Amount Proportion (%) 669,101,598.84 100.00 1,696,741.00 0.25 667,404,857.84 99.75 669,101,598.84 100.00	Bad debtprovision Amount Proportion (%) 340,308.20 0.05 340,308.20 20.06 340,308.20 0.05	Carrying amount 668,761,290.64 1,356,432.80 667,404,857.84
Amount 669,101,598.84 1,696,741.00 667,404,857.84 669,101,598.84	Amount 340,308.20 340,308.20 340,308.20
		668,761,290.64

— II-176 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Continued:

Unit: RMB

Opening balance

		Opening balance
Category Other receivables with provision for ECL on an individual basis Other receivables with provision for ECL on a group basis Including: Grouped by aging Grouped by related parties Total	Book balance Amount Proportion (%) 1,336,194,245.89 100.00 1,696,641.00 0.13 1,334,497,604.89 99.87 1,336,194,245.89 100.00	Bad debtprovision Amount Proportion (%) 170,964.10 0.01 170,964.10 10.08 170,964.10 0.01	Carrying amount 1,336,023,281.79 1,525,676.90 1,334,497,604.89
	Amount 1,336,194,245.89 1,696,641.00 1,334,497,604.89 1,336,194,245.89	Amount 170,964.10 170,964.10 170,964.10
			1,336,023,281.79

5) Other receivables with provision for ECL on a group basis
① Grouped by aging

Unit: RMB

Aging Within 1 year 1–2 Year 2–3 Year 3–4 Year 4–5 Year Over 5 years Total		Closing balance
	Book balance 100.00 1,693,391.00 3,250.00 1,696,741.00	Bad debt provision 5.00 338,678.20 1,625.00 340,308.20	Proportion (%) 5.00 20.00 50.00

— II-177 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

② Grouped by related parties

Closing balance Aging Book balance Bad debt provision Within 1 year 533,549,310.07 1–2 years 133,855,547.77 2–3 years 3–4 years 4–5 years Over 5 years Total 667,404,857.84 6) Provision for bad debts of other receivables Bad debt provision Stage I Stage II Stage III ECL over the next 12 months Lifetime ECL (non-credit impaired Lifetime ECL (credit impaired) Opening balance 170,964.10 Opening balance in the current period – Transfer to stage II – Transfer to stage III – Reversed from stage II – Reversed from stage I Provision made for the period 169,344.10 Reversed in the period Offset in the period Write off in the period Closing balance 340,308.20		Closing balance
				Proportion (%)


				Unit: RMB Total 170,964.10 169,344.10
				340,308.20

— II-178 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

7) Top five other receivables according to the closing balance collected by the debtor

Unit: RMB

Company name Nature of payment Ningbo Yintai Yongheng Trading Co., Ltd. ( 寧波銀泰永亨貿易有限公司) Current account Qinghai Dachaidan Mining Co., Ltd. (青海大柴旦礦業有限公司) Current account Yintai Shenghong Supply Chain Management Co., Ltd. (銀泰盛鴻供應鏈管理有限公司) Current account Jilin Banmiaozi Mining Co., Ltd. (吉林板廟子礦業有限公司) Current account Shanghai Shengwei Mining Investment Co., Ltd. (上海盛蔚礦業投資有限公司) Current account Total	Closing balance Aging 309,524,666.71 Within 1 year 1-2 years 184,360,416.68 Within 1 year 100,182,361.11 Within 1 year 54,485,500.32 Within 1 year 1-2 years 18,851,913.02 Within 1 year 667,404,857.84	Proportion to the Closing balance of other receivables Closing balance of provision for bad debts (%) 46.26 27.55 14.97 8.14 2.82 99.74

2. Long-term equity investment

Unit: RMB

Item Investment in subsidiaries Total		Closing balance	Carrying amount 7,535,036,559.55 7,535,036,559.55		Opening balance
	Book balance 7,535,036,559.55 7,535,036,559.55	Provision for impairment		Book balance 7,535,036,559.55 7,535,036,559.55	Provision for impairment	Carrying amount 7,535,036,559.55
						7,535,036,559.55

— II-179 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(1) Investment in subsidiaries

Unit: RMB

Investee Opening balance (carrying amount) Changes in the Additional investment Reduce in investment Inner Mongolia Yulong Mining Industry Co., Ltd. (內蒙古玉龍礦業股份有限公司) 2,745,459,892.91 Shanghai Shengwei Mining Investment Co., Ltd. (上海盛蔚礦業投資有限公司) 4,609,576,666.64 Yintai Shenghong Supply Chain Management Co., Ltd. (銀泰盛鴻供應鏈管理有限公司) 180,000,000.00 Total 7,535,036,559.55 3. *Investment Income* Item Income from long-term equity investments under cost method Investment income from disposal of long-term equity investment Investment income of wealth management products Interest income from acquisition of equity Total		Changes in the	current period

— II-180 —

APPENDIX II FINANCIAL INFORMATION OF THE TARGET COMPANY

XVII. SUPPLEMENTARY INFORMATION

1. Breakdown of Non-Recurring Profit or Loss for the Period

✔ Applicable □ N/A

Unit: RMB

Item

Amount Explanation

-4,577,810.27

Gain and loss on disposal of non-current assets -4,577,810.27 Government grants included in current profit or loss (other than government grants which are closely related to corporate business and granted based on a fixed amount or a fixed quantity unified by the state) 6,091,132.15
Capital occupation fee charged to non-financial Interest income from enterprises included in current profits and losses 53,857,224.11 acquisition of equity
Profit and loss from entrusting others to invest in Income from wealth or manage assets 35,219,154.17 management
Gain or loss on changes in fair value from financial assets held for trading, derivative financial assets, financial liabilities held for trading, derivative financial liabilities, and investment income from disposal of financial assets held for trading, derivative financial assets, financial liabilities held for trading, derivative financial liabilities and other debt investment, except for effective hedging transactions that are related to the Company’ s normal operation -8,949,227.16
Other non-operating income and expenses other than the above 17,345,424.35
Less: Effect of income tax 27,551,006.49 Effect of minority interest -7,738,753.26 Total 79,173,644.12

Reasons shall be given with respect to the Company’s defining non-recurring profit and loss items based on the “Explanatory Announcement No. 1 for Information Disclosure by Public Issuers of Securities– Non-recurring Profit or Loss”, and classifying the non-recurring profit and loss items defined and listed in the Explanatory Notice on Information Disclosure of Companies with Public Offering No. 1-Non-recurring Profit and Loss 《公開發行證券的公司信息披露解釋性公告第( 1號－非經常性損益》) as recurring profit and loss items.

□ Applicable ✔ N/A

— II-181 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

2. Return on net assets and earnings per share

Profit during the reporting period Weighted average return on equity Net profit attributable to ordinary shareholders of the company 13.21% Net profit attributable to ordinary shareholders of the company after deducting non-recurring profit and loss 12.42%	Earnings per share
	Basic earnings per share Diluted earnings per share (RMB / share) (RMB / share) 0.4475 0.4475 0.4189 0.4189

3. Differences in accounting data under domestic and foreign accounting standards

(1) Differences in net profit and net assets in financial reports disclosed in accordance with international accounting standards and Chinese accounting standards
Applicable ✔ N/A
(2) Differences in net profit and net assets in financial reports disclosed in accordance with foreign accounting standards and Chinese accounting standards
Applicable ✔ N/A

— II-182 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(ii) The audited consolidated financial statements of the Target Group for the financial year ended 31 December 2021 prepared in accordance with CAS and audited by Da Hua Certified Public Accountants (Special General Partnership).

I. AUDIT REPORT

Type of audit opinion Standard unqualified opinion Signing date of audit report 8 April 2022 Name of auditor Da Hua Certified Public Accountants (Special General Partnership) Number of audit report Da Hua Shen Zi [2022] No. 008053 Name of certified public Hui Zengqiang Wang Zebin accountants

Text of the Audit Report

AUDIT REPORT

Da Hua Shen Zi [2022] No. 008053

All shareholders of Yintai Gold Co., Ltd.:

I. Audit Opinion

We have audited the financial statements of Yintai Gold Co., Ltd. (hereinafter referred to as Yintai Gold), including the consolidated and parent company balance sheet on 31 December 2021, consolidated and parent company income statement, consolidated and parent company cash flow statement, consolidated and parent company statement of changes in shareholders’ equity, and notes to relevant financial statements for 2021.

In our opinion, the attached financial statements have been prepared in accordance with the Accounting Standards for Business Enterprises in all material respects, and fairly reflect the consolidated and parent company financial position of Yintai Gold on 31 December 2021 and the consolidated and parent company operating results and cash flows in 2021.

II. The Basis for Forming the Audit Opinion

— II-183 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

III. Key Audit Matters

We have identified the following matters as key audit matters that need to be communicated in the audit report.

Revenue recognition;
Fixed assets and intangible assets;
Impairment of goodwill.
(I) Revenue recognition

1. Description of matter

As stated in the accounting policies described in “IV. Significant Accounting Policies and Accounting Estimates (xxxii)” and “VI. Note 40 to the Main Items of the Consolidated Financial Statements” in the notes to the financial statements, revenue from the main operations of Yintai Gold was RMB9,037 million in 2021, an increase of 14.36% over the same period of the previous year. Given that operating revenue is one of the key performance indicators for Yintai Gold, we have identified revenue recognition as a key audit matter.

2. Audit response

Our important audit procedures for revenue recognition include:

(1) Understand and evaluate the effectiveness of Yintai Gold’s design and implementation of internal control over sales and collection;
(2) Understand whether there are significant changes in the accounting policies for revenue recognition by examining agreements and contracts signed with major customers, and evaluate the appropriateness of the accounting policies for revenue recognition;
(3) Perform analytical procedures for fluctuations in revenue and gross margin of major products;
(4) Letter to major customers to confirm the sales amount and the receivables balance at the end of the period in 2021, and implement alternative audit procedures for customers who have not responded;

— II-184 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(5) Select samples from the recorded revenue transactions, and randomly check the supporting documents related to revenue, including sales contracts or agreements, sales invoices, delivery orders, settlement documents, etc.;
(6) Carry out a cut-off test on operating revenue to confirm whether the income is recorded in the correct accounting period;
(7) Review the adequacy and completeness of relevant disclosures in the notes to the financial statements.

Based on the audit work performed, we believe that the principles and methods adopted by the management in revenue recognition are reasonable.

(II) Fixed assets and intangible assets

1. Description of matter

As stated in the accounting policies described in “IV. Significant Accounting Policies and Accounting Estimates (xx) and (xxiv)” and “VI. Notes 10 and 13 to the Main Items of the Consolidated Financial Statements” in the notes to the financial statements, as of 31 December 2021, the total carrying value of Yintai Gold’s fixed assets was RMB2,809 million, and the total carrying value of intangible assets was RMB7,112 million, accounting for a significant proportion of the total consolidated assets, and Yintai Gold is an asset-heavy company with a large scale, quantity and type of assets, therefore, we think this matter is a key audit matter.

2. Audit response

Our important audit procedures for fixed assets and intangible assets include:

(1) Understand and evaluate the effectiveness of the internal control design and implementation of Yintai Gold’s fixed assets and intangible assets;
(2) Check the original basis for the formation of the original value of fixed assets and intangible assets;
(3) Understand the assumptions and methods used in the depreciation and amortization model, and review the accuracy of the accrual and allocation of depreciation and amortization expenses;
(4) Check the ownership certificates of fixed assets and intangible assets to determine whether they are owned or controlled by the audited unit;
(5) Check the increase and decrease of fixed assets and intangible assets, and obtain relevant details for verification;

— II-185 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(6) In order to confirm the existence of fixed assets, a physical inventory procedure was carried out for the fixed assets, and a two-way check was carried out between the physical objects and the ledger;
(7) Check whether there is indication of impairment in fixed assets and intangible assets, and check whether the identification of asset groups is appropriate;
(8) Review the adequacy and completeness of relevant disclosures in the notes to the financial statements.

Based on the audit work performed, we believe that the accounting principles and methods adopted by the management for fixed assets and intangible assets are reasonable.

(III) Impairment of goodwill

1. Description of matter

As stated in the accounting policies described in “IV. Significant Accounting Policies and Accounting Estimates (xxvi)” and “VI. Note 14 to the Main Items of the Consolidated Financial Statements” in the notes to the financial statements, as of 31 December 2021, the total carrying value of Yintai Gold’s goodwill was RMB452 million, and the corresponding impairment provision balance was RMB0.00.

2. Audit response

Our important audit procedures for goodwill impairment include:

(1) We evaluate and test the effectiveness of the design and implementation of the internal control related to the goodwill impairment test, including the adoption of key assumptions and the review and approval of impairment accrual amount;
(2) Evaluate the appropriateness of the valuation method used by the management when making cash flow projections by reference to industry practices;

— II-186 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(3) Recalculate the discount rate based on the market data of comparable companies in the industry, and compare our calculation results with those adopted by the management when calculating the present value of estimated future cash flows, to evaluate the discount rate used in calculating the present value of estimated future cash flows;
(4) Analyze the cash flow by comparing historical data and forecast data to evaluate the reliability and historical accuracy of the management’s forecasting process.
(5) Review the adequacy and completeness of relevant disclosures in the notes to the financial statements.

Based on the audit work performed, we believe that the management’s judgments and estimates on goodwill impairment are reasonable.

IV. Other Information

The management of Yintai Gold is responsible for other information. Other information includes that covered in Yintai Gold’s 2021 Annual Report, but excludes the financial statements and our audit report.

Our audit opinion on the financial statements does not cover the other information, nor do we express any form of assurance conclusion thereon.

If, based on the work we have performed, we determine that there is a material misstatement of the other information, we shall report that fact. In this regard, we have nothing to report.

V. Management and Governance’s Responsibilities for the Financial Statements

The governance is responsible for overseeing the financial reporting process of Yintai Gold.

— II-187 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

VI. Responsibilities of Certified Public Accountants for the Audit of Financial Statements

Identify and assess the risks of material misstatement of the financial statements due to fraud or error, design and implement audit procedures to address these risks, and obtain adequate and appropriate audit evidence as the basis for issuing an audit opinion. Since fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls, the risk of not detecting a material misstatement resulting from fraud is higher than the risk of not detecting a material misstatement resulting from error.
Understand the internal controls relevant to auditing in order to design appropriate audit procedures, but not for the purpose of expressing an opinion on the effectiveness of internal controls.
Evaluate the appropriateness of management’s selection of accounting policies and the rationality of accounting estimates and related disclosures.
Conclude on the appropriateness of management’s use of the going concern assumption. At the same time, based on the audit evidence obtained, a conclusion is reached as to whether there is a material uncertainty regarding the matters or circumstances that may cast significant doubt on the ability of Yintai Gold to continue as a going concern. If we conclude that a material uncertainty exists, auditing standards require that we draw the attention of users of the report to the relevant disclosures in the financial statements in the audit report; if the disclosures are inadequate, we should express a non-unqualified opinion. Our conclusions are based on the information available up to the date of the audit report. However, future matters or circumstances may cause Yintai Gold to be unable to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, and evaluate whether the financial statements fairly reflect relevant transactions and matters.
Obtain sufficient and appropriate audit evidence regarding the financial information of entities or business activities in Yintai Gold to express an opinion on the financial statements. We are responsible for guiding, supervising and performing group audits. We accept sole responsibility for our audit opinion.

— II-188 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Da Hua Certified Public Certificate Public Accountant Hui Zengqiang Accountants registered in China: (Special General Partnership) (Project Partner) Beijing, China Certificate Public Accountant Wang Zebin registered in China:

8 April 2022

— II-189 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

II. FINANCIAL STATEMENTS

The statement in the financial notes is presented in RMB

1. Consolidated Balance Sheet

Prepared by: Yintai Gold Co., Ltd.

Item Current assets: Monetary capital Clearing settlement funds Loans to other banks Financial assets held for trading Derivative financial assets Notes receivable Accounts receivable Receivables financing Prepayments Premiums receivable Reinsurance accounts receivable Reinsurance contract reserve receivable Other receivables Including: Interests receivable Dividends receivable Financial assets held under resale agreements Inventories Contract assets Assets held for sale Non-current assets due within one year Other current assets Total current assets	31 December 2021 1,455,700,499.01 2,074,042,141.82 112,351,762.10 39,977,496.73 42,740,385.17 47,639,935.53 336,372.46 1,028,330,998.21 36,839,584.51 4,837,622,803.08	Unit: RMB 31 December 2020 482,679,148.39 1,535,264,849.67 99,865,745.36 48,269,866.25 26,885,087.34 20,886,951.58 1,026,982,033.15 693,121,505.30
		3,933,955,187.04

— II-190 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Item

31 December 2021 31 December 2020

Non-current assets:

on-current assets:
Loans and advances Debt investments Other debt investments Long-term receivables Long-term equity investments Other equity instrument investments Other non-current financial assets Investment properties Fixed assets Construction in progress Productive biological assets Oil and gas assets Right-of-use assets Intangible assets Development expenses Goodwill Long-term deferred expenses Deferred income tax assets Other non-current assets tal non-current assets tal assets	44,303,885.24 2,808,584,710.82 424,659,399.66 37,134,963.76 7,112,054,994.74 452,365,699.74 29,672,067.83 98,305,166.55 88,552,675.92 11,095,633,564.26 15,933,256,367.34	55,803,885.24 2,783,312,677.63 200,415,684.70 5,318,458,341.50 452,365,699.74 26,510,372.05 80,300,961.89 55,632,960.05
		8,972,800,582.80

		12,906,755,769.84

Total non-current assets

Total assets

— II-191 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Item Current liabilities: Short-term borrowings Borrowing from central bank Loans from other banks Financial liabilities held for trading Derivative financial liabilities Bills payable Accounts payable Advances received Contract liabilities Proceeds from sale of repurchase financial assets Deposits from clients and placements from other banks Deposit for agency security transaction Deposit for agency security underwriting Staff remuneration payables Taxes payable Other payables Including: Interests payable Dividends payable Handling fees and commission payable Reinsurance accounts payable Liabilities held for sale Non-current liabilities due within one year Other current liabilities Total current liabilities	31 December 2021 682,032,529.88 1,718,374,146.25 162,883,100.68 144,048.99 16,016,500.89 56,319,147.45 175,549,465.08 215,556,106.87 59,549,061.47 2,082,145.12 3,088,506,252.68	31 December 2020 179,194,662.50 447,518,000.00 122,152,655.48 9,918,998.44 11,138,631.36 48,874,301.36 140,184,775.87 203,427,908.82 6,781,376.00 1,448,022.08
		1,170,639,331.91

— II-192 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Item

31 December 2021 31 December 2020

Non-current liabilities:

on-current liabilities:
Provision for insurance contracts Long-term borrowings Bonds payable Including: Preference shares Perpetual bonds Lease liabilities Long-term payables Long-term staff remuneration payables Accrued liabilities Deferred income Deferred income tax liabilities Other non-current liabilities tal non-current liabilities tal liabilities	10,346,681.01 150,241,052.00 42,538,554.00 410,400.00 302,467,065.46 506,003,752.47 3,594,510,005.15	234,929,916.67 20,344,128.00 45,283,429.64 444,600.00 354,563,348.18 14,248,463.35
		669,813,885.84

		1,840,453,217.75

Total non-current liabilities

Total liabilities

— II-193 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Item Owners’ equity: Share capital Other equity instruments Including: Preference shares Perpetual bonds Capital reserve Less: Treasury shares Other comprehensive income Special reserve Surplus reserve General risk reserve Undistributed profit Total equity attributable to the owners of the parent company Non-controlling interest Total owners’ equity Total liabilities and owners’ equity	31 December 2021 2,776,722,265.00 4,431,280,488.30 -6,369,278.83 2,558,340.56 503,405,545.11 2,758,837,701.09 10,466,435,061.23 1,872,311,300.96 12,338,746,362.19 15,933,256,367.34	31 December 2020 2,776,722,265.00 4,431,280,488.30 -6,400,461.01 5,346,480.89 438,886,250.88 2,244,198,862.94
		9,890,033,887.00

		1,176,268,665.09
		11,066,302,552.09

		12,906,755,769.84

Legal Representative: Principal in charge of accounting: Head of the Accounting Department: Yang Haifei Wang Xuan Liu Weimin

— II-194 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

2. Balance Sheet of the Parent Company

Item Current assets: Monetary capital Financial assets held for trading Derivative financial assets Notes receivable Accounts receivable Receivables financing Prepayments Other receivables Including: Interests receivable Dividends receivable Inventories Contract assets Assets held for sale Non-current assets due within one year Other current assets Total current assets Non-current assets: Debt investments Other debt investments Long-term receivables Long-term equity investments Other equity instrument investments Other non-current financial assets Investment properties Fixed assets Construction in progress Productive biological assets Oil and gas assets Right-of-use assets Intangible assets Development expenses Goodwill Long-term deferred expenses Deferred income tax assets Other non-current assets Total non-current assets Total assets	31 December 2021 40,367,127.30 115,263,500.00 180,959.46 540,093,918.94 1,087.75 695,906,593.45 8,682,698,659.55 30,000,000.00 904,572.54 6,650,626.11 1,374,720.37 5,125,117.78 8,726,753,696.35 9,422,660,289.80	Unit: RMB 31 December 2020 7,328,002.01 431,000,000.00 713,903.78 668,761,290.64 665,444,103.52
		1,773,247,299.95

		7,535,036,559.55 42,000,000.00 980,491.80 1,655,775.83 85,077.05
		7,579,757,904.23

		9,353,005,204.18

— II-195 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Item

31 December 2021 31 December 2020

Current liabilities:

Short-term borrowings 100,129,861.11 Financial liabilities held for trading Derivative financial liabilities Bills payable Accounts payable 147,775.09 318,282.93 Advances received Contract liabilities Staff remuneration payables 2,497,256.20 2,169,851.45 Taxes payable 564,411.06 10,083,669.45 Other payables 256,771,309.88 240,675.46 Including: Interests payable Dividends payable Liabilities held for sale Non-current liabilities due within one year 5,782,240.66 Other current liabilities Total current liabilities 365,892,854.00 12,812,479.29 Non-current liabilities: Long-term borrowings 234,929,916.67 Bonds payable Including: Preference shares Perpetual bonds Lease liabilities 492,251.54 Long-term payables Long-term staff remuneration payables Accrued liabilities Deferred income Deferred income tax liabilities Other non-current liabilities Total non-current liabilities 492,251.54 234,929,916.67 Total liabilities 366,385,105.54 247,742,395.96

— II-196 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Item

Owners’ equity: Share capital Other equity instruments Including: Preference shares Perpetual bonds Capital reserve Less: Treasury shares Other comprehensive income Special reserve Surplus reserve Undistributed profit Total owners’ equity Total liabilities and owners’ equity

31 December 2021 2,776,722,265.00 4,431,733,687.79 748.10 490,131,290.81 1,357,687,192.56 9,056,275,184.26 9,422,660,289.80	31 December 2020 2,776,722,265.00 4,431,733,687.79 748.10 425,611,996.58 1,471,194,110.75
	9,105,262,808.22

	9,353,005,204.18

— II-197 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

3. Consolidated Statement of Income

Unit: RMB

	2021	2020
Total operating revenue	9,040,243,854.29	7,905,802,338.95
Including: Operating revenue	9,040,243,854.29	7,905,802,338.95
Interest income
Premium earned
Handling fees and commission income
Total operating cost	7,289,097,284.99	6,241,476,027.45
Including: Operating cost	6,771,001,162.75	5,747,473,473.73
Interest expenses
Handling fees and commission expenses
Surrender value
Net payment of insurance claims
Net provision of insurance liability
contract reserve
Premium bonus expenses
Reinsurance expenses
Taxes and surcharges	178,634,545.58	189,900,185.98
Selling expenses	7,575,466.67	3,822,550.75
Administrative expenses	264,633,295.30	256,613,664.72
R&D expenses
Financial expenses	67,252,814.69	43,666,152.27
Including: Interest expenses	70,823,851.02	42,193,580.61
Interest income	7,564,849.45	1,029,909.86
Add: Other revenue	5,554,246.80	6,567,007.72
Investment income (loss is represented by “-”)	90,914,114.99	88,920,111.18
Including: Investment income from associates
and joint ventures
Gains from derecognition of
financial assets measured at
amortized cost
Gains from foreign exchange (loss is
represented by “-”)
Gains from net exposure to hedging (loss is
represented by “-”)
Gain on changes in fair value (loss is
represented by “-”)	20,542,397.64	-8,792,960.06
Impairment loss of credit (loss is represented
by “-”)	-1,538,036.32	-1,194,993.39
Impairment loss of assets (loss is represented
by “-”)
Gains from disposal of assets (loss is
represented by “-”)	-1,743,156.41	-1,890,453.55

Item

I. Total operating revenue

II. Total operating cost

— II-198 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Item		2021	2020
III.	Operating profit (loss is represented by “-”)	1,864,876,136.00	1,747,935,023.40
	Add: Non-operating revenue	3,561,948.20	73,086,301.14
	Less: Non-operating expenses	23,821,011.96	59,949,682.33
IV.	Total profit (total loss is represented by “-”)	1,844,617,072.24	1,761,071,642.21
	Less: Income tax expense	422,907,820.53	394,953,966.00
V.	Net profit (net loss is represented by “-”)	1,421,709,251.71	1,366,117,676.21
	(I) Classified by continuity of operations
	1. Net profit from continuing operations (net
	loss is represented by “-”)	1,421,709,251.71	1,366,117,676.21
	2. Net profit from discontinued operations (net
	loss is represented by “-”)
	(II) Classified by ownership
	1. Net profit attributable to shareholders of the
	parent company	1,273,338,698.63	1,242,446,761.34
	2. Profit or loss attributable to non-controlling
	interests	148,370,553.08	123,670,914.87
VI.	Net other comprehensive income after tax	26,353.04	20,370,318.61
	Net other comprehensive income after tax
	attributable to owners of the parent company	31,182.18	18,989,603.88
	(I) Other comprehensive income not reclassified to
	profit or loss

Changes arising on remeasurement of defined benefit plans
Other comprehensive income accounted for using the equity method that cannot be reclassified to profit or loss
Changes in fair value of investments in other equity instruments
Changes in fair value of own credit risk of the company
Others

— II-199 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Item					2021
	(II) Other comprehensive income to be	reclassified
	to profit or loss				31,182.18	18,989,603.88
	1. Other comprehensive income accounted for
	using the equity method that may be
	reclassified to profit or loss
	2. Changes in fair value of other debt
	investments
	3. Amount of financial assets reclassified into
	other comprehensive income
	4. Provisions for credit impairment	of other
	debt investments
	5. Reserve for cash flow hedging				534,118.82	25,221,422.70
	6. Exchange differences on translation			of
	financial statements in foreign currency				-502,936.64	-6,231,818.82
	7.Others
	Net other comprehensive income after tax
	attributable to non-controlling interest				-4,829.14	1,380,714.73
VII.	Total comprehensive income				1,421,735,604.75	1,386,487,994.82
	Total comprehensive income attributable	to		owners
	of the parent company				1,273,369,880.81	1,261,436,365.22
	Total comprehensive income attributable	to
	non-controlling interests				148,365,723.94	125,051,629.60
VIII.	Earnings per share:
	(I) Basic earnings per share				0.4586	0.4475
	(II) Diluted earnings per share				0.4586	0.4475
	Legal Representative:	Principal in charge				Head of the
	Yang Haifei		of accounting:		Accounting Department:
				Wang Xuan		Liu Weimin

— II-200 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

4. Income Statement of the Parent Company

				Unit: RMB
Item			2021	2020
I.	Operating revenue		0.00	0.00
	Less:	Operating cost	0.00	0.00
		Taxes and surcharges	837,593.97	375,997.91
		Selling expenses
		Administrative expenses	57,208,029.81	55,461,920.92
		R&D expenses
		Financial expenses	-1,345,851.34	-33,300,874.42
		Including: Interest expenses	20,946,958.31	14,304,500.00
		Interest income	22,674,021.99	47,637,995.27
	Add:	Other revenue	1,486,648.34	3,326,698.87
		Investment income (loss is represented by “-”)	695,469,924.17	62,942,715.11
		Including: Investment income from associates
		and joint ventures
		Gains from derecognition of
		financial assets measured at
		amortized cost (loss is
		represented by “-”)
		Gains from net exposure to hedging (loss is
		represented by “-”)
		Gain on changes in fair value (loss is
		represented by “-”)
		Impairment loss of credit (loss is represented
		by “-”)	-1,625.00	-169,344.10
		Impairment loss of assets (loss is represented
		by “-”)
		Gains from disposal of assets (loss is
		represented by “-”)	67,154.33
II.	Operating profit (loss is represented by “-”)		640,322,329.40	43,563,025.47
	Add:	Non-operating revenue	1,886.79	71,343,396.40
	Less:	Non-operating expenses	13,139.81
III.	Total	profit (total loss is represented by “-”)	640,311,076.38	114,906,421.87
	Less:	Income tax expense	-4,881,865.91	30,227,449.67
IV.	Net profit (net loss is represented by “-”)		645,192,942.29	84,678,972.20
	(I) Net profit from continuing operations (net loss
	is represented by “-”)		645,192,942.29	84,678,972.20
	(II) Net profit from discontinued operations (net
	loss is represented by “-”)

— II-201 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

2021

2020

Item

V. Net other comprehensive income after tax

(I) Other comprehensive income not reclassified to
profit or loss
Changes arising on remeasurement of defined benefit plans
Other comprehensive income accounted for using the equity method that cannot be reclassified to profit or loss
Changes in fair value of investments in other equity instruments
Changes in fair value of own credit risk of the company
Others
(II) Other comprehensive income to be reclassified to profit or loss
Other comprehensive income accounted for using the equity method that may be
reclassified to profit or loss
Changes in fair value of other debt investments
Amount of financial assets reclassified into other comprehensive income
Provisions for credit impairment of other debt investments
Reserve for cash flow hedging
Exchange differences on translation of financial statements in foreign currency
Others

VI. Total comprehensive income

645,192,942.29

84,678,972.20

VII. Earnings per share:

(I) Basic earnings per share
(II) Diluted earnings per share

— II-202 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

5. Consolidated Statement of Cash Flows

Item I. Cash flows from operating activities: Cash received from sales of goods and provision of services Net increase in deposits from clients and placements from other banks Net increase in borrowings from central bank Net increase in loans from other financial institutions Cash received from premiums of original insurance contracts Net cash received from reinsurance business Net increase in deposits from policyholders and investments Cash received from interest, handling fees and commissions Net increase in loans from other banks Net increase in repurchases business fund Net cash received from agency security transaction Receipt of tax rebates Other cash received relating to operating activities Sub-total of cash inflow from operating activities	2021 9,737,007,157.39 173,659.98 42,081,890.16 9,779,262,707.53	Unit: RMB 2020 8,638,076,155.36 18,158,893.77
		8,656,235,049.13

— II-203 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Item Cash paid for goods purchased and services rendered Net increase in loans and advances to customers Net increase in placements with central bank and other banks Cash paid for claims on original insurance contracts Net increase in loans to other banks Cash payment for interest, handling fees and commissions Cash payment for premium bonus Cash paid to and on behalf of staff Taxes paid Other cash paid relating to operating activities Sub-total of cash outflow from operating activities Net cash flows generated from operating activities II. Cash flows generated from investment activities: Cash received from disposal of investments Cash received from gains in investments Net cash received from disposal of fixed assets, intangible assets and other long-term assets Net cash received from disposal of subsidiaries and other operating entities Other cash received relating to investment activities Sub-total of cash inflow from investment activities	2021 6,645,078,019.71 274,355,512.39 723,085,588.70 94,053,942.21 7,736,573,063.01 2,042,689,644.52 10,979,419,260.61 161,141,190.44 194,330.40 600,000,000.00 11,740,754,781.45	2020 5,264,752,257.08 217,834,530.29 602,330,298.16 144,615,605.20
		6,229,532,690.73

		2,426,702,358.40

		8,075,045,406.06 26,165,936.94 84,100.00 63,552,189.72
		8,164,847,632.72

— II-204 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Item Cash paid for purchase of fixed assets, intangible assets and other long-term assets Cash paid for investment Net increase in pledged loans Net cash paid for acquiring subsidiaries and other operating entities Other cash paid relating to investment activities Sub-total of cash outflow from investment activities Net cash flows generated from investment activities III. Cash flows from financing activities: Proceeds received from investments Including: Proceeds received by subsidiaries from minority interests’ investment Cash received from borrowings Other cash received relating to financing activities Sub-total of cash inflow from financing activities Cash paid for repayment of debts Cash payments for dividend and profit distribution or interest repayment Including: Dividend and profit paid by subsidiaries to minority interests Other cash paid relating to financing activities Sub-total of cash outflow from financing activities Net cash flows generated from financing activities	2021 718,407,227.52 10,788,683,149.63 1,033,941,654.42 4,810,225.00 12,545,842,256.57 -805,087,475.12 680,741,200.00 950,682,812.67 1,631,424,012.67 514,500,000.00 1,006,986,085.66 173,262,232.90 1,044,057,960.00 2,565,544,045.66 -934,120,032.99	2020 603,620,657.39 9,093,567,096.28 1,329,800.00
		9,698,517,553.67

		-1,533,669,920.95

		8,207,100.00 8,207,100.00 229,000,000.00 606,585,284.32
		843,792,384.32

		345,748,590.00 445,008,409.62 22,852,467.33 787,054,622.72
		1,577,811,622.34

		-734,019,238.02

— II-205 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Item IV. Effect on cash and cash equivalents due to changes in foreign exchange rates V. Net increase in cash and cash equivalents Add: Balance of cash and cash equivalents at the beginning of the period VI. Balance of cash and cash equivalents at the end of the period	2021 -875,388.58 302,606,747.83 445,104,601.52 747,711,349.35	2020 -5,180,269.88 153,832,929.55 291,271,671.97
		445,104,601.52

— II-206 —

APPENDIX II FINANCIAL INFORMATION OF THE TARGET COMPANY

6. Statement of Cash Flows of the Parent Company

Item I. Cash flows generated from operating activities: Cash received from sales of goods and provision of services Receipt of tax rebates Other cash received relating to operating activities Sub-total of cash inflow from operating activities Cash paid for goods purchased and services rendered Cash paid to and on behalf of staff Taxes paid Other cash paid relating to operating activities Sub-total of cash outflow from operating activities Net cash flows generated from operating activities II. Cash flows generated from investment activities: Cash received from disposal of investments Cash received from gains in investments Net cash received from disposal of fixed assets, intangible assets and other long-term assets Net cash received from disposal of subsidiaries and other operating entities Other cash received relating to investment activities Sub-total of cash inflow from investment activities	2021 16,894,631.65 16,894,631.65 33,708,630.73 10,525,442.90 18,618,254.69 62,852,328.32 -45,957,696.67 5,081,926,500.00 752,979,899.89 90,000.00 1,953,610,946.31 7,788,607,346.20	Unit: RMB 2020 5,552,123.12
		5,552,123.12

		31,427,145.36 9,587,939.27 26,381,527.54
		67,396,612.17

		-61,844,489.05

		2,346,000,000.00 9,085,491.00 1,382,045,544.75
		3,737,131,035.75

— II-207 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Item Cash paid for purchase of fixed assets, intangible assets and other long-term assets Cash paid for investment Net cash paid for acquiring subsidiaries and other operating entities Other cash paid relating to investment activities Sub-total of cash outflow from investment activities Net cash flows generated from investment activities III. Cash flows generated from financing activities: Proceeds received from investments Cash received from borrowings Other cash received relating to financing activities Sub-total of cash inflow from financing activities Cash paid for repayment of debts Cash payments for dividend and profit distribution or interest repayment Other cash paid relating to financing activities Sub-total of cash outflow from financing activities Net cash flows generated from financing activities IV. Effect on cash and cash equivalents due to changes in foreign exchange rates V. Net increase in cash and cash equivalents Add: Balance of cash and cash equivalents at the beginning of the period VI. Balance of cash and cash equivalents at the end of the period	2021 512,520.38 5,901,852,100.00 1,207,000,000.00 7,109,364,620.38 679,242,725.82 100,000,000.00 340,000,000.00 440,000,000.00 234,500,000.00 709,523,066.26 96,222,837.60 1,040,245,903.86 -600,245,903.86 33,039,125.29 7,328,002.01 40,367,127.30	2020 18,186.00 2,706,000,000.00 601,000,000.00
		3,307,018,186.00

		430,112,849.75




		410,979,109.40 529,334.92
		411,508,444.32

		-411,508,444.32

		-43,240,083.62 50,568,085.63
		7,328,002.01

— II-208 —

APPENDIX II FINANCIAL INFORMATION OF THE TARGET COMPANY

	Unit: RMB				Non-controlling Total owners’	interest equity		1,176,268,665.09 11,066,302,552.09									1,176,268,665.09 11,066,302,552.09				696,042,635.87 1,272,443,810.10	148,365,723.94 1,421,735,604.75		680,671,233.33 680,671,233.33
						Others Sub-total		9,890,033,887.00									9,890,033,887.00				576,401,174.23	1,273,369,880.81
					General risk Undistributed	reserve profit		2,244,198,862.94									2,244,198,862.94				514,638,838.15	1,273,338,698.63
7. *Consolidated Statement of Changes in Owners’ Equity*	Current Amount	2021	Equity attributable to the owners of the parent company	Other equity instruments Other	Capital Less: Treasury comprehensive Special Surplus Preference Perpetual	Items Share capital reserve shares income reserve reserve shares bonds Others	I. Balance at the end of previous	year 2,776,722,265.00 4,431,280,488.30 -6,400,461.01 5,346,480.89 438,886,250.88	Add: Changes in accounting	policy	Prior-period error	correction	Merger of enterprises	under common control	Others	II. Balance at the beginning of the	current year 2,776,722,265.00 4,431,280,488.30 -6,400,461.01 5,346,480.89 438,886,250.88	III. Amount of	increase/decrease/change in the	current year (decrease is	represented by “-”) 31,182.18 -2,788,140.33 64,519,294.23	(I) Total comprehensive income 31,182.18	(II) Contribution and reduction	of capital by owners	1. Ordinary shares	contributed by owners	2. Capital contributed by	other equity instrument	holders

— II-209 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

		Total owners’	equity				680,671,233.33	-826,279,867.23						-826,279,867.23
		Non-controlling	interest				680,671,233.33	-132,099,300.98						-132,099,300.98
			Sub-total					-694,180,566.25						-694,180,566.25
			Others
		Undistributed	profit					-758,699,860.48		-64,519,94.23				-694,180,566.25
		General risk	reserve
Equity attributable to the owners of the parent company	Other	Capital Less: Treasury comprehensive Special Surplus	reserve shares income reserve reserve					64,519,294.23		64,519,2294.23
			Others
	Other equity instruments	Preference Perpetual	shares bonds
			Share capital
			ms	3. Amount included in	owners’ equity in share	payment	4. Others	(III) Profit distribution	1. Withdrawal of surplus	reserves	2. Withdrawal of general	risk reserve	3. Distributions to owners	(or shareholders)	4. Others	(IV) Carry-forward of owners’	equity	1. Conversion of capital	reserves to increase	capital (or share capital)	2. Conversion of surplus	reserves to increase	capital (or share capital)	3. Making up of losses by	surplus reserves	4. Carry-forward of retained	earnings from changes in	defined benefit plans

— II-210 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

		Non-controlling Total owners’	interest equity					-895,020.42 -3,683,160.75	3,319,986.80 27,999,999.38	-4,215,007.22 -31,683,160.13			1,872,311,300.96 12,338,746,362.19
			Others Sub-total					-2,788,140.33	24,680,012.58	-27,468,152.91			10,466,435,061.23
		General risk Undistributed	reserve profit										2,758,837,701.09
Equity attributable to the owners of the parent company	Other	Capital Less: Treasury comprehensive Special Surplus	reserve shares income reserve reserve Others					-2,788,140.33	24,680,012.58	-27,468,152.91			4,431,280,488.30 -6,369,278.83 2,558,340.56 503,405,545.11
	Other equity instruments	Preference Perpetual	shares bonds
			Items Share capital	5. Carry-forward of retained	earnings from other	comprehensive income	6. Others	(V) Special reserves	1. Current withdrawal	2. Current use	(VI) Others	IV. Balance at the end of the current	period 2,776,722,265.00

— II-211 —

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

		Non-controlling Total owners’	interest equity		1,063,578,843.52 10,111,230,435.09									1,063,578,843.52 10,111,230,435.09				112,689,821.57 955,072,117.00	125,051,629.60 1,386,487,994.82		8,207,100.00 8,207,100.00		8,207,100.00 8,207,100.00
			Others Sub-total		9,047,651,591.57									9,047,651,591.57				842,382,295.43	1,261,436,365.22
		General risk Undistributed	reserve profit		1,406,894,608.22									1,406,894,608.22				837,304,254.72	1,242,446,761.34
Equity attributable to the owners of the parent company	Other	Less: Treasury comprehensive	Capital reserve shares income Special reserve Surplus reserve Others		5,225,129,078.87 -25,390,064.89 27,226,568.71 430,418,353.66									5,225,129,078.87 -25,390,064.89 27,226,568.71 430,418,353.66				-793,848,590.57 18,989,603.88 -21,880,087.82 8,467,897.22	18,989,603.88
	Other equity instruments	Preference Perpetual	shares bonds
			Items Share capital	I. Balance at the end of previous	year 1,983,373,047.00	Add: Changes in accounting	policy	Prior-period error	correction	Merger of enterprises	under common control	Others	II. Balance at the beginning of the	current year 1,983,373,047.00	III. Amount of	increase/decrease/change in the	current year (decrease is	represented by “-”) 793,349,218.00	(I) Total comprehensive income	(II) Contribution and reduction	of capital by owners	1. Ordinary shares	contributed by owners	2. Capital contributed by	other equity instrument	holders

— II-212 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

		Total owners’	equity					-410,579,356.72						-410,579,356.72
		Non-controlling	interest					-13,904,747.32						-13,904,747.32
			Sub-total					-396,674,609.40						-396,674,609.40
			Others
		Undistributed	profit					-405,142,506.62		-8,467,897.22				-396,674,609.40
		General risk	reserve
Equity attributable to the owners of the parent company	Other	Less: Treasury comprehensive	Capital reserve shares income Special reserve Surplus reserve					8,467,897.22		8,467,897.22							-793,349,218.00			-793,349,218.00
			Others
	Other equity instruments	Preference Perpetual	shares bonds
			Share capital														793,349,218.00			793,349,218.00
			Items	3. Amount included in	owners’ equity in share	payment	4. Others	(III) Profit distribution	1. Withdrawal of surplus	reserves	2. Withdrawal of general	risk reserve	3. Distributions to owners	(or shareholders)	4. Others	(IV) Carry-forward of owners’	equity	1. Conversion of capital	reserves to increase	capital (or share capital)	2. Conversion of surplus	reserves to increase	capital (or share capital)	3. Making up of losses by	surplus reserves	4. Carry-forward of retained	earnings from changes in	defined benefit plans	5. Carry-forward of retained	earnings from other	comprehensive income	6. Others

— II-213 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

		Non-controlling Total owners’	interest equity	-6,664,160.71 -28,544,248.53	2,816,014.33 25,597,580.25	-9,480,175.04 -54,141,828.78	-499,372.57		1,176,268,665.09 11,066,302,552.09
			Others Sub-total	-21,880,087.82	22,781,565.92	-44,661,653.74	-499,372.57		9,890,033,887.00
		General risk Undistributed	reserve profit						2,244,198,862.94
Equity attributable to the owners of the parent company	Other	Less: Treasury comprehensive	Capital reserve shares income Special reserve Surplus reserve Others	-21,880,087.82	22,781,565.92	-44,661,653.74	-499,372.57		4,431,280,488.30 -6,400,461.01 5,346,480.89 438,886,250.88
	Other equity instruments	Preference Perpetual	shares bonds
			Share capital						2,776,722,265.00
			Items	(V) Special reserves	1. Current withdrawal	2. Current use	(VI) Others	IV. Balance at the end of the current	period

— II-214 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

	Unit: RMB			Total owners’	Others equity	9,105,262,808.22					9,105,262,808.22			-48,987,623.96	645,192,942.29										-694,180,566.25
				Undistributed	profit	1,471,194,110.75					1,471,194,110.75			-113,506,918.19	645,192,942.29										-758,699,860.48	-64,519,294.23
					Special reserve Surplus reserve	425,611,996.58					425,611,996.58			64,519,294.23											64,519,294.23	64,519,294.23
8. *Statement of Changes in Shareholders’ Equity of the Parent Company*	Current amount	2021	Other equity instruments Other	Less: Treasury comprehensive Preference Perpetual	Items Share capital Capital reserve shares income shares bonds Others	I. Balance at the end of previous year 2,776,722,265.00 4,431,733,687.79 748.10	Add: Changes in accounting policy	Prior-period error correction	Others	II. Balance at the beginning of the current	year 2,776,722,265.00 4,431,733,687.79 748.10	III. Amount of increase/decrease/change in	the current year (decrease is represented	by “-”)	(I) Total comprehensive income	(II) Contribution and reduction of capital	by owners	1. Ordinary shares contributed by	owners	2. Capital contributed by other equity	instrument holders	3. Amount included in owners’	equity in share payment	4. Others	(III) Profit distribution	1. Withdrawal of surplus reserves

— II-215 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

		Total owners’	equity		-694,180,566.25																			9,056,275,184.26
			Others
		Undistributed	profit		-694,180,566.25																			1,357,687,192.56
			Special reserve Surplus reserve																					490,131,290.81
	Other	comprehensive	income																					748.10
2021		Less: Treasury	shares
			Capital reserve																					4,431,733,687.79
			Others
	Other equity instruments	Preference Perpetual	shares bonds
			Share capital																					2,776,722,265.00
			Items	2. Distributions to owners (or	shareholders)	3. Others	(IV) Carry-forward of owners’ equity	1. Conversion of capital reserves to	increase capital (or share capital)	2. Conversion of surplus reserves to	increase capital (or share capital)	3. Making up of losses by surplus	reserves	4. Carry-forward of retained earnings	from changes in defined benefit	plans	5. Carry-forward of retained earnings	from other comprehensive income	6. Others	(V) Special reserves	1. Current withdrawal	2. Current use	(VI) Others	IV. Balance at the end of the current period

— II-216 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Unit: RMB			Total owners’	Others equity	9,417,757,817.99					9,417,757,817.99			-312,495,009.77	84,678,972.20										-396,674,609.40			-396,674,609.40
			Undistributed	profit	1,791,657,645.17					1,791,657,645.17			-320,463,534.42	84,678,972.20										-405,142,506.62	-8,467,897.22		-396,674,609.40
				Surplus reserve	417,144,099.36					417,144,099.36			8,467,897.22											8,467,897.22	8,467,897.22
				Special reserve
		Other	comprehensive	income	748.10					748.10
	2020		Less: Treasury	shares
				Capital reserve	5,225,582,278.36					5,225,582,278.36			-793,848,590.57
				Others
		Other equity instruments	Preference	shares Perpetual bonds
Previous amount				Items Share capital	I. Balance at the end of previous year 1,983,373,047.00	Add: Changes in accounting policy	Prior-period error correction	Others	II. Balance at the beginning of the current	year 1,983,373,047.00	III.Amount of increase/decrease/change in	the current year (decrease is represented	by “-”) 793,349,218.00	(I) Total comprehensive income	(II) Contribution and reduction of capital	by owners	1. Ordinary shares contributed by	owners	2. Capital contributed by other equity	instrument holders	3. Amount included in owners’	equity in share payment	4. Others	(III) Profit distribution	1. Withdrawal of surplus reserves	2. Distributions to owners (or	shareholders)

— II-217 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

		Total owners’	equity																		-499,372.57	9,105,262,808.22
			Others
		Undistributed	profit																			1,471,194,110.75
			Surplus reserve																			425,611,996.58
			Special reserve
	Other	comprehensive	income																			748.10
2020		Less: Treasury	shares
			Capital reserve		-793,349,218.00		-793,349,218.00														-499,372.57	4,431,733,687.79
			Others
	Other equity instruments	Preference	shares Perpetual bonds
			Share capital		793,349,218.00		793,349,218.00															2,776,722,265.00
			Items	3. Others	(IV) Carry-forward of owners’ equity	1. Conversion of capital reserves to	increase capital (or share capital)	2. Conversion of surplus reserves to	increase capital (or share capital)	3. Making up of losses by surplus	reserves	4. Carry-forward of retained earnings	from changes in defined benefit	plans	5. Carry-forward of retained earnings	from other comprehensive income	6. Others	(V) Special reserves	1. Current withdrawal	2. Current use	(VI) Others	IV. Balance at the end of the current period

— II-218 —

APPENDIX II FINANCIAL INFORMATION OF THE TARGET COMPANY

III. BASIC INFORMATION OF THE COMPANY

(I) Company Profile

Company name: Yintai Gold Co., Ltd.

Abbreviation of the Yintai Gold. company:

Registered address: Harato Street, Balagalgaole Town, West Ujimqin Banner, XilinGol League, Inner Mongolia Autonomous Region.

Office address:

Rooms 5103/5104, Block C, Yintai Center, No. 2 Jianguomenwai Street, Chaoyang District, Beijing.

Registered capital: RMB2,776,722,265.

Unified social credit 911525007116525588. code:

Legal representative: Yang Haifei.

Business scope:

(II) History of the Company

Approved by Chongqing Municipal People’s Government (Yu Fu [1999] No. 90) on 20 May 1999, Chongqing Wujiang Electric Power Group Company (重慶烏江電力集團公司)

— II-219 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(“ Wujiang Electric Power Group ”), as the main initiator, jointly sponsored the establishment of Wujiang Electric Power with Chongqing Qianjiang County Xiaonanhai (Group) Company (重慶市黔江縣小南海（集團）公司), Chongqing Qianjiang Development Zone Hydropower Engineering and Construction Installation Company (重慶市黔江開發區水電工程建築安裝公司), Chongqing Qianjiang Development Zone Hydropower Material Supply and Marketing Company (重慶市黔江開發區水電物資供銷公司) and Chongqing Wujiang Manganese Industry (Group) Co., Ltd. (重慶烏江錳業（集團）有限責任公司).

On 18 March 2002, Wujiang Electric Power Group, the largest shareholder of the company, signed the “Share Transfer Agreement” with Guangzhou Development District Holding Group Limited (廣州開發區控股集團有限公司) (“ Guangzhou Development District Holding ”), and Wujiang Electric Power Group transferred 157,465,400 state-owned legal person shares held by it to Guangzhou Development District Holding, accounting for 53.20% of the company’s total share capital. The transfer was approved by Chongqing Municipal People’s Government (Yu Fu [2002] No. 90), Ministry of Finance (Cai Qi [2002] No. 216), and CSRC (Zheng Jian Han [2002] No. 264).

On 21 November 2005, Guangzhou Development District Holding and China Yintai Holdings Co., Ltd. (“ China Yintai ”) signed the “Share Transfer Agreement”, transferring

— II-220 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

24.40% of the company’s state shares held by it to China Yintai. On 3 August 2006, a supplementary agreement was signed and the transfer of shares was changed to 29.90%. On 1 March 2007, it was approved by the SASAC, and on 10 September 2007, it was approved by the CSRC. After the completion of the equity transfer, China Yintai holds 159,307,200 shares of the company, accounting for 29.90% of the company’s total share capital, and became the company’s largest shareholder.

On 15 October 2007, the company held the 2007 second extraordinary general meeting, and considered and approved the Shareholding Reform Plan. The company’s non-outstanding shares were reduced to 6.254 shares for every 10 shares. At the same time, according to the relevant agreement between China Yintai and Guangzhou Development District Holding, the share reduction arrangement corresponding to the transfer of the shares held by China Yintai to Guangzhou Development District Holding was executed by Guangzhou Development District Holding on its behalf. After the share reduction, the company converted 3.485 shares for every 10 shares to all shareholders after the share reduction from the capital reserve. At the same time, the company distributed 1.3635 bonus shares and cash dividends of RMB0.1515 (including tax) for every 10 shares to all shareholders after the share reduction with undistributed profits. After the plan was implemented on 24 January 2008, the company’s total share capital was changed from 532,800,000 shares to 622,925,700 shares, and the non-outstanding shares held by the original non-outstanding shareholders were changed to outstanding shares with limited selling conditions. This share capital change has been verified by Zhongxi Certified Public Accountants Co., Ltd., and Zhong Xi Yan Zi (2007) No. 02017 and No. 02018 capital verification reports have been issued. Accordingly, the company went through the industrial and commercial change registration procedures, and the registered capital was changed from RMB532,800,000 to RMB622,925,700.

On 10 March 2011, the commitments made by China Yintai, Guangzhou Development District Holding and Chongqing Xinyu Investment (Group) Company Limited (“ Chongqing Xinyu ”) in the announcement of the implementation of the shareholding reform plan were fulfilled and the corresponding shares were unlocked and can be transferred in the market.

— II-221 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Hou Renfeng, 198,018,132 shares to Wang Shui and 16,638,143 shares to Li Honglei to purchase related assets, and approving the company’s non-public issue of not more than 50 million new shares to raise supporting funds for this share issue to purchase assets. On 11 January 2013, Zhongxi Certified Public Accountants Co., Ltd. issued a capital verification report (Zhong Xi Yan Zi [2013] No. 02001), in which the company actually received the new registered capital (share capital) of RMB412,644,044.00 from Hou Renfeng, Wang Shui and Li Honglei, who contributed their equity interests in Inner Mongolia Yulong Mining Co., Ltd. (內蒙古玉龍礦業股份有限公司) (“Yulong Mining”) and received an additional registered capital (share capital) of RMB50,000,000.00 from China Yintai in the form of monetary capital, resulting in a total of 462,644,044 new shares.

From 27 August 2015 to 14 September 2015, China Yintai increased its shareholding in the company by a total of 4,068,726 shares through the centralized bidding trading

— II-222 —

APPENDIX II FINANCIAL INFORMATION OF THE TARGET COMPANY

system, after which it held 202,608,648 shares of the company, representing 18.73% of the total share capital of the company, and remained the largest shareholder of the company.

On 25 December 2017, the company’s major asset reorganization was approved and obtained the Reply on Approving Yintai Resources Co., Ltd. to Issue Shares to Shen Guojun and Other Parties to Purchase Assets (《關於核准銀泰資源股份有限公司向沈國軍等發行股份購買資產的批覆》) (Zheng Jian Xu Ke [2017] No. 2365) from the CSRC to issue shares to eight counterparties, including Shen Guojun, to purchase 89.38% equity interest in Shanghai Shengwei. All counterparties completed the transfer procedures in respect of their shares in Shanghai Shengwei on 10 January 2018. As approved by the Shenzhen Stock Exchange, the additional shares were listed on 26 January 2018. The company completed the title transfer procedures for the above-mentioned shares and Shanghai Shengwei became its wholly-owned subsidiary, which has been included in the scope of consolidated statements since then. Pursuant to the above-mentioned approval of the CSRC, the company issued 72,319,201 shares to Shen Guojun, 62,344,139 shares to Shanghai Lanju Enterprise Management Center (Limited Partnership) (上海瀾聚企業管理中心（有限合夥）), 49,875,311 shares to Shanghai Baohu Investment Management Center (Limited Partnership) (上海趵虎投資管理中心（有限合夥）), 33,250,207 shares to Shanghai Wenwu Enterprise Management Center (Limited Partnership) (上海溫悟企業管理中心（有限合夥）), 32,252,701 shares to Cheng Shaoliang, 30,174,563 shares to Shanghai Chaomeng Enterprise Management Center (Limited Partnership) (上海巢盟企業管理中心（有限合夥） ), 29,925,187 shares to Gongqingcheng Runda Investment Management Partnership (Limited Partnership) (共青城潤達投資管理合夥企業（有限合夥）) and 24,937,655 shares to Wang Shui to purchase the relevant assets at a par value of RMB1 per share and an issue price of RMB12.03 per share, increasing the registered capital by RMB335,078,964. After the issue, the registered capital and share capital of the company increased from RMB1,081,616,070 to RMB1,416,695,034. This change in share capital was verified by Zhongxi Certified Public Accountants (Special General Partnership), which issued the capital verification report of Zhong Xi Yan Zi (2018) No. 0001. The company accordingly went through the business change registration procedures, and the registered capital was changed from RMB1,081,616,070 to RMB1,416,695,034.

On 3 September 2018, China Yintai increased its shareholding in the company by 2,820,000 shares through the centralized bidding trading system of the Shenzhen Stock

— II-223 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Exchange. After this increase, China Yintai held 286,472,107 shares of the company, representing 14.44% of the total share capital of the company. Shen Guojun, the de facto controller of the company, and China Yintai, the controlling shareholder of the company, were parties acting in concert. After this increase, Shen Guojun and China Yintai held 20.51% equity interest in aggregate in the company. In summary, this increase in shareholding did not affect the listing status of the company.

— II-224 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(III) Scope of consolidated financial statements

As of 31 December 2021, the subsidiaries within the scope of the company’s consolidated financial statements were as follows:

Name of subsidiary

Abbreviation of subsidiary

Shanghai Shengwei Mining Investment Co., Ltd. (上海 Shanghai Shengwei 盛蔚礦業投資有限公司) Sino Gold Tenya (HK) Limited Sino Gold Hong Kong Rockmining Group Company Limited (HK) Rockmining Hong Heihe Yintai Mining Development Co., Ltd. (黑河銀泰 Heihe Yintai 礦業開發有限責任公司) Qinghai Dachaidan Mining Co., Ltd. (青海大柴旦礦業 Qinghai Dachaidan 有限公司) Inner Mongolia Yulong Mining Co., Ltd. (內蒙古玉龍 Yulong Mining 礦業股份有限公司) Jilin Banmiaozi Mining Co., Ltd. (吉林板廟子礦業 Jilin Banmiaozi 有限公司) Jilin Yintai Shengxin Mining Co., Ltd. (吉林銀泰盛鑫 Yintai Shengxin 礦業有限公司) Yintai Shenghong Supply Chain Management Yintai Shenghong Co., Ltd. (銀泰盛鴻供應鏈管理有限公司) Ningbo Yintai Yongheng Trading Co., Ltd. (寧波銀泰 Yongheng Trading 永亨貿易有限公司) Yintai Shenghong Singapore Co., Ltd. (銀泰盛鴻 Shenghong Singapore 新加坡有限公司) Mangshi Huasheng Gold Mine Development Co., Ltd. Huasheng Gold Mine (芒市華盛金礦開發有限公司)

Sino Gold Hong Kong Rockmining Hong Kong Heihe Yintai

(IV) Approval and publication of financial statements

These financial statements have been approved for publication by the company’s board of directors on 8 April 2022.

— II-225 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

IV. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

1. Basis of preparation

2. Going concern

V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES

The company is required to comply with the disclosure requirements for solid mineral resources business in the Guidelines No. 3 for Self-Regulatory Regulation of Listed Companies of the Shenzhen Stock Exchange – Industry Information Disclosure.

Specific Accounting Policies and Accounting Estimates Indication

The following disclosures have covered the specific accounting policies and accounting estimates formulated by the company based on the actual production and operation characteristics. For details, please refer to “V. 20. Fixed assets” and “V.24. Intangible assets”, “V. 31. Revenue”, “V. 35. Other significant accounting policies and accounting estimates”.

1. Statement of compliance with Accounting Standards for Business Enterprises

2. Accounting period

An accounting period is from 1 January to 31 December of each calendar year.

— II-226 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

3. Business cycle

The company takes 12 months as a business cycle.

4. Functional currency

Renminbi is adopted as the functional currency for recording.

5. Accounting treatments of business combinations involving entities under common control and entities not under common control

(1) If the terms, conditions and economic effects of transactions for the purpose of realizing business combination in phases, fall in the following one or more situations, multiple transactions shall be regarded as a package transaction for accounting treatment
- ① These transactions were entered into at the same time or after considering the effects of each other;
- ② Only when regarding these transactions as a whole, can it achieve a complete business result;
- ③ The occurrence of one transaction depends on the occurrence of at least one other transaction;
- ④ A transaction is not economical when treated alone, but is economical when considered with other transactions.
(2) Business combinations involving entities under common control

— II-227 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(3) Business combinations involving entities not under common control

The acquisition date refers to the date on which the company actually obtained control over the acquiree, that is, the date when the acquiree’s net assets or the control of production and business decisions were transferred to the company. At the same time when the following conditions are met, the company generally believes that the transfer of control rights has been achieved:

① The business combination contract or agreement has been approved by the internal authority of the company.
② The business combination matters, which need to be approved by the relevant competent departments of the state, has been approved.
③ The necessary procedures for the transfer of property rights have been completed.
④ The company has paid most of the combined price and has the ability and plan to pay the remaining amount.
⑤ The company has actually controlled the financial and operating policies of the acquiree and enjoyed corresponding benefits and assumed corresponding risks.

— II-228 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(4) Relevant expenses in relation to combination

6. Preparation of consolidated financial statements

(1) Scope of consolidation

— II-229 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(2) Procedures of consolidation

— II-230 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

① Addition of subsidiary or business

During the reporting period, initial amount in the consolidated balance sheets is adjusted for the addition of new subsidiaries and businesses due to business combinations involving entities under common control. The income, expenses and profits of the subsidiaries from the beginning of the consolidation to the end of the reporting period are included in the consolidated income statements, and the cash flows of the subsidiaries and the businesses from the beginning of the consolidation to the end of the reporting period are included in the consolidated cash flow statements. At the same time, those relevant items of comparison of financial statements, are adjusted as if the consolidated reporting entity has existed since the date of establishment of control by the ultimate control party.

— II-231 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

② Disposal of subsidiary or business

1) General treatments

— II-232 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

2) Piecemeal disposal of subsidiary

A. Such transactions are occurred together or made under considerations of mutual impacts;
B. A complete business consequence could only be made under such series of transactions;
C. The occurrence of a transaction is dependent on occurrence of at least one transaction;
D. One transaction itself is not economical itself, but when considered together with other transactions would become economical.

③ Acquisition of minority interest of subsidiary

— II-233 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

④ Partly disposal of equity investment in subsidiaries without losing control

7. Classification of joint venture arrangements and accounting treatment for joint operations

(1) Classification of joint venture arrangements

① Its legal form shows the joint ventures enjoy rights to and assume obligations for relevant assets and liabilities respectively in the arrangement.
② The contract terms of the joint venture arrangement stipulate that the joint ventures enjoy rights to and assume obligations for relevant assets and liabilities respectively in the arrangement.
③ Other relevant facts and situations show that the joint ventures enjoy rights to and assume obligations for relevant assets and liabilities respectively in the arrangement. For example, the joint ventures enjoy almost all output related to the arrangement and repayment of liabilities in the arrangement consecutively relies on the joint ventures’ supports.

— II-234 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(2) Accounting treatment for joint operations

① assets it solely holds and its share of jointly-held assets based on its percentage;
② liabilities it solely assumes and its share of jointly-assumed liabilities based on its percentage;
③ incomes from sale of output enjoyed by it from the joint operation;
④ incomes from sale of output from the joint operation based on its percentage; and
⑤ separate costs and costs for the joint operation based on its percentage.

— II-235 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

8. Determination criteria for cash and cash equivalents

9. Foreign currency businesses and translation of foreign currency statements

(1) Foreign currency businesses

Foreign currency business transaction are recognized at the beginning and translated into Renminbi using the spot exchange rate prevailing on the date when transaction occurred.

(2) Translation of foreign currency financial statements

— II-236 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

the other comprehensive income to profit or loss for the period; when disposing of partial overseas equity investment or due to other reasons causing decrease in holding ratio of overseas operation but not losing control, the foreign currency translation difference attributable for disposed is transferred to minority interests but not profit or loss for the period. In occasion disposal of equity interest in foreign associate or joint operation, the foreign currency translation difference attributable to the portion disposed of is transferred to profit or loss for the period.

10. Financial instruments

A financial asset or financial liability is recognized when the company becomes a party to a contract for a financial instrument.

(1) Classification and measurement of financial assets

① Financial assets measured in amortized cost.
② Financial assets at fair value through other comprehensive income.
③ Financial assets at fair value through profit or loss.

— II-237 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

① Classified as financial assets measured in amortized cost

1) For financial assets that have been acquired or originated for credit impairment, the company calculates and determines the interest income based on the amortized cost and credit-adjusted effective interest rate of the financial assets from initial recognition.
2) For financial assets that have not been credit-impaired but become credit-impaired in subsequent periods, the company calculates and determines the interest income based on the amortized cost and effective interest rate of the financial assets in subsequent periods. If the financial instrument is no longer credit-impaired due to an improvement in its credit risk in a subsequent period, the company calculates and determines interest income by

— II-238 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

multiplying the effective interest rate by the carrying amount of the financial asset.

② Financial assets classified as at fair value through other comprehensive income

③ Financial assets designated as at fair value through other comprehensive income

— II-239 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

to the company and the amount of the dividend can be measured reliably. The company’s investment in these financial assets is reported in other equity instruments.

④ Financial assets classified as at fair value through profit or loss

The company presents these financial assets under the items of financial assets held for trading and other non-current financial assets based on their liquidity.

⑤ Financial assets designated as at fair value through profit or loss

1) Embedded derivatives do not materially change the cash flows of the hybrid contract.
2) When initially determining whether a similar hybrid contract needs to be split, it is almost clear without analysis that the embedded derivatives it contains should not be

— II-240 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

split. Where an embedded prepayment option for a loan allows the holder to prepay the loan at an amount close to amortized cost, the prepayment option does not need to be split.

The company presents these financial assets under the items of financial assets held for trading and other non-current financial assets based on their liquidity.

(2) Classification, recognition and measurement of financial liabilities

Subsequent measurement of financial liabilities depends on their classification:

① Financial liabilities measured at fair value through profit or loss

— II-241 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

hedging instruments and those that meet financial guarantee contracts. Financial liabilities held for trading (including derivatives that are financial liabilities) are subsequently measured at fair value and all changes in fair value are included in profit or loss for the period, except for those relating to hedge accounting.

1) Accounting mismatches can be eliminated or significantly reduced.
2) The management and performance evaluation of a portfolio of financial liabilities or a portfolio of financial assets and financial liabilities on a fair value basis, in accordance with the corporate risk management or investment strategy as set out in the official written documents, and reporting to key management personnel within the enterprise on this basis.

② Other financial liabilities

1) Financial liabilities at fair value through profit or loss.
2) Financial liabilities arising from the transfer of a financial asset that does not meet the conditions for derecognition or continues to be involved in the transferred financial asset.
3) Financial guarantee contracts that do not fall under the first two categories of this article, and loan commitments that

— II-242 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

do not fall under category 1) of this article for loans at below-market interest rates.

(3) Derecognition of financial assets and financial liabilities
① A financial asset is derecognized when one of the following conditions is met, i.e, it is written off from its account and balance sheet:
- 1) The contractual right to receive the cash flows from the financial asset is terminated.
- 2) The financial asset has been transferred and the transfer meets the requirements for derecognition of the financial asset.
② Conditions for derecognition of financial liabilities

A financial liability (or a portion of a financial liability) is derecognized if the current obligation of the financial liability (or portion of a financial liability) has been discharged.

Where the company repurchases a portion of a financial liability, the carrying amount of the financial liability as a whole is allocated based on the fair value of the continuing recognition portion and the derecognition portion as a proportion of the fair value of the financial liability as a whole at the date of repurchase. The difference between the carrying amount allocated to the derecognized portion and the

— II-243 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

consideration paid, including the non-cash assets transferred out or liabilities assumed, is included in the current profit or loss.

(4) The basis for recognition and measurement of financial asset transfers

When a transfer of financial assets occurs, the company assesses the extent of the risks and rewards of retaining ownership of the financial assets and deals with each of the following:

① Where substantially all the risks and rewards of ownership of a financial asset are transferred, the financial asset is derecognized and the rights and obligations arising or retained in the transfer are recognized separately as assets or liabilities.
② A financial asset is recognized if it retains substantially all the risks and rewards of ownership.
③ Where substantially all the risks and rewards of ownership of a financial asset have not been transferred or retained (i.e, other than those in ① and ② of this article), they are dealt with in the following circumstances, depending on whether they retain control over the financial asset:
1) Where control over the financial asset is not retained, the financial asset is derecognized and the rights and obligations arising or retained in the transfer are recognized separately as assets or liabilities.
2) Where control over the financial asset is retained, the financial asset continues to be recognized to the extent that it continues to be involved in the transferred financial asset and the related liability is recognized accordingly. The extent to which the company continues to be involved in the transferred financial asset is the extent to which the company is exposed to risks or rewards from changes in the value of the transferred financial asset.

① Where the overall transfer of a financial asset satisfies the derecognition condition, the difference between the following two amounts is included in the current profit or loss:
1) The carrying amount of the transferred financial asset at the date of derecognition.

— II-244 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

2) The sum of the consideration received for the transfer of a financial asset and the amount of the corresponding derecognized portion of the cumulative change in fair value that would have been credited directly to other comprehensive income (the financial asset involved in the transfer is a financial asset measured at fair value with the change in other comprehensive income).
② Where a financial asset is partially transferred and the transferred portion as a whole satisfies the derecognition condition, the carrying amount of the financial asset as a whole before the transfer is apportioned between the derecognition portion and the continuing recognition portion (in which case, the retained service asset shall be regarded as a part of the continuing recognition of the financial asset) based on the relative fair value on the transfer date, and the difference between the following two amounts is included in the current profit or loss:
1) The carrying amount of the derecognized portion at the date of derecognition.
2) The sum of the consideration received for the derecognition component and the amount of the corresponding derecognition component of the cumulative change in fair value originally included in other comprehensive income (the financial asset involved in the transfer is a financial asset measured at fair value with its change included in other comprehensive income).

(5) Determination of fair value of financial assets and financial liabilities

— II-245 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Financial assets acquired or derived initially, or financial liabilities assumed, are determined on the basis of market transaction prices.

(6) Impairment of financial instruments

The company performs impairment accounting and recognizes loss allowances for financial assets measured at amortized cost, financial assets classified as measured at fair value through other comprehensive income and financial guarantee contracts.

For receivables arising from transactions governed by revenue standards, the company applies the simplified measurement method to measure the loss allowance at an amount equal to lifetime ECLs.

For financial assets other than those that have undergone credit impairment using the simplified measurement method and purchases or origination described above, the company assesses at each balance sheet date whether the credit risk of the relevant financial instrument has increased significantly since initial recognition and measures its loss allowance, recognizes ECLs and changes therein separately as follows:

— II-246 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

① If the credit risk of the financial instrument has not increased significantly since initial recognition and is in stage 1, the loss allowance is measured at an amount equal to the expected credit loss of the financial instrument over the next 12 months and interest income is calculated based on the carrying amount and the effective interest rate.
② If the credit risk of the financial instrument has increased significantly since initial recognition but no credit impairment has occurred, it is in stage 2, the loss allowance is measured at an amount equal to the expected credit loss over the lifetime of the financial instrument, and interest income is calculated based on the carrying amount and the effective interest rate.
③ If the financial instrument has been credit-impaired since initial recognition, it is in stage 3, the company measures its loss allowance at an amount equal to the expected credit losses over the lifetime of the financial instrument and calculates interest income at amortized cost and effective interest rates.

① Significant increase in credit risk

The company uses available reasonable and supportable forward-looking information to determine whether the credit risk of a financial instrument has increased significantly since initial recognition by comparing the risk of a default occurring on the balance sheet date with the risk of a default occurring on the date of initial recognition. For financial guarantee contracts, the date on which the company becomes a

— II-247 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

party to an irrevocable commitment is the date of initial recognition when the company applies the impairment provision for financial instruments.

In assessing whether there has been a significant increase in credit risk, the company considers the following factors:

1) Whether there has been an actual or expected significant change in the operating results of the debtor;
2) Whether there has been a significant adverse change in the regulatory, economic or technological environment in which the debtor is located;
3) Whether there has been a significant change in the value of the collateral used as security for the debt or in the quality of the guarantees or credit enhancements provided by third parties that is expected to reduce the debtor’s economic incentive to pay within the contractual time limit or affect the probability of default;
4) Whether there has been a significant change in the expected performance and repayment behavior of the debtor;
5) Changes in the company’s credit management methods for financial instruments, etc.

② Financial assets with credit impairment

1) Significant financial difficulties of the issuer or the debtor;
2) Breach of contract by the debtor, such as default or overdue payment of interest or principal, etc.;

— II-248 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

3) A concession given by a creditor to the debtor that the debtor would not otherwise make for economic or contractual reasons relating to the debtor’s financial difficulties;
4) The debtor is likely to go bankrupt or undergo other financial restructuring;
5) The financial difficulty of the issuer or the debtor results in the disappearance of an active market for the financial asset;
6) A financial asset is purchased or originated at a significant discount that reflects the fact that a credit loss has occurred.

Credit impairment of financial assets may be caused by the joint action of multiple events, and may not be caused by separately identifiable events.

③ Determination of expected credit losses

The company determines the ECLs for the relevant financial instruments as follows:

1) For financial assets, credit losses are the present value of the difference between the contractual cash flows that the company is expected to receive and the cash flows that it expects to receive.
2) For lease receivables, the credit loss is the present value of the difference between the contract cash flow collectable by the Company and the expected cash flow.

— II-249 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

3) For financial guarantee contracts, credit losses are the present value of the difference between the expected payments to be made by the company to the contract holder for credit losses incurred by the contract holder, less the amount that the company expects to receive from the contract holder, the debtor or any other party.
4) For a financial asset that is credit-impaired at the balance sheet date but not purchased or originated from credit-impaired, credit loss is the difference between the carrying amount of the financial asset and the present value of the estimated future cash flows discounted at the original effective interest rate.

④ Write-down of financial assets

(7) Offset of financial assets and financial liabilities

① The company has a legal right to set off the recognized amounts and such legal right is currently enforceable;
② The company plans to settle on a net basis, or to realize the financial asset and settle the financial liability simultaneously.

— II-250 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

11. Bills receivable

See Note V.10.(6) Impairment of financial instruments for details of the method of determining and accounting for ECL on bills receivable.

Basis for determination Name of portfolio of portfolio

Method of provision

Bank acceptance Bank acceptance has a high credit rating, a short duration, low risk of default, and a strong ability to fulfill its contractual cash flow obligations in the short term
Trade acceptance Classification according to common credit risk characteristics
ECL is not recognized with reference to historical credit loss experience, in combination with current conditions and expectations of future economic conditions
ECL is measured with reference to historical credit loss experience, in combination with current conditions and expectations of future economic conditions

12. Accounts receivable

See Note V.10.(6) Impairment of financial instruments for details of the company’s method of determining and accounting for ECL on accounts receivable.

The company separately determines the credit loss of accounts receivable that have been credit-impaired after the initial recognition.

— II-251 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Basis for determination Name of portfolio of portfolio Method of provision Aging portfolio Classification according ECL is calculated based to common credit risk on aging and ECL rates characteristics over the lifetime Related party Receivables arising ECL rate of the portfolio portfolio between related parties is 0% based on default within the scope of risk exposure and ECL consolidated rates over the lifetime statements

13. Accounts receivable financing

See Note V.10.(6) Impairment of financial instruments for details of the company’s method of determining and accounting for ECL on accounts receivable financing.

14. Other receivables

Method of determination and accounting treatment for ECL of other receivables

See Note V.10.(6) Impairment of financial instruments for details of the company’s method of determining and accounting for ECL on other receivables.

The company separately recognises credit losses on other receivables for which credit impairment has occurred subsequent to initial recognition.

— II-252 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

	Basis for determination
Name of portfolio	of portfolio	Method of provision
Aging portfolio	Classification according	ECL is calculated based
	to common credit risk	on default risk
	characteristics	exposure and ECL
		rates within the next 12
		months or over the
		lifetime
Related party	Receivables arising	ECL rate of the portfolio
portfolio	between related parties	is 0% based on default
	within the scope of	risk exposure and ECL
	consolidated	rates within the next 12
	statements	months or over the
		lifetime

15. Inventories

(1) Classification of inventories

(2) Valuation of inventories

(3) Determination criteria for the net realizable value of inventories and provision for inventory impairment

— II-253 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

merchandize and materials for sale) that can be sold directly is determined using the estimated saleable price of such inventory deducted by the cost of sales and relevant taxation over the course of ordinary production and operation. The net realizable value of material in inventory that requires processing is determined using the estimated saleable price of the finished product deducted by the cost to completion, estimated cost of sales and relevant taxation over the course of ordinary production and operation. The net realizable value of inventory held for performance of sales contract or labor service contract is determined based on the contractual price; in case the amount of inventory held exceeds the contractual amount, the net realizable value of the excess portion of inventory is calculated using the normal saleable price.

(4) Inventory system

Perpetual inventory system is adopted.

(5) Amortization of low-value consumables and packaging
① Low-value consumables are amortized by one-time write-off;
② Packaging materials are amortized by one-time write-off;
③ Other supplementary materials are amortized by one-time write-off.

16. Contract assets

For the determination method and accounting treatment method of the expected credit losses of the contract assets of the company, please refer to Impairment of financial instruments of Note V.10.(6).

— II-254 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

17. Contract Cost

(1) Contract performance cost

① The cost is directly related to a current or expected contract, including direct labor, direct materials, manufacturing costs (or similar), costs that are clearly attributable to the customer, and other costs that are incurred solely as a result of the contract;
② The cost increases the resources that the enterprise will use to fulfill its performance obligations in the future;
③ The cost is expected to be recovered.

The asset is presented in inventory or other non-current assets based on whether the amortisation period at initial recognition exceeds a normal operating cycle.

(2) Contract acquisition cost

(3) Amortization of contract costs

(4) Impairment of contract costs

— II-255 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

assets and the cost estimated to be incurred for the transfer of the related commodities, the excess shall be provided for impairment and recognised as an asset impairment loss.

18. Other debt investments

See Note V.10.(6) Impairment of financial instruments for details of the method of determining and accounting for ECL on other debt investments.

19. Long-term equity investments

(1) Initial determination of investment costs
① For long-term equity investment formed by business combination, details of accounting policies are set out in Note V. 5. Accounting treatments of business combinations involving entities under common control and entities not under common control.
② Long-term equity investments obtained through other means

— II-256 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

The initial investment costs of a long-term equity investment obtained through debt restructuring is determined based on the fair value.

(2) Subsequent measurement and profit or loss recognition

① Cost method

② Equity method

The company shall, based on the fair value of identifiable net assets of the investee when it obtains the investment, recognize its

— II-257 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(3) Change of the accounting methods for long-term equity investments
① Change of measurement at fair value to accounting under equity method

— II-258 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

② Change of measurement at fair value or accounting under equity method to cost method

③ Change of accounting under equity method to measurement at fair value

— II-259 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

④ Change of cost method to equity method

⑤ Change of cost method into measurement at fair value

(4) Disposal of long-term equity investment

① these transactions were entered into at the same time or after considering the effects of each other;
② only when regarding these transactions as a whole, can it achieve a complete business result;
③ the occurrence of one transaction depends on the occurrence of at least one other transaction;
④ a transaction is not economical when treated alone, but is economical when considered with other transactions.

— II-260 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

① In separate financial statements for equity disposed, the difference between the carrying value and the actual payment is included in current profit or loss. Where the remaining equity after disposal can implement common control or place significant impact over the investee, the equity method is adopted for accounting treatment, and the remaining equity is adjusted as if the equity is adopted at the time of acquisition; where the remaining equity after disposal cannot implement common control or place significant impact over the investee, relevant provisions of Accounting Standards for Enterprises No. 22 – Recognition and Measurement of Financial Instruments shall be adopted for accounting, and the difference between the fair value on the date when the control is lost and the carrying value is included in current profit or loss.
② In consolidated financial statements, for the transactions before the loss of control over subsidiaries, the capital reserve (share premium) is adjusted by the difference between the price of disposal and the net asset shares of subsidiaries continuously calculated since the date of acquisition or combination corresponding to the long-term equity investment; where the capital reserve is insufficient, retained earnings are adjusted; at the time of loss of control over subsidiaries, the remaining equity are re-measured according to the fair value at the date of loss of control. The difference between the sum of the price acquired for disposal of equity and the fair value of the remaining equity less shares of net assets constantly calculated since the date of acquisition based on the original shareholding proportion is included in the investment income in the period when the control is lost and is written down to good will. Other comprehensive income related to original equity investment in the subsidiaries is transferred to current investment income at the time of loss of control.

① In separate financial statements, the difference between each disposal price before the loss of control and the carrying value of

— II-261 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

the long-term equity investment corresponding to the equity disposed is recognized as other comprehensive income; and transferred to current profit or loss at the time of loss of control.

② In consolidated financial statements, the difference between each disposal price before the loss of control and the share of net assets in the subsidiary corresponding to the disposal of investment is recognized as other comprehensive income, and shall be transferred to profit or loss for the period when control is lost.
(5) Criteria for determination of common control and significant impact

20. Fixed assets

(1) Recognition conditions

① economic benefits related to such fixed assets are likely to flow into the enterprise;

— II-262 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

② costs of such fixed assets can be reliably measured.

(2) Method of depreciation

				Annual
		Period of	Residual	depreciation
Category	Method of depreciation	depreciation	value ratio	ratio
			(%)	(%)
Houses and buildings	Average year method	20-50	5	1.90-4.75
Machinery equipment	Average year method	5-10	5	9.50-19.00
Underground works	Units-of-production
assets	method
Transportation equipment	Average year method	5	5	19.00
Office facilities and	Average year method	3-5	5	19.00-31.67
others

The company determines the useful life and estimated net residual value of fixed assets based on their nature and use condition. The useful life, estimated net residual value and method of depreciation of fixed assets are re-assessed at the end of the period, and corresponding adjustment is made when any difference from the originally estimated amount is found.

— II-263 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(3) Basis of recognition, valuation and depreciation of fixed assets acquired under finance leases

21. Construction in progress

The company is required to comply with the disclosure requirements of solid mineral resources business of the Guidelines No. 3 for Self-Regulatory Regulation of Listed Companies of the Shenzhen Stock Exchange – Industry Information Disclosure

(1) Initial determination of construction in progress

(2) Criteria and timing for conversion of construction in progress into fixed assets

22. Borrowing expenses

(1) Principles of recognizing capitalization of borrowing expenses

— II-264 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Borrowing expenses are capitalized when all of the following conditions are met:

① the asset expense has occurred, which includes expenses in the form of cash paid, non-monetary asset transferred or interest-bearing obligations assumed for the construction or product of an asset that meets capitalization conditions;
② the borrowing expenses have occurred;
③ the necessary construction or production activities for bringing the asset to the expected usable or saleable conditions have started.
(2) Capitalization period of borrowing expenses

When the construction or production of an asset meeting capitalization conditions has reached expected useful or saleable conditions, the capitalization of borrowing expenses is stopped.

(3) Suspension of capitalization period

(4) Calculation of capitalized amount of borrowing expenses

Interest expenses of special loans (net of interest income from unutilized loans deposited in bank or investment gain earned from temporary investment)

— II-265 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

and supplementary expenses incurred for the construction or production of asset that meets capitalization conditions before the asset reaches expected useable or saleable condition are capitalized.

23. Right-of-use assets

The company recognizes the right to use the leased assets during the lease period as the right-of-use assets at the commencement date of the lease, including:

1) The initial measurement amount of the lease liability;
2) If the lease payment is paid on or before the start of the lease period, if there is a lease incentive, the relevant amount of the lease incentive already enjoyed shall be deducted;
3) The initial direct costs incurred by the lessee;
4) The lessee expects to incur costs in order to dismantle and remove the leased assets, restore the premises where the leased assets are located, or restore the leased assets to the state agreed in the lease terms.

The company subsequently adopts the average year method to make provision for the depreciation of right-of-use assets. If it is reasonable to determine the ownership of the leased asset when the lease term expires, the Company shall make depreciation within the remaining useful life of the leased asset. If it cannot be reasonably determined that the ownership of the leased assets can be obtained at the end of the lease period, the Company shall accrue depreciation within the shorter of the lease period and the remaining useful life of the leased assets.

The company uses the changed present value of lease payments to remeasure the lease liability and adjust the carrying amount of right-of-use asset accordingly. If the carrying amount of the right-of-use asset is reduced to zero and there is a further reduction in the measurement of the lease liability, the company recognises any remaining amount of the remeasurement in profit or loss for the period.

— II-266 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

24. Intangible assets and development expenses

(1) Valuation method, service life and impairment test

① Initial measurement of intangible assets

— II-267 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

rights used during the development process, interest expenses meeting capitalization conditions, and other direct costs for bringing the intangible asset to expected usage.

② Subsequent measurement of intangible assets

The company determines the useful life of intangible assets on acquisition, which are classified as intangible assets with limited useful life and indefinite useful life.

1) Intangible assets with a limited useful life

Intangible assets with a limited useful life are amortised using straight line method over the term during which they bring economic benefits to the company.

The company’s geological achievements (mining rights) are amortised under the production method from the commencement of mining at the relevant mine.

The estimated useful life and basis for the intangible assets with a limited life are as follows:

	Estimated
Item	useful life	Basis
Land use right	7-50 years	Title certificate
Software	5-10 years	Benefit period

2) Intangible assets with indefinite useful life

If the term of economic benefit the intangible asset can bring to the company cannot be estimated, it is deemed to be an intangible asset with indefinite life.

— II-268 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

25. Exploration and development expenses

Exploration and development expenses refer to expenses incurred in detailed investigation and exploration in geological exploration activities, with mining areas as accounting objects.

26. Impairment of long-term assets

— II-269 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

impairment shall be made accordingly. Once the asset impairment loss is recognized, it will not be reversed for the value recovered in the subsequent periods.

27. Long-term deferred expenses

28. Contract Liability

Contract Liability refers to the company’s obligation to transfer goods to the customer for the consideration received or receivable.

29. Employee Remuneration

(1) Accounting treatment of short-term remuneration

Employee remuneration refers to all kinds of remunerations and other relevant reimbursements made by the company to its employees in exchange for services of said employees or termination of the labor relationship. Employee remuneration includes short-term remuneration, post-employment benefits, termination benefits and other long-term employee benefits.

— II-270 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(2) Accounting treatment of post-employment benefits

The post-employment benefits of the company are categorized as defined contribution plans and defined benefit plans.

(3) Accounting treatment of termination benefits

— II-271 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(4) Accounting treatment of other long-term employee benefits

Other long-term employee benefits refer to all the employee compensations other than short-term remuneration, post-employment benefits and termination benefits.

30. Lease Liability

On the commencement date of the lease term, the company recognizes the present value of unpaid lease payments as lease liabilities, except for short-term leases and leases of low-value assets. When calculating the present value of the lease payment, the company adopts the interest rate implicit in the leases as the discount rate; if the interest rate implicit in the leases cannot be determined, the lessee’s incremental borrowing rate is adopted as the discount rate. The company calculates interest expenses of the lease liability during each period of the lease term according to a fixed periodic interest rate, which is included in the current profit and loss, unless otherwise stipulated to be included in the cost of related assets. Variable lease payments that are not included in the measurement of lease liabilities are included in the current profit and loss when they actually occur, unless otherwise stipulated to be included in the cost of related assets.

After the commencement date of the lease term, when there is change in either the in-substance fixed payments, the amount expected to be payable under a residual value guarantee, the index or rate used to determine the amount of lease payments, the assessment results on the purchase options, extension options or termination options or the actual exercise of such options, the lease liability is remeasured to the present value of the revised lease payments.

31. Estimated liabilities

(1) Criteria for recognition of estimated liabilities

The company recognises an estimated liability when the obligations associated with the contingency simultaneously meet the following conditions:

The obligation is a present obligation of the company;

Fulfilment of this obligation is likely to result in outflow of economic benefits from the company;

The amount of the obligation can be measured reliably.

— II-272 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(2) Measurement of estimated liabilities

The company’s estimated liabilities are initially measured using the best estimate of the expenditure necessary to meet the relevant present obligations.

The best estimates are dealt with as follows:

Where there is no continuous range (or interval) of required expenditures, or there is a continuous range but the probability of occurrence of various results within the range is different, if the contingency involves a single item, the best estimate is determined based on the most probable amount; if the contingency involves more than one item, the best estimate is determined by calculating the various possible outcomes and the associated probabilities.

32. Revenue

Accounting policies adopted for revenue recognition and measurement

The company’s revenue is mainly derived from the sale of commodities and metal trading.

(1) General principles for revenue recognition

The company recognises revenue at the transaction price allocated to a contractual performance obligation when the customer obtains control of the related goods or services.

— II-273 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

A performance obligation is a contract whereby the company conveys a clearly identifiable good or service to a customer.

Obtaining control over the relevant commodity means being able to dominate the use of the commodity and obtain substantially all of the economic benefits therefrom.

For performance obligations performed within a certain period of time, the company uses the output method/ input method to determine the appropriate performance schedule based on the nature of the goods and services. The output method determines the performance progress based on the value of the goods transferred to the customer (the input method determines the performance progress based on the company’s inputs to fulfill the performance obligations). When the performance schedule cannot be reasonably determined, if the company expects to be compensated for the costs already incurred, revenue is recognised based on the amount of costs already incurred until the performance schedule can be reasonably determined.

(2) Specific method of revenue recognition

In addition to metal trading, the company’s sales of main commodities include: alloy gold, lead concentrate (containing silver) and zinc concentrate. The specific conditions for revenue recognition are that the commodities have been delivered and the control has been transferred, and at the same time, both the purchaser and the seller have confirmed that the weighing and test results are correct, and have no objection to the selling price of the commodities. Revenue from metal trading is recognized when the company has delivered the bill of lading, weight bill, etc. or transferred the warehouse receipt to the customer according to the contract, has received the payment for the goods or obtained the right to receive payment, and the relevant economic benefits are likely to flow in the company.

— II-274 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

33. Government subsidies

(1) Classification

(2) Recognition of government subsidies

(3) Accounting treatment

The company determines whether a class of government subsidy business should be accounted for using the gross method or the net method based on the substance of the economic business. Generally, the company selects only one approach for same or similar government-subsidized business and applies that approach consistently to that business.

— II-275 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

relevant expenses or losses are recognized. Government subsidies aimed at compensating for relevant expenses or losses the enterprise that are already incurred are directly included in the current profit or loss or offset against related costs once received.

34. Deferred income tax assets / deferred income tax liabilities

(1) Criteria for recognition of deferred income tax assets

For deductible temporary difference in relation to investment in the associates, corresponding deferred income tax assets are recognized in the

— II-276 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

following conditions: the temporary difference is probably reversed in a foreseeable future and it is likely that taxable income is obtained for deduction of the deductible temporary difference in the future.

(2) Criteria for recognition of deferred income tax liabilities

The company recognizes deferred income tax liabilities on the temporary difference between the taxable but not yet paid taxation in the current and previous periods, excluding:

① temporary difference arising from the initial recognition of goodwill;
② transactions or events arising from no business combination, and neither the accounting profit or the taxable income (or deductible losses) is affected when the transaction or event occurs;
③ for taxable temporary difference in relation to investment in subsidiaries or associates, the time for reversal of the difference can be controlled and the difference is probably not reversed in a foreseeable future.
(3) Deferred income tax assets and deferred income tax liabilities are presented net of offset when the following conditions are met:
① The enterprise has the legal right to settle the current income tax assets and current income tax liabilities on a net basis;
② Deferred income tax assets and deferred income tax liabilities are related to income taxes levied by the same tax administration department on the same taxable entity or different taxable entities, however, in the future period when each significant deferred income tax asset and deferred income tax liability are transferred back, the taxable entities involved intend to settle the current income tax assets and current income tax liabilities on a net basis or acquire assets and settle debts simultaneously.

35. Lease

(1) Accounting treatment of operating lease

At inception of a contract, the company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange of consideration. To assess whether a contract conveys the right to control the use of an identified asset, the company assesses whether the client in the contract has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of uses, and has the right to direct the use of the asset during such period.

— II-277 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Where a contract concurrently contains multiple separate leases, the company as a lessor and a lessee splits the contract and conducts accounting treatment for all separate leases respectively. Where the following conditions are concurrently met, use of the rights of identified assets shall constitute a separate lease in the contract:

1) A lessee may earn profits from separate use of the assets or joint use with other resources readily available;
2) There is no high dependence or high correlation between the assets and other assets in the contract.

Where a contract contains both lease and non-lease components, and when the company acts as a lessor and a lessee, the lease and non-lease components will be separated for accounting treatment.

(1) As a lessee
① Please refer to Note V. 23 and Note V. 30 for details of the accounting treatment of the company as a lessee.
② Modification of lease

Modification of lease is the modification of lease scope, lease consideration, and lease term beyond the original contract terms, including the addition or termination of the rights of use of one or more leased assets, and the extension or shortening of the lease period stipulated in the contract.

If the modification of lease happens and meets the following conditions, the company will conduct accounting treatment for the modification of lease as a separate lease:

1) the modification of lease expands the scope of lease by increasing the rights of use of one or more leased assets;
2) the increased consideration and the individual price of the expanded part of lease are equivalent after adjustment is made in accordance with the contract situation.

If accounting treatment for the modification of lease as a separate lease is not conducted, the company shall redetermine the lease term on the effective date of modification of lease and discount the modified lease payments using the revised discount rate, in order to remeasure the lease liabilities. When calculating the present value of the lease payments after modification, the

— II-278 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

company adopts the interest rate contained in the lease for the remaining lease periods as the discount rate; if the lease interest rate contained in the lease for the remaining lease periods cannot be readily determined, the company’s incremental borrowing rate shall then be used as the discount rate on the effective date of modification of lease.

In view of the consequences of the above adjustment of the lease liabilities, the company conducts accounting treatment based on each of the following cases accordingly:

1) if the modification of lease results in a narrower scope of lease or a shorter lease term, the company reduces the book value of the right-of-use assets to reflect the partial or complete termination of the lease. The company recognises the gain or loss relevant to the partial or complete termination of the leases in the current profits or loss;
2) for other modification of lease, the company adjusts the book value of the right-of-use assets accordingly.
③ Short-term leases and low-value asset leases

On the commencement date of the lease term, the company shall recognise leases with a lease term of less than 12 months and not including a call option as a short-term lease; single leases with a lower value when being a new asset are recognised as low-value asset leases. The company chooses not to recognise short-term leases and low-value asset leases as right-of-use assets and lease liabilities. During each period over the lease term, short-term leases and low-value asset leases shall be recognised in the related asset cost or current profit and loss on a straight-line basis or recognised in profit or loss in the period in which they actually arise.

(2) As a lessor

On the commencement date of the lease term, all leases with risks and rewards incident to the ownership of the leased assets are substantially transferred into finance leases, and all other leases are operating leases.

As the lessor of an operating lease, lease payments under an operating lease are recognised in current profits or loss on a straight-line basis in each period over the lease term or recognised in profits or loss in the period in which they actually arise.

— II-279 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(2) Accounting treatment of finance lease

36. Other important accounting policies and accounting estimates

(1) Hedge accounting

A. The hedge accounting method is applied for hedging instruments that meet the following conditions at the same time
① The hedging relationship consists only of qualified hedging instruments and hedged items.
② At the beginning of hedging, the company officially designated the hedging instrument and the hedged item, and prepared written documents on the hedging relationship, the risk management strategy and objectives of the hedging.
③ The hedging relationship meets the requirements for hedging effectiveness.

If the hedging meets the following conditions at the same time, the hedging relationship is deemed to meet the requirements of hedging effectiveness:

1) There is an economic relationship between the hedged item and the hedging instrument. The economic relationship makes changes in the opposite direction in the value of the hedging instrument and the hedged item due to their exposure to the same hedged risk.

— II-280 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

  - 2) The effect of credit risk does not dominate the value changes arising from the economic relationship between the hedged item and the hedging instrument.

  - 3) The hedge ratio of the hedging relationship is equal to the ratio of the quantity of hedged items actually hedged by the company to the actual quantity of hedging instruments used to hedge them, which however does not reflect an imbalance in the relative weights of hedging items and hedging instruments, which will lead to ineffective hedging and may produce accounting results that are inconsistent with the objectives of hedge accounting.

B. Fair value hedge accounting
① Gain or loss from hedging instruments is included in profit and loss for the period. If the hedging instrument is used to hedge a non-trading equity instrument investment (or its component) that is measured at fair value through other comprehensive income, the gain or loss arising from the hedging instrument is included in other comprehensive income.
② The gain or loss of the hedged item due to the hedged risk exposure is included in profit or loss for the period, and the carrying amount of the recognized hedged item that is not measured at fair value is adjusted at the same time. If the hedged item is a financial asset (or its component) measured at fair value through other comprehensive income, the gain or loss arising from the hedged risk exposure is included in profit or loss for the period, and its carrying amount has been measured at fair value and no adjustment is required. If the hedged item is a non-trading equity instrument investment (or its component) that the company chooses to measure at fair value through other comprehensive income, the gain or loss arising from the hedged risk exposure is included in other comprehensive income, and its carrying amount has been measured at fair value and no adjustment is required.

— II-281 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

If the hedged item is an unrecognized firm commitment (or its component), the cumulative changes in fair value caused by the hedged risk exposure after the hedging relationship is designated is recognized as an asset or liability, and the related gain or loss is included in profit or loss for each respective period. When an asset is acquired or a liability is assumed for the performance of the firm commitment, the initially recognized amount of the asset or liability is adjusted to include the accumulated changes in the fair value of the hedged item that has been recognized.

③ If the hedged item is a financial instrument (or its component) measured at amortized cost, the adjustment to the carrying amount of the hedged item shall be amortized according to the actual interest rate recalculated on the date when the amortization starts, and included in profit or loss for the period. The amortization can start from the adjustment date, but not later than the time point of termination of the adjustment to hedging gain and loss on the hedged item. If the hedged item is a financial asset (or its component) measured at fair value through other comprehensive income, the accumulated hedging gain or loss recognized shall be amortized in the same way and included in profit or loss for the period, but the carrying amount of the financial asset (or its component) will not be adjusted.
C. Cash flow hedge accounting
① The part of gain or loss generated by the hedging instrument that is effective in hedging is included in other comprehensive income as the cash flow hedging reserve. The amount of cash flow hedging reserve shall be determined at the lower of absolute amounts of the following:
- 1) The cumulative gain or loss of the hedging instrument since the beginning of hedging;
- 2) The cumulative changes in the present value of estimated future cash flow of the hedged item since the beginning of hedging. The amount of cash flow hedge reserve included in other comprehensive income in each period is the change in cash flow hedging reserve for the period.

— II-282 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

② The part of the gain or loss generated by the hedging instrument that is ineffective in hedging (that is, other gain or loss after deducting other comprehensive income) shall be included in profit or loss for the period.
③ The amount of cash flow hedging reserve shall be accounted for in accordance with the following requirements:
- 1) The hedged item is an expected transaction, and the expected transaction causes the company to subsequently recognize a non-financial asset or non-financial liability, or the expected transaction of a non-financial asset or a non-financial liability forms a firm commitment applicable to fair value hedge accounting, the cash flow hedging reserve amount originally recognized in other comprehensive income shall be transferred out and included in the initially recognized amount of the asset or liability.
- 2) For cash flow hedges that are not involved in the previous requirement, during the same period when the hedged expected cash flow affects profit and loss, the cash flow hedging reserve amount originally recognized in other comprehensive income is transferred out and included in profit and loss for the period.
- 3) If the cash flow hedging reserve amount recognized in other comprehensive income is a loss, and all or part of the loss is not expected to be covered in future accounting periods, in such case, the part that is not expected to be covered will be transferred out from other comprehensive income and included in profit and loss for the period.
D. Termination of hedge accounting

In case of any of the following circumstances, the use of hedge accounting shall be terminated:

① The hedging relationship no longer satisfies the risk management objectives due to changes in risk management objectives.

— II-283 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

② The hedging instrument has expired, been sold, terminated or exercised.
③ The economic relationship between the hedged item and the hedging instrument no longer exists, or the effect of credit risk begins to dominate the value changes arising from the economic relationship between the hedged item and the hedging instrument.
④ The hedging relationship no longer satisfies other conditions for applying the hedging accounting method stipulated in this standard. When the rebalancing of the hedging relationship is applicable, the enterprise should first consider the rebalancing of hedging relationship, and then evaluate whether the hedging relationship meets the conditions for applying the hedge accounting method stipulated in this standard.

E. Fair value options for credit risk exposure

① The subject of credit risk exposure of the financial instrument (such as the borrower or holder of the loan commitment) is consistent with that involved in credit derivative instrument;
② The repayment level of the financial instrument is consistent with that of the instruments to be delivered according to the terms of credit derivative instrument.

— II-284 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(2) Safety production fee

The company’s provision standard for special reserve is: RMB5/ton for open-pit mines, RMB10/ton for underground mines, and RMB1.0-1.5/ton for tailings safety production fees.

(3) Treasury shares

— II-285 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

37. Changes in important accounting policies and accounting estimates

(1) Changes in important accounting policies

✔ Applicable □ N/A

Contents and reasons for changes in accounting policies

The company has implemented the Accounting Standards for Business Enterprises No. 21 – Leasing revised by the Ministry of Finance in 2018 from 1 January 2021

Approval procedure Remark Considered and approved by the (1) board of directors on 27 April 2021

Note (1): Impact of the implementation of the new lease standard on the company

The company has implemented the Accounting Standards for Business Enterprises No. 21 – Leasing revised by the Ministry of Finance in 2018 from 1 January 2021. For details of the revised accounting policies, please refer to Note V. Significant Accounting Policies and Accounting Estimates.

On the date of initial implementation, from 1 January 2021, the Company has recognized right-of-use assets and lease liabilities at the present value of the minimum lease payments for the future rents payable in respect of all leased assets (excluding short-term lease and low-value asset lease for which the simplified approach is adopted), and has recognized depreciation separately, but the finance costs were not recognized and information for the comparable periods was not adjusted.

In addition, this change in accounting policy is carried out by the company in accordance with relevant regulations and requirements issued by the Ministry of Finance. After the change, the accounting policy can objectively and fairly reflect the company’s financial conditions and operating results, and is in line with relevant laws and regulations and the actual situation of the company. This change in accounting policy will increase the company’s total assets and total liabilities, but will not have a significant and substantial impact on the company’s net assets and net profit, nor will it prejudice the interests of the company and shareholders.

— II-286 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

The impact of implementation of the new lease standards on relevant items of the balance sheet as at 31 December 2020 is presented as follows:

==> picture [456 x 221] intentionally omitted <==

----- Start of picture text -----

Unit: RMB
Cumulative
Balance sheet items 31 December 2020 amount impacted 1 January 2021
Prepayments 26,885,087.34 -518,569.80 26,366,517.54
Right-of-use assets 15,538,486.59 15,538,486.59
Total assets 26,885,087.34 15,019,916.79 41,905,004.13
Lease liability 8,266,472.95 8,266,472.95
Non-current liabilities due within
one year 6,781,376.00 6,753,443.84 13,534,819.84
Total Liabilities 6,781,376.00 15,019,916.79 21,801,292.79
----- End of picture text -----

(2) Changes in important accounting estimates
Applicable ✔ N/A
(3) Explanation on adjusting relevant financial statement items for the year of the first implementation of new lease standard from 2021
✔ Applicable □ N/A

Is it necessary to adjust the balance sheet items at the beginning of the

year

✔ Yes □ No

— II-287 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Consolidated Balance Sheet

Item Current assets: Monetary funds Settlement reserves funds Placements with banks and other financial institutions Financial assets held for trading Derivative financial assets Bills receivable Accounts receivable Receivables financing Prepayments Premiums receivable Reinsurance accounts receivable Reinsurance contract reserves receivable Other receivables Of which: Interest receivable Dividends receivable Financial assets purchased under agreements to resell Inventory Contract assets Assets held for sale Non-current assets due within one year Other current assets Total current assets	31 December 2020 482,679,148.39 1,535,264,849.67 99,865,745.36 48,269,866.25 26,885,087.34 20,886,951.58 1,026,982,033.15 693,121,505.30 3,933,955,187.04	1 January 2021 482,679,148.39 1,535,264,849.67 99,865,745.36 48,269,866.25 26,366,517.54 20,886,951.58 1,026,982,033.15 693,121,505.30 3,933,436,617.24	Unit: RMB Adjustment -518,569.80
			-518,569.80

— II-288 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Item Non-current assets: Loans and advances to customers Debt investment Other debt investments Long-term receivables Long-term equity investment Investment in other equity instruments Other non-current financial assets Investment property Fixed assets Construction in progress Productive biological assets Oil and gas assets Right-of-use asset Intangible assets Development expenditure Goodwill Long-term prepaid expenses Deferred income tax assets Other non-current assets Total non-current assets Total assets	31 December 2020 55,803,885.24 2,783,312,677.63 200,415,684.70 5,318,458,341.50 452,365,699.74 26,510,372.05 80,300,961.89 55,632,960.05 8,972,800,582.80 12,906,755,769.84	1 January 2021 55,803,885.24 2,783,312,677.63 200,415,684.70 15,538,486.59 5,318,458,341.50 452,365,699.74 26,510,372.05 80,300,961.89 55,632,960.05 8,988,339,069.39 12,921,775,686.63	Adjustment 15,538,486.59
			15,538,486.59

			15,019,916.79

— II-289 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Item Current liabilities: Short-term borrowing Borrowing from the central bank Placements from banks and other financial institutions Financial liabilities held for trading Derivative financial liabilities Bills payable Accounts payable Advance payment Contract liabilities Financial assets sold under repurchase agreements Receipts of deposits and deposits from other banks Brokerage for trading securities Amount paid for agency securities underwriting Employee remuneration payable Taxes payable Other payables Of which: Interest payable Dividends payable Fees and commissions payable Reinsurance accounts payables Liabilities held for sale Non-current liabilities due within one year Other current liabilities Total current liabilities	31 December 2020 179,194,662.50 447,518,000.00 122,152,655.48 9,918,998.44 11,138,631.36 48,874,301.36 140,184,775.87 203,427,908.82 6,781,376.00 1,448,022.08 1,170,639,331.91	1 January 2021 179,194,662.50 447,518,000.00 122,152,655.48 9,918,998.44 11,138,631.36 48,874,301.36 140,184,775.87 203,427,908.82 13,534,819.84 1,448,022.08 1,177,392,775.75	Adjustment 6,753,443.84
			6,753,443.84

— II-290 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Item Non-current liabilities: Reserves for insurance contracts Long term borrowing Bonds payable Of which: Preferred shares Perpetual bonds Lease liability Long-term payables Long-term employee remuneration payable Estimated liabilities Deferred income Deferred income tax liabilities Other non-current liabilities Total non-current liabilities Total liabilities Owners’ equity: Share capital Other equity instruments Of which: Preferred shares Perpetual bonds Capital reserve Less: Treasury shares Other comprehensive income Special reserve Surplus reserve Provision for general risk Undistributed profit Total equity attributable to owners of the parent company Minority interests Total owner’s equity Total liabilities and owner’s equity	31 December 2020 234,929,916.67 20,344,128.00 45,283,429.64 444,600.00 354,563,348.18 14,248,463.35 669,813,885.84 1,840,453,217.75 2,776,722,265.00 4,431,280,488.30 -6,400,461.01 5,346,480.89 438,886,250.88 2,244,198,862.94 9,890,033,887.00 1,176,268,665.09 11,066,302,552.09 12,906,755,769.84	1 January 2021 234,929,916.67 8,266,472.95 20,344,128.00 45,283,429.64 444,600.00 354,563,348.18 14,248,463.35 678,080,358.79 1,855,473,134.54 2,776,722,265.00 4,431,280,488.30 -6,400,461.01 5,346,480.89 438,886,250.88 2,244,198,862.94 9,890,033,887.00 1,176,268,665.09 11,066,302,552.09 12,921,775,686.63	Adjustment 8,266,472.95
			8,266,472.95

			15,019,916.79







			15,019,916.79

— II-291 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Balance Sheet of the Parent Company

Item Current assets: Monetary funds Financial assets held for trading Derivative financial assets Notes receivable Accounts receivable Receivables financing Prepayments Other receivables Of which: Interest receivable Dividends receivable Inventory Contract assets Assets held for sale Non-current assets due within one year Other current assets Total current assets	31 December 2020 7,328,002.01 431,000,000.00 713,903.78 668,761,290.64 665,444,103.52 1,773,247,299.95	1 January 2021 7,328,002.01 431,000,000.00 195,333.98 668,761,290.64 665,444,103.52 1,772,728,730.15	Unit: RMB Adjustment -518,569.80
			-518,569.80

— II-292 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Item Non-current assets: Debt investment Other debt investment Long-term receivables Long-term equity investment Investment in other equity instruments Other non-current financial assets Investment property Fixed assets Construction in progress Productive biological assets Oil and gas assets Right-of-use assets Intangible assets Development expenditure Goodwill Long-term prepaid expenses Deferred income tax assets Other non-current assets Total non-current assets Total assets	31 December 2020 7,535,036,559.55 42,000,000.00 980,491.80 1,655,775.83 85,077.05 7,579,757,904.23 9,353,005,204.18	1 January 2021 7,535,036,559.55 42,000,000.00 980,491.80 12,351,162.79 1,655,775.83 85,077.05 7,592,109,067.02 9,364,837,797.17	Adjustment 12,351,162.79
			12,351,162.79

			11,832,592.99

— II-293 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Item Current liabilities: Short-term borrowing Financial liabilities held for trading Derivative financial liabilities Bills payable Accounts payable Advance payment Contract liabilities Employee remuneration payable Taxes payable Other payables Of which: Interest payable Dividends payable Liabilities held for sale Non-current liabilities due within one year Other current liabilities Total current liabilities Non-current liabilities: Long term borrowing Bonds payable Of which: Preferred shares Perpetual bonds Lease liability Long-term payables Long-term employee remuneration payable Estimated liabilities Deferred income Deferred income tax liabilities Other non-current liabilities Total non-current liabilities Total Liabilities	31 December 2020 318,282.93 2,169,851.45 10,083,669.45 240,675.46 12,812,479.29 234,929,916.67 234,929,916.67 247,742,395.96	1 January 2021 318,282.93 2,169,851.45 10,083,669.45 240,675.46 5,558,100.77 18,370,580.06 234,929,916.67 6,274,492.22 241,204,408.89 259,574,988.95	Adjustment 5,558,100.77
			5,558,100.77

			6,274,492.22
			6,274,492.22

			11,832,592.99

— II-294 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Item Owners’ equity: Share capital Other equity instruments Of which: Preferred shares Perpetual bonds Capital reserve Less: Treasury shares Other comprehensive income Special reserve Surplus reserve Undistributed profit Total owner’s equity Total liabilities and owner’s equity	31 December 2020 2,776,722,265.00 4,431,733,687.79 748.10 425,611,996.58 1,471,194,110.75 9,105,262,808.22 9,353,005,204.18	1 January 2021 2,776,722,265.00 4,431,733,687.79 748.10 425,611,996.58 1,471,194,110.75 9,105,262,808.22 9,364,837,797.17	Adjustment


			11,832,592.99

(4) Explanation on retroactively adjusting the comparative data in the prior period due to the first implementation of new lease standard from 2021
Applicable ✔ N/A

— II-295 —

APPENDIX II FINANCIAL INFORMATION OF THE TARGET COMPANY

VI. TAXATION

1. Main Types of Taxes and Corresponding Rates

Tax type	Tax basis	Tax rate
VAT	Product sales revenue /	13%, 6%, 3%
	taxable service revenue
Urban maintenance and construction tax	VAT	1%-7%
Corporate income tax	Taxable income	15%, 17%, 25%
Education surcharge	VAT	3%
Local education fee surcharge	VAT	2%, 1%
Resource tax	Sales revenue	5%, 4.5%, 4% for gold;
		5%, 3%, 2.5% for
		silver; 6% for lead,
		zinc.

Please make a disclosure if there are taxpayers with different corporate income tax rates

Name of taxpayer

Name of taxpayer	Income tax rate
Yulong Mining, Qinghai Dachaidan	15%
Shenghong Singapore	17%
Other entities	25%

2. Tax Incentives

(1) Corporate income tax

(2) VAT

— II-296 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

the Gold Exchange (holding the Gold Transaction Settlement Voucher issued by the Gold Exchange) without physical delivery; the VAT refund policy is implemented when physical delivery occurs, and urban maintenance and construction tax and education surcharges are exempted at the same time.

(3) Resource tax

According to the Specific Measures for Reduction and Exemption of Resource Tax in Jilin Province under Specific Circumstances jointly promulgated by the Jilin Provincial Department of Finance, the Jilin Provincial Taxation Bureau of the State Administration of Taxation, and the Jilin Provincial Department of Natural Resources, where an enterprise mines co-associated ore and the sales of co-associated ore and main mineral products are accounted for separately, the resource tax shall be reduced by 50% of the tax payable on the silver of co-associated ore.

VII. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS

1. Monetary Funds

Unit: RMB

Item Cash on hand Bank deposits Other monetary funds Total Including: Total amount deposited overseas	Closing balance 424,890.78 604,795,496.29 850,480,111.94 1,455,700,499.01 126,811,871.06	Opening balance 304,773.93 262,489,216.06 219,885,158.40
		482,679,148.39

		26,369,038.62

— II-297 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

As of 31 December 2021, the company has no pledge, freezing or potential recovery risk.

The breakdown of restricted monetary funds is as follows:

Item Environmental governance deposit Security deposit for futures Security deposit for bank acceptance ETC frozen funds Total	Closing balance 39,680,429.21 7,969,625.00 660,336,595.45 2,500.00 707,989,149.66	Unit: RMB Opening balance 33,462,255.21 3,592,791.66 518,000.00 1,500.00
		37,574,546.87

As of 31 December 2021, restricted funds are:

RMB39,680,429.21 of the environmental governance deposit, including RMB10,646,161.18 of the environmental governance deposit placed by the subsidiary Yulong Mining in the bank, RMB13,544,126.24 of the environmental governance deposit placed in the bank by the subsidiary Qinghai Dachaidan, RMB7,792,426.95 of the environment protection deposit placed in the bank by the subsidiary Jilin Banmiaozi, and RMB7,697,714.84 of the geological environment protection deposit placed in the bank by the subsidiary Heihe Yintai;
RMB7,969,625.00 of the deposit for futures placed by the subsidiary Shenghong Singapore in the futures exchange;
RMB660,336,595.45 of the deposit for the bank acceptance placed in the bank by the subsidiary Yintai Shenghong;
RMB2,500.00 of the ETC frozen funds placed in the bank by the subsidiary Jilin Banmiaozi.

2. Financial Assets Held for Trading

Item Financial assets measured at fair value through profit or loss Of which: Wealth management products Total	Closing balance 2,074,042,141.82 2,074,042,141.82 2,074,042,141.82	Unit: RMB Opening balance 1,535,264,849.67 1,535,264,849.67
		1,535,264,849.67

Other explanation: Among them, RMB810,000,000.00 of bank wealth management is restricted to be used as a deposit for bank acceptance, see Note 55 for details.

