Jinchuan Golden Ocean Capital Limited (The "Issuer") (Incorporated in Hong Kong with Limited Liability)

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, 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 announcement.

This announcement appears for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for securities or an invitation to enter into any agreement to do any such things, nor is it calculated to invite any offer to acquire, purchase or subscribe for any securities.

This announcement and the listing document referred to herein have been published for information purposes only as required by the Listing Rules and do not constitute an offer to sell nor a solicitation of an offer to buy any securities. Neither this announcement nor anything referred to herein (including the listing document) forms the basis for any contract or commitment whatsoever. For the avoidance of doubt, the publication of this announcement and the listing document referred to herein shall not be deemed to be an offer of securities made pursuant to a prospectus issued by or on behalf of the issuer for the purposes of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong nor shall it constitute an advertisement, invitation or document containing an invitation to the public to enter into or offer to enter into an agreement to acquire, dispose of, subscribe for or underwrite securities for the purposes of the Securities and Futures Ordinance (Cap. 571) of Hong Kong.

The material contained in this announcement is not for distribution or circulation, directly or indirectly, in or into the United States. This announcement is solely for the purpose of reference and does not constitute an offer to sell or the solicitation of an offer to buy any securities in the United States or any other jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. The securities referred to herein have not been and will not be registered under the United States Securities Act of 1933, as amended (the “Securities Act”), and may not be offered or sold within the United States, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Accordingly, the securities offer are being offered and sold only outside the United States in offshore transaction in compliance with Regulation S under the Securities Act.

Notice to Hong Kong investors: The Issuer and the Guarantor confirm that with respect to the Hong Kong market, the Bonds are intended for purchase by professional investors only (as defined in Chapter 37 of the Rules Governing the Listing of Securities on the Hong Kong Stock Exchange) and have been listed on the Hong Kong Stock Exchange on that basis. Accordingly, each the Issuer and the Guarantor confirm that the Bonds are not appropriate as an investment for retail investors in Hong Kong. Investors should carefully consider the risks involved.

Jinchuan Golden Ocean Capital Limited (the "Issuer") (incorporated in Hong Kong with limited liability)

U.S.$280,000,000 4.0 per cent. Guaranteed Bonds due 2024 (the "Bonds") (Stock Code: 40597)

unconditionally and irrevocably guaranteed by

Jinchuan Group Co., Ltd. (the "Guarantor") (incorporated in the People’s Republic of China with limited liability)

This announcement is issued pursuant to Rule 37.39A of the Rules Governing the Listing of Securities (the "Listing Rules") on The Stock Exchange of Hong Kong Limited (the "Hong Kong Stock Exchange"). Please refer to the offering circular dated 4 February 2021 (the "Offering Circular") appended hereto in relation to the Bonds. As disclosed in the Offering Circular, the Bonds to be issued will be intended for purchase by professional investors only (as defined in Chapter 37 of the Listing Rules) and will be listed on the Hong Kong Stock Exchange on that basis. The Offering Circular does not constitute a prospectus, notice, circular, brochure or advertisement offering to sell any securities to the public in any jurisdiction, nor is it an invitation to the public to make offers to subscribe for or purchase any securities, nor is it circulated to invite offers by the public to subscribe for or purchase any securities.

11 February 2021

As at the date of this announcement, the directors of the Issuer are Mr. GAO Tianpeng, Mr. WANG Jinxing and Mr. WANG Guohu.

As at the date of this announcement, the directors of the Guarantor are Mr. WANG Yongqian, Mr. XIU Jun, Mr. LI Shangyong, Mr. ZHANG Sanlin, Mr. SHI Guomin, Mr. ZHANG Xiaolei, Mr. LIU Wanxiang, Mr. CUI Siming, Mr. ZHAO Zhongwei, Mr. MA Yongyi and Mr. ZHAO Qinghua. IMPORTANT NOTICE

NOT FOR DISTRIBUTION IN THE UNITED STATES.

IMPORTANT: You must read the following disclaimer before continuing. The following disclaimer applies to the offering circular (the “Offering Circular”) attached to this e-mail. You are advised to read this disclaimer carefully before accessing, reading or making any other use of the Offering Circular. In accessing the Offering Circular, you agree to be bound by the following terms and conditions, including any modifications to them from time to time, each time you receive any information as a result of such access. You acknowledge that the access to the Offering Circular is intended for use by you only and you agree you will not forward or otherwise provide access to any other person.

NOTHING IN THIS ELECTRONIC TRANSMISSION CONSTITUTES AN OFFER OF SECURITIES FOR SALE IN THE UNITED STATES OR ANY OTHER JURISDICTION WHERE IT IS UNLAWFUL TO DO SO.

THE SECURITIES AND THE GUARANTEE THEREOF DESCRIBED THEREIN HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR OTHER JURISDICTION AND THE SECURITIES MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES, EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE OR LOCAL SECURITIES LAWS. THIS OFFERING IS MADE SOLELY IN OFFSHORE TRANSACTIONS PURSUANT TO REGULATION S UNDER THE SECURITIES ACT.

THE OFFERING CIRCULAR MAY NOT BE FORWARDED OR DISTRIBUTED TO ANY OTHER PERSON AND MAY NOT BE REPRODUCED IN ANY MANNER WHATSOEVER AND, IN PARTICULAR, MAY NOT BE FORWARDED TO ANY ADDRESS IN THE UNITED STATES. ANY FORWARDING, DISTRIBUTION OR REPRODUCTION OF THE OFFERING CIRCULAR IN WHOLE OR IN PART IS UNAUTHORISED. FAILURE TO COMPLY WITH THIS DIRECTIVE MAY RESULT IN A VIOLATION OF THE SECURITIES ACT OR THE APPLICABLE LAWS OF OTHER JURISDICTIONS.

Singapore Securities and Futures Act Product Classification – Solely for the purposes of its obligations pursuant to sections 309B(1)(a) and 309B(1)(c) of the Securities and Futures Act (Chapter 289 of Singapore), as modified or amended from time to time (the “SFA”), the Issuer has determined, and hereby notifies all relevant persons (as defined in Section 309A of the SFA) that the securities described therein are “prescribed capital markets products” (as defined in the Securities and Futures (Capital Markets Products) Regulations 2018).

Confirmation of Your Representation: You have accessed the attached document on the basis that you have confirmed to Jinchuan Golden Ocean Capital Limited (金川金海資本有限公司) (the “Issuer”), Jinchuan Group Co., Ltd. (金川集團股份有限公司) (the “Guarantor”) and Morgan Stanley & Co. International plc, BOCOM International Securities Limited, BNP Paribas, CCB International Capital Limited, China Minsheng Banking Corp., Ltd., Hong Kong Branch, China Securities (International) Corporate Finance Company Limited, CNCB (Hong Kong) Capital Limited, Industrial Bank Co., Ltd., Hong Kong Branch, Shanghai Pudong Development Bank Co., Ltd., Hong Kong Branch, SPDB International Capital Limited, Standard Chartered Bank and Zhongtai International Securities Limited (together, the “Joint Lead Managers”) that (1) you and any customers you represent are not in the United States, (2) the e-mail address that you gave us and to which this e-mail has been delivered is not located in the United States, and (3) you consent to delivery of this document by electronic transmission, and (4) to the extent you purchase the securities described in the attached document, you will be doing so in an offshore transaction as defined in Regulation S under the Securities Act in compliance with Regulation S thereunder.

The Offering Circular has been made available to you in electronic form. You are reminded that documents transmitted via this medium may be altered or changed during the process of transmission and consequently none of the Joint Lead Managers or any of their respective affiliates, directors, officers, employees, representatives, agents and each person who controls any of them or we accept any liability or responsibility whatsoever in respect of any such alteration or change to the Offering Circular distributed to you in electronic format or any difference between the Offering Circular distributed to you in electronic format and the hard copy version.

Restrictions: Nothing in this electronic transmission constitutes, and may not be used in connection with, an offer or an invitation by or on behalf of any of the Joint Lead Managers or us to subscribe for or purchase any of the securities described therein in any place where offers or solicitations are not permitted by law, and access has been limited so that it shall not constitute in the United States or elsewhere directed selling efforts (within the meaning of Regulation S under the Securities Act). If a jurisdiction requires that the offering be made by a licensed broker or dealer and any Joint Lead Manager or any affiliate or a Joint Lead Manager is a licensed broker or dealer in that jurisdiction, the offering shall be deemed to be made by that Joint Lead Manager or such affiliate on behalf of us in such jurisdiction. Any securities to be issued in respect thereof will not be registered under the Securities Act and may not be offered or sold in the United States unless registered under the Securities Act or pursuant to an exemption from such registration. Access has been limited so that it shall not constitute a general solicitation in the United States or elsewhere. If you have gained access to this transmission contrary to the foregoing restrictions, you will be unable to purchase any of the securities described therein.

This Offering Circular is being furnished in connection with an offering in offshore transactions outside the United States in compliance with Regulation S under the Securities Act solely for the purpose of enabling a prospective investor to consider the purchase of the securities described in the Offering Circular. You are reminded that the information in the attached Offering Circular is not complete and may be changed.

You are reminded that you have accessed the Offering Circular on the basis that you are a person into whose possession the Offering Circular may be lawfully delivered in accordance with the laws of the jurisdiction in which you are located.

Actions that You May Not Take: If you receive the Offering Circular by e-mail, you should not reply by e-mail to the Offering Circular, and you may not purchase any securities by doing so. Any reply e-mail communications, including those you generate by using the “Reply” function on your e-mail software, will be ignored or rejected.

You are responsible for protecting against viruses and other destructive items. Your use of this e-mail is at your own risk and it is your responsibility to take precautions to ensure that it is free from viruses and other items of a destructive nature. JINCHUAN GOLDEN OCEAN CAPITAL LIMITED (金川金海資本有限公司) (incorporated with limited liability in Hong Kong)

U.S.$280,000,000 4.0 PER CENT. GUARANTEED BONDS DUE 2024 Unconditionally and Irrevocably Guaranteed by

JINCHUAN GROUP CO., LTD. (金川集團股份有限公司) (incorporated with limited liability in the People’s Republic of China) Issue Price: 100.0 per cent.

The U.S.$280,000,000 4.0 per cent. Guaranteed Bonds due 2024 (the “Bonds”) will be issued by Jinchuan Golden Ocean Capital Limited (金川金海資本有限公司) (the “Issuer”) and will be unconditionally and irrevocably guaranteed (the “Guarantee”) by Jinchuan Group Co., Ltd. (金川集團股份有限公司) (the “Guarantor”). The Issuer is an indirect wholly-owned subsidiary of the Guarantor. The Bonds will constitute direct, unsubordinated, unconditional and (subject to Condition 4(a) of the terms and conditions of the Bonds (the “Terms and Conditions of the Bonds”)) unsecured obligations of the Issuer and shall at all times rank pari passu and without any preference or priority among themselves. The payment obligations of the Issuer under the Bonds shall, save for such exceptions as may be provided by applicable legislation and subject to Condition 4 of the Terms and Conditions of the Bonds, at all times rank at least equally with all its other present and future unsecured and unsubordinated obligations. The Bonds will bear interest on their outstanding principal amount from and including 10 February 2021 at the rate of 4.0 per cent. per annum. Interest will be payable semi-annually in arrear in equal instalments on 10 February and 10 August in each year, commencing on 10 August 2021. All payments of principal, premium and interest by or on behalf of the Issuer or the Guarantor in respect of the Bonds or under the Guarantee shall be made free and clear of, and without withholding or deduction for or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or within Hong Kong or the PRC or any political subdivision or any authority therein or thereof having power to tax unless such withholding or deduction is required by law, to the extent described in “Terms and Conditions of the Bonds – Taxation”. Where such withholding or deduction is made by the Issuer or, as the case may be, the Guarantor by or within the PRC up to and including the rate applicable on 4 February 2021 (the “Applicable Rate”), the Issuer or, as the case may be, the Guarantor will increase the amounts paid by it to the extent required, so that the net amount received by Bondholders equals the amount which would otherwise have been receivable by them had no such withholding or deduction been required. If the Issuer or, as the case may be, the Guarantor, is required to make any deduction or withholding (a) by or within the PRC in excess of the Applicable Rate or (b) by or within Hong Kong, then the Issuer or, as the case may be, the Guarantor, shall pay such additional amounts (“Additional Tax Amounts”) as will result in receipt by the Bondholders of such amounts as would have been received by them had no such withholding or deduction been required, except that no Additional Tax Amounts shall be payable in respect of any Bond (or the Guarantee, as the case may be) in the circumstances set out in Condition 8 of the Terms and Conditions of the Bonds. The Guarantor has made application for the pre-issuance registration (the “Pre-Issuance Registration”) of the offering of the Bonds with the National Development and Reform Commission (the “NDRC”) in accordance with the Notice on Promoting the Administrative Reform of the Filing and Registration System for Issuance of Foreign Debt by Enterprises (Fa Gai Wai Zi [2015] No. 2044) (國家發展改革委關於推進企業發行外債備案登記制管理改革的通知)(發改外資[2015]2044號) (the “NDRC Notice”) issued by the NDRC which took effect on 14 September 2015. The Guarantor has received an Enterprise Foreign Debt Pre-Issuance Registration Certificate dated 30 April 2020 from the NDRC (the “NDRC Certificate”) with respect to the Pre-Issuance Registration and as at the date of this Offering Circular, the NDRC Certificate remains valid and in full force and effect. Pursuant to the requirements of the NDRC Notice, the Guarantor will be required to file or cause to be filed with the NDRC the requisite information and documents in respect of the issue of the Bonds within 10 Registration Business Days (as defined in “Terms and Conditions of the Bonds”) from the Issue Date (as defined below). The Guarantor will enter into a deed of guarantee (the “Deed of Guarantee”) on or about 10 February 2021 (the “Issue Date”). The Guarantor will be required to file or cause to be filed with the State Administration of Foreign Exchange (“SAFE”) the Deed of Guarantee within 15 Registration Business Days after execution of the Deed of Guarantee in accordance with the Provisions on the Foreign Exchange Administration of Cross-Border Guarantees (跨境擔保外匯管理規定) promulgated by SAFE on 12 May 2014 which came into effect on 1 June 2014 (the “Cross-Border Security Registration”). The Guarantor intends to complete the Cross-Border Security Registration with SAFE as soon as practicable and in any event before the Registration Deadline (being 100 Registration Business Days after the Issue Date) and comply with all applicable PRC laws and regulations in relation to the Guarantee. Unless previously redeemed, or purchased and cancelled, the Bonds will be redeemed at their principal amount on 10 February 2024. The Bonds may be redeemed at the option of the Issuer in whole, but not in part, at their principal amount, (together with interest accrued up to but excluding the date fixed for redemption) in the event of certain changes affecting taxes of Hong Kong or the PRC as described under “Terms and Conditions of the Bonds – Redemption and Purchase – Redemption for Taxation Reasons”. At any time following the occurrence of a Change of Control or a No Registration Event (each as defined in “Terms and Conditions of the Bonds”), the holder of any Bond will have the right, at such holder’s option, to require the Issuer to redeem all but not some only of that holder’s Bonds on the Put Settlement Date (as defined in the Terms and Conditions of the Bonds) at 101 per cent. (in the case of a redemption for a Change of Control) or 100 per cent. (in the case of a redemption for a No Registration Event) of their principal amount, together with accrued interest up to but excluding such Put Settlement Date. See “Terms and Conditions of the Bonds – Redemption and Purchase – Redemption for Relevant Events”. The Bonds will be issued in denominations of U.S.$200,000 and integral multiples of U.S.$1,000 in excess thereof. Singapore Securities and Futures Act Product Classification – Solely for the purposes of its obligations pursuant to sections 309B(1)(a) and 309B(1)(c) of the Securities and Futures Act (Chapter 289 of Singapore), as modified or amended from time to time (the “SFA”), the Issuer has determined, and hereby notifies all relevant persons (as defined in Section 309A of the SFA) that the Bonds are “prescribed capital markets products” (as defined in the Securities and Futures (Capital Markets Products) Regulations 2018). Investing in the Bonds involves risks. See “Risk Factors” beginning on page 11 for a discussion of certain factors to be considered in connection with an investment in the Bonds. The Bonds and the Guarantee have not been and will not be registered under the United States Securities Act of 1933, as amended (the “Securities Act”) and, subject to certain exceptions, may not be offered, sold or delivered within the United States. The Bonds and the Guarantee are being offered in offshore transactions outside the United States in reliance on Regulation S of the Securities Act (“Regulation S”). For a description of these and certain further restrictions on offers and sales of the Bonds and the Guarantee and distribution of this Offering Circular, see “Subscription and Sale”. Application will be made to The Stock Exchange of Hong Kong Limited (the “HKSE”) for the listing of the Bonds by way of debt issues to professional investors (as defined in Chapter 37 of the Rules Governing the Listing of Securities on the HKSE) (the “Professional Investors”) only and such permission is expected to become effective on 11 February 2021. This document is for distribution to Professional Investors only. Notice to Hong Kong investors: The Issuer and the Guarantor confirm that the Bonds are intended for purchase by Professional Investors only and will be listed on The Stock Exchange of Hong Kong Limited on that basis. Accordingly, the Issuer and the Guarantor confirm that the Bonds are not appropriate as an investment for retail investors in Hong Kong. Investors should carefully consider the risks involved. The HKSE has not reviewed the contents of this document, other than to ensure that the prescribed form disclaimer and responsibility statements, and a statement limiting distribution of this document to Professional Investors only have been reproduced in this document. Listing of the Bonds on the HKSE is not to be taken as an indication of the commercial merits or credit quality of the Bonds, the Issuer, the Guarantor, the Group or the quality of disclosure in this document. Hong Kong Exchanges and Clearing Limited and the HKSE take no responsibility for the contents of this document, 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 document. This document includes particulars given in compliance with the Rules Governing the Listing of Bonds on The Stock Exchange of Hong Kong Limited for the purpose of giving information with regard to the Issuer and the Guarantor. The Issuer and the Guarantor accept full responsibility for the accuracy of the information contained in this document and confirm, 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 herein misleading. The Bonds will be represented by beneficial interests in a global certificate (the “Global Certificate”) in registered form, which will be registered in the name of a nominee for, and shall be deposited on or about the Issue Date with, a common depositary for Euroclear Bank SA/NV (“Euroclear”) and Clearstream Banking S.A. (“Clearstream”). Beneficial interests in the Global Certificate will be shown on, and transfers thereof will be effected only through, records maintained by Euroclear and Clearstream. Except as described in the Global Certificate, certificates for Bonds will not be issued in exchange for interests in the Global Certificate. The Bonds are expected to be assigned a rating of BBB- by Fitch Ratings (“Fitch”). The rating does not constitute a recommendation to buy, sell or hold the Bonds and may be subject to suspension, reduction or withdrawal at any time by Fitch. A suspension, reduction or withdrawal of the rating assigned to the Bonds may adversely affect the market price of the Bonds.

Joint Global Coordinators, Joint Bookrunners and Joint Lead Managers Morgan Stanley BOCOM International

Joint Bookrunners and Joint Lead Managers BNP PARIBAS CCB International China Minsheng Banking China Securities Corp., Ltd., Hong Kong International Branch CNCB Capital Industrial Bank Shanghai SPDB Standard Zhongtai Co., Ltd. Pudong International Chartered Bank International Hong Kong Development Branch Bank Hong Kong Branch

Offering Circular dated 4 February 2021 IMPORTANT NOTICE

THIS OFFERING CIRCULAR DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE THE OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS OFFERING CIRCULAR NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES IMPLY THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE ISSUER, THE GUARANTOR OR ANY OF THEIR RESPECTIVE SUBSIDIARIES OR THAT THE INFORMATION SET FORTH IN THIS OFFERING CIRCULAR IS CORRECT AS AT ANY DATE SUBSEQUENT TO THE DATE HEREOF.

Hong Kong Exchanges and Clearing Limited and the HKSE take no responsibility for the contents of this Offering 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 Offering Circular. This Offering Circular includes particulars given in compliance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited for the purpose of giving information with regard to the Issuer, the Guarantor and the Guarantor and its subsidiaries taken as a whole (collectively, the “Group”). The Issuer and the Guarantor accept full responsibility for the accuracy of the information contained in this Offering Circular and confirm, 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 herein misleading. Investors are advised to read and understand the contents of the Offering Circular before investing. If in doubt, investors should consult their advisors.

Each of the Issuer and the Guarantor, having made all reasonable enquiries, confirms that (i) this Offering Circular contains all information with respect to the Issuer, the Guarantor, the Group, and to the Guarantee and the Bonds, which is material in the context of the issue and offering of the Bonds (including all information required by applicable laws and the relevant rules and regulations imposed by the HKSE and the information which, according to the particular nature of the Issuer, the Guarantor, the Group, the Guarantee and the Bonds, is necessary to enable investors and their investment advisors to make an informed assessment of the assets and liabilities, financial position, profits and losses, and prospects of the Issuer, the Guarantor and the Group and the rights attaching to the Guarantee and the Bonds); (ii) the statements contained in this Offering Circular relating to the Issuer, the Guarantor and the Group, are in every material particular true and accurate and not misleading in any material respect and do not omit to state a material fact necessary in order to make the statements herein, in the light of the circumstances under which they were made, not misleading; (iii) the opinions and intentions expressed in this Offering Circular are honestly held, have been reached after considering all relevant circumstances and are based on reasonable assumptions; (iv) there are no other facts in relation to the Issuer, the Guarantor, the Group, or the Guarantee or the Bonds, the omission of which would, in the context of the issue and offering of the Bonds, make any statement in this Offering Circular misleading in any material respect; and (v) all reasonable enquiries have been made by the Issuer and the Guarantor to ascertain such facts and to verify the accuracy of all such information and statements in this Offering Circular.

The Issuer and the Guarantor have prepared this Offering Circular solely for use in connection with the proposed offering of the Bonds and giving of the Guarantee described in this Offering Circular. The distribution of this Offering Circular and the offering of the Bonds in certain jurisdictions may be restricted by law. Persons into whose possession this Offering Circular comes are required by the Issuer, the Guarantor and Morgan Stanley & Co. International plc, BOCOM International Securities Limited, BNP Paribas, CCB International Capital Limited, China Minsheng Banking Corp., Ltd., Hong Kong Branch, China Securities (International) Corporate Finance Company Limited, CNCB (Hong Kong) Capital Limited, Industrial Bank Co., Ltd., Hong Kong Branch, Shanghai Pudong Development Bank Co., Ltd., Hong Kong Branch, SPDB International Capital Limited, Standard Chartered Bank and Zhongtai International Securities Limited (the “Joint Lead Managers”) to inform themselves about and to observe any such restrictions. No action is being taken to permit a public offering of the Bonds or the distribution of this Offering Circular in any jurisdiction where action would be required for such purposes. There are restrictions on the offer and sale of the Bonds and the Guarantor giving the Guarantee, and the circulation

–i– of documents relating thereto, in certain jurisdictions and to persons connected therewith. For a description of certain further restrictions on offers and sales of the Bonds and the Guarantee and distribution of this Offering Circular, see “Subscription and Sale”.

No person has been or is authorised to give any information or to make any representation not contained in or not consistent with this Offering Circular or any information supplied by the Issuer and the Guarantor or such other information as is in the public domain and, if given or made, any such other information or representation should not be relied upon as having been authorised by the Issuer, the Guarantor, the Joint Lead Managers, the Trustee, the Agents (as defined in the “Terms and Conditions of the Bonds”) or any of their respective directors, officers, employees, affiliates, representatives, agents or advisors, or any person who controls any of them. Neither the delivery of this Offering Circular nor any offering, sale or delivery made in connection with the issue of the Bonds shall, under any circumstances, constitute a representation that there has been no change or development reasonably likely to involve a change in the affairs of the Issuer, the Guarantor or the Group since the date hereof or create any implication that the information contained herein is correct as at any date subsequent to the date hereof.

None of the Joint Lead Managers, the Trustee, the Agents or any of their respective directors, officers, employees, affiliates, representatives, agents or advisors, or any person who controls any of them, has independently verified the information contained in this Offering Circular. Accordingly, no representation, warranty or undertaking, express or implied, is made or given and no responsibility or liability is accepted, by the Joint Lead Managers, the Trustee, the Agents or any of their respective directors, officers, employees, affiliates, representatives, agents or advisors, or any person who controls any of them, as to the accuracy, completeness or sufficiency of the information contained in this Offering Circular and nothing contained in this Offering Circular is, or shall be relied upon as, a promise, representation or warranty by the Joint Lead Managers, the Trustee, the Agents, or any of their respective directors, officers, employees, affiliates, representatives, agents, or advisors, or any person who controls any of them. This Offering Circular is not intended to provide the basis of any credit or other evaluation nor should it be considered as a recommendation by any of the Issuer, the Guarantor, the Joint Lead Managers, the Trustee or the Agents, or any of their respective directors, officers, employees, affiliates, representatives, agents or advisors, or any person who controls any of them, that any recipient of this Offering Circular should purchase the Bonds. Each person receiving this Offering Circular acknowledges that such person has not relied on the Joint Lead Managers, the Trustee, the Agents or any of their respective directors, officers, employees, affiliates, representatives, agents or advisors, or any person who controls any of them, in connection with its investigation of the accuracy of such information or its investment decision, and each such person must rely on its own examination of the Issuer, the Guarantor and the Group, and the merits and risks involved in investing in the Bonds. See “Risk Factors” for a discussion of certain factors to be considered in connection with an investment in the Bonds.

To the fullest extent permitted by law, none of the Joint Lead Managers, the Trustee, the Agents or any of their respective directors, officers, employees, affiliates, representatives, agents or advisors, or any person who controls any of them, accepts any responsibility for the contents of this Offering Circular or for any other statement made or purported to be made by a Joint Lead Manager, the Trustee or an Agent, or any of their respective directors, officers, employees, affiliates, representatives, agents or advisors, or any person who controls any of them, in connection with the Issuer, the Guarantor, the Group, the issue and offering of the Bonds or the giving of the Guarantee. Each of the Joint Lead Managers, the Trustee, the Agents and any of their respective directors, officers, employees, affiliates, representatives, agents or advisors, or any person who controls any of them, accordingly disclaims all and any liability, whether arising in tort or contract or otherwise, which it might otherwise have in respect of this Offering Circular or any such statement. None of the Joint Lead Managers, the Trustee, the Agents or any of their respective directors, officers, employees, affiliates, representatives, agents or advisors, or any person who controls any of them undertakes to review the financial condition or affairs of the Issuer, the Guarantor or the Group during the life of the arrangements contemplated by this Offering Circular nor to advise any investor or potential investor in the Bonds of any information coming to the attention of the Joint Lead Managers, the Trustee or the Agents or any of their respective directors, officers, employees, affiliates, representatives, agents or advisors, or any person who controls any of them.

–ii– The appointment of the Trustee and the Agents is conditional on successful completion of China Construction Bank (Asia) Corporation Limited’s KYC procedures.

Singapore Securities and Futures Act Product Classification – Solely for the purposes of its obligations pursuant to sections 309B(1)(a) and 309B(1)(c) of the Securities and Futures Act (Chapter 289 of Singapore), as modified or amended from time to time (the “SFA”), the Issuer has determined, and hereby notifies all relevant persons (as defined in Section 309A of the SFA) that the Bonds are “prescribed capital markets products” (as defined in the Securities and Futures (Capital Markets Products) Regulations 2018).

IN CONNECTION WITH THIS OFFERING, ANY OF THE JOINT LEAD MANAGERS ACTING AS STABILISATION MANAGER (THE “STABILISATION MANAGER”), OR ANY PERSON ACTING ON BEHALF OF THE STABILISATION MANAGER, MAY OVER-ALLOT BONDS OR EFFECT TRANSACTIONS WITH A VIEW TO SUPPORTING THE MARKET PRICE OF THE BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL. HOWEVER, THERE CAN BE NO ASSURANCE THAT THE STABILISATION MANAGER (OR PERSONS ACTING ON BEHALF OF THE STABILISATION MANAGER) WILL UNDERTAKE A STABILISATION ACTION. ANY STABILISATION ACTION MAY BEGIN ON OR AFTER THE DATE ON WHICH ADEQUATE PUBLIC DISCLOSURE OF THE TERMS OF THE OFFER OF THE BONDS IS MADE AND, IF BEGUN, MAY BE ENDED AT ANY TIME, BUT IT MUST END NO LATER THAN THE EARLIER OF 30 DAYS AFTER THE ISSUE OF THE BONDS AND 60 DAYS AFTER THE DATE OF THE ALLOTMENT OF THE BONDS. ANY STABILISATION ACTION OR OVER-ALLOTMENT MUST BE CONDUCTED BY THE STABILISATION MANAGER (OR PERSONS ACTING ON BEHALF OF THE STABILISATION MANAGER) IN ACCORDANCE WITH ALL APPLICABLE LAWS AND RULES.

This Offering Circular is provided solely for the purpose of enabling the recipient to consider purchasing the Bonds. The investors or prospective investors should read this Offering Circular carefully before making a decision regarding whether or not to purchase the Bonds. This Offering Circular cannot be used for any other purpose and any information in this Offering Circular cannot be disclosed to any other person. This Offering Circular is personal to each prospective investor and does not constitute an offer to any other person or to the public generally to purchase or otherwise acquire the Bonds.

This Offering Circular summarises certain material documents and other information, and the Issuer, the Guarantor and the Joint Lead Managers refer the recipient of this Offering Circular to them for a more complete understanding of what is contained in this Offering Circular. None of the Issuer, the Guarantor, the Joint Lead Managers, the Trustee or the Agents or any of their respective directors, officers, employees, affiliates, representatives, agents or advisors, or any person who controls any of them, are making any representations regarding the legality of an investment in the Bonds under any law or regulation. The recipient of this Offering Circular should not consider any information in this Offering Circular to be legal, business or tax advice. Any investor or prospective investor should consult his/her/its own attorney, business advisor and tax advisor for legal, business and tax advice regarding an investment in the Bonds.

The contents of this Offering Circular have not been reviewed by any regulatory authority in the People’s Republic of China, Hong Kong or elsewhere. Investors are advised to exercise caution in relation to the offer. If any investor is in any doubt about any of the contents of this document, that investor should obtain independent professional advice.

– iii – INDUSTRY AND MARKET DATA

Market data and certain industry forecasts and statistics used throughout this Offering Circular have been obtained from, among other sources, internal surveys, market research, publicly available information and industry publications. Industry publications generally state that the information that they contain has been obtained from sources believed to be reliable but that the accuracy and completeness of that information is not guaranteed. Similarly, internal surveys, industry forecasts and market research, while believed to be reliable, have not been independently verified, and none of the Issuer, the Guarantor, the Joint Lead Managers, the Trustee or the Agents or any of their respective directors, officers, employees, affiliates, representatives, agents or advisors, or any person who controls any of them, make any representation as to the correctness, accuracy or completeness of such information. Such information may not be consistent with other information compiled within or outside the PRC. In addition, third-party information providers may have obtained information from market participants and such information may not have been independently verified. This Offering Circular summarises certain documents and other information, and investors should refer to them for a more complete understanding of what is discussed in those documents.

PRESENTATION OF FINANCIAL INFORMATION

The audited consolidated financial information of the Guarantor as at and for the years ended 31 December 2017, 2018 and 2019 included in this Offering Circular has been extracted from the Guarantor’s consolidated financial statements as at and for the years ended 31 December 2018 and 2019 (the “Group’s Audited Financial Statements”), which were prepared and presented in accordance with the Accounting Standards for Business Enterprises in China (“PRC GAAP”) and audited by WUYIGE Certified Public Accountants LLP (“Daxin”) in accordance with the Chinese Auditing Standards issued by the Ministry of Finance of the PRC (“MOF”). PRC GAAP differs in certain material respects from International Financial Reporting Standards (“IFRS”). For a discussion of certain differences between PRC GAAP and IFRS, see “Summary of Certain Differences between PRC GAAP and IFRS”.

The Group’s Audited Financial Statements (including the reports relating thereto) are issued in simplified Chinese and the English translation of which included elsewhere in this Offering Circular are provided for reference only. Neither the Joint Lead Managers nor their respective affiliates, directors, employees and advisors has independently verified or checked the accuracy of such translation and can give no assurance that the information contained in such translation is accurate, truthful or complete.

ROUNDING

In this Offering Circular, where information has been presented in thousands or millions of units, amounts may have been rounded up or down. Accordingly, totals of columns or rows of numbers in tables may not be equal to the apparent total of the individual items and actual numbers may differ from those contained herein due to rounding.

–iv– CERTAIN DEFINITIONS AND CONVENTIONS

In this Offering Circular, unless otherwise specified or the context otherwise requires, all references to the “Group” are to the Guarantor and its subsidiaries, all references to the “PRC” and “China” are to the People’s Republic of China (excluding Hong Kong, the Macau Special Administrative Region of the People’s Republic of China and Taiwan for the purpose of this Offering Circular), all references to “Hong Kong” are to the Hong Kong Special Administrative Region of the People’s Republic of China, all references to “PRC government”orthe“State” mean the central government of the PRC, including all political subdivisions (including provincial, municipal and other regional or local governmental entities) and instrumentalities thereof, or, where the context requires, any of them; all references to the “United States” and “U.S.” are to the United States of America; all references to “Renminbi” and “RMB” are to the lawful currency of the PRC; and all references to “U.S. dollars”, “USD” and “U.S.$” are to the lawful currency of the United States of America.

The Guarantor records and publishes its financial statements in Renminbi. Unless otherwise stated in this Offering Circular, all translations from Renminbi into U.S. dollars were made at the rate of RMB6.9618 to U.S.$1.00, the noon buying rate in New York City for cable transfers payable in Renminbi as certified for customs purposes by the Federal Reserve Bank of New York on 31 December 2019. All such translations in this Offering Circular are provided solely for your convenience and no representation is made that the Renminbi amounts referred to herein have been, could have been or could be converted into U.S. dollars, or vice versa, at any particular rate, or at all. For further information relating to the exchange rates, see “Exchange Rate Information”.

The English names of the PRC established companies or entities, PRC nationals, departments, facilities, laws, regulations, certificates, titles and the like are translations of their Chinese names and are included for identification purpose only. In the event of any inconsistency, the Chinese name shall prevail.

–v– In this Offering Circular, unless the context otherwise requires, the following expressions shall have the following meanings.

Ag the chemical symbol for silver.

Au the chemical symbol for gold. brownfield a mining project in an area where certain facilities or mining operations already exist.

CAGR compound annual growth rate. cathode an electrode through which electric current flows out of a polarised electrical device.

Chinese National Standard the PRC National Standard for the Classification of Resources/Reserves for Solid Fuels and Mineral Commodities (GB/T 17766-1999) (中國固體礦產資源/儲量分類(GB/T 17766-1999)). Unlike internationally employed codes for the reporting of mineral resources and mineral reserves such as NI 43-101 and SAMREC, the Chinese National Standard does not count mineral reserves in when reporting mineral resources.

Co the chemical symbol for cobalt. concentrates the product of ore processing plants that contain higher concentrations of the minerals and are suitable for smelting.

Cu the chemical symbol for copper. deposit a body of mineralisation containing a sufficient average grade of metal or metals to warrant further exploration and/or development expenditure.

DRC the Democratic Republic of Congo. drilling the process of making a circular hole in the ground with a drill, which is typically used to obtain a cylindrical sample of ore. exploration activity to prove the location, volume and quality of an ore body.

Gansu SASAC State-owned Assets Supervision and Administration Commission of Gansu Provincial Government (甘肅省人民政府國有資產監督管理委員會). grade the concentration, commonly expressed as percentage or grammes per tonne, of useful elements, minerals or their components in any ore or concentrate. greenfield a mining project in an area where there are no existing facilities.

–vi– Jinchuan International Resources Jinchuan Group International Resources Co., Ltd. (金川集團國際資源有限公司), a company listed on the HKSE under stock code 02362, in which the Guarantor owned a 60.21% equity interest as at 31 December 2019.

JORC Code Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves, with the most recent revision being published late in 2012. kg kilogrammes.

Kt thousand tonnes.

LME London Metal Exchange.

MB the Metal Bulletin, a specialist international publisher and information provider for the global steel, non-ferrous and scrap metals markets. mine life the number of years that a mine is expected to continue operations based on the current mine plan. mining right the right to mine mineral resources and obtain mineral products in areas where mining activities are licensed.

Mt million tonnes.

NCA lithium nickel cobalt aluminium oxides.

NCM 811 nickel cobalt manganese with nickel : cobalt : manganese at a ratio of 8:1:1.

Ni the chemical symbol for nickel.

NI 43-101 National Instrument 43-101, a mineral resource classification scheme used for the public disclosure of information relating to mineral properties in Canada. non-ferrous metals metals other than the ferrous metals such as iron, manganese and chromium.

OFAC the U.S. Department of Treasury’s Office of Foreign Assets Control. ore mineral-bearing rock that contains one or more minerals. ore processing the process through which physical or chemical properties, such as density, surface reactivity, magnetism and colour, are utilised to separate the useful components of ores from useless rocks, which are then concentrated or purified by means of, among others, flotation, magnetic selection, electric selection, physical selection, chemical selection, reselection or a combination of these methods.

– vii – PBOC People’s Bank of China (中國人民銀行). platinum group metals the group of metallic elements including ruthenium, rhodium, palladium, osmium, iridium, platinum and selenium.

SAIC State Administration for Industry and Commerce of the PRC (國家工商總局), the predecessor of the State Administration for Market Regulation (國家市場監督管理總局).

SAMREC The South African Code for the Reporting of Exploration Results, Mineral Resources and Mineral Reserves, 2016 edition. smelting a pyro-metallurgical process of separating metal by fusion from those impurities with which it is chemically combined or physically mixed.

SNEL Société Nationale d’Electricité, the national electricity company of the Democratic Republic of the Congo. sq.km. square kilometre.

SMM Report an industrial report prepared by Shanghai Metals Market Information & Technology Co. Ltd., an independent third party.

State Council State Council of the PRC (中華人民共和國國務院). tonne metric tonne equal to 1,000 kg, or 2,204.6 pounds.

– viii – FORWARD-LOOKING STATEMENTS

The Issuer and the Guarantor have made certain forward-looking statements in this Offering Circular. All statements other than statements of historical facts contained in this Offering Circular constitute “forward-looking statements”. Some of these statements can be identified by forward-looking terms, such as “anticipate”, “target”, “believe”, “can”, “would”, “could”, “estimate”, “expect”, “aim”, “intend”, “may”, “plan”, “will”, “would” or similar words. However, these words are not the exclusive means of identifying forward-looking statements. All statements regarding expected financial condition and results of operations, business plans and prospects are forward-looking statements. These forward-looking statements include but are not limited to statements as to the business strategy, revenue and profitability, planned projects and other matters as they relate to the Issuer and/or the Guarantor and/or the Group discussed in this Offering Circular regarding matters that are not historical fact. These forward-looking statements and any other projections contained in this Offering Circular (whether made by the Issuer, the Guarantor or by any third party) involve known and unknown risks, including those disclosed in the section titled “Risk Factors”, uncertainties and other factors that may cause the actual results, performance or achievements of the Issuer, the Guarantor or the Group to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements or other projections.

These forward-looking statements speak only as at the date of this Offering Circular. Each of the Issuer and the Guarantor expressly disclaims any obligation or undertaking to release publicly any update or revision to any forward-looking statement contained herein to reflect any change in the Group’s expectations with regard thereto or any change of events, conditions or circumstances, on which any such statement was based.

The factors that could cause the actual results, performances and achievements of the Issuer, the Guarantor, the Group or any member of the Group to be materially different include, among others:

• general economic, political and business conditions and competitive environment in the PRC and elsewhere;

• industry risks;

• fluctuation in price and availability of minerals and metal products;

• fluctuation in price of and demand for steel;

• changes in regulations relating to import and export of minerals and metal products;

• ability of the Group to maintain its sales contracts with its major customers on terms commercially acceptable to the Group or at all;

• the continued availability of capital and financing;

• interest rates and foreign exchange rates, taxes and duties;

• ability of the Group to control its costs;

• interruptions in product production and delivery, natural disasters, industrial action, terrorist attacks and other events beyond the Group’s control; and

• other factors, including those discussed in “Risk Factors” and elsewhere in this Offering Circular.

–ix– TABLE OF CONTENTS

Page SUMMARY...... 1 SUMMARY CONSOLIDATED FINANCIAL INFORMATION ...... 4 THE OFFERING ...... 7 RISK FACTORS ...... 11 TERMS AND CONDITIONS OF THE BONDS ...... 43 SUMMARY OF PROVISIONS RELATING TO THE BONDS IN GLOBAL FORM ...... 62 USE OF PROCEEDS ...... 64 EXCHANGE RATE INFORMATION ...... 65 CAPITALISATION AND INDEBTEDNESS...... 67 DESCRIPTION OF THE ISSUER...... 68 DESCRIPTION OF THE GROUP...... 69 DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT ...... 110 INDUSTRY OVERVIEW ...... 114 PRC REGULATIONS ...... 131 TAXATION...... 145 SUBSCRIPTION AND SALE ...... 148 SUMMARY OF CERTAIN DIFFERENCES BETWEEN PRC GAAP AND IFRS...... 152 GENERAL INFORMATION ...... 153 INDEX TO FINANCIAL STATEMENTS...... F-1

–x– SUMMARY

The summary below is only intended to provide a limited overview of information described in more detail elsewhere in this Offering Circular. As it is a summary, it does not contain all of the information that may be important to investors and terms defined elsewhere in this Offering Circular shall have the same meanings when used in this summary. Prospective investors should therefore read this Offering Circular in its entirety, including the section titled “Risk Factors”, before making an investment decision.

OVERVIEW

The Group is a leading non-ferrous metals company in China and globally, with nickel, copper and cobalt at its core. The Group is the third largest nickel producer and fourth largest cobalt producer in the world, and the fourth largest copper producer in China as measured by 2019 output, according to the SMM Report. The Group also believes that it was the largest platinum group metal producer in Asia in terms of product output in 2019. The Group operates a fully vertically integrated business model encompassing critical stages along the mining value chain, including mining, processing, smelting, refining and downstream processing. The Group is well-positioned to capitalize on the new energy revolution, particularly in the electric vehicles industry in China. The Group has developed an annual production capacity of 200.0 Kt of nickel products, 1.0 Mt of copper products, 12.0 Kt of cobalt products, 25.0 tonnes of gold, 600.0 tonnes of silver, 6.0 tonnes of platinum group metals and 5.6 Mt of chemical products.

The Guarantor was established in 1959, following the discovery of a nickel mine in Jinchang, Gansu Province in 1958. After 60 years of development, the Group has established an extensive business network in China. As at 31 December 2019, the Group had a network comprised of approximately 127 direct and indirect subsidiaries spread across 17 provinces and municipalities in the PRC. In addition, as at 31 December 2019, the Group had over nine subsidiaries or branches in six overseas jurisdictions, namely, Hong Kong, Singapore, United States, Canada, South Africa, and Australia. According to information published by China Enterprise Confederation and China Enterprise Directors Association in 2019, in terms of revenue, the Group was the largest state-owned enterprise in Gansu Province.

As at 31 December 2019, the Group had 13 key non-ferrous mines in the PRC and overseas, some of which were wholly owned by the Group while some were controlled but only partially owned by the Group. For details, please see the subsection headed “– Business of the Group – Non-ferrous Metals – Non-ferrous mineral resources and reserves”. Among them, four mines, namely, the Jinchuan Mine, the Tibet Xietongmen Copper Mine, the Gansu Subei County Heishan Copper-Nickel Mine and the Tibet Dabu Copper and Molybdenum Mine employ the Chinese National Standard for the estimation of resources and reserves; six mines, namely, the Ruashi Mine, the Chibuluma Copper Mine, the Kinsenda Project, the Wesizwe Platinum Mine, the Musonoi Project and the Lubembe Project employ the SAMREC Code; the Bahuerachi Copper Mine and the Munali Nickel Mine employ the NI 43-101; the Indonesia Jinchuan WP&RKA Laterite Nickel Project employs JORC Code. As at December 31, 2019, the Group owns total resources of 4,844.8 Kt nickel, 11,305.6 Kt copper, 618.7 Kt cobalt, and 549.2 Kt platinum group metals (all in contained metals). For the years ended 31 December 2017, 2018 and 2019, the Group’s total revenue was RMB217,042.4 million, RMB220,875.1 million and RMB233,674.5 million, respectively. For the years ended 31 December 2017, 2018 and 2019, the Group recorded gross profit of RMB7,959.7 million, RMB10,498.5 million and RMB10,533.2 million, respectively.

COMPETITIVE STRENGTHS

• Irreplaceable key player in China’s non-ferrous metals industry with strategic exposure to high quality resources around the world

• Well-positioned to capture the strong demand of electric vehicle industry for nickel, copper and cobalt as a core member in China’s world-class EV value chain

–1– • Production of high-quality non-ferrous products at scale with strong brand recognition and close relationship with both upstream and downstream partners

• World’s leading technologies and equipment with comprehensive resources utilisation capabilities

• Critical member in promoting Gansu into a competitive industrial province and continuous strong government support received for business expansion

• Prudent financial management capabilities to practically reduce financial risks

• Outstanding production safety and social responsibility, led by a committed management team with extensive industry experience

BUSINESS STRATEGIES

• Further develop non-ferrous metals business as the Group’s core competitive strength, further improve the synergies among the Group’s different business segments and maintain a flexible and diversified product portfolio

• Continue to retain prudent financial management policies and effectively manage overall financial risk; leverage capital markets to optimise funding sources and minimise funding costs

• Strengthen sales and marketing efforts especially in overseas markets

• Continue efforts in research and development

• Pursue sustainable growth through environmental protection measures

• Enhance the Group’s management and operational efficiency to control cost and improve profitability

• Continue efforts in recruiting and retaining talent to build a capable team in line with the Group’s corporate culture

RECENT DEVELOPMENT

2020 Commodities Market Overview

During the first quarter of 2020, nickel, cobalt and copper benchmark prices dropped significantly due to COVID-19 pandemic. However, since April 2020, strong stimulus policies released by major economies, as well as economic recovery in China supported a strong recovery of the metals prices. Nickel, cobalt and copper benchmark prices have all increased significantly since then.

According to SMM Report, average nickel, cobalt and copper benchmark prices in 2020 remain relatively stable compared to 2019 average prices. Nickel price recovered and reached its year high in December 2020. Average SHFE nickel price in 2020 was RMB109,412/ton compared to 2019 average of RMB110,405/ton. Copper price reached its 7-year high by end of 2020. Average SHFE copper price in 2020 was RMB48,802/ton, compared to 2019 average of RMB47,650/ton. Cobalt price averaged RMB262,284/ton in 2020 compared to RMB272,752/ton in 2019.

2020 Group Operational Performance

The Group has maintained normal operation throughout 2020. It is expected that 2020 full year nickel, cobalt and copper production volume would slightly increase compared with 2019.

–2– 2020 Third Quarter Financial Information

On 26 October 2020, the Guarantor announced its consolidated financial information as at and for the nine months ended 30 September 2020 (the “2020 Third Quarterly Financial Information”) on the website of China Foreign Exchange Trade System (http://www.chinamoney.com.cn/).

The 2020 Third Quarterly Financial Information was extracted from the management accounts of the Group and was prepared in accordance with PRC GAAP. It has not been audited or reviewed by the Group’s auditor and accordingly, does not provide the same quality of information associated with information that has been subject to an audit or review. The 2020 Third Quarterly Financial Information does not form part of this Offering Circular and should not be relied upon by investors in any way. The 2020 Third Quarterly Financial Information is not indicative of the financial condition or results of operations of the Group for any period of a year or any full year.

For the nine months ended 30 September 2020, as compared with the same period in 2019, revenue of the Group increased while gross profit and net profit of the Group decreased slightly, mainly due to the unfavorable metals prices in the first half of 2020, as well as slight increases of operating cost and administrative expenses resulting from increases of research and development cost for improving manufacturing process and technique.

As at 30 September 2020 compared with 31 December 2019, the Group’s total debt decreased as the Group repaid part of its debt with excess cash. For the nine months ended 30 September 2020, as compared with the same period in 2019, the net cash flow generated from the Group’s operating activities increased while the Group’s capital expenditure decreased significantly. As a result, the Group’s increase in cash and cash equivalents increased significantly as at 30 September 2020 as compared with 30 September 2019.

–3– SUMMARY CONSOLIDATED FINANCIAL INFORMATION

The summary consolidated financial information of the Guarantor as at and for the years ended 31 December 2017, 2018 and 2019 as set forth below is extracted from the Group’s Audited Financial Statements, which have been audited by Daxin in accordance with Chinese Auditing Standards issued by MOF. The Group’s Audited Financial Statements were prepared and presented in accordance with PRC GAAP. PRC GAAP differs in certain material respects from IFRS. For a discussion of certain differences between PRC GAAP and IFRS, see “Summary of Certain Differences between PRC GAAP and IFRS”.

The summary consolidated financial information as set forth below should be read in conjunction with, and is qualified in its entirety by reference to, the relevant audited consolidated financial statements of the Guarantor and the notes thereto included elsewhere in this Offering Circular. The Guarantor’s historical consolidated financial information should not be taken as an indication of its future financial performance.

CONSOLIDATED BALANCE SHEET

As at 31 December 2017 2018 2019 (audited) (RMB in millions) Current assets Monetary fund ...... 6,461.6 7,874.3 6,215.0 Financial assets at fair value through profit or loss ...... 1.4 114.9 12.5 Notes receivables ...... 1,408.9 1,048.5 688.2 Receivables financing ...... – – 211.9 Accounts receivables ...... 3,239.5 2,949.6 2,398.8 Prepayments ...... 1,731.3 1,986.0 861.5 Other receivables ...... 8,114.5 10,080.0 9,665.3 Inventories ...... 22,887.9 19,398.8 21,195.7 Non-current assets due within one year ...... – – – Other current assets ...... 3,160.5 1,945.8 1,402.9 Total current assets ...... 47,005.5 45,397.8 42,651.8

Non-current assets Available-for-sale financial assets ...... 2,541.8 2,964.5 2,440.6 Held-to-maturity investments ...... – – – Long-term receivables ...... 55.4 131.4 118.3 Long-term equity investments ...... 1,034.4 1,346.6 1,218.1 Investment properties ...... 2,507.8 1,991.7 2,168.5 Fixed assets ...... 38,413.2 42,846.7 45,857.1 Construction in progress ...... 13,837.5 9,960.7 9,081.3 Productive biological assets ...... 1.6 3.5 24.0 Oil and gas assets ...... – – – Intangible assets ...... 9,401.4 9,393.7 9,605.6 Development costs ...... – – – Goodwill ...... 267.5 267.5 426.4 Long-term deferred expenses ...... 14.1 55.8 100.6 Deferred income tax assets ...... 1,886.3 1,424.5 1,107.7 Other non-current assets ...... 901.0 419.9 618.7 Total non-current assets ...... 70,862.1 70,806.5 72,767.0 Total assets ...... 117,867.6 116,204.4 115,418.8

–4– As at 31 December 2017 2018 2019 (audited) (RMB in millions) Current liabilities Short-term loans ...... 25,254.7 23,098.3 14,995.0 Financial liabilities measured at fair value through profit or loss ...... 24.2 17.6 18.5 Notes payables ...... 3,699.6 2,601.5 3,535.7 Accounts payables ...... 8,459.8 7,941.3 8,042.9 Receipts in advance ...... 2,331.0 2,906.5 2,226.5 Employee compensations payable ...... 7.0 6.0 21.2 Taxes payables ...... 1,111.3 499.7 533.6 Other payables ...... 3,713.1 4,475.8 4,871.6 Non-current liabilities due within one year ...... 11,973.3 4,172.7 2,339.5 Other current liabilities ...... 85.7 113.3 60.6 Total current liabilities ...... 56,659.6 45,832.7 36,645.2

Non-current liabilities Long-term loans ...... 13,477.7 17,687.1 19,527.0 Bonds payables ...... – 1,000.0 6,000.0 Long-term payables ...... 946.0 652.9 599.5 Long-term employee benefits payable ...... 3,991.5 3,905.9 3,753.3 Estimated liabilities ...... 1,499.5 1,517.7 1,538.3 Deferred income ...... 1,047.5 1,034.8 1,026.9 Deferred income tax liabilities ...... 3,181.9 3,501.4 2,970.5 Other non-current liabilities ...... – – 37.9 Total non-current liabilities ...... 24,144.1 29,299.7 35,453.3 Total liabilities ...... 80,803.7 75,132.4 72,098.5

Shareholders’ equity Paid-in capital ...... 22,946.5 22,946.5 22,946.5 Capital reserve ...... 17,301.9 18,427.3 17,317.5 Other comprehensive income ...... (408.7) (1,151.0) 201.5 Including: Translation differences of financial statements denominated in foreign currency ...... (1,436.1) (1,359.6) (652.4) Special reserve ...... 188.3 166.8 131.2 Surplus reserve ...... 955.8 157.7 296.6 Including: Statutory reserve ...... 477.9 157.7 227.2 Other surplus reserve ...... 477.9 – 69.4 General risks provision ...... 47.6 49.6 63.0 Retained earnings...... (9,384.9) (7,838.8) (5,932.2) Total equity attributable to shareholders of the parent company ...... 31,646.4 32,758.1 35,024.2 Minority interests ...... 5,417.5 8,313.9 8,296.0 Total shareholders’ equity ...... 37,063.8 41,072.0 43,320.2 Total liabilities and shareholders’ equity ...... 117,867.6 116,204.4 115,418.8

–5– CONSOLIDATED INCOME STATEMENT

For the year ended 31 December 2017 2018 2019 (audited) (RMB in millions) Total operating revenue ...... 217,042.4 220,875.1 233,674.5 Including: Operating revenue ...... 217,042.4 220,875.1 233,674.5 Total operating costs ...... 215,969.3 216,014.0 229,236.6 Including: Operating costs ...... 209,082.7 210,376.7 223,141.3 Business taxes and surcharges ...... 730.4 660.0 732.2 Selling expenses ...... 840.3 922.8 1,114.9 Administrative expenses ...... 1,448.3 1,739.5 2,218.0 Research and development expenses ...... 156.5 317.0 375.5 Financial expenses ...... 1,868.0 1,998.0 1.654.6 Add: Other gains ...... 120.8 241.2 255.7 Investment income ...... (977.1) (156.7) (167.0) Including: Income from investment in associates and joint ventures ...... (29.7) 8.4 (25.4) Gains from changes in fair value ...... 975.9 108.3 139.4 Credit impairment loss ...... – – (8.0) Assets impairment loss ...... (1,843.1) (2,143.1) (1,892.6) Gains from assets disposals ...... 8.1 (8.4) 140.2 Operating profit ...... 1,200.8 2,902.4 2,905.6 Add: Non-operating income ...... 252.9 171.5 50.3 Including: Governmental subsidy ...... 124.2 30.0 0.9 Less: Non-operating expenses ...... 299.5 560.1 131.5 Total profit ...... 1,154.2 2,513.9 2,824.4 Less: Income tax expenses ...... 324.6 1,148.1 1,115.2 Net profit ...... 829.6 1,365.8 1,709.3 (I) Net profit classified by ownership ...... 1.Net profit attributable to shareholders of the parent company ...... 600.1 1,548.0 2,059.0 2.Profit and loss of minority interests ...... 229.5 (182.3) (349.7) (II) Net profit classified by continuing operations ...... 1. Net profit from continuing operations ...... 829.6 1,365.8 1,709.3 2. Net profit from discontinued operations ...... – – – Total other comprehensive income, net of tax ...... 45.7 (759.2) 1,275.7 Other comprehensive income (net of tax) attributable to owners of the parent company ...... 140.2 (742.3) 1,352.5 (I) Items that will not be reclassified to profit or loss .... 217.9 (1,159.0) 1,103.6 1. Remeasurement of defined benefit plan ...... 217.9 (1,159.0) 1,103.6 2. Other comprehensive income that cannot be transferred to profit or loss under equity method ...... – – – 3. Changes in fair value of other equity instrument investments ...... – – – 4. Changes in fair value of enterprise’s own credit risk.... – – – (II) Items that may be reclassified to profit or loss ...... (77.7) 416.7 248.9 1. Other comprehensive income that can be transferred to profit or loss under equity method ...... – – – 2. Changes in fair value of other debt investments ...... – – – 3. Gains or losses arising from changes in fair value of available-for-sale financial assets ...... 369.7 340.2 (458.2) 4. The amount of financial assets reclassified to other comprehensive income ...... – – – 5. Held-to-maturity investments reclassified as gains and losses on available-for-sale financial assets ...... – – – 6. Provision for credit impairment of other debt investments ...... – – – 7. Effective portion of gains or losses arising from cash flow hedging instruments ...... – – – 8. Translation differences arising from translation of foreign currency financial statements ...... (474.4) 76.5 707.1 9. Others ...... – – – Other comprehensive income (net of tax) attributable to non-controlling shareholders ...... (94.5) (16.9) (76.8) Total comprehensive income ...... 875.3 606.6 2,985.0

Total comprehensive income attributable to shareholders of the parent company ...... 740.3 805.8 3,411.5 Total comprehensive income attributable to minority interests ...... 135.0 (199.2) (426.4)

–6– THE OFFERING

The following summary contains some basic information about the Bonds. Some of the terms described below are subject to important limitations and exceptions. Words and expressions defined in “Terms and Conditions of the Bonds” shall have the same meanings in this summary. For a more complete description of the terms and conditions of the Bonds, see “Terms and Conditions of the Bonds” in this Offering Circular.

Issuer Jinchuan Golden Ocean Capital Limited (金川金海資本有限公司).

Guarantor Jinchuan Group Co., Ltd. (金川集團股份有限公司).

The Bonds U.S.$280,000,000 4.0 per cent. Guaranteed Bonds due 2024.

The Guarantee The Guarantor will unconditionally and irrevocably guarantee the due payment of all sums expressed to be payable by the Issuer under the Trust Deed and the Bonds. Its obligations in that respect will be contained in the Deed of Guarantee.

Issue Price 100.0 per cent.

Form and Denomination The Bonds will be issued in registered form in the specified denomination of U.S.$200,000 and in integral multiples of U.S.$1,000 in excess thereof.

Interest The Bonds will bear interest on their outstanding principal amount from and including 10 February 2021, at the rate of 4.0 per cent. per annum, payable semi-annually in arrear in equal instalments of U.S.$20.0 on 10 February and 10 August in each year, commencing on 10 August 2021 as further set out in Condition 5 of the Terms and Conditions of the Bonds.

Issue Date 10 February 2021.

Maturity Date 10 February 2024.

Use of Proceeds The proceeds from the issue of the Bonds will be used for repaying offshore borrowings and supplementing offshore working capital. See “Use of Proceeds”.

Status of the Bonds The Bonds will constitute direct, unsubordinated, unconditional and (subject to Condition 4(a) of the Terms and Conditions of the Bonds) unsecured obligations of the Issuer and shall at all times rank pari passu and without any preference or priority among themselves. The payment obligations of the Issuer under the Bonds shall, save for such exceptions as may be provided by applicable legislation and subject to Condition 4 of the Terms and Conditions of the Bonds, at all times rank at least equally with all the Issuer’s other present and future unsecured and unsubordinated obligations.

Status of the Guarantee The obligations of the Guarantor under the Guarantee shall, save for such exceptions as may be provided by applicable legislation and subject to Condition 4 of the Terms and Conditions of the Bonds, at all times rank at least equally with all its other present and future unsecured and unsubordinated obligations.

–7– Negative Pledge The Bonds will contain a negative pledge provision as further described in Condition 4(a) of the Terms and Conditions of the Bonds.

Events of Default Upon the occurrence of certain events as described in Condition 9 of the Terms and Conditions of the Bonds, the Trustee at its discretion may, and if so requested in writing by holders of at least 25 per cent. of the aggregate principal amount of the Bonds then outstanding or if so directed by an Extraordinary Resolution (as defined in the Trust Deed) shall (provided in any such case that the Trustee shall have been indemnified and/or secured and/or pre- funded to its satisfaction), give written notice to the Issuer and the Guarantor that the Bonds are, and they shall immediately become, due and payable at their principal amount together (if applicable) with accrued interest as further set out in Condition 9 of the Terms and Conditions of the Bonds.

Taxation All payments of principal, premium and interest by or on behalf of the Issuer or the Guarantor in respect of the Bonds or under the Guarantee shall be made free and clear of, and without withholding or deduction for or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or within Hong Kong or the PRC or any political subdivision or any authority therein or thereof having power to tax, unless such withholding or deduction is required by law.

Where such withholding or deduction is made by the Issuer or, as the case may be, the Guarantor by or within the PRC up to and including the aggregate rate applicable on 4 February 2021 (the “Applicable Rate”), the Issuer or, as the case may be, the Guarantor will increase the amounts paid by it to the extent required, so that the net amount received by Bondholders equals the amounts which would otherwise have been receivable by them had no such withholding or deduction been required.

If the Issuer or, as the case may be, the Guarantor, is required to make any deduction or withholding (i) by or within the PRC in excess of the Applicable Rate or (ii) by or within Hong Kong, then the Issuer or, as the case may be, the Guarantor, shall pay such additional amounts (“Additional Tax Amounts”) as will result in receipt by the Bondholders of such amounts as would have been received by them had no such withholding or deduction been required, except that no Additional Tax Amounts shall be payable in respect of any Bond (or the Guarantee, as the case may be) in the circumstances as set out in Condition 8 of the Terms and Conditions of the Bonds.

Final Redemption Unless previously redeemed, or purchased and cancelled, the Bonds will be redeemed at their principal amount on 10 February 2024.

–8– Redemption for Taxation Reasons The Bonds may be redeemed at the option of the Issuer in whole, but not in part, at any time, on giving not less than 30 nor more than 60 days’ notice to the Bondholders (which notice shall be irrevocable) and in writing to the Trustee and the Principal Paying Agent, at their principal amount (together with interest accrued up to but excluding the date fixed for redemption), in the event of certain changes affecting taxes of Hong Kong or the PRC, as further described in “Terms and Conditions of the Bonds – Redemption and Purchase – Redemption for Taxation Reasons”.

Redemption for Relevant Events At any time following the occurrence of a Relevant Event (as defined in Condition 6(c) of the Terms and Conditions of the Bonds), the holder of any Bond will have the right, at such holder’s option, to require the Issuer to redeem all but not some only of that Bondholder’s Bonds on the Put Settlement Date at 101 per cent. (in the case of a redemption for a Change of Control) or 100 per cent. (in the case of a redemption for a No Registration Event) of their principal amount, together with accrued interest up to but excluding such Put Settlement Date. See “Terms and Conditions of the Bonds – Redemption and Purchase – Redemption for Relevant Events”.

Further Issues The Issuer may from time to time without the consent of the Bondholders create and issue further securities either having the same terms and conditions as the Bonds in all respects (or in all respects except for the issue date, the first payment of interest on them and the timing for compliance with the requirements set out in the Terms and Conditions of the Bonds relating to the NDRC Post-issue Filing and the Cross-Border Security Registration) and so that such further issue shall be consolidated and form a single series with the outstanding securities of any series (including the Bonds) or upon such terms as the Issuer may determine at the time of their issue. References in the Terms and Conditions of the Bonds to the Bonds include (unless the context requires otherwise) any other securities issued pursuant to Condition 15 of the Terms and Conditions of the Bonds and forming a single series with the Bonds.

Trustee China Construction Bank (Asia) Corporation Limited (中國建設銀行(亞洲)股份有限公司).

Principal Paying Agent China Construction Bank (Asia) Corporation Limited (中國建設銀行(亞洲)股份有限公司).

Registrar and Transfer Agent China Construction Bank (Asia) Corporation Limited (中國建設銀行(亞洲)股份有限公司).

–9– Clearing Systems The Bonds will be represented by beneficial interests in the Global Certificate, which will be registered in the name of a nominee for, and deposited on the Issue Date with, a common depositary for Euroclear and Clearstream. Beneficial interests in the Global Certificate will be shown on, and transfers thereof will be effected only through, records maintained by Euroclear and Clearstream. Except in the limited circumstances described in the Global Certificate, owners of interests in Bonds represented by the Global Certificate will not be entitled to receive definitive Certificates in respect of their individual holdings of Bonds. The Bonds are not issuable in bearer form.

Governing Law and Jurisdiction English law. Exclusive jurisdiction of the Hong Kong courts.

Listing Application will be made to the HKSE for the listing of, and permission to deal in, the Bonds by way of debt issues to Professional Investors only.

Selling Restrictions The Bonds and the Guarantee will not be registered under the Securities Act or under any state securities laws of the United States and will be subject to customary restrictions on transfer and resale. See “Subscription and Sale”.

ISIN XS2294198549.

Common Code 229419854.

Legal Entity Identifier 254900PIEGH8EWAV1I59.

–10– RISK FACTORS

An investment in the Bonds involves a number of risks. Investors should carefully consider all of the information in this Offering Circular and, in particular, the risks described below, before deciding to invest in the Bonds. The following describes some of the significant risks relating to the Group, its business, the market in which the Group operates and the value of Bonds. Some risks may be unknown to the Group and other risks, currently believed to be immaterial, could in fact be material. Any of these could materially and adversely affect the business, financial condition, results of operations or prospects of the Group or the value of the Bonds. The Guarantor believes that the risk factors described below represent the principal risks inherent in investing in the Bonds, but the ability of the Issuer and the Guarantor to pay interest, principal or other amounts on or in connection with any Bonds may be affected by some factors that may not be considered as significant risks by the Issuer and the Guarantor on information currently available to them or which they are currently unable to anticipate. All of these factors are contingencies which may or may not occur and the Issuer and the Guarantor are not in a position to express a view on the likelihood of any such contingency occurring. This Offering Circular contains forward-looking statements that involve risks and uncertainties. The actual results of the Group could differ materially from those anticipated in these forward-looking statements as a result of many factors, including the risks described below and elsewhere in this Offering Circular.

The statements below regarding the risk factors of holding any Bonds are not exhaustive. Prospective investors should also read the detailed information set out elsewhere in this Offering Circular and reach their own views prior to making any investment decision.

RISKS RELATING TO THE GROUP

The Group’s businesses are vulnerable to downturns in the general economy and industries in which the Group operates or which the Group serves.

Demand for the Group’s products depends on the general economy and the level of activity and growth in the industries in which the Group operates or serves, such as the non-ferrous and chemical industries. Development of the relevant industries is subject to various factors, including but not limited to market fluctuations of prices of commodities, general political or economic conditions, technology development, government investment plans and regulations, many of which are beyond the Group’s control. There is considerable uncertainty over the long-term effects of the expansionary monetary and fiscal policies that have been adopted by the central banks and financial authorities of some of the world’s leading economies, including the United States. There have also been concerns over unrest in the Middle East and Africa, which have resulted in volatility in oil prices and other markets, over the political situation over Korean Peninsula, over the withdrawal of the United Kingdom from the European Union, and over the escalation of China-U.S. trade friction and the bilateral tariffs on imports imposed by both countries. These and other issues resulting from the global economic slowdown and financial market turmoil have adversely affected, and may continue adversely affecting, the Chinese market and consumption capacity in this market, which may lead to a decline in the general demand for products and erosion of their sale prices. Starting from December 2019, there has been and continues to be considerable volatility in the global markets as a result of the coronavirus (COVID-19) outbreak across all asset classes, including stocks, bonds, oil and metals, and these volatilities may continue. The above unfavourable financial or economic conditions have adversely affected non-ferrous and chemical industries. Furthermore, concerns over inflation, energy costs, geopolitical issues, the availability and cost of credit, unemployment, and consumer confidence, declining asset values, capital market volatility and liquidity issues have created difficult operating conditions in the past and may continue to do so in the future.

–11– Given the recent events, various governments and other observers have predicted substantially lower economic growth for 2020. China’s first quarter GDP has contracted by 6.8% in 2020 as compared to 2019, largely as a result of the impact of the COVID-19 outbreak. Governments and central banks around the globe have introduced or are planning fiscal and monetary stimulus measures including tax cuts, direct subsidies, rate cuts, bond repurchase programs and the suspension or relaxation of prudential bank capital requirements. These measures aim to contain the economic impact of the epidemic, stabilize the markets and provide liquidity easing to the markets. There is no assurance that such measures will be introduced in time or will be sufficient or effective in delivering their policy objectives or be successful in containing the economic impact of the epidemic or stabilizing the markets.

As a result, the general economy in the PRC or the world or any particular industry in which the Group operates or which it serves may grow at a lower-than-expected rate or even experience a downturn. Uncertainty about future economic conditions makes it challenging for the Group to forecast its results of operations, make business decisions and identify risks that may affect its business. Failure to timely and appropriately adapt to changes resulting from the difficult macroeconomic environment could materially and adversely affect the Group’s businesses, financial condition and results of operations.

The Group relies heavily on raw material suppliers for its business, which exposes it to risks associated with fluctuations in the prices of raw materials and availability of raw material supplies.

The major raw materials for the Group’s production include, among other things, nickel concentrates, copper concentrates and cobalt concentrates. In order not to deplete its own mineral resources, the Group relies heavily on external raw material suppliers in the PRC and overseas. In 2019, the self-provision ratio of the Group’s nickel raw materials, copper raw materials and cobalt raw materials were approximately 60%, 15% and 25%, respectively.

The prices of raw materials that the Group depends on could be affected by a number of factors, including market supply and demand, changes in the import taxes and duties of the PRC, geopolitical conditions, the Chinese and global economic conditions and changes to the Chinese or international environmental and regulatory requirements. Any significant increase in the costs of the Group’s raw materials may increase its cost of sales and hence negatively affect its profit margin and, more generally, its businesses, financial condition, results of operations and prospects. Most of the Group’s purchased raw materials rely on imports, while the upstream industry generally has a strong monopoly, and the prices of imported ore raw materials have shown steady growth in recent years. A reduction in, or lack of availability of, raw materials or interruptions in the supply chain could also affect the Group’s profitability to the extent that it is required to pay higher prices for, or is unable to secure adequate supplies of, the necessary raw materials. If any supplier that the Group relies on for raw materials ceases or limits production, raises prices of its products or sells its products to alternate buyers, the Group’s production may be restricted and the Group may incur significant additional costs, including capital costs, in order to find alternate, reliable and affordable raw material suppliers. The Group may also experience significant production delays while locating new supply sources. There is no assurance the Group will be able to locate such alternate suppliers at favourable prices or at all. There is also no assurance that the Group may pass along the increased costs. If the Group is unable to locate alternate suppliers or pass on all or a portion of the increased cost of any of its raw materials to its customers, it could materially and adversely affect the Group’s businesses, financial condition, results of operations and prospects.

The Group is exposed to declines in the current and expected volumes of supply or demand for commodities and to market fluctuations of commodity prices.

The current and expected volumes of supply and demand for the commodities in which the Group is active vary over time based on changes in resource availability, government policies, such as the 13th Five-Year Plan, costs of production, global and regional economic conditions, demand in end markets for products in which the commodities are used, technological developments, including commodity substitutions, fluctuations in global production capacity, global and regional weather conditions, natural disasters and geopolitical conditions, among others, all of which affect global markets as well as supply and demand dynamics of commodities. Furthermore, changes in current and expected supply and demand conditions affect the current and expected future prices of each commodity. There is no assurance that the market condition will not deteriorate in the future, which may materially and adversely affect the Group’s businesses, financial condition and results of operations.

–12– Declines in the volume of each commodity produced or sold by the Group, as well as declines in the prices of commodities, could materially and adversely affect the Group’s businesses, financial condition and results of operations. There is no assurance that falls in prices of commodities will not occur, which may materially and adversely affect the Group’s businesses, financial condition, results of operations.

These declines could result in a reduction in the volume and/or margin in respect of commodities produced by the Group’s industrial assets. For example:

• the insolvency of key suppliers, particularly those with whom the Group has long-term supply or off-take contracts under which the Group agrees to purchase certain amounts of the future production from the suppliers, could result in supply chain difficulties and/or unmatched commodity price exposures and/or a reduction in commodities available for the Group’s marketing activities;

• although fluctuation of commodity prices is common and generally expected in the industry, a significant reduction or increase in commodity prices could result in customers or suppliers, as the case may be, being unwilling or unable to honour their contractual commitments to purchase or sell commodities at pre-agreed pricing terms;

• a tightening of available credit may make it more difficult for the Group to obtain, or may increase the cost of obtaining, financing for its trading activities and capital expenditures for its industrial assets;

• a decline in the value of inventories may result in write-downs; and

• production at the Group’s industrial assets may be curtailed or suspended as it becomes not economically viable.

The industries in which the Group operates are heavily regulated and changes to the PRC regulations and policies on such industries may materially and adversely affect the Group’s businesses, financial condition and results of operations.

The Group is closely correlated with the non-ferrous industry. The PRC government exerts significant influence on the non-ferrous industry in the PRC by implementing industry policies and other economic measures, such as those relating to credit and financing, land use, governmental approval of new projects, environmental protection, technological and capacity requirements of production facilities and foreign investment. These industry policies and economic measures may significantly reduce the level of construction activities and capital investments in the PRC non-ferrous industry, which in turn could materially and adversely affect Group’s businesses, financial condition and results of operations.

The PRC government has implemented a series of policies and regulations designed to prevent overcapacity in, and to enhance the production efficiency and global competitiveness of, the PRC non-ferrous and chemical industries, such as the Plan of Restructuring and Revitalising the Non-ferrous Metals Industries (《有色金屬產業調整和振興規劃》) issued on 11 May 2009, the Guiding Opinions on Further Managing the Support of Financial Services for the Restructuring and Revitalisation of Key Industries and the Inhibition of Overcapacity in Some Industries (《關於進一步做好金融服務支援重點產業調整振興和抑制部分行業產能過剩的指導意見》) issued on 22 December 2009, the Notice of the State Council Concerning Further Eliminating Outdated Production Capacity (《國務院關於進一步加強淘汰落後產能工作的通知》) issued on 6 February 2010, the Guiding Opinions of the State Council on Resolving Excess Capacity Conflicts (《國務院關於化解產能嚴重過剩矛盾的指導意見》) issued on 6 October 2013, and the Guiding Opinions of the General Office of the State Council on Creating a Favourable Market Environment and Promoting the Non-ferrous Metals Industry to Adjust Structure, Advance Transformation and Increase Efficiency (《國務院辦公廳關於營造良好市場環境促進有色金屬工業調結構促轉型增效益的指導意見》) issued on 5 June 2016. The strategic transformation of the industry will have certain impacts on companies that operate in the industry. The Group’s performance has a strong correlation with the mining industry. Relevant laws and regulations were promulgated to supervise this industry, such as

–13– the Implementation Rules on the Mineral Resources Law of the PRC (《中華人民共和國礦產資源法實施細則》) issued in March 1994 and the Procedures for the Administration of Registration of Mining of Mineral Resources (《礦產資源開採登記管理辦法》) issued in February 1998. These laws, regulations and governmental policies are subject to changes which may impose significant costs or limitations on the way the Group conducts or expands business, such as those affecting the extent to which the Group can engage in, or charge fees for, specific businesses. The changes in the laws, regulations and other governmental policies may have significant effect on the Group’s business, and the Group may not be able to adapt to such changes on a timely basis. Moreover, there may be uncertainties regarding the interpretation and application of new laws, regulations and other governmental policies. Failure to comply with the applicable laws, regulations and other governmental policies may result in fines, restrictions on the Group’s activities or other adverse consequences, which could materially and adversely affect the Group’s businesses, financial condition and results of operations.

The Group’s businesses and operations require significant capital resources on an ongoing basis. Any failure to obtain sufficient funding may limit the Group’s ability to engage in desired activities and grow its business, and may materially and adversely affect the Group’s businesses, financial condition, results of operations, growth prospects and expansion plans.

The Group’s businesses and operations are capital-intensive. The Group requires significant capital resources to purchase different raw materials, acquire and develop mineral resources, obtain exploration and mining rights and permits and purchase and maintain mining and processing facilities and equipment both inside and outside of China.

The Group currently funds its operations primarily through cash generated from operations, bank loans and proceeds from issuance of debt instruments. The Group may need to obtain additional financing for future acquisitions and investment opportunities. For instance, the Group may expand its existing mining projects or acquire new mining resources in the PRC or abroad. In addition, if the Group acquires or invests in another company, the company it acquires or invests in may require additional financing to fund continuing operations and/or growth.

The Group cannot guarantee that cash generated from its operations will be sufficient to fund the Group’s development and expansion. The availability of external funding is subject to various factors, including governmental approvals, market conditions, credit availability, interest rates, the performance of each of the businesses the Group operates and the financial performance of the Group (such as the debt asset ratio). To the extent that additional financing proves to be economically unavailable when needed for a particular investment or acquisition, the Group may be compelled to either restructure the transaction or abandon the investment or acquisition plan which may in turn materially and adversely affect its businesses, financial condition, results of operations, growth prospects and expansion plans.

The accuracy of the resources and reserves estimates of the Group’s mines is based on a number of assumptions, and grade of ore such mines produce may not conform to current estimates, and such estimates should not be interpreted as assurances of the economic viability of the Group’s mines or the profitability of its future operations.

The resources and reserves estimates of the Group’s mines are based on a number of assumptions in accordance with relevant industry standards, such as the NI 43-101, SAMREC, JORC, and the Chinese National Standard. However, there can be no assurance that the Group’s resources and reserves of minerals and metals will be recovered in the quantities, qualities or yields presented in this Offering Circular. Resources and reserves estimates of minerals and metals are inherently prone to variability, and involve expressions of judgment with regard to the presence and grade of ore bodies and the ability to extract and process the ores economically. These judgments are based on various factors such as knowledge, experience and industry practice, and the accuracy of these estimates may be affected by many factors, including the quality of the results of exploration drilling, sampling of the ore body and analysis of the ore samples and the procedures adopted by and experience of the persons making the estimates.

–14– Estimates of the resources and reserves at the Group’s mines may change significantly when new information or technologies become available or new factors arise, and interpretations and deductions on which the resources and reserves estimates are based may prove to be inaccurate. Due to limited extent of exploration and the diversity and complexity of the geological structures of the Group’s mine, its estimates may differ significantly from the actual mine reserves in terms of tonnage, quality and feasibility. Should the amount of reserves significantly deviate from the estimates, the Group’s businesses, financial condition and results of operations may be materially and adversely affected.

If the Group encounters mineralisation or geological or mining conditions different from those estimated based on historical drillings, samplings and similar examinations, the Group may have to adjust its mining plans in a way that could materially and adversely affect its businesses, financial condition and results of operations and reduce the estimated amount of resources and reserves available for production and expansion plans.

In addition, the development period estimated by the Group may differ from the actual development cycle due to various reasons such as unexpected difficulty in mineral resources development and development procrastination. The aforesaid differences in the resources development projects invested in by the Group will affect the operational results and future development of the Group’s businesses.

The Group’s mining operations have limited mine lives and eventual closure of these operations will entail costs and risks regarding ongoing monitoring, rehabilitation and compliance with environmental standards.

The Group’s existing mining operations in the PRC and overseas have limited mine lives and will eventually be depleted. The Group needs to perform certain procedures to remedy the environmental and social effects of its mining operations on local communities and the environment. Remediation, rehabilitation, closure and removal of the Group’s facilities will incur various costs and are subject to various risks. The key tasks for mine closures are, but not limited to, (i) long-term management of permanent engineered structures and acid rock drainage; (ii) closure in accordance with local or international environmental standards; (iii) orderly retrenchment of employees and the third-party contractors; and (iv) relinquishment of the site with associated permanent structures and community development infrastructure and programmes to new owners. There is no assurance that such closure of mines will be successful and without delays or additional costs, in which case the Group may be subject to increased costs, penalties or other administrative actions, damages to reputation, even suspension and cancellation of mining permits, the occurrence of which would materially and adversely affect the Group’s businesses, financial condition and results of operations.

Failure to discover new reserves or resources, maintain or enhance existing reserves or resources, develop new mining operations or expand the Group’s current mining operations could materially and adversely affect the Group’s businesses, financial condition and results of operations.

Mining exploration is unpredictable in nature. The success of any mining exploration programme depends on various factors, many of which are beyond the Group’s control. Due to the unpredictable and speculative nature of the mining industry, there is no assurance that any exploration programme the Group is currently undertaking or may undertake in the future will result in the discovery of valuable reserves or resources. There is no assurance that reported resources can be converted into reserves. Furthermore, actual results upon production may differ from those anticipated at the time of discovery.

To access additional reserves in explored areas, the Group will need to successfully complete development projects, including but not limited to extending existing mines and developing new mines. There are a number of uncertainties inherent in the development and construction of any new mine or an extension of an existing mine, including but not limited to (i) the availability and timing of necessary governmental

–15– approvals; (ii) the timing and cost necessary to construct mining and processing facilities; (iii) the availability and cost of labour, utilities, auxiliary materials and other supplies and the accessibility of transportation and other infrastructure; and (iv) the availability of funds to finance construction and production activities.

There is no assurance that any future exploration activities or development projects will extend the life of the Group’s existing mining operations or result in any new economic mining operations and such failure could materially and adversely affect the Group’s businesses, financial condition and results of operations.

The Group’s major projects may not be completed as planned, may exceed their initial budgets or schedules, or may not achieve the Group’s anticipated economic results or commercial viability.

As part of the Group’s business growth strategies, the Group has been undertaking, and may undertake in the future, a number of projects with significant capital expenditure. The Group’s major projects generally require a substantial amount of capital investment and take years to complete.

The Group’s major projects could be delayed or otherwise materially and adversely affected by a number of risks or uncertainties. In addition, before the Group commences major projects, the Group typically conducts extensive feasibility studies, which may require significant capital outlays. However, the Group cannot guarantee that each of such projects, ongoing, planned or to be undertaken, will ultimately be implemented or generate any profit. Moreover, actual costs for the Group’s major projects may exceed their initial budgets as a result of various reasons such as delays in schedule, increases in funding costs due to volatilities in foreign exchange and interest rates, changes in original design, and increases in materials and other supplies or labour costs. In addition, the Group’s major projects may not be able to achieve the anticipated economic results and commercial viability due to a variety of factors, including but not limited to adverse changes in market conditions, lower than-expected grade or yield of mineral reserves in respect of the Group’s mining projects, low utilisation of capacity in respect of the Group’s manufacturing facilities, high construction and production costs, and decreased demand and prices for the Group’s products and services. It may materially and adversely affect the Group’s businesses, financial condition, results of operations and growth prospects if any of its major projects is not completed as planned, exceeds its initial budgets or schedules, or fails to achieve anticipated economic results or commercial viability.

The Group is subject to extensive environmental, safety and health laws and regulations, and the Group’s compliance with these laws and regulations may be onerous and costly.

As the Group produces air emissions, discharges waste water and handles hazardous substances during its operations and processes, and chemicals are used in the exploration and production methods relating to mining activities, it is subject to, and thus incurs costs complying with environmental, safety and health laws and regulations promulgated by the PRC government and the governments of overseas jurisdictions in which the Group operates. At the Ruashi Mine, contamination of groundwater has been identified as a significant risk. At the Kinsenda Project, apart from groundwater contamination issues, studies indicate that dewatering is likely to result in the lowering of the groundwater levels in the shallower aquifer where community boreholes are located. In addition, environmental hazards may be encountered while products are in transit or during the disposal of waste products.

Given the magnitude, complexity and continuous amendments to these laws and regulations, compliance therewith may be onerous or may involve substantial financial resources and other resources to establish efficient compliance and monitoring systems. The liabilities, costs, obligations and requirements associated with these laws and regulations may therefore be substantial and may delay the commencement of, or cause interruptions to, the Group’s operations. In December 2013, the Ministry of Environmental Protection of the PRC (the predecessor of the Ministry of the Ecology and Environment of the PRC) identified certain non-compliance incidents by the Group with relevant environmental laws and regulations, such as excessive pollutants emission and improper disposal and storage of hazardous wastes. The Group rectified these issues in a timely manner and the Ministry of Environmental Protection has not

–16– identified any further issues. While the Group has internal policies, management systems and designated personnel to monitor the Group’s compliance with the relevant environmental laws and regulations, there is no guarantee that non-compliance will not occur in the future. Non-compliance with the relevant laws and regulations applicable to the Group’s operations may result in substantial penalties or fines, suspension or revocation of the Group’s relevant licences or permits, termination of government contracts or suspension of the Group’s operations. Such events could materially and adversely affect the Group’s businesses, financial condition, results of operations and reputation, all of which could materially and adversely affect the Group’s ability to be profitable and attract new customers.

In addition, the environmental, safety and health laws and regulations in the PRC and other jurisdictions in which the Group operates continue to evolve. Any changes or amendments to such laws or regulations may cause the Group to incur additional capital expenditures, or other obligations or liabilities, which would leave it with less capital to pursue development in other areas. As a result, the Group may incur significant additional costs. Furthermore, as the Group continues to expand its overseas operations, some of the new overseas markets that the Group is seeking to enter may have more onerous environmental, safety and health laws and regulations than China, and compliance with such regulations may be costly and could hinder the Group’s endeavours to enter into these new overseas markets. Failure to comply with environmental laws and regulations may trigger a variety of administrative, civil and criminal enforcement measures, including the assessment of monetary penalties, the imposition of remedial requirements and the issuance of orders enjoining future operations, all of which may materially and adversely affect the Group’s businesses, financial condition and results of operations.

Any claim beyond the Group’s current insurance coverage may result in substantial expenses and a diversion of resources.

The Group is subject to various operational risks in connection with its business, and the Group is not insured against all of these risks, which is in line with the market practice. For example, the Group does not maintain any business interruption insurance or third party liability insurance against claims for property damage, personal injury and environmental liabilities other than the third party liability insurance for the Group’s vehicles, and the Group does not have product liability insurance, any fire, earthquake insurance or property insurance with respect to its properties, facilities or inventory, which is in line with market practice. According to the relevant PRC laws and regulations, the Group will be liable for losses and costs arising from accidents resulting from fault or omission on the part of the Group or its employees. The relevant PRC laws and regulations do not require mining enterprises to obtain insurance for such liability, except insurance in respect of work-related injuries, which the Group has obtained for its employees.

Any claim beyond the Group’s current insurance coverage may result in substantial expenses and a diversion of resources, and may materially and adversely affect the Group’s businesses, financial condition and results of operations.

Intense competition in the markets in which the Group operates could reduce the Group’s market share and profitability.

The Group faces significant competition in the markets in which the Group operates. The Group’s competition comes from various sources, including large PRC state-owned and privately owned enterprises in the PRC and overseas. Some of the Group’s foreign competitors may have greater financial, technical, management or other resources and may provide more services than the Group does, and could possibly form mergers or joint ventures with some of the Group’s domestic competitors or other foreign competitors to the Group’s detriment. In addition, some of the Group’s existing customers may, in the future, expand upstream and downstream along the industry value chain and, as a result, may compete with the Group in the marketing of non-ferrous metals and chemical products.

–17– The Group’s market position depends on the Group’s ability to anticipate and respond to various competitive factors, including pricing strategies adopted by competitors, changes in customer preferences, availability of capital and financing resources and the introduction of new or improved technologies and products and services in the relevant sectors and markets. Increased competition may result in price reductions or decline in sales volumes of the Group. In addition, the Group’s current or potential competitors may offer services or products comparable or superior to those that the Group offers at the same or lower prices or adapt more quickly than the Group does to evolving industry trends or changing market conditions. Therefore, the Group may not be able to maintain its arrangements with major customers on terms that are favourable or acceptable to the Group, which could materially and adversely affect its businesses, financial condition and results of operations.

The Group may not be able to expand successfully through, among others, identifying or pursuing suitable acquisition opportunities or achieving optimal results in future acquisitions, and the Group may encounter difficulties in integrating and developing the acquired assets or businesses successfully.

The Group has invested in and may in the future invest in business expansion in line with its development strategy, through organic growth, acquisitions and joint ventures. The Group’s expansion has created, and will continue to place, substantial demand on the Group’s resources. In addition, managing the Group’s growth and integration of acquired assets or businesses, will require the Group to, among other things:

• comply with the laws, regulations and policies governing the Group’s expansion, including obtaining timely approval for the construction or expansion of production facilities as required under PRC laws;

• maintain adequate control on the expansion or upgrade projects of its current business or the Group’s expansion into new business lines to prevent, among other things, project delays or cost overruns;

• attract, train and motivate members of the Group’s management and qualified employees to support successful business expansion;

• gain market acceptance for new products and services and establish relationships with new customers and suppliers;

• achieve sufficient utilisation of new production facilities to recover costs;

• manage relationships with employees, customers and business partners during the course of the Group’s business expansion and integration of new businesses;

• access debt, equity or other capital resources to fund the Group’s business expansion, which may divert financial resources otherwise available for other purposes;

• divert significant management attention and resources from the Group’s other businesses; and

• strengthen the Group’s operational, financial and management controls, particularly those of the Group’s newly acquired subsidiaries, to maintain the reliability of the Group’s reporting processes.

Any difficulty in meeting the foregoing or similar requirements could significantly delay or otherwise constrain the Group’s ability to implement its expansion plans, or result in failure to achieve the expected benefits of the combination, acquisition or write-offs of acquired assets or investments, which in turn would limit the Group’s ability to increase operational efficiency, reduce marginal manufacturing costs or otherwise strengthen the Group’s market position. Failure to obtain the intended economic benefits from the business expansion could materially and adversely affect the Group’s businesses, financial condition and results of operations. The Group may also experience mixed results from its expansion plans in the short term.

–18– In addition, acquisitions may result in the incurrence and inheritance of debts and other liabilities, assumption of potential legal liabilities in respect of the acquired businesses, and incurrence of impairment charges related to goodwill and other intangible assets, any of which could harm the Group’s businesses, financial condition and results of operations. In particular, if any of the acquired businesses fails to perform as the Group expects, the Group may be required to recognise a significant impairment charge, which may materially and adversely affect its businesses, financial condition and results of operations. As a result, there can be no assurance that the Group will be able to achieve the strategic purpose of any acquisition, the desired level of operational integration or the Group’s investment return target.

The Group’s joint ventures and strategic investments may not be successful.

The Group has non-controlling interests in a number of joint ventures. Although the Group has not been materially constrained by the nature of the Group’s ownership interests, there is no assurance that the Group’s joint venture partners will not exercise their power of veto or their controlling influence in any of the Group’s joint ventures in a way that will hinder the Group’s corporate objectives and reduce any anticipated cost savings or revenue enhancement resulting from these joint ventures. In addition, whether or not the Group maintains operational control in such joint ventures, such arrangements necessarily involve special risks and the Group’s joint venture partners may:

• have economic or business interests or goals that are inconsistent with or opposed to those of the Group;

• exercise veto rights so as to block actions that the Group believes to be in the Group’s or the joint venture’s best interests;

• take action contrary to the Group’s policies or objectives with respect to the investments; or

• as a result of financial or other difficulties, be unable or unwilling to fulfil their obligations under the joint venture or other agreements, such as contributing capital to expansion or maintenance projects.

The Group faces counterparty risks.

While the Group generally sells its goods and provides services to reputable customers and evaluates the customers’ credit in accordance with its internal risk management criteria, such as their background, credit history and likelihood of default, it has limited access to information about its customers and the Group may encounter difficulties in the collection of receivables in certain countries that the Group has less experience in its dealings; therefore, the Group cannot guarantee that all of its customers will fully perform their obligations under their respective contracts with the Group, and the deterioration of any customers’ credit or payment conditions may result in those customers defaulting on their contractual obligations, which could materially and adversely affect the Group’s businesses, financial condition and results of operations.

The Group is also exposed to risks associated with entering into contracts with the PRC government and foreign governmental entities and other public organisations. For instance, delays or changes resulted from the changes in the governments’ budgets or for other policy considerations. In addition, disputes with governmental entities and other public organisations could potentially lead to contract termination if these remain unresolved or may take a considerably longer period of time to resolve than disputes with counterparties in the private sector, and payments from these entities and organisations may be delayed as a result.

–19– The Group’s operations require certain permits, licences and certificates, the loss of which could significantly hinder the Group’s businesses and operations. The Group is subject to periodic inspections, examinations, inquiries and audits by regulatory authorities.

The Group is required to obtain and maintain valid permits, licences and certificates from various government authorities to conduct the Group’s businesses, including, among others, land use rights, buildings ownership certificates, and those required for the Group’s exploration, mining, producing and trading of minerals and metals.

The Group currently does not possess valid land use rights or buildings ownership certificates to certain properties used to conduct business in the PRC. In addition, certain buildings of the Group mainly for office purposes in the PRC are leased from third parties who have not provided the relevant building ownership certificates and a substantial portion of the leasehold interests in leased properties have not been registered with the relevant PRC government authorities as required by PRC laws. There can be no assurance that the use of such leased properties will not be challenged.

If the Group fails to comply with any of the regulations or satisfy any of the conditions required for the maintenance of its permits, licences and certificates, such permits, licences and certificates could be temporarily suspended or even revoked, rejected upon renewal or delayed for renewal, upon expiry of their original terms, which could materially and adversely affect the Group’s businesses, financial condition and results of operations. Currently some subsidiaries of the Group in the PRC are applying for issuance or renewal of relevant permits, licenses or certificates for business operations including without limitation hazardous chemicals operation licenses, pollutant discharge permits and work safety licenses.

The PRC government at various levels and government authorities of the jurisdictions where the Group conducts business may conduct routine or special inspections, examinations, inquiries and audits on the Group. The Group may be subject to suspension or revocation of the relevant permits, licences or certificates, or the fines or other penalties due to any non-compliance discovered as a result of such inspections, examinations, inquiries and audits. In the event that the Group fails to comply with applicable laws and regulations or fails to maintain, renew or obtain the necessary permits, licences or certificates, the Group’s qualification to conduct its various businesses may be materially and adversely affected.

There is no assurance that the Group will continue to receive government grants and other governmental support in the future.

From time to time, the Group receives various types of fiscal and policy support from the PRC government, including but not limited to government grants and state capital injection, primarily due to its engagement in business activities or projects that are in line with the relevant industry guidelines and regulations or encouraged by the PRC government. The Group believes that such governmental support, the amounts of which are variable, is generally available to other companies in the industry in which the Group operates that meet the criteria for the relevant business scale and/or projects set by the PRC government. There is, however, no assurance that the Group will continue to receive such governmental support and, if the Group is not able to remain qualified for, or the relevant PRC government changes its policy regarding, such governmental support, it would materially and adversely affect the Group’s businesses, financial condition and results of operations.

The Group’s operations are subject to risks relating to occupational hazards and production safety.

The Group’s mining operations involve handling and storage of certain dangerous substances, and its operations also involve the use of heavy machinery, giving rise to inherent risks that cannot be completely eliminated through prevention efforts. The Group and its third-party contractors may encounter accidents, maintenance or technical difficulties, mechanical failures or breakdowns during the exploration, mining and production processes. The occurrence of such accidents may disrupt or result in a suspension of the Group’s operations, increase production costs, result in liability to the Group and harm its reputation. Such incidents may also result in a breach of laws and regulations applicable to the Group’s mining operations,

–20– or any consent, approvals or authorisations obtained from the relevant authorities, which may result in fines and penalties or even possible revocation of the Group’s mining operation permits. There have been instances where the Group were imposed administrative penalties by the relevant PRC governmental authorities for safety accidents during the business operations. In October 2018, during an onsite overhaul conducted by a third-party contractor to Jinchuan Group Co., Ltd. Thermoelectric Branch, severe casualties (five deaths, one serious injury and 14 minor injuries, all of whom were employees of the third-party contractor) were caused by the leakage of carbon monoxide. The Group took immediate actions to properly handle the aftermath of the accident and takes measures to ensure the work safety. The thermoelectric branch was fined RMB700 thousand as the thermal power plant was considered to be mainly responsible for the occurrence of the accident and the expansion of casualties according to the reply to the incident investigation report from Jinchuan Municipal Government and the Administrative Penalty Decision (JinYingJiFa [2019] No. 2) issued by Jinchang City Emergency Management Bureau. There is no assurance that the Group can avoid similar accidents in the future, the occurrence of which may materially and adversely affect the Group’s businesses, financial condition and results of operations in the future.

The Group’s operations are also subject to manufacturing, operating and handling risks associated with the products the Group produces and the machinery the Group uses in its operations, including storage and transportation of raw materials, products, hazardous substances and waste. The Group is exposed to potential hazards including discharges or releases of hazardous substances, exposure to dust and the operation of mobile equipment and manufacturing machinery. These risks can subject the Group to potentially significant liabilities relating to personal injury, death or property damage, and may result in civil or criminal penalties, which could harm the Group’s productivity, profitability and reputation.

There is no assurance that accidents such as fire, equipment mishandling and mechanical failures which may result in property damage, severe personal injuries or even fatalities will not occur during the course of the Group’s operations. If the Group or its third-party contractors fail to comply with any relevant laws, regulations or policies or any accidents occur as a result of any of the foregoing events, it may materially and adversely affect the Group’s businesses, financial condition and results of operations and the Group may be subject to penalties, and civil or criminal liabilities.

Product liability claims against the Group could materially and adversely affect the Group’s businesses, financial condition and results of operations.

The corporate customers of the Group, from time to time could claim that the Group’s products do not meet contractual requirements or that quality defects exist, and seek to return or exchange the products they have purchased. Retail customers and third-parties could claim to have been harmed by the Group’s products. Disputes could arise between the Group and its customers, as well as third-parties, with respect to breach of contract, warranty or recall claims, or claims for negligence, product liability, strict liability, personal injury or property damage. There is no assurance that safety measures, processes and policies the Group has in place for its operations will be sufficient to mitigate or reduce casualties or accidents and to investigate and address claims related to product liabilities. Any such claims, with or without merit, could result in litigation and significant diversion of management’s attention and resources. Investigating and defending against these claims could be time-consuming and could incur significant cost and result in damage to the Group’s reputation.

Public information on the Group may be limited and PRC corporate disclosure and accounting standards differ from IFRS.

While one of the Guarantor’s subsidiaries, Jinchuan International Resources, is listed on the Hong Kong Stock Exchange, the Group is a private company incorporated in the PRC and is not listed on any stock exchange. There may be less publicly available information about the Group than is regularly made available by public companies in certain other countries and territories. In addition, the consolidated financial statements of the Group are prepared and presented in accordance with PRC GAAP, which are different from IFRS.

–21– The Group derives a certain amount of business from international operations that are subject to foreign economic and political uncertainties and security risks.

The Group has been operating part of the Group’s businesses, primarily through the Group’s subsidiaries, Jinchuan Group (Hong Kong) Resources Holdings Limited and Jinchuan International Resources, outside of China, including in countries and territories that are subject to rapidly changing economic and political conditions beyond the Group’s control. The Group intends to continue exploring business opportunities in selected foreign markets and strategically expanding the global footprint of the Group’s overseas operations. As a result, the Group is exposed to various risks associated with conducting businesses in foreign jurisdictions and territories, including, among others, risks associated with:

• politics, including risks of loss due to civil unrest, acts of terrorism, acts of war, regional and global political or military tensions, strikes and strained or altered foreign or community relations related to China or other relevant countries;

• economic, financial and market instability, and credit risks, including, for example, those relating to the potential deterioration of the credit markets and other economic conditions in the United States and other countries;

• changes in foreign government regulations or policies;

• dependence on foreign governments or entities controlled by such foreign governments for electricity, water, transportation and other utility or infrastructural needs;

• trade restrictions or embargoes;

• sanctions imposed by certain countries against transactions with other countries in which the Group conducts businesses, such as sanctions imposed by the Office of Foreign Assets Control of the U.S. Department of the Treasury and the European Unions, which may limit the Group’s ability to obtain funding for certain overseas projects;

• expropriation and nationalisation of the Group’s assets in foreign jurisdictions; and

• lack of a well-developed or independent legal system in the foreign jurisdictions in which the Group has overseas operations, which may create difficulties in the enforcement of contractual rights.

The Group may be subject to OFAC and other economic sanctions risks in its overseas business.

The Group has historically generated immaterial revenue from or within the countries which are the targets of economic sanctions imposed by the U.S and other jurisdictions, including the DRC, Cuba, Sudan, Myanmar and Zimbabwe. For example, the Guarantor has subsidiaries in the DRC which operate and develop copper mines and projects in the DRC, including the Ruashi, Kinsenda, Lubembe and Musonoi mines. The Guarantor also purchased cobalt hydroxide from Ruashi Mining Company in the DRC.

The Group has implemented internal control systems relating to business dealings to avoid conducting any business with the sanctioned regimes, regions or organisations. However, there is no guarantee that such measures are sufficient. Furthermore, the sanction laws of the U.S. and other jurisdictions are evolving and changing frequently, and there is no guarantee that the Group’s internal control measures will be sufficient for the Group to track such changes in a timely manner. Should the Group conduct any transaction with such sanctioned regimes, regions or organisations, it may be found to be in breach of sanction laws, which may result in a potential penalty from the sanction law authorities of the relevant jurisdiction. The Group’s ability to obtain funding for certain overseas projects may also be limited.

–22– The Group is subject to risks relating to the political, economic, regulatory, legal and social aspects associated with conducting operations in Zambia and the DRC and investing in South Africa and Indonesia.

The Group conducts certain of its mining operations in high-risk jurisdictions such as the DRC, Zambia, South Africa and Indonesia. Similar to other emerging markets, Zambia, the DRC South Africa and Indonesia are subject to certain political, economic, regulatory, legal and social developments that may, individually or in combination, create risks for investors that may be more difficult to predict or measure than in certain developed economies.

