THE CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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.

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 Xinjiang Xinxin Mining Industry Co., Ltd., you should at once hand this circular and the accompanying form of proxy to the purchaser or the transferee or to the bank, licensed securities dealer or other agent through whom the sale was effected for transmission to the purchaser or transferee.

This circular appears for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for securities of the Company.

Xinjiang Xinxin Mining Industry Co., Ltd.*
新疆新鑫礦業股份有限公司
(a joint stock limited company incorporated in the People's Republic of China with limited liability)
(Stock code: 3833)

MAJOR TRANSACTION AND CONNECTED TRANSACTION
IN RELATION TO THE ACQUISITION OF 51% EQUITY INTEREST IN THE TARGET COMPANY
PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION
NOTICE OF THE 2025 EGM
NOTICE OF THE 2025 DOMESTIC SHARE CLASS MEETING AND
NOTICE OF THE 2025 H SHARE CLASS MEETING

Financial Adviser to the Company

Independent Financial Adviser to the Independent Board Committee and
the Independent Shareholders

A letter from the Board of the Company is set out on pages 1 to 30 of this circular. A letter from the Independent Board Committee containing its recommendation to the Independent Shareholders is set out on pages 31 to 32 of this circular. A letter from the Independent Financial Adviser containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 33 to 53 of this circular.

Notices convening the EGM and the Class Meetings to be held at Conference Room, 6/F, No. 501, Fusion South Road, Cooperation Zone, Economic and Technological Development Zone, Urumqi, Xinjiang, the PRC on Friday, 9 May 2025 at 12:00 p.m. were despatched to the Shareholders in the manner as they elect to receive corporate communications on 24 March 2025, and published on the website of the Stock Exchange at www.hkexnews.hk and the Company's website at kunlun.wsfg.hk.

Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or the Class Meetings or any adjournment thereof should you so wish.

24 March 2025

For identification purposes only

CONTENT

Pages

DEFINITIONS ii

LETTER FROM THE BOARD 1

LETTER FROM THE INDEPENDENT BOARD COMMITTEE. 31

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER 33

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 OF THE TARGET COMPANY III-1

APPENDIX IV - UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP IV-1

APPENDIX V - COMPETENT PERSON'S REPORT V-1

APPENDIX VI - VALUATION REPORT. VI-1

APPENDIX VII - GENERAL INFORMATION. VII-1

APPENDIX VIII - SPECIAL RESOLUTION I COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD. VIII-1

APPENDIX IX - SPECIAL RESOLUTION II COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD. IX-1

NOTICE OF THE 2025 EGM. EGM-1

NOTICE OF THE 2025 DOMESTIC SHARE CLASS MEETING. DCM-1

NOTICE OF THE 2025 H SHARE CLASS MEETING. HCM-1

DEFINITIONS

In this circular, unless the context otherwise requires, the following terms shall have the meanings set out below:

“Acquisition” the acquisition of the Subject Interest contemplated under the Equity Transfer Agreement

“Amended Profit Compensation Agreement” the amendment agreement to be entered into by the Parties and Shanghai Xingqiang, pursuant to which the Company shall assume all rights and obligations of Xinjiang Non-ferrous under the Profit Compensation Agreement

“Announcement” the announcement dated 14 February 2025 of the Company in relation to the Equity Transfer Agreement and the transactions contemplated thereunder

“Articles of Association” the articles of association of the Company

“Articles” articles of associations of the Target Company as amended upon Completion

“associate(s)” has the meaning ascribed to it under the Listing Rules

“Board” the board of directors of the Company

“CaF₂” calcium fluoride

“Chapter 18 Value” the appraised value of the Karchar Fluorspar Mine excluding the Inferred Mineral Resource(s) under the Market Value basis under the Valuation Report

“Company” Xinjiang Xinxin Mining Industry Co., Ltd.* (新疆新鑫礦業股份有限公司), a joint stock limited company incorporated in the PRC with limited liability, the H Shares of which are listed on the Stock Exchange

“Competent Evaluator” a Competent Person undertaking valuations that satisfies Rule 18.23 of the Listing Rules

“Competent Person” a person satisfying the requirements of Rules 18.21 to 18.22 of the Listing Rules

– ii –

DEFINITIONS

"Competent Person’s Report"
the Competent Person’s report on the Karchar Fluorspar Mine issued by SRK in accordance with the requirements under Chapter 18 of the Listing Rules, which is set out in Appendix V – Competent Person’s Report to this circular

"Completion"
completion of the sale and purchase of the Subject Interest pursuant to the terms of the Equity Transfer Agreement

"connected person(s)"
has the meaning ascribed to it under the Listing Rules

"Consideration"
the total consideration in the sum of approximately RMB1,098.08 million, payable by the Company to Xinjiang Non-ferrous for the Acquisition under the Equity Transfer Agreement

"Director(s)"
director(s) of the Company

"Domestic Share Class Meeting"
the 2025 domestic share class meeting of the Company (or any adjournment thereof) to be held at 1:30 p.m. on Friday, 9 May 2025 (or immediately after the conclusion of the EGM or any adjournment thereof) at Conference Room, 6/F, No. 501, Fusion South Road, Cooperation Zone, Economic and Technological Development Zone, Urumqi, Xinjiang, the PRC

"EGM"
the 2025 extraordinary general meeting of the Company (or any adjournment thereof) to be held at Conference Room, 6/F, No. 501, Fusion South Road, Cooperation Zone, Economic and Technological Development Zone, Urumqi, Xinjiang, the PRC on Friday, 9 May 2025 at 12:00 p.m. for the purpose of considering and, if thought fit, passing the relevant resolution to approve the Equity Transfer Agreement and the transactions contemplated thereunder and the amendments to the Articles of Association

"Enlarged Group"
the Group as enlarged through Completion

"Equity Transfer Agreement"
the equity transfer agreement dated 14 February 2025 entered into by the Parties in relation to the Acquisition

"Exploration Fees"
exploration fees for the mining assets of the Target Company during the Profit Compensation Period

iii -

DEFINITIONS

"Exploration Licence I"
the exploration licence held by the Target Company for Xinjiang Ruoqiang County Karchar Southwest Fluorspar Mine exploration, the details of which are set out in the section headed "Information of the Target Company – Mineral assets of the Target Company – (iii) Exploration and mining licences" in the Letter from the Board and Table 3.2 in the Competent Person's Report in Appendix V to this circular

"Exploration Licence II"
the exploration licence held by the Target Company for Xinjiang Ruoqiang County Karchar West Copper-Gold Mine exploration, the details of which are set out in the section headed "Information of the Target Company – Mineral assets of the Target Company – (iii) Exploration and mining licences" in the Letter from the Board and Table 3.2 in the Competent Person's Report in Appendix V to this circular

"Feasibility Study"
a comprehensive technical and economic study of the selected development option for a mineral project that includes appropriately detailed assessments of applicable Modifying Factors together with any other relevant operational factors and detailed financial analysis that are necessary to demonstrate at the time of reporting that extraction is reasonably justified (economically mineable). The results of the study may reasonably serve as the basis for a final decision by a proponent or financial institution to proceed with, or finance, the development of the project. The confidence level of the study will be higher than that of a Pre-Feasibility Study

"Former Personal Guarantee Letter"
the personal guarantee letter dated 25 July 2023 entered into by Mr. Wu, the details of which are set out in the section headed "Other Transaction Documents Contemplated Under the Equity Transfer Agreement" in the Letter from the Board in this circular

"Former Share Pledge Agreement"
the share pledge agreement dated 25 July 2023 entered into between Shanghai Xingqiang and Xinjiang Non-ferrous, the details of which are set out in the section headed "Other Transaction Documents Contemplated Under the Equity Transfer Agreement" in the Letter from the Board in this circular

"Group"
the Company and its subsidiaries

– iv –

DEFINITIONS

"Guaranteed Profit"
the guaranteed aggregated net profit of the Target Company in the amount of RMB429,383,100 for the Profit Compensation Period

"Hong Kong"
the Hong Kong Special Administrative Region of the PRC

"H Share(s)"
overseas listed foreign share(s) in the ordinary share capital of the Company with a nominal value of RMB0.25 each subscribed for and traded in Hong Kong dollars and listed on the Stock Exchange

"H Share Class Meeting"
the 2025 H share class meeting of the Company (or any adjournment thereof) to be held at 2:00 p.m. on Friday, 9 May 2025 (or immediately after the conclusion of the EGM and the Domestic Share Class Meeting or any adjournment thereof) at Conference Room, 6/F, No. 501, Fusion South Road, Cooperation Zone, Economic and Technological Development Zone, Urumqi, Xinjiang, the PRC

"Independent Board Committee"
an independent committee of the Board, comprising all of the independent non-executive Directors, namely Mr. Hu Benyuan, Mr. Huang Yong and Mr. Lee Tao Wai, and formed to advise the Independent Shareholders in respect of the Equity Transfer Agreement and the transactions contemplated thereunder

"Independent Financial Adviser" or "Maxa Capital"
Maxa Capital Limited, a corporation licensed to carry out type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activities under the SFO, and the independent financial adviser to the Independent Board Committee and the Independent Shareholder(s) in respect of the Equity Transfer Agreement and the transactions contemplated thereunder

"Independent Shareholder(s)"
the Shareholder(s) other than Xinjiang Non-ferrous and its associates, who is/are neither involved nor interested in the Equity Transfer Agreement and the transactions contemplated thereunder

"independent third party"
third party independent of and not connected with the Company and its connected persons

– v –

DEFINITIONS

“Indicated Mineral Resource(s)”
as defined under the JORC Code (2012), an “Indicated Mineral Resource” is that part of a Mineral Resource for which quantity, grade (or quality), densities, shape and physical characteristics are estimated with sufficient confidence to allow the application of modifying factors in sufficient detail to support mine planning and evaluation of the economic viability of the deposit. An Indicated Mineral Resource has a lower level of confidence than that applying to a Measured Mineral Resource and may only be converted to a Probable Ore Reserve

“Inferred Mineral Resource(s)”
as defined under the JORC Code (2012), an “Inferred Mineral Resource(s)” is that part of a Mineral Resource for which quantity and grade (or quality) are estimated on the basis of limited geological evidence and sampling. An Inferred Mineral Resource has a lower level of confidence than that applying to an Indicated Mineral Resource and must not be converted to an Ore Reserve. It is reasonably expected that the majority of Inferred Mineral Resources could be upgraded to Indicated Mineral Resources with continued exploration

“JLL”
Jones Lang LaSalle Corporate Appraisal and Advisory Limited, the Competent Evaluator

“JORC Code (2012)”
the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (2012 edition), as published by the Joint Ore Reserves Committee

“Karchar Fluorspar Mine”
Karchar fluorspar mine* (卡爾恰爾螢石礦) located to the southeast of Ruoqiang County, Xinjiang Autonomous Region, the PRC

“km”
kilometer

“km²”
square kilometer

“kt”
thousand tonnes

“Latest Practicable Date”
19 March 2025, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein

– vi –

DEFINITIONS

"Listing Rules"
the Rules Governing the Listing of Securities on the Stock Exchange

"LOM"
life of mine

"Market Value"
the estimated amount (or the cash equivalent of some other consideration) for which the mineral asset should exchange on the date of valuation between a willing buyer and a willing seller in an arm's length transaction after appropriate marketing where the parties had each acted knowledgeably, prudently and without compulsion

"Measured Mineral Resource(s)"
as defined under the JORC Code (2012), a "Measured Mineral Resource" is that part of a Mineral Resource for which quantity, grade (or quality), densities, shape, and physical characteristics are estimated with confidence sufficient to allow the application of modifying factors to support detailed mine planning and final evaluation of the economic viability of the deposit. A Measured Mineral Resource has a higher level of confidence than that applying to either an Indicated Mineral Resource or an Inferred Mineral Resource

"Mtpa"
million tonnes per annum

"Mineral Resource(s)"
as defined under the JORC Code (2012), a "Mineral Resource" is a concentration or occurrence of solid material of economic interest in or on the earth's crust in such form, grade (or quality), and quantity that there are reasonable prospects for eventual economic extraction. Mineral Resources are subdivided, in order of increasing geological confidence, into Inferred Mineral Resource, Indicated Mineral Resource and Measured Mineral Resource categories according to the degrees of geological confidence

– vii –

DEFINITIONS

"Modifying Factors"
as defined under the JORC Code (2012), “Modifying Factors” are considerations used to convert Mineral Resources to Ore Reserves. These include, but are not restricted to, mining, processing, metallurgical, infrastructure, economic, marketing, legal, environmental, social and governmental factors

"Mr. Wu"
Mr. Wu Jun (吳軍), the controlling shareholder of Shanghai Xingqiang as at the Latest Practicable Date

"Ore Reserve(s)"
as defined under the JORC Code (2012), an “Ore Reserve” is the economically mineable part of a Measured and/or Indicated Mineral Resource, including losses and dilution that may occur due to mine design and during mining operation

"Original Acquisition"
the acquisition by Xinjiang Non-ferrous of the Subject Interest through acquisition of equity interest in the Target Company from Shanghai Xingqiang and capital increase in the Target Company in August 2023

"Original Purchase Price"
the total consideration in the amount of approximately RMB885.6 million paid by Xinjiang Non-ferrous for the Subject Interests under the Original Acquisition

"Party(ies)"
Xinjiang Non-ferrous, the Company, and the Target Company, collectively and each a Party

"Personal Guarantee Letter"
the personal guarantee letter to be entered into by Mr. Wu, pursuant to which Mr. Wu shall provide irrevocable personal guarantee on a joint and several liability basis in favour of the Company for Shanghai Xingqiang’s performance of its obligations under the Amended Profit Compensation Agreement

"PRC"
the People’s Republic of China (for the purpose of this circular, excluding Hong Kong, Taiwan and the Macau Special Administrative Region of the PRC)

– viii –

DEFINITIONS

"Pre-Feasibility Study"
a comprehensive study of a range of options for the technical and economic viability of a mineral project that has advanced to a stage where a preferred mining method, in the case of underground mining, or the pit configuration, in the case of an open pit, is established and an effective method of mineral processing is determined. It includes a financial analysis based on reasonable assumptions on the Modifying Factors and the evaluation of any other relevant factors which are sufficient for a Competent Person, acting reasonably, to determine if all or part of the Mineral Resources may be converted to an Ore Reserve at the time of reporting. A Pre-Feasibility Study is at a lower confidence level than a Feasibility Study

"Probable Ore Reserve(s)"
as defined under the JORC Code (2012), a "Probable Ore Reserve" is the economically mineable part of an Indicated Mineral Resource, and in some circumstances, a Measured Mineral Resource

"Profit Compensation Agreement"
the profit compensation agreement dated 25 July 2023 entered into by Xinjiang Non-ferrous and Shanghai Xingqiang (as amended by the same parties), the details of which are set out in the section headed "Other Transaction Documents Contemplated Under the Equity Transfer Agreement" in the Letter from the Board in this circular

"Profit Compensation Period"
the period comprising the five months ending 31 December 2025 and the two years ending 31 December 2027

"RMB"
Renminbi, the lawful currency of the PRC

"SFO"
the Securities and Futures Ordinance (Chapter 571, laws of Hong Kong)

"Shanghai Xingqiang"
Shanghai Xingqiang Mining Industry Co., Ltd.* (上海興芜礦業有限公司), a limited liability company incorporated in the PRC, which beneficially held 49% equity interest in the Target Company as at the Latest Practicable Date

"Shareholder(s)"
shareholder(s) of the Company

– ix –

DEFINITIONS

"Share Pledge Agreement"
the share pledge agreement to be entered into between Shanghai Xingqiang and the Company, pursuant to which Shanghai Xingqiang shall pledge its equity interest in the Target Company representing the registered share capital in the Target Company of RMB43,482,400 in favour of the Company to secure Shanghai Xingqiang’s performance of its obligations under the Amended Profit Compensation Agreement

"SRK"
SRK Consulting (Hong Kong) Limited, the Competent Person

"Stock Exchange"
The Stock Exchange of Hong Kong Limited

"Subject Interest"
51% equity interest in the Target Company to be acquired by the Company under the Equity Transfer Agreement

"subsidiary"
has the meaning to be construed in accordance with section 2 of the Companies Ordinance (Chapter 32, laws of Hong Kong)

"Target Company"
Xinjiang Huaou Mining Co., Ltd.* (新疆華甌礦業有限公司), a state-controlled enterprise with limited liability and incorporated in the PRC

"VALMIN Code"
Code for the Technical Assessment and Valuation of Mineral and Petroleum Assets and Securities for Independent Expert Reports 2015 Edition

"Valuation Report"
the valuation report prepared by JLL in compliance with the requirements under Chapter 18 of the Listing Rules, which is set out in Appendix VI – Valuation Report to this circular

"Xinjiang Non-ferrous"
Xinjiang Non-ferrous Metal Industry (Group) Ltd.* (新疆有色金屬工業(集團)有限責任公司), a wholly state-owned enterprise with limited liability and incorporated in the PRC, being one of the promoters and the controlling shareholder of the Company

"Xinjiang Non-ferrous Group"
Xinjiang Non-ferrous and its subsidiaries (excluding the Group)

"%"
per cent

For identification purpose only

LETTER FROM THE BOARD

Executive Director:
Mr. Chen Yin

Non-executive Directors:
Mr. Qi Xinhui
Mr. Zhou Chuanyou
Mr. Wang Lijian
Ms. Chen Yang
Mr. Hu Chengye

Independent Non-executive Directors:
Mr. Hu Benyuan
Mr. Huang Yong
Mr. Lee Tao Wai

Statutory address and principal place of
business in the PRC:
No. 501, Fusion South Road,
Cooperation Zone, Economic and
Technological Development Zone,
Urumqi, Xinjiang

Registered office in Hong Kong:
9/F The Center,
99 Queen's Road Central,
Central, Hong Kong

24 March 2025

To the Shareholders

Dear Sir or Madam,

MAJOR TRANSACTION AND CONNECTED TRANSACTION
IN RELATION TO THE ACQUISITION OF 51% EQUITY INTEREST
IN THE TARGET COMPANY
PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION
NOTICE OF THE 2025 EGM
NOTICE OF THE 2025 DOMESTIC SHARE CLASS MEETING AND
NOTICE OF THE 2025 H SHARE CLASS MEETING

LETTER FROM THE BOARD

INTRODUCTION

Reference is made to the Announcement.

On 14 February 2025, Xinjiang Non-ferrous, the Company, and the Target Company entered into the Equity Transfer Agreement pursuant to which Xinjiang Non-ferrous conditionally agreed to transfer, and the Company conditionally agreed to acquire, the Subject Interest, representing 51% equity interest in the Target Company, at the Consideration of approximately RMB1,098.08 million in accordance with the terms and conditions of the Equity Transfer Agreement.

Upon Completion, the Target Company will become a non-wholly owned subsidiary of the Company and its financial information will be consolidated into the financial statements of the Company.

The purpose of this circular is to provide you with, among other things: (i) further information on the Equity Transfer Agreement and the transactions contemplated thereunder; (ii) financial and other information on the Target Company; (iii) unaudited pro forma financial information on the Enlarged Group; (iv) the Competent Person's Report and the Valuation Report as required by Chapter 18 of the Listing Rules; (v) the recommendation from the Independent Board Committee to the Independent Shareholders in relation to the Equity Transfer Agreement and the transactions contemplated thereunder; (vi) a letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders; (vii) details of the proposed amendments to the Articles of Association; and (viii) details of the notices of the EGM, Domestic Share Class Meeting and H Share Class Meeting.

THE EQUITY TRANSFER AGREEMENT

Material Terms of the Equity Transfer Agreement

The material terms of the Equity Transfer Agreement are set out as follows:

Date

14 February 2025

LETTER FROM THE BOARD

Parties

(i) Xinjiang Non-ferrous (as the vendor);
(ii) the Company (as the purchaser); and
(iii) the Target Company.

As at the Latest Practicable Date, (i) Xinjiang Non-ferrous was the controlling shareholder (as defined under the Listing Rules) of the Company and was beneficially interested in 885,204,000 domestic shares of the Company, representing approximately 40.06% of the entire issued share capital of the Company. Accordingly, Xinjiang Non-ferrous is a connected person of the Company; and (ii) the Target Company is a non-wholly owned subsidiary of Xinjiang Non-ferrous and therefore a connected person of the Company.

Assets to be acquired

Pursuant to the Equity Transfer Agreement, Xinjiang Non-ferrous conditionally agreed to transfer, and the Company conditionally agreed to acquire, the Subject Interest, representing 51% equity interest in the Target Company.

Consideration and payment of Consideration

Pursuant to the Equity Transfer Agreement, the Consideration will be approximately RMB1,098.08 million.

The Consideration shall be payable in cash within five working days upon the Equity Transfer Agreement taking effect.

The Consideration of approximately RMB1,098.08 million is currently expected to be financed by the Company's (i) internal resources, i.e. cash in the amount of approximately RMB448.08 million and (ii) external financing, i.e. the bank loan in the amount of approximately RMB650.00 million. In the meantime, depending on its actual operational needs and financial conditions, the Company would apply for working capital loan to meet its daily working capital requirements. As at 30 June 2024, the Company's gearing ratio is approximately 2.3%, which has been maintained at a low level. Taking into account the present internal resources and the available credit facilities of the Enlarged Group, and considering the effect of the Acquisition, the Directors, after due and careful enquiry, are of the opinion that the Enlarged Group will have sufficient working capital to satisfy its present requirements.

Each of Xinjiang Non-ferrous and the Company shall bear its own relevant taxes and fees arising in the course of the transfer of the Subject Interest in accordance with applicable laws and regulations.

LETTER FROM THE BOARD

Effective date

The Equity Transfer Agreement shall take effect upon execution by the legal representative or authorised representative and affixation of the seal of each Party and satisfaction of the following conditions precedent:

(i) the approval of the Equity Transfer Agreement and the transactions contemplated thereunder by the Board and the Independent Shareholders at the EGM in compliance with the requirements under the Listing Rules;

(ii) the due execution of the Amended Profit Compensation Agreement;

(iii) the due execution of the Share Pledge Agreement and the Personal Guarantee Letter; and

(iv) the approval from the Xinjiang State-owned Assets Supervision and Administration Commission in respect of the Acquisition.

As at the Latest Practicable Date, save and except that the Equity Transfer Agreement and the transactions contemplated thereunder had been approved by the Board and the Xinjiang State-owned Assets Supervision and Administration Commission, none of the conditions precedent above had been satisfied or waived.

Transitional arrangement

Pursuant to the terms of the Equity Transfer Agreement, the transitional period will have commenced from 31 October 2024 (i.e. the reference date of the Valuation Report) and end on the date of completion of the registration of the transfer of the Subject Interest with the local administration of industry and commerce.

During such transitional period, (i) Xinjiang Non-ferrous shall actively maintain the stability of the production and operation, assets, personnel, etc. of the Target Company, and shall not engage in any acts against the interests of the Target Company, such as concealing or transferring assets or disposing of assets in disguised form; and (ii) the profit or loss of the Target Company attributable to the Subject Interest shall belong to the Company.

LETTER FROM THE BOARD

Amendments and termination

Upon occurrence of the following events, the Equity Transfer Agreement may be amended or terminated:

(i) the Equity Transfer Agreement becomes unenforceable due to force majeure event(s) or external cause(s) without default on the part of any Party; or
(ii) in the event that any Party ceases to be able to perform its contractual obligations under the Equity Transfer Agreement, other Parties are entitled to terminate the Equity Transfer Agreement.

Upon default of a Party, if the non-defaulting Parties could not continue to pursue the objective(s) underlying the Equity Transfer Agreement, the non-defaulting Parties are entitled to terminate the Equity Transfer Agreement.

Upon occurrence of the following events, the Company is entitled to terminate the Equity Transfer Agreement:

(i) upon signing of the Equity Transfer Agreement, there exists a significant deterioration in the production and operation of the Target Company without any effective solution;
(ii) upon signing of the Equity Transfer Agreement, there exist major issues such as those in relation to environmental protection and production safety, or other major administrative violations or penalties that prevent the Target Company from operating in the ordinary course of its business;
(iii) upon signing of the Equity Transfer Agreement, discovery by the Company of any material non-disclosure, misleading or false statements or records in the documents or introductory materials provided by Xinjiang Non-ferrous;
(iv) other circumstances stipulated by law; or
(v) if one or more of the condition(s) precedent is/are not satisfied or otherwise waived (except for those required under the Listing Rules).

LETTER FROM THE BOARD

Basis of Determination of the Consideration

The Consideration of approximately RMB1,098.08 million was agreed upon after arm’s length negotiations between Xinjiang Non-ferrous and the Company based on the equity value of the Subject Interest of approximately RMB1,098.08 million as at 31 October 2024 as appraised by JLL in the Valuation Report, and taking into account various factors including the production, operation and financial condition of the Target Company as well as the future development plan of the Target Company and the Karchar Fluorspar Mine.

Based on the above, the Directors (including the independent non-executive Directors who have given their view in the letter from the Independent Board Committee contained in this circular after receiving the advice from the Independent Financial Adviser) consider that the Consideration is fair and reasonable.

Xinjiang Non-ferrous obtained the Subject Interest under the Original Acquisition in August 2023 at the Original Purchase Price. The Company considers that the Original Purchaser Price would not affect the fairness and reasonableness of the Consideration. The Original Acquisition is an independent transaction from the Acquisition where parties thereto negotiated the price under separate circumstances and considerations. As far as the Acquisition is concerned, the Company engaged JLL, a Competent Evaluator, to prepare the Valuation Report in compliance with the requirements under Chapter 18 of the Listing Rules and the VALMIN Code and determined the amount of the Consideration based on the equity value of the Subject Interest as appraised by JLL in the Valuation Report. The Company is satisfied that the financial forecasts and assumptions provided in relation to the Target Company are reasonably justified, with regards to the relevant factors, including the production, operation and financial condition of the Target Company as well as the future development plan of the Target Company as at the reference date of the Valuation Report. The key operational assumptions in arriving the results of the Valuation Report, such as the production schedule, the capital expenditure and the unit price of product are either adjusted or developed by the independent expert (such as SRK) or based on independent resources. In arriving the fairness and reasonableness of the Consideration, the Directors have also taken into account the letter from the Independent Board Committee, which has taken into account the advice of the Independent Financial Advisers, who is of the view that the Consideration is fair and reasonable as far as the Independent Shareholders are concerned after its assessment. The details of such assessment by the Independent Financial Advisers are set out in section 7 “Assessment of the Consideration” in the Letter from the Independent Financial Adviser.

As mentioned above, the Original Acquisition is an independent and separate transaction from the Acquisition. The rights of Xinjiang Non-ferrous under the Profit Compensation Agreement are rights granted to Xinjiang Non-ferrous under the Original Acquisition by Shanghai Xingqiang upon their negotiations at that time and are attached to the Subject Interest. As part of the Acquisition, all rights attached to the Subject Interest would be passed from Xinjiang Non-ferrous to the Company and upon Completion, Xinjiang Non-ferrous would not hold the Subject Interest anymore and it would cease to enjoy any rights attached thereto. Upon the Amended Profit Compensation Agreement taking effect,

LETTER FROM THE BOARD

the Company will assume all rights of Xinjiang Non-ferrous under the Profit Compensation Agreement. The assumption of such rights granted by Shanghai Xingqiang, i.e. the other shareholder of the Target Company, is beneficial to the management and the achievement of profit targets of the Target Company and is therefore in the interest of the Company and its Shareholders as a whole. Furthermore, as set out above, the amount of the Consideration is based on the equity value of the Subject Interest as appraised by JLL in the Valuation Report and the financial forecasts and assumptions thereunder in relation to the Target Company are reasonably justified and are not based on the Guaranteed Profit. Based on above, the Company considers that terms and conditions of the transactions contemplated under the Equity Transfer Agreement are fair and reasonable.

MATERIAL TERMS IN THE ARTICLES OF ASSOCIATION OF THE TARGET COMPANY

Upon Completion, the rights and obligations of the shareholders of the Target Company with respect to the Target Company are to be governed by the Articles. The material terms of the Articles are set out as follows:

Matters Requiring Approval of Shareholders Representing More than Two-Thirds of the Total Voting Rights

The approval of shareholders representing more than two-thirds of the total voting rights in the Target Company in a general meeting is required for matters, among others, in relation to (i) remunerations to directors and supervisors, (ii) the profit distribution and loss recovery plans, (iii) increases or reductions of the registered share capital, (iv) the issuance of corporate bonds, (v) external guarantees and investments, (vi) acquisitions or sales of material assets with a value exceeding 30% of the Target Company’s most recent audited total assets or of RMB20.0 million or above, (vii) acquisitions or sales of non-operational assets with a value of RMB0.5 million or above, (viii) mergers, spinoffs, dissolutions, liquidations or changes of corporate forms, and (ix) amendments to the Articles.

LETTER FROM THE BOARD

Composition of the Board of Directors and Appointments of the Chairman and the Vice Chairman

The board of directors of the Target Company consists of five directors, three of which shall be appointed by the Company and two of which shall be appointed by Shanghai Xingqiang. The chairman and the vice chairman of the board of directors of the Target Company shall be appointed by the Company and Shanghai Xingqiang, respectively.

Appointments of the Senior Management

The general manager (who shall act simultaneously as the legal representative of the Target Company) shall be appointed by the board of directors of the Target Company on the recommendation of the Company. The vice general managers shall be appointed by the board of directors of the Target Company on the recommendation of the general manager. The chief financial officer shall be appointed by the board of directors of the Target Company on the recommendation of Shanghai Xingqiang.

Profit Distribution

Provided that the Target Company has made profits in three consecutive years and the conditions for profit distribution are met, the Target Company shall distribute no less than 30% of its distributable profits as dividends after retention of after-tax profits as statutory reserve and discretionary reserve. Where no profit distribution is made under such circumstances, a shareholder of the Target Company who votes against the non-distribution of profits in a general meeting is entitled to request the Target Company to acquire its equity interest in the Target Company at a reasonable price, or transfer its equity interest in the Target Company if the Target Company fails to do so.

Pre-Emption Right and Limitation on Transfer of Equity Interest by Shareholders

The shareholders of the Target Company are entitled to the pre-emption right to subscribe for the newly registered share capital of the Target Company.

Transfer of equity interest in the Target Company to a third party by a shareholder shall be subject to approval of the majority of the non-transferring shareholder(s) of the Target Company. Upon such an approval, the other non-transferring shareholder(s) shall have the right of first refusal to purchase the relevant equity interest under the same conditions offered to the third party.

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LETTER FROM THE BOARD

INFORMATION OF THE COMPANY AND XINJIANG NON-FERROUS

The Company

The Company is principally engaged in the mining, ore processing, smelting and refining of nickel, copper and other non-ferrous metals, which include cobalt and precious metals such as gold, silver, platinum and palladium.

Xinjiang Non-ferrous

Xinjiang Non-ferrous is principally engaged in, among other things, investment in nonferrous metal industry and sale of non-ferrous metal products. To the best knowledge, information and belief of the Directors having made all reasonable enquiries, as at the Latest Practicable Date, Xinjiang Non-ferrous was a wholly state-owned enterprise.

INFORMATION OF THE TARGET COMPANY

The Target Company is a limited liability company incorporated in the PRC on 7 December 2007. As at the Latest Practicable Date, its registered share capital was RMB113.0 million, which had been fully paid. It is principally engaged in energy investment, mining investment, mineral resources exploration and investment, and sales of mineral products.

As at the Latest Practicable Date, the Target Company was owned as to 51% by Xinjiang Non-ferrous and 49% by Shanghai Xingqiang. To the Directors' knowledge, information and belief, and having made all reasonable enquiries, as at the Latest Practicable Date, Shanghai Xingqiang, an independent third party of the Company, was owned as to 94.75% by Mr. Wu and 5.25% by another individual, each an independent third party of the Company.

Upon Completion, the Target Company will be owned as to 51% by the Company and 49% by Shanghai Xingqiang.

Mineral assets of the Target Company

Karchar Fluorspar Mine

(i) Location: The Karchar Fluorspar Mine is located approximately 73 km southeast of Ruoqiang Town, Ruoqiang County, Bayingolin Mongol Autonomous Prefecture in southeastern Xinjiang, the PRC, and approximately 196 km west of Huatugou Town, Mangya City, Qinghai, the PRC.

LETTER FROM THE BOARD

(ii) Commodity type: The main commodity is fluorspar, an important industrial mineral with a variety of applications. The Karchar Fluorspar Mine is currently being designed to produce acid-grade fluorspar concentrate at 97% CaF₂, primarily targeting the hydrofluoric acid and aluminium fluoride markets, within the PRC.

(iii) Exploration and mining licences:

The following tables set out a summary of the key information pertaining to the exploration and mining licences of the Target Company:

Exploration Licences

Exploration Licence I

Project name Xinjiang Ruoqiang County Karchar Southwest Fluorspar Mine Exploration

Area 17.63 km² (partly overlaps with the mining licence below)

Validity From 15 June 2021 to 15 June 2026

Exploration Licence II

Project name Xinjiang Ruoqiang County Karchar West Copper-Gold Mine Exploration

Area 25.90 km²

Validity From 9 August 2021 to 9 August 2026

Mining Licence

Project name Xinjiang Ruoqiang County Karchar Fluorspar Mine

Commodity type Fluorspar

Mining Capacity 1.2 Mtpa

Area 7.763 km²

Elevation range From 3,203 meters to 2,354 meters above the sea level

Validity From 27 June 2023 to 27 June 2038

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LETTER FROM THE BOARD

(iv) Exploration and Proposed Operation:

The Target Company commenced exploration in the Karchar Fluorspar Mine area in 2008, with an initial focus on copper and gold mineralization. In 2009, the exploration focus shifted with the discovery of fluorspar mineralization. A comprehensive exploration program was conducted from 2016 to 2019, and an infill drilling program was completed in 2024. In addition to the exploration activities within the mining license area, preliminary exploration was also carried out within the Exploration Licence II area from 2008 to 2024 and as at 31 October 2024, only 4 drill holes were completed and additional exploration work is required to determine whether a deposit exists.

The Karchar Fluorspar Mine is currently under construction and has not yet started operations. The proposed mining methods include underground (a) cut-and-fill method and (b) drift-and-fill method. The trial production and commercial production are currently expected to commence in the third quarter of 2025. The ore production of the Karchar Fluorspar Mine is expected to be approximately 155 kt in 2025, 797 kt in 2026, and 1,200 kt in 2027. The full production capacity of 1.2 Mtpa is expected to be achieved by 2027. The Karchar Fluorspar Mine has a LOM up to year 2047. For details of the production plan, please refer to section 8.9 headed "Production schedule" of the Competent Person's Report in Appendix V to this circular.

The total capital requirement for the development of the Karchar Fluorspar Mine project is estimated to be approximately RMB1,612.6 million, which is expected to be funded by the Target Company's existing share capital and external financing. As at the Latest Practicable Date, the Target Company has entered into loan agreement(s) with the relevant bank(s) with credit limit of approximately RMB 1,260.0 million.

The Target Company intends to produce and sell its products directly to the fluorochemical companies located within the PRC initially. As at the Latest Practicable Date, the Target Company had not yet entered into any offtake agreement.

(v) Mineral Resources and Ore Reserves:

The following table sets out the Mineral Resources estimate of the Karchar Fluorspar Mine covered by the mining licence granted to the Target Company as at 31 October 2024 in accordance with the JORC Code (2012):

Mineral Resource Category	Tonnage (kt)	Grade (%)	CaF_{2} (kt)
Indicated Mineral Resource	35,480	33.24	11,795
Inferred Mineral Resource	26,455	32.56	8,614
Total	61,936	32.95	20,409

LETTER FROM THE BOARD

Notes:

The Mineral Resources set out above are on an in situ basis at a 15% CaF₂ cut-off.
Tonnages are set out in metric units, grades are set out in percentage of CaF₂. Tonnages and grades are rounded appropriately. Rounding, as required by reporting guidelines, may result in apparent summation differences between tonnes, grade and contained mineral content. These differences, if occur, are not considered to be material.

The following table sets out the Ore Reserve estimate of the Karchar Fluorspar Mine covered by the mining licence granted to the Target Company as at 31 October 2024 in accordance with the JORC Code (2012):

Ore Reserve Category	Ore Reserve (kt)	CaF₂ (%)	CaF₂ Contained (kt)
Probable Ore Reserve	24,787	28.6	7,094
Total	24,787	28.6	7,094

Notes:

These Ore Reserves are classified as Probable Ore Reserves as there is no Measured Mineral Resource.
The cut-off grade to distinguish between ore and waste is 16.6% CaF₂.
The Ore Reserves are reported as dry metric tonne.
The Ore Reserves are reported at the reference point as received at the run-of-mine bin.
The Ore Reserves are reported inclusive of Mineral Resources.

The Company has engaged SRK to prepare the Competent Person’s Report in compliance with the requirements under Chapter 18 of the Listing Rules. Further information about the Karchar Fluorspar Mine are provided in the Competent Person’s Report, which is set out in Appendix V – Competent Person’s Report to this circular.

LETTER FROM THE BOARD

Valuation of the mineral assets of the Target Company

The Company has engaged JLL to prepare the Valuation Report in compliance with the requirements under Chapter 18 of the Listing Rules.

Valuation approach and assumptions

The discounted cash flow method of the income approach is adopted as the valuation approach for the Market Value of the Karchar Fluorspar Mine. Other valuation methodologies such as the market approach were considered, however, the approach's reliability is potentially compromised by numerous, often undisclosed factors that may have influenced comparable market transactions, thereby introducing a significant element of subjectivity. On the other hand, the cost approach is inappropriate for the valuation as it does not directly incorporate information about the economic benefits contributed by the Karchar Fluorspar Mine. Considering the reserves, mining and processing recoveries, and capital and operating costs are well defined in the Competent Person's Report, it is generally accepted that the discounted cash flow method is the most relevant and appropriate valuation method.

The key general assumptions and operational assumptions are listed as follows:

(i) General assumptions

(1) The Target Company, which holds the Karchar Fluorspar Mine, has been duly established and validly existing, and has obtained the necessary governmental authorizations, approvals, permits, licenses or certificates required to perform its business. The valuation assumes that the Karchar Fluorspar Mine's legal standing in ownership, permits, regulatory approvals, and operation rights remain valid, legally compliant, and free of any liens, encumbrances, disputes, or risks.

(2) In order to realize the growth potential of the business and maintain a competitive edge, additional manpower, equipment and facilities are necessary to be employed. For the valuation exercise, JLL has assumed that all proposed facilities and systems will work properly and will be sufficient for future expansion.

(3) JLL has assumed continuation of prudent and effective management policies over whatever period of time that is considered to be necessary in order to maintain the character and integrity of the assets valued.

(4) JLL has assumed all the information provided to it to be reliable and legitimate. JLL has relied to a considerable extent on such information in arriving at its opinion of value.

LETTER FROM THE BOARD

(5) JLL has assumed that there will be no material change in the existing political, legal, technological, fiscal or economic condition which may adversely affect the business of the Target Company.

(6) Operational and contractual terms bound by the contracts and agreements entered into by the Target Company will be honored.

(7) Competitive advantages and disadvantages of the Target Company will not change significantly during the period under consideration.

(ii) Operational assumptions

(1) The LOM of the Karchar Fluorspar Mine is up to year 2047, which is based on the permitted annual production capacity and the existing ore reserves estimated by SRK.

(2) The designed production capacity is 1.2 Mtpa. The ore production of the Karchar Fluorspar Mine is approximately at 155 kt of in year 2025 and 797 kt in year 2026. The Karchar Fluorspar Mine is targeting a full capacity in 2027.

(3) The valuation of the Karchar Fluorspar Mine has been undertaken based on price estimates by an independent market research company. The projected real unit prices of 97% fluorite wet powder (approximately 10% moisture content) from 2025 to 2027 are estimated to be RMB3,553, 3,661, and 3,758/ton respectively, including tax of 13%, prices after 2027 are assumed to be constant.

(4) Ore grade ranges from 24.65% to 30.36% throughout the LOM of the Karchar Fluorspar Mine.

(5) Processing recovery rate is assumed to be 80% for the LOM of the Karchar Fluorspar Mine.

(6) The product is fluorspar concentrate with 97% CaF₂ with approximately 10% moisture content.

(7) The unit operating cost, comprising of purchase of raw and auxiliary material, purchase of power and fuel, wages and salaries expense, safety production cost, mining outsourcing costs, selling and administration expense is estimated at approximately RMB254/ton.

(8) Total capital expenditure over the LOM (including capital expenditure for maintenance) is approximately RMB1.85 billion.

(9) The depreciation method used is straight-line, with an asset lifespan of 10-25 years and a salvage value of 5%.

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LETTER FROM THE BOARD

Valuation Results

Based on the valuation methodology and assumptions, the preferred value for the Chapter 18 Value of the Karchar Fluorspar Mine is estimated at RMB1,991.00 million as at 31 October 2024. After deriving the Chapter 18 Value of the Karchar Fluorspar Mine, JLL has included the other assets and liabilities of the Target Company to arrive at the equity value of the Subject Interest. The equity value of the Subject Interest is estimated at approximately RMB1,098.08 million as at 31 October 2024.

Further information about the valuation of the Karchar Fluorspar Mine and the equity value of the Subject Interest are provided in the Valuation Report, which is set out in Appendix VI – Valuation Report to this circular.

Financial Information of the Target Company

The audited major financial figures of the Target Company for the two years ended 31 December 2023 and the ten months ended 31 October 2024, prepared in accordance with the China Accounting Standards for Business Enterprises, are summarised as follows:

	For the year ended/as at 31 December		For the ten months ended/as at 31 October
	2022 (audited) RMB'000	2023 (audited) RMB'000	2024 (audited) RMB'000
Revenue	-	2,307.7	7,265.7
Loss before tax	10,221.0	2,355.3	3,967.5
Loss after tax	10,221.0	2,355.3	3,965.9
Net assets	63,123.5	414,201.6	410,235.7

LETTER FROM THE BOARD

Further Information of the Target Company and the Karchar Flourspar Mine

No material adverse changes

No material adverse changes had occurred from the effective date of the Competent Person’s Report, being 31 October 2024, up to the Latest Practicable Date.

Land use and other licenses/permits required under the laws

As of the Latest Practicable Date, the Target Company had obtained the land use rights for industrial use for an area of approximately 48.9 hectares for construction in the Karchar Fluorspar Mine.

As of the Latest Practicable Date, to the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, the Target Company was undergoing the relevant process of acquiring the land use certificate(s) for tailings pond in the Karchar Fluorspar Mine.

Article 5(1) of the Mineral Resources Law of the People’s Republic of China provides that ‘the exploration and mining of mineral resources shall be subject to the obtaining of exploration rights and mining rights respectively in accordance with the law, except as otherwise provided for in this Law.’ Accordingly, the Target Company shall obtain exploration certificate and mining certificate for its exploration, development and exploitation activities. The Target Company currently has two exploration licences and one mining licence, the details of which are set out in the section headed “Information of the Target Company – Mineral assets of the Target Company – (iii) Exploration and mining licences” in this Letter from the Board. As confirmed by the Company’s PRC legal advisers, the Target Company has obtained all necessary licences, permits and approvals for its exploration, development and exploitation activities.

The two exploration licences of the Target Company will expire in June and August 2026, respectively. From a regulatory perspective, according to Article 24 of the Mineral Resources Law of the People’s Republic of China (as amended in 2024), the validity period of an exploration right is five years, and it can be renewed three times after expiration, with each renewal being for five years. From an implementation perspective, although the Mineral Resources Law of the People’s Republic of China (as amended in 2024) will not come into effect until 1 July 2025, it has already been implemented in practice. For example, the term of the exploration licences held by the Target Company was fixed at five years according to such new law. In terms of material renewal conditions, Article 17 of the Measures for the Administration of Registration of Mineral Resources Exploration Blocks (revised in 2014) stipulates that the exploration right holders shall meet the statutory minimum exploration investment during the validity period of the exploration right. As at the Latest Practicable Date, the Target Company’s continuing exploration investment had complied with the relevant regulatory requirement. Accordingly, as at the Latest Practicable Date, the Target Company, the Company and its PRC legal advisers did not foresee any difficulties in renewing the two exploration licenses of the Target Company.

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LETTER FROM THE BOARD

In addition to the mining licence and exploration licences, the Target Company has also completed the registration for pollutant discharge. The Karchar Fluorspar Mine is currently in the infrastructure construction phase. Upon completion of the infrastructure construction and before the commencement of operation, it will be necessary for the Target Company to apply for safety production permit and other environment-related operating permits.

With regards to the safety production permit, according to Article 2 (1) of the Measures for the Implementation of Safety Production Permit for Non-coal Mines (amended in 2015), ‘non-coal mining enterprises must obtain safety production permit in accordance with the provisions of these implementation measures.’ Having considered that the Target Company has substantially fulfilled the conditions and compiled the information required for the grant of the safety production permit as set out in Article 8 of such Measures, as at the Latest Practicable Date, the Target Company, the Company and its PRC legal advisers did not anticipate any legal impediments in obtaining the safety production permit.

With regards to the environment-related operating permits, the Target Company has obtained the relevant approval for environmental impact assessment from the relevant competent department(s), and upon completion of infrastructure construction, it only needs to undergo the acceptance and examination process and complete filing. As at the Latest Practicable Date, the Target Company, the Company and its PRC legal advisers did not anticipate any legal impediments in obtaining the environment-related operating permits.

Environmental, social, health and safety issues

The Environmental Impact Assessment Law of the PRC and the Regulations on the Administration of Environmental Protection of Construction Projects mandate that projects potentially having a significant environmental impact must prepare an environmental impact assessment report and the construction unit must submit the environmental impact report and the environmental impact report form to the environmental protection administrative department with the authority for approval before commencing construction. An environmental impact assessment report for the Karchar Fluorspar Mine was prepared in May 2023 and approved by the Bayingolin Mongol Autonomous Prefecture Ecology and Environment Bureau in Xinjiang in June 2023.

The Law of PRC on Soil and Water Conservation requires that in mountainous, hilly, windy, sandy, and other areas prone to water and soil loss, production and construction projects that may cause such loss must prepare a soil and water conservation plan. A soil and water conservation plan for the Karchar Fluorspar Mine was prepared in October 2024 and was approved by the Water Resources Bureau of Ruoqiang County in December 2024.

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LETTER FROM THE BOARD

The potential environmental issues for the Karchar Fluorspar Mine identified by SRK are as follows:

(a) as mentioned above, the Target Company will be required to apply for other environment-related operating permits upon completion of the infrastructure construction and before the commencement of operation in accordance with relevant PRC laws and regulations. According to SRK's understanding, such permits are not required at the current stage; and

(b) if there is a significant change to the water intake point, SRK is of the opinion that the Target Company shall consult the relevant government departments to determine whether re-approval is required, and, if necessary, revise or supplement the water resources assessment report and submit it to the original reviewing authority for re-evaluation.

A potential social issue for the Karchar Fluorspar Mine identified by SRK is the lack of stakeholder engagement and other community-related programs. Given that the Karchar Flourspar Mine is situated in an uninhabited area, with no residential settlements in close proximity, the Target Company received no public feedback during a public participation survey for the environmental impact assessment. No stakeholder engagement plans are in place other than the public participation conducted during the environmental impact assessment phase. SRK is of the opinion that the Target Company shall develop appropriate stakeholder engagement plan and grievance mechanism to reduce social risks.

The following measures are recommended by SRK to be taken to control and contain health and safety risks associated with the operation of the Karchar Fluorspar Mine:

(a) there should be an effective safety management system encompassing on-site training, field policies, safe production work procedures, risk management (including indicator signs), the use of personal protective equipment, an emergency response plan, accident reporting, on-site first aid, designated safety personnel, and daily safety meetings;

(b) prior to the mine commencing formal production, appropriate safety signage be installed at appropriate locations, display safety measures and procedures in work areas, adequately protect and cover moving mechanical parts, and install protective railings on all platforms. Workers should be provided with suitable personal protective equipment; and

(c) safety production records should be maintained prior to the commencement of formal production and accident analysis reports for any potential future safety incidents should be prepared in accordance with internationally recognised occupational safety and health practices. Flourspar mining must take precautions against fluoride dust hazards, as long-term inhalation of fluorite dust can lead to fluorosis. Workers should wear standard-compliant dust masks, ensure proper workplace ventilation, and install dust collection systems in processing areas. These measures help reduce the associated risks.

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LETTER FROM THE BOARD

SRK has not sighted any documentation in relation to any actual or potential impacts of non-governmental organisations on the sustainability of Karchar Fluorspar Mine operations.

Compliance with the PRC laws, regulations and permits

As at the Latest Practicable Date, to the best of the Directors' knowledge, information and belief, having made all reasonable enquiries, there were no non-compliance incidents with the PRC laws, regulations and permits at both national and local levels which may have a material adverse impact on the operations and mining activities of the Karchar Fluorspar Mine.

Save as disclosed above, as at the Latest Practicable Date, to the best of the Directors' knowledge, information and belief, having made all reasonable enquiries, the Target Company had obtained all necessary permits and paid all applicable taxes, fees, royalties and other significant payment in accordance with the PRC laws and regulations.

No legal claims or proceedings

As at the Latest Practicable Date, to the best of the Directors' knowledge, information and belief, having made all reasonable enquiries, the Target Company was not subject to any legal claims or proceedings that may have an influence on its rights to explore or mine and the Target Company was not subject to any claims that may exist over the land on which exploration or mining activity would be carried out, including any ancestral or native claims.

Environmental liabilities

According to due diligence findings of the Company's PRC legal advisers and the Competent Person's Report, currently there are no cases of environmental liabilities which may have a material impact on the operations and mining activities of the Target Company and mines owned by it.

Key risks identified in relation to the Karchar Fluorspar Mine

In accordance with Chapter 18 of the Listing Rules, SRK identified in its Competent Person's Report certain risks relating to the Karchar Fluorspar Mine's operation. Such risks are ranked as high, medium or low based on Guidance Note 7 issued by the Stock Exchange. Please refer to the section 18 headed "Risk Assessment" of the Competent Person's Report in Appendix V to this circular for details. The following table shows the summary of SRK's risk assessment.

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LETTER FROM THE BOARD

Risk	Likelihood	Consequence	Rating
Mineral Resource and Ore Reserve
Shortage of Ore Reserve	Unlikely	Moderate	Low
Mining
Poor production plan	Unlikely	Moderate	Low
Bad project implementation	Possible	Moderate	Medium
Modifying the mine design unfavourable	Possible	Moderate	Medium
Processing
Process flowchart and equipment configuration	Possible	Moderate	Medium
Impact of raw water on fluorspar recovery	Likely	Moderate	High
Impact of return water on fluorspar recovery	Possible	Minor	Low
Pulp heating on operation cost	Possible	Moderate	Medium
Infrastructure
The installation of the water intake facility and pipelines cannot be completed by June 2025, which may impact the Karchar Fluorspar Mine’s commissioning timeline	Unlikely	Moderate	Low
The shared and self-built substations face potential delays that could affect the Karchar Fluorspar Mine’s power requirements	Possible	Minor	Low
Tailings Storage Facility
An increase in the annual deposition of tailings or a deterioration in tailings characteristics can compromise dam strength/stability	Unlikely	Moderate	Low

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LETTER FROM THE BOARD

Risk	Likelihood	Consequence	Rating
Inadequate sealing of the arch plates at the intake of a frame-type drainage well can lead to structural damage, resulting in economic losses or potential hazards in the reservoir area	Unlikely	Moderate	Low
The water balance calculation for the tailings pond during both average and wet years has not been conducted	Unlikely	Minor	Low
Environment and Social
Application for environment-related permits and licences	Unlikely	Moderate	Low
Change of water intake point	Possible	Moderate	Medium
Lack of stakeholder engagement and other community-related programs	Possible	Minor	Low

In relation to the impact of raw water on fluorspar recovery, the Company acknowledges the impacts of raw water on ore processing as identified by SRK. Raw water contains elevated levels of calcium and magnesium ions that hinder the separation of fluorspar and calcite. If monitoring during the production process shows that the water quality adversely affects fluorspar recovery, the Company will promptly implement targeted softening measures. This will involve adjusting pH levels with sodium hydroxide (NaOH) to precipitate calcium and magnesium ions, thereby reducing their interference. SRK concurs that the proposed measures are appropriate to address the potential risk.

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LETTER FROM THE BOARD

Funding plans for remediation, rehabilitation, and closure and removal of facilities

There is a plan for the development and utilisation of mineral resources and ecological protection and restoration of the Karchar Fluorspar Mine in place, which includes details on the mine geological environment protection and land reclamation management project, schedule, scope of responsibility, and investment estimation. The plan also includes facility demolition, waste removal, and site leveling.

The static and dynamic total investments for the Karchar Fluorspar Mine’s mine geological environment protection and land reclamation project are estimated to be RMB56.22 million and RMB87.42 million, respectively. The Target Company recognises closure and environmental restoration provisions for the mine closure costs and tailings dam closure costs. The management discounted projected future expenditures to net present value based on prior years’ experience and the best estimate of future expenditures required for environmental restoration. As at 31 October 2024, the Target Company had made provision for mine closure and environmental restoration in the amount of approximately RMB20.67 million. This provision may be modified in the future years with the increasingly prominent impact of mining activities on land and environment. The related mine closure and environmental restoration costs will be reviewed and revised annually as appropriate.

In accordance with applicable local regulations, 0.21% of the sales revenue of the Target Company would be allocated to a mine geological rehabilitation fund on a monthly basis.

REASONS FOR AND BENEFITS OF THE ACQUISITION

Through the Acquisition, the Company can obtain quality mineral resources, fully leverage its access to its capital, technology, talent and other professional and marketing resources as well as integrated management advantages as a listed company to achieve the objective of realising the economic value of the high-quality mineral resources and enhance the Company’s market influences and competitiveness, which is in line with the Company’s development strategies. The Acquisition is expected to improve the Company’s high-quality mineral resource reserves, increase its asset scale, achieve diversified mineral development, mitigate market fluctuation risks and enhance market risks resistance.

The Acquisition is also expected to help improve the Company’s sustainable profitability. With the continuous development of the downstream fluorochemical industry, the future demand for fluorspar will continue to increase. Hydrofluoric acid plays a key role in refrigerants, new energy, new materials, national defense, and aerospace. As an important raw material for fluoropolymers, fluorine-containing intermediates, and electronic-grade hydrofluoric acid, hydrofluoric acid is of significant strategic importance. With the continuous release of China’s fluorochemical production capacity, especially in the new energy field, the demand for fluorspar resources in fluorine-containing lithium battery materials, semiconductors, and photovoltaic panels is expected to continue to grow rapidly. Upon Completion, it is expected that the Target Company will provide the Company with a new drive of profit growth, improve the Company’s revenue structure and level, and promote sustainable and healthy development of the Company.

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LETTER FROM THE BOARD

FINANCIAL IMPACTS OF THE ACQUISITION

Upon Completion, the Target Company will become a non-wholly owned subsidiary of the Company and its financial information will be consolidated into the financial statements of the Company. The unaudited pro forma financial information of the Enlarged Group (for the purpose of illustrating the impact of the Acquisition as if the Acquisition had taken place on 30 June 2024) is set out in Appendix IV to this circular.

Effect on assets and liabilities

Based on the unaudited pro forma financial information of the Enlarged Group as contained in Appendix IV to the Circular and subject to assumptions thereunder, it is expected that the total assets of the Enlarged Group would increase by approximately RMB1,894.9 million and its total liabilities would increase by approximately RMB1,357.3 million. Hence, net assets of the Enlarged Group are expected to increase by approximately RMB537.6 million as a result of the Completion.

Effect on earnings

Taking into account the factors set out in the section headed "Reasons for and Benefits of the Acquisition" in this letter, and in view of the development potential and prospects of and the mineral assets of the Target Company and the financial projection adopted in the Valuation Report, it is expected that upon completion of the construction of the Karchar Fluorspar Mine, the Enlarged Group's profit will be enhanced as the Karchar Fluorspar Mine gradually enters the stable production period.

The aforementioned analyses are for illustrative purpose only and do not purport to represent how the financial position of the Enlarged Group will be upon Completion.

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LETTER FROM THE BOARD

BOARD APPROVAL

The Equity Transfer Agreement and the transactions contemplated thereunder were considered and approved by the Board.

As at the Latest Practicable Date, Mr. Qi Xinhui, a non-executive Director, was the deputy general manager of Xinjiang Non-ferrous; Mr. Wang Lijian, a non-executive Director, was the director of the organization and personnel department, director (manager) of the human resources department, and vice president of the Party school (黨校) of Xinjiang Non-ferrous; Ms. Chen Yang, a non-executive Director, was the manager of the legal department of Xinjiang Non-ferrous; Mr. Chen Yin, an executive Director, was the deputy secretary to the Party Committee (黨委) of the Company, who was appointed directly by the Party Committee of Xinjiang Non-ferrous Group. Therefore, each of the above Directors is deemed or may be perceived to have a material interest in the transactions contemplated under the Equity Transfer Agreement and has abstained from voting on the Board resolutions approving the Equity Transfer Agreement and the transactions contemplated thereunder.

LISTING RULES IMPLICATIONS

As the highest applicable percentage ratio (as defined under the Listing Rules) in respect of the Acquisition is more than 25% but less than 100%, the Acquisition constitutes a major transaction of the Company and is therefore subject to the reporting, announcement, circular and shareholders' approval requirements under Chapter 14 of the Listing Rules.

As at the Latest Practicable Date, Xinjiang Non-ferrous was the controlling shareholder (as defined under the Listing Rules) of the Company and was beneficially interested in approximately 40.06% of the entire issued share capital of the Company. Accordingly, Xinjiang Non-ferrous is a connected person of the Company and the Acquisition constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules. Given that the highest applicable percentage ratio (as defined under Rule 14.07 of the Listing Rules) in respect of the Acquisition is more than 5%, the Acquisition is subject to the reporting, announcement, circular and the Independent Shareholders' approval requirements under Chapter 14A of the Listing Rules.

INDEPENDENT BOARD COMMITTEE AND APPOINTMENT OF INDEPENDENT FINANCIAL ADVISER

The Independent Board Committee comprising all the independent non-executive Directors has been formed to advise the Independent Shareholders on the Equity Transfer Agreement and the transactions contemplated thereunder. Maxa Capital has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders on the Equity Transfer Agreement and the transactions contemplated thereunder.

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LETTER FROM THE BOARD

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

The Special Provisions of the State Council on the Overseas Offering and Listing of Shares by Joint Stock Limited Companies promulgated (the "Special Provisions") by the State Council of the PRC on 4 August 1994 and the Notice on Implementation of the Mandatory Provisions for the Articles of Association of Companies to be Listed Overseas (the "Mandatory Provisions") were abolished on 31 March 2023; the Trial Measures for the Administration of Overseas Issuance and Listing of Securities by Domestic Enterprises and relevant guidelines (the "Trial Measures"), which became effective on 31 March 2023, stipulate that domestic enterprises directly listed overseas shall formulate their articles of association with reference to the Guidelines for Articles of Association of Listed Companies and other relevant provisions of the China Securities Regulatory Commission on corporate governance, the newly amended Company Law of the PRC (the "Company Law") which became effective on 1 July 2024 and the Guidelines for the Articles of Association of Listed Companies promulgated by the China Securities Regulatory Commission which came into effect on 15 December 2023. In light of the above mentioned PRC regulatory changes, the Hong Kong Stock Exchange has also proposed certain amendments to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules"), including (i) removing the class meeting requirement and other relevant requirements in relation to the issue and repurchase of shares by a PRC issuer; (ii) deleting provisions requiring disputes involving holders of H shares to be resolved by arbitration; (iii) removing the requirements that the articles of association of PRC issuers shall contain the Mandatory Provisions and other ancillary provisions; (iv) amending the requirements for submission of documents for new listing applications to reflect the new PRC filing regime applicable to Mainland China companies listed overseas; and (v) amending other Listing Rules provisions to address issues arising from treating domestic shares and H shares as different classes. The amendments are effective from 1 August 2023.

In view of this, the Company intends to amend its current Articles of Association according to the abovementioned applicable PRC laws and regulations and the Listing Rules and taking into account the actual situation of the Company, so as to adapt the Articles of Association to the provisions and rules and better meet the practical needs of corporate governance. Pursuant to the Trial Measures and the relevant guidelines, taking into account that the Special Requirements and the Mandatory Provisions have been repealed, the relevant clauses in the Articles of Association which give effect to the Special Requirements and the Mandatory Provisions are no longer applicable and are proposed to be deleted. After the deletion of the aforesaid clauses, the Company is still required to comply with the requirements of the Listing Rules. At the same time, a small number of regulatory amendments will be made to the Articles of Association in light of the actual situation of the Company in accordance with the Rules Governing the Listing of Listed Companies, the Company Law, the Guidelines for the Articles of Association of Listed Companies and other regulatory rules and the Listing Rules. For details of the comparison table on the proposed amendments to the Articles of Association, please refer to the Appendix VIII to Appendix IX of this circular. The Proposed Amendments will not jeopardise the protection of Shareholders and will not

27 -

LETTER FROM THE BOARD

materially affect the relevant shareholder protection measures. In particular, pursuant to the applicable laws and regulations in the PRC as mentioned above, the domestic shares and the H Shares are regarded as the same class of ordinary shares, holders of domestic shares and H Shares are no longer regarded as different classes of shareholders and the substantive rights attaching to both types of shares are the same, and therefore the removal of the requirement for the class meeting in the Articles of Association will not jeopardise the protection of the Shareholders. In addition, given that there are sufficient dispute resolution channels (such as court proceedings in the Mainland China and Hong Kong) for Shareholders to exercise their rights under the Articles of Association, the removal of the arbitration provision from the Articles of Association to abolish arbitration as the only means of dispute resolution will not affect the protection of Shareholders.

The relevant resolution on the amendments to the Articles of Association was approved at the Board meeting on 14 February 2025, and are presented to the shareholders for approval at the EGM and Class Meetings. The amended Articles of Association will be effective from the date of consideration and approval at the EGM and Class Meetings.

The Articles of Association have been prepared in Chinese without an official English version. Any English translation is for reference only. In case of any inconsistency, the Chinese version shall prevail.

EGM AND CLASS MEETINGS

A notice convening the EGM to be held at Conference Room, 6/F, No. 501, Fusion South Road, Cooperation Zone, Economic and Technological Development Zone, Urumqi, Xinjiang, the PRC on Friday, 9 May 2025 at 12:00 p.m. was despatched to the Shareholders in the manner as they elect to receive corporate communications on 24 March 2025. The notice of the EGM is set out on pages EGM-1 to EGM-3 of this circular.

A notice convening the Domestic Share Class Meeting to be held at Conference Room, 6/F, No. 501, Fusion South Road, Cooperation Zone, Economic and Technological Development Zone, Urumqi, Xinjiang, the PRC 1:30 p.m. on Friday, 9 May 2025 (or immediately after the conclusion of the EGM or any adjournment thereof) was despatched to the Shareholders in the manner as they elect to receive corporate communications on 24 March 2025. The notice of the Domestic Share Class Meeting is set out on pages DCM-1 to DCM-3 of this circular.

A notice convening the H Share Class Meeting to be held at Conference Room, 6/F, No. 501, Fusion South Road, Cooperation Zone, Economic and Technological Development Zone, Urumqi, Xinjiang, the PRC at 2:00 p.m. on Friday, 9 May 2025 (or immediately after the conclusion of the EGM and Domestic Share Class Meeting or any adjournment thereof) was despatched to the Shareholders in the manner as they elect to receive corporate communications on 24 March 2025. The notice of the H Share Class Meeting is set out on pages HCM-1 to HCM-3 of this circular.

28 -

LETTER FROM THE BOARD

Forms of proxy for use at the EGM and the Class Meetings is enclosed with this circular. Whether or not you are able to attend the EGM and the Class Meetings in person, you are requested to complete the enclosed form of proxy in accordance with the instructions printed thereon and return the same to (i) the Company's H Share registrar, Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen's Road East, Wan Chai, Hong Kong (for holders of H Shares), (ii) the Company at 6/F, 501 Fusion South Road, Cooperation Zone, Economic and Technological Development Zone, Urumqi, Xinjiang, the PRC (for holders of Domestic Shares) as soon as possible and in any event not later than 24 hours before the time appointed for holding the EGM and the Class Meetings or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM and the Class Meetings or any adjournment thereof should you so wish.

As at the Latest Practicable Date, to the best of the Directors' knowledge, information and belief, having made all reasonable enquiries, save for Xinjiang Non-ferrous and its close associates who are required to abstain from voting on the resolution approving the Equity Transfer Agreement and the transactions contemplated thereunder to be proposed at the EGM, no other Shareholder or any of its close associates had any material interest in the Equity Transfer Agreement and the transactions contemplated thereunder, and no other Shareholder is required to abstain from voting on the resolution to be proposed at the EGM and the Class Meetings.

According to Rule 13.39(4) of the Listing Rules, all votes at the EGM and the Class Meetings will be taken by poll and the Company will announce the results of the poll in the manner prescribed under Rule 13.39(5) of the Listing Rules.

CLOSURE OF REGISTER OF MEMBERS

The register of members of the Company will be closed from Wednesday, 9 April 2025 to Friday, 9 May 2025 (both days inclusive), during which time no share transfers will be registered. In order to be eligible to attend the EGM and the H Share Class Meeting, instruments of transfer accompanied by share certificates and other appropriate documents must be lodged with the Company's H share registrar, Computershare Hong Kong Investor Services Limited at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong no later than 4:30 p.m. on Tuesday, 8 April 2025. Shareholders of the Company whose names appear on the register of members of the Company at the opening of business on Friday, 9 May 2025 are entitled to attend the EGM and the Class Meetings.

RECOMMENDATION

Your attention is drawn to:

(i) the "Letter from the Independent Board Committee" set out on pages 31 to 32 of this circular which contains its recommendation to the Independent Shareholders; and
(ii) the "Letter from the Independent Financial Adviser" set out on pages 33 to 53 of this circular which contains its recommendation to the Independent Board Committee and the Independent Shareholders.

LETTER FROM THE BOARD

The Independent Board Committee, having taken into account the advice of the Independent Financial Adviser and having considered the terms of the Equity Transfer Agreement, considers that (i) the terms of the Equity Transfer Agreement and the transactions contemplated thereunder are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned; and (ii) the transactions contemplated under the Equity Transfer Agreement, though not in the ordinary and usual course of business of the Group, are in the interests of the Company and the Shareholders as a whole. Accordingly, the Independent Board Committee recommends the Independent Shareholders to vote in favor of the resolution approving the Equity Transfer Agreement and the transactions contemplated thereunder at the EGM.

Taking into account the letter from the Independent Board Committee and all factors stated above as a whole, the Directors consider the Equity Transfer Agreement and the transactions contemplated thereunder are fair and reasonable and in the interest of the Company and its Shareholders as a whole. Accordingly, the Directors recommend the Independent Shareholders to vote in favor of the resolution approving the Equity Transfer Agreement and the transactions contemplated thereunder at the EGM.

The Directors also consider that the proposed amendments to the Articles of Association are adjustments in accordance with the changes in the applicable laws and regulations in the PRC and the Listing Rules, which are in line with the practical needs of corporate governance and in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend the Shareholders to vote in favor of the resolution approving the amendments to the Articles of Association at the EGM and the Class Meetings.

GENERAL

Your attention is drawn to the letter from the Independent Board Committee, the letter from the Independent Financial Adviser, the amendments to the Articles of Association and the additional information set out in the appendices to this circular, and the notices of the EGM and the Class Meetings.

Yours faithfully,

For and on behalf of the Board of

Xinjiang Xinxin Mining Industry Co., Ltd.*

Wu Ning, Lam Siu Wing

Joint Company Secretaries

For identification purposes only

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Xinjiang Xinxin Mining Industry Co., Ltd.*

新疆新鑫礦業股份有限公司
(a joint stock limited company incorporated in the People's Republic of China with limited liability)
(Stock code: 3833)

24 March 2025

To the Independent Shareholders

Dear Sir/Madam,

MAJOR TRANSACTION AND CONNECTED TRANSACTION IN RELATION TO THE ACQUISITION OF 51% EQUITY INTEREST IN THE TARGET COMPANY

We refer to the circular dated 24 March 2025 (the "Circular") of Xinjiang Xinxin Mining Industry Co., Ltd (the "Company") of which this letter forms part. Terms defined in the Circular shall have the same meanings herein unless otherwise specified.

We, being the independent non-executive Directors, have been appointed by the Board as members of the Independent Board Committee to advise the Independent Shareholders on the Equity Transfer Agreement and the transactions contemplated thereunder. Maxa Capital has been appointed as the Independent Financial Adviser to advise the Independent Shareholders and us in this regard.

Please refer to the "Letter from the Board" set out on pages 1 to 30 of the Circular which contains, inter alia, information in respect of the Equity Transfer Agreement and the transactions contemplated thereunder and the "Letter from the Independent Financial Adviser" set out on pages 33 to 53 of the Circular which contains its advice in respect of the Equity Transfer Agreement and the transactions contemplated thereunder.

31 -

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Having taken into account the advice of the Independent Financial Adviser and having considered the terms of the Equity Transfer Agreement, we consider that (i) the terms of the Equity Transfer Agreement and the transactions contemplated thereunder are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned; and (ii) the transactions contemplated under the Equity Transfer Agreement, though not in the ordinary and usual course of business of the Group, are in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favor of the resolution approving the Equity Transfer Agreement and the transactions contemplated thereunder at the EGM.

Yours faithfully,

For and on behalf of the Independent Board Committee

Xinjiang Xinxin Mining Industry Co., Ltd.*

Mr. Hu Benyuan, Mr. Huang Yong and Mr. Lee Tao Wai

For identification purposes only
32 -

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the full text of the letter from Maxa Capital Limited, the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders setting out its advice in respect of the terms of the Equity Transfer Agreement and the transactions contemplated thereunder, which has been prepared for the purpose of inclusion in this circular.

邁時資本

MAXA CAPITAL

Unit 2602, 26/F, Golden Center
188 Des Voeux Road Central
Sheung Wan
Hong Kong

24 March 2025

To the Independent Board Committee and the Independent Shareholders

MAJOR TRANSACTION AND CONNECTED TRANSACTION

IN RELATION TO
THE ACQUISITION OF 51% EQUITY INTEREST IN
THE TARGET COMPANY

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the Equity Transfer Agreement and the transactions contemplated thereunder, details of which are set out in the letter from the Board (the "Letter from the Board") contained in the circular of the Company dated 24 March 2025 (the "Circular"), of which this letter forms parts. Capitalised terms used in this letter shall have the same meanings as those defined in the Circular unless the context otherwise requires.

Upon Completion, the Target Company will become a non-wholly owned subsidiary of the Company and its financial information will be consolidated into the financial statements of the Company.

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

LISTING RULES IMPLICATIONS

As the highest applicable percentage ratio (as defined under the Listing Rules) in respect of the Acquisition is more than 25% but less than 100%, the Acquisition constitutes a major transaction of the Company and is therefore subject to the reporting, announcement, circular and shareholders’ approval requirements under Chapter 14 of the Listing Rules.

As at the Latest Practicable Date, Xinjiang Non-ferrous was the controlling shareholder (as defined under the Listing Rules) of the Company and was beneficially interested in 885,204,000 domestic shares of the Company, representing approximately 40.06% of the entire issued share capital of the Company. Accordingly, Xinjiang Non-ferrous is a connected person of the Company and the Acquisition constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules. Given that the highest applicable percentage ratio (as defined under Rule 14.07 of the Listing Rules) in respect of the Acquisition is more than 5%, the Acquisition is subject to the reporting, announcement, circular and the Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules.

The Company will convene the EGM as soon as practicable to consider, and if thought fit, approve the Equity Transfer Agreement and the transactions contemplated thereunder. As at the Latest Practicable Date, to the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, save for Xinjiang Non-ferrous and its close associates who are required to abstain from voting on the resolution to be proposed at the EGM, no other Shareholder or any of its close associates had any material interest in the Equity Transfer Agreement and the transactions contemplated thereunder, and no other Shareholder is required to abstain from voting on the resolution to be proposed at the EGM.

INDEPENDENT BOARD COMMITTEE

The Independent Board Committee comprising Mr. Hu Benyuan, Mr. Huang Yong and Mr. Lee Tao Wai, being all the independent non-executive Directors, has been formed to advise the Independent Shareholders on the Equity Transfer Agreement and the transactions contemplated thereunder. We, Maxa Capital Limited, have been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this regard.

OUR INDEPENDENCE

As at the Latest Practicable Date, we did not have any relationship with or interest in the Company, its subsidiaries and any other parties that could reasonably be regarded as relevant to our independence in accordance with Rule 13.84 of the Listing Rules and accordingly, were qualified to give independent advice to the Independent Board Committee and the Independent Shareholders in respect of the Equity Transfer Agreement and the transactions contemplated thereunder. Save for this appointment, there was no other engagement between the Company and us in the past two years. Apart from normal advisory fees payable to us in connection with this appointment, no arrangement exists whereby we will receive any fees or benefits from the Company.

34 -

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

BASIS OF OUR OPINION

In formulating our opinion and recommendation, we have reviewed, among other things: (i) the Equity Transfer Agreement; (ii) the annual report of the Company for the year ended 31 December 2023 (the "2023 AR"); (iii) the interim report of the Company for the six months ended 30 June 2024 (the "2024 IR"); (iv) the audit report on the Target Company for each of the three years ended 31 December 2023 and the ten months ended 31 October 2024 prepared by ShineWing Certified Public Accountants (LLP) (the "Audit Report"); (v) the Competent Person's Report; (vi) the Valuation Report; and (vii) the unaudited pro forma financial information on the Enlarged Group. We consider that we have reviewed sufficient and relevant information and documents, and have taken reasonable steps as required under Rule 13.80 of the Listing Rules to reach an informed view and to provide a reasonable basis for our recommendation. We have relied on the statements, information, opinions and representations contained in the Circular and the information and representations provided to us by the Directors and the management of the Group (the "Management"). We have reviewed, inter alia, the statements, information, opinions and representations contained or referred to in the Circular and the information and representations as provided to us by the Directors and the Management. We have assumed that (i) all statements, information and representations provided by the Directors and the Management; and (ii) the information referred to in the Circular, for which they are solely responsible, were true and accurate at the time when they were provided and continued to be so as at the Latest Practicable Date. We have also assumed that all statements of belief, opinion, intention and expectation made by the Directors in the Circular were reasonably made after due enquiry and careful consideration. We have no reason to suspect that any material facts or information have been withheld or to doubt the truth, accuracy and completeness of the information and facts contained in the Circular, or the reasonableness of the representations and opinions expressed by the Company, its advisers and/or the Directors. We consider that we have been provided with sufficient information to reach an informed view and to provide a reasonable basis for our opinion. We have not, however, conducted any independent verification of the information included in the Circular and provided to us by the Directors and the Management nor have we conducted any form of in-depth investigation into the business and affairs or the future prospects of the Group.

The Directors jointly and severally accept full responsibility for the accuracy of the information contained in the Circular and have confirmed, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts the omission of which would make any statement in the Circular misleading.

Our opinion is necessarily based on the financial, economic, market and other conditions in effect and the information made available to us as at the Latest Practicable Date. Nothing contained in this letter should be construed as a recommendation to hold, sell or buy any Shares or any other securities of the Company. Where information in this letter has been extracted from published or otherwise publicly available sources, the sole responsibility of us is to ensure that such information has been correctly and fairly extracted, reproduced or presented from the relevant stated sources and not be used out of context.

35 -

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion, we have taken into consideration the following principal factors and reasons:

1. Background information of the Group

Set out below is a summary of the consolidated financial information of the Group for the two years ended 31 December 2022 ("FY2022") and 31 December 2023 ("FY2023"), and for the six months ended 30 June 2023 ("1H2023") and 30 June 2024 ("1H2024") (collectively known as the "Review Period") as extracted from the 2023 AR and 2024 IR:

	For the year ended		For the six months ended
	31 December		30 June
	2022	2023	2023	2024
	RMB'000	RMB'000	RMB'000	RMB'000
	(audited)	(audited)	(unaudited)	(unaudited)
Revenue	2,863,725	2,049,837	763,744	1,065,347
- Nickel cathode	2,066,783	1,171,991	592,301	531,526
- Copper cathode	582,664	296,104	88,402	208,801
- Copper concentrate	97,753	93,862	43,919	64,174
- Other products	101,058	465,655	31,809	249,883
- Other operations	15,467	22,225	7,313	10,963
Operating profit	844,122	206,057	211,282	176,791
Net profit for the year/period	743,236	162,343	170,303	133,978

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

FY2023 vs FY2022

As illustrated in the table above, the Group’s revenue amounted to approximately RMB2,049.8 million for FY2023, representing a decrease of approximately 28.4% as compared to approximately RMB2,863.7 million for FY2022. The decrease in the Group’s revenue was mainly due to the combined effects of (i) decrease in revenue derived from nickel cathode by approximately RMB894.8 million to approximately RMB1,172.0 million for FY2023, which was mainly attributable to the decrease in the selling price of nickel cathode and the decrease in the production and sales volume of nickel cathode under the impact of guidance from relevant departments to the work of mine safety in Xinjiang Uyghur Autonomous Region since February 2023 (the “National Assistance Guidance on Production Safety”), as well as the temporary suspension of production in Kalatongke Mining due to technical upgrade; (ii) decrease in revenue derived from copper cathode by approximately RMB286.6 million to approximately RMB296.1 million for FY2023, which was mainly due to the decrease in the production and sales volume of copper cathode under the impact of National Assistance Guidance on Production Safety, as well as the temporary suspension of production in Kalatongke Mining due to technical upgrade; and was partially offset by (iii) increase in revenue derived from other products by approximately RMB364.6 million to approximately RMB465.7 million for FY2023, which was mainly attributable to the revenue from the sales of precious metal materials and copper leaching tailings amounting to approximately RMB93.4 million RMB227.7 million in FY2023 respectively, as compared to the revenue from the sales of electrolytic cobalt amounting to approximately RMB41.3 million in FY2022, resulting in significant increase in the revenue from other products in FY2023.

The Group recorded net profit of approximately RMB162.3 million for FY2023, which decreased by approximately 78.2% as compared to the net profit of approximately RMB743.2 million for FY2022. The decrease in the Group’s net profit for FY2023 as compared to FY2022 was primarily due to (i) the sales volume of nickel cathode decreased from 12,752 tonnes in FY2022 to 7,747 tonnes in FY2023, representing a decrease of approximately 39.2%; (ii) the sales volume of copper cathode decreased from 9,775 tonnes in FY2022 to approximately 4,908 tonnes in FY2023, representing a decrease of approximately 49.8%; (iii) the average selling price of nickel cathode (tax exclusive, including gains and losses from change in fair value) decreased from approximately RMB165,303 per tonne in FY2022 to approximately RMB142,601 per tonne in FY2023, representing a decrease of approximately 13.7%; (iv) the Group recorded an investment loss of approximately RMB32.9 million in FY2023 as compared to investment income of approximately RMB96.2 million in FY2022, mainly due to the share of net loss of a joint venture in FY2023 as compared to the share of net profit of joint venture in FY2022; and (v) the Group recorded fair value loss on derivative financial instruments in relation to metal trading contract of approximately RMB65.8 million in FY2023 whereas fair value gain of approximately RMB38.2 million on such derivative instruments was recognised in FY2022.

37 -

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

1H2024 vs 1H2023

The total revenue of the Group was approximately RMB1,065.3 million for 1H2024, representing an increase of approximately 39.5% as compared to approximately RMB763.7 million for 1H2023. Such increase in the revenue was primarily attributable to the combined effects of (i) increase in revenue derived from other products by approximately RMB218.1 million to approximately RMB249.9 million for 1H2024, which was mainly attributable to the revenue of approximately RMB204.7 million from the sales of copper leach tailings, approximately RMB26.7 million from other products (including sulphuric acid, gold and silver) and approximately RMB18.5 million from other residues during 1H2024; (ii) increase in revenue derived from the copper cathode by approximately RMB120.4 million to approximately RMB208.8 million for 1H2024, which was mainly attributable to the increase in market price and sales volume of copper cathodes as compared to 1H2023; and was partially offset by (iii) decrease in revenue derived from nickel cathode by approximately RMB60.8 million to approximately RMB531.5 million for 1H2024, which was mainly due to the lower selling price of nickel cathode during the period as compared to 1H2023.

The Group recorded net profit of approximately RMB134.0 million for 1H2024, which decreased by approximately 21.3% as compared to the net profit of approximately RMB170.3 million for 1H2023. The decrease in the Group's net profit for 1H2024 as compared to 1H2023 was primarily due to (i) decrease of overall gross profit from principal operation by approximately RMB25.9 million to approximately RMB323.3 million for 1H2024 mainly attributable to the decrease in the gross profit of nickel cathode by approximately RMB135.4 million to approximately RMB199.3 million for 1H2024 as a result of the decrease in the average selling price of nickel cathode in 1H2024 as compared to 1H2023; and (ii) an impairment loss on exploration rights of approximately RMB31.8 million was recognised in 1H2024.

	As at 31 December		As at 30 June
	2022	2023	2024
	RMB'000	RMB'000	RMB'000
	(audited)	(audited)	(unaudited)
Non-current assets	5,606,853	5,673,560	5,561,626
Current assets	2,222,608	2,164,018	2,201,763
Total assets	7,829,460	7,837,578	7,763,389
Non-current liabilities	1,123,488	1,132,100	982,727
Current liabilities	1,016,307	1,184,969	1,229,794
Total liabilities	2,139,794	2,317,070	2,212,520
Net current assets	1,206,301	979,049	971,970
Net assets	5,689,666	5,520,508	5,550,869

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Total assets

The Group had total assets of approximately RMB7,837.6 million as at 31 December 2023, which mainly comprised of (i) fixed assets of approximately RMB3,566.7 million; (ii) inventories of approximately RMB1,284.6 million; (iii) intangible assets of approximately RMB1,124.1 million; and (iv) cash at bank and on hand of approximately RMB553.8 million, representing an increase of approximately RMB8.1 million or 0.1% as compared to approximately RMB7,829.5 million as at 31 December 2022.

The Group had total assets of approximately RMB7,763.4 million as at 30 June 2024, which mainly comprised of (i) fixed assets of approximately RMB3,484.4 million; (ii) inventories of approximately RMB1,159.8 million; (iii) intangible assets of approximately RMB1,079.1 million; and (iv) cash at bank and on hand of approximately RMB660.1 million, representing a decrease of approximately RMB74.2 million or 0.9% as compared to approximately RMB7,837.6 million as at 31 December 2023.

Total liabilities

The Group had total liabilities of approximately RMB2,317.1 million as at 31 December 2023, which mainly comprised of (i) long-term borrowings of approximately RMB563.7 million; (ii) long-term payables of approximately RMB333.6 million; (iii) accounts payable of approximately RMB302.1 million; (iv) notes payable of approximately RMB224.1 million; and (v) other payables of approximately RMB212.2 million, representing an increase of approximately RMB177.3 million or 8.3% as compared to approximately RMB2,139.8 million as at 31 December 2022.

The Group had total liabilities of approximately RMB2,212.5 million as at 30 June 2024, which mainly comprised of (i) long-term borrowings of approximately RMB414.5 million; (ii) long-term payables of approximately RMB336.8 million; (iii) accounts payable of approximately RMB269.2 million; and (iv) other payables of approximately RMB313.3 million, representing a decrease of approximately RMB104.6 million or 4.5% as compared to approximately RMB2,317.1 million as at 31 December 2023.

Liquidity Position

The Group's current ratios were approximately 2.2 times, 1.8 times and 1.8 times as at each of 31 December 2022, 31 December 2023 and 30 June 2024, respectively. The Group's gearing ratios, which are calculated on the basis of the Group's net debts over total capital (net debts plus total equity), as at each of 31 December 2022 and 2023 and 30 June 2024 remained fairly stable at approximately 6.2%, 4.9% and 2.3%, respectively.

39 -

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

2. Background information of Xinjiang Non-ferrous

Xinjiang Non-ferrous is principally engaged in, among other things, investment in nonferrous metal industry and sale of non-ferrous metal products. As at the Latest Practicable Date, to the best knowledge, information and belief of the Directors having made all reasonable enquiries, Xinjiang Non-ferrous is a wholly state-owned enterprise with limited liability and incorporated in the PRC, being one of the promoters and the controlling shareholder of the Company.

3. Background information of the Target Company and the Karchar Fluorspar Mine

3.1 The Target Company

The Target Company is a limited liability company incorporated in the PRC on 7 December 2007. As at the Latest Practicable Date, its registered share capital was RMB113.0 million, which has been fully paid. It is principally engaged in energy investment, mining investment, mineral resources exploration and investment, and sales of mineral products.

Upon Completion, the Target Company will be owned as to 51% by the Company and 49% by Shanghai Xingqiang.

The Company has engaged ShineWing Certified Public Accountants (LLP), an independent accountant to prepare the Audit Report. Set out below are the audited major financial information of the Target Company for the two years ended 31 December 2023 and the ten months ended 31 October 2024 as extracted from the Audit Report:

	For the year ended/As at 31 December		For the ten months ended/As at 31 October
	2022 RMB'000 (audited)	2023 RMB'000 (audited)	2024 RMB'000 (audited)
Revenue	-	2,307.7	7,265.7
Loss before tax	10,221.0	2,355.3	3,967.5
Loss after tax	10,221.0	2,355.3	3,965.9
Net assets	63,123.5	414,201.6	410,235.7

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

3.2 The Karchar Fluorspar Mine

The Karchar Fluorspar Mine is located approximately 73 km southeast of Ruoqiang Town, Ruoqiang County, Bayingolin Mongol Autonomous Prefecture in southeastern Xinjiang, the PRC, and approximately 196 km west of Huatugou Town, Mangya City, Qinghai, the PRC.

The Karchar Fluorspar Mine is currently under construction and has not yet started operations. The proposed mining methods include underground (a) cut-and-fill method and (b) drift and fill method. The trial production and commercial production are currently expected to commence in the third quarter of 2025. The ore production of the Karchar Fluorspar Mine is expected to be approximately 155 kt in 2025, 797 kt in 2026, and 1,200 kt in 2027. The full production capacity of 1.2 Mtpa is expected to be achieved by 2027. The Karchar Fluorspar Mine has a LOM up to year 2047.

For further details of the Karchar Fluorspar Mine including but not limited to, (i) commodity type; (ii) exploration and mining licences; (iii) mineral resources and ore reserves; and (iv) other information regarding the Karchar Fluorspar Mine, please refer to the section headed "Mineral assets of the Target Company" of the Circular as well as the Competent Person's Report as set out in Appendix V to the Circular.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

4. Industry Overview

To assess the prospect of the Karchar Fluorspar Mine, we have obtained the market study report on fluorspar (the “Market Study Report”) prepared by Shanghai Metals Market (the “SMM”), a leading and independent integrated internet platform provider of nonferrous and ferrous metals in the PRC, with its extensive database covers over 20 years of historical data and receives over 400,000 page views per day. Its flagship portal (www.metal.com and www.smm.cn) engages the most customers in the nonferrous and ferrous metals industry and has the largest volume of unique daily visitors.

Fluorspar, also known as fluorite, is an essential non-metallic mineral resource used in various fields such as metallurgy, chemical and building materials industry. It is also used in the strategic emerging industries such as new energy and new materials. According to the Market Study Report, the primary demand for fluorspar is driven by the fluorochemical industry, which accounts for approximately 67% of total consumption in 2023. Other significant uses of fluorspar include aluminium fluoride production (15%), steelmaking (11%) and cement manufacturing (7%). Main products of fluorspar include but not limited to acid grade fluorspar fine powder, metallurgical grade fluorspar fine powder and high-grade fluorspar lump ore.

Historical and projected average price of fluorspar fine powder from 2018 to 2027E

Source: SMM

Notes:

Fluorspar fine powder with 97% CaF₂ and 10% moisture.
All prices are 13% tax inclusive.

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Nominal price represents the price of fluorspar fine powder expressed in current monetary terms, without adjusting for inflation or deflation.
Real price represents the price of fluorspar fine powder adjusted for inflation or deflation.

As stated in the Market Study Report, the nominal price of fluorspar fine powder showed a fluctuating upward trend, increasing from RMB2,645 per ton in 2018 to RMB3,448 per ton in 2024, representing a compound annual growth rate (the “CAGR”) of approximately 4.5%. The nominal price of fluorspar fine powder was traded at a record high of RMB3,750 per ton at the end of 2018, with prices traded within the range of RMB2,600 to RMB3,500 per ton in 2019, primarily benefiting from the increase in demand as a result of the expansion of production capacity in downstream refrigerant market, coupled with the decrease in supply following the implementation of environmental policy, safety regulation and ecological conservation red line policy. Price of fluorspar remained relatively stable between 2019 and 2022, with fluctuations in 2020 and 2021, primarily due to the declining demand from the downstream refrigerant export market during the pandemic. Since 2022, due to limited mine resources, tightened environmental policies, frequent extreme weather events and recurring epidemics, supply of fluorspar remained tight, while demand of fluorspar increased as a result of the expansion of production capacity in downstream fluorine chemicals industry, further contributing to the increase in price of fluorspar fine powder.

We noted from the Market Study Report that, driven by the demand from downstream industry and other strategic emerging industries such as new energy and new materials, China’s fluorspar consumption is projected to grow from 6.91 Mt in 2024 to 7.74 Mt in 2027, with a CAGR of approximately 4.5%. Meanwhile, SMM forecasts that China’s fluorspar production will increase from 5.90 Mt in 2024 to 6.22 Mt in 2027, with a CAGR of approximately 1.8%. In view of the robust demand from the downstream industry and the supply constraints mentioned above, SMM expects the price of fluorspar to continue to rise from 2025 to 2027, with an estimated CAGR of approximately 3.3%.

5. Reasons for and benefits of the Acquisition

As disclosed in the Letter from the Board, through the Acquisition, the Company can obtain quality mineral resources, fully leverage its access to its capital, technology, talent and other professional and marketing resources as well as integrated management advantages as a listed company to achieve the objective of realising the economic value of the high-quality mineral resources and enhance the Company’s market influences and competitiveness, which is in line with the Company’s development strategies. The Acquisition is expected to improve the Company’s high-quality mineral resource reserves, increase its asset scale, achieve diversified mineral development, mitigate market fluctuation risks and enhance market risks resistance.

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Acquisition is also expected to help improve the Company's sustainable profitability. With the continuous development of the downstream fluorochemical industry, the future demand for fluorspar will continue to increase. Hydrofluoric acid plays a key role in refrigerants, new energy, new materials, national defense, and aerospace. As an important raw material for fluoropolymers, fluorine-containing intermediates, and electronic-grade hydrofluoric acid, hydrofluoric acid is of significant strategic importance. With the continuous release of China's fluorochemical production capacity, especially in the new energy field, the demand for fluorspar resources in fluorine-containing lithium battery materials, semiconductors, and photovoltaic panels is expected to continue to grow rapidly. Upon Completion, it is expected that the Target Company will provide the Company with a new drive of profit growth, improve the Company's revenue structure and level, and promote sustainable and healthy development of the Company. Based on our review of the financial projection adopted in the Valuation Report, details of which are set out in the section headed "7. Assessment of the Consideration" below, we note that the mining asset of the Target Company is expected to generate positive net income in the year of 2025, with a substantial increase in the subsequent two years, driven by the expansion of production capacity of the Karchar Fluorspar Mine.