— II-298 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

3. Derivative Financial Assets

Unit: RMB

Item Hedging instrument Derivative financial assets with no designated hedging relationship Total 4. *Accounts Receivable*	Closing balance 95,601,151.10 16,750,611.00 112,351,762.10	Opening balance 70,246,083.57 29,619,661.79
		99,865,745.36

(1) Disclosure by aging of accounts receivable

Aging Within 1 year 1–2 years 2–3 years 3–4 years 4–5 years Over 5 years Subtotal Less: Provision for bad debts Total	Closing balance 42,081,575.52 42,081,575.52 2,104,078.79 39,977,496.73	Unit: RMB Opening balance 50,810,385.53
		50,810,385.53
		2,540,519.28
		48,269,866.25

— II-299 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(2) Disclosure by category of provision for bad debts

Unit: RMB

Category Accounts receivable with provision for bad debts on a group basis Accounts receivable with provision for bad debts on an individual basis Including: Grouped by aging Total	Closing balance Book balance Bad debt provision Amount Proportion Amount Proportion 42,081,575.52 100.00% 2,104,078.79 5.00% 42,081,575.52 100.00% 2,104,078.79 5.00% 42,081,575.52 100.00% 2,104,078.79 5.00%	Carrying amount 39,977,496.73 39,977,496.73 39,977,496.73	Opening balance Book balance Bad debt provision Amount Proportion Amount Proportion 50,810,385.53 100.00% 2,540,519.28 5.00% 50,810,385.53 100.00% 2,540,519.28 5.00% 50,810,385.53 100.00% 2,540,519.28 5.00%	Carrying amount 48,269,866.25 48,269,866.25
				48,269,866.25

(3) Accounts receivable with provision for Book balance ECL by combination

Unit: RMB

Name Within 1 year 1–2 years 2–3 years 3–4 years 4–5 years Over 5 years Total	Book balance 42,081,575.52 42,081,575.52	Closing balance Bad debt provision 2,104,078.79 2,104,078.79	Proportion 5.00%
			5.00%

If the bad debt provision for accounts receivable is made according to the general model of expected credit losses, please refer to the disclosure method of other receivables to disclose the relevant information of bad debt provision:

==> picture [105 x 10] intentionally omitted <==

— II-300 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(4) Provision for, recovery or reversal of bad debts in the current period

Provision for bad debts in the current period:

Unit: RMB

Category Accounts receivable with provision for ECL on an individual basis Accounts receivable with provision for ECL on a group basis Including: Grouped by aging Total	Opening balance 2,540,519.28 2,540,519.28 2,540,519.28	Amount of change in the current period Provision Recovery or reversal Write off Others -436,440.49 -436,440.49 -436,440.49	Closing balance 2,104,078.79 2,104,078.79
			2,104,078.79

(5) Top five accounts receivable according to the closing balance collected by the debtor

Unit: RMB

Company name Unit 1 Unit 2 Unit 3 Total	Closing balance of accounts receivable 29,093,622.53 12,351,331.01 636,621.98 42,081,575.52	Proportion to the total closing balance of accounts receivable 69.14% 29.35% 1.51% 100.00%	Closing balance of provision for bad debts 1,454,681.14 617,566.55 31,831.10
			2,104,078.79

— II-301 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

5. Advance Payment

(1) Breakdown of prepayments by aging

Unit: RMB

Aging Within 1 year 1 to 2 years 2 to 3 years Over 3 years Total	Closing balance Amount Proportion (%) 42,290,340.47 98.95 263,235.33 0.62 64,377.67 0.15 122,431.70 0.28 42,740,385.17 100.00	Opening balance Amount Proportion (%) 25,519,767.76 96.79 215,260.98 0.82 47,818.64 0.18 583,670.16 2.21 26,366,517.54 100.00	Opening balance Amount Proportion (%) 25,519,767.76 96.79 215,260.98 0.82 47,818.64 0.18 583,670.16 2.21 26,366,517.54 100.00
			100.00

(2) Top five prepayments according to the closing balance collected by the debtor

Unit: RMB

Company name Unit 1 Unit 2 Unit 3 Unit 4 Unit 5 Total	Closing balance 15,312,605.78 10,644,006.11 5,259,593.60 2,182,490.00 1,501,000.00 34,899,695.49	Proportion of total prepayments Time of prepayments Reasons for no settlement (%) 35.83 2021 Cooperation project not completed 24.90 2021 Electricity needs to be paid in advance, billed once a month 12.31 2021 Purchase order not completed 5.11 2021 Purchase order not completed 3.51 2021 Purchase order not completed 81.66

— II-302 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

6. Other Receivables

Unit: RMB

Item Interest receivable Dividend receivable Other receivables Total	Closing balance 336,372.46 47,303,563.07 47,639,935.53	Opening balance 20,886,951.58
		20,886,951.58

(1) Interest receivable

1) Classification of interest receivable

Unit: RMB

Item

Closing balance Opening balance

Interest receivable on forward locked remitting to statement date 336,372.46 Total 336,372.46

— II-303 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(2) Other receivables

1) Disclosure by aging

Unit: RMB

Aging Within 1 year 1–2 years 2–3 years 3–4 years 4–5 years Over 5 years Subtotal Less: Provision for bad debts Total	Closing balance 32,618,038.49 15,505,574.91 30,463.29 97,974.66 1,717,048.52 212,029.14 50,181,129.01 2,877,565.94 47,303,563.07	Opening balance 9,892,640.79 9,069,820.52 362,501.74 2,007,812.64 12,847.16 9,095,459.88
		30,441,082.73
		9,554,131.15
		20,886,951.58

2) Classification of other receivables by nature of payment

Unit: RMB

Nature of payment Current account Reserve fund Deposit and security deposit Others Total	Closing balance 44,296,754.78 272,771.56 5,251,222.68 360,379.99 50,181,129.01	Opening balance 25,526,138.81 318,824.46 4,232,048.05 364,071.41
		30,441,082.73

— II-304 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

3) Disclosure by three stages of financial asset impairment

Unit: RMB

Name Stage I Stage II Stage III Total	Closing balance Book balance Bad debt provision 50,181,129.01 2,877,565.94 50,181,129.01 2,877,565.94	Carrying amount 47,303,563.07 47,303,563.07	Opening balance Book balance Bad debt provision 23,205,290.71 2,318,339.13 7,235,792.02 7,235,792.02 30,441,082.73 9,554,131.15	Carrying amount 20,886,951.58
				20,886,951.58

4) Disclosure by category of provision for bad debts

Unit: RMB

Category Other receivables with provision for ECL on an individual basis Other receivables with provision for ECL on a group basis Including: Grouped by aging Total	Closing balance Book balance Bad debt provision Amount Proportion Amount Proportion (%) (%) 50,181,129.01 100.00 2,877,565.94 5.73 50,181,129.01 100.00 2,877,565.94 5.73 50,181,129.01 100.00 2,877,565.94 5.73	Carrying amount 47,303,563.07 47,303,563.07 47,303,563.07	Opening balance Book balance Bad debt provision Amount Proportion Amount Proportion (%) (%) 7,235,792.02 23.77 7,235,792.02 100.00 23,205,290.71 76.23 2,318,339.13 9.99 23,205,290.71 76.23 2,318,339.13 9.99 30,441,082.73 100.00 9,554,131.15 31.39	Carrying amount 20,886,951.58 20,886,951.58
				20,886,951.58

— II-305 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

5) Other receivables with provision for ECL on a group basis

Unit: RMB

Aging Within 1 year (inclusive) 1–2 years 2–3 years 3–4 years 4–5 years Over 5 years Total	Closing balance Book balance Bad debt provision 32,618,038.49 1,630,221.67 15,505,574.91 775,278.75 30,463.29 3,046.33 97,974.66 19,594.94 1,717,048.52 345,791.74 212,029.14 103,632.51 50,181,129.01 2,877,565.94	Proportion (%) 5.00 5.00 10.00 20.00 20.00 50.00
		5.73

6) Provision for bad debts of other receivables

Bad debt provision Balance as at 1 January 2021 Balance as at 1 January 2021 in the current period – Transfer to stage III Provision made for the period Written off in the period Balance as at 31 December 2021	Stage I ECL over the next 12 months 2,318,339.13 – -600,300.00 1,159,526.81 2,877,565.94	Stage II Lifetime ECL (non-credit impaired –	Stage III Lifetime ECL (credit impaired) 7,235,792.02 – 600,300.00 814,950.00 8,651,042.02	Unit: RMB Total 9,554,131.15 – 1,974,476.81 8,651,042.02
				2,877,565.94

7) Other receivables actually written off in the current period

Unit: RMB

Item

Other receivables actually written off

Write-off amount 8,651,042.02

— II-306 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Important write-offs of other receivables:

Unit: RMB

					Whether the
					payment is
	Nature of			Write-off	generated by
	other	Write-off	Reason for	procedures	related party
Company name	receivables	amount	write-off	performed	transactions
West Ujimqin Banner Industrial	Current account	3,000,000.00	Unrecoverable	Approval by	No
Development Fund				management
Management Office
People’s Government Office of	Current account	700,000.00	Unrecoverable	Approval by	No
West Ujimqin Banner				management
Baiyinhua Government of West	Current account	600,000.00	Unrecoverable	Approval by	No
Ujimqin Banner				management
Beijing China Enterprise	Current account	500,000.00	Unrecoverable	Approval by	No
Appraisals Company				management
West Ujimqin Banner Traffic	Current account	500,000.00	Unrecoverable	Approval by	No
Police Brigade				management
Beijing Jingtian & Gongcheng	Current account	400,000.00	Unrecoverable	Approval by	No
				management
Bayanhua Town Government of	Current account	303,209.77	Unrecoverable	Approval by	No
West Ujimqin Banner				management
Bayanhua Town Bayan Hubo	Current account	300,000.00	Unrecoverable	Approval by	No
Gacha				management
Chifeng Haifangtong Company	Current account	220,000.00	Unrecoverable	Approval by	No
				management
West Ujimqin Banner	Current account	200,000.00	Unrecoverable	Approval by	No
Aolinbaolige Professional				management
Cooperative
Baorihushugacha People’s	Current account	200,000.00	Unrecoverable	Approval by	No
Committee of Bayanhua Town,				management
Xiwuzhumuqin Banner
Tubuqin	Current account	170,000.00	Unrecoverable	Approval by	No
				management
Beijing Dacheng Law Offices	Current account	150,000.00	Unrecoverable	Approval by	No
				management
Odenbaatar	Current account	128,569.30	Unrecoverable	Approval by	No
				management
Bi Yuande	Current account	121,625.00	Unrecoverable	Approval by	No
				management
Grass Supervision Bureau of West	Current account	115,000.00	Unrecoverable	Approval by	No
Ujimqin Banner				management
Herdsman borrowing - Hasbartel	Current account	100,000.00	Unrecoverable	Approval by	No
				management

Total

–

– 7,708,404.07

– –

— II-307 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

8) Top five other receivables according to the closing balance collected by the debtor

Unit: RMB

Unit name Nature of payment Unit 1 Current account Unit 2 Current account Unit 3 Deposit and security deposit Unit 4 Security deposit Unit 5 Current account Total	Closing balance Aging 21,908,655.35 Within 1 year, 1–2 years 21,908,655.34 Within 1 year, 1–2 years 2,000,000.00 Within 1 year 1,555,709.40 4–5 years 342,820.00 Within 1 year 47,715,840.09	Proportion to the total closing balance of other receivables (%) 43.66 43.66 3.99 3.10 0.68 95.09	Closing balance of provision for bad debts 1,095,432.77 1,095,432.77 100,000.00 311,141.88 17,141.00
			2,619,148.42

7. Inventory

Does the company need to comply with the disclosure requirements of the real estate industry

— II-308 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(1) Classification of inventory

Unit: RMB

Item Raw materials Work in process Inventory goods Total	Book balance 159,811,562.85 433,327,966.03 435,191,469.33 1,028,330,998.21	Closing balance Provision for inventory decline or impairment provision for contract performance cost	Carrying amount 159,811,562.85 433,327,966.03 435,191,469.33 1,028,330,998.21	Book balance 133,829,155.22 481,333,840.40 413,518,456.82 1,028,681,452.44	Opening balance Provision for inventory decline or impairment provision for contract performance cost 1,699,419.29 1,699,419.29	Carrying amount 132,129,735.93 481,333,840.40 413,518,456.82
						1,026,982,033.15

(2) Provision for inventory decline and impairment provision for contract performance cost

==> picture [48 x 8] intentionally omitted <==

----- Start of picture text -----

Unit: RMB
----- End of picture text -----

Item Raw materials Total	Opening balance 1,699,419.29 1,699,419.29	Increased amount in the current period Closing balance Provision	Decreased amount in the current period Others Reversed or offset 1,699,419.29 1,699,419.29	Others

— II-309 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

8. Other Current Assets

Unit: RMB

Item Deposit for and interest from acquisition of equity, etc. VAT credit Advanced income tax Others Total 9. *Investment in Other Equity Instruments* Item Qinghai Kunlun Gold Co., Ltd. (青海昆侖黃金有限公司) Baishan Rongsheng Mining Co., Ltd. (白山市融盛礦業有限責任公司) Chifeng Herizeng Mining Development Co., Ltd. (赤峰市和日增礦業開發有限公司) Shanghai Sijin Enterprise Management Co., Ltd. (上海思晉企業管理有限公司) Jiaxing Xiyao Equity Investment Partnership (嘉興希耀股權投資合夥企業) Total *10.* *Fixed Assets* Item Fixed assets Disposal of fixed assets Total	Closing balance 34,558,798.54 2,239,746.51 41,039.46 36,839,584.51 Closing balance 12,000,000.00 500,000.00 1,803,885.24 30,000,000.00 44,303,885.24 Closing balance 2,808,584,710.82 – 2,808,584,710.82	Opening balance 664,637,057.82 26,691,379.85 1,275,495.80 517,571.83
		693,121,505.30

		Unit: RMB Opening balance 12,000,000.00 1,803,885.24 12,000,000.00 30,000,000.00
		55,803,885.24

		Unit: RMB Opening balance 2,783,312,677.63 –
		2,783,312,677.63

— II-310 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(1) Fixed assets

Unit: RMB

			Shaft		Office
	Houses and		engineering	Means of	equipment and
Item	buildings	Machinery	assets	transport	others	Total
I. Original carrying amount:
1. Opening balance	1,986,427,945.22	1,514,431,340.93	1,809,030,231.95	70,374,009.31	35,734,887.81	5,415,998,415.22
2. Increased amount in the current period	106,751,171.07	46,184,823.17	192,571,775.19	10,425,759.97	5,386,627.21	361,320,156.61
(1) Purchase	19,610,374.20	16,660,248.44	14,873,951.30	9,510,592.99	5,215,593.21	65,870,760.14
(2) Transfer of construction in progress	82,677,776.99	25,379,831.07	157,413,704.33		164,834.00	265,636,146.39
(3) Equity acquisition	4,463,019.88	4,144,743.66	20,284,119.56	915,166.98	6,200.00	29,813,250.08
3. Decreased amount in the current period	23,884,892.12	33,354,170.97	8,236,389.07	7,538,595.04	801,640.67	73,815,687.87
(1) Disposal or retirement	21,580,662.12	32,024,092.25	8,236,389.07	7,538,595.04	801,640.67	70,181,379.15
(2) Other decreases	2,304,230.00	1,330,078.72				3,634,308.72
4. Closing balance	2,069,294,224.17	1,527,261,993.13	1,993,365,618.07	73,261,174.24	40,319,874.35	5,703,502,883.96
II. Accumulated depreciation
1. Opening balance	884,488,562.53	1,006,902,006.53	653,602,790.89	53,164,821.12	23,036,366.89	2,621,194,547.96
2. Increased amount in the current period	95,319,079.19	84,435,866.59	130,597,541.94	9,850,758.72	4,188,067.05	324,391,313.49
(1) Accrual	93,222,939.68	80,996,963.65	112,053,920.21	8,963,630.27	4,182,115.05	299,419,568.86
(2) Equity acquisition	2,096,139.51	3,438,902.94	18,543,621.73	887,128.45	5,952.00	24,971,744.63
3. Decreased amount in the current period	17,868,829.92	26,458,632.04	7,933,589.23	8,919,216.17	978,610.58	62,158,877.94
(1) Disposal or retirement	14,941,070.23	26,069,951.32	7,933,589.23	8,919,216.17	978,610.58	58,842,437.53
(2) Other decreases	2,927,759.69	388,680.72				3,316,440.41
4. Closing balance	961,938,811.80	1,064,879,241.08	776,266,743.60	54,096,363.67	26,245,823.36	2,883,426,983.51
III. Provision for impairment
1. Opening balance	11,491,189.63					11,491,189.63
2. Increased amount in the current period
(1) Accrual
3. Decreased amount in the current period
(1) Disposal or retirement
4. Closing balance	11,491,189.63					11,491,189.63
IV. Carrying amount
1. Closing carrying amount	1,095,864,222.74	462,382,752.05	1,217,098,874.47	19,164,810.57	14,074,050.99	2,808,584,710.82
2. Opening carrying amount	1,090,448,193.06	507,529,334.40	1,155,427,441.06	17,209,188.19	12,698,520.92	2,783,312,677.63

— II-311 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(2) Fixed assets without title certificate

Unit: RMB

Item

Reasons for not completing Carrying amount the certificate of title

Heihe Yintai houses and buildings 29,514,038.59 Title certificate is in the process of application Yulong Mining houses and buildings 63,947,881.96 Title certificate is in the process of application

Total

93,461,920.55

11. Construction in Progress

Unit: RMB

Item Closing balance Opening balance Construction in progress 424,659,399.66 198,263,994.48 Engineer materials 2,151,690.22 Total 424,659,399.66 200,415,684.70

— II-312 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(1) Construction in progress

Unit: RMB

Project Jilin Banmiaozi shaft project Jilin Banmiaozi tailings pond expansion project Jilin Banmiaozi’s other projects Qinghai Dachaidan Qinglongtan underground engineering prospecting project Qinghai Dachaidan Xijinggou underground prospecting project Qinghai Dachaidan Jinlonggou slope exploration engineering Qinghai Dachaidan 323 South open pit stripping project Heihe Yintai plant selection, reconstruction and expansion project Heihe Yintai underground excavation project (phase II) Yulong Mining plant selection, reconstruction and expansion project Yulong Mining Huaaobaote moutain mine section comprehensive mining project Surface diamond drilling in Huasheng Gold Mine Others Total	Book balance 47,680,131.22 9,387,042.08 4,174,411.44 41,596,642.28 13,564,562.23 52,858,428.63 91,600,593.18 1,707,473.00 140,484,628.67 1,707,718.66 1,332,550.70 18,565,217.57 424,659,399.66	Closing balance Provision for impairment	Carrying amount 47,680,131.22 9,387,042.08 4,174,411.44 41,596,642.28 13,564,562.23 52,858,428.63 91,600,593.18 1,707,473.00 140,484,628.67 1,707,718.66 1,332,550.70 18,565,217.57 424,659,399.66	Opening balance Book balance Provision for impairment 130,736,609.41 1,163,566.83 19,428,872.04 11,796,662.23 16,523,858.21 7,923,732.07 6,764,267.56 1,686,492.24 2,239,933.89 198,263,994.48	Carrying amount 130,736,609.41 1,163,566.83 19,428,872.04 11,796,662.23 16,523,858.21 7,923,732.07 6,764,267.56 1,686,492.24 2,239,933.89
					198,263,994.48

— II-313 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

				Sources of funds		Self-owned funds	Self-owned funds	Borrowing, self-owned	funds	Borrowing, self-owned	funds		Self-owned funds		Self-owned funds	Self-owned funds		Self-owned funds				Self-owned funds		Self-owned funds
	Current	interest	capitalization	rate
Including:	Capitalized	amount of	interest in the	current period
	Accumulated	amount of	interest	capitalized					1,670,600.00		12,300.00														1,682,900.0
			Project	progress	(%)	67.92	99.64		95.64		62.00		50.81		49.73	100.00		90.00				75.00		5.00
Proportion of	cumulative	project	investment to	budget	(%)	60.80	99.57		95.64		62.00		50.81		49.73	95.93		93.32				77.18		30.49
				Closing balance		47,680,131.22	9,387,042.08		41,596,642.28		13,564,562.23		52,858,428.63		91,600,593.18	0.00		1,707,473.00				140,484,628.67		1,707,718.66	400,587,219.95
	Other	decreased	amount in the	current period		345,023.70	157,817.00											21,933.00				23,196,840.01			23,721,613.71
Amount	transferred to	fixed assets in	the current	period		116,791,399.86	1,752,787.01		26,502,174.12				12,686,102.71			38,370,472.93		3,730,066.75							199,833,003.38
		Amount of	Increase in the	current period		34,079,945.37	10,134,079.26		48,669,944.36		1,767,900.00		49,020,673.13		91,600,593.18	30,446,740.86		5,459,472.75				156,917,201.12		21,226.42	428,117,776.45
			Opening	balance		130,736,609.41	1,163,566.83		19,428,872.04		11,796,662.23		16,523,858.21			7,923,732.07						6,764,267.56		1,686,492.24	196,024,060.59
				Budget		271,074,800.00	100,435,400.00		431,994,800.00		44,414,600.00		129,000,000.00		184,210,000.00	40,000,000.00		5,850,000.00				212,074,500.00		5,600,000.00	1,424,654,100.00
				Name of project		Jilin Banmiaozi shaft lane project	Jilin Banmiaozi tailings pond expansion project	Qinghai Dachaidan Qinglongtan underground	engineering prospecting project	Qinghai Dachaidan Xijinggou underground prospecting	project	Qinghai Dachaidan Jinlonggou slope exploration	engineering	Qinghai Dachaidan 323 South open pit stripping	project	Heihe Yintai underground excavation project (phase II)	Heihe Yintai plant selection, reconstruction and	expansion project	Heihe Yintai underground development engineering	(phase II)	Yulong Mining plant selection, reconstruction and	expansion project	Yulong Mining Huaaobaote moutain mine section	comprehensive mining project	Total

— II-314 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(3) Engineering materials

Unit: RMB

Item Steel Wood Others Total	Closing balance Book balance Provision for impairment	Carrying amount	Opening balance Book balance Provision for impairment Carrying amount 1,814,014.28 1,814,014.28 33,202.23 33,202.23 304,473.71 304,473.71 2,151,690.22 2,151,690.22	Opening balance Book balance Provision for impairment Carrying amount 1,814,014.28 1,814,014.28 33,202.23 33,202.23 304,473.71 304,473.71 2,151,690.22 2,151,690.22
				2,151,690.22

— II-315 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

12. Right-of-use assets

Unit: RMB

		Houses and
Item		buildings	Land	Total
I. Original carrying amount:
1.	Opening balance	15,538,486.59		15,538,486.59
2.	Increased amount in the
	current period	739,002.51	28,774,298.84	29,513,301.35
	Lease	739,002.51	28,774,298.84	29,513,301.35
3.	Decreased amount in the
	current period
4.	Closing balance	16,277,489.10	28,774,298.84	45,051,787.94
II. Accumulated depreciation
1.	Opening balance
2.	Increased amount in the
	current period	6,971,289.60	945,534.58	7,916,824.18
(1) Accrual		6,971,289.60	945,534.58	7,916,824.18
3.	Decreased amount in the
	current period
4.	Closing balance	6,971,289.60	945,534.58	7,916,824.18
III. Provision for impairment
1.	Opening balance
2.	Increased amount in the
	current period
(1) Accrual
3.	Decreased amount in the
	current period
(1) Disposal
4.	Closing balance
IV. Carrying amount
1.	Closing carrying amount	9,306,199.50	27,828,764.26	37,134,963.76
2.	Opening carrying amount	15,538,486.59		15,538,486.59

— II-316 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

13. Intangible Assets

(1) Intangible assets

Unit: RMB

	Geological	Geological
	exploration	achievements	Land use		Patented
Item	costs	(Mining rights)	rights	Software	technology	Total
I. Original carrying amount
1. Opening balance	817,901,695.64	5,900,331,674.41	481,129,391.87	16,391,695.04	30,000.00	7,215,784,456.96
2. Increased amount in the current period	96,739,677.02	2,182,394,563.68	29,990,759.11	584,905.66		2,309,709,905.47
(1) Purchase	85,208,673.52	227,878,300.00	29,990,759.11	584,905.66		343,662,638.29
(2) Equity acquisition	11,531,003.50	1,954,516,263.68				1,966,047,267.18
3. Decreased amount in the current period	10,016,095.33			62,655.00		10,078,750.33
(1) Disposal	10,016,095.33			62,655.00		10,078,750.33
4. Closing balance	904,625,277.33	8,082,726,238.09	511,120,150.98	16,913,945.70	30,000.00	9,515,415,612.10
II. Accumulated amortization
1. Opening balance		1,803,837,519.04	65,286,701.86	12,813,859.78	3,250.00	1,881,941,330.68
2. Increased amount in the current period		492,742,338.26	12,372,109.46	979,709.18	3,000.00	506,097,156.90
(1) Accrual		492,742,338.26	12,372,109.46	979,709.18	3,000.00	506,097,156.90
3. Decrease d amount in the current period				62,655.00		62,655.00
(1) Disposal				62,655.00		62,655.00
4. Closing balance		2,296,579,857.30	77,658,811.32	13,730,913.96	6,250.00	2,387,975,832.58
III. Provision for impairment
1. Opening balance			15,384,784.78			15,384,784.78
2. Increased amount in the current period
3. Decreased amount in the current period
4. Closing balance			15,384,784.78			15,384,784.78
IV. Carrying amount
1. Closing carrying amount	904,625,277.33	5,786,146,380.79	418,076,554.88	3,183,031.74	23,750.00	7,112,054,994.74
2. Beginning carrying amount	817,901,695.64	4,096,494,155.37	400,457,905.23	3,577,835.26	26,750.00	5,318,458,341.50

Explanation: In January 2022, the mining rights of Huasheng Gold Mine have been lifted from the seizure.

(2) Land use rights without title certificates

Unit: RMB

Item

Reasons for not completing Carrying amount the certificate of title

Land acquisition for the expansion construction project of Jilin Banmiaozi tailings pond

37,000,712.34

Title certificate is in the process of application

— II-317 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

14. Goodwill

(1) Original carrying amount of goodwill

Unit: RMB

Name of investee or matters for goodwill to arise Sino Gold Hong Kong Jilin Banmiaozi Qinghai Dachaidan Total	Opening balance 93,902,442.61 130,557,523.84 227,905,733.29 452,365,699.74	Increase in the current period Arising from a business combination Others	Decrease in the current period Disposal Others	Closing balance 93,902,442.61 130,557,523.84 227,905,733.29
				452,365,699.74

Information about the asset group or combination of asset groups to which the goodwill is attributable

(2) Provision for goodwill impairment

The company’s goodwill arose when the subsidiary Shanghai Shengwei merged with enterprises not under the common control. The goodwill obtained from the merger has been allocated to the asset group of Sino Gold Hong Kong, asset group combination of Jilin Banmiaozi, and asset group combination of Qinghai Dachaidan for impairment test. The management of the company accesses the possible impairment of goodwill every year. The impairment test of goodwill is performed by the company based on the future business plan of asset groups, historical data and other information to predict the future cash flow to test the recoverable amount of asset groups containing goodwill on the reporting date. After testing, as of 31 December 2021, the balance of provision for goodwill impairment was RMB0.00.

Asset group of Sino Gold Hong Kong: The goodwill of this asset group arose when Shanghai Shengwei purchased Sino Gold Hong Kong, Rock Hong Kong and Heihe Yintai, which is consistent with the asset group determined on the purchase date. On 31 December 2021, the carrying amount of the asset group to which goodwill is attributable is RMB1,793,732,700, and the recoverable amount is recognized at the present value of estimated future cash flow, and no indication of impairment was found in the asset group related to goodwill after testing.

— II-318 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

is RMB39,000,000 (representing a relatively small proportion of the asset group combination on the original purchase date, about 2.3%), which has less impact on the asset group combination and goodwill testing. On 31 December 2021, the carrying amount of the asset group combination to which goodwill is attributable is RMB1,477,711,300, and the recoverable amount is recognized at the present value of estimated future cash flow and the fair value net the disposal expenses, and no indication of impairment was found in the asset group combination related to goodwill after testing.

Asset group combination of Qinghai Dachaidan: The goodwill of this asset group combination arose when Shanghai Shengwei purchased Qinghai Dachaidan, which is consistent with the asset group combination determined on the purchase date. On 31 December 2021, the carrying amount of the asset group combination to which goodwill is attributable is RMB1,395,455,500, and the recoverable amount is recognized at the present value of estimated future cash flow and the fair value net the disposal expenses, and no indication of impairment was found in the asset group combination related to goodwill after testing.

15. Long-term Deferred Expenses

Unit: RMB

Item Highway outside the mining area Electric facilities supporting fee Asset maintenance expenditure 35KV line reconstruction and expansion Reconstruction of power distribution room and power generation room Shaft engineering design fee Land rent Slope control project Carbon pulp plant design fee Others Total	Opening balance 17,422,387.33 1,013,307.50 7,913,826.60 160,850.62 26,510,372.05	Amount of Increase in the current period 1,866,474.46 299,699.72 197,805.22 19,290.66 1,074,638.29 299,074.85 557,627.36 3,131,490.23 5,008.74 7,451,109.53	Amortization amount in the current period 974,052.14 251,034.90 2,757,847.56 16,038.26 332.60 84,839.87 17,944.49 44,023.21 84,634.87 58,665.85 4,289,413.75	Other reductions	Closing balance 16,448,335.19 2,628,747.06 5,455,678.76 181,766.96 18,958.06 989,798.42 281,130.36 513,604.15 3,046,855.36 107,193.51
					29,672,067.83

— II-319 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

16. Deferred Income Tax Assets / Deferred Income Tax Liabilities

(1) Deferred income tax assets not offset

Unit: RMB

Item Provision for assets impairment Unrealized profit in intra-group transactions Deductible losses Depreciation and amortization Expensed exploration expenditures Estimated liabilities Accrued expenses Hedging instruments included in other comprehensive income Total	Closing balance Deductible temporary differences Deferred income tax assets 31,857,619.18 6,191,908.64 30,765,720.40 7,691,430.10 148,488,798.21 37,122,199.55 269,968,395.68 61,862,140.42 13,052,763.57 3,263,190.89 17,066,746.00 2,608,297.03 6,323,487.40 1,580,871.85 517,523,530.44 120,320,038.48	Opening balance Deductible temporary differences Deferred income tax assets 40,671,044.18 7,736,439.44 32,056,406.92 8,014,101.73 47,732,092.95 11,932,358.32 270,254,267.89 61,444,944.26 13,052,763.57 3,263,190.89 18,905,908.11 2,707,667.58 11,067,125.05 2,766,781.26 242,806.41 54,585.00 433,982,415.08 97,920,068.48	Opening balance Deductible temporary differences Deferred income tax assets 40,671,044.18 7,736,439.44 32,056,406.92 8,014,101.73 47,732,092.95 11,932,358.32 270,254,267.89 61,444,944.26 13,052,763.57 3,263,190.89 18,905,908.11 2,707,667.58 11,067,125.05 2,766,781.26 242,806.41 54,585.00 433,982,415.08 97,920,068.48
			97,920,068.48

— II-320 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(2) Deferred income tax liabilities not offset

Unit: RMB

Item Appreciation of the combined asset valuation of enterprises not under the same control Capitalized exploration expenditure Depreciation and amortization Change in fair value Hedging instruments included in other comprehensive income Total	Closing balance Taxable temporary difference Deferred income tax liabilities 1,341,341,379.61 296,719,189.28 75,762,914.80 11,364,437.22 53,505,572.00 13,376,393.01 11,576,662.40 2,894,165.59 511,009.16 127,752.29 1,482,697,537.97 324,481,937.39	Opening balance Taxable temporary difference Deferred income tax liabilities 1,556,568,240.46 344,391,938.95 87,927,398.55 13,189,109.78 58,405,624.16 14,601,406.04 1,702,901,263.17 372,182,454.77	Opening balance Taxable temporary difference Deferred income tax liabilities 1,556,568,240.46 344,391,938.95 87,927,398.55 13,189,109.78 58,405,624.16 14,601,406.04 1,702,901,263.17 372,182,454.77
			372,182,454.77

(3) Deferred income tax assets or liabilities stated on a net basis after offset

							Unit: RMB
				Deferred	Closing balance	Deferred	Opening
				income tax	of deferred	income tax	balance of
				assets and	income tax	assets and	deferred income
				liabilities offset	assets or	liabilities offset	tax assets or
				at the end of the	liabilities after	at the beginning	liabilities after
Item				period	offset	of the period	offset
Deferred	income	tax	assets	22,014,871.93	98,305,166.55	17,619,106.59	80,300,961.89
Deferred	income	tax	liabilities	22,014,871.93	302,467,065.46	17,619,106.59	354,563,348.18

— II-321 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

17. Other Non-Current Assets

Unit: RMB

Item Advance payment for engineering equipment Advance payment of the transfer fee for prospecting rights Advance payment of the security deposit for prospecting rights Total	Book balance 30,321,875.92 56,901,000.00 1,329,800.00 88,552,675.92	Closing balance Provision for impairment	Carrying amount 30,321,875.92 56,901,000.00 1,329,800.00 88,552,675.92	Opening balance Book balance Provision for impairment 54,303,160.05 1,329,800.00 55,632,960.05	Carrying amount 54,303,160.05 1,329,800.00
					55,632,960.05

Other explanation:

The security deposit for prospecting rights is paid in advance, the balance of which is frozen and supervised by three parties through a tripartite supervision agreement signed by Yintai Shengxin, the 602nd Team of Jilin Provincial Nonferrous Metals Geological Exploration Bureau and its account opening bank.

18. Short-term Loans

(1) Classification of short-term loans

Item Guaranteed loan Credit loan Interest payable not due Total	Closing balance 579,741,200.00 100,000,000.00 2,291,329.88 682,032,529.88	Unit: RMB Opening balance 179,000,000.00 194,662.50
		179,194,662.50

(2) Explanation of short-term loans

The subsidiary Qinghai Dachaidan obtained a loan of RMB180 million from Haixi Branch of China Construction Bank Co., Ltd. through a guaranteed loan, and the guarantor was Yintai Gold Co., Ltd.

— II-322 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

The subsidiary Heihe Yintai obtained two loans from Heihe Branch of Industrial and Commercial Bank of China Co., Ltd. through guaranteed loans, both of which were RMB100 million. Heihe Yintai has signed the Gold Lease Contract with Heihe Branch of Industrial and Commercial Bank of China Co., Ltd. through secured guarantee, and the guarantor was Yintai Gold Co., Ltd. Heihe Yintai obtained a loan of RMB139,741,200 on the premise that it does not assume the risk of price fluctuations during the gold lease period.

The subsidiary Yulong Mining obtained a loan of RMB60 million from Xilingol League Branch of Industrial and Commercial Bank of China Co., Ltd. through a guaranteed loan, and the guarantor was Yintai Gold Co., Ltd.

19. Bills Payable

Type Bank acceptance Domestic letter of credit Total *20.* *Accounts Payable*	Closing balance 1,618,374,146.25 100,000,000.00 1,718,374,146.25	Unit: RMB Opening balance 447,518,000.00
		447,518,000.00

Item Payment for engineering equipment Material payables Accounts payable Service charge payable Exploration fee Others Total	Closing balance 77,612,260.35 46,777,935.53 20,424.15 7,219,748.16 29,157,825.39 2,094,907.10 162,883,100.68	Unit: RMB Opening balance 61,092,251.18 47,187,548.70 9,276,688.33 568,143.37 2,286,818.03 1,741,205.87
		122,152,655.48

— II-323 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

21. Advance payment

Item Advances on sales Total *22.* *Contract Liabilities* Item Advance receipt of merchandise sales Total	Closing balance 144,048.99 144,048.99 Closing balance 16,016,500.89 16,016,500.89	Unit: RMB Opening balance 9,918,998.44
		9,918,998.44

		Unit: RMB Opening balance 11,138,631.36
		11,138,631.36

23. Employee Salaries Payable

(1) Breakdown of employee salaries payable

Item 1. Short-term remuneration 2. Post-employment benefits – defined contribution plan 3. Dismissal benefits Total	Opening balance 48,658,238.84 172,666.05 43,396.47 48,874,301.36	Increase in the current period 258,673,285.75 23,020,143.61 2,447,731.12 284,141,160.48	Decrease in the current period 251,394,469.96 22,810,716.84 2,491,127.59 276,696,314.39	Unit: RMB Closing balance 55,937,054.63 382,092.82
				56,319,147.45

— II-324 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(2) Breakdown of short-term remuneration

Unit: RMB

Item 1. Wages, bonuses, allowances and subsidy 2. Employee benefits 3. Social insurance premiums Of which: Medical insurance premiums Work injury insurance premiums Maternity insurance premiums 4. Housing provident fund 5. Trade union funds and employee education funds Total	Opening balance 34,850,943.70 131,249.34 153,468.85 -25,180.51 2,961.00 186,734.45 13,489,311.35 48,658,238.84	Increase in the current period 213,070,545.43 18,877,118.70 11,800,267.17 9,830,788.78 1,787,756.91 181,721.48 11,222,836.32 3,702,518.13 258,673,285.75	Decrease in the current period 208,230,803.46 18,877,118.70 10,697,755.26 8,857,839.96 1,673,098.16 166,817.14 10,765,992.48 2,822,800.06 251,394,469.96	Closing balance 39,690,685.67 1,233,761.25 1,126,417.67 89,478.24 17,865.34 643,578.29 14,369,029.42
				55,937,054.63

(3) Breakdown of defined contribution plan

Unit: RMB

Item 1. Basic endowment insurance 2. Unemployment insurance premium Total	Opening balance 167,843.38 4,822.67 172,666.05	Increase in the current period 22,204,849.81 815,293.80 23,020,143.61	Decrease in the current period 22,001,725.91 808,990.93 22,810,716.84	Closing balance 370,967.28 11,125.54
				382,092.82

— II-325 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

24. Taxes Payable

Unit: RMB

Item VAT Corporate income tax Personal income tax Urban maintenance and construction tax Education surcharge Local education surcharges Resource tax Stamp duty Environmental protection tax Other taxes Total	Closing balance 12,893,090.28 138,693,536.45 735,550.36 737,924.59 112,825.32 75,216.88 20,128,571.60 1,020,489.54 150,085.37 1,002,174.69 175,549,465.08	Opening balance 4,670,440.94 123,758,318.55 813,398.33 99,359.28 58,336.10 38,890.74 9,029,400.44 325,825.58 57,478.55 1,333,327.36
		140,184,775.87

25. Other Payables

Item Other payables Total	Closing balance 215,556,106.87 215,556,106.87	Unit: RMB Opening balance 203,427,908.82
		203,427,908.82

— II-326 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(1) Breakdown of other payables by the nature of payment

Unit: RMB

Item Current account Security deposit and deposit Payment for project Withholding payment Service charges Accrued expenses Advance payment Others Total	Closing balance 32,705,151.57 160,020,142.40 12,977,989.66 831,893.14 611,100.92 1,384,617.40 7,025,211.78 215,556,106.87	Opening balance 55,459.86 171,166,065.52 16,267,624.84 599,309.03 94,769.29 11,067,125.05 4,177,555.23
		203,427,908.82

2) Significant other payables aged more than 1 year

Unit: RMB

Item Unit 1 Unit 2 Unit 3 Unit 4 Unit 5 Total	Closing balance Reasons for non-payment or carryover 22,988,994.18 Payment terms have not been met 5,259,302.78 Payment terms have not been met 3,000,000.00 Payment terms have not been met 3,000,000.00 Payment terms have not been met 3,000,000.00 Payment terms have not been met 37,248,296.96

26. Non-current Liabilities Due within One Year

Unit: RMB

Item Long-term payables due within one year Lease liabilities due within one year Total	Closing balance 52,381,376.00 7,167,685.47 59,549,061.47	Opening balance 6,781,376.00 6,753,443.84
		13,534,819.84

— II-327 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

27. Other Current Liabilities

Item Tax on items to be offset Total *28.* *Long-term Loans* Item Guaranteed loans Interest payable not due Total *29.* *Lease liabilities* Item Lease liabilities Less: Lease liabilities due within one year Total *30.* *Long-term Payables*	Closing balance 2,082,145.12 2,082,145.12 Closing balance Closing balance 17,514,366.48 7,167,685.47 10,346,681.01	Unit: RMB Opening balance 1,448,022.08
		1,448,022.08

		Unit: RMB Opening balance 234,500,000.00 429,916.67
		234,929,916.67

		Unit: RMB Opening balance 15,019,916.79 6,753,443.84
		8,266,472.95

Item Long-term payables Total	Closing balance 150,241,052.00 150,241,052.00	Unit: RMB Opening balance 20,344,128.00
		20,344,128.00

— II-328 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(1) Breakdown of long-term payables by the nature of payment

Unit: RMB

Item Mining rights transfer fees Less: Long-term payables due within one year Total	Closing balance 202,622,428.00 52,381,376.00 150,241,052.00	Opening balance 27,125,504.00 6,781,376.00
		20,344,128.00

31. Estimated Liabilities

Unit: RMB

Closing Opening Item balance balance Causes Disposal fees 42,538,554.00 45,283,429.64 Estimated costs incurred in restoring the ecological environment of mining areas Total 42,538,554.00 45,283,429.64

Item

32. Deferred Income

Unit: RMB

Increase in Decrease in Opening the current the current Closing Item balance period period balance Causes Government subsidies 444,600.00 34,200.00 410,400.00 Financial allocation related to assets of tailings environment special funds for pollution control Total 444,600.00 34,200.00 410,400.00

— II-329 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Items involving government subsidies:

==> picture [48 x 7] intentionally omitted <==

----- Start of picture text -----

Unit: RMB
----- End of picture text -----

Amount Amount Amount of Amount of included in included in offsetting new subsidy non-operating other costs and Related to in the income in income in expenses in assets / Opening current the current the current the current Other Closing related to Liability item balance period period period period changes balance income Government subsidies for tailings pond 444,600.00 34,200.00 410,400.00 Related to environmental protection assets Total 444,600.00 34,200.00 410,400.00

33. Other Non-Current Liabilities

Unit: RMB

Item Closing balance Opening balance Dividends payable by Jilin Banmiaozi to minority shareholders 14,248,463.35 Total 14,248,463.35 34. Share Capital Unit: RMB

Increase or decrease in this change (+, -)

==> picture [455 x 79] intentionally omitted <==

----- Start of picture text -----

Conversion of
capital reserve
Opening Issuance of new into share
balance shares Bonus shares capital Others Subtotal Closing balance
Total number of shares 2,776,722,265.00 2,776,722,265.00
----- End of picture text -----

— II-330 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

35. Capital Reserve

Unit: RMB

Increase in the Decrease in the Item Opening balance current period current period Closing balance Capital premium (share capital premium) 4,431,280,488.30 4,431,280,488.30 Total 4,431,280,488.30 4,431,280,488.30

36. Other Comprehensive Income

Unit: RMB

Item I. Other comprehensive income to be reclassified to profit or loss Cash flow hedge reserve Translation differences of foreign currency financial statements Total other comprehensive income	Opening balance -6,400,461.01 -163,907.25 -6,236,553.76 -6,400,461.01	Amount for the current period	Amount for the current period		Attributable to minority shareholders after tax -4,829.14 12,893.05 -17,722.19 -4,829.14	Closing balance -6,369,278.83 370,211.57 -6,739,490.40
		Amount before income tax in the current period Less: Transfer from other comprehensive income in the last period to profit or loss in the current period Less: Transfer from other comprehensive income in the last period to retained earnings in the current period 208,690.33 729,349.16 -520,658.83 208,690.33	Deduct: Income tax expense 182,337.29 182,337.29 182,337.29	Attributable to the parent company after tax 31,182.18 534,118.82 -502,936.64 31,182.18
						-6,369,278.83

— II-331 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

37. Special Reserve

Unit: RMB

Item Safety production fees Total *38.* *Surplus Reserve* Item Statutory surplus reserve Total	Opening balance 5,346,480.89 5,346,480.89 Opening balance 438,886,250.88 438,886,250.88	Increase in the current period 24,680,012.58 24,680,012.58 Increase in the current period 64,519,294.23 64,519,294.23	Decrease in the current period 27,468,152.91 27,468,152.91 Decrease in the current period	Closing balance 2,558,340.56
				2,558,340.56

				Unit: RMB Closing balance 503,405,545.11
				503,405,545.11

39. Undistributed Profit

		Unit: RMB
	For the current	For the last
Item	period	period
Undistributed profit at the end of the last period before
adjustment	2,244,198,862.94	1,406,894,608.22
Adjusted undistributed profit at the beginning of the
period	2,244,198,862.94	1,406,894,608.22
Add: Net profit attributable to owners of the parent
company in the current period	1,273,338,698.63	1,242,446,761.34
Less: Appropriation of statutory surplus reserve	64,519,294.23	8,467,897.22
Dividends payable on ordinary shares	694,180,566.25	396,674,609.40
Undistributed profit at the end of the period	2,758,837,701.09	2,244,198,862.94

— II-332 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

40. Operating Revenue and Operating Costs

Unit: RMB

Item Main business Other businesses Total	Amount for the current period Revenue Costs 9,037,064,242.29 6,769,224,798.67 3,179,612.00 1,776,364.08 9,040,243,854.29 6,771,001,162.75	Amount for the last period Revenue Costs 7,902,639,439.32 5,745,935,431.31 3,162,899.63 1,538,042.42 7,905,802,338.95 5,747,473,473.73	Amount for the last period Revenue Costs 7,902,639,439.32 5,745,935,431.31 3,162,899.63 1,538,042.42 7,905,802,338.95 5,747,473,473.73
			5,747,473,473.73

Is the lower of the net profit before and after deducting non-recurring profit and loss after auditing negative

□ Yes ✔ No

Income related information:

Unit: RMB

Contract classification I. Market or customer type Of which: Non-ferrous metal mining and processing Metal commodity trading Others Total	Amount for the current period 3,787,132,977.43 5,249,931,264.86 3,179,612.00 9,040,243,854.29	Amount for the last period 3,290,839,290.41 4,611,800,148.91 3,162,899.63
		7,905,802,338.95

Information related to performance obligations: The company has signed a legal and valid purchase and sale contract with customers in the sales of mineral products, which stipulates the target product, delivery method, delivery period, pricing method, weighing and testing standards, collection and payment settlement method and the liability for breach of contract, etc., and the performance obligations and rights are clear. There are clear market-based prices and calculation methods for the selling price of the company’s products, and revenue is finally recognized after completion of product delivery, confirmation of test results and unit price and other performance obligations.

— II-333 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

41. Taxes and Surcharges

Unit: RMB

Item Urban maintenance and construction tax Education surcharge Resource tax Property tax Land holding tax Vehicle usage tax Stamp duty Environmental protection tax Mineral resource compensation fee Others Total	Amount for the current period 4,956,487.82 4,946,520.37 155,159,454.12 3,101,688.39 2,959,184.69 216,980.23 4,705,190.26 433,571.38 2,155,468.32 178,634,545.58	Amount for the last period 4,081,849.62 4,081,926.93 124,897,349.56 3,008,370.23 3,675,328.94 232,372.83 3,046,367.58 177,905.27 44,827,577.77 1,871,137.25
		189,900,185.98

42. Selling Expenses

Unit: RMB

Item Employee remuneration Storage fee Shipping fee Travel expenses Lab fees Depreciation Others Total	Amount for the current period 1,410,955.96 5,442,955.54 215,021.68 115,498.85 22,595.23 368,439.41 7,575,466.67	Amount for the last period 1,009,141.30 997,957.48 644,487.17 233,963.85 197,376.00 612,351.47 127,273.48
		3,822,550.75

— II-334 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

43. Management Costs

Unit: RMB

Item Employee remuneration Depreciation and amortization Consulting and service fees Business hospitality Rental fees Office expenses Travel expenses Tax Maintenance fees Utility bill Downtime loss Insurance fees Vehicle and miscellaneous expenses Greening costs Heating costs Feasibility study fees Others Total	Amount for the current period 144,328,192.26 31,506,485.42 16,997,967.52 8,944,129.36 7,526,718.61 2,133,029.60 3,067,393.36 1,023,526.22 3,632,869.16 3,254,442.02 1,194,520.24 1,218,195.25 4,393,113.08 2,125,717.50 5,222,484.22 3,638,000.00 24,426,511.48 264,633,295.30	Amount for the last period 126,604,317.62 34,356,710.95 10,718,631.05 8,098,640.23 6,904,043.30 2,525,236.40 4,101,447.21 5,575,111.02 1,834,991.51 4,265,528.08 6,511,564.59 1,118,544.50 3,535,591.78 2,108,477.82 6,630,305.92 9,734,863.17 21,989,659.57
		256,613,664.72

44. Financial Expenses

Item Interest expense Less: Interest income Exchange gains and losses Bank charges Others Total	Amount for the current period 70,823,851.02 7,564,849.45 -692,005.56 2,717,180.31 1,968,638.37 67,252,814.69	Unit: RMB Amount for the last period 42,193,580.61 1,029,909.86 1,636,984.87 865,496.65
		43,666,152.27

— II-335 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

45. Other Gains

Unit: RMB

Other sources of income Government subsidies Refund of withholding fees Others Total *46.* *Investment Income* Item Investment income of wealth management products Investment income from disposal of derivative financial assets Interest income from acquisition of equity Equity investment Others Total	Amount for the current period 4,842,666.91 619,914.88 91,665.01 5,554,246.80 Amount for the current period 60,942,723.35 10,070,401.46 7,021,969.51 14,412,012.62 -1,532,991.95 90,914,114.99	Amount for the last period 6,091,132.15 351,166.91 124,708.66
		6,567,007.72

		Unit: RMB Amount for the last period 35,219,154.17 -1,964,832.58 53,857,224.11 1,808,565.48
		88,920,111.18

*47.* *Gains from Change in Fair Value* Source of gains from change in fair value Financial assets held for trading Derivative financial instruments Total	Amount for the current period 8,833,282.20 11,709,115.44 20,542,397.64	Unit: RMB Amount for the last period -8,792,960.06
		-8,792,960.06

— II-336 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

48. Credit Impairment Losses

Unit: RMB

Item Bad debt loss Total *49.* *Gains from disposal of assets*	Amount for the current period -1,538,036.32 -1,538,036.32	Amount for the last period -1,194,993.39
		-1,194,993.39

Source of gains on disposal of assets Gains or losses on disposal of fixed assets Total *50.* *Non-operating revenue*	Amount for the current period -1,743,156.41 -1,743,156.41	Unit: RMB Amount for the last period -1,890,453.55
		-1,890,453.55

Unit: RMB

Item Compensation Liquidated damages income Forfeited income Gains on surplus Others Total	Amount for the current period 588,015.61 795,485.92 1,122.00 2,177,324.67 3,561,948.20	Amount for the last period 71,343,396.40 166,984.32 196.17 1,575,724.25 73,086,301.14	Amount included in the current non-recurring profit and loss 588,015.61 795,485.92 1,122.00 2,177,324.67
			3,561,948.20

— II-337 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

51. Non-operating expenses

Unit: RMB

Item External donation Loss on damage and retirement of non-current assets Fines and late fees Liquidated damages and compensation Others Total	Amount for the current period 936,406.43 18,032,295.28 1,966,554.94 1,013,807.40 1,871,947.91 23,821,011.96	Amount for the last period 11,083,703.50 2,687,356.72 45,352,163.28 826,458.83 59,949,682.33	Amount included in the current non-recurring profit and loss 936,406.43 18,032,295.28 1,966,554.94 1,013,807.40 1,871,947.91
			23,821,011.96

52. Income Tax Expense

(1) Income tax expense table

Unit: RMB

Item Current income tax expense Deferred income tax expense Total	Amount for the current period 476,670,275.93 -53,762,455.40 422,907,820.53	Amount for the last period 412,621,193.77 -17,667,227.77
		394,953,966.00

— II-338 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(2) Adjustment process of accounting profit and income tax expense

Unit: RMB

	Amount for the
Item	current period
Total profit	1,844,617,072.24
Income tax expense calculated at statutory / applicable tax rate	461,154,268.06
Effect of different tax rates applicable to subsidiaries	-97,453,300.47
Effect of adjusting income taxes for the prior period	7,295,270.92
Impact on non-taxable income	-168,134.43
Effect of non-deductible costs, expenses and losses	12,189,817.67
Effect of using deductible losses of deferred in-come tax assets not recognized
in the prior period	724,848.28
Effect of deductible temporary differences or deductible losses of deferred
income tax assets not recognized in the current period	206,257.48
Effect of the restoration of fair value of consolidated subsidiaries	38,958,793.02
Income tax expense	422,907,820.53

53. Cash Flow Statement Items

(1) Other cash received related to operating activities

Unit: RMB

Item Receipt of current account Interest income Government subsidies for daily business activities Security deposit received Others Total	Amount for the current period 16,667,025.86 7,564,849.45 4,808,466.91 10,567,370.24 2,474,177.70 42,081,890.16	Amount for the last period 3,499,388.27 1,029,909.86 6,056,932.15 5,631,359.52 1,941,303.97
		18,158,893.77

— II-339 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(2) Other cash paid related to operating activities

Unit: RMB

Item Payment of current account Security deposit Business hospitality Consulting and service fees Rental fees Travel expenses Maintenance fees Bank charges Office expenses Warehousing and shipping fees Environmental greening and water and soil conservation costs External donation Insurance fees Fines and late fees Material consumption Others Total	Amount for the current period 6,545,329.33 6,524,470.72 8,943,754.85 18,508,017.29 1,896,586.85 3,269,727.83 4,556,047.04 2,717,180.31 3,044,321.22 7,120,931.27 10,473,926.32 956,219.85 830,227.88 1,964,307.36 653,433.05 16,049,461.04 94,053,942.21	Amount for the last period 25,153,644.76 11,134,036.03 8,098,640.23 10,718,631.05 6,904,043.30 4,335,411.06 1,834,991.51 865,496.65 2,525,236.40 1,642,444.65 2,108,477.82 11,083,703.50 1,118,544.50 45,152,163.28 9,734,863.17 2,205,277.29
		144,615,605.20

(3) Other cash received related to investment activities

Item Compensation received Withdrawal of deposit for equity acquisition Total	Amount for the current period 600,000,000.00 600,000,000.00	Unit: RMB Amount for the last period 63,552,189.72
		63,552,189.72

— II-340 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(4) Other cash paid related to investment activities

Unit: RMB

Item Advance payment of deposit for prospecting rights Security deposit for futures pledge Total	Amount for the current period 4,810,225.00 4,810,225.00	Amount for the last period 1,329,800.00
		1,329,800.00

(5) Other cash received related to financing activities

Item Amount for the current period Receipt of bill financing 443,900,000.00 Funds received from warehouse receipts, cargo pledges or other credit financing 506,782,812.67 Total 950,682,812.67 (6) Other cash paid related to financing activities Item Amount for the current period Repayment of bill financing and discount interest 499,642,227.76 Share registration fee Repayment of warehouse receipts, cargo pledges or other credit financing and interest 486,878,024.86 Loan liquidated damages 25,591,000.00 Purchase of minority interest 10,662,100.00 Rentals 21,284,607.38 Total 1,044,057,960.00	Unit: RMB Amount for the last period 407,000,000.00 199,585,284.32
	606,585,284.32

	Unit: RMB Amount for the last period 613,687,253.60 529,334.02 172,838,035.10
	787,054,622.72

Explanation: The liquidated damages for breach of contract of loan is that for breach of contract of loan incurred by Huasheng Gold Mine before the acquisition by the company. At present, the loan has been fully settled.

— II-341 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

54. Supplementary Information on the Cash Flow Statement

(1) Supplementary information on the cash flow statement

Unit: RMB

	Amount for the	Amount for the
Supplementary information	current period	last period
1. Reconciliation of net profit to cash flows from
operating activities:
Net profit	1,421,709,251.71	1,366,117,676.21
Add: Credit impairment loss	1,538,036.32	1,194,993.39
Depreciation of fixed assets, depreciation of oil
and gas assets and depreciation of productive
biological assets	299,419,568.86	309,610,496.83
Depreciation of right-of-use assets	7,916,824.18
Amortization of intangible assets	506,097,156.90	351,629,695.70
Amortization of long-term deferred expenses	4,289,413.75	5,291,118.60
Losses on disposal of fixed assets, intangible
assets and other long-term assets
(gain represented by “–”)	1,743,156.41	1,890,453.55
Losses from retirement of fixed assets
(gain represented by “–”)	18,032,295.28	2,687,356.72
Losses from changes in fair value
(gain represented by “–”)	-20,542,397.64	8,792,960.06
Financial expenses (gain represented by “–”)	70,823,851.02	42,193,580.61
Investment loss (gain represented by “–”)	-90,914,114.99	88,920,111.18
Decrease in deferred income tax assets
(increase represented by “–”)	-1,538,420.39	27,190,829.59
Increase in deferred income tax liabilities
(decrease represented by “–”)	-52,224,035.01	-38,295,594.11
Decrease in inventory (increase represented
by “–”)	-1,348,965.06	37,935,522.67
Decrease in operating receivable items
(increase represented by “–”)	-26,866,534.10	-14,990,377.07
Increase in operating payable items
(decrease represented by “–”)	577,757,300.40	454,039,524.92
Others	-673,202,743.12	-39,665,768.09
Net cash flows from operating activities	2,042,689,644.52	2,426,702,358.40
2. Significant investment and financing activities that do
not involve cash receipts and payments:
Conversion of debt into capital
Convertible corporate bonds due within one year
Finance leasing of fixed assets
3. Net changes in cash and cash equivalents:
Closing balance of cash	747,711,349.35	445,104,601.52
Less: Opening balance of cash	445,104,601.52	291,271,671.97
Add: Closing balance of cash equivalents
Less: Opening balance of cash equivalents
Net increase in cash and cash equivalents	302,606,747.83	153,832,929.55

— II-342 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(2) Net cash paid for acquisition of subsidiaries in the current period

Unit: RMB

	Amount
Cash or cash equivalents paid in the current period for business combination
occurred in the current period	1,037,000,000.00
Of which: Huasheng Gold Mine	1,037,000,000.00
Less: Cash and cash equivalents held by subsidiaries on the date of purchase	3,058,345.58
Of which: Huasheng Gold Mine	3,058,345.58
Add: cash or cash equivalents paid in the current period for business
combinations that occurred in previous periods
Receipt of net cash paid by subsidiaries	1,033,941,654.42

(3) Total cash outflow related to leases

The total cash outflow related to lease in the current period was RMB21,284,607.38 (for last period: RMB6,181,705.30).

(4) Composition of cash and cash equivalents

			Unit: RMB
Item		Closing balance	Opening balance
I. Cash		747,711,349.35	445,104,601.52
Including: Cash on hand		424,890.78	304,773.93
	Bank deposits readily available for payment	604,795,496.29	262,489,216.06
	Other monetary funds readily available for
	payment	142,490,962.28	182,310,611.53
II. Cash equivalents
Including: Bond investments that mature within three
	months
III. Closing	balance of cash and cash equivalents	747,711,349.35	445,104,601.52
Including: Restricted cash and cash equivalents used
	by the parent company or subsidiaries
	within the group

— II-343 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

55. Assets with Restricted Ownership or Use Rights

Unit: RMB

Closing carrying
Item amount Reasons for restriction Monetary funds 707,989,149.66 As of 31 December 2021, restricted funds are: 1. RMB39,680,429.21 of the environmental governance deposit, including RMB10,646,161.18 of the environmental governance deposit placed by the subsidiary Yulong Mining in the bank, RMB13,544,126.24 of the environmental governance deposit placed in the bank by the subsidiary Qinghai Dachaidan, RMB7,792,426.95 of the environment protection deposit placed in the bank by the subsidiary Jilin Banmiaozi, and RMB7,697,714.84 of the geological environment protection deposit placed in the bank by the subsidiary Heihe Yintai;

Financial assets held for
trading
Inventory
Other non-current assets
Total

2.
RMB7,969,625.00 of the deposit for futures placed by the
subsidiary Shenghong Singapore in the futures exchange;
3.
RMB660,336,595.45 of the deposit for the bank
acceptance placed in the bank by the subsidiary Yintai
Shenghong;
4.
RMB2,500.00 of the ETC frozen funds placed in the bank
by the subsidiary Jilin Banmiaozi.
810,000,000.00
The closing balance is a structured deposit, which is also the
security deposit for bank acceptance.
129,268,144.55
In the inventory at the end of the period, RMB129,268,144.55 was
restricted in use: RMB25,318,647.56 was pledged for the
financing
of
the
subsidiary
Yintai
Shenghong;
RMB103,949,496.99 was pledged for the financing of the
subsidiary Yongheng Trading.
1,329,800.00
The security deposit for prospecting rights is paid in advance, the
balance of which is frozen and supervised by three parties
through a tripartite supervision agreement signed by Yintai
Shengxin, the 602nd Team of Jilin Provincial Nonferrous Metals
Geological Exploration Bureau and its account opening bank.
1,648,587,094.21

— II-344 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

56. Monetary Items in Foreign Currency

(1) Monetary items in foreign currency

Unit: RMB

				Closing RMB
		Closing foreign		balance after
Item		currency balance	Translation rate	translation
Monetary	funds	–	–
Of which:	US dollar	19,793,620.08	6.3757	126,198,183.54
	Singapore dollar	71,662.11	4.7179	338,094.67

(2) Explanation of overseas operating entities, including for important overseas operating entities, the principal place of business overseas, recording currency and basis of choice, and if the recording currency changes, the reasons shall also be disclosed.

✔ Applicable □ N/A

Basis for adopting Name of overseas Registered place Reporting functional currency for subsidiary of business currency bookkeeping Yintai Shenghong Singapore Singapore US dollar Sales, purchases, Co., Ltd. financing and other operating activities are mainly denominated in US dollars

57. Hedging

Disclosure of hedging items and related hedging instruments by hedging type, qualitative and quantitative information on hedged risks:

— II-345 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

According to the Accounting Standards for Business Enterprises No. 24 – Hedge Accounting, the daily accounting treatment of hedging business is carried out, and hedging is divided into fair value hedging and cash flow hedging.

Fair value hedging: The company is faced with large price fluctuations during metal trading activities, and manages the risk of commodity price changes through the futures contracts of futures exchanges for purchased commodity inventories or contracts for purchases and sales that have not yet been priced because it is worried that future inventory prices will fall and sales revenue will decline. The company buys or sells a corresponding number of futures contracts in a certain proportion in the futures market, so as to stabilize the risk of price fluctuations for the company.

Unit: RMB

Item Precious metal hedging Other non-ferrous metal hedging Total	Closing balance 78,582,692.60 17,018,458.50 95,601,151.10	Opening balance 47,303,728.16 22,942,355.41
		70,246,083.57

— II-346 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

58. Government Subsidies

(1) Basic information on government subsidies

Unit: RMB

			Amount included
			in profit and loss
Type	Amount	Presentation item	for the period
Multi-level capital market
subsidies	1,226,211.00	Other income	1,226,211.00
Enterprise transformation and
upgrade subsidies	2,120,000.00	Other income	2,120,000.00
Stabilizing job allowance	790,355.91	Other income	790,355.91
Rewards for enterprises above
designated size	300,000.00	Other income	300,000.00
Special subsidies for scientific
achievements	236,000.00	Other income	236,000.00
Government subsidies for tailings
pond environmental protection	444,600.00	Deferred income	34,200.00
Safety production reward	135,900.00	Other income	135,900.00

VIII. CHANGES IN THE SCOPE OF CONSOLIDATION

1. Changes in the Scope of Consolidation for Other reasons

Explain the changes in the scope of consolidation caused by other reasons (such as the establishment of new subsidiaries, liquidation of subsidiaries, etc.) and related circumstances:

Deregistration of subsidiary in the period: Sino Gold BMZ Limited was approved to be deregistered by the Registrar of Companies of Cayman Islands in December 2021.

Deregistration of subsidiary in the period: Jilin Jincheng Mining Co., Ltd. completed the deregistration in April 2021.

Addition of subsidiary in the period: In September 2021, the company acquired 60% of the equity in Huasheng Gold Mine through cash acquisition and included it in the scope of consolidated statements. When the company obtains control over the subsidiary, the subsidiary does not constitute a business and is not accounted for in accordance with the business combination standards. The company allocates the purchase cost based on the relative fair value of various identifiable assets and liabilities acquired on the purchase date.

— II-347 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

IX. EQUITY IN OTHER ENTITIES

1. Equity in Subsidiaries

(1) Composition of the enterprise group

Name of subsidiary
Major place of
business
Place of
registration
Business nature
Yulong Mining
Inner Mongolia
Inner Mongolia
Xilingol League
Mining of silver, lead,
and zinc mines, sales
of mineral products
Yintai Shenghong
Shanghai
Shanghai
Free-Trade
Zone
Supply chain
management, etc.
Shenghong Singapore
Singapore
Singapore
supply chain
management, etc.
Yongheng Trading
Ningbo
Jiangbei District,
Ningbo City,
Zhejiang
Province
Trading services
Shanghai Shengwei
Shanghai
Shanghai
Controlling company
Jilin Banmiaozi
Baishan City,
Jilin Province
Baishan City,
Jilin Province
Prospecting, mining and
smelting of gold mines,
sales of mineral
products
Yintai Shengxin
Baishan City,
Jilin Province
Baishan City,
Jilin Province
Geological prospecting
Sino Gold Hong Kong
Hong Kong
Hong Kong
Controlling company
Rock Hong Kong
Hong Kong
Hong Kong
Controlling company
Heihe Yintai
Xunke County,
Heihe City,
Heilongjiang
Province
Xunke County,
Heihe City,
Heilongjiang
Province
Prospecting, mining and
smelting of gold mines,
sales of mineral
products
Qinghai Dachaidan
Haixi Prefecture,
Qinghai
Province
Haixi Prefecture,
Qinghai
Province
Prospecting, mining and
smelting of gold mines,
sales of mineral
products
Huasheng Gold Mine
Mangshi, Dehong
Prefecture,
Yunnan
Mangshi, Dehong
Prefecture,
Yunnan
Prospecting, mining and
smelting of gold mines,
sales of mineral
products

Shareholding ratio
Method of
obtaining
Direct
Indirect
76.67%
Business
combination
96.60%
New
establishment
96.60%
New
establishment
96.60%
New
establishment
100.00%
Business
combination
95.00%
Business
combination
75.00%
New
establishment
100.00%
Business
combination
100.00%
Business
combination
100.00%
Business
combination
90.00%
Business
combination
60.00%
Purchase in cash

— II-348 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(2) Important non-wholly owned subsidiaries

Unit: RMB

			Dividends
		Profit and loss	declared for	Balance of
		attributable to	distribution to	minority
		minority	minority	shareholders’
	Minority	shareholders	shareholders	equity at the
	shareholding	in the current	in the current	end of the
Name of subsidiary	ratio	period	period	period
Yulong Mining	23.33%	80,371,498.81	104,985,900.00	916,926,897.25
Jilin Banmiaozi	5.00%	13,066,854.02	15,000,000.00	67,236,906.36
Qinghai Dachaidan	10.00%	57,549,131.74	10,113,400.98	180,256,886.80
Yintai Shenghong	3.40%	556,835.82	2,000,000.00	11,211,873.70
Huasheng Gold Mine	40.00%	-2,653,312.34		688,680,020.99

— II-349 —

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

(3) Major financial information of important non-wholly owned subsidiaries	Unit: RMB	Closing balance Opening balance	Non-current Current Non-current Non-current Current Non-current	Current assets assets Total assets liabilities liabilities Total Liabilities Current assets assets Total assets liabilities liabilities Total Liabilities	391,398,834.01 3,752,235,722.90 4,143,634,556.91 203,467,844.31 9,953,363.24 213,421,207.55 475,881,890.63 3,698,011,714.10 4,173,893,604.73 125,395,823.66 8,828,762.03 134,224,585.69	168,362,446.30 1,522,632,539.97 1,690,994,986.27 143,282,089.76 278,648,569.19 421,930,658.95 163,297,846.59 1,459,503,062.92 1,622,800,909.51 134,508,188.40 180,565,474.32 315,073,662.72	403,010,132.85 1,425,308,976.32 1,828,319,109.17 296,468,099.26 199,499,729.47 495,967,828.73 438,623,500.64 1,224,044,484.99 1,662,667,985.63 280,317,469.22 298,174,005.57 578,491,474.79	2,365,357,189.37 5,779,516.74 2,371,136,706.11 2,040,182,102.64 1,562,030.75 2,041,744,133.39 1,232,783,090.89 4,081,060.20 1,236,864,151.09 1,003,621,536.99 1,003,621,536.99	19,378,283.43 2,026,058,004.55 2,045,436,287.98 314,630,239.44 9,105,996.06 323,736,235.50		Unit: RMB	Amount for the current period Amount for the last period	Total Cash flow from Total Cash flow from	Operating comprehensive operating Operating comprehensive operating	revenue Net profit income Forehead activities revenue Net profit income Forehead activities	1,042,599,941.58 344,495,541.46 344,495,541.46 538,020,123.82 798,021,145.95 246,557,908.69 246,557,908.69 452,121,178.12	831,644,408.53 261,337,080.53 261,337,080.53 479,932,499.78 705,848,193.07 245,101,286.27 245,101,286.27 426,856,560.77	800,485,728.94 332,355,032.35 332,355,032.35 478,927,865.37 751,143,593.48 293,116,939.83 293,116,939.83 381,355,921.40	8,747,281,951.12 16,287,360.58 16,149,958.62 -72,306,228.78 7,856,134,303.10 14,812,371.68 7,888,128.54 374,972,465.65	– 6,633,280.85 -6,633,280.85 -11,637,815.88		Other explanations: The major financial information of the subsidiary is the amount after adjusting the individual financial statements based on the fair value	of the company’s identifiable assets and liabilities on the purchase date when the consolidated statements are prepared.
				Name of subsidiary	Yulong Mine Industry	Jilin Banmiaozi	Qinghai University Chai Dan	Yintai Hung	Huasheng Gold Mine						Name of subsidiary	Yulong Mining	Jilin Banmiaozi	Qinghai Dachaidan	Yintai Shenghong	Huasheng Gold Mine

— II-350 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

2. Transactions in which share of the subsidiary’s owner’s equity changes and still controls the subsidiary

(1) Explanation on the share of changes in the owner’s equity of the subsidiary

The company acquired 5% equity of Yintai Shenghong held by minority shareholders at a cash payment of RMB10.6621 million in the current period, with its shareholding ratio increasing from 90% to 95%. In addition, the company increased capital of RMB100 million to Yintai Shenghong, and its shareholding ratio increased from 95% to 96.5962%.

(2) Impact of the transaction on minority interest and owner’s equity attributable to the parent company

Unit: RMB

	Yintai Shenghong Supply
	Chain Management
Item	Co., Ltd.
Purchase cost/disposal consideration	10,662,100.00
– Cash	10,662,100.00
– Fair value of non-cash assets
Total purchase cost/disposal consideration	10,662,100.00
Less: Share of net assets of subsidiaries calculated based on
the proportion of equity acquired/disposed of	10,662,100.00
Difference	0.00
Including: Adjusted capital reserve
Adjusted surplus reserve
Adjusted retained earnings

— II-351 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

X. RISKS RELATED TO FINANCIAL INSTRUMENTS

The main risks caused by the company’s financial instruments are credit risk, liquidity risk and market risk.

1. Credit risk

As of 31 December 2021, the book balance and expected credit impairment losses of relevant assets are as follows:

Item Financial assets held for trading Derivative financial assets Accounts receivable Other receivables Other current assets Total	Book balance 2,074,042,141.82 112,351,762.10 42,081,575.52 50,181,129.01 36,839,584.51 2,315,496,192.96	Unit: RMB Provision for impairment 2,104,078.79 2,877,565.94
		4,981,644.73

— II-352 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

2. Liquidity risk

Liquidity risk is the risk that the company will encounter shortage of funds in meeting obligations that are settled by delivering cash or other financial assets.

It is the company’s policy to ensure that it has sufficient cash to meet debt obligations as they fall due. Liquidity risk is centrally controlled by the company’s financial department. The finance department will ensure that the company has sufficient funds to repay its debts under all reasonable forecasts through monitoring of cash balance, as well as rolling forecast of cash flows for the next 12 months.

As of 31 December 2021, the company’s financial liabilities and off-balance-sheet guarantee items are presented at undiscounted contractual cash flow over the remaining maturity of contract as follows:

Unit: RMB

Item Short-term borrowing Bills payable Accounts payable Other payables Lease liabilities Long-term payables Non-current liabilities due within one year Total		Closing balance	Closing balance
	Within 1 year 682,032,529.88 1,718,374,146.25 155,957,459.68 190,937,625.70 59,549,061.47 2,806,850,822.98	1-3 years 3,052,021.89 13,975,403.38 1,821,077.49 104,762,752.00 123,611,254.76	Over 3 years 3,873,619.11 10,643,077.79 8,525,603.52 45,478,300.00 68,520,600.42	Total 682,032,529.88 1,718,374,146.25 162,883,100.68 215,556,106.87 10,346,681.01 150,241,052.00 59,549,061.47
				2,998,982,678.16

3. Market risk

(1) Exchange rate risk

— II-353 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

As of 31 December 2021, the amount of foreign currency financial assets and foreign currency financial liabilities held by the company converted into RMB is presented as follows:

Unit: RMB

Closing balance US Singapore dollar dollar-denominated -denominated Item item item Total Foreign currency financial assets: Monetary funds 126,198,183.54 338,094.67 126,536,278.21

(2) Interest rate risk

(3) Other price risks

XI. DISCLOSURE OF FAIR VALUE

1. Financial Instruments Measured at Fair Value

The company presented the carrying amount of financial instruments measured at fair value on 31 December 2021 according to three levels of fair value. When the fair value is classified into three levels as a whole, it is based on the lowest level among the three levels to which each important input used in fair value measurement belongs. The three levels are defined as follows:

Level 1: They are unadjusted quoted prices in active markets for identical assets or liabilities available at the date of measurement;

— II-354 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Level 2: They are direct or indirect observable inputs for the relevant asset or liability other than Level 1 inputs;

Level 3: They are unobservable inputs for the relevant asset or liability.

2. Fair Value Measurement at the End of the Period

(1) Continuous fair value measurement

Unit: RMB

Item Financial assets held for trading Derivative financial assets Investment in other equity instruments Total	Level 1 112,351,762.10 112,351,762.10	Fair value at the end of the period Level 2 Level 3 2,074,042,141.82 44,303,885.24 2,074,042,141.82 44,303,885.24	Total 2,074,042,141.82 112,351,762.10 44,303,885.24
			2,230,697,789.16

XII. RELATED PARTIES AND RELATED PARTY TRANSACTIONS

1. The Parent Company of the Enterprise

				Shareholding	Proportion of
				ratio of the	voting rights of
				parent	the parent
Name of the parent			Registered	company in the	company in the
company	Place of registration	Business nature	capital	enterprise	enterprise
China Yintai Holdings	Unit 4701, 47th Floor,	Limited liability	RMB1,000,000,000	14.44%	14.44%
Co., Ltd.	Building 3, Yard 2,	company
	Jianguomenwai Street,
	Chaoyang District,
	Beijing

Explanation of the parent company of the enterprise

(1) The parent company of the company is China Yintai Holdings Co., Ltd., the scope of whose main business is asset custody, reorganization and operation; investment, development and operation of agriculture, forestry, animal

— II-355 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

husbandry and fishery; investment, development and operation of high-tech industries; research and development and sales of sanitary products and labor insurance products; investment and operation of commercial department store retailing.

(2) Shen Guojun holds 100% equity of Beijing Guojun Investment Co., Ltd. (北京國俊投資有限公司), which in turn holds 92.5% equity of China Yintai. As of the balance sheet date, Shen Guojun directly holds 6.49% equity of Yintai Gold, and China Yintai holds 14.44% equity of Yintai Gold. In view of the above, Shen Guojun and China Yintai jointly hold 20.93% equity of Yintai Gold.

The ultimate controlling party of the enterprise is Shen Guojun.

2. Subsidiaries of the Enterprise

For the details of subsidiaries of the enterprise, please refer to Note IX. EQUITY IN OTHER ENTITIES.

3. Other Related Party

Name of other related party

Relationship between other related parties and the company

Beijing Yintai Real Estate Co., Ltd. and its Property Management Branch

Same ultimate controller

4. Related Transactions

(1) For subsidiaries that have a control relationship and have been included in the scope of the company’s consolidated financial statements, their mutual transactions and parent-subsidiary transactions have been offset.
(2) Related party transactions of purchase and sale of goods, provision and acceptance of services

Unit: RMB

transaction Amount for the Amount for the Related party content current period last period Beijing Yintai Real Estate Co., Ltd. Property services 591,301.85 585,851.22 Property Management Branch

Related party

— II-356 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(3) Related leases

The company as lessee:

Unit: RMB

(4) Remuneration of key management personnel

Unit: RMB0’000 Amount for the Amount for the Item current period last period Remuneration of key management personnel 1,767.29 1,702.65

5. Receivables and Payables of Related Parties

(1) Receivable items

Unit: RMB

		Closing	balance		Opening	balance
			Provision			Provision
		Book	for bad		Book	for bad
Item	Related party	balance		debts	balance	debts
Prepayments	Beijing Yintai Real Estate	54,026.73			52,618.39
	Property Management
	Branch
Other receivables	Beijing Yintai Real Estate	1,555,709.40	311,141.88		1,555,709.40	311,141.88
	Co., Ltd.
	Beijing Yintai Real Estate	107,181.60	21,436.32		107,181.60	21,436.32
	Co., Ltd. Property
	Management Branch

— II-357 —

APPENDIX II FINANCIAL INFORMATION OF THE TARGET COMPANY

XIII. COMMITMENTS AND CONTINGENCIES

1. Important Commitments

The company has no important commitments that need to be disclosed.

2. Contingencies

(1) Important contingencies existing on the balance sheet date

The company has no important contingencies that need to be disclosed.

XIV. EVENTS AFTER THE BALANCE SHEET DATE

1. Profit Distribution

According to the Resolution on Consideration of the Company’s Profit Distribution Plan for 2021 deliberated at the twelfth meeting of the eighth session of the board of directors of the company, the proposed profit distribution plan for 2021 of the company is: based on the existing share capital of 2,776,722,265 shares, a cash dividend of RMB2.5 (tax included) will be distributed to all shareholders for every 10 shares, for a total of RMB694,180,566.25. The resolution still needs to be submitted to the company’s 2021 annual general meeting for consideration.

XV. OTHER IMPORTANT MATTERS

1. Proceeds from the Transfer of Mining Rights of Jilin Banmiaozi

According to relevant provisions of the Interim Measures for the Administration of Collection of Proceeds from the Transfer of Mining Rights 《礦業權出讓收益徵收管理暫行( 辦法》) (Cai Zong [2017] No. 35) issued by the Ministry of Finance and the Ministry of Land and Resources, if the prospecting right obtained after submitting prior application been converted into the mining right, the proceeds from the transfer of mining right shall be collected based on the remaining resources reserves by way of transfer by agreement. According to the Assessment Report on Proceeds from the Transfer of Jinying Gold Mine Mining Rights of Jilin Banmiaozi Mining Co., Ltd. (Jilin Guodi Mining Rights Ping Bao Zi [2020] No. S080) issued by Jilin Guodi Mining Rights Evaluation Co., Ltd. (吉林國地礦業權評估有限公司), the appraised value of proceeds from the transfer of Jinying Gold Mine mining right of Jilin Banmiaozi Mining Co., Ltd. is RMB227,878,300, and such mining rights was acquired on 13 April 2021.

— II-358 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

2. Guarantees Provided by the Company for its Controlling Subsidiaries

Unit: RMB

Guaranteed party
Yulong Mining
Heihe Yintai
Heihe Yintai
Qinghai Dachaidan
Yintai Shenghong
Yintai Shenghong
Yintai Shenghong
Yintai Shenghong
Total

Guarantee
amount
Guarantee
start date
Guarantee expiry date
Whether the
guarantee has
been fulfilled
60,000,000.00
2021/3/31
Three years after the
expiration of the main
contract debt performance
period
No
200,000,000.00
2021/4/9
Two years after the
expiration of the precious
metal lease term under the
main contract
No
139,741,200.00
2021/9/30
Two years after the
expiration of the precious
metal lease term under the
main contract
No
180,000,000.00
2021/9/27
Three years after the
expiration of the main
contract debt performance
period
No
100,000,000.00
2021/8/26
Three years after the
expiration of the main
contract debt performance
period
No
150,000,000.00
2021/11/18
Three years after the
expiration of the main
contract debt performance
period
No
62,500,000.00
2021/11/11
Three years after the
expiration of the main
contract debt performance
period
No
29,998,500.00
2021/11/22
Three years after the
expiration of the main
contract debt performance
period
No
922,239,700.00

— II-359 —

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

XVI. NOTES TO MAIN ITEMS OF THE FINANCIAL STATEMENTS OF THE PARENT COMPANY

1. Other Receivables

								Unit: RMB
Item							Closing balance	Opening balance
Other	receivables						540,093,918.94	668,761,290.64
Total							540,093,918.94	668,761,290.64

		1)	_Classification _	_of _	_other _	_receivables _	according to the nature of payment

Unit: RMB

Nature of payment Current account Deposit and security deposit Others Total	Closing book balance 538,739,111.14 1,693,391.00 100.00 540,432,602.14	Opening book balance 667,404,857.84 1,696,641.00 100.00
		669,101,598.84

— II-360 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

2) Provision for bad debts

Unit: RMB

Bad debt provision Balance as at 1 January 2021 Balance as at 1 January 2021 in the current period – Transfer to stage III Provision made for the period Reversed in the period Balance as at 31 December 2021	Stage I ECL over the next 12 months 340,308.20 – -1,625.00 338,683.20	Stage II Lifetime ECL (non-credit impaired Lifetime ECL (non-credit impaired) –	Stage III Lifetime ECL (non-credit impaired Lifetime ECL (credit impaired) – 1,625.00 1,625.00 3,250.00	Total 340,308.20 – 0.00 1,625.00 3,250.00
				338,683.20

Disclosure by age

Aging Within 1 year (inclusive) 1–2 years 2–3 years 3–4 years 4–5 years Over 5 years Total	Unit: RMB Book balance 488,739,211.14 50,000,000.00 1,693,391.00
	540,432,602.14

— II-361 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

3) Provision for bad debts made, recovered or reversed in the current period

Provision for bad debts in the current period:

Unit: RMB

			Changes in the current period	Changes in the current period
			Recovered or
Category	Opening balance	Provision	reversed	Write off	Others	Closing balance
Receivables with provision
for ECL on a group basis	340,308.20	1,625.00		3,250.00		338,683.20

4) Top five other receivables according to the closing balance collected by the debtor

Unit: RMB

Unit name Nature of payment Unit 1 Current account Unit 2 Current account Unit 3 Current account Unit 4 Current account Unit 5 Security deposit Total	Closing balance Aging 282,793,777.77 Within 1 year, 1-2 years 104,659,777.80 Within 1 year 100,000,000.00 Within 1 year 51,285,555.57 Within 1 year 1-2 years 1,555,709.40 4-5 years 540,294,820.54	Proportion to the total closing balance of other receivables 52.33% 19.37% 18.50% 9.49% 0.29% 99.98%	Closing balance of provision for bad debts 311,141.88
			311,141.88

— II-362 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

2. Long-term Equity Investment

Unit: RMB

Closing balance Item Book balance Provision for impairment Carrying amount Investment in subsidiaries 8,682,698,659.55 8,682,698,659.55 Total 8,682,698,659.55 8,682,698,659.55 (1) Investment in subsidiaries	Book balance 7,535,036,559.55 7,535,036,559.55	Opening balance Provision for impairment	Carrying amount 7,535,036,559.55
			7,535,036,559.55

Unit: RMB

Investee Yintai Shenghong Supply Chain Management Co., Ltd. (銀泰盛鴻供應鏈管理有限公司) Mangshi Huasheng Gold Mine Development Co., Ltd. (芒市華盛金礦開發有限公司) Inner Mongolia Yulong Mining Industry Co., Ltd. (內蒙古玉龍礦業股份有限公司) Shanghai Shengwei Mining Investment Co., Ltd. (上海盛蔚礦業投資有限公司) Total	Opening balance (carrying amount) 180,000,000.00 2,745,459,892.91 4,609,576,666.64 7,535,036,559.55	Additional investment 110,662,100.00 1,037,000,000.00 1,147,662,100.00	Changes in the Reduce in investment	current period Provision for impairment	Others	Closing balance (carrying amount) 290,662,100.00 1,037,000,000.00 2,745,459,892.91 4,609,576,666.64 8,682,698,659.55	Closing balance of provision for impairment

— II-363 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

3. Investment Income

Item Income from long-term equity investments under cost method Investment income of wealth management products Interest income from acquisition of equity Total	Amount for the current period 663,014,100.00 25,433,854.66 7,021,969.51 695,469,924.17	Unit: RMB Amount for the last period 9,085,491.00 53,857,224.11
		62,942,715.11

XVII. SUPPLEMENTARY INFORMATION

1. Breakdown of Non-Recurring Profit or Loss for the Period

✔Applicable
□N/A
Item
Gain and loss on disposal of non-current assets
Government grants included in current profit or loss
(other than government grants which are closely related
to the company’s business, in line with national policies
and regulations and granted continuously based on a
fixed amount or a fixed quantity unified by the state)
Capital occupation fee charged to non-financial
enterprises included in current profits and losses
Profit and loss from entrusting others to invest in or
manage assets
Gain or loss on changes in fair value from financial assets
held for trading, derivative financial assets, financial
liabilities held for trading, derivative financial
liabilities, and investment income from disposal of
financial assets held for trading, derivative financial
assets, financial liabilities held for trading, derivative
financial liabilities and other debt investment, except
for effective hedging transactions that are related to the
Company’ s normal operation
Other non-operating income and expenses other than the
above
Less: Effect of income tax
Effect of minority interest
Total

Unit
Amount
Explanation
-19,775,451.69
4,842,666.91
7,021,969.51
69,776,005.55
Income from
wealth
management
36,191,529.52
-1,515,188.59
24,357,257.59
521,126.38
71,663,147.24

Unit: RMB

— II-364 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Specific circumstances of other profit and loss items that meet the definition of non-recurring profit and loss:

□ Applicable ✔ N/A

The company does not have other specific circumstances of profit and loss items that meet the definition of non-recurring profit and loss.

Explanation shall be given with respect to the defining of non-recurring profit and loss items set out in the Explanatory Notice on Information Disclosure of Companies with Public Offering No. 1-Non-recurring Profit and Loss (《公開發行證券的公司信息披露解釋性公告第1號－非經常性損益》) as recurring profit and loss items.

Applicable ✔ N/A

2. Return on Net Assets and Earnings per Share

		Earnings	per share
Profit during the reporting	Weighted average	Basic earnings	Diluted earnings
period	return on equity	per share		per share
		(RMB/share)	(RMB/share)
Net profit attributable to ordinary
shareholders of the company	12.65%	0.4586		0.4586
Net profit attributable to ordinary
shareholders of the company
after deducting non-recurring
profit and loss	11.98%	0.4328		0.4328

3. Differences in Accounting Data under Domestic and Foreign Accounting Standards

(1) Differences in net profit and net assets in financial reports disclosed in accordance with international accounting standards and Chinese accounting standards
- Applicable ✔ N/A
(2) Differences in net profit and net assets in financial reports disclosed in accordance with foreign accounting standards and Chinese accounting standards
- Applicable ✔ N/A
(3) Explanation of the reasons for the differences in accounting data under domestic and foreign accounting standards. If the difference is adjusted for materials that have been audited by an overseas audit institution, the name of the overseas institution should be indicated
- Applicable ✔ N/A

— II-365 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(iii) The audited consolidated financial statements of the Target Group for the financial year ended 31 December 2022 prepared in accordance with the CAS and audited by Da Hua Certified Public Accountants (Special General Partnership).

I. AUDIT REPORT

Type of audit opinion Standard unqualified opinion Signing date of audit report 27 February 2023 Name of auditor Da Hua Certified Public Accountants (Special General Partnership) Number of audit report Da Hua Shen Zi [2023] No. 002726 Name of certified public Hui Zengqiang Wang Zebin accountants

Text of the Audit Report

Da Hua Shen Zi [2023] No. 002726

All shareholders of Yintai Gold Co., Ltd.:

I. Audit Opinion

We have audited the financial statements of Yintai Gold Co., Ltd. (hereinafter referred to as Yintai Gold), including the consolidated and parent company balance sheet on 31 December 2022, consolidated and parent company income statement, consolidated and parent company cash flow statement, consolidated and parent company statement of changes in shareholders’ equity, and notes to relevant financial statements for 2022.

In our opinion, the attached financial statements have been prepared in accordance with the Accounting Standards for Business Enterprises in all material respects, and fairly reflect the consolidated and parent company financial position of Yintai Gold on 31 December 2022 and the consolidated and parent company operating results and cash flows in 2022.

— II-366 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

II. The Basis for Forming the Audit Opinion

III. Key Audit Matters

We have identified the following matters as key audit matters that need to be communicated in the audit report:

Revenue recognition;
Fixed assets and intangible assets;
Impairment of goodwill.

— II-367 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(I) Revenue recognition

1. Description of matter

As stated in the accounting policies described in “III. Significant Accounting Policies and Accounting Estimates (xxxii)” and “V. Note 40 to the Main Items of the Consolidated Financial Statements” in the notes to the financial statements, revenue from the main operations of Yintai Gold was RMB8,373 million in 2022, a decrease of 7.35% over the same period of the previous year. Given that operating revenue is one of the key performance indicators for Yintai Gold, we have identified revenue recognition as a key audit matter.

2. Audit response

Our important audit procedures for revenue recognition include:

(1) Understand and evaluate the effectiveness of Yintai Gold’s design and implementation of internal control over sales and collection;
(2) Understand whether there are significant changes in the accounting policies for revenue recognition by examining agreements and contracts signed with major customers, and evaluate the appropriateness of the accounting policies for revenue recognition;
(3) Perform analytical procedures for fluctuations in revenue and gross margin of major products;
(4) Letter to major customers to confirm the sales amount and the receivables balance at the end of the period in 2022, and implement alternative audit procedures for customers who have not responded;
(5) Select samples from the recorded revenue transactions, and randomly check the supporting documents related to revenue, including sales contracts or agreements, sales invoices, delivery orders, settlement documents, etc.;
(6) Carry out a cut-off test on operating revenue to confirm whether the income is recorded in the correct accounting period;
(7) Review the adequacy and completeness of relevant disclosures in the notes to the financial statements.

Based on the audit work performed, we believe that the principles and methods adopted by the management in revenue recognition are reasonable.

— II-368 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(II) Fixed assets and intangible assets

1. Description of matter

As stated in the accounting policies described in “III. Significant Accounting Policies and Accounting Estimates (xx) and (xxiv)” and “V. Notes 10 and 13 to the Main Items of the Consolidated Financial Statements” in the notes to the financial statements, as of 31 December 2022, the total carrying value of Yintai Gold’s fixed assets was RMB2,906 million, and the total carrying value of intangible assets was RMB6,572 million, accounting for a significant proportion of the total consolidated assets, and Yintai Gold is an asset-heavy company with a large scale, quantity and type of assets, therefore, we think this matter is a key audit matter.

2. Audit response

Our important audit procedures for fixed assets and intangible assets include:

(1) Understand and evaluate the effectiveness of the internal control design and implementation of Yintai Gold’s fixed assets and intangible assets;
(2) Check the original basis for the formation of the original value of fixed assets and intangible assets;
(3) Understand the assumptions and methods used in the depreciation and amortization model, and review the accuracy of the accrual and allocation of depreciation and amortization expenses;
(4) Check the ownership certificates of fixed assets and intangible assets to determine whether they are owned or controlled by the audited unit;
(5) Check the increase and decrease of fixed assets and intangible assets, and obtain relevant details for verification;
(6) In order to confirm the existence of fixed assets, a physical inventory procedure was carried out for the fixed assets, and a two-way check was carried out between the physical objects and the ledger;
(7) Check whether there is indication of impairment in fixed assets and intangible assets, and check whether the identification of asset groups is appropriate;
(8) Review the adequacy and completeness of relevant disclosures in the notes to the financial statements.

— II-369 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Based on the audit work performed, we believe that the accounting principles and methods adopted by the management for fixed assets and intangible assets are reasonable.

(III) Impairment of goodwill

1. Description of matter

As stated in the accounting policies described in “III. Significant Accounting Policies and Accounting Estimates (xxvi)” and “V. Note 14 to the Main Items of the Consolidated Financial Statements” in the notes to the financial statements, as of 31 December 2022, the total carrying value of Yintai Gold’s goodwill was RMB452 million, and the corresponding impairment provision balance was RMB0.00.

2. Audit response

Our important audit procedures for goodwill impairment include:

(1) We evaluate and test the effectiveness of the design and implementation of the internal control related to the goodwill impairment test, including the adoption of key assumptions and the review and approval of impairment accrual amount;
(2) Evaluate the appropriateness of the valuation method used by the management when making cash flow projections by reference to industry practices;
(3) Recalculate the discount rate based on the market data of comparable companies in the industry, and compare our calculation results with those adopted by the management when calculating the present value of estimated future cash flows, to evaluate the discount rate used in calculating the present value of estimated future cash flows;
(4) Analyze the cash flow by comparing historical data and forecast data to evaluate the reliability and historical accuracy of the management’s forecasting process.
(5) Review the adequacy and completeness of relevant disclosures in the notes to the financial statements.

— II-370 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Based on the audit work performed, we believe that the management’s judgments and estimates on goodwill impairment are reasonable.

IV. OTHER INFORMATION

The management of Yintai Gold is responsible for other information. Other information includes that covered in Yintai Gold’s 2022 Annual Report, but excludes the financial statements and our audit report.

Our audit opinion on the financial statements does not cover the other information, nor do we express any form of assurance conclusion thereon.

If, based on the work we have performed, we determine that there is a material misstatement of the other information, we shall report that fact. In this regard, we have nothing to report.

V. MANAGEMENT AND GOVERNANCE’S RESPONSIBILITIES FOR THE FINANCIAL STATEMENTS

When preparing the financial statements, the management of Yintai Gold is responsible for assessing Yintai Gold’s ability to continue as a going concern, disclosing matters related to going concern, and using the going concern assumption, unless management plans to liquidate Yintai Gold, terminate operations, or have no other realistic options.

The governance is responsible for overseeing the financial reporting process of Yintai Gold.

— II-371 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

VI. RESPONSIBILITIES OF CERTIFIED PUBLIC ACCOUNTANTS FOR THE AUDIT OF FINANCIAL STATEMENTS

Identify and assess the risks of material misstatement of the financial statements due to fraud or error, design and implement audit procedures to address these risks, and obtain adequate and appropriate audit evidence as the basis for issuing an audit opinion. Since fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls, the risk of not detecting a material misstatement resulting from fraud is higher than the risk of not detecting a material misstatement resulting from error.
Understand the internal controls relevant to auditing in order to design appropriate audit procedures, but not for the purpose of expressing an opinion on the effectiveness of internal controls.
Evaluate the appropriateness of management’s selection of accounting policies and the rationality of accounting estimates and related disclosures.
Conclude on the appropriateness of management’s use of the going concern assumption. At the same time, based on the audit evidence obtained, a conclusion is reached as to whether there is a material uncertainty regarding the matters or circumstances that may cast significant doubt on the ability of Yintai Gold to continue as a going concern. If we conclude that a material uncertainty exists, auditing standards require that we draw the attention of users of the report to the relevant disclosures in the financial statements in the audit report; if the disclosures are inadequate, we should express a non-unqualified opinion. Our conclusions are based on the information available up to the date of the audit report. However, future matters or circumstances may cause Yintai Gold to be unable to continue as a going concern.

— II-372 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Evaluate the overall presentation, structure and content of the financial statements, and evaluate whether the financial statements fairly reflect relevant transactions and matters.
Obtain sufficient and appropriate audit evidence regarding the financial information of entities or business activities in Yintai Gold to express an opinion on the financial statements. We are responsible for guiding, supervising and performing group audits. We accept sole responsibility for our audit opinion.

Da Hua Certified Public Accountants Certificate Public Accountant (Special General Partnership) registered in China: Beijing, China (Project Partner) Hui Zengqiang Certificate Public Accountant Wang Zebin registered in China: 27 February 2023

II. FINANCIAL STATEMENTS

The statement in the financial notes is presented in RMB

1. Consolidated Balance Sheet

Prepared by: Yintai Gold Co., Ltd.

Unit: RMB

Item

31 December 2022 1 January 2022

Current assets:

— II-373 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Item Monetary capital Clearing settlement funds Loans to other banks Financial assets held for trading Derivative financial assets Notes receivable Accounts receivable Receivables financing Prepayments Premiums receivable Reinsurance accounts receivable Reinsurance contract reserve receivable Other receivables Including: Interests receivable Dividends receivable Financial assets held under resale agreements Inventories Contract assets Assets held for sale Non-current assets due within one year Other current assets Total current assets	31 December 2022 1,873,983,258.68 2,000,435,680.65 300,234,674.43 39,811,311.25 22,094,356.86 62,238,875.25 1,359,012,390.21 25,111,662.32 5,682,922,209.65 - - - - - - - - - - - - - -	1 January 2022 1,455,700,499.01 2,074,042,141.82 112,351,762.10 39,977,496.73 42,740,385.17 47,639,935.53 336,372.46 1,028,330,998.21 36,839,584.51
		4,837,622,803.08 - - - - - - - - - - - - - -

— II-374 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Item

31 December 2022 1 January 2022

Non-current assets: Loans and advances Debt investments Other debt investments Long-term receivables Long-term equity investments Other equity instrument investments Other non-current financial assets Investment properties Fixed assets Construction in progress Productive biological assets Oil and gas assets Right-of-use assets Intangible assets Development expenses Goodwill Long-term deferred expenses Deferred income tax assets Other non-current assets Total non-current assets Total assets	14,303,885.24 2,906,294,177.88 247,342,850.20 35,102,199.66 6,571,669,996.38 452,365,699.74 26,657,502.44 138,588,065.52 91,553,046.79 10,483,877,423.85 - - - - - - - - - - - - - - 16,166,799,633.50	44,303,885.24 2,808,584,710.82 424,659,399.66 37,134,963.76 7,112,054,994.74 452,365,699.74 29,672,067.83 98,305,166.55 88,552,675.92
		11,095,633,564.26 - - - - - - - - - - - - - -
		15,933,256,367.34

— II-375 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Item Current liabilities: Short-term borrowings Borrowing from central bank Loans from other banks Financial liabilities held for trading Derivative financial liabilities Bills payable Accounts payable Advances received Contract liabilities Proceeds from sale of repurchase financial assets Deposits from clients and placements from other banks Deposit for agency security transaction Deposit for agency security underwriting Staff remuneration payables Taxes payable Other payables Including: Interests payable Dividends payable Handling fees and commission payable Reinsurance accounts payable Liabilities held for sale Non-current liabilities due within one year Other current liabilities Total current liabilities Non-current liabilities: Provision for insurance contracts Long-term borrowings Bonds payable Including: Preference shares Perpetual bonds Lease liabilities Long-term payables Long-term staff remuneration payables Accrued liabilities Deferred income Deferred income tax liabilities Other non-current liabilities Total non-current liabilities Total liabilities	31 December 2022 839,659,319.93 33,218,530.67 1,293,652,490.61 235,922,157.80 3,165,054.05 17,797,907.12 64,444,311.21 153,170,488.64 275,141,052.63 56,447,686.55 2,313,727.92 2,974,932,727.13 - - - - - - - - - - - - - - 109,143,213.89 10,140,594.47 97,859,676.00 42,824,545.30 376,200.00 252,142,938.19 512,487,167.85 - - - - - - - - - - - - - - 3,487,419,894.98	1 January 2022 682,032,529.88 1,718,374,146.25 162,883,100.68 144,048.99 16,016,500.89 56,319,147.45 175,549,465.08 215,556,106.87 59,549,061.47 2,082,145.12
		3,088,506,252.68 - - - - - - - - - - - - - - 10,346,681.01 150,241,052.00 42,538,554.00 410,400.00 302,467,065.46
		506,003,752.47 - - - - - - - - - - - - - -
		3,594,510,005.15

— II-376 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Item	31 December 2022	1 January 2022
Owners’ equity:
Share capital	2,776,722,265.00	2,776,722,265.00
Other equity instruments
Including: Preference shares
Perpetual bonds
Capital reserve	4,431,280,488.30	4,431,280,488.30
Less: Treasury shares
Other comprehensive income	7,244,129.12	-6,369,278.83
Special reserve	5,013,951.45	2,558,340.56
Surplus reserve	551,831,400.23	503,405,545.11
General risk reserve
Undistributed profit	3,140,687,398.34	2,758,837,701.09
Total equity attributable to the owners	of the parent
company	10,912,779,632.44	10,466,435,061.23
Non-controlling interest	1,766,600,106.08	1,872,311,300.96
Total owners’ equity	12,679,379,738.52	12,338,746,362.19
	- - - - - - - - - - - - - -	- - - - - - - - - - - - - -
Total liabilities and owners’ equity	16,166,799,633.50	15,933,256,367.34

Legal Representative:	Principal in charge	Head of the
Yang Haifei	of accounting: Accounting Department:
	Wang Xuan	Liu Weimin

— II-377 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

2. Balance Sheet of the Parent Company

Item Current assets: Monetary capital Financial assets held for trading Derivative financial assets Notes receivable Accounts receivable Receivables financing Prepayments Other receivables Including: Interests receivable Dividends receivable Inventories Contract assets Assets held for sale Non-current assets due within one year Other current assets Total current assets Non-current assets: Debt investments Other debt investments Long-term receivables Long-term equity investments Other equity instrument investments Other non-current financial assets Investment properties Fixed assets Construction in progress Productive biological assets Oil and gas assets Right-of-use assets Intangible assets Development expenses Goodwill Long-term deferred expenses Deferred income tax assets Other non-current assets Total non-current assets Total assets	31 December 2022 7,045,958.87 262,000,000.00 963,020.33 856,238.25 74,432.81 270,939,650.26 - - - - - - - - - - - - - - 8,682,698,659.55 1,147,571.88 950,089.46 1,093,664.90 14,953,901.31 8,700,843,887.10 - - - - - - - - - - - - - - 8,971,783,537.36	Unit: RMB 1 January 2022 40,367,127.30 115,263,500.00 180,959.46 540,093,918.94 1,087.75
		695,906,593.45 - - - - - - - - - - - - - - 8,682,698,659.55 30,000,000.00 904,572.54 6,650,626.11 1,374,720.37 5,125,117.78
		8,726,753,696.35 - - - - - - - - - - - - - -
		9,422,660,289.80

— II-378 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Item 31 December 2022 1 January 2022 Current liabilities: Short-term borrowings 100,117,638.89 100,129,861.11 Financial liabilities held for trading Derivative financial liabilities Bills payable Accounts payable 214,202.15 147,775.09 Advances received Contract liabilities Staff remuneration payables 6,668,372.74 2,497,256.20 Taxes payable 237,426.87 564,411.06 Other payables 17,700,475.97 256,771,309.88 Including: Interests payable Dividends payable Liabilities held for sale Non-current liabilities due within one year 492,251.55 5,782,240.66 Other current liabilities Total current liabilities 125,430,368.17 365,892,854.00 - - - - - - - - - - - - - - - - - - - - - - - - - - - - Non-current liabilities: Long-term borrowings Bonds payable Including: Preference shares Perpetual bonds 492,251.54 Lease liabilities Long-term payables Long-term staff remuneration payables Accrued liabilities Deferred income Deferred income tax liabilities Other non-current liabilities

Total current liabilities

Non-current liabilities:

Total non-current liabilities

Total liabilities

- - - - - - - - - - - - - - 125,430,368.17	492,251.54 - - - - - - - - - - - - - -
	366,385,105.54

— II-379 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Item Owners’ equity: Share capital Other equity instruments Including: Preference shares Perpetual bonds Capital reserve Less: Treasury shares Other comprehensive income Special reserve Surplus reserve Undistributed profit Total owners’ equity Total liabilities and owners’ equity	31 December 2022 2,776,722,265.00 4,431,733,687.79 748.10 538,557,145.93 1,099,339,322.37 8,846,353,169.19 - - - - - - - - - - - - - - 8,971,783,537.36	1 January 2022 2,776,722,265.00 4,431,733,687.79 748.10 490,131,290.81 1,357,687,192.56
		9,056,275,184.26 - - - - - - - - - - - - - -
		9,422,660,289.80

— II-380 —

APPENDIX II FINANCIAL INFORMATION OF THE TARGET COMPANY

3. Consolidated Statement of Income

Unit: RMB

Item I. Total operating revenue Including: Operating revenue Interest income Premium earned Handling fees and commission income II. Total operating cost Including: Operating cost Interest expenses Handling fees and commission expenses Surrender value Net payment of insurance claims Net provision of insurance liability contract reserve Premium bonus expenses Reinsurance expenses Taxes and surcharges Selling expenses Administrative expenses R&D expenses Financial expenses Including: Interest expenses Interest income Add: Other revenue Investment income (loss is represented by “-”) Including: Investment income from associates and joint ventures Gains from derecognition of financial assets measured at amortized cost Gains from foreign exchange (loss is represented by “-”) Gains from net exposure to hedging (loss is represented by “-”) Gain on changes in fair value (loss is represented by “-”) Impairment loss of credit (loss is represented by “-”) Impairment loss of assets (loss is represented by “-”) Gains from disposal of assets (loss is represented by “-”)	2022 8,381,544,037.91 8,381,544,037.91 6,832,124,550.81 6,301,963,158.77 177,936,589.48 3,078,911.57 310,824,328.57 38,321,562.42 60,358,985.39 16,331,096.68 10,423,604.61 107,659,154.29 12,267,690.03 -64,533,177.70 569,620.39	2021 9,040,243,854.29 9,040,243,854.29
		7,289,097,284.99 6,771,001,162.75 178,634,545.58 7,575,466.67 264,633,295.30 67,252,814.69 70,823,851.02 7,564,849.45 5,554,246.80 90,914,114.99 20,542,397.64 -1,538,036.32 -1,743,156.41

— II-381 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Item III. Operating profit (loss is represented by “-”) Add: Non-operating revenue Less: Non-operating expenses IV. Total profit (total loss is represented by “-”) Less: Income tax expense V. Net profit (net loss is represented by “-”) (I) Classified by continuity of operations 1. Net profit from continuing operations (net loss is represented by “-”) 2. Net profit from discontinued operations (net loss is represented by “-”) (II) Classified by ownership 1. Net profit attributable to shareholders of the parent company 2. Profit or loss attributable to non-controlling interests VI. Net other comprehensive income after tax Net other comprehensive income after tax attributable to owners of the parent company (I) Other comprehensive income not reclassified to profit or loss 1. Changes arising on remeasurement of defined benefit plans 2. Other comprehensive income accounted for using the equity method that cannot be reclassified to profit or loss 3. Changes in fair value of investments in other equity instruments 4. Changes in fair value of own credit risk of the company 5. Others (II) Other comprehensive income to be reclassified to profit or loss 1. Other comprehensive income accounted for using the equity method that may be reclassified to profit or loss 2. Changes in fair value of other debt investments 3. Amount of financial assets reclassified into other comprehensive income 4. Provisions for credit impairment of other debt investments	2022 1,615,806,378.72 482,003.27 7,186,185.63 1,609,102,196.36 364,853,266.11 1,244,248,930.25 1,244,248,930.25 1,124,456,118.62 119,792,811.63 14,093,109.20 13,613,407.95 13,613,407.95	2021 1,864,876,136.00 3,561,948.20 23,821,011.96
		1,844,617,072.24 422,907,820.53
		1,421,709,251.71 1,421,709,251.71 1,273,338,698.63 148,370,553.08
		26,353.04 31,182.18 31,182.18

— II-382 —

APPENDIX II FINANCIAL INFORMATION OF THE TARGET COMPANY

Item					2022	2021
	5. Reserve for cash flow hedging				-370,211.57	534,118.82
	6. Exchange differences on translation			of
	financial statements in foreign currency				13,983,619.52	-502,936.64
	7.Others
	Net other comprehensive income after tax
	attributable to non-controlling interest				479,701.25	-4,829.14
VII.	Total comprehensive income				1,258,342,039.45	1,421,735,604.75
	Total comprehensive income attributable	to		owners
	of the parent company				1,138,069,526.57	1,273,369,880.81
	Total comprehensive income attributable	to
	non-controlling interests				120,272,512.88	148,365,723.94
VIII.	Earnings per share:
	(I) Basic earnings per share				0.4050	0.4586
	(II) Diluted earnings per share				0.4050	0.4586
	Legal Representative:	Principal in charge				Head of the
	Yang Haifei		of accounting:		Accounting Department:
				Wang Xuan		Liu Weimin

— II-383 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

4. Income Statement of the Parent Company

			Unit: RMB
Item		2022	2021
I.	Operating revenue	0.00	0.00
	Less: Operating cost	0.00	0.00
	Taxes and surcharges	111,623.89	837,593.97
	Selling expenses
	Administrative expenses	54,878,572.38	57,208,029.81
	R&D expenses
	Financial expenses	3,360,496.00	-1,345,851.34
	Including: Interest expenses	15,662,951.86	20,946,958.31
	Interest income	12,362,548.15	22,674,021.99
	Add: Other revenue	5,343,648.98	1,486,648.34
	Investment income (loss is represented
	by “-”)	527,867,229.05	695,469,924.17
	Including: Investment income from
	associates and joint ventures
	Gains from derecognition of
	financial assets measured at
	amortized cost (loss is
	represented by “-”)
	Gains from net exposure to hedging (loss is
	represented by “-”)
	Gain on changes in fair value (loss is
	represented by “-”)
	Impairment loss of credit (loss is
	represented by “-”)	-508,514.55	-1,625.00
	Impairment loss of assets (loss is
	represented by “-”)
	Gains from disposal of assets (loss is
	represented by “-”)	93,633.00	67,154.33
II.	Operating profit (loss is represented by “-”)	474,445,304.21	640,322,329.40
	Add: Non-operating revenue	450.00	1,886.79
	Less: Non-operating expenses	15,986.56	13,139.81
III.	Total profit (total loss is represented by “-”)	474,429,767.65	640,311,076.38
	Less: Income tax expense	-9,828,783.53	-4,881,865.91
IV.	Net profit (net loss is represented by “-”)	484,258,551.18	645,192,942.29
	(I) Net profit from continuing operations (net loss is
	represented by “-”)	484,258,551.18	645,192,942.29
	(II) Net profit from discontinued operations (net loss
	is represented by “-”)

— II-384 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

2022

2021

Item

V. Net other comprehensive income after tax

(I) Other comprehensive income not reclassified to profit or loss
Changes arising on remeasurement of defined benefit plans
Other comprehensive income accounted for using the equity method that cannot be reclassified to profit or loss
Changes in fair value of investments in other equity instruments
Changes in fair value of own credit risk of the company
Others
(II) Other comprehensive income to be reclassified to profit or loss
Other comprehensive income accounted for using the equity method that may be reclassified to profit or loss
Changes in fair value of other debt investments
Amount of financial assets reclassified into other comprehensive income
Provisions for credit impairment of other debt investments
Reserve for cash flow hedging
Exchange differences on translation of financial statements in foreign currency
Others

VI. Total comprehensive income

484,258,551.18 645,192,942.29

VII. Earnings per share:

(I) Basic earnings per share
(II) Diluted earnings per share

— II-385 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

5. Consolidated Statement of Cash Flows

Item I. Cash flows from operating activities: Cash received from sales of goods and provision of services Net increase in deposits from clients and placements from other banks Net increase in borrowings from central bank Net increase in loans from other financial institutions Cash received from premiums of original insurance contracts Net cash received from reinsurance business Net increase in deposits from policyholders and investments Cash received from interest, handling fees and commissions Net increase in loans from other banks Net increase in repurchases business fund Net cash received from agency security transaction Receipt of tax rebates Other cash received relating to operating activities Sub-total of cash inflow from operating activities Cash paid for goods purchased and services rendered Net increase in loans and advances to customers Net increase in placements with central bank and other banks Cash paid for claims on original insurance contracts Net increase in loans to other banks Cash payment for interest, handling fees and commissions Cash payment for premium bonus Cash paid to and on behalf of staff Taxes paid Other cash paid relating to operating activities Sub-total of cash outflow from operating activities Net cash flows generated from operating activities	2022 8,959,658,060.33 8,659,368.70 39,937,963.68 9,008,255,392.71 - - - - - - - - - - - - - - 5,883,466,565.16 292,844,093.91 758,358,964.90 84,503,415.12 7,019,173,039.09 - - - - - - - - - - - - - - 1,989,082,353.62 - - - - - - - - - - - - - -	Unit: RMB 2021 9,737,007,157.39 173,659.98 42,081,890.16 9,779,262,707.53 - - - - - - - - - - - - - - 6,645,078,019.71 274,355,512.39 723,085,588.70 94,053,942.21
		7,736,573,063.01 - - - - - - - - - - - - - -
		2,042,689,644.52 - - - - - - - - - - - - - -

— II-386 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Item II. Cash flows generated from investment activities: Cash received from disposal of investments Cash received from gains in investments Net cash received from disposal of fixed assets, intangible assets and other long-term assets Net cash received from disposal of subsidiaries and other operating entities Other cash received relating to investment activities Sub-total of cash inflow from investment activities Cash paid for purchase of fixed assets, intangible assets and other long-term assets Cash paid for investment Net increase in pledged loans Net cash paid for acquiring subsidiaries and other operating entities Other cash paid relating to investment activities Sub-total of cash outflow from investment activities Net cash flows generated from investment activities	2022 8,322,631,116.12 152,756,366.67 3,214,000.00 8,478,601,482.79 - - - - - - - - - - - - - - 608,637,399.88 9,230,410,372.00 9,839,047,771.88 - - - - - - - - - - - - - - -1,360,446,289.09 - - - - - - - - - - - - - -	2021 10,979,419,260.61 161,141,190.44 194,330.40 600,000,000.00
		11,740,754,781.45 - - - - - - - - - - - - - - 718,407,227.52 10,788,683,149.63 1,033,941,654.42 4,810,225.00
		12,545,842,256.57 - - - - - - - - - - - - - -
		-805,087,475.12 - - - - - - - - - - - - - -

— II-387 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Item III. Cash flows from financing activities: Proceeds received from investments Including: Proceeds received by subsidiaries from minority interests’ investment Cash received from borrowings Other cash received relating to financing activities Sub-total of cash inflow from financing activities Cash paid for repayment of debts Cash payments for dividend and profit distribution or interest repayment Including: Dividend and profit paid by subsidiaries to minority interests Other cash paid relating to financing activities Sub-total of cash outflow from financing activities Net cash flows generated from financing activities IV. Effect on cash and cash equivalents due to changes in foreign exchange rates V. Net increase in cash and cash equivalents Add: Balance of cash and cash equivalents at the beginning of the period VI. Balance of cash and cash equivalents at the end of the period	2022 968,754,000.00 889,069,448.56 1,857,823,448.56 - - - - - - - - - - - - - - 700,741,200.00 927,426,594.64 188,175,568.54 824,276,981.14 2,452,444,775.78 - - - - - - - - - - - - - - -594,621,327.22 - - - - - - - - - - - - - - 8,116,467.53 - - - - - - - - - - - - - - 42,131,204.84 747,711,349.35 789,842,554.19	2021 680,741,200.00 950,682,812.67
		1,631,424,012.67 - - - - - - - - - - - - - - 514,500,000.00 1,006,986,085.66 173,262,232.90 1,044,057,960.00
		2,565,544,045.66 - - - - - - - - - - - - - -
		-934,120,032.99 - - - - - - - - - - - - - - -875,388.58 - - - - - - - - - - - - - -
		302,606,747.83 445,104,601.52
		747,711,349.35

— II-388 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

6. Statement of Cash Flows of the Parent Company

Item I. Cash flows generated from operating activities: Cash received from sales of goods and provision of services Receipt of tax rebates Other cash received relating to operating activities Sub-total of cash inflow from operating activities Cash paid for goods purchased and services rendered Cash paid to and on behalf of staff Taxes paid Other cash paid relating to operating activities Sub-total of cash outflow from operating activities Net cash flows generated from operating activities II. Cash flows generated from investment activities: Cash received from disposal of investments Cash received from gains in investments Net cash received from disposal of fixed assets, intangible assets and other long-term assets Net cash received from disposal of subsidiaries and other operating entities Other cash received relating to investment activities Sub-total of cash inflow from investment activities	2022 6,985,085.77 6,985,085.77 - - - - - - - - - - - - - - 33,801,276.81 1,051,421.05 12,722,994.96 47,575,692.82 - - - - - - - - - - - - - - -40,590,607.05 - - - - - - - - - - - - - - 1,982,263,500.00 527,867,229.05 919,558,972.19 3,429,689,701.24 - - - - - - - - - - - - - -	Unit: RMB 2021 16,894,631.65
		16,894,631.65 - - - - - - - - - - - - - - 33,708,630.73 10,525,442.90 18,618,254.69
		62,852,328.32 - - - - - - - - - - - - - -
		-45,957,696.67 - - - - - - - - - - - - - - 5,081,926,500.00 752,979,899.89 90,000.00 1,953,610,946.31
		7,788,607,346.20 - - - - - - - - - - - - - -

— II-389 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Item Cash paid for purchase of fixed assets, intangible assets and other long-term assets Cash paid for investment Net cash paid for acquiring subsidiaries and other operating entities Other cash paid relating to investment activities Sub-total of cash outflow from investment activities Net cash flows generated from investment activities III. Cash flows generated from financing activities: Proceeds received from investments Cash received from borrowings Other cash received relating to financing activities Sub-total of cash inflow from financing activities Cash paid for repayment of debts Cash payments for dividend and profit distribution or interest repayment Other cash paid relating to financing activities Sub-total of cash outflow from financing activities Net cash flows generated from financing activities IV. Effect on cash and cash equivalents due to changes in foreign exchange rates V. Net increase in cash and cash equivalents Add: Balance of cash and cash equivalents at the beginning of the period VI. Balance of cash and cash equivalents at the end of the period	2022 556,511.84 2,099,000,000.00 368,000,000.00 2,467,556,511.84 - - - - - - - - - - - - - - 962,133,189.40 - - - - - - - - - - - - - - 100,000,000.00 270,000,000.00 370,000,000.00 - - - - - - - - - - - - - - 100,000,000.00 698,097,649.58 526,766,101.20 1,324,863,750.78 - - - - - - - - - - - - - - -954,863,750.78 - - - - - - - - - - - - - - - - - - - - - - - - - - - - -33,321,168.43 40,367,127.30 7,045,958.87	2021 512,520.38 5,901,852,100.00 1,207,000,000.00
		7,109,364,620.38 - - - - - - - - - - - - - -
		679,242,725.82 - - - - - - - - - - - - - - 100,000,000.00 340,000,000.00
		440,000,000.00 - - - - - - - - - - - - - - 234,500,000.00 709,523,066.26 96,222,837.60
		1,040,245,903.86 - - - - - - - - - - - - - -
		-600,245,903.86 - - - - - - - - - - - - - - - - - - - - - - - - - - - -
		33,039,125.29 7,328,002.01
		40,367,127.30

— II-390 —

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

Unit: RMB					Non-controlling Total owners’	interest equity	1,872,311,300.96 12,338,746,362.19					1,872,311,300.96 12,338,746,362.19			-105,711,194.88 340,633,376.33	120,272,512.88 1,258,342,039.45
						Sub-total	10,466,435,061.23					10,466,435,061.23			446,344,571.21	1,138,069,526.57
						Others
					Undistributed	profit	2,758,837,701.09					2,758,837,701.09			381,849,697.25	1,124,456,118.62
					General risk	reserve
						Surplus reserve	503,405,545.11					503,405,545.11			48,425,855.12
	2022	Equity attributable to the owners of the parent company		Other	Less: Treasury comprehensive	shares income Special reserve	-6,369,278.83 2,558,340.56					-6,369,278.83 2,558,340.56			13,613,407.95 2,455,610.89	13,613,407.95
						Capital reserve	4,431,280,488.30					4,431,280,488.30
						Others
Current Amount			Other equity instruments			Share capital Preference shares Perpetual bonds	2,776,722,265.00					2,776,722,265.00
						Items	I. Balance at the end of previous year	Add: Changes in accounting policy	Prior-period error correction	Merger of enterprises under common control	Others	II. Balance at the beginning of the current year	III. Amount of increase/decrease/change in the	current year (decrease is represented	by “–”)	(I) Total comprehensive income	(II) Contribution and reduction of capital	by owners	1. Ordinary shares contributed by	owners	2. Capital contributed by other equity	instrument holders	3. Amount included in owners’ equity	in share payment	4. Others

— II-391 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

				Total owners’	equity		-920,163,881.41			-920,163,881.41															2,455,218.29	39,108,437.97	-36,653,219.68		12,679,379,738.52
				Non-controlling	interest		-225,983,315.16			-225,983,315.16															-392.60	4,897,318.97	-4,897,711.57		1,766,600,106.08
					Sub-total		-694,180,566.25			-694,180,566.25															2,455,610.89	34,211,119.00	-31,755,508.11		10,912,779,632.44
					Others
				Undistributed	profit		-742,606,421.37	-48,425,855.12		-694,180,566.25																			3,140,687,398.34
				General risk	reserve
					Surplus reserve		48,425,855.12	48,425,855.12																					551,831,400.23
2022	Equity attributable to the owners of the parent company		Other	Less: Treasury comprehensive	shares income Special reserve																				2,455,610.89	34,211,119.00	-31,755,508.11		7,244,129.12 5,013,951.45
					Capital reserve																								4,431,280,488.30
					Others
		Other equity instruments			Share capital Preference shares Perpetual bonds																								2,776,722,265.00
					Items	(III) Profit distribution	1. Withdrawal of surplus reserves	2. Withdrawal of general risk reserve	3. Distributions to owners (or	shareholders)	4. Others	(IV) Carry-forward of owners’ equity	1. Conversion of capital reserves to	increase capital (or share capital)	2. Conversion of surplus reserves to	increase capital (or share capital)	3. Making up of losses by surplus	reserves	4. Carry-forward of retained earnings	from changes in defined benefit	plans	5. Carry-forward of retained earnings	from other comprehensive income	6. Others	(V) Special reserves	1. Current withdrawal	2. Current use	(VI) Others	IV. Balance at the end of the current period

— II-392 —

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

Unit: RMB					Non-controlling Total owners’	interest equity	1,176,268,665.09 11,066,302,552.09						1,176,268,665.09 11,066,302,552.09			696,042,635.87 1,272,443,810.10	148,365,723.94 1,421,735,604.75		680,671,233.33 680,671,233.33							680,671,233.33 680,671,233.33	-132,099,300.98 -826,279,867.23				-132,099,300.98 -826,279,867.23
						Sub-total	9,890,033,887.00						9,890,033,887.00			576,401,174.23	1,273,369,880.81										-694,180,566.25				-694,180,566.25
						Others
					Undistributed	profit	2,244,198,862.94						2,244,198,862.94			514,638,838.15	1,273,338,698.63										-758,699,860.48	-64,519,294.23			-694,180,566.25
					General risk	reserve
						Surplus reserve	438,886,250.88						438,886,250.88			64,519,294.23											64,519,294.23	64,519,294.23
	2021	Equity attributable to the owners of the parent company		Other	Less: Treasury comprehensive	shares income Special reserve	-6,400,461.01 5,346,480.89						-6,400,461.01 5,346,480.89			31,182.18 -2,788,140.33	31,182.18
						Capital reserve	4,431,280,488.30						4,431,280,488.30
						Others
Previous amount			Other equity instruments			Share capital Preference shares Perpetual bonds	2,776,722,265.00						2,776,722,265.00
						Items	I. Balance at the end of previous year	Add: Changes in accounting policy	Prior-period error correction	Merger of enterprises under common	control	Others	II. Balance at the beginning of the current year	III. Amount of increase/decrease/change in the	current year (decrease is represented by	“–”)	(I) Total comprehensive income	(II) Contribution and reduction of capital	by owners	1. Ordinary shares contributed by	owners	2. Capital contributed by other equity	instrument holders	3. Amount included in owners’ equity	in share payment	4. Others	(III) Profit distribution	1. Withdrawal of surplus reserves	2. Withdrawal of general risk reserve	3. Distributions to owners (or	shareholders)	4. Others

— II-393 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

			Total owners’	equity														-3,683,160.75	27,999,999.38	-31,683,160.13		12,338,746,362.19
			Non-controlling	interest														-895,020.42	3,319,986.80	-4,215,007.22		1,872,311,300.96
				Sub-total														-2,788,140.33	24,680,012.58	-27,468,152.91		10,466,435,061.23
				Others
			Undistributed	profit																		2,758,837,701.09
			General risk	reserve
				Surplus reserve																		503,405,545.11
Equity attributable to the owners of the parent company		Other	Less: Treasury comprehensive	shares income Special reserve														-2,788,140.33	24,680,012.58	-27,468,152.91		-6,369,278.83 2,558,340.56
				Capital reserve																		4,431,280,488.30
				Others
	Other equity instruments			Preference shares Perpetual bonds
				Share capital																		2,776,722,265.00
				Items	(IV) Carry-forward of owners’ equity	1. Conversion of capital reserves to	increase capital (or share capital)	2. Conversion of surplus reserves to	increase capital (or share capital)	3. Making up of losses by surplus	reserves	4. Carry-forward of retained earnings	from changes in defined benefit	plans	5. Carry-forward of retained earnings	from other comprehensive income	6. Others	(V) Special reserves	1. Current withdrawal	2. Current use	(VI) Others	IV. Balance at the end of the current period

— II-394 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

	Unit: RMB				Total owners’	Others equity	9,056,275,184.26						9,056,275,184.26			-209,922,015.07	484,258,551.18
					Undistributed	Special reserve Surplus reserve profit	490,131,290.81 1,357,687,192.56						490,131,290.81 1,357,687,192.56			48,425,855.12 -258,347,870.19	484,258,551.18
8. *Statement of Changes in Shareholders’ Equity of the Parent Company*	Current amount	2022	Other equity instruments	Other	Preference Perpetual Less: Treasury comprehensive	Items Share capital shares bonds Others Capital reserve shares income	I. Balance at the end of previous year 2,776,722,265.00 4,431,733,687.79 748.10		Add: Changes in accounting policy	Prior-period error correction	Others	II. Balance at the beginning of the current	year 2,776,722,265.00 4,431,733,687.79 748.10	III. Amount of increase/decrease/change in	the current year (decrease is represented	by “–”)	(I) Total comprehensive income	(II) Contribution and reduction of	capital by owners	1. Ordinary shares contributed by	owners	2. Capital contributed by other	equity instrument holders	3. Amount included in owners’	equity in share payment	4. Others

— II-395 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

— II-396 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Unit: RMB				Total owners’	Others equity	9,105,262,808.22					9,105,262,808.22			-48,987,623.96	645,192,942.29										-694,180,566.25			-694,180,566.25
				Undistributed	Surplus reserve profit	425,611,996.58 1,471,194,110.75					425,611,996.58 1,471,194,110.75			64,519,294.23 -113,506,918.19	645,192,942.29										64,519,294.23 -758,699,860.48	64,519,294.23 -64,519,294.23		-694,180,566.25
					Special reserve
			Other	comprehensive	income	748.10					748.10
	2021			Less: Treasury	shares
					Capital reserve	4,431,733,687.79					4,431,733,687.79
					Others
		Other equity instruments		Preference	shares Perpetual bonds
Previous amount					Items Share capital	I. Balance at the end of previous year 2,776,722,265.00	Add: Changes in accounting policy	Prior-period error correction	Others	II. Balance at the beginning of the current	year 2,776,722,265.00	III. Amount of increase/decrease/change in	the current year (decrease is represented	by “–”)	(I) Total comprehensive income	(II) Contribution and reduction of	capital by owners	1. Ordinary shares contributed by	owners	2. Capital contributed by other	equity instrument holders	3. Amount included in owners’	equity in share payment	4. Others	(III) Profit distribution	1. Withdrawal of surplus reserves	2. Distributions to owners (or	shareholders)	3. Others

— II-397 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

— II-398 —

APPENDIX II FINANCIAL INFORMATION OF THE TARGET COMPANY

III. BASIC INFORMATION OF THE COMPANY

(I) Company Profile

Company name: Abbreviation of the company: Registered address:

Office address:

Registered capital: Unified social credit code: Legal representative: Business scope:

Yintai Gold Co., Ltd. Yintai Gold.

Harato Street, Balagalgaole Town, West Ujimqin Banner, XilinGol League, Inner Mongolia Autonomous Region.

Rooms 5103/5104, Block C, Yintai Center, No. 2 Jianguomenwai Street, Chaoyang District, Beijing. RMB2,776,722,265. 911525007116525588. Yang Haifei.

— II-399 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(II) History of the Company

Yintai Gold Co., Ltd. (hereinafter referred to as the “ company ”) was formerly known as “Chongqing Wujiang Power Co., Ltd. (重慶烏江電力股份有限公司) (the company’s securities are abbreviated as Wujiang Power)”, “Southern Science City Development Co., Ltd. (南方科學城發展股份有限公司) (the company’s securities are abbreviated as Science City)”, “Yintai Resources Co., Ltd. (銀泰資源股份有限公司)” (the company’s securities are abbreviated as Yintai Resources).”

On 18 March 2002, Wujiang Electric Power Group, the largest shareholder of the company, signed the “Share Transfer Agreement” with GDD Holding Group Co., Ltd. (“ GDD Holding ”), and Wujiang Electric Power Group transferred 157,465,400 state-owned legal person shares held by it to GDD Holding, accounting for 53.20% of the company’s total share capital. The transfer was approved by Chongqing Municipal People’s Government (Yu Fu [2002] No. 90), Ministry of Finance (Cai Qi [2002] No. 216 ), and CSRC (Zheng Jian Han [2002] No. 264 ).