These risks, which the Group believes are greater in Zambia and the DRC, include, among others, labour unrest, invalidation of governmental orders and permits, corruption, uncertain political and economic environments, sovereign risk, war (including within or with other countries), civil disturbances and terrorist actions, arbitrary changes in laws or policies, the failure of foreign parties to honour contractual relations with little or no recourse to local courts, challenges to or reviews of the Group’s legal and contractual rights, reviews of taxation of foreign companies, changing tax and royalty regimes, delays in obtaining or the inability to obtain, or the cancellation of, necessary governmental permits, limitations on foreign ownership, limitations on the repatriation of earnings, limitations on mineral exports, price controls, review of taxes on foreign investment, instability due to economic underdevelopment, inadequate infrastructure and increased financing costs. As a result of conflict in the DRC, international governments may impose regulations or sanctions to limit commercial trade activities for and make more burdensome purchases of goods and services originating in the DRC, which could materially and adversely affect the Group’s businesses, financial condition and results of operations.

The DRC is in transition from a largely state-controlled economy to one based on free market principles, and from a non-democratic political system with a centralised ethnic power base to one based on more democratic principles. The northeast region of the DRC has undergone civil unrest and instability in recent years which could have an impact on political, social or economic conditions in the DRC more broadly. While the government of the DRC is working to extend the central government’s authority into this region, there can be no assurance that such efforts will be successful. In addition, many of the mineral rights and interests of the Group in the DRC are subject to government approvals, licences and permits, which, as a practical matter, are subject to the discretion of applicable governments or governmental officials. No assurance can be given that the Group will be successful in obtaining, maintaining or renewing any or all of the various approvals, licences and permits required to operate its projects in full force and effect or without modification or revocation. Although the Group’s projects in the DRC are in the southeast of the country, the effect of unrest and instability on political, social or economic conditions in the DRC could result in the impairment of the Group’s exploration, future development and prospective mining operations.

The Congolese Parliament adopted the New Mining Code in January 2018. Pursuant to the New Mining Code, subcontracting activities in the mining sector are subject to an act establishing the rules applicable to subcontracting in the private sector (the Subcontracting Act). The Subcontracting Act notably provides that activities can only be subcontracted to Congolese-owned companies promoted by Congolese nationals (with strictly limited exceptions); all companies established on Congolese national territory must put in place, internally, a policy of training that should allow Congolese nationals to acquire the technical know-how and the qualifications necessary to accomplish certain activities; and companies may not subcontract more than 40 per cent of the value of a contract. In this respect, whereas local content requirements were already imposed on subcontracting activities in the mining sector by a ministerial decree, the Subcontracting Act’s implementation measures impose rather unclear obligations on mining operators and subcontractors.

–23– The DRC and Zambian laws in respect of mining codes, tax laws and environmental legislation are susceptible to change, revision or cancellation in connection with any changes in ruling political party or government. Such changes may have a material adverse effect on the Group’s results of operations and business. Political disruptions and civil unrest that may occur in any neighbouring countries could potentially have an adverse effect on Zambian and the DRC exports and consequently, on the Group’s business. Changes or instability to the economic or political environment in any of South Africa or its neighbouring countries could affect the attractiveness of South Africa as a country to invest in or do business with and which could materially and adversely affect the Group’s businesses, financial condition and results of operations.

Changes in the interpretation or enforcement of the laws and regulations currently in effect in Zambia, the DRC, South Africa and Indonesia could adversely affect the Group’s business and it is difficult to predict the future political, social and economic direction in these countries.

The Group is subject to risks relating to the restrictions on mineral production in the DRC and Zambia.

The Group, when conducting its mining and producing operations in the DRC and Zambia, is subject to various applicable laws, regulations and policies relating to the limitations or prohibitions on mineral exports and production. Any changes or implementation of new laws, regulations and policies in this regard could materially and adversely affect the Group’s businesses, financial condition and results of operations.

Both the DRC and Zambia government had recently revisited its mining legislations. Copper and cobalt royalties in the DRC were raised from 2% to 3.5% in June 2018 and the DRC government has further declared cobalt as a “strategic” mineral and nearly tripling the royalty rate to 10% near the end of 2018. Crossing the border, the Zambia government has implemented a new 5% import tax on copper concentrates produced in the DRC and exported to Zambia for processing, with effect from 1 January 2019. The implementation of the new DRC Mining Code and Zambia import tax may impact the Group’s sales international strategy and cashflow.

The Group may not be able to maintain the provision of adequate and uninterrupted supplies of electricity, water, necessary raw materials, auxiliary materials, equipment and spare parts at favourable prices or at all.

The Group’s successful operations depend on its ability to obtain in a timely manner from suppliers sufficient quantities of raw materials, auxiliary materials, energy and water supplies and other commodities at acceptable prices and quality. Electricity and water are the main utilities used in the Group’s operations. There can be no assurance that supplies of electricity, water, raw materials and auxiliary materials, equipment or spare parts will not be interrupted or that their prices will not increase in the future. For example, in the DRC, electricity supplied from its national electricity company SNEL has been erratic due to the poor infrastructure and inadequate maintenance of the national power grids, cables and plants. The mining operations and development activities of the Group at the Ruashi Mine and the Kinsenda Project have been disrupted from time to time as a result of such power outages. While efforts have been made to improve the availability of power supplies at the Ruashi Mine such as leasing diesel powered generators, there is no guarantee that the Group’s operations at the Ruashi Mine and the Kinsenda Project will not be interrupted in the future, which may materially and adversely affect the Group’s businesses, financial condition and results of operations.

An interruption in supply of electricity or other materials will materially and adversely affect the Group’s underground production and its safety by disrupting operations such as water pumping and ventilation. In addition, an interruption in the supply of electricity, water, auxiliary materials, equipment or spare parts will materially and adversely affect the operation of the Group’s ore processing plant and other facilities and a suspension of operation may happen as a result. In addition, if there is any increase in the prices, the Group’s ability to pass the increased costs to its customers is limited.

–24– The Group is exposed to foreign exchange rate fluctuations.

A substantial portion of the Group’s revenues and cost of sales is denominated in Renminbi. However, the Group conducts part of its mining business overseas, and the Group has made and expects to continue to make significant equity and other investments in overseas mining and other projects. The Group’s foreign exchange-denominated assets and liabilities are expected to significantly increase as the Group further expands its overseas businesses. The Group is therefore subject to significant risks associated with foreign currency fluctuations.

The conversion of Renminbi into foreign currencies, including the US dollar, has been based on rates set by the PBOC. Since 21 July 2005, the Renminbi is no longer pegged solely to the U.S. dollar. Instead, a managed floating exchange system has been introduced by the PRC government which allows the Renminbi to fluctuate within a regulated band based on market supply and demand and by reference to a basket of currencies. There can be no assurance that such exchange rate will remain stable against the U.S. dollar or other foreign currencies in the market. In August 2015, the PBOC lowered the daily mid-point trading price of Renminbi significantly against the U.S. dollar. On 5 August 2019, the PBOC set the Renminbi’s daily reference rate above 7 per U.S. dollar for the first time in over a decade amidst an uncertain trade and global economic climate. In this regard, depreciation of the Renminbi against the United States dollar or any such other relevant foreign currencies could have an adverse effect on the Group’s business, financial condition and results of operations. Any volatility of the Renminbi exchange rate in the future may materially affect the Group’s business, financial condition, operating results and future prospects, and any devaluation of Renminbi against the U.S. dollar will increase the amount of Renminbi the Group would need to service its obligations denominated in U.S. dollars or other relevant currencies.

The Group is subject to risks normally associated with cross-border trading, and the Group’s export products have been and may become subject to anti-dumping or countervailing duty proceedings.

The Group generates revenues from exports of certain non-ferrous metals and minerals products to foreign jurisdictions. Such foreign jurisdictions to which the Group makes export sales may take restrictive measures, including, among others, anti-dumping duties and other non-tariff barriers, to protect their own markets. The Group’s sales in major overseas markets may be adversely affected by increases in or new impositions of anti-dumping duties, countervailing duties, quotas or tariffs imposed on the Group’s exports. Further increases in or new imposition of anti-dumping duties, countervailing duties, quotas or tariffs on the Group’s sales in these markets could adversely affect the exports to these regions in the future. By virtue of its transactions with parties outside the PRC, the Group will be subject to the risks normally associated with cross-border business transactions and activities. The Group will also be exposed to the risk of changes in social, legal, political and economic conditions in the foreign jurisdictions to which it exports. In particular, unexpected changes in regulatory requirements, tariffs and other trade barriers and price or exchange controls could limit the Group’s operations and make the repatriation of profits difficult.

The Group’s operations consume substantial amounts of coal and natural gas, and the Group’s operations may be adversely affected if the Group is not able to procure sufficient coal and natural gas or if coal and natural gas prices rise significantly.

The Group relies heavily on coal and natural gas as its energy and fuel source in the Group’s production of metals. If the Group is not able to obtain the amount of coal and natural gas needed for its production due to a shortage of coal and natural gas, constraints on coal and natural gas transportation or any other reason, the Group may be forced to reduce its production output or suspend its metal refining operations, which could materially and adversely affect the Group’s businesses, financial condition and results of operations. Should the price of coal or natural gas increase, it would materially and adversely affect the Group’s operating margin, financial condition and results of operations if the Group is unable to pass on increases in the coal and natural gas prices to its customers or offset price increases through productivity improvements.

–25– The Group is subject to inventory risks.

As at 31 December 2019, the Group’s inventory amounted to approximately RMB21,195.7 million, primarily comprising raw materials of RMB7,300.9 million and finished goods inventory of RMB5,352.3 million. Having an appropriate level of finished goods inventory is crucial in meeting the volatile market demand and an appropriate level of raw materials inventory is pivotal in minimising the effect of the volatility of the raw materials prices. Any sudden decrease in the market demand and the corresponding unanticipated drop in the sales of the relevant goods or any failure of the Group in successfully maintaining the flexibility in its raw materials supply arrangements could cause the Group’s inventory to accumulate or depreciate in value, which may adversely affect the Group’s businesses, financial condition and results of operations. The Group reviews its inventory from time to time and makes provisions when it deems necessary. Any unanticipated depreciation of the Group’s inventory value could materially and adversely affect the Group’s businesses, financial condition and results of operations.

The Group’s hedging strategy may not always be effective.

The Group is exposed to market risks primarily arising from changes in prices of raw materials, products and inventory. In order to mitigate these risks, the Group utilizes derivative instruments in the futures market of nickel, copper and precious metals to hedge its exposure to changing commodity prices. The Group may not be able to realize gains from its futures contracts to the extent it anticipates or at all, or the Group may even suffer a loss if its expectation about the future market conditions is wrong. The Group has internal policies aiming at avoiding engaging in speculative investment by the use of futures trading. However, there is no assurance that the Group’s hedging strategy and activities will be effective. In the event of disruptions in the commodity exchanges or markets in which the Group engages in these hedging transactions, the Group’s ability to manage price risk may be adversely affected. Any occurrence of the foregoing events could materially and adversely affect the Group’s business, financial condition and results of operations.

The Group may experience a shortage of reliable and adequate transport capacity for its goods. Any disruption in transportation of its goods or any material increase in transportation costs could materially and adversely affect the Group’s businesses, financial condition and results of operations.

The Group uses roadway, railway and cargo ship systems to transport its goods to its customers in the PRC or abroad. It did not experience any transportation disruption that had a material adverse effect on its businesses, financial condition and results of operations for the years ended 31 December 2017, 2018 and 2019. However, there is no assurance that the Group can always secure sufficient roadway, railway or seaborne transportation capacity or that disruptions will not occur in the future. Furthermore, natural disasters may cause interruption to the transportation system, which could in turn affect the transportation of its goods. In addition, any changes in fuel prices or fuel supply may be unpredictable and beyond the Group’s control. There is no assurance that shortage of fuel will not occur in the future. Any surge in fuel prices or shortage of fuel supply may lead to increases in our operation and transportation costs. In such cases, if the Group cannot transfer the increased costs to its customers, its profitability and operations could be adversely affected.

Changes in government tax policy may materially and adversely affect the Group’s businesses, financial condition and results of operations.

The Group’s subsidiaries in the PRC are generally subject to a corporate income tax rate of 25% under the relevant PRC enterprise income tax law currently in effect. Some of the Group’s subsidiaries are entitled to preferential tax treatment, such as the 15% preferential tax rate due to China’s national polity of western development. To the extent there are any changes in, or withdrawals of, the Group’s preferential tax treatment, or increases in the effective tax rate, the Group’s tax liability would increase correspondingly. In addition, the PRC government from time to time adjusts or changes its policies on value-added, business, resources, fuel and oil, property development and other taxes. Such adjustments or changes, together with any uncertainty resulting therefrom, could materially and adversely affect the Group’s businesses, financial condition and results of operations.

–26– Any failure to maintain an effective quality control system for the Group’s production, construction and other operational activities could materially and adversely affect the Group’s businesses, financial condition and results of operations.

The quality of the Group’s services and products is critical to the success of its businesses and operations. In order to continue the success of its businesses, the Group needs to maintain an effective quality control system for the Group’s production, construction and other operational activities. The effectiveness of the Group’s quality control system depends significantly on a number of factors, including the design of the system and the related training programme, as well as the Group’s ability to ensure that the Group’s employees adhere to its quality control policies and guidelines. Any failure or deterioration of the Group’s quality control systems could result in defects in its products or projects, which in turn may subject the Group to contractual, product liability and other claims. Any such claims, regardless of whether they are ultimately successful, could cause the Group to incur significant costs, harm its business reputation and result in significant disruption to its operations. Furthermore, if any of such claims was ultimately successful, the Group could be required to pay substantial monetary damages or penalties, which could materially and adversely affect the Group’s businesses, financial condition and results of operations.

The Group is subject to litigation risks.

In the ordinary course of business, claims involving customers, suppliers, subcontractors and project owners may be brought against the Group and by the Group in connection with its contracts. Claims may be brought against the Group for back charges for alleged defective or incomplete work, liabilities for defective products, personal injuries and deaths, damage to or destruction of property, breaches of warranty, delayed payments to the Group’s suppliers or subcontractors, or late completion of projects or other contracts. The claims and back charges may involve actual damages and contractually agreed upon liquidated sums. If the Group were found to be liable on any of the claims, the Group would have to incur a charge against earnings to the extent a reserve had not been established for the matter in the Group’s accounts, or to the extent the claims were not sufficiently covered by the Group’s insurance coverage. The Group may bring charges against the counterparties for their failure to fulfil the contractual obligations. Both claims brought against the Group and by the Group, if not resolved through negotiation, are often subject to lengthy and expensive litigation or arbitration proceedings. Charges associated with claims brought against the Group and write-downs associated with claims brought by the Group could materially and adversely affect the Group’s businesses, financial condition, results of operations and cash flow. Moreover, legal proceedings resulting in judgments or findings against the Group may harm the Group’s reputation and damage its prospects for future contract awards.

The Group may be exposed to claims in relation to the unsatisfactory performance of third-party service providers, and disputes with business partners may also materially and adversely affect its businesses, financial condition and results of operations.

The Group relies on third-party service providers for certain services, including but not limited to mining infrastructure construction, logistics services or warehouse management. Therefore, the Group is exposed to the risk that its third-party service providers may fail to perform their obligations, which may materially and adversely affect the Group’s businesses, financial condition and results of operations. In addition, from time to time, the Group co-operates with business partners to develop its businesses, including acquiring strategic mining resources or businesses that complement its own business line. Furthermore, the Group operates certain mining projects through joint venture arrangements and may enter into further joint ventures in the future along with the expansion of its operations. The Group may have disputes with these business partners or joint venture partners over various aspects, such as performance of each party’s obligations, scope of each party’s responsibilities, product quality and logistics services. Failure to timely settle such disputes could materially and adversely affect the Group’s businesses, financial condition and results of operations.

–27– The Group’s business depends substantially on the continuing efforts of its senior management team and its ability to attract and retain qualified technical personnel.

The Group’s business depends substantially on the continued services of its senior management team and, to a significant extent, on its ability to attract, train and retain qualified technical personnel. There can be no assurance that the Group will be able to attract or retain qualified technical personnel. If one or more of the Group’s senior management or key employees were unable or unwilling to continue their service with the Group, the Group might not be able to replace them with persons of equivalent expertise and experience within a reasonable period of time or at all. If any of the senior management or key employees of the Group joins a competitor or forms a competing company, the Group may lose customers, suppliers, know-how and key personnel and staff members. If any dispute arises between such employees and the Group, there can be no assurance that the extent to which any non-competition undertakings of such employees could be enforced in the Group’s favour or at all. In addition, as the Group’s business has grown and is expected to continue to grow rapidly, the Group’s ability to train and integrate new employees into its operations may not meet the growing demands of its business, which may materially and adversely affect the Group’s businesses, financial condition and results of operations.

Failure to protect the intellectual property rights of the Group may materially and adversely affect the Group’s businesses, financial condition and results of operations and the Group may be exposed to infringement or misappropriation claims by third parties.

As at 31 December 2019, the Group had 70 patents under application and 242 granted patents in the PRC, including 285 invention patents. As at 31 December 2019, the Group had more than 152 trademarks registered in the PRC. There is no assurance that the steps the Group has taken to protect its intellectual property rights are adequate to prevent or deter infringement or other misappropriation of its intellectual property. Any significant infringement of the Group’s brand name or other intellectual properties could weaken its competitive position and have an adverse effect on the Group’s operations. To protect the Group’s intellectual property rights, the Group may have to commence legal proceedings against any misappropriation or infringement. However, there is no assurance that the Group will prevail in such proceedings. The Group may be subject to litigation or other proceedings involving the allegations of violations of intellectual property rights of third parties. The defence of such litigation or other proceedings can be both costly and time-consuming. An adverse determination in any such litigation or proceedings to which the Group may become a party could materially and adversely affect the Group’s businesses, financial condition or results of operations.

The Guarantor’s voting interests in its subsidiaries may be diluted.

One of the Guarantor’s subsidiaries, Jinchuan International Resources, is listed on the Hong Kong Stock Exchange with the stock code of 2362. Such subsidiary may from time to time need additional capital to achieve their expansion plans or other business objectives, and may issue additional shares or other equity securities to meet their capital needs. The Guarantor may be unable to, or choose not to, subscribe for the securities offered in any such additional issuances by its subsidiaries. If the Guarantor fails to subscribe for additional equity securities of a subsidiary on a pro-rata basis consistent with the Guarantor’s existing shareholding in such subsidiary, the Guarantor’s equity interest in such subsidiary will be diluted. A dilution in the Guarantor’s equity interest in a subsidiary would reduce the Guarantor’s share of the profits earned by such subsidiary, which may materially and adversely affect the Group’s businesses, financial condition and results of operations. If the Guarantor reduces its ownership significantly, it may cause its representation on such subsidiary’s board of directors to be reduced, or otherwise reduce the Guarantor’s ability to influence or direct the operations of that subsidiary.

The Group has a portfolio of multiple businesses, which exposes it to challenges in managing its ancillary business segments.

The Group primarily engages in the exploration, mining, smelting, processing and trading of various non-ferrous metals. The Group also engages in manufacture and sales of chemical products. The Group’s management may experience difficulty ensuring that sufficient attention and support are provided to each of its ancillary businesses, and may also not possess the necessary experience or be able to focus on what

–28– drives each business segment, in terms of factors such as preferred suppliers, operating costs and the dynamics of the relevant industry. In addition, it may be difficult for the Group to concentrate on building any particular ancillary businesses, which by extension may prevent the Group from retaining its leading position in its core businesses.

The Group may have difficulties in monitoring and deploying internal control measures with respect to the Group’s business operations in an effective and timely manner because of its large number of operating subsidiaries and their broad range of businesses.

The development of the Group’s management and internal control measures has largely coincided with the expansion of its businesses. Some of the Group’s internal control and coordinating measures relating to its operations may not be implemented satisfactorily throughout the Group because as at 31 December 2019, the Group has approximately 127 direct and indirect subsidiaries, a broad range of businesses and a large and widely dispersed middle-level management team. As a result, competition often arises among the Group’s subsidiaries, and the Group may from time to time encounter difficulties in monitoring compliance with its internal control policies and procedures and the relevant laws and regulations by its subsidiaries and its managerial and other employees. In addition, the Group conducts its overseas operations in many countries and jurisdictions, and may be governed by different laws, regulations and business practices and conventions. The Group’s unfamiliarity with these foreign laws and regulations or the Group’s inability to effectively manage the activities of its overseas subsidiaries, joint ventures or third parties could expose the Group to legal risks and liabilities, including corrupt business practices. Accordingly, as the Group streamlines the operations of the Group’s various subsidiaries and operations, the Group aims to continue to strengthen its management and internal control mechanisms to address such integration issues, through various measures such as the integrated management of the Group’s financial data, risk management, consolidation of internal resources, and a uniform information system. However, the Group cannot guarantee that it will be able to implement internal control mechanisms that will promptly and adequately respond to its expanded scope of operations; nor can the Group guarantee that its employees will not, in their personal capacity, act in such a way that contravenes the Group’s internal control procedures.

The interests of the Group’s controlling shareholder who exerts significant influence over the Group may conflict with the interests of the Group.

As at the date of this Offering Circular, Gansu SASAC, through its wholly-owned subsidiary Gansu Assets Investment Group Co., Ltd. and other subsidiaries, beneficially owns 66% of the Group’s share capital. The interests of Gansu SASAC may conflict or even compete with the interests of the Group and/or the Group’s other shareholders. Gansu SASAC may take actions that are in the interest of its subsidiaries, associates and other related entities to the Group’s detriment. For example, Gansu SASAC may seek to influence the Group’s decision as to the amount of dividends the Group declares and distributes. Any increase in the Group’s dividend payout would reduce funds otherwise available for reinvestment in the Group’s businesses and thus may adversely affect the Group’s future prospects and financial condition.

The Group may not be able to detect and prevent fraud or other misconduct committed by its employees, representatives, agents, customers or other third parties.

The Group may be exposed to fraud or other misconduct committed by its employees, representatives, agents, customers or other third parties that could subject it to litigation, financial losses and sanctions imposed by governmental authorities, as well as affects its reputation. These misconducts could include:

• hiding unauthorised or unsuccessful activities, resulting in unknown and unmanaged risks or losses;

• intentionally concealing material facts, or failing to perform necessary due diligence procedures designed to identify potential risks, which are material to the Group in deciding whether to make investments or dispose of assets;

• improperly using or disclosing confidential information;

–29– • engaging in improper activities such as offering bribes to counterparties in return for any type of benefits or gains;

• misappropriation of funds;

• conducting transactions that exceed authorised limits;

• engaging in misrepresentation or fraudulent, deceptive or otherwise improper activities;

• engaging in unauthorised or excessive transactions to the detriment of the Group’s customers; or

• otherwise not complying with applicable laws or the Group’s internal policies and procedures.

The Group’s internal control procedures are designed to monitor its operations and ensure overall compliance. However, such internal control procedures may be unable to identify all incidents of noncompliance or suspicious transactions in a timely manner if at all. Furthermore, it is not always possible to detect and prevent fraud and other misconduct, and the precautions the Group takes to prevent and detect such activities may not be effective.

There is no assurance that fraud or other misconduct will not occur in the future. If such fraud or other misconduct does occur, it may cause negative publicity as a result, and could materially and adversely affect the Group’s businesses, financial condition and results of operations.

The Group’s operations depend on its research and development capabilities, which may not always produce positive results.

The Group’s ability to improve its mining capabilities and profit from its technology services business segment depends largely on the Group’s research and development capabilities. However, research and development programmes require considerable human resources, time and capital investment and the benefits of any such investment may not yield immediate tangible benefits. There can be no assurance that its research and development efforts will be effective. Even if such efforts are successful, the Group may be unable to apply such new technologies to products in ways that are accepted by customers.

If the Group is unable to maintain or enhance the Group’s research and development capabilities, the Group may be placed at a disadvantageous position against the Group’s competitors domestically and overseas, thereby materially and adversely affecting the Group’s businesses, financial condition, results of operations and future development. The Group is often engaged to undertake large, complicated projects that require it to develop or adopt new technology and construction methods, which could put a strain on its research and development resources. The use of new technology and construction methods may also result in experimental failures, increased costs and unstable conditions, which may adversely affect the profitability of some of the Group’s projects.

The Group’s indebtedness could leave the Group exposed to interest rate risk and could limit the Group’s ability to fund its business operations and expansion.

The Group is subject to financial leverage. The Group has relied, and expects to continue to rely, on both short-term and long-term borrowings to fund its capital requirements. As at 31 December 2019, the Group had a total bank credit facility of approximately RMB180 billion. As at 31 December 2019, the Group had long-term loans of RMB19,527.0 million, short-term loans of RMB14,995.0 million, and bonds payables of RMB6,000.0 million, respectively. A significant increase in interest rates would increase the Group’s payment obligations and could materially and adversely affect the Group’s businesses, financial condition and results of operations. There can be no assurance that the PBOC will not raise lending rates, and any increase in these rates will increase the Group’s financing cost and may materially and adversely affect the Group’s businesses, financial condition and results of operations. The Group’s borrowings could limit the Group’s ability to secure funding for its operations and the Group’s future expansion. The decrease in funds available to the Group could also limit its ability to respond to changing market conditions, increase its vulnerability to adverse economic and industry conditions and place the Group at a competitive

–30– disadvantage compared to those of its competitors that have greater capital resources. Moreover, the Group may not have sufficient funds to pay off its borrowings upon maturity, and the Group may not be able to refinance or restructure such borrowings on terms satisfactory to the Group or at all.

In addition, during offshore acquisitions, the Group may be required to provide bank guarantees in favour of the sellers to secure payment obligations. The availability of bank guarantees depends on various factors, including the Group’s capitalisation, working capital, borrowing levels, past performance, management expertise and external factors, such as the relevant financial institutions’ evaluation of the Group’s credit, general market conditions and the overall financial capacity of the financial institutions, some of which factors are beyond the Group’s control. There is no guarantee that the Group will continue to be able to obtain sufficient bank guarantees, which may materially and adversely affect the Group’s ability to secure offshore acquisitions.

Failure to comply with the restrictions and covenants in the Group’s debt agreements could materially and adversely affect the Group’s businesses, financial condition and results of operations.

If the Guarantor or any of its subsidiaries is unable to comply with the restrictions (including restrictions on the Guarantor’s future investments) and covenants in its current or future debt obligations and other agreements, there could be a default under the terms of such obligations or agreements. In the event of a default under these agreements, the holders of the debt could terminate their commitments to lend to the Guarantor or its subsidiaries, accelerate repayment of the debt and declare all outstanding amounts due and payable or terminate the agreements, as the case may be. Furthermore, some of the debt agreements which the Guarantor or its subsidiaries have entered into may contain cross-acceleration or cross-default provisions. As a result, default by the Guarantor or its subsidiaries under any of such agreements may cause the acceleration of repayment of not only such debt but also other debt, including the Bond, or result in a default under other debt agreements. If any of these events occurs, there is no assurance that the assets and cash flows of the Group would be sufficient to repay in full all of the debts as they become due, or that the Group would be able to find alternative financing on terms that are favourable or acceptable to the Group.

The Group is exposed to inclement weather and climatic conditions, acts of God, severe contagious disease, acts of terrorism or war, and adverse work environments in the PRC and overseas.

A significant amount of the Group’s business activities are conducted outdoors and could be materially and adversely affected by weather and climatic conditions. The Group also operates in areas that are under the threat of ice storms, floods, earthquakes, landslides, mudslides, sandstorms or drought. Acts of war and terrorist attacks, including those in foreign jurisdictions in which the Group has operations, may cause damage or disruption to the Group and its employees, subcontractors, operations, equipment, facilities and markets, any of which could affect the Group’s business, financial condition and results of operations. The outbreak of any severe contagious disease such as SARS, H1N1 Influenza and COVID-19 could also result in interruption of the Group’s business. If any of the Group’s employees is suspected of having contagious disease or condition, the Group may be required to apply quarantines or suspend the operations. Furthermore, any outbreak of pandemic diseases, such as COVID-19, may restrict economic activities in affected regions, resulting in reduced business volume, temporary closure of our offices or mines, or otherwise disrupt our business operations and adversely affect our results of operations. In addition, HIV/AIDS, malaria and other diseases are prevalent in Zambia, the DRC and South Africa. The per capita incidences of the HIV/AIDS virus in these countries have been estimated as being among the highest in the world. A significant increase in the incidence of HIV and AIDS infection and HIV and AIDS-related diseases among its workforce over the next several years may limit or disrupt the Group’s exploration and operation activities or development of future mining operations. During periods of curtailed activity, the Group may continue to incur operating expenses, but the Group’s revenue from operations may be delayed or reduced. Such events could also have severe effects on the overall business sentiments and environment in the PRC and the world, and may in turn lead to a slower economic growth in the PRC or global economy, which may have materially and adversely affect the Group’s businesses, financial condition and results of operations.

–31– In addition, the Group conducts some of the Group’s operations under a variety of geographical and other conditions, including on difficult terrain, under harsh site conditions, in busy urban centres where delivery of materials and availability of labour may be affected, and on sites which may previously have been exposed to environmental hazards. Such conditions may result in personal injuries or fatalities or have a negative effect on the Group’s work performance and efficiency.

The 2020 Third Quarterly financial information has not been reviewed or audited by the auditor of the Group and does not form part of this Offering Circular.

The 2020 Third Quarterly financial information published on the website hosted by China Foreign Exchange Trade System (http://www.chinamoney.com.cn/) has not been audited or reviewed by the Group’s auditor, and accordingly, does not provide the same quality of information associated with information that has been subject to an audit or review. The 2020 Third Quarterly financial information does not form part of this Offering Circular and should not be relied upon by investors in any way.

Daxin, the auditor of the Guarantor, may be involved in investigations initiated by relevant PRC authorities and/or subject to litigation or other proceedings from time to time.

Daxin, the auditor for the Guarantor, is a registered accounting firm in the PRC. It is supervised by relevant PRC regulatory agencies, including China Securities Regulatory Commission (中國證券監督管理委員會)(“CSRC”). In the past few years, Daxin has been subject to several administrative sanction by the CSRC. For example, in January 2020, Jilin Regulatory Bureau of CSRC issued a warning letter to Daxin in relation to its inadequate procedure when performing audit of the financial statements of Changchun Gas Co., Ltd. (長春燃氣股份有限公司). In March 2020, Shanghai Regulatory Bureau of CSRC issued a warning letter to Daxin in relation to its inadequate procedure when performing audit of the financial statements of Beijing Tianxiang Changyun Technology Co., Ltd. (北京天翔昌運科技股份有限公司). In July 2020, Beijing Regulatory Bureau of CSRC issued a warning letter to Daxin for its violation of Provisions on the Regular Rotation of Signatory Certified Public Accountants for the Securities and Futures Auditing Business (關於證券期貨審計業務簽字註冊會計師定期輪換的規定).

Daxin has also recently been the subject of certain litigation proceedings in connection with its audit services. In January 2019, the CSRC issued an administrative penalty decision against Daxin in relation to certain inadequate procedures and violations of accounting standards in connection with its preparation of the audited financial statements of Wuyang Construction Group Co. Ltd. (五洋建設集團股份有限公司) (“Wuyang”) for its onshore bond offering, and Daxin was subject to a fine of RMB1.8 million. Subsequently in December 2020, the Hangzhou Intermediate People’s Court made a first instance judgment on a class action litigation by bondholders in relation to the misstatements in the financial statements in the offering of the bonds issued by Wuyang, and held that the intermediaries involved in the transaction, including Daxin, were jointly and severally liable for the damages caused by Wuyang’s misrepresentation of an aggregate amount of RMB790 million. Whilst Daxin has confirmed that it intends to appeal against the first instance judgment and that it has sufficient internal resources and insurance coverage to cover any required damages or compensation even if the appeal is unsuccessful, there is no assurance that Daxin will not be subject to any other administrative actions, litigation or other proceedings in the future.

According to Daxin, none of the abovementioned administrative sanctions and litigation proceedings are related to the Daxin serving as the Guarantor’s current auditor. The abovementioned administrative sanctions imposed by CSRC and the litigation proceedings involving Wuyang do not disqualify the Daxin from participating in the offering of the Bonds or have any impact on the ability of Daxin to provide services to the Group. There can be no assurance that the involvement of Daxin in such administrative actions or litigation and other proceedings or any negative news about Daxin would not affect investors’ confidence in companies and financial statements audited or reviewed by it. Prospective investors should consider these factors prior to making any investment decision.

–32– RISKS RELATING TO THE PRC

Changes in the PRC’s economic, political and social conditions as well as governmental policies could materially and adversely affect the Group’s businesses, financial condition and results of operations.

Substantially all of the Group’s assets and operations are located in the PRC and substantially all of the revenue is derived from its operations in the PRC. Accordingly, the Group’s business operations and prospects are subject, to a significant degree, to the economic, political and legal development in the PRC. The Chinese economy differs from the economies of most developed countries in many respects, including that it:

• has a high level of government involvement;

• is in a relatively early stage of development of a market-oriented economy;

• has experienced rapid growth;

• has a tightly controlled foreign exchange policy; and

• may be characterised by a relatively inefficient allocation of resources.

While the Chinese economy has undergone significant growth during the past 30 years, the growth has been uneven across different regions and among various economic sectors. A substantial portion of productive assets in China, including mines, remain state-owned and the PRC government exercises a high degree of control over these assets.

In an effort to stimulate the growth of the Chinese economy, the PRC government has implemented and may continue to implement various monetary, fiscal or other economic measures to expand investments in infrastructural projects, increase liquidity in the credit markets and encourage employment. However, there is no assurance that such monetary, fiscal or other economic measures will prove to be effective. If the Chinese economy experiences a slowdown or even a downturn, the Group may experience a delay or reduction in, or cancellation of, projects available to the Group and demand for the services and products the Group provides in the Group’s various business segments may grow at a lower-than expected rate or otherwise decrease. Furthermore, the Group cannot guarantee that the Group is able to make timely adjustments to the Group’s business and operational strategies so as to capture and benefit from the potential business opportunities presented to the Group as a result of the changes in the economic and other policies of the PRC government. Also, the PRC government will continue to make adjustments to its economic policy objectives and measures in the future, which may include or result in a significant reduction in its budget for investments in infrastructure and other projects. This could materially and adversely affect the Group’s businesses, financial condition and results of operations. Moreover, unfavourable financing and other economic conditions for the industries that the Group serves could negatively affect the Group’s customers and their ability or willingness to fund capital expenditures in the future or pay for past services.

Government control of currency conversion and fluctuation in the exchange rate between the Renminbi and other currencies could negatively affect the Group’s ability to make payments to the Bondholders.

Most of the Group’s revenue is denominated and settled in Renminbi. The PRC government imposes controls on the convertibility of the Renminbi into foreign currencies and, in certain cases, the remittance of foreign currencies out of China. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and expenditures from trade related transactions, can be made in foreign currencies without prior approval from SAFE or its local counterparts provided that the Group satisfies certain procedural requirements. However, capital account transactions must be approved by or registered with SAFE or its local branch. The PRC government may also, at its discretion, restrict access in the future to foreign currencies for current account transactions.

–33– Since a significant amount of the Group’s future cash flows from operations will be denominated in Renminbi, any fluctuation in exchange rate between RMB and other currencies may limit the Group’s ability to purchase goods and services outside of China or otherwise fund its business activities that are conducted in foreign currencies. In addition, if the foreign exchange control system prevents the Group from obtaining sufficient foreign currency to satisfy its currency demands, the Group may not be able to make payments in foreign currencies to its Bondholders, which would adversely affect the value of your investment.

The Group’s labour costs may increase for reasons such as the implementation of the PRC Labour Contract Law or inflation in the PRC.

The PRC Labour Contract Law (《中華人民共和國勞動合同法》) became effective on 1 January 2008 in the PRC and was amended on 28 December 2012 and became effective on 1 July 2013. It imposes more stringent requirements on employers in relation to entry into fixed-term employment contracts and dismissal of employees. Pursuant to the PRC Labour Contract Law, the employer is required to make compensation payment to a fixed-term contract employee when the term of their employment contract expires, unless the employee does not agree to renew the contract even though the conditions offered by the employer for renewal are the same as or are better than those stipulated in the current employment contract. In general, the amount of compensation payment is equal to the monthly wage of the employee multiplied by the number of full years that the employee has worked for the employer. A minimum wage requirement has also been incorporated into the PRC Labour Contract Law. In addition, unless otherwise prohibited by the PRC Labour Contract Law or objected to by the employees themselves, the employer is also required to enter into non-fixed-term employment contracts with employees who have previously entered into fixed-term employment contracts for two consecutive terms.

In addition, under the Regulations on Paid Annual Leave for Employees (《職工帶薪年休假條例》), which became effective on 1 January 2008, employees who have worked continuously for more than one year are entitled to paid annual leave ranging from 5 to 15 days, depending on the length of the employees’ work time. Employees who consent to waive such vacation at the request of employers shall be compensated an amount equal to three times their normal daily salaries for each vacation day being waived. Under the National Leisure and Tourism Outline 2013-2020 (《國民旅遊休閒綱要2013-2020》) which became effective on 2 February 2013, regulations on paid annual leave of employees shall have been implemented on a general basis by 2020. As a result of the PRC Labour Contract Law, the Regulations on Paid Annual Leave for Employees and the National Leisure and Tourism Outline 2013-2020, the Group’s labour costs (inclusive of those incurred by contractors) may increase. Further, under the PRC Labour Contract Law, when an employer terminates its PRC employees’ employment, the employer may be required to compensate them for such amount which is determined based on their length of service with the employer, and the employer may not be able to efficiently terminate non-fixed-term employment contracts under the PRC Labour Contract Law without cause. In the event the Group decides to significantly change or decrease its workforce, the PRC Labour Contract Law could adversely affect its ability to effect these changes in a cost-effective manner or in the manner that the Group desires, which could materially and adversely affect the Group’s businesses, financial condition and results of operations. In addition, according to the Interim Provisions on Labor Dispatch (《勞務派遣暫行規定》) promulgated by the Ministry of Human Resources and Social Security on 24 January 2014, the number of dispatched employees engaged by any company may not exceed 10% of the total number of its employees, including both directly hired employees and dispatched employees, and dispatched employees can only be used for temporary, ancillary or substitutable positions. Some of the Group’s subsidiaries in the PRC have failed to comply with such regulations and may be required to make rectification within a specific time limit by relevant authorities; if not, they may be subject to a fine of RMB5,000 to RMB10,000 per dispatched employee.

Further, if there is a shortage of labour or for any reason the labour cost in the PRC rises significantly, the costs of production of the Group’s products is likely to increase. This may in turn affect the selling prices of the products, which may then affect the demand of such products and thereby adversely affect the Group’s sales and financial condition. Increase in costs of other components required for production of the products may cause similar adverse effects, particularly if the Group is unable to identify and employ other appropriate means to reduce the costs of production. In such circumstances, the profit margin may decrease and the financial results may be adversely affected.

–34– In addition, inflation in the PRC has increased in recent years. According to the National Bureau of Statistics of the PRC, consumer price inflation in the PRC was 1.6%, 2.1% and 2.9% in 2017, 2018 and 2019, respectively. Inflation in the PRC increases the costs of labour and the costs of raw materials the Group must purchase for production. Recently released data indicated that the PRC’s inflation rate will continue to rise in 2014. Rising labour costs may increase the Group’s operating costs and partially erode the cost advantage of the Group’s PRC-based operations and therefore negatively affect the Group’s profitability.

The PRC legal system is continuously evolving and has inherent uncertainties that could limit the legal protection available to Bondholders and the Group.

The PRC legal system is a civil law system based on written statutes. Unlike common law systems, prior court decisions may be cited for reference but have limited value as precedents, or at all. Since 1979, the PRC legal system has evolved rapidly and a large volume of laws and regulations governing economic matters in general, such as foreign investment, corporate organisation and governance, commerce, taxation and trade, have been promulgated by competent authorities. Some of these laws and regulations are relatively new, and as a result the volume of published cases in relation to these laws and regulations are limited. In addition, the interpretations of many laws, regulations and rules are not always consistent and uniform and the enforcement of these laws, regulations and rules involves uncertainties. These uncertainties could limit the legal protection available to the Group and foreign investors. Furthermore, any litigation in China may be protracted, resulting in substantial costs and diversion of the Group’s resources and management attention. As the Chinese legal system continues to evolve, the Group cannot predict the future development in the PRC legal system, including promulgation of new laws, changes to existing laws or the interpretation and enforcement thereof.

RISKS RELATING TO THE BONDS AND THE GUARANTEE

An active trading market for the Bonds may not develop and there may be limited liquidity for the Bonds.

The Bonds are a new issue of securities for which there is currently no trading market. There can be no assurance as to the liquidity of the Bonds or that an active trading market will develop or as to liquidity or sustainability of any such market, the ability of holders to sell their Bonds or the price at which holders will be able to sell their Bonds. If the Bonds are allocated to a limited group of investors, and a limited number of investors hold a significant proportion of the Bonds, liquidity will be restricted and the development of a liquid trading market for the Bonds will be affected. If a market does develop, it may not be liquid and the Bonds could trade at prices that may be higher or lower than the initial issue price depending on many factors, including prevailing interest rates, the Group’s operations and the market for similar securities. The Joint Lead Managers are not obligated to make a market in the Bonds and any such market making, if commenced, may be discontinued at any time at the sole discretion of the Joint Lead Managers. Therefore, investors may not be able to sell their Bonds easily or at prices that will provide them with a yield comparable to similar investments that have a developed secondary market. In addition, Bondholders should be aware of the prevailing and widely reported global credit market conditions (which continue at the date of this Offering Circular), whereby there is a general lack of liquidity in the secondary market for instruments similar to the Bonds. Such lack of liquidity may result in investors suffering losses on the Bonds in secondary resales even if there is no decline in the performance of the assets of the Group. It is not possible to predict which of these circumstances will change and whether, if and when they do change, there will be a more liquid market for the Bonds and instruments similar to the Bonds at that time. Although application will be made for the listing of the Bonds on the HKSE, no assurance can be given as to the liquidity of, or trading market for, the Bonds. In addition, the Bonds are being offered pursuant to exemptions from registration under the Securities Act and, as a result, investors will only be able to resell their Bonds in transactions that have been registered under the Securities Act or in transactions not subject to or exempt from registration under the Securities Act.

–35– If the Guarantor fails to complete registration with SAFE in connection with the Guarantee, there may be logistical hurdles for cross-border payments under the Guarantee.

Pursuant to the Deed of Guarantee executed by the Guarantor, the Guarantor will unconditionally and irrevocably guarantee the due payment of all sums expressed to be payable by the Issuer under the Bonds and the Trust Deed. The Guarantor is required to file or cause to be filed with SAFE, the Deed of Guarantee (the “Cross-Border Security Registration”) in accordance with, and within the time period prescribed by, the Provisions on the Foreign Exchange Administration on Cross-Border Guarantees (《跨境擔保外匯管理規定》)(“Foreign Exchange of Cross-Border Guarantee Measures”). Although the non-registration does not render the Guarantee ineffective or invalid under PRC law, the Guarantor may not be able to go through the procedures for the purchase of foreign exchange and remittance to perform its obligations under the Guarantee of the Bonds and SAFE may impose penalties on the Guarantor if registration is not carried out within the stipulated time frame. The Guarantor has undertaken to use its reasonable endeavours to complete the Cross-Border Security Registration before the Registration Deadline (being 100 Registration Business Days after the Issue Date). The Guarantor intends to complete the Cross-Border Security Registration as soon as practicable and in any event before the Registration Deadline. If the Cross-Border Security Registration is not completed within the Registration Deadline, the holder of a Bond shall have the option to require the Issuer to redeem such Bond pursuant to Condition 6(c) of the Terms and Conditions of the Bonds. In addition, if the Guarantor fails to complete such Cross-Border Security Registration, there may be logistical hurdles at the time of remittance of funds (if any cross-border payment is to be made by the Guarantor under the Guarantee) as domestic banks may require evidence of the Cross-Border Security Registration with SAFE in order to effect such remittance, although this does not affect the validity of the Guarantee itself.

Interpretation of the Foreign Exchange of Cross-Border Guarantee Measures may involve significant uncertainty, which may adversely affect the enforceability and/or effective performance of the Guarantee of the Bonds in the PRC. In addition, the administration of the Foreign Exchange of Cross-Border Guarantee Measures may be subject to a certain degree of executive and policy discretion by SAFE. There is no assurance that the Cross-Border Security Registration can be completed by the Guarantor or that such registration will not be revoked or amended in the future or that future changes in PRC laws and regulations will not have a negative impact on the validity and enforceability of the Guarantee of the Bonds in the PRC.

The Bonds and the Guarantee are unsecured obligations.

The Bonds and the Guarantee are unsecured obligations of the Issuer and the Guarantor, respectively. The payment obligations under the Bonds and the Guarantee may be adversely affected if:

• the Issuer or the Guarantor enters into bankruptcy, liquidation, reorganisation or other winding-up proceedings;

• there is a default in payment under the Issuer’s or the Guarantor’s future secured indebtedness or other unsecured indebtedness; or

• there is an acceleration of any of the Issuer’s or the Guarantor’s indebtedness.

If any of these events were to occur, the Issuer’s or the Guarantor’s assets may not be sufficient to pay amounts due on the Bonds.

The Issuer or the Guarantor may not be able to redeem the Bonds upon the due date for redemption thereof.

Following the occurrence of a Relevant Event (as defined in the Terms and Conditions of the Bonds), the Issuer may, at the option of any Bondholder, be required to redeem all, but not some only, of such Bondholder’s Bonds at 101 per cent. (in the case of a redemption for a Change of Control) or 100 per cent. (in the case of a redemption for a No Registration Event) of their principal amount, together in each case with accrued interest. If such an event were to occur, the Issuer may not have sufficient cash in hand and may not be able to arrange financing to redeem the Bonds in time, or on acceptable terms, or at all. There can also be no assurance that the Guarantor would have sufficient liquidity at such time to make the required redemption of the Bonds. The ability to redeem the Bonds in such event may also be limited by the terms of other debt instruments. Failure to repay or redeem tendered Bonds by the Issuer or the Guarantor could constitute an event of default under the Bonds, which may also constitute a default under the terms of the Issuer’s, the Guarantor’s or the Group’s other indebtedness.

–36– The Issuer has limited assets and will need to rely on cash flow from the Guarantor and other subsidiaries of the Guarantor (particularly onshore operating subsidiaries of the Guarantor) to service their respective obligations under the Bonds and the Guarantee.

The Issuer is a wholly-owned subsidiary of the Guarantor and has limited operations of its own and will be dependent upon payments from the Guarantor and its subsidiaries to meet its obligations under the Bonds and the Guarantee.

The Issuer has no business operations other than issuing the Bonds and engaging in related transactions. The proceeds from the issuance of the Bonds will be used by the Issuer for purposes of repaying offshore borrowings and supplementing offshore working capital. See “Use of proceeds”. Bondholders’ recourse to the Issuer is limited as the Issuer has only limited assets. The Issuer’s ability to make payments on the Bonds is dependent directly on payments (in the form of capital injections, intercompany loans or otherwise) to the Issuer by the Guarantor and certain of the Guarantor’s subsidiaries, which will depend on a number of factors, some of which may be beyond the control of the Guarantor and/or the Issuer. If the Guarantor or any of the Guarantor’s subsidiaries is unable to make timely payments to the Issuer, the Issuer will not have any other source of funds to meet its payment obligations under the Bonds.

If the Guarantor does not, or is unable for any reason, to make capital injections, intercompany loans or otherwise to the Issuer, the Issuer may be unable to comply with its payment obligations under the Bonds.

The liquidity and price of the Bonds following this offering may be volatile.

The price and trading volume of the Bonds may be highly volatile. Factors such as variations in the revenues, earnings and cash flows of the Group and proposals of new investments, strategic alliances and/or acquisitions, interest rates and fluctuations in prices for comparable companies could cause the price of the Bonds to change. Any such developments may result in large and sudden changes in the volume and price at which the Bonds will trade. There can be no assurance that these developments will not occur in the future.

A single or a limited number or group of investors, which may or may not be affiliated, may subscribe for a substantial portion of the principal amount of the Bonds.

A single or a limited number or group of investors, which may or may not be affiliated, may subscribe for a substantial portion of the principal amount of the Bonds. If a substantial portion of the Bonds is subscribed by a single or a limited number or group of investors, the interests of the other Bondholders may be affected. Any holder or group of affiliated holders of a substantial principal amount of the Bonds, even if less than a majority, will be able to exercise certain rights and powers in relation to the Bonds. For example, holders of the Bonds holding at least 75 per cent. of the aggregate principal amount of the Bonds may, subject to the Terms and Conditions of the Bonds, vote on an Extraordinary Resolution to approve a Winding-Up against the Issuer.

Holders of a substantial amount of the Bonds will also have substantial voting power and influence in meetings of Bondholders and in the consideration of extraordinary resolutions relating the Bonds. The interests of the holder or group of affiliated holders of a substantial principal amount of the Bonds may not be aligned or coincide with those of the other Bondholders. In addition, the presence of a substantial Bondholder(s) may also reduce the liquidity and trading price of the Bonds in the secondary trading market. There can accordingly be no assurance that any holdings by a holder of a substantial portion of the principal amount of the Bonds will not affect the interests of the other Bondholders of the Bonds.

Developments in the international financial markets and world economic conditions may adversely affect the market price of the Bonds.

The market price of the Bonds may be adversely affected by declines in the international financial markets and world economic conditions. The market for the Bonds is, to varying degrees, influenced by economic and market conditions in other markets. Although economic conditions are different in each country, investors’ reactions to developments in one country can affect the securities markets and the securities of issuers in other countries, including the PRC. Since the global financial crisis in 2008 and 2009, the international financial markets have experienced significant volatility. Recently, the international financial markets have also experienced significant volatility caused by global financial and economic happenings,

–37– including the European debt crisis, the withdrawal of the United Kingdom from the European, the escalation trade friction between the United States and the PRC and the outbreak of COVID-19. If similar developments occur in the international financial markets in the future, the market price of the Bonds could be adversely affected.

Investment in the Bonds is subject to interest rate risks.

The PRC government has gradually liberalised the regulation of interest rates in recent years. Further liberation may increase interest rate volatility. The Bonds will carry a fixed interest rate. Consequently, the trading price of the Bonds will vary with the fluctuations in the Renminbi interest rates. If Bondholders try to sell their Bonds before their maturity, they may receive an offer that is less than they have invested.

The Bonds may not be a suitable investment for all investors.

Each potential investor in any Bonds must determine the suitability of that investment in light of its own circumstances. In particular, each potential investor should:

• have sufficient knowledge and experience to make a meaningful evaluation of the Bonds, the merits and risks of investing in the Bonds and the information contained in this Offering Circular;

• have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its particular financial situation, an investment in the Bonds and the impact such investment will have on its overall investment portfolio;

• have sufficient financial resources and liquidity to bear all of the risks of an investment in the Bonds;

• understand thoroughly the terms of the Bonds and be familiar with the behaviour of any relevant indices and financial markets; and

• be able to evaluate (either alone or with the help of a financial advisor) possible scenarios for economic, interest rate and other factors that may affect its investment and its ability to bear the applicable risks.

A potential investor should not invest in Bonds which are complex financial instruments unless it has the expertise (either alone or with the help of a financial advisor) to evaluate how the Bonds will perform under changing conditions, the resulting effects on the value of such Bonds and the impact this investment will have on the potential investor’s overall investment portfolio.

Additionally, the investment activities of certain investors are subject to legal investment laws and regulations, or review or regulation by certain authorities. Each potential investor should consult its legal advisors to determine whether and to what extent (a) Bonds are legal investments for it, (b) Bonds can be used as collateral for various types of borrowing and (c) other restrictions apply to its purchase of any Bonds. Financial institutions should consult their legal advisors or the appropriate regulators to determine the appropriate treatment of Bonds under any applicable risk-based capital or similar rules.

Certain facts and statistics are derived from publications not independently verified by the Group, the Joint Lead Managers or their respective advisors.

Facts and statistics in this Offering Circular relating to global economy and the relevant industries are derived from publicly available sources. While the Issuer and the Guarantor have taken reasonable care to ensure that the facts and statistics presented are accurately reproduced from such sources, they have not been independently verified by any of the Issuer, the Guarantor, the Joint Lead Managers, the Trustee, the Agents or their respective directors, officers, employees, affiliates, representatives, agents or advisors, or any person who controls any of them and, therefore, none of these parties make any representation as to the accuracy of such facts and statistics. Due to possibly flawed or ineffective calculation and collection methods and other problems, the facts and statistics herein may be inaccurate or may not be comparable to facts and statistics produced for other economies and should not be unduly relied upon. Further, there is no assurance that they are stated or compiled on the same basis or with the same degree of accuracy as may be the case elsewhere.

–38– Bondholders may be subject to foreign exchange risks.

The Bonds are denominated and payable in U.S. dollars. A Bondholder who measures investment returns by reference to a currency other than U.S. dollars would be subject to foreign exchange risks by virtue of an investment in the Bonds, due to, among other things, economic, political and other factors over which none of the Issuer or the Guarantor has any control. Depreciation of the U.S. dollars against such currency could cause a decrease in the effective yield of the Bonds below their stated coupon rates and could result in a loss when the return on the Bonds is translated into such currency. In addition, there may be tax consequences for investors as a result of any foreign currency gains resulting from any investment in the Bonds.

The insolvency laws of Hong Kong, the PRC and other local insolvency laws may differ from those of another jurisdiction with which the Bondholders are familiar.

As the Issuer is incorporated under the laws of Hong Kong and the Guarantor is incorporated under the laws of the PRC, any insolvency proceeding relating to the Issuer or, as the case may be, the Guarantor would likely involve insolvency laws of Hong Kong or the PRC, as applicable, the procedural and substantive provisions of which may differ from comparable provisions of the local insolvency laws of jurisdictions with which the Bondholders are familiar.

Modifications and waivers may be made in respect of the Terms and Conditions of the Bonds, the Trust Deed, the Agency Agreement and the Deed of Guarantee by the Trustee or less than all of the Bondholders.

The Terms and Conditions of the Bonds contain provisions for calling meetings of Bondholders to consider matters affecting their interests generally. These provisions permit defined majorities to bind all Bondholders, including those Bondholders who do not attend and vote at the relevant meeting and those Bondholders who vote in a manner contrary to the majority. Furthermore, there is a risk that the decision of the majority of Bondholders may be adverse to the interests of individual Bondholders.

The Terms and Conditions of the Bonds also provide that the Trustee may (but shall not be obliged to), without the consent of Bondholders, agree to any modification of the Terms and Conditions of the Bonds, the Trust Deed, the Agency Agreement or the Deed of Guarantee (other than in respect of certain reserved matters) which in the opinion of the Trustee will not be materially prejudicial to the interests of Bondholders and to any modification of the Terms and Conditions of the Bonds, the Trust Deed or the Deed of Guarantee which is in its opinion of a formal, minor or technical nature or is to correct a manifest error or to comply with any mandatory provision of law.

In addition, the Trustee may (but shall not be obliged to), without the consent of the Bondholders, authorise or waive any proposed breach or breach, or failure to comply with, any of the Terms and Conditions of the Bonds, the Trust Deed, the Agency Agreement or the Deed of Guarantee (other than a proposed breach or breach relating to the subject of certain reserved matters) if, in the opinion of the Trustee, the interests of the Bondholders will not be materially prejudiced thereby.

The Trustee may request Bondholders to provide an indemnity and/or security and/or pre-funding to its satisfaction.

In certain circumstances, including without limitation the giving of notice to the Issuer and the Guarantor pursuant to Condition 9 of the Terms and Conditions of the Bonds and taking steps and/or actions and/or instituting proceedings pursuant to Condition 13 of the Terms and Conditions of the Bonds, the Trustee may, at its sole discretion, request Bondholders to provide an indemnity and/or security and/or pre-funding to its satisfaction before it takes such steps and/or actions and/or institutes proceedings on behalf of Bondholders. The Trustee shall not be obliged to take any such steps and/or actions and/or institute proceedings if not first indemnified and/or secured and/or pre-funded to its satisfaction. Negotiating and agreeing to an indemnity and/or security and/or pre-funding can be a lengthy process and may impact on

–39– when such steps and/or actions can be taken and/or when such proceedings can be instituted. The Trustee may not be able to take such steps and/or actions and/or institute such proceedings, notwithstanding the provision of an indemnity and/or security and/or pre-funding to it, in breach of the terms of the Trust Deed or the Terms and Conditions of the Bonds and in such circumstances, or where there is uncertainty or dispute as to the applicable laws or regulations, to the extent permitted by the agreements and the applicable laws and regulations, it will be for the Bondholders to take such steps and/or actions and/or institute proceedings directly.

The Issuer may issue additional Bonds in the future.

The Issuer may, from time to time, and without prior consultation of the Bondholders create and issue further Bonds (see “Terms and Conditions of the Bonds – Further Issues”) or otherwise raise additional capital through such means and in such manner as it may consider necessary. There can be no assurance that such future issuance or capital raising activity will not adversely affect the market price of the Bonds.

The Issuer may be treated as a PRC resident enterprise for PRC tax purposes and certain withholding taxes and value-added tax may be applicable.

Under the New Enterprise Income Tax (“EIT”) Law and its implementation rules, any gains realised on the transfer of the Bonds by Bondholders who are deemed under the new EIT law as non-resident enterprises may be subject to PRC EIT if such gains are regarded as incomes derived from sources within the PRC. Under the new EIT law, a “non-resident enterprise” means an enterprise established under the laws of a jurisdiction other than the PRC and whose actual administrative organisation is not in the PRC, which has established offices or premises in the PRC, or which has not established any offices or premises in the PRC but has obtained incomes derived from sources within the PRC. In addition, there is uncertainty as to whether gains realised on the transfer of the Bonds by individual holders who are not PRC citizens or residents will be subject to PRC individual income tax. If such gains are subject to PRC income tax, the 10 per cent. EIT rate and 20 per cent. individual income tax rate will apply respectively unless there is an applicable tax treaty or arrangement that reduces or exempts such income tax. The taxable income will be the balance of the total income obtained from the transfer of the Bonds minus all costs and expenses that are permitted under PRC tax laws to be deducted from the income. According to an arrangement between the PRC and Hong Kong for avoidance of double taxation, Bondholders who are Hong Kong residents, including both enterprise holders and individual holders, will be exempted from PRC income tax on capital gains derived from a sale or exchange of the Bonds.

VAT is unlikely to be applicable to any transfer of the Bonds between entitles or individuals located outside of the PRC and therefore unlikely to be applicable to gains realised upon such transfers of the Bonds, but there is uncertainty as to the applicability of VAT if either the seller or buyer of the Bonds is located inside the PRC. Notice of the Ministry of Finance and the State Administration of Taxation on Overall Implementation of the Pilot Program of Replacing Business Tax with Value-added Tax (《財政部、國家稅務總局關於全面推開營業稅改徵增值稅試點的通知》(“Circular 36”)) together with other laws and regulations pertaining to VAT are relatively new, the interpretation and enforcement of such laws and regulations involve uncertainties. VAT is applicable where the entities or individuals provide services within the PRC. The services are treated as being provided within the PRC where either the service provider or the service recipient is located in the PRC. The services subject to VAT include the provision of financial services such as the provision of loans. It is further clarified under Circular 36 that the “loans” refers to the activity of lending capital for another’s use and receiving the interest income thereon. Based on the definition of “loans” under Circular 36, the issuance of Bonds is likely to be treated as the Bondholders providing loans to the Issuer, which thus could be regarded as the provision of financial services that could be subject to VAT. Nevertheless, given that both the Issuer and the Bondholders under the Bonds are located outside of the PRC, it may be argued that the holders of the Bonds shall not be subject to VAT when receiving the interest payments under the Bonds. However, there can be no assurance that relevant PRC tax authorities will not regard the provision of loans to the Issuer under the Bonds as the provision of financial services within the PRC, which thus could be subject to VAT. If relevant PRC

–40– tax authorities deem the holders of the Bonds as providing financial services within the PRC, interest paid on the Bonds might be subject to PRC value-added tax and relevant local levies (currently at a rate of 6.36 – 6.72 per cent.), and the Issuer will be obliged to withhold the VAT.

If a Bondholder, being a non-resident enterprise or non-resident individual, is required to pay any PRC income tax or VAT on gains on the transfer of the Bonds, the value of the relevant Bondholder’s investment in the Bonds may be materially and adversely affected.

The Bonds will initially be represented by the Global Certificate and holders of a beneficial interest in the Global Certificate must rely on the procedures of the relevant Clearing System.

The Bonds will initially be represented by the Global Certificate. Such Global Certificate will be deposited with a common depositary for Euroclear and Clearstream (each of Euroclear and Clearstream, a “Clearing System”). Except in the circumstances described in the Global Certificate, investors will not be entitled to receive definitive Bonds. The relevant Clearing System will maintain records of the beneficial interests in the Global Certificate.

While the Bonds are represented by the Global Certificate, investors will be able to trade their beneficial interests only through the Clearing Systems. While the Bonds are represented by the Global Certificate the Issuer will discharge its payment obligations under the Bonds by making payments to the common depositary for Euroclear and Clearstream for distribution to their account holders. A holder of a beneficial interest in the Global Certificate must rely on the procedures of the relevant Clearing System to receive payments under the Bonds. The Issuer has no responsibility or liability for the records relating to, or payments made in respect of, beneficial interests in the Global Certificate.

Holders of beneficial interests in the Global Certificate will not have a direct right to vote in respect of the Bonds. Instead, such holders will be permitted to act only to the extent that they are enabled by the relevant Clearing System to appoint appropriate proxies.

The Guarantor’s obligations under the Guarantee will be structurally subordinated to all existing and future indebtedness and other liabilities of each of the Guarantor’s existing and future subsidiaries (other than the Issuer), and effectively subordinated to the Guarantor’s secured debt to the extent of the value of the collateral securing such indebtedness.

The Issuer was established by the Guarantor specifically for the purpose of issuing the Bonds and will on-lend the entire proceeds from the issue of the Bonds to other members of the Group. The Issuer does not and will not have any assets other than such loan(s) and its ability to make payments under the Bonds will depend on its receipt of timely payments from the borrower(s) under such loan arrangement(s).

The Guarantee will be structurally subordinated to any debt and other liabilities and commitments, including trade payables and lease obligations, of the Guarantor’s existing and future subsidiaries, whether or not secured. The Guarantor’s obligations under the Guarantee will not be guaranteed by any of the Guarantor’s subsidiaries, and the Guarantor’s ability to make payments under the Guarantee depends partly on the receipt of dividends, distributions, interest or advances from its subsidiaries. The ability of such subsidiaries to pay dividends to the Guarantor is subject to various restrictions under applicable laws. The Guarantor’s subsidiaries are separate legal entities that have no obligation to pay any amounts due under the Guarantee or make any funds available therefore, whether by dividends, loans or other payments. The Guarantor’s right to receive assets of any of the Guarantor’s subsidiaries, upon that subsidiary’s liquidation or reorganisation, will be effectively subordinated to the claim of that subsidiary’s creditors (except to the extent that the Guarantor are creditors of that subsidiary). Consequently, the Guarantee will be effectively subordinated to all liabilities, including trade payables and lease obligations, of any of the Guarantor’s subsidiaries and any subsidiaries that the Guarantor may in the future acquire or establish. The

–41– outstanding indebtedness of the subsidiaries of the Guarantor may also contain covenants restricting the ability of such subsidiaries to pay dividends in certain circumstances for so long as such indebtedness remains outstanding. Moreover, the Guarantor’s percentage interests in its subsidiaries and joint ventures could be reduced in the future.

The Guarantee is the Guarantor’s unsecured obligations and will (i) rank at least equally in right of payment with all the Guarantor’s other present and future unsubordinated and unsecured indebtedness; and (ii) be effectively subordinated to all of the Guarantor’s present and future secured indebtedness to the extent of the value of the collateral securing such obligations. Accordingly, claims of secured lenders, whether senior or junior, with respect to assets securing their loans will be prior with respect to those assets. In the event of the Guarantor’s bankruptcy, insolvency, liquidation, reorganisation, dissolution or other winding up, or upon any acceleration of the Bonds, these assets will be available to pay obligations on the Guarantee only after all other debt secured by these assets has been repaid in full. Any remaining assets will be available to the Bondholders rateably with all of the Guarantor’s other unsecured and unsubordinated creditors, including trade creditors. If there are not sufficient assets remaining to pay all these creditors, then all or a portion of the Bonds then outstanding would remain unpaid.

Investors should not place any reliance on any information released by the Guarantor on the website hosted by China Foreign Exchange Trade System.

As a company which issued domestic debt securities in the PRC, the Guarantor has been subject to periodic reporting and other information disclosure requirements in the PRC. As a result, from time to time the Guarantor publicly releases information relating to itself on the website hosted by China Foreign Exchange Trade System (http://www.chinamoney.com.cn/) or other media outlets. However, the information released by the Guarantor in connection with its domestic listing is based on the regulatory requirements of the securities authorities and market practices in the PRC which are different from those applicable to the offering of the Bonds. Such information does not and will not form a part of this Offering Circular. As a result, prospective investors of the Bonds are reminded that, in making their investment decisions as to whether to purchase the Bonds, they should rely only on the financial, operating and other information included in this Offering Circular. By applying to purchase the Bonds in the offering, investors will be deemed to have agreed that you will not rely on any information other than that contained in this Offering Circular.

The PRC government has no legal obligations under the Bonds or the Guarantee of the Bonds.

The PRC government is not an obligor and shall under no circumstances has any obligation arising out of or in connection with the Bonds or the Guarantee in lieu of the Issuer or, as the case may be, the Guarantor. Bondholders shall have no recourse to the PRC government in respect of any obligation arising out of or in connection with the Bonds or the Guarantee in lieu of the Issuer or, as the case may be, the Guarantor.

Gansu SASAC, which is supervised by the Gansu Provincial Government, as the controlling shareholder of the Guarantor, only has the limited liability in the form of its equity contribution in the Guarantor. Being controlled by Gansu SASAC does not provide assurance on the Issuer’s or the Guarantor’s financial condition. Gansu SASAC, or the Gansu Provincial Government, does not have any payment obligations under the Bonds or the Guarantee of the Bonds. The Bonds are solely to be repaid by the Issuer, and the Guarantor pursuant to the Guarantee, each as an obligor under the relevant transaction documents and as an independent legal person.

–42– TERMS AND CONDITIONS OF THE BONDS

The following other than the words in italics is the text of the terms and conditions of the Bonds substantially in the form in which they will appear on the reverse of each of the definitive certificates evidencing the Bonds:

The issue of the US$280,000,000 4.0 per cent. guaranteed bonds due 2024 (the “Bonds”, which term shall include, unless the context requires otherwise, any further bonds issued in accordance with Condition 15 and consolidated and forming a single series therewith) was authorised by a resolution of the Board of Directors of Jinchuan Golden Ocean Capital Limited (金川金海資本有限公司) (the “Issuer”) passed on 25 March 2020 and the guarantee of the Bonds was authorised by a resolution of the board of directors of Jinchuan Group Co., Ltd. (金川集團股份有限公司) (the “Guarantor”) passed on 27 September 2019 and shareholders resolutions of the Guarantor passed on 27 October 2019. The Bonds are constituted by a trust deed (the “Trust Deed”) dated on or about 10 February 2021 between the Issuer, the Guarantor and China Construction Bank (Asia) Corporation Limited (中國建設銀行(亞洲)股份有限公司) (the “Trustee”, which expression shall include all persons for the time being the trustee or trustees under the Trust Deed) as trustee for itself and the holders of the Bonds. These terms and conditions include summaries of, and are subject to, the detailed provisions of the Trust Deed, which includes the form of the Bonds. The Bonds have the benefit of a deed of guarantee (the “Deed of Guarantee”) dated on or about 10 February 2021 executed by the Guarantor and the Trustee relating to the Bonds. The Bonds are the subject of an agency agreement (the “Agency Agreement”) dated on or about 10 February 2021 relating to the Bonds between the Issuer, the Guarantor, the Trustee and China Construction Bank (Asia) Corporation Limited (中國建設銀行(亞洲)股份有限公司) as principal paying agent (the “Principal Paying Agent”, which expression shall include any successor principal paying agent appointed from time to time in connection with the Bonds), as the transfer agent (the “Transfer Agent”, which expression shall include any successor transfer agent appointed from time to time in connection with the Bonds) and as the registrar (the “Registrar”, which expression shall include any successor registrar appointed from time to time in connection with the Bonds), and any other agents named in it.

Copies of the Trust Deed, the Deed of Guarantee and the Agency Agreement are available for inspection by the Bondholders, at all reasonable times during usual business hours (being between 9:00 a.m. (Hong Kong time) and 3:00 p.m.(Hong Kong time)) from Monday to Friday (other than public holidays) at the principal office of the Trustee (presently at 20/F CCB Tower, 3 Connaught Road Central, Central, Hong Kong) and at the specified office of the Principal Paying Agent following prior written request and proof of holding and identity satisfactory to the Trustee or, as the case may be, the Principal Paying Agent. “Agents” means the Principal Paying Agent, the Registrar, the Transfer Agent and their respective successors and any other agent or agents appointed from time to time under the Agency Agreement with respect to the Bonds. The Bondholders are entitled to the benefit of, are bound by, and are deemed to have notice of, all the provisions of the Trust Deed and the Deed of Guarantee and are deemed to have notice of those provisions applicable to them of the Agency Agreement.

All capitalised terms that are not defined in these terms and conditions (these “Conditions”) will have the meanings given to them in the Trust Deed.

1 FORM, SPECIFIED DENOMINATION AND TITLE

The Bonds are issued in the specified denomination of US$200,000 and integral multiples of US$1,000 in excess thereof (each, an “Authorised Denomination”).

The Bonds are represented by registered certificates (the “Certificates”) and, save as provided in Condition 2(a), each Certificate shall represent the entire holding of Bonds by the same holder.

–43– Title to the Bonds shall pass only by transfer and by registration of title in the register that the Issuer shall procure to be kept by the Registrar in accordance with the provisions of the Agency Agreement (the “Register”). Except as ordered by a court of competent jurisdiction or as required by law, the holder (as defined below) of any Bond shall be deemed to be and may be treated as its absolute owner for all purposes whether or not it is overdue and regardless of any notice of ownership, trust or an interest in it, any writing on the Certificate representing it or the theft or loss of such Certificate and no person shall be liable for so treating the holder.

In these Conditions, “Bondholder” and “holder” mean the person in whose name a Bond is registered in the Register (or in the case of a joint holding, the first name thereof).

Upon issue, the Bonds will be represented by a global certificate (the “Global Certificate”) deposited with a common depositary for, and representing Bonds registered in the name of a nominee of, Euroclear Bank SA/NV (“Euroclear”) and Clearstream Banking S.A. (“Clearstream”). These Conditions are modified by certain provisions contained in the Global Certificate while any of the Bonds are represented by the Global Certificate. See “Summary of Provisions Relating to the Bonds in Global Form”.

Except in the limited circumstances described in the Global Certificate, owners of interests in Bonds represented by the Global Certificate will not be entitled to receive definitive Certificates in respect of their individual holdings of Bonds. The Bonds are not issuable in bearer form.

2 TRANSFERS OF BONDS AND DELIVERY OF NEW CERTIFICATES

(a) Transfer: A holding of Bonds may, subject to the Agency Agreement and Condition 2(d), be transferred in whole or in part upon the surrender (at the specified office of the Registrar or any Transfer Agent) of the Certificate(s) representing such Bonds to be transferred, together with the form of transfer endorsed on such Certificate(s) (or another form of transfer substantially in the same form and containing the same representations and certifications (if any), unless otherwise agreed by the Issuer), duly completed and executed and any other evidence as the Registrar or Transfer Agent may require; provided, however, that a Bond may not be transferred unless the principal amount of Bonds transferred and (where not all of the Bonds held by a Holder are being transferred) the principal amount of the balance of Bonds not transferred are Authorised Denominations. In the case of a transfer of only part of a holding of Bonds represented by one Certificate, a new Certificate shall be issued to the transferee in respect of the part transferred and a further new Certificate in respect of the balance of the holding not transferred shall be issued to the transferor. In the case of a transfer of Bonds to a person who is already a holder of Bonds, a new Certificate representing the enlarged holding shall only be issued against surrender of the Certificate representing the existing holding. No transfer of title to a Bond will be valid unless and until entered on the Register. All transfers of Bonds and entries on the Register will be made in accordance with the detailed regulations concerning transfers and registration of Bonds scheduled to the Agency Agreement. The regulations may be changed by the Issuer or the Registrar, with the prior written approval of the Registrar (in the case of any change proposed by the Issuer) and (in either case) the Trustee. A copy of the current regulations will be made available (free of charge to the Bondholders and at the Issuer’s expense) by the Registrar to any Bondholder upon prior written request and provision of proof of holding and identity to the satisfaction of the Registrar.

Transfers of interests in the Bonds evidenced by the Global Certificate will be effected in accordance with the rules of the relevant clearing systems.

–44– (b) Delivery of New Certificates: Each new Certificate to be issued upon transfer of Bonds pursuant to Condition 2(a) shall be available for delivery within five business days of receipt by the Registrar, or as the case may be, any Transfer Agent, of a duly completed form of transfer and surrender of the existing Certificate(s). Delivery of the new Certificate(s) shall be made at the specified office of the Transfer Agent or of the Registrar (as the case may be) to whom delivery or surrender of such form of transfer or Certificate shall have been made or, at the option of the holder making such delivery or surrender as aforesaid and as specified in the relevant form of transfer or otherwise in writing, be mailed by uninsured post at the risk of the holder entitled to the new Certificate to such address as may be so specified, unless such holder requests otherwise and pays in advance to the relevant Transfer Agent or the Registrar (as the case may be) the costs of such other method of delivery and/or such insurance as it may specify. In these Conditions, “business day” means a day, other than a Saturday or Sunday or public holiday, on which commercial banks are generally open for business in the place of the specified office of the relevant Transfer Agent or the Registrar (as the case may be).

Except in the limited circumstances described in the Global Certificate, owners of interests in the Bonds will not be entitled to receive physical delivery of Certificates.

(c) Transfer or Exercise Free of Charge: Certificates, on transfer, exercise of an option or partial redemption, shall be issued and registered without charge by or on behalf of the Issuer, the Registrar or any Transfer Agent, but upon payment by the relevant Bondholder of any tax or other governmental charges that may be imposed in relation to them (or the giving of such indemnity and/or security and/or pre-funding as the Registrar or the relevant Transfer Agent may require).

(d) Closed Periods: No Bondholder may require the transfer of a Bond to be registered (i) during the period of 15 days ending on (and including) the due date for any payment of principal (or premium), or interest in respect of that Bond, (ii) after a Put Exercise Notice has been deposited in respect of such Bonds pursuant to Condition 6(c), (iii) after any such Bond has been called for redemption, or (iv) during the period of seven days ending on (and including) any Record Date (as defined in Condition 7(a)(ii)).

3 GUARANTEE AND STATUS

(a) Guarantee: The Guarantor has unconditionally and irrevocably guaranteed the due payment of all sums expressed to be payable by the Issuer under the Trust Deed and the Bonds. Its obligations in respect of the Bonds and the Trust Deed (the “Guarantee”) are contained in the Deed of Guarantee. The obligations of the Guarantor under the Deed of Guarantee shall, save for such exceptions as may be provided by applicable legislation and subject to Condition 4, at all times rank at least equally with all its other present and future unsecured and unsubordinated obligations.

(b) Status: The Bonds constitute direct, unsubordinated, unconditional and (subject to Condition 4(a)) unsecured obligations of the Issuer and shall at all times rank pari passu and without any preference or priority among themselves. The payment obligations of the Issuer under the Bonds shall, save for such exceptions as may be provided by applicable legislation and subject to Condition 4, at all times rank at least equally with all its other present and future unsecured and unsubordinated obligations.

–45– 4 NEGATIVE PLEDGE AND OTHER COVENANTS

(a) Negative Pledge: So long as any Bond remains outstanding (as defined in the Trust Deed), neither the Issuer nor the Guarantor will, and each of the Issuer and the Guarantor will ensure that none of their respective Subsidiaries (other than a Listed Subsidiary or Subsidiary of a Listed Subsidiary) will, create, or have outstanding, any mortgage, charge, lien, pledge or other security interest, upon the whole or any part of its present or future undertaking, assets or revenues (including any uncalled capital) to secure any Relevant Indebtedness or to secure any guarantee or indemnity in respect of any Relevant Indebtedness, without at the same time or prior thereto according to the Bonds the same security as is created or subsisting to secure any such Relevant Indebtedness, guarantee or indemnity or such other security as either (i) the Trustee shall in its absolute discretion deem not materially less beneficial to the interest of the Bondholders or (ii) shall be approved by an Extraordinary Resolution (as defined in the Trust Deed) of the Bondholders.

(b) Undertakings relating to the Guarantee: The Guarantor undertakes that it will (i) file or cause to be filed with SAFE, the Deed of Guarantee within 15 Registration Business Days after the execution of the Deed of Guarantee in accordance with the Provisions on the Foreign Exchange Administration of Cross-Border Guarantees (跨境擔保外匯管理規定) promulgated by SAFE on 12 May 2014 which came into effect on 1 June 2014 (the “Cross-Border Security Registration”); and (ii) use its reasonable endeavours to complete the Cross-Border Security Registration and obtain a certificate of registration from SAFE (or any other document evidencing the completion of registration issued by SAFE) on or before the Registration Deadline and comply with all applicable PRC laws and regulations in relation to the Guarantee.

(c) Undertakings relating to NDRC: The Guarantor undertakes to file or cause to be filed with the NDRC the requisite information and documents within ten Registration Business Days after the Issue Date in accordance with the Circular on Promoting the Reform of the Filing and Registration System on the Issuance by Enterprises of Foreign Debt (國家發展改革委關於推進企業發行外債備案登記制管理改革的通知(發改外資[2015]2044號)) issued by the NDRC and which came into effect on 14 September 2015, and any implementation rules as issued by the NDRC from time to time (the “NDRC Post-issue Filing”) and shall comply with all applicable PRC laws and regulations in connection with the Bonds.

(d) Notification of Completion of the NDRC Post-issue Filing and the Cross-Border Security Registration: The Guarantor shall, within 15 Registration Business Days after the later of submission of the NDRC Post-issue Filing and the receipt of the registration certificate from SAFE (or any other document evidencing the completion of Cross-Border Security Registration), provide the Trustee and the Principal Paying Agent with: (i) a certificate in English substantially in the form set out in the Trust Deed signed by an Authorised Signatory (as defined in the Trust Deed) of the Guarantor confirming the completion of the NDRC Post-issue Filing and the Cross-Border Security Registration; and (ii) copies of the relevant documents evidencing the NDRC Post-issue Filing (if any) and SAFE registration certificates or any other document evidencing the completion of the Cross-Border Security Registration, each certified in English by an Authorised Signatory of the Guarantor, as being a true and complete copy of the original ((i) and (ii) together, the “Registration Documents”). Such certificate shall contain an instruction to the Principal Paying Agent to deliver the notice attached to such certificate to the Bondholders (in accordance with Condition 16) confirming the completion of the NDRC Post-issue Filing and the Cross-Border Security Registration.

The Trustee shall have no obligation or duty to monitor or ensure or to assist with the filing or registration of the Bonds or the Deed of Guarantee with SAFE at any time or to verify the accuracy, validity and/or genuineness of any documents in relation to or in connection with the Cross-Border Security Registration and/or the Registration Documents or to procure that any Registration Document is translated into English or to give notice to the Bondholders confirming the completion of the Cross-Border Security Registration, and shall not be liable to Bondholders or any other person for not doing so.

–46– (e) Issuer Activities: The Issuer shall not, and the Guarantor will procure that the Issuer will not, carry on any business activity whatsoever other than in connection with the issue of bonds and other offshore debt securities and any other activities reasonably incidental thereto (such activities shall, for the avoidance of doubt, include the on-lending of the proceeds of the issue of the bonds and other offshore debt securities to any other Subsidiaries of the Guarantor).

(f) Financial Statements: So long as any Bond remains outstanding, the Issuer and the Guarantor shall furnish the Trustee with (i) a Compliance Certificate of the Issuer and the Guarantor (on which the Trustee may rely conclusively as to such compliance and shall not be liable to any Bondholder or any other person for such reliance) and a copy of the relevant Guarantor Audited Financial Reports within 150 days of the end of each Relevant Period prepared in accordance with PRC GAAP (audited by a nationally recognised firm of independent accountants) and if such statements shall be in the Chinese language, together in each such case with an English translation of the same translated by (A) a nationally recognised firm of accountants or (B) a professional translation service provider and checked by a nationally recognised firm of accountants, together with a certificate in English signed by an Authorised Signatory of the Guarantor certifying that such translation is complete and accurate; and (ii) a copy of the Guarantor Unaudited Semi-Annual Financial Reports within 120 days of the end of each Relevant Period prepared on a basis consistent with the Guarantor Audited Financial Reports and if such statements shall be in the Chinese language, together in each such case with an English translation of the same and translated by (A) a nationally recognised firm of accountants or (B) a professional translation service provider and checked and confirmed by a nationally recognised firm of accountants, together with a certificate in English signed by an Authorised Signatory of the Guarantor certifying that such translation is complete and accurate.

(g) Rating Maintenance: So long as any Bond remains outstanding, save with the approval of an Extraordinary Resolution of the Bondholders, the Issuer and the Guarantor shall use their all reasonable endeavours to maintain a rating on the Bonds by at least one Rating Agency and notify the Trustee of any change in rating in accordance with the Trust Deed.

(h) In these Conditions:

“Compliance Certificate” means a certificate of each of the Issuer and the Guarantor signed by an Authorised Signatory of the Issuer or, as the case may be, the Guarantor that, having made all reasonable enquiries, to the best knowledge, information and belief of the Issuer or, as the case may be, the Guarantor as at a date (the “Certification Date”) not more than seven days before the date of the certificate that:

(i) no Event of Default (as defined in Condition 9 or Potential Event of Default (as defined in the Trust Deed)) has occurred since the Certification Date of the last such certificate or (if none) the date of the Trust Deed or, if such an event had occurred, giving details of it; and

(ii) the Issuer or the Guarantor (as the case may be) has complied with all its covenants and obligations under the Trust Deed, the Bonds and the Deed of Guarantee;

“Guarantor Audited Financial Reports” means, for a Relevant Period the annual audited consolidated balance sheet, income statement and cashflow statements of the Guarantor and its consolidated Subsidiaries together with any statements, reports (including any directors’ and auditors’ reports) and notes attached to or intended to be read with any of them, prepared in accordance with the applicable PRC GAAP;

“Guarantor Unaudited Semi-Annual Financial Reports” means, for a Relevant Period, the unaudited and unreviewed consolidated balance sheet, income statement and cashflow statements of the Guarantor and its consolidated Subsidiaries, prepared in accordance with the applicable PRC GAAP;

–47– “Issue Date” means 10 February 2021;

“Listed Subsidiary” means, at any time, any Subsidiary of the Issuer the shares of which are listed on The Stock Exchange of Hong Kong Limited or any other recognised stock exchange;

“NDRC” means the National Development and Reform Commission of the PRC;

“PRC” means the People’s Republic of China, and for the purposes of these Conditions only, excluding the Hong Kong Special Administrative Region of the People’s Republic of China, the Macau Special Administrative Region of the People’s Republic of China and Taiwan;

“PRC GAAP” means the Accounting Standards for Business Enterprises issued by the Ministry of Finance of the PRC from time to time;

“Rating Agencies” means any one of (i) S&P Global Ratings, a division of S&P Global Inc., and its successors (“S&P”), (ii) Moody’s Investors Service, Inc., a subsidiary of Moody’s Corporation, and its successors (“Moody’s”), (iii) Fitch Ratings and its successors (“Fitch”), or (iv) if one or more of S&P, Moody’s or Fitch shall not make a rating of the Bonds publicly available, any internationally recognised securities rating agency or agencies, as the case may be, selected by the Issuer, which shall be substituted for S&P, Moody’s or Fitch or any combination thereof, as the case may be;

“Registration Business Day” means a day, other than a Saturday or Sunday, on which commercial banks are generally open for business in Beijing;

“Registration Deadline” means the day falling 100 Registration Business Days after the issue date that the Bonds are issued;

“Relevant Indebtedness” means any indebtedness which is in the form of, or represented or evidenced by, bonds, notes, debentures, loan stock certificates or other securities which for the time being are, or are intended to be or capable of being, quoted, listed or dealt in or traded on any stock exchange or over-the-counter market or other securities market issued outside the PRC;

“Relevant Period” means, in relation to the Guarantor Audited Financial Reports and the Compliance Certificate of the Guarantor, each period of twelve months ending on the last day of the Guarantor’s financial year (being 31 December of that financial year) and, in relation to the Guarantor Unaudited Semi-Annual Financial Reports, each period of six months ending on the last day of the first half of the Guarantor’s financial year (being 30 June of that financial year);

“SAFE” means the State Administration of Foreign Exchange or its local branch; and a“Subsidiary” of any person means (a) any company or other business entity of which that person owns or controls (either directly or through one or more other Subsidiaries) more than 50 per cent. of the issued share capital or other ownership interest having ordinary voting power to elect directors, managers or trustees of such company or other business entity, or (b) any company or other business entity which at any time has its accounts consolidated with those of that person or which, under the laws, regulations or generally accepted accounting principles of the jurisdiction of incorporation of such person from time to time, should have its accounts consolidated with those of that person.

–48– 5 INTEREST

The Bonds bear interest on their outstanding principal amount from and including 10 February 2021 at the rate of 4.0 per cent. per annum, payable semi-annually in arrear in equal instalments of US$20.0 per Calculation Amount (as defined below) on 10 February and 10 August in each year (each an “Interest Payment Date”) commencing on 10 August 2021.

Each Bond will cease to bear interest from the due date for redemption unless, upon surrender of the Certificate representing such Bond, payment of principal or premium (if any) is improperly withheld or refused. In such event it shall continue to bear interest at such rate (both before and after judgment) until whichever is the earlier of (a) the day on which all sums due in respect of such Bond up to that day are received by or on behalf of the relevant Bondholder, and (b) the day falling seven days after the Trustee or the Principal Paying Agent has notified Bondholders of receipt of all sums due in respect of all the Bonds up to that seventh day (except to the extent that there is failure in the subsequent payment to the relevant Bondholder under these Conditions).

If interest is required to be calculated for a period of less than a complete Interest Period (as defined below), the relevant day-count fraction will be determined on the basis of a 360-day year consisting of 12 months of 30 days each and, in the case of an incomplete month, the number of days elapsed.

In these Conditions, the period beginning on and including 10 February 2021 and ending on but excluding the first Interest Payment Date and each successive period beginning on and including an Interest Payment Date and ending on but excluding the next succeeding Interest Payment Date is called an “Interest Period”.

Interest in respect of any Bond shall be calculated per US$1,000 in principal amount of the Bonds (the “Calculation Amount”). The amount of interest payable per Calculation Amount for any period shall (save as provided above in relation to equal instalments) be equal to the product of the rate of interest specified above in these Conditions, the Calculation Amount and the day count fraction for the relevant period, rounding the resulting figure to the nearest cent (half a cent being rounded upwards).

Where the Calculation Amount changes during an Interest Period, the amount of interest payable shall be calculated by applying the day-count fraction to each Calculation Amount for the period during which such Calculation Amount was applicable in such Interest Period and aggregating the results for the entire such Interest Period.

6 REDEMPTION AND PURCHASE

(a) Final Redemption: Unless previously redeemed, or purchased and cancelled, the Bonds will be redeemed at their principal amount on 10 February 2024. The Bonds may not be redeemed at the option of the Issuer other than in accordance with this Condition 6.

(b) Redemption for Taxation Reasons: The Bonds may be redeemed at the option of the Issuer in whole, but not in part, at any time, on giving not less than 30 nor more than 60 days’ notice to the Bondholders (which notice shall be irrevocable) and in writing to the Trustee and Principal Paying Agent, at their principal amount, (together with interest accrued up to but excluding the date fixed for redemption), if the Issuer or, if the Guarantee were called, the Guarantor (as the case may be) satisfies the Trustee immediately prior to the giving of such notice that (i) the Issuer (or, if the Guarantee were called, the Guarantor) has or will become obliged to pay Additional Tax Amounts (as defined in Condition 8) as provided or referred to in Condition 8 as a result of any change in, or amendment to, the laws or regulations of Hong Kong or the PRC, or, in each case, any political subdivision or any authority thereof or therein having power to tax, or any change in the application or official interpretation of such laws or regulations (including, but not limited to, any decision by a court of competent jurisdiction),

–49– which change or amendment becomes effective on or after 4 February 2021, and (ii) such obligation cannot be avoided by the Issuer (or the Guarantor, as the case may be) taking reasonable measures available to it, provided that no such notice of redemption shall be given earlier than 90 days prior to the earliest date on which the Issuer (or the Guarantor, as the case may be) would be obliged to pay such Additional Tax Amounts were a payment in respect of the Bonds (or the Guarantee, as the case may be) then due. Prior to the publication of any notice of redemption pursuant to this Condition 6(b), the Issuer (or the Guarantor, as the case may be) shall deliver to the Trustee (A) a certificate in English signed by one Authorised Signatory (as defined in the Trust Deed) of the Issuer (or of the Guarantor, as the case may be) stating that the obligation referred to in (i) above cannot be avoided by the Issuer (or of the Guarantor, as the case may be) taking reasonable measures available to it, and (B) an opinion, in a form and substance satisfactory to the Trustee, of independent tax or legal advisers of recognised standing to the effect that the Issuer, or if the Guarantee were called, the Guarantor, has or will become obliged to pay such Additional Tax Amounts as a result of such change or amendments. The Trustee shall be entitled (but shall not be obliged) to accept and rely upon such certificate or opinion as sufficient evidence of the satisfaction of the condition precedent set out in (ii) above of this Condition 6(b), in which event it shall be conclusive and binding on the Bondholders and the Trustee shall be protected and shall have no liability to the Issuer, any Bondholder or any other person for so accepting and relying on such certificate or opinion. All Bonds in respect of which any notice of redemption is given under this Condition 6(b) shall be redeemed on the date and in such manner as specified in such notice in accordance with this Condition 6(b).

(c) Redemption for Relevant Events: At any time following the occurrence of a Relevant Event, the holder of any Bond will have the right, at such holder’s option, to require the Issuer to redeem all but not some only of that holder’s Bonds on the Put Settlement Date (as defined below) at 101 per cent. (in the case of a redemption for a Change of Control) or 100 per cent. (in the case of a redemption for a No Registration Event) of their principal amount, together with accrued interest up to but excluding such Put Settlement Date. In order to exercise such right, the holder of the relevant Bond must deposit at the specified office of the Principal Paying Agent or any other Paying Agent a duly completed and signed notice of redemption, in the form for the time being current, obtainable from the specified office of the Principal Paying Agent or any other Paying Agent (a “Put Exercise Notice”), together with the Certificate evidencing the Bonds to be redeemed by not later than 30 days following a Relevant Event, or, if later, 30 days following the date upon which notice thereof is given to the Bondholders by the Issuer in accordance with Condition 16.

The “Put Settlement Date” shall be the fourteenth day (in the case of a redemption for a Change of Control) or the seventh day (in the case of a redemption for a No Registration Event) after the expiry of such period of 30 days as referred to above. A Put Exercise Notice, once delivered, shall be irrevocable and the Issuer shall redeem the Bonds the subject of the Put Exercise Notices delivered as aforesaid on the Put Settlement Date.

The Issuer shall give notice to Bondholders in accordance with Condition 16 and to the Trustee and the Principal Paying Agent in writing by not later than 14 days (in the case of a redemption for a Change of Control) or five days (in the case of a redemption for a No Registration Event) following the first day on which it becomes aware of the occurrence of a Relevant Event, which notice shall specify the procedure for exercise by holders of their rights to require redemption of the Bonds pursuant to this Condition 6(c).

In this Condition 6:

a“Change of Control” occurs when:

(i) the Controlling Persons cease to directly or indirectly Control the Guarantor;

–50– (ii) the Guarantor consolidates with or merges into or sells or transfers all or substantially all of the Guarantor’s assets to any other person or persons, acting together, except where such person(s) is/are directly or indirectly Controlled by the Controlling Persons; or

(iii) the Guarantor ceases to directly or indirectly hold or own 100 per cent. of the issued share capital of the Issuer;

“Control” means: (i) in the case the Guarantor’s shares are not listed on any stock exchange, the ownership, acquisition or control by the Controlling Persons of more than 50 per cent. of the voting rights of the issued share capital of a person or (ii) in the case the Guarantor’s shares are listed on a stock exchange, the Controlling Persons, together, being the largest direct or indirect shareholder of the voting rights of the issued share capital of a person and having the right to appoint and/or the remove all or the majority of the members of a person’s board of directors or other equivalent or successor governing body, whether obtained directly or indirectly, and whether obtained by ownership of share capital, the possession of voting rights, contract or otherwise and the terms “controlling” and “controlled” have meanings correlative to the foregoing;

“Controlling Persons” mean (A) SASAC; (B) the central government of the PRC; (C) the provincial government of Gansu; and (D) any other person directly or indirectly wholly owned or wholly held by the central government of the PRC or the provincial government of Gansu;

a“No Registration Event” occurs when the Registration Conditions are not complied with on or before the Registration Deadline;

a“person” includes any individual, company, corporation, firm, partnership, joint venture, undertaking, association, organisation, trust, state, agency of a state (in each case whether or not being a separate legal entity) but does not include:

(i) the Guarantor’s board of directors or any other governing board; and

(ii) the Guarantor’s wholly-owned direct or indirect Subsidiaries;

“Registration Conditions” means the receipt by the Trustee of the Registration Documents;

a“Relevant Event” means a Change of Control or a No Registration Event; and

“SASAC” means the State-owned Assets Supervision and Administration Commission of Gansu Provincial Government or its successor.

The Trustee and the Agents shall not be required to take any steps to ascertain whether a Relevant Event has occurred and shall not be responsible for or liable to Bondholders, the Issuer or any other person for any loss arising from any failure to do so.

(d) Notices of redemption: If in respect of any Bond, a redemption notice pursuant to Condition 6(b) and a Put Exercise Notice are given, the Put Exercise Notice shall prevail.

(e) Purchase: The Issuer, the Guarantor and their respective Subsidiaries may at any time purchase Bonds in the open market or otherwise at any price. The Bonds so purchased, while held by or on behalf of the Issuer, the Guarantor or any such Subsidiary, shall not entitle the holder to vote at any meetings of the Bondholders and shall not be deemed to be outstanding, inter alia, for the purposes of calculating quorums at meetings of the Bondholders or for the purposes of Conditions 9, 12(a) and 13.

–51– (f) Cancellation: All Certificates representing Bonds purchased by or on behalf of the Issuer, the Guarantor and their respective Subsidiaries may be surrendered for cancellation to the Registrar and, upon surrender thereof, all such Bonds shall be cancelled forthwith. Any Certificates so surrendered for cancellation may not be reissued or resold and the obligations of the Issuer and the Guarantor in respect of any such Bonds shall be discharged.

7 PAYMENTS

(a) Method of Payment:

(i) Payments of principal and premium shall be made (subject to surrender of the relevant Certificates at the specified office of any Transfer Agent or of the Registrar if no further payment falls to be made in respect of the Bonds represented by such Certificates) in the manner provided in Condition 7(a)(ii) below.

(ii) Interest on each Bond shall be paid on the due date to the person shown on the Register at the close of business on the fifth Payment Business Day before the due date for payment thereof (the “Record Date”). Payments of interest on each Bond shall be made in US dollars by transfer to the registered account in U.S. dollars maintained by the Bondholder with a bank.

(iii) If the amount of principal being paid upon surrender of the relevant Certificate is less than the outstanding principal amount of such Certificate, the Registrar will annotate the Register with the amount of principal so paid and will (if so requested in writing by the Issuer or a Bondholder) issue a new Certificate with a principal amount equal to the remaining unpaid outstanding principal amount. If the amount of premium (if any) or interest being paid is less than the amount then due, the Registrar will annotate the Register with the amount of premium (if any) or interest so paid.

So long as the Global Certificate is held on behalf of Euroclear, Clearstream or any other clearing system, each payment in respect of the Global Certificate will be made to the person shown as the holder of the relevant Global Certificate in the Register at the close of business of the relevant clearing system on the Clearing System Business Day before the due date for such payments, where “Clearing System Business Day” means a weekday (Monday to Friday, inclusive) except 25 December and 1 January.

(b) Payments subject to Fiscal Laws: Payments will be subject in all cases to (i) any fiscal or other laws and regulations applicable thereto in the place of payment, but without prejudice to the provisions of Condition 8 and (ii) any withholding or deduction required pursuant to an agreement described in Section 1471(b) of the U.S. Internal Revenue Code of 1986 (the “Code”) or otherwise imposed pursuant to Sections 1471 through 1474 of the Code, any regulations or agreements thereunder, any official interpretations thereof, or (without prejudice to the provisions of Condition 8) any law implementing an intergovernmental approach thereto. No commission or expenses shall be charged to the Bondholders in respect of such payments.

(c) Payment Initiation: Payment instructions (for value on the due date or, if that is not a Payment Business Day, for value the first following day which is a Payment Business Day) will be initiated on the due date for payment (or, if that date is not a Payment Business Day, on the first following day which is a Payment Business Day), or, in the case of payments of principal and premium (if any) where the relevant Certificate has not been surrendered at the specified office of any Transfer Agent or of the Registrar, on a Payment Business Day on which the Principal Paying Agent is open for business and on which the relevant Certificate is surrendered.

–52– (d) Appointment of Agents: The Principal Paying Agent, the Registrar and the Transfer Agent initially appointed by the Issuer and the Guarantor and their respective specified offices are listed below. The Principal Paying Agent, the Registrar and the Transfer Agents act solely as agents of the Issuer and the Guarantor and do not assume any obligation or relationship of agency or trust for or with any Bondholder. The Issuer and the Guarantor reserve the right at any time with the approval of the Trustee to vary or terminate the appointment of the Principal Paying Agent, the Registrar, or the Transfer Agent and to appoint additional or other paying agents and/or transfer agents, provided that the Issuer shall at all times maintain (i) a Principal Paying Agent, (ii) a Registrar with a specified office outside the United Kingdom, (iii) a Transfer Agent, and (iv) such other agents as may be required by any other stock exchange on which the Bonds may be listed, in each case, as approved by the Trustee.

Notice of any such change or any change of any specified office shall promptly be given by the Issuer to the Bondholders in accordance with Condition 16.

(e) Delay in Payment: Bondholders will not be entitled to any interest or other payment for any delay after the due date in receiving the amount due on a Bond if the due date is not a Payment Business Day, or if the Bondholder is late in surrendering or cannot surrender its Certificate (if required to do so).

(f) Non-Payment Business Days: If any date for payment in respect of any Bond is not a Payment Business Day, the holder shall not be entitled to payment until the next following Payment Business Day nor to any interest or other sum in respect of such postponed payment. In this Condition 7, “Payment Business Day” means a day (other than a Saturday, a Sunday or a public holiday) on which banks and foreign exchange markets are generally open for business and settlement of U.S. dollars payments in Hong Kong and New York City (if surrender of the relevant Certificate is required) and the relevant place of presentation.

8 TAXATION

All payments of principal, premium and interest by or on behalf of the Issuer or the Guarantor in respect of the Bonds or under the Guarantee shall be made free and clear of, and without withholding or deduction for or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or within Hong Kong or the PRC or any political subdivision or any authority therein or thereof having power to tax, unless such withholding or deduction is required by law.

Where such withholding or deduction is made by the Issuer or, as the case may be, the Guarantor, by or within the PRC up to and including the aggregate rate applicable on 4 February 2021 (the “Applicable Rate”), the Issuer or, as the case may be, the Guarantor, will increase the amounts paid by it to the extent required, so that the net amount received by Bondholders equals the amounts which would otherwise have been receivable by them had no such withholding or deduction been required.

(a) Other connection: to a holder (or to a third party on behalf of a holder) who is liable to such taxes, duties, assessments or governmental charges in respect of such Bond by reason of his having some connection with Hong Kong (in the case of payments made by the Issuer) or the PRC (in the case of payments made by the Issuer or the Guarantor) other than the mere holding of the Bond or where the withholding or deduction could be avoided by the holder making a declaration of non-residence or other similar claim or filing for exemption to the appropriate authority; or

–53– (b) Surrender more than 30 days after the Relevant Date: in respect of which the Certificate representing it is presented for payment more than 30 days after the Relevant Date except to the extent that the holder of it would have been entitled to such Additional Tax Amounts on surrendering the Certificate representing such Bond for payment on the last day of such period of 30 days (as if such last day were a Payment Business Day).

“Relevant Date” in respect of any Bond means the date on which payment in respect of it first becomes due or (if any amount of the money payable is improperly withheld or refused) the date on which payment in full of the amount outstanding is made or (if earlier) the date seven days after that on which notice is duly given to the Bondholders that, upon further surrender of the Certificate representing such Bond being made in accordance with these Conditions, such payment will be made, provided that payment is in fact made upon such surrender.