As disclosed in the 2024 IR, for the six months ended 30 June 2024, the Group's revenue was mainly driven by the sales of nickel cathode and copper cathode, which accounted for approximately 50.4% and 19.8%, respectively, of the revenue generated from principal businesses. Based on our review of the historical financial performance of the Group, details of which are set out in the section headed "1. Background information of the Group" above, we note that the revenue contribution of the sales of nickel cathode and copper cathode fluctuated substantially during the Review Period, primarily due to the fluctuation of the selling price as well as the production and sales volume of nickel cathode and copper cathode. As advised by the Management, the Company conducted various studies, including geological surveys, economic feasibility studies, market analyses, and others, on multiple mineral assets prior to confirming the Acquisition. Based on the results of these studies, the Company selected the Karchar Fluorspar Mine, as it provides the Company with considerable financial return under reasonable transaction terms. In view of the above and taking into account the market demand of fluorspar, we concur with the Company that the Acquisition can help enhance the product mix of the Company, mitigate the impact of market volatility on its profitability, and further enhance its competitiveness and market influences in the mining industry.

Having considered that (i) the principal business of the Target Company is in line with the principal business of the Group; (ii) the Acquisition will diversify the Company's product portfolio, thereby mitigate the market fluctuation risk and strengthen its market competitiveness; (iii) the market demand of fluorspar is considerable due to its wide-ranging application in various industries as mentioned above; and (iv) the financial performance of the Group is expected to be improved following the increase in production capacity of the Karchar Fluorspar Mine, we are of the view that the Acquisition is in the interests of the Company and the Shareholders as a whole.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

6. Principal terms of the Equity Transfer Agreement

Date: 14 February 2025

Parties:
(i) Xinjiang Non-ferrous (as the vendor);
(ii) the Company (as the purchaser); and
(iii) the Target Company.

Assets to be acquired: Pursuant to the Equity Transfer Agreement, Xinjiang Non-ferrous conditionally agreed to transfer, and the Company conditionally agreed to acquire, the Subject Interest, representing 51% equity interest in the Target Company.

Consideration and payment of Consideration: Pursuant to the Equity Transfer Agreement, the Consideration will be approximately RMB1,098.08 million.

The Consideration shall be payable in cash within five working days upon the Equity Transfer Agreement taking effect.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

For further details of the terms of the Equity Transfer Agreement, such as effective date, transitional arrangement, amendments and termination, please refer to the section headed “THE EQUITY TRANSFER AGREEMENT” in the Letter from the Board.

7. Assessment of the Consideration

As disclosed in the Letter from the Board, the Consideration of approximately RMB1,098.08 million was agreed upon after arm’s length negotiations between Xinjiang Non-ferrous and the Company based on the equity value of the Subject Interest of approximately RMB1,098.08 million as at 31 October 2024 as appraised by JLL in the Valuation Report, and taking into account various factors including the production, operation and financial condition of the Target Company as well as the future development plan of the Target Company and the Karchar Fluorspar Mine.

To assess the fairness and reasonableness of the Consideration, we have obtained the Valuation Report prepared by JLL (the “Valuer”) in accordance with the requirements under Chapter 18 of the Listing Rules and noted that (i) the Chapter 18 Value of the Karchar Fluorspar Mine as at 31 October 2024 (the “Valuation Date”) was in the range of RMB1,455 million to RMB2,321 million with the preferred value being RMB1,991 million (the “Valuation”); and (ii) the equity value of the Subject Interest amounted to approximately RMB1,098.08 million, details of which are set out in Appendix VI to the Circular.

As part of our due diligence, we have enquired the Valuer with particular attention to (i) Valuer’s engagement letter with the Company; (ii) Valuer’s qualification and experience; and (iii) the steps and due diligence measures taken by the Valuer in preparing the Valuation Report. Based on our review of the engagement letter entered into between the Company and the Valuer, we are satisfied that the terms and scope of the engagement between the Company and the Valuer are appropriate to the opinion the Valuer is required to give. The Valuer confirmed that it is independent from the Company and its connected parties. Based on our research, we understand that the Valuer is a long-established professional valuation firm since 2008 with possession of relevant professional qualifications and experience required to perform the Valuation. We note that each team member possesses the necessary professional valuation credentials and has prior experience in assessing mining projects. We also understand from the Valuer that it has carried out on-site inspections and made relevant enquiries and searches for preparing the Valuation Report and no irregularities were noted. Based on the above, we consider that the Valuer is qualified and possesses relevant experience in conducting the Valuation.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

We noted from the Valuation Report that such report is conducted in accordance with the guidelines set by the Australian Code for public reporting of Technical Assessments and Valuations of Mineral Assets 2015 Edition (the "VALMIN Code"), prepared by the VALMIN Committee, a joint committee of the Australasian Institute of Mining and Metallurgy and the Australian Institute of Geoscientists with the participation of the Australian Securities and Investment Commission (ASIC), the Australian Securities Exchange (ASX), or of other relevant securities exchanges. The Valuer has considered three generally accepted approaches, namely, market approach, cost approach and income approach. The Valuer considered that the cost approach is inappropriate as it does not capture the economic benefit contributed by the mineral assets of the Target Company. Given the comparable market transactions may be influenced by various factors, thereby introducing a significant element of subjectivity, the market approach is not the most appropriate valuation approach to rely on in determining the Chapter 18 Value of the Karchar Fluorspar Mine. The Valuer considered that the discounted cash flow (the "DCF") method of the income approach as the most appropriate method to rely on in determining the Chapter 18 Value of the Karchar Fluorspar Mine because (i) DCF model is common approach used to value mining projects which exploration has advanced to a degree where there is a reserve definition and a feasible development plan; and (ii) the reserves, mining and processing recoveries, and capital and operating costs are available and well defined in the Competent Person's Report. In light of the above, we concur with the Valuer that the adoption of income approach and DCF method is appropriate for the Valuation.

Based on our review of the Valuation Report and discussion with the Valuer, we note that the financial projection of Karchar Fluorspar Mine is based on (i) the production schedule and capital expenditure as suggested in the Competent Person's Report; (ii) the sales price as suggested in the Market Study Report; and (iii) the operating costs as suggested by the Preliminary Design (Substitute Feasibility Study) of the Karchar Fluorspar Mine in Ruoqiang County, Xinjiang (the "2024 ENFI Preliminary Design"), prepared by China ENFI Engineering Technology Co., Ltd ("China ENFI") in April 2024. As part of our due diligence, we have:

(i) obtained the Competent Person's Report and note that (a) such report is prepared in accordance to the JORC Code (2012) and the VALMIN Code and in complied with Chapter 18 of the Listing Rules; (b) the production schedules were formulated mainly based on the probable ore reserves reported in accordance with the JORC Code (2012) of approximately 24,787 kt as at 31 October 2024 and the production plan of reaching full capacity by 2027; and (c) the capital expenditure was mainly estimated with reference to the 2024 ENFI Preliminary Design and the actual engineering, procurement and construction contracts as provided and updated by the Target Company. In respect the background of the Competent Person, we have reviewed the independence, qualification and experience of SRK and consider that the responsible competent person meets the requirements of a Competent Person as defined by Chapter 18 of the Listing Rules and the relevant project team members are capable in preparing the Competent Person's Report. In addition, we have discussed with the Valuer and noted from the Valuation Report that the Valuer considers the Competent Person's Report to be thorough and complete. It is also understood that the Valuer finds

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the mine and operational plans to be reasonable and comprehensive, based on their own observations of the mine fields, review of the relevant documentation, and discussions with the staff;

(ii) obtained the Market Study Report and understand the basis of the projected real unit prices of 97% fluorite wet powder, details of which are set out in the section headed "4. Industry Overview" above. We have also performed independent research regarding the reliability of SMM and note that SMM is (a) a well-known integrated platform in the field of nonferrous and ferrous metals in the PRC, with services ranging from benchmark prices, analysis, news, consulting, and conferences of the metals, mining and renewable energies; and (b) a common data source referenced by companies listed on the Stock Exchange and engaged in the mining industry; and

(iii) obtained the 2024 ENFI Preliminary Design and understand the basis of determining the operating costs, including the mining operating costs and processing operating costs. In respect the reliability of China ENFI, we performed independent research and note that China ENFI (a) possesses a comprehensive Grade A qualification in engineering design and an engineering consulting unit Grade A credit certificate; and (b) engaged in more than 12,000 engineering projects in more than 30 countries and regions in the past 70 years, with the provision of full life-cycle services such as general contracting, project management, engineering consultancy, design, cost consultancy, supervision, environmental assessment, etc.

In view of the above and having considered that the abovementioned reports as referenced by the financial projection adopted in the Valuation Report have been reviewed and approved by the internal experts of the Group, we have no doubt on the aforesaid basis of the financial projection.

In applying the DCF method, we understand that it is necessary to determine an appropriate discount rate to calculate the net present value of the appraised asset. Therefore, we have reviewed the parameters adopted in the calculation of the discount rate (i.e. weighted average cost of capital) and performed the following works in assessing the fairness and reasonableness of the discount rate:

(i) we note that the Valuer has adopted the build-up model in determining the cost of equity, an additive model commonly used for calculating the cost of equity capital. As discussed with the Valuer, we understand such model is adopted given (a) the absence of sufficient numbers of listed companies which primarily engaged in the fluorspar mining and sales operation and share similar profit model; and (b) it is widely accepted in the investment and financial analysis communities. As part of our due diligence work, we have searched through the internet and note that the adoption of build-up model in calculating the required rate of return on equity is not uncommon;

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(ii) in arriving at the cost of equity, we note that the Valuer has adopted (a) the risk-free rate of 2.14%, which is determined with reference to the 10-year China government bond yield as at the Valuation Date; (b) the long-term equity risk premium of 4.98%, which is determined with reference to the long term equity risk premium for China quoted on Damodaran Online¹; (c) the industry premium of 1.36%, which is determined with reference to the premium of metal and mining industry as quoted on the “Kroll Cost of Capital Navigator²”; (d) the size premium of 2.91%, which is determined with reference to the premium for micro-cap of the “Kroll Cost of Capital Navigator”; and (e) the company-specific risk premium of 3%, which is determined by the Valuer with reference to the market practice to reflect the risk of uncertainty regarding the target asset’s operations and financial projections. As part of our due diligence, we have (a) independently researched the valuation reports published on the website of Stock Exchange and note that abovementioned source of reference is commonly referred to by the market; (b) independently researched the source of reference for the risk-free rate and long-term equity risk premium and compared against with the relevant parameters; (c) verified the parameters quoted from the “Kroll Cost of Capital Navigator” with the supporting documents provided by the Valuer, given such information is not publicly available; and (d) discussed with the Valuer regarding the basis and assumptions of the major factors considered in deriving the discount rate, which is in line with industry practice;

(iii) in arriving at the cost of debt, we note that the Valuer has adopted 3.6% as the cost of debt, which is determined with reference to the latest 5-year or above loan prime rate of China as of the Valuation Date. As part of our due diligence, we have independently research on the website of the People’s Bank of China and note that the cost of debt is correctly adopted. As the operation of the Karchar Fluorspar Mine is more than five years, we therefore consider the adoption of cost of debt by referencing to the 5-year or above loan prime rate is justifiable; and

(iv) in arriving at the weight of equity and weight of debt, the Valuer has adopted a debt-to-equity ratio of 14.50%, which is determined with reference to the latest leverage ratio of the gold and mining industry as suggested by Kroll as of the Valuation Date. As advised by the Valuer, due to the insufficient number of comparable companies as mentioned above, the Valuer has considered to derive the debt-to-equity ratio with reference to the industry composite, which is in line with the market practice.

¹ Damodaran is an online database published by Aswath Damodaran, a finance professor at New York University.

² Based on the website of Kroll, a leading independent provider of risk and financial advisory solutions, it is noted that the “Kroll Cost of Capital Navigator” is a global cost of capital tool and data delivery platform and is one of the most authoritative sources of equity risk premia, size premia and other critical data used in computing cost of capital.

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

In view of the above, we consider the discount rate adopted by the Valuer is fair and reasonable.

We note that the Valuer has made various assumptions for the Valuation, details of which are set out in the sub-sections headed "M. Assumptions" and "N. Project Valuation Assumption" of the Valuation Report contained in the Appendix VI to the Circular. As part of our due diligence work, we have (i) discussed with the Valuer and noted that the adoption of such assumptions is in line with the market practice; (ii) discussed with the Management and understand such assumptions have been reviewed and agreed by the Company. In view of the above and having considered the qualification and experience of the Valuer, we have no doubt on the fairness and reasonableness of the assumptions adopted in the Valuation Report.

Difference between the Consideration and the Original Purchase Price

As disclosed in the Letter from the Board, Xinjiang Non-ferrous obtained the Subject Interest under the Original Acquisition in August 2023 at the Original Purchase Price. We note that the Consideration represents a premium of approximately 24.0% over the Original Purchase Price, being the consideration paid by Xinjiang Non-ferrous for the Subject Interests under the Original Acquisition. As advised by the Management, the Original Acquisition is an independent transaction from the Acquisition where parties thereto negotiated the price under separate circumstances and considerations. Based on our discussion with the Management, we understand the Original Purchase Price is determined, among other factors, with reference to a valuation report (the "2023 Valuation Report") conducted by an independent valuer. As part of our due diligence, we have reviewed the 2023 Valuation Report and note that the primary factor leading to the abovementioned difference is the unit price of fluorite fine powder adopted in the calculation of the projected revenue. Based on our review of the price movement of fluorite fine powder in the Market Study Report, we note that its price has demonstrated a general upward trend since 2022, driven by increasing demand for fluorspar amid limited supply. As such, we consider the premium of the Consideration over the Original Purchase Price to be justifiable.

Conclusion

Having considered (i) the reasons and benefits of the Acquisitions as set out in the section headed "5. Reasons for and benefits of the Acquisition" above; (ii) the Chapter 18 Value is fair and reasonable taking into account the due diligence work performed by us in respect of the Valuation; (iii) the Consideration is determined, amongst others, based on the equity value of the Subject Interest of approximately RMB1,098.08 million as at 31 October 2024 as appraised by the Valuer in the Valuation Report; and (iv) the premium of the Consideration over the Original Purchase Price is justifiable due to reasons as mentioned above, we are of the view that the Consideration is fair and reasonable as far as the Independent Shareholders are concerned.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

8. Assessment of the other transaction documents contemplated under the Equity Transfer Agreement

With reference to the Letter from the Board, given Xinjiang Non-ferrous would no longer hold the Subject Interest upon Completion, all rights attached to the Subject Interest would be passed from Xinjiang Non-ferrous to the Company, which include the rights of Xinjiang Non-ferrous under the Profit Compensation Agreement. It is understood that the such rights were granted to Xinjiang Non-ferrous under the Original Acquisition by Shanghai Xingqiang upon their negotiations at that time and are attached to the Subject Interest. Having considered that (i) Xinjiang Non-ferrous will transfer all its interest in the Target Company to the Company and cease to hold any interest in the Target Company upon Completion; (ii) the entering into of the Amended Profit Compensation Agreement, though not negotiated between the Company and Shanghai Xingqiang, can still serve as an additional measure to help safeguard the interest of the Company; and (iii) the Consideration is determined based on the equity value of the Subject Interest as appraised by the Valuer in the Valuation Report, and the financial forecasts and assumptions thereunder in relation to the Target Company are reasonably justified and are not based on the Guaranteed Profit, we concur with the Company that the terms and conditions of the transactions contemplated under the Equity Transfer Agreement are fair and reasonable.

9. Financial effects of the Acquisition on the Group

Upon Completion, the Target Company will become a non-wholly owned subsidiary of the Company and its financial information will be consolidated into the financial statements of the Company.

The analysis below is based on the unaudited pro forma financial information of the Enlarged Group as set out in Appendix IV to the Circular (the "Pro Forma Financial Information"). It should be noted that such analysis is for illustrative purposes only and does not purport to represent how the financial position of the Enlarged Group will be upon Completion.

9.1 Effects on net assets

As at 30 June 2024, the Group had net assets of approximately RMB5,550.9 million. Based on the Pro Forma Financial Information, the net assets of the Enlarged Group would increase to approximately RMB6,088.4 million as at 30 June 2024, representing an increase of approximately 9.7% as compared to the net assets of the Group as at 30 June 2024.

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

9.2 Effects on liabilities

As at 30 June 2024, the Group had total liabilities of approximately RMB2,212.5 million. Based on the Pro Forma Financial Information, the total liabilities of the Enlarged Group would be approximately RMB3,569.8 million as at 30 June 2024, representing an increase of approximately 61.3% as compared to the total liabilities of the Group as at 30 June 2024, which was mainly due to the recognition of payable of the Consideration upon Completion.

9.3 Effects on cash and working capital

As at 30 June 2024, the Group had unrestricted cash and cash equivalent of approximately RMB635.3 million. Since the Company will satisfy the Consideration partly in cash by internal resources, the Enlarged Group’s working capital would be reduced due to the Acquisition. As stated in the section headed “SUFFICIENCY OF WORKING CAPITAL” of Appendix I to the Circular, taking into account the present internal resources and the available credit facilities of the Enlarged Group, and considering the effect of the Acquisition, the Directors, after due and careful enquiry, are of the opinion that the Enlarged Group will have sufficient working capital to satisfy its present requirements, for the next 12 months from the date of the Circular.

9.4 Effects on earnings

As the Karchar Fluorspar Mine is still under construction and not expected to reach its designed production capacity shortly after Completion. Accordingly, the Acquisition would not immediately contribute material revenue or profit to the Enlarged Group upon Completion. It is expected that upon completion of the construction of the Karchar Fluorspar Mine, the Enlarged Group’s profit will be enhanced as the Karchar Fluorspar Mine gradually enters the stable production period.

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RECOMMENDATION

Taking into account of the above factors and reasons, we are of the view that (i) the terms of the Equity Transfer Agreement and the transactions contemplated thereunder are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned; and (ii) the transactions contemplated under the Equity Transfer Agreement, though not in the ordinary and usual course of business of the Group, are in the interests of the Company and the Shareholders as a whole. Accordingly, we advise the Independent Board Committee to recommend, and we ourselves recommend the Independent Shareholders to vote in favour of the resolution to be proposed at the EGM to approve the Equity Transfer Agreement and the transactions contemplated thereunder.

Yours faithfully,

For and on behalf of

Maxa Capital Limited

Sammy Leung

Managing Director

Mr. Sammy Leung is a licensed person registered with the Securities and Futures Commission of Hong Kong and a responsible officer of Maxa Capital Limited to carry out type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activities under the SFO and has over 12 years of experience in the corporate finance industry.

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

1. THREE-YEAR FINANCIAL INFORMATION OF THE GROUP

The audited consolidated financial statements of the Group for the three years ended 31 December 2023 together with the accompanying notes to such financial statements, can be found on pages 87 to 288 of the annual report of the Company for the year ended 31 December 2023, pages 84 to 240 of the annual report of the Company for the year ended 31 December 2022 and 79 to 228 of the annual report of the Company for the year ended 31 December 2021. Please see below the hyperlinks to the aforesaid documents:

Annual report for the year ended 31 December 2023: https://www1.hkexnews.hk/listedco/listconews/sehk/2024/0424/2024042402162.pdf
Annual report for the year ended 31 December 2022: https://www1.hkexnews.hk/listedco/listconews/sehk/2023/0411/2023041101445.pdf
Annual report for the year ended 31 December 2021: https://www1.hkexnews.hk/listedco/listconews/sehk/2022/0408/2022040800398.pdf

The unaudited consolidated financial statements of the Group for the six months ended 30 June 2024 together with the accompanying notes to such financial statements, can be found on pages 21 to 196 of the interim report of the Company for the six months ended 30 June 2024. Please see below the hyperlink to the aforesaid document:

Interim report for the six months ended 30 June 2024: https://www1.hkexnews.hk/listedco/listconews/sehk/2024/0905/2024090501432.pdf

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

2. STATEMENT OF INDEBTEDNESS OF THE ENLARGED GROUP

At the close of business on 31 January 2025, being the latest practicable date for the purpose of this statement of indebtedness prior to the date of this circular, the outstanding bank loans and other borrowings, lease liabilities and external guarantees of the Enlarged Group comprise the following:

	RMB million
Outstanding bank loans and other borrowings
– Unsecured and unguaranteed borrowings	811.93
– Secured and guaranteed borrowings	–
Lease liabilities	4.16
External guarantees	25.00
	841.09

Contingent liabilities

Save as disclosed in Notes X.2(4) and XIII to the unaudited consolidated interim financial statements of the Group as set out in the interim report of the Group for the six months ended 30 June 2024, as at 31 January 2025, the Group had no significant contingent liabilities.

Save as aforesaid above, as at 31 January 2025, the Group did not have any other debt securities issued and outstanding, or authorised or otherwise created but unissued, loans or term loans (secured, unsecured, guaranteed or otherwise), other borrowings or indebtedness in the nature of borrowings including bank overdrafts and liabilities under acceptances (other than normal trade bills), acceptance credits, debentures, mortgages, charges, hire purchase commitments, guarantees or other material contingent liabilities.

3. SUFFICIENCY OF WORKING CAPITAL

Taking into account the present internal resources and the available credit facilities of the Enlarged Group, and considering the effect of the Acquisition, the Directors, after due and careful enquiry, are of the opinion that the Enlarged Group will have sufficient working capital to satisfy its present requirements, for the next 12 months from the date of this circular. As at the date of this circular, the Company has obtained the confirmation as required under Rule 14.66(12) of the Listing Rules.

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

4. BUSINESS TREND AND FINANCIAL PROSPECTS OF THE ENLARGED GROUP

The Enlarged Group will enhance the analysis and research on the price trends of nickel cathode, copper cathode and fluorite fine powder in both international and domestic markets, and adopt more flexible and proactive marketing strategies based on its actual circumstances and financial strength, thereby promoting sales with higher prices. In the meantime, the Enlarged Group will further reduce production costs and expenditures and continuously enhance economic benefits, management level and overall operation efficiency.

a) Promote the project construction and consolidate the development foundation

The Company will fully support the construction of the Karchar Fluorspar Mine project to ensure that the Karchar Fluorspar Mine will be put into production and generate efficacy in accordance with the plan. The Company will make every effort to promote the construction of the key projects of each subsidiary, so as to realize the upgrading and transformation of the entire process of mining, ore processing and smelting. The Company will coordinate current stable production and long-term development, and make scientific planning for medium- and long-term production and technological reform.

b) Strengthen safety responsibilities to ensure production stability

The Company will refine the responsibility system, strengthen the implementation of safety responsibilities, improve the safety management system, accelerate the construction of video surveillance and artificial intelligence identification systems, and enhance the ability to prevent and control major risks. The Company will enhance employee safety education and training, bear prevention risk and control in mind, improve the capability to detect and manage hidden dangers and respond to emergencies, and continuously improve the safety quality of all employees.

c) Increase investment in innovation to release development momentum

The Company will continuously increase investment in scientific and technological research and development, strengthen the cultivation of scientific and technological innovation talents, continuously improve the research and development and innovation capabilities, accelerate the promotion of scientific and technological innovation breakthroughs and the transformation and application of the results, and promote process upgrades based on industry chain to realize technological innovation and cost reduction, forming a new impetus for high-quality development.

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

d) Deepen enterprise reform and enhance development quality

In accordance with the requirements of a new round of state-owned enterprise reform, the Company will improve the corporate governance system, continue to deepen corporate reform and release the vitality of corporate development. The Company will further strengthen the construction of internal control system and compliant operation management, deepen cost management and control in a comprehensive manner, exercise strict budget control over the funds and fully examine market trends to enhance the synchronization between the Company's internal operation and management and the external market. The Company will carry forward the reform of "double-hundred enterprises" in depth, promote the tenure system and contractual management vigorously, and fully stimulate the internal impetus of the enterprise.

POSSIBLE RISKS OF THE ENLARGED GROUP

Commodity price risk

The prices of the Enlarged Group's products are impacted by prices of the international and domestic markets and changes in global supply and demand for such products. Price volatility of products is also affected by the global and the PRC economic cycle as well as the fluctuations in the global currency markets. Both the international and domestic market prices as well as the volatility of supply and demand are beyond the control of the Company. Therefore, the volatility of product prices may materially affect the revenue and the consolidated income of the Enlarged Group.

Risk of fluctuations in exchange rate

The transactions of the Enlarged Group are all denominated in RMB. Fluctuations in currency exchange rates may affect the international and domestic non-ferrous metal and fluorite fine powder commodity prices, which may impact the Enlarged Group's operating results. RMB is not a freely convertible currency and the conversion of RMB to a basket of currencies may involve fluctuations. In light of further actions and measures that may be adopted for free transactions of RMB by the PRC government, fluctuations in exchange rates may adversely affect the Enlarged Group's translation or conversion of net assets, earnings and any dividends declared by the Enlarged Group into Hong Kong dollars.

I-4 -

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Environmental risk

The Chinese economy has shifted from a fast-growing phase to a high-quality development phase where emphasis is placed on the optimization of economic structure and transformation of development patterns. The government's environmental protection supervision will increase the volatility of the output by the enterprises to some extent. The Enlarged Group will endeavour to upgrade our major production processes to cater for the optimization of domestic economic structure, changes in development patterns and the national and regional requirements for production safety and improvement of environmental protection standards.

Interest rate risk

The Enlarged Group's interest rate risk mainly arises from bank borrowings and interest-bearing long-term debts. Bank deposits and loans at floating rate expose the Enlarged Group to cash flow interest rate risk, while fixed rate interest-bearing financial liabilities of the Enlarged Group are subject to the risk of the fair value of interest. The Enlarged Group adjusts the relative proportion of contracts at fixed rate and contracts at floating rate based on market situation.

I-5 -

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

INDEPENDENT AUDITOR'S REPORT

XYZH/2025URAA1B0022

Xinjiang Hua'ou Mining Industry Co., Ltd.

Board of Directors of Xinjiang Hua'ou Mining Industry Co., Ltd.:

I. AUDIT OPINION

We have audited the financial statements of Xinjiang Hua'ou Mining Industry Co., Ltd. (hereinafter referred to as "the Company"), which comprise the balance sheet as at 31 October 2024, 31 December 2023, 31 December 2022, and 31 December 2021, the income statement, the cash flow statement, and the statement of changes in owners' equity for January-October 2024, FY 2023, FY 2022, and FY 2021, and the notes to the financial statements.

In our opinion, the accompanying financial statements were prepared in accordance with Accounting Standards for Business Enterprises in all material respects, and presented fairly the financial position of the Company as of 31 October 2024, 31 December 2023, 31 December 2022, and 31 December 2021, and the results of operations and cash flows for January-October 2024, FY 2023, FY 2022, and FY 2021.

II. BASIS FOR OPINION

We conducted our audit in accordance with China Standards on Auditing for Chinese Certified Public Accountants. Our responsibilities under those standards are further described in the "Auditor's Responsibilities for the Audit of the Financial Statements" section of our report. We are independent of the Company in accordance with the Code of Ethics for Chinese Certified Public Accountants, and we have fulfilled our other ethical responsibilities of the code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for expressing our audit opinion.

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

III. RESPONSIBILITIES OF THE MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR THE FINANCIAL STATEMENTS

The management of the Company (hereinafter referred to as "the Management") is responsible for the preparation of the financial statements in accordance with the provisions of the Accounting Standards for Business Enterprises to achieve a fair presentation, and designing, implementing and maintaining the necessary internal controls so that the financial statements are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Management either intends to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company's financial reporting process.

IV. AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance as to whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that expresses our opinion. Although reasonable assurance is a high level of assurance, it is not a guarantee that an audit conducted in accordance with auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are generally considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions that users of the financial statements make on the basis of the financial statements.

During the course of the audit in accordance with auditing standards, we exercise professional judgement and maintain professional skepticism. We also carry out the following works:

(1) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for expressing audit opinions. The risk of failing to detect a material misstatement due to fraud is higher than the risk of failing to detect a material misstatement due to error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations or overriding internal controls.

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

(2) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of its internal control.

(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Management.

(4) Conclude on the appropriateness of the Management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, auditing standards require us to draw the attention of users of the financial statements to the relevant disclosures in the financial statements in our auditors’ report or, if such disclosures are inadequate, we shall modify our opinion. Our conclusions are based on information available as of the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.

(5) Evaluate the overall presentation, structure and content of the financial statements, and also whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

ShineWing Certified Public Accountants (LLP)
Chinese Certified
Public Accountant: Shao Lixin

Chinese Certified
Public Accountant: Wei Yuemei

Beijing, China
22 January 2025

II-3 -

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

BALANCE SHEET

Prepared by: Xinjiang Hua'ou Mining Industry Co., Ltd.
Currency: RMB Yuan

Item	Note	31 October	31 December	31 December	31 December
		2024	2023	2022	2021
Current assets:
Cash at bank and on hand	V.1	204,280,747.84	312,847,809.43	39,320.12	288,835.37
Financial assets held for trading		-	-	-	-
Derivative financial assets		-	-	-	-
Notes receivable		-	-	-	-
Accounts receivable	V.2	8,085,634.36	-	-	-
Financing receivables		-	-	-	-
Prepayments	V.4	40,485,115.77	5,599,596.14	-	807,912.38
Other receivables	V.3	198,802.53	524,762.98	47,467.38	750,604.99
Including: Interest receivables		-	-	-	-
Dividends receivable		-	-	-	-
Inventories		-	-	-	-
Contract assets		-	-	-	-
Held-for-sale assets		-	-	-	-
Non-current assets due within one year		-	-	-	-
Other current assets	V.5	7,036,985.09	2,726,185.37	-	-
Total current assets		260,087,285.59	321,698,353.92	86,787.50	1,847,352.74

APPENDIX II
FINANCIAL INFORMATION OF THE TARGET COMPANY

Item	Note	31 October 2024	31 December 2023	31 December 2022	31 December 2021
Non-current assets:
Debt investments		–	–	–	–
Other debt investments		–	–	–	–
Long-term receivables		–	–	–	–
Long-term equity investments		–	–	–	–
Investment in other equity instruments		–	–	–	–
Other non-current financial assets		–	–	–	–
Investment properties		–	–	–	–
Fixed assets	V.6	31,930,153.67	756,716.58	14,144.40	79,143.63
Construction in progress	V.7	99,614,835.58	31,314,519.17	–	–
Productive biological assets		–	–	–	–
Oil and gas assets		–	–	–	–
Right-of-use assets	V.8	–	4,883.95	28,018.49	–
Intangible assets	V.9	76,537,107.00	71,789,294.69	–	–
Development costs		–	–	–	–
Goodwill		–	–	–	–
Long-term prepaid expenses		–	–	–	–
Deferred tax assets	V.10	2,341,635.73	–	–	–
Other non-current assets	V.11	–	–	69,294,221.59	64,667,905.51
Total non-current assets		210,423,731.98	103,865,414.39	69,336,384.48	64,747,049.14
Total assets		470,511,017.57	425,563,768.31	69,423,171.98	66,594,401.88

– II-5 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

Item	Note	31 October 2024	31 December 2023	31 December 2022	31 December 2021
Current liabilities:
Short-term borrowings		-	-	-	-
Financial liabilities held for trading		-	-	-	-
Derivative financial liabilities		-	-	-	-
Notes payable		-	-	-	-
Accounts payable	V.13	27,883,641.16	6,555,202.02	4,960,540.52	4,399,075.66
Advances from customers	V.15	-	-	582,760.00	-
Contract liabilities		-	-	-	-
Employee benefits payable	V.16	895,397.54	546,413.79	22,826.20	27,792.20
Taxes payable	V.17	52,203.06	117,643.82	2,781.84	46.84
Other payables	V.14	8,429,539.73	4,139,734.72	707,831.81	5,140,279.09
Including: Interests payable		-	-	-	-
Dividends payable		-	-	-	-
Held-for-sale liabilities		-	-	-	-
Non-current liabilities due within one year	V.18	-	3,150.22	22,911.69	-
Other current liabilities		-	-	-	-
Total current liabilities		37,260,781.49	11,362,144.57	6,299,652.06	9,567,193.79

II-6 -

APPENDIX II
FINANCIAL INFORMATION OF THE TARGET COMPANY

Item	Note	31 October 2024	31 December 2023	31 December 2022	31 December 2021
Non-current liabilities:		–	–	–	–
Long-term borrowings		–	–	–	–
Bonds payable		–	–	–	–
Including: Preference shares		–	–	–	–
Perpetual bonds		–	–	–	–
Lease liabilities	V.19	–	–	–	–
Long-term payables		–	–	–	–
Long-term employee benefits payable		–	–	–	–
Provisions	V.20	20,674,432.87	–	–	–
Deferred income		–	–	–	–
Deferred tax liabilities	V.10	2,340,123.38	–	–	–
Other non-current liabilities		–	–	–	–
Total non-current liabilities		23,014,556.25	–	–	–
Total liabilities		60,275,337.74	11,362,144.57	6,299,652.06	9,567,193.79

– II-7 –

APPENDIX II
FINANCIAL INFORMATION OF THE TARGET COMPANY

Item	Note	31 October 2024	31 December 2023	31 December 2022	31 December 2021
Owners’ equity:
Paid-in capital	V.21	113,000,000.00	113,000,000.00	90,000,000.00	5,000,000.00
Other equity instruments		–	–	–	–
Including: Preference shares		–	–	–	–
Perpetual bonds		–	–	–	–
Capital reserves	V.22	337,566,752.22	337,566,752.22	7,133,352.22	75,816,052.22
Less: Treasury stock		–	–	–	–
Other comprehensive income		–	–	–	–
Special reserves		–	–	–	–
Surplus reserves		–	–	–	–
Undistributed profits	V.23	-40,331,072.39	-36,365,128.48	-34,009,832.30	-23,788,844.13
Total owners’ equity		410,235,679.83	414,201,623.74	63,123,519.92	57,027,208.09
Total liabilities and owners’ equity		470,511,017.57	425,563,768.31	69,423,171.98	66,594,401.88

Legal representative: He Deqiang
Principal in charge of accounting: Zhao Yanhui
Head of accounting department: Zhao Yanhui

– II-8 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

INCOME STATEMENT

Prepared by: Xinjiang Hua'ou Mining Industry Co., Ltd.
Currency: RMB Yuan

Item	Note	31 October 2024	31 December 2023	31 December 2022	31 December 2021
I. Revenue	V.24	7,265,746.69	2,307,655.48	-	-
Less: Cost of sales	V.24	6,560,111.25	384.07	-	-
Taxes and surcharges	V.25	296,402.74	110,245.74	11,593.08	4,849.84
Selling expenses		-	-	-	-
General and administrative expenses	V.26	8,343,383.25	3,812,257.95	10,201,582.33	671,589.39
Research and development expenses		-	-	-	-
Financial expenses	V.27	-3,894,142.96	749,756.45	7,819.85	3,137.04
Including: Interest expenses		-	1,578,650.11	5,131.81	-
Interest income		3,896,140.56	832,299.13	504.46	501.86
Add: Other income		-	-	-	-
Investment income (Loss marked with “-”)		-	-	-	-
Including: Income from investments in associates and joint ventures		-	-	-	-
Gains on derecognition of financial assets measured at amortized cost		-	-	-	-
Gains on changes in fair value (Loss marked with “-”)		-	-	-	-
Credit impairment losses (Loss marked with “-”)	V.28	-8,082.31	-2,000.00	-	-
Asset impairment losses (Loss marked with “-”)		-	-	-	-
Gains on disposal of assets (Loss marked with “-”)	V.29	3,150.22	-	-	-

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

Item	Note	31 October	31 December	31 December	31 December
		2024	2023	2022	2021
II. Operating profit (Loss marked with “-”)		-4,044,939.68	-2,366,988.73	-10,220,995.26	-679,576.27
Add: Non-operating income	V.30	96,730.01	12,921.57	7.50	-
Less: Non-operating expenses	V.31	19,246.59	1,229.02	0.41	-
III. Total profit (Total loss marked with “-”)		-3,967,456.26	-2,355,296.18	-10,220,988.17	-679,576.27
Less: Income tax expenses	V.32	-1,512.35	-	-	-
IV. Net profit (Net loss marked with “-”)		-3,965,943.91	-2,355,296.18	-10,220,988.17	-679,576.27
(I) Net profit from continuing operations (Net loss marked with “-”)		-3,965,943.91	-2,355,296.18	-10,220,988.17	-679,576.27
(II) Net profit from discontinued operations (Net loss marked with “-”)		-	-	-	-
V. Net other comprehensive income after tax		-	-	-	-
(I) Other comprehensive income that cannot be reclassified into profit or loss		-	-	-	-
1. Remeasurement of changes in defined benefit plans		-	-	-	-
2. Other comprehensive income not converted into profit or loss under the equity method		-	-	-	-
3. Fair value changes of investments in other equity instruments		-	-	-	-
4. Fair value changes of enterprise’s own credit risks		-	-	-	-
5. Others		-	-	-	-

II-10 -

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

Item		31 October 2024	31 December 2023	31 December 2022	31 December 2021
(II)	Other comprehensive income to be reclassified to profit or loss	-	-	-	-
	1. Other comprehensive income available for transfer to profit or loss under the equity method	-	-	-	-
	2. Fair value changes of other debt instruments	-	-	-	-
	3. Amount reclassified from financial assets to other comprehensive income	-	-	-	-
	4. Provision for credit impairment of other debt investments	-	-	-	-
	5. Cash flow hedge reserves (Effective portion of cash flow hedge gains and losses)	-	-	-	-
	6. Translation difference of foreign currency statements	-	-	-	-
	7. Others	-	-	-	-
VI. Total comprehensive income		-3,965,943.91	-2,355,296.18	-10,220,988.17	-679,576.27
VII. Earnings per share		-	-	-	-
(I) Basic earnings per share (RMB/share)		-	-	-	-
(II) Diluted earnings per share (RMB/share)		-	-	-	-

Legal representative: He Deqiang

Principal in charge of accounting: Zhao Yanhui

Head of accounting department: Zhao Yanhui

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

CASH FLOW STATEMENT

Prepared by: Xinjiang Hua'ou Mining Industry Co., Ltd.
Currency: RMB Yuan

Item	Note	31 October 2024	31 December 2023	31 December 2022	31 December 2021
I. Cash flows from operating activities:
Cash received from sales of goods or rendering of services		96,500.53	2,234.00	–	–
Received tax refunds		–	1,621.00	–	–
Cash received relating to other operating activities		732,145,455.57	493,313,932.61	704,102.12	16,750,646.33
Sub-total of cash inflows from operating activities		732,241,956.10	493,317,787.61	704,102.12	16,750,646.33
Cash paid for goods and services		12,626,353.80	2,575,187.60	–	–
Cash paid to and on behalf of employees		9,283,305.42	1,614,692.34	319,204.28	341,460.98
Payments of taxes and surcharges		558,796.07	60,136.96	11,593.08	1,695.60
Cash paid relating to other operating activities		724,589,441.34	492,943,746.98	1,009,774.71	3,279,971.20
Sub-total of cash outflows from operating activities		747,057,896.63	497,193,763.88	1,340,572.07	3,623,127.78
Net cash flows from operating activities	V.33	-14,815,940.53	-3,875,976.27	-636,469.95	13,127,518.55

– II-12 –

APPENDIX II
FINANCIAL INFORMATION OF THE TARGET COMPANY

Item	31 October 2024	31 December 2023	31 December 2022	31 December 2021
II. Cash flows from investing activities:
Cash received from disinvestments	-	-	-	-
Cash received from returns on investments	-	-	-	-
Cash received from the disposal of fixed assets, intangible assets and other long-term assets	-	1,744,840.00	582,760.00	-
Net cash received from the disposal of subsidiaries and other business units	-	-	-	-
Cash received relating to other investing activities	-	-	-	-
Sub-total of cash inflows from investing activities	-	1,744,840.00	582,760.00	-
Cash paid to acquire fixed assets, intangible assets and other long-term assets	93,855,221.06	37,623,231.03	15,403,103.30	8,323,441.40
Cash paid for investments	-	-	-	-
Net cash paid to acquire subsidiaries and other business units	-	-	-	-
Cash paid relating to other investing activities	-	-	-	-
Sub-total of cash outflows from investing activities	93,855,221.06	37,623,231.03	15,403,103.30	8,323,441.40
Net cash flows from investing activities	-93,855,221.06	-35,878,391.03	-14,820,343.30	-8,323,441.40

– II-13 –

APPENDIX II
FINANCIAL INFORMATION OF THE TARGET COMPANY

Item	31 October 2024	31 December 2023	31 December 2022	31 December 2021
III. Cash flows from financing activities:
Cash received from investments	–	353,433,400.00	16,317,300.00	–
Cash received from borrowings	–	–	–	–
Cash received relating to other financing activities	–	2,834,953.22	2,580,000.00	5,040,002.00
Sub-total of cash inflows from financing activities	–	356,268,353.22	18,897,300.00	5,040,002.00
Cash repayments of debts	–	–	–	–
Cash used to pay dividends, profits, or interest expenses	–	1,583,543.39	–	–
Cash paid relating to other financing activities	–	3,537,653.22	3,690,002.00	9,616,750.00
Sub-total of cash outflows from financing activities	–	5,121,196.61	3,690,002.00	9,616,750.00
Net cash flows from financing activities	–	351,147,156.61	15,207,298.00	–4,576,748.00

– II-14 –

APPENDIX II
FINANCIAL INFORMATION OF THE TARGET COMPANY

Item	31 October 2024	31 December 2023	31 December 2022	31 December 2021
IV. Effect of foreign exchange rate changes on cash and cash equivalents
V. Net increase in cash and cash equivalents	-108,671,161.59	311,392,789.31	-249,515.25	227,329.15
Add: Opening balance of cash and cash equivalents	311,432,109.43	39,320.12	288,835.37	61,506.22
VI. Closing balance of cash and cash equivalents	202,760,947.84	311,432,109.43	39,320.12	288,835.37

Legal representative: He Deqiang
Principal in charge of accounting: Zhao Yanhui
Head of accounting department: Zhao Yanhui

– II-15 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

Prepared by: Xinjiang Hua'ou Mining Industry Co., Ltd.

Currency: RMB Yuan

STATEMENT OF CHANGES IN OWNERS' EQUITY

Item	Other equity instruments
	Paid-in capital	Preference shares	Perpetual bonds	Others	Capital reserves	Less: Treasury stock	Other comprehensive income	Special reserves	Surplus reserves	Undistributed profits	Total owners' equity
I. Closing balance of the prior year	113,000,000.00	-	-	-	337,566,752.22	-	-	-	-	-36,365,128.48	-
Add: Changes in accounting policies	-	-	-	-	-	-	-	-	-	-	-
Correction of prior-period errors	-	-	-	-	-	-	-	-	-	-	-
Others	-	-	-	-	-	-	-	-	-	-	-
II. Opening balance of the current year	113,000,000.00	-	-	-	337,566,752.22	-	-	-	-	-36,365,128.48	-
III. Increase or decrease in the current year (Decrease marked with “-”)	-	-	-	-	-	-	-	-	-	-3,965,943.91	-
(I) Total comprehensive income	-3,965,943.91	-3,965,943.91	-	-	-	-	-	-	-	-	-
(II) Owner's inputs and decreases in capital	-	-	-	-	-	-	-	-	-	-	-
1. Capital invested by owners	-	-	-	-	-	-	-	-	-	-	-
2. Other equity instrument holder's investment	-	-	-	-	-	-	-	-	-	-	-
3. Amount of share-based payments included in shareholder's equity	-	-	-	-	-	-	-	-	-	-	-
4. Others	-	-	-	-	-	-	-	-	-	-	-
(III) Distribution of profits	-	-	-	-	-	-	-	-	-	-	-
1. Withdrawal of surplus reserves	-	-	-	-	-	-	-	-	-	-	-
2. Distribution to owners	-	-	-	-	-	-	-	-	-	-	-
3. Others	-	-	-	-	-	-	-	-	-	-	-
(IV) Internal transfer of owners' equity	-	-	-	-	-	-	-	-	-	-	-
1. Transfer of capital reserve to share capital	-	-	-	-	-	-	-	-	-	-	-
2. Transfer of surplus reserve to share capital	-	-	-	-	-	-	-	-	-	-	-
3. Surplus reserves to cover losses	-	-	-	-	-	-	-	-	-	-	-
4. Changes in defined benefit plans carried forward to retained earnings	-	-	-	-	-	-	-	-	-	-	-
5. Other comprehensive income carried forward to retained earnings	-	-	-	-	-	-	-	-	-	-	-
6. Others	-	-	-	-	-	-	-	-	-	-	-
(V) Special reserves	-	-	-	-	-	-	-	-	-	-	-
1. Withdrawal in the current year	-	-	-	-	-	-	-	848,828.23	-	-	848,828.23
2. Use in the current year	-	-	-	-	-	-	-	848,828.23	-	-	848,828.23
(VI) Others	-	-	-	-	-	-	-	-	-	-	-
IV. Closing balance of the current year	113,000,000.00	-	-	-	337,566,752.22	-	-	-	-	-40,331,072.39	-

Legal representative: He Deqiang
Principal in charge of accounting: Zhao Yanhui
Head of accounting department: Zhao Yanhui

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

Item	FY 2023
	Other equity instruments			Capital reserves	Less: Treasury stock	Other comprehensive income	Special reserves	Surplus reserves	Undistributed profits	Others	Total owners' equity
	Paid-in capital	Preference shares	Perpetual bonds
I. Closing balance of the prior year	90,000,000.00	-	-	7,133,352.22	-	-	-	-	-34,009,832.30	-	63,123,519.92
Add: Changes in accounting policies	-	-	-	-	-	-	-	-	-	-	-
Correction of prior-period errors	-	-	-	-	-	-	-	-	-	-	-
Others	-	-	-	-	-	-	-	-	-	-	-
II. Opening balance of the current year	90,000,000.00	-	-	7,133,352.22	-	-	-	-	-34,009,832.30	-	63,123,519.92
III. Increase or decrease in the current year (Decrease marked with "·")	23,000,000.00	-	-	330,433,400.00	-	-	-	-	-2,355,296.18	-	351,078,103.82
(I) Total comprehensive income	-	-	-	-	-	-	-	-	-2,355,296.18	-	-2,355,296.18
(II) Owner's inputs and decreases in capital	23,000,000.00	-	-	330,433,400.00	-	-	-	-	-	-	353,433,400.00
1. Capital invested by owners	23,000,000.00	-	-	330,433,400.00	-	-	-	-	-	-	353,433,400.00
2. Other equity instrument holder's investment	-	-	-	-	-	-	-	-	-	-	-
3. Amount of share-based payments included in shareholder's equity	-	-	-	-	-	-	-	-	-	-	-
4. Others	-	-	-	-	-	-	-	-	-	-	-
(III) Distribution of profits	-	-	-	-	-	-	-	-	-	-	-
1. Withdrawal of surplus reserves	-	-	-	-	-	-	-	-	-	-	-
2. Distribution to owners	-	-	-	-	-	-	-	-	-	-	-
3. Others	-	-	-	-	-	-	-	-	-	-	-
(IV) Internal transfer of owners' equity	-	-	-	-	-	-	-	-	-	-	-
1. Transfer of capital reserve to share capital	-	-	-	-	-	-	-	-	-	-	-
2. Transfer of surplus reserve to share capital	-	-	-	-	-	-	-	-	-	-	-
3. Surplus reserves to cover losses	-	-	-	-	-	-	-	-	-	-	-
4. Changes in defined benefit plans carried forward to retained earnings	-	-	-	-	-	-	-	-	-	-	-
5. Other comprehensive income carried forward to retained earnings	-	-	-	-	-	-	-	-	-	-	-
6. Others	-	-	-	-	-	-	-	-	-	-	-
(V) Special reserves	-	-	-	-	-	-	-	-	-	-	-
1. Withdrawal in the current year	-	-	-	-	-	-	-	-	-	-	-
2. Use in the current year	-	-	-	-	-	-	-	-	-	-	-
(VI) Others	-	-	-	-	-	-	-	-	-	-	-
IV. Closing balance of the current year	113,000,000.00	-	-	337,566,752.22	-	-	-	-	-36,365,128.48	-	414,201,623.74

Legal representative: He Deqiang
Principal in charge of accounting: Zhao Yanhui
Head of accounting department: Zhao Yanhui

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

Item	FY 2022
	Paid-in capital	Other equity instruments			Capital reserves	Less: Treasury stock	Other comprehensive income	Special reserves	Surplus reserves	Undistributed profits	Others
		Preference shares	Perpetual bonds	Others
I. Closing balance of the prior year	5,000,000.00	-	-	-	75,816,052.22	-	-	-	-	-23,788,844.13	-
Add: Changes in accounting policies	-	-	-	-	-	-	-	-	-	-	-
Correction of prior-period errors	-	-	-	-	-	-	-	-	-	-	-
Others	-	-	-	-	-	-	-	-	-	-	-
II. Opening balance of the current year	5,000,000.00	-	-	-	75,816,052.22	-	-	-	-	-23,788,844.13	-
III. Increase or decrease in the current year (Decrease marked with “-”)	85,000,000.00	-	-	-	-68,682,700.00	-	-	-	-	-10,220,988.17	-
(I) Total comprehensive income	-	-	-	-	-	-	-	-	-	-10,220,988.17	-
(II) Owner's inputs and decreases in capital	15,050,000.00	-	-	-	1,267,300.00	-	-	-	-	-	16,317,300.00
1. Capital invested by owners	15,050,000.00	-	-	-	1,267,300.00	-	-	-	-	-	16,317,300.00
2. Other equity instrument holder's investment	-	-	-	-	-	-	-	-	-	-	-
3. Amount of share-based payments included in shareholder's equity	-	-	-	-	-	-	-	-	-	-	-
4. Others	-	-	-	-	-	-	-	-	-	-	-
(III) Distribution of profits	-	-	-	-	-	-	-	-	-	-	-
1. Withdrawal of surplus reserves	-	-	-	-	-	-	-	-	-	-	-
2. Distribution to owners	-	-	-	-	-	-	-	-	-	-	-
3. Others	-	-	-	-	-	-	-	-	-	-	-
(IV) Internal transfer of shareholders' equity	69,950,000.00	-	-	-	-69,950,000.00	-	-	-	-	-	-
1. Transfer of capital reserve to share capital	69,950,000.00	-	-	-	-69,950,000.00	-	-	-	-	-	-
2. Transfer of surplus reserve to share capital	-	-	-	-	-	-	-	-	-	-	-
3. Surplus reserves to cover losses	-	-	-	-	-	-	-	-	-	-	-
4. Changes in defined benefit plans carried forward to retained earnings	-	-	-	-	-	-	-	-	-	-	-
5. Other comprehensive income carried forward to retained earnings	-	-	-	-	-	-	-	-	-	-	-
6. Others	-	-	-	-	-	-	-	-	-	-	-
(V) Special reserves	-	-	-	-	-	-	-	-	-	-	-
1. Withdrawal in the current year	-	-	-	-	-	-	-	-	-	-	-
2. Use in the current year	-	-	-	-	-	-	-	-	-	-	-
(VI) Others	-	-	-	-	-	-	-	-	-	-	-
IV. Closing balance of the current year	90,000,000.00	-	-	-	7,133,352.22	-	-	-	-	-34,009,832.30	-

Legal representative:
He Deqiang

Principal in charge of accounting:
Zhao Yanhui

Head of accounting department:
Zhao Yanhui

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

Item	FY 2021
	Paid-in capital	Other equity instruments			Capital reserves	Less: Treasury stock	Other comprehensive income	Special reserves	Surplus reserves	Undistributed profits	Total owners' equity
		Preference shares	Perpetual bonds	Others
I. Closing balance of the prior year	5,000,000.00	-	-	-	-	-	-	-	-	-23,109,267.86	-18,109,267.86
Add: Changes in accounting policies	-	-	-	-	-	-	-	-	-	-	-
Correction of prior-period errors	-	-	-	-	-	-	-	-	-	-	-
Others	-	-	-	-	-	-	-	-	-	-	-
III. Opening balance of the current year	5,000,000.00	-	-	-	-	-	-	-	-	-23,109,267.86	-18,109,267.86
III. Increase or decrease in the current year (Decrease marked with "·")	-	-	-	-	75,816,052.22	-	-	-	-	-679,576.27	75,136,475.95
(I) Total comprehensive income	-	-	-	-	-	-	-	-	-	-679,576.27	-679,576.27
(II) Owner's inputs and decreases in capital	-	-	-	-	75,816,052.22	-	-	-	-	-	75,816,052.22
1. Capital invested by owners	-	-	-	-	68,682,700.00	-	-	-	-	-	68,682,700.00
2. Other equity instrument holder's investment	-	-	-	-	-	-	-	-	-	-	-
3. Amount of share-based payments included in shareholder's equity	-	-	-	-	-	-	-	-	-	-	-
4. Others	-	-	-	-	7,133,352.22	-	-	-	-	-	7,133,352.22
(III) Distribution of profits	-	-	-	-	-	-	-	-	-	-	-
1. Withdrawal of surplus reserves	-	-	-	-	-	-	-	-	-	-	-
2. Distribution to owners	-	-	-	-	-	-	-	-	-	-	-
3. Others	-	-	-	-	-	-	-	-	-	-	-
(IV) Internal transfer of owners' equity	-	-	-	-	-	-	-	-	-	-	-
1. Transfer of capital reserve to share capital	-	-	-	-	-	-	-	-	-	-	-
2. Transfer of surplus reserve to share capital	-	-	-	-	-	-	-	-	-	-	-
3. Surplus reserves to cover losses	-	-	-	-	-	-	-	-	-	-	-
4. Changes in defined benefit plans carried forward to retained earnings	-	-	-	-	-	-	-	-	-	-	-
5. Other comprehensive income carried forward to retained earnings	-	-	-	-	-	-	-	-	-	-	-
6. Others	-	-	-	-	-	-	-	-	-	-	-
(V) Special reserves	-	-	-	-	-	-	-	-	-	-	-
1. Withdrawal in the current year	-	-	-	-	-	-	-	-	-	-	-
2. Use in the current year	-	-	-	-	-	-	-	-	-	-	-
(VI) Others	-	-	-	-	-	-	-	-	-	-	-
IV. Closing balance of the current year	5,000,000.00	-	-	-	75,816,052.22	-	-	-	-	-23,788,844.13	57,027,208.09

Legal representative: He Deqiang
Principal in charge of accounting: Zhao Yanhui
Head of accounting department: Zhao Yanhui

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

NOTES TO THE FINANCIAL STATEMENTS

1 January 2021 – 31 October 2024

(Unless indicated otherwise, all amounts are expressed in RMB)

I. GENERAL INFORMATION

Xinjiang Hua'ou Mining Industry Co., Ltd. (hereinafter referred to as "the Company") was established on 7 December 2007. Its Unified Social Credit Identifier: 91650104666699380L, which was issued by Ruoqiang County Market Supervision Administration Bureau on 3 August 2023; Legal representative: He Deqiang; Registered capital: RMB113 million, paid-in capital: RMB113 million, of which Xinjiang Nonferrous Metals Industry (Group) Co., Ltd. contributed RMB57.63 million, accounting for 51% of the registered capital, and Shanghai Xingqiang Mining Co., Ltd. contributed RMB55.37 million, accounting for 49% of the registered capital. The Company's legal domicile: Room 16, Office on the sixth floor of the Credit Mining Complex Building west of Tuanjie Road and south of Jiankang Road, Ruoqiang County, Bayin'guoleng Mongolian Autonomous Prefecture, Xinjiang; Type of the Company: limited liability company (state-holding company).

The Company's scope of business is mainly as follows: energy investment; mining investment; mineral resources exploration and investment; and sale of mineral products (Items subject to approval in accordance with the law can only be carried out after approved by the relevant departments).

II. BASIS FOR THE PREPARATION OF FINANCIAL STATEMENTS

1. Basis for the preparation

The Company's financial statements have been prepared on the basis of transactions and events that actually occurred, in accordance with the Accounting Standards for Business Enterprises, its Application Guidelines, Interpretations and other relevant regulations issued by the Ministry of Finance (hereinafter collectively referred to as the "Accounting Standards for Business Enterprises"), and on the basis of the accounting policies and estimates set out in "III. Significant accounting policies and accounting estimates" in this note.

2. Going concern

The Company has the financial resources to support it and considers it reasonable to prepare its financial statements on a going concern basis.

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

III. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES

Specific accounting policies and accounting estimates formulated by the Company in accordance with the actual production and operation characteristics include the method of providing for expected credit losses on receivables, the valuation method of inventories, depreciation of property, plant and equipment, amortization of intangible assets and right-of-use assets, judgmental criteria for the capitalization of development expenditures, impairment of long-term assets, and recognition and measurement of income.

1. Statement of compliance with the Accounting Standards for Business Enterprises

The financial statements comply with the requirements of the Accounting Standards for Business Enterprises and give a true, accurate and complete presentation of the financial position of the Company as at 31 October 2024, 31 December 2023, 31 December 2022, and 31 December 2021, and of the results of its operations and cash flows for January-October 2024, FY 2023, FY 2022, and FY 2021, and other related information.

2. Accounting period

The accounting period of the Company is from 1 January to 31 December of the calendar year.

3. Recording currency

The recording currency of the Company is Renminbi (RMB).

4. Cash and cash equivalents

Cash and cash equivalents comprise cash on hand, deposits that can be readily drawn on demand, and short-term and highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

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APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

5. Financial instruments

A financial instrument refers to any contract that gives rise to a financial asset of one party and a financial liability or equity instrument of the other parties. The Company recognizes a financial asset or a financial liability when the Company becomes a party to the contractual provisions of a financial instrument.

(1) Financial assets

1) Classification & measurement

According to the business model of financial assets management and the contractual terms of the cash flows of financial assets, the Company classifies its financial assets in the following categories: (1) financial assets measured at 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 at initial recognition. For financial assets at fair value through profit or loss, the related transaction costs are recognized directly in profit or loss; for other categories of financial assets, the related transaction costs are recognized in the initial recognition amount. For accounts receivable or notes receivable arising from the sale of goods or provision of services that do not contain or consider significant financing components, the Company recognizes them initially at the amount of the consideration to which it expects to be entitled.

Debt instruments

The debt instruments held by the Company refer to the instruments that meet the definition of financial liabilities from the issuers' perspective. There are three categories into which the Company classifies its debt instruments:

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

Measured at amortized cost:

The Company's business model for managing such financial assets is to collect the contractual cash flows, and the contractual cash flow characteristics of such financial assets are consistent with the basic lending arrangements. That is, the cash flows generated on a specific date, represent solely payment of the principal and interest on the outstanding principal amount. The Company recognizes interest income for such financial assets in accordance with the effective interest method. Such financial assets mainly include cash at bank and on hand, notes receivable, accounts receivable, other receivables, debt investment, and long-term receivables. The debt investments and long-term receivables of the Company that matures within one year (including one year) since the balance sheet date are presented as non-current assets due within one year, while debt investments with a maturity of one year or less at the time of acquisition are presented as other current assets.

Measured at fair value through other comprehensive income:

The Company's business model for managing such financial assets is achieved both by collecting contractual cash flows and from the sale of these assets. The contractual cash flow characteristics of such financial assets are consistent with the basic lending arrangements. Such financial assets are measured at fair value through other comprehensive income, but impairment losses or gains, exchange gains and losses, and interest income calculated by the effective interest method are recognized in the current profit and loss. Such financial assets mainly include receivables financing, other debt investments, etc. The Company's other debt investments with a maturity of within one year (including one year) from the balance sheet date are shown as non-current assets due within one year; other debt investments with a maturity of within one year (including one year) at the time of acquisition are shown as other current assets.

Measured at fair value through profit or loss:

The Company classifies debt instruments held that are not classified as at amortized cost and at fair value through other comprehensive income as at fair value through profit or loss. In order to eliminate or significantly reduce accounting mismatch on initial recognition, the Company designates part of financial assets as financial assets at fair value through profit or loss. The assets with a maturity of more than 1 year and expected to be held for more than 1 year are presented in other non-current financial assets, others are presented in financial assets held for trading.

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APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

Equity instruments:

Investments in equity instruments, over which the Company has no control, joint control, or significant influence, are measured at fair value through profit or loss under financial assets held for trading; investments in equity instruments expected to be held for over one year as from the balance sheet date are included in other non-current financial assets.

In addition, a portion of certain investments in equity instruments not held for trading is designated as financial assets at fair value through other comprehensive income upon initial recognition under other investments in equity instruments. The relevant dividend income of such financial assets is recognized in profit or loss for the current period.

2) Impairment of financial assets

The Company recognizes loss provisions based on expected credit losses for financial assets measured at amortized cost, investments in debt instruments at fair value through other comprehensive income, contract assets, lease receivables, and financial guarantee contracts.

The Company recognizes expected credit losses by calculating the probability-weighted amount of the present value of the difference between the cash flows receivable under a contract and the cash flows expected to be received, weighted by the risk of default, considering reasonable and substantiated information about past events, current conditions and projections of future economic conditions that are available at the balance sheet date without undue additional cost and effort.

For notes receivable, accounts receivable, financing receivables and contract assets arising from ordinary operating activities, such as sales of goods and rendering of services, the Company measures the loss allowance based on lifetime expected credit losses, regardless of whether there is a significant financing component. For lease receivables, the Company also elects to measure the loss allowance based on lifetime expected credit losses.

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APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

Except for notes receivable, accounts receivable, financing receivables, contract assets and lease receivables mentioned above, at each balance sheet date, the Company measures separately the expected credit losses on financial instruments in different stages. If the credit risk of a financial instrument has not increased significantly since initial recognition, the financial instrument is in stage 1, and the Company measures the loss allowances based on the expected credit losses in the next 12 months; if the credit risk of a financial instrument has increased significantly since initial recognition, but credit impairment has not occurred, the financial instrument is in stage 2, and the Company measures the loss allowances based on the expected credit losses over the entire life of the instrument; and if a financial instrument has been impaired since initial recognition, the financial instrument is in stage 3, and the Company measures the loss allowances based on the expected credit losses over the entire life of the instrument.

For financial instruments with low credit risk at the balance sheet date, the Company assumes that there has been no significant increase in credit risk since initial recognition, recognizes them as financial instruments in stage 1, and measures the loss allowances based on the expected credit losses in the next 12 months.

The Company calculates interest income on financial instruments in stages 1 and 2 on the basis of their book balance before the provision for impairment and the effective interest rate. For financial instruments in stage 3, interest income is calculated on the basis of their book balance less amortized cost after provision for impairment and the effective interest rate.

When information on expected credit losses cannot be assessed at a reasonable cost for a single financial asset, the Company classifies receivables into portfolios based on credit risk characteristics, calculates expected credit losses on a portfolio basis, and determines the portfolios on the following basis:

Related party portfolio Related party customers

Non-related party portfolio

Non-related party customers

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APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

For the receivables, lease receivables, notes receivable and financing receivable derived from daily business activities such as sales of goods and rendering of services, the Company calculates the expected credit loss by referring to the historical credit loss experience, combining the current situation and the forecast of future economic conditions, and based on the exposure at default and lifetime expected credit loss rate throughout its lifetime. For other notes receivable, financing receivable, and receivables and long-term receivables classified into portfolios, the Company calculates the expected credit loss by referring to the historical credit loss experience, combining the current situation and the forecast of the future economic conditions, and based on the exposure at default and lifetime expected credit loss rate within the next 12 months or throughout its lifetime.

The Company recognizes the provision or reversal of losses in profit or loss for the current period. In the case of a debt instrument held at fair value through other comprehensive income, the Company adjusts other comprehensive income while recording gain or loss in profit and loss.

3) Derecognition of financial assets

A financial asset is derecognized when any of the below criteria is met: (i) the contractual rights to receive the cash flows from the financial asset expire; (ii) the financial asset has been transferred and the Company transfers substantially all the risks and rewards of ownership of the financial asset to the transferee; or (iii) the financial asset has been transferred and the Company has not retained control of the financial asset, although the Company neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset.

Upon derecognition of investments in other equity instruments, the difference between their book value and the sum of the consideration received and the accumulated changes in fair value that had been recognized directly in other comprehensive income is recognized in retained earnings, as derecognizing the remaining financial assets, it is recognized in profit or loss.

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APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

(2) Financial liabilities

Financial liabilities are classified as financial liabilities at amortized cost or financial liabilities at fair value through profit or loss at initial recognition.

The Company’s financial liabilities are mainly financial liabilities measured at amortized cost, including notes payable, accounts payable, other payables, borrowings and bonds payable, etc. The financial liabilities are initially measured at fair value exclusive transaction costs and are subsequently measured at the effective interest rate method. Financial liabilities with maturities within 1 year (including one year) are presented in current liabilities. Financial liabilities with maturities of more than 1 year but are due within 1 year (including one year) at the balance sheet date are presented in the current portion of non-current liabilities. Others are presented in non-current liabilities.

When the present obligation of financial liabilities is discharged in whole or in part, the Company shall derecognize the financial liabilities or the portion of the obligation that is discharged. The difference between the book value of the derecognized portion and the consideration paid is recognized in profit or loss.

(3) Determination of fair value of financial instruments

The fair value of a financial instrument that is traded in an active market is determined at the quoted price in the active market. Financial instruments for which no active market exists are valued using valuation techniques to determine their fair value. In valuation, the Company uses valuation techniques that are applicable in the current circumstances and supported by sufficient available data and other information, selects inputs that are consistent with the characteristics of the asset or liability that would be considered by a market participant in a transaction for the underlying asset or liability, and prioritizes the use of relevant observable inputs to the extent possible. Where relevant observable inputs are not available or not practicable to obtain, unobservable inputs shall be used.

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APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

6. Fixed assets

(1) Recognition and initial measurement of fixed assets

Fixed assets comprise buildings, machinery, transportation equipment, electronic and office equipment, and disposal costs

Fixed assets are recognized when it is probable that the related economic benefits will flow to the Company and the costs can be reliably measured. Fixed assets purchased or constructed by the Company are initially measured at cost at the acquisition date. The fixed assets contributed by the State shareholders at the reorganization of the Company into a corporation entity are recognized based on the evaluated amounts approved by the state-owned assets administration department.

Subsequent expenditures incurred for a fixed asset are included in the cost of the fixed asset when it is probable that the associated economic benefits will flow to the Company and the related cost can be reliably measured. The book value of the replaced part is derecognized. All the other subsequent expenditures are recognized in profit or loss in the period in which they are incurred.

(2) Depreciation methods of fixed assets

Fixed assets are depreciated using the straight-line method over the estimated useful lives of the assets, after deducting their estimated net residual value from the recorded value. For the fixed assets that have been provided for impairment loss, the related depreciation charge is prospectively determined based on the adjusted carrying amounts over their remaining useful lives.

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APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

The estimated useful lives, net residual value rate and annual depreciation rates of fixed assets are presented below:

No.	Type	Period of depreciation (years)	Estimated residual value rate (%)	Annual depreciation rate (%)
1	Buildings	20-50	5	1.90-4.75
2	Machinery	10	3 or 5	9.50-9.70
3	Transportation equipment	3-10	0, 3 or 5	9.5-33.33
	Electronic and office
4	equipment	3-5	0, 3 or 5	19-33.33
5	Others	3-5	3 or 5	19-32.33

The estimated useful life, the estimated net residual value of a fixed asset and the depreciation method applied to the asset are reviewed, and adjusted as appropriate at least at each year-end.

(3) Impairment of fixed assets

When the recoverable amount of a fixed asset is less than the book value, the book value is written down to the recoverable amount (Note III.10).

(4) Disposal of fixed assets

A fixed asset is derecognized on disposal or when no future economic benefits are expected from its use or disposal. The amount of proceeds from disposal on sale, transfer, retirement or damage of a fixed asset net of its book value and related taxes and expenses is recognized in profit or loss for the current period.

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APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

7. Construction in progress

Construction in progress is measured at actual cost. Actual cost comprises construction costs, installation costs, equipment investment costs and other necessary expenditures incurred to bring the construction in progress to its intended useable condition. Construction in progress is transferred to fixed assets when the assets are ready for their intended use, and depreciation begins the following month. When the recoverable amount of construction in progress is less than the book value, the book value is written down to the recoverable amount (Note III.10).

Construction in progress is transferred to fixed assets when it reaches its intended useable condition, based on the following criteria:

Item	Criteria for carrying forward fixed assets
Buildings	From the date of reaching the intended state of use
Machinery	Complete the installation and commissioning, meet the design requirements and complete trial production

8. Intangible assets

Intangible assets include mining rights, exploration rights, land use rights and others, and are initially measured at cost or fair value.

(1) Mining rights

Mining rights are stated at the actual cost. Mining rights acquired by the business combination are recognized at the fair value at the acquisition date, and are subsequently recorded at cost less accumulated amortization and impairment losses. Once the mineral object has been formally mined, the mining rights are amortized on the output method.

(2) Exploration rights

Exploration rights acquired by purchase are recorded at actual acquisition cost and subsequently measured in accordance with the accounting policy for mining rights when they are converted to mining rights.

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APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

(3) Land use rights

Land use rights invested by the shareholders are recognized at the value agreed by all the shareholders unless the agreed value is not fair. Purchased land use rights are stated at actual cost, while land use rights acquired by the business combination are recognized at the fair value at the acquisition date, and subsequently recorded at cost less accumulated amortization and impairment losses. Land use rights are amortized on a straight-line basis over their useful lives.

(4) Periodical review of useful life and amortization method

For an intangible asset with a finite useful life, a review of its useful life and amortization method is performed at each year-end, with adjustments made as appropriate.

(5) Research and development

The expenditure on an internal research and development project is classified into expenditure on the research phase and expenditure on the development phase based on its nature and whether there is material uncertainty that the research and development activities can form an intangible asset at the end of the project.

Expenditure on the research phase is recognized in profit or loss in the period in which it is incurred. Expenditure on the development phase is capitalized only if all the following conditions are satisfied:

it is technically feasible to complete the intangible asset so that it will be available for use or sale;
management intends to complete the intangible asset, and use or sell it;
it can be demonstrated how the intangible asset will generate economic benefits;
there are adequate technical, financial and other resources to complete the development and the ability to use or sell the intangible asset; and the expenditure attributable to the intangible asset during its development phase can be reliably measured.
II-31 -

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

Development expenditures that do not meet the above criteria are recognized in profit or loss as incurred. Development expenditures charged to profit or loss in prior periods are not re-recognized as assets in subsequent periods. Expenditures in the development stage that have been capitalized are presented as development expenditures on the balance sheet and are transferred to intangible assets from the date the project reaches its scheduled use.

(6) Impairment of intangible assets

When the recoverable amount of the intangible asset is less than the book value, the book value is written down to the recoverable amount (Note III.10).

9. Exploration assets and filling cost

The Company’s exploration assets include topographical and geological exploration, exploration drilling, sampling, trenching and relevant commercial and technical feasibility study, and the expenditure arising from expanding existing orebody exploration and improving the orebody productivity.

At the initial stage of the exploration project, exploration and evaluation expenditures are recognized in profit or loss when they occur. When the project has technical feasibility and commercial feasibility, the exploration and evaluation expenditures (including the cost of purchasing the mineral exploration right) are capitalized into exploration and evaluation assets by individual projects.

The exploration and evaluation assets are carried forward as fixed assets or intangible assets when they reach their intended useable condition, and are depreciated or amortised over their useful lives. When the project is aborted, the relevant unrecoverable cost will be written off and recognized in profit or loss when it occurs.

Infill costs incurred after the extraction of the deposit are included in production costs.

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FINANCIAL INFORMATION OF THE TARGET COMPANY

10. Impairment of long-term assets

Fixed assets, construction in progress, intangible assets with finite useful lives, investment property measured by cost method and long-term equity investments in subsidiaries, joint ventures and associates are tested for impairment if there is any indication that an asset may be impaired at the balance date. For intangible assets which have not been ready to use, regardless of the existence of the indicators of impairment losses, the impairment tests should be carried out annually. If the result of the impairment test indicates that the recoverable amount of the asset is less than its book value, a provision for impairment is made and an impairment loss is recognized for the amount by which the asset's book value exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and the present value of the future cash flows expected to be derived from the asset. Provision for asset impairment is determined and recognized on an individual asset basis. If it is not possible to estimate the recoverable amount of an individual asset, the recoverable amount of a group of assets to which the asset belongs is determined. A group of assets is the smallest group of assets that can generate independent cash inflows.

Once the above asset impairment loss is recognised, it will not be reversed for the value recovered in the subsequent periods.

11. Employee benefits

Employee benefits mainly include short-term employment benefits, post-employment benefits and termination benefits incurred in exchange for service rendered by employees or labor relations terminated.

(1) Short-term employment benefits

Short-term employment benefits mainly include wages or salaries, bonuses, allowances and subsidies, staff welfare, medical insurance, work injury insurance, maternity insurance, housing provident fund, labor union funds, employee education funds, short-term payable leaves, etc. The Company recognizes the short-term employment benefits actually incurred as a liability in the accounting period in which the employee provides the service and recognizes it in profit or loss or in the cost of the related asset. Non-monetary benefits are measured at fair value.

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FINANCIAL INFORMATION OF THE TARGET COMPANY

(2) Post-employment benefits

The Company classifies its post-employment benefit plans as defined contribution plans. The defined contribution plan is a post-employment benefit plan under which the Company has no further payment obligations after making fixed contributions to a separate fund; during the reporting period, the Company’s post-employment benefits mainly consisted of basic pension insurance, unemployment insurance and enterprise annuity for employees.

Basic pension insurance

The Company’s employees participate in the basic social pension insurance organized and implemented by the local labor and social security departments. The Company pays monthly pension insurance premiums to the local social basic pension insurance agency based on the locally stipulated social basic pension insurance contribution base and ratio. Upon the retirement of an employee, the local labor and social security authorities are responsible for paying the retired employee a basic social pension. The Company recognizes a liability for the amount of contributions payable calculated in accordance with the above social security provisions in the accounting period in which the employee provides the services, and recognizes it in profit or loss or in the cost of the related assets.

(3) Termination benefits

Termination benefits are payables when employment is terminated by the Company before the employment contract expires, or compensation is provided as an offer to encourage employees to accept voluntary redundancy. The Company recognizes termination benefits as liabilities and charges to profit or losses at the earlier of the following dates: (i) when the Company can no longer withdraw the offer of termination plan; and (ii) when the Company recognizes costs for restructuring which involves the payment of termination benefits.

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FINANCIAL INFORMATION OF THE TARGET COMPANY

12. Provisions

Certain present obligations are required as a result of events that have already occurred and are recognized as provisions when it is probable that an outflow of economic benefits will result from the performance of the operation and the amount can be measured reliably. Obligations to abandon fixed assets that satisfy the conditions for recognition of a provision are recognized as provisions and are also included in the original cost of the related fixed assets in an amount equal to the present value of the expenditures that are expected to be incurred as future expenditures based on local conditions and relevant requirements. This portion of the value is depreciated as part of the cost of the fixed asset. Over the useful life of a fixed asset, the fixed asset abandonment obligation is determined using the effective interest rate method to determine the interest expense to be borne in each period. If the conditions for recognition of provisions are not met, expenditures incurred for dismantling, removal and site clearance at the time of abandonment are recognized as clean-up costs in profit or loss when they are actually incurred.

A provision is initially measured at the best estimate of the expenditure required to settle the related present obligation. Factors surrounding a contingency, such as the risks, uncertainties and the time value of money, are considered in reaching the best estimate of a provision. Where the effect of the time value of money is material, the best estimate is determined by discounting the related future cash outflows. The increase in the discounted amount of the provision arising from the passage of time is recognized as interest expense.

The book value of provisions is reviewed at each balance sheet date and adjusted to reflect the current best estimate.

The provisions expected to be settled within one year since the balance sheet date are classified as current liabilities.

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

13. Revenue recognition

The Company recognizes revenue in accordance with the amount of the consideration to be received when customers acquire control of the relevant commodity.

(1) Sales of goods

Sales are recognized when the products have been shipped to the specific location in accordance with the sales contract and the customers have inspected the products and signed acceptance notices. There is no significant financing component as the sales are made with a credit term varied by customers' credit risk characteristics, which is consistent with market practices. Advance received from customers is presented as contract liabilities in the balance sheet.

14. Safety production costs

Pursuant to Regulation No. [2022]136, "Management Measures of Accrual and Use of Safety Fund of Business Enterprises", issued by the Ministry of Finance and the State Administration of Work Safety, the Company is required to accrue safety production costs. safety production cost is earmarked for improving the safety of production.

Pursuant to Regulation No. [2010]8, "Accounting Standards for Business Enterprises Interpretation No. 3", issued by the Ministry of Finance on 21 June 2010, enterprises in high-risk industries should accrue safety production costs under China's law and regulation, and safety production cost should be accrued to production costs or current profit or loss, and credited to special reserves. When the Company uses the extracted production safety fees, if it is an expense, it should be directly offset against the special reserves. The safety production costs of the Company that are formed into fixed assets through a collection of construction in progress are recognized as fixed assets when the safety projects are completed and to the expected conditions for use; at the same time, the special reserve is written down through the costs of formed fixed assets, and the same amount is confirmed to accumulated depreciation. For these fixed assets, there will be no further depreciation in the following accounting periods. During the reporting period, the Company had not yet commenced mining activities and accrued production safety fees based on actual utilization.

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FINANCIAL INFORMATION OF THE TARGET COMPANY

15. Deferred tax assets and deferred tax liabilities

Deferred tax assets and deferred tax liabilities are calculated and recognized based on the differences arising between the tax bases of assets and liabilities and their book values (temporary differences). Deferred tax asset is recognized for the deductible losses that can be carried forward to subsequent years for deduction of the taxable profit in accordance with the tax laws. No deferred tax liability is recognized for a temporary difference arising from the initial recognition of goodwill. No deferred tax asset or deferred tax liability is recognized for the temporary differences resulting from the initial recognition of assets or liabilities due to a transaction other than a business combination, which affects neither accounting profit nor taxable profit (or deductible loss). At the balance sheet date, deferred tax assets and deferred tax liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled.

Deferred tax assets are only recognized for deductible temporary differences, deductible losses and tax credits to the extent that it is probable that taxable profit will be available in the future against which the deductible temporary differences, deductible losses and tax credits can be utilized.

Deferred tax assets and deferred tax liabilities that also meet the following conditions are presented net of offsetting amounts:

the deferred tax assets and liabilities are related to the same taxpayer within the Company and the same taxation authority; and
that taxpayer within the Company has a legally enforceable right to offset current tax assets against current tax liabilities.
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FINANCIAL INFORMATION OF THE TARGET COMPANY

16. Leases

Leases, refer to a contract in which the lessor transfers the right to use the assets to the lessee for consideration in a certain period.

The Company as the lessee

The Company recognizes the right to use assets at the beginning of the lease term and recognizes the lease liabilities by the present value of unpaid lease payments. Lease payments include fixed payments and payments to be made in the case of a reasonable determination of the exercise of the purchase option or termination of the lease option. The variable rent determined according to a certain proportion of sales volume is not included in the rental payment amount but is included in the current profit and loss when it occurs. The Company's lease liabilities payable within one year (including one year) from the balance sheet date are listed as non-current liabilities due within one year.

Right-of-use assets of the Company comprise leased buildings. Right-of-use assets are measured initially at cost which comprises the amount of the initial measurement of lease liabilities, any lease payments made at or before the commencement date and any initial direct costs, less any lease incentives received. If the Company is able to obtain ownership of the leased asset at the end of the lease term with reasonable certainty, depreciation is provided over the remaining useful life of the leased asset; if it cannot be reasonably certain that the ownership of leased assets can be obtained at the end of the lease term, depreciation is provided over the shorter of the lease term and the remaining useful life. When the recoverable amount is less than the book value of the right-of-use asset, the Company writes down the book value to its recoverable amount.

For short-term leases with a lease term not exceeding 12 months and leases of low-value assets with a low brand-new value of a single asset, the Company chooses not to recognize right-of-use assets and lease liabilities and to recognize the related rental expenses in profit or loss or costs of the related assets on a straight-line basis over each period of the lease term.

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APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

The Company as the lessor

A lease that in substance transfers substantially all the risks and rewards incidental to ownership of an asset is a finance lease. Others are classified as operating leases.

(1) Operating lease

Where the Company leases out self-owned buildings, machinery, and transportation equipment under operating leases, the rental income therefrom is recognized on a straight-line basis over the lease term. Variable rental that is linked to a certain percentage of sales is recognized in rental income as incurred.

When the lease is changed, the Company regards it as a new lease from the effective date of the change and regards the advance receipts or lease receivables related to the lease before the change as the receipts for the new lease.

17. Significant accounting estimates and judgments

The Company continuously evaluates critical accounting estimates and critical judgments used, based on historical experience and other factors, including reasonable expectations of future events.

(1) Critical judgments in applying accounting policies

1) Classification of financial assets

The significant judgments involved in determining the classification of the Company’s financial assets include, among others, analyses of business models and contractual cash flow characteristics.

The Company determines the business model for managing financial assets at the portfolio level, taking into account factors such as the manner in which the performance of the financial assets is evaluated and reported to key management personnel, the risks affecting the performance of the financial assets and the manner in which they are managed, and the manner in which the management of the underlying business is remunerated.

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APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

The following key judgments exist when the Company assesses whether the contractual cash flows of a financial asset are consistent with the underlying lending arrangement: whether it is probable that the principal amount will change in time distribution or amount over the life of the asset, for example, as a result of early repayment; and whether the interest rate includes only the time value of money, credit risk, other fundamental borrowing risks, and considerations for costs and profits. For example, whether the amount of the early repayment reflects only the outstanding principal, the interest calculated based on the unpaid principal, and the reasonable compensation paid for the early termination of the contract.

2) Judgment of significant increase in credit risk

In distinguishing different stages in which the financial instruments are held, the Company’s judgments of significant increases in credit risk and credit impairments are set out as below:

The Company’s main criteria for determining a significant increase in credit risk are the overdue days exceeding 180 days, or significant changes in one or more of the following indicators: the operating environment in which the debtor operates, internal or external credit ratings, actual or expected results of operations, or significant decreases in the value of the guarantee or the credit rating of the guarantor.

The Company’s main criteria for determining that credit impairment has occurred are that the overdue days are more than 360 days (i.e., a default has occurred) or that one or more of the following conditions have been met: the debtor is experiencing significant financial difficulty, other debt restructuring, or it is probable that the debtor will be insolvent, among other things.

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APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

(2) Critical accounting estimates and their key assumptions

The following critical accounting estimates and key assumptions have a significant risk of causing a material adjustment to the book value of assets and liabilities in the next accounting year:

1) Accounting estimates for provision for impairment of non-current assets

In accordance with the accounting policy described in Note III.10, the Company assesses the book value of fixed assets, construction in progress, land use rights, and mining rights annually to determine whether it exceeds the recoverable amount, which may result in impairment.

During the reporting period, the Company did not make any provision for impairment of fixed assets, construction in progress, land use rights and mining rights. The recoverable amounts of the cash-generating units related to fixed assets, construction in progress, land use rights, and mining rights are determined by calculating the present value of the expected future cash flows from the assets. This present value is determined by discounting the cash flow forecasts approved by the management. In the discounting process, the management's assumptions and estimates regarding the selling prices of metals, discount rates, and inflation rates are applied. The discount rate used in the discounted cash flow forecast of the financial budget varies depending on the cash-generating unit. The main assumptions in calculating the asset's value in use include the sales prices of nickel and copper, the inflation rate and the discount rate.

2) Mineral reserves

Given the subjective judgement involved in the preparation of information on mineral reserves, it is not possible to achieve a high degree of precision in the technical estimation of the Company's mineral reserves, which can only be estimated to approximate figures.

The Company is required to follow a number of authoritative guidelines on technical standards before an estimated mineral reserve can be identified as "proven" and "probable". Estimates of proven and probable reserves are updated regularly, and recent production and technical data from individual mines are taken into account. In addition, estimates of proven and probable mineral reserves are subject to change as prices and costs change from year to year. For accounting purposes, these changes are treated as changes in accounting estimates and are reflected in the relevant depreciation rates on a prospective basis.

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APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

Despite the inherent limitations of these reserve estimation techniques, these estimates are used to determine depreciation expense and impairment losses. Depreciation rates are determined on the basis of proven developed economically mineable reserves at the end of the period and current mine ore production.

3) Income taxes

In ordinary operating activities, uncertainty exists in the ultimate tax treatment of certain transactions and events. Significant judgement is required when the Company is accounting for income tax expense in each region. If the final determination of these tax matters results in a difference from the amounts initially recorded, the difference will affect the amount of income tax expense and deferred income tax in the period in which such final determination is made.

The estimation of deferred tax assets requires the estimation of taxable income and applicable tax rates for each subsequent year, and the realization of deferred tax assets depends on whether it is probable that the Group will generate sufficient taxable income in the future. Future changes in tax rates and the timing of reversal of temporary differences may also affect income tax expense as well as the balance of deferred income taxes. Changes in the above estimates could result in significant adjustments to deferred income taxes.

Significant changes in accounting policies and accounting estimates

(1) Significant changes in accounting policies

The Ministry of Finance issued the Notice on the Issuance of Interpretation No. 15 of the Accounting Standards for Business Enterprises (hereinafter referred to as "Interpretation 15") in 2021 and the Implementation Questions and Answers of the Accounting Standards for Business Enterprises in 2022. The Company has prepared its financial statements for FY 2022 in accordance with the above-mentioned notice and implementation questions and answers, and these revisions have no significant impact on the Company's financial statements.

(2) Significant changes in accounting estimates

There were no changes in accounting estimates during the reporting period.

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APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

IV. TAXATION

1. Principal categories and tax rates applicable to the Company

Tax category	Basis for taxation	Tax rate/levy rate/tax amount
Value-added tax	Taxable value-added amount (excluding simplified levy, the taxable amount is calculated using the taxable sales amount multiplied by the effective tax rate less deductible input tax of the current period)	13%, 9%, 6%, 1%
Urban maintenance and construction tax	Turnover tax payable	5%
Education surcharge	Turnover tax payable	3%
Local education surcharge	Turnover tax payable	2%
Property tax	Taxable residual value	1.2%
Land use tax	Actual area of land in use	1.05 Yuan/m²
Enterprise income tax	Taxable income	25%

2. Tax preferential policies and basis

According to the Announcement of the Ministry of Finance and the State Taxation Administration on Exempting Small-scale Value-added Tax Taxpayers from Value-added Tax (Announcement No. 1 [2023] of the Ministry of Finance and the State Taxation Administration), “from 1 January 2023 to 31 December 2023, small-scale taxpayers of VAT subject to a rate of 3% for their taxable sales revenue are entitled to a reduced VAT rate of 1%; prepaid VAT items subject to a 3% advance collection rate are entitled to a reduced VAT prepayment rate of 1%”. The Company is entitled to the preferential policy from January to July 2023.

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

According to the Announcement of the Ministry of Finance and the State Taxation Administration on Further Implementing the "Six Local Taxes and Two Fees" Reduction and Exemption Policies for Micro and Small Enterprises (Announcement No. 10 [2022] of the Ministry of Finance and the State Taxation Administration), "small-scale taxpayers of value-added tax, small micro-profit enterprises and individual businesses can receive a reduction in resource tax, urban maintenance and construction tax, property tax, urban land use tax, stamp duty (excluding stamp duty on securities transactions), cultivated land occupancy tax, education surcharge, and local education surcharge within a range of 50% of the tax amount. The implementation period is from 1 January 2022 to 31 December 2024". The Company is entitled to the preferential policy in 2022 and January to July 2023.

V. NOTES TO THE PRINCIPAL ITEMS OF THE FINANCIAL STATEMENTS

1. Cash at bank and on hand

	31 October	31 December	31 December	31 December
Item	2024	2023	2022	2021
Cash on hand	-	-	20,368.22	17,965.00
Cash at bank	204,280,747.84	312,847,809.43	18,951.90	270,870.37
Total	204,280,747.84	312,847,809.43	39,320.12	288,835.37

Restricted cash at bank and on hand

	31 October	31 December	31 December	31 December
Item	2024	2023	2022	2021
Land reclamation bond	1,518,800.00	1,415,700.00	-	-
ETC guarantee	1,000.00	-	-	-
Total	1,519,800.00	1,415,700.00	-	-

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

2. Accounts receivable

Item	31 October	31 December	31 December	31 December
	2024	2023	2022	2021
Accounts receivable	8,085,634.36	–	–	–
Less: Provision for bad debts	–	–	–	–
Book value	8,085,634.36	–	–	–

(1) Accounts receivable presented according to their aging at the date of accounting

	Book balance
	31 October	31 December	31 December	31 December
Aging	2024	2023	2022	2021
Within 1 year
(including 1 year)	8,085,634.36	–	–	–
Total	8,085,634.36	–	–	–

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

(2) Presentation of accounts receivable by bad debt accrual method

Type	31 October 2024
	Book balance		Bad debt provision		Book value
	Amount	Ratio (%)	Amount	Accrual ratio (%)
Bad debt provision on an individual basis	-	-	-	-	-
Bad debt provision by portfolio	8,085,634.36	100.00	-	-	8,085,634.36
Including: Receivables from related party customers	1,630,684.70	20.17	-	-	1,630,684.70
Receivables from non-related party customers	6,454,949.66	79.83	-	-	6,454,949.66
Total	8,085,634.36	100.00	-	-	8,085,634.36

Bad debt provision for accounts receivable by portfolio

Portfolio – Receivables from related party customers

Aging	31 October 2024
	Book balance	Expected credit loss rate over the entire duration (%)	Bad debt provision
Not overdue	1,630,684.70	-	-
1-6 months overdue	-	-	-
7-18 months overdue	-	-	-
More than 18 months overdue	-	-	-
Total	1,630,684.70	-	-

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

Portfolio – Receivables from non-related party customers

Aging	31 October 2024
	Book balance	Expected credit loss rate over the entire duration (%)	Bad debt provision
Not overdue	6,454,949.66	–	–
1-6 months overdue	–	–	–
7-18 months overdue	–	–	–
More than 18 months overdue	–	–	–
Total	6,454,949.66	–	–

(3) Accounts receivable actually written off during the reporting period

There were no write-offs of accounts receivable for the Company from January to October 2024, as well as in FY 2023, FY 2022, and FY 2021.