— II-400 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

On 21 November 2005, GDD Holding and China Yintai Holdings Co., Ltd. (“ China Yintai ”) signed the “Share Transfer Agreement”, transferring 24.40% of the company’s state shares held by it to China Yintai. On 3 August 2006, a supplementary agreement was signed and the transfer of shares was changed to 29.90%. On 1 March 2007, it was approved by the SASAC, and on 10 September 2007, it was approved by the CSRC. After the completion of the equity transfer, China Yintai holds 159,307,200 shares of the company, accounting for 29.90% of the company’s total share capital, and became the company’s largest shareholder.

On 15 October 2007, the company held the 2007 second extraordinary general meeting, and considered and approved the Shareholding Reform Plan. The company’s non-outstanding shares were reduced to 6.254 shares for every 10 shares. At the same time, according to the relevant agreement between China Yintai and GDD Holding, the share reduction arrangement corresponding to the transfer of the shares held by China Yintai to GDD Holding was executed by GDD Holding on its behalf. After the share reduction, the company converted 3.485 shares for every 10 shares to all shareholders after the share reduction from the capital reserve. At the same time, the company distributed 1.3635 bonus shares and cash dividends of RMB0.1515 (including tax) for every 10 shares to all shareholders after the share reduction with undistributed profits. After the plan was implemented on 24 January 2008, the company’s total share capital was changed from 532,800,000 shares to 622,925,700 shares, and the non-outstanding shares held by the original non-outstanding shareholders were changed to outstanding shares with limited selling conditions. This share capital change has been verified by Zhongxi Certified Public Accountants Co., Ltd., and Zhong Xi Yan Zi (2007) No. 02017 and No. 02018 capital verification reports have been issued. Accordingly, the company went through the industrial and commercial change registration procedures, and the registered capital was changed from RMB532,800,000 to RMB622,925,700.

On 10 March 2011, the commitments made by China Yintai, GDD Holding and Chongqing Xinyu Investment (Group) Company Limited (“ Chongqing Xinyu ”) in the announcement of the implementation of the shareholding reform plan were fulfilled and the corresponding shares were unlocked and can be transferred in the market.

— II-401 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

On 28 December 2012, the company received the Reply on Approving the Major Assets Reorganization of Southern Science City Development Co., LTD., and the Issuance of Shares to Hou Renfeng and Other Parties to Purchase Assets and Raise Supporting Funds 《關於核准南方科學城發展股份有限公司重大資產重組及向侯仁峰等發行股份購買資產( 並募集配套資金的批覆》) (Zheng Jian Xu Ke [2012] No. 1740) from the CSRC, approving the major assets reorganization of the company and the issuance of 197,987,769 shares to Hou Renfeng, 198,018,132 shares to Wang Shui and 16,638,143 shares to Li Honglei to purchase related assets, and approving the company’s non-public issue of not more than 50 million new shares to raise supporting funds for this share issue to purchase assets. On 11 January 2013, Zhongxi Certified Public Accountants Co., Ltd. issued a capital verification report (Zhong Xi Yan Zi [2013] No. 02001), in which the company actually received the new registered capital (share capital) of RMB412,644,044.00 from Hou Renfeng, Wang Shui and Li Honglei, who contributed their equity interests in Inner Mongolia Yulong Mining Co., Ltd. (內蒙古玉龍礦業股份有限公司) (“ Yulong Mining ”) and received an additional registered capital (share capital) of RMB50,000,000.00 from China Yintai in the form of monetary capital, resulting in a total of 462,644,044 new shares.

— II-402 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

On 25 December 2017, the company’s major asset reorganization was approved and obtained the Reply on Approving Yintai Resources Co., Ltd. to Issue Shares to Shen Guojun and Other Parties to Purchase Assets (《關於核准銀泰資源股份有限公司向沈國軍等發行股份購買資產的批覆》) (Zheng Jian Xu Ke [2017] No. 2365) from the CSRC to issue shares to eight counterparties, including Shen Guojun, to purchase 89.38% equity interest in Shanghai Shengwei. All counterparties completed the transfer procedures in respect of their shares in Shanghai Shengwei on 10 January 2018. As approved by the Shenzhen Stock Exchange, the additional shares were listed on 26 January 2018. The company completed the title transfer procedures for the above-mentioned shares and Shanghai Shengwei became its wholly-owned subsidiary, which has been included in the scope of consolidated statements since then. Pursuant to the above-mentioned approval of the CSRC, the company issued 72,319,201 shares to Shen Guojun, 62,344,139 shares to Shanghai Lanju Enterprise Management Center (Limited Partnership) (上海瀾聚企業管理中心（有限合夥）), 49,875,311 shares to Shanghai Baohu Investment Management Center (Limited Partnership) (上海趵虎投資管理中心（有限合夥）), 33,250,207 shares to Shanghai Wenwu Enterprise Management Center (Limited Partnership) (上海溫悟企業管理中心（有限合夥）), 32,252,701 shares to Cheng Shaoliang, 30,174,563 shares to Shanghai Chaomeng Enterprise Management Center (Limited Partnership) (上海巢盟企業管理中心（有限合夥）), 29,925,187 shares to Gongqingcheng Runda Investment Management Partnership (Limited Partnership) (共青城潤達投資管理合夥企業（有限合夥）) and 24,937,655 shares to Wang Shui to purchase the relevant assets at a par value of RMB1 per share and an issue price of RMB12.03 per share, increasing the registered capital by RMB335,078,964. After the issue, the registered capital and share capital of the company increased from RMB1,081,616,070 to RMB1,416,695,034. This change in share capital was verified by Zhongxi Certified Public Accountants (Special General Partnership), which issued the capital verification report of Zhong Xi Yan Zi (2018) No. 0001. The company accordingly went through the business change registration procedures, and the registered capital was changed from RMB1,081,616,070 to RMB1,416,695,034.

— II-403 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

— II-404 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(III) Scope of consolidated financial statements

As of 31 December 2022, the subsidiaries within the scope of the company’s consolidated financial statements were as follows:

Name of subsidiary

Abbreviation of subsidiary

Shanghai Shengwei Mining Investment Co., Ltd. Shanghai Shengwei (上海盛蔚礦業投資有限公司) Sino Gold Tenya (HK) Limited Sino Gold Hong Kong Rockmining Group Company Limited Rockmining Hong Heihe Yintai Mining Development Co., Ltd. (黑河銀泰 Heihe Yintai 礦業開發有限責任公司) Qinghai Dachaidan Mining Co., Ltd. (青海大柴旦礦業 Qinghai Dachaidan 有限公司) Inner Mongolia Yulong Mining Co., Ltd. (內蒙古玉龍 Yulong Mining 礦業股份有限公司) Jilin Banmiaozi Mining Co., Ltd. (吉林板廟子礦業 Jilin Banmiaozi 有限公司) Jilin Yintai Shengxin Mining Co., Ltd. (吉林銀泰盛鑫 Yintai Shengxin 礦業有限公司) Yintai Shenghong Supply Chain Management Co., Yintai Shenghong Ltd. (銀泰盛鴻供應鏈管理有限公司) Ningbo Yintai Yongheng Trading Co., Ltd. (寧波銀泰 Yongheng Trading 永亨貿易有限公司) Yintai Shenghong Singapore Co., Ltd. (銀泰盛鴻新加 Shenghong Singapore 坡有限公司) Mangshi Huasheng Gold Mine Development Co., Ltd. Huasheng Gold Mine (芒市華盛金礦開發有限公司)

Sino Gold Hong Kong Rockmining Hong Kong Heihe Yintai

(IV) Approval and publication of financial statements

These financial statements have been approved for publication by the company’s board of directors on 27 February 2023.

IV. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

1. Basis of preparation

— II-405 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Commission’s Regulation on the Information Disclosure of Companies Offering Securities to the Public No.15 – General Provisions on Financial Reporting (Revised in 2014).

2. Going concern

V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES

The company is required to comply with the disclosure requirements for the solid mineral resources industry under the Self-Regulatory Guidelines No. 3 – Industrial Information Disclosure for Listed Companies on the Shenzhen Stock Exchange.

Specific Accounting Policies and Accounting Estimates Indication

The following disclosures have covered the specific accounting policies and accounting estimates formulated by the company based on the actual production and operation characteristics. For details, please refer to “V. 20. Fixed assets” and “V.24. Intangible assets”, “V. 33. Revenue”, “V. 36. Other significant accounting policies and accounting estimates”.

1. Statement of compliance with Accounting Standards for Business Enterprises

2. Accounting period

An accounting period is from 1 January to 31 December of each calendar year.

3. Business cycle

The company adopts 12 months as a business cycle.

4. Functional currency

Renminbi is adopted as the functional currency for recording.

5. Accounting treatments of business combinations involving entities under common control and entities not under common control

(1) If the terms, conditions and economic effects of transactions for the purpose of realizing business combination in phases, fall in the following one or more situations, multiple transactions shall be regarded as a package transaction for accounting treatment
- ① These transactions were entered into at the same time or after considering the effects of each other;

— II-406 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

② Only when regarding these transactions as a whole, can it achieve a complete business result;
③ The occurrence of one transaction depends on the occurrence of at least one other transaction;
④ A transaction is not economical when treated alone, but is economical when considered with other transactions.
(2) Business combinations involving entities under common control

For assets and liabilities acquired under business combinations, the assets, liabilities of the acquiree (including goodwill arising from the acquisition of the acquiree by the ultimate controller) on the date of combination are included in the consolidated financial statements of the ultimate controller using the book values. If there is any difference between the book values of net assets acquired and the consideration paid for the combination (or the total amount of face value of issued shares), share premium in capital reserve is adjusted. If the share premium in capital reserve is insufficient, the retained earnings are adjusted. If there is any contingent consideration required to be recognized as estimated obligations or assets, capital reserve (capital or share premium) is adjusted by the difference between the amount of such estimated obligations or assets and the amount of settlement of subsequent contingent consideration; where the capital reserve is insufficient, the retained earnings are adjusted.

— II-407 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(3) Business combinations involving entities not under common control

① The business combination contract or agreement has been approved by the internal authority of the company.
② The business combination matters, which need to be approved by the relevant competent departments of the state, has been approved.
③ The necessary procedures for the transfer of property rights have been completed.
④ The company has paid most of the combined price and has the ability and plan to pay the remaining amount.
⑤ The company has actually controlled the financial and operating policies of the acquiree and enjoyed corresponding benefits and assumed corresponding risks.

— II-408 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

recognition and measurement criteria for financial instruments, the sum of the fair value of such equity investment on the date of combination and the new investment cost are accounted as the initial investment cost on the date of combination. The difference between the fair value of the original equity and its book value and the accumulative changes originally included in the other comprehensive income are transferred to current investment income on the date of combination.

(4) Relevant expenses in relation to combination

6. Preparation of consolidated financial statements

(1) Scope of consolidation

(2) Procedures of consolidation

— II-409 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

① Addition of subsidiary or business

During the reporting period, initial amount in the consolidated balance sheets is adjusted for the addition of new subsidiaries and businesses due to business combinations involving entities under common control. The income, expenses and profits of the subsidiaries from the beginning of the consolidation to the end of the reporting period are included in the consolidated income statements, and the cash flows of the subsidiaries and the businesses from the beginning of the consolidation to the end of the reporting period are included in the consolidated cash flow statements. At the same time, those relevant items of comparison of financial statements are adjusted as if the consolidated the reporting entity has existed since the date of establishment of control by the ultimate control party.

— II-410 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

② Disposal of subsidiary or business

1) General treatments

— II-411 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

2) Piecemeal disposal of subsidiary

A. Such transactions are occurred together or made under considerations of mutual impacts;
B. A complete business consequence could only be made under such series of transactions;
C. The occurrence of a transaction is dependent on occurrence of at least one transaction;
D. One transaction itself is not economical itself, but when considered together with other transactions would become economical.

③ Acquisition of minority interest of subsidiary

— II-412 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

④ Partly disposal of equity investment in subsidiaries without losing control

7. Classification of joint arrangements and accounting treatment for joint operations

(1) Classification of joint venture arrangements

① Its legal form shows the joint ventures enjoy rights to and assume obligations for relevant assets and liabilities respectively in the arrangement.
② The contract terms of the joint venture arrangement stipulate that the joint ventures enjoy rights to and assume obligations for relevant assets and liabilities respectively in the arrangement.
③ Other relevant facts and situations show that the joint ventures enjoy rights to and assume obligations for relevant assets and liabilities respectively in the arrangement. For example, the joint ventures enjoy almost all output related to the arrangement and repayment of liabilities in the arrangement consecutively relies on the joint ventures’ supports.

— II-413 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(2) Accounting treatment for joint operations

① assets it solely holds and its share of jointly-held assets based on its percentage;
② liabilities it solely assumes and its share of jointly-assumed liabilities based on its percentage;
③ incomes from sale of output enjoyed by it from the joint operation;
④ incomes from sale of output from the joint operation based on its percentage; and
⑤ separate costs and costs for the joint operation based on its percentage.

8. Determination criteria for cash and cash equivalents

— II-414 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

9. Foreign currency businesses and translation of foreign currency statements

(1) Foreign currency businesses

Foreign currency business transaction are recognized at the beginning and translated into Renminbi using the spot exchange rate prevailing on the date when transaction occurred.

(2) Translation of foreign currency financial statements

— II-415 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

When disposing of an overseas operation, the foreign currency translation difference for items under the other comprehensive income in the balance sheet that are related to such overseas operation is transferred from the other comprehensive income to profit or loss for the period; when disposing of partial overseas equity investment or due to other reasons causing decrease in holding ratio of overseas operation but not losing control, the foreign currency translation difference attributable for disposed is transferred to minority interests but not profit or loss for the period. In occasion disposal of equity interest in foreign associate or joint operation, the foreign currency translation difference attributable to the portion disposed of is transferred to profit or loss for the period.

10. Financial instruments

A financial asset or financial liability is recognized when the company becomes a party to a contract for a financial instrument.

— II-416 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(1) Classification and measurement of financial assets

① Financial assets measured in amortized cost.
② Financial assets at fair value through other comprehensive income.
③ Financial assets at fair value through profit or loss.

— II-417 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

① Classified as financial assets measured in amortized cost

1) For financial assets that have been acquired or originated for credit impairment, the company calculates and determines the interest income based on the amortized cost and credit-adjusted effective interest rate of the financial assets from initial recognition.
2) For financial assets that have not been credit-impaired but become credit-impaired in subsequent periods, the company calculates and determines the interest income based on the amortized cost and effective interest rate of the financial assets in subsequent periods. If the financial instrument is no longer credit-impaired due to an improvement in its credit risk in a subsequent period, the company calculates and determines interest income by multiplying the effective interest rate by the carrying amount of the financial asset.

— II-418 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

② Financial assets classified as at fair value through other comprehensive income

— II-419 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

③ Financial assets designated as at fair value through other comprehensive income

— II-420 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

④ Financial assets classified as at fair value through profit or loss

The company presents these financial assets under the items of financial assets held for trading and other non-current financial assets based on their liquidity.

⑤ Financial assets designated as at fair value through profit or loss

— II-421 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

1) Embedded derivatives do not materially change the cash flows of the hybrid contract.
2) When initially determining whether a similar hybrid contract needs to be split, it is almost clear without analysis that the embedded derivatives it contains should not be split. Where an embedded prepayment option for a loan allows the holder to prepay the loan at an amount close to amortized cost, the prepayment option does not need to be split.

The company presents these financial assets under the items of financial assets held for trading and other non-current financial assets based on their liquidity.

(2) Classification, recognition and measurement of financial liabilities

— II-422 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Subsequent measurement of financial liabilities depends on their classification:

① Financial liabilities measured at fair value through profit or loss

A financial liability is classified as a financial liability held for trading if one of the following conditions is met: the underlying financial liability is assumed primarily for the purpose of selling or repurchasing in the near term; it is part of a centrally managed portfolio of identifiable financial instruments, and there is objective evidence that the enterprise has recently adopted a short-term profit model; it is a derivative instrument, except for those that are designated as effective hedging instruments and those that meet financial guarantee contracts. Financial liabilities held for trading (including derivatives that are financial liabilities) are subsequently measured at fair value and all changes in fair value are included in profit or loss for the period, except for those relating to hedge accounting.

— II-423 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

1) Accounting mismatches can be eliminated or significantly reduced.
2) The management and performance evaluation of a portfolio of financial liabilities or a portfolio of financial assets and financial liabilities on a fair value basis, in accordance with the corporate risk management or investment strategy as set out in the official written documents, and reporting to key management personnel within the enterprise on this basis.

② Other financial liabilities

1) Financial liabilities at fair value through profit or loss.
2) Financial liabilities arising from the transfer of a financial asset that does not meet the conditions for derecognition or continues to be involved in the transferred financial asset.
3) Financial guarantee contracts that do not fall under the first two categories of this article, and loan commitments that do not fall under category 1) of this article for loans at below-market interest rates.

— II-424 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(3) Derecognition of financial assets and financial liabilities
① A financial asset is derecognized when one of the following conditions is met, i.e, it is written off from its account and balance sheet:
- 1) The contractual right to receive the cash flows from the financial asset is terminated.
- 2) The financial asset has been transferred and the transfer meets the requirements for derecognition of the financial asset.
② Conditions for derecognition of financial liabilities

A financial liability (or a portion of a financial liability) is derecognized if the current obligation of the financial liability (or portion of a financial liability) has been discharged.

— II-425 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(4) The basis for recognition and measurement of financial asset transfers

When a transfer of financial assets occurs, the company assesses the extent of the risks and rewards of retaining ownership of the financial assets and deals with each of the following:

① Where substantially all the risks and rewards of ownership of a financial asset are transferred, the financial asset is derecognized and the rights and obligations arising or retained in the transfer are recognized separately as assets or liabilities.
② A financial asset is recognized if it retains substantially all the risks and rewards of ownership.
③ Where substantially all the risks and rewards of ownership of a financial asset have not been transferred or retained (i.e, other than those in ① and ② of this article), they are dealt with in the following circumstances, depending on whether they retain control over the financial asset:
1) Where control over the financial asset is not retained, the financial asset is derecognized and the rights and obligations arising or retained in the transfer are recognized separately as assets or liabilities.
2) Where control over the financial asset is retained, the financial asset continues to be recognized to the extent that it continues to be involved in the transferred financial asset and the related liability is recognized accordingly. The extent to which the company continues to be involved in the transferred financial asset is the extent to which the company is exposed to risks or rewards from changes in the value of the transferred financial asset.

— II-426 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

① Where the overall transfer of a financial asset satisfies the derecognition condition, the difference between the following two amounts is included in the current profit or loss:
1) The carrying amount of the transferred financial asset at the date of derecognition.
2) The sum of the consideration received for the transfer of a financial asset and the amount of the corresponding derecognized portion of the cumulative change in fair value that would have been credited directly to other comprehensive income (the financial asset involved in the transfer is a financial asset measured at fair value with the change in other comprehensive income).
② Where a financial asset is partially transferred and the transferred portion as a whole satisfies the derecognition condition, the carrying amount of the financial asset as a whole before the transfer is apportioned between the derecognition portion and the continuing recognition portion (in which case, the retained service asset shall be regarded as a part of the continuing recognition of the financial asset) based on the relative fair value on the transfer date, and the difference between the following two amounts is included in the current profit or loss:
1) The carrying amount of the derecognized portion at the date of derecognition.
2) The sum of the consideration received for the derecognition component and the amount of the corresponding derecognition component of the cumulative change in fair value originally included in other comprehensive income (the financial asset involved in the transfer is a financial asset measured at fair value with its change included in other comprehensive income).

— II-427 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(5) Determination of fair value of financial assets and financial liabilities

A financial asset or financial liability that has an active market is determined at its fair value based on quoted prices in the active market, unless the financial asset has a shelf life that is specific to the asset itself. Financial assets that are restricted for sale against the asset itself are determined at quoted prices for related assets or liabilities in active markets, net of the amount of compensation required by market participants to assume the risk of not selling the financial asset in the open market for a specified period of time. Quoted prices in active markets include quoted prices that are readily and regularly available from exchanges, dealers, brokers, industry groups, pricing agencies or regulators, etc, and that represent actual and recurring market transactions on a fair trading basis.

Financial assets acquired or derived initially, or financial liabilities assumed, are determined on the basis of market transaction prices.

(6) Impairment of financial instruments

The company performs impairment accounting and recognizes loss allowances for financial assets classified as measured at amortized cost, financial assets classified as measured at fair value through other comprehensive income and financial guarantee contracts.

— II-428 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

For receivables arising from transactions governed by revenue standards, the company applies the simplified measurement method to measure the loss allowance at an amount equal to lifetime ECLs.

① If the credit risk of the financial instrument has not increased significantly since initial recognition and is in stage 1, the loss allowance is measured at an amount equal to the expected credit loss of the financial instrument over the next 12 months and interest income is calculated based on the carrying amount and the effective interest rate.

— II-429 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

② If the credit risk of the financial instrument has increased significantly since initial recognition but no credit impairment has occurred, it is in stage 2, the loss allowance is measured at an amount equal to the expected credit loss over the lifetime of the financial instrument, and interest income is calculated based on the carrying amount and the effective interest rate.
③ If the financial instrument has been credit-impaired since initial recognition, it is in stage 3, the company measures its loss allowance at an amount equal to the expected credit losses over the lifetime of the financial instrument and calculates interest income at amortized cost and effective interest rates.

— II-430 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

① Significant increase in credit risk

In assessing whether there has been a significant increase in credit risk, the company considers the following factors:

1) Whether there has been an actual or expected significant change in the operating results of the debtor;
2) Whether there has been a significant adverse change in the regulatory, economic or technological environment in which the debtor is located;
3) Whether there has been a significant change in the value of the collateral used as security for the debt or in the quality of the guarantees or credit enhancements provided by third parties that is expected to reduce the debtor’s economic incentive to pay within the contractual time limit or affect the probability of default;
4) Whether there has been a significant change in the expected performance and repayment behavior of the debtor;
5) Changes in the company’s credit management methods for financial instruments, etc.

— II-431 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

② Financial assets with credit impairment

1) Significant financial difficulties of the issuer or the debtor;
2) Breach of contract by the debtor, such as default or overdue payment of interest or principal, etc.;
3) A concession given by a creditor to the debtor that the debtor would not otherwise make for economic or contractual reasons relating to the debtor’s financial difficulties;
4) The debtor is likely to go bankrupt or undergo other financial restructuring;
5) The financial difficulty of the issuer or the debtor results in the disappearance of an active market for the financial asset;
6) A financial asset is purchased or originated at a significant discount that reflects the fact that a credit loss has occurred.

Credit impairment of financial assets may be caused by the joint action of multiple events, and may not be caused by separately identifiable events.

— II-432 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

③ Determination of expected credit losses

The company determines the ECLs for the relevant financial instruments as follows:

1) For financial assets, credit losses are the present value of the difference between the contractual cash flows that the company is expected to receive and the cash flows that it expects to receive.
2) For lease receivables, credit losses are the present value of the difference between the contractual cash flows that the company is expected to receive and the cash flows that it expects to receive.
3) For financial guarantee contracts, credit losses are the present value of the difference between the expected payments to be made by the company to the contract holder for credit losses incurred by the contract holder, less the amount that the company expects to receive from the contract holder, the debtor or any other party.
4) For a financial asset that is credit-impaired at the balance sheet date but not purchased or originated from credit-impaired, credit loss is the difference between the carrying amount of the financial asset and the present value of the estimated future cash flows discounted at the original effective interest rate.

— II-433 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

④ Write-down of financial assets

(7) Offset of financial assets and financial liabilities

① The company has a legal right to set off the recognized amounts and such legal right is currently enforceable;
② The company plans to settle on a net basis, or to realize the financial asset and settle the financial liability simultaneously.

11. Bills receivable

See Note V.10.(6) Impairment of financial instruments for details of the method of determining and accounting for ECL on bills receivable.

— II-434 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

	Basis for determination
Name of portfolio	of portfolio	Method of provision
Bank acceptance	Bank acceptance has a	ECL is not recognized
	high credit rating, a	with reference to
	short duration, low risk	historical credit loss
	of default, and a strong	experience, in
	ability to fulfill its	combination with
	contractual cash flow	current conditions and
	obligations in the short	expectations of future
	term	economic conditions
Trade acceptance	Classification according	ECL is measured with
	to common credit risk	reference to historical
	characteristics	credit loss experience,
		in combination with
		current conditions and
		expectations of future
		economic conditions

12. Accounts receivable

See Note V.10.(6) Impairment of financial instruments for details of the company’s method of determining and accounting for ECL on accounts receivable.

The company separately determines the credit loss of accounts receivable that have been credit-impaired after the initial recognition.

— II-435 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

13. Accounts receivable financing

See Note V.10.(6) Impairment of financial instruments for details of the company’s method of determining and accounting for ECL on accounts receivable financing.

14. Other receivables

Method of determining and accounting for ECL on other receivables

See Note V.10.(6) Impairment of financial instruments for details of the company’s method of determining and accounting for ECL on other receivables.

The company separately recognises credit losses on other receivables for which credit impairment has occurred subsequent to initial recognition.

— II-436 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

15. Inventories

(1) Classification of inventories

(2) Valuation of inventories

— II-437 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(3) Determination criteria for the net realizable value of inventories and provision for inventory impairment

When a comprehensive count of inventories is done at the end of the period, provision for inventory impairment is allocated or adjusted using the lower of the cost of inventory and the net realizable value. The net realizable value of stock in inventory (including finished products, inventory merchandize and materials for sale) that can be sold directly is determined using the estimated saleable price of such inventory deducted by the cost of sales and relevant taxation over the course of ordinary production and operation. The net realizable value of material in inventory that requires processing is determined using the estimated saleable price of the finished product deducted by the cost to completion, estimated cost of sales and relevant taxation over the course of ordinary production and operation. The net realizable value of inventory held for performance of sales contract or labor service contract is determined based on the contractual price; in case the amount of inventory held exceeds the contractual amount, the net realizable value of the excess portion of inventory is calculated using the normal saleable price.

(4) Inventory system

Perpetual inventory system is adopted.

(5) Amortization of low-value consumables and packaging
① Low-value consumables are amortized by one-time write-off;
② Packaging materials are amortized by one-time write-off;
③ Other supplementary materials are amortized by one-time write-off.

— II-438 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

16. Contract assets

17. Contract Cost

(1) Contract performance cost

① The cost is directly related to a current or expected contract, including direct labor, direct materials, manufacturing costs (or similar), costs that are clearly attributable to the customer, and other costs that are incurred solely as a result of the contract;
② The cost increases the resources that the enterprise will use to fulfill its performance obligations in the future;
③ The cost is expected to be recovered.

The asset is presented in inventory or other non-current assets based on whether the amortisation period at initial recognition exceeds a normal operating cycle.

— II-439 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(2) Contract acquisition cost

(3) Amortization of contract costs

(4) Impairment of contract costs

Where the carrying value of the above assets relating to contract costs is higher than the difference between the remaining consideration expected to be obtained by the Company from the transfer of the commodities related to the assets and the cost estimated to be incurred for the transfer of the related commodities, the excess shall be provided for impairment and recognised as an asset impairment loss.

18. Other debt investments

See Note V.10.(6) Impairment of financial instruments for details of the method of determining and accounting for ECL on other debt investments.

— II-440 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

19. Long-term equity investments

(1) Initial determination of investment costs
- ① For long-term equity investment formed by business combination, details of accounting policies are set out in Note V. 5. Accounting treatments of business combinations involving entities under common control and entities not under common control.
- ② Long-term equity investments obtained through other means

The initial investment costs of a long-term equity investment obtained through debt restructuring is determined based on the fair value.

— II-441 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(2) Subsequent measurement and profit or loss recognition

① Cost method

② Equity method

— II-442 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

The company shall, based on the fair value of identifiable net assets of the investee when it obtains the investment, recognize its attributable share of the net profit or loss of the investee after it adjusts the net profit of the investee. The profit or loss of the unrealized internal transaction between the company and the associates, joint ventures be deducted with the part attributable to the company according to the proportion the company is entitled to, and the gains or losses on investment shall be recognized on such basis.

— II-443 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(3) Change of the accounting methods for long-term equity investments
① Change of measurement at fair value to accounting under equity method

— II-444 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

② Change of measurement at fair value or accounting under equity method to cost method

③ Change of accounting under equity method to measurement at fair value

— II-445 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

④ Change of cost method to equity method

⑤ Change of cost method into measurement at fair value

(4) Disposal of long-term equity investment

① these transactions were entered into at the same time or after considering the effects of each other;
② only when regarding these transactions as a whole, can it achieve a complete business result;
③ the occurrence of one transaction depends on the occurrence of at least one other transaction;

— II-446 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

④ a transaction is not economical when treated alone, but is economical when considered with other transactions.

① In separate financial statements for equity disposed, the difference between the carrying value and the actual payment is included in current profit or loss. Where the remaining equity after disposal can implement common control or place significant impact over the investee, the equity method is adopted for accounting treatment, and the remaining equity is adjusted as if the equity is adopted at the time of acquisition; where the remaining equity after disposal cannot implement common control or place significant impact over the investee, relevant provisions of Accounting Standards for Enterprises No. 22 – Recognition and Measurement of Financial Instruments shall be adopted for accounting, and the difference between the fair value on the date when the control is lost and the carrying value is included in current profit or loss.
② In consolidated financial statements, for the transactions before the loss of control over subsidiaries, the capital reserve (share premium) is adjusted by the difference between the price of disposal and the net asset shares of subsidiaries continuously calculated since the date of acquisition or combination corresponding to the long-term equity investment; where the capital reserve is insufficient, retained earnings are adjusted; at the time of loss of control over subsidiaries, the remaining equity are re-measured according to the fair value at the date of loss of control. The difference between the sum of the price acquired for disposal of equity and the fair value of the remaining equity less shares of net assets constantly calculated since the date of acquisition based on the original shareholding proportion is included in the investment income in the period when the control is lost and is written down to good will. Other comprehensive income related to original equity investment in the subsidiaries is transferred to current investment income at the time of loss of control.

— II-447 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

① In separate financial statements, the difference between each disposal price before the loss of control and the carrying value of the long-term equity investment corresponding to the equity disposed is recognized as other comprehensive income; and shall be transferred to current profit or loss at the time of loss of control.
② In consolidated financial statements, the difference between each disposal price before the loss of control and the share of net assets in the subsidiary corresponding to the disposal of investment is recognized as other comprehensive income, and shall be transferred to profit or loss for the period when control is lost.
(5) Criteria for determination of common control and significant impact

Significant impact refers to the power of an investing party to participate in making decisions on the financial and operating policies of an invested entity, but not to control or jointly control together with other parties over the formulation of these policies. The company determines the significant impact on investee in one or more situations as follows after a comprehensive consideration of all facts and situations: ① dispatching representatives in the board of directors or similar power organ of the investee; ② participating in the formulation of the financial and operation policies of the investee; ③ having significant deals with the investee; ④ dispatching management personnel to the investee; and ⑤ providing key technical data to investee.

— II-448 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

20. Fixed assets

(1) Recognition conditions

① economic benefits related to such fixed assets are likely to flow into the enterprise;
② costs of such fixed assets can be reliably measured.
(2) Method of depreciation

21. Constructions in progress

(1) Initial determination of construction in progress

(2) Criteria and timing for conversion of construction in progress into fixed assets

— II-450 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

22. Borrowing expenses

(1) Principles of recognizing capitalization of borrowing expenses

Borrowing expenses are capitalized when all of the following conditions are met:

① the asset expense has occurred, which includes expenses in the form of cash paid, non-monetary asset transferred or interest-bearing obligations assumed for the construction or product of an asset that meets capitalization conditions;
② the borrowing expenses have occurred;
③ the necessary construction or production activities for bringing the asset to the expected usable or saleable conditions have started.
(2) Capitalization period of borrowing expenses

When the construction or production of an asset meeting capitalization conditions has reached expected useful or saleable conditions, the capitalization of borrowing expenses is stopped.

— II-451 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(3) Suspension of capitalization period

(4) Calculation of capitalized amount of borrowing expenses

Interest expenses of special borrowings (net of interest income from unutilized loans deposited in bank or investment gain earned from temporary investment) and supplementary expenses incurred for the construction or production of asset that meets capitalization conditions before the asset reaches expected useable or saleable condition are capitalized.

The interest amount that should be capitalized on normal borrowings is calculated based on the weighted average of expenses of the aggregate asset exceeding the expenses of the portion of special borrowings multiplied by the capitalization ratio of the normal borrowings utilized. Capitalization ratio is calculated based on normal weighted average interest rate.

— II-452 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

23. Right-of-use assets

At the commencement date of the lease, the company recognizes the right to use the leased assets during the lease term as a right-of-use asset, including:

1) the initial measurement amount of the lease liability;
2) the amount of lease payment paid on or before the beginning of the lease term, the amount of lease incentive already enjoyed shall be deducted if there is a lease incentive;
3) initial direct expenses incurred by the lessee;
4) the costs that the lessee is expected to incur in order to dismantle and remove the leased asset, restore the leased asset to the site or restore the leased asset to the state agreed upon in the lease terms.

The right-of-use assets are depreciated on a straight-line basis subsequently by the company. If the company is reasonably certain that the ownership of the underlying asset will be transferred to the Group at the end of the lease term, the company depreciates the asset from the commencement date to the end of the useful life of the asset. Otherwise, the company depreciates the assets from the commencement date to the earlier of the end of the useful life of the asset or the end of the lease term.

— II-453 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

24. Intangible assets

① Initial measurement of intangible assets

— II-454 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

② Subsequent measurement of intangible assets

The company determines the useful life of intangible assets on acquisition, which are classified as intangible assets with limited useful life and indefinite useful life.

1) Intangible assets with a limited useful life

Intangible assets with a limited useful life are amortised using straight line method over the term during which they bring economic benefits to the company.

The company’s geological achievements (mining rights) are amortised under the production method from the commencement of mining at the relevant mine.

The estimated useful life and basis for the intangible assets with a limited life are as follows:

Item	Estimated useful life	Basis
Land use right	7–50 years	Title certificate
Software	5–10 years	Benefit period

2) Intangible assets with indefinite useful life

If the term of economic benefit the intangible asset can bring to the company cannot be estimated, it is deemed to be an intangible asset with indefinite life.

— II-455 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

25. Exploration and development expenses

Exploration and development expenses refer to expenses incurred in detailed investigation and exploration in geological exploration activities, with mining areas as accounting objects.

26. Impairment of long-term assets

— II-456 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

27. Long-term deferred expenses

28. Contract Liability

Contract Liability refers to the company’s obligation to transfer goods to the customer for the consideration received or receivable.

29. Employee Remuneration

(1) Accounting treatment of short-term remuneration

Short-term remuneration refers to the employee compensation other than post-employment benefits and termination benefits, which are required to

— II-457 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

be fully paid within 12 months upon the end of the annual reporting period when the employees provide relevant services. During the accounting period when the employees provide services, the company recognizes the short-term remuneration payable as liabilities and includes them into relevant asset costs and expenses according to benefits from the services provided by employees.

(2) Accounting treatment of post-employment benefits

The post-employment benefits of the company are categorized as defined contribution plans and defined benefit plans.

— II-458 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(3) Accounting treatment of termination benefits

(4) Accounting treatment of other long-term employee benefits

Other long-term employee benefits refer to all the employee compensations other than short-term remuneration, post-employment benefits and termination benefits.

— II-459 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

30. Lease liabilities

At the commencement date of the lease period, the company recognizes the present value of outstanding lease payments as a lease liability, excluding short-term leases and leases of low-value assets. The company adopts the interest rate implicit in the lease as the discount rate to calculate the present value of the lease payments. Where the interest rate implicit in the lease cannot be determined, the incremental borrowing rate of the lessee shall be used as the discount rate. The company calculates the interest expense of the lease liability during each period of the lease term in accordance with the constant periodic rate of interest and recognizes it in profit or loss for the current period, except otherwise stipulated in the cost of related assets. The variable lease payment that is not included in the measurement of lease liabilities is recognized in profit or loss for the current period when it actually occurs, except that it is otherwise stipulated to be included in the cost of relevant assets.

After a lease term commences, when there is a change in the amount of in-substance fixed lease payments, a change in the amounts expected to be payable under a residual value guarantee, a change in future lease payments resulting from a change in an index or a rate used to determine those payments, a change in assessment of an option to purchase the underlying asset, renew or terminate the lease, or change in the actual exercise of an option, the company remeasures the carrying amount of the lease liability by discounting the revised lease payments.

31. Estimated liabilities

(1) Criteria for recognition of estimated liabilities

The company recognises an estimated liability when the obligations associated with the contingency simultaneously meet the following conditions:

The obligation is a present obligation of the company;

Fulfilment of this obligation is likely to result in outflow of economic benefits from the company;

The amount of the obligation can be measured reliably.

(2) Measurement of estimated liabilities

The company’s estimated liabilities are initially measured using the best estimate of the expenditure necessary to meet the relevant present obligations.

— II-460 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

The best estimates are dealt with as follows:

32. Revenue

The company is required to comply with the disclosure requirements for the solid mineral resources industry under the Self-Regulatory Guidelines No. 3 - Industrial Information Disclosure for Listed Companies on the Shenzhen Stock Exchange.

The company’s revenue is mainly derived from the sale of commodities and metal trading.

(1) General principles for revenue recognition

The company recognises revenue at the transaction price allocated to a contractual performance obligation when the customer obtains control of the related goods or services.

A performance obligation is a contract whereby the company conveys a clearly identifiable good or service to a customer.

— II-461 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Obtaining control over the relevant commodity means being able to dominate the use of the commodity and obtain substantially all of the economic benefits therefrom.

(2) Specific method of revenue recognition

In addition to metal trading, the company’s sales of main commodities include: alloy gold, lead concentrate (containing silver) and zinc concentrate. The specific conditions for revenue recognition are that the commodities have been delivered and the control has been transferred, and at the same time, both the purchaser and the seller have confirmed that the weighing and test results are correct, and have no objection to the selling price of the commodities. Metal trading revenue is recognized when the company has contractually delivered bills of lading, weighing slips etc. or transferred warehouse receipts to customers, payment has been received or the right to receive payment has been acquired and it is probable that the related economic benefits will flow in.

— II-462 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

33. Government subsidies

(1) Classification

Government subsidies related to assets are obtained by the Company for the purposes of constructing or forming long-term assets in other ways. Government subsidies related to revenue refer to the government subsidies other than those related to assets.

(2) Recognition of government subsidies

— II-463 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(3) Accounting treatment

— II-464 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

34. Deferred income tax assets / deferred income tax liabilities

(1) Criteria for recognition of deferred income tax assets

(2) Criteria for recognition of deferred income tax liabilities

The company recognizes deferred income tax liabilities on the temporary difference between the taxable but not yet paid taxation in the current and previous periods, excluding:

① temporary difference arising from the initial recognition of goodwill;
② transactions or events arising from no business combination, and neither the accounting profit or the taxable income (or deductible losses) is affected when the transaction or event occurs;

— II-465 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

③ for taxable temporary difference in relation to investment in subsidiaries or associates, the time for reversal of the difference can be controlled and the difference is probably not reversed in a foreseeable future.
(3) Deferred income tax assets and deferred income tax liabilities are presented net of offset when the following conditions are met
① The enterprise has the legal right to settle the current income tax assets and current income tax liabilities on a net basis;
② Deferred income tax assets and deferred income tax liabilities are related to income taxes levied by the same tax administration department on the same taxable entity or different taxable entities, however, in the future period when each significant deferred income tax asset and deferred income tax liability are transferred back, the taxable entities involved intend to settle the current income tax assets and current income tax liabilities on a net basis or acquire assets and settle debts simultaneously.

35. Leasing

At inception of a contract, the company assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset or group of identified assets for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset for a period of time, the company assesses whether, throughout the period of use, the customer has both the right to obtain substantially all of the economic benefits from use of the identified asset and the right to direct the use of the identified asset.

— II-466 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

For a contract that contains multiple separate lease components, the company separates the components of the contract and accounts for each separate lease component. The right to use an underlying asset is a separate lease component if both of the following conditions are satisfied:

1) the lessee can benefit from use of the underlying asset either on its own or together with other resources that are readily available to the lessee; and
2) the underlying asset is neither highly dependent on, nor highly interrelated with, the other underlying assets in the contract.

For a contract that contains lease components and non-lease components, the company, as a lessor or a lessee, accounts for each lease component within the contract as a lease separately from non-lease components of the contract.

(1) As lessee
① The accounting treatment of the company as a lessee is shown in Note V.23 and Note V.30.
② Lease modifications

Lease modification is a change in the scope of a lease, or the consideration or term for a lease, that was not part of the original terms and conditions of the lease, for example, adding or terminating the right to use one or more underlying assets, or extending or shortening the contractual lease term.

The company accounts for a lease modification as a separate lease if both of the following conditions are satisfied:

1) the modification increases the scope of the lease by adding the right to use one or more underlying assets; and
2) the consideration for the lease increases by an amount commensurate with the stand-alone price for the increase in scope and any appropriate adjustments to that stand-alone price to reflect the circumstances of the particular contract.

— II-467 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

For a lease modification that is not accounted for as a separate lease, at the effective date of the lease modification, the company redetermines the lease term and remeasures the lease liability by discounting the revised lease payments using a revised discount rate. The revised discount rate is determined as the interest rate implicit in the lease for the remainder of the lease term, or the lessee’s incremental borrowing rate at the effective date of the modification, if the interest rate implicit in the lease cannot be readily determined.

For a lease modification that is not accounted for as a separate lease, the company accounts for the remeasurement of the lease liability by:

1) decreasing the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease for lease modifications that decrease the scope of the lease or shorten the lease term. The company recognizes the gain or loss relating to the partial or full termination of the lease in profit or loss for the current period; or
2) making a corresponding adjustment to the carrying amount of the right-of-use asset for all other lease modifications.
③ Short-term leases and leases of low-value assets

The company applies the short-term lease recognition exemption to its short-term leases (that is those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the recognition exemption for leases of low-value assets to leases of assets that are considered to be of low value. Lease payments on short-term leases and leases of low-value assets are recognized as an expense on a straight-line basis over the lease term, with contingent rentals included in profit or loss when actually incurred.

— II-468 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(2) As lessor

A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying asset, except that a lease is classified as an operating lease at the inception date.

As lessor under an operating lease, rent income under an operating lease is recognized on a straight-line basis over the lease term, through profit or loss for the current period, with contingent rentals included in profit or loss when actually incurred.

36. Other important accounting policies and accounting estimates

(1) Hedge accounting

A. The hedge accounting method is applied for hedging instruments that meet the following conditions at the same time
① The hedging relationship consists only of qualified hedging instruments and hedged items.
② At the beginning of hedging, the company officially designated the hedging instrument and the hedged item, and prepared written documents on the hedging relationship, the risk management strategy and objectives of the hedging.
③ The hedging relationship meets the requirements for hedging effectiveness.

— II-469 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

If the hedging meets the following conditions at the same time, the hedging relationship is deemed to meet the requirements of hedging effectiveness:

  - 1) There is an economic relationship between the hedged item and the hedging instrument. The economic relationship makes changes in the opposite direction in the value of the hedging instrument and the hedged item due to their exposure to the same hedged risk.

  - 2) The effect of credit risk does not dominate the value changes arising from the economic relationship between the hedged item and the hedging instrument.

  - 3) The hedge ratio of the hedging relationship is equal to the ratio of the quantity of hedged items actually hedged by the company to the actual quantity of hedging instruments used to hedge them, which however does not reflect an imbalance in the relative weights of hedging items and hedging instruments, which will lead to ineffective hedging and may produce accounting results that are inconsistent with the objectives of hedge accounting.

B. Fair value hedge accounting
① Gain or loss from hedging instruments is included in profit and loss for the period. If the hedging instrument is used to hedge a non-trading equity instrument investment (or its component) that is measured at fair value through other comprehensive income, the gain or loss arising from the hedging instrument is included in other comprehensive income.

— II-470 —

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

② The gain or loss of the hedged item due to the hedged risk exposure is included in profit or loss for the period, and the carrying amount of the recognized hedged item that is not measured at fair value is adjusted at the same time. If the hedged item is a financial asset (or its component) measured at fair value through other comprehensive income, the gain or loss arising from the hedged risk exposure is included in profit or loss for the period, and its carrying amount has been measured at fair value and no adjustment is required. If the hedged item is a non-trading equity instrument investment (or its component) that the company chooses to measure at fair value through other comprehensive income, the gain or loss arising from the hedged risk exposure is included in other comprehensive income, and its carrying amount has been measured at fair value and no adjustment is required.

③ If the hedged item is a financial instrument (or its component) measured at amortized cost, the adjustment to the carrying amount of the hedged item shall be amortized according to the actual interest rate recalculated on the date when the amortization starts, and included in profit or loss for the period. The amortization can start from the adjustment date, but not later than the time point of termination of the adjustment to hedging gain and loss on the hedged item. If the hedged item is a financial asset (or its component) measured at fair value through other comprehensive income, the accumulated hedging gain or loss recognized shall be amortized in the same way and included in profit or loss for the period, but the carrying amount of the financial asset (or its component) will not be adjusted.
C. Cash flow hedge accounting
① The part of gain or loss generated by the hedging instrument that is effective in hedging is included in other comprehensive income as the cash flow hedging reserve.

— II-471 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

The amount of cash flow hedging reserve shall be determined at the lower of absolute amounts of the following:

1) The cumulative gain or loss of the hedging instrument since the beginning of hedging;
2) The cumulative changes in the present value of estimated future cash flow of the hedged item since the beginning of hedging. The amount of cash flow hedge reserve included in other comprehensive income in each period is the change in cash flow hedging reserve for the period.
② The part of the gain or loss generated by the hedging instrument that is ineffective in hedging (that is, other gain or loss after deducting other comprehensive income) shall be included in profit or loss for the period.
③ The amount of cash flow hedging reserve shall be accounted for in accordance with the following requirements:
1) The hedged item is an expected transaction, and the expected transaction causes the company to subsequently recognize a non-financial asset or non-financial liability, or the expected transaction of a non-financial asset or a non-financial liability forms a firm commitment applicable to fair value hedge accounting, the cash flow hedging reserve amount originally recognized in other comprehensive income shall be transferred out and included in the initially recognized amount of the asset or liability.

— II-472 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

2) For cash flow hedges that are not involved in the previous requirement, during the same period when the hedged expected cash flow affects profit and loss, the cash flow hedging reserve amount originally recognized in other comprehensive income is transferred out and included in profit and loss for the period.
3) If the cash flow hedging reserve amount recognized in other comprehensive income is a loss, and all or part of the loss is not expected to be covered in future accounting periods, in such case, the part that is not expected to be covered will be transferred out from other comprehensive income and included in profit and loss for the period.

D. Termination of hedge accounting

In case of any of the following circumstances, the use of hedge accounting shall be terminated:

① The hedging relationship no longer satisfies the risk management objectives due to changes in risk management objectives.
② The hedging instrument has expired, been sold, terminated or exercised.
③ The economic relationship between the hedged item and the hedging instrument no longer exists, or the effect of credit risk begins to dominate the value changes arising from the economic relationship between the hedged item and the hedging instrument.
④ The hedging relationship no longer satisfies other conditions for applying the hedging accounting method stipulated in this standard. When the rebalancing of the hedging relationship is applicable, the enterprise should first consider the rebalancing of hedging relationship, and then evaluate whether the hedging relationship meets the conditions for applying the hedge accounting method stipulated in this standard.

— II-473 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

E. Fair value options for credit risk exposure

① The subject of credit risk exposure of the financial instrument (such as the borrower or holder of the loan commitment) is consistent with that involved in credit derivative instrument;
② The repayment level of the financial instrument is consistent with that of the instruments to be delivered according to the terms of credit derivative instrument.

(2) Safety production fee

The company’s provision standard for special reserve is: RMB5/ton for open-pit mines, RMB10 and RMB15/ton for underground mines, and RMB1.0-5.0/ton for tailings safety production fees.

— II-474 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(3) Treasury shares

— II-475 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

37. Changes in important accounting policies and accounting estimates

(1) Changes in accounting policies

Contents and reasons for changes in accounting policies

Approval procedure

Remark

The company implemented the provisions of “accounting treatment of external sales of products or by-products generated before fixed assets are ready for intended use or during research and development process” and the “judgment on loss-making contracts” under the Accounting Standards for Business Enterprises Interpretation No. 15 issued by the Ministry of Finance in 2021, with effect from 1 January 2022.

N/A ①

The Company implemented the provisions of “accounting treatment of the income tax effects of dividends related to financial instruments classified as equity instruments by the issuer” and “accounting treatment of the modification of cash-settled share-based payment to equity-settled share-based payment” under the Accounting Standards for Business Enterprises Interpretation No. 16 (Cai Kuai [2022] No. 31, hereinafter referred to as “Interpretation No. 16”) issued by the Ministry of Finance in 2022, with effect from 13 December 2022. In Interpretation No. 16, the provision of “accounting treatment of the exclusion from initial recognition of deferred income taxes associated with assets and liabilities arising from a single transaction” came into effect from 1 January 2023.

N/A ①

① Impact of the implementation of the Accounting Standards for Business Enterprises Interpretation No. 15 and 16 on the company

The changes in accounting policy are reasonable amendments made by the company in accordance with the provisions and requirements of Accounting Standards 15 and 16 issued by the Ministry of Finance. The changed accounting policy can reflect the financial position and operating results of the company in a more objective and fair manner, and follows the provisions of relevant laws and regulations and the actual situation of the company. There will be no material impact on the company’s financial position, results of operations and cash flows, nor will there be any situation that will harm the interests of the company and its shareholders.

(2) Changes in accounting estimates

There were no changes in important accounting estimates during the reporting period

— II-476 —

APPENDIX II FINANCIAL INFORMATION OF THE TARGET COMPANY

VI. TAXATION

1. Main Types of Taxes and Corresponding Rates

Tax type	Tax basis	Tax rate
VAT	Product sales revenue/	13%, 6%, 3%
	taxable service revenue
Urban maintenance and construction tax	VAT	1%-7%
Corporate income tax	Taxable income	15%, 17%, 25%
Education surcharge	VAT	3%
Local education fee surcharge	VAT	2%, 1%
Resource tax	Sales revenue	5%, 4.5%, 4% for gold;
		5%, 3%, 2.5% for
		silver;
		6% for lead, zinc

Please make a disclosure if there are taxpayers with different corporate income tax rates

Name of taxpayer

Name of taxpayer Income tax rate Yulong Mining, Qinghai Dachaidan 15% Shenghong Singapore 17% Other entities 25%

— II-477 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

2. Tax Incentives

(1) Corporate income tax

(2) VAT

(3) Resource tax

— II-478 —

APPENDIX II FINANCIAL INFORMATION OF THE TARGET COMPANY

VII. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS

1. Monetary Funds

Unit: RMB

Item Cash on hand Bank deposits Other monetary funds Total Including: Total amount deposited overseas Total amount of funds restricted for use due to mortgage, pledge or freezing	Closing balance 626,569.58 1,206,130,067.92 667,226,621.18 1,873,983,258.68 70,776,164.72 1,084,140,704.49	Opening balance 424,890.78 604,795,496.29 850,480,111.94 1,455,700,499.01 126,811,871.06
		707,989,149.66

The breakdown of restricted monetary funds of RMB1,084,140,704.49 is as follows:

Item Environmental governance deposit Letter of credit deposit Security deposit for futures Security deposit for bank acceptance ETC frozen funds Total 2. *Financial Assets Held for Trading*	Closing balance 53,746,340.73 29,399,042.60 5,237,475.00 995,755,846.16 2,000.00 1,084,140,704.49	Opening balance 39,680,429.21 7,969,625.00 660,336,595.45 2,500.00
		707,989,149.66

Item Financial assets measured at fair value through profit or loss Of which: Wealth management products Total	Closing balance 2,000,435,680.65 2,000,435,680.65 2,000,435,680.65	Unit: RMB Opening balance 2,074,042,141.82 2,074,042,141.82
		2,074,042,141.82

— II-479 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

3. Derivative Financial Assets

Unit: RMB

Item Hedging instrument Derivative financial assets with no designated hedging relationship Total	Closing balance 122,674,377.20 177,560,297.23 300,234,674.43	Opening balance 95,601,151.10 16,750,611.00
		112,351,762.10

4. Accounts Receivable

(1) Disclosure of accounts receivable by aging

Unit: RMB

Aging Within 1 year 1–2 years 2–3 years 3–4 years 4–5 years Over 5 years Subtotal Less: Provision for bad debts Total	Closing balance 41,906,643.42 41,906,643.42 2,095,332.17 39,811,311.25	Opening balance 42,081,575.52 42,081,575.52 2,104,078.79
		39,977,496.73

— II-480 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(2) Disclosure by category of provision for bad debts

Unit: RMB

Category Accounts receivable with provision for bad debts on an individual basis Accounts receivable with provision for bad debts on a group basis Including: Grouped by aging Total	Closing balance Book balance Bad debt provision Amount Proportion Amount Proportion (%) (%) 41,906,643.42 100.00 2,095,332.17 5.00 41,906,643.42 100.00 2,095,332.17 5.00 41,906,643.42 100.00 2,095,332.17 5.00	Carrying amount 39,811,311.25 39,811,311.25 39,811,311.25	Opening balance Book balance Bad debt provision Amount Proportion Amount Proportion (%) (%) 42,081,575.52 100.00 2,104,078.79 5.00 42,081,575.52 100.00 2,104,078.79 5.00 42,081,575.52 100.00 2,104,078.79 5.00	Carrying amount 39,977,496.73 39,977,496.73
				39,977,496.73

(3) Accounts receivable with provision for ECL by combination

					Unit: RMB
				Closing balance
				Bad debt
Name			Book balance	provision	Proportion
					(%)
Within	1	year	41,906,643.42	2,095,332.17	5.00

□ Applicable ✔ N/A

— II-481 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(4) Provision for, recovery or reversal of bad debts in the current period

Provision for bad debts in the current period:

Unit: RMB

Amount of change in the current period

Category Accounts receivable with provision for ECL on an individual basis Accounts receivable with provision for ECL on a group basis Including: Grouped by aging Total	Opening balance 2,104,078.79 2,104,078.79 2,104,078.79	Provision 2,095,332.17 2,095,332.17 2,095,332.17	Recovery or reversal Write off Others 2,104,078.79 2,104,078.79 2,104,078.79	Closing balance 2,095,332.17 2,095,332.17
				2,095,332.17

(5) Top five accounts receivable according to the closing balance collected by the debtor

Unit: RMB

Company name Henan Zhongyuan Gold Smelter Co., Ltd. (河南中原黃金冶煉廠有限責任公司) Shandong Hengbang Smelting Co., Ltd. (山東恒邦冶煉股份有限公司) Henan Jinli Gold and Lead Group Co., Ltd. (河南金利金鉛集團有限公司) Shanjin Ruipeng (Tianjin) Trading Co., Ltd. (山金瑞鵬（天津）貿易有限公司) Total	Closing balance of accounts receivable 35,757,440.24 5,900,305.82 232,180.61 16,716.75 41,906,643.42	Proportion to the total closing balance of accounts receivable (%) 85.33 14.08 0.55 0.04 100.00	Closing balance of provision for bad debts 1,787,872.01 295,015.29 11,609.03 835.84
			2,095,332.17

— II-482 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

5. Advance Payment

(1) Breakdown of prepayments by aging

Unit: RMB

Aging Within 1 year 1 to 2 years 2 to 3 years Over 3 years Total	Closing balance Amount Proportion (%) 16,180,635.28 73.23 5,603,043.23 25.36 98,519.99 0.45 212,158.36 0.96 22,094,356.86	Opening balance Amount Proportion (%) 42,290,340.47 98.95 263,235.33 0.62 64,377.67 0.15 122,431.70 0.28 42,740,385.17	Opening balance Amount Proportion (%) 42,290,340.47 98.95 263,235.33 0.62 64,377.67 0.15 122,431.70 0.28 42,740,385.17

(2) Top five prepayments according to the closing balance collected by the debtor

Company name Wenzhou Tongye Construction Engineering Co., Ltd. (溫州通業建設工程有限公司) Jinchengxin Mining Management Co., Ltd. (金誠信礦業管理股份有限公司) Thyssenkrupp Industrial Solutions (China) Co., Ltd. (蒂森克虜伯工程技術（中國）有限公司) State Grid Qinghai Provincial Electric Power Company Haixi Power Supply Company Customer Service Center (國網青海省電力公司海西供電公司客戶服務中心) Chifeng Baoxing Bearing Materials Co., Ltd. (赤峰保興軸承物資有限公司) Total	Closing balance 5,523,004.24 2,301,728.69 1,500,000.00 1,000,000.00 807,273.90 11,132,006.83	Proportion of total prepayments Time of prepayments Reasons for no settlement (%) 25.00 2021 Cooperation project not completed 10.42 2022 Cooperation project not completed 6.79 2022 Purchase order not completed 4.53 2022 Purchase order not completed 3.65 2022 Purchase order not completed 50.39

— II-483 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

6. Other Receivables

Unit: RMB

Item Interest receivables Other receivables Total (1) Interest receivables	Closing balance 62,238,875.25 62,238,875.25	Opening balance 336,372.46 47,303,563.07
		47,639,935.53

1) Classification of interest receivable

Unit: RMB

Item Closing balance Opening balance Interest receivable on forward locked remitting to statement date 336,372.46 Total 336,372.46

Total

(2) Other receivables

1) Disclosure by aging

Unit: RMB

Aging Within 1 year 1–2 years 2–3 years 3–4 years 4–5 years Over 5 years Subtotal Less: Provision for bad debts Total	Closing balance 127,761,241.50 283,880.72 252,961.97 20,463.29 50,241.70 1,289,535.53 129,658,324.71 67,419,449.46 62,238,875.25	Opening balance 32,618,038.49 15,505,574.91 30,463.29 97,974.66 1,717,048.52 212,029.14 50,181,129.01 2,877,565.94
		47,303,563.07

— II-484 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

2) Classification of other receivables by the nature of payment

Unit: RMB

Nature of payment Current account Reserve fund Deposit and security deposit Others Total	Closing book balance 84,664,872.89 156,167.99 44,805,230.28 32,053.55 129,658,324.71	Opening book balance 44,296,754.78 272,771.56 5,251,222.68 360,379.99
		50,181,129.01

3) Disclosure by three stages of financial asset impairment

Closing balance Opening balance Item Book balance Bad debt provision Carrying amount Book balance Bad debt provision Stage I 66,149,915.89 3,911,040.64 62,238,875.25 50,181,129.01 2,877,565.94 Stage II Stage III 63,508,408.82 63,508,408.82 0.00 Total 129,658,324.71 67,419,449.46 62,238,875.25 50,181,129.01 2,877,565.94 4) Disclosure by category of provision for bad debts	Unit: RMB Carrying amount 47,303,563.07
	47,303,563.07

Unit: RMB

Closing balance Book balance Bad debt provision Category Amount Proportion Amount Proportion (%) (%) Other receivables with provision for ECL on an individual basis 63,508,408.82 48.98 63,508,408.82 100.00 Other receivables with provision for ECL on a group basis 66,149,915.89 51.02 3,911,040.64 5.91 Including: Grouped by aging 66,149,915.89 51.02 3,911,040.64 5.91 Total 129,658,324.71 100.00 67,419,449.46 52.00	Carrying amount 0.00 62,238,875.25 62,238,875.25 62,238,875.25	Opening balance Book balance Bad debt provision Amount Proportion Amount Proportion (%) (%) 50,181,129.01 100.00 2,877,565.94 5.73 50,181,129.01 100.00 2,877,565.94 5.73 50,181,129.01 100.00 2,877,565.94 5.73	Carrying amount 47,303,563.07 47,303,563.07
			47,303,563.07

— II-485 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

5) Other receivables with provision for ECL on an individual basis

Unit: RMB

			Closing	balance
		Bad debts
Company name	Book balance	proportion	Proportion		Reasons
				(%)
Nanchu Warehouse
Management Group Co., Ltd.
Shanghai Branch (南儲倉儲
管理集團有限公司上海
分公司)	63,508,408.82	63,508,408.82		100.00	Expected unrecoverable

6) Other receivables with provision for ECL on a group basis

Unit: RMB

Aging Within 1 year (inclusive) 1–2 years 2–3 years 3–4 years 4–5 years Over 5 years Total	Closing balance Book balance Bad debt provision 64,252,832.68 3,212,641.63 283,880.72 14,194.04 252,961.97 25,296.20 20,463.29 4,092.66 50,241.70 10,048.34 1,289,535.53 644,767.77 66,149,915.89 3,911,040.64	Proportion (%) 5.00 5.00 10.00 20.00 20.00 50.00

— II-486 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

7) Provision for bad debts of other receivables

Unit: RMB

Bad debt provision Opening balance Opening balance in the current period Provision made for the period Reversed in the period Written off in the period Closing balance	Stage I ECL over the next 12 months 2,877,565.94 – 1,033,474.70 3,911,040.64	Stage II Stage III Total Lifetime ECL (non-credit impaired Lifetime ECL (credit impaired) 2,877,565.94 – – – 63,508,408.82 64,541,883.52 63,508,408.82 67,419,449.46

8) Top five other receivables according to the closing balance collected by the debtor

Unit: RMB

Company name Nature of payment Nanchu Warehouse Management Group Co., Ltd. Shanghai Branch Current account The First Geological Survey Institute of Qinghai Province (青海省第一地質勘查院) Current account Dachaidan Administrative Committee State-owned Assets Investment Operation Co., Ltd. (大柴旦行政委員會國有資產投資運營有限公司) Current account Zhejiang Nanhua Capital Management Co., Ltd. (浙江南華資本管理有限公司) Security deposit Luzheng Capital Management Co., Ltd. (魯證資本管理有限公司) Security deposit Total	Closing balance Aging 63,508,408.82 Within 1 year 10,651,682.05 Within 1 year 10,504,782.03 Within 1 year 5,986,641.20 Within 1 year 5,335,768.50 Within 1 year 95,987,282.60	Proportion to the total closing balance of other receivables (%) 48.98 8.22 8.10 4.62 4.12 74.04	Closing balance of provision for bad debts 63,508,408.82 532,584.10 525,239.10 299,332.06 266,788.43
			65,132,352.51

— II-487 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

7. Inventory

Does the company need to comply with the disclosure requirements of the real estate industry

(1) Classification of inventory

Unit: RMB

Item Raw materials Work in process Inventory goods Total	Book balance 183,551,307.59 740,338,844.58 435,122,238.04 1,359,012,390.21	Closing balance Provision for inventory decline	Provision for inventory decline 183,551,307.59 740,338,844.58 435,122,238.04 1,359,012,390.21	Carrying amount 159,811,562.85 433,327,966.03 435,191,469.33 1,028,330,998.21	Opening balance Book balance	Carrying amount 159,811,562.85 433,327,966.03 435,191,469.33
						1,028,330,998.21

8. Other Current Assets

Item VAT credit Advanced income tax Definite commitment to purchase goods Others Total	Closing balance 15,087,106.93 2,830,332.00 7,191,902.51 2,320.88 25,111,662.32	Unit: RMB Opening balance 34,558,798.54 2,239,746.51 41,039.46
		36,839,584.51

— II-488 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

9. Investment in Other Equity Instruments

Unit: RMB

Item Qinghai Kunlun Gold Co., Ltd. (青海昆侖黃金有限公司) Baishan Rongsheng Mining Co., Ltd. (白山市融盛礦業有限責任公司) Chifeng Herizeng Mining Development Co., Ltd. (赤峰市和日增礦業開發有限公司) Jiaxing Xiyao Equity Investment Partnership (嘉興希耀股權投資合夥企業) Total	Closing balance 12,000,000.00 500,000.00 1,803,885.24 14,303,885.24	Opening balance 12,000,000.00 500,000.00 1,803,885.24 30,000,000.00
		44,303,885.24

10. Fixed Assets

Unit: RMB Item Closing balance Opening balance Fixed assets 2,906,294,177.88 2,808,584,710.82 Total 2,906,294,177.88 2,808,584,710.82

— II-489 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(1) Fixed assets

Unit: RMB

			Shaft		Office
	Houses and		engineering	Means of	equipment and
Item	buildings	Machinery	assets	transport	others	Total
I. Original carrying amount:
1. Opening balance	2,069,294,224.17	1,527,261,993.13	1,993,365,618.07	73,261,174.24	40,319,874.35	5,703,502,883.96
2. Increased amount in the current period	136,326,043.42	172,632,460.47	409,625,091.34	7,121,835.19	3,451,231.14	729,156,661.56
(1) Purchase	35,424,257.30	34,367,371.57		7,121,835.19	2,266,861.38	79,180,325.44
(2) Transfer of construction in progress	100,901,786.12	138,265,088.90	289,875,338.19		1,184,369.76	530,226,582.97
(3) Reclassification			119,749,753.15			119,749,753.15
3. Decreased amount in the current period	119,753,742.40	9,818,761.82		8,354,366.42	2,794,504.70	140,721,375.34
(1) Disposal or retirement	3,989.25	9,818,761.82		8,354,366.42	2,794,504.70	20,971,622.19
(2) Reclassification	119,749,753.15					119,749,753.15
4. Closing balance	2,085,866,525.19	1,690,075,691.78	2,402,990,709.41	72,028,643.01	40,976,600.79	6,291,938,170.18
II. Accumulated depreciation
1. Opening balance	961,938,811.80	1,064,879,241.08	776,266,743.60	54,096,363.67	26,245,823.36	2,883,426,983.51
2. Increased amount in the current period	74,296,417.81	80,893,671.22	364,654,473.90	8,220,420.75	4,470,256.20	532,535,239.88
(1) Accrual	74,296,417.81	80,893,671.22	342,458,304.83	8,220,420.75	4,470,256.20	510,339,070.81
(2) Reclassification			22,196,169.07			22,196,169.07
3. Decreased amount in the current period	22,197,311.45	8,900,068.63		7,936,601.83	2,775,438.81	41,809,420.72
(1) Disposal or retirement	1,142.38	8,900,068.63		7,936,601.83	2,775,438.81	19,613,251.65
(2) Reclassification	22,196,169.07					22,196,169.07
4. Closing balance	1,014,037,918.16	1,136,872,843.67	1,140,921,217.50	54,380,182.59	27,940,640.75	3,374,152,802.67
III. Provision for impairment
1. Opening balance	11,491,189.63					11,491,189.63
2. Increased amount in the current period
(1) Accrual
3. Decreased amount in the current period
(1) Disposal or retirement
4. Closing balance	11,491,189.63					11,491,189.63
IV. Carrying amount
1. Closing carrying amount	1,060,337,417.40	553,202,848.11	1,262,069,491.91	17,648,460.42	13,035,960.04	2,906,294,177.88
2. Opening carrying amount	1,095,864,222.74	462,382,752.05	1,217,098,874.47	19,164,810.57	14,074,050.99	2,808,584,710.82

(2) Fixed assets without title certificate

Unit: RMB

Item

Reasons for not completing Carrying amount the certificate of title

Yulong Mining houses and buildings

Heihe Yintai houses and buildings

160,816,297.53 Title certificate is in the process of application
27,601,545.73 Title certificate is in the process of application

— II-490 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

11. Construction in Progress

Unit: RMB

Item

Construction in progress

Total

Closing balance Opening balance 247,342,850.20 424,659,399.66 247,342,850.20 424,659,399.66

— II-491 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(1) Construction in progress

Unit: RMB

Project Jilin Banmiaozi shaft lane project Jilin Banmiaozi tailings pond expansion project Other projects of Jilin Banmiaozi Qinghai Dachaidan Qinglongtan underground engineering prospecting project Qinghai Dachaidan south shaft project Qinghai Dachaidan Xijinggou underground prospecting project Qinghai Dachaidan Jinlonggou slope exploration engineering Qinghai Dachaidan 323 South open pit stripping project Qinghai Dachaidan Xijinggou open pit prospecting project Heihe Yintai plant selection, reconstruction and expansion project Yulong Mining plant selection, reconstruction and expansion project Yulong Mining Huaaobaote moutain mine section comprehensive mining project Surface diamond drilling in Huasheng Gold Mine Others Total	Closing balance Book balance Provision for impairment 41,797,537.96 17,988,748.29 30,625,627.16 26,492,900.51 13,564,562.23 98,782,837.41 545,000.00 17,545,636.64 247,342,850.20	Carrying amount 41,797,537.96 17,988,748.29 30,625,627.16 26,492,900.51 13,564,562.23 98,782,837.41 545,000.00 17,545,636.64 247,342,850.20	Opening balance Book balance Provision for impairment 47,680,131.22 9,387,042.08 4,174,411.44 41,596,642.28 13,564,562.23 52,858,428.63 91,600,593.18 1,707,473.00 140,484,628.67 1,707,718.66 1,332,550.70 18,565,217.57 424,659,399.66	Carrying amount 47,680,131.22 9,387,042.08 4,174,411.44 41,596,642.28 13,564,562.23 52,858,428.63 91,600,593.18 1,707,473.00 140,484,628.67 1,707,718.66 1,332,550.70 18,565,217.57
				424,659,399.66

— II-492 —

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

				Sources of funds		Self-owned funds		Self-owned funds	Self-owned funds	Self-owned funds	Borrowing, self-owned	funds	Self-owned funds		Self-owned funds		Self-owned funds		Self-owned funds
	Current	interest	capitalization	rate		90,673,761.88		6,074,214.82
Including:	Capitalized	amount of	interest in the	current period		140,484,628.67		1,707,473.00
	Accumulated	amount of	interest	capitalized		245,177,957.86		9,280,000.00				1,670,600.00								1,670,600.00
			Project	progress		100%		100%	69.83%	99.80%		96%	17.44%		70.00%		100%		0.09%
Proportion of	cumulative	project	investment to	budget		94.28%		83.85%	69.09%	74.54%		96.00%	17.44%		70.00%		100.00%		0.09%
				Closing balance		0.00		0.00	41,797,537.96	17,988,748.29		30,625,627.16	26,492,900.51		98,782,837.41		0.00		545,000.00	216,232,651.33
	Other	decreased	amount in the	current period
Amount	transferred to	fixed assets in	the current	period		231,158,390.55		7,781,687.82	41,107,917.77	10,242,086.85		26,623,334.38	1,073,888.37		76,181.98		91,600,593.18			409,664,080.90
		Amount of	Increase in the	current period		90,673,761.88		6,074,214.82	35,225,324.51	18,843,793.06		20,084,313.97	23,134,794.17		46,000,590.76				545,000.00	240,581,793.17
			Opening	balance		140,484,628.67		1,707,473.00	47,680,131.22	9,387,042.08		37,164,647.57	4,431,994.71		52,858,428.63		91,600,593.18			385,314,939.06
				Budget		245,177,957.86		9,280,000.00	309,475,800.00	159,439,000.00		431,994,800.00	158,083,000.00		251,000,000.00		184,210,000.00		578,995,300.00	2,327,655,857.86
				Name of project	Yulong Mining plant selection, reconstruction and	expansion project	Heihe Yintai plant selection, reconstruction and	expansion project expansion project	Jilin Banmiaozi shaft lane project	Jilin Banmiaozi tailings pond expansion project	Qinghai Dachaidan Qinglongtan underground	engineering prospecting project	Qinghai Dachaidan south shaft project	Qinghai Dachaidan Jinlonggou slope exploration	engineering	Qinghai Dachaidan 323 South open pit stripping	project	Qinghai Dachaidan Xijinggou open pit prospecting	project	Total

— II-493 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

12. Right-of-use assets

Unit: RMB

	Houses and
Item	buildings	Land	Total
I. Original carrying amount:
1. Opening balance	16,277,489.10	28,774,298.84	45,051,787.94
2. Increased amount in the
current period	1,547,331.64	10,403,865.63	11,951,197.27
(1) Lease	1,547,331.64	10,403,865.63	11,951,197.27
3. Decreased amount in the
current period
4. Closing balance	17,824,820.74	39,178,164.47	57,002,985.21
II. Accumulated depreciation
1. Opening balance	6,971,289.60	945,534.58	7,916,824.18
2. Increased amount in the
current period	7,104,562.17	6,879,399.20	13,983,961.37
(1) Accrual	7,104,562.17	6,879,399.20	13,983,961.37
3. Decreased amount in the
current period
(1) Disposal
4. Closing balance	14,075,851.77	7,824,933.78	21,900,785.55
III. Provision for impairment
1. Opening balance
2. Increased amount in the
current period
(1) Accrual
3. Decreased amount in the
current period
(1) Disposal
4. Closing balance
IV. Carrying amount
1. Closing carrying amount	3,748,968.97	31,353,230.69	35,102,199.66
2. Opening carrying amount	9,306,199.50	27,828,764.26	37,134,963.76

— II-494 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

13. Intangible Assets

(1) Intangible assets

Unit: RMB

		Geological
	Geological	achievements			Patented
Item	exploration costs	(Mining rights)	Land use rights	Software	technology	Total
I. Original carrying amount
1. Opening balance	904,625,277.33	8,082,726,238.09	511,120,150.98	16,913,945.70	30,000.00	9,515,415,612.10
2. Increased amount in the current
period	104,607,696.05	104,091,630.87	50,309.32	6,394,188.54		215,143,824.78
(1) Purchase	104,607,696.05	104,091,630.87	50,309.32	6,394,188.54	215,143,824.78
3. Decreased amount in the current
period	93,485,540.02			814,853.38		94,300,393.40
(1) Disposal				814,853.38		814,853.38
(2) Transfer of prospecting rights to
mining rights	93,485,540.02					93,485,540.02
4. Closing balance	915,747,433.36	8,186,817,868.96	511,170,460.30	22,493,280.86	30,000.00	9,636,259,043.48
II. Accumulated amortization
1. Opening balance		2,296,579,857.30	77,658,811.32	13,730,913.96	6,250.00	2,387,975,832.58
2. Increased amount in the current
period		648,410,876.00	12,653,333.75	976,073.37	3,000.00	662,043,283.12
(1) Accrual		648,410,876.00	12,653,333.75	976,073.37	3,000.00	662,043,283.12
3. Decreased amount in the current
period				814,853.38		814,853.38
(1) Disposal				814,853.38		814,853.38
4. Closing balance		2,944,990,733.30	90,312,145.07	13,892,133.95	9,250.00	3,049,204,262.32
III. Provision for impairment
1. Opening balance			15,384,784.78			15,384,784.78
2. Increased amount in the current
period
(1) Accrual
3. Decrease d amount in the current
period
(1) Disposal
4. Closing balance			15,384,784.78			15,384,784.78
IV. Carrying amount
1. Closing carrying amount	915,747,433.36	5,241,827,135.66	405,473,530.45	8,601,146.91	20,750.00	6,571,669,996.38
2. Beginning carrying amount	904,625,277.33	5,786,146,380.79	418,076,554.88	3,183,031.74	23,750.00	7,112,054,994.74

— II-495 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(2) Land use rights without title certificates

Unit: RMB

Item

Reasons for not completing Carrying amount the certificate of title

Jilin Banmiaozi tailings pond expansion project

37,820,148.90 Title certificate is in the process of application

14. Goodwill

(1) Original carrying amount of goodwill

Unit: RMB

Name of investee or matters for goodwill to arise Sino Gold Hong Kong Jilin Banmiaozi Qinghai Dachaidan Total	Increase in the current period Decrease in the current period Opening balance Arising from a business combination Disposal 93,902,442.61 130,557,523.84 227,905,733.29 452,365,699.74	Closing balance 93,902,442.61 130,557,523.84 227,905,733.29
		452,365,699.74

— II-496 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(2) Provision for goodwill impairment

Unit: RMB

Information about the asset group or combination of asset groups to which the goodwill is attributable

The company’s goodwill arose when the subsidiary Shanghai Shengwei merged with enterprises not under the common control. The goodwill obtained from the merger has been allocated to the asset group of Sino Gold Hong Kong, asset group combination of Jilin Banmiaozi, and asset group combination of Qinghai Dachaidan for impairment test. The management of the company accesses the possible impairment of goodwill every year. The impairment test of goodwill is performed by the company based on the future business plan of asset groups, historical data and other information to predict the future cash flow to test the recoverable amount of asset groups containing goodwill on the reporting date. After testing, as of 31 December 2022, the balance of provision for goodwill impairment was RMB0.00.

Asset group of Sino Gold Hong Kong: The goodwill of this asset group arose when Shanghai Shengwei purchased Sino Gold Hong Kong, Rock Hong Kong and Heihe Yintai, which is consistent with the asset group determined on the purchase date. On 31 December 2022, the carrying amount of the asset group to which goodwill is attributable is RMB1,541,192,400, and the recoverable amount is recognized at the present value of estimated future cash flow, and no indication of impairment was found in the asset group related to goodwill after testing.

Asset group combination of Jilin Banmiaozi: The goodwill of asset group combination arose from the acquisition of Jilin Banmiaozi by Shanghai Shengwei. Compared with the date of purchase, Xiaoshiren prospecting rights, Lengjiagou prospecting rights and Zhenzhumen prospecting rights in the original asset group combination have been cancelled, and the carrying amount of such prospecting rights is RMB39,000,000 (representing a relatively small proportion of the asset group combination on the original purchase date, about 2.3%), which has less impact on the asset group combination and goodwill testing. On 31 December 2022, the carrying amount of the asset group combination to which goodwill is attributable is RMB1,493,112,000, and the recoverable amount is recognized at the present value of estimated future cash flow and the fair value net the disposal expenses, and no indication of impairment was found in the asset group combination related to goodwill after testing.

Asset group combination of Qinghai Dachaidan: The goodwill of this asset group combination arose when Shanghai Shengwei purchased Qinghai Dachaidan, which is consistent with the asset group combination determined on the purchase date. On 31 December 2022, the carrying amount of the asset group combination to which goodwill is attributable is RMB1,512,149,300, and the recoverable amount is recognized at the present value of estimated future cash flow and the fair value net the disposal expenses, and no indication of impairment was found in the asset group combination related to goodwill after testing.

— II-497 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

15. Long-term Deferred Expenses

Unit: RMB

Item Highway outside the mining area Asset maintenance expenditure Carbon pulp plant design fee Electric facilities supporting fee Others Total	Opening balance 16,448,335.19 5,455,678.76 3,046,855.36 2,628,747.06 2,092,451.46 29,672,067.83	Amount of Increase in the current period 1,701,185.13 363,055.95 2,064,241.08	Amortization amount in the current period 974,052.14 2,581,156.86 338,539.48 352,135.60 832,922.39 5,078,806.47	Other reductions	Closing balance 15,474,283.05 4,575,707.03 2,708,315.88 2,276,611.46 1,622,585.02
					26,657,502.44

16. Deferred Income Tax Assets / Deferred Income Tax Liabilities

(1) Deferred income tax assets not offset

Unit: RMB

Item Provision for assets impairment Unrealized profit in intra-group transactions Deductible losses Depreciation and amortization Expensed exploration expenditures Estimated liabilities Accrued expenses Total	Closing balance Deductible temporary differences Deferred income tax assets 92,409,774.24 21,518,123.13 29,475,023.00 7,368,755.75 201,950,507.04 50,487,626.76 311,926,319.41 72,837,517.58 13,052,763.57 3,263,190.89 18,114,369.68 2,814,986.91 913,624.00 228,406.00 667,842,380.94 158,518,607.02	Opening balance Deductible temporary differences Deferred income tax assets 31,857,619.18 6,191,908.64 30,765,720.40 7,691,430.10 148,488,798.21 37,122,199.55 269,968,395.68 61,862,140.42 13,052,763.57 3,263,190.89 17,066,746.00 2,608,297.03 6,323,487.40 1,580,871.85 517,523,530.44 120,320,038.48	Opening balance Deductible temporary differences Deferred income tax assets 31,857,619.18 6,191,908.64 30,765,720.40 7,691,430.10 148,488,798.21 37,122,199.55 269,968,395.68 61,862,140.42 13,052,763.57 3,263,190.89 17,066,746.00 2,608,297.03 6,323,487.40 1,580,871.85 517,523,530.44 120,320,038.48
			120,320,038.48

— II-498 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(2) Deferred income tax liabilities not offset

Unit: RMB

Item Appreciation of the combined asset valuation of enterprises not under the same control Capitalized exploration expenditure Depreciation and amortization Change in fair value Hedging instruments included in other comprehensive income Total	Closing balance Taxable temporary difference Deferred income tax liabilities 1,076,347,555.00 247,216,395.47 53,121,735.31 7,968,260.30 54,984,316.13 13,746,079.03 12,570,979.61 3,142,744.89 1,197,024,586.05 272,073,479.69	Opening balance Taxable temporary difference Deferred income tax liabilities 1,341,341,379.61 296,719,189.28 75,762,914.80 11,364,437.22 53,505,572.00 13,376,393.01 11,576,662.40 2,894,165.59 511,009.16 127,752.29 1,482,697,537.97 324,481,937.39	Opening balance Taxable temporary difference Deferred income tax liabilities 1,341,341,379.61 296,719,189.28 75,762,914.80 11,364,437.22 53,505,572.00 13,376,393.01 11,576,662.40 2,894,165.59 511,009.16 127,752.29 1,482,697,537.97 324,481,937.39
			324,481,937.39

(3) Deferred income tax assets or liabilities stated on a net basis after offset

				Unit: RMB
		Closing balance		Opening balance
	Deferred income	of deferred	Deferred income	of deferred
	tax assets and	income tax	tax assets and	income tax
	liabilities offset	assets or	liabilities offset	assets or
	at the end of the	liabilities after	at the beginning	liabilities after
Item	period	offset	of the period	offset
Deferred income tax assets	19,930,541.50	138,588,065.52	22,014,871.93	98,305,166.55
Deferred income tax liabilities	19,930,541.50	252,142,938.19	22,014,871.93	302,467,065.46

— II-499 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

17. Other Non-Current Assets

Unit: RMB

Item Advance payment for engineering equipment Advance payment of the transfer fee for prospecting rights Advance payment of the security deposit for prospecting rights Total	Book balance 31,322,246.79 58,901,000.00 1,329,800.00 91,553,046.79	Closing balance Provision for impairment	Carrying amount 31,322,246.79 58,901,000.00 1,329,800.00 91,553,046.79	Opening balance Book balance Provision for impairment 30,321,875.92 56,901,000.00 1,329,800.00 88,552,675.92	Carrying amount 30,321,875.92 56,901,000.00 1,329,800.00
					88,552,675.92

18. Short-term Loans

Unit: RMB Item Closing balance Opening balance Guaranteed loan 719,940,000.00 579,741,200.00 Credit loan 100,000,000.00 100,000,000.00 Gold lease 18,814,000.00 Interest payable not due 905,319.93 2,291,329.88 Total 839,659,319.93 682,032,529.88 19. Derivative Financial Liabilities

Unit: RMB

Item Closing balance Opening balance Foreign exchange forward contract 28,860,996.94 Commodity options contract 4,357,533.73 Total 33,218,530.67

— II-500 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

20. Bills Payable

Unit: RMB

Type Bank acceptance Domestic letter of credit Total	Closing balance 1,226,452,490.61 67,200,000.00 1,293,652,490.61	Opening balance 1,618,374,146.25 100,000,000.00
		1,718,374,146.25

21. Accounts Payable

Unit: RMB

Item Payment for engineering equipment Material payables Service charge payable Exploration fee Accounts payable Others Total	Closing balance 136,383,596.15 43,163,794.75 29,288,851.74 19,579,578.34 7,506,336.82 235,922,157.80	Opening balance 77,612,260.35 46,777,935.53 7,219,748.16 29,157,825.39 20,424.15 2,094,907.10
		162,883,100.68

— II-501 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(1) Important accounts payable aged over one year

Company name

Reasons for non-payment or Closing balance carryover

Chifeng Yiyuan Construction Engineering 8,284,609.33 The contract has not been Co., Ltd. (赤峰益源建築工程有限公司) fulfilled
Chifeng Zhongyicheng Labor Service Co., 3,164,650.31 The contract has not been Ltd. (赤峰眾益誠勞務服務有限公司) fulfilled
Kirk Electromechanical Equipment 1,140,000.00 The contract has not been (Shanghai) Co., Ltd. (柯爾科機電設備 fulfilled
（上海）有限公司)
Jinzhou Mining Machinery (Group) Co., Ltd. 1,044,247.79 The contract has not been (錦州礦山機器（集團）有限公司) fulfilled
The First Geological Survey Institute of 3,648,004.22 The contract has not been Qinghai Province fulfilled (青海省第一地質勘查院)
Qinghai Fulin Trading Co., Ltd. (青海福霖商 2,097,000.00 The contract has not been 貿有限公司) fulfilled
Shandong Bofeng Fan Co., Ltd. (山東博風風 1,550,000.00 The contract has not been 機有限公司) fulfilled

Total

20,928,511.65

22. Advance payment

Unit: RMB Item Closing balance Opening balance Advances on sales 3,165,054.05 144,048.99 Total 3,165,054.05 144,048.99 23. Contract Liabilities

Unit: RMB

Item Advance receipt of merchandise sales Total	Closing balance 17,797,907.12 17,797,907.12	Opening balance 16,016,500.89
		16,016,500.89

— II-502 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

24. Employee Salaries Payable

(1) Breakdown of employee salaries payable

Unit: RMB

Item 1. Short-term remuneration 2. Post-employment benefits - defined contribution plan 3. Dismissal benefits Total	Opening balance 55,937,054.63 382,092.82 56,319,147.45	Increase in the current period 273,054,713.26 26,701,355.78 540,836.57 300,296,905.61	Decrease in the current period 264,959,306.79 26,671,598.49 540,836.57 292,171,741.85	Closing balance 64,032,461.10 411,850.11
				64,444,311.21

(2) Breakdown of short-term remuneration

Unit: RMB

Item 1. Wages, bonuses, allowances and subsidy 2. Employee benefits 3. Social insurance premiums Of which: Medical insurance premiums Work injury insurance premiums Maternity insurance premiums 4. Housing provident fund 5. Trade union funds and employee education funds Total	Opening balance 39,690,685.67 0.00 1,233,761.25 1,126,417.67 89,478.24 17,865.34 643,578.29 14,369,029.42 55,937,054.63	Increase in the current period 234,539,764.92 10,217,408.94 13,148,874.88 11,829,751.13 1,236,812.56 82,311.19 10,599,121.32 4,549,543.20 273,054,713.26	Decrease in the current period 225,905,873.24 10,217,408.94 14,259,812.81 12,928,503.84 1,235,889.84 95,419.13 11,021,062.73 3,555,149.07 264,959,306.79	Closing balance 48,324,577.35 0.00 122,823.32 27,664.96 90,400.96 4,757.40 221,636.88 15,363,423.55
				64,032,461.10

(3) Breakdown of defined contribution plan

Item 1. Basic endowment insurance 2. Unemployment insurance premium Total	Opening balance 370,967.28 11,125.54 382,092.82	Increase in the current period 25,774,719.84 926,635.94 26,701,355.78	Decrease in the current period 25,746,360.77 925,237.72 26,671,598.49	Unit: RMB Closing balance 399,326.35 12,523.76
				411,850.11

— II-503 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

25. Taxes Payable

Unit: RMB

Item VAT Corporate income tax Personal income tax Urban maintenance and construction tax Education surcharge Local education surcharges Resource tax Stamp duty Environmental protection tax Other taxes Total	Closing balance 4,799,692.72 112,724,176.51 1,582,915.04 241,205.55 144,056.68 96,037.80 29,149,759.73 1,733,471.51 118,152.26 2,581,020.84 153,170,488.64	Opening balance 12,893,090.28 138,693,536.45 735,550.36 737,924.59 112,825.32 75,216.88 20,128,571.60 1,020,489.54 150,085.37 1,002,174.69
		175,549,465.08

26. Other Payables

Item Other payables Total	Closing balance 275,141,052.63 275,141,052.63	Unit: RMB Opening balance 215,556,106.87
		215,556,106.87

— II-504 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(1) Other Payables

Unit: RMB

Item Closing balance Current account 27,728,282.77 Security deposit and deposit 238,482,726.89 Payment for project 5,763,143.50 Withholding payment 709,203.38 Service charges Accrued expenses Others 2,457,696.09 Total 275,141,052.63 *27.* *Non-current Liabilities Due within One Year*	Opening balance 32,705,151.57 160,020,142.40 12,977,989.66 831,893.14 611,100.92 1,384,617.40 7,025,211.78
	215,556,106.87

Item Long-term payables due within one year Lease liabilities due within one year Total *28.* *Other Current Liabilities* Item Tax on items to be offset Total	Closing balance 52,381,376.00 4,066,310.55 56,447,686.55 Closing balance 2,313,727.92 2,313,727.92	Unit: RMB Opening balance 52,381,376.00 7,167,685.47
		59,549,061.47

		Unit: RMB Opening balance 2,082,145.12
		2,082,145.12

— II-505 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

29. Long-term Loans

Unit: RMB

Item

Closing balance Opening balance

Guaranteed loans 109,000,000.00 Interest payable not due 143,213.89 Total 109,143,213.89

30. Lease liabilities

Unit: RMB

Item Closing balance Opening balance Lease liabilities 14,206,905.02 17,514,366.48 Less: Lease liabilities due within one year 4,066,310.55 7,167,685.47 Total 10,140,594.47 10,346,681.01

31. Long-term Payables

Unit: RMB Item Closing balance Opening balance Long-term payables 97,859,676.00 150,241,052.00 Total 97,859,676.00 150,241,052.00

(1) Breakdown of long-term payables by the nature of payment

Unit: RMB

Item Mining rights transfer fees Less: Long-term payables due within one year Total	Closing balance 150,241,052.00 52,381,376.00 97,859,676.00	Opening balance 202,622,428.00 52,381,376.00
		150,241,052.00

— II-506 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

32. Estimated Liabilities

Unit: RMB

Closing Opening Item balance balance Causes Disposal fees 42,824,545.30 42,538,554.00 Estimated costs incurred in restoring the ecological environment of mining areas Total 42,824,545.30 42,538,554.00

33. Deferred Income

Unit: RMB

Increase in Decrease in Opening the current the current Closing Item balance period period balance Causes Government subsidies 410,400.00 34,200.00 376,200.00 Financial allocation of tailings environment special funds for pollution control Total 410,400.00 34,200.00 376,200.00

Items involving government subsidies:

Unit: RMB

				Amount	Amount	Amount of
		Amount of		included in	included in	offsetting
		new subsidy		non-operating	other	costs and			Related to
			in the	revenue in	income in	expenses in			assets /
	Opening		current	the current	the current	the current	Other	Closing	related to
Liability item	balance		period	period	period	period	changes	balance	income
Government subsidies for tailings pond									Related to
environmental protection	410,400.00				34,200.00			376,200.00	assets

— II-507 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

34. Share Capital

==> picture [48 x 7] intentionally omitted <==

----- Start of picture text -----

Unit: RMB
----- End of picture text -----

==> picture [456 x 269] intentionally omitted <==

----- Start of picture text -----

Increase or decrease in this change (+, -)
Conversion of
Issuance of capital reserve
Opening balance Closing balance new shares Bonus shares into share capital Others Subtotal
Total number of shares 2,776,722,265.00 2,776,722,265.00
35. Capital Reserve
Unit: RMB
Increase in the Decrease in the
Item Opening balance current period current period Closing balance
Capital premium (share capital premium) 4,431,280,488.30 4,431,280,488.30
Total 4,431,280,488.30 4,431,280,488.30
36. Other Comprehensive Income
----- End of picture text -----

==> picture [48 x 8] intentionally omitted <==

----- Start of picture text -----

Unit: RMB
----- End of picture text -----

Item Other comprehensive income to be reclassified to profit or loss Cash flow hedge reserve Translation differences of foreign currency financial statements Total other comprehensive income	Opening balance -6,369,278.83 370,211.57 –6,739,490.40 –6,369,278.83	Amount for the current period Amount before income tax in the current period Less: Transfer from other comprehensive income in the last period to profit or loss in the current period Less: Transfer from other comprehensive income in the last period to retained earnings in the current period Deduct: Income tax expense 14,476,366.07 511,009.16 -127,752.29 511,009.16 -127,752.29 14,476,366.07 14,476,366.07 511,009.16 -127,752.29	Attributable to the parent company after tax 13,613,407.95 -370,211.57 13,983,619.52 13,613,407.95	Attributable to minority shareholders after tax 479,701.25 -13,045.30 492,746.55 479,701.25	Closing balance 7,244,129.12 7,244,129.12
					7,244,129.12

— II-508 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

37. Special Reserve

Unit: RMB

Item Opening balance Safety production fees 2,558,340.56 Total 2,558,340.56 *38.* *Surplus Reserve* Item Opening balance Statutory surplus reserve 503,405,545.11 Total 503,405,545.11 *39.* *Undistributed Profit*	Increase in the current period 34,211,119.00 34,211,119.00 Increase in the current period 48,425,855.12 48,425,855.12	Decrease in the current period 31,755,508.11 31,755,508.11 Decrease in the current period	Closing balance 5,013,951.45
			5,013,951.45

			Unit: RMB Closing balance 551,831,400.23
			551,831,400.23

		Unit: RMB
	For the current	For the last
Item	period	period
Undistributed profit at the end of the last period before
adjustment	2,758,837,701.09	2,244,198,862.94
Adjusted undistributed profit at the beginning of
the period	2,758,837,701.09	2,244,198,862.94
Add: Net profit attributable to owners of the parent
company in the current period	1,124,456,118.62	1,273,338,698.63
Less: Appropriation of statutory surplus reserve	48,425,855.12	64,519,294.23
Dividends payable on ordinary shares	694,180,566.25	694,180,566.25
Undistributed profit at the end of the period	3,140,687,398.34	2,758,837,701.09

— II-509 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

40. Operating Revenue and Operating Costs

Unit: RMB

Item Main business Other businesses Total	Amount for the current period Revenue Costs 8,373,181,068.98 6,293,654,772.42 8,362,968.93 8,308,386.35 8,381,544,037.91 6,301,963,158.77	Amount for the last period Revenue Costs 9,037,064,242.29 6,769,224,798.67 3,179,612.00 1,776,364.08 9,040,243,854.29 6,771,001,162.75	Amount for the last period Revenue Costs 9,037,064,242.29 6,769,224,798.67 3,179,612.00 1,776,364.08 9,040,243,854.29 6,771,001,162.75
			6,771,001,162.75

Is the lower of the net profit before and after deducting non-recurring profit and loss after auditing negative

□ Yes ✔ No

Income related information:

Unit: RMB

Contract classification Market or customer type Of which: Non-ferrous metal mining and processing Metal commodity trading Others Total	Amount for the current period 3,751,018,340.57 4,622,162,728.41 8,362,968.93 8,381,544,037.91	Amount for the last period 3,787,132,977.43 5,249,931,264.86 3,179,612.00
		9,040,243,854.29

— II-510 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

41. Taxes and Surcharges

Unit: RMB

Item Urban maintenance and construction tax Education surcharge Resource tax Property tax Land holding tax Vehicle usage tax Stamp duty Environmental protection tax Others Total	Amount for the current period 4,449,821.70 4,391,417.40 153,635,801.57 3,520,253.69 3,636,519.17 273,638.52 5,772,211.25 392,016.57 1,864,909.61 177,936,589.48	Amount for the last period 4,956,487.82 4,946,520.37 155,159,454.12 3,101,688.39 2,959,184.69 216,980.23 4,705,190.26 433,571.38 2,155,468.32
		178,634,545.58

42. Selling Expenses

Unit: RMB

Item Employee remuneration Storage fee Travel expenses Lab fees Depreciation Others Total	Amount for the current period 1,549,099.04 1,117,192.71 173,729.04 132,850.00 53,047.33 52,993.45 3,078,911.57	Amount for the last period 1,410,955.96 5,442,955.54 215,021.68 115,498.85 22,595.23 368,439.41
		7,575,466.67

— II-511 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

43. Management Costs

Unit: RMB

Item Employee remuneration Depreciation and amortization Consulting and service fees Business hospitality Rental fees Office expenses Travel expenses Tax Maintenance fees Utility bill Downtime loss Insurance fees Vehicle and miscellaneous expenses Greening costs Heating costs Feasibility study fees Others Total	Amount for the current period 159,189,298.61 36,276,946.44 28,012,384.26 11,923,695.11 7,832,649.95 2,567,747.52 2,795,658.26 3,715,320.26 4,258,217.69 2,295,427.77 23,011,564.82 1,041,863.96 3,914,968.70 2,981,583.23 10,250,379.01 10,756,622.98 310,824,328.57	Amount for the last period 144,328,192.26 31,506,485.42 16,997,967.52 8,944,129.36 7,526,718.61 2,133,029.60 3,067,393.36 1,023,526.22 3,632,869.16 3,254,442.02 1,194,520.24 1,218,195.25 4,393,113.08 2,125,717.50 5,222,484.22 3,638,000.00 24,426,511.48
		264,633,295.30

44. Financial Expenses

Item Interest expense Less: Interest income Exchange gains and losses Bank charges Others Total	Amount for the current period 60,358,985.39 16,331,096.68 -9,988,965.55 2,890,889.73 1,391,749.53 38,321,562.42	Unit: RMB Amount for the last period 70,823,851.02 7,564,849.45 -692,005.56 2,717,180.31 1,968,638.37
		67,252,814.69

— II-512 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

45. Other Gains

Unit: RMB

Other sources of income Government subsidies Refund of withholding fees Others Total *46.* *Investment Income* Item Investment income of wealth management products Investment income from disposal of derivative financial assets Interest income from acquisition of equity Option income Investment income from disposal of other equity instruments Others Total	Amount for the current period 5,918,522.17 4,505,082.44 10,423,604.61 Amount for the current period 36,724,401.18 38,653,660.56 29,448,879.38 2,832,213.17 107,659,154.29	Amount for the last period 4,842,666.91 619,914.88 91,665.01
		5,554,246.80

		Unit: RMB Amount for the last period 60,942,723.35 10,070,401.46 7,021,969.51 14,412,012.62 -1,532,991.95
		90,914,114.99

47. Gains from Change in Fair Value

Source of gains from change in fair value Financial assets held for trading Derivative financial instruments Total	Amount for the current period 11,771,554.30 496,135.73 12,267,690.03	Unit: RMB Amount for the last period 8,833,282.20 11,709,115.44
		20,542,397.64

— II-513 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

48. Credit Impairment Losses

Item Bad debt loss Total *49.* *Gains from disposal of assets*	Amount for the current period -64,533,177.70 -64,533,177.70	Unit: RMB Amount for the last period -1,538,036.32
		-1,538,036.32

Source of gains on disposal of assets Gains or losses on disposal of fixed assets Total	Amount for the current period 569,620.39 569,620.39	Unit: RMB Amount for the last period -1,743,156.41
		-1,743,156.41

50. Non-operating revenue

Unit: RMB

Item Forfeited income Liquidated damages income Gains on surplus Others Total	Amount for the current period 342,482.78 74,400.00 2,577.47 62,543.02 482,003.27	Amount for the last period 795,485.92 588,015.61 1,122.00 2,177,324.67 3,561,948.20	Amount included in the current non-recurring profit and loss 342,482.78 74,400.00 2,577.47 62,543.02
			482,003.27

— II-514 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

51. Non-operating expenses

Unit: RMB

Item External donation Loss on damage and retirement of non-current assets Fines and late fees Liquidated damages and compensation Others Total	Amount for the current period 3,596,853.69 1,553,713.43 152,359.70 418,634.32 1,464,624.49 7,186,185.63	Amount for the last period 936,406.43 18,032,295.28 1,966,554.94 1,013,807.40 1,871,947.91 23,821,011.96	Amount included in the current non-recurring profit and loss 3,596,853.69 1,553,713.43 152,359.70 418,634.32 1,464,624.49
			7,186,185.63

52. Income Tax Expense

(1) Income tax expense table

Unit: RMB

Item Current income tax expense Deferred income tax expense Total	Amount for the current period 455,332,540.06 -90,479,273.95 364,853,266.11	Amount for the last period 476,670,275.93 -53,762,455.40
		422,907,820.53

— II-515 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(2) Adjustment process of accounting profit and income tax expense

Unit: RMB

	Amount for the
Item	current period
Total profit	1,609,102,196.36
Income tax expense calculated at statutory/applicable tax rate	402,275,549.09
Effect of different tax rates applicable to subsidiaries	-90,967,743.48
Effect of adjusting income taxes for the prior period	-519,044.22
Effect of non-deductible costs, expenses and losses	6,267,876.14
Effect of deductible temporary differences or deductible losses of deferred
income tax assets not recognized in the current period	452,397.73
Effect of the restoration of fair value of consolidated subsidiaries	47,344,230.85
Income tax expense	364,853,266.11

53. Cash Flow Statement Items

(1) Other cash received related to operating activities

Unit: RMB

Item Receipt of current account Security deposit received Interest income Government subsidies for daily business activities Refund of individual tax fee Others Total	Amount for the current period 3,619,804.36 13,393,549.00 11,018,190.75 5,884,322.17 4,505,082.44 1,517,014.96 39,937,963.68	Amount for the last period 16,667,025.86 10,567,370.24 7,564,849.45 4,808,466.91 619,914.88 1,854,262.82
		42,081,890.16

— II-516 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(2) Other cash paid related to operating activities

Unit: RMB

Item Amount for the current period Payment of current account 4,837,072.85 Security deposit 14,014,426.66 Business hospitality 11,516,718.84 Consulting and service fees 14,687,882.04 Vehicle and miscellaneous expenses 3,914,968.69 Rental fees Travel expenses 2,953,533.01 Maintenance fees 2,930,186.40 Bank charges 2,890,889.73 Office expenses 2,381,567.53 Warehousing and shipping fees 1,603,670.82 Environmental greening and water and soil conservation costs 7,019,948.16 External donation 3,596,853.69 Insurance fees 1,356,426.32 Fines and late fees 152,359.70 Material consumption 2,992,038.47 Others 7,654,872.21 Total 84,503,415.12 (3) Other cash received related to investment activities	Amount for the last period 6,545,329.33 6,524,470.72 8,943,754.85 18,508,017.29 1,896,586.85 3,269,727.83 4,556,047.04 2,717,180.31 3,044,321.22 7,120,931.27 10,473,926.32 956,219.85 830,227.88 1,964,307.36 653,433.05 16,049,461.04
	94,053,942.21

Item Withdrawal of futures trading margin Withdrawal of deposit for equity acquisition Total	Amount for the current period 3,214,000.00 3,214,000.00	Unit: RMB Amount for the last period 600,000,000.00
		600,000,000.00

— II-517 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(4) Other cash paid related to investment activities

Unit: RMB

Item Amount for the current period Security deposit for futures pledge Total (5) Other cash received related to financing activities Item Amount for the current period Funds received from warehouse receipts, cargo pledges or other credit financing 338,010,089.91 Receipt of bill financing 551,059,358.65 Total 889,069,448.56 (6) Other cash paid related to financing activities Item Amount for the current period Repayment of warehouse receipts, cargo pledges or other credit financing and interest 297,947,914.39 Repayment of bill financing and interest 515,753,540.07 Liquidated damages for short-term loans Purchase of minority interest Rentals 10,575,526.68 Total 824,276,981.14	Amount for the last period 4,810,225.00
	4,810,225.00

	Unit: RMB Amount for the last period 506,782,812.67 443,900,000.00
	950,682,812.67

	Unit: RMB Amount for the last period 486,878,024.86 499,642,227.76 25,591,000.00 10,662,100.00 21,284,607.38
	1,044,057,960.00

— II-518 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

54. Supplementary Information on the Cash Flow Statement

(1) Supplementary information on the cash flow statement

Unit: RMB

	Amount for the	Amount for the
Supplementary information	current period	last period
1. Reconciliation of net profit to cash flows from
operating activities
Net profit	1,244,248,930.25	1,421,709,251.71
Add: Provision for impairment of assets	64,533,177.70	1,538,036.32
Depreciation of fixed assets, depreciation of oil
and gas assets and depreciation of productive
biological assets
Depreciation	510,339,070.81	299,419,568.86
Depreciation of right-of-use assets	13,983,961.37	7,916,824.18
Amortization of intangible assets	662,043,283.12	506,097,156.90
Amortization of long-term deferred expenses	5,078,806.47	4,289,413.75
Losses on disposal of fixed assets, intangible
assets and other long-term assets (gain
represented by “-”)	-569,620.39	1,743,156.41
Losses from retirement of fixed assets (gain
represented by “-”)	1,553,713.43	18,032,295.28
Losses from changes in fair value (gain
represented by “-”)	-12,267,690.03	-20,542,397.64
Financial expenses (gain represented by “-”)	44,746,495.80	70,823,851.02
Investment loss (gain represented by “-”)	-107,659,154.29	-90,914,114.99
Decrease in deferred income tax assets (increase
represented by “-”)	-37,798,874.46	-1,538,420.39
Increase in deferred income tax liabilities
(decrease represented by “-”)	-52,935,904.07	-52,224,035.01
Decrease in inventory (increase represented by
“-”)	-330,681,392.00	-1,348,965.06
Decrease in operating receivable items (increase
represented by “-”)	-64,553,336.36	-26,866,534.10
Increase in operating payable items (decrease
represented by “-”)	60,630,686.90	577,757,300.40
Others	-11,609,800.63	-673,202,743.12
Net cash flows from operating activities	1,989,082,353.62	2,042,689,644.52
2. Significant investment and financing activities that do
not involve cash receipts and payments
Conversion of debt into capital
Convertible corporate bonds due within one year
Finance leasing of fixed assets
3. Net changes in cash and cash equivalents:
Closing balance of cash	789,842,554.19	747,711,349.35
Less: Opening balance of cash	747,711,349.35	445,104,601.52
Add: Closing balance of cash equivalents
Less: Opening balance of cash equivalents
Net increase in cash and cash equivalents	42,131,204.84	302,606,747.83

— II-519 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(2) Composition of cash and cash equivalents

Unit: RMB

Item	Closing balance	Opening balance
1. Cash	789,842,554.19	747,711,349.35
Including: Cash on hand	626,569.58	424,890.78
Bank deposits readily available for payment	655,674,222.76	604,795,496.29
Other monetary funds readily available for
payment	133,541,761.85	142,490,962.28
2. Cash equivalents
Including: Bond investments due within 3 months
3. Closing balance of cash and cash equivalents	789,842,554.19	747,711,349.35

55. Assets with Restricted Ownership or Use Rights

Unit: RMB

Closing carrying Item amount Reasons for restriction Monetary funds 1,084,140,704.49 Environmental governance deposit of RMB53,746,340.73; letter of credit deposit of RMB29,399,042.60; futures deposit of RMB5,237,475.00; deposit for the bank acceptance of RMB995,755,846.16; ETC frozen funds of RMB2,000.00 Inventory 165,043,740.00 Pledge made by Yintai Shenghong and Yongheng Trading for financing purposes Other non-current assets 1,329,800.00 The security deposit for prospecting rights is paid in advance, the balance of which is frozen and supervised by three parties through a tripartite supervision agreement signed by Yintai Shengxin, the 602nd Team of Jilin Provincial Nonferrous Metals Geological Exploration Bureau and its account opening bank. Total 1,250,514,244.49

— II-520 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

56. Monetary Items in Foreign Currency

(1) Monetary items in foreign currency

Unit: RMB

Closing RMB Closing foreign balance after Item currency balance Translation rate translation Monetary funds 470,534,326.30 Of which: US dollar 67,546,069.51 6.9646 470,431,355.73 Singapore dollar 19,866.60 5.1831 102,970.57

(2) Explanation of overseas operating entities, including for important overseas operating entities, the principal place of business overseas, recording currency and basis of choice, and if the recording currency changes, the reasons shall also be disclosed.
✔ Applicable □ N/A

Basis for adopting Name of overseas Registered place Reporting functional currency for subsidiary of business currency bookkeeping Yintai Shenghong Singapore US dollar Sales, purchases, financing Singapore Co., Ltd. and other operating activities are mainly denominated in US dollars

57. Hedging

Disclosure of hedging items and related hedging instruments by hedging type, qualitative and quantitative information on hedged risks:

— II-521 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Unit: RMB

Item Precious metal hedging Other non-ferrous metal hedging Total	Closing balance 84,708,400.77 37,965,976.43 122,674,377.20	Opening balance 78,582,692.60 17,018,458.50
		95,601,151.10

— II-522 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

58. Government Subsidies

(1) Basic information on government subsidies

Unit: RMB

Type Multi-level capital market subsidies Special funds for private economic development Stabilizing job allowance Rewards for enterprises above designated size Special subsidies for scientific achievements Incentives for specialized and new small and medium-sized enterprises from the Finance Bureau Continuous production rewards during the Spring Festival by the Finance Bureau Safety production rewards Government subsidies for tailings pond environmental protection VAT exemption for the resettlement of retired soldiers Subsidies for vocational skills training Free trade zone development support funds Subsidies for additional posts for the unemployed Total	Amount Presentation item 603,000.00 Other income 1,000,000.00 Other income 1,725,306.72 Other income 1,685,300.00 Other income 154,000.00 Other income 120,000.00 Other income 30,000.00 Other income 3,000.00 Other income 34,200.00 Other income 489,750.00 Other income 42,570.00 Other income 28,395.45 Other income 3,000.00 Other income 5,918,522.17	Amount included in profit and loss for the period 603,000.00 1,000,000.00 1,725,306.72 1,685,300.00 154,000.00 120,000.00 30,000.00 3,000.00 34,200.00 489,750.00 42,570.00 28,395.45 3,000.00
		5,918,522.17

(2) Return of government subsidies

□ Applicable ✔ N/A

— II-523 —

APPENDIX II FINANCIAL INFORMATION OF THE TARGET COMPANY

VIII. CHANGES IN THE SCOPE OF CONSOLIDATION

There was no change in the scope of consolidation during the period.

IX. EQUITY IN OTHER ENTITIES

1. Equity in Subsidiaries

(1) Composition of the enterprise group

				Shareholding ratio	Shareholding ratio
	Major place of	Place of				Method of
Name of subsidiary	business	registration	Business nature	Direct	Indirect	obtaining
Yulong Mining	Inner Mongolia	Inner Mongolia	Mining of silver, lead,	76.67%		Business
		Xilingol League	and zinc mines, sales			combination
			of mineral products
Yintai Shenghong	Shanghai	Shanghai	Supply chain	96.60%		New
		Free-Trade	management, etc.			establishment
		Zone
Shenghong Singapore	Singapore	Singapore	supply chain		96.60%	New
			management, etc.			establishment
Yongheng Trading	Ningbo	Jiangbei District,	Trading services		96.60%	New
		Ningbo City,				establishment
		Zhejiang
		Province
Shanghai Shengwei	Shanghai	Shanghai	Controlling company	100.00%		Business
						combination
Jilin Banmiaozi	Baishan City, Jilin	Baishan City, Jilin	Prospecting, mining and		95.00%	Business
	Province	Province	smelting of gold mines,			combination
			sales of mineral
			products
Yintai Shengxin	Baishan City, Jilin	Baishan City, Jilin	Geological prospecting		75.00%	New
	Province	Province				establishment
Sino Gold Hong Kong	Hong Kong	Hong Kong	Controlling company		100.00%	Business
						combination
Rock Hong Kong	Hong Kong	Hong Kong	Controlling company		100.00%	Business
						combination
Heihe Yintai	Xunke County,	Xunke County,	Prospecting, mining and		100.00%	Business
	Heihe City,	Heihe City,	smelting of gold mines,			combination
	Heilongjiang	Heilongjiang	sales of mineral
	Province	Province	products
Qinghai Dachaidan	Haixi Prefecture,	Haixi Prefecture,	Prospecting, mining and		90.00%	Business
	Qinghai	Qinghai	smelting of gold mines,			combination
	Province	Province	sales of mineral
			products
Huasheng Gold Mine	Mangshi, Dehong	Mangshi, Dehong	Prospecting, mining and	60.00%		Acquisition in
	Prefecture,	Prefecture,	smelting of gold mines,			cash
	Yunnan	Yunnan	sales of mineral
			products

— II-524 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(2) Important non-wholly owned subsidiaries

Unit: RMB

			Dividends
		Profit and loss	declared for	Balance of
		attributable to	distribution to	minority
		minority	minority	shareholders’
	Minority	shareholders	shareholders	equity at the
	shareholding	in the current	in the current	end of the
Name of subsidiary	ratio	period	period	period
Yulong Mining	23.33%	59,616,882.06	124,816,570.00	851,296,815.70
Jilin Banmiaozi	5.00%	9,029,828.94	15,000,000.00	61,266,735.30
Qinghai Dachaidan	10.00%	60,283,152.50	86,166,745.16	154,803,295.15
Yintai Shenghong	3.40%	707,921.74		12,399,496.69
Huasheng Gold Mine	40.00%	-9,549,691.52		679,130,329.47

(3) Major financial information of important non-wholly owned subsidiaries

Unit: RMB

			Closing	balance					Opening	balance
		Non-current		Current	Non-current			Non-current		Current	Non-current
Name of subsidiary	Current assets	assets	Total assets	liabilities	liabilities	Total Liabilities	Current assets	assets	Total assets	liabilities	liabilities	Total Liabilities
Yulong Mine Industry	426,175,920.85	3,701,901,319.25	4,128,077,240.10	469,173,573.86	9,999,870.84	479,173,444.70	391,398,834.01	3,752,235,722.90	4,143,634,556.91	203,467,844.31	9,953,363.24	213,421,207.55
Jilin Banmiaozi	186,249,920.76	1,391,922,178.32	1,578,172,099.08	212,979,875.90	215,480,168.29	428,460,044.19	168,362,446.30	1,522,632,539.97	1,690,994,986.27	143,282,089.76	278,648,569.19	421,930,658.95
Qinghai Dachaidan	639,787,478.73	1,316,547,212.30	1,956,334,691.03	285,680,633.96	396,716,780.45	682,397,414.41	403,010,132.85	1,425,308,976.32	1,828,319,109.17	296,468,099.26	199,499,729.47	495,967,828.73
Yintai Shenghong	1,910,502,979.16	18,977,976.72	1,929,480,955.88	1,562,330,137.06	2,867,154.10	1,565,197,291.16	2,365,357,189.37	5,779,516.74	2,371,136,706.11	2,040,182,102.64	1,562,030.75	2,041,744,133.39
Huasheng Gold Mine	23,721,827.52	2,047,254,339.53	2,070,976,167.05	363,823,508.23	9,326,835.15	373,150,343.38	19,378,283.43	2,026,058,004.55	2,045,436,287.98	314,630,239.44	9,105,996.06	323,736,235.50

Unit: RMB

		Amount for the	current period			Amount for	the last period
				Cash flow				Cash flow
			Total	from			Total	from
	Operating		comprehensive	operating	Operating		comprehensive	operating
Name of subsidiary	revenue	Net profit	income	activities	revenue	Net profit	income	activities
Yulong Mining	967,059,673.99	255,608,571.17	255,608,571.17	524,870,286.09	1,042,599,941.58	344,495,541.46	344,495,541.46	538,020,123.82
Jilin Banmiaozi	681,861,866.52	180,647,727.57	180,647,727.57	273,880,454.18	831,644,408.53	261,337,080.53	261,337,080.53	479,932,499.78
Qinghai Dachaidan	817,011,963.44	356,452,731.27	356,452,731.27	460,300,582.88	800,485,728.94	332,355,032.35	332,355,032.35	478,927,865.37
Yintai Shenghong	8,244,583,512.43	20,797,982.80	34,891,092.00	-80,528,998.70	8,747,281,951.12	16,287,360.58	16,149,958.62	-72,306,228.78
Huasheng Gold Mine		-23,874,228.81	-23,874,228.81	-20,626,817.44		-6,633,280.85	-6,633,280.85	-11,637,815.88

— II-525 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

X. RISKS RELATED TO FINANCIAL INSTRUMENTS

The main risks caused by the company’s financial instruments are credit risk, liquidity risk and market risk.

1. Credit risk

As of 31 December 2022, the book balance and expected credit impairment losses of relevant assets are as follows:

Item Financial assets held for trading Derivative financial assets Accounts receivable Other receivables Other current assets Total	Book balance 2,000,435,680.65 300,234,674.43 41,906,643.42 129,658,324.71 25,111,662.32 2,497,346,985.53	Unit: RMB Provision for impairment 2,095,332.17 67,419,449.46
		69,514,781.63

— II-526 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

2. Liquidity risk

Liquidity risk is the risk that the Company will encounter shortage of funds in meeting obligations that are settled by delivering cash or other financial assets.

As of 31 December 2022, the Company’s financial liabilities and off-balance-sheet guarantee items are presented at undiscounted contractual cash flow over the remaining maturity of contract as follows:

Unit: RMB

Item Short-term borrowing Derivative financial liabilities Bills payable Accounts payable Other payables Non-current liabilities due within one year Long term borrowing Lease liabilities Long-term payables Total	Within 1 year 839,659,319.93 33,218,530.67 1,293,652,490.61 223,904,970.11 268,849,943.61 56,447,686.55 2,715,732,941.48	Closing balance 1-3 years Over 3 years 9,629,890.65 2,387,297.04 3,991,109.02 2,300,000.00 109,143,213.89 1,092,223.82 9,048,370.65 97,859,676.00 221,716,113.38 13,735,667.69	Total 839,659,319.93 33,218,530.67 1,293,652,490.61 235,922,157.80 275,141,052.63 56,447,686.55 109,143,213.89 10,140,594.47 97,859,676.00
			2,951,184,722.55

3. Market risk

(1) Exchange rate risk

— II-527 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

As of 31 December 2022, the amount of foreign currency financial assets and foreign currency financial liabilities held by the company converted into RMB is presented as follows:

Unit: RMB

Closing balance Singapore dollar Dollar-denominated -denominated Item item item Total Foreign currency financial assets: Monetary funds 470,431,355.73 102,970.57 470,534,326.30

Item

(2) Interest rate risk

(3) Other price risks

— II-528 —

APPENDIX II FINANCIAL INFORMATION OF THE TARGET COMPANY

XI. DISCLOSURE OF FAIR VALUE

1. Financial Instruments Measured at Fair Value

The company presented the carrying amount of financial instruments measured at fair value on 30 June 2022 according to three levels of fair value. When the fair value is classified into three levels as a whole, it is based on the lowest level among the three levels to which each important input used in fair value measurement belongs. The three levels are defined as follows:

Level 1: They are unadjusted quoted prices in active markets for identical assets or liabilities available at the date of measurement;

Level 2: They are direct or indirect observable inputs for the relevant asset or liability other than Level 1 inputs;

Level 3: They are unobservable inputs for the relevant asset or liability.

2. Fair Value Measurement at the End of the Period

(1) Continuous fair value measurement

Unit: RMB

Item Financial assets held for trading Derivative financial assets Investment in other equity instruments Derivative financial liabilities Total	Level 1 300,234,674.43 33,218,530.67 333,453,205.10	Fair value at the end of the period Level 2 Level 3 2,000,435,680.65 14,303,885.24 2,000,435,680.65 14,303,885.24	Total 2,000,435,680.65 300,234,674.43 14,303,885.24 33,218,530.67
			2,348,192,770.99

— II-529 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

XII. RELATED PARTIES AND RELATED PARTY TRANSACTIONS

1. The Parent Company of the Enterprise

				Shareholding	Proportion of
				ratio of the	voting rights of
				parent	the parent
Name of the parent			Registered	company in the	company in the
company	Place of registration	Business nature	capital	enterprise	enterprise
China Yintai Holdings Co.,	Unit 4701, 47th Floor,	Limited liability	RMB1,000,000,000	14.44%	14.44%
Ltd.	Building 3, Yard 2,	company
	Jianguomenwai Street,
	Chaoyang District,
	Beijing

Explanation of the parent company of the enterprise

(1) The parent company of the company is China Yintai Holdings Co., Ltd., the scope of whose main business is asset custody, reorganization and operation; investment, development and operation of agriculture, forestry, animal husbandry and fishery; investment, development and operation of high-tech industries; research and development and sales of sanitary products and labor insurance products; investment and operation of commercial department store retailing.
(2) Shen Guojun holds 100% equity of Beijing Guojun Investment Co., Ltd. (北京國俊投資有限公司), which in turn holds 92.5% equity of China Yintai. As of the balance sheet date, Shen Guojun directly holds 6.49 % equity of Yintai Gold, and China Yintai holds 14.44 % equity of Yintai Gold. In view of the above, Shen Guojun and China Yintai jointly hold 20.93 % equity of Yintai Gold.

The ultimate controlling party of the enterprise is Shen Guojun.

2. Subsidiaries of the enterprise

For the details of subsidiaries of the enterprise, please refer to Note IX. Equity in Other Entities.

— II-530 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

3. Other related party

Name of other related party

Relationship between other related parties and the company

Beijing Yintai Real Estate Co., Ltd.

Same ultimate controller

Beijing Yintai Real Estate Co., Ltd. Property Management Branch

Beijing Yintai Savills Property Management Co., Ltd. Beijing First Branch

4. Related transactions

(1) Related party transactions of purchase and sale of goods, provision and acceptance of services

Purchase of goods and receipt of services

Unit: RMB

Related party

Beijing Yintai Real Estate Co., Ltd., Beijing Yintai Real Estate Co., Ltd. Property Management Branch, Beijing Yintai Savills Property Management Co., Ltd. Beijing First Branch

Related
transaction	Amount for the	Amount for the
content	current period	last period
Property services	621,408.97	591,301.85

(2) Related leases

The company as lessee:

Unit: RMB

				Interest	expenses on
		Lease	fees paid	lease liabilities assumed		Increase in right-of-use assets
	Type of leased	Amount for the	Amount for the	Amount for the	Amount for the	Amount for the	Amount for the
Name of lessor	assets	current	last period	current	last period	current	last period
Beijing Yintai Real Estate	Office building	6,222,837.60	6,222,837.60	144,271.35	368,411.21	0.00	6,650,626.11
Co., Ltd.