Neither the Trustee nor any Agent shall be responsible for paying any tax, duty, charges, assessments, withholding or other payment referred to in this Condition 8 or otherwise in connection with the Bonds or for determining whether such amounts are payable or the amount thereof, and none of them shall be responsible or liable for any failure by the Issuer, the Guarantor, any Bondholder or any third party to pay such tax, duty, charges, assessments, withholding or other payment in any jurisdiction or to provide any notice or information to the Trustee or any Agent that would permit, enable or facilitate the payment of any principal, premium (if any), interest or other amount under or in respect of the Bonds without deduction or withholding for or on account of any tax, duty, charges, assessments withholding or other payment imposed by or in any jurisdiction.

9 EVENTS OF DEFAULT

If any of the following events (each an “Event of Default”) occurs, the Trustee at its discretion may, and if so requested in writing by holders of at least 25 per cent. of the aggregate principal amount of the Bonds then outstanding or if so directed by an Extraordinary Resolution, shall (provided in any such case that the Trustee shall have been indemnified and/or secured and/or pre-funded to its satisfaction), give written notice to the Issuer and the Guarantor that the Bonds are, and they shall immediately become, due and payable at their principal amount together (if applicable) with accrued interest:

(a) Non-Payment: the Issuer and the Guarantor each fail to pay the principal of any of the Bonds when due or any premium or interest on any of the Bonds within seven business days after the due date for payment; or

(b) Breach of Other Obligations: the Issuer or the Guarantor does not perform or comply with any one or more of its other obligations under the Bonds, the Trust Deed or the Deed of Guarantee (where applicable), which default is in the opinion of the Trustee incapable of remedy or, if such default is in the opinion of the Trustee capable of remedy, such default is not, remedied within 30 days after notice of such default shall have been given to the Issuer or the Guarantor (as the case may be) by the Trustee; or

(c) Cross-Default: (i) any other present or future indebtedness of the Issuer or the Guarantor or any of their respective Subsidiaries for or in respect of moneys borrowed or raised becomes (or becomes capable of being declared) due and payable prior to its stated maturity by reason of any actual or potential default, event of default or the like (howsoever described), or (ii) any such indebtedness is not paid when due or, as the case may be, within any originally applicable grace period, or (iii) the Issuer or the Guarantor or any of their respective Subsidiaries fails to pay when due any amount payable by it under any present or future guarantee for, or indemnity in respect of, any moneys borrowed or raised provided that the aggregate amount of the relevant indebtedness, guarantees and indemnities in respect of which one or more of the events mentioned above in this Condition 9(c) have occurred equals or exceeds US$40 million or its equivalent; or

–54– (d) Enforcement Proceedings: a distress, attachment, execution or other legal process is levied, enforced or sued out on or against a substantial part of the property, assets or revenues of the Issuer, the Guarantor or any of their respective Principal Subsidiaries and is not discharged or stayed within 30 days; or

(e) Security Enforced: any mortgage, charge, pledge, lien or other encumbrance, present or future, created or assumed by the Issuer, the Guarantor or any of their respective Principal Subsidiaries over all or a substantial part of its assets becomes enforceable and any step is taken to enforce it (including the taking of possession or the appointment of a receiver, manager or other similar person) and is not discharged within 30 days; or

(f) Insolvency: the Issuer, the Guarantor or any of their respective Principal Subsidiaries is (or is deemed by law or a court to be) insolvent or bankrupt or unable to pay its debts, stops, suspends or threatens to stop or suspend payment of all or a substantial part of its debts, proposes or makes any agreement for the deferral, rescheduling or other readjustment of all of its debts (other than in respect of any debt being contested in good faith and for which adequate reserves have been made), proposes or makes a general assignment or an arrangement or composition with or for the benefit of the relevant creditors in respect of any of such debts or a moratorium is agreed or declared in respect of or affecting all or a substantial part of the debts of the Issuer or the Guarantor or any of their respective Principal Subsidiaries; or

(g) Winding-up: an order is made or an effective resolution passed for the winding-up or dissolution of the Issuer, the Guarantor or any of their respective Principal Subsidiaries, or the Issuer or the Guarantor or any of their respective Principal Subsidiaries ceases or threatens to cease to carry on all or a substantial part of its business or operations, except for (i) the purpose of and followed by a reconstruction, amalgamation, reorganisation, merger or consolidation on terms approved by the Trustee or by an Extraordinary Resolution of the Bondholders, (ii) in the case of a Principal Subsidiary, whereby the undertaking and assets of the Principal Subsidiary are transferred to or otherwise vested in the Issuer or the Guarantor (as the case may be) or any of their respective Subsidiaries in any combination (iii) in the case of a Principal Subsidiary that is incorporated specifically for the purposes of prospecting for minerals, its voluntary, solvent winding-up or dissolution following the completion of the relevant prospecting or (iv) a disposal on an arm’s length basis where the assets resulting from such disposal are vested in the Guarantor or any of its Subsidiaries; or

(h) Nationalisation: any step is taken by any person with a view to the seizure, compulsory acquisition, expropriation or nationalisation of all or a substantial part of the assets of the Issuer, the Guarantor or any of their respective Principal Subsidiaries; or

(i) Authorisation and Consents: any action, condition or thing (including the obtaining or effecting of any necessary consent, approval, authorisation, exemption, filing, licence, order, recording or registration) at any time required to be taken, fulfilled or done in order (i) to enable the Issuer and the Guarantor lawfully to enter into, exercise their respective rights and perform and comply with their respective obligations under the Bonds, the Trust Deed and the Deed of Guarantee, (ii) to ensure that those obligations are legally binding and enforceable and (iii) to make the Bonds, the Trust Deed and the Deed of Guarantee admissible in evidence in the courts of Hong Kong is not taken, fulfilled or done; or

(j) Illegality: it is or will become unlawful for the Issuer or the Guarantor to perform or comply with any one or more of its obligations under any of the Bonds, the Trust Deed and/or the Deed of Guarantee; or

–55– (k) Unenforceability of Guarantee: the Guarantee becomes unenforceable or invalid or shall for any reason cease to be in full force and effect or is claimed to be unenforceable, invalid or not in full force and effect by the Guarantor; or

(l) Analogous Events: any event occurs which under the laws of any relevant jurisdiction has an analogous effect to any of the events referred to in any of Conditions 9(d) to 9(k) (both inclusive).

The Issuer has undertaken in the Trust Deed that, at the same time as its annual audited financial statements are issued, and also within 14 days after any written request by the Trustee, it will send to the Trustee a certificate signed by one Authorised Signatory of the Issuer to the effect that as at a date not more than five days prior to the date of the certificate, no Event of Default or event or circumstance that could with the giving of notice, lapse of time and/or issue of a certificate become an Event of Default or Relevant Event has occurred.

In this Condition 9, “Consolidated Total Assets”, in relation to an entity, means the aggregate of all assets of such entity as shown in the latest audited consolidated balance sheet of such entity.

In these Conditions:

“Principal Subsidiary” means any Subsidiary of the Guarantor:

(a) whose total assets or (in the case of a Subsidiary which itself has Subsidiaries) consolidated total assets, as shown by its latest audited balance sheet are at least 5 per cent. of the consolidated total assets of the Guarantor and its Subsidiaries as shown by the latest audited consolidated balance sheet of the Guarantor and its Subsidiaries including, for the avoidance of doubt, the investment of the Guarantor or in each Subsidiary whose accounts are not consolidated with the consolidated audited accounts of the Guarantor and after adjustment for minority interests; or

(b) whose total operating income or (in the case of a Subsidiary which itself has Subsidiaries) consolidated total operating income, as shown by its latest audited income statement is at least 5 per cent. of the consolidated total operating income as shown by the latest audited consolidated income statement of the Guarantor and its Subsidiaries including, for the avoidance of doubt, the Guarantor and its consolidated Subsidiaries’ share of total operating income of Subsidiaries not consolidated and of jointly controlled entities and after adjustment for minority interests; or

(c) whose net profits or (in the case of a Subsidiary which itself has Subsidiaries) consolidated net profits, as shown by its latest audited income statement are at least 5 per cent. of the consolidated net profits as shown by the latest audited consolidated income statement of the Guarantor and its Subsidiaries including, for the avoidance of doubt, the Guarantor and its consolidated Subsidiaries’ share of profits of Subsidiaries not consolidated and of jointly controlled entities and after adjustment for minority interests; or

(d) to which is transferred the whole or substantially the whole of the assets of a Subsidiary which immediately prior to such transfer was a Principal Subsidiary, provided that (xx) the Principal Subsidiary which so transfers its assets shall forthwith upon such transfer cease to be a Principal Subsidiary and the Subsidiary to which the assets are so transferred shall forthwith become a Principal Subsidiary and (yy) on or after the date on which the first published audited accounts (consolidated, if appropriate) of the Guarantor prepared as of a date later than such transfer are issued, whether such transferor Subsidiary or such transferee Subsidiary is or is not a Principal Subsidiary shall be determined on the basis of such accounts by virtue of the provisions of paragraphs (a), (b) or (c) above of this definition;

–56– provided that, in relation to paragraphs (a), (b) or (c) above:

(i) in the case of a corporation or other business entity becoming a Subsidiary after the end of the financial period to which the latest consolidated audited accounts of the Guarantor relate, the reference to the then latest consolidated audited accounts of the Guarantor for the purposes of the calculation above shall, until consolidated audited accounts of the Guarantor for the financial period in which the relevant corporation or other business entity becomes a Subsidiary are available, be deemed to be a reference to the then latest consolidated audited accounts of the Guarantor adjusted to consolidate the latest audited accounts (consolidated in the case of a Subsidiary which itself has Subsidiaries) of such Subsidiary in such accounts;

(ii) if at any relevant time in relation to the Guarantor or any Subsidiary which itself has Subsidiaries no consolidated accounts are prepared and audited, revenue, net profits or gross assets of the Guarantor and/or any such Subsidiary shall be determined on the basis of pro forma consolidated accounts prepared for this purpose by the Guarantor;

(iii) if at any relevant time in relation to any Subsidiary, no accounts are audited, its gross assets, revenue or net profits (consolidated, if appropriate) shall be determined on the basis of pro forma accounts (consolidated, if appropriate) of the relevant Subsidiary prepared for this purpose by the Guarantor; and

(iv) if the accounts of any subsidiary (not being a Subsidiary referred to in proviso (i) above) are not consolidated with those of the Guarantor, then the determination of whether or not such subsidiary is a Principal Subsidiary shall be based on a pro forma consolidation of its accounts (consolidated, if appropriate) with the consolidated accounts (determined on the basis of the foregoing) of the Guarantor.

A certificate prepared by the directors of the Guarantor, that in their opinion, a Subsidiary is or is not, or was or was not, a Principal Subsidiary shall, in the absence of manifest error, be conclusive and binding on the Bondholders and all parties.

10 PRESCRIPTION

Claims against the Issuer or the Guarantor for payment in respect of the Bonds or the Guarantee shall be prescribed and become void unless made within 10 years (in the case of principal or premium) or five years (in the case of interest) from the appropriate Relevant Date in respect of them.

11 REPLACEMENT OF CERTIFICATES

If any Certificate is lost, stolen, mutilated, defaced or destroyed, it may be replaced, subject to applicable laws, regulations or other relevant regulatory authority regulations, at the specified office of the Registrar or such other Transfer Agent as may from time to time be designated by the Issuer for that purpose and notice of whose designation is given to Bondholders, in each case on payment by the claimant of the fees and costs incurred in connection therewith and on such terms as to evidence, security, indemnity and otherwise as the Issuer, the Registrar or the relevant Transfer Agent may require. Mutilated or defaced Certificates must be surrendered before replacements will be issued.

12 MEETINGS OF BONDHOLDERS, MODIFICATION AND WAIVER

(a) Meetings of Bondholders: The Trust Deed contains provisions for convening meetings of Bondholders to consider matters affecting their interests, including the sanctioning by Extraordinary Resolution of a modification of any of these Conditions or any provisions of the Trust Deed, the Agency Agreement and/or the Deed of Guarantee. Such a meeting may be convened by the Trustee or upon the written request to the Trustee from the Bondholders

–57– holding not less than 10 per cent. in aggregate principal amount of the Bonds for the time being outstanding and subject to the Trustee being indemnified and/or secured and/or pre-funded to its satisfaction against all costs and expenses. The quorum for any meeting convened to consider an Extraordinary Resolution will be two or more persons holding or representing more than 50 per cent. in aggregate principal amount of the Bonds for the time being outstanding, or at any adjourned meeting two or more persons being or representing Bondholders whatever the principal amount of the Bonds held or represented, unless the business of such meeting includes the modification or abrogation of certain of the provisions of these Conditions and certain of the provisions of the Trust Deed, including consideration of proposals, inter alia, (i) to modify the maturity of the Bonds or the dates on which interest is payable in respect of the Bonds, (ii) to reduce or cancel the principal amount of, any premium payable on redemption of, or interest on, the Bonds, (iii) to change the currency of payment of the Bonds, (iv) to modify the provisions concerning the quorum required at any meeting of Bondholders or the majority required to pass an Extraordinary Resolution, (v) to modify or cancel the Deed of Guarantee (subject to Condition 12(b)) or (vi) to amend this proviso, in which case the necessary quorum will be two or more persons holding or representing not less than 75 per cent., or at any adjourned meeting not less than 25 per cent., in aggregate principal amount of the Bonds for the time being outstanding. Any Extraordinary Resolution duly passed shall be binding on Bondholders (whether or not they were present at the meeting at which such resolution was passed).

The Trust Deed provides that a resolution (A) in writing signed by or on behalf of the holders of not less than 90 per cent. in aggregate principal amount of the Bonds for the time being outstanding or (B) passed by way of electronic consents through the relevant clearing system(s) in accordance with the Trust Deed shall for all purposes be as valid and effective as an Extraordinary Resolution passed at a meeting of Bondholders duly convened and held. Such a resolution in writing may be contained in one document or several documents in the same form, each signed by or on behalf of one or more Bondholders.

(b) Modification and Waiver: The Trustee may (but shall not be obliged to) agree, without the consent of the Bondholders, to (i) any modification of or waiver or authorisation of any breach or proposed breach of, or failure to comply with, any of these Conditions or any of the provisions of the Trust Deed, the Agency Agreement or the Deed of Guarantee, that is of a formal, minor or technical nature or is made to correct a manifest error or to comply with any mandatory provision of law, and (ii) any other modification (except as mentioned in the Trust Deed and the Deed of Guarantee), and any waiver or authorisation of any breach or proposed breach, of any of these Conditions or any of the provisions of the Trust Deed, the Agency Agreement and/or the Deed of Guarantee that is in the opinion of the Trustee not materially prejudicial to the interests of the Bondholders. Any such modification, authorisation or waiver shall be binding on the Bondholders and, unless the Trustee otherwise requires, such modification, authorisation or waiver shall be notified by the Issuer to the Bondholders as soon as practicable.

(c) Entitlement of the Trustee: In connection with the exercise of its functions, rights, powers and/or discretions (including but not limited to those referred to in this Condition 12) the Trustee shall have regard to the interests of the Bondholders as a class and shall not have regard to the consequences of such exercise for individual Bondholders and the Trustee shall not be entitled to require on behalf of any Bondholder, nor shall any Bondholder be entitled to claim, from the Issuer, the Guarantor or the Trustee any indemnification or payment in respect of any tax consequence of any such exercise upon individual Bondholders.

(d) Directions from Bondholders: Notwithstanding anything to the contrary in these Conditions, the Trust Deed, the Agency Agreement and the Deed of Guarantee, whenever the Trustee is required or entitled by the terms of these Conditions, the Trust Deed, the Agency Agreement and the Deed of Guarantee to exercise any discretion or power, take or refrain from taking any

–58– action, make any decision or give any direction or certification, the Trustee is entitled, prior to exercising any such discretion or power, taking or refraining from taking any such action, making any such decision, or giving any such direction or certification, to seek directions from the Bondholders by way of an Extraordinary Resolution and shall have been indemnified and/or secured and/or pre-funded to its satisfaction against all action, proceedings, claims and demands to which it may be or become liable and all costs, charges, damages, expenses (including but not limited to legal expenses) and liabilities which may be incurred by it in connection therewith, and the Trustee is not responsible for any loss or liability incurred by any person as a result of any delay in it exercising such discretion or power, taking such action, making such decision, or giving such direction or certification where the Trustee is seeking such directions from Bondholders or in the event that no such directions are received by the Trustee.

13 ENFORCEMENT

At any time after the Bonds become due and payable, the Trustee may, at its discretion and without further notice, take such steps and/or actions and/or institute such proceedings against the Issuer and/or the Guarantor as it may think fit to enforce the terms of the Trust Deed, the Bonds and/or the Deed of Guarantee (as the case may be), but it need not take any such steps and/or actions and/or institute such proceedings unless (a) it shall have been so directed by an Extraordinary Resolution or so requested in writing by Bondholders holding at least 25 per cent. in aggregate principal amount of the Bonds for the time being outstanding, and (b) it shall have been indemnified and/or secured and/or pre-funded to its satisfaction. No Bondholder may proceed directly against the Issuer or the Guarantor unless the Trustee, having become bound so to proceed, fails to do so within a reasonable time and such failure is continuing.

14 INDEMNIFICATION OF THE TRUSTEE

The Trust Deed contains provisions for the indemnification of the Trustee and for its relief from responsibility. The Trustee is entitled to be indemnified, secured and/or pre-funded to its satisfaction and to be relieved from responsibility in certain circumstances including, without limitation, provisions relieving it from taking steps and/or actions and/or instating proceedings to enforce its rights under the Trust Deed, the Agency Agreement, the Deed of Guarantee and/or the Conditions and in respect of the Bonds and payment or taking other actions unless first indemnified and/or secured and/or pre-funded to its satisfaction and to be paid its fees, costs, expenses, indemnity payments and other amounts in priority to the claims of the Bondholders. In addition, the Trustee and its affiliates are entitled to enter into business transactions with the Issuer, the Guarantor and any entity related (directly or indirectly) to the Issuer or the Guarantor without accounting for any profit.

The Trustee and the Agents may rely conclusively and without liability to Bondholders, the Issuer, the Guarantor or any other person on any report, confirmation, certificate, information, opinion or advice of any accountants, auditors, lawyers, valuers, auctioneers, surveyors, brokers, financial advisers, financial institution or any other expert or professional advisor, whether or not addressed to it and whether their liability in relation thereto is limited (by its terms or by any engagement letter relating thereto entered into by the Trustee or any other person or in any other manner) by reference to a monetary cap, methodology or otherwise. The Trustee may accept and shall be entitled to rely on any such report, confirmation, certificate, information, opinion or advice, in which case such report, confirmation, certificate, information, opinion or advice shall be binding on the Issuer, the Guarantor and the Bondholders.

None of the Trustee or the Agents shall have any obligation to monitor compliance with the provisions of the Trust Deed, the Agency Agreement, the Deed of Guarantee or these Conditions, or ascertain whether an Event of Default or a Potential Event of Default has occurred, and they shall not be liable to the Bondholders or any other person for not doing so.

–59– None of the Trustee or the Agents shall be responsible or liable for the performance by the Issuer, the Guarantor and/or any other person appointed by the Issuer or Guarantor in relation to the Bonds of the duties and obligations on their part expressed in respect of the same and, unless it has written notice from the Issuer and/or the Guarantor to the contrary, the Trustee and each Agent shall be entitled to assume that the same are being duly performed.

None of the Trustee or any Agent shall be liable to any Bondholder, the Issuer, the Guarantor or any other person for any action taken by the Trustee or any such Agent in accordance with the instructions of the Bondholders. The Trustee shall be entitled to rely conclusively on any direction, request or resolution of Bondholders given by Bondholders holding the requisite principal amount of Bonds outstanding or passed at a meeting of Bondholders convened and held in accordance with the Trust Deed.

Each Bondholder shall be solely responsible for making and continuing to make its own independent appraisal and investigation into the financial condition, creditworthiness, condition, affairs, status and nature of the Issuer and the Guarantor, and the Trustee shall not at any time have any responsibility or liability for the same and each Bondholder shall not rely on the Trustee in respect thereof.

15 FURTHER ISSUES

The Issuer may from time to time without the consent of the Bondholders create and issue further securities either having the same terms and conditions as the Bonds in all respects (or in all respects except for the issue date, the first payment of interest on them and the timing for compliance with the requirements set out in these Conditions in relation to the NDRC Post-issue Filing and the Cross-Border Security Registration) and so that such further issue shall be consolidated and form a single series with the outstanding securities of any series (including the Bonds) or upon such terms as the Issuer may determine at the time of their issue. References in these Conditions to the Bonds include (unless the context requires otherwise) any other securities issued pursuant to this Condition 15 and forming a single series with the Bonds. Any further securities forming a single series with the outstanding securities of any series (including the Bonds) constituted by the Trust Deed or any deed supplemental to it shall, and any other securities may (with the consent of the Trustee), be constituted by a deed supplemental to the Trust Deed. The Trust Deed contains provisions for convening a single meeting of the Bondholders and the holders of securities of other series where the Trustee so decides.

16 NOTICES

Notices to the holders of Bonds shall be mailed to them at their respective addresses in the Register and deemed to have been given on the fourth weekday (being a day other than a Saturday or a Sunday) after the date of mailing. The Issuer shall also ensure that notices are duly published in a manner that complies with the rules and regulations of any stock exchange or other relevant authority on which the Bonds are for the time being listed. Any such notice shall be deemed to have been given on the date of such publication or, if published more than once, on the first date on which publication is made.

So long as the Global Certificate is held on behalf of Euroclear and Clearstream, any notice to holders of the Bonds shall be validly given by the delivery of the relevant notice Euroclear and Clearstream, for communication by the relevant clearing system to entitled accountholders in substitution for notification as required by these Conditions and shall be deemed to have been given on the date of delivery of such clearing system.

–60– 17 CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999

No person shall have any right to enforce any term or condition of the Bonds or any provision of the Trust Deed under the Contracts (Rights of Third Parties) Act 1999 except and to the extent (if any) that the Bonds expressly provided for such Act to apply to any of their terms.

18 GOVERNING LAW AND JURISDICTION

(a) Governing Law: The Trust Deed, the Agency Agreement, the Deed of Guarantee and the Bonds are governed by, and shall be construed in accordance with, English law.

(b) Jurisdiction: The courts of Hong Kong are to have exclusive jurisdiction to settle any disputes that may arise out of or in connection with the Bonds, the Deed of Guarantee, the Trust Deed or the Agency Agreement and accordingly any legal action or proceedings arising out of or in connection with any Bonds, the Deed of Guarantee, the Trust Deed or the Agency Agreement (“Proceedings”) may be brought in such courts. Pursuant to the Trust Deed, each of the Issuer, the Guarantor, the Trustee and the Agents has irrevocably submitted to the exclusive jurisdiction of such courts and waived any objection to the Proceedings in any such courts whether on the ground of venue or on the ground that the Proceedings have been brought in an inconvenient forum.

(c) Service of Process: The Guarantor irrevocably appoints the Issuer at Unit 3101, 31st Floor, United Centre, 95 Queensway, Admiralty, Hong Kong as its authorised agent in Hong Kong to accept service of process in any Proceedings in Hong Kong based on any of the Bonds, the Deed of Guarantee, the Trust Deed or the Agency Agreement. If for any reason the Guarantor ceases to have such an agent in Hong Kong, it will promptly appoint a substitute process agent and will notify the Trustee of such appointment within 30 days of such cessation. Nothing herein shall affect the right to serve process in any other manner permitted by law.

(d) Waiver of Immunity: Each of the Issuer and the Guarantor has, pursuant to the Trust Deed, waived any right to claim sovereign or other immunity from jurisdiction or execution and any similar defence, and has irrevocably consented to the giving of any relief or the issue of any process, including, without limitation, the making, enforcement or execution against any property whatsoever (irrespective of its use or intended use) of any order or judgment made or given in connection with any Proceedings.

–61– SUMMARY OF PROVISIONS RELATING TO THE BONDS IN GLOBAL FORM

The Global Certificate contains provisions which apply to the Bonds in respect of which the Global Certificate is issued, some of which modify the effect of the Terms and Conditions of the Bonds set out in this Offering Circular. Terms defined in the Terms and Conditions of the Bonds set out in this Offering Circular have the meaning in the paragraphs below. The following is a summary of certain of those provisions.

The Bonds will be represented by a Global Certificate which will be registered in the name of a nominee for, and deposited with, a common depositary on behalf of Euroclear and Clearstream.

Under the Global Certificate, the Issuer and the Guarantor, for value received, will promise to pay such principal, interest and premium (if any) on the Bonds to the holder of the Bonds on such date or dates as the same may become payable in accordance with the Terms and Conditions of the Bonds, save that the calculation is made in respect of the total aggregate amount of the Bonds represented by the Global Certificate, together with such other sums and additional amounts (if any) as may be payable under the Terms and Conditions of the Bonds and in accordance therewith.

Owners of interests in the Bonds in respect of which the Global Certificate is issued will be entitled to have title to the Bonds registered in their names and to receive individual definitive Certificates if either Euroclear and Clearstream or any other clearing system (an “Alternative Clearing System”) is closed for business for a continuous period of 14 days (other than by reason of holidays, statutory or otherwise) or announces an intention permanently to cease business or does in fact do so. In such circumstances, the Issuer will cause sufficient individual definitive Certificates to be executed and delivered to the Registrar for completion, authentication and despatch to the relevant holders of the Bonds. A person with an interest in the Bonds in respect of which the Global Certificate is issued must provide the Registrar not less than 30 days’ notice at its specified office of such holder’s intention to effect such exchange and a written order containing instructions and such other information as the Issuer and the Registrar may require to complete, execute and deliver such individual definitive Certificates.

NOTICES

So long as the Bonds are represented by the Global Certificate and the Global Certificate is held on behalf of Euroclear and Clearstream or any Alternative Clearing System, notices to holders of the Bonds shall be given by delivery of the relevant notice to Euroclear and Clearstream or such Alternative Clearing System, for communication by it to accountholders entitled to an interest in the Bonds in substitution for notification as required by the Terms and Conditions of the Bonds.

MEETINGS

For the purposes of any meeting of Bondholders, the holder of the Bonds represented by the Global Certificate shall be treated as two persons for the purposes of any quorum requirements of a meeting of Bondholders and as being entitled to one vote in respect of each U.S.$1,000 in principal amount of Bonds for which the Global Certificate is issued.

BONDHOLDER’S REDEMPTION

The Bondholder’s redemption option in Condition 6(c) of the Terms and Conditions of the Bonds may be exercised by the holder of the Global Certificate giving notice to the Principal Paying Agent of the principal amount of Bonds in respect of which the option is exercised within the time limits specified in the Terms and Conditions of the Bonds.

–62– ISSUER’S REDEMPTION

The option of the Issuer provided for in Condition 6(b) of the Terms and Conditions of the Bonds shall be exercised by the Issuer giving notice to the Bondholders within the time limits set out in and containing the information required by the Terms and Conditions of the Bonds.

TRANSFERS

Transfers of interests in the Bonds will be effected through the records of Euroclear and Clearstream (or any Alternative Clearing System) and their respective participants in accordance with the rules and procedures of Euroclear and Clearstream (or any Alternative Clearing System) and their respective direct and indirect participants.

CANCELLATION

Cancellation of any Bond by the Issuer following its redemption or purchase by the Issuer, the Guarantor or any of their respective Subsidiaries will be effected by a reduction in the principal amount of the Bonds in the register of Bondholders.

TRUSTEE’S POWERS

In considering the interests of Bondholders while the Global Certificate is registered in the name of a nominee for a clearing system, the Trustee may, to the extent it considers it appropriate to do so in the circumstances, but without being obligated to do so, (a) have regard to any information as may have been made available to it by or on behalf of the relevant clearing system or its operator as to the identity of its accountholders (either individually or by way of category) with entitlements in respect of the Bonds and (b) consider such interests on the basis that such accountholders were the holders of the Bonds in respect of which the Global Certificate is issued.

The Global Certificate shall not become valid for any purpose until authenticated by or on behalf of the Registrar.

The Global Certificate and any non-contractual obligations arising out of or in connection with it shall be governed by and construed in accordance with English law.

–63– USE OF PROCEEDS

The gross proceeds of the issue of the Bonds will be U.S.$280,000,000. The Issuer intends to apply the proceeds for purposes of repaying offshore borrowings and supplementing offshore working capital.

–64– EXCHANGE RATE INFORMATION

The PBOC sets and publishes daily a base exchange rate with reference primarily to the supply and demand of Renminbi with reference to a basket of currencies in the market during the prior day. On 21 July 2005, the PRC government introduced a managed floating exchange rate system to allow the value of the Renminbi to fluctuate within a regulated band based on market supply and demand and by reference to a basket of currencies. The PRC government has since made and in the future may make further adjustments to the exchange rate system. On 18 May 2007, the PBOC enlarged, effective on 21 May 2007, the floating band for the trading prices in the interbank foreign exchange spot market of Renminbi against the U.S. dollar from 0.3 per cent. to 0.5 per cent. around the central parity rate. This allows the Renminbi to fluctuate against the U.S. dollar by up to 0.5 per cent. above or below the central parity rate published by the PBOC. On 20 June 2010, the PBOC announced that it intended to further reform the Renminbi exchange rate regime by allowing greater flexibility in the Renminbi exchange rate and on 16 April 2012, the band was expanded to 1.0 per cent. The band was further expanded to 2.0 per cent. on 14 March 2014. On 11 August 2015, the PBOC announced to improve the central parity quotations of Renminbi against the U.S. dollar by authorising market-makers to provide central parity quotations to the China Foreign Exchange Trading Centre daily before the opening of the interbank foreign exchange market with reference to the interbank foreign exchange market closing rate of the previous day, the supply and demand for foreign exchange as well as changes in major international currency exchange rates. Following the announcement by the PBOC on 11 August 2015, Renminbi depreciated significantly against the U.S. dollar. On 11 December 2015, CFETS, a sub-institutional organisation of the PBOC, published the CFETS Renminbi exchange rate index for the first time which weighs the Renminbi based on 13 currencies, to guide the market in order to measure the Renminbi exchange rate from a new perspective. In January and February 2016, Renminbi experienced further fluctuations in value against the U.S. dollar. The PRC government may adopt further reforms of its exchange rate system, including making the Renminbi freely convertible in the future. Following the gradual appreciation of Renminbi in 2017, Renminbi experienced a recent depreciation in value against U.S. dollar following a fluctuation in the first half of 2018. In August 2019, the PBOC on 5 August 2019 set the Renminbi’s daily reference rate above 7 per U.S. dollar for the first time in over a decade amidst an uncertain trade and global economic climate. The PRC government may adopt further reforms of its exchange rate system, including making the Renminbi freely convertible in the future.

–65– The following table sets forth the exchange rate of the Renminbi against the U.S. dollar. The exchange rate refers to the Noon Buying Rate as set forth in the weekly H. 10 statistical release of the U.S. Federal Reserve Board.

Noon buying rate(1) Period Low Average(2) High Period End (RMB per U.S.$1.00) 2015 ...... 6.1870 6.2827 6.4896 6.4778 2016 ...... 6.4480 6.6400 6.9580 6.9430 2017 ...... 6.4773 6.7569 6.9575 6.5063 2018 ...... 6.2649 6.6090 6.9737 6.8755 2019 ...... 6.6822 6.9081 7.1786 6.9618 2020 January...... 6.8589 6.9184 6.9749 6.9161 February ...... 6.9650 6.9967 7.0286 6.9906 March...... 6.9244 7.0205 7.1099 7.0808 April ...... 7.0341 7.0708 7.0989 7.0622 May...... 7.0622 7.1016 7.1681 7.1348 June ...... 7.0575 7.0816 7.1263 7.0651 July ...... 6.8487 6.8775 6.8927 6.9744 August ...... 6.8474 6.9270 6.9799 6.8474 September ...... 6.7529 6.8106 6.8474 6.7896 October ...... 6.6503 6.7254 6.7898 6.6919 November ...... 6.5556 6.6029 6.6899 6.5760 December ...... 6.5208 6.5393 6.5705 6.5250 2021 January(3) ...... 6.4550 6.4656 6.4760 6.4750

Notes:

(1) Exchange rates between Renminbi and U.S. dollar represent the noon buying rates as set forth in the H. 10 statistical release of the Federal Reserve Board.

(2) Averages have been calculated using the average of the daily rates during the relevant period.

(3) As of January 8, 2021.

–66– CAPITALISATION AND INDEBTEDNESS

The following table sets out the Group’s consolidated capitalisation and indebtedness as at 31 December 2019 on an actual basis and as adjusted to give effect to the issuance of the Bonds, before deducting the underwriting fees and commissions and other estimated expenses payable in connection with this offering.

This table should be read in conjunction with the consolidated financial statements as at and for the year ended 31 December 2019 of the Guarantor and related notes thereto included elsewhere in this Offering Circular.

As at 31 December 2019 As As Actual Actual adjusted adjusted RMB U.S.$ RMB U.S.$ (in millions) (audited) Bank and other borrowings – current portion Short-term loans ...... 14,995.0 2,153.9 14,995.0 2,153.9 Non-current liabilities due within one year (current portion of long-term borrowings) ...... 2,239.5 321.7 2,239.5 321.7 17,234.5 2,475.6 17,234.5 2,475.6 Bank and other borrowings – non-current portion Long-term loans ...... 19,527.0 2,804.9 19,527.0 2,804.9 Bonds payables ...... 6,000.0 861.8 6,000.0 861.8 Bonds to be issued(1) ...... – – 1,949.3 280.0 25,527.0 3,666.7 27,476.3 3,946.7 Total shareholders’ equity ...... 43,320.2 6,222.6 43,320.2 6,222.6 Total capitalisation(2) ...... 86,081.7 12,364.9 88,031.0 12,644.9

(1) Representing the aggregate principal amount of the Bonds without taking into account any underwriting fees and commissions or other estimated expenses payable in connection with this offering.

(2) Representing the total of borrowings and shareholders’ equity, which is affected by borrowings, debt and equity financing activities of the Group after 31 December 2019, mainly including a total RMB1,000 million short-term borrowing from Agriculture Bank of China, a total of RMB500 million short-term borrowing from the Export-import Bank of China, a RMB500 million short-term borrowing from Bank of China, a RMB1,600 million short-term borrowing from Industrial and Commercial Bank of China, a total of USD300 million short-term borrowing from China Development Bank and a RMB200 million three year borrowing from China Development Bank. The Group had early repaid the aforesaid borrowings except the USD300 million short-term borrowing from China Development Bank by the end of June 2020.

Save as disclosed in this Offering Circular, there have been no material changes to the capitalisation or indebtedness of the Guarantor since 31 December 2019.

–67– DESCRIPTION OF THE ISSUER

OVERVIEW

The Issuer was incorporated on 11 September 2019 and is registered as a limited liability company under the laws of Hong Kong (Hong Kong company registration number 2872213). The registered office of the Issuer is located at Unit 3101, 31st Floor, United Centre, 95 Queensway, Admiralty, Hong Kong. The Issuer is a wholly owned subsidiary of Jinchuan Group (Hongkong) Resources Holdings Limited, which is in turn a wholly-owned subsidiary of the Guarantor.

SHARE CAPITAL

As at the date of this Offering Circular, the Issuer has an issued share capital of HK$1.00 comprising one share in issue. The share of the Issuer is wholly-owned by Jinchuan Group (Hongkong) Resources Holdings Limited.

The equity security of the Issuer is not listed or dealt on any stock exchange and no listing or permission to deal in such security is being or is proposed to be sought as at the date of this Offering Circular.

BUSINESS ACTIVITIES

As at the date of this Offering Circular, the Issuer has not engaged, since the date of its incorporation, in any material activities other than the proposed issue of the Bonds and the on-lending of the proceeds thereof to the Guarantor or its subsidiaries.

As at the date of this Offering Circular, the Issuer does not have any employees and has no subsidiaries.

DIRECTORS OF THE ISSUER

The directors of the Issuer as at the date of this Offering Circular are Mr. GAO Tianpeng (郜天鵬), Mr. WANG Jinxing (王金星) and Mr. WANG Guohu (王國虎).

FINANCIAL STATEMENTS

As at the date of this Offering Circular, the Issuer has not prepared any financial statements. The Issuer shall prepare its first financial statements in respect of its first financial year, being the period from 11 September 2019 (being the date of its incorporation) to 31 December 2020, in accordance with Hong Kong Financial Reporting Standards.

–68– DESCRIPTION OF THE GROUP

OVERVIEW

For the years ended 31 December 2017, 2018 and 2019, the Group’s total revenue was RMB217,042.4 million, RMB220,875.1 million and RMB233,674.5 million, respectively. For the years ended 31 December 2017, 2018 and 2019, the Group recorded gross profit of RMB7,959.7 million, RMB10,498.5 million and RMB10,533.2 million, respectively.

HISTORY AND DEVELOPMENT OF THE GROUP

The Guarantor was established in 1959, following the discovery of a nickel mine in Jinchang, Gansu Province in 1958. The Group was managed as an affiliate of the China Nonferrous Metals Industry Corporation in 1983. The Group realised its goal of increasing annual nickel output to 20.0 Kt in three years and promoted a management system of overall responsibility by factory manager in 1985. The Group was promoted to a Class-One National Enterprise in 1991. After 60 years of development, the Group had established a network comprised of over approximately 127 direct and indirect subsidiaries spread across 17 provinces and municipalities in the PRC and over nine subsidiaries or branches in six overseas jurisdictions, namely, Hong Kong, Singapore, United States, Canada, South Africa, and Australia, as at 31 December 2019. As a leader in the non-ferrous metal industry in China, the Group’s development over the past 60 years has received attention and recognition from the PRC government. Mr. Deng Xiaoping, Mr. Jiang Zemin, Mr. Hu Jintao and Mr. Xi Jinping, all paid visits to the Group or met with the representatives of the Group. The Group was the largest state-owned enterprise in Gansu Province in terms of revenue in 2019 according to the China Enterprise Confederation and China Enterprise Directors Association.

–69– The following table sets forth key milestones in the development of the Group.

July 1958 ...... Anickel mine was discovered in Jinchang, Gansu Province. The mine was later named the Jinchuan Mine, which ended the plight of China’s lack of nickel and cobalt.

October 1959 ...... Yongchang Nickel Factory (永昌鎳廠) was founded, which is a predecessor of the Guarantor.

September 1964 ...... TheGroup produced the first batch of electrolytic nickel, which is the first company to achieve nickel or cobalt production in China; the Group also successfully conducted the first opencast mining blast.

April 1965 ...... TheGroup successfully extracted platinum group metals.

July 1966 ...... Established China’s first electrolytic nickel workshop.

March 1978 ...... The Group was recognised at the National Science Conference as China’s top three bases for comprehensive utilisation of mineral resources.

July 1989 ...... Theproject “Comprehensive Resource Utilisation of Jinchuan” received the National Science and Technology Progress Award (Special Class) (國家科技進步特等獎) granted by the State Council.

May 1993 ...... Thelargest nickel flash smelting production system in Asia was put into use at the Jinchuan Mine.

April 1995 ...... The“JINTUO GRADE 1” electrolytic nickel was registered on LME.

August 1995 ...... The second stage expansion of the nickel flash smelting production system at the Jinchuan Mine was put into production, equipping the Jinchuan Mine with the world’s leading mining facilities and technologies.

April 1997 ...... The “Golden Camel” was recognised as a well-known trademark in China by the trademark office of the SAIC, the first product to receive this award in the national nonferrous metals industry.

December 2002...... TheLanzhou Jinchuan Technology Park Project was launched.

September 2005 ...... Thefirst copper synthesis smelting furnace utilising flash smelting and slag dilution technology in the world was put into production at the Jinchuan Mine, granting the Group a leading position in thermo- metallurgy of copper.

March 2006 ...... TheGroup was listed among the first batch of flagship companies with recycling economy by the Fourth Session of the Tenth National People’s Congress.

–70– September 2007 ...... TheGroup’s “JNMC” high-purity cathode copper was recognised as a China Top Brand by the China Top Brand Strategy Promotion Committee and recognised as a National Inspection-Exempted Product by the General Administration of Quality Supervision, Inspection and Quarantine of the PRC later in December 2007.

October 2007 ...... TheGroup’s oxygen-rich top-blown nickel smelting project was put into operation. The project was the first one in the world to apply such technology in the nickel smelting industry.

July 2008 ...... TheGroup was among the first batch of National Innovation Enterprises recognised by the Ministry of Science and Technology, State-owned Assets Supervision and Administration Commission of the State Council and All-China Federation of Labour.

October 2010 ...... The “GOLDEN CAMEL 9995” electrolytic cobalt was registered on LME.

November 2010...... The Group acquired 61.1% equity interest in Macau Investment Holdings Limited (currently known as Jinchuan International Resources), a company listed on the Hong Kong Stock Exchange with stock code 02362.

December 2010...... The“JNMC” big sheet of cathode copper was registered on LME.

April 2011 ...... TheGroup won the China Industry Award (中國工業大獎) granted by China Federation of Industrial Economics, which is the highest award in the industrial sector in China and the Groups is the first non-ferrous metal company which received this award.

December 2011 ...... Therevenue of the Group reached RMB100 billion, becoming the first enterprise in Gansu Province to record a revenue over RMB100 billion.

January 2012 ...... Jinchuan Group Limited (金川集團有限公司) was re-named as Jinchuan Group Co., Ltd. (金川集團股份有限公司), which marked the beginning of its overall shareholding reform and comprehensive reorganisation.

The Group acquired Metorex (Proprietary) Limited, a mid-tier South African mining company with operating mines and active development projects located in Zambia and the DRC.

June 2012...... TheGroup entered into share subscription agreements with 18 strategic investors, including the State Development and Investment Corporation, raising approximately RMB10.1 billion.

January 2013 ...... TheGroup’s “Key Technologies and Applications of Highly Efficient Utilisation of Complex and Rough Nickel-Cobalt Resources Project” and “Project of Comprehensive Technology of Continuous Mining of High Stress Extra-Large Nickel Deposit” won the 2012 National Science and Technology Progress Award (first class and second class respectively) granted by the State Council.

September 2013 ...... TheGroup was named as the National Security and Cultural Education Enterprise Demonstration Base by the State Administration of Work Safety of the PRC.

–71– December 2013...... TheGroup’s revenue exceeded RMB184.8 billion, ranking 88th among the top 500 enterprises in China, 30th among the manufacturing enterprises in China, 39th among the 100 largest multi-national enterprises in China and first among the state-owned enterprises in Gansu Province.

February 2014...... Trafigura Pte Ltd., together with Trafigura Investment (China) Co., Ltd., acquired equity stake in Guangxi Jinchuan Nonferrous Metal Co., Ltd., which expands the Group’s raw materials supply.

September 2015 ...... TheGroup held the 21st Jinchuan Scientific and Technological Tackling Conference successfully and deepened its innovation-driven development.

October 2015 ...... TheState Key Laboratory of Comprehensive Utilisation of Nickel and Cobalt Resources of the Group was approved and it was among the first batch of key state laboratories established by enterprises of Gansu Province.

December 2015...... Guangxi Jinchuan Nonferrous Metal Co., Ltd. to become an export base for Maritime Silk Road strategies for Gansu Province.

November 2016...... The Group gained exposure to laterite nickel resources through its Jinchuan WP&RKA project in Indonesia.

July 2017 ...... TheGroup’s Kinsenda project started trial production.

December 2017...... The22nd Science and Technology Innovation Conference and Jinchang City-Jinchuan Group’s Land-Enterprise Integration Innovation Conference was held. The Group adopted “improving quality and efficiency, transforming business and upgrading manufacturing” as its operation strategy and achieved overall profitability.

November 2018...... The Group entered into agreement with State Power Investment Corporation Yellow River Upstream Hydropower Development Co., Ltd. (國家電投集團黃河上游水電開發有限責任公司) and the Qinghai Provincial Bureau of Geology and Minerals to jointly develop the second largest nickel-cobalt sulphide mine in China – the Xiari-hamu (夏日哈木) nickel mine in Qinghai.

December 2018...... TheGroup’s revenue exceeded RMB220 billion, ranking 87th among the top 500 enterprises in China, 29th among the manufacturing enterprises in China, 45th among the 100 largest multi-national enterprises in China and first among the state-owned enterprises in Gansu Province.

May 2019 ...... TheIndonesia Jinchuan WP&RKA laterite nickel mine project was put into operation, marking the Group’s entry into laterite nickel mining.

July 2019 ...... TheGroup ranked 369th among the Fortune Global 500.

September 2019 ...... TheGroup ranked 96th on top 500 Chinese Enterprises 2019.

–72– The following chart sets out a simplified Group structure as at the date of this Offering Circular:

Gansu State-owned Assets Supervision and Administration Commission

100.0%(1) 100.0%(1)

Gansu State-Owned Assets Investment Group Co., Ltd.

100.0% 100.0% 100.0%

Gansu Industry & Gansu Xinglong Gansu Electric Jiuquan Iron & China Development China Baowu Steel Taiyuan Iron and Other Transportation Fund Management Power Investment Steel (Group) Bank Capital Group Corporation Steel (Group) Shareholders(1) Investment Corp Co., Ltd. Group Co., Ltd. Corporation Ltd. Limited Co., Ltd.

12.89% 1.41% 0.70% 1.66% 47.97% 1.40% 13.53% 4.87% 4.87% 10.70% –73–

The Guarantor

100.0%

Jinchuan Group (Hong Kong) Resources Holding Limited

60.21% 100.0%

Jinchuan International The Issuer Resources(2)

Notes:

(1) Directly and indirectly.

(2) Jinchuan International Resources is a company listed on the Hong Kong Stock Exchange with the stock code of 2362.

(3) as at 30 June 2020. RECENT DEVELOPMENT

2020 Commodities Market Overview

2020 Group Operational Performance

The Group has maintained normal operation throughout 2020. It is expected that 2020 full year nickel, cobalt and copper production volume would slightly increase compared with 2019.

2020 Third Quarter Financial Information

COMPETITIVE STRENGTHS

Irreplaceable key player in China’s non-ferrous metals industry with strategic exposure to high quality resources around the world

Non-ferrous metals such as copper, nickel, and cobalt are strategic resources for the national economy as they are key raw materials for various industries such as electric vehicles industry, aerospace industry, information technology industry. The non-ferrous metals industry is one of the pillar industries in the national economy.

–74– The Group shouldered the mission of developing the country’s nickel and cobalt industry since its establishment, witnessed and contributed to the development of China’s nickel and cobalt industry from zero to one. In 1958, the discovery of the nickel mine in Jinchang ended China’s history of lacking nickel and cobalt resources. In 1966, the Group established the first relatively complete production line of nickel, cobalt and platinum group metals in China. Through continuous technology breakthroughs, the Group promoted China’s nickel and cobalt mining and smelting technologies to the world’s leading level.

The Group controls large amount of upstream resources through 13 mine assets globally, including four domestic mines and nine overseas mines. For details, please see “Description of the Group – Business of the Group – Non-ferrous metals – Non-ferrous mineral resources and reserves”. As at December 31, 2019, the Group owns total resources of 4,844.8 Kt nickel, 11,305.6 Kt copper, 618.7 Kt cobalt, and 549.2 Kt platinum group metals (all in contained metals). According to the SMM Report, Jinchuan nickel mine in Gansu Province is the largest nickel sulphide mine in China and is also the only operating nickel mine in China with large-scale nickel production. Most of nickel producers in China rely on imports of nickel concentrate and other nickel intermediary products for nickel production due to limited access to nickel resources. Jinchuan is the only nickel producer that owns high quality and large scale upstream resources in China. According to SMM report, Jinchuan produced 81.8kt nickel (contained metals) from Jinchuan nickel mine in 2019, which accounts for approximately 70% of total nickel mine production in China. As a result, the Group is crucial to China’s domestic supply of nickel ores. Besides, the Group owns and operates some of the highest grade copper projects in the world. For example, the Kinsenda project is one of the world’s highest grade copper deposits, with an average copper reserve grade of 5.7%, compared to an average grade of 0.8% for copper mines in China according to the SMM Report.

The Group also has leading nickel, cobalt and copper production capabilities. According to the SMM Report, the Group is the third largest nickel producer and fourth largest cobalt producer in the world, and the fourth largest copper producer in China in terms of the 2019 output volume.

The strategic importance and contribution of the Group has been highly valued by national leaders. More than 30 national leaders have visited the Group in person over the past six decade, including Mr. Deng Xiaoping, Mr. Jiang Zemin, Mr. Hu Jintao, and Mr. Xi Jinping.

More importantly, the Group’s unique strategic locations in both coastal and inland China help safeguard the nation’s supply of strategic resources. The Group’s headquarter is located at the starting point of the Land Silk Road under “One Belt, One Road” initiative and enjoys growing westward links to Central Asia countries, a key region where the Group has been establishing cross-border partnerships on upstream resources. Guangxi Jinchuan Nonferrous Metals Co., Ltd., a subsidiary of the Group, is located in Fangchenggang City in Guangxi province, a port city on the 21st Century Maritime Silk Road. The Group has established smelting facilities in Fangchenggang City to process imported raw materials. In addition, the Group’s WP&RKA laterite nickel mine project in Indonesia is the key project listed on the China-Indonesia cooperation list. Supported by financing from China Development Bank, it is also the first overseas project under “One Belt, One Road” initiative in Gansu Province.

The Group also plays an important role in aerospace industry as a key raw materials supplier. The Group produced high-end nickel products for China’s aerospace projects such as Shenzhou series spacecraft and C919 aircraft. The Group has also developed K418, C22, GH4169 and other high temperature alloy and mother alloys, which are applied in spacecraft and aircraft engines to meet the demands of high temperature alloy raw materials in aerospace industry. In 2017, the Group and the AECC Beijing Institute of Aeronautical Materials (中國航發北京航空材料研究院), which is the only institute focusing on the development of aeronautical materials, entered into a scientific research cooperation agreement on the Development and Application Research of Deformed Superalloy Processing Materials for Aero Engines. In 2018, The Group entered into the Strategic Cooperation Agreement on Research on Aerospace Propulsion Technology with the Academy of Aerospace Liquid Propulsion Technology of China Aerospace Science and Technology Corporation (中國航天科技集團航天液體推進技術研究院), which is the only comprehensive institute focusing on liquid propulsion and stands for the highest technology level in liquid propulsion field in China.

–75– Well-positioned to capture the strong demand of electric vehicle industry for nickel, copper and cobalt as a core member in China’s world-class EV value chain

China has become the largest electric vehicle market in the world, and is expected to continue to grow rapidly due to strong regulatory incentives. The electric vehicles sold in China accounts for approximately half of the total of the world. China has been continuing to promote the use of electric vehicles and the construction of charging piles over the years. The rapid development of electric vehicle market has greatly stimulated the demand for power batteries. According to the SMM Report, ternary cathode materials based batteries enjoy a significant advantage in energy density, and have grabbed increasing market shares in the total EV batteries installed, accounting up to 50% in 2018. Demand for nickel, cobalt and copper have grown rapidly as these are key raw materials for ternary cathode materials based batteries. High-nickel ternary materials, such as NCM811 and NCA, especially, have larger capacity so that they have attracted all major battery manufacturers both in China and globally. As a result, nickel demand is expected to further increase, according to the SMM Report.

The Group is a critical supplier on the electric vehicle value chain with high-quality upstream nickel, cobalt and copper resources. The Group is the third largest nickel producer and fourth largest cobalt producer in the world, and the fourth largest copper producer in China in terms of the output in 2019, according to the SMM Report. The Group is also actively working to expand along the value chain. For example, the Group plans to establish a 100ktpa ternary precursor project, the 30ktpa phase I of which was completed in mid-2019, in Jinchuan Technology Park in Lanzhou and 30ktpa high-nickel ternary precursor project in Nantong, Jiangsu province, with an aim to produce high quality ternary precursors. The Group has also established a cobalt tetroxide project for high voltage lithium-ion battery with an annual production capacity of 3 Kt in 2018 and also plans to build a recycling production line for waste battery with an annual production capacity of 5 Kt in Lanzhou.

Production of high-quality non-ferrous products at scale with strong brand recognition and close relationship with both upstream and downstream partners

The Group has developed an annual production capacity of 200.0 Kt of nickel, 1.0 Mt of copper, 12.0 Kt of cobalt products, 25.0 tonnes of gold, 600.0 tonnes of silver, 6.0 tonnes of platinum group metals and 5.6 Mt of chemical products.

Adhering to the principle of “satisfying customers and focusing on details”, the Group makes continuous efforts on strengthening quality management and improving product quality. The Group pays close attention to product quality and safety, and differentiated needs from various customers. The Group has built a strong reputation over the years and the products are widely recognised by customers.

A significant number of the Group’s major products have received wide recognition in the global market. For example, the Group’s “JINTUO GRADE 1” electrolytic nickel, registered on LME, has a primary grade at 99.96%. The Group’s “JNMC” big sheet of cathode copper, registered on LME, is one of a few products on the market with a copper content of higher than 99.99%. The Group’s “Golden Camel” electrolytic nickel and “JNMC” high-purity cathode copper were both recognised as China Well-Known Trademark and National Inspection-exempted Product. In addition, the Group has obtained awards including the Famous Brand Products of Gansu Province in 2018, the first Gansu Provincial Government Quality Award in 2012, the China Industry Award (中國工業大獎) in 2011 (which is the highest award in the industrial sector in China) and the Luban Award (魯班獎) for its copper refining project of Guangxi Jinchuan Nonferrous Metal Co., Ltd. The Group is the first non-ferrous metals company that received this award. The Group was also recognised as an enterprise with Quality Credit Rating of AAA by China Association for Quality Inspection in 2017, and a National Customer Satisfaction Enterprise in 2010.

Benefiting from the high-quality products and its brand recognition, the Group has established stable and wide sales network throughout China. The Group has maintained long-term and stable relationships with top clients in industries such as special steels, battery materials and others through continuous dedication to customers’ needs for high-quality and stable-supply products. The Group has also formed long-standing cooperation with major suppliers including global leading commodities traders as well as world’s top mining companies to secure upstream resources.

–76– World’s leading technologies and equipment with comprehensive resources utilisation capabilities

The Group has also been at the forefront of the non-ferrous metals mining and refining technology development since its establishment. The Group has achieved world-class comprehensive resources utilisation capabilities and is able to extract 16 out of 21 elements contained in the mine resources in Jinchuan Mine, including valuable rare metals such as palladium, rhodium, rhenium. As a result, the Group can not only produce rare metals which are strategically important to the country but also increase profitability due to extra revenue from by-products. The Group’s “Comprehensive Resource Utilisation of the Jinchuan Mine” project won the Special Class of State Science & Technology Progress Award granted by the State Council in 1989, which is the highest award for technology development in China and is key to the national strategy of China. By the end of 2019, there were only 35 of such awards granted to non-military technologies and one other comparable project which obtained such award is the high-speed train system of China.

The Group is an unparalleled leader in ultra-high purity metals technologies. Ultra-high purity metals could be used in semiconductors and super alloys, thin-film solar cells, as well as aerospace industries. The Group is able to produce 7N ultra-high purity (over 99.99999%) copper, 6N ultra-high purity (over 99.9999%) nickel and 6N (over 99.9999%) ultra-high purity cobalt and is the only company in China that is able to produce 6N ultra-high nickel and cobalt. The Group is now a key supplier to world leading sputtering target materials (used for semiconductors) producers. Jinchuan Technology Park’s “Production of ultra-high purity copper, cobalt and nickel for ultra-large-scale integrated circuits” won 2nd prize of Industrial Science and Technology Award issued by China Nonferrous Metals Industry Association in 2018.

The Group has also developed a series of core technologies that leads the non-ferrous metals industry in China and globally. For example, the Group has key technologies for efficient utilisation of complex nickel-cobalt metals resources, as well as integrated technologies for the continuous and efficient mining of high-stress mega ore deposits, which are both world-leading technologies. In China, the Group leads in the technologies such as carbonylation technologies, key technologies to decrease magnesium and increase nickel recovery, pyritic smelting technology to produce electrolytic copper from nickel-copper concentrate, electrodeposited cobalt technology of perchlorinated medium insoluble anode, extraction and production of high-purity platinum group metal from low-grade raw materials, and extractive metallurgy technology of copper and cobalt.

Since the issuance of 12th Five-Year Plan of China, the Group has organised more than 400 research projects with various topics, undertaken 26 national science and technology plan projects, and obtained 149 major achievements. More than 60% of the achievements have been applied to production. As at 31 December 2019, the Group had 242 patents and 70 patents under application in the PRC, 285 of which are invention patents. As at 31 December 2019, the Group had more than 152 trademarks registered in the PRC.

In recognition of the Group’s technological achievement, the Group received a number of national awards. The Group received National Enterprise Technology Achievement Award granted by the NDRC, the Ministry of Science and Technology, the Ministry of Finance, the General Administration of Customs of the PRC, and the State Administration of Taxation of the PRC in 2009; and the Group’s “Key Technologies and Applications of Highly Efficient Utilisation of Complex and Rough Nickel-Cobalt Resources Project” and “Project of Comprehensive Technology of Continuous Mining of High Stress Extra-Large Nickel Deposit” won the first and second prize, respectively, of the 2012 National Award of Science and Technology Progress granted by the State Council in 2013. The Group also won the China Industry Award (中國工業大獎) granted by China Federation of Industrial Economics in 2011, which is the highest award in the industrial sector in China and the Group was the first non-ferrous metals company that won such award. The Group has obtained more than 100 awards granted by governments of provincial level or above.

–77– The Group is equipped with large-scale mechanised mining facilities and advanced underground production facilities and equipment all through in-house technologies. The Group owns the first nickel flash smelting production system in Asia, which is the fifth in the world; the world’s largest submerged oxygen-enriched top-blown nickel smelting furnace with an annual processing capacity of 1.4 Mt of concentrates; the world’s first non-submerged pure-oxygen top-blown autogenous furnace with an annual capacity of 135 Kt of concentrates. The Group has also developed leading technologies for copper processing and refining. The comprehensive copper processing line has an annual capacity of more than 10 Mt. The pure-oxygen autogenous smelting for copper concentrate with high nickel content, the smelting technology of miscellaneous copper in tilting furnace and the bottom blowing furnace copper smelting technology in copper smelting are also leading in the industry. As a result, ore recovery rate of the Group is as high as 96.8%, while mining loss rate and depletion rate are both less than 4%, enhancing mineral extraction from the mine and increasing our profitability.

The Group has established a highly-cooperative and creative team of technicians with comprehensive expertise and extensive experience. As at 31 December 2019, the Group had 668 senior engineers, which represents approximately 22% of total engineering and technology staff of the Group, and nine special technicians. More than 2,600 employees were granted awards by governments of provincial level or above. In addition, the Group has set up special funds of RMB10 million ever year to incentivise innovations from employees.

The Group also actively seeks opportunities to cooperate with reputable universities and scientific and technological research institutes in China to jointly develop new technologies. The Group has one research institute, one national key laboratory, two national technology centres, four joint laboratories and over 60 production-study-research joint units. For example, over the years, the Group has entered into the Joint Research Agreement with the Institute of Process Engineering, the Institute of Metal Research and the Dalian Institute of Chemical Physics of the Chinese Academy of Science and has initiated more than ten research projects. The Group has also cooperated with the Chinese Academy of Engineering in preparing the Strategic Research on the Comprehensive Utilisation and Sustainable Development of Nickel, Cobalt and Copper and entered into the Strategic Cooperation Agreement on Research on Aerospace Propulsion Technology with the Academy of Aerospace Liquid Propulsion Technology of China Aerospace Science and Technology Corporation (中國航天科技集團航天推進技術研究院). Academy of Aerospace Liquid Propulsion Technology is the only integrated aerospace liquid power technology research institute in China, representing the highest technical level of liquid power technology in China.

Critical member in promoting Gansu into a competitive industrial province and continuous strong government support received for business expansion

The Group also plays a critical role in Gansu Province’s economy. It is the largest state-owned enterprise in Gansu Province by 2019 total revenue. It is also the first and the only Fortune 500 Company in Gansu Province.

The Group is a critical member in Gansu’s 13th Five-Year Plan to develop non-ferrous metals new materials and battery materials value chain. According to Gansu’s 13th Five-Year Plan, Gansu Province aims to create a Ni-Cu-Co and aluminum alloy value chain with industrial production of over RMB100 billion, with a focus on nickel and nickel-based alloys, cobalt-based alloys, copper and copper alloys, tungsten-molybdenum alloys, Ni-Co-Cu metal chemical materials, etc. Battery materials industry is also one of the key focuses in Gansu’s 13th Five-Year Plan. According to the plan, Gansu Province will vigorously develop a range of new NiMH & Li-ion battery materials and products including cobaltosic oxide, ternary precursors and nickel balls coated with cobalt, and new materials for making carbon anodes, electrolyte and membranes in li-ion batteries, so as to create a value chain of rare-earth materials and battery materials with industrial production of over RMB100 billion. With its unique advantage of nickel and cobalt resources, the Group is a core enterprise in Gansu Province’s industrial strategies.

–78– As the largest state-owned enterprise in the province, the Group makes significant contributions to Gansu’s GDP growth and fiscal revenue. In 2018 and 2019, the Group’s revenue accounted for 36.2% and 34.1% respectively of total revenue from all state-owned enterprises under supervision of Gansu SASAC according to public information from Gansu SASAC. The Group’s profit before tax in 2018 and 2019 accounted for 27.9% and 29.2% respectively of all state-owned enterprises under supervision of Gansu SASAC according to public information from Gansu SASAC.

For the year ended 31 December 2017, 2018 and 2019, the Groups has received funding from the government amounted to RMB0.83 billion, RMB0.79 billion and RMB0.79 billion, respectively. Also, the Group enjoys the preferential tax rate of 15% granted to enterprises who participates in the Western Development of China and nine subsidiaries of the Group enjoys the preferential tax rate of 15% granted to high-technology companies and part of the non-ferrous metals of the Group enjoys a tax return in exporting.

Prudent financial management capabilities to practically reduce financial risks

The Group is dedicated to the continuous development and maintenance of a prudent risk management system, especially the financial risks. The Group has established a comprehensive risk management system, which provides the management team with timely supervision of the Group’s operational risk and financial risk, including foreign exchange risk and risks associated with fluctuations in the prices of raw materials. The Group has also built an outstanding risk management team by hiring highly qualified and experienced risk management officers and implementing effective training programmes. The Group has consolidated the risk management staff of its domestic and overseas subsidiaries into one team, aiming to ensure the effectiveness and efficiency of the Group’s risk management.

As at 31 December 2019, the Group has obtained over RMB180 billion credit facilities, among which RMB65.8 billion were from China policy banks including China Development Bank and China Export-Import Bank of China. As at 31 December 2019, RMB93.1 billion credit facilities were unutilised. The Group also maintains good relationships with domestic commercial banks including the Big Four state-owned commercial banks (Bank of China, Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China).

As a result, the Group is able to maintain a strong and healthy balance sheet with a healthy structure of the receivables and payables and a sustainable debt structure. The Group has a disciplined capital expenditure policy which controls its annual capital expenditure below RMB4.5-5.0 billion. For the years ended 31 December 2017, 2018 and 2019, the Group incurred capital expenditure of RMB2.2 billion, RMB3.6 billion and RMB3.8 billion respectively.

Outstanding production safety and social responsibility, led by a committed management team with extensive industry experience

The Group has adopted a “circular economy model” during the operations for environmental protection and sustainable development. Leveraging advanced technologies, the model aims to lower resource consumption and minimise pollution. The Group has established a sound reward and punishment mechanism for environmental protection. The Group has also invested in various environmental protection projects and has made great achievements. For details, please see “Description of the Group – Environmental Protection”. In recognition of the Group’s environmental protection efforts, the Group won two third prizes of China Circular Economy Association Science and Technology Award in 2018 and 2019.

For the years ended 31 December 2017, 2018 and 2019, the Group believes that it achieved high standards of production safety and employee health. The Group has obtained and maintained work safety permits issued by relevant PRC local authorities and has strictly complied with applicable laws and regulations both domestically and overseas. The Group advances healthcare package to its employees by maintaining comprehensive insurance coverage for its employees, investing in an employee hospital, paying for employees’ physical examination and maintaining health records for each employee. In recognition of the

–79– Group’s efforts in ensuring production safety and employee health, the State Administration of Work Safety of the PRC named the Group as “National Security and Cultural Education Enterprise Demonstration Base” in 2013. The Ministry of Social Security, the All-China Federation of Labour and the China Enterprise Confederation/China Entrepreneur Association named the Group the “National Model Labour Relations Enterprise” in 2011. In 2017, 2018 and 2019, the Group’s injury rate per million man hours were 0.064, 0.16 and 0.16, respectively, which the Group believes to be lower than its major competitors. The safety management strategy of “Jinchuan Model” has also been recognised by the State Administration of Work Safety and has been promoted nationwide.

The Group also dedicates to improving its technologies so as to make itself a more environmental friendly enterprise and has made achievements in this regard. The sulfur dioxide utilization rate of the Group has reached 98.5% and all wastewater of Group is treated properly. The Group’s energy consumption per RMB10,000 turnover has been lowered to 0.6279 tonnes of standard coal. As at the date of this Offering Circular, the Group was not involved in any pollution incident which is material to the Group’s business operation or has any compensation made in relation to environmental protection issues.

The Group has forged a dedicated management team with extensive industry experience, which can quickly capture the ever-changing market opportunities. The Guarantor’s senior management team has extensive experience in the global metals and mining industry, strong technical and operational expertise in mining operations. Many members of the senior management of the Group have been with the Group for over 25 years, which allows them to master industry knowledge and skills in managing the Group’s business operations. For details, please see “Directors, Supervisors and Senior Management”.

Furthermore, the Group has a highly proficient professional workforce. As at 31 December 2019, approximately 24% of the Group’s workforce had bachelor’s degrees or above. As at 31 December 2019, the Group had 668 senior engineers and nine special technicians, and 2,637 employees were granted awards by provincial government or above, recognising their scientific and technological achievements. As at 31 December 2019, the Group had 28,964 full-time employees, including around 8,000 employees overseas.

BUSINESS STRATEGIES

Further develop non-ferrous metals business as the Group’s core competitive strength, further improve the synergies among the Group’s different business segments and maintain a flexible and diversified product portfolio

The Group intends to further expand its mineral resources through securing more high quality resources in China and globally. The Group intends to further develop mining resources and reserves at existing mines, including the exploration and development of the area under and around the Jinchuan Mine. Besides, in line with the 13th Five-Year Plan of China, the Group will actively seek opportunities to acquire suitable targets in overseas markets, focusing on the Group’s core business, such as nickel, copper, cobalt and other non-ferrous minerals. With the benefit of China’s national policy of securing mineral resources overseas, the Group’s experience and know-how, the Group is well positioned to seek opportunities of high-quality mining resources and reserves overseas. The Group also intends to enhance its strategic relationships with third party suppliers of quality mineral ores such as global commodities traders and leading mining companies in order to have diversified sources of raw materials.

It also intends to increase mining and processing efficiency, so that it can convert its resource advantages into cost advantages, which in turn would increase its profitability. The Group intends to keep optimising the geographical locations of its production facilities in China to take advantages of low transportation or energy costs by allocating production capacity to regions with abundant raw materials or energy supply at low costs.

–80– The Group also operates in the industries such as construction engineering, technology services, energy and power supply and transportation and logistics. The Group intends to further improve the synergies between its various business segments. For instance, the Group intends to improve its overall management efficiency to enhance the support to the business segments that are outside its core business segments, including logistics services and market information sharing. The Group will also enhance communication among its sales and marketing teams that are in charge of different metals, so that the Group can responds to the latest market trends and business opportunities.

Continue to retain prudent financial management policies and effectively manage overall financial risk; leverage capital markets to optimise funding sources and minimise funding costs

The Group intends to continue to implement prudent financial management policies including financial budgeting, foreign exchange risk management, commodities hedging risk management, disciplined capital expenditure policies, etc.

A significant portion of the Group’s funding comes from bank loans. The Group will expand its funding sources on a sustainable basis and seek to minimise its funding cost in order to maintain the liquidity necessary to manage its business growth. Through Jinchuan International Resources, the Group has gained access to more diversified funding sources. The Group intends to increase its participation in the capital markets (both equity and debt capital markets) in order to seek additional funding sources. The Group also intends to seek and enhance its strategic cooperation with both domestic and foreign financial institutions to facilitate timely funding at competitive rates for its business operations, and will continue to adhere to its stringent processes to effectively manage its liquidity and interest rate risks.

Strengthen sales and marketing efforts especially in overseas markets

For the years ended 31 December 2017, 2018 and 2019, the Group’s revenue generated from sales in overseas markets amounted to RMB19,788 million, RMB21,165 million and RMB43,569 million, respectively, representing a CAGR of 48%. The Group intends to explore business opportunities in overseas markets in order to capture the growth potential globally and to diversify its operations. In particular, the Group intends to:

• continue to extend its overseas network through various means, such as participation in international conferences, exhibitions and investment forums, publishing in international journals for the non-ferrous metals industry, leveraging the networks of non-government organisations such as chambers of commerce, and cooperating with PRC financial institutions and companies investing or operating overseas;

• leverage the Group’s brand name and reputation to actively pursue business opportunities overseas through various channels, such as direct contracting with local companies, cooperation with local agents, securing work in the overseas projects of domestic companies or their overseas subsidiaries, leveraging overseas financing from domestic and international financial institutions to engage in projects, entering into joint venture arrangements and selectively acquiring local companies; and

• further accumulate local know-how in overseas markets, strengthen the training of the Group’s employees, recruit talent and local staff, improve financial controls, increase support for the overseas representative offices, and strive to establish the Group’s reputation and brand name in the international market.

Continue efforts in research and development

The Group intends to maintain its leadership in the mineral and mining industries by continuing to focus on technological research and development to further improve its current manufacturing technology, equipment and manufacturing process. In addition, the Group will focus on developing new technologies and equipment for future utilisation. In particular, the Group intends to:

• maintain and upgrade the Group’s current manufacturing technology, equipment and manufacturing process in mining, production, and waste recovery and recycling to enhance operational efficiency through improving the group’s independent research and development capabilities;

–81– • explore and develop new technologies and equipment to recover additional valuable metals from current ore bodies and improve recovery rate; and

• strengthen partnerships with universities, institutes and other enterprises to overcome technical difficulties in nickel and cobalt manufacturing, and apply for national research and development funds.

Pursue sustainable growth through environmental protection measures

The Group has adopted a “circular economy model” aiming to pursue sustainable growth and building an environmentally friendly enterprise with a high resource recovery and utilisation rate. The Group has adopted various energy efficient and waste recycling technologies to reduce pollution. For example, the Group has identified ways of improving the utilisation of smelting wastes by encouraging fertiliser and chemical companies to build facilities in Gansu Province. The Group intends to further strengthen its partnerships with local steel mills to fully utilise nickel smelting slag, and with cement companies for the use of other mineral wastes. The Group intends to continue its promotion of ecological restoration and the further improvement of the mines’ current eco-system. The chart below shows the Group’s circular economy focusing on pollution prevention and efficiency improvement.

Operating Equipment for New Metals Building Materials Materials Retrofitted Metallurgy Equipment Equipment

Repair Remanufacturing Inspection Broken Worn-out Tailings Waste Rock and Acid Sludge Solid Waste Recycling Solid Waste Equipment Equipment Coal Slag and Slag Equipment Remanufacturing

Mine Landscape/ Production Mining Water Supply Treatment Ore Wastewater Downstream Metal Waste Metal Dressing Products water Products Concentrate

Smelting Recycling Wastewater Downstream Processing Downstream Resources for Cyclical Economy

Comprehensive Utilization of Mineral Comprehensive Nickel/Copper Refining

Processing Chemicals Anode

Electrolysis

Co- Electrolysis Salts Chemicals generation Recycling Waste Heat Waste Chemicals-Based Cyclical Economy

Enhance the Group’s management and operational efficiency to control cost and improve profitability

The Group intends to continue improving the efficiency of its administration and management processes, in particular, those associated with the implementation of business strategy, determination of commercial decisions, establishment of development objectives, risk control and performance assessment. The Group also intends to improve the efficiency of its operation process, in particular, those associated with production, facilities utilisation and resource utilisation. For example, the Group will consider shutting

–82– down production facilities with less advanced technologies while improving utilisation of facilities with more advanced technologies. The Group intends to keep optimising the geographical locations of its production facilities in China to take advantage of low transportation or energy costs by allocating production capacity to regions with abundant raw materials or energy supply at low costs. The Group intends to further improve the internal coordination and co-operation among different business units. The Group believes these measures will further enhance its competitive advantage over other competitors and help it to achieve sustainable growth.

Continue efforts in recruiting and retaining talent to build a capable team in line with the Group’s corporate culture

The success of the Group relies on the skills and dedication of its management and employees. The Group intends to expand its current high-quality talent pool by providing employees with comprehensive insurance plans and diversified trainings. The Group will maintain and improve its human resource management system, keeping records of the recruitment process, employee’s performance as well as their remunerations and insurance plans. The Group’s professional team reflects and promotes its core values of “Responsibility, People First, Innovation and Win-win” that form the Group’s corporate culture. The Group believes these measures will further enhance its competitive advantage over other competitors and help it to achieve sustainable growth.

AWARDS

Key awards the Group obtained include the following:

2019...... Market Advancement Award of 2018 by the Shanghai Futures Exchange;

2019...... two third prizes of the 2018 China Recycle Economy Association Science and Technology Award;

2018...... theGroup’s nickel minerals was named as the Single Champion Product in Manufacturing Industry by the Ministry of Industry and Information Technology of the PRC and the China Federation of Industrial Economics;

2018...... onesecond prize and a third prize of the Science and Technology Award in Non-ferrous Metal Industry of China by China Nonferrous Metals Industry Association;

2018...... 11 products of the Group were awarded Golden Cup Award for Non-ferrous Metal Product Quality for 2018 by the China Nonferrous Metals Industry Association;

2017...... theOutstanding Chinese Patent Award by the State Intellectual Property Office of the PRC;

2017...... twogold awards, one silver award and one bronze award in the 22nd National Exhibition of Inventions by China Invention Association;

2016...... first prize of the Science and Technology Award in Non-ferrous Metal Industry of China by China Nonferrous Metals Industry Association and China Nonferrous Metals Society;

–83– 2016...... onegolden award and two silver awards of the Project Award of the Invention Entrepreneurship Award in the Ninth International Exhibition of Inventions by China Invention Association;

2013...... theNational Security and Cultural Education Enterprise Demonstration Base by the State Administration of Work Safety of the PRC;

2013...... the Group’s “Key Technologies and Applications of Highly Efficient Utilisation of Complex and Rough Nickel-Cobalt Resources Project” and “Project of Comprehensive Technology of Continuous Mining of High Stress Extra-Large Nickel Deposit” won the first and second prize, respectively, for the 2012 National Award of Science and Technology Progress granted by the State Council;

2012...... the first Gansu Provincial Government Quality Award granted by the government of Gansu Province;

2011...... China Industry Award granted by the China Federation of Industrial Economics, which is the highest award in the industrial sector in China;

2010...... anEnterprise with Credit Rating of AAA of Gansu Province by Gansu Enterprise Quality Credit Rating Evaluation Committee and Gansu Association of Quality;

2009...... theNational Enterprise Technology Achievement Award by the National Development and Reform Commission, the PRC Ministry of Science and Technology, the PRC Ministry of Finance, the General Administration of Customs of the PRC, and the State Administration of Taxation of the PRC;

2008...... theNational Quality Award by the China Association for Quality;

2007...... “National Pioneer Enterprise of Outstanding Performance” by the China Association for Quality;

2006...... National “Ankang Cup” Safe Manufacture Pioneer Enterprise by the All-China Federation of Labour and the State Administration of Work Safety of the PRC;

1989...... theGroup’s “Jinchuan Resource Comprehensive Utilisation” project was granted the Special Award of China National Award for Science and Technology Progress by the State Council;

1985...... the“Golden Camel” No. 1 electrolytic nickel won the National Gold Award by the State Economic Commission of the PRC;

–84– BUSINESS OF THE GROUP

The Group is a leading non-ferrous metals company in China and globally, with nickel, copper and cobalt at its core. The Group is the third largest nickel producer and fourth largest cobalt producer in the world, and the fourth largest copper producer in China as measured by 2019 output, according to the SMM Report. The Group’s fully vertically integrated business model incorporates critical stages of the mining value chain, including mining, processing, smelting, refining and downstream processing. The Group is well-positioned to capitalize on the new energy revolution, particularly in the electric vehicles industry in China. The Group has developed an annual production capacity of 200.0 Kt of nickel, 1.0 Mt of copper products, 12.0 Kt of cobalt products, 25.0 tonnes of gold, 600.0 tonnes of silver, 6.0 tonnes of platinum group metals and 5.6 Mt of chemical products.

The following table sets forth details of the Group’s revenue by business segment for the years indicated.

Year ended 31 December 2017 2018 2019 Revenue % Revenue % Revenue % (RMB in millions, except for percentage) Non-ferrous metals .... 51,574.2 23.7 62,987.7 28.5 64,875.7 27.8 Trade ...... 159,912.4 73.7 149,231.8 67.6 161,627.9 69.1 Others(1) ...... 5,555.8 2.6 8,655.6 3.9 7,171.0 3.1 Total ...... 217,042.4 100 220,875.1 100 233,674.5 100

(1) Others include chemical products, construction engineering, energy and power supply, transportation and logistics and others.

The following table sets forth details of the Group’s gross profit by business segment for the years indicated.

Year ended 31 December 2017 2018 2019 Gross Gross Gross Profit % Profit % Profit % (RMB in millions, except for percentage) Non-ferrous metals .... 6,296.1 79.1 7,591.0 72.3 8,744.6 83.0 Trade ...... (533.3) (6.7) 164.3 1.6 167.9 1.6 Others(1) ...... 2,196.9 27.6 2,743.1 26.1 1,620.8 15.4 Total ...... 7,959.7 100.0 10,498.4 100.0 10,533.2 100.0

(1) Others include chemical products, construction engineering, energy and power supply, transportation and logistics and others.

Non-ferrous Metals

The Group engages in the production and sales of non-ferrous metals, including nickel, copper, cobalt, titanium and precious metals products.

In terms of product output in 2019, the Group was the third largest nickel manufacturer and the fourth largest cobalt manufacturer in the world, and the fourth largest copper manufacturer in China, according to the SMM Report. The Group believes that it was the largest platinum group metal manufacturer in Asia in terms of product output in 2019. The Group aims to further enhance its leading market position in the non-ferrous industry to maintain its position as a global leading non-ferrous metals supplier with an integrated business model.

–85– Non-ferrous mineral resources and reserves

The Group secures non-ferrous minerals primarily through (i) its own mines in the PRC and overseas, (ii) equity investment in companies with relevant mineral resources, (iii) strategic cooperation with mineral companies and (iv) purchases from spot market.

As at 31 December 2019, the Group had four major non-ferrous ore mines in the PRC, namely, the Jinchuan Mine, the Tibet Xietongmen Copper Mine, the Gansu Subei County Heishan Copper-Nickel Mine and the Tibet Dabu Copper, Molybdenum Mine, the mineral resources and reserves of which are measured according to the Chinese National Standard. As at 31 December 2019, the Group also had nine major non-ferrous ore mines overseas, namely, the Chibuluma Copper Mine and the Munali Nickel Mine in Zambia, the Kinsenda Project, the Ruashi Mine, the Musonoi Project and the Lubembe Project in the DRC, the Wesizwe Platinum Mine in South Africa, the Bahuerachi Copper Mine in Mexico and the Indonesia Jinchuan WP&RKA Laterite Nickel Project in Indonesia, the mineral resources and reserves of which are measured according to the SAMREC Code, Chinese National Standard, NI 43-101 and JORC Code. As at 31 December 2019, the Group also had 10 exploration rights covering 169.8 sq.km in the PRC and had exploration rights covering 1,642.4 sq.km overseas.

The following table sets forth details of the Group’s 13 major mines as at 31 December 2019:

Mine/Deposit Location Ore Stage Reserves Resources Measure Standard PRC 1. Jinchuan Mine . . . Gansu Province, Ni In operation 3,055.6 Kt 3,783.3 Kt Chinese National China Standard Cu In operation 2,058.5 Kt 2,502.9 Kt Chinese National Standard Co In operation 92.3 Kt 106.0 Kt Chinese National Standard Au In operation 38.4 tonnes 38.7 tonnes Chinese National Standard Ag In operation 930.0 tonnes 949.4 tonnes Chinese National Standard Platinum group In operation 107.1 tonnes 135.8 tonnes Chinese National metals Standard 2. Tibet Xietongmen Tibet Autonomous Cu Under 734.2 Kt 2,087.6 Kt Chinese National Copper Mine . . . Region, China construction Standard Au Under 102.0 tonnes 202.7 tonnes Chinese National construction Standard Ag Under 666.6 tonnes 1,041.9 tonnes Chinese National construction Standard 3. Gansu Subei County Gansu Province, Ni Under 66.2 Kt 90.3 Kt Chinese National Heishan Copper- China exploration Standard Nickel Mine . . . Cu Under 36.2 Kt 46.5 Kt Chinese National exploration Standard Co Under 1.7 Kt 2.7 Kt Chinese National exploration Standard Au Under 0.6 tonnes 0.9 tonnes Chinese National exploration Standard Ag Under 12.0 tonnes 18.6 tonnes Chinese National exploration Standard Platinum group Under 0.7 tonnes 1.1 tonnes Chinese National metals exploration Standard 4. Tibet Dabu Copper Tibet Autonomous Cu To exit – 259.7 Kt Chinese National and Molybdenum Region, China Standard Mine ......

–86– Mine/Deposit Location Ore Stage Reserves Resources Measure Standard Overseas 5. Ruashi Mine..... theDRC Cu Inoperation 268.0 Kt 678.0 Kt SAMREC Code Co In operation 29.0 Kt 92.0 Kt SAMREC Code 6. Chibuluma Copper Zambia Cu In operation(1) 7.0 Kt 56.0 Kt SAMREC Code Mine ...... 7. Kinsenda Mine . . . the DRC Cu In operation 326.0 Kt 1,085.0 Kt SAMREC Code 8. Wesizwe Platinum . . South Africa Platinum group Under 259.3 tonnes 412.4 tonnes SAMREC Code metals construction 9. Bahuerachi Copper Mexico Cu Under feasibility 1,006.4 Kt 1,705.4 Kt NI 43-101 Mine ...... study Au Under feasibility 10.9 tonnes 16.8 tonnes NI 43-101 study Ag Under feasibility 1,106.6 tonnes 1,900.3 tonnes NI 43-101 study 10. Musonoi Project . . . the DRC Cu Under 595.0 Kt 1,086.0 Kt SAMREC Code construction(2) Co Under 183.0 Kt 363.0 Kt SAMREC Code construction(2) 11. Lubembe Project . . the DRC Cu Under – 1,800.0 Kt SAMREC Code exploration 12. Indonesia Jinchuan Indonesia Ni In operation – 914.8 Kt JORC Code WP&RKA Laterite Co In operation – 54.7 Kt JORC Code Nickel Project . . 13. Munali Nickel Zambia Ni In lease – 56.4 Kt NI 43-101 Mine ......

(1) The Chibuluma Copper Mine has been leased out since December 2020.

(2) The Musonoi project has been under construction since 2020.

PRC mines

• Jinchuan Mine (in operation)

The Jinchuan Mine is the Group’s largest mineral resources base which has abundant nickel, copper, cobalt, gold, silver and platinum group metals resources. It is located in Jinchang City, Gansu province and is wholly owned and operated by the Group. The Jinchuan Mine has four main mine areas, namely the Longshou Mine, the No. 2 Mine Area, the No. 3 Mine Area and the No. 4 Mine Area. It also has a poly-metallic copper-nickel sulphide deposit in symbiosis with proven reserves of 6.03 Mt of nickel. The three mega-tonnage large-size-pit mine areas at the Jinchuan Mine in operation, the Longshou Mine, the No. 2 Mine Area and the No. 4 Mine Area were integrated to be one mine area-the Nickel-copper Mine Area in Baijiazui Sub-mine Area (the “Baijiazui Mine Area”) according to the Notice of the Ministry of Land and Resources of Gansu Province on the Overall Plan for the Development and Integration of Mineral Resources in Gansu Province (GanGuoTuZiKuangFa [2010] No. 118) (《甘肅省國土資源廳關於印發甘肅省礦產資源開發整合總體方案的通知》(甘國土資礦發[2010]118號)) and the Implementation Plan for the Development and Integration of Mineral Resources of Baijiazuizi Copper-nickel mine in Jinchang City, Gansu Province.

As at 31 December 2019, the resources of nickel-copper mines in Baijiazuizi Mining Area were approximately 406 million tonnes ore resources containing approximately 3.78 million tonnes of nickel and approximately 2.50 million tonnes of copper. The Group has formulated a long-term plan for the development and utilization of the Jinchuan Mine. It is estimated that the nickel-copper mine in Baijiazui Mining Area can be utilised for more than 40 years.

–87– • Tibet Xietongmen Copper Mine (under construction)

The Tibet Xietongmen Copper Mine, wholly owned by the Group, is located in Rongma Town, Xietongmen County, Tibet Autonomous Region, China. It is approximately 250 km from the Lhasa Airport. The Tibet Xietongmen Copper Mine benefits from a convenient transportation network with access to the Qinghai-Tibet Highway, the Sichuan-Tibet Highway and the Qinghai-Tibet Railway. The site area of the Tibet Xietongmen Copper Mine is 12.89 sq.km.

• Gansu Subei County Heishan Copper-Nickel Mine (under exploration)

The Gansu Subei County Heishan Copper-Nickel Mine is located in Mazongshan Town, Subei County, Gansu, China. It is approximately 53 km from the Liuyuan Station on the Lan-Xin Railroad Line. The Group currently has an exploration right covering 1.54 sq.km. The Gansu Subei County Heishan Copper-Nickel Mine is still under exploration.

• Tibet Dabu Copper and Molybdenum Mine (to exit)

Tibet Dabu Copper and Molybdenum Mine is locates in Dabu Village, Qushui County, Lhasa City if the Tibet Autonomous Region. It is almost 25 km from Lhasa City. The Group is considering to exit operating the Tibet Dabu Copper and Molybdenum Mine.

The following table sets forth an estimation of the ore resources of nickel (Ni), copper (Cu) and cobalt (Co) for the PRC mines according to the Chinese National Standard as at 31 December 2019:

Tonnage Grade Contained Metals Mt (% Ni) (% Cu) (% Co) (kt Ni) (kt Cu) (kt Co) Jinchuan Mine .... 405.90 0.93 0.62 0.03 3783.3 2502.9 106.0 Tibet Xietongmen Copper Mine .... 519.24 0 0.40 0 0 2087.6 0 Gansu Subei County Heishan Copper- Nickel Mine ..... 16.40 0.55 0.28 0.02 90.3 46.5 2.7 Tibet Dabu Copper and Molybdenum Mine ...... 104.26 0 0.25 0 0 259.7 0

Overseas Mines

• Ruashi Mine (in operation)

The Ruashi Mine is an open-pit oxide copper and cobalt mine with sulphide potential underneath. The mine is located in the DRC on the outskirts of Lubumbashi, capital of the Katanga Province. It was first discovered by Union Miniére in 1919 and has been under intensive drilling evaluation. The designed ore-processing capacity of the Ruashi Mine is 1.44 million tons per year, with an annual production capacity of 45,000 tonnes of copper cathode and 5,000 tonnes of cobalt in cobalt hydroxide. Copper cathode products are sold locally, and cobalt hydroxide products are sold locally and were supplied as raw materials to Lanzhou Jinchuan Science and Technology Parks Co., Ltd., which is owned by the Group, for further processing. Ruashi Mine continued with higher stripping rates of waste and lower grade ore in 2019.

As at 31 December 2019, the Group owns a 75% interest in the Ruashi Mine through Jinchuan International Resources and the remaining 25% interest is held by a mining company owned by the DRC government.

–88– • Chibuluma Copper Mine (in lease)

The Chibuluma Copper Mine is an underground copper mine in Zambia, located 15 km west of Kitwe, the second largest city of Zambia. The Chibuluma Copper Mine consists of Chibuluma South Mine and Chifupu Deposit. The designed annual mining capacity of the Chibuluma Copper Mine is 600,000 tonnes with an annual copper concentrate production amounting to 17,000 tonnes.

As at 31 December 2019, the Group owns a 85% interest in the Chibuluma South Mine (including the Chifupu Deposit) through Jinchuan International Resources, and the remaining 15% interest is held by a mining company owned by the Zambian government.

The Chibuluma Copper South Mine has entered into the late stage of development. In 2016, the Group accelerated the construction of Chifupu Deposit and completed the construction of the infrastructure of the Chifupu Deposit ahead of schedule and made it ready for operation, which supplemented the declining production profile caused by the depletion of resources in Chibuluma South Mine. The Chifupu Deposit is expected to be able to extend the life of mine until 2022. The Chibuluma Copper Mine has been leased out since December 2020.

• Kinsenda Project (in operation)

The Kinsenda Project is an underground copper mine in the Katanga Province of the DRC and is one of the world’s highest grade copper deposits. The project has access to a regional highway 20 km to the west of the site. The designed annual mining capacity is 600,000 tonnes, and a 24,000-tonne annual output of copper in copper concentrate. In April 2017, the plant started to produce copper concentrate. It managed to produce 31,059t of copper content in concentrates in 2019.

As at 31 December 2019, the Group owns a 77% interest in the Kinsenda Project through Jinchuan International Resources and the remaining 23% interest is held by a DRC company independent from the Group.

• Indonesia Jinchuan WP&RKA Laterite Nickel Project (in operation)

In 2016, the Group acquired 60% equity interest in PT Wanatiara Persada (the “WP Company”) and 40% equity interest in PT Rimba Kurnia Alam (the “RKA Company”) to invest in the WP&RKA Laterite Nickel Project in Indonesia.

The project was constructed by the WP Company. The construction includes the mines, smelting plants, captive power plants, ancillary facilities, terminal yards, living areas and other areas. The total investment amount is approximately U.S.$601 million, of which 30% is invested by shareholders’ capital, and the remaining is invested through debt financing by PT Wanatiara Persada with a term of 10 years.

The project is estimated to produce approximately 200.0 Kt of ferronickel which contains 15% or more nickel and approximately 30.0 Kt of nickel. The design and operation period of the smelting plant is 20 years. The Group has negotiated with multiple domestic and overseas companies in order to establish long-term commercial relationship.

The project is Gansu Province’s first overseas investment project under China’s “One Belt, One Road” initiative and a key overseas construction project of the Group. In May 2019, the WP Company was put into operation, which indicated that the Group entered into the field of laterite nickel ore, lying a solid foundation for the industrial transformation and upgrading and the realisation of sustainable development of the Group.

–89– • Wesizwe Platinum Mine (under construction)

The Wesizwe Platinum Mine is a greenfield platinum project located in the forest on the west of the Bushveld Complex, approximately 35 km northwest from the Rustenburg, a mining city of South Africa. The Wesizwe Platinum Mine has two veins, Merensky and UG2. The Wesizwe Platinum Mine is still under construction.

As at 31 December 2019, the Group owns a 45% interest in the Wesizwe Platinum Mine through China-Africa Jinchuan Investment Limited in which the Group owned a 55% equity interest, and the remaining 55% interest is held by public shareholders.

• Munali Nickel Mine (in lease)

The Munali Nickel Mine is located 85 km South from Lusaka, the capital of Zambia. The Group wholly owned the Munali Nickel Mine and has obtained a mining right covering 238.7 sq.km. effective through May 2031. This mine is fully constructed and has all necessary infrastructures in place. This mine was under production in 2008 and 2011 but is currently undergoing maintenance work.

• Bahuerachi Copper Mine (under feasibility study)

The Bahuerachi Copper Mine is located in south-western Chihuahua State, Mexico, at an altitude of 200 to 1,300 metres. It is located 8 km from the nearest town and 126 km from the nearest port city, Los Mochis. This mine is a large poly-metallic porphyry copper mine, including copper, gold, silver and molybdenum. The Bahuerachi Copper Mine is currently owned, operated and managed by Tyler Resources Inc., a wholly owned subsidiary of the Group in Mexico. Considering the steep terrain, rugged road conditions and inadequate external infrastructure, the project still needs certain preliminary preparations before starting the mine development.

• Musonoi Project (under construction)

The Musonoi Project is a copper and cobalt exploration project situated in the northern outskirts of Kolwezi, approximately 360 km northwest of Lubumbashi city, the capital of the Katanga Province of the DRC. The designed annual mining capacity of the project is one million tonnes, with an annual output of approximately 28,000 tonnes of copper and approximately 5,000 tonnes of cobalt in concentrate ores. The project is estimated to be invested with U.S.$378 million in the initial phase and have a service period of 16 years.

As at 31 December 2019, a total of 120 diamond drill holes have been drilled on the Musonoi Project area totaling 34,795m in length, of which 94 drill holes covering 30,041m have been drilled in the Dilala East area while 26 drill holes covering 4,754m in the Dilala West area.

As at 31 December 2019, the Group owns a 75% interest in the Musonoi Project through Jinchuan International Resources and the remaining 25% interest is held by a DRC company independent from the Group. The Musonoi Project has been under construction since 2020.

• Lubembe Project (under exploration)

The Lubembe Project is a greenfield copper exploration project in the Katanga Province of the DRC. The mine is a large-scale oxidised-primary sulfide ore mixed copper mine.

As at 31 December 2019, the Group owns a 77% interest in the Lubembe Project through Jinchuan International Resources and the remaining 23% interest is held by a DRC company independent from the Group.

–90– The following table sets forth an estimation of the ore resources and/or reserves of copper (Cu), cobalt (Co), and platinum group metals in the following overseas mines according to the SAMREC Code as at 31 December 2019:

Tonnage Grade Contained Metals Mt (% Cu) (% Co) (kt Cu) (kt Co) Ruashi Mine Reserves – Proved ...... 0.1 6.1 0.4 6 – – Probable ...... 12.1 2.2 0.2 262 28 – Total ...... 12.2 2.2 0.2 268 29

Resources – Measured ...... 0.1 6.1 0.4 6 1 – Indicated ...... 27.6 2.0 0.3 560 70 – Inferred ...... 6.8 1.7 0.3 113 21 – Total ...... 34.4 2.0 0.3 678 92

Chibuluma Copper Mine Reserves – Proved ...... 0.22 2.7–6– – Probable ...... 0.03 1.3 – 0.3 – – Total ...... 0.25 2.7–7–

Resources – Measured ...... 0.4 3.0 – 12 – – Indicated ...... 0.4 2.0–7– – Inferred ...... 1.4 2.6 – 37 – – Total ...... 2.1 2.7 – 56 –

Kinsenda Project Reserves – Proved ...... 0.1 4.9–3– – Probable ...... 5.7 5.7 – 323 – – Total ...... 5.7 5.7 – 326 –

Resources – Measured ...... 0.7 4.5 – 32 – – Indicated ...... 12.1 5.2 – 631 – – Inferred ...... 10.3 4.1 – 422 – – Total ...... 23.1 4.7 – 1,085 –

Musonoi Project Reserves – Proved ...... 11.4 3.2 0.9 360 102 – Probable ...... 9.0 2.6 0.9 235 80 – Total...... 20.3 2.9 0.9 595 183

Resources – Measured ...... 17.5 2.8 0.8 483 148 – Indicated ...... 14.2 2.2 0.8 315 117 – Inferred...... 13.0 2.2 0.8 287 98 – Total...... 44.6 2.4 0.8 1,086 363

Lubembe Project Resources – Measured ...... ––––– – Indicated ...... 56.5 1.8 – 1,039 – – Inferred...... 36.6 2.1 – 761 – – Total...... 93.1 1.9 – 1,800 –

–91– Contained Tonnage Grade Metals Mt (g/t) (tonne platinum group metals) Wesizwe Platinum Mine Reserves – Proved ...... 7.05 5.08 35.80 – Probable ...... 54.07 4.13 223.55 – Total ...... 61.12 4.24 259.34

Resources – Measured ...... 6.70 6.27 42.02 – Indicated ...... 50.99 5.15 262.39 – Inferred ...... 21.32 5.07 108.02 – Total ...... 79.01 5.22 412.43

The following table sets forth an estimation of the ore resources of copper (Cu) in the Bahuerachi Copper Mine and nickel (Ni) in the Munali Nickel Mine according to the NI 43-101 as at 31 December 2019:

Contained Tonnage Grade Metals Mt (% Cu) (kt Cu) Bahuerachi Copper Mine – Measured ...... 125.96 0.46 579.41 – Indicated ...... 239.22 0.37 885.12 – Inferred ...... 53.53 0.45 240.90 – Total ...... 418.71 0.41 1,705.43

Contained Tonnage Grade Metals Mt (% Ni) (kt Ni) Munali Nickel Mine – Measured ...... 2.91 1.05 30.4 – Indicated ...... 2.30 1.0 23.0 – Inferred ...... 0.36 0.83 3.0 – Total ...... 5.57 1.01 56.4

The following table sets forth an estimation of the ore resources of nickel (Ni) and cobalt (Co) in the Indonesia Jinchuan WP&RKA Laterite Nickel Project according to the JORC as at 31 December 2019:

Tonnage Grade Contained Metals Mt (% Ni) (% Co) (kt Ni) (kt Co) Indonesia Jinchuan WP&RKA Laterite Nickel Project – Indicated ...... 59.55 1.40 0.08 835.75 49.17 – Inferred ...... 6.61 1.20 0.08 79.01 5.48 – Total ...... 66.16 1.38 0.08 914.76 54.65

–92– Product and production process

Product

Ores mined from mines contain very limited quantities of metal. After ore processing and metal concentration, comes an intermediate product with a higher metal content. Metal concentrates will then go through smelting and refining processes in order to form very high content metal products of the standard quality recognised in the industry.

The Group produces various non-ferrous metal products and sells them to end customers or trading companies in the PRC and overseas. The main non-ferrous metal products of the Group include nickel products, copper products, cobalt products and platinum group metal products, which are widely used in industries such as machinery, electricity, construction, electronics, automobile, metallurgy, national defence and high technology. Nickel products are the key raw materials to high-end and high-tech manufacturing industries such as new-generation information technologies, aerospace and marine engineering. It is also the key raw material for the ternary lithium batteries of electric vehicles. Copper products are the key raw materials for electric vehicles such as components of electric vehicles and charging infrastructure and are the important components of renewable energies such as wind turbines and solar panels. Cobalt products are the key raw materials of the lithium batteries of electric vehicles. Platinum group products are widely used in high-tech industries. For instance, they are used as important catalysts in automobile industry and are the key raw materials for hydrogen fuel cell electrochemical catalysts. Platinum group metals also play vital roles in aerospace and healthcare industries.

• Nickel products: The Group’s operations cover the entire production chain of nickel products. The Group mainly produces nickel metal products through its nickel smelting plant in the PRC. The Group had developed an annual production capacity of 200.0 Kt of nickel products.

• Copper products: The Group produces copper products primarily through its copper smelting plant in the PRC. The Group had developed an annual production capacity of 1.0 Mt of copper products.

• Cobalt products: The Group produces cobalt products primarily through its cobalt smelting plant in the PRC. The Group had developed 12.0 Kt of cobalt products.

• Gold: The Group produces gold primarily through its precious metal smelting plant in the PRC. The Group had developed an annual production capacity of 25.0 tonnes of gold.

• Silver: The Group produces silver primarily through its precious metal smelting plant in the PRC. The Group had developed an annual production capacity of 600.0 tonnes of silver.

• Platinum group metals: The Group produces platinum group metals primarily through its precious metal smelting plant in the PRC. The Group had developed an annual production capacity of 6.0 tonnes of platinum group metals.

The following table sets forth the Group’s production volume of its key non-ferrous metals products for the periods indicated.

Year ended 31 December Products 2017 2018 2019 Nickel products (Kt) ...... 153.7 157.0 170.5 Copper products (Kt) ...... 780.2 886.0 917.4 Cobalt products (Kt) ...... 10.2 10.7 10.9 Gold (tonne) ...... 6.6 10.0 14.0 Silver (tonne) ...... 175.0 301.0 385.0 Platinum group metals (tonne) ...... 4.0 4.0 4.3

–93– The Group’s revenue from its non-ferrous metals business segment is generated through sales of self-manufactured, non-ferrous metal products. The following table sets forth the Group’s revenue from its key non-ferrous metals products for the periods indicated.

Year ended 31 December Products 2017 2018 2019 (RMB in millions) (audited) Nickel products ...... 10,382.5 13,810.3 15,646.2 Copper products ...... 34,314.7 41,373.6 38,960.4 Cobalt products ...... 2,673.2 3,651.6 3,804.1 Precious metals products ...... 4,203.8 4,152.2 6,465.0

The following table sets forth details of selected main products.

Type Usage Nickel products Electrolytic nickel cathode Electrolytic nickel cathodes (full size plate) are used in the (full size plate) ...... production of stainless steel, high nickel alloys, nickel plating, steel, alloy steel, cupronickel, catalysts and batteries, etc.

Nickel carbonyl powder...... Nickel carbonyl powder is widely used in areas including homeland security, aerospace, chemicals, the atomic energy industry, metallurgy, electronic communications and advanced magnetic materials.

Nickel protoxide ...... Nickel protoxide is used in: (i) enamel porcelain glaze colourants, (ii) magnetic materials, (iii) the glass industry and (iv) nickel salts, nickel catalysts and secondary battery materials.

Copper products High-purity copper cathode ...... High-purity copper cathodes are used in the wire, electronic, mechanical manufacturing, military and other industries.