(4) Accounts receivable with top five closing balances by debtors

Name of the organization	31 October 2024
	Closing balance of accounts receivable	Ratio of the total closing balance of accounts receivable	Closing balance of bad debt provision for accounts receivable
Zhejiang Jianhui Mining Construction Group Co., Ltd.	6,078,302.19	75.17	–
Shanghai Xingqiang Mining Co., Ltd.	1,517,655.45	18.77	–
China MCC5 Group Corp., Ltd.	309,410.57	3.83	–
Xinjiang Non-ferrous Metal Industry (Group) Quanxin Construction Co., Ltd.	113,029.25	1.40	–
Xinjiang Yongtong Guangming Electric Power Installation Engineering Co., Ltd.	65,765.70	0.81	–
Total	8,084,163.16	99.98	–

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

Other receivables

Item	31 October 2024	31 December 2023	31 December 2022	31 December 2021
Other receivables	198,802.53	524,762.98	47,467.38	750,604.99

(1) Other receivables categorized by nature of payment

Nature of payment	31 October 2024	31 December 2023	31 December 2022	31 December 2021
Receivables from related parties	500.00	108,299.22	-	-
Social security advances receivable	104,475.59	86,091.21	1,228.65	1,211.97
Deposits and margin	100,000.00	102,000.00	2,000.00	2,000.00
Others	3,909.25	230,372.55	44,238.73	747,393.02
Sub-total	208,884.84	526,762.98	47,467.38	750,604.99
Less: Provision for bad debts	10,082.31	2,000.00	-	-
Total	198,802.53	524,762.98	47,467.38	750,604.99

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FINANCIAL INFORMATION OF THE TARGET COMPANY

(2) Other receivables presented by aging

Aging	31 October 2024	31 December 2023	31 December 2022	31 December 2021
Within 1 year
(including 1 year)	108,384.84	524,762.98	45,467.38	333,604.99
1-2 years	100,500.00	–	–	–
2-3 years	–	–	–	400,000.00
3-4 years	–	–	–	15,000.00
4-5 years	–	–	–	2,000.00
Over 5 years	–	2,000.00	2,000.00	–
Total	208,884.84	526,762.98	47,467.38	750,604.99

(3) Presentation of other receivables by bad debt accrual method

Type	31 October 2024
	Book balance		Bad debt provision		Book value
	Amount	Ratio (%)	Amount	Accrual ratio (%)
Bad debt provision on an individual basis	–	–	–	–	–
Bad debt provision by portfolio	208,884.84	100.00	10,082.31	4.83	198,802.53
Including: Related party portfolio	500.00	0.24	500.00	–	–
Non-related party portfolio	208,384.84	99.76	10,082.31	4.83	198,302.53
Total	208,884.84	100.00	10,082.31	4.83	198,802.53

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

Type	31 December 2023
	Book balance		Bad debt provision		Book value
	Amount	Ratio (%)	Amount	Accrual ratio (%)
Bad debt provision on an individual basis	2,000.00	0.38	2,000.00	100.00	–
Bad debt provision by portfolio	524,762.98	99.62	524,762.98	–	–
Including: Related party portfolio	108,299.22	20.56	108,299.22	–	–
Non-related party portfolio	416,463.76	79.06	416,463.76	–	–
Total	526,762.98	100.00	2,000.00	0.38	524,762.98
Type	31 December 2022
	Book balance		Bad debt provision		Book value
	Amount	Ratio (%)	Amount	Accrual ratio (%)
Bad debt provision on an individual basis	–	–	–	–	–
Bad debt provision by portfolio	47,467.38	100.00	–	–	47,467.38
Including: Related party portfolio	–	–	–	–	–
Non-related party portfolio	47,467.38	100.00	–	–	47,467.38
Total	47,467.38	100.00	–	–	47,467.38

– II-50 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

Type	31 December 2021
	Book balance		Bad debt provision		Book value
	Amount	Ratio (%)	Amount	Accrual ratio (%)
Bad debt provision on an individual basis	–	–	–	–	–
Bad debt provision by portfolio	750,604.99	100.00	–	–	750,604.99
Including: Related party portfolio	–	–	–	–	–
Non-related party portfolio	750,604.99	100.00	–	–	750,604.99
Total	750,604.99	100.00	–	–	750,604.99

1) Bad debt provision for other receivables on an individual basis

Name	31 December 2023
	Book balance	Bad debt provision	Accrual ratio (%)	Reason of accrual
Zhao Jinfa	2,000.00	2,000.00	100.00	Likelihood of recovery expected to be low

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

2) Bad debt provision for other receivables by portfolio

	31 October 2024
Aging	Book balance	Bad debt provision	Accrual ratio (%)
Within 1 year (including 1 year)	108,384.84	82.31	0.08
1-2 years	100,500.00	10,000.00	9.95
Total	208,884.84	10,082.31	-
	31 December 2023
Aging	Book balance	Bad debt provision	Accrual ratio (%)
Within 1 year (including 1 year)	524,762.98	-	-
Total	524,762.98	-	-
	31 December 2022
Aging	Book balance	Bad debt provision	Accrual ratio (%)
Within 1 year (including 1 year)	45,467.38	-	-
Over 5 years	2,000.00	-	-
Total	47,467.38	-	-

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

Aging	31 December 2021
	Book balance	Bad debt provision	Accrual ratio (%)
Within 1 year (including 1 year)	333,604.99	–	–
1-2 years	–	–	–
2-3 years	400,000.00	–	–
3-4 years	15,000.00	–	–
4-5 years	2,000.00	–	–
Total	750,604.99	–	–

3) Bad debt provision for other receivables by the general model of expected credit losses

	Stage 1	Stage 2	Stage 3
Bad debt provision	Expected credit loss over the next 12 months	Lifetime expected credit loss (not credit-impaired)	Lifetime expected credit loss (credit-impaired)	Total
Balance as at 1 January 2024	–	2,000.00	–	2,000.00
Balance in current period as at 1 January 2024	–	–	–	–
Accrual in current period	82.31	8,000.00	–	8,082.31
Reversal in current period	–	–	–	–
Charge-offs in current period	–	–	–	–
Write-offs in current period	–	–	–	–
Other changes	–	–	–	–
Balance as at 31 October 2024	82.31	10,000.00	–	10,082.31

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

	Stage 1	Stage 2	Stage 3
Bad debt provision	Expected credit loss over the next 12 months	Lifetime expected credit loss (not credit-impaired)	Lifetime expected credit loss (credit-impaired)	Total
Balance as at 1 January 2023	-	-	-	-
Balance in current period as at 1 January 2023	-	-	-	-
Accrual in current period	-	2,000.00	-	2,000.00
Reversal in current period	-	-	-	-
Charge-offs in current period	-	-	-	-
Write-offs in current period	-	-	-	-
Other changes	-	-	-	-
Balance as at 31 December 2023	-	2,000.00	-	2,000.00

– II-54 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

(4) Provisions for bad debts on other receivables accrued, recovered and reversed during the period

Type	1 January 2024	Changes in current period				Others
		31 October 2024	Accrual	Recovery or reversal	Charge-off or write-offs
Bad debt provision on an individual basis	2,000.00	-2,000.00	-	-	-	-
Bad debt provision by portfolio	-	10,082.31	-	-	-	10,082.31
Total	2,000.00	8,082.31	-	-	-	10,082.31
		Changes in current period
	1 January 2023	Accrual	Recovery or reversal	Charge-off or write-offs	Others	31 December 2023
Bad debt provision on an individual basis	-	2,000.00	-	-	-	2,000.00
Bad debt provision by portfolio	-	-	-	-	-	-
Total	-	2,000.00	-	-	-	2,000.00

(5) Other receivables actually written off during the reporting period

There were no write-offs of other receivables for the Company from January to October 2024, as well as in FY 2023, FY 2022, and FY 2021.

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

(6) Other receivables with significant closing balances by debtors

Name of the organization	Nature of payment	31 October 2024	Aging	Ratio of the total closing balance of other receivables (%)	Bad debt provision Closing balance
Bazhou Kunlun Outdoor Emergency Rescue Center Xinjiang Non-ferrous Metal Research Institute Co., Ltd.	Margin	100,000.00	1-2 years	47.87	10,000.00
	Deposit	500.00	Within 1 year	0.24	-
Total	-	100,500.00	-	48.11	10,000.00
Name of the organization	Nature of payment	31 December 2023	Aging	Ratio of the total closing balance of other receivables (%)	Bad debt provision Closing balance
Ruoqiang County Natural Resources Bureau	Others	156,100.50	Within 1 year	29.63	-
Fuyun Xinshengtong Trade Co., Ltd.	Others	107,799.22	Within 1 year	20.46	-
Bazhou Kunlun Outdoor Emergency Rescue Center	Margin	100,000.00	Within 1 year	18.98	-
Wang Zheng	Cash advance	73,643.01	Within 1 year	13.98	-
Zhao Jinfa	Deposit	2,000.00	Over 5 years	0.38	2,000.00
Total	-	439,542.73	-	83.43	2,000.00

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

Name of the organization	Nature of payment	31 December 2022	Aging	Ratio of the total closing balance of other receivables (%)	Bad debt provision Closing balance
Wang Zheng	Cash advance	44,238.73	Within 1 year	93.20	-
Zhao Jinfa	Deposit	2,000.00	Over 5 years	4.21	-
Total	-	46,238.73	-	97.41	-
Name of the organization	Nature of payment	31 December 2021	Aging	Ratio of the total closing balance of other receivables (%)	Bad debt provision Closing balance
Zhu Chunsun	Cash advance	400,000.00	2-3 years	53.29	-
Wang Zheng	Cash advance	332,393.02	Within 1 year	44.28	-
Gao Hui	Cash advance	15,000.00	3-4 years	2.00	-
Zhao Jinfa	Deposit	2,000.00	4-5 years	0.27	-
Total	-	749,393.02	-	99.84	-

II-57 -

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

4. Prepayments

(1) Aging of prepayments

	31 October 2024		31 December 2023
	Amount	Ratio (%)	Amount	Ratio (%)
Item
Within 1 year	36,102,897.49	89.18	5,599,596.14	100.00
1-2 years	4,382,218.28	10.82	-	-
Total	40,485,115.77	100.00	5,599,596.14	100.00

Note: As at 31 October 2024, prepayments aged over one year amounted to RMB4,382,218.28, mainly for prepayments for equipment purchases, which have not yet been settled as the purchased equipment items have not yet arrived.

	31 December 2022		31 December 2021
	Amount	Ratio (%)	Amount	Ratio (%)
Item
Within 1 year	-	-	100,000.00	12.38
1-2 years	-	-	125,993.69	15.59
2-3 years	-	-	155,993.69	19.31
Over 3 years	-	-	425,925.00	52.72
Total	-	-	807,912.38	100.00

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

(2) Prepayments with significant closing balances by prepayment recipients

	31 October 2024		31 December 2023
Name of the organization	Closing balance of prepayments	Ratio of the total closing balance of prepayments (%)	Closing balance of prepayments	Ratio of the total closing balance of prepayments (%)
China MCC5 Group Corp., Ltd.	8,585,796.01	21.21	-	-
Xinjiang Yongtong Guangming Electric Power Installation Engineering Co., Ltd.	3,965,399.58	9.79	-	-
BGRIMM Machinery & Automation Technology Co., Ltd.	4,276,950.00	10.56	-	-
Hengyang Conveying Machinery Co., Ltd.	4,179,000.00	10.32	-	-
CITIC Heavy Industries Co., Ltd.	3,726,000.00	9.20	-	-
CITIC Heavy Industries Co., Ltd.	-	-	2,829,000.00	50.52
Ruoqiang Zhenjie Real Estate Development Co., Ltd.	-	-	828,444.00	14.79
Henan Winner Vibrating Equipment Co., Ltd.	-	-	680,000.00	12.14
Bazhou Kunlun Outdoor Emergency Rescue Center	-	-	440,000.00	7.86
Hebi Coal Chemical Machinery Co., Ltd.	-	-	374,000.00	6.68
Total	24,733,145.59	61.08	5,151,444.00	91.99

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

	31 December 2022		31 December 2021
Name of the organization	Closing balance of prepayments	Ratio of the total closing balance of prepayments (%)	Closing balance of prepayments	Ratio of the total closing balance of prepayments (%)
Chen Jialing	–	–	281,987.38	34.90
Chen Songping	–	–	262,675.00	32.51
Wang Zheng	–	–	100,000.00	12.38
Xi’an Tianzhou Mining Technology Group Co., Ltd. mineral processing test fee	–	–	100,000.00	12.38
Huang Ming’an	–	–	63,250.00	7.83
Total	–	–	807,912.38	100.00

5. Other current assets

Item	31 October 2024	31 December 2023	31 December 2022	31 December 2021
Input tax to be deducted	6,951,362.31	2,726,185.37	–	–
Prepaid land use tax	85,622.78	–	–	–
Total	7,036,985.09	2,726,185.37	–	–

– II-60 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

6. Fixed assets

Item	31 October 2024	31 December 2023	31 December 2022	31 December 2021
Fixed assets	31,930,153.67	756,716.58	14,144.40	79,143.63
Liquidation of fixed assets	-	-	-	-
Total	31,930,153.67	756,716.58	14,144.40	79,143.63

(1) State of fixed assets

Item	Buildings	Machinery	Transportation equipment	Electronic and office equipment	Disposal costs	Others	Total
I. Original book value
1. Balance at 1 January 2024	-	18,719.80	1,315,223.09	299,094.91	-	64,471.68	1,697,509.48
2. Increase during the period	4,571,005.10	5,987,878.22	28,318.58	1,182,509.57	20,058,200.38	18,383.26	31,846,295.11
(1) Purchase	633,097.35	839,168.14	28,318.58	1,182,509.57	-	18,383.26	2,701,476.90
(2) Transfer-in from construction in progress	3,937,907.75	5,148,710.08	-	-	-	-	9,086,617.83
(3) Others	-	-	-	-	20,058,200.38	-	20,058,200.38
3. Decrease during the period	-	-	-	-	-	-	-
4. Balance at 31 October 2024	4,571,005.10	6,006,598.02	1,343,541.67	1,481,604.48	20,058,200.38	82,854.94	33,543,804.59
II. Accumulated depreciation
1. Balance at 1 January 2024	-	605.26	906,556.08	30,157.26	-	3,474.30	940,792.90
2. Increase during the period	129,758.97	352,423.45	61,965.96	110,462.22	-	18,247.42	672,858.02
(1) Accrual	129,758.97	352,423.45	61,965.96	110,462.22	-	18,247.42	672,858.02
3. Decrease during the period	-	-	-	-	-	-	-
4. Balance at 31 October 2024	129,758.97	353,028.71	968,522.04	140,619.48	-	21,721.72	1,613,650.92
III. Provision for impairment
1. Balance at 1 January 2024	-	-	-	-	-	-	-
2. Increase during the period	-	-	-	-	-	-	-
(1) Accrual	-	-	-	-	-	-	-
3. Decrease during the period	-	-	-	-	-	-	-
4. Balance at 31 October 2024	-	-	-	-	-	-	-
IV. Book value
1. Book value at 31 October 2024	4,441,246.13	5,653,569.31	375,019.63	1,340,985.00	20,058,200.38	61,133.22	31,930,153.67
2. Book value at 1 January 2024	-	18,114.54	408,667.01	268,937.65	-	60,997.38	756,716.58

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

Item	Buildings	Machinery	Transportation equipment	Electronic and office equipment	Disposal costs	Others	Total
I. Original book value
1. Balance at 1 January 2023	-	-	885,946.72	26,600.00	-	-	912,546.72
2. Increase during the period	-	18,719.80	429,276.37	272,494.91	-	64,471.68	784,962.76
(1) Purchase	-	18,719.80	429,276.37	83,513.49	-	64,471.68	595,981.34
(2) Transfer-in from construction in progress	-	-	-	188,981.42	-	-	188,981.42
3. Decrease during the period	-	-	-	-	-	-	-
4. Balance at 31 December 2023	-	18,719.80	1,315,223.09	299,094.91	-	64,471.68	1,697,509.48
II. Accumulated depreciation
1. Balance at 1 January 2023	-	-	885,946.72	12,455.60	-	-	898,402.32
2. Increase during the period	-	605.26	20,609.36	17,701.66	-	3,474.30	42,390.58
(1) Accrual	-	605.26	20,609.36	17,701.66	-	3,474.30	42,390.58
3. Decrease during the period	-	-	-	-	-	-	-
4. Balance at 31 December 2023	-	605.26	906,556.08	30,157.26	-	3,474.30	940,792.90
III. Provision for impairment
1. Balance at 1 January 2023	-	-	-	-	-	-	-
2. Increase during the period	-	-	-	-	-	-	-
3. Decrease during the period	-	-	-	-	-	-	-
4. Balance at 31 December 2023	-	-	-	-	-	-	-
IV. Book value
1. Book value at 31 December 2023	-	18,114.54	408,667.01	268,937.65	-	60,997.38	756,716.58
2. Book value at 1 January 2023	-	-	-	14,144.40	-	-	14,144.40

– II-62 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

Item	Buildings	Machinery	Transportation equipment	Electronic and office equipment	Disposal costs	Others	Total
I. Original book value
1. Balance at 1 January 2022	-	-	1,489,249.72	59,238.00	-	-	1,548,487.72
2. Increase during the period	-	-	-	3,800.00	-	-	3,800.00
(1) Purchase	-	-	-	3,800.00	-	-	3,800.00
3. Decrease during the period	-	-	603,303.00	36,438.00	-	-	639,741.00
(1) Disposal or scrapping	-	-	603,303.00	36,438.00	-	-	639,741.00
4. Balance at 31 December 2022	-	-	885,946.72	26,600.00	-	-	912,546.72
II. Accumulated depreciation
1. Balance at 1 January 2022	-	-	1,428,472.75	40,871.34	-	-	1,469,344.09
2. Increase during the period	-	-	60,776.97	8,022.26	-	-	68,799.23
3. Decrease during the period	-	-	603,303.00	36,438.00	-	-	639,741.00
(1) Disposal or scrapping	-	-	603,303.00	36,438.00	-	-	639,741.00
4. Balance at 31 December 2022	-	-	885,946.72	12,455.60	-	-	898,402.32
III. Provision for impairment
1. Balance at 1 January 2022	-	-	-	-	-	-	-
2. Increase during the period	-	-	-	-	-	-	-
(1) Accrual	-	-	-	-	-	-	-
3. Decrease during the period	-	-	-	-	-	-	-
4. Balance at 31 December 2022	-	-	-	-	-	-	-
IV. Book value
1. Book value at 31 December 2022	-	-	-	14,144.40	-	-	14,144.40
2. Book value at 1 January 2022	-	-	60,776.97	18,366.66	-	-	79,143.63

– II-63 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

Item	Buildings	Machinery	Transportation equipment	Electronic and office equipment	Disposal costs	Others	Total
I. Original book value
1. Balance at 1 January 2021	-	-	1,709,249.72	36,438.00	-	-	1,745,687.72
2. Increase during the period	-	-	-	22,800.00	-	-	22,800.00
(1) Purchase	-	-	-	22,800.00	-	-	22,800.00
3. Decrease during the period	-	-	220,000.00	-	-	-	220,000.00
(1) Disposal or scrapping	-	-	220,000.00	-	-	-	220,000.00
4. Balance at 31 December 2021	-	-	1,489,249.72	59,238.00	-	-	1,548,487.72
II. Accumulated depreciation
1. Balance at 1 January 2021	-	-	1,526,918.82	36,438.00	-	-	1,563,356.82
2. Increase during the period	-	-	121,553.93	4,433.34	-	-	125,987.27
(1) Accrual	-	-	121,553.93	4,433.34	-	-	125,987.27
3. Decrease during the period	-	-	220,000.00	-	-	-	220,000.00
(1) Disposal or scrapping	-	-	220,000.00	-	-	-	220,000.00
4. Balance at 31 December 2021	-	-	1,428,472.75	40,871.34	-	-	1,469,344.09
III. Provision for impairment
1. Balance at 1 January 2021	-	-	-	-	-	-	-
2. Increase during the period	-	-	-	-	-	-	-
3. Decrease during the period	-	-	-	-	-	-	-
4. Balance at 31 December 2021	-	-	-	-	-	-	-
IV. Book value
1. Book value at 31 December 2021	-	-	60,776.97	18,366.66	-	-	79,143.63
2. Book value at 1 January 2021	-	-	182,330.90	-	-	-	182,330.90

(2) State of fixed assets with pending certificates of ownership

On 31 October 2024, the book value of RMB868,837.11 of buildings were in the process of applying the property ownership certificates. The Company's management believes that there is no substantial difficulty in obtaining the property ownership certificate, and there is no significant adverse effect on the Company's operation:

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

7. Construction in progress

Item	31 October 2024	31 December 2023	31 December 2022	31 December 2021
Construction in progress	88,998,327.60	27,156,181.96	–	–
Construction materials	10,616,507.98	4,158,337.21	–	–
Total	99,614,835.58	31,314,519.17	–	–

7.1 Construction in progress

(1) Details of construction in progress

Item	31 October 2024			31 December 2023
	Book balance	Provision for impairment	Book value	Book balance	Provision for impairment	Book value
Xinjiang Ruoqiang County Kalqiar Fluorite Mining and Processing
Construction Project	88,998,327.60	–	88,998,327.60	27,156,181.96	–	27,156,181.96

(2) Changes in significant construction in progress projects during the period

Project name	1 January 2024	Increase during the period	Decrease during the period			31 October 2024
			Transfer to fixed assets	Transfer to intangible assets	Other decreases
Xinjiang Ruoqiang County Kalqiar Fluorite Mining and Processing
Construction Project	27,156,181.96	74,977,266.00	4,928,078.26	4,600,617.58	3,606,424.52	88,998,327.60

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

Project name	Budget (RMB10,000)	Engineering inputs as a percentage of budget (%)	Progress of works (%)	Accumulative amount of interest capitalized	Including: Amount of interest capitalized during the period	Interest capitalization rate for the period (%)	Source of funds
Xinjiang Ruoqiang County Kalqiar Fluorite Mining and Processing Construction Project
	161,261.00	6.33	6.33	-	-	-	Self-raised
				Decrease during the period
Project name	1 January 2023	Increase during the period	Transfer to fixed assets	Transfer to intangible assets	Other decreases	31 October 2023
Xinjiang Ruoqiang County Kalqiar Fluorite Mining and Processing Construction Project
	-	27,345,163.38	188,981.42	-	-	27,156,181.96
				Including: Amount of interest capitalized during the period
Project name	Budget (RMB10,000)	Engineering inputs as a percentage of budget (%)	Progress of works (%)	Accumulative amount of interest capitalized	Interest capitalization rate for the period (%)	Source of funds
Xinjiang Ruoqiang County Kalqiar Fluorite Mining and Processing Construction Project
	161,261.00	1.70	1.70	-	-	-	Self-raised

– II-66 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

7.2 Construction materials

Item	31 October 2024			31 December 2023
	Book balance	Provision for impairment	Book value	Book balance	Provision for impairment	Book value
Specialized materials	10,616,507.98		10,616,507.98	4,158,337.21		4,158,337.21

8. Right-of-use assets

Item	Buildings	Land use rights	Total
I. Original book value
1. Balance at 1 January 2024	46,911.69	-	46,911.69
2. Increase during the period	-	-	-
3. Decrease during the period	46,911.69	-	46,911.69
(1) Others	46,911.69	-	46,911.69
4. Balance at 31 October 2024	-	-	-
II. Accumulated depreciation
1. Balance at 1 January 2024	42,027.74	-	42,027.74
2. Increase during the period	4,883.95	-	4,883.95
(1) Others	4,883.95	-	4,883.95
3. Decrease during the period	46,911.69	-	46,911.69
(1) Others	46,911.69	-	46,911.69
4. Balance at 31 October 2024	-	-	-
III. Provision for impairment
1. Balance at 1 January 2024	-	-	-
2. Increase during the period	-	-	-
3. Decrease during the period	-	-	-
4. Balance at 31 October 2024	-	-	-
IV. Book value
1. Book value at 31 October 2024	-	-	-
2. Book value at 1 January 2024	4,883.95	-	4,883.95

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

Item	Buildings	Land use rights	Total
I. Original book value
1. Balance at 1 January 2023	46,911.69	–	46,911.69
2. Increase during the period	–	–	–
3. Decrease during the period	–	–	–
4. Balance at 31 December 2023	46,911.69	–	46,911.69
II. Accumulated depreciation
1. Balance at 1 January 2023	18,893.20	–	18,893.20
2. Increase during the period	23,134.54	–	23,134.54
(1) Accrual	23,134.54	–	23,134.54
3. Decrease during the period	–	–	–
4. Balance at 31 December 2023	42,027.74	–	42,027.74
III. Provision for impairment
1. Balance at 1 January 2023	–	–	–
2. Increase during the period	–	–	–
3. Decrease during the period	–	–	–
4. Balance at 31 December 2023	–	–	–
IV. Book value
1. Book value at 31 December 2023	4,883.95	–	4,883.95
2. Book value at 1 January 2023	28,018.49	–	28,018.49

– II-68 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

Item	Buildings	Land use rights	Total
I. Original book value
1. Balance at 1 January 2022	–	–	–
2. Increase during the period	46,911.69	–	46,911.69
3. Decrease during the period	–	–	–
4. Balance at 31 December 2022	46,911.69	–	46,911.69
II. Accumulated depreciation
1. Balance at 1 January 2022	–	–	–
2. Increase during the period	18,893.20	–	18,893.20
(1) Accrual	18,893.20	–	18,893.20
3. Decrease during the period	–	–	–
4. Balance at 31 December 2022	18,893.20	–	18,893.20
III. Provision for impairment
1. Balance at 1 January 2022	–	–	–
2. Increase during the period	–	–	–
3. Decrease during the period	–	–	–
4. Balance at 31 December 2022	–	–	–
IV. Book value
1. Book value at 31 December 2022	28,018.49	–	28,018.49
2. Book value at 1 January 2022	–	–	–

– II-69 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

9. Intangible assets

(1) List of intangible assets

Item	Land use rights	Software	Mining rights	Total
I. Original book value
1. Balance at 1 January 2024	–	207,547.17	71,595,268.80	71,802,815.97
2. Increase during the period	4,600,617.58	49,889.37	158,641.50	4,809,148.45
(1) Purchase	4,600,617.58	49,889.37	–	4,650,506.95
(2) Others	–	–	158,641.50	158,641.50
3. Decrease during the period	–	–	–	–
4. Balance at 31 October 2024	4,600,617.58	257,436.54	71,753,910.30	76,611,964.42
II. Accumulated amortization
1. Balance at 1 January 2024	–	13,521.28	–	13,521.28
2. Increase during the period	23,003.10	38,333.04	–	61,336.14
(1) Accrual	23,003.10	38,333.04	–	61,336.14
3. Decrease during the period	–	–	–	–
4. Balance at 31 October 2024	23,003.10	51,854.32	–	74,857.42
III. Provision for impairment
1. Balance at 1 January 2024	–	–	–	–
2. Increase during the period	–	–	–	–
3. Decrease during the period	–	–	–	–
4. Balance at 31 October 2024	–	–	–	–
IV. Book value
1. Book value at 31 October 2024	4,577,614.48	205,582.22	71,753,910.30	76,537,107.00
2. Book value at 1 January 2024	–	194,025.89	71,595,268.80	71,789,294.69

Intangible assets generated from the Company’s internal research and development accounted for 0.00% of the balance of intangible assets at the end of the period.

The mining right owned by the Company is the mining right of Kalqiar fluorite mine in Ruoqiang County, Xinjiang, which was acquired in July 2023.

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

Item	Land use rights	Software	Mining rights	Total
I. Original book value
1. Balance at 1 January 2023	–	–	–	–
2. Increase during the period	–	207,547.17	71,595,268.80	71,802,815.97
(1) Purchase	–	207,547.17	–	207,547.17
(2) Others	–	–	71,595,268.80	71,595,268.80
3. Decrease during the period	–	–	–	–
4. Balance at 31 December 2023	–	207,547.17	71,595,268.80	71,802,815.97
II. Accumulated amortization
1. Balance at 1 January 2023	–	–	–	–
2. Increase during the period	–	13,521.28	–	13,521.28
(1) Accrual	–	13,521.28	–	13,521.28
3. Decrease during the period	–	–	–	–
4. Balance at 31 December 2023	–	13,521.28	–	13,521.28
III. Provision for impairment
1. Balance at 1 January 2023	–	–	–	–
2. Increase during the period	–	–	–	–
3. Decrease during the period	–	–	–	–
4. Balance at 31 December 2023	–	–	–	–
IV. Book value
1. Book value at 31 December 2023	–	194,025.89	71,595,268.80	71,789,294.69
2. Book value at 1 January 2023	–	–	–	–

Intangible assets generated from the Company’s internal research and development accounted for 0.00% of the balance of intangible assets at the end of the period.

(2) Land use rights with pending certificates of ownership

As of 31 October 2024, the land with the book value of RMB4,577,614.48 was in the process of applying the property ownership certificates. The Company’s management believes that there is no substantial difficulty in obtaining the property ownership certificates described above, and no significant adverse effect would be exerted on the Company’s operation.

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

10. Deferred tax assets and deferred tax liabilities

(1) Deferred tax assets without offsetting

	31 October 2024		31 December 2023
Item	Deductible temporary differences	Deferred tax assets	Deductible temporary differences	Deferred tax assets
Provision for credit impairment	10,082.33	1,512.35	–	–
Provisions	15,600,822.53	2,340,123.38	–	–
Total	15,610,904.86	2,341,635.73	–	–

(2) Deferred tax liabilities without offsetting

	31 October 2024
Item	Taxable temporary differences	Deferred tax liabilities
Fixed assets-disposal costs	15,600,822.53	2,340,123.38

(3) Deferred tax assets or liabilities presented as the net amount after offsetting

	31 October 2024
Item	Offsetting amount of deferred tax assets and liabilities at period-end	Closing balance of deferred tax assets or liabilities after offsetting
Deferred tax assets	2,340,123.38	1,512.35
Deferred tax liabilities	2,340,123.38	–

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

11. Other non-current assets

	31 October 2024			31 December 2023
Item	Book balance	Provision for impairment	Book value	Book balance	Provision for impairment	Book value
Exploration costs	-	-	-	-	-	-
	31 December 2022			31 December 2021
Item	Book balance	Provision for impairment	Book value	Book balance	Provision for impairment	Book value
Exploration costs	69,294,221.59	-	69,294,221.59	64,667,905.51	-	64,667,905.51

12. Assets with restricted ownership or use

	31 October 2024
Item	Book balance	Book value	Type of restriction	Specific restrictions
Cash at bank and on hand	1,519,800.00	1,416,700.00	Guarantee	Land reclamation bond, ETC bond
	31 December 2023
Item	Book balance	Book value	Type of restriction	Specific restrictions
Cash at bank and on hand	1,415,700.00	1,415,700.00	Guarantee	Land reclamation bond

– II-73 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

13. Accounts payable

(1) Accounts payable presented by nature of payment

Item	31 October 2024	31 December 2023	31 December 2022	31 December 2021
Payables for construction projects	21,066,811.23	1,642,836.76	1,687,686.76	–
Payables for purchases	4,211,823.03	2,351,554.86	–	–
Payable for purchase of services	2,398,707.41	2,302,810.40	32,500.00	–
Payables for exploration	–	90,000.00	3,240,353.76	4,394,075.66
Others	206,299.49	168,000.00	–	5,000.00
Total	27,883,641.16	6,555,202.02	4,960,540.52	4,399,075.66

(2) Accounts payable presented by aging

Item	31 October 2024	31 December 2023	31 December 2022	31 December 2021
Within 1 year	25,998,010.24	4,885,015.26	1,586,464.86	3,342,686.76
1-2 years	247,944.16	32,500.00	2,822,686.76	1,056,388.90
2-3 years	–	1,637,686.76	551,388.90	–
Over 3 years	1,637,686.76	–	–	–
Total	27,883,641.16	6,555,202.02	4,960,540.52	4,399,075.66

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

14. Other payables

	31 October	31 December	31 December	31 December
Item	2024	2023	2022	2021
Other payables	8,429,539.73	4,139,734.72	707,831.81	5,140,279.09

Other payables presented by nature of payment

	31 October	31 December	31 December	31 December
Nature of payment	2024	2023	2022	2021
Payables to related parties	50,210.12	410,147.40	707,831.81	1,870,002.00
Labor costs	-	-	-	3,270,193.00
Margin	7,950,000.00	3,605,000.00	-	-
Other payables	429,329.61	124,587.32	-	84.09
Total	8,429,539.73	4,139,734.72	707,831.81	5,140,279.09

15. Advances from customers

	31 October	31 December	31 December	31 December
Type	2024	2023	2022	2021
Transfer payments for exploration rights	-	-	582,760.00	-

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

16. Employee benefits payable

(1) Classification of employee benefits payable

Item	1 January 2024	Increase during the period	Decrease during the period	31 October 2024
Short-term employment benefits	546,287.59	8,934,320.35	8,585,336.60	895,271.34
Post-employment benefits – Defined contribution plan	126.20	915,467.08	915,467.08	126.20
Total	546,413.79	9,849,787.43	9,500,803.68	895,397.54
Item	1 January 2023	Increase during the period	Decrease during the period	31 December 2023
Short-term employment benefits	22,700.00	2,396,686.56	1,873,098.97	546,287.59
Post-employment benefits – Defined contribution plan	126.20	238,116.57	238,116.57	126.20
Total	22,826.20	2,634,803.13	2,111,215.54	546,413.79
Item	1 January 2022	Increase during the period	Decrease during the period	31 December 2022
Short-term employment benefits	27,666.00	455,992.98	460,958.98	22,700.00
Post-employment benefits – Defined contribution plan	126.20	12,771.58	12,771.58	126.20
Total	27,792.20	468,764.56	473,730.56	22,826.20

– II-76 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

Item	1 January 2021	Increase during the period	Decrease during the period	31 December 2021
Short-term employment benefits	11,100.00	387,484.28	370,918.28	27,666.00
Post-employment benefits – Defined contribution plan	–	11,047.03	10,920.83	126.20
Total	11,100.00	398,531.31	381,839.11	27,792.20

(2) Short-term employment benefits

Item	1 January 2024	Increase during the period	Decrease during the period	31 October 2024
Salaries, bonuses, allowances and subsidies	507,404.32	7,221,767.55	6,896,092.23	833,079.64
Staff welfare	–	641,590.39	630,229.27	11,361.12
Social insurances	–	340,615.95	340,615.95	–
Including: Medical insurance	–	316,558.30	316,558.30	–
Work injury insurance	–	24,057.65	24,057.65	–
Housing provident fund	–	424,199.00	424,199.00	–
Labor union fund and employee education fund	38,883.27	219,655.07	238,158.74	20,379.60
Other short-term employee benefits	–	86,492.39	56,041.41	30,450.98
Total	546,287.59	8,934,320.35	8,585,336.60	895,271.34

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

Item	1 January 2023	Increase during the period	Decrease during the period	31 December 2023
Salaries, bonuses, allowances and subsidies	22,700.00	1,988,967.44	1,504,263.12	507,404.32
Staff welfare	–	178,433.93	178,433.93	–
Social insurances	–	79,553.39	79,553.39	–
Including: Medical insurance	–	69,480.48	69,480.48	–
Work injury insurance	–	10,072.91	10,072.91	–
Housing provident fund	–	98,869.00	98,869.00	–
Labor union fund and employee education fund	–	50,862.80	11,979.53	38,883.27
Other short-term employee benefits	–	–	–	–
Total	22,826.20	2,396,686.56	1,873,098.97	546,413.79

– II-78 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

Item	1 January 2022	Increase during the period	Decrease during the period	31 December 2022
Salaries, bonuses, allowances and subsidies	27,666.00	439,900.00	444,866.00	22,700.00
Staff welfare	–	3,994.60	3,994.60	–
Social insurances	–	4,229.06	4,229.06	–
Including: Medical insurance	–	4,017.27	4,017.27	–
Work injury insurance	–	211.79	211.79	–
Housing provident fund	–	–	–	–
Labor union fund and employee education fund	–	7,869.32	7,869.32	–
Other short-term employee benefits	–	–	–	–
Total	27,666.00	455,992.98	460,958.98	22,700.00

– II-79 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

Item	1 January 2021	Increase during the period	Decrease during the period	31 December 2021
Salaries, bonuses, allowances and subsidies	11,100.00	340,766.00	324,200.00	27,666.00
Staff welfare	–	41,802.00	41,802.00	–
Social insurances	–	4,916.28	4,916.28	–
Including: Medical insurance	–	4,774.92	4,774.92	–
Work injury insurance	–	141.36	141.36	–
Housing provident fund	–	–	–	–
Labor union fund and employee education fund	–	–	–	–
Other short-term employee benefits	–	–	–	–
Total	11,100.00	387,484.28	370,918.28	27,666.00

(3) Defined contribution plans

Item	1 January 2024	Increase during the period	Decrease during the period	31 October 2024
Basic pension insurance	123.97	646,060.16	646,060.16	123.97
Unemployment insurance	2.23	20,126.84	20,126.84	2.23
Enterprise annuity payment	–	249,280.08	249,280.08	–
Total	126.20	915,467.08	915,467.08	126.20

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

Item	1 January 2023	Increase during the period	Decrease during the period	31 December 2023
Basic pension insurance	123.97	160,238.40	160,238.40	123.97
Unemployment insurance	2.23	3,951.45	3,951.45	2.23
Enterprise annuity payment	-	73,926.72	73,926.72	-
Total	126.20	238,116.57	238,116.57	126.20
Item	1 January 2022	Increase during the period	Decrease during the period	31 December 2022
Basic pension insurance	123.97	12,248.64	12,248.64	123.97
Unemployment insurance	2.23	489.21	489.21	2.23
Enterprise annuity payment	-	33.73	33.73	-
Total	126.20	12,771.58	12,771.58	126.20
Item	1 January 2021	Increase during the period	Decrease during the year	31 December 2021
Basic pension insurance	-	10,605.19	10,481.22	123.97
Unemployment insurance	-	441.84	439.61	2.23
Enterprise annuity payment	-	-	-	-
Total	-	11,047.03	10,920.83	126.20

– II-81 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

Taxes payable

	31 October	31 December	31 December	31 December
Item	2024	2023	2022	2021
Individual income tax	51,547.89	19,481.49	2,781.84	46.84
Stamp duty	–	98,162.33	–	–
Land use tax	44.44	–	–	–
Property tax	610.73	–	–	–
Total	52,203.06	117,643.82	2,781.84	46.84

Non-current liabilities due within one year

	31 October	31 December	31 December	31 December
Item	2024	2023	2022	2021
Lease liabilities due within one year	–	3,150.22	22,911.69	–

Lease liabilities

	31 October	31 December	31 December	31 December
Item	2024	2023	2022	2021
Lease payments	–	3,150.22	22,911.69	–
Less: Unrecognized financing costs	–	–	–	–
Reclassification to non-current liabilities due within one year	–	3,150.22	22,911.69	–
Total	–	–	–	–

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

20. Provisions

Item	31 October 2024	31 December 2023	31 December 2022	31 December 2021	Reasons for formation
Provision for mine closure and environmental restoration	20,674,432.87	-	-	-	Note

Note: The company recognizes closure and environmental restoration provisions for the mine closure costs and tailings dam closure costs. The management discounted projected future expenditures to net present value based on prior years' experience and the best estimate of future expenditures required for environmental restoration. This provision may be modified in the future years with the increasingly prominent impact of mining activities on land and environment. The related mine closure and environmental restoration costs will be reviewed and revised annually as appropriate.

The Company recognizes the disposal costs for mining geological environment restoration fees in accordance with the mining geological environment protection and land reclamation plan and the relevant provisions of the Accounting Standards for Business Enterprises. The costs are included in the recorded cost of the relevant assets, amortized over the estimated mining life in proportion to the production, and charged to production costs.

21. Paid-in capital

Item	31 October 2024		31 December 2023
	Amount	Ratio (%)	Amount	Ratio (%)
Xinjiang Nonferrous Metals Industry (Group) Co., Ltd.	57,630,000.00	51.00	57,630,000.00	51.00
Shanghai Xingqiang Mining Co., Ltd.	55,370,000.00	49.00	55,370,000.00	49.00
Total	113,000,000.00	100.00	113,000,000.00	100.00

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

	31 December 2022		31 December 2021
Item	Amount	Ratio (%)	Amount	Ratio (%)
Xinjiang Nonferrous Metals Industry (Group) Co., Ltd.	-	-	-	-
Shanghai Xingqiang Mining Co., Ltd.	90,000,000.00	100.00	5,000,000.00	100.00
Total	90,000,000.00	100.00	5,000,000.00	100.00

22. Capital reserves

Item	1 January 2024	Increase during the period	Decrease during the period	31 October 2024
Capital premium	330,433,400.00	-	-	330,433,400.00
Other capital reserves	7,133,352.22	-	-	7,133,352.22
Total	337,566,752.22	-	-	337,566,752.22
Item	1 January 2023	Increase during the period	Decrease during the period	31 December 2023
Capital premium	-	330,433,400.00	-	330,433,400.00
Other capital reserves	7,133,352.22	-	-	7,133,352.22
Total	7,133,352.22	330,433,400.00	-	337,566,752.22
Item	1 January 2022	Increase during the period	Decrease during the period	31 December 2022
Capital premium	68,682,700.00	-	68,682,700.00	-
Other capital reserves	7,133,352.22	-	-	7,133,352.22
Total	75,816,052.22	-	68,682,700.00	7,133,352.22

II-84 -

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

Item	1 January 2021	Increase during the period	Decrease during the period	31 December 2022
Capital premium	–	68,682,700.00	–	68,682,700.00
Other capital reserves	–	7,133,352.22	–	7,133,352.22
Total	–	75,816,052.22	–	75,816,052.22

23. Undistributed profits

Item	January – October 2024	FY 2023	FY 2022	FY 2021
Undistributed profits at the beginning of the year	-36,365,128.48	-34,009,832.30	-23,788,844.13	-23,109,267.86
Add: Net profit attributable to the owners of the parent company for the period	-3,965,943.91	-2,355,296.18	-10,220,988.17	-679,576.27
Closing balance for the period	-40,331,072.39	-36,365,128.48	-34,009,832.30	-23,788,844.13

24. Revenue and cost of sales

(1) Details of revenue and cost of sales

	January – October 2024		FY 2023
Item	Revenue	Cost	Revenue	Cost
Other operations	7,265,746.69	6,560,111.25	2,307,655.48	384.07

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

(2) Breakdown of revenue and cost of sales

Classification of contracts	January – October 2024		FY 2023
	Revenue	Cost of sales	Revenue	Cost of sales
Other operations	7,265,746.69	6,560,111.25	2,307,655.48	384.07
Sales of electricity	3,360,017.30	3,360,177.01	–	–
Transfer of exploration rights	–	–	2,304,554.43	–
Sales of materials	3,501,193.57	3,199,934.24	384.07	384.07
Others	404,535.82	–	2,716.98	–
Total	7,265,746.69	6,560,111.25	2,307,655.48	384.07

Taxes and surcharges

Item	January – October 2024	FY 2023	FY 2022	FY 2021
Urban maintenance and construction tax	–	1,152.28	–	–
Education surcharge	–	1,152.28	–	–
Property tax	610.73	–	–	–
Land use tax	214,101.38	–	–	–
Stamp duty	81,442.83	103,151.67	11,593.08	394.29
Other taxes	247.8	4,789.51	–	4,455.64
Total	296,402.74	110,245.74	11,593.08	4,849.84

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

26. General and administrative expenses

Item	January – October 2024	FY 2023	FY 2022	FY 2021
Employee benefits	6,442,471.95	2,361,006.89	75,674.85	160,387.07
Traveling expenses	174,096.60	198,382.25	83,492.79	19,802.54
Depreciation and amortisation	257,879.44	74,929.73	19,209.87	–
Repair cost	1,336.63	319.91	–	–
Technical service fees	86,015.96	43,109.47	–	–
Intermediary fees	56,792.45	29,693.96	–	–
Including: Annual final accounts audit fees	–	29,433.96	–	–
Office expenses	173,185.80	79,894.29	12,601.82	2,869.05
Business entertainment expenses	35,693.47	121,369.10	170,163.01	88,089.00
Leasing fees	53,097.36	16,560.00		24,000.00
Others	977,907.95	648,325.68	224,405.18	85,138.91
Exploration costs	84,905.64	238,666.67	9,616,034.81	291,302.82
Total	8,343,383.25	3,812,257.95	10,201,582.33	671,589.39

27. Financial expenses

Item	January – October 2024	FY 2023	FY 2022	FY 2021
Interest expenses	–	1,578,650.11	5,131.81	–
Less: Interest income	3,896,140.56	832,299.13	504.46	501.86
Add: Other expenditures	1,997.60	3,405.47	3,192.50	3,638.90
Total	–3,894,142.96	749,756.45	7,819.85	3,137.04

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

28. Credit impairment Losses

Item	January – October 2024	FY 2023	FY 2022	FY 2021
Bad debt losses on other receivables	-8,082.31	-2,000.00	-	-

29. Gains on disposal of assets

Item	January – October 2024	FY 2023	FY 2022	FY 2021
Gains on disposal of non-current assets	3,150.22	-	-	-
Gains on disposal of non-current assets not classified as held for sale	3,150.22	-	-	-
Including: Gains on disposal of right-of-use assets	3,150.22	-	-	-
Total	3,150.22	-	-	-

30. Non-operating income

Item	January – October 2024	FY 2023	FY 2022	FY 2021
Gains on disposal of damaged or scrapped non-current assets	-	12,920.79	-	-
Revenue from fines and forfeitures	96,700.00
Others	30.01	0.78	7.50	-
Total	96,730.01	12,921.57	7.50	-

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

31. Non-operating expenses

Item	January – October 2024	FY 2023	FY 2022	FY 2021
Compensation payments	1,000.00	–	–	–
External donations	9,828.00	–	–	–
Others	8,418.59	1,229.02	0.41	–
Total	19,246.59	1,229.02	0.41	–

32. Income tax expenses

Item	January – October 2024	FY 2023	FY 2022	FY 2021
Deferred income tax expenses	-1,512.35	–	–	–

33. Supplement information on Cash Flow Statement

(1) Supplement information on Cash Flow Statement

Item	January – October 2024	FY 2023	FY 2022	FY 2021
1. Reconciliation of net profit to cash flows from operating activities:
Net profit	-3,965,943.91	-2,355,296.18	-10,220,988.17	-679,576.27
Add: Provision for asset impairment	–	–	–	–
Credit impairment Loss	8,082.31	2,000.00	–	–
Depreciation of fixed assets, depletion of oil and gas assets, depreciation of bearer biological assets	246,749.48	38,273.91	316.67	–
Depreciation of right-of-use assets	4,883.95	23,134.54	18,893.20	–
Amortization of intangible assets	38,333.04	13,521.28		–
Amortisation of long-term prepaid expenses	–	–	–	–

– II-89 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

Item	January – October 2024	FY 2023	FY 2022	FY 2021
Losses on disposal of fixed assets, intangible assets and other long-term assets (gains marked with “–”)	-3,150.22	-12,920.79	–	–
Losses on write-off of fixed assets (gains marked with “–”)	–	–	–	–
Losses on changes in fair value (gains marked with “–”)	–	–	–	–
Financial expenses (gains marked with “–”)	–	1,578,650.11	5,131.81	–
Losses on investment (gains marked with “–”)	–	–	–	–
Decrease in deferred tax assets (increase marked with “–”)	-2,341,635.73	–	–	–
Increase in deferred tax liabilities (decrease marked with “–”)	2,340,123.38	–	–	–
Decrease in inventories (increase marked with “–”)	–	–	–	–
Decrease in operating receivables (increase marked with “–”)	-37,042,019.75	-8,248,743.34	-3,046,783.53	11,401,241.63
Increase in operating payables (decrease marked with “–”)	25,898,636.92	5,085,404.20	12,606,960.07	2,405,853.19
Others
Net cash flows from operating activities	-14,815,940.53	-3,875,976.27	-636,469.95	13,127,518.55
2. Significant investment and financing activities not related to cash deposit and withdrawal:	–	–	–	–
3. The net movement of cash and cash equivalents:
Closing balance of cash	202,760,947.84	311,432,109.43	39,320.12	288,835.37
Less: Opening balance of cash	311,432,109.43	39,320.12	288,835.37	61,506.22
Add: Closing balance of cash equivalents	–	–	–	–
Less: Opening balance of cash equivalents	–	–	–	–
Net increase in cash and cash equivalents	-108,671,161.59	311,392,789.31	-249,515.25	227,329.15

– II-90 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

(2) Composition of cash and cash equivalents

Item	31 October 2024	31 December 2023	31 December 2022	31 December 2021
Cash	202,760,947.84	311,432,109.43	39,320.12	288,835.37
Including: Cash on hand	–	–	20,368.22	17,965.00
Bank deposits available for payments at any time	202,760,947.84	311,432,109.43	18,951.90	270,870.37
Cash equivalents	–	–	–	–
Closing balance of cash and cash equivalents	202,760,947.84	311,432,109.43	39,320.12	288,835.37

(3) Monetary funds not classified as cash and cash equivalents

Item	31 October 2024	31 December 2023	31 December 2022	31 December 2021	Reasons for not being classified as cash and cash equivalents
Land reclamation bond	1,518,800.00	1,415,700.00	–	–	Not available for withdrawal at any time
ETC guarantee	1,000.00	–	–	–	Not available for withdrawal at any time
Total	1,519,800.00	1,415,700.00	–	–	–

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

VI. GOVERNMENT GRANTS

Government grants recognized during the reporting period based on amounts receivable

None.

Liability items involving government grants

None.

VII. FAIR VALUE DISCLOSURES

The Company does not have assets subsequently measured at fair value on a non-continuing basis.
Disclosure of the fair value of assets and liabilities that are not subsequently measured at fair value

The Company’s financial assets and financial liabilities measured at amortised cost mainly include receivables, payables, etc. Except for the financial assets and financial liabilities mentioned above, there is no significant difference between the book value of other financial assets and financial liabilities not measured at fair value and the fair value.

VIII. CAPITAL MANAGEMENT

The Company’s capital management policies aim to safeguard the Company’s ability to continue as a going concern, thereby providing returns for shareholders and benefits for other stakeholders and maintaining an optimal capital structure to reduce the cost of capital. To maintain or adjust the capital structure, the Company may adjust the amounts of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debts. The Company’s total capital is the owners’ equity as shown in the balance sheet. The Company is not subject to external mandatory capital requirements and monitors its capital using the gearing ratio. As at 31 October 2024, 31 December 2023, 31 December 2022 and 31 December 2021, the Group’s gearing ratios were as follows:

	31 October	31 December	31 December	31 December
Item	2024	2023	2022	2021
Gearing ratio	12.81%	2.67%	9.07%	14.37%

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

IX. RELATED PARTIES AND RELATED PARTY TRANSACTIONS

1. Related party relationships

(1) Information on the Company's parent company

Name of parent company	Place of registration	Nature of business	Registered capital (RMB 10,000)	Parent company's shareholding in the Company (%)	Parent company's share of voting rights in the Company (%)
Xinjiang Nonferrous Metals Industry (Group) Co., Ltd.	Urumqi, China	Smelting and processing of nonferrous and precious metals	163,035.61	51.00	51.00

Note: The Company's ultimate controlling party is Xinjiang Non-ferrous Group, whose place of registration is Urumqi, China.

(2) Other related parties

Name of other related parties	Relationship with the Company
Shanghai Xingqiang Mining Co., Ltd.	Other shareholders
Xinjiang Jiqiang Mining Co., Ltd.	Subsidiary controlled by other shareholders
Wu Jun	Actual controller of other shareholders
Ji Zhenbao	Supervisors
Shanghai Jishen Construction and Installation Engineering Co., Ltd.	Related parties of other shareholders
Fukang Nonferrous Metals Development Co., Ltd.	Under common control of Xinjiang Non-ferrous Group
Fuyun Xinshengtong Trade Co., Ltd.	Under common control of Xinjiang Non-ferrous Group
Urumqi Congxin Human Resource Service Co., Ltd.	Under common control of Xinjiang Non-ferrous Group
Xinjiang Non-ferrous Metal Industry (Group) Quanxin Construction Co., Ltd.	Under common control of Xinjiang Non-ferrous Group
Xinjiang Kalatongke Mining Co., Ltd.	Under common control of Xinjiang Non-ferrous Group

– II-93 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

Name of other related parties	Relationship with the Company
Xinjiang Non-ferrous Metal Research Institute Co., Ltd.	Under common control of Xinjiang Non-ferrous Group
Xinjiang Yakesi Resources Co., Ltd.	Under common control of Xinjiang Non-ferrous Group
Hami Hexin Mining Industry Co., Ltd.	A joint venture of Xinjiang Non-ferrous Group

2. Related party transactions

(1) Pricing strategies

The prices of sales to related parties, purchases from related parties, provision of services by related parties and leases of relevant assets from related parties, are determined based on the mutually agreed prices.

(2) Related party transactions on purchases and sales of goods, provision and receipt of services

1) Purchases of goods

Related party	January – October 2024	FY 2023	FY 2022	FY 2021
Under common control of Xinjiang Non-ferrous Group:	–	–	–	–
Procurement of materials	–	–	–	–
Fuyun Xinshengtong Trade Co., Ltd.	11,515,451.26	1,964,143.36	–	–
Fukang Nonferrous Metals Development Co., Ltd.	53,494.34	–	–	–
Xinjiang Non-ferrous Metal Industry (Group) Quanxin Construction Co., Ltd.	4,761.06	–	–	–
Total	11,573,706.66	1,964,143.36	–	–

– II-94 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

2) Acceptance of services

Related party	January – October 2024	FY 2023	FY 2022	FY 2021
Under common control of Xinjiang Non-ferrous Group:	–	–	–	–
Payment for works and labor	–	–	–	–
Xinjiang Non-ferrous Metal Industry (Group) Quanxin Construction Co., Ltd.	1,413,626.82	–	–	–
Urumqi Congxin Human Resource Service Co., Ltd.	86,387.66	–	–	–
Shipping costs	–	–	–	–
Fukang Nonferrous Metals Development Co., Ltd.	4,128.44	61,467.88	–	–
Other service fees	–	–	–	–
Xinjiang Non-ferrous Metal Research Institute Co., Ltd.	–	7,200.00	–	–
Xinjiang Kalatongke Mining Co., Ltd.	53,097.36	–	–	–
Other shareholders:	–	–	–	–
Payment for works and labor	–	–	–	–
Shanghai Xingqiang Mining Co., Ltd.	847,470.68	–	–	–
Total	2,404,710.96	68,667.88	–	–

– II-95 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

3) Sales of products and energy

Related party	January - October 2024	FY 2023	FY 2022	FY 2021
Under common control of Xinjiang Non-ferrous Group:	-	-	-	-
Xinjiang Non-ferrous Metal Industry (Group) Quanxin Construction Co., Ltd.	105,852.36	-	-	-
Other shareholders	-	-	-	-
Shanghai Xingqiang Mining Co., Ltd.	1,343,057.92	-	-	-
Other related parties	-	-	-	-
Xinjiang Jiqiang Mining Co., Ltd.	-	2,304,554.43	-	-
Total	1,448,910.28	2,304,554.43	-	-

Related party receivable and payable balances

(1) Accounts receivable

	31 October 2024		31 December 2023
Related party	Book balance	Bad debt provision	Book balance	Bad debt provision
Xinjiang Non-ferrous Metal Industry (Group) Quanxin Construction Co., Ltd.	113,029.25	-	-	-
Shanghai Xingqiang Mining Co., Ltd.	1,517,655.45	-	-	-
Total	1,630,684.70	-	-	-

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

(2) Other receivables

	31 October 2024		31 December 2023
Related party	Book balance	Bad debt provision	Book balance	Bad debt provision
Xinjiang Non-ferrous Metal Research Institute Co., Ltd.	500.00	-	500.00	-
Fuyun Xinshengtong Trade Co., Ltd.	-	-	107,799.22	-
Total	500.00	-	108,299.22	-

(3) Prepayments

Related party	31 October 2024	31 December 2023	31 December 2022	31 December 2021
Fuyun Xinshengtong Trade Co., Ltd.	-	5,705.60	-	-

(4) Accounts payable

Related party	31 October 2024	31 December 2023	31 December 2022	31 December 2021
Shanghai Xingqiang Mining Co., Ltd.	847,470.68	-	-	-
Wu Jun	1,637,686.76	1,637,686.76	1,637,686.76	-
Fuyun Xinshengtong Trade Co., Ltd.	506,709.33	-	-	-
Fukang Nonferrous Metals Development Co., Ltd.	10,318.04	-	-	-
Xinjiang Non-ferrous Metal Industry (Group) Quanxin Construction Co., Ltd.	1,413,626.82	-	-	-
Total	4,415,811.63	-	-	-

II-97 -

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

(5) Advances

Related party	31 October 2024	31 December 2023	31 December 2022	31 December 2021
Xinjiang Jiqiang Mining Co., Ltd.	-	-	582,760.00	-

(6) Other payables

Related party	31 October 2024	31 December 2023	31 December 2022	31 December 2021
Shanghai Xingqiang Mining Co., Ltd.	39,549.56	25,752.45	707,831.81
Ji Zhenbao	-	-	-	750,000.00
Shanghai Jishen Construction and Installation Engineering Co., Ltd.	-	-	-	1,100,000.00
Xinjiang Jiqiang Mining Co., Ltd.	-	-	-	20,002.00
Xinjiang Xinxin Mining Industry Co., Ltd.	-	331,056.41	-	-
Xinjiang Yakesi Resources Co., Ltd.	10,660.56	36,954.01	-	-
Hami Hexin Mining Industry Co., Ltd.	-	16,384.53	-	-
Total	50,210.12	410,147.40	707,831.81	1,870,002.00

II-98 -

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

X. COMMITMENTS AND CONTINGENCIES

1. Commitments for capital expenditure

There are no contracted commitments for capital expenditure which is not required to be presented on the balance sheet.

2. Contingencies

(1) Insurance

The Company purchases personal accident injury commercial insurance for its employees. However, such insurance may not be sufficient to cover the potential future losses. Although the possible impact of underinsurance on future contingencies cannot be reasonably anticipated at this time, management believes that the above events could have a material adverse effect on the Company’s operating performance or financial condition.

(2) Pending litigation

The Company has no pending litigation.

XI. EVENTS AFTER THE BALANCE SHEET DATE

The Company has no other events after the balance sheet date.

XII. OTHER IMPORTANT EVENTS

As at the balance sheet date, the Company had no other material transactions and material commitments that are required to be disclosed and have an impact on investors’ decisions.

Xinjiang Hua’ou Mining Industry Co., Ltd.
22 January 2025

II-99 -

APPENDIX III

MANAGEMENT DISCUSSION AND ANALYSIS OF THE TARGET COMPANY

The following is the management discussion and analysis of the Target Company, which shall be read together with the historical financial information for the three financial years ended 31 December 2023 and the ten months ended 31 October 2024 as set out in the audit report of ShineWing Certified Public Accountants (LLP). The full text of such audit report is set out in Appendix II to this circular.

Business overview

The Target Company was established on 7 December 2007 and its registered address is at Room 16, Office on the sixth floor of the Credit Mining Complex, Building west of Tuanjie Road and south of Jiankang Road, Ruoqiang County, Bayin'guoleng Mongolian Autonomous Prefecture, Xinjiang.

Xinjiang Non-ferrous Group acquired 51% equity interest, a controlling interest, in the Target Company in 2023 through acquisition and capital increase and the remaining 49% equity interest of the Target Company is held by Shanghai Xingqiang. The principal business of the Target Company includes energy investment, mining investment, mineral resource exploration and investment and sales of mineral product.

Revenue

For the three financial years ended 31 December 2023, and the ten months ended 31 October 2024, the Target Company was in the infrastructure construction phase without any production or sales of products. For the two financial years ended 31 December 2022, the revenue of the Target Company was RMB0. For the financial year ended 31 December 2023 and the ten months ended 31 October 2024, the Target Company's revenue was mainly generated from the transfer of exploration rights, sales of raw materials and sales of electricity, etc., which were approximately RMB2,307.66 thousand and RMB7,265.75 thousand, respectively.

Operating costs

For the three financial years ended 31 December 2023, and the ten months ended 31 October 2024, the Target Company was in the construction period, and its operating costs mainly consisted of the cost of selling raw materials and electricity for the financial year ended 31 December 2023 and ten months ended 31 October 2024, which were approximately RMB0.38 thousand and RMB6,560.11 thousand, respectively. There was no revenue or cost expenditure for the two financial years ended 31 December 2022.

III-1 -

APPENDIX III

MANAGEMENT DISCUSSION AND ANALYSIS OF THE TARGET COMPANY

Gross profit and gross profit margin

For the three financial years ended 31 December 2023, and the ten months ended 31 October 2024, the Target Company was in the exploration and infrastructure construction period without product output and relevant revenue, and therefore there were no gross profit or gross profit margin analysis for the time being.

Total comprehensive profit for the year/period

For the three financial years ended 31 December 2023 and the ten months ended 31 October 2024, the Target Company did not generate any profits, which was mainly due to the reason that until 31 October 2024, the Karchar Fluorspar Mine project of the Target Company had been under construction period and there had been no production or sale of ore product and the expenses incurred were presented on an actual basis.

Assets and liabilities

As at 31 December 2021, 2022 and 2023, and 31 October 2024, the total assets of the Target Company were approximately RMB66,594.40 thousand, RMB69,423.17 thousand, RMB425,563.77 thousand, and RMB470,511.02 thousand, respectively. The increase of total assets of the Target Company in 2023 was mainly due to the capital increase resulting from the merger and acquisition by Xinjiang Non-ferrous Group; the increase of total assets of the Target Company as at 31 October 2024 was mainly due to the increase in advance receipts, fixed assets, and investment in construction in progress with the successive commencement of the construction of projects after the Target Company entered the infrastructure construction period.

As at 31 December 2021, 2022 and 2023, and 31 October 2024, the total liabilities of the Target Company were approximately RMB9,567.19 thousand, RMB6,299.65 thousand, RMB11,362.14 thousand, and RMB60,275.34 thousand, respectively. The decrease of total liabilities of the Target Company as at 31 December 2022 was mainly due to the decrease in other accounts payable. The increase of total liabilities of the Target Company as at 31 December 2023 was mainly due to the increase in accounts payable, other payables, and wages payable. The increase of total liabilities of the Target Company as at 31 October 2024 was mainly due to the increase in accounts payable, other payables, and wages payable, as well as the increase in provisions as a result of provision made for land reclamation and abandonment fees.

As at 31 December 2021, 2022 and 2023, and 31 October 2024, the debt to asset ratio of the Target Company were $14.37\%$, $9.07\%$, $2.67\%$, and $12.81\%$, respectively.

III-2 -

APPENDIX III
MANAGEMENT DISCUSSION AND ANALYSIS OF THE TARGET COMPANY

Liquidity and financial resources

As at 31 December 2021, 2022 and 2023, and 31 October 2024, the current assets of the Target Company were approximately RMB1,847.35 thousand, RMB86.79 thousand, RMB321,698.35 thousand, and RMB260,087.29 thousand, respectively, amongst which cash and cash equivalents were approximately RMB288.84 thousand, RMB39.32 thousand, RMB312,847.81 thousand, and RMB204,280.75 thousand, respectively, accounting for 15.64%, 45.31%, 97.25%, and 78.54% of current assets; accounts receivable was approximately RMB0 thousand, RMB0 thousand, RMB0 thousand, and RMB8,085.63 thousand, respectively, accounting for 0%, 0%, 0%, and 3.11% of current assets; the aggregate of the prepayments, other receivables, and other current assets were approximately RMB1,558.52 thousand, RMB47.47 thousand, RMB8,850.54 thousand, and RMB47,720.90 thousand, respectively, accounting for 84.36%, 54.69%, 2.75%, and 18.35% of current assets.

As at 31 December 2021, 2022 and 2023, and 31 October 2024, the Target Company’s current ratios (current assets to current liabilities) were 0.19, 0.01, 28.31, and 6.98, respectively.

As at 31 October 2024, the Target Company did not have any borrowings and the main source of funding for the Target Company had been the share capital from the shareholders. In January 2025, the Target Company entered into a 10-year bank loan with principal amount of approximately RMB48.93 million mainly for the construction of the Karchar Fluorspar Mine. The interest rate of such loan is a floating rate determined based on the regional bank’s lending policy. All cash and cash equivalent of the Target Company is held in RMB.

The capital management of the Target Company would be strictly implemented in accordance with the Target Company’s financial management policies, and monetary fund approval policies would be strictly implemented. The full process management would be carried out starting from the plan of the initial source of funds and followed by approval at different levels.

Foreign exchange risk

The main business of the Target Company is within the PRC, and all transactions are settled in RMB, so there is no foreign exchange risk.

Contingent liability

As at 31 December 2021, 2022 and 2023, and 31 October 2024, the Target Company had no significant contingent liabilities.

III-3 -

APPENDIX III

MANAGEMENT DISCUSSION AND ANALYSIS OF THE TARGET COMPANY

Significant investments or capital assets

As at the Latest Practicable Date, the Target Company did not hold any significant investment nor did it have any plans for significant investments or capital assets.

Employee, remuneration and training

As at 31 October 2024, the total number of employees in the Target Company was 42. The Target Company determined employee remuneration based on market standards, personal qualifications, experience, skills, performance and contributions. The Target Company regularly reviews its remuneration and benefits policies, as well as the individual performance of its employees, to ensure that they are fairly paid. The Target Company also provides safety trainings to employees in accordance with relevant laws and regulations.

Future prospects

Fluorspar is widely used in fields such as information technology, new energy, and high-end manufacturing. In the field of information technology, hydrogen fluoride and fluorine-containing specialty gases are cleaning agents and etching gases for integrated circuits, semiconductors, etc.; in the field of new energy, fluorspar is used in the production of positive electrode materials and electrolytes for lithium batteries. The stable supply of fluorspar resources is crucial for facilitating the development of strategic emerging industries.

The development and utilization of fluorspar mines in the PRC has a long history. With the improvement of environmental awareness and policy guidance, the development and utilization of fluorspar mines are gradually moving towards standardization and intensification. At the same time, the comprehensive utilization level of fluorspar mines has been continuously improved, and the resource utilization rate and added value have been enhanced through methods such as beneficiation and deep processing. The Target Company engages in the mining, processing, and sales of fluorspar, and the construction and implementation of the Karchar Fluorspar Mine not only bring certain economic benefits to the enterprise, but also comply with regional development plans, secure resource for the development of related industries, drive local economic growth, and have good social benefits.

III-4 -

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION

OF THE ENLARGED GROUP

A. UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

Unaudited pro forma financial information of the enlarged Group

The following unaudited pro forma financial information (the “unaudited pro forma financial information”) has been prepared to illustrate the financial impact on Xinjiang Xinxin Mining Industry Co., Ltd. (hereinafter referred to as the “Company” or, together with its subsidiaries, the “Group”) of the proposed acquisition of 51% equity interest (the “acquisition”) in Xinjiang Hua’ou Mining Industry Co., Ltd. (“the target company”). The unaudited pro forma financial information consists of the unaudited pro forma balance sheet as at 30 June 2024. The unaudited pro forma financial information has been prepared by the directors of the Company (the “Directors”) in accordance with Rule 4.29 of the Listing Rules to illustrate the effect of the acquisition on the assets and liabilities of the Group as at 30 June 2024, as if the acquisition had occurred on that date.

The unaudited pro forma financial information is in accordance with Note 1, extracted from the Group’s unaudited consolidated statement of financial position as at 30 June 2024, which is included in the Company’s published interim report for the six months ended 30 June 2024; and Note 2, extracted from the audited statement of financial position of the target company as at 31 October 2024, as set out in this Circular.

The unaudited pro forma financial information has been prepared based on the historical data mentioned above and the pro forma adjustments directly related to the acquisition and supported by facts described in the accompanying notes, as if the acquisition had occurred on 30 June 2024.

The unaudited pro forma financial information has also been prepared by the Directors based on certain assumptions, estimates, and uncertainties, and is intended for illustrative purposes only. Due to their hypothetical nature, the unaudited pro forma financial information is not necessarily intended to forecast the status of the Group’s assets and liabilities if the acquisition had occurred on 30 June 2024 or any future date. The unaudited pro forma financial information should be read in conjunction with, among other things, the financial information of the Group as set out in Appendix I to the Circular and the accountant’s report of the target company as set out in Appendix II to the Circular, and other financial information contained in other parts of the Circular.

IV-1 -

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION

OF THE ENLARGED GROUP

Unaudited pro forma financial information of the Enlarged Group

	The Group as at 30 June 2024 RMB Note 1	The target company as at 31 October 2024 RMB Note 2	Pro forma adjustments		Unaudited pro forma data of the Enlarged Group as at 30 June 2024 RMB
			RMB Note 3	RMB Note 4
Current assets
Cash at bank and on hand	660,106,535.67	204,280,747.84	-	-	864,387,283.51
Notes receivable	25,153,408.66	-	-	-	25,153,408.66
Accounts receivable	36,287,622.14	8,085,634.36	-	-	44,373,256.50
Financing receivables	257,489,302.93	-	-	-	257,489,302.93
Prepayments	29,916,470.58	40,485,115.77	-	-	70,401,586.35
Other receivables	22,393,720.09	198,802.53	-	-	22,592,522.62
Inventories	1,159,756,174.46	-	-	-	1,159,756,174.46
Other current assets	10,660,069.84	7,036,985.09	-	-	17,697,054.93
Total current assets	2,201,763,304.37	260,087,285.59	-	-	2,461,850,589.96
Non-current assets
Long-term equity investments	197,843,221.86	-	-	-	197,843,221.86
Investment properties	222,972,250.85	-	-	-	222,972,250.85
Fixed assets	3,484,435,841.74	31,930,153.67	-	-	3,516,365,995.41
Construction in progress	460,835,092.37	99,614,835.58	-	-	560,449,927.95
Right-of-use assets	669,309.65	-	-	-	669,309.65
Intangible assets	1,079,076,970.96	76,537,107.00	1,326,151,784.13		2,481,765,862.09
Including: Land use rights, exploration rights and mining rights	1,076,589,617.48	76,331,524.78	1,326,151,784.13	-	2,479,072,926.39
Other intangible assets	2,487,353.48	205,582.22	-	-	2,692,935.70
Development costs	20,310,949.28	-	-	-	20,310,949.28
Goodwill	9,987,911.01	-		98,195,222.14	108,183,133.15
Long-term prepaid expenses	2,023,519.33	-	-	-	2,023,519.33
Deferred tax assets	61,840,282.49	2,341,635.73	-	-	64,181,918.22
Other non-current assets	21,630,475.12	-	-	-	21,630,475.12
Total non-current assets	5,561,625,824.66	210,423,731.98	1,326,151,784.13	98,195,222.14	7,196,396,562.91
Total assets	7,763,389,129.03	470,511,017.57	1,326,151,784.13	98,195,222.14	9,658,247,152.87

– IV-2 –

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION

OF THE ENLARGED GROUP

	The Group as at 30 June 2024 RMB Note 1	The target company as at 31 October 2024 RMB Note 2	Pro forma adjustments		Unaudited pro forma data of the Enlarged Group as at 30 June 2024 RMB
			RMB Note 3	RMB Note 4
Current liabilities
Short-term borrowings	200,000,000.00	-	-	-	200,000,000.00
Notes payable	51,026,761.09	-	-	-	51,026,761.09
Accounts payable	269,243,196.02	27,883,641.16	-	-	297,126,837.18
Advances from customers	384,143.73	-	-	-	384,143.73
Contract liabilities	46,742,582.80	-	-	-	46,742,582.80
Employee benefits payable	92,724,054.05	895,397.54	-	-	93,619,451.59
Taxes payable	56,802,780.08	52,203.06	-	-	56,854,983.14
Other payables	313,343,554.82	8,429,539.73		1,098,084,000.00	1,419,857,094.55
Non-current liabilities due within one year	193,449,898.74	-	-	-	193,449,898.74
Other current liabilities	6,076,535.76	-	-	-	6,076,535.76
Total current liabilities	1,229,793,507.09	37,260,781.49	-	1,098,084,000.00	2,365,138,288.58
Net current assets	971,969,797.28	222,826,504.10	-	-1,098,084,000.00	96,712,301.38
Total assets less current liabilities	6,533,595,621.94	433,250,236.08	1,326,151,784.13	-999,888,777.86	7,293,108,864.29
Non-current liabilities
Long-term borrowings	414,500,000.00	-	-	-	414,500,000.00
Long-term payables	336,830,181.64	-	-	-	336,830,181.64
Long-term employee benefits payable	1,843,383.71	-	-	-	1,843,383.71
Provisions	124,278,084.77	20,674,432.87	-	-	144,952,517.64
Deferred income	24,344,754.13	-	-	-	24,344,754.13
Deferred tax liabilities	80,930,394.54	2,340,123.38	198,922,767.62	-	282,193,285.54
Total non-current liabilities	982,726,798.79	23,014,556.25	198,922,767.62	-	1,204,664,122.66
Total liabilities	2,212,520,305.88	60,275,337.74	198,922,767.62	1,098,084,000.00	3,569,802,411.24
Net assets	5,550,868,823.15	410,235,679.83	1,127,229,016.51	-999,888,777.86	6,088,444,741.63

IV-3 -

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION

OF THE ENLARGED GROUP

	The Group as at 30 June 2024	The target company as at 31 October 2024	Pro forma adjustments		Unaudited pro forma data of the Enlarged Group as at 30 June 2024
		RMB	RMB	RMB
	RMB	RMB	RMB	RMB	RMB
Equity
Share capital	552,500,000.00	113,000,000.00	-	-113,000,000.00	552,500,000.00
Capital reserves	4,259,048,821.29	337,566,752.22	1,127,421,527.96	-1,677,491,180.18	4,046,545,921.29
Special reserves	6,403,764.33	-	-	-	6,403,764.33
Surplus reserves	276,250,000.00	-	-	-	276,250,000.00
Undistributed profits	452,296,184.63	-40,331,072.39	-192,511.45	37,244,701.12	449,017,301.91
Total equity attributable to owners of the parent company	5,546,498,770.25	410,235,679.83	1,127,229,016.51	-1,753,246,479.06	5,330,716,987.53
Non - controlling interests	4,370,052.90	-	-	753,357,701.20	757,727,754.10
Total equity	5,550,868,823.15	410,235,679.83	1,127,229,016.51	-999,888,777.86	6,088,444,741.63

Note:

The data of the Group as at 30 June 2024 is extracted from the published interim report of the Company for the six months ended 30 June 2024 and has not been adjusted.
The data of the target company as at 31 October 2024 is extracted from the audited statement of financial position of the target company as at 31 October 2024 which is set out in Appendix II of the Circular.
The amount represents the adjusted amount by the Group, calculated as continuously measuring the fair value of the identifiable net assets as at the completion date of the acquisition (31 August 2023) until 31 October 2024, after Xinjiang Nonferrous Metals Industry (Group) Co., Ltd. (the "holder of equity interests in the target company") acquired the target company on the completion date of the acquisition.
The transaction costs of the acquisition amounting to RMB 1,098,084,000.00 were taken into account when preparing the unaudited pro forma financial information. On 14 February 2025, the Group entered into an equity transfer agreement (the "Equity Transfer Agreement") with the target company and the holder of equity interests in the target company. The total consideration (the "Consideration") for the acquisition shall be paid in a lump sum in cash. This pro forma financial information does not take into account the impact of financing arrangements such as merger and acquisition loans that may be made.
Goodwill was recognized when the transaction of the holder of equity interest in the target company acquiring the target company occurred. That is, it is the proportion by which the consideration paid by the holder of equity interest in the target company exceeds the net fair value of the identifiable assets and liabilities of the target company it is entitled to.
No other adjustments have been made to the unaudited pro forma financial information to reflect the results of any transactions or other dealings entered into by the Group after 30 June 2024.
IV-4 -

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION

OF THE ENLARGED GROUP

B. ASSURANCE REPORT BY THE INDEPENDENT REPORTING ACCOUNTANT ON PREPARATION OF UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

The following is the text of a report on the unaudited pro forma financial information of the Group received from ShineWing Certified Public Accountants (LLP), for the purpose of incorporation in this circular.

ASSURANCE REPORT BY THE INDEPENDENT REPORTING ACCOUNTANT ON THE PREPARATION OF UNAUDITED PRO FORMA FINANCIAL INFORMATION

XYZH/2025BJAA16B0132

Xinjiang Xinxin Mining Industry Co., Ltd.

To the Directors of Xinjiang Xinxin Mining Industry Co., Ltd.:

Dear Sirs,

We have completed our assurance engagement on the unaudited pro forma financial information of Xinjiang Xinxin Mining Industry Co., Ltd. (the "Company") and its subsidiaries (collectively, the "Group"), as well as Xinjiang Hua'ou Mining Industry Co., Ltd. (together with the Group, the "Enlarged Group") prepared by the directors of the Company (the "Directors") for illustrative purposes only, and we hereby report on it. The unaudited pro forma financial information consists of the unaudited pro forma balance sheet as of 30 June 2024 and the notes relating to major transactions and related party transactions as set out on pages IV-2 to IV-4 of the Company's circular dated 24 March 2025 (the "Circular"). The applicable standards used by the Directors of the Company for preparation of unaudited pro forma financials are set out on page IV-1 of the Circular.

The Directors of the Company have prepared unaudited pro forma financial information for the purpose of illustrating the effect of the proposed acquisition of 51% equity interest in Xinjiang Hua'ou Mining Industry Co., Ltd. (the "Acquisition") on the assets and liabilities of the Group as at 30 June 2024 as if the Acquisition had taken place as at 30 June 2024. As part of their work, the Directors have extracted information about the financial position of the Group from the unaudited consolidated interim financial statements of the Group for the six months ended 30 June 2024, for which a review report has been issued.

Directors' responsibilities for unaudited pro forma financial information

The Directors are responsible for the preparation of the unaudited pro forma financial information in accordance with Rule 4.29 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 No. 7 – Preparation of Pro Forma Financial Information for Inclusion in Investment Circular (the "Accounting Guideline No. 7") issued by the Hong Kong Institute of Certified Public Accountants (the "HKICPA").

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION

OF THE ENLARGED GROUP

Our independence and quality management

We have complied with the independence and other ethical requirements of the China Code of Ethics for Certified Public Accountants issued by the Chinese Institute of Certified Public Accountants, which is founded on fundamental principles of integrity, objectivity and impartiality, independence, professional competence and diligence, confidentiality and good professional conduct.

Our firm applies the Accounting Firm Quality Management Standards No. 5101 – Practice Quality Management issued by the Ministry of Finance of the PRC, which requires the Firm to design, implement and operate a quality management system, including policies or procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

Reporting accountant’s responsibilities

Our responsibility is to express an opinion on the unaudited pro forma financial information in accordance with Rule 4.29(7) of the Listing Rules and to report our opinion to you. We do not accept any responsibility for any reports previously issued by us in respect of any financial information used in the preparation of the unaudited pro forma financial information, other than to the recipients specified by us on the date of issue of such reports.

We conducted our work in accordance with the China Standard on Review Engagements by Certified Public Accountants No. 2101 – Review of Financial Statements issued by the Ministry of Finance of the People’s Republic of China (the “Standard”). The Standard requires the reporting accountant to plan and perform procedures to obtain reasonable assurance as to whether the Directors have prepared unaudited pro forma financial information in accordance with Rule 4.29 of the Listing Rules and with reference to Accounting Guideline 7 issued by the HKICPA.

In connection with this engagement, we do not undertake to update or re-issue any report or opinion on any of the historical financial information used in the preparation of the unaudited pro forma financial information, nor have we reviewed or audited the financial information used in the preparation of the unaudited pro forma financial information in the course of this engagement.

The unaudited pro forma financial information is contained in the Circular solely to illustrate the effect of the Acquisition on the unadjusted financial information of the Group as if the Acquisition had taken place at the earlier date selected for illustrative purposes. Accordingly, there can be no assurance that the actual results of the Acquisition as at 30 June 2024 will be the same as those presented.

IV-6 -

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION

OF THE ENLARGED GROUP

The review engagement to assess whether the unaudited pro forma financial information has been properly prepared in line with the applicable standards involves carrying out procedures to assess whether the applicable standards adopted by the Directors in preparing the unaudited pro forma financial information provide a reasonable basis for presenting the significant effects that arise directly from the events or transactions and to obtain sufficient and appropriate evidence in respect of the following items:

whether the relevant unaudited pro forma adjustments have had an appropriate impact on those standards; and
whether the unaudited pro forma financial information reflects an appropriate application of those adjustments to the unadjusted financial information.

The procedures selected depend on the reporting accountant’s judgment, taking into account the accountant’s understanding of the Group’s nature, the events or transactions relevant to the unaudited pro forma financial information prepared, and other relevant engagement circumstances.

This engagement also involved assessing the overall presentation of the unaudited pro forma financial information.

We believe the evidence we have obtained is sufficient and appropriate to provide a basis for our opinions.

Opinion

In our opinion:

(a) the unaudited pro forma financial information has been properly prepared on the basis stated;

(b) the relevant basis is consistent with the accounting policies of the Group; and

IV-7 -

APPENDIX IV
UNAUDITED PRO FORMA FINANCIAL INFORMATION
OF THE ENLARGED GROUP

(c) the adjustments are appropriate for the purposes of the unaudited pro forma financial information disclosed pursuant to Rule 4.29(1) of the Listing Rules.

ShineWing Certified Public Accountants (LLP)
Chinese Certified
Public Accountant: Shao Lixin

Chinese Certified
Public Accountant: Zuo Dongqiang

Beijing, China
24 March 2025

– IV-8 –

APPENDIX V
COMPETENT PERSON'S REPORT

Final

Karchar Fluorspar Project, Xinjiang, China

Xinjiang Xinxin Mining Industry Co., Ltd.

SRK Consulting (Hong Kong) Limited • XJX001 • 24 March 2025

srk consulting

V-1 -

APPENDIX V
COMPETENT PERSON'S REPORT

Final

Independent Technical Report on Karchar Fluorspar Project

Prepared for:

Xinjiang Xinxin Mining Industry Co., Ltd.
No. 501, Fusion South Road, Cooperation Zone
Economic and Technological Development District
Urumqi City, Xinjiang
China

Prepared by:

SRK Consulting (Hong Kong) Limited
Suite 1818, 18th Floor, V Heun Building,
138 Queen’s Road, Central, Hong Kong
+852 2520 2522
www.srk.com

Lead Author: (Gavin) Heung Ngai Chan

Initials: GC

Reviewer: Jeames McKibben

Initials: JM

File Name:

XJX001_ITR on Xinjiang Karchar Fluorspar Project_Rev8.docx

Suggested Citation:

SRK Consulting (Hong Kong) Limited.
Independent Technical Report on Karchar Fluorspar Project

Final

Prepared for Xinjiang Xinxin Mining Industry Co., Ltd.: Urumqi City, Xinjiang.
Project number: XJX001.
Issued 24 March 2025.

Copyright © 2025

SRK Consulting (Hong Kong) Limited
- XJX001
- 24 March 2025

srk consulting

APPENDIX V

COMPETENT PERSON'S REPORT

ACKNOWLEDGMENTS

The following consultants have contributed to the preparation of this Report.

Role	Name	Professional designation
Coordinating Author	Gavin Chan	BSc, MPhil, PhD, FAIG
Coordinating Author	Tony Tang	BSc, MSc, PhD, MAusIMM, MAIG
Coordinating Author	Falong Hu	MBA, BEng, FAusIMM
Coordinating Author	Lanliang Niu	BEng, MAusIMM
Coordinating Author	Nan Xue	MSc, MBA, MAusIMM
Coordinating Author	Chunfu Yang	BEng, RCE, CSPM
Peer Review	Cael Gniel	BSc (Hons), MAIG, RPGeo (MRE)
Peer Review	Jeames McKibben	BSc(Hons), MBA, FAusIMM(CP), MAIG, MRICS
Releasing Authority	Gavin Chan	BSc, MPhil, PhD, FAIG

Disclaimer: The opinions expressed in this Report have been based on the information supplied to SRK Consulting (Hong Kong) Limited (SRK) by Xinjiang Xinxin Mining Industry Co., Ltd. (Xinjiang Xinxin). The opinions in this Report are provided in response to a specific request from Xinjiang Xinxin to do so. SRK has exercised all due care in reviewing the supplied information. While SRK has compared key supplied data with expected values, the accuracy of the results and conclusions from the review are entirely reliant on the accuracy and completeness of the supplied data. SRK does not accept 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 SRK's 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 SRK had no prior knowledge nor had the opportunity to evaluate.

APPENDIX V

COMPETENT PERSON'S REPORT

Useful Definitions V-21

1 Introduction V-37

1.1 Background V-37
1.2 Scope of work V-37
1.3 Work program V-38
1.4 Reporting standard V-38
1.5 Effective Date and Report Date V-39
1.6 Unit, projection and currency V-39
1.7 Project team V-40
1.8 Statement of SRK independence V-42
1.9 Legal matters. V-43
1.10 Warranties. V-43
1.11 Indemnities V-43
1.12 Reliance on other experts V-44
1.13 Source of information V-44
1.14 Consents V-45
1.15 Limitations V-46
1.16 Corporate capability V-47

APPENDIX V
COMPETENT PERSON'S REPORT

2 Fluorspar and Its Uses V-48
3 Project Overview. V-49
3.1 Location and access. V-49
3.2 Licences V-50
3.3 Climate, local resources and infrastructure. V-52
3.4 Current project status V-53
3.4.1 Ownership V-53
3.4.2 Mine construction status. V-54
4 Geology V-55
4.1 Regional geology V-55
4.2 Local geology and mineralisation V-57
5 Exploration V-58
5.1 Drilling campaigns V-59
5.1.1 Drilling campaign 2008–2011 V-59
5.1.2 Drilling campaign 2016–2019 V-59
5.1.3 Drilling campaign 2024. V-60
5.2 Drilling database V-60
5.2.1 Exploration in Karchar West V-61

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APPENDIX V

COMPETENT PERSON'S REPORT

6 Sampling and Assays. V-62

6.1 Sampling V-62

6.1.1 Sampling techniques V-62
6.1.2 Sample preparation. V-62
6.1.3 Assay methodology V-62

6.2 Quality assurance and quality control V-63

6.2.1 Duplicates V-63
6.2.2 Bulk density. V-64
6.2.3 Historical verification V-65

6.3 SRK verification SRK. V-66

6.3.1 Laboratory Duplicates V-68
6.3.2 Blanks V-69
6.3.3 Certified reference materials V-69

7 Mineral Resource Estimation V-70

7.1 Introduction V-70
7.2 Mineral Resource estimation procedures. V-71
7.3 Database compilation and validation V-72
7.4 Geological modelling. V-72

APPENDIX V
COMPETENT PERSON'S REPORT

7.5 Exploratory data analysis ... V-74
7.5.1 Compositing ... V-74
7.5.2 Top-capping ... V-75
7.5.3 Variography ... V-80

7.6 Grade and tonnage estimation ... V-82
7.6.1 Block model and grade estimation ... V-82
7.6.2 Model validation ... V-84

7.7 Classification ... V-88
7.8 Mineral Resource Statement ... V-89
7.8.1 Reasonable prospects for eventual economic extraction ... V-89
7.8.2 Mineral Resource Statement ... V-89
7.8.3 Grade-tonnage sensitivities ... V-91

8 Mining ... V-92
8.1 Introduction ... V-92
8.2 Hydrogeology ... V-93
8.2.1 Studies ... V-93
8.2.2 Groundwater characteristics ... V-93

8.3 Geotechnical engineering ... V-95
8.3.1 Rock masses quality ... V-95
8.3.2 Rock strength summary ... V-96

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APPENDIX V
COMPETENT PERSON'S REPORT

8.3.3 Stope stability geotechnical analysis V-97
8.3.4 Surface stability analysis V-99

8.4 Mining methodology V-100

8.4.1 Cut-and-Fill mining method V-100
8.4.2 Drift-and-Fill mining method V-102

8.5 Mine development V-104

8.5.1 Stope preparation and development V-104
8.5.2 Level spacing V-104
8.5.3 Development system V-105

8.6 Mine logistics V-108
8.7 Mining equipment V-109
8.8 Mine services V-110

8.8.1 Backfill V-110
8.8.2 Ventilation V-111
8.8.3 Dewatering V-112
8.8.4 Air compression V-112
8.8.5 Water supply V-112
8.8.6 Other infrastructure V-113

8.9 Production schedule V-113

– V-8 –

APPENDIX V
COMPETENT PERSON'S REPORT

9 Ore Reserve Estimation ... V-116
9.1 Introduction ... V-116
9.2 Ore Reserve Estimation Procedures ... V-116
9.3 Technical studies ... V-117
9.4 Ore definition ... V-118
9.5 Modifying Factors ... V-118
9.6 Ore Reserve estimates ... V-121
9.7 Ore Reserve Statement ... V-122
9.8 Conclusions and recommendations ... V-123

10 Mineral Processing ... V-123
10.1 Introduction ... V-123
10.2 Mineralogy ... V-125
10.2.1 Head assay and mineral composition ... V-125
10.2.2 Principal mineral dissemination characteristics ... V-126
10.2.3 Intercalation and dissociation features ... V-127
10.2.4 Mineralogical factors ... V-129
10.3 Metallurgical testwork ... V-130
10.3.1 Grindability testing ... V-130
10.3.2 Pre-concentration testwork ... V-130
10.3.3 Flotation tests ... V-131

V-9 -

APPENDIX V
COMPETENT PERSON'S REPORT

10.4 Test results analysis ... V-136
10.5 Conclusions and recommendations ... V-138

11 Processing Plant ... V-139
11.1 Design capacity, product and work system ... V-139
11.2 Design process flow ... V-140
11.2.1 Crushing and screening ... V-140
11.2.2 Grinding and classification ... V-140
11.2.3 Flotation ... V-142
11.2.4 Dewatering ... V-143

11.3 Design technical parameters and indicators ... V-144
11.4 Processing facilities and equipment ... V-145
11.4.1 Major equipment ... V-145

11.5 Construction progress and commissioning, production plans. ... V-147
11.6 Consumption ... V-149
11.7 Conclusions and recommendations ... V-150

12 Infrastructure ... V-152
12.1 Introduction ... V-152
12.2 Power supply ... V-153
12.3 Solar heating system ... V-155
12.4 Water supply ... V-156
12.5 Conclusion ... V-158

– V-10 –

APPENDIX V
COMPETENT PERSON'S REPORT

13 Tailings Storage Facility... V-158
13.1 Documents reviewed... V-158
13.1.1 Natural conditions of the site... V-159
13.1.2 Tailings production and characteristics... V-161
13.1.3 Tailings disposal plan... V-162
13.1.4 Tailings storage facility... V-163
13.1.5 Tailings transport pipeline... V-166
13.1.6 Safety supervision... V-166
13.1.7 Project progress... V-167
13.2 Conclusions and recommendations... V-167

14 Environment, Licensing and Community... V-168
14.1 Environmental and social review objectives... V-168
14.2 Review Process, scope and criteria... V-168
14.3 Environment-related licences... V-168
14.4 Ecological assessment... V-171
14.5 Water management... V-171
14.6 Waste and tailings management... V-173
14.7 Dust and noise... V-174
14.8 Hazardous substances management... V-175
14.9 Safety and health... V-175

V-11 -

APPENDIX V
COMPETENT PERSON'S REPORT

14.10 Closure Plan and reclamation ... V-176
14.11 Social evaluation ... V-177

15 Market Study ... V-177

15.1 Introduction ... V-177
15.2 Chinese fluorspar mining industry ... V-178
15.3 Supply ... V-178
15.4 Demand ... V-179
15.5 Market outlook and prices ... V-180

16 Costs ... V-181

16.1 Capital costs ... V-181
16.2 Operating costs ... V-183
16.3 Economic viability analysis ... V-185

17 Conclusion ... V-187
18 Risk Assessment ... V-188

References ... V-194

V-12 -

APPENDIX V

COMPETENT PERSON'S REPORT

TABLES

Table 1.1: Details of qualifications and experience of the project team. V-40
Table 3.1: Mining licence information. V-50
Table 3.2: Exploration licences information V-51
Table 5.1: Karchar fluorspar drill database statistics V-60
Table 5.2: Karchar West drill database statistics V-61
Table 6.1: Laboratory duplicates and inter-laboratory checks statistics (2011-2019) V-63
Table 7.1: Comparison between raw and composite samples V-75
Table 7.2: Summary statistics of composite and capped composite data of $\mathrm{CaF}_2$ samples V-80
Table 7.3: Variogram parameters used for ordinary kriging estimation V-82
Table 7.4: Block model parameters V-83
Table 7.5: Grade estimation and search ellipse parameters V-83
Table 7.6: Composite and block means comparison V-85
Table 7.7: Mineral Resource Statement of the Project as at 31 October 2024. V-90
Table 8.1: Rock quality designation. V-95
Table 8.2: Rock strength summary V-96
Table 8.3: Geotechnical parameters used for analysis V-97
Table 8.4: Stope stability analysis results V-98
Table 8.5: Design parameters for mining stope. V-104
Table 8.6: Key parameters of vertical development V-107
Table 8.7: Key parameters of lateral development V-107

APPENDIX V
COMPETENT PERSON'S REPORT

Table 8.8: Key parameters of the conveyor belts V-108
Table 8.9: Design parameters for mining stope preparation drives V-109
Table 8.10: Key parameters of the primary fans V-111
Table 8.11: Production schedule over the life of mine V-114
Table 9.1: Parameters for estimation of cut-off grade V-118
Table 9.2: Estimate process summary V-121
Table 9.3: Ore Reserves Statement for Karchar Fluorspar Mine as at 31 October 2024 V-122
Table 10.1: Ore chemical composition V-125
Table 10.2: Ore mineral composition V-125
Table 10.3: Dissociation degree of fluorspar under different grinding fineness V-128
Table 10.4: Bond ball mill work index V-130
Table 10.5: Closed circuit flotation test conditions V-133
Table 10.6: Closed circuit flotation test conditions (continued from Table 10.5) V-134
Table 10.7: Summary of processing test results V-135
Table 10.8: Fluorspar Concentrate Quality V-135
Table 11.1: Design technical parameters of the processing plant V-144
Table 11.2: Design technical indicators of the processing plant V-145
Table 11.3: Major processing equipment V-146
Table 11.4: Commissioning and production plan for the processing plant V-148
Table 11.5: Material and reagent consumption V-149

– V-14 –

APPENDIX V
COMPETENT PERSON'S REPORT

Table 12.1: Water balance V-157
Table 13.1: Tailings particle size distribution V-162
Table 15.1: SMM forecast prices V-180
Table 16.1: 2023–2047 capital cost estimate V-182
Table 16.2: 2025–2035 operating cash cost estimate V-183
Table 16.3: Post-tax sensitivity analysis V-186
Table 16.4: Post-tax NPVs at different discount rates V-187
Table 18.1: Risk assessment matrix V-189
Table 18.2: Project risk assessment V-189

– V-15 –

APPENDIX V

COMPETENT PERSON'S REPORT

FIGURES

Figure 3.1: Project location V-49
Figure 3.2: Licences V-52
Figure 3.3: Aerial view of the Project site (looking east) V-54
Figure 4.1: Project major tectonic terrains V-56
Figure 4.2: Regional structural geology map V-56
Figure 4.3: Local geology map V-58
Figure 5.1: Plan view of drill holes completed from 2008 to 2024 V-61
Figure 6.1: Correlation between density and $\mathrm{CaF}_2$ grade V-64
Figure 6.2: Example of comparison between drill hole and verification twinned hole assays V-65
Figure 6.3: Q-Q plots between 2008-2019 and 2021 drilling programs V-66
Figure 6.4: Correlation plot between original (2008-2019) and SRK check assays V-67
Figure 6.5: Correlation plot between ALS laboratory assay and laboratory duplicates of $\mathrm{CaF}_2$ (2008-2019) V-68
Figure 6.6: SRK verification assays laboratory blanks results V-69
Figure 6.7: SRK verification assays laboratory standard results V-70
Figure 7.1: General relationship between Mineral Resources and Ore Reserves V-71
Figure 7.2: Horizontal view of interpreted domains V-72
Figure 7.3: Long section view along E-W, dipping $35^{\circ}$ towards N. V-72
Figure 7.4: Cross section view along N-S V-73
Figure 7.5: 3D perspective of interpreted domains and Project area topography V-73

APPENDIX V
COMPETENT PERSON'S REPORT

Figure 7.6: Flagged intervals length histogram plot. V-74
Figure 7.7: Domain V1 assays' grades histogram and probability distribution, capping at 74% CaF₂. V-76
Figure 7.8: Domain V2 assays' grades histogram and probability distribution, capping at 58% CaF₂. V-76
Figure 7.9: Domain V3 assays' grades histogram and probability distribution, capping at 50% CaF₂. V-77
Figure 7.10: Domain V4 assays' grades histogram and probability distribution, capping at 57% CaF₂. V-77
Figure 7.11: Domain V5 assays' grades histogram and probability distribution, no top capping. V-78
Figure 7.12: Domain V6 assays' grades histogram and probability distribution, capping at 64% CaF₂. V-78
Figure 7.13: Domain V7 assays' grades histogram and probability distribution, no top capping. V-79
Figure 7.14: Domain V8 assays' grades histogram and probability distribution, capping at 44% CaF₂. V-79
Figure 7.15: Variograms and fitted curves of Domain V6. V-81
Figure 7.16: Visual validation of selected cross sections (looking east). V-84
Figure 7.17: Domain V6 swath plot along the east–west, north–south and vertical direction, respectively. V-86
Figure 7.18: All domains swath plot along the east–west, north–south and vertical direction, respectively. V-87
Figure 7.19: Classification of project horizontal view. V-88
Figure 7.20: Project grade-tonnage curve. V-91

– V-17 –

APPENDIX V

COMPETENT PERSON'S REPORT

Figure 8.1: Stope stability geotechnical analysis model V-97
Figure 8.2: Stability analysis for B-B at 2,450 m asl. V-98
Figure 8.3: Stability analysis for B-B at 2,450 m asl. V-99
Figure 8.4: Surface stability analysis results upon completion of mining V-100
Figure 8.5: Schematic of CAF with a roadheader. V-101
Figure 8.6: Schematic of CAF with drill-and-blast. V-102
Figure 8.7: Schematic of DAF with roadheader V-103
Figure 8.8: Schematic of DAF with drill-and-blast. V-103
Figure 8.9: Schematic of the development system. V-105
Figure 8.10: Production schedule over the life of mine V-115
Figure 8.11: Production schedule over the life of mine V-116
Figure 9.1: Plan view of Ore Reserve estimates areas V-120
Figure 9.2: Tonnes and average $\mathrm{CaF}_2$ grade in stopes per vertical interval V-120
Figure 9.3: Estimates process waterfall chart. V-121
Figure 10.1: Intercalation particle size curves of fluorspar and calcite. V-128
Figure 10.2: Experimental process flow of Guangdong Academy of Sciences. V-132
Figure 11.1: Designed crushing-grinding flow of the processing plant V-141
Figure 11.2: Design flotation flowsheet V-143
Figure 11.3: Construction of processing plant - 18 November 2024 V-148

– V-18 –

APPENDIX V
COMPETENT PERSON'S REPORT

Figure 12.1: Infrastructure plan view ... V-152
Figure 12.2: Shared substation ... V-153
Figure 12.3: Substation ... V-154
Figure 12.4: Solar heating system ... V-155
Figure 12.5: Water source ... V-156
Figure 13.1: Location of tailings storage facility and processing plant ... V-159
Figure 13.2: Topography and geomorphology of the proposed TSF area ... V-161
Figure 13.3: Tailings disposal process flow diagram ... V-163
Figure 13.4: Longitudinal section of the tailings dam ... V-164
Figure 16.1: Post-tax sensitivity analysis ... V-186

– V-19 –

APPENDIX V
COMPETENT PERSON'S REPORT

APPENDICES

Table 1 — JORC Code (2012)

– V-20 –

APPENDIX V

COMPETENT PERSON'S REPORT

USEFUL DEFINITIONS

This list contains definitions of symbols, units, abbreviations, and terminology that may be unfamiliar to the reader.