— II-531 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(3) Remuneration of key management personnel

Unit: RMB0’000

Amount for the Amount for the Item current period last period Remuneration of key management personnel 1,834.24 1,767.29

5. Receivables and Payables of Related Parties

(1) Receivable items

Unit: RMB

			Closing	balance		Opening	balance
				Provision			Provision
			Book	for bad		Book	for bad
Item	Related party		balance		debts	balance	debts
Prepayments	Beijing Yintai Real Estate					54,026.73
		Co., Ltd. Property
		Management Branch
Prepayments	Beijing Yintai Real Estate		578,990.80
		Co., Ltd.
Prepayments	Beijing Yintai Savills		22,200.00
		Property Management
		Co., Ltd. Beijing First
		Branch
Other receivables	Beijing Yintai Real Estate		1,662,891.00	831,445.50		1,555,709.40	311,141.88
		Co., Ltd.
Other receivables	Beijing Yintai Real Estate					107,181.60	21,436.32
		Co., Ltd. Property
		Management Branch
	(2)	Payable items

Unit: RMB

		Closing book	Opening book
Item	Related party	balance	balance
Non-current liabilities due	Beijing Yintai Real	492,251.55	5,782,240.66
within one year	Estate Co., Ltd.
Lease liabilities	Beijing Yintai Real		492,251.54
	Estate Co., Ltd.

— II-532 —

APPENDIX II FINANCIAL INFORMATION OF THE TARGET COMPANY

XIII. COMMITMENTS AND CONTINGENCIES

1. Important Commitments

Important commitments existing on the balance sheet date

The company has no important commitments that need to be disclosed.

2. Contingencies

(1) To state that the company has no important contingencies that need to be disclosed

The company has no important contingencies that need to be disclosed.

XIV. EVENTS AFTER THE BALANCE SHEET DATE

1. Profit Distribution

According to the Resolution on Consideration of the Company’s Profit Distribution Plan for 2022 deliberated at the 17th meeting of the eighth session of the board of directors of the company, the proposed profit distribution plan for 2022 of the company is: based on the existing share capital of 2,776,722,265 shares, a cash dividend of RMB2.8 (tax included) will be distributed to all shareholders for every 10 shares, for a total of RMB777,482,234.20. The resolution still needs to be submitted to the company’s 2022 annual general meeting for consideration.

XV. OTHER IMPORTANT MATTERS

1. Other Important Transactions and Matters that Affect Investors’ Decision-Making

On 5 December 2022, the trading of the company’s shares was suspended due to the planning of the change of control by the actual controller of the company. On 9 December, Mr. Shen Guojun, the actual controller of the company and China Yintai Holdings Co., Ltd., the controlling shareholder, entered into the Share Transfer Agreement with Shandong Gold, under which China Yintai Holdings Co., Ltd. transferred its 401,060,950 shares of the company and Mr. Shen Guojun transferred his 180,120,118 shares of the company (581,181,068 shares in total, representing 20.93% of the total share capital of the company) to Shandong Gold. On 19 January 2023, Mr. Shen Guojun, the actual controller of the company and China Yintai Holdings Co., Ltd., the controlling shareholder, entered into the Supplemental Agreement to the Share Transfer Agreement with Shandong Gold. On 3 February 2023, the Company received notification from Shandong Gold that it had recently received the “Approval on the Acquisition of the Control over Yintai Gold Co., Ltd. by Shandong Gold Mining Co., Ltd. through Agreements” from the State-owned Assets Supervision and Administration Commission of Shandong Province, which consented to this transaction.

— II-533 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

The implementation of this transaction is subject to review by the Hong Kong Stock Exchange, approval at the general meeting of Shandong Gold, review by the State Administration of Market Supervision on business operators concentration and relevant procedures to be performed in accordance with the regulations of the Shenzhen Stock Exchange on the transfer through agreements, and the relevant work is being further advanced. If the transfer is successfully completed, Shandong Gold will become the controlling shareholder of the company, and the actual controller of the company will change to the State-owned Assets Supervision and Administration Commission of the Shandong Provincial People’s Government.

2. Guarantees Provided by the company for its Controlling Subsidiaries

				Whether the
	Guarantee	Guarantee		guarantee has
Guaranteed party	amount	start date	Guarantee expiry date	been fulfilled
Qinghai Dachaidan	180,000,000.00	18 November 2022	Three years after the expiration	No
			of the main contract debt
			performance period
Qinghai Dachaidan	109,000,000.00	20 June 2022	Three years after the expiration	No
			of the main contract debt
			performance period
Heihe Yintai	200,000,000.00	27 May 2022	Two years after the expiration	No
			of the precious metal lease
			term under the main contract
Heihe Yintai	130,000,000.00	11 November 2022	Two years after the expiration	No
			of the precious metal lease
			term under the main contract
Heihe Yintai	18,814,000.00	15 December 2022	Two years after the expiration	No
			of the precious metal lease
			term under the main contract
Yulong Mining	30,000,000.00	22 March 2022	Two years after the expiration	No
			of the precious metal lease
			term under the main contract
Yulong Mining	51,337,200.00	20 June 2022	Two years after the expiration	No
			of the precious metal lease
			term under the main contract
Yulong Mining	38,662,800.00	3 August 2022	Two years after the expiration	No
			of the precious metal lease
			term under the main contract
Yulong Mining	29,940,000.00	5 August 2022	Two years after the expiration	No
			of the precious metal lease
			term under the main contract
Yulong Mining	60,000,000.00	29 March 2022	Three years after the expiration	No
			of the precious metal lease
			term under the main contract

— II-534 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Guaranteed party
Yintai Shenghong
Yintai Shenghong
Yintai Shenghong
Yongheng Trading
Yintai Shenghong
Yintai Shenghong
Total

Guarantee
amount
Guarantee
start date
Guarantee expiry date
Whether the
guarantee has
been fulfilled
99,000,000.00
28 July 2022
Three years after the expiration
of the main contract debt
performance period
No
65,000,000.00
15 November 2022
Three years after the expiration
of the main contract debt
performance period
No
39,000,000.00
12 December 2022
Four years after the expiration
of the main contract debt
performance period
No
65,000,000.00
13 July 2022
Three years after the expiration
of the main contract debt
performance period
No
29,950,000.00
19 October 2022
Three years after the expiration
of the main contract debt
performance period
No
40,000,000.00
14 December 2022
Three years after the expiration
of the main contract debt
performance period
No
1,185,704,000.00

XVI. NOTES TO MAIN ITEMS OF THE FINANCIAL STATEMENTS OF THE PARENT COMPANY

1. Other Receivables

Unit: RMB

Item Closing balance Opening balance Other receivables 856,238.25 540,093,918.94 Total 856,238.25 540,093,918.94

— II-535 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(1) Other receivables

1) Classification by the nature of payment

Unit: RMB

Nature of payment Current account Security deposit Others Total	Closing book balance 1,693,391.00 10,045.00 1,703,436.00	Opening book balance 538,739,111.14 1,693,391.00 100.00
		540,432,602.14

2) Provision for bad debts

Unit: RMB

	Stage I	Stage II	Stage III
	ECL over the	Lifetime ECL	Lifetime ECL
	next 12	(non-credit	(credit
Bad debt provision	months	impaired	impaired)	Total
Balance as at 1 January 2022	338,683.20			338,683.20
Balance as at 1 January 2022 during
the current period
Provision made for the period	508,514.55			508,514.55
Balance as at December 2022	847,197.75			847,197.75

Changes in book balance with significant changes in loss provision for the year

□ Applicable ✔ N/A

— II-536 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Disclosure by aging

Unit: RMB

Aging Within 1 year (inclusive) Over 5 years Total	Book balance 10,045.00 1,693,391.00
	1,703,436.00

3) Provision made, collected or reversed for bad debts during the current period

Provision made for bad debts during the current period:

Unit: RMB

Category Receivables with provision for ECL on a group basis Total	Opening balance 338,683.20 338,683.20	Amount of change during the period Provision Recovery or reversal Write-off Others 508,514.55 508,514.55	Closing balance 847,197.75
			847,197.75

— II-537 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

4) Top five other receivables according to the closing balance collected by the debtor

Unit: RMB

Company name Nature of payment Beijing Yintai Real Estate Co., Ltd. (北京銀泰置業有限公司) Security deposit Beijing Jiahe Xingye Kemao Co., Ltd. (北京嘉禾興業科貿有限責任公司) Security deposit SPD Bank Jianguo Road Sub-branch (浦發銀行建國路支行) Refundable handling fee Beijing Ziji Ziyi Trading Co., Ltd. (北京子吉子軼商貿有限公司) Security deposit Total	Closing balance Aging 1,662,891.00 Over 5 years 30,000.00 Over 5 years 10,045.00 Within 1 year 500.00 Over 5 years 1,703,436.00	Proportion to the closing balance of other receivables (%) 97.62% 1.76% 0.59% 0.03% 100.00%	Closing balance of provision for bad debts 831,445.50 15,000.00 502.25 250.00
			847,197.75

2. Long-term equity investment

Unit: RMB

Item Investment in subsidiaries Total	Book balance 8,682,698,659.55 8,682,698,659.55	Closing balance Provision for impairment	Carrying amount 8,682,698,659.55 8,682,698,659.55	Book balance 8,682,698,659.55 8,682,698,659.55	Opening balance Provision for impairment	Carrying amount 8,682,698,659.55
						8,682,698,659.55

— II-538 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(1) Investment in subsidiaries

Unit: RMB

Investee Inner Mongolia Yulong Mining Industry Co., Ltd. (內蒙古玉龍礦業股份有限公司) Shanghai Shengwei Mining Investment Co., Ltd. (上海盛蔚礦業投資有限公司) Yintai Shenghong Supply Chain Management Co., Ltd. (銀泰盛鴻供應鏈管理有限公司) Mangshi Huasheng Gold Mine Development Co., Ltd. (芒市華盛金礦開發有限公司) Total 3.	Opening balance (carrying amount) Changes in the current period Additional investment Reduce in investment Provision for impairment Others 2,745,459,892.91 4,609,576,666.64 290,662,100.00 1,037,000,000.00 8,682,698,659.55 *Investment Income*	Closing balance (carrying amount) Closing balance of provision for impairment 2,745,459,892.91 4,609,576,666.64 290,662,100.00 1,037,000,000.00 8,682,698,659.55

Item Income from long-term equity investments under cost method Investment income from disposal of other equity investments Investment income of wealth management products Interest income from acquisition of equity Total	Amount for the current period 520,183,430.00 2,832,213.17 4,851,585.88 527,867,229.05	Unit: RMB Amount for the last period 663,014,100.00 25,433,854.66 7,021,969.51
		695,469,924.17

— II-539 —

APPENDIX II FINANCIAL INFORMATION OF THE TARGET COMPANY

XVII. SUPPLEMENTARY INFORMATION

1. Breakdown of Non-Recurring Profit or Loss for the Period

✔ Applicable □ N/A

Unit: RMB

Item

Amount Explanation

Gain and loss on disposal of non-current assets Government grants included in current profit or loss (other than government grants which are closely related to the company’s normal business operations and in line with national policies, granted based on a certain fixed amount or a fixed quantity on an ongoing basis) Profit and loss from entrusting others to invest in or manage assets Gain or loss on changes in fair value from financial assets held for trading, financial liabilities held for trading, and investment income from disposal of financial assets held for trading, financial liabilities held for trading, and other available-for-sale financial assets, except for effective hedging transactions that are related to the company’ s normal operation Other non-operating income and expenses other than the above Less: Effect of income tax Effect of minority interest Total	-984,093.04 5,918,522.17 48,495,955.48 77,515,981.45 -645,386.49 32,614,020.82 2,314,297.28 95,372,661.47	Income from wealth management
		–

Details of other profit or loss items that fall within the meaning of non-recurring profit and loss:

□Applicable ✔ N/A

There was no other profit or loss item of the company that fall within the meaning of non-recurring profit and loss.

Please explain the reasons for defining the non-recurring profit and loss items stated in the Explanatory Notice on Information Disclosure of Companies with Public Offering No. 1-Non-recurring Profit and Loss 《公開發行證券的公司信息披露解釋性公告第( 1號－非經常性損益》) by the company as the recurring profit and loss items.

□ Applicable ✔ N/A

— II-540 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

2. Return on net assets and earnings per share

		Earnings	Earnings	per share	per share
	Weighted				Diluted
Profit during	average return	Basic earnings		earnings per
the reporting period	on equity	per share				share
		_(RMB _	/ share)	_(RMB / _		share)
Net profit attributable to
ordinary shareholders of
the company	10.58%		0.4050			0.4050
Net profit attributable to
ordinary shareholders of
the company after
deducting non-recurring
profit and loss	9.72%		0.3706			0.3706

3. Differences in accounting data under domestic and foreign accounting standards

(1) Differences in net profit and net assets in financial reports disclosed in accordance with international accounting standards and Chinese accounting standards
Applicable ✔ N/A
(2) Differences in net profit and net assets in financial reports disclosed in accordance with foreign accounting standards and Chinese accounting standards

□ Applicable ✔ N/A

(3) Reason for differences of accounting data in financial reports prepared under overseas and Chinese accounting standards, if the difference adjustment has been carried out for the data audited by oversea audit institution, the name of oversea audit institution should be specified

— II-541 —

APPENDIX II FINANCIAL INFORMATION OF THE TARGET COMPANY

2. DIFFERENCES IN ACCOUNTING POLICIES ADOPTED BY THE COMPANY AND THE TARGET COMPANY

As described in the section entitled “Letter from the Board — Waiver from Strict Compliance with Rule 14.67(6)(a)(i) of the Hong Kong Listing Rules”, the Company has applied to the Hong Kong Stock Exchange for, and been granted, a waiver from the requirement to issue an accountants’ report on Yintai Gold Co., Ltd (“ Yintai Gold ”) and its subsidiaries (“ Target Group ”) in accordance with Rule 14.67(6)(a)(i) of the Listing Rules.

Instead, this circular contains a copy of the English translation of the audited consolidated financial statements of the Target Group for the financial years ended 31 December 2020, 2021 and 2022 prepared in accordance with China Accounting Standards for Business Enterprise (“ CAS ”) (the “ Target Group Historical Track Record Accounts ”) as set out in the section entitled “Financial Information of the Target Group”.

The Target Group Historical Track Record Accounts cover the consolidated statement of financial position of the Target Group as at 31 December 2020, 2021 and 2022 and the consolidated income statement, consolidated changes in equity, consolidated statement of cash flows, and the notes to the consolidated financial statements of the Target Group for each of the years ended 31 December 2020, 2021 and 2022 (the “ Reporting Periods ”).

The accounting policies adopted in the preparation of the Target Group Historical Track Record Accounts are substantially consistent with the accounting policies adopted by the Shandong Gold Mining Co., Ltd (the “ Company ”), which comply with International Financial Reporting Standards (“ IFRS ”) issued by the International Accounting Standards Board, except for:

the adoption for new leases accounting standard, as set out in Note i to the “Reconciliation”; and
the reclassification of certain account captions, as set out in Note ii to the “Reconciliation”.

RECONCILIATION INFORMATION

I. Basis of Preparation

In addition to inclusion of the Target Group Historical Track Record Accounts in the circular, a reconciliation has been prepared by the directors of the Company by comparing the accounting policies adopted by Yintai Gold for the preparation of the Target Group Historical Track Record Accounts and the accounting policies adopted by the Target Group and the Company, and quantifying the relevant material financial effects of such differences as if it had been prepared in accordance with the accounting policies adopted by the Company which are in the compliance with IFRS (the “ Reconciliation Information ”). Your attention is drawn to the fact that as the Reconciliation Information has not been subject to an independent audit and accordingly, no opinion is expressed by an auditor or reporting accountants on whether it presents a true and fair view of the the Target Group’s consolidated financial position as at 31 December 2020, 2021, 2022, nor its consolidated results for the years then ended under the accounting policies adopted by the Company.

— II-542 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

SHINEWING (HK) CPA Limited was engaged by the Company to conduct work on the Reconciliation Information in accordance with the Hong Kong Standard on Assurance Engagements 3000 (Revised) “Assurance Engagements Other Than Audits or Reviews of Historical Financial Information” (“ HKSAE 3000 ”) issued by the Hong Kong Institute of Certified Public Accountants (the “ HKICPA ”).

The work conducted by SHINEWING (HK) CPA Limited consisted primarily of:

(a) comparing the “Unadjusted CAS Financial Information” of the Reconciliation Information with the audited consolidated financial statements of the Target Group under CAS for each of the years ended 31 December 2020, 2021 and 2022, as set out in Appendix II to this circular;
(b) assessing the appropriateness of the adjustments made in arriving at the “Adjusted IFRS Financial Information in accordance with the Company’s Accounting Policies” of the Reconciliation Information, which included evaluating the differences between the accounting policies adopted by the Target Group and the Company for each of the years ended 31 December 2020, 2021 and 2022, as set out in Appendix II to this circular, and obtaining evidence supporting the adjustments made in arriving at the “Adjusted IFRS Financial Information in accordance with the Company’s Accounting Policies”; and
(c) checking the arithmetic accuracy of the calculation of the “Adjusted IFRS Financial Information in accordance with the Company’s Accounting Policies” of the Reconciliation Information.

For the purposes of this engagement, SHINEWING (HK) CPA Limited is not responsible for updating or reissuing any reports or opinions on any historical financial information used in compiling the Reconciliation Information, nor have SHINEWING (HK) CPA Limited, in the course of this engagement, performed an audit or review of the financial information used in compiling the Reconciliation Information. SHINEWING (HK) CPA Limited’s engagement was intended solely for the use of the board of directors of the Company in connection with this circular and may not be suitable for any other purpose.

Based on the work performed, SHINEWING (HK) CPA Limited has concluded that:

(a) the “Unadjusted CAS Financial Information” of the Reconciliation Information is in agreement with the audited consolidated financial statements of the Target Group prepared under CAS for each of the years ended 31 December 2021, 2021 and 2022, as set out in Appendix II to this circular; and
(b) the adjustments made in arriving at the “Adjusted IFRS Financial Information in accordance with the Company’s Accounting Policies” of the Reconciliation Information reflect, in all material respects, the differences between the accounting policies adopted by the Target Group and the Company for each of the years ended 31 December 2020, 2021 and 2022, as set out in Appendix II to this circular; and
(c) the calculation of the “Adjusted IFRS Financial Information in accordance with the Company’s Accounting Policies” of the Reconciliation Information is arithmetically accurate.

— II-543 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

II. Reconciliation

Consolidated Balance Sheet as at 31 December 2022

Current assets Cash and cash equivalents Bank balance and cash Restricted bank deposits Financial assets held for trading Derivative financial assets Financial assets at fair value through profit or loss Trade receivables Prepayment Other receivables Prepayment, trade and other receivables Inventories Other current assets Prepaid income tax Total current assets Non-current assets Investments in other equity instruments Financial assets at fair value through other comprehensive income Fixed assets Construction in progress Property, plant, and equipment Right-of-use assets Intangible assets Goodwill Long-term deferred expenses Deferred income tax assets Other non-current assets Total non-current assets Total asset	Unadjusted CAS Financial Information (Unaudited) RMB’000 1,873,983 – – 2,000,436 300,235 – 39,811 22,094 62,239 – 1,359,012 25,112 – 5,682,922 14,304 – 2,906,294 247,343 – 35,102 6,571,670 452,366 26,658 138,588 91,553 10,483,878 16,166,800	Adjustments Reclassification (Note ii) RMB’000 (1,873,983) 789,843 1,084,141 (2,000,436) (300,235) 2,300,670 (39,811) (22,094) (62,239) 146,426 – (25,112) 2,830 – (14,304) 14,304 (2,906,294) (247,343) 3,135,854 405,474 (387,691) – (26,658) – 26,658 – –	Adjusted IFRS Financial Information in accordance with the Company’s Accounting Policies (Unaudited) RMB’000 – 789,843 1,084,141 – – 2,300,670 – – – 146,426 1,359,012 – 2,830
			5,682,922
			– 14,304 – – 3,135,854 440,576 6,183,979 452,366 – 138,588 118,211
			10,483,878
			16,166,800

— II-544 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Adjustments Reclassification

Current liabilities Short-term borrowings Borrowings Derivative financial liabilities Financial liabilities at fair value through profit or loss Notes payables Trade payables Deposit Contract liabilities Employee benefits payable Tax payables Other payables Trade and other payables Current income tax liabilities Current portion of non-current liabilities Other current liabilities Lease liabilities Current portion of other non-current liabilities Total current liabilities Non-current Liabilities Long-term borrowings Borrowings Lease liabilities Long-term payables Provisions Provision for asset retirement obligations Deferred income Deferred revenue Deferred income tax liabilities Other non-current liabilities Total non-current liabilities Total liabilities	Unadjusted CAS Financial Information (Unaudited) RMB’000 839,659 – 33,219 – 1,293,652 235,922 3,165 17,798 64,444 153,170 275,143 – – 56,448 2,314 – – 2,974,934 109,143 – 10,141 97,860 42,825 – 376 – 252,143 – 512,488 3,487,422	(Note ii) RMB’000 (839,659) 839,659 (33,219) 33,219 (1,293,652) (235,922) (3,165) (17,798) (64,444) (153,170) (275,143) 1,932,885 112,724 (56,448) (2,314) 4,066 52,381 – (109,143) 109,143 – (97,860) (42,825) 42,825 (376) 376 – 97,860 – –	Adjusted IFRS Financial Information in accordance with the Company’s Accounting Policies (Unaudited) RMB’000 – 839,659 – 33,219 – – – – – – – 1,932,885 112,724 – – 4,066 52,381
			2,974,934
			– 109,143 10,141 – – 42,825 – 376 252,143 97,860
			512,488
			3,487,422

— II-545 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Equity Share capital Capital reserve Other comprehensive income Special reserve Surplus reserve Retained profits Reserves Total equity attributable to owners of the company Non-controlling interests Total equity	Unadjusted CAS Financial Information (Unaudited) RMB’000 2,776,722 4,431,280 7,244 5,014 551,831 3,140,687 – 10,912,778 1,766,600 12,679,378	Adjustments Reclassification (Note ii) RMB’000 – (4,431,280) (7,244) (5,014) (551,831) (3,140,687) 8,136,056 – – –	Adjusted IFRS Financial Information in accordance with the Company’s Accounting Policies (Unaudited) RMB’000 2,776,722 – – – – – 8,136,056
			10,912,778 1,766,600
			12,679,378

— II-546 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Consolidated income statement as at 31 December 2022

Operating revenue Revenue Operating costs Taxes and surcharges Cost of sales Selling expenses Administrative expenses General and administrative expenses Finance expenses Financial income Financial costs Other income Other revenue Investment income Share of results of associates Other gains and (losses), net Gain on changes in fair value Asset impairment losses Gains on disposals of assets Non-operating income Non-operating expenses Profit before tax Income tax expense Profit for the year Profit for the year attributable to: Owners of the Company Non-controlling interests	Unadjusted CAS Financial Information (Unaudited) RMB’000 8,381,544 – (6,301,963) (177,937) – (3,079) (310,824) – (38,322) – – 10,424 – 107,659 – – 12,268 (64,533) 570 482 (7,186) 1,609,103 (364,853) 1,244,250 1,124,457 119,793 1,244,250	Adjustments Reclassification (Note ii) RMB’000 (8,381,544) 8,381,544 6,301,963 177,937 (6,483,642) – 310,824 (365,908) 38,322 16,331 (60,359) (10,424) 10,424 (107,659) – 113,792 (12,268) 64,533 (570) (482) 7,186 – – – – – –	Adjusted IFRS Financial Information in accordance with the Company’s Accounting Policies (Unaudited) RMB’000 – 8,381,544 – – (6,483,642) (3,079) – (365,908) – 16,331 (60,359) – 10,424 – – 113,792 – – – – – 1,609,103 (364,853) 1,244,250 1,124,457 119,793 1,244,250

— II-547 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Profit for the year Other comprehensive income: Owners of the Company Non-controlling interests Total comprehensive income for the year Owners of the Company Non-controlling interests EARNINGS PER SHARE – Basic and diluted (RMB)	Unadjusted CAS Financial Information (Unaudited) RMB’000 1,244,250 13,613 480 14,093 1,138,070 120,273 1,258,343 0.41	Adjustments Reclassification (Note ii) RMB’000 – – – – – – – –	Adjusted IFRS Financial Information in accordance with the Company’s Accounting Policies (Unaudited) RMB’000 1,244,250
			13,613 480
			14,093
			1,138,070 120,273
			1,258,343

			0.41

— II-548 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Consolidated Balance Sheet as at 31 December 2021

Current assets Cash and cash equivalents Bank balance and cash Restricted bank deposits Financial assets held for trading Derivative financial assets Financial assets at fair value through profit or loss Trade receivables Prepayment Other receivables Prepayment, trade and other receivables Inventories Other current assets Prepaid income tax Total current assets Non-current assets Investments in other equity instruments Financial assets at fair value through other comprehensive income Fixed assets Construction in progress Property, plant, and equipment Right-of-use assets Intangible assets Goodwill Long-term deferred expenses Deferred income tax assets Other non-current assets Total non-current assets Total asset	Unadjusted CAS Financial Information (Unaudited) RMB’000 1,455,700 – – 2,074,042 112,352 – 39,977 42,740 47,640 – 1,028,331 36,840 – 4,837,622 44,304 – 2,808,585 424,659 – 37,135 7,112,055 452,366 29,672 98,305 88,553 11,095,634 15,933,256	Adjustments Reclassification (Note ii) RMB’000 (1,455,700) 747,711 707,989 (2,074,042) (112,352) 2,186,394 (39,977) (42,740) (47,640) 164,957 – (36,840) 2,240 – (44,304) 44,304 (2,808,585) (424,659) 3,213,836 418,077 (398,669) – (29,672) – 29,672 – –	Adjusted IFRS Financial Information in accordance with the Company’s Accounting Policies (Unaudited) RMB’000 – 747,711 707,989 – – 2,186,394 – – – 164,957 1,028,331 – 2,240
			4,837,622
			– 44,304 – – 3,213,836 455,212 6,713,386 452,366 – 98,305 118,225
			11,095,634
			15,933,256

— II-549 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Adjustments Reclassification

Current liabilities Short-term borrowings Borrowings Derivative financial liabilities Financial liabilities at fair value through profit or loss Notes payables Trade payables Deposit Contract liabilities Employee benefits payable Tax payables Other payables Trade and other payables Current income tax liabilities Current portion of non-current liabilities Other current liabilities Lease liabilities Current portion of other non-current liabilities Total current liabilities Non-current Liabilities Long-term borrowings Borrowings Lease liabilities Long-term payables Provisions Provision for asset retirement obligations Deferred income Deferred revenue Deferred income tax liabilities Other non-current liabilities Total non-current liabilities Total liabilities	Unadjusted CAS Financial Information (Unaudited) RMB’000 682,033 – – – 1,718,374 162,883 144 16,017 56,319 175,549 215,556 – – 59,549 2,082 – – 3,088,506 – – 10,347 150,241 42,539 – 410 – 302,467 – 506,004 3,594,510	(Note ii) RMB’000 (682,033) 682,033 – – (1,718,374) (162,883) (144) (16,017) (56,319) (175,549) (215,556) 2,208,230 138,694 (59,549) (2,082) 7,168 52,381 – – – – (150,241) (42,539) 42,539 (410) 410 – 150,241 – –	Adjusted IFRS Financial Information in accordance with the Company’s Accounting Policies (Unaudited) RMB’000 – 682,033 – – – – – – – – – 2,208,230 138,694 – – 7,168 52,381
			3,088,506
			– – 10,347 – – 42,539 – 410 302,467 150,241
			506,004
			3,594,510

— II-550 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Adjustments

Reclassification

		Reclassification
Equity Share capital Capital reserve Other comprehensive income Special reserve Surplus reserve Retained profits Reserves Total equity attributable to owners of the company Non-controlling interests Total equity	Unadjusted CAS Financial Information (Unaudited) RMB’000 2,776,722 4,431,280 (6,369) 2,558 503,406 2,758,838 – 10,466,435 1,872,311 12,338,746	(Note ii) RMB’000 – (4,431,280) 6,369 (2,558) (503,406) (2,758,838) 7,689,713 – – –	Adjusted IFRS Financial Information in accordance with the Company’s Accounting Policies (Unaudited) RMB’000 2,776,722 – – – – – 7,689,713
			10,466,435 1,872,311
			12,338,746

— II-551 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Consolidated income statement as at 31 December 2021

Operating revenue Revenue Operating costs Taxes and surcharges Cost of sales Selling expenses Administrative expenses General and administrative expenses Finance expenses Financial income Financial costs Other income Other revenue Investment income Share of results of associates Other gains and (losses), net Gain on changes in fair value Asset impairment losses Gains on disposals of assets Non-operating income Non-operating expenses Profit before tax Income tax expense Profit for the year Profit for the year attributable to: Owners of the Company Non-controlling interests	Unadjusted CAS Financial Information (Unaudited) RMB’000 9,040,244 – (6,771,001) (178,635) – (7,575) (264,633) – (67,253) – – 5,554 – 90,914 – – 20,542 (1,538) (1,743) 3,562 (23,821) 1,844,617 (422,907) 1,421,710 1,273,339 148,371 1,421,710	Adjustments Reclassification (Note ii) RMB’000 (9,040,244) 9,040,244 6,771,001 178,635 (6,952,348) – 264,633 (267,453) 67,253 7,565 (70,824) (5,554) 5,554 (90,914) – 89,454 (20,542) 1,538 1,743 (3,562) 23,821 – – – – – –	Adjusted IFRS Financial Information in accordance with the Company’s Accounting Policies (Unaudited) RMB’000 – 9,040,244 – – (6,952,348) (7,575) – (267,453) – 7,565 (70,824) – 5,554 – – 89,454 – – – – – 1,844,617 (422,907) 1,421,710 1,273,339 148,371 1,421,710

— II-552 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Profit for the year Other comprehensive income: Owners of the Company Non-controlling interests Total comprehensive income for the year Owners of the Company Non-controlling interests EARNINGS PER SHARE – Basic and diluted (RMB)	Unadjusted CAS Financial Information (Unaudited) RMB’000 1,421,710 31 (5) 26 1,273,370 148,366 1,421,736 0.46	Adjustments Reclassification (Note ii) RMB’000 – – – – – – – –	Adjusted IFRS Financial Information in accordance with the Company’s Accounting Policies (Unaudited) RMB’000 1,421,710 31 (5) 26 1,273,370 148,366 1,421,736 0.46

— II-553 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Consolidated Balance Sheet as at 31 December 2020

Current assets Cash and cash equivalents Bank balance and cash Restricted bank deposits Financial assets held for trading Derivative financial assets Financial assets at fair value through profit or loss Trade receivables Prepayment Other receivables Prepayment, trade and other receivables Inventories Other current assets Prepaid income tax Total current assets Non-current assets Investments in other equity instruments Financial assets at fair value through other comprehensive income Fixed assets Construction in progress Property, plant, and equipment Right-of-use assets Intangible assets Goodwill Long-term deferred expenses Deferred income tax assets Other non-current assets Total non-current assets Total asset	Unadjusted CAS Financial Information (Unaudited) RMB’000 482,679 – – 1,535,265 99,866 – 48,270 26,885 20,887 – 1,026,982 693,122 – 3,933,956 55,804 – 2,783,313 200,416 – – 5,318,458 452,366 26,510 80,301 55,633 8,972,801 12,906,757	Adjustments GAAP difference Reclassification (Note i) (Note ii) RMB’000 RMB’000 – (482,679) – 445,105 – 37,575 – (1,535,265) – (99,866) – 1,635,131 – (48,270) (519) (26,366) – (20,887) – 787,369 – – – (693,122) – 1,275 (519) – – (55,804) – 55,804 – (2,783,313) – (200,416) – 2,962,708 15,538 400,458 – (379,437) – – – (26,510) – – – 26,510 15,538 – 15,019 –	Adjusted IFRS Financial Information in accordance with the Company’s Accounting Policies (Unaudited) RMB’000 – 445,105 37,575 – – 1,635,131 – – – 787,369 1,026,982 – 1,275
		GAAP difference (Note i) RMB’000 – – – – – – – (519) – – – – – (519) – – – – – 15,538 – – – – – 15,538 15,019
			3,933,437
			– 55,804 – – 2,962,708 415,996 4,939,021 452,366 – 80,301 82,143
			8,988,339
			12,921,776

— II-554 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Adjustments

Current liabilities Short-term borrowings Borrowings Notes payables Trade payables Deposit Contract liabilities Employee benefits payable Tax payables Other payables Trade and other payables Current income tax liabilities Current portion of non-current liabilities Other current liabilities Lease liabilities Current portion of other non-current liabilities Total current liabilities Non-current Liabilities Long-term borrowings Borrowings Lease liabilities Long-term payables Provisions Provision for asset retirement obligations Deferred income Deferred revenue Deferred income tax liabilities Other non-current liabilities Total non-current liabilities Total liabilities	Unadjusted CAS Financial Information (Unaudited) RMB’000 179,195 – 447,518 122,153 9,919 11,139 48,874 140,185 203,430 – – 6,781 1,448 – – 1,170,642 234,930 – – 20,344 45,283 – 445 – 354,563 14,248 669,813 1,840,455	GAAP difference (Note i) RMB’000 – – – – – – – – – – – – – 6,753 – 6,753 – – 8,266 – – – – – – – 8,266 15,019	Reclassification (Note ii) RMB’000 (179,195) 179,195 (447,518) (122,153) (9,919) (11,139) (48,874) (140,185) (203,430) 860,908 123,758 (6,781) (1,448) – 6,781 – (234,930) 234,930 – (20,344) (45,283) 45,283 (445) 445 – 20,344 – –	Adjusted IFRS Financial Information in accordance with the Company’s Accounting Policies (Unaudited) RMB’000 – 179,195 – – – – – – – 860,908 123,758 – – 6,753 6,781
				1,177,395
				– 234,930 8,266 – – 45,283 – 445 354,563 34,592
				678,079
				1,855,474

— II-555 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Equity Share capital Capital reserve Other comprehensive income Special reserve Surplus reserve Retained profits Reserves Total equity attributable to owners of the company Non-controlling interests Total equity	Unadjusted CAS Financial Information (Unaudited) RMB’000 2,776,722 4,431,280 (6,400) 5,346 438,886 2,244,199 – 9,890,033 1,176,269 11,066,302	Adjustments GAAP difference Reclassification (Note i) (Note ii) RMB’000 RMB’000 – – – (4,431,280) – 6,400 – (5,346) – (438,886) – (2,244,199) – 7,113,311 – – – – – –	Adjusted IFRS Financial Information in accordance with the Company’s Accounting Policies (Unaudited) RMB’000 2,776,722 – – – – – 7,113,311
		GAAP difference (Note i) RMB’000 – – – – – – – – – –
			9,890,033 1,176,269
			11,066,302

— II-556 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Consolidated income statement as at 31 December 2020

Operating revenue Revenue Operating costs Taxes and surcharges Cost of sales Selling expenses Administrative expenses General and administrative expenses Finance expenses Financial income Financial costs Other income Other revenue Investment income Share of results of associates Other gains and (losses), net Gain on changes in fair value Asset impairment losses Gains on disposals of assets Non-operating income Non-operating expenses Profit before tax Income tax expense Profit for the year Profit for the year attributable to: Owners of the Company Non-controlling interests	Unadjusted CAS Financial Information (Unaudited) RMB’000 7,905,802 – (5,747,473) (189,900) – (3,823) (256,612) – (43,666) – – 6,567 – 88,920 – – (8,793) (1,195) (1,890) 73,086 (59,950) 1,761,073 (394,954) 1,366,119 1,242,448 123,671 1,366,119	Adjustments GAAP difference Reclassification (Note i) (Note ii) RMB’000 RMB’000 – (7,905,802) – 7,905,802 – 5,747,473 – 189,900 – (5,939,008) – – – 256,612 – (258,674) – 43,666 – 1,030 – (42,194) – (6,567) – 6,567 – (88,920) – – – 91,373 – 8,793 – 1,195 – 1,890 – (73,086) – 59,950 – – – – – – – – – – – –	Adjusted IFRS Financial Information in accordance with the Company’s Accounting Policies (Unaudited) RMB’000 – 7,905,802 – – (5,939,008) (3,823) – (258,674) – 1,030 (42,194) – 6,567 – – 91,373 – – – – – 1,761,073 (394,954) 1,366,119 1,242,448 123,671 1,366,119
		GAAP difference (Note i) RMB’000 – – – – – – – – – – – – – – – – – – – – – – – – – – –

— II-557 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Adjustments

Profit for the year Other comprehensive income: Owners of the Company Non-controlling interests Total comprehensive income for the year Owners of the Company Non-controlling interests EARNINGS PER SHARE – Basic and diluted_(RMB)_	Unadjusted CAS Financial Information (Unaudited) RMB’000 1,366,119 18,988 1,381 20,369 1,261,436 125,052 1,386,488 0.45	GAAP difference (Note i) RMB’000 – – – – – – – –	Reclassification (Note ii) RMB’000 – – – – – – – –	Adjusted IFRS Financial Information in accordance with the Company’s Accounting Policies (Unaudited) RMB’000 1,366,119
				18,988 1,381
				20,369
				1,261,436 125,052
				1,386,488

				0.45

Notes to the Reconciliation:

i. The Target Group adopted CAS No. 21 — Leases (“ CAS 21 ”) which is align with IFRS 16 “Leases” (“ IFRS 16 ”) since 1 January 2021.While the Company adopted IFRS 16 since 1 January 2019. Accordingly, this adjustment presents the financial impacts on consolidated financial information of the Target Group for the adoption of IFRS 16 for the year ended 31 December 2020.
ii. The line items and amounts under CAS are extracted from the consolidated financial statements of the Target Group for each of the years ended 31 December 2020, 2021 and 2022 prepared in accordance with CAS. The line items and amounts under IFRS are prepared by the directors of the Company using the accounting policies applied in the consolidated financial statements of the Company in accordance with IFRS respectively for each of the years ended 31 December 2020, 2021 and 2022. To align with the presentation of the consolidated financial statements of the Target Group with that of the Company, reclassification adjustments are made according to the Company’s accounting policies under IFRS by splitting or grouping certain account captions of the Target Group. These reclassifications do not have any impact on the net profit nor the net assets of the Target Group.

— II-558 —

APPENDIX II FINANCIAL INFORMATION OF THE TARGET COMPANY

3. SUPPLEMENTAL FINANCIAL INFORMATION OF THE TARGET GROUP

The Company sets out the following supplemental financial information of the Target Group, which was not included in the Target Group’s consolidated financial statements for each of the years ended 31 December 2020, 2021 and 2022.

1. Aging Analysis of Trade Payables

All the trade payables amounts are for goods and services provided to the Target Group prior to the end of the financial period which are unpaid. The ageing analysis of trade and notes payables is as follows:

Within 1 year Between 1 and 2 years Between 2 and 3 years Over 3 years Total	31 December 2022 RMB’000 1,498,804 23,703 1,007 6,060 1,529,574	31 December 2021 RMB’000 1,867,805 3,847 5,198 4,407 1,881,257	31 December 2020 RMB’000 548,970 5,866 10,872 3,963
			569,671

2. Concentration of Customers and Suppliers

(i) Concentration of Suppliers, Gross Purchases

(% of total gross	31 December	31 December	31 December
purchases)	2022	2021	2020
Largest supplier	13.96%	9.55%	9.61%
Five largest suppliers,
combined	35.05%	27.05%	36.01%
*Concentration of Customers,*	*Gross Sales*
	31 December	31 December	31 December
(% of total gross sales)	2022	2021	2020
Largest customers	21.78%	15.22%	12.22%
Five largest customers,
combined	46.07%	53.91%	43.83%

(ii) Concentration of Customers, Gross Sales

None of the Target Group’s directors had any interest in the five largest customers during the years ended 31 December 2020, 2021 and 2022.

— II-559 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

3. Director’s and Supervisors’ Remuneration

Directors’ remuneration for the year, disclosed pursuant to the Listing Rules, section 383(1) (a), (b), (c) and (f) of the Hong Kong Companies Ordinance and Part 2 of the Companies Regulation (Disclosure of Information about Benefits of Directors), is as follows:

Fees Basic salaries, housing fund, other allowances and benefits in kind Discretionary bonuses Pension costs	31 December 2022 RMB’000 300 6,368 7,155 300 14,123	31 December 2021 RMB’000 300 7,024 6,680 296 14,300	31 December 2020 RMB’000 300 9,386 6,386 197
			16,269

The remuneration of the Target Group’s directors for the year ended 31 December 2022 is set out below:

Names of directors and supervisors Executive Directors: YANG Haifei WANG Shui OU Xingong LIU Liming YUAN Meirong LU Sheng Non-executive Directors: CUI Jin WANG Yaping ZHANG Da Supervisors: HU Bin LIU Weimin ZHAO Shimei	Director’s fee RMB’000 – – – – – – 100 100 100 – – – 300	Salaries, allowance and other benefits RMB’000 2,592 18 1,502 1,121 18 18 – – – 553 546 – 6,368	Discretionary bonus RMB’000 2,060 1,572 2,500 600 – – – – – 140 283 – 7,155	Retirement benefit scheme RMB’000 60 – 60 60 – – – – – 60 60 – 300	Total RMB’000 4,712 1,590 4,062 1,781 18 18 100 100 100 753 889 –
					14,123

— II-560 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

The remuneration of the Target Group’s directors for the year ended 31 December 2021 is set out below:

Names of directors and supervisors Executive Directors: YANG Haifei WANG Shui OU Xingong LIU Liming YUAN Meirong LU Sheng Non-executive Directors: CUI Jin WANG Yaping ZHANG Da Supervisors: HU Bin LIU Weimin ZHAO Shimei	Director’s fee RMB’000 – – – – – – 100 100 100 – – – 300	Salaries, allowance and other benefits RMB’000 2,540 797 1,477 1,103 41 23 – – – 537 506 – 7,024	Discretionary bonus RMB’000 2,044 1,190 2,500 600 – – – – – 128 218 – 6,680	Retirement benefit scheme RMB’000 54 26 54 54 – – – – – 54 54 – 296	Total RMB’000 4,638 2,013 4,031 1,757 41 23 100 100 100 719 778 –
					14,300

— II-561 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

The remuneration of the Target Group’s directors for the year ended 31 December 2020 is set out below:

Names of directors and supervisors Executive Directors: YANG Haifei XIN Xiangdong WANG Shui OU Xingong LIU Liming YUAN Meirong LU Sheng Non-executive Directors: CUI Jin WANG Yaping ZHANG Da DENG Yanchang Supervisors: HU Bin LIU Weimin ZHAO Shimei	Director’s fee RMB’000 – – – – – – – 100 100 17 83 – – – 300	Salaries, allowance and other benefits RMB’000 2,512 1,354 1,566 1,435 1,194 291 33 – – – – 516 485 – 9,386	Discretionary bonus RMB’000 2,254 1,230 1,230 1,000 400 40 – – – – – 114 118 – 6,386	Retirement benefit scheme RMB’000 41 – 23 23 41 23 – – – – – 23 23 – 197	Total RMB’000 4,807 2,584 2,819 2,458 1,635 354 33 100 100 17 83 653 626 –
					16,269

Executive Directors:

On 6 November 2008, Mr. Yang Haifei was appointed as an executive director of the company in the fourth session of the Board of the company and was re-appointed at the fifth, sixth, seventh and eighth session of the Board of the company.
On 28 February 2013, Mr. Wang Shui was appointed as an executive director of the company in the fifth session of the Board of the company and was re-appointed at the sixth, seventh and eighth session of the Board of the company.
On 16 November 2020, Mr. Ou Xingong was appointed as an executive director of the company in the eighth session of the Board of the company.
On 6 November 2008, Mr. Liu Liming was appointed as an executive director of the company in the fourth session of the Board of the company and was re-appointed at the fifth, sixth, seventh and eighth session of the Board of the company.

— II-562 —

FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

On 7 November 2017, Mr. Yuan Meirong was appointed as an executive director of the company in the seventh session of the Board of the company and was re-appointed at the eighth session of the Board of the company.
On 15 May 2019, Mr. Lu Sheng as an executive director of the company in the seventh session of the Board of the company and was re-appointed at the eighth session of the Board of the company.
On 16 November 2020, Mr. Xin Xiangdong resigned as an executive director of the company.

Non-executive Directors:

On 19 September 2019, Mr. Cui Jin was appointed as a non-executive director of the seventh session of the board of directors of the company, and was re-appointed in the eighth session of the board of directors of the company.
On 17 May 2018, Mr. Wang Yaping was appointed as a non-executive director of the seventh session of the board of directors of the company, and was re-appointed in the eighth session of the board of directors of the company.
On 16 November 2020, Mr. Zhang Da was appointed as a non-executive director of the eighth session of the board of directors of the company.
On 16 November 2020, Mr. Deng Yanchang resigned as a non-executive director of the company.

Supervisors:

On 11 November 2011, Mr. Hu Bin was appointed as a supervisor of the fifth supervisory committee of the company, and was re-appointed in the sixth, seventh and eighth supervisory committee of the company.
On 7 November 2017, Mr. Liu Weimin was appointed as a supervisor of the seventh supervisory committee of the Company, and was re-appointed in the eighth supervisory committee of the Company.
On 7 November 2017, Ms. Zhao Shimei was appointed as a supervisor of the seventh supervisory committee of the Company, and was re-appointed in the eighth supervisory committee of the Company.

— II-563 —

APPENDIX II FINANCIAL INFORMATION OF THE TARGET COMPANY

4. Five Highest Paid Individuals

Total compensation payable to the five highest paid employees at the Target Group is as follows:

Basic salaries, housing fund, other allowances and benefits in kind Pension costs 5. Auditor Remuneration Auditors’ remuneration Moore Stephens Da Hua Certified Public Accountants – Audit services – Non-audit services Other auditors Total	31 December 2022 RMB’000 14,813 243 15,056 31 December 2022 RMB’000 1,800 – 463 2,263	31 December 2021 RMB’000 13,977 247 14,224 31 December 2021 RMB’000 1,620 – 23 1,643	31 December 2020 RMB’000 14,174 127
			14,301

			31 December 2020 RMB’000 1,840 – 20
			1,860

— II-564 —

MANAGEMENT DISCUSSION AND ANALYSIS ON THE TARGET COMPANY

APPENDIX III

The following is a discussion of the results of the Target Company and should be read in conjunction with the historical financial information for the three financial years ended 31 December 2022 as set out in Appendix II to this circular.

The Target Company is a company incorporated in the PRC with limited liability and its shares are listed on the Shenzhen Stock Exchange (stock code: 000975). The principal activities of the Target Company and its subsidiaries (the “ Target Group ”) are the mining and processing of precious metals and non-ferrous metals and trading of metals.

FINANCIAL REVIEW

Operating revenue

For the three years ended 31 December 2020, 2021, 2022, the operating revenues generated by the Target Group amounted to RMB7,905.8 million, RMB9,040.2 million and RMB8,381.5 million respectively. The operating revenues of the Target Group in 2021 increased by 14.3% over 2020, mainly due to the increase in the price and quantity of gold sales. The Target Group’s operating revenue in 2022 decreased by 7.3% compared to 2021 mainly due to the decrease in sales volume of gold and silver in 2022 compared to 2021, affected by certain factors beyond control in 2022.

Operating cost

For the three years ended 31 December 2020, 2021 and 2022, the operating costs of the Target Group were RMB5,747.5 million, RMB6,771.0 million and RMB6,302.0 million respectively. The operating cost of the Target Group in 2021 increased by 17.8% compared with 2020, mainly because of the increase in sales volume of gold in 2021, combined with the rising raw material prices. The operating cost of the Target Group in 2022 was 6.9% lower than that in 2021, mainly due to the decrease in sales volume of gold and silver in 2022, affected by certain factors beyond control in 2022.

Selling expenses

For the three years ended 31 December 2020, 2021 and 2022, the selling expenses of the Target Group were RMB3.8 million, RMB7.6 million and RMB3.1 million respectively. The selling expenses of the Target Group in 2021 increased by 98.2% compared with 2020, mainly due to the significant increase in warehousing fees under the impact of the pandemic in 2021. The selling expenses of the Target Group in 2022 decreased significantly by 59.4% compared with 2021, mainly due to a reduction in warehousing fees.

— III-1 —

MANAGEMENT DISCUSSION AND ANALYSIS ON THE TARGET COMPANY

APPENDIX III

Administrative expenses

For the three years ended 31 December 2020, 2021 and 2022, the administrative expenses of the Target Group were RMB256.6 million, RMB264.6 million and RMB310.8 million respectively. The administrative expenses of the Target Group in 2021 were the same as those in 2020, while the administrative expenses in 2022 increased by 17.5% over 2021, mainly due to the significant increase in shutdown losses under the impact of the COVID-19 pandemic in 2022.

Financial expenses

For the three years ended 31 December 2020, 2021 and 2022, financial expenses of the Target Group were RMB43.7 million, RMB67.3 million and RMB38.3 million respectively. The financial expenses of the Target Group in 2021 increased significantly by 54.0% compared with 2020, mainly due to the increase in bank loans in 2021, and the corresponding increase in interest expenses on the loans. The financial expenses of the Target Group in 2022 decreased by 43.0% compared with 2021, mainly due to the partial repayment of the bank loans in 2022 and the corresponding decrease in interest expenses on the loans, combined with the increase in interest income and exchange gains.

Other revenue

For the three years ended 31 December 2020, 2021 and 2022, other revenue of the Target Group was RMB6.6 million, RMB5.6 million and RMB10.4 million respectively. The other revenue of the Target Group in 2021 decreased by 15.4% compared with 2020, mainly due to the decrease in government subsidies received in relation to ordinary activities in 2021. The other revenue of the Target Group in 2022 increased significantly by 87.7% compared with 2021, which was mainly due to the significant increase in the refunds of withholding and payment fees received in 2022.

Credit impairment losses

For the three years ended 31 December 2020, 2021 and 2022, the Target Group’s credit impairment losses were RMB1.2 million, RMB1.5 million and RMB64.5 million, respectively. In 2022, the Target Group’s credit impairment losses increased significantly, mainly due to the fact that the Target Group made a provision for large amount of impairment on current account due to litigation-related matters in 2022, with an amount of RMB63.5 million.

Total profit

For the three years ended 31 December 2020, 2021, 2022, the total profits generated by the Target Group amounted to RMB1,761.1 million, RMB1,844.6 million and RMB1,609.1 million respectively; net profits amounted to RMB1,366.1 million, RMB1,421.7 million and RMB1,244.2 million, respectively. The profits and net profits of the Target Group in 2021 increased compared with 2020, mainly due to the increase in the price and quantity of gold sales. The Target Group’s profits and net profits in 2022 decreased compared to 2021 mainly due to the decrease in sales volume of gold and silver in 2022 compared to 2021, affected by certain factors beyond control in 2022, combined with the impact of rising raw material prices and production costs.

— III-2 —

MANAGEMENT DISCUSSION AND ANALYSIS ON THE TARGET COMPANY

APPENDIX III

LIQUIDITY, FINANCIAL RESOURCES AND CAPITAL STRUCTURE

As at 31 December 2020, 2021 and 2022, the total current assets of the Target Group were RMB3,934.0 million, RMB4,837.6 million and RMB5,682.9 million respectively. The current assets of the Target Group mainly include monetary funds, financial assets held for trading, derivative financial assets, accounts receivable, notes receivable, other receivables, inventories and other current assets. As at 31 December 2020, 2021 and 2022, the monetary funds of the Target Group were RMB482.7 million, RMB1,455.7 million and RMB1,874.0 million respectively.

As at 31 December 2020, 2021 and 2022, the total current liabilities of the Target Group were RMB1,170.6 million, RMB3,088.5 million and RMB2,974.9 million respectively. The current liabilities of the Target Group mainly include short-term borrowings, notes payable, accounts payable, staff remuneration payables, taxes payable, other payables and other current liabilities, etc. As at 31 December 2020, 2021 and 2022, the short-term borrowings of the Target Group were RMB179.2 million, RMB682.0 million and RMB839.7 million respectively.

As at 31 December 2020, 2021 and 2022, the total assets of the Target Group were RMB12,906.8 million, RMB15,933.3 million and RMB16,166.8 million respectively; total liabilities were RMB1,840.5 million, RMB3,594.5 million and RMB3,487.4 million respectively; the total owners’ equity was RMB11,066.3 million, RMB12,338.7 million and RMB12,679.4 million respectively. On 31 December 2020, 2021 and 2022, the Target Group’s gearing ratio (i.e., total liabilities divided by total assets) was 14.3%, 22.6% and 21.6%, respectively.

CASH FLOWS

The following table sets out the cash flows of the Target Company for the periods indicated:

	For the year ended 31 December	For the year ended 31 December	For the year ended 31 December
	2020	2021	2022
	RMB’000	RMB’000	RMB’000
Net cash flows generated from operating	2,426,702	2,042,689	1,989,082
Net cash flows generated from investment
activities	(1,533,670)	(805,088)	(1,360,446)
Net cash flows generated from financing
activities	(734,019)	(934,120)	(594,621)
Changes in foreign exchange rates	(5,180)	(875)	8,116
Net increase in cash and cash equivalents	153,833	302,606	42,131
Balance of cash and cash equivalents
at the beginning of the year	291,272	445,105	747,711
Balance of cash and cash equivalents
at the end of the year	445,105	747,711	789,842

— III-3 —

MANAGEMENT DISCUSSION AND ANALYSIS ON THE TARGET COMPANY

APPENDIX III

SIGNIFICANT INVESTMENTS, ACQUISITIONS AND DISPOSALS

In September 2021, Yintai Gold acquired 60% equity interest in Mangshi Huasheng Gold Mine Development Co., Ltd. (芒市華盛金礦開發有限公司) (“ Huasheng Gold Mine ”) held by Zhang Hui (張輝) with RMB1,037 million of its own capital and became its controlling shareholder, bringing Huasheng Gold Mine into the scope of Yintai Gold’s merger. The main business of Huasheng Gold Mine is alloy gold mining, processing and smelting. Through the acquisition of control of Huasheng Gold Mine, Yintai Gold has expanded its asset scale, increased its gold resource reserves and improved its sustainable operation ability, which is in line with its strategic goal.

The Target Group is expected to have no major investment, acquisition or disposal plans in the next year.

CONTINGENT LIABILITIES

As at 31 December 2020, 2021 and 2022, the Target Group does not have any contingent liabilities which may have a material adverse effect on its financial position or operating results.

ASSET RESTRICTION AND PLEDGE

As at 31 December 2020, 2021 and 2022, the carrying amount of the Target Group’s assets whose ownership or use rights was restricted was RMB604.1 million, RMB1,648.6 million and RMB1,250.5 million, respectively. Restricted assets mainly include inventories pledged for financing, security deposit for bank acceptance and other security deposits.

As at 31 December 2020, 2021 and 2022, the carrying amount of the pledged assets of the Target Group was RMB118.2 million, RMB129.3 million and RMB165.0 million, respectively. Pledged assets are inventories pledged for financing.

FOREIGN EXCHANGE RISK

Most of the Target Group’s revenue, operating costs and expenses are denominated in Renminbi and are expected to continue in the future. Yintai Shenghong Singapore Co., Ltd. (銀泰盛鴻新加坡有限公司), a subsidiary of the Target Group, is registered and operates in Singapore, and its sales, procurement, financing, and other operating activities are mainly denominated in US dollars. The Target Group’s financial assets in US dollars and Singapore dollar are relatively small in scale, but are subject to price risk due to changes in exchange rates.

EMPLOYEES AND REMUNERATION POLICY

As at 31 December 2020, 2021 and 2022, the number of employees of the Target Group was 1,566, 1,571 and 1,670 respectively, and the total remuneration (including social security contributions) was RMB227 million, RMB284 million and RMB300 million respectively.

— III-4 —

MANAGEMENT DISCUSSION AND ANALYSIS ON THE TARGET COMPANY

APPENDIX III

The employee remuneration plan of the Target Group complies with the PRC industry standards, including basic salary, bonus and other allowances. The Target Group also contributes to social security benefit schemes for employees in accordance with the PRC labor law and local government laws and regulations. Such social security contributions include pensions, medical insurance, unemployment insurance, work-related injury insurance, and housing provident funds. In addition, the Target Group also regularly provides training sessions for staff to enhance their skills.

For further details of the Target Group’s financial information, please refer to the financial information of the Target Group Historical Track Record Accounts set out in Appendix II to this circular.

— III-5 —

PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX IV

BASIS OF PREPARATION OF THE UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

The following unaudited pro forma financial information of the Enlarged Group (the “Unaudited Pro Forma Financial Information”) has been prepared on the basis of the notes set out below and in accordance with paragraph 4.29 of the Listing Rules for the purpose of illustrating the effects on the consolidated statement of assets and liabilities of the Enlarged Group as if the Transaction had been completed on 31 December 2022.

The Unaudited Pro Forma Financial Information has been prepared based on (i) the use of accounting policies of the Enlarged Group consistent with that of the Group, as set out in the published annual report of the Group for the year ended 31 December 2022; (ii) the consolidated statement of financial position of the Group as at 31 December 2022, as set out in its published 2022 annual report for the year ended 31 December 2022; (iii) the consolidated balance sheet of the Target Company as at 31 December 2022; and (iv) the pro forma adjustments prepared to reflect the effects of the Transaction as explained in the notes set out below that are directly attributable to the Transaction and not relating to future events or decisions and are factually supportable.

The Unaudited Pro Forma Financial Information should be read in conjunction with other financial information contained in this circular.

The Unaudited Pro Forma Financial Information has been compiled by the directors of the Company for illustrative purposes only and is based on a number of assumptions, estimates and currently available information. Because of its hypothetical nature, the Unaudited Pro Forma Financial Information may not give a true picture of the financial position of the Enlarged Group had the Transaction been completed as at 31 December 2022 or at any future date.

— IV-1 —

PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX IV

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF ASSETS AND LIABILITIES OF THE ENLARGED GROUP AS AT 31 DECEMBER 2022

ASSETS Non-current assets Property, plant and equipment Investment properties Right-of-use assets Intangible assets Goodwill Investments in associates Financial assets at fair value through other comprehensive income Financial assets at fair value through profit or loss Inventories Deferred income tax assets Other non-current assets	Audited consolidated statement of assets and liabilities of the Group as at 31 December 2022 RMB’000 Note 1 37,028,403 176,190 852,397 20,556,647 1,673,190 1,988,901 7,900 5,160,074 1,415,830 289,468 591,840 69,740,840	Unaudited consolidated statement of assets and liabilities of the Target Group as at 31 December 2022 RMB’000 Note 2 3,135,854 – 440,576 6,183,979 452,366 – 14,304 – – 138,588 118,211 10,483,878	Pro forma adjustments RMB’000 RMB’000 Note 3 Note 4 353,210 – – – 83,506 – 3,460,638 – 9,324,125 – – – 7,609 – – – – – 108,479 – (26,657) – 13,310,910 –	Unaudited pro forma consolidated statement of assets and liabilities of the Enlarged Group as at 31 December 2022 RMB’000 40,517,467 176,190 1,376,479 30,201,264 11,449,681 1,988,901 29,813 5,160,074 1,415,830 536,535 683,394
				93,535,628

— IV-2 —

PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX IV

Current assets Inventories Prepayment, trade and other receivables Prepaid income tax Financial assets at fair value through profit or loss Restricted bank deposits Bank balances and cash Total assets LIABILITIES Non-current liabilities Borrowings Lease liabilities Deferred income tax liabilities Deferred revenue Provision for asset retirement obligations Other non-current liabilities	Audited consolidated statement of assets and liabilities of the Group as at 31 December 2022 RMB’000 Note 1 4,092,280 4,683,615 105,146 2,959,904 1,880,825 7,753,482 21,475,252 91,216,092 13,548,305 143,670 4,076,245 16,084 733,117 1,206,566 19,723,987	Unaudited consolidated statement of assets and liabilities of the Target Group as at 31 December 2022 RMB’000 Note 2 1,359,012 146,426 2,830 2,300,670 1,084,141 789,843 5,682,922 16,166,800 109,143 10,141 252,143 376 42,825 97,860 512,488	Pro forma adjustments RMB’000 RMB’000 Note 3 Note 4 1,424,355 – – – – – 19 – – – – (4,586) 1,424,374 (4,586) 14,735,284 (4,586) – – (3) – 1,776,180 – (282) – – – – – 1,775,895 –	Unaudited pro forma consolidated statement of assets and liabilities of the Enlarged Group as at 31 December 2022 RMB’000 6,875,647 4,830,041 107,976 5,260,593 2,964,966 8,538,739
				28,577,962

				122,113,590

				13,657,448 153,808 6,104,568 16,178 775,942 1,304,426
				22,012,370

— IV-3 —

PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX IV

Current liabilities Trade and other payables Lease liabilities Tax payables Borrowings Financial liabilities at fair value through profit or loss Current portion of other non-current liabilities Total liabilities Net assets	Audited consolidated statement of assets and liabilities of the Group as at 31 December 2022 RMB’000 Note 1 13,144,075 64,506 303,418 9,780,631 11,265,745 131,562 34,689,937 54,413,924 36,802,168	Unaudited consolidated statement of assets and liabilities of the Target Group as at 31 December 2022 RMB’000 Note 2 1,932,885 4,066 112,724 839,659 33,219 52,381 2,974,934 3,487,422 12,679,378	Pro forma adjustments RMB’000 RMB’000 Note 3 Note 4 12,760,086 – – – – – – – – – – – 12,760,086 – 14,535,981 – 199,303 (4,586)	Unaudited pro forma consolidated statement of assets and liabilities of the Enlarged Group as at 31 December 2022 RMB’000 27,837,046 68,572 416,142 10,620,290 11,298,964 183,943
				50,424,957

				72,437,327

				49,676,263

Notes:

The balances are extracted from the consolidated statement of financial position of the Group as at 31 December 2022 as set out in the Company’s published annual report for the year ended 31 December 2022.
The balances are extracted from the unaudited consolidated balance sheet of the Target Group as at 31 December 2022, which is prepared by the Company in accordance with the Group’s accounting policies under International Financial Reporting Standards (“ IFRS ”). Set out in Appendix II to this circular is a reconciliation between the Target Group’s financial information for each of the years ended 31 December 2020, 2021, 2022 (the “ Reporting Periods ”) as extracted from the Target Group’s consolidated financial statements prepared in accordance with the China Accounting Standards for Business Enterprises (“ CAS ”) for the Reporting Periods, and the adjusted financial information for the Reporting Periods had it instead been prepared in accordance with the accounting policies under IFRS adopted by the Company.

— IV-4 —

PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX IV

On 9 December 2022, the Company entered into the Shares Transfer Agreement with China Yintai Holdings Co., Ltd. and Mr. Shen Guojun (the “ Transferors ”), pursuant to which, the Company has agreed to acquire and Transferors has agreed to dispose of 581,181,068 shares in Yintai Gold, representing approximately 20.93% of the total issued share capital of Yintai Gold (the “ Transaction ”). Upon the completion of the Transaction, the Company will hold 581,181,068 shares in Yintai Gold, representing approximately 20.93% of the total issued share capital of Yintai Gold and become a shareholder of Yintai Gold. The ultimate controlling party of the Yintai Gold will changed to State-owned Assets Supervision and Administration Commission of Shandong Provincial People’s Government.

Considering the following factors, the directors of the Company are of the view that the Company will have control over Yintai Gold upon the completion of the Transaction, and Yintai Gold will become a subsidiary of the Company and be consolidated into the Company’s consolidated financial statements:

(i) Other than the Company, the remaining investors of Yintai Gold are made up of a large number of widely dispersed, unrelated third-party investors who do not have a mechanism to act collectively to veto the Company’s decisions.
(ii) The Company will have 20.93% direct equity interests in Yintai Gold, and by taking into account the similarity of industry and synergies of operation between the Group and the Target Group, the Company will have sufficient exposure to variable returns to have control over Yintai Gold.

As the Company and Yintai Gold are not under common control of State-owned Assets Supervision and Administration Commission of Shandong Provincial People’s Government and its subsidiaries both before and after the Transaction, the Transaction is not regarded as a business combination under common control. In accordance with the Company’s accounting policies, the assets and liabilities of the Target Group are consolidated using the fair value of the assets and liabilities by the Target Group. The pro forma adjustment is using the differences of the fair value of the assets and liabilities and the disclosed financial statement.

The pro forma adjustment represents the cash consideration of RMB12,760,000,000 to be settled for the Transaction and the goodwill of approximately RMB9,776,491,000 generated from the transaction.

The pro forma adjustment represents the estimated professional fees and other expenses to be incurred for the Transaction of approximately RMB4,586,000.
Apart from the above, no adjustments have been made to reflect any trading results or other transactions of the Enlarged Group entered into subsequent to 31 December 2022.

— IV-5 —

PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX IV

INDEPENDENT REPORTING ACCOUNTANTS’ ASSURANCE REPORT ON THE COMPILATION OF UNAUDITED PRO FORMA FINANCIAL INFORMATION

==> picture [111 x 36] intentionally omitted <==

The Directors Shandong Gold Mining Co., Ltd.

We have completed our assurance engagement to report on the compilation of unaudited pro forma financial information of Shandong Gold Mining Co., Ltd. (the “ Company ”) and its subsidiaries (collectively referred to as the “ Group ”), and Yintai Gold Co., Ltd. and its subsidiaries (the “ Target Group ”) by the directors of the Company for illustrative purposes only. The unaudited pro forma financial information consists of the unaudited pro forma consolidated net asset statement as at 31 December 2022 and related notes as set out on pages IV-1 to IV-5 of Appendix IV of the Company’s Circular in connection with proposed acquisition of the Target Group (the “ Transaction ”) issued by the Company. The applicable criteria on the basis of which the directors of the Company have compiled the unaudited pro forma financial information are described in page IV-1 to IV-5.

The unaudited pro forma financial information has been compiled by the directors of the Company to illustrate the impact of the proposed acquisition of the Target Group (the “ Transaction ”) on the Group’s financial position as 31 December 2022 as if the Transaction had taken place at 31 December 2022. As part of this process, information about the Group’s financial position has been extracted by the directors of the Company from the Group’s financial statement for the year ended 31 December 2022, on which an assurance report has been published.

Directors’ Responsibility for the Unaudited pro forma Financial Information

The directors of the Company are responsible for compiling the unaudited pro forma financial information in accordance with paragraph 29 of Chapter 4 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “ Listing Rules ”) and with reference to Accounting Guideline 7 “Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars” (“ AG7 ”) issued by the Hong Kong Institute of Certified Public Accountants (the “ HKICPA ”).

Our Independence and Quality Management

We have complied with the independence and other ethical requirement of the Code of Ethics for Professional Accountants issued by the HKICPA, which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behavior.

The firm applies Hong Kong Standard on Quality Management (“ HKSQM ”) 1, Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements, which requires the firm to design, implement and operate a system of quality management including policies or procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

— IV-6 —

PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX IV

Reporting Accountants’ Responsibilities

Our responsibility is to express an opinion, as required by paragraph 29(7) of Chapter 4 of the Listing Rules, on the unaudited pro forma financial information and to report our opinion to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the unaudited pro forma financial information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

We conducted our engagement in accordance with Hong Kong Standard on Assurance Engagements 3420 “Assurance Engagements to Report on the Compilation of Pro Forma Financial Information Included in a Prospectus” issued by the HKICPA. This standard requires that the reporting accountants plan and perform procedures to obtain reasonable assurance about whether the directors of the Company have compiled the unaudited pro forma financial information in accordance with paragraph 29 of Chapter 4 of the Listing Rules and with reference to AG7 issued by the HKICPA.

For purposes of this engagement, we are not responsible for updating or reissuing any reports or opinions on any historical financial information used in compiling the unaudited pro forma financial information, nor have we, in the course of this engagement, performed an audit or review of the financial information used in compiling the unaudited pro forma financial information.

The purpose of unaudited pro forma financial information included in an investment circular is solely to illustrate the impact of the Transaction on unadjusted financial information of the Group as if the Transaction had occurred at an earlier date selected for purposes of the illustration. Accordingly, we do not provide any assurance that the actual outcome of the Transaction at 31 December 2022 would have been as presented.

A reasonable assurance engagement to report on whether the unaudited pro forma financial information has been properly compiled on the basis of the applicable criteria involves performing procedures to assess whether the applicable criteria used by the directors in the compilation of the unaudited pro forma financial information provide a reasonable basis for presenting the significant effects directly attributable to the event or transaction, and to obtain sufficient appropriate evidence about whether:

the related unaudited pro forma adjustments give appropriate effect to those criteria; and
the unaudited pro forma financial information reflects the proper application of those adjustments to the unadjusted financial information.

The procedures selected depend on the reporting accountants’ judgment, having regard to the reporting accountants’ understanding of the nature of the Group, the event or transaction in respect of which the unaudited pro forma financial information has been compiled, and other relevant engagement circumstances.

The engagement also involves evaluating the overall presentation of the unaudited pro forma financial information.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

— IV-7 —

PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX IV

Opinion

In our opinion:

(a) the unaudited pro forma financial information has been properly compiled on the basis stated;
(b) such basis is consistent with the accounting policies of the Group; and
(c) the adjustments are appropriate for the purposes of the unaudited pro forma financial information as disclosed pursuant to paragraph 29(1) of Chapter 4 of the Listing Rules.

SHINEWING (HK) CPA Limited

Certified Public Accountants

Wong Chuen Fai

Practising Certificate Number: P05589

Hong Kong

15 June 2023

— IV-8 —

COMPETENT PERSON’S REPORT

APPENDIX V

合資格人士報告 Competent Person’s Report

山東黃金礦業股份有限公司 SHANDONG GOLD MINING CO., LTD.

==> picture [106 x 35] intentionally omitted <==

寶萬礦產有限公司 BAW MINERAL PARTNERS LIMITED

31 May 2023

— V-1 —

COMPETENT PERSON’S REPORT

APPENDIX V

合資格人士報告 Competent Person’s Report

Prepared for

山東黃金礦業股份有限公司 SHANDONG GOLD MINING CO., LTD.

寶萬礦產有限公司 BAW MINERAL PARTNERS LIMITED

31 May 2023

BAW Project Number: 060-WWL-CPR-2113

Complied by: Guangnan Li Peer Review by: Karfai Leung

Author: Baiqiu Wang, Shugang Zhao, Tao Xu, Wenhong Cao, Guangnan Li

— V-2 —

COMPETENT PERSON’S REPORT

APPENDIX V

Disclaimer

This report has been prepared solely in accordance with the specific requirements and instructions of the Client. The opinions expressed in this report have been based on the information supplied to BAW by the client or through the virtual data room by the owner of Project T. BAW has exercised all due care in reviewing the supplied information. While BAW has compared the key supplied data with the expected value, the accuracy, and effectiveness of the results and conclusions from the report are completely dependent on the quality of the supplied data. BAW does not take responsibility for any errors or omissions in the supplied information and does not accept any consequential liability arising from commercial decisions or actions resulting from them. Opinions presented in this report apply to the site conditions and features as they existed at the time of BAW investigations, and those reasonably foreseeable. These opinions do not necessarily apply to conditions and features that may arise after the date of this report, about which BAW had no prior knowledge nor had the opportunity to evaluate.

BAW hereby certifies that neither BAW nor its directors, shareholders, or staff have any present or prospective interests in the Client or its mining properties. BAW is to receive the professional fee for its services (the work product of which includes this report) at its normal commercial rate and customary payment schedules. The payment of our professional fee is not contingent on the outcome of this report.

— V-3 —

COMPETENT PERSON’S REPORT

APPENDIX V

1	Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-15
	1.1	Background and Scope of Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-15
	1.2	Reporting Standard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-15
	1.3	Team Members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-16
	1.4	Site Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-16
	1.5	Independence Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-16
	1.6	Indemnities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-16
	1.7	Source of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-17
	1.8	Terms of Reference, Units, Abbreviations, and Currency . . . . . . . . . . . . . . . . . .	V-17
	1.9	Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-18
2	Banmiaozi Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		V-18
	2.1	Property Description and Location . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-18
	2.2	Accessibility, Climate, Local Resources, Infrastructure and Physiography . . . . .	V-20
	2.3	History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-22
	2.4	Geological Setting and Mineralization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-23
	2.5	Deposit Types . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-27
	2.6	Exploration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-27
	2.7	Drilling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-28
	2.8	Sample Preparation, Analysis and Security . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-30
	2.9	Data Verification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-32
	2.10	Mineral Resource Estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-32
	2.11	Mining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-48
	2.12	Processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-52
	2.13	Permitting, Environmental, Health and Social Impacts . . . . . . . . . . . . . . . . . . . .	V-60
	2.14	Economic Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-62
	Appendices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		V-65
3	Dachaidan Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		V-76
	3.1	Property Description and Location . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-76
	3.2	Accessibility, Climate, Local Resources, Infrastructure and Physiography . . . . .	V-79
	3.3	History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-80
	3.4	Geological Setting and Mineralization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-83
	3.5	Deposit Types . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-86
	3.6	Exploration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-86
	3.7	Drilling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-87
	3.8	Sample Preparation, Analysis and Security . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-88

— V-4 —

COMPETENT PERSON’S REPORT

APPENDIX V

	3.9	Data Verification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-91
	3.10	Mineral Resource Estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-91
	3.11	Mining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-104
	3.12	Processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-114
	3.13	Permitting, Environmental, Health and Social Impacts . . . . . . . . . . . . . . . . . . . .	V-125
	3.14	Economic Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-128
	Appendices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		V-132
4	Heihe	Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-142
	4.1	Property Description and Location . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-142
	4.2	Accessibility, Climate, Local Resources, Infrastructure and Physiography . . . . .	V-144
	4.3	History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-145
	4.4	Geological Setting and Mineralization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-147
	4.5	Deposit Types . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-152
	4.6	Exploration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-152
	4.7	Drilling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-153
	4.8	Sample Preparation, Analysis and Security . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-154
	4.9	Data Verification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-156
	4.10	Mineral Resource Estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-157
	4.11	Mining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-166
	4.12	Processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-172
	4.13	Permitting, Environmental, Health and Social Impacts . . . . . . . . . . . . . . . . . . . .	V-177
	4.14	Economic Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-179
	Appendices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		V-182
5	Yulong Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		V-192
	5.1	Property Description and Location . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-192
	5.2	Accessibility, Climate, Local Resources, Infrastructure and Physiography . . . . .	V-194
	5.3	History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-196
	5.4	Geological Setting and Mineralization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-198
	5.5	Deposit Types . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-202
	5.6	Exploration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-202
	5.7	Drilling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-204
	5.8	Sample Preparation, Analysis and Security . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-205
	5.9	Data Verification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-207
	5.10	Mineral Resource Estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-208
	5.11	Mining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-214

— V-5 —

COMPETENT PERSON’S REPORT

APPENDIX V

	5.12	Processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-222
	5.13	Permitting, Environmental, Health and Social Impacts . . . . . . . . . . . . . . . . . . . .	V-229
	5.14	Economic Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-233
	Appendices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		V-238
6	Huasheng Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		V-248
	6.1	Property Description and Location . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-248
	6.2	Accessibility, Climate, Local Resources, Infrastructure and Physiography . . . . .	V-250
	6.3	History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-252
	6.4	Geological Setting and Mineralization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-254
	6.5	Deposit Types . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-259
	6.6	Exploration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-259
	6.7	Drilling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-261
	6.8	Sample Preparation, Analysis and Security . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-261
	6.9	Data Verification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-263
	6.10	Mineral Resource Estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-263
	6.11	Mining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-271
	6.12	Processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-277
	6.13	Permitting, Environmental, Health and Social Impacts . . . . . . . . . . . . . . . . . . . .	V-283
	6.14	Economic Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-284
	Appendices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		V-288
7	Risk	Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-297
8	References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		V-300

— V-6 —

COMPETENT PERSON’S REPORT

APPENDIX V

List of Figures

— V-7 —

COMPETENT PERSON’S REPORT

APPENDIX V

Figure 3-11 Final pit boundary at Qinglonggou 323 South Mine from Changchun Gold Design
Institute, 2020 FS report (Source: Dachaidan) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-106
Figure 3-12 No. 1 System Processing Flowsheet Diagram. . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-116
Figure 3-13 No. 2 System Processing Flowsheet Diagram . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-118
Figure 3-14 Flotation Concentrate Dewatering (not run yet) + Roasting Processing Flowsheet
Diagram . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-119
Figure 3-15 CIL 1, CIL 2, CIL 3, Carbon Stripping and Electrowinning Processing Flowsheet . . V-120
Figure 3-16 Flotation Concentrate Dewatering (not run yet) + Roasting Processing Flowsheet
Diagram . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-121
Figure 3-17 Arsenic Precipitation, Acid Neutralization Processing Flowsheet Diagram . . . . . . . V-122
Figure 3-18 Application of different valuation Methodologies . . . . . . . . . . . . . . . . . . . . . . . . . V-130
Figure 4-1 Location of the Heihe Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-142
Figure 4-2 Satellite Image of the Heihe Project area . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-144
Figure 4-3 Regional Geological Map, Adjacent Area of the Heihe Project . . . . . . . . . . . . . . . . . V-148
Figure 4-4 Geological Map of the Dong’an Gold Deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-149
Figure 4-5 Representative Cross Section of the Dong’an Gold Deposit . . . . . . . . . . . . . . . . . . . V-150
Figure 4-6 Geological Map Showing the Alteration Zoning . . . . . . . . . . . . . . . . . . . . . . . . . . . V-151
Figure 4-7 Domain modelling for Dong’an gold mine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-157
Figure 4-8 Histogram and Log-probability plot for Composites and Capped-composites . . . . . . V-158
Figure 4-9 Varigraphy study for Dong’an deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-159
Figure 4-10 Swath plot Dong’an deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-162
Figure 4-11 Section plot for Dong’an deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-163
Figure 4-12 Mined out Stopes as of 2022/12/31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-164
Figure 4-13 Conceptual Dong’an sublevel stoping method at Dong’an Mine (Source: Heihe) . . . V-167
Figure 4-14 Conceptual Dong’an Upward Horizontal Layered Filling Method at Dong’an Mine
(Source: Heihe) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-168
Figure 4-15 The Heihe Existing Processing Flowsheet Diagram . . . . . . . . . . . . . . . . . . . . . . . . V-173

— V-8 —

COMPETENT PERSON’S REPORT

APPENDIX V

— V-9 —

COMPETENT PERSON’S REPORT

APPENDIX V

Figure	6-11	Pit limits at Maiwoba by BAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-272
Figure	6-12	Huasheng Mine Simplified Processing Flowsheet Diagram . . . . . . . . . . . . . . . . . . V-278
Figure	6-13	Application of different valuation Methodologies . . . . . . . . . . . . . . . . . . . . . . . . . V-286

— V-10 —

COMPETENT PERSON’S REPORT

APPENDIX V

List of Tables

Table 1-1 Terms of Reference, Units, Abbreviations and Currency	Table 1-1 Terms of Reference, Units, Abbreviations and Currency	. . . . . . . . . . . . . . . . . . . . . .	V-17
Table 2-1 Mining and Exploration Licenses, Banmiaozi Project	.	. . . . . . . . . . . . . . . . . . . . . . .	V-19
Table 2-2 Vertex Coordinates of the Mining License, Banmiaozi	Project . . . . . . . . . . . . . . . . . .		V-19
Table 2-3 Vertex Coordinates of the Exploration License, Banmiaozi Project . . . . . . . . . . . . . .			V-20
Table 2-4 Corner Coordinates of the Banshigou Exploration License . . . . . . . . . . . . . . . . . . . .			V-20
Table 2-5 Historical Annual Mining Summary of the Banmiaozi Project . . . . . . . . . . . . . . . . . .			V-23
Table 2-6 Summary of Major Sample Workings as of 31/12/2022		. . . . . . . . . . . . . . . . . . . . . . .	V-28
Table 2-7 Summary statistics of 1 m composites (Au) and topo cut grade threshold applied
during estimation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	.	. . . . . . . . . . . . . . . . . . . . . . .	V-33
Table 2-8 Varigraphy study for Jinying deposit . . . . . . . . . . . .	.	. . . . . . . . . . . . . . . . . . . . . . .	V-40
Table 2-9 Variogram parameters in Datamine™ZXY rotation .	.	. . . . . . . . . . . . . . . . . . . . . . .	V-40
Table 2-10 Block model attributes . . . . . . . . . . . . . . . . . . . . .	.	. . . . . . . . . . . . . . . . . . . . . . .	V-41
Table 2-11 Summary of Jinying Mineral Resources at a 1.0 g/t Au		cut-off as of 2022/12/31 . . . .	V-47
Table 2-12 Jinying Mine Mineral Reserve at a 2.0 g/t Au cut-off	as of 2022/12/31 . . . . . . . . . . .		V-50
Table 2-13 The preliminary Jinying mine schedule . . . . . . . . .	.	. . . . . . . . . . . . . . . . . . . . . . .	V-51
Table 2-14 Mine Major Equipment Summary . . . . . . . . . . . . .	.	. . . . . . . . . . . . . . . . . . . . . . .	V-52
Table 2-15 Processing Plant Throughput, Gold Grade and Overall		Recovery since 2019 . . . . . . .	V-56
Table 2-16 Flotation Process Closed-Circuit Test Result . . . . .	.	. . . . . . . . . . . . . . . . . . . . . . .	V-58
Table 2-17 Flotation Concentrate Leaching Test Result . . . . . .	.	. . . . . . . . . . . . . . . . . . . . . . .	V-58
Table 2-18 Flotation Tailing Leaching Test Result . . . . . . . . . .	.	. . . . . . . . . . . . . . . . . . . . . . .	V-58
Table 2-19 Blended Ore Leaching Test Result . . . . . . . . . . . . .	.	. . . . . . . . . . . . . . . . . . . . . . .	V-59
Table 2-20 Recommended Processing Test Result . . . . . . . . . .	.	. . . . . . . . . . . . . . . . . . . . . . .	V-59
Table 3-1 Mining and Exploration Licenses, Dachaidan Project	.	. . . . . . . . . . . . . . . . . . . . . . .	V-77
Table 3-2 1992-2002 Production Summary of the Tanjianshan area . . . . . . . . . . . . . . . . . . . . . .			V-82

— V-11 —

COMPETENT PERSON’S REPORT

APPENDIX V

Table 3-3 Annual Production of the Tanjianshan Area during 2011-2016 . . . . . . . . . . . . . . . . . .	Table 3-3 Annual Production of the Tanjianshan Area during 2011-2016 . . . . . . . . . . . . . . . . . .	V-83
Table 3-4 Summary of Major Sample Workings as of 31/12/2022 . . . . . . . . . . . . . . . . . . . . . . .		V-86
Table 3-5 Summary of Dachaidan mineralized domains . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . .	V-92
Table 3-6 Summary statistics of 1 m composites (Au) and topo	cut grade threshold applied
during estimation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . .	V-95
Table 3-7 Yintai Varigraphy study for Dachaidan deposit . . . .	. . . . . . . . . . . . . . . . . . . . . . . . .	V-97
Table 3-8 BAW Search radius and interpolation parameters for	Au (ppm) and interpolation
methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . .	V-97
Table 3-9 Summary of bulk density for each domain . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . .	V-97
Table 3-10 Variogram parameters in Datamine™ZXY rotation	. . . . . . . . . . . . . . . . . . . . . . . .	V-98
Table 3-11 Block model attributes . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . .	V-98
Table 3-12 Summary of Dachaidan Mineral Resources at a 1.0	g/t Au as of 2022/12/31 . . . . . . .	V-101
Table 3-13 Dachaidan Mineral Reserve Blocks at a 2.0 g/t Au cut-off as of 2022/12/31 by BAW .		V-108
Table 3-14 The preliminary Dachaidan mine schedule by BAW	. . . . . . . . . . . . . . . . . . . . . . . .	V-111
Table 3-15 Mine Major Equipment Summary . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . .	V-112
Table 3-16 Mine Major Equipment Summary (Source: Dachaidan) . . . . . . . . . . . . . . . . . . . . . .		V-113
Table 4-1 Corner Coordinates of the Mining License, Heihe Project . . . . . . . . . . . . . . . . . . . . .		V-143
Table 4-2 Historical Annual Mining Summary of the Heihe Project . . . . . . . . . . . . . . . . . . . . .		V-147
Table 4-3 Summary of Major Sample Workings as of 31/12/2022 . . . . . . . . . . . . . . . . . . . . . . .		V-153
Table 4-4 Summary statistics of 1 m composites (Au) and topo	cut grade threshold applied
during estimation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . .	V-158
Table 4-5 Varigraphy study for Dong’an deposit . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . .	V-159
Table 4-6 Variogram parameters in Datamine™ZXY rotation	. . . . . . . . . . . . . . . . . . . . . . . . .	V-160
Table 4-7 Block model attributes . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . .	V-160

Table 4-8 Summary of Dong’an Mineral Resources at a 1.0 g/t Au cut-off as of 2022/12/31 . . . . V-165

— V-12 —

COMPETENT PERSON’S REPORT

APPENDIX V

— V-13 —

COMPETENT PERSON’S REPORT

APPENDIX V

Table 6-4 Resource Estimate of the Huasheng Project by SRK, as of 31/12/2015 . . . . . . . . . .	. . V-253
Table 6-5 Reserve Estimate of the Huasheng Project by SRK, as of 31/12/2015 . . . . . . . . . .	. . V-253
Table 6-6 Historical Production Summary of the Huasheng Project . . . . . . . . . . . . . . . . . . .	. . V-254
Table 6-7 Summary of Major Sample Workings as of 31/12/2022 . . . . . . . . . . . . . . . . . . . . .	. . V-260
Table 6-8 Summary statistics of 1 m composites (Au) and topo cut grade threshold applied
during estimation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . V-265
Table 6-9 Varigraphy study for Huasheng deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . V-266
Table 6-10 Variogram parameters in Datamine™ZXY rotation . . . . . . . . . . . . . . . . . . . . . .	. . V-267
Table 6-11 Block model attributes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . V-267
Table 6-12 Search radius and interpolation parameters for Au (ppm) and interpolation methods	. V-267
Table 6-13 Summary of Huasheng Mineral Resources at a 0.3 g/t Au cut-off as of 2022/12/31	. . V-270
Table 6-14 Summary of Huasheng Mineral Reserve at a 0.5 g/t Au cut-off as of December 31,
2022, by BAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . V-273
Table 6-15 The preliminary Huasheng mine schedule by BAW . . . . . . . . . . . . . . . . . . . . . . .	. . V-274
Table 6-16 Current Mining Equipment in Use (Source: Huasheng) . . . . . . . . . . . . . . . . . . . .	. . V-275
Table 6-17 Major Mining Equipment by Changchun Gold Design Institute (2023) (Source:
Huasheng) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . V-276
Table 7-1 Risks Factors in association with the Gold Mine . . . . . . . . . . . . . . . . . . . . . . . . .	. . V-297

— V-14 —

COMPETENT PERSON’S REPORT

APPENDIX V

1 INTRODUCTION

1.1 Background and Scope of Work

BAW Mineral Partners Limited (“ BAW ”) was commissioned by Shandong Gold Mining Co., Ltd (“ SD Gold ” or the “ Client ”) in February 2023 to prepare the Competent Persons Report (“ CPR ”) for five mining properties owned by China Yintai Holdings Co., Ltd. (“ Yintai ”) (the “ Project ”) located in the People’s Republic of China (“ PRC ”) pursuant to the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves 2012 Edition (“ JORC Code 2012 ”) and Chapter 18 of Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (“ HKEX ”).

The purpose of this CPR is to provide an independent technical assessment of the mining properties in relation to its various aspects, in particular, project geology, drilling, sampling, sample preparation, resource estimates, mine planning, past production, reserve estimates, capital costs, operating costs and economic analysis with reference to the requirements of the JORC Code 2012.

The scope of work of BAW’s engagement is as follows:

Assessment of all the available technical information as of December 31, 2022.
Assessment of the completeness and reasonableness of the technical information made available to us by the Client.
Assessment of the resource models and their database.
Preparation of a resource estimate.
Development of an updated long-term mine plan and production schedule based on the optimized mining strategy, processing strategy, sale strategy,
Preparation of a reserve estimate.
Assessment of the processing and recovery operations.
Assessment of the tailing storage facilities.
Site visit.
Preparation of this CPR.

1.2 Reporting Standard

In this CPR, the standard adopted for the reporting of the Mineral Resources and Ore Reserves is that defined by the terms and definitions given in the Australasian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves (the “ JORC Code ”) prepared by the Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia revised in 2012. The JORC Code is a mineral resource/ore reserve

— V-15 —

COMPETENT PERSON’S REPORT

APPENDIX V

classification system that has been widely used and is internationally recognized. It has also been used in independent technical reports for mineral resources and ore reserve statements for the natural resource companies listed on the HKEX.

1.3 Team Members

The team members and their responsibilities are as below:

Mr. Shugang Zhao – review of resource model and estimation.
Dr. Baiqiu Wang – Review of regional geology and exploration review.
Mr. Tao Xu – Review of mining and reserve estimation.
Ms. Wenhong Cao – Review of processing, metallurgical and plant information.
Mr. Guangnan Li – Overall project management and coordination, economic analysis.
Dr. Weiliang Wang – Review of geology and internal review.
Mr. Karfai Leung – Review of the CPR.

1.4 Site Inspection

BAW has assembled a team of Competent Persons, including, Mr. Shugang Zhao and Dr. Baiqiu Wang, to undertake a site visit to the Project in March 2023. During the site visit, BAW had discussions with the mine personnel on technical aspects relating to the Project.

1.5 Independence Statement

BAW certifies that neither BAW nor its directors, shareholders, or staff have any present or prospective interests in the Client or its mining properties. BAW is to receive the professional fee for its services (the work product of which includes this report) at its normal commercial rate and customary payment schedules. The payment of our professional fee is not contingent on the outcome of this report.

1.6 Indemnities

The Client has provided BAW with an indemnity under which BAW is to be compensated for any liability and/or any additional work or expenditure resulting from any additional work required:

Which results from BAW’s reliance on material information provided by the Client;
Which relates to any consequential extension workload through queries, questions or public hearings arising from this CPR.

— V-16 —

COMPETENT PERSON’S REPORT

APPENDIX V

1.7 Source of Information

Information used to support this CPR was derived from previous technical data and reports prepared previously for the properties, from the reports and documents listed in the Section of Reference of this CPR, and from the technical and financial information provided by the Client.

1.8 Terms of Reference, Units, Abbreviations, and Currency

Unless otherwise stated:

All units of measurement in the Report are in the metric system.
All costs, revenues, and values are expressed in terms of Renminbi (RMB).
All metal prices are expressed in terms of Renminbi (RMB).

Table 1-1 Terms of Reference, Units, Abbreviations and Currency

AAS Atomic Absorption Spectroscopy COG Cut-off grade BAW BAW Mineral Partners G&A General and Administration cost CAPEX Capital Cost HG High Grade g/t Gram per ton KTPA or thousand tonnes per annum ktpa HQ3 Diamond drilling bit size LG Low grade IDW3 Inverse Distance Weighted Cubed MT or Million Tonnes mt RDDD Diamond drill holes MTPA Million tonnes per annum or mtpa km Kilometre NQ Diamond drilling bit size LOM Life of Mine OPEX Operating Capex m Meter PQ3 Diamond drilling bit size MW Megawatt PEA Preliminary Economic Assessment NQ3 Diamond drilling bit size CP Competent Person NPV Net present value TPA or tonnes per annum tpa PQ Diamond drilling bit size ROM Raw Ore Material/Run of Mine QA/QC Quality Assurance/Quality tpd Tonne per day Control RL Reduced Level TSF Tailings Storage Facility JORC Australasian Code for Reporting VALMIN Australasian Code for Public of Exploration Results, Mineral Reporting of technical Resources and Ore Reserves assessments and Valuations of mineral assets

— V-17 —

COMPETENT PERSON’S REPORT

APPENDIX V

1.9 Effective Date

The effective date for the Mineral Resources and Ore Reserves was December 31, 2022. BAW is not aware of any material changes to the information of the mining properties between the effective date and the signature date of this CPR except that the tonnage of the Mineral Resources and Ore Reserves may have been depleted by regular mining activities if any.

2 BANMIAOZI PROJECT

2.1 Property Description and Location

2.1.1 Property Location

The Banmiaozi Gold Project (“ Banmiaozi Project ”) is situated 6.3 km northwest of Baishan City in Jilin Province, China, and approximately 40 km northwest of the China-North Korea border (Figure 2-1). The administrative division falls under the jurisdiction of the Hunjiang District, Baishan City, Jilin Province. Changchun City, the provincial capital of Jilin Province, is located approximately 220 km northwest of the Banmiaozi Project.

==> picture [294 x 341] intentionally omitted <==

Figure 2-1 Location of the Banmiaozi Project

Source: Google Map

— V-18 —

COMPETENT PERSON’S REPORT

APPENDIX V

2.1.2 Ownership

The Banmiaozi Project, including all mineral resources and reserves, as well as all mining operations discussed in this CPR is owned by Jilin Banmiaozi Mining Ltd. (“ Jilin Banmiaozi ”), which is indirectly 95% owned by Yintai.

2.1.3 Tenure, Permit and License

Based on the information provided to BAW, details of the mining license and the adjacent exploration license are summarized in Table 2-1. The vertex coordinates of the licenses are provided in Table 2-2 and Table 2-3.

Table 2-1 Mining and Exploration Licenses, Banmiaozi Project

					Permitted
		Expiration			Ore
Property	License Number	Date	Area	Elevation	Production
			(km2)	(m)	(kt)
	Mining	License
Jinying	C1000002011044110112056	13/12/2025	2.0514	750~-200	800
Mining
Area

Exploration License

Banmiaozi T2200002008054010000429 26/04/2024 0.0811 / / Exploration Area (Preserved)

Table 2-2 Vertex Coordinates of the Mining License, Banmiaozi Project

	Chinese Geodetic Coordinate System 2000 (“CGCS2000”)	Chinese Geodetic Coordinate System 2000 (“CGCS2000”)
Vertex	Coordinates No.	Eastings/m	Northings/m
1		4650105.96	42530809.53
2		4651097.67	42531794.94
3		4650913.27	42531956.94
4		4651626.17	42532667.24
5		4651104.07	42533198.95
6		4651011.57	42533199.45
7		4649957.76	42532168.44
8		4649955.46	42531661.94
9		4649614.56	42531318.14

— V-19 —

COMPETENT PERSON’S REPORT

APPENDIX V

Table 2-3 Vertex Coordinates of the Exploration License, Banmiaozi Project

Geographic Coordinate System

Vertex	Longitude ° E	Latitude ° N
1	126.2402423	41.5940225
2	126.2402426	41.5937227
3	126.2345959	41.5924788
4	126.2403159	41.5924728
5	126.2403159	41.5940223

Source: National Mineral Exploration and Mining Information Publicity System, China

Yintai has provided the necessary permits and licenses required for the current operation of the Banmiaozi Project, including the Mine Safety Production License, Tailings Safety Production License, Water Extraction Permit, Radiation Safety Production License, Blasting Operation License, and Pollution Discharge Permit. However, BAW did not independently verify the information related to the location, area, and status of these permits and licenses.

2.1.3.1 Banshigou Exploration License

In addition to the two licenses previously mentioned, Jilin Banmiaozi also manages another nearby exploration right, namely the Banshigou exploration license. This license is owned by Yintai Shengxin Mining Co., Ltd., a subsidiary indirectly controlled by Yintai with a 75% interest. The license spans an area of 7.15 square kilometers and remains valid until July 2025. The corner coordinates for this license can be found in Table 2-4.

Table 2-4 Corner Coordinates of the Banshigou Exploration License

			System
Corner	Coordinates	No.	Longitude ° E	Latitude ° N
1			126.2604	42.0131
2			126.2729	41.5942
3			126.2558	41.5942
4			126.2525	42.0032
5			126.2433	42.0032
6			126.2433	42.0056
7			126.2535	42.0132

2.2 Accessibility, Climate, Local Resources, Infrastructure and Physiography

2.2.1 Accessibility

The Banmiaozi Project is easily accessible via a 2 km paved road that connects to the Baishan-Changchun highway. The nearest railway station is situated 7 km away in Baishan City. The project area benefits from well-established railway and highway networks that provide connections to

— V-20 —

COMPETENT PERSON’S REPORT

APPENDIX V

Changchun, Tonghua, and other surrounding areas. The closest airport to the project site is in Tonghua City, 53 km away, offering daily domestic flights to major international airports in the region, such as Beijing.

2.2.2 Topography, Elevation, and Vegetation

The Banmiaozi Project is situated on the southwest foothills of the Changbai Mountains, south of the Longgang Mountains, and northwest of the Hunjiang Valley. The area’s mountain ranges generally run in a northeast direction and are part of the middle and low mountainous regions. The terrain predominantly slopes from the southwest to the northeast, with the highest elevation at 830 m on the southwestern boundary and the lowest point near the 5th bend at an altitude of 545 m, resulting in a relative height difference of 285 m. The area features a complex landscape, with valleys mostly forming a “V” shape. The terrain is significantly dissected, and the slope of the mountain sides generally varies between 30° and 40°.

2.2.3 Climate

The Project area is situated in the North Temperate Zone and experiences a continental monsoon climate. Spring is characterized by dry and windy conditions, while summer is hot and rainy. Autumn is typically dry and arid, and winter brings cold and snowy weather. The highest temperature can reach 35 °C, and the lowest may plummet to -36.5 °C, with an average annual temperature of 3.8 °C. The average annual precipitation is approximately 860 mm, with the rainy season primarily occurring from June to August. The average annual evaporation is 1,100 mm. The area typically experiences freezing conditions in November, with thawing beginning in April of the following year. The maximum depth of frozen soil can reach 1.60 m.

2.2.4 Local Resources and Infrastructure

The mining area features favorable runoff conditions and lacks any large bodies of water, with only two tributaries of the Hun River – the Diaoshui River to the west and the Banshigou River to the east – flowing from northwest to southeast before joining the Hun River, which is part of the Yalu River system. In this Project, a portion of the mine inflow water is treated and reused in production, while the remaining water is discharged to the local river. The domestic water supply is sourced from the municipal tap water system of Baishan City.

The Banmiaozi Project’s power supply is from the Jiangbei substation, which is located 4 km from the mining area. This substation connects to the Project via a 66 kV overhead transmission line. The mine is equipped with a step-down substation featuring an SZ10-6300/66 kVA transformer with a 66/10.5 transformation ratio. The 66 kV equipment is installed outdoors, while the 10 kV distribution cabinet is indoors.

The Project area is predominantly agricultural, and mining is the leading industry. For instance, the Banshigou iron mine, the largest iron mine in Jilin Province, is located 3 km north of the Project area. This area benefits from well-developed infrastructure, ample water and electricity resources, as well as a substantial labor force.

— V-21 —

COMPETENT PERSON’S REPORT

APPENDIX V

2.3 History

2.3.1 Ownership

The initial exploration right of the Banmiaozi Project was granted to the Jilin Province Tonghua Geological and Mineral Exploration Development Institute (“ Tonghua Institute ”) in 2000. In 2004, the exploration license was transferred to Jilin Banmiaozi, a joint venture formed by the Tonghua Institute and Sino Gold Mining Limited (“ Sino Gold ”). The initial exploration area spanned 62.16 km² but has been reduced several times in 2010, 2014, and 2018, resulting in the current exploration area covering 0.0811 km². In April 2008, Jilin Banmiaozi obtained a mining license from the Ministry of Land and Resources. The license was valid for 11 years and covered an area of 2.0514 km², permitting underground gold mining with an approved annual ore production of 660,000 tons. The mining license was later extended to December 2025, with an increased capacity of production to 800,000 tons per year. Sino Gold was wholly acquired by Eldorado Gold Corporation (“ Eldorado ”) in 2009. In 2016, Yintai acquired Jilin Banmiaozi with its mineral rights of the Banmiaozi Project.

2.3.2 Exploration and Development

In 1998, the Tonghua Institute conducted a geological survey in the area. As a result, the Banmiaozi gold mineralization was discovered. Between 2001 and 2002, the Tonghua Institute continued the gold exploration work in the area, carrying out a 1:50,000 geochemical survey, which identified two anomalies of Au, As, Sb, and Hg. Drilling, trenching, and adit were conducted in these anomaly areas, leading to the recognition of two gold ore bodies.

From 2003 to 2007, the Tonghua Institute and Sino Gold jointly established Jilin Banmiaozi to continue field exploration. A total of 50,555 m of drilling, along with comprehensive exploration, led to the discovery of a large underground gold deposit, including No. I, II, III, and IV ore bodies. In March 2007, the “ Exploration Report of Jinying Gold Mine, Baishan City, Jilin Province ” (“ Exploration Report 2007 ”) was compiled.

In December 2015, Jilin Banmiaozi submitted a “ Resource/Reserve Verification Report of Jinying Gold Mine in Baishan City, Jilin Province ” (“ Verification Report 2015 ”), reporting the discovery of five new ore bodies, including No. II-1, II-2, IV-1, V (within the mining license area), and VI.

During 2017-2018, exploration focused on extending the No. V ore body from the mining license area into the exploration license area, primarily using underground drilling. In addition to the extension of No. V, several new ore bodies were discovered, including V-1 to V-5 and V-1’ to V-6’. In 2018, Jilin Banmiaozi compiled an updated “ Resource/Reserve Verification Report of Jinying Gold Mine in Baishan City, Jilin Province ” (“ Verification Report 2018 ”). Since 2019, the Banmiaozi Project has focused on the production exploration program, including underground drilling and sampling, to support mining operations and expand mineral resources. In 2019, Jilin Banmiaozi reported additional exploration results and compiled the “General Exploration Report of Banmiaozi Gold Mine in Baishan City, Jilin Province”.

Infrastructure construction for the Banmiaozi Project began in 2007, with a construction period of 1.5 years. In November 2008, trial production commenced, and mining operations began in December 2009.

— V-22 —

COMPETENT PERSON’S REPORT

APPENDIX V

2.3.3 Historical Resource and Reserve Estimates

Resource and reserve estimates were made in 2007, 2015 and 2019, in compliance with Chinese standards, and approved by the Ministry of Land and Resources. However, the resource and reserve estimates presented in Sections 2.10 and 2.11 are based on the JORC Code 2012.

2.3.4 Production

The Banmiaozi Project started its production in 2009 with a licensed annual capacity of 660,000 tons, which increased to 800,000 tons in 2019. The processing plant has a theoretical maximum capacity of 900,000 tons per year, while the actual capacity is 600,000 to 700,000 tons per year. The historical annual mining output is summarized in Table 2-5.

Table 2-5 Historical Annual Mining Summary of the Banmiaozi Project

Year	Ore	Au
	(t)	(t)
2009	275,343	1.008
2010	592,494	2.472
2011	709,318	3.239
2012	793,269	3.090
2013	823,658	2.939
2014	658,500	2.636
2015	645,314	2.568
2016	654,945	2.187
2017	573,034	2.701
2018	568,076	2.442
2019	365,696	1.210
2020	607,693	2.327
2021	459,942	1.907
2022	376,192	1.832

Source: Annual Reserve Report of the Banmiaozi Project, 2009-2022

2.4 Geological Setting and Mineralization

2.4.1 Regional Geology

The Banmiaozi Project is located in the eastern North China Craton, adjacent to the Longgang Block, within the Liaoning-Jilin orogenic belt and the Laoling uplift zone (Figure 2-2). This orogenic belt is situated in the eastern part of the North China Craton and is in faulted contact with the Langlin and Longgang blocks to the southeast and northwest, respectively. The belt has undergone multiple tectonic-magmatic-metamorphic events, including rifting and orogenesis in the Palaeoproterozoic, the development of a superimposed Neoproterozoic-Palaeozoic basin, the collision between the Siberian Plate and the North China Craton during the late Palaeozoic-early Mesozoic, and subduction of the

— V-23 —

COMPETENT PERSON’S REPORT

APPENDIX V

Palaeo-Pacific Plate beneath the North China Craton during the Mesozoic. Within this complex evolution, numerous deposits rich in metallic and non-metallic minerals were formed in the Liaoning-Jilin orogenic belt.

==> picture [440 x 378] intentionally omitted <==

Figure 2-2 Regional Geological Map

Source: Li et al., 2020

The stratigraphy of the Banmiaozi Project and its peripheral area is dominated by Archaean, Proterozoic, and Phanerozoic strata. The Archaean strata, mainly consisting of the Yangjiadian Formation (Anshan Group), are located in the northwest of the Project area. These strata mainly occur as xenoliths within Mesoarchean rocks of the tonalite-trondhjemite-granodiorite (“ TTG ”) series. The lithologies include amphibolite, biotite-plagioclase gneiss, mica schist, garnet-biotite granulite, siliceous garnet-biotite-plagioclase gneiss, and magnetite quartzite. These volcanic and sedimentary ferro-siliceous formations have been metamorphosed to amphibolite facies, with some granulite-facies assemblages also recognized locally.

The Paleoproterozoic Ji’an Group is mainly composed of a volcanic-sedimentary sequence characterized by marble-bearing polysilicon, high-Al and -Fe rocks. The Mesoproterozoic Laoling Group is the main exposed strata in the central and western parts of the Banmiaozi Project area, including the

— V-24 —

COMPETENT PERSON’S REPORT

APPENDIX V

Linjiagou and Zhenzhumen Formations. The lithologies are dominantly feldspar quartzite, quartzite, leptite, granulite, calcsilicate, carbonaceous slate, marble, and dolomitic marble.

The Neoproterozoic stratigraphy consists of the Sinian and Qingbaikou System, with the Diaoyutai and Nanfen formations of the Qingbaikou System widely exposed in the central and southeastern parts of the Project area. The outcrops mainly comprise medium-grained grey-white quartz sandstone, siltstone, and shale. The gold mineralization is found within a silicified tectonic breccia belt developed at the contact between the Diaoyutai Formation and the underlying Zhenzhumen Formation.

The Qiaotou Formation (medium-to-fine-grained quartz sandstone and siltstone), the Wanlong Formation (laminated limestone and micrite limestone), and the Badaojiang Formation (stromatolitic and algal limestones) of the Sinian System are distributed in the central-southern part of the mining area. The Cambrian strata are mainly distributed in the southeastern part of the Project area, consisting of sandstone, siltstone, shale, tuff, and limestone, unconformably underlain by the Upper Proterozoic strata.

The majority of regional magmatic rocks in the area are Archaean metamorphic plutonic rocks (TTG), making up over 80% of the Archaean outcrops. The TTG is comprised of tonalitic gneiss and trondhjemite and has been subject to weak magmatic activity since the Proterozoic, with granodiorite porphyry, granite porphyry, and diorite porphyry veins sporadically distributed. The regional fold-thrust system resulting from NW-trending compression includes NE-trending thrust faults and NW-trending compressional torsional faults, which developed under the same stress field as NW-trending nappes. The ore is hosted mainly in the silicified tectonic breccia belt superimposed on the NE-trending faults.

2.4.2 Ore Deposit Geology and Mineralization

The Banmiaozi gold deposit is hosted within an irregular stratiform-like silicified tectonic breccia belt that generally consists of at least two stages of breccia formation. The first stage formed along the unconformity before mineralization, and the second stage formed coevally with mineralization, and there is a superposition between the two.

The composition of the breccias is complex and includes haematite-quartz sandstone, silicified quartz sandstone, silicified dolomite marble, minor quartzite, shale, diorite porphyry, haematite, and baryte. The cement is mainly a mixture of powdered rocks and minerals, including silica, calcium-iron, and baryte. The metallogenic belt hosts several gold orebodies, which show stratiform-like or lenticular shapes (Figure 2-3). The hanging wall of the ore body shows distinct alterations as silicification and pyritization. Weak silicification is evident in the footwall marble, but the alteration zone is much narrower than in the hanging wall. The main mineralization occurs with the alteration of silicified-pyritized-baryte. The ore minerals are predominantly native gold with minor silver-bearing native gold and electrum, which occur in pyrite, quartz, chalcedony, baryte, dolomite, minor iron dolomite, sericite, and chlorite. Studies of fluid inclusions within baryte indicate that the initial ore-forming fluids were medium to low temperature, low density, and composed mainly of H2O and CO2. Mixing with metamorphic fluids during the ore-forming process was the main mechanism of mineralization.

— V-25 —

COMPETENT PERSON’S REPORT

APPENDIX V

==> picture [400 x 286] intentionally omitted <==

Figure 2-3 Geological Map of the Banmiaozi Gold Deposit

Source: Li et al., 2020

2.4.3 Mineralization

A total of 9 major ore bodies, numbered I, II, II-1, II-2, III, IV, IV-1, V, and VI have been recognized. Among them, I, II, III, and IV are the main ore bodies, and all 9 ore bodies have a stratiform-like shape and are distributed in a northeast direction of 40°-60°, with a total discontinuous extension of 1,970 m, trending southeast at an inclination angle of 48°-61° (Figure 2-4). Three ore bodies, I, II, and VI, are exposed on the surface, while the remaining 6 ore bodies, II-1, II-2, III, IV, IV-1, and V, are concealed. I, II, III, and IV are partially connected and dip to the northeast. II, II-1, II-2, V, and VI are independent ore bodies. Among them, I, II, III, and IV are the main ore bodies, while the other 5 are minor ore bodies.

— V-26 —

COMPETENT PERSON’S REPORT

APPENDIX V

==> picture [341 x 297] intentionally omitted <==

Figure 2-4 Cross-section of No. I Ore Body along Exploration Line No. 34

Source: Jilin Banmiaozi, 2018

2.5 Deposit Types

The Laoling uplift zone, situated within the Liaoning-Jilin orogenic belt, is a significant tectonic-magmatic belt associated with Au-polymetallic mineralization. This area has not only produced large gold deposits such as Banmiaozi and Huanggoushan but also more than 100 medium-small gold deposits, including Baligou, Nancha, Dasongshu, Taojingou, Wudaoyangcha, Xiaoshiren, Tianqiaogou, Taiyangcha, Nandapo, and Daqinggou. The Banmiaozi gold deposit was formed in a tectonic setting involving the subduction of the Palaeo-Pacific Plate beneath the North China Craton. Its characteristics, as described in the previous section, indicate that it can be classified as a collisional orogenic gold deposit.

2.6 Exploration

The exploration and development activities were carried out following the “ Specifications for Hard-Rock Gold Exploration ” (DZ/T0205-2002) and “ General Requirements for Solid Mineral Exploration ” (GB/T13908-2002; GB/T13908-2020). These regulations specify the type of work that must be undertaken in each evaluation or verification phase.

From 2003 to 2008, exploration work for the Banmiaozi Project focused on surface activities, including topographic and geological mapping, geophysical survey, trenching, and diamond drilling with minor underground channel sampling. Since the mine commenced production in 2009, a limited amount

— V-27 —

COMPETENT PERSON’S REPORT

APPENDIX V

of surface exploration, such as diamond drilling, has been maintained. However, the primary focus of systematic exploration has shifted to underground activities, including extensive underground diamond and rotary drilling, tunnelling, and underground channel sampling. The exploration grid spacing is generally 40-80 × 40-80 m. Based on the exploration database provided to BAW, major sample workings as of the end of 2022 are summarized in Table 2-6.

Table 2-6 Summary of Major Sample Workings as of 31/12/2022

Type Surface Drill Hole Underground Diamond Drill Hole Underground Rotary Drill Hole Surface Trench Underground Channel Total	Collar 358 3,270 1,943 44 17,920 23,535	Depth (m) 111,845.7 299,697.48 30,592.00 1,329.93 119,254.70 562,719.90	Samples 15,883 101,222 20,314 695 53,450
			191,564

Surface and underground surveys strictly followed the “ Specifications of Survey for Geological and Mineral Resources Exploration ” (GB/T18341-2001) and were carried out using a total station. incorporating the Beijing Coordinates System (1954) and Chinese Geodetic Coordinate System 2000 (“ CGCS2000 ”).

Trenching was conducted for exposing the surface alteration zones, ore-hosting structures, and ore bodies. However, due to the dense vegetation cover and thick weathered slope deposits (2-5 m) in the Project area, trenching was not used as the primary exploration method to improve efficiency and minimize environmental damage. Trenching was conducted vertically to the strike of the ore body, with a top width of 1.5 to 2.0 m, a depth of 1.2 to 1.8 m, and a bottom width of 1.0 to 1.3 m.

The production exploration and mining production adits were constructed either parallel or perpendicular to the ore bodies, with dimensions of 4.6 × 4.8 m and a slope of less than 3‰. The primary spacing is 20 × 30 m.

Channel sampling was used for sampling in underground adits and trenches. Channel placement was arranged to be as perpendicular to the ore body’s strike as possible. Samples were determined according to ore type, wall rock, and mineralization distribution. The sampling interval was predominantly 1 m; however, a small portion of samples might slightly exceed or fall short of this interval. The channel dimensions are 10 × 3-5 cm. Samples were cut using a diamond saw along the pre-drawn sketch lines on the wall and taken using a steel chisel.

2.7 Drilling

Surface and underground drilling at the Banmiaozi Project were contracted to third-party operators. Rotary drilling has been extensively utilized since 2017, especially for intensely altered rock beds, with chip samples collected. Diamond drilling was conducted on the surface from 2004 to 2020 and underground since 2004.

— V-28 —

COMPETENT PERSON’S REPORT

APPENDIX V

Diamond drilling primarily used an NQ-sized core, with a minor HQ-sized core. All drill hole collars were surveyed using a total station. Downhole surveys were performed with an inclinometer or downhole camera every 50 m for surface drilling and 30 m for underground drilling, with additional measurements taken at the roof and floor of the intercepted ore body. Hole depth correction measurements were taken every 100 m, as well as when encountering the ore body and at the end of the hole. According to the drill hole database provided to BAW, core recovery was acceptable, with over 95% of sample intervals for surface drill holes having a core recovery of at least 90%, and 80% of sample intervals for underground drill holes having a core recovery of over 85%, considering the conditions of the structure and alteration. Upon completion of drilling, the hole was sealed with cement and marked with a permanent cement monument.

Upon retrieving the core from the core barrel, it was placed in plastic core boxes and transported from the drill site to the logging facility. At the logging site, lengths were marked in the core boxes, and wooden markers were inserted with downhole measurements. By arranging the core boxes in order of depth, the core loss was verified, and the correct depths were marked in the boxes. Drill cores were then logged for lithology, alteration, mineralogy, and geotechnical data.

Sample intervals were established at nominal 1 m lengths. However, based on core recovery, lithology, alteration, structure, and mineralization, actual sample intervals predominantly ranged from 0.3 to 1.5 m.

A saw splitter was used to cut the core in half along its long axis at the logging site. One half was bagged, sealed, and marked for further sample preparation, while the other half was preserved in the original core box for future inspection. Drill cores have been stored on shelves in a core storage shed, with some historical drill cores piled on the ground outside the storage shed. Recently acquired underground drill cores have been placed at a storage site within an underground adit.

2.7.1 Discussion

It is clear that the latest exploration work was carried out years ago before BAW’s engagement for this CPR. As such, BAW was not able to observe the work during the course of drilling, density measurements, sampling procedures, sample preparation and geochemical analysis. However, BAW reviewed the protocol applied and considers the methods to be generally conformable with the Chinese national standards and industry practice. Assuming that no significant material biases have been introduced, BAW is of the opinion that the overall geological database and conformable with the industry practice and appropriate for subsequent use in Mineral Resources and Ore Reserves estimation in accordance with the requirement of the JORC Code 2012.

The existing drill core storage shed is over capacity, resulting in many core boxes being piled outside and within underground adits. Some core boxes have been damaged due to piling and exposure to weathering. BAW recommends that the storage shed should be expanded to improve the storage conditions for drill cores.

— V-29 —

COMPETENT PERSON’S REPORT

APPENDIX V

2.8 Sample Preparation, Analysis and Security

2.8.1 Density Determination

Based on the data provided to BAW, as of December 31, 2022, a total of 440 density measurements were completed by the Ministry of Land and Resources Changchun Mineral Resources Supervision and Inspection Center (“ Changchun Laboratory ”) on drill core and channel samples using the conventional water displacement method with wax-coated samples, with an average of 2.7 g/cm[3] .

2.8.2 Sample Preparation

Sample preparation was carried out by the Jilin Nonferrous Metal Geological Exploration Bureau 606 Brigade Laboratory (“ 606 Brigade Laboratory ”) and Jilin Province No. 1 Geological Survey and Testing Center (“ Jilin No. 1 Laboratory ”). Sample processing procedure: The original sample weight is generally 2-3.5 kg. Firstly, it is dried for 4-6 hours at a temperature controlled at around 80 °C. Then, it is crushed by a jaw crusher to 20-80 mesh and rifle split into the coarse duplicate and primary samples. The primary sample was pulverized by a rod mill to 200 mesh and rifle split into a fine duplicate and primary sample for further assay.

2.8.3 Sample Analysis

The sample analysis was carried out by the Xi’an Nonferrous Geology Research Testing Center (“ Xi’an Laboratory ”) before 2007 and the Changchun Laboratory during 2008-2015. Jilin No. 1 Laboratory has been used as the primary assay laboratory since then, with a small portion of samples analyzed by Jilin Province No. 5 Geological Survey Laboratory (“ Jilin No. 5 Laboratory ”) to compile the Verification Report 2018.

The gold content of the samples was determined using the method of activated carbon absorption-atomic absorption spectrometry (“ AAS ”). The analytical procedure involved aqua regia digestion, Au preconcentration with activated carbon cloth, heating the Au-absorbed cloth at 650-700 °C, hydrochloric and nitric acid digestion, and measurement using atomic absorption spectrometer.

Before 2018, ALS Laboratory in Australia (“ ALS ”) and SGS Laboratory in Tianjin (“ SGS ”) served as the umpire laboratory for external checks, employing the fire assay – AAS method for Au content determination. Recent external checks were conducted by Liaoning Provincial Geological and Mineral Research Institute Testing Center (“ Liaoning Laboratory ”). The assay work complied with Chinese standards “Geological and Mineral Laboratory Testing Quality Management Standards” (DZ/T 0130.1-1994; DZ/T 0130.1-2006).

Except for ALS and SGS, there is no information regarding internationally accepted accreditations for these laboratories. Xi’an Laboratory, Changchun Laboratory, Jilin No. 1 Laboratory, Jilin No. 5 Laboratory, and Liaoning Laboratory were reported in previous technical reports provided by Yintai to hold applicable provincial or national analytical certifications from relevant China authorities.

— V-30 —

COMPETENT PERSON’S REPORT

APPENDIX V

2.8.4 Quality Assurance and Quality Control

Jilin Banmiaozi performed the insertion of quality control samples, including standards and duplicates, at rates of 8.2% and 7.5%, respectively, according to the Exploration Report 2007. This demonstrates that 97.3% of the standard and 99% of the duplicate results yielded an acceptable level of assaying accuracy and precision. 1.5% of the total samples were sent to ALS for external examination, and 96.1% of them were deemed acceptable. Internal and external checks have also been conducted for the samples. According to the Verification Report 2015 and 2018, 9.44% of the total samples were analyzed for internal checks. The relative deviation of the sample and duplicate pairs was calculated to evaluate whether the results were acceptable. The internal check results showed that the acceptable rate for Au assay was 95.8%. 4.1% of the total samples were sent to SGS for external checks, with qualification rates for Au assay at 93.9%.

2.8.5 Sample Security

During the site visit, BAW reviewed the sample security protocol and found that the mine site personnel made reasonable efforts to ensure proper preservation, accurate logging, and secure transportation of samples. In BAW’s opinion, the implemented security protocol effectively maintains the validity and integrity of the samples.

2.8.6 Discussion

BAW did not visit the laboratories responsible for analyzing samples for the Banmiaozi Project, except the Jinlin No. 1 Laboratory. BAW reviewed the protocols and procedures of the Jinlin No. 1 Laboratory and found them to be following industry standards.

Fire assay is the industry-standard method for the gold assay used in resource estimation. BAW considers that the activated carbon absorption method, as an Au preconcentration method, may result in an underestimation of the final Au measurements. A portion of the historical samples was externally cross-checked using fire assay by ALS and SGS, which is considered adequate. To eliminate uncertainties for the recent samples, BAW suggests randomly selecting sample duplicates for re-assaying using the fire assay method and conducting a comparison study.

In compliance with relevant Chinese regulations, exploration or mining projects are required to periodically conduct verification reporting, which encompasses a comprehensive assessment of all aspects of exploration, production, and resource/reserve estimates. It should be noted that the standards followed in these verification reports are not entirely consistent with the JORC Code 2012, as they adhere to Chinese standards. However, the verification reports do provide additional validation for the historical data. The verification reporting was completed for the Banmiaozi Project in 2015 and 2018. The QA/QC program for assay analysis in the Banmiaozi Project was implemented as part of this verification reporting process. BAW considers the program to be of adequate quality, consistently applied, and routinely monitored. The Jilin No. 1 Laboratory has regularly carried out internal checks and sent samples for external checks since 2017, but the relevant data are unavailable for BAW to review. BAW recommends that Yintai continues to independently incorporate an adequate number of quality control samples, including standards, blanks, and duplicates, in all sample batches before submission to the assay laboratory in the future. This will enhance the monitoring of assay accuracy and precision.

— V-31 —

COMPETENT PERSON’S REPORT

APPENDIX V

2.9 Data Verification

2.9.1 Database

BAW recognizes that the Banmiaozi Project is subject to periodic authority agency reviews and verification reporting in compliance with the Chinese standard of “S pecification for Hard-Rock Gold Exploration ” (DZ/T 0205-2002). This specification rigorously outlines the detailed standards and requirements for various aspects such as exploration, drilling, sampling, assaying, QA/QC, mining, processing, etc.

BAW conducted the following verification procedures: interviewing on-site geologists and engineers; reviewing and validating the primary drilling and sampling database provided by Yintai; randomly selecting and cross-checking between logging data and original logging records, and between logging data and drill cores; assessing the existing geological interpretation and block model. After completing sufficient checks, BAW considers the drilling and sampling data, the interpreted geological framework, and the block model to be reasonable for use in Mineral Resource estimation.

2.9.2 Site Inspection

BAW experts conducted a site visit to the Banmiaozi Project in March 2023. The purpose of the visit was to inspect various aspects of the project, including mineralization, drilling operations, logging, sampling, the database, the assay laboratory, mining and processing operations, and mine infrastructure, in collaboration with on-site personnel. No independent verification samples were collected during the site visit.

2.10 Mineral Resource Estimates

The most recent resource estimate of Banmiaozi Jinying gold mine provided for our review was carried out by the Geology and Mineral Exploration and Development Bureau of Jilin Province in December 2018. The resource estimation report “Resource & Reserve Estimation Report (2018) for Baishan Jinying Gold Mine” was dated December 31, 2018. Wireframing and Ordinary Krigin-grade interpolation were used to build a block model at that time. Annual internal grade estimate and mining depletion were updated to Block Model based on the production data during the period from 2019 to 2022. The resource estimate and technical report were reviewed by BAW.