Cobalt products Electrodeposited cobalt ...... Electrodeposited cobalt is used in the manufacture of cobalt alloys, heat resistant alloys, tungsten carbide, welding alloys and various cobalt alloys.

Cobaltosic Oxide...... Cobaltosic Oxide is used in the manufacture of battery, magnetic materials and thermistors.

Precious metal products Gold bullion ...... Gold bullion is used in the production of various gold- made products.

Silver ...... Silver is used in the production of various silver-made products.

Selenium powder ...... Selenium powder is used in areas including electronics, glass, chemical engineering and medicines.

–94– Production process

The Group has adopted advanced technology and equipment for its operations. For example, the Group is the first in Asia to use the flash smelting technology to produce high nickel mattes, and the Group ranks third in the world in terms of nickel production volume; fourth in the world in terms of cobalt production volume; first in China in terms of production volume of platinum group metals; fourth in China in terms of copper production volume. By developing carbonyl nickel production technology, the Group became the third in the world to master carbonylation smelting technology. The Group has manufactured and utilised China’s most advanced equipment such as the ball mill and the flotation machines. The Group places importance on the recycling economy through recovering solid wastes, such as wastes containing nickel and copper, to produce nickel and copper metal products, and recovering hazardous gases and pollutants to produce chemical products.

The following flow chart sets forth the main steps of the integrated production process in general:

Mining

Ore

Ore processing

Concentrates

Smelting & Refining

Various Metals

Fabricating

The Group excavates ores from its own mines. Through ore processing, concentrates and solid wastes are generated. The Group recovers solid wastes from which it produces concentrates through another round of ore processing. The Group continues this process for several rounds to achieve very high metal recovery rates. All of the concentrates generated are smelted and refined to produce various metals. These various metals are then fabricated into various profiles.

For different non-ferrous metal products, the Group adopts different production processes.

–95– Nickel production process

The following flowchart demonstrates the key stages of the production process of nickel product.

Mining

Ore Processing

Concentrates(1)

Flash smelting

Converter blowing

Separation of high grade nickel matte by flotation process

Nickel anode melting

Electrolytic refining

Electrolytic nickel

(1) The Group also purchases concentrates from independent third party suppliers which go into the smelting process.

Copper product production process

The Group starts the production process from copper concentrates which are either purchased from independent third party suppliers or formed during the separation of high grade nickel matte during the flotation process. The production process is slightly different depending on the source of the copper concentrates.

–96– The following flowchart demonstrates the key stages of the copper product production process using purchased copper concentrates.

Purchased copper concentrate

Synthesis furnace smelting

Converter blowing

Copper anode sheet

Electrolytic refining

Cathode copper

The following flowchart demonstrates the key stages of the copper product production process using copper concentrates formed during the separation of high grade nickel matte during the flotation process.

Separation of high grade nickel matte by the flotation process

Natural smelting

Kaldo blowing

Copper anode sheet

Electrolytic refining

Cathode copper

–97– Cobalt product production process

The following flowchart demonstrates the key stages of the production process of cobalt product.

Cobalt residue and purchased cobalt raw materials

Dissolution

De-ironing

Extraction

Separation of nickel and cobalt

Electrolytic cobalt

Gold and silver production process

The following flowchart demonstrates the key stages of the production process of gold and silver products.

Copper anode mud

Autoclave leaching

Alloy blowing

Refining

Gold and silver

–98– Platinum group metal production process

The following flowchart demonstrates the key stages of the production process of platinum group metal.

First alloy and hot residual

Vulcanised alloy

Second high matte sorting

Second alloy sorting

All-wet extraction

Platinum group metals

Smelting facilities

The Group primarily operates five smelting plants, namely, one nickel smelting plant, two copper smelting plants, one cobalt smelting plant and one precious metal smelting plant. A material increase or decrease in utilisation rates of the smelting plants can have a significant effect on the Group’s production volume, cost of sales and gross profit margin. The following table sets forth the details of the five smelting plants in 2019:

Production Utilisation Facility Location Products Capacity rate (%) Nickel smelting plant .... Jinchang, Gansu Electrolytic nickel (Kt) 200Kt 97.3 Copper smelting plant . . . Jinchang, Gansu Cathode copper (Kt) 1,000Kt 80.9 Fangchenggang, Guangxi Copper smelting plant . . . the DRC Cathode copper (Kt) 33Kt 102.4 Cobalt smelting plant .... Jinchang, Gansu Cobalt products (Kt) 12Kt 90.8 Lanzhou, Gansu Precious metal smelting Jinchang, Gansu Gold (kg) 25t 56.0 plant ...... Silver (kg) 600t 64.2 Platinum group metals 6,000kg 71.7 (kg)

Sales of non-ferrous metal products

The Group sells non-ferrous metal products in both domestic and overseas markets through its nine subsidiaries and branches. The PRC is the Group’s key market.

–99– The Group transports its products sold domestically by rail and road. For nickel products, approximately 60% of them were transported by rail and the remaining 40% were transported by road. For copper products, approximately 80% of them were transported by rail and the remaining 20% were transported by road. The Group requests its customer to bear the costs of transportation of non-ferrous metal products.

The Group transports its products sold overseas mainly by rail and by sea.

Pricing

The Group has established a marketing management committee at its headquarters, which is in charge of determining the price for each type of non-ferrous metals based on various factors, including the market competition landscape, operating costs, raw material costs, prevailing market conditions of the products, customer relationships, product quality and applicable rules and policies. The marketing management committee will evaluate and determine the price by reference to the spot prices and futures prices in LME and the Shanghai Futures Exchange. The Group has also adopted various pricing and clearing mechanisms, such as long-term pricing, short-term pricing and base point pricing.

The prices of the Group’s products are also affected by global and domestic economic environment and the demand for its products and services as well as market competition in the industries in which the Group conducts business. Please see the section headed “Risk Factors – Risks Relating to the Group – The Group’s businesses are vulnerable to downturns in the general economy and industries in which the Group operates or which the Group serves”.

The following table sets forth the average selling price of the Group’s key products for the periods indicated.

Year ended 31 December Products 2017 2018 2019 Nickel (RMB in thousands per tonne) ...... 85.6 104.4 99.5 Copper (RMB in thousands per tonne) ...... 49.2 50.5 41.8 Cobalt (RMB in thousands per tonne) ...... 390.2 505.2 228.7 Titanium (RMB in thousands per tonne) ...... 23.9 – – Precious metals (RMB in thousands per kg) Gold ...... 275.0 269.9 312.4 Silver ...... 3.9 3.6 3.3 Platinum ...... 221.1 198.9 174.3 Palladium ...... 210.2 241.8 329.3

Trade

The Group’s trading business mainly includes trading of raw materials and finished products of non-ferrous metals. Adopting a marketized operating model and leveraging the Group’s strengths in stable customer and supplier relationships, the Group’s trading business mainly serves to increase its revenue and market share of non-ferrous metals and balance the market price of metals. The Group purchases raw materials and products of non-ferrous metals mainly from overseas. Leveraging its advantages such as broad sales network, superior geographical location and convenient transportation, the Group then resells these products to downstream companies such as domestic steel and copper manufacturers to realise service fees income. The Group’s trading business enables the Group to grow its market share in non-ferrous metals market by participating in the full value chain and expanding the sales network. The Group has strict risk management over trading businesses. The Group sets limits to the inventory of trading business so as to hedge open metal positions by adhering to the model of spot hedging and balance preservation and strictly forbids trade finance businesses such as financing and providing external guarantees.

– 100 – For the years ended 31 December 2017, 2018 and 2019, the Group’s revenue generated from trading business amounted to RMB159.9 billion, RMB149.2 billion and RMB161.6 billion, respectively, representing 73.7%, 67.6% and 69.2% of the Group’s total revenue, respectively.

Products

In order to make full use of the advantages of the Group in geographic location and taxation, the Group has set up branches in Hong Kong, Singapore and other regions to serve as platforms for its trade businesses. The following table sets forth the revenue of sales of copper products, nickel products and other products including precious metals, cobalt products, aluminium and lead for the years ended 31 December 2017, 2018 and 2019.

Year ended 31 December Products 2017 2018 2019 (RMB in billions, except in percentage) revenue % revenue % revenue % Nickel products ...... 20.1 12.6 18.6 12.5 14.8 9.2 Copper products ...... 115.5 72.2 106.2 71.1 122.5 75.8 Others ...... 24.3 15.2 24.4 16.4 24.3 15.0 Total ...... 159.9 100.0 149.2 100.0 161.6 100.0

Sales and Pricing

The trading partners mainly include trading intermediaries and end products users. The Group develops its new customers by attending trade shows and onsite visits. The Group maintains good relationships with its major customers and haven’t had material disputes with its customers.

Trading products are purchased and sold on market prices. Generally, to determine the prices of metals, the Group first refers to the futures and spot prices of LME and Shanghai Metal Exchange as a benchmark. The Group then determines the premium or discount to the benchmark based on the quality of the products. To determine the prices of ore concentrate, the Group follows the general practice in China, which is adjusting the benchmark price of the metals contained in the ores published on the Shanghai Futures Exchange according to the valuation coefficient of the corresponding range of the benchmark price.

Risk Management System

Market Risk Management

Commodity prices fluctuation is one of the major risks in the trading business. The Group adheres to the principle of “zero risk exposure” in each trading unit. Specifically, the “risk exposure” refers to the net position the Group has after hedging of the physicals and futures. In principle, all the trading units cannot hold any open position. If it is really necessary to generate open positions, it must be examined and approved by the management team. Each trading unit shall report its risk exposure to the risk control department on a daily basis.

Futures Hedging Risk Management

Hedging risks mainly include predictable risks that are triggered by internal organisational issues and can be prevented, as well as unpredictable risks that cannot be prevented but the consequences of losses can be controlled.

– 101 – The Group has carried out a comprehensive risk management mechanism, through which the Group is able to prevent the predictable risks caused by the internal organisation issues and to control the damages by unpredictable risks. To be more specific, measures for predictable risks include: (i) conduct compliance checks on relevant business departments regularly and irregularly; (ii) the audit department monitors the implementation of the hedging activities, the margin account, transaction settlement account and fund transfer; and (iii) the finance department manages, calculates and monitors the accounts of each trading unit. Measures for unpredictable risks are as follows: (i) closely monitor the daily trading settlement and hedging activities; if any of the trading unit has open position, they need to liquidate their positions on the same day (not more than the next day) and also escalate as risk events, and (ii) under extreme market conditions, risk emergency mechanism should be activated timely.

Credit Risk Management

The credit risk of the trading counterparties is also one of the major risks in the trading business. The Group has formulated a comprehensive credit policy management system to prevent the risk of increasing accounts receivables due to improper use of credit policies.

The marketing management committee of the company is responsible for examining and approving the total credit line of each trading unit. Each trading unit shall grant credit to customers within the limit of the approved credit line each year. In general, the Group’s nickel and copper products are sold on a payment-after-delivery basis, so customers are not granted any credit policies in principle. Non-ferrous metals deep processing, battery materials, and construction businesses will offer credit arrangement per industry practice.

The Group applies a comprehensive credit rating management system for its customers. The Group will conduct a comprehensive analysis on the operation and credit status of each customer to evaluate credit profile of the customer for a period of time in the future. Main procedures of customer credit rating include: (i) collection of customer information, including financial data, market research data, and cooperation history with the Group, etc.; (ii) import the data into the customer information database; and (iii) compiling credit rating examination and approval form and credit rating according to internal review procedures. Customer credit rating needs to be updated regularly, including annual evaluation update and dynamic evaluation update when unexpected events happened.

Others

Chemical Products Production

The Group recycles hazardous gases generated by its non-ferrous metals production processes to produce chemical products through its chemical plant. The chemical products mainly include sulphuric acid, hydrochloric acid and chloride. Resources for the Group’s chemical products production mainly comes from metallurgy business of Jinchuan Mine and raw salt resources in surrounding areas, overseas sulphide ore resources imported from Fangchenggang base of the Group and the limestone mine of Jinchuan Mine.

During smelting and processing of nickel, copper and cobalt, large amount of hazardous gases and pollutants, such as sulphur dioxide, chlorine and salt products are generated. To effectively control the emission of the hazardous gases and pollutants, the Group recovers and processes sulphur dioxide, chlorine and salt products to sulphuric acid, hydrochloric acid, and electronic alkali, which are used as raw materials in the production of phosphate fertiliser and polyvinyl chloride polymer. The chemical product business segment reflects the Group’s circular economy model, which adheres to principles of “high-tech, low-resources-consumption and minimal-environmental-pollution” production.

– 102 – The following flowcharts demonstrate the key stages of the production process of chemical products.

Mining

Ore processing

Combustion product gases

Chemical engineering

Chemical products

sulfuric Purifying Conversion processes acid

tail Smelting suction flue gas process

Conversion Purifying neutralisation Sulfite Producing process processes

Caustic soda Salt Brine Electrolysis chlorine storehouse process hydrochloric acid

The following table sets forth the Group’s production volume of its key chemical products for the periods indicated.

Year ended 31 December Chemical products 2017 2018 2019 (tonne) Sulphuric acid ...... 3,516,783 3,678,197 2,751,266 Sodium sulphite ...... 14,221 7,575 7,064 caustic soda ...... 100,835 171,880 189,263

The following table sets forth the average selling price of the Group’s key chemical products for the periods indicated.

Year ended 31 December Chemical products 2017 2018 2019 (RMB per tonne) Sulphuric acid ...... 170 180 146 Sodium sulphite ...... 1,493 2,092 2,090 caustic soda ...... 1,493 3,017 2,966

– 103 – The Group mainly sells its chemical products in Gansu Province and other nearby provinces of China. Sulfuric acid products are mainly sold within Gansu Province and Guangxi Autonomous Region while part of it are sold to other provinces of China such as Sichuan, Hubei, Shanxi, Ningxia and Qinghai.

Apart from chemicals production, the Group also conducts its business in the industries such as construction engineering and machinery manufacturing, energy and power supply and transportation and logistics. These segments are mainly to maintain the Group’s business operation in a balanced level. Under the engineering construction business segment, the Group has obtained seven qualifications on general contracting and six qualifications on specialised contracting. Among such qualifications, there are several A-class qualifications such as general contracting qualification of house building engineering construction, general contracting of highway engineering construction, specialised contracting qualification of steel structures and specialised contracting qualification of anticorrosion and thermal insulation. The Group conducts its machinery manufacturing business mainly through its two subsidiaries, Jinchuan Machinery Manufacturing Co., Ltd. and Jinchuan Niedu Industrial Co., Ltd. Jinchuan Machinery Manufacturing Co., Ltd. manufactures various equipment such as mining trucks and converters. Its key clients include large mine companies, energy companies, solar energy companies and chemical engineering material companies in 23 provinces and autonomous regions in China and 15 countries overseas. Jinchuan Niedu Industrial Co., Ltd. manufactures machineries such as air storage tanks and filter caldrons. Its key clients include copper smelting plants, nickel smelting plants, nickel salt plants, copper salt plants and titanium plants. For the years ended 31 December 2017, 2018 and 2019, the Group’s revenue generated from other business segments amounted to RMB5.6 billion, RMB8.7 billion and RMB7.2 billion, respectively.

PROCUREMENT AND SUPPLIERS

For the years ended 31 December 2017, 2018 and 2019, the Group purchased part of its raw materials of non-ferrous metal products from independent third party suppliers mainly through long-term purchase and sales agreements. For the years ended 31 December 2017, 2018 and 2019, the proportion of long-term purchase agreements for nickel raw materials is 91.5%, 91.4% and 97.9% respectively. For the years ended 31 December 2017, 2018 and 2019, the proportion of long-term purchase agreements for copper raw materials is 98%, 95% and 87% respectively. The Group’s major third party suppliers were mineral companies in the PRC and overseas. Under the long-term purchase and sales agreements, the purchase prices were usually determined based on prevailing market prices. Nickel raw material procurement generally adopts coefficient pricing method. Procurement prices of domestic nickel raw materials is determined with reference to the average middle price published on www.smm.cn; and the procurement prices of imported nickel raw materials is determined with reference to the nickel spot settlement price published on LME. The procurement price for imported copper raw materials is determined in accordance with the Treatment Charge/Refining Charge model on the international market. The procurement price for cobalt raw materials is the pricing coefficient multiplies the quotation period as published in London Metal Bulletin, while the pricing coefficient varies with quotation period as published in London Metal Bulletin.

The Group usually makes down payments of 70% to 90% of the purchase price by shipping of the raw materials by the third party suppliers, and pays the remaining balance after the raw materials arrive and are evaluated and accepted by the Group. The Group maintains good relationships with third party suppliers and has not had any material disputes with any of its major suppliers.

The Group’s purchases from its five largest nickel, copper and cobalt suppliers approximately amounted to 72%, 70% and 96% in 2017; amounted to 72%, 70% and 96% in 2018 and amounted to 72%, 71% and 96% in 2019. During the same periods, the Group’s purchases from the single largest nickel, copper and cobalt supplier amounted to 23%, 45% and 46% in 2017; amounted to 23%, 46% and 49% in 2018 and amounted to 23%, 46% and 47% in 2019.

SALES AND MARKETING

The Group markets and sells minerals and metals in both PRC and overseas markets. The PRC is the Group’s key market.

– 104 – As at 31 December 2019, the Group had nine subsidiaries and branches selling non-ferrous metals in the PRC and overseas. The Group has established an international sales and marketing network with Shanghai being the marketing centre covering Chinese cities such as Beijing, Guangzhou, Lanzhou, Shenyang and Wuhan and the overseas markets of the United States, Canada, Australia and South Africa.

Leveraging its prudent cash flow management, proven track record of business operations and efficient inventory management, the Group believes that it is well positioned to manage risks associated with challenging market conditions. In addition, capitalising on its experience in the non-ferrous mining and trading industry and its extensive global business network, the Group has developed a well-trained sales team to provide quick responses to queries and sales orders. The Group believes that it has developed a comprehensive customer support system to provide high value-added services on top of its quality products, and intends to continue to develop unique and market leading products. The Group strives to improve its competitiveness through offering and supplying a wide range of high-quality products.

COMPETITION

The Group primarily competes with both Chinese and overseas companies in the industry of mining, refining and trading non-ferrous metals. The Group’s competition comes from various sources, including state-owned enterprises and private companies in the PRC and overseas, particularly international mining companies with extensive marketing and sales networks and rich mineral resources. The Group also competes with companies that enjoy special protection by local governments in the jurisdictions in which they operate. Competition mainly focuses on price and quality of products. The Group believes that it is well positioned to compete against other industry peers with its mining resources, low cost, global sales network and integrated business model covering upstream mining and downstream processing.

RISK MANAGEMENT AND INTERNAL CONTROL

The Group has established a comprehensive risk management system, comprised of a centralised risk management department at its headquarters as well as risk management team at its major subsidiaries. This provide the management team with timely supervision of the operations of the Group and detailed risk management regulations. The Group has also built an outstanding risk management team by hiring highly qualified and experienced risk management officers and implementing effective training programmes. The Group has consolidated the risk management staff of its domestic and overseas subsidiaries into one team, aiming to ensure the effectiveness and efficiency of the Group’s risk management. In addition, the Group engages external independent auditors to conduct audits from time to time as a supplement to its internal audit work. The Group closely monitors and controls risks associated with its operations, including those associated with future operations and trade receivables.

RESEARCH AND DEVELOPMENT

Technology development has been the focus of the Group since its establishment. The Group holds a science and technology conference every two years. The Group has established a Nickel-Cobalt Research & Design Institute, two national technology centres, namely, the Technology Centre and the National Nickel and Cobalt Advanced Materials Engineering Research Centre, four joint laboratories. The Group has also formed cooperative relationships with nearly 100 research institutes, such as the Chinese Academy of Sciences, the Chinese Academy of Engineering, Fudan University, Kunming University of Science and Technology, Central South University, Lanzhou University and Lanzhou University of Technology. The Group has entered into a joint research cooperation agreement with the PRC Resource and Environmental Science Data Centre, the Changchun Institute of Applied Chemistry, the Institute of Process Engineering, the Lanzhou Institute of Physical Chemistry, and the Dalian Institute of Physical Chemistry of Chinese Academy of Sciences. Pursuant to this agreement, six cooperative projects are being developed. In addition, the Group has been cooperating with the Chinese Academy of Engineering on a research project entitled “The Comprehensive Utilisation and Sustainable Development of Nickel, Cobalt and Copper in China”, which is considered to be one of the major projects of the Chinese Academy of Engineering in 2014. The Group has also entered into an aerospace propulsion technology research

– 105 – strategic cooperation agreement with the Aerospace Propulsion Technology Research Institute of the China Aerospace Science and Technology Corporation. The Group has mastered numerous key technologies with independent intellectual property rights, which are advanced in China and overseas, such as the Magnesium Peroxide Concentrate Flash Smelting Technology and the Magnesium Suppress Nickel-induced High Recovery Rate Ore Processing Technology. The Group intends to continue to look for co-operation opportunities with academic and research institutes to further enhance and develop technologies for mining and ore processing.

Through the continuous contribution of its research and development, the Group has obtained many achievements. As at 31 December 2019, the Group had 242 patents and 70 patents under application in the PRC, 285 of which are invention patents. As at 31 December 2019, the Group had more than 152 trademarks registered in the PRC. The Group has obtained more than 100 awards granted by provincial governments or above. In 2019, the Group was awarded the Market Advancement Award of 2018 by the Shanghai Futures Exchange and won two third prizes of the 2018 China Recycle Economy Association Science and Technology Award; in 2018, the Group won a bronze award in the tenth International Exhibition of Inventions by China Invention Association.

QUALITY CONTROL

The Group believes that maintaining a high product quality standard is key to its success. The Group has a quality control policy in place to ensure that the quality of products meets the standard. The quality control department is responsible for ensuring the quality of products. As at 31 December 2019, there were around 400 employees who were engaged in quality control with an average of seven years of professional experience. The Group monitors the production process closely by taking samples at various stages and examining them in laboratories. As at 31 December 2019, the Group had not received any complaints regarding the quality of its products which may have a material and adverse effect on the Group’s businesses, financial condition or results of operations.

INTELLECTUAL PROPERTY

The Group places great importance on the creation, application, management and protection of intellectual property rights. Through research and development and its ordinary course of business, the Group has obtained various intellectual property rights that are valuable to its business. The Group protects and will continue to seek to protect these intellectual property rights through copyrights, patents, trademarks and contractual rights.

As at 31 December 2019, the Group had 242 patents and 70 patents under application in the PRC, 285 of which are invention patents. As at 31 December 2019, the Group had more than 152 trademarks registered in the PRC.

EMPLOYEES

As at 31 December 2019, the Group had 28,964 full-time employees, including around 8,000 employees overseas. The following table sets forth the number of employees by function:

Number Production and operation ...... 21,488 Management ...... 3,217 Engineering and technology ...... 2,926 Others ...... 1,333 Total ...... 28,964

– 106 – Among all the employees, approximately 24% have bachelor’s degrees or above. The Group has 668 senior engineers and nine special technicians. As at 31 December 2019, 2,637 employees were granted awards by government of provincial level or above, in recognition of their scientific and technological achievements.

The Group considers its relationship with its workforce to be good and the Group has not experienced any work stoppages or strikes. In accordance with the various regulations applicable to enterprises and the relevant requirements of various local governments in the areas in which the Group operates, the Group makes contributions to pension contribution plans, employees’ medical insurance, unemployment insurance, maternity insurance and workers’ compensation injury insurance.

HEALTH AND SAFETY

The Group regards occupational health and safety as one of its important corporate and social responsibilities.

All of the Group’s subsidiaries engaging in mining, construction and dangerous chemicals production and processing operations in the PRC have obtained and maintained work safety permits issued by relevant PRC local authorities. In the PRC, work safety permit reviews are performed by the relevant governmental authorities once every three years. The Group has not experienced any termination or suspension of its work safety permits by the relevant government departments. With regard to its overseas operations, the Group is committed to strict compliance with applicable local laws on occupational health, safety and environmental protection.

In October 2012, there was an accident where a crane rigger was crushed to death during the operation of a crane. The family of the deceased received the insurance benefits according to the applicable PRC laws and regulations in a timely manner. There is no litigation or legal proceeding brought against the Group due to such accident. To avoid such accidents in the future, the Group has formulated and implemented two internal protocols, the Life Preservation Protocol for deadly operations and the Zero Injury Protocol for non-deadly hazardous operations. In October 2018, during an onsite overhaul conducted by a third-party contractor to Jinchuan Group Co., Ltd. Thermoelectric Branch, severe casualties (five deaths, one serious injury and 14 minor injuries, all of whom were employees of the third-party contractor) were caused by the leakage of carbon monoxide. The thermoelectric branch was fined RMB700 thousand for this incident. The Group took immediate actions to properly handle the aftermath of the accident and takes measures to ensure the work safety. In 2017, 2018 and 2019, the Group’s injury rate per million man hours were 0.064, 0.16 and 0.16, respectively, which are believed by the Group to be lower than its major competitors. The Group has also adopted an advanced safety management mode which was recognised as “Jinchuan Mode” by the State Administration of Work Safety of the PRC and promoted in China.

In order to advance better healthcare to its employees, the Group invested approximately RMB20.0 million in building an employee hospital in 2019. The Group pays for physical examinations for its employees, current and retired, every two years and has established and maintained health records for each employee. The Group invites professionals to deliver lectures on healthcare and pays for psychological health consultation services for its employees. Save as disclosed in the Offering Circular, for the years ended 31 December 2017, 2018 and 2019, the Group was not subject to fines or penalties resulting from transgressions related to occupational health and safety matters which could materially and adversely affect the Group’s businesses, financial condition and results of operations. As at the date of this Offering Circular, the Group is not aware of any occupational health and safety proceedings or investigations to which it is or might become a party.

– 107 – ENVIRONMENTAL PROTECTION

The Group is subject to environmental laws and regulations governing air pollution, noise emissions, hazardous substances, water and waste discharge and other environmental matters issued by the relevant governmental authorities in jurisdictions in which it operates, including China. In December 2013, the PRC Ministry of Environmental Protection has identified certain areas at non-compliance by the Group with relevant environmental laws and regulations, including excessive pollutant emission and improper disposal and storage of hazardous waste. The Group rectified its non-compliance in a timely manner, and the PRC Ministry of Environmental Protection had not identified any further issues. The Group has obtained all material environmental permits and approvals to conduct its business, its mining and production facilities, operation, processes and equipment, and is in compliance in all material respects with applicable environmental and safety regulations and standards in the relevant jurisdictions in which it operates. For the years ended 31 December 2017, 2018 and 2019, there had not been any material environmental pollution accident and the Group was not subject to any fines or penalties resulting from transgressions related to environmental protection matters which could materially and adversely affect the Group’s businesses, financial condition and results of operations. As at the date of this Offering Circular, the Group is not aware of any environmental proceedings or investigations to which it is or might become a party.

The Group has adopted a “circular economy model” for environmental protection and sustainable development. Based on this model, the Group has formed the recycle economy industry chain of comprehensive utilisation of resources, which constitutes five industry chains, namely equipment re-producing chain, solid wastes comprehensive utilisation chain, wastewater re-use chain, chemical products recycle chain, and residual heat recycle chain. Leveraging the five embedded recycle chains, wasted resources produced during the processing can be further used. For examples, damaged production equipment can be repaired or recycled for further use or be used in new equipment; solid wastes generated during the production of non-ferrous metals products, such as tailings, debris, and acid mud, are recovered and produced into metallurgical materials, construction materials and metals, respectively; wastewater, through wastewater treatment, becomes water sources for greening and production, while wastewaters can be produced into chemical products through special processing; crude salt, through electrolyzing, can be used to produce chemical products; residual heat generated during the production of non-ferrous metals products, can further be used to generate electricity to facilitate more production.

COMMUNITY AND PUBLIC AWARENESS

The Group maintains an ongoing dialogue with the public, government agencies and regulators. The Group believes directly engaging in the welfare of communities in which it operates is important. The Group is committed to communities in the vicinity of its business operations, its employees and their families. The Group’s goal is to enable members of the community to clearly voice their opinion and receive appropriate feedback. The consultation conducted in the scope of the environmental impact assessment report indicates support from local communities for the Group’s non-ferrous metals production operations. The Group’s Chibuluma Mine in Zambia was recognised as the “Model Community” in 2011. As at the date of this Offering Circular, the Group is not aware of any proceedings or investigations regarding community matters to which it is or might become a party or any non-governmental organisation impact on the sustainability of the Group’s operations.

INSURANCE

The Group maintains insurance coverage in amounts that the Group believes are consistent with its risk of loss and the customary practice in the relevant industry. The Group purchases pension insurance, medical insurance, unemployment insurance, workplace injury insurance and maternity insurance for its employees and personal injury insurance for its overseas and onsite workers pursuant to the relevant laws and regulations.

The Group maintains insurance in line with customary practice in the PRC. However, the insurance programmes maintained by the Group may not be sufficient to cover claims in respect of personal injury or property or environmental damage arising from accidents on its property or relating to its operations, or to cover business interruption risks. Such insurance is not mandatory under the laws and regulations of the PRC. Please see the section headed “Risk Factors – Risks Relating to the Group – Any claim beyond the Group’s current insurance coverage may result in substantial expenses and a diversion of resources”. The Group’s insurance expense amounted to a total of RMB42.3 million, RMB42.4 million and RMB48.4 million for the years ended 31 December 2017, 2018 and 2019, respectively.

– 108 – LEGAL AND COMPLIANCE

The Group is required to obtain and maintain valid permits, licences and certificates from various governmental authorities to conduct the Group’s businesses, including, among others, those required for the Group’s exploration, mining and trading of minerals and metals and its property development operations. As at the date of this Offering Circular, save as otherwise disclosed in this Offering Circular, the Group has obtained and maintained all the permits, licences and certificates material to its operations.

The Group is, from time to time, involved in legal proceedings arising in the ordinary course of its business, including as plaintiff or defendant in litigation or arbitration proceedings. To the best of its knowledge, there are no current litigation or arbitration proceedings against the Group or any of its senior management team members that could materially and adversely affect its businesses, financial condition and results of operations.

– 109 – DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT

DIRECTORS

The members of the board of directors of the Guarantor (the “Board”) as at the date of this Offering Circular are as follows:

Name Age Position WANG Yongqian (王永前) ...... 53 Chairman of the Board and secretary of the CPC Committee XIU Jun (修軍)...... 56 Deputy chairman of the Board LI Shangyong (李尚勇)...... 55 Director, the general manager and deputy secretary of the CPC Committee ZHANG Sanlin (張三林)...... 55 Director, deputy general manager, standing member of the CPC Committee SHI Guomin (史國敏)...... 58 Director ZHANG Xiaolei (張曉蕾) ...... 39 Director LIU Wanxiang (劉萬祥) ...... 52 Director CUI Siming (崔思明) ...... 49 Director ZHAO Zhongwei (趙中偉) ...... 54 Independent Director MA Yongyi (馬永義) ...... 56 Independent Director ZHAO Qinghua (趙慶華) ...... 56 Independent Director

Mr. WANG Yongqian, aged 53. Mr. Wang has a Master’s degree in engineering and is a professor-level senior engineer. He has over 28 years’ experience in non-ferrous metal industry and was appointed as the director of Guarantor by the 2018 Shareholder’s Meeting in May 2019 and serves as the Chairman of the Board since June 2019. Mr. Wang also serves as the secretary of the CPC (the Communist Party of China) committee of Guarantor.

Mr. XIU Jun, aged 56. He was appointed as the director of the Guarantor by the 2018 Shareholder’s Meeting in May 2019 and serves as a director of Guarantor. Mr. Xiu also serves as the deputy head (leading roles of departments or equivalents) of investment committee and risk control committee of China Development Bank Capital Co., Ltd.

Mr. LI Shangyong, aged 55. Mr. Li has a Bachelor’s degree in engineering and is a professor-level senior engineer. He has over 33 years’ experience in non-ferrous metal industry and as appointed as the director of Guarantor by the 2018 Shareholder’s Meeting in May 2019 and serves as the director, general manager and deputy secretary of the CPC committee of the Guarantor.

Mr. ZHANG Sanlin, aged 55. Mr. Zhang graduated from national economic planning and management department of Zhengzhou University of Aeronautics in July 1985 and the economic department of Lanzhou Business School in July 2007. Mr. Zhang obtained a Master’s degree in industrial management from the Party School of Gansu Province in June 2006. He is a senior economist. Mr. Zhang has over 34 years’ working experience and was appointed as the director of the Guarantor by the 2018 Shareholder’s Meeting in May 2019 and serves as the standing member of the CPC Committee, the director and deputy general manager of Guarantor.

Mr. SHI Guomin, aged 58. Mr. Shi has a Bachelor’s degree and is an on-job doctoral student. He is also a professor-level senior engineer. Mr. Shi was appointed as the director of the Guarantor by the 2018 Shareholder’s Meeting in May 2019. He serves as executive director, general manager and deputy secretary of the CPC committee at the Baosteel Stainless Steel Co., Ltd. He also serves as director of the Guarantor.

–110– Mr. Zhang Xiaolei, aged 39. Mr. Zhang has a Master’s degree in Finance and Economics of Dongbei University. He successively served as the director of the finance office of the steel pipe under the planning and finance department of Shanxi Taigang Stainless Steel Co., Ltd., the assistant director of the planning and finance department and the director of the planning and finance department of Taiyuan Iron & Steel (Group) Co., Ltd. Mr. Zhang has been a director of the Guarantor since September 2020.

Mr. CHAI Zhiyong, aged 57. Mr. Chai has a Master’s degree in business administration and is an engineer. He was appointed as the director of the Guarantor by the 2018 Shareholder’s Meeting in May 2019. Mr. Chai also serves as the deputy general manager and director of Taiyuan Iron & Steel (Group) Co., Ltd. and the director of Shanxi Taigang Stainless Steel Co., Ltd.

Mr. LIU Wanxiang, aged 52. Mr. Liu has a Master’s degree in business administration and is an engineer. He was appointed as the director of the Guarantor by the 2018 Shareholder’s Meeting and serves as the director of the Guarantor. He also serves as the deputy secretary of the CPC committee, general manager and director of Gansu Electric Power Investment Group Co., Ltd.

Mr. CUI Siming, aged 49. Mr. Cui has a Master’s degree and is a senior accountant. Mr. Cui was appointed as the director of Guarantor by the 2018 Shareholder’s Meeting in May 2019 and serves as a director of the Guarantor.

Mr. ZHAO Zhongwei, aged 54. Mr. Zhao graduated from Central South University with a Doctorate degree. Mr. Zhao is a professor and a doctoral supervisor. Mr. Zhao was appointed as the independent director of the Guarantor in March 2020 and serves as an independent director of the Guarantor. He also serves as deputy dean of School of Metallurgy and Environment of Central South University and distinguished professor of Cheung Kong Scholars Programme of Ministry of Education.

Mr. MA Yongyi, aged 56. Mr. Ma has a Doctorate degree and is a professor, a doctoral supervisor, a Certified Public Accountant and expert entitled to Government Special Allowance granted by the State Council. Mr. Ma was appointed as the independent director of the Guarantor in March 2020 and serves as an independent director of the Guarantor. He also serves as dean of Academic Affairs Division, dean of Distance Education Centre, dean of teacher management committee of Beijing National Accounting Institute.

Mr. ZHAO Qinghua, aged 56. Mr. Zhao graduated from Northwest University of Political Science and Law with a Bachelor’s degree in law. Mr. Zhao was appointed as the independent director of the Guarantor in March 2020 and serves as an independent director of the Guarantor. He also serves as a partner lawyer in Beijing Dentons (Lanzhou) Law Offices, LLP.

SUPERVISORS

The supervisors of the Guarantor as at the date of this Offering Circular are as follows:

Name Age Position WANG Yi (王毅) ...... 47 Supervisor LI Shoushan (李守善)...... 57 Supervisor HU Yaoqiong (胡耀瓊)...... 57 Employee Supervisor, chairman of the labour union and standing member of the CPC Committee WANG BAOLIN (王寶林) ...... 39 Employee Supervisor, deputy secretary of the disciplinary committee

– 111 – Mr. WANG Yi, aged 47. Mr. Wang graduated from Beijing University of Aeronautics and Astronautics with a Bachelor’s degree in engineering and Guanghua School of Management of Peking University with a MBA degree. Mr. Wang was appointed as the supervisor of the Guarantor in March 2020. He serves as the deputy general manager of Firth Equity Division of China Development Bank Capital Corporation Ltd. and the supervisor of the Guarantor.

Mr. LI Shoushan, aged 57. Mr. Li has a Master’s degree and is a political commissar. Mr. Li was appointed as the supervisor of the Guarantor by the 2018 Shareholder’s Meeting in May 2019. He serves as the deputy general manager of Gansu Industry and Transportation Investment Co., Ltd. and the supervisor of the Guarantor.

Mr. HU Yaoqiong, aged 57. Mr. Hu has a Master’s degree and is a senior economist. He has over 37 years’ working experience. He serves as the standing member of the CPC Committee, chairman of the labour union and employee supervisor of the Guarantor.

Mr. Wang Baolin, aged 39. Mr. Wang has a Bachelor’s degree from Jiaozuo Institute of Technology (the predecessor of China University of Mining and Technology) and is a thermal engineer. From April 2010 to October 2012, Mr. Wang majored in Business Administration in the School of Continuing Education of Xi’an Jiaotong University. Mr. Wang successively served various positions in the Guarantor, including the technician of Power Plant of the Group; the sole duty deputy secretary of the Communist Youth League of the Guarantor (section level); the secretary of the Communist Youth League of Jinchuan Group Company (middle-level deputy); the deputy minister of the mass work department of the Guarantor; the deputy secretary to the CPC of the Guarantor; the secretary to the discipline committee, and chairman of labor union of Jinchuan Group Thermal Power Company (金川集團熱電公司) (middle-level post); the secretary to the CPC and the discipline committee of the Jinchuan Group Company Nickel Smelting Plant (金川集團公司鎳冶煉廠); the minister of the supervision department of the Guarantor; the deputy secretary to the discipline committee and the minister of the supervision department of the Guarantor; the secretary to the discipline committee of the Guarantor. From August 2011 to July 2013, Mr. Wang took a temporary post as the deputy head of Minle County (民樂縣), Zhangye, Gansu Province. Mr. Wang has been serving as the deputy secretary to the disciplinary committee and the employee representative supervisor of the Guarantor since 11 January 2020.

MEMBERS OF SENIOR MANAGEMENT

The senior management of the Guarantor as at the date of this Offering Circular are as follows:

Name Age Position WANG Yongqian (王永前) ...... 53 Chairman of the Board and secretary of the CPC Committee LI Shangyong (李尚勇)...... 55 Director, the general manager and deputy secretary of the CPC Committee ZHANG Sanlin (張三林)...... 55 Director, deputy general manager and standing member of the CPC Committee ZHOU Min (周民) ...... 54 Deputy general manager LIU Yuqiang (劉玉強)...... 58 Deputy general manager WAN Aidong (萬愛東) ...... 51 Deputy general manager GUO Huigao (郭慧高) ...... 48 Deputy general manager LI Zhilei (李志磊) ...... 46 Deputy general manager ZHANG Youda (張有達) ...... 48 Deputy general manager CAI Juan (蔡娟)...... 48 Chief financial officer

Mr. WANG Yongqian serves as the Chairman of the Board and secretary of the CPC Committee of the Guarantor. For details of Mr. Wang’s biography, see “– Directors”.

–112– Mr. LI Shangyong serves as the director, general manager and deputy secretary of the CPC Committee of the Guarantor. For details of Mr. Li’s biography, see “– Directors”.

Mr. ZHANG Sanlin serves as the director and the deputy general manager of the Guarantor. For details of Mr. Zhang’s biography, see “– Directors”.

Mr. ZHOU Min, aged 54. Mr. Zhou has a Bachelor’s degree and is a professor-level senior engineer. He has over 31 years’ working experience and was appointed as the deputy general manager of the Guarantor by the Board in December 2011.

Mr. LIU Yuqiang, aged 58. Mr. Liu has a Bachelor’s degree and is a senior engineer. He has over 34 years’ working experience and was appointed as the deputy general manager of the Guarantor by the Board in April 2013.

Mr. WAN Aidong, aged 51. Mr. Wan graduated from the department of non-ferrous metal metallurgy of Changsha Non-Ferrous Metal College in June 1991 and graduated from the politic and law department of the Correspondence College of the Party School of the Central Committee of C.P.C in December 1997. He has a Bachelor’s degree and is a metallurgy engineer. Mr. Wan has over 28 years’ working experience and was appointed as the deputy general manager of the Guarantor by the Board in October 2016.

Mr. GUO Huigao, aged 48. Mr. Guo has a Master’s degree and is a senior mining engineer. He has over 26 years’ working experience and was appointed as the deputy general manager of the Guarantor by the Board in August 2018.

Mr. LI Zhilei, aged 46. Mr. Li has a Bachelor’s degree and a Master’s degree in engineering. He is a senior engineer. He has over 22 years’ working experience and was appointed as the deputy general manager of the Guarantor by the Board in August 2018.

Mr. ZHANG Youda, aged 48. Mr. Zhang has a Master’s degree and is a senior accountant, a senior economist, a high-end leading personnel of accountant in Gansu Province, a national leading personnel of accountant and an expert consultant of the third session of Company Internal Control System Committee of the Ministry of Finance of the PRC. Mr. Zhang also served as chief financial officer of the Guarantor from April 2018 to June 2020. He has over 28 years’ working experience and was appointed as the deputy general manager of Guarantor by the Board in August 2018. He also serves as the standing member of the CPC Committee of the Guarantor.

Ms. CAI Juan, aged 48. Ms. Cai Juan has a Master’s degree and is a national accountant, a senior auditor, a Certified Public Accountants and a Certified Internal Auditor. She served as the deputy director of finance and audit department, deputy director of the discipline inspection; the secretary of the party committee, secretary of the discipline inspection committee, the general manager of the audit and risk control law department, director of the office of the board of supervisors of the Guarantor and deputy general counsel of the Guarantor. Ms. Cai also served as the chairman of the Labour Union in Jinchuan Group Engineering and Construction Co., Ltd., the chief accountant and director of Party’s Branch Secretary General, secretary to the Discipline Inspection Committee and the chairman of the Labour Union of Guangxi Jinchuan Nonferrous Metals Co., Ltd. Ms. Cai has 27 years’ working experience and was appointed as the chief financial officer of the Guarantor in June 2020.

–113– INDUSTRY OVERVIEW

NICKEL SECTOR OVERVIEW

Nickel Industry Value Chain

Nickel is a lustrous, silvery-white metal with relatively low thermal and electrical conductivities, high resistance to corrosion and oxidation, excellent strength and toughness at elevated temperatures, and is capable of being magnetized. These qualities make nickel widely used for alloying elements, coatings, batteries, medical equipment, transport, power generation, etc. Its biggest use is in alloying – particularly with chromium and other metals to produce stainless and heat-resisting steels. The nickel industry value chain covers upstream exploration, development, and mining, midstream smelting and refining, as well as downstream processing.

Globally, major nickel mines are divided into two categories: nickel sulphide ore mines and nickel oxide ore (laterite ore) mines. Before 2007, nickel production from sulphide ore is the major source of the global nickel supply. Nickel production from laterite ore increased since 2008 due to its lower mining cost and easy conversion into ferronickel to produce stainless steel. As a result, laterite ore supplied approximately 67% of global nickel production in 2018. Ferronickel produced from laterite ore mines has become the major source of raw materials for stainless steel production. However, there are no mature commercially- ready and cost effective technologies to convert laterite ore into nickel products that could be used in applications other than stainless steel.

The output of primary nickel production is generally divided into three main product categories. Nickel class I includes a group of nickel products comprising electrolytic nickel, powders and briquettes, as well as carbonyl nickel. Nickel chemical compounds mainly include nickel salts, nickel chloride and other chemical compounds that contains nickel element. Nickel class II mainly comprises ferronickel and nickel pig iron (“NPI”). Downstream applications of nickel include stainless steel, metal alloy, electroplating, and battery materials, which accounts for approximately 70%, 15%, 7% and 6% of nickel consumption respectively in 2019. It is expected that nickel demand from battery materials will increase sharply, mainly driven by the growth of electric vehicle (“EV”) industry.

The below diagram summarizes the mine-to-product flow of nickel.

Upstream Midstream Downstream Applications

Nickel Plate Engineering Alloy Nickel Class I Nickel Pellets Hardware

Electroplating Sulphide Ores Nickel Briquettes Transportation

Nickel Chemical Nickel Salts Construction Compounds Batteries

Ferronickel Electronics Laterite Ores Nickel Class II Stainless Steel NPI Others

Source: SMM Report

–114– Nickel Reserves

According to the United States Geological Survey, global nickel reserves are approximately 89 million tons by end of 2019. The majority of nickel reserves are located in Indonesia, Australia, Brazil, Russia and Cuba, together accounting for approximately 72% of the total reserves in the world.

Nickel reserves in China are only about 2.8 million tons, accounting for 3% of global reserves, with the majority of nickel reserves located in Gansu Province (62%). Jinchuan nickel mine in Gansu Province is the largest nickel sulphide mine in China and is also the only operating nickel mine in China with large-scale nickel production.

Global Nickel Reserves by Country – 2019 China Nickel Reserves by Province – 2019

RoW Others Guatemala 10% Sichuan 7% 2% 3% Canada Indonesia Hubei 3% 24% 3% China Jilin 3% 4% South Africa Yunnan 4% 9% Philippines 5% Cuba Xinjiang Gansu 12% 6% Australia 62% Russia 21% 9% Brazil 13%

Source: SMM Report

Laterite ore and sulphide ore comprise approximately 55% and 28% of the global nickel reserves respectively, with the rest of the nickel reserves contained in ferromanganese nodule undersea. Nickel reserves in ferromanganese nodule have not yet been developed commercially.

Sulphide ore accounts for approximately 90% of nickel reserves in China.

According to the SMM Report, global top 5 sulphide ore mines by nickel resources in 2019 are Taimyr nickel mine in Russia, Dumont nickel mine in Canada, Jinchuan nickel mine in China, Mogalakwena nickel mine in South Africa, and Kola nickel mine in Russia.

Global Top 5 Nickel Sulphide Ore Mines – by Nickel Resources by end of 2019

Nickel Resources by end No. Mine Company of 20191 Country (million tons) 1 Taimyr nickel mine...... Norilsk 15.49 Russia 2 Dumont nickel mine ...... Karora Resources 5.73 Canada 3 Jinchuan nickel mine ...... Jinchuan Group 3.90 China 4 Mogalakwena nickel mine ..... Anglo America 3.41 South Africa 5 Kola nickel mine ...... Norilsk 3.11 Russia

Source: SMM Report

1 Resources of Taimyr, Mogalakwena, and Kola mines based on JORC standard; resources of Dumont mine based on NI43-101 standard; resources of Jinchuan mine based on China Mineral Reserves and Resources Classification System

–115– Nickel Product Supply

Global nickel production increased from 2.0 million tons in 2014 to 2.6 million tons in 2020, with a CAGR of 4.4%. The production growth is mainly driven by nickel salts and class II products.

Nickel salts is one of the key raw materials for EV batteries. The rapid expansion of global EV industry has facilitated the nickel salts production to increase from 0.35 million tons in 2014 to 0.85 million tons in 2020, with a CAGR of 15.9%. China has been both the world’s largest consumer and producer of nickel salts during the years due to the booming Chinese EV market. Nickel class II products have increased from 0.48 million tons in 2014 to 0.98 million tons in 2020 with a CAGR of 12.6%. China and Indonesia are two major countries producing nickel class II products. The nickel ore export ban by Indonesia starting from January 2020 is expected to affect NPI production in China. An increasing number of Chinese companies have invested in nickel smelters in Indonesia to produce nickel class II products directly in Indonesia. Supply of nickel class I products decreased from 1.09 million tons in 2014 to 0.75 million tons in 2020, mainly due to the lack of new nickel sulphide ore discoveries.

Most of nickel producers in China rely on imports of nickel concentrate and nickel ores for nickel production due to limited access to nickel resources. Jinchuan is the only nickel producer that owns high quality and large scale upstream resources in China. Jinchuan produces 81.8kt nickel (contained metals) from Jinchuan nickel mine in 2019, which accounts for approximately 70% of total nickel mine production in China.

2014 – 2020 Global Nickel Production 2020 Global Nickel Production Breakdown

Kt 3,000 2,576 12% Nickel Salts 2,400 9% 1,988 33% Class I 38% 1,800 6%

1,200 3%

600 0%

0 (3%) 2014 2015 2016 2017 20182019 2020

Production Growth Rate Class II 29%

Source: SMM Report

According to the SMM Report, the following table sets forth top five nickel smelters globally by nickel production volume in 2019:

Production No. Company Volume % (Kt) 1 Norilsk Nickel ...... 229 9% 2 Vale...... 208 8% 3 Jinchuan...... 170 7% 4 Glencore ...... 121 5% 5 BHP Billiton ...... 83 3% Total 811 33% Global Total 2,494 100%

Source: SMM Report

–116– According to the SMM Report, Jinchuan contributed 83% of electrolytic nickel production in China in 2019. The following table sets forth top three Class I nickel producers in China by production volume in 2019:

2019 Production %of No. Company Nickel Product Volume China Total (Kt)

1 Jinchuan Nickel Sulfate ...... 67.5 11% Electrolytic Nickel ...... 146.0 83% 2 GEM Nickel Sulfate ...... 91.7 15% Electrolytic Nickel ...... 0.0 0% 3 Ji En Nickel Sulfate ...... 48.1 8% Electrolytic Nickel ...... 3.9 2% China Total Nickel Sulfate ...... 622.2 100% Electrolytic Nickel ...... 176.7 100%

Source: SMM Report

Nickel Product Demand

Global nickel consumption increased from 1.87 million tons in 2014 to 2.49 million tons in 2020, with a CAGR of 4.9%. China has been the largest nickel consumer, accounting for approximately half of the global nickel consumption during this period. In 2020, nickel consumption in stainless steel, metal alloy, electroplating, and battery materials accounted 71%, 15%, 6% and 6% of global nickel consumption respectively in 2020.

During 2014 to 2020, global nickel consumption growth mainly came from stainless steel and batteries sector while nickel consumption in other areas was quite stable. Global nickel consumption in stainless steel increased from 1.2 million tons in 2014 to 1.8 million tons in 2020, with a CAGR of 6.4%, which mainly came from China. The rapid development of the EV industry also boosted nickel consumption. During 2014 to 2020, nickel consumption in batteries materials grew exponentially from 56kt to 149kt with a CAGR of 17.7%.

2014 – 2020 Global Nickel Consumption 2020 Global Nickel Consumption Breakdown

Kt Battery Others Materials 3,000 2,489 10% 2% 6% Electroplating 2,500 8% 1,871 6% 2,000 6% 1,500 Metal Alloy 4% 15% 1,000

500 2%

0 0% 2014 2015 2016 2017 2018 2019 2020 Stainless Steel Consumption Growth Rate 71%

Source: SMM Report

–117– Nickel Market Balance

Nickel industry was oversupplied from 2014 to 2015 due to the rapid increase in the production of ferronickel. As the nickel price went down, some high-cost nickel smelters shut down and exited the market. Nickel market turned into a supply shortage since 2016 as the production of stainless steels increased and boosted the nickel demand while nickel supply growth was relatively slower.

In 2019 and 2020, nickel supply picked up as nickel production from Indonesia increased. NPI production from China and Indonesia increased by 0.4 million tons in 2020 compared to 2018. From the demand side, the global EV industry continue to expand rapidly which supports the nickel demand in the long run.

Nickel Supply and Demand – Globally (kt)

4,000

3,000

2,000

1,000

0 2014 2015 2016 2017 2018 2019 2020 2021F 2022F 2023F Supply Demand

Source: SMM Report

China nickel market has been experiencing supply shortage from 2014 to 2019 due to the lack of nickel resources in China and the exponential growth of demand from especially from the EV industry. In 2019, China nickel supply increased due to the increasing NPI capacity, leading to a slight oversupply situation. However, in 2020, the Chinese market again turned into a supply shortage. Since the nickel ore export ban in Indonesia which took effect in 1 January 2020, a lot of Chinese nickel producers reduced production due to lack of raw materials. On the other hand, demand from stainless steel and EV industry continued to grow especially since the second half of the year as the economy recovered from COVID-19. Compared to 2019, 2020 nickel consumption in stainless steel increased 9.0% and nickel consumption in EV industry increased 32.9%. As ferronickel and NPI production in Indonesia will pick up quickly in the future, it is expected that lower cost Indonesian products will be exported to China, potentially leading to oversupply in Class II products. Class I products are expected to be in supply shortage due to limited nickel sulphide resources and lack of new nickel discoveries in China.

Nickel Supply and Demand – China (kt)

2,000

1,500

1,000

500

0 2014 2015 2016 2017 2018 2019 2020 2021F 2022F 2023F Supply Demand

Source: SMM Report

–118– Historical Nickel Prices

Nickel prices decreased significantly after reaching high at US$10,439/ton (LME) and RMB152,757/ton (SHFE) in May 2014 mainly due to oversupply. In February 2016, nickel prices reached the lowest point in the last five years at US$8,302/ton (LME) and RMB68,273/ton (SHFE).

In the second half of 2016, Philippine, the largest nickel producer at that time widened a crackdown on mines over environmental concerns, sparking a jump in nickel-ore prices. In 2017 and 2018, with strong demand from stainless steel sector, nickel prices gradually increased. Since 2018, uncertainties around the global economy and trade tension had a negative impact on the nickel demand, adding downward pressure on the nickel price. In July 2019, there was rumours around Indonesian’s ore export ban starting earlier in 2020, which drove up the nickel prices. In 2020, due to the impact of COVID-19, nickel price declined dramatically in the first quarter of 2020. Nickel prices recovered since April 2020 in light of fiscal expansion plans and continuous quantitative easing in major economies. Nickel prices reached its year high in December 2020. The average LME nickel price was US$13,760/ton and the average SHFE nickel price was RMB109,412/ton in 2020.

LME (US$/ton) SHFE (RMB/ton) 30,000 200,000

30000200000

25,000 25000 160,000

160000

20,000

20000 120,000

120000 15,000

15000 80,000

80000 10,000

10000

40,000 5,000 40000

5000

0 0

2014-012014-042014-072014-102015-012015-042015-072015-102016-012016-042016-072016-102017-012017-042017-072017-102018-012018-042018-072018-102019-012019-042019-072019-102020-012020-042020-082020-102021-01

LME SHFE

Source: SMM, LME, SHFE

COPPER MARKET OVERVIEW

Copper Industry Value Chain

Copper is a soft, malleable, and ductile metal with very high thermal and electrical conductivity. Copper and copper alloy products are widely used in electricity, electronics, telecommunications, transportation, machinery, etc. The copper industry chain covers upstream exploration, development, and mining, midstream smelting and refining, as well as downstream processing. The below diagram summarizes the mine-to-product flow of copper.

Mining and Processing Refining Deep Processing Downstream Applications

Copper Wire Electrics Ore Crude Copper

Copper Bar Home Appliance

Cathode Copper

Copper Concentrate Copper Plate and Strip Transportation

Electrolytic Copper Copper Foil Construction

Scrap Copper Copper Pipe Machinery

Others Others Recycling

Source: SMM Report

–119– Copper Reserves

According to the United States Geological Survey, global copper reserves are approximately 870 million tons in 2019. The majority of nickel reserves are located in Chile, Australia, Peru, Russia, Mexico and US, which in total accounted for 62% of the total copper reserves in the world.

Global copper reserves increased from 700 million tons in 2014 to 870 million tons in 2019 with a CAGR of 4.4%. Global copper reserves growth rate has been slowed down compared to historical years, mainly due to the decreasing exploration budget. Total exploration investment reached the peak of US$4.7Bn in 2012 and declined afterwards. In 2018, global copper exploration investment was US$2.2Bn. As a result, new copper discovery rates are currently at historical low, adding supply pressure in the long-term.

Copper reserves in China are only about 26 million tons, accounting for 3% of global reserves, with the majority of copper reserves located in China Midwest (c.90%). Copper mines in China are mostly small to medium size with low grade. The average grade for copper mines in China is approximately 0.8%.

Global Copper Reserves by Country – 2019 China Copper Reserves by Province – 2019

Chile Eastern 23% Coast 10%

RoW 38%

Australia 10% Central China 50%

Western Peru China US 10% 40% 6% Mexico Russia 6% 7%

Copper Mine Supply

Global copper concentrate production increased from 14.78 million tons in 2014 to 16.51 million tons in 2020, with a CAGR of 1.87%. Copper concentrate production from Peru increased 49% from 2014 to 2020 and accounted for 10% of global production in 2020. This is due to the commissioning of several large scale copper projects in Peru, including China Minmetals’ Las Bambas mine and Freeport’s Cerro Verde expansion project. Copper concentrate production in China accounts for 9% of global supply in 2020. In 2020, copper concentrate production in Central and South America, Asia, North America, Africa and Europe accounted for 40%, 19%, 12%, 12%, and 8% respectively.

During 2022 to 2023, it is expected that new copper projects will mainly be from Chile and Peru, including Quellaveco project in Peru with production capacity of 250ktpa, Quebrada Blanca Phase II in Chile with production capacity of 278ktpa, and Kakula-Kansoko-Kamoa project in DRC Congo with production capacity of 200ktpa.

– 120 – 2014 – 2020 Global Copper 2020 Global Copper Concentrate Production Concentrate Production by Region

million tons North RoW America 18 8% Africa 4% 12% 17 12% 17 6%

16 4% Oceania 15 5% 15 2%

14 0% Asia 13 (2%) 19% Central & South 12 (4%) America 2014 2015 2016 2017 2018 2019 2020 40%

Production Growth Rate Europe 8%

Source: SMM, Bloomberg

Refined Copper Product Supply

Global refined copper production increased from 21.8 million tons in 2014 to 23.0 million tons in 2020, with a CAGR of 0.91%. China has the largest refined copper production in 2020, accounting for 42% of the global production in 2020. Chile has the second largest refined copper production in 2020 and is the largest refined copper exporter in the world with 95% of its refined copper production exported.

2014 – 2020 Global Refined Copper Production 2020 Global Refined Copper Production by Region

Mt RoW North Africa 24 6% 1% America Oceania 5% 7% Central & 1% South America 23 23 3% 12%

22 22 0%

Europe 21 (3%) 15%

20 (6%) 2014 2015 2016 2017 2018 2019 2020 Asia 59% Production Growth Rate

Source: SMM, Bloomberg

According to the SMM Report, the following table sets forth top 5 copper producers in China by the product volume in 2019:

Top 5 Copper Producers in China – By 2019 Production

No. Company 2019 % (kt)

1 Jiangxi Copper ...... 1,556 17.4% 2 Tongling Nonferrous Metals ...... 1,401 15.7% 3 Yunnan Copper ...... 1,115 12.5% 4 Jinchuan ...... 917 10.2% 5 Daye Nonferrous ...... 505 5.6% Total ...... 5,494 61.4% China Total ...... 8,950 100.0%

Source: SMM Report

– 121 – Refined Copper Product Demand

Global refined copper demand increased from 21.6 million tons in 2014 to 22.8 million tons in 2020, with a CAGR of 0.87%. The majority of copper demand comes from Asia, accounting for 75% of global demand in 2020. China is the world’s largest copper consumer and accounted for 58% of global copper consumption in 2020.

2014 – 2020 Global Refined Copper Demand 2020 Global Refined Copper Demand by Region

Mt RoW North 1% 26 6% Africa America Central & 1% 9% South 4% America 1% 24 2%

0% Europe 13% 22 -2%

-4%

20 -6% 2014 2015 2016 2017 2018 2019 2020 Asia 75% Consumption Growth Rate

Source: SMM, Bloomberg

Copper Market Balance

Global copper refining production capacity is expected to increase 2% from 2021 to 2023 and reach 29.0 million tons in 2023. China would still be the world’s largest copper refiner accounting for approximately 50% of global copper refining capacity in 2023. Apart from China, new refining capacity would mainly come from Chile, DRC Congo, India, and Indonesia.

As a result of the stimulus policies worldwide, copper demand would also pick up. It is expected that copper demand would increase 3.0% from 2021 to 2023.

Copper Supply and Demand – Globally (kt)

30,000

20,000

10,000

0 2014 2015 2016 2017 2018 2019 2020 2021F 2022F 2023F Supply Demand

Source: SMM Report

– 122 – Copper Supply and Demand – China (kt)

15,000

10,00

5,000

0 2014 2015 2016 2017 2018 2019 2020 2021F 2022F 2023F Supply Demand

Source: SMM Report

Historical Copper Price

Copper prices have been fluctuated quite a lot during 2014 to 2020. LME copper prices declined approximately 41% from US$7,385/ton in January 2014 to US$4,326/ton in January 2016, mainly due to copper oversupply. Major copper producers cut production and led to a global supply cut. Global demand also picked up since second half of 2016 with recovering global economy. Since 2017, Escondida mine stopped production due to strike and China’s ban of Category-7 copper scrap both added pressure on the copper supply side, leading to higher copper prices. Uncertainties in the global macro economy, trade tensions in 2018 had a negative impact on the copper demand. On the other hand, some large mine copper projects have hit roadblocks in coming on stream and in construction (these include licensing issues for Tia Maria copper mine in Peru and production delays at Oyu Tolgoi copper mine). In 2020, copper prices showed a V-shaped trend. Copper prices declined significantly in the first quarter due to impact from COVID-19. However, strong stimulus plans globally and supply shock have supported a strong recovery of copper prices, which increased to 7-year high by end of 2020.

SHFE RMB/ton LME US$/ton

70,000 9,000

60,000 7,500 50,000 6,000 40,000 4,500 30,000 3,000 20,000

10,000 1,500

0 0

2014-01 2014-06 2014-12 2015-05 2015-11 2016-04 2016-10 2017-03 2017-09 2018-03 2018-08 2019-01 2019-07 2020-01 2020-07 2020-12

SHFE LME

– 123 – COBALT SECTOR OVERVIEW

Cobalt Industry Value Chain

Cobalt is a hard metal with steel grey and metallic lustre; its major physical and chemical parameters are similar to those of iron and nickel. Cobalt is widely used in batteries, electroplating, catalysts, metal alloys to improve anti-corrosion properties, etc. The cobalt industry chain covers upstream exploration, development, and mining, midstream smelting and refining, as well as downstream processing.

The below diagram summarizes the mine-to-product flow of cobalt.

Upstream Midstream Downstream

Cobalt Chemical Compounds Lithium Cobaltate Ore Cobalt Tetroxide (Battery Materials) 1. Cobalt Chloride 2. Cobalt Sulfate Cobalt Hard Powder Alloy Cobalt Intermediate 3. Cobalt Carbonate 4. Cobalt Oxalate Catalyst

Magnetic Material Electrolytic Cobalt High Temperature Alloy

Source: SMM Report

Cobalt Reserves

Global cobalt reserves was approximately 7.0 million tons in 2019, with the majority of cobalt reserves located in DRC Congo (51.4%), followed by Australia (17.1%), Cuba (7.1%), and Philippines (3.7%). China only had approximately 80kt cobalt reserves in 2019, accounting for only 1% of global reserves. Cobalt reserves in China mainly are mainly located in Gansu Province, Shandong Province, Yunnan Province, Hebei Province, Qinghai Province, and Shanxi Province, with together owns approximately 69% of total cobalt reserves in China.

Cobalt Supply

In most cases, cobalt is a by-product of copper or nickel mining. Therefore, the possibility of increase in production on a standalone basis is small, as its production scale is largely affected by the development of copper and nickel projects.

In 2020, global cobalt production was 161.5kt, and it is expected to increase to 185.3kt in 2023. China is the largest refined cobalt producer, accounting for approximately 70% of global refined cobalt production, followed by Finland (7%), Canada (5%), and Belgium (2%).

Top 4 Cobalt Producers Globally

No. Company 2019 (kt) 1 Glencore ...... 46 2 Huayou Cobalt ...... 28 3 China Moly ...... 16 4 Jinchuan ...... 11 Total ...... 101

Source: SMM Report

– 124 – Cobalt Demand

Downstream applications for cobalt mainly include lithium battery materials, high temperature alloy, hard alloy, magnetic material, etc. Lithium battery material is the major end use of cobalt consumption, representing c.53% of the total cobalt consumption in 2020. Another important application of cobalt is high temperature alloy that can operate at a high fraction of its melting point and is widely used in the aviation and aerospace sector. High temperature alloy accounted for approximately 15% of the global cobalt consumption in 2020. Carbide alloy with high temperature resistance and corrosion resistance accounted for 12% of cobalt consumption in 2020. Carbide alloy is made by cementing hard (tungsten, titanium) particle high resistance materials (cobalt, nickel) and is widely used in cutlery, rock drilling, mining and drilling tools etc.

The development of electric vehicles will continue to be the key driver for cobalt demand as ternary lithium batteries which use Ni-Co lithium manganite as the cathode material is the major type of lithium battery used in the electric vehicles. It is expected that global cobalt demand will increase to 167.4kt in 2023, with a CAGR of 8%.

Cobalt Supply and Demand – Globally (kt)

200200

150150

100100

5050

00 2018 2019 2020F 2021F 2022F 2023F

Supply Demand

Source: SMM Report

Cobalt Supply and Demand – China (kt)

120

100

0 2016 2017 2018 2019 2020F 2021F 2022F 2023F Supply Demand

Source: SMM Report

– 125 – Historical Cobalt Price

From 2016 to 2017, driven by government EV facilitating policies, EV industry has seen exponential growth. Cobalt demand also increased rapidly as cobalt is the key raw material for EV batteries. Cobalt prices reached a peak in mid-2018 and declined afterwards. Cobalt prices continued to decline in the first half of 2019 to US$12/lb in July 2019. Glencore announced to close the world’s largest cobalt mine Mutanda mine in DRC Congo in 2020 to 2021 and cut production in another mine KCC. Cobalt prices bounced back in light of the supply cut since second half of 2019. In 2020, cobalt prices were quite fluctuated. Cobalt prices declined in the first quarter in light of the decreasing demand. Since the second quarter, cobalt mine supply tightened and supported the prices to recover. Also, as demand recovered since July, cobalt prices continued to increase in the second half of 2020.

RMB/ton 800,000

700,000

600,000

500,000

400,000

300,000

200,000

100,000

Jan-17 Jul-17 Jan-18 Jul-18 Jan-19 Jul-19 Jan-20 Jul-20 Mar-17 May-17 Sep-17 Nov-17 Mar-18 May-18 Sep-18 Nov-18 Mar-19 May-19 Sep-19 Nov-19 Mar-20 May-20 Sep-20 Nov-20

Source: SMM Report

KEY MARKET TRENDS FOR NICKEL, COPPER AND COBALT PRODUCTS – ELECTRIC VEHICLES (EV)

EV Value Chain

Since 2017, over a dozen countries have announced targets varying from the ban of new sales on diesel vehicles to requirements for full electrification. Many countries also implemented incentives for EV manufacturers and purchasers to boost the penetration rate of EVs. Mainstream EV types with large battery packs primarily include battery electric vehicles (BEVs), plug-in hybrid electric vehicles (PHEVs), fuel cell electric vehicles (FCEV), low speed electric vehicles (LSEVs).

The below diagram summarizes the value chain for EV industry.

Upstream Midstream Downstream

Cathode Material Electrical Batteries System Anode Material

Separator Electronic OEM Control Motor

Electrolyte

Battery Shell Thermal Management Charging Piles

Lithium

Other Metals

Source: SMM Report

– 126 – EV Market Outlook

The EV sector picked up paces globally during 2014-2018, recording 13 times growth in sales during the five-year period, or a CAGR of c. 91.5%. It is expected that the EV sector will continue with its fast capacity expansion during 2019-2030 under strong government support worldwide and achieve annual sales of 31.72 million units by 2030, growing at 26.5% CAGR. Besides newly emerged EV makers such as Tesla, all leading traditional carmakers including Volkswagen, BMW, GM, Ford, Daimler and Toyota have incorporated EVs into their corporate strategies and announced ambitious expansion plans, aiming to boost EV sales to c. 20%-50% of their respectively total sales by 2030.

EV Sales Projections – Globally (mm units)

35 350%

35 31.7 30 300% 30 27.5

25 23.8 250%

20.5 20 200% 20 17.4

14.5 15 150%

15 10.8 10 100% 10 8.0 6.0 3.2 4.6 5 50% 5 2.2 2.0 0.8 1.2 0.2 0.6 0 0% 0 2014 2015 2016 2017 2018 2019 2020F 2021F 2022F 2023F 2024F 2025F 2026F 2027F 2028F 2029F 2030F

Global NEV Sales YoY%

China is the world’s largest market for EVs, accounting for half of global sales.

China’s EV sales posted CAGR of 83.4% during 2014-2018, fuelled mainly by government subsidies. When subsidies began to taper off in 2019, the growth momentum has been a bit dampened. In early 2020, Chinese government announced that it will extend state subsidies and tax breaks for Electric Vehicles (BEV, PHEV and FCEV) by two years until the end of 2022 to strengthen the market. In 2020, total EV sales in China reached 1.37 million units, increasing by 13.2% compared to 2019. In the near term, the profitability of the whole sector might be squeezed as subsidies being pulled out. However, in the long run, EVs will continue to have upside potential through 2030 and remain very attractive to consumers, driven by more mature and reliable technology and cost effectiveness, continued favorable polices and increasing penetration of supplemental infrastructure and charging piles. China’s annual EV sales are expected to hit 14.38 million units by 2030.

EV Sales Projections – China (mm units)

16 350% 16.0 14.4

12.6 1212.8 250% 10.7

8.9

9.6 8 7.3 150%

5.6

6.4 4.2 4 2.4 3.0 50%

3.2 1.2 1.9 1.3 1.4 0.6 0.1 0.2 0.3 0 (50%)

0.0 2014 2015 2016 2017 2018 2019 2020F 2021F 2022F 2023F 2024F 2025F 2026F 2027F 2028F 2029F 2030F

China NEV Sales YoY%

Source: SMM Report

– 127 – Demand for Nickel and Cobalt from EV Batteries

The explosive growth of the global EV industry also boosted the demand for nickel and cobalt, which are the key raw materials for the ternary cathode materials (TCMs). TCM-based batteries enjoy a significant advantage in energy density, and have grabbed increasing market shares in the total EV batteries installed, up to 50% in 2018. As a result, nickel consumption by EV batteries rose from 3,200 tons to 101,000 tons from 2014 to 2020, with a CAGR of 78.2%; Cobalt consumption grew from 1,200 tons to 23,600 tons, with a CAGR of 64.3% in the same period.

Over the past five years, nickel consumption by EV batteries was growing fast, which reflected the trend of higher nickel content in EV batteries. High-nickel ternary materials, e.g., NCM811 and NCA, have larger capacity so that they have attracted all major battery manufacturers. Domestic battery giants including CATL, BYD, Lishen and EVE Energy, have all chosen the NCM811 technology path. Global giants including Samsung SDI, SKI and LG Chem have also chosen to follow both NCM811 and NCA technology paths.

It is expected that by 2030, the global nickel consumption from EV batteries would reach 2.2 million tons, with a CAGR of 35.8%, and the cobalt consumption would hit 167,000 tons, with a CAGR of 21.6%. This will be mainly driven by continued expansion of EV sales and penetration of high-nickel ternary materials in EV batteries.

Although high-nickel ternary materials are still in their budding stages of commercialization and face challenges in safety and production process, all leading companies are actively conducting R&D. The trend of higher nickel content in power batteries will result in rapid growth in nickel demand.

Nickel Demand from EV Batteries – Globally (million tons)

200%

2.5 Nickel Demand YoY%

2.5

2.0 150% 2.0

1.51.5 100% 0.6

1.0

1.0 50%

0.5 0.5

0.0 0% 0.0 2014 2015 2016 2017 2018 2019 2020F 2021F 2022F 2023F 2024F 2025F 2026F 2027F 2028F 2029F 2030F Nickel Demand 0.00 0.01 0.03 0.04 0.07 0.09 0.10 0.14 0.20 0.27 0.39 0.59 0.81 1.06 1.39 1.79 2.16 YoY% 353% 90% 65% 67% 18% 15% 42% 38% 35% 47% 50% 37% 32% 31% 28% 21%

Source: SMM Report

– 128 – Cobalt Demand from EV Batteries – Globally (kt)

180.00 Cobalt Demand YoY% 200%

160.00

140.00 150%

120.00 100% 100.00

80.00 50% 60.00

40.00 0% 20.00

0.00 (50%) 2014 2015 2016 2017 2018 2019 2020F 2021F 2022F 2023F 2024F 2025F 2026F 2027F 2028F 2029F 2030F Cobalt Demand 1.00 5.00 10.00 15.00 24.00 26.00 24.00 28.00 32.00 41.00 59.00 68.00 80.00 96.00 121.00 147.00 167.00 YoY% 353% 85% 55% 59% 7% -8% 18% 16% 28% 28% 28% 19% 20% 26% 21% 14%

Source: SMM Report

Demand for Copper from EV

Copper foils are key components of the negative current collector in EV batteries. Copper consumption varies among different types of battery materials, e.g., c. 1.84kg/kWh for lithium iron phosphate (LIP), 1.41kg/kWh for ternary materials and c. 1.44kg/kWh for lithium manganite. Copper consumption by EV batteries grew 11 times during 2014-2018.

It is expected that during 2019-2030, with the increasing EV output, copper consumption by EV batteries will also see exponential growth, with a CAGR of 29.4%. Ternary lithium batteries are now the mainstream in compact passenger EVs and claiming an increasing ratio in the total number of power batteries, owing to their higher energy density and other advantages.

Copper Demand from EV Batteries – Globally (kt)

1,200.00 Copper Consumption YoY% 200%

1,000.00 150% 800.00

600.00 100%

400.00 50% 200.00

0.00 0% 2014 2015 2016 2017 2018 2019 2020F 2021F 2022F 2023F 2024F 2025F 2026F 2027F 2028F 2029F 2030F Copper Consumption 6.45 21.45 38.70 54.27 60.99 65.94 74.70 116.8 151.7 194.1 276.7 380.3 419.7 529.1 679.0 814.3 986.6

YoY% 233% 80% 40% 12% 8% 13% 56% 30% 28% 43% 37% 10% 26% 28% 20% 21%

Source: SMM Report

As one of the key element in EV infrastructure network, demand for EV charging piles has also increased over the years. There are two types of charging piles, namely, household and public. All household charging piles adopt Alternating Current (“AC”) charging and use c. 2kg of copper per pile. Public charging piles, on the other hand, adopt either Direct Current Fast Charging (“DCFC”) which uses c. 25kg of copper per pile, or AC slow charging which uses c. 7kg of copper per pile. At present, household charging piles are the mainstream as EV vendors usually provide each buyer with a supplementary charging pile for free. During 2014-2018, copper consumption by EV charging piles expanded by 22 times.

– 129 – Copper consumption by EV charging piles is expected to continue with rapid growth and increase by 7 times during 2021-2030, with a CAGR of 21%. According to a report published by the China Electric Vehicle Charging Infrastructure Promotion Alliance, the number of charging and battery swapping stations in China is expected to quadruple to 48,000 by 2030, up from 12,000 in 2020. The total of AC and DC charging piles is expected to skyrocket, growing 15 times from 5 million in 2020 to 80 million by 2030. The Chinese government is attaching greater importance to construction of charging piles as part of the supplemental infrastructure for the EV sector. Since 2019, dozens of local governments have begun to allocate more of their new energy subsidies to charging piles so as to fund construction and maintenance. Meanwhile, in order to meet the growing demand for cross-town mobility with EVs, China is actively rolling out more copper consuming DCFC piles near leading metropolitans, e.g., Beijing, Shanghai Guangzhou, etc. It is expected that by 2030, 54% of EV charging will use DCFC piles and 51% of EV charging demand will be met by public charging piles. In Europe and the U.S., public charging piles will also play an increasing role, representing 40-50% of the total EV charging by 2030, up from c. 30% nowadays.

Copper Demand from EV Charging Facilities – Globally (million tons)

18.00 Copper Consumption YoY% 400%

16.00

14.00 300% 12.00

10.00 200% 8.00

6.00 100% 4.00

2.00

0.00 0% 2014 2015 2016 2017 2018 2019 2020F 2021F 2022F 2023F 2024F 2025F 2026F 2027F 2028F 2029F 2030F Copper Consumption 0.01 0.05 0.08 0.15 0.24 0.27 0.39 0.62 1.00 1.57 2.35 3.52 5.29 7.68 10.18 12.75 15.97

YoY% 72% 35% 11% 41% 38% 51% 20% 20% 39% 45% 55% 47% 12% 5% 5% 1%

Source: SMM Report

– 130 – PRC REGULATIONS

This section summarises the principal PRC laws and regulations which are relevant to the Group’s business and operations. As this is a summary, it does not contain a detailed analysis of the PRC laws and regulations which are relevant to the Group’s business and operations.

THE PRC LEGAL SYSTEM

The PRC legal system is based on the PRC Constitution and is made up of written laws, regulations, directives and local laws, laws of Special Administrative Regions and laws resulting from international treaties entered into by the PRC government. In general, PRC court judgements do not constitute binding precedents. However, they may be used for the purposes of judicial reference and guidance.

The National People’s Congress of the PRC (the “NPC”) and the Standing Committee of the NPC are empowered by the PRC Constitution to exercise the legislative power of the State. The NPC has the power to amend the PRC Constitution and enact and amend basic laws governing State agencies and civil, criminal and other matters. The Standing Committee of the NPC is empowered to enact and amend all laws except for the laws that are required to be enacted and amended by the NPC.

The State Council is the highest organ of the State administration and has the power to enact administrative rules and regulations. The ministries and commissions under the State Council are also vested with the power to issue orders, directives and regulations within the jurisdiction of their respective departments. All administrative rules, regulations, directives and orders promulgated by the State Council and its ministries and commissions must be consistent with the PRC Constitution and the national laws enacted by the NPC. In the event that a conflict arises, the Standing Committee of the NPC has the power to annul such administrative rules, regulations, directives and orders. The People’s Congresses or their standing committees of the comparatively larger cities may, in light of the specific local conditions and actual needs, formulate local regulations, provided that they do not contradict the PRC Constitution, the national laws, the administrative regulations and the local regulations of their respective provinces or autonomous regions, and they shall submit the regulations to the standing committees of the people’s congresses of the provinces or autonomous regions for approval before implementation.

At the regional level, the provincial and municipal congresses and their respective standing committees may enact local rules and regulations and the local governments may promulgate administrative rules and directives applicable to their own administrative areas. These local rules and regulations must be consistent with the PRC Constitution, the national laws and the administrative rules and regulations promulgated by the State Council.

The State Council, provincial and municipal governments may also enact or issue rules, regulations or directives in new areas at the law for experimental purposes or in order to enforce the law. After gaining sufficient experience with experimental measures, the State Council may submit legislative proposals to be considered by the NPC or the Standing Committee of the NPC for enactment at the national level.

The PRC Constitution vests the power to interpret laws in the Standing Committee of the NPC. The Supreme People’s Court, in addition to its power to give general interpretation on the application of laws in judicial proceedings, also has the power to interpret specific cases. The State Council and its ministries and commissions are also vested with the power to interpret rules and regulations that they have promulgated. At the regional level, the power to interpret regional rules and regulations is vested in the regional legislative and administrative bodies which promulgated such laws.

– 131 – THE PRC JUDICIAL SYSTEM

Under the PRC Constitution and the Law of Organisation of the People’s Courts (《人民法院組織法》), the judicial system is made up of the Supreme People’s Court, the local courts and special courts.

The local courts are comprised of the basic courts, the intermediate courts and the higher courts. The basic courts are organised into civil, criminal, economic, administrative and other divisions. The intermediate courts are organised into divisions similar to those of the basic courts, and are further organised into other special divisions, such as the intellectual property division. The higher level courts supervise the basic and intermediate courts. The people’s procuratorates also have the right to exercise legal supervision over the civil proceedings of courts of the same level and lower levels. The Supreme People’s Court is the highest judicial body in the PRC. It supervises the administration of justice by all other courts.

The courts employ a two-tier appellate system. A party may appeal against a judgement or order of a local court to the court at the next higher level. Second judgements or orders given at the next higher level and the first judgements or orders given by the Supreme People’s Court are final. First judgements or orders of the Supreme People’s Court are also final. If, however, the Supreme People’s Court or a court at a higher level finds an error in a judgement which has been given by any court at a lower level, or if the people’s procuratorate at a higher level finds such error in a legally effective judgement or order of any people’s court at a lower level the case may then be retried in accordance with the judicial supervision procedures.

The Civil Procedure Law of the PRC (《中華人民共和國民事訴訟法》), which was adopted on 9 April 1991 and amended on 28 October 2007, 31 August 2012 and 27 June 2017, respectively, sets forth the criteria for instituting a civil action, the jurisdiction of the courts, the procedures to be followed for conducting a civil action and the procedures for enforcement of a civil judgement or order. All parties to a civil action conducted within the PRC must comply with the Civil Procedure Law. Generally, a civil case is initially heard by a local court where the defendant resides. The parties to a contract may, by express agreement, select a jurisdiction where civil actions may be brought, provided that the jurisdiction is either the plaintiff’s or the defendant’s place of residence, the place of execution or implementation of the contract or the place of the object of the contract. However, such selection cannot violate the stipulations of grade jurisdiction and exclusive jurisdiction in any case.

A foreign individual or enterprise generally has the same litigation rights and obligations as a citizen or legal person of the PRC. If a foreign country’s judicial system limits the litigation rights of PRC citizens and enterprises, the PRC courts may apply the same limitations to the citizens and enterprises of that foreign country within the PRC. If any party to a civil action refuses to comply with a judgement or order made by a court or an award granted by an arbitration panel in the PRC, the aggrieved party may apply to the court to request for enforcement of the judgement, order or award. The time limit imposed on the right to apply for such enforcement is two years. If a person fails to satisfy a judgement made by the court within the stipulated time, the court will, upon application by any party to the action, mandatorily enforce the judgement.

A party seeking to enforce a judgement or order of a court against a party who is not located within the PRC and does not own any property in the PRC may apply to a foreign court with proper jurisdiction for recognition and enforcement of the judgement or order. A foreign judgement or ruling may also be recognised and enforced by a PRC court in accordance with the PRC enforcement procedures if the PRC has entered into, or acceded to, an international treaty with the relevant foreign country, which provides for such recognition and enforcement, or if the judgement or ruling satisfies the court’s examination in accordance with the principle of reciprocity, unless the court finds that the recognition or enforcement of such judgement or ruling will result in a violation of the basic legal principles of the PRC, its sovereignty or security, or for reasons of social and public interests.

– 132 – FOREIGN EXCHANGE CONTROLS

The lawful currency of the PRC is the Renminbi, which is subject to foreign exchange controls and is not freely convertible into foreign currency at this time. SAFE, under the authority of PBOC, is empowered with the functions of administering all matters relating to foreign exchange, including the enforcement of foreign exchange control regulations.

Prior to 31 December 1993, a quota system was used for the management of foreign currency. Any enterprise requiring foreign currency was required to obtain a quota from the local SAFE office before it could convert Renminbi into foreign currency through PBOC or other designated banks. Such conversion had to be effected at the official rate prescribed by SAFE on a daily basis. Renminbi could also be converted into foreign currency at swap centres. The exchange rates used by swap centres were largely determined by the demand for, and supply of, the foreign currency and the Renminbi requirements of enterprises in the PRC. Any enterprise that wished to buy or sell foreign currency at a swap centre had to obtain the prior approval of SAFE.

On 28 December 1993, PBOC, under the authority of the State Council, promulgated the “Notice of PBOC Concerning Further Reform of the Foreign Currency Control System (《中國人民銀行關於進一步改革外匯管理體制的公告》)”, effective from 1 January 1994. The Notice announced the abolition of the foreign exchange quota system, the implementation of conditional convertibility of Renminbi in current account items, the establishment of the system of settlement and payment of foreign exchange by banks, and the unification of the official Renminbi exchange rate and the market rate for Renminbi established at swap centres. On 26 March 1994, PBOC promulgated the “Provisional Regulations for the Administration of Settlement, Sale and Payment of Foreign Exchange (《結匯、售匯及付匯管理暫行規定》)” (the “Provisional Regulations”), which set out detailed provisions regulating the trading of foreign exchange by enterprises, economic organisations and social organisations in the PRC.

On 1 January 1994, the former dual exchange rate system for Renminbi was abolished and replaced by a controlled floating exchange rate system, which was determined by demand and supply of Renminbi. Pursuant to such system, PBOC set and published the daily central parity of Renminbi-U.S. dollar exchange rate. Such exchange rate was determined with reference to the transaction price for Renminbi-U.S. dollar in the inter-bank foreign exchange market on the previous day. Also, PBOC, with reference to exchange rates in the international foreign exchange market, announced the exchange rates of Renminbi against other major foreign currencies. In foreign exchange transactions, designated foreign exchange banks may, within a specified range, freely determine the applicable exchange rate in accordance with the rate announced by PBOC.

On 29 January 1996, the State Council promulgated the “Regulations for the Control of Foreign Exchange of the PRC (《中華人民共和國外匯管理條例》)” (“Control of Foreign Exchange Regulations”) which became effective from 1 April 1996. The Control of Foreign Exchange Regulations classifies all international payments and transfers into current account items and capital account items. Most current account items are subject to the approval by relevant banks that are duly authorised by SAFE to do so, while capital account items are still subject to SAFE approval directly. The Control of Foreign Exchange Regulations was subsequently amended on 14 January 1997. Such amendment affirms that the State shall not restrict international current account payments and transfers. On 1 August 2008, the Control of Foreign Exchange Regulations were further amended pursuant to a resolution of the State Council of the PRC and came into effect on 5 August 2008 (the “New Forex Regulation”). The Renminbi will be convertible for current account items (including the distribution of dividends, interest and royalties payments, and trade and service-related foreign exchange transactions) upon presentation of valid receipts and proof certifying the purposes of the conversion of Renminbi into foreign currency to the foreign exchange administration. Conversion of Renminbi into foreign exchange and remittance of foreign exchange funds outside of PRC for capital account items, like direct investment, loan, loan guarantee, securities investment, capital contribution and repatriation of investment, is still subject to restriction, and prior approval from SAFE or its competent branch.

– 133 – On 20 June 1996, PBOC promulgated the “Regulations for Administration of Settlement, Sale and Payment of Foreign Exchange (《結匯、售匯及付匯管理規定》)” (the “Settlement Regulations”) which became effective on 1 July 1996. The Settlement Regulations superseded the Provisional Regulations and abolished the remaining restrictions on convertibility of foreign exchange in respect of current account items while retaining the existing restrictions on foreign exchange transactions in respect of capital account items. Domestic entities seeking to enter into foreign exchange transactions are required to open up foreign exchange accounts for current account or capital account transactions, as the case may be, at banks involved in foreign exchange business. Interest payments for foreign debt may be made from a foreign exchange account of a domestic entity or using foreign exchange purchased at designated foreign exchange banks after the verification of the authenticity of the transaction by SAFE. Domestic entities may apply to SAFE for approval to purchase foreign exchange by presenting valid documents required by the Settlement Regulations for repayment of foreign debt principal and such payment can be made upon the approval of SAFE.

On 25 October 1998, PBOC and SAFE promulgated the “Notice Concerning the Discontinuance of Foreign Exchange Swap Business (《中國人民銀行、國家外匯管理局關於停辦外匯調劑業務的通知》)” pursuant to which and with effect from 1 December 1998, all foreign exchange swap business in the PRC for foreign-invested enterprises was discontinued, while the trading of foreign exchange by foreign- invested enterprises was to be regulated under the system for the settlement and sale of foreign exchange applicable to banks.

On 21 July 2005, PBOC announced that, beginning from 21 July 2005, the PRC will implement a regulated and managed floating exchange rate system based on market supply and demand and by reference to a basket of currencies. The Renminbi exchange rate is no longer pegged to the U.S. dollar only. PBOC will announce the closing price of a foreign currency such as the U.S. dollar traded against the Renminbi in the inter-bank foreign exchange market after the closing of the market on each business day, setting the central parity for trading of the Renminbi on the following business day.

On 9 June 2016, SAFE published the “Notice on Reforming and Standardising the Administrative Policies on Capital Account Foreign Exchange Settlement”(《國家外匯管理局關於改革和規範資本項目結匯管理政策的通知》) (the “Notice”), which became effective on the same day. According to this Notice, PRC domestic enterprises (including both Chinese-funded enterprises and Foreign-invested enterprises but except financial institutions) can convert foreign debt borrowed offshore into RMB for their actual business needs in the PRC. It therefore may provide a legal basis for a PRC issuer/borrower to remit the proceeds from its offshore direct bond issuance/offshore borrowing back to the PRC and convert such proceeds (including foreign exchange capital and foreign debt and overseas listed repatriation of capital, etc.) into RMB for onshore business use after certain foreign exchange settlement. The implementation of the Notice enables PRC issuer/borrower to open a remittance account with an onshore bank and to process the remittance (including Foreign exchange capital, foreign debt and transferred back funds raised through overseas listing etc.) of such proceeds from offshore to onshore based on domestic institution’s actual business need.

On 23 October 2019, SAFE issued Notice of the State Administration of Foreign Exchange on Further Promoting the Facilitation of Cross-border Trade and Investment (《國家外匯管理局關於進壹步促進跨境貿易投資便利化的通知》) (the “Circular 28”), according to which, among other things, the pilot program (to facilitate foreign exchange receipts and payments for trade in services and to facilitate payment with the income under capital account) is launched, restrictions on the domestic equity investment by non-investment foreign-funded enterprises with their capital funds is cancelled, the restriction on the use of foreign exchange settlement funds under the capital account is relaxed, the administration of registration of foreign debts of enterprises is reformed.

– 134 – RULES FOR CROSS-BORDER RENMINBI BUSINESS

On 17 June 2010, 27 July 2011 and 3 February 2012 respectively, PBOC and five other PRC authorities (the “Six Authorities”) promulgated the “Circular on Issues concerning the Expansion of the Scope of the Pilot Programme of Renminbi Settlement of Cross-border Trades”(《關於擴大跨境貿易人民幣結算試點有關問題的通知》), the “Circular on Expanding the Regions of Cross-border Trade Renminbi Settlement (《關於擴大跨境貿易人民幣結算地區的通知》) and the “Notice on Matters Relevant to the Administration of Enterprises Engaged in Renminbi Settlement of Export Trade in Goods”(《關於出口貨物貿易人民幣結算企業管理有關問題的通知》) (together as “Circulars”). Pursuant to these Circulars, (i) Renminbi settlement of imports and exports of goods and of services and other current account items became permissible, (ii) the list of designated pilot districts were expanded to cover all provinces and cities in the PRC, (iii) the restriction on designated offshore districts has been lifted and (iv) any enterprise qualified for the export and import business is permitted to use Renminbi as settlement currency for exports of goods.

On 5 July 2013, PBOC issued the “Circular of the People’s Bank of China on Simplifying the Procedures for Cross-border RMB Business and Improving the Relevant Policies”(《關於簡化跨境人民幣業務流程和完善有關政策的通知》) (the “2013 PBOC Notice”) to simplify the procedures under the cross-border Renminbi trade settlement, relaxed deadlines and financing account limit, regulate the domestic non-financial institutions Renminbi offshore lending business and provide external guarantees and other services. The 2013 PBOC Notice encourages the domestic bank to carry out cross-border Renminbi trade financing business, the domestic non-financial institutions to apply with domestic bank for its offshore Renminbi settlement business as well.

According to the 2013 PBOC Notice, PBOC does not set limits for the qualification and guaranteed amount of domestic non-financial institutions engaging in the cross-border Renminbi guarantee business.

On 4 January 2018, the PBOC promulgated Notice of the People’s Bank of China on Further Improving Policies of Cross-Border RMB Business to Promote Trade and Investment Facilitation (Yin Fa [2018] No. 3) (《中國人民銀行關於進一步完善人民幣跨境業務政策促進貿易便利化的通知》(銀發[2018]3號])), pursuant to which any cross-border transactions that use a foreign exchange currency can use Renminbi for settlement.

On 23 March 2018, PBOC promulgated Issuance of Notice of People’s Bank of China on Business Rules of Cross Border Interbank Payment System (中國人民銀行關於印發《人民幣跨境支付系統業務規則的通知》). The notice regulates cross border interbank payment conducts, clarifies management rules on participants and protects legitimate rights of operating institutions and participants of cross border interbank payment system.

REGULATIONS REGARDING OVERSEAS INVESTMENT AND ACQUISITION ACTIVITIES

NDRC Supervision

On December 26, 2017, NDRC issued the Measures for the Administration of Overseas Investment of Enterprises (《企業境外投資管理辦法》) (the “Order 11”), which has been effective on March 1, 2018 and replace the Measures for the Administration of Approval and Filing of Overseas Investment Projects (《境外投資項目核准和備案管理辦法》). The Order 11 remove the previous system of reporting the project information, eliminate the process of initial examination by local governments before applications are submitted to the NDRC for further examination, relax requirements on the deadline for investors to go through the approval or record-filing formalities, and provide for the approving and record-filing procedures, and time limits, alterations, and renewal in this regard. The Order 11 subject the outbound investment activities carried out by an enterprise overseas under the control of a domestic enterprise or natural person to the administration, introduce relevant systems concerning the report on the progress of a project, report on particularly unfavourable circumstances, and inquiry about and report on major matters, and propose forming records for violations and illegalities arising in outbound investment.

– 135 – Furthermore, the Order 11 specify major tasks of the NDRC in announcing information about outbound investment, establishing cooperative investment mechanism and pushing forward the protection of enterprises’ overseas interests, stating that the NDRC may alert investors or interested parties to possible risks for their reference.

According to the Order 11, “overseas investment” means the investment activities where an enterprise in the territory of the People’s Republic of China (hereinafter referred to as the “investor”), directly or through an overseas enterprise controlled by it, acquires any ownership, right of control, right of operation and management, or other relevant rights and interests overseas, by contributing assets or rights and interests, providing financing or security, or any other means. “Investment activities” mainly includes without limitation the following circumstances:

(i) Acquiring the ownership of, the right to use, and other rights and interests in land overseas.

(ii) Acquiring a concession to prospect or exploit and other rights and interests in overseas natural resources.

(iii) Acquiring the ownership of, the right of business management of, and other rights and interests in overseas infrastructure.

(iv) Acquiring the ownership of, the right of business management of, and other rights and interests in any overseas enterprise or asset.

(v) New construction, reconstruction, or expansion of overseas fixed assets.

(vi) Forming a new overseas enterprise or increasing investment in an existing overseas enterprise.

(vii) Forming a new or acquiring a non-controlling stake in an overseas equity investment fund.

(viii) Controlling an overseas enterprise or asset by an agreement, a trust, or any other means.

Pursuant to the Order 11, NDRC shall, within the extent of its duties as specified by the State Council, fulfil its duties as the overseas investment administrative department, and as needed for maintaining the national interests and national security of China, conduct general guidance of, provide comprehensive services for, and regulate the whole process of overseas investment. NDRC shall establish an overseas investment management and service network system (the “network system”). An investor may undergo the confirmation and recordation formalities and report the relevant information through the network system; and in a matter involving any national secret or unsuitable for the use of the network system, an investor may separately submit hard-copy materials. The NDRC shall issue a guide to the operations on the network system.

According to the Order 11, sensitive projects conducted by investors directly or through overseas enterprises controlled by them shall be subject to confirmation management. The confirmation authority is the NDRC. The NDRC shall publish a catalogue of sensitive industries. “Sensitive project” means:

(i) a project involving a sensitive country or region; or

(ii) a project involving a sensitive industry.

For the purposes of these Measures, “sensitive country or region” means:

(i) a country or region without diplomatic relations with China;

(ii) a country or region in war or civil disturbance;

– 136 – (iii) a country or region in which enterprises are restricted from investment under any international treaty or agreement, among others, concluded or acceded to by China; or

(iv) any other sensitive country or region.

“Sensitive industry” means:

(i) research, production or maintenance of arms;

(ii) exploitation or utilisation of cross-border water resources;

(iii) news media; or

(iv) any other industry in which enterprises are restricted from investment according to China’s laws, regulations and relevant macro-economic control policy.

Non-sensitive projects directly conducted by investors, namely, non-sensitive projects involving investors’ direct contribution of assets or rights and interests or provision of financing or security, shall be subject to recordation management.

Among the projects subject to recordation management, if the investor is an enterprise managed by the Central Government (including financial enterprises managed by the Central Government and enterprises directly managed by the State Council or the agencies of the State Council), the recordation authority is the NDRC; if the investor is a local enterprise, and the amount of Chinese investment is not less than U.S.$300 million, the recordation authority is the NDRC; and if the investor is a local enterprise, and the amount of Chinese investment is less than U.S.$300 million, the recordation authority is the development and reform department of the provincial government at the place of registration of the investor.

For a project subject to confirmation or recordation management, the investor shall obtain a project confirmation document or recordation notice before implementing the project.

For a project subject to confirmation management, the investor shall submit a project application report, with relevant documents attached, to the confirmation authority through the network system.

Pursuant to the Order 11, where an investor conducts a high-value non-sensitive project through an overseas enterprise controlled by it, the investor shall, before implementing the project, submit a high-value non-sensitive project reporting form through the network system, and notify the NDRC of the relevant information. Where the content of the high-value non-sensitive project reporting form submitted by an investor is incomplete, the NDRC shall, within five working days of receipt of it, notify the investor of all necessary supplements and corrections at one time. If the investor is not notified within the period, the content of it shall be deemed complete. The NDRC shall publish the standard text of the high-value non-sensitive project reporting form. “High-value non-sensitive project” means a non-sensitive project in which the amount of Chinese investment is U.S.$300 million or more.

MOFCOM Supervision

MOFCOM issued the new version of the Administration of Overseas Investment on 6 September 2014, effective from 6 October 2014 (the “New Overseas Investment Rules”) (《境外投資管理辦法》). Under the New Overseas Investment Rules, a domestic enterprise intending to carry out any overseas investment shall report to the competent department of commerce for verification or filing and shall, with regard to an enterprise so verified or filed, issue thereto an Enterprise Overseas Investment Certificate. If two or more enterprises make joint investment to establish an overseas enterprise, the larger (or largest) shareholder shall be responsible for the verification or filing procedure after soliciting written consent of other investing parties.

– 137 – An enterprise that intends to invest in a sensitive country or region or a sensitive industry shall apply for the verification by MOFCOM. “Sensitive countries and regions” mean those countries without a diplomatic relationship with the PRC, or subject to the UN sanctions or otherwise under the list of verified countries and regions published by MOFCOM from time to time. “Sensitive industries” mean those industries involving the products and technologies which are restricted from being exported, or affecting the interests of more than one country (or region). In accordance with the New Overseas Investment Rules, Central Enterprises, which refer to enterprises for which the State-owned Asset Supervision and Administration Commission of the PRC State Council perform the duty of capital contributor, their affiliated enterprises or other centrally-administered entities, shall apply to MOFCOM for verification and MOFCOM shall, within 20 working days of accepting such application, decide whether or not the verification is granted. For a local enterprise, it shall apply through the provincial department of commerce to MOFCOM for such verification. The provincial department of commerce shall give a preliminary opinion within 15 working days of accepting such local enterprise’s application and report all application documents to MOFCOM, while MOFCOM shall decide whether or not the verification is granted within 15 working days of receipt of such preliminary opinion from the provincial department of commerce. Upon verification, the Enterprise Overseas Investment Certificate shall be issued to the investing enterprise by MOFCOM.

Other than those overseas investments subject to MOFCOM verification as described above, all other overseas investments are subject to a filing requirement. The investing enterprise shall complete the filing form through the Overseas Investment Management System, an online system maintained by MOFCOM and print out a copy of such filing form for stamping with the company chop, and then submit such stamped filing form together with a copy of its business licence, for filing at MOFCOM (for a Central Enterprise) or the provincial department of commerce (for a local enterprise) respectively. MOFCOM or the provincial department of commerce shall accept the filing and issue the Enterprise Overseas Investment Certificate within three working days of receipt of such filing form.

The investing enterprise must carry out the investment within 2 years of the date of the relevant Enterprise Overseas Investment Certificate, otherwise such Certificate will automatically expire and a new filing or verification application has to be made by the investing enterprise after such expiry if the investing enterprise still needs to make overseas investment. In addition, if any item recorded in such Certificate is changed, the investing enterprise shall handle an updating process at MOFCOM or the provincial department of commerce (as the case may be).

If an overseas invested company carries out a re-investment activity offshore, the investing enterprise shall report such re-investment activity to MOFCOM or the provincial department of commerce (as the case may be) after the legal formalities is completed offshore. The investing enterprise shall fill in and print out a copy of the Overseas Chinese-invested Enterprise Re-investment Report Form from the Overseas Investment Management System and stamp and submit such Report Form to MOFCOM or the provincial department of commerce.

The New Overseas Investment Rules specifically provide that an overseas invested company cannot use the words of “China” (“中國”or“中華”) in its name, unless otherwise approved.