Abbreviation	Meaning
°	degrees
°C	degrees Celsius
μm	micrometres, equal to one millionth of a metre
AIG	Australian Institute of Geoscientists
ARD	acid rock drainage
asl	above sea level
AusIMM	Australasian Institute of Mining and Metallurgy
CaF₂	calcium fluoride
CAGR	compound annual growth rate
cm	centimetres
CMA	China Inspection Body and Laboratory Mandatory Approval
CRM	certified reference material
CSPM	Certified Senior Project Manager in China
EIA	Environmental Impact Assessment
EPCM	Engineering, Procurement and Construction Management
EPMP	Environmental Protection and Management Plan
ESHS	Environmental, Social, Health and Safety

– V-21 –

APPENDIX V

COMPETENT PERSON'S REPORT

EU	European Union
FCA	Environmental Final Check and Acceptance
g	grams
g/cm³	grams per cubic centimetre
g/t	grams per tonne
GPa	gigapascals
HDPE	high density polyethylene
IDW	inverse distance weighted
IFC	International Finance Corporation
ITR	Independent Technical Report
JORC Code	2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves
k	thousand
kg	kilograms
km	kilometres
km²	square kilometres
kt	thousand tonnes
kV	kilovolts
kW	kilowatts

– V-22 –

APPENDIX V
COMPETENT PERSON'S REPORT

kWh/t	kilowatt tonnes per hour
L/s	litres per second
LoM	life-of-mine
Lu	Lugeon unit
m asl	metres above sea level
m	metres
m/d	metres per day
m²	square metres
m³	cubic metres
m³/d	cubic metres per day
m³/h	cubic metres per hour
m³/s	cubic metres per second
m³/t	cubic metres per tonne
mm	millimetres
MPa	megapascals
Mt	million tonnes
Mtpa	million tonnes per annum
MVA	megavolt amperes
NPV	net present value

– V-23 –

APPENDIX V
COMPETENT PERSON'S REPORT

PRC People’s Republic of China
RCE Registered Civil Engineer in China
RL relative level
RoM run-of-mine
RQD rock quality designation
tpd tonnes per day

– V-24 –

APPENDIX V

COMPETENT PERSON'S REPORT

DEFINITIONS

Bulk density: A physical property of mineral components, defined by the weight of an object or material divided by its volume, including the volume of its pore spaces.

Channel sample: Sample collected by cutting a continuous groove or channel into the rock face using tools such as chisels, saws, or drills. The groove is typically uniform in width and depth to ensure consistency.

Compressive: The capacity of a material or structure to withstand loads tending to reduce size, measured by plotting.

Drill core: A solid, cylindrical sample of rock produced by an annular drill bit, generally rotatively driven but sometimes cut by percussive methods (drill core is extracted from a drill hole).

Drill hole: A hole drilled in the ground by a drill rig, usually for exploratory purposes to obtain geological information and to allow sampling of rock material.

EDTA: Ethylene diamine tetraacetic acid; a polyamino carboxylic acid with the formula C10H16N2O8. It is known for its ability to sequester metal ions, forming stable complexes. This property makes it useful in applications where metal ions need to be controlled or removed.

Exploration: Activities undertaken to prove the location, volume and quality of a deposit

Fault: A fracture or fracture zone in rock along which movement has occurred

Feed ore: Mined rock delivered to the processing plant

Filtering and drying: Filtering, dehydration and heat-drying are employed to dry the product. Dust and tiny particles are also removed during the heat drying

Formation: A body of rock having a consistent set of characteristics (lithology) that distinguish it from adjacent bodies of rock

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APPENDIX V

COMPETENT PERSON'S REPORT

Hauling: Conveying of the product of the mine from the working places to the bottom of the hoisting shaft, or slope

Magmatic: Pertaining to, or derived from, magma

Metamorphic rock: A rock formed by transformation of existing rocks subject to elevated heat and pressure

Mineral Resource: Concentration or occurrence of material of intrinsic economic interest on or inside the Earth's crust in such form, quality and quantity that there are reasonable prospects for eventual economic extraction. The location, quantity, grade, geological characteristics and continuity of a mineral resource are known, estimated or interpreted from specific geological evidence and knowledge

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EXECUTIVE SUMMARY

SRK Consulting (Hong Kong) Limited (SRK) is an associate company of the international group holding company, SRK Global Limited. SRK has been commissioned by Xinjiang Xinxin Mining Industry Co., Ltd. (Xinjiang Xinxin or the Company) to prepare an Independent Technical Report (ITR or the Report) relating to the Karchar Fluorspar Project (the Project), located in Ruoqiang County, Xinjiang Uyghur Autonomous Region (Xinjiang) of People’s Republic of China (PRC). The Project comprises one mining licence (7.763 km²) and two exploration licences (43.53 km²).

The Project is currently owned by Xinjiang Huaou Mining Co., Ltd. (Huaou) and is under construction, with completion estimated at the end of the first half of 2026. The Project is designed to have nameplate mining and processing capacities of 1.2 Mtpa.

SRK understands that its ITR will be included in a Circular in relation to the acquisition of the Project by Xinjiang Xinxin to be lodged with the Hong Kong Stock Exchange (HKEx). This Report has been prepared by a multidisciplinary team in accordance to the VALMIN Code (2015), JORC Code (2012) guidelines and HKEx Listing Rules.

Scope of work

SRK’s scope of work includes a review of the following technical aspects relating to the Project:

geology and Mineral Resource
mining and Ore Reserve
processing
environmental and social aspects
market study
capital and operating costs

A risk assessment has also been included.

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Work program

SRK's work program began in April 2023 and involved reviewing the provided information, conducting site visits in April 2023 and December 2024, estimating Mineral Resources and Ore Reserves in accordance with the JORC Code (2012), and preparing this Report.

Karchar Fluorspar Project

The Project is situated approximately 73 km southeast of Ruoqiang Town in Ruoqiang County, Xinjiang, and about 196 km west of Huatugou Town in Mangya, Qinghai. The area falls under the administrative jurisdiction of Ruoqiang County, Bayingolin Mongol Autonomous Prefecture, Xinjiang. With a new paved road nearing completion, the travel distance from Ruoqiang to the Project area will be reduced to 140 km.

The Project includes one granted mining licence and two granted exploration licences. The mining licence, issued in 2023, covers the well-explored Karchar fluorspar deposit. It spans an area of 7.763 km² and is valid until June 2038, with an approved production capacity of 1.2 Mtpa. The two exploration licences surround and adjoin the mining licence, forming a coherent package along an east-west trend. The exploration licences collectively cover a total area of 43.53 km², with validity until June 2026 and August 2026, respectively.

Since 2008, Huaou has conducted a phased exploration program in the Project area, leading to the declaration of Chinese mineral resources in 2019. In 2023, Huaou received the mining licence and commissioned China ENFI Engineering Corporation (ENFI) to develop preliminary designs for future mining and processing operations (2024 ENFI Preliminary Design).

Construction of the Project began in March 2024. By December 2024, significant progress had been made on the underground mine development, power supply, processing plant facilities, and the tunnel for the pipeline connecting the processing plant and the tailings storage facility (TSF). However, construction on auxiliary facilities, including the water supply station, backfill station, and the TSF, had not yet started.

Huaou plans to complete the power supply system by January 2025, the processing plant by June 2025, and mining development by March 2026. Tenders for the TSF and other facilities will be issued in January 2025, with construction expected to finish by June 2025.

Huaou has set an ambitious construction and commissioning schedule. By June 2025, it plans to begin trial processing at the processing plant using by-product ore from the underground development. The completion of underground mining development is scheduled by the first half of 2026. The Project aims to reach its target production capacity of 1.2 Mtpa by 2027.

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Geology

The Project area is situated within the Altyn Tagh Range, an east–west trending range of mountains and ridges positioned between the Tarim Basin Craton to the north and the Qaidam Basin to the south. This range is influenced by the Karchar-Kosh Fault, which passes through the Project area, trends north-northeast and dips steeply to the north. This structure can be traced for approximately 160 km, and ranges from 300 m to 450 m in width. The Karchar fluorspar deposit is situated adjacent to the Karchar-Kosh Fault, with the subsidiary fault system playing a pivotal role in governing magmatic activity, metamorphic processes, and mineralisation.

The local geological setting is dominated by the Palaeoproterozoic Altyn Group, a highly metamorphosed succession with biotite-plagioclase gneiss as the dominant rock type. The schistosity dips southward at angles ranging from 60° to 70°.

The known fluorspar-bearing mineralisation extends along strike for nearly 6 km, with over a dozen veins identified to date. These veins exhibit branching and pinch-and-swell characteristics, with the thickest veins measuring 23.5 m in width and extending over 900 m down-dip. These veins generally dip northeast to north-northwest. The veins are primarily composed of calcite and fluorspar, with minor quartz and trace amounts of pyrite, chalcopyrite, and galena. The ore exhibits coarse to mega-crystal structures and various textures, including vein, banded, brecciated and massive forms. Wall rock alteration is weak, primarily involving carbonatisation.

Exploration

Huaou engaged the 11th Geological Brigade of Zhejiang Province (11th Brigade) from 2008 to explore the Project area. Initially, the focus was on copper and gold mineralisation. However, in 2009, the discovery of fluorspar mineralisation led to a shift in the exploration focus. In 2011, three drill holes were completed, providing a basic understanding of the mineralisation. From 2016 to 2019, the 11th Brigade conducted a comprehensive exploration program, drilling 176 holes and identifying eight major mineralised zones. In 2024, an infill drilling program (42 drill holes) was completed. The purpose of the recent program is to expand the resource size and upgrade the resource classification.

In addition to the exploration activities within the mining licence area, preliminary exploration was also carried out in the Karchar West exploration licence area. Between 2008 and 2024, 13 trenches with a total volume of 119.29 m³ were excavated and 4 drill holes totalling 1,079.40 m were drilled. The exploration results indicate that mineralisation is present in part of the exploration licence area. However, additional exploration work is required to determine whether a deposit exists.

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In the drilling campaign from 2008 to 2019, 179 drill holes with a total length of 59,506.22 m and 284 trenches with a total volume of 8,067.09 m³ were completed. The data from all drill holes and trenches were used for resource estimation. Core samples collected from 2024 drilling campaign have been sent to the laboratory for assaying. The results are still pending and were not included in the database for resource estimation.

The samples were sent to two laboratories in different years: Henan Rock and Mineral Testing Center (2009) and Xinjiang Non-ferrous Geological Survey Bureau Testing Center (2011~2024). SRK reviewed the 2008–2019 campaign database as well as the 2021 Xinjiang Non-ferrous Geological Survey Bureau 701 Brigade verification report, which had followed the Chinese industry standard. SRK also visited the Xinjiang Non-ferrous Geological Survey Bureau Testing Center on 21 April 2023. SRK implemented a verification program, including ground-truthing of the drill hole collar coordinates, spot-checking of drill cores against core photographs and a review of the procedures for sample collection, preparation, and analysis. As part of the verification program, 221 samples stored at the Xinjiang Non-ferrous Geological Survey Bureau Testing Center were selected and sent to Gouzhou ALS laboratory for re-assay (this represents 3.3% of all 6,782 analysed samples). The results show a good reproducibility with the re-assayed duplicates.

Mineral Resource estimation

The deposit wireframes were created using Datamine Studio RM software based on the drill hole and trench samples. A nominal cut-off of 15% CaF₂ was applied to define the mineralised fluorspar intervals. This cut-off was generally adhered to, with a few exceptions: low-grade intervals shorter than 2 m were included in the domains, and isolated intervals not associated with other drill holes were excluded. Low-grade intervals longer than 2 m were treated as waste layers and excluded from the domains. Eight fluorspar domains (Domain V1 to Domain V8) were modelled based on geological logging and the 15% CaF₂ threshold. For Domain V8, four parallel veins with short extensions were grouped together due to their similar orientation, size and geological characteristics.

A three-dimensional block modelling approach was used to estimate the tonnage and grade. The CaF₂ grade of each block was interpolated using ordinary kriging (OK) for Domains V1–V8, with the Squared Inverse Distance Weighted (IDW) method used for verification.

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The following criteria have been applied in classifying the Mineral Resources of the Project:

Blocks estimated in search passes 1 and 2 were generally classified as Indicated except in areas where the slope of regression fell below 0.3.
Blocks estimated in search pass 3 were classified as Inferred.

The Mineral Resource estimates prepared by SRK as at 31 October 2024 for the Project are tabulated in Table ES-1.

Table ES-1: Mineral Resource Statement of the Karchar Project as at 31 October 2024

Mineral Resource Category	Tonnage (kt)	Grade (%)	CaF₂ (kt)
Indicated	35,480	33.24	11,795
Inferred	26,455	32.56	8,614
Total	61,936	32.95	20,409

Source: SRK

Notes:

Totals may not add up due to rounding.
The Mineral Resources are reported on an in situ basis at a 15% CaF₂ cut-off.
Bulk density: Domain V1: 2.78 t/m³; Domain V2: 2.74 t/m³; Domain V3: 2.67 t/m³; Domain V4: 2.78 t/m³; Domain V5: 2.81 t/m³; Domain V6: 2.79 t/m³; Domain V7: 2.77 t/m³; Domain V8: 2.73 t/m³.
Tonnages are reported in metric units, grades are reported in percentage of CaF₂. Tonnages and grades are rounded appropriately. Rounding, as required by reporting guidelines, may result in apparent summation differences between tonnes, grade and contained mineral content. Where these differences occur, SRK does not consider them to be material.

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Competent Person's Statement

The information in this Report that relates to Mineral Resources is based on information compiled by Dr (Tony) Shuangli Tang who is a Member of the AIG and Member of the AusIMM. Dr Tang is a full-time employee of SRK Consulting (Hong Kong) Limited and has sufficient experience that is relevant to the style of mineralisation, type of deposit under consideration and to the activity which he undertakes to qualify as a Competent Person as defined in the 2012 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code).

Mining

The 2024 ENFI Preliminary Design proposes a mining capacity of 4,000 tpd for the Project, with mining operations planned in two phases:

Phase I involves mining above the 2,900 m asl. The mining sequence will proceed from the bottom to the top, using the 2,900 m asl as the initial mining level.
Phase II involves mining below the 2,900 m asl, starting at the initial mining level of 2,700 m asl. The pilot mining area is between the 2,900 m asl and 2,700 m asl, followed by mining between the 2,700 m asl and 2,450 m asl.

The proposed development system for both phases is the 'Belt Inclined Shaft and Decline Development System.' Two mining methods are suggested for the Project: the Cut and Fill method and the Drift and Fill method. The Drift and Fill method is particularly suitable for areas with relatively weak rock mass or where the orebody thickness exceeds 8 m.

In the mining design, stopes are aligned along the strike with a length of 60 m and a width equal to the orebody thickness. The level spacing is set at 50 m and the sublevel spacing is 12.5 m, with each vertical slice (cut) measuring 4–5 m. No rib pillars are left between adjacent stopes, optimising resource extraction.

Two specific mining techniques are proposed, which will be used concurrently: the roadheader and the drill-and-blast methods. The choice between these techniques depends on the hardness and strength of the rock materials. The roadheader technique is used for relatively soft rock while the drill-and-blast technique is used for harder rock.

The expected life-of-mine (LoM) for the Karchar Fluorspar Mine is 23 years with a peak production rate of 1.2 Mtpa. A mining dilution rate of approximately 5% and a mining loss rate of 5% are applied.

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Ore Reserves estimation

According to the JORC Code, Ore Reserves are the economically mineable part of Measured and/or Indicated Mineral Resources, including losses and dilution that may occur due to mine design and during mining operation. Ore Reserves are typically defined at a reference point, which for this Report is considered to be the mineable materials as received at the run-of-mine (RoM) bin.

As at 31 October 2024, Ore Reserves of 24.8 Mt at an average grade of 28.6% CaF₂ for 7.1 Mt of contained CaF₂ are estimated to reside within the mining licence area, reported in accordance with the JORC Code (2012). These Ore Reserves are classified in the Probable category as there is no Measured Mineral Resource (Table ES-2).

Table ES-2: Ore Reserves Statement for the Karchar Project as at 31 October 2024

Ore Reserve Category	Ore Reserve (kt)	CaF₂ (%)	CaF₂ Contained (kt)
Probable	24,787	28.6	7,094
Total	24,787	28.6	7,094

Source: SRK

Notes:

The Ore Reserves are classified as Probable Ore Reserves as there is no Measured Mineral Resource.
The cut-off grade to distinguish between ore and waste is 16.6% CaF₂.
The Ore Reserves are reported as dry metric tonne.
The Ore Reserves are reported at the reference point where they are received at the RoM bin.
The Ore Reserves are reported inclusive of Mineral Resources.

Competent Person's Statement

The information in this Report which relates to the Ore Reserve is compiled by Falong Hu who is a full-time employee of SRK Consulting (China) Limited. Mr. Hu is a Fellow of AusIMM and has sufficient experience relevant to the kind of project, style of mineralisation, type of deposit under consideration, and the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code 2012).

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Processing

Huaou commissioned several research institutions to conduct extensive mineralogical studies and processing testwork. The Karchar fluorspar deposit is a challenging carbonate-type ore with coarse fluorite grains which are easily liberated through grinding. The optimal grinding fineness is 65% to 70% passing 200 mesh. The ore's Bond ball mill work index is 9.67 kWh/t, indicating medium to slightly soft hardness. Fluorite is the sole target mineral for recovery. A conventional multi-stage flotation process is used, with some middlings reprocessed to discard tailings, achieving good beneficiation results: concentrate CaF₂ grades range from 97.2% to 99.2% and recovery ranges from 80.0% to 85.2%.

Fluorite flotation uses fatty acid collectors, the effectiveness of which is significantly influenced by temperature. Various reagents were tested, with the lowest roughing temperature reaching 12 °C. Lower temperatures require more collectors and result in lower recovery rates. No tests were conducted for cleaner flotation temperatures and further screening for low-temperature collectors is needed. The processing indicators are strongly affected by water quality and the high hardness of water from the Aksu River may reduce recovery rates. Given the laboratory test conditions, the process water recycling tests were not thorough and the impact of return water on processing indicators should be further evaluated during production.

The design capacity of the processing plant is 1.2 Mtpa, or 4,000 tpd. The product is fluorspar concentrate, with an annual output of approximately 300,000 tonnes. The plant operates with an annual availability of 82.2% and 300 effective working days per year. The design targets a concentrate CaF₂ grade of 97%, with a moisture content not exceeding 12%, and a CaF₂ recovery rate of 80%. Compared to processing test results, SRK considers these design targets reasonable. The designed ore feed size for the processing plant is less than 350 mm. The crushing and grinding process is 'two-stage closed-circuit crushing with pre-screening and single-stage closed-circuit grinding,' with a grinding fineness of 70% passing 74 μm. SRK opines that this crushing and grinding process is reasonable, allowing the grinding fineness to fluctuate between 65% and 70% passing 74 μm in actual production.

The designed fluorite flotation process is 'two-stage roughing, three-stage desliming followed by two-stage scavenging, regrinding of rough concentrate, and eight-stage cleaning'. This process is overly complex, and SRK suggests significant simplification by eliminating desliming and regrinding of rough concentrate, recommending a 'two-stage roughing, seven-stage cleaning, with some middlings reprocessed' process. Due to the mine's high-altitude (cold) location, the current fluorite collectors' activity decreases at low temperatures (below 12 °C), requiring increased dosage and resulting in lower recovery rates. The design includes direct steam heating of the slurry, which is technically feasible but costly. Continued testing to develop low-temperature flotation processes or find low-temperature flotation reagents is recommended.

The high calcium and magnesium ion content and hardness of Aksu River water requires treatment using coagulation-mechanical sedimentation before its use in production. The impact of new water and return water quality on processing indicators requires further assessment during production.

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Tailings storage facility

The proposed TSF is located in a valley southeast of the processing plant, a straight-line distance of approximately 3.2 km. Tailings will be transported to the TSF through a 4.4 km pipeline, with 2.74 km running through a tunnel, 0.7 km along the dam crest, and the remaining portion on the surface. There are no villages or protected areas within a 10 km radius of the TSF area.

The processing plant generates 905,300 tpa of tailings, of which 436,300 t is concentrated to a weight concentration of 35% and sent to the proposed TSF. The upstream method is used for tailings dam construction and storage, with a final stacking elevation of 3,144 m and a total dam height of 73 m. The initial dam height is 23 m, constructed as a permeable rockfill dam, and the subsequent dam height is 50 m, using the upstream tailings stacking method. The total storage capacity is 20.624 million m³ and the TSF has a service life of 41 years.

The catchment area of the TSF is approximately 6.85 km². Within the TSF, four framed drainage wells and tunnels are set at different elevations for flood discharge. Around the TSF area, diversion ditches are established to separate clean and dirty water. The base of the TSF is lined with high-density polyethylene (HDPE) geomembrane and bentonite mats for seepage prevention, with a composite geotextile drainage net placed on top for drainage. Downstream, there are seepage recovery facilities. Seepage from the TSF is returned to the facility through these recovery systems, and clarified water is pumped back to the processing plant for recycling via a floating pump station. Stormwater is discharged outside the TSF through internal flood discharge facilities and diversion ditches.

Two monitoring systems (online and manual) are set up to monitor the water level, dry beach length, phreatic line, dam deformation, tailings discharge, and rainfall. Monitoring indicators and regulatory mechanisms are established, and the collected data will be integrated into the entire mining area's network.

SRK considers the construction plan and facility setup for the TSF to be reasonable. The safety analysis result is sound and the identified risk levels are low and generally manageable.

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Environmental

The Project has successfully completed the Environmental Impact Assessment (EIA) for its mining and processing operations, encompassing the mine, processing plant, TSF, and auxiliary facilities. This assessment has received approval from the relevant government authorities. SRK considers that the report preparation aligns with Chinese government requirements for project development. As the project progresses, SRK recommends that Huaou obtain the required environmental permits for commercial production, in accordance with national laws and regulations.

There are no nationally or regionally protected wildlife species within the Project area. Additionally, the area does not host any critically endangered, endangered, or vulnerable species, nor any other important species listed in the China Biodiversity Red List. The Project plans to use water from the Aksu River as the primary water source for the processing plant, with mine drainage serving as a supplementary water source for production. The Project is designed to implement a closed circulation system for production wastewater, ensuring no discharge. During the site inspection, SRK observed that the Project is situated in an uninhabited area, with no residential settlements nearby. Huaou conducted a public participation survey for the EIA. No feedback or comments were received from the public during this process.

Market outlook

An independent market study on the Chinese fluorspar market, including demand, supply and future price trends was conducted. As a leading global producer, China raised fluorspar production from 353 Mt in 2018 to 578 Mt in 2023. The production capacity in 2023 was 7.75 Mt, with significant contributions from regions such as Zhejiang and Inner Mongolia in East and North China. Demand, driven primarily by the fluorochemical industry, rose from 4.69 Mt in 2018 to 6.44 Mt in 2023, with East China being the largest consumer. Forecasts predict both production and demand will grow, with prices for acid-grade fluorspar concentrate expected to increase from RMB/t 3,190 (nominal, tax inclusive) in 2023 to RMB/t 3,899 (nominal, tax inclusive) by 2028, highlighting its strategic industrial importance and supply constraints.

Capital and operating costs

The total capital cost estimated for the development of the Project is RMB1,612.6 million. From 2023 to October 2024, mine design and construction has already incurred costs of RMB126.5 million. A budget of RMB504.4 million is allocated for November to December 2024. The budgeted capital costs are RMB552.4 million (2025), RMB303.7 million (2026) and RMB125.7 million (2027). The budget includes 14% contingency.

By 2027, when the Project reaches its target production capacity of 1.2 Mtpa, the annual operating cash cost is projected to be RMB446.3 million. The operating cash unit cost is estimated at RMB/t 372 ore or RMB/t 1,459 fluorspar concentrate. Breakeven analysis indicates that the net present value (NPV) will reach zero when the fluorspar concentrate sales price reaches RMB/t 1,827. The estimated payback period is 6.7 years.

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COMPETENT PERSON'S REPORT

1 INTRODUCTION

1.1 Background

SRK Consulting (Hong Kong) Limited (SRK) is an associate company of the international group holding company, SRK Global Limited (the SRK Group). SRK has been commissioned by Xinjiang Xinxin Mining Industry Co., Ltd. (Xinjiang Xinxin, hereafter also referred to as the Company) to prepare an Independent Technical Report (ITR or the Report) relating to the Karchar Fluorspar Project (the Project), located in Ruoqiang County, Xinjiang Uyghur Autonomous Region (Xinjiang) of People's Republic of China (PRC). The Project is covered by a single granted mining licence (7.763 km²) and two granted exploration licences (43.53 km²).

The Project is currently owned by Xinjiang Huaou Mining Co., Ltd. (Huaou) and is under construction, with an estimated completion date at the end of the first half of 2026. The Project is designed to have nameplate mining and processing capacities of 1.2 Mtpa.

SRK understands that its ITR will be included in a Circular in relation to the acquisition of the Project by Xinjiang Xinxin to be lodged with the Hong Kong Stock Exchange (HKEx).

1.2 Scope of work

SRK's scope of work for this Report includes a review of the following technical aspects:

geology and Mineral Resource
mining and Ore Reserve
processing
infrastructure
environmental and social aspects
market study
capital and operating costs

A risk assessment has also been included.

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COMPETENT PERSON'S REPORT

1.3 Work program

SRK’s work program commenced in April 2023 and activities completed under this commission included:

review of the supplied information
site visits in April 2023 and December 2024 SRK
estimation of Mineral Resources and Ore Reserves in accordance with the JORC Code (2012)
preparation of this Report

1.4 Reporting standard

Key authors of this Report are Members or Fellows of either the Australasian Institute of Mining and Metallurgy (AusIMM) and/or the Australian Institute of Geoscientists (AIG) or members of other international Recognised Professional Organisations. As such, these authors are bound by international mineral reporting codes, including those adopted for the purpose of preparing this Report, namely the VALMIN and JORC Codes.

For the avoidance of doubt, this Report has been prepared according to:

the 2015 edition of the Australasian Code for Public Reporting of Technical Assessments and Valuations of Mineral Assets (VALMIN Code)
the 2012 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code).

In accordance with the stated reporting guidelines, all geological and other relevant factors defining the Company’s Exploration Results, Exploration Targets, Mineral Resources and Ore Reserves have been considered in sufficient detail to serve as a guide for future exploration and development activities. Table 1 of the JORC Code has been used as a checklist during the preparation of this Report and any comments are provided on an ‘if not, why not’ basis to ensure clarity to an investor on whether aspects of the future development program have been considered as they apply to the JORC Code (2012) Table 1.

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COMPETENT PERSON'S REPORT

The criteria of the JORC Code Table 1 reflect the normal systematic approach to exploration and target evaluation. Relevance and Materiality are overriding principles which determine the information that needs to be publicly reported. This Report has attempted to provide sufficient comment on all matters that might materially affect a reader's understanding or interpretation of the results being reported. The criteria under which each project is being evaluated are consistent with the current understanding of the geological controls on the known mineralisation, but as more knowledge is gained, these criteria could change and be improved over time.

As per the VALMIN Code (2015), a draft of the Report was supplied to Xinjiang Xinxin to check for material error, factual accuracy and omissions before the final version of the Report was issued.

1.5 Effective Date and Report Date

The Effective Date of this Report is 31 October 2024.

The Fluorspar Mineral Resource and Ore Reserve statements set out in this Report are reported as at 31 October 2024.

The Report Date is 24 March 2025.

As of the Report Date of this Report, there have been no material changes to the status of the Project since the Effective Date. This includes no substantial changes to the stated Mineral Resources and Ore Reserves at the Project as outlined in this Report.

1.6 Unit, projection and currency

Throughout this Report, SRK has used the International System of Units. All units used in this Report are defined under Useful Definitions.

The projection of all coordinates relies on the XIAN 80 datum.

All monetary values used in this Report are expressed in 2024 terms in Chinese Renminbi (RMB).

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1.7 Project team

This Report has been prepared by a multidisciplinary team, comprising consultants and associates from various SRK offices. The qualifications, experience and roles of the consultants and associates who carried out the work in this Report are listed in Table 1.1. They have extensive experience in the mining industry and are members in good standing of appropriate professional institutions.

Table 1.1: Details of qualifications and experience of the project team

Specialist	Position/Company	Responsibility	Length and type of experience	Site inspection	Professional designation
(Gavin) Heung Ngai Chan	Principal Consultant/SRK Hong Kong	Project Management, project economics, report compilation. Competent Person taking the overall responsibility of the Report.	20 years – 17 years in consulting specialising in valuation, financial modelling, project evaluation, geological modelling and resource estimation; 3 years in academia	17-21 April 2023	BSc, MPhil, PhD (Earth Sciences), GradDip (AppFin), GradCert (Geostats), FAIG
(Tony) Shuangli Tang	Senior Consultant/SRK Hong Kong	Geology, Exploration, Sampling and Assays and Mineral Resource Estimation	10 years – 2 years in exploration geology and valuation; 8 years in consulting specialising in geological modelling and resource estimation	19-21 December 2024	BSc, MSc, PhD, MAusIMM, MAIG
Falong Hu	Principal Consultant/SRK China	Mining Assessment and Ore Reserve Estimation	17 years – 3 years in mining engineering; 14 years in consulting specialising in mine planning, technical studies and Ore Reserve estimation	17-21 April 2023	MBA, BEng, FAusIMM
Lanliang Niu	Principal Consultant/SRK China	Mineral processing and processing plant	38 years – 20 years in academic research and gold and rare earth mines processing; and 18 years in consulting specialising in mineral processing	17-21 April 2023	BEng, MAusIMM

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COMPETENT PERSON'S REPORT

Specialist	Position/Company	Responsibility	Length and type of experience	Site inspection	Professional designation
Nan Xue	Principal Consultant/SRK China	Environmental licencing and Social	18 years – 18 years in consulting specialising in environmental impact assessment and environmental technical studies	17-21 April 2023	BSc, MSc, MBA, MAusIMM
Chunfu Yang	Associate Principal Consultant/SRK Hong Kong	Tailings storage facility	49 years – 5 years as a lecturer in university, 31 years in engineering and technical management in mine tailings, 13 years in consulting specialising in tailings engineering	No site visit	BEng, RCE, CSPM
Cael Gniel	Senior Consultant/SRK Australasia	Peer review – Geology and Mineral Resource	13 years – 6 years in exploration, mine and resource geology, 7 years as a consultant resource geologist	No site visit	BSc (Hons), MAIG, RPGeo (MRE)
Jeames McKibben	Principal Consultant/SRK Australasia	Overall Report	30 years in consulting specialising in valuation and corporate advisory; 2 years as an analyst; 8 years in exploration and project management roles	No site visit	BSc(Hons), MBA, MRICS, FAusIMM(CP), MAIG

Source: SRK

Key authors experience

Dr Gavin Chan has over 20 years of academic and commercial experience in geosciences and has worked on a wide range of commodities, including precious metals, base metals, bulk commodities, and industrial minerals, as well as construction materials in Australia, Asia, Africa, Europe, and the Caribbean. Gavin has extensive experience in technical due diligence, technical economic analysis, valuation, fatal flaw and project analysis, as well as public reporting. He has prepared public reports for stock exchanges in Hong Kong, Indonesia, Singapore, and Australia. His experience is considered relevant to the style of mineralisation and type of deposit under consideration.

APPENDIX V

COMPETENT PERSON'S REPORT

Dr Tony Tang is an experienced geologist with over 10 years of experience in the fields of exploration, geological modeling, resource estimation, project assessment, and valuation. He has worked across a diverse range of commodities, including gold, copper, graphite, fluorspar, tin, tungsten, bauxite, construction aggregates, coal, and petroleum. His expertise spans projects located in Asia, Africa, and South America. Tony is proficient in several 3D modeling software packages, including Leapfrog Edge and Datamine Studio RM, with capabilities in 3D geological interpretation, geostatistical analysis, and geological modeling for resource estimation. Tony is also a registered mineral assets and mining rights appraiser in China and has extensive experience in valuation review. His experience is considered relevant to the style of mineralization and type of deposit under consideration.

Mr Falong Hu has worked as a trainee, site engineer, and mine planner on several mine sites in two different international mining companies, with over 17 years of experience. He is familiar with the operation and design of underground and open-pit mines, scheduling and cost estimates, long-hole blasting and production operation, rock mechanics, ventilation, and back-fill. As a consulting engineer, he accumulated extensive experience in nearly 100 projects, including due diligence, technical review and/or audit, mine project evaluation and valuation, scoping/pre-feasibility/feasibility studies, operation optimization, and competent person reporting for the public financial market. His experience relates to minerals including gold, fluorspar, silver, lead, zinc, copper, iron, bauxite, laterite-nickel, sylvine, phosphate, and graphite, as well as quartzite, marble, bentonite, coal (open cast), construction aggregate, and so on, in China and other parts of Asia, America, Africa, and Oceania. He is a modeler in both technical and economic aspects and is also proficient in digital modeling using Geovia Suites, Datamine, and Deswik Suites. His experience is considered relevant to the style of mineralisation and type of deposit under consideration.

1.8 Statement of SRK independence

Neither SRK nor any of the project team members of this Report have any material present or contingent interest in the outcome of this Report, nor do they have any pecuniary or other interest that could be reasonably regarded as being capable of affecting their independence or that of SRK.

SRK has no prior association with Xinjiang Xinxin regarding the mineral assets that are the subject of this Report. SRK has no beneficial interest in the outcome of the technical assessment being capable of affecting its independence.

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1.9 Legal matters

SRK has not been engaged to comment on any legal matters.

SRK is not qualified to make legal representations as to the ownership and legal standing of the mineral tenements that are the subject of this Report. SRK has not attempted to confirm the legal status of the mineral titles, joint venture (JV) agreements, local heritage or potential environmental or land access restrictions. SRK understands such matters are discussed elsewhere within Xinjiang Xinxin’s Circular.

SRK has been provided with legal documentation obtained by Kanda Law Firm. The document, ‘Legal Due Diligence Report on Xinjiang Huaou Mining Co., Ltd.’, dated 6 February 2025, provides commentary on Huaou’s legal rights to the Project.

SRK’s understanding of the current tenure situation is set out in Section 3.2 of this Report.

1.10 Warranties

Xinjiang Xinxin has represented in writing to SRK that full disclosure has been made of all material information and that, to the best of its knowledge and understanding, such information is complete, accurate and true.

1.11 Indemnities

As recommended by the VALMIN Code (2015), Xinjiang Xinxin has provided SRK with an indemnity under which SRK is to be compensated for any liability and/or any additional work or expenditure resulting from any additional work required:

which results from SRK’s reliance on information provided by Xinjiang Xinxin or to Xinjiang Xinxin not providing material information; or
which relates to any consequential extension workload through queries, questions or public hearings arising from this Report.

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1.12 Reliance on other experts

SRK has not performed an independent verification of the licences and land titles nor the legality of any underlying agreements that may exist concerning the permits, commercial agreements with third parties or sales contracts and instead has relied on information as provided to SRK by Xinjiang Xinxin’s independent legal advisors.

The commodity price and inflation forecasts used in this Report for economic evaluation purpose is provided by Shanghai Metals Market (SMM), an independent market research company.

1.13 Source of information

This Report is based on information made available to SRK by Xinjiang Xinxin, and on information collected during SRK’s site visits.

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1.14 Consents

SRK consents to this Report being included, in full, in Xinjiang Xinxin’s Circular in the form and context in which it is provided and not for any other purpose. SRK provides this consent on the basis that the Technical Assessment expressed in the Executive Summary and in the individual sections of this Report is considered with, and not independently of, the information set out in the complete Report.

Practitioner Consent

The Competent Person who has overall responsibility for the preparation of this Report is Dr (Gavin) Heung Ngai Chan. Dr Chan is a Fellow of the Australasian Institute of Geoscientists (AIG) in good standing and a full-time employee of SRK Consulting (Hong Kong) Limited. Dr Chan obtained his Bachelor’s and Master’s degrees in Earth Sciences from the University of Hong Kong in 2000 and 2004, respectively, and his Doctoral degree in Earth Sciences from Oxford University in 2008. Dr Chan has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined under the 2012 edition of the JORC Code. Dr Chan consents to the inclusion in this Report of the Mineral Resources and Ore Reserves in the form and context in which they appear.

The Competent Person who has overall responsibility for Mineral Resource is Dr (Tony) Shuangli Tang. Dr Tang is a Member of the AIG in good standing and a full-time employee of SRK Consulting (Hong Kong) Limited. Dr Tang obtained his Bachelor’s and Master’s degrees in Geology from China University of Geosciences in 2008 and 2011, respectively and his Doctoral degree in Earth Sciences from the University of Hong Kong in 2015. Dr Tang has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined under the 2012 edition of the JORC Code. Dr Tang consents to the inclusion in the Report of the Mineral Resources in the form and context in which they appear.

The Competent Person who has overall responsibility for Ore Reserves is Mr Falong Hu. Mr Hu is a full-time employee of SRK Consulting (China) Limited and a Fellow of the AusIMM in good standing. Mr Hu obtained his Bachelor’s degree in Mining Engineering from Central South University in 2009 and a Master’s degree in Business Administration from China University of Geosciences in 2014. Mr Hu has sufficient experience relevant to the style of mineralisation, type of deposit under consideration, and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 edition of the JORC Code. Mr Hu consents to the inclusion in the Report of Ore Reserves in the form and context in which they appear.

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HKEx requirements

Dr (Gavin) Heung Ngai Chan meets the requirements of the Competent Person, as set out in Chapter 18 of the HKEx Listing Rules. Dr Chan is a Fellow of good standing of AIG; has more than five years' experience relevant to the style of mineralisation and type of deposit under consideration; is independent of the issuer applying all the tests in sections 18.21 and 18.22 of the Listing Rules; does not have any economic or beneficial interest (present or contingent) in any of the reported assets; has not received a fee dependent on the findings of this ITR; is not officer, employee of a proposed officer for the issuer or any group, holding or associated company of the issuer; and takes overall responsibility for the ITR.

1.15 Limitations

SRK's opinion contained herein is based on information provided to SRK by Xinjiang Xinxin throughout the course of SRK's investigations, which in turn reflects various technical and economic conditions at the time of writing. SRK has taken the technical information as provided by Xinjiang Xinxin in good faith.

This Report includes technical information, which requires subsequent calculations to derive subtotals, totals, averages and weighted averages. Where such calculations involve a degree of rounding, SRK does not consider such rounding to be material.

The input, handling, computation, and output of the geological data and Mineral Resource and Ore Reserve information has been conducted professionally and accurately and to the high standards commonly expected within the geoscience profession.

In conducting this assessment, SRK has assessed and addressed all activities and technical matters that might reasonably be considered to be relevant and material to such an assessment conducted to internationally accepted standards. Based on observations, interviews with appropriate staff and a review of available documentation, SRK is, after reasonable enquiry, satisfied that there are no outstanding relevant material issues other than those indicated in this Report. However, it is impossible to dismiss absolutely the possibility that parts of the site or adjacent properties may give rise to additional issues.

The conclusions presented in this Report are professional opinions based solely on SRK's interpretations of the documentation received, interviews and conversations with personnel knowledgeable about the site, and other available information, as referenced in this Report. These conclusions are intended exclusively for the purposes stated herein.

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For these reasons, prospective readers should make their own assumptions and assessments of the subject matter of this Report. Opinions presented in this Report apply to the site's conditions and features as they existed at the time of SRK's investigations, and those reasonably foreseeable. These opinions cannot necessarily apply to conditions and features that may arise after the effective date of this Report, about which SRK had no prior knowledge, nor had the opportunity to evaluate. Certain amounts and percentage figures included in this Report have been subject to rounding adjustments.

1.16 Corporate capability

SRK is an independent, international group providing specialised consultancy services. Among SRK's clients are many of the world's mining companies, exploration companies, financial institutions, engineering, procurement and construction management (EPCM) and construction firms, and government bodies.

Formed in Johannesburg in 1974, the SRK Group now employs some 1,700 staff internationally in over 40 permanent offices in 20 countries on 6 continents. A broad range of internationally recognised associate consultants complements the core staff.

The SRK Group's independence is ensured by the fact that it is strictly a consultancy organisation, with ownership by staff. SRK does not hold equity in any projects or companies. This permits SRK's consultants to provide clients with conflict-free and objective support on crucial issues.

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2 FLUORSPAR AND ITS USES

Fluorspar, also known as fluorite, is a mineral composed of calcium fluoride (CaF₂) and is an important industrial mineral with a variety of applications. One of its primary uses is in the production of hydrofluoric acid (HF), which is derived from acid-grade fluorspar containing over 97% CaF₂. Hydrofluoric acid is a precursor to many fluorine-containing compounds, including refrigerants, pharmaceuticals and fluoropolymers, making fluorspar a critical component in these industries.

Fluorspar is also essential in the production of aluminium fluoride (AlF₃), which is used in the aluminium smelting process. Aluminium fluoride acts as a flux to lower the melting point of electrolytes, facilitating the production of aluminium.

In the metallurgical sector, fluorspar is used as a flux in steelmaking. Metallurgical-grade fluorspar, which contains between 60% and 85% CaF₂, helps remove impurities such as sulfur and phosphorus from the steel and improves the fluidity of slag. This improves the quality of the steel and the efficiency of the production process.

In cement manufacturing, fluorspar serves as a mineraliser. It helps lower the clinking temperature, improves clinker quality, enhances kiln efficiency, and can reduce emissions, leading to energy savings and improved product quality.

Additionally, ceramic-grade fluorspar is utilised in the manufacture of ceramics, glass, and enamel. It lowers the melting point of raw materials, thereby improving the efficiency and energy consumption of the production process.

Beyond these uses, fluorspar is also involved in the production of synthetic cryolite (Na₃AlF₆), which is used in aluminium smelting, and in the production of welding rods. Its diverse applications make fluorspar a critical mineral in many industrial processes, with its demand closely tied to the production of fluorine-based chemicals and materials. Optical-grade fluorspar is a high-purity form used in the manufacture of lenses and optical components. Its low dispersion and high transparency to ultraviolet light make it ideal for applications like high-quality lenses and telescopes where precise light transmission is crucial.

The Project is currently being designed to produce acid-grade fluorspar concentrate at 97% CaF₂, primarily targeting the hydrofluoric acid and aluminium fluoride markets, within the PRC.

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3 PROJECT OVERVIEW

3.1 Location and access

The Karchar Fluorspar Project is located approximately 73 km southeast of Ruoqiang Town, a town in Ruoqiang County, Bayingolin Mongol Autonomous Prefecture in southeastern Xinjiang, China. It is also approximately 196 km west of Huatugou Town, a town in Mangya City, Qinghai, China.

Administratively, the Project falls under the jurisdiction of Ruoqiang County, Bayingolin Mongol Autonomous Prefecture, Xinjiang. The travel distance from the project area to Mangya City is 261 km. As at December 2024, a new road connecting Ruoqiang County to the Project area was nearing completion, reducing the travel distance to 140 km. Of this new paved road, 120 km has been funded by the PRC government, and 20 km has been funded by Huaou (Figure 3.1).

Figure 3.1: Project location

Sources: SRK, ESRI map

The Xinjiang Korla-Qinghai Golmud Railway is an important link between the Qinghai-Tibet Railway and the Southern Xinjiang Railway. It stretches over 1,214.6 km and passes through Ruoqiang Town, which has a key freight loading and unloading point.

Upon the commencement of fluorspar production from the Project, it is expected that fluorspar concentrate products will be loaded and transported from Ruoqiang Town to customers in various parts of China.

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3.2 Licences

The Project encompasses a single granted mining licence (7.763 km²) which is surrounded by and adjacent to two granted exploration licences (43.53 km²). The Karchar Southwest exploration licence surrounds the mining licence, with its eastern boundary, adjoining the Karchar West exploration licence (Note) (Figure 3.2).

Detailed information pertaining to the mining and exploration licences is shown in Table 3.1 and Table 3.2.

Table 3.1: Mining licence information

Mining licence no.	C6500002023066210155378
Mining licence holder	Xinjiang Huaou Mining Co., Ltd.
Project name	Xinjiang Ruoqiang County Karchar Fluorspar Mine
Commodity type	Fluorspar
Mining Method	Underground mining
Mining Capacity	1,200,000 tpa
Area	7.763 km²
Elevation range	From 3,203 to 2,354 m asl
Validity	From 27 June 2023 to 27 June 2038

Source: Huaou

Note: According to Huaou, Xinxin and its PRC legal advisor, Huaou was not subject to any legal claims or proceedings that may have an influence on its rights to explore or mine and Huaou was not subject to any claims that may exist over the land on which exploration or mining activity would be carried out, including any ancestral or native claims.

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Table 3.2: Exploration licences information

Exploration licence no.	T6500002008106010017299
Exploration licence holder	Xinjiang Huaou Mining Co., Ltd.
Project name	Xinjiang Ruoqiang County Karchar Southwest Fluorspar Mine Exploration
Area¹	17.63 km²
Validity	From 15 June 2021 to 15 June 2026
Exploration licence no.	T6500002008073010011214
Exploration licence holder	Xinjiang Huaou Mining Co., Ltd.
Project name	Xinjiang Ruoqiang County Karchar West Copper-Gold Mine Exploration
Area	25.90 km²
Validity	From 9 August 2021 to 9 August 2026
Source: Huaou
Note: This exploration licence partly overlaps with the mining licence: C6500002023066210155378.

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The tenements boundaries are shown in Figure 3.2.

Figure 3.2: Licences

Sources: SRK, ESRI map.

3.3 Climate, local resources and infrastructure

The Project area is situated in the northern Altyn Mountains, a mountain range in northwestern China that separates the Tarim Basin from the Tibetan Plateau. The Project is characterised by undulating terrain, with elevations ranging from a high of 3,382 m to a low of 2,886 m.

This region experiences a continental Alpine cold and arid climate, with hot, dry summers and very cold winters. The average annual temperature is 1.5 °C. From November to March (winter), temperatures consistently remain below 0 °C. The highest and lowest recorded temperatures are 28.7 °C and -29.5 °C, respectively. During July and August (summer), daytime temperatures rise above 15 °C, while nighttime temperatures drop below 4 °C.

The area is a subalpine desert with sparse vegetation. A limited variety of herbaceous and drought-tolerant plants, such as red willow, Haloxylon, aspen, Achnatherum splendens and Pipa grass, can be found along river valleys, large gullies, and perennial water systems. A few wild animals, including goats, hares, wild donkeys, gazelles and jackals, can be observed in the vicinity.

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The surrounding area to the project area is largely uninhabited, to sparsely populated, and as a result the local economy is undeveloped. In the summer, nearby nomadic residents engage in basic pastoralism and mining. There are no crops nearby, and the main animals are gazelles and wolves. The primary mineral deposits include coal, jade and fluorspar.

The primary power supply for the Project is provided by the Baiganhu 220 kV substation, located about 18 km to the northwest of the mine site. This substation is equipped with two main transformers, each with a capacity of 180 MVA. Huaou has entered into a power supply agreement with the State Grid Corporation of China to build a power line and a shared substation. This infrastructure will extend from the Baiganhu 220 kV substation to provide electricity to the Project and two other nearby mines. The Project is scheduled to be connected to the electrical grid in the first quarter of 2025.

The Project's water supply is derived from the Aksu River, which is a tributary of the upper reaches of the Ruoqiang River. This water originates from glacial meltwater in the southern mountains and flows continuously year-round. The water intake point is located approximately 10 km southeast of the mining area, at the confluence with a left-bank tributary of the Aksu River. The water source is stable, with minimal variation in surface runoff throughout the year, and the average runoff exceeds 6 m³/s.

3.4 Current project status

3.4.1 Ownership

In 2008, Huaou was granted an exploration licence to explore for porphyry hosted copper and gold mineralisation in the surrounding area to the current project. Initial exploration was completed between 2008 and 2011. In 2014, Huaou was granted a second exploration licence on the east of the initial licence for copper and gold mineralisation exploration.

In 2015, the focus shifted towards the exploration and development of fluorspar and a comprehensive program was conducted in the first exploration licence between 2016 and 2018. The initial exploration licence was renewed in 2019, covering an area of 23.52 km² and was valid until June 2021. In 2021, the exploration licence was again renewed, this time covering an area of 17.63 km² and remains valid until 2026.

The second exploration licence was renewed in 2019, covering an area of 34.56 km² and was valid until July 2021. In 2021, the exploration licence was again renewed, this time covering an area of 25.9 km² and remains valid until 2026.

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Having located potential viable deposits of fluorspar, Huaou was granted a mining licence in June 2023. The mining licence covers 7.763 km² within the broader exploration licence area and is valid for 15 years until June 2038. The approved production capacity is 1.2 Mtpa with mining envisaged to occur at elevations ranging from 3,203 m asl to 2,354 m asl via underground mining techniques.

3.4.2 Mine construction status

In June 2023, Huaou commissioned China ENFI Engineering Corporation (China ENFI) to develop preliminary designs ('2024 ENFI Preliminary Design') to support future mining and processing operations which included mining, processing, the tailings storage facility (TSF), auxiliary facilities and other infrastructure.

The construction of the Project commenced in March 2024. By December 2024, the underground mine development, which was under construction, included shafts, declines, underground development levels, ventilation shafts, tailings tunnels and drainage tunnels. The processing plant facilities being built comprised the main plant building, secondary and tertiary crushing workshops, a crushed ore silo, a concentrate stockyard, a comprehensive maintenance workshop, an integrated warehouse, a laboratory, a sulfuric acid silo, a high-elevation water tank, and reagent storage areas. The tunnel connecting the processing plant and the TSF is being constructed. Additionally, substations and living camps were under construction. However, construction had not yet begun on ancillary infrastructure such as the TSF, water supply station, and backfill station.

Figure 3.3: Aerial view of the Project site (looking east)

Source: SRK site visit, December 2024

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Huaou plans to complete the substation by the end of January 2025. The processing plant facilities are expected to be finished by the end of June 2025, and mining development is scheduled for completion by the end of March 2026. Tenders for the TSF, water supply station, and backfill station will be issued during January 2025, with construction slated for completion by the end of June 2025.

Huaou plans to complete the construction of the processing plant and auxiliary facilities by late June 2025. This will be followed by trial processing using by-product ore extracted during the underground mining construction phase. The development of the underground mining operations is scheduled to be completed by the first quarter of 2026.

4 GEOLOGY

4.1 Regional geology

The Project area is situated within the Altyn Tagh Range, positioned between the Tarim Basin Craton to the north and the Qaidam Basin to the south.

Bedrock units of the region belong to the Altyn Group, a metamorphic sequence of predominantly mafic and felsic orthogneisses and metasedimentary rocks stretching over 300 km in an east- northeast direction and is 30–50 km wide (Figure 4.1). These rocks are of Archaean to Palaeoproterozoic age and have undergone significant deformation and metamorphism, resulting in the formation of gneiss, marble, and both clastic and carbonate rocks, which reflect extensive collisional orogenic events.

Major faults in the area include the Karchar-Kosh (F1), Ghejik(F2), Hongqi Daban-Pasha Lik shear zones (F3), and southern Altyn Fault, with many secondary faults primarily trending from northeast to east-west (Figure 4.2) (Wan et a., 2013). The Karchar-Kosh Fault (F1) is of particular interest to the mineralisation at the mine site, as it passes through the Project area. This fault zone trends north-northeast and dips steeply to the north. This regional-scale structure can be traced for approximately 160 km, with a width ranging from 300 m to 450 m.

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Figure 4.1: Project major tectonic terrains

Source: Wang, C., Liu, L., Yang, W. Q., Zhu, X. H., Cao, Y. T., Kang, L., & He, S. P. (2013). Provenance and ages of the Altyn Complex in Altyn Tagh: Implications for the early Neoproterozoic evolution of northwestern China. Precambrian Research, 230, 193-208.

Figure 4.2: Regional structural geology map

Source: The 11th Geological Brigade of Zhejiang Province

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4.2 Local geology and mineralisation

The local geology is dominated by the Palaeoproterozoic Altyn Group, with biotite-plagioclase gneiss as the dominant rock type. The schistosity dips southward at angles ranging from 60° to 70°.

The known fluorspar deposit is situated adjacent to the Karchar-Kosh Fault, with the subsidiary fault system playing a pivotal role in governing magmatic activity, metamorphic processes, and mineralisation. Pre-mineralisation faults mainly trend northeast, while syn-mineralisation faults trend near east-west and are irregularly fan-shaped, hosting numerous fluorspar-calcite veins. The area also contains alkali-feldspar granite and felsic pegmatite dykes, with fluorspar mineralisation closely related to the granite (Figure 4.3).

The known mineralisation extends over a strike length of nearly 6,000 m, with over a dozen veins identified to date. These veins exhibit branching and pinch-and-swell characteristics, with the thickest veins measuring 23.5 m wide and extending over 900 m down-dip. These veins generally dip northeast to north-northwest.

The veins are primarily composed of calcite and fluorspar, with minor quartz and trace amounts of pyrite, chalcopyrite and galena. Fluorspar occurs in two mineralisation phases: an early phase of white and light green, followed by a later phase of light purple, purple, and dark purple. Purple fluorspar veins often intersect or develop alongside white fluorspar veins. The ore exhibits coarse to mega-crystal structures and various textures, including vein, banded, brecciated and massive forms. Wall rock alteration is weak, primarily involving carbonatisation.

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Figure 4.3: Local geology map

Source: Gao, Yongbao, Long Zhang, Leon Bagas, Keiko Hattori, Ming Liu, Huanhuan Wu, Yuanwei Wang et al. 'Mineralogy and 40Ar-39Ar dating of the recently discovered tainiolite occurrences in the Kaerqiaer fluorite Belt, western Altyn Tagh Terrane.' Ore Geology Reviews (2024): 105990.

5 EXPLORATION

Since 2008, Huaou has engaged the 11th Geological Brigade of Zhejiang Province (11th Brigade) to explore the Project area. Initially, the focus was on porphyry related copper and gold mineralisation. However, in 2009, exploration focus shifted to definition of fluorite-bearing veins after the discovery of fluorspar mineralisation in the region.

In 2011, three drill holes (for $717.30\mathrm{m}$ ) were completed to test several previously defined mineralised veins evident at surface, thus providing a basic understanding of the mineralisation. From 2016 to 2019, the 11th Brigade conducted a comprehensive exploration program, drilling 176 holes $(58,788.92\mathrm{m})$ and identifying eight major mineralised zones to a depth of approximately $700\mathrm{m}$ .

In 2024, an infill drilling program of 42 drill holes (for $21,135.95\mathrm{m}$ ) was completed. The purpose of this most recent program was to expand the resource size and improve geological confidence in the known mineralisation and thus the resource classification.

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5.1 Drilling campaigns

5.1.1 Drilling campaign 2008–2011

In 2008, during the reconnaissance program, the 11th Brigade conducted geological prospecting and surface sampling, collecting 961 samples, which were subsequently analysed for $\mathrm{CaF}_2$.

In 2009, 1:10,000 scale geological mapping of the Project area was performed, along with four geological and five surface sampling transects, leading to the discovery of vein-hosted fluorspar mineralisation. To further define the fluorspar mineralisation trend, seven trenches totalling $525\mathrm{m}^3$ were excavated and subsequently sampled.

In 2011, nine transects were conducted and excavated 65 trenches with a total volume of $678.78\mathrm{m}^3$. Additionally, three drill holes were completed, totalling $717.30\mathrm{m}$ in length. These activities provided a preliminary understanding of the mineralisation. The drilling used NQ diamond drill cores, primarily completed by models XY-4 and XY-44 rigs, with some use of models HXY-44 and EGR-600 rigs, recovering cores with a diameter of $49\mathrm{mm}$.

5.1.2 Drilling campaign 2016–2019

In 2016, one drill hole was completed, reaching a depth of $452.02\mathrm{m}$. Two trenches were excavated, with a total volume of $10.56\mathrm{m}^3$. Channel samples were collected from these previously excavated trenches to verify the quality of the earlier sampling and assay results.

Between 2017 and 2019, three phases of drilling were conducted. In 2017, 45 drill holes were completed, covering a total of $13,288.27\mathrm{m}$ and 135 trenches were excavated with a combined volume of $5,490.10\mathrm{m}^3$. This phase also included 1:2000 scale topographic and geological mapping, along with the exploration of three geological sections. In 2018, the next phase involved drilling 78 drill holes, totalling $23,593.46\mathrm{m}$, and excavating 57 trenches with a total earth volume of $961.61\mathrm{m}^3$. The final phase in 2019 included drilling 51 drill holes with a cumulative length of $21,455.17\mathrm{m}$ and excavating 19 trenches with a total volume of $401.04\mathrm{m}^3$. Upon completing these phases, the nominal drill spacing was $200 - 100\mathrm{m}$ by $100 - 50\mathrm{m}$. The drilling used NQ diamond drilling rigs with a core diameter of $49\mathrm{mm}$, primarily using models XY-4 and XY-44 rigs, with some use of models HXY-44 and EGR-600 rigs. These efforts culminated in the estimation of mineral resources by the 11th Brigade, completed in accordance with Chinese standards.

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5.1.3 Drilling campaign 2024

From April to December 2024, an infill drilling program was carried out, comprising 42 drill holes with a total length of 21,135.95 m. The drill spacing adhered to the previous drill spacing of 200–100 m by 100–50 m. The drilling used diamond drilling rigs, primarily models XY-4 and XY-44, with occasional use of models HXY-44 and EGR-600 rigs. Drill holes were initially started with HQ size, providing a core diameter of 64 mm, and were reduced to NQ size, with a core diameter of 49 mm, at greater depths.

5.2 Drilling database

Between 2008 and 2019, the drilling campaigns completed 179 drill holes, totalling 59,506.22 m and excavated 284 trenches with a combined volume of 8,067.09 m³. SRK has used all these drill holes and trenches for Mineral Resource estimation, as detailed in Table 5.1. However, core samples from the 2024 drilling campaign were sent to the laboratory for assay and the results are pending. These samples have therefore not been included in SRK’s database for estimation of Mineral Resources.

Table 5.1: Karchar fluorspar drill database statistics

	Drill hole (counts)	Total length (m)	Trenches (counts)	Total volume (m³)
2011	3	717.3	72	1,203.78
2016	1	452.02	2	10.56
2017	45	13,288.27	134	5,490.1
2018	79	23,593.46	57	961.61
2019	51	21,455.17	19	401.04
Total	179	59,506.22	284	8,067.09

Source: The 11th Brigade

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Figure 5.1 presents a plan view that shows the collar positions of all drill holes and the boundaries of the mining and exploration licences.

Figure 5.1: Plan view of drill holes completed from 2008 to 2024

Source: SRK

5.2.1 Exploration in Karchar West

In addition to the exploration activities within the mining licence area, preliminary exploration was also carried out in the Karchar West exploration licence area (Figure 3.2). Between 2008 and 2019, 13 trenches with a total volume of $119.29\mathrm{m}^3$ were excavated and one drill hole reaching $390.4\mathrm{m}$ was drilled. In 2024, three drill holes were completed, totalling $770.40\mathrm{m}$ (Table 5.2). The exploration results indicate that fluorspar mineralisation is present in northern part of the exploration licence area. However, additional exploration work is required to determine whether a deposit exists.

Table 5.2: Karchar West drill database statistics

	Drill hole (counts)	Total length (m)	Trenches (counts)	Total volume (m3)
2008–2019	1	309.4	13	119.29
2024	3	770.4	0	0
Total	4	1,079.4	13	119.29

Source: Huaou

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6 SAMPLING AND ASSAYS

6.1 Sampling

6.1.1 Sampling techniques

All diamond drill core was logged for lithology, minerals, texture, structure and rock quality designation (RQD). Core was cut in half using a core saw. One half of this core sample was then collected taken for assay, while the other half was preserved in the core box for future reference. Trench samples were collected by cutting a channel with chisel at the bottom of the trench, with each channel sample measuring 10 cm by 3 cm in dimension.

The samples were sent to two laboratories over the years: the Henan Rock and Mineral Testing Center in 2009 and Xinjiang Non-ferrous Geological Survey Bureau Testing Center from 2011 to 2024. Both laboratories are accredited by the China Inspection Body and Laboratory Mandatory Approval (CMA).

6.1.2 Sample preparation

The drill core samples were dried and crushed to a size of 0.85 mm (20 mesh), then mixed thoroughly and reduced in size using a riffle splitter. A 150 g portion was taken and placed in an agate jar with agate balls, then ground using a planetary ball mill to a final powder size of 0.074 mm (200 mesh). The ground powder was then dried at 110 °C, prepared for testing, and carefully packaged, numbered, weighed, checked, and labelled.

6.1.3 Assay methodology

The calcium fluoride (CaF₂) content of each sample was assayed using the volumetric titration method. Under this method, a 0.3 g sample is weighed and placed in a beaker, then diluted using acetic acid (CH3COOH). The solution is heated in a boiling water bath at 100 °C to dissolve calcium carbonate (CaCO₃) and calcium sulfate (CaSO₄). The insoluble residue is then filtered and soaked in hydrochloric acid (HCl) and boric acid (BH₃O₃) in a boiling water bath for 30 minutes to dissolve the calcium fluoride. The calcium fluoride solution is then filtered and prepared for titration. Sucrose solution, triethanolamine (N(CH₂CH₂OH)₃) and potassium hydroxide (KOH) solution and a few drops of calcein-phenolphthalein complex indicator are added into the solution. As the ethylene diaminetetraacetic acid (EDTA) standard solution is titrated into the mixture, the green fluorescence gradually disappears against a black background.

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6.2 Quality assurance and quality control

The quality assurance and quality control (QA/QC) protocols adopted as part of the assaying process included the insertion of laboratory pulp duplicates and inter-laboratory checks. No certified reference material (CRM) or blank samples were inserted by the project proponents to assess laboratory contamination. SRK received the QA/QC results for the years 2011–2019; however, the QA/QC data for 2009 are not available. The QA/QC results for 2024 results are pending.

6.2.1 Duplicates

A total of 528 laboratory pulp duplicates were randomly selected as an internal quality control to test the reproducibility of the laboratory analysis, which represents 7.8% of all 6,782 assayed samples. For the inter-laboratory check, 323 samples were sent to Xinjiang Geological and Mineral Exploration Bureau Experimental Testing Center, which is accredited by CMA. These samples account for 4.8% of all 6,782 assayed samples. SRK considers the duplicates ratios to be reasonable.

Table 6.1 presents the results from these duplicate samples. The duplicates returned good reproducibility compared with the original results.

Table 6.1: Laboratory duplicates and inter-laboratory checks statistics (2011–2019)

Duplicate	Mean	Primary Standard deviation	Median	Mean	Duplicates Standard deviation	Median	No. of pairs	Correlation coefficient
CaF_{2} Laboratory duplicates	33.95	11.91	34.11	33.77	12.08	34.06	528	0.967
CaF_{2} Inter-laboratory checks	34.36	11.93	33.29	33.96	12.16	32.80	528	0.987

Source: The 11th Brigade

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6.2.2 Bulk density

A total of 184 bulk density samples distributed through all deposits were tested, comprising 28 samples from the trenches and 156 from drill hole cores. The testing was conducted at the Xinjiang Non-ferrous Geological Survey Bureau Testing Center using the conventional wax-sealed water immersion method. This involves dividing the weight of the sample by the volume of water displaced by the sample.

Statistical results from this testing regime indicate that sample density increases slightly with fluorspar grade, but the overall variation is minimal and unlikely to be material (Figure 6.1). Therefore, for SRK’s Mineral Resource estimation purposes, the density of different domains was calculated based on the data from each specific domain. This calculation indicates that the bulk density values for each domain are: Domain V1: 2.78 t/m³; Domain V2: 2.74 t/m³; Domain V3: 2.67 t/m³; Domain V4: 2.78 t/m³; Domain V5: 2.81 t/m³; Domain V6: 2.79 t/m³; Domain V7: 2.77 t/m³; Domain V8: 2.73 t/m³.

Figure 6.1: Correlation between density and CaF₂ grade

Source: SRK analysis, 2025

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6.2.3 Historical verification

In 2021, a verification program was conducted by Xinjiang Non-ferrous Group to review the exploration work completed between 2008 and 2019. As part of this program, 8 twinned holes were completed, and 35 historical trenches were re-logged and re-sampled to evaluate the previous diamond drilling and trenching results. A total of 558 samples (359 samples from trenches and 199 samples from drill holes) were sent for testing to the Xinjiang Non-ferrous Geological Survey Bureau Testing Center, with three duplicate samples also sent to SGS Tianjin for additional verification purposes (and comparison between laboratories).

A visual comparison was made between the drilling and trench assays from the 2008–2019 period and the 2021 verification. The results indicate that the mineralised intervals intercepted in original and verification drilling programs are similar. For example, Figure 6.2 presents a section view of drill hole assays, comparing twinned holes YZK3902 and YZK4203 with drill holes ZK3902 and ZK4203 from the 2008–2019 program. The verification drill holes confirmed the geometry of the mineralised envelope and the grade distribution.

Figure 6.2: Example of comparison between drill hole and verification twinned hole assays

Source: SRK analysis, 2025

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6.3 SRK verification SRK

As part of its independent review, SRK evaluated the 2008–2019 drilling/trenching campaign database and the 2021 verification program results conducted by Xinjiang Non-ferrous Group. Additionally, SRK visited the Xinjiang Non-ferrous Geological Survey Bureau Testing Center on 21 April 2023.

SRK performed a statistical analysis of the original 2008–2019 databases and 2021 verification results. A quantile-quantile (Q-Q) plot was generated to compare the distribution of drilling and trench assays (Figure 6.3). SRK’s analysis identified a slight low bias in the 2021 verification assay results, especially between 5% and 25% CaF₂, particularly around the 15% CaF₂ threshold. The cause of this bias is unclear (and remains to be investigated), but it may be related to the selection of samples along the boundaries of the mineralised intervals.

Figure 6.3: Q-Q plots between 2008–2019 and 2021 drilling programs

Source: SRK analysis, 2025

Additionally, SRK conducted spot checks on the drill hole collar positions and compared drill core assay information against drill core photographs. The procedures for sample collection, preparation, and analysis were reviewed. A total of 221 pulp samples, preserved at the Xinjiang Non-ferrous Geological Survey Bureau Testing Center, were selected and sent to the Guangzhou ALS laboratory for re-assaying. These samples represent 3.3% of the 6,782 samples that were assayed. SRK considers the duplicates ratio to be reasonable.

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Figure 6.4 presents the results, showing that the re-assays had a good reproducibility.

Figure 6.4: Correlation plot between original (2008–2019) and SRK check assays

Source: SRK, 2025 based on assay information provided by the Xinjiang Non-ferrous Geological Survey Bureau Testing Center

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6.3.1 Laboratory Duplicates

As part of SRK's verification program, laboratory duplicate samples were inserted at a frequency of one duplicate in every 10 samples for ALS assays. The result all fell within $\pm 10\%$ deviation, indicating that there is no significant bias (Figure 6.5).

Figure 6.5: Correlation plot between ALS laboratory assay and laboratory duplicates of $\mathrm{CaF}_2$ (2008–2019)

Source: SRK, 2025 based on assay information provided by the ALS Guanghzou laboratory

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6.3.2 Blanks

A total of 22 pure quartz blanks were inserted in SRK's verification sample batches at a frequency of one in every 10 samples. The results returned were within detection limits values, which are 0.1% CaF₂ (Figure 6.6).

Figure 6.6: SRK verification assays laboratory blanks results

Source: SRK, 2025 based on assay information provided by the ALS Guanghzou laboratory

6.3.3 Certified reference materials

The certified reference material (CRMs, also known as standards) inserted as part of SRK's verification procedures was UST 3138-81 Fluorspar 'HJ'. This CRM was sourced from the Har-Airag fluorspar deposit in Mongolia, with a default value of 72.6% and a standard deviation of 0.65%.

A total of 22 CRM/standards were inserted in the sample batches at a frequency of one in every 10 samples. The expected mean values and their acceptable limits are presented in Figure 6.7. The assay results for these CRM/standards were all within 1 standard deviation, indicating that there is no significant bias.

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Figure 6.7: SRK verification assays laboratory standard results SRK

Source: SRK, 2025 based on assay information provided by the ALS Guanghzou laboratory

7 MINERAL RESOURCE ESTIMATION

7.1 Introduction

Based on the available drilling data (including SRK's verification) and geostatistical analysis, SRK considers that the quality of the drilling and trenching data collected by the 11th Geological Brigade during the 2008 to 2019 exploration programs is reasonable. The exploration data are considered suitable for use in Mineral Resource estimation in accordance with the JORC Code (2012) (Figure 7.1).

The JORC Code (2012) states that 'A Mineral Resource is a concentration or occurrence of solid material of economic interest in or on the Earth's crust in such form, grade (or quality), and quantity that there are reasonable prospects for eventual economic extraction'. Mineral Resources associated with this Project have been classified as Inferred, Indicated and Measured Resources according to the degrees of geological confidence.

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Figure 7.1: General relationship between Mineral Resources and Ore Reserves

Source: JORC Code (2012)

7.2 Mineral Resource estimation procedures

SRK’s resource evaluation process involved the following steps:

database compilation and verification
construction of wireframe models for the boundaries of the fluorspar mineralisation
definition of resource domains
data conditioning (compositing and capping) for geostatistical analysis and variography
block modelling and grade interpolation
Mineral Resource classification and validation
assessment of ‘reasonable prospects for eventual economic extraction’ and selection of appropriate cut-off grades
preparation of the Mineral Resource Statement.

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7.3 Database compilation and validation

Data from the 2008–2019 drilling campaign, including collar, assay, and survey information, along with logs, were compiled into a Microsoft Excel sheet. The data were then validated using Datamine Studio and Leapfrog Edge to identify errors such as missing or overlapping intervals and duplicated samples.

7.4 Geological modelling

The wireframes for eight domains were created using Datamine Studio RM software, based on drill hole and trench samples. A nominal cut-off grade of 15% CaF₂ was used to define the mineralised fluorspar intervals. This cut-off grade was generally adhered to, with a few exceptions: intervals that were lower than 15% and shorter than 2 m were included in the domains, and isolated intervals not associated with other drill holes were excluded. Low-grade intervals that were longer than 2 m were treated as waste layers and excluded from the domains. In total, eight fluorspar domains (Domain V1 to Domain V8) were modelled based on geological logging and the 15% CaF₂ cut-off grade threshold. For Domain V8, four parallel veins with short (i.e. <300 m) extensions were grouped together due to their similar orientation, size and geological characteristics (Figure 7.2 to Figure 7.5).

Figure 7.2: Horizontal view of interpreted domains

Source: SRK, 2025

Figure 7.3: Long section view along E–W, dipping 35° towards N

Source: SRK, 2025

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Figure 7.4: Cross section view along N-S

Source: SRK, 2025

Figure 7.5: 3D perspective of interpreted domains and Project area topography

Source: SRK, 2025

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7.5 Exploratory data analysis

All drill hole and trench samples were flagged with a domain code and checked in sections to ensure that intervals with grades >15% CaF₂ were interpreted and included in the appropriate domains.

7.5.1 Compositing

The flagged drill hole and trench intervals with fluorspar of sufficient grade were plotted by their length to help select an appropriate composite length (Figure 7.6). Block model cell dimensions and anticipated mining methods were also considered. The diagram shows that most flagged samples have a length of 1.0 m and a composite length of 1.0 m was therefore applied to all data. The residuals of composited intervals were retained and evenly distributed among composited samples within the same domain. After compositing, the sample count and grade remained close to the raw data, indicating that the compositing was appropriate (Table 7.1).

Figure 7.6: Flagged intervals length histogram plot

Source: SRK, 2025

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Table 7.1: Comparison between raw and composite samples

Domain	Number of samples		Mean Grade		% Diff	Std Dev		Coeff of variation
	Raw	Composite	Raw	Composite		Raw	Composite	Raw	Composite
V1	52	59	33.81	33.34	-1%	16.48	14.90	0.49	0.45
V2	128	110	34.73	35.35	2%	12.29	10.92	0.35	0.31
V3	238	256	32.87	33.83	3%	11.97	8.96	0.36	0.26
V4	1,062	1,232	32.42	32.20	-1%	12.30	10.97	0.38	0.34
V5	571	523	33.32	33.60	1%	10.99	8.50	0.33	0.25
V6	1,272	1,149	33.30	33.19	0%	11.39	10.10	0.34	0.30
V7	96	83	30.63	30.06	-2%	10.91	8.43	0.36	0.28
V8	69	66	31.58	31.96	1%	8.38	6.55	0.27	0.20

Source: SRK, 2025

7.5.2 Top-capping

The impact of outliers on composite data in all domains was individually assessed using grade histogram plots and cumulative probability distribution. A three-dimensional visual validation of the selected capping levels was conducted to evaluate the spatial distribution of higher-grade values. Different $\mathrm{CaF}_2$ grades, ranging from $44\%$ to $74\%$ , were applied as top-capping levels for domains V1 through V8. The comparison between composite and top-capped samples indicated a reduction in the coefficient of variation (Table 7.2).

As shown in Figure 7.7 to Figure 7.14, the histogram on the left represents the grade distribution of the samples. If it does not follow a normal distribution and exhibits a long tail, the sample data need to be truncated in the high-grade interval. The probability distribution plot on the right shows that when there is a significant inflection point in the high-grade interval, the sample data require truncation.

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Figure 7.7: Domain V1 assays' grades histogram and probability distribution, capping at 74% CaF₂

Source: SRK, 2025

Figure 7.8: Domain V2 assays' grades histogram and probability distribution, capping at 58% CaF₂

Source: SRK, 2025

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Figure 7.9: Domain V3 assays' grades histogram and probability distribution, capping at 50% CaF₂

Source: SRK, 2025

Figure 7.10: Domain V4 assays' grades histogram and probability distribution, capping at 57% CaF₂

Source: SRK, 2025

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Figure 7.11: Domain V5 assays' grades histogram and probability distribution, no top capping

Source: SRK, 2025

Figure 7.12: Domain V6 assays' grades histogram and probability distribution, capping at 64% CaF₂

Source: SRK, 2025

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Figure 7.13: Domain V7 assays' grades histogram and probability distribution, no top capping

Source: SRK, 2025

Figure 7.14: Domain V8 assays' grades histogram and probability distribution, capping at 44% CaF₂

Source: SRK, 2025

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Table 7.2: Summary statistics of composite and capped composite data of $\mathrm{CaF}_2$ samples

Domain	Number of Samples		Mean Grade		% Diff	Top-Capping Value	Std Dev		Coeff of Variation
	Un-Capped	Top-Capped	Un-Capped	Top-Capped			Un-Capped	Top-Capped	Un-Capped	Top-Capped
V1	59	59	33.34	33.15	-1%	74	14.90	14.35	0.45	0.43
V2	110	110	35.35	34.97	-1%	58	10.92	9.82	0.31	0.28
V3	256	256	33.83	33.67	0%	50	8.96	8.55	0.26	0.25
V4	1,232	1,232	32.20	31.95	-1%	57	10.97	10.14	0.34	0.32
V5	523	523	33.60	33.60	0%	-	8.50	8.50	0.25	0.25
V6	1,149	1,149	33.19	33.15	0%	64	10.10	9.97	0.30	0.30
V7	83	83	30.06	30.06	0%	-	8.43	8.43	0.28	0.28
V8	66	66	31.96	31.70	-1%	44	6.55	5.68	0.20	0.18

Source: SRK, 2025

7.5.3 Variography

Variogram modelling for all domains was performed using Snowden Supervisor software. Variogram fitting was completed in the following steps:

The nugget was determined by the downhole variogram.
The variogram anisotropy ellipsoid was set on the horizontal plane based on data scatter features.
The direction of maximum continuity within the sample plane was taken as the major axis of the variogram anisotropy ellipsoid, and the perpendicular direction (within the plane) was taken as the semi-major axis of the anisotropy ellipsoid.
The direction perpendicular to the plane was used as the minor axis of the anisotropy ellipsoid.
The variogram model was set to fit the three principal directions and checked against other directions.

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Figure 7.15 shows an example of the fitted variogram model of Domain V6.

Figure 7.15: Variograms and fitted curves of Domain V6

Source: SRK, 2025

The number next to the line indicates the counts of sample-pairs used for the variogram calculation.

The variogram parameters, which include axis angles, nuggets, sills, and the ranges of the three axes, were modelled.

Domains V1, V7 and V8 do not have sufficient samples to fit a meaningful variogram. For these domains, variography was 'borrowed' from neighbouring domains with similar geological character and orientation (i.e. the variogram for the Domain V2 was applied to Domain V1, and variogram for Domain V6 was applied to domains V7 and V8, respectively).

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The variogram parameters of all domains are presented in Table 7.3.

Table 7.3: Variogram parameters used for ordinary kriging estimation

Domain	Datamine Rotations				Structure 1				Structure 2				Structure 3
	Rotation X	Rotation Z	Rotation X	Nugget	Semi-		Major axis	Minor axis	Semi-	Semi-		Major axis	Minor axis	Semi-	Semi-
					Sill	Major axis				Major axis	Sill				Major axis	Major axis
V1	-5	30	-5	0.12	0.63	172	94	2	1	186	177	5	-	-	-	-
V2	-5	30	-5	0.12	0.63	172	94	2	1	186	177	5	-	-	-	-
V3	20	25	15	0.16	0.72	115	60	3	1	162	130	5	-	-	-	-
V4	-5	35	5	0.12	0.32	33	22	2	0.8	202	31	11	1	250	86	18
V5	5	35	5	0.36	0.5	100	125	5	1	240	214	12	-	-	-	-
V6	-5	45	-35	0.25	0.65	181	286	4	1	381	382	23	-	-	-	-
V7	-5	45	-35	0.25	0.65	181	286	4	1	381	382	23	-	-	-	-
V8	-5	45	-35	0.25	0.65	181	286	4	1	381	382	23	-	-	-	-

Source: SRK, 2025

7.6 Grade and tonnage estimation

7.6.1 Block model and grade estimation

A three-dimensional block modelling approach was used to estimate the tonnage and grade. The coordinates and dimensions of the block model are presented in Table 7.4. A block size of 40 m by 40 m was chosen, based on the one-third to one-fourth of the exploration sampling spacing 200–100 m by 100–50 m. In the RL (z) direction, a block size of 5 m was adopted to better align with the domain average thickness of 3–5 m. To accommodate variations in domain boundaries, the sub- block size was reduced to 2 m by 2 m and 1 m in the RL (z) direction to meet the minimum mining thickness of 1 m (Table 7.4). No rotation was applied to the model.

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Table 7.4: Block model parameters

Dimension	Base point	Rotation	Block size (m)	Minimum sub-block (m)
Easting	380850	N/A	40	2
Northing	4261700	N/A	40	2
Z (RL)	2200	N/A	5	1

Source: SRK, 2025

The $\mathrm{CaF}_2$ grade of each block was interpolated using ordinary kriging (OK) for Domains V1-V8, with the Squared Inverse Distance Weighted (IDW) method used for verification. The basic search ellipsoid was defined with a $100\mathrm{m}$ major axis along the strike and a $50\mathrm{m}$ semi-major axis along the dip, based on the exploration sampling spacing of $200 - 100\mathrm{m}$ by $100 - 50\mathrm{m}$ . Dynamic anisotropy was applied to the estimation, allowing the search ellipse orientation of each block to be adjusted according to the local vein strike and dip angles, thereby better aligning with the narrow vein. The orientation parameters were estimated using wireframe plane dip angles within $50\mathrm{m}$ radius spheroid through dynamic anisotropy modelling method. The parameters used for the grade estimation are summarised in Table 7.5.

Table 7.5: Grade estimation and search ellipse parameters

Search ellipsoid	Major axis (m)	Semi-Major axis (m)	Minor axis (m)	Minimum number of samples	Maximum number of samples	Maximum number from a drill hole
Pass 1	100	50	10	4	10	2
Pass 2	200	100	20	3	10	2
Pass 3	300	150	30	2	10	2

Source: SRK, 2025

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7.6.2 Model validation

SRK undertook block model validation to confirm the reasonableness of the estimation parameters and estimation results. SRK adopted the following methods for its validation:

visual validation of block grades against drill hole grades
statistical comparison of mean grades between composites and block
trend analysis.

SRK conducted a visual validation of the cross-sectional view, comparing drill hole and trench grades with block model grades (Figure 7.16). This validation showed that a good correlation had been achieved between local block estimations and nearby samples with no significant block model smoothing.

Figure 7.16: Visual validation of selected cross sections (looking east)

Source: SRK, 2025

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The arithmetic mean values of the composite and the block were also compared, showing that the deviations are within an acceptable level (Table 7.6).

Table 7.6: Composite and block means comparison

Domain No.	Composite mean (%)	Block model mean (%)	Absolute deviation	Relative deviation (%)
V1	33.15	35.93	2.78	8%
V2	34.97	33.44	1.53	-4%
V3	33.67	32.93	0.74	-2%
V4	31.95	33.22	1.27	4%
V5	33.47	33.45	0.02	0%
V6	33.15	32.88	0.27	-1%
V7	30.06	30.17	0.11	0%
V8	31.70	30.58	1.12	-4%

Source: SRK, 2025

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Figure 7.17 shows the grade swath plots for Domain V6 in the east-west, north-south and vertical directions. Figure 7.18 presents the swath plots for all domains combined. These plots show that the composite grades, block grades and tonnages generally correlate at an acceptable level.

Figure 7.17: Domain V6 swath plot along the east-west, north-south and vertical direction, respectively

Source: SRK, 2025

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Figure 7.18: All domains swath plot along the east-west, north-south and vertical direction, respectively

Source: SRK, 2025

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7.7 Classification

Mineral Resource classification should take into account the confidence in the geological continuity of the mineralisation, the quality and quantity of exploration data supporting the estimates and the geostatistical confidence in the tonnage and grade estimates.

The classification criteria should integrate all these concepts to delineate consistent areas with similar resource classifications. The following criteria have been applied in classifying the Mineral Resources of the Project (Figure 7.19):

Blocks estimated in search passes 1 and 2 were generally classified as Indicated except in areas where the slope of regression fell below 0.3
Blocks estimated in pass 3 were classified as Inferred.

Figure 7.19: Classification of project horizontal view

Source: SRK, 2025

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7.8 Mineral Resource Statement

7.8.1 Reasonable prospects for eventual economic extraction

Clause 20 of the JORC Code (2012) requires that all publicly reported Mineral Resource estimates must demonstrate ‘reasonable prospects for eventual economic extraction’.

In the case of the Project, the Competent Person considers the following attributes provide the basis for the Project being able to meet this criterion:

Processing testwork has successfully shown that a saleable fluorspar concentrate with a 97% CaF₂ content can be produced.
The proposed mining method is deemed appropriate for recovering this type of vein-type fluorspar deposit.
An independent market study supports the proposed sales strategy.

Based on these factors, the Competent Person considers that the declared Mineral Resource is able to demonstrate ‘reasonable prospects for eventual economic extraction’.

7.8.2 Mineral Resource Statement

The Mineral Resource estimates as at 31 October 2024 for the Project are tabulated in Table 7.7. The Mineral Resources have been classified as Indicated and Inferred in accordance with the JORC Code (2012) and are based on the analysis and assumptions outlined in this Report.

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Table 7.7: Mineral Resource Statement of the Project as at 31 October 2024

Domain	Mineral Resource Category	Tonnage (kt)	Grade (%)	CaF₂ (kt)
Domain V1	Indicated	167	35.99	60
	Inferred	102	36.97	38
Domain V2	Indicated	1,694	33.48	567
	Inferred	178	33.81	60
Domain V3	Indicated	1,420	33.27	472
	Inferred	750	32.99	247
Domain V4	Indicated	6,825	32.56	2,222
	Inferred	4,576	34.32	1,570
Domain V5	Indicated	6,493	33.44	2,171
	Inferred	2,421	33.48	811
Domain V6	Indicated	17,459	33.66	5,876
	Inferred	16,368	32.13	5,260
Domain V7	Indicated	536	29.15	156
	Inferred	1,646	30.42	501
Domain V8	Indicated	887	30.40	270
	Inferred	414	30.81	127
Sub-Total	Indicated	35,480	33.24	11,795
	Inferred	26,455	32.56	8,614
Total		61,936	32.95	20,409

Source: SRK.