2.10.1 Wireframes

Gold mineralization of the Jinying deposit is mainly hosted by the breccia zone which is affected by faults F102 and F100. All domains are determined based on geology, alteration and the interpreted controls on mineralization from production experience. A cut-off value at 1.0 g/t Au is used to define domains. A total of 6 mineralization domains are generated for the resource estimate. Jinying mineralization is 1,970 m long along NE 40~60°, dipping southeast 48~61°.

— V-32 —

COMPETENT PERSON’S REPORT

APPENDIX V

==> picture [136 x 154] intentionally omitted <==

==> picture [299 x 154] intentionally omitted <==

Figure 2-5 Domain modelling for Jinying gold mine

2.10.2 Compositing

No composites were provided to BAW for review. Drill hole assay intervals are composited within the geological domains at 1.0 m and short intervals at the end of the domain are incorporated into the preceding interval by BAW.

2.10.3 Capping

No capping description and capped composites of about 2022 internal models were provided to BAW. According to the 2018 report, 26,397 samples were analyzed of which 5,163 samples were constrained by 6 domains. Histogram and probability plot were used when capping. Outliers were replaced by the value at the 97.5% distribution frequency point within each domain. The impact of Au grade outlier is evaluated on a geological domain basis by BAW respectively. BAW believes that the capping value for the 2018 model is appropriate. Considering the significant change in the dataset, BAW believes that the capping value of the 2018 model is a bit lower.

Table 2-7 Summary statistics of 1 m composites (Au) and topo cut grade threshold applied during estimation

Model	Domain	1	2	3	4	5	6
2018 Yintai	No of samples	2,060	877	870	1,068	52	135
	Capping Value	21.40	19.47	18.24	27.87	44.77	11.35
	Min	0.01	0.01	0.020	0.01	0.810	0.060
	Max	83.80	65.2	47.63	78.5	52.13	22.60
	Mean	4.69	5.11	4.45	5.75	7.93	3.47
	SD	6.19	5.48	5.11	7.62	9.22	3.17
	CV	0.99	1.32	1.33	1.49	0.96	0.95

— V-33 —

COMPETENT PERSON’S REPORT

APPENDIX V

Model	Domain	1	2	3	4	5	6
2022 Model	No of samples	26,048	10,551	16,030	20,552	17,367	123
	Capping Value	50.5	45.7	50.4	67.3	60	12.6
	Min	0.01	0.01	0.01	0.01	0.01	0.01
	Max	86.81	65.2	68.32	164.99	124.32	22.6
	Mean	3.8	4.32	4.14	4.22	4.89	3.03
	SD	5.27	5.11	5.93	6.89	7.93	3.7
	CV	1.39	1.18	1.43	1.63	1.62	1.22
2018 Capped	No of samples	2,060	877	870	1,068	52	135
Model	Min	0.01	0.01	0.02	0.01	0.81	0.06
	Max	21.4	19.56	18.24	27.77	44.67	11.35
	Mean	4.41	4.91	4.27	5.45	7.79	3.38
	SD	4.59	4.45	4.32	6.19	8.58	2.76
	CV	0.95	1.29	1.30	1.45	0.94	0.93
2022 Capped	No of samples	26,048	10,551	16,030	20,552	17,367	123
Model	No. of Capped	19	12	12	20	35	4
	Min	0.01	0.01	0.01	0.01	0.01	0.01
	Max	50.5	45.7	50.4	67.3	60	12.6
	Mean	3.79	4.31	4.13	4.2	4.85	2.87
	SD	5.12	5.04	5.83	6.57	7.57	3.07
	CV	1.35	1.17	1.41	1.56	1.56	1.07

==> picture [211 x 207] intentionally omitted <==

==> picture [212 x 207] intentionally omitted <==

— V-34 —

COMPETENT PERSON’S REPORT

APPENDIX V

==> picture [208 x 199] intentionally omitted <==

==> picture [208 x 216] intentionally omitted <==

==> picture [211 x 213] intentionally omitted <==

==> picture [211 x 216] intentionally omitted <==

— V-35 —

COMPETENT PERSON’S REPORT

APPENDIX V

==> picture [211 x 218] intentionally omitted <==

==> picture [211 x 222] intentionally omitted <==

==> picture [212 x 217] intentionally omitted <==

==> picture [212 x 218] intentionally omitted <==

— V-36 —

COMPETENT PERSON’S REPORT

APPENDIX V

==> picture [211 x 222] intentionally omitted <==

==> picture [212 x 216] intentionally omitted <==

Figure 2-6 Histogram and Log-probability plot for Composites and Capped-composites

2.10.4 Variograms

No Varigraphy modelling was provided to BAW.

BAW has attempted to develop variograms for each Au domain using capped composites as below:

==> picture [404 x 253] intentionally omitted <==

— V-37 —

COMPETENT PERSON’S REPORT

APPENDIX V

==> picture [404 x 272] intentionally omitted <==

==> picture [404 x 294] intentionally omitted <==

— V-38 —

COMPETENT PERSON’S REPORT

APPENDIX V

==> picture [404 x 277] intentionally omitted <==

==> picture [404 x 290] intentionally omitted <==

Figure 2-7 Varigraphy study for Jinying deposit

— V-39 —

COMPETENT PERSON’S REPORT

APPENDIX V

Table 2-8 Varigraphy study for Jinying deposit

			Zone		Nugget	Sill	Major	Semi	Minor
2018/2022	Yintai	all	Domain	1	7	11.07	65	54	26
			Domain	2	6.5	13.54	51	50	25
			Domain	4	7.1	30.18	46	30	10
BAW			Domain	1	0.26	0.74	49	35	24
			Domain	2	0.3	0.7	86	38	24
			Domain	3	0.15	0.75	133	50	14
			Domain	4	0.32	0.68	57	37	27

In BAW’s opinion, it is reasonable to classify Measured resources with 40 x 30 m drill spacing and Indicated resources with 80 x 60 m spacing, the same as the current technical report stated.

2.10.5 Bulk Density

A total of 330 special density tests were collected, of which 28 were from the 2005 exploration, 122 from the 2007 exploration, and 180 from the 2008 exploration. 321 of the bulk density samples were constrained by the domain, and the average value of 2.70 t/m[3] was used for the Jingying model.

2.10.6 Block Model

Block size is set at 5 m x 5 m x 2.5 m, with the sub-block at 2.5 m x 2.5 m x 1.25 m. A list of block model attributes is presented in the following Table. The volume block model was coded by 6 mineralized domains using the geological wireframes. Final block volumes were validated against the wireframe volumes. The dimensions and extent of the block model see as follows.

Table 2-9 Variogram parameters in Datamine[TM] ZXY rotation

	Origin	MAX	Parent-Cell	Sub-cell
Easting	531000	533265	5	2.5
Northing	4650000	4651350	5	2.5
RL	–250	780	2.5	1.25

Ordinary Krigin was used by Yintai for grade interpolation. 50 m and 100 m were used for two different passes when performing OK. Gold (Au ppm) was interpolated to the empty block model using IDW3 (Inverse Distance Cube) and OK methods by BAW. On considering the performance of Variograms, BAW believes that IDW3 is more suitable for the Jinying deposit, and fewer passes could cause over-smoothing of grade and the approach could result in larger tonnage and lower grade. Blocks interpolated bypass 1 within 40 m drill hole spacing are classified as Measured, and with 40-80 m spacing in pass 2 are classified as Indicated. The rest are classified as Inferred.

— V-40 —

COMPETENT PERSON’S REPORT

APPENDIX V

Table 2-10 Block model attributes

Attribute

Description

BLOCK Production block name IJK IJK number for each parent block ZONE Mineralization block number DENSITY Estimated in situ dry bulk density Au_idw Estimated gold value in ppm (idw3 method) Au_ok Estimated gold value in ppm (Kriging method) No of Samples Number of samples for grade interpolation (idw3 method) No of Holes Number of Holes for grade interpolation (idw3 method) SV Search volume category CAT Resource classification Mined Historical mining Depletion

2.10.7 Model Verification

To verify the current model, BAW has not only visually checked the Au block grade and the composite grade used for the estimation by sections, but also independently conducted Jinying Au resource estimate using the capped composites with Inverse Distance Cube (IDW3) through Datamine software. The resource estimations by Jinying and BAW are consistent.

==> picture [311 x 225] intentionally omitted <==

==> picture [139 x 257] intentionally omitted <==

==> picture [311 x 33] intentionally omitted <==

— V-41 —

COMPETENT PERSON’S REPORT

APPENDIX V

==> picture [449 x 191] intentionally omitted <==

==> picture [449 x 197] intentionally omitted <==

==> picture [415 x 236] intentionally omitted <==

==> picture [36 x 236] intentionally omitted <==

— V-42 —

COMPETENT PERSON’S REPORT

APPENDIX V

==> picture [380 x 250] intentionally omitted <==

==> picture [70 x 250] intentionally omitted <==

==> picture [446 x 199] intentionally omitted <==

— V-43 —

COMPETENT PERSON’S REPORT

APPENDIX V

==> picture [426 x 180] intentionally omitted <==

==> picture [391 x 222] intentionally omitted <==

==> picture [37 x 222] intentionally omitted <==

==> picture [249 x 202] intentionally omitted <==

==> picture [179 x 202] intentionally omitted <==

— V-44 —

COMPETENT PERSON’S REPORT

APPENDIX V

==> picture [426 x 199] intentionally omitted <==

==> picture [426 x 181] intentionally omitted <==

Figure 2-8 Swath plot for the Jinying deposit

— V-45 —

COMPETENT PERSON’S REPORT

APPENDIX V

==> picture [358 x 190] intentionally omitted <==

==> picture [358 x 188] intentionally omitted <==

==> picture [358 x 189] intentionally omitted <==

Figure 2-9 Section plot for the Jinying deposit

— V-46 —

COMPETENT PERSON’S REPORT

APPENDIX V

2.10.8 Resource Reporting

==> picture [398 x 152] intentionally omitted <==

Figure 2-10 Mined out Stopes as of 2022/12/31

The current resource estimate prepared by Jinying is based on a 1.0 g/t Au cut-off grade, which was used for the Jinying mine site.

Table 2-11 Summary of Jinying Mineral Resources at a 1.0 g/t Au cut-off as of 2022/12/31

Cut-off CAT 1.0 g/t Au Measured Indicated Total Measured + Indicated Inferred Total	TONNES (kt) 4,584 482 5,067 1,675 6,742	Au Grade (g/t) 4.03 3.62 3.99 3.72 3.92	Gold Metal (kg) 18,480 1,746 20,226 6,233
			26,459

Notes:

The Mineral Resource estimates are reported according to the JORC Code 2012.
The effective date for the Mineral Resource estimates is Dec 31, 2022.
Mineral Resource estimates account for mining depletion up to and including Dec 31, 2022.
A cut-off grade at 1.0 g/t Au was used for Jinying underground mining.
Applicable rounding has been applied to the stated tonnages, grades, and metal content to reflect the level of accuracy and precision of the estimate.

— V-47 —

COMPETENT PERSON’S REPORT

APPENDIX V

2.10.9 Conclusions and Recommendations

BAW visually inspected the Jinying block model grade against the composites, carried out a capping study, investigated variograms, interpolated Au grade with the Inverse Distance Cube method using Datamine and compared the volumetric of each domain with Yintai model. BAW concluded that the global resource estimation prepared by BAW and by Yintai has no material deviation, and the resource model provided by Jinying is acceptable.

BAW is aware that the mineralization is presumably open at depth and therefore further exploration and infill drilling is recommended for upcoming resource estimation.

According to the Yintai announcement, exploration was conducted in the Banshigou area from 2020 to 2023, and copper and gold mineralization was discovered, but drilling data were not provided to BAW for review.

2.11 Mining

BAW mainly relied on Jilin Banmiaozi Mining, 2021 Jinying Gold Mine Resources/Reserves Annual Report, Chifeng Yuanyechangshun, 2018 Verification Report on Resources and Reserves of Jinying Gold Mine, Changchun Gold Design Institute, 2017 FS report, the information and data provided by the Banmiaozi and collected from site inspection by BAW. BAW understands that a portion of the data is pending further updates.

2.11.1Mining Methods

This chapter summarizes the major operational mining method and the underground operation at Jinying Gold Mine of Jilin Banmiaozi Mining.

2.11.1.1 Mine Operation Status

Gold mines of Jilin Banmiaozi of Yintai Gold are located in Jilin; the province is rich in gold and non-ferrous metal resources.

The underground mine is accessed via declines, and decline transports the ore, waste rock, personnel and materials.

2.11.1.2 Mining Methods

The ore body makes it suitable for the use of underground mining. Underground access is using a combination of declines and shafts. Several mining methods have been used over the years.

— V-48 —

COMPETENT PERSON’S REPORT

APPENDIX V

2.11.1.2.1 Sublevel Open Stoping with Delayed Backfill

At present, most of the ore was extracted using the Jinying sublevel open stoping with delayed backfill method. The conceptual sublevel open stoping with delayed backfill method is shown in Figure 2-11.

==> picture [432 x 233] intentionally omitted <==

Figure 2-11 Conceptual Jinying sublevel open stoping with delayed backfill method at Jinying mine (Source: Banmiaozi)

The stoping mining method of Jinying mine is used for ore thickness between 10 m to 20 m, and the dip is between 52[o] and 65°. The mining followed by filling is suitable for ore rocks with moderate stability and above with a steep dip ore body.

The stopes are arranged to the longitudinal of the ore body, and each stope is mined respectively. The width of the stope is 20 m, and the length of the stope is the horizontal thickness of the ore body (standard 15 m). The stope height is 15 m or 30 m according to the thickness of the orebody and one access ramp is arranged in each stope with a spacing of 20 m.

Level spacing with a height of 15 m to 20 m and the level is connected by raises. Level roadways, which are located on orebody hanging walls are connected by ramps.

The ore is loaded by the CAT R1700G diesel loader to the CAT AD45B and VOLVO A35E trucks, and the ore is transported to the surface crusher or ore storage yard by a haul truck.

2.11.1.2.2 Other Mining Methods

Several mining methods other than Jinying sublevel open stoping with delayed backfill method, etc. have been used over the years.

— V-49 —

COMPETENT PERSON’S REPORT

APPENDIX V

2.11.2 Mineral Reserve Estimates

In this chapter, BAW reviewed and summarizes mining factors, economic factors, and the preliminary reserve estimation.

2.11.2.1 Factors

BAW makes conservative assumptions for Banmiaozi.

2.11.2.2 Reserve Estimation

The data discussed in the previous section of this chapter is used to create potential total reserve estimation. The potential reserve of a total of 4,013 kt with an average grade of 4.07 g/t at a 2.0 g/t cut-off summarizes in Table 2-12.

Table 2-12 Jinying Mine Mineral Reserve at a 2.0 g/t Au cut-off as of 2022/12/31

Cut-off CAT 2.0 g/t Au Proven Probable Total	TONNES (kt) 3,672 341 4,013	Au Grade (g/t) 4.08 3.94 4.07	Gold Metal Note (koz) 14,999 1,343 16,342

BAW Cautionary Note about Reserves Estimates:

This is only a preliminary reserve estimate with a conceptual Mine plan. The mineral reserve estimate, with an effective date of December 31, 2022, was prepared by BAW. BAW understands that due to a lack of data or information, a portion of the data is pending further updates.

2.11.3 Production Schedule

Before preparing this preliminary schedule, BAW reviewed the information and data provided by Banmiaozi and collected it from the site inspection by BAW. If there are any discrepancies, the content in the original report shall prevail. BAW understands that a portion of the data is pending further updates.

Based on the information provided to BAW, details of the mining license and the adjacent exploration license are summarized in the previous section.

Based on the information provided to BAW, historic production is summarized in the previous section.

— V-50 —

COMPETENT PERSON’S REPORT

APPENDIX V

The information and data for this preliminary schedule are described below:

From the Jinying production budget from Banmiaozi, the production of 703,000 t/a, 548,000 t/a, and 560,000 t/a are considered respectively for the Year 2023, the Year 2024 and Year 2025.
Banmiaozi Jinying Mining currently owns an 800,000 t/a mining license.
Assumed production of 800,000 t/a starting from 2026 after expansion.
Assumed comprehensive gold recovery from Section of Processing: 87.63%.
Gold production is based on economic targets.
The production schedule will be adjusted based on further data.

A preliminary mine scheduling was developed (Table 2-13)

Table 2-13 The preliminary Jinying mine schedule

			Year 1	Year 2	Year 3	Year 4	Year 5	Year 6	Year 7
ZONE	TONNES	Au grade	2023	2024	2025	2026	2027	2028	2029	Total
	(t)	(g/t)
	4,013,000	4.07	700,000	550,000	560,000	660,000	660,000	660,000	223,000
Total	4,013,000	4.07	700,000	550,000	560,000	660,000	660,000	660,000	223,000
		Grade g/t	4.07	4.07	4.07	4.07	4.07	4.07	4.07
		Rec. g/t	3.57	3.57	3.57	3.57	3.57	3.57	3.57
		Rec. gold
		OZ	80,500	63,250	64,400	75,900	75,900	75,900	25,645	461,494

Cautionary note that this is only a preliminary mine schedule based on a conceptual plan and a preliminary reserve estimate. BAW understands that a portion of the data is pending further updates. The preliminary schedule will be adjusted based on further data. BAW recommends that a complete supporting study and detailed long-term plan should be done in compliance with the Mine schedule.

2.11.4 Mining Equipment

Diesel and electric hydraulic equipment will be employed throughout the mine. The primary haulage fleet will consist of haul trucks and LHDs for the mineralized material, waste handling, secondary tasks, and backfill. Development drilling will be conducted using jumbos and long-hole drilling will be conducted using equivalent drills.

— V-51 —

COMPETENT PERSON’S REPORT

APPENDIX V

Equipment requirements were developed from the first principles, based on the maximum annual duty hours for an individual piece of equipment, modified for mechanical availability and projected utilization. A list of the major equipment used in the mine is shown in Table 2-14.

Table 2-14 Mine Major Equipment Summary

Major Equipment	Total
Jumbo (Boomer282)	5
Mining Jumbo (SIMBA H1354)	2
Scraper (R1700G)	3
Truck (A35E, AD45B)	6

2.11.5 Mine Service

This chapter summarizes the mine service at Jinying Gold Mine of Jilin Banmiaozi Mining.

2.11.5.1 Mine Drainage and Water Supply

The shafts are used to dewater the underground mine. The Shaft shall have some pump stations and an associated collection of sumps. Pumps operating status depends on sump levels. The underground water is pumped to the surface 400 m[3] pond by water treatment, which is a water supply for production and firefighting. There is a 10 m[3] water tank near the pond, which provides rescue water for the underground.

2.11.5.2 Compressed Air

The compressor houses are located in portal areas, with one MH200 air compressor (30 m[3] /min, 1.0 MPa) and one MH200VSD air compressor (30 m[3] /min, 1.0 MPa) for the underground.

2.11.5.3 Power Supply

The Baishan 220 kV Substation serves as the power supply for the mine substation. The 6 km LGJ-120/25 overhead line is used to lead to the 66/10 kV mine substation with two SZ11-10000 66/10 kV transformers. Mine substation then supplies power via a distribution line to other low-voltage users.

Six diesel generators set, as an emergency power source for mines, are installed to connect to the 10 kV power grid.

2.11.5.4 Communications

At present, a communication system is installed and used for the underground. A total of two optical cables are set for the system. One connects underground through the decline, and the other one through the air shaft.

2.12 Processing

The information in this section is based on all the mineral processing-related documents provided by Yintai. If there are any discrepancies, the content in the original test report shall prevail.

— V-52 —

COMPETENT PERSON’S REPORT

APPENDIX V

2.12.1 Process Description

The existing mineral processing plant was operated since 2011, the average feeding gold grade is about 3.26 g/t and the overall recovery is 87.63% as per the data of Jan. to Oct. 2022 from the cost of Jinying Mine of Banmiaozi.

The existing mineral processing flowsheet is as below in Figure 2-12.

==> picture [285 x 374] intentionally omitted <==

Figure 2-12 Banmiaozi Mine Process Flow Simplified Diagram

Main Mineral Processing Plant including below systems:

1) Two stages of crushing with one screening closed circuit.
2) Two stages of grinding and two stages of classifications of closed circuits.
3) Thickening and CIL system.
4) Carbon stripping, Electrowinning and carbon Regeneration System.

— V-53 —

COMPETENT PERSON’S REPORT

APPENDIX V

5) Smelting System.
6) Cyanide Destruction and Tailing Disposal.

1) Crushing and Screening

After the ore is blended in the ore yard, it is fed into the ROM bin by a forklift and then it is fed to C110 primary Jaw Crusher through 17GBZ160-7 Heavy-Duty Apron Feeder. The crushed products pass through 1# and 2# Belt Conveyors to 3# Belt Conveyor in the crushing plant, and then are fed to YA2460 Circular Vibrating Screen.

The downsize products of screening are fed into the intermediate buffer bin by 4# Belt Conveyor, and the ore is fed into a HP300 Cone Crusher by the Feeding Belt Conveyors at the bottom of the bin. The crushed products are discharged to 3# Belt Conveyor and are combined with the products of Jaw Crusher. The oversize products of screening are sent to Crushing Products Bin through 5# Belt Conveyor.

2) Grinding and Classification

The material in Crushing Products Bin is fed to the ball mill by the 6# Belt Conveyor through 4 sets of Belt Feeders, and the materials are transported to the MQY40×67 overflow type ball mill, by 6# Belt Conveyor. The ball mill discharges the slurry into the primary slurry pump tank, and then the primary slurry pumps the slurry into the primary classification- 1 set of φ375×4 hydro cyclone clusters. The underflow of the cyclone cluster flows to the feeding chute of the primary ball mill; the overflow of the cyclone flows to the secondary slurry pump tank. Then the secondary pump pumps the slurry into 1 set of φ258x8 cyclone cluster for pre-inspection and classification. The underflow of the secondary cyclone cluster flows to an overflow type ball mill- MQY40 x 67 forming a closed circuit; the overflow of the secondary cyclone cluster flows to a trash screen-DZSF-1536 for removing trashes from the previous processes, and the underflow of trash screen, P80 = - 45μm flows to a high-efficiency thickener- GX-18 for thickening the slurry to the concentrate around 45%.

3) Thickening and CIL System

The underflow of the thickener is pumped to 1# tank of the CIL system, which includes 10 units tanks of φ95000×10000 in sequence, by a 6/4D-AH (CR) slurry pump. When processing oxidizes ore, 1# tank is for alkali leaching; 2# to 4# are for leaching; 5# to 9# tanks are for leaching and adsorption. While processing sulfide ore, 1# to 4# are pre-leaching tanks and 5# to 9# are leaching and adsorption tanks; the 10# tank is a buffer tank. The tailing slurry from 9# flows to the safety screen- DZSF-1225 for screening. The overflow of the safety screen is processed separately, and the underflow of the safety screen is pumped to the cyanide destruction process.

New carbon is added to the adsorption tank- 9#, and transported to 8#, 7#, 6#, 5# through 5 sets of φ150 air lifters installed in adsorption tanks 5# to 9#. Air lifter of 5# tank lifts the loaded carbons to Loaded Carbon Separation Screen-DZSF-0916. The loaded carbons are transported to the carbon stripping and electrowinning process and the underflow of the Separation Screen flows back to 5# tank.

— V-54 —

COMPETENT PERSON’S REPORT

APPENDIX V

4) Carbon Stripping, Electrowinning and Carbon Regeneration System

The loaded carbons are transported to a storage tank and then fed to an acid-washing tank for washing with 30% hydrochloric acid. After acid washing, the loaded carbons are washed with water and then transported to the desorption column for desorption of Au (CN) 2- by spraying Nan and NaOH. Au (CN) 2- absorbed on loaded carbons are into the pregnant solution in the condition of required temperature, pressure and PH. Then after filtration and heating, the pregnant solution with Au (CN) 2- is fed to electrowinning cell. In the electrowinning cell, it has electrowinning reaction and Au (CN) 2- is deoxidized to the cathode or falls to the bottom of the electrowinning cell. When the amount of gold sludge in the electrolytic tank (the gold deposited on the cathode or the bottom of the tank is sludge, so it is called gold sludge) reaches a certain level, gold sludge is sent to the smelter for smelting and processing. The desorbed carbons are fed to the carbon regeneration system. The Carbon Regeneration System includes acid washing and rinsing, dewatering, heating, quenching, and screening, then the active carbons are reused in the CIL system.

5) Smelting

After the gold sludge is sent to the smelting room, firstly it is dried for the next process.

Add borax, soda ash, quartz and other ballasting agents to the dried gold sludge and smelt and purify it in an intermediate frequency alchemy furnace to produce alloy gold.

6) Cyanide Destruction and Tailings Disposal

A Cyanide Destruction

The underflow of the safety screen flows into two cyanide destruction mixing tanks for cyanide removal, adding cyanide removal agents copper sulfate and sodium metabisulfite to reduce the cyanide concentration in the slurry to below 1 ppm, to meet the safe discharge standard, then the slurry flows into the buffer tank, and then the slurry is pumped to the tailings filter press plant through three plunger pumps (two open and one standby).

B Tailings Disposal

After being filtered by four filter pressers, the filter cake with a moisture of about 20.5 % is conveyed to the tailings pond for dam building through the Belt Conveyors, and the filter pressers’ liquid is thickened and then returned to the return pool of the water plant for reuse. The tailings dry stockpile site is located in the small creek valley of Zengjiagou, about 600 meters southwest of the processing plant.

— V-55 —

COMPETENT PERSON’S REPORT

APPENDIX V

2.12.2 Recovery

Table 2-15 provides a summary of processing plant throughput, gold grade and overall recovery since 2019.

Table 2-15 Processing Plant Throughput, Gold Grade and Overall Recovery since 2019

		01-10,
Parameters	Unit	2022	2021	2020	2019
Total throughput	t	586,576	662,251	727,648	600,007
gold grade	g/t	3.26	3.28	3.34	2.80
overall recovery	%	87.63	86.97	87.18	88.96

As per the above data, the overall recovery is around 87% and the gold grade is about 3.26 g/t.

Overall recovery is lower than 90%, which is unnormal, and it may come from the ore type changes little by little along with the underground mining deep changing.

2.12.3 Test Work

Some test works have been done by the third party as well as the owners’ team based on different ROM, performing different processing methods, which can give some guidance for improving the gold recovery.

1) Metallurgical Test, by Changchun Gold Research Institute, 2005.08 and 2005.12

This test is introduced in Jinying Gold Mine Developing Plan , which was drafted by Changchun Gold Design Institute, 2017.12. It did the test on verifying the effecting of gold state on gold recovery.

2) Metallurgical Test, by an Australian company, 2006.03

This test has been done with 5 kinds of represented ore types, illustrating that the element of pyrite and the state of gold affect the recovery of leaching.

A. Blended Samples Test Result:

The cyanidation leaching rate of the representative mixed ore samples in the Jinying gold deposit ranges from 79.09% to 81.82% on average, and the grade of cyanide residue is 0.90 to 0.80×10[-6] ; the test ore sample (4.40×10[-6] ) is consistent with the selected grade in the first mining stage of the mine production in the design, and it is considered that the beneficiation test results are representative of the mixed ore. The gold leaching rate can reach 81.82% when the grinding particle size is 0.045 mm, accounting for 95% and the leaching time is 48 hours. This experiment is a test under the condition that the oxide ore and the sulfide ore cannot be distinguished, and they are mixed and mixed, and it indirectly reflects the average overall recovery rate of the whole mine so far.

— V-56 —

COMPETENT PERSON’S REPORT

APPENDIX V

B. Pilot Test Result

The leaching rate of representative ore samples in the Jinying gold deposit is between 82.8% and 85.29% on average, and the cyanide tailings grade is 0.65 to 0.76×10[-6] ; (4.42×10[-6] ), it is considered that the beneficiation test results are representative for the mixed ore. The gold leaching rate can reach 84.2% when the grinding particle size is 0.045 mm at 95% and the leaching time is 48 hours. This experiment is a test on representative No. II ore body with low-sulfur type ore, and it indirectly reflects the average overall recovery rate of the whole mine in the past two years.

The conclusion of this metallurgical Test includes: this test has determined the mine processing and smelting process and various process parameters. The overall recovery rate of beneficiation and smelting of the mine was 83.20% within six years of operation. After continuous exploration and research in production, the comprehensive recovery rate of processing and smelting has reached an average of 86.38% in the past three years, which is consistent with the test results.

3) Refractory Ore Metallurgical Test and Research Report-2007

Northwest Non-Ferrous Geological Research issued this test report in December 2007.

In the test report, the samples were crushed, processed, tested and analyzed. The ore is blended according to the request of the entrusting party, and finally mixed into one primary ore sample of five drill holes, one “full oxide ore” combined ore sample, one “full sulfide ore” “Combined ore sample, one composite sample of 80% oxide ore and 20% sulfide ore, one composite sample of 70% oxide ore and 30% sulfide ore.

The metal minerals of the Banmiaozi Gold Mine in Jilin are mainly pyrite, marcasite and limonite, the precious metal minerals are natural gold, and the non-metallic minerals are mainly quartz. The ore-bearing rocks are quartz sandstone and quartz fine sandstone. The particle size of gold is less than 0.006 mm, which is microscopic and ultramicroscopic gold. The occurrence states of gold minerals are mainly intergranular gold and wrapped gold.

— V-57 —

COMPETENT PERSON’S REPORT

APPENDIX V

The beneficiation and smelting test carried out detailed tests on five ores according to the fixed test process and conditions provided by the entrusting party. The technical indicators of the processing and smelting test process are as follows:

A. 100% Sulfide Ore Flotation Process Test

Flotation Process Closed-Circuit Test shows in Table 2-16.

Table 2-16 Flotation Process Closed-Circuit Test Result

			Gold
Product Name	Yield	Gold Grade	Recovery
	(%)	(g/t)	(%)
Concentrate	26.10	21.40	83.53
Tailings	73.90	1.49	16.47
100% Sulfide Ore	100.00	6.69	100.00

B. 100% Sulfide Ore Flotation Process Concentrate – Leaching Test

The flotation concentrates leaching test result is in Table 2-17.

Table 2-17 Flotation Concentrate Leaching Test Result

			Gold
	Flotation	Leaching	leaching
Gold Concentrate	Recovery,	tailing	Recovery,	Recovery,
Grade, g/t	%	Grade, %	%	%
21.40	83.53	9.66	54.86	45.82

C. 100% Sulfide Ore Flotation Process Tailing – Leaching Test

The flotation tailing leaching test result is in Table 2-18.

Table 2-18 Flotation Tailing Leaching Test Result

			Gold
	Flotation	Leaching	leaching
God Concentrate	Recovery,	tailing	Recovery,	Recovery,
Grade, g/t	%	Grade, %	%	%
1.49	16.47	0.40	73.15	12.03

The recovery of 100% sulfide ore flotation and then leaching (B+C) is 57.85%.

— V-58 —

COMPETENT PERSON’S REPORT

APPENDIX V

D. Blended Ore Leaching Test

The blended ore leaching test result shows in Table 2-19.

Table 2-19 Blended Ore Leaching Test Result

		Leaching	Gold
		Tailing	Leaching
Blended Ores	ROM Grade	Grade	Recovery
	(g/t)	(g/t)	(%)
100% Sulfide Ore	6.57	2.98	54.64
100% Oxide Ore	10.40	0.84	91.92
70% Oxide Ore	8.70	1.32	84.83
80% Oxide Ore	9.68	1.30	86.57

E. 100% Sulfide Ore Recommended Test

As per the above processing test, the flotation+flotation tailing leaching has been performed, and flotation concentrates are as the gold concentrate, overall gold recovery is 95.56%. Recommended processing test results are shown in Table 2-120.

Table 2-20 Recommended Processing Test Result

				Leaching
				Tailings
		Gold	Flotation	Gold	Gold		Overall
Product	Yield	Grade	Recovery	Grade	Leaching	Recovery	Recovery
	(%)	(g/t)	(%)	(g /t)	(%)	(%)	(%)
Gold Concentrate Flotation Tailing	26.10 73.90	21.40 1.49	83.53 16.47	0.40	73.15	83.53 12.03	95.56

4) Other Test Reports During Production

Besides the metallurgical test report done in 2007, below is the test reports list from the owner, which has been done mainly by the owner’s lab.

a) 2011 Oxide Ore and Sulfide Ore direct and indirect pre-leaching leaching test
b) 2011 Sulfide Ore CIL tailings test
c) 2011 Oxide Ore CIL tailings test
d) 2011 Slurry Heating Pretreatment Test
e) 2012 Grinding Fineness Test

— V-59 —

COMPETENT PERSON’S REPORT

APPENDIX V

f) 2012 6# Ore body Leaching Test
g) 2013 High, Medium, Low Sulfide Ore Leaching Test
h) 2013 Tailings Cake Test
i) 2013 NaOH Pre-leaching Leaching Test

In NaOH Pre-leaching Leaching Test, it compares the ore with and without NaOH pre-treatment and it also concluded that the net revenue of the ore with NaOH pre-leaching starting from grinding will be USD 20,026/day.

Based on the mining planning in 2023, 2024 and 2025, it can be known that the processing plant will still process mainly oxide ore with a small amount of sulfide ore. The overall gold recovery of 2022 is about 87.63%, which means the recovery still can be improved by some optimized test by the production team or by a third party based on the existing ore type.

2.13 Permitting, Environmental, Health and Social Impacts

2.13.1 Operational Licenses and Permits

BAW is aware that certain license such as business licenses, mining licenses, exploration licenses, safety production permits and water use permits are in place such the operation is in compliance with the regulatory and legal requirements of the PRC.

Table 2-21 Details of Mining License

Mining License Holder	Jilin Banmiaozi Mining Co., Ltd.
Name of Property	Jilin Banmiaozi
License Type	Mining
License ID	C1000002011044110112056
Area (km2)	2.0514
Elevation (m)	From 750 m to -200 m
Permitted Production Capacity	800 ktpa
Type of Commodities	Gold
Mining Method	Underground
Valid Period	13 April 2021 to 13 December 2025

— V-60 —

COMPETENT PERSON’S REPORT

APPENDIX V

Table 2-22 Details of Exploration License

License Type		Exploration
License ID		T22000020080504010000429
Area (km2)		0.0811
Valid Period		26 April 2022 – 26 April 2024
	Table 2-23 Details of the Business License
Property	Business License No	Issue Date	Permitted Activities
Jilin Banmiaozi	912206017536172674	09 February 2022	Exploration, Mining,
			Processing and Sales
	Table 2-24 Details of the Safety Production Permit
	Safety Production
Property	Permit No	Issue Date	Expiry Date
Jilin Banmiaozi	(2020) DXB5132	03 March 2022	06 December 2023

Table 2-25 Details of the Safety Production Permit (Tailing Storage Facilities)

	Safety Production
Property	Permit No	Issue Date	Expiry Date
Jilin Banmiaozi	(2022) WKBY0025	20 October 2022	19 October 2025

Table 2-26 Details of the Water Use Permits

				Water Supply	Water Use
Property	Water Use Permit No	Issue Date	Expiry Date	Source	Allocation (m3)
Jilin Banmiaozi	C220602G2022-0027	22 April 2022	21 April 2027	Groundwater	1.4879 Million

2.13.2 Environmental Management

In order to address the potential environmental impacts resulted from the mining operation, professional design research institutes were commissioned to carry out studies of Sustainable Development and Utilization Plan of Mineral Resources (“ SDP ”) for its various operation. SDP is a combination of Mineral Resources Development and Utilization Plan, Land Reclamation Plan, and Geological Environment Protection and Restoration Plan to assess various aspects, such as, impacts on ecology, land subsidence, water and soil conservation, underground hydrogeology, surface drainage, dust and air quality, noise control, solid waste and emission, regulatory compliance and planning of environmental monitoring pursuant to the regulatory and legal requirements of the PRC in relation to

— V-61 —

COMPETENT PERSON’S REPORT

APPENDIX V

nation-wide environmental, provincial environmental and administration. BAW understands that the SDPs were reviewed and approved by relevant government agencies pursuant to the regulatory and legal requirements of the PRC.

2.13.3 Occupational Health and Safety

Gold mining operation in the PRC is generally required to implement corporate safety policy and conducts its operations in accordance with the relevant national laws and regulations with respect to Occupational Health and Safety (“ OHS ”) in construction, mining, production, blasting and explosives handling, waste rock dump design, mineral processing, environmental noise, emergency response, water and soil conservation, fire protection and fire extinguishment, sanitary provision, power provision, labour and supervision. BAW understands that the gold mine generally implement OHS procedures in line with the national standards, attaching importance to a safe working environment for employees which protect them from potential occupational hazards and health and safety risks.

2.14 Economic Analysis

BAW reviewed the forecasted operation data and analyzed the late mine operation data provided by Mine. BAW also prepared a production schedule for the Banmiaozi project based on the information provided. To assess the economic viability of Minable Resources under the production schedule, BAW has performed an economic analysis for the Minable Resources estimated throughout the LOM. Determination of economic viability involves the sum of discounted annual free cash flow projected from the start of the year till the end of the LOM. The economic analysis is based on the following assumptions:

The economic analysis presented here is on a 100%-equity basis that shows the basic economics of the project.
It does not incorporate financing items such as interest paid, and loan principal paid back.
The analysis also does not incorporate any losses carried forward for tax purposes and any refund of valued-added taxes previously or currently paid.

2.14.1 Valuation Methodology

Market Approach

The market Approach measures the value of an asset through an analysis of recent sales or offerings of comparable property. Sales and offering prices are adjusted for differences in location, time of sale, utility, and the terms and conditions of sale between the asset being appraised and the comparable properties.

Income Approach

The income Approach measures the value of an asset by the present value of its future economic benefits. These benefits can include earnings, cost savings, tax deductions and proceeds from its disposition.

— V-62 —

COMPETENT PERSON’S REPORT

APPENDIX V

Cost Approach

The cost Approach measures the value of an asset by the cost to reproduce or replace it with another like a utility. To the extent that the asset being valued provides less utility than a new asset, the reproduction or replacement cost would be adjusted to reflect appropriate physical deterioration and functional and economic obsolescence.

2.14.2 Adopted Valuation Approach

Among the abovementioned valuation methodologies, the selection of the valuation method for the Banmiaozi Project is based on, among other things, the quantity and quality of the information provided, the availability of the data, the availability of relevant market transactions, the uniqueness of the Project, the nature of business and industry involved of the Project, professional judgment and technical expertise of the management.

The selection of the valuation approach is determined primarily by the stage of development of the concerned mineral asset. The chart below (Figure 2-13) shows the application of valuation methodology for valuing mineral assets.

==> picture [434 x 327] intentionally omitted <==

Figure 2-13 Application of different valuation Methodologies

— V-63 —

COMPETENT PERSON’S REPORT

APPENDIX V

2.14.2.1 Mineable Resource

Regarding the Mineable Resources of Banmiaozi Project, the income approach is considered to be the most suitable valuation methodology since its net present value can be measured by the present value of the future economic benefits. In addition, compared with the cost approach, the income approach can effectively and accurately reflect the future earnings of the Project. Among the income approaches, we adopted the approach of discounted cash flow projection. The adoption of such an approach for valuing the Mineable Resources is considered to be fair, reasonable and conformable with the industry practice.

2.14.2.2 Discounted Cashflow

In this method, the value depends on the present value of the economic benefits to be generated. The expected future cash flows available for payment of shareholders’ loans and interest (which, in certain circumstances, is used to repay the registered capital plus interest and dividends) are converted to their present value equivalent using a rate of return appropriate for the business risk.

The expected debt-free cash flow for each year was determined as follows:

FCF = EBIT (1 – T) + Dep – InvCapex – InvNWC

FCF = Expected Cash Flow

EBIT = Earnings before interest and tax

T = Tax rate

Dep = Non-cash items

InvCapex = Investment in capital expenditure

InvNWC = Investment in net working capital

The estimated cash flows for each of the years in the discrete projection period are then converted to their present value equivalent using a rate of return appropriate for the risk of achieving the asset’s projected cash flows. The present values of the estimated cash flows are then added to the present value equivalent of the residual value of the asset (if any) at the end of the discrete projection period to arrive at an estimate of the value of the specific asset. The present value of the expected free cash flow was calculated as follows:

PVCF = CF1/(1+r)[1] + CF2/(1+r)[2] + … + CFn/(1+r)[n]

In which

PVCF = Present value of free cash flows

CF = Estimated cash flows

— V-64 —

COMPETENT PERSON’S REPORT

APPENDIX V

r = Discount rate

n = Number of the year of projections

2.14.3 Gold Production and Revenue

According to the production plan developed by BAW, the Banmiaozi project will produce 13,517,190 g of gold. The long-term gold price is estimated to be 443.30 RMB/g, and the total revenue of gold should be CNY5,992.13 million.

2.14.4 Operating Cost and Capital Expenditure

The cash cost of LOM is estimated at CNY2,800.82 Million, while the capital expenditures are CNY134.41 Million.

2.14.5 NPV and Sensitivity Analysis

Regarding the Minable Resources of Project Banmiaozi, the income approach is considered to be the most suitable valuation methodology since its net present value can be measured by the present value of the future economic benefits. Therefore, such an approach can effectively reflect the future revenue of the project. The NPV of the Banmiaozi Project is CNY1,321.27 Million at a 9.09% discount rate. The sensitivity analysis shows that the NPV estimate is the most sensitive to commodity prices and discount rates.

Appendices

Appendix 1: JORC Code, 2012 Edition – Table 1

Section 1 Sampling Techniques and Data

Criteria

Commentary

Sampling Techniques • Trenching and tunnelling were conducted. Representative channel samples were collected using a diamond saw and chisel, with channel dimensions of 10 × 3-5 cm and a typical interval of 1 m.
Diamond and rotary drilling were employed. Diamond drill cores were cut along the long axis using a saw splitter. Rock chip samples were collected from rotary drilling. Sample intervals were primarily set at 1 m lengths.
Mineralization was identified based on lithology and alteration.

— V-65 —

COMPETENT PERSON’S REPORT

APPENDIX V

Criteria

Drilling Techniques

Commentary

Standard tube core drilling and rotary air blast rigs were utilized. Drill cores were primarily HQ-sized for surface drill holes and NQ-sized for underground drill holes.
Down-hole surveys were conducted using a digital inclinometer or downhole camera at intervals of 50 m for surface drilling and 30 m for underground drilling.

Drill Sample Recovery

The logging geologist measured drill core recovery for each run and recorded the results in the primary database. Core recovery was determined by dividing the drilling footage by the core length.
Upon encountering low sample recovery during drilling, the logging geologist and driller worked together to promptly rectify the problem and optimize recovery.
No relationship between sample recovery and grade was found.

Logging

Drill cores were qualitatively logged by geologists to capture details such as texture, grain size, lithology, alteration, structure, and recovery.
All drill hole cores were properly logged and photographed. Logging information was initially recorded on standardized logging sheets and subsequently digitized into the electronic database.
Sub-sampling techniques and sample preparation
Half-core samples were obtained by splitting drill cores in half.
Channel and rock chip samples were collected in their entirety for sample preparation, without splitting.
All samples underwent drying, crushing, splitting, and pulverizing according to the proper procedures. The Chichette formula (Q = k×d²) was used to determine the minimum allowable sample weight, where: Q represents the sample weight (kg), k is the coefficient determined by the ore type (0.2 for this rock type), and d is the maximum sample grain diameter (mm).
No field duplicates were collected.
On-site geologists deemed the sample size appropriate for the gold grain size observed.

— V-66 —

COMPETENT PERSON’S REPORT

APPENDIX V

Criteria

Quality of assay data and laboratory tests

Commentary

The use of activated carbon absorption with AAS may lead to an underestimation of the final gold determination. A portion of the results cross-checked by fire assay with AAS was deemed adequate. BAW recommends routinely cross-checking the primary results using the fire assay method.
Geophysical tools, spectrometers, and handheld XRF instruments were not utilized for assaying purposes.
Basic samples were analyzed by domestically certified Chinese laboratories, which implemented internal quality control procedures in line with relevant PRC standards. No systemic bias was reported.
Verification of sampling and assaying
BAW geologists carried out a field inspection of significant intersections.
No twinned holes were drilled.
All geological logging and sampling information was initially recorded on logging sheets and later digitized into an electronic database. Both physical and electronic logging and sampling records were well-maintained.
During the site visit, BAW reviewed data entry procedures, and storage protocols, and verified the primary data.
No adjustment was made to the assay data.

Location of data points

Drill holes, trenches, and adits were surveyed in compliance with relevant PRC standards by certified surveyors under the supervision of on-site geologists.
The Beijing Coordinate System (1954) and Chinese Geodetic Coordinate System 2000 were applied for this project.
Detailed topographic surveys were conducted by certified surveyors and deemed adequate for modelling and Mineral Resource estimation purposes.

Data spacing and distribution

The exploration grid was set at 40-80 × 40-80 m. Samples were collected continuously throughout mineralization zones and their contact zones in wall rocks, with a typical length of 1 m.

— V-67 —

COMPETENT PERSON’S REPORT

APPENDIX V

Criteria

Commentary

Orientation of data in relation to geological structure
Considering the deposit type, the drilling orientation and subsequent sampling are deemed unbiased for Mineral Resource estimation purposes.
The spacing of drill holes is sufficient to establish the degree of geological and grade continuity appropriate for the Mineral Resource and Ore Reserve estimation procedures and for the classifications applied.

Sample security

Jilin Banmiaozi managed the chain of custody for sample security. Samples were collected, packed, marked, and logged before being delivered to the laboratory for preparation and assaying. The drill cores were stored in a surface core shed and an underground tunnel, although some cores were placed outside the core shed.
Audits or reviews • All aspects of sampling techniques strictly adhered to relevant PRC national standards and specifications. BAW reviewed and cross-checked the sampling data.

Section 2 Reporting of Exploration Results

Criteria

Commentary

Mineral tenement and • BAW was provided with scanned copies of the original mining land tenure status and exploration licenses, and the details are stated in Sections 2.1.2 and 2.1.3 of this report.
Exploration done by other parties
Detailed information can be found in Section 2.3.2 of this report.
Geology • Detailed information can be found in Sections 2.4 and 2.5 of this report.

Drill hole Information

All drill hole information was entered into the database and utilized for Mineral Resource estimation. Due to the extensive amount of drill hole data, a detailed tabulation of this information is not presented.

— V-68 —

COMPETENT PERSON’S REPORT

APPENDIX V

Criteria

Data aggregation methods

Commentary

All samples are composited within the geological domains at a 1.0 m length, and short intervals at the end of the domain are incorporated into the preceding interval. A cut-off value of 1.0 g/t Au is used to define the domains.
Outliers were replaced by the value at the 97.5% distribution frequency point of the sample group within each domain, meaning 83.80 g/t was used for high-grade capping for domain 1 and, 65.2 g/t for domain 2, 47.63 g/t for domain 3, 78.5 g/t for domain 4, 52.13 g/t for domain 5, 22.60 g/t for domain 6.
No metal-equivalent approaches were applied.
Relationship between mineralization widths and intercept lengths
Diagrams
Balanced reporting
Other substantive exploration data
Gold mineralization of the Jinying deposit is mainly hosted by the breccia zone which is affected by faults F102 and F100. All domains are determined based on geology, alteration and the interpreted controls on mineralization from production experience.
Not Applicable in this report.
The reporting is fully representative of the data provided at this stage.
BAW is not aware of any other material or substantive exploration data that has not been reported.
Adequate samples were measured for specific gravity, as detailed in Section 2.8.1.
Further work
BAW was informed that Jilin Banmiaozi would conduct further underground drilling and sampling programs within the current mining and exploration licenses.

— V-69 —

COMPETENT PERSON’S REPORT

APPENDIX V

Section 3 Estimation and Reporting of Mineral Resources

Criteria

Commentary

Database integrity • The data provided by the Company in Access format was imported into a Surpac RM database after validation.
Data validation steps included:
- Validation through constraints and libraries set in the database, e.g., overlapping/missing intervals, intervals exceeding maximum depth, valid geology codes, missing assays.
- Validation through 3D visualization in 3D software to check for any obvious collar, down-hole survey, or assay import errors.
Site visits • BAW Competent Person visited the Banmiaozi Project from March 23 to 25, 2023. Various aspects of the project were inspected, including mineralization, drilling operations, logging, sampling, the database, the assay laboratory, mining and processing operations, and mine infrastructure, in collaboration with on-site personnel.

Geological interpretation

The geological interpretation was based on lithology, assays, structure and geotechnical information.
The data used in the resource estimation was from the approved exploration reports or laboratory assay results.
A cut-off value at 1.0 g/t Au is used to define domains. A total of 6 mineralization domains are generated for the resource estimate.
Dimensions • Not Applicable in this report.

— V-70 —

COMPETENT PERSON’S REPORT

APPENDIX V

Criteria

Estimation and modelling techniques

Commentary

Variograms were developed by BAW for each Au domain using capped composites, and Search parameters were based on drill hole spacing, the orientation of mineralization and variogram modelling.
The Mineral Resource was estimated using Inverse Distance interpolation in Surpac using 3 different passes.
The parent cell size and estimation parameters were based on the drill hole spacing and the nature of the mineralization style at the project.
The geological interpretation was used to help build a mineralized wireframe model and the resource estimate was conducted within the model.
Validation of the Mineral Resource estimate has been conducted by:
Visual drill hole section data comparisons with the block model and
Swath plots of major elements in three orthogonal directions.

Moisture

Cut-off parameters

Mining factors or assumptions
Tonnages are estimated on a dry basis.
The current resource estimate by Jinying is based on a 1.0 g/t Au cut-off, which was used for Jinying mining onsite.
The mining method assumed is Underground mining.
Mining factors such as mining dilution shown above were not incorporated into the Mineral Resource estimate.

— V-71 —

COMPETENT PERSON’S REPORT

APPENDIX V

Criteria

Metallurgical factors or assumptions

Commentary

There are three metallurgical tests done by a third party with represented samples. Some tests have been done by the production team in 2012 which indicates the overall recovery could be better if there is a NaOH pretreatment.
The overall gold recovery is 87% as per the document from the owner.
Processing recovery rates presented above were incorporated into the Mineral Resource estimate.
Environmental factors or assumptions
Bulk density

Classification

No assumptions have been made regarding possible waste or process residue disposal options or environmental surveys.
The conventional water displacement method was utilized on a total of 440 samples from drill cores and channel samples, with an average of 2.7 g/cm[3] .
Mineral Resources have been classified in the Measured, Indicated and Inferred categories in accordance with the JORC Code 2012 guidelines.
A range of criteria was considered in determining the classification for the project, including:
geological confidence in the interpretations,
sample data density,
sample/assay confidence,
grade continuity of the mineralization,
estimation method.
Blocks interpolated bypass 1 based on at least composites from 3 holes within 40 m drill hole spacing are classified as Measured, and with 40-80 m spacing & Composites from 2 holes in pass 2 are classified as Indicated. The rest are classified as Inferred.
The Competent Persons endorse the final results and classification for the project.

— V-72 —

COMPETENT PERSON’S REPORT

APPENDIX V

Criteria

Commentary

Audits or reviews

Mr. Weiliang Wang and Karfai Leung, MAusIMM, has undertaken a peer review.
There are no outstanding issues arising from these reviews.
Discussion of relative accuracy/confidence
Relative accuracy and confidence have been assessed through validation of the model as outlined above.
The Mineral Resource estimate comprises material categorized as Measured, Indicated and Inferred Mineral Resource. The Mineral Resource categories reflect the assumed accuracy and confidence of a global.

Section 4 Estimation and Reporting of Ore Reserves

Criteria

Commentary

Mineral Resource estimate • The block models prepared by Yintai were used as the basis of Ore for conversion to Reserve estimate. Ore Reserves
The Mineral Resources are reported inclusive of Ore Reserves.
Site visits • BAW Competent Person visited the Banmiaozi Project from March 23 to 25, 2023. Various aspects of the project were inspected, including mineralization, drilling operations, logging, sampling, the database, the assay laboratory, mining and processing operations, and mine infrastructure, in collaboration with on-site personnel.
Study status • The feasibility study report (2017.05) conducted by Changchun Gold Design Institute was provided to BAW.
The feasibility study report was used as the basis of the Ore Reserve estimate.
Cut-off parameters • The feasibility study report (2017.05) conducted by Changchun Gold Design Institute was provided to BAW.
The feasibility study report was used as the basis of the Ore Reserve estimate.
Mining factors or • Not Applicable in this report. assumptions

— V-73 —

COMPETENT PERSON’S REPORT

APPENDIX V

Criteria

Commentary

Metallurgical factors or assumptions
The processing flowsheet is a conventional crushing, grinding, CIL, Carbon stripping and Electrowinning, which is simple and mature, and suitable for low-sulfur ore.
There are three metallurgical tests done by a third party with represented samples and with well-tested technology. There are also some tests done by the owner’s production team in 2012, which indicates the overall recovery could be better if there is a NaOH pretreatment. This test would be a good reference for improving gold overall recovery.
The key element that determines the gold recovery if using current processing is the content of sulfur, gold state-gold dissociation degree.
Environmental • Environmental, safety and production permits were obtained.
Infrastructure • The infrastructure meets the basic requirements of production and transportation.
Costs • The Opex and Capex were provided by the Mine.
Refer to section 2.13.4.
Revenue factors • Production Schedule is developed by BAW.
Refer to section 2.13.3.
Market assessment • Not Applicable in this report.
Economic • The input data to calculate NPV is described in Section 2.13 which mainly includes the production plan, sales revenue, production cost, administration cost, Capex and taxes.
Refer to section 2.13.5.
Social • Not Applicable in this report. Other • None.

— V-74 —

COMPETENT PERSON’S REPORT

APPENDIX V

Criteria

Classification

Commentary

The mineable Measured Resources, including diluting materials and allowances of losses, were classified as Proved Ore Reserves.
The mineable Indicated Resources, including diluting materials and allowances of losses, were classified as Probable Ore Reserves.
The results appropriately reflect the Competent Person’s view of the deposit.

Audits or reviews

Mr. Weiliang Wang and Karfai Leung, MAusIMM, has undertaken a peer review.
There are no outstanding issues arising from these reviews.

Discussion of relative accuracy/confidence

Usually, the Ore Reserve estimate is reported based on some technical and economic assumptions which have been understood well to date. These assumptions would change as time goes on, so different Ore Reserve can be estimated/calculated.

— V-75 —

COMPETENT PERSON’S REPORT

APPENDIX V

3 DACHAIDAN PROJECT

3.1 Property Description and Location

3.1.1 Property Location

The Dachaidan Gold Project (“ Dachaidan Project ”) is located approximately 75 kilometres northwest of the town of Dachaidan, under the jurisdiction of Dachaidan town in Haixi Mongolian and Tibetan Autonomous Prefecture, Qinghai Province (Figure 3-1). The Project area is about 200 km away from Dunhuang City to the north and Golmud City to the south, and about 660 kilometres northwest of Xining City, the capital of Qinghai Province.

==> picture [362 x 297] intentionally omitted <==

Figure 3-1 Location of the Dachaidan Project

Source: Yintai

3.1.2 Ownership

Yintai, through its 90% owned subsidiary, Qinghai Dachaidan Mining Co., Ltd. (“ Dachaidan Mining ”) holds the Dachaidan Project, which encompasses all mineral resources and reserves, as well as all mining operations reported in this Report.

— V-76 —

COMPETENT PERSON’S REPORT

APPENDIX V

3.1.3 Tenure, Permit and License

Dachaidan Mining currently owns two mining licenses and seven exploration licenses. Details of the licenses are summarized in Table 3-1 and Figure 3-2.

Table 3-1 Mining and Exploration Licenses, Dachaidan Project

				Licensed Ore
Property	License Number	Expiration Date	Area	Production
			(km2)	(kt)
	Mining License
Tanjianshan Au Mining Area	C1000002011104120140032	17/06/2023	1.03	600
(“Tanjianshan”)
Qinglonggou Au Mining Area	C1000002010044120060797	16/05/2023	3.89	400
(“Qinglonggou”)
	Exploration License
Qinglongshan Au Exploration	T6300002018014010054584	15/10/2025	12.73	/
Area (“Qinglongshan”)
Xijinggou Au Periphery	T6300002021084010056482	15/10/2025	8.05	/
Exploration Area
(“Xijinggou Periphery”)
Xijinggou Au Exploration	T6300002008044010000385	19/08/2023	1.20	/
Area (“Xijinggou”)
Qingshan Au Exploration	T6300002008044010000384	23/06/2026	17.74	/
Area (“Qingshan”)
Qinglonggou Au Below	T6300002022034050056745	16/03/2027	3.89	/
3000 m Exploration Area
(“Qinglonggou Below”)
Jinlonggou Au Exploration	T6300002008044010000382	16/02/2024	2.90	/
Area (“Jinlonggou”)
Jinlonggou Au Periphery	T6300002022024010056718	19/06/2026	63.05	/
Exploration Area
(“Jinlonggou Periphery”)

— V-77 —

COMPETENT PERSON’S REPORT

APPENDIX V

The licensed mining elevation ranges for the Tanjianshan and Qinglonggou areas are 3,000-3,556 meters and 3,300-3,710 meters, respectively. Qinglonggou Below was established in 2022, representing the exploration rights for depths below 3,000 meters elevation within the scope of the Qinglonggou mining license. In 2021, the current exploration licenses for Xijinggou and Jinlonggou were separated from the original license areas to prepare for future conversion to mining licenses. The remaining areas of the original licenses now constitute the Xijinggou Periphery and Jinlonggou Periphery areas. To avoid potential confusion, the original exploration license areas for Xijinggou and Jinlonggou before 2021 are referred to as “ Xijinggou Former ” and “ Jinlonggou Former .”

==> picture [301 x 280] intentionally omitted <==

Figure 3-2 Mining and Exploration License Areas of the Dachaidan Project

Source: Google Earth

Yintai has provided the necessary permits and licenses required for the current operation of the Dachaidan Project, including the Mine Safety Production License, Tailings Safety Production License, Water Extraction Permit, Radiation Safety Production License, Blasting Operation License, and Pollution Discharge Permit. However, BAW did not independently verify the information related to the location, area, and status of these permits and licenses. Additionally, BAW does not know about any other permits required for carrying out the proposed work on the property, nor is it aware of whether such permits have been obtained.

— V-78 —

COMPETENT PERSON’S REPORT

APPENDIX V

3.2 Accessibility, Climate, Local Resources, Infrastructure and Physiography

3.2.1 Accessibility

The Dachaidan Project area is situated approximately 104 km southeast of Dachaidan town, encompassing 30 km of gravel roads. The area benefits from the Dunhuang-Golmud Highway running through its northern section, ensuring relatively accessible transportation. The Xitieshan station, which is part of the Ningxia-Golmud Railway, is the nearest railway station with a driving distance of around 190 km. Moreover, the Liuyuan station on the Lanzhou-Xinjiang Railway is approximately 300 km away.

The nearest domestic airports to the project are located in Dunhuang and Golmud, both at distances exceeding 300 km. Dunhuang Airport provides daily flight connections to Chinese major cities such as Beijing, Xi’an, Lanzhou, Urumqi, and Xining. Additionally, Golmud Airport offers weekly flights to Xining. From Xining, passengers can access regular daily flights to some Chinese major cities, such as Beijing, Shanghai, Guangzhou, Wuhan, Chengdu, Urumqi, and Xi’an.

3.2.2 Topography, Elevation, and Vegetation

The Dachaidan Project area is situated in the southeastern part of the Saishiteng Mountain Range, which is located on the northern margin of the Qaidam Basin. The surrounding areas of the project consist of large alluvial plain deserts that belong to the plateau mountainous area. The elevation in the area ranges from 3,150 to 3,560 meters, with most parts being between 3,300 to 3,500 meters. The maximum relative height difference is 600 meters, and the general relative height difference is 200 meters. The terrain in the Project area is rugged and steep, with developed gullies and bare bedrock exposed on the mountains.

The Project area is in a desert with sparse vegetation, mainly consisting of camel thorns. Only within a range of 300-400 meters on both sides of the Aolao River, there is relatively abundant natural oasis vegetation, such as red willows, reeds, grasses, and camel thorns. The Mahai Farm, over 20 kilometres to the southwest of the Project area, is a large-scale artificial oasis. There are wild animals such as argali sheep, hares, birds, and rodents in the area.

3.2.3 Climate

The Project area has a typical continental plateau climate characterized by dryness, coldness, long winters and short summers, frequent winds, long sunshine hours, and large daily temperature differences. According to recent years’ meteorological data from the Dachaidan weather station, the annual average precipitation is 82.6 millimeters, while the annual evaporation reaches 2,219 mm. The rainy season is mainly concentrated in July and August. The highest monthly average temperature is between 20.6 and 23.0 ºC during July and August, while the lowest monthly average temperature is between -17.1 and -25.0 ºC, mostly occurring between December and February. The annual average temperature is around 0.8-2.3 ºC. The Project area is prone to sandstorms, with the maximum wind force reaching 8.9 during spring and 8 during autumn, with the most frequent winds coming from the west and northwest each month. November to next February is the freezing season. In some rainy seasons, there are short periods of heavy rain or torrential rain, which can lead to the collection of floodwaters in the Jinlonggou, major dry gullies, and river valleys.

— V-79 —

COMPETENT PERSON’S REPORT

APPENDIX V

3.2.4 Local Resources and Infrastructure

The area’s water system is underdeveloped, characterized by dry gullies and brief floods during the summer rainy season, which quickly seeps into the ground and vanish. About 3 kilometres to the east of the Project area, the Aolao River originates in the valley between Tuergen Daban and Mahaidaban, flowing through the northeast of the mining area. Due to significant infiltration at the mountain’s base, a dry riverbed forms, and only upon entering Mahaidaban to the south does the river begin to flow and accumulate. The river flows from north to south, providing a permanent water source with a flow rate of 23,587-38,275 cubic meters per day. After a 20-kilometre course, it enters the Mahai Basin, where it seeps into the ground in the north, accounting for 10% of the Mahai Basin’s underground water supply resources. The Aolao River’s water quality is weakly alkaline and of poor quality but remains potable and suitable for industrial and domestic purposes. The project’s production water is sourced from a pumping station approximately 3 kilometres east of the existing mineral processing plant on the Aolao River’s banks. The water is pumped and transported to a high-level tank within the plant after pressurization and then supplied directly to the production facilities. Drinking water for daily use is transported from external sources, while other domestic water is sourced from the Aola River.

The Project area is surrounded by abundant energy resources. The Changdi Coal Mine is located 5.5 kilometres southwest of the Project area, and larger coal mines such as Gaoquan Coal Mine and Yuka Coal Mine are situated 40 kilometres away. Coal for domestic and production use can be sourced locally, and nearby refineries in Lenghu, Golmud, and Huatugou can provide various industrial oil materials.

A 35/10 kV substation is established in the Project area based on the distribution of external power supply and internal electricity load. The power source is a single-circuit 35 kV overhead transmission line from Shuanglong Substation, approximately 23 km away.

The area’s population is sparse, primarily concentrated in Dachaidan Town and Xitieshan Town, with neighboring county-level cities and towns focused in Golmud City and Lenghu Town. The local economy is predominantly on mineral exploration, mining, and processing, which develops the local chemical, transportation, and social services industries.

3.3 History

3.3.1 Ownership

In 1992, Dachaidan Gold Dragon Mining Development Co., Ltd (“ Dachaidan Dragon ”), a joint venture established by Qinghai Province No.1 Geological, Mineral Exploration Brigade (“ No.1 Brigade ”) and the local government, obtained the mining rights for the Tanjianshan area.

In 1996, the initial exploration license for the Qinglonggou area was granted to the No.1 Brigade.

In 2000, Dachaidan Dragon and Sino Mining International Ltd. (“ Sino Mining ”) formed a joint venture, Dachaidan Mining, which later took over the exploration rights for the Tanjianshan and Qinglonggou areas.

In 2002, Afcan Mining Corporation Ltd. acquired Sino Mining’s interest in Dachaidan Mining and subsequently sold it to Eldorado Gold Corporation (“ Eldorado ”) in 2005.

— V-80 —

COMPETENT PERSON’S REPORT

APPENDIX V

In 2002, the initial exploration license for the Qinglongshan area was issued to Dachaidan Mining. In 2006, Dachaidan Mining was granted mining licenses for the Tanjianshan and Qinglonggou areas.

In 2008, Dachaidan Mining first acquired the exploration licenses for the Qingshan, Jinlonggou Former, and Xijinggou areas.

In 2016, Yintai acquired a 90% interest in Dachaidan Mining and the mineral rights it held for the Dachaidan Project from Eldorado.

In 2021, both Jinlonggou Former and Xijinggou Former areas were split into two exploration license areas, Jinlonggou and Jinlonggou Periphery, and Xijinggou and Xijinggou Periphery, respectively.

In 2022, the exploration license for the Qinglonggou Below area was granted to Dachaidan Mining.

3.3.2 Exploration and Development

Historically, the boundaries of the various mineral rights areas within the Dachaidan Project have experienced numerous alterations, including reductions and subdivisions, resulting in the present-day delineation of licensed areas. Consequently, the same name might represent entirely different mineral rights scopes in both past and present contexts, potentially leading to confusion when recounting the exploration history. In the following exploration history summary, BAW will adhere to the current mining rights areas and their respective names for clarity and consistency.

In 1989, the No.5 Geological Brigade of Qinghai Province discovered gold mineralization in the Tanjianshan area and conducted drilling verification. From 1988 to 1992, the No.5 Geological Brigade conducted systematic geological mapping in the area and discovered a series of gold mineralization areas. From 1993 to 1999, the No. 1 Brigade conducted prospecting work in Tanjianshan, Qinglonggou, Jinlonggou and Xijinggou areas, including geological mapping, geochemical survey, geophysical survey, trenching, tunnelling and drilling. Prospecting reports summarizing the preliminary results were submitted for the Tanjianshan and Jinlonggou areas.

From 2000 to 2005, Dachaidan Mining conducted systematic exploration programs to define the resource/reserve of the Tanjianshan area and the Qinglonggou area, including extensive mapping, trenching, diamond drilling and sampling. In 2004 and 2007, Dachaidan Mining compiled the “ Resource/Reserve Reassessment Report for the Jinlonggou Deposit at an Elevation of 3,378-3,408 m in Tanjianshan Gold Minefield, Dachaidan, Qinghai Province ” and “ Exploration Report of the Jinlonggou Gold Deposit, Dachaidan, Qinghai Province ” (“ Tanjianshan Report 2007 ”).

— V-81 —

COMPETENT PERSON’S REPORT

APPENDIX V

From 2008-2022, Dachaidan Mining has continued the comprehensive exploration programs within all the exploration and mining license areas, using mapping, trenching, reverse circulation (“ RC ”) drilling, surface and underground diamond drilling, tunnelling, and channel sampling to expand resources/reserves and support mining operations. A series of exploration or verification reports have been completed for the Dachaidan Project. The most recent reports for each license are summarized as the following: “ Resource/Reserve Verification Report of the Qinglonggou Gold Deposit, Dachaidan, Qinghai Province ” (“ Qinglonggou Report 2020 ”), “ General Prospecting Report of the Qinglonggou Deposit Below 3300 m, Dachaidan, Qinghai Province ” (“ Qinglonggou Below Report 2022 ”), “ General Exploration Report of the Qinglongshan Gold Deposit Qinglonggou Section Exploration line 16600N-13800N, Dachaidan, Qinghai Province ” (“ Qinglongshan Report 2014 ”), “ General Prospecting Report of the Qingshan Gold Deposit, Dachaidan, Qinghai Province ” (“ Qingshan Report 2020 ”), “ General Exploration Report of the Jinlonggou Gold Deposit, Dachaidan, Qinghai Province ” (“ Jinlonggou Report 2019 ”), and “ General Exploration Report of the Xijinggou Gold Deposit, Dachaidan, Qinghai Province ” (“ Xijinggou Report 2020 ”).

3.3.3 Historical Resource and Reserve Estimates

Multiple resource and reserve estimates have been made for the Dachaidan Project since 1996 These estimations were in compliance with Chinese standards and approved by the Ministry of Land and Resources. However, the resource and reserve estimates in Sections 3.10 and 3.11 are based on the JORC 2012 and will be different from previous estimates.

3.3.4 Production

In 1992, Dachaidan Dragon initiated small-scale gold production within the Tanjianshan area using heap leaching, achieving a gold recovery rate of approximately 48%. In 1995, underground mining of the sulfide ore began, employing flotation-roasting-cyanidation for gold extraction with an average recovery rate of 82%. The production data for the Tanjianshan area from 1992 to 2002 are summarized in Table 3-2.

Table 3-2 1992-2002 Production Summary of the Tanjianshan area

Year 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 total	Ore (t) 15,045 23,920 42,279 55,751 57,319 39,393 42,182 54,884 57,672 56,378 54,492 499,321	Au (kg) 109.38 205.71 301.45 343.43 376.01 259.60 344.63 351.26 388.13 406.49 350.93
		3,437.02

Source: Tanjianshan Exploration Report 2007

— V-82 —

COMPETENT PERSON’S REPORT

APPENDIX V

Production was suspended during 2003-2006 and resumed in 2007 after the construction of a new processing plant. From 2007 to 2010, the average annual gold production was approximately four tons. The gold production of the Tanjianshan area during Eldorado’s ownership from 2011 to 2016 is summarized in Table 3-3.

Table 3-3 Annual Production of the Tanjianshan Area during 2011-2016

Year	Ore Milled	Au
	(t)	(t)
2011	1,005,236	3.576
2012	1,056,847	3.440
2013	1,064,058	3.155
2014	1,045,440	3.347
2015	1,060,176	3.035
2016	869,964	1.532

Source: Eldorado Online Data Center, http://apps.indigotools.com/IR/IAC/?Ticker=EGO&Exchange=NYSE#

Production in the Tanjianshan area was suspended from 2017 to 2019 due to the development program for underground mining. In 2019, open-pit and underground mining operations commenced in the Qinglonggou area in 2019 and 2020, respectively. In 2019, 2020, 2021, and 2022, the Dachaidan Project utilized approximately 420, 807, 500, and 761 thousand tons of total registered reserves (Chinese standard), respectively, containing gold of 2.26, 2.36, 1.74, and 4.30 tons, according to Yintai’s annual reports.

3.4 Geological Setting and Mineralization

3.4.1 Regional Geology

The Dachaidan Project area is situated along the northern margin of the Qaidam Block and the North Qaidam orogenic belt. The North Qaidam orogenic belt, situated at the northern edge of the Tibetan Plateau, is bordered by the Qaidam Basin to the south, the Tarim Basin to the west, and the Sino-Korean craton to the east (Figure 3-3).

The Qaidam Block to the south comprises a Mesozoic to Cenozoic intracontinental basin with strata deposited on a Precambrian crystalline basement. Some high-grade metamorphic rocks, such as marble, granulite, and felsic gneisses, crop out along the southern margin of the block and are intruded by late Paleozoic granitoid plutons. The North Qaidam orogenic belt, which includes eclogite- and garnet-peridotite-bearing terranes, extends for approximately 400 km along the northern Qaidam Mountains. The overall characteristics of the rock assemblages, ultra-high pressure (UHP) metamorphic evolution, and zircon ages suggest that the North Qaidam orogenic belt represents a continental subduction zone from the Early Paleozoic. The North Qaidam orogenic system comprises the earliest subduction zones of the Caledonian age in the northern Tibetan Plateau.

The Qilian Block is an imbricate thrust belt of Precambrian basement overlain by Paleozoic sedimentary sequences. The basement consists of granitic gneiss, marble, amphibolite, and minor granulite. Garnet-bearing (S-type) granite intrusions from the Qilian Block have Neoproterozoic protolith ages, similar to the ages of the granitic gneisses in the North Qaidam orogenic belt. Paleoproterozoic granitic gneisses have also been recognized in the Qilian Block.

— V-83 —

COMPETENT PERSON’S REPORT

APPENDIX V

To the east, the Qilian oceanic-type orogen, parallel to the North Qaidam orogenic belt, extends from the Altyn Tagh fault southeastward for approximately 1,000 km to the Qinling-Dabie orogen. This orogen forms a major geographic-tectonic boundary between North and South China. The North Qaidam orogenic belt and the North Qilian orogenic belt may indeed represent a tectonic evolution from oceanic subduction to continental collision, followed by continental underthrusting, ultimately leading to the final exhumation.

==> picture [452 x 172] intentionally omitted <==

Figure 3-3 Regional Geological Map

Source: Google Map

3.4.2 Ore Deposit Geology

The stratigraphy of the Dachaidan Project area is composed of the Middle Proterozoic Wandonggou Group and the Ordovician-Silurian Tanjianshan Group. The Wandonggou Group is a regional greenschist facies metamorphic sequence with a thickness greater than 2,000 m, and the protolith is a sequence of carbonate, clastic and volcanic rocks. It is the main wall rock of the gold mineralization in Qinglonggou. To the east, west, and northwest of the Tanjianshan area are several kilometres wide Quaternary alluvial plains. To the southwest is a low mountain range composed of the Tanjianshan Group, which has been disrupted by a series of faults.

Multi-stage shearing and folding occurred simultaneously within the Project area, forming a complex structural pattern. Well-developed NW-trending faults in the Tanjianshan area are a part of the regional NW-trending large-scale fault zone, which is ~20 km long, extending from the Tanjianshan area northwestwards to the Qinlonggou area. The fault zone is 1 to 2 km in width, with NW strikes and steep dips. Regionally, the Tanjianshan and Wandonggou Group are mainly controlled by the NW-trending faults, as well as secondary N-S and E-W faults. N-S-trending folds are well developed within carbonaceous mylonite schist and control most of the orebodies in the Tanjianshan area.

The magmatic activity includes the intrusion of the gabbroic intrusion of the Caledonian period in the Wandonggou Group, and the late Yanshanian intrusion of mainly diorite porphyrite in the Wandonggou Group and the Tanjianshan Group. Intrusive rocks are developed in the area, with the main intrusion period being the Late Paleozoic, and the Early Paleozoic. The intrusions are mainly composed of intermediate-felsic rocks with minor mafic-ultramafic rocks.

— V-84 —

COMPETENT PERSON’S REPORT

APPENDIX V

==> picture [392 x 323] intentionally omitted <==

Figure 3-4 Geological map of the Dachaidan Project Area

Source: Yintai

3.4.3 Alteration and Mineralization

The occurrence of gold mineralization in the area is primarily controlled by the regional NW faulting structures and is mostly hosted in marble, dioritic-granitic porphyry, and carbonaceous phyllite of the Tanjianshan and Wandonggou Group. The ore bodies generally strike NW with steep dip angles. Mineralization primarily occurs in massive, veining, and disseminated forms, while smaller ore bodies exhibit disseminated forms. The ore minerals include pyrite, arsenopyrite, and hematite, with minor sphalerite, galena, and chalcopyrite. The main gangue minerals are quartz, sericite, plagioclase, and calcite. Gold mainly occurs as native gold, silver-bearing native gold, and electrum. The ores are classified as oxides and sulfides according to the oxidation state.

The main alteration types closely related to gold mineralization include pyritization, silicification, sericitization, hematitization, carbonatization (calcite, siderite), and limonitization. Silicification is a good indicator of gold mineralization and is well-developed in carbonaceous phyllite. Hematitization mainly occurs in the periphery of the mineralization zone. Siderite appears in the outermost zone of the alteration-mineralization, adjacent to the hematitization zone. It manifests as light-yellow veinlets in the fractures of carbonaceous phyllite.

— V-85 —

COMPETENT PERSON’S REPORT

APPENDIX V

3.5 Deposit Types

The gold mineralization within the Dachaidan Project area occurred in the Middle Paleozoic, generally coeval with the UHP metamorphism, which formed in the subduction/accretion zones due to the amalgamation of the Qaidam Block and Qilian Block.

The gold deposits possess the most features of orogenic gold deposits. Studies indicate that the deposit is associated with repeated ductile-brittle shear and is formed by low salinity and CO2-rich hydrothermal fluids. The abundant mafic-felsic intrusive rocks of the Hercynian period near the Project area provided a heat source for gold mineralization. The main mineralization temperature of the ore-forming stage is concentrated between 170 and 210[o] C, with a mineralization pressure of 17.30 MPa, corresponding to a mineralization depth of 1.7 km. The mineralization environment was an extensional environment after the collisional orogeny. The Dachaidan Project is an example of most orogenic gold deposits in the western orogenic belts of China, which is controlled by a large-scale shear zone, and sited near the deep fault and tectonic boundary of the Early Paleozoic to Early Mesozoic polycyclic collisional orogenic belt. Gold ores in the deposit are the products of overprinting of two hydrothermal and mineralizing events in two orogenies.

3.6 Exploration

The exploration work at the Dachaidan Project began in the early 1990s. Around 2000, Dachaidan Mining started carrying out systematic sampling work in various mining areas through trenching, tunnelling, surface and underground drilling, to support resource/reserve estimation and mining production. In particular, after Yintai took over in 2017, the scale of exploration work was further expanded. Based on the exploration database provided to BAW, major sample workings as of the end of 2022 are summarized in Table 3-4.

Table 3-4 Summary of Major Sample Workings as of 31/12/2022

Type Trench Diamond Drill Hole RC Drill Hole Underground Channel Total	Collar 1,059 2,959 2,926 2,698 9,642	Depth (m) 35,617.88 521,446.44 273,583.91 59,484.06 890,132.29	Samples 23,344 439,744 220,733 22,661
			706,482

— V-86 —

COMPETENT PERSON’S REPORT

APPENDIX V

Trenching was mainly used to expose alteration and mineralization zones within 3 m from the surface. The trench’s top width is generally 2-3 m, and the bottom width is 1-2 m with a depth of 1.5-2 m. The slope angle of the walls is 60-80 degrees. All trenching projects reached a depth of at least 0.3-0.5 m into fresh bedrock for geological logging and channel sampling.

Surface and underground surveys strictly followed the “ Specifications of Survey for Geological and Mineral Resources Exploration ” (GB/T18341-2001) and were carried out using a total station, incorporating the Beijing Coordinates System (1954) and the local independent coordinate system.

Channel sampling was employed for sampling in adits and trenches. Samples were determined based on the ore type, wall rock, and mineralization distribution. The sampling interval was nominal 1 m, mostly not exceeding 1.5 m. The channel dimensions were 10 × 5 cm, with the individual sample weight above 4 kg. Samples were taken along the ore bodies every 5-10 m. A diamond saw was used to cut samples along the pre-drawn sketch lines on the wall, and a steel chisel and jackhammer were employed for sample collection. Underground channel sampling was mainly conducted in the adits of Tanjianshan and Qinglonggou, with minor samples collected from the Xijinggou and Qingshan adits.

3.7 Drilling

Diamond drilling at the Dachaidan Project has been conducted since 1993. From 2007, RC drilling was also utilized. Underground drilling was mainly carried out in the Tanjianshan and Qinglonggou areas from 2000. The basic drill hole spacing was determined based on the distribution, shape, and dimensions of the ore bodies within the different license areas and the targeted confidence of resources, varying from 20 × 20 m to 80 × 80 m.

Reverse circulation (RC) drilling was predominantly employed in areas with thick unconsolidated sediment cover due to its benefits, including rapid drilling speed, environmentally friendly operations, and cost efficiency. The majority of RC drill holes were vertical, with depths ranging from 0 to 150 meters. Downhole surveys were conducted using an inclinometer at the end of each hole. Hole depth correction measurements were taken every 100 meters and at the hole’s termination. Rock chip recovery rates were typically over 90%. Upon drilling completion, holes were sealed with cement and marked with a permanent cement monument 20 cm above ground level.

Diamond drilling primarily used HQ- and NQ-sized cores. Drill hole collars were surveyed using a total station. Downhole surveys were performed with an inclinometer or downhole camera every 30 m, with additional measurements taken at the start and end of the hole. Hole depth correction measurements were taken every 30 m for inclined holes and 100 m for vertical holes, as well as at the end of the hole. According to the drill hole database provided to BAW, 89% of sample intervals from historical drill holes have core recoveries of at least 90%, which is considered to be satisfactory given the conditions of the structure and mineralization. Upon completion of drilling, the hole was sealed with cement and marked with a permanent cement monument.

Upon retrieving the core from the core barrel, it was placed in plastic core boxes and transported from the drill site to the logging facility. At the logging site, lengths were marked in the core boxes, and laminated paper markers were inserted with downhole measurements. By arranging the core boxes in order of depth, the core loss was verified, and the correct depths were marked in the boxes. Drill cores were then logged for lithology, alteration, mineralogy, and geotechnical data.

— V-87 —

COMPETENT PERSON’S REPORT

APPENDIX V

After the geological logging was completed, core samples were collected under the supervision of a geologist with the assistance of a technician. The longitudinal cutting line was aligned as perpendicularly as possible to the structural direction of the core. The geologist determined the specific location of each sample, typically 1 m in length. Each sample weighed approximately 4 kg. Geological boundaries, such as different lithological and mineralized boundaries, and structural limits were taken into consideration when dividing each sample to avoid cross-layer sampling. A diamond saw splitter was utilized to longitudinally cut the core in half at the logging site. One-half of the core was bagged, sealed, and marked for subsequent sample preparation, while the other half was preserved in the original core box for future inspection. All core boxes are placed in an outdoor area and stacked separately according to different drill holes.

3.7.1 Discussion

Currently, the drill cores are stored outdoors, making them susceptible to damage and deterioration due to exposure to sunlight, rain and snow. BAW recommends establishing an indoor core storage facility to better preserve the drill cores.

BAW did not personally inspect the drilling and sampling operations on site. BAW understands that such operations were in compliance with relevant Chinese national standards. However, based on field observations and reviews of data, protocols and verification reports, BAW considers that the exploration, drilling and sampling procedures are generally reasonable. The drill cores examined by BAW were found to be in good condition.

In BAW’s opinion, the documented protocols and primary data related to exploration and drilling generally conform to industry practices. As such, BAW assumes that no significant material biases have been introduced, and the collected data are essentially acceptable for mineral resource estimation.

3.8 Sample Preparation, Analysis and Security

3.8.1 Density Measurement

Density measurements were routinely performed on drill core samples representing various ore lithologies, using the Archimedes’ method (water displacement). The length of core samples generally did not exceed 20 cm. External density measurements were carried out by the Qinghai Province Geological and Mineral Testing and Application Center (“ Qinghai Testing Center ”).

3.8.2 Sample Preparation

Sample preparation was conducted by Dachaidan Mining at their on-site preparation facility. The standard procedure for sample preparation included: low-temperature drying at 105 ºC for 12 hours, weighing on a balance, coarse crushing using a jaw crusher to achieve a 3 mm particle size, homogenizing and splitting with a riffle splitter to produce a primary and a coarse duplicate sample, pulverizing to pass a 200 mesh sieve (90%) using a disc mill, homogenizing, and splitting with a riffle splitter to obtain a primary and two powder duplicate samples, discarding the remainder. The primary and duplicate samples were weighed up to 180 g on a balance and sealed in sample bags. The primary sample was sent for further assay, while the duplicates were stored for future inspection. To ensure sample integrity and prevent contamination, the jaw crusher and disc mill were cleaned with barren quartz samples after each sample was crushed and pulverized, and the equipment surfaces were cleaned using high-pressure air.

— V-88 —

COMPETENT PERSON’S REPORT

APPENDIX V

3.8.3 Sample Analyses

During 2003-2004, samples were sent to the SGS laboratory in Perth and the Genalysis laboratory in Perth for sample assay. From 2005 to 2006, the SGS laboratory in Tianjin (“ SGS Tianjin ”) was responsible for Au analyses. Since 2007, Intertek Laboratory in Beijing (“ Intertek Beijing ”) and ALS Laboratory in Guangzhou (“ ALS Guangzhou ”) have also been utilized as major assay laboratories. In 2008, Dachaidan Mining established an internal laboratory at the mine site (“ Dachaidan Laboratory ”) and began routinely carrying out assay work for the Dachaidan Project. Since 2008, SGS Tianjin, ALS Guangzhou, and Intertek Beijing have continued to be employed for sample assays to comply with the laboratory qualification requirements of Chinese domestic standards for formal verification reporting in different license areas of the Dachaidan Project. The analytical method used was fire assay with atomic absorption spectrometry to determine gold content, using a 50 g powder sample. The detection limit is 0.01 ppm, and the upper limit is 100 ppm gold.

Before 2007, the Standard and Reference Laboratory in Perth (“ STAR Laboratory ”) was utilized as an umpire laboratory. Since 2008, external checks have been conducted by the Ministry of Land and Resources Xining Mineral Resources Supervision and Testing Center (“ Xining Testing Center ”) and Qinghai Testing Center.

All laboratories in use, except the Dachaidan Laboratory, Xining Testing Center and Qinghai Testing Center, hold internationally recognized accreditations. In previous technical reports provided by Yintai, the Xining Testing Center and Qinghai Testing Center were reported to possess applicable provincial certifications issued by the relevant China authorities.

The sample preparation, assay and QA/QC procedures were strictly carried out following the Chinese standard “ Quality Management Specifications for Geological and Mineral Laboratory Testing ” (DZ0130.1-0130.13-94; DZ/T 0130-2006).

3.8.4 Quality Assurance and Quality Control

QA/QC has been an integral part of the entire project, incorporated into daily work. The reliability of sample preparation and analytical results were assessed by inserting blanks, standards, and duplicates, as well as conducting internal and external checks. Standards were sourced externally, while blanks were created using barren quartz veins near the Project area. Approximately 10% and 5% of the total samples assayed were subjected to internal and external checks, respectively. The relative deviation of the sample and duplicate pairs was calculated to evaluate the acceptability of internal and external check results. The QC performance of the Dachaidan Project was evaluated based on the QC data compiled in the historical exploration or verification reports mentioned in the “History” section.

Between 2003 and 2005, Dachaidan Mining conducted a verification program on the historical sampling data (since 1991) used in previous resource estimations. Twin samples for historical channel samples were systematically collected at the original positions, and field duplicates were re-sampled from the historical drill cores at the original intervals. The assay results of the duplicates were deemed comparable with the historical results and considered acceptable for resource estimations.

— V-89 —

COMPETENT PERSON’S REPORT

APPENDIX V

For the samples collected from the exploration program in the Tanjianshan area between 2003 and 2005, standards and blanks were inserted into the sample batch for assay at a rate of 3% for each type. Assays of blanks indicated that there was occasional minor contamination during the sample preparation process; however, it remained at an acceptable level. Most assays of standards yielded results within ±5% of the certified value, indicating an acceptable level of accuracy and precision in the assaying process. Internal and external checks were conducted on approximately 7.4% and 11.4% of the total samples, respectively. For samples with Au grades above 1.0 g/t, the acceptable rates for both internal and external checks exceeded 95%.

For the Qinglongshan and Qinglonggou areas during 2008-2012, internal and external checks were carried out on 13.1% and 7.8% of the total assays, with acceptable rates of 97.3% and 92.7%, respectively. From 2013 to 2020, 11.5% and 7.1% of internal and external checks were conducted, with acceptable rates of 98.3% and 95.4%, respectively.

For the Qingshan area during 2013-2020, according to the Qingshan Report 2020, internal and external checks were carried out on 12.2% and 8.8% of the total assays, with acceptable rates of 97.3% and 96.3%, respectively.

For the Jinlonggou area during 2008-2018, according to the Jinlonggou Report 2019, internal and external checks were conducted on 11.3% and 5.8% of the total assays, with acceptable rates of 98.0% and 93.6%, respectively.

For the Xijinggou area during 2008-2018, according to the Xijinggou Report 2020, internal and external checks were carried out on 9.5% and 4.9% of the total assays, with acceptable rates of 97.0% and 92.3%, respectively.

3.8.5 Sample Security

During the site visit, BAW reviewed the sample security protocol and found that the mine personnel made reasonable efforts to ensure proper preservation, accurate logging, and secure transportation of samples. In BAW’s opinion, the implemented security protocol effectively maintains the validity and integrity of the samples.

3.8.6 Discussion

BAW did not visit all the laboratories responsible for analyzing samples from the Dachaidan Project, except the Dachaidan Laboratory at the mine site. BAW reviewed the protocols and procedures of the Dachaidan Laboratory and found them to be following industry standards.

As required by relevant Chinese regulations, exploration or mining projects need to periodically conduct verification reporting, which includes a comprehensive assessment of all aspects of exploration, production, and resource/reserve estimates. It should be noted that the standards used in these verification reports are not entirely consistent with the JORC Code 2012, as they adhere to Chinese domestic standards. However, the verification reports do provide additional validation for the historical data. The QA/QC program for assay analysis in the Dachaidan Project was implemented as part of this verification reporting process. The recent assay results of quality control samples in the database provided by Yintai are incomplete for BAW to conduct a comprehensive review. Based on the existing data provided, BAW concluded that the program was of adequate quality, consistently applied, and routinely monitored.

— V-90 —

COMPETENT PERSON’S REPORT

APPENDIX V

3.9 Data Verification

3.9.1 Database

BAW acknowledges that the Dachaidan Project is subject to periodic authority agency reviews and verification reporting in compliance with the Chinese standard of “ Specification for Hard-Rock Gold Exploration ” (DZ/T 0205-2002). This specification rigorously outlines the detailed standards and requirements for various aspects such as exploration, drilling, sampling, assaying, QA/QC, mining, processing, and more.

3.9.2 Site Inspection

BAW expert conducted a site visit to the Dachaidan Project from March 21 to 24, 2023. The purpose of the visit was to inspect various aspects of the project, including mineralization, drilling operations, logging, sampling, the database, the assay laboratory, mining and processing operations, and mine infrastructure, in collaboration with on-site personnel. No independent verification samples were collected during the site visit.

3.10 Mineral Resource Estimates

The most recent resource estimate of Dachaidan gold mine provided for the review was carried out by Qinghai Dachaidan Mining Limited as of Dec 31, 2022. Internal block-grade modelling was done for the deposit by an onsite geologist. As an internal estimate, Wireframing, Block grade simulation, pit design and mining depletion data were provided and reviewed by BAW. Capping, assay compositing, varigraphy modelling and grade interpolation parameters were not provided. Visual check, statistical and IDW2 grade simulation was performed by BAW for reviewing.

3.10.1Wireframes

Gold mineralization of the Dachaidan deposit is quite complex in three-dimensional space. Mineralization appears complex along strike and dip, and there was no significant guidance for hangingwall and footwall. In order to define the domain, since 2007, the Eldorado Gold onsite geologists used the Probability Assisted Kriging (PACK) method to distinguish samples above a given cut-off value from background mineralization. The PACK, by studying the histogram, probability plot, and variance characteristics of au samples, 0.5 g/t Au was used as a cut-off value. The probability of the Au grade exceeding the cut-off value was estimated for each block by using the ordinary Kriging method, and a probabilistic map on sections was used to test the consistence of lithologic interpretation between sample grades.

— V-91 —

COMPETENT PERSON’S REPORT

APPENDIX V

==> picture [434 x 202] intentionally omitted <==

Figure 3-5 Dachaidan mineralized domains

No PACK models were provided to BAW. The model provided by Dachaidan was built based on a cut-off at 1.0 g/t Au, and all domains are determined based on geology, alteration, and the interpreted controls on mineralization from production experience. A total of 289 mineralization domains are generated for the resource estimate. BAW visually checked the wireframes by sections and no significant errors were found.

Table 3-5 Summary of Dachaidan mineralized domains

Zone Jinlonggou Pit 3 Qinglonggou North M2 Qinglonggou 323 Qinglonggou North M3 Qinglonggou North Deep East Qinglonggou North Deep West Qinglonggou South Qinglonggou East Xijinggou Total	Domain 72 9 33 65 4 1 13 12 80 289	Volume 1,628,011.11 334,200.3 341,623.93 418,665.8 95,200.8 490,393 159,732.9 808,221.7 1,672,613.6
		5,948,663.14

3.10.2Compositing

— V-92 —

COMPETENT PERSON’S REPORT

APPENDIX V

3.10.3Capping

No capping description and Capped composites were provided to BAW. The impact of the Au grade outlier is evaluated on a geological domain basis by BAW.

==> picture [208 x 216] intentionally omitted <==

==> picture [216 x 216] intentionally omitted <==

==> picture [212 x 217] intentionally omitted <==

==> picture [216 x 217] intentionally omitted <==

— V-93 —

COMPETENT PERSON’S REPORT

APPENDIX V

==> picture [210 x 217] intentionally omitted <==

==> picture [211 x 217] intentionally omitted <==

==> picture [208 x 217] intentionally omitted <==

==> picture [216 x 217] intentionally omitted <==

— V-94 —

COMPETENT PERSON’S REPORT

APPENDIX V

==> picture [215 x 217] intentionally omitted <==

==> picture [214 x 217] intentionally omitted <==

Figure 3-6 Histogram and Log-probability plot for Capped-composites

Table 3-6 Summary statistics of 1 m composites (Au) and topo cut grade threshold applied during estimation

	No. of
Capped Composites	Samples	Mean	SD	CV	Skewness	Kurtosis	Min	Max
Xijinggou	1,933	4.25	6.26	1.475	4.8	40.1	0.005	88.8
Jinlonggou Pit 3	3,280	2.43	3.53	1.464	3.74	17.6	0.01	25.45
Qinglonggou M2	1,952	7.64	10.06	1.31	2.18	5.42	0.01	58
Qinglonggou M3	4,300	3.51	5.6	1.59	2.64	6.55	0.01	25.9
Qinglonggou South	538	4.9	8.154	1.66	3.19	11.1	0.01	45.5

— V-95 —

COMPETENT PERSON’S REPORT

APPENDIX V

3.10.4Variograms

No Varigraphy modelling was provided to BAW. BAW has attempted to develop variograms for each Au domain using capped composites and seems the variograms do perform not well. Omnidirectional variograms were generated to test the possible continuity range.

==> picture [211 x 228] intentionally omitted <==

==> picture [210 x 228] intentionally omitted <==

==> picture [211 x 228] intentionally omitted <==

Figure 3-7 Varigraphy study for Dachaidan deposit

— V-96 —

COMPETENT PERSON’S REPORT

APPENDIX V

Table 3-7 Yintai Varigraphy study for Dachaidan deposit

					Major	Major
Zone	Nugget	Range	Rotation ZXY	Major	/Semi	/Minor
Jinlonggou Pit 3	27.04	3.672	16.68/10/-82	1	1.97	4.33
Qinglonggou M2	112.2	5.3	186/0/-80	1	2.5	1.5
Qinglonggou 323	2.49	5.19	345/9/-70	1	1	2.1
Qinglonggou North M3	37.50	4.49	180/30/40	1	1.69	2

BAW noticed that all Dachaidan resources were classified as Inferred by the onsite geologist, which in BAW’s opinion, it is reasonable to classify Measured resources with 20 x 20 m drill spacing and Indicated resources with 40 x 40 m spacing within the main domain at Qinglonggou site. And the IDW seems more appropriate for grade interpolation rather than OK.

Table 3-8 BAW Search radius and interpolation parameters for Au (ppm) and interpolation methods

				Min	Max		Max. Comp	Capping	Capping
Search Range		Range		Composites	Composites	Min Hole	per Hole	Value	Distance
1	20	20	10	7	20	3	3		5
2	40	40	20	4	12	2	3	13.9	5
3	80	80	40	1	6	1	3		5

3.10.5Bulk Density

Average bulk density values were used for each domain separately. BAW believes that density should be interpolated within a constrained wireframe for each mineralized domain separately.

Table 3-9 Summary of bulk density for each domain

Model	Density
Jinlonggou Pit 3	2.78
Qinglonggou North M2	2.80
Qinglonggou 323	2.77
Qinglonggou North M3	2.80
Qinglonggou North Deep East	2.80
Qinglonggou North Deep West	2.80
Qinglonggou South	2.80
Qinglonggou East	2.85
Xijinggou	2.72

3.10.6Block Model

Block size is set at 5 m x 5 m x 5 m. Volume percentages were coded into each block to evaluate local tonnes constrained by each domain. A list of block model attributes is presented in the following Table. The volume block model was coded by 285 mineralized domains using the geological and structural wireframes. Final block volumes were validated against the wireframe volumes. The dimensions and extent of the block model see as follows.

— V-97 —

COMPETENT PERSON’S REPORT

APPENDIX V

Table 3-10 Variogram parameters in Datamine™ZXY rotation

					Parent
Site	Coordinates		Min	Max	Block	Rotation
Jinlonggou Pit 3	Y		12,700	14,000	5	0
	X		10,400	10,900	5	0
	Z		2,900	3,550	5	0
Xijinggou	Y		10,000	11,600	5	0
	X		16,000	18,000	5	0
	Z		2,900	3,800	5	0
Qinglonggou North M2	Y		15,860	16,580	5	0
	X		11,020	11,130	5	0
	Z		3,300	3,710	5	0
Qinglonggou North M3	Y		15,400	16,720	5	0
	X		10,580	11,320	5	0
	Z		3,100	3,700	5	0
Qinglonggou North Deep West	Y		15,600	16,300	5	0
	X		10,700	11,100	5	0
	Z		2,700	3,400	5	0
Qinglonggou South	Y		14,300	15,400	5	0
	X		10,200	10,900	5	0
	Z		3,000	3,600	5	0
Qinglonggou East	Y	4,242,580		4,243,580	5	0
	X		630,400	631,500	5	0
	Z		2,600	3,600	5	0

Gold (Au ppm) was interpolated to the empty block model using Ordinary Krigin by a site geologist in Dachaidan, and IDW3 (Inverse Distance Cube) methods were used by BAW as verification. BAW believes IDW3 was more suitable for Dachaidan and 3 pass grade interpolation was used, which pass 1 related to Measured resources, pass 2 to Indicated and Pass 3 to Inferred.

Table 3-11 Block model attributes

Attribute	Description
BLOCK	Production block name
IJK	IJK number for each parent block
ZONE	Mineralization block number
Vol	Volume percentage
DENSITY	Estimated in situ dry bulk density
Au_idw	Estimated gold value in ppm (idw3 method)

— V-98 —

COMPETENT PERSON’S REPORT

APPENDIX V

Attribute Description Au_ok Estimated gold value in ppm (Kriging method) No of Samples Number of samples for grade interpolation (idw3 method) No of Holes Number of Holes for grade interpolation (idw3 method) SV Search volume category CAT Resource classification Mined Historical mining Depletion

3.10.7 Model Verification

==> picture [426 x 276] intentionally omitted <==

— V-99 —

COMPETENT PERSON’S REPORT

APPENDIX V

==> picture [426 x 295] intentionally omitted <==

Figure 3-8 Swath plot for Dachaidan deposit

BAW has not only visually checked the Au block grade and the composite grade used for the estimation by sections, but also independently conducted Dachaidan Au resource estimate using the capped composites with Inverse Distance Cube (IDW3) through Datamine software. The resource estimations by Dachaidan and BAW are consistent.

3.10.8 Resource Reporting

The current resource estimate by Dachaidan is based on the 1.0 g/t Au cut-off, which was given by Dachaidan. The MRE presented in Table 3-12 has been depleted by all mining and development works, as of 31 December 2022.

— V-100 —

COMPETENT PERSON’S REPORT

APPENDIX V

Table 3-12 Summary of Dachaidan Mineral Resources at a 1.0 g/t Au as of 2022/12/31

Site CAT Jinlonggou Pit 3 Measured Indicated M+I Inferred Total Qinglonggou M2 Measured Indicated M+I Inferred Total Qinglonggou South Measured Indicated M+I Inferred Total Qinglonggou M3 Measured Indicated M+I Inferred Total Qinglonggou North Deep East Measured Indicated M+I Inferred Total	TONNES (kt) – 2,754 2,754 1,190 3,944 – 346 346 186 532 – – – 427 427 – 613 613 266 879 – – – 383 383	Au grade (g/t) – 3.78 3.78 3.04 3.55 – 7.64 7.64 6.23 7.15 – – – 6.21 6.21 – 3.81 3.81 2.93 3.55 – – – 5.13 5.13	Gold Metal Note (kg) – OP & PIT20221231 10,399 10,399 3,615 14,015 – OP PIT20221231 & Mined Stope 2,646 2,646 1,159 3,805 – – – 2,650 2,650 – Mined Stope 2,335 2,335 780 3,115 – – – 1,964 1,964

— V-101 —

COMPETENT PERSON’S REPORT

APPENDIX V

Site CAT Qinglonggou North Deep West Measured Indicated M+I Inferred Total Xijinggou Measured Indicated M+I Inferred Total Qinglonggou East Measured Indicated M+I Inferred Total Stockpile Measured Indicated M+I Inferred Total Total Measured Indicated M+I Inferred Total	TONNES (kt) – – – 1,356 1,356 – 2,700 2,700 1,506 4,206 – 1,738 1,738 529 2,267 1,314 – 1,314 – 1,314 1,314 8,151 9,465 5,843 15,308	Au grade (g/t) – – – 2.69 2.69 – 4.08 4.08 4.24 4.14 – 8.11 8.11 7.62 7.99 5.21 – 5.21 – 5.21 5.21 4.97 5.00 4.15 4.67	Gold Metal Note (kg) – – – 3,644 3,644 – 11,014 11,014 6,380 17,394 – 14,095 14,095 4,029 18,124 6,850 – 6,850 – 6,850 6,850 40,489 47,339 24,221 71,561

Notes:

The Mineral Resource estimates are reported following the JORC 2012 Definition Standards for Mineral Resources & Mineral Reserves.
The effective date for the Mineral Resource estimates is Dec 31, 2022.

— V-102 —

COMPETENT PERSON’S REPORT

APPENDIX V

Mineral Resource estimates account for mining depletion up to and including Dec 31, 2022.
A cut-off value at 1.0 g/t Au was used for Dachaidan open pit deposit.
Applicable rounding has been applied to the stated tonnages, grades, and metal content to reflect the level of accuracy and precision of the estimate.

3.10.9 Conclusions and Recommendations

BAW visually inspected the Dachaidan block model grade against the composites, carried out a capping study, investigated variograms, interpolated Au grade with the Inverse Distance Cube method using Datamine and compared the volumetric of each domain with the onsite model. BAW concluded that the global resources between BAW and Dachaidan match well, and the internal resource estimate model provided by Dachaidan is acceptable.

==> picture [370 x 333] intentionally omitted <==

Figure 3-9 Yintai 2022 Exploration

404 holes totaling 83,545.92 m Infill and explorational drilling were conducted by Dachaidan in the year 2022, and some areas are still under exploration, BAW noticed that there were explorational mineralized materials were not included in the resource estimate as the limited dataset provided, according to Yintai Gold 2022 Annual report and internal exploration report, there is still 8,530 kg gold metal underestimated this time, drilling data, models and the related report was not provided to BAW. Mineralization in the Dachaidan area is quite complex and promising, BAW believes that infill and explorational drilling is recommended to get more resources.

— V-103 —

COMPETENT PERSON’S REPORT

APPENDIX V

3.11 Mining

BAW mainly relied on Changchun Gold Design Institute, 2018 & 2020 Feasibility Study report; Qinglonggou Gold Mine, 2021 Mine Reserves Annual Report, the information and data provided by the Dachaidan and collected from site inspection by BAW. BAW understands that a portion of the data is pending further updates.

Qinghai Dachaidan Gold Mine of Yintai Gold is located in Haixi Prefecture, Qinghai.

From Qinglonggou Gold Mine 2021 Mine Reserve Annual Report of Qinghai Dachaidan Mining, February 2022, the mine shut down from 2013 to 2018; from 2019 to 2021, the Qinglonggou Gold Mine operated in the Qinglonggou section. This annual report includes Qinglonggou North, Qinglonggou South and 323 North and 323 South in Figure 3-10.

==> picture [229 x 334] intentionally omitted <==

Figure 3-10 Map of Qinglonggou gold mine from Changchun Gold Design Institute, 2020 FS report (Source: Dachaidan)

Tanjianshan project includes Jinlonggou Mining Area. Qinglonggou Project includes Qinglonggou North Mining Area, Qinglonggou South Mining Area, 323 South Mining Area and 323 North Mining Area. Xijinggou Mining Area is under the feasibility study phase. The open pit mining at Qinglonggou 323 North was completed.

— V-104 —

COMPETENT PERSON’S REPORT

APPENDIX V

3.11.1 Mining Methods

BAW reviewed Changchun Gold Design Institute, 2018 & 2020 Feasibility Study reports, the information and data provided by the Dachaidan and collected from site inspection by BAW.

3.11.1.1 Qinglonggou North

This chapter summarizes the major operational mining method and the underground operation at Qinglonggou North.

3.11.1.1.1 Mine Operation Status

Mining at Qinglonggou North uses the underground mining method.

3.11.1.1.2 Mining Methods

The ore body makes it suitable for the use of underground mining. The mine uses adit and main decline development to access different underground ore zones. Trackless transportation is adopted, and haul trucks are used for transportation.

Several mining methods such as Avoca mining, Cut and Fill mining, Shrinkage mining, etc. have been used over the years.

Avoca: thickness greater than 4 m, the continuous filling and segmented open field method is used.
Cut and Fill: thickness less than 0.8 m, cutting and filling method mining used.
Shrinkage Stoping: thickness greater than 0.8 m and less than 4 m, and good ore rock stability. Shallow-hole retention and subsequent filling method adopted.

3.11.1.2 Qinglonggou South

This chapter summarizes the major operational mining method and the underground operation at Qinglonggou South.

3.11.1.2.1 Mine Operation Status

Mining at Qinglonggou South uses the underground mining method.

3.11.1.2.2 Mining Methods

The ore body makes it suitable for the use of underground mining.

— V-105 —

COMPETENT PERSON’S REPORT

APPENDIX V

Several mining methods such as Avoca mining, Cut and Fill mining, Shrinkage mining, etc. is similarly used with Qinglonggou North.

3.11.1.3 Qinglonggou 323 South

This chapter summarizes the major operational mining method and the surface operation at Qinglonggou 323 South.

3.11.1.3.1 Mine Operation Status

Mining at Qinglonggou Gold 323 South uses the open pit mining method.

3.11.1.3.2 Mining Methods

The ore body makes it suitable for the use of surface mining. The mine uses access road development. Hauling is performed by a fleet of haul trucks. The fleet is primarily used for mine production and stockpile handling; however, it is also involved in tasks such as clean-up and other support functions.

The final pit mining boundary is shown in Figure 3-11.

==> picture [261 x 295] intentionally omitted <==

Figure 3-11 Final pit boundary at Qinglonggou 323 South Mine from Changchun Gold Design Institute, 2020 FS report (Source: Dachaidan)

— V-106 —

COMPETENT PERSON’S REPORT

APPENDIX V

The open pit mine is a truck and excavator mining operation, with a fleet of haul trucks combined with hydraulic excavators and front-end loaders (FELs) as primary loading units. The FELs, due to their mobility, are assigned to ore or waste as required and are utilized for stockpile re-handle.

3.11.1.4 Tanjianshan

This chapter summarizes the major operational mining method and the operation at Tanjianshan.

3.11.1.4.1 Mine Operation Status

Tanjianshan previously used the open pit method. Currently, Mining at Jinlonggou uses an underground method.

3.11.1.4.2 Mining Methods

BAW considers that the mining method and scope adopted are reasonable.

3.11.1.5 Xijinggou

This chapter summarizes the major operational mining method and the operation at Xijinggou. LERINM carried out a feasibility study and submitted the Feasibility Report for Mining Engineering of Xijinggou Gold Mine in February 2021.

3.11.1.5.1 Mine Operation Status

Mining at Xijinggou uses the open pit mining method.

3.11.1.5.2 Mining Methods

LERINM conducted an economic and technical comparison between open pit and underground mining operations in terms of capital investment, production cost, the quality of mined mineralized materials, and production safety, concluding that it is better to adopt open pit mining focusing on the mineralized body located at Xijinggou.

3.11.2 Mineral Reserve Estimates

In this chapter, BAW reviewed and summarizes mining factors, economic factors, and the preliminary reserve estimation.

3.11.2.1 Factors

BAW makes conservative assumptions for Dachaidan.

3.11.2.2 Reserve Estimation

The data discussed in the previous section of this chapter is used to create potential total reserve estimation. The potential Dachaidan reserve estimate summarizes in Table 3-13.

— V-107 —

COMPETENT PERSON’S REPORT

APPENDIX V

Table 3-13 Dachaidan Mineral Reserve Blocks at a 2.0 g/t Au cut-off as of 2022/12/31 by BAW

Site CAT Jinlonggou Pit 3 Proved Probable Total Qinglonggou M2 Proved Probable Total Qinglonggou South Proved Probable Total Qinglonggou M3 Proved Probable Total Qinglonggou North Deep East Proved Probable Total Qinglonggou North Deep West Proved Probable Total Xijinggou Proved Probable Total	TONNES (kt) – 1,975 1,975 – 343 343 – – – – 472 472 – – – – – – – 2,035 2,035	Au grade (g/t) – 4.16 4.16 – 6.91 6.91 – – – – 4.01 4.01 – – – – – – – 4.38 4.38	Gold Metal Note (kg) – OP & PIT20221231 8,212 8,212 – OP PIT20221231 & Mined Stope 2,371 2,371 – – – – Mined Stope 1,894 1,894 – – – – – – – 8,918 8,918

— V-108 —

COMPETENT PERSON’S REPORT

APPENDIX V

Site CAT Qinglonggou East Proved Probable Total Stockpile Proved Probable Total TOTAL Proved Probable Total	TONNES (kt) – 1,684 1,684 1,314 – 1,314 1,314 6,509 7,823	Au grade (g/t) – 7.49 7.49 5.21 – 5.21 5.21 5.22 5.22	Gold Metal Note (kg) – 12,609 12,609 6,850 – 6,850 6,850 34,005 40,855

BAW Cautionary Note about Reserves Estimates :

This is only a preliminary reserve estimate with a conceptual mine plan. The mineral reserve estimate, with an effective date of December 31, 2022, was prepared by BAW. BAW understands that due to a lack of data or information, a portion of the data is pending further updates.

3.11.3Production Schedule

Before preparing this preliminary schedule, BAW reviewed the information and data provided by the Dachaidan and collected from the site inspection by BAW. BAW understands that a portion of the data is pending further updates. If there are any discrepancies, the content in the original report shall prevail.

Based on the information provided to BAW, details of the mining license and the adjacent exploration license are summarized in the previous section.

Based on the information provided to BAW, historic production is summarized in the previous section.

The information and data for this preliminary schedule are described below:

From the Year 2023-2025 production and development plan of Qinglonggou North, the production of 240,000 t/a is considered respectively for the Year 2023, Year 2024, and Year 2025.
From the production and stripping plan of Qinglonggou 323 South, the production of 346,000 t for the Year 2023.

— V-109 —

COMPETENT PERSON’S REPORT

APPENDIX V

From the Year 2023-2025 production and development plan of Jinlonggou Decline, the production of 65,000 t/a, 120,000 t/a, and 240,000 t/a are considered respectively for the Year 2023, Year 2024, and Year 2025.
From the Year 2023-2025, the production and development plan of Qinglonggou South Shaft, the production of 3,000 t/a, 55,000 t/a, and 60,000 t/a are considered respectively for the Year 2023, Year 2024, and Year 2025.
From the Year 2023-2025 production and striping plan of Xijinggou, the production of 5,700 t/a, 249,000 t/a, and 884,800 t/a are considered respectively for the Year 2024, Year 2025, Year 2026.
From the section of processing, mill throughput: about 643,000 t (with water 0.66%).
Dachaidan Mining currently owns two mining licenses: 600,000 t/a for Tanjianshan and 400,000 t/a for Qinglonggou.
Assumed comprehensive gold recovery from Section of Processing: 89.90%.
Gold production is based on economic targets.
The production schedule will be adjusted based on further data.

A preliminary Dachaidan mine scheduling was developed by BAW (Table 3-14).

— V-110 —

COMPETENT PERSON’S REPORT

APPENDIX V

ZONE TONNES Grade Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Remnant	2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034	(t) (g/t)	Jinlonggou Pit 3 1,975,000 4.16 411,000 120,000 240,000 100,000 100,000 100,000 300,000 300,000 300,000 4,000	Qinlonggou M2 343,000 6.91 240,000 103,000	Qinlonggou M3 472,000 4.01 137,000 240,000 95,000	Xijinggou 2,035,000 4.38 5,700 249,000 884,880 300,000 300,000 295,420	Qinlonggou East 1,684,000 7.49 3,000 55,000 60,000 148,000 243,000 247,580 343,000 343,000 241,420	Stockpiles 1,314,000 5.21 222,300 101,580 639,000 351,120	Total 7,823,000 654,000 643,000 789,000 884,880 643,000 643,000 643,000 643,000 643,000 643,000 643,000 351,120	Grade g/t 5.18 5.22 4.44 4.38 5.01 5.52 5.54 5.94 5.94 5.58 5.20 5.21	Rec. g/t 4.66 4.69 3.99 3.94 4.50 4.96 4.98 5.34 5.34 5.01 4.68 4.68	Rec. Au OZ 98,285 97,264 101,480 112,349 93,324 102,907 103,320 110,647 110,647 103,933 96,987 53,028 1,184,171	Cautionary note that this is only a preliminary mine schedule based on a conceptual plan and a preliminary reserve estimate. BAW understands	that a portion of the data is pending further updates. The preliminary schedule will be adjusted based on further data. BAW recommends that a complete	supporting study and detailed long-term plan should be done in compliance with the Mine schedule.

— V-111 —

COMPETENT PERSON’S REPORT

APPENDIX V

3.11.4 Mining Equipment

3.11.4.1 Qinglonggou North Equipment

Diesel and electric hydraulic equipment will be employed throughout the mine. The primary haulage fleet will consist of haul trucks and LHDs for the mineralized material, waste handling, and secondary tasks. Development drilling will be conducted using jumbos and long-hole drilling will be conducted using equivalent drills. A list of the major equipment used is shown in Table 3-15.

Table 3-15 Mine Major Equipment Summary

Major Equipment	Total
Jumbo	2
Bolter	1
Longhole Drill	1
Raise boring	1
Cable Bolter	1
LHD	11
Truck	9

Equipment requirements were based on the maximum annual duty hours for an individual piece of equipment, modified for mechanical availability and projected utilization.

3.11.4.2 Qinglonggou South Equipment

The major equipment is similarly used in Qinglonggou North.

3.11.4.3 Qinglonggou 323 South Equipment

Diesel and electric hydraulic equipment will be employed throughout the mine. Equipment requirements were developed from the first principles, based on the maximum annual duty hours for an individual piece of equipment, modified for mechanical availability and projected utilization. A list of the major equipment used in the mine is shown in Table 3-16.

— V-112 —

COMPETENT PERSON’S REPORT

APPENDIX V

Table 3-16 Mine Major Equipment Summary (Source: Dachaidan)

	Major Equipment	Type	Q.	Note
1	Excavator	PC850-8E0	1	4.5 m3
2	Excavator	500	1	4.5 m3
3	Excavator	PC460LC-8	3	3.6 m3
4	Excavator	360	1	2 m3
5	Excavator (breaker)	PC220-8M0	1
6	Haul truck	TL855B	13	25 m3
7	Haul truck	875	2	30 m3
8	Loader		5

3.11.5 Mine Service

3.11.5.1 Qinglonggou North Mine Service

This chapter summarizes the mine service at Qinglonggou North.

3.11.5.1.1 Ventilation

The ventilation will involve all the existing raise and shaft connections to the surface. At present, the south shaft and north shaft are used for ventilation.

Ideally, a stope should be ventilated with natural ventilation flowing from the level below through the stope up the raise. The raise and man ways should be placed so that the airflow supplies most of the stope. Auxiliary ventilation can be introduced as required.

3.11.5.1.2 Mine Drainage and Water Supply

The adits and shafts are used to dewater the underground mine. The adit is gravity drainage. The Shaft shall have some pump stations and an associated collection of sumps. Pumps operating status depends on sump levels.

A centralized water supply is adopted, using a 300 m[3] water pond near the north air shaft. 12 m[3] water tank is equipped for underground water supply and rescue water.

The underground production water supply is described below:

The water for production, firefighting, supply, and rescue is supplied by the surface drainage pumping station.
The production, firefighting, supply, and rescue use one set of water supply systems.

3.11.5.1.3 Backfilling

The continuous filling sublevel stoping method is used for larger than 4 m ore body, and the stope void is filled with waste rock cementation.

— V-113 —

COMPETENT PERSON’S REPORT

APPENDIX V

A cement slurry preparation station is built near the portal of the north return air shaft, which is transported through the pipeline to the underground and mixed with the waste rock to fill the stope.

3.11.5.1.4 Power Supply

The overhead line (10 kV, LGJ-120 and 1.45 km) connected to Qinglonggou North from the 35/10 kV substation. The capacity can meet the demand of the Qinglonggou North Mine.

3.11.5.2 Qinglonggou South Mine Service

The Mine service at Qinglonggou South is similarly used with Qinglonggou North.

3.11.5.3 Qinglonggou 323 South Mine Service

This chapter summarizes the mine service at Qinglonggou 323 South.

3.11.5.3.1 Personnel

Sufficient human resources with certain job skills meet the requirement of the operation. According to the operation, Qinglonggou 323 South requires a total of 57 people (excluding outsourcing), including 12 open-pit mining management personnel and 45 auxiliary production and management personnel.

3.11.5.3.2 Power Supply

A mobile diesel generator set (100 kVA and 400 V) is proposed as the power supply for submersible pumps and lighting equipment.

3.11.5.3.3 Communication

Wireless walkie-talkies and mobile phones are mainly used for communication.

3.12 Processing

The information in this section is based on the reports below. If there are any discrepancies, the content in the original reports shall prevail.

1) Qinglonggou Gold 323 Section (South) Basic Engineering by Changchun Gold Design Institute, 2020.12.
2) Qinglonggou Gold Modification Project Basic Engineering by Changchun Gold Design Institute, 2020.
3) Qinghai Province Dachaidan Town Jinlonggou Gold Metallurgical Test Report , by Qinghai Geology Mine Test and Application Center, 2018.11.
4) Qinghai Dachaidan Xijingou Gold Mining Project Feasibility Study , by Lanzhou Non-ferrous Metallurgical Design and Research Institute Ltd., 2021.02.

— V-114 —

COMPETENT PERSON’S REPORT

APPENDIX V

5) Qinghai Dachaidan Mining Inc. Processing Flow Sheet , by the owner.
6) Various Projects Summary , by the owner.
7) Processing Plants Annual Report – 2022 , by the owner.
8) Qinghai Dachaidan Mining Inc. Processing Plant Introduction and Production Situation , by the owner.

Dachaidan Tanjianshan projects include Jinlonggou Mining Area, and Qinglonggou Project, which includes Qinglonggou North Mining Area, Qinglonggou South Mining Area, 323 South Mining Area and 323 (North) Mining Area. Xijinggou Mining Area is under the feasibility study phase.

Qinghai Dachaidan Mining Co. Ltd. processing plants started in October 2006 but suspended operation in December 2016, and then restarted in April 2019. Currently, the processing plant is processing oxidized ores or low-sulfur ores now. The product is alloy gold and the byproduct is H2SO4 and the middle product – Flotation Concentrate now. (Roasting System has not run yet.)

The concentrator currently has two systems for processing two different types of ores.

1) The process of the No. 1 system: Crushing – SAG – Classification – Pre-leaching – Leaching and Adsorption (CIL) – carbon stripping and electrowinning – smelting – cyanide destruction – tailings flotation (2 Roughing + 1 Scavenging + 1 Cleaning)
2) The process of the No. 2 system: Crushing – SAG – Classification – Quick and Pre-Flotation – Flotation (2 Roughing – 1 Scavenging – 2 Cleaning) – Flotation Concentrate Oxidation Roasting – Flotation Tailings and Roasting Sand Cyanidation.

The two systems are relatively independent and cooperate. The process can be flexibly adjusted according to the type of ore.

When processing low-carbon, low-sulfur, easy-smelting ore. The ore is processed by the No. 1 system first and then cyanide tailings are processed by flotation of the No. 2 system after cyanidation destruction. The flotation concentrate is oxidized and roasted, and the calcined product returns to the No. 1 system for CIL, forming “CIL + Cyanide Tailing Flotation + Flotation Concentrate Oxide and Roasting + Calcination CIL” processing and smelting plant.

When fed with refractory gold ores containing high arsenic, high sulfur, and high carbon fine particles, the ore is processed by the No. 2 system for flotation, the flotation concentrate is oxidized and roasted, and the flotation tailings and calcined product enter CIL of No. 1 system. It forms “Flotation – Flotation Concentrate Oxidizing and Roasting + Flotation Tailings Roasting and Roasted Product CIL”.

— V-115 —

COMPETENT PERSON’S REPORT

APPENDIX V

3.12.1 Process Description

Currently, ROM is mainly Oxide Ore or low-sulfur ore, the processing is Crushing + Grinding Circuit + CIL + CIL Tailings Cyanide Destruction + Tailings Flotation + Flotation Concentrate. Oxidizing and Roasting will run in the future.

A. The existing No. 1 System Processing Flowsheet is Figure 3-12

==> picture [318 x 379] intentionally omitted <==

Figure 3-12 No. 1 System Processing Flowsheet Diagram

1) Crushing

ROM from the ROM bin is fed to the C100 jaw crusher through 1 set of 1,500×7,000 heavy-duty Apron Feeder for crushing. The product of primary crushing is transported to Storage Bin by 1# and 2# Belt Conveyors. The particle size of the crushed product is -120 mm.

— V-116 —

COMPETENT PERSON’S REPORT

APPENDIX V

2) Grinding Circuit

The grinding circuit has only one series for the No.1 and No. 2 system, including SAG + Classification 1 + Classification 2. The ore in Storage Bin is sent to the 3# Belt Conveyor by the Motor Vibration Feeder and then fed into the φ10,200×4,700×SAG by the 3# Belt conveyor for grinding. SAG mill discharges slurry to 1 set of 2,300×5,000 vibrating screens for screening. The pebbles on the screen are sent to a φ1,295 cone crusher for pebble crushing through 4#, 5#, and 6# Belt Conveyors and the crushed pebbles are transported to the 3# Belt conveyor by 7# Belt Conveyor and then back to SAG mill for regrinding. The vibrating screen underflow flows to the pump tank and then is pumped by the slurry pump to 1 set of hydro cyclone clusters – φ250×10 for classification. The overflow of the cyclone flows to the trash screen and the underflow flows to the SAG mill or flows to quick flotation which is based on the ore type of ROM. The oversize material of the trash screen is collected and the undersized material flows to the CIL system or Flotation system, named No.1 and No.2 system separately and opened as per different types of ores. Cyclone overflow is with -200 mesh at 80%.