Foreign Exchange Administration

According to the “Circular of the State Administration of Foreign Exchange on Promulgating the Administrative Provisions on Foreign Exchange of the Outbound Direct Investments of Domestic Institutions” and “Circular of the State Administration of Foreign Exchange on Further Simplifying and Improving the Direct Investment-related Foreign Exchange Administration Policies”(《國家外匯管理局關於進一步簡化和改進直接投資外匯管理政策的通知》), domestic investors within the PRC that have been permitted to make outbound investment shall go through the procedures of registration with local commercial bank where such domestic investor is incorporated. Such local commercial bank shall have obtained the financial institution identification codes issued by the foreign exchange regulatory authorities and have opened the capital account information system at the foreign exchange regulatory authority in

– 138 – the place where it is located. The local commercial bank shall issue a foreign exchange registration certificate (境外直接投資外匯登記業務憑證) generated by the capital account information system for overseas direct investment to the domestic investor. The domestic investor shall go through the formalities for outward remittance of funds for overseas direct investment at the designated foreign exchange bank by presenting the approval document issued by the department in charge of overseas direct investment and the foreign exchange registration certificate for overseas direct investment. The scope of foreign exchange funds for overseas direct investment of domestic investors includes their own foreign exchange funds, domestic loans in foreign currencies in compliance with relevant provisions, foreign exchange purchased with Renminbi, material objects, intangible assets and other foreign exchange funds approved by SAFE for overseas direct investment. The profits gained from overseas direct investment of domestic institutions may be deposited in overseas banks and used for overseas direct investment.

NDRC Registration

On 14 September 2015, the NDRC issued the NDRC Notice, which became effective on the same day. In order to encourage the use of low-cost capital in the international capital markets in promoting investment and steady growth and to facilitate cross border financing, the New NDRC Circular abolishes the case-by-case quota review and approval system for the issuance of foreign debts by PRC enterprises and sets forth the following measures to promote the administrative reform of the issuance of foreign debts by PRC enterprises or overseas enterprises and branches controlled by PRC enterprises:

• steadily promote the administrative reform of the filing and registration system for the issuance of foreign debts by enterprises;

• increase the size of foreign debts issued by enterprises, and support the transformation and upgrading of key sectors and industries;

• simplify the filing and registration of the issuance of foreign debts by enterprises; and

• strengthen the supervision during and after the process to prevent risks.

For the purposes of the New NDRC Circular, “foreign debts” means RMB-denominated or foreign currency-denominated debt instruments with a maturity of one year or above which are issued offshore by PRC enterprises and their controlled offshore enterprises or branches and for which the principal and interest are repaid as agreed, including offshore bonds and long-term and medium-term international commercial loans, etc. According to this definition, offshore bonds issued by both PRC enterprises and their controlled offshore enterprises or branches shall be regulated by the New NDRC Circular.

Pursuant to the New NDRC Circular, an enterprise shall: (i) apply to the NDRC for the filing and registration procedures prior to the issuance of the bonds; and (ii) shall report the information on the issuance of the bonds to NDRC within 10 working days after the completion of each issuance. The materials to be submitted by an enterprise shall include an application report and an issuance plan, setting out details such as the currency, size, interest rate, term, use of proceeds and remittance details. The NDRC shall decide whether to accept an application within 5 working days upon receipt of the filing and registration application and shall issue a Certificate for Filing and Registration of the Issuance of Foreign Debts by Enterprises based on the overall size of foreign debts within 7 working days upon accepting the application.

To issue foreign debts, an enterprise shall meet these basic conditions:

• have a good credit history with no default in its issued bonds or other debts;

• have sound corporate governance and risk prevention and control mechanisms for foreign debts; and

• have a good credit standing and relatively strong capability to repay its debts.

– 139 – Pursuant to the New NDRC Circular, the NDRC shall control the overall size of foreign debts that can be raised by PRC enterprises and their controlled overseas branches or enterprises. Based on trends in the international capital markets, the needs of the PRC economic and social development and the capacity to absorb foreign debts, the NDRC shall reasonably determine the overall size of foreign debts and guide the funds towards key industries, key sectors, and key projects encouraged by the State, and effectively support the development of the real economy. When the limit of the overall size of foreign debts has been exceeded, the NDRC shall make a public announcement and shall no longer accept applications for filing and registration. The Guarantor has received the NDRC Certificate which remains valid and in full force and effect.

According to the New NDRC Circular, the proceeds raised may be used onshore or offshore according to the actual needs of the enterprises, but priority shall be given to supporting the investment in major construction projects and key sectors, such as “One Belt and One Road”, the coordinated development of Beijing, Tianjin, and Hebei Province, the Yangtze River Economic Belt, international cooperation on production capacity and the equipment manufacturing.

As the New NDRC Circular is newly published, certain detailed aspects of its interpretation and application remain subject to further clarification. The Guarantor undertakes that it will comply with the requirements of the New NDRC Circular in respect of the Bonds.

EIT LAW

Prior to 1 January 2008, under the then applicable PRC law and regulations, entities established in the PRC were generally subject to a 33 per cent. EIT. However, entities that satisfied certain conditions enjoyed preferential tax treatment. In accordance with the tax laws and regulations effective until 31 December 2007, foreign invested manufacturing enterprises scheduled to operate for a period no less than ten years were exempted from paying state income tax for two years starting from its first profit making year and were allowed a 50 per cent. reduction in its tax rate in the third, fourth and fifth years (“two-year exemption and three-year reduction by half”).

On 16 March 2007, the NPC enacted the EIT law, which, together with its related implementation rules issued by the State Council on 6 December 2007, became effective on 1 January 2008. The new EIT law imposes a single uniform income tax rate of 25 per cent. on all Chinese enterprises, including foreign invested enterprises, and eliminates or modifies most of the tax exemptions, reductions and preferential treatments available under the previous tax laws and regulations. On 26 December 2007, the State Council issued a “Notice on the Implementation of the Transitional Preferential Enterprise Income Tax Policies” (《國務院關於實施企業所得稅過渡優惠政策的通知》), or Circular 39. Further, as at 1 January 2008, the enterprises that previously enjoyed “two-year exemption and three-year reduction by half” of EIT and other preferential treatments in the form of tax deductions and exemptions within specified periods may, after the implementation of the new EIT law, continue to enjoy the relevant preferential treatments until the expiration of the time period. However, if such an enterprise has not enjoyed the preferential treatments yet because of its failure to make profits, its preferential time period shall be calculated from 2008.

After the implementation of the new EIT law, the preferential tax treatment for encouraged enterprises located in western China and certain industry-oriented tax incentives are still available. Pursuant to the “Notice on Tax Policy Issues Concerning Further Implementing the Western China Development Strategy” (《關於深入實施西部大開發戰略有關稅收政策問題的通知》), effective from 1 January 2011, the enterprises within the state-encouraged industry located in western China are taxed at a preferential income tax rate of 15 per cent. for years from 1 January 2011 to 31 December 2020 after being approved by the competent tax authority.

In addition, pursuant to the “Circular of the Ministry of Finance and State Administration of Taxation on Issues Relevant to the Execution of the Catalogue of Public Infrastructure Projects Entitled for Preferential Tax Treatment” promulgated on 23 September 2008 (《財政部、國家稅務總局關於執行公共

– 140 – 基礎設施項目企業所得稅優惠目錄有關問題的通知》)(“Circular 46”) and the “Circular on Issues Concerning the Implementation of Enterprise Income Tax Incentives on Infrastructure Project Enterprises Which Are Supported by the State”(《關於實施國家重點扶持的公共基礎設施項目企業所得稅優惠問題的通知》) with effect from 1 January 2008 (“Circular 80”), an enterprise set up after 1 January 2008 and engaged in public infrastructure projects is entitled to three-year full exemption followed by a three-year 50 per cent. exemption commencing from the first year it generates operating revenue.

VALUE-ADDED TAX

According to the “Tentative Regulations on the Value-added Tax of the PRC 《中華人民共和國增值稅暫行條例》” which was revised by the State Council on 19 November 2017, and the “Detailed Implementation Rules of the Tentative Regulations on the Value-added Tax of the PRC (《中華人民共和國增值稅暫行條例實施細則》)” promulgated by the PRC Ministry of Finance which came into effect on 1 January 2009 and was amended on 28 October 2011, organisations or individuals who sell commodities, provide processing, repairing or replacement services, or import commodities within the PRC’s territories are subject to value-added tax, and shall pay the value-added tax accordingly. The rate of the value-added tax shall be 17 per cent. or 13 per cent., depending on the commodities being sold. For taxpayers exporting commodities, the tax rate shall be zero per cent. except as otherwise prescribed by the State Council.

On 23 March 2016, the Ministry of Finance and the SAT issued Circular 36, which completely replaced the regime of PRC business tax from 1 May 2016. Pursuant to Circular 36, VAT is applicable where the entities or individuals provide services within the PRC. The services are treated as being provided within the PRC where either the service provider or the service recipient is located in the PRC. The services subject to VAT include the provision of financial services such as the provision of loans. It is further clarified under Circular 36 that the “loans” refers to the activity of lending capital for another’s use and receiving the interest income thereon. The rate of the value-added tax for the provision of financial services shall be 6%. In addition, the holders of the Bonds may also be subject to the local levies at approximately 6 per cent. to 12 per cent. (comprising) of the VAT payment and consequently, the combined rate of VAT and local levies could be around 6.36 per cent. to 6.72 per cent.

Cross-border Security Laws

On 12 May 2014, SAFE promulgated the Notice concerning the Foreign Exchange Administration Rules on Cross-Border Security and the relating implementation guidelines (國家外匯管理局關於發布《跨境擔保外匯管理規定》的通知) (collectively the “New Regulations”). The New Regulations, which came into force on 1 June 2014, replace twelve other regulations regarding cross-border security and introduce a number of changes, including: (i) abolishing prior SAFE approval and quota requirements for cross-border security; (ii) requiring SAFE registration for two specific types of cross-border security only unless as otherwise expressly specified by the foreign exchange authority; (iii) removing eligibility requirements for providers of cross-border security except for general restriction clauses such as uses of funds which apply to all institutions; (iv) the validity of any cross-border security agreement is no longer subject to SAFE approval; and (v) removing SAFE verification requirement for performance of cross-border security. A cross-border guarantee is a form of security under the New Regulations. The New Regulations classify cross-border security into three types:

• Nei Bao Wai Dai (內保外貸)(“NBWD”): security/guarantee provided by an onshore security provider for a debt owing by an offshore debtor to an offshore creditor.

• Wai Bao Nei Dai (外保內貸)(“WBND”): security/guarantee provided by an offshore security provider for a debt owing by an onshore debtor to an onshore creditor.

• Other Types of Cross-border Security (其他形式跨境擔保): any cross-border security/guarantee other than NBWD and WBND.

– 141 – In respect of NBWD, in the case where the onshore security provider is a non-financial institution, it shall conduct a registration of the relevant security/guarantee with SAFE within 15 working days after its execution (or 15 working days after the date of changes to the principal clauses of the security). The funds borrowed offshore shall not be directly or indirectly repatriated to or used onshore by means of loans, equity investments or securities investments without SAFE approval. In addition, if any onshore security provider under a NBWD provides any security or guarantee for an offshore bond issuance, the offshore issuer’s equity shares must be fully or partially held directly or indirectly by the onshore security provider. Moreover, the proceeds from any such offshore bond issuance must be applied towards the offshore project(s), where an onshore entity holds equity interest, and in respect of which the related approval, registration, record, or confirmation have been obtained from or made with the competent authorities subject to PRC Laws.

The Guarantor will unconditionally and irrevocably guarantee the due payment of all sums expressed to be payable by the Issuer under the Bonds and the Trust Deed. The Guarantor’s obligations in respect of the Bonds and the Trust Deed (the “Guarantee”) are contained in the Deed of Guarantee. The Deed of Guarantee will be executed by the Guarantor on or before the Issue Date. Under the New Regulations, the Deed of Guarantee does not require any pre-approval by SAFE and is binding and effective upon execution.

The Guarantor is required to submit the Deed of Guarantee to the local SAFE for registration within 15 working days after its execution. SAFE registration is merely a post signing registration requirement, which is not a condition to the effectiveness of the Guarantee.

Under the New Regulations, the local SAFE will go through a procedural review (as opposed to a substantive approval process) of the Guarantor’s application for registration. Upon completion of the review, the local SAFE will issue a registration notice or record to the Guarantor to confirm the completion of the registration.

Under the New Regulations:

• non-registration does not render the Guarantee ineffective or invalid under PRC law although SAFE may impose penalties on the Guarantor if registration is not carried out within the stipulated time frame of 15 working days; and

• there may be logistical hurdles at the time of remittance (if any cross-border payment is to be made by the Guarantor under the Guarantee) as domestic banks may require evidence of SAFE registration in order to effect such remittance, although this does not affect the validity of the Guarantee itself.

A PRC non-financial institution may provide guarantee for offshore entities in accordance with the Property Law of the People’s Republic of China, the Guarantee Law of the People’s Republic of China and other relevant laws. Where the guarantee performance is triggered for a non-financial institution, the non-financial institution may directly handle the foreign exchange purchase and external payment required to perform its guarantee obligations on the strength of the guarantee registration document with the seal of the foreign exchange bureau affixed thereto.

Mineral Resources Law

The Mineral Resources Law of the PRC (《中華人民共和國礦產資源法》) was promulgated by the Standing Committee of the National People’s Congress on 19 March 1986 and became effective on 1 October 1986. On 27 August 2009, the Standing Committee of the National People’s Congress amended the Mineral Resources Law which became effective on the same date.

– 142 – Pursuant to the Mineral Resources Law of the PRC and its implementation rules, The State has ownership over all mineral resources in PRC, including such resources on the earth’s surface or underground. The State ownership of mineral resources shall remain unchanged notwithstanding that the ownership or the right to use the land to which such mineral resources are attached has been granted to a different entity or individual.

Ministry of Natural Resources of the PRC (“MONR”) is responsible for the supervision and administration of the mining and exploration of mineral resources nationwide. The geology and mineral resources departments of the People’s Government of the respective provinces, autonomous regions and municipalities are responsible for the supervision and administration of the exploration, development and mining of mineral resources within their respective jurisdictions.

Exploration rights and mining rights may be acquired with consideration. Enterprises engaged in the mining or exploration of mineral resources must pay a certain amount of money for obtaining exploration rights and mining rights. Anyone who exploits mineral resources must pay resources tax and resources compensation fee in accordance with relevant regulations of the State.

Exploration rights and mining rights are transferable, but any transfer shall satisfy such other conditions as stipulated under the PRC laws and regulations. The reselling of exploration rights and mining rights for profit is prohibited.

MONR and the geological and mineral resources department of the People’s Government of the provinces, autonomous regions and municipalities authorised by MONR are responsible for the granting of exploration and mining permits. Generally, holders of exploration licenses and mining licenses have rights and obligations as prescribed by laws.

ENVIRONMENTAL PROTECTION LAWS

The Environmental Protection Law of the PRC (《中華人民共和國環境保護法》) was promulgated by the Standing Committee of the National People’s Congress on 13 September 1979 and amended on 24 April 2014. The amended law became effective on 1 January 2015.

Ministry of Ecology and Environment of the PRC is responsible for supervision and administration of environmental protection work nationwide and formulates the national standards on environmental quality. The departments in charge of environmental protection at the county level or above are responsible for the administration of environmental protection work within their own jurisdictions.

Enterprises, institutions and other manufacturing operators that discharge pollutants shall take effective measures to prevent and control the pollution and damage to the environment, as well as pay the fee for discharging pollutants in accordance with the relevant laws and regulations. Effective measures shall be adopted to prevent and control the pollution and harm caused to the environment by the emission of exhaust air, sewage, waste residues, dust, malodorous gas, radioactive substances, noise, vibration and electromagnetic radiation. If environmental protection tax is levied in accordance with the law, no sewage charge shall be levied.

The State shall implement a pollutant discharge permit administration system pursuant to the law and regulations. Enterprises, institutions and other manufacturing operators shall discharge pollutants pursuant to the requirements of the pollutant discharge permit. Discharge of pollutants shall not be allowed without a pollutant discharge permit.

The penalties for breaches of the environmental protection laws vary from warnings, fines to administrative sanctions, depending on the degree of damage. Any entity whose construction projects fail to satisfy the requirements on pollution prevention may be ordered to suspend its production or operation and be subject to a fine. The responsible person of the entity may be subject to criminal liabilities for serious breaches resulting in significant damage to private or public property or personal death or injury.

– 143 – WORK SAFETY

Pursuant to the Work Safety Law of the PRC (《中華人民共和國安全生產法》) promulgated by the Standing Committee of the National People’s Congress on 29 June 2002 and amended on 31 August 2014 and became effective on 1 December 2014, Ministry of Emergency Management of the PRC is responsible for the overall supervision and management of the work safety nationwide, while the departments in charge of work safety at the county level or above are responsible for the overall supervision and management of the work safety within their own jurisdictions.

Under the Regulations on Work Safety Licence (《安全生產許可證條例》), promulgated on 13 January 2004 and amended on 29 July 2014, no mining enterprise may engage in production activities without holding a valid work safety licence. Enterprises which fail to fulfil the work safety conditions may not carry out any production activity. If the licencing authorities are of the opinion that the mining enterprises do not fulfil the work safety requirements, the work safety licences may be withheld or revoked.

Under the Law on Safety in Mines of the PRC (《中華人民共和國礦山安全法》), promulgated on 7 November 1992, became effective on 1 May 1993 and further amended on 27 August 2009, in the case of accidents, mining enterprises shall immediately take measures to rescue their workers and report any personal deaths or injuries to the relevant authority. In the event of a minor accident, the mining enterprise shall be responsible for investigating and handling the case. In the event of a serious accident, the government, the relevant authority, the labour union and the mining enterprise shall conduct investigation and handle the case together. In addition, mining enterprise shall pay compensation to any staff who was injured or died in the accident in accordance with the national requirements. Such mining enterprise may only resume production after the relevant danger at the scene has been eliminated.

The PRC government implemented an accountability system for incidents relating to work safety. The responsible person for a work safety incident may be subject to demotion or termination of employment, and may be subject to criminal liabilities.

The PRC government has also formulated a set of national standards on work safety for the mining industry. The mine design must be approved in accordance with the requisite procedures. A mining enterprise shall have its own management body or designated safety management team handling work safety matters. Education and training on work safety shall be provided to workers to ensure that they fully understand the regulations on and the procedures required for work safety and are able to master the necessary skills for operation safety for their own positions. Those not having received such said education and training may not be allowed to work at the mine.

– 144 – TAXATION

The following summary of certain tax consequences of the purchase, ownership and disposition of the Bonds is based upon applicable laws, regulations, rulings and decisions in effect as at the date of this Offering Circular, all of which are subject to change (possibly with retroactive effect). This discussion does not purport to be a comprehensive description of all the tax considerations that may be relevant to a decision to purchase, own or dispose of the Bonds and does not purport to deal with consequences applicable to all categories of investors, some of which may be subject to special rules. Neither these statements nor any other statements in this Offering Circular are to be regarded as advice on the tax position of any Bondholder or any persons acquiring, selling or otherwise dealing in the Bonds or on any tax implications arising from the acquisition, sale or other dealings in respect of the Bonds. Persons considering the purchase of the Bonds should consult their own tax advisors concerning the possible tax consequences of buying, holding or selling any Bonds under the laws of their country of citizenship, residence or domicile.

HONG KONG

Withholding Tax

No withholding tax is payable in Hong Kong in respect of payments of principal or interest on the Bonds or in respect of any capital gains arising from the sale of the Bonds.

Profits Tax

Hong Kong profits tax is chargeable on every person carrying on a trade, profession or business in Hong Kong in respect of profits arising in or derived from Hong Kong from such trade, profession or business (excluding profits arising from the sale of capital assets).

Interest on the Bonds may be deemed to be profits arising in or derived from Hong Kong from a trade, profession or business carried on in Hong Kong in the following circumstances:

(a) interest on the Bonds is derived from Hong Kong and is received by or accrues to a corporation carrying on a trade, profession or business in Hong Kong;

(b) interest on the Bonds is derived from Hong Kong and is received by or accrues to a person, other than a corporation, carrying on a trade, profession or business in Hong Kong and is in respect of the funds of that trade, profession or business;

(c) interest on the Bonds is received by or accrues to a financial institution (as defined in the Inland Revenue Ordinance (Cap. 112) of Hong Kong (the “IRO”)) and arises through or from the carrying on by the financial institution of its business in Hong Kong; or

(d) interest on the Bonds is received by or accrues to a corporation, other than a financial institution, and arises through or from the carrying on in Hong Kong by the corporation of its intra-group financing business (within the meaning of section 16(3) of the IRO).

Sums received by or accrued to a financial institution by way of gains or profits arising through or from the carrying on by the financial institution of its business in Hong Kong from the sale, disposal and redemption of Bonds will be subject to Hong Kong profits tax. Sums received by or accrued to a corporation, other than a financial institution, by way of gains or profits arising through or from the carrying on in Hong Kong by the corporation of its intra-group financing business (within the meaning of section 16(3) of the IRO) from the sale, disposal or other redemption of Bonds will be subject to Hong Kong profits tax.

– 145 – Sums derived from the sale, disposal or redemption of Bonds will be subject to Hong Kong profits tax where received by or accrued to a person, other than a corporation, who carries on a trade, profession or business in Hong Kong and the sum has a Hong Kong source unless otherwise exempted. The source of such sums will generally be determined by having regard to the manner in which the Bonds are acquired and disposed of.

In certain circumstances, Hong Kong profits tax exemptions (such as concessionary tax rates) may be available. Investors are advised to consult their own tax advisors to ascertain the applicability of any exemptions to their individual position.

Stamp Duty

No Hong Kong stamp duty will be chargeable upon the issue or transfer of a Bond.

PRC

Income Tax

Pursuant to the PRC EIT Law effective on 1 January 2008 and amended on 29 December 2018, and the Individual Income Tax Law of the PRC effective on 1 September 2011, and amended on 31 August 2018 (“IIT Law”), and their implementation rules respectively, an income tax is imposed on the interests by way of withholding in respect of the Bonds, paid by the Issuer (if such interests are regarded as income derived from sources within the PRC under the EIT Law or the IIT Law (as the case may be)) to non-resident Bondholders, including non-resident enterprises and non-resident individuals. The current rates of such income tax are 20 per cent. (for non-resident individuals) and 10 per cent. (for non-resident enterprises) of the gross amount of the interest. However, the tax so charged on interests paid on the Bonds to non-resident Bondholders who or which are residents of Hong Kong (including enterprise holders and individual holders) as defined under the Arrangement between the PRC and Hong Kong for Purpose of the Avoidance of Double Taxation will be 7 per cent. of the gross amount of the interest pursuant to the arrangement between the PRC and Hong Kong and relevant interpretation of the arrangement formulated by SAT of the PRC.

Under the EIT Law and its implementation rules, any gains realised on the transfer of the Bonds by holders who are deemed under the EIT Law as non-resident enterprises may be subject to PRC enterprise income tax if such gains are regarded as incomes derived from sources within the PRC. Under the EIT Law, a “non-resident enterprise” means an enterprise established under the laws of a jurisdiction other than the PRC and whose actual administrative organisation is not in the PRC, which has established offices or premises in the PRC, or which has not established any offices or premises in the PRC but has obtained incomes derived from sources within the PRC. In addition, there is uncertainty as to whether gains realised on the transfer of the Bonds by individual holders who are not PRC citizens or residents will be subject to PRC individual income tax under the IIT Law and its implementation rules. If such gains are subject to PRC income tax, the 10 per cent. enterprise income tax rate and 20 per cent. individual income tax rate will apply respectively unless there is an applicable tax treaty or arrangement that reduces or exempts such income tax. The taxable income will be the balance of the total income obtained from the transfer of the Bonds minus all costs and expenses that are permitted under PRC tax laws to be deducted from the income. According to an arrangement between the PRC and Hong Kong for avoidance of double taxation, Bondholders who are Hong Kong residents, including both enterprise holders and individual holders, will be exempted from PRC income tax on capital gains derived from a sale or exchange of the Bonds. In addition, as the Guarantor is a PRC resident enterprise, in the event that the Guarantor is required to fulfil its obligations under the Guarantee by making interest payments on behalf of the Issuer, the Guarantor will be obliged to withhold PRC enterprise income tax at a rate of 10 per cent. on such payments to non-PRC resident enterprise holders of the Bonds and 20 per cent. for non-resident individual holders of the Bonds

– 146 – if such interest payments are deemed to be derived from sources within the PRC. To the extent that the PRC has entered into arrangements relating to the avoidance of double-taxation with any jurisdiction, such as Hong Kong, which allows a lower rate of withholding tax, such lower rate may apply to qualified holders of the Bonds.

Value Added Tax

On 23 March 2016, MOF and SAT issued Circular 36, which introduced a new VAT from 1 May 2016. Under Circular 36, VAT is applicable where the entities or individuals provide services within the PRC. The revenue generated from the provision of taxable sale of services by entities and individuals, such as financial services, shall be subject to PRC VAT if the seller or buyer of the services is within PRC. In the event that foreign entities or individuals do not have a business establishment in the PRC, the purchaser of services shall act as the withholding agent unless otherwise provided for by MOF and SAT. According to the Explanatory Notes to Sale of Services, Intangible Assets and Real Property attached to Circular 36, financial services refer to the business activities of financial and insurance operation, including loan processing services, financial services of direct charges, insurance services and the transfer of financial instruments, and the VAT rate is 6 per cent.

Circular 36 further clarified that “loan services” refer to the activities of lending capital for another’s use and receiving the interest income thereon. Based on such an interpretation, the issuance of Bonds may be treated as the Bondholders providing loans to the Issuer, which thus shall be regarded as the provision of financial services. Accordingly, the interest and other earnings received by a non-PRC resident Bondholder from the Guarantor and, if the Issuer is treated as a PRC resident enterprise, the Issuer may be obligated to withhold VAT of 6 per cent. and certain surcharges on VAT for payments of interest and certain other amounts on the Bonds paid by the Guarantor. Pursuant to Interim Regulation of the People’s Republic of China on Urban Maintenance and Construction Tax (《中華人民共和國城市維護建設稅暫行條例》), which will be superseded by the PRC Urban Maintenance and Construction Tax Law (《中華人民共和國城市維護建設稅法》) effective from 1 September 2021, Interim Provisions on the Collection of Educational Surcharges (《徵收教育費附加的暫行規定》), Notice of the Ministry of Finance on the Relevant Matters on Unifying the Policies on Local Education Surcharges (《財政部關於統一地方教育附加政策有關問題的通知》) and other relevant PRC laws and regulations, the local levies will be applicable when entities and individuals are obligated to pay VAT (for an aggregate of 6 per cent. to 12 per cent. on any VAT payable) and consequently, the combined rate of VAT and surcharges would be around between 6.36 per cent. to 6.72 per cent.

However, there is uncertainty as to whether gains derived from a sale or exchange of Bonds consummated outside of the PRC between non-PRC resident Bondholders will be subject to PRC VAT. VAT is unlikely to be applicable to any transfer of Bonds between entities or individuals located outside of the PRC and therefore unlikely to be applicable to gains realised upon such transfers of Bonds, but there is uncertainty as to the applicability of VAT if either the seller or buyer of Bonds is located inside the PRC. Circular 36 together with other laws and regulations pertaining to VAT are relatively new, the interpretation and enforcement of such laws and regulations involve uncertainties.

The Issuer has agreed to pay additional amounts to holders of the Bonds so that holders of the Bonds would receive the full amount of the scheduled payment, as further set out in “Terms and Conditions of the Bonds”.

Stamp Duty

No PRC stamp duty will be imposed on non-resident holders either upon issuance of the Bonds or upon a subsequent transfer of Bonds to the extent that the register of holders of the Bonds is maintained outside the PRC and the sale of the Bonds is made outside of the PRC. The Issuer intends to maintain the register of holders of the Bonds outside the PRC.

– 147 – SUBSCRIPTION AND SALE

The Issuer and the Guarantor have entered into a subscription agreement with the Joint Lead Managers dated 4 February 2021 (the “Subscription Agreement”), pursuant to which and subject to certain conditions contained therein, the Issuer has agreed to sell to the Joint Lead Managers, and the Joint Lead Managers have agreed to severally, but not jointly, subscribe and pay for, or to procure subscribers to subscribe and pay for, the aggregate principal amount of the Bonds set forth opposite its name below:

Principal Amount of the Bonds be Joint Lead Managers subscribed (U.S.$) Morgan Stanley & Co. International plc...... 112,000,000 BOCOM International Securities Limited ...... 112,000,000 BNP Paribas...... 5,600,000 CCB International Capital Limited...... 5,600,000 China Minsheng Banking Corp., Ltd., Hong Kong Branch...... 5,600,000 China Securities (International) Corporate Finance Company Limited ...... 5,600,000 CNCB (Hong Kong) Capital Limited ...... 5,600,000 Industrial Bank Co., Ltd. Hong Kong Branch ...... 5,600,000 Shanghai Pudong Development Bank Co., Ltd., Hong Kong Branch ...... 5,600,000 SPDB International Capital Limited...... 5,600,000 Standard Chartered Bank...... 5,600,000 Zhongtai International Securities Limited ...... 5,600,000 TOTAL ...... 280,000,000

The Subscription Agreement provides that the Issuer and the Guarantor will jointly and severally indemnify the Joint Lead Managers and their affiliates against certain liabilities in connection with the offer and sale of the Bonds. The Subscription Agreement provides that the obligations of the Joint Lead Managers are subject to certain conditions precedent and entitles the Joint Lead Managers to terminate it in certain circumstances prior to payment being made to the Issuer.

The Joint Lead Managers and their respective affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, principal investment, hedging, financing and brokerage activities (“Banking Services or Transactions”). The Joint Lead Managers and their respective affiliates have, from time to time, performed, and may in the future perform, various Banking Services and/or Transactions with the Issuer and the Guarantor, for which they have received, or will receive, customary fees and expenses.

In connection with the Offering of the Bonds, the Joint Lead Managers and/or their respective affiliates, or affiliates of the Issuer or the Guarantor, may place orders, receive allocations and purchase Bonds for their own account (without a view to distributing such Bonds) and such orders and/or allocations of the Bonds may be material. Such entities may hold or sell such Bonds or purchase further Bonds for their own account in the secondary market or deal in any other securities of the Issuer or the Guarantor, and therefore, they may offer or sell the Bonds or other securities otherwise than in connection with the offering of the Bonds. Accordingly, references herein to the bonds being ‘offered’ should be read as including any offering of the Bonds to the Joint Lead Managers and/or their respective affiliates, or affiliates of the Issuer or the Guarantor, for their own account. Such entities are not expected to disclose such transactions or the extent of any such investment, otherwise than in accordance with any legal or regulatory obligation to do so. Furthermore, it is possible that only a limited number of investors may subscribe for a significant proportion of the Bonds. If this is the case, liquidity of trading in the Bonds may be constrained. See “Risk Factors – Risks Relating to the Bonds and the Guarantee – An active trading market for the Bonds may not develop and there may be limited liquidity for the Bonds”. The Issuer, the Guarantor and the Joint Lead Managers are under no obligation to disclose the extent of the distribution of the Bonds amongst individual investors.

– 148 – In the ordinary course of their various business activities, the Joint Lead Managers and their respective affiliates make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers, and may at any time hold long and short positions in such securities and instruments. Such investment and securities activities may involve securities and instruments of the Issuer and/or the Guarantor, including the Bonds, and could adversely affect the trading prices of the Bonds. Certain of the Joint Lead Managers or their affiliates that have a lending relationship with the Issuer and/or the Guarantor routinely hedge their credit exposure to the Issuer and/or the Guarantor consistent with their customary risk management policies. Typically, such Joint Lead Managers and their affiliates would hedge such exposure by entering into transactions which consist of either the purchase of credit default swaps or the creation of short positions in the Issuer’s and/or the Guarantor’s securities, including potentially the Bonds offered hereby. Any such short positions could adversely affect future trading prices of the Bonds offered hereby. The Joint Lead Managers and their affiliates may make investment recommendations and/or publish or express independent research views (positive or negative) in respect of the Bonds or other financial instruments of the Issuer or the Guarantor, and may recommend to their clients that they acquire long and/or short positions in the Bonds or other financial instruments.

In connection with the issue of the Bonds, any of the Joint Lead Managers acting as stabilisation manager (the “Stabilisation Manager”) (or persons acting on its behalf) may, to the extent permitted by applicable laws and directives, over-allot the Bonds or effect transactions with a view to supporting the market price of the Bonds at a level higher than that which might otherwise prevail, but in so doing, the Stabilisation Manager (or any person acting on behalf of the Stabilisation Manager) shall act as principal and not as agent of the Issuer or the Guarantor. However, there is no assurance that the Stabilisation Manager (or any person acting on behalf of the Stabilisation Manager) will undertake a stabilisation action. Any stabilisation action may begin on or after the date on which adequate public disclosure of the terms of the offer of the Bonds is made and, if begun, may be ended at any time, but it must end no later than the earlier of 30 days after the issue date of the Bonds and 60 days after the date of the allotment of the Bonds. Any loss or profit sustained as a consequence of any such over-allotment or stabilisation shall be for the account of the Stabilisation Manager.

GENERAL

The distribution of this Offering Circular or any offering material and the offering, sale or delivery of the Bonds are restricted by law in certain jurisdictions. Therefore, persons who may come into possession of this Offering Circular or any offering material are advised to consult with their own legal advisors as to what restrictions may be applicable to them and to observe such restrictions. This Offering Circular may not be used for the purpose of an offer or invitation in any circumstances in which such offer or invitation is not authorised.

No action has been or will be taken in any jurisdiction by the Issuer, the Guarantor or the Joint Lead Managers that would permit a public offering, or any other offering under circumstances not permitted by applicable law, of the Bonds, or possession or distribution of this Offering Circular, any amendment or supplement thereto issued in connection with the proposed resale of the Bonds or any other offering or publicity material relating to the Bonds, in any country or jurisdiction where action for that purpose is required. Accordingly, the Bonds may not be offered or sold, directly or indirectly, and neither this Offering Circular now any other offering material or advertisements in connection with the Bonds may be distributed or published, by the Issuer, the Guarantor or the Joint Lead Managers, in or from any country or jurisdiction, except in circumstances which will result in compliance with all applicable rules and regulations of any such country or jurisdiction and will not impose any obligations on the Issuer, the Guarantor or the Joint Lead Managers.

If a jurisdiction requires that the offering be made by a licensed broker or dealer and the Joint Lead Managers or any affiliate of them is a licensed broker or dealer in that jurisdiction, the offering shall be deemed to be made by the Joint Lead Managers or such affiliate on behalf of the Issuer in such jurisdiction.

– 149 – UNITED STATES

The Bonds and the Guarantee have not been and will not be registered under the Securities Act and may not be offered or sold within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Each of the Joint Lead Managers has represented that it has not offered or sold, and has agreed that it will not offer or sell, any of the Bonds or the Guarantee constituting part of its allotment within the United States except in accordance with Rule 903 of Regulation S under the Securities Act. Accordingly, neither it, its affiliates nor any persons acting on its or their behalf have engaged or will engage in any directed selling efforts with respect to the Bonds or the Guarantee. Terms used in this paragraph have the meanings given to them by Regulation S under the Securities Act.

UNITED KINGDOM

Each Joint Lead Manager has represented and agreed that:

(a) it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000 (the “FSMA”) received by it in connection with the issue or sale of the Bonds in circumstances in which Section 21(1) of the FSMA does not apply to the Issuer or the Guarantor; and

(b) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the Bonds in, from or otherwise involving the United Kingdom.

HONG KONG

Each Joint Lead Manager has represented and agreed that:

(a) it has not offered or sold and will not offer or sell in Hong Kong, by means of any document, any Bonds other than (i) to “professional investors” as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong (the “SFO”) and any rules made under the SFO; or (ii) in other circumstances which do not result in the document being a “prospectus” as defined in the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong (the “C(WUMP)O”) or which do not constitute an offer to the public within the meaning of the C(WUMP)O; and

(b) it has not issued or had in its possession for the purposes of issue, and will not issue or have in its possession for the purposes of issue, whether in Hong Kong or elsewhere, any advertisement, invitation or document relating to the Bonds, which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to the Bonds which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” as defined in the SFO and any rules made under the SFO.

THE PEOPLE’S REPUBLIC OF CHINA

Each Joint Lead Manager has represented, warranted and agreed that the Bonds are not being offered or sold and may not be offered or sold, directly or indirectly, in the People’s Republic of China (for such purposes, not including Hong Kong, the Macau Special Administrative Region of the People’s Republic of China or Taiwan), except as permitted by the securities laws of the People’s Republic of China by it or any of its affiliates.

– 150 – SINGAPORE

Each Joint Lead Manager has acknowledged that this Offering Circular has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, each Joint Lead Manager has represented, warranted and agreed that it has not offered or sold any Bonds or caused the Bonds to be made the subject of an invitation for subscription or purchase and will not offer or sell any Bonds or cause the Bonds to be made the subject of an invitation for subscription or purchase, and has not circulated or distributed, nor will it circulate or distribute, this Offering Circular or any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the Bonds, whether directly or indirectly, to any person in Singapore other than (i) to an institutional investor (as defined in Section 4A of the Securities and Futures Act (Chapter 289) of Singapore, as modified or amended from time to time (the “SFA”)) pursuant to Section 274 of the SFA, (ii) to a relevant person (as defined in Section 257(2) of the SFA) pursuant to Section 275(1) of the SFA, or any person pursuant to Section 275(1A) of the SFA, and in accordance with the conditions specified in Section 275 of the SFA, or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Where the Bonds are subscribed or purchased under Section 275 of the SFA by a relevant person which is:

(a) a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or

(b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor, securities or securities-based derivatives contracts (each term as defined in Section 2(1) of the SFA) of that corporation or the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the Bonds pursuant to an offer made under Section 275 of the SFA, except:

(i) to an institutional investor or to a relevant person, or to any person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the SFA;

(ii) where no consideration is or will be given for the transfer;

(iii) where the transfer is by operation of law;

(iv) as specified in Section 276(7) of the SFA; or

(v) as specified in Regulation 37A of the Securities and Futures (Offers of Investments) (Securities and Securities-based Derivatives Contracts) Regulations 2018.

– 151 – SUMMARY OF CERTAIN DIFFERENCES BETWEEN PRC GAAP AND IFRS

The Group’s Audited Financial Statements included in this Offering Circular were prepared and presented in accordance with PRC GAAP. PRC GAAP are substantially in line with IFRS, except for certain differences between PRC GAAP and IFRS. The following is a general summary of certain differences between PRC GAAP and IFRS on recognition and presentation as applicable to the Guarantor. The Guarantor is responsible for preparing the summary below. Since the summary is not meant to be exhaustive, there is no assurance regarding the completeness of the financial information and related footnote disclosure between PRC GAAP and IFRS and no attempt has been made to quantify such differences. Had any such quantification or reconciliation been undertaken by the Guarantor, other potentially significant accounting and disclosure differences may have required that are not identified below. Additionally, no attempt has been made to identify possible future differences between PRC GAAP and IFRS as a result of prescribed changes in accounting standards. Regulatory bodies that promulgate PRC GAAP and IFRS have significant ongoing projects that could affect future comparisons or events that may occur in the future.

In making an investment decision, investors must rely upon their own examination of the Guarantor, the Group, the terms of the offering and the financial information included herein. Potential investors should consult their own professional advisors for an understanding of any differences that may exist between PRC GAAP and IFRS, and how those differences might affect the financial information included herein.

Reversal of Impairment Losses on Assets

In accordance with to “PRC Accounting Standards No. 8 – Impairment of Assets”, an asset impairment loss that has been recognised shall not be reversed in subsequent accounting periods, while in accordance with IAS 36 “Impairment of Assets”, an entity shall assess at the end of each reporting period whether there is any indication that an impairment loss recognised in prior periods for an asset other than goodwill may no longer exist or may have decreased. If any such indication exists, the entity shall estimate the recoverable amount of that asset. An impairment loss recognised in prior periods for an asset other than goodwill can be reversed if, and only if, there has been a change in the estimates used to determine the recoverable amount of that asset since the last impairment loss was recognised.

As at 31 December 2019, the Group had no such reversal of impairment losses on assets. Therefore, the above technical difference had no substantial impact on the audited financial statements included elsewhere in this Offering Circular.

– 152 – GENERAL INFORMATION

1. Clearing System: The Bonds have been accepted for clearance through Euroclear and Clearstream under Common Code 229419854 and the ISIN for the Bonds is XS2294198549.

2. Authorisations: Each of the Issuer and the Guarantor has obtained all necessary consents, approvals and authorisations in connection with the issue and performance of their respective obligations under the Bonds, the Trust Deed, the Deed of Guarantee and the Agency Agreement. The issue of the Bonds was authorised by a resolution of the board of directors of the Issuer dated 25 March 2020. The Guarantor has obtained all necessary consents, approvals and authorisations in connection with the giving and performance of the Guarantee. The giving of the Guarantee was authorised by a resolution of the board of directors dated 27 September 2019 and shareholders resolutions of the Guarantor dated 27 October 2019.

3. No Material and Adverse Change: There has been no material adverse change, or any development or event likely to involve a prospective change, in the condition (financial or otherwise), prospects, properties, results of operations, business or general affairs of the Issuer, the Guarantor or the Group since 31 December 2019.

4. Litigation: None of the Issuer, the Guarantor or any member of the Group is involved in any litigation or arbitration proceedings which the Issuer or the Guarantor believes is material in the context of the Bonds or the giving of the Guarantee nor is the Issuer or the Guarantor aware that any such proceedings are pending or threatened.

5. Available Documents: So long as any of the Bonds is outstanding, copies of the Group’s Audited Financial Statements, the Issuer’s and the Guarantor’s articles of association (provided those have been provided to the Trustee), the Trust Deed, the Deed of Guarantee and the Agency Agreement will be available for inspection from the Issue Date upon prior written request and satisfactory proof of holding and identity at all reasonable times during normal business hours (being between 9:00 a.m. and 3:00 p.m. (Hong Kong time)) from Monday to Friday (other than public holidays) at the principal office of the Trustee, which at the date of this Offering Circular is at 20/F, CCB Tower, 3 Connaught Road Central, Central, Hong Kong.

6. Audited Financial Statements: The Group’s consolidated financial information as at and for the years ended 31 December 2017, 2018 and 2019 has been derived from the Group’s Audited Financial Statements, which have been audited by Daxin in accordance with PRC GAAP and are included elsewhere in this Offering Circular.

7. Listing of Bonds: Application will be made to the HKSE for the listing of, and permission to deal in, the Bonds by way of debt issues to Professional Investors only and such permission is expected to become effective on or about 11 February 2021.

8. Legal Entity Identifier: The Legal Entity Identifier of the Issuer is 254900PIEGH8EWAV1I59.

– 153 – INDEX TO FINANCIAL STATEMENTS

Page

Audited Consolidated Financial Statements as at and for the Years Ended 31 December 2019 of the Guarantor Auditor’s Report...... F-3 Consolidated Statement of Financial Position ...... F-7 Consolidated Statement of Comprehensive Income ...... F-11 Consolidated Cash Flow Statement ...... F-13 Consolidated Statement of Changes in Equity...... F-15 Notes to Financial Statements ...... F-19

Audited Consolidated Financial Statements as at and for the Years Ended 31 December 2018 of the Guarantor Auditor’s Report...... F-193 Consolidated Balance Sheet...... F-197 Consolidated Income Statement ...... F-199 Consolidated Cash Flow Statement ...... F-200 Consolidated Statement of Changes in Equity...... F-201 Notes to Financial Statements ...... F-209

– F-1 – – F-2 – – F-3 – – F-4 – – F-5 – – F-6 – – F-7 – – F-8 – – F-9 – – F-10 – – F-11 – – F-12 – – F-13 – – F-14 – – F-15 – – F-16 – – F-17 – – F-18 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Jinchuan Group Co., Ltd. Notes to the Financial Statements (All amounts are expressed, unless otherwise stated, in CNY) I. Company Profile

Jinchuan Group Co., Ltd. (hereinafter referred to as the "Company" or "Jinchuan Group Company") is located in Jinchang City, Gansu Province, formerly the Jinchuan Nonferrous Metals Company established in 1961. The Company was successively subordinated to the Ministry of Metallurgical Industry of China, China Nonferrous Metals Industry Corporation and China Copper, Lead and Zinc Group Company, which was transferred to the Gansu Provincial People's Government in July 2000.

From April to July in 2000, Jinchuan Nonferrous Metals Company signed the Contract of Debt-to-Equity Conversion and the Supplementary Agreement of Debt-to-Equity Conversion with Guokai Finance Co., Ltd., China Xinda Asset Management Company, China Copper-Lead-Zinc Group Company and Gansu Industrial Transport Investment Company. It was agreed that China Copper-Lead-Zinc Group Company and Gansu Industrial Transport Investment Company should use Jinchuan Group Company as their partners. On March 31, 2000, as the base day, all the net assets reflected in the balance sheet after stripping off non-operating assets and deducting public welfare funds are used as capital contribution. Guokai Finance Co., Ltd. and Xinda Asset Management Co., Ltd. jointly set up Jinchuan Nonferrous Metals Co., Ltd. with their creditor's rights to Jinchuan Group Company as capital contribution, respectively. In November 2000, the State Economic and Trade Commission approved the above-mentioned debt-to-equity swap agreement and supplementary agreement with the State Economic and Trade Industry Document [2000] 1085. The Gansu Provincial Government approved the overall restructuring of Jinchuan Group Company to establish "Jinchuan Group Company Limited" in GZH [2000] 131

As of December 31, 2004, the Company's paid-in capital was CNY 4,152,284,381.03, of which CNY 2,426,515,202.78 is from Gansu government, accounting for 58.44%;CNY 936,511,053.76 is from Guokai Finance Co., Ltd., accounting for 22.56%; CNY 336,852,110.56 is from Shanghai Baosteel Company, accounting for 8.11%; CNY 336,852,110.56 is from Taiyuan Iron and Steel (Group) Co., Ltd., accounting for 8.11%; CNY 115,553,903. 37 is from Gansu Industrial Transport Investment Company, accounting for 2.78%.

In March 2005, with the approval of Gansu Provincial Finance Department and Gansu Provincial Land and Resources Department, Gancaijian [2005] No. 12, the Company increased the state capital held by Gansu Provincial Government by a total of CNY 1,258,869,800.00 in the mining rights of Longshou Mine, No. 2 Mining Area, quartz and sandstone yards of open-pit ores

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– F-19 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

In October 2005, the Company added CNY 296,042,778.44 of land appraised and confirmed into the paid-in capital to increase the state capital held by the Gansu Provincial Government. In December 2005, according to the Company's profit distribution plan, to increase capital with undistributed profits, which the state capital held by Gansu Provincial Government increased by CNY 348,763,237.90, Gansu Industrial Transport Investment Company increased by CNY 11,286,833.60, Guokai Financial Co., Ltd. increased by CNY 91,474,576.99, Shanghai Baosteel Group Company increased by CNY 32,902,339.16, Taiyuan Iron and Steel (Group) Co., Ltd. increased by CNY 32,902,339.16.

In May 2009, the State-owned Assets Supervision and Administration Commission of Gansu Province, in accordance with the spirit of the relevant meeting of the Standing Meeting of the Gansu Provincial People's Government and the Notice of the General Office of the Gansu Provincial People's Government on the Transfer of State-owned Equity in Some Provincial Enterprises (No. 80 of Office Release, 2009) , issued the State-owned Assets Supervision and Administration Commission of the Provincial Government on Transferring State-owned Equity Notice of Group Co., Ltd. (GG Asset Rights [2009] No. 135) transfers the state-owned shares of Jinchuan Group Company with CNY 4,330,191,019.12 to Gansu State-owned Asset Investment Group Co., Ltd.

According to the resolution of the first provisional meeting of shareholders' meeting in 2010, the Gansu Provincial Government changed its investment in Lanzhou Science and Technology Park into increasing its investment in Jinchuan Group Company, increasing its paid-in capital by CNY 680.16 million. Meanwhile, the Gansu Provincial Government transferred the financial entrusted loan to the paid-in capital by CNY 134.49 million. According to the resolution of the above-mentioned shareholders' meeting, the other shareholders of the Company should increase their capital in the same proportion and receive separate income. Taiyuan Iron and Steel (Group) Co., Ltd. and Shanghai Baosteel Group Co., Ltd. Contributed CNY 69,563,123.48 in currency, Guokai Finance Co., Ltd. contributed CNY 193,398,325.35 in currency, and Gansu Industrial Transportation Investment Co., Ltd. contributed CNY 23,862,965.96 in currency. The above-mentioned investment has been verified. After the above capital verification, the Company's paid-in capital is CNY 7,395,566,934.94. Among which, Gansu State-owned Assets Investment Group Co., Ltd. has CNY 4,330,191,019.12, accounting for 58.55%; Gansu People's Government's State-owned Assets Supervision and Administration Commission 814,653,110.39 yuan, accounting for 11.02%; Guokai Finance Co., Ltd. has 1,221,383,956.10 yuan, accounting for 16.51%; Gansu Industrial Transportation Investment Company CNY 150,703,702.93, accounting for 2.04%; Taiyuan Iron and Steel (Group) Co., Ltd. CNY 439,317,573.20, accounting for 5.94%; Shanghai Baosteel Group Company CNY 439,317,573.20, accounting for 5.94%.

According to the resolution of the shareholders' meeting in 2011, Jinchuan Group Co., Ltd. has been restructured as a whole into Jinchuan Group Co., Ltd. The original shareholders of Jinchuan Group Co., Ltd. use the net assets of the parent Company audited on June 30, 2011 as their capital contribution. As of December 31, 2011, the total equity of the Company is CNY 18,800,000,000.00 yuan, of which Gansu State-owned Assets Investment Group Co., Ltd. is 11,007,620,088.00 yuan, accounting for 58.55%; Gansu Provincial People's Government State-owned Assets Supervision and Administration Commission is CNY 2,070,899,853.00, accounting for 11.02%; Guokai Finance Co., Ltd. is CNY 3,104,835,448.00, accounting for 16.51%; Company CNY 383,098,367.00, accounting for 2.04%, Taiyuan Iron and Steel (Group) Co., Ltd. is CNY 1,116,773,122.00, accounting for

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– F-20 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

5.94%; Shanghai Baosteel Group Co., Ltd. is CNY 1,116,773,122.00, accounting for 5.94%. The above changes in equity have been verified by Guofuhaohua Accounting Firm and issued the capital verification report of Guohao 704A223 [2011].

According to the resolution of the first provisional shareholders' meeting in 2012, the resolution of the second meeting of the first board of directors, and the regulation of the State-owned Assets Supervision and Administration Commission of the Gansu Provincial People's Government "Summary of the Leading Group Meeting on the Reform and Listing of Jinchuan Group on June 14, 2012", the Company applies for an increase of registered capital of CNY 4,146,544,651.00, which is subscribed by the holding companies of the State-owned Assets Supervision and Administration Commission of the With its 100% equity of Gansu Provincial People's Government, including Jinchuan Niedu Industrial Co., Ltd., Jiuquan Iron and Steel (Group) Co., Ltd., Gansu Electric Power Investment Group Co., Ltd., Shenzhen Ping'an Innovation Capital Investment Co., Ltd., China-Africa Development Fund Co., Ltd., Runbo (Tianjin) Equity Investment Fund Partnership, Zhejiang Hailiang Co., Ltd., Shanghai SAIC Huankai Investment Management Co., Ltd., China Eastern Asset Management Corporation, Jingyuan Coal Industry Group Co., Ltd., China Xinda Asset Management Co., Ltd., Beijing Hongdaxin Asset Management Co., Ltd., Guangda Jincong (Lanzhou) Jinnie Investment Co., Ltd., National Development Investment Co., Gansu Rare Earth New Materials Co., Ltd., China Hi-tech Investment Group Co., Ltd., Jincheng Capital Management Co., Ltd., Tibet Mining Development Co., Ltd., and other companies of total seventeen specific investors subscribe in Currency Funds. Upon completion of the above-mentioned capital increase, the Company's equity capital is CNY 22,946,544,651.00. Among which, the State-owned Assets Supervision and Administration Commission of Gansu Provincial People's Government has CNY 2,957,627,874.00, accounting for 12.89%; Gansu State-owned Assets Investment Group Co., Ltd. has CNY 11,007,620,088.00, accounting for 47.97%; Guokai Financial Co., Ltd. has CNY 3,104,835,448.00, accounting for 13.53%; Baosteel Group Co., Ltd. has CNY 1,116,773,122.00, accounting for 4.87%; Taiyuan Iron and Steel (Group) Co., Ltd. has CNY 1,116,773,122.00, accounting for 4.87%; Gansu Industrial Transport Investment Company has CNY 383,098,367.00, accounting for 1.67%; Jiuquan Iron and Steel (Group) Co., Ltd. has CNY 321,543,408.00, accounting for 1.40%; Gansu Electric Power Investment Group Co., Ltd. has CNY 321,543,408.00, accounting for 1.40%; Shenzhen Ping'an Innovation Capital Investment Co., Ltd. has CNY 321,543,408.00, accounting for 1.40%; China-Africa Development Fund Co., Ltd. has CNY 321,543,408.00, accounting for 1.40%; Runbo (Tianjin) equity investment fund partnership enterprise has CNY 284,565,916.00, accounting for 1.24%; Zhejiang Hailiang Co., Ltd. has CNY 257,234,726.00, accounting for 1.12%; Shanghai SAIC Huankai Investment Management Co., Ltd. has CNY 257,220,000.00, accounting for 1.12%; China Eastern Asset Management Company has CNY 160,780,000.00, accounting for 0.70%; Jingyuan Coal Group Co., Ltd. has CNY 160,771,700.00, accounting for 0.70%; China Xinda Asset Management Co., Ltd. has CNY 160,771,700.00, accounting for 0.70%; Beijing Hongdaxin Asset Management Co., Ltd. has CNY 160,771,700.00, accounting for 0.70%; Guangdajinkong (Lanzhou) Jinquan Investment Co., Ltd. has CNY 156,401,211.00, accounting for 0.68%; National Development Investment Co., Ltd. has CNY 128,617,363.00, accounting for 0.56%; Gansu Rare Earth New Materials Co., Ltd. has CNY 100,000,000.00, accounting for 0.44%; China High-tech Investment Co., Ltd. hasCNY 64,308,682.00, accounting for 0.28%; Jincheng Capital Management Co., Ltd. has CNY 50,000,000, accounting for 0.22%; Tibet Mining Development Co., Ltd. Has CNY 32,200,000.00, accounting for 0.14%. The above changes have been verified by Guofuhaohua Accounting

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– F-21 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Firm (Special General Partnership) and issued the Capital Verification Report No. 704B91 of GHYZ [2012].

According to the State-owned Assets Supervision and Administration Commission of Gansu Provincial People's Government's Approval of Transferring Part of the Stock Ownership of Gansu Industrial Transport Investment Company to Jinchuan Group Co., Ltd. (Ganguo Assets Rights [2013] No.3) , (Ganguo Assets Rights [2013] No.4) and the Resolution of the Fifth Meeting of the First Board of Directors and the Shareholders' Meeting in 2013, Gansu Province's industry will be transferred. The 60,661,172.00 shares held by the Transportation Investment Company were transferred to Gansu Electric Power Investment Group Company without compensation. After the above changes were completed, Gansu Industrial Transportation Investment Company held CNY 322,437,195.00, accounting for 1.41% of the total equity. Gansu Electric Power Investment Group Company held CNY 382,204,580.00, accounting for 1.66% of the total equity.

According to the resolution of the first provisional shareholders' meeting in 2015, Beijing Hongdaxin Assets Management Co., Ltd. transferred 160,771,700 shares of its own Company to Gansu State-owned Assets Investment Group Co., Ltd. After completing the above changes, Gansu State-owned Assets Investment Group Co., Ltd. held CNY 11,168,391,788.00, accounting for 48.67% of the total equity.

According to the Company's "Resolution of the 2016 Annual Shareholders' Meeting" in June 2017, the shareholder state development investment Company transferred 0.56% of its shares to China Investment High-tech Industrial Investment Company. After the transfer, the share-holding ratio of China Investment High-tech Industrial Investment Company changed to 0.84%. After this change, the Company's share capital is CNY 22,946,544,651.00, of which 12.89% is owned by the State-owned Assets Supervision and Administration Commission of Gansu Provincial People's Government; 48.67% is owned by Gansu State-owned Assets Investment Group Co., Ltd.; 13.53% is owned by Guokai Financial Co., Ltd.; 24.91% is owned by China Baowu Iron and Steel Group Co., Ltd., Taiyuan Iron and Steel Group Co., Ltd., Gansu Province Provincial Industrial Transportation Investment Company, Jiuquan Iron and Steel (Group) Co., Ltd., Gansu Electric Power Investment Group Co., Shenzhen Ping'an Innovation Capital Investment Co., Ltd., China-Africa Development Fund Co., Ltd., Runbo (Tianjin) Equity Investment Fund Partnership, Zhejiang Hailiang Co., Ltd., Shanghai SAIC Huankai Investment Management Co., Ltd., China Oriental Asset Management Unit Co., Ltd., Jingyuan Coal Industry Group Co., Ltd., China Xinda Asset Management Co., Ltd., Beijing Hongdaxin Asset Management Co., Ltd., Guangda Jinkong (Lanzhou) Jinnie Investment Co., Ltd., Gansu Rare Earth New Materials Co., Ltd., China High-tech Investment Group Co., Jincheng Capital Management Co., Ltd. and Tibet Mining Development Co., Ltd. in total.

According to the second provisional shareholders' meeting held in September 2018, Gansu Xinglong Capital Management Co., Ltd. was agreed to increase its shareholders, holding CNY 160,771,700.00 of the Company, with a share-holding ratio of 0.70%. Gansu State-owned Asset Investment Group Co., Ltd. was agreed to reduce its share-holding to CNY 11,007,620,088.00, with the share-holding ratio changing from 48.67% to 47.97%.

According to the first provisional general meeting of shareholders held by the Company in January 2019, it is agreed that the state-owned investment management Co., Ltd. shall be added as the shareholder of the Company, holding 192,926,045.00 shares of the

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– F-22 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Company, with the shareholding ratio of 0.84%, and that China sdic high-tech industry investment Co., Ltd. shall no longer be a shareholder of the Company.

The Company now holds the business license of enterprise legal person issued by Jinchang Administration for Industry and Commerce. Unified social credit code: 91620300224690952T; Registered capital: 22,946,544,651.00 yuan; Legal representative: Wang Yongqian; Company residence: Beijing Road, Jinchang City; Company's business scope: nickel, copper, cobalt, rare and precious metals, inorganic chemical products, chemical dangerous goods, engineering, lifting. Machinery and equipment and production and sale of chemical, mining, mineral processing, smelting, mechanical complete sets of equipment, domestic and foreign trade, import and export, domestic and foreign futures business, mining, manufacturing, construction, transportation, breeding, real estate, social services, scientific research and comprehensive technical services, hydroelectric heating production and supply, health, culture and education, recycling and sale of waste materials (where permitted) Projects that can be operated under license shall be operated under license; Business term: 28 September 2001 to 27 September 2071.

The parent Company of the Company is Gansu State-owned Assets Investment Group Co., Ltd. and the final controlling party is the State-owned Assets Supervision and Administration Commission of Gansu Provincial People's Government.

This financial statement has been approved by the board of directors of the Company in May 26, 2020. In accordance with the articles of association of the Company, the financial statements will be submitted to the shareholders' meeting for consideration. II. Basis of Preparation

The financial statements of the Company are prepared on the basis of going concern, based on actual transactions and events, in accordance with the provisions of the accounting standards for business enterprises - basic standards and specific accounting standards issued by the ministry of finance (hereinafter collectively referred to as "accounting standards for business enterprises") , and based on the following important accounting policies and accounting estimates.

The Company, a subsidiary of Lanzhou Jinchuan New Materials Technology Co., Ltd. (hereinafter referred to as "Jinchuan Company new materials") in 2019 on January 1 2017, Ministry of Finance promulgated the accounting standards for enterprises No. 22 - recognition and measurement of financial instruments, the accounting standards for enterprises No. 23 - transfer of financial assets, the accounting standards for enterprises No. 24 - hedging accounting, the accounting standards for enterprises No. 37 - presentation of financial instruments (the four criteria hereinafter generally referred to as the "new financial instruments standards"). The financial statements of Jinchuan New Materials Company are prepared in accordance with the provisions of accounting standards for business enterprises - basic standards, new financial instrument standards and other specific accounting standards. III. Statement of Compliance with ASBE

The financial statements prepared by the Company meet the requirements of the Accounting Standards for Business Enterprises, which presented truthfully and fairly for the

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– F-23 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Company’s financial conditions as of 31 December 2019, operating results, cash flow status and other relevant information of 2019. IV. Significant Accounting Policies and Accounting Estimates

1. Accounting Period

The Company's accounting periods include an annual and a medium-term period. The medium-term accounting period is a period shorter than the reporting period of a complete accounting year. The accounting year of the Group is from 1 January to 31 December.

2. Functional Currency

CNY is the currency of the primary economic environment in which the Company and its domestic subsidiaries operate. The Company and its domestic subsidiaries choose CNY as the functional currency.

3. Accounting Basis and Valuation Principles

According to the relevant provisions of the enterprise accounting standards, the accounting of the Company is based on accrual basis. Except for some financial instruments and investment properties, the financial statements are based on historical cost. The amount of non-current assets held for sale after deducting the estimated expenses from the fair value and the original book values which meet the held for sale conditions shall be calculated at a lower price. In case of any impairment of assets, the corresponding impairment provisions shall be made in accordance with relevant provisions.

4. Business Combination

A business combination is a transaction or event that brings together two or more separate enterprises into one reporting entity. Business combinations are classified into business combinations under common control and business combinations not under common control.

1) Merger accounting for business combinations under common control Merger accounting for business combinations under common control is a business combination in which all the combining enterprises are ultimately controlled by the same party or parties both before and after the combination, and that control is not transitory. For a business combination under common control, the absorbing party is the party that acquires the control right of other involved enterprises on combination date. The combined party is other enterprises involved in the combination. The combination date refers to the date on which the absorbing party effectively obtains control of the party being absorbed.

Assets and liabilities that are obtained in a business combination by the absorbing party

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– F-24 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail shall be measured at their carrying amounts as recorded by the party being absorbed on the combination date. The difference between the carrying amount of the net assets obtained and the carrying amount of the consideration paid for the combination (or the aggregate face value of shares issued as consideration) shall be adjusted to the capital reserve (share premium) . If the capital reserve (share premium) is not sufficient to absorb the difference, excess shall be adjusted against retained earnings.

Cost incurred by the absorbing party that is directly attributable to the combination shall be charged against profit or loss in the period in which the cost is incurred.

2) Acquisition method of accounting for other business combinations Acquisition method of accounting for other business combinations is a business combination in which all the combining enterprises are not ultimately controlled by the same party or parties before and after the combination. For a business combination not under common control, the party that, on the acquisition date, obtains control of other enterprises participating in the combination is the acquirer. Other enterprises participating in the combination are the acquiree. Acquisition date is the date on which the acquirer effectively obtains control of the acquiree.

For a business combination not under common control, combination cost is the aggregate of the fair value of the assets given, liabilities incurred or assumed, and equity securities issued by the acquirer in exchange for control of the acquiree on the acquisition date. Service expense including audit fees, legal fees, valuation and consulting fees, and other administrative expenses attributable to the business combination shall be charged against profit or loss in the period in which the service expense is incurred. The transaction expense of the equity securities or debt securities issued by the acquirer as combination consideration shall be included in the initial cost of equity securities or debt securities issued. The contingent consideration in the business combination shall be included into the combination cost at its fair value on the acquisition date. In case that within 12 months after the acquisition date, any new or further evidence is found regarding the existing situation as on the acquisition date, which causes adjustment on contingent consideration, goodwill shall be adjusted accordingly. The combination cost incurred by the acquirer and the identifiable net assets acquired in the combination are initially measured at fair value on the acquisition date. The positive difference between the combination cost and the fair value of the identifiable net assets it obtains from the acquiree on the acquisition date is recognized as goodwill. As for the negative difference between the combination cost and the fair value of the identifiable net assets it obtains from the acquiree, it is necessary to review the measurement of the fair values of the identifiable assets, liabilities and contingent liabilities it obtains from the acquiree as well as the combination cost. If the combination cost is still less than the fair value of the identifiable net assets it obtains from the acquiree, the difference shall be recorded through profit or loss for the current period.

Where the deductible temporary difference of the acquiree obtained by the acquirer is not recognized on the ground that the recognition condition of deferred tax asset has not been meet on the acquisition date, within 12 months after the acquisition date, if further information is obtained to indicate that the relevant situation on the acquisition date existed and the economic interest brought by the deductible temporary difference of the acquirer on the acquisition date is expected to be realized, the amount of the difference shall be recognized as relevant deferred tax asset and goodwill shall be deducted by the same

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– F-25 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail amount. If the goodwill is insufficient to be deducted, the difference is recognized through profit or loss for the current period; otherwise, the difference recognized as the deferred tax asset which is relate to business combination shall be recognized through profit or loss for the current period.

For the business combinations not under common control and completed through multiple transactions, according to Notice of the Ministry of Finance of the People’s Republic of China on Issuing Interpretations No.5 on Accounting Standards for Business Enterprises (Caikuai [2012] No.19) and the criteria about “package deal” in Article 51 of Accounting Standards for Business Enterprises No.33-Consolidated Financial statements (refer to Note IV, 5 (2) , whether these multiple transactions are included in “package deal” shall be judged. If they are included in “package deal”, the accounting treatment shall be conducted in accordance with the descriptions of previous paragraphs of this Part and Note IV. 14“Long-term Equity Investment”; if they are not included in “package deal”, relevant accounting treatment shall be conducted differently in separate financial statements and consolidated financial statements.

In consolidated financial statements, the equity of the acquiree held before the acquisition date shall be re-measured at fair value of the equity on the acquisition date, and the difference between fair value and book value shall be recorded in the current income from investment. If the equity of the acquiree held before the acquisition date involves other comprehensive income, relevant accounting treatment for other comprehensive income shall be conducted on the same base as the acquiree disposes of relevant assets and liabilities directly (all shares shall be transferred into investment income for the current period which consists of the acquisition date, except the corresponding shares changed by net liabilities or net assets in benefit plan redesigned by the acquiree under equity method) .

In individual financial statements, the initial investment cost of the investment is the sum of the book value of the equity investment held before the purchase date and the new investment cost on the purchase date;Acquisition date before the acquiree stakes involved in other comprehensive income, at the disposal of the investment will be related with other comprehensive income is direct disposal of related assets or liabilities on the basis of the same accounting treatment (i.e., in addition to the measured in accordance with the equity method accounting by the purchaser to set benefit plan net debt or equity lead to the change of the corresponding share outside, the rest into the current investment income) .

In the consolidated financial statements, the equity held before the purchase date is remeasured according to the fair value of the equity on the purchase date, and the difference between the fair value and the book value is recorded in the current investment income.Acquisition date before the acquiree stakes involved in other comprehensive income,

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– F-26 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail other comprehensive income related shall adopt the same as the acquiree direct disposal of related assets and liabilities on the basis of accounting (i.e., in addition to the measured in accordance with the equity method accounting by the purchaser to set benefit plan net debt or equity lead to the change of the corresponding share outside, the rest to belong to the current investment income) on the acquisition date.

5. Preparation Method for Consolidated Financial Statements

1) Identification of the scope of the consolidation The scope of consolidated financial statements shall be determined on the basis of control. Control means the Company has power over the investee, by participating in the relevant activities of the investee and has variable returns, and the ability to use the power to influence the return amount of the investee. The combination scope includes the Company and all subsidiaries. Subsidiary is the corporate body controlled by the Company.

The Company will reassess combination scope if relevant elements on the control definition have changed due to the change of the relevant facts and circumstances.

2) The method for preparation of consolidated financial statements From the date the Company obtains the actual control over a subsidiary’s net assets and production operation decision-making power, the Company includes the subsidiary into the consolidated scope; from the date the Company loses control over a subsidiary, the subsidiary shall cease to be consolidated. For a subsidiary disposed of, the operating results and cash flows before the disposal date are appropriately included in the consolidated statement of income and the consolidated statement of cash flow; for a subsidiary disposed during the current period, no adjustments are made to the opening balance of the consolidated balance sheet. Where a subsidiary is acquired through a business combination not under common control, the subsidiary’s operating results and cash flows after the combination date are appropriately included in the consolidated statement of income and the consolidated statement of cash flow and no adjustments is made to the opening balance and comparative figures of the consolidated financial statements. Where a subsidiary is acquired through a business combination under common control, the subsidiary’s operating results and cash flows from the beginning of the reporting period to the combination date are appropriately included in the consolidated statement of income and the consolidated statement of cash flow and adjustments is made to the comparative figures of the consolidated financial statements accordingly.

When preparing the consolidated financial statements, if subsidiary and the Company adopt the inconsistent accounting policies or accounting periods, the Company shall adjust the financial statements of the subsidiary based on its own accounting period and accounting policies. For a business combination not under common control, the subsidiary shall be adjusted based on the fair value of the identifiable net asset and adjustments to financial statements shall be made.

All material balances, transactions, and unrealized profits within the scope of consolidated financial statements shall be eliminated in the preparation of consolidated financial statements.

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– F-27 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Shareholders’ equity and current net profit or loss of subsidiary which not attributable to the Company shall be solely presented as minority shareholders’ equity of consolidated balance sheet and net profit of consolidated statement of income, respectively. The amount of current profit or loss of subsidiary is attributable to minority shareholders’ equity; it should be presented as “Minority shareholders’ equity” under the net profit consolidated statement of income. If the losses of subsidiary exceed the shareholders’ portion of the opening balance of shareholders’ equity of the subsidiary, the excess shall be allocated against the non-controlling interests.

If the Company loses control over a subsidiary due to the disposal of a portion of an equity investment or other reasons, the remaining equity shall be re-measured at its fair value at the date when control is lost. The difference obtained through the total amount of consideration received from the disposal of equity and the fair value of the remaining equity, less the share of net assets of the former subsidiary calculated continuously from the acquisition date or the combination date based on the previous shareholding proportion, shall be recognized as investment income for the current period when control is lost. Other comprehensive income related to original subsidiary will be transferred into the current profit and loss in investment at the date the Company lost control over the subsidiary. (That is, in addition to the re-measurement of changes in the net liabilities or net assets of the defined benefit plan in the original subsidiary, the rest will be transferred into investment income for the current period) . After that, for the remaining part of this part of equity, according to Accounting Standards For Enterprise No.2-Long Term Equity Investment or Accounting Standards For Enterprises No.22-Recognition And Measurement Of Financial Instrument and related regulation for subsequent measurement, and there are details in Notes IV.14 “Long-term equity investment” or Notes IV.9 “Financial instruments”.

If the Company loses control over a subsidiary in multiple transactions in which it disposes equity investments in the subsidiary in stages, the Company is required to determine whether each transaction shall be included in a package deal. If one or more than one of the following conditions are met by all of the terms and conditions of the transactions and their economic effects in regard to the disposal of equity investment in subsidiaries, the accounting treatment for these transactions shall be conducted as a package deal: ķThese transactions are carried out simultaneously or in the condition that each part will be impacted; ĸThese transactions as a whole will achieve a complete business results; ĹThe occurrence of one transaction are dependent on at least one transaction; ĺOne transaction may seem to be uneconomic when considered solely, but it can be recognized as economic when considered with other transactions. If one transaction is not included in the package transaction, each of transaction will be according to the “Partly disposal of subsidiaries of a long-term equity investment without losing control” and each of the transaction will respectively follow the part disposal subsidiaries of a long-term equity investment under the control not lost (refer to Notes IV. 14. (2) ĺ) and “losing control due to disposal of part of equity investments or other reasons” of the original subsidiaries suited for the principle as accounting treatment. If disposal subsidiary Company equity investment at other each transaction belonged to a package transaction until Company losing control, thus each transaction shall be dealt with accounting treatment in which each transaction is recognized as one that dispose of subsidiaries until lose control. However, the difference between the disposals prices of prior before control lost with Company net asset shall be recognized as other comprehensive income, the profit and loss of current year shall be transferred when control is lost.

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– F-28 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

6. Classification and Accounting Treatment for Joint Arrangements and Joint Operation

A Joint arrangement is an arrangement of which two or more parties have joint control. The Company divides joint venture arrangement into joint operation and joint venture based on the rights enjoyed and obligations assumed in joint venture arrangements. A joint operation is a joint arrangement whereby the Company has rights to the assets and obligations for the liabilities, relating to the arrangement. A joint venture is a joint arrangement whereby the Company only has rights to the net assets of the arrangement.

The Company adopts equity method for accounting of investment of joint ventures and disposes according to the accounting policy described in the Note IV.14 (2) ĸ “Long-term Equity Investment under Equity method”.

As a joint venture party, for joint operation, the Company recognizes the assets held solely and liabilities assumed solely and recognizes the Company’s share of any assets held jointly and liabilities assumed jointly; recognizes the Company’s revenue from the sale of its share of the output arising from the joint operation; recognizes the Company’s share of the revenue from the sale of the output by the joint operation; recognizes the expenses incurred solely by the Company and the Company’s share of any expenses incurred jointly.

When the Company invests or sells assets towards joint operation as a party of the joint-venture (this asset does not constitute business, the same below) , or upon purchasing assets by joint operation but before selling such assets to the third party, the Company only recognizes the part belonging to other participants of joint operation in profit or loss caused by this transaction. Where such assets belong to the impairment losses for assets according to Accounting Standard for Business Enterprises No. 8 – Impairment of Assets and other regulations, the Company will recognize losses in full amount for investment or sales of assets from the Company to joint operation. For assets purchased by the Company from joint operation, the Company will recognize these losses according to its shareholding proportion.

7. Recognition Criteria for Cash and Cash Equivalents

Cash and cash equivalents of the Company comprise cash on hand, bank deposits available for payment at any time and those investments that are short-term (to be matured within three months at the time of acquisition) , and highly liquid investments held by the Company which are readily convertible into known amounts of cash and which are subject to insignificant risk of value change.

8. Accounting Treatment of Foreign Currency Transactions

1) Translation of foreign currency transactions Transactions denominated in foreign currencies are translated into CNY at the spot rate of the trading day (commonly referred to as the central parity of the foreign exchange rate quoted by the people's bank of China, same below) . However, if the foreign currency exchanges business of the Company or the transaction involving foreign currency exchange, the amount shall be translated into CNY at the exchange rate that was actually used.

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– F-29 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

2) Translation method for monetary and non-monetary Item denominated in foreign currency At the balance sheet date, foreign currency monetary Item are translated using the spot exchange rate at the balance sheet date. All the exchange differences thus resulted are taken to profit or loss, except for ķthose relating to foreign currency borrowings specifically for construction and acquisition of qualifying assets, which are capitalized in accordance with the principle of capitalization of borrowing costs, ĸhedging accounting, the exchange difference related to hedging instruments for the purpose of net oversea operating investment is recorded in the comprehensive income till the date of disposal and recognized in profit or loss of the period; exchange difference from changes of other account balance of foreign currency monetary Item, Ĺthe available-for-sale monetary Item denominated in foreign currency are recognized in the profit or loss for the currency period except for such foreign exchange differences arising from the other changes in the balance other than amortized cost that will be recognized in the other comprehensive income.

Where the preparation of consolidated financial statements involves overseas operations, if any foreign currency monetary item constitutes a net investment in overseas operations in essence, the exchange difference resulting from the change of exchange rate shall be included in other comprehensive gains; when dealing with overseas operations, it shall be transferred to the current profit or loss.

The foreign currency non-monetary Item measured at historical cost shall continue to be translated at the spot exchange rates at the dates of the transactions. The foreign currency non-monetary Item measured at the fair value shall be translated at the spot exchange rate on the date when the fair value has been determined, and the difference between the translated reporting currency amount and the original one shall be treated as the changes in fair value (including changes in exchange rate) and recorded in the current profit or loss or recognized as other comprehensive income.

On the balance sheet date, the spot exchange rate on the balance sheet date is adopted for the conversion of foreign currency monetary Item. The resulting exchange difference shall be included in the current profits and losses, except that: ķ the exchange differences arising from special foreign currency loans related to the acquisition and construction of assets eligible for capitalization shall be handled in accordance with the principle of capitalization of borrowing costs; and ĸ the exchange differences of hedging instruments used for effective hedging of net investment abroad. (The difference is included in other comprehensive gains and losses until the net investment is disposed of) and Ĺthe exchange difference arising from the changes in other book balances shall be included in other comprehensive gains.

The non-monetary Item of foreign currency measured at historical cost are still measured by the amount of the book-keeping base currency converted at the spot exchange rate on the date of transaction. Foreign currency non-monetary Item measured by fair value shall be converted at spot exchange rate on the date of determination of fair value. The difference between the converted amount of base currency and the original amount of base currency shall be treated as changes in fair value (including changes in exchange rate) , and shall be included in current profits and losses or recognized as other comprehensive gains and recorded in capital reserve.

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– F-30 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

3) Translation method of financial statements denominated in foreign currency When preparing the consolidated financial statements involving the overseas operation, if there are foreign-currency monetary Item essentially constituting a net investment in an overseas operation, the exchange difference incurred due to the exchange rate change shall be presented in other comprehensive income as "difference arising from the translation of foreign currency financial statements". When disposing of the overseas operation, the current profit or loss shall be transferred to the current profit or loss.

The cash flow of overseas subsidiaries shall be translated at the spot exchange rate on the date of cash flow happening. Changes in exchange rate shall be deemed as adjustment item and shall be separately presented in the statement of cash flow.

Opening amount and prior year’s actual amount are presented in line with the amount after the translation of prior year financial statements.

For the preparation of consolidated financial statements, when the disposal of all shareholders’ equities with respect to the overseas operations by the Company, as well as parts of equity investments, results in a lost in control over the overseas operations, the Company shall convert the difference, which is presented under the Item of the owner’s equities of the parent Company in the balance sheet and which arises from the translation of foreign currency financial statements relating to this overseas business, into the profit or loss of the period for disposal.

When overseas operational control is retained but the proportion of overseas operational equity held by the Company decreases due to disposal of partial equity investments or other reasons, the difference arising from translation of foreign currency relevant to the disposed portion of such overseas operation will be recognized as non-controlling shareholder equity. The difference shall not be transferred into current profit or loss. In the event that the disposed overseas operation involves partial equities of affiliated enterprises and joint ventures, the difference arising from translation of foreign currency relevant to the disposed portion of such overseas operation will be transferred into the current profit or loss for disposal as per the disposed proportion of overseas operation.

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– F-31 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

9. Financial Instruments

Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instruments. Financial assets and financial liabilities are initially measured at fair value. For financial assets and financial liabilities measured at fair value and changes recorded in current profit and loss, relevant transaction costs are directly accounted in profit and loss. For other financial assets and financial liabilities, relevant transaction costs are accounted in initially recognized amount

1) The identification method for the fair value of financial assets and liabilities Fair value refers to the price that can be received through selling an asset or payment for the transfer of a liability by the market participant in the orderly transaction on the measurement date. The fair value of the financial assets or financial liabilities in the active market of the Company shall be determined at the quoted price in the active market in case that the financial instruments exist in the active market. The quoted price in active market refers to price that is easily obtained from the exchange, broker, industry association, pricing service institution, etc. and represents the price of market transaction actually happened in the fair transaction. The fair value of the financial assets or financial liabilities of the Company shall be determined via valuation technique in case that the underlying financial instruments do not exist in the active market. The value appraisal techniques mainly comprise the prices adopted by the parties, who are familiar with the condition, in the latest market transaction upon their own free will, the current fair value obtained by referring to other financial instruments of the same essential nature, the cash flow capitalization method, the option pricing model, etc.

2) Classification, recognition and measurement of financial assets Financial assets bought or sold in ordinary manner is recognized and derecognized based on the transaction date. Financial assets at initial recognition are divided into measured at fair value and the changes are recorded into the profits and losses of the current financial assets, held-to-maturity investments, loans and receivables, and financial assets available for sale.

ķ Financial assets at fair value through profit or loss:

Including trading financial assets and financial assets designated as at fair value through profit or loss.

Transactional financial assets refer to financial assets that satisfy one of the following conditions:

A. the purpose of acquiring such financial assets is to sell in short term.

B. the asset is part of the identifiable financial instruments combination that is collectively managed, and there is proof that the Company manages the combination to gain profits in short term.

C. the assets belongs to derivatives, however, are specified as effective hedging tool derivatives, and belongs to the derivatives of the financial guarantee contract and has no offer in the active market and the equity instruments of its fair value cannot be reliably

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– F-32 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail measured and must be settled by delivering the equity instruments investment hook derivatives.

A financial asset may be designated as at fair value through profit or loss upon initial recognition only when one of the following conditions is satisfied: A. Such designation may eliminate or significantly reduce a measurement or recognition inconsistency that would otherwise result from measuring assets or recognizing the gains or losses on them on different bases; B. The official written documents of risk management or investment strategies of the Company concerned have described that the said combination of financial assets, the said combination of financial liabilities, or the combination of financial assets and financial liabilities will be managed and evaluated on the basis of their fair values and will be reported to the key management personnel.

The subsequent measurement of financial assets measured at fair value and the fair value change is measured into profits and losses of current period shall use fair value, the profits or loss from fair value change and equity or interests income related to such financial assets are recorded into profits and losses of the current period.

ĸ Held-to-maturity investments

It refers to those non-derivative financial asset that has fixed maturity date or has fixed or identifiable refund amount, while the Company has specific intent and is capable of holding it to its maturity.

Held-to-maturity investment shall be subsequently measured at amortized cost by actual interest rate method, with profit or loss arising out from de-recognition, impairment or amortization included into the profit or loss for the period.

The actual interest rate method refers to the method by which the post-amortization costs and the interest incomes or interest expenses of different installments are calculated in light of the actual interest rates of the financial assets or financial liabilities (including a set of financial assets or financial liabilities) . The effective interest rate refers to the interest rate adapted to the future cash flow of a financial asset or financial liability within the predicted term of existence or within a shorter applicable term into the current book value of the financial asset or financial liability.

To calculate the actual interest rate, the Company estimates the future cash flow on the basis of taking all the contractual provisions concerning the financial asset or financial liability into account (exclude the future credit losses) . The various fee charged, trading expenses, premiums or reduced values, etc., which are paid or collected by the parties to a financial asset or financial liability contract and which form a part of the actual interest rate, shall be taken into account in the determination of the actual interest rate.

Ĺ Loans and receivables

Loans and Receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivable classified by the Company include notes receivable, accounts receivables, interest receivable, dividends receivable and other receivables.

Loans and receivables are subsequently measured at amortized cost using the effective interest method. Gain or loss arising from de-recognition, impairment or

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– F-33 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail amortization is recognized in current profit or loss.

ĺ Available-for-sale financial assets

Includes non-derivative financial assets that are designated for sale at the time of initial recognition, and financial assets other than financial assets that are measured at fair value and whose changes are booked into current profits and losses, loans and receivables, and investments held to maturity.

The closing cost of the available-for-sale debt instrument is determined at amortized cost, namely, the closing cost is the amount that the initially recognized amount deducts the repaid principal, adds or deducts accumulated amortized amount arising from the amortization of the balance between the initially recognized amount and the due amount by effective interest rate, and less amounts after incurred impairment loss. Closing cost of the available-for-sale equity instrument investment is the cost of acquisition.

Available-for-sale financial assets are subsequently measured at fair value. Any gains or losses arising from changes in the fair value are recognized as other comprehensive incomes, except that impairment losses and exchange differences related to amortized cost of monetary financial assets denominated in foreign currencies are recognized in current profit or loss, until the financial assets are derecognized, at which time the gains or losses are released and recorded in current profit or loss. However, for investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured, and derivative financial assets that are linked to and must be settled by delivery of such unquoted equity instruments, they are measured subsequently at cost.

The interest earned during the sale of financial assets and the cash dividends declared by the invested entity shall be included in the investment income.

3) Impairment of financial assets Besides financial assets whose fair value has been recorded into the current profits and losses, the Company checks the carrying value of other financial assets on each balance sheet date. If there is objective evidence that shows that impairment loss occurs to the financial assets, an impairment provision shall be made.

The Company carries out individual impairment test on the financial assets with significant amount on individual basis; and carries out individual impairment test or impairment test together with the portfolio of the financial assets with similar credit risks on the financial assets without significant amount on individual basis. For those not impaired in individual impairment test (including the financial assets with and without significant amount on individual basis) , the Company carries out impairment test on such assets together with the portfolio of the financial assets with similar credit risks. The financial assets impaired in individual impairment test are not subject to the impairment test together with the portfolio of the financial assets with similar credit risks.

ķ Impairment of held-to-maturity investments, loans and receivables

The financial assets measured by cost or amortized cost write down their carrying value by the estimated present value of future cash flow. The difference is recorded as impairment loss. If there is objective evidence to indicate the recovery of value of financial assets after

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– F-34 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail impairment, and it is related with subsequent event after recognition of loss, the impairment loss recorded originally can be reversed. The carrying value of financial assets after impairment loss reversed shall not exceed the amortized cost of the financial assets without provisions of impairment loss on the reserving date.

ĸ Impairment for available-for-sale financial assets

Where the fair value of the equity instrument investment drops significantly or not contemporarily according to the integrated relevant factors, an available-for-trade financial asset is impaired. Among them, "dropping significantly" refers to the cumulative decline of fair value more than 20%, and "non-temporary decline" refers to the continuous decline of fair value for more than 12 months.

When an available-for-sale financial asset is impaired, the accumulative losses arising from the decrease of the fair value which was originally included into other comprehensive incomes shall be transferred out and recorded into the current profit or loss; the accumulative losses that are transferred out shall be the balance obtained from the initially obtained costs of the sold financial asset after deducting the principals as taken back, the current fair value and the impairment losses as was recorded into the current profit or loss.

If, after an impairment loss has been recognized, there is objective evidence that the value of the financial asset is recovered, and it is objectively related to an event occurring after the impairment loss was recognized, the initial impairment loss can be reversed and the reserved impairment loss on available-for-trade equity instrument is recorded in the profit or loss, the reserved impairment loss on available-for-trade debt instrument is recorded in the current profit or loss.

The equity instrument where there is no quoted price in an active market, and whose fair value cannot be reliably measured, or impairment loss on a derivative asset that is linked to and must be settled by delivery of such an unquoted equity instrument shall not be reversed.

4) Recognition basis and measurement method of transferred financial assets The financial assets meeting one of the following conditions shall be de-recognized:

Where the contractual rights for collecting the cash flow of the said financial asset are terminated; ᬅ Where the said financial asset has been transferred and almost all risks and rewards of ownership of financial assets have been transferred into the transfer-in ᬆ party;

The financial assets have been transferred; Although the Company has neither transferred nor retained almost all risks and rewards of ownership of financial ᬇ assets, the Company has given up the control to the financial assets.

If the enterprise has neither retained all the risks and rewards from the financial asset nor control over the asset, the asset is recognized according to the extent it exists as financial asset, and correspondent liability is recognized. The extent of existence refers the level of risk by the financial asset changes the enterprise is facing.

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– F-35 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

For a transfer of a financial asset in its entirety that satisfies the de-recognition criteria, the difference between the book value of the financial asset transferred; and the sum of the consideration received from the transfer and any cumulative gain or loss that has been recorded in other comprehensive incomes, is recorded in current profit or loss.

If a part of the transferred financial asset qualifies for de-recognition, the book value of the transferred financial asset is allocated between the part that continues to be recognized and the part that is derecognized, based on the respective fair values of those parts. The difference between the book value allocated to the part derecognized; and the sum of the consideration received for the part derecognized and any cumulative gain or loss allocated to the part derecognized which has been previously recorded in other comprehensive incomes, is recorded in current profit or loss.

In case of endorsement transfer of the financial assets to be sold by means of attaching the right of recourse or the financial assets held by the Company, the Company shall determine whether almost all risks and remunerations of the ownership of such financial assets are transferred. If almost all risks and remunerations of the ownership of such financial assets are transferred to the transferee, de-recognize such financial assets; where retained, do not de-recognize such financial assets; where neither transferred nor retained, continue to judge whether the enterprise retains control over such assets, and conduct the accounting treatment according to the principle mentioned in above paragraphs.

5) Classification and measurement of financial liabilities Financial liabilities shall be classified into the financial liabilities at fair value through profit and loss and other financial liabilities when they are initially recognized. When initial recognition, the financial assets shall be measured at fair value. For the financial liabilities at fair value through profit and loss, the relevant transaction expenses thereof shall be directly recorded into the current profit or loss; for other categories of financial liabilities, the transaction expenses thereof shall be recorded into the initially recognized amount.

ķ Financial liabilities at fair value through profit and loss

The condition that the transactional financial liability at fair value through profit and loss when it is initially recognized is consistent with the condition that the transactional asset at fair value through profit and loss when it is initially recognized.

The subsequent measurement of financial liability that is measured by fair value and whose fair value change shall be recorded into the current profits and losses shall be based on fair value, the profits and losses arising from its fair value change and the relative equity interests and interests shall be recorded into the current profits and losses.

ĸ Other financial liabilities

Ĺ Financial guarantee contract

Financial guarantee contracts that are not classified as financial liabilities measured by

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– F-36 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail fair value with the changes in fair value recognized in profit or loss are initially recognized at fair value. After the initial recognition, financial guarantee contracts shall be measured at the higher of the amount recognized in accordance with the Accounting Standards for Enterprises No. 13 - Contingencies Subsequent measurement and the initial recognition amount deducted by the accumulative amortization amount determined in accordance with the Accounting Standards for Business Enterprises No. 14 - Revenue.

6) De-recognition of financial liabilities The Group de-recognizes a financial liability or part of it when the underlying present obligation or part of it is discharged or cancelled or has expired. An agreement between the Company (an existing borrower) and existing lender to replace original financial liability with a new financial liability with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new liability.

When the Company de-recognizes a financial liability or a part of it, it recognizes the difference between the carrying amount of the financial liability (or part of the financial liability) de-recognized the consideration paid (including any non-cash assets transferred or new financial liabilities assumed) in profit or loss.

7) Derivative instruments and embedded derivative instruments Where the Company is entitled to offset the confirmed financial assets and financial liabilities, and the legal rights are executable by now; at the same time, the Company plans netting or simultaneously realizes the financial assets to liquidate the financial liabilities, the financial assets and financial liabilities are listed in the balance sheet with the amount after offsetting each other. In addition, the financial assets and financial liabilities are shown separately in the balance sheet and shall not offset each other.

8) Equity instruments Equity instrument is any contract that evidences a residual interest in the assets of the Company deducting all liabilities. The Company issues (including re-financing) , repurchases, sells or cancels equity instruments for disposal of changes of equity investments. The Company does not recognize the change amount of fair value of the equity instrument. Transaction expenses related to equity investment shall be deducted from equity.

The Company's various distributions (excluding stock dividends) of the holder of equity instruments reduce shareholders' equity. The Company does not recognize the fair value change of the equity instruments.

10.Financial Instruments (Implementation of the New Financial Instruments Policy)

A financial asset or financial liability is recognized when Jinchuan New Materials becomes a party to a financial instrument contract.

1) Classification, recognition and measurement of financial assets According to the business model of managing financial assets and the characteristics of contract cash flow of financial assets, Jinchuan New Materials Company divides financial

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– F-37 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail assets into: financial assets measured by amortized cost; Financial assets measured at fair value and whose changes are recorded in other comprehensive income; Financial assets that are measured at fair value and whose changes are booked into current profits and losses.

Financial assets are measured at fair value at the time of initial recognition.For financial assets measured at fair value and whose changes are recorded into the current profit and loss, the relevant transaction costs are directly recorded into the current profit and loss;For other classes of financial assets, related transaction fees are included in the initial recognition amount.For accounts receivable or notes receivable arising from the sale of products or the provision of services, which do not contain or take no account of major financing elements, Jinchuan New Materials Co., Ltd. shall take the amount of consideration it is entitled to receive as the initial recognition amount.

ķ Financial assets measured at amortized cost

Jinchuan New Materials management of financial assets measured at the amortized cost business model to cash flow for a contract as the goal, and the contractual cash flow characteristics of financial assets is consistent with the basic lending facility, namely the cash flow at a specific date, is only on the principal and on the basis of the outstanding principal amount of the payment of interest.Jinchuan New Materials Co., Ltd., for such financial assets, adopts the effective interest rate method and conducts subsequent measurement according to the amortized cost. The profit or loss caused by its amortization or impairment shall be recorded into the current profit and loss.

ĸ Financial assets measured at fair value and whose changes are recorded in other comprehensive income

Jinchuan New Materials Co., Ltd. manages such financial assets with the business model of both receiving and selling the contract cash flow, and the characteristics of the contract cash flow of such financial assets are consistent with the basic lending arrangement.Jinchuan New Materials Co., Ltd. measures such financial assets according to the fair value and records their changes into other comprehensive income, but the impairment loss or profit, exchange profit and loss and interest income calculated according to the actual interest rate method are recorded into the current profit and loss.

In addition, Jinchuan New Materials Co., Ltd. designates part of its investment in non-trading equity instruments as financial assets measured at fair value and whose changes are included in other comprehensive income.Jinchuan New Materials Co., Ltd. booked the related dividend income of such financial assets into the current profit and loss, and the fair value change into other comprehensive income.When the recognition of the financial asset is terminated, the accumulated gains or losses previously recorded in other comprehensive income will be transferred from other comprehensive income to retained earnings, not included in the current profit or loss.

Ĺ Financial assets that are measured at fair value and whose changes are booked into current profits and losses

Jinchuan New Materials Co., Ltd. classifies the above financial assets measured at amortized cost and financial assets measured at fair value other than financial assets whose changes are included in other comprehensive income into financial assets measured at fair

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– F-38 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail value and whose changes are included in current profits and losses.In addition, in the initial recognition, in order to eliminate or significantly reduce accounting mismatches, Jinchuan New Materials Co., Ltd. designated part of the financial assets as financial assets measured at fair value and recorded its changes into the current profit and loss.For such financial assets, Jinchuan New Materials Company adopts fair value for subsequent measurement, and changes in fair value are recorded into current profits and losses.

2) Classification, recognition and measurement of financial liabilities When financial liabilities are initially recognized, they are classified as financial liabilities and other financial liabilities which are measured at fair value and whose changes are recorded into current profits and losses. For financial liabilities measured at fair value and whose changes are recorded into the current profit and loss, the relevant transaction costs are directly recorded into the current profit and loss, and the relevant transaction costs of other financial liabilities are recorded into the initial recognized amount.

ķ Financial liabilities that are measured at fair value and whose changes are booked into current profits and losses

Financial liabilities that are measured at fair value and whose changes are recorded into current profits and losses include trading financial liabilities (including derivatives belonging to financial liabilities) and financial liabilities that are specified as measured at fair value and whose changes are recorded into current profits and losses at the initial recognition.

Transaction financial liabilities (including derivatives belonging to financial liabilities) are subsequently measured at fair value, and the changes in fair value are recorded into the current profit and loss except those related to hedge accounting.

Is designated as at fair value and whose fluctuations are included in the current profits and losses of the financial liabilities and the liabilities by Jinchuan New Materials Company changes its credit risk caused by changes in fair value recorded in other comprehensive income, the liabilities, and terminated the recognition as included in other comprehensive income of their own credit risk changes caused by the changes in fair value of the total amount transferred to retained earnings.The remaining fair value changes are booked into the current profit and loss.Jinchuan New Materials Co., Ltd. shall record all the gains or losses of the financial liabilities (including the amount affected by the change of the enterprise's own credit risk) into the current profit and loss if the accounting mismatches in the profit and loss will be caused or enlarged by dealing with the impact of the change of its own credit risk of the financial liabilities in the above way.

ĸ Other financial liabilities

In addition to the transfer of a financial asset is not in conformity with the conditions to stop the recognition or formed by its continuous involvement in the transferred financial asset, financial liabilities and financial guarantee contract of other financial liabilities classified as financial liabilities measured at the amortized cost, measured at the amortized cost for subsequent measurement, recognition has been stopped or amortization of the profit or loss is included in the current profits and losses.

3) Confirmation basis and measurement method of financial asset transfer

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– F-39 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

A financial asset that meets one of the following conditions shall be confirmed for termination:

ķ Termination of the contractual right to receive the cash flow of the financial asset;

ĸ The financial assets have been transferred, and the ownership of the financial assets almost all the risk and reward transferred to the transferee;

Ĺ The financial assets have been transferred, although the enterprise neither transferred nor retained almost all the risks and rewards on the ownership of the financial assets, but gave up the control of the financial assets.

If the enterprise neither transfers nor retains nearly all the risks and rewards in the ownership of the financial asset, and does not relinquish control over the financial asset, the relevant financial asset shall be recognized according to the degree of continuing involvement in the transferred financial asset, and the relevant liability shall be recognized accordingly.The degree of continued involvement in the transferred financial assets refers to the level of risk faced by the enterprise due to the change in the value of the financial assets.

If the overall transfer of financial assets meets the conditions of termination recognition, the difference between the book value of the transferred financial assets and the consideration received as a result of the transfer and the accumulated amount of the change in fair value originally included in other comprehensive income shall be recorded into the current profit and loss.

The transfer of a financial asset part meet the recognition criteria of termination, the book value of the transferred financial asset between termination confirmation and not terminate part according to the relative fair value of the share, and will be received by transfer of value and share to terminate identified previously included in the other part of the changes in fair value of the accumulative amount of comprehensive income and apportion the carrying amount of the difference between the sum of all accounted for as current profit or loss.

Jinchuan New Materials Co., Ltd. needs to determine whether almost all the risks and rewards in the ownership of the financial assets have been transferred for the financial assets sold with the right of recourse or the financial assets held by it have been endorsed and transferred. Where almost all the risks and rewards in the ownership of the financial asset have been transferred to the transferor, the recognition of the financial asset shall be terminated;Where almost all risks and rewards in the ownership of a financial asset are retained, the recognition of the financial asset shall not be terminated;Where there is neither transfer nor retention of almost all the risk and reward in the ownership of a financial asset, it continues to determine whether the enterprise retains control over the asset and conducts accounting treatment in accordance with the principles described in the preceding paragraphs.

4) Termination recognition of financial liabilities If the current obligations of the financial liability (or part thereof) have been discharged, Jinchuan New Materials Company shall terminate the recognition of the financial liability (or part thereof). Jinchuan New Materials Co., Ltd. (the borrower) signs an agreement with the lender to replace the original financial liability by assuming the new financial liability. If the contract terms of the new financial liability are substantially different from the original

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– F-40 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail financial liability, the confirmation of the original financial liability shall be terminated and a new financial liability shall be confirmed at the same time.If Jinchuan New Materials Company materially modifies the contract terms of the original financial liability (or part thereof) , it shall terminate the recognition of the original financial liability and confirm a new financial liability in accordance with the revised terms.

If the financial liability (or part thereof) is recognized after termination, Jinchuan New Materials Company shall record the difference between its book value and the consideration paid (including the non-cash assets transferred or the liabilities assumed) into the current profit and loss.

5) Offsets of financial assets and liabilities When new materials Company has offset amount have been confirmed in Jinchuan legal rights of financial assets and financial liabilities, and this kind of legal rights is the executable, and Jinchuan Company plans to netting or new material at the same time to liquidate the financial assets and liquidation of the financial liability, financial assets and financial liabilities to offset each other after amount listed in the balance sheet.In addition, financial assets and financial liabilities are shown separately in the balance sheet and are not offset against each other.

6) Method for determining the fair value of financial assets and financial liabilities Fair value refers to the price paid by market participants to receive or transfer a liability by selling an asset in an orderly transaction on the measurement date.If there is an active market for financial instruments, Jinchuan New Materials Company uses the quotation in the active market to determine its fair value.Quotes in an active market are prices that are easily obtained on a regular basis from exchanges, brokers, trade associations, pricing services, etc., and represent the prices of market transactions that actually occur in a fair trade.If there is no active market for financial instruments, Jinchuan New Materials Company uses valuation technology to determine its fair value.Valuation techniques include the prices used in recent market transactions by parties that are familiar with and willing to trade, the current fair value of other financial instruments that are essentially the same, the discounted cash flow method and the option pricing model.In valuation, the Company adopts valuation techniques that are applicable in the current situation and supported by sufficient available data and other information, selects the input values consistent with the characteristics of the assets or liabilities considered by market participants in the transaction of the relevant assets or liabilities, and uses the relevant observable input values as a priority as possible.Use a non-input value in cases where the relevant observable input value is unavailable or not feasible to obtain.

7) Equity instruments An equity instrument is a contract to prove ownership of the remaining equity in Jinchuan New Materials' assets after deducting all liabilities.Jinchuan New Materials Company issues (including refinancing) , repurchases, sells or cancels equity instruments as equity changes, and transaction costs related to equity transactions are deducted from equity.Jinchuan New Materials does not recognize fair value changes in equity instruments.

If the equity instrument of Jinchuan New Materials Company distributes dividends (including "interest" generated by the instrument classified as equity instrument) during its

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– F-41 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail existence, it shall be treated as profit distribution.

11.Methods of Determining and Accounting for Expected Credit Losses (Implementation of the New Financial Instruments Standard Policy)

1) Determination method of expected credit loss Based on the expected credit loss, Jinchuan New Materials Company conducts impairment accounting treatment for the financial assets (including receivables) measured at amortized cost, financial assets (including debt securities classified as receivables) classified as fair value measured and their changes included in other comprehensive income, and the leasing receivables, and confirms the loss provision.