Notes:

Totals may not add up due to rounding.
The Mineral Resources are reported on an in situ basis at a 15% CaF₂ cut-off.
Bulk density: Domain V1: 2.78 t/m³; Domain V2: 2.74 t/m³; Domain V3: 2.67 t/m³; Domain V4: 2.78 t/m³; Domain V5: 2.81 t/m³; Domain V6: 2.79 t/m³; Domain V7: 2.77 t/m³; Domain V8: 2.73 t/m³.
Tonnages are reported in metric units (i.e. metric tonnes), grades are reported in percentage of CaF₂. Tonnages and grades are rounded appropriately. Rounding, as required by reporting guidelines, may result in apparent summation differences between tonnes, grade and contained mineral content. Where these differences occur, SRK does not consider them to be material.

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Competent Person's Statement

7.8.3 Grade-tonnage sensitivities

The grade-tonnage curves are shown in Figure 7.20. The stated Mineral Resources are largely insensitive to the selection of the reporting cut-off grades between $5\%$ and $25\% \mathrm{CaF}_2$ but becomes highly sensitive between $25\%$ and $40\% \mathrm{CaF}_2$ .

Figure 7.20: Project grade-tonnage curve

Source: SRK, 2025

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8 MINING

8.1 Introduction

The Karchar Fluorspar Mine (the Mine) remains in development and has not yet commenced operations. This section provides an assessment of the proposed mining system at the Mine, covering mining conditions, the development system and mine service systems. It also evaluates the overall applicability of the mining plan, the equipment involved and the LoM plan. The purpose of this assessment is to provide a basis for the declaration of Ore Reserves in accordance with JORC Code (2012).

Huaou currently holds the granted mining licence for the Mine, which is valid for 15 years, from 27 June 2023 to 27 June 2038. This licence covers an area of approximately 7.763 km² with an approved mining capacity of 1.2 Mtpa. The permitted mining elevation ranges from 3,203 m to 2,354 m asl.

The key assumptions presented in the 2024 ENFI Preliminary Design are as follows:

ENFI has accounted for design losses for defined Chinese resources located above 3,150 m asl as these are close to the surface. A 30 m-thick crown pillar has been included for safety reasons. The design does not consider ore recovery from areas located between elevation range of 2,450 m to 2,354 m asl, as defined Chinese resources within this range are relatively dispersed. Overall, the design scope covers elevations from 2,450 m to 3,150 m asl.
The Aksu River flows near the western part of the fluorspar deposit. To minimise the river's impact on any future underground mining operation, a 100 m buffer zone on both sides of the river has been defined and designated as a protective boundary, with the associated underground mining operation's safety pillars delineated at a 70° angle on both sides. No proposed mining operation resources will be mined within the safety pillars. The western boundary of the proposed mining operation is set at Exploration Line 47.
On the eastern side, due to the thin nature of the defined orebody as well as the low grade, poor continuity and all resources being Inferred category, no mining is considered east of Exploration Line 66.
In summary, the mining range for this design is between Exploration Lines 47 and 66 with an elevation range from 3,150 m to 2,450 m asl.

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The 2024 ENFI Preliminary Design considers mining in two phases:

Phase I: involves mining above 2,900 m asl with the mining sequence proceeding from bottom to top, using 2,900 m as the initial mining level.
Phase II: involves mining below 2,900 m asl, starting at an initial mining level of 2,700 m asl. The initial mining area is between the 2,900 m and 2,700 m asl, followed by mining between the 2,700 m and 2,450 m asl.

In SRK's opinion, the level of accuracy of the Modifying Factors presented in the 2024 ENFI Preliminary Design is equivalent to that of a pre-feasibility study (PFS) as per the JORC Code (2012) guidelines. Based on the reviewed results of the 2024 ENFI Preliminary Design, SRK developed a mine design and production schedule using the updated MRE (Section 7).

8.2 Hydrogeology

8.2.1 Studies

From September 2016 to November 2019, the 11th Geology Team of Zhejiang Province conducted detailed exploration work at the Mine. This work focused on hydrogeological surveys of the proposed mining area, including monitoring water levels in 49 hydrogeological boreholes, conducting four pumping tests and performing water quality analysis.

In 2023, Xinjiang Xindi Geotechnical Engineering Investigation and Design Co., Ltd. completed four geophysical survey lines, drilled seven hydrogeological boreholes, conducted five sets of pumping tests, and performed water quality analysis. This purpose of this study is to ascertain the water conductivity and abundance of the faults.

8.2.2 Groundwater characteristics

The 2024 ENFI Preliminary Design provides a summary of the hydrogeological conditions in the mining area, forms part of the runoff area of the hydrogeological unit in the middle section of the northern foothills of the Altyn Mountains. The mine area lithology mainly includes metamorphic rocks, migmatites, granites and Quaternary sand and gravel. Based on the groundwater storage types and burial conditions, the groundwater in the mining area is categorised into two types: pore water in loose rock formations and fissure water in bedrock.

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Pore water in loose rock

This aquifer is mainly distributed in the Aksu River bed, floodplains, valleys, and low-lying areas. It consists of sand, gravel, pebbles and some small boulders. The thickness of the aquifer varies, reaching up to a maximum of 55.17 m. The water table extends down to 35.20 m, with a permeability coefficient from 5 m/d to 25 m/d.

Fissure water in bedrock

The fissure water in blocky rock types occurs in the central part of the mining area, covers a large area and acts as a direct water source for the deposit. The primary lithologies include gneiss and granite. The development of aquifer fissures is uneven throughout the rockmass, with most fissures being underdeveloped. However, near the contact zone between the deposit and its hanging wall and footwall, the rock is fractured, featuring well-developed joints and fissures. The groundwater table is situated at depths of 17.4 m to 185.5 m, with a permeability coefficient of 0.001 m/d to 0.023 m/d and a specific yield of 0.0157 L/s to 0.024 L/s.

Faults

There are two faults, F1 and F2, defined within the mining area, each running nearly east-west and intersecting the Aksu River between Exploration Line 55 and Exploration Line 63. Based on the results of the previous pumping tests, the water abundance of faults F1 and F2 near the Aksu River area is greater than that of the eastern section of these faults. Current data suggest only a weak hydraulic connection between the groundwater in the fault fracture zones and the Aksu River under natural conditions. Although the Aksu River, being a perennial surface river, may potentially recharge the mined-out area indirectly through the fault fracture zone groundwater, the overall water abundance and conductivity of faults F1 and F2 are weak, resulting in a limited impact on the mine's water inflow.

Mine water inflow

The current design uses the results from pumping tests to predict the mine water inflow at the 2,900 m asl, 2,550 m asl and 2,450 m asl levels. The estimated normal water inflows for these levels are approximately 550 m³/d, 4,400 m³/d, and 4,900 m³/d, respectively. Since the mine has not yet been developed, ENFI applied a scale factor of 1.8, based on industry benchmarks to estimate the maximum inflow from the normal inflow. This results in predicted maximum inflows of approximately 1,000 m³/d, 7,900 m³/d, and 8,800 m³/d, respectively.

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8.3 Geotechnical engineering

8.3.1 Rock masses quality

Rock quality designation (RQD) is a measure of the quality of rock taken from a borehole and signifies the degree of jointing or fracture in a rockmass. RQD values of 75% or more indicate good quality hard rock and less than 50% shows low quality weathered rocks. The Project's RQD values, categorised by different lithologies, are detailed in Table 8.1.

Table 8.1: Rock quality designation

Lithology	RQD (%)
	Min.	Max.	Mean
Fluorite-Calcite Vein	0	100	54.5
Biotite-Plagioclase Gneiss	3	100	50.8
Biotite Syenogranitic Gneiss	3	96.4	46.6
Biotite-Hornblende-Plagioclase
Gneiss	25.1	99	59.4
Diopside-Plagioclase-Hornblende
Vein	59.2	86	67.7
Olivine Marble	54.3	81.3	71
Phlogopite Marble	7.1	95.2	54.7
Porphyritic Syenogranite	0	96.9	43.6
Fine-Grained Syenogranite	6	91.1	59
Granitic Syenogranitic Gneiss	0	80.7	35.5
Leucocratic Biotite-Plagioclase
Banded Migmatite	32.6	89.4	63.9
Syenogranite Vein	0	90.2	44.5
Potassium Feldspar Granite Vein	0	92.5	48.1
Leucocratic Rock Vein	3	100	57.5

Source: 2024 ENFI Preliminary Design

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8.3.2 Rock strength summary

Based on the characteristics of rock mass properties, rock group strength, and rock mass structure, the engineering geological rock group predominantly exhibits a blocky structure. The specific rock strength properties for each rock group are detailed in Table 8.2.

Table 8.2: Rock strength summary

Lithology	Density (g/cm³)	Tangent Modulus (GPa)	Poisson's ratio	UCS (MPa)	TS (MPa)	Cohesion (MPa)	IFA (°)
Gneiss Blocky Rock Group	2.75	1.06	0.21	65.66	4.34	4.53	39.18
Migmatite Blocky Group	2.72	–	–	73.69	5.95	–	–
Carbonate Blocky Group	2.72	1.18	0.21	76.5	6.63	5.4	36.7
Granite Blocky Group	2.53	1.63	0.21	110.75	5.61	7.1	38.9
Leucocratic Rock Vein	2.64	1.32	0.26	86.6	5.69	5.9	38.63

Source: 2024 ENFI Preliminary Design

Notes:

UCS: Uniaxial Compressive Strength.
TS: Tensile Strength.
IFA: Internal Friction Angle

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8.3.3 Stope stability geotechnical analysis

ENFI conducted a stope stability geotechnical analysis. Table 8.3 outlines the geotechnical parameters used for this analysis.

Table 8.3: Geotechnical parameters used for analysis

Lithology	Density (g/cm³)	Elastic Modulus (GPa)	Poisson's ratio	TS (MPa)	Cohesion (MPa)	IFA (°)
Surrounding Rock	2.66	12.1	0.21	4.5	4.7	37.66
Orebody	2.77	9.3	0.16	2.42	2.8	36.52
Backfill	1.8	0.9	0.3	0.4	0.5	28

Source: 2024 ENFI Preliminary Design

The stability analysis was conducted based on the proposed use of the cut-and-fill mining method. A single stope was assumed to measure 60 m by 8 m by 5 m. To account for the size effect, the model was extended to 200 m by 40 m by 30 m (Figure 8.1). The profiles A-A and B-B were analysed to evaluate the stability of the mined-out stope under two working conditions: at the 2,700 m asl and the 2,450 m asl.

Figure 8.1: Stope stability geotechnical analysis model

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Source: 2024 ENFI Preliminary Design

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Table 8.4 presents the results for various scenarios. Figure 8.2 illustrates the stability analysis results for the B-B profile at the $2,450\mathrm{m}$ asl.

Table 8.4: Stope stability analysis results

Level	Section	Plastic Zone	Maximum Principal Stress	Minimum Principal Stress
2,700 m asl	A-A	No plastic zone	Stress concentrated at the junction of the top/bottom and sidewalls, maximum principal stress 18.51 MPa	No tensile stress zone
	B-B	No plastic zone	Stress concentrated at the junction of the top/bottom and sidewalls, maximum principal stress 20.6 MPa	No tensile stress zone
2,450 m asl	A-A	There are a few plastic zones, all of which are shear failure plastic zones.	Stress concentrated at the junction of the top/bottom and sidewalls, maximum principal stress 32.88 MPa	No tensile stress zone
	B-B	There are a few plastic zones, all of which are shear failure plastic zones	Stress concentrated at the junction of the top/bottom and sidewalls, maximum principal stress 36.64 MPa	No tensile stress zone

Source: 2024 ENFI Preliminary Design

Figure 8.2: Stability analysis for B-B at $2,450\mathrm{m}$ asl

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Source: 2024 ENFI Preliminary Design

According to the analysis results, the modelled stope is basically stable given the selected stope parameters for mining.

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8.3.4 Surface stability analysis

A three-dimensional geotechnical model of the entire mining area was developed, with the x-axis oriented along the strike of the deposit, the Y-axis being perpendicular to the strike direction of the deposit, and the Z-axis representing the vertical direction. The model dimensions are 8,000 m by 3,000 m by 1,630 m (Figure 8.3).

Figure 8.3: Stability analysis for B-B at 2,450 m asl

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Source: 2024 ENFI Preliminary Design

According to the overall mining strategy, mining will occur into two phases: Phase I involves mining above the 2,900 m asl, and Phase II involves mining below the 2,900 m asl. Based on this mine sequencing, the profile at Exploration Line 07 was analysed for its maximum principal stress, vertical displacement and plastic zone. The results show:

Phase I: mining causes minimal stress disturbance, with vertical displacement changes only at the millimetre level and no plastic zone formation.
Phase II, stress concentration occurs, with vertical displacement changes reaching the centimetre level and sporadic plastic zones appear.

Upon the completion of mining, stress concentration becomes more pronounced, vertical displacement changes remain small and the plastic zones increase but are limited to sporadic distribution in the bottom of the deposit and do not penetrate further (Figure 8.4).

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Figure 8.4: Surface stability analysis results upon completion of mining

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Source: 2024 ENFI Preliminary Design

Overall, the modelled changes in plastic zones, stress, and deformation across the three mining stages indicate that Phase I mining has almost no impact on the surface, while Phase II has a minimal impact. With a 30 m protective crown pillar in place, underground mining is not expected to compromise the stability of surface slopes.

8.4 Mining methodology

The selection of a mining method involved evaluating a range of factors, including orebody characteristics to ensure efficiency, safety and environmental responsibility. In the 2024 ENFI Preliminary Design, two mining methods were proposed concurrently for the mine, taking into account the specific properties and structure of the orebody. These methods are outlined in greater detail below:

8.4.1 Cut-and-Fill mining method

The first proposed mining method is the Cut-and-Fill mining method (CAF). This method is suitable for areas where the rock mass is competent, with an orebody thickness of less than 6.0 m and minimal variation in the orebody shape. Two specific mining techniques may be used: CAF with a roadheader (CAFR) and CAF with drill-and-blast (CAFDB). The choice between these methods depends on the hardness and strength of the rock. For relatively soft rock, the CAFR method is used; if the rock is relatively hard, the CAFDB method is used.

The proposed slopes are arranged along the strike, with a length of 60 m and a width equal to the orebody thickness. The level spacing is 50 m and the sublevel spacing is 12.5 m, with each cut (vertical slice) measuring 4–5 m. No rib pillars are proposed to be left between adjacent slopes.

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In the CAFR method (Figure 8.5), the cut material is to be loaded onto a 20-tonne truck by the roadheader's shovel and transported to the ore pass within its mining section. Each roadheader is paired with two mine trucks. Each sublevel ore pass is equipped with a griddle, featuring a mesh size of 350 mm by 350 mm.

In the CAFDB method (Figure 8.6), a jumbo rig drills horizontal holes with a diameter of 42 mm and a depth ranging from 3.6 m to 4.2 m. Explosive cartridges are manually loaded with digital electronic detonators. A 3.0 m³ diesel load, haul and dump (LHD) unit is used for material extraction. The blasted material is unloaded into the ore pass by the LHD unit, and if the transportation distance exceeds 200 m, mine trucks are used for hauling the materials to the ore pass.

Fresh airflow enters the stope through the main levels and sublevels, and the exhaust air exits through the return air raise (RAR) into the upper-level return air drives, then to the return air shaft (RAS), and finally to the surface.

After each slice is mined, the bottom 3.0 m of the stope is backfilled with cemented tailings fill with a strength not less than 0.5 MPa, and the top 1.0 m is backfilled with a strength not less than 2.0 MPa. The first mining slice in the stope should be backfilled with a thickness greater than 5.0 m, incorporating wire mesh to provide a strength greater than 5.0 MPa, which will serve as the roof of the lower-level stope.

Figure 8.5: Schematic of CAF with a roadheader

CAF with a roadheader

8 Return Air Drive
9 Decline
10 Connection Drive for Backfill & Ventilation
11 Drainage Raise
12 Connection Drive for Drainage
13 Fill Retaining Wall

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Source: 24 ENFI Preliminary Design and modified by SRK

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Figure 8.6: Schematic of CAF with drill-and-blast

CAF with drill-and-blast

srk consulting

Source: 24 ENFI Preliminary Design and modified by SRK

8.4.2 Drift-and-Fill mining method

The second proposed method mining is Drift-and-Fill (DAF), which is similar to the CAF method. Both methods involve mining by slice and subsequently backfilling, following a bottom-up sequence within the stopes. The key difference is that DAF is particularly suitable for areas where the rock mass is relatively weak or where the orebody thickness exceeds $8.0\mathrm{m}$ . In such cases, drifting along the strike direction and timely backfilling are necessary.

There are two specific mining techniques under this method: DAF with roadheader (DAFR) (Figure 8.7) and DAF with drill-and-blast (DAFDB) (Figure 8.8). The method selected depends on the hardness and strength of the rock materials. For relatively soft rock, the DAFR method is preferred, while for harder rock, the DAFDB method is used.

When applying DAF, due to the width of each slice, mining occurs in a primary and secondary sequence. After mining the primary drift, it is promptly backfilled to provide support for mining the secondary drift. Once the entire slice is completed, mining proceeds to the upper slice until the stope is fully mined. As with CAF, the first slice must always be backfilled to a strength of $5.0\mathrm{MPa}$ , as it serves as the roof for lower-level stopes. Materials handling depends on the technique applied, whether using a roadheader or mine trucks. The ventilation system is identical to that used in CAF.

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Figure 8.7: Schematic of DAF with roadheader

Source: 24 ENFI Preliminary Design and modified by SRK

Figure 8.8: Schematic of DAF with drill-and-blast

DAF with drill-and-blast

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Source: 24 ENFI Preliminary Design and modified by SRK

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8.5 Mine development

8.5.1 Stope preparation and development

Certain developments must be considered during the preparation phase for mining the stopes. Table 8.5 summarises the various types of development activities required for stope preparation, along with their respective design parameters.

Table 8.5: Design parameters for mining stope

SN	Type	Profile (m)
1	Sublevel	4.2 × 3.9
2	Attack Ramp	4.2 × 3.9
3	Return Air Raise	φ 2.0
4	Backfill & Return Air Drive	3.0 × 3.0
5	Connection Drive for Drainage	3.0 × 3.0
6	Ore Pass	φ 2.0
7	Connection Drive for Ore Pass	4.2 × 3.9

Source: 2024 ENFI Preliminary Design

8.5.2 Level spacing

Under the current mining concept, the main level spacing is assumed to be 50.0 m, with sublevel spacing at 12.5 m. In Phase I, the main levels are established at elevations of 3,100 m asl, 3,050 m asl, 3,000 m asl, 2,950 m asl and 2,900 m asl. The levels at 3,000 m asl, 2,950 m asl and 2,900 m asl are designated for locomotive transportation, while the upper levels at 3,100 m asl and 3,050 m asl are designated for mobile equipment transportation. The main levels and sublevels are interconnected by declines.

In Phase II, the main levels are established at elevations of 2,850 m asl, 2,800 m asl, 2,750 m asl, 2,700 m asl, 2,650 m asl, 2,600 m asl, 2,550 m asl, 2,500 m asl and 2,450 m asl. In Phase II, levels at 2,600 m asl and above are designated for locomotive transportation, while the deeper levels at 2,550 m asl, 2,500 m asl and 2,450 m asl are designated for trackless transportation.

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8.5.3 Development system

The 2024 ENFI Preliminary Design evaluated two development system trade-off studies for Phase I: 2024:

Option I: ‘The Belt Inclined Shaft and Decline Development System’
Option II: ‘The Decline Development System’

Both options are technically feasible. Option I requires less infrastructure construction than Option II. Although both options require significant development work at sublevels, the construction timelines are similar. Option I uses belt transportation, which requires fewer trackless equipment, resulting in reduced management complexity compared to Option II. Additionally, Option I offers spare capacity for future mine expansion. In contrast, Option II will incur increasing transportation costs as the mining depth increases.

The 2024 ENFI Preliminary Design recommended Option I: ‘The Belt Inclined Shaft and Decline Development System’ for both stages.

Figure 8.9: Schematic of the development system

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Source: 24 ENFI Preliminary Design and modified by SRK

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For Phase I, the production scale is 4,000 tpd. The proposed development includes constructing a new belt inclined shaft (BC1), a decline (Main Decline), an intake air shaft (Main Intake Air Shaft), an east return air shaft (hereafter referred to as the East Return Air Shaft), and a west return air shaft (West Return Air Shaft). Mined materials are hoisted to the surface via the belt inclined shaft, while personnel, materials and equipment are moved via the Main Decline. Once on the surface, mined materials are transferred to a conveyor belt and subsequently transported to individual bins (waste rock bin and RoM bin) at the processing plant. A waste rock bin is situated near the RoM bin, and waste rock is conveyed to the waste rock dump via a distribution belt. The Main Decline is used for transporting personnel, materials and equipment and also serves as an intake air passage, functioning as the main safety exit for the entire mine.

For Phase II, mining involves extraction of the orebody below 2,900 m asl. Two new belt inclined shafts (BC2 and BC3) are constructed to extended down to the 2,600 m asl, working in conjunction with BC1 to transport ore and waste rock to the surface. The belt inclined shafts operate transport ore and waste rock in a time-sharing manner. The Main Decline is extended downward, and one blind intake shaft (Blind Intake Air Shaft) and two blind return air shafts (1# Blind Return Air Shaft and 2# Blind Return Air Shaft) are constructed. When mining below 2,700 m asl in later stages, a third blind return air shaft (hereafter referred to as 3# Blind Return Air Shaft) is constructed. The mined material will need to be transported via an extended decline rather than a belt inclined shaft.

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Table 8.6 summarises the key parameters of the vertical development at the Mine.

Table 8.6: Key parameters of vertical development

Shaft	Easting	Northing	Elevation (m)	Depth (m)	Diameter (m)	Ladder way
Intake Air Shaft	384,113	4,262,266	2,995/2,850	145	φ 5.5	Yes
East Return Air Shaft	384,906	4,262,460	3,033/2,900	133	φ 3.7	Yes
West Return Air Shaft	383,362	4,262,291	2,980/2,850	130	φ 3.7	Yes
Blind Intake Air Shaft	384,165	4,262,464	2,850/2,450	400	φ 5.5	Yes
1# Blind Return Air Shaft	383,347	4,262,405	2,850/2,700	150	φ 3.7	Yes
2# Blind Return Air Shaft	384,911	4,262,455	2,900/2,450	450	φ 3.7	Yes
3# Blind Return Air Shaft	383,271	4,262,535	2,700/2,450	250	φ 3.7	Yes

Source: 2024 ENFI Preliminary Design

Table 8.7 summarises the key parameters of the lateral development at the Mine.

Table 8.7: Key parameters of lateral development

Shaft	Easting	Northing	Azimuth	Elevation (m)	Length (m)	Gradient	Profile (m)
BC1 Belt Incline	384,391	4,262,352	285°	3,010/2,846	701	13.65°	3.9 × 3.2
Decline	384,010	4,262,284	0°	3,150/2,995/2,450	4,980	15%/8%/3%	4.2 × 3.9
BC2 Belt Incline	Connected with BC1			2,857/2,744	456	13.91°	3.9 × 3.2
BC3 Belt Incline	Connected with BC2			2,748/2,561	834	13.14°	3.9 × 3.2

Source: 2024 ENFI Preliminary Design

Overall, the chosen development strategy reflects a balanced approach that addresses current operational needs while accommodating future growth potential, which is considered reasonable from SRK's perspective.

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8.6 Mine logistics

Within the underground mining section, material is transported to the ore pass using mine trucks or LHD units, from where it is moved to the main level transport drifts. In these drifts, electric locomotives or mine trucks transfer the material to the conveyor belt transfer level, which then transports it to the surface via conveyor belts.

The mine logistics is organised into two main phases:

Phase I: Mined materials are hoisted to the surface via BC1, while personnel, materials and equipment are transported through the decline.

Phase II: This phase involves mining below the 2,900 m asl, divided into two stages. The first stage, spanning from 2,700 m to 2,900 m asl, uses BC2 and BC3 (with BC3 extending to the 2,600 m level) for the transportation of mined materials, which are subsequently conveyed to the surface via BC1. The second stage, from 2,450 m asl to 2,700 m asl, involves a smaller quantity of mineral material, and thus the decline is extended downward. Mined materials are transported via the decline to the 2,600 m asl, and then relayed to the surface by BC3, BC2, and BC1.

Table 8.8 summarises the key parameters of the conveyor belts.

Table 8.8: Key parameters of the conveyor belts

Description	Unit	BC1	BC2	BC3	Surface Belt
Horizontal Length of Conveyor Belt	M	667	456	801	219.9
Vertical Height of Conveyor Belt	m	166.3	113.0	187.0	29.0
Designed Hourly Capacity	t/h	400	400	400	400
Operating Speed	m/s	2.5	2.5	2.5	2.5
Belt Width	mm	1,000	1,000	1,000	1,200
Belt Inclination Angle	°	14.0	13.9	13.1	7.2
Number of Motors	unit	1.0	1.0	1.0	1.0
Motor Power	kW	450.0	355.0	560.0	132.0
Drive Pulley Diameter	mm	1,000	1,000	1,000	800

Source: 2024 ENFI Preliminary Design

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8.7 Mining equipment

In the 2024 ENFI Preliminary Design, the proposed work schedule comprises three 8-hour shifts per day, operating 300 days a year. The primary production equipment includes roadheaders, drill rigs, LHD units, mine trucks, and other auxiliary equipment for production support (Table 8.9). When calculating the quantity of production equipment required, an availability rate of 85% and a utilisation rate of 75% for the primary production equipment have been assumed. Additionally, a 20% contingency has been factored in due to the Project's location at high altitude.

Table 8.9: Design parameters for mining stope preparation drives

Category	Type	Model	Quantity	Power (kW)
Production Equipment	Drill Rig	CYTJ45	5	63
	Jack Hammer	YT-28	8
	Jack Hammer	YSP-45	4
	Explosive Transportation Vehicle	FCB-3	1
	Explosive Transportation Vehicle	WCB-1.5	1
	Roadheader	EBZ260	9	420
	Raiseborer	AT-3000	1	132
	LHD Loader	WJ-3	4
	LHD Loader	WJ-2	2
	Mine Truck	UQ-20	14
	Rock Breaker	UPT-119/2000	1
	Scaler	XMPYT-54/450	2
	Rock Bolt Rig	CYTM41/2	1	55
	Concrete Agitator	KJCJ-4	2
	Shotcrete	UPS-20J	1	90

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Category	Type	Model	Quantity	Power (kW)
Production Support	Fuel Truck	CY-4000	1
	Material Transportation
	Vehicle	FL-5	2
	Scissor Lift	UC-2	2
	Personnel Carrier	RU-25	2
	Personnel Carrier	RU-6	1
	Primary Fan	FKCDZNo28/2 × 500	2	2 × 500
	Secondary Fan	FKNo7/15	16	15
	Secondary Fan	FKNo5/11	16	11

Source: 2024 ENFI Preliminary Design

8.8 Mine services

8.8.1 Backfill

The 2024 ENFI Preliminary Design proposes the use of cemented tailings backfill, using tailings from the processing plant as aggregate. The average daily requirement for backfill slurry is 1,656 m³/d, totalling 496,800 m³ per annum. The concentration of the backfill slurry is expected to range between 64% and 72%, with a concentration rate of 69% used for material consumption calculations.

After each slice is mined, three types of backfill material are required. The first 5.0 m slice needs a strength of 5.0 MPa. For the remaining slices, the bottom 3.0 m require a strength of 0.5 MPa, and the top 1.0 m requires a strength of 2.0 MPa. Consequently, the cement-to-sand ratios are set at 1:4, 1:6, and 1:10, respectively, based on these strength requirements.

The consumption of cement, tailings, and water for these scenarios is calculated to be 224 tpd for cement, 1,562 tpd for tailings, and 803 tpd for water. Tailings from the processing plant is transported to the backfill station's deep cone thickener via slurry pumps for concentration. Cement is delivered to the backfill station by trucks and stored in the cement silo using high-pressure air.

Phase I and Phase II both include four backfill boreholes, with two in use and two as backups. The backfill station is located at the 2,995 m asl. When mining stopes ceases above the 2,950 m asl, the backfill will need to be pumped upwards.

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8.8.2 Ventilation

The ventilation system is designed to optimise airflow throughout the underground mine workings, using a central two-wing approach. Fresh air is to be introduced via a combination of intake shafts and decline, ensuring effective distribution to all working areas.

The main ventilation fans (FKCDZNo28/2 × 500) are installed at the surface level of the East Return Air Shaft and West Return Air Shaft. These fans are crucial for maintaining the exhaust ventilation system, ensuring that contaminated air is efficiently expelled from the mine.

The system's design allows for fan reversal, which is critical in emergency situations to quickly change airflow direction. This feature eliminates the need for additional reversal airways and maintains a reversal rate exceeding 60%.

Ventilation requirements are calculated based on several factors, including the air needed for the working face, diesel-powered equipment, and the maximum number of personnel per shift. The base ventilation volume is determined to be 188.0 m³/s. After accounting for a redundancy factor of 1.2 and a high-altitude factor of 1.15, the total designed ventilation volume increases to 260.0 m³/s. This ensures adequate airflow even in challenging conditions.

Table 8.10: Key parameters of the primary fans

Item	Unit	Key parameter
		West	East
Fan Model		FKCDZNo28/2 × 500	FKCDZNo28/2 × 500
Airflow Volume	m³/s	137.5	148.5
Fan Pressure	Pa	3,893	4,105
Power	kW	2 × 500	2 × 500
Voltage	kV	10	10

Source: 2024 ENFI Preliminary Design

Secondary fans are placed in areas where natural airflow is insufficient, such as long dead-end drives or poorly ventilated working faces. These fans enhance local ventilation and ensure that all areas receive sufficient airflow. Ventilation control structures are used to manage and direct airflow as required. These structures are important for maintaining optimal ventilation conditions throughout the mine.

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8.8.3 Dewatering

The dewatering is designed to two phases:

Phase I: The drainage pump station at the 2,850 m asl is designed to handle normal water inflows of 1,610 m³/d and maximum inflows of 2,060 m³/d. The station is to be equipped with three MD155-30×6 multistage pumps, each with a rated flow of 155 m³/h and a head of 180 m. These pumps are capable of efficiently managing water levels and preventing flooding.

Phase II: Additional pump stations are to be established at the 2,550 m and 2,450 m asl. The 2,550 m asl station is equipped to manage normal and maximum inflows of 5,960 m³/d and 9,860 m³/d, respectively. It uses MD360-60×9 multistage pumps, which are designed for high-capacity drainage operations.

8.8.4 Air compression

The mine will use a centralised compressed air supply system, with a surface compressor station housing three SA250A screw compressors. Each compressor has a discharge capacity of 46.2 m³/min at a pressure of 0.85 MPa. These compressors provide the necessary air supply for underground operations, ensuring that all equipment and personnel have access to clean, compressed air.

The system is designed to meet a maximum air consumption of 90.8 m³/min, with two compressors operating and one on standby. Air is to be distributed via φ 159 mm by 6 mm seamless steel pipes, ensuring efficient and reliable air delivery throughout the mine.

8.8.5 Water supply

The mine's daily water consumption for production is estimated at 1,200 m³, to be supplied through φ 159 mm by 6 mm seamless steel pipes. These pipelines will also serve as fire suppression lines, providing a dual-purpose solution that enhances safety and efficiency.

Pressure-reducing valves are to be installed at entry points to ensure that water pressure meets operational requirements. These valves are essential for maintaining consistent water flow and preventing damage to equipment.

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8.8.6 Other infrastructure

Maintenance chamber

Phase I includes the establishment of an underground maintenance chamber for trackless equipment at the 2,912 m asl level, located at the auxiliary ramp junction. This chamber is to be primarily used for the routine maintenance, repair and servicing of underground trackless equipment such as drilling and ore extraction machinery. In Phase II, a similar maintenance chamber is to be set up at the 2,712 m asl at the auxiliary ramp junction.

In Phase I, near the track transport yard at the 2,900 m asl, a locomotive maintenance chamber is to be established. This chamber is responsible for the routine maintenance of track transport equipment, including the disassembly and assembly of entire vehicles, bench work repairs, frame and carriage repairs, and the maintenance of underground electrical equipment, as well as the storage of tools and materials.

Refuelling point

No fuel chambers are to be established underground. In Phase I, a refuelling point is to be set up at the eastern side of the 2,912 m asl, near the west wind side. In Phase II, a refuelling point is to be established near the II-1# pedestrian return air shaft (2,750–2,700 m) junction at the 2,712 m asl.

Refuge chamber

Since the lowest production level in Phase I is at 2,900 m asl, which is relatively shallow with a vertical distance of less than 300 m from the surface safety exit, no refuge chamber is to be established in Phase I. In Phase II, an ordinary refuge chamber with capacity for 50 people is to be established at the 2,700 m asl.

8.9 Production schedule

SRK has revised the proposed production schedule, including the productivity and scheduling criteria applied to the mine schedule as summarised below:

Stope Sequence: The sequence follows a bottom-up approach.
Hanging Wall and Footwall Sequence: The sequence progresses from the hanging wall to the football.
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Operational Phases: According to the 2024 ENFI Preliminary Design, mining operations are arranged into two phases.
Full Production Capacity: The full production capacity is set at 1.2 Mtpa.
Production ramp-up: approximately 150 kt of by-product feed in 2025 and 800 kt feed proposed in 2026 according to the site forecast. The mine is targeting a full capacity in 2027.

Table 8.11 and Figure 8.10 indicate the production schedule over the LoM.
Table 8.11: Production schedule over the life of mine

	RoM Tonnes (t)	RoM Grade (%)
LoM Total	24,787,013	28.6
2025	154,668	29.3
2026	797,184	28.2
2027	1,200,365	27.8
2028	1,204,041	27.7
2029	1,200,235	28.2
2030	1,203,191	29.6
2031	1,207,997	30.4
2032	1,201,689	28.6
2033	1,209,258	28.3
2034	1,197,734	28.4
2035	1,206,639	28.6
2036	1,197,179	28.6
2037	1,200,246	29.5
2038	1,198,647	29.3
2039	1,202,192	28.4
2040	1,202,334	28.7
2041	1,201,542	28.3
2042	1,201,327	28.1
2043	1,198,976	29.3
2044	1,205,011	28.8
2045	1,198,898	27.3
2046	981,669	28.9
2047	15,992	24.7

Source: SRK

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Figure 8.10: Production schedule over the life of mine

srk consulting 55

Source: SRK Notes:

Notes:

The line represents the average $\mathrm{CaF}_2$ grade, corresponding to the right axis.
The column represents the RoM tonnes amount, corresponding to the left axis.
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Figure 8.11 shows the stope mined annually.

Figure 8.11: Production schedule over the life of mine

Source: SRK

9 ORE RESERVE ESTIMATION

9.1 Introduction

The definition of Ore Reserves in accordance with the JORC Code (2012) is as follows:

An 'Ore Reserve' is the economically mineable part of a Measured and/or Indicated Mineral Resource. It includes diluting materials and allowances for losses, which may occur when the material is mined or extracted and is defined by studies at Pre-Feasibility or Feasibility level as appropriate that include application of Modifying Factors. Such studies demonstrate that, at the time of reporting, extraction could reasonably be justified.

9.2 Ore Reserve Estimation Procedures

SRK conducted a review of the Mine's technical studies, including mine planning input parameters and Modifying Factors. Using the latest Mineral Resource estimate and associated block model prepared by SRK (refer Chapter 7), along with the verified Modifying Factors, SRK developed the mine design and production schedule in line with the strategy proposed by the technical studies. This process was undertaken to report an Ore Reserve in accordance with the JORC Code.

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The Ore Reserve estimation involved the following steps:

Conduct site inspections.
Process Mineral Resource Models (MRMs).
Review previous studies and designs for the Project.
Define the ore/waste cut-off.
Assess, modify and applied the mining factors to the estimation
Consider the other disciplines Modifying Factors
Review technical economic analysis for the Project
Prepare the Ore Reserve Statement
Conduct internal peer review.

9.3 Technical studies

SRK’s mining review was primarily based on the following exploration report and technical studies, along with site observations.

‘Exploration Report of the Karchar Fluorspar Mine in Ruoqiang County, Xinjiang’, November 2020, 11th Geology Team of Zhejiang Province.
‘Feasibility Study Report on the Mining and Processing Project of the Karchar Fluorspar Mine in Ruoqiang County, Xinjiang’, September 2022, BGRIMM Technology Group, hereafter referred to as ‘22 BGRIMM FS’.
‘Preliminary Design (Substitute Feasibility Study) of the Karchar Fluorspar Mine in Ruoqiang County, Xinjiang’, April 2024, China ENFI Engineering Corporation (hereafter referred to as ‘2024 ENFI Preliminary Design’).

Both the 22 BGRIMM PFS and 2024 ENFI Preliminary Design specify a capacity of 4,000 tpd. SRK considers the level of accuracy of the Modifying Factors described in the 2024 ENFI Preliminary Design is similar to the pre-feasibility study level, prepared in accordance with the JORC Code (2012). Based on the reviewed results of the 2024 ENFI Preliminary Design, SRK conducted mine design and production schedule modelling based on the updated Mineral Resource Model (MRM) prepared by SRK.

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9.4 Ore definition

The following formula considers various cost and recovery factors to establish the minimum grade, i.e. $\mathrm{CaF}_2$ cut-off grade at which the ore can be economically mined:

$$
A = \frac {C m + C p + C g}{P / 97 \% * R * (1 - R _ {t})}
$$

The parameters used to estimate the cut-off grade are presented in Table 9.1. The preferred cut-off grade is the estimated value rounded up to the nearest 0.1. SRK considers that material above the cut-off grade is economically extractable under the current assumptions.

Table 9.1: Parameters for estimation of cut-off grade

Item	Unit	Parameter	Description
Preferred cut-off grade	%	16.6	Round up to nearest 0.1
A	%	16.61	Estimated feed cut-off grade of CaF_{2}
Cm	RMB/t RoM	179.35	Mining cash cost
Cp	RMB/t RoM	107.14	Processing cash cost
Cg	RMB/t RoM	31.04	General & Administration cash cost
P	RMB/t	2,389	Forecast fluorspar concentrate (97% CaF_{2}) price (VAT exclusive)
R	%	80.0	Processing recovery for CaF_{2} in concentrate
Rt	%	3.00	Resource tax (3% of revenue)

Source: 2024 ENFI Preliminary Design

9.5 Modifying Factors

Defined Mineral Resources within the Measured and Indicated categories are able to be converted to Ore Reserve through the application of various Modifying Factors. The primary factors considered for conversion purposes include mining losses and dilution. Other considerations include the quality of the resource, as well as environmental, legal, or political constraints, and any other factors that might influence of the proportion of the resource that will ultimately be sold.

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The mining factors applied to the Ore Reserve estimates are as follows:

Mining Design Scope:
The design is constrained within the mining licence limit.
Only Measured and Indicated Mineral Resources are considered.
Safety considerations include a crown pillar, a safety pillar for the river (west side of the orebody) and other surface or underground infrastructure.
Design Loss:
Stopes with grades below the cut-off grade were categorised as design loss.
Resources that are isolated and at a significant distance to the main design are difficult to reach and therefore unlikely to be economically recoverable.
Mining Dilution:
A dilution of 0.1 m is applied to both side walls, resulting in a dilution rate of approximately 5%.
Mining Loss:
A 5% loss rate is applied to cover the loss from workface handover to the RoM bin during transportation.

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The mine design results are illustrated in Figure 9.1. Figure 9.2 presents the tonnes and average $\mathrm{CaF}_2$ grade within the stopes at each vertical interval.

Figure 9.1: Plan view of Ore Reserve estimates areas

Source: SRK

Figure 9.2: Tonnes and average $\mathrm{CaF}_2$ grade in stopes per vertical interval

$\nrightarrow$ srk consulting 55

Source: SRK

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9.6 Ore Reserve estimates

The estimated Ore Reserve based on stated Mineral Resource estimates (within the Measured and Indicated categories) and application of appropriate Modifying Factors is summarised in Table 9.2, and illustrated in the waterfall chart shown in Figure 9.3.

Table 9.2: Estimate process summary

Description	Tonne (kt)
Indicated and Inferred Mineral Resources at 15% CaF₂ cut-off grade	61,863
Design Scope MI MRE	35,436
Mineable Shapes Optimisation	27,958
Mining Stopes at 16.6% CaF₂ cut-off grade	22,267
Allowance for Dilution	3,825
Mining Loss	-1,305
Ore Reserve as at 31 October 2024	24,787

Source: SRK

Notes:

Any differences between totals and sum of components are due to rounding.

Figure 9.3: Estimates process waterfall chart

srk consulting 55

Source: SRK

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9.7 Ore Reserve Statement

According to the JORC Code, an Ore Reserves are the economically mineable part of Measured and/or Indicated Mineral Resources, including losses and dilution that may occur due to mine design and during mining operation. Ore Reserves are typically defined at a reference point, which for this Report is considered to be the mineable materials as received at the RoM bin.

As at 31 October 2024, Probable Ore Reserves of 24.8 Mt at an average grade of 28.6% CaF₂ for 7.1 Mt of contained CaF₂ are estimated to reside within the mining licence area, reported in accordance with the JORC Code (2012). These Ore Reserves are classified in the Probable category as there is no Measured Mineral Resource (Table 9.3).

Table 9.3: Ore Reserves Statement for Karchar Fluorspar Mine as at 31 October 2024

Category	Ore Reserve (kt)	CaF₂ (%)	CaF₂ Contained (kt)
Probable	24,787	28.6	7,094
Total	24,787	28.6	7,094

Source: SRK

Notes:

The Ore Reserves are classified as Probable Ore Reserves as there is no Measured Mineral Resource.
The cut-off grade to distinguish between ore and waste is 16.6% CaF₂.
The Ore Reserves are reported as dry metric tonne.
The Ore Reserves are reported at the reference point as received at the RoM bin.
The Ore Reserves are reported inclusive of Mineral Resources.

Competent Person's Statement

The information in this Report which relates to the Ore Reserve is compiled by Falong Hu who is a full-time employee of SRK Consulting (China) Limited. Mr Hu is the Fellow of AusIMM and has sufficient experience relevant to the kind of project, style of mineralisation, type of deposit under consideration, and the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code 2012).

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9.8 Conclusions and recommendations

SRK has conducted estimation of the Ore Reserves for the Mine in accordance with the JORC Code. These estimates are based on the ENFI Design 24, prepared in 2024. The mine plan proposed in this technical study employs mature mining technology, commonly used in underground mining, and is considered technically reasonable and feasible.

The planned mining techniques include a combination of CAF and DAF, incorporating the use of a roadheader as an option. This mechanised mining methodology is applied based on rock mass conditions, and its application is expected to be further enhanced in future production.

Currently, there are no Measured Mineral Resources, and consequently, no Proven Ore Reserves. SRK recommends improving the Ore Reserve classification by conducting infill drilling and underground channel sampling to mitigate the risks associated with mine design or planning.

Some of the proposed level drives are located near or across the orebody. SRK recommends modifying the design during short-term planning to address this issue.

10 Mineral Processing

10.1 Introduction

Several research institutes have conducted mineralogical studies and processing testwork on composite samples from the Project. These tests have characterised the processing properties of the fluorspar ore. The results provide a solid foundation for designing the processing flowsheet. This chapter summarises the test results and describe the proposed design of the processing plant. The following testwork has been undertaken:

Yantai Jinnuo Mining Machinery Co., Ltd. ('Yantai Jinnuo'), 'Flotation Test Report on Fluorspar Southwest of Karchar, Ruoqiang County, Xinjiang', July 2011.
Xi'an Tianzhou Mining Technology Group Co., Ltd. ('Xi'an Tianzhou'), 'Mineral Processing Test Report on Karchar Southwest Fluorspar Mine, Ruoqiang County, Xinjiang', August 2018.

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Institute of Comprehensive Utilization of Mineral Resources, Chinese Academy of Geological Sciences ('Institute of Academy of Geological Sciences'), 'Mineral Processing Test Report of Karchar Fluorspar Mine in Ruoqiang County, Xinjiang', August 2021.
Institute of Comprehensive Utilization of Mineral Resources, Chinese Academy of Geological Sciences, 'Comprehensive Utilization Technology Research Report of Karchar Fluorspar Mine in Ruoqiang County, Xinjiang', December 2022.
Luoyang Mining Machinery Engineering Design and Research Institute Co., Ltd. ('Luoyang Minining Machinery Design Institute'), 'Xinjiang Xinxin Mining Co., Ltd. Karchar Fluorspar Ore BOND Ball Mill Work Index Test Report', February 2023.
Xinjiang Institute of Non-ferrous Metals ('Xinjiang Institute of Non-ferrous Metals'), 'Beneficiation Process Experimental Research Report of Karchar Fluorspar Mine in Ruoqiang County, Xinjiang', March 2023.
Institute of Resource Utilization and Rare Earth Development, Guangdong Academy of Sciences ('Guangdong Academy of Sciences'), 'Mineral Processing Experimental Research Report of Karchar Southwest Fluorspar Mine in Ruoqiang County, Xinjiang', March 2023.
Mining and Metallurgy Technology Group Co., Ltd. ('North Mining Institute'), 'Mineral Processing Experimental Research Report of Karchar Southwest Fluorspar Mine, Ruoqiang County, Xinjiang', Mining and Metallurgy Technology Group Co., Ltd., March 2023.
Changsha Mining Research Institute Co., Ltd. ('Changsha Mining Research Institute'), 'Mineral Processing Research Report of Karchar Southwest Fluorspar Mine in Ruoqiang County, Xinjiang', April 2023.
Tanshan Research Institute of China Coal Technology Engineering Group ('Tangshan Institute of CCTEG'), 'Floating-Sinking Test and Pre-discarding Tailings Test, Part 1 – Report of Laboratory Test', July 2023.
Tangshan Institute of CCTEG, 'Floating-Sinking Test and Pre-discarding Tailings Test, Part 2 – Report of Pilot Test', September 2023.

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10.2 Mineralogy

10.2.1 Head assay and mineral composition

The chemical and mineral compositions of the ore are shown in Table 10.1 and Table 10.2, respectively. These results show that the ore has a very simple mineral composition. The primary minerals are calcite and fluorspar, with quartz and minor amounts of other minerals. Among these, fluorspar is the only mineral of economic interest. The ore is classified as calcite-type fluorspar ore. Since both calcite and fluorspar contain calcium, their floatability is similar. Therefore, the primary task of processing testwork is to effectively separate these two minerals.

Table 10.1: Ore chemical composition

Composition	CaF_{2}	CaCO_{3}	SiO_{2}	Al_{2}O_{3}	Na_{2}O	K_{2}O
Content (%)	36.73	50.91	10.20	0.45	0.19	0.029
Composition	TFe	TiO2	MgO	MnO	S	P2O5
Content (%)	0.22	0.014	0.18	0.08	0.065	0.05

Source: Xinjiang Institute of Non-ferrous Metals 'Beneficiation Process Research Report of Karchar Fluorspar Mine in Ruoqiang County, Xinjiang' (March 2023)

Table 10.2: Ore mineral composition

Mineral	Weight percentage (%)	Mineral	Weight percentage (%)
Calcite	53.63	Hematite	0.35
Fluorspar	32.90	Chlorite	0.32
Quartz	7.43	pyrophyllite	0.10
Feldspar	1.49	Barite	0.04
Illite	1.47	Limonite	0.04
Apatite	0.98	other	0.44
Mica	0.81	total	100.00

Source: Institute of Academy of Geological Sciences 'Mineral Processing Test Report of Karchar Fluorspar Mine in Ruoqiang County, Xinjiang' by the (August 2021)

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10.2.2 Principal mineral dissemination characteristics

Fluorspar, also known as fluorite, has the chemical composition of $\mathrm{CaF}_2$. Other elements can substitute for calcium through isomorphism, be adsorbed in the cracks of fluorspar, or be present as solid inclusions within separate minerals. Additionally, fluorspar often contains impurities such as $\mathrm{Fe}_2\mathrm{O}_3$, $\mathrm{Al}_2\mathrm{O}_3$, and $\mathrm{SiO}_2$. It has a density of $3.8~\mathrm{g/cm^3}$ and a Mohs hardness of 3.86.

Fluorspar in the Project ore is colourless or light purple and is distributed in euhedral to subhedral granular, elongated, and irregular forms, with occasional fine-grained euhedral fluorspar particles. Some fluorspar forms fine veins that interlace with fine veins of calcite and quartz. Additionally, fluorspar replaces other minerals, with the contact boundaries appearing as embayed and other irregular shapes, leaving numerous residual bodies. Inclusions of quartz and chalcedony are observed, and sometimes remnants of calcite structures can be seen.

The particle size of fluorspar varies widely, with the largest exceeding $10~\mathrm{mm}$ and the smallest, constrained by microfracture spaces, ranging from $10~\mu\mathrm{m}$ to $20~\mu\mathrm{m}$. Generally, the particle size falls between $0.2~\mathrm{mm}$ and $2~\mathrm{mm}$.

The chemical composition of calcite is $\mathrm{CaCO}_3$, and it often contains isomorphic substitutes such as Mn, Fe, Zn, Mg, and Sr. Calcite has a hardness of 3 and a density of $2.6 - 2.9~\mathrm{g/cm^3}$.

Calcite in the Project ore is colourless and transparent, appearing in euhedral to subhedral granular forms. Some calcite particles are relatively large, ranging from 0.5 mm to 10 mm. Additionally, some calcite forms fine veins that interlace within the ore.

Quartz has a chemical composition of $\mathrm{SiO}_2$ and often contains small amounts of impurities such as $\mathrm{Al}_2\mathrm{O}_3$, $\mathrm{CaO}$, and $\mathrm{MgO}$. Its specific gravity varies with crystal form, ranging from $2.22~\mathrm{g/cm^3}$ to $2.65~\mathrm{g/cm^3}$. Quartz typically exhibits a well-formed euhedral to subhedral granular structure. Some coarse-grained quartz, with a higher degree of euhedral crystal formation, can reach a maximum size of $0.5~\mathrm{mm}$ and is found adjacent to minerals like biotite, feldspar and calcite. Additionally, quartz and quartz veins are distributed in fine-grained and vein-like forms within fluorspar and calcite.

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The Project ore contains approximately 1.49% feldspar, which appears in euhedral to subhedral granular structures and is distributed alongside quartz and biotite. The feldspar particles are larger than the adjacent quartz, with a maximum size of up to 2 mm.

Biotite has a composition of K{(Mg, Fe)₃AlSi₃O₁₀₂} and typically forms in platy, scaley or radiating aggregates. It has a hardness of 2–3 and a specific gravity of 3.02–3.12 g/cm³. In the Project ore sample, biotite constitutes about 8% and appears in flaky form, distributed among the granular quartz.

In addition to the minerals mentioned above, the Project ore contains trace amounts of illite, barite, apatite, pyrite and chlorite. Their concentrations are very low and have minimal impact on the properties of the Project ore.

10.2.3 Intercalation and dissociation features

Figure 10.1 shows the particle size distribution curves for fluorspar and calcite. Fluorspar particles larger than 0.074 mm constitute 93%, while calcite particles account for 95%, indicating that both minerals have relatively coarse intercalation particle sizes. According to measurements by the Institute of Academy of Geological Sciences and the Xinjiang Institute of Non-ferrous Metals, when crushed to a particle size of less than 0.2 mm, the monomer dissociation degree is 89.6% for fluorspar, 89.4% for calcite, and 65.7% for quartz. The dissociation degree for other minerals is also above 60%. When ground to 68% passing 200 mesh (P₆₈=74 μm), the monomer dissociation degrees for fluorspar, calcite, and quartz are approximately 92%, 96%, and 89%, respectively. These data indicate that fluorspar and calcite are easily dissociated, which is advantageous for the processing and separation of fluorspar from other minerals.

Table 10.3 presents the degree of dissociation of fluorspar at various grinding fineness levels. When ground to 65% passing 200 mesh (P₆₈=74 μm), the degree of monomer dissociation for fluorspar exceeds 90%. The associated minerals are primarily carbonates, with quartz following. The optimal grinding fineness is between 65% and 70% passing 200 mesh.

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Figure 10.1: Intercalation particle size curves of fluorspar and calcite

Source: Changsha Mining Institute 'Mineral Processing Technology Research Report of Karchar Southwest Fluorspar Mine in Ruoqiang County, Xinjiang' (April 2023)

Table 10.3: Dissociation degree of fluorspar under different grinding fineness

Grinding fineness (<0.074 mm)	Monomer (≥95%)	Conjoined minerals			Monomer 3/4 conjoined
		>3/4	3/4–1/2	1/2–1/4	<1/4
55%	89.05	3.43	3.18	2.15	2.19	92.48
65%	90.64	3.14	2.98	1.89	1.35	93.78
70%	91.85	2.91	2.75	1.65	0.84	94.76
75%	92.83	2.56	2.49	1.47	0.65	95.39
80%	93.25	2.45	2.33	1.36	0.61	95.70

Source: Changsha Mining Institute 'Mineral Processing Technology Research Report of Karchar Southwest Fluorspar Mine in Ruoqiang County, Xinjiang' (April 2023)
Note: Monomer refers to mineral grains whose area ratio of fluorspar is greater than or equal to 95%.

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10.2.4 Mineralogical factors

The mineralogical factors affecting fluorspar processing mainly include the following three aspects:

Mineral composition: in addition to fluorspar, calcite comprises more than 50% of the composition, classifying it as a calcite-type fluorspar ore. Calcite and fluorspar have a closely interwoven relationship and are both calcium-bearing non-metallic minerals with similar floatability. Additionally, both are easily ground minerals, making the separation of fluorspar from calcite challenging.
Dissemination particle size: Fluorspar appears in euhedral to subhedral granular or anhedral granular forms, with a high degree of crystallinity and well-formed crystal shapes. Coarse particles with a dissemination size greater than 74 µm account for over 92%, making them easy to dissociate and float. However, a small amount of irregular fine-grained fluorspar is relatively more difficult to dissociate and harder to recover through flotation.
Intergrowth relationship: Most fluorspar is intergrown along the edges with minerals like calcite and quartz, forming a relatively simple intergrowth relationship that facilitates easy dissociation and recovery. However, a small amount of fluorspar is encapsulated within quartz or calcite, or contains inclusions of calcite, quartz, and other minerals. This encapsulated structure results in a more complex intergrowth relationship, leading to lower dissociation. If these fluorspar particles enter the concentrate, they can affect the concentrate grade; if they enter the tailings, they can impact the recovery rate of fluorspar.
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10.3 Metallurgical testwork

10.3.1 Grindability testing

The Bond ball mill work index (BWi) of the ore has been tested by the Luoyang Mining Machinery Design Institute following the standard test procedure. The results, presented in Table 10.4, show that with a grinding fineness of P80=85 µm, the BWi is 9.67 kWh/t. This indicates that the ore has medium hardness and is relatively easy to grind.

Table 10.4: Bond ball mill work index

Specific gravity (g/cm³)	Bulk density (g/cm³)	F80 (µm)	P80 (µm)	BWi (kWh/t)
2.878	1.568	2,368	121	9.43
			85	9.67

Source: Luoyang Mining Machinery Design Institute, Karchar Fluorspar Ore BOND Ball Mill Work Index Test Report', February 2023.

10.3.2 Pre-concentration testwork

In testing conducted by the Institute of Academy of Geological Sciences, the composite ore sample was crushed to a size of less than 15 mm. Grains sized 6–15 mm were separated for testing with an X-ray intelligent sorting machine and a colour sorter, respectively. Grains sized 1–15 mm were used for a dense medium separation test. None of these three tests effectively excluded waste, indicating that the pre-concentration of the ore is technically challenging.

The report from the Changsha Mining Institute detailed the results of heavy medium separation conducted by the Shandong Cyclone Separation Engineering Technology Research Center. The ore was crushed to a size of less than 8 mm, and grains sized 0.5–8 mm, which accounted for 82% of the sample, were used for the heavy medium cyclone sorting test. The tailings yield, or rejection rate, was 15% of the original ore, with a tailings grade of 5.8% and a fluorspar loss rate of 2.6%. This indicates that the heavy medium cyclone is technically feasible. However, its economic feasibility still needs to be assessed by conducting economic analysis.

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From May to September 2024, the China Coal Technology and Engineering Group conducted laboratory and pilot testing on the heavy medium separation of composite samples. Two types of equipment were used for separating ore particles sized -10+0.75 mm: a conical pressure cyclone and a cylindrical pressure cyclone. Both methods yielded similar separation results. The cylindrical pressure cyclone achieved a concentrate yield rate of 68.53% to 74.71%, a concentrate grade of 38.01% to 41.23%, and a concentrate recovery rate of 91.47% to 94.64%. The tailings yield rate was 25.29% to 31.47%, with a tailings grade of 6.16% to 7.72% CaF₂, and a fluorspar loss of 5.36% to 8.53%. These results indicate that the ore is difficult to be separated using gravity methods.

Despite the significant technical challenges associated with pre-concentration, SRK considers that it is important to explore the possibility of pre-concentration. This process can eliminate some tailings before the ore is ground, thereby reducing the volume of ore entering the mill. It also enhances the grade of the ore fed into the mill which in turn lowers the cost of ore processing.

10.3.3 Flotation tests

Fluorspar flotation is a common recovery method known for its high separation efficiency, low particle size limit for recovery, high concentrate grade, and high recovery rate. Consequently, flotation is generally used, except in the case of high-grade massive fluorspar. Because carbonate minerals such as calcite have buoyancy similar to that of fluorspar, the main focus of the flotation test is on inhibiting these other carbonate minerals to effectively separate fluorspar from them.

The experimental processing flowsheets by various research institutions follow the principle of 'one-time grinding, multi-stage processing,' with differing structures. These include one stage of roughing, zero to two stages of scavenging, with scavenger concentrates sequentially returned. Roughing concentrates undergo five to seven stages of cleaning, where the tailings from the first two to three cleaning stages (cleaner middlings) is combined. After one stage of cleaning, the concentrates are returned to the previous operation stage (either roughing or cleaning) and the tailings is considered the final tailings. The process at the Changsha Mining Research Institute is somewhat complex, following a 'one-stage roughing, two-stage scavenging, seven-stage cleaning' flowsheet. The middlings from cleaning stages one and two are separately processed using a 'one- stage roughing and one-stage cleaning' flowsheet. The Guangdong Academy of Sciences employs a conventional fluorspar flotation process (Figure 10.2) which involves 'one-stage roughing, one- stage scavenging, five-stage cleaning', with the first two cleaner middlings being merged and re-processed.

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Figure 10.2: Experimental process flow of Guangdong Academy of Sciences

Source: Guangdong Academy of Sciences 'Processing Test Report of Karchar Southwest Fluorspar Mine in Ruoqiang County, Xinjiang' (March 2023)

The test conditions for each test are shown in Table 10.5 and Table 10.6 and the corresponding test results are summarised in Table 10.7. The ore grade ranges from 31.5% to 36.7% CaF₂, the final concentrate grade is between 97.2% and 99.2% CaF₂ and the recovery varies from 80.0% to 85.2%.

The multi-element chemical analysis results of the concentrate are shown in Table 10.8. The quality of the concentrate meets at least the FC-97A¹ grade requirements of the Chinese fluorspar industry quality standard (YB/T5217-2019).

¹ ≥97%CaF₂, ≤1.50%SiO₂, ≤CaCO₃, ≤0.05%S, ≤0.05%P, ≤0.05%As, ≤0.10 organic materials, ≥14%H₂O

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Table 10.5: Closed circuit flotation test conditions

Condition and result	Xi'an Tianzhou	Institute of Academy of Geological Sciences	Xinjiang Institute of Non-ferrous Metals
Grinding fineness for roughing	P_{65}=74 μm	P_{70}=74 μm	P_{68}=74 μm
Floatation temperature	34–36 °C	24 °C	20 ± 2 °C
Experimental water	Xi'an water	Chengdu water	Urumqi water
Floatation flow	1 rougher 2 scavenger 7 cleaner, closed circuit	1 rougher 7 cleaner, closed circuit	1 rougher 2 scavenger 7 cleaner, closed circuit
Middlings processing	Cleaner 1, 2 and 3 middlings, merge and cleaning, and return to rougher	Cleaner 1 middling discard Cleaner 2,3 and 4 middlings, merge and cleaning, and return to rougher	Scavenger 1 concentrate and Cleaner 2,3 and 4 middlings, merge and cleaning, and return to rougher
Rougher regulator and dosage	Sodium carbonate 500 g/t	Acidified water glass 600 g/t	Acidified water glass 1,600 g/t
	Tannin extract 1,800 g/t	EM-326C 300 g/t	Tannin extract 465 g/t FS 40 g/t Al_{2}(SO_{4})_{3} 40 g/t
Rougher collector	Saponified oleic acid 240 g/t	EM-OL 430 g/t	Emulsified oleic acid YS-3 325 g/t

Source:

Xi'an Cosmos 'Mineral Processing Test Report of Karchar Southwest Fluorspar Mine in Ruoqiang County, Xinjiang' (August 2018)

'Mineral Processing Test Report of Karchar Fluorspar Mine in Ruoqiang County, Xinjiang' by the Institute of Academy of Geological Sciences (August 2021)

Xinjiang Non-ferrous Metals Research Institute 'Experimental Research on the Beneficiation Process Report of Karchar Fluorspar Mine in Ruoqiang County, Xinjiang' (March 2023).

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Table 10.6: Closed circuit flotation test conditions (continued from Table 10.5)

Condition and result	Guangdong Academy of Sciences	North Mining Institute	Changsha Mining Research Institute
Grinding fineness for Roughing	P_{70}=74 μm	P_{65}=74 μm	P_{70}=74 μm
Floatation temperature	Room temperature	Room temperature	Room temperature
Experimental Water	Guangzhou water	Beijing water	Changsha water
Floatation flow	1 rougher 1 scavenger 5 cleaner, closed circuit	1 rougher 7 cleaner, closed circuit	1 rougher 2 scavenger 7 cleaner, closed circuit
Middlings Processing	Cleaner 1 and 2 middlings, merge and cleaning, and return to rougher	Cleaner 1, 2, 3 and 4 middlings, merge and cleaning, and return to rougher	Cleaner 1 middlings, cleaning, and return to rougher; Cleaner 2 middlings, cleaning, and return to Cleaner 1
Rougher regulator and dosage	GYSH 6,000 g/t	Na_{2}CO_{3} 500 g/t	CD-8 500 g/t
	GYS-2 1,000 g/t	BK525 600 g/t	Na_{2}CO_{3} 1,000 g/t
SSBL 1,000 g/t
Rougher collector	GYF 360 g/t	BK409A 500 g/t	CK-1 500 g/t

Source:
Guangdong Academy of Sciences 'Beneficiation Process Test Report of Karchar Southwest Fluorspar Mine in Ruoqiang County, Xinjiang' (March 2023)
Changsha Mining Research Institute 'Mineral Processing Technology Research Report of Karchar Southwest Fluorspar Mine in Ruoqiang County, Xinjiang' (April 2023)
Mining and Metallurgy Technology Group 'Feasibility Study Report on Karchar Fluorspar Mine Mining and Dressing Project in Ruoqiang County, Xinjiang' (October 2022) (no test report, refer to ENFI's preliminary design).

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Table 10.7: Summary of processing test results

Index	Xi'an Tianzhou	Institute of Academy of Geological Sciences	Xinjiang Institute of Non-ferrous Metals	Guangdong Academy of Sciences	North Mining Institute	Changsha Mining Research Institute
Raw Ore CaF₂ grade	35.23	31.52	36.73	33.57	33.43	35.36
Raw Ore CaCO₃ grade	52.4	53.63	50.91	58.76	56.48	55.71
Concentrate Yield	28.47	26.69	30.05	29.37	28.00	30.20
Concentrate CaF₂ grade	99.20	97.21	97.84	97.36	98.00	98.34
Tailings CaF₂ grade	9.77	7.28	10.47	7.04	8.32	8.10
Concentrate CaCO₃ grade	0.35	0.55	0.64	1.83	0.76	0.83
Concentrate CaF₂ recovery	80.17	83.13	80.05	85.19	82.09	84.00

Source: same as Table 10.5 and Table 10.6

Table 10.8: Fluorspar Concentrate Quality

Institutes	CaF₂	CaCO₃	Chemical composition (%)
			SiO₂	As	P	S	F₂O₃
Xi'an Tianzhou	99.20	0.31	0.38	0.0004	0.0031	0.025	0.015
Institute of Academy of Geological Sciences	97.21	0.55	0.62	≤0.0005	0.03	0.03	0.020
Xinjiang Institute of Non-ferrous Metals	97.97	0.52	0.77	0.002	0.016	0.017	0.024
Guangdong Academy of Sciences	98.82	0.36	0.70	<0.0005	0.02	<0.01	0.028
Changsha Mining Research Institute	98.34	0.83	0.30	<0.0005	0.0036	0.0036	0.026

Source: same as Table 10.5 and Table 10.6

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10.4 Test results analysis

The key factors affecting fluorspar flotation recovery include the following five aspects:

Grinding fineness: sufficient monomer dissociation to achieve high-grade concentrate and high recovery
Reagent and dosage: Carbonate mineral inhibitors and fluorspar collectors, collectors should have good selectivity and low temperature resistance
Flotation temperature: Since fluorspar collectors are mostly fatty acids, their dispersion and activity in the pulp are greatly affected by temperature
Water Quality: Both fluorspar and calcite are calcium-containing minerals. The hardness of the water and the concentration of residual reagents in the return water can significantly impact the process and its outcomes
Middlings Treatment Method: Directly returning middlings can lead to the accumulation of calcite in the flotation circuit, which can deteriorate the process, affecting concentrate quality and recovery rate. Typically, a portion of the middlings is reprocessed separately, with tailings discarded directly, and the reprocessed concentrate is returned to the previous flotation stage.

The suitable grinding fineness determined by the tests is 65% to 70% passing 200 mesh (with 65% to 70% being less than 74 µm), which is consistent with the fluorspar grain size results obtained from mineralogical studies. Typically, this fineness can be achieved with one stage of grinding, allowing for simplified equipment configuration.

The Bond Ball Mill Work Index (BMi) of the Project composite ranges from 9.43 to 9.67 kWh/t, indicating that the ore is medium-soft and easy to grind.

With respect to the flotation process, various flowsheets were tested under the principle of multi-stage cleaning. The findings are summarised as follows:

Roughing and Scavenging: Fluorspar exhibits a rapid flotation rate, achieving a 90% recovery rate within just two minutes of roughing. Test results indicate that a process involving one stage of roughing and zero to two stages of scavenging is suitable. By extending the roughing time, scavenging can be minimised or limited to just one stage.
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Desliming of Raw Ore: The Xinjiang Non-ferrous Metals Research Institute conducted desliming of the ore slurry before roughing, removing 13% of the slime with a 12% loss of fluorspar. The flotation results after desliming were not better than those without desliming, so desliming is not recommended.
Regrinding of Rough Concentrate: The Guangdong Academy of Sciences conducted regrinding-flotation tests on the rough concentrate from roughing. The results showed that while the CaF₂ grade of the concentrate slightly increased after regrinding, the recovery rate significantly decreased. Therefore, regrinding of the concentrate is not recommended. Mineralogical studies indicate that when the fineness is ground to Pₑ₁=74 μm, the monomer dissociation degree of fluorspar exceeds 90%, with only 3% of rich intergrowths, further suggesting that regrinding of the rough concentrate is unnecessary.
Cleaner: 5~8 stage cleaning can meet the quality requirements of concentrate; the number of cleaning stages is related to the type and dosage of gangue inhibitor and is also closely related to the treatment method of middlings.
Reprocessing of Cleaner Middlings: Sequentially returning cleaner middlings can lead to the accumulation of calcite in the process which has an impact on the operation. The Institute of Geology and Mineral Resources directly treats the cleaner initial middlings as tailings, which may increase fluorspar loss. The Changsha Mining Research Institute processes the cleaner initial and cleaner secondary middlings using a 'one-stage roughing, one-stage cleaning' two-stage flotation, yielding good results, although the process is somewhat complex. The Guangdong Academy of Sciences combines the first two stages of cleaner middlings for re-cleaning, resulting in a relatively simple process that avoids the cyclic accumulation of calcite and reduces the number of cleaning stages.
Cleaner Middlings Regrinding: The Xinjiang Institute of Non-ferrous Metals grinds mixed middlings until 80% of them are less than 400 mesh (Pₕ₀=38 μm) and then re-cleans them. The results show no significant difference compared to not grinding, so regrinding is not recommended.
Most fluorspar collectors involve the use of fatty acids which are modified to enhance their collecting ability, selectivity, and low-temperature resistance. Although different reagents are used by each testing unit, it is consistently found that when the temperature falls below 20°C, the activity of the collectors decreases, leading to a decline in processing indicators and requiring an increase in reagent dosage. SRK considers that further tests are required to select appropriate collectors that are effective at low temperatures.
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Regarding water quality, the water from Aksu River has high hardness, which tests have shown can lead to reduced recovery rates. Therefore, softening treatment is necessary, or an alternative water source should be selected. Additionally, process return water adversely affects processing indicators. Due to laboratory constraints, multiple recycling tests of the water were not conducted, so the extent of the impact of return water require further exploration during the actual production.

10.5 Conclusions and recommendations

The principal minerals in the ore are fluorspar and calcite, comprising 32.90% and 53.63% respectively, followed by quartz at 7.43%. These three minerals account for approximately 94% of the total mineral content. The Karchar fluorspar deposit is of the carbonate type. Since both fluorspar and calcite are calcium-containing minerals with similar physical and chemical properties, the separation of fluorspar from calcite is the main focus and key challenge in processing research.
Most of the fluorspar in the ore is coarse grained and easily liberated. However, a small amount of fluorspar is finely disseminated and interlocked with gangue minerals, making it more difficult to liberate. When the ore is crushed to a size of less than 0.2 mm, the monomer liberation degree of fluorspar is 89.57%. When ground to 65% passing 200 mesh (P₆₅=74 μm), the monomer liberation degree of fluorspar exceeds 90%. When ground to P₆₈=74 μm, the monomer liberation degrees of fluorspar, calcite and quartz are approximately 92%. These data indicate that fluorspar is easily liberated, which is beneficial for its separation from other minerals during processing.
The ore is medium-soft and easy to grind, with a suitable grinding fineness of 65% to 70% passing 200 mesh. The optimal processing process involves 'one-stage roughing, zero to two-stage of scavenging, and five- to seven-stage of cleaning, with tailings discarded after re-cleaning the first two to three cleaner middlings.' There is no need for regrinding the rough concentrate or the cleaner middlings. Based on the processing test results from various research units, the raw ore grade is 31.5% to 36.7% CaF₂, the concentrate grade is 97.2% to 99.2% CaF₂, and the recovery ranges from 80.0% to 85.2%.
The water source for the Project is from Aksu River which has high hardness. This can reduce the recovery rate of fluorspar. It should be softened before use, or an alternative water source should be selected. Process return water contains a large amount of flotation reagents and flocculants, which typically have a negative impact on processing indicators. The tests on process recycled water have not been sufficiently thorough to evaluate its impact on processing indicators, and this requires further investigation in future production.
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Temperature affects the reactivity of processing reagents and has a significant impact on processing indicators. Given the high cost of heating the slurry and considering the cold climate at the site, SRK suggests continuing experiments to find flotation reagents effective at low temperatures.

11 PROCESSING PLANT

In October 2022, the Mining Technology Group Co., Ltd. prepared a report ‘Feasibility Study Report on the Mining and Processing Project of the Karchar Fluorspar Mine in Ruoqiang County, Xinjiang.’ China ENFI Engineering Corporation prepared the report ‘Preliminary Design of the Karchar Fluorspar Mine in Ruoqiang County, Xinjiang’ in June 2023, with revisions made in April 2024 (‘2024 ENFI Preliminary Design’).

SRK conducted site visits to the Project sites in April 2023 and December 2024. Full-scale construction of the Project commenced in August 2023, with plans to complete and commence trial processing at the processing plant by June 2025. This chapter is based on the findings from the site visits and the preliminary design content provided by ENFI.

11.1 Design capacity, product and work system

The designed nameplate capacity of the processing plant is 1.2 Mtpa, with a daily capacity of 4,000 t. The final product has been designed as an acid-grade fluorspar concentrate, with an annual output of approximately 300,000 t and a concentrate grade of 97% CaF₂.

The processing plant is designed operate on a continuous work system, maintaining an annual availability of 82.2% over 300 working days per year. Operations before the crushed ore silo, including the coarse ore silo, medium and fine crushing workshop, and screening workshop, will run three shifts per day, each lasting 5 hours, resulting in an annual availability of 51.4%. In contrast, operations after the crushed ore silo, such as the grinding and flotation workshop and the dewatering workshop, will run three shifts per day, each lasting 8 hours, achieving an annual availability of 82.2%.

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11.2 Design process flow

The designed processing flowsheet is as follows: Crushing and grinding use a ‘two-stage closed-circuit crushing + pre-screening before grinding + one-stage closed-circuit grinding’ process. Pretreatment involves ‘preheat the slurry before adding reagents and adjusting the slurry.’ The separation process employs a flotation method with ‘two-stage roughing + two-stage scavenging + regrinding of rough concentrate + eight-stage cleaning + one-stage cleaning scavenging stage + desliming of cleaner tailings + desliming of rough tailings.’ Concentrate dewatering uses a ‘thickening + filtration’ two-stage dewatering process. The final processing product is acid-grade fluorspar concentrate.

Figure 11.1 and Figure 11.2 show the crushing-grinding flowsheet and flotation flowsheet, respectively, as described in ENFI’s ‘Preliminary Design.’

11.2.1 Crushing and screening

The maximum ore size from underground mining is expected to average 350 mm, which is transported via a belt conveyor to the coarse ore silo. From there, a heavy-duty belt feeder and a belt conveyor will transport the ore to a buffer ore silo before the medium crushing stage. The ore is then fed by a belt feeder to a standard cone crusher for medium crushing. The medium-crushed product is conveyed by a belt conveyor to a buffer ore silo in the screening plant. From there, two belt feeders feed the ore to two double-deck heavy-duty vibrating screens for screening. The oversize product is returned via a belt conveyor to the buffer ore silo before fine crushing. Ore from the fine crushing buffer silo is fed by a belt feeder to a short-head cone crusher for fine crushing. The ore from the fine crushing buffer bin is fed via the under-bin belt feeder to a fine crushing short-head cone crusher. The fine-crushed product is then transported by a belt conveyor to the buffer ore bin in the screening plant, forming a closed-circuit fine crushing system. The product with a particle size below 12mm is conveyed by the belt conveyor to the fine ore bin.

11.2.2 Grinding and classification

Four heavy-duty belt feeders are installed below the fine ore silo, where the ore is transported via a belt conveyor to two double-deck linear vibrating screens for pre-grinding screening in the main plant. The oversize product is conveyed by a belt conveyor to the ball mill for grinding, while the undersize product is transported by a slurry pump to the classification pump pool.

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The main plant uses a ball mill with a diameter of 5.03 m and a length of 6.4 m (Φ5.03 m by 6.4 m) for grinding. The grinding product enters the classification pump pool and is pumped to a hydrocyclone cluster consisting of 12 units with a diameter of 500 mm (Φ500-12) for classification. The underflow from the hydrocyclone flows by gravity back into the ball mill, forming a closed grinding circuit. The overflow from the hydrocyclone contains about 70% of particles smaller than 0.074 mm (P₇₀=74 μm). The overflow from the classification hydrocyclone flows by gravity to a coarse screen to remove coarse residue, then flows to the transfer pump pool and is pumped into the fluorspar flotation slurry conditioning tank.

Figure 11.1: Designed crushing-grinding flow of the processing plant

Source: 24 ENFI, redrafted by SRK

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11.2.3 Flotation

The roughing slurry conditioning is equipped with four slurry agitation tanks. The first three tanks use direct steam heating for the slurry, while the last tank adds flotation reagents for slurry conditioning. After heating and intensive conditioning, the slurry enters 34 flotation machines with a capacity of 50 m³ each and 6 flotation machines with a capacity of 30 m³ each for flotation. The process involves two stages of roughing, desliming of roughing tailings, two stages of scavenging, eight stages of cleaning, one stage of cleaning scavenging, regrinding of rough concentrate, scavenging of cleaner tailings (cleaning scavenging), and desliming of cleaning scavenging tailings. This results in the production of the final fluorspar concentrate and tailings.

The concentrate from the first cleaner is pumped to a hydrocyclone cluster consisting of 10 units with a diameter of 250 mm (Φ250-10) for classification. The underflow from the hydrocyclone flows by gravity to a vertical mill for regrinding. The regrind product is then pumped back into the hydrocyclone cluster, forming a closed regrinding circuit. The overflow from the hydrocyclone flows by gravity to a slurry agitation tank for conditioning. The middlings from the first cleaner undergoes one stage of cleaning scavenging (middlings re-cleaning), with the concentrate from cleaning scavenging flowing by gravity back to the first cleaner. The tailings from the second cleaner is pumped by a slurry pump back to the first cleaner. The fluorspar concentrate produced from the eighth cleaning stage is pumped by a slurry pump to two concentrate thickeners with a diameter of 30 m (φ 30 m). The tailings from cleaning scavenging undergoes desliming twice using hydrocyclones, with the underflow returning to Scavenging I for reprocessing. The overflow from the desliming hydrocyclones is combined with the tailings from Scavenging II and pumped to a tailings thickener with a diameter of 30 m (φ 30 m).

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Figure 11.2: Design flotation flowsheet

Source: 2024 ENFI Preliminary Design, redrafted by SRK

11.2.4 Dewatering

The concentrate undergoes a two-stage dewatering process of ‘thickening-filtering.’ The underflow from two concentrate thickeners with a diameter of 30 m (φ 30 m) is pumped to four 120 m² disc filters for filtration. The moisture content of the dewatered fluorspar concentrate is less than 12%. It is then transferred by a belt conveyor to the concentrate silo for storage, or it can be loaded onto trucks for external transport using a front loader. The overflow from the concentrate thickeners and the filtrate is recycled.

The tailings, with an initial concentration of 15.25%, is thickened to a concentration of 28% using a tailings thickener with a diameter of 30 m (φ 30 m) and then pumped to the filling station and tailings storage facility.

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11.3 Design technical parameters and indicators

The technical parameters for the processing plant design are shown in Table 11.1, and the technical indicators are detailed in Table 11.2. (Table 11.1 and Table 11.2).

The closed-circuit flotation test can achieve a fluorspar concentrate grade of 97.21% to 99.20% CaF₂ and a recovery of 80.05% to 86.55%. Considering the test conditions, product quality requirements, and production practices, ENFI's preliminary design proposed the technical indicators (Table 11.2), SRK considers that the proposed indicators align with the general principles of scaling up from laboratory to commercial production in a processing plant and are reasonable. However, in actual production, there are numerous influencing factors such as water quality, reagents, temperature, operation and malfunctions. Therefore, achieving the target 80% recovery rate may present certain challenges.

Table 11.1: Design technical parameters of the processing plant

Design parameter	Unit	Value
Processing plant production capacity	t/y	1,200,000
Ore processing capacity	t/d	4,000
Annual operating days	d/a	300
Daily crushing operating hours	h/d	15
Annual crushing uptime	%	51.4
Daily grinding and flotation operating hours	h/d	24
Annual grinding and flotation uptime	%	82.2
Maximum feed size for coarse crushing	mm	350
Crushing product size P₁₀₀	mm	12
Crushing product size P₈₀	mm	9
Grinding product fineness P₆₅	μm	74
Coarse grinding circulating load	%	350
Regrinding fineness of rough concentrate P₈₅	μm	74
Ore density	t/m³	2.79
Ore loose coefficient		1.6
Ore moisture	%	3
Flotation roughing concentration	%w/w	30
Roughing slurry conditioning time	min	15
Flotation roughing time	min	9
Flotation scavenging time	min/pc	9
Cleaning stage time	min/pc	6
Concentrate thickener capacity	t/m²·d	1.04
Concentrate filter capacity	t/m²·d	0.20

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Design parameter	Unit	Value
Final concentrate moisture	%	12
Coarse ore storage time	h	24
Fine ore storage time	h	36
Reagent dosage
Sodium carbonate	g/t	500
Sodium silicate	g/t	5,350
Sulfuric acid	g/t	5,350
CD-8	g/t	750
CK-1	g/t	690

Source: 2024 ENFI Preliminary Design

Table 11.2: Design technical indicators of the processing plant

Product	Quantity (t/d)	(kt/a)	Yield (%)	CaF₂ Grade (%)	CaF₂ Recovery (%)
Fluorspar Concentrate	982.43	294.73	24.56	97.00	80.00
Tailings	3,017.57	905.27	75.44	7.90	20.00
Raw Ore	4,000.00	1,200.00	100.00	29.78	100.00

Source: 2024 ENFI Preliminary Design

11.4 Processing facilities and equipment

11.4.1 Major equipment

Table 11.3 lists the major processing equipment to be employed at the Project. Belt conveyors, slurry pumps, submersible pumps, and lifting equipment are numerous and therefore not included. These pieces of equipment are calculated based on the process and design technical parameters as commonly used in fluorspar processing. There are up to five groups of desliming cyclones with associated slurry pumps, as well as vertical mills and associated classification cyclone groups for regrinding rough concentrate. SRK considers that desliming and regrinding of rough concentrate are unnecessary, and thus these pieces of equipment are also unnecessary.

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Table 11.3: Major processing equipment

No.	Name	Specification/Model	Motor Power (kW)	Quantity
1	Coarse Ore Bin	6,000 m³		1
2	Heavy-Duty Belt Feeder	1.2 × 6.0 m	30	4
3	Vibrating Feeder	900 × 2,200 mm	3.2	1
4	Standard Cone Crusher	Hydraulic, Extra Coarse Cavity	500	1
5	Short Head Cone Crusher	Hydraulic, Fine Cavity	500	1
6	Belt Ore Feeder	1.4 × 8.0 m	37	1
7	Double-Deck Heavy-Duty Vibrating Screen	3.6 × 8.0 m	18.5	2
8	Belt Ore Feeder	2.0 × 5.0 m	30	2
9	Fine Ore Bin	6,000 m³		1
10	Heavy-Duty Belt Feeder	1.2 × 6.0 m	30	4
11	Vibrating Feeder	900 × 2,200 mm	3.2	1
12	Double-Deck Linear Vibrating Screen	3.6 × 7.3 m	27	2
13	Ball Mill	φ 5.03 × 6.4 m	2,600	1
14	Cyclone Group 1 – Grinding Classification	φ 500-12		1
15	Cyclone Group 2 – Roughing Tailings Desliming 1	φ 250-16		1
16	Cyclone Group 3 – Roughing Tailings Desliming 2	φ 150-22		1
17	Cyclone Group 4 – Roughing Tailings Desliming 3	φ 75-50		1
18	Cyclone Group 5 – Cleaning Tailings Desliming 1	φ 250-16		1
19	Cyclone Group 6 – Clean Scavenging Tailings Desliming 2	φ 100-42		1
20	Cyclone Group 7 – Rough Concentrate Regrinding Classification	φ 250-10		1
21	High-Frequency Vibrating Fine Screen	1.0 × 2.8 m	2.5 × 2	2
22	Five-Deck High-Frequency Vibrating Fine Screen	1.0 × 2.1 m	2.2 × 2	4

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No.	Name	Specification/Model	Motor Power (kW)	Quantity
23	Vertical Mill		500	1
24	Slurry Heating Agitation Tank	φ 4.0 × 4.5 m	55	3
25	Slurry Agitation Tank	φ 4.0 × 4.5 m	55	1
26	Slurry Agitation Tank	φ 3.0 × 3.0 m	22	1
27	Automatic Dosing Machine	48 points		1
28	Inflatable Flotation Machine	50 m³	132	6
29	Inflatable Flotation Machine	50 m³	110	12
30	Inflatable Flotation Machine	50 m³	90	16
31	Inflatable Flotation Machine	30 m³	75	3
32	Inflatable Flotation Machine	30 m³	55	3
33	Slurry Agitation Tank	φ 3.5 × 3.5 m	18.5	1
34	Concentrate Thickener	φ 30 m	45	2
35	Disc Filter	120 m²	132	4
36	High-Efficiency Tailings Thickener	φ 30 m	30	1

Source: 2024 ENFI Preliminary Design

11.5 Construction progress and commissioning, production plans

The processing plant is currently under construction. Figure 11.3 shows the main construction site (photograph taken on 18 November 2024). Construction progress and investment progress control are both well controlled. Weekly project progress reports are prepared to detail construction progress, investment completion, project challenge and countermeasure analysis.

The processing plant equipment has been ordered and will be installed according to the construction progress and installation schedule.

The processing plant is scheduled for completion by June 2025. Table 11.4 outlines the plans for cold and hot commissioning, as well as the transition to commercial production. SRK considers this timeline to be ambitious in comparison with other similar projects in China. The target completion date may require adjustments based on the actual construction progress and the complexity of equipment installation.

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Table 11.4: Commissioning and production plan for the processing plant

Date	Planned content
1-10 June 2025	Equipment inspection and preparation, individual equipment no-load trial run, system no-load integrated trial run
11-30 June 2025	Water, power, reagent systems, and control systems inspection. Conduct low- load (30%~40%) integrated trial runs, medium-load (50%~70%) integrated trial runs, and high-load (80%~100%) integrated trial runs. Address any issues exposed during the system integration promptly.
1-30 July 2025	Trial production involves monitoring various operating parameters and technical indicators, adjusting and optimising operating parameters, coordinating the cooperation between different sections and operations, and conducting a comprehensive evaluation of the process and equipment.
1 August 2025	Commercial production. Continuously improve quality control, equipment maintenance, reagent protocols, and production management in subsequent production processes.

Source: Karchar Fluorspar Mine Project Construction Progress Report, 18 November 2024.

Figure 11.3: Construction of processing plant – 18 November 2024

Source: Karchar Fluorspar Mine Project Construction Progress Report, 18 November 2024.

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11.6 Consumption

Table 11.5 presents the forecast material and reagent consumption for the Project over the LoM. The power consumption is estimated to be 43.5 kWh per tonne of ore, and the fresh water consumption is 0.53 m³ per tonne of ore, both of which fall within normal and reasonable ranges, comparing with similar projects in China. SRK notes that the proposed water source is the nearby Aksu River. Based on site observations, the Aksu River water has high hardness, and the process flowsheet uses a significant amount of reagents, including a small amount of flocculant, which could adversely affect processing indicators.

ENFI 24 has chosen the reagent system developed by the Changsha Mining Institute for production. However, actual production will still necessitate testing and selecting reagent types, as well as making adjustments to the reagent system.

ENFI 24 incorporates a water purification station within the processing plant site to treat water from the production water source. This station is equipped with facilities for purifying and pressurising production water, boasting a capacity of 600 m³/h, and employs coagulation and sedimentation treatment processes. Water from the production source is pumped and pressurised into the mechanical accelerated clarification tank at the purification station, where polyaluminum chloride (PAC) is added for coagulation and sedimentation. The clarified water then flows into the production water tank and is subsequently pumped to a 2,000 m³ high-level production and fire- fighting water tank at the processing plant. This configuration supplies water for production and fire- fighting needs across the mining site, processing plant, and living area.

Table 11.5: Material and reagent consumption

Material/Reagent Name	Unit	Consumption
Steel Balls	kg/t	0.30
Liners	kg/t	0.15
Machine Oil	kg/t	0.01
Grease	kg/t	0.01
Conveyor Belt	m²/t	3.00
Filter Cloth	m²/t	0.42
Sodium Silicate	kg/t	5.35
Sodium Carbonate	kg/t	0.5
DB-8	kg/t	0.75
CK-1	kg/t	0.69
Sulfuric Acid	kg/t	5.35
Flocculant	kg/t	0.01

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Material/Reagent Name	Unit	Consumption
Electricity	kWh	43.50
Water	m³/t	5.13
– Of which: Circulating and Return Water	m³/t	4.60
– New Water	m³/t	0.53

Source: 2024 ENFI Preliminary Design

11.7 Conclusions and recommendations

The processing plant is designed to treat 1.2 Mtpa, with a daily processing capacity of 40,000 t. The product is fluorspar concentrate with 97% CaF₂. The plant operates on a continuous work system with an annual availability of 82.2% and 300 working days. The designed recovery rate is 80%. Compared to processing test results, SRK considers these design indicators to be reasonable.
The designed feed size for the processing plant is less than 350 mm, with a crushing and grinding process of ‘two-stage closed-circuit crushing with pre-screening and one-stage closed-circuit grinding,’ with a grinding fineness of 70% less than 74 μm. SRK considers the crushing and grinding process to be reasonable, allowing the grinding fineness to fluctuate between 65% and 70% less than 74 μm in actual production.
Pre-concentration is a measure to improve ore feed grade, increase ore processing capacity, and reduce processing costs. With the development of intelligent sorters in recent years, these sorters are increasingly used in ore pre-concentration. Since fluorspar exhibits fluorescence under ultraviolet light, distinguishing it from other minerals, SRK recommends continuing pre-selection tests and further techno-economic studies for the Project to evaluate the feasibility of pre-selection.
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The designed fluorspar flotation process involves ‘slurry heating, two-stage roughing, two-stage scavenging, regrinding of rough concentrate, and eight-stage cleaning.’ SRK considers this process overly complex. Since desliming increases fluorspar loss without improving flotation indicators, SRK recommends eliminating the desliming operation. Given the rapid flotation speed of Karchar fluorspar, SRK suggests simplifying the roughing and scavenging process to either two-stage roughing or a combination of one roughing and one scavenging stage. SRK proposes a process of ‘two-stage roughing and seven-stage cleaning, with some middlings concentrated for re-selection.’ The two-stage roughing will eliminate the need for scavenging operations, thereby simplifying equipment configuration. Middlings from the first and second cleaning stages can be combined for re-selection, with tailings directly discarded, and the re-selection concentrate returned to the roughing operation.
The high hardness of water from Aksu River is expected to negatively affect the processing process. The 2024 ENFI Preliminary Design includes a water purification station intended to treat water from the water source; however, the treatment facilities are designed only for domestic water, not production water. During SRK’s site visit, several springs were observed without travertine deposits. SRK considers sampling and testing these springs: if they exhibit low hardness, they could be suitable sources for both production and domestic water. SRK understands that Huaou will monitor water quality during production. If it is found that water quality negatively impacts fluorspar recovery, Huaou will implement targeted softening measures. These measures will include adjusting pH levels using sodium hydroxide (NaOH) to precipitate calcium and magnesium ions, thereby minimising their interference. SRK considers that these proposed measures are suitable for addressing the potential risk.
The mine is situated in a high-altitude, cold region, where the current fluorspar collectors exhibit reduced activity at low temperatures (below 15 °C). This requires increased dosages and leads to lower recovery rates. The ENFI Preliminary Design recommends direct steam heating of the slurry. SRK considers slurry heating feasible but suggests incorporating process water heating devices to maintain slurry temperature by heating the process water. Additionally, SRK recommends ongoing testing and selection of low-temperature processing reagents to reduce costs.
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12 INFRASTRUCTURE

12.1 Introduction

This chapter describes the key infrastructure as outlined in the preliminary design by ENFI and the construction details provided by Huaou (Figure 12.1). It also evaluates whether the infrastructure is appropriate and sufficient to support the planned operation. The key infrastructure currently under construction includes power supply lines, a shared substation, a dedicated substation, a tunnel connecting the processing plant and TSF and auxiliary facilities. The water intake point has been selected but construction of the water supply facilities has not yet commenced.

