Annual Report 2018 ZIJIN MINING GROUP CO., LTD
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ANNUAL REPORT 2018 ZIJIN MINING GROUP CO., LTD. Annual Report 2018 1 CONTENTS 2 Corporate Information 5 Financial Highlights 7 Chairman’s Statement 24 Management Discussion and Analysis 40 Brief Biography of Directors, Supervisors and Senior Management 44 Report of the Directors 70 Report of the Independent Directors 74 Report of the Supervisory Committee 80 The Work in the Active Fulfillment of Social Responsibilities 94 Corporate Governance Report 106 Auditor’s Report 114 Consolidated Statement of Financial Position 116 Consolidated Statement of Profit or Loss 118 Consolidated Statement of Changes in Equity 119 Consolidated Statement of Cash Flows 121 Company Statement of Financial Position 123 Company Statement of Profit or Loss 124 Company Statement of Changes in Equity 125 Company Statement of Cash Flows 127 Notes to Financial Statements 2 ZIJIN MINING GROUP CO., LTD. Annual Report 2018 Corporate Information (English translation is for reference only. If there is any discrepancy, Chinese version will prevail.) EXECUTIVE DIRECTORS PRINCIPAL PLACE OF BUSINESS IN HONG KONG Chen Jinghe (Chairman) Unit 7503A, Level 75, International Commerce Centre Lan Fusheng (President) 1 Austin Road West, Kowloon, Hong Kong Zou Laichang Lin Hongfu LEGAL ADDRESS AND PRINCIPAL PLACE OF Fang Qixue BUSINESS IN THE PRC Lin Hongying 1 Zijin Road, Shanghang County, Fujian Province, the PRC NON-EXECUTIVE DIRECTOR LEGAL CONSULTANT OF THE COMPANY Li Jian (HONG KONG LAWS) INDEPENDENT NON-EXECUTIVE DIRECTORS Chungs Lawyers Lu Shihua AUDITORS Zhu Guang Sit Hoi Wah, Kenneth PRC Auditors: Cai Meifeng Ernst & Young Hua Ming LLP AUDIT AND INTERNAL CONTROL COMMITTEE HONG KONG H SHARE REGISTRAR AND Lu Shihua TRANSFER OFFICE Lan Fusheng Computershare Hong Kong Investor Services Limited Li Jian Shops 1712-1716, 17th Floor, Hopewell Centre Zhu Guang 183 Queen’s Road East, Wanchai, Hong Kong Sit Hoi Wah, Kenneth Cai Meifeng WEBSITE AUTHORISED REPRESENTATIVE www.zjky.cn Chen Jinghe STOCK CODE Lan Fusheng Hong Kong Stock Exchange: 02899 SUPERVISORS Shanghai Stock Exchange: 601899 Lin Shuiqing Xu Qiang Fan Wensheng Liu Wenhong Lan Liying COMPANY SECRETARY Fan Cheung Man ZIJIN MINING GROUP CO., LTD. Annual Report 2018 3 Corporate Information (continued) (English translation is for reference only. If there is any discrepancy, Chinese version will prevail.) DEFINITION In this report, unless otherwise indicated in the context, the following expressions have the meanings set out below: A Share(s) The domestic share(s) issued by the Company to domestic investors with a nominal value of RMB0.10 each, which are listed on the Shanghai Stock Exchange BNL Barrick (Niugini) Limited, a company under joint operation of the Company Board, Board of Directors The board of Directors of the Company Chongli Zijin Chongli Zijin Mining Company Limited Company, Zijin, Zijin Mining Zijin Mining Group Co., Ltd.* CSRC China Securities Regulatory Commission Director(s) The director(s) of the Company DR Congo The Democratic Republic of the Congo H Share(s) The overseas-listed foreign invested share(s) in the Company’s share capital, with a nominal value of RMB0.10 each, which are listed on the Hong Kong Stock Exchange Heilongjiang Zijin Copper Heilongjiang Zijin Copper Company Limited, a wholly-owned subsidiary of the Company Hong Kong Stock Exchange, The Stock Exchange of Hong Kong Limited Stock Exchange Listing Rules The Rules Governing the Listing of Securities on the Hong Kong Stock Exchange Longxing Company Russia Longxing Company Limited, a subsidiary of the Company Minxi Xinghang Minxi Xinghang State-owned Assets Investment Company Limited, a substantial shareholder of the Company Musonoie La Compagnie Minière de Musonoie Global SAS, a subsidiary of the Company Nevsun, Nevsun Resources Nevsun Resources Ltd., a subsidiary of the Company and delisted in March 2019 Nkwe Nkwe Platinum Limited, a subsidiary of the Company Norton, Norton Gold Fields Norton Gold Fields Limited, a wholly-owned subsidiary of the Company PRC The People’s Republic of China but for the purpose of this report, excludes Hong Kong SAR, Macau SAR and Taiwan RTB Bor Group, Bor Copper Rudarsko-Topioničarski Basen RTB Bor Doo, changed its name to Zijin Bor Copper Doo Bor after the acquisition, a subsidiary of the Company Supervisor(s) The supervisor(s) of the Company Wulatehouqi Zijin Wulatehouqi Zijin Mining Company Limited, a subsidiary of the Company Xinjiang Ashele Copper, Xinjiang Habahe Ashele Copper Company Limited, a subsidiary of the Company Xinjiang Ashele, Ashele Xinjiang Zijin Non-ferrous Xinjiang Zijin Non-ferrous Metals Company Limited, a wholly-owned subsidiary of the Company ZGC JV Zeravshan LLC, a subsidiary of the Company Zijin Copper Zijin