Jinchuan Company at each balance sheet date to assess new material related financial tools of credit risk from whether increased significantly after initial recognition, financial tools of credit impairment process can be divided into three stages, for different stages of the financial instruments impairments using different accounting methods: ķ the first stage, the credit risk of financial instruments since the initial confirmation has not increased significantly, Jinchuan New Materials Company, over the next 12 months of financial instruments in accordance with the expected measurement that credit losses, and according to the book balance (i.e., not deduct depreciation reserves) and the actual interest rate of interest income; ĸ in the second stage, if the credit risk of the financial instrument has significantly increased since the initial recognition but no credit impairment has occurred, Jinchuan New Materials Company shall measure the loss provision according to the expected credit loss of the financial instrument throughout its lifetime and calculate the interest income according to its book balance and the actual interest rate; Ĺ in the third stage, if a credit impairment occurs after the initial recognition, Jinchuan New Materials Company shall calculate the loss provision according to the expected credit loss of the financial instrument in the whole duration, and calculate the interest income according to its amortized cost (book balance minus the impairment provision) and the actual interest rate.

ķ A method of measuring loss provision for financial instruments with lower credit risk

For the financial instrument with low credit risk on the balance sheet date, Jinchuan New Materials Company can directly assume that the credit risk of the instrument has not increased significantly since the initial confirmation without comparing it with the credit risk at the initial confirmation date.

If the financial tools, the lower the risk of default in the debtor to perform the contract in a short time the obligation of the cash flow ability is very strong, and even the economic situation and business environment in a long term adverse change but not necessarily must reduce the borrower's ability to fulfill its obligations to the contractual cash flow, the financial instruments been seen as a lower credit risk.

ĸ Method of preparing for loss measurement of receivables and leasing receivables

Jinchuan for new material Company by the accounting standards for enterprises no. 14 - revenue standard transaction form of accounts receivable (regardless of whether any significant financing component) , and by the accounting standards for enterprises no. 21 -

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– F-42 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

leases standard lease receivables, adopt simplified method, which is always according to the duration of expected credit loss measurement loss.

A. Notes receivable

Jinchuan New Materials Co., Ltd. measures the loss provision for notes receivable at the expected credit loss amount equivalent to the entire duration.Based on the credit risk characteristics of notes receivable, it is divided into different portfolios:

Item Recognition basis of portfolio

Bank acceptance Acceptors are Banks with less credit risk

Jinchuan New Materials Co., Ltd. believes that the bank acceptance bill it holds does not have significant credit risk and will not cause major losses due to bank default, so it is not necessary to prepare for bad debts.

B. Trade receivable

In addition to accounts receivable and contract assets, which are evaluated separately for credit risk, they are divided into different portfolios based on their credit risk characteristics:

Item Recognition basis of portfolio

This portfolio is the receivables of enterprises controlled by Jinchuan New Portfolio A Materials Co., Ltd. The portfolio takes the overdue age of receivables of domestic customers as the Portfolio B credit risk feature. The portfolio takes the overdue age of receivables of domestic customers as the Portfolio C credit risk feature.

For the accounts receivable divided into portfolio A, Jinchuan New Materials Company does not plan to set aside provisions for bad debts.

For the accounts receivable divided into portfolio B and portfolio C, Jinchuan New Materials Co., Ltd., referring to the experience of historical credit loss, combined with the current situation and the prediction of future economic conditions, compiled the comparison table of the overdue days of accounts receivable and the expected credit loss rate of the entire duration to calculate the expected credit loss.

C. Other receivables

Based on whether the credit risk of other receivables has significantly increased since the initial confirmation, Jinchuan New Materials Company measures the impairment loss with the amount equivalent to the expected credit loss in the next 12 months or the whole duration.In addition to other receivables with single assessment of credit risk, they are divided into different portfolios based on their credit risk characteristics:

Item Recognition basis of portfolio

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– F-43 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Portfolio A This portfolio is the receivables of enterprises controlled by Jinchuan New Materials Co., Ltd.

This portfolio is all kinds of receivables, such as deposit, margin and petty cash, which should be Portfolio B collected in daily business activities.

For other receivables divided into portfolio A, Jinchuan New Materials Company does not plan to set aside provisions for bad debts.

For other receivables divided into portfolio B, Jinchuan New Materials Co., Ltd. calculated the expected credit loss by default risk exposure and the expected credit loss rate within the next 12 months or the entire duration by referring to the historical credit loss experience, combining with the current situation and the forecast of future economic conditions.

D. Long-term receivables (excluding receivables and leasing receivables that contain a material financing component)

Jinchuan New Materials Co., Ltd. measures the impairment loss of long-term receivables by the amount equivalent to the expected credit loss in the next 12 months or the whole duration based on whether the credit risk has significantly increased since the initial confirmation.In addition to the long-term receivables that evaluate the credit risk separately, they are divided into different portfolios based on their credit risk characteristics:

Item Recognition basis of portfolio

Portfolio A This portfolio is characterized by aging as credit risk.

12.Receivables

Receivables comprise accounts receivable and other receivables, etc.

1) Recognition criteria of bad debt provisions ķ Recognition criteria and method of provision for bad debts for receivables that are individually significant

The Company recognizes accounts receivables over CNY 1,000,000 as receivables of individual significance.

The Company assesses individually significant receivables for impairment on individual basis; financial assets which are not impaired on individual basis will be assessed for impairment collectively with a portfolio of financial assets which share similar credit risk characteristics. For receivables that are individually impaired, the receivable will not be assessed for impairment collectively with a portfolio of financial assets which share similar credit risk characteristics.

ĸ Basis of recognition and calculation and method of assessing provision for bad debts for receivables according to credit risk profile

A. Recognition basis of portfolio of credit risk features

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– F-44 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

As for the receivables that are not individually significant and that are individually significant without impairment in the separate test, the Company classifies the financial asset based on the similarity and correlation of credit risk features. Those credits usually reflect the capability of debtor paying all due amounts as per the contract of such assets and are related to the future cash flow measurement of the asset inspected.

Recognition basis of different portfolio:

Item Recognition basis of portfolio

Except for receivables with impairment reserve, the proportion of bad debts reserve is determined based on the actual loss rate of the portfolio of Aging portfolios receivables with similar credit risk characteristics and the current situation analysis method.

Related parties portfolios The associate portfolio is divided according to the ownership relationship.

B. Method of assessing bad debt provision recognized based on portfolio of credit risk features

When impairment test is conducted based on portfolio, the amount of bad debt provision is recognized through historical experience loss, current economic situation and the anticipated loss existing in receivables portfolio as per the structure of receivable portfolio and similar credit risk features (capability of debtor for paying debt pursuant to contract term) .

Method of assessing bad debt provision of different portfolio:

Item Provision method

Aging portfolios Aging analysis

Related parties portfolios No provision for bad debts

A. For the portfolio 1, the aging analysis method is adopted to assess bad debt provision.

Proportion of provision of Proportion of provision of other Aging receivables (%) receivables (%)

Within 1 year (including 1 year, the same below)

1-2 years 10.00 10.00

2-3 years 30.00 30.00

3-4 years 50.00 50.00

4-5 years 70.00 70.00

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– F-45 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Over 5 years 100.00 100.00

Ĺ The receivables that are individually insignificant but for which provision for bad debts has been individually assessed and provided:

For the account receivables not individually significant, the Company assesses the account receivables individually for impairment when are of following characteristics: If there is objective evidence indicating the impairment, the impairment loss is recognized at the difference between the present value of future cash flow less the carrying amount; Related party receivables; Receivables in dispute with the other party or involving litigation or arbitration; Clear indications that the debtor is likely to be unable to meet repayment obligations, such as receivables, etc.

2) Reversal of bad debt provisions If there are objective evidences showing that the value of the receivables has been recovered, and the receivables is objectively related to the events occurring after the confirmation of the loss, the impairment loss recognized previously is reversed and recognized through profit or loss for the current period. However, the book value after the reversal shall not exceed the amortized cost of the receivables on the date of reversal.

Where the Company transfers receivables to financial institutions without recourse, the difference between the book value of the transferred receivables and the relevant taxes shall be recorded into the current profit and loss according to the transaction amount.

13.Inventories

1) Classification of inventory Inventories mainly comprise raw materials, work-in-progress, self-made semi-finished products, completed products, turnover materials, inventory commodities, under-construction products (development costs) .

2) Method used to assign cost for inventories The inventory shall be initially measured at actual costs when acquired, which comprises purchase cost, processing cost, and other costs. Cost of acquisition and issue of Jinchuan Group Company is measured using the weighted average method. If the difference between the planned cost and the actual cost of inventory is calculated with the planned cost accounting, the planned cost will be adjusted to the actual cost through the cost discrepancy account and the cost discrepancy that should be borne by forwarding the inventory on time.

3) Recognition of net realizable value of inventory and accruing method of provision for the loss on decline in value of inventories. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale and relevant taxes. An enterprise shall determine the net realizable value of inventories based on solid evidence obtained and after taking into consideration the purpose for which the inventory is held, and the effect of events occurring after the balance sheet date.

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– F-46 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Inventories are required to be measured at the lower of cost and net realizable value on the balance sheet date. If the cost of inventories is higher than the net realizable value, the provision for the loss on decline in value of inventories shall be made. The provision for the loss on decline in value of inventory is assessed based on the difference between the cost of single inventory item and its net realizable value.

After the provision for decline in value of inventories is made, if the circumstances that previously caused inventories to be written down below cost no longer exist so that the net realizable value of inventories is higher than their cost, the original provision for decline in value is reversed and the reversal is included in profit or loss for the period.

4) The inventory system of inventories is the perpetual inventory system. 5) Amortization method for low value consumables Immediate write-off method is used for low value consumables upon usage.

14.Long-term Equity Investments

Long-term equity investments in this part refers to the long-term equity investments that the Company has control. joint control or significant influence over the investee. Long-term equity investments that the Company does not have joint control or significant influence over the investee are measured as financial assets held for sale or financial assets measured at fair value through profit or loss, and please refer to Note IV.9 Financial Instruments for relevant accounting policy.

Joint control refers to joint control owned by the Company over an arrangement as per relevant agreements and relevant activities of this arrangement must be determined upon consent of participants sharing the right of control. The term “significant influence” refers to the power to participate in making determinations on the financial and operating policies of an investment entity, but not to control or do joint control together with other parties over the formulation of these policies.

1) Recognition of investment cost If the long-term equity investment is obtained from the business combination involving enterprises under the common control, the share of book value of owners’ equity of the acquiree in consolidated financial statements of the ultimate controlling party under the combination date shall be deemed as the initial investment cost of the long-term equity investment. The difference between the initial investment cost and the carrying amount of cash paid, non-cash assets transferred, and liabilities assumed shall be adjusted to capital reserve. If the balance of capital reserve is not sufficient, any excess shall be adjusted to retained earnings. If the Company issues equity securities as the consideration for combination, the book value of the owners’ equity of the combined party on the combination date in consolidated financial statements of the ultimate controlling party shall be the initial investment cost of long-term equity investments. With the total face value of the shares issued as equity, the difference between the initial investment cost of long-term equity investment and the total face value of the shares issued shall be adjusted as capital reserve. If the capital reserve is insufficient to set it off, the retained earnings shall be adjusted. If shares of the acquiree are obtained step by step through several transactions, which results

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– F-47 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail in the combination of enterprises under the different control, it shall be treated respectively as per whether it belongs to “a package deal”: where it belongs to “a package deal”, the accounting treatment for each transaction shall be conducted as a transaction obtaining the right of control. Where it does not belong to “a package deal”, the book value of the ownership interest of the acquiree on the combination date in consolidated financial statements of the ultimate controlling party shall be the initial investment cost of long-term equity investments. The difference among the initial investment cost of long-term equity investments, the book value of long-term equity investment which has reached the amount before the combination and total book value of new payment consideration obtained under the acquisition date shall be adjusted as capital reserve. If the capital reserve is insufficient to set it off, the retained earnings shall be adjusted. The accounting treatment on the equity investments measured under equity method held before the combination date or the other comprehensive income recognized for the available-for-sale financial assets shall not be conducted.

For long-term equity investment obtained through business combination not involving enterprises under the common control, the cost of combination shall be deemed as the initial investment cost of long-term equity investments on the acquisition date, and the cost of combination is the aggregate of the fair values, include the assets given, liabilities incurred or assumed, and equity securities issued by the acquirer. If shares of the acquiree are obtained step by step through several transactions, which results in the combination of enterprises under the different control, it shall be treated respectively as per whether it belongs to “a package deal”: where it belongs to “a package deal”, the accounting treatment for each transaction shall be conducted as a transaction obtaining the right of control. Where it does not belong to “a package deal”, the sum of the carrying amount of equity investment of the acquiree held originally and additional investment costs shall be initial investment costs of long-term equity investment if the accounting method is changed as cost method. If equity held originally is accounted for using equity method, the accounting treatment shall not be conducted on the other comprehensive income related to it. If the equity investments held originally was available-for-sale financial assets, the difference between the fair value and the book value, and the accumulated fair value changes previously recognized in other comprehensive income are transferred to profit or loss for the current period.

The intermediary costs for the business combination including the expenses for audit, legal services and consultancy services and other relevant management costs by the merging party and the acquirer shall be recorded into current profit or loss.

Equity investments other than long-term equity investment from business combination are initially measured at cost. Such cost is respectively recognized at the purchase price in cash actually paid by the Company, fair value of equity securities issued by the Company, specified value in investment contracts or agreements, fair value or original book value of transferred assets in non-monetary asset exchange and transactions and fair value of the long-term equity investment itself based on different means of acquiring that long-term equity investment. Expenses, taxes and other necessary expenditures directly related to the acquisition of long-term equity investment are also included into investment cost. In case of being able to implement significant influence or common control to the invested entity due to additional investment but which does not constitute control, cost of long-term equity investment shall be the sum of fair value of original held equity investment recognized as per the Accounting Standards for Business Enterprises No.22 - Recognition and Measurement of Financial Instruments and newly increased investment cost.

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– F-48 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

2) Subsequent measurement and method of recognition of profit or loss Where an investing enterprise can exercise joint control (except those that constitutes the joint operators) or significant influence over the investee, a long-term equity investment shall be accounted for using the equity method. In addition, the Company uses the cost model in the financial statements to calculate long-term equity investment that can control the investee.

ķ Long-term equity investment income accounted by cost method

The long-term equity investment accounted by the cost model shall be measured at the initial investment cost. And the additional or recovered investments shall be used to adjust the cost of long-term equity investment. Except for the cash dividends or distributions declared and not yet distributed in the considerations paid to acquire the investment, the cash dividend or distributions declared by the investee that belong to the investee shall be recognized as the investment gains.

ĸ Long-term equity investment accounted by equity method

If the initial cost of a long-term equity investment, accounted by equity method, is more than attributable share of the fair value of the investee’s identifiable net assets for the investment in the investee, the initial cost of the long-term equity investment may not be adjusted; if the initial cost of a long-term equity investment is less than the attributable share of the fair value of the investee’s identifiable net assets for the investment in the investee, the difference shall be recorded into current profit or loss and the cost of the long-term equity investment shall be adjusted simultaneously.

When it is accounted by equity method, the investment gains and other comprehensive incomes shall be recognized respectively, and the book value of long-term equity investment shall be adjusted according to the net profit or loss and other comprehensive incomes realized by the investee, which shall be enjoyed or shared. The enjoyed part shall be accounted according to profits or cash dividends announced to be assigned by the investee with the corresponding decrease of the book value of long-term equity investment. For other changes of owners’ equity excluding net profit or loss of investee, other comprehensive income and profits distributed, the book value of long-term equity investments shall be adjusted and included into capital reserve. The Company shall, on the ground of the fair value of all identifiable assets of the investee when it obtains the investment, recognize the attributable share of the net profit or loss of the investee after it adjusts the net profits of the investee. If the accounting policies and accounting period adopted by the investee do not consistent with the investor, the financial statements of the investee shall be adjusted according to the accounting policies and accounting periods of the Company, and according to which the investment profits and other comprehensive incomes shall be recognized. If investment and sales of assets cannot be constructed as business in transactions between the Company, associates and joint ventures, the unrealized profit or loss of internal transaction shall be offset through calculating the part attributable to the Company based on sharing ratio so as to recognize the profit or loss of investment. Where the unrealized losses from the internal transactions between the Company and the invested entity belong to the impairment losses from the transferred assets, they shall not be written off. Where the assets contributed by the Company towards joint ventures or associates constitute business, and the investor acquires long-term equity investment but not the control right thereof, the

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– F-49 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail fair value of the contribution shall be the initial investment cost of the newly added long-term equity investment. The balance of book value between initial investment cost and the contribution shall be recorded into current profit or loss in full amount. If the assets sales, from the Company to joint ventures or associates, constitute business, the total difference between consideration achieved and book value of business shall be recorded into current profit or loss. Where the assets purchased by the Company from associates and joint ventures constitute business, accounting treatment shall be recognize the profit or loss in relation to the transaction in full amount.

The Company shall recognize the net losses of the investee until the book value of the long-term equity investment and other long-term equity which substantially forms the net investment made to the investee are reduced to zero. In addition, if the Company has the extra obligation towards its investee to undertake extra losses, the extra obligation shall be recognized as Provisions according to expected obligation and recorded into current profit or loss. If the investee realizes any net profits later, the Company shall, after the amount of its attributable share of profits offsets against its attributable share of the unrecognized losses, resume recognizing its attributable share of profits.

Ĺ Minority equity acquisition

When preparing consolidated financial statements, as for the difference between the long-term equity investment increased newly due to purchase minority equity and the net asset proportion continuously calculated from the purchase date (or combination date) by subsidiary based and enjoyed by the Company based on newly increasing shareholding ratio, capital reserve is adjusted. If the capital reserve is insufficient to write down, the retained earnings shall be adjusted.

ĺ Disposal of long-term equity investment

In the consolidated financial statements, the parent Company disposes the long-term equity investment of the subsidiary without losing control right. The difference between the disposing amount and the net asset of the subsidiary enjoyed correspondingly in disposing long-term equity investment is recorded into owner’s equity; If the parent Company loses its control right on the subsidiary due to the disposal of the long-term equity investment of the subsidiary, the relevant accounting policy as indicated in Note IV-5 (2) The method for preparation of consolidated financial statements shall be followed for handling.

For long-term equity investment measured by equity method and whose resting equity continues to be measured by equity method, during disposal, other comprehensive income originally recorded into the ownership equity shall be treated with corresponding percentage on the same basis of when the investee dispose related assets or liability directly. The ownership equity recognized from other ownership equity change arising not from net profits and losses, other comprehensive income and profits distribution shall be recorded into the current profits and losses under certain ratio.

For long-term equity investment measured by cost method and whose resting equity continues to be measured by equity method, other comprehensive income recognized by

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– F-50 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail measurement standards or financial instrument or equity method before gaining the control over the investee, shall be treated on the same basis of when the investee dispose related assets or liability directly, and shall be recorded into the current profits and losses based on certain ration. . The ownership equity recognized from other ownership equity change arising not from net profits and losses, other comprehensive income and profits distribution and measured by equity method shall be recorded into the current profits and losses under certain ratio.

In situation where the Company loses control over the investee because of partial equity disposal, when consolidating the financial statement, if the Company still jointly control or have significant influence over the investee with the resting equity, then such equity investment shall be measured by equity method, and adjust such equity assuming it was measured by equity method at initial recognition; if the Company no longer jointly control or have significant influence over the investee with the resting equity, then such equity investment shall be treated as financial instrument and by the relative measurement standards, the balance between the carrying value and fair value of the control losing date shall be recorded into the current profits and losses. For other comprehensive income recognized before the control losing date by equity method or recognized as financial instrument and measured by the relative standards shall be treated on the control losing date the same as how the investee dispose relative assets or liabilities directly , The ownership equity recognized from other ownership equity change arising not from net profits and losses, other comprehensive income and profits distribution and measured by equity method shall be recorded into the current profits and losses. Among them, for resting equity measured by equity method after disposal, other comprehensive income and other ownership equity recognized under certain ratio; for resting equity after disposal recognized as financial instrument and measured by relative standards, other comprehensive income and other ownership equity shall be fully transferred.

If the Company no longer has joint control or significant influence over the investee after disposal of part of the equity, than the resting equity after disposal shall be recognized as financial instrument and measured by relative standards, the balance between the fair value and carrying value on the date of losing joint control or significant influence shall be recorded into the current profits and losses. Other comprehensive income of the original equity investment measured by equity method shall be treated the same as how the investee dispose relative assets or liabilities directly during de-recognition with equity method. The ownership equity recognized from other ownership equity change arising not from net profits and losses, other comprehensive income and profits distribution shall be recorded fully into the current profits and losses at recognition with equity method.

When the Company loses control over the subsidy through multiple transaction of subsidy equity disposal, if such transaction qualifies package deal, each transaction shall be treated as one transaction of subsidy equity disposal and losing control over subsidy. The balance between the disposal price of each transaction before losing control and the carrying value of the long-term equity investment of the equity disposed shall be first recognized as other comprehensive income, and transferred to the current profits and losses when losing control.

3) Confirmation criteria and calculation methods of impairment reserve for long-term equity investment

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– F-51 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

The confirmation criteria and calculation methods of impairment reserve for long-term equity investment are detailed in Note IV-22, Impairment Loss of Non-Current and Non-Financial Assets.

15.Investment Property

Investment property refers to property held for the purpose of gaining rent or capital appreciation. It includes tenured rented, tenure held for the purpose of transfer after appreciation, and building rented.

The Company adopts cost model for subsequent measurement of investment properties.

Investment properties is initially measured at cost. Subsequent expenditures related to investment properties are included in the cost of investment properties if the economic benefits related to the asset are likely to flow in and the cost can be reliably measured. Other follow-up expenditures shall be included in current profits and losses when they occur.

The Company adopts cost model for subsequent measurement of investment properties and depreciation or amortization in accordance with the policies which consistent with the building or land use rights.

The impairment test and provision method of investment properties are detailed in Note IV-22 Impairment Loss of Non-Current and Non-Financial Assets.

When the investment properties is disposed of, or permanently withdrawn from use, and it is not expected to obtain economic benefits from its disposal, the confirmation of the investment properties shall be terminated. The disposal income from the sale, transfer, scrapping or destruction of investment properties shall be recorded into the current profit and loss after deducting its book value and relevant taxes and fees.

16.Fixed Assets

1) Recognition criteria of fixed assets Fixed assets refer to the tangible assets that simultaneously possess the features as follows: they are held for the sake of producing commodities, rendering labor service, renting or business management; and their useful life is in excess of one fiscal year. The initial measurement of a fixed asset shall be made at its cost while considering the effect of discard expenses.

2) The classification, pricing, and depreciation of the fixed assets Fixed assets shall be depreciated within their useful life from the next month when they reach their intended usable state. The service life, estimated net residual value, annual depreciation rate and depreciation methods of various types of fixed assets are as follows:

Net residual Depreciation rate Depreciation Item Years rate (%) (%) method

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– F-52 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Net residual Depreciation rate Depreciation Item Years rate (%) (%) method

Buildings and straight-line 10-45 5 2.11-9.50 structures method

Machinery and straight-line 8-22 5 4.32-11.88 equipment method

straight-line Transport 9 5 10.56 method

straight-line Electronic equipment 4-7 5 13.57-23.75 method

Estimated net residual is to predict that the fixed assets’ estimate useful life at the end of service life of the desired state, the amount the Company received from such assets after deducting estimated disposal fee.

3) Test of impairment loss and method of provision for depreciation Test of impairment loss and method of provision for depreciation see Note IV.-22 Impairment Loss of Non-Current and Non-Financial Assets.

4) The recognition and pricing for fixed assets rented by financial leasing Financial leasing is leasing of all risk ad remuneration related to the assets, whose ownership can be transferred or not as well ultimately. The provision of depreciation of fixed assets rented by financial leasing shall be the same as that of self-owned fixed assets. For assets that can be reasonably obtain the ownership when the lease is due, the provision of depreciation shall be performed within the useful life of such assets; for assets that cannot be reasonably obtain the ownership when the lease is due, the provision of deprecation shall be based on the shorter one among the leasing period and the useful life of such assets.

5) Others For the subsequent expenditure related to the fixed assets, if the related economic benefit shall goes to the Company and can be reliably measured, then it shall be recognized as fixed assets cost, and the carrying value of the part replaced shall be derecognized. Besides this, other subsequent expenditure shall be recorded into the current profits and losses.

When the fixed assets is at disposal or cannot produce economic benefit based on estimate, and then the fixed assets shall be derecognized. The disposal income of selling or transfer scraped or damaged asset after deducting the balance between its carrying value and related taxes shall be recorded into the current profits and losses.

The Company shall re-evaluate the useful life. estimated net residual value and depreciation method at least by the end of the year. Changes occurred shall be recognized as change in accounting estimates.

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– F-53 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

17.Construction in Progress

The construction in progress shall be recognized based on the actual constructional expenditure, including each constructional expenditure occurred during the construction period, the loans of capitalization before the construction reaches service state, and etc. When the construction in progress reaches service state, it is converted into fixed assets.

The test method and provision method of impairment loss of the construction in progress see Note. IV-22 Impairment Loss of Non-Current and Non-Financial Assets.

18.Borrowing Costs

Borrowing costs include interest, amortization of discounts or premiums related to borrowings, ancillary costs incurred in connection with the arrangement of borrowings, and exchange differences arising from foreign currency borrowings. Where the borrowing costs incurred to an enterprise can be directly attributable to the acquisition and construction or production of assets eligible for capitalization, they shall be capitalized; it should be stop to be capitalized if the construction or production of assets meet the capitalization conditions which available to use or sale. Other borrowing costs should be recognized as expense when occurred.

The amount of interest of specific-purpose borrowings to be capitalized shall be the actual interest expense incurred on that borrowing for the period less any bank interest earned from depositing the borrowed funds before being used on the asset or any investment income on the temporary investment of those funds. An enterprise shall determine the amount of interest to be capitalized on general-purpose borrowings by applying a capitalization rate to the weighted average of the excess amounts of cumulative expenditures on the asset over and above the amounts of specific-purpose borrowings. The capitalization rate shall be the weighted average of the interest rates applicable to the general-purpose borrowings.

During the period of capitalization, the exchange differences on foreign currency specific-purpose borrowings shall be all capitalized; the exchange differences on foreign currency general-purposes borrowings shall be recorded into current profit or loss.

Assets qualified for casualization are assets (fixed assets, investment property, inventories, etc.) that necessarily take a substantial period of time for acquisition, construction or production to get ready for their intended use or sale.

Capitalization of borrowing costs shall be suspended during periods in which the acquisition, construction or production of a qualifying asset is interrupted abnormally, when the interruption is for a continuous period of more than 3 months until the acquisition, construction or production is resumed.

19.Biological Assets

1) Consumable biological assets Consumable biological assets refer to biological assets held for sale or harvested as agricultural products in the future, including growing field crops, vegetables, timber forests,

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– F-54 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail and livestock for sale. Consumable biological assets are initially measured at cost. The cost of a consumable biological asset cultivated, constructed, propagated or farmed on its own is the necessary expenditure directly attributable to the asset before the harvest, including capitalization conditional borrowing costs. Subsequent expenditures such as management and maintenance expenses for consumable biological assets after harvesting are included in the current profit and loss.

When the expendable biological assets are harvested or sold, the weighted average method is used to carry forward the cost according to the book value.

On the balance sheet date, expendable biological assets are measured at the lower of cost and net realizable value, and the depreciation reserves of expendable biological assets are calculated in accordance with the method of confirming the inventory depreciation reserves.If the factors affecting the impairment have disappeared, the amount of the writedown shall be restored, and shall be carried back within the amount of the provision for depreciation which has been calculated and withdrawn, and the amount of the writedown shall be recorded into the current profit and loss.

If the consumable biological asset changes its use, as a productive biological asset, the cost after changing the use is determined by the book value at the time of changing the use. If the consumable biological assets change their use, as a public welfare biological asset, it is considered to be depreciated according to the “Accounting Standards for Business Enterprises No. 8 – Impairment of Assets”, and the impairment provision is made at the time of impairment, and then The book value after the impairment value is prepared is determined.

2) Bearer biological assets Bearer biological assets refer to biological assets held for the purpose of producing agricultural products, providing labor services or renting, including economic forests, firewood forests, livestock production and working animals.

Bearer biological assets are initially measured at cost. The cost of a productive biological asset created or propagated by itself is the necessary expenditure that can be directly attributed to the asset before the asset reaches its intended production and operation purpose, including the borrowing cost that meets the capitalization conditions.

The Company reviews the useful life, expected net residual value and depreciation method of bearer biological assets at the end of the year, and treat any changes as accounting estimation change.

The difference between the disposal income of the sale, loss, death or damage of public welfare biological assets after deducting the book value and related taxes and expenses is included in the current profit and loss.

The Company reexamines the consumptive biological assets and the bearer biological assets at the balance sheet date; If the assets show signs of impairment, then recoverable amount is to be estimated. The estimated recoverable amount of an asset is based on a single asset. If it is difficult to estimate the recoverable amount of a single asset, the recoverable amount of an asset group is determined on the basis of the asset group to which the asset belongs. If the net realizable value of consumptive biological assets or the productive biological asset's recoverable amount lower than its book value, according to the

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– F-55 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail difference between the recoverable amount and book value, the depreciation of biological assets write-down or impairment, and recorded in the current profit and loss.

Once the impairment loss is recognized, it will not be carried back in the subsequent accounting period.

If a productive biological asset is converted into a consumable biological asset, the cost after the conversion shall be measured as the book value at the time of conversion; If the bearer biological assets change their purpose as the public welfare biological assets, the accounting standards for shall be followed to consider whether the impairment occurs. When the impairment occurs, the impairment provision shall be calculated first, and then the book value shall be determined

20.Intangible Assets

1) The recognition and pricing method for intangible assets An intangible asset is the identifiable non-monetary assets possessed or controlled by enterprises which have no physical shape.

The initial recognition intangible assets shall be based on costs. Costs related to intangible assets, if the related economic benefits shall be going to the Company and can be reliably measured, then the costs shall be recognized as intangible assets costs. Apart from this, other costs shall be counted into the current profits and losses.

Land-use right acquired is normally recognized as an intangible asset. For self-developed plants and other buildings, related land use right expenditure and building construction costs are respectively measured as intangible assets and fixed assets. For buildings purchased otherwise, the related prices shall be allocated between the tenure and the building. Those that are hard to be allocated shall be recognized as fixed assets.

2) Amortization of intangible assets For intangible assets with limited service life, since the date of available for use, the Company shall amortize the original value minus the residual value and provision of impairment loss based on straight-line method within its service life, and shall not amortize intangible assets with uncertain service life.

The Company shall reevaluate the intangible assets with limited service life and its amortization method at the year end. Any changes occurred shall be treated as accounting estimate change. Moreover, the Company shall reevaluate intangible assets with uncertain service life. If there is proof that the limit of the economic benefits that such intangible assets brings to the enterprise is foreseeable, then its service life shall be estimated and it shall be amortized as intangible assets with limited service life.

3) Research and development costs The expenditure of internal research and development projects is divided into research phase expenditure and development stage expenditure. Among them, the research is to acquire and understand new scientific or technical knowledge and ingenious plan of investigation, the best in acquiring knowledge and activities, research or other knowledge of applied research, evaluation and final selection, materials, equipment, products, processes,

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– F-56 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail systems or services research of alternatives, new or improved materials, devices, products, processes, systems or services may substitute for the preparation, design, evaluation and final selection, etc.; Development refers to the commercial production or use, apply findings or other knowledge to a plan or design, in order to produce something new or substantive improved materials, devices, products, etc., such as production or use before the prototype and model of the design, construction and test, have no commercial production economies of scale of the trial production facilities design, construction and operation, etc.

Costs at research level shall be recorded into current profit and loss when occurred.

ķ It is feasible technically to finish intangible assets for use or sale;

ĸ It is intended to finish and use or sell the intangible assets;

Ĺ The usefulness of methods for intangible assets to generate economic benefits shall be proved, including being able to prove that there is a potential market for the products manufactured by applying the intangible assets or there is a potential market for the intangible assets itself or the intangible assets will be used internally;

ĺ It is able to finish the development of the intangible assets, and able to use or sell the intangible assets, with the support of sufficient technologies, financial resources and other resources; and

Ļ The development expenditures of the intangible assets can be reliably measured.

Costs which cannot be identified whether occur at the research level or development level shall be recorded fully into the current profit and loss.

4) Impairment test method for intangible assets and accrual method for impairment provision For details see Note IV.-22 Impairment Loss of Non-Current and Non-Financial Assets.

21.Long-term Prepaid Expenses

The long-term prepaid expenses of the Company are expenses for current and future periods that have been disbursed but will be amortized over one year. Long-term pending expenses are amortized by the straight-line method during the expected benefit period.

22.Impairment Loss of Non-Current and Non-Financial Assets

For fixed assets, construction in progress, intangible assets with limited service life, investment property measured by costs, long-term equity investment on the subsidiary, jointly owned or jointly operated enterprises, goodwill and other non-current and non-financial assets, the Company shall determine on the balance sheet date if there is signs of impairment loss. If such sign exists, then the Company shall estimates the amounts

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– F-57 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail retrievable, and perform test of impairment loss. Goodwill, intangible assets with uncertain service life, and intangible assets that haven’t reached the usable state yet shall be performed test of impairment loss, regardless of the existence of signs of impairment loss.

According to the test results, if the asset’s retrievable amount is lower than its carrying cost, then provision of impairment loss shall be made based on the balance and be recorded into impairment loss. The retrievable amount shall be higher one among the asset’s net value of the fair value deducted by disposal fee and the current value of the future cash flow of the asset. The fair value of the asset shall be determined by the contractual price of fair trade; for asset with no selling contract and is in the active market, its fair value can be estimated on the basis of best information receivable. Disposal fee includes legal service, tax, handling fee related to the disposal of the asset and any direct costs for the purpose of making the asset available for sale. The current value of the asset’s future cash flow level shall be determined based on the further cash flow level estimate during its consecutive use and final disposal, and the discounting amount shall be determined based on a proper discounting rate. For provision of assets impairment loss that is measured and recognized as individual asset, if the retrievable amount of the individual asset is hard to be estimated, than the retrievable amount shall be determined based on the assets combination that such asset belongs to. Assets combination is the minimum combination that can generate independent cash flow.

For goodwill individually listed in the financial statement, when performing test of impairment loss, its carrying value shall be amortized to assets combination that is going to benefit from the cooperative of business combination as estimated. According to the test result, if the retrievable amount of the assets combination including the amortized goodwill is lower than the carrying value, than the corresponding impairment loss is recognized. The amount of impairment loss shall be first deducted by the carrying value of the goodwill amortized to such assets combination, and then be deducted by the carrying value of all the other assets based on the percentage of the carrying value of each of the other assets besides goodwill in the combination.

The impairment loss of assets stated above, once recognized, shall not be returned in the periods afterwards.

23.Employee Compensation

Employee compensation of the Company mainly includes short-term employee remuneration, post-services benefits, termination benefits and other long-term employee benefits. Among them:

Post-service benefits mainly include basic endowment insurance, unemployment insurance and annuities. Post-service benefits plans include a defined contribution plan and

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– F-58 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail a defined benefit pension plan. When using the defined contribution plan, the corresponding payable amount shall be included in the relevant asset cost or current income statement when incurred.

During the circumstances of the cancellation of the labor relationship with the employee before the expiration of the labor contract or offered compensation for encouraging the employees to voluntarily accept the layoffs, when the Company cannot unilaterally withdraw the dismissal benefit provided by the plan for canceling the labor relationship or the proposed layoffs, after the Company confirms the costs related to the reorganization involving the dismissal welfare, the employee compensation liability arising from dismiss welfare is recognized and shall be recorded in the current income statement. However, if the dismiss welfare is not fully paid within 12 months after the end of the annual report period, it shall be treated according to other long-term employee compensation.

Employee internal retirement plans are handled on the same principle as the above mentioned termination benefits. The Company plans to pay the retired staff salaries and social insurance premiums during the period from the moment employee cease service until the normal retirement date. The salaries and social insurance premiums shall be included in the current income statement (dismiss welfare) when meeting the provisions confirmation conditions.

The accounting shall be based on the defined contribution plan if meets the standards of the plan, otherwise shall be proceeding in accordance with the defined benefit plan.

24.Revenue

1) Revenue from sales of goods Revenue from sales of goods is recognized when significant risks and rewards attached to the ownership of the goods sold are passed to the buyer, when neither continual involvement in the rights normally associated with the ownership of the goods sold nor effective control over the goods controls are retained, when revenue arising from the goods sold is reliably measurable, when inflow of future economic benefits is probable, and when cost incurred or to be incurred associated with the goods sold is reliably measurable.

2) Revenue from the rendering of services Revenue arising from rendering of services is recognized on the balance date using the percentage of completion method when the outcome of the services rendered can be reliably estimated. The percentage of completion of the services rendered is calculated by dividing the cost to date by the budgeted total cost.

The outcome of a transaction can be estimated reliably when all the following conditions are satisfied: ķthe amount of revenue can be measured reliably; ĸit is probable that the economic benefits associated with the transaction will flow to the Company; Ĺthe stage of completion of the transaction can be measured reliably; ĺthe costs incurred for the transaction and the costs to complete the transaction can be measured reliably.

When the outcome of the services rendered cannot be reliably estimate, revenue is recognized as cost reimbursement received or to be received, if any, and cost incurred is recognized in profit or loss for the period in which the cost is incurred. No revenue is

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– F-59 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail recognized if cost reimbursement is not probable.

3) Revenue from the construction contracts Revenue is recognized on an accrual basis in accordance with the relevant contract or agreement.

25.Construction Contract

Where the results of a construction contract can be reliably estimated, contract revenues and contract costs are recognized on the balance sheet date in accordance with the percentage completion method. The contract completion schedule shall be determined according to the proportion of the contract workload that has been completed to the estimated total contract workload.

The result of the construction contract can be reliably estimated to mean that: ķthe total revenue of the contract can be reliably measured; ĸthe economic benefits related to the contract are likely to flow into the enterprise; Ĺthe actual contract costs can be clearly distinguished and reliably measured; ĺThe completion schedule and the costs that still need to be incurred to complete the contract can be reliably determined.

If the result of the construction contract cannot be reliably estimated, but the contract cost can be recovered, the contract revenue is recognized according to the actual contract cost that can be recovered, and the contract cost is recognized as the contract expense in the current period in which it occurs; the contract cost cannot be recovered, and it occurs. It is immediately recognized as a contract fee and the contract revenue is not confirmed. If the uncertainties that make the results of the construction contract cannot be reliably estimated cease to exist, the income and expenses related to the construction contract are determined according to the percentage of completion method.

If the estimated total cost of the contract exceeds the total contract revenue, the estimated loss is recognized as the current expense.

The accumulated costs incurred in the construction contract and the accumulated recognized gross profit (loss) and the settled price are shown in the balance sheet as net offset. The accumulated costs incurred in the construction contract and the sum of the accumulated recognized gross profit (loss) and the excess of the settled price are shown as inventory; the part of the settled price in the construction contract that exceeds the sum of the accumulated costs incurred and the accumulated recognized gross profit (loss) is shown as the advance receipt.

26.Government Grants

Government grants are transfer of monetary assets and non-monetary assets from the government to the Company at no consideration, excluding the capital invested by the government as equity owner. Government grant can be classified as grant related to the assets and grants related to the income. The Company recognizes the government subsidies obtained for the purpose of constructing long-term assets or formalin the assets by other methods as government grant related to assets, and other government grants are recognized as government grants related to income. If the government documents do not

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– F-60 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail clearly specify the recipients, the subsidy will be divided into government grants related to income and government grants related to assets in the following ways: (1) If government documents specify that the funds must be used for specific project, according to the project’s budget, the ratio of capitalized amount to the expensed amount should be calculated. The ratio needs to be reviewed on each balance sheet date and adjusted if necessary; (2) If the government documents only have general expression, or doesn’t specify the particular projects, the government grant should be recognized as a government grant related to income.

If a government grant is in the form of a transfer of a monetary asset, it is measured at the amount received or receivable. If a government grant is in the form of a non-monetary asset, it is measured at fair value. If the fair value cannot be reliably determined, it is measured at a nominal amount. A government grant measured at a nominal amount is recognized immediately in profit or loss for the period.

The Company will recognize and measure the government grants according to the actual amount received. However, at the end of the period, if there is conclusive evidence proving that the Company can meet the criteria of the financial support policy, and it is expected to receive financial support funds, the government grants should be measured at the amount of the funds receivable. The government subsidies measured at the amount of the funds receivable shall meet all the following conditions: (1) The amount of the funds receivables has been approved by the government department, or could be reasonably estimated according to the relevant provisions of the officially issued financial fund management measures, and It is estimated that there is no major uncertainty in the amount; (2) It is based on the financial support projects and its financial fund management measures officially publicly released by the local financial department and according to “The Regulations On The Openness Of Government Information” The measures should be inclusive (any enterprise that meets the specified conditions can apply) , rather than specifically for a specific enterprise; (3) the relevant government grant approvals has clearly promised the payment period, and the payment of the government grant is guaranteed by the corresponding government budget. Hence, it can be reasonably confirmed that the subsidies can be received within the prescribed time limit; (4) Other relevant conditions (if any) that should be met according to the specific circumstances of the Company and the government grant.

A government grant related to an asset is recognized as deferred income, and evenly amortized to profit or loss over the useful life of the related asset in a reasonable and systematic manner. For a government grant related to income, if the grant is a compensation for related expenses or losses to be incurred in subsequent period, the grant is recognized as deferred income, and recognized in profit or loss over the periods in which the related costs are recognized. If the grant is a compensation for related expenses or losses already incurred, the grant is recognized immediately in profit or loss for the period.

The government grants related to the daily activities of the Company are included in other income or offset the related costs according to the essence of the economic business. The government grants unrelated to the daily activities are included in the non-operating

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– F-61 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail income and expenses.

The government subsidies related to the daily activities of the Company shall be included in other benefits or the related costs shall be written down according to the essence of economic business; Government subsidies unrelated to daily activities shall be included in the non-operating income and expenditure.

When government subsidy needs to be returned, if the related deferred income balance exists, the book value of related deferred income shall be offset and the excess part shall be included in the current profit or loss; if it is other cases, it shall be directly carried to the current profits and losses. The Company relocated for the public interests of overall urban planning, reservoir construction, shantytown transformation and subsidence area management, and received the relocation compensation directly allocated by the government from the financial budget as a special payable. Among them, if the Company compensates for the loss of fixed assets and intangible assets, related expenditure, shutdown losses and newly built assets during the process of relocation and reconstruction, the special payables shall be transferred to the deferred income, and the relocation compensation shall be deducted and transferred according to the nature of the special payables, according to the government subsidies related to assets and the government subsidies related to income. If there is a balance after the amount of deferred income is added, it shall be recognized as capital reserve.

27.Deferred Tax Assets and Deferred Tax Liabilities

As for the temporary difference arising from the difference between the book value of some asset or liability and its tax base and the difference between the book value of an item that has not been recognized as an asset or liability with its tax base determined in light of the tax law and its tax base, it is allowed to recognize it as the deferred income tax assets or the deferred income tax liabilities by balance sheet liability method.

For temporary differences associated with the initial recognition of goodwill and the initial recognition of an asset or liability arising from a transaction (not a business combination) that affects neither the accounting profit nor taxable profits (or deductible losses) at the time of transaction, no deferred tax asset or liability is recognized. For taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures, no deferred income tax liability related is recognized except where the Company is able to control the timing of reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. All deferred income tax liabilities arising from taxable temporary differences except the ones mentioned above are recognized.

Related to the initial recognition of the assets or liabilities arising from the following transactions that is not business combination and the accounting profits will not be affected, nor will the taxable amount (or the deductible loss) be affected at the time of transaction, the deductible temporary differences are not allowed to recognize relevant deferred tax assets. As for the deductible temporary differences related to the investments of subsidiary, associates and joint enterprises, corresponding deferred tax asset shall not be recognized if the temporary differences are unlikely to be reversed in the excepted future and it is likely to acquire any amount of taxable income tax that may be used for making up the deductible temporary differences. Except the above-mentioned cases, the Company shall recognize

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– F-62 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail the deferred tax liabilities arising from a deductible temporary difference to the extent of the amount of the taxable income which it is most likely to obtain, and which can be deducted from the deductible temporary difference.

For the deductible losses and tax credit that can be carried forward, deferred tax assets for deductible temporary differences are recognized to the extent that it is probable that taxable profits will be available against which the deductible temporary differences can be utilized.

At the balance sheet date, deferred tax assets and liabilities are measured at the tax rates according to tax law, that are expected to apply in the period in which the asset is realized or the liability is settled.

At the balance sheet date, the Company reviews the carrying amount of deferred tax assets. If it is no longer probable that sufficient taxable profit will be available in future periods to allow the benefits of the deferred tax assets to be used, the Company reduces the carrying amount of deferred tax assets. The amount of such reduction is reversed when it becomes probable that sufficient taxable profit will be available.

28.Leases

A finance lease is a lease that transfers in substance all the risks and rewards incident to ownership of an asset. Title may or may not eventually be transferred. An operating lease is a lease other than a finance lease.

If the leasing business meets one or more of the following criteria, it is usually a financial lease: ķat the expiration of the lease term, the ownership of the leased asset is transferred to the lessee. ĸThe lessee has the option to purchase the leased asset. The purchase price entered into is expected to be much lower than the fair value of the leased asset when the option is exercised. Therefore, it can be reasonably determined at the lease start date that the lessee will exercise this option. ĹEven if the ownership of the asset is not transferred, the lease term accounts for the majority of the useful life of the leased asset. ĺThe present value of the minimum lease payment of the lessee on the lease start date is almost equivalent to the fair value of the leased asset on the lease start date; The present value of the minimum lease receivable of the lessor on the lease start date is almost equivalent to the leasehold asset fair on the lease start date. ĻLease assets are of a special nature. If no major modifications are made, only the tenant can use them.

1) Accounting treatments of operating leases as lessee The rental expenses of operating leases are recognized in the relevant asset costs or current profit or loss on the straight-line method in each period of the lease term. The initial direct costs are recognized in the current profit and loss. Contingent rentals payments are recognized in profit or loss when incurred.

2) Accounting treatments of operating leases as lessor Rental income from operating leases is recognized in profit or loss on the straight-line basis. The initial direct expenses of a significant amount are capitalized at the time of occurrence, and are recognized in the current profit and loss on the same basis as the reorganization of rental income. Contingent rentals are recognized in profit or loss when

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– F-63 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail incurred.

3) Accounting treatments of finance leases as lessee On the commencement date of the lease term, the lower of the fair value of the leased asset and the present value of the minimum lease payment is taken as the book value of the leased asset, and the minimum lease payment is taken as the book value of the long-term payable. The difference is treated as unrecognized financing charges. In addition, the initial direct costs attributable to the leased item that occur during the lease negotiation and the signing of the lease contract are also included in the value of the leased asset. The balance of the minimum lease payments after deducting the unrecognized financing expenses is presented as long-term liabilities and long-term liabilities mature within one year.

The unrecognized financing expenses are calculated by the effective interest method during the lease, and are recognized as financing expenses in the current period. Contingent rentals are recognized in profit or loss when incurred.

4) Accounting treatments of finance leases as lessor A lessor shall, on the commencement date of the lease term, recognize the sum of the minimum lease receipts on the commencement date and the initial direct costs as the book value in an account of the finance lease values receivable, and record the unguaranteed residual value at the same time. The balance between the sums of the minimum lease receipts, the initial direct costs and the unguaranteed residual value, and the sum of their present values shall be recognized as unrealized financing income. The balance of deducting finance lease receivable with unrealized financing profit is presented in long-term liabilities and long-term liabilities due within one year, respectively.

Unrealized financing income is calculated by the effective interest during the lease term, and is recognized as financing income. Contingent rentals are recognized in profit or loss when incurred.

29.Fair Value Measurement

Fair value is the price that a market participant must pay to receive or transfer a liability in an orderly transaction that occurs on the measurement date. Whether the fair value is observable or estimated using valuation techniques, the fair value measured 1)and/orInitial disclosed measurement in these financial statements is determined on this basis. According to the nature of the transaction and the characteristics of the related assets or liabilities, the Company determines whether the fair value of the initial confirmation is equal to the transaction price. The Company considers that the transaction price is not equal to the fair value in the following circumstances:

ķThe transaction takes place between the related parties, and there is no evidence that the related party transaction is carried out under market conditions.

ĸTransactions are forced.

ĹThe unit of measurement represented by the transaction price is different from that of

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– F-64 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail the relevant assets or liabilities measured at fair value.

ĺ The market for trading is not the main market (or the most favorable market) for related assets or liabilities.

Other relevant accounting standards require or permit the Company to make initial measurement of relevant assets or liabilities at fair value, and the transaction price is not equal to the fair value. The difference between the transaction price and fair value shall be handled in accordance with the requirements of other relevant accounting standards. If other relevant accounting standards do not clearly stipulate this, the Company shall include the difference in current profits and losses.

2) Valuation technique

When the Company measures the relevant assets or liabilities at fair value, it uses valuation techniques that are applicable in the current circumstances and that are sufficient to support the use of data and other information. The valuation techniques used mainly include market law, income method and cost method. The Company measures the fair value using one or more of the valuation techniques, and fully considers the reasonableness of each valuation result, and selects the amount that best represents the fair value in the current situation as the fair value.

Fair value measurement is based on the observable of the input values and the importance of such inputs to the overall fair value measurement, which are divided into three levels:

The first level input value is an unadjusted quote for the same asset or liability that can be obtained on the measurement date in an active market. An active market is a market in which the volume of transactions or transactions of related assets or liabilities is sufficient to continue to provide pricing information. The second level inputķ value is an input value that is directly or indirectly observable for related assets or liabilities other ĸ than the first level input value. The second level of input values includes: quotes for Ĺ similar assets or liabilities in an active market. Quotations for identical or similar assets or liabilities are in a non-active market. Observable inputs other than quotes, ĺ including interest rates that are observable during the normal quote interval, yield curves, implied volatility, credit spreads, and etc. Market verified input values. The third level input value is the unobservable input value. The Company only uses the third level if there is no market activity in the relevant assets or liabilities or the market activity rarely causes the relevant observable input value to be unavailable or not feasible input value.

When the Company measures assets and liabilities at fair value, it first uses the first level input value, secondly uses the second level input value, and finally uses the third level3) inputAccounting value. treatment The Company measures the related assets or liabilities at fair value, whether the changes in fair value should be accounted for in the current profit or loss or other comprehensive income, and other relevant accounting standards that require or allow the Company to measure or disclose using fair value, see this other relevant parts of Note IV.

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– F-65 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

30.Cost of Safety Production

According to the Regulations of the Ministry of Finance and the State Administration of Safety Supervision and Administration on the Extraction and Use of Safety Production Expenses in Enterprises (CQ [2012] No.16) formulated jointly by the Ministry of Finance and the State Administration of Safety Supervision and Administration, safety expenses are extracted, which are specially used to improve and improve the conditions of safety production in enterprises.

According to the relevant provisions of Interpretation No. 3 of the Accounting Standards for Enterprises (CK[2009]No. 8) of the Ministry of Finance, the production safety fees drawn by the Company shall be included in the cost of the relevant products or current profits and losses, as well as in the subject of "special reserve".

When the Company uses the extracted safety production cost, which belongs to expenditure, it directly deducts the special reserve; if it uses the extracted safety production cost to form fixed assets, it shall collect the expenditure incurred through the subject of "under-construction project", and confirm it as fixed assets when the safety project is completed and achieves its intended usable state; at the same time, it shall deduct the special reserve according to the cost of forming the fixed assets. Prepare and confirm the accumulated depreciation of the same amount. The fixed assets are no longer depreciated in the later period. V. Explanations for Changes in Accounting Policies, Accounting Estimate, and Correction of Error

1. Changes in Accounting Policies

1) Implement the accounting policy changes caused by the consolidated financial statement format issued by the ministry of finance The Ministry of Finance issued the notice on the revision and issuance of the format of consolidated financial statements (2019 version) in September 2019 (No. 16 [2019]) (hereinafter referred to as the "format of consolidated financial statements"). The enterprises that implement the accounting standards for business enterprises shall prepare the consolidated financial statements in accordance with the accounting standards for business enterprises and the requirements of the notice.

Implement the revised format of consolidated financial statements: the influence of according to the requirement of the consolidated financial statements format, the Company will "notes receivable and accounts receivable" were shown as "receivables" and "accounts receivable" two projects, remove the "notes payable and accounts payable" were shown as "notes payable" and "accounts payable" two projects.The Company has retroactively adjusted the statement of the comparison period, and the accounting policy change has no impact on the merger and the parent Company's net profit and shareholders' equity.

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– F-66 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

2) The Company's subsidiary, Lanzhou Jinchuan New Materials technology Co., Ltd. (hereinafter referred to as "Jinchuan New Materials Company") , changes in accounting policies caused by the implementation of the new financial instrument standards The Ministry of Finance issued on March 31, 2017, respectively by the accounting standards for enterprises no. 22 - recognition and measurement financial instruments (2017 revision) "(finance and accounting) [2017] No. 7, the accounting standards for enterprises no. 23 - transfer of financial assets (revised in 2017) " (finance and accounting) [2017] No. 8, the accounting standards for enterprises No. 2 - hedging accounting (2017 revision) "(finance and accounting) [2017] 9, On May 2, 2017, the accounting standard for business enterprises No. 37 - presentation of financial instruments (revised in 2017) (No. 14 of [2017]) (collectively referred to as the "new financial instrument standard") was issued, requiring domestic listed enterprises to implement the new financial instrument standard from January 1, 2019. Jinchuan New Materials Co., Ltd. began to implement the aforementioned new financial instrument guidelines on January 1, 2019.

Jinchuan New Materials' implementation of the new financial instrument guidelines has no impact on the Company's retained earnings or other consolidated earnings as of January 1, 2019.

2. Changes in Accounting Estimates

The Company has no accounting estimate changes that should be disclosed in current year.

3. Significant Prior Errors Correction

The Company has no accounting errors to be disclosed in current year. VI. Taxes

1. Major Taxes and Tax Rates

Type of tax Basis of tax Tax rate

The output tax shall be calculated on the basis of the taxable income, and the VAT shall be calculated on the basis of the Value Added Tax 13%. 9%. 6%. 3% difference after deducting the input tax allowed to be deducted in the current period.

City construction tax According to the actual payment of turnover tax. 5%. 7%

Educational surcharge According to the actual payment of turnover tax. 3%

Local education surcharge According to the actual payment of turnover tax. 2%

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– F-67 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Type of tax Basis of tax Tax rate

Resources tax According to the concentrate nickel sales revenue, 50% reduction. 4%

30%. 28%. 25%. Enterprise Income tax Payment shall be made according to the taxable income amount. 20%. 16.5%. 15%

The Company's VAT taxable sales or imports of goods, the original 16%/10% tax rate.As of April 1, 2019, the applicable tax rate has been adjusted to 13/9%, according to the announcement on policies related to deepening VAT reform (notice of the general administration of customs of the state administration of taxation of the ministry of finance no. 39 of 2019) .

Income tax rates of enterprises with different taxpayers

Taxpayer name income Tax rate

Nickel and Cobalt New Material Innovation Center Co., Ltd. 15%

Jinchuan Group Copper Co., Ltd. 15%

Jinchuan Niedu Industrial Co., Ltd. 25%

Jinchuan Group Nickel Salt Co., Ltd. 25%

Jinchuan Group Powder Material Co., Ltd. 25%

Jinchuan Wire & Cable Factory 25%

Jinchuan Group Precision Copper Material Co., Ltd. 25%

Gansu Jinchang Jinchuan Group Engineering Construction Co., Ltd. 15%

Gansu Jinchuan Chemical New Materials Co., Ltd. 25%

Jinchuan Group Automation Engineering Co., Ltd. 15%

Jinchang Credit Engineering Construction Supervision Co., Ltd. 20%

Jinchang Jianheng Engineering Quality Inspection Co., Ltd. 25%

Jinchuan Nickel and Cobalt Research and Design Institute Co., Ltd. 25%

Gansu Jinchuan International Economic and Technical Cooperation Co., Ltd. 25%

Jinchang Jujia Ecological Agriculture Co., Ltd. 15%

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– F-68 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Taxpayer name income Tax rate

Jinchuan Group Nickel Alloy Co., Ltd. 25%

Gansu Jinchuan Energy Saving Technology Co., Ltd. 25%

Lanzhou Jinchuan Technology Park 25%

Gansu Jinyu Material Co., Ltd. 15%

Jinchuan Group Finance Co., Ltd. 15%

Gansu Jinhui Mining Co., Ltd. 25%

Gansu Jinhe Mining Co., Ltd. 25%

Tibet Jinchuan Mining Investment Co., Ltd. 15%

Tibet Xinniu Mineral Development Co., Ltd. 15%

China National Nonferrous Industry Nan Hua Corp. 25%

Beijing Jinchuan Hotel 10%

China-Hong Kong Jinbang (Beijing) International Cultural Consulting Co., Ltd. 20%

Shenyang Jinhan Materials Co., Ltd. 25%

Jinchuan Group International Trading Co., Ltd. 25%

Shanghai Niedu Restaurant 20%

Jinke Nonferrous Metal Co., Ltd. 25%

Guangdong jinhui metal Co., Ltd. 25%

Guangxi Jinchuan Nonferrous Metals Co., Ltd. 15%

Beihai Real Estate Development Co., Ltd. 25%

Jinchuan Group (Hongkong) Resources Holdings Limited 16.5%

China Gold Nickel Industry Co., Ltd. 30%

South Africa Resources Co., Ltd. 28%

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– F-69 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

2. Tax Preferences and Approval Documents

(1) VAT tax preference and approval are as follows ķ According to the provisions of Fiscal and Tax Document [2003] No. 86, the Company and its subsidiaries implement the policy of VAT immediate refund for platinum produced and sold from May 1, 2003.

ĸ The Company and its subsidiaries are exempt from VAT for the sale of gold and gold ore by gold production and business units in accordance with the provisions of Financial and Tax Article [2002] No. 142.

Ĺ The Company's subsidiary Lanzhou Jinchuan New Materials technology Co., Ltd. According to the customs commodity code & import and export tariff in 2015, the Company's product "cobalt tetroxoxide" is entitled to export tax rebate, the customs commodity code is: 28220010, the tax rate is 17% and the tax rebate rate is 13%.

ĺ of the Company, a subsidiary of jinchang Jinchuan industrial Co., Ltd. ten thousand party according to the Ministry of Finance, state administration of taxation issued by the documents of the comprehensive utilization of resources VAT preferential catalogue of products and services (CS [2015] 78 date) , since November 1, 2019 to December 31, 2019, enjoy the comprehensive utilization of resources of VAT is products and services return policy焧

Ļ The Company, a subsidiary of Gansu Jinchuan energy saving technology Co., Ltd. According to the "about promoting energy conservation service industry development of value added tax, business tax and enterprise income tax policy issues notice (CS [2010] 110 date) regulation, the Company is engaged in the waste heat recovery technology renovation project of 480000 tons of sulfuric acid system since July 1, 2015 to July 31, 2022 from value-added tax.From January 1, 2018 to August 31, 2027, the Company will be exempted from VAT for the technical transformation project of waste heat recovery of 700,000-ton sulfuric acid system.

(2) The tax preferences and approvals for income tax are as follows ķ The Company and its subsidiaries jinchang Jinchuan wanfang industrial Co., Ltd., Lanzhou Jinchuan precious metal material Co., Ltd., and Lanzhou Jinchuan New Materials technology Co., Ltd.According to the ministry of finance, general administration of customs, state administration of taxation on the tax policies thorough implementation of western development strategy of the circular CS [2011] no. 58 (hereinafter referred to as "CS [2011] no. 58") in the second article "since January 1, 2011 to December 31, 2020, in the western region of the encouraged industry business enterprise income tax shall be levied at a reduced rate of 15%".Corporate income tax will be paid at 15% in 2019.

ĸ The Company's subsidiary Guangxi Jinchuan nonferrous metals Co., Ltd. shall pay the enterprise income tax at a reduced rate of 15% from [2017] to [2019] according to the document no.280 of guikegaozi [2017].

According to the ministry of finance issued by the state administration of taxation on revision of < the recognition of hi-tech enterprises management approach > notification "(the

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– F-70 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

goat [2016] no. 32, hereinafter referred to as the" measures ") and the ministry of finance issued by the state administration of taxation about revised guidelines > < the recognition of hi-tech enterprises management notice "(the ignition [2016] no. 195) and the relevant tax rules, Jinchuan group information and automation engineering Co., Ltd., since January 1, 2018 to December 31, 2020 to enjoy the pay enterprise income tax rate of 15%.

Ĺ The Company's investment in the purchase of special equipment such as environmental protection, energy and water conservation, and safe production may be deducted from the enterprise income tax by 10% of the investment amount upon the approval of the tax authorities.

ĺ Gansu Jinchuan Energy Saving Technology Co., Ltd., a subsidiary of the company, is exempted from paying the income of 480000 tons of waste heat recovery technology transformation project of sulphuric acid system from July 1, 2015 to July 31, 2022 in accordance with the announcement of the State Development and Reform Commission of the State Administration of Taxation on the implementation of preferential corporate income tax policies for energy management projects of energy saving service enterprises Industrial income tax: the company's 700000 ton sulfuric acid system waste heat recovery technology transformation project income is exempted from corporate income tax from January 1, 2018 to August 31, 2027.

Ļ Tibet Ruicheng Trade Co., Ltd., Tibet Jinchuan Mining Investment Co., Ltd. and Tibet Xinniu Mineral Development Co., Ltd., subsidiaries of the company, pay enterprise income tax at the rate of 15% for all kinds of enterprises (including enterprises outside Tibet) located in Lhasa Economic and Technological Development Zone from 2011 to 2020 according to the provisions of Tzf [2011] No. 14 document.

ļ According to the enterprise income tax law of the people's Republic of China and its implementing regulations, the Circular of the Ministry of Finance and the State Administration of Taxation on the implementation of the inclusive tax relief policy for small and micro enterprises (CS [2019] No. 13). The company's subsidiaries, Gansu Jinchuan Jiuding composite material Co., Ltd., Shanghai nickel Hotel Co., Ltd., Gansu Jingpu Testing Technology Co., Ltd., Jinchang Chengxin Engineering Construction Supervision Co., Ltd. and Zhonggang Jinbang (Beijing) International Cultural Consulting Co., Ltd., whose annual taxable income does not exceed 1 million yuan, shall be included in the taxable income by 25% and paid at the tax rate of 20% The enterprise income tax shall be paid; the part of the annual taxable income exceeding 1 million yuan but not exceeding 3 million yuan shall be included in the taxable income by 50%, and the enterprise income tax shall be paid at the rate of 20%. VII. Business Combinations and Consolidated Financial Statements

1. Information of Subsidiaries

Major No. Enterprise name Level Type Registered Place Operating Nature of business place

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– F-71 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Major No. Enterprise name Level Type Registered Place Operating Nature of business place Gansu Jinchuan Nickel Domestic Jinchang city, Cobalt New Material Jinchang city, New material product 1 2 non-financial Gansu Technology Innovation Gansu province development subsidiaries province Center Co., Ltd. Jinchuan Group Domestic Jinchang city, Nonferrous metal Jinchang city, 2 Copper Industry Co., 2 non-financial Gansu smelting and Gansu province Ltd. subsidiaries province marketing The smelting and processing of copper Baotou Huading Domestic Baotou, Inner Baotou, Inner smelting and its 3 Copper Development 2 non-financial Mongolia Mongolia subsidiary products Co., Ltd. subsidiaries and the sale of finished products Domestic Non - ferrous metals, Shanghai Tengyu Jiading district, Jiading district, 4 3 non-financial mineral products Trading Co., Ltd. Shanghai Shanghai subsidiaries sales Domestic Jinchang city, Transport of ordinary Jinchuan Group Jinchang city, 5 2 non-financial Gansu goods and dangerous Logistics Co., Ltd. Gansu province subsidiaries province goods by road Jinchuan Group Domestic Jinchang city, Jinchang city, Power, heat 6 Thermal Power Co., 2 non-financial Gansu Gansu province production, sales Ltd. subsidiaries province Domestic Jinchang city, Jinchuan Nickel Jinchang city, Non - ferrous metal 7 2 non-financial Gansu Industrial Co., Ltd. Gansu province processing sales subsidiaries province Jinchang Nickel Domestic Jinchang city, Jinchang city, Nonferrous metal 8 MiningIindustrial Co., 3 non-financial Gansu Gansu province processing Ltd. subsidiaries province Domestic Jinchang city, Jinchang Aowei Metal Jinchang city, Nonferrous metal 9 4 non-financial Gansu Co., Ltd. Gansu province processing subsidiaries province Processing and Jinchang Jinchuan Domestic Jinchang city, Jinchang city, production of 10 Wanfang Industrial Co., 3 non-financial Gansu Gansu province packaging materials Ltd. subsidiaries province and products Domestic Jinchang city, Jinchang Jinchuan Jinchang city, 11 3 non-financial Gansu Services Hotel Co., Ltd. Gansu province subsidiaries province Jinchuan group Domestic Jinchang city, Jinchang city, 12 jinchang lisheng 3 non-financial Gansu Printing Gansu province industrial Co., Ltd. subsidiaries province The processing and Jinchuan Group Domestic Jinchang city, Jinchang city, production of casting 13 Machinery 3 non-financial Gansu Gansu province and forging parts, Manufacturing Co., Ltd. subsidiaries province common parts, etc

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– F-72 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Major No. Enterprise name Level Type Registered Place Operating Nature of business place Domestic Jinchang city, Solar products Gansu Jinchuan Solar Jinchang city, 14 4 non-financial Gansu manufacturing and Energy Co., Ltd. Gansu province subsidiaries province marketing Domestic Jinchang city, Gansu Jintai Electric Jinchang city, Solar power 15 4 non-financial Gansu Power Co., Ltd. Gansu province generation subsidiaries province Construction Gansu Jinchuan Jinge Domestic Jinchang city, engineering Jinchang city, 16 Mining Vehicle 4 non-financial Gansu machinery Gansu province Manufacturing Co., Ltd. subsidiaries province manufacturing and marketing Mining enterprise King kong (DRC) Co., Overseas Lubumbashi, Lubumbashi, 17 3 maintenance Ltd. subsidiary Congo Congo business Domestic Jinchang city, Jinchuan Group Nickel Jinchang city, Nickel salt products 18 2 non-financial Gansu Salt Co., Ltd. Gansu province processing and sales subsidiaries province Jinchuan Group Domestic Jinchang city, Powder material Jinchang city, 19 Powder Material Co., 2 non-financial Gansu processing, Gansu province Ltd. subsidiaries province marketing Domestic Jinchang city, Jinchuan Group Wire Jinchang city, Sales of wire and 20 2 non-financial Gansu And Cable Co., Ltd. Gansu province cable subsidiaries province Gansu Jinchuan Aike Domestic Jinchang city, Electric wire and Jinchang city, 21 Mineral Insulated Cable 3 non-financial Gansu cable development Gansu province Co., Ltd. subsidiaries province and sales Copper and copper alloy pipe, bar, line, Jinchuan Group Domestic Jinchang city, row, mold, ingot, pipe Jinchang city, 22 Precision Copper Co., 2 non-financial Gansu fitting, nickel and Gansu province Ltd. subsidiaries province nickel alloy pipe, bar processing, marketing Jinchuan Group Domestic Jinchang city, Construction, Jinchang city, 23 Engineering 2 non-financial Gansu construction supplies Gansu province Construction Co., Ltd. subsidiaries province production and sales Gansu Jinchuan Group Domestic Lanzhou, Lanzhou, Gansu Real estate 24 Real Estate 3 non-financial Gansu province development Development Co., Ltd. subsidiaries province Gansu Jinchuan Jujin Domestic Lanzhou, Lanzhou, Gansu The property 25 Property Management 3 non-financial Gansu province management Co., Ltd. subsidiaries province Gansu Jinchuan Domestic Jinchang city, Jinchang city, Composite product 26 Jiuding Composite 3 non-financial Gansu Gansu province sales Material Co., Ltd. subsidiaries province

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– F-73 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Major No. Enterprise name Level Type Registered Place Operating Nature of business place Jinjian Zhongsheng Domestic Jinchang city, Construction Jinchang city, 27 Construction Labor 3 non-financial Gansu engineering labor Gansu province Service Co., Ltd. subsidiaries province subcontracting Domestic Fangchengga Guangxi Jinchuan Fangchenggang 28 3 non-financial ng city, Real estate Industrial Co., Ltd. city, Guangxi subsidiaries Guangxi Obe island, Indonesia Jinchuan Overseas North of Jakarta, maruku norte 29 3 Mining services Construction Co., Ltd. subsidiary Indonesia province, Indonesia Gansu Jinchuan Domestic Jinchang city, Jinchang city, The chemical 30 Chemical New Material 2 non-financial Gansu Gansu province industry Co., Ltd. subsidiaries province Jinchuan Group Domestic Jinchang city, Automation product Information and Jinchang city, 31 2 non-financial Gansu development and Automation Gansu province subsidiaries province design Engineering Co., Ltd. Jinchang Chengxin Domestic Jinchang city, Engineering Jinchang city, Engineering 32 2 non-financial Gansu Construction Gansu province supervision subsidiaries province Supervision Co., Ltd. Jinchuan Group Domestic Jinchang city, Jinchang Engineering Jinchang city, Project cost 33 3 non-financial Gansu Cost Consulting Co., Gansu province monitoring subsidiaries province Ltd. Jinchang Jianheng Domestic Jinchang city, Jinchang city, 34 Engineering Quality 2 non-financial Gansu Engineering test Gansu province Inspection Co., Ltd. subsidiaries province Jinchuan Nickel-Cobalt Domestic Jinchang city, Jinchang city, 35 Research And Design 2 non-financial Gansu Design Gansu province Institute Co., Ltd. subsidiaries province Gansu Jinchuan Domestic Jinchang city, International Economic Jinchang city, Engineering 36 2 non-financial Gansu And Technological Gansu province contracting subsidiaries province Cooperation Co., Ltd. Jinchang Jujia Domestic Jinchang city, Jinchang city, 37 Ecological Agriculture 2 non-financial Gansu Dairy production Gansu province Co., Ltd. subsidiaries province Domestic Lanzhou, Jinchuan Group Nickel Lanzhou, Gansu Metal, alloy powder 38 2 non-financial Gansu Alloy Co., Ltd. province material sales subsidiaries province Gansu Jinchuan Domestic Lanzhou, Lanzhou, Gansu The energy 39 Energy Saving 2 non-financial Gansu province management Technology Co., Ltd. subsidiaries province

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– F-74 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Major No. Enterprise name Level Type Registered Place Operating Nature of business place Domestic Lanzhou, Lanzhou Jinchuan Lanzhou, Gansu New energy materials 40 2 non-financial Gansu Science Park Co., Ltd. province production and sales subsidiaries province Research and Lanzhou Jinchuan Domestic Lanzhou, Lanzhou, Gansu development of 41 Precious Metal Material 3 non-financial Gansu province precious metal Co., Ltd. subsidiaries province products Domestic Lanzhou, Gansu Jingpu Testing Lanzhou, Gansu Quality inspection 42 3 non-financial Gansu Technology Co., Ltd. province technical service subsidiaries province Domestic Changsha, Nonferrous metal Hunan Ruixiang New Changsha, hunan 43 3 non-financial hunan smelting and rolling Material Co., Ltd. province subsidiaries province processing industry Hunan Xingrui New Domestic Changsha, Changsha, hunan Production and 44 Material Research And 4 non-financial hunan province processing Development Co., Ltd. subsidiaries province Domestic Nantong city, Nantong Kubo New Nantong city, Production and 45 4 non-financial jiangsu Material Co., Ltd. jiangsu province processing subsidiaries province Ruixiang (hk) Industrial Overseas Hong Kong, 46 4 Hong Kong, China, Trade Co., Ltd. subsidiary China, Domestic Nantong city, Nantong Ruixiang New Nantong city, Production and 47 4 non-financial jiangsu Material Co., Ltd. jiangsu province processing subsidiaries province Domestic Nantong city, Nantong Oxside New Nantong city, Production and 48 4 non-financial jiangsu Materials Co., Ltd. jiangsu province processing subsidiaries province Domestic Nantong city, Jiangsu Ruixiang New Nantong city, Production and 49 4 non-financial jiangsu Material Co., Ltd. jiangsu province processing subsidiaries province Yongzhou Lingling Domestic Yongzhou city, Yongzhou city, Production and 50 Ruixiang New Material 4 non-financial hunan hunan province processing Co., Ltd. subsidiaries province Lithium, cobalt Lanzhou Jinchuan New Domestic Lanzhou, Lanzhou, Gansu resources 51 Materials Technology 3 non-financial Gansu province development and Co., Ltd. subsidiaries province production and sales Research and development and Lanzhou Jintong Domestic sales of new 52 Energy Storage Power 4 non-financial Lanzhou city Lanzhou city materials for binary New Material Co., Ltd. subsidiaries and ternary precursor of lithium battery Jinchuan Cobalt Overseas City of Los Wholesale of metal 53 4 Los Angeles, Products Corp. subsidiary Angeles, USA products

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– F-75 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Major No. Enterprise name Level Type Registered Place Operating Nature of business place Domestic Lanzhou, Gansu Jinyu Materials Lanzhou, Gansu Nonferrous metal 54 2 non-financial Gansu Co., Ltd. province trade subsidiaries province Domestic Lanzhou, Jinchuan Group Lanzhou, Gansu 55 2 financial Gansu Financial leverage Finance Co., Ltd. province subsidiaries province Domestic Lanzhou, Gansu Jinhui Mining Lanzhou, Gansu Nonferrous metal 56 2 non-financial Gansu Co., Ltd. province trade subsidiaries province Domestic Jiuquan city, Jiuquan Jinhui Mining Jiuquan city, Mineral products, non 57 3 non-financial Gansu Company Gansu province - ferrous metal sales subsidiaries province Domestic Lanzhou, Gansu Jinhe Mining Lanzhou, Gansu 58 2 non-financial Gansu Mineral development Co., Ltd. province subsidiaries province Domestic Mining investment, Tibet Jinchuan Mining 59 2 non-financial Tibet Lhasa Tibet Lhasa mineral products Investment Co., Ltd. subsidiaries sales Domestic Tibet Xinniu Mineral 60 2 non-financial Tibet Lhasa Tibet Lhasa Mineral production Development Co., Ltd. subsidiaries China Jinchuan Domestic The Beijing The Beijing Investment 61 Investment Holding 2 non-financial municipal municipal management Co., Ltd. subsidiaries Domestic Beijing Jindu Materials The Beijing The Beijing Nonferrous metal 62 3 non-financial Trading Co., Ltd. municipal municipal trade subsidiaries Domestic Tibet Ruicheng Trading Nonferrous metal 63 3 non-financial Tibet Lhasa Tibet Lhasa Co., Ltd. trade subsidiaries Domestic Beijing JINCHUAN The Beijing The Beijing 64 2 non-financial The service sector HOtel Co., Ltd. municipal municipal subsidiaries Zhonggang Jinbang Domestic (Beijing) International The Beijing The Beijing 65 2 non-financial Service Cultural Consulting municipal municipal subsidiaries Co., Ltd. Jinchuan Group Domestic Nonferrous metal 66 International Trading 2 non-financial Shanghai Shanghai trade Co., Ltd. subsidiaries Shanghai Jinchuan Domestic Nonferrous metal 67 International Trade Co., 3 non-financial Shanghai Shanghai trade Ltd. subsidiaries

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– F-76 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Major No. Enterprise name Level Type Registered Place Operating Nature of business place Domestic Luoyang Longchang Henan Nonferrous metal 68 4 non-financial Henan Luoyang Copper Co., Ltd. Luoyang trade subsidiaries Domestic Jinchuan Maike Metal Nonferrous metal 69 3 non-financial Shanghai Shanghai Resources Co., Ltd. trade subsidiaries Jinheng (Shanghai) Domestic 70 Financial Leasing Co., 4 non-financial Shanghai Shanghai Financing lease Ltd. subsidiaries Domestic Shanghai Hongding Real estate 71 4 non-financial Shanghai Shanghai Property Co., Ltd. brokerage subsidiaries Domestic Shanghai Hongmao Real estate 72 4 non-financial Shanghai Shanghai Property Co., Ltd. brokerage subsidiaries Domestic Shanghai Hongsheng Real estate 73 4 non-financial Shanghai Shanghai Property Co., Ltd. brokerage subsidiaries SKY HERO (HONG Overseas Hong Kong, Nonferrous metal 74 4 Hong Kong, China, KONG) Limited subsidiary China, trade Jinchuan Maike Metal Overseas Nonferrous metal 75 Resources Singapore 4 Singapore Singapore subsidiary trade Ltd. Domestic Shanghai Nickel Hotel 76 2 non-financial Shanghai Shanghai The service sector Co., Ltd. subsidiaries Domestic Kunshan city, Jinke Nonferrous Kunshan city, Nonferrous metal 77 2 non-financial jiangsu Metals Co., Ltd. jiangsu province rolling process subsidiaries province Guangzhou Domestic Guangzhou city, Guangdong Jinhui city, Nonferrous metal 78 2 non-financial guangdong Metal Co., Ltd. guangdong trade subsidiaries province province Domestic Jiangsu Jinrong Metal Nonferrous metal 79 3 non-financial Jiangsu nantong Shanghai Material Co., Ltd. trade subsidiaries Guangxi JINCHUAN Domestic Fangchengga Nonferrous metal Fangchenggang 80 NONFERROUS 2 non-financial ng city, smelting and city, Guangxi METAls Co., Ltd. subsidiaries Guangxi marketing Domestic Fangchengga Guangxi Jinchuan Fangchenggang Gas production and 81 3 non-financial ng city, Xinrui Gas Co., Ltd. city, Guangxi sales subsidiaries Guangxi Guangxi Jinchuan Domestic Shangsi county, Shangsi Mineral development 82 3 Jinda Mining Co., Ltd. non-financial Guangxi county, and purchase and

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– F-77 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Major No. Enterprise name Level Type Registered Place Operating Nature of business place subsidiaries Guangxi sale

Domestic Fangchengga Guangxi Jinchuan Fangchenggang Energy production 83 3 non-financial ng city, Energy Co., Ltd. city, Guangxi and marketing subsidiaries Guangxi Beihai Jinchuan Real Domestic Real estate Guangxi 84 Estate Development 2 non-financial Guangxi beihai development and beihai Co., Ltd. subsidiaries operation Jinchuan Group (HK) Mineral products Resources Holdings Overseas Hong Kong, development, sales, 85 Limited Jinchuan 2 Hong Kong, China, subsidiary China, non - ferrous metal Group (HK) Resources products trade Holdings Limited Shanghai Jinchuan Domestic Nonferrous metal 86 junhe Economic 4 non-financial Shanghai Shanghai trade Development Co., Ltd. subsidiaries China Gold and Nickel Overseas Sydney, 87 Corporation Of 2 Sydney, Australia Mineral sales subsidiary Australia Australia Australia Gold Field Overseas Perth, 88 2 Perth, Australia Sales Nickel Co. subsidiary Australia Jinchuan American Overseas The United 89 2 The United States Sales Company subsidiary States South Africa Jinchuan Overseas Johannesburg, Johannesburg 90 2 Sales Resources Co., Ltd. subsidiary South Africa , South Africa Canada Jinchuan Overseas Toronto, 91 2 Toronto, Canada Mineral development Resources Co., Ltd. subsidiary Canada Taylor Resources, Overseas 92 3 Mexico Mexico Mineral development Mexico subsidiary Fangchenggang city Domestic Fangchengga Gangkou District Fangchenggang 93 2 non-financial ng city, Services Wender Hotel city, Guangxi subsidiaries Guangxi Management Co., Ltd.

(Continued)

Paid-in Capital Shareholding Investment Voting Acquire No. Enterprise name (Ten thousand Proportion (Ten thousand Proportion (%) method yuan) (%) yuan) Gansu Jinchuan Nickel Cobalt New Material 1 1,000.00 100.00 100.00 1,000.00 Investment Technology Innovation Center Co., Ltd. Jinchuan Group Copper 2 400,000.00 100.00 100.00 400,000.00 Investment Industry Co., Ltd.

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– F-78 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Paid-in Capital Shareholding Investment Voting Acquire No. Enterprise name (Ten thousand Proportion (Ten thousand Proportion (%) method yuan) (%) yuan) Merger of Baotou Huading Copper enterprises 3 38,000.00 40.00 40.00 20,800.00 Development Co., Ltd. not under the same control Merger of Shanghai Tengyu Trading enterprises 4 1,000.00 100.00 100.00 1,000.00 Co., Ltd. not under the same control Jinchuan Group Logistics 5 53,511.54 100.00 100.00 53,511.54 Investment Co., Ltd. Jinchuan Group Thermal 6 109,197.32 100.00 100.00 109,197.32 Investment Power Co., Ltd. Jinchuan Nickel Industrial Business 7 73,243.97 100.00 100.00 141,791.12 Co., Ltd. combination Jinchang Nickel 8 25,786.63 100.00 100.00 29,770.76 Investment MiningIindustrial Co., Ltd. Jinchang Aowei Metal Co., 9 885.67 100.00 100.00 899.54 Investment Ltd. Jinchang Jinchuan 10 Wanfang Industrial Co., 12,493.47 100.00 100.00 14,361.78 Investment Ltd. Jinchang Jinchuan Hotel 11 1,986.88 100.00 100.00 3,804.65 Investment Co., Ltd. Jinchuan group jinchang 12 2,319.00 100.00 100.00 3,701.53 Investment lisheng industrial Co., Ltd. Jinchuan Group Machinery 13 44,406.19 100.00 100.00 44,420.28 Investment Manufacturing Co., Ltd. Gansu Jinchuan Solar 14 7,000.00 98.57 98.57 6,900.00 Investment Energy Co., Ltd. Gansu Jintai Electric 15 40,000.00 40.00 40.00 16,000.00 Investment Power Co., Ltd. Gansu Jinchuan Jinge 16 Mining Vehicle 1,500.00 64.90 64.90 973.50 Investment Manufacturing Co., Ltd.

17 King kong (DRC) Co., Ltd. 134.40 100.00 100.00 134.40 Investment

Jinchuan Group Nickel Salt 18 15,005.70 100.00 100.00 57,671.87 Investment Co., Ltd. Jinchuan Group Powder 19 13,000.00 100.00 100.00 24,891.09 Investment Material Co., Ltd. Jinchuan Group Wire And 20 35,000.00 100.00 100.00 84,916.40 Investment Cable Co., Ltd.

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– F-79 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Paid-in Capital Shareholding Investment Voting Acquire No. Enterprise name (Ten thousand Proportion (Ten thousand Proportion (%) method yuan) (%) yuan) Gansu Jinchuan Aike 21 Mineral Insulated Cable 2,500.00 51.00 51.00 1,275.00 Investment Co., Ltd. Jinchuan Group Precision 22 5,000.00 100.00 100.00 99,072.43 Investment Copper Co., Ltd. Jinchuan Group 23 Engineering Construction 51,039.07 100.00 100.00 62,549.35 Investment Co., Ltd. Gansu Jinchuan Group 24 Real Estate Development 5,000.00 100.00 100.00 5,000.00 Investment Co., Ltd. Gansu Jinchuan Jujin 25 Property Management Co., 500.00 100.00 100.00 500.00 Investment Ltd. Gansu Jinchuan Jiuding 26 Composite Material Co., 3,500.00 51.00 51.00 1,785.00 Investment Ltd. Jinjian Zhongsheng 27 Construction Labor Service 500.00 100.00 100.00 500.00 Investment Co., Ltd. Guangxi Jinchuan 28 10,000.00 100.00 100.00 9,474.95 Investment Industrial Co., Ltd. Indonesia Jinchuan 29 638.45 100.00 100.00 638.45 Investment Construction Co., Ltd. Gansu Jinchuan Chemical 30 40,000.00 70.00 70.00 28,000.00 Investment New Material Co., Ltd. Jinchuan Group Information and 31 6,000.00 85.74 85.74 4,287.20 Investment Automation Engineering Co., Ltd. Jinchang Chengxin 32 Engineering Construction 400.00 100.00 100.00 400.00 Investment Supervision Co., Ltd. Jinchuan Group Jinchang 33 Engineering Cost 200.00 100.00 100.00 279.43 Investment Consulting Co., Ltd. Jinchang Jianheng 34 Engineering Quality 100.00 100.00 100.00 120.43 Investment Inspection Co., Ltd. Jinchuan Nickel-Cobalt 35 Research And Design 5,000.00 100.00 100.00 13,899.53 Investment Institute Co., Ltd. Gansu Jinchuan 36 9,595.19 89.58 89.58 8,595.19 Investment International Economic

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– F-80 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Paid-in Capital Shareholding Investment Voting Acquire No. Enterprise name (Ten thousand Proportion (Ten thousand Proportion (%) method yuan) (%) yuan) And Technological Cooperation Co., Ltd. Jinchang Jujia Ecological 37 9,000.00 100.00 100.00 10,042.83 Investment Agriculture Co., Ltd. Jinchuan Group Nickel 38 60,000.00 100.00 100.00 147,683.84 Investment Alloy Co., Ltd. Gansu Jinchuan Energy 39 Saving Technology Co., 500.00 100.00 100.00 500.00 Investment Ltd. Lanzhou Jinchuan Science 40 254,000.00 100.00 100.00 320,533.16 Investment Park Co., Ltd. Lanzhou Jinchuan 41 Precious Metal Material 2,317.24 68.18 68.18 1,580.00 Investment Co., Ltd. Gansu Jingpu Testing 42 1,282.49 100.00 100.00 1,282.49 Investment Technology Co., Ltd. Merger of Hunan Ruixiang New enterprises 43 44,969.25 52.59 52.59 23,651.25 Material Co., Ltd. not under the same control Merger of Hunan Xingrui New enterprises 44 Material Research And 4,000.00 100.00 100.00 4,000.00 not under the Development Co., Ltd. same control Merger of Nantong Kubo New enterprises 45 7,675.85 100.00 100.00 7,675.85 Material Co., Ltd. not under the same control Merger of Ruixiang (hk) Industrial enterprises 46 8,529.95 100.00 100.00 8,529.95 Co., Ltd. not under the same control Merger of Nantong Ruixiang New enterprises 47 32,275.23 100.00 100.00 32,275.23 Material Co., Ltd. not under the same control Merger of Nantong Oxside New enterprises 48 3,120.73 100.00 100.00 3,120.73 Materials Co., Ltd. not under the same control Merger of Jiangsu Ruixiang New enterprises 49 4,500.00 100.00 100.00 4,500.00 Material Co., Ltd. not under the same control

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– F-81 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Paid-in Capital Shareholding Investment Voting Acquire No. Enterprise name (Ten thousand Proportion (Ten thousand Proportion (%) method yuan) (%) yuan) Merger of Yongzhou Lingling enterprises 50 Ruixiang New Material Co., 10,000.00 100.00 100.00 10,000.00 not under the Ltd. same control Lanzhou Jinchuan New 51 Materials Technology Co., 106,537.70 92.44 92.44 231,155.50 Investment Ltd. Lanzhou Jintong Energy 52 Storage Power New 20,000.00 100.00 100.00 20,000.00 Investment Material Co., Ltd. Jinchuan Cobalt Products 53 326.71 100.00 100.00 326.71 Investment Corp. Gansu Jinyu Materials Co., 54 1,000.00 80.00 80.00 1,083.59 Investment Ltd. Jinchuan Group Finance 55 100,000.00 95.00 95.00 95,000.00 Investment Co., Ltd. Gansu Jinhui Mining Co., 56 1,000.00 55.00 55.00 550.00 Investment Ltd. Jiuquan Jinhui Mining 57 123.23 100.00 100.00 123.23 Investment Company Gansu Jinhe Mining Co., 58 6,667.00 75.00 75.00 5,000.25 Investment Ltd. Tibet Jinchuan Mining 59 25,000.00 100.00 100.00 25,000.00 Investment Investment Co., Ltd. Tibet Xinniu Mineral 60 11,111.00 55.00 55.00 6,111.00 Investment Development Co., Ltd. China Jinchuan Investment 61 43,500.00 100.00 100.00 41,025.00 Investment Holding Co., Ltd. Beijing Jindu Materials 62 2,100.00 90.00 90.00 11,025.30 Investment Trading Co., Ltd. Tibet Ruicheng Trading 63 5,000.00 100.00 100.00 5,000.00 Investment Co., Ltd. Beijing JINCHUAN HOtel 64 71.38 100.00 100.00 71.38 Investment Co., Ltd. Zhonggang Jinbang (Beijing) International 65 2,000.00 100.00 100.00 2,000.00 Investment Cultural Consulting Co., Ltd. Jinchuan Group 66 International Trading Co., 100,000.00 99.75 99.75 99,750.00 Investment Ltd. Shanghai Jinchuan 67 100,000.00 60.00 60.00 6,000.00 Investment International Trade Co.,

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– F-82 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Paid-in Capital Shareholding Investment Voting Acquire No. Enterprise name (Ten thousand Proportion (Ten thousand Proportion (%) method yuan) (%) yuan) Ltd.

Luoyang Longchang 68 900.00 100.00 100.00 900.00 Investment Copper Co., Ltd. Jinchuan Maike Metal 69 100,000.00 70.00 70.00 70,000.00 Investment Resources Co., Ltd. Jinheng (Shanghai) 70 - 100.00 100.00 - Investment Financial Leasing Co., Ltd. Shanghai Hongding 71 500.00 100.00 100.00 500.00 Investment Property Co., Ltd. Shanghai Hongmao 72 500.00 100.00 100.00 500.00 Investment Property Co., Ltd. Shanghai Hongsheng 73 500.00 100.00 100.00 500.00 Investment Property Co., Ltd. SKY HERO (HONG 74 3,050.35 100.00 100.00 3,050.35 Investment KONG) Limited Jinchuan Maike Metal 75 18,930.83 100.00 100.00 18,930.83 Investment Resources Singapore Ltd. Shanghai Nickel Hotel Co., 76 1,500.00 100.00 100.00 2,623.58 Investment Ltd. Jinke Nonferrous Metals 77 5,357.20 100.00 100.00 6,328.76 Investment Co., Ltd. Guangdong Jinhui Metal 78 2,000.00 100.00 100.00 2,000.00 Investment Co., Ltd. Jiangsu Jinrong Metal 79 500.00 100.00 100.00 500.00 Investment Material Co., Ltd. Guangxi JINCHUAN 80 NONFERROUS METAls 300,000.00 70.00 70.00 210,000.00 Investment Co., Ltd. Guangxi Jinchuan Xinrui 81 17,654.00 65.00 65.00 13,071.90 Investment Gas Co., Ltd. Guangxi Jinchuan Jinda 82 600.00 51.00 51.00 306.00 Investment Mining Co., Ltd. Guangxi Jinchuan Energy 83 2,000.00 100.00 100.00 2,000.00 Investment Co., Ltd. Beihai Jinchuan Real 84 Estate Development Co., 500.00 100.00 100.00 500.00 Investment Ltd. Jinchuan Group (HK) Resources Holdings 85 Limited Jinchuan Group 1,165,903.34 100.00 100.00 1,165,903.34 Investment (HK) Resources Holdings Limited

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– F-83 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Paid-in Capital Shareholding Investment Voting Acquire No. Enterprise name (Ten thousand Proportion (Ten thousand Proportion (%) method yuan) (%) yuan) Shanghai Jinchuan junhe 86 Economic Development 25,755.22 60.00 60.00 15,453.13 Investment Co., Ltd. China Gold and Nickel 87 581.50 60.00 60.00 348.90 Investment Corporation Of Australia Australia Gold Field Nickel 88 6,456.25 98.75 98.75 6,375.54 Investment Co. Jinchuan American 89 4,959.88 100.00 100.00 5,796.90 Investment Company South Africa Jinchuan 90 0.11 100.00 100.00 3,519.61 Investment Resources Co., Ltd. Canada Jinchuan 91 173,399.32 100.00 100.00 173,399.32 Investment Resources Co., Ltd.

92 Taylor Resources, Mexico 7,724.41 100.00 100.00 103,975.18 Investment

Fangchenggang city Gangkou District Wender 93 100.00 100.00 Others Hotel Management Co., Ltd.

2. Reasons for Existence of Control when the Parent Company Owns Less than Half of the Voting Rights over the Investee

Reasons for Shareholding Voting not being Paid-in No. Enterprise name Proportion Proportion Investment Level included in capital (%) (%) the scope of merger Gansu Jinyuan Coal 1 billion 0.714 billion 1 51.00 51.00 2 Note Industry Co., Ltd. yuan yuan

Note: According to the constitution of Gansu Jinyuan Coal Industry Co., Ltd., Jingyuan Coal Industry Group Co., Ltd. will play its own industry advantages and be responsible for project development and operation. Jingyuan Coal Industry Group Co., Ltd. merged the statements of Gansu Jinyuan Coal Industry Co., Ltd., so the Company did not include them in the merger scope.

3. Information of Important Partly-Owned Subsidiaries

1) Minority shareholder

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– F-84 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Minority Profit and loss Dividend paid to Cumulative minority No. Name of company shareholding attributable to minority minority shareholders' equity proportion (%) shareholders shareholders at the end of the year Lanzhou Jinchuan Advanced 1 7.52 -36,184,878.07 10,965,614.13 Materials Technology Co., Ltd. Beijing Jindu Material Trade Co., 2 10.00 158,475.84 -264,297,881.27 Ltd. Jinchuan Group International 3 0.25 -526,132,159.77 -73,868,814.18 Trading Co., Ltd. Guangxi Jinchuan Nonferrous 4 30.00 88,123,372.06 1,214,667,981.05 Metals Co., Ltd.

2) Major financial information

2019

Lanzhou Guangxi Item Jinchuan New Beijing Jindu Jinchuan Group Jinchuan Materials Material Trade International Nonferrous Technology Co., Co., Ltd. Trading Co., Ltd. Metals Co., Ltd. Ltd.

Current assets 1,658,291,667.26 88,127,058.75 3,048,295,920.05 4,878,886,705.76

Non-current assets 1,575,939,709.07 16,185,508.85 2,311,824,709.00 7,732,596,579.81

Total assets 3,234,231,376.33 104,312,567.60 5,360,120,629.05 12,611,483,285.57

Current liability 3,036,059,892.08 2,747,291,380.38 5,678,788,191.49 8,798,645,129.05

Non-Current liability 52,398,670.59 1,327,962,433.55 21,721,724.67

Total liability 3,088,458,562.67 2,747,291,380.38 7,006,750,625.04 8,820,366,853.72

Revenues 3,762,605,811.86 92,672,583,603.53 19,984,040,321.37

Net profit -515,082,167.75 1,584,758.45 -1,064,007,125.25 246,092,843.18

Total comprehensive income -516,007,801.45 1,584,758.45 -1,599,366,701.88 260,388,362.29

Cash flow from operating 823,273,225.54 -989,682.24 -34,553,970.89 1,669,526,929.46 activities (Continued)

Item 2018

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– F-85 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Lanzhou Guangxi Jinchuan New Beijing Jindu Jinchuan Group Jinchuan Materials Material Trade International Nonferrous Technology Co., Ltd. Trading Co., Ltd. Metals Co., Ltd. Co. ,Ltd.

Current assets 2,636,030,126.04 89,460,451.24 5,899,167,660.21 4,208,727,815.83

Non-current assets 1,635,085,287.88 16,274,086.13 2,356,353,660.50 7,970,164,901.87

Total assets 4,271,115,413.92 105,734,537.37 8,255,521,320.71 12,178,892,717.70

Current liability 3,410,095,421.35 2,750,298,108.60 6,910,272,217.05 7,313,551,691.19

Non-Current liability 154,273,186.77 1,392,512,397.77 1,316,285,734.24

Total liability 3,564,368,608.12 2,750,298,108.60 8,302,784,614.82 8,629,837,425.43

Revenues 4,843,316,566.22 123,792,108,577.71 22,361,976,311.54

Net profit -1,439,765,414.00 4,394,586.16 -1,051,322,926.79 215,490,973.27

Total comprehensive income -1,440,402,922.04 4,394,586.16 -1,051,322,926.79 215,490,973.27

Cash flow from operating -782,544,957.07 -5,122,861.95 956,921,190.73 1,973,611,885.97 activities

4. Subsidiaries No Longer Included in the Scope of Consolidation this Year

ķ The situation of subsidiaries which are not included in the scope of consolidation this year

Proporti The Registration Nature of on of Proportion of Subsidiary name Reasons Location Business Shareho voting lding(%) rights(%) Gansu Jinsheng Solar products Jinchang city, Solar Energy manufacturing 35 35 Sold Gansu province Technology Co., Ltd. and marketing Shenyang Jinhan Shenyang, Nonferrous metal Material Trading Co., 100 100 Write-off Liaoning province trade Ltd.

ĸThe financial position of subsidiaries on the date of disposal and the balance sheet date of the last accounting period

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– F-86 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Date of disposal Subsidiary name Date of disposal Total Total owner’s Total asset liabilities equity Gansu Jinsheng Solar Energy Technology 2019/4/30 11,077,808.64 393,260.30 10,684,548.34 Co., Ltd.

Shenyang Jinhan Material Trading Co., Ltd. 2019/7/31

(Continued)

31-12-2018 Subsidiary name Date of disposal Total owner’s Total asset Total liabilities equity Gansu Jinsheng Solar Energy Technology 2019/4/30 11,103,906.11 395,384.99 10,708,521.12 Co., Ltd.

Shenyang Jinhan Material Trading Co., Ltd. 2019/7/31 2,740,202.02 1,225,808.00 1,514,394.02

Ĺ The operating results of subsidiaries from the beginning of the year to the disposal date

From beginning of the year to the date of disposal Subsidiary name Date of disposal Revenue Expense Net profit

Gansu Jinsheng Solar Energy Technology 2019/4/30 1,646,283.10 1,670,255.88 -23,972.78 Co., Ltd.

Shenyang Jinhan Material Trading Co., Ltd. 2019/7/31 1,043,736.86 2,558,130.88 -1,514,394.02

5. Subject of this Period Newly Included in the Scope of Consolidation

The closing net Net profit in current Name assets year

Baotou Huading Copper Development Co., Ltd. 570,006,336.61 43,567,203.11

Jinchuan Group Logistics Co., Ltd. 536,458,856.33 1,343,445.09

Jinchuan Group Thermal Power Co., Ltd. 1,116,163,947.62 24,190,756.00

King kong (DRC) Co., Ltd. 765,123.18 -623,098.65

Hunan Ruixiang New Material Co., Ltd. 187,292,353.40 41,084,415.25

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– F-87 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Fangchenggang City Gangkou District Wender Hotel Management Co., 25,122,510.08 -405,876.60 Ltd.

6. Absorption and Consolidation During this Period

Absorption and merger under the same control occurred in this period: Nantong Ruixiang New Materials Co., Ltd. absorbed and merged Nantong Ruixiang New Materials Research Center Co., Ltd.

Main assets, liabilities and amounts incorporated:

Item Amount

Assets:

Accounts receivable 15,000.00

Other receivables 17,301,427.46

Fixed assets 3,416,356.52

Projects under construction 727,326.65

Intangible assets 2,963,588.80

Liabilities:

Other payables 1,063,313.36

7. Merger of Enterprises Not Under the Same Control Occurred in the Current Period

Fair value of identifiable net assets Combining Trading on Company name Book equity date Methods price Amount to determine Baotou Huading Copper 2019.1.1 546,439,133.50 598,390,621.83 239,356,248.73 Development Co., Ltd. Hunan Ruixiang New Material 2019.1.1 147,573,433.71 147,573,433.71 236,512,500.00 Co., Ltd. (Continued)

Company name Goodwill Income from the Net profit from

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– F-88 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Methods date of the date of to purchase to the purchase to Amount determin end of the the end of the e period period Baotou Huading Copper Development Co., 0.00 2,449,398,850.25 43,567,203.11 Ltd.

Hunan Ruixiang New Material Co., Ltd. 158,903,631.21 1,076,000,311.86 41,084,415.25

VIII. Significant Items in Consolidated Financial Statements

1. Cash and cash equivalents

Item Closing balance Opening balance

Cash 1,682,022.29 263,936.41

Bank deposit 5,089,334,821.61 6,526,512,035.89

Other monetary asset 1,124,024,638.65 1,347,485,285.05

Total 6,215,041,482.55 7,874,261,257.35

Including: Total amount deposited outside PRC 2,979,656,423.63 3,377,815,105.51

Note: For monetary funds with restricted ownership, please refer to Note VIII-62.

2. Financial Assets Measured at Fair Value Through Profit or Loss

Item Closing balance of fair value Opening balance of fair value

Trading financial assets 11,196,590.39

Including: Debt instrument investment

Equity instrument investment 11,196,590.39

Others

Financial assets designated to be measured at fair value and whose changes are included in 1,267,919.26 114,854,722.14 current profits and losses.