Figure 12.1: Infrastructure plan view

Source: SRK

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12.2 Power supply

The power supply is from the Baiganhu 220 kV substation, located about 18 km from the Project site and equipped with two 180 MVA main transformers. Huaou has entered into a power supply agreement with the State Grid Corporation to build a power supply line and a shared substation from the Baiganhu 220 kV substation to provide electricity to the Project and two other nearby mines. As of December 2024, SRK was informed that approximately 80% of the civil engineering work had been completed, and all electrical equipment and supporting facilities had been delivered to the site. About 40% of the work on constructing the secondary equipment room and outdoor secondary cable trenches had been finished. The shared substation is scheduled to supply power via Line A in the first quarter of 2025 (Figure 12.2).

Figure 12.2: Shared substation

Source: Huaou

The power supply for the mining area is facilitated by a 110 kV power line extending from the shared substation to a self-built substation within the mining area (Figure 12.3). This self-built substation is a 110 kV/10 kV main step-down facility, featuring a single-circuit 110 kV power supply line that steps down to 10 kV to supply power to various mining surface facilities, underground pump substations, the conveyor belt haulage system, the fresh air raise heating system, and the assist decline heating system.

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The mining surface facilities are proposed to include two ventilation shaft substations, backfilling substations, a compressor air substation, and a maintenance substation. Underground pump substations are to be located on levels 2,850 m asl, 2,550 m asl, and 2,450 m asl.

The intake air shaft heating system and the assist decline air heating system are to be used to increase the temperature of intake fresh air during the winter.

The low voltage from the underground pump substations is stepped down to supply low voltage substations located on each level. The low voltage supply is 415 V for drilling, 380 V for level dewatering pumping and auxiliary fans and 220–250 V for lighting and rail operations.

Construction of the self-built 110 kV substation commenced in July 2024. Most of the construction was completed as of December 2024. The self-built 110 kV substation is scheduled to be ready for power supply by the first quarter of 2025.

Figure 12.3: Substation

Source: Huaou

The Project has a diesel power station with six 10 kV, 800 kW diesel generator sets currently providing power to the mine. Once external power supply is connected, it will serve as a backup power source for the mine. The Project's power supply is designed with dual power sources to fully ensure the safety and reliability of the power supply.

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12.3 Solar heating system

Huaou plans to install a medium-temperature solar hot water system to meet its industrial heating needs. This innovative system will primarily be used to heat the raw ore slurry for a processing plant with a daily capacity of 4,000 t. The design strategy involves using solar energy to raise the temperature of cold water from 2-7 °C to 70 °C, which is then stored in a thermal storage tank for use by the plant. During periods of insufficient sunlight, such as cloudy or rainy weather, auxiliary heating equipment will be used to maintain the required temperature levels.

The Project site is exposed to an annual average solar irradiation of 1,689.2 kWh/m². The solar collector has a total illuminated area of 9,686 m² and can capture up to 16,361.6 MWh of solar energy each year.

Construction of the solar heating system commenced in September 2024. The installation of the solar heating system has been completed, with equipment commissioning currently in progress (Figure 12.4).

Figure 12.4: Solar heating system

Source: SRK site visit, December 2024

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12.4 Water supply

The Project's principal water source is surface water from the Aksu River, a tributary of the upper reaches of the Ruoqiang River. The water source originates from glacial meltwater in the southern mountains. The intake point is located approximately 10 km southeast of the mining area. This intake point is situated at the confluence of a left-bank tributary of the Aksu River. The water source is stable, with little variation in surface runoff throughout the year, and the average runoff exceeds 6 m³/s.

Figure 12.5: Water source

Source: SRK site visit, December 2024

From the water intake point, a seepage filtration pool will be installed in the main channel at the tributary's confluence. This pool will consist of 10 buried (377 mm diameter) bridge-style seepage pipes in the lower layer and three layers of artificial filter material on top. Subsurface flow will be filtered through the filter material and water pipes, then directed into a collection pipe leading to Collection Pool #1 (50 m³). After sedimentation and sand flushing, water will be transported via gravity-fed pipelines to Storage Pool #2 (2,000 m³). From Storage Pool #2, a DN450 water pipeline will be installed, with a capacity exceeding 460 m³/h.

During the rainy season, the Project's waste dump generates 4,350 m³/d of water. A sedimentation pond is set up in the form of a ground pit lined with a membrane, with a capacity of 5,000 m³. During normal drainage, the sedimentation pond processes and re-uses the water in the high-level water tank of the concentrator. During heavy rain, the water is discharged after passing through the sedimentation pond.

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The Project is divided into three areas: the mining area, the processing plant, and the accommodation area. The mining area is equipped with a domestic water supply system, a production water supply system, a fire-fighting water supply system, and a return water system. The processing plant is equipped with a domestic water supply system, a production water supply system, a fire-fighting water supply system, a circulating water system, and a return water system. The accommodation area is equipped with a domestic water supply system and a fire-fighting water supply system. A water purification station is set up within the mining industrial site to treat water from the production water source. The water purification station is equipped with production water purification and pressurisation facilities, with a production capacity of 600 m³/h, using coagulation and sedimentation treatment processes.

Freshwater will be used directly for industrial purposes, including firefighting. For domestic purposes, freshwater intake will be pumped to the water treatment plant at the processing plant, where it will undergo sedimentation, filtration with sand and activated carbon, and disinfection with reagents such as calcium hydroxide and chlorine dioxide. The Project's total water consumption is estimated to be approximately 25,476 m³/d, including 6,335 m³/d of new production water (including 650 m³/d of contingency), 200 m³/d of domestic water, 1,435 m³/d of circulating water, and 17,506 m³/d of return water. Detailed water usage for each functional area is provided in Table 12.1.

Table 12.1: Water balance

Workshop and Equipment Name	Total Water Usage (m³/d)	Water Condition	Supply (m³/d)					Discharge (m³/d)
			Fresh Water	Domestic Water	Circulating Water	Return Water	Circulating Water	Return Water	Loss	Discharge
Mining	1,440	Production Water	1,440						1,440
Grinding and Flotation Section	20,510	Recycled, Production Water	2,104		1,320	17,086	1,320	15,410	3,760	20
Tailings Facilities	1,416	Production Water	1,301		115		115	1,296	3	2
Backfill Mixing Station	780	Recycled, Production Water	360			420		780
Boiler Room	480	Production Water	480						480
Domestic Water	200	Domestic Water		200					40	160
Total	24,826		5,685	200	1,435	17,506	1,435	17,486	5,723	182
Contingency	650		650						650
Grand Total	25,476		6,335	200	1,435	17,506	1,435	17,486	6,373	182

Source: Huaou

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The construction contract for the water supply project is planned to be tendered by late December 2024, with all civil works and pipeline installations completed during 2025. Normal water supply capacity is expected to be established by June 2025.

12.5 Conclusion

The proposed power supply and water supply systems have been designed to meet the Project's operational demands. The power supply system is adequate to support both mining and processing operations.

Similarly, the water supply system is designed to provide sufficient for the Project's various processes. It uses water collected from the intake point on the Aksu River as well as from the waste dump and underground operation and incorporates return water from the TSF. The system's capacity is designed to fulfill both operational and domestic requirements effectively.

13 TAILINGS STORAGE FACILITY

13.1 Documents reviewed

The following documents have been reviewed to support the SRK's TSF review.

'Environmental Impact Report for the Mining and Processing Project of the Karchar Fluorspar Mine in Ruoqiang County, Xinjiang Huaou Mining Co., Ltd.' (Volumes I and II) Xinjiang Green Environment Tianchen Environmental Technology Co., Ltd., May 2023
'Preliminary Design (Feasibility Study) for the Karchar Fluorspar Mine in Ruoqiang County, Xinjiang Huaou Mining Co., Ltd.' China ENFI Engineering Corporation, April 2024
'Safety Facility Design for the Tailings Storage Facility of the Karchar Fluorspar Mine in Ruoqiang County, Xinjiang Huaou Mining Co., Ltd.' (Approval Version) China ENFI Engineering Corporation, September 2024
'Construction Drawings (Preparation Drawings) for Tailings Facilities (Initial Dam, Seepage Facilities, Flood Discharge Facilities)' China ENFI Engineering Corporation, September 2024
'Geological and Hydrogeological Investigation Report for the Tailings Storage Facility of the Karchar Fluorspar Mine in Ruoqiang County, Xinjiang Huaou Mining Co., Ltd.' (Detailed Investigation Version 05) Beijing Urban Construction Survey and Design Research Institute Co., Ltd., September 2024

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'Static Geotechnical Testing Research on Dam Construction Materials for the Tailings Storage Facility of the Karchar Fluorspar Mine in Ruoqiang County, Xinjiang Huaou Mining Co., Ltd.' Yangtze River Water Resources Commission, Yangtze River Academy of Sciences, Ministry of Water Resources Key Laboratory of Geotechnical Mechanics and Engineering, March 2024
'Dynamic Geotechnical Testing Research on Dam Construction Materials for the Tailings Storage Facility of the Karchar Fluorspar Mine in Ruoqiang County, Xinjiang Huaou Mining Co., Ltd.' Yangtze River Water Resources Commission, Yangtze River Academy of Sciences, Ministry of Water Resources Key Laboratory of Geotechnical Mechanics and Engineering, April 2024
'Overall Plan Introduction for the Karchar Fluorspar Mine' Huaou Mining, December 13, 2024

13.1.1 Natural conditions of the site

The proposed TSF is to be situated in a valley, approximately $3.2\mathrm{km}$ southeast of the processing plant. Upon completion, it is expected to cover an area of approximately $0.8\mathrm{km}^2$ and has a catchment area of approximately $6.85\mathrm{km}^2$ . Within a $10\mathrm{km}$ radius of the proposed TSF area, there are no farmlands, residents, villages, scenic spots, nature reserves, water source protection areas, or significant wetlands. The Aksu River, a tributary of the upper Ruoqiang River, is located $1.4\mathrm{km}$ downstream (Figure 13.1).

Figure 13.1: Location of tailings storage facility and processing plant

Source: Huaou

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In assessing the optimal location for the TSF, SRK notes the following considerations:

The Project experiences is located in a typical continental alpine cold arid climate zone, characterised by hot, dry summers and harsh winters. The annual average temperature is 1.5 °C, with daily maximum and minimum temperatures reaching 28.7 °C and -29.5 °C, respectively. There is a notable temperature difference between day and night, with daytime temperatures in July and August exceeding 15 °C and nighttime temperatures dropping below 4 °C. The rainy season occurs from June to August, with an average annual precipitation of 63.6 mm and a maximum daily precipitation of 20.1 mm. The average annual evaporation is 3,057 mm, primarily occurring in the summer months of June, July and August, with a monthly cumulative evaporation reaching 1,445 mm. The windy season extends from March to August, with predominant northwest and southeast winds, an average annual wind speed of 2.2 m/s, and a maximum wind speed of 26 m/s. The freezing period lasts from mid-November to March.

The TSF is to be located on lands located on the northern slope of the Altyn-Tagh Mountains, an area characterised by steep terrain. The elevation of this ranges from a high of 3,382 m to a low of 2,888 m, resulting in a relative height difference of approximately 494 m. The upper sections of the mountain slopes feature exposed bedrock, primarily composed of strongly to moderately weathered granite. The middle and lower sections, extending to the foot and gullies, are covered with Quaternary silt at the top and loose deposits formed by Quaternary alluvial and colluvial deposits at the bottom. These are underlain by strongly to moderately weathered bedrock, mainly consisting of gneiss and granite.

The regional groundwater types consist of loose layer pore aquifers and bedrock fracture aquifers. There are no rivers or surface water bodies or stable groundwater aquifers. The moderately weathered granite generally has a permeability rate of less than 5 Lu, acting as a natural relative aquiclude. This creates a small, complete, independent, and closed hydrogeological unit within the storage area.

The engineering geological and hydrogeological conditions of the proposed TSF area are relatively simple, with minimal impact from adverse geological factors. The geology at the tailings dam site is stable, showing no signs of hazardous features such as landslides, karst formations, or debris flows. There are only a few areas containing unstable rocks and loose soils. The maximum freezing depth in the TSF area is 1.0 m. The topography and geomorphology of the proposed TSF area are shown in Figure 13.2.

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Figure 13.2: Topography and geomorphology of the proposed TSF area

Source: Huaou

From a seismicity perspective, the basic peak ground acceleration value at the Project site is 0.15g, with a characteristic period of the basic ground motion acceleration response spectrum of 0.45 seconds, corresponding to a seismic intensity of VII. Within a 150 km radius of the mining area, there have been 15 earthquakes with magnitudes between 3 and 5, and one earthquake with a magnitude above 5 in the past 10 years. The epicentres of these earthquakes are relatively far from the Project area, resulting in limited impact on the region.

13.1.2 Tailings production and characteristics

Once operating at full capacity, the processing plant will process 1.2 Mt of ore annually (4,000 tpd), producing 905,300 t tailings each year. Of this amount, 469,000 t per year are estimated to be used for underground backfill, while the remaining 436,300 t per year are estimated to be directed to the TSF. The total tailings storage volume is 17,228,200 t. The weight concentration of tailings slurry discharged from the processing plant is 15.25%, and the dry density of the tailings is 2.79 t/m³. The tailings particle size distribution is shown in Table 13.1.

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Table 13.1: Tailings particle size distribution

Particle size (mm)	Distribution ratio (%)
+0.15	5
-0.15+0.074	25
-0.074+0.038	30
-0.038	40
Total	100

Source: Huaou

The tailings is classified as Category I general industrial solid waste.

13.1.3 Tailings disposal plan

The tailings slurry from the processing plant is thickened to a weight concentration of 35% using a high-efficiency thickener before being pumped to the TSF. The upstream method is used for tailings deposition and dam construction. Some of the tailings water evaporates in the storage area and is retained in the voids between tailings particles. Another portion is clarified, exposed to sunlight, and biodegraded within the TSF before being returned to the processing plant via a floating pump station. Seepage water in the storage area is collected by a downstream seepage recovery pump station and returned to the TSF (Figure 13.3). Flood diversion ditches are constructed around the TSF to separate clean water from contaminated water, and flood discharge facilities are installed within the storage area.

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Figure 13.3: Tailings disposal process flow diagram

Source: 2024 ENFI Preliminary Design

13.1.4 Tailings storage facility

The proposed TSF includes a tailings dam (initial dam and subsequent dam), flood discharge facilities, clean and contaminated water separation facilities, seepage prevention and drainage facilities, seepage recovery facilities, and monitoring equipment.

The TSF is a valley-type structure, designed with a final accumulation elevation of 3,144 m, using the upstream tailings dam construction method. The total dam height is 73 m, with the initial dam standing at 23 m and the subsequent tailings accumulation dam at 50 m. The total storage capacity is estimated at 20.624 million m³, with an effective storage capacity of 14.4367 million m³, and a service life of 41 years.

The tailings dam is to comprise an initial dam and a subsequent dam. The initial dam is a permeable earth-rock structure with a crest elevation of 3,094 m, a height of 23 m, a crest length of 410 m and a crest width of 5 m. Both the upstream and downstream sides feature 2 m-wide berms, with a slope ratio of 1:2, and are reinforced with 400 mm-thick dry-laid stone revetments. The construction materials for the initial dam are sourced from within the storage area and must meet specific criteria, including a saturated compressive strength of at least 30 MPa, a softening coefficient of no less than 0.7, and a compacted porosity of no more than 22%.

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Once the tailings fills the initial dam, the subsequent dam is to be constructed by progressively stacking sub-dams constructed from coarse tailings deposited in front of the dam. Each sub-dam has a height of 2.5 m and a crest width of 5 m. The initial maximum elevation rate of the accumulation dam is 2.7 m per year, gradually decreasing to 0.8 m per year, with a final height of 50 m, a crest elevation of 3,144 m, and a crest length of approximately 600 m. The average outer slope is 1:4.5, with a platform every 5 m, and an outer slope ratio of 1:3.5 between platforms. A layer of φ 63 high-density polyethylene (HDPE) horizontal drainage pipes is installed every 5 m of elevation difference, spaced 15 m apart, to collect seepage water within the dam body and discharge it to the downstream seepage recovery pool via φ 160 HDPE seepage collection pipes. The outer slope is covered with 0.4–0.6 m of hillside soil, and longitudinal and transverse reinforced concrete grid drainage ditches are set on the dam slope and shoulder. The typical longitudinal section of the tailings dam is illustrated in Figure 13.4.

Figure 13.4: Longitudinal section of the tailings dam

Source: 2024 ENFI Preliminary Design

The storage area is to be lined with a 1.5 mm-thick HDPE geomembrane and a modified bentonite mat for seepage prevention. A composite geotextile drainage net is installed above the membrane for drainage purposes. The lining is applied in six phases, reaching the final accumulation elevation of 3,144 m. Downstream of the initial dam, a cut-off dam and seepage recovery facilities are installed, with the seepage prevention layer extending from the base of the initial dam and connecting to these downstream facilities. Seepage collected in the storage area is pumped back into the TSF by the seepage recovery facilities and, along with clarified water, is returned to the processing plant for recycling via a floating pump station. The bottom of the storage area consists of a highly permeable gravel-sand layer. Two environmental dams are positioned downstream of the cut-off dam to intercept accidental tailings water and tailings from the TSF. Both the cut-off dam and the two downstream sediment dams are impermeable earth-rock structures, each with a height of 4 m.

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The catchment area above the toe of the tailings dam is estimated to span 6.85 km², while the storage area itself covers 0.80 km². Reinforced concrete flood diversion ditches are constructed around the TSF to channel floodwater to the downstream valley of the cut-off dam. These ditches function as environmental facilities to separate clean and dirty water, designed to handle 24-hour rainfall based on multi-year averages. They measure 0.6 m in width, 0.5 m in depth, have a longitudinal slope of no less than 0.8%, and extend approximately 6 km in total length, all constructed with reinforced concrete.

Four frame-type drainage wells are installed along the right bank of the storage area at different elevations, connected by four branch tunnels to a main tunnel, directing rainwater from the storage area to the adjacent downstream valley. The flood control standard is determined by calculating the maximum 24-hour rainfall for a 200-year to 500-year return period. The drainage wells have an inner diameter of 2.5 m and a height of 12–15 m. The tunnels are arch shaped with straight walls, 2.0 m wide and 2.0 m high.

The total length of the main and branch tunnels is approximately 1,611 m, with a longitudinal slope of 0.02 and a maximum discharge flow of 5.1 m³/s. An energy dissipation pool is installed at the outlet. The flood discharge facilities are constructed in four phases.

The storage area and dam body are equipped with two monitoring systems: online monitoring and manual monitoring. Online monitoring includes surface displacement of the tailings dam, internal displacement, dry beach length, reservoir water level, precipitation, phreatic line depth, and video surveillance. Manual monitoring includes surface displacement of the tailings dam, reservoir water level, phreatic line depth, outer slope ratio, and routine inspections. Monitoring data will be integrated into the entire mining area’s network for information transmission and resource sharing.

The water inflow to the TSF is approximately 2,700 m³/d. A water balance analysis was conducted for different operational periods of the TSF during drought years, assuming a 95% return water rate. The results indicate that the return water rate will decrease annually, with a maximum return water rate of 44.1% in later years. To maximise water recovery and minimise discharge, three pumps to be installed, each with a return water capacity of 80 m³/h, providing a total return water capacity of over 3,840 m³/d, with a return water rate exceeding 100%.

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The TSF is equipped with access, communication, lighting, duty, safety protection facilities, and safety signage. Hazardous rocks and collapsible soils in the storage area have been treated and removed, with the removed soil and rock materials stored in a topsoil storage area.

As part of the 2024 ENFI Preliminary Design, a flood safety analysis and review were conducted for different operational periods using storm floods with a return period of 200 to 500 years. The results show that the maximum flood height at the TSF is 0.7 m, and the maximum discharge capacity of the drainage system is 5.1 m³/s. This capacity is well within the TSF's flood control and drainage capabilities, fully satisfying the flood safety requirements for the TSF.

A series of analyses were also included in the 2024 ENFI Preliminary Design. Seepage analysis, stability analysis, and flood safety analysis were conducted for the tailings dam under normal, flood, and seismic conditions (VII intensity). Structural safety analysis calculations were performed for the flood discharge facilities. The stability safety factor under seismic conditions is 1.31, significantly higher than the standard requirement of 1.15.

13.1.5 Tailings transport pipeline

The TSF lies approximately 3 km southeast of the processing plant. The main transport pipeline is a φ 250 × (7+12) reinforced plastic composite pipe, 4.4 km long. It includes 2.74 km in a tunnel, 0.7 km along the dam crest, and the rest on the surface, insulated with 10 cm of polyurethane foam and supported by concrete every 3 m. A backup pipeline, φ 219 × 8, 16Mn steel, is 4 km long, laid similarly, with the same insulation and support.

13.1.6 Safety supervision

Clear monitoring indicators and response measures are provided for the water level, sediment beach length, slope, phreatic line depth, dam deformation, and groundwater quality of the TSF. Requirements for TSF safety and environmental supervision agencies, personnel, supervision, system construction, and emergency response plan preparation and drills for various levels of government and enterprises are proposed.

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13.1.7 Project progress

Preliminary design, safety facility design, and construction preparation drawings have been completed. The construction of TSF is planned to be tendered in December 2024 and completed by June 2025.

As of December 2024, the tunnel for the tailings transport pipeline was under construction.

13.2 Conclusions and recommendations

After reviewing the relevant materials and documents, SRK concludes that the site selection, facility setup, design standards, flood and hydraulic calculations, structural safety and stability analysis, monitoring indicator requirements, and safety supervision requirements for the TSF adhere to China's relevant standards and regulations. SRK considers the analysis and calculation results to be reliable.

ENFI has thoroughly assessed each risk area and developed response measures. By implementing these measures according to design specifications, potential risk levels can be minimised. However, to ensure the safety and reliability of the TSF throughout its lifecycle, it is crucial to maintain high construction quality for the initial infrastructure. Particular attention should be paid to facilities implemented in phases or gradually during the operational period, as well as to risk areas with higher accident potential. These include the construction and sealing of flood discharge facilities, the installation of seepage prevention systems, and the construction and discharge processes of the tailings dam.

Although Chinese requirements states that a detailed design for closure works should be prepared prior to closure, SRK recommends having a preliminary plan and cost estimate ready for inclusion in the overall cost assessment.

Conducting a water balance analysis for the TSF under varying precipitation levels will improve tailings water management. This analysis will guide the Project's water balance and fresh water supply, and assist in monitoring discharge water quality while formulating response measures and plans. SRK recommends enhancing the water balance analysis for average and wet years and testing the quality of external discharge water to ensure compliance. If the water quality does not meet standards, appropriate disposal measures should be taken.

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14 ENVIRONMENT, LICENSING AND COMMUNITY

14.1 Environmental and social review objectives

The purpose of this SRK’s review is to identify and/or verify existing and potential environmental, social, permitting responsibilities and risks and to assess any mitigation measures for the Project.

14.2 Review Process, scope and criteria

The verification process for environmental and licencing compliance of the Project involved a review and inspection of the Project’s environmental management performance against:

China’s national environmental regulations
The Equator Principles, World Bank/International Finance Corporation (IFC) environmental standards and guidelines, and internationally recognised environmental management practices.

The methodology applied for this environmental review included desktop data review, site visits and communication with Huaou’s technical personnel. SRK conducted site visits in April 2023 and December 2024.

14.3 Environment-related licences

The 2018 Constitution of the PRC serves as the basis for China’s environmental policymaking. Article 26 of the Constitution mandates that the Chinese Government is responsible for protecting and enhancing the living and ecological environments of the people, as well as preventing pollution and other public hazards. Additionally, the Chinese Government is tasked with organising and promoting tree planting and forest protection.

The following laws and regulations provide environmental legislative support for the Mineral Resources Law of PRC (2019) and the Environmental Protection Law of PRC (2014):

Environmental Impact Assessment Law (2018)
Air Pollution Prevention and Control Law (2018)
Noise Pollution Prevention and Control Act (2021)
Water Pollution Prevention and Control Law (2017)

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Solid Waste Environmental Pollution Prevention Law (2020)
Forestry Act (2021)
Water Resources Act (2016)
Land Administration Law (2019)
Wildlife Protection Act (2023)
Construction Project Environmental Protection Management Regulations (2017).

In addition to business and mining licences, other environment-related operating permits are necessary for project construction and production under relevant Chinese laws and regulations. These primarily include safety production permits, water intake permits, and sewage discharge permits. SRK understands that these environment-related operating permits are not required at the current stage. Below are the specific requirements outlined by relevant laws and regulations for these permits:

According to the ‘Work Safety Law of the People’s Republic of China’ and the ‘Regulations on Work Safety Licence,’ the state government implements a safety production licence system for mining enterprises. Before a mine is completed and put into production or use, the construction unit is responsible for organising the inspection and acceptance of safety facilities. Only after passing this inspection can the mine be put into production and use. Before production, the enterprise should apply for a safety production licence from the relevant issuing management agency in accordance with regulations. According to Huaou, Xinxin, and its PRC legal advisor, no legal impediments are anticipated in obtaining the safety production permit.
According to the ‘Water Law of the People’s Republic of China’ and the ‘Administrative Measures for Water Drawing Permits’, units that directly draw water resources from rivers, lakes, or underground sources must apply to the water administrative department or the river basin management agency for a water drawing licence and pay the water resources fee. For construction projects that require water withdrawal, the applicant must entrust a unit with the appropriate qualifications to prepare a water resource demonstration report for the construction project.

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According to the 'Regulations on the Management of Pollutant Discharge Permits' and the 'Measures for the Administration of Pollution Discharge Permits', units that discharge pollutants must apply to the relevant examination and approval department for a pollutant discharge permit before starting production facilities or actually discharging pollutants. The application form for the pollutant discharge permit can be submitted through the permit management information platform, by letter, or by other means. The pollutant discharge permit is valid for 5 years.

The 'Environmental Impact Assessment Law of the PRC' and the 'Regulations on the Administration of Environmental Protection of Construction Projects' mandate that projects potentially having a significant environmental impact must prepare an Environmental Impact Assessment (EIA) report. This report should provide a comprehensive and detailed assessment of the pollution generated by the construction project and evaluate its environmental impact. Additionally, the construction unit must submit the environmental impact report and the environmental impact report form to the environmental protection administrative department with the authority for approval before commencing construction. Currently, the Project has completed an EIA report for the mining and processing project, covering mines, processing plants, TSF and auxiliary facilities. The report was prepared by Xinjiang Lujing Tianchen Environmental Protection Technology Co., Ltd. in May 2023. The Bayingolin Mongol Autonomous Prefecture Ecology and Environment Bureau in Xinjiang approved this EIA report on 12 June 2023. Upon completion of construction, an acceptance and examination process, as well as filing procedures, will be undertaken. According to Huaou, Xinxin, and their PRC legal advisers, no legal impediments are anticipated in obtaining the environment-related operating permits.

The Law of PRC on Soil and Water Conservation requires that in mountainous, hilly, windy, sandy, and other areas prone to water and soil loss, production and construction projects that may cause such loss must prepare a soil and water conservation plan. The production and construction unit is responsible for preparing a soil and water conservation plan. For this project, the soil and water conservation plan was prepared by Xinjiang Fangxin Engineering Design Consulting Co., Ltd. in October 2024 and was approved by the Water Resources Bureau of Ruoqiang County on 3 December 2024.

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14.4 Ecological assessment

The construction of mine roads, stope and processing plant infrastructure and the dumping of waste rock and tailings will disturb the surface features in various areas of the Project site. This construction and operation may impact or result in the loss of local flora and fauna habitats. If these damaged areas are not effectively managed and restored, the land could become polluted, altering its functions and leading to soil erosion. The EIA examines and evaluates the status of the regional ecological environment and proposes effective measures to mitigate and manage the impact on local wildlife and vegetation.

The Project area does not fall within any national parks, nature reserves, world natural heritage sites, natural parks, or ecological protection red lines. During its site investigation, SRK observed that the mining area and its surroundings have sparse vegetation cover. According to the ecological environment status investigation in the EIA report, the Project area hosts a small number of herbaceous plants and drought-tolerant species such as red willow, Haloxylon, aspen, Achnatherum splendens, and Pipa grass. Nearby wildlife includes species like Qingyang, hare, wild donkey, bear, gazelle, wild yak and jackal. There are no national or autonomous region-level protected wild animals in the Project evaluation area, nor are there any species listed as critically endangered, endangered, or vulnerable in the 'China Biodiversity Red List' or other important species lists.

The ecological protection measures outlined in the EIA report include prohibiting the unauthorised construction of temporary roads that could damage the original topography of non-construction areas, conducting routine biodiversity surveys, and promptly addressing subsidence areas. SRK considers these ecological protection measures to be reasonable and feasible. Additionally, SRK recommends retaining the topsoil stripped during the construction stage for use in future rehabilitation.

14.5 Water management

The main surface water body in proximity to the Project area is the Aksu River, which flows through the mining area from south to north and serves as a tributary to the upper reaches of the Ruoqiang River. The physical properties of the Aksu River vary with the seasons. During the summer, when ice and snow melt, the water becomes turbid. In spring, autumn, and winter, the water is characterised with a milky white colour. Additionally, summer precipitation and melting ice and snow in the area contribute to seasonal surface water flow.

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The Project plans to use the water from the Aksu River as the primary water source for the processing plant, with water from the underground mining operation will also contribute to the water supply to the processing plant. Shallow groundwater in the valley will provide domestic water for the mining area. A new water intake well is planned, along with a domestic water intake pump, to transport water to the domestic water treatment facility in the mining area for treatment before use. The water resources assessment report states that the water intake falls within the industrial water supply index for the Ruoqiang River Basin and does not exceed the surface water industrial use index, thus aligning with the water resource allocation plan for the Ruoqiang River Basin in Ruoqiang County.

The potential negative impact of the Project on surface and groundwater primarily arises from the discharge of untreated production and domestic wastewater. Additionally, mining activities can alter groundwater levels. The main sources of wastewater pollution in the Project include mine inflow water, processing wastewater, return water from tailings ponds, leachate from waste rock piles, machine repair wastewater, industrial site rainwater, and domestic sewage.

Domestic sewage is treated using buried sewage treatment facilities, and once it meets standards, it is used for irrigation and landscaping in the living area.

After coagulation and sedimentation, the inflow water from underground mining is re-used for underground operations and fire protection. In later stages, this water is redirected to support mining production and transported via pipelines to the processing plant for use.

Processing wastewater is recycled back into the production process. Tailings slurry is piped to the tailings pond, which is equipped with a return water system. A water pump transfers clarified water from the TSF to the production return pool of the processing plant, creating a 'closed loop' system for production wastewater with no discharge.

During the EIA period of the Project, the water quality of Aksu River was monitored (the sampling points were located in the upstream and downstream of the Project area). The monitoring items mainly include 22 items including pH, dissolved oxygen, permanganate index, COD, BOD5, ammonia nitrogen, total phosphorus, copper, zinc, fluoride, selenium, arsenic, mercury, hexavalent chromium, lead, and cyanide. According to the monitoring results, the monitoring factors in the upper and lower reaches of the Aksu River all meet the Class I standard in the 'Environmental Quality Standards for Surface Water' (GB3838-2002).

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The Project's EIA report recommends formulating and implementing a groundwater level and quality monitoring plan for the mining area and surrounding regions. It also suggests establishing a dynamic groundwater monitoring system to prevent the project development from directly impacting the groundwater environment negatively. SRK recommends regular monitoring of the environmental quality of surface water and groundwater (including upstream and downstream areas) in the Project area after the project is put into operation. SRK also recommends that an effective stormwater diversion system be built to separate surface runoff from polluted areas and clean areas. In addition, measures such as ground hardening, setting of cofferdams, water collection ditches, leachate collection pools, and accident pools for the concentrator area, temporary storage of hazardous waste, topsoil storage yards, and TSF can also reduce risks of the pollution of surface water and groundwater.

14.6 Waste and tailings management

The waste rocks generated from the initial infrastructure construction and mining of this Project are all piled in the waste rock yard, which can be used for paving roads and damming the TSF, etc. During the service life of the mine, a total of 9.6 Mt of waste rock is estimated to be produced. The designed waste rock stockpile covers an area of 240,000 m² and has a volume of approximately 4.7 million m³. The mine waste rock stockpile is located on the southeast side of the mining and processing plant site. The EIA pointed out that the concentration values of all monitoring items in the waste rock leachate of this project are lower than the maximum allowable discharge in the 'Hazardous Waste Identification Standard-Leach Toxicity Identification' (GB5085.3-2007) and 'Sewage Comprehensive Discharge Standard' (GB8978-1996) Concentration, and the waste rock produced by this Project is Class I general industrial solid waste. SRK suggests building a leachate collection tank for the waste rock dump to collect, treat and re-use the leached wastewater from the waste rock dump.

The EIA suggests that the tailings produced by the Project should be comprehensively used, part of which is used for the filling of underground mining voids, and the rest is used for stacking dams and storing in TSF. The Project conducted a leaching toxicity analysis on the tailings sand samples of the mineral processing test. The analysis results showed that the tailings sand samples were not hazardous wastes with leaching toxicity characteristics and belonged to the 'General Industrial Solid Waste Storage and Landfill Pollution Control Standards' (GB18599-2020) Class I general industrial solid waste. The TSF will be fully anti-seepage, and anti-seepage materials will be installed on the slope of the tailings dam and the bottom of the TSF. Detailed information on tailings discharge and the TSF are given in Chapter 13.

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14.7 Dust and noise

The dust emission sources of the Project mainly derive from loading and unloading of rock materials (both ore and waste), ore storage yards, crushers, screening, waste rock yards, topsoil storage yards, TSF, and the movement of vehicles and mobile equipment.

The EIA proposes the following proposed dust management measures:

Strengthen underground ventilation, adopt spraying and watering, and wet operation.
Regularly sprinkle water and reduce dust on unorganised dust spots such as mining and mining industrial squares, waste rock yards, transportation roads, and filling stations.
Harden the road surface of the transportation road as much as possible and ensure the transportation vehicles strictly adopt measures such as adherence to speed limits and load limits, and use of tarpaulin covering.
Install an air-collecting hood in the workshop above the blanking point equipment and crushing equipment in the feeding process and install a bag filter.

SRK considers that the dust management measures proposed in the EIA are reasonable and feasible, and it is recommended that the above measures be implemented during the construction and operation of the Project.

Equipment that generates high noise during the operation of the Project mainly includes underground rock drills, ventilators, air compressors, water pumps and blasting noise in the mining field. In addition, the crushing and screening equipment and mobile mechanical equipment in the processing plant are also noise sources. The EIA predicts that the noise at the boundary of the mining area and the processing plant of the Project meets the requirements of the Class 2 emission standard in the 'Environmental Noise Emission Standards at the Boundary of Industrial Enterprises' (GB12348-2008). The EIA also proposes a series of noise prevention and control measures, such as optimising the layout of the site, selecting low-noise equipment, and equipping employees with noise protection equipment, etc.

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14.8 Hazardous substances management

Hazardous substances, which can be corrosive, reactive, explosive, toxic, flammable, and potentially biologically infectious, pose risks to human and environmental health. These substances are primarily produced during project construction, mining, and processing operations. They include hydrocarbons (such as fuels, waste oils, and lubricants), processing reagents, chemical and oil containers, batteries, medical waste, and paints.

During the Project’s operation, a small amount of waste engine oil and oil barrels will be generated. The EIA estimates that there will be 120 waste oil barrels per year (approximately 1.8 t annually) and about 2 tonnes of waste engine oil annually, totalling 3.8 tpa, all classified as hazardous waste. The Project will establish a temporary hazardous waste storage room at the mining site to store these materials. Additionally, the Project laboratory will produce about 0.5 t of waste reagents and 2.6 t of waste packaging annually, both considered hazardous waste, which should be temporarily stored in the hazardous waste storage room and regularly transferred to qualified units for disposal. The transportation and transfer of hazardous waste should comply with the relevant requirements of the ‘Technical Specifications for the Collection, Storage, and Transportation of Hazardous Waste,’ ‘Management Measures for Hazardous Waste Transfer Forms,’ and ‘Management Measures for Hazardous Waste Transfer.’ SRK recommends that Huaou reinforce the ground where waste engine oil, processing reagents, and oil tanks are stored, and establish secondary containment facilities to mitigate pollution risks from leaks. Collected waste engine oil and other hazardous waste should be handed over to qualified units for disposal.

14.9 Safety and health

An effective safety management system should encompass on-site training, field policies, safe production work procedures, risk management (including indicator signs), the use of personal protective equipment, an emergency response plan, accident reporting, on-site first aid, designated safety personnel, and daily safety meetings.

SRK recommends that prior to the mine commencing formal production, appropriate safety signage be installed at appropriate locations, display safety measures and procedures in work areas, adequately protect and cover moving mechanical parts, and install protective railings on all platforms. Workers should be provided with suitable personal protective equipment, such as hard hats, reflective vests, noise-cancelling earplugs, and dust masks.

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SRK recommends that Huaou maintains safety production records prior to the commencement of formal production and prepare accident analysis reports for any potential future safety incidents. Based on internationally recognised occupational safety and health practices, these reports should analyse the causes of personnel injuries or near-miss incidents and outline measures to prevent their recurrence. Flourspar mining must take precautions against fluoride dust hazards, as long-term inhalation of fluorite dust can lead to fluorosis. Workers should wear standard-compliant dust masks, ensure proper workplace ventilation, and install dust collection systems in processing areas. These measures help reduce the associated risks.

14.10 Closure Plan and reclamation

Internationally accepted industry practice for managing mine closure and reclamation involves implementing a practical closure and reclamation process and documenting it through the development of a closure and reclamation plan. This process typically encompasses the following aspects:

Identify closure stakeholders (e.g. government, employees, communities, etc.).
Through interviews and consultations, reach agreement with stakeholders on mine closure standards and land-use types after mine closure.
Keep records of consultations.
Establish reclamation goals based on post-closure land-use types.
Describe/identify mine closure responsibilities (determine responsibilities according to mine closure criteria).
Formulate a mine closure management system and estimate the mine closure cost (clear/reduce mine closure responsibilities).
Establish closure cost/financial benefit estimation process.
Develop post-closure monitoring actions/plans (in line with reclamation objectives and closure criteria).

Chinese national requirements for mine closure are outlined in Article 21 of the Mineral Resources Law of PRC (2023), the Rules for Implementation of the Mineral Resources Law, the Mine Site Geological Environment Protection Regulations (2019), and the Land Rehabilitation Regulation (2011) issued by the State Council. These legislative requirements emphasise the necessity of conducting land rehabilitation, preparing a geological environmental protection and reclamation plan, and submitting it for assessment and approval. Additionally, the Project should establish a mine geological environment treatment and restoration fund account.

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In this review, SRK assessed a plan for the development and utilisation of mineral resources and ecological protection and restoration of the Karchar Project, compiled by Xinjiang Xice Planning and Design Co., Ltd. The plan included details on the mine geological environment protection and land reclamation management project, schedule, scope of responsibility, and investment estimation. The reclamation plan provides a comprehensive description of the objectives, tasks, standards, methods, progress, and costs associated with the reclamation work. The estimated static total investment² for the Project’s mine geological environment protection and land reclamation project is RMB56.22 million, while the dynamic total investment³ is RMB87.42 million. Specifically, the static total investment estimate for the mine geological environment protection and management project is approximately RMB1.96 million, with a dynamic investment of RMB3.04 million. The static total investment for the land reclamation project is RMB54.27 million, with a dynamic investment of RMB84.38 million. The plan includes facility demolition, waste removal, and site leveling. According to the Regulations on the Management of Mine Geological Environment Restoration Funds in the Xinjiang Uygur Autonomous Region (2022), mining enterprises must allocate funds at the end of each month based on factors such as the mining coefficient, extraction method coefficient, and sales revenue. The monthly allocated fund amounts to 0.21% of the sales revenue of this project.

14.11 Social evaluation

During its site investigations, SRK observed that the project is situated in an uninhabited area, with no residential settlements near the Project area. Huaou conducted the public participation survey for the EIA in compliance with the ‘Measures for Public Participation in Environmental Impact Assessment.’ No public feedback on the Project was received during this survey. Despite this outcome, SRK recommends that Huaou designs and implements a stakeholder engagement plan, establishes an external communication and complaint mechanism, and ensures the continuous involvement of Project stakeholders in line with international good practice. As part of this review, SRK has not sighted any documentation in relation to any actual or potential impacts of non-governmental organisations on the sustainability of Karchar Fluorspar Mine operations.

15 MARKET STUDY

15.1 Introduction

Shanghai Metals Market (SMM), an independent market research company has prepared a market study on the Chinese fluorspar market (SMM, 2024). This chapter provides a summary of SMM’s study, covering fluorspar consumption and uses, production and resource distribution, market dynamics, and future price outlook.

² The static investment consists of construction and installation costs, equipment and tool procurement costs, other engineering construction fees, and basic contingency fees.

³ The dynamic investment refers to the increase in construction investment during the construction period due to construction period interest and changes in newly approved taxes, fees, exchange rates, interest rates by the state, as well as price changes during the construction period. It includes price difference contingency fees, construction period interest, etc.

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15.2 Chinese fluorspar mining industry

China is a leading global producer of fluorspar, with production increasing from 353 Mt in 2018 to 578 Mt in 2023, reflecting a compound annual growth rate (CAGR) of 10.4%. During this period, there was a notable rise in the production of acid-grade fluorspar concentrate, a key product. The Chinese fluorspar mining industry is characterised by numerous small-scale private enterprises, resulting in a fragmented market. Approximately 750 fluorspar mining companies operate in China, but only a few have an annual production capacity exceeding 100,000 t. These mines are mainly clustered in Zhejiang, Jiangxi, Inner Mongolia, Wunan and Xinjiang. This 'small and scattered' structure presents challenges, including environmental and safety concerns. Despite these issues, the industry is gradually moving towards more standardised and consolidated operations, driven by increased environmental awareness and policy guidance.

15.3 Supply

In 2023, China's fluorspar production capacity totalled 7.75 Mt, with production capacities being relatively dispersed, as the top 10 companies accounted for only 31.3% of the total capacity. These companies are located in East China (Zhejiang, Jiangxi, Fujian, Anhui), North (Inner Mongolia) and Central China (Hunan). Jinshi Resources, the industry leader located in Zhejiang, had a production capacity of 1.17 Mt, capturing a market share of 15.1%.

In Xinjiang, two fluorspar projects are under construction, including this Project and another one by Xinfeng Group. Xinfeng Group's project is expected to commence operation by late 2024. Xinfeng's project will be the only integrated mining and fluorochemical enterprise in Xinjiang and the entire Northwest region.

From 2018 to 2024, China's fluorspar production experienced a continuous upward trend, increasing from 3.53 Mt in 2018 to 5.90 Mt in 2024, with a CAGR of 8.9%. Production of acid-grade fluorspar concentrate rose from 2.22 Mt to 4.03 Mt with a CAGR of approximately 10.4%, accounting for 60% to 70% of total fluorspar production.

SMM forecasts that China's fluorspar production will continue to increase from 5.9 Mt in 2024 to 6.22 Mt in 2027, with a CAGR of approximately 1.8%. Acid-grade fluorspar concentrate production is also expected to rise from 4.12 Mt to 4.31 Mt with a CAGR of approximately 2.3%.

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15.4 Demand

The primary demand for fluorspar is driven by the fluorochemical industry, which accounted for 66% of total consumption in 2023. Other significant uses of fluorspar include aluminium fluoride production (15%), steelmaking (11%), and cement manufacturing (7%). Since 2018, fluorspar consumption in China has been increasing, rising from 4.69 Mt in 2018 to 6.44 Mt in 2024, with a CAGR of 6.7%. This growth is largely attributed to strong demand from the fluorochemical, steel, and aluminium smelting industries.

From 2025 to 2027, China's fluorspar consumption is projected to grow from 7.25 Mt to 7.74 Mt, with a CAGR of approximately 3.3%. This growth is primarily driven by the fluorochemical industry, as demand from the steelmaking and cement manufacturing sectors is expected to remain stable or decline.

Regionally, East China is the largest consumer of fluorspar, accounting for 44.8% of total consumption in 2023, followed by North China (21.7%) and Central China (11.1%). The high concentration of fluorochemical enterprises in these regions directly contributes to the elevated consumption levels. In contrast, the western regions, such as Northwest and Southwest China, have lower consumption levels due to the limited presence of fluorochemical industries and fewer electrolytic aluminium enterprises. Overall, regional fluorspar consumption is on the rise. In East China, consumption increased from 1.96 Mt in 2018 to 3.17 Mt in 2024, with a CAGR of approximately 8.3%. By 2027, consumption is expected to reach 3.68 Mt, with a CAGR of approximately 4.9%. In Northwest China, consumption is also projected to rise, from 330,000 t in 2024 to 340,000 t by 2027, with a CAGR of approximately 1.7%.

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15.5 Market outlook and prices

SMM forecasts that the fluorspar market will continue to grow, driven by strong demand and constrained supply. From 2018 to 2024, the price of acid-grade fluorspar concentrate in China showed a fluctuating upward trend, increasing from RMB/t 2,645 to RMB/t 3,448 (nominal, tax inclusive). Prices are expected to continue to grow, reaching RMB/t 3,808 (nominal, tax inclusive) by 2027, with a projected CAGR of 3.3%. All these prices are for fluorspar concentrate with 97% CaF₂ with 10% moisture, quoted as mine-gate prices. Regional price variations are likely to persist due to differences in transportation costs, production seasons, and product quality. Eastern regions, known for higher product quality and lower transportation costs, may experience higher prices compared to other areas. Overall, the market conditions suggest that fluorspar prices will remain elevated, reflecting its strategic importance in various industrial applications and the challenges associated with its production.

Table 15.1: SMM forecast prices

| Type
(RMB/t) | 2025 | 2026 | 2027 | Long-Term Price |
| --- | --- | --- | --- | --- |
| Nominal, tax inclusive | 3,571 | 3,695 | 3,808 | 3,808 |
| Nominal, tax exclusive | 3,160 | 3,270 | 3,370 | 3,370 |
| Real, tax inclusive | 3,553 | 3,661 | 3,758 | 3,758 |
| Real, tax exclusive | 3,144 | 3,240 | 3,326 | 3,326 |

Source: SMM

Notes: All these prices are for fluorspar concentrate with 97% CaF₂ with 10% moisture, quoted as mine-gate prices.

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16 COSTS

16.1 Capital costs

The total estimated capital cost for developing the Project is RMB1,612.6 million. This estimate is derived from the preliminary design by 2024 ENFI Preliminary Design and the actual (Engineering, Procurement and Construction) EPC contracts. The main cost components include shaft construction, tunnel construction for tailings, procurement and installation of underground mining equipment, construction of the mining area, processing plant construction, processing automation systems, and telecommunication systems.

The largest cost centre is the construction of TSF and auxiliary facilities. The latter encompasses workshops, office buildings, dormitories and the provision of heat, electricity and water. This amounts to RMB478.2 million. From 2023 to October 2024, the mine design and construction incurred costs of RMB126.5 million. For November to December 2024, a budget of RMB504.4 million was allocated.

In the years 2025, 2026, and 2027, the budgeted expenditures are RMB552.4 million, RMB303.7 million, and RMB125.7 million, respectively. Additionally, a 14% contingency has been included in the budget.

2024 ENFI Preliminary Design also includes a sustaining capital budget of RMB361.7 million over the LoM, which will cover major equipment replacements, overhauls, and other expenses throughout the mine's lifespan. SRK has reviewed the capital cost estimate details and considers them reasonable to support the planned project construction and operation.

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Table 16.1: 2023-2047 capital cost estimate

Cost Centre	Total LoM	2023	Jan-Oct 2024	Nov-Dec 2024	2025	2026	2027	2028–2047
Shaft and tailings transport pipe tunnel	225.6	–	13.6	35.4	100.0	46.0	30.6	–
Underground drilling	4.3	–	1.1	–	3.2	–	–	–
Underground mining equipment and installation	105.6	–	0.4	46.4	33.6	13.0	12.2
Mining area construction	114.4	–	3.0	30.0	58.4	23.0	–
Processing plant area and processing plant automatic system	347.6	14.7	11.5	149.0	76.8	65.6	30.0	–
Auxiliary facilities and TSF	478.2	6.1	29.5	152.7	186.9	83.0	20.0	–
Telecommunication system	51.6	–	0.2	2.3	34.4	11.6	3.0	–
Other expenses	106.4	9.0	37.4	25.5	22.4	11.0	1.1	–
Contingency	178.9	–	–	63.0	36.7	50.5	28.7	–
Subtotal	1,612.6	29.9	96.6	504.4	552.4	303.7	125.7	–
Sustaining Capital	361.7	–	–	–	–	1.3	15.5	344.9
Total	1,974.3	29.9	96.6	504.4	552.4	305.0	141.1	344.9

Sources: 2024 ENFI Preliminary Design and Huaou

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16.2 Operating costs

The projected operating cash costs for the period from 2025 to 2035 are detailed in Table 16.2. This forecast is based on 2024 ENFI Preliminary Design, which incorporates quotations, standards, and mining contract. It also considers resource tax and other charge rates set by the Chinese government.

The processing plant is expected to begin trial production in June 2025, with the Project reaching its target annual mining and processing capacity of 1.2 Mt by 2027. By that year, the annual operating cash cost is projected to be RMB446.3 million. The largest cost component is mining, amounting to RMB215.4 million, followed by processing at RMB128.6 million, and general and administrative costs at RMB55.9 million. The operating cash unit cost is estimated to be RMB/t 372 ore or RMB/t 1,459 fluorspar concentrate.

Table 16.2: 2025-2035 operating cash cost estimate

Production Profile	Unit	Total
		LoM	2025	2026	2027	2028	2029	2030	2031	2032	2033	2034	2035
Ore	kt	24,787	154.7	797.2	1,200.4	1,204.0	1,200.2	1,203.2	1,208.0	1,201.7	1,209.3	1,197.7	1,206.6
Grade	CaF1%	28.6	29.29	28.18	27.80	27.69	28.17	29.55	30.36	28.60	28.32	28.35	28.63
Feed ore	T	24,787	154.7	797.2	1,200.4	1,204.0	1,200.2	1,203.2	1,208.0	1,201.7	1,209.3	1,197.7	1,206.6
Feed ore grade	CaF1%	28.6	29.3	28.2	27.8	27.7	28.2	29.6	30.4	28.6	28.3	28.4	28.6
Recovery	%	80	80	80	80	80	80	80	80	80	80	80	80
Fluorspar concentrate 97% CaF2(dry)	kt	5,850	37.4	185.3	275.2	274.9	278.8	293.2	302.5	283.5	282.5	280.1	284.9
Fluorspar concentrate 97% CaF2(wet)	kt1	6,500	41.5	205.9	305.8	305.5	309.8	325.8	336.1	315.0	313.9	311.2	316.6
Operating Cash Cost
Mining	RMB million	4,469.2	43.7	149.2	215.4	216.0	215.3	215.9	216.7	215.6	217.0	214.9	216.5
Processing	RMB million	2,690.5	41.5	95.0	128.6	129.0	128.6	128.9	129.4	128.8	129.6	128.3	129.3
General and Administration	RMB million	1,227.2	32.1	46.2	55.3	55.9	56.3	57.7	58.7	56.8	56.7	56.4	56.9
Sales Cost	RMB million	145.5	0.9	4.7	7.0	7.1	7.0	7.1	7.1	7.1	7.1	7.0	7.1
Non-income taxes, royalites and other governmental charges	RMB million	894.8	4.2	22.7	40.0	42.6	43.1	45.3	47.2	44.1	43.9	42.9	43.4
Total	RMB million	9,427.2	122.5	317.8	446.3	450.6	450.4	454.9	459.1	452.3	454.2	449.5	453.2

Notes: 1 wet tonne with 10% moisture

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Production Profile	Unit	Total LoM	2025	2026	2027	2028	2029	2030	2031	2032	2033	2034	2035
Operating Cash Cost by Activities
Contract mining	RMB million	2,324.3	14.5	74.8	112.6	112.9	112.5	112.8	113.3	112.7	113.4	112.3	113.1
Workforce employment	RMB million	874.4	40.0	40.0	40.0	40.1	40.0	40.1	40.3	40.1	40.3	39.9	40.2
Consumables	RMB million	1,595.8	10.0	51.3	77.3	77.5	77.3	77.5	77.8	77.4	77.9	77.1	77.7
Fuel electricity, water and other services	RMB million	2,212.0	13.8	71.1	107.1	107.4	107.1	107.4	107.8	107.2	107.9	106.9	107.7
On-site and off-site administration	RMB million	1,333.9	38.9	51.8	60.2	60.8	61.1	62.4	63.3	61.5	61.5	61.2	61.7
Environmental protection and monitoring	RMB million	46.4	0.3	1.4	2.1	2.2	2.2	2.3	2.4	2.3	2.2	2.2	2.3
Transportation of workforce	RMB million	-	-	-	-	-	-	-	-	-	-	-	-
Product marketing and transport	RMB million	145.5	0.9	4.7	7.0	7.1	7.0	7.1	7.1	7.1	7.1	7.0	7.1
Non-income taxes, royalties and other governmental charges	RMB million	894.8	4.2	22.7	40.0	42.6	43.1	45.3	47.2	44.1	43.9	42.9	43.4
Contingency allowances	RMB million	-	-	-	-	-	-	-	-	-	-	-	-
Total	RMB million	9,427.2	122.5	317.8	446.3	450.6	450.4	454.9	459.1	452.3	454.2	449.5	453.2
Operating Cash Unit Cost
Ore	RMB/t	380	792	399	372	374	375	378	380	376	376	375	376
Fluorspar Concentrate	RMB/t	1,450	2,951	1,544	1,459	1,475	1,454	1,396	1,366	1,436	1,447	1,445	1,432

Sources: 24 ENFI Preliminary Design and Huaou
Notes: ${}^{1}$ wet tonne with 10% moisture

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16.3 Economic viability analysis

An analysis of the Project’s economic viability has been conducted, including capital and operating costs and the production schedule outlined in this Report. A base case scenario was developed, designed processing recovery for the Project, spanning from October 31, 2025, to the end of the LoM. It is important to note that this analysis aims only to demonstrate the Project’s economic viability. The calculated after-tax (25% corporate income tax) net present values (NPVs) do not reflect the fair market values or profitability of the Project. In the base case scenario, a forecast sale price and a 10% discount rate were applied. This discount rate was determined by considering the real, risk-free, long-term interest rate (1.65% for the 10-year PRC Government Bond Rate), mining project risk (2% to 4%), and country risk (2% to 4%).

The analysis indicates that the after-tax NPV, using a 10% real discount rate, yielded a positive NPV as of 31 October 2024. It is important to note that finance costs or company debt were not included in this analysis. The breakeven analysis shows that the NPV will reach zero when the fluorspar concentrate sales price reaches RMB/t 1,827. The estimated payback period is 6.7 years.

Additionally, a post-tax sensitivity analysis was conducted concerning sale price, capital and operating costs, and processing recovery. The findings are as follows:

1% increase in sale price results in a 2.62% increase in NPV.
1% increase in operating cost leads to a 1.50% decrease in NPV.
1% increase in capital cost causes a 0.51% decrease in NPV.
1% increase in processing recovery causes a 2.62% increase in NPV.
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Table 16.3: Post-tax sensitivity analysis

Variance	Sale price	Operating Cost	Capital Cost	Processing Recovery
25%	3,408	1,288	1,796	3,408
20%	3,139	1,442	1,849	3,139
15%	2,869	1,597	1,902	2,869
10%	2,600	1,751	1,955	2,600
5%	2,330	1,906	2,008	2,330
0%	2,061	2,061	2,061	2,061
-5%	1,791	2,215	2,114	1,791
-10%	1,522	2,370	2,167	1,522
-15%	1,252	2,525	2,220	1,252
-20%	982	2,679	2,273	982
-25%	712	2,834	2,326	712

Source: SRK

Figure 16.1: Post-tax sensitivity analysis

Source: SRK

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Table 16.4 provides the NPVs of the Project's post-tax cash flows at various discount rates, expressed in RMB. All NPVs are positive, demonstrating the Project's economic viability and supporting the validity of the Ore Reserve declaration in this Report.

Table 16.4: Post-tax NPVs at different discount rates

6%	8%	10%	12%	14%
3,062	2,502	2,061	1,708	1,423

Source: SRK

17 CONCLUSION

The Karchar Fluorspar Project, situated in Ruoqiang County, Xinjiang, is set to be benefited from improved infrastructure, including a new road that reduces the travel distance to Ruoqiang by 140 km and a connection to the Baiganhu 220 kV substation, located 18 km away.

The Project encompasses a mining licence (7.763 km²) and two exploration licences (43.53 km²). Since 2008, exploration efforts have identified substantial mineral resources, with an Indicated Mineral Resource of 35.48 Mt at 33.24% CaF₂ and an Inferred Mineral Resource of 26.46 Mt at 32.56% CaF₂, in accordance with the JORC Code (2012). The Probable Ore Reserves are estimated at 24.8 Mt with an average grade of 28.6% CaF₂, also in accordance with the JORC Code (2012), supporting an LoM of 23 years.

Geologically, the project is situated in the Altyn Tagh Range, influenced by the significant Karchar-Kosh Fault. The deposit features multiple fluorspar veins cutting through gneiss country rocks, primarily composed of calcite and fluorspar. The exploration program has been comprehensive, with numerous drill holes and trenches contributing data for use in the resource estimation.

Underground mining operations are planned in two phases, using the 'Belt Inclined Shaft and Decline Development System' with Cut and Fill and Drift and Fill mining methods. The processing plant, with a capacity of 1.2 Mtpa, employs a conventional multi-stage flotation process to achieve a fluorspar concentrate CaF₂ grade of 97%, with a moisture content not exceeding 12%, and a CaF₂ recovery rate of 80%.

The TSF is located in a valley southeast of the processing plant, approximately 3.2 km away. Tailings will be transported via a 4.4 km pipeline, with sections running through a tunnel and along the dam crest. The TSF has a total storage capacity of 20.624 Mm³ and a service life of 41 years, sufficient to support the processing plant operation.

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The Project's power supply is scheduled for completion by January 2025, ensuring reliable electricity for mining and processing operations. Water supply will primarily come from the Aksu River, with mine drainage serving as a supplementary source.

The Project has completed its Environmental Impact Assessment (EIA), with no significant environmental concerns identified. Market studies suggest strong demand for fluorspar, driven by the fluorochemical industry, with prices expected to rise.

The Project requires an estimated capital investment of RMB1,612.6 million. Operating cash costs are projected to be RMB446.3 million by 2027 when the production capacity reaches 1.2 Mtpa. The estimated payback period of 6.7 years.

The 2024 ENFI Preliminary Design, considered equivalent to a pre-feasibility study and prepared in accordance with the JORC Code. The revised mine plan and production schedule based on the Ore Reserves are sufficiently designed to meet the Project's objectives.

As of December 2024, the Project has made significant progress in its construction phase. Key developments include substantial advancements in underground mine development, power supply, and processing plant facilities. However, construction of auxiliary facilities such as the water supply station, backfill station, and TSF has not yet commenced. The Project aims to complete the power supply system by January 2025, the processing plant and TSF by June 2025, and the mining development by March 2026. The overall target is to reach a production capacity of 1.2 Mtpa by 2027. While the production schedule is considered ambitious and there may be delays in construction completion, the Project is technically and economically viable, well-positioned to leverage its strategic location, robust resource base, and favourable market conditions.

18 RISK ASSESSMENT

The following section presents that were identified and described in section above. Risks have been classified from major to minor:

Major risk: the factor poses an immediate danger of a failure which, if uncorrected, will have a material effect (>15% to 20%) on the project cash flow and performance and could potentially lead to project failure.
Moderate risk: the factor, if uncorrected, could have a significant effect (10% to 15–20%) on the project cashflow and performance unless mitigated by some corrective action.
Minor risk: the factor, if uncorrected, will have little or no effect (<10%) on project cash flow and performance.

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In addition to the risk factor, the likelihood of risk must also be considered. Likelihood of occurrence within a 7-year timeframe can be considered as:

likely: will probably occur.
possible: may occur.
unlikely: unlikely to occur.

Table 18.1: Risk assessment matrix

Likelihood	Consequence
	Minor	Moderate	Major
Likely	Medium	High	High
Possible	Low	Medium	High
Unlikely	Low	Low	Medium

The results of the risk assessment rating are presented in Table 18.2. The rating of the risks is presented before implementation of control recommendations.

Table 18.2: Project risk assessment

#Risk	Description	Control Recommendations	Likelihood	Consequence	Rating
Mineral Resource and Ore Reserve
Shortage of Ore Reserve	Lack of significant Ore Reserves to support LoM.	Impose a more intensive infill drilling to update the Inferred Mineral Resources into Indicated or Measured Mineral Resources to support the mine plan.	Unlikely	Moderate	Low
Mining
Poor Production plan	Failure to meet production targets due to the shortage of mine access development or due to the equipment shutdown.	Ensure that short-term planning is capable of identifying and resolving issues that could cause production delays, in addition to meeting the ore production target.	Unlikely	Moderate	Low
Bad Project Implement	Failure to meet project construction target due to shortage of resource or project management planning.	Ensure that construction project plan is monitored and set up the standby plan as well as contingency to the budget.	Possible	Moderate	Medium

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#Risk	Description	Control Recommendations	Likelihood	Consequence	Rating
Modifying the Mine design Unfavourable.	The mine design changing due to further understanding to the mineralisation, leads to delay of project plan or more capital to develop the underground mine.	Short/medium term planning follows by the infill drilling, ensure that the long-term development or drives are off the buffer zone of the mineralisation. Update the mine design since the mineral resource update considered additional drilling or tunnelling information.	Possible	Moderate	Medium
Processing
Process flowchart and equipment configuration	The designed flotation process is conservative and complicated, with more redundant equipment configuration, will lead to high level for both capex and opex.	Simplify the flotation process, eliminating regrinding of the first cleaner concentrate and all desliming operations.	Possible	Moderate	Medium
Impact of raw water on fluorspar recovery	The raw water comes from Aksu River, which contains high calcium and magnesium ions, which is not conducive to the separation of fluorspar and calcite, will reduce the fluorspar recovery.	Carry out flotation test using Aksu River water to assess its influence on the fluorspar recovery and build a raw water treatment station adopting appropriate method to remove calcium and magnesium ions.	Likely	Moderate	High
Impact of return water on fluorspar recovery	Return water contains calcium and magnesium ions, flocculants and suspended matter are also not conducive to the separation of fluorspar and calcite, which may lead to lower recovery of fluorspar.	Continually monitor on the effect of return water on processing indices during actual production and carry out treatment of return water when necessary.	Possible	Minor	Low
Pulp heating on operation cost	Steam was designed to heat the ground pulp to more than 20°C before flotation, pulp heating will lead to higher costs.	Research low-temperature flotation process/selection of low-temperature flotation reagents.	Possible	Moderate	Medium

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#Risk	Description	Control Recommendations	Likelihood	Consequence	Rating
Infrastructure
The installation of the water intake facility and pipelines cannot be completed by June 2025, which may impact the Project’s commissioning timeline.	As of the end of 2024, construction of water intake facility and pipelines had not yet commenced.	To ensure adherence to the delivery schedule, closely monitor the progress of the water intake facility and pipelines construction.	Unlikely	Moderate	Low
The shared and self-built substations face potential delays that could affect the Project’s power requirements.	Approximately 40% of the construction work on the shared substation has been completed. Most of the self-built 110 kV substation construction was finished by December 2024. Both substations are stated to be operational and ready to supply power by the first quarter of 2025.	To ensure the delivery schedule remains on track, closely monitor the construction progress of the shared and self-built substation.	Possible	Minor	Low
TSF
An increase in the annual deposition of tailings or a deterioration in tailings characteristics can compromise dam strength/stability.	Changes in mining, mineral processing, or tailings disposal methods that lead to increased tailings deposition or deteriorating characteristics can further weaken dam integrity.	Evaluate the effects of any alterations in these processes on the volume and quality of the tailings.	Unlikely	Moderate	Low
Inadequate sealing of the arch plates at the intake of a frame-type drainage well can lead to structural damage, resulting in economic losses or potential hazards in the reservoir area.	While the drainage capacity is substantial and the structure is generally reliable, the intake is elevated by gradually sealing prefabricated arch plates as the tailings height increases. Poor quality in the production and sealing of these arch plates can compromise structural integrity, leading to economic losses or potential risks in the reservoir area.	Ensure the quality of the prefabricated arch plates and the effectiveness of their sealing.	Unlikely	Moderate	Low

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#Risk	Description	Control Recommendations	Likelihood	Consequence	Rating
The water balance calculation for the tailings pond during both average and wet years has not been conducted.	Despite the return water capacity exceeding the volume of water entering the tailings pond, the absence of these calculations means that any excess rainwater that cannot be returned will be discharged as floodwater.	Perform the water balance calculations for the tailings pond during both average and wet years to ensure proper management and compliance.	Unlikely	Minor	Low
Environment and Social
Application for environment-related permits and licences	Although the Project is currently in the infrastructure construction phase, in accordance with relevant Chinese laws and regulations, it will be necessary to apply for licences such as the Safety Production Permit and the Pollution Discharge Permit as the construction is completed and enters trial operation.	Apply for the necessary permits and licences in a timely manner according to the requirements of each project phase.	Unlikely	Moderate	Low
Change of water intake point	If there is a significant change to the water intake point, the project owner may need to revise or supplement the water resources assessment report and submit it to the original reviewing authority for re-evaluation.	If the water intake point changes, consult the relevant government departments to determine whether re-approval is required.	Possible	Moderate	Medium
Lack of stakeholder engagement and other community-related programs	The Project has only conducted public participation during the environmental impact assessment phase and does not have any other stakeholder engagement plans.	Develop appropriate stakeholder engagement plan and grievance mechanism to reduce social risks.	Possible	Minor	Low

Source: SRK

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CLOSURE

This report, Independent Technical Report on Xinjiang Karchar Fluorspar Project, was prepared by

(Gavin) Heung Ngai Chan

Principal Consultant (Project Evaluation)

and reviewed by

Jeames McKibben

Principal Consultant (Project Evaluation)

All data used as source material plus the text, tables, figures, and attachments of this document have been reviewed and prepared in accordance with generally accepted professional engineering and environmental practices.

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REFERENCES

Fluorite Market Research Report by Shanghai Metals Market Information Technology Co., Ltd. January 2025

The 11th Geological Brigade of Zhejiang Province, Xinjiang Ruoqiang County Karchar Fluorspar Deposits Exploration Report, 2020.

Wang, C., Liu, L., Yang, W. Q., Zhu, X. H., Cao, Y. T., Kang, L.,... & He, S. P. (2013). Provenance and ages of the Altyn Complex in Altyn Tagh: Implications for the early Neoproterozoic evolution of northwestern China. Precambrian Research, 230, 193-208.

Fluorite Flotation Test Report for the Southwest of Kalqial, Ruoqiang County, Xinjiang, Yantai Jinnuo Mining Machinery Co., Ltd., July 2011.

Fluorite Ore Dressing Test Research Report for the Southwest of Kalqial, Ruoqiang County, Xinjiang, Xi'an Tianzhou Mining Technology Group Co., Ltd., August 2018.

Fluorite Ore Dressing Test Research Report for Kalqial, Ruoqiang County, Xinjiang, Institute of Mineral Resources Comprehensive Utilization, Chinese Academy of Geological Sciences, August 2021.

Technical Research Report on Comprehensive Utilization of Fluorite Mine in Kalqial, Ruoqiang County, Xinjiang, Institute of Mineral Resources Comprehensive Utilization, Chinese Academy of Geological Sciences, December 2022.

Bond Ball Mill Work Index Test Report for Raw Ore of Kalqial Fluorite Mine, Xinjiang Xinxin Mining Co., Ltd., Luoyang Mining Machinery Engineering Design Institute Co., Ltd., February 2023.

Fluorite Ore Dressing Process Test Research Report for the Southwest of Kalqial, Ruoqiang County, Xinjiang, Guangdong Academy of Sciences Institute of Resource Utilization and Rare Earth Development, March 2023.

Fluorite Ore Dressing Test Research Report for the Southwest of Kalqial, Ruoqiang County, Xinjiang, BGRIMM Technology Group, March 2023.

Fluorite Ore Dressing Process Test Research Report for the Southwest of Kalqial, Ruoqiang County, Xinjiang, Changsha Research Institute of Mining and Metallurgy Co., Ltd., April 2023.

China Coal Technology & Engineering Group Pre-selection Test Report.

Feasibility Study Report on Mining and Dressing Engineering of Kalqial Fluorite Mine, Ruoqiang County, Xinjiang, BGRIMM Technology Group, October 2022.

Preliminary Design of Kalqial Fluorite Mine, Ruoqiang County, Xinjiang, by Xinjiang Huaou Mining Co., Ltd., China ENFI Engineering Corporation, April 2024.

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Table 1 – JORC Code (2012)

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JORC Code, 2012 Edition – Table 1

SECTION 1 SAMPLING TECHNIQUES AND DATA

Criteria	JORC Code explanation JORC	Commentary
Sampling techniques	Nature and quality of sampling (eg cut channels, random chips, or specific specialised industry standard measurement tools appropriate to the minerals under investigation, such as down hole gamma sondes, or handheld XRF instruments, etc). These examples should not be taken as limiting the broad meaning of sampling.	The main source of information which supports the declaration of Mineral Resources is from drilling and trenching in 2008–2011, 2016–2019 and 2024.
	Include reference to measures taken to ensure sample representivity and the appropriate calibration of any measurement tools or systems used. Aspects of the determination of mineralisation that are Material to the Public Report.	The samples collected from the 2024 exploration campaign are currently undergoing assay analysis and, as a result, have not been used in the estimation of Mineral Resources.
	In cases where ‘industry standard’ work has been done this would be relatively simple (eg ‘reverse circulation drilling was used to obtain 1 m samples from which 3 kg was pulverised to produce a 30 g charge for fire assay’). In other cases more explanation may be required, such as where there is coarse gold that has inherent sampling problems. Unusual commodities or mineralisation types (eg submarine nodules) may warrant disclosure of detailed information.	Downhole surveys were measured every 50 m, trench surveys were measured every interval.
		The surface mineralisation was determined by trenches. The channel sampling method was used for the trench sampling, at general length intervals of approximately 1 m. The drill core sample intervals were approximately 1 m.
		The sample length is generally 1 m, with a minimum length of 0.05 m and maximum length of 3.5 m.
		The samples do not cross the different lithology units.
		The drill core was cut into two equal halves by a core saw. One half was taken as basic samples for assaying, and the remaining half was left in the core box for further checking.

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Criteria	JORC Code explanation JORC	Commentary
Drilling techniques	Drill type (eg core, reverse circulation, open-hole hammer, rotary air blast, auger, Bangka, sonic, etc) and details (eg core diameter, triple or standard tube, depth of diamond tails, face-sampling bit or other type, whether core is oriented and if so, by what method, etc).	The drill holes were all drilled using HQ or NQ diamond drilling rig with a single core barrel inside the drilling rods to take diamond core, mainly model XY-4 and XY-44, and some are model HXY-44 and EGR-600. The recovered core diameter is 56 mm (HQ) or 49 mm (NQ).
Drill sample recovery	Method of recording and assessing core and chip sample recoveries and results assessed.
Measures taken to maximise sample recovery and ensure representative nature of the samples.
Whether a relationship exists between sample recovery and grade and whether sample bias may have occurred due to preferential loss/gain of fine/ coarse material.	The mineralised core recovery was approximately 97% and Overall average core recovery was approximately 96%.
Logging	Whether core and chip samples have been geologically and geotechnically logged to a level of detail to support appropriate Mineral Resource estimation, mining studies and metallurgical studies.
Whether logging is qualitative or quantitative in nature. Core (or costean, channel, etc) photography.
The total length and percentage of the relevant intersections logged.	Geological logging (lithology, mineral veins, minerals colour and approximate content, core recovery, etc.) was carried out by the site geologist of the 11th Geological Brigade of Zhejiang Province.
The rock quality designation (RQD) was also logged, and basic geotechnical logging was carried out.

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Criteria	JORC Code explanation JORC	Commentary
Sub-sampling techniques and sample preparation	If core, whether cut or sawn and whether quarter, half or all core taken.	For the exploration campaigns of 2008–2019, the Henan Rock and Mineral Testing Center (2009) and Xinjiang Non-ferrous Geological Survey Bureau Experimental Testing Center (2011~2019) undertook basic analysis for the CaF_{2} content. The drill core was cut into two equal halves by a core saw. One half was taken as basic samples for assaying, and the remaining half was left in the core box for further checking.
	If non-core, whether riffled, tube sampled, rotary split, etc and whether sampled wet or dry.
	For all sample types, the nature, quality and appropriateness of the sample preparation technique.
	Quality control procedures adopted for all sub-sampling stages to maximise representivity of samples.	The sampling preparation before testing was as follows:
	Measures taken to ensure that the sampling is representative of the in situ material collected, including for instance results for field duplicate/second-half sampling.	- The samples were dried, and crushed to 0.85 mm (20 mesh), mixed evenly, shrunk, and then divided into two splits by a riffle splitter.
	Whether sample sizes are appropriate to the grain size of the material being sampled.	- One of the splits (150 g) sample was ground to 0.074 mm (200 mesh) by a planetary ball mill, and taken to use for basic analysis.
		- The remaining splits were taken approximately 500 g to be reserved as duplicates.

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Criteria	JORC Code explanation JORC	Commentary
Quality of assay data and laboratory tests	The nature, quality and appropriateness of the assaying and laboratory procedures used and whether the technique is considered partial or total. For geophysical tools, spectrometers, handheld XRF instruments, etc, the parameters used in determining the analysis including instrument make and model, reading times, calibrations factors applied and their derivation, etc.

Nature of quality control procedures adopted (eg standards, blanks, duplicates, external laboratory checks) and whether acceptable levels of accuracy (ie lack of bias) and precision have been established. | 2008–2019: the Xinjiang Non-ferrous laboratory used internal and external check procedures to carry out the QA/QC procedure, which met the China industry standard practice.

2021: the Xinjiang Non-ferrous Geological Survey Bureau 701 Brigade verification also used internal and external check to carry out the QA/QC procedure, following the China industry standard practice.

2023: The control samples including the Certified Reference Materials (CRMs), blanks and duplicates were inserted into the sample batches, at a frequency of one in every 25 samples. Fluorspar assay methodology, the TGC analysis procedure used in the internal and external two laboratories was generally divided into three steps as follows:

Step 1 – Carbonate carbon removal: 1:1 nitric acid was added to the sample to remove the carbonate carbon with low temperature heating.
Step 2 – Organic carbon removal: Once removed the carbonate carbon, sample was dried, and then put in muffle furnace with 400°C temperature heating for 3 hours to remove the organic carbon.
Step 3 – TGC content determination: After the carbonate carbon and organic carbon removal, the sample was finally determined by the high-frequency infrared carbon and sulfur analyser. |

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Criteria	JORC Code explanation JORC	Commentary
Verification of sampling and assaying	The verification of significant intersections by either independent or alternative company personnel.	No material issues were found with the analysis for the QA/QC procedures for 2008–2019 exploration programs. SRK has been provided with some of the 2008–2019 sampling procedures and protocol documents for review, which meet the China industry standards.
	The use of twinned holes.
	Documentation of primary data, data entry procedures, data verification, data storage (physical and electronic) protocols.	The 2021 twinned hole verification meets China industry standards.
	Discuss any adjustment to assay data.	The QA/QC procedures in 2023 were supervised by SRK. The drilling, logging, sampling, and assaying methods are considered consistent with industry best practice.
		To SRK’s knowledge, no adjustments to the assay data were made.
Location of data points	Accuracy and quality of surveys used to locate drill holes (collar and down-hole surveys), trenches, mine workings and other locations used in Mineral Resource estimation.	All drill hole and trench collars were surveyed by real-time kinematic GPS by XIAN 80 datum.
	Specification of the grid system used.	All the downhole surveys were measured every 50 m.
	Quality and adequacy of topographic control.
Data spacing and distribution	Data spacing for reporting of Exploration Results.	The resource drilling was conducted on a 200 × 160 m to 100 × 80 m grid spacing.
	Whether the data spacing and distribution is sufficient to establish the degree of geological and grade continuity appropriate for the Mineral Resource and Ore Reserve estimation procedure(s) and classifications applied.	Most of the samples were collected at an interval of approximately 1 m.
	Whether sample compositing has been applied.	Most of the drill hole spacing inside the tenement licence is sufficient to support the declaration of Mineral Resources.
		Sample compositing across the mineralised domains has been applied.

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Criteria	JORC Code explanation JORC	Commentary
Orientation of data in relation to geological structure	Whether the orientation of sampling achieves unbiased sampling of possible structures and the extent to which this is known, considering the deposit type.

If the relationship between the drilling orientation and the orientation of key mineralised structures is considered to have introduced a sampling bias, this should be assessed and reported if material. | The vertical and inclined drill holes were drilled to intercept the mineralised intervals, hosted by a set of felsic veins with shallow-moderate dip to the north.

171 of 179 drill holes intersected the mineralised veins, and vertical drill holes did not introduce bias in the sampling. |
| Sample security | The measures taken to ensure sample security. | Based on the information available, all remaining drill core are stored on site and pulp samples are held securely at Xinjiang Non-ferrous laboratory. |
| Audits or reviews | The results of any audits or reviews of sampling techniques and data. | SRK reviewed the 2008–2019 historical work, including drill hole locations, mineralisation examination, drill core loggings validation, the sampling techniques checking and choosing pulp sample to the third laboratory validation during the process of preparing this Report. |

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COMPETENT PERSON'S REPORT

SECTION 2 REPORTING OF EXPLORATION RESULTS

Criteria	JORC Code explanation JORC	Commentary
Mineral tenement and land tenure status	Type, reference name/number, location and ownership including agreements or material issues with third parties such as joint ventures, partnerships, overriding royalties, native title interests, historical sites, wilderness or national park and environmental settings.	There are two exploration licences and a mining licence for the Karchar Fluorspar Project. The two exploration licences cover a total area of 43.53 km², and are valid to 15 June 2026 and 9 August 2026, respectively.
The mining licence covers an area of 7.763 km² and is valid to 27 June 2038.
	The security of the tenure held at the time of reporting along with any known impediments to obtaining a licence to operate in the area.
Exploration done by other parties	Acknowledgment and appraisal of exploration by other parties.	There are three systematic exploration phases:
- In 2008–2011, the Project was explored by the 11th Geological Brigade of Zhejiang Province.
		- In 2016–2019, the Project was explored by the 11th Geological Brigade of Zhejiang Province.
		- In 2024, the Project was explored by the 11th Geological Brigade of Zhejiang Province.
		The samples collected from the 2024 exploration campaign are currently undergoing assay analysis.
		All available drilling and trench information from 2008 to 2019 has been incorporated in the geological database used in support of the Mineral Resource estimate.

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Criteria	JORC Code explanation JORC	Commentary
Geology	Deposit type, geological setting and style of mineralisation.	The fluorspar deposit of the project area is the fluorspar- calcite pegmatite type, mainly occurs in a ‘vein shape’, and hosted along the contact of the Middle Ordovician monzogranite intrusion and the Neo-Archaean- Palaeoproterozoic Altyn Group.
		Many fluorspar-calcite pegmatite veins are filled in along the nearly east–west fracture structure, forming a fluorspar mineralisation belt with a length over 5,300 m.
Drill hole Information	A summary of all information material to the understanding of the exploration results including a tabulation of the following information for all Material drill holes: easting and northing of the drill hole collar elevation or asl (above sea level in metres) of the drill hole collar dip and azimuth of the hole down hole length and interception depth hole length. If the exclusion of this information is justified on the basis that the information is not Material and this exclusion does not detract from the understanding of the report, the Competent Person should clearly explain why this is the case.	Between 2008 and 2019, a total of 179 diamond drill holes were drilled for a total of 59,506 m.
		15 of 179 drill holes have a dipping angle between 85° and 90°, nearly vertical. The remaining drill holes are inclined with a high angle toward south.
		In 2024, a total of 42 diamond holes were drilled for a total length of 21,135.95 m.
		Out of the 42 drill holes, 6 have a dipping angle between 85° and 90°, making them nearly vertical. The remaining 35 drill holes are inclined at a steep angle towards the south, with one drill hole inclined towards the north.
		The drill hole collars were surveyed by real-time kinematic GPS.
		Unless otherwise specified, all the coordinates used in this Report are XIAN 80 datum.

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COMPETENT PERSON'S REPORT

Criteria	JORC Code explanation JORC	Commentary
Data aggregation methods	In reporting Exploration Results, weighting averaging techniques, maximum and/or minimum grade truncations (eg cutting of high grades) and cut-off grades are usually Material and should be stated. Where aggregate intercepts incorporate short lengths of high grade results and longer lengths of low grade results, the procedure used for such aggregation should be stated and some typical examples of such aggregations should be shown in detail. The assumptions used for any reporting of metal equivalent values should be clearly stated.	Not applicable; no Exploration Results are specifically reported.
Relationship between mineralisation widths and intercept lengths	These relationships are particularly important in the reporting of Exploration Results.
If the geometry of the mineralisation with respect to the drill hole angle is known, its nature should be reported.
If it is not known and only the down hole lengths are reported, there should be a clear statement to this effect (eg ‘down hole length, true width not known’).	The vertical and inclined drill holes were drilled to intercept the mineralised intervals, and veins are with shallow- moderate dip to the north. The intercept lengths closely approximate the widths of the mineralisation.
Diagrams	Appropriate maps and sections (with scales) and tabulations of intercepts should be included for any significant discovery being reported. These should include, but not be limited to a plan view of drill hole collar locations and appropriate sectional views.	Various maps, sections and diagrams are included in the Report, but they are not reproduced here for clarity.
Balanced reporting	Where comprehensive reporting of all Exploration Results is not practicable, representative reporting of both low and high grades and/or widths should be practiced to avoid misleading reporting of Exploration Results.	Not applicable; no Exploration Results are specifically reported.

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COMPETENT PERSON'S REPORT

Criteria	JORC Code explanation JORC	Commentary
Other substantive exploration data	Other exploration data, if meaningful and material, should be reported including (but not limited to): geological observations; geophysical survey results; geochemical survey results; bulk samples – size and method of treatment; metallurgical test results; bulk density, groundwater, geotechnical and rock characteristics; potential deleterious or contaminating substances.	Not applicable; no Exploration Results are specifically reported.
Further work	The nature and scale of planned further work (eg tests for lateral extensions or depth extensions or large-scale step-out drilling).	No further work is planned in 2025.
	Diagrams clearly highlighting the areas of possible extensions, including the main geological interpretations and future drilling areas, provided this information is not commercially sensitive.

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COMPETENT PERSON'S REPORT

SECTION 3 ESTIMATION AND REPORTING OF MINERAL RESOURCES

Criteria	JORC Code explanation JORC	Commentary
Database integrity	Measures taken to ensure that data has not been corrupted by, for example, transcription or keying errors, between its initial collection and its use for Mineral Resource estimation purposes.	The database was prepared by SRK according to the geological information following Chinese industry standards, provided by Xinjiang Huaou Mining Company. SRK validated the database.
	Data validation procedures used.	SRK modelled the fluorspar mineralised orebodies based on the database.
		SRK included drill hole and trench data from exploration 2008–2019.
Site visits	Comment on any site visits undertaken by the Competent Person and the outcome of those visits.	Gavin Chan, Fong Cheuk, Lanliang Niu, Xue Nan and Falong Hu visited the Project on 18-21 April 2023.
	If no site visits have been undertaken indicate why this is the case.	Tony Tang visited the Project on 19-21 December 2024.
Geological interpretation	Confidence in (or conversely, the uncertainty of) the geological interpretation of the mineral deposit.	SRK recorded the fluorspar mineralised code based on the CaF₂ threshold of 15% as well as the lithological logging code.
	Nature of the data used and of any assumptions made.	SRK interpreted and modelled eight CaF₂ mineralised domains.
	The effect, if any, of alternative interpretations on Mineral Resource estimation.
	The use of geology in guiding and controlling Mineral Resource estimation.
	The factors affecting continuity both of grade and geology.

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COMPETENT PERSON'S REPORT

Criteria	JORC Code explanation JORC	Commentary
Dimensions	The extent and variability of the Mineral Resource expressed as length (along strike or otherwise), plan width, and depth below surface to the upper and lower limits of the Mineral Resource.	The in situ rough dimensions (in metres) of fluorspar mineralised domains are as below:

Domain V1: 430 × 420 × 1.5 (strike × dip extension × average thickness)
Domain V2: 780 × 280 × 3.5
Domain V3: 1650 × 680 × 3.5
Domain V4: 3200 × 800 × 4.4
Domain V5: 2600 × 870 × 3.6
Domain V6: 3500 × 1060 × 5.4
Domain V7: 1260 × 880 × 2.7
Domain V8: 330 × 300 × 3.2 |
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COMPETENT PERSON'S REPORT

Criteria	JORC Code explanation JORC	Commentary
Estimation and modelling techniques	The nature and appropriateness of the estimation technique(s) applied and key assumptions, including treatment of extreme grade values, domaining, interpolation parameters and maximum distance of extrapolation from data points. If a computer assisted estimation method was chosen include a description of computer software and parameters used.	The Mineral Resource estimate was carried out using Datamine Studio RM software.
	The availability of check estimates, previous estimates and/or mine production records and whether the Mineral Resource estimate takes appropriate account of such data.	Fluorspar mineralised domains were constructed:
	The assumptions made regarding recovery of by-products.	Fluorspar domains were defined by threshold of 15% CaF_{2} based on the lithological code.
	Estimation of deleterious elements or other non-grade variables of economic significance (eg sulphur for acid mine drainage characterisation).	Samples were composited to 1 m within the domains and units, and the residual length was added to previous intervals.
	In the case of block model interpolation, the block size in relation to the average sample spacing and the search employed.	Top-capping was used for composites in domains V1–V4, V6 and V8.
	Any assumptions behind modelling of selective mining units.	Directional variogram modelling was performed within the plane of domain orientation. The CaF_{2} was estimated by ordinary kriging (OK) for all domains.
		Block estimation was conducted using Datamine Studio RM software.

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COMPETENT PERSON'S REPORT

Criteria	JORC Code explanation JORC	Commentary
	Any assumptions about correlation between variables.	SRK produced the parent block model with dimensions of 40 m × 40 m × 5 m (east × north × elevation) and sub- block dimension of 2 m × 2 m × 1 m (east × north × elevation) to better reflect the thin vein features. Rotation to fit the wireframes was not applied.
	Description of how the geological interpretation was used to control the resource estimates.
	Discussion of basis for using or not using grade cutting or capping.	The search distances were derived from the drilling spacing grid.
	The process of validation, the checking process used, the comparison of model data to drill hole data, and use of reconciliation data if available.	Block model validation was conducted by visual comparisons between drill holes and grade estimates, comparison between block and composite grades, and by swath plots along major axes showing comparisons between mean composite and mean block grades.
		No detailed grade control data or production records are available for reconciliation.
		No modelling of selective mining units was undertaken. The Mineral Resource estimate was reported on 31 October 2024.
Moisture	Whether the tonnages are estimated on a dry basis or with natural moisture, and the method of determination of the moisture content.	All tonnages are reported as dry tonnages using an average dry in situ bulk density factor for each fluorspar domains.

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COMPETENT PERSON'S REPORT

Criteria	JORC Code explanation JORC	Commentary
Cut-off parameters	The basis of the adopted cut-off grade(s) or quality parameters applied.	A 15% CaF₂ cut-off grade is used for estimation.
A top-capping grade is used for each orebody:
- Domain V1, top capping 74%
- Domain V2, top capping 58%
- Domain V3, top capping 50%
- Domain V4, top capping 57%
- Domain V5, no capping
- Domain V6, top capping 64%
- Domain V7, no capping
- Domain V8, top capping 44%.
Mining factors or assumptions	Assumptions made regarding possible mining methods, minimum mining dimensions and internal (or, if applicable, external) mining dilution. It is always necessary as part of the process of determining reasonable prospects for eventual economic extraction to consider potential mining methods, but the assumptions made regarding mining methods and parameters when estimating Mineral Resources may not always be rigorous. Where this is the case, this should be reported with an explanation of the basis of the mining assumptions made.	A 1 m minimum ore thickness to comply with inferred mining equipment capacities was used. No other mining factors were applied to the Mineral Resource estimation process.

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COMPETENT PERSON'S REPORT

Criteria	JORC Code explanation JORC	Commentary
Metallurgical factors or assumptions	The basis for assumptions or predictions regarding metallurgical amenability. It is always necessary as part of the process of determining reasonable prospects for eventual economic extraction to consider potential metallurgical methods, but the assumptions regarding metallurgical treatment processes and parameters made when reporting Mineral Resources may not always be rigorous. Where this is the case, this should be reported with an explanation of the basis of the metallurgical assumptions made.	Metallurgical factors were indirectly integrated by defining CaF_{2} cut-off grades. No other metallurgical factors were directly or indirectly applied in Mineral Resource estimation.
Environmental factors or assumptions	Assumptions made regarding possible waste and process residue disposal options. It is always necessary as part of the process of determining reasonable prospects for eventual economic extraction to consider the potential environmental impacts of the mining and processing operation. While at this stage the determination of potential environmental impacts, particularly for a greenfields project, may not always be well advanced, the status of early consideration of these potential environmental impacts should be reported. Where these aspects have not been considered this should be reported with an explanation of the environmental assumptions made.	An EIA covering the proposed mine, processing plant, TSF and auxiliary facilities has been prepared and approved by relevant Chinese government authorities.

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COMPETENT PERSON'S REPORT

Criteria	JORC Code explanation JORC	Commentary
Bulk density	Whether assumed or determined. If assumed, the basis for the assumptions. If determined, the method used, whether wet or dry, the frequency of the measurements, the nature, size and representativeness of the samples.	The average density on each fluorspar domain was used in the Mineral Resource estimate. The details are as below:
	The bulk density for bulk material must have been measured by methods that adequately account for void spaces (vugs, porosity, etc), moisture and differences between rock and alteration zones within the deposit.	- Domain V1: 2.78 t/m³
	Discuss assumptions for bulk density estimates used in the evaluation process of the different materials.	- Domain V2: 2.74 t/m³
		- Domain V3: 2.67 t/m³
		- Domain V4: 2.78 t/m³
		- Domain V5: 2.81 t/m³
		- Domain V6: 2.79 t/m³
- Domain V7: 2.77 t/m³
Classification	The basis for the classification of the Mineral Resources into varying confidence categories. Whether appropriate account has been taken of all relevant factors (ie relative confidence in tonnage/grade estimations, reliability of input data, confidence in continuity of geology and metal values, quality, quantity and distribution of the data).	Classification based on data quality and quantity (including drill hole spacing), geological complexity and grade continuity and grade interpolation.
	Whether the result appropriately reflects the Competent Person’s view of the deposit.	Indicated Mineral Resources classification criteria: Estimated in the first or second pass with a slope of regression above 0.3. This broadly correlates to a drill spacing of 100 m (strike) by 50–60 m (dip).
		Inferred Mineral Resources classification criteria: Estimated in Pass 3 and generally has a drill spacing less than 200 m (strike) by 100 m (dip).
		The result appropriately reflects the Competent Person’s view of the deposit.
Audits or reviews	The results of any audits or reviews of Mineral Resource estimates.	No other external reviews in relation to the latest Mineral Resource estimate have been completed to date.