3) CIL

The CIL system includes 8 sets of φ9,000×9,500 tanks for leaching in sequence. During the leaching process, lime and sodium cyanide are added and oxygen is filled. The carbons are lifted by a lifter from 9# to 2# tanks. The gold-loaded carbons are lifted by a lifter from the 2# tank to the safety screen; the overflow is transferred to of Carbon Stripping and Electrowinning system; the underflow goes back to 2#. Cyanide tailings flow out from 9# to the safety screen. The overflow with fine-loaded carbons of the safety screen is processed separately and the underflow of the safety screen flows to the Cyanide Destruction system.

4) Carbon Stripping and Electrowinning

Refer to the No.2 system process description.

5) Cyanide Tailings Destruction

The cyanide tailings flow into 4 stirring tanks of φ5,000×6,500 by gravity, and the cyanide is broken by the Inco method. By adding sodium metabisulfite, copper sulfate and filling oxygen to carry out cyanide removal chemical reaction, remove the cyanide in the cyanide tailings slurry and make the total cyanide in the slurry less than 5ppm.

The cyanide tailings slurry is detoxified by the Inco method (SO2-air method) and then goes to flotation, the final concentrate of flotation is stored in No. 2 TSF, and the final tailings of flotation are sent to No. 4 TSF. The water from the concentrate storage and tailing storage is returned to the production system for recycling to achieve zero discharge.

— V-117 —

COMPETENT PERSON’S REPORT

APPENDIX V

6) Cyanide Tailings Flotation

After cyanide destruction, the tailings are pumped into 2 sets of φ5,500×6,000 mixing tanks in the flotation system (The No. 2 system), where chemicals are added and stirred. The stirred slurry is fed into the flotation cells and undergoes two stages of roughing, one stage of cleaning and one stage of scavenger. The concentrate of the cleaning is the processing concentrate and is pumped to 2# storage ponds. The tailings of the flotation flow to the tailing thickener. The underflow of the thickener is sent to 4# TSF and the overflow is returned to reuse in the processing.

7) Tailings Disposal

The underflow of the thickener is sent to 4# TSF and the overflow is returned to reuse in the processing.

B. The existing No. 2 System Processing Flowsheet is in Figure 3-13.

==> picture [378 x 266] intentionally omitted <==

Figure 3-13 No. 2 System Processing Flowsheet Diagram

1) Crushing

There is only one series of crushing for the No.1 and No.2 system.

2) Grinding Circuit

No.1 and No.2 systems use the same series of grinding circuits.

— V-118 —

COMPETENT PERSON’S REPORT

APPENDIX V

3) Flotation

The underflow of the trash screen flows to the flotation system, which includes quick flotation, pre-flotation, 2 roughing, 1 scavenging and 1 cleaning. (This flotation also processes the CIL tailings when ROM is oxidized ore.)

4) Flotation Concentrate Dewatering + Roasting (not in operation)

The existing processing plant has installed the facilities with equipment for flotation concentrate dewatering and roasting, but they are not in operation now.

Below is a processing flowsheet of flotation concentrate dewatering and roasting, Figure 3-14.

==> picture [329 x 278] intentionally omitted <==

Figure 3-14 Flotation Concentrate Dewatering (not run yet) + Roasting Processing Flowsheet Diagram

5) Flotation Tailings and Roasted Sand Cyanidation, Carbon Stripping and Electrowinning

Below is a processing flowsheet of CIL 1, CIL 2 (small), CIL 3 (big), Carbon Stripping and Electrowinning, Figure 3-15.

— V-119 —

COMPETENT PERSON’S REPORT

APPENDIX V

==> picture [410 x 351] intentionally omitted <==

Figure 3-15 CIL 1, CIL 2, CIL 3, Carbon Stripping and Electrowinning Processing Flowsheet

Flotation tailings are processed by thickener; overflow goes to the water recycling system and underflow goes to the pre-cyanidation system including 3 sets of φ9,000×9,500 leaching tanks for pre-leaching.

The tailings of pre-leaching flows to 1A and 1B CIL 2 (small cyanidation process) including 8 sets of φ5,000×5,600. The tailings of 1A and 1B flow to CIL 3 (Big CIL) which includes 7 sets of φ9,000×9,500 leaching tanks. The tailings of CIL 3 flow to cyanide destruction and TSF.

The gold-loaded carbon of overflow of the safety screen is transported by hydraulic power to Carbon Stripping and Electrowinning system.

The gold-loaded carbon is desorbed by high-pressure cyanide-free, and the pregnant solution is electrolyzed to obtain gold sludge, which is sent to the alchemy room for smelting. The stripped carbon after desorption is acidized and neutralized and then goes to a reaeration kiln and then quenched for future usage.

— V-120 —

COMPETENT PERSON’S REPORT

APPENDIX V

6) Cyanide Tailings Destruction and Tailings Disposal
- No.1 and No.2 are with the same cyanide tailings destruction and tailing disposal.
C. Flotation Concentrate Dewatering (not run yet) + Roasting

The existing processing plant has installed the facilities with equipment for flotation concentrate dewatering and roasting, but they are not in operation now.

Below is a processing flowsheet of flotation concentrate dewatering and roasting, Figure

3-16.

==> picture [329 x 278] intentionally omitted <==

Figure 3-16 Flotation Concentrate Dewatering (not run yet) + Roasting Processing

Flowsheet Diagram

— V-121 —

COMPETENT PERSON’S REPORT

APPENDIX V

D. Arsenic Precipitation, Acid Neutralization

Below is a processing flowsheet of Arsenic precipitation, and acid neutralization, Figure 3-17.

==> picture [350 x 340] intentionally omitted <==

Figure 3-17 Arsenic Precipitation, Acid Neutralization Processing Flowsheet Diagram

The dilute arsenic acid produced in the purification process is dersenicized by the lime-iron salt method (adding polyferric sulfate and lime). After adding ferric sulfate to the arsenic-containing waste acid, adjust the pH to 2.5-4. Under this condition, ferric sulfate and arsenic trioxide will form iron arsenate precipitation. Continue to use lime to adjust the pH value to 8-9, and calcium hydroxide and ferric sulfate will generate hydrogen. Ferric oxide and ferric hydroxide are a kind of colloid, which can adsorb ferric arsenate and co-precipitate together. After the treatment, the arsenic concentration of the arsenic-containing waste liquid reaches the discharge standard (less than 5 ppm, national standard GB5085.3-2007), and the up-to-standard discharge enters the tailings pond or returns to the production water tank for recycling, to achieve harmless treatment.

— V-122 —

COMPETENT PERSON’S REPORT

APPENDIX V

The polyferric sulfate used for arsenic removal in production mainly uses on-site raw materials (calcined tailings and sulfuric acid) through chemical reactions to generate ferric sulfate instead of purchased polyferric sulfate for arsenic removal production.

To purify dilute acid containing arsenic, the lime iron salt method (adding polyferric sulfate and lime) is used to remove arsenic from dilute acid. The arsenic concentration of arsenic-containing waste liquid after treatment can meet the discharge standard (less than 5 ppm, national standard GB5085.3-2007), discharge up to the standard into the tailings pond or return to the production tank for recycling, to achieve harmless treatment.

3.12.2 Recovery

As per Production Metallurgical Report from Jan. 2022 to Oct. 2022 provided by the owner, CIL gold recovery is 84.76% and flotation gold recovery (based on ROM) is 5.14%, so the overall gold recovery of the existing processing plant is 89.90%.

ROM gold grade: 3.88 g/t

Mill throughput: about 643,292 t (with water 0.66%)

Grinding Fineness: -200 mesh at 82.70%.

3.12.3 Test Work

Qinghai Province Dachaidan Town Jinlonggou Gold Metallurgical Test Repor t, by, Qinghai Geology Mine Test and Application Center, 2018.11.
Qinghai Dachaidan Mining Co., Ltd. Gold Metallurgical Test Report , by the owner, 2021.05.

The main purpose of the metallurgical test report of Qinghai Province Dachaidan Town Jinlonggou Gold is to verify if Jinlonggou Gold Mine can be processed with the same processing method as Qinglonggou Gold Mine.

The conclusion of this test report:

a) Ore Process Mineralogy

The south of the Qinglonggou III ore belt – Jinlonggou Mine is hydrothermal gold ore, the rock types are dolomite marble and sericite phyllite, and the main metal minerals are native gold, pyrite, arsenopyrite, sphalerite, galena and trace Chalcopyrite, the main gangue minerals are dolomite, sericite and quartz. The main gold-bearing mineral is natural gold, containing 0.14% arsenic.

The Qinglonggou III ore belt is altered rock-type gold ore, and the rock types are carbon-bearing muscovite schist, marble, diorite, fine-grained diorite, and the main metal minerals are native gold, pyrite, arsenopyrite and a small amount of Chalcopyrite, the main gangue minerals are quartz, plagioclase, potassium feldspar, muscovite, carbonate, carbonaceous. The main gold-bearing mineral is natural gold, containing 0.060% arsenic.

— V-123 —

COMPETENT PERSON’S REPORT

APPENDIX V

b) From the perspective of process mineralogy, although the mineral compositions in the two ores are different, the main gold-bearing minerals are native gold, so both are suitable for gold recovery by flotation and cyanide leaching. The different gangue minerals in the two ores have little effect on the separation effect from the processing phenomenon.
c) Due to the special relationship between these two ore belts, it is advisable to mix the ores from the two ore belts during mining and processing in the future. Considering the uniformity of the process and the adaptability of the existing equipment of the processing plant to the process, the final recommended mineral processing process is as follows:

Raw ore grinding to -0.074 mm at 84% flotation – flotation tailings cyanidation process. The gold recovery rate of the whole process can reach 90%, the processing plant equipment has high adaptability, the difficulty of process transformation is low, and the pharmaceutical system remains unchanged.

Generally speaking, the Jinlonggou Sulfide Ore and the Qinglonggou III ore belt are easy to be processed and can be processed with the same processing.

Qinghai Dachaidan Mining Co., Ltd. Gold Metallurgical Test Report, by the owner, 2021.05.

The test samples of Jinlonggou by-product ore and Qinglongtan M3 ore were all sent by geology. Among them, Qinglongtan M3 ore sample is divided into four test samples: 2015jk1 (gold: 13.18 g/t, sulfur: 1.56%), 2015jk2 (gold: 2.03 g/t, sulfur: 0.00%), 2015jk3 (gold: 2.63 g/t, sulfur: 0.00%), 2015jk comprehensive sample (2015jk1:2015jk2:2015jk3=1:2:2, gold: 4.17 g/t, sulfur: 0.14%). The gold grade of Jinlonggou by-product mine is 2.56 g/t, and the sulfur grade is 2.80%.

Test results are as the following:

The average leaching rate of Jinlonggou by-product ore is 80.51%.

The average leaching rate of 2015jk1 test samples was 88.81%.

The average leaching rate of 2015jk2 test samples is 95.02%.

The average leaching rate of 2015jk3 test samples is 95.47%.

The average leaching rate of 2015jk comprehensive sample test samples was 93.49%.

Qinghai Dachaidan Mining Co., Ltd. Gold Metallurgical Test Report is done by the owner in May 2021. It doesn’t have mineralogy analysis for the samples, and the current processing parameters are not provided by the owner, so we can’t know if the current processing parameters can be improved or not. Along with the change of ore type of ROM, the processing can be adjusted since existing processing plants are designed for two types of ores.

— V-124 —

COMPETENT PERSON’S REPORT

APPENDIX V

3.13 Permitting, Environmental, Health and Social Impacts

3.13.1 Operational Licenses and Permits

Table 3-17 Details of Mining License

Mining License Holder	Qinghai Dachaidan Mining Co., Ltd.
Name of Property	Tanjianshan Au Mining Area (“Tanjianshan”)
License Type	Mining
License ID	C1000002011104120120032
Area (km2)	1.03
Elevation (m)	From 750 m to -200 m
Permitted Production Capacity	600 ktpa
Type of Commodities	Gold
Mining Method	Open Pit Mine
Valid Period	17 June 2011 to 17 June 2023

— V-125 —

COMPETENT PERSON’S REPORT

APPENDIX V

Table 3-18 Details of Mining License

Mining License Holder Qinghai Dachaidan Mining Co., Ltd. Name of Property Qinglonggou Au Mining Area (“ Qinglonggou ”) License Type Mining License ID C1000002010044120060797 Area (km[2] ) 3.89 Elevation (m) From 750 m to -200 m Permitted Production Capacity 400 ktpa Type of Commodities Gold Mining Method Open Pit Mine Valid Period 05 January 2023 to 05 September 2028

Table 3-19 Details of Exploration License

License Type	Exploration
License ID	T6300002018014010054584
Area (km2)	12.73
Valid Period	22 March 2021 to 15 October 2025

Table 3-20 Details of Exploration License

License Type Exploration License ID T6300002021084010056482 Area (km[2] ) 8.05 Valid Period 19 August 2021 to 15 October 2025

— V-126 —

COMPETENT PERSON’S REPORT

APPENDIX V

Table 3-21 Details of Exploration License

License Type	Exploration
License ID	T6300002008044010000385
Area (km2)	1.2
Valid Period	19 August 2021 – 18 August 2023
	Table 3-22 Details of Exploration License
License Type	Exploration
License ID	T6300002008044010000384
Area (km2)	17.74
Valid Period	19 August 2021 – 23 June 2026
	Table 3-23 Details of Exploration License
License Type	Exploration
License ID	T6300002022034050056745
Area (km2)	3.89
Valid Period	17 March 2022 – 16 March 2027
	Table 3-24 Details of Exploration License
License Type	Exploration
License ID	T6300002008044010000382
Area (km2)	2.90
Valid Period	17 February 2022 – 16 February 2024

— V-127 —

COMPETENT PERSON’S REPORT

APPENDIX V

Table 3-25 Details of Exploration License

License Type	Exploration
License ID	T6300002022024010056718
Area (km2)	63.05
Valid Period	17 February 2022 – 19 June 2026

3.13.2 Environmental Management

3.13.3 Occupational Health and Safety

3.14 Economic Analysis

BAW reviewed the forecasted operation data and analyzed the late mine operation data provided by Mine. BAW also prepared a production schedule for the Dachaidan project based on the information provided. To assess the economic viability of Minable Resources under the production schedule, BAW has performed an economic analysis for the Minable Resources estimated throughout the LOM. Determination of economic viability involves the sum of discounted annual free cash flow projected from the start of the year till the end of the LOM. The economic analysis is based on the following assumptions:

The economic analysis presented here is on a 100%-equity basis that shows the basic economics of the project.

— V-128 —

COMPETENT PERSON’S REPORT

APPENDIX V

It does not incorporate financing items such as interest paid and loan principal paid back.
The analysis also does not incorporate any losses carried forward for tax purposes and any refund of valued-added taxes previously or currently paid.

3.14.1Valuation Methodology

• Market Approach

Income Approach

• Cost Approach

3.14.2Adopted Valuation Approach

Among the abovementioned valuation methodologies, the selection of the valuation method for the Dachaidan Project is based on, among other things, the quantity and quality of the information provided, the availability of the data, the availability of relevant market transactions, the uniqueness of the Project, the nature of business and industry involved of the Project, professional judgment and technical expertise of the management.

— V-129 —

COMPETENT PERSON’S REPORT

APPENDIX V

The selection of the valuation approach is determined primarily by the stage of development of the concerned mineral asset. The chart below (Figure 3-18) shows the application of valuation methodology for valuing mineral assets.

==> picture [434 x 327] intentionally omitted <==

Figure 3-18 Application of different valuation Methodologies

3.14.2.1 Mineable Resource

Regarding the Mineable Resources of the Dachaidan Project, the income approach is considered to be the most suitable valuation methodology since its net present value can be measured by the present value of the future economic benefits. In addition, compared with the cost approach, the income approach can effectively and accurately reflect the future earnings of the Project. Among the income approaches, we adopted the approach of discounted cash flow projection. The adoption of such an approach for valuing the Mineable Resources is considered to be fair, reasonable and conformable with the industry practice.

3.14.2.2 Discounted Cashflow

— V-130 —

COMPETENT PERSON’S REPORT

APPENDIX V

The expected debt-free cash flow for each year was determined as follows:

FCF =

EBIT (1 – T) + Dep – InvCapex – InvNWC

FCF = Expected Cash Flow

EBIT = Earnings before interest and tax

T = Tax rate

Dep = Non-cash items

InvCapex = Investment in capital expenditure

InvNWC = Investment in net working capital

PVCF = CF1/(1+r)[1] + CF2/(1+r)[2] +[...] + CFn/(1+r)[n]

In which

PVCF = Present value of free cash flows

CF = Estimated cash flows

r = Discount rate

n = Number of the year of projections

3.14.3 Gold Production and Revenue

According to the production plan developed by BAW, the Dachaidan project will produce 36,725,274 g of gold. The long-term gold price is estimated to be 443.30 RMB/g. The total revenue of gold should be CNY14,503.45 million.

3.14.4 Operating Cost and Capital Expenditure

The cash cost of LOM is estimated at CNY2,750.39 million, while the capital expenditures are CNY1,988.47 million.

— V-131 —

COMPETENT PERSON’S REPORT

APPENDIX V

3.14.5 NPV and Sensitivity Analysis

Regarding the Minable Resources of Project Dachaidan, the income approach is considered to be the most suitable valuation methodology since its net present value can be measured by the present value of the future economic benefits. Therefore, such an approach can effectively reflect the future revenue of the project. The NPV of the Dachaidan Project is CNY4,176.65 million at a 9.79% discount rate. The sensitivity analysis shows that the NPV estimate is the most sensitive to commodity prices and discount rates.

Appendices

Appendix 1: JORC Code, 2012 Edition – Table 1

Section 1 Sampling Techniques and Data

Criteria Commentary Sampling techniques • Trenching and tunnelling were conducted. Representative channel samples were collected using a diamond saw and chisel, with channel dimensions of 10 × 5 cm and a typical interval of 1 m.
Diamond and RC drilling were employed. Diamond drill cores were cut along the long axis using a saw splitter. Rock chip samples were collected from RC drilling. Sample intervals were primarily set at 1 m lengths.
Mineralization was identified based on lithology and alteration.

Drilling techniques

Standard tube core drilling rigs were utilized, with drill cores primarily being HQ-sized and NQ-sized.
Down-hole surveys were conducted using a digital inclinometer or downhole camera at intervals of 30 m.

Drill sample recovery

The logging geologist measured drill core recovery for each run and recorded the results in the primary database. Core recovery was determined by dividing the drilling footage by the core length.
Upon encountering low sample recovery during drilling, the logging geologist and driller worked together to promptly rectify the problem and optimize recovery.
No relationship between sample recovery and grade was found.

— V-132 —

COMPETENT PERSON’S REPORT

APPENDIX V

Criteria

Logging

Commentary

Drill cores were qualitatively logged by geologists to capture details such as oxidation, lithology, alteration, structure, and recovery.
All drill hole cores were properly logged and photographed. Logging information was initially recorded on standardized logging sheets and subsequently digitized into the electronic database.
Sub-sampling techniques and sample preparation
Half-core samples were obtained by splitting drill cores in half.
Channel and rock chip samples were collected in their entirety for sample preparation, without splitting.
All samples underwent drying, crushing, splitting, and pulverizing according to the proper procedures. The Chichette formula (Q = k×d[2] ) was used to determine the minimum allowable sample weight, where: Q represents the sample weight (kg), k is the coefficient determined by the ore type (0.8 for this rock type), and d is the maximum sample grain diameter (mm).
No field duplicates were collected.
On-site geologists deemed the sample size appropriate for the gold grain size observed.
Quality of assay data and laboratory tests
The use of fire assay with AAS for gold determination was considered appropriate.
Geophysical tools, spectrometers, and handheld XRF instruments were not utilized for assaying purposes.
Basic samples were analyzed by both the internal mine-site laboratory and domestically and internationally certified Chinese laboratories, which implemented internal quality control procedures in line with relevant PRC and international standards. No systemic bias was reported.

— V-133 —

COMPETENT PERSON’S REPORT

APPENDIX V

Criteria

Commentary

Verification of sampling and • BAW geologists carried out a field inspection of significant assaying intersections.
No twinned holes were drilled.
All geological logging and sampling information was initially recorded on logging sheets and later digitized into an electronic database. Both physical and electronic logging and sampling records were well-maintained.
During the site visit, BAW reviewed data entry procedures, and storage protocols, and verified the primary data.
No adjustment was made to the assay data.

Location of data points

Drill holes, trenches, and adits were surveyed in compliance with relevant PRC standards by certified surveyors under the supervision of on-site geologists.
The Beijing Coordinate System (1954) and the local independent coordinate system were applied for this project.
Detailed topographic surveys were conducted by certified surveyors and deemed adequate for modelling and Mineral Resource estimation purposes.
Data spacing and distribution
The exploration grid was set at 20-80 × 20-80 m. Samples were collected continuously throughout mineralization zones and their contact zones in wall rocks, with a typical length of 1 m.
The spacing of drill holes is sufficient to establish the degree of geological and grade continuity appropriate for the Mineral Resource and Ore Reserve estimation procedures and for the classifications applied.
Orientation of data in • Considering the deposit type, the drilling orientation and relation to geological subsequent sampling are deemed unbiased for Mineral Resource structure estimation purposes.
Sample security
Dachaidan Mining managed the chain of custody for sample security. Samples were collected, packed, marked, and logged before being delivered to the laboratory for preparation and assaying. The drill cores were stored at an outdoor location within the mine site.

— V-134 —

COMPETENT PERSON’S REPORT

APPENDIX V

Criteria

Commentary

Audits or reviews

All aspects of sampling techniques strictly adhered to relevant PRC national standards and specifications. BAW reviewed and cross-checked the sampling data.

Section 2 Reporting of Exploration Results

Criteria

Commentary

Mineral tenement and land tenure status
BAW was provided with scanned copies of the original mining and exploration licenses, and the details are stated in Sections 3.1.2 and 3.1.3 of this report.
Exploration done by other parties
Detailed information can be found in Section 3.3.2 of this report.

Geology

Detailed information can be found in Sections 3.4 and 3.5 of this report.

Drill hole Information

All drill hole information was entered into the database and utilized for Mineral Resource estimation. Due to the extensive amount of drill hole data, a detailed tabulation of this information is not presented.

Data aggregation methods

All samples are composited within the geological domains at a 1.0 m length, and short intervals at the end of the domain are incorporated into the preceding interval. A cut-off value of 1.0 g/t Au is used to define the domains.
No capping descriptions were provided to BAW. BAW conducted Histogram and Log-probability plot to test the capped composites provided by Dachaidan. 88.8 g/t was used for a head cut for Jinggou and 25.45 g/t for Jinlonggou Pit 3, 58 g/t for Qinglonggou M2, 25.9 g/t for Qinglonggou M3 and 45.5 g/t for Qinglonggou South.
No metal-equivalent approaches were applied.

— V-135 —

COMPETENT PERSON’S REPORT

APPENDIX V

Criteria

Commentary

Relationship between mineralization widths and intercept lengths
Gold mineralization of the Dachaidan deposit is quite complex in three-dimensional space. Mineralization appears complex along strike and dip, and there was no significant guidance for hangingwall and footwall.
A quit amount of drilling and sampling was done by the site geologist and, Model provided by Dachaidan was built based on a cut-off at 1.0 g/t Au, and all domains are determined based on geology, alteration and the interpreted controls on mineralization from production experience.

Diagrams

Not Applicable in this report.
Balanced reporting
The reporting is fully representative of the data provided at this stage.
Other substantive exploration data
Adequate samples were measured for specific gravity, as detailed in Section 3.8.1.
Further work
BAW was informed that Dachaidan Mining would conduct further exploration programs within the current mining and exploration licenses.

Section 3 Estimation and Reporting of Mineral Resources

Criteria Commentary

Database integrity • The data provided by the Company in Access format was imported into a Surpac database after validation.
Data validation steps included:
- Validation through constraints and libraries set in the database, e.g., overlapping/missing intervals, intervals exceeding maximum depth, valid geology codes, missing assays.
- Validation through 3D visualization in 3D software to check for any obvious collar, down-hole survey, or assay import errors.

— V-136 —

COMPETENT PERSON’S REPORT

APPENDIX V

Criteria

Site visits

Geological interpretation

Dimensions

Estimation and modelling techniques

Commentary

BAW Competent Person visited the Dachaidan Project from March 21 to 24, 2023. Various aspects of the project were inspected, including mineralization, drilling operations, logging, sampling, the database, the assay laboratory, mining and processing operations, and mine infrastructure, in collaboration with on-site personnel.
The model provided by Dachaidan was built based on a cut-off at 1.0 g/t Au, and all domains are determined based on geology, alteration, and the interpreted controls on mineralization from production experience.
Not Applicable in this report.
Gold (Au ppm) was interpolated to the empty block model using Ordinary Krigin by a site geologist in Dachaidan, and IDW3 (Inverse Distance Cube) methods were used by BAW as verification.
The parent cell size and estimation parameters were based on the drill hole spacing and the nature of the mineralization style at the project.
The geological interpretation was used to help build a mineralized wireframe model and the resource estimate was conducted within the model.
Validation of the Mineral Resource estimate has been conducted by:
Visual drillhole section data comparisons with the block model and
Swath plots of major elements in three orthogonal directions.

Moisture

Cut-off parameters

Mining factors or assumptions
Tonnages are estimated on a dry basis.
The current resource estimate by Dachaidan is based on the 1.0 g/t Au cut-off, which was given by Dachaidan.
The mining method assumed is open pit mining and Underground mining.
Mining factors such as mining dilution shown above were not incorporated into the Mineral Resource estimate.

— V-137 —

COMPETENT PERSON’S REPORT

APPENDIX V

Criteria

Metallurgical factors or assumptions

Commentary

Simple studies of ore properties and processing tests were conducted, and the files were provided by the Company.
The overall gold recovery is 89.90% as per the document from the owner.
Processing recovery rates presented above were incorporated into the Mineral Resource estimate.
Environmental factors or assumptions
Bulk density

Classification

No assumptions have been made regarding possible waste or process residue disposal options or environmental surveys.
The conventional water displacement method was utilized for the density determination of gold mineralization.
Mineral Resources have been classified in the Measured, Indicated and Inferred categories in accordance with the JORC Code 2012 guidelines.
A range of criteria was considered in determining the classification for the project, including:
geological confidence in the interpretations,
sample data density,
sample/assay confidence,
grade continuity of the mineralization,
estimation method.
All blocks provided to BAW were lack classification while, in BAW’s opinion, it is reasonable to classify Measured resources with 20 x 20 m drill spacing interpolated by at least 3 holes. and Indicated resources with 40 x 40 m spacing & 2 holes within the main domain at Qinglonggou site. And the IDW seems more appropriate for grade interpolation rather than OK.
The Competent Persons endorse the results and classification for the project.

— V-138 —

COMPETENT PERSON’S REPORT

APPENDIX V

Criteria

Commentary

Audits or reviews

Mr. Weiliang Wang and Karfai Leung, MAusIMM, has undertaken a peer review.
There are no outstanding issues arising from these reviews.
Discussion of relative accuracy/confidence
Relative accuracy and confidence have been assessed through validation of the model as outlined above.
The Mineral Resource estimate comprises material categorized as Measured, Indicated and Inferred Mineral Resource. The Mineral Resource categories reflect the assumed accuracy and confidence of a global.

Section 4 Estimation and Reporting of Ore Reserves

Criteria

Commentary

The mineral Resource • The block models prepared by Yintai were used as the basis of the estimate for conversion to Ore Reserve estimate. Ore Reserves
The Mineral Resources are reported inclusive of Ore Reserves.
Site visits • BAW Competent Person visited the Dachaidan Project from March 21 to 24, 2023. Various aspects of the project were inspected, including mineralization, drilling operations, logging, sampling, the database, the assay laboratory, mining and processing operations, and mine infrastructure, in collaboration with on-site personnel.
Study status • The feasibility study report (2021.02) conducted by Lanzhou Engineering & Research Institute of Nonferrous Metallurgy was provided to BAW.
The feasibility study report (2020.11) conducted by Changchun Gold Design Institute was provided to BAW.
The feasibility study report (2018.01) conducted by Changchun Gold Design Institute was provided to BAW.
The feasibility study report (2006.04) conducted by BGRIMM was provided to BAW.
The feasibility study report was used as the basis of the Ore Reserve estimate.

— V-139 —

COMPETENT PERSON’S REPORT

APPENDIX V

Criteria

Commentary

Cut-off parameters

The feasibility study report (2021.02) conducted by Lanzhou Engineering & Research Institute of Nonferrous Metallurgy was provided to BAW.
The feasibility study report (2020.11) conducted by Changchun Gold Design Institute was provided to BAW.
The feasibility study report (2018.01) conducted by Changchun Gold Design Institute was provided to BAW.
The feasibility study report (2006.04) conducted by BGRIMM was provided to BAW.
Mining factors or assumptions
Not Applicable in this report.
Metallurgical factors or • No processing test is recommended as the existing process assumptions includes two systems, which can be adjusted and process two different types of ores.
The harmful element to processing and smelting is arsenic, so the processing was designed to recover arsenic.
It doesn’t have any documents about the smelting and alloy gold, so assuming that alloy gold meets the requirement of the terms and sales agreement.
Environmental • Environmental, safety and production permits were obtained.
Infrastructure • The infrastructure meets the basic requirements of production and transportation.
Costs • The Opex and Capex were provided by the Mine.
Refer to section 3.13.4.
Revenue factors • Production Schedule is developed by BAW. • Refer to section 3.13.3.
Market assessment • Not Applicable in this report.

— V-140 —

COMPETENT PERSON’S REPORT

APPENDIX V

Criteria

Economic

Commentary

The input data to calculate NPV is described in Section 3.13 which mainly includes the production plan, sales revenue, production cost, administration cost, Capex and taxes.
Refer to section 3.13.5.

Social

Other

Classification

Not Applicable in this report.
None.
The mineable Measured Resources, including diluting materials and allowances of losses, were classified as Proved Ore Reserves.
The mineable Indicated Resources, including diluting materials and allowances of losses, were classified as Probable Ore Reserves.
The results appropriately reflect the Competent Person’s view of the deposit.

Audits or reviews

Mr. Weiliang Wang and Karfai Leung, MAusIMM, has undertaken a peer review.
There are no outstanding issues arising from these reviews.
Discussion of relative accuracy/confidence
Usually, the Ore Reserve estimate is reported based on some technical and economic assumptions which have been understood well to date. These assumptions would change as time goes on, so different Ore Reserve can be estimated/calculated.

— V-141 —

COMPETENT PERSON’S REPORT

APPENDIX V

4 HEIHE PROJECT

4.1 Property Description and Location

4.1.1 Property Location

==> picture [359 x 368] intentionally omitted <==

Figure 4-1 Location of the Heihe Project

Source: Google Map

— V-142 —

COMPETENT PERSON’S REPORT

APPENDIX V

4.1.2 Ownership

Yintai, via its wholly owned subsidiary Heihe Yintai Mining Development Co., Ltd. (“ Heihe Mining ”), maintains a 100% ownership interest in the Heihe Project. This interest includes all mineral resources and reserves, as well as all mining operations detailed in this report. Heihe Mining was formerly known as Heihe Luoke Mining Development Co., Ltd. (“ Heihe Luoke ”) before 2021.

4.1.3 Tenure, Permit and License

Heihe Mining holds a mining license that encompasses an area of 0.1386 square kilometres and an elevation range of 280 to -100 meters above sea level (Figure 4-2). The license number is C100002016044210142237, with a validity period spanning from May 2016 to May 2033. The corner coordinates of the mining license are provided in Table 4-1.

Table 4-1 Corner Coordinates of the Mining License, Heihe Project

	Chinese Geodetic Coordinate System 2000 (“CGCS2000”)	Chinese Geodetic Coordinate System 2000 (“CGCS2000”)
Corner	Coordinates No.	Eastings/m	Northings/m
1		5459993.21	43492077.07
2		5459992.92	43492279.22
3		5459745.49	43492481.01
4		5459189.41	43492480.26
5		5459189.58	43492318.51
6		5459714.82	43492319.25

Yintai has secured the necessary permits and licenses required for the ongoing operation of the Heihe Project, including the Mine Safety Production License, Tailings Safety Production License, Water Extraction Permit, Radiation Safety Production License, Blasting Operation License, and Pollution Discharge Permit. However, BAW did not independently verify the information concerning the location, area, and status of these permits and licenses. Furthermore, BAW is unaware of any additional permits required for executing the proposed work on the property, and whether such permits have been obtained or not.

— V-143 —

COMPETENT PERSON’S REPORT

APPENDIX V

==> picture [362 x 309] intentionally omitted <==

Figure 4-2 Satellite Image of the Heihe Project area

Source: Ovital Map

4.2 Accessibility, Climate, Local Resources, Infrastructure and Physiography

4.2.1 Accessibility

The Heihe Project is easily accessible via an 8 km paved road that connects to the Xunke-Wuyiling highway. Xunke County is located 70 km away from the Heihe Project, while Yichun City, also in Heilongjiang Province, is situated 120 km away (Figure 3-1). The town of Sunwu, located 118 km away, is well-connected to Beian, Suihua, Harbin, and other areas via a railway and highway network. Similarly, Wuyiling is connected to Yichun, Suihua, Harbin, and other areas through a railway and highway network. The transportation network in the region is relatively convenient, and the Heilongjiang River, which flows through Xunke County, is navigable from May to October every year. The sailing distance from Xunke to the Heihe port is approximately 170 km. The nearest airport to the Project site is located in Heihe City, providing daily domestic flights to major international airports such as Harbin and Beijing.

4.2.2 Topography, Elevation, and Vegetation

The Heihe Project is situated in the northern part of the Lesser Khingan Range, a low mountainous region with the highest elevation of 304.90 m and the lowest erosion benchmark of 125.75 m above sea level in the Kuerbin River valley, yielding a relative height difference of 179.15 m. The area features well-developed surface vegetation and a few outcrops of bedrock.

— V-144 —

COMPETENT PERSON’S REPORT

APPENDIX V

4.2.3 Climate

The area experiences a temperate continental monsoon climate, characterized by long, cold winters, short, hot summers, windy springs, and rainy autumns. Based on meteorological data from the Xunke County meteorological station spanning from 1964 to April 2003, the annual average temperature is -0.1 °C. The highest temperature occurs in July at 22.3 °C, while the lowest temperature occurs in January at -26 °C. Precipitation primarily occurs from June to September, with an annual average of 429.9 mm, a maximum of 690.7 mm and a minimum of 383.8 mm. The annual average evaporation is 1,047.6 mm, with a maximum of 1,218.8 mm and a minimum of 862.2 mm. The average annual relative humidity stands at 68%. The maximum frozen depth exceeds 2.2 m, and the freezing period extends from October to next April. The area is predominantly subject to northwesterly winds with a maximum wind speed of 34 m/s.

4.2.4 Local Resources and Infrastructure

The area boasts well-developed water systems. The Kuerbin River, a tributary of the Heilongjiang River, flows from south to north 1.2 km north of the deposit’s center, and the Wusonggang River flows from east to west into the Kurbin River 1.2 km south of the deposit’s center (Figure 3-2). The Kuerbin River is 40-80 m wide and has an average annual flow of 13.9-80.7 m[3] /s, with a maximum flow of 2,680 m[3] /s. The flood season is primarily concentrated from April to August. The Wusonggang River is 1-5 m wide, with a maximum flow of 0.264 m[3] /s and experiences dry conditions during the winter. The main water source of the Heihe Project comes from the Kuerbin River, with one large open well and one deep well constructed on the riverbank. The large open well is used for production purposes, while the deep well is used for living and office needs. Both wells are equipped with submersible pumps, which extract water through a pipeline to the water source pump station.

A 35 kV substation, known as Baoshan Substation, is located 28 km from the Project area. This substation supplies power to the Heihe Project through the “Baoqi Transmission Line.” Within the Project area, a 35/10 kV main step-down substation is installed. The 35 kV overhead power line is connected to the Erlian Fire Inspection Station, which is 6.88 km away. Additionally, two sets of diesel generator units are installed at the step-down substation to serve as emergency power sources in the event of a 10 kV power supply failure.

Residents near the Project area are primarily located in agricultural farms and forests. The farms mainly focus on agricultural production, cultivating crops such as wheat, soybeans, corn, and sugar beets. The forests are predominantly engaged in forestry operations, growing and planting deciduous trees like larch. These forest areas also yield medicinal herbs, mushrooms, and fungi. Industrial production in the vicinity of the Project area includes power generation, liquor production, and grain processing.

4.3 History

4.3.1 Ownership

The Heihe Project’s initial exploration rights were granted in 1998 to the Heilongjiang Province Nonferrous Metal Geological Exploration 707 Brigade (the “ 707 Brigade ”). In 2007, the 707 Brigade and Sino Gold Mining Limited (“ Sino Gold ”) established a joint venture, Heihe Luoke (the predecessor of Heihe Mining), which has held the exploration rights for the Dong’an mine ever since. Sino Gold was

— V-145 —

COMPETENT PERSON’S REPORT

APPENDIX V

wholly acquired by Eldorado Gold Corporation (“ Eldorado ”) in 2009. In 2016, Yintai acquired Heihe Luoke and the mineral rights it held for the Heihe Project from Eldorado.

In November 2015, Heihe Luoke submitted an application to the Ministry of Land and Resources for the transfer of exploration rights to mining rights for the exploration line No. 19-44 of ore body No. 5. After completing the required reserve registration and other formalities, the company obtained the mining license for the Heihe Project in May 2016. The mining license, valid for 17 years, covers an area of 0.1386 km[2] and permits both underground and open-pit mining of gold and silver.

4.3.2 Exploration and Development

In April 1998, the 707 Brigade discovered mineralized altered quartzite rolling stones in the northern part of the project area during a geological survey. That same year, through geological mapping and trenching work, four gold ore bodies (No. 1-4) were discovered. These ore bodies are located in Early Cretaceous felsic volcanic rocks and are preliminarily confirmed as epithermal gold deposits.

In 1999, the 707 Brigade further investigated the scale, occurrence, and grade of the four gold ore bodies (No. 1-4) using trenching. Through geological mapping, geochemical surveys, trenching, and other work, five additional gold ore bodies (No. 5-9), including the No. 5 orebody, were discovered that year.

In 2000, the 707 Brigade conducted a comprehensive survey of the Heihe Project area and its periphery, including a 1:50,000 sediment survey, 1:20,000 geological mapping, soil survey, geophysical survey, and trenching. The survey expanded the extent of the No. 5 ore body and discovered four new gold ore bodies (No. 10-13).

From 2001 to May 2003, the 707 Brigade completed drilling and two tunnels cutting through the No. 5 ore body. In 2003, the 707 Brigade compiled the “ Exploration Report of the Exploration Line 19-44, No. 5 ore body, Dong’an Gold Deposit, Xunke County, Heilongjiang Province ” (“ Exploration Report 2003 ”).

From 2007 to 2009, Heihe Luoke focused on widespread surface exploration and conducted systematic diamond drilling.

In 2017, based on previous exploration results, Heihe Luoke compiled the “ Mineral Resource and Reserve Verification Report of the No. 5 Ore Body, Exploration Line 19-44, Dong’an Gold Deposit, Xunke County, Heilongjiang Province ” (“ Verification Report 2017 ”), which was approved by the Ministry of Land and Resources.

Since 2019, Heihe Mining has conducted systematic underground drilling, tunnelling, and channel sampling during underground mining operations.

4.3.3 Historical Resource and Reserve Estimates

BAW acknowledges that mineral resource and reserve estimates were previously conducted in 2003 and 2017, following the Chinese standards, and approved by the Ministry of Land and Resources. However, the resource and reserve estimates presented in Sections 4.10 and 4.11 adhere to JORC Code 2012 and are different from previous estimates.

— V-146 —

COMPETENT PERSON’S REPORT

APPENDIX V

BAW also notes that Eldorado conducted mineral resource and reserve estimations in compliance with JORC Code during its ownership of the Heihe Project from 2009 to 2016. However, the original data and details of these estimates are unavailable, making it impossible for BAW to verify and review this resource and reserve estimates.

4.3.4 Production

The Heihe Project commenced production in 2017 with a capacity of 450 tons per day. Open-pit mining was initially conducted at an elevation range of 279 to 213 meters, which was completed in June 2019. In 2020, the project underwent a technical upgrade, increasing the production capacity to 1,250 tons per day. Underground mining began in July 2020 at an elevation range of 213 to 65 meters, utilizing decline development and truck transportation. Currently, the project is in the underground mining phase. The mine’s historical production is listed in Table 4-2.

Table 4-2 Historical Annual Mining Summary of the Heihe Project

Year 2017 2018 2019 2020 2021 2022 Total	Au Mining (t) 0.55 3.3 3.15 2.26 2.85 2.91 15.02	Ag Mining (t) 1.24 15.36 18.14 11.97 15.26 17.72
		79.69

Source: Provided by Heihe Mining

4.4 Geological Setting and Mineralization

4.4.1 Regional Geology

The northern Lesser Xing’an Range, situated in the eastern segment of the Central Asian Orogenic Belt and north of the Songliao basin, is a typical tectonomagmatic and metallogenic regime (Figure 4-3). The region experienced episodic tectonomagmatic events, mainly attributed to the evolution of the Paleo-Asian Ocean during the Paleozoic and Mesozoic subduction of the Paleo-Pacific oceanic slab beneath the Eurasian continent. The Mashan Complex, a Neoproterozoic metamorphic rock sequence of felsic schists, silty slate, and granite gneiss, forms the ancient basement. It is overlain by Paleozoic neritic facies clastic rocks, such as limestone, dolomitic marble, and carbonaceous slate of the Heilongjiang Complex. Early Triassic subaerial pyroclastic rocks were deposited above both the Late Paleozoic submarine clastic-carbonate sequence and co-collisional granitic rocks, which indicate the tectonic transition from the closure to post-collision of the Paleo-Asian Ocean basin. Triassic to Jurassic granitic rocks (175-225 Ma) are widespread throughout the region, where the Paleo-Pacific plate descends beneath the Eurasian continent, accompanied by comagmatic skarn- and porphyry-style mineralization. These long-lived subduction processes led to episodic volcanic activities with ages of

— V-147 —

COMPETENT PERSON’S REPORT

APPENDIX V

190-173 Ma (compressional conditions) and 130-105 Ma (extensional conditions). The Dong’an epithermal gold deposits, as well as several adjacent epithermal gold deposits of Sandaowanzi, Gaosongshan, Tuanjiegou, and Zhangsangou, are hosted by andesitic-rhyolitic volcanic rocks, which are dominated by Early Cretaceous andesitic lava.

==> picture [410 x 389] intentionally omitted <==

Figure 4-3 Regional Geological Map, Adjacent Area of the Heihe Project

Source: Liu et al., 2021

— V-148 —

COMPETENT PERSON’S REPORT

APPENDIX V

4.4.2 Ore Deposit Geology

The Dong’an gold deposit is situated in the Sunwu-Jiayin volcanic basin and is approximately 45 km southeast of Xunke County. Field mapping has documented multistage magmatic events at Dong’an (Figure 4-4). The Early Jurassic granitic complex covers a quarter of Dong’an and is intruded by Early Cretaceous granite porphyry stocks and dikes in some places. Above the granitic complex are the Early Cretaceous andesitic (Ningyuancun Formation) and rhyolitic pyroclastic rocks (Fuminhe Formation;), which are unconformably covered by the conglomerates of the Tertiary Sunwu Formation and the basalts of the Quaternary Daxiongshan Formation. The intrusive rocks and Early Cretaceous strata were cut by transtensional north-south faults that are parallel to the majority of ore veins.

==> picture [406 x 273] intentionally omitted <==

Figure 4-4 Geological Map of the Dong’an Gold Deposit

Source: Liu et al., 2021

— V-149 —

COMPETENT PERSON’S REPORT

APPENDIX V

4.4.3 Alteration and Mineralization

The Dong’an gold deposit contains more than twenty orebodies, which are controlled by steep, north-south-trending faults (Figure 4-5). The length of the representative ore bodies, including Nos. 1, 5, 10, 12, 13, and 19, ranges from 50 to 770 m, with thicknesses of 1.0 to 9.4 m and grades of 1.06 to 26.64 g/t Au. The No. 5 vein, which has been exploited, is characterized by an average thickness of 6.7 m and a maximum vertical depth of over 358 m.

==> picture [293 x 508] intentionally omitted <==

Figure 4-5 Representative Cross Section of the Dong’an Gold Deposit

Source: Liu et al., 2021

— V-150 —

COMPETENT PERSON’S REPORT

APPENDIX V

Five vein facies have been identified, including quartz + hematite veinlets, peripheral microcrystalline-quartz veins, quartz + pyrite + chlorite veins, quartz + fluorite veins, and lattice quartz-carbonate veins. The hydrothermal fluids responsible for the highest gold precipitation were associated with the quartz + pyrite + chlorite veins. The metallic minerals primarily consist of disseminated and vesicle-filling pyrite, along with minor chalcopyrite, sphalerite, galena, arsenopyrite, electrum, and native silver.

Hydrothermal alteration is well-preserved (Figure 4-6) and displays a zoning pattern that progresses inward toward the ore bodies, from a chlorite-carbonate assemblage (propylitic) to a smectite-sericite assemblage (intermediate argillic), and finally to a silica-adularia-sericite assemblage (phyllic). Weak propylitic alteration is widespread and overprints alkali-feldspar granite and andesite rocks. The altered rocks exhibit carbonate lines and chlorite replacing feldspar and mafic minerals, respectively. The intermediate argillic zone is characterized by abundant smectite and sericite, which replaced plagioclase minerals and groundmass/cements in the host rocks. Inward, the alteration assemblage is restricted to narrow zones around siliceous veins and breccias, comprising silica phases + sericite ± adularia.

==> picture [366 x 401] intentionally omitted <==

Figure 4-6 Geological Map Showing the Alteration Zoning

Source: Liu et al., 2021

— V-151 —

COMPETENT PERSON’S REPORT

APPENDIX V

4.5 Deposit Types

Epithermal deposits typically form at shallow depths (<1.5 km) under low temperature and pressure conditions and are associated with volcanic activity. High Sulphidation (“ HS ”) and Low Sulphidation (“ LS ”) subtypes are common, often occurring in island arc and continental margin regions. In Northeast China, Cretaceous volcanic eruptions and porphyritic stock emplacements, resulting from the rollback of the Paleo-Pacific Plate, triggered extensive hydrothermal copper and gold mineralization. The region contains LS and HS gold deposits as well as gold-rich porphyry copper deposits. All ore veins were formed during the final stages of volcanic events, with ore-bearing initial fluids likely originating from a cooling magma chamber at shallow depths. The magmatic-hydrothermal process favours porphyry mineralization and, potentially, distal LS mineralization.

The characteristics of Dong’an gold mineralization indicate LS epithermal mineralization. The related hydrothermal alteration in the wall rocks is zoned from proximal and distal to ore bodies, consisting of quartz + sericite ± adularia (phyllic), quartz + sericite + clay minerals (argillic), and outer chlorite + carbonate (propylitic). The low-sulfide gold-bearing quartz veins are hosted within Early Jurassic granite and Early Cretaceous andesite tuff, containing pyrite and trace amounts of chalcopyrite, galena, sphalerite, and electrum.

4.6 Exploration

From 2001 to 2009, exploration work for the Heihe Project focused on surface activities, including topographic and geological mapping, magnetic surveys, electrical resistivity, geochemical surveys, trenching, and diamond drilling. Heihe Mining carried out systematic production exploration work since Yintai’s takeover in 2017, encompassing underground diamond drilling, tunnelling, and channel sampling.

Surface trenching was primarily used for delineating geological boundaries, geochemical anomalies, and mineralization zones. The trenches were generally oriented around 90°. The longest main trench measured 245.5 meters, with typical lengths ranging from 20 to 100 meters. The entrance width of trenches was usually around 2 meters, and the bottom width was typically about 0.8 meters. Trenching reached a maximum depth of 5 meters, while the standard depth ranged from 3 to 4 meters. Bedrock was typically exposed to depths of 0.3 to 0.5 meters. Original geological records of trenching were completed in the field and included a 1:100 scale sketch of the trench side and bottom, along with a text description.

— V-152 —

COMPETENT PERSON’S REPORT

APPENDIX V

A series of adits were developed at levels ranging from 225 to 25 meters, featuring general dimensions of 3.8-4.5 meters (width) × 3.6-4.5 meters (height) for mining operations. Extensive channel sampling and underground drilling have been conducted within these adit levels since 2019. Based on the exploration database provided to BAW, major sample workings as of the end of 2022 are summarized in Table 4-3.

Table 4-3 Summary of Major Sample Workings as of 31/12/2022

Type Surface Drill Hole Underground Drill Hole Surface Trench Underground Channel Total	Collar 216 388 107 857 1,568	Depth (m) 46,362.47 26,966.30 6,369.72 10,444.64 90,143.13	Samples 11,778 9,892 497 5,708
			27,875

Surface and underground surveys strictly followed the “ Specifications of Survey for Geological and Mineral Resources Exploration ” (GB/T18341-2001) and were carried out using the total station. incorporating the Xi’an Coordinates System (1980).

Channel sampling was used for sampling in underground adits and trenches. Samples were determined according to ore type, wall rock, and mineralization distribution. The sample intervals ranged from 0.5 to 1.5 m, with an average of 1.0 m, and channel dimensions of 10 × 5 cm. Samples were cut using a diamond saw along the pre-drawn sketch lines on the wall and taken using a steel chisel.

4.7 Drilling

All drilling programs were diamond drilling, primarily conducted during the periods of 2001-2003, 2007-2009, and 2019-present. Since 2019, drilling programs have focused on underground drilling to support mining operations and expand mineral resources. The drill hole spacing was designed to be 40-80 m along the strike and dip directions.

Surface and underground drilling were contracted to third-party operators and conducted using diamond core equipment, primarily with HQ size core for surface drilling and NQ size core for underground drilling. All drill hole collars were surveyed using a total station. Downhole surveys were conducted using an inclinometer or downhole camera every 50 m for surface drilling and 30 m for underground drilling, with additional measurements taken at the collar and end of the hole. According to the drill hole database provided to BAW, core recovery was satisfactory, with more than 95% of boreholes having a core recovery of at least 90%. After the completion of drilling, the hole is sealed with cement and marked with a permanent cement monument.

Upon retrieving the core from the core barrel, it was placed in plastic core boxes and transported from the drill site to the logging site. Lengths were marked in the core boxes, and wooden markers were inserted with downhole lengths. By laying out the core boxes in order of depth, the core loss was verified, and the correct depths were marked in the boxes. Drill cores were then logged for lithological, alteration, mineralogy, and geotechnical data.

— V-153 —

COMPETENT PERSON’S REPORT

APPENDIX V

Sample intervals were established at nominal 1.0 m lengths. However, based on core recovery, lithology, alteration, structure, and mineralization, actual sample intervals predominantly ranged from 0.5 to 1.5 m.

At the logging site, a saw splitter was used to cut the core in half along its long axis. One half was bagged, sealed, and marked for further sample preparation, while the other half was preserved in the original core box for future inspection. Historical drill cores have been stored on shelves in a dedicated core storage shed, while some recent underground drill cores have been temporarily placed outside the logging site for the time being.

4.7.1 Discussion

BAW did not personally inspect the drilling and sampling operations on site. BAW understands that such operations are carried out in compliance with relevant Chinese national standards. However, based on field observations and reviews of data, protocols and verification reports, BAW considers that the exploration, drilling, and sampling procedures within the Heihe Project are generally reasonable. The drill cores examined by BAW are typically in good condition, although some recent drill cores are stored outdoors. BAW recommends moving these cores to a core storage facility in the future and replacing the wooden markers with some more durable materials.

In BAW’s opinion, the documented protocols and primary data regarding exploration and drilling generally adhere to industry practices. Therefore, BAW assumes that no significant material biases have been introduced, and the collected data are essentially acceptable for mineral resource estimation.

4.8 Sample Preparation, Analysis and Security

4.8.1 Density Determination

Based on the data provided to BAW, as of December 31, 2022, the Laboratory of 707 Brigade conducted a total of 440 density measurements on drill core samples using the conventional water displacement method with wax-coated samples. Additionally, three samples were externally analyzed for density at the Heilongjiang Nonferrous Metal Geological Testing Center, yielding an average error of -0.97%. Density measurements were also performed on two bulk samples collected from the 255 m and 185 m level adits, and these results were consistent with previous measurements obtained from core samples.

4.8.2 Sample Preparation

The sample preparation at the mine site laboratory followed these procedures: Samples were first dried at a low temperature of 105 °C. They were then crushed using a jaw crusher and sieved to 4.0 mm. After homogenization and riffle splitting, the samples were further crushed with a double-roll crusher to 2 mm. The samples were then processed with a disc mill and sieved to 1.0 mm, followed by another round of homogenization and riffle splitting. Finally, the samples were pulverized using a ring mill and sieved to a particle size of 0.074 mm.

— V-154 —

COMPETENT PERSON’S REPORT

APPENDIX V

4.8.3 Sample Analysis

Samples collected before 2003 were analyzed by the Laboratory of 707 Brigade using foam absorption-atomic absorption spectrometry (“ AAS ”) for Au content. The analytical procedure involved aqua regia digestion, preconcentration with polyurethane foam, desorption with thiourea, and measurement using an atomic absorption spectrometer. Ag content was analyzed using the aqua regia digestion – AAS method. The Heilongjiang Province Nonferrous Metal Geological Test Center (“ HPNM ”) served as the umpire laboratory for external checks, employing the same assaying procedure as the Laboratory of 707 Brigade.

Between 2008 and 2010, samples were analyzed by multiple laboratories, including ALS Laboratory in Guangzhou (“ ALS ”), SGS Laboratory in Tianjin (“ SGS ”), and Nonferrous Metal Northwest Geological Test Center (“ NMNG ”). These labs utilized fire assay coupled with AAS for Au and aqua regia digestion with AAS for Ag content determination.

Since 2017, when the Heihe Project entered the production stage, all samples have been analyzed by the internal mine site laboratory using fire assay with AAS for Au and aqua regia digestion with AAS for Ag.

Except for ALS and SGS, there is no information regarding internationally accepted accreditations for these laboratories. The laboratory of 707 Brigade, HPNM, and NMNG in previous technical reports hold applicable provincial or national analytical certifications issued by China authorities. The mine site laboratory does not have such certification.

4.8.4 Quality Assurance and Quality Control

Internal and external checks have been conducted for the samples. One in ten samples is made up of internal duplicates. According to the Verification Report 2017, 10.81% of the total samples were analyzed for internal check. The relative deviation of the sample and duplicate pairs was calculated to evaluate whether the results were acceptable. The internal check results showed that the acceptable rates for Au and Ag assay were 92.2% and 86.3%, respectively. External checks were conducted by the Heilongjiang Nonferrous Metal Geological Testing Center. 6.02% of the total samples were sent for external checks. The qualification rates for Au and Ag assay were 87.3% and 90.1%, respectively.

4.8.5 Sample Security

4.8.6 Discussion

BAW did not visit the laboratories historically responsible for analyzing samples from the Dong’an Project, except for the internal mine site laboratory. BAW reviewed the protocols and procedures of the mine site laboratory and found them to be in accordance with industry standards.

— V-155 —

COMPETENT PERSON’S REPORT

APPENDIX V

Fire assay is the industry-standard method for the gold assay used in resource estimation. In the early stages of the Heihe Project, the foam absorption method was employed for gold assay. BAW considers that using foam absorption as a preconcentration method for gold may result in an underestimation of gold measurements. To eliminate uncertainties in this regard, re-analyzing historical samples using the fire assay method is suggested. Since the number of samples analyzed using the foam absorption method is relatively small, BAW believes that the impact on the overall resource estimation is minimal.

In compliance with relevant Chinese regulations, exploration or mining projects are required to periodically conduct verification reporting, which includes a comprehensive assessment of all aspects of exploration, production, and resource/reserve estimates. It should be noted that the standards followed in these verification reports are not entirely consistent with the JORC Code 2012, as they adhere to Chinese domestic standards. However, the verification reports do provide additional validation for the historical data. The most recent verification report for the Heihe Project was completed in 2017. The QA/QC program for assay analysis in the Heihe Project was implemented as part of this verification reporting process. BAW considers the program to be of adequate quality, consistently applied, and routinely monitored. The mine site laboratory has regularly carried out internal checks and sent samples for external checks since 2017, but the relevant data is unavailable for BAW to review. BAW recommends that Yintai independently incorporate an adequate number of quality control samples, including standards, blanks, and duplicates, in all sample batches before submission to the assay laboratory in the future. This will increase the degree of accuracy and precision in the monitoring of the assay.

4.9 Data Verification

4.9.1 Database

BAW recognizes that the Heihe Project is subject to periodic authority agency reviews and verification reporting in compliance with the Chinese standard of “S pecification for Hard-Rock Gold Exploration ” (DZ/T 0205-2002). This specification rigorously outlines the detailed standards and requirements in various aspects such as exploration, drilling, sampling, assaying, QA/QC, mining, processing, etc.

BAW conducted the following verification procedures: interviewing on-site geologists and engineers; reviewing and validating the primary drilling and sampling database provided by Yintai; randomly selecting and cross-checking between logging data and original logging records, between logging data and drill cores, and between assay data and original assay reports; assessing the existing geological interpretation and block model. After completing sufficient checks, BAW considers the drilling and sampling data, the interpreted geological framework, and the block model to be reasonable for use in Mineral Resource estimation.

4.9.2 Site Inspection

BAW experts conducted a site visit to the Heihe Project from March 19 to 21, 2023. The purpose of the visit was to inspect various aspects of the project, including mineralization, drilling operations, logging, sampling, the database, the mine site laboratory, mining and processing operations, and mine infrastructure, in collaboration with on-site personnel. No independent verification samples were collected during the site visit.

— V-156 —

COMPETENT PERSON’S REPORT

APPENDIX V

4.10 Mineral Resource Estimates

The most recent resource estimate of the Heihe Dong’an gold mine provided for review was carried out by Rock Mining Development Co., Ltd in April 2017. The resource estimate technical report “Resource & Reserve Estimation Report (2017) for Dong’an Gold Mine” was dated Dec. 31, 2016. Inverse Distance Power was conducted based on varigraphy modelling using Geovia Surpac 6.6, and grade interpolation was used to build a block model at that time. Annual Internal grade estimate and mining depletion were updated to Wireframing and Block Model based on production data from 2017 to 2022. The latest resource estimate and technical report were reviewed by BAW.

4.10.1 Wireframes

Gold mineralization of the Dong’an deposit is mainly hosted by the quartzite zone which is affected by fault Striking South to North. 2 different domains were determined based on geology, alteration and the interpreted controls on mineralization from production experience. A cut-off value at 1.0 g/t Au is used to define domains. BAW noticed that the internal 2022 wireframe is more suitable for the Dong’an deposit for the significant change of the drill hole dataset.

==> picture [389 x 204] intentionally omitted <==

Figure 4-7 Domain modelling for Dong’an gold mine

4.10.2 Compositing

No composites were provided to BAW for reviewing. Drill hole assay intervals are composited within the geological domains at 1.0 m and short intervals at the end of the domain are incorporated into the preceding interval by BAW.

— V-157 —

COMPETENT PERSON’S REPORT

APPENDIX V

4.10.3 Capping

No capping description and capped composites regarding the 2022 internal model were provided to BAW. According to the 2017 report, 684 samples were analyzed and constrained by domain 5.

Table 4-4 Summary statistics of 1 m composites (Au) and topo cut grade threshold

applied during estimation

	No of	Capping
Model	samples	Value	Min	Max	Mean	SD	CV
2017
Dong’an-Au	684	49.78	0.01	1,015	11.19	42.97	3.84
2017
Dong’an-Ag	684	521.0	1	1,496.00	76.61	161.38	2.10
2022-Au-BAW	7,488	38.33	0.01	813.16	7.57	1.17	2.14
2022-AG-BAW	7,488	484.7	1	3,597	78.36	150.7	1.92

Histogram and probability plot were used when capping. Outliers were replaced by the value at the 97.5% distribution frequency value The impact of Au grade outlier is evaluated on a geological domain basis by BAW respectively. BAW believes that the capping value for the 2017 model is appropriate. Considering the significant change in the dataset, BAW believes that the capping value of the 2017 model is a bit lower.

==> picture [212 x 214] intentionally omitted <==

==> picture [216 x 216] intentionally omitted <==

Figure 4-8 Histogram and Log-probability plot for Composites and Capped-composites

— V-158 —

COMPETENT PERSON’S REPORT

APPENDIX V

4.10.4 Variograms

==> picture [414 x 249] intentionally omitted <==

Figure 4-9 Varigraphy study for Dong’an deposit

No Varigraphy modelling was provided to BAW. BAW has attempted to develop variograms for each Au domain using capped composites as below:

Table 4-5 Varigraphy study for Dong’an deposit

			Zone	Nugget	Sill	Major	Semi	Minor
2018/2022	Yintai	all	Au	67	33.51	120	80	10
BAW			Au	0.31	0.69	90	84	12

In BAW’s opinion, it is reasonable to classify Measured resources with 40 x 25 m drill spacing and Indicated resources with 80 x 80 m spacing, the same as the current technical report stated.

4.10.5 Bulk Density

A total of 81 special density test were collected and, the average value of 2.60 t/m[3] were used for the Dong’an model.

— V-159 —

COMPETENT PERSON’S REPORT

APPENDIX V

4.10.6 Block Model

Block size is set at 3 m x 3 m x 2 m, with the sub-block at 1.5 m x 1.5 m x 1.0 m. A list of block model attributes is presented in the following Table. The volume block model was coded by 2 mineralized domains using the geological wireframes. Final block volumes were validated against the wireframe volumes. The dimensions and extent of the block model see as follows.

Table 4-6 Variogram parameters in Datamine[TM] ZXY rotation

	Origin	MAX	Parent-Cell	Sub-cell
Easting	492109.202	492325.202	3	1.5
Northing	5459200.854	5460043.854	3	1.5
RL	–25	281	2	1

2 pass Inverse Distance Power was used by Yintai for grade interpolation. 60 m and 120 m were used for two different passes when performing IDW. Gold (Au ppm) was interpolated to the empty block model using IDW2 and OK methods by BAW. On considering the performance of Variograms, BAW believes that IDW2 is more suitable for the Dong’an deposit. Blocks interpolated by pass 1 within 40 m drill hole spacing are classified as Measured, and with 40-80 m spacing in pass 2 are classified as Indicated. The rest are classified as Inferred.

Table 4-7 Block model attributes

Attribute Description BLOCK Production block name IJK IJK number for each parent block ZONE Mineralization block number DENSITY Estimated in situ dry bulk density Au_idw Estimated gold value in ppm (idw3 method) Au_ok Estimated gold value in ppm (Kriging method) No of Samples Number of samples for grade interpolation (idw3 method) No of Holes Number of Holes for grade interpolation (idw3 method) SV Search volume category CAT Resource classification Mined Historical mining Depletion

— V-160 —

COMPETENT PERSON’S REPORT

APPENDIX V

4.10.7 Model Verification

To verify the current model, BAW visually checked the Au block grade and the composite grade used for the estimation by sections. The resource estimations by Dong’an and BAW are consistent.

==> picture [236 x 159] intentionally omitted <==

==> picture [169 x 223] intentionally omitted <==

==> picture [236 x 65] intentionally omitted <==

==> picture [372 x 206] intentionally omitted <==

==> picture [35 x 206] intentionally omitted <==

— V-161 —

COMPETENT PERSON’S REPORT

APPENDIX V

==> picture [404 x 196] intentionally omitted <==

==> picture [404 x 195] intentionally omitted <==

==> picture [406 x 192] intentionally omitted <==

Figure 4-10 Swath plot Dong’an deposit

— V-162 —

COMPETENT PERSON’S REPORT

APPENDIX V

==> picture [437 x 215] intentionally omitted <==

==> picture [439 x 215] intentionally omitted <==

Figure 4-11 Section plot for Dong’an deposit

— V-163 —

COMPETENT PERSON’S REPORT

APPENDIX V

4.10.8 Resource Reporting

==> picture [393 x 190] intentionally omitted <==

Figure 4-12 Mined out Stopes as of 2022/12/31

The current resource estimate by Dong’an is based on a 1.0 g/t Au cut-off, which was used for onsite mining.

— V-164 —

COMPETENT PERSON’S REPORT

APPENDIX V

Table 4-8 Summary of Dong’an Mineral Resources at a 1.0 g/t Au cut-off as of 2022/12/31

Cut-off CAT 1.0 g/t Au Measured Indicated M+I Inferred Total Stockpile Measured Indicated M+I Inferred Total Total Measured Indicated M+I Inferred Total	TONNES (kt) 1,393 160 1,553 80 1,632 214 – 214 – 214 1,607 160 1,767 80 1,846	Au grade (g/t) 6.57 2.59 6.16 2.40 5.97 3.27 – 3.27 – 3.27 6.13 2.59 5.81 2.39 5.66	Gold Metal (kg) 9,144 414 9,558 191 9,749 700 – 700 – 700 9,844 414 10,258 191 10,449	Ag grade (g/t) 71.17 58.18 69.84 65.82 69.64 76 – 76 – 76 71.84 58.08 70.60 65.44 70.41	Silver Metal (kg) 99,132 9,292 108,424 5,235
					113,659

					16,320 – 16,320 –
					16,320

					115,452 9,292 124,744 5,235
					129,979

Notes:

The Mineral Resource estimates are reported following the JORC 2012 Definition Standards for Mineral Resources & Mineral Reserves.
The effective date for the Mineral Resource estimates is Dec 31, 2022.
Mineral Resource estimates account for mining depletion up to and including Dec 31, 2022.
A cut-off value at 1.0 g/t Au was used for Dong’an underground mining.
Applicable rounding has been applied to the stated tonnages, grades, and metal content to reflect the level of accuracy and precision of the estimate.

4.10.9 Conclusions and Recommendations

BAW visually inspected the Dong’an block model grade against the composites, carried out a capping study, investigated variograms, interpolated Au grade with the Inverse Distance power method using Datamine and compared the volumetric of each domain with the Yintai model. BAW concluded that the global resources between BAW and Yintai match well, and the internal resource estimate model provided by Dong’an is acceptable.

— V-165 —

COMPETENT PERSON’S REPORT

APPENDIX V

BAW noticed that mineralization is still open in deep and along strike, explorational and infill drilling is recommended to get more resources for this zone.

4.11 Mining

BAW mainly relied on Heilongjiang Metallurgical Design Institute, 2018 PFS report; Heihe Luoke Mining, 2017 Verification Report on Gold Deposit Resources and Reserves of Line 19-44 of No. 5 Ore body of Dong’an Gold Deposit, Xunke, Heilongjiang; Heihe Yintai Mining, 2022 Heihe Yintai Mining Dong’an Gold Mine 2021 Reserves Annual Report; BGRIMM, 2009 Feasibility Study report, the information and data provided by the Heihe and collected from site inspection by BAW. If there are any discrepancies, the content in the original reports shall prevail. BAW understands that a portion of the data is pending further updates.

4.11.1 Mining Methods

This chapter summarizes the major operational mining method and the underground operation at Dong’an Mine at Heilongjiang Heihe Yintai Mining.

4.11.1.1 Mine Operation Status

Gold mines of Heihe Yintai of Yintai Gold are located in Heilongjiang; the province is rich in gold and non-ferrous metal resources.

The Dong’an Gold Mine was open-pit mining in the early stage and the open-pit mining ended in June 2019. In July 2020, underground mining began. The underground mine is accessed via decline. The underground ore is directly loaded onto a 20t haul truck and transported to the surface through the decline.

4.11.1.2 Mining Methods

The ore body makes it suitable for the use of underground mining. Underground access is using a combination of declines and shafts. Several mining methods such as Dong’an sublevel open stoping with backfilling, etc. have been used over the years.

4.11.1.2.1 Longhole sublevel stoping

Recently, most of the ore was extracted using the sublevel stoping mining method shown in Figure 4-13. The long-hole sublevel stoping method was chosen for the deposit because it is better suited and increases the ore body extraction. Long-hole open stoping (LHOS) is a highly selective and highly productive mining method and can cater to varying ore thicknesses and dips. In longitudinal development, the ore drives are driven parallel to the ore body strike.

— V-166 —

COMPETENT PERSON’S REPORT

APPENDIX V

==> picture [426 x 247] intentionally omitted <==

Figure 4-13 Conceptual Dong’an sublevel stoping method at Dong’an Mine (Source: Heihe)

The YQ120 and KQG-150 down-hole drilling rigs are used for deep-hole drilling. Jumbo is used for drilling face, which is mainly used for the blast holes. Raise boring is used for development, such as cable raises, ventilation raises, etc. The ore was loaded onto 20 t haul trucks by the 4 m[3] scrapers, then directly transported to the surface.

Currently, the No. 5 ore body is the main mining area, in which sublevel stoping with backfilling method is applied.

4.11.1.2.2 Other mining methods

The other mining methods are adopted according to the conditions of the ore body. When the surrounding rocks of the stope are unstable, and the top pillar is used, the Dong’an Upward Horizontal Layered Filling Method is adopted shown in Figure 4-14.

— V-167 —

COMPETENT PERSON’S REPORT

APPENDIX V

==> picture [400 x 272] intentionally omitted <==

Figure 4-14 Conceptual Dong’an Upward Horizontal Layered Filling Method at Dong’an Mine

(Source: Heihe)

The upward layered filling method is suitable for steeply dip ore bodies with moderately stable ore rocks, large longitudinal ore bodies, and an average thickness of less than 10-15 m.

The stopes are arranged along longitudinal, and the access ramp (every 50-100 m) is connected to the roadway.

4.11.2 Mineral Reserve Estimates

In this chapter, BAW reviewed and summarizes mining factors, economic factors, and the preliminary reserve estimation.

4.11.2.1 Factors

BAW makes conservative assumptions for Heihe.

4.11.2.2 Reserve Estimation

The date discussed in the previous section of this chapter is used to create potential total reserve estimation. The potential Heihe reserve estimate summarizes in Table 4-9.

— V-168 —

COMPETENT PERSON’S REPORT

APPENDIX V

Table 4-9 Dong’an Mineral Reserve at a 3.0 g/t Au cut-off as of 2022/12/31 by BAW

Cut-off CAT 3.0 g/t Au Proven Probable Total Stockpile Proven Probable Total Total Proven Probable Total	TONNES (kt) 1,141 44 1,185 214 – 214 1,355 44 1,399	Au Grade (g/t) 7.15 3.84 7.03 3.27 – 3.27 6.54 3.84 6.45	Gold Metal (kg) 8,160 169 8,329 700 – 700 8,860 169 9,029	Au Grade (g/t) 72.00 91.33 72.72 76 – 76 72.69 91.33 73.28	Ag Metal (kg) 82,177 4,022
					86,199

					16,320 –
					16,320

					98,497 4,022
					102,519

BAW Cautionary Note about Reserves Estimates:

This is only a preliminary reserve estimate with a conceptual mine plan. The mineral reserve estimate, with an effective date of December 31, 2022, was prepared by BAW. BAW understands that due to a lack of data or information, a portion of the data is pending further updates.

4.11.3 Production Schedule

Before preparing this preliminary schedule, BAW reviewed the information and data provided by the Heihe and collected from site inspection by BAW. If there are any discrepancies, the content in the original report shall prevail. BAW understands that a portion of the data is pending further updates.

Based on the information provided to BAW, details of the mining license and the adjacent exploration license are summarized in the previous section.

Based on the information provided to BAW, historic production is summarized in the previous section.

The information and data for this preliminary schedule are described below:

From the Year 2023-2025, the production and development plan of Heihe Dong’an, the production of 421,000 t/a, 375,000 t/a and 160,000 t/a is considered respectively for the Year 2023, Year 2024 and Year 2025.
Heihe Dong’an Mining currently owns a 375,000 t/a mining license.

— V-169 —

COMPETENT PERSON’S REPORT

APPENDIX V

This project has been in operation since May 20th, 2021 and reached a capacity of 1,250 t/d in October 2021. The Existing Processing Flowsheet with 1,250 t/d Capacity from Section of Processing.
Assumed comprehensive gold recovery from Section of Processing: Au 97.44%; Ag 73.14%.
Gold production is based on economic targets.
The schedule will be adjusted based on further data.

A preliminary Dong’an mine scheduling was developed by BAW (Table 4-10):

Table 4-10 The preliminary Dong’an mine schedule by BAW

				Year 1	Year 2	Year 3	Year 4
ZONE	TONNES	Au Grade	Ag Grade	2023	2024	2025	2026	Remnant
	(t)	(g/t)	(g/t)
Dong’an	1,185,000	7.03	72.72	421,000	375,000	375,000	14,000
Stockpiles	214,000	3.27	76.00				214,000
Total	1,399,000			421,000	375,000	375,000	228,000
		Grade g/t		7.03	7.03	7.03	3.50
		Rec. g/t		6.85	6.85	6.85	3.41
		Rec. Au OZ		92,987	82,827	82,827	25,078	283,720
			Grade g/t	72.72	72.72	72.72	75.80
			Rec. g/t	53.19	53.19	53.19	55.44
			Rec. Ag (g)	22,391,899	19,945,278	19,945,278	12,640,113	74,922,568

4.11.4 Mining Equipment

The 20 t dump truck is used to haul underground ore to the surface; the 20 t dump truck is also used to transport waste rock from the shaft to the face for backfilling. A total of five 20 t dump trucks are currently in place.

Equipment requirements were based on the maximum annual duty hours for an individual piece of equipment, modified for mechanical availability and projected utilization. A list of the major equipment used in the mine is shown in Table 4-11.

— V-170 —

COMPETENT PERSON’S REPORT

APPENDIX V

Table 4-11 Mine Major Equipment Summary

Major Equipment	Total
Jumbo (DD2710 BHP 2751G)	1
LHD (FL06A & LH307)	2
Excavator (330D2L)	1
Scaling Cutter XMPYT-55/450(J)	1
Truck	5

Source: Heihe Yintai (2022.12)

4.11.5 Mine Service

This chapter summarizes the mine service at Heilongjiang Heihe Yintai Mining.

4.11.5.1 Ventilation

The ventilation will involve all the declines and shaft connections to the surface.

At present, the decline is used for air intake and the shaft is used for air return. The FKCDZ-8-No25/2×200 fan is installed in the shaft, which meets the underground ventilation requirements.

Ideally, a stope should be ventilated with natural ventilation flowing from the level below through the stope up the raise. The raise and manways should be placed so that the airflow supplies most of the stope. Auxiliary ventilation can be introduced as required. The 5.5 kW and 11 kW local fans are used for local ventilation.

4.11.5.2 Mine Drainage and Water Supply

The shafts are used to dewater the underground mine. The Shaft shall have some pump stations and an associated collection of sumps. Pumps operating status depends on sump levels. The underground water is pumped to the surface of 300 m[3] ponds, which is the water supply for production and firefighting.

The water source mainly comes from the wells near Kurbin River.

The underground production water supply is described below:

A submersible pump is used in the well near the river to pump the water to New Pond., which is directly used for production.
The underground water from sumps will be pumped out of the mine to clarify for discharge or potential re-use underground.

The domestic water supply is described below:

The domestic water comes from the deep well, which is installed with a submersible pump.

— V-171 —

COMPETENT PERSON’S REPORT

APPENDIX V

The water supplies to the domestic facilities after water purifier treatment. The processed water has been distributed to domestic users.

4.11.5.3 Compressed Air

The compressor houses are located in portal areas, with one MH200 air compressor (30 m[3] /min, 1.0 MPa) and one MH200VSD air compressor (30 m[3] /min, 1.0 MPa) for the underground.

4.11.5.4 Power Supply

The Baoshan 35 KV Substation, 28 km away from the mine, serves as the 35 KV power supply for the mine substation. The 35 KV overhead line is used to lead to the 35/10 kV mine substation about 800 m away from the portal area. Mine substation then distributes power via a 10 kV line to other low-voltage users.

One 1,000 kW and one 1,500 kW diesel generator set, as an emergency power source for mines, near the mine substation is installed to connect to the 10 kV power grid.

4.11.5.5 Communications

A digital program-controlled dispatching telephone exchange system in the production dispatching center is installed and used for the production and management of working faces, mechanical and electrical in the mine.

The underground communication system has a complete two-way communication function between the underground telephone stations and the surface dispatching center.

The mine communication room is connected to the signal tower, to ensure telephone communication and internet connection.

4.12 Processing

The information in this section is based on below reports and documents from the owner, if there are any discrepancies, the content in the original reports shall prevail.

1) Heilongjiang Province Xunke Town Dong’an Gold Mine 5 # Ore Body Metallurgical Test by Jilin Province Metallurgical Research Institute, 2003.06.
2) Heilongjiang Dong’an Gold Mine Small Scale Metallurgical Test by Beijing General Research Institute of Mining & Metallurgy, 2009.02.
3) Heihe Yintai Mining Development Co. Ltd. Dong’an Gold Mine – Crushing and Grinding, and Tailing Filter Pressing Modification Project Basic Engineering by Heilongjiang Province Metallurgical Research and Planning Institute, 2019.02.
4) Heihe Yintai Mining Development Co. Ltd. Dong’an Gold Mine Metallurgical Test by Changchun Gold Research Ltd., 2019.03.

— V-172 —

COMPETENT PERSON’S REPORT

APPENDIX V

5) Heilongjiang Province Xunke Town Dong’an Gold Mine 5 # Ore Body 19 – 44 Resource Reserve Verification Report by Heihe Luoke Mining Development Ltd., 2017.04.
6) Processing Plant Introduction of Production, by the owner.
7) Production Report of 2022 , by the owner.

This project has been in operation since May 20th, 2021 and reached a capacity of 1,250 t/d in October 2021. In 2020, the expansion project of the concentrator was implemented on the previous 400 t/d processing plant. New crushing and grinding were constructed and the processing is primary crushing + SAG + Ball mill.

To increase production, and ensure grinding fineness and product recovery rate, the particle size of the originally designed crushed ore product is adjusted from 150 mm to 90 mm-120 mm during production. In addition, to improve the production efficiency of the carbon strip and electrowinning process and reduce production costs, the carbon strip and electrowinning process has been modified in December 2021, and the original normal temperature and pressure have been changed to a high temperature and high-pressure (cyanide-free) carbon stripping and electrowinning process. The Existing Processing Flowsheet with 1,250 t/d Capacity is as Figure 4-15.

==> picture [316 x 346] intentionally omitted <==

Figure 4-15 The Heihe Existing Processing Flowsheet Diagram

— V-173 —

COMPETENT PERSON’S REPORT

APPENDIX V

4.12.1 Process Description

The existing processing plant includes: Crushing, Grinding, CIL, Carbon Stripping and Electrowinning, Carbon Generation, Smelting, CIL Tailing Cyanide Destruction, Tailings Disposal.

1) Crushing

ROM is fed by truck lift into ROM bin and then is fed to primary jaw crusher-C116 by apron feeder. The primary jaw crusher products are discharged to 1# Belt Conveyor, and then are transported to Crushing Products Storage Bin. The materials from Storage Bin are transported by a vibrating feeder under the bin to 2# Belt Conveyor, and then are fed to SAG by 2# Belt Conveyor.

2) Grinding

The products of SAG flow through a Trommel screen. The underflow goes to 1# pump pond and oversize (pebbles) materials are fed to 3# Belt Conveyor, and then transferred to 4# Belt Conveyor and 5# Belt Conveyor to 2# Belt Conveyor combined with crushing products, and then return to SAG, forming a closed circuit.

The slurry of 1# Pump Pond is pumped by slurry pumps (1 standby 1 in operation) into the hydro cyclone cluster. The overflow of the cyclone cluster flows to the ball mill and the underflow of the cyclone cluster flows to a trash screen-linear vibrating screen. The oversize material is collected by a trash bin and the underflow of screening goes to the slurry distributor. The slurry goes to the air removal feeding box of 1# thickener or 2# thickener before the CIL system.

3) CIL

The system of CIL includes 8 tanks and 1# and 2# tanks are for pre-leaching added with lime slurry. The slurry flows from 1# to 8# tanks in sequence. Tanks 3#, 4#, 5#, 6#, 7#, and 8# are with interstage screens for keeping loaded carbon when the slurry flows to the next tank. The air and NaCN are added into 3# to 8# tanks and the lifters of these tanks transport the loaded carbons from 8# to 3#, and the loaded carbons are lifted from 3# tanks and then fed to the loaded-carbon separating screen. The oversize loaded carbons are transported to loaded carbon storage and underflow goes back to 3# tanks.

4) Carbon Stripping and Electrowinning

The loaded carbon are transferred to the acid washing column for acid washing and then fed to the elution column for carbon stripping. The pregnant solution goes to the electrowinning cell for electrolysis. It has electrowinning reaction and Au (CN) 2- is deoxidized to the cathode or falls to the bottom of the electrowinning cell. When the amount of gold sludge in the electrolytic tank (the gold deposited on the cathode or fall to the bottom of the cell, which is called gold sludge) reaches a certain level, gold sludge is to filtrate and dry. Then the gold cake is sent to the gold furnace for smelting. The eluted carbons are fed to the carbon regeneration system.

— V-174 —

COMPETENT PERSON’S REPORT

APPENDIX V

5) Carbon Regeneration

Eluted carbons are transported to the dewatering screen and oversize carbons are fed to the carbon regeneration kiln for heating. Then its products are sent to water tanks for quenching. After quenching, the carbons are fed to a separating screen for separation, the active carbons are stored in the storage tank and the underflow goes to recycle water system for reusing.

6) Smelting

The gold is filtrated by a gold sludge filter and by a vacuum filter in sequence, then is dried by the dryer to form a dry cake. The dry gold cake is sent to the gold furnace for smelting and then it has the final product of gold alloy, and the gold alloy is locked in the safe; inclination tailings are processed separately.

7) CIL Tailing Cyanide Destruction

Tailings from 8# tank flows to safety screen for collecting loaded carbons. The oversize material-loaded-carbons are collected and processed separately. The underflow of the safety screen flows to the tailing pump pond and is pumped to 1# CN[-] destruction tank, and then flows to 2#, 3#, and 4# CN[-] destruction tanks in sequence, added with copper sulfate and sodium metabisulfite for removing CN[-] .

8) Tailing Disposal

Until the cyanide concentration in the slurry is below 1 ppm, meeting the safe discharge standard, then the slurry can be pumped to buffer tanks, and then the slurry is pumped to the tailings filter press plant for filtration and the belt conveyors transport the filter cakes to the tailing dumps.

— V-175 —

COMPETENT PERSON’S REPORT

APPENDIX V

4.12.2 Recoveries

Based on the document of the current production situation provided by the owner, below is a production indexes summary of the existing processing plant which is with 1,250 t/d capacity. The existing processing plant runs smoothly with a high-quality index. See Table 4-12:

Table 4-12 Heihe Existing Processing Plant Production Indexes Summary

Indexes	Unit	Quantity
Au Feeding Grade	g/t	6.71
Ag Feeding Grade	g/t	54.67
Grinding Fineness, -200 mesh	%	92.00
Overall, Au Recovery	%	97.44 (average of
		2021 and 2022)
Overall Ag Recovery	%	73.14 (average of
		2021 and 2022)
Electricity	Kwh/month	57.71
Still Ball	Kg/t (ROM)	2.97
NaCN	Kg/t (ROM)	3.21
CaO	Kg/t (ROM)	2.47
Metabisulfite	Kg/t (ROM)	5.49
CuSO4	Kg/t(ROM)	0.26
ZnSO4	Kg/t (ROM)	0.34
HCl	Kg/t (ROM)	0.32
Carbon	Kg/t (ROM)	0.097

4.12.3 Test Work

Below is the test report list as per the documents from the owner:

1) Heilongjiang Province Xunke Town Dong’an Gold Mine 5 # Ore Body Metallurgical Test by Jilin Province Metallurgical Research Institute, 2003.06.
2) Heilongjiang Dong’an Gold Mine Small Scale Metallurgical Test by Beijing General Research Institute of Mining & Metallurgy, 2009.02.
3) Heihe Yintai Mining Development Co. Ltd. Dong’an Gold Mine Metallurgical Test by Changchun Gold Research Ltd., 2019.03.
4) Heihe Yintai Mining Development Co. Ltd. Dong’an Gold Mine Metallurgical Test by Changchun Gold Research Ltd., 2019.03.

Here is a comparison of the test result of 2019 and processing indexes of the existing 1,250 t/d processing plant, see Table 4-13.

— V-176 —

COMPETENT PERSON’S REPORT

APPENDIX V

Table 4-13 Test Result of 2019 and Existing 1,250 t/d Processing Indexes Comparison

		Au ROM	Au Leaching
Name	Processing	Grade, g/t	Recovery, %
Test Report 2019	-200 mesh, 92%,	27.16	98.82
	slurry concentrate-
	40%, PH=10.8,
	leaching time 38h
Existing Processing Plant	-200 mesh, 92%	7.82	97.44
		(Average of 2021
		and 2022)

The existing processing plant’s overall recovery is 97.44%, which is the average of the 2021 and 2002 production indexes. From the above data, the current overall recovery is almost as good as the test result.

4.13 Permitting, Environmental, Health and Social Impacts

4.13.1 Operational Licenses and Permits

Table 4-14 Details of Mining License

Mining License Holder	Heihe Yintai Mining Development Co., Ltd.
Name of Property	The Dong’an Gold Deposit
License Type	Mining
License ID	C1000002016044210142237
Area (km2)	0.1386
Elevation (m)	From 280 m to -100 m
Permitted Production Capacity	375.0 ktpa
Type of Commodities	Gold and Silver
Mining Method	Underground/Open Pit Mine
Valid Period	18 May 2016 to 18 May 2033

— V-177 —

COMPETENT PERSON’S REPORT

APPENDIX V

Table 4-15 Details of the Business License

Property	Business License No	Issue Date	Permitted Activities
Heihe Yintai Mining	91231100663888397E	22 August 2019	Mining, Exploration,
Development Co., Ltd.			processing and Sales

Table 4-16 Details of the Safety Production Permit

	Safety Production
Property	Permit No	Issue Date	Expiry Date
Heihe Yintai Mining	2020 HH3739	06 May 2021	10 September 2023
Development Co., Ltd.

Table 4-17 Details of the Safety Production Permit (Tailing Storage Facilities)

	Safety Production
Property	Permit No	Issue Date	Expiry Date
Heihe Yintai Mining	2022 007	25 November	24 November 2023
Development Co., Ltd.		2020

4.13.2 Environmental Management

4.13.3 Occupational Health and Safety

— V-178 —

COMPETENT PERSON’S REPORT

APPENDIX V

4.14 Economic Analysis

BAW reviewed the forecasted operation data and analyzed the late mine operation data provided by Mine. BAW also prepared a production schedule for the Heihe project based on the information provided. To assess the economic viability of Minable Resources under the production schedule, BAW has performed an economic analysis for the Minable Resources estimated throughout the LOM. Determination of economic viability involves the sum of discounted annual free cash flow projected from the start of the year till the end of the LOM. The economic analysis is based on the following assumptions:

The economic analysis presented here is on a 100%-equity basis that shows the basic economics of the project.
It does not incorporate financing items such as interest paid and loan principal paid back.
The analysis also does not incorporate any losses carried forward for tax purposes and any refund of valued-added taxes previously or currently paid.

4.14.1 Valuation Methodology

Market Approach

Income Approach

Cost Approach

— V-179 —

COMPETENT PERSON’S REPORT

APPENDIX V

4.14.2 Adopted Valuation Approach

Among the abovementioned valuation methodologies, the selection of the valuation method for the Heihe Project is based on, among other things, the quantity and quality of the information provided, the availability of the data, the availability of relevant market transactions, the uniqueness of the Project, the nature of business and industry involved of the Project, professional judgment and technical expertise of the management.

The selection of the valuation approach is determined primarily by the stage of development of the concerned mineral asset. The chart below (Figure 4-16) shows the application of valuation methodology for valuing mineral assets.

==> picture [434 x 328] intentionally omitted <==

Figure 4-16 Application of different valuation Methodologies

4.14.2.1 Mineable Resource

Regarding the Mineable Resources of the Heihe Project, the income approach is considered to be the most suitable valuation methodology since its net present value can be measured by the present value of the future economic benefits. In addition, compared with the cost approach, the income approach can effectively and accurately reflect the future earnings of the Project. Among the income approaches, we adopted the approach of discounted cash flow projection. The adoption of such an approach for valuing the Mineable Resources is considered to be fair, reasonable and conformable with the industry practice.

— V-180 —

COMPETENT PERSON’S REPORT

APPENDIX V

4.14.2.2 Discounted Cashflow

The expected debt-free cash flow for each year was determined as follows:

FCF = EBIT (1 – T) + Dep – InvCapex – InvNWC

FCF = Expected Cash Flow

EBIT = Earnings before interest and tax

T = Tax rate

Dep = Non-cash items

InvCapex = Investment in capital expenditure

InvNWC = Investment in net working capital

PVCF = CF1/(1+r)[1] + CF2/(1+r)[2] + … + CFn/(1+r)[n]

In which

PVCF = Present value of free cash flows

CF = Estimated cash flows

r = Discount rate

n = Number of the year of projections

— V-181 —

COMPETENT PERSON’S REPORT

APPENDIX V

4.14.3 Metal Production and Revenue

According to the production plan developed by BAW, the Heihe project will produce 8,799,154 g of gold and 74,922,568 g of silver. The long-term gold price is estimated to be 443.30 RMB/g and the Ag price is 4.12 RMB/g. The total revenue for gold should be CNY3,900.64 million and CNY308.31 million for silver.

4.14.4 Operating Cost and Capital Expenditure

The cash cost of LOM is estimated at CNY896.82 million, while the capital expenditures are CNY165.09 million.

4.14.5 NPV and Sensitivity Analysis

Regarding the Minable Resources of Project Heihe, the income approach is considered to be the most suitable valuation methodology since its net present value can be measured by the present value of the future economic benefits. Therefore, such an approach can effectively reflect the future revenue of the project. The NPV of the Heihe Project is CNY2,090.5 million at a 9.09% discount rate. The sensitivity analysis shows that the NPV estimate is the most sensitive to commodity prices and discount rates.

Appendices

Appendix 1: JORC Code, 2012 Edition – Table 1

Section 1 Sampling Techniques and Data

Criteria Commentary Sampling techniques • Trenching and tunnelling were conducted. Representative channel samples were collected using a diamond saw and chisel, with channel dimensions of 10 × 5 cm and a typical interval of 1 m.
• Diamond drilling was employed, and cores were cut along the long axis using a saw splitter. Sample intervals were primarily set at 1 m lengths.
• Mineralization was identified based on lithology and alteration.
Drilling techniques • Both standard and triple tube core drilling rigs were utilized, with drill cores primarily being HQ-sized for surface drill holes and NQ-sized for underground drill holes.
Down-hole surveys were conducted using a digital inclinometer or downhole camera at intervals of 50 m for surface drilling and 30 m for underground drilling.

— V-182 —

COMPETENT PERSON’S REPORT

APPENDIX V

Criteria

Drill sample recovery

Commentary

The logging geologist measured drill core recovery for each run and recorded the results in the primary database. Core recovery was determined by dividing the drilling footage by the core length.
Upon encountering low sample recovery during drilling, the logging geologist and driller worked together to promptly rectify the problem and optimize recovery.
The mineralization is relatively homogeneous and no relationship between sample recovery and grade was found.

Logging

Drill cores were qualitatively logged by geologists to capture details such as oxidation, texture, grain size, lithology, alteration, structure, and recovery.
All drill hole cores were properly logged and photographed. Logging information was initially recorded on standardized logging sheets and subsequently digitized into the electronic database.
Sub-sampling techniques and sample preparation
Half-core samples were obtained by splitting drill cores in half.
Channel samples were collected in their entirety for sample preparation, without splitting.
All samples underwent drying, crushing, splitting, and pulverizing according to the proper procedures. The Chichette formula (Q = k×d²) was used to determine the minimum allowable sample weight, where: Q represents the sample weight (kg), k is the coefficient determined by the ore type (0.8 for this rock type), and d is the maximum sample grain diameter (mm).
No field duplicates were collected.
On-site geologists deemed the sample size appropriate for the gold grain size observed.

— V-183 —

COMPETENT PERSON’S REPORT

APPENDIX V

Criteria

Quality of assay data and laboratory tests

Commentary

The use of fire assay with AAS for gold determination and aqua regia digestion with AAS for silver determination was considered appropriate.
Geophysical tools, spectrometers, and handheld XRF instruments were not utilized for assaying purposes.
Basic samples were analyzed by both the internal mine-site laboratory and domestically certified Chinese laboratories, which implemented internal quality control procedures in line with relevant PRC standards. No systemic bias was reported.
Verification of sampling and assaying
BAW geologists carried out a field inspection of significant intersections.
No twinned holes were drilled.
All geological logging and sampling information was initially recorded on logging sheets and later digitized into an electronic database. Both physical and electronic logging and sampling records were well-maintained.
During the site visit, BAW reviewed data entry procedures, and storage protocols, and verified the primary data.
No adjustment was made to the assay data.

Location of data points

Drill holes, trenches, and adits were surveyed in compliance with relevant PRC standards by certified surveyors under the supervision of on-site geologists.
The Xi’an Coordinate System (1980) was applied to this project.
Detailed topographic surveys were conducted by certified surveyors and deemed adequate for modelling and Mineral Resource estimation purposes.

— V-184 —

COMPETENT PERSON’S REPORT

APPENDIX V

Criteria

Commentary

Data spacing and distribution
The exploration grid was set at 40-80 × 40-80 m. Samples were collected continuously throughout mineralization zones and their contact zones in wall rocks, with a typical length of 1 m.
The spacing of drill holes is sufficient to establish the degree of geological and grade continuity appropriate for the Mineral Resource and Ore Reserve estimation procedures and for the classifications applied.
Orientation of data in relation to geological structure
Considering the deposit type, the drilling orientation and subsequent sampling are deemed unbiased for Mineral Resource estimation purposes.
Sample security
Heihe Mining managed the chain of custody for sample security. Samples were collected, packed, marked, and logged before being delivered to the laboratory for preparation and assaying. The drill cores were stored in an on-site core shed, although some recent cores were temporarily placed outside.
Audits or reviews • All aspects of sampling techniques strictly adhered to relevant PRC national standards and specifications. BAW reviewed and cross-checked the sampling data.

Section 2 Reporting of Exploration Results

Criteria

Commentary

Mineral tenement and land tenure status
BAW was provided with a scanned copy of the original mining license, and the details are stated in Sections 4.1.2 and 4.1.3 of this report.
Exploration done by other • Detailed information can be found in Section 4.3.2 of this report. parties
Geology
Detailed information can be found in Sections 4.4 and 4.5 of this report.
Drill hole Information • All drill hole information was entered into the database and utilized for Mineral Resource estimation. Due to the extensive amount of drill hole data, a detailed tabulation of this information is not presented.

— V-185 —

COMPETENT PERSON’S REPORT

APPENDIX V

Criteria

Commentary

Data aggregation methods

All samples are composited within the geological domains at a 1.0 m length, and short intervals at the end of the domain are incorporated into the preceding interval. A cut-off value of 1.0 g/t Au is used to define the domains.
Histogram and probability plot were used when capping. Outliers were replaced by the value at the 97.5% distribution frequency value.
No metal-equivalent approaches were applied.
Relationship between • Gold mineralization of the Dong’an deposit is mainly hosted by mineralization widths and the quartzite zone which is affected by fault Striking South to intercept lengths North.
Diagrams
Not Applicable in this report.
Balanced reporting • The reporting is fully representative of the data provided at this stage.
Other substantive • Adequate samples were measured for specific gravity, as detailed exploration data in Section 4.8.1.
Further work • BAW was informed that Heihe Mining was applying for exploration rights in the peripheral area of the current mining license and intended to conduct further exploration programs.
Section 3 Estimation and Reporting of Mineral Resources

Criteria Commentary

Database integrity • The data provided by the Company in Access format was imported into a Surpac database after validation.
Data validation steps included:
- Validation through constraints and libraries set in the database, e.g., overlapping/missing intervals, intervals exceeding maximum depth, valid geology codes, and missing assays.
- Validation through 3D visualization in 3D software to check for any obvious collar, down-hole survey, or assay import errors.

— V-186 —

COMPETENT PERSON’S REPORT

APPENDIX V

Criteria

Commentary

Site visits

BAW Competent Person visited the Heihe Project from March 19 to 21, 2023. Various aspects of the project were inspected, including mineralization, drilling operations, logging, sampling, the database, the assay laboratory, mining and processing operations, and mine infrastructure, in collaboration with on-site personnel.

Geological interpretation

2 different domains were determined based on geology, alteration and the interpreted controls on mineralization from production experience.
A cut-off value at 1.0 g/t Au is used to define domains.

Dimensions

Not Applicable in this report.
Estimation and modelling techniques
The Mineral Resource was estimated using Inverse Distance interpolation in Surpac.
2 pass Inverse Distance Power was used by Yintai for grade interpolation. 60 m and 120 m were used for two different passes when performing IDW.
The parent cell size and estimation parameters were based on the drill hole spacing and the nature of the mineralization style at the project.
The geological interpretation was used to help build a mineralized wireframe model and the resource estimate was conducted within the model.
Validation of the Mineral Resource estimate has been conducted by:
- Visual drill hole section data comparisons with the block model and
- Swath plots of major elements in three orthogonal directions.
Moisture • Tonnages are estimated on a dry basis.

Cut-off parameters

Not Applicable in this report.

— V-187 —

COMPETENT PERSON’S REPORT

APPENDIX V

Criteria

Mining factors or assumptions

Commentary

The mining method assumed is underground mining.
Mining factors such as mining dilution shown above were not incorporated into the Mineral Resource estimate.
Metallurgical factors or assumptions
Simple studies of ore properties and processing tests were conducted and the files were provided by the Company.
The overall gold recovery is 97.44% as per the document from the owner.
Processing recovery rates presented above were incorporated into the Mineral Resource estimate.
Environmental factors or assumptions
Bulk density
Classification
No assumptions have been made regarding possible waste or process residue disposal options or environmental surveys.
The conventional water displacement method was utilized on a total of 440 samples from drill cores.
Mineral Resources have been classified in the Measured, Indicated and Inferred categories in accordance with the JORC Code 2012 guidelines.
A range of criteria was considered in determining the classification for the project, including:
geological confidence in the interpretations,
sample data density,
sample/assay confidence,
grade continuity of the mineralization,
estimation method.
Blocks interpolated bypass 1 within 40 m drill hole spacing are classified as Measured, and with 40-80 m spacing in pass 2 are classified as Indicated. The rest are classified as Inferred.
The Competent Persons endorse the results and classification for the project.

— V-188 —

COMPETENT PERSON’S REPORT

APPENDIX V

Criteria

Commentary

Audits or reviews

Mr. Weiliang Wang and Karfai Leung, MAusIMM, has undertaken peer review.
There are no outstanding issues arising from these reviews.
Discussion of relative accuracy/confidence
Relative accuracy and confidence have been assessed through validation of the model as outlined above.
The Mineral Resource estimate comprises material categorized as Measured, Indicated and Inferred Mineral Resource. The Mineral Resource categories reflect the assumed accuracy and confidence as a global.

Section 4 Estimation and Reporting of Ore Reserves

Criteria

Commentary

The mineral Resource • The block models prepared by Yintai were used as the basis of the estimate for conversion to Ore Reserve estimate. Ore Reserves
The Mineral Resources are reported inclusive of Ore Reserves.
Site visits • BAW Competent Person visited the Heihe Project from March 19 to 21, 2023. Various aspects of the project were inspected, including mineralization, drilling operations, logging, sampling, the database, the assay laboratory, mining and processing operations, and mine infrastructure, in collaboration with on-site personnel.
Study status • The feasibility study report (2009.01) conducted by BGRIMM was provided to BAW.
The feasibility study report was used as the basis of the Ore Reserve estimate.
Cut-off parameters • The feasibility study report (2009.01) conducted by BGRIMM was provided to BAW.
The feasibility study report was used as the basis of the Ore Reserve estimate.
Mining factors or • Not Applicable in this report. assumptions

— V-189 —

COMPETENT PERSON’S REPORT

APPENDIX V

Criteria

Commentary

Metallurgical factors or assumptions
The processing flowsheet is a conventional crushing, grinding, CIL, Carbon stripping and Electrowinning, which is simple and mature and is suitable for low-sulfur ore.
Compared with test results in 2019, the current processing overall gold recovery is good.
It doesn’t have any documents about alloy gold analysis, so assuming that alloy gold meets the requirement of terms and sales agreement.
Environmental
Environmental, safety and production permits were obtained.
Infrastructure
The infrastructure meets the basic requirements of production and transportation.
Costs • The Opex and Capex were provided by the Mine.
Refer to section 4.13.4.
Revenue factors • Production Schedule is developed by BAW.
Refer to section 4.13.3.
Market assessment • Not Applicable in this report.
Economic • The input data to calculate NPV is described in Section 4.13 which mainly includes the production plan, sales revenue, production cost, administration cost, Capex and taxes.
Refer to section 4.13.5.
Social • Not Applicable in this report. Other • None.

— V-190 —

COMPETENT PERSON’S REPORT

APPENDIX V

Criteria

Classification

Commentary

The mineable Measured Resources, including diluting materials and allowances of losses, were classified as Proved Ore Reserves.
The mineable Indicated Resources, including diluting materials and allowances of losses, were classified as Probable Ore Reserves.
The results appropriately reflect the Competent Person’s view of the deposit.

Audits or reviews

Mr. Weiliang Wang and Karfai Leung, MAusIMM, has undertaken a peer review.
There are no outstanding issues arising from these reviews.

Discussion of relative accuracy/confidence

Usually, the Ore Reserve estimate is reported based on some technical and economic assumptions which have been understood well to date. These assumptions would change as time goes on, so different Ore Reserve can be estimated/calculated.

— V-191 —

COMPETENT PERSON’S REPORT

APPENDIX V

5 YULONG PROJECT

5.1 Property Description and Location

5.1.1 Property Location

The Yulong Project, an Ag-Pb-Zn mineral project, is located approximately 25 km northeast of Baorigesitai Township in West Ujimqin Banner, Inner Mongolia Autonomous Region, China. It falls under the administrative jurisdiction of Bayanhua Town within West Ujimqin Banner. Hohhot, the capital of the Inner Mongolia Autonomous Region, is situated around 760 km southwest. The Project is also 175 km south of the China-Mongolia border.

==> picture [384 x 291] intentionally omitted <==

Figure 5-1 Location of the Yulong Project

Source: Google Map

5.1.2 Ownership

Yintai, through its 76.67% owned subsidiary, Inner Mongolia Yulong Mining Co., Ltd. (“ Yulong Mining ”) holds the Yulong Project, which includes all mineral resources and reserves, as well as all mining operations reported in this Report.

— V-192 —

COMPETENT PERSON’S REPORT

APPENDIX V

5.1.3 Tenure, Permit and License

Yulong Mining currently owns two valid mining licenses and four valid exploration licenses. Additionally, there are two expired exploration licenses (expired on 08/11/2022), 1118 and Periphery, which are applying for the extension. Details of the licenses are summarized in Table 5-1 and Figure 5-2. Exploration No. 1 and No.2 are exploration rights in depth below 400 m elevation within the scope of Huaaobaote mining license.

Table 5-1 Mining and Exploration Licenses, Yulong Project

				Licensed
		Expiration		Ore
Property	License Number	Date	Area	Production
			(km2)	(kt)
	Mining License – Valid
Huaaobaote Ag-Pb Mining Area
(“Huaaobaote”)	C1500002011024210112496	11/11/2037	1.7093	1,000
Huaaobaote Mountain Pb-Zn-Ag Mining
Area (“Huaaobaote Mountain”)	C1500002012054210125299	16/05/2023	1.0269	250
	Exploration License – Valid
Huaaobaote Ag-Pb Below 400 m
Exploration Area No.1 (“Exploration
No.1”)	T1525002022054050056825	17/05/2027	1.68	/
Huaaobaote Ag-Pb Below 400 m
Exploration Area No.2 (“Exploration
No.2”)	T1525002022054050056826	17/05/2027	0.05	/
Huaaobaote 1038 Pb-Zn Exploration
Area (“1038”)	T1525002008043010006893	24/12/2024	1.51	/
Huaaobaote Nanshan Pb-Zn Exploration
Area (“Nanshan”)	T1525002008043010006891	20/01/2024	2.42	/
	Exploration License – Expired
1118 Highland Pb-Zn Exploration Area
(“1118”)	T1525002009123010037416	08/11/2022	15.42	/
Huaaobaote Ag-Pb-Zn Periphery
Exploration Area (“Periphery”)	T1525002009114010036050	08/11/2022	21.76	/

— V-193 —

COMPETENT PERSON’S REPORT

APPENDIX V

Yintai has provided the necessary permits and licenses required for the current operation of the Yulong Project, including the Mine Safety Production License, Tailings Safety Production License, Water Extraction Permit, Radiation Safety Production License, Blasting Operation License, and Pollution Discharge Permit. However, BAW did not independently verify the information related to the location, area, and status of these permits and licenses. Additionally, BAW is unaware of any other permits required for carrying out the proposed work on the property, and whether such permits have been obtained or not.

==> picture [407 x 206] intentionally omitted <==

Figure 5-2 Mining and Exploration License Area of the Yulong Project

Source: Google Earth

5.2 Accessibility, Climate, Local Resources, Infrastructure and Physiography

5.2.1 Accessibility

The Yulong Project is accessible via a 7 km paved road connecting to the S206 provincial highway. The area’s road network is well-developed and maintained, which enables the project site easily to connect to some major neighboring cities, such as West Ujimqin Banner, XilinGol League, and Holingol City. The project is located 57 kilometres from the nearest railway station, Huolinhe Station in Holingol City. The closest airport to the project is also in Holingol City, which provides daily domestic flights to major international airports in the region, such as Shenyang and Hohhot.

5.2.2 Topography, Elevation, and Vegetation

The project area is situated on the northwest slope of the southwestern end of the Greater Khingan Range. The highest peak in the vicinity is Huaaobaote Mountain, which has an elevation of 1,103.5 m and a relative height difference of approximately 143 m compared to the lowest point at an elevation of 960 m. The terrain within the mining area is relatively gentle, featuring hills in the east and valleys in the west. The area is blanketed by a substantial layer of Quaternary deposits, predominantly consisting of residual, slope, and loess deposits. The region is characterized by grassland with well-developed vegetation and extensive coverage. No geological hazards, such as landslides or mudslides, have been documented in this area.

— V-194 —

COMPETENT PERSON’S REPORT

APPENDIX V

5.2.3 Climate

The area features a continental semi-arid climate, characterized by long, cold winters and short, hot summers. The average annual temperature ranges between 4-5 °C, with a frost-free period of 108 days and an annual sunshine duration of 2,741 hours. In January, temperatures can plummet to as low as -36 °C, with an average monthly temperature of -25 °C. In contrast, July temperatures can reach a maximum of 38 °C, with an average monthly temperature of 26 °C, resulting in an average summer temperature of 18 °C. Typically, ice begins to form in October, with the freezing period extending from October to next April, lasting approximately six months. The average annual precipitation is 300-400 mm, with a maximum value of 460 mm. The precipitation is primarily concentrated between June and August, which accounts for 75% of the annual precipitation. The average annual evaporation is roughly 2,000 mm, significantly exceeding the precipitation levels. The area is known for strong winds during winter and spring, primarily originating from the west, with an average wind speed of 3.2 m/s and a maximum wind speed of 20 m/s. Wind forces in the area range from 3-7 on the Beaufort scale.

5.2.4 Local Resources and Infrastructure

The water supply issue for the Yulong Project was resolved in 2003. Located approximately 5 km southwest of the mining area, the water source currently has six supply wells with a capacity of around 4,000 m[3] /day. The aquifer lithology consists of a faulted serpentinite zone, with a thickness of 70 to 90 m and a water level depth of 30 to 35 m. Water quality tests indicate that the hydrochemical type is characterized as bicarbonate-calcium-magnesium water. The content of other compounds and heavy metal ions meets national drinking water quality standards.

In the processing plant area, there is one 2,000 m[3] high-level production water tank, two 1,000 m[3] low-level precipitation tanks, and one 200 m[3] domestic water tank in the residential area. The water source for the low-level precipitation tanks is supplemented by underground inflow water, while the domestic water tank is supplied by a dedicated well for domestic water use.

The mine has established a 35 kV substation in Baorigesitai to supply the existing mining and processing facilities. The power supply lines are connected through 35 kV overhead transmission lines to Huaaobaote 110 kV substation (Yilong line, 25 km away) and Jinxingan 110 kV substation (Yinxin line, 41.1 km away), meeting the dual power supply requirements for the project’s first-level load. The main substation is equipped with a 16,000 kVA main transformer and an 8,000 kVA main transformer.

At the No. 20 sub-shaft location in the mining area, there is a 1,200 kW diesel generator set, and at the 35 kV main step-down substation location, there is a 2,000 kW diesel generator set serving as a backup power source for the mining area.

The project area is situated 70 km away from Bayanhua Coal Mine and Huolinhe Coal Mine, which can adequately meet the fuel demands of the project. Sand and gravel required for construction in the mining area are primarily sourced from quarries approximately 30 km to the east. Other building materials are predominantly purchased from Holingol City, Tongliao City, and Chifeng City. The surrounding areas mainly engage in mining, animal husbandry, and tourism industries.

— V-195 —

COMPETENT PERSON’S REPORT

APPENDIX V

5.3 History

5.3.1 Ownership

The initial exploration licenses for the Huaaobaote and Huaaobaote Mountain areas were issued to Chifeng Jinyuan Mining Development Co., Ltd. (“ Jinyuan Mining ”) in 1999. These licenses were later transferred to West Ujimqin Banner Xinyuan Mining Development Co., Ltd. (“ Xinyuan Mining ”) in 2002. On December 12, 2002, Xinyuan Mining was granted the first mining licenses for these two areas. In 2007, Xinyuan Mining changed its name to Yulong Mining, which has held the licenses since then.

For the 1118 and Periphery areas, exploration licenses were granted to Jinyuan Mining in 2003 and later acquired by Yulong Mining in 2007 and 2009, respectively. Both licenses expired on 08/11/2022 and are currently applying for the extension.

The exploration licenses for the 1038 and Nanshan areas were granted to Jinyuan Mining in 2002 and subsequently transferred to Yulong Mining in 2007 and 2008, respectively.

Finally, the exploration licenses for Exploration No. 1 and No. 2 areas were issued to Yulong Mining in 2022.

5.3.2 Exploration and Development

In 1965, the Aeromagnetic Exploration Brigade of the Geological Department conducted a 1:1,000,000 aeromagnetic survey in the Yulong Project area, leading to the discovery and delineation of the Huaaobaote ultramafic intrusion. In 1976, the No. 2 Regional Geological Surveying Brigade of the Inner Mongolia Autonomous Region Geological Bureau carried out a 1:200,000 regional geological survey in the Hanwula area. This effort resulted in the publication of geological and mineral reports, maps, and charts, the establishment of stratigraphic systems, the identification of intrusion phases, and detailed descriptions of igneous rocks. The structural features of the area were systematically analyzed from a geological and mechanical perspective, clarifying the structural outline and providing reliable regional geological data for further exploration and prospecting. In 1989, the No. 2 Geophysical Brigade of the Ministry of Geology and Mineral Resources conducted a 1:200,000 regional geochemical survey.

5.3.2.1 Huaaobaote and Huaaobaote Mountain Areas

In 1999, Jinyuan Mining initiated geological mapping and trenching in the project area. Ground geophysical surveys and vertical shaft development were carried out between 2000 and 2001, leading to the discovery of Pb-Zn-Ag mineralization and the delineation of the No. I1 and II2 ore bodies. Subsequently, a general exploration report was compiled. From 2002 to 2009, Xinyuan Mining (later Yulong Mining) continued exploration in the Project area, including mapping, tunnelling, and diamond drilling.

For the Huaaobaote area, production commenced under Xinyuan Mining in 2003. In 2007 and 2009, Yulong Mining summarized historical exploration results and submitted a supplementary general exploration report and a final exploration report titled “Exploration Report of Huaaobaote Ag-Pb-Zn Mine, West Ujimqin Banner, Inner Mongolia Autonomous Region” (“ Huaaobaote Exploration Report 2009 ”). Since 2009, Yulong Mining has conducted production exploration activities, including surface

— V-196 —

COMPETENT PERSON’S REPORT

APPENDIX V

and underground drilling, tunnelling, and underground channel sampling to support the underground mining operation and to expand resources. In 2022, Yulong Mining acquired two exploration licenses to investigate potential mineralization below 400 meters, which is beneath the current mining level.

For the Huaaobaote Mountain area, Yulong Mining completed a general exploration report and a verification report titled “Resource/Reserve Verification Report of Huaaobaote Mountain Pb-Zn-Ag Deposit, West Ujimqin Banner, Inner Mongolia Autonomous Region” (“ Huaaobaote Mountain Verification Report 2009 ”) in 2008 and 2009. From 2010 to 2017, the exploration program focused on surface trenching and a diamond drilling program in the Huaaobaote Mountain area.

5.3.2.2 1118 Area

From 2008 to 2010, preliminary geochemical and geophysical surveys were conducted, which delineated a series of anomalies. During 2012-2013, systematic exploration, including topographic mapping, geological mapping, detailed geophysical and geochemical surveys, trenching, and diamond drilling, was carried out, culminating in the completion of a general exploration report in 2014. From 2016 to 2019, Yulong Mining conducted extensive surface diamond drilling and compiled the “Exploration Report of 1118 Highland Polymetallic Deposit, West Ujimqin Banner, Inner Mongolia Autonomous Region” (“ 1118 Exploration Report 2019 ”). The drilling program continued in 2022 before the exploration license’s expiration.

5.3.2.3 Periphery Area

During 2004-2008, Jinyuan Mining conducted preliminary geological mapping, geophysical surveys, trenching, and diamond drilling to evaluate the exploration potential. From 2010 to 2017, Yulong Mining carried out extensive exploration work, including topographic mapping, geological mapping, detailed geophysical surveys, trenching, and diamond drilling. The exploration results were compiled into a general exploration report in 2014 and a final exploration report titled “Exploration Report of Huaobaote Mine Periphery Ag-Polymetallic Deposit, West Ujimqin Banner, Inner Mongolia Autonomous Region” (“ Periphery Exploration Report 2017 ”) in 2017.

5.3.3 Historical Resource and Reserve Estimates

BAW acknowledges that mineral resource and reserve estimates were previously conducted for Huaaobaote, Huaaobaote Mountain, 1118 and Periphery areas during 2002-2019, following the Chinese standards, and approved by the Ministry of Land and Resources. However, the resource and reserve estimates presented in Sections 5.10 and 5.11 adhere to JORC Code 2012 and will be different from previous estimates.

— V-197 —

COMPETENT PERSON’S REPORT

APPENDIX V

5.3.4 Production

Yulong Project started production in 2003 within the Huaaobaote mining license area, with an annual mining capacity of 280 thousand tons. From 2009 to 2022, the Project completed several technical renovations, resulting in an annual production capacity of 720 thousand tons. Two processing plants have been constructed with daily processing capacities of 1,400 and 2,000 tons, respectively. The mine’s recent production summary is presented in Table 5-2.

Table 5-2 2020-2022 Production Summary of the Yulong Project

			Pb-Ag	Zn-Ag
Year	Ore	Mining	Concentrate	Concentrate
		(kt)	(kt)	(kt)
2020		654	18,579.0	244,56.1
2021		661	17,842.0	28,787.4
2022		702	22,652.7	38,802.4

5.4 Geological Setting and Mineralization

5.4.1 Regional Geology

The Yulong Project is situated in the northeastern section of the Tianshan-Tuquan polymetallic metallogenic belt within the southern Great Hingan Mountain. Bordered by the Erlian-Hegenshan fault to the north, the Xar Moron fault to the south, and the Nenjiang fault to the northeast, this area is part of the expansive Central Asian Orogenic Belt, which is the most extensive Phanerozoic accretionary orogen. The region experienced the Paleozoic through the Triassic evolution of the Paleo-Asian ocean and is marked by multiple stages of accretion, collision, and later regional extension. During the Mesozoic, the southern Great Hingan Mountain was affected by the closure of the Mongol-Okhotsk Ocean and the subduction of the Paleo-Pacific oceanic plate, as demonstrated by the collision-related metamorphic rocks followed by extension and widespread Late Mesozoic volcanic rocks and granitoids.

The oldest formation in this region is a Paleozoic, medium- to high-grade metamorphic complex called the Xilinhot massif, which is primarily composed of amphibole and plagioclase-bearing gneisses, biotite-bearing granitic gneiss, and mica schist. Various Ordovician-Silurian, Devonian, and Carboniferous detrital metasedimentary units, carbonate rocks, and volcanic formations are present in the area. Permian volcano-sedimentary formations, made up of carbonaceous clastic rocks, carbonate rocks, and mafic to intermediate volcanic rocks, are widespread and host multiple mineral deposits. The Paleozoic strata are intruded by substantial Hercynian (Middle to Late Paleozoic) to Yanshanian (Jurassic to Cretaceous) granitic plutons and are overlain by Mesozoic volcano-sedimentary sequences. The Paleozoic granitoids are primarily found in the western part of the southern Great Hingan Mountain. The Mesozoic granitoids include granodiorite, monzogranite, and syenogranite, and are dispersed throughout the southern Great Hingan Mountain. Mesozoic volcanic-sedimentary sequences form the main cover

— V-198 —

COMPETENT PERSON’S REPORT

APPENDIX V

sequence in the southern Great Hingan Mountain. The Mesozoic volcanism started in the Late Jurassic and reached its peak during the Cretaceous. The geochemistry of these volcanic encompasses a broad range of rock types, including basaltic trachy-andesites, trachy-andesites, trachytes, rhyolites, and lesser amounts of basalts and dacites.

==> picture [407 x 295] intentionally omitted <==

Figure 5-3 Geological map of the Greater Hingan Mountains Area

Source: Ouyang et al., 2014

5.4.2 Ore Deposit Geology

The Yulong Project is situated in the northeastern portion of the Meiluote fault zone. The exposed strata encompass the Lower Permian Shoushangou Formation, Upper Jurassic Mankehtou-Eb Formation, Upper Cenozoic Wuchagou Formation, and Quaternary unconsolidated deposits (Figure 5-4).

The Lower Permian Shoushangou Formation primarily consists of sandstone, conglomeratic sandstone, siltstone, and andesitic volcaniclastic rocks. These rocks exhibit intense alteration, characterized by mylonitization, chloritization, and hematization. The Shoushangou Formation is unconformably overlain by Late Variscan ultramafic rocks and is locally intruded by magmatic rocks. The majority of the significant orebodies are hosted within this formation.

The Upper Jurassic Mankehtou-Ebo Formation unconformably overlies the Shoushangou Formation. It is composed of felsic volcaniclastic rocks, crystal tuff, felsic brecciated tuff, and ignimbrite.

— V-199 —

COMPETENT PERSON’S REPORT

APPENDIX V

Quaternary deposits are extensively distributed and include alluvial and colluvial sediments, as well as eolian sediments.

==> picture [441 x 266] intentionally omitted <==

Figure 5-4 Geological Map of the Yulong Project Area

Source: Yintai

The volcanic and subvolcanic activities in the Yulong Project area have undergone multiple stages, leading to the reactivation of the Meiluote fault zone. A series of NW-, NE-, and N-S-trending faults developed within an area of approximately 500 m in width and 1,000 m in length, providing space for the transportation and emplacement of ore fluids. In the Huaaobaote area, over 40 ore bodies, primarily trending NW and secondarily N-S and NE, have been identified in the mining area.

The NE-trending F1 fault zone, with a length of 80 km and a width of approximately 600 m, exhibits distinct compressional characteristics and a dip angle of around 70° to the SE. It serves as the main controlling structure for polymetallic mineralization in the area. The NW-trending F8 fault zone, with a length of approximately 8,000 m, is divided into four groups of faulting clusters, namely F8-1, F8-2, F8-3, and F8-4. It controls the NW-trending mineralization veins in the II1, II2, II3, and II4 mining areas with a width of approximately 600 m and a length of 500 m, striking at 320° and dipping 60° to the SE.

The N-S-trending F13 fault zone is a concealed fault zone that controls 17 orebodies, including the VII and VII# orebodies, which are distributed N-S with a length of approximately 1,500 m and a width of 100 m. It trends to the W and dips 60-80°. The N-S-trending F14 fault zone is another concealed fault zone that controls 13 orebodies, including the III5 and III6 orebodies, which are distributed in the N-S direction in the III mining area, with a length of approximately 300 m and a width of 150 m. It trends to the W and dips 60-80°.

— V-200 —

COMPETENT PERSON’S REPORT

APPENDIX V

The magmatic rocks in the Project area mainly include Late Variscan ultramafic rock, Yanshanian pluton, dykes, and sills. The Late Variscan ultramafic rocks are controlled by the F1 fault zone, extending NNE. The ultramafic rocks include serpentinite and harzburgite. Yanshanian magmatic rocks include rhyolite, granite porphyry and diorite porphyry.

==> picture [408 x 352] intentionally omitted <==

Figure 5-5 Representative Cross Section of the Huaaobaote area, Yulong Project

Source: Yintai

5.4.3 Alteration and Mineralization

The wall rocks in the Huaaobaote mining area are intensely altered, predominantly featuring silicification, hematization, pyritization, carbonatization, chloritization, actinolitization, sericitization, and kaolinization. Pyritization, silicification, and kaolinization are closely associated with mineralization. Due to surface oxidation, surface minerals often transform into oxides such as hematite, forming a siliceous cap. Moreover, the alteration is strongest along both sides of the Meiluote fault, and all the above alterations develop along the fault structure.

— V-201 —

COMPETENT PERSON’S REPORT

APPENDIX V

The main ore bodies’ mineralization primarily occurs in massive, veining, and disseminated forms, while smaller ore bodies exhibit disseminated and banded forms. The ore bodies are distributed in three directions: northeast, northwest, and approximately north-south. The ore bodies’ thickness generally ranges from several meters to tens of meters, and their shape is simple, appearing as lenses and veins. The mineralization zone has extensive extensions along strike and dip, reaching several hundred meters.