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– F-89 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Item Closing balance of fair value Opening balance of fair value

Including: Debt instrument investment

Equity instrument investment

Others 1,267,919.26 114,854,722.14

Total 12,464,509.65 114,854,722.14

3. Note Receivable

1) Classification of note receivable

Closing balance Opening balance

Prov Provi ision Item sion for Book balance Book value Book balance for Book value bad bad debt debts s

Bank acceptance draft 639,801,557.91 639,801,557.91 941,118,153.55 941,118,153.55

Commercial 1,100,000.00 1,100,000.00 acceptance draft

Letter of credit 47,301,694.44 47,301,694.44 107,370,989.47 107,370,989.47

1,048,489,143. Total 688,203,252.35 688,203,252.35 1,048,489,143.02 02

2) The notes receivable that has been pledged

Item The pledged amount at the end of 2019

Bank acceptance bills 165,495,144.00

Commercial acceptance bills

Total 165,495,144.00

Note: Notes receivable with restricted ownership are detailed in Notes VIII-62 assets with restricted ownership and use rights.

3) Notes receivable endorsed or discounted at the end of the year and not yet due on the balance sheet date

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– F-90 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Amount of derecognition at the Unrecognized amount at the end Item end of the year of the year

Bank acceptance bills 2,779,609,937.22

Commercial acceptance bills

Total 2,779,609,937.22

4. Accounts Receivables

Closing balance

Classification Carrying amount Bad-debt provision

Proportion Proportion Amount Amount (%) (%) Individually significant and assessed for 1,425,237,256.78 28.30 1,369,576,119.08 96.09 impairment individually According to the credit risk characteristics of the combination of provision for bad debts to 3,604,199,403.65 71.55 1,261,071,657.28 34.99 receivables

Including: Aging portfolio 3,604,199,403.65 71.55 1,261,071,657.28 34.99

Consolidation scope association portfolio

Individually insignificant but assessed for 7,807,118.91 0.15 7,807,118.91 100.00 impairment individually

Total 5,037,243,779.34 —— 2,638,454,895.27 ——

(Continued)

Opening balance

Classification Carrying amount Bad-debt provision

Proportion Proportion Amount Amount (%) (%) Individually significant and assessed for 1,078,654,772.92 23.87 1,078,654,772.92 100.00 impairment individually According to the credit risk characteristics of the combination of provision for bad 3,411,486,352.50 75.49 461,899,893.82 13.54 debts to receivables

Including: Aging portfolio 3,411,486,352.50 75.49 461,899,893.82 13.54

-89-

– F-91 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Opening balance

Classification Carrying amount Bad-debt provision

Proportion Proportion Amount Amount (%) (%)

Consolidation scope association portfolio

Individually insignificant but assessed for 28,946,853.70 0.64 28,946,853.70 100.00 impairment individually

Total 4,519,087,979.12 —— 1,569,501,520.44 ——

1) Accounts receivable of individual significance subject to individually assessment for impairment at the end of year

Propor Name of debtors Book value Bad debt Aging tion Reasons (%) Changtaixing (Shanghai) Less possibility of Investment Management 856,267,812.81 856,267,812.81 1-2 years 100.00 recovery. Co., Ltd. Shanghai Qichang Metal Less possibility of 185,537,125.68 129,875,987.98 Over 5 years 70.00 Trading Co., Ltd. recovery. Shanghai Jitian 3-4 years Less possibility of Investment Group Co., 175,203,420.10 175,203,420.10 100.00 4激5years recovery. Ltd. Hangzhou Fuyun Industry 3-4years Less possibility of 157,839,295.42 157,839,295.42 100.00 and Trade Co., Ltd. Over 5 years recovery. Jiangsu Metallurgical 1-2years Less possibility of 50,389,602.77 50,389,602.77 100.00 Design Institute Co., Ltd. 3-4years recovery.

Total 1,425,237,256.78 1,369,576,119.08 —— —— ——

2) Accounts receivable portfolio subject to impairment by credit risk ķ Aging analysis method

Closing balance Opening balance

Aging Carrying amount Carrying amount bad-debt bad-debt Proportion provision Proportion provision Amount Amount (%) (%) Within 1 year 1,806,821,597.07 53.73 2,480,763,117.22 72.72 (inclusive)

-90-

– F-92 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

1-2 years 186,707,770.26 5.55 18,859,017.19 262,850,581.01 7.70 26,285,058.10 (inclusive) 2-3 years 148,647,016.78 4.42 43,973,179.30 122,430,582.19 3.59 36,729,174.67 (inclusive)

3-4 years 97,411,986.54 2.90 49,326,258.63 7,469,564.59 0.22 3,734,782.30

4-5 years 2,667,315.60 0.08 1,867,120.92 476,072,095.81 13.95 333,250,467.07

Over 5 1,120,498,291.22 33.32 1,120,498,291.22 61,900,411.68 1.82 61,900,411.68 years

Total 3,362,753,977.47 100.00 1,234,523,867.26 3,411,486,352.50 100.00 461,899,893.82

ĸ Jinchuan New Materials Company USES new financial instrument to disclose according to overdue account age

Aging Closing balance

No overdue 170,513,602.74

Within 1 year overdue 58,915,586.44

1-2 years late 12,016,237.00

Overdue 2 to 3 years

Overdue for more than 3 years

Subtotal 241,445,426.18

Less: provision for bad debts 26,547,790.02

Total 214,897,636.16

A. According to the overdue age of domestic customers portfolio accounts receivable provisions

Closing balance Item Carrying amount Bad-debt provision Proportion (%)

Not overdue 126,567,968.85 12,656,796.89 10.00

Within 1 year overdue 58,915,586.44 5,891,558.64 10.00

1-2 years overdue 12,016,237.00 3,604,871.10 30.00

-91-

– F-93 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Total 197,499,792.29 22,153,226.63 -

B. According to the overdue aging of the portfolio of overseas customers account receivable provision

Closing balance Item Carrying amount bad-debt provision Proportion (%)

Not overdue 43,945,633.89 4,394,563.39 10.00

Total 43,945,633.89 4,394,563.39 10.00

3) Accounts receivable with provision for bad debts at the end of the year, though not significant.

Proportion Name of debtors Book value Bad debt Age Reasons (%) Ningxia Kejie Lithium Battery Over 3 Less likely to 3,295,760.27 3,295,760.27 100.00 Co., Ltd. years withdraw Inner Mongolia Zhongxi Mining Less likely to 2,190,421.94 2,190,421.94 1-2 years 100.00 Co., Ltd. withdraw Ningxia Kejie Lithium Battery Over 3 Less likely to 1,985,525.00 1,985,525.00 100.00 Co., Ltd. years withdraw Zhangye Ganzhou Wanjia 1-2 years Less likely to Non-staple Food Business 273,908.36 273,908.36 100.00 2-3 years withdraw Department Hai' an Jinquan Electrical Less likely to 61,503.34 61,503.34 2-3 years 100.00 Equipment Co., Ltd. withdraw

Total 7,807,118.91 7,807,118.91 —— —— ——

4) Actual write-off of accounts receivable in the current year

If it is due to The nature of Write-off Write off Write off related Name of Debtors accounts procedures for amount reason party receivable performance transactions Tianjin Xinshenghongta General manager Payment for Less likely to New Material 9,750,074.84 office meeting No goods withdraw Technology Co., Ltd. approval Chongqing Yongkang Payment for Company Board meeting 6,074,532.31 No Industrial Co., Ltd. goods written off decision Baochang Nonferrous Payment for Unable to Board meeting Electronic Materials Co., 6,026,805.20 No goods withdraw decision Ltd.

-92-

– F-94 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Liaoning Yike Copper Payment for Less likely to Board meeting 2,988,706.58 No Co., Ltd. goods withdraw decision Jinshi International Maintenance Unable to Board meeting 1,786,151.43 No Limited fund withdraw decision Chengdu Jingyuan New Payment for Unable to Board meeting Material Technology Co., 1,609,000.00 No goods withdraw decision Ltd. Payment for Company Debt settlement and Finland Nickel Industry 759,552.43 No goods written off write-off General manager Xinjiang Zijin Zinc Co., Payment for Less likely to 227,823.00 office meeting No Ltd. goods withdraw approval

Total —— 29,222,645.79 —— —— ——

5) Status of accounts receivable in the top five of the year-end balances collected by the debtor.

Percentage in total Name of Debtors Book value Bad debt provision accounts receivable Changtaixing (Shanghai) Investment 861,467,812.81 17.10 861,467,812.81 Management Co., Ltd.

State Grid Gansu Electric Power Company 367,143,201.86 7.29 10,723,355.42

Tibet Huili Investment Co., Ltd. 297,912,168.04 5.91 297,912,168.04

Jiangxi Panson Trading Co., Ltd. 209,878,336.20 4.17 209,878,336.20

Shanghai Qichang Metal Trading Co., Ltd. 185,537,125.68 3.68 129,875,987.98

Total 1,921,938,644.59 38.15 1,509,857,660.45

5. Debt Securities Classified as Receivables

1) The category of debt securities classified as receivables is shown

Classification Closing balance Opening balance

Bank acceptance 211,872,634.05 72,680,400.14

Total 211,872,634.05 72,680,400.14

2) Debt securities classified as receivables that has been endorsed or discounted at the end of the period and is not yet due on the balance sheet date

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– F-95 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Amount of derecognition at the Unrecognized amount at the Item end of the year end of the year

Bank acceptance 943,845,393.94

Total 943,845,393.94

6. Prepayments

1) Aging of advances to suppliers

Closing balance Opening balance

Aging Book value Book value Bad debt Bad debt Proportion Proportion Amount Amount (%) (%) Within 1 year 787,703,032.77 84.43 1,910,523,698.94 93.48 (inclusive) 1-2 years 22,680,469.55 2.43 42,106,467.85 2.06 (inclusive) 2-3 years 6,989,044.34 0.75 13,795,590.23 0.67 (inclusive) Over 3 115,629,466.75 12.39 71,476,945.85 77,425,577.11 3.79 57,863,115.90 years

Total 933,002,013.41 100.00 71,476,945.85 2,043,851,334.13 100.00 57,863,115.90

2) Large amount of advances to suppliers with aging over 1 year

Reasons for Unsettled Name of debtors Closing balance Aging Settlements Trade working capital in Congo International Mining Cor 18,902,700.00 Over 3 years advance

Jinan Junmu Copper Co., Ltd. 13,613,829.95 Over 3 years There are legal disputes

SADRC 11,636,823.21 Over 3 years There are legal disputes

Gansu Weiyu Riveting & Welding Co., Ltd. - 9,260,074.17 Segmented aging Prepaid equipment Indonesia project Prepaid chromium BO KAI TRADING 6,478,769.19 Over 3 years concentrate Prepaid chromium GPS 5,934,718.02 Over 3 years concentrate

-94-

– F-96 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Sanhe North Metallurgical Machinery Co., Ltd. 4,502,192.94 1-2Years Prepaid equipment

Total 70,329,107.48 —— ——

3) The top five advances to suppliers classified by debtors are as follows:

Proportion Provision for bad Name of debtors Book balance (%) debt

Zhongyi Knitwear Import and Export Corporation 162,037,670.00 17.37

Shanghai Huayi Engineering Co., Ltd. 126,290,912.16 13.54

Beijing Tiezong Wutong International Trade Co., Ltd. 66,001,796.47 7.07

Qinghai Copper Industry Co., Ltd. 38,408,119.73 4.12

Congo International Mining Cor 18,902,700.00 2.03 18,902,700.00

Total 411,641,198.36 44.13 18,902,700.00

7. Other Receivable

Item Closing balance Opening balance

Interest receivable 15,612,218.91 10,427,380.06

Dividend receivable 13,883,150.83

Other receivable 9,649,727,227.34 10,055,684,325.94

Total 9,665,339,446.25 10,079,994,856.83

1) Interest receivable

Item Closing balance Opening balance

Fixed deposit 3,112,652.14 1,500,562.18

Entrusted loan 2,727,300.68 622,772.11

Others 9,772,266.09 8,304,045.77

-95-

– F-97 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Total 15,612,218.91 10,427,380.06

2) Dividends receivable

Whether the Closing Opening Reason for not impairment occurs Item balance balance collecting and the basis for its judgment

Aging within one year 7,883,150.83 —— —— including: Baotou Huading Copper 7,883,150.83 Development Co.Ltd.

Aging over 1 year 6,000,000.00 —— ——

Including: Baotou Huading Copper 6,000,000.00 Development Co.Ltd.

Total 13,883,150.83 —— ——

3) Other receivables

Closing balance

Types Book balance Provision for bad debt

Proportion Proportion Amount Amount (%) (%) Individually significant and assessed for 7,237,268,000.69 69.68 187,314,895.25 2.59 impairment individually According to the credit risk characteristics of the portfolio of provision for bad debts to other 3,141,382,640.91 30.25 541,608,519.01 17.24 account receivables

Including: Aging portfolio 3,141,382,640.91 30.25 541,608,519.01 17.24

Consolidation scope association portfolio

Individually insignificant but assessed for 7,528,664.89 0.07 7,528,664.89 100.00 impairment individually

Total 10,386,179,306.49 —— 736,452,079.15 ——

(Continued)

Opening balance Types Book balance Provision for bad debt

-96-

– F-98 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Proportion Proportion Amount Amount (%) (%) Individually significant and assessed for 5,791,062,954.23 54.22 187,314,895.25 3.23 impairment individually According to the credit risk characteristics of the portfolio of provision for bad debts to other 4,890,500,992.33 45.78 438,564,725.37 8.97 account receivables

Including: Aging portfolio 4,890,500,992.33 45.78 438,564,725.37 8.97

Consolidation scope association portfolio

Individually insignificant but assessed for impairment individually

Total 10,681,563,946.56 — 625,879,620.62 —

ķOther account receivable of individual significance subject to individually assessment for impairment at the end of year

Bad debt Proportion Name of Debtors Amount Aging Reasons provision (%) Gansu Xinye Asset Management 1-2 years. 5,080,397,027.10 Co., Ltd. 2-3 years Gansu Provincial Head office for 1,010,603,837.42 1-2 years Economic Cooperation

Luoyang Xingyuan Copper Co., Ltd. 360,000,000.00 1-2 years

Han Wenchao 304,471,613.32 Over 5 years

Less Segmented Jinchuan Company School 187,314,895.25 187,314,895.25 100.00 likelyto aging withdraw. Segmented Jinchuan Staff Hospital 171,168,416.25 aging Tiandao International Investment 123,312,211.35 1-2 years Co., Ltd.

Total 7,237,268,000.69 187,314,895.25 — —

ĸ Other account receivable portfolio subject to impairment by credit risk

A. Aging analysis of provision for bad debts of other receivables

Closing balance Opening balance Aging Book balance Provision for Book balance Provision for

-97-

– F-99 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Proportion bad debt Proportion bad debt Amount Amount (%) (%) Within 1 year 1,913,182,830.57 61.40 4,025,937,388.02 82.31 (inclusive) 1-2 years 397,445,793.48 12.76 39,716,192.06 429,631,156.71 8.79 42,965,290.67 (inclusive) 2-3 years 415,122,636.67 13.33 124,536,791.01 21,389,588.43 0.44 6,416,876.54 (inclusive)

3-4 years 24,143,001.37 0.78 12,071,500.69 13,565,556.90 0.28 6,782,778.45

4-5 years 12,676,496.74 0.41 8,873,547.73 58,590,956.00 1.20 41,013,669.20

Over 5 352,513,654.45 11.32 352,513,654.45 341,386,346.27 6.98 341,386,110.51 years

Total 3,115,084,413.28 100.00 537,711,685.94 4,890,500,992.33 100.00 438,564,725.37

B. Jinchuan New Materials Company adopts the new financial instrument standard to calculate and withdraw bad debts according to the expected credit loss

Closing balance

Aging Book balance Provision for bad debt Amount Proportion (%)

Within 1 year (inclusive) 20,513,176.40 78.00 2,051,317.64

1-2 years 5,235,051.14 19.91 1,570,515.34

2-3 years 550,000.00 2.09 275,000.00

3-4 years 0.09 0.09

Total 26,298,227.63 100.00 3,896,833.07

(Continued)

Stage I Stage II Stage III

Provision for bad Expected Expected credit loss for Expected credit loss for Total debt credit losses lifetime (no credit lifetime (credit over the next impairment) impairment occurred) 12 months

-98-

– F-100 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Opening balance 559,049.69 177,100.05 736,149.74

The opening balance is reassessed after the 559,049.69 177,100.05 736,149.74 current period Accrual in current 1,492,267.95 1,668,415.38 3,160,683.33 period Reversal in current period Write off in current period

Other changes

Closing balance 2,051,317.64 1,845,515.43 3,896,833.07

ĹAt the end of the period, although the single amount is not significant, other receivables are separately calculated and withdrawn for bad debt provision

Provision Proportion Name of debtors Book balance for bad Aging Reason (%) debt Luoyang Xingyuan Copper Co., Less likely to 6,993,882.73 6,993,882.73 1-2 years 100.00 Ltd. withdraw Jiangsu Metallurgical Design Less likely to 520,000.00 520,000.00 2-3 years 100.00 Institute Co., Ltd. withdraw State Grid Shanghai Electric Less likely to 14,782.16 14,782.16 4-5 years 100.00 Power Company withdraw

Total 7,528,664.89 7,528,664.89 —— —— ——

ĺThe actual write-off of other receivables in the current year

If it is due Nature of Write off Reason for Write-off procedures to related Name of debtors other amount write-off for performance party receivables transactions Senshengshiyang Enterprise Current Less likely to Board meeting 17,671,465.98 No Development Co., account withdraw decision Ltd. Baiyin Urban Development Current Less likely to Board meeting 2,126,700.00 No Investment (Group) account withdraw decision Co., Ltd.

-99-

– F-101 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Yangxin Jiali Current Debt unit Board meeting 956,109.25 No Technology Co., Ltd. account bankruptcy decision Nantong Finance Less likely to Legal fees 37,680.00 CFO review No Bureau withdraw Less likely to Zheng Mei Reserve fund 24,974.42 CFO review No withdraw Shuguang gas plant, Less likely to Deposit 10,700.00 CFO review No Gangzha District withdraw Less likely to Zheng Chunhua Reserve fund 10,377.00 CFO review No withdraw Nantong Agricultural Less likely to Power Service Co., Deposit 9,500.00 CFO review No withdraw Ltd. Less likely to Li Bingzhong Reserve fund 3,000.00 CFO review No withdraw Tibet Xihai Cold Less likely to Chain Logistics Co., Margin 2,000.00 CFO review No withdraw Ltd. Less likely to Yang Shanpei Reserve fund 1,756.20 CFO review No withdraw Nantong Huayang Less likely to Liquefied Gas Cost 1,330.00 CFO review No withdraw Processing Co., Ltd. Jiangsu Environmental Less likely to Cost 120.00 CFO review No Protection Publicity withdraw And Education center Sihaitongzhou Less likely to Drinking Water Deposit 100.00 CFO review No withdraw Company

Total —— 20,855,812.85 —— —— ——

ĻOther receivables in the top five of the ending balance collected by the debtor

Percentage of Name of Nature of Provision for Book balance Aging total other debtors money bad debt receivables (%) Gansu Xinye Asset Current account 5,080,397,027.10 Segmented aging 48.91 Management Co., Ltd. Gansu Head Office for Current account 1,010,603,837.42 Within 1 year 9.73 Economic Cooperation

- 100 -

– F-102 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Percentage of Name of Nature of Provision for Book balance Aging total other debtors money bad debt receivables (%) Gansu Jinyuan Coal Industry Current account 451,197,436.58 Segmented aging 4.34 144,083,481.19 Group Co., Ltd. Luoyang Xingyuan Copper Current account 366,993,882.73 1-2 years 3.53 6,993,882.73 Co., Ltd.

Han Wenchao Current account 304,471,613.32 Over 5 years 2.93

Total —— 7,213,663,797.15 —— 69.44 151,077,363.92

8. Inventories

1) Classification of Inventories

Closing balance Item Book balance Impairment provision Book value

In-transit material/material procurement 4,725,524,658.08 10,471,802.68 4,715,052,855.40

Raw materials 2,757,962,777.52 172,127,420.03 2,585,835,357.49

In products 126,407,422.48 6,760,879.73 119,646,542.75

Self-made semi-finished products 6,996,735,360.82 43,728,728.45 6,953,006,632.37

Inventory goods 5,294,438,560.49 194,965,827.01 5,099,472,733.48

Turnover materials (packaging, low 16,395,252.62 16,395,252.62 value consumables.)

Entrusted processing materials 278,918,510.44 64,869,847.79 214,048,662.65

Goods sold 257,237,046.35 4,392,389.23 252,844,657.12

Developing products under construction 1,006,118,557.50 1,006,118,557.50 engineering construction 227,653,320.67 227,653,320.67

Consumable biological assets 5,603,125.80 5,603,125.80

Total 21,692,994,592.77 497,316,894.92 21,195,677,697.85

- 101 -

– F-103 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

(Continued)

Opening balance Item Book balance Impairment provision Book value

In-transit material/material procurement 2,727,497,523.02 133,138,374.04 2,594,359,148.98

Raw materials 3,046,059,855.77 716,860,031.12 2,329,199,824.65

In products 548,128,581.28 190,186,076.03 357,942,505.25

Self-made semi-finished products 6,186,957,660.24 51,346,470.68 6,135,611,189.56

Inventory goods 6,786,864,732.20 758,610,362.55 6,028,254,369.65

Turnover materials (packaging, low 168,285.52 168,285.52 value consumables.)

Entrusted processing materials 93,757,204.54 285,617.04 93,471,587.50

Goods sold 253,066,666.36 90,971,589.29 162,095,077.07

Developing products under construction 1,587,200,832.86 1,587,200,832.86

Engineering construction 108,164,751.32 108,164,751.32

Consumable biological assets 2,354,936.22 2,354,936.22

Total 21,340,221,029.33 1,941,398,520.75 19,398,822,508.58

Note: The inventory with restricted ownership is detailed in Notes VIII-62 Assets with Restricted Ownership or Use Rights.

9. Other Current Assets

Item Closing balance Opening balance

Relevant taxes to be deducted and paid in 1,067,676,426.88 1,882,951,832.56 advance Purchase of wealth management products 335,200,000.00 62,890,000.00 and structured deposits other 2,923.87

Pending property 176,684,569.99

- 102 -

– F-104 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Subtotal 1,579,560,996.87 1,945,844,756.43

Less: Provision for impairment of property 176,684,569.99 to be processed

Total 1,402,876,426.88 1,945,844,756.43

Note: The inventory with restricted ownership is detailed in Notes Notes VIII-62 Assets with Restricted Ownership or Use Rights.

10.Available for Sale Financial Assets

1) Available-for-sale financial assets classification

Closing balance Opening balance Item Depreciation Depreciation Book balance Book value Book balance Book value reserves reserves Debt instrument Equity 2,805,361,951.02 364,722,354.94 2,440,639,596.08 3,307,453,125.17 342,915,767.91 2,964,537,357.26 instrument Including: Measured 1,248,179,981.88 341,343,838.58 906,836,143.30 1,797,813,218.72 341,343,838.58 1,456,469,380.14 at fair value Measured 1,557,181,969.14 23,378,516.36 1,533,803,452.78 1,509,639,906.45 1,571,929.33 1,508,067,977.12 at cost

Total 2,805,361,951.02 364,722,354.94 2,440,639,596.08 3,307,453,125.17 342,915,767.91 2,964,537,357.26

2) Details of financial assets available for sale

Opening Item Increase Decrease Closing year balance Beijing Zhongse Hi-Tech Investment 624,249.05 624,249.05 Development Co., Ltd. Tibet Jindewang Mining Industry Co., 4,000,000.00 4,000,000.00 Ltd. Zhongse International Mining Co., 6,000,000.00 6,000,000.00 Ltd.

China Enfei Engineering Corporation 101,752,266.67 101,752,266.67

MCC Jinji Mining Development Co., 216,060,000.00 216,060,000.00 Ltd.

Shanxi Taigang Stainless Steel 5,700,000.00 5,700,000.00

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– F-105 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Opening Item Increase Decrease Closing year balance Precision Strip Co., Ltd.

Zhongyanyabulai Salination Group 560,000.00 560,000.00 Co., Ltd. Harbin Dongqing Special Materials 8,000,000.00 8,000,000.00 Co., Ltd. Shaanxi Jianchaling Nickel Industry 35,000,000.00 35,000,000.00 Co., Ltd. Wanbao Resources (Hong Kong) 18,182,337.98 18,182,337.98 Co., Ltd. National Engineering Research Center of Advanced Energy Storage 10,000,000.00 10,000,000.00 Materials Co., Ltd.

Bank of Tibet Co., Ltd. 45,000,000.00 45,000,000.00

Gansu Jinyuan Coal Industry Co., 714,000,000.00 714,000,000.00 Ltd.

Gansu Bank Co., Ltd. 1,310,948,215.26 464,569,831.84 846,378,383.42

Gansu Jiu Steel Group Hongxing 10,070,910.48 790,909.20 10,861,819.68 Iron and Steel Co., Ltd.

Canada Gobi Mining Co., Ltd. 8,715,913.00 1,673,948.00 10,389,861.00

Australian Red Stone Resources 51,569.59 25,520.81 26,048.78 Co., Ltd.

Australian Metal X Co., Ltd. 90,227,500.00 73,927,506.40 16,299,993.60

Australian Fox Company 317,485.00 3,250.52 320,735.52

Belvedere Company 10,150,998.90 8,119,299.18 2,031,699.72

New Zealand Asian Mineral 7,053,340.00 5,118,212.00 12,171,552.00 Resources Co.,Ltd. Dunhuang Wenbo Investment Co., 100,000,000.00 100,000,000.00 Ltd. China Gold International Resources 14,528,607.57 14,528,607.57 Corp. Ltd. Zhejiang jinying ruixiang new 45,000,000.00 45,000,000.00 material Co., Ltd.

Maseve Ltd 4,404,840.34 3,951,209.24 8,356,049.58

Runbo (Tianjin) Equity Investment 100,000,000.00 100,000,000.00 Fund Partnership (Limited

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– F-106 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Opening Item Increase Decrease Closing year balance Partnership)

Zhejiang Xinrui Air Separation Plant 11,770,000.00 11,770,000.00 Co.Ltd. Gansu Jinchuan Shenwu Resources Comprehensive Utilization 35,000,000.00 17,500,000.00 52,500,000.00 Technology Co., Ltd. Haitong Qidong (Weihai) Equity Investment Fund Management Co., 300,000.00 300,000.00 Ltd. Haitong Qidong (Weihai) Equity Investment Fund Partnership 91,078,000.00 6,040,937.50 85,037,062.50 (Limited Partnership) Guojin Metal Network Information 5,041,123.42 83,000.19 5,124,123.61 Technology Co., Ltd.

Total. 2,964,537,357.26 74,120,529.15 598,018,290.33 2,440,639,596.08

3) Saleable financial assets measured at fair value at the end of the year

Available-for-sale Available-for-sale Item Other Total equity instrument Debt instrument The cost of equity instrument 1,828,511,152.2 /amortized cost of debt 1,828,511,152.21 1 instruments 1,248,179,981.8 Fair value 1,248,179,981.88 8 Amount of changes in fair value that are included in other -580,331,170.33 -580,331,170.33 comprehensive income The amount of impairment 341,343,838.58 341,343,838.58 provision

Total 906,836,143.30 906,836,143.30

11.Long-term Receivables

Closing balance Opening Balance End-of-year Item Provision discount Provision for Book balance Book value Book balance for bad Book value rate interval bad debts debts

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– F-107 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

BT project 89,472,858.31 8,938,105.40 80,534,752.91 89,381,054.04 89,381,054.04 project payment Margin for 42,000,000.00 4,200,000.00 37,800,000.00 42,000,000.00 42,000,000.00 financial leasing

Total 131,472,858.31 13,138,105.40 118,334,752.91 131,381,054.04 131,381,054.04 —

12.Long-term Equity Investment

1) Classification of long-term equity investment

Item Opening balance Increase Decrease Closing balance

Investment in joint venture 12,165,598.08 927,763.32 11,237,834.76

Investment in associates 1,349,409,207.54 434,754,622.51 562,262,961.92 1,221,900,868.13

Subtotal 1,361,574,805.62 434,754,622.51 563,190,725.24 1,233,138,702.89

Less: Impairment provision for 15,000,000.00 15,000,000.00 long-term equity investment

Total 1,346,574,805.62 434,754,622.51 563,190,725.24 1,218,138,702.89

2) Details for long-term equity investment

Changes in current year Opening Invested units Investment cost Profit or loss Adjustment balance Decr on investment on other Increase ease under equity comprehensi method ve income

Total 1,788,650,739.75 1,346,574,805.62 434,754,622.51 -25,443,239.86

1. Joint venture 12,150,000.00 12,165,598.08 -927,763.32

Gansu Jinchuan Jindinghui Material 12,150,000.00 12,165,598.08 -927,763.32 Co., Ltd.

2. Association 1,776,500,739.75 1,334,409,207.54 434,754,622.51 -24,515,476.54

China Gold Group Yangshan Gold 360,000,000.00 300,402,135.52 -22,114,961.71 Mine Co., Ltd.

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– F-108 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Changes in current year Opening Invested units Investment cost Profit or loss Adjustment balance Decr on investment on other Increase ease under equity comprehensi method ve income Gansu Electricity Publishing and 6,000,000.00 6,632,381.44 625,552.27 Selling Co., Ltd. Jinlong (Hong Kong) Investment Co., Limited Jinlong 70,880,000.00 70,880,000.00 -610,688.63 (Hong Kong) Investment Co., Ltd. Harbin Dongqing Special materials 56,298,812.11 56,298,812.11 -616,688.67 Co., Ltd. Qinghai Yellow River Mining Co., 306,392,400.00 306,392,400.00 Ltd. Lanzhou Jinchuan Keriyuan Battery 249,900,000.00 246,554,949.55 2,570,502.89 Co., Ltd. Gansu Jinni 120,000,000.00 108,962,077.88 Chemical Co., Ltd. Baotou Huading Copper 208,000,000.00 249,690,510.24 1,130,982.77 Development Co., Ltd. Tibet Jiaxu Material 15,000,000.00 Trading Co., Ltd. Gansu Jinchuan Hengxin Polymer 6,000,000.00 4,350,198.73 1,282,063.56 Technology Co., Ltd. Gansu Jinchuan Zhanggu Fluid 10,400,000.00 9,850,275.69 -1,110,830.43 Technology Co., Ltd. Indonesia - PTRimbaKurniaAla 129,933,617.24 171,454,178.49 -5,720,636.31 m Gansu Hongrui Engineering Cost 1,183,410.40 1,183,410.40 49,227.72 Consulting Co., Ltd. Hunan Ruixiang 236,512,500.00 236,512,500.00 New Material Co.,

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– F-109 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Changes in current year Opening Invested units Investment cost Profit or loss Adjustment balance Decr on investment on other Increase ease under equity comprehensi method ve income Ltd.

(Continued)

Change in current year Closing balance for Invested Units Other Provision Closing balance Cash provision for equity for Other dividend impairment changes impairment

Total -8,000,000.00 -529,747,485.38 1,233,138,702.89 15,000,000.00

1. Joint venture 11,237,834.76

Gansu Jinchuan Jindinghui 11,237,834.76 Material Co., Ltd.

2. Association -8,000,000.00 -529,747,485.38 1,221,900,868.13 15,000,000.00

China Gold Group Yangshan 278,287,173.81 Gold Mine Co., Ltd. Gansu Electricity Publishing 7,257,933.71 and Selling Co., Ltd. Jinlong (Hong Kong) Investment Co., Limited 70,269,311.37 Jinlong (Hong Kong) Investment Co., Ltd. Harbin Dongqing Special 55,682,123.44 materials Co., Ltd. Qinghai Yellow River Mining 306,392,400.00 Co., Ltd. Lanzhou Jinchuan Keriyuan 249,125,452.44 Battery Co., Ltd. Gansu Jinni Chemical Co., 108,962,077.88 Ltd. Baotou Huading Copper -8,000,000.00 -242,821,493.01 Development Co., Ltd. Tibet Jiaxu Material Trading 15,000,000.00 15,000,000.00 Co., Ltd. Gansu Jinchuan Hengxin 5,632,262.29 Polymer Technology Co., Ltd.

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– F-110 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Change in current year Closing balance for Invested Units Other Provision Closing balance Cash provision for equity for Other dividend impairment changes impairment Gansu Jinchuan Zhanggu 8,739,445.26 Fluid Technology Co., Ltd. Indonesia - -50,413,492.37 115,320,049.81 PTRimbaKurniaAlam Gansu Hongrui Engineering 1,232,638.12 Cost Consulting Co., Ltd. Hunan Ruixiang New -236,512,500.00 Material Co., Ltd.

13.Investment Properties

1) Investment properties calculated by cost

Closing Item Opening balance Increase Decrease balance

Original book value 2,103,968,355.96 266,209,864.94 8,569,017.44 2,361,609,203.46

Including: House, buildings 2,103,968,355.96 264,981,496.43 8,569,017.44 2,360,380,834.95

Land use right 1,228,368.51 1,228,368.51

Accumulated depreciation (amortization) 112,264,641.28 82,347,090.72 1,466,844.66 193,144,887.34

Including: House, buildings 112,264,641.28 82,164,882.73 1,466,844.66 192,962,679.35

Land use 182,207.99 182,207.99

Net book value of investment property 1,991,703,714.68 —— —— 2,168,464,316.12

Including: House, buildings 1,991,703,714.68 —— —— 2,167,418,155.60

Land use right —— —— 1,046,160.52

Accumulative amount of investment property

Including: House, buildings

Land use right

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– F-111 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Closing Item Opening balance Increase Decrease balance

Book value of investment property 1,991,703,714.68 —— —— 2,168,464,316.12

Including: House, buildings 1,991,703,714.68 —— —— 2,167,418,155.60

Land use right —— —— 1,046,160.52

Note: For details of investment properties whose ownership is restricted, such as mortgage and pledge, see Notes VIII- 62 Assets with Restricted Ownership or Use Rights.

14.Fixed Assets

Item Closing book value Opening Carrying value

Fixed asset 45,857,122,501.17 42,846,731,473.13

Disposal of fixed assets

Total 45,857,122,501.17 42,846,731,473.13

1) Details of fixed assets

Item Opening balance Addition Reduction Closing balance

1. Original book value 69,153,002,480.64 8,238,135,269.68 3,468,701,027.46 73,922,436,722.86

Including:House and buildings 39,782,444,076.30 5,768,764,573.09 1,073,030,825.80 44,478,177,823.59

Machinery equipment 28,733,933,056.31 2,393,921,702.46 2,313,848,575.44 28,814,006,183.33

Transportation equipment 601,431,862.39 63,822,376.21 81,821,626.22 583,432,612.38

Land assets 35,193,485.64 11,626,617.92 46,820,103.56

2.Accumulated depreciation 25,843,965,720.23 3,568,681,857.89 1,811,406,212.21 27,601,241,365.91

Including:House and buildings 12,424,376,981.03 1,646,315,140.45 544,250,140.87 13,526,441,980.61

Machinery equipment 12,991,119,302.42 1,893,904,974.54 1,230,497,953.39 13,654,526,323.57

Transportation equipment 428,469,436.78 28,461,742.90 36,658,117.95 420,273,061.73

Land assets

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– F-112 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

3. Net book value of fixed assets 43,309,036,760.41 —— —— 46,321,195,356.95

Including:House and buildings 27,358,067,095.27 —— —— 30,951,735,842.98

Machinery equipment 15,742,813,753.89 —— —— 15,159,479,859.76

Transportation equipment 172,962,425.61 —— —— 163,159,550.65

Land assets 35,193,485.64 —— —— 46,820,103.56

4. Provision for impairment of fixed 462,305,287.28 1,817,580.06 50,011.56 464,072,855.78 assets

Including:House and buildings 47,169,881.62 4,215.39 47,174,097.01

Machinery equipment 411,169,612.34 1,813,364.67 50,011.56 412,932,965.45

Transportation equipment 3,965,793.32 3,965,793.32

Land assets

5. Book value of fixed assets 42,846,731,473.13 —— —— 45,857,122,501.17

Including:House and buildings 27,310,897,213.65 —— —— 30,904,561,745.97

Machinery equipment 15,331,644,141.55 —— —— 14,746,546,894.31

Transportation equipment 168,996,632.29 —— —— 159,193,757.33

Land assets 35,193,485.64 —— —— 46,820,103.56

Note: The situation of the fixed assets whose ownership is restricted such as mortgage and pledge is detailed in Notes VIII- 62 Assets with Restricted Ownership or Use Rights. Constructions in Progress

15.construction in progress

1) Details of construction in progress:

Item Closing book value Opening book value

Construction in progress 8,927,716,807.61 9,572,928,531.77

Project goods and materials 153,620,434.52 387,769,446.06

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– F-113 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Total 9,081,337,242.13 9,960,697,977.83

ķ Details of construction in progress:

Closing balance Opening balance Item Provision for Provision for Book balance Book value Book balance Book value impairment impairment 850 Project in No.2 Mining Area 400,000 tons copper smelting in 81,783,120.54 81,783,120.54 68,868,951.93 68,868,951.93 Fangchenggang, Guangxi Mining of lean ore in Western 462,558,335.48 462,558,335.48 426,190,714.05 426,190,714.05 Longshou Coal Mine 300 kt/apvc project newly built in 45,297,218.18 45,297,218.18 10,589,057.19 10,589,057.19 chemical plant Jinchuan east poor 861,150,276.79 861,150,276.79 689,442,479.05 689,442,479.05 mining project 400 kt/a ion-exchange 491,269,915.52 491,269,915.52 416,075,191.94 416,075,191.94 membrane caustic soda (Phase II) Development and Utilization of No.3 340,828,118.76 340,828,118.76 Mining Area General technical 376,342,904.85 376,342,904.85 522,537,872.38 522,537,872.38 renovation projects

Metterius Project 192,110,595.60 192,110,595.60 123,305,217.00 123,305,217.00

Siveplatin project 4,308,877,845.77 4,308,877,845.77 4,266,172,458.91 4,266,172,458.91

Ternary Precursor Body Project for 100kt/a Power 269,972,720.29 269,972,720.29 70,790,966.50 70,790,966.50 Lithium Ion Batteries (Phase I) Deep Mining Engineering in No.2 230,831,982.79 230,831,982.79 140,867,200.64 140,867,200.64 Mining Area 35,000 tons of nickel sulfate 55,834,678.08 55,834,678.08 technical

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– F-114 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Closing balance Opening balance Item Provision for Provision for Book balance Book value Book balance Book value impairment impairment transformation project 3 960 t/a Extension to 50 000 t/a Ternary Precursor for Power Lithium 164,080,824.80 164,080,824.80 44,741,039.72 44,741,039.72 Ion Batteries and 110 000 t/a Sodium Sulfate by-product Project (Phase I) 5000 t/a Special-shaped Copper Strip 21,579,513.04 21,579,513.04 20,302,031.45 20,302,031.45 Project for Electronic Lead Frame Ultra-low Emission Technological Revamping of 89,443,768.92 89,443,768.92 60,134,912.55 60,134,912.55 2*150MW Unit in Jinchuan Group Co., Ltd. Phase II Project of Low Temperature Waste Heat Utilization of 39,096,438.24 39,096,438.24 30,246,726.01 30,246,726.01 Circulating Cooling Water for 2*150 MW Cogeneration Unit Upgrading of waste water treatment 52,712,348.00 52,712,348.00 18,537,343.02 18,537,343.02 system containing nickel and cobalt 4000t Ternary Precursor 32,904,405.07 32,904,405.07 25,409,281.15 25,409,281.15 Extension Project Resource disposal of hazardous waste 25,017,944.14 25,017,944.14 11,118,520.45 11,118,520.45 in jinchang city, Gansu province

Indonesia project 1,442,554,001.73 1,442,554,001.73

Jinchuan science 41,871,559.64 41,871,559.64 and technology

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– F-115 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Closing balance Opening balance Item Provision for Provision for Book balance Book value Book balance Book value impairment impairment museum phase ii renovation Precious metal one, two resources 44,971,865.57 44,971,865.57 comprehensive recovery project 35kt/a nickel salt project for high-end 76,819,358.31 76,819,358.31 electroplating Cobalt ball nickel 20,669,692.72 20,669,692.72 coating project Whole bottom continuous copper smelting technology energy-saving and 56,304,192.18 56,304,192.18 environmental protection renovation Jinchuan construction steel structure (zhanjiang-fangche 29,689,232.70 29,689,232.70 nggang) relocation, expansion and reconstruction project Copper electrolysis expansion and transformation 18,847,712.48 18,847,712.48 project of Guangxi Jinchuan Company Middle mining area 1220 horizontal 6,458,715.59 6,458,715.59 back filling air project The rest of the 938,974,782.00 51,920,461.60 887,054,320.40 830,050,546.58 41,668,777.32 788,381,769.26 project

Total 8,979,637,269.21 51,920,461.60 8,927,716,807.61 9,614,597,309.09 41,668,777.32 9,572,928,531.77

ĸ Important construction in projects changes in the current period

Opening Transfer to Item Budget Increasee Decrease Closing balance balance fixed assets

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– F-116 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Opening Transfer to Item Budget Increasee Decrease Closing balance balance fixed assets 850 Project in No.2 1,550,000,000.00 40,794,336.79 40,794,336.79 Mining Area 400,000 tons copper smelting in 413,715,000.00 68,868,951.93 67,256,673.07 54,342,504.46 81,783,120.54 Fangchenggang, Guangxi Mining of lean ore in Western 1,039,300,000.00 426,190,714.05 39,276,113.93 2,908,492.50 462,558,335.48 Longshou Coal Mine 300 kt/apvc project newly built in 161,390,000.00 10,589,057.19 34,708,160.99 45,297,218.18 chemical plant Jinchuan east poor 1,650,330,000.00 689,442,479.05 171,707,797.74 861,150,276.79 mining project 400 kt/a ion-exchange 817,500,000.00 416,075,191.94 75,194,723.58 491,269,915.52 membrane caustic soda (Phase II) Development and Utilization of No.3 979,690,000.00 340,828,118.76 10,089,935.91 350,918,054.67 Mining Area General technical 1,622,399,700.00 522,537,872.38 164,497,264.04 310,692,231.57 376,342,904.85 renovation projects

Metterius Project 4,508,170,000.00 123,305,217.00 68,805,378.60 192,110,595.60

Siveplatin project 4,912,261,577.23 4,266,172,458.91 42,705,386.86 4,308,877,845.77

Ternary Precursor Body Project for 100kt/a Power 2,568,380,600.00 70,790,966.50 199,181,753.79 269,972,720.29 Lithium Ion Batteries (Phase I) Deep Mining Engineering in 1,693,500,000.00 140,867,200.64 89,964,782.15 230,831,982.79 No.2 Mining Area 35,000 tons of nickel sulfate technical 218,510,200.00 55,834,678.08 130,868,492.56 186,703,170.64 transformation project 3 960 t/a Extension to 50 000 t/a Ternary Precursor 650,000,000.00 44,741,039.72 119,339,785.08 164,080,824.80 for Power Lithium Ion Batteries and

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– F-117 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Opening Transfer to Item Budget Increasee Decrease Closing balance balance fixed assets 110 000 t/a Sodium Sulfate by-product Project (Phase I) 5000 t/a Special-shaped Copper Strip 30,000,000.00 20,302,031.45 2,310,760.87 1,033,279.28 21,579,513.04 Project for Electronic Lead Frame Ultra-low Emission Technological Revamping of 87,000,000.00 60,134,912.55 29,308,856.37 89,443,768.92 2*150MW Unit in Jinchuan Group Co., Ltd. Phase II Project of Low Temperature Waste Heat Utilization of 66,484,600.00 30,246,726.01 8,849,712.23 39,096,438.24 Circulating Cooling Water for 2*150 MW Cogeneration Unit Upgrading of wastewater treatment system 71,690,000.00 18,537,343.02 34,175,004.98 52,712,348.00 containing nickel and cobalt 4000t Ternary Precursor 14,900,000.00 25,409,281.15 7,495,123.92 32,904,405.07 Extension Project Resource disposal of hazardous waste 68,090,000.00 11,118,520.45 13,899,423.69 25,017,944.14 in jinchang city, Gansu province

Indonesia project 3,762,000,000.00 1,442,554,001.73 1,515,314,166.18 2,957,868,167.91

Jinchuan science and technology 41,871,559.64 41,871,559.64 museum phase ii renovation Precious metal one, two resources 180,900,000.00 44,971,865.57 44,971,865.57 comprehensive recovery project 35kt/a nickel salt 325,200,000.00 76,819,358.31 76,819,358.31 project for high-end

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– F-118 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Opening Transfer to Item Budget Increasee Decrease Closing balance balance fixed assets electroplating

Cobalt ball nickel 39,000,000.00 20,669,692.72 20,669,692.72 coating project Whole bottom continuous copper smelting technology 60,000,000.00 58,281,543.30 1,977,351.12 56,304,192.18 energy-saving and environmental protection renovation Jinchuan construction steel structure (zhanjiang-fangche 38,330,500.00 29,689,232.70 29,689,232.70 nggang) relocation, expansion and reconstruction project Copper electrolysis expansion and transformation 48,240,000.00 18,847,712.48 18,847,712.48 project of Guangxi Jinchuan Company Middle mining area 1220 horizontal 29,150,000.00 6,458,715.59 6,458,715.59 back filling air project The rest of the 830,050,546.58 1,892,229,301.02 1,776,029,086.02 7,275,979.58 938,974,782.00 project

Total 29,786,388,349.87 9,614,597,309.09 5,055,582,614.66 5,683,266,674.96 7,275,979.58 8,979,637,269.21

(Continued)

Including: Project total The cumulative Project interest Year Interest investment amount of Sources of Item progress capitalization capitalization proportion of the interest funds (%) amount this Proportion (%) budget (%) capitalized year 850 Project in No.2 81.84 100.00 Owned funds Mining Area 400,000 tons copper smelting in 42.29 85.00 Owned funds Fangchenggang, Guangxi

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– F-119 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Mining of lean ore in Owned Western Longshou 94.13 91.00 222,156,439.48 20,353,982.46 3.27 funds/loans Coal Mine 300 kt/apvc project newly built in chemical 28.07 Owned funds plant Lean Mine Mining Owned Project in Eastern 79.50 95.00 107,400,935.60 70,738.68 3.27 funds/loans Jinchuan 400 kt/a ion-exchange Owned membrane caustic 60.09 15,736,803.12 15,736,803.12 funds/loans soda (Phase II) Development and Owned Utilization of No.3 42.67 100.00 100,168,403.49 89,935.91 3.27 funds/loans Mining Area General technical Owned 47,615,281.81 8,943,144.60 renovation projects funds/loans

Metterius Project Owned funds

SIVEPLATIN Owned funds PROJECT Ternary Precursor Body Project for 32.92 32.92 Owned funds 100kt/a Power Lithium Ion Batteries (Phase I) Deep Mining Engineering in No.2 14.16 55.00 Owned funds Mining Area 35,000 tons of nickel sulfate technical 85.44 Owned funds transformation project 3 960 t/a Extension to 50 000 t/a Ternary Precursor for Power Lithium Ion Batteries 29.30 29.30 Owned funds and 110 000 t/a Sodium Sulfate by-product Project (Phase I) 5000 t/a Special-shaped Copper Strip Project 75.38 Owned funds for Electronic Lead Frame

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– F-120 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Ultra-low Emission Technological Revamping of Owned 67.76 90.00 2,419,522.93 2,419,522.93 3.27 2*150MW Unit in funds/loans Jinchuan Group Co., Ltd. Phase II Project of Low Temperature Waste Heat Utilization Owned 58.81 95.00 1,177,408.34 1,177,408.34 3.27 of Circulating Cooling funds/loans Water for 2*150 MW Cogeneration Unit Upgrading of waste water treatment Owned 73.53 1,409,671.62 1,312,996.07 system containing funds/loans nickel and cobalt 4000t Ternary Precursor Extension 94.01 94.01 Owned funds Project Resource disposal of hazardous waste in 36.74 36.74 Owned funds jinchang city, Gansu province

Indonesia project Owned funds

Jinchuan science and technology museum Owned funds phase ii renovation Precious metal one, two resources 24.86 24.86 Owned funds comprehensive recovery project 35kt/a nickel salt project for high-end 23.62 Owned funds electroplating Cobalt ball nickel 53.00 Owned funds coating project Whole bottom continuous copper smelting technology 0.97 Owned funds energy-saving and environmental protection renovation Jinchuan construction steel structure (zhanjiang-fangcheng 77.46 80.00 Owned funds gang) relocation, expansion and reconstruction project

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– F-121 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Copper electrolysis expansion and transformation project 39.07 78.77 Owned funds of Guangxi Jinchuan Company Middle mining area 1220 horizontal back 22.16 30.00 Owned funds filling air project Owned The rest of the project 1,471,029.83 448,513.02 funds/loans

Total 499,555,496.22 50,553,045.13

2) Impairment provision for construction in progress

Project Opening balance Current year Closing balance Reason

Technical bottleneck can not be Installation of solar broken, can not achieve normal vacuum coating 41,668,777.32 41,668,777.32 production, sealed in the plant production line to idle Wind power reactor plant Projects are stagnant and 10,251,684.28 10,251,684.28 project assets are idle

Total 41,668,777.32 10,251,684.28 51,920,461.60 ——

3) Project goods and materials

Item Closing balance Opening balance

Project materials 90,954,485.99 186,785,497.65

Special equipment 62,665,948.53 200,983,948.41

Total 153,620,434.52 387,769,446.06

16. Productive biological assets

1) Measured at cost ķ The opening and closing balance of book value of biological assets subsequently measured at cost

Closing balance of book value Item Opening balance of book value Increase Decrease Amount quantity

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– F-122 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Animal husbandry 5,224,598.96 23,330,007.05 1,852,910.33 26,701,695.68

Total 5,224,598.96 23,330,007.05 1,852,910.33 26,701,695.68

ĸ Depreciation and impairment of bearer biological assets at cost

Ending Estimate Closing balance of Estimated net Depreciation balance of Item d using accumulated residual value method impairment life depreciation provision Straight line Animal husbandry 2,733,748.88 method

Total - - - 2,733,748.88

17.Intangible Assets

1) Classification

Item Opening balance Increase Decrease Closing balance

Original book value 14,400,757,453.96 293,621,283.18 588,757,417.02 14,105,621,320.12

Including: Land use 2,184,512,707.72 173,420,999.24 44,308,500.35 2,313,625,206.61 right

Exploration rights 1,623,518,914.97 7,107,402.91 1,630,626,317.88

Prospecting right 10,470,426,704.82 85,201,873.18 544,448,916.67 10,011,179,661.33

Right to use sea area 84,638,490.00 84,638,490.00

Proprietary technology 35,815,412.07 27,487,912.77 63,303,324.84

Software 1,845,224.38 403,095.08 2,248,319.46

Accumulative 4,197,787,095.48 389,546,519.87 1,182,104,139.53 3,405,229,475.82 amortization amount Including: Land use 217,270,749.05 40,530,803.93 6,159,273.30 251,642,279.68 right

Exploration rights 553,973,276.07 42,533,129.90 596,506,405.97

Prospecting right 3,380,024,950.46 288,687,304.86 1,174,787,794.43 2,493,924,460.89

Right to use sea area 12,083,282.95 1,692,769.80 13,776,052.75

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– F-123 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Item Opening balance Increase Decrease Closing balance

Proprietary technology 33,570,392.57 15,582,782.66 1,157,071.80 47,996,103.43

Software 864,444.38 519,728.72 1,384,173.10

Amount of provision for impairment of intangible 809,243,785.21 290,415,653.19 4,840,100.00 1,094,819,338.40 assets Including: Land use 297,603,308.37 41,069,681.76 338,672,990.13 right

Exploration rights 150,254,286.82 238,519,543.14 388,773,829.96

Prospecting right 361,386,190.02 10,826,428.29 4,840,100.00 367,372,518.31

Right to use sea area

Proprietary technology

Software

Book value 9,393,726,573.27 - - 9,605,572,505.90

Including: Land use 1,669,638,650.30 - - 1,723,309,936.80 right

Exploration rights 919,291,352.08 - - 645,346,081.95

Prospecting right 6,729,015,564.34 - - 7,149,882,682.13

Right to use sea area 72,555,207.05 - - 70,862,437.25

Proprietary technology 2,245,019.50 - - 15,307,221.41

Software 980,780.00 - - 864,146.36

Note: For details of intangible assets, whose ownership is restricted, such as mortgage and pledge, see Notes VIII 62 Assets with Restricted Ownership or Use Rights.

18.Goodwill

Book value of goodwill

Name of investee or events which formed Opening balance Increase Decrease Closing Balance goodwill

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– F-124 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Consolidation not under the same control - Ni Du 267,508,495.91 267,508,495.91 Industrial Company Consolidation not under the same control - Hunan 158,903,631.21 158,903,631.21 Ruixiang

Total 267,508,495.91 158,903,631.21 426,412,127.12

19.Long-term Prepaid Expenses

Opening Closing Other reasons Item Increase Amortization Decrease balance balance for reduction

Land rental fee 9,120,000.00 83,657,504.39 3,774,917.91 89,002,586.48

Transferred to Decoration cost 46,693,927.06 801,330.05 2,918,586.07 35,132,733.52 9,443,937.52 investment properties

Catalyst 3,218,445.74 1,106,015.91 2,112,429.83

Total 55,813,927.06 87,677,280.18 7,799,519.89 35,132,733.52 100,558,953.83 ——

20.Deferred Income Tax Assets and Liabilities

1) Confirmed deferred income tax assets and deferred income tax liabilities

Closing balance Opening balance

Item Deferred income Deductible /taxable Deferred income Deductible tax temporary tax /taxable temporary assets/liabilities difference assets/liabilities difference 1.Deferred income tax 1,107,696,189.89 7,327,313,035.44 1,424,448,129.82 8,726,062,853.34 assets

Asset impairment provision 283,102,458.58 1,834,120,816.43 472,211,464.12 2,660,609,044.48

Accrued long-term 562,993,030.23 3,753,286,868.23 585,884,567.75 3,905,897,118.30 employee benefits payable Floating profit and loss of 1,646,202.69 6,584,810.76 futures

Estimated debts 167,857,822.71 1,118,132,389.78 167,512,912.11 1,116,752,747.40

Offset unrealized profits 71,439,606.49 476,264,043.23 54,531,341.22 362,961,573.43 from internal transactions

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– F-125 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Closing balance Opening balance

Item Deferred income Deductible /taxable Deferred income Deductible tax temporary tax /taxable temporary assets/liabilities difference assets/liabilities difference

Deductible loss 6,006,852.14 36,866,119.44 114,910,014.18 579,163,753.38

Other 16,296,419.74 108,642,798.33 27,751,627.75 94,093,805.59

2. Deferred income tax 2,970,487,728.25 19,662,466,139.67 3,501,372,577.28 11,938,806,680.14 liabilities Changes in fair value of transactional financial 4,353,054.30 17,412,217.21 assets Changes in the fair value of financial assets available for 67,819,426.24 452,129,508.24 sale Floating profit and loss of 2,759,605.84 18,126,105.59 4,881,074.49 23,086,583.32 futures Appreciation of evaluation of 44,792,302.40 174,825,752.70 51,145,959.33 202,268,161.62 fixed assets

Others 2,922,935,820.01 19,469,514,281.38 3,373,173,062.92 11,243,910,209.75

2) Unconfirmed deferred income tax assets

Item Closing balance Opening balance

Deductible temporary differences 4,287,307,632.82 1,613,053,280.57

Deductible losses 8,025,257,687.64 5,221,092,422.95

Total 12,312,565,320.46 6,834,145,703.52

3) Unconfirmed deferred income tax assets deductible losses will be expired in the following year

Year Closing balance Opening balance Note

2018 7,959,817.17

2019 915,321,544.33 885,633,815.69

2020 1,122,085,778.73 868,274,551.75

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– F-126 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Year Closing balance Opening balance Note

2021 1,912,110,760.81 1,856,977,615.00

2022 475,196,672.63 289,882,798.17

2023 1,222,983,717.17 1,312,363,825.17

2024 2,377,559,213.97

Total 8,025,257,687.64 5,221,092,422.95 ——

21.Other Non-current Assets

Item Closing balance Opening balance

Deposit of capital discounted 303,751,506.02 128,380,439.78

Exploration expenditure 29,181,052.57 39,597,334.59

Other (Hong Kong Resources) 24,922,239.33 119,475,761.25

Deposit on purchase of equity 26,000,000.00

Engineering equipment section 260,886,318.86 106,469,055.33

Total 618,741,116.78 419,922,590.95

22.Short-term loans

1) Classification of short-term loan

Item Closing balance Opening balance

Pledge loan 77,897,630.00 402,135,697.98

Mortgage loan 804,211,195.20 52,920,495.17

Guaranteed loan 428,893,726.23 150,000,000.00

Credit loan 13,684,019,880.06 22,493,230,664.37

Total 14,995,022,431.49 23,098,286,857.52

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– F-127 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Note: The RMB 69,875,000.00 pledges in the ending pledge loan are 15 patent rights;RMB 8,022,630.00 pledges are in stock of RMB 8,738,746.07.

In the ending mortgage loan, the mortgage of RMB 94,211,195.20 is the fixed asset of RMB 40,480,109.26 and the intangible asset of RMB 46,741,242.73; The collateral of RMB 700,000,000.00 is the fixed asset of RMB 1,445,557,982.57 and the intangible asset of RMB 121,125,585.77; RMB 10,000,000.00 collateral is a fixed asset valued at RMB 61,988,884.29.

At the end of the period, the guarantee loan was RMB 95,891,273.12, and the guarantor was Nantong Kubo New Material Co., Ltd., Hunan Guoyu Lithium energy Industry Co., Ltd., Nantong Ruixiang New material Co., Ltd., Tang Guoshun, Zhang Yuyu;The guaranteed loan at the end of the year is RMB 333,002,453.11, and the guarantee is RMB 335,200,000.00 of structured financial products.

2) There are no short-term borrowings overdue at the end of the year.

23.Financial Liabilities Measured at Fair Value Through Profit or Loss

Item Closing fair value Opening fair value

Transactional financial liabilities 18,532,850.16 17,604,835.36

Total 18,532,850.16 17,604,835.36

24.Accounts payable

Item Closing balance Opening balance

Banker's acceptance bill 3,315,097,471.23 1,577,203,248.24

Commercial acceptance bill

Letter of credit 220,566,997.96 1,024,285,158.54

Total 3,535,664,469.19 2,601,488,406.78

25.Notes Payable

Aging Closing balance Opening balance

Within 1 year (inclusive) 4,256,940,234.46 3,465,492,774.00

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– F-128 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

1-2 years (inclusive) 1,028,411,527.16 1,693,142,530.47

2-3 years (inclusive) 306,300,090.25 1,562,851,164.75

Over 3 years 2,451,230,589.78 1,219,859,455.38

Total 8,042,882,441.65 7,941,345,924.60

Important payables aging over 1 year

Creditors Closing balance Reason for unpaid

Provisional estimate 2,821,027,884.28 Not settled yet

Gansu Hengchang Construction 61,287,752.37 The project is not completed Engineering Co., Ltd. Guangdong Dadao Building Materials 13,300,366.11 The project is not completed Co., Ltd.

Total 2,895,616,002.76 ——

26.Advance receipts

Aging Closing balance Opening balance

Within 1 year (inclusive) 1,805,016,387.33 2,479,967,078.20

Over 1 year 421,486,233.40 426,531,647.38

Total 2,226,502,620.73 2,906,498,725.58

Important advances aging over 1 year

Creditors Closing balance Reason for uncarried

Advance payment for individual house sales 210,766,476.80 The contract is not yet executed

Qingyuan Pilot Materials Co., Ltd. 66,335,910.27 The contract is not yet executed

Hunan Jinfeng Nonferrous metal Co., Ltd. 24,785,933.93 There is legal proceedings

Qingyuan Shenda Rare Metal Trading Co., Ltd. 21,541,581.50 The contract is not yet executed

Foshan Judefu Steel Industry Co., Ltd. 17,450,000.00 There is legal proceedings

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– F-129 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Creditors Closing balance Reason for uncarried

Wuxi Jisheng Metal Material Co., Ltd. 10,000,000.00 There is legal proceedings

Total 350,879,902.50 ——

27.Payroll payable

1) Employee benefits payable list

Opening Closing Item Increase Decrease balance balance 1. Short-term employee employee 6,049,312.48 4,357,012,876.05 4,346,912,004.67 16,150,183.86 benefits payable 2. Post-employment benefits- setting up 583,805,730.44 580,171,628.03 3,634,102.41 deposit plan

3. Termination benefits 17,113,164.54 15,685,021.10 1,428,143.44

4. Other benefits due within one year

5. Other 182,084.00 182,084.00

Total 6,049,312.48 4,958,113,855.03 4,942,950,737.80 21,212,429.71

2) List of short-term employee employee benefits payable

Opening Closing Item Increase Decrease balance balance Salaries, bonuses, allowances and 14,924,895.0 4,701,871.46 3,271,452,324.74 3,261,229,301.12 subsidies 8

Welfare 195,485,151.06 195,485,151.06

Social insurance 204,445,614.67 204,357,256.22 88,358.45

Including: Basic medical insurance 155,563,472.50 155,549,033.10 14,439.40

Supplementary medical insurance

Industrial injury insurance 46,638,748.68 46,565,984.78 72,763.90

Maternity insurance 1,869,001.49 1,867,846.34 1,155.15

Serious sickness relief fund 137,434.60 137,434.60

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– F-130 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Opening Closing Item Increase Decrease balance balance

Other premiums 236,957.40 236,957.40

Housing provident fund 54,016.90 271,594,090.72 271,648,107.62

Trade union funds and employee 1,233,628.30 74,631,660.32 74,916,399.51 948,889.11 education funds

6. Non-monetary welfare

7. Labor service expenses 331,456,688.87 331,456,688.87

8. Other short-term employee salary 59,795.82 7,947,345.67 7,819,100.27 188,041.22

16,150,183.8 Total 6,049,312.48 4,357,012,876.05 4,346,912,004.67 6

3) List of details of Deposit Plan

Opening Item Increase Decrease Closing balance balance

1. Pension insurance 411,130,863.19 410,598,326.91 532,536.28

2. Employment insurance 17,083,353.80 17,082,230.15 1,123.65

3. Enterprise annuity payment 155,591,513.45 152,491,070.97 3,100,442.48

Total 583,805,730.44 580,171,628.03 3,634,102.41

28.Taxes payable

Tax Item Opening balance Due in current year Paid in current year Closing balance

VAT 28,449,537.50 1,664,979,841.47 1,666,648,592.11 26,780,786.86

Corporate income tax 391,319,226.70 813,152,660.86 776,004,649.34 428,467,238.22

City construction tax 18,512,369.28 115,059,107.58 114,120,321.89 19,451,154.97

Education surcharges 7,908,383.78 51,090,354.11 50,088,566.28 8,910,171.61

Local education surcharges 5,073,259.83 32,814,029.51 32,331,576.71 5,555,712.63

House property tax 15,469,085.14 120,361,540.90 132,865,121.53 2,965,504.51

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– F-131 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Tax Item Opening balance Due in current year Paid in current year Closing balance

Land use tax 10,375.00 106,080,312.51 105,608,223.17 482,464.34

Vehicle and Vessel Use Tax 884,468.58 884,468.58

Stamp duty 16,361,597.16 90,645,698.86 86,722,835.75 20,284,460.27

Resource tax 9,847,113.87 122,906,496.97 121,999,128.54 10,754,482.30

Individual income tax 3,251,176.59 52,092,329.65 50,564,552.36 4,778,953.88

Land tax 788,586.58 53,315,620.68 53,410,551.03 693,656.23

Deed tax 2,480,856.71 1,909,992.90 570,863.81

Environmental Protection Tax 2,640,811.95 24,921,105.33 23,854,889.46 3,707,027.82

Water conservancy fund 246,726.53 226,641.53 20,085.00

Other 37,697.79 12,114,612.20 11,979,043.95 173,266.04

Total 499,669,221.17 3,263,145,762.45 3,229,219,155.13 533,595,828.49

29.Other Payables

Item Closing balance Opening balance

Interest payables 236,869,972.34 255,041,671.41

Dividend payables 593,777,846.40 579,450,379.87

Other payables 4,040,959,616.58 3,641,258,131.18

Total 4,871,607,435.32 4,475,750,182.46

1) Interests payable

Item Closing balance Opening balance

Amortization interest on a long-term loan 19,937,685.05 20,882,422.37 that is repaid at maturity

Corporate bond interest 185,422,777.78 4,054,722.21

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– F-132 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Interest is payable on short-term 17,368,098.54 204,530,974.69 borrowings

Other interest 14,141,410.97 25,573,552.14

Total 236,869,972.34 255,041,671.41

2) Dividends payables

Item Closing balance Opening balance

Common stock dividend 593,777,846.40 579,450,379.87

Total 593,777,846.40 579,450,379.87

3) Other payables ķ Other payable by nature

Item Closing balance Opening balance

Current account 3,494,172,757.59 2,869,290,020.77

Retention money 289,553,521.06 280,062,913.57

Deposit 103,099,938.56 57,128,644.78

Deduction of Social Security and Personal Tax 1,165,522.35 1,755,087.01

Substitute money 2,480,923.50 1,009,335.94

Net Liabilities of Commodity Futures Contracts 210,432,492.35

Other 150,486,953.52 221,579,636.76

Total 4,040,959,616.58 3,641,258,131.18

ĸ Other payable with aging over 1 year

Company Closing balance Reasons for non-payment

Jinjian Global mining Co., Ltd. 651,137,982.42 Project not completed

China Africa Development Fund Co., Ltd. 722,005,307.10 Project not completed

Total 1,373,143,289.52 ——

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– F-133 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

30.Non-current Liabilities Due Within One Year

Item Closing balance Opening balance

Long-term borrowings due within 1 year 2,234,600,000.00 4,055,600,000.00

Bonds payable within 1 year

Long-term payables due within 1 year 104,940,504.62 117,140,608.01

Other long-term liability due within 1 year

Total 2,339,540,504.62 4,172,740,608.01

31.Other Current Liabilities

Item Closing balance Opening balance

Short-term bonds payable

Short-term provisions 60,638,992.71 113,256,771.99

Total 60,638,992.71 113,256,771.99

32.Long-term loans

Closing interest rate Item Closing balance Opening balance range(%)

Pledge loan

Mortgage loan 1,460,683,931.23 1,377,100,000.00 4.900%-5.047%

Guaranteed loan 631,600,000.00 1,311,000,000.00 4.500%

Credit loan 19,669,294,486.84 19,054,596,843.33 1.330%-4.275%

Subtotal 21,761,578,418.07 21,742,696,843.33

Less: Long-term borrowings due within 1 year(see note VIII. 2,234,600,000.00 4,055,600,000.00 1.330%-4.275% 30)

Total 19,526,978,418.07 17,687,096,843.33 ——

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– F-134 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Note: The mortgage of RMB 66,356,131.23 in the ending mortgage is the fixed asset of RMB 40,480,109.26, and the intangible asset of RMB 46,741,242.73; RMB 1,336,477,800.00 as an investment properties with a value of RMB 1,689,930,666.43; RMB 48,550,000.00 the collateral is a fixed asset with a value of RMB 86,072,353.50; RMB 9,300,000.00 collateral is an intangible asset valued at RMB 4,240,799.71 and a fixed asset valued at RMB 13,200,982.00.

The guarantor of RMB 500,000,000.00 in the ending guarantee loan is Jinchuan Group Co., Ltd.; The guarantor of RMB 131,600,000.00 is Nantong Ruixiang New Materials Co., Ltd.

33.Bonds Payable

1) Bonds payable

Item Closing balance Opening balance

Medium-term note 6,000,000,000.00 1,000,000,000.00

Subtotal 6,000,000,000.00 1,000,000,000.00

Less: Bonds payable due within 1 year (Note VIII-30)

Total 6,000,000,000.00 1,000,000,000.00

2) Movement of bonds (excluding preference shares classified as: financial liabilities, perpetual bonds and other financial instruments)

Bond name Face value Issue date Term to Bond name Opening balance

18 Jinchuan MTN002 500,000,000.00 2018/11/13 3 years 500,000,000.00 500,000,000.00

18 Jinchuan MTN001 500,000,000.00 2018/12/12 3 years 500,000,000.00 500,000,000.00

19 Jinchuan MTN001 2,500,000,000.00 2019/1/15 3 years 2,500,000,000.00

19 Jinchuan MTN002 2,500,000,000.00 2019/3/19 3 years 2,500,000,000.00

Less : bonds payable due within 1 year (see Note VIII-30)

Total 6,000,000,000.00 6,000,000,000.00 1,000,000,000.00

(Continued)

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– F-135 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Provision for Amortization Current year Closing Bond name Amount on offer interest at of discount repayment balance par

18 Jinchuan MTN002 500,000,000.00

18 Jinchuan MTN001 500,000,000.00

19 Jinchuan MTN001 2,500,000,000.00 2,500,000,000.00

19 Jinchuan MTN002 2,500,000,000.00 2,500,000,000.00

Less: bonds payable due within 1 year (see Note VIII-30)

Total 5,000,000,000.00 6,000,000,000.00

34.Long-term Payable

Item Closing balance Opening balance

Long-term Payable 292,879,094.64 361,235,096.21

Special Payable 306,647,087.46 291,623,069.11

Total 599,526,182.10 652,858,165.32

1) The top 5 of long-term payable on closing balance:

Item Closing balance Opening balance

Including: 1. Financing leases payable 39,636,282.33 142,516,871.27

2. Cost of mine rehabilitation 253,242,812.31 218,718,224.94

Total 292,879,094.64 361,235,096.21

2) The top 5 of special payables on closing balance

Opening Closing Item Increase Decrease balance balance 1. Supplementary funds for low-rent 106,460,206.87 8,943,172.11 7,873,544.76 107,529,834.22 housing construction 2. Management Expenses of Housing 5,034,503.24 5,780,000.00 5,000,000.00 5,814,503.24 Provident Fund Center

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– F-136 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

3. 12 # Residential Building Project in Shantytowns of State-owned Industry and 3,570,000.00 3,570,000.00 Mines 4. Supporting Infrastructure Construction 536,465,400.0 170,615,850.00 555,582,300.00 189,732,750.00 of Safe Housing Project 0

5. Gobi Vanilla Garden Project 5,942,509.00 1,217,900.00 7,160,409.00

556,499,353.7 Total 291,623,069.11 571,523,372.11 306,647,087.46 6

35.Long-term employee compensation payable

Closing Item Opening balance Increase Decrease balance 1. Net liabilities of benefit plans for post-service welfare settings

2. Dismissal benefits

3,753,286,868.2 3.Other long-term benefits 3,905,897,118.30 118,650,000.00 271,260,250.07 3 Including: Retirement and Survivors' 2,791,930,859.1 2,871,205,824.45 118,650,000.00 197,924,965.30 overall expenses 5 Intermediate person transition 1,034,691,293.85 73,335,284.77 961,356,009.08 compensation fund 3,753,286,868.2 Total 3,905,897,118.30 118,650,000.00 271,260,250.07 3

36.Accrued liabilities

Item Closing balance Opening balance

Reclamation fee 420,198,396.84 400,952,668.74

Outstanding loss contract loss 1,116,752,747.40 1,116,752,747.40

Pending litigation 1,379,642.38

Total 1,538,330,786.62 1,517,705,416.14

37.Deferred revenue

Opening Ret Item Increase Profit of loss Others Closing balance balance urn

- 135 -

– F-137 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Opening Ret Item Increase Profit of loss Others Closing balance balance urn Comprehensive system for deep development of 1,533,000.00 1,533,000.00 oversize ore deposits Demonstration project of energy management 9,500,000.00 500,000.00 9,000,000.00 center of industrial enterprises 10kt/a base nickel high technology 4,750,000.00 250,000.00 4,500,000.00 industrialization project Conservation and comprehensive 20,000,000.00 2,000,000.00 18,000,000.00 utilization of mineral resources Construction fund of demonstration base for comprehensive utilization of mineral resources (demonstration base for 501,200,000.00 30,500,000.00 470,700,000.00 comprehensive utilization of copper and nickel polymetallic mineral resources in Jinchuan, Gansu province) Incentive fund for saving and comprehensive utilization of 9,500,000.00 500,000.00 9,000,000.00 copper and nickel sulfide mineral resources in longshou mine Longshou mountain mine geological 28,500,000.00 1,500,000.00 27,000,000.00 environment treatment project Subsidies for state-level training 5,000,000.00 3,169.50 4,996,830.50 bases for highly

- 136 -

– F-138 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Opening Ret Item Increase Profit of loss Others Closing balance balance urn skilled personnel

Land for project construction phase 8,654,500.00 455,500.00 8,199,000.00 iii Low-temperature waste heat project of circulating 8,645,000.00 455,000.00 8,190,000.00 cooling water in workshop 2 (2112044) Mining engineering of middle section of 850 in no.2 45,600,000.00 2,400,000.00 43,200,000.00 mining area (2041002) Development of efficient utilization technology for rare 15,865,000.00 835,000.00 15,030,000.00 and precious metals In 2013, the central government 14,250,000.00 750,000.00 13,500,000.00 funded the heavy metal pollution project Provincial special fund for pollution 1,900,000.00 100,000.00 1,800,000.00 reduction in 2013 In 2013, major demonstration projects of circular economy and resource conservation and key industrial 5,415,000.00 285,000.00 5,130,000.00 pollution control projects in key energy conservation projects were carried out 2012 Gansu provincial government 6,175,000.00 325,000.00 5,850,000.00 subsidy fund for the circular transformation of

- 137 -

– F-139 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Opening Ret Item Increase Profit of loss Others Closing balance balance urn industrial parks (comprehensive utilization project of nickel anode sludge) Special fund for circulating transformation of the park (phase ii 3,800,000.00 200,000.00 3,600,000.00 of 400,000 tons of ionic membrane caustic soda) Special fund for prevention and control of heavy metal pollution 17,100,000.00 900,000.00 16,200,000.00 from the central government in 2014 2014 provincial pollution emission reduction award instead of advance allocation fund 1,710,000.00 90,000.00 1,620,000.00 (SCR project of boiler denitrification in thermal power plant ii) Special financial fund of the circular economy development province in 2014 (60,000 tons electrolytic nickel 4,750,000.00 250,000.00 4,500,000.00 energy expansion technology - residual chlorine absorption technology renovation project) In 2014, major demonstration projects of circular economy and 9,500,000.00 500,000.00 9,000,000.00 resource conservation and key industrial pollution control

- 138 -

– F-140 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Opening Ret Item Increase Profit of loss Others Closing balance balance urn projects in key energy conservation projects Capital of industrial transformation and upgrading project of provincial state-owned 4,000,000.00 4,000,000.00 enterprises in 2014 (15,000 tons/year titanium sponge smelting project) Transformation of 9,500,000.00 500,000.00 9,000,000.00 high pressure fan Heat and power workshop boiler 18,430,000.00 970,000.00 17,460,000.00 out of stock renovation Environmental protection gas collection standard management 1,520,000.00 80,000.00 1,440,000.00 project of copper smelting self-heating furnace area 42kt/a nickel anode slime sulfur recovery 8,550,000.00 450,000.00 8,100,000.00 technology renovation project Thermal power workshop environmental 8,550,000.00 450,000.00 8,100,000.00 protection technology renovation project In 2014, municipal pollution prevention and control and special subsidy fund was awarded instead of 950,000.00 50,000.00 900,000.00 paid (desulfurization project of nickel flash furnace drying kiln, online

- 139 -

– F-141 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Opening Ret Item Increase Profit of loss Others Closing balance balance urn rectification project of thermal power Company and chemical plant) 2016 provincial special fund for 3,000,000.00 3,000,000.00 industry and informatization High selection through film and film refining 1,430,550.95 1,430,550.95 industrialization technology development cost funding 2,268,878.72 520,628.72 1,748,250.00

Jinchuan Company 2, 3 old buildings 10,565,200.00 10,565,200.00 shantytown reconstruction project 300000 tons/year PVC project park circular 11,645,283.02 1,900,000.00 9,745,283.02 transformation state subsidy funds 300,000-ton copper deep 15,610,000.00 7,470,000.00 8,140,000.00 processing project Ten thousand tons 400,000.00 400,000.00 of FRP project 5 thousand tons of phosphorus 12,881,360.72 6,230,833.36 6,650,527.36 copper ball renovation project Yuzhong county land bureau 9,944,653.27 1,104,961.44 8,839,691.83 infrastructure construction funds Construction of innovation and entrepreneurship 3,620,606.04 3,620,606.04 demonstration park

- 140 -

– F-142 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Opening Ret Item Increase Profit of loss Others Closing balance balance urn Funds for industrial transformation and upgrading projects 4,737,788.58 3,998,388.58 739,400.00 of provincial state-owned enterprises Jinchuan group research project 3,015,750.00 603,148.56 2,412,601.44 funding 100kt/a ternary 11,756,315.50 1,006,072.76 12,762,388.26 item Development of standard sample for spectral 690,000.00 690,000.00 analysis of nickel cobalt copper Development of ternary materials for lithium 800,000.00 470,000.00 1,270,000.00 nickel-cobalt aluminate (NCA) Intelligent workshop for selecting high-end materials of nickel 2,000,000.00 1,000,000.00 1,000,000.00 and cobalt and rare precious metals Jinchang city social security 34,312,583.20 291,551.65 9,260,008.01 25,344,126.84 center stable post subsidies 10 million yuan provincial special fund for new 6,994,812.81 3,664,323.05 3,330,489.76 material innovation center of nickel and cobalt 2* environmental protection fund for ultra-low emission 3,600,000.00 3,600,000.00 7,200,000.00 technology renovation project of 150 units Introduction and application of 4,700,000.00 4,700,000.00 technology and equipment for

- 141 -

– F-143 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Opening Ret Item Increase Profit of loss Others Closing balance balance urn industrial production of carbonyl nickel pellets in carbonyl metallurgy plant Research on green co-smelting technology and complete set of 6,400,000.00 2,150,000.00 8,550,000.00 equipment for complex copper base polymetal solid waste Jinchang municipal hazardous waste recycling disposal 8,460,000.00 6,300,000.00 590,400.00 14,169,600.00 project (phase I project) The second choice is to expand energy and reduce 26,330,000.00 26,330,000.00 energy consumption The performance improvement and renovation project of ring flue gas 6,180,000.00 6,180,000.00 desulfurization system in nickel smelter Special fund of central air pollution prevention and control in 2019 2,400,000.00 2,400,000.00 from jinchang municipal bureau of ecology and environment Study on the key technology and efficient way of industrialization of 1,610,000.00 710,000.00 900,000.00 positive silver powder for crystalline silicon solar cell Industrial Internet innovation and 9,000,000.00 9,000,000.00 development

- 142 -

– F-144 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Opening Ret Item Increase Profit of loss Others Closing balance balance urn project - industrial enterprise network security comprehensive protection platform Research and industrialization of key generic technology and 1,500,000.00 1,500,000.00 equipment of nickel sulfate green smelting Fangchenggang finance bureau special fund for ecological 16,000,000.00 2,285,714.28 13,714,285.72 civilization construction in 2019 We collected the special central infrastructure fund for ecological civilization construction from 4,000,000.00 4,000,000.00 fangchenggang municipal bureau of industry and information technology Funds for the upfront expenses 2,000,000.00 2,000,000.00 of major projects Special budget investment for 37,890,000.00 37,890,000.00 technical upgrading in 2019 Other miscellaneous 101,087,148.87 72,743,957.37 48,572,625.70 49,911,303.74 75,347,176.80 Item

Total 1,034,768,431.68 193,471,581.78 139,142,701.20 62,224,753.74 1,026,872,558.52

38.Other Non-current Liabilities

Item Closing balance Opening balance

- 143 -

– F-145 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Long-term employee benefit liabilities 21,186,849.45

Employee bonus plan 2,929,129.68

Long-term lease liability 13,739,797.91

Total 37,855,777.04

39.Paid-in Capital

Opening balance Closing balance Investors Increase Decrease Proporti Proporti Amount Amount on (%) on (%)

Total 22,946,544,651.00 100.00 192,926,045.00 192,926,045.00 22,946,544,651.00 100.00

State-owned Assets Supervision and Administration 2,957,627,874.00 12.89 2,957,627,874.00 12.89 Commission of Gansu Provincial People's Government Gansu State-Owned Assets Investment 11,007,620,088.00 47.97 11,007,620,088.00 47.97 group Co., Ltd. Gansu Xinglong Capital management 160,771,700.00 0.70 160,771,700.00 0.70 Co., Ltd. China Development 3,104,835,448.00 13.53 3,104,835,448.00 13.53 Finance Co., Ltd. China Baowu Iron & 1,116,773,122.00 4.87 1,116,773,122.00 4.87 Steel Group Co., Ltd. Taiyuan Iron & Steel 1,116,773,122.00 4.87 1,116,773,122.00 4.87 (Group) Co., Ltd. Gansu Industrial Transportation 322,437,195.00 1.41 322,437,195.00 1.41 Investment Company Jiuquan Iron & Steel 321,543,408.00 1.40 321,543,408.00 1.40 (Group) Co., Ltd. Gansu Electric Power Investment Group 382,204,580.00 1.67 382,204,580.00 1.67 Co., Ltd. Shenzhen Ping’ an Innovation Capital 321,543,408.00 1.40 321,543,408.00 1.40 Investment Co., Ltd.

- 144 -

– F-146 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Opening balance Closing balance Investors Increase Decrease Proporti Proporti Amount Amount on (%) on (%) China Africa Development Fund 321,543,408.00 1.40 321,543,408.00 1.40 Co., Ltd. Runbo (Tianjin) Equity Investment Fund 284,565,916.00 1.24 284,565,916.00 1.24 Partnership Zhejiang Hailiang Co., 257,234,726.00 1.12 257,234,726.00 1.12 Ltd. Shanghai Saic-Huankai 257,220,000.00 1.12 257,220,000.00 1.12 Investment Management Co., Ltd. China Oriental Asset 160,780,000.00 0.70 160,780,000.00 0.70 Management Co., Ltd. Jingyuan Coal Industry Group Co., 160,771,700.00 0.70 160,771,700.00 0.70 Ltd. China Cinda Asset 160,771,700.00 0.70 160,771,700.00 0.70 Management Co., Ltd. Guangda Financial Holding (Lanzhou) 156,401,211.00 0.68 156,401,211.00 0.68 Jinyuan Investment Co., Ltd. Gansu Rare Earth 100,000,000.00 0.44 100,000,000.00 0.44 New Material Co., Ltd. China Sdic High-Tech Industry Investment 192,926,045.00 0.84 192,926,045.00 Corporation State-owned Investment 192,926,045.00 192,926,045.00 0.84 Management Co., Ltd. Jincheng Capital 50,000,000.00 0.22 50,000,000.00 0.22 Management Co., Ltd. Tibet Mineral Development Co., 32,200,000.00 0.13 32,200,000.00 0.13 Ltd.

40.Capital Reserve

Item Opening balance Increase Decrease Closing balance

- 145 -

– F-147 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Capital surplus 15,780,846,031.83 15,780,846,031.83

Other capital reserve 2,646,434,338.08 11,932,854.62 1,121,696,305.92 1,536,670,886.78

Total 18,427,280,369.91 11,932,854.62 1,121,696,305.92 17,317,516,918.61

41.Special Reserve

Opening balance Closing balance Note

Including: Including:belo Including: Including:belo Item belonging to the Increase Decrease nging to the belonging to nging to shareholders of shareholders minority minority the parent of the parent shareholders shareholders Company Company Secure 166,788,350.59 39,218,458.81 233,070,277.43 295,817,117.34 131,238,226.90 12,021,742.59 production fee

Total 166,788,350.59 39,218,458.81 233,070,277.43 295,817,117.34 131,238,226.90 12,021,742.59 —

42.Surplus Reserve

Opening Closing Item Increase Decrease balance balance

Legal surplus reserves 157,738,123.13 69,442,178.84 227,180,301.97

Discretionary surplus reserve 69,442,178.84 69,442,178.84

Total 157,738,123.13 138,884,357.68 296,622,480.81

43.Retained earnings

Item Current year Prior year

Opening balance of the current year -7,838,844,852.92 -9,384,940,178.25

Increasing in current year 2,058,962,517.95 1,548,038,806.25

Including: Transfer of current year's net profit 2,058,962,517.95 1,548,038,806.25

Other adjustments

- 146 -

– F-148 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Item Current year Prior year

Decreasing in the current year 152,341,801.24 1,943,480.92

Including: Surplus reserve is drawn this year 138,884,357.68

Extraction of General Risk Preparedness for the Year 13,457,443.56 1,943,480.92

Distribution of cash dividends for the current year

Transferred Capital (Notes VIII, 35)

Other decreases

Closing balance of the current year -5,932,224,136.21 -7,838,844,852.92

44.Operating Revenue and Costs

1) Details for Operating income and costs

Current year Prior year Item Revenue Costs Revenue Costs

Subtotal of principle 222,932,092,161.3 233,366,966,045.92 219,822,694,348.40 209,760,579,547.04 operating activities 1

Nickel series products 15,646,222,306.00 11,292,337,798.44 13,810,276,821.49 9,990,974,241.84

Copper series products 38,960,358,451.49 36,297,815,526.84 41,373,564,662.99 38,686,711,554.85

Cobalt series products 3,804,130,493.59 3,154,262,306.12 3,651,625,143.03 3,314,993,836.18

Precious Metal Products 6,464,968,019.68 5,386,702,983.30 4,152,232,149.43 3,404,042,303.40

161,459,997,915.1 Trade 161,627,892,702.72 149,231,828,779.22 149,067,491,285.27 9

Other 6,863,394,072.44 5,340,975,631.42 7,603,166,792.24 5,296,366,325.50

Subtotal of other business 307,558,866.08 209,188,188.38 1,052,438,051.46 616,091,380.11

223,141,280,349.6 Total 233,674,524,912.00 220,875,132,399.86 210,376,670,927.15 9

45.Selling Expense

- 147 -

– F-149 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Item Current year Prior year

Freight 825,215,857.28 685,495,508.61

Employee compensation 94,671,004.61 77,550,602.92

Storage and packing expenses 83,627,471.64 71,207,062.43

Laboratory, insurance, commodity inspection, etc 34,858,437.93 20,724,525.56

Travel fee 9,301,420.25 8,507,248.96

Legal fees 6,374,238.82 8,012,774.21

Advertising and exhibition fees 4,187,026.18 6,069,983.66

Administrative office expenses 4,041,562.72 4,765,572.33

Amortization of depreciation 1,099,599.76 1,736,411.81

Royalty fee 16,321,294.87

Other 35,196,902.10 38,774,020.75

Total 1,114,894,816.16 922,843,711.24

46.Administrative Expenses

Item Current year Prior year

Employee compensation 885,815,718.92 667,777,109.05

Amortization of depreciation 635,958,594.87 449,125,483.85

Mining royalty 188,139,018.60 178,935,585.78

Audit consultation, service fee, etc 100,555,840.93 108,788,421.97

Rent, heating, etc 61,582,814.06 80,519,936.48

Water motor material consumption 30,755,168.10 43,496,279.42

Travel fee 20,566,534.37 35,916,597.71

- 148 -

– F-150 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Item Current year Prior year

Information system fee 19,277,676.93 27,612,996.56

Office and conference entertainment 32,635,241.54 26,668,156.25

Transportation insurance, etc. 34,939,858.70 25,851,213.10

Repair fee 69,025,537.56 25,432,143.48

Afforestation fees 20,571,207.23 16,379,756.21

Sewage, waste water and other treatment fees 67,970,857.64 12,846,512.90

Stoppage loss 8,431,713.80 10,500,586.30

Party committee fee 12,398,736.09 9,874,342.33

Design inspection fee, etc 7,307,089.32 7,403,294.15

Inventory gains and losses -13,288,877.33 3,205,152.18

Other 35,399,584.86 9,206,246.37

Total 2,218,042,316.19 1,739,539,814.09

47.Research and Development Expenses

Item Current year Prior year

Development expense 375,541,799.39 316,961,824.70

Total 375,541,799.39 316,961,824.70

48.Financial Expenses

Item Current year Prior year

Interest expense 1,682,322,343.60 1,871,791,597.76

Less: Interest revenue 187,451,533.47 174,867,416.74

- 149 -

– F-151 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Item Current year Prior year

Exchange gains and losses -71,092,348.65 69,813,856.56

Bank charges 230,833,055.30 231,268,460.00

Total 1,654,611,516.78 1,998,006,497.58

49.Other Incomes

Amount recognized in Item Current year Prior year extraordinary profit and loss

Development zone finance bureau pension refund 27,577,841.17 46,167,305.30 27,577,841.17

Construction fund of demonstration base for 30,500,000.00 30,500,000.00 30,500,000.00 comprehensive utilization of mineral resources

Platinum tax refund 12,751,752.12 19,855,344.73 12,751,752.12

13 million yuan for processing trade logistics expenses in 2018 and 3 million yuan for discount loan for steady 16,000,000.00 growth and structural adjustment in foreign trade Government subsidy funds for undertaking the project of gradient transfer of logistics expenses in processing trade 15,000,000.00 in 2017

Special fund for foreign trade and economic development 6,989,200.00 6,989,200.00

Special fund for foreign trade and economic development 333,000.00 9,990,000.00 333,000.00

Government grant (social security grant) 20,590,000.00 7,619,444.00 20,590,000.00

300,000-ton copper deep processing project 6,800,000.00

New material application insurance subsidy 3,200,000.00 6,494,400.00 3,200,000.00

Jinchang city social security center stable post subsidies 42,386,143.33 6,294,408.09 42,386,143.33

National and local joint engineering laboratory for high 6,001,611.42 performance battery materials Nickel smelting top blowing furnace area environmental 2,287,722.22 4,817,333.33 2,287,722.22 gas collection standard control

Municipal electricity subsidy 3,846,150.00 4,604,000.00 3,846,150.00

- 150 -

– F-152 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Amount recognized in Item Current year Prior year extraordinary profit and loss Capital of industrial transformation and upgrading project of provincial state-owned enterprises in 2014 (15,000 4,000,000.00 4,000,000.00 4,000,000.00 tons/year titanium sponge smelting project) 10 million yuan provincial special fund for new material 3,664,323.05 3,005,187.19 3,664,323.05 innovation center of nickel and cobalt

Policy incentive fund 6,406,065.66 2,817,198.00 6,406,065.66

High skilled personnel training base project 2,600,000.00

Mining project of middle section 850 in no.2 mining area 2,400,000.00 2,400,000.00 2,400,000.00

Central government funds for the treatment of heavy metal 2,200,000.00 pollution Black copper slag production electrodeposition copper 2,146,000.00 project High selection through membrane and membrane refining 2,044,490.74 industrialization technology development Conservation and comprehensive utilization of mineral 2,000,000.00 2,000,000.00 2,000,000.00 resources Gansu province steady growth adjustment structural 2,000,000.00 transformation and upgrading subsidies project funds

300,000 tons/year new chemical material PVC project 1,900,000.00 1,900,000.00 1,900,000.00

The project of technological transformation, energy 1,600,000.00 expansion and production increase in 2017 Comprehensive system for deep development of oversize 1,533,000.00 1,533,000.00 1,533,000.00 ore deposits Longshou mountain mine geological environment 1,500,000.00 1,500,000.00 1,500,000.00 treatment project Research and industrialization of key technologies of 1,243,416.67 nickel industry chain

Funds for infrastructure construction 1,104,961.44 1,104,961.47 1,104,961.44

Intelligent workshop project for selecting high-end 1,000,000.00 1,000,000.00 1,000,000.00 materials of nickel and cobalt and rare precious metals Support fund for the relocation and expansion project of 992,000.00 home dairy factory

Heat and power workshop boiler out of stock renovation 970,000.00 970,000.00 970,000.00

Special fund for prevention and control of heavy metal 900,000.00 900,000.00 900,000.00 pollution from the central government in 2014

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– F-153 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Amount recognized in Item Current year Prior year extraordinary profit and loss Development of efficient utilization technology for rare and 835,000.00 835,000.00 835,000.00 precious metals

Personal income tax commission 722,349.31 808,094.52 722,349.31

Small and medium-sized enterprises to develop market project funds and yuzhong county bureau of industry and 260,000.00 770,000.00 260,000.00 information technology project funds In 2013, the central government funded the heavy metal 750,000.00 750,000.00 750,000.00 pollution project The environmental protection gas collection in the area of 221,944.45 736,666.66 221,944.45 copper smelting self-heating furnace reaches the standard The environmental protection gas collection in the area of 80,000.00 80,000.00 80,000.00 copper smelting self-heating furnace reaches the standard 5 thousand tons of phosphorus copper ball renovation 730,833.36 730,833.33 730,833.36 project Project subsidy from jinchang finance bureau (special fund 7,470,000.00 970,000.00 7,470,000.00 for innovation and entrepreneurship)

Jinchuan group research project funding 603,148.56 603,148.60 603,148.56

Innovation driven project development fund 868,000.00 528,000.00 868,000.00

Research, development and industrialization of new 374,373.40 500,626.60 374,373.40 electroplating palladium salt and coupling system Demonstration project of energy management center of 500,000.00 500,000.00 500,000.00 industrial enterprises Incentive fund for saving and comprehensive utilization of copper and nickel sulfide mineral resources in longshou 500,000.00 500,000.00 500,000.00 mine In 2014, major demonstration projects of recycling economy and resource conservation in key energy conservation projects and key industrial pollution control 500,000.00 500,000.00 500,000.00 projects (the sixth batch) - technological transformation of raw materials preparation of carbonyl nickel and platinum group metals

High pressure fan renovation project 500,000.00 500,000.00 500,000.00

Jinchang Jinchuan district commerce bureau foreign trade 500,000.00 steady growth adjustment project funds

VAT refund on demand 490,164.52 484,697.88 490,164.52

Remaining subsidy funds for demonstration and pilot 475,000.00 475,000.00 475,000.00 projects of circular transformation of national parks (the

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– F-154 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Amount recognized in Item Current year Prior year extraordinary profit and loss first batch) (comprehensive treatment technology transformation project of smelting flue gas)

The project construction three - phase land payment 455,500.00 455,500.00 455,500.00

Low temperature waste heat project of circulating cooling 455,000.00 455,000.00 455,000.00 water in workshop 2 2kt/a nickel anode slime sulfur recovery technology 450,000.00 450,000.00 450,000.00 renovation project Thermal power workshop environmental protection 450,000.00 450,000.00 450,000.00 technology renovation project Upgrade and upgrade the standard of flue gas of flash 83,333.33 450,000.00 83,333.33 furnace Synthetic furnace area environmental gas collection 440,000.00 440,000.00 440,000.00 standard control project Special fund for powder preparation r&d talent training 400,000.00 project

5000T/A FRP composite material production plant 400,000.00 400,000.00 400,000.00

Risk margin 391,000.00 376,919.00 391,000.00

Remaining subsidy funds for recycling and upgrading demonstration sites in national parks (the first batch) (1.1 362,500.00 362,500.00 362,500.00 million tons/year copper smelting slag separation project) 2012 Gansu provincial government subsidy fund for the circular transformation of industrial parks (comprehensive 325,000.00 325,000.00 325,000.00 utilization project of nickel anode sludge) 2013 major demonstration project of recycling economy and resource conservation of key energy conservation projects and key industrial pollution control project 285,000.00 285,000.00 285,000.00 (comprehensive utilization of downhole wastewater in west no.2 mining area of longshou mine) Remaining subsidy funds for demonstration and pilot projects of circular transformation of national parks (the 275,000.00 275,000.00 275,000.00 first batch) Remaining subsidy funds for recycling and upgrading demonstration sites in national parks (the first batch) 97,500.00 97,500.00 97,500.00 (comprehensive utilization of nickel anode sludge)

10kt/a base nickel high technology industrialization project 250,000.00 250,000.00 250,000.00

Special financial fund of the circular economy development province in 2014 (60,000 tons electrolytic 250,000.00 250,000.00 250,000.00 nickel energy expansion technology - residual chlorine

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– F-155 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Amount recognized in Item Current year Prior year extraordinary profit and loss absorption technology renovation project)

4.1 super high purity rare/rare precious metal preparation 1,033,543.40 216,878.50 1,033,543.40 technology Special fund for circulating transformation of the park 200,000.00 200,000.00 200,000.00 (phase ii of 400,000 tons of ionic membrane caustic soda) Several measures of science and technology innovation project of finance bureau of zunjinchang city, Gansu 500,000.00 200,000.00 500,000.00 province The comprehensive utilization of 700,000 yuan nickel and cobalt resources specialized mass innovation space 240,658.00 196,754.91 240,658.00 construction Nickel smelting flash furnace, melting casting area environmental protection gas collection standard 1,496,984.14 3,321,904.75 1,496,984.14 treatment, industrial green development special funds Upgrading of environmental monitoring facilities for acid 109,722.22 183,333.33 109,722.22 tail gas production Research on the construction of ciose-loop system of 11,300.00 180,000.00 11,300.00 secondary precious metal resources

Comprehensive recovery project of copper anode mud 160,000.00 160,000.00 160,000.00

Jinchang city science and technology bureau subsidies 800,000.00 150,000.00 800,000.00

Scientific research project of new damming technology 224,900.00 127,600.00 224,900.00 and equipment for large ultrafine tailings dam Surplus subsidy funds for recycling and upgrading demonstration sites in national industrial parks (the first 105,000.00 105,000.00 105,000.00 batch)

High stability and high activity automobile exhaust project 1,336,994.02 63,005.98 1,336,994.02

Jinchang municipal bureau of industry and information technology will award key industrial enterprises in place of 1,700,000.00 1,700,000.00 the incentive fund in 2018 Jinchuan group Company transferred the subsidy fund of railway logistics freight reduction project of outsourcing 13,000,000.00 13,000,000.00 copper raw materials in processing trade in 2019 to the department of commerce of Gansu province Special fund account of Shanghai pudong new area expo area development management committee special fund 3,471,000.00 3,471,000.00 financial support fund of pudong new area economic development

Jinchuan district bureau of commerce jinchang city 2019 590,000.00 590,000.00

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– F-156 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Amount recognized in Item Current year Prior year extraordinary profit and loss foreign labor cooperation personnel project fund subsidy

Fangchenggang city employment service center new jobs 2,238,982.47 2,238,982.47 social security subsidies Special fund for environmental protection and ecological 2,665,714.28 360,000.00 2,665,714.28 progress The key preparation technology and industrialization of 1,272,655.68 1,272,655.68 super high purity NI

Provincial safety supervision bureau security rescue fund 1,457,500.00 1,457,500.00

Funds for industrial transformation and upgrading projects 3,998,388.58 3,998,388.58 of provincial state-owned enterprises Fangchenggang bureau of commerce autonomous region 7,359,964.00 7,359,964.00 level business development special fund

Copper anode project 4,000,000.00 4,000,000.00

Special funds for industry and development of the 1,030,000.00 1,030,000.00 autonomous region Research and development of key technology and automatic forming equipment of microcrystalline 2,500,000.00 2,500,000.00 phosphorous copper ball Study on the key technology and efficient way of industrialization of positive silver powder for crystalline 710,000.00 710,000.00 silicon solar cell Pilot development, doping and coating modification and industrialization of monocrystalline NCM ternary series 860,000.00 860,000.00 precursors Construction of state key laboratory for comprehensive 520,628.72 520,628.72 utilization of nickel and cobalt resources

Clean and efficient resource recovery program 1,489,936.07 40,000.00 1,489,936.07

Changsha economic and technological development zone 783,500.00 783,500.00 city open economic development funds

Other 1,158,156.12 1,093,426.92 1,158,156.12

Total 255,716,333.62 241,192,491.92 255,716,333.62

50.Investment Income

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– F-157 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Item Current year Prior year

Long term equity investment revenue by using equity method -25,443,239.86 8,417,818.39

Income from disposal of long-term equity investment -8,886,954.18 -93,094,661.77

Income from holding to maturity investments during holding

Revenue from available-to-sell financial assets investment 94,190,253.55 16,560,978.21

Gains from disposal of available-to-sale financial assets

Futures liquidation gains and losses -190,333,512.39 -155,816,067.32

Investment income from entrusted loans 1,819,022.98

Others -36,567,336.73 65,389,077.03

Total -167,040,789.61 -156,723,832.48

51.Gains from Changes in Fair value

Sources of income from changes in fair value Current year Prior year

Financial assets measured at fair value and their changes included in current profits and losses

Derivative financial assets

Financial liabilities measured at fair value through profit or loss -7,988,739.01

Floating profit and loss of futures 281,280,050.52 138,954,822.78

Commodity swap transactions - unrealized gains 297,404.61

Gain and loss of fair value changes embedded in derivative -96,650,914.82 -12,147,829.74 financial instruments

Other -45,213,865.70 -10,789,368.61

Total 139,415,270.00 108,326,290.03

52.Credit Impairment Loss

- 156 -

– F-158 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Item Current year Prior year

Bad debt losses 7,947,019.36

Credit impairment loss of debt investment

Other debt investment impairment losses

Impairment loss of contract assets

Other

Total 7,947,019.36

53.Impairment Loss of Assets

Item Current year Prior year

Bad debt losses 1,206,569,920.72 74,750,505.01

Loss of inventory 264,554,004.69 1,800,338,943.81

Impairment losses on financial assets available for sale 22,182,337.98

Impairment loss of fixed assets 1,817,580.06 226,292,906.05

Impairment loss of construction in progress 10,251,684.28 41,668,777.32

Impairment loss of intangible assets 290,415,653.19

Other impairment losses 96,813,354.63

Total 1,892,604,535.55 2,143,051,132.19

54.Gains on Disposal of Assets

Amount recognized in Item Current year Prior year extraordinary profit and loss Disposal is not divided into disposal gains or losses arising from holding non-current 140,170,660.86 -8,425,607.55 assets for sale

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– F-159 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Amount recognized in Item Current year Prior year extraordinary profit and loss

Total 140,170,660.86 -8,425,607.55

55.Non-operating Income

1) Classification of non-operating revenue

Amount recognized in Item Current year Prior year extraordinary profit and loss

Gains on disposal of non-current assets 8,028,809.44

Government subsidies(details as below) 901,416.00 30,021,577.47 901,416.00

Default compensation 10,717,247.60 99,866,359.83 10,717,247.60

Other 38,692,785.13 33,614,878.01 38,692,785.13

Total 50,311,448.73 171,531,624.75 50,311,448.73

2) Details for government grants

The amount in The amount Item current year in prior year

Gansu province innovation base and talent plan (the second batch) project 50,000.00

Jinchang finance bureau allocated special funds for the transformation of 87,500.00 anti-cult education

Special fund for strengthening the city by industry in 2018 200,000.00

Funding for the meritocracy program 400,000.00

Patent grant 108,000.00

Financial subsidy of development zone 23,416.00

Sports volunteer subsidy 2,500.00

Policy incentive 7,815,000.00

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– F-160 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

The amount in The amount Item current year in prior year

Port district tax bureau to return the excess income tax 10,767,863.63

The autonomous region's 2018 import discount rate is 8.21 2,588,899.20

2017 foreign trade project fund of the provincial department of commerce 2,330,000.00

Solar vacuum coating production line project 2,109,916.64

Guangxi zhuang autonomous region department of science and technology 620,000.00 no. 66 in 2018 key research and development plan project subsidies

Tourism development fund of jinchang finance bureau 600,000.00

Fangchenggang finance bureau 50,000 tons and 150,000 tons of copper 500,000.00 concentrate early subsidies The department of science and technology of Guangxi zhuang autonomous 500,000.00 region recognized the subsidy for high-tech enterprises The development and reform commission of fangchenggang allocated funds for energy conservation, emission reduction and pollution reduction in 350,000.00 2018 Jinchang municipal finance bureau special fund for innovation and 300,000.00 entrepreneurship Logistics subsidy fund of fangchenggang beibuwan (Guangxi) economic 163,200.00 zone construction management committee office 8.03

Science and technology department award 100,000.00

Subsidies for energy conservation technology renovation fund of 93,000.00 fangchenggang finance bureau from 2013 to 2016 Fangchenggang city science, technology and intellectual property office 50,000.00 after the recognition of high-tech enterprises reward

Steady post subsidies 30,899.34

Other 30,000.00 1,102,798.66

Total 901,416.00 30,021,577.47

56.Non-operating Expenses

Amount recognized in Item Current year Prior year extraordinary profit and loss

Losses on disposal of non-current assets 85,398,276.16 85,991,127.29 85,398,276.16

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– F-161 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Amount recognized in Item Current year Prior year extraordinary profit and loss

Donations expenses 2,625,258.58 8,281,456.42 2,625,258.58

Fine expenses 8,292,175.13 16,611,302.29 8,292,175.13

Others 35,184,318.32 449,195,590.68 35,184,318.32

Total 131,500,028.19 560,079,476.68 131,500,028.19

57.Income Tax expense

1) Income Tax Form

Item Current year Prior year

Income tax in current period 817,752,353.55 411,287,325.18

Adjustment for deferred tax 297,397,369.82 736,783,369.80

Total 1,115,149,723.37 1,148,070,694.98

2) Accounting profit and adjustment process of accounting profit and income tax expense

Item Current year

Profit before tax 2,824,435,851.03

Income tax expense calculated at the statutory / applicable tax rate 423,665,377.65

The impact of different tax rates on subsidiaries -69,703,971.11

Adjust the effect of income taxes in the previous period -51,029,851.51

The impact of non-taxable income -56,279,924.64

Nondeductible costs, fee, and losses impact 16,264,102.32

The impact of deductible loss on deferred income tax assets not 52,297,911.64 recognized in the prior period of use The impact of deductible temporary differences or deductible losses on 794,504,840.67 deferred income tax assets not recognized this year

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– F-162 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Tax adjustment leads to changes in deferred income tax assets/liabilities 5,431,238.35 balance at the beginning of the year

Income tax expenses 1,115,149,723.37

58.Other Comprehensive Income Attributable to the Parent Company Owner

1) Other comprehensive income each item and its income tax influence and turn into profit and loss situation

Current year Prior year Item Pretax amount Income tax The net after-tax Pretax amount Income tax The net after-tax

Other comprehensiv e income attributable to the parent Company: I. Other comprehensiv e income that cannot be 1,255,590,000.00 152,007,194.08 1,103,582,805.92 -1,315,320,000.00 -156,347,364.83 -1,158,972,635.17 reclassified into profit and loss 1. Reset the change 1,255,590,000.00 152,007,194.08 1,103,582,805.92 -1,315,320,000.00 -156,347,364.83 -1,158,972,635.17 amount of the benefit plan II. Other comprehensiv e income 168,054,779.99 -80,858,375.78 248,913,155.77 475,215,884.79 58,512,017.81 416,703,866.98 reclassified into profit and loss 1. Profit and loss of fair value changes of financial -539,055,838.51 -80,858,375.78 -458,197,462.73 398,711,315.78 58,512,017.81 340,199,297.97 assets available for sale Less: Other comprehensiv e income in the early

- 161 -

– F-163 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Current year Prior year Item Pretax amount Income tax The net after-tax Pretax amount Income tax The net after-tax period into the current profit and loss

Subtotal -539,055,838.51 -80,858,375.78 -458,197,462.73 398,711,315.78 58,512,017.81 340,199,297.97

2. Translation of foreign currency 707,110,618.50 707,110,618.50 76,504,569.01 76,504,569.01 financial statements Less: Other comprehensiv e income in the early period into the current profit and loss

Subtotal 707,110,618.50 707,110,618.50 76,504,569.01 76,504,569.01

3. Other

Less: other comprehensiv e income in the early period into the current profit and loss

Subtotal

V. Total other comprehensiv 1,423,644,779.99 71,148,818.30 1,352,495,961.69 -840,104,115.21 -97,835,347.02 -742,268,768.19 e income

2) Adjustment of other comprehensive income projects

Amount of Amount of Opening change in prior Opening change in Closing Item balance of prior year (marked balance of current year balance of year with "-" for current year (marked with "-" current year reduction) for reduction) Remeasure the change in the -139,230,861.93 -1,158,972,635.17 -1,298,203,497.10 1,103,582,805.92 -194,620,691.18 set benefit plan

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– F-164 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Amount of Amount of Opening change in prior Opening change in Closing Item balance of prior year (marked balance of current year balance of year with "-" for current year (marked with "-" current year reduction) for reduction) Other comprehensive income that cannot be 228,583,017.37 228,583,017.37 228,583,017.37 transferred under the equity method Changes in the fair value of financial assets 938,006,383.89 340,199,297.97 1,278,205,681.86 -458,197,462.73 820,008,219.13 available for sale Translation of foreign currency -1,436,058,529.24 76,504,569.01 -1,359,553,960.23 707,110,618.50 -652,443,341.73 financial statements

Total -408,699,989.91 -742,268,768.19 -1,150,968,758.10 1,352,495,961.69 201,527,203.59

59.Borrowing Costs

Current capitalized borrowing Capitalization Capitalized asset projects costs rate

Upgrading of nickel-cobalt waste water treatment system 1,312,996.07 3.27

Longshou mine west lean mining project 20,353,982.46 3.27

East mining area 1100 horizontal filling air return project 318,185.91 3.27

East mining area 980 middle development project 647,901.94 3.27

Mining development and utilization project 89,935.91 3.27

Supplementary infrastructure exploration reserves for 130,327.11 3.27 upper disk ore bodies below the 1220 middle section

Jinchuan east poor mining project 70,738.68 3.27

Second, choose the technical transformation project of 8,295,242.66 3.27 energy expansion and energy consumption reduction Jinchuan Group Co., Ltd. 2 × 150MW ultra-low emission 2,419,522.93 3.27 technology transformation

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– F-165 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Current capitalized borrowing Capitalization Capitalized asset projects costs rate 2*150MW cogeneration unit circulating cooling water low 1,177,408.34 3.27 temperature waste heat utilization project phase ii Chemical plant 400kt/a ionic membrane caustic soda 15,736,803.12 3.27 (phase ii)

Total 50,553,045.13 ——

60.Consolidated Cash Flow Statement

1) Supplementary information on cash flow statement

Item Current year Prior year

1. Adjust net profit to cash flow from operating activities: - -

Net profit 1,709,286,127.66 1,365,788,439.24

Add: Asset impairment provision 1,892,604,535.55 2,143,051,132.19

Impairment of credit 7,947,019.36 -

Depreciation of fixed assets, depletion of oil and gas assets and 3,125,845,475.05 2,782,619,940.51 depreciation of bearer biological assets

Amortization of intangible assets 359,779,893.89 129,710,972.91

Amortization of long-term prepaid expenses 7,799,519.89 4,134,459.96

Loss on disposal of fixed assets, intangible assets and other -140,170,660.86 8,425,607.55 long-term assets (marked with "-" for earnings)

Loss of scrapping fixed assets (income marked with "-") 85,398,276.16 77,962,317.85

Fair value change loss (earnings marked with "-") -139,415,270.00 -108,326,290.03

Financial expenses (income marked with "-") 1,611,229,994.95 1,941,605,454.32

Investment loss (marked with "-" for earnings) 167,040,789.61 156,723,832.48

Reduction of deferred tax assets (increase marked with "-") 327,106,063.10 477,107,172.50

Deferred income tax liability increase (decrease marked with "-") -463,065,422.79 259,676,197.30

Inventory reduction (increase marked with "-") -1,606,081,004.91 2,057,157,324.67

- 164 -

– F-166 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Item Current year Prior year

Reduction of operating receivables (increase marked with "-") 1,998,864,495.70 -427,002,436.48

Increase of operational Item payable (decrease marked with "-") 48,456,790.61 909,180,073.28

Other -40,610,553.94 -21,474,011.76

Net cash flow from operating activities 8,952,016,069.03 11,756,340,186.49

2. Major investments and financing activities not involving cash - - receipts and payments:

Debt to capital

Convertible corporate bonds maturing within one year

Financing leasing of fixed assets

3. Net change in cash and cash equivalents: - -

The ending balance of cash 4,815,883,995.00 6,295,074,435.82

Less: cash at the beginning of the year 6,295,074,435.82 6,216,625,846.53

Plus: ending balance of cash equivalents

Less: the Opening balance of a cash equivalent

Net increase in cash and cash equivalents -1,479,190,440.82 78,448,589.29

2) Information of acquisition or disposal of subsidiaries and other business

Item Current year

1. Cash and cash equivalents paid to acquire subsidiaries and business units 242,510.74

Less: Cash and cash equivalents held by subsidiaries and business units 5,969.67

Add: Net cash outflow on acquisition of subsidiaries and business units

Net assets of the acquired subsidiaries 236,541.07

3) Information of cash and cash equivalents

- 165 -

– F-167 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Item Closing balance Opening balance

Cash 4,815,883,995.00 6,295,074,435.82

Including: Cash on hand 1,682,022.29 263,936.41

Bank deposits 4,814,201,972.71 6,294,810,499.41

Other monetary funds

Payable deposits with the Central Bank

Deposit interbank funds

Inter-bank dismantlement

Cash equivalents

Including: Investments in debt securities due within three months

Closing balance of cash and cash equivalents 4,815,883,995.00 6,295,074,435.82

Including: Restricted cash and cash equivalent of the Company and subsidiaries within the Group

61.Foreign Currency Monetary Item

Item Closing balance in CNY

Cash and cash equivalent 3,478,602,150.02

Account receivable 2,413,350,483.28

Other receivable 5,073,368,674.35

Short-term borrowings 6,641,182,432.83

Account payable 2,388,306,282.22

Other payable 4,908,315,574.08

Interests payable 471,323.65

Long-term borrowings 8,775,694,486.84

- 166 -

– F-168 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Item Closing balance in CNY

Long-term payable 253,242,812.31

62.Assets with Restricted Ownership or Use Rights

Item Closing balance Reasons for restrictions

Bank acceptance deposit of 480.45 million yuan, l/c deposit of 276.99 million yuan, guarantee deposit of 9濁16 million yuan, time deposit and notice Cash and cash 1,399,157,487.55 deposit of 309.51 million yuan for guarantee, deposit of 262.96 million yuan equivalent for central bank reserve,39.31 million yuan for designated purpose, 12.17 million yuan for frozen funds, and other 8.60 million yuan

Notes receivables 165,495,144.00 Note payable issued by pledge is 55.856 million yuan

The bank of Gansu obtained a credit line of 700.00 million yuan, and Inventories 815,761,166.00 mortgaged the inventory of 4.5 million yuan to timbinuo (zhejiang) new material technology Co., Ltd. to obtain a loan of 4.16 million yuan We obtained a short-term loan of 10 million yuan from the bank of Gansu, a loan line of 719.11 million yuan from the export-import bank of China, a Fixed assets 1,917,669,970.78 long-term loan of 9.6 million yuan from the agricultural development bank, a long-term loan of 48.55 million yuan from the CDB, a short-term loan of 94.211 million yuan, and a long-term loan of 66.356 million yuan We obtained a loan line of 719.11 million yuan from the export-import bank of China, a long-term loan of 9.06 million yuan from the agricultural Intangible assets 172,107,628.21 development bank, a short-term loan of 94.211 million yuan, and a long-term loan of 66.356 million yuan Investment 1,689,930,666.43 Secured hangzhou bank 700.00 million yuan long-term loan property Other current Obtained a short-term loan of 333濁00 million yuan from the business 335,200,000.00 assets department of huaxia bank Shanghai branch IX. Contingencies 1) As of December 31, 2019, Hunan Ruixiang New Materials Co., Ltd. (hereinafter referred to as Hunan Ruixiang) , a subsidiary of the Company, provides guarantee for loans to the following units:

Name of The guarantees Amount Time limit Notes insured entity Tang shunguo The people's court of Lingling district, Yongzhou loans Yongzhou city, Hunan province shall bear the joint and Tang Shunguo 10,000,000.00 Long-term Rural Commercial several liability for compensation according to Bank Co., Ltd. the civil judgment

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– F-169 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Total 10,000,000.00

Hunan Ruixiang provided a guarantee for Tang Shunguo's loan of RMB 100,000.00 yuan to Yongzhou Rural Commercial Bank Co., Ltd. After the loan was overdue, Tang Shunguo did not return the loan. According to the civil judgment ((2019) Xiang 1102 MC No. 1098) of the people's court of Lingling district, Yongzhou city, Hunan province, Hunan Ruixiang shall assume joint and several liability for compensation from April 1, 2019.Hunan Ruixiang cannot predict the solvency of Tang Shunguo and other guarantors and therefore cannot predict the financial impact on the Company.