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Criteria	JORC Code explanation JORC	Commentary
Discussion of relative accuracy/confidence	Where appropriate a statement of the relative accuracy and confidence level in the Mineral Resource estimate using an approach or procedure deemed appropriate by the Competent Person. For example, the application of statistical or geostatistical procedures to quantify the relative accuracy of the resource within stated confidence limits, or, if such an approach is not deemed appropriate, a qualitative discussion of the factors that could affect the relative accuracy and confidence of the estimate.	There is a high level of confidence in the underlying drill hole sample data.

Estimation quality parameters, such as the kriging slope of regression, are used to assess the relative accuracy of local block estimates. The closer the kriging slope of regression is to 1 the better the local block estimate. However, this does not mean that the global grade and tonnage curves are correct as local accuracy and global block distribution accuracy are conflicting aspirations. |
| | The statement should specify whether it relates to global or local estimates, and, if local, state the relevant tonnages, which should be relevant to technical and economic evaluation. Documentation should include assumptions made and the procedures used. These statements of relative accuracy and confidence of the estimate should be compared with production data, where available. | The average kriging slope of regression for the Indicated material is 0.49. The average for the Inferred material is 0.36.

There has been no modern mining of the deposit. |

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COMPETENT PERSON'S REPORT

SECTION 4 ESTIMATION AND REPORTING OF ORE RESERVES

(Criteria listed in section 1, and where relevant in sections 2 and 3, also apply to this section.)

Criteria	JORC Code explanation JORC	Commentary
Mineral Resource estimate for conversion to Ore Reserves	Description of the Mineral Resource estimate used as a basis for the conversion to an Ore Reserve.	SRK completed a Mineral Resource estimate for the Project with an effective date of 31 October 2024.
	Clear statement as to whether the Mineral Resources are reported additional to, or inclusive of, the Ore Reserves.	The reported Mineral Resource includes Ore Reserves.
Site visits	Comment on any site visits undertaken by the Competent Person and the outcome of those visits.	Mr Falong Hu, the Competent Person for this Ore Reserve Statement, is a full-time employee of SRK Consulting (China) Limited.
	If no site visits have been undertaken indicate why this is the case.	Mr Falong Hu conducted a site visit from 17-21 April 2023. Since Mr Hu’s visit, the Project has been under construction without any mining operations.
Study status	The type and level of study undertaken to enable Mineral Resources to be converted to Ore Reserves.	The following technical studies are available to review:
	The Code requires that a study to at least Pre-Feasibility Study level has been undertaken to convert Mineral Resources to Ore Reserves. Such studies will have been carried out and will have determined a mine plan that is technically achievable and economically viable, and that material Modifying Factors have been considered.	Feasibility Study Report on the Mining and Processing Project of the Kaerqiaer Fluorspar Mine in Ruoqiang County, Xinjiang, September 2022, BGRIMM Technology Group
		Preliminary Design of the Kaerqiaer Fluorspar Mine in Ruoqiang County, Xinjiang’, April 2024, China ENFI Engineering Corporation, hereafter referred to as ‘2024 ENFI Preliminary Design’.
		SRK considers the accuracy of the Modifying Factors described in the 2024 ENFI Preliminary Design to be similar to that of a pre-feasibility level study prepared in accordance with the JORC Code (2012).

APPENDIX V

COMPETENT PERSON'S REPORT

Criteria

Cut-off parameters

JORC Code explanation JORC

The basis of the cut-off grade(s) or quality parameters applied.

Commentary

The $\mathrm{CaF}_2$ grade was used as the cut-off grade to define ore. This cut-off grade can vary based on factors such as metal prices, mining and processing costs, and recovery rates.

Item	Unit	Parameter	Description
Preferred cut-off grade	%	16.6	Round up to nearest 0.1
A	%	16.61	Estimated feed cut-off grade of CaF_{2}
Cm	RMB/t RoM	179.35	Mining cash cost
Cp	RMB/t RoM	107.14	Processing cash cost
Cg	RMB/t RoM	31.04	Total General & Administration cash cost
P	RMB/t	2,389	Forecast concentrate (97% CaF_{2}) price excl. VAT
R	%	80.00	Processing recovery for CaF_{2} in concentrate
Rt	%	3.00	Royalty to revenue

SRK is of the view that material above the cut-off grade of $16.6\%$ could be defined as economically extractable under those specific conditions.

The parameters were derived from 2024 ENFI Preliminary Design.

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COMPETENT PERSON'S REPORT

Criteria	JORC Code explanation JORC	Commentary
Mining factors or assumptions	The method and assumptions used as reported in the Pre-Feasibility or Feasibility Study to convert the Mineral Resource to an Ore Reserve (i.e. either by application of appropriate factors by optimisation or by preliminary or detailed design).	Based on the geological conditions, the following mining methods are employed.
Cut and Fill ('CAF') with roadheader mining method
	The choice, nature and appropriateness of the selected mining method(s) and other mining parameters including associated design issues such as pre-strip, access, etc.	Cut-and-Fill with drill-and-blast mining method
Drift-and-Fill (DAF) with roadheader mining method
	The assumptions made regarding geotechnical parameters (eg pit slopes, stope sizes, etc), grade control and pre- production drilling.	Drift-and-Fill with drill-and-blast mining method
	The major assumptions made and Mineral Resource model used for pit and stope optimisation (if appropriate).	The stope is arranged along the strike, with a length of 60 m and a width equal to the orebody thickness. The level spacing is 50 m, and the sublevel spacing is 12.5 m, with each cut measuring 4–5 m. No rib pillars are left between adjacent stopes.
	The mining dilution factors used.	The primary distinction between CAF and DAF is that DAF is particularly suitable for areas where the rock mass is relatively weak, or where the orebody thickness exceeds 8 m.
		The mining factors applied to the Ore Reserve estimates are:
		Mining design scope:
		The design is constrained within the mining licence limit.

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COMPETENT PERSON'S REPORT

Criteria	JORC Code explanation JORC	Commentary
	The mining recovery factors used.	Only Indicated Mineral Resources are considered for the estimation.
	Any minimum mining widths used.
	The manner in which Inferred Mineral Resources are utilised in mining studies and the sensitivity of the outcome to their inclusion.	Safety considerations for the crown pillar, safety pillar for the river (west side of the orebody), and other surface or underground infrastructure.
	The infrastructure requirements of the selected mining methods.	Design Loss:
		Stopes with grades below the cut-off grade will be considered as design loss.
		Resources that are isolated and located far from the main design.
		A dilution of 0.1 m is applied to both side walls, resulting in a dilution rate of approximately 5%.
		A 5% loss rate is applied to cover the loss from workface handover to the RoM bin during transportation.
		A 3 m minimum mining width was considered based on the proposed roadheader module that could operate.
		The development system is ‘The Belt Inclined Shaft + Decline Development System’, and the level spacing is 50 m.
		Inferred Mineral Resources were considered as waste materials during the mine design.
		The mine design takes into account mine service infrastructure, including backfill, ventilation, power supply, water supply, air compression and dewatering systems.

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COMPETENT PERSON'S REPORT

Criteria	JORC Code explanation JORC	Commentary
Metallurgical factors or assumptions	The metallurgical process proposed and the appropriateness of that process to the style of mineralisation.

Whether the metallurgical process is well- tested technology or novel in nature.

The nature, amount and representativeness of metallurgical test work undertaken, the nature of the metallurgical domaining applied and the corresponding metallurgical recovery factors applied.

Any assumptions or allowances made for deleterious elements.

The existence of any bulk sample or pilot scale test work and the degree to which such samples are considered representative of the orebody as a whole.

For minerals that are defined by a specification, has the ore reserve estimation been based on the appropriate mineralogy to meet the specifications? | The ore is calcite type fluorspar ore.

The designed process is based on the results of many flotation tests. The process adapts to the ore properties and is mature. The designed process is conservative and redundant.

8 laboratories have carried out the processing tests, including ball mill work index test, heavy medium pre- discarding test, and flotation test. The test results show that the ore is not amenable to gravity separation and suitable for flotation. The suitable grinding fineness is 65%~70% of minus 200 mesh, BWi=9.67 kW/h, and the flotation pulp temperature should not be lower than 20°C.

The concentrate obtained by flotation test has a grade of 97.2% to 99.2% CaF₂, a recovery rate of 80.0% to 85.2% CaF₂, and a low content of harmful elements such as sulfur and phosphorus. The designed concentrate grade of the concentrator is 97% CaF₂, the CaF₂ recovery rate is 80%. The designed index is proper and achievable. |
| Environmental | The status of studies of potential environmental impacts of the mining and processing operation. Details of waste rock characterisation and the consideration of potential sites, status of design options considered and, where applicable, the status of approvals for process residue storage and waste dumps should be reported. | An EIA covering the proposed mine, processing plant, TSF and auxiliary facilities has been prepared and approved by relevant Chinese government authorities. |

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COMPETENT PERSON'S REPORT

Criteria	JORC Code explanation JORC	Commentary
Infrastructure	The existence of appropriate infrastructure: availability of land for plant development, power, water, transportation (particularly for bulk commodities), labour, accommodation; or the ease with which the infrastructure can be provided, or accessed.	As of December 2024, a new road connecting Ruoqiang County to the Project area is nearly complete, reducing travel distance to 140 km.

The primary power supply comes from the Baiganhu 220 kV substation, 18 km northwest of the mine, with two 180 MVA transformers. Huaou has an agreement with the State Grid Corporation of China to build a power line and shared substation, extending from Baiganhu to supply the Project and two nearby mines. The Project will connect to the electrical grid in Q1 2025.

Water supply is sourced from the Aksu River, a tributary of the Ruoqiang River. The water intake is 10 km southeast of the mining area, with stable flow year-round. |
| Costs | The derivation of, or assumptions made, regarding projected capital costs in the study.

The methodology used to estimate operating costs.

Allowances made for the content of deleterious elements.

The source of exchange rates used in the study.

Derivation of transportation charges.

The basis for forecasting or source of treatment and refining charges, penalties for failure to meet specification, etc.

The allowances made for royalties payable, both Government and private. | The capital cost estimate is derived from the 2024 Preliminary Design by ENFI and actual EPC contracts, recently updated by Huaou.

The operating cost forecast is based on the 2024 Preliminary Design by ENFI, incorporating quotations, industry standards, and the mining contract.

It also considers resource tax and other charge rates set by the Chinese government.

Resource tax: 3% of revenue.

Mining licence fee: 2.4% of revenue

Mine geological rehabilitation fund: approximately 0.2% revenue |

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COMPETENT PERSON'S REPORT

Criteria	JORC Code explanation JORC	Commentary
Revenue factors	The derivation of, or assumptions made regarding revenue factors including head grade, metal or commodity price(s) exchange rates, transportation and treatment charges, penalties, net smelter returns, etc.

The derivation of assumptions made of metal or commodity price(s), for the principal metals, minerals and co-products. | The head grade is based on the developed mining schedule.

The sale price (at mine gate) is based on the forecast made by Shanghai Metals Market (SMM), an independent market research company. |
| Market assessment | The demand, supply and stock situation for the particular commodity, consumption trends and factors likely to affect supply and demand into the future.

A customer and competitor analysis along with the identification of likely market windows for the product.

Price and volume forecasts and the basis for these forecasts.

For industrial minerals the customer specification, testing and acceptance requirements prior to a supply contract. | The market study was prepared by SMM, an independent market research company.

Acid-grade fluorspar concentrate production is expected to increase from 4.029 Mt to 4.414 Mt, with a CAGR of approximately 2.3%.

From 2024 to 2028, China’s fluorspar consumption is projected to grow from 6.91 Mt to 7.89 Mt, with a CAGR of approximately 3.4%. This growth is primarily driven by the fluorochemical industry, while demand from the steelmaking and cement manufacturing sectors is expected to remain stable or decline.

SMM forecasts continued growth in the fluorspar market, driven by strong demand and constrained supply.

SMM Prices are expected to rise, reaching RMB/t 3,899 (nominal, tax inclusive) by 2028, with a projected CAGR of 3.1%. |

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COMPETENT PERSON'S REPORT

Criteria	JORC Code explanation JORC	Commentary
Economic	The inputs to the economic analysis to produce the net present value (NPV) in the study, the source and confidence of these economic inputs including estimated inflation, discount rate, etc.

NPV ranges and sensitivity to variations in the significant assumptions and inputs. NPV | A base case economic analysis was undertaken at a 10% (real) discount rate.

The inputs included the mining and processing plant production schedule, capital and operating cost estimates, and the forecast sales price by SMM.

A range of positive NPVs was derived at different discount rates, and the key sensitive parameters are sales price and processing recovery. |
| Social | The status of agreements with key stakeholders and matters leading to social licence to operate. | The Project is located in an uninhabited area with no residential settlements in close proximity to the Project area.

During the EIA consultation process, no public feedback was received. |
| Other | To the extent relevant, the impact of the following on the project and/or on the estimation and classification of the Ore Reserves:

Any identified material naturally occurring risks.

The status of material legal agreements and marketing arrangements.

The status of governmental agreements and approvals critical to the viability of the project, such as mineral tenement status, and government and statutory approvals. There must be reasonable grounds to expect that all necessary Government approvals will be received within the timeframes anticipated in the Pre-Feasibility or Feasibility study. Highlight and discuss the materiality of any unresolved matter that is dependent on a third party on which extraction of the reserve is contingent. | The identified risks are tabulated in the risk assessment section of this Report.

No material issues in relation to the mineral tenement status as described in the legal due diligence report provided to SRK. |

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APPENDIX V

COMPETENT PERSON'S REPORT

Criteria	JORC Code explanation JORC	Commentary
Classification	The basis for the classification of the Ore Reserves into varying confidence categories.	Indicated Mineral Resource in the mine blocks are classified as Probable Ore Reserves.
	Whether the result appropriately reflects the Competent Person’s view of the deposit.	The classification of Ore Reserves appropriately reflects the Competent Person’s view of the deposits.
	The proportion of Probable Ore Reserves that have been derived from Measured Mineral Resources (if any).	There is no Measured Mineral Resource. Therefore, no Proven Ore Reserve has been classified.
Audits or reviews	The results of any audits or reviews of Ore Reserve estimates.	An internal peer review was undertaken.
Discussion of relative accuracy/confidence	Where appropriate a statement of the relative accuracy and confidence level in the Ore Reserve estimate using an approach or procedure deemed appropriate by the Competent Person. For example, the application of statistical or geostatistical procedures to quantify the relative accuracy of the reserve within stated confidence limits, or, if such an approach is not deemed appropriate, a qualitative discussion of the factors which could affect the relative accuracy and confidence of the estimate.	The Ore Reserves estimates are based on the 2024 ENFI Preliminary Design, which SRK considers to be at a pre-feasibility study level.
All Modifying Factors have been applied for the declaration global estimate of Ore Reserves estimates.

– V-222 –

APPENDIX V

COMPETENT PERSON'S REPORT

Criteria

JORC Code explanation JORC

The statement should specify whether it relates to global or local estimates, and, if local, state the relevant tonnages, which should be relevant to technical and economic evaluation. Documentation should include assumptions made and the procedures used.

Accuracy and confidence discussions should extend to specific discussions of any applied Modifying Factors that may have a material impact on Ore Reserve viability, or for which there are remaining areas of uncertainty at the current study stage.

It is recognised that this may not be possible or appropriate in all circumstances. These statements of relative accuracy and confidence of the estimate should be compared with production data, where available.

Commentary

As in the case for most mining projects, the extent to which the estimate of Ore Reserves may be affected by mining, metallurgical, infrastructure, permitting, market and other factors could vary from major gains to total losses of Ore Reserves.

There are no issues known to the Competent Person that are expected to materially affect the Ore Reserve estimates.

V-223 -

APPENDIX VI
VALUATION REPORT

VALUATION REPORT

THE CHAPTER 18 VALUE OF

"XINJIANG RUOQIANG COUNTY KARCHAR FLUORSPAR PROJECT"

Clients : Xinjiang Xinxin Mining Industry Co., Ltd.
Xinjiang Non-ferrous Metal Industry (Group) Ltd.
Ref. No. : CON101514383BV-1
Report Date: 24 March 2025

– VI-1 –

APPENDIX VI
VALUATION REPORT

A. Scope ... VI-7
B. Basis of Value ... VI-7
C. Basis of Opinion ... VI-8
D. Independence Declaration ... VI-9
E. Statement of Competence ... VI-9
F. Source of Information ... VI-10
G. Background of the Target Company and the Project ... VI-11
H. Technical Report ... VI-12
I. Site Inspection ... VI-13
J. Encumbrances ... VI-13
K. Existing Exploration and Operational Readiness ... VI-13
L. Valuation Approach ... VI-14

VI-2 -

APPENDIX VI
VALUATION REPORT

M. Assumptions ... VI-16
N. Project Valuation Assumption ... VI-17
O. Discount Rate ... VI-21
P. Discounted Cash Flow Valuation for the Project. ... VI-23
Q. Risk Factor ... VI-25
R. Valuation Comments. ... VI-28
S. Opinion of Value ... VI-29
T. Limiting Conditions ... VI-29
Exhibit A – Limiting Conditions ... VI-30
Exhibit B – Valuers’ Biography ... VI-33
Exhibit C – Valuers’ Professional Declaration ... VI-35
Exhibit D – Equity Value for the Target Company ... VI-39
Exhibit E – Glossary ... VI-40

– VI-3 –

APPENDIX VI

VALUATION REPORT

JLL

仲量聯行

Jones Lang LaSalle Corporate Appraisal and Advisory Limited

7/F One Taikoo Place 979 King's Road Hong Kong

Tel +852 2846 5000 Fax +852 2169 6001

Company Licence No.: C-030171

24 March 2025

The Board of Directors

Xinjiang Xinxin Mining Industry Co., Ltd.,

No. 501, Fusion South Road, Cooperation Zone,

Economic and Technological Development Zone,

Urumqi, Xinjiang,

P.R. China

Xinjiang Non-ferrous Metal Industry (Group) Ltd.

No. 636, North Youhao Road,

Urumqi, Xinjiang

Dear Sirs,

INDEPENDENT VALUATION ON THE CHAPTER 18 VALUE OF "XINJIANG RUOQIANG COUNTY KARCHAR FLUORSPAR PROJECT"

INTRODUCTION

In accordance with the instructions from Xinjiang Xinxin Mining Industry Co., Ltd. (the “Company”) and Xinjiang Non-ferrous Metal Industry (Group) Ltd., Jones Lang LaSalle Corporate Appraisal and Advisory Limited (“JLL”) has undertaken a valuation exercise which requires us to express an independent opinion on the Market Value of “Xinjiang Ruoqiang County Karchar Fluorspar Project” (the “Project”) owned by Xinjiang Huaou Mining Co., Ltd. (the “Target Company”) as of October 31, 2024 (the “Valuation Date”) under the guidance of Chapter 18 of the Hong Kong Listing Rules (“Chapter 18”). The report which follows is dated 24 March 2025 (the “Report Date”). The purpose of this valuation is for the Clients’ internal reference and inclusion in its public disclosure.

This report has been prepared in accordance with the guidelines set by the Australian Code for public reporting of Technical Assessments and Valuations of Mineral Assets 2015 Edition (the “VALMIN Code”), prepared by the VALMIN Committee, a joint committee of the Australasian Institute of Mining and Metallurgy and the Australian Institute of Geoscientists with the participation of the Australian Securities and Investment Commission (ASIC), the Australian Securities Exchange (ASX), or of other relevant securities exchanges.

APPENDIX VI

VALUATION REPORT

The valuation was carried out on a Market Value basis. The Market Value is defined as “the estimated amount (or the cash equivalent of some other consideration) for which the Mineral Asset should exchange on the date of Valuation between a willing buyer and a willing seller in an arm’s length transaction after appropriate marketing where the parties had each acted knowledgeably, prudently and without compulsion”.

Under the definition of Market Value, a willing buyer acting knowledgeably, prudently and without compulsion shall take into consideration of the potential economic benefit from Inferred Resources. It is considered the value obtained through strict adherence to Chapter 18 does not align with the established definition of Market Value. In particular, Chapter 18.30 (3) states that: “Indicated Resources and Measured Resources are only included in economic analyses if the basis on which they are considered to be economically extractable is explained and they are appropriately discounted for the probabilities of their conversion to mineral Reserves. All assumptions must be clearly disclosed. Valuations for Inferred Resources are not permitted”. As such, we have performed the valuation of the Project excluding the Inferred Resources under the Market Value basis, which we referred to as the “Chapter 18 Value”.

The valuation contains calculations and forecasts based on data provided by the Company as well as those contained in the report titled "Independent Technical Report on Xinjiang Karchar Fluorspar Project" (the "Technical Report") dated 24 March 2025, prepared by SRK Consulting (Hong Kong) Limited (the "Technical Expert"). The Technical Report outlines the Project including review of technical aspects of Geology and Mineral Resource, Mining and Ore Reserve, Mining Assessment, Beneficiation and processing, Environmental and social aspects, Market study, Capital costs and operating costs.

SRK Consulting (Hong Kong) Limited is an associate company of the international group holding company, SRK Global Limited (the SRK Group). SRK is an independent, international consultancy providing focused advice and solutions to clients, mainly in the earth and water resource industries, and offers services from exploration to mine closure for mining projects.

The conclusion of value is based on accepted valuation procedures and practices that rely substantially on the use of numerous assumptions and consideration of various factors that are relevant to the operation of the Project and the Target Company. Considerations of various risks and uncertainties that have potential impact on the business have also been made.

The valuation date is on 31 October 2024 and this report has been prepared on the basis of information available up to that date unless as specifically stated in the text. This report may contain information, such as third-party industry analysis, which has become available since that date. The opinions expressed herein are given in good faith and we believe that any assumptions or interpretations made by it are reasonable.

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APPENDIX VI
VALUATION REPORT

While every effort has been made to ensure the accuracy of this report, we take no responsibility if the conclusions of this report are based on incomplete or misleading data. No opinion has been expressed on matters that require legal or other specialized expertise or knowledge beyond what is customarily employed by valuers. The conclusions assume continuation of prudent management over whatever period of time that is reasonable and necessary to maintain the character and integrity of the assets valued.

JLL has undertaken the valuation of the Project based on a discounted cash flow method under the income approach as primary valuation methodology.

Based on the results of our investigations and analysis outlined in the report which follows, we are of the opinion that the Chapter 18 Value of the Project as at the Valuation Date is in the range of RMB1,455 million to RMB2,321 million with the preferred value being RMB1,991 million.

The following pages outline the factors considered, methodology and assumptions employed in formulating our opinions and conclusions. Any opinions are subject to the assumptions and limiting conditions contained therein.

Yours faithfully,

For and on behalf of

Jones Lang LaSalle Corporate Appraisal and Advisory Limited

Johannes Francois Erasmus
Principal Consultant

Simon M. K. Chan
Executive Director

VI-6 -

APPENDIX VI
VALUATION REPORT

A. SCOPE

The purpose of this valuation is to express an independent opinion, in accordance with Chapter 18 of the Hong Kong Listing Rules (“Chapter 18”), on the Market Value of “Xinjiang Ruoqiang County Karchar Fluorspar Project” (the “Project”) located in the Bayingolin Mongolian Autonomous Prefecture, Xinjiang Uygur Autonomous Region (Figure 1) owned by Xinjiang Huaou Mining Co., Ltd. (the “Target Company”) as of October 31, 2024 (the “Valuation Date”). The report that follows is dated 24 March 2025 (the “Report Date”). The purpose of this valuation is for the Company’s internal reference and inclusion in its public disclosure.

B. BASIS OF VALUE

VI-7 -

APPENDIX VI

VALUATION REPORT

C. BASIS OF OPINION

We have conducted our valuation in accordance with the Code for the Technical Assessment and Valuation of Mineral and Petroleum Assets and Securities for Independent Expert Reports 2015 Edition (the "VALMIN Code"), prepared by the VALMIN Committee, a joint committee of the Australasian Institute of Mining and Metallurgy and the Australian Institute of Geoscientists with the participation of the Australian Securities and Investment Commission (ASIC), the Australian Securities Exchange (ASX), or of other relevant securities exchanges.

In order to form an opinion on the Chapter 18 Value of the Project and the Target Company, it is vital to make assumptions of certain future events, e.g. economic and market factors. We have taken all reasonable care in examining those assumptions made to ensure that they are appropriate to the case. These assumptions are based on the technical knowledge and experience of the Target Company. The valuation procedures employed include the review of physical and economic conditions of the Target Company, and an assessment of the key assumptions, estimates, and representations made by the proprietor or the operator of the Project. All matters essential to the proper understanding of the valuation will be disclosed in the valuation report.

The following factors form an integral part of our basis of opinion:

Assumptions on the market conditions and the subject assets that are considered to be fair and reasonable;
Financial performance that shows a consistent trend of the operation;
Consideration and analysis on the micro and macro economy affecting the subject assets;
Analysis on tactical planning, management and synergy of the subject assets;
Analytical review of the subject assets; and
Assessment of the leverage and liquidity of the subject assets.

We planned and performed our valuation so as to obtain all the information that we considered necessary in order to provide us with sufficient evidence to express our opinion on the subject assets. We have not undertaken due diligence of the legal status of the Project.

Unless otherwise indicated, all financial figures quoted in this Valuation Report refer to Chinese Yuan Renminbi ("RMB"). The values stated in this Valuation Report do not include any allowance for the costs of negotiating any sale.

VI-8 -

APPENDIX VI
VALUATION REPORT

D. INDEPENDENCE DECLARATION

JLL confirms that to the best of our knowledge and belief, we are independent of the Clients, the Target Company and the Project, and have not contravened any independence requirements stipulated as per our professional memberships. Our fee is not contingent upon our conclusion of value.

E. STATEMENT OF COMPETENCE

This report is prepared by Johannes Francois Erasmus and Simon Chan.

Johannes Francois Erasmus has over 40 years of experience in the global resources industry. His qualifications and professional associations include registered Professional Geologist (PGeo) in Canada and a Professional Natural Scientist (Pr. Sci. Nat) in South Africa. He obtained a BSc degree in Geology from the University of South Africa, a Graduate Diploma in Mining Engineering as well as a master’s degree in Mineral Economics from the University of the Witwatersrand in South Africa. Mr. Erasmus is experienced in providing mineral expert services of Feasibility and Pre-feasibility studies, Risk analysis of mining projects, Managing license evaluation and acquisition, Evaluation of investment opportunities, Corporate advisory services, Valuation of Mineral Projects to VALMIN standards, Competent Evaluator Reports (Chapter 18) and Competent Person Reports (NI43-101 and JORC) for Hong Kong and other international Stock Exchanges. These qualifications require him to be subjected to enforceable code of ethics, therefore we deem Mr. Erasmus to be suitably qualified to produce public reports as cited in the JORC code. He has experience with fluorite mining and other mineral asset valuation over an extensive period and thus meets the criteria of a Competent Person under the VALMIN Code. He fulfills VALMIN’s standard for competence and his acceptance for the overall responsibility of the report, allows him an Expert status under the “Expert and Specialists” section of the VALMIN Code.

Simon Chan has extensive work experience in accounting, auditing, valuation and corporate advisory services and now oversees the business valuation department of JLL. He has extensive valuation experience in mineral assets, mining rights and corresponding project investments and has provided a wide range of valuations services to numerous listing companies in Mainland China, Hong Kong, Singapore and the United States since 2007. He is a member of the Australasian Institute of Mining and Metallurgy (AusIMM) as well as a fellow of the Royal Institute of Chartered Surveyors (RICS), Hong Kong Institute of Certified Public Accountants (“HKICPA”) and CPA Australia. His extensive experience means he fulfills the requirement to be a “Securities Expert” under the definition of “VALMIN Practitioners” set out in the VALMIN Code.

VI-9 -

APPENDIX VI
VALUATION REPORT

F. SOURCE OF INFORMATION

In conducting our valuation of the Chapter 18 Value of the Project, we have reviewed information from several sources, including, but not limited to:

Information on the Project including, but not limited to, presentations, prepared documentation, exploration data, mine planning, legal, marketing and financial data;
The Technical Report prepared by the Technical Expert;
Market Study on the Chinese fluorspar market prepared by Shanghai Metals Market (SMM);
Preliminary Design (Substitute Feasibility Study) of the Karchar Fluorspar Mine in Ruoqiang County, Xinjiang, for the Project prepared by China ENFI Engineering Technology Co., Ltd. (“China ENFI”);
Site inspection on 18-21 April 2023 (Ms. Xinyue Dong & Ms. Runzhu Guo) together with the expert technical witnesses of the SRK team Interviews of management and employees of the Company and the Target Company; and
Prior industry knowledge and continuing industry research.

A large amount of paper-based and digital data was provided to us. The data covered the exploration program, laboratory analysis of rock samples, geology, mine operational planning and procedures, financial budgets including forecast sales and revenue, operating and capital expenditure, expenses and income, land ownership, environmental management planning, tax, legal and regulatory matters. We reviewed the Technical Report and believed that it is consistent with industry practice in terms of methodology and completeness. We also believe that, within the normal constraints of financial modeling of future events, the assumptions have properly been considered as to forecast operational performance, revenues and costs are reasonable. All requests to the Target Company for information and clarification were answered to our satisfaction and within a reasonable time. The staff members of the Target Company and the Company were made available for interviews as requested and were cooperative and forthcoming. We have no reason to believe that the information provided to us is inaccurate or incomplete.

VI-10 -

APPENDIX VI

VALUATION REPORT

G. BACKGROUND OF THE TARGET COMPANY AND THE PROJECT

The Project is held by the Target Company, Xinjiang Huaou Mining Co., Ltd., which was established in 2007. The Target Company mainly engaged in mining investment, mineral resource exploration investment, and mineral product sales. Since its establishment, the company has conducted multiple exploration works and obtained the following mining right licenses and exploration licenses for the Project.

Table 1: Licences of the Target Company

Mining licence No.	C6500002023066210155378
Mining right holder	Xinjiang Huaou Mining Co., Ltd.
Project name	Xinjiang Ruoqiang County Karchar Fluorspar Mine
Commodity type	Fluorspar
Mining Method	Underground mining
Mining Capacity	1,200,000 tpa
Area	7.763 km²
Elevation range	From 3,203 to 2,354 m asl
Validity	From June 27, 2023 to June 27, 2038
Exploration licence No.	T6500002008106010017299
Exploration right holder	Xinjiang Huaou Mining Co., Ltd.
Project name	Xinjiang Ruoqiang County Karchar Southwest Fluorspar Mine Exploration
Area	17.63 km²
Validity	From June 15, 2021, to June 15, 2026
Exploration licence No.	T6500002008073010011214
Exploration right holder	Xinjiang Huaou Mining Co., Ltd.
Project name	Xinjiang Ruoqiang County Karchar West Copper-Gold Mine Exploration
Area	25.9 km²
Validity	From August 9, 2021, to August 9, 2026

The mining area is located to the southeast of Ruoqiang County, Xinjiang, with a straight-line distance of about $73.50\mathrm{km}$ , and to the west of Huatugou Town, Mangya City, Qinghai, with a straight-line distance of about $195.60\mathrm{km}$ . The administrative area is under the jurisdiction of Ruoqiang County, Bayingoleng Mongol Autonomous Prefecture, Xinjiang. The travel distance Ruoqiang County to the mining area is $484\mathrm{km}$ , and from Mangya City to the mining area is $261\mathrm{km}$ . The mining license was granted for the well-explored Karchar fluorspar mine. The two exploration licenses are situated along an east-west trend, adjacent to each other, with the western exploration license overlapping the mining license.

APPENDIX VI

VALUATION REPORT

Figure 1: Location of the Project

Source: SRK

H. TECHNICAL REPORT

We have been provided with a report produced by SRK Consulting (Hong Kong) Limited titled "Independent Technical Report on Xinjiang Karchar Fluorspar Project" dated 24 March 2025.

We regard the Technical Report as being very thorough and complete, and adopted the estimation of the reserve provided for the fields. We note further that the bulk of the operating and other cost estimates are based on the experience of the technical expert, and we consider the cost and capital expenditure forecasts are sound.

The Technical Expert also presents a good review of the mine and operational plans. Based on our own observations of the mine fields and our review of the relevant documentation and discussions with the staff, we agree with the Target Company that the mine and operational plans appear reasonable and complete.

In regard to some matters, such as the discount rate used in the Net Present Value ("NPV") calculation, we have adopted a different value from the Technical Expert, which are further discussed in Section O below.

APPENDIX VI
VALUATION REPORT

I. SITE INSPECTION

Site inspection of the site areas has been undertaken on 18-21 April 2023, we have also sought the assistance from the Target Company’s employees for picture record of those site area around the Valuation Date for us to understand the latest conditions of the site areas. Together with the expert technical witnesses of the SRK team, the provided photographs, interviews with the technical personnel of the company and JLL’s own site visit, we are satisfied with the operational data provided by the company.

J. ENCUMBRANCES

We questioned the directors of the Company about the existence of any encumbrances on the Project that were not in the public domain. We have no reason to believe that we have not been provided with all relevant information that might be reasonably considered to influence the economic value of the Project.

K. EXISTING EXPLORATION AND OPERATIONAL READINESS

According to the Technical Report, the Target Company has carried out multiple exploration programs and evaluation work. In June 2023, the Target Company commissioned China ENFI to conduct Preliminary Design (Substitute Feasibility Study) for mining, mineral processing, tailings facilities, and other mining engineering projects. Construction at the project site commenced in March 2024. By December 2024, the major mining projects, processing plant facilities, substations and living camps are under construction. Remaining projects, such as the tailings storage facility, water supply station, and backfill station, have not yet commenced construction. The Target Company plans to complete the processing plant and ancillary facilities by the end of June 2025 to start commissioning. Simultaneously, mining projects construction will be proceeded and completed by the end of March 2026.

– VI-13 –

APPENDIX VI
VALUATION REPORT

L. VALUATION APPROACH

In arriving at our assessed value, we have considered three generally accepted approaches, namely market approach, cost approach and income approach.

Market Approach considers prices recently paid for similar assets, with adjustments made to market prices to reflect condition and utility of the appraised assets relative to the market comparative. Assets for which there is an established secondary market may be valued by this approach. Benefits of using this approach include its simplicity, clarity, speed and the need for few or no assumptions. It also introduces objectivity in application as publicly available inputs are used. However, one has to be wary of the hidden assumptions in those inputs as there are inherent assumptions on the value of those comparable assets. It is also difficult to find comparable assets. Furthermore, this approach relies exclusively on the efficient market hypothesis.

Cost Approach considers the cost to reproduce or replace in new condition the assets appraised in accordance with current market prices for similar assets, with allowance for accrued depreciation or obsolescence present, whether arising from physical, functional or economic causes. The cost approach generally furnishes the most reliable indication of value for assets without a known secondary market. Despite the simplicity and transparency of this approach, it does not directly incorporate information about the economic benefits contributed by the subject assets.

Income Approach is the conversion of expected periodic benefits of ownership into an indication of value. It is based on the principle that an informed buyer would pay no more for the project than an amount equal to the present worth of anticipated future benefits (income) from the same or a substantially similar project with a similar risk profile. This approach allows for the prospective valuation of future profits and there are numerous empirical and theoretical justifications for the present value of expected future cash flows. However, this approach relies on numerous assumptions over a long-time horizon and the result may be very sensitive to certain inputs. It also presents a single scenario only.

We have adopted the discounted cash flow method of the Income Approach in this exercise, it is an estimation of the NPV of the forecast free cash flow produced by the Project since the Valuation Date. Other valuation methodologies such as the market approach were considered, however, the approach's reliability is potentially compromised by numerous, often undisclosed factors that may have influenced comparable market transactions, thereby introducing a significant element of subjectivity. On the other hand, the cost approach is inappropriate for the valuation as it does not directly incorporate information about the economic benefits contributed by the Project. Both methodologies are less preferred comparing to the Discounted Cash Flow method given a LOM plan has been developed. Considering the reserves, mining and processing recoveries, and capital and operating costs are well defined in the Technical Report, it is generally accepted that the Discounted Cash Flow ("DCF") method is the most relevant and appropriate valuation method.

VI-14 -

APPENDIX VI
VALUATION REPORT

In accordance with the requirements of the VALMIN Code and Chapter 18, the Chapter 18 Value of the Project has been determined within a range of values, and a preferred value, has been calculated.

This report is compliant with the requirements of the VALMIN Code (2015). The fundamental objective of the VALMIN Code is the protection of investors. With this objective in mind, we have conducted the valuation in the following way:

where there has been a choice of a simple and a complex method of estimating a financial factor and there is no material difference between the methods in the resulting accuracy of, or confidence about, the factor amount, the simple method has been used; and
where there is a material uncertainty regarding the quantum of an amount or parameter, we have been as conservative as possible to be consistent with our intent to provide a reasonable estimate of the Chapter 18 Value of the Project.

Income Approach

Whereas a Market Approach is more common in valuing projects before the exploration stage has begun, the Project in which exploration has advanced to a degree where there is a reserve definition and a feasible development plan, a more appropriate approach to valuation is usually to estimate the NPV of the project – an approach known as the Discounted Cash Flow ("DCF") method.

We make the following observations on the efficacy of the NPV valuation method:

it is necessarily based on many assumptions including future operating performance, revenue and costs and the reader must remember that it is intended to provide guidance and not an exact number;
it is sensitive to changes in the discount rate to a certain extent;
many of the calculations in the financial model were made on an accrual basis while the determination of free cash flow must necessarily be made on a cash basis;
it assumes constant risk over the life time of the project; and
it does not allow for management's ability to change the cost structure or scale of the project in response to changed operating or market conditions.

– VI-15 –

APPENDIX VI
VALUATION REPORT

M. ASSUMPTIONS

Assumptions considered to have significant sensitivity effects in this valuation have been evaluated in order to provide a more accurate and reasonable basis for arriving at our assessed value. The following key assumptions in determining the market value of the Subject have been made:

Other than enquiring with the Company, the Target Company and the Company’s legal advisor, we have neither conducted a full legal audit of the status of the various tenements nor formally reviewed all material factors affecting the tenements. Basic examination of the provided documents has not identified any evidence of issues with the operation rights related to the Project. According to the Company, all relevant taxes and fees for the mining rights, which were due before the Valuation Date, have been paid for. The Target Company, which holds the Project, has been duly established and validly existing, and has obtained the necessary governmental authorizations, approvals, permits, licenses or certificates required to perform its business. The Project appears to be in good standing with current, valid licenses and approvals, and with no identified outstanding commitments as at the Valuation Date. The valuation assumes that the Project’s legal standing in ownership, permits, regulatory approvals, and operation rights remain valid, legally compliant, and free of any liens, encumbrances, disputes, or risks.
In order to realize the growth potential of the business and maintain a competitive edge, additional manpower, equipment and facilities are necessary to be employed. For the valuation exercise, we have assumed that all proposed facilities and systems will work properly and will be sufficient for future expansion.
We assume continuation of prudent and effective management policies over whatever period of time that is considered to be necessary in order to maintain the character and integrity of the assets valued.
We have assumed all the information provided to us to be reliable and legitimate. We have relied to a considerable extent on such information in arriving at our opinion of value.
We have assumed that there will be no material change in the existing political, legal, technological, fiscal or economic condition which may adversely affect the business of the Target Company.
Operational and contractual terms bound by the contracts and agreements entered into by the Target Company will be honored.
Competitive advantages and disadvantages of the Target Company will not change significantly during the period under consideration.
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APPENDIX VI

VALUATION REPORT

N. PROJECT VALUATION ASSUMPTION

Reserve and mining schedule

According to the Technical Report, the Mineral Resource estimates as at 31 October 2024 for the Mine are listed below, only Measured and Indicated Resources were considered under Chapter 18.

Table 2: Mineral Resource

Mineral Resource Category	Tonnage (kt)	Grade (%)	CaF₂ (kt)
Indicated	35,480	33.24	11,795
Inferred	26,455	32.56	8,614
Total	61,936	32.95	20,409

With reference to the Technical Report, JORC code states that an Ore Reserves are the economically mineable part of Measured and/or Indicated Mineral Resources, including losses and dilution that may occur due to mine design and during mining operation. Ore Reserves are typically defined at a reference point, which for the Technical Report is considered to be the mineable materials as received at the RoM bin. As of 31 October 2024, Probable Ore Reserves of 24.8 Mt at an average grade of 28.6% CaF₂ for 7.1 Mt of contained CaF₂ are estimated to reside within the mining licence area. These Ore Reserves are classified in the Probable category as there is no Measured Mineral Resource. According to the Technical Report, ore recovery rate is assumed to be 80% for the full mine life of the Karchar Fluorspar Mine.

Table 3: Ore Reserves Statement for Karchar Fluorspar Mine as at 31 October 2024

Reserve Category	Tonnage (kt)	Grade (%)	CaF₂ (kt)
Probable	24,787	28.6	7,094
Total	24,787	28.6	7,094

In considering the mining and processing capacity as that has been suggested by the Technical Report, together with the valid period and extension of the mining license, we have adopted the following production schedule in the valuation.

APPENDIX VI

VALUATION REPORT

Table 4: Production schedule

Year	RoM Tonnes (t)	RoM Metal (t)	RoM Grade (%)
2025	154,668	45,300	29.3
2026	797,184	224,652	28.2
2027	1,200,365	333,727	27.8
2028	1,204,041	333,363	27.7
2029	1,200,235	338,056	28.2
2030	1,203,191	355,559	29.6
2031	1,207,997	366,740	30.4
2032	1,201,689	343,706	28.6
2033	1,209,258	342,506	28.3
2034	1,197,734	339,579	28.4
2035	1,206,639	345,447	28.6
2036	1,197,179	342,973	28.6
2037	1,200,246	354,367	29.5
2038	1,198,647	350,661	29.3
2039	1,202,192	341,011	28.4
2040	1,202,334	345,457	28.7
2041	1,201,542	339,529	28.3
2042	1,201,327	337,679	28.1
2043	1,198,976	351,466	29.3
2044	1,205,011	346,696	28.8
2045	1,198,898	327,682	27.3
2046	981,669	283,553	28.9
2047	15,992	3,942	24.7
Total	24,787,013	7,093,649	28.6

Unit price of Fluorspar

As of the Valuation Date, the Project is not in operation and no actual prices are quoted, in addition, we are given to understand no long-term supply contracts has been executed. The valuation of the Project has been undertaken based on price estimates by Shanghai Metals Market (SMM), an independent market research company, which has prepared a market study on the Chinese fluorspar market (SMM, 2024). SMM forecasts that the fluorspar market will continue to grow, driven by strong demand and constrained supply. The projected real unit prices of 97% fluorite wet powder (approximately 10% moisture content) from 2025 to 2027 are estimated to be 3,553, 3,661, and 3,758 RMB/ton respectively, including tax of 13%, prices after 2027 are assumed to be constant.

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APPENDIX VI

VALUATION REPORT

Capital Expenditure

According to the Technical Report, the capital expenditure ("Capex") schedules of the Project are as follow:

Table 5: Overall capital expenditure schedule

Item	Development Engineering (RMB'000)	Machinery equipment (RMB'000)	Total (RMB'000)
2024 (Nov – Dec)	314,799	189,587	504,386
2025	344,763	207,633	552,395
2026	190,358	114,643	305,001
2027	88,072	53,041	141,113
2030	6,241	3,759	10,000
2031	19,647	11,833	31,480
2032	6,241	3,759	10,000
2035	30,763	18,527	49,290
2036	41,067	24,733	65,800
2037	30,763	18,527	49,290
2038	30,763	18,527	49,290
2040	40,119	24,161	64,280
2045	9,643	5,807	15,450
Total	1,153,239	694,535	1,847,775

The Capex in the Technical Report covered capital costs for development, budgeted expenditures for contingency, and a sustaining capital budget including equipment replacements, overhauls, and other expenses throughout the mine's lifespan. We considered that the capital expenditure ("Capex") suggested in the Technical Report to be reasonable at the time of preparation.

Operating Costs

Operating costs include mining operating costs and processing operating costs, comprises mainly of purchase of raw and auxiliary material, purchase of power and fuel, wages & salaries expense, safety production cost, mining outsourcing costs, selling expense, administration expense (including mine geological environment governance and restoration fund & mineral royalty), depreciation and amortization, repair charge and other expenses.

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VALUATION REPORT

Table 6: Unit Operating Cost

Items	Unit cost (RMB/t)
Purchase of raw and auxiliary material	64.38
Purchase of power and fuel	30.97
Wages & salaries expense	39.17
Safety production cost	9.82
Mining outsourcing costs	93.77
Selling expenses	5.87
Other expenses	9.74

Table 7: Management Expense

Items	Management Expense (RMB million/annum)
Executive compensation	6.25
Experimental design fee	5.00
Exploration expenses	4.00
Business entertainment expenses	3.50
Other management expenses	9.97

The mine geological environment governance and restoration fund equals to revenue multiplied by 70% multiplied by mineral coefficient and multiplied by mining method coefficient. The mineral coefficient for this Project is 1%, and the underground mining coefficient is 0.3.

The mineral royalty fee is assumed to be 2.4% of the mining revenue and is included in the administration expense.

The depreciation method used is straight-line, with an asset lifespan of 10-25 years and a salvage value of 5%. In addition to projected depreciation from the forecast capital expenditures, there are also depreciations from existing plants & machinery and land.

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APPENDIX VI
VALUATION REPORT

Additional Tax

Additional tax comprises urban maintenance and construction tax, education tax surcharges, local education tax surcharges, which is 5%, 3% and 2% of Value Added Tax (“VAT”) respectively, and resource tax amounting to 3% of revenue.

Income Tax Expense

The Project shall be subject to China income tax rate of 25% throughout the projection period.

O. DISCOUNT RATE

In applying the discounted cash flow method, it is necessary to determine an appropriate discount rate for the assets under review. The discount rate represents an estimate of the rate of return required by a third party investor for an investment of this type. The rate of return expected from an investment by an investor relates to perceived risk. Risk factors relevant in our selection of an appropriate discount rate include:

Interest rate risk, which measures variability of returns, caused by changes in the general level of interest rates;
Purchasing power risk, which measures loss of purchasing power over time due to inflation;
Liquidity risk, which measures the ease with which an instrument can be sold at the prevailing market price;
Market risk, which measures the effects of the general market on the price behavior of securities; and
Business risk, which measures the uncertainty inherent in projections of operating income.

Consideration of risk, burden of management, degree of liquidity, and other factors affect the rate of return acceptable to a given investor in a specific investment. An adjustment for risk is an increment added to a base or safe rate to compensate for the extent of risk believed to be involved in the investment. The appropriate discount rate for the valuation exercise is the weighted average cost of capital.

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APPENDIX VI
VALUATION REPORT

Cost of Equity

The appropriate rate of return for valuing the Project is the return on equity. We have adopted the Build-Up Model to estimate the cost of equity. The Build-Up Model is an additive model commonly used for calculating the cost of equity capital, which involves summing the building blocks of specific risk components of the assets or business. These risk factors, when combined, represent the overall return anticipated by an investor from acquiring a specific business. The Build-Up Model is widely accepted in the investment and financial analysis communities for the purpose of estimating a company's required return on equity capital.

The equation of Build-Up Model is shown as follows:

$$
\text{Cost of Equity or Required Return on Equity (r_e)} = \text{Risk Free Rate} + \text{Long Term Equity risk premium} + \text{Industry risk premium} + \text{Size Premium} + \text{Specific Risk Premium}
$$

The return on equity required of a company represents the total rate of return investors expect to earn, through a combination of dividends and capital appreciation, as a reward for risk taking.

Weighted Average Cost of Capital

The concept of Weighted Average Cost of Capital ("WACC") is to incorporate the different costs of capital for all sources of the Subject's capital and weight by their proportionate share of total capital to determine the Project's overall cost of capital.

The equation of WACC is shown as follows:

$$
\text{WACC} = \text{Percentage of equity financing} \times \text{Required Return on Equity} + \text{Percentage of debt financing} \times \text{Required Return on Debt} \times (1 - \text{Corporate tax rate})
$$

APPENDIX VI

VALUATION REPORT

Parameters for WACC

Table 8: Parameters for WACC

	As of 31 October
Parameter	2024	Remark	Source
Risk-free Rate	2.14%	Based on 10-year China Sovereign Curve	Bloomberg
Long Term Equity risk premium	4.98%	China Equity Risk Premium	Prof. Damodaran estimate
Industry premium	1.36%	Metals and Mining (GICS 151040)	Kroll Cost of Capital Navigator
Size Premium	2.91%	Based on size of the Project	Kroll Cost of Capital Navigator
Company-specific Risk Premium	3.00%	Forecast and operational risk (uncertainty)
Cost of Equity	14.39%	Calculated according to the equation of CAPM as stated above
Cost of Debt	3.60%	China Loan Prime Rate	People's Bank of China
Cost of Debt (tax adjusted)	2.70%
WACC (Nominal)	12.91%
Inflation Rate	2.00%	China Long Term Inflation Rate	International Monetary Fund
WACC (Real)	10.70%

P. DISCOUNTED CASH FLOW VALUATION FOR THE PROJECT

The free cash flow model has been applied in this valuation to calculate the NPV of the Project. Having determined this as the Chapter 18 Value, this same value can be used as a preferred value within a sensitivity analysis.

APPENDIX VI

VALUATION REPORT

Sensitivity analyses was performed using several values for fluorspar prices and discount rate. Table 9 below shows the effect on NPV by varying the price and the discount rate while using the base case production costs. The price variation is calculated based on the cumulative annual growth rate of the historical price provide by SMM.

Table 9: NPV in RMB thousands – fluorspar price varied with the discount rate

		Discount rate
		-1.0%	-0.5%	0.0%	0.5%	1.0%
Real
fluorspar price
(Note below)	1	1,395,381	1,296,066	1,202,610	1,114,596	1,031,641
	2	1,778,416	1,664,019	1,556,354	1,454,942	1,359,344
	3	2,250,537	2,117,066	1,991,438	1,873,092	1,761,518
	4	2,462,852	2,320,724	2,186,943	2,060,914	1,942,092
	5	2,603,740	2,455,898	2,316,735	2,185,633	2,062,025

Note:
1. Based on unit price of RMB3,190/ton in 2023 from SMM report, assuming no change in unit price over the projection period
2. Based on unit price of RMB3,440/ton in 2024 from SMM report, assuming no change in unit price over the projection period
3. Base case, referencing SMM price forecast from year 2025 to 2027, at CAGR of 2.23%
4. CAGR of 4.30% from year 2025 to 2027, calculated based on historical real unit price between 2019–2023 from SMM report
5. CAGR of 5.14% from year 2025 to 2027, calculated based on historical real unit price between 2018–2023 from SMM report

The cells of Table 9 that are shaded light grey contain the range of values that JLL believes are the most likely to contain a Chapter 18 Value for the Project. The cells of Table 9 that are shaded dark grey are included to assist the reader in drawing their own conclusion as to the value of the project. The reader is cautioned to remember that it is not possible to forecast future performance of the project or other economic factors with certainty and that it is prudent to consider a sufficient range of variation in the relevant factors. From the tables above, we are of the opinion that the Chapter 18 Value of the Project as at the Valuation Date is ranged from RMB1,455 million to RMB2,321 million with the preferred value being RMB1,991 million.

– VI-24 –

APPENDIX VI
VALUATION REPORT

Q. RISK FACTOR

The Technical Report includes a comprehensive review of the Project’s risks and we agree with the conclusions of the Technical Expert in regard to those risks. We include some additional commentary on general risk factors for the sake of prudence. The mining industry is a high risk business where earnings can be highly volatile. Many risks directly related to the mining operation can be minimised by good planning and management practices. However, there are a number of risks that fall outside of the control of the mine operators. For each of the risks detailed below, we have provided a subjective assessment of the consequences of the risk on the overall Project operation and the likelihood of such risks occurring.

Financing risk

Due to the size of the project and the length of the development phase, the project would require large amount of investment and financing. The development of the project would largely be depending on securing the cash flow. Failure to fund the development of the Project may result in considerable delays. Alternatively, any requirements to source outside funding may necessitate more detailed and costly feasibility studies. As of the report date, the Target Company has not yet reached a final investment decision and thus there is uncertainty in the timing and cost of the Project. Major risk, depending on management decision, could possibly occur

Transportation risk

The project involves construction of infrastructures through areas with lack of water supplies, electricity provision, or highways for transportation. The construction could be affected by the available resources and could extend the construction period. Moderate risk, unlikely to occur.

Environmental impact risk

In addition to business and mining licenses, other environment-related operating permits are necessary for project construction and production under relevant Chinese laws and regulations. There are no environmental aspects foreseen that would prevent the development of the Project. Low risk, likely to occur.

Occupational Health and Safety risk

The Technical Report mentioned multiple safety measures for the Project, however, there remains a risk of severe injury to workers or others. Such incidents could potentially result in legal liabilities under both occupational health and safety legislation and common law principles. Low risk, likely to occur.

APPENDIX VI
VALUATION REPORT

Technology/equipment risk

The Project relies on simple technology, well understood and proven technology and mining practices. We believe that the Target Company and its workforce are very familiar with the equipment and mining methodology. The achievability of the development plan may highly depend on the technical performance of the equipment. Moderate risk, unlikely to occur.

Technical Personnel and Contractors

The Project faces potential risks from contractors, including technical staff, who may not meet performance expectations, as well as from possible equipment failures, these factors could hinder the Project's planned exploration and mining operations. The Project might encounter difficulties in securing all the necessary personnel and equipment required to execute its proposed exploration and mining activities within the planned budget constraints. Moderate risk, unlikely to occur.

Industry/regional/global economic weakening

The Project's performance can be directly or indirectly affected by characteristics and changing forces of supply and demand for the contributing inputs and/or the produced goods and services associated with the Project. These forces work to impact the magnitude of the gap between inflows and outflows regarding the Subject and thus its value. Variations in the degree of competition or in barriers to entry are key drivers of changes to supply whilst consumption preferences, income levels or the availability of substitutes are key drivers of changes to demand. Macroeconomic circumstances including inflation, interest rate fluctuations and existing and forecast levels of growth in the broader economy may also impact customer sentiment, leading to reduction in demand for fluorspar, potentially harming the Project's financial performance and growth prospects. Moderate risk, could possibly occur, underscores the need for a well-managed business.

Operation risk

The Target Company faces the same operational risks as every mining company: bad weather, machinery failure, wall collapse, rising prices etc. The experience of the Target Company in the mining business will help them reduce the likely impact of any of these occurrences. Moderate risk, unlikely to occur.

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APPENDIX VI
VALUATION REPORT

Resources/Reserves Risk

Estimation of resources/reserves is not an exact science and relies on sufficient quality data and a good understanding of the controls for the estimator to make an accurate assessment of the resources/reserves. It is common for mining operations to return values of tonnages and/or grades for mining units that are significantly different to the resource/reserves estimation for the particular blocks – sometimes higher, sometimes lower. The inherent risks can be highly significant for deposits of narrow, high grade mineralization or where the economic minerals are erratically distributed. It is also worth noting that the economic viability of a Mineral Resource or Reserve is dynamic and subject to continuous reassessment. Market fluctuations and changes in operational parameters can alter the profitability of extracting specific ore blocks. Moderate risk, likely to occur.

Realization of Forecast and Projection

This valuation is premised in part on the financial information and/or projections provided by the management of the Company or as contained in the Technical Report. The quantity of reserves, volatility in fluorspar prices, mining schedule and plan, current and projected operating costs and the projected capital expenditure requirements are key elements that can materially affect the Chapter 18 Value of the Project. Since the projections are subject to a number of assumptions (including but not limited to the projected capital and operating expenditure being sufficient, fluorspar prices being relatively stable, the absence of adverse changes in the existing political, legal and economic conditions at the time), and involve known and unknown risks as well as uncertainties, there is no assurance that the projections will materialise as predicted. In the event that material variances between the projected parameters and the actual parameters occur, the Chapter 18 Value of the subject assets may differ significantly from that set out in this report. Moderate risk, likely to occur.

Forecast Prices

The valuation of the Project has relied on forecast fluorspar prices. Future fluorspar prices may differ markedly from the forecasts and could drastically affect the profitability of the operations. Fluorspar prices can be influenced by numerous factors outside of the control of mine operators, such as world supply and demand, forward selling activities, natural disasters disrupting supplies, macro-economic conditions and political issues. Over the life of the mine, it is likely that the mine plan will change in order to accommodate changes in fluorspar prices in order to maintain or maximize profitability. High risk, very likely to occur.

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APPENDIX VI
VALUATION REPORT

R. VALUATION COMMENTS

The valuation of an interest in an asset requires consideration of all relevant factors affecting the operation of the business and its ability to generate future investment returns. The factors considered in the valuation included, but were not limited to, the following:

the nature of the business;
the financial condition of the business and the economic outlook in general;
the operational contracts and agreements in relation to the business;
the projected operating results; and
the financial and business risk of the mining operation including the continuity of income and the projected future results.

The conclusion of the value is based on accepted valuation procedures and practices promulgated in the VALMIN Code that rely substantially on the use of numerous assumptions and the consideration of many uncertainties, not all of which can be easily quantified or ascertained. Further, while the assumptions and consideration of such matters are considered by us to be reasonable, they are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the control of the Target Company.

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APPENDIX VI
VALUATION REPORT

S. OPINION OF VALUE

Based on the results of our investigations and analysis outlined in the report, we are of the opinion that the Chapter 18 Value of the Project as at the Valuation Date is in the range from RMB1,455 million to RMB2,321 million with the preferred value being RMB1,991 million.

T. LIMITING CONDITIONS

This report and opinion of value are subject to our Limiting Conditions as included in Exhibit A of this report.

Yours faithfully,

For and on behalf of

Jones Lang LaSalle Corporate Appraisal and Advisory Limited

Johannes Francois Erasmus
Principal Consultant

Simon M. K. Chan
Executive Director

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APPENDIX VI
VALUATION REPORT

EXHIBIT A – LIMITING CONDITIONS

In the preparation of our reports, we relied on the accuracy, completeness and reasonableness of the financial information, forecast, assumptions and other data related to the Target Company, provided to us by the Company and the Target Company and/or their representatives. We did not carry out any work in the nature of an audit and neither are we required to express an audit or viability opinion. We declare that we have taken all reasonable care to ensure that all such information has been presented in a professional manner and we believe, on reasonable grounds, that the information is true, complete as to material details, and not misleading. However, the responsibility for arriving at conclusions based on the Chapter 18 Value provided in this valuation report rests solely with the Clients and our reports were only used as part of the Clients’ analysis in reaching their own conclusion of value.
We have explained as part of our service engagement procedure that it is the director’s responsibility to ensure proper books of accounts are maintained, and the financial information and forecast give a true and fair view and have been prepared in accordance with the relevant standards and company’s ordinance.
Public information and industry and statistical information have been obtained from sources we deem to be reputable and reliable, and we have undertaken necessary verification procedures with our best endeavor. However, we make no representation as to the accuracy or completeness of such information obtained.
The management of the Clients have reviewed and agreed on the report and confirmed that the basis, assumptions, calculations and results are appropriate and reasonable.
Jones Lang LaSalle Corporate Appraisal and Advisory Limited shall not be required to give testimony or attendance in court or to any government agency by reason of this exercise, with reference to the project described herein. Should there be any kind of subsequent services required, the corresponding expenses and time costs will be reimbursed from you. Such kind of additional work may incur without prior notification to you.
No opinion is intended to be expressed for matters which require legal or other specialized expertise or knowledge, beyond what is customarily employed by valuers.
The use of and/or the reliance of the report is subject to the terms of engagement letter/proposal and the full settlement of the fees and all expenses.

– VI-30 –

APPENDIX VI
VALUATION REPORT

Our conclusions assume continuation of prudent management policies over whatever period of time that is considered to be necessary in order to maintain the character and integrity of the assets valued.
We assume that there are no hidden or unexpected conditions associated with the subject matter under review that might adversely affect the reported review result. Further, we assume no responsibility for changes in market conditions, government policy or other conditions after the Valuation/ Reference Date. We cannot provide assurance on the achievability of the results forecasted by the Target Company because events and circumstances frequently do not occur as expected; difference between actual and expected results may be material; and achievement of the forecasted results is dependent on actions, plans and assumptions of management.
This report has been prepared for inclusion in the Circular of the Company in connection with the acquisition of the Target Company. Our consent to the disclosure of the report in connection with the acquisition is solely for the purpose of providing information to potential investors or any interested party.
The calculation of values expressed herein is valid only for the purpose stated in the engagement letter/or proposal as of the reference date. In accordance with our standard practice, we must state that this report and exercise is for the use only by the party to whom it is addressed and no responsibility is accepted with respect to any third party for the whole or any part of its contents.
Where a distinct and definite representation has been made to us by party/parties interested in the assets valued, we are entitled to rely on that representation without further investigation into the veracity of the representation if such investigation is beyond the scope of normal scenario analysis work.
The Clients agree to indemnify and hold us and our personnel harmless against and from any and all losses, claims, actions, damages, expenses or liabilities, including reasonable attorney's fees, to which we may become subjects in connection with this engagement. Our maximum liability relating to services rendered under this engagement (regardless of form of action, whether in contract, negligence or otherwise) shall be limited to the charges paid to us for the portion of its services or work products giving rise to liability. In no event shall we be liable for consequential, special, incidental or punitive loss, damage or expense (including without limitation, lost profits, opportunity costs, etc.), even if it has been advised of their possible existence.
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APPENDIX VI
VALUATION REPORT

We are not environmental consultants or auditors, and we take no responsibility for any actual or potential environmental liabilities that may exist although we have considered environmental liabilities as a risk factor in the valuation. We do not conduct or provide environmental assessments and have not performed one for the subject property.
This exercise is premised in part on the historical financial information and future forecast provided by the management of the Company. We have assumed the accuracy and reasonableness of the information provided after exercising all due care in reviewing such information. We have relied to a considerable extent on such information in arriving at our calculation of value. Since projections relate to the future, there will usually be differences between projections and actual results and in some cases, those variances may be material. Accordingly, to the extent any of the above mentioned information requires adjustments, the resulting value may differ significantly.
Actual transactions involving the subject assets/business might be concluded at a higher or lower value, depending upon the circumstances of the transaction and the business, and the knowledge and motivation of the buyers and sellers at that time.
This report and the conclusion of values arrived at herein are for the exclusive use of our client for the sole and specific purposes as noted herein. Furthermore, the report and conclusion of values are not intended by the author, and should not be construed by the reader, to be investment advice in any manner whatsoever. The conclusion of values represents the consideration based on information furnished by the Target Company and other sources.
The Company has been provided with drafts of our report for correction of any factual errors, comments as to confidentiality issues, errors of fact or misinterpretation, substantive disagreements on the assumptions that JLL has adopted, and notation of any material omissions. The views, statements, opinions and conclusions expressed by JLL are based on the assumption that all data provided to it by the Company are complete, factual and correct to the best of their knowledge. The Target Company has separately represented in writing that to the best of its knowledge, they have provided JLL with all material information relevant to their operations and projects described in this report. This report and the conclusion in it are effective at Valuation Date. Those conclusions may change in the future with changes in relevant metal prices, exploration and other technical developments in regard to the projects and the market for mineral properties.
The financial projects (if any) made in this report are not meant to be profit forecasts and are purely used for the purpose of preparing the values arrived herein.
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APPENDIX VI
VALUATION REPORT

EXHIBIT B – VALUERS’ BIOGRAPHY

Johannes Francois Erasmus
Principal Consultant

Qualifications and Professional Memberships
BSc
Graduate Diploma Engineering (Mining)
MSc Mineral Economics
Professional Geoscientist (P. Geo), Canada
Professional Natural Scientist (Pr. Sci. Nat), South Africa

Experience

Mr. Erasmus has more than 40 years diversified industry experience, including exploration, developing projects through feasibility to production and operational mining throughout the world. The last 20 years he has operated as an independent mining and mineral economic consultant, financial analyst and valuator, primarily to corporate clients including Mining Companies and Mining Project Investors. Mr. Erasmus is experienced in providing mineral expert services, including mining license evaluation and acquisition, Corporate advisory services, Valuation of Mineral Projects to VALMIN standards, Competent Evaluator Reports (Chapter 18) and Competent Person Reports (NI43-101 and JORC) for Hong Kong and other international Stock Exchanges. In addition, Mr. Erasmus has published and presented papers at Mining Conferences and at the United Nations. Papers he published include Black Empowerment in the South African Mining Industry Colloquium (March 2003), Mineral Rights and Property Valuation at the International Platinum Conference – Sun City (2006).

VI-33 -

APPENDIX VI
VALUATION REPORT

Simon M. K. Chan
Executive Director, Jones Lang LaSalle Corporate Appraisal and Advisory Limited

Qualifications and Professional Memberships
B. Commerce, FCPA, FCPA (Aust.), RICS, CVA, ICVS and Member of AusIMM

Experience

Simon has extensive work experience in valuation and corporate advisory industries. He has provided a wide range of valuation services to numerous listed and listing companies of different industries in China, Hong Kong, Singapore and the United States. The valuation services provided include firm valuation, equity valuation, mining rights and mineral assets valuation, purchase price allocation, intangible asset identification and valuation (e.g. trademark, customer base, patent, etc.), biological asset valuation, current asset and liability valuation, goodwill and other asset impairment evaluation, convertible bond valuation, employee share option valuation and other financial instrument valuation. Simon has participated in certain large scale IPOs of State-owned and privately-owned enterprises in China. He has successfully assisted various multinational companies invested in China and has provided different extent of valuable due diligence services for these companies.

– VI-34 –

APPENDIX VI
VALUATION REPORT

EXHIBIT C – VALUERS’ PROFESSIONAL DECLARATION

The following valuers certify, to the best of their knowledge and belief, that:

Information has been obtained from sources that are believed to be reliable. All facts which have a bearing on the value concluded have been considered by the valuers and no important facts have been intentionally disregarded.
The reported analyses, opinions, and conclusions are subject to the assumptions as stated in the report and based on the valuers’ personal, unbiased professional analyses, opinions, and conclusions. The valuation exercise is also bounded by the limiting conditions.
The reported analyses, opinions, and conclusions are independent and objective.
The valuers have no present or prospective interest in the asset that is the subject of this report, and have no personal interest or bias with respect to the parties involved.
The valuers’ compensation is not contingent upon the amount of the value estimate, the attainment of a stipulated result, the occurrence of a subsequent event, or the reporting of a predetermined value or direction in value that favours the cause of the client.
The analyses, opinions, and conclusions were developed, and this report has been prepared, in accordance with the International Valuation Standards published by the International Valuation Standards Committee and VALMIN Code.
Each of Jones Lang LaSalle Corporate Appraisal and Advisory Limited and Johannes Francois Erasmus, the qualified person producing the Independent Valuation Report, has confirmed that it/he has reviewed the information contained in the Circular which relates to the Independent Valuation Report and further confirmed that the information presented therein is accurate, balanced, complete and not inconsistent with the Independent Valuation Report.
The under mentioned persons provided professional assistance in the compilation of this report.

Johannes Francois Erasmus

Principal Consultant
BSc Geology
Graduate Diploma Engineering (Mining)
MSc Mineral Economics,
Professional Natural Scientist (Geological Science)
Reg. No. 400099/03
Member of the Geological Society of South Africa

Simon M. K. Chan

Executive Director
FCPA, FCPA (Aust.),
RICS, CVA, ICVS
Member of AusIMM

– VI-35–

APPENDIX VI

VALUATION REPORT

Valuer's Declaration II:

I, Johannes Francois Erasmus, hereby confirm that:

I have carried out the assignment for Jones Lang LaSalle Corporate Appraisal and Advisory, located at:

7/F, One Taikoo Place
979 King's Road
Quarry Bay, Hong Kong
Tel: (852) 2846 5000
Fax: (852) 2169 6001

I graduated with Bachelor of Science (BSc) in Geology from the University of South Africa (1981) Followed a Graduate Diploma Engineering (Mining) and a Master's degree in Mineral Economics from the University of the Witwatersrand, South Africa.
I am a registered Professional Geologist (P. Geo) in Canada, and a Registered Natural Scientist (Pr. Sci. Nat) in South Africa. I am a Member of Geological Society in South Africa.
I have read the definition of "qualified person" set out in the proposed HK listing rules for mineral, fluorspar companies and certify that I fulfill the requirement to be a "qualified person" for the purpose of the said rules.
I have over 40 years' experience in the resources industry and during the last 20 years I have undertaken projects and fluorspar assets evaluations and valuation assignments on over 10 fluorspar related projects. Nine of these projects have occurred during the last 5 years and include assignments in Mongolia and South Africa.
I am the primary author responsible for the preparation and compilation of this valuation report.
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APPENDIX VI
VALUATION REPORT

I have neither present nor prospective interests in the fluorspar assets, the Target Company, the Company or the values reported herein.
I am not aware of any material fact or material change with respect to the subject matter of the valuation report that is not reflected in the valuation report.
I have read the definition of “Expert and Specialist” set out in the VALMIN Code (2015) and certify, by reason of my education, affiliation with a professional association and past relevant work experience, that I fulfill the requirements to be an “Expert” for the purpose of the VALMIN Code (2015).
This report has been prepared in accordance with the guidelines set by the VALMIN Code (2015) established by the VALMIN Committee in Australia.

Johannes Francois Erasmus

VI-37 -

APPENDIX VI
VALUATION REPORT

I, Simon M. K. Chan, hereby certify that:

I have read the definition of “Expert and Specialist” set out in the VALMIN Code and certify, by reason of my education, affiliation with a professional association and past relevant work experience, I fulfill the requirements to be a “Specialist” for the purpose of the VALMIN Code.
I am responsible for the review of this valuation report.
I have read the VALMIN Code and the valuation report has been prepared in accordance with the VALMIN Code.
I am a certified public accountant in Hong Kong (HKICPA) and Australia (CPA (Aust)), and I am also a member of the AusIMM. I have extensive work experience in valuation and corporate advisory industry.
I am not aware of any material fact or material change with respect to the subject matter of the report that is not reflected in the report, that a failure to disclose would make the report misleading.
I am independent of the Target Company and the Company, in compliance with Clause 24 of the VALMIN Code.
The valuation report is prepared within Jones Lang LaSalle with registered address at 7/F, One Taikoo Place, 979 King’s Road, Quarry Bay, Hong Kong.

Simon M. K. Chan

– VI-38 –

APPENDIX VI
VALUATION REPORT

EXHIBIT D – EQUITY VALUE FOR THE TARGET COMPANY

After deriving the Chapter 18 Value of the Project, we included the following other assets and liabilities of the Target Company to arrive at the equity value of 51% equity interest of the Target Company.

RMB'000

PV of FCFF (Chapter 18 Value of Project) 1,991,438

Add:

Cash and cash equivalents 204,281
Other accounts receivable 8,284
Other current assets 7,037
Deferred-tax assets 2,342

Less:

Accounts Payable (27,884)
Payable to employees (895)
Taxes payable (52)
Other payables (8,430)
Other liabilities (23,015)

100% equity value of the Target Company 2,153,106
51% equity value of the Target Company 1,098,084
51% equity value of the Target Company (Rounded) 1,098,000

VI-39 -

APPENDIX VI
VALUATION REPORT

EXHIBIT E – GLOSSARY

NI43-101
A national instrument for the Standards of Disclosure for Mineral Projects within Canada. The Instrument is a codified set of rules and guidelines for reporting and displaying information related to mineral properties owned by, or explored by, companies which report these results on stock exchanges within Canada.

JORC Code
A code of professional conduct developed by the Joint Ore Reserves Committee which sets the minimum standards for public reporting of Exploration Results, Mineral Resources and Ore Reserves in Australia and New Zealand and which has been adopted by and included in the listing rules of the Australian Stock Exchange and the New Zealand Stock Exchange.

VALMIN Code
A code of professional conduct that establishes standards of best practice for the technical assessment and valuation of mineral and petroleum assets and securities by geologists involved in the preparation of Independent Expert’s Reports. The VALMIN Code was developed by a joint committee of The AusIMM, AIG and MICA (now the Consultants Society of The AusIMM), in consultation with the Australian Securities and Investment Commission, the Australian Stock Exchange Limited, the Minerals Council of Australia, the Petroleum Exploration Society of Australia, the Securities Association of Australia and representatives from the Australian finance sector. The Code is binding on all members of The AusIMM and AIG.

– VI-40 –

APPENDIX VII

GENERAL INFORMATION

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.

DISCLOSURE OF INTERESTS

Directors, supervisors and chief executive of the Company

(i) As at the Latest Practicable Date, save and except for Mr. Zhou Chuanyou, being a Director, who has interest in 345,924,000 domestic shares and 135,000,000 H Shares of the Company as set out in the section headed "Substantial shareholders of the Company" on page VII-2 of this circular, none of the Directors, supervisors and chief executive of the Company had any interests and short positions in the shares, underlying shares and/or debentures (as the case may be) of the Company or any of its associated corporations (within the meaning of the SFO) which was required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interest and short position which any such Director, chief executive or supervisor is taken or deemed to have under such provisions of the SFO) or which was required to be entered into the register required to be kept by the Company under section 352 of the SFO or which was otherwise required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers in the Listing Rules.

(ii) As at the Latest Practicable Date, none of the Directors or supervisors of the Company had any direct or indirect interest in any assets which have since 31 December 2023 (being the date to which the latest published audited financial statements of the Company were made up) been acquired or disposed of by or leased to any member of the Group, or are proposed to be acquired or disposed of by or leased to any member of the Group.

VII-1 -

APPENDIX VII

GENERAL INFORMATION

Substantial shareholders of the Company

As at the Latest Practicable Date, so far as the Directors are aware, each of the following persons, not being a Director, chief executive or supervisor of the Company, had an interest in the shares of the Company which falls to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO:

Name	Number of shares held	Class of share	Approximate percentage of shareholding on relevant class of shares (%)	Approximate percentage of the total share capital (%)
Xinjiang Non-ferrous (Note 1)	885,204,000 (L)	Domestic share	70.29	40.06
Shanghai Yilian Kuangneng Co. Ltd.*
(上海怡聊赣能實業有限公司) (“Shanghai Yilian”) (Note 2)	282,896,000 (L)	Domestic share	22.46	12.80
Zhongjin Investment (Group) Ltd.*
(中金投資(集團)有限公司) (“Zhongjin Investment”) (Note 2)	63,028,000 (L)	Domestic share	5.00	2.85
	135,000,000 (L)	H share	14.20	6.11
Zijin Mining Group Company Limited*
(紫金赣業集團股份有限公司)
(“Zijin Mining”)	59,444,000 (L)	H share (Note 3)	6.25	2.69
Zijin Mining Group (Xiamen) Investment Co., Ltd*
(紫金赣業集團(廈門)投資有限公司)
(“Zijin Mining (Xiamen)”)	56,580,000(L)	H share	5.95	2.56

(L) = Long positions

Note 1: Mr. Qi Xinhui, Mr. Wang Lijian, and Ms. Chen Yang, each a non-executive Director, and Mr. Chen Yin, an executive Director, hold various positions or is/are otherwise connected with Xinjiang Non-ferrous Group. For details, please refer to the section headed “Competing Interest” in this appendix.

Note 2: The entire shareholding or equity interest of Shanghai Yilian and Zhongjin Investment are beneficially owned by Mr. Zhou Chuanyou, a non-executive Director and the chairman of the board of Zhongjin Investment.

Note 3: The H shares are held by Zijin Mining (Xiamen) and Gold Mountains (H. K.) International Mining Company Limited (金山(香港)國際赣業有限公司). The entire shareholding or equity interest of Zijin Mining (Xiamen) and Gold Mountains (H. K.) International Mining Company Limited are beneficially owned by Zijin Mining.

VII-2 -

APPENDIX VII

GENERAL INFORMATION

Save as disclosed above, as at the Latest Practicable Date, there was no other person (other than a Director, chief executive or supervisor of the Company), who had an interest or short position in the shares or underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who was, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group.

SERVICE AGREEMENTS

As at the Latest Practicable Date, each of the Directors and supervisors of the Company had entered into a service contract for a term of three years with the Company from 14 October 2023 or the date of new appointment or re-designation to the expiration of the term of the seventh session of the Board of Directors and of the Supervisory Committee of the Company.

Pursuant to the Articles of Association, the term for Directors and supervisors of the Company is three years commencing from the date of their respective appointment or re-appointment, subject to re-appointment at a general meeting.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or supervisors of the Company had any existing or proposed service contract with any member of the Group (except contracts expiring or determinable by the Group within one year without payment of compensation (other than statutory compensation)).

INTEREST IN CONTRACTS

As at the Latest Practicable Date, none of the Directors or supervisors of the Company had a material interest, either directly or indirectly, in any contract of significance to the business of the Group to which any member of the Group was a party.

NO MATERIAL ADVERSE CHANGES

As at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position of the Group since 31 December 2023, the date to which the latest published consolidated audited financial statements of the Group were made up.

VII-3 -

APPENDIX VII

GENERAL INFORMATION

COMPETING INTEREST

As at the Latest Practicable Date, the following Directors were considered to have interests in a business which competes or is likely to compete, either directly or indirectly, with the businesses of the Company, as defined in the Listing Rules:

As at the Latest Practicable Date, Mr. Qi Xinhui, a non-executive Director, was the deputy general manager of Xinjiang Non-ferrous; Mr. Wang Lijian, a non-executive Director, was the director of the organization and personnel department, director (manager) of the human resources department, and vice president of the Party school* (熏校) of Xinjiang Non-ferrous; Ms. Chen Yang, a non-executive Director, was a manager of the legal department of Xinjiang Non-ferrous; and Mr. Chen Yin, an executive Directour, was the deputy secretary of the Party Committee * (熏委) of the Company, who was appointed by the Party Committee of Xinjiang Non-ferrous. Mr. Qi Xinhui, Mr. Wang Lijian, Ms. Chen Yang and Mr. Chen Yin, have not given any confidential or sensitive commercial information of the Company to Xinjiang Non-ferrous or any other third party and have physically abstained from voting on the resolution(s) approving connected transactions with Xinjiang Non-ferrous.

Xinjiang Non-ferrous is principally engaged in, among other things, investment in non-ferrous metal industry and sale of non-ferrous metal products. For details of the competition or potential competition between business of the Group and business of Xinjiang Non-ferrous, please refer to the section headed "Relationship with Xinjiang Non-ferrous" in the Company's Prospectus dated 27 September 2007.

In light of the Non-competition Agreement as set out in the section headed "Non-competition Agreement" in the annual report of the Company for the year ended 31 December 2023, and given the Board is independent from the board of directors of Xinjiang Non-ferrous and the above Directors do not control the Board, the Group is capable of carrying on its businesses independent from, and at arm's length from, the business of Xinjiang Non-ferrous.

Save as disclosed above, as at Latest Practicable Date, none of the Directors and its subsidiary, or their respective close associates (as defined in the Listing Rules) had interests in a business which competes or is likely to compete, either directly or indirectly, with the businesses of the Group.

EXPERTS AND CONSENTS

(a) The followings are the qualifications of the experts who have given opinions and advice which are included in this circular:

Name	Qualification
ShineWing Certified Public Accountants (LLP)	Certified Public Accountants in the PRC

VII-4 -

APPENDIX VII

GENERAL INFORMATION

Name	Qualification
Maxa Capital Limited	A corporation licensed to carry out type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activities under the SFO
Jones Lang LaSalle
Corporate Appraisal
and Advisory Limited	Competent Evaluator
SRK Consulting (Hong Kong) Limited	Competent Person

(b) As at the Latest Practicable Date, each of the experts above did not have any shareholding, directly or indirectly, in any member of the Group or any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for any securities in any member of the Group.

(c) As at the Latest Practicable Date, each of the experts above did not have any direct or indirect interest in any assets which had been acquired, or disposed of by, or leased to, or which were proposed to be acquired or disposed of by, or leased to, any member of the Group since 31 December 2023, the date to which the latest published audited consolidated financial statements of the Group were made up.

(d) As at the Latest Practicable Date, each of the experts above had given and had not withdrawn its written consent to the issue of this circular with inclusion of its letter and/or report and references to its name and/or its opinion in the form and context in which they appear.

LITIGATION

So far as the Directors are aware, as at the Latest Practicable Date, none of the member of the Group was engaged in any litigation or claim of material importance to the Group and no litigation or claim of material importance to the Group is known to the Directors to be pending or threatened against any member of the Group.

MATERIAL CONTRACTS

Save and except for the Equity Transfer Agreement, the details of which are set out in the Letter from the Board in this circular, in the two years immediately preceding the date of this circular and up to the Latest Practicable Date, there was no material contract (not being contracts entered into in the ordinary course of business) entered into by the Company or any of its subsidiaries which are or may be material.

VII-5 -

APPENDIX VII

GENERAL INFORMATION

MISCELLANEOUS

(a) The joint company secretaries of the Company are Mr. Wu Ning and Mr. Lam Siu Wing. Mr. Lam Siu Wing is a fellow member of both Hong Kong Institute of Certified Public Accountants (HKICPA) and Chartered Accountants Australia and New Zealand (CAANZ, formerly known as the Institute of Chartered Accountants of Australia (ICAA)).

(b) The registered office of the Company in Hong Kong is situated at 9/F, The Center, 99 Queen’s Road Central, Central, Hong Kong and its statutory address and principal place of business in the PRC is at No. 501, Fusion South Road, Cooperation Zone, Economic and Technological Development Zone, Urumqi, Xinjiang.

(c) The share registrar and transfer office of the Company in Hong Kong, Computershare Hong Kong Investor Services Limited, is at Shops 1712–1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong.

DOCUMENTS ON DISPLAY

Copies of the following documents will be displayed on the websites of the Stock Exchange at www.hkexnews.hk and the Company at kunlun.wsfg.hk for a period of 14 days from the date of this circular:

(a) the Equity Transfer Agreement;

(b) the agreed form of the Amended Profit Compensation Agreement;

(d) the agreed form of the Personal Guarantee Letter;

(e) the letter from the Independent Board Committee to the Independent Shareholders, the text of which is set out on pages 31 to 32 of this circular;

(f) the letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders, the text of which is set out on pages 33 to 53 of this circular;

(g) the audit report on the Target Company for each of the three years ended 31 December 2023 and the ten months ended 31 October 2024 prepared by ShineWing Certified Public Accountants (LLP), the text of which is set out in Appendix II to this circular;

(h) the assurance report from ShineWing Certified Public Accountants (LLP) on the unaudited pro forma financial information of the Enlarged Group, the text of which is set out in Appendix IV to this circular;

VII-6 -

APPENDIX VII
GENERAL INFORMATION

(i) the Competent Person’s Report, the text of which is set out in Appendix V to this circular;
(j) the Valuation Report, the text of which is set out in Appendix VI to this circular; and
(k) the written consents referred to in the section headed “Experts and Consents” in this appendix.

VII-7 -

APPENDIX VIII SPECIAL RESOLUTIONS I-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Xinjiang Xinxin Mining Industry Co., Ltd.*
Comparison Table on the Amendments I to the Articles of Association

EXPLANATION:

In the amended articles, the text proposed to be deleted is presented in the form of a strikethrough line, while the text proposed to be added is presented in the form of an underline;
The following table does not include amendment comparisons for changes in clause numbers only.

Original articles	Amended articles	Basis for amendments
Full text Shareholders’ general meeting	Full text Shareholders’ general meeting	It is amended according to the Company Law of the People’s Republic of China (hereinafter referred to as the “Company Law”).
Full text Annual general meeting	Full text Annual shareholders’ general meeting	It is amended according to the Company Law.

– VIII-1 –

APPENDIX VIII SPECIAL RESOLUTIONS I-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
Article 1 In order to regulate the composition and act of Xinjiang Xinxin Mining Industry Co., Ltd. (the “Company”), insist on and consolidate the comprehensive leadership of the Party, protect the legitimate rights and interests of shareholders and creditors, the Articles of Association (the “Articles”) are formulated in accordance with the Company Law of the People’s Republic of China (the “Company Law”), the Securities Law of the People’s Republic of China, the Special Provisions of the State Council Concerning the Flotation and Listing Abroad of Stocks by Limited Stock Companies (the “Special Provisions”), the Prerequisite Clauses for Articles of Association of Companies Seeking Listing outside the PRC (the “Prerequisite Clauses”), the Letter of Opinions on the Supplemental Amendments to Articles of Association of Companies Seeking Listing in Hong Kong (the “Letter of Opinions on Supplemental Amendments”) and other relevant regulations.	Article 1 In order to regulate the composition and act of Xinjiang Xinxin Mining Industry Co., Ltd. (the “Company”), insist on and consolidate the comprehensive leadership of the Party, protect the legitimate rights and interests of shareholders, staff and creditors, the Articles of Association (the “Articles”) are formulated in accordance with the Company Law of the People’s Republic of China (the “Company Law”), the Securities Law of the People’s Republic of China, the Special Provisions of the State Council Concerning the Flotation and Listing Abroad of Stocks by Limited Stock Companies (the “Special Provisions”), the Prerequisite Clauses for Articles of Association of Companies Seeking Listing outside the PRC (the “Prerequisite Clauses”), the Letter of Opinions on the Supplemental Amendments to Articles of Association of Companies Seeking Listing in Hong Kong (the “Letter of Opinions on Supplemental Amendments”) the Trial Measures for the Administration of Overseas Issuance and Listing of Securities by Domestic Enterprises (the “Trial Measures”), the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and other relevant regulations.	the “Special Provisions”, the “Prerequisite Clauses”, the Letter of Opinions on the Supplemental Amendments to Articles of Association of Companies Seeking Listing in Hong Kong (the “Letter of Opinions on Supplemental Amendments”) have been abolished; add the Trial Measures for the “Trial Measures” and the “Listing Rules” as the basis for amendments.
Article 2 The Company is a company limited by shares established in accordance with the Company Law, the Special Provisions and other relevant regulations and shall observe and comply with the Company Law, Special Provisions and the Articles.	Article 2 The Company is a company limited by shares established in accordance with the Company Law, the Special Provisions and other relevant regulations and shall observe and comply with the Company Law, Special Provisions and the Articles.	It is deleted as the Special Provisions has been abolished.

– VIII-2 –

APPENDIX VIII SPECIAL RESOLUTIONS I-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
Article 4 Domicile of the Company: No. 501, Fusion South Road, Cooperation Zone, Economic and Technological Development Zone, Urumqi, Xinjiang.
Postal Code: 830027
Telephone number: 0086-0991-4852773
Fax number: 0086-0991-4853773	Article 4 Domicile of the Company: No. 501, Fusion South Road, Cooperation Zone, Economic and Technological Development Zone, Urumqi, Xinjiang.
Postal Code: 830027
Telephone number: 0086-0991-4852773
Fax number: 0086-0991-4853773	It is deleted as the Prerequisite Clauses on which the original article was based has been abolished and for the purpose of maintaining the stability of content of the Articles given that the contact information of the Company may change.
Article 5 The legal representative of the Company is the chairman of the Company.	Article 5 The legal representative of the Company is the chairman general manager of the Company.	It is amended according to the Company Law and in combination with the actual situation of the Company.
Article 8 The Articles shall be passed by way of special resolution at the general meeting of the Company and come into effect from the date of listing of the Company's overseas listed foreign shares of the initial public offering on The Stock Exchange of Hong Kong Limited (the “Hong Kong Stock Exchange”) and shall be submitted to the original industry and commerce administration organ for record, superseding the original articles of association of the Company.
The Articles shall be the legally binding document regulating the constitution and act of the Company, the rights and obligations between the Company and its shareholders, and the rights and obligations among the shareholders from the effective date of the Articles.	Article 8 The Articles shall be passed by way of special resolution at the general meeting of the Company and come into effect from the date of listing of the Company's overseas listed foreign shares of the initial public offering on The Stock Exchange of Hong Kong Limited (the “Hong Kong Stock Exchange”) and shall be submitted to the original industry and commerce administration organ company registration authority for record, superseding the original articles of association of the Company.
The Articles shall be the legally binding document regulating the constitution and act of the Company, the rights and obligations between the Company and its shareholders, and the rights and obligations among the shareholders from the effective date of the Articles.	It is amended according the Company Law.

VIII-3 -

APPENDIX VIII SPECIAL RESOLUTIONS I-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
Article 10 The Company may invest in other enterprises; however, unless the law provides otherwise, it shall not become the investor that assumes joint and several liability for the debts of the enterprises in which it invests.	Article 10 The Company may invest in other enterprises; however, unless if the law provides otherwise, it that the Company shall not become the investor that assumes joint and several liability for the debts of the enterprises in which it invests, the provisions shall apply.	It is amended according the Company Law.
Article 13 The Company shall have ordinary shares in place at all times. The Company may create other classes of shares according to its needs, subject to the approval by the companies examining and approving authority(ies) authorized by the State Council.	Article 13 The Company shall have ordinary shares in place at all times. The Company may create other classes of shares according to its needs, subject to the approval by the companies examining and approving authority(ies) authorized by the State Council. For the issue of securities, the Company shall follow the registration or filing procedures with the China Securities Regulatory Commission (hereinafter referred to as the “CSRC”) in accordance with the provisions of the Securities Law and the Trial Measures.	It is amended as the Special Provisions and the Prerequisite Clauses on which the original article was based have been abolished and in accordance with the Securities Law and the Trial Measures.
The issue of the shares of the Company shall be equal and fair. Every share of the same class shall rank pari passu with each other.	The issue of the shares of the Company shall be equal and fair. Every share of the same class shall rank pari passu with each other.
Shares of the same class issued at the same time shall be issued on the same conditions and at the same price. Any entity and individual shall pay the same price for each of the share they subscribe for.	Shares of the same class issued at the same time shall be issued on the same conditions and at the same price. Any entity and individual shall pay the same price for each of the share they subscribe for.

VIII-4 -

APPENDIX VIII SPECIAL RESOLUTIONS I-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
Article 15 Upon approval by the securities regulatory authority of the State Council, the Company may issue shares to domestic investors and foreign investors.

The “foreign investors” referred to in the preceding paragraph shall mean the investors from foreign countries or Hong Kong, Macau and Taiwan who have subscribed the shares issued by the Company. The “domestic investors” shall mean the investors within the territory of the People’s Republic of China other than those mentioned above who have subscribed the shares issued by the Company. | Article 15 Upon approval by the securities regulatory authority of the State Council registration or filing with the CSRC, the Company may issue shares to domestic investors and foreign investors.