The ore minerals include pyrite, galena, and sphalerite. The primary mineralization mineral assemblages are galena-sphalerite-pyrite, galena-sphalerite, galena-proustite; galena-sphalerite-tetrahedrite; galena-sphalerite-pyrite-realgar; pyrite-realgar, etc. Gangue minerals mainly include quartz, feldspar, sericite, chlorite, calcite, hornblende, serpentine, and fluorite.

5.5 Deposit Types

The deposit is a vein-type, low-medium temperature, subvolcanic-hosted hydrothermal polymetallic (Ag-Pb-Zn) deposit. Based on previous studies and mineralization characteristics, the deposit can be interpreted as a volcanogenic massive sulfide deposit, with the main mineralization period being the Late Jurassic.

The formation of this deposit relies on four fundamental conditions: first, felsic volcanic rocks provide mineral sources and heat for mineralization; second, fissures, fractures, and breccia zones in the wall rock furnish channels for mineral fluid transportation and emplacement; third, serpentinite and Shoushangou sandstone constitute mineral fluid barrier layers; and fourth, the Upper Jurassic volcaniclastic rock cover and lower tectonic layer form a trapping structure.

5.6 Exploration

The exploration and development activities were carried out following the “ Specifications for copper, lead, zinc, silver, nickel and molybdenum mineral exploration ” (DZ/T 0214-2002; DZ/T 0214-2020) and “ General Requirements for Solid Mineral Exploration ” (GB/T13908-2002; GB/T13908-2020). These regulations specify the type of work that must be undertaken in each evaluation or verification phase.

Since 2003, a systematic sampling program has been continuously carried out through trenching and surface diamond drilling in various license areas of the Yulong Project. Only a limited number of trenches were constructed to protect the environment. Trenching was mainly used to expose alteration and mineralization zones within 3 m from the surface. The trench’s top width is generally 2.5-3.5 m, and the bottom width is 1-1.8 m with a depth of 1.5-4.5 m. All trenching projects reached a depth of more than 0.3 m into fresh bedrock for geological logging and channel sampling.

In the Huaaobaote area, underground drilling and channel sampling in adits has been conducted since 2014 and 2016, respectively, to expand mineral resources and support mining operations. Vertical shafts and an adit network within the levels of 420-955 m have been extensively sampled. The adits are divided into two types: drifts and crosscuts. Drifts mainly determine the variation characteristics of the ore body along the strike, while crosscuts aim to determine the thickness, occurrence, grade, and contact between the ore body and the wall rock along the exploration line. The adits are mostly straight to ensure convenient transportation.

— V-202 —

COMPETENT PERSON’S REPORT

APPENDIX V

Based on the exploration database provided to BAW, major sample workings as of December 31st, 2022 are summarized in Table 5-3.

Table 5-3 Summary of Major Sample Workings as of 31/12/2022

Type Collar Huaaobaote Surface Drill Hole 319 Underground Drill Hole 166 Underground Channel 2,712 Subtotal 3,197 Huaaobaote Mountain Surface Drill Hole 103 Periphery Surface Trench 23 Surface Drill Hole 149 Subtotal 172 1118 Surface Trench 5 Surface Drill Hole 224 Subtotal 229 Total 3,701	Depth (m) 181,041.09 30,652.02 47,866.97 259,560.08 52,301.00 910.46 70,414.2 71,324.66 170.34 146,239.27 146,409.61 529,595.35	Samples 53,199 12,132 33,436
		98,767
		10,684 419 17,628
		18,047
		15 68,525
		68,540
		196,038

Channel sampling was employed for sampling in underground adits and trenches. Samples were determined based on the ore type, wall rock, and mineralization distribution. The sampling interval was primarily 1 m, mostly not exceeding 1.5 m. Samples less than 1 m were collected separately. The channel dimensions were 10 × 3-5 cm. Samples were taken along the ore bodies every 5-10 m. A diamond saw was used to cut samples along the pre-drawn sketch lines on the wall, and a steel chisel was employed for sample collection.

— V-203 —

COMPETENT PERSON’S REPORT

APPENDIX V

5.7 Drilling

Surface and underground diamond drilling at the Yulong Project were contracted to third-party operators. Surface drilling was carried out in the Huaaobaote area from 2003, in the Huaaobaote Mountain area from 2004 to 2018, in the Periphery area from 2005 to 2017, and in the 1118 area from 2017 to 2022. Underground drilling has been conducted in the Huaaobaote area since 2014. The drill hole spacing was designed to be 50 × 50 m and could be increased to 100 × 100 m locally, considering the characteristics of the mineralization.

Diamond drilling primarily used HQ- and NQ-sized cores, as well as minor AQ-sized cores for some underground drilling. All drill hole collars were surveyed using a total station. Downhole surveys were performed with an inclinometer every 50 m for inclined holes and 100 m for vertical holes, with additional measurements taken when encountering bedrock and the main ore body. Hole depth correction measurements were taken every 50 m for inclined holes and 100 m for vertical holes, as well as at the end of the hole. According to the drill hole database provided to BAW, 92%, 85%, 90%, and 95% of sample intervals, respectively, from Huaaobaote, Huaaobaote Mountain, Periphery, and 1118 areas have core recoveries of at least 90%, which is considered to be satisfactory given the conditions of the structure and mineralization. Upon completion of drilling, the hole was sealed with cement and marked with a permanent cement monument.

Upon retrieving the core from the core barrel, it was placed in wooden core boxes and transported from the drill site to the logging facility. At the logging site, lengths were marked in the core boxes, and laminated paper markers were inserted with downhole measurements. By arranging the core boxes in order of depth, the core loss was verified, and the correct depths were marked in the boxes. Drill cores were then logged for lithology, alteration, mineralogy, and geotechnical data. Plastic core boxes were utilized for recent drill cores and previous wooden boxes were also replaced.

Sample intervals were established based on core recovery, lithology, alteration, structure, and mineralization, actual sample intervals predominantly ranged from 1 to 3 m.

A saw splitter was used to cut the core in half along its long axis at the logging site. One half was bagged, sealed, and marked for further sample preparation, while the other half was preserved in the original core box for future inspection. When the drill core was broken into small pieces, rock chips, and rock powder and could not be split using a core splitter, the selective picking method was used for sampling. Considering the sampling representativeness, the small rock pieces were separately split in half for sampling, and the remaining rock chips and powder were mixed evenly before taking half for sampling. For the AQ-sized core, the whole core was sampled for further assay.

Drill cores have been stored on shelves in a new core storage warehouse, which was constructed in 2021. Historical drill core boxes have been relocated to the new warehouse from the old core storage shed and replaced with new plastic boxes and durable markers.

— V-204 —

COMPETENT PERSON’S REPORT

APPENDIX V

5.7.1 Discussion

BAW did not personally inspect the drilling and sampling operations on site, which BAW understands were carried out in compliance with relevant Chinese national standards. However, based on field observations and reviews of data, protocols and verification reports, BAW considers that the exploration, drilling, and sampling procedures within the Yulong Project are generally reasonable. The drill cores examined by BAW are in good condition.

5.8 Sample Preparation, Analysis and Security

5.8.1 Density Determination

Based on the data provided to BAW, as of December 31, 2022, the Inner Mongolia Autonomous Region No. 10 Geological and Mineral Exploration and Development Institute Laboratory (“ No. 10 Laboratory ”) conducted density measurements on 161, 56, 116, and 76 samples from Huaaobaote, Huaaobaote Mountain, Periphery and 1118 area, respectively, using the conventional water displacement method with wax-coated samples.

5.8.2 Sample Preparation

Sample preparation and assay were conducted by the No. 10 Laboratory from 2003 to 2017 and the mine site Laboratory of Yulong Mining (“ Yulong Laboratory ”) has taken over the work since then. The standard procedure of sample preparation is low-temperature drying, weighing on a balance, coarse crushing with a jaw crusher, fine crushing with a double-roll crusher, homogenization, splitting with a riffle splitter into a primary and a fine duplicate sample, and discarding the remainder. The duplicate sample was weighed on a balance and kept in a sample bag. The primary sample was weighed on a balance, pulverized to -200 mesh with a rod mill, and split into a powder primary sample for further assay and a powder duplicate.

5.8.3 Sample Analysis

Samples with low Pb and Zn grades were analyzed using HCl-HNO3 digestion, followed by atomic absorption spectrometry (AAS).

High Pb and Zn grade samples were assayed using the EDTA (ethylenediaminetetraacetic acid) complexometric titration method. The samples were digested with HCl, HNO3, and H2SO4, and the solution was filtered and adjusted to a suitable pH for complexometric titration of Zn and Pb. The solution was titrated using Xylenol Orange as an indicator. The concentration of Zn and Pb was calculated based on the volume of EDTA solution consumed and the known concentration of the standard EDTA solution.

Extremely high Pb and Zn grade samples were analyzed using the X-ray fluorescence (XRF) method.

— V-205 —

COMPETENT PERSON’S REPORT

APPENDIX V

In the Yulong Laboratory, Ag content was determined using fire assay and high-precision weighing. Ag was preconcentrated in a lead button by fire assay and heated at 1,000 ℃ to evaporate the lead content. The remaining Ag pellet was cleaned and weighed using a high-precision electronic balance to calculate the Ag content in the sample. No. 10 Laboratory utilized acid digestion and AAS method to analyze Ag content.

Before 2019, several laboratories, including Inner Mongolia Autonomous Region Central Laboratory, Inner Mongolia Autonomous Region Mineral Experiment Research Institute, Liaoning Province Geological Experiment Research Institute, and Inner Mongolia Autonomous Region Mineral Experiment Research Institute, were used as umpire laboratories. In recent years, external checks have been conducted by BGRIMM MTC Technology Co., Ltd (“ BGRIMM Laboratory ”) and SGS Laboratory in Tianjin (“ SGS ”).

It should be noted that there is no information available on whether these laboratories hold any internationally recognized accreditations, except for BGRIMM Laboratory and SGS. However, the rest of the laboratories, excluding Yulong Laboratory, in previous reports obtained applicable provincial measurement certifications issued by China authorities.

5.8.4 Quality Assurance and Quality Control

Approximately 10% and 5% of the total samples assayed were subject to internal and external checks. The relative deviation of the sample and duplicate pairs was calculated to evaluate whether the results were acceptable.

According to the Huaaobaote Exploration Report 2009, from 2003 to 2008, internal and external checks were conducted on 9.57% and 5.63% of the total samples for the Huaaobaote area. The acceptable rate for Pb, Zn, and Ag internal checks were 94.0%, 96.4%, and 93.2%, while for external checks, they were 95.7%, 96.2%, and 96.2%, respectively.

For the Huaaobaote Mountain area during 2007-2008, internal and external checks were carried out on 10.04% and 6.00% of the total samples, according to the Huaaobaote Mountain Verification Report 2009. The acceptable rate for Pb, Zn, and Ag internal checks were 83.0%, 89.1%, and 83.0%, while for external checks, they were 84.4%, 87.0%, and 92.2%, respectively.

For the Periphery area during 2010-2017, internal and external checks were carried out on 8.82% and 5.41% of the total samples, according to the Periphery Exploration Report 2017. The acceptable rate for Pb, Zn, and Ag internal checks were 90.6%, 94.0%, and 95.7%, while for external checks, they were 95.1%, 97.2%, and 95.8%, respectively.

For the 1118 areas during 2017-2019, internal and external checks were carried out on 10.31% and 2.47% of the total samples, according to the Periphery Exploration Report 2017. The acceptable rate for Pb, Zn, and Ag internal checks were 99.0%, 99.5%, and 99.0%, while for external checks, they were 98.0%, 95.0%, and 98.0%, respectively.

In 2022, internal and external checks were conducted on 99 and 24 geological samples, respectively. The acceptable rate for Pb, Zn, and Ag internal checks were 74.7%, 68.7%, and 68.7%, while for external checks, they were 83.3%, 95.8%, and 91.7%, respectively.

— V-206 —

COMPETENT PERSON’S REPORT

APPENDIX V

5.8.5 Sample Security

5.8.6 Discussion

BAW did not visit all the laboratories responsible for analyzing samples, except the Yulong Laboratory at the mine site. BAW reviewed the protocols and procedures of the Yulong Laboratory and found them to be following industry standards.

In compliance with relevant Chinese regulations, exploration or mining projects are required to periodically provide verification reports, which include a comprehensive assessment of all aspects of exploration, production, and resource/reserve estimates. It should be noted that the standards followed in these verification reports are not entirely consistent with the JORC Code 2012, as they adhere to Chinese domestic standards. However, the verification reports do provide additional validation for the historical data. The QA/QC program for assay analysis in the Yulong Project was implemented as part of this verification report. BAW considers the program to be of adequate quality, consistently applied, and routinely monitored. The Yulong laboratory has regularly carried out internal checks and sent samples to external checks since 2017, but only the relevant data from 2022 are available for BAW to review. The acceptable rates of the 2022 internal checks for geological samples are relatively low. BAW suggests conducting further investigation on the 2022 assay results by the Yulong Laboratory. BAW recommends that Yintai independently incorporate an adequate number of quality control samples, including standards, blanks, and duplicates, in all sample batches before submission to the assay laboratory in the future. This will enhance the monitoring of assay accuracy and precision.

5.9 Data Verification

5.9.1 Database

BAW recognizes that the Yulong Project is subject to periodic authority agency reviews and verification reporting in compliance with the Chinese standards of the “ Specifications for copper, lead, zinc, silver, nickel and molybdenum mineral exploration ” (DZ/T 0214-2002; DZ/T 0214-2020) and “ General Requirements for Solid Mineral Exploration ” (GB/T13908-2002; GB/T13908-2020), which rigorously outline the detailed standards and requirements for various aspects such as exploration, drilling, sampling, assaying, QA/QC, mining, processing, etc.

BAW conducted the following verification procedures: interviewing on-site geologists and engineers; reviewing and validating the primary drilling and sampling database; randomly selecting and cross-checking between logging data and original logging records, between logging data and drill cores, and between assay data and original assay reports; assessing the existing geological interpretation and block model. After completing sufficient checks, BAW considers the drilling and sampling data, the interpreted geological framework, and the block model to be reasonable for mineral resource estimation.

— V-207 —

COMPETENT PERSON’S REPORT

APPENDIX V

5.9.2 Site Inspection

BAW experts conducted a site visit to the Yulong Project from March 26 to 28, 2023. The purpose of the visit was to inspect various aspects of the project, including mineralization, drilling operations, logging, sampling, the database, the assay laboratory, mining and processing operations, and mine infrastructure, in collaboration with on-site personnel. No independent verification samples were collected during the site visit.

5.10 Mineral Resource Estimates

The most recent resource estimate of Yulong Xiwuzhumuqi Banner Huaaobaote Pb-Ag-Zn mine provided for the review was carried out by Inner Mongolia Yulong Mining Co., Ltd. in January 2023. The resource estimate technical report “Annual Reserve Report (2022) for Huaaobaote Pb-Ag-Zn Mine” was dated Dec. 31, 2022. Geological block grade modelling was used to estimate the resource at that time. The resource estimate and technical report were reviewed by BAW.

5.10.1Wireframes

Mineralization of the Huaaobaote deposit is mainly hosted by structural fracture zones, structural breccias, structural fissures, and cataclysmic rock zones in metamorphic sandstones. All domains are determined based on geology, alteration and the interpreted controls on mineralization from production experience. A cut-off value at 0.8% equivalent pb is used to define domains. A total of 15 mineralization domains are generated for the resource estimate. Huaaobaote mineralization is 1,800 m long along NW and NE, dipping 60~70°.

==> picture [408 x 277] intentionally omitted <==

Figure 5-6 Domain modelling for Huaaobaote gold mine

— V-208 —

COMPETENT PERSON’S REPORT

APPENDIX V

5.10.2 Compositing

No composites were provided to BAW for review.

Drill hole assay intervals are composited within the geological domains at 1.5 m for Mountain Huaaobaote Section and 1.0 m for Huaaobaote Section, and short intervals at the end of the domain are incorporated into the preceding interval by BAW.

5.10.3 Capping

No capping description and capped composites about the 2022 internal model were provided to BAW. According to the 2022 report, massive and disseminated mineralization hosted most of the resources. Uniform grade distribution was present for Pb-Zn in both mineralizations, where no capping for Pb-Zn was done for composites. While 6~8 times of mean grade was used for high-grade capping for Ag.

==> picture [255 x 211] intentionally omitted <==

Figure 5-7 Histogram and Log-probability plot for Composites and Capped-composites

— V-209 —

COMPETENT PERSON’S REPORT

APPENDIX V

5.10.4 Variograms

No Varigraphy modelling was provided to BAW. BAW has attempted to develop variograms for each domain using capped composites as below:

==> picture [215 x 137] intentionally omitted <==

==> picture [217 x 135] intentionally omitted <==

==> picture [213 x 135] intentionally omitted <==

==> picture [213 x 136] intentionally omitted <==

Figure 5-8 Varigraphy study for Huaaobaote deposit

— V-210 —

COMPETENT PERSON’S REPORT

APPENDIX V

Table 5-4 Varigraphy study for Huaaobaote deposit

	Zone	Nugget	Sill	Major	Semi	Minor
BAW	Domain 1	0.48	0.52	135	88	16

In BAW’s opinion, it is reasonable to classify Measured resources with 50 x 50 m drill spacing and Indicated resources with 100 x 100 m spacing, the same as the current technical report stated.

5.10.5 Bulk Density

A total of 161 special density tests were collected, of which 129 were from the primary zone (21 from 2004 exploration, 48 from 2005 exploration and 60 from 2008 exploration), 2 from the oxidation zone and 30 from primary pyrite ore from 2004 exploration. 129 of the bulk density samples were constrained by the domain, and an average value of 3.60 t/m[3] was used for the Huaaobaote model.

5.10.6 Block Model

Block size is set at 5 m x 5 m x 2 m, with the sub-block at 2.5 m x 2.5 m x 1 m. A list of block model attributes is presented in the following Table 5-6. The volume block model was coded by 15 mineralized domains using the geological wireframes. Final block volumes were validated against the wireframe volumes. The dimensions and extent of the block model see as follows.

Table 5-5 Variogram parameters in Datamine[TM] ZXY rotation

	MIN	MAX	Parent-Cell	Sub-cell
Easting	418325	418845	5	2.5
Northing	5014815	5015150	5	2.5
RL	645	875	2	1

Inverse Distance Square was used by Yintai for grade interpolation. Equ-Pb (Pb equivalent grade, %) was interpolated to the empty block model using IDW2 by BAW for verification. On considering the performance of Variograms, BAW believes that IDW2 is more suitable for the Huaaobaote deposit, Blocks interpolated bypass 1 within 50 m drill hole spacing is classified as Measured, and with 50-100 m spacing in pass 2 are classified as Indicated. The rest are classified as Inferred.

Table 5-6 Block model attributes

Attribute	Description
BLOCK	Production block name
IJK	IJK number for each parent block
ZONE	Mineralization block number
Pbidw	–
Zn_idw	–
Ag_idw	–
DENSITY	Estimated in situ dry bulk density
Equ-Pb	Estimated ∑Pb in percentage (idw2 method)
No of Samples	Number of samples for grade interpolation (idw2 method)
No of Holes	Number of Holes for grade interpolation (idw2 method)
SV	Search volume category
CAT	Resource classification
Mined	Historical mining Depletion

— V-211 —

COMPETENT PERSON’S REPORT

APPENDIX V

5.10.7 Resource Reporting

The current resource estimate by Huaaobaote is based on 0.8 g/t Pb equivalent cut-off grade, which was used for Huaaobaote mining onsite.

Table 5-7 Summary of Huaaobaote Mineral Resources at a 0.8 g/t Pb equivalent cut-off as of 2022/12/31

Site CAT TONNES (kt) Huaaobaote Mountain Measured – Indicated 4,926 M+I 4,926 Inferred 3,547 Total 8,472 Huaaobaote Measured 1,013 Indicated 10,321 M+I 11,334 Inferred 12,627 Total 23,961 1038 Height Measured – Indicated 219 M+I 219 Inferred 384 Total 604 Nanshan Measured – Indicated 332 M+I 332 Inferred 275 Total 607	Pb grade (%) – 0.64 0.64 0.79 0.71 3.51 1.19 1.40 1.42 1.41 – 1.15 1.15 1.15 1.15 – 2.54 2.54 1.96 2.28	Pb Metal (t) – 31,740 31,740 28,140 59,879 35,603 122,563 158,166 179,031 337,197 – 2,527 2,527 4,416 6,943 – 8,427 8,427 5,382 13,809	Zn grade (%) – 1.30 1.30 1.44 1.36 3.53 1.86 2.01 2.05 2.03 – 2.03 2.03 2.19 2.13 – 2.89 2.89 2.37 2.65	Zn Metal (t) – 64,070 64,070 51,079 115,149 35,731 191,830 227,561 258,996 486,557 – 4,455 4,455 8,431 12,886 – 9,596 9,596 6,499 16,095	Ag grade Silver Metal (g/t) (kg) – – 66.16 325,895 66.16 325,895 79.60 282,315 71.79 608,210 265.55 269,000 113.85 1,175,000 127.40 1,444,000 154.19 1,947,000 141.52 3,391,000 – – 136.82 30,023 136.82 30,023 125.20 48,117 129.43 78,140 – – 190.99 63,418 190.99 63,418 158.17 43,459 176.13 106,877	Cu grade (%) – 0.16 0.16 0.02 0.02 – – – – – – – – – – – – – – –	Copper Metal Au grade Gold Metal (t) (g/t) (kg) – 777 777 614 1,391 – – – – – – – – – – – – – – –

— V-212 —

COMPETENT PERSON’S REPORT

APPENDIX V

Site CAT TONNES (kt) 1118 Height Measured – Indicated 12,057 M+I 12,057 Inferred 10,942 Total 23,000 Peripheral (II) area Measured 318 Indicated 588 M+I 906 Inferred 901 Total 1,807 Total Measured 1,331 Indicated 28,443 M+I 29,774 Inferred 28,676 Total 58,450	Pb grade (%) – 0.56 0.56 0.56 0.56 – 0.08 0.05 1.04 0.54 2.67 0.82 0.90 1.03 0.95	Pb Metal (t) – 67,573 67,573 61,391 128,964 – 490 490 16,542 9,816 35,603 233,320 268,923 294,902 556,609	Zn grade Zn Metal (%) (t) – – 1.65 198,951 1.65 198,951 1.89 206,916 1.76 405,867 – – 0.13 790 0.09 790 1.23 11,108 0.66 21,386 2.68 35,731 1.65 469,693 1.70 505,424 1.89 543,029 1.81 1,057,940	Ag grade Silver Metal (g/t) (kg) – – 73.22 882,877 73.22 882,877 82.60 903,837 77.68 1,786,715 183.41 58,324 208.47 122,578 199.67 180,902 194.96 175,658 197.32 356,560 245.92 327,324 91.40 2,599,791 98.31 2,927,115 118.58 3,400,386 108.25 6,327,502	Cu grade (%) – 0.32 0.32 0.44 3.76 – – – – – – 1.38 1.32 1.69 1.50	Copper Metal (t) – 38,600 38,600 47,825 86,424 – – – – – – 39,376 39,376 48,439 87,815	Au grade (g/t) 0.97 0.97	Gold Metal (kg) 1,753
								1,753

Notes:

The Mineral Resource estimates are reported following the JORC 2012 Definition Standards for Mineral Resources & Mineral Reserves.
The effective date for the Mineral Resource estimates is Dec 31, 2022.
Mineral Resource estimates account for mining depletion up to and including Dec 31, 2022.
A cut-off value at 0.8 g/t Pb equivalent was used for Huaaobaote underground mining.
Applicable rounding has been applied to the stated tonnages, grades, and metal content to reflect the level of accuracy and precision of the estimate.

5.10.8 Conclusions and Recommendations

BAW visually inspected the Huaaobaote block model grade against the composites, carried out a capping study, investigated variograms, interpolated Pb equivalent grade with the Inverse Distance Power method using Datamine and compared the volumetric of each domain with the Yintai model. BAW concluded that the global resources between BAW and Yintai match well, and the internal resource estimate model provided by Huaaobaote is acceptable.

— V-213 —

COMPETENT PERSON’S REPORT

APPENDIX V

5.11 Mining

BAW mainly relied on LERINM, 2021 Feasibility Study report; Huaaobaote Silver-Lead Mine, 2021 Reserves Annual Report, the information and data provided by the Yulong and collected from site inspection by BAW. If there are any discrepancies, the content in the original report shall prevail. BAW understands that a portion of the data is pending further updates.

5.11.1 Mining Methods

This chapter summarizes the major operational mining method and the underground operation at Huaaobaote Mine of Inner Mongolia Yulong Mining.

5.11.1.1 Mine Operation Status

Yulong Mining Company, a subsidiary of Yintai Gold, is located in West Ujimqin Banner, Inner Mongolia.

5.11.1.2 Mining Methods

The ore body makes it suitable for underground mining. Before 2012, shrinkage stoping was mainly used. Currently, several mining methods such as sublevel stoping, shrinkage stoping, etc. have been used over the years.

When the ore grade is high and the thickness of the ore body is ≥5 m, the method of sublevel open stoping with backfilling is recommended.
When the ore grade is high and the thickness of the ore body is less than 5 m, the method of shrinkage stoping mining with backfilling is recommended.
The other mining method is used according to the ore body, grade and stability.

— V-214 —

COMPETENT PERSON’S REPORT

APPENDIX V

5.11.1.2.1 Huaaobaote long hole sublevel stoping with delayed backfill

Most of the ore was extracted using a Huaaobaote long-hole sublevel stoping mining method with delayed backfill, which is shown in Figure 5-9.

==> picture [410 x 274] intentionally omitted <==

Figure 5-9 Conceptual Huaaobaote long-hole sublevel stoping method at

Huaaobaote Mine (Source: Yulong)

Longitudinal long-hole stoping methods operate along or parallel to the strike of the ore body.

The void stopes are commonly filled with tailings cement. After the mining cycle is completed, it is necessary to seal in time and carry out full tailings cemented filling.

— V-215 —

COMPETENT PERSON’S REPORT

APPENDIX V

5.11.1.2.2 Shrinkage stoping

Shrinkage stoping mining method (Figure 5-10 conceptual shrinkage stoping method) is being considered to extract some portions of the ore materials.

==> picture [406 x 272] intentionally omitted <==

Figure 5-10 Conceptual shrinkage stoping method at Huaaobaote Mine (Source: Yulong)

Shrinkage stoping is a mining method used for steeply dipping, narrower ore bodies. It is an overhand mining method that relies on broken ore being left in the stope. During the mining cycle, about 1/3 of the ore blasted is extracted equivalent to the swell factor of in-situ ore to be broken. When mining is complete to the next upper horizon, the ore is extracted. They are commonly filled with tailings and waste rocks.

5.11.2 Mineral Reserve Estimates

In this chapter, BAW reviewed and summarizes mining factors, economic factors, and the preliminary reserve estimation.

5.11.2.1 Factors

BAW makes conservative assumptions for Yulong.

— V-216 —

COMPETENT PERSON’S REPORT

APPENDIX V

5.11.2.2 Reserve Estimation

The data discussed in the previous section is used to create a potential total reserve estimation. The potential reserve of a total of 29,823 kt with an average Pb grade of 0.83% at an Eq Pb cut-off summarizes in Table 5-8 by BAW.

BAW Cautionary Note about Reserves Estimates:

This is only a preliminary reserve estimate with a conceptual mine plan. The mineral reserve estimate, with an effective date of December 31, 2022, was prepared by BAW. BAW understands that due to a lack of data or information, a portion of the data is pending further updates.

Table 5-8 Yulong Mineral Reserve at an Eq Pb cut-off as of 2022/12/31 by BAW

Site Cut-off CAT Huaaobaote Eq Pb Proven Probable Total Total Eq Pb Proven Probable Total	TONNES (kt) 1,015 10,338 11,353 1,015 10,338 11,353	Pb grade (%) 3.23 1.09 1.28 3.23 1.09 1.28	Pb Metal (t) 32,726 112,660 145,386 32,726 112,660 145,386	Zn grade (%) 3.24 1.71 1.84 3.24 1.71 1.84	Zn Metal (t) 32,844 176,330 209,174 32,844 176,330 209,174	Ag grade (g/t) 243.69 104.48 116.92 243.69 104.48 116.92	Silver Metal (kg) 247,265 1,080,060 1,327,325 247,265 1,080,060 1,327,325	Cu grade (%) – – – –	Copper Metal (t) – –
									–

									–

5.11.3 Production Schedule

Before preparing this preliminary schedule, BAW reviewed the information and data provided by Yulong and collected from the site inspection by BAW. If there are any discrepancies, the content in the original report shall prevail. BAW understands that a portion of the data is pending further updates.

Based on the information provided to BAW, details of the mining license and the adjacent exploration license are summarized in the previous section.

Based on the information provided to BAW, historic production is summarized in the previous section.

— V-217 —

COMPETENT PERSON’S REPORT

APPENDIX V

The information and data for this preliminary schedule are described below:

From the 3-year production and development plan of Huaaobaote mine from Yulong, the production of 71,000 t/a is considered respectively for the Year 2023, Year 2024 and Year 2025.
Heihe Mining currently owns mining licenses: 1,000,000 t/a for Huaaobaote.
From Section of Processing: current processing plant capacity: 2,000 t/d processing plant; two processing plants have been constructed with daily processing capacities of 1,400 and 2,000 tons, respectively.
Assumed comprehensive lead recovery from Section of Processing: Pb 91.96%; Zn 87.72%, Ag 93.215%.
Production is based on the economic target.
The schedule will be adjusted based on further data.

— V-218 —

COMPETENT PERSON’S REPORT

APPENDIX V

	Remnant						133,635			183,243			1,237,329,161
Year 13	2035		223,000	223,000	1.28	1.18	2,625	1.84	1.61	3,599	116.92	108.99	24,304,096
Year 12	2034		1,000,000	1,000,000	1.28	1.18	11,771	1.84	1.61	16,140	116.92	108.99	108,986,978
Year 11	2033		1,000,000	1,000,000	1.28	1.18	11,771	1.84	1.61	16,140	116.92	108.99	108,986,978
Year 10	2032		1,000,000	1,000,000	1.28	1.18	11,771	1.84	1.61	16,140	116.92	108.99	108,986,978
Year 9	2031		1,000,000	1,000,000	1.28	1.18	11,771	1.84	1.61	16,140	116.92	108.99	108,986,978
Year 8	2030		1,000,000	1,000,000	1.28	1.18	11,771	1.84	1.61	16,140	116.92	108.99	108,986,978
Year 7	2029		1,000,000	1,000,000	1.28	1.18	11,771	1.84	1.61	16,140	116.92	108.99	108,986,978
Year 6	2028		1,000,000	1,000,000	1.28	1.18	11,771	1.84	1.61	16,140	116.92	108.99	108,986,978
Year 5	2027		1,000,000	1,000,000	1.28	1.18	11,771	1.84	1.61	16,140	116.92	108.99	108,986,918
Year 4	2026		1,000,000	1,000,000	1.28	1.18	11,771	1.84	1.61	16,140	116.92	108.99	108,986,978
Year 3	2025		710,000	710,000	1.28	1.18	8,357	1.84	1.61	11,460	116.92	108.99	77,380,754
Year 2	2024		710,000	710,000	1.28	1.18	8,357	1.84	1.61	11,460	116.92	108.99	77,380,754
Year 1	2023		710,000	710,000	1.28	1.18	8,357	1.84	1.61	11,460	116.92	108.99	77,380,754
	Ag grade	(g/t)	116.92	116.92							Grade g/t	Rec. g/t	Rec. Ag (g)
	Zn grade	(%)	1.84	1.84				Grade %	Rec.%	Rec. Zn (t)
	Pb grade	(%)	1.28	1.28	Grade %	Rec. %	Rec. Pb (t)
	TONNES	(t)	11,353,000	11,353,000
	ZONE		Huaaobaote	Total

— V-219 —

COMPETENT PERSON’S REPORT

APPENDIX V

5.11.4 Mining Equipment

Diesel and electric hydraulic equipment are employed throughout the mine. The primary haulage fleet consists of haul trucks and LHDs for the mineralized material, waste handling, secondary tasks, and backfilling. Development drilling is conducted using jumbos and long-hole drilling is conducted using equivalent drills.

Equipment requirements are based on the maximum annual duty hours for an individual piece of equipment, modified for mechanical availability and projected utilization. A list of the major equipment used in the mine is shown in Table 5-10.

Table 5-10 Mine Major Equipment Summary

Major Equipment	Major Equipment	Area 1	Area 2	Area 3	Total
Jumbo		8	5	6	19
LHD		29	14	19	62
Long-hole Drill		1	1		2
Raise boring		1	1	2	4
Bolter			1	1	2
Excavator				1	1
Breaker		3	1		4
Scaling	Cutter	1	1		2
Truck		1	1		2
Source:	Yulong (2022.9)

5.11.5 Mine Service

This chapter summarizes the mine service at Huaaobaote Mine of Inner Mongolia Yulong Mining.

5.11.5.1 Ventilation

The ventilation involves all of the shaft connections to the surface. In zone 1 and zone 2, the FKCDZNo24/2×110 fan is installed for SJ16 return air shaft, the FKCDZNo24/2×110 fan is installed for SJ8 return air shaft, and the FKZNo15/110 fan is installed for SJ18 return air shaft. In zone 3, the FKZNo16/55 fan is installed for SJ12 return air shaft, and the FKZNo11/30 fan is installed for SJ19 return air shaft.

— V-220 —

COMPETENT PERSON’S REPORT

APPENDIX V

5.11.5.2 Mine Drainage and Water Supply

The shafts are used to dewater the underground mine. The Shaft shall have some pump stations and an associated collection of sumps. Pumps operating status depends on sump levels.

In the processing plant area, one 2,000 m[3] pond and two 1,000 m[3] settling ponds are in place. One 200 m[3] pond is in place for domestic users.

The water source of the sedimentation pond is from underground drainage, and the water source of the domestic pond is from the domestic water well.

The underground production water supply is described below:

The water for production and firefighting is supplied by the surface drainage pumping station.
The production and firefighting use one set of water supply systems.

5.11.5.3 Compressed Air

The compressor houses are located at portal areas, with recently additional two sets of JN200-41/8-II screw air compressors for the underground.

5.11.5.4 Power Supply

At present, the power has been supplied from two external substations: one is Huaaobao 110 kV substation (LGJ-95 and 38 km); the other is Jinxing’an 110 kV substation (LGJ-95 and 42 km). The 35 kV overhead line is used to lead to the 35/10 kV mine substation in the Huaaobaote area. The mine substation is located west of the processing plant and transmitted to the high-voltage distribution room through a 10 kV line, and then supplies power to other low-voltage distribution rooms.

Six diesel generators set, as an emergency power source for mines, are installed to connect to the 10 kV power grid.

One 1,200 kW diesel generator set at 20# auxiliary shaft area and one 2,000 kW diesel generator set at the 35 kV substation area are used as backup power sources.

— V-221 —

COMPETENT PERSON’S REPORT

APPENDIX V

5.12 Processing

The information in this section is based on the reports and documents from the owner. If there are any discrepancies, the content in the original reports shall prevail.

1) Huaaobaote Ag-Pb Mine 2022 Reserve Verification Repo rt by the owner, 2022.
2) Neimenggu Yulong Mining Huaaobaote Ag-Pb Mine 1 million t/a Mining and Processing Engineering Feasibility Study , by Lanzhou Non-ferrous Design Institute Ltd., 2021.12.
3) Existing processing introduction and processing flowsheet , by the owner.
4) 2000 t/d and 3030 t/d main processing equipment listed , by the owner.

Huaaobaote Ag-Pb mine started in 2002, and it was purchased in 2012 by the public company of Yintai Resource Ltd. Since 2003, the company installed three processing plants with a capacity of 100 t/d (increased to 400 t/d after), 1,000 t/d and 2,000 t/d (2 series of grinding and classification) in sequence.

In 2022, the processing plant with a capacity of 2,000 t/d runs normally from March to December, and the change of consumed parts was about 6 months. The modification of combining processing plants of 400 t/d and 1,000 t/d has been implemented in 2021. The civil structure and equipment installation was finished at the end of 2021. In May of 2022, this processing plant started running with ores but was in operation until the end of December 2022. This modified processing plant has been out of operation now because of the high cost of old equipment maintenance.

The new design of 3,030 t/d mining and processing engineering feasibility study has been done by Lanzhou Non-ferrous Design Institute Ltd. in December 2021. This new design will do some modifications to the existing 1,400 t/d and 2,000 t/d processing plants, and the new 3,030 t/d processing plant will be in the existing 1,400 t/d processing plant.

— V-222 —

COMPETENT PERSON’S REPORT

APPENDIX V

5.12.1Process Description

1. 2,000 t/d Processing Plant

The processing Plant with a capacity of 2,000 t/d flowsheets is as Figure 5-11.

==> picture [285 x 397] intentionally omitted <==

Figure 5-11 2,000 t/d Processing Flowsheet Diagram

— V-223 —

COMPETENT PERSON’S REPORT

APPENDIX V

2,000 t/d processing plant includes three stages of crushing and one stage of screening closed circuit + one stage of grinding circuit with grinding fineness at -200 mesh at 60% (2 series) + Pb flotation with 1 roughing – 2 scavenging – 3 cleaning + Zn Flotation with 1 roughing – 2 scavenging – 3 cleaning + S Flotation with 1 roughing – 2 scavenging – 3 cleaning + Concentrate Thickening + 2 stages of Concentrate Filtration + Tailings Disposal.

a) Crushing and Screening:

The ROM is fed by truck lift into the ROM bin and then is fed by apron feeder- GBZ125-4 to primary jaw crusher-C100. The products of the jaw crusher are discharged to 1# Belt Conveyor and fed to the secondary crusher-GP11F. GP11F discharges the products to 2# Belt Conveyor and the materials are transported to screening-2YAHG1848.

The oversize materials of the screen, particle size ≥15 mm, flow to 3# Belt Conveyor and then are fed to the storage bin before tertiary crusher-GP11S, which discharges its products to 2# Belt Conveyor and combines with products of primary jaw crusher to feed to the screen.

The undersize materials of the screen, particle size ＜15 mm, are discharged to 4# Belt Conveyor which feeds materials to Crushing Products Bin.

b) Grinding and Classification (2 series):

4# Belt Conveyor transports the products of secondary to Crushing Products Bin; the materials are fed by 5# and 6# belt feeders to 7# Belt Conveyor. The materials are fed to Grid Ball Mill-MQG 2736. The product of the ball mill discharges to Spiral Classification; the overflow with particle size – 200 mesh at 60% flows to the pump pond and then is pumped to mixing tanks before flotation.

c) Flotation:

After the slurry is adjusted by the reagent, it flows to Pb-Zn flotation roughing. Pb roughing concentrate goes to cleaning 1,2, and 3 in sequence and the middling of cleaning 1,2,3 is back to Pb roughing, cleaning 1, and cleaning 2 in sequence. The concentrate of Pb cleaning 3 is the final product-Pb concentrate.

Pb roughing tailing goes to scavenging 1 and 2 in sequence. The middling of scavenging 1 combines with cleaning 1 tailing to back to Pb roughing; the scavenging 2 middling goes back to scavenging 1. The concentrate of scavenging 2 goes to mixing tanks of Zn flotation.

Zn flotation includes 1 roughing – 2 scavenging – 3 cleaning. The concentrate of Zn roughing goes to cleaning 1, 2 and 3 in sequence; the middling of cleaning 1, 2, and 3 is back to Zn roughing, cleaning 1, and cleaning 2 in sequence. The concentrate of Zn cleaning 3 is the final product-Zn concentrate.

— V-224 —

COMPETENT PERSON’S REPORT

APPENDIX V

Zn roughing tailing goes to scavenging 1 and 2 in sequence. The middling of scavenging 1 combines with cleaning 1 tailing to back to Zn roughing; the scavenging 2 middling goes back to scavenging 1. The concentrate of scavenging 2 goes to mixing tanks of S flotation.

S flotation includes 1 roughing- 2 scavenging- 3 cleaning. The concentrate of S roughing goes to cleaning 1, 2 and 3 in sequence; the middling of cleaning 1, 2, and 3 is back to S roughing, cleaning 1, and cleaning 2 in sequence. The concentrate of S cleaning 3 is the final product- S concentrate.

S roughing tailing goes to scavenging 1 and 2 in sequence. The middling of scavenging 1 combines with cleaning 1 tailing to back to S roughing; the scavenging 2 middling goes back to scavenging 1. The concentrate of scavenging 2 goes to tailing disposal.

d) Concentrate Disposal and Tailings Disposal:

Pb concentrate is fed to 11 thickener- NZS-12; overflow is back to the recycle water system for reusing; underflow is pumped to 1 set of vacuum filter- GW20 for filtration. Zn concentrate is fed to 2 thickener- NZS-12; overflow is back to the recycle water system for reusing; underflow is pumped to 1 set of vacuum filter-GW30 for filtration. Pb and Zn concentrates are stored in the concentrates room separately for sale.

S flotation tailings are pumped to the tailing pond directly.

2. 1,400 t/d processing description

Underground Primary Crushing + SAB process + Classification + Pb flotation with 1 roughing - 1 scavenging - 3 cleaning + Zn Flotation with 1 roughing - 2 scavenging - 3 cleaning + S Flotation with 1 roughing - 1 scavenging - 1 cleaning + 1 thickening + 2 stages of Concentrate Filtration + Tailings Disposal.

— V-225 —

COMPETENT PERSON’S REPORT

APPENDIX V

As per the processing description of the 1 million t/a processing modification report, the main processing equipment of 1,400 t/d is as below in Table 5-11.

Table 5-11 1,400 t/d Processing Plant Main Equipment List

Sequence	Name	Model	Quantity
1	Jaw Crusher	C100	1
2	SAG	Ø5.49×3.05	1
3	Ball Mill	MQG Ø3.2×5.4	1
4	Hydro Cyclone	FX-610 × 2	1
5	Pb Flotation Cell	XYF II/KYF II-24	5
6	Pb Flotation Cell	XYF II/KYF II-2	4
7	Zn Flotation Cell	XYF II/KYF II-24	9
8	Zn Flotation Cell	XYF II/KYF II-2	4
9	S Flotation Cell	XYF II/KYF II-24	7
	S Flotation Cell	XYF II/KYF II-6	2
10	Zn Concentrate Thickener	NXZ-12	1
11	Pb Concentrate Thickener	NXZ-9	1
12	S Concentrate Thickener	NXZ-24	1
13	Ceramic Filter	TT-12	1
14	Ceramic Filter	TT-15	1
15	Ceramic Filter	TT-30	1

3. New Design of 3,030 t/d Processing Description

Underground Primary Crushing + SAB process + Classification + Pb flotation with 1 roughing – 3 scavenging – 4 cleaning + Zn Flotation with 1 roughing – 3 scavenging – 4 cleaning + S Flotation with 1 roughing – 2 scavenging- 3 cleaning + Concentrate Thickening + 2 stages of Concentrate Filtration + Tailings Disposal.

— V-226 —

COMPETENT PERSON’S REPORT

APPENDIX V

The processing of 3,030 t/d is similar to 2,000 t/d, and below is the main processing equipment in Table 5-12.

Table 5-12 3,030 t/d Processing Plant Main Equipment List

Sequence	Name	Model	Unit	Quantity
1	Jaw Crusher	C100	unit	1
2	Apron Feeder	1400×6000	unit	1
3	Apron Feeder	1200×4500	unit	1
4	Belt Conveyor	B1000	unit	3
5	Belt Conveyor	B500	unit	2
6	Metal Remover	RCY-C100T2	unit	1
7	SAG	5.49×3.05	unit	1
8	Ball Mill	3.81×6.71	unit	1
9	Linear Screen	SLG1848W	unit	2
10	Linear Screen	SLG1536W	unit	1
11	Cyclone Cluster	6×500CVX	set	1
12	Agitator	XB-3500	unit	2
13	Lifting Agitator	XBT-3500	unit	2
14	Reagent Agitator	RJW-2500	unit	1
15	Reagent Agitator	RJW-2500	unit	2
16	Reagent Agitator	RJW-1500	unit	3
17	High Density Agitator	XBN-1500	unit	1
18	High Density Agitator	XBN-2000	unit	1
19	Flotation Cell	XCF II-40	unit	10
20	Flotation Cell	KYF II-40	unit	16
21	Flotation Cell	XCF II-16	unit	8
22	Flotation Cell	KYF II-16	unit	9
23	Lime Adding System		unit	1
24	Reagent Adding System		unit	1
25	Thickener	NZY-18G	unit	1
26	Thickener	NZY-22G	unit	1
27	Ceramic Filter	BST-35M²	unit	1
28	Ceramic Filter	BST-60M²	unit	1

— V-227 —

COMPETENT PERSON’S REPORT

APPENDIX V

5.12.2 Recoveries

1) Existing processing plant 2,000 t/d recovery:

As per the 1 million t/a processing plant Feasibility Study, below is a summary of existing processing plant indexes. See Table 5- 13.

Table 5-13 Existing Processing Indexes

Year	Throughput	ROM	Grade (%)		Pb Concentrate Grade	Pb Concentrate Grade	(%)	Zn Concentrate Grade (%)	Zn Concentrate Grade (%)			Recovery	(%)
	(t)	Pb	Zn	Ag*	Pb	Zn	Ag*	Pb	Zn	Ag*	Pb	Zn	AgPb*	AgZn*
2017	728,258.54	1.94	2.83	245	52.11	5.76	6,093	0.89	43.62	389	90.376	90.361	83.918	9.337
2018	821,568.28	1.92	2.87	232	59.15	5.11	6,599	0.97	45.19	430	92.371	89.889	85.19	10.568
2019	598,347.9	1.58	2.03	205	52.99	3.96	6,529	1.23	46.76	549	86.244	85.398	81.547	9.892
2020	620,507.27	1.8	2.19	244	54.72	4.46	7,236	1.41	46.99	575	89.717	87.749	87.538	9.651
2021	787,819.04	1.37	1.82	208	57.58	5.39	7,979	1.1	45.69	550	91.959	87.717	84.024	9.191

2) New Design 3,030 t/d Processing Recovery:

New design processing indexes are based on existing processing plants and below are the processing indexes. See Table 5-14.

Table 5-14 3,030 t/d Processing Indexes

	Yield,		Grade (%)		Recovery (%)	Recovery (%)
Product	%	Pb	Zn	Ag*	Pb	Zn	Ag
Pb Con.	2.13	52	2.5	5,000	88	2.85	84.09
Zn Con.	3.65	0.9	45	300	2.61	88	8.65
Tailings	94.22	0.13	0.18	9.75	9.39	9.15	7.26
ROM	100	1.26	1.87	126.62	100	100	100

5.12.3 Test Work

Several test reports have been shown in the owner’s document listed below, but only No. 1 and No. 2 can be found, so this chapter only compared No. 1 and No. 2 test results with current production indexes.

Inner Mongolia Yulong Mining Silver-Pb-Zn Polymetallic Ore Processing Test Report , by Beijing Nonferrous Metals Research Institute, 2011.07.

The existing 1400 t/d modification processing plant is based on this test report.

The Experimental study on the separation of lead and antimony , by Shenyang Institute of Nonferrous Metals, by 2012.01.

— V-228 —

COMPETENT PERSON’S REPORT

APPENDIX V

Inner Mongolia Yulong Mining Co., Ltd. Polymetallic Ore Beneficiation Process Test Technology Research Report , by Hunan Nonferrous Research Institute, 2014.05.
Inner Mongolia Yulong Mining Copper-Silver-Tin Polymetallic Mine , by Guangzhou Nonferrous Metals Institute, 2017.01.
Yulong Mining Polymetallic Mineral Processing Test Report , by Guosheng Mining, Yulong Mining, 2019.07.
Inner Mongolia Yulong Mining Small-scale Test Report , by Solvay, 2019.12.

The comparison of test reports of No. 1 and No. 2 and existing production indexes are shown in Table 5-15.

Table 5-15 Test Results and Existing Production Indexes Comparison

								Pb
		Pb ROM	Zn ROM	Ag ROM	Pb	Concentrate, %		Recovery,	Zn	Concentrate, %		Zn
Name	Processing	Grade, %	Grade, %	Grade, g/t	Pb	Zn	Ag	%	Pb	Zn	Ag, g/t	Recovery
Test Report 2011	Pb1-1-3	1.91	4.14	240.4	51.42	4.33	6,123.9	88.45	0.65	46.03	/	88.18
	Zn1-1-3
Test Report 2014	Pb1-2-3	3.6	3.56	495.6	55.46	2.35	6,899.15	88.9	0.85	45.53	384.27	88.41
	Zn1-2-2
	S1-2-3
Existing Processing	Pb1-2-3	1.37	1.82	208	57.58	5.39	7,979	91.96	1.1	45.69	550	87.72
Plant	Zn1-2-3
	S1-2-3

From the above data comparison of test reports, we can see that existing production indexes are better than the test results of the No. 1 and No. 2 report.

5.13 Permitting, Environmental, Health and Social Impacts

5.13.1 Operational Licenses and Permits

— V-229 —

COMPETENT PERSON’S REPORT

APPENDIX V

Table 5-16 Details of Mining License

Mining License Holder	Inner Mongolia Yulong Mining Co., Ltd.
Name of Property	Huaaobaote Ag-Pb Mining Area (“Huaaobaote”)
License Type	Mining
License ID	C1500002011024210112496
Area (km2)	1.7093
Elevation (m)	From 1,030 m to 400 m
Permitted Production Capacity (kt)	1,000
Type of Commodities	Silver, Lead and Zinc
Mining Method	Underground
Valid Period	From 11 November 2012 to 11 November 2037

Table 5-17 Details of Mining License

Mining License Holder	Inner Mongolia Yulong Mining Co., Ltd.
Name of Property	Huaaobaote Mountain Pb-Zn-Ag Mining Area
	(“Huaaobaote Mountain”)
License Type	Mining
License ID	C1500002012054210125299
Area (km2)	1.0269
Elevation (m)	From 1,030 m to -473 m
Permitted Production Capacity (kt)	250
Type of Commodities	Silver, Lead and Zinc
Mining Method	Underground
Valid Period	From 16 May 2020 to 16 May 2023

— V-230 —

COMPETENT PERSON’S REPORT

APPENDIX V

Table 5-18 Details of Exploration License

License Type	Exploration
License ID	T1525002022054050056825
Area (km2)	1.68
Valid Period	18 May 2022 – 17 May 2027

Table 5-19 Details of Exploration License

License Type	Exploration
License ID	T1525002022054050056826
Area (km2)	0.05
Valid Period	18 May 2022 – 17 May 2027

Table 5-20 Details of Exploration License

License Type	Exploration
License ID	T1525002008043010006893
Area (km2)	1.51
Valid Period	From 21 January 2022 to 20 January 2024

Table 5-21 Details of Exploration License

License Type	Exploration
License ID	T1525002008043010006891
Area (km2)	2.42
Valid Period	From 21 January 2022 to 20 January 2024

— V-231 —

COMPETENT PERSON’S REPORT

APPENDIX V

Table 5-22 Details of Exploration License Exploration License – Expired

License Type Exploration License ID T1525002009123010037416 Area (km[2] ) 15.42 Valid Period From 09 November 2020 to 08 November 2022

Table 5-23 Details of Exploration License Exploration License – Expired

License Type Exploration License ID T1525002009114010036050 Area (km[2] ) 21.76 Valid Period From 09 November 2020 to 08 November 2022

Table 5-24 Details of Safety Production Permit

	Safety Production
Property	Permit No	Issue Date	Expiry Date
Inner Mongolia Yulong	(2021) 001822	17 May 2022	24 June 2024
Mining Co., Ltd.
_Table _	_5-25 Details of Safety Production _	Permit
	Safety Production
Property	Permit No	Issue Date	Expiry Date
Inner Mongolia Yulong	(2020) 006377	17 May 2022	19 August 2023
Mining Co., Ltd.

Table 5-26 Details of Safety Production Permit (Tailing Storage Facilities)

	Safety Production
Property	Permit No	Issue Date	Expiry Date
Inner Mongolia Yulong	(2020) 00648	16 August 2022	15 August 2025
Mining Co., Ltd.

— V-232 —

COMPETENT PERSON’S REPORT

APPENDIX V

Table 5-27 Details of Water Use Permits

				Water Supply	Water Use
Property	Water Use Permit No	Issue Date	Expiry Date	Source	Allocation (m3)
Inner Mongolia Yulong	S1520496514689	25 December	31 December	Groundwater	934,800
Mining Co., Ltd.		2017	2022

5.13.2 Environmental Management

5.13.3 Occupational Health and Safety

5.14 Economic Analysis

BAW reviewed the forecasted operation data and analyzed the late mine operation data provided by Mine. BAW also prepared a production schedule for the Yulong project based on the information provided. To assess the economic viability of Minable Resources under the production schedule, BAW has performed an economic analysis for the Minable Resources estimated throughout the LOM. Determination of economic viability involves the sum of discounted annual free cash flow projected from the start of the year till the end of the LOM. The economic analysis is based on the following assumptions:

The economic analysis presented here is on a 100%-equity basis that shows the basic economics of the project.
It does not incorporate financing items such as interest paid and loan principal paid back.

— V-233 —

COMPETENT PERSON’S REPORT

APPENDIX V

The analysis also does not incorporate any losses carried forward for tax purposes and any refund of valued-added taxes previously or currently paid.

5.14.1 Valuation Methodology

Market Approach

Income Approach

Cost Approach

5.14.2 Adopted Valuation Approach

Among the abovementioned valuation methodologies, the selection of the valuation method for the Yulong Project is based on, among other things, the quantity and quality of the information provided, the availability of the data, the availability of relevant market transactions, the uniqueness of the Project, the nature of business and industry involved of the Project, professional judgment and technical expertise of the management.

The selection of the valuation approach is determined primarily by the stage of development of the concerned mineral asset. The chart below (Figure 5-12) shows the application of valuation methodology for valuing mineral assets.

— V-234 —

COMPETENT PERSON’S REPORT

APPENDIX V

==> picture [434 x 328] intentionally omitted <==

Figure 5-12 Application of different valuation Methodologies

5.15.2.1 Mineable Resource

Regarding the Mineable Resources of the Yulong Project, the income approach is considered to be the most suitable valuation methodology since its net present value can be measured by the present value of the future economic benefits. In addition, compared with the cost approach, the income approach can effectively and accurately reflect the future earnings of the Project. Among the income approaches, we adopted the approach of discounted cash flow projection. The adoption of such an approach for valuing the Mineable Resources is considered to be fair, reasonable and conformable with the industry practice.

5.15.2.2 Discounted Cashflow

The expected debt-free cash flow for each year was determined as follows:

FCF = EBIT (1 – T) + Dep – InvCapex – InvNWC

FCF = Expected Cash Flow

— V-235 —

COMPETENT PERSON’S REPORT

APPENDIX V

EBIT = Earnings before interest and tax

T = Tax rate

Dep = Non-cash items

InvCapex = Investment in capital expenditure

InvNWC = Investment in net working capital

— V-236 —

COMPETENT PERSON’S REPORT

APPENDIX V

PVCF = CF1/(1+r)[1] + CF2/(1+r)[2] + … + CFn/(1+r)[n]

In which

PVCF = Present value of free cash flows

CF = Estimated cash flows

r = Discount rate

n = Number of the year of projections

5.14.3 Metal Production and Revenue

According to the production plan developed by BAW, the Yulong project will produce 133,634.8 Tons of Pb, 188,242.87 Tons of Zn and 1,237,329,161 g of silver. The long term Pb price is estimated to be 14,287 RMB/Ton, Zn 18,628 RMB/Ton and the Ag price 5.44 RMB/g. The total revenue of Pb should be CNY1,909.25 million, CNY3,413.44 million for Zn and CNY6,731.27 million for Ag.

5.14.4 Operating Cost and Capital Expenditure

The cash cost of LOM is estimated at CNY5,221.11 million, while the capital expenditures are CNY495.22 million.

5.14.5 NPV and Sensitivity Analysis

Regarding the Minable Resources of Project Yulong, the income approach is considered to be the most suitable valuation methodology since its net present value can be measured by the present value of the future economic benefits. Therefore, such an approach can effectively reflect the future revenue of the project. The NPV of the Yulong Project is CNY 2,462.8 million at a 9.23% discount rate. The sensitivity analysis shows that the NPV estimate is the most sensitive to commodity prices and discount rates.

— V-237 —

COMPETENT PERSON’S REPORT

APPENDIX V

Appendices

Appendix 1: JORC Code, 2012 Edition – Table 1

Section 1 Sampling Techniques and Data

Criteria

Commentary

Sampling techniques • Trenching and tunnelling were conducted. Representative channel samples were collected using a diamond saw and chisel, with channel dimensions of 10 × 3-5 cm and a typical interval of 1 m.
Diamond drilling was employed, and cores were cut along the long axis using a saw splitter. Sample intervals were primarily set at 1-3 m lengths.
Mineralization was identified based on ore minerals, lithology and alteration.
Drilling techniques • Standard tube core drilling rigs were utilized, with drill cores primarily being HQ-sized and NQ-sized.
Down-hole surveys were conducted using a digital inclinometer at intervals of 50 m for inclined holes and 100 m for vertical holes.
Drill sample recovery • The logging geologist measured drill core recovery for each run and recorded the results in the primary database. Core recovery was determined by dividing the drilling footage by the core length.
Upon encountering low sample recovery during drilling, the logging geologist and driller worked together to promptly rectify the problem and optimize recovery.
No relationship between sample recovery and grade was found.
Logging • Drill cores were qualitatively logged by geologists to capture details such as oxidation, lithology, alteration, structure, and recovery.
All drill hole cores were properly logged and photographed. Logging information was initially recorded on standardized logging sheets and subsequently digitized into the electronic database.

— V-238 —

COMPETENT PERSON’S REPORT

APPENDIX V

Criteria

Sub-sampling techniques and sample preparation

Commentary

Half-core samples were obtained by splitting drill cores in half.
Channel samples were collected in their entirety for sample preparation, without splitting.
All samples underwent drying, crushing, splitting, and pulverizing according to the proper procedures. The Chichette formula (Q = k×d[2] ) was used to determine the minimum allowable sample weight, where: Q represents the sample weight (kg), k is the coefficient determined by the ore type (0.2 for this rock type), and d is the maximum sample grain diameter (mm).
No field duplicates were collected.
On-site geologists deemed the sample size appropriate for the gold grain size observed.
Quality of assay data and laboratory tests
Low Pb and Zn grade samples were analyzed using HCl-HNO3 digestion with AAS, while high Pb and Zn grade samples were assayed using the EDTA complexometric titration method or XRF. Ag content was determined using fire assay.
Geophysical tools, spectrometers, and handheld XRF instruments were not utilized for assaying purposes.
Basic samples were analyzed by both the internal mine-site laboratory and domestically certified Chinese laboratories, which implemented internal quality control procedures in line with relevant PRC standards. No systemic bias was reported.
Verification of sampling and assaying
BAW geologists carried out a field inspection of significant intersections.
No twinned holes were drilled.
All geological logging and sampling information was initially recorded on logging sheets and later digitized into an electronic database. Both physical and electronic logging and sampling records were well-maintained.
During the site visit, BAW reviewed data entry procedures, and storage protocols, and verified the primary data.
No adjustment was made to the assay data.

— V-239 —

COMPETENT PERSON’S REPORT

APPENDIX V

Criteria

Commentary

Location of data points

Drill holes, trenches, and adits were surveyed in compliance with relevant PRC standards by certified surveyors under the supervision of on-site geologists.
The Beijing Coordinates System (1954) and Chinese Geodetic Coordinate System 2000 were applied for this project.
Detailed topographic surveys were conducted by certified surveyors and deemed adequate for modelling and Mineral Resource estimation purposes.
Data spacing and distribution
The exploration grid was set at 50-100 × 50-100 m. Samples were collected continuously throughout mineralization zones and their contact zones in wall rocks, with a typical length of 1-3 m.
The spacing of drill holes is sufficient to establish the degree of geological and grade continuity appropriate for the Mineral Resource and Ore Reserve estimation procedures and for the classifications applied.
Orientation of data in • Considering the deposit type, the drilling orientation and relation to geological subsequent sampling are deemed unbiased for Mineral Resource structure estimation purposes.
Sample security
Yulong Mining managed the chain of custody for sample security. Samples were collected, packed, marked, and logged before being delivered to the laboratory for preparation and assaying. The drill cores were stored in an on-site core shed.
Audits or reviews • All aspects of sampling techniques strictly adhered to relevant PRC national standards and specifications. BAW reviewed and cross-checked the sampling data.

Section 2 Reporting of Exploration Results

Criteria

Commentary

Mineral tenement and land • BAW was provided with scanned copies of the original mining tenure status and exploration licenses, and the details are stated in Sections 5.1.2 and 5.1.3 of this report.
Exploration done by other • Detailed information can be found in Section 5.3.2 of this report. parties

— V-240 —

COMPETENT PERSON’S REPORT

APPENDIX V

Criteria

Commentary

Geology

Detailed information can be found in Section 5.4 and 5.5 of this report.

Drill hole Information

All drill hole information was entered into the database and utilized for Mineral Resource estimation. Due to the extensive amount of drill hole data, a detailed tabulation of this information is not presented.

Data aggregation methods

All samples are composited within the geological domains at 1.5 m for Mountain Huaaobaote Section and 1.0 m for Huaaobaote Section, and short intervals at the end of the domain are incorporated into the preceding interval. A cut-off value of 0.8% Pb equivalent is used to define the domains.
No capping description and capped composites about the 2022 internal model were provided to BAW. According to the 2022 report, massive and disseminated mineralization hosted most of the resources. Uniform grade distribution was present for Pb-Zn in both mineralization, where no capping for Pb-Zn was done for composites. While 6~8 times of mean grade was used for high-grade capping for Ag.
Pb/Ag metal-equivalent approaches were applied. And 1 Zn = 1.29 Pb; 1 Zn = 0.0046 Ag
Relationship between mineralization widths and intercept lengths
Huaaobaote mineralization is 1,800 m long along NW and NE, dipping 60~70°.
Diagrams
Not Applicable in this report.
Balanced reporting • The reporting is fully representative of the data provided at this stage.
Other substantive • BAW is not aware of any other material or substantive exploration exploration data data that has not been reported
Adequate samples were measured for specific gravity, as detailed in Section 5.8.1.
Further work • BAW was informed that Yulong Mining would conduct further exploration programs within the current mining and exploration licenses.

— V-241 —

COMPETENT PERSON’S REPORT

APPENDIX V

Section 3 Estimation and Reporting of Mineral Resources

Criteria

Commentary

Database integrity • The data provided by the Company in Excel format was imported into a Surpac database after validation.
Data validation steps included:
- Validation through constraints and libraries set in the database, e.g., overlapping/missing intervals, intervals exceeding maximum depth, valid geology codes, and missing assays.
- Validation through 3D visualization in 3D software to check for any obvious collar, down-hole survey, or assay import errors.
Site visits • BAW Competent Person visited the Yulong Project from March 26 to 28, 2023. Various aspects of the project were inspected, including mineralization, drilling operations, logging, sampling, the database, the assay laboratory, mining and processing operations, and mine infrastructure, in collaboration with on-site personnel.

Geological interpretation

The geological interpretation was based on lithology, assays, structure and geotechnical information.
The data used in the resource estimation was from the approved exploration reports or laboratory assay results.
Dimensions • Not Applicable in this report.

— V-242 —

COMPETENT PERSON’S REPORT

APPENDIX V

Criteria

Estimation and modelling techniques

Commentary

The Mineral Resource was estimated using Inverse Distance interpolation in Surpac.
Search parameters were based on attitudes of mineralized zones and supported by geological knowledge gained from surface geological mapping, drill hole data and modelling analysis.
The parent cell size and estimation parameters were based on the drill hole spacing and the nature of the mineralization style at the project.
The geological interpretation was used to help build a mineralized wireframe model and the resource estimate was conducted within the model.
Validation of the Mineral Resource estimate has been conducted by:
Visual drill hole section data comparisons with the block model and
Swath plots of major elements in three orthogonal directions.

Moisture

Cut-off parameters

Mining factors or assumptions
Tonnages are estimated on a dry basis.
The current resource estimate by Huaaobaote is based on 0.8 g/t Pb equivalent cut-off grade, which was used for Huaaobaote mining onsite.
The mining method assumed is open pit mining.
Mining factors such as mining dilution shown above have been incorporated into the Mineral Resource estimate.
Metallurgical factors or assumptions
Simple studies of ore properties and processing tests were conducted and the files were provided by the owner.
The overall Pb recovery is 91.96% and the overall Zn recovery is 87.72%, which is as per the document from the owner.
Processing recovery rates presented above were incorporated into the Mineral Resource estimate.

— V-243 —

COMPETENT PERSON’S REPORT

APPENDIX V

Criteria

Commentary

Environmental factors or assumptions

No assumptions have been made regarding possible waste or process residue disposal options or environmental surveys.

Bulk density

The conventional water displacement method was utilized on a total of 409 samples from various types of ores.

Classification

Mineral Resources have been classified in the Measured, Indicated and Inferred categories in accordance with the JORC Code 2012 guidelines.
A range of criteria was considered in determining the classification for the project, including:
- geological confidence in the interpretations,
- sample data density,
- sample/assay confidence,
- grade continuity of the mineralization,
- estimation method.
The Competent Persons endorse the final results and classification for the project.
Audits or reviews • Mr. Weiliang Wang and Karfai Leung, MAusIMM, has undertaken a peer review,
There are no outstanding issues arising from these reviews.

Discussion of relative accuracy/confidence

Relative accuracy and confidence have been assessed through validation of the model as outlined above.
The Mineral Resource estimate comprises material categorized as Measured, Indicated and Inferred Mineral Resource. The Mineral Resource categories reflect the assumed accuracy and confidence of a global.

— V-244 —

COMPETENT PERSON’S REPORT

APPENDIX V

Section 4 Estimation and Reporting of Ore Reserves

Criteria

Commentary

The mineral Resource • The block models prepared by Yintai were used as the basis of the estimate for conversion to Ore Reserve estimate. Ore Reserves
The Mineral Resources are reported inclusive of Ore Reserves.
Site visits • BAW Competent Person visited the Yulong Project from March 26 to 28, 2023. Various aspects of the project were inspected, including mineralization, drilling operations, logging, sampling, the database, the assay laboratory, mining and processing operations, and mine infrastructure, in collaboration with on-site personnel.
Study status • The feasibility study report (2021.12) conducted by Lanzhou Engineering & Research Institute of Nonferrous Metallurgy was provided to BAW.
The feasibility study report was used as the basis of the Ore Reserve estimate.
Cut-off parameters • The feasibility study report (2021.12) conducted by Lanzhou Engineering & Research Institute of Nonferrous Metallurgy was provided to BAW.
The feasibility study report was used as the basis of the Ore Reserve estimate.
Mining factors or • Not Applicable in this report. assumptions
Metallurgical factors or assumptions
The processing flowsheet is a conventional crushing, grinding, and flotation, which is simple and mature and is suitable for the ore type of Yulong project.
There are several test reports done by the third party with represented samples and two of the reports were provided by the owner.

— V-245 —

COMPETENT PERSON’S REPORT

APPENDIX V

Criteria

Commentary

Compared with the test report of 2011 and 2014, Pb and Zn recovery of existing processing are good. Zn recovery is affected by the separation of Pb and Zn flotation, which can be optimized by the production team.
It doesn’t have the document about requirements and sales agreement, so assuming that the current Pb concentrate and Zn concentrate to meet the requirement of terms and sales agreement.
Environmental
Environmental, safety and production permits were obtained.
Infrastructure • The infrastructure meets the basic requirements of production and transportation.
Costs • The Opex and Capex were provided by the Mine.
Refer to section 5.13.4.
Revenue factors • Production Schedule is developed by BAW.
Refer to section 5.13.3.
Market assessment • Not Applicable in this report.
Economic • The input data to calculate NPV is described in Section 5.13 which mainly includes the production plan, sales revenue, production cost, administration cost, Capex and taxes.
Refer to section 5.13.5.
Social • Not Applicable in this report.
Other • None.
Classification • The mineable Measured Resources, including diluting materials and allowances of losses, were classified as Proved Ore Reserves.
The mineable Indicated Resources, including diluting materials and allowances of losses, were classified as Probable Ore Reserves.
The results appropriately reflect the Competent Person’s view of the deposit.

— V-246 —

COMPETENT PERSON’S REPORT

APPENDIX V

Criteria

Commentary

Audits or reviews • Mr. Weiliang Wang and Karfai Leung, MAusIMM, has undertaken a peer review,
There are no outstanding issues arising from these reviews.
Discussion of relative accuracy/confidence
Usually, the Ore Reserve estimate is reported based on some technical and economic assumptions which have been understood well to date. These assumptions would change as time goes on, so different Ore Reserve can be estimated/calculated.

— V-247 —

COMPETENT PERSON’S REPORT

APPENDIX V

6 HUASHENG PROJECT

6.1 Property Description and Location

6.1.1 Property Location

The Huasheng (Mangshi) Project is located approximately 32 km southwest of Mangshi City and about 40 km northwest of the China-Myanmar border. The project area falls under the jurisdiction of Shangmanggang Village, Santaishan Town, Mangshi City, in the Dehong Dai-Jingpo Autonomous Prefecture, Yunnan Province. Kunming City, the capital of Yunnan Province, is situated roughly 460 km to the east. The project location is depicted in Figure 6-1.

==> picture [436 x 374] intentionally omitted <==

Figure 6-1 Location of the Huasheng Project

Source: Google Map

— V-248 —

COMPETENT PERSON’S REPORT

APPENDIX V

6.1.2 Ownership

Yintai, through its 60% owned subsidiary, Mangshi Huasheng Gold Mine Development Co., Ltd. (“ Huasheng Gold ”) holds the Huasheng Project, which includes all mineral resources and reserves, as well as all mining operations.

6.1.3 Tenure, Permit and License

The mining license, held by Huasheng Gold, covers an area of 0.6338 square kilometres with an expiry date of 11/07/2025 and a permitted annual mining capacity of 100 thousand tons, including the Maiwoba and Guoyuan area. Table 6-1 and Figure 6-2 present the corner coordinates and areas of the mining license.

Table 6-1 Corner Coordinates of the Mining License, Huasheng Project

Corner	Coordinates No.	Eastings/m	Northings/m
		Maiwoba area
1		2689686.13	33435378.13
2		2690143.13	33435620.13
3		2690346.13	33435888.13
4		2690206.13	33436088.13
5		2689536.13	33435478.13
6		2689111.85	33435285.11
7		2689114.16	33434713.12
		Guoyuan area
8		2691080.34	33436794.52
9		2691014.55	33436913.13
10		2690653.14	33436427.43
11		2690496.14	33436424.13
12		2690363.14	33436182.73
13		2690402.14	33436155.93
14		2690708.14	33436175.12
15		2690913.64	33436325.62
16		2690992.24	33436434.52
17		2691077.14	33436708.12
	Xi’an 1980 Coordinate	System; Elevation: 1500 -1100 m above sea level

— V-249 —

COMPETENT PERSON’S REPORT

APPENDIX V

Yintai has provided the necessary permits and licenses required for the current operation of the Huasheng Project, including the Water Extraction Permit and Pollution Discharge Permit. However, BAW did not independently verify the information related to the location, area, and status of these permits and licenses. Additionally, BAW does not know about any other permits required for carrying out the proposed work on the property, unaware of whether such permits have been obtained or not.

==> picture [452 x 327] intentionally omitted <==

Figure 6-2 Mining License area of the Huasheng Project

Source: SRK, 2016

6.2 Accessibility, Climate, Local Resources, Infrastructure and Physiography

6.2.1 Accessibility

The Huasheng Project area is easily accessible via a 2 km gravel road that connects to National Highway 320. The distance from National Highway 320 to the city center of Mangshi is 23 km, and 33 km to the Dehong Autonomous Prefecture government (in Mangshi). The project area can also be reached via the G56 Highway, which runs from Mangshi to Kunming, spanning a total distance of 829 km. Mangshi has a domestic airport offering daily flights to major cities in China, such as Kunming and Beijing. Mangshi city is situated approximately 300 kilometres from Dali city, which has a railway station connected to the national railway network. The Dali-Ruili railway, which passes through Mangshi, is currently under construction and is estimated to be completed in 2025.

— V-250 —

COMPETENT PERSON’S REPORT

APPENDIX V

6.2.2 Topography, Elevation, and Vegetation

The Huasheng Project is situated at the southwestern edge of the Hengduan Mountains, within a secondary watershed southeast of the Bangdian River, a Mangshi River tributary. The terrain, marked by mountains and valleys, slopes southwestward, aligning with the predominant northeast-southwest structure. Slopes typically range between 20°-30°, with some areas exceeding 60°. The highest point is Leixiu Mountain (elevation 1,505.6 m) in the southwest, while the lowest is the Dagang River exits in the northwest (elevation 1,070 m), creating a relative elevation difference of 435.6 m.

The project area boasts dense vegetation, with over 80% coverage, and exhibits distinct vertical zonation due to terrain, topography, and climate. Plant species include Chinese fir, Simao pine, and birch, while peacocks, wild boars, and pheasants are the primary animal species.

6.2.3 Climate

The Huasheng Project area features a subtropical monsoon climate with low latitude and mountainous influences, characterized by long summers, short winters, small seasonal temperature differences, large annual temperature fluctuations, distinct dry and wet seasons, and significant vertical differences. The climate is marked by dry springs and winters and wet summers and autumns. Records from Mangshi Meteorological Station indicate an average annual temperature of 19.6°C, with extreme highs of 36.2 °C and winter lows of 0.6 °C.

The rainy season spans May to October, with an average annual rainfall of 1,654.6 mm. Rainfall during this season accounts for 89.9% of the total annual precipitation, with July and August experiencing heavy rain and contributing 46.8% of the total annual rainfall. The area experiences an average of 171 rainy days per year. Rainfall distribution varies with terrain, landform, and elevation, resulting in higher rainfall in mountainous areas than in dam and valley areas, and fluctuating rainfall amounts with altitude.

The region boasts abundant sunshine, with an annual duration of 2,252.9 hours and an average annual evaporation of 1,342.3 mm. The frost-free period lasts over 300 days per year. The prevailing wind direction is southwest, with wind speeds typically ranging from 1 to 3 levels and a maximum of 6 levels. The average annual wind speed is 1.0 m/s, with a maximum of 15.7 m/s, and windless conditions occur 10.5% of the year.

6.2.4 Local Resources and Infrastructure

Santaishan, the closest town to the project area, has a population of approximately 7,700 and is predominantly composed of the De’ang, Han, and Jingpo ethnic groups. Two neighbouring villages are Xiamanggang and Shangmangang.

Mangshi, the capital of the Dehong Autonomous Prefecture, is a modern city with a well-developed local infrastructure. Most raw materials and daily necessities are available in the city. Local agriculture produces wheat, soybeans, corn, rice, sugarcane, coffee, peanuts, rapeseed, tobacco, and various vegetables. The industrial sector comprises sugar production, papermaking, building materials, wood processing, and hydropower. Valuable mineral resources in the area include gold, copper, lead, zinc, and coal.

— V-251 —

COMPETENT PERSON’S REPORT

APPENDIX V

A 110 kV substation near the project area has adequate remaining capacity for this project’s power needs. A 35 kV transmission line extends 3.6 km from the 110 kV substation to the project area.

The Dagang River, a seasonal river located about 2 km away, flows northward from the center of the project area and ultimately joins the regional Longjiang River via the Bangdian River. Domestic production water supply is from the Dagang River and transported via pipelines.

6.3 History

6.3.1 Ownership

The original mining license for the Huasheng Project was granted to the No. 209 Geological Brigade of the Southwest Geological Bureau of Nuclear Industry (“ No. 209 Brigade ”) in 1999, including the Maiwaba and Guoyuan areas with a total area of 0.4338 km[2] . The license was extended in 2009 and later transferred to Huasheng Gold in 2015, with the area expanded to 0.6338 km[2] . In 2021, Yintai acquired a 60% stake in Huasheng Gold, becoming the biggest shareholder.

6.3.2 Exploration and Development

In 1988, the Geological Brigade of the Southwest Geological Bureau of Nuclear Industry discovered a 12 km gold mineralization zone along the Shangmanggang fault. In 1994, the No. 209 Brigade conducted an exploration within the Guoyuan area and prepared a general exploration report on the Guoyuan area in 1995. With the mining license granted in 1999, the No. 209 Brigade began small-scale open-pit mining. In 2009, No. 209 Brigade summarized historical exploration data and compiled the “ Resource/Reserve Verification Report of the Mangshi Gold Deposit, Luxi City, Yunnan Province ”.

In 2009, Huasheng Gold was established through the restructuring of the No. 209 Brigade. Between 2009-2013, Huasheng Gold carried out systematic exploration, including topographic and geological mapping, diamond drilling, and sampling. From 2011 to 2012, a total of 27 drill holes were completed, mainly in the Maiwoba area. In 2013, Huasheng Gold submitted the “ Resource/Reserve Verification Report of the Mangshi Gold Deposit, Dehong Prefecture, Yunnan Province ” (“ Verification Report 2013 ”). In 2014, Yunnan Hongdi Mineral Resource Co., Ltd (“ Hongdi ”), commissioned by Huasheng Gold, conducted an exploration in the Maiwoba area and completed 34 drill holes. In 2015 and 2016, SRK Consulting Ltd. (“ SRK ”) performed two technical reviews for the Huasheng Project based on previous exploration results. From 2012 to 2020, Huasheng Gold carried out a limited amount of exploration work, including 18 drill holes and some sample assays.

From 2021-2022, Kunming Fulin Mining Co., Ltd (“ Fulin ”), commissioned by Huasheng Gold, executed extensive drilling, focusing on the Maiwoba area, with a total of 45 drill holes completed. In 2022, Huasheng Gold submitted the “ Resource/Reserve Verification Report of the Mangshi Gold Deposit, Yunnan Province ” (“ Verification Report 2022 ”), which was waiting for approval by the Ministry of Land and Natural Resources as of 31/12/2022.

6.3.3 Historical Resource and Reserve Estimates

Resource and reserve estimates were conducted in 1995, 2009, 2013, 2014, and 2022 following Chinese standards and approved by the Ministry of Land and Resources. However, the resource and reserve estimates discussed in Sections 6.10 and 6.11 are based on the JORC Code 2012 and will be different from previous estimates.

— V-252 —

COMPETENT PERSON’S REPORT

APPENDIX V

In the technical review reports of 2015 and 2016, SRK completed resource and reserve estimations following the JORC Code 2012. Details of the resource/reserve estimates are summarized in Tables 6-2, 6-3, 6-4, and 6-5.

Table 6-2 Resource Estimate of the Huasheng Project by SRK, as of 30/09/2014

Mineralised	Resource
Domain	Category	Volume	Tonnage	Grade	Au Metal
		(1,000 m3)	(1,000 t)	(g/t)	(1,000 kg)	(Moz)
VII	Indicated	6,203	16,313	3.11	50.65	1.63
	Inferred	2,663	7,005	2.87	20.12	0.65

Table 6-3 Reserve Estimate of the Huasheng Project by SRK, as of 30/09/2014

	Ore
Mineralised	Reserve
Domain	Category	Volume	Tonnage	Grade	Au Metal
		(1,000 m3)	(1,000 t)	(g/t Au)	(1,000 kg)	(Moz)
VII	Probable	6,070	15,970	3.00	47.84	I1.54

Table 6-4 Resource Estimate of the Huasheng Project by SRK, as of 31/12/2015

Mineralised		Resource
Domain		Category	Volume	Tonnage	Grade	Au Metal
			(1,000 m3)	(1,000 t)	(g/t)	(1,000 kg)	(Moz)
VII		Indicated	6,188	16,275	3.11	50.62	1.63
		Inferred	2,642	6,950	2.89	20.05	0.64
_Table _	_6-5 _	Reserve Estimate of the Huasheng Project by SRK, as of 31/12/2015
		Ore
Mineralised		Reserve
Domain		Category	Volume	Tonnage	Grade	Au Metal
			(1,000 m3)	(1,000 t)	(g/t Au)	(1,000 kg)	(Moz)
VII		Probable	6,070	15,970	3.00	47.84	1.54

— V-253 —

COMPETENT PERSON’S REPORT

APPENDIX V

6.3.4 Production

Gold production at the Huasheng Project started in 2009 and was suspended for an upgrade in 2015. The initial mining operations targeted shallow lateritic gold deposits, which were depleted in 2011 for the Guoyuan area and in 2013 for the Maiwoba area. Between 2013 and 2015, the production shifted to the deep Carlin-type gold deposits. SRK summarized the historical production data in 2016, which can be found in Table 6-6.

Table 6-6 Historical Production Summary of the Huasheng Project

			Gold	Produced
	Tonnage	Feed	Metal	Gold	Total
Year	Mined out	Grade	Mined out	Bullion	Recovery
	(1,000 t)	(g/t Au)	(kg)	(kg)	(%)
2009	108	0.78	85	49	58.14
2010	231	0.84	194	136	69.97
2011	104	0.76	79	54	68.73
2012	85	0.64	55	37	67.66
2013	81	1.08	92	73	79.48
2014	972	1.94	1,874	1,499	80.01
2015	1,076	1.56	1,683	1,332	79.15

6.4 Geological Setting and Mineralization

6.4.1 Regional Geology

The Huasheng Project is situated in the southwestern section of the Baoshan Block at the southeastern edge of the Tibetan Plateau, an area composed of several micro-continental blocks and tectonic belts. Within the project area, the Baoshan Block is separated from the Tengchong Block and the Gaoligong Belt to the northwest by the Longling-Ruili Fault (Figure 6-3).

The Longling-Ruili Fault is a significant deep regional fault and forms a crucial part of the southern section of the Nujiang Fault System (Figure 6-4). It is characterized as a large-scale strike-slip and thrust fault zone. The fault trends southwest with a dip of 30° to 40°. A series of secondary local faults occur parallel or subparallel to the Longling-Ruili Fault to the southeast, such as the Shangmanggang Fault, which is genetically linked to the gold mineralization of the Huasheng Project.

— V-254 —

COMPETENT PERSON’S REPORT

APPENDIX V

To the northwest of the Longling-Ruili Fault, the Gaolinggong Belt is dominated by Mesoproterozoic metamorphic rocks, including gneiss, schist, and granulite. The Baoshan Block, acting as the footwall of the fault zone, is characterized by a complex anticline structure with Sinian-Cambrian weakly metamorphosed rocks in the hinge area and Ordovician-Tertiary sedimentary sequences on the limbs.

Mafic-ultramafic intrusions are identified within the Longling-Ruili Fault zone. The ultramafic rocks consist of harzburgite, lherzolite, and dunite, while the mafic rocks, outcropping along the local secondary faults and intruding the Triassic and Jurassic strata, are primarily composed of subvolcanic rocks. Cretaceous granitic intrusive complexes extensively occur as batholiths or stocks in the Gaolinggong Belt and Baoshan Block.

==> picture [430 x 435] intentionally omitted <==

Figure 6-3 Regional Geological Map

Source: SRK, 2016

— V-255 —

COMPETENT PERSON’S REPORT

APPENDIX V

6.4.2 Ore Deposit Geology

The project area is characterized by a northeast-trending anticline structure, with the Lower Permian Shazipo Formation forming the hinge and the Middle Jurassic and Late Triassic strata comprising the limbs. Gold mineralization is primarily hosted within the Shazipo Formation, which mainly consists of dolomite and dolomitic limestone intercalated with minor argillaceous limestone. The Jurassic stratigraphy, from bottom to top, includes the Mengjia Formation, Liuwan Formation, and Longhai Formation. The Mengjia Formation mainly comprises sandstone, siltstone, argillaceous limestone, and oolitic limestone. The Longhai Group predominantly consists of limestone, shale, and siltstone. The Nanshuba Formation primarily consists of sandstone, siltstone, and shale.

The Shangmanggang Fault (F1) is developed along the unconformity between the Shazipo Formation and the Mengjia Formation, striking at 38°-50° with an average dip of 48°. The fracture zone of the fault, ranging from 100-300 m in width, resulted from compressive shearing during the early stage and tensile faulting in the later stage. It is primarily composed of cataclastic rocks, fault gouges, karst breccia, and tectonic breccia. The occurrence of gold mineralization, extending over 7 km, is predominantly associated with the Shangmanggang Fault and is divided into four areas from southwest to northeast: Yangshishan, Guanglingpo, and the Huasheng Project’s Maiwoba and Guoyuan areas. Another set of faults, F3, dips to the northwest and is present in the middle of the Maiwoba area, having formed after the mineralization and locally intersecting F1. A series of monzonite porphyry stocks intruded into the Longhai Formation and are distributed in a northeast-trending pattern parallel to the Shangmanggang Fault.

— V-256 —

COMPETENT PERSON’S REPORT

APPENDIX V

==> picture [430 x 478] intentionally omitted <==

Figure 6-4 Geological Map of the Huasheng Project Area

Source: Liu et al., 2023

6.4.3 Alteration and Mineralization

The gold mineralization of the Huasheng Project can be divided into two zones from bottom to top, a hypogene zone and a lateritic zone. In the hypogene zone, the gold deposit is hosted in the unweathered sedimentary rocks of the Shazipo Formation and Mengjia Formation, while in the lateritic zone, gold is enriched in approximately 20 m thick, highly weathered, red clay sediments (Figure 6-5). In between, a transition brown-gray semi-oxidized zone can be also recognized.

— V-257 —

COMPETENT PERSON’S REPORT

APPENDIX V

The lateritic zone is mainly composed of quartz, plagioclase, limonite, illite, and kaolinite, with minor goethite, montmorillonite, alunite, and jarosite. A total of eight ore bodies were discovered within the lateritic zone and most of them were mined out before 2015. Only the ore body GI and GII of the Guoyuan area, and MI of the Maiwaba area are partially preserved till present.

For the hypogene zone, four major ore bodies, MII-1, MII-2, MII-3 and MII-4, as well as nine small ore bodies, have been recognized in the Maiwoba area (Figure 6-3). The major ore bodies are emplaced at a depth of 50-350 m from the surface, with a southwest strike and an average dip of 18°-46°. The length of the major ore bodies ranges from 478 to 1,272 m and the average thickness from 7.09 to 18.23 m.

In the Huasheng Project area, the primary alteration is related to intermediate-to-low-temperature hydrothermal processes and is closely associated with gold mineralization. The main alteration types include silicification, pyritization, hematitization, baritization, carbonatization, and argillic alteration.

Ore minerals primarily occur as disseminations within the fractures of dolomites and consist of limonite, pyrite, siderite, and magnesite, along with minor amounts of sphalerite, chalcopyrite, hematite, magnetite, ilmenite, and galena. The dominant gangue minerals are dolomite, accompanied by calcite, quartz, feldspar, and kaolinite, with traces of sericite, zircon, and barite.

==> picture [430 x 330] intentionally omitted <==

Figure 6-5 Exploration Line J26 Cross Section of the Huasheng Project

Source: Yintai

— V-258 —

COMPETENT PERSON’S REPORT

APPENDIX V

The ore minerals mainly include pyrite, sphalerite, chalcopyrite, limonite, hematite, magnetite, ilmenite, and siderite, with minor stibnite, cinnabar, galena, chalcocite, and covellite. Gold mainly occurs in native form and electrum. The gangue minerals are mainly calcite, dolomite, quartz, feldspar, and kaolinite, with minor sericite, zircon, and barite. The primary texture of the ore-bearing dolomitic limestone has been altered by silicification, sericitization, and carbonatization. Gold mineralization occurs in disseminated texture (pyrite), metasomatic structure (quartz and dolomite replacing original dolomite), and vein texture (pyrite, stibnite, cinnabar, and carbonates in veinlets). Pyrite, as an ore mineral, is fine-grained, subhedral with grain size ranging from 0.01 to 1.60 mm, and the grain size of hematite ranges from 0.004 to 0.4 mm. The gold minerals are mainly fine to very fine-grained, with over 70% of the grain size less than 0.037 mm. They are mainly present in the form of angular or elongated as inter-grain gold (accounting for 54.00%), inclusion gold (accounting for 26.80%) or fissure gold (accounting for 19.20%).

6.5 Deposit Types

The Huasheng Project features two types of gold mineralization: Carlin-type gold mineralization at depth and lateritic mineralization near the surface. The hypogene gold deposit shares similarities with the Carlin-type gold deposits in Nevada, USA, in aspects such as ore structure, ore-controlling factors, mineral assemblage, mineral composition, gold particle size, and low silver content. Previous research suggests that the Carlin-type gold mineralization occurred within faults and fractured carbonate and clastic rocks from the Early Cretaceous to Early Paleogene, providing the primary gold source for the lateritic zone. The Project area underwent multiple uplift events during the Middle Cenozoic, causing paleo-karstification and laterization of bedrock. This lateralization process facilitated gold migration and enrichment within the supergene red clay zone.

6.6 Exploration

Huasheng Gold has conducted systematic exploration, including topographic mapping, geological mapping, trenching, diamond, percussion and reverse circulation (“ RC ”) drilling, and hydrological and geotechnical surveys since 2011. To control the boundary of the open-pit mining area, eight trenches were completed between lines 14-18 in the Maiwoba mining area. The trenches were dug into the bedrock for 30 cm and were surveyed, logged and channel sampled afterwards.

— V-259 —

COMPETENT PERSON’S REPORT

APPENDIX V

Based on the exploration database provided to BAW, major sample workings as of December 31st, 2022 are summarized in Table 6-7.

Table 6-7 Summary of Major Sample Workings as of 31/12/2022

Type Surface Drill Hole RC Drill Hole Percussion Drill Hole Trench Total	Collar 130 6 17 8 161	Depth (m) 31,765.7 820.0 1,124.0 281.0 33,990.7	Samples 17,517 792 762 168
			18,477

Surface and underground surveys strictly followed the “ Specifications of Survey for Geological and Mineral Resources Exploration ” (GB/T18341-2001) and were carried out using a total station. incorporating the Xi’an Coordinates System (1980) and Chinese Geodetic Coordinate System 2000.

Channel sampling was utilized in trenches, with samples selected based on the ore type, wall rock, and mineralization distribution. Sampling intervals ranged from 0.5 to 1.5 meters, and channel dimensions were 10 × 5 cm. A minimum sample weight of 10 kg per meter was required.

— V-260 —

COMPETENT PERSON’S REPORT

APPENDIX V

6.7 Drilling

The diamond drill holes were arranged along the exploration lines perpendicular to the strike of the ore body with a basic grid of 80 × 80 m, locally increased to 40 × 40 m.

For diamond drilling, the general initial hole diameter is PQ, and the final hole diameter is HQ and NQ. All drill hole collars were surveyed using a total station. Downhole surveys were performed with an inclinometer or downhole camera every 30-50 m. Hole depth correction measurements were taken every 50-100 m, as well as at the end of the hole. According to the drill hole database provided to BAW, core recoveries of all diamond drill holes exceeded 90%, which is considered to be satisfactory given the conditions of the structure and mineralization. Upon completion of drilling, the hole was sealed with cement and marked with a permanent cement monument.

Half-core samples were obtained at the drilling site using a saw splitter, cutting along the pre-drawn sampling line and the long axis of the core. Unconsolidated core samples were manually collected. One half was bagged, sealed, and labelled for further sample preparation, while the other half was preserved in a plastic core box for future examination. Sample intervals ranged from 0.3 to 1.5 m, and sample weights were between 2.5 and 5.0 kg. Continuous sampling was conducted within the ore body, with additional samples collected at the top and bottom. Sampling across boundaries was avoided. Drill cores were preserved in plastic core boxes, stacked in the core shed.

6.7.1 Discussion

BAW did not personally inspect the drilling and sampling operations on site, to our understanding, which were carried out in compliance with relevant Chinese national standards. However, based on field observations and reviews of data, protocols, and verification reports, BAW considers the exploration, drilling, and sampling procedures of the Huasheng Project to be generally reasonable, although some historical cores were found to be improperly preserved. The sampling quality of historical percussion and RC drilling could not be assessed as no duplicate samples were preserved. BAW was informed that all the percussion and RC drilling results have been discarded by Huasheng Gold due to poor sampling quality.

6.8 Sample Preparation, Analysis and Security

6.8.1 Density Determination

Since 2012, a total of 95 samples have been collected, sealed and sent to Yunnan Province Geological and Mineral Exploration and Development Bureau Central Laboratory Dianxi Testing Institute (“ Dianxi Laboratory ”) for density measurements, utilizing the water displacement method on wax-coated samples, yielding an average density of 2.73 t/m[3] .

6.8.2 Sample Preparation

Sample preparation was carried out by the Dianxi Laboratory, Ministry of Land and Resources Kunming Mineral Resources Supervision and Inspection Center (“ Kunming Laboratory ”), Yunnan Nonferrous Geological Bureau Testing Center (“ Yunnan Laboratory ”), and the Huasheng Gold Laboratory located at the mine site (“ Huasheng Laboratory ”).

— V-261 —

COMPETENT PERSON’S REPORT

APPENDIX V

The standard procedure for sample preparation involved the following steps: drying at 60 ºC, coarse crushing to 4 mm, homogenization, splitting, fine crushing to 1 mm, homogenization, and splitting into primary and fine duplicate samples, with the remainder discarded. The primary sample was pulverized to -200 mesh, divided into a 500-1,000 g powder primary sample for further assay, and a powder duplicate.

Sample preparation, subsequent assay, and QA/QC procedures were rigorously conducted in compliance with the Chinese standard “ Quality Management Specifications for Geological and Mineral Laboratory Testing ” (DZ0130.1-0130.13-94; DZ/T 0130-2006).

6.8.3 Sample Analyses

The same laboratories responsible for sample preparation also conducted sample analysis. The gold content in the samples was determined using activated carbon absorption-atomic absorption spectrometry (“ AAS ”). The analytical procedure included aqua regia digestion, Au pre-concentration with activated carbon cloth, heating the Au-absorbed cloth at 650-700 ºC, aqua regia digestion, and measurement using AAS.

External checks were performed by the Dianxi Laboratory, Ministry of Land and Resources Hangzhou Mineral Resources Supervision and Inspection Center (“ Hangzhou Laboratory ”), China Metallurgical and Geological Bureau Kunming Exploration Testing Central Laboratory (“ Metallurgical Laboratory ”), and Yunnan Province Mineral Exploration Bureau Central Laboratory (“ Yunnan Exploration Laboratory ”).

Information regarding internationally accepted accreditations for these laboratories is unavailable. However, except for the Huasheng Laboratory, all other laboratories in previous technical reports hold Chinese provincial or national analytical certifications.

6.8.4 Quality Assurance and Quality Control

To maintain the quality of the analysis, a portion of the samples was selected for both internal and external checks in compliance with Chinese standards. Internal and external check samples were taken from duplicate samples at rates of 10% and 5%, respectively.

According to the 2013 Verification Report, internal and external checks were performed on 10.5% and 5.7% of total assays during 2012-2013, yielding acceptable rates of 96.8% and 92.6%, respectively. From 2013 to 2022, multiple laboratories conducted internal and external checks, with individual laboratory acceptable rates exceeding 95%. In summary, 11.4% and 6.3% of the samples underwent internal and external checks, resulting in acceptable rates of 98.4% and 97.0%, respectively.

6.8.5 Discussion

BAW did not visit the laboratories outside of Huasheng Mine. However, BAW reviewed the protocols and procedures of the Huasheng Laboratory and found them to be in line with industry standards.

Fire assay is the industry-standard method for the gold assay used in resource estimation. BAW believes that the activated carbon absorption method, as an Au preconcentration technique, may lead to an underestimation of the final Au measurements. To address uncertainties, BAW recommends randomly selecting sample duplicates for re-assaying using the fire assay method and conducting a comparative study.

— V-262 —

COMPETENT PERSON’S REPORT

APPENDIX V

According to Chinese mining regulations, exploration or mining projects must periodically conduct verification reporting, which includes a comprehensive assessment of all aspects of exploration, production, and resource/reserve estimates. It is noted that the standards followed in these verification reports do not entirely align with the JORC Code 2012, as they adhere to Chinese domestic standards. Nevertheless, the verification reports provide additional validation for the historical data. The QA/QC program for assay analysis in the Huasheng Project was implemented as part of this verification reporting. The QC data for the samples assayed by the Huasheng Laboratory is not available for BAW to review. Based on the existing data provided, BAW considers the program to be of adequate quality, consistently applied, and regularly monitored. BAW recommends that Yintai continue to independently incorporate a sufficient number of quality control samples, including standards, blanks, and duplicates, in all sample batches before submission to the assay laboratory in the future. This will improve the monitoring of assay accuracy and precision.

6.9 Data Verification

6.9.1 Database

BAW acknowledges that the Huasheng Project is subject to periodic authority agency reviews and verification reporting in compliance with the Chinese standard of “ Specification for Hard-Rock Gold Exploration ” (DZ/T 0205-2002). This specification stringently outlines the detailed standards and requirements for various aspects such as exploration, drilling, sampling, assaying, QA/QC, mining, processing, and more.

BAW conducted the following verification procedures: interviewing on-site geologists and engineers; reviewing and validating the primary drilling and sampling database provided by Yintai; randomly selecting and cross-checking between logging data and original logging records, and between logging data and drill cores; assessing the existing geological interpretation and block model. After completing thorough checks, BAW considers the drilling and sampling data, the interpreted geological framework, and the block model to be reasonable for use in mineral resource estimation.

6.9.2 Site Inspection

BAW experts conducted a site visit to the Huasheng Project from April 13 to 15, 2023. The purpose of the visit was to inspect various aspects of the project, including mineralization, drilling operations, logging, sampling, the database, the assay laboratory, mining and processing operations, and mine infrastructure, in collaboration with on-site personnel. No independent verification samples were collected during the site visit.

6.10 Mineral Resource Estimates

The most recent resource estimate of Huasheng gold mine provided for the review was carried out by Kunming Fulin Mining Co., Ltd as of July 31, 2022. The resource estimate technical report “Resource & Reserve Estimation Report (2022) for Mangshi Huasheng Gold Mine” was following Chinese Classifications for mineral resources and reserves based on polygon estimation. Block-grade modelling was also done for the deposit by Fulin group for future mining design. Wireframing, Block grade simulation, pit design and mining depletion data were provided and reviewed by BAW. As an internal estimate, Wireframing, Capping, assay compositing, varigraphy modelling and grade interpolation parameters were not provided. Visual check, statistical and IDW2 grade simulation was performed by BAW for reviewing.

— V-263 —

COMPETENT PERSON’S REPORT

APPENDIX V

6.10.1Wireframes

Gold mineralization of the Huasheng deposit is mainly hosted by the F1 fault, which is manifested as laterite-type gold deposits and Carlin-like gold deposits. All domains are determined based on geology, alteration and the interpreted controls on mineralization from production experience. A cut-off value at 0.3 g/t Au is used to define domains. A total of 5 mineralization domains are generated for the resource estimate. Huasheng mineralization is 1,000 m long along NE-SW, 200 m wide along SE-NW and 200 m vertical (see appendices – plan views and sections).

6.10.2Compositing

6.10.3Capping

No capping description and composites were provided to BAW.

==> picture [216 x 217] intentionally omitted <==

==> picture [216 x 216] intentionally omitted <==

— V-264 —

COMPETENT PERSON’S REPORT

APPENDIX V

==> picture [217 x 217] intentionally omitted <==

==> picture [215 x 218] intentionally omitted <==

Figure 6-6 Histogram and Log-probability plot for Composites and Capped-composites

The impact of the Au grade outlier is evaluated on a geological domain basis by BAW. The influence of composites with extreme value is limited through the application of grade and distance thresholds (5 m) during estimation. For Au estimation, some extremely high values were capped when the distance between the sample and block exceeds 5 m. Where the distance threshold is not exceeded, the value of the sample is not capped. Capping values by BAW are presented in the table below. The methodology applied could result in an overestimation of local grade within the 5 m range.

Table 6-8 Summary statistics of 1 m composites (Au) and topo cut grade threshold applied during estimation

	Capping
File	Value	Points	mean	SD	CV	Skewness	Kurtosis	Max	Min
Assays		5273	2.156	2.54	1.178	3.16	18.45	36.5	0.3
Composites		5614	2.246	2.51	1.121	2.94	16.74	36.5	0.3
Capped
Composites	13.9	5614	2.225	2.37	1.066	2.05	4.78	13.9	0.3

— V-265 —

COMPETENT PERSON’S REPORT

APPENDIX V

6.10.4 Variograms

No Varigraphy modelling was provided to BAW. BAW has attempted to develop variograms for each Au domain using capped composites as below:

==> picture [442 x 265] intentionally omitted <==

Figure 6-7 Varigraphy study for Huasheng deposit

Table 6-9 Varigraphy study for Huasheng deposit

			Rotation
Zone	Nugget	Sill	ZXY	Major	Semi	Minor
Huasheng	0.2	0.8	–135/0/0	230	140	60

The variograms perform well. In BAW’s opinion, it is reasonable to classify Measured resources with 40 x 40 m drill spacing and Indicated resources with 80 x 80 m spacing, the same as the current technical report stated.

6.10.5 Bulk Density

The mineralization is composed of laterite-type and Carlin-type material, which are distributed in Guoyuan zone and Maiwoba zone respectively. 95 special gravity samples were taken for different lithology and Au grade in Maiwoba zone, of which 65 samples were from the 2014 Hongdi exploration and 30 samples from the 2021 Fulin exploration. An average value of 2.73 t/m[3] was used for the Fulin model. Density should be interpolated within a constrained wireframe for each mineralized domain separately.

— V-266 —

COMPETENT PERSON’S REPORT

APPENDIX V

6.10.6 Block Model

Block size is set at 5 m x 5 m x 5 m, with the sub-block at 2.5 m x 2.5 m x 2.5 m. A list of block model attributes is presented in the following Table. The volume block model was coded by 5 mineralized domains using the geological and structural wireframes. Final block volumes were validated against the wireframe volumes. The dimensions and extent of the block model see as follows.

Gold (Au ppm) was interpolated to the empty block model using IDW2 (Inverse Distance Power) and NN (nearest neighbor) methods. Kriging neighbourhood analysis (KNA) was performed to determine optimal block sizes. Studio RM uses a sub-cell method to evaluate volumes in domains.

BAW believes that fewer passes could cause over-smoothing of grade and the approach could result in larger tonnage and lower grade. The industry common practice is using three passes for grade interpolation with pass 1 related to Measured resources, pass 2 to Indicated and Pass 3 to Inferred. Blocks interpolated bypass 1 within 40 m drill hole spacing are classified as Measured, and with 40-80 m spacing in pass 2 are classified as Indicated. The rest are classified as Inferred.

Table 6-10 Variogram parameters in Datamine[TM] ZXY rotation

	Origin	MAX	Parent-Cell	Sub-cell
Easting	434596	436286	5	2.5
Northing	2688733	2690478	5	2.5
RL	800	1600	5	2.5

Table 6-11 Block model attributes

Attribute	Description
BLOCK	Production block name
IJK	IJK number for each parent block
ZONE	Mineralization block number
DENSITY	Estimated in situ dry bulk density
Au_idw	Estimated gold value in ppm (idw3 method)
Au_NN	Estimated gold value in ppm (NN method)
Au_ok	Estimated gold value in ppm (Kriging method)
No of Samples	Number of samples for grade interpolation (idw3 method)
No of Holes	Number of Holes for grade interpolation (idw3 method)
SV	Search volume category
CAT	Resource classification
Mined	Historical mining Depletion

Table 6-12 Search radius and interpolation parameters for Au (ppm) and interpolation methods

								Max.
Search	Rotation				Min	Max		Comp per	Capping	Capping
Range	ZXY		Range		Composites	Composites	Min Hole	Hole	Value	Distance
1		40	40	20	7	20	3	3		5
2	–135/0/0	80	80	40	4	12	2	3	13.9	5
3		120	120	60	1	6	1	3		5

— V-267 —

COMPETENT PERSON’S REPORT

APPENDIX V

6.10.7 Model Verification

To verify the current Huasheng model, BAW has not only visually checked the Au block grade and the composite grade used for the estimation by sections, but also independently conducted Huasheng Au resource estimate using the capped composites with Inverse Distance Power (IDW2) through Datamine software. The resource estimations by Fulin and BAW are consistent.

==> picture [436 x 269] intentionally omitted <==

Figure 6-8 Swath plot for Huasheng deposit

— V-268 —

COMPETENT PERSON’S REPORT

APPENDIX V

==> picture [353 x 193] intentionally omitted <==

==> picture [354 x 194] intentionally omitted <==

==> picture [356 x 196] intentionally omitted <==

Figure 6-9 Section plot for Huasheng deposit

— V-269 —

COMPETENT PERSON’S REPORT

APPENDIX V

6.10.8 Resource Reporting

==> picture [422 x 233] intentionally omitted <==

Figure 6-10 Block grade interpolation for Huasheng deposit

The current resource estimate by Huasheng is based on the 0.3 g/t Au cut-off, which was given by Huasheng.

Table 6-13 Summary of Huasheng Mineral Resources at a 0.3 g/t Au cut-off as of 2022/12/31

Zone CAT MVB, 0.3 g/t Measured Indicated Measured + Indicated Inferred Total	TONNES (kt) 2,932 7,401 10,334 7,374 17,708	Au grade (g/t) 1.99 1.96 1.97 1.21 1.65	Gold Metal (kg) 5,850 14,477 20,327 8,901
			29,228

Notes:

The Mineral Resource estimates are reported following the JORC 2012 Definition Standards for Mineral Resources & Mineral Reserves.
The effective date for the Mineral Resource estimates is Dec 31, 2022.
Mineral Resource estimates account for mining depletion up to and including Dec 31, 2022.
A cut-off value at 0.3 g/t Au was used for Huasheng open pit deposit.
Applicable rounding has been applied to the stated tonnages, grades, and metal content to reflect the level of accuracy and precision of the estimate.

— V-270 —

COMPETENT PERSON’S REPORT

APPENDIX V

6.10.9 Conclusions and Recommendations

BAW visually inspected the Fulin block model grade against the composites, carried out a capping study, investigated variograms, interpolated Au grade with the Inverse Distance Power method using Datamine and compared the volumetric of each domain with the Fulin model. BAW concluded that the global resources between BAW and Fulin match well, and the internal resource estimate model provided by Huasheng is acceptable.

BAW believes that the existing cut-off grade calculation parameter needs further investigation, especially the gold metallurgical recovery rate.

According to the 2022 resource estimation report, there is still 957 kg of gold at Guoyuan deposit, drilling data and models were not provided to BAW. BAW notes that there are still some resources outside the mining rights (1,439 kt @1.89 g/t Au, about 2,724 kg gold) and mineralization is open along the strike, expansion of the mining lease is recommended for the Huasheng deposit.

The Mangshi Gold Mine is divided into the Guoyuan and Maiwoba areas from northeast to southwest, forming the Shangmanggang gold polymetallic mineralization belt along with the Guanglingpo and Yangshishan deposit of the Luxi Gold Mine in the southwest direction. The strike of the gold polymetallic mineralization belt is consistent with the Shangmanggang Fault. Existing exploration indicates that there is Carlin-type gold mineralization along with the Fault belt in deep. Mineralization remains open in both strike and dip directions, explorational drilling is recommended.

6.11 Mining

BAW mainly relied on SRK, 2016 report; Yunnan Hongdi, 2014 Mangshi Gold Mine Maiwoba Section Resources/Reserves Verification Report and Changchun Gold Design Institute, 2023 Feasibility Study draft report, the information and data provided by the Huasheng and collected from the site inspection by BAW. If there are any discrepancies, the content in the original report shall prevail. BAW notes that Changchun Gold Design Institute is currently commissioned working Feasibility Study. BAW understands that a portion of the data is pending further updates.

6.11.1 Mining Methods

This chapter summarizes the major operational mining method and the operation at Yunnan Mangshi Huasheng Mining.

6.11.1.1 Mine Operation Status

Gold mines of Yunnan Huasheng of Yintai Gold are located in Yunnan; the province is rich in gold and non-ferrous metal resources.

— V-271 —

COMPETENT PERSON’S REPORT

APPENDIX V

mined until 2013, and the surface land reclamation work has been completed. The main ore body currently mined is the No. VII ore body of the Maiwoba mine section, which is open-pit mining.

The mine operation was shut down in 2016, and no production operations have been carried out so

far.

6.11.1.2 Mining Methods

The ore body makes it suitable for the use of surface mining.

Conventional open-pit mining methods will be used to extract a portion of the Deposit. This method was selected considering the deposit’s size, shape, orientation, and proximity to the surface. Drilling, blasting, loading, and hauling will be used to mine the open pit material within the designed pit to meet the mine production schedule.

Open pit mining will include conventional drilling and blasting with a combination of a backhoe type excavator, hydraulic excavator, and front-end loader type excavator loading broken rock into haul trucks, which will haul the material from the bench to the crusher, run of mine (ROM) stockpile or waste stockpiling areas depending on the material type. Ancillary equipment includes dozers, graders, and various maintenance, support, service and utility vehicles. This Technical Report considers a mining contractor operator scenario.

BAW reviewed the SRK 2016 report and the Data provided by Huasheng. SRK considers that the mining method and scope adopted by the pre-feasibility study are reasonable.

BAW is using the open pit as shown in Figure 6-11.

==> picture [402 x 222] intentionally omitted <==

Figure 6-11 Pit limits at Maiwoba by BAW

— V-272 —

COMPETENT PERSON’S REPORT

APPENDIX V

SRK considers the mining and stripping method adopted to be mature mining technology commonly used in open-pit mining practices. It is technically reasonable and feasible. The designed bench height and bench slope angle are also within the reasonable scope. The designed three-phase large-scale stripping and mining scenario is reasonable and will reduce the amount of time and investment required for construction.

BAW notes that Changchun Gold Design Institute is currently commissioned working Feasibility Study. BAW understands that a portion of the data is pending further updates.

6.11.2 Mineral Reserve Estimates

In this chapter, BAW reviewed and summarizes mining factors, economic factors, and the preliminary reserve estimation.

6.11.2.1 Factors

BAW makes conservative assumptions for Huasheng.

6.11.2.2 Reserve Estimation

The data discussed in the previous section of this chapter is used to create potential total reserve estimation. The potential reserve of a total of 8,903 kt with an average Au grade of 2.18 g/t at a 0.5 g/t cut-off summarizes in Table 6-14 Summary of Huasheng Mineral Reserve at a 0.5 g/t Au cut-off as of December 31, 2022, by BAW.

Table 6-14 Summary of Huasheng Mineral Reserve at a 0.5 g/t Au cut-off as of December 31, 2022, by

BAW

Cut-off CAT 0.5 g/t Au Proven Probable Total	TONNES (kt) 2,621 6,283 8,903	Au grade (g/t) 2.15 2.19 2.18	Gold Metal Note (kg) 5,626 13,775 19,401

BAW Cautionary Note about Reserves Estimates:

This is only a preliminary reserve estimate with a conceptual mine plan. The mineral reserve estimate, with an effective date of December 31, 2022, was prepared by BAW. BAW understands that due to a lack of data or information, a portion of the data is pending further updates.
BAW notes that Changchun Gold Design Institute is currently commissioned working Feasibility Study. BAW understands that a portion of the data is pending further updates.

— V-273 —

COMPETENT PERSON’S REPORT

APPENDIX V

6.11.3 Production Schedule

Before preparing this preliminary schedule, BAW reviewed the information and data provided by Huasheng and collected from the site inspection by BAW. If there are any discrepancies, the content in the original report shall prevail. BAW understands that a portion of the data is pending further updates.

Based on the information provided to BAW, details of the mining license and the adjacent exploration license are summarized in the previous section.

Based on the information provided to BAW, historic production is summarized in the previous section.

The information and data for this preliminary schedule are described below:

The first two years of production are ramped up, and 80% of the designed production is considered.
From the Huasheng expansion plan, the proposed production of 1,200,000 t/a is under process and the expansion is proposed to be started after April 2024.
From the Huasheng mining and stripping plan, the stripping work proposed to start from September 2023 to March 2024, total ore production of 600,000 t is considered for stripping work.
From the long-term plan of Huasheng, the production of 1,042,000 t/a considered for each year after the Year 2025.
The production scale of the mining license in the mining area is 100,000 t/a and the new 1.2 Mt of production is in process.
Assumed gold metallurgical recovery: 73%.
Gold production is based on economic targets.
The schedule will be adjusted based on further data.

A preliminary Huasheng mine scheduling was developed by BAW (Table 6-15):

Table 6-15 The preliminary Huasheng mine schedule by BAW

		Au	Year 1	Year 2	Year 3	Year 4	Year 5	Year 6	Year 7	Year 8	Year 9	Year 10	Remnant
ZONE	TONNES	Grade	2023	2024	2025	2026	2027	2028	2029	2030	2031	2032
	(t)	(g/t)
Mangshi	8,998,000	2.05	300,000	900,000	1,042,000	1,042,000	1,042,000	1,042,000	1,042,000	1,042,000	1,042,000	504,000
Total	8,998,000	2.05	300,000	900,000	1,042,000	1,042,000	1,042,000	1,042,000	1,042,000	1,042,000	1,042,000	504,000
		Grade g/t	2.05	2.05	2.05	2.05	2.05	2.05	2.05	2.05	2.05	2.05
		Rec. g/t	1.50	1.50	1.50	1.50	1.50	1.50	1.50	1.50	1.50	1.50
		Rec. Au OZ	14,476	43,428	50,280	50,280	50,280	50,280	50,280	50,280	50,280	24,320	434,182

— V-274 —

COMPETENT PERSON’S REPORT

APPENDIX V

BAW notes that Changchun Gold Design Institute is currently commissioned working Feasibility Study. BAW understands that a portion of the data is pending further updates.

6.11.4 Mining Equipment

BAW reviewed SRK, 2016 technical report. Huasheng gold mine has purchased mining equipment to maintain the mining operation, and this equipment, as listed in Table 6-16 is still useful and has been included in the pre-feasibility study.

Table 6-16 Current Mining Equipment in Use (Source: Huasheng)

Equipment
Specification
Tongli automobile
45 t
Northern Benz automobile
45 t
Hongyan Kingkan automobile
35 t
Air compressor
XRHS836
Crawler DTH drill
680
Carter bulldozer
D9
Shantui 220 bulldozer
SD22
Shantui 320 bulldozer
SD32
Shovel loader
XGMA 953
Shovel loader
CLG 855
Road roller
CLG 614
Carter excavator
349D (2.4 m3)
Carter excavator
336D (1.8 m3)
Carter excavator
320 (1.0 m3)
Volvo excavator
460 (2.1 m3)
Kobelco excavator
350-8 (1.0 m3)
XGMA excavator
XG806 (0.2 m3)
Total

Quantity
Purchase/Use
date
25
2012/12
18
2011/01
5
2010/10
2
2013/09
2
2013/09
1
2015/10
1
2011/10
2
2011/10
2
2013/01
1
2012/10
1
2012/11
1
2010/01
5
2012/10
6
2009/04
1
2009/04
2
2009/09
1
2009/11
1
2009/11
77

SRK considers that currently available mining equipment plus new additional equipment as designed by BGRIMM can meet the needs of expected expanding mining and stripping operations at a mining production rate of 1.2 Mtpa.

BAW notes that Changchun Gold Design Institute is currently commissioned working Feasibility Study. This major mining equipment is shown in Table 6-17 from this FS draft report. BAW understands that a portion of the data is pending further updates.

— V-275 —

COMPETENT PERSON’S REPORT

APPENDIX V

Table 6-17 Major Mining Equipment by Changchun Gold Design Institute (2023) (Source: Huasheng)

No	Equipment	Unit	Quantity	Specification
				(t)
1	150 mm DTH drilling rig	Unit	6	23
2	100 mm DTH drilling rig	Unit	2	9
3	Breaking hammer	Unit	2	32
4	2 m3 Hydraulic Excavator	Unit	2	42
5	4 m3 Hydraulic Excavator	Unit	6	67.3
6	3 m3 Shovel Loader	Unit	2	16.5
7	45 t Dump Truck	Unit	48	40
8	220 Hp Bulldozer	Unit	2	22.7
9	20 t Water Truck	Unit	2	10.8
10	180 Hp Land Grader	Unit	2	18.5
11	120 Hp Road Roller	Unit	2	10
12	8 t Fuel Truck	Unit	1	8.8

6.11.5 Mine Service

6.11.5.1 Water Supply

The Daganghe stream is the main water supply source for the site, which is sufficient to provide an adequate water supply for the Mangshi mine construction and production.

The water intake points currently used are at a distance of about 800 m southeast of the open pit. It is connected to the existing pond in the mining area through pipelines. The volume of the high-level pond is 700 m[3] , and it is currently used as a domestic water source.

6.11.5.2 Power Supply

There is one 110 kV substation near the mining area, and its capacity can meet the power demand of this project. One 36 km cable line (35 kV, model LGJ-185) is used to connect the 110 kV substation and the mine. This line is used as the main power supply for electrical equipment at the mine.

6.11.5.3 Other Supply

Fuel and construction materials, including steel, cement, wood, sand, stone, etc. are supplied from Mangshi, the province of Yunnan.

— V-276 —

COMPETENT PERSON’S REPORT

APPENDIX V

6.12 Processing

The information in this section is based on the following report and document list. If there are any discrepancies, the content in the original reports shall prevail.

1) Mangshi Huasheng Gold Mine Developing Ltd. Gold Mine Resource Development Plan, by Yunnanzhonglindi Geology and Prospecting Research Institute, 2013.06.
2) Mangshi Huasheng Gold Mine Developing Ltd. Expending Project Pre-Feasibility Study, by Beijing General Research Institute of Mining & Metallurgy, 2014.12.
3) Mangshi Huasheng Gold Mine Feasibility Study , by Changchun Gold Design Institute Ltd., 2022.12.
4) Mangshi Huasheng Gold Mine Developing Ltd. Gold Mine Metallurgy Test , by Changchun Gold Research Institute Ltd., 2022.11.
5) Mangshi Huasheng Gold Mine Resource Reserve Verification , by Kunming Fulin Mining Ltd., 2022.09.
6) Mangshi Huasheng Gold Mine Resource Reserve Verification , by Kunming Fulin Mining Ltd., 2013.03.
7) Yunnan Province Dezhou Mangshi Gold Mine Resource Reserve Verification , by Yunnan Hongdi Mining Ltd., 2014.08.

Since Huasheng Mine was established in 2009, it has mainly exploited the laterite-type gold resources found in the Maiwoba Mine Section and the Orchard Mine Section. The laterite-type gold resources in the Maiwoba Mine Section were mined until the end of 2011. At the beginning of 2012, it began to mine Colin-type gold resources. The laterite-type gold resources in the orchard section were mined until 2013, and the surface land reclamation work has been completed. The main ore body currently mined is the No. VII ore body of the Maiwoba mine section, which is open-pit mining. The production scale of the mining license in the mining area is 50,000 t/a. The open-pit heap leaching process will continue to be applied and the pregnant liquid will be extracted by activated carbon adsorption to extract gold. The gold-loaded carbon is desorbed, electrowinning and purified to produce high-quality gold. The existing processing and operation parameters are referred to Luxi Mine, applying crushing, stockpile, leaching, carbon adsorption, loaded carbon stripping, carbon regeneration and electrowinning, and smelting.

— V-277 —

COMPETENT PERSON’S REPORT

APPENDIX V

6.12.1 Process Description

1. The Existing Processing Description:

Mining + crushing + stacking (adding lime) + cyanidation to dissolve gold + activated carbon adsorption + carbon stripping and electrowinning + carbon regeneration + smelting.

The processing flowsheet is as Figure 6-12.

==> picture [349 x 350] intentionally omitted <==

Figure 6-12 Huasheng Mine Simplified Processing Flowsheet Diagram

After mining from the open pit, the ROM is crushed by the primary crusher and then ROM is packed to the rock pile. The ore pile is sprayed with NaOH and NaCN liquid. The pregnant liquid is collected and then carbons are added to adsorb Au[+] . Loaded carbons are transferred to the carbon stripping and electrowinning process; the products of electrowinning- the gold sludge goes to the smelting system and has the products of alloy gold. The desorption carbons are transferred to the carbon regeneration system.

— V-278 —

COMPETENT PERSON’S REPORT

APPENDIX V

2. Prefeasibility Study (1.2 million t/y) Processing Description:

According to the ore reserve report provided by the construction party, the Huasheng Gold Mine in Mangshi, Yunnan is dominated by raw ore, accounting for about 55% of the total ore reserves, followed by oxidized mines, which account for about 18% of the total ore reserves. Mines account for about 27% of the total ore reserves. It is designed to use a heap leaching process for low-grade oxidized ore, a complete set of treatments for high-grade oxidized ore, and full cementation + flotation process for primary ore process flow.

A. Low-grade Oxidized Ore

Two-stage one closed-circuit crushing + heap leaching + carbon adsorption + carbon stripping and electrowinning + smelting process.

B. High-grade Oxidized Ore

Primary crushing + semi-autogenous grinding + ball milling + cyanide leaching + carbon adsorption + carbon stripping and electrowinning + smelting.

C. Sulfide Ore

(CIL + flotation) adopts the process of coarse crushing + semi-autogenous grinding + ball milling + cyanide leaching, gold-loaded carbon for desorption electrolysis + smelting, and cyanide slag for flotation. Among them, the crushing and grinding workshop, cyanide leaching workshop and gold recovery workshop are shared parts of high-grade oxidized ore and primary ore.

6.12.2 Recovery

ROM Type: Broken Altered Dolomite Type and Earthy Ore

ROM Size: 0-75 mm, not more than 150 mm

Sodium Cyanide Dosage: 0.5 kg/t, NaCN 0.05-0.06%

Lime Dosage: 5 kg/t ROM

Leaching solution PH: 10-11

Spray Frequency: 9.0 L/h.m[2]

Spray method: Intermittent

ROM Gold Grade: 1.35 g/t

Gold leaching Rate: 76.50% (Oxidized Ore)

— V-279 —

COMPETENT PERSON’S REPORT

APPENDIX V

Substitution Rate: 96.50%

Smelting Recovery Rate: 99.00%

Global Recovery Rate: 73%

Tailings Gold Grade: 0.32 g/t

6.12.3 Test Work

Mangshi Gold Mine has done several metallurgical tests from May 2013 to November 2022 and below is the test list:

1) Yunnan Nuclear 209 Mangshi Gold Mine Metallurgical Test Report , by Yantai Jinpeng Metallurgical Design and Research Institute Ltd., 2013.05.
2) Mangshi Huasheng Gold Mine Developing Ltd. Gold Mine Cyanidation Test Report , by Changchun Gold Research Institute Ltd., 2013.06.
3) Mangshi Huasheng Gold Mine Developing Ltd. Gold Mine Ball Mill Bond Indexes Test Report , by Luoyang Mining Mechanical Design and Research Ltd. Application and Technical Research Lab, 2013.09.
4) Mangshi Huasheng Gold Mine Developing Ltd. Gold Mine Metallurgy Test , by Kunming Fulin Mining Ltd., 2022.08.
5) Mangshi Huasheng Gold Mine Developing Ltd. Gold Mine Metallurgy Test , by Changchun Gold Research Institute Ltd., 2022.11.