Copper Company Limited, a wholly-owned subsidiary of the Company Zijin Tongguan Xiamen Zijin Tongguan Investment Development Company Limited, a subsidiary of the Company 4 ZIJIN MINING GROUP CO., LTD. Annual Report 2018 Corporate Information (continued) (English translation is for reference only. If there is any discrepancy, Chinese version will prevail.) GENERAL Zijin Mining Group Company Limited* (formerly known as Fujian Zijin Mining Industry Company Limited*) was incorporated on 6 September 2000 with the approval of the People’s Government of Fujian Province as a joint stock limited company in the People’s Republic of China by Minxi Xinghang State-owned Assets Investment Company Limited, Shanghang County Jinshan Trading Company Limited, Xinhuadu Industrial Group Company Limited, Fujian Xinhuadu Engineering Company Limited, Xiamen Hengxing Group Company Limited, Fujian Xinhuadu Department Store Company Limited, Fujian Gold Group Company Limited and Fujian Minxi Geologist as its promoters. In December 2003, the Company was listed on The Stock Exchange of Hong Kong Limited. The Company was the first Mainland gold production enterprise listed overseas. In 2004, 2005, 2006 and 2007, for 4 consecutive years the Company applied reserves to issue new shares, and in April 2008, the Company issued 1.4 billion A Shares at RMB7.13 per share and was listed on the Shanghai Stock Exchange on 25 April 2008 at a nominal value of RMB0.1 each. Pursuant to a resolution in relation to the proposal of conversion of capital reserve into share capital passed at the 2010 annual general meeting, on the basis of 5 new shares for every 10 existing shares, additional 7,270,654,550 shares were issued on the basis of total 14,541,309,100 issued shares at the end of 2010. After the conversion, the total number of shares increased to 21,811,963,650 shares. The Company implemented repurchase of H Shares from 21 August 2013 to 13 January 2016 and repurchased 271,220,000 H Shares in total. The shares repurchased mentioned above were cancelled. The total number of shares of the Company decreased by 271,220,000, and the registered capital decreased by RMB27,122,000. After the deduction, the total number of shares of the Company was 21,540,743,650, and the registered capital was RMB2,154,074,365. The Company issued 1,490,475,241 Renminbi-denominated ordinary A Shares under non-public issuance in 2017. The registered capital increased by RMB149,047,524.1. The registered capital of the Company correspondingly changed to RMB2,303,121,889.1. As at 31 December 2018, the registered capital of the Company was RMB2,303,121,889.1 comprising 5,736,940,000 H Shares, representing about 24.91% of the total issued shares, and 17,294,278,891 A Shares, representing about 75.09% of the total issued shares. The Company and its subsidiaries (the “Group”) are mainly engaged in the exploration and mining of gold, copper, zinc and other metal mineral resources, supplemented by refining, processing and sales of related products. Exploitation of gold, copper and zinc mineral resources is the core component of the Group’s business. The Group also covers refining and processing businesses to an optimal extent, as well as other mining-related businesses such as research and development, construction, trade and finance, etc. As at the end of 2018, the Group owned 195 exploration rights covering a total area of 2,279.90 square kilometres and 233 mining rights covering a total area of 874.45 square kilometres. This report is published in both Chinese and English. In case of any discrepancies, the Chinese version shall prevail over its English version. ZIJIN MINING GROUP CO., LTD. Annual Report 2018 5 Financial Highlights (English translation is for reference only. If there is any discrepancy, Chinese version will prevail.) In this annual report, unless otherwise stated, monetary units are denominated in Renminbi (“RMB”). 2014 TO 2018 FINANCIAL INFORMATION AS PREPARED IN ACCORDANCE WITH CHINA ACCOUNTING STANDARDS FOR BUSINESS ENTERPRISES (“CAS”) AND THE RELATED LAWS AND REGULATIONS: For the year ended 31 December RMB 2018 2017 2016 2015 2014 OPERATING INCOME 105,994,246,123 94,548,619,098 78,851,137,811 74,303,573,739 58,760,533,928 Less: Operating costs 92,651,374,475 81,371,973,684 69,782,246,837 68,007,729,583 50,881,767,555 Taxes and surcharges 1,598,995,649 1,352,340,359 907,955,846 809,662,007 838,416,174 Selling expenses 887,451,338 748,942,449 667,483,736 691,861,398 905,512,920 Administrative expenses 2,964,964,865 2,694,689,753 2,627,244,848 2,367,776,482 2,078,925,245 Research and development expenses 274,380,222 299,380,476 195,227,412 252,964,144 96,198,991 Financial expenses 1,254,241,143 2,012,950,292 581,525,541 945,668,268 767,954,016 Impairment losses on assets 1,500,399,230 2,220,905,893 560,842,460 470,685,123