The “foreign investors” referred to in the preceding paragraph shall mean the investors from foreign countries or Hong Kong, Macau and Taiwan who have subscribed the shares issued by the Company. The “domestic investors” shall mean the investors within the territory of the People’s Republic of China other than those mentioned above who have subscribed the shares issued by the Company. | It is amended in accordance with the Trial Measures. |

VIII-5 -

APPENDIX VIII SPECIAL RESOLUTIONS I-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
Article 18
...
It was approved by special resolution at the second extraordinary general meeting of 2007 held by the Company on 11 May 2007 and by the China Securities Regulatory Commission that the Company would implement share split for the purpose of the public offering of the Company’s overseas listed foreign shares, i.e., to split the issued domestic ordinary shares of the Company with a par value of RMB1.00 per share into four shares of a par value of RMB0.25 per share. After the share split, the registered capital of the Company shall remain RMB380,000,000 and the total number of the domestic ordinary shares of the Company shall be 1,520,000,000 shares, among which, 954,204,000 shares were held by Xinjiang Nonferrous Metal Industry (Group) Co., Ltd., accounting for 62.7766% of the total number of the Company’s shares; 282,896,000 shares were held by Shanghai Yilian Mining and Energy Co., Ltd., accounting for 18.6116% of the total number of the Company’s shares; 198,028,000 shares were held by Zhongjin Investment (Group) Co., Ltd., accounting for 13.0282% of the total number of the Company’s shares; 56,580,000 shares were held by Xiamen Zijin High-tech Co., Ltd. (renamed as Zijin Mining Group (Xiamen) Investment Co., Ltd.), accounting for 3.7224% of the total number of the Company’s shares; 22,020,000 shares were held by Xinjiang Xinying New Material Co., Ltd., accounting for 1.4487% of the total number of the Company’s shares; and 6,272,000 shares were held by Shaanxi Honghao Industry Co., Ltd., accounting for 0.4125% of the total number of the Company’s shares.	Article 18
...
It was approved by special resolution at the second extraordinary general meeting of 2007 held by the Company on 11 May 2007 and by the China Securities Regulatory Commission CSRC that the Company would implement share split for the purpose of the public offering of the Company’s overseas listed foreign shares, i.e., to split the issued domestic ordinary shares of the Company with a par value of RMB1.00 per share into four shares of a par value of RMB0.25 per share. After the share split, the registered capital of the Company shall remain RMB380,000,000 and the total number of the domestic ordinary shares of the Company shall be 1,520,000,000 shares, among which, 954,204,000 shares were held by Xinjiang Nonferrous Metal Industry (Group) Co., Ltd., accounting for 62.7766% of the total number of the Company’s shares; 282,896,000 shares were held by Shanghai Yilian Mining and Energy Co., Ltd., accounting for 18.6116% of the total number of the Company’s shares; 198,028,000 shares were held by Zhongjin Investment (Group) Co., Ltd., accounting for 13.0282% of the total number of the Company’s shares; 56,580,000 shares were held by Xiamen Zijin High-tech Co., Ltd. (renamed as Zijin Mining Group (Xiamen) Investment Co., Ltd.), accounting for 3.7224% of the total number of the Company’s shares; 22,020,000 shares were held by Xinjiang Xinying New Material Co., Ltd., accounting for 1.4487% of the total number of the Company’s shares; and 6,272,000 shares were held by Shaanxi Honghao Industry Co., Ltd., accounting for 0.4125% of the total number of the Company’s shares.	It is amended as Article 13 of the Articles has defined the abbreviation of the “China Securities Regulatory Commission”.

VIII-6 -

APPENDIX VIII SPECIAL RESOLUTIONS I-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
Article 19
……
Upon approval by China Securities Regulatory Commission, Zhongjin Investment (Group) Co., Ltd. converted 135,000,000 domestic unlisted shares that it held into overseas listed shares, and Zijin Mining Group (Xiamen) Investment Co., Ltd. converted 56,580,000 domestic unlisted shares that it held into overseas listed shares. On 19 December 2022, the aforesaid shares totaling 191,580,000 shares were listed on the Hong Kong Stock Exchange. Upon completion of the conversion of the domestic unlisted shares into overseas listed shares, the total number of shares of the Company shall be 2,210,000,000 shares (comprising 1,259,420,000 domestic ordinary shares, representing 56.99% of the total number of issued shares of the Company; and 950,580,000 H shares, representing 43.01% of the total number of issued shares of the Company).
Zhongjin Investment (Group) Co., Ltd. holds 63,028,000 domestic ordinary shares, representing 2.85% of the total number of issued shares of the Company; Zijin Mining Group (Xiamen) Investment Co., Ltd. no longer holds domestic ordinary shares.
Upon approval by the State Council or the regulatory authority(ies) authorized by the State Council and subject to the requirements of the Hong Kong Stock Exchange, the domestic shares of the Company may be converted into H shares of the Company and be listed and traded on the Hong Kong Stock Exchange.	Article 19
……
Upon approval by China Securities Regulatory Commission CSRC, Zhongjin Investment (Group) Co., Ltd. converted 135,000,000 domestic unlisted shares that it held into overseas listed shares, and Zijin Mining Group (Xiamen) Investment Co., Ltd. converted 56,580,000 domestic unlisted shares that it held into overseas listed shares. On 19 December 2022, the aforesaid shares totaling 191,580,000 shares were listed on the Hong Kong Stock Exchange. Upon completion of the conversion of the domestic unlisted shares into overseas listed shares, the total number of shares of the Company shall be 2,210,000,000 shares (comprising 1,259,420,000 domestic ordinary shares, representing 56.99% of the total number of issued shares of the Company; and 950,580,000 H shares, representing 43.01% of the total number of issued shares of the Company).
Zhongjin Investment (Group) Co., Ltd. holds 63,028,000 domestic ordinary shares, representing 2.85% of the total number of issued shares of the Company; Zijin Mining Group (Xiamen) Investment Co., Ltd. no longer holds domestic ordinary shares.
Upon approval by the State Council or the regulatory authority(ies) authorized by the State Council filing with the CSRC and subject to the requirements of the Hong Kong Stock Exchange, the domestic shares of the Company may be converted into H shares of the Company and be listed and traded on the Hong Kong Stock Exchange.	It is amended as Article 13 of the Articles has defined the abbreviation of the “China Securities Regulatory Commission” and in accordance with the Trail Measures.

VIII-7 -

APPENDIX VIII SPECIAL RESOLUTIONS I-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
Article 20 The Company’s board of directors may make implementation arrangements for the scheme of the respective issuance of overseas listed foreign shares and domestic shares after proposals made for the issuance of the same have been approved by the securities regulatory authority of the State Council.

The Company may implement the proposals respectively to issue overseas listed foreign shares and domestic shares pursuant to the preceding paragraph within fifteen months from the date of approval by the securities supervisory authority of the State Council. | It is deleted as the Special Provisions and the Prerequisite Clauses on which the original article was based have been abolished and the Listing Rules has also deleted relevant provisions, and in combination with the changes to the stock issuance review system. |
| Article 21 Where the Company respectively issues overseas listed foreign shares and domestic shares within the total number of shares fixed by its proposals for issue of shares, such shares shall be fully subscribed for in the respective offerings. If the shares cannot be fully subscribed for in the respective offerings due to special circumstances, the shares may, subject to the approval by the securities regulatory authority of the State Council, be issued respectively for subscription in several issues. | Article 21—Where the Company respectively issues overseas listed foreign shares and domestic shares within the total number of shares fixed by its proposals for issue of shares, such shares shall be fully subscribed for in the respective offerings. If the shares cannot be fully subscribed for in the respective offerings due to special circumstances, the shares may, subject to the approval by the securities regulatory authority of the State Council, be issued respectively for subscription in several issues. | It is deleted as the Special Provisions and the Prerequisite Clauses on which the original article was based have been abolished, the Listing Rules has also deleted relevant provisions, and Article 13 of the Articles has formulated the basis for the issue of securities. |

VIII-8 -

APPENDIX VIII SPECIAL RESOLUTIONS I-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
Article 23
...
Following the increase or decrease in its capital, the Company shall complete change of registration with the original industry and commerce administration authority and make an announcement.	Article 21
...
Following the increase or decrease in its capital, the Company shall complete change of registration with the original industry and commerce administration its registration authority and make an announcement. If the Company issues securities, it shall file with the CSRC within 3 working days after the completion of the issuance.	It is amended in accordance with the Company Law and the Trial Measures.
Article 26 Shares held by the promoters of the Company shall not be transferred within one year from the date on which the Company is incorporated. Shares issued prior to public offering of the Company shall not be transferred within one year from the date on which the shares of the Company are listed and traded on the Hong Kong Stock Exchange.
...	Article 24 Shares held by the promoters of the Company shall not be transferred within one year from the date on which the Company is incorporated. Shares issued prior to public offering of the Company shall not be transferred within one year from the date on which the shares of the Company are listed and traded on the Hong Kong Stock Exchange.
...	It is amended in accordance with the Company Law.

VIII-9 -

APPENDIX VIII SPECIAL RESOLUTIONS I-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
Article 29 Upon approval by the securities regulatory authority of the State Council, the holders of domestic shares of the Company may transfer all or part of their domestic shares to overseas investors, and such transferred shares may be listed and traded on overseas stock exchanges; and they may also convert all or part of their domestic shares to foreign shares and such converted shares may be listed and traded on overseas stock exchanges. The listing and trading of transferred or converted shares on overseas stock exchanges shall comply with the regulatory procedures, regulations and requirements of such overseas stock exchanges.	Article 27 Upon approval by the securities regulatory authority of the State Council filing with the CSRC, the holders of domestic shares of the Company may transfer all or part of their domestic shares to overseas investors, and such transferred shares may be listed and traded on overseas stock exchanges; and they may also convert all or part of their domestic shares to foreign shares and such converted shares may be listed and traded on overseas stock exchanges. The listing and trading of transferred or converted shares on overseas stock exchanges shall comply with the regulatory procedures, regulations and requirements of such overseas stock exchanges.	It is amended in accordance with the Trial Measures.

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APPENDIX VIII SPECIAL RESOLUTIONS I-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
Article 31 The Company must produce a balance sheet and a assets list in the event of reduction of its registered capital.

The Company shall, within ten days from the date of adoption of the resolution on reduction of its registered capital, notify its creditors, and shall make an announcement in the newspaper (including newspaper in the PRC and which complies with the Listing Rules of The Stock Exchange of Hong Kong Limited) within 30 days therefrom. The creditors shall, within 30 days from the date on which they receive the notice, or within 45 days from the date on which the announcement is made in the event of their failure to receive such notice, be entitled to require the Company to discharge its debts or provide relevant securities for the discharge of such debts.

After reduction of the capital by the Company, the registered capital shall not be less than the minimum amount required by laws. | Article 29 The Company must shall produce a balance sheet and a assets list in the event of reduction of its registered capital.

The Company shall, within ten days from the date of adoption of the resolution on reduction of its registered capital, notify its creditors, and shall make an announcement in the newspaper (including newspaper in the PRC and which complies with the Listing Rules of The Stock Exchange of Hong Kong Limited) or the National Enterprise Credit Information Publicity System within 30 days therefrom. The creditors shall, within 30 days from the date on which they receive the notice, or within 45 days from the date on which the announcement is made in the event of their failure to receive such notice, be entitled to require the Company to discharge its debts or provide relevant securities for the discharge of such debts.

After reduction of the capital by the Company, the registered capital shall not be less than the minimum amount required by laws. | It is amended in accordance with the Company Law. |
| Article 32 Under the following circumstances, the Company may repurchase its issued shares in accordance with the procedures set out in the Articles and subject to the approval by the relevant responsible authority of the State Council:

(1) it cancels shares for the purpose of reduction of the Company’s capital;

(2) it merges with other companies that hold its shares;

…… | Article 30 Under the following circumstances, the Company may repurchase its issued shares in accordance with the procedures set out in the Articles and subject to the approval by the relevant responsible authority of the State Council:

(1) it cancels shares for the purpose of reduction reduces the registered capital of the Company’s capital;

(2) it merges with other companies that hold its shares;

…… | It is amended as the Special Provisions and the Prerequisite Clauses on which the original article was based have been abolished and in accordance with the Trial Measures and Guidelines for the Articles of Association. |

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APPENDIX VIII SPECIAL RESOLUTIONS I-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
Article 33 The Company may repurchase its shares in one of the following ways, subject to the approval by the relevant governing authority of the State:
(1) by making an offer for the repurchase of its shares to all its shareholders on a pro rata basis;
(2) by public trading on a stock exchange;
(3) by a contractual agreement outside a stock exchange; or
(4) other ways permitted by laws and administrative regulations or by the securities regulatory authority of the State Council.	Article 31 The Company may repurchase its shares in one of the following ways, subject to the approval by the relevant governing authority of the State:
(1) by making an offer for the repurchase of its shares to all its shareholders on a pro rata basis;
(2) by public trading on a stock exchange;
(3) by a contractual agreement outside a stock exchange; or
(4) other ways permitted by laws and administrative regulations or by the securities regulatory authority of the State Council.	It is amended in accordance with the Company Law and the Trial Measures.
Article 35 Upon the repurchase of shares pursuant to the laws, the Company shall, within the period as required by the laws and administrative regulations, cancel such shares and conduct change of registration of registered capital with the original industry and commerce administration authority.
The aggregate par value of the cancelled shares shall be deducted from the Company’s registered capital.	Article 33 Upon the repurchase of shares pursuant to the laws, the Company shall, within the period as required by the laws and administrative regulations, cancel such shares and conduct change of registration of registered capital with the original industry and commerce administration authority its registration authority.
The aggregate par value of the cancelled shares shall be deducted from the Company’s registered capital.	It is amended in accordance with the Company Law.

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APPENDIX VIII SPECIAL RESOLUTIONS I-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
Article 41 Share certificates shall be signed by the chairman of the board. Where the Hong Kong Stock Exchange requires other senior management of the Company to sign on the share certificates, the share certificates shall also be signed by such other relevant senior management. The share certificates shall take effect after being affixed or printed with the seal of the Company. The affixing of the seal of the Company on the share certificates shall authorized by the board. The signatures of the chairman of the board or other senior management of the Company appearing on the share certificates may also be in printed form. Regulations of the securities regulatory authorities in the jurisdiction where the shares of the Company are listed shall be separately applicable in case the share certificates of the Company are issued and traded in a paperless manner.	Article 39 Share certificates shall be signed by the chairman of the board legal representative. Where the Hong Kong Stock Exchange requires other senior management of the Company to sign on the share certificates, the share certificates shall also be signed by such other relevant senior management. The share certificates shall take effect after being affixed or printed with the seal of the Company. The affixing of the seal of the Company on the share certificates shall authorized by the board. The signatures of the chairman of the board legal representative or other senior management of the Company appearing on the share certificates may also be in printed form. Regulations of the securities regulatory authorities in the jurisdiction where the shares of the Company are listed shall be separately applicable in case the share certificates of the Company are issued and traded in a paperless manner.	It is amended in accordance with the Company Law.

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APPENDIX VIII SPECIAL RESOLUTIONS I-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
Article 43 The Company may, in accordance with the mutual understanding and agreements between the securities regulatory authority of the State Council and the overseas securities regulatory organizations, maintain the original register of shareholders of overseas listed foreign shares overseas and appoint overseas agent(s) to manage such register of shareholders. The original register of shareholders H shares shall be maintained in Hong Kong.
A duplicate register of shareholders of overseas listed foreign shares shall be maintained at the domicile of the Company. The appointed overseas agent(s) shall ensure the consistency between the original and the duplicate register of shareholders at all times.
If there is any inconsistency between the original and the duplicate register of shareholders of overseas listed foreign shares, the original register of shareholders shall prevail.	Article 41 The Company may, in accordance with the mutual understanding and agreements between the securities regulatory authority of the State Council and the overseas securities regulatory organizations, maintain the original register of shareholders of overseas listed foreign shares overseas and appoint overseas agent(s) to manage such register of shareholders. The original register of shareholders H shares shall be maintained in Hong Kong.
A duplicate register of shareholders of overseas listed foreign shares shall be maintained at the domicile of the Company. The appointed overseas agent(s) shall ensure the consistency between the original and the duplicate register of shareholders at all times.
If there is any inconsistency between the original and the duplicate register of shareholders of overseas listed foreign shares, the original register of shareholders shall prevail.	It is deleted as the Special Provisions and the Prerequisite Clauses on which the original article was based have been abolished and the Listing Rules has also deleted the relevant statement.
Article 47 No change of registration can be made in the register of shareholders as a result of the transfer of shares within 30 days prior to the date of a shareholders’ general meeting or within five days before the record date set by the Company for the purpose of distribution of dividends.	Article 45 No change of registration can be made in the register of shareholders as a result of the transfer of shares within 30 four working days prior to the date of a shareholders’ general meeting or within five days before the record date set by the Company for the purpose of distribution of dividends.	It is amended in accordance with the Guide on Disclosure of Record Date, Book Closure and Latest Time for Lodging Transfers of Shares and with reference to market practices after communication with the Hong Kong Registrar.

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APPENDIX VIII SPECIAL RESOLUTIONS I-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
Article 50 If the share certificates (the “original certificates”) held by any shareholder whose name registered in the register of shareholders or any person who requests to have his/her/its name entered in the register of shareholders is lost, such person may apply to the Company for issuing new share certificates in respect of such shares (the “Relevant Shares”). Application by a shareholder of domestic shares, who has lost his/her/its share certificate(s), for the issue of new share certificate(s) shall be dealt with in accordance with Article 143 of the Company Law. ...	Article 48 If the share certificates (the “original certificates”) held by any shareholder whose name registered in the register of shareholders or any person who requests to have his/her/its name entered in the register of shareholders is lost, such person may apply to the Company for issuing new share certificates in respect of such shares (the “Relevant Shares”). Application by a shareholder of domestic shares, who has lost his/her/its share certificate(s), for the issue of new share certificate(s) shall be dealt with in accordance with Article 143 of the Company Law. ...	It is amended in accordance with the Company Law.
Article 54 The shareholders of ordinary shares of the Company shall enjoy the following rights: ... (5) the right to obtain relevant information in accordance with laws, administrative regulations and the provisions of the Articles, including: i. the right to obtain the Articles after payment of costs;	Article 52 The shareholders of ordinary shares of the Company shall enjoy the following rights: ... (5) the right to obtain relevant information in accordance with laws, administrative regulations and the provisions of the Articles, including: i. the right to obtain the Articles after payment of costs;	It is amended in accordance with the Company Law.

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APPENDIX VIII SPECIAL RESOLUTIONS I-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
ii. the right to inspect free of charge and copy after payment of a reasonable fee, the following:	ii. the right to inspect free of charge and copy after payment of a reasonable fee, the following:
(vii) copy of the latest annual return submitted to the industry and commerce administration or other responsible authorities;	(vii) copy of the latest annual return submitted to the industry and commerce administration Company’s registration authority or other responsible authorities;
(viii) minutes of shareholders’ general meetings and resolutions of the board meetings and meetings of the supervisory committee;	(viii) minutes of shareholders’ general meetings and resolutions of the board meetings and meetings of the supervisory committee;
(ix) corporate bond counterfoils;	(ix) register of holders of corporate bond counterfoils;
...	...
Article 56 Without prejudice to Chapter 22 of the Articles, where the resolutions of the shareholders’ general meeting or the board of the Company violate laws or administrative regulations, shareholders are entitled to apply to the people’s court to for nullifying such resolutions.	Article 54 Without prejudice to Chapter 22 of the Articles, where the resolutions of the shareholders’ general meeting or the board of the Company violate laws or administrative regulations, shareholders are entitled to apply to the people’s court to for nullifying such resolutions.	It is deleted as the Special Provisions and the Prerequisite Clauses on which the original article was based have been abolished and the Listing Rules has also deleted the relevant articles of the original Chapter 22 of the Articles.
Where the procedures for convening the shareholders’ general meeting, the board meeting, and the voting methods violate laws, administrative regulations or the Articles, or the content of the resolutions violate the Articles, the shareholders are entitled to, within 60 days from the date on which such resolutions are adopted, make a petition to the people’s court to revoke the resolutions.	Where the procedures for convening the shareholders’ general meeting, the board meeting, and the voting methods violate laws, administrative regulations or the Articles, or the content of the resolutions violate the Articles, the shareholders are entitled to, within 60 days from the date on which such resolutions are adopted, make a petition to the people’s court to revoke the resolutions.

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APPENDIX VIII SPECIAL RESOLUTIONS I-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
Article 57 Without prejudice to Chapter 22 of the Articles, where directors, senior management of the Company violates laws, administrative regulations or the Articles in performance of their duties for the Company, and thus cause losses to the Company, shareholders individually or jointly holding more than 1% of the shares for more than 180 consecutive days shall be entitled to request, in writing, the supervisory committee to initiate proceedings in a people’s court. Where the supervisory committee violates laws, administrative regulations or the Articles in performance of its duties for the Company, and thus causes losses to the Company, the shareholders shall be entitled to request, in writing, the board to initiate proceedings in a people’s court.
……	Article 55 Without prejudice to Chapter 22 of the Articles, where directors, senior management of the Company violates laws, administrative regulations or the Articles in performance of their duties for the Company, and thus cause losses to the Company, shareholders individually or jointly holding more than 1% of the shares for more than 180 consecutive days shall be entitled to request, in writing, the supervisory committee to initiate proceedings in a people’s court. Where the supervisory committee violates laws, administrative regulations or the Articles in performance of its duties for the Company, and thus causes losses to the Company, the shareholders shall be entitled to request, in writing, the board to initiate proceedings in a people’s court.
……	It is deleted as the Special Provisions and the Prerequisite Clauses on which the original article was based have been abolished and the Listing Rules has also deleted the relevant articles of the original Chapter 22 of the Articles.
Article 58 Without prejudice to Chapter 22 of the Articles, where a director, senior of the Company violates laws, administrative regulations or the Articles, and thus causes damages to the interests of the shareholders, shareholders may initiate proceedings in a people’s court.	Article 56 Without prejudice to Chapter 22 of the Articles, where a director, senior of the Company violates laws, administrative regulations or the Articles, and thus causes damages to the interests of the shareholders, shareholders may initiate proceedings in a people’s court.	It is deleted as the Special Provisions and the Prerequisite Clauses on which the original article was based have been abolished and the Listing Rules has also deleted the relevant articles of the original Chapter 22 of the Articles.

VIII-17 -

APPENDIX VIII SPECIAL RESOLUTIONS I-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
Article 59 The shareholders of ordinary shares of the Company shall assume the following obligations:	Article 57 The shareholders of ordinary shares of the Company shall assume the following obligations:	It is amended in accordance with the Company Law.
(1) to comply with the Articles;	(1) to comply with the Articles;
(2) to pay for subscription of shares according to the number of shares subscribed and the method of subscription;	(2) to pay for subscription of shares according to the number of shares subscribed and the method of subscription;
(3) not to withdraw its/his investment unless laws and regulations provide otherwise;	(3) not to withdraw its/his investment unless laws and regulations provide otherwise;
(4) not to abuse his rights to infringe the interests of the Company or other shareholders; and not to abuse the independent status of the Company as a legal person or the limited liability of shareholders to infringe the interests of the creditors of the Company.	(4) not to abuse his rights to infringe the interests of the Company or other shareholders; and not to abuse the independent status of the Company as a legal person or the limited liability of shareholders to infringe the interests of the creditors of the Company.
Where the shareholders of the Company abuse the rights of shareholders and thus causes loss to the Company or other shareholders, they shall be liable for compensation according to laws.	Where the shareholders of the Company abuse the rights of shareholders and thus causes loss to the Company or other shareholders, they shall be liable for compensation according to laws.
...	...

– VIII-18 –

APPENDIX VIII SPECIAL RESOLUTIONS I-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
Article 61 The “controlling shareholder” referred to in the preceding article means a person who satisfies one of the following conditions:	Article 59 The “controlling shareholder” referred to in the preceding article means a person who satisfies one of the following conditions:	It is amended as the Supplementary Provisions of the Civil Code explain that “more than” includes the figures listed.
(1) a person who, acting alone or in concert with others, has the power to elect more than half of the directors;	(1) a person who, acting alone or in concert with others, has the power to elect more than over half of the directors;
(2) a person who, acting alone or in concert with others, has the power to exercise 30% or more or has the power to control the exercise 30% or more of the voting rights in the Company;	(2) a person who, acting alone or in concert with others, has the power to exercise more than 30% or more or has the power to control the exercise more than 30% or more of the voting rights in the Company;
(3) a person who, acting alone or in concert with others, holds 30% or more of the issued shares of the Company; or	(3) a person who, acting alone or in concert with others, holds more than 30% or more of the issued shares of the Company; or
(4) a person who, acting alone or in concert with others, has de facto control of the Company in any other way.	(4) a person who, acting alone or in concert with others, has de facto control of the Company in any other way.

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APPENDIX VIII SPECIAL RESOLUTIONS I-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
Article 63 The shareholder’s general meeting shall exercise the following functions and powers:	Article 61 The shareholder’s general meeting shall exercise the following functions and powers:	It is amended in accordance with the Company Law.
...	...
(9) to resolve on merger, division, change of corporate vehicle, dissolution and liquidation or change of the nature of incorporation of the Company;	(9) to resolve on merger, division, change of corporate vehicle, dissolution and liquidation or change of the nature of incorporation of the Company;
...	...
(13) to consider proposals raised by shareholders who, individually or jointly, represent more than 3% of the total number of voting shares issued by the Company;	(13) to consider proposals raised by shareholders who, individually or jointly, represent more than 31% of the total number of voting shares issued by the Company;
(14) to consider the matters regarding acquisition and disposal of assets by the Company in one year which exceed 30% of the latest audited total assets of the Company; and to consider and approve the provision of guarantees as specified in Article 64 of the Articles;	(14) to consider the matters regarding acquisition and disposal of assets by the Company in one year which exceed 30% of the latest audited total assets of the Company; and to consider and approve the provision of guarantees as specified in Article 6462 of the Articles;
...	...

VIII-20 -

APPENDIX VIII SPECIAL RESOLUTIONS I-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
Article 66 Shareholders’ general meetings include annual general meetings and extraordinary general meetings. Annual general meetings are held once every year and within six months from the end of the preceding financial year.

The Company must convene an extraordinary general meeting within two months of the actual occurrence of one of the following events: | Article 64 Shareholders’ meetings include annual shareholders’ meetings and extraordinary shareholders’ meetings. Annual general meetings are held once every year and within six months from the end of the preceding financial year.

The Company must convene an extraordinary shareholders’ meeting within two months of the actual occurrence of one of the following events: | It is amended as the Supplementary Provisions of the Civil Code explain that “more than” includes the figures listed. |
| (1) where the number of directors is less than the number of directors required by the Company Law or less than two-thirds of the number of directors required by the Articles; | (1) where the number of directors is less than the number of directors required by the Company Law or less than two-thirds of the number of directors required by the Articles; | |
| (2) where the unrecovered losses of the Company amount to one-third of the total amount of the share capital; | (2) where the unrecovered losses of the Company amount to one-third of the total amount of the share capital; | |
| (3) where shareholder(s) who hold(s), individually or jointly, 10% or more of the Company’s shares so request(s); | (3) where shareholder(s) who hold(s), individually or jointly, more than 10% or more of the Company’s shares so request(s); | |
| ... | ... | |

VIII-21 -

APPENDIX VIII SPECIAL RESOLUTIONS I-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
Article 67 Where the Company convenes a shareholders’ general meeting, a notice should be given to all registered shareholders 45 days before the date of the meeting to notify such shareholders the matters to be considered at such meeting as well as the date and the venue of the meeting. Shareholders who intend to attend the general meeting should serve a written reply to the Company 20 days before the date of the meeting.	Article 65 Where the Company convenes a an annual shareholders’ general meeting, a notice should be given to all registered shareholders 45 days before the date of the meeting to notify such shareholders the matters to be considered at such meeting as well as the date and the venue of and matters to be considered at the meeting shall be notified to all shareholders twenty-one days before the date of the meeting; extraordinary shareholders’ meeting shall be notified to all shareholders fifteen days before the date of the meeting. Shareholders who intend to attend the general meeting should serve a written reply to the Company 20 days before the date of the meeting.	It is amended in accordance with the Company Law and the Listing Rules.
Article 68 Where the Company convenes a general meeting, shareholder(s) who individually or jointly hold(s) more than 3% of total voting shares issued by the Company are entitled to put forward new proposals in writing to the Company and the Company shall include matters of those proposals that are within terms of reference of shareholders’ general meetings in the agenda of such meeting.	Article 66 Where the Company convenes a general meeting, the board of directors, the supervisory committee and shareholder(s) who individually or jointly hold(s) more than 31% of total voting shares issued by the Company are entitled to put forward new proposals in writing to the Company and the Company shall include matters of those proposals that are within terms of reference of shareholders’ general meetings in the agenda of such meeting.	It is amended in accordance with the Company Law.

VIII-22 -

APPENDIX VIII SPECIAL RESOLUTIONS I-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
Article 69 The Company shall calculate the number of voting shares represented by shareholders who intend to attend the general meeting based upon the written replies received 20 days before the date of the meeting. If the number of voting shares represented by shareholders who intend to attend the meeting amounts to more than half of the total number of voting shares of the Company, the Company may hold a general meeting. Otherwise, the Company should within five days give the shareholders further notice of the matters to be considered at the meeting as well as the date and venue of the meeting by way of a public announcement. The Company may hold a general meeting after such announcement is made.

The extraordinary general meetings cannot decide to announce matters that are not specified in the notice. | Article 67 The Company shall calculate the number of voting shares represented by shareholders who intend to attend the general meeting based upon the written replies received 20 days before the date of the meeting. If the number of voting shares represented by shareholders who intend to attend the meeting amounts to more than half of the total number of voting shares of the Company, the Company may hold a general meeting. Otherwise, the Company should within five days give the shareholders further notice of the matters to be considered at the meeting as well as the date and venue of the meeting by way of a public announcement. The Company may hold a general meeting after such announcement is made.

The extraordinary shareholders' general meetings cannot decide to announce matters that are not specified in the notice. | It is amended as the Special Provisions and the Prerequisite Clauses on which the original article was based have been abolished and according to the Company Law and in combination with the actual situation of the Company. |

VIII-23 -

APPENDIX VIII SPECIAL RESOLUTIONS I-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
Article 71 Notice of the general meeting shall be delivered in person or by pre-paid post to shareholders (whether they have a voting right at the general meeting or not) and the address of the recipient is the address registered in the register of shareholders. Notice of the general meeting to shareholders of domestic shares may be served by way of public announcements.

The announcement aforesaid should be published in one or more newspapers designated by the securities regulatory authority of the State Council 45 to 50 days before the date of the meeting. All shareholders of domestic shares are deemed to have received the notice of the general meeting upon the publication of the announcement. | Article 69 Notice of the general meeting shall be delivered in person or by pre-paid post to shareholders (whether they have a voting right at the general meeting or not) and the address of the recipient is the address registered in the register of shareholders. Notice of the general meeting to shareholders of domestic shares may be served by way of public announcements.

Notice of the shareholders' meeting shall be delivered to shareholders (whether they have a voting right at the shareholders' meeting or not) in accordance with the provisions of Chapter 21 of the Articles. Where a notice served by way of public announcement, all relevant persons are deemed to have received the notice upon the publication of the announcement. | It is amended according to the requirements relating to paperless communication under the Listing Rules and in combination with the actual situation of the Company. |

VIII-24 -

APPENDIX VIII SPECIAL RESOLUTIONS I-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
Article 84 At any general meeting of shareholders, a resolution is decided on a show of hands unless a poll is demanded by the following persons before or after voting by show of hands:
(1) the chairman of the meeting;
(2) at least two shareholders or their proxies entitled to vote; or
(3) one or more shareholders (including their proxies) individually or jointly holding 10% or more of the voting shares at the meeting.	Article 82 At any shareholders’ general meeting-of-shareholders, a resolution is decided on a show of hands unless a poll is demanded by the following persons before or after voting by show of hands:
(1) the chairman of the meeting;
(2) at least two shareholders or their proxies entitled to vote; or
(3) one or more shareholders (including their proxies) individually or jointly holding more than 10% or more of the voting shares at the meeting.	It is amended as the Supplementary Provisions of the Civil Code explain that “more than” includes the figures listed.
...	...

VIII-25 -

APPENDIX VIII SPECIAL RESOLUTIONS I-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
Article 91 Convening of an extraordinary general meeting or a class shareholders’ meeting is required to take the following procedures:

(1) Two or more shareholders holding a total of 10% or more voting shares at the meeting to be held may sign one or more written requests of the same form and contents, with the agenda of the meeting clearly stated, and submit it/them to the board for the convening of an extraordinary general meeting or a class shareholders’ meeting. The board shall forthwith convene the extraordinary general meeting or class shareholders’ meeting upon receipt of the written request aforesaid. The number of shares referred to above is calculated on the date of submission of the shareholders’ written requests.

(2) If the board has not issued the notice for the convening of the meeting within 30 days upon the receipt of the written request aforesaid, shareholders requesting such may convene the meeting on their own within four months upon the receipt of such request by the board. The meeting will be convened following is the procedures as similar as possible to that for convening of general meetings by the board. | Article 89 Convening of an extraordinary general meeting or a class shareholders’ meeting is required to take the following procedures:

(1) Shareholders Two or more shareholders individually or jointly holding a total of more than 10% or more voting shares at the meeting to be held may sign one or more written requests of the same form and contents, with the agenda of the meeting clearly stated, and submit it/them to the board for the convening of an extraordinary general meeting or a class shareholders’ meeting. The board shall forthwith convene the extraordinary general meeting or class shareholders’ meeting make a decision as to whether or not to convene an extraordinary shareholders’ meeting within 10 days from the date of receipt of such request and shall reply to the shareholders in writing upon receipt of the written request aforesaid. The number of shares referred to above is calculated on the date of submission of the shareholders’ written requests.

(2) If the board has not issued the notice for the convening of the meeting within 30 days upon the receipt of the written request aforesaid, shareholders requesting such may convene the meeting on their own within four months upon the receipt of such request by the board. The meeting will be convened following is the procedures as similar as possible to that for convening of general meetings by the board. | It is amended in accordance with the Company Law. |

VIII-26 -

APPENDIX VIII SPECIAL RESOLUTIONS I-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
Where a meeting is convened by shareholders on their own because the board fails to convene the meeting at the request referred to above, reasonable expenses incurred are to be borne by the Company and to be deducted from the Company’s payable to the director(s) negligent in performing his/their duties.

At a general meeting, except for trade secrets which cannot be disclosed to the public, the board and supervisory committee shall give replies or explanations on queries and suggestions made by shareholders. | Where the board agrees to convene an extraordinary shareholders’ meeting, it shall issue a notice of the shareholders’ meeting within five days after the resolution was made. Any change to the original request in the notice shall be subject to the approval from the relevant shareholders.

Where the board disagrees to convene an extraordinary shareholders’ meeting or fails to give a reply within 10 days upon receipt of the request, shareholders individually or jointly holding more than 10% of the shares of the Company shall have the right to submit a request to the supervisory committee on holding an extraordinary shareholders’ meeting and such request shall be made to the supervisory committee in writing.

Where the supervisory committee agrees to convene an extraordinary shareholders’ meeting, it shall issue a notice of shareholders’ meeting within five days after receiving the request. Any changes to the original proposal in the notice shall be approved by the relevant shareholders. Where the supervisory committee disagrees to convene an extraordinary or fails to give a reply within 10 days upon receipt of the request, shareholders individually or jointly holding more than 10% of the shares of the Company for 90 or more consecutive days may convene and preside over the meeting on their own. | |

VIII-27 -

APPENDIX VIII SPECIAL RESOLUTIONS I-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
	Where a meeting is convened by shareholders on their own because the board fails to convene the meeting at the request referred to above, reasonable expenses incurred are to be borne by the Company and to be deducted from the Company’s payable to the director(s) negligent in performing his/their duties.

At a shareholders’ general meeting, except for trade secrets which cannot be disclosed to the public, the board and supervisory committee shall give replies or explanations on queries and suggestions made by shareholders. | |
| Article 114 The board of directors comprises nine directors, including a chairman and a vice chairman. More than half of the members of the board shall be external directors (who do not work in the Company), including three independent directors.

The Company does not have employee representative directors. | Article 111 The board of directors comprises nine directors, including a chairman and a vice chairman. The More than half of the members of the board shall be external directors (who do not work in the Company), including includes three independent directors.

The Company does not have employee representative directors. | It is amended in accordance with the Company Law. |

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APPENDIX VIII SPECIAL RESOLUTIONS I-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
Article 115 The board of directors exercises the following functions and powers:

……

(8) deciding on external investment, acquisition and disposal of assets, pledge of assets, external guarantee, entrusted financial management, connected transactions and other matters under the authority granted by the general meeting;

……

When the board of directors resolve on matters as referred to in the previous clause, save for (6), (7) and (11) which should be approved by voting by more than two-thirds of the directors, the rest may be approved by voting by more than half of the directors.

…… | Article 112 The board of directors exercises the following functions and powers:

……

(8) deciding on external investment, acquisition and disposal of assets, pledge of assets, external guarantee, entrusted financial management, connected transactions, external donations and other matters under the authority granted by the shareholders’ general meeting;

……

…… | It is amended in accordance with the Company Law. |
| Article 117 The board shall establish strict review and decision-making procedures to determine the scope of authority for external investment, acquisition and disposal of assets, pledge of assets, external guarantee, entrusted financial management and connected transactions, and it shall organize relevant experts and professionals to review the major investment projects and submit to the general meeting for approval.

…… | Article 114 The board shall establish strict review and decision-making procedures to determine the scope of authority for external investment, acquisition and disposal of assets, pledge of assets, external guarantee, entrusted financial management, and connected transactions and external donations, and it shall organize relevant experts and professionals to review the major investment projects and submit to the shareholders’ meeting for approval.

…… | It is amended in accordance with the Company Law. |

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APPENDIX VIII SPECIAL RESOLUTIONS I-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
Article 118 The chairman and vice chairman of the board shall be elected and removed by a majority of all directors. Term of office of the chairman and vice chairman of the board shall be the same as the term of office of the same session of the board and they may be re-elected.	Article 115 The chairman and vice chairman of the board shall be elected and removed by a majority of all directors. Term of office of the chairman and vice chairman of the board shall be the same as the term of office of the same session of the board and they may be re-elected.	It is amended in accordance with the Company Law.
Article 119 The chairman shall exercise the following functions and powers:
(1) to preside over the shareholders’ general meetings and to convene and preside over the board meetings;
(2) to monitor and examine the implementation of the board resolutions;
(3) to sign securities issued by the Company;
(4) to exercise other functions and powers granted by the board;	Article 116 The chairman shall exercise the following functions and powers:
(1) to preside over the shareholders’ general meetings and to convene and preside over the board meetings;
(2) to monitor and examine the implementation of the board resolutions;
(3) to sign securities issued by the Company;
(43) to exercise other functions and powers granted by the board;	It is amended in accordance with the Company Law.
Article 120 Vice chairman of the board of the Company shall assist the chairman of the board with his work. In the event of any inability or failure of the chairman to perform his duties, the vice chairman shall perform such duties. In the event of any inability or failure of the vice chairman to perform his duties, a director elected jointly by more than half of the directors shall perform such duties.	Article 117 Vice chairman of the board of the Company shall assist the chairman of the board with his work. In the event of any inability or failure of the chairman to perform his duties, the vice chairman shall perform such duties. In the event of any inability or failure of the vice chairman to perform his duties, a director elected jointly by more than over half of the directors shall perform such duties.	It is amended in accordance with the Company Law.

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APPENDIX VIII SPECIAL RESOLUTIONS I-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
Article 123 Notice of the board meeting and extraordinary board meeting shall be in written forms such as mails, delivery in person, facsimile, email and so on. Notice of the extraordinary board meeting shall be issued 10 days prior to such meeting.	Article 120 Notice of the board meeting and extraordinary board meeting shall be in written forms such as mails, delivery in person, facsimile, email and so on. Notice of the extraordinary board meeting shall be issued 10 days prior to such meeting. Under special circumstances, in case of an extraordinary board meeting is required to be convened as soon as possible, an advance notice period of 10 days maybe waived upon the unanimous consent of the directors. The extraordinary board meeting may be convened via on-site meeting, electronic communication, or in combination of on-site meeting and electronic communication.	It is amended according to the Company Law and in combination with the actual situation of the Company.

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APPENDIX VIII SPECIAL RESOLUTIONS I-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
Article 132 The board may establish several specific committees such as audit committee, remuneration committee and strategic committee, which, under the leadership of the board, assist the board to perform its functions and powers, or to provide suggestions and advisory opinions to the board for decision-making.	Article 129 The board may establish several specific special committees such as audit committee, nomination committee, remuneration and assessment committee and strategic and sustainable development (ESG) committee, which, under the leadership of the board, assist the board to perform its functions and powers, or to provide suggestions and advisory opinions to the board for decision-making. The special committees shall be responsible to the board and shall perform their duties as stipulated in the Articles and as authorized by the board. Proposals shall be submitted to the board for consideration and approval. All members of the special committees shall be directors, among which, the majority of the members of the audit committee, the nomination committee and the remuneration and assessment committee shall be independent directors who also convene the meeting of such committees, and the convener of the audit committee shall be an accounting professional. The board shall be responsible for formulating the rules of procedures for the special committees to regulate their operations.	It is amended according to the Company Law and in combination with the actual situation of the Company.

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APPENDIX VIII SPECIAL RESOLUTIONS I-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
Article 151 The Company shall have a supervisory committee. The supervisory committee shall consist of five supervisors, including one shareholder representative supervisor, two independent supervisors and two employee representative supervisors. The number of supervisors not working in the Company shall account for more than half of the total number of the supervisors.	Article 148 The Company shall have a supervisory committee. The supervisory committee shall consist of three five supervisors, including one shareholder representative supervisor, two independent supervisors and two employee representative supervisors. The number of supervisors not working in the Company shall account for more than half of the total number of the supervisors.	It is amended according to the Company Law and in combination with the actual situation of the Company.
The supervisory committee shall have a chairman, whose appointment and removal shall be passed by more than two-thirds of the total number of the supervisors.	The supervisory committee shall have a chairman, whose appointment and removal shall be passed by more than two-thirds of the total number of the supervisors. The chairman of the supervisory committee shall be elected by over half of the supervisors.
The chairman of the supervisory committee shall convene and chair the meetings of the supervisory committee. If the chairman of the supervisory committee fails to or does not perform his duties, a supervisor jointly elected by more than half of the total number of supervisors shall convene and chair the meetings of the supervisory committee.	The chairman of the supervisory committee shall convene and chair the meetings of the supervisory committee. If the chairman of the supervisory committee fails to or does not perform his duties, a supervisor jointly elected by more than over half of the total number of supervisors shall convene and chair the meetings of the supervisory committee.

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APPENDIX VIII SPECIAL RESOLUTIONS I-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
Article 152 The supervisory committee shall be consisted of shareholder representative supervisors and employee representative supervisors in an appropriate proportion which shall not be less than one-third of the total number of the supervisors. The election and removal of shareholder representative supervisors and independent supervisors shall be resolved by the general meeting while the democratic election and removal of employee representative in the supervisory committee shall be approved by the employees of the Company through the meeting of employee representatives, or the employee meeting, or through other forms.	Article 149 The supervisory committee shall be consisted of shareholder representative supervisors and employee representative supervisors in an appropriate proportion which shall not be less than one-third of the total number of the supervisors. The election and removal of shareholder representative supervisors and independent supervisors non-employee representative supervisors shall be resolved by the shareholders' general meeting while the democratic election and removal of employee representative in the supervisory committee shall be approved by the employees of the Company through the meeting of employee representatives, or the employee meeting, or through other forms.	It is amended according to the Company Law.

VIII-34 -

APPENDIX VIII SPECIAL RESOLUTIONS I-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
Article 154 The supervisory committee shall hold a meeting at least once every six months. Supervisors may propose to convene extraordinary meetings of the supervisory committee.	Article 151 The supervisory committee shall hold a meeting at least once every six months. Supervisors may propose to convene extraordinary meetings of the supervisory committee.	It is amended according to the Company Law and in combination with the actual situation of the Company.
Written notice of the meeting of the supervisory committee shall be served to all supervisors 10 days prior to the meeting. The notice shall include the date, venue and duration of the meeting; reasons for holding the meeting and matters to be discussed, and the date of the notice.	Written notice of the meeting of the supervisory committee shall be served to all supervisors 10 days prior to the meeting. The notice shall include the date, venue and duration of the meeting; reasons for holding the meeting and matters to be discussed, and the date of the notice. If the supervisory committee convenes an extraordinary meeting, a notice shall be served to all supervisors five days prior to the meeting. Under special circumstances, in case of an extraordinary meeting of the supervisory committee is required to be convened as soon as possible, an advance notice period of five days may be waived upon the unanimous consent of the supervisors. The extraordinary meetings of the supervisory committee may be convened via on-site meeting, electronic communication, or in combination of on-site meeting and electronic communication.
Meetings of the supervisory committee shall be held only if more than half of all supervisors attending the meeting.	Meetings of the supervisory committee shall be held only if more than half of all supervisors attending the meeting.
The voting method of the meeting of the supervisory committee shall be voting by open ballot. Each supervisor shall have one vote. Where the number of votes for and against a resolution are equal, the chairman of the supervisory committee shall have an additional vote. Supervisors shall attend the meetings of the supervisory committee in person or they shall appoint another supervisor in writing to attend the meeting on behalf of them if they are unable to attend the meeting for whatever reasons. The proxy form shall specify the scope of authority. Resolutions of the meeting of the supervisory committee shall be passed by more than two-thirds of the number of the supervisors.

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APPENDIX VIII SPECIAL RESOLUTIONS I-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
	The voting method of the meeting of the supervisory committee shall be voting by open ballot. Each supervisor shall have one vote. Where the number of votes for and against a resolution are equal, the chairman of the supervisory committee shall have an additional vote. Supervisors shall attend the meetings of the supervisory committee in person or they shall appoint another supervisor in writing to attend the meeting on behalf of them if they are unable to attend the meeting for whatever reasons. The proxy form shall specify the scope of authority.

Resolutions of the meeting of the supervisory committee shall be passed by more than two-thirds over half of the number of the supervisors. The resolution of the supervisory committee shall be voted by way of a poll ‘a show of hands or other means permitted by laws and regulations. On the premise that the supervisors can fully express their opinions, the extraordinary meetings of the supervisory committee may be convened by way of electronic communication, provided that the resolutions and records of the supervisory committee shall be signed afterwards. | |

VIII-36 -

APPENDIX VIII SPECIAL RESOLUTIONS I-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
Article 163 A person shall not hold the office of directors, supervisors, general manager or senior management of the Company if any of the following circumstances apply:
(1) a person without civil capacity or with restricted civil capacity;
(2) a person who has been sentenced for committing the offences of corruption, bribery, misappropriation or appropriation of property or damaging the social economic order, and the sentence is enforced for no more than five years or a person who has been deprived of his political rights and not more than five years have elapsed since the sentence is executed;
(3) a person who is a former director, factory manager or manager of a company or an enterprise which is insolvent and liquidated and who is personally liable for the winding up of such company or enterprise, where no more than three years have elapsed since the date of completion of the liquidation of the company or enterprise;	Article 160 A person shall not hold the office of directors, supervisors, general manager or senior management of the Company if any of the following circumstances apply:
(1) a person without civil capacity or with restricted civil capacity;
(2) a person who has been sentenced for committing the offences of corruption, bribery, misappropriation or appropriation of property or damaging the social economic order, and the sentence is enforced for no more than five years or a person who has been deprived of his political rights and not more than five years have elapsed since the sentence is executed, and not more than two years have elapsed since the date of the expiration of the probation period if probation is announced;
(3) a person who is a former director, factory manager or manager of a company or an enterprise which is insolvent and liquidated and who is personally liable for the winding up of such company or enterprise, where no more than three years have elapsed since the date of completion of the liquidation of the company or enterprise;	It is amended according to the Company Law.

VIII-37 -

APPENDIX VIII SPECIAL RESOLUTIONS I-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
(4) a person who is a former legal representative of a company or enterprise whose business license has been revoked or which is ordered to close due to violation of laws and who was personally liable, where no more than three years have elapsed since the date of the revocation of the business license of such company or enterprise;	(4) a person who is a former legal representative of a company or enterprise whose business license has been revoked or which is ordered to close due to violation of laws and who was personally liable, where no more than three years have elapsed since the date of the revocation of the business license or being ordered to close down of such company or enterprise;
(5) a person who has a relatively large amount of due and outstanding debts;	(5) a person who has a relatively large amount of due and outstanding debts and is listed as a dishonest person subject to enforcement by the people’s court;
(6) a person who has committed criminal offences and is still under investigation by the judicial authorities;	(6) a person who has committed criminal offences and is still under investigation by the judicial authorities;
(7) a person who, according to laws and administrative regulations, cannot act as a leader of an enterprise;	(7) a person who, according to laws and administrative regulations, cannot act as a leader of an enterprise;
(8) a person who is not a natural person;	(8) a person who is not a natural person;
...	...

VIII-38 -

APPENDIX VIII SPECIAL RESOLUTIONS I-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
Article 165 The director, supervisor and other senior management shall undertake to the Company that they will observe and comply with the Company Law, the Special Provisions, the Articles and the provisions of the takeovers code and code repurchase of the stock exchange where the shares of the Company are listed.	Article 162 The director, supervisor and other senior management shall undertake to the Company that they will observe and comply with the Company Law, the Special Provisions Trial Measures, the Articles and the provisions of the takeovers code and code repurchase of the stock exchange where the shares of the Company are listed.	The Trial Measures issued by the CSRC have been added as the basis for relevant regulations as the Special Provisions on which the original article was based have been abolished.
Article 167 In exercising their rights or performing their duties, the directors, supervisors, general manager and other senior management of the Company shall act with prudence, diligence and skills as a reasonably prudent person would exercise under similar circumstances.
...	Article 165 In exercising their rights or performing their duties, the directors, supervisors, general manager and other senior management of the Company shall act with prudence, diligence and skills as a reasonably prudent person would exercise under similar circumstances.
...	It is amended according to the Company Law.
Article 174 The Company shall not pay taxes for its directors, supervisors, general manager and other senior management in any way.	Article 171 The Company shall not pay taxes for its directors, supervisors, general manager and other senior management in any way (the Company shall pay remuneration to the aforesaid personnel in accordance with the relevant provisions of the Tax Law, except for the fulfillment of the withholding and payment obligations).	It is amended according to the relevant provisions of the Tax Law and in combination with the actual situation of the Company.

VIII-39 -

APPENDIX VIII SPECIAL RESOLUTIONS I-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
Article 185 ...

The Company shall deliver or send by prepaid mail to each shareholder of overseas listed foreign shares, (1) a photocopy of the directors’ report along with the balance sheet (including all documents required to be attached by laws) and profit and loss accounts or income statements (including the aforesaid financial reports) or (2) a summary of the financial report no later than 21 days prior to the date of the annual general meeting, and the addresses of the recipients shall be those recorded in the register of shareholders. | Article 182 ...

The Company shall notify deliver or send by prepaid mail to each shareholder of overseas listed foreign shares in accordance with the provisions of Chapter 21 of the Articles, (1) a photocopy of the directors’ report along with the balance sheet (including all documents required to be attached by laws) and profit and loss accounts or income statements (including the aforesaid financial reports) or (2) a summary of the financial report no later than 21 days prior to the date of the annual general meeting, and the addresses of the recipients shall be those recorded in the register of shareholders. | It is amended according to the requirements relating to paperless communication under the Listing Rules and in combination with the actual situation of the Company. |
| Article 192 The common reserve fund of the Company shall be used for making up the Company’s losses, expanding the Company’s production and operation, or being converted into the capital of the Company. However, The capital common reserve fund shall not be used to make up the Company’s losses.

When the Company converts its statutory common reserve fund to capital, the balance of such common reserve fund shall not fall below 25% of the Company’s registered capital prior to such conversions. | Article 189 The common reserve fund of the Company shall be used for making up the Company’s losses, expanding the Company’s production and operation, or being converted into the capital of the Company. However, The capital common reserve fund shall not be used to make up the Company’s losses.

– VIII-40 –

APPENDIX VIII SPECIAL RESOLUTIONS I-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
Article 204 The appointment, removal or non-reappointment of an audit firm shall be determined by the general meeting, and reported to the securities regulatory authority of the State Council for record.	Article 201 The appointment, removal or non-reappointment of an audit firm shall be determined by the general meeting, and reported to the securities regulatory authority of the State Council for record.	It is amended as the Special Provisions and the Prerequisite Clauses on which the original article was based have been abolished and in combination with the actual situation of the Company.
Article 205 Prior notice shall be given to the audit firm if the Company decides to remove or not to renew the appointment of such audit firm. Such audit firm shall have the right to present its views at the general meeting. Where the audit firm resigns from its position, it shall make clear to the general meeting whether there is any impropriety on the part of the Company.	Article 202 Prior notice shall be given to the audit firm if the Company decides to remove or not to renew the appointment of such audit firm. Such audit firm shall have the right to present its views at the general meeting. Where the audit firm resigns from its position, it shall make clear to the general meeting whether there is any impropriety on the part of the Company.	It is amended according to the requirements relating to paperless communication under the Listing Rules and in combination with the actual situation of the Company.
(1) An audit firm may resign by depositing at the Company’s legal address a written resignation notice. Such notice shall contain the following statements:	(1) An audit firm may resign by depositing at the Company’s legal address a written resignation notice. Such notice shall contain the following statements:
(i) a statement to the effect that there are no circumstances connected with its resignation which it considers should be brought to the notice of the shareholders or creditors of the Company; or	(i) a statement to the effect that there are no circumstances connected with its resignation which it considers should be brought to the notice of the shareholders or creditors of the Company; or
(ii) a statement of any such circumstances.	(ii) a statement of any such circumstances.
The notice shall become effective on the date of depositing at the Company’s legal address or on such later date as may be stipulated in such notice.	The notice shall become effective on the date of depositing at the Company’s legal address or on such later date as may be stipulated in such notice.

VIII-41 -

APPENDIX VIII SPECIAL RESOLUTIONS I-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
(2) The Company shall send copies of the aforesaid notice to relevant responsible authorities within 14 days upon its receipt of the notice referred to in (1) of this Article. If the notice contains the statements specified in (1) (ii) of this Article, the Company shall place a copy of such statements in the Company for shareholders’ review. The Company shall also send a copy of the aforesaid statements to each shareholder of overseas listed foreign shares by prepaid post, and the address of the recipient shall be the address in the register of shareholders.	(2) The Company shall send copies of the aforesaid notice to relevant responsible authorities within 14 days upon its receipt of the notice referred to in (1) of this Article. If the notice contains the statements specified in (1) (ii) of this Article, the Company shall place a copy of such statements in the Company for shareholders’ review. The Company shall also send a copy of the aforesaid statements to each shareholder of overseas listed foreign shares by prepaid post, and the address of the recipient shall be the address in the register of shareholders in accordance with the provisions of Chapter 21 of the Articles.

VIII-42 -

APPENDIX VIII SPECIAL RESOLUTIONS I-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
Article 206 For a merger or division of the Company, the board shall put forward a plan, and the plan shall go through relevant approval process after it has been passed according to the procedures specified in the Articles. Shareholders who oppose the Company's merger or division plans shall have the right to require the Company or the shareholders who approve the merger or division plans to purchase their shares at a fair price. The content of the resolution on the merger or division of the Company shall be made into special document available for shareholders' review.

With regard to shareholders of overseas listed foreign shares, the aforesaid documents shall also be sent to each of them by mail. | Article 203 For a merger or division of the Company, the board shall put forward a plan, and the plan shall go through relevant approval process after it has been passed according to the procedures specified in the Articles. Shareholders who oppose the Company's merger or division plans shall have the right to require the Company or the shareholders who approve the merger or division plans to purchase their shares at a fair price. The content of the resolution on the merger or division of the Company shall be made into special document available for shareholders' review.

With regard to shareholders of overseas listed foreign shares, the aforesaid documents shall also be sent to each of them by mail in accordance with the provisions of Chapter 21 of the Articles. | It is amended according to the requirements relating to paperless communication under the Listing Rules and in combination with the actual situation of the Company. |

VIII-43 -

APPENDIX VIII SPECIAL RESOLUTIONS I-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
Article 207 The merger of the Company may take the form of merger by absorption or merger by establishment.

In the case of a merger of the Company, the parties shall enter into a merger agreement and prepare balance sheets and an assets lists. The Company shall notify its creditors within 10 days from the date on which the resolutions on the Company’s merger are passed and shall make announcements in newspaper at least three times within 30 days. The creditors shall have the right to require the Company to settle the debts or provide relevant guarantees within 30 days upon their receipt of the notice or within 45 days from the date of announcement for those who have not received the notice.

After the merger of the Company, the creditor’s rights and debts of each of the merging parties shall be assumed by the surviving company or the newly established company. | Article 204 The merger of the Company may take the form of merger by absorption or merger by establishment.

In the case of a merger of the Company, the parties shall enter into a merger agreement and prepare balance sheets and an assets lists. The Company shall notify its creditors within 10 days from the date on which the resolutions on the Company’s merger are passed and shall make announcements in newspaper at least three times or the National Enterprise Credit Information Publicity System within 30 days. The creditors shall have the right to require the Company to settle the debts or provide relevant guarantees within 30 days upon their receipt of the notice or within 45 days from the date of announcement for those who have not received the notice.

After the merger of the Company, the creditor’s rights and debts of each of the merging parties shall be assumed by the surviving company or the newly established company. | It is amended according to the Company Law. |

VIII-44 -

APPENDIX VIII SPECIAL RESOLUTIONS I-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
Article 208 In the case of a division of the Company, its assets shall be divided accordingly.

In the case of a division of the Company, the parties to the division shall enter into a division agreement and prepare balance sheets and assets lists. The Company shall notify its creditors within 10 days from the date on which the resolutions on division are passed and shall make announcements in newspaper at least three times within 30 days.

Debts of the Company prior to the division shall be assumed by the companies in existence after the division, except otherwise agreed in the debt payment agreement entered into by the Company and its creditors before the division. | Article 205 In the case of a division of the Company, its assets shall be divided accordingly.

VIII-45 -

APPENDIX VIII SPECIAL RESOLUTIONS I-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
Article 213 The liquidation committee shall inform its creditors within 10 days upon its establishment, and shall make announcements in newspaper at least three times within 60 days. The creditors shall within 30 days upon their receipt of the notice, or for creditors, who have not received the notice, within 45 days of the date of the announcement, declare their creditor’s rights to the liquidation committee. For declaring creditors’ rights, the creditors shall explain the relevant matters on the creditor’s rights and shall supporting documents. The liquidation committee shall register such creditor’s rights.

During the period of declaring creditor’s rights, the liquidation committee shall not discharge the debts owed to the creditors. | Article 210 The liquidation committee shall inform its creditors within 10 days upon its establishment, and shall make announcements in newspaper at least three times or the National Enterprise Credit Information Publicity System within 60 days. The creditors shall within 30 days upon their receipt of the notice, or for creditors, who have not received the notice, within 45 days of the date of the announcement, declare their creditor’s rights to the liquidation committee. For declaring creditors’ rights, the creditors shall explain the relevant matters on the creditor’s rights and shall supporting documents. The liquidation committee shall register such creditor’s rights.

During the period of declaring creditor’s rights, the liquidation committee shall not discharge the debts owed to the creditors. | It is amended according to the Company Law. |
| Article 221 Amendments of the Articles in relation to the contents of the Prerequisite Clauses shall become effective upon approvals by the Companies Approving Department as authorized by the State Council and the securities regulatory authorities of the State Council. Amendments in relation to the matters to be approved by other governing authorities shall be reported to the relevant authorities for approval. If the amendments are in relation to the registered particulars of the Company, change of registration shall be made in accordance with laws. | Article 218 Amendments of the Articles in relation to the contents of the Prerequisite Clauses shall become effective upon approvals by the Companies Approving Department as authorized by the State Council and the securities regulatory authorities of the State Council. Amendments in relation to the matters to be approved by other governing authorities shall be reported to the relevant authorities for approval. If the amendments are in relation to the registered particulars of the Company, change of registration shall be made in accordance with laws. | It is amended as the Prerequisite Clauses on which the original article was based have been abolished. |

VIII-46 -

APPENDIX VIII SPECIAL RESOLUTIONS I-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
CHAPTER 22 RESOLUTIONS OF DISPUTES

Article 231 The Company shall comply with the following rules for dispute resolution:

(1) Any disputes or claims arising between shareholders of overseas listed foreign shares and the Company, between shareholders of overseas listed foreign shares and the Company’s directors, supervisors, general manager or other senior management, or between shareholders of overseas listed foreign shares and shareholders of domestic shares, on the basis of any rights or obligations specified by the Articles, the Company Law and any other relevant laws and administrative regulations concerning the affairs of the Company, shall be submitted by relevant parties to arbitration.

When the aforementioned dispute or claim of rights is submitted to arbitration, the entire claim or dispute shall be submitted to arbitration, and all persons whose causes of action were based on the same ground or the persons whose participation is necessary for the resolution of such dispute or claim, shall obey the arbitration award, provided that such person is the Company, the Company’s shareholders, directors, supervisors, general manager or other senior management. | CHAPTER 22 RESOLUTIONS OF DISPUTES

Article 231 The Company shall comply with the following rules for dispute resolution:

(4) Any disputes or claims arising between shareholders of overseas listed foreign shares and the Company, between shareholders of overseas listed foreign shares and the Company’s directors, supervisors, general manager or other senior management, or between shareholders of overseas listed foreign shares and shareholders of domestic shares, on the basis of any rights or obligations specified by the Articles, the Company Law and any other relevant laws and administrative regulations concerning the affairs of the Company, shall be submitted by relevant parties to arbitration.

VIII-47 -

APPENDIX VIII SPECIAL RESOLUTIONS I-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
Disputes with respect to the definition of shareholders and disputes concerning the register of shareholders need not be resolved by arbitration.	Disputes with respect to the definition of shareholders and disputes concerning the register of shareholders need not be resolved by arbitration.
(2) A claimant of arbitration may choose the arbitration to be conducted by China International Economic and Trade Arbitration Commission in accordance with its arbitration rules or Hong Kong International Arbitration Centre in accordance with its securities arbitration rules. Once a claimant of arbitration submits a dispute or claim of rights to arbitration, the other party must participate the arbitration at the arbitration organization selected by the claimant.	(2)—A claimant of arbitration may choose the arbitration to be conducted by China International Economic and Trade Arbitration Commission in accordance with its arbitration rules or Hong Kong International Arbitration Centre in accordance with its securities arbitration rules. Once a claimant of arbitration submits a dispute or claim of rights to arbitration, the other party must participate the arbitration at the arbitration organization selected by the claimant.
If a claimant selects Hong Kong International Arbitration Centre as the arbitration organ, either party may apply for the arbitration to be conducted in Shenzhen in accordance with the securities arbitration rules of Hong Kong International Arbitration Centre.	If a claimant selects Hong Kong International Arbitration Centre as the arbitration organ, either party may apply for the arbitration to be conducted in Shenzhen in accordance with the securities arbitration rules of Hong Kong International Arbitration Centre.
(3) If any disputes or claims of rights as a result of (1) are resolved by arbitration, the laws of the People’s Republic of China shall apply, except otherwise provided by laws and administrative regulations.	(3)—If any disputes or claims of rights as a result of (1) are resolved by arbitration, the laws of the People’s Republic of China shall apply, except otherwise provided by laws and administrative regulations.
(4) The award of the arbitration organ shall be final and conclusive and binding on all parties.	(4)—The award of the arbitration organ shall be final and conclusive and binding on all parties.

VIII-48 -

APPENDIX VIII SPECIAL RESOLUTIONS I-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
Article 234 The Articles shall be written in Chinese. If there is any discrepancy, the latest version registered with the Industry and Commerce Administration of Xinjiang Uygur Autonomous Region shall prevail.	Article 230 The Articles shall be written in Chinese. If there is any discrepancy, the latest version registered with the Industry and Commerce Administration of Xinjiang Uygur Autonomous Region Company’s registration authority shall prevail.	It is amended according to the Company Law.
Article 235 For the purpose of the Articles, references to “above”, “below”, “beyond”, “less than”, “more than” and “exceed” shall exclude the figures listed.	Article 231 For the purpose of the Articles, references to “above” and “expiration” shall include the figures listed: “below”, “beyond”, “less than”, “more than” and “exceed” shall exclude the figures listed.	It is amended as the Supplementary Interpretation of the Civil Code.

VIII-49 -

APPENDIX IX SPECIAL RESOLUTIONS II-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Xinjiang Xinxin Mining Industry Co., Ltd.*
Comparison Table on the Amendments II to the Articles of Association

EXPLANATION:

In the amended articles, the text proposed to be deleted is presented in the form of a strikethrough line, while the text proposed to be added is presented in the form of an underline;
The following table does not include amendment comparisons for changes in clause numbers only.

Original articles	Amended articles	Basis for amendments
Article 29 Upon approval by the securities regulatory authority of the State Council, the holders of domestic shares of the Company may transfer all or part of their domestic shares to overseas investors, and such transferred shares may be listed and traded on overseas stock exchanges; and they may also convert all or part of their domestic shares to foreign shares and such converted shares may be listed and traded on overseas stock exchanges. The listing and trading of transferred or converted shares on overseas stock exchanges shall comply with the regulatory procedures, regulations and requirements of such overseas stock exchanges.

Unless otherwise required by an overseas stock exchange, neither the listing and trading of shares so transferred on such overseas stock exchange nor the conversion of such domestic shares into foreign shares and their listing and trading on such overseas stock exchange requires voting at general meeting or class meeting.

The overseas listed foreign shares converted from domestic shares are the same class shares as the original overseas listed foreign shares. | Article 27 Upon approval by the securities regulatory authority of the State Council filing with the CSRC, the holders of domestic shares of the Company may transfer all or part of their domestic shares to overseas investors, and such transferred shares may be listed and traded on overseas stock exchanges; and they may also convert all or part of their domestic shares to foreign shares and such converted shares may be listed and traded on overseas stock exchanges. The listing and trading of transferred or converted shares on overseas stock exchanges shall comply with the regulatory procedures, regulations and requirements of such overseas stock exchanges.

The overseas listed foreign shares converted from domestic shares are the same class shares as the original overseas listed foreign shares. | It is amended as the Special Provisions and the Prerequisite Clauses on which the original article was based have been abolished and in accordance with the Listing Rules. |

– IX-1 –

APPENDIX IX SPECIAL RESOLUTIONS II-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
Article 91 Convening of an extraordinary general meeting or a class shareholders’ meeting is required to take the following procedures:

(2) If the board has not issued the notice for the convening of the meeting within 30 days upon the receipt of the written request aforesaid, shareholders requesting such may convene the meeting on their own within four months upon the receipt of such request by the board. The meeting will be convened following is the procedures as similar as possible to that for convening of general meetings by the board. | It is amended as the Special Provisions and the Prerequisite Clauses on which the original article was based have been abolished and in accordance with the Company Law and the Listing Rules. |

– IX-2 –

APPENDIX IX SPECIAL RESOLUTIONS II-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
Where a meeting is convened by shareholders on their own because the board fails to convene the meeting at the request referred to above, reasonable expenses incurred are to be borne by the Company and to be deducted from the Company’s payable to the director(s) negligent in performing his/their duties.

– IX-3 –

APPENDIX IX SPECIAL RESOLUTIONS II-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
	Where a meeting is convened by shareholders on their own because the board fails to convene the meeting at the request referred to above, reasonable expenses incurred are to be borne by the Company and to be deducted from the Company’s payable to the director(s) negligent in performing his/their duties.

– IX-4 –

APPENDIX IX SPECIAL RESOLUTIONS II-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
Chapter 9 Special Procedures for the Voting of Class Shareholders

Article 97 Shareholders who hold different classes of shares are class shareholders.

Class shareholders shall enjoy rights and assume obligations in accordance with laws, administrative regulations and the provisions of the Articles.

Article 98 If the Company intends to vary or abrogate the rights of class shareholders, it must obtain approval by a special resolution in a general meeting and the approval at a separate general meeting convened by the class shareholders so affected in accordance with Articles 100 to 104.

Article 99 The following circumstances shall be deemed to be variation or abrogation of the rights of certain class shareholders:

(1) to increase or decrease the number of shares of that class, or to increase or decrease the 30 number of shares of another class having voting or distribution rights or other privileges equal or superior to those of the shares of that class;

(2) to convert all or part of the shares of that class into shares of another class or to convert all or part of the shares of another class into shares of that class or to grant rights of conversion;

(3) to remove or reduce rights to accrued dividends or rights to cumulative dividends attached to shares of that class; | Chapter 9 Special Procedures for the Voting of Class Shareholders

Article 97 Shareholders who hold different classes of shares are class shareholders.

Class shareholders shall enjoy rights and assume obligations in accordance with laws, administrative regulations and the provisions of the Articles.

Article 99 The following circumstances shall be deemed to be variation or abrogation of the rights of certain class shareholders:

(3) to remove or reduce rights to accrued dividends or rights to cumulative dividends attached to shares of that class; | It is amended as the Special Provisions and the Prerequisite Clauses on which the original article was based have been abolished and in accordance with the Company Law and the Listing Rules. |

– IX-5 –

APPENDIX IX SPECIAL RESOLUTIONS II-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
(4) to reduce or remove preferential rights to receive dividends or to the assets distribution in the event of the Company’s liquidation attached to shares of that class;	(4) to reduce or remove preferential rights to receive dividends or to the assets distribution in the event of the Company’s liquidation attached to shares of that class;
(5) to increase, remove or reduce the rights of conversion, options, voting rights, the right of transfer, pre-emptive rights, and the right to acquire securities of the Company attached to shares of that class;	(5) to increase, remove or reduce the rights of conversion, options, voting rights, the right of transfer, pre-emptive rights, and the right to acquire securities of the Company attached to shares of that class;
(6) to remove or reduce rights to receive sums payable by the Company in specific currencies attached to shares of that class;	(6) to remove or reduce rights to receive sums payable by the Company in specific currencies attached to shares of that class;
(7) to create a new class of shares having voting or distribution rights or privileges equal or superior to those of the shares of that class;	(7) to create a new class of shares having voting or distribution rights or privileges equal or superior to those of the shares of that class;
(8) to restrict the transfer or the ownership of shares of that class or to increase such restrictions;	(8) to restrict the transfer or the ownership of shares of that class or to increase such restrictions;
(9) to issue subscription rights or share conversion rights in respect of shares of that class or another class;	(9) to issue subscription rights or share conversion rights in respect of shares of that class or another class;
(10) to increase the rights or privileges of shares of another class;	(10) to increase the rights or privileges of shares of another class;
(11) to propose to restructure the Company in such a way which results in the disproportionate distribution of obligations between various classes of shareholders in the restructuring; and	(11) to propose to restructure the Company in such a way which results in the disproportionate distribution of obligations between various classes of shareholders in the restructuring; and
(12) to amend or repeal the provisions of this Chapter.	(12) to amend or repeal the provisions of this Chapter.

– IX-6 –

APPENDIX IX SPECIAL RESOLUTIONS II-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
Article 100 Affected class shareholders, whether or not having the right to vote at the general meeting, shall have the right to vote at class meetings in respect of matters concerning (2) to (8) and (11) to (12) of Article 99 hereof, however, interested shareholder(s) shall not be entitled to vote at such class shareholders’ meetings.

The “interested shareholder” referred to in the preceding paragraph means:

(1) in the case of a repurchase of shares by way of a general offer to all shareholders of the Company on a pro rata basis or by way of public trading on a stock exchange pursuant to Article 32 hereof, an “interested shareholder” is a controlling shareholder as defined in Article 61 hereof;

(2) in the case of a repurchase of shares by way of a contractual agreement outside the stock exchange pursuant to Article 32 hereof, a shareholder to which the proposed agreement is related; and

(3) in the case of the restructuring of the Company, a shareholder who assumes a relatively lower proportion of obligation than the obligations imposed on other shareholders of that class or who has an interest different from that of other shareholders of that class 31. | Article 100 Affected class shareholders, whether or not having the right to vote at the general meeting, shall have the right to vote at class meetings in respect of matters concerning (2) to (8) and (11) to (12) of Article 99 hereof, however, interested shareholder(s) shall not be entitled to vote at such class shareholders’ meetings.

The “interested shareholder” referred to in the preceding paragraph means:

(2) in the case of a repurchase of shares by way of a contractual agreement outside the stock exchange pursuant to Article 32 hereof, a shareholder to which the proposed agreement is related; and

– IX-7 –

APPENDIX IX SPECIAL RESOLUTIONS II-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
Article 101 Resolutions of a class shareholders’ meeting shall be passed by more than two thirds of the voting shares of shareholders of that class attending the class shareholders’ meeting according to Article 100.	Article 101—Resolutions of a class shareholders’ meeting shall be passed by more than two thirds of the voting shares of shareholders of that class attending the class shareholders’ meeting according to Article 100.
Article 102 Written notice of a class shareholders’ meeting of the Company shall be sent to all shareholders who are registered as shareholders of that class in the register of shareholders 45 days before the date of the class shareholders’ meeting, specifying the matters to be considered as well as the date and the venue of the class shareholders’ meeting. A shareholder who intends to attend the class shareholders’ meeting shall deliver his/her written reply to the Company twenty days before the date of the class shareholders’ meeting.	Article 102—Written notice of a class shareholders’ meeting of the Company shall be sent to all shareholders who are registered as shareholders of that class in the register of shareholders 45 days before the date of the class shareholders’ meeting, specifying the matters to be considered as well as the date and the venue of the class shareholders’ meeting. A shareholder who intends to attend the class shareholders’ meeting shall deliver his/her written reply to the Company twenty days before the date of the class shareholders’ meeting.
If the number of voting shares held by the shareholders who intend to attend such meeting represent more than half of the total number of voting shares of that class at such meeting, the Company may hold the class shareholders’ meeting; if not, the Company shall within five days give the shareholders further notice of the matter to be considered as well as the date and the venue of the class shareholders’ meeting by way of public announcement. The Company may then hold the class shareholder’ meeting after such public announcement has been made.	If the number of voting shares held by the shareholders who intend to attend such meeting represent more than half of the total number of voting shares of that class at such meeting, the Company may hold the class shareholders’ meeting; if not, the Company shall within five days give the shareholders further notice of the matter to be considered as well as the date and the venue of the class shareholders’ meeting by way of public announcement. The Company may then hold the class shareholder’ meeting after such public announcement has been made.

– IX-8 –

APPENDIX IX SPECIAL RESOLUTIONS II-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
Article 103 Notice of class meetings only needs to be delivered to shareholders entitled to vote thereat.

Class shareholders’ meetings shall be held in a way as similar as possible to that of general meetings. The provisions of the Articles relating to the procedures for holding general meetings are also applicable to class shareholders’ meetings.

Article 104 Apart from the shareholders of other classes, the shareholders of domestic shares and overseas listed foreign invested shares are deemed to be shareholders of different classes.

The special procedures for voting by class shareholders do not apply to the following circumstances:

(1) where the Company issues, upon the approval by a special resolution in a general meeting, the domestic shares and overseas listed foreign shares, either separately or concurrently once every twelve months, and the respective numbers of the domestic shares and overseas listed foreign shares to be issued do not exceed 20% of each of the issued domestic shares and overseas listed foreign invested shares; | Article 103—Notice of class meetings only needs to be delivered to shareholders entitled to vote thereat.

Article 104—Apart from the shareholders of other classes, the shareholders of domestic shares and overseas listed foreign invested shares are deemed to be shareholders of different classes.

The special procedures for voting by class shareholders do not apply to the following circumstances:

(1)—where the Company issues, upon the approval by a special resolution in a general meeting, the domestic shares and overseas listed foreign shares, either separately or concurrently once every twelve months, and the respective numbers of the domestic shares and overseas listed foreign shares to be issued do not exceed 20% of each of the issued domestic shares and overseas listed foreign invested shares; | |

– IX-9 –

APPENDIX IX SPECIAL RESOLUTIONS II-COMPARISON TABLE ON THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF XINJIANG XINXIN MINING INDUSTRY CO., LTD.

Original articles	Amended articles	Basis for amendments
(2) where the Company’s plan to issue domestic shares and overseas listed foreign invested shares at the time of its incorporation is carried out within 15 months from the date of approval by the securities regulatory authority of the State Council;	(2)—where the Company’s plan to issue domestic shares and overseas listed foreign invested shares at the time of its incorporation is carried out within 15 months from the date of approval by the securities regulatory authority of the State Council;
(3) upon approval by the securities regulatory authority of the State Council, shareholders of domestic shares of the Company transfer their shares to overseas investors and such shares are listed and traded abroad. Listing and trading of the shares so transferred on overseas stock exchange shall comply with regulatory procedures, regulations and requirements of overseas stock exchanges.	(3)—upon approval by the securities regulatory authority of the State Council, shareholders of domestic shares of the Company transfer their shares to overseas investors and such shares are listed and traded abroad. Listing and trading of the shares so transferred on overseas stock exchange shall comply with regulatory procedures, regulations and requirements of overseas stock exchanges.

– IX-10 –

NOTICE OF THE 2025 EGM

NOTICE IS HEREBY GIVEN that the extraordinary general meeting (“EGM”) of Xinjiang Xinxin Mining Industry Co., Ltd. (the “Company”) will be held at 12:00 p.m. on Friday, 9 May 2025 at Conference Room, 6/F, No. 501, Fusion South Road, Cooperation Zone, Economic and Technological Development Zone, Urumqi, Xinjiang, the People’s Republic of China to consider and, if thought fit, approve the following resolutions:

Unless otherwise defined, capitalized terms used in this notice and the following resolution shall have the same meanings as those defined in the circular of the Company dated 24 March 2025.

ORDINARY RESOLUTION

(1) to consider and approve the Equity Transfer Agreement and the transactions contemplated thereunder. Any one Director be and is hereby authorised to do all such acts and things and execute such other documents as he in his sole and absolute discretion deems necessary, desirable or expedient in relation to the implementation of the above (if necessary).

SPECIAL RESOLUTIONS

(1) To consider and approve the proposed amendments to the Articles of Association I.
(2) To consider and approve the proposed amendments to the Articles of Association II.

By order of the Board
Xinjiang Xinxin Mining Industry Co., Ltd.*
Wu Ning, Lam Siu Wing
Joint Company Secretaries

Xinjiang, the PRC
24 March 2025

EGM-1 -

NOTICE OF THE 2025 EGM

Notes:

Closure of register of members and eligibility for attending the EGM

The register of members of the Company will be closed from Wednesday, 9 April 2025 to Friday, 9 May 2025 (both days inclusive), during which time no share transfers will be registered. In order to be eligible to attend the EGM, instruments of transfer accompanied by share certificates and other appropriate documents must be lodged with the Company’s H share registrar, Computershare Hong Kong Investor Services Limited at Shops 1712–1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong no later than 4:30 p.m. on Tuesday, 8 April 2025. Shareholders of the Company whose names appear on the register of members of the Company at the opening of business on Friday, 9 May 2025 are entitled to attend the EGM.

Notice of attendance

Shareholders who intend to attend the EGM should complete and lodge the accompanying reply slip and return it to the Company’s H Share registrar, Computershare Hong Kong Investor Services Limited, on or before 4:30 p.m. on Friday, 18 April 2025. The reply slip may be delivered by hand, by post or by fax to the Company’s H Share registrar. Completion and return of the reply slip does not affect the right of a shareholder of the Company to attend the EGM.

Proxy

Every shareholder of the Company who has the right to attend and vote at the EGM is entitled to appoint one or more proxies, whether or not they are members of the Company, to attend and vote on his behalf at the EGM.

A proxy must be appointed by an instrument in writing and signed by the appointer or his attorney duly authorised in writing. If the appointer is a legal person, then the instrument shall be signed under a legal person’s seal or signed by its director or an attorney duly authorised in writing. The instrument appointing the proxy shall be deposited at the Company’s H Share registrar, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong, not less than 24 hours before the time appointed for the holding of the EGM. If the instrument appointing the proxy is signed by a person authorised by the appointer, the power of attorney or other document of authority under which the instrument is signed shall be notarised. The notarised power of attorney or other document of authority shall be deposited together and at the same time with the instrument appointing the proxy at the Company’s H Share registrar. Return of a form of proxy will not preclude a shareholder of the Company from attending in person and voting at the EGM or any adjournment thereof if he so wishes.

If more than one proxy is appointed, such proxies shall only be entitled to vote by poll. Shareholders or their proxies are required to produce their identification documents when attending the EGM.

EGM-2 -

NOTICE OF THE 2025 EGM

Others

Pursuant to Rule 13.39(4) of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules"), all votes at the general meeting will be taken by poll and the Company will announce the results of the poll in the manner prescribed under Rule 13.39(5) of the Listing Rules.

The EGM is expected to last for approximately one and a half hour. Shareholders and their proxies attending the meeting shall be responsible for their own travelling and accommodation expenses.

As at the date of this notice, the executive Director is Mr. Chen Yin; the non-executive Directors are Mr. Qi Xinhui, Mr. Zhou Chuanyou, Mr. Wang Lijian, Ms. Chen Yang and Mr. Hu Chengye; and the independent non-executive Directors are Mr. Hu Benyuan, Mr. Huang Yong and Mr. Lee Tao Wai.

For identification purposes only
EGM-3 -

NOTICE OF THE 2025 DOMESTIC SHARE CLASS MEETING

NOTICE IS HEREBY GIVEN that the domestic share class meeting in 2025 (“Domestic Share Class Meeting”) of Xinjiang Xinxin Mining Industry Co., Ltd. (the “Company”) will be held at 1:30 p.m. on Friday, 9 May 2025 (or immediately after the conclusion of the EGM or any adjournment thereof) at Conference Room, 6/F, No. 501, Fusion South Road, Cooperation Zone, Economic and Technological Development Zone, Urumqi, Xinjiang, the People’s Republic of China to consider and, if thought fit, approve the following resolutions:

Unless otherwise defined, capitalized terms used in this notice and the following resolution shall have the same meanings as those defined in the circular of the Company dated 24 March 2025.

SPECIAL RESOLUTION

To consider and approve the proposed amendments to the Articles of Association II;

By order of the Board
Xinjiang Xinxin Mining Industry Co., Ltd.*
Wu Ning, Lam Siu Wing
Joint Company Secretaries

Xinjiang, the PRC
24 March 2025

DCM-1 -

NOTICE OF THE 2025 DOMESTIC SHARE CLASS MEETING

Notes:

Closure of register of members and eligibility for attending the Domestic Share Class Meeting

The register of members of the Company will be closed from Wednesday, 9 April 2025 to Friday, 9 May 2025 (both days inclusive), during which time no share transfers will be registered. Domestic shareholders of the Company whose names appear on the register of members of the Company at the opening of business on Friday, 9 May 2025 are entitled to attend the Domestic Share Class Meeting.

Notice of attendance

Shareholders who intend to attend the Domestic Share Class Meeting should complete and lodge the accompanying reply slip and return it to the Company, on or before 4:30 p.m. on Friday, 18 April 2025. The reply slip may be delivered by hand, by post or by fax to the Company at 6/F, No. 501, Fusion South Road, Cooperation Zone, Economic and Technological Development Zone, Urumqi, Xinjiang. Completion and return of the reply slip does not affect the right of a shareholder of the Company to attend the Domestic Share Class Meeting.

Proxy

Every domestic shareholder of the Company who has the right to attend and vote at the Domestic Share Class Meeting is entitled to appoint one or more proxies, whether or not they are members of the Company, to attend and vote on his behalf at the Domestic Share Class Meeting.

A proxy must be appointed by an instrument in writing and signed by the appointer or his attorney duly authorised in writing. If the appointer is a legal person, then the instrument shall be signed under a legal person's seal or signed by its director or an attorney duly authorised in writing. The instrument appointing the proxy shall be deposited at the Company at 6/F, No. 501, Fusion South Road, Cooperation Zone, Economic and Technological Development Zone, Urumqi, Xinjiang, not less than 24 hours before the time appointed for the holding of the Domestic Share Class Meeting. If the instrument appointing the proxy is signed by a person authorised by the appointer, the power of attorney or other document of authority under which the instrument is signed shall be notarised. The notarised power of attorney or other document of authority shall be deposited together and at the same time with the instrument appointing the proxy to the Company. Return of a form of proxy will not preclude a shareholder of the Company from attending in person and voting at the Domestic Share Class Meeting or at any adjournment thereof if he so wishes.

If more than one proxy is appointed, such proxies shall only be entitled to vote by poll. Shareholders or their proxies are required to produce their identification documents when attending the Domestic Share Class Meeting.

DCM-2 -

NOTICE OF THE 2025 DOMESTIC SHARE CLASS MEETING

Others

Pursuant to Rule 13.39(4) of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules"), all votes at the Domestic Share Class Meeting will be taken by poll and the Company will announce the results of the poll in the manner prescribed under Rule 13.39(5) of the Listing Rules.

The Domestic Share Class Meeting is expected to last for approximately half an hour. Shareholders and their proxies attending the meeting shall be responsible for their own travelling and accommodation expenses.

For identification purposes only

– DCM-3 –

NOTICE OF THE 2025 H SHARE CLASS MEETING

NOTICE IS HEREBY GIVEN that the H share class meeting in 2025 (“H Share Class Meeting”) of Xinjiang Xinxin Mining Industry Co., Ltd. (the “Company”) will be held at 2:00 p.m. on Friday, 9 May 2025 (or immediately after the conclusion of the EGM and Domestic Share Class Meeting or any adjournment thereof) at Conference Room, 6/F, No. 501, Fusion South Road, Cooperation Zone, Economic and Technological Development Zone, Urumqi, Xinjiang, the People’s Republic of China to consider and, if thought fit, approve the following resolutions:

Unless otherwise defined, capitalized terms used in this notice and the following resolution shall have the same meanings as those defined in the circular of the Company dated 24 March 2025.

SPECIAL RESOLUTION

To consider and approve the proposed amendments to the Articles of Association II;

By order of the Board
Xinjiang Xinxin Mining Industry Co., Ltd.*
Wu Ning, Lam Siu Wing
Joint Company Secretaries

Xinjiang, the PRC
24 March 2025

HCM-1 -

NOTICE OF THE 2025 H SHARE CLASS MEETING

Notes:

Closure of register of members and eligibility for attending the H Share Class Meeting

The register of members of the Company will be closed from Wednesday, 9 April 2025 to Friday, 9 May 2025 (both days inclusive), during which time no share transfers will be registered. In order to be eligible to attend the H Share Class Meeting, instruments of transfer accompanied by share certificates and other appropriate documents must be lodged with the Company's H share registrar, Computershare Hong Kong Investor Services Limited at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong no later than 4:30 p.m. on Tuesday, 8 April 2025. H shareholders of the Company whose names appear on the register of members of the Company at the opening of business on Friday, 9 May 2025 are entitled to attend the H Share Class Meeting.

Notice of attendance

Shareholders who intend to attend the H Share Class Meeting should complete and lodge the accompanying reply slip and return it to the Company's H Share registrar, Computershare Hong Kong Investor Services Limited, on or before 4:30 p.m. on Friday, 18 April 2025. The reply slip may be delivered by hand, by post or by fax to the Company at 6/F, No. 501, Fusion South Road, Cooperation Zone, Economic and Technological Development Zone, Urumqi, Xinjiang. Completion and return of the reply slip does not affect the right of a shareholder of the Company to attend the H Share Class Meeting.

Proxy

Every H shareholder of the Company who has the right to attend and vote at the H Share Class Meeting is entitled to appoint one or more proxies, whether or not they are members of the Company, to attend and vote on his behalf at the H Share Class Meeting.

A proxy must be appointed by an instrument in writing and signed by the appointer or his attorney duly authorised in writing. If the appointer is a legal person, then the instrument shall be signed under a legal person's seal or signed by its director or an attorney duly authorised in writing. The instrument appointing the proxy shall be deposited at the Company's H Share registrar, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen's Road East, Wan Chai, Hong Kong, not less than 24 hours before the time appointed for the holding of the H Share Class Meeting. If the instrument appointing the proxy is signed by a person authorised by the appointer, the power of attorney or other document of authority under which the instrument is signed shall be notarised. The notarised power of attorney or other document of authority shall be deposited together and at the same time with the instrument appointing the proxy to the Company. Return of a form of proxy will not preclude a shareholder of the Company from attending in person and voting at the H Share Class Meeting or at any adjournment thereof if he so wishes.

HCM-2 -

NOTICE OF THE 2025 H SHARE CLASS MEETING

Others

Pursuant to Rule 13.39(4) of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules"), all votes at the H Share Class Meeting will be taken by poll and the Company will announce the results of the poll in the manner prescribed under Rule 13.39(5) of the Listing Rules.

The H Share Class Meeting is expected to last for approximately half an hour. Shareholders and their proxies attending the meeting shall be responsible for their own travelling and accommodation expenses.

For identification purposes only

– HCM-3 –

AI assistant

Xinjiang Xinxin Mining Industry Co., Ltd. — Proxy Solicitation & Information Statement 2025

50896_rns_2025-03-24_f593ead8-8954-474c-bb12-cc8bbfbd27d6.pdf

INTRODUCTION

THE EQUITY TRANSFER AGREEMENT

Material Terms of the Equity Transfer Agreement

Parties

Assets to be acquired

Consideration and payment of Consideration

Effective date

Transitional arrangement

Amendments and termination

Basis of Determination of the Consideration

OTHER TRANSACTION DOCUMENTS CONTEMPLATED UNDER THE EQUITY TRANSFER AGREEMENT

MATERIAL TERMS IN THE ARTICLES OF ASSOCIATION OF THE TARGET COMPANY

Matters Requiring Approval of Shareholders Representing More than Two-Thirds of the Total Voting Rights

Composition of the Board of Directors and Appointments of the Chairman and the Vice Chairman

Appointments of the Senior Management

Profit Distribution

Pre-Emption Right and Limitation on Transfer of Equity Interest by Shareholders

INFORMATION OF THE COMPANY AND XINJIANG NON-FERROUS

The Company

Xinjiang Non-ferrous

INFORMATION OF THE TARGET COMPANY

Mineral assets of the Target Company

Karchar Fluorspar Mine

Exploration Licences

Mining Licence

Valuation of the mineral assets of the Target Company

Valuation approach and assumptions

(i) General assumptions

Valuation Results

Financial Information of the Target Company

Further Information of the Target Company and the Karchar Flourspar Mine

No material adverse changes

Land use and other licenses/permits required under the laws

Environmental, social, health and safety issues

Compliance with the PRC laws, regulations and permits

No legal claims or proceedings

Environmental liabilities

Key risks identified in relation to the Karchar Fluorspar Mine

Funding plans for remediation, rehabilitation, and closure and removal of facilities

REASONS FOR AND BENEFITS OF THE ACQUISITION

FINANCIAL IMPACTS OF THE ACQUISITION

Effect on assets and liabilities

Effect on earnings

BOARD APPROVAL

LISTING RULES IMPLICATIONS

INDEPENDENT BOARD COMMITTEE AND APPOINTMENT OF INDEPENDENT FINANCIAL ADVISER

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

EGM AND CLASS MEETINGS

CLOSURE OF REGISTER OF MEMBERS

RECOMMENDATION

GENERAL

Xinjiang Xinxin Mining Industry Co., Ltd.*

MAJOR TRANSACTION AND CONNECTED TRANSACTION IN RELATION TO THE ACQUISITION OF 51% EQUITY INTEREST IN THE TARGET COMPANY

邁時資本

MAJOR TRANSACTION AND CONNECTED TRANSACTION

INTRODUCTION

LISTING RULES IMPLICATIONS

INDEPENDENT BOARD COMMITTEE

OUR INDEPENDENCE

BASIS OF OUR OPINION

PRINCIPAL FACTORS AND REASONS CONSIDERED

1. Background information of the Group

FY2023 vs FY2022

1H2024 vs 1H2023

Total assets

Total liabilities

Liquidity Position

2. Background information of Xinjiang Non-ferrous

3. Background information of the Target Company and the Karchar Fluorspar Mine

3.1 The Target Company

3.2 The Karchar Fluorspar Mine

4. Industry Overview

5. Reasons for and benefits of the Acquisition

6. Principal terms of the Equity Transfer Agreement

7. Assessment of the Consideration

Difference between the Consideration and the Original Purchase Price

Conclusion

Xinjiang Xinxin Mining Industry Co., Ltd. Proxy Solicitation & Information Statement 2025