The above No.1, No.2 and No.3 test reports were introduced by Mangshi Huasheng Gold Mine Developing Ltd. Gold Mine Expansion Engineering Pre-Feasibility Study , which was drafted by Beijing General Research Institute of Mining & Metallurgy in December 2014.

The conclusions of the No.1, No.2 and No.3 test reports are as below:

1) Yunnan Nuclear 209 Mangshi Gold Mine Metallurgical Test Report , by Yantai Jinpeng Metallurgical Design and Research Institute Ltd., 2013.05

Through the systematic test research on ore samples, it can be seen that gravity separation, flotation, and none of the processes are suitable for this ore sample. According to the nature of the ore, it is recommended to use the CIL process to treat the ore. The Au grade of the sample is 1.61 g/t, and the ore process type is fine-grained disseminated gold oxide ore. The grinding fineness -0.074 mm at 85%, the dosage of calcium oxide is 7.0 kg/t, the dosage of sodium cyanide is 2 kg/t, the leaching time is 24 hours, the gold tailings grade was 0.19 g/t, the gold leaching recovery was 88.19%, and the overall gold recovery is 85.30%.

Since the ore samples are not representative, the test data provided cannot be used as the basis for this design.

— V-280 —

COMPETENT PERSON’S REPORT

APPENDIX V

2) Mangshi Huasheng Gold Mine Developing Ltd. Gold Mine Cyanidation Test Report , by Changchun Gold Research Institute Ltd., 2013.06

It is recommended to use the cyanidation process to treat the ore. The recyclable elements in the ore are gold and silver with an average grade of 3.47 g/t and 30.41 g/t respectively, and the ore process type is sulfide-lean carbonate-type gold-bearing oxidized ore. The ore grinding fineness is -0.074mm at 90%, and the amount of calcium oxide is 4.5 kg/t. The amount of sodium cyanide leaching recovery is 84.73% in condition with a gold concentration of 1 kg/t and a leaching time of 24 hours. The ore samples tested in this report are representative to a certain extent.

3) Mangshi Huasheng Gold Mine Developing Ltd. Gold Mine Ball Mill Bond Indexes Test Report , by Luoyang Mining Mechanical Design and Research Ltd. Application and Technical Research Lab, 2013.09.

When the grinding fineness is -0.074 mm at 85%, the crushed ore sample HS-1# ball mill Work index: 9.31 kWh/t; core type ore sample HS-2# ball mill work index: 10.83 kWh/t.

4) Mangshi Huasheng Gold Mine Developing Ltd. Gold Mine Metallurgy Test , by Kunming Fulin Mining Ltd., 2022.08.

This test report was introduced by Mangshi Huasheng Gold Mine Resource Reserve Verification , which was drafted by Kunming Fulin Mining Ltd. in November 2022.

The main conclusion is below:

a) The selected grade of ROM is Au 1.92 g/t, containing Ag at 0.78 g/t, S at 0.21%, and As at 135×10[-6] . Au is the target element of beneficiation and recovery, and the associated beneficial element silver has no comprehensive recovery value. The content of sulfur and arsenic in the raw ore is low, which is beneficial to the direct leaching of gold.
b) The main ore mineral in the raw ore is the natural element gold; the main gangue mineral is dolomite, a small amount of calcite, quartz, sericite, pyrite, etc.
c) The gold in the raw ore is mainly natural gold, with a distribution rate of 78.65%. This part of gold is easy to be leached directly; the rest of the gold is present in the gangue minerals in the form of isomorphism or ultramicroscopic inclusions, and this part of the metal is difficult to leach.
d) cyanidation processing optimized test results:

The grinding fineness is -200 mesh at 95%, the concentration of Jinchan gold leaching agent is 0.20%, the pulp concentration is 25%, and the leaching time is 24 hours.

— V-281 —

COMPETENT PERSON’S REPORT

APPENDIX V

e) Under the above conditions, the gold leaching rate is at 86.80%, the leaching tailings grade is at 0.267 g/t, and the Jinchan gold leaching agent consumption of 0.860 kg/t can be obtained.
5) Mangshi Huasheng Gold Mine Developing Ltd. Gold Mine Metallurgy Test , by Changchun Gold Research Institute Ltd., 2022.11.
a) Oxidized Ore Test

The cyanidation test was applied to the samples from 2013 and 2022, which are mainly oxidized ores.

2013 sample cyanidation test:

The samples are low-sulfur carbonate-type gold containing oxidized ore. Au and Ag ROM grade is at 3.47 g/t and 30.41 g/t separately. The leaching recovery is 84.73% in condition with grinding fineness at -0.075 um of 85%.

2022 sample cyanidation test:

Gold ROM grade is 1.85 g/t and grinding fineness is -0.074 mm at 90%, the leaching tailings grade is 0.20 g/t and the gold leaching recovery is 89.19%.

b) Sulfide Ore Test

The gold grade of ROM is 1.85 g/t, the sulfur grade is 2.12%, and gold is the only valuable element. The ore process type is low-sulphide fine-grained carbonate-type refractory gold-bearing ore.

The cyanidation test has been done and the test result is leaching recovery at 21.62% which is not good.
The flotation test has been done on leaching tailings and the test result is feeding grade of Au is 0.47 g/t, Ag is 2.88 g/t, S is 0.80% and the recovery is 76.46%, 47.79%, and 65.04% in separate.
The flotation and flotation tailings cyanidation tests have been done on ROM and the test result is leaching tailings grade is 0.44 g/t, gold flotation recovery is 70.72%, leaching recovery is 7.45%, so overall gold recovery is 78.17% which is similar with leaching tailings flotations.

So, the test report recommends adopting cyanidation + leaching tailings flotation processing, considering the TSF standards differences because of different types of tailings.

— V-282 —

COMPETENT PERSON’S REPORT

APPENDIX V

6.13 Permitting, Environmental, Health and Social Impacts

6.13.1 Operational Licenses and Permits

Table 6-18 Details of Mining License

Mining License Holder	Mangshi Huasheng Gold Mine Development
	Co., Ltd.
Name of Property	The Huasheng Project
License Type	Mining
License ID	C5300001009114120045284
Area (km2)	0.6338
Elevation (m)	From 1,500 m to 1,100 m
Permitted Production Capacity	100.00 ktpa
Type of Commodities	Gold
Mining Method	Underground/Open Pit Mine
Valid Period	11 July 2015 to 11 July 2025

Table 6-19 Details of Business License

Property	Business License No	Issue Date	Permitted Activities
Mangshi Huasheng Gold	91533103219105958F	11 September	Mining and Processing
Mine Development		2021
Co., Ltd.

— V-283 —

COMPETENT PERSON’S REPORT

APPENDIX V

Table 6-20 Details of Water Use Permits

				Water Supply	Water Use
Property	Water Use Permit No	Issue Date	Expiry Date	Source	Allocation (m3)
Mangshi Huasheng Gold	DHMS2022053	06 June 2022	13 August	Surface Water	3.00 Million
Mine Development			2027
Co., Ltd.

6.13.2 Environmental Management

6.13.3 Occupational Health and Safety

6.14 Economic Analysis

BAW reviewed the forecasted operation data and analyzed the late mine operation data provided by Mine. BAW also prepared a production schedule for the Huasheng project based on the information provided. To assess the economic viability of Minable Resources under the production schedule, BAW has performed an economic analysis for the Minable Resources estimated throughout the LOM. Determination of economic viability involves the sum of discounted annual free cash flow projected from the start of the year till the end of the LOM. The economic analysis is based on the following assumptions:

The economic analysis presented here is on a 100%-equity basis that shows the basic economics of the project.
It does not incorporate financing items such as interest paid and loan principal paid back.

— V-284 —

COMPETENT PERSON’S REPORT

APPENDIX V

The analysis also does not incorporate any losses carried forward for tax purposes and any refund of valued-added taxes previously or currently paid.

6.14.1 Valuation Methodology

Market Approach

Income Approach

• Cost Approach

6.14.2 Adopted Valuation Approach

Among the abovementioned valuation methodologies, the selection of the valuation method for the Huasheng Project is based on, among other things, the quantity and quality of the information provided, the availability of the data, the availability of relevant market transactions, the uniqueness of the Project, the nature of business and industry involved of the Project, professional judgment and technical expertise of the management.

— V-285 —

COMPETENT PERSON’S REPORT

APPENDIX V

The selection of the valuation approach is determined primarily by the stage of development of the concerned mineral asset. The chart below (Figure 6-13) shows the application of valuation methodology for valuing mineral assets.

==> picture [434 x 327] intentionally omitted <==

Figure 6-13 Application of different valuation Methodologies

6.14.2.1 Mineable Resource

Regarding the Mineable Resources of the Huasheng Project, the income approach is considered to be the most suitable valuation methodology since its net present value can be measured by the present value of the future economic benefits. In addition, compared with the cost approach, the income approach can effectively and accurately reflect the future earnings of the Project. Among the income approaches, we adopted the approach of discounted cash flow projection. The adoption of such an approach for valuing the Mineable Resources is considered to be fair, reasonable and conformable with the industry practice.

6.14.2.2 Discounted Cashflow

— V-286 —

COMPETENT PERSON’S REPORT

APPENDIX V

The expected debt-free cash flow for each year was determined as follows:

FCF = EBIT (1 – T) + Dep – InvCapex – InvNWC

FCF = Expected Cash Flow

EBIT = Earnings before interest and tax

T = Tax rate

Dep = Non-cash items

InvCapex = Investment in capital expenditure

InvNWC = Investment in net working capital

PVCF = CF1/(1+r)[1] + CF2/(1+r)[2] + … + CFn/(1+r)[n]

In which

PVCF = Present value of free cash flows

CF = Estimated cash flows

r = Discount rate

n = Number of the year of projections

6.14.3 Gold Production and Revenue

According to the production plan developed by BAW, the Huasheng project will produce 13,465,507 g of gold. The long-term gold price is estimated to be 443.3 RMB/gram. The total revenue of gold should be CNY5,969.22 million.

6.14.4 Operating Cost and Capital Expenditure

The cash cost of LOM is estimated at CNY1,132.43 Million, while the capital expenditures are CNY946.92 Million.

— V-287 —

COMPETENT PERSON’S REPORT

APPENDIX V

6.14.5 NPV and Sensitivity Analysis

Regarding the Minable Resources of Project Huasheng, the income approach is considered to be the most suitable valuation methodology since its net present value can be measured by the present value of the future economic benefits. Therefore, such an approach can effectively reflect the future revenue of the project. The NPV of the Huasheng Project is CNY1,347.75 million at a 9.09% discount rate. The sensitivity analysis shows that the NPV estimate is the most sensitive to commodity prices and discount rates.

Appendices

Appendix 1: JORC Code, 2012 Edition – Table 1

Section 1 Sampling Techniques and Data

Criteria Commentary Sampling techniques • Trenching was conducted. Representative channel samples were collected using a diamond saw and chisel, with channel dimensions of 10 × 5 cm and a typical interval of 0.5-1.5 m.
Diamond, RC and percussion drilling were employed, and cores were cut along the long axis using a saw splitter. Rock chip samples were collected from RC and percussion drilling. Sample intervals were primarily set at 1 m lengths.
Mineralization was identified based on lithology and alteration.
Drilling techniques • Standard tube core drilling rigs were utilized, with drill cores primarily being HQ-sized and NQ-sized.
Down-hole surveys were conducted using a digital inclinometer or downhole camera at intervals of 30-50 m.
Drill sample recovery • The logging geologist measured drill core recovery for each run and recorded the results in the primary database. Core recovery was determined by dividing the drilling footage by the core length.
Upon encountering low sample recovery during drilling, the logging geologist and driller worked together to promptly rectify the problem and optimize recovery.
No relationship between sample recovery and grade was found.

— V-288 —

COMPETENT PERSON’S REPORT

APPENDIX V

Criteria

Logging

Commentary

Drill cores were qualitatively logged by geologists to capture details such as oxidation, texture, grain size, lithology, alteration, structure, and recovery.
All drill hole cores were properly logged and photographed. Logging information was initially recorded on standardized logging sheets and subsequently digitized into the electronic database.
Sub-sampling techniques and sample preparation
Half-core samples were obtained by splitting drill cores in half.
Channel and rock chip samples were collected in their entirety for sample preparation, without splitting.
All samples underwent drying, crushing, splitting, and pulverizing according to the proper procedures. The Chichette formula (Q = k×d²) was used to determine the minimum allowable sample weight, where: Q represents the sample weight (kg), k is the coefficient determined by the ore type (0.8 for this rock type), and d is the maximum sample grain diameter (mm).
No field duplicates were collected.
On-site geologists deemed the sample size appropriate for the gold grain size observed.
Quality of assay data and laboratory tests
The use of activated carbon absorption with AAS may lead to an underestimation of the final gold determination. BAW recommends routinely cross-checking the primary results using the fire assay method.
Geophysical tools, spectrometers, and handheld XRF instruments were not utilized for assaying purposes.
Basic samples were analyzed by both the internal mine-site laboratory and domestically certified Chinese laboratories, which implemented internal quality control procedures in line with relevant PRC standards. No systemic bias was reported.
Verification of sampling and assaying
BAW geologists carried out a field inspection of significant intersections.
No twinned holes were drilled.

— V-289 —

COMPETENT PERSON’S REPORT

APPENDIX V

Criteria

Commentary

All geological logging and sampling information was initially recorded on logging sheets and later digitized into an electronic database. Both physical and electronic logging and sampling records were well-maintained.
During the site visit, BAW reviewed data entry procedures, and storage protocols, and verified the primary data.
No adjustment was made to the assay data.

Location of data points

Drill holes and trenches were surveyed in compliance with relevant PRC standards by certified surveyors under the supervision of on-site geologists.
The Xi’an Coordinate System (1980) and Chinese Geodetic Coordinate System 2000 were applied to this project.
Detailed topographic surveys were conducted by certified surveyors and deemed adequate for modelling and Mineral Resource estimation purposes.
Data spacing and distribution
The exploration grid was set at 40-80 × 40-80 m. Samples were collected continuously throughout mineralization zones and their contact zones in wall rocks, with a typical length of 1 m.
The spacing of drill holes is sufficient to establish the degree of geological and grade continuity appropriate for the Mineral Resource estimation procedures and for the classifications applied.
Orientation of data in relation to geological structure
Sample security

Audits or reviews

Considering the deposit type, the drilling orientation and subsequent sampling are deemed unbiased for Mineral Resource estimation purposes.
Huasheng Gold managed the chain of custody for sample security. Samples were collected, packed, marked, and logged before being delivered to the laboratory for preparation and assaying. The drill cores were stored in an on-site core shed.
All aspects of sampling techniques strictly adhered to relevant PRC national standards and specifications. BAW reviewed and cross-checked the sampling data.

— V-290 —

COMPETENT PERSON’S REPORT

APPENDIX V

Section 2 Reporting of Exploration Results

Criteria

Commentary

Mineral tenement and land tenure status
BAW was provided with a scanned copy of the original mining license, and the details are stated in Sections 6.1.2 and 6.1.3 of this report.
Exploration done by other parties
Detailed information can be found in Section 6.3.2 of this report.

Geology

Detailed information can be found in Section 6.4 and 6.5 of this report.

Drill hole Information

All drill hole information was entered into the database and utilized for Mineral Resource estimation. Due to the extensive amount of drill hole data, a detailed tabulation of this information is not presented.

Data aggregation methods

All samples are composited within the geological domains at a 1.0 m length, and short intervals at the end of the domain are incorporated into the preceding interval. A cut-off value of 0.3 g/t Au is used to define the domains.
No capping description and composites were provided to BAW. Value at 13.9 g/t Au was used for high-grade capping.
No metal-equivalent approaches were applied.
Relationship between • Gold mineralization of the Huasheng deposit is mainly hosted by mineralization widths and the F1 fault, which is manifested as laterite-type gold intercept lengths mineralization and Carlin-like gold mineralization.
Huasheng mineralization is 1,000 m long along NE-SW, 200 m wide along SE-NW and 200 m vertical (see appendices – plan views and sections).
Diagrams
Not Applicable in this report.
Balanced reporting • The reporting is fully representative of the data provided at this stage.
Other substantive • BAW is not aware of any other material or substantive exploration exploration data data that has not been reported. .
Adequate samples were measured for specific gravity, as detailed in Section 6.8.1.
Further work • BAW was informed that Huasheng Gold intended to conduct further exploration programs within the current mining license.

— V-291 —

COMPETENT PERSON’S REPORT

APPENDIX V

Section 3 Estimation and Reporting of Mineral Resources

Criteria Commentary Database integrity • The data provided by the Company in Excel format was imported into a Surpac database after validation.
Data validation steps included:
- Validation through constraints and libraries set in the database, e.g., overlapping/missing intervals, intervals exceeding maximum depth, valid geology codes, and missing assays.
- Validation through 3D visualization in 3D software to check for any obvious collar, down-hole survey, or assay import errors.
Site visits • BAW Competent Person visited the Huasheng Project from April 13 to 15, 2023. Various aspects of the project were inspected, including mineralization, drilling operations, logging, sampling, the database, the assay laboratory, mining and processing operations, and mine infrastructure, in collaboration with on-site personnel.

Geological interpretation

All domains are determined based on geology, alteration and the interpreted controls on mineralization from production experience.
A cut-off value at 0.3 g/t Au is used to define domains.
A total of 5 mineralization domains are generated for the resource estimate.
Dimensions • Not Applicable in this report.
Estimation and modelling • The Mineral Resource was estimated using Inverse Distance techniques interpolation in Surpac.
Gold (Au ppm) was interpolated to the empty block model using IDW2 (Inverse Distance Power) and OK methods.
Search parameters were based on attitudes of mineralized zones and supported by geological knowledge gained from surface geological mapping, drill hole data and modelling analysis.

— V-292 —

COMPETENT PERSON’S REPORT

APPENDIX V

Criteria

Commentary

The parent cell size and estimation parameters were based on the drill hole spacing and the nature of the mineralization style at the project.
The geological interpretation was used to help build a mineralized wireframe model and the resource estimate was conducted within the model.
Validation of the Mineral Resource estimate has been conducted by:
Visual drill hole section data comparisons with the block model and
Swath plots of major elements in three orthogonal directions.

Moisture

Tonnages are estimated on a dry basis.
Cut-off parameters • The current resource estimate by Huasheng is based on the 0.3 g/t Au cut-off, which was given by Huasheng.
Mining factors or • The mining method assumed is open pit mining. assumptions
Mining factors such as mining dilution shown above have been incorporated into the Mineral Resource estimate.
Metallurgical factors or • Simple studies of ore properties and processing tests were assumptions conducted and the file was provided by the Company.
Overall gold recovery is 73% which is as per the document from the owner.
Processing recovery rates presented above were incorporated into the Mineral Resource estimate.
Environmental factors or • No assumptions have been made regarding possible waste or assumptions process residue disposal options or environmental surveys.
Bulk density • The conventional water displacement method was utilized on a total of 95 samples from drill cores and channel samples, with an average of 2.73 g/cm[3] .

— V-293 —

COMPETENT PERSON’S REPORT

APPENDIX V

Criteria

Classification

Commentary

Mineral Resources have been classified in the Measured, Indicated and Inferred categories in accordance with the JORC Code 2012 guidelines.
A range of criteria was considered in determining the classification for the project, including:
geological confidence in the interpretations,
sample data density,
sample/assay confidence,
grade continuity of the mineralization,
estimation method.
The Competent Persons endorse the final results and classification for the project.

Audits or reviews

Mr. Weiliang Wang and Karfai Leung, MAusIMM, has undertaken a peer review.
There are no outstanding issues arising from these reviews.
Discussion of relative accuracy/confidence
Relative accuracy and confidence have been assessed through validation of the model as outlined above.
The Mineral Resource estimate comprises material categorized as Measured, Indicated and Inferred Mineral Resource. The Mineral Resource categories reflect the assumed accuracy and confidence of a global.

— V-294 —

COMPETENT PERSON’S REPORT

APPENDIX V

Section 4 Estimation and Reporting of Ore Reserves

Criteria

Commentary

The mineral Resource • The block models prepared by Yintai were used as the basis of the estimate for conversion to Ore Reserve estimate. Ore Reserves
Site visits • BAW Competent Person visited the Huasheng Project from April 13 to 15, 2023. Various aspects of the project were inspected, including mineralization, drilling operations, logging, sampling, the database, the assay laboratory, mining and processing operations, and mine infrastructure, in collaboration with on-site personnel.
Study Status • The feasibility study report (2014.12) conducted by BGRIMM was provided to BAW.
The technical review report (2016.03) conducted by SRK was provided to BAW.
Cut-off parameters • The feasibility study report (2014.12) conducted by BGRIMM was provided to BAW.
The technical review report (2016.03) conducted by SRK was provided to BAW.
Details of the cut-off grade chosen are stated in Section 6.11.2 of this report.
Mining factors or • Not Applicable in this report. assumptions
Metallurgical factors or • The processing flowsheet is a heap leaching which is simple and assumptions mature.
There are four metallurgical test reports done with represented samples by a third party.
It doesn’t have any document about the smelting and alloy gold, so assuming that alloy gold meets the requirement of terms and sales agreement.

As per the latest metallurgical test in 2022, the CIL test result on oxidized ore is better than the current heap leaching. The new design is based on three different ore types, which can extract the ores efficiently.

— V-295 —

COMPETENT PERSON’S REPORT

APPENDIX V

Criteria

Commentary

Environmental

Environmental, safety and production permits were obtained.
Infrastructure
The infrastructure meets the basic requirements of production and transportation.

Costs

The Opex and Capex were provided by the Mine.
Refer to section 6.13.4.
Revenue factors • Production Schedule is developed by BAW.
Refer to section 6.13.3.
Market assessment • Not Applicable in this report.
Economic • The input data to calculate NPV is described in Section 6.13 which mainly includes the production plan, sales revenue, production cost, administration cost, Capex and taxes.
Refer to section 6.13.5.
Social • Not Applicable in this report.
Other • None.
Classification • The mineable Measured Resources, including diluting materials and allowances of losses, were classified as Proved Ore Reserves.
The mineable Indicated Resources, including diluting materials and allowances of losses, were classified as Probable Ore Reserves.
The results appropriately reflect the Competent Person’s view of the deposit.
Audits or reviews • Mr. Weiliang Wang and Karfai Leung, MAusIMM, has undertaken a peer review.
There are no outstanding issues arising from these reviews.
Discussion of relative accuracy/confidence
Usually, the Ore Reserve estimate is reported based on some technical and economic assumptions which have been understood well to date. These assumptions would change as time goes on, so different Ore Reserve can be estimated/calculated.

— V-296 —

COMPETENT PERSON’S REPORT

APPENDIX V

7 RISK ASSESSMENT

The mining industry is traditionally and inherently a high-risk business compared to other industries globally. The risk is an accumulated risk due to factors such as the nature of the orebodies, grade variations, natural disasters, geotechnical and hydrological risk, environmental, community, health and safety and water supply.

BAW’s risk identification and assessment process focused on areas where there is perceived technical risk to the operation and exploration projects, including resources, reserves, operation, environmental, community, health and safety, particularly where the risk factor could materially impact the projected production and hence cashflow generated by the operation. The assessment is necessarily subjective and qualitative. Risk has been classified as low, moderate, or high based on the following definitions:

High Risk: the factor poses an immediate danger of a failure, which if uncorrected, could have a material impact (>15%) on the project cash flow and performance and could potentially lead to project failure.
Moderate Risk: the factor, if uncorrected, could have a significant impact (>10%) on the project cash flow and performance unless mitigated by some corrective action.
Low Risk: the factor, if uncorrected, could have little or no effect on project cash flow and performance.

Risk mitigation measures are recommended for each risk in order to reduce the risk’s probability and/ or impact to an acceptable or practical level.

BAW summarized the risk factors in Table 7-1:

Table 7-1 Risks Factors in association with the Gold Mine

Risk Factors	Level	Potential Impact	Methods of Mitigation
Commodity prices	High	Similar to other mining operations,	Using financial instruments to
		commodity prices are the most	hedge if applicable.
		important factors which
		materially affects the	A focus on efficiency upgrade
		profitability of operations.	throughout the operation will
			minimize the impact.
		Low commodity price may bring
		significant negative impact to
		financial health of the operation.

— V-297 —

COMPETENT PERSON’S REPORT

APPENDIX V

Risk Factors	Level	Potential Impact	Methods of Mitigation
Gold Resources	Moderate	Measured Resources, Indicated	Additional in-fill drilling
		Resources and Inferred	activities may further reduce
		Resources have been reasonably	the resource risk for
		classified using the latest	subsequent mine planning.
		geological databases and models.
			Acquisition of exploration
			properties to expand the
			resource portfolio.
Mining Operation	Low to	Extraction is planned to be carried	The mine site can allocate more
	Moderate	out in the way of open-pit mining	financial and human
		and shrinkage stoping for	resources to further improve
		different operation which are	its operation management and
		common mining methods adopted	skillsets of mechanized
		in the mining industry. BAW is	mining method to achieve a
		of the opinion that the mining	higher mining recovery.
		methods reasonable and
		appropriate for the this kind of
		gold deposits.
Production Targets	Moderate	BAW considers production target is	Implementation of advanced
		reasonable and achievable for the	production scheduling to
		Gold Mines.	address the issue of
			production short fall when
		Variation of the mining dilution	mining activities are expected
		factor from time to time may	to approach fault zones.
		cause variation in mining
		recovery factors, resulting in	A more coordinated production
		variation in quantity of the	scheduling may be necessary
		finished gold products.	in order to achieve maintain
			the production target when
		The faults encountered as mining	mining activities proceed to
		advances may also cause some	those Gold Mine.
		production short fall in some
		short periods.

— V-298 —

COMPETENT PERSON’S REPORT

APPENDIX V

Risk Factors	Level	Potential Impact	Methods of Mitigation
Infrastructure	Low	A number of Gold Mines is located	Continuous and regular effort
		in mountainous region. Part of	on maintenance and upgrade
		the access roads are rugged near	of the roads will allow better
		the mines.	access for the mining trucks
			and other equipment.
		Water supply is generally sufficient
		but could be a problem during	Construction of small-scale
		dry seasons.	reservoir will reduce the risk
			of water shortage.
		Electricity is generally sufficient
		for production.
CAPEX	Moderate	Projected CAPEX includes	Detailed finance control and
		sustaining capital and have been	budgeting will be required.
		reasonably budgeted in the
		financial model for the Gold
		Mines.
Materials and	Low to	The overall economics is founded	Further optimization of all
labour prices	Moderate	on a combination of pricing for	operation processes to
		metals, materials and labor.	minimize cost of production
		Therefore, it is sensitive to	shall assist in reducing the
		materials and labor prices over	economic impact of high
		which it has limited control.	materials and labor prices.
Environment	Moderate	Increasing concern of	Additional capital shall be
		environmental protection by the	budgeted to satisfy the latest
		PRC Government may have	regulatory environmental
		negative impact on the mining	requirements.
		activities.
Occupational	Low to	Realizing the importance to	Additional capital shall be
Health and	Moderate	improve its production safety	budgeted to satisfy the latest
Safety		record and therefore, the Gold	regulatory requirements.
		Mines have been placing
		emphasize and allocating
		resources to ensure its planned
		operation is conducted in
		accordance with the national
		safety regulations.
		All the necessary mine safety
		measures have been undertaken
		by the Gold Mine management.
		No safety issues were identified
		during BAW’s site visit to the
		Gold Mines.

— V-299 —

COMPETENT PERSON’S REPORT

APPENDIX V

8 REFERENCES

Jilin Banmiaozi, 2007. Exploration Report of Jinying Gold Mine, Baishan City, Jilin Province.
Jilin Banmiaozi, 2015. Resource/Reserve Verification Report of Jinying Gold Mine in Baishan City, Jilin Province.
Jilin Banmiaozi, 2018. Resource/Reserve Verification Report of Jinying Gold Mine in Baishan City, Jilin Province.
Jilin Banmiaozi, 2019. General Exploration Report of the Banmiaozi Gold Mine in Baishan City Jilin Province.
Li, X., Sun, G., Sun, F., Sun, J., Wang, Q. and Wang, G., 2020. Zircon U-Pb chronology, Petrochemistry characteristics and Metallogenic significance of Granodiorite porphyry in the Banmiaozi gold deposit in the NE margin of the North China Craton. Arabian Journal of Geosciences, 13, 1-20.
707 Brigade, 2003. Exploration Report of the Exploration Line 19-44, No. 5 Ore Body, Dong’an Gold Deposit, Xunke County, Heilongjiang Province.
Heihe Luoke, 2017. Mineral Resource and Reserve Verification Report of the No. 5 Ore Body, Exploration Line 19-44, Dong’an Gold Deposit, Xunke County, Heilongjiang Province.
Liu, Y., Sun, J., Han, J., Ren, L., Gu, A., Zhao, K., Feng, Y. and Chu, X., 2021. Constraints of magmatic differentiation on epithermal mineralization at Dong’an, NE China: Insights from zircon geochronology, elements and Sr-Hf-Nd isotope geochemistry. Journal of Geochemical Exploration, 226, p.106768.
Ouyang, H., Wu, X., Mao, J., Su, H., Santosh, M., Zhou, Z. and Li, C., 2014. The nature and timing of ore formation in the Budunhua copper deposit, southern Great Hingan Mountain: Evidence from geology, fluid inclusions, and U-Pb and Re-Os geochronology. Ore Geology Reviews, 63, 238-251.
Yulong Mining, 2009. Exploration Report of Huaaobaote Ag-Pb-Zn Mine, West Ujimqin Banner, Inner Mongolia Autonomous Region.
Yulong Mining, 2009. Resource/Reserve Verification Report of Huaaobaote Mountain Pb-Zn-Ag Deposit, West Ujimqin Banner, Inner Mongolia Autonomous Region.
Yulong Mining, 2017. Exploration Report of Huaaobaote Mine Periphery Ag-Polymetallic Deposit, West Ujimqin Banner, Inner Mongolia Autonomous Region.
Yulong Mining, 2019. Exploration Report of 1118 Highland Polymetallic Deposit, West Ujimqin Banner, Inner Mongolia Autonomous Region.

— V-300 —

COMPETENT PERSON’S REPORT

APPENDIX V

Qinglonggou Gold 323 Section (South) Basic Engineering by Changchun Gold Design Institute, 2020.12.
Qinglonggou Gold Modification Project Basic Engineering by Changchun Gold Design Institute, 2020.
Qinghai Province Dachaidan Town Jinlonggou Gold Metallurgical Test Report, by Qinghai Geology Mine Test and Application Center, 2018.11.
Qinghai Dachaidan Xijingou Gold Mining Project Feasibility Study, by Lanzhou Non-ferrous Metallurgical Design and Research Institute Ltd., 2021.02.
Heilongjiang Province Xunke Town Dong’an Gold Mine 55 Ore Body Metallurgical Test by Jilin Province Metallurgical Research Institute, 2003.06.
Heilongjiang Dong’an Gold Mine Small Scale Metallurgical Test by Beijing General Research Institute of Mining & Metallurgy, 2009.02.
Heihe Yintai Mining Development Co. Ltd. Dong’an Gold Mine – Crushing and Grinding, and Tailing Filter Pressing Modification Project Basic Engineering by Heilongjiang Province Metallurgical Research and Planning Institute, 2019.02.
Heihe Yintai Mining Development Co. Ltd. Dong’an Gold Mine Metallurgical Test by Changchun Gold Research Ltd., 2019.03.
Heilongjiang Province Xunke Town Dong’an Gold Mine 5# Ore Body 19 – 44 Resource Reserve Verification Report by Heihe Luoke Mining Development Ltd., 2017.04.
Neimenggu Yulong Mining Huaaobaote Ag-Pb Mine 1 million t/a Mining and Processing Engineering Feasibility Study, by Lanzhou Non-ferrous Design Institute Ltd., 2021.12.
Eldorado Online Data Center, http://apps.indigotools.com/IR/IAC/?Ticker=EGO&Exchange=NYSE#
Yintai Gold Corporation Ltd., Annual Reports 2016-2022. Shenzhen Stock Exchange.
Dachaidan Mining, 2004. Resource/Reserve Reassessment Report for the Jinlonggou Deposit at an Elevation of 3,378-3,408 m in Tanjianshan Gold Minefield, Dachaidan, Qinghai Province.
Dachaidan Mining, 2007. Exploration Report of the “Jinlonggou Gold Deposit, Dachaidan, Qinghai Province.
Dachaidan Mining, 2014. General Exploration Report of the Qinglongshan Gold Deposit Qinglonggou Section Exploration line 16600N-13800N, Dachaidan, Qinghai Province.”
Dachaidan Mining, 2019. General Exploration Report of the Jinlonggou Gold Deposit, Dachaidan, Qinghai Province.

— V-301 —

COMPETENT PERSON’S REPORT

APPENDIX V

Dachaidan Mining, 2019. General Exploration Report of the Xijinggou Gold Deposit, Dachaidan, Qinghai Province.
Dachaidan Mining, 2020. Resource/Reserve Verification Report of the Qinglonggou Gold Deposit, Dachaidan, Qinghai Province.
Dachaidan Mining, 2020. General Prospecting Report of the Qingshan Gold Deposit, Dachaidan, Qinghai Province.
Dachaidan Mining, 2022. General Prospecting Report of the Qinglonggou Deposit Below 3,300 m, Dachaidan, Qinghai Province.
Zhang, L., Chen, R.X., Zheng, Y.F., Hu, Z. and Xu, L., 2017. Whole-rock and zircon geochemical distinction between oceanic-and continental-type eclogites in the North Qaidam orogen, northern Tibet. Gondwana Research, 44, 67-88.
Huasheng Gold, 2013. Resource/Reserve Verification Report of the Mangshi Gold Deposit, Dehong Prefecture, Yunnan Province.
Huasheng Gold, 2022. Resource/Reserve Verification Report of the Mangshi Gold Deposit, Yunnan Province.
Liu, X., Chen, Y., Hu, Y., Liang, J., Wang, Y., He, W. and Chen, X., 2023. Fine gold grains inside the limonite in the supergene Shangmanggang gold deposit, SW China: Implications for gold mobilization and mineral exploration. Journal of Geochemical Exploration, 248, 107193.

— V-302 —

VALUATION REPORT OF THE TARGET COMPANY

APPENDIX VI

VALUATION REPORT

OF

EQUITY INTEREST IN YINTAI GOLD CO., LTD.

PREPARED

FOR

PREPARED BY

==> picture [106 x 34] intentionally omitted <==

BAW Mineral Partners

31 May 2023

PROJECT NO: 060

— VI-1 —

VALUATION REPORT OF THE TARGET COMPANY

APPENDIX VI

==> picture [106 x 35] intentionally omitted <==

Unit 6A Gaylord Commercial Building 114-118 Lockhart Road Wanchai, Hong Kong

31 May 2023

Shandong Gold Mining Co., Ltd. No. 2503 Jingshi Road Licheng District Jinan, Shandong Province the PRC

Dear Sirs/Madams,

This report was prepared solely for Shandong Gold Mining Co., Ltd. (the “ Company ”), which has engaged BAW Mineral Partners Limited (“ BAW ” or “ we ”) to perform a valuation of 100% equity interest in Yintai Gold Co., Ltd. (the “ Target Company ”) which indirectly holds 100% interest in Heihe Yintai Mining Exploitation Co., Ltd. (“ Heihe Yintai ”) (黑河銀泰礦業開發有限責任公司), 90% interest in Qinghai Dachaidan Mining Co., Ltd. (“ Qinghai Dachaidan ”) (青海大柴旦礦業有限公司), 95% interest in Jilin Banmiaozi Mining Co., Ltd. (“ Jilin Banmiaozi ”) (吉林板廟子礦業有限公司), 76.67% interest in Inner Mongolia Yulong Mining Holdings Co., Ltd. (“ Yulong ”) (內蒙古玉龍礦業股份有限公司) and 60% interest in Mangshi Huasheng Gold Mining Exploitation Co., Ltd. (“ Mangshi Huasheng ”) (芒市華盛金礦開發有限公司) (collectively the “ Mining Assets ”) located in Heilongjiang Province, Qinghai Province, Jilin Province, Inner Mongolia Autonomous Region, and Yunnan Province of the People’s Republic of China (the “ PRC ”) respectively as of 31 March 2023 (the “ Date of Valuation ”). The Target Company is principally engaged in the business of exploration, mining and sales of gold at the Mining Assets.

The approaches and methodologies adopted in our work did not comprise an examination in accordance with generally accepted accounting principles, the objective of which is an expression of an opinion regarding the fair presentation of financial statements or other financial information, whether historical or prospective, presented in accordance with generally accepted accounting principles.

We express no opinion and accept no responsibility for the accuracy and completeness of the financial information or other data provided to us by others. We assume that the financial and other information provided to us is accurate and complete, and we have relied upon this information in performing our valuation.

— VI-2 —

VALUATION REPORT OF THE TARGET COMPANY

APPENDIX VI

BAW hereby certifies that neither BAW, nor its directors, shareholders, staffs have any present or prospective interests in the Company or its mining properties. BAW is to receive the professional fee for its services (the work product of which includes this report) at its normal commercial rate and customary payment schedules. The payment of our professional fee is not contingent on the outcome of this report.

Yours faithfully,

For and on behalf of

BAW MINERAL PARTNERS LIMITED

Karfai Leung

LEUNG Kar Fai

— VI-3 —

VALUATION REPORT OF THE TARGET COMPANY

APPENDIX VI

1	SUMMARY OF SALIENT FACTS	. . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . .	VI-6
2	PURPOSE OF VALUATION . . . . .	. . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . .	VI-6
3	BASIS OF VALUATION . . . . . . . .	. . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . .	VI-6
4	PREMISES OF VALUATION . . . .	. . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . .	VI-7
5	REPORTING STANDARD . . . . . .	. . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . .	VI-7
6	INDEPENDENCE STATEMENT . .	. . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . .	VI-7
7	COMPETENCE STATEMENT . . .	. . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . .	VI-8
8	SCOPE OF WORK . . . . . . . . . . . .	. . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . .	VI-8
9	LIMITATION IN SCOPE OF WORK	. . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . .	VI-9
10	SOURCES OF INFORMATION . .	. . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . .	VI-9
11	SITE INSPECTION . . . . . . . . . . .	. . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . .	VI-10
12	ECONOMIC OVERVIEW . . . . . . .	. . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . .	VI-10
13	OVERVIEW OF THE MINING ASSETS . . . . . . . . .		. . . . . . . . . . . . . . . . . . . . . . . . .	VI-11
	13.1 Location and Access . . . . . .	. . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . .	VI-11
	13.2 Ownership of the Mining Assets . . . . . . . . . . .		. . . . . . . . . . . . . . . . . . . . . . . . .	VI-15
	13.3 Mineral Resources . . . . . . .	. . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . .	VI-19
	13.4 Ore Reserves . . . . . . . . . . .	. . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . .	VI-25
14	MAJOR ASSUMPTIONS . . . . . . .	. . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . .	VI-27
15	VALUATION METHODOLOGY . .	. . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . .	VI-28
	15.1. General Valuation Approaches	. . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . .	VI-28
	15.1.1. Market Approach .	. . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . .	VI-28
	15.1.2. Income Approach .	. . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . .	VI-29
	15.1.3. Cost Approach . . .	. . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . .	VI-29
	15.2. Adopted Approach for the Valuation . . . . . . . .		. . . . . . . . . . . . . . . . . . . . . . . . .	VI-29
	15.3. Valuation of the Ore Reserves	. . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . .	VI-30
	15.3.1. Discounted Cash Flow Method . . . . .		. . . . . . . . . . . . . . . . . . . . . . . . .	VI-30
	15.3.2. Mineral Resources and Ore Reserves		. . . . . . . . . . . . . . . . . . . . . . . . .	VI-31
	15.3.3. Production Capacity	and Schedule . .	. . . . . . . . . . . . . . . . . . . . . . . . .	VI-31
	15.3.4. Basis of Revenue .	. . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . .	VI-31
	15.3.5. Basis of Capital Expenditure . . . . . .		. . . . . . . . . . . . . . . . . . . . . . . . .	VI-32
	15.3.6. Basis of Operating Expenditure . . . .		. . . . . . . . . . . . . . . . . . . . . . . . .	VI-32
	15.3.7. Basis of Working Capital Requirement		. . . . . . . . . . . . . . . . . . . . . . . .	VI-32
	15.3.8. Comparable Companies . . . . . . . . . .		. . . . . . . . . . . . . . . . . . . . . . . . .	VI-32
	15.3.9. Discount Rate . . . .	. . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . .	VI-35
	15.3.10. Sensitivity Analysis	. . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . .	VI-36
	15.4. Valuation of the Mineral Resources . . . . . . . .		. . . . . . . . . . . . . . . . . . . . . . . . .	VI-37

— VI-4 —

VALUATION REPORT OF THE TARGET COMPANY

APPENDIX VI

16	RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI-39
	16.1. Resource and Reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI-39
	16.2. Fluctuation of the Selling Price and Demand . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI-39
	16.3. Implementation for Future Development Plan . . . . . . . . . . . . . . . . . . . . . . . . . .	VI-39
	16.4. Social and Environmental Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI-39
	16.5. Government Policy Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI-39
17	LIMITING CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI-39
18	REMARKS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI-40
19	OPINION OF VALUE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI-41
APPENDIX A – QUALIFICATION OF THE VALUATION TEAM MEMBERS . . . . . . . . . . .		VI-41

— VI-5 —

VALUATION REPORT OF THE TARGET COMPANY

APPENDIX VI

1 SUMMARY OF SALIENT FACTS

Valuation Subject

100% equity interest in Yintai Gold Co., Ltd. (the “ Target Company ”)

Mining Assets Heihe Yintai Mining Exploitation Co., Ltd. Gold Mine, Qinghai Dachaidan Mining Co., Ltd. Gold Mine, Jilin Banmiaozi Mining Co., Ltd. Gold Mine, Inner Mongolia Yulong Mining Holdings Co., Ltd. Silver Mine and Mangshi Huasheng Gold Mining Exploitation Co., Ltd. Gold Mine (collectively “ Mining Assets ”)
Gold Mine Operator Heihe Yintai, Qinghai Dachaidan, Jilin Banmiaozi, Yulong and Mangshi Huasheng
Mining License Holder Heihe Yintai, Qinghai Dachaidan, Jilin Banmiaozi, Yulong and Mangshi Huasheng
Mining Assets Location Heilongjiang Province, Qinghai Province, Jilin Province, Inner Mongolia Autonomous Region, and Yunnan Province of the PRC
Current Status of the Mining In production Assets

Date of Valuation 31 March 2023 Report Date 31 May 2023

Fair Market Value Preferred value of the Target Company: RMB12,348,000,000

2 PURPOSE OF VALUATION

This report was prepared solely for the use of the directors and management of the Company. In addition, BAW acknowledges that this report may be made available to the Company for public disclosure purpose and used as reference on the Company’s circular. We will not accept any responsibility or liability to any third party to whom in respect of, or arising out of, the contents of this report may be shown.

3 BASIS OF VALUATION

Our valuation was performed based on the Fair Market Value (“ FMV ”), which is defined by International Valuation Standards established by the International Valuation Standards Council as “the estimated price for the transfer of an asset or liability between identified knowledgeable and willing parties that reflects the respective interests of those parties”.

— VI-6 —

VALUATION REPORT OF THE TARGET COMPANY

APPENDIX VI

4 PREMISES OF VALUATION

Premises of valuation relate to the concept of valuing a subject in the manner which would generate the greatest return to the owner of the asset, taking into account what is physically possible, financially feasible and legally permissible. Premises of valuation include the following:

Going concern: appropriate when the business is expected to continue operating without the intention or threat of liquidation in the foreseeable future;
Orderly liquidation: appropriate for a business that is clearly going to cease operations in the near future and is allowed sufficient time to sell its assets in the open market;
Forced liquidation: appropriate when time or other constraints do not allow an orderly liquidation; and
Assembled group of assets: appropriate when all assets of a business are sold in the market piecemeal instead of the entire business itself.

The valuation of the Target Company is prepared on the going concern basis.

5 REPORTING STANDARD

The reporting standard of this report is the VALMIN Code which is Guidelines for Technical Assessment and Valuation of Mineral Assets and Mineral Securities for Independent Expert Reports as adopted by the Australasian Institute of Mining and Metallurgy in 1995 and updated in 2005.

The reporting of Resource and Reserve is referenced to the Australasian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves (the “ JORC Code ”) prepared by the Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia revised in 2012. The JORC Code is a mineral resource/ore reserve classification system that has been widely used and is internationally recognized. It has also been used in independent technical reports for mineral resource and ore reserve statements for the natural resource companies listed on the HKEX.

The VALMIN Code incorporates the JORC Code for the reporting of Mineral Resources and Ore Reserves.

6 INDEPENDENCE STATEMENT

BAW certifies that neither BAW, nor its directors, shareholders, staffs have any present or prospective interests in the Company, Target Company or Mining Assets. BAW is to receive the professional fee for its services (the work product of which includes this report) at its normal commercial rate and customary payment schedules. The payment of our professional fee is not contingent on the outcome of this report.

— VI-7 —

VALUATION REPORT OF THE TARGET COMPANY

APPENDIX VI

7 COMPETENCE STATEMENT

Mr. Leung Kar Fai, as the Director of BAW and being responsible for the overall project management of this report, graduated with Honours with a Bachelor of Science (major Earth Sciences) and a Master of Philosophy in Earth Sciences, both from The University of Hong Kong.

He has more than fifteen years of extensive experience in the mining industry including project generation, prospecting, field exploration, mineral resource definition, HSE management, mineral assets valuation, mineral assets acquisition, M&A and IPO process for energy, base metals, non-ferrous metals and precious metals in the PRC, Southeast Asia, North Asia, Central-Asia, Mid-East, Africa, Australasian, North and South Americas.

He possesses relevant education, qualifications, experience and professional expertise so as to have a reputation that gives authority to statements made in relation to the valuation matters of this report. He meets all the requirements for “Competent Person” as defined in the Australasian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves (“ JORC Code ”).

8 SCOPE OF WORK

Our valuation work was based on the assumptions stated herein and the information provided by the management of the Company, the management of the Target Company and/or their representative(s) (collectively the “ Management ”). In the course of our valuation work, we conducted the following processes to evaluate the reasonableness of the adopted basis and assumptions provided:

Discussed with the Management in relation to the background, development, operations, financial performance and other relevant information of the Target Company;
Reviewed relevant financial information, operational information and other relevant data concerning the Target Company;
Conducted site inspections;
Reviewed and discussed with the Management on the business development concerning the Mining Assets provided to us by the Management;
Performed market research in relation to the economic outlook in general and the specific economic environment and market elements affecting the business, industry and market and obtained relevant statistical figures from public sources;
Examined relevant basis and assumptions of both the financial and operational information of the Target Company, which were provided by the Management;
Prepared a valuation model to derive the fair market value of the Target Company; and
Presented all relevant information on, including but not limited to, the scope of work, source of information, overview of the Target Company, overview of the industry, major

— VI-8 —

VALUATION REPORT OF THE TARGET COMPANY

APPENDIX VI

assumptions, valuation methodology, sensitivity analysis, limiting conditions, remarks and conclusion of value in this report.

We have no reason to believe that any material facts have been withheld from us. However, we do not warrant that our investigations have revealed all of the matters which an audit or more extensive examination might disclose.

9 LIMITATION IN SCOPE OF WORK

Our scope of work for the purpose of the valuation is constrained by the following limitations:

In performing our services, we relied on the accuracy of the information provided by the Management with regards to the Target Company’s financial projections and business affairs as well as the outlook for the business. The procedures and enquiries undertaken by us in preparing this report do not include any verification work, nor do they constitute an examination made in accordance with generally accepted auditing standards. As such, we do not express an opinion or offer any forms of assurance regarding the accuracy, reasonableness, completeness, or reliability of these information we are based;
Information furnished by others, upon which all or portions of this report are based, is believed to be reliable. However, we did not independently verify this information and no warranty is given as to the accuracy of such information;
The results of our work are dependent on the financial projections of the Target Company. However, because events and circumstances frequently do not occur as expected, there will usually be differences between predicted and actual results, and those differences may be material. We take no responsibility for the achievement of predicted results;
Our analysis relied on information provided by the Management. We are not required to verify the legal titles of the Target Company; and
We considered published market data and other public information, where appropriate, for which we are not responsible for their content and accuracy. Such information was obtained from sources such as Bloomberg, S&P Capital IQ and publicly available industry reports.

10 SOURCES OF INFORMATION

For the purpose of our valuation, we were provided with the information in respect of the Target Company prepared by the Management. The valuation required the consideration of all relevant factors including, but not limited to, the following:

Background information of the operation and relevant corporate information of the Target Company;
Historical financial information of the Target Company such as management accounts for the year ended December 31, 2022;
Financial projections of the Target Company;

— VI-9 —

VALUATION REPORT OF THE TARGET COMPANY

APPENDIX VI

Competent Persons’ Report (“ CPR ”) of the Mining Assets prepared by BAW;
Registrations, legal documents, permits and licenses related to the Mining Assets;
The economic outlook in general and the specific economic environment and market elements affecting the coal mining business, industry and market; and
Bloomberg database and other reliable sources of market data.

We also conducted research from public sources and carried out site inspection to assess the reasonableness and fairness of information provided. We assumed the accuracy of the information furnished to us and relied to a considerable extent on such information in arriving at our opinion.

11 SITE INSPECTION

During BAW’s site visit, the following tasks were carried out as part of our analysis process:

Tour of the Mining Assets and its site office; and
Meetings with the Management from different operational and supporting departments.

12 ECONOMIC OVERVIEW

With the world’s largest population, the PRC is the second largest economy, as well as the second largest importer and consumer in the world. Its significant role in the international arena has become increasingly obvious. During the global financial crisis of 2008, the Chinese government has taken effective stimulus policies to prevent huge economic decline. The PRC has been the largest contributor to world growth since the crisis.

==> picture [440 x 203] intentionally omitted <==

Figure 12.1 – GDP of the PRC (in USD Billion) from 2012 to 2022 (Source: Trading Economics, World Bank)

— VI-10 —

VALUATION REPORT OF THE TARGET COMPANY

APPENDIX VI

As shown in Figure 12.1, the gross domestic product (GDP) of the PRC was worth USD17,734.06 billion in 2021, representing 7.94% of the world economy. The Chinese GDP is expected to reach USD17,300.00 billion by the end of 2023 whereas in the long-term, the Chinese GDP is projected to trend around USD17,500.00 in 2024 and USD17,800.00 billion in 2025 according to the Trading Economics macro models.

13 OVERVIEW OF THE MINING ASSETS

13.1 Location and Access

The Jilin Banmiaozi Gold Mine is situated 6.3 km northwest of Baishan City in Jilin Province, the PRC, and approximately 40 km northwest of the China-North Korea border (Figure 13-1). The administrative division falls under the jurisdiction of the Hunjiang District, Baishan City, Jilin Province. Changchun City, the provincial capital of Jilin Province, is located approximately 220 km northwest of the Jilin Banmiaozi Gold Mine.

==> picture [306 x 356] intentionally omitted <==

Figure 13-1: Location Map showing the Jilin Banmiaozi Gold Mine

— VI-11 —

VALUATION REPORT OF THE TARGET COMPANY

APPENDIX VI

The Qinghai Dachaidan Gold Mine is located approximately 75 kilometres northwest of the town of Dachaidan, under the jurisdiction of Dachaidan town in Haixi Mongolian and Tibetan Autonomous Prefecture, Qinghai Province, the PRC (Figure 13-2). The Qinghai Dachaidan Gold Mine is about 200 km away from Dunhuang City to the north and Golmud City to the south, and about 660 kilometres northwest of Xining City, the capital of Qinghai Province.

==> picture [426 x 349] intentionally omitted <==

Figure 13-2: Location Map showing the Qinghai Dachaidan Gold Mine

— VI-12 —

VALUATION REPORT OF THE TARGET COMPANY

APPENDIX VI

The Heihe Yintai Gold Mine is located in the southeast region of Heilongjiang Province, the PRC, approximately 45 km from Xunke County and 145 km from Heihe City. Harbin, the capital city of Heilongjiang Province, lies around 427 km to the southwest. The Heihe Yintai Gold Mine falls under the administrative jurisdiction of Xinxing Township in Xunke County and is situated approximately 15 km south of the China-Russia border.

==> picture [374 x 382] intentionally omitted <==

Figure 13-3: Location Map showing the Hehei Yintai Gold Mine

— VI-13 —

VALUATION REPORT OF THE TARGET COMPANY

APPENDIX VI

The Yulong Silver Mine, a silver-lead-zinc operation, is located approximately 25 km northeast of Baorigesitai Township in West Ujimqin Banner, Inner Mongolia Autonomous Region, the PRC. It falls under the administrative jurisdiction of Bayanhua Town within West Ujimqin Banner. Hohhot, the capital of the Inner Mongolia Autonomous Region, is situated around 760 km southwest. The Yulong Silver Mine is also 175 km south of the China-Mongolia border.

==> picture [426 x 321] intentionally omitted <==

Figure 13-4: Location Map showing the Yulong Silver Mine

— VI-14 —

VALUATION REPORT OF THE TARGET COMPANY

APPENDIX VI

The Mangshi Huasheng Gold Mine is located approximately 32 km southwest of Mangshi City and about 40 km northwest of the China-Myanmar border. The project area falls under the jurisdiction of Shangmanggang Village, Santaishan Town, Mangshi City, in the Dehong Dai-Jingpo Autonomous Prefecture, Yunnan Province, the PRC. Kunming City, the capital of Yunnan Province, is situated roughly 460 km to the east.

==> picture [412 x 355] intentionally omitted <==

Figure 13-5: Location Map showing the Mangshi Huasheng Gold Mine

13.2 Ownership of the Mining Assets

Pursuant to the “Mineral Resource Law of the PRC”, all mineral resources in the PRC are owned by the nation. All types of exploration and mining activities in the PRC generally requires approval from the relevant government agencies in the form of exploration license or mining license granted for a specific area during a specified period of validity (generally extendable once expired).

— VI-15 —

VALUATION REPORT OF THE TARGET COMPANY

APPENDIX VI

The Mining Assets are currently owned by the Target Company. The licenses of the Mining Assets were provided by the Company for our review. The license details such as license ID, effective date, area, valid period and permitted production capacity are summarized as below.

Table 13.1: License Details of Heihe Yintai

Mining License	Holder	Heihe Yintai Mining Exploitation Co., Ltd. (黑河銀
		泰礦業開發有限責任公司)
Name of Property		Heihe Yintai
License Type		Mining
License ID		C1000002016044210142237
Area (km2)		0.1386
Elevation (m)		From 280 m to -100 m
Permitted Production Capacity		375 ktpa
Type of Commodities		Gold and silver
Mining Method		Underground and open pit
Valid Period		18 May 2016 to 18 May 2033
	Table 13.2a: License Details of Qinghai Dachaidan
Mining License	Holder	Qinghai Dachaidan Mining Co., Ltd.
Name of Property		Qinghai Dachaidan Tanjianshan
License Type		Mining
License ID		C1000002011104120120032
Area (km2)		1.0306
Elevation (m)		From 3,556 m to 3,000 m
Permitted Production Capacity		600 ktpa
Type of Commodities		Gold
Mining Method		Open pit
Valid Period		17 June 2011 to 17 June 2023

— VI-16 —

VALUATION REPORT OF THE TARGET COMPANY

APPENDIX VI

Table 13.2b: License Details of Qinghai Dachaidan

Mining License Holder	Qinghai Dachaidan Mining Co., Ltd.
Name of Property	Qinghai Dachaidan Qinglonggou
License Type	Mining
License ID	C1000002010044120060797
Area (km2)	2.8751
Elevation (m)	From 3,710 m to 3,450 m
Permitted Production Capacity	200 ktpa
Type of Commodities	Gold
Mining Method	Open + underground pit
Valid Period	17 January 2016 to 17 January 2023

Table 13.3: License Details of Jilin Banmiaozi

Mining License Holder	Jilin Banmiaozi Mining Co., Ltd.
Name of Property	Jilin Banmiaozi Jinying Gold Mine
License Type	Mining
License ID	C1000002011044110112056
Area (km2)	2.0514
Elevation (m)	From 750 m to -200 m
Permitted Production Capacity	800 ktpa
Type of Commodities	Gold
Mining Method	Underground
Valid Period	13 April 2021 to 13 December 2025

— VI-17 —

VALUATION REPORT OF THE TARGET COMPANY

APPENDIX VI

Table 13.4a: License Details of Yulong

Mining License Holder	Inner Mongolia Yulong Mining Holdings Co., Ltd.
Name of Property	Yulong Mining Company Huaao Baoteshan
License Type	Mining
License ID	C1500002012054210125299
Area (km2)	1.0269
Elevation (m)	From 1,030 m to 400 m
Permitted Production Capacity	250 ktpa
Type of Commodities	Silver, lead and zinc
Mining Method	Underground
Valid Period	16 May 2020 to 16 May 2023
Table 13.4b:	License Details of Yulong
Mining License Holder	Inner Mongolia Yulong Mining Holdings Co., Ltd.
Name of Property	Yulong Mining Company Huaao Baote
License Type	Mining
License ID	C150000201124210112496
Area (km2)	1.7093
Elevation (m)	From 1,030 m to 400 m
Permitted Production Capacity	1,000 ktpa
Type of Commodities	Silver, lead and zinc
Mining Method	Underground
Valid Period	11 Nov 2012 to 11 Nov 2037

— VI-18 —

VALUATION REPORT OF THE TARGET COMPANY

APPENDIX VI

Table 13.5: License Details of Mangshi Huasheng

Mining License Holder Mangshi Huasheng Gold Mine Exploitation Co., Ltd. Name of Property Yunnan Huasheng Mangshi Gold Mine License Type Mining License ID C5300002009114120045284 Area (km[2] ) 0.6338 Elevation (m) From 1,500 m to 1,100 m Permitted Production Capacity 100 ktpa Type of Commodities Gold Mining Method Underground and open pit Valid Period 11 July 2015 to 11 July 2025

13.3 Mineral Resources

The Mineral Resources estimated by the CPR for the Mining Assets in conformity with the requirements of the JORC Code 2012 as of 31 December 2022 are summarized as below:

Table 13.6: Mineral Resources estimated for Jilin Banmiaozi as of 31 December 2022

Cut-off Grade Category 1.0 g/t Au Measured Indicated M+I Inferred Total	Tonnage (kt) 4,584 482 5,067 1,675 6,742	Gold Grade (g/t) 4.03 3.62 3.99 3.72 3.92	Contained Gold (kg) 18,480 1,746 20,226 6,233
			26,459

— VI-19 —

VALUATION REPORT OF THE TARGET COMPANY

APPENDIX VI

Table 13.7: Mineral Resources estimated for Qinghai Dachaidan as of 31 December 2022

Site Category Jinlonggou Pit 3 Measured Indicated M+I Inferred Total Qinglonggou M2 Measured Indicated M+I Inferred Total Qinglonggou South Measured Indicated M+I Inferred Total Qinglonggou M3 Measured Indicated M+I Inferred Total Qinglonggou North Deep East Measured Indicated M+I Inferred Total Qinglonggou North Deep West Measured Indicated M+I Inferred Total	Tonnage (kt) – 2,754 2,754 1,190 3,944 – 346 346 186 532 – – – 427 427 – 613 613 266 879 – – – 383 383 – – – 1,356 1,356	Gold Grade (g/t) – 3.78 3.78 3.04 3.55 – 7.64 7.64 6.23 7.15 – – – 6.21 6.21 – 3.81 3.81 2.93 3.55 – – – 5.13 5.13 – – – 2.69 2.69	Contained Gold (kg) – 10,399 10,399 3,615
			14,015

			– 2,646 2,646 1,159
			3,805

			– – – 2,650
			2,650

			– 2,335 2,335 780
			3,115

			– – – 1,964
			1,964

			– – – 3,644
			3,644

— VI-20 —

VALUATION REPORT OF THE TARGET COMPANY

APPENDIX VI

Site Category Xijinggou Measured Indicated M+I Inferred Total Qinglonggou East Measured Indicated M+I Inferred Total Stockpile Measured Indicated M+I Inferred Total Total Measured Indicated M+I Inferred Total	Tonnage (kt) – 2,700 2,700 1,506 4,206 – 1,738 1,738 529 2,267 1,314 – 1,314 – 1,314 1,314 8,151 9,465 5,843 15,308	Gold Grade (g/t) – 4.08 4.08 4.24 4.14 – 8.11 8.11 7.62 7.99 5.21 – 5.21 – 5.21 5.21 4.97 5.00 4.15 4.67	Contained Gold (kg) – 11,014 11,014 6,380
			17,394

			– 14,095 14,095 4,029
			18,124

			6,850 – 6,850 –
			6,850

			6,850 40,490 47,339 24,221
			71,561

— VI-21 —

VALUATION REPORT OF THE TARGET COMPANY

APPENDIX VI

Table 13.8: Mineral Resources estimated for Hehei Yintai as of 31 December 2022

Cut-off Category 1.0 g/t Au Measured Indicated M+I Inferred Total Stockpile Measured Indicated M+I Inferred Total Total Measured Indicated M+I Inferred Total	Tonnage (kt) 1,393 160 1,553 80 1,632 214 – 214 – 214 1,607 160 1,767 80 1,846	Gold Grade Contained Gold (g/t) (kg) 6.57 9,144 2.59 414 6.16 9,558 2.40 191 5.97 9,749 3.27 700 – – 3.27 700 – – 3.27 700 6.13 9,844 2.59 414 5.81 10,258 2.39 191 5.66 10,449	Silver Grade Contained Silver (g/t) (kg) 71.17 99,132 58.18 9,292 69.84 108,424 65.82 5,235 69.64 113,659 76 16,320 – – 76 16,320 – – 76 16,320 71.84 115,452 58.08 9,292 70.60 124,744 65.44 5,235 70.41 129,979	Silver Grade Contained Silver (g/t) (kg) 71.17 99,132 58.18 9,292 69.84 108,424 65.82 5,235 69.64 113,659 76 16,320 – – 76 16,320 – – 76 16,320 71.84 115,452 58.08 9,292 70.60 124,744 65.44 5,235 70.41 129,979
				113,659

				16,320 – 16,320 –
				16,320

				115,452 9,292 124,744 5,235
				129,979

Table 13.9: Mineral Resources estimated for Yulong as of 31 December 2022

Site Category Huaaobaote Mountain Measured Indicated M+I Inferred Total	Tonnage (kt) – 4,926 4,926 3,547 8,472	Lead grade (%) – 0.64 0.64 0.79 0.71	Contained Lead (t) – 31,740 31,740 28,140 59,879	Zinc grade (%) – 1.30 1.30 1.44 1.36	Contained Zinc (t) – 64,070 64,070 51,079 115,149	Silver grade (g/t) – 66.16 66.16 79.60 71.79	Contained Silver (kg) – 325,895 325,895 282,315 608,210	Copper grade (%) – 0.16 0.16 0.02 0.02	Contained Copper (t) – 777 777 614
									1,391

— VI-22 —

VALUATION REPORT OF THE TARGET COMPANY

APPENDIX VI

Site Category Huaaobaote Measured Indicated M+I Inferred Total 1038 Height Measured Indicated M+I Inferred Total Nanshan Measured Indicated M+I Inferred Total 1118 Height Measured Indicated M+I Inferred Total	Tonnage (kt) 1,013 10,321 11,334 12,627 23,961 – 219 219 384 604 – 332 332 275 607 – 12,057 12,057 10,942 23,000	Lead grade (%) 3.51 1.19 1.40 1.42 1.41 – 1.15 1.15 1.15 1.15 – 2.54 2.54 1.96 2.28 – 0.56 0.56 0.56 0.56	Contained Lead (t) 35,603 122,563 158,166 179,031 337,197 – 2,527 2,527 4,416 6,943 – 8,427 8,427 5,382 13,809 – 67,573 67,573 61,391 128,964	Zinc grade (%) 3.53 1.86 2.01 2.05 2.03 – 2.03 2.03 2.19 2.13 – 2.89 2.89 2.37 2.65 – 1.65 1.65 1.89 1.76	Contained Zinc (t) 35,731 191,830 227,561 258,996 486,557 – 4,455 4,455 8,431 12,886 – 9,596 9,596 6,499 16,095 – 198,951 198,951 206,916 405,867	Silver grade (g/t) 265.55 113.85 127.40 154.19 141.52 – 136.82 136.82 125.20 129.43 – 190.99 190.99 158.17 176.13 – 73.22 73.22 82.60 77.68	Contained Silver (kg) 269,000 1,175,000 1,444,000 1,947,000 3,391,000 – 30,023 30,023 48,117 78,140 – 63,418 63,418 43,459 106,877 – 882,877 882,877 903,837 1,786,715	Copper grade (%) – – – – – – – – – – – – – – – – 0.32 0.32 0.44 3.76	Contained Copper (t) – – – –
									–

									– – – –
									–

									– – – –
									–

									– 38,600 38,600 47,825
									86,424

— VI-23 —

APPENDIX VI

VALUATION REPORT OF THE TARGET COMPANY

Site Category Peripheral (Ⅱ) area Measured Indicated M+I Inferred Total Total Measured Indicated M+I Inferred Total	Tonnage (kt) 318 588 906 901 1,807 1,331 28,443 29,774 28,676 58,450	Lead grade (%) – 0.08 0.05 1.04 0.54 2.67 0.82 0.90 1.03 0.95	Contained Lead (t) – 490 490 16,542 9,816 35,603 233,320 268,923 294,902 556,609	Zinc grade (%) – 0.13 0.09 1.23 0.66 2.68 1.65 1.70 1.89 1.81	Contained Zinc (t) – 790 790 11,108 21,386 35,731 469,693 505,424 543,029 1,057,940	Silver grade (g/t) 183.41 208.47 199.67 194.96 197.32 245.92 91.40 98.31 118.58 108.25	Contained Silver (kg) 58,324 122,578 180,902 175,658 356,560 327,324 2,599,791 2,927,115 3,400,386 6,327,502	Copper grade (%) – – – – – – 1.38 1.32 1.69 1.50	Contained Copper (t) – – – –
									–

									– 39,376 39,376 48,439
									87,815

Table 13.10: Mineral Resources estimated for Mangshi Huasheng as of 31 December 2022

Cut-off Grade Category 0.3 g/t Au Measured Indicated M+I Inferred Total	Tonnage (kt) 2,932 7,401 10,334 7,374 17,708	Gold Grade (g/t) 1.99 1.96 1.97 1.21 1.65	Contained Gold (kg) 5,850 14,477 20,327 8,901
			29,228

— VI-24 —

VALUATION REPORT OF THE TARGET COMPANY

APPENDIX VI

13.4 Ore Reserves

The Ore Reserves estimated by the CPR for the Mining Assets in conformity with the requirements of the JORC Code 2012 as of 31 December 2022 are summarized as below:

Table 13.11: Ore Reserves estimated for Jilin Banmiaozi as of 31 December 2022

Cut-off Grade Category 2.0 g/t Au Proven Probable Total	Tonnage (kt) 3,672 341 4,013	Gold Grade (g/t) 4.08 3.94 4.07	Contained Gold (kg) 14,999 1,343
			16,342

Table 13.12: Ore Reserves estimated for Qinghai Dachaidan as of 31 December 2022

Category Jinlonggou Pit 3 Proved Probable Total Qinglonggou M2 Proved Probable Total Qinglonggou South Proved Probable Total Qinglonggou M3 Proved Probable Total	Tonnage (kt) – 1,975 1,975 – 343 343 – – – – 472 472	Gold Grade (g/t) – 4.16 4.16 – 6.91 6.91 – – – – 4.01 4.01	Gold Metal (kg) – 8,212
			8,212

			– 2,371
			2,371

			– –
			–

			– 1,894
			1,894

— VI-25 —

VALUATION REPORT OF THE TARGET COMPANY

APPENDIX VI

Category Qinglonggou North Deep East Proved Probable Total Qinglonggou North Deep West Proved Probable Total Xijinggou Proved Probable Total Qinglonggou East Proved Probable Total Stockpile Proved Probable Total TOTAL Proved Probable Total	Tonnage (kt) – – – – – – – 2,035 2,035 – 1,684 1,684 1,314 – 1,314 1,314 6,509 7,823	Gold Grade (g/t) – – – – – – – 4.38 4.38 – 7.49 7.49 5.21 – 5.21 5.21 5.22 5.22	Gold Metal (kg) – –
			–

			– –
			–

			– 8,918
			8,918

			– 12,609
			12,609

			6,850 –
			6,850

			6,850 34,005
			40,855

— VI-26 —

VALUATION REPORT OF THE TARGET COMPANY

APPENDIX VI

Table 13.13: Ore Reserves estimated for Hehei Yintai as of 31 December 2022

Cut-off Category 3.0 g/t Au Proven Probable Total	Tonnage (kt) 1,141 44 1,185	Gold Grade Contained Gold (g/t) (kg) 7.15 8,160 3.84 169 7.03 8,329	Silver Grade Contained Silver (g/t) (kg) 72.00 82,177 91.33 4,022 72.72 86,199	Silver Grade Contained Silver (g/t) (kg) 72.00 82,177 91.33 4,022 72.72 86,199
				86,199

Table 13.14: Ore Reserves estimated for Yulong as of 31 December 2022

Site Category Huaaobaote Mountain Proven Probable Total	Tonnage (kt) 1,015 10,338 11,353	Pb grade (%) 3.23 1.09 1.28	Pb Metal (t) 32,726 112,660 145,386	Zn grade (%) 3.24 1.71 1.84	Zn Metal (t) 32,844 176,330 209,174	Silver Grade Contained Silver (g/t) (kg) 243.69 247,265 104.48 1,080,060 116.92 1,327,325	Silver Grade Contained Silver (g/t) (kg) 243.69 247,265 104.48 1,080,060 116.92 1,327,325
							1,327,325

Table 13.15: Ore Reserves estimated for Mangshi Huasheng as of 31 December 2022

Cut-off Category 0.5 g/t Au Proven Probable Total	Tonnage (kt) 2,621 6,283 8,903	Gold Grade (g/t) 2.15 2.19 2.18	Contained Gold (kg) 5,626 13,775
			19,401

14 MAJOR ASSUMPTIONS

In conducting our valuation work, the following assumptions were adopted in order to sufficiently support our conclusion of value including, but not limited to the information provided and the representations made by the Management with regard to the Target Company’s financial and business affairs are accurate and reliable;

The Target Company will continue to operate as a going concern and has sufficient liquidity and capability to achieve the business development; All relevant permits, business certificates, licenses and legal approvals to operate the business in the localities in which the Target Company operates or intends to operate would be officially obtained and renewable upon expiry with de minimis expenses;

— VI-27 —

VALUATION REPORT OF THE TARGET COMPANY

APPENDIX VI

There will be sufficient supply of technical staff in the industry in which the Target Company operates or intends to operate, and the Target Company will retain competent management, key personnel and technical staff to support their ongoing operations and developments;
There will be no major changes in the current taxation laws in the localities in which the Target Company operates or intends to operate and that the rates of tax payable shall remain unchanged and that all applicable laws and regulations will be complied with;
There were no major changes in the financial position and performance of the Target Company between the Date of Valuation and the date of this report;
There will be no major changes in the political, legal, economic or market conditions in the localities in which the Target Company operates or intends to operate, which would adversely affect the revenues attributable to and profitability of the Target Company;
There will be no material changes in the relevant interest rates and exchange rates that would impact the Target Company’s business; and
There are no undisclosed actual or contingent assets or liabilities, no unusual obligations or substantial commitments, other than in the ordinary course of business and as reflected in the financials, nor any litigation pending or threatened, which would have a material impact on the value of the Target Company as of the Date of Valuation.

In the event actual events do not accord with one or more of the above assumptions, the resulted value of the Target Company may vary substantially from the figure as set out in this report.

15 VALUATION METHODOLOGY

15.1. General Valuation Approaches

Conventional valuation approaches include Income Approach, Market Approach and Cost Approach. Each of these approaches is appropriate in one or more circumstances, and sometimes, two or more approaches may be used together. Whether to adopt a particular approach will be determined by the most commonly adopted practice in valuing the subjects that are similar in nature.

15.1.1. Market Approach

The market approach measures the value of an asset through an analysis of recent sales or offerings of comparable property. Sales and offering prices are adjusted for differences in location, time of sale, utility, and the terms and conditions of sale between the asset being appraised and the comparable properties.

— VI-28 —

VALUATION REPORT OF THE TARGET COMPANY

APPENDIX VI

15.1.2. Income Approach

The income approach measures the value of an asset by the present value of its future economic benefits. These benefits can include earnings, cost savings, tax deductions and proceeds from its disposition.

15.1.3. Cost Approach

The cost approach measures the value of an asset by the cost to reproduce or replace it with another of like utility. To the extent that the asset being valued provides less utility than a new asset, the reproduction or replacement cost new would be adjusted to reflect appropriate physical deterioration, functional and economic obsolescence.

15.2. Adopted Approach for the Valuation

Among the abovementioned valuation approaches, the selection of the valuation approach in valuing the Target Company is based on, among other criteria, the quantity and quality of the information provided, accessibility to available data, availability of relevant market transactions, uniqueness of the Target Company’s operations, nature of the industry the Target Company is participating in, professional judgment and technical expertise.

The income approach was considered to be the most appropriate valuation approach in this valuation for valuing the Ore Reserves estimated for the Mining Assets, as it takes the future growth potential and the specific issues of the Mining Assets into consideration. Under the income approach, the Discounted Cash Flow (“ DCF ”) method was adopted.

The market approach was considered to be the most appropriate valuation approach in this valuation for valuing remaining Mineral Resources estimated for the Mining Assets which have not included in the Ore Reserves, given that those Mineral Resources were not supported by a number of technical metrics and parameters such as production costs, processing recovery and cashflow projection. In addition, compared to the cost approach the market approach is more likely to reflect current market expectations over the corresponding industry since the price multiples of the comparable companies were arrived from market consensus and capture the future growth potentials. Under the market approach, comparable transaction method was adopted.

— VI-29 —

VALUATION REPORT OF THE TARGET COMPANY

APPENDIX VI

15.3. Valuation of the Ore Reserves

15.3.1. Discounted Cash Flow Method

The DCF method begins with an estimation of the annual cash flows, which a market participant acquirer would expect the asset to generate over a discrete projection period. The expected debt-free cash flow for each year was determined as follows:

FCF = EBIT (1 – T) + NCI – InvCapex – InvNWC

Where:

FCF = free cash flow EBIT = earnings before income and tax T = tax rate NCI = non-cash incomes InvCapex = investment in capital expenditure InvNWC = investment in net working capital

The estimated cash flows for each of the years in the discrete projection period are then converted to their present value equivalent using a rate of return appropriate for the risk of achieving the asset’s projected cash flows. The present value of the estimated cash flows are then added to the present value equivalent of the residual value of the asset (if any) at the end of the discrete projection period to arrive at an estimate of the value of the specific asset. The present value of the expected free cash flow is calculated as follows:

PVFCF = FCF1 / (1 + r)[1] + FCF2 / (1 + r)[2] + … + FCFn / (1 + r)[n]

Where:

PVFCF = present value of free cash flows FCF = free cash flow r = discount rate n = number of year of projections

In our valuation work, key technical parameters such as Gold Reserves, production schedule, and other relevant costs data were largely derived from the CPR. Provided below is a brief description and analysis of the major assumptions applied in the valuation.

— VI-30 —

VALUATION REPORT OF THE TARGET COMPANY

APPENDIX VI

15.3.2. Mineral Resources and Ore Reserves

In our valuation, the Mineral Resources and Ore Reserves adopted were derived from the CPR. Details of the Mineral Resources and Ore Reserves as of the Date of Valuation can be referred to the CPR and previous sections of Mineral Resources and Ore Reserves in this Report.

15.3.3. Production Capacity and Schedule

Production schedules prepared for the Mining Assets by the CPR have been adopted in this valuation. The annual production capacity adopted for each gold mine in the valuation is conformable with its permitted production capacity. Details of the production schedules can be referred to the CPR.

15.3.4. Basis of Revenue

Annual revenue is determined by applying estimated metal prices to the estimated annual payable products for each operating year. Metal prices have been applied to all production without hedging. The revenue is the gross value of the payable products sold before transportation charges.

Our valuation work adopted the forecasted metal prices sourced from Bloomberg. Given the long-term uncertainty of price associated with commodities, the selling price was assumed to be stationary and no price growth was factored into the revenue projection. The selling prices of finished products applied in the valuation are tabulated as below:

Table 15.1: Projected Selling Prices

		Selling Price
Finished	Products	inclusive VAT
		(USD/oz)
Gold		2,007.00
Silver		24.63

Source: Bloomberg

— VI-31 —

VALUATION REPORT OF THE TARGET COMPANY

APPENDIX VI

With the adopted selling price mentioned above, revenue generated by the Target Company is summarized as below:

Table 15.2: Projected Revenue of the Mining Assets (RMB in million)

Revenue 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Heihe Yintai 1,400.22 1,247.23 1,247.23 413.55 – – – – – – – – – Qinghai Dachaidan 970.76 1,040.07 1,058.90 1,070.63 994.12 1,414.79 1,420.46 1,521.19 1,521.19 1,428.90 1,333.39 729.03 – Jilin Banmiaozi 1,111.47 866.41 885.38 1,264.83 1,264.83 951.78 – – – – – – – Yulong 753.84 753.84 753.84 1,061.74 1,061.74 1,061.74 1,061.74 1,061.74 1,061.74 1,061.74 1,061.74 1,061.74 236.77 Mangshi Huasheng 199.02 597.05 691.26 691.26 691.26 691.26 691.26 691.26 691.26 334.35 – – –

15.3.5. Basis of Capital Expenditure

Capital Expenditure (“ CAPEX ”) generally comprises of Development and Expansion CAPEX, Sustaining CAPEX, Rehabilitation CAPEX and Exploration CAPEX. BAW was given to understand that the CPR and Mining Assets prepared a projection of Development and Expansion CAPEX and Sustaining CAPEX for further mine development and mining equipment, support facilities based on the proposed production schedule and Rehabilitation CAPEX for proposed rehabilitation program and environmental work, which is reasonable and conformable with the industry practice. No projection was made for Exploration CAPEX.

15.3.6. Basis of Operating Expenditure

Operating Expenditure (“ OPEX ”) can be classified into operating cash costs and total production costs. The operating cash costs generally include mining costs, processing (washing) costs, G&A costs, selling costs, environmental protection costs, taxes, resource compensation levy, interests on loans and other cash cost items. The total production costs comprise the operating cash costs, depreciation/ amortization costs and other non-cash cost items. These costs are expressed in RMB.

15.3.7. Basis of Working Capital Requirement

The working capital requirement for the projection period, projected by the Management, was made reference to the market data, including account receivables turnover days, inventories turnover days and account payables turnover days.

15.3.8. Comparable Companies

In applying the DCF method, the estimated cash flows for each of the years in the discrete projection period are then converted to their present value equivalent using a rate of return appropriate for the risk of achieving the asset’s projected cash flows, or the discount rate. The appropriate discount rate for the Target Company was determined with reference to the business nature and financial information of publicly listed companies that are considered to be comparable to the Target Company (“ Comparable Companies ”).

— VI-32 —

VALUATION REPORT OF THE TARGET COMPANY

APPENDIX VI

Given that there is no company which is exactly the same as the Target Company, a set of the Comparable Companies must be identified in valuing the Target Company. To determine the set of the Comparable Companies, we adopted the following principles during our selection process:

The companies are principally engaged in the business of production and sales of gold in the PRC; and
Sufficiency of information (such as listing and operating histories, and availability of the financial information to the public).

Based on the abovementioned selection criteria, we considered the set of the Comparable Companies adopted in the valuation is comprehensive. Details of the Comparable Companies are listed as follows:

Table 15.3: Comparable Companies Adopted for Valuation

Bloomberg Company Name Ticker Business Description Zijin Mining Group Co Ltd 2899 HK Zijin Mining Group Company Limited operates Equity metal mineral resources exploration and mining businesses. The Company produces gold, copper, zinc, iron, and other base metals. Zijin Mining Group also conducts metal trade and investment businesses domestically and internationally. Shandong Gold Mining Co 600547 CH Shandong Gold Mining Co., Ltd. operates gold Ltd Equity mining and production businesses. The Company provides gold exploration, processing, and outsourcing gold smelting services. Shandong Gold Mining also conducts gold jewelry purification and non-ferrous metal production businesses. Zhongjin Gold Corp Ltd 600489 CH Zhongjin Gold Corp Ltd acquires, explores and Equity develops properties for gold production. The Company’s products also include silver, electrolytic copper and sulphuric acid. Chifeng Jilong Gold Mining 600988 CH Chifeng Jilong Gold Mining Co.,Ltd. offers precious Co Ltd Equity metals mining and processing services. The

Chifeng Jilong Gold Mining Co.,Ltd. offers precious metals mining and processing services. The Company produces gold, silver, antimony, palladium, antimony, and other precious metal products. Chifeng Jilong Gold Mining also conducts resource comprehensive recycling businesses. Western Region Gold Co Ltd mines and smelts gold, chrome ore, iron ore in western China.

Western Region Gold Co Ltd 601069 CH Equity

— VI-33 —

VALUATION REPORT OF THE TARGET COMPANY

APPENDIX VI

Bloomberg Company Name Ticker Business Description China Gold International 2099 HK China Gold International Resources Corp Ltd. is a Resources Corp Ltd Equity mining company focused on the exploration and development of gold projects in inner Mongolia and copper projects in Tibet Autonomous Region of China. Yantai Yuancheng Gold Co 600766 CH Yantai Yuancheng Gold Co Ltd’s business scope Ltd Equity includes the development, operation and rental of real estate, building furnishing materials, gold mining and sales of copper. Tongguan Gold Group Ltd 340 HK Equity Tongguan Gold Group Limited operates as a gold mining company. The Company provides gold exploration, mining, processing, sales, and other services. Tongguan Gold Group markets its products throughout Hong Kong. Lingbao Gold Group Co Ltd 3330 HK Lingbao Gold Group Co., Ltd. operates as a mining Equity company. The Company explores, mines, smelts, refines, and processes gold bullion, silver, copper products, and sulfuric acid. Lingbao Gold Group serves customers internationally. Grand T G Gold Holdings 8299 HK Grand T G Gold Holdings Limited is a mining Ltd Equity company. The Company focuses on gold exploration, mining and mineral processing in the Peoples Republic of China. Grand T G Gold Holdings current principal gold project-Taizhou Mining is located in Tongguan County, Shaanxi Province along the Xiao Qinlin Mineralized Belt.

Taung Gold International 621 HK Equity Taung Gold International Ltd. is a mineral Ltd exploration and production company. The Company is a gold exploration and development company focused on developing assets in South Africa. Taung Gold’s projects are the Evander in the Mpumalanga Province and Jeanette in the Free State Province. Dragon Mining Ltd 1712 HK Dragon Mining Limited operates gold mining and Equity production businesses. The Company provides gold exploration, development, and supervision services. Dragon Mining conducts businesses in Sweden, Finland, and other countries.

Source: Bloomberg

— VI-34 —

VALUATION REPORT OF THE TARGET COMPANY

APPENDIX VI

15.3.9. Discount Rate

In order to estimate the value of the Target Company and perform an overall reasonability assessment, it is required to determine an appropriate discount rate for the Target Company. As such, we adopted the weighted average cost of capital (“ WACC ”) as a basic discount rate for the Target Company. WACC represents the weighted average return attributable to all of the operating assets of the Target Company. WACC was computed using the formula below:

==> picture [177 x 10] intentionally omitted <==

Where:

WACC = weighted average cost of capital Re = cost of equity Rd = cost of debt E = value of the firm’s equity D = value of the firm’s debt V = sum of the values of the firm’s equity and debt Tc = corporate tax rate

As a component of WACC, the cost of equity was determined using the Capital Asset Pricing Model (“ CAPM ”). CAPM calculates a required return based on a risk measurement. It describes the relationship between the risk of a particular asset, its market price and the expected return to the investor, that investors required additional return to compensate additional risk associated. CAPM was modified to reflect the size premium and company-specific risk premium associated with the Target Company. The cost of equity under the modified CAPM was computed using the formula below:

==> picture [146 x 12] intentionally omitted <==

Where:

Re = cost of equity Rf = risk-free rate β = beta coefficient MRP = market risk premium

— VI-35 —

VALUATION REPORT OF THE TARGET COMPANY

APPENDIX VI

RPS = size premium RPU = company-specific risk premium

In the valuation, the yield rate of the 10-year Government Bond of the PRC of 2.85% as of the Date of Valuation, as extracted from Bloomberg, was adopted as the risk-free rate. The market risk premium of the PRC as of the Date of Valuation of 12.38% was determined from Bloomberg.

The beta coefficient for the Target Company was determined by the median of the betas of the Comparable Companies, with adjustment for differences in corporate tax rates and leverage compositions. As a result, the beta coefficient of the Target was calculated as 0.73.

Considering the above-mentioned parameters, our analysis suggested a cost of equity before any other risk premium of 11.93%.

The weight of debt and weight of equity were determined by making reference to the median of the weight of debt and weight of equity of the Comparable Companies respectively. The weight of equity was adopted as 67.36%.

The cost of debt is determined by making reference to the prime rate in the PRC of 4.30% before tax. The after tax cost of debt adopted was 3.23% and 5.36%.

Accounting for the above items, the nominal WACC as of the Date of Valuation is derived as 9.09% and 9.79%.

15.3.10. Sensitivity Analysis

By its very nature, valuation work cannot be regarded as an exact science and the conclusion arrived at in many cases will of necessity be subjective and dependent on the exercise of individual judgment. Hence, there is no single indisputable range and generally we cannot provide absolute assurance on a valuation. Thus, the following sensitivity analysis was applied to determine the impact of change of the discount rate on the FMV of the Target Company.

— VI-36 —

VALUATION REPORT OF THE TARGET COMPANY

APPENDIX VI

Table 16.1: Sensitivity Analysis of the Change in Discount Rate for the Valuation as of 31 March 2023

		Change in Fair
		Market Value of
	Fair Market Value of	100% Interest in
	100% Interest in the	the Target
Discount Rate	Target Company	Company
	RMB	(%)
11%	12,178,000,000	-5.69%
10%	12,642,000,000	-2.10%
Base case (9.09% and 9.79%)	12,913,000,000	–
8%	13,681,000,000	5.95%
7%	14,263,000,000	10.45%

A further sensitivity analysis was run for changes of gold prices, operating cash costs and CAPEX at a discount rate of 9.09% and 9.79%. The resulted changes of after-tax FMV are summarized below.

Table 16.2: Sensitivity Analysis of the Change in Gold Prices as of 31 March 2023

		Change in Fair
		Market Value of
	Fair Market Value of	100% Interest in
	100% Interest in the	the Target
Gold price change	Target Company	Company
	RMB	(%)
+15%	14,820,000,000	14.77%
+10%	14,184,000,000	9.84%
+5%	13,549,000,000	4.93%
Base case	12,913,000,000	–
-5%	12,276,000,000	-4.93%
-10%	11,640,000,000	-9.86%
-15%	11,005,000,000	-14.78%

15.4. Valuation of the Mineral Resources

The market approach develops a value using the principle of substitution which suggests that if one thing is similar to another and could be used (our case invested in) for the other, that they must be equal. Furthermore, the price of two like and similar items should approximate one another.

Given that there is no mineral property exactly the same as the Target Company or the Mining Assets, comparable transactions (“ Comparable Transactions ”) must be appropriately

— VI-37 —

VALUATION REPORT OF THE TARGET COMPANY

APPENDIX VI

selected. In order to determine a set of qualified Comparable Transactions from historic transactions which are available from the public domain, we established multiple selection criteria outlined as below:

Historic transactions were involved with the JORC-compliant Indicated Resource or above delineated according to the JORC Code 2012 or resources delineated according to the PRC’s national standard, collectively the “Qualified Resource”;
The geographic location of the mineral properties in relation to historic transactions being similar with that of the Target Company or Mining Assets;
The stage of development of the mineral properties in relation to historic transactions being similar with that of the Target Company or Mining Assets;
Completed mining and surface facilities in relation to historic transactions being similar with that of the Target Company as of the transaction date;
The delineated quantity of contained metal in relation to historic transactions being comparable with that of the Target Company;
Historic transactions were completed within three years prior to the Date of Valuation; and
Historic transaction details are sufficiently available from the public domain.

According to the CPR, the remaining Measured and Indicated Resources that have not been included in the Ore Reserves are summarized as below.

Table 15.4: Remaining Measured and Indicated Resources Adopted for Valuation

Mining Assets Banmiaozi Dachaidan Heihe Yulong Huasheng Total	Gold Resources (kg) which are not included in Ore Reserves 3,884 6,484 1,929 n/a 926 13,223	Silver Resources (kg) which are not included in Ore Reserves n/a n/a 38,545 1,599,790 n/a
		1,638,335

As demonstrated above, the quantity of remaining Measured and Indicated Resources is 13,223 kg of gold and 1,638,335 kg of silver which are adopted in the valuation using market approach. The analysis of Comparable Transactions shows that the unit acquisition cost per ounce stands at 8.68% of the spot gold price at the time of transaction.

— VI-38 —

VALUATION REPORT OF THE TARGET COMPANY

APPENDIX VI

16 RISK FACTORS

16.1. Resource and Reserve

Estimations of tonnage, grade and overall content of a deposit are not precise calculations but are based on interpretation and on sampling. There is always a potential error in the projection of sampling data when estimating the tonnage and grade of the surrounding strata, and significant variations may occur. It is possible that some resources may not be economically mineable. Additionally, historical recovery rate might not be able to be sustained in future operations. The FMV of the Target Company may be diminished if any of these events happen.

16.2. Fluctuation of the Selling Price and Demand

Commodity price and demand are fluctuated. If the selling price decreases substantially or the demand for Gold diminishes in the long run, the value of the Target Company will be adversely affected.

16.3. Implementation for Future Development Plan

Future development of the Target Company may be subject to the approval by the local government. Any delays in the proposed future development plan may adversely affect the value of the Target Company.

16.4. Social and Environmental Issues

If there are any complaints or protests by the local community or any changes on the environmental regulation or requirement, the operation of the Target Company may suffer adverse impact and thus negatively affect our conclusion of value.

16.5. Government Policy Change

Our DCF-based evaluation of the Target Company is reliant on the existing government policy as it existed at the time of the evaluation. Any changes in existing government policy may affect our conclusion of value.

17 LIMITING CONDITIONS

The valuation reflects facts and conditions existing at the Date of Valuation. Subsequent events have not been considered and we are not required to update our report for such events and conditions.

To the best of our knowledge, all data set forth in this report are reasonable and accurately determined. The data, opinions, or estimates identified as being furnished by others that have been used in formulating this analysis are gathered from reliable sources; yet, no guarantee is made nor liability assumed for their accuracy.

— VI-39 —

VALUATION REPORT OF THE TARGET COMPANY

APPENDIX VI

We have relied on information provided by the Management to a considerable extent in arriving at our opinion of value. We have not verified the accuracy of the information provided and have assumed that the aforesaid information is accurate. We have not conducted any further investigations concerning whether all data have been provided to us for our assessment and we have no reason to believe that any material data have been withheld from us.

We would particularly point out that our valuation was based on the information such as the projections made by the Target Company, company background, business nature of the Target Company provided to us.

Our conclusion of the value was derived from generally accepted valuation procedures and practices that rely substantially on the use of various assumptions and the consideration of many uncertainties, not all of which can be easily quantified or ascertained.

By its very nature, valuation work cannot be regarded as an exact science and the conclusions arrived at in many cases will of necessity be subjective and dependent on the exercise of individual judgment. Hence, there is no single indisputable range and generally we cannot provide absolute assurance on a valuation.

This report is for the exclusive use of the party to whom it is addressed and for the specific purpose stated in Section 2 – Purpose of Valuation , neither the whole nor any part of this report nor any reference thereto may be included in any document, circular or statement without our written approval of the form and context in which it will appear. We will not accept any responsibility or liability to any third party to whom in respect of, or arising out of, the contents of this report may be shown.

The title of this report shall not pass to the Company until all professional fees have been paid in full.

18 REMARKS

Unless otherwise stated, all monetary amount stated in this valuation report are in Renminbi (RMB).

— VI-40 —

VALUATION REPORT OF THE TARGET COMPANY

APPENDIX VI

19 OPINION OF VALUE

Based on the investigation and analysis stated above, our scope of work, the valuation method employed, information reviewed and the assumptions adopted, the Fair Market Value of the Target Company as of 31 March 2023 (i.e., the Date of Valuation), in our opinion, was reasonably stated as below:

Mining Assets Heihe Yintai Qinghai Dachaidan Jilin Banmiaozi Yulong Mangshi Huasheng Remaining Mineral Resources Total Fair Market Value	Fair Market Value 3,466,000,000 3,535,000,000 1,723,000,000 1,982,000,000 602,000,000 1,040,000,000
	12,348,000,000

APPENDIX A – QUALIFICATION OF THE VALUATION TEAM MEMBERS

Mr. Karfai Leung (MPhil, MAusIMM), as the Director of BAW and responsible for the overall project management of this engagement, has more than fifteen years of extensive experience in the mining industry globally including project generation, prospecting, field exploration, mineral resource definition, HSE management, mineral assets valuation, mineral assets acquisition for energy, base metals, non-ferrous metals and precious metals in the PRC, Southeast Asia, North Asia, Central-Asia, Mid-East, Africa, Australasian, North and South Americas. He has hands-on and extensive experience in cash-flow modelling, valuation, due diligence, capital raising, M&A deals and IPOs project management. He meets all the requirements for “Competent Person” as defined in the Australasian JORC Code and the HKEX Listing Rules for the purpose of mineral resource/ore reserve estimation and reporting.

Mr Tom Lam (CFA) has participated in numerous valuations of businesses and financial instruments in M&A deals, Pre-IPO and debt & equity financing for publicly listed and private companies. In particular, he was involved in a wide variety of industries, including natural resources, renewable energy, forestry and agriculture, e-commerce platforms, banking and financial services.

— VI-41 —

GENERAL INFORMATION

APPENDIX VII

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

2. DISCLOSURE OF INTERESTS

(A) Directors’, Supervisors’ and Chief Executives’ Interests and Short Positions in the Shares, the Underlying Shares and Debentures

Save as disclosed below, as at the Latest Practicable Date, none of the Directors, supervisors or chief executives of the Company has any interest or short position in the Shares, underlying Shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required (a) to be notified to the Company and the Hong Kong Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were taken or deemed to have taken under such provisions of the SFO); (b) to be recorded in the register required to be kept by the Company pursuant to section 352 of the SFO; or (c) to be notified to the Company and the Hong Kong Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers of the Hong Kong Listing Rules, in accordance with information received by the Company:

							Approximate
				Number of		Approximate	percentage of
				Shares/		percentage of	shareholding
				underlying		shareholding	in the total
		Nature of	Class of	Shares	Long/Short	in the relevant	issued share
Name	Title	interest	Shares	interested	position	class Shares	capital
Mr. Tang Qi	Executive	Beneficial	A Shares	149,056	Long	0.0041%	0.0033%
	Director	owner

— VII-1 —

GENERAL INFORMATION

APPENDIX VII

(B) Substantial Shareholders’ and Other Persons’ Interests and Short Positions in the Shares, Underlying Shares and Debentures

So far as is known to the Directors and chief executive of the Company, as at the Latest Practicable Date, the following persons (other than the Directors, supervisors and chief executive of the Company) had interests or short positions in the Shares and underlying Shares, which were required to be notified to the Company pursuant to the provisions of Divisions 2 and 3 of Part XV of the SFO, or which were required to be recorded in the register required to be kept by the Company pursuant to section 336 of the SFO:

						Approximate
			Number of		Approximate	percentage of
			Shares/		percentage of	shareholding
			underlying		shareholding	in the total
		Class of	Shares	Long/Short	in the relevant	issued share
Name	Nature of interest	Shares	interested	position	class Shares	capital
SDG Group Co.	Beneficial owner	A Shares	1,694,069,251	Long	46.87%	37.87%
	Interest held by	A Shares	345,073,733	Long	9.55%	7.71%
	controlled
	corporation
	(Note 1)
Shandong Gold Resources	Beneficial owner	A Shares	194,872,049	Long	5.39%	4.36%
Development Co., Ltd.	(Note 2)
(“SDG Resources
Development”)
Schroders PLC	Investment manager	H Shares	85,890,350	Long	9.99%	1.92%
Gold Virtue Limited	Beneficial owner	H Shares	94,189,655	Long	10.97%	2.11%
	Beneficial owner	H Shares	11,000,000	Short	1.28%	0.25%
China Structural Reform Fund	Beneficial owner	H Shares	76,639,270	Long	8.92%	1.71%
Corporation Limited
(中國國有企業機構調整基金
股份有限公司)
CEB-GFAM-China Structural	Trustee	H Shares	76,639,270	Long	8.92%	1.71%
Reform Fund Asset
Management Account No. 1
(廣發資管–國調基金1號定向
資產管理計劃)

— VII-2 —

GENERAL INFORMATION

APPENDIX VII

Notes:

(1) These 345,073,733 A Shares comprise 194,872,049 A Shares held by SDG Resources Development, 115,477,482 A Shares held by SDG Non-ferrous, 31,467,157 A Shares held by Shandong Gold Group Qingdao Gold Co., Ltd. (“ Qingdao Gold ”) and 3,257,045 A Shares held by SDG (Beijing) Industry Investment Co., Ltd. (“ Beijing Industry Investment ”). Each of SDG Resources Development, Qingdao Gold and Beijing Industry Investment is wholly-owned by SDG Group Co. SDG Group Co. holds 100% equity interest of SDG Non-ferrous. As such, SDG Group Co. is deemed to be interested in the Shares held by SDG Resources Development, SDG Non-ferrous, Qingdao Gold and Beijing Industry Investment for the purpose of the SFO.
(2) SDG Resources Development is wholly-owned by SDG Group Co., and therefore SDG Group Co. is deemed to be interested in all the Shares held by SDG Resources Development for the purpose of the SFO.

3. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had any existing or proposed service contracts with any member of the Enlarged Group (excluding contracts expiring or determinable by the employer within one year without payment of compensation (other than statutory compensation)).

4. COMPETING INTERESTS

As at the Latest Practicable Date, the Directors are not aware of any business or interest of the Directors nor any of their respective associates (as defined in the Hong Kong Listing Rules) that competes or may compete with the business of the Group and any other conflicts of interest which any such person has or may have with the Group as would be required to be disclosed under Rule 8.10 of the Hong Kong Listing Rules as if each of them was a controlling Shareholder).

5. INTERESTS IN CONTRACT OR ARRANGEMENTS

As at the Latest Practicable Date, none of the Directors was materially interested in contract or arrangement subsisting which is significant in relation to the business of the Enlarged Group, nor has any Director had any direct or indirect interest in any assets which have been acquired or disposed of by or leased to or are proposed to be acquired or disposed of by or leased to any member of the Enlarged Group since 31 December 2022, the date to which the latest published audited consolidated financial statements of the Group were made up.

— VII-3 —

GENERAL INFORMATION

APPENDIX VII

6. DIRECTORS’ AND SUPERVISORS’ EMPLOYMENT WITH SUBSTANTIAL SHAREHOLDERS

The followings are the particulars of Directors’ and Supervisors’ employment with substantial Shareholders (holding interests or short positions in the shares and underlying shares of the Company required to be disclosed to the Company pursuant to Divisions 2 and 3 of Part XV of the SFO) as at the Latest Practicable Date:

Mr. Li Hang, the chairman of the Board, serves as the deputy secretary of the CPC Committee and general manager of the Shandong Gold Group Co., Ltd..

Mr. Wang Lijun, the Director, serves as a standing committee member of the CPC Committee and deputy general manager of Shandong Gold Group Co., Ltd..

Mr. Li Xiaoping, the chairman of the Supervisory Committee, serves as a standing committee member of the CPC Committee of Shandong Gold Group Co., Ltd..

Ms. Wang Xiaoling, the Director, serves as a special consultant of Shandong Gold Group Co., Ltd..

7. LITIGATION

As at the Latest Practicable Date, save as disclosed in this circular, so far as the Directors are aware, no member of the Enlarged Group was engaged in any litigation, arbitration or claim of material importance and there was no litigation, arbitration or claim of material importance known to the Directors to be pending or threatening against any member of the Enlarged Group.

8. NO MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors are not aware of any material adverse change in the financial or trading position of the Group since 31 December 2022, the date to which the latest published audited consolidated financial statements of the Group were made up.

9. MATERIAL CONTRACTS

The Enlarged Group has entered into the following contracts (not being contracts entered into in the ordinary course of business) within two years preceding the date of this circular which is or may be material:

(i) On 5 August 2021 (after trading hours), Shandong Gold Mining (Laizhou) Co., Ltd. (“ SDG Mining (Laizhou) ”) and SDG Group Co. entered into the acquisition agreements on the acquisitions of 100% equity interests in Shandong Dikuang Laijin Holdings Co., Ltd. (which directly holds 55% equity interests of Laizhou Hongsheng Mining Investment Co., Ltd. (“ Hongsheng Mining ”)) and 45% equity interests in Hongsheng Mining at an aggregate consideration of RMB4,667,014,358.15.

— VII-4 —

GENERAL INFORMATION

APPENDIX VII

(ii) On 5 August 2021 (after trading hours), SDG Mining (Laizhou) and SDG Group Co. entered into the acquisition agreement on the acquisition of 100% equity interests in Shandong Laizhou Ludi Gold Mine Company Limited at a consideration of RMB2,034,195,071.54.
(iii) On 5 August 2021 (after trading hours), SDG Mining (Laizhou) and SDG Group Co. entered into the acquisition agreement on the acquisition of 100% equity interests in Shandong Tiancheng Mining Co., Ltd. at a consideration of RMB431,031,818.49.
(iv) On 22 December 2021 (after trading hours), the Company (as the vendor) entered into a sale and purchase agreement with Shandong Guoxin Yiyang Group Investment and Development Limited (“ Guoxin Yiyang Investment ”) (as the purchaser), pursuant to which the Company agreed to sell and Guoxin Yiyang Investment agreed to purchase the asset located at the No. 3 Building, Shuntai Square, No. 2000 Shunhua Road, High-tech Zone, Jinan City, the PRC at a total consideration of approximately RMB414.6 million.
(v) The Share Transfer Agreement and the Supplemental Agreement.

10. EXPERTS AND CONSENTS

The following is the qualification of experts who have given opinion or advice which is contained in this circular:

Name

Qualification

BAW Mineral Partners Limited Competent person and valuer

SHINEWING (HK) CPA Limited Certified public accountants

Each of the above experts has given and confirmed that it has not withdrawn its written consent to the issue of this circular with the inclusion herein of its statements and/or references to its name in the form and context in which it appears. Each of the above experts has further confirmed that as at the Latest Practicable Date, it was not interested in the share capital of any member of the Group, nor did it have any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group. It was not interested in any assets which have been, since 31 December 2022 (being the date to which the Company’s latest audited financial statements were made up), acquired or disposed of by or leased to any member of the Enlarged Group, or are proposed to be acquired or disposed of by or leased to any member of the Enlarged Group.

— VII-5 —

GENERAL INFORMATION

APPENDIX VII

11. CORPORATE INFORMATION OF THE COMPANY

Registered office and headquarters No. 2503, Jingshi Road, Licheng District, Jinan, Shandong in the PRC Province, the PRC Principal place of business in Hong Rooms 4003-06, China Resources Building, No. 26 Kong Harbour Road, Hong Kong H share registrar Tricor Investor Services Limited at 17/F, Far East Finance Centre, 16 Harcourt Road, Hong Kong Joint Company secretaries Mr. Tang Qi Ms. Ng Sau Mei (FCG, HKFCG)

12. DOCUMENTS ON DISPLAY

Copies of the following documents will be published on the websites of the Hong Kong Stock Exchange (http://www.hkexnews.hk) and the Company (http://www.sdhjgf.com.cn) for a period of 14 days from the date of this circular:

(a) the Share Transfer Agreement;
(b) the Supplemental Agreement;
(c) the report from SHINEWING (HK) CPA Limited in respect of the unaudited pro forma financial information of the Enlarged Group, the text of which is set out in Appendix IV to this circular;
(d) the Competent Person’s Report prepared by BAW Mineral Partners Limited, the text of which is set out in Appendix V to this circular;
(e) the Valuation Report prepared by BAW Mineral Partners Limited, the text of which is set out in Appendix VI to this circular; and
(f) the written consents referred to in the paragraph headed “Experts and Consents” in this appendix.

— VII-6 —

NOTICE OF 2023 THIRD EXTRAORDINARY GENERAL MEETING

APPENDIX VIII

==> picture [64 x 70] intentionally omitted <==

SHANDONG GOLD MINING CO., LTD. 山東黃金礦業股份有限公司

(a joint stock company incorporated in the People’s Republic of China with limited liability)

(Stock Code: 1787)

NOTICE OF 2023 THIRD EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that the 2023 third extraordinary general meeting (“ EGM ”) of Shandong Gold Mining Co., Ltd. (the “ Company ”) will be held at the conference room of the Company, No. 2503, Jingshi Road, Licheng District, Jinan, Shandong Province, the PRC at 10:00 a.m. on Friday, 30 June 2023 for the purpose of considering and, if thought fit, passing the following resolution:

ORDINARY RESOLUTION

THAT:

to consider and approve the resolution regarding the signing of the Supplemental Agreement to the Share Transfer Agreement.

Note: The resolution is in connection with the Company’s acquisition of 581,181,068 shares of Yintai Gold Co., Ltd. held by China Yintai Holdings Co., Ltd. and Mr. Shen Guojun (the “ Acquisition ”). For details of the Acquisition, please refer to the circular of the Company dated 15 June 2023.

By Order of the Board Shandong Gold Mining Co., Ltd. Li Hang Chairman

Jinan, PRC 15 June 2023

As at the date of this notice, the executive directors of the Company are Mr. Liu Qin, Mr. Wang Shuhai and Mr. Tang Qi; the non-executive directors of the Company are Mr. Li Hang, Mr. Wang Lijun and Ms. Wang Xiaoling; and the independent non-executive directors of the Company are Mr. Wang Yunmin, Mr. Liew Fui Kiang and Ms. Zhao Feng.

— VIII-1 —

NOTICE OF 2023 THIRD EXTRAORDINARY GENERAL MEETING

APPENDIX VIII

Notes:

Holders of the Company’s H Shares should note that the register of members of the Company will be closed from Tuesday, 27 June 2023 to Friday, 30 June 2023 (both days inclusive). All transfer documents accompanied by the relevant share certificates must be lodged with the Company’s H share registrar, namely Tricor Investor Services Limited at 17/F, Far East Finance Centre, 16 Harcourt Road, Hong Kong no later than 4:30 p.m. on Monday, 26 June 2023. H Shareholders whose names appear on the H shares register of members of the Company at the close of business on Monday, 26 June 2023 are entitled to attend with their identity cards or passports and vote at the EGM. The record date and arrangements in respect of the holders of A Shares of the Company who are entitled to attend the EGM will be determined and announced separately in the PRC.
Any shareholder entitled to attend and vote at the EGM is entitled to appoint a proxy or more proxies (who need not be a shareholder of the Company) to attend the EGM and vote thereat in his stead. For any shareholder who appoints more than one proxy, the voting right can only be exercised by his/her proxies on a poll.
Any shareholder who intends to appoint a proxy to attend the EGM shall put it in writing, with the proxy form to be signed by the appointor or his attorney duly authorized in writing. If the appointor is a corporation, the proxy form must be affixed with its common seal, or signed by any of its directors or attorney duly authorized in writing. If the proxy form is signed by an attorney authorized by the appointer, the power of attorney or other authorization documents must be notarially certified. The notarially certified power of attorney or other authorization documents together with the proxy form must be delivered to the Company’s H share registrar, Tricor Investor Services Limited at 17/F, Far East Finance Centre, 16 Harcourt Road, Hong Kong (for H shareholders only) not later than 24 hours before the time appointed for the holding of the EGM (i.e. before 10:00 a.m. on Thursday, 29 June 2023). Completion and return of the proxy form will not affect the rights of the shareholders to attend and vote at the EGM in person.
Proxies of holders of the Company’s H Shares shall bring along the proxy form, instrument(s) for appointing a proxy (if applicable) and the proxies’ identity cards or passports to attend the EGM.
According to Article 108 of the Articles of Association, an ordinary resolution shall be passed by more than half of the votes cast by the shareholders (including proxies) present at the general meeting, while a special resolution shall be passed by more than two-thirds of the votes cast by the shareholders (including proxies) present at the general meeting.
Directors, supervisors and senior management of the Company and the witnessing lawyers and other relevant personnel employed by the Company will attend the EGM.

— VIII-2 —

Figure 2-1 Location of the Banmiaozi Project . . . .	. . . . .	. . .	. . . . . . . . . . . . . . . . . . . . . . . . .	V-18
Figure 2-2 Regional Geological Map . . . . . . . . . .	. . . . .	. . .	. . . . . . . . . . . . . . . . . . . . . . . . .	V-24
Figure 2-3 Geological Map of the Banmiaozi Gold Deposit		. .	. . . . . . . . . . . . . . . . . . . . . . . . .	V-26
Figure 2-4 Cross-section of No. I Ore Body along Exploration Line No. 34 . . . . . . . . . . . . . . .				V-27
Figure 2-5 Domain modelling for Jinying gold mine	. . . .	. . .	. . . . . . . . . . . . . . . . . . . . . . . . .	V-33
Figure 2-6 Histogram and Log-probability plot for Composites			and Capped-composites . . . . . .	V-37
Figure 2-7 Varigraphy study for Jinying deposit . .	. . . . .	. . .	. . . . . . . . . . . . . . . . . . . . . . . . .	V-39
Figure 2-8 Swath plot for the Jinying deposit . . . .	. . . . .	. . .	. . . . . . . . . . . . . . . . . . . . . . . . .	V-45
Figure 2-9 Section plot for the Jinying deposit . . .	. . . . .	. . .	. . . . . . . . . . . . . . . . . . . . . . . . .	V-46
Figure 2-10 Mined out Stopes as of 2022/12/31 . .	. . . . .	. . .	. . . . . . . . . . . . . . . . . . . . . . . . .	V-47
Figure 2-11 Conceptual Jinying sublevel open stoping with		delayed backfill method at Jinying
mine (Source: Banmiaozi) . . . . . . . . . . . . . . . .	. . . . .	. . .	. . . . . . . . . . . . . . . . . . . . . . . . .	V-49
Figure 2-12 Banmiaozi Mine Process Flow Simplified Diagram			. . . . . . . . . . . . . . . . . . . . . . . .	V-53
Figure 2-13 Application of different valuation Methodologies			. . . . . . . . . . . . . . . . . . . . . . . . .	V-63
Figure 3-1 Location of the Dachaidan Project . . . .	. . . . .	. . .	. . . . . . . . . . . . . . . . . . . . . . . . .	V-76
Figure 3-2 Mining and Exploration License Areas of	the Dachaidan Project . . . . . . . . . . . . . . .			V-78
Figure 3-3 Regional Geological Map . . . . . . . . . .	. . . . .	. . .	. . . . . . . . . . . . . . . . . . . . . . . . .	V-84
Figure 3-4 Geological map of the Dachaidan Project	Area	. . .	. . . . . . . . . . . . . . . . . . . . . . . . .	V-85
Figure 3-5 Dachaidan mineralized domains . . . . . .	. . . . .	. . .	. . . . . . . . . . . . . . . . . . . . . . . . .	V-92
Figure 3-6 Histogram and Log-probability plot for Capped-composites . . . . . . . . . . . . . . . . . .				V-95
Figure 3-7 Varigraphy study for Dachaidan deposit	. . . . .	. . .	. . . . . . . . . . . . . . . . . . . . . . . . .	V-96
Figure 3-8 Swath plot for Dachaidan deposit . . . .	. . . . .	. . .	. . . . . . . . . . . . . . . . . . . . . . . . .	V-100
Figure 3-9 Yintai 2022 Exploration . . . . . . . . . . .	. . . . .	. . .	. . . . . . . . . . . . . . . . . . . . . . . . .	V-103
Figure 3-10 Map of Qinglonggou gold mine from Changchun Gold Design Institute, 2020 FS
report (Source: Dachaidan) . . . . . . . . . . . . . . . .	. . . . .	. . .	. . . . . . . . . . . . . . . . . . . . . . . . .	V-104

Figure 4-16 Application of different valuation Methodologies	. . . . . . . . . . . . . . . . . . .	.	. . . . . V-180
Figure 5-1 Location of the Yulong Project . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . .	.	. . . . . V-192
Figure 5-2 Mining and Exploration License Area of the Yulong Project . . . . . . . . . . . .		.	. . . . . V-194
Figure 5-3 Geological map of the Greater Hingan Mountains Area . . . . . . . . . . . . . . . .		.	. . . . . V-199
Figure 5-4 Geological Map of the Yulong Project Area . . . .	. . . . . . . . . . . . . . . . . . . .	.	. . . . . V-200
Figure 5-5 Representative Cross Section of the Huaaobaote area, Yulong Project . . . . . .		.	. . . . . V-201
Figure 5-6 Domain modelling for Huaaobaote gold mine . . .	. . . . . . . . . . . . . . . . . . . .	.	. . . . . V-208
Figure 5-7 Histogram and Log-probability plot for Composites and Capped-composites		.	. . . . . V-209
Figure 5-8 Varigraphy study for Huaaobaote deposit . . . . . .	. . . . . . . . . . . . . . . . . . . .	.	. . . . . V-210
Figure 5-9 Conceptual Huaaobaote long-hole sublevel stoping	method at Huaaobaote Mine
(Source: Yulong) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . .	.	. . . . . V-215
Figure 5-10 Conceptual shrinkage stoping method at Huaaobaote Mine (Source: Yulong)			. . . . . V-216
Figure 5-11 2,000 t/d Processing Flowsheet Diagram . . . . .	. . . . . . . . . . . . . . . . . . . .	.	. . . . . V-223
Figure 5-12 Application of different valuation Methodologies	. . . . . . . . . . . . . . . . . . .	.	. . . . . V-235
Figure 6-1 Location of the Huasheng Project . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . .	.	. . . . . V-248
Figure 6-2 Mining License area of the Huasheng Project . . .	. . . . . . . . . . . . . . . . . . . .	.	. . . . . V-250
Figure 6-3 Regional Geological Map . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . .	.	. . . . . V-255
Figure 6-4 Geological Map of the Huasheng Project Area . .	. . . . . . . . . . . . . . . . . . . .	.	. . . . . V-257
Figure 6-5 Exploration Line J26 Cross Section of the Huasheng Project . . . . . . . . . . . .		.	. . . . . V-258
Figure 6-6 Histogram and Log-probability plot for Composites and Capped-composites		.	. . . . . V-265
Figure 6-7 Varigraphy study for Huasheng deposit . . . . . . .	. . . . . . . . . . . . . . . . . . . .	.	. . . . . V-266
Figure 6-8 Swath plot for Huasheng deposit . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . .	.	. . . . . V-268
Figure 6-9 Section plot for Huasheng deposit . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . .	.	. . . . . V-269
Figure 6-10 Block grade interpolation for Huasheng deposit	. . . . . . . . . . . . . . . . . . . .	.	. . . . . V-270

Table 4-9 Dong’an Mineral Reserve at a 3.0 g/t Au cut-off as of 2022/12/31 by BAW	Table 4-9 Dong’an Mineral Reserve at a 3.0 g/t Au cut-off as of 2022/12/31 by BAW	. . . . . . . . V-169
Table 4-10 The preliminary Dong’an mine schedule by BAW . . . . . . .	. . . . . . . . . . .	. . . . . . . . V-170
Table 4-11 Mine Major Equipment Summary . . . . . . . . . . . . . . . . . .	. . . . . . . . . . .	. . . . . . . . V-171
Table 4-12 Heihe Existing Processing Plant Production Indexes Summary . . . . . . . .		. . . . . . . . V-176
Table 4-13 Test Result of 2019 and Existing 1,250 t/d Processing Indexes Comparison		. . . . . . . V-177
Table 5-1 Mining and Exploration Licenses, Yulong Project . . . . . . . .	. . . . . . . . . . .	. . . . . . . . V-193
Table 5-2 2020-2022 Production Summary of the Yulong Project . . . .	. . . . . . . . . . .	. . . . . . . . V-198
Table 5-3 Summary of Major Sample Workings as of 31/12/2022 . . . .	. . . . . . . . . . .	. . . . . . . . V-203
Table 5-4 Varigraphy study for Huaaobaote deposit . . . . . . . . . . . . . .	. . . . . . . . . . .	. . . . . . . . V-211
Table 5-5 Variogram parameters in Datamine™ZXY rotation . . . . . .	. . . . . . . . . . .	. . . . . . . . V-211
Table 5-6 Block model attributes . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . .	. . . . . . . . V-211
Table 5-7 Summary of Huaaobaote Mineral Resources at a 0.8 g/t Pb equivalent cut-off as of
2022/12/31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . .	. . . . . . . . V-212
Table 5-8 Yulong Mineral Reserve at an Eq Pb cut-off as of 2022/12/31	by BAW . . .	. . . . . . . . V-217
Table 5-9 The preliminary Huaaobaote mine schedule by BAW . . . . .	. . . . . . . . . . .	. . . . . . . . V-219
Table 5-10 Mine Major Equipment Summary . . . . . . . . . . . . . . . . . .	. . . . . . . . . . .	. . . . . . . . V-220
Table 5-11 1,400 t/d Processing Plant Main Equipment List . . . . . . . .	. . . . . . . . . . .	. . . . . . . . V-226
Table 5-12 3,030 t/d Processing Plant Main Equipment List . . . . . . . .	. . . . . . . . . . .	. . . . . . . . V-227
Table 5-13 Existing Processing Indexes . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . .	. . . . . . . . V-228
Table 5-14 3,030 t/d Processing Indexes . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . .	. . . . . . . . V-228
Table 5-15 Test Results and Existing Production Indexes Comparison	. . . . . . . . . . .	. . . . . . . . V-229
Table 6-1 Corner Coordinates of the Mining License, Huasheng Project	. . . . . . . . . .	. . . . . . . . V-249
Table 6-2 Resource Estimate of the Huasheng Project by SRK, as of 30/09/2014 . . . .		. . . . . . . . V-253
Table 6-3 Reserve Estimate of the Huasheng Project by SRK, as of 30/09/2014 . . . .		. . . . . . . . V-253

AI assistant

Shandong Gold Mining Co., Ltd. — Proxy Solicitation & Information Statement 2023

50168_rns_2023-06-14_4c99b0ec-0ebf-4f1a-9475-12af948fc330.pdf

SHANDONG GOLD MINING CO., LTD. 山東黃金礦業股份有限公司

MAJOR TRANSACTION ACQUISITION OF SHARES IN THE TARGET COMPANY AND NOTICE OF 2023 THIRD EXTRAORDINARY GENERAL MEETING

DEFINITIONS

DEFINITIONS

SHANDONG GOLD MINING CO., LTD. 山東黃金礦業股份有限公司

(Stock Code: 1787)

Executive Directors:

Non-executive Directors:

Independent Non-executive Directors:

Principal place of business in Hong Kong:

MAJOR TRANSACTION ACQUISITION OF SHARES IN THE TARGET COMPANY AND NOTICE OF 2023 THIRD EXTRAORDINARY GENERAL MEETING

1. INTRODUCTION

2. THE ACQUISITION

The Supplemental Agreement

Asset to be acquired

LETTER FROM THE BOARD

Consideration

Transfer price

Payment

Evaluation and pricing of the transaction

(2) Acquiring control over the Target Company

(3) Strategic synergy

(4) Broad prospects for development

LETTER FROM THE BOARD

(4) Strategic synergy between the Company and the Target Company

(5) The broader prospects for development of the Target Company

Effectiveness of the Terms of the Agreements

Completion

(1) The General Meeting’s Level

(2) The Board of Directors’ Level

(3) Management level

Information of the Relevant Parties

The Company

China Yintai

Mr. Shen

Information of the Target Company

LETTER FROM THE BOARD

LETTER FROM THE BOARD

Summary of the major mining assets held by the Target Company

(I) Banmiaozi Project

Business Licence

LETTER FROM THE BOARD

(II) Dachaidan Project

LETTER FROM THE BOARD

Mining Licences

LETTER FROM THE BOARD

(III) Heihe Project

Mining Licence

Business Licence

LETTER FROM THE BOARD

(IV) Yulong Project

Mining Licences

LETTER FROM THE BOARD

LETTER FROM THE BOARD

(V) Huasheng Project

Business Licence

Reasons for and Benefits of the Acquisition

(I) Continued improvement in industry competitiveness and brand influence

(II) Further increase in resource reserves

(III) Significant increase in both gold production and non-ferrous metal production

(IV) Further strengthening of the capacity of industrial and regional synergies

LETTER FROM THE BOARD

Impact of the Transaction on Yintai Gold’s Horizontal Competition

LETTER FROM THE BOARD

Impact of the Transaction on Yintai Gold’s Related Party Transactions

Impact of the Transaction on the Independence of Yintai Gold

Hong Kong Listing Rules Implications

Financial Effects of the Acquisition

Waiver from Strict Compliance with Rule 14.67(6)(a)(i) of the Hong Kong Listing Rules

Legal Proceedings and Compliance

Environmental Responsibility

LETTER FROM THE BOARD

Others

Impairment assessment of goodwill and intangible assets involved in the pro forma financial information of the Enlarged Group in Appendix IV of this circular

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LETTER FROM THE BOARD

Shandong Gold Mining Co., Ltd. Proxy Solicitation & Information Statement 2023