2) Except for the aforementioned contingencies, as of December 31, 2019, the Company has no other material contingencies that should be disclosed but not disclosed. X. Events after Balance Sheet Date

The Company has no no non-adjustable matters that need to be disclosed after the balance sheet date. XI. Related Parties Relationship & Transactions

1. The Basic Situation of the Parent Company

The proportion of the The voting rights Name of the Place of Nature of Registered parent Company's of the parent parent Company registration business capital ownership of the Company to the enterprise (%) enterprise (%) Gansu Provincial Investment and State-owned Lanzhou, CNY 12.31 Financing 47.97 47.97 Assets Investment Gansu billion Management Group Co., Ltd.

2. Subsidiaries of the Company

Detailed information is provided in Note VII. Business consolidation and consolidated financial statements.

3. Joint Venture and Associated Companies of the Company

Detailed information is provided in Note VIII-12 Long-term investment.

4. Other Related Party

Name of related party Relation to the Company Organization code certificate

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– F-170 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Other Enterprises Controlled by Gansu Xinye Asset Management Co., Ltd. Shareholders, shareholder of 916200007190339464 subsidiaries

5. Related Party Transactions

1) Associated transactions in the purchase and sale of goods, the provision and receipt of services

Current year

Related Pricing Transaction Name of related party transaction policies category Propora and content Amount tion% decision-m aking procedures Gansu Xinye Asset Management Sales of Electrolytic 117,314,621.09 0.05 Market value Co., Ltd. goods copper Power cost, Gansu Jinchuan Hengxin Sales of chemical 4,820,114.92 Market value Polymer Technology Co., Ltd. goods products Electric cobalt, Lanzhou Jinchuan Keriyuan Sales of electrolytic nickel, 9,055,714.88 Market value Battery Co., Ltd. goods water and electricity heating

Total 131,190,450.89

Provide Management Indonesia -PTRimbaKurniaAlam labor 886,538.96 Market value services services

Total 886,538.96

Electrolytic Gansu Xinye Asset Management Procuremen copper, 298,231,350.58 0.13 Market value Co., Ltd. t of goods electrolytic nickel Procuremen Gansu Jinni Chemical Co., Ltd. Acetylene 665,781,526.38 0.30 Market value t of goods

Total 964,012,876.96

(Continued)

Prior year Related Name of related Transaction transaction Pricing policies and party category Proporati content Amount decision-making on% procedures

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– F-171 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Prior year Related Name of related Transaction transaction Pricing policies and party category Proporati content Amount decision-making on% procedures Gansu Xinye Asset Electric copper, Sales of goods 1,311,198,880.31 2.89 Market value Management Co., Ltd. electric nickel Gansu Jinchuan Expenditure on Hengxin Polymer Sales of goods 1,715,723.98 Market value power Material Co., Ltd. Electric cobalt, Lanzhou Jinchuan electrolytic nickel, Keriyuan Battery Co., Sales of goods 1,869,331.48 Market value water and electricity Ltd. heating Gansu Jinchuan Jinding Hui New Sales of goods Electrolytic nickel 2,674,728.05 0.01 Market value Material Technology Co., Ltd. Gansu jinni chemical Sales of goods acetylene 26,587.28 Market value Co., Ltd. China Gold Group Yangshan Gold Mine Sales of goods 527,716.00 Market value Co., Ltd. Baotou Huading Copper Development Sales of goods Electrical copper 66,616.22 Market value Co., Ltd.

Total 1,318,079,583.32

Gansu Xinye Asset Procurement of Electric nickel, 10,541,071.98 0.03 Market value Management Co., Ltd. goods electric copper Baotou Huading Procurement of Electrolytic copper, Copper Development 298,231,350.58 79.11 Market value goods electrolytic nickel Co., Ltd. Electric cobalt, Lanzhou Jinchuan Procurement of electrolytic nickel, Keriyuan Battery Co., 90,473,939.34 0.24 Market value goods water and electricity Ltd. heating Tibet Jiaxu Material Procurement of Electroless nickel 60,000.00 Market value Trading Co., Ltd. goods

Total 399,306,361.90

2) Associated leasing

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– F-172 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

The impact Basis for of leasing Name of Name of Lease start Termination Rental determining Lease assets Amount income on lessor lessee date date income lease the income Company Drawing Jinchuan Lanzhou section large Group Jinchuan Industrial material butt Nickel keriyuan 8,873,342.82 2016.10.01 2021.09.31 505,309.73 facility lease Small welding area Alloy Co., battery Co., contract 1296 square Ltd. Ltd. meters

3) Other transactions

Other transactions Type Prior year

Permanent secondary convertible securities Gansu Xinye Asset Management Co., Ltd. 1,014,335,760.00 (PSCS) transfer payments

6. Relevant Party's Balance of Receivables and Payables

1) Receivables

Closing balance Opening balance Item Related party Provision for Provision for Carry amount Carry amount bad debt bad debt Gansu Jinchuan Hengxin Accounts Polymer Technology Co., 1,343,862.90 3,500,000.00 1,050,000.00 receivable Ltd. Lanzhou Jinchuan Accounts Keriyuan Battery 721,806.22 761,219.78 receivable material Co., Ltd. Accounts Tibet Jiaxu Material 140,442,768.00 140,442,768.00 140,442,768.00 140,442,768.00 receivable Trading Co., Ltd. Accounts Indonesia - 939,731.30 receivable PTRimbaKurniaAlam Baotou Huading Copper Accounts Industry Development 9,262.84 receivable Co., Ltd. Accounts Nantong Ruixiang New 3,679,139.00 3,679,139.00 receivable Materials Co., Ltd. China Gold Group Accounts Yangshan Gold Mine 121,400.00 receivable Co., Ltd.

Total 143,448,168.42 140,442,768.00 148,513,789.62 145,441,907.00

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– F-173 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Closing balance Opening balance Item Related party Provision for Provision for Carry amount Carry amount bad debt bad debt Other Gansu Xinye Asset 5,080,397,027.10 5,065,585,760.00 receivables Management Co., Ltd. Other Gansu Jinyuan Coal 451,197,436.58 144,083,481.19 451,197,436.58 54,750,564.60 receivables Industry Group Co., Ltd. China Gold Group Other Yangshan Gold Mine 255,601,584.90 255,601,584.90 255,601,584.90 255,601,584.90 receivables Co., Ltd. Gansu Jinchuan Hengxin Other Polymer Technology Co., 15,492,900.00 4,417,544.15 13,100,000.00 2,756,613.48 receivables Ltd. Lanzhou Jinchuan Other Keriyuan Battery Co., 595,061.22 1,119.83 receivables Ltd.

Total 5,803,284,009.80 404,102,610.24 5,785,484,781.48 313,108,762.98

2) Payables

Closing Opening Item Related party balance balance

Deferred revenue Gansu Jinchuan Jinding Hui New Material Technology Co., Ltd. 800,460.76 616,243.52

Deferred revenue Gansu Jinchuan Hengxin Polymer Technology Co., Ltd. 56,850.00

Total 857,310.76 616,243.52

Payables Gansu Jinchuan Hengxin Polymer Technology Co., Ltd. 594,491.00 594,491.00

Payables Baotou Huading Copper Industry Development Co., Ltd. 1,411,847.42

Total 594,491.00 2,006,338.42

XII. Notes to the Financial Statements of Parent Company

1. Accounts Receivable

1) Classification

Classification Closing balance

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– F-174 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Book balance Bad debts

Proportion Proportion Amount Amount (%) (%) Individually significant and assessed for 153,629,930.77 9.31 153,629,930.77 100.00 impairment individually According to the credit risk characteristics of the combination of provision for bad debts to 1,496,683,872.75 90.69 229,443,291.57 15.33 receivables

Including: Aging portfolio 157,156,076.77 9.52 140,535,389.78 89.42

Consolidation scope association portfolio 1,339,527,795.98 81.17 88,907,901.79 6.64

Individually insignificant but assessed for impairment individually

Total 1,650,313,803.52 - 383,073,222.34 -

(Continued)

Opening balance

Classification Book balance Bad debts

Proportion Proportio Amount Amount (%) n (%) Individually significant and assessed for 294,075,251.97 23.30 294,075,251.97 100.00 impairment individually According to the credit risk characteristics of the combination of provision for bad debts to 967,167,637.66 76.64 112,739,639.55 11.66 receivables

Including: Aging portfolio 73,766,514.50 5.85 1,210,819.09 1.64

Consolidation scope association portfolio 893,401,123.16 70.79 111,528,820.46 12.48

Individually insignificant but assessed for 759,552.43 0.06 759,552.43 100.00 impairment individually

Total 1,262,002,442.06 - 407,574,443.95 -

2) Accounts receivable of which provision for bad debts is of individually insignificant

Provision for Proportio Reasons for Name of debtors Book balance Aging bad debts n (%) provision

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– F-175 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Possibility of Hangzhou Fuyun Industry and 105,635,002.30 105,635,002.30 3-4 years 100.00 recovery may be Trade Co., Ltd. small Possibility of Shanghai Jitian Investment 3-4 years. 47,994,928.47 47,994,928.47 100.00 recovery may be Group Co., Ltd. 4-5 years small

Total 153,629,930.77 153,629,930.77 - -

3) Other account receivable portfolio subject to impairment by credit risk Aging analysis of provision for bad debts of other receivables

Closing balance Opening balance

Aging Book value Book value Provision Provision for for bad Proport bad debts Proport Amount Amount debts ion (%) ion (%) Within 1 year 16,481,404.41 10.49 72,326,197.86 98.05 (inclusive)

1-2 years 134,652.02 0.18 13,465.20

2-3 years 116,652.02 0.07 34,995.61 154,729.62 0.21 46,418.89

3-4 years 115,252.34 0.07 57,626.17

4-5 years

Over 5 years 140,442,768.00 89.37 140,442,768.00 1,150,935.00 1.56 1,150,935.00

Total 157,156,076.77 - 140,535,389.78 73,766,514.50 - 1,210,819.09

4) The Company does not have single item of the ending amount although not significant but single item of the provision for bad debt accounts receivable 5) The actual write-off of accounts receivable during the reporting period

Whether Verification due to Nature of Name of debtors Amount Reason procedures related receivable performed transaction s

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– F-176 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

General Payment for Company Shenyang Jinhan Materials Co., Ltd. 19,386,782.24 manager Yes goods written off approval Debt Payment for Company Finland Nickel Industry 759,552.43 settlement No goods written off and write-off

Total - 20,146,334.67 - - -

6) The top 5 accounts receivable at the end of the year

Proportion Bad debt Name of debtors Book balance (%) provision

Jinchuan Group Copper Co., Ltd. 504,611,635.54 30.58

Lanzhou Jinchuan New Materials Technology Co., Ltd. 511,982,201.13 31.02

Tibet Jiaxu Material Trading Co., Ltd. 140,442,768.00 8.51 140,442,768.00

Hangzhou Fuyun Industry and Trade Co., Ltd. 105,635,002.30 6.40 105,635,002.30

Beijing Jindu Materials Trading Co., Ltd. 74,735,917.96 4.53 74,735,917.96

Total 1,337,407,524.93 81.04 320,813,688.26

7) The Company has no financial assets transferred by the termination of recognized accounts receivable 8) The Company has no accounts receivable transfer, such as asset securitization, factoring, etc., continue to be involved in the formation of assets, liabilities

2. Other Receivable

Item Closing Balance Opening Balance

Interest receivable 659,278.49 52,261,203.87

Dividend receivable 124,425,993.18

Other receivable 14,022,112,564.85 13,086,351,864.70

Total 14,022,771,843.34 13,263,039,061.75

1) Interest receivable

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– F-177 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Item Closing balance Opening balance

Fixed deposit 169,302.18 60,778.28

Others 489,976.31 52,200,425.59

Total 659,278.49 52,261,203.87

2) Dividends receivable

Whether the Reason impairment Closing Opening Item for not occurs and the balance balance collecting basis for its judgment

Aging within one year 124,425,993.18

Including: (1) Jinchuan American Co., Ltd. 74,740,770.56

(2) Jinke Nonferrous Metals Co., Ltd. 49,685,222.62

Aging over one year

Total 124,425,993.18 - -

3) Other receivables

Closing balance

Types Book balance Provision for bad debt

Proporti Proporti Amount Amount on (%) on (%) Individually significant and assessed for impairment 4,739,733,311.50 26.76 187,314,895.25 3.95 individually According to the credit risk characteristics of the portfolio of provision for bad debts to other account 12,974,286,632.80 73.24 3,504,592,484.20 27.01 receivables

Including: Aging portfolio 1,623,894,453.94 9.17 507,386,718.25 31.25

Consolidation scope association portfolio 11,350,392,178.86 64.08 2,997,205,765.95 26.41

Individually insignificant but assessed for impairment individually

Total 17,714,019,944.30 - 3,691,907,379.45 -

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– F-178 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

(Continued)

Opening balance

Types Book balance Provision for bad debt

Proporti Proporti Amount Amount on (%) on (%) Individually significant and assessed for impairment 4,409,733,311.50 26.41 187,314,895.25 4.25 individually According to the credit risk characteristics of the portfolio of provision for bad debts to other account 12,284,726,089.40 73.59 3,420,792,640.95 27.85 receivables

Including: Aging portfolio 1,679,149,603.56 10.06 423,586,875.00 25.23

Consolidation scope association portfolio 10,605,576,485.84 63.53 2,997,205,765.95 28.26

Individually insignificant but assessed for impairment individually

Total 16,694,459,400.90 - 3,608,107,536.20 -

ķ Other account receivable of individual significance subject to individually assessment for impairment at the end of year

Bad debt Proportio Name of debtors Amount Aging Reasons provision n (%) Gansu Province Xinye Assets 4,051,250,000.00 2-3years Management Co., Ltd.

Han Wenchao 330,000,000.00 1-2years

Headquarters of Jinchuan Segmented Less likely 187,314,895.25 187,314,895.25 100.00 Company aging of withdraw. Staff Hospital of Jinchuan Segmented 171,168,416.25 Company aging

Total 4,739,733,311.50 187,314,895.25 - - -

ĸ Other account receivable portfolio subject to impairment

A. Aging analysis of provision for bad debts of other receivables

Closing balance Opening balance Aging Book balance Provision for Book balance Provision for

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– F-179 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Proportion bad debts Proportion bad debts Amount Amount (%) (%) Within 1 year 517,097,953.10 31.84 861,537,285.86 51.31 (inclusive)

1-2 years 347,633,062.99 21.41 34,762,056.30 413,453,194.77 24.62 41,347,494.48

2-3 years 405,518,153.07 24.97 121,655,445.92 1,571,103.25 0.09 471,330.98

3-4 years 1,428,127.96 0.09 714,063.98 6,485,366.67 0.39 3,242,683.33

4-5 years 6,540,015.92 0.40 4,578,011.15 19,390,956.00 1.15 13,573,669.20

Over 5 345,677,140.90 21.29 345,677,140.90 376,711,697.01 22.43 364,951,697.01 years

Total 1,623,894,453.94 - 507,386,718.25 1,679,149,603.56 - 423,586,875.00

Ĺ The Company does not have any other receivables which, though not significant, separately account for bad debt reserves at the end of the period

ĺ Provision for bad debts recovered or returned

Whether Nature of Recovered or Verification due to Name of debtor other returned Reason procedures related receviables amount performed transaction s Resolutions Baiyin Urban Development Current Less likely to of relevant 2,126,700.00 No Investment (Group) Co., Ltd. account withdraw board meetings

Total - 2,126,700.00 - - -

Ļ Other receivables in the top five of the year-end amounts collected by the debtor

Percentage of other Bad debt Name of debtors Nature Book balance Aging receivables (%) provision Gansu Xinye Asset Current 4,051,250,000.00 2-3 years 22.87 Management Co., Ltd. account Beijing Jindu Material Trade Current 2,551,487,265.95 2-3 years 14.40 2,551,487,265.95 Co., Ltd. account Gansu Jinchuan Chemical Current 1,695,140,585.08 1-2 years 9.57 Materials Co., Ltd. account Jinchuan Group International Current Within 1 1,599,935,517.13 9.03 Trade Co., Ltd. account year

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– F-180 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Gansu Jinyuan Coal Industry Current 1,339,720,617.77 1-2 years 7.56 Co., Ltd. account

Total - 11,237,533,985.93 63.43 2,551,487,265.95

3. Long-term Equity Investment

1) Classification of long-term equity investment

Item Opening balance Increase Decrease Closing balance

Investment in Subsidiaries 31,665,536,968.79 2,407,903,356.05 8,000,000.00 34,065,440,324.84

Investment in joint venture

Investment in join ownership 307,034,516.96 410,854,425.37 717,888,942.33

Subtotal 31,972,571,485.75 2,818,757,781.42 8,000,000.00 34,783,329,267.17

Less : Impairment provision for long-term equity 14,500,000.00 8,000,000.00 6,500,000.00 investment

Total 31,958,071,485.75 2,818,757,781.42 34,776,829,267.17

2) Details for long-term equity investment

Changes in current year

Invested units Investment cost Opening balance Profit or loss on Adjustment Additional Reduces investment on other investment investment under equity comprehen method sive income

Total 34,867,511,536.95 31,972,571,485.75 2,841,474,568.16 8,000,000.00 -22,716,786.74

Subsidiaries 34,065,440,324.84 31,665,536,968.79 2,407,903,356.05 8,000,000.00

Jinchuan Nickel Industrial Co., 1,417,911,204.11 1,417,911,204.11 Ltd. Jinchuan Group Nickel Salt Co., 576,718,691.09 416,718,691.09 160,000,000.00 Ltd. Jinchuan Group Wire And Cable 849,164,000.46 849,164,000.46 Co., Ltd.

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– F-181 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Changes in current year

Invested units Investment cost Opening balance Profit or loss on Adjustment Additional Reduces investment on other investment investment under equity comprehen method sive income Jinchuan Group Precision copper 990,724,252.54 990,724,252.54 Co., Ltd. Jinchuan Group Powder Material 248,910,937.97 151,910,937.97 97,000,000.00 Co., Ltd. Jinchuan Group Engineering 537,521,326.15 378,973,908.64 158,547,417.51 Construction Co., Ltd. Jinchang Chengxin Engineering 4,000,000.00 4,000,000.00 Construction Supervision Co., Ltd. Jinchuan Group Information And Automation 42,872,000.00 42,872,000.00 Engineering Co., Ltd. Jinchuan Nickel-Cobalt Research And 138,995,256.09 138,995,256.09 Design institute Co., Ltd. Gansu Jinchuan International Economic And 85,951,872.55 85,951,872.55 Technological Cooperation Co., Ltd. Gansu Jinyu Materials Co., 6,500,000.00 6,500,000.00 Ltd. Gansu Jinchuan Chemical New 280,000,000.00 280,000,000.00 Material Co., Ltd. Gansu Jinchuan Energy Saving 5,000,000.00 5,000,000.00 Technology Co., Ltd.

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– F-182 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Changes in current year

Invested units Investment cost Opening balance Profit or loss on Adjustment Additional Reduces investment on other investment investment under equity comprehen method sive income Jinchuan Group Nickel alloy Co., 1,476,838,415.00 1,476,838,415.00 Ltd. Jinchuan Group 923,000,000.00 923,000,000.00 Finance Co., Ltd. Lanzhou Jinchuan 3,205,331,554.76 3,205,331,554.76 Science Park Co., Ltd. Gansu Jinhui 5,500,000.00 5,500,000.00 Mining Co., Ltd. Gansu Jinhe 50,002,500.00 50,002,500.00 Mining Co., Ltd. Zhonggang Jinbang (Beijing) International 20,000,000.00 20,000,000.00 Cultural Consulting Co., Ltd. China Jinchuan Investment 410,250,000.00 410,250,000.00 Holding Co., Ltd. Beijing Jinchuan 713,813.47 713,813.47 Hotel Co., Ltd. Shenyang Jinhan Material Trading 8,000,000.00 8,000,000.00 Co., Ltd. Jinchuan Group International 997,500,000.00 997,500,000.00 Trading Co., Ltd. Shanghai Nickel 26,235,779.00 26,235,779.00 Hotel Co., Ltd. Jinke Nonferrous 99,845,646.25 18,904,310.57 80,941,335.68 Metals Co., Ltd. Guangdong Jinhui Metal Co., 20,000,000.00 20,000,000.00 Ltd. Guangxi Jinchuan 2,100,000,000.00 2,100,000,000.00 Nonferrous Metals Co., Ltd.

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– F-183 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Changes in current year

Invested units Investment cost Opening balance Profit or loss on Adjustment Additional Reduces investment on other investment investment under equity comprehen method sive income Beihai Jinchuan Real Estate 5,000,000.00 5,000,000.00 Development Co., Ltd. Tibet Jinchuan Mining 250,000,000.00 250,000,000.00 Investment Co., Ltd. Jinchuan Group (Hk) Resources Holdings Ltd 11,659,033,379.83 11,444,707,379.83 214,326,000.00 Jinchuan Group (Hk) Resources Holdings ltd. China Gold and Nickel 3,489,028.43 3,489,028.43 Corporation of Australia Australia Gold Field Nickel Co.. 63,755,420.83 63,755,420.83 Ltd Jinchuan American 57,969,028.73 57,969,028.73 Company South Africa Jinchuan 35,196,105.00 35,196,105.00 Resources Co., Ltd. Canada Jinchuan Resources Co., 1,733,993,209.72 1,733,993,209.72 Ltd. Jinchuan Group 4,000,000,000.00 4,000,000,000.00 Copper Co., Ltd. Jinchang Jujia Ecological 100,428,300.00 40,428,300.00 60,000,000.00 Agriculture Co., Ltd. Nickel-cobalt New Material 10,000,000.00 10,000,000.00 Innovation Center Co., Ltd.

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– F-184 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Changes in current year

Invested units Investment cost Opening balance Profit or loss on Adjustment Additional Reduces investment on other investment investment under equity comprehen method sive income Jinchuan Group Logistics Co., 535,115,411.24 535,115,411.24 Ltd. Jinchuan Group Thermal Power 1,091,973,191.62 1,091,973,191.62 Co., Ltd.

2. Joint Ventures

3. Associates 802,071,212.11 307,034,516.96 433,571,212.11 -22,716,786.74

Guangzhou Longyuan metal 2,500,000.00 Co., Ltd. China Gold Group Yangshan 360,000,000.00 300,402,135.52 -22,114,961.71 Gold Mine Co., Ltd. Gansu Power Investment And 6,000,000.00 6,632,381.44 625,552.27 Sales Power Co., Ltd. Jinlong (Hong Kong) Investment Co., Limited Jinlong 70,880,000.00 70,880,000.00 -610,688.63 (Hong Kong) Investment Co., Ltd. Harbin Dongqing Special Materials 56,298,812.11 56,298,812.11 -616,688.67 Co., Ltd. Qinghai Yellow River Mining Co., 306,392,400.00 306,392,400.00 Ltd.

(Continued)

Change in current year Closing balance for Invested units Closing balance Other equity Cash Provision for provision for Other changes dividend impairment impairment

- 183 -

– F-185 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Change in current year Closing balance for Invested units Closing balance Other equity Cash Provision for provision for Other changes dividend impairment impairment

Total 34,783,329,267.17 6,500,000.00

1. Subsidiaries 34,065,440,324.84 6,500,000.00

Jinchuan Nickel industrial Co., 1,417,911,204.11 Ltd. Jinchuan Group Nickel salt Co., 576,718,691.09 Ltd. Jinchuan Group Wire and Cable 849,164,000.46 Co., Ltd. Jinchuan Group Precision copper 990,724,252.54 Co., Ltd. Jinchuan Group Powder Material 248,910,937.97 Co., Ltd. Jinchuan Group Engineering 537,521,326.15 Construction Co., Ltd. Jinchang Chengxin Engineering Construction Supervision Co., 4,000,000.00 Ltd. Jinchuan Group Information and 42,872,000.00 Automation Engineering Co., Ltd. Jinchuan Nickel-Cobalt Research 138,995,256.09 and Design Institute Co., Ltd. Gansu Jinchuan International Economic and Technological 85,951,872.55 Cooperation Co., Ltd.

Gansu Jinyu Materials Co., Ltd. 6,500,000.00 6,500,000.00

Gansu Jinchuan Chemical New 280,000,000.00 Material Co., Ltd. Gansu Jinchuan Energy Saving 5,000,000.00 Technology Co., Ltd. Jinchuan Group Nickel Alloy Co., 1,476,838,415.00 Ltd.

Jinchuan Group Finance Co., Ltd. 923,000,000.00

Lanzhou Jinchuan Science park 3,205,331,554.76 Co., Ltd.

Gansu Jinhui mining Co., Ltd. 5,500,000.00

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– F-186 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Change in current year Closing balance for Invested units Closing balance Other equity Cash Provision for provision for Other changes dividend impairment impairment

Gansu Jinhe Mining Co., Ltd. 50,002,500.00

Zhonggang Jinbang (Beijing) International Cultural Consulting 20,000,000.00 Co., Ltd. China Jinchuan Investment 410,250,000.00 Holding Co., Ltd.

Beijing Jinchuan Hotel Co., Ltd. 713,813.47

Shenyang Jinhan Material Trading Co., Ltd. Jinchuan Group International 997,500,000.00 Trading Co., Ltd.

Shanghai Nickel Hotel Co., Ltd. 26,235,779.00

Jinke Nonferrous Metals Co., Ltd. 99,845,646.25

Guangdong Jinhui metal Co., Ltd. 20,000,000.00

Guangxi Jinchuan Nonferrous 2,100,000,000.00 Metals Co., Ltd. Beihai Jinchuan real Estate 5,000,000.00 Development Co., Ltd. Tibet Jinchuan Mining Investment 250,000,000.00 Co., Ltd. Jinchuan Group (Hk) Resources Holdings Ltd Jinchuan Group (Hk) 11,659,033,379.83 Resources Holdings Ltd China Gold and Nickel 3,489,028.43 Corporation of Australia Australia Gold Field Nickel Co.. 63,755,420.83 Ltd

Jinchuan American Company 57,969,028.73

South Africa Jinchuan Resources 35,196,105.00 Co., Ltd. Canada Jinchuan Resources Co., 1,733,993,209.72 Ltd.

Jinchuan Group Copper Co., Ltd. 4,000,000,000.00

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– F-187 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Change in current year Closing balance for Invested units Closing balance Other equity Cash Provision for provision for Other changes dividend impairment impairment Jinchang Jujia Ecological 100,428,300.00 Agriculture Co., Ltd. Nickel-cobalt New Material 10,000,000.00 Innovation Center Co., Ltd. Jinchuan Group Logistics Co., 535,115,411.24 Ltd. Jinchuan Group Thermal Power 1,091,973,191.62 Co., Ltd.

2. Joint ventures

3. Associates 717,888,942.33

Guangzhou Longyuan Metal Co., Ltd. China Gold Group Yangshan Gold 278,287,173.81 Mine Co., Ltd. Gansu power Investment and 7,257,933.71 Sales Power Co., Ltd. Jinlong (Hong Kong) Investment Co., Ltd. Jinlong (Hong Kong) 70,269,311.37 Investment Co., Ltd. Harbin Dongqing Special 55,682,123.44 materials Co., Ltd. Qinghai Yellow River Mining Co., 306,392,400.00 Ltd.

4. Operating Revenue and Costs

Current year Prior year Item Revenue Costs Revenue Cost

Subtotal of principle operating activities 61,496,142,251.98 54,700,572,638.29 44,369,309,234.62 35,263,590,854.92

Nickel series products 15,163,564,066.46 10,854,644,220.19 16,364,600,759.60 13,277,037,293.65

Copper series products 12,479,926,828.43 10,689,405,806.43 8,556,157,734.02 6,137,997,284.53

Cobalt series products 331,757,482.68 251,807,111.31 871,096,376.84 813,175,001.79

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– F-188 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Current year Prior year Item Revenue Costs Revenue Cost

Precious Metal Products 1,202,988,207.21 701,463,626.87 3,828,937,619.39 3,716,330,563.95

Trade 28,418,472,830.77 28,284,114,405.01 9,211,657,624.57 9,118,142,797.05

Other 3,899,432,836.43 3,919,137,468.48 5,536,859,120.20 2,200,907,913.95

Subtotalof other business 258,229,960.44 231,656,119.74 1,055,695,023.07 2,994,921,877.89

Total 61,754,372,212.42 54,932,228,758.03 45,425,004,257.69 38,258,512,732.81

5. Investment Income

1) Detailed information of investment income

Source of investment income Current year Prior year

Long-term equity investment income accounted by equity method -22,716,786.74 -25,408,891.02

Investment income from disposal of long-term equity investment 294,976.32

Income from holding to maturity investments during holding

Disposal of investment returns from holding to maturity investments

Revenue from available-to-sell financial assets investment 71,333,644.76 1,346,226.83

Investment gains from disposal of financial assets available for sale

When controlling rights are acquired, the profits generated by the recounting of equity at fair value After the loss of control right, the residual equity gains will be recalculated at fair value

Futures liquidation gains and losses -78,054,331.50 18,104,368.09

Investment income from entrusted loans

Subsidiary dividend and others 150,532,509.90 293,411,229.51

Total 121,095,036.42 287,747,909.73

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– F-189 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

6. Cash Flow Statement

Supplementary information Current year Prior year

Reconciliation of net profit to cash flows from operating activities:

Net profit 3,701,760,409.22 3,354,991,775.41

Add: Provision for impairment loss of assets 95,817,053.58 277,044,387.45

Depreciation of fixed assets, bio-assets, and natural gas 1,044,893,837.14 1,335,025,544.46

Amortization of intangible assets 54,071,054.74 83,275,286.98

Amortization of long-term prepaid expensess 3,733,712.13 3,040,000.08

Losses on disposal of fixed assets, intangible assets and other -8,514,801.69 176,722.22 long-term assets (revenue use”-“)

Losses on scrapping of fixed assets (revenue use”-“) 11,315,610.38 23,662,636.43

Losses of fair value variation (revenue use”-“) 11,993,424.16 -27,988,744.24

Financial expenses (revenue use”-“) 1,039,737,307.12 1,444,970,686.31

Losses from investments (revenue use”-“) -121,095,036.42 -287,747,909.73

Decrease in deferred tax assets (revenue use”-“) 53,394,513.01 710,906,671.10

Increase in deferred tax liabilities (revenue use”-“) 625,353.34 1,318,888.37

Decrease in inventories (revenue use”-“) -1,166,675,574.94 3,161,124,762.95

Decrease in operating receivables (revenue use”-“) ) -1,044,689,949.83 -1,255,280,483.53

Increase in operating payables (revenue use”-“) 2,119,531,765.00 -2,450,189,775.01

Others -33,854,268.03 -23,014,812.22

Net cash flows from operating activities 5,762,044,408.91 6,351,315,637.03

Investing and financing activities that do not affect cash receipt and payment:

Liabilities converted capital

Reclassify convertible bonds to be expired within one year as current liability

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– F-190 – Jinchuan Group Co., Ltd. Notes to the 2019 Financial Statements January 1, 2019 - December 31, 2019

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail

Supplementary information Current year Prior year

Fixed assets subject to finance leases

3. Net increase in cash and cash equivalents:

Cash at the end of the period 1,536,802,267.68 1,767,006,017.33

Less: cash at the beginning of the period 1,767,006,017.33 2,597,925,231.98

Add: cash equivalents at the end of the period

Less: cash equivalents at the beginning of the period

Net increase in cash and cash equivalents -230,203,749.65 -830,919,214.65

XIII. Financial Statements Permitted

The Company’s financial statements and the consolidated financial statements for current year have been approved by the board of directors of the Company on 26 May 2020.

Jinchuan Group Co., Ltd.

May 26, 2020

Notes to the financial statements on pages 17 to 189 are signed by the following responsible persons

Legal Representative Chief Financial Officer Financial Controller

Signature: Signature: Signature:

Date: Date: Date:

- 189 -

– F-191 – – F-192 – – F-193 – – F-194 – – F-195 – – F-196 – – F-197 – – F-198 – – F-199 – – F-200 – – F-201 – – F-202 – – F-203 – – F-204 – – F-205 – – F-206 – – F-207 – – F-208 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Jinchuan Group Co., Ltd Notes to the Financial Statements

I. Company Profile Jinchuan Group Co., Ltd. (hereinafter referred to as the "Company" or "Jinchuan Group Company") is located in Jinchang City, Gansu Province, formerly the Jinchuan Nonferrous Metals Company established in 1961. The company was successively subordinated to the Ministry of Metallurgical Industry of China, China Nonferrous Metals Industry Corporation and China Copper, Lead and Zinc Group Company, which was transferred to the Gansu Provincial People's Government in July 2000. From April to July in 2000, Jinchuan Nonferrous Metals Company signed the Contract of Debt-to-Equity Conversion and the Supplementary Agreement of Debt-to-Equity Conversion with Guokai Finance Co., Ltd., China Xinda Asset Management Company, China Copper-Lead-Zinc Group Company and Gansu Industrial Transport Investment Company. It was agreed that China Copper-Lead-Zinc Group Company and Gansu Industrial Transport Investment Company should use Jinchuan Group Company as their partners. On March 31, 2000, as the base day, all the net assets reflected in the balance sheet after stripping off non-operating assets and deducting public welfare funds are used as capital contribution. Guokai Finance Co., Ltd. and Xinda Asset Management Co., Ltd. jointly set up Jinchuan Nonferrous Metals Co., Ltd. with their creditor's rights to Jinchuan Group Company as capital contribution, respectively. In November 2000, the State Economic and Trade Commission approved the above-mentioned debt-to-equity swap agreement and supplementary agreement with the State Economic and Trade Industry Document [2000] 1085. The Gansu Provincial Government approved the overall restructuring of Jinchuan Group Company to establish "Jinchuan Group Company Limited" in Gan Zheng Letter [2000] 131 As of December 31, 2004, the company's paid-in capital was CNY 4,152,284,381.03, of which CNY 2,426,515,202.78 is from Gansu government, accounting for 58.44%;CNY 936,511,053.76 is from Guokai Finance Co., Ltd., accounting for 22.56%; CNY 336,852,110.56 is from Shanghai Baosteel Company, accounting for 8.11%; CNY 336,852,110.56 is from Taiyuan Iron and Steel (Group) Co., Ltd., accounting for 8.11%; CNY 115,553,903. 37 is from Gansu Industrial Transport Investment Company, accounting for 2.78%.

– F-209 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

In March 2005, with the approval of Gansu Provincial Finance Department and Gansu Provincial Land and Resources Department, Gancaijian [2005] No. 12, the company increased the state capital held by Gansu Provincial Government by a total of CNY 1,258,869,800.00 in the mining rights of Longshou Mine, No. 2 Mining Area, quartz and sandstone yards of open-pit ores. In October 2005, the company added CNY 296,042,778.44 of land appraised and confirmed into the paid-in capital to increase the state capital held by the Gansu Provincial Government. In December 2005, according to the company's profit distribution plan, to increase capital with undistributed profits, which the state capital held by Gansu Provincial Government increased by CNY 348,763,237.90, Gansu Industrial Transport Investment Company increased by CNY 11,286,833.60, Guokai Financial Co., Ltd. increased by CNY 91,474,576.99, Shanghai Baosteel Group Company increased by CNY 32,902,339.16, Taiyuan Iron and Steel (Group) Co., Ltd. increased by CNY 32,902,339.16. In May 2009, the State-owned Assets Supervision and Administration Commission of Gansu Province, in accordance with the spirit of the relevant meeting of the Standing Meeting of the Gansu Provincial People's Government and the Notice of the General Office of the Gansu Provincial People's Government on the Transfer of State-owned Equity in Some Provincial Enterprises (No. 80 of Office Release, 2009) , issued the State-owned Assets Supervision and Administration Commission of the Provincial Government on Transferring State-owned Equity Notice of Group Co., Ltd. (Ganguo Asset Rights [2009] 135) transfers the state-owned shares of Jinchuan Group Company with CNY 4,330,191,019.12 to Gansu State-owned Asset Investment Group Co., Ltd. According to the resolution of the first provisional meeting of shareholders' meeting in 2010, the Gansu Provincial Government changed its investment in Lanzhou Science and Technology Park into increasing its investment in Jinchuan Group Company, increasing its paid-in capital by CNY 68,016 million. Meanwhile, the Gansu Provincial Government transferred the financial entrusted loan to the paid-in capital by CNY 13,449 million. According to the resolution of the above-mentioned shareholders' meeting, the other shareholders of the company should increase their capital in the same proportion and receive separate income. Taiyuan Iron and Steel (Group) Co., Ltd. and Shanghai Baosteel Group Co., Ltd. Contributed CNY 69,563,123.48 in currency, Guokai Finance Co., Ltd. contributed CNY 193,398,325.35 in currency, and Gansu Industrial Transportation Investment Co., Ltd. contributed CNY 23,862,965.96 in currency. The above-mentioned investment has been verified. After the above capital verification, the company's paid-in

– F-210 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail] capital is CNY 7,395,566,934.94. Among which, Gansu State-owned Assets Investment Group Co., Ltd. has CNY 4,330,191,019.12, accounting for 58.55%; Gansu People's Government's State-owned Assets Supervision and Administration Commission 814,653,110.39 yuan, accounting for 11.02%; Guokai Finance Co., Ltd. has 1,221,383,956.10 yuan, accounting for 16.51%; Gansu Industrial Transportation Investment Company CNY 150,703,702.93, accounting for 2.04%; Taiyuan Iron and Steel (Group) Co., Ltd. CNY 439,317,573.20, accounting for 5.94%; Shanghai Baosteel Group Company CNY 439,317,573.20, accounting for 5.94%. According to the resolution of the shareholders' meeting in 2011, Jinchuan Group Co., Ltd. has been restructured as a whole into Jinchuan Group Co., Ltd. The original shareholders of Jinchuan Group Co., Ltd. use the net assets of the parent company audited on June 30, 2011 as their capital contribution. As of December 31, 2011, the total equity of the company is CNY 18,800,000,000.00 yuan, of which Gansu State-owned Assets Investment Group Co., Ltd. is 11,007,620,088.00 yuan, accounting for 58.55%; Gansu Provincial People's Government State-owned Assets Supervision and Administration Commission is CNY 2,070,899,853.00, accounting for 11.02%; Guokai Finance Co., Ltd. is CNY 3,104,835,448.00, accounting for 16.51%; Company CNY 383,098,367.00, accounting for 2.04%, Taiyuan Iron and Steel (Group) Co., Ltd. is CNY 1,116,773,122.00, accounting for 5.94%; Shanghai Baosteel Group Co., Ltd. is CNY 1,116,773,122.00, accounting for 5.94%. The above changes in equity have been verified by Guofuhaohua Accounting Firm and issued the capital verification report of Guohao 704A223 [2011]. According to the resolution of the first provisional shareholders' meeting in 2012, the resolution of the second meeting of the first board of directors, and the regulation of the State-owned Assets Supervision and Administration Commission of the Gansu Provincial People's Government "Summary of the Leading Group Meeting on the Reform and Listing of Jinchuan Group on June 14, 2012", the company applies for an increase of registered capital of CNY 4,146,544,651.00, which is subscribed by the holding companies of the State-owned Assets Supervision and Administration Commission of the With its 100% equity of Gansu Provincial People's Government, including Jinchuan Niedu Industrial Co., Ltd., Jiuquan Iron and Steel (Group) Co., Ltd., Gansu Electric Power Investment Group Co., Ltd., Shenzhen Ping'an Innovation Capital Investment Co., Ltd., China-Africa Development Fund Co., Ltd., Runbo (Tianjin) Equity Investment Fund Partnership, Zhejiang Hailiang Co., Ltd., Shanghai SAIC Huankai Investment Management Co., Ltd.,

– F-211 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

China Eastern Asset Management Corporation, Jingyuan Coal Industry Group Co., Ltd., China Xinda Asset Management Co., Ltd., Beijing Hongdaxin Asset Management Co., Ltd., Guangda Jincong (Lanzhou) Jinnie Investment Co., Ltd., National Development Investment Co., Gansu Rare Earth New Materials Co., Ltd., China Hi-tech Investment Group Co., Ltd., Jincheng Capital Management Co., Ltd., Tibet Mining Development Co., Ltd., and other companies of total seventeen specific investors subscribe in Currency Funds. Upon completion of the above-mentioned capital increase, the company's equity capital is CNY 22,946,544,651.00. Among which, the State-owned Assets Supervision and Administration Commission of Gansu Provincial People's Government has CNY 2,957,627,874.00, accounting for 12.89%; Gansu State-owned Assets Investment Group Co., Ltd. has CNY 11,007,620,088.00, accounting for 47.97%; Guokai Financial Co., Ltd. has CNY 3,104,835,448.00, accounting for 13.53%; Baosteel Group Co., Ltd. has CNY 1,116,773,122.00, accounting for 4.87%; Taiyuan Iron and Steel (Group) Co., Ltd. has CNY 1,116,773,122.00, accounting for 4.87%; Gansu Industrial Transport Investment Company has CNY 383,098,367.00, accounting for 1.67%; Jiuquan Iron and Steel (Group) Co., Ltd has CNY 321,543,408.00, accounting for 1.40%; Gansu Electric Power Investment Group Co., Ltd has CNY 321,543,408.00, accounting for 1.40%; Shenzhen Ping'an Innovation Capital Investment Co., Ltd has CNY 321,543,408.00, accounting for 1.40%; China-Africa Development Fund Co., Ltd has CNY 321,543,408.00, accounting for 1.40%; Runbo (Tianjin) equity investment fund partnership enterprise has CNY 284,565,916.00, accounting for 1.24%; Zhejiang Hailiang Co., Ltd has CNY 257,234,726.00, accounting for 1.12%; Shanghai SAIC Huankai Investment Management Co., Ltd has CNY 257,220,000.00, accounting for 1.12%; China Eastern Asset Management Company has CNY 160,780,000.00, accounting for 0.70%; Jingyuan Coal Group Co., Ltd has CNY 160,771,700.00, accounting for 0.70%; China Xinda Asset Management Co., Ltd. has CNY 160,771,700.00, accounting for 0.70%; Beijing Hongdaxin Asset Management Co., Ltd. has CNY 160,771,700.00, accounting for 0.70%; Guangdajinkong (Lanzhou) Jinquan Investment Co., Ltd. has CNY 156,401,211.00, accounting for 0.68%; National Development Investment Co., Ltd. has CNY 128,617,363.00, accounting for 0.56%; Gansu Rare Earth New Materials Co., Ltd. has CNY 100,000,000.00, accounting for 0.44%; China High-tech Investment Co., Ltd. hasCNY 64,308,682.00, accounting for 0.28%; Jincheng Capital Management Co., Ltd. has CNY 50,000,000, accounting for 0.22%; Tibet Mining Development Co., Ltd. Has CNY 32,200,000.00, accounting for 0.14%. The above changes have been verified by

– F-212 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Guofuhaohua Accounting Firm (Special General Partnership) and issued the Capital Verification Report No. 704B91 of Guohao [2012]. According to the State-owned Assets Supervision and Administration Commission of Gansu Provincial People's Government's Approval of Transferring Part of the Stock Ownership of Gansu Industrial Transport Investment Company to Jinchuan Group Co., Ltd. (Ganguo Assets Rights [2013] No.3) , (Ganguo Assets Rights [2013] No.4) and the Resolution of the Fifth Meeting of the First Board of Directors and the Shareholders' Meeting in 2013, Gansu Province's industry will be transferred. The 60,661,172.00 shares held by the Transportation Investment Company were transferred to Gansu Electric Power Investment Group Company without compensation. After the above changes were completed, Gansu Industrial Transportation Investment Company held CNY 322,437,195.00, accounting for 1.41% of the total equity. Gansu Electric Power Investment Group Company held CNY 382,204,580.00, accounting for 1.66% of the total equity. According to the resolution of the first provisional shareholders' meeting in 2015, Beijing Hongdaxin Assets Management Co., Ltd. transferred 160,771,700 shares of its own company to Gansu State-owned Assets Investment Group Co., Ltd. After completing the above changes, Gansu State-owned Assets Investment Group Co., Ltd. held CNY 11,168,391,788.00, accounting for 48.67% of the total equity. According to the company's "Resolution of the 2016 Annual Shareholders' Meeting" in June 2017, the shareholder state development investment company transferred 0.56% of its shares to China Investment High-tech Industrial Investment Company. After the transfer, the share-holding ratio of China Investment High-tech Industrial Investment Company changed to 0.84%. After this change, the company's share capital is CNY 22,946,544,651.00, of which 12.89% is owned by the State-owned Assets Supervision and Administration Commission of Gansu Provincial People's Government; 48.67% is owned by Gansu State-owned Assets Investment Group Co., Ltd; 13.53% is owned by Guokai Financial Co., Ltd; 24.91% is owned by China Baowu Iron and Steel Group Co., Ltd., Taiyuan Iron and Steel Group Co., Ltd., Gansu Province Provincial Industrial Transportation Investment Company, Jiuquan Iron and Steel (Group) Co., Ltd., Gansu Electric Power Investment Group Co., Shenzhen Ping'an Innovation Capital Investment Co., Ltd., China-Africa Development Fund Co., Ltd., Runbo (Tianjin) Equity Investment Fund Partnership, Zhejiang Hailiang Co., Ltd., Shanghai SAIC Huankai Investment Management Co., Ltd., China Oriental Asset Management Unit Co., Ltd., Jingyuan Coal

– F-213 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Industry Group Co., Ltd., China Xinda Asset Management Co., Ltd., Beijing Hongdaxin Asset Management Co., Ltd., Guangda Jinkong (Lanzhou) Jinnie Investment Co., Ltd., Gansu Rare Earth New Materials Co., Ltd., China High-tech Investment Group Co., Jincheng Capital Management Co., Ltd. and Tibet Mining Development Co., Ltd. in total. According to the second provisional shareholders' meeting held in September 2018, Gansu Xinglong Capital Management Co., Ltd. was agreed to increase its shareholders, holding CNY 160,771,700.00 of the company, with a share-holding ratio of 0.70%. Gansu State-owned Asset Investment Group Co., Ltd. was agreed to reduce its share-holding to CNY 11,007,620,088.00, with the share-holding ratio changing from 48.67% to 47.97%. The company now holds the business license of enterprise legal person issued by Jinchang Administration for Industry and Commerce. Unified social credit code: 91620300224690952T; Registered capital: 22,946,544,651.00 yuan; Legal representative: Wang Yongqian; Company residence: Beijing Road, Jinchang City; Company's business scope: nickel, copper, cobalt, rare and precious metals, inorganic chemical products, chemical dangerous goods, engineering, lifting. Machinery and equipment and production and sale of chemical, mining, mineral processing, smelting, mechanical complete sets of equipment, domestic and foreign trade, import and export, domestic and foreign futures business, mining, manufacturing, construction, transportation, breeding, real estate, social services, scientific research and comprehensive technical services, hydroelectric heating production and supply, health, culture and education, recycling and sale of waste materials (where permitted) Projects that can be operated under license shall be operated under license; Business term: 28 September 2001 to 27 September 2071. The parent company of the company is Gansu State-owned Assets Investment Group Co., Ltd. and the final controlling party is the State-owned Assets Supervision and Administration Commission of Gansu Provincial People's Government.

II. Basis of Preparation The financial statements of the Company are prepared, on a going concern basis, to recognize and measure the transactions and events that have occurred in accordance with the requirements of Accounting Standards for Business Enterprises – Basic Standards issued by the Ministry of Finance

III. Statement of Compliance with ASBE

– F-214 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

The financial statements prepared by the Company meet the requirements of the Accounting Standards for Business Enterprises, which presented truthfully and fairly for the Company’s financial conditions as of 31 December 2018 and 31 December 2017, operating results, cash flow status and other relevant information of 2018 and 2017.

IV. Significant Accounting Policies and Accounting Estimates

1. Accounting Period The Company's accounting periods include an annual and a medium-term period. The medium-term accounting period is a period shorter than the reporting period of a complete accounting year. The accounting year of the Group is from 1 January to 31 December.

2. Functional Currency CNY is the currency of the primary economic environment in which the Company and its domestic subsidiaries operate. The Company and its domestic subsidiaries choose CNY as the functional currency.

3. Accounting Basis and Valuation Principles According to the relevant provisions of the enterprise accounting standards, the accounting of the company is based on accrual basis. Except for some financial instruments and investment real estate, the financial statements are based on historical cost. The amount of non-current assets held for sale after deducting the estimated expenses from the fair value and the original book values which meet the held for sale conditions shall be calculated at a lower price. In case of any impairment of assets, the corresponding impairment provisions shall be made in accordance with relevant provisions.

4. Business Combination A business combination is a transaction or event that brings together two or more separate enterprises into one reporting entity. Business combinations are classified into business combinations under common control and business combinations not under common control.

(1) Merger accounting for business combinations under common control Merger accounting for business combinations under common control is a business combination in which all the combining enterprises are ultimately controlled by the same

– F-215 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail] party or parties both before and after the combination, and that control is not transitory. For a business combination under common control, the absorbing party is the party that acquires the control right of other involved enterprises on combination date. The combined party is other enterprises involved in the combination. The combination date refers to the date on which the absorbing party effectively obtains control of the party being absorbed. Assets and liabilities that are obtained in a business combination by the absorbing party shall be measured at their carrying amounts as recorded by the party being absorbed on the combination date. The difference between the carrying amount of the net assets obtained and the carrying amount of the consideration paid for the combination (or the aggregate face value of shares issued as consideration) shall be adjusted to the capital reserve (share premium) . If the capital reserve (share premium) is not sufficient to absorb the difference, excess shall be adjusted against retained earnings. Cost incurred by the absorbing party that is directly attributable to the combination shall be charged against profit or loss in the period in which the cost is incurred.

(2) Acquisition method of accounting for other business combinations Acquisition method of accounting for other business combinations is a business combination in which all the combining enterprises are not ultimately controlled by the same party or parties before and after the combination. For a business combination not under common control, the party that, on the acquisition date, obtains control of other enterprises participating in the combination is the acquirer. Other enterprises participating in the combination are the acquiree. Acquisition date is the date on which the acquirer effectively obtains control of the acquiree. For a business combination not under common control, combination cost is the aggregate of the fair value of the assets given, liabilities incurred or assumed, and equity securities issued by the acquirer in exchange for control of the acquiree on the acquisition date. Service expense including audit fees, legal fees, valuation and consulting fees, and other administrative expenses attributable to the business combination shall be charged against profit or loss in the period in which the service expense is incurred. The transaction expense of the equity securities or debt securities issued by the acquirer as combination consideration shall be included in the initial cost of equity securities or debt securities issued. The contingent consideration in the business combination shall be included into the combination cost at its fair value on the acquisition date. In case that within 12 months after the acquisition date, any new or further evidence is found regarding

– F-216 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail] the existing situation as on the acquisition date, which causes adjustment on contingent consideration, goodwill shall be adjusted accordingly. The combination cost incurred by the acquirer and the identifiable net assets acquired in the combination are initially measured at fair value on the acquisition date. The positive difference between the combination cost and the fair value of the identifiable net assets it obtains from the acquiree on the acquisition date is recognized as goodwill. As for the negative difference between the combination cost and the fair value of the identifiable net assets it obtains from the acquiree, it is necessary to review the measurement of the fair values of the identifiable assets, liabilities and contingent liabilities it obtains from the acquiree as well as the combination cost. If the combination cost is still less than the fair value of the identifiable net assets it obtains from the acquiree, the difference shall be recorded through profit or loss for the current period. Where the deductible temporary difference of the acquiree obtained by the acquirer is not recognized on the ground that the recognition condition of deferred tax asset has not been meet on the acquisition date, within 12 months after the acquisition date, if further information is obtained to indicate that the relevant situation on the acquisition date existed and the economic interest brought by the deductible temporary difference of the acquirer on the acquisition date is expected to be realized, the amount of the difference shall be recognized as relevant deferred tax asset and goodwill shall be deducted by the same amount. If the goodwill is insufficient to be deducted, the difference is recognized through profit or loss for the current period; otherwise, the difference recognized as the deferred tax asset which is relate to business combination shall be recognized through profit or loss for the current period. For the business combinations not under common control and completed through multiple transactions, according to Notice of the Ministry of Finance of the People’s Republic of China on Issuing Interpretations No.5 on Accounting Standards for Business Enterprises (Caikuai [2012] No.19) and the criteria about “package deal” in Article 51 of Accounting Standards for Business Enterprises No.33---Consolidated Financial statements (refer to Note IV, 5 (2) , whether these multiple transactions are included in “package deal” shall be judged. If they are included in “package deal”, the accounting treatment shall be conducted in accordance with the descriptions of previous paragraphs of this Part and Note IV. 12 “Long-term Equity Investment”; if they are not included in “package deal”, relevant accounting treatment shall be conducted differently in separate financial statements and consolidated financial statements.

– F-217 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

In separate financial statements, the sum of the book value of the equity investment of the acquiree held before the acquisition date and the investment cost incurred on the acquisition date shall be the initial investment cost of such an investment. If the equity of the acquiree held before the acquisition date involves other comprehensive income, when handling this project, relevant accounting treatment for other comprehensive income shall be conducted on the same base as the acquiree disposes of relevant assets and liabilities directly (all shares shall be transferred into investment income for the current period, except the corresponding shares changed by net liabilities or net assets in benefit plan redesigned by the acquiree under equity method) . In consolidated financial statements, the equity of the acquiree held before the acquisition date shall be re-measured at fair value of the equity on the acquisition date, and the difference between fair value and book value shall be recorded in the current income from investment. If the equity of the acquiree held before the acquisition date involves other comprehensive income, relevant accounting treatment for other comprehensive income shall be conducted on the same base as the acquiree disposes of relevant assets and liabilities directly (all shares shall be transferred into investment income for the current period which consists of the acquisition date, except the corresponding shares changed by net liabilities or net assets in benefit plan redesigned by the acquiree under equity method) .

5. Preparation Method for Consolidated Financial Statements

(1) Identification of the scope of the consolidation The scope of consolidated financial statements shall be determined on the basis of control. Control means the Company has power over the investee, by participating in the relevant activities of the investee and has variable returns, and the ability to use the power to influence the return amount of the investee. The combination scope includes the Company and all subsidiaries. Subsidiary is the corporate body controlled by the Company. The Company will reassess combination scope if relevant elements on the control definition have changed due to the change of the relevant facts and circumstances.

(2) The method for preparation of consolidated financial statements From the date the Company obtains the actual control over a subsidiary’s net assets and production operation decision-making power, the Company includes the subsidiary into the consolidated scope; from the date the Company loses control over a subsidiary,

– F-218 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail] the subsidiary shall cease to be consolidated. For a subsidiary disposed of, the operating results and cash flows before the disposal date are appropriately included in the consolidated statement of income and the consolidated statement of cash flow; for a subsidiary disposed during the current period, no adjustments are made to the opening balance of the consolidated balance sheet. Where a subsidiary is acquired through a business combination not under common control, the subsidiary’s operating results and cash flows after the combination date are appropriately included in the consolidated statement of income and the consolidated statement of cash flow and no adjustments is made to the opening balance and comparative figures of the consolidated financial statements. Where a subsidiary is acquired through a business combination under common control, the subsidiary’s operating results and cash flows from the beginning of the reporting period to the combination date are appropriately included in the consolidated statement of income and the consolidated statement of cash flow and adjustments is made to the comparative figures of the consolidated financial statements accordingly. When preparing the consolidated financial statements, if subsidiary and the Company adopt the inconsistent accounting policies or accounting periods, the Company shall adjust the financial statements of the subsidiary based on its own accounting period and accounting policies. For a business combination not under common control, the subsidiary shall be adjusted based on the fair value of the identifiable net asset and adjustments to financial statements shall be made. All material balances, transactions, and unrealized profits within the scope of consolidated financial statements shall be eliminated in the preparation of consolidated financial statements. Shareholders’ equity and current net profit or loss of subsidiary which not attributable to the Company shall be solely presented as minority shareholders’ equity of consolidated balance sheet and net profit of consolidated statement of income, respectively. The amount of current profit or loss of subsidiary is attributable to minority shareholders’ equity; it should be presented as “Minority shareholders’ equity” under the net profit consolidated statement of income. If the losses of subsidiary exceed the shareholders’ portion of the opening balance of shareholders’ equity of the subsidiary, the excess shall be allocated against the non-controlling interests. If the Company loses control over a subsidiary due to the disposal of a portion of an equity investment or other reasons, the remaining equity shall be re-measured at its fair value at the date when control is lost. The difference obtained through the total amount of

– F-219 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail] consideration received from the disposal of equity and the fair value of the remaining equity, less the share of net assets of the former subsidiary calculated continuously from the acquisition date or the combination date based on the previous shareholding proportion, shall be recognized as investment income for the current period when control is lost. Other comprehensive income related to original subsidiary will be transferred into the current profit and loss in investment at the date the Company lost control over the subsidiary. (That is, in addition to the re-measurement of changes in the net liabilities or net assets of the defined benefit plan in the original subsidiary, the rest will be transferred into investment income for the current period) . After that, for the remaining part of this part of equity, according to Accounting Standards For Enterprise No.2-Long Term Equity Investment or Accounting Standards For Enterprises No.22-Recognition And Measurement Of Financial Instrument and related regulation for subsequent measurement, and there are details in Notes IV.12 “Long-term capital investment” or Notes IV.9 “Financial instruments”. If the Company loses control over a subsidiary in multiple transactions in which it disposes equity investments in the subsidiary in stages, the Company is required to determine whether each transaction shall be included in a package deal. If one or more than one of the following conditions are met by all of the terms and conditions of the transactions and their economic effects in regard to the disposal of equity investment in subsidiaries, the accounting treatment for these transactions shall be conducted as a package deal: ķThese transactions are carried out simultaneously or in the condition that each part will be impacted; ĸThese transactions as a whole will achieve a complete business results; ĹThe occurrence of one transaction are dependent on at least one transaction; ĺOne transaction may seem to be uneconomic when considered solely, but it can be recognized as economic when considered with other transactions. If one transaction is not included in the package transaction, each of transaction will be according to the “Partly disposal of subsidiaries of a long-term equity investment without losing control” and each of the transaction will respectively follow the part disposal subsidiaries of a long-term equity investment under the control not lost (refer to Notes IV. 12. (2) ĺ) and “losing control due to disposal of part of equity investments or other reasons” of the original subsidiaries suited for the principle as accounting treatment. If disposal subsidiary Company equity investment at other each transaction belonged to a package transaction until Company losing control, thus each transaction shall be dealt with accounting treatment in which each transaction is recognized as one that dispose of

– F-220 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail] subsidiaries until lose control. However, the difference between the disposals prices of prior before control lost with Company net asset shall be recognized as other comprehensive income, the profit and loss of current year shall be transferred when control is lost.

6. Classification and Accounting Treatment for Joint Arrangements and Joint Operation A Joint arrangement is an arrangement of which two or more parties have joint control. The Company divides joint venture arrangement into joint operation and joint venture based on the rights enjoyed and obligations assumed in joint venture arrangements. A joint operation is a joint arrangement whereby the Company has rights to the assets and obligations for the liabilities, relating to the arrangement. A joint venture is a joint arrangement whereby the Company only has rights to the net assets of the arrangement. The Company adopts equity method for accounting of investment of joint ventures and disposes according to the accounting policy described in the Note IV.12 (2) ĸ “Long-term Equity Investment under Equity method”. As a joint venture party, for joint operation, the Company recognizes the assets held solely and liabilities assumed solely and recognizes the Company’s share of any assets held jointly and liabilities assumed jointly; recognizes the Company’s revenue from the sale of its share of the output arising from the joint operation; recognizes the Company’s share of the revenue from the sale of the output by the joint operation; recognizes the expenses incurred solely by the Company and the Company’s share of any expenses incurred jointly. When the Company invests or sells assets towards joint operation as a party of the joint-venture (this asset does not constitute business, the same below) , or upon purchasing assets by joint operation but before selling such assets to the third party, the Company only recognizes the part belonging to other participants of joint operation in profit or loss caused by this transaction. Where such assets belong to the impairment losses for assets according to Accounting Standard for Business Enterprises No. 8 – Impairment of Assets and other regulations, the Company will recognize losses in full amount for investment or sales of assets from the Company to joint operation. For assets purchased by the Company from joint operation, the Company will recognize these losses according to its shareholding proportion.

7. Recognition Criteria for Cash and Cash Equivalents

– F-221 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

8. Accounting Treatment of Foreign Currency Transactions

(1) Translation of Foreign Currency Transactions Transactions denominated in foreign currencies are translated into CNY at the spot rate of the trading day (commonly referred to as the central parity of the foreign exchange rate quoted by the people's bank of China, same below) . However, if the foreign currency exchanges business of the company or the transaction involving foreign currency exchange, the amount shall be translated into CNY at the exchange rate that was actually used.

(2) Translation method for monetary and non-monetary items denominated in foreign currency At the balance sheet date, foreign currency monetary items are translated using the spot exchange rate at the balance sheet date. All the exchange differences thus resulted are taken to profit or loss, except for ķthose relating to foreign currency borrowings specifically for construction and acquisition of qualifying assets, which are capitalized in accordance with the principle of capitalization of borrowing costs, ĸhedging accounting, the exchange difference related to hedging instruments for the purpose of net oversea operating investment is recorded in the comprehensive income till the date of disposal and recognized in profit or loss of the period; exchange difference from changes of other account balance of foreign currency monetary items, Ĺthe available-for-sale monetary items denominated in foreign currency are recognized in the profit or loss for the currency period except for such foreign exchange differences arising from the other changes in the balance other than amortized cost that will be recognized in the other comprehensive income. Where the preparation of consolidated financial statements involves overseas operations, if any foreign currency monetary item constitutes a net investment in overseas operations in essence, the exchange difference resulting from the change of exchange rate shall be included in other comprehensive gains; when dealing with overseas operations, it shall be transferred to the current profit or loss.

– F-222 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

The foreign currency non-monetary items measured at historical cost shall continue to be translated at the spot exchange rates at the dates of the transactions. The foreign currency non-monetary items measured at the fair value shall be translated at the spot exchange rate on the date when the fair value has been determined, and the difference between the translated reporting currency amount and the original one shall be treated as the changes in fair value (including changes in exchange rate) and recorded in the current profit or loss or recognized as other comprehensive income. On the balance sheet date, the spot exchange rate on the balance sheet date is adopted for the conversion of foreign currency monetary items. The resulting exchange difference shall be included in the current profits and losses, except that: ķ the exchange differences arising from special foreign currency loans related to the acquisition and construction of assets eligible for capitalization shall be handled in accordance with the principle of capitalization of borrowing costs; and ĸ the exchange differences of hedging instruments used for effective hedging of net investment abroad. (The difference is included in other comprehensive gains and losses until the net investment is disposed of) and Ĺthe exchange difference arising from the changes in other book balances shall be included in other comprehensive gains. The non-monetary items of foreign currency measured at historical cost are still measured by the amount of the book-keeping base currency converted at the spot exchange rate on the date of transaction. Foreign currency non-monetary items measured by fair value shall be converted at spot exchange rate on the date of determination of fair value. The difference between the converted amount of base currency and the original amount of base currency shall be treated as changes in fair value (including changes in exchange rate) , and shall be included in current profits and losses or recognized as other comprehensive gains and recorded in capital reserve.

(3) Translation Method of Financial Statements Denominated in Foreign Currency When preparing the consolidated financial statements involving the overseas operation, if there are foreign-currency monetary items essentially constituting a net investment in an overseas operation, the exchange difference incurred due to the exchange rate change shall be presented in other comprehensive income as "difference arising from the translation of foreign currency financial statements". When disposing of the overseas operation, the current profit or loss shall be transferred to the current profit or loss.

– F-223 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

The foreign currency adopted in the foreign exchange statements for overseas operation shall be translated into CNY as per the following methods: Assets and liabilities on the balance sheet shall be translated at the spot rate at the balance sheet date; shareholders’ equity items shall be translated at the spot rate occurred except for the item of “undistributed profit”. The income and expense items in the profit statement shall be translated at the current average rate of the transaction date. The opening undistributed profits are the closing undistributed profits translated at the prior year; for closing undistributed profits, each item shall be calculated and presented as per the translated profits; and the difference between the asset items and the sum of liability items and shareholders' equity items after translation shall be recognized into other comprehensive incomes as translation differences arising on translation of financial statements denominated in foreign currencies. When disposing overseas operation and losing the control, difference arising from the translation of foreign currency financial statements, which are presented under shareholders' equity in the balance sheet and related to the overseas operation, shall be transferred to the profit or loss for the current period in whole or in proportion of the disposed overseas operation. The cash flow of overseas subsidiaries shall be translated at the spot exchange rate on the date of cash flow happening. Changes in exchange rate shall be deemed as adjustment item and shall be separately presented in the statement of cash flow. Opening amount and prior year’s actual amount are presented in line with the amount after the translation of prior year financial statements. For the preparation of consolidated financial statements, when the disposal of all shareholders’ equities with respect to the overseas operations by the Company, as well as parts of equity investments, results in a lost in control over the overseas operations, the Company shall convert the difference, which is presented under the items of the owner’s equities of the parent company in the balance sheet and which arises from the translation of foreign currency financial statements relating to this overseas business, into the profit or loss of the period for disposal. When overseas operational control is retained but the proportion of overseas operational equity held by the Company decreases due to disposal of partial equity investments or other reasons, the difference arising from translation of foreign currency relevant to the disposed portion of such overseas operation will be recognized as non-controlling shareholder equity. The difference shall not be transferred into current profit or loss. In the event that the disposed overseas operation involves partial equities of

– F-224 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail] affiliated enterprises and joint ventures, the difference arising from translation of foreign currency relevant to the disposed portion of such overseas operation will be transferred into the current profit or loss for disposal as per the disposed proportion of overseas operation.

9. Financial Instruments Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instruments. Financial assets and financial liabilities are initially measured at fair value. For financial assets and financial liabilities measured at fair value and changes recorded in current profit and loss, relevant transaction costs are directly accounted in profit and loss. For other financial assets and financial liabilities, relevant transaction costs are accounted in initially recognized amount

(1) The Identification Method for the Fair Value of Financial Assets and Liabilities Fair value refers to the price that can be received through selling an asset or payment for the transfer of a liability by the market participant in the orderly transaction on the measurement date. The fair value of the financial assets or financial liabilities in the active market of the Company shall be determined at the quoted price in the active market in case that the financial instruments exist in the active market. The quoted price in active market refers to price that is easily obtained from the exchange, broker, industry association, pricing service institution, etc. and represents the price of market transaction actually happened in the fair transaction. The fair value of the financial assets or financial liabilities of the Company shall be determined via valuation technique in case that the underlying financial instruments do not exist in the active market. The value appraisal techniques mainly comprise the prices adopted by the parties, who are familiar with the condition, in the latest market transaction upon their own free will, the current fair value obtained by referring to other financial instruments of the same essential nature, the cash flow capitalization method, the option pricing model, etc.

(2) Classification, Recognition and Measurement of Financial Assets Financial assets bought or sold in ordinary manner is recognized and derecognized based on the transaction date. Financial assets at initial recognition are divided into measured at fair value and the changes are recorded into the profits and losses of the current financial assets, held-to-maturity investments, loans and receivables, and financial assets available for sale. ķ Financial Assets at fair value through profit or loss:

– F-225 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Including trading financial assets and financial assets designated as at fair value through profit or loss. Transactional financial assets refer to financial assets that satisfy one of the following conditions: A. the purpose of acquiring such financial assets is to sell in short term. B. the asset is part of the identifiable financial instruments combination that is collectively managed, and there is proof that the company manages the combination to gain profits in short term. C. the assets belongs to derivatives, however, are specified as effective hedging tool derivatives, and belongs to the derivatives of the financial guarantee contract and has no offer in the active market and the equity instruments of its fair value cannot be reliably measured and must be settled by delivering the equity instruments investment hook derivatives. A financial asset may be designated as at fair value through profit or loss upon initial recognition only when one of the following conditions is satisfied: A. Such designation may eliminate or significantly reduce a measurement or recognition inconsistency that would otherwise result from measuring assets or recognizing the gains or losses on them on different bases; B. The official written documents of risk management or investment strategies of the Company concerned have described that the said combination of financial assets, the said combination of financial liabilities, or the combination of financial assets and financial liabilities will be managed and evaluated on the basis of their fair values and will be reported to the key management personnel. The subsequent measurement of financial assets measured at fair value and the fair value change is measured into profits and losses of current period shall use fair value, the profits or loss from fair value change and equity or interests income related to such financial assets are recorded into profits and losses of the current period. ĸ Held-to-maturity Investments It refers to those non-derivative financial asset that has fixed maturity date or has fixed or identifiable refund amount, while the company has specific intent and is capable of holding it to its maturity. Held-to-maturity investment shall be subsequently measured at amortized cost by actual interest rate method, with profit or loss arising out from de-recognition, impairment or amortization included into the profit or loss for the period. The actual interest rate method refers to the method by which the post-amortization costs and the interest incomes or interest expenses of different installments are calculated in light of the actual interest rates of the financial assets or financial liabilities (including a

– F-226 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail] set of financial assets or financial liabilities) . The effective interest rate refers to the interest rate adapted to the future cash flow of a financial asset or financial liability within the predicted term of existence or within a shorter applicable term into the current book value of the financial asset or financial liability. To calculate the actual interest rate, the Company estimates the future cash flow on the basis of taking all the contractual provisions concerning the financial asset or financial liability into account (exclude the future credit losses) . The various fee charged, trading expenses, premiums or reduced values, etc., which are paid or collected by the parties to a financial asset or financial liability contract and which form a part of the actual interest rate, shall be taken into account in the determination of the actual interest rate. Ĺ Loans and Receivables Loans and Receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivable classified by the Company include notes receivable, accounts receivables, interest receivable, dividends receivable and other receivables. Loans and receivables are subsequently measured at amortized cost using the effective interest method. Gain or loss arising from de-recognition, impairment or amortization is recognized in current profit or loss. ĺ Available-For-Sale Financial Assets "Available-for-sale financial assets" refers to the non-derivative financial assets which are designated as being available-for-sale when they are initially recognized as well as the financial assets other than financial assets at fair value through profit or loss, loans and receivables and held-to-maturity investment. The closing cost of the available-for-sale debt instrument is determined at amortized cost, namely, the closing cost is the amount that the initially recognized amount deducts the repaid principal, adds or deducts accumulated amortized amount arising from the amortization of the balance between the initially recognized amount and the due amount by effective interest rate, and less amounts after incurred impairment loss. Closing cost of the available-for-sale equity instrument investment is the cost of acquisition. Available-for-sale financial assets are subsequently measured at fair value. Any gains or losses arising from changes in the fair value are recognized as other comprehensive incomes, except that impairment losses and exchange differences related to amortized cost of monetary financial assets denominated in foreign currencies are recognized in current profit or loss, until the financial assets are derecognized, at which time the gains or

– F-227 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail] losses are released and recorded in current profit or loss. However, for investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured, and derivative financial assets that are linked to and must be settled by delivery of such unquoted equity instruments, they are measured subsequently at cost. The interest earned during the sale of financial assets and the cash dividends declared by the invested entity shall be included in the investment income.

(3) Impairment of Financial Assets Besides financial assets whose fair value has been recorded into the current profits and losses, the company checks the carrying value of other financial assets on each balance sheet date. If there is objective evidence that shows that impairment loss occurs to the financial assets, an impairment provision shall be made. The Company carries out individual impairment test on the financial assets with significant amount on individual basis; and carries out individual impairment test or impairment test together with the portfolio of the financial assets with similar credit risks on the financial assets without significant amount on individual basis. For those not impaired in individual impairment test (including the financial assets with and without significant amount on individual basis),the Company carries out impairment test on such assets together with the portfolio of the financial assets with similar credit risks. The financial assets impaired in individual impairment test are not subject to the impairment test together with the portfolio of the financial assets with similar credit risks. ķ Impairment of Held-to-maturity Investments, Loans and Receivables The financial assets measured by cost or amortized cost write down their carrying value by the estimated present value of future cash flow. The difference is recorded as impairment loss. If there is objective evidence to indicate the recovery of value of financial assets after impairment, and it is related with subsequent event after recognition of loss, the impairment loss recorded originally can be reversed. The carrying value of financial assets after impairment loss reversed shall not exceed the amortized cost of the financial assets without provisions of impairment loss on the reserving date. ĸ Impairment for Available-for-sale Financial Assets Where the fair value of the equity instrument investment drops significantly or not contemporarily according to the integrated relevant factors, an available-for-trade financial asset is impaired. Among them, "dropping significantly" refers to the cumulative decline of

– F-228 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail] fair value more than 20%, and "non-temporary decline" refers to the continuous decline of fair value for more than 12 months. When an available-for-sale financial asset is impaired, the accumulative losses arising from the decrease of the fair value which was originally included into other comprehensive incomes shall be transferred out and recorded into the current profit or loss; the accumulative losses that are transferred out shall be the balance obtained from the initially obtained costs of the sold financial asset after deducting the principals as taken back, the current fair value and the impairment losses as was recorded into the current profit or loss. If, after an impairment loss has been recognized, there is objective evidence that the value of the financial asset is recovered, and it is objectively related to an event occurring after the impairment loss was recognized, the initial impairment loss can be reversed and the reserved impairment loss on available-for-trade equity instrument is recorded in the profit or loss, the reserved impairment loss on available-for-trade debt instrument is recorded in the current profit or loss. The equity instrument where there is no quoted price in an active market, and whose fair value cannot be reliably measured, or impairment loss on a derivative asset that is linked to and must be settled by delivery of such an unquoted equity instrument shall not be reversed.

(4) Recognition Basis and Measurement Method of Transferred Financial Assets The financial assets meeting one of the following conditions shall be de-recognized: ķ Where the contractual rights for collecting the cash flow of the said financial asset are terminated; ĸ Where the said financial asset has been transferred and almost all risks and rewards of ownership of financial assets have been transferred into the transfer-in party; Ĺ The financial assets have been transferred; Although the Company has neither transferred nor retained almost all risks and rewards of ownership of financial assets, the Company has given up the control to the financial assets. If the enterprise has neither retained all the risks and rewards from the financial asset nor control over the asset, the asset is recognized according to the extent it exists as financial asset, and correspondent liability is recognized. The extent of existence refers the level of risk by the financial asset changes the enterprise is facing. For a transfer of a financial asset in its entirety that satisfies the de-recognition criteria, the difference between the book value of the financial asset transferred; and the sum of

– F-229 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail] the consideration received from the transfer and any cumulative gain or loss that has been recorded in other comprehensive incomes, is recorded in current profit or loss. If a part of the transferred financial asset qualifies for de-recognition, the book value of the transferred financial asset is allocated between the part that continues to be recognized and the part that is derecognized, based on the respective fair values of those parts. The difference between the book value allocated to the part derecognized; and the sum of the consideration received for the part derecognized and any cumulative gain or loss allocated to the part derecognized which has been previously recorded in other comprehensive incomes, is recorded in current profit or loss. In case of endorsement transfer of the financial assets to be sold by means of attaching the right of recourse or the financial assets held by the Company, the Company shall determine whether almost all risks and remunerations of the ownership of such financial assets are transferred. If almost all risks and remunerations of the ownership of such financial assets are transferred to the transferee, de-recognize such financial assets; where retained, do not de-recognize such financial assets; where neither transferred nor retained, continue to judge whether the enterprise retains control over such assets, and conduct the accounting treatment according to the principle mentioned in above paragraphs.

(5) Classification and Measurement of Financial Liabilities Financial liabilities shall be classified into the financial liabilities at fair value through profit and loss and other financial liabilities when they are initially recognized. When initial recognition, the financial assets shall be measured at fair value. For the financial liabilities at fair value through profit and loss, the relevant transaction expenses thereof shall be directly recorded into the current profit or loss; for other categories of financial liabilities, the transaction expenses thereof shall be recorded into the initially recognized amount. ķ Financial Liabilities at fair value through profit and loss The condition that the transactional financial liability at fair value through profit and loss when it is initially recognized is consistent with the condition that the transactional asset at fair value through profit and loss when it is initially recognized. The subsequent measurement of financial liability that is measured by fair value and whose fair value change shall be recorded into the current profits and losses shall be based on fair value, the profits and losses arising from its fair value change and the relative equity interests and interests shall be recorded into the current profits and losses. ĸ Other Financial Liabilities

– F-230 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Derivative financial liabilities that linked with equity instruments, which do not have a quoted price in an active market and their fair value cannot be measured reliably, is subsequently measured by cost Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Gains or losses arising from de-recognition or amortization is recognized in profit or loss for the current period. Ĺ Financial Guarantee Contract Financial guarantee contracts that are not classified as financial liabilities measured by fair value with the changes in fair value recognized in profit or loss are initially recognized at fair value. After the initial recognition, financial guarantee contracts shall be measured at the higher of the amount recognized in accordance with the Accounting Standards for Enterprises No. 13 - Contingencies Subsequent measurement and the initial recognition amount deducted by the accumulative amortization amount determined in accordance with the Accounting Standards for Business Enterprises No. 14 - Revenue.

(6) De-recognition of Financial Liabilities The Group de-recognizes a financial liability or part of it when the underlying present obligation or part of it is discharged or cancelled or has expired. An agreement between the Company (an existing borrower) and existing lender to replace original financial liability with a new financial liability with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new liability. When the Company de-recognizes a financial liability or a part of it, it recognizes the difference between the carrying amount of the financial liability (or part of the financial liability) de-recognized the consideration paid (including any non-cash assets transferred or new financial liabilities assumed) in profit or loss.

(7) Derivative Instruments and Embedded Derivative Instruments Where the Company is entitled to offset the confirmed financial assets and financial liabilities, and the legal rights are executable by now; at the same time, the Company plans netting or simultaneously realizes the financial assets to liquidate the financial liabilities, the financial assets and financial liabilities are listed in the balance sheet with the amount after offsetting each other. In addition, the financial assets and financial liabilities are shown separately in the balance sheet and shall not offset each other.

(8) Equity Instruments Equity instrument is any contract that evidences a residual interest in the assets of the Company deducting all liabilities. The Company issues (including re-financing) ,

– F-231 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail] repurchases, sells or cancels equity instruments for disposal of changes of equity investments. The Company does not recognize the change amount of fair value of the equity instrument. Transaction expenses related to equity investment shall be deducted from equity. The company's various distributions (excluding stock dividends) of the holder of equity instruments reduce shareholders' equity. The company does not recognize the fair value change of the equity instruments.

10. Receivables Receivables comprise accounts receivable and other receivables, etc.

(1) Recognition Criteria of Bad Debt Provisions ķ Recognition criteria and method of provision for bad debts for receivables that are individually significant The Company recognizes accounts receivables over CNY 1,000,000 as receivables of individual significance. The Company assesses individually significant receivables for impairment on individual basis; financial assets which are not impaired on individual basis will be assessed for impairment collectively with a portfolio of financial assets which share similar credit risk characteristics. For receivables that are individually impaired, the receivable will not be assessed for impairment collectively with a portfolio of financial assets which share similar credit risk characteristics. ĸ Basis of recognition and calculation and method of assessing provision for bad debts for receivables according to credit risk profile A. Recognition basis of portfolio of credit risk features As for the receivables that are not individually significant and that are individually significant without impairment in the separate test, the Company classifies the financial asset based on the similarity and correlation of credit risk features. Those credits usually reflect the capability of debtor paying all due amounts as per the contract of such assets and are related to the future cash flow measurement of the asset inspected. Recognition basis of different portfolio:

Items Recognition basis of portfolio Except for receivables with impairment reserve, the proportion of bad debts reserve is determined based on the actual loss rate of the portfolio Aging portfolios of receivables with similar credit risk characteristics and the current situation analysis method.

– F-232 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Items Recognition basis of portfolio

Related parties portfolios The associate portfolio is divided according to the ownership relationship.

B. Method of Assessing Bad Debt Provision Recognized Based on Portfolio of Credit Risk Features When impairment test is conducted based on portfolio, the amount of bad debt provision is recognized through historical experience loss, current economic situation and the anticipated loss existing in receivables portfolio as per the structure of receivable portfolio and similar credit risk features (capability of debtor for paying debt pursuant to contract term) . Method of assessing bad debt provision of different portfolio:

Items Provision method

Aging portfolios Aging analysis

Related parties portfolios No provision for bad debts

AˊFor the portfolio 1, the aging analysis method is adopted to assess bad debt provision. Proportion of provision of Proportion of provision of other Aging receivables (%) receivables (%) Within 1 year (including 1 year, the same below) 1-2 years 10.00 10.00

2-3 years 30.00 30.00

3-4 years 50.00 50.00

4-5 years 70.00 70.00

Over 5 years 100.00 100.00

ʔ The receivables that are individually insignificant but for which provision for bad debts has been individually assessed and provided: For the account receivables not individually significant, the Company assesses the account receivables individually for impairment when are of following characteristics: If there is objective evidence indicating the impairment, the impairment loss is recognized at the difference between the present value of future cash flow less the carrying amount; Related party receivables; If receivables in dispute with the other party or involving litigation or arbitration; Clear indications that the debtor is likely to be unable to meet repayment obligations, such as receivables, etc.

– F-233 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

(2) Reversal of Bad Debt Provisions If there are objective evidences showing that the value of the receivables has been recovered, and the receivables is objectively related to the events occurring after the confirmation of the loss, the impairment loss recognized previously is reversed and recognized through profit or loss for the current period. However, the book value after the reversal shall not exceed the amortized cost of the receivables on the date of reversal.

11. Inventories

1. Category of Inventories

(1) Classification of inventory Inventories mainly comprise raw materials, work-in-progress, self-made semi-finished products, completed products, turnover materials, inventory commodities, under-construction products (development costs) .

(2) Method Used to Assign Cost for Inventories The pricing basis for the acquisition and delivery of inventories The inventory shall be initially measured at actual costs when acquired, which comprises purchase cost, processing cost, and other costs. Cost of acquisition and issue of Jinchuan Group Company is measured using the weighted average method. If the difference between the planned cost and the actual cost of inventory is calculated with the planned cost accounting, the planned cost will be adjusted to the actual cost through the cost discrepancy account and the cost discrepancy that should be borne by forwarding the inventory on time.

(3) Recognition of Net Realizable Value of Inventory and Accruing Method of Provision for the Loss on Decline in Value of Inventories. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale and relevant taxes. An enterprise shall determine the net realizable value of inventories based on solid evidence obtained and after taking into consideration the purpose for which the inventory is held, and the effect of events occurring after the balance sheet date. Inventories are required to be measured at the lower of cost and net realizable value on the balance sheet date. If the cost of inventories is higher than the net realizable value, the provision for the loss on decline in value of inventories shall be made. The provision

– F-234 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail] for the loss on decline in value of inventory is assessed based on the difference between the cost of single inventory item and its net realizable value. After the provision for decline in value of inventories is made, if the circumstances that previously caused inventories to be written down below cost no longer exist so that the net realizable value of inventories is higher than their cost, the original provision for decline in value is reversed and the reversal is included in profit or loss for the period.

(4) Inventory System The perpetual inventory system is adopted.

(5) Amortization Method for Low Value Consumables Immediate write-off method is used for low value consumables upon usage.

12. Long-term Equity Investments Long-term equity investments in this part refers to the long-term equity investments that the Company has control. joint control or significant influence over the investee. Long-term equity investments that the Company does not have joint control or significant influence over the investee are measured as financial assets held for sale or financial assets measured at fair value through profit or loss, and please refer to Note IV.9 Financial Instruments for relevant accounting policy. Joint control refers to joint control owned by the Company over an arrangement as per relevant agreements and relevant activities of this arrangement must be determined upon consent of participants sharing the right of control. The term “significant influence” refers to the power to participate in making determinations on the financial and operating policies of an investment entity, but not to control or do joint control together with other parties over the formulation of these policies.

(1) Recognition of Investment Cost If the long-term equity investment is obtained from the business combination involving enterprises under the common control, the share of book value of owners’ equity of the acquiree in consolidated financial statements of the ultimate controlling party under the combination date shall be deemed as the initial investment cost of the long-term equity investment. The difference between the initial investment cost and the carrying amount of cash paid, non-cash assets transferred, and liabilities assumed shall be adjusted to capital reserve. If the balance of capital reserve is not sufficient, any excess shall be adjusted to retained earnings. If the Company issues equity securities as the

– F-235 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail] consideration for combination, the book value of the owners’ equity of the combined party on the combination date in consolidated financial statements of the ultimate controlling party shall be the initial investment cost of long-term equity investments. With the total face value of the shares issued as equity, the difference between the initial investment cost of long-term equity investment and the total face value of the shares issued shall be adjusted as capital reserve. If the capital reserve is insufficient to set it off, the retained earnings shall be adjusted. If shares of the acquiree are obtained step by step through several transactions, which results in the combination of enterprises under the different control, it shall be treated respectively as per whether it belongs to “a package deal”: where it belongs to “a package deal”, the accounting treatment for each transaction shall be conducted as a transaction obtaining the right of control. Where it does not belong to “a package deal”, the book value of the ownership interest of the acquiree on the combination date in consolidated financial statements of the ultimate controlling party shall be the initial investment cost of long-term equity investments. The difference among the initial investment cost of long-term equity investments, the book value of long-term equity investment which has reached the amount before the combination and total book value of new payment consideration obtained under the acquisition date shall be adjusted as capital reserve. If the capital reserve is insufficient to set it off, the retained earnings shall be adjusted. The accounting treatment on the equity investments measured under equity method held before the combination date or the other comprehensive income recognized for the available-for-sale financial assets shall not be conducted. For long-term equity investment obtained through business combination not involving enterprises under the common control, the cost of combination shall be deemed as the initial investment cost of long-term equity investments on the acquisition date, and the cost of combination is the aggregate of the fair values, include the assets given, liabilities incurred or assumed, and equity securities issued by the acquirer. If shares of the acquiree are obtained step by step through several transactions, which results in the combination of enterprises under the different control, it shall be treated respectively as per whether it belongs to “a package deal”: where it belongs to “a package deal”, the accounting treatment for each transaction shall be conducted as a transaction obtaining the right of control. Where it does not belong to “a package deal”, the sum of the carrying amount of equity investment of the acquiree held originally and additional investment costs shall be initial investment costs of long-term equity investment if the accounting method is changed as cost method. If equity held originally is accounted for using equity

– F-236 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail] method, the accounting treatment shall not be conducted on the other comprehensive income related to it. If the equity investments held originally was available-for-sale financial assets, the difference between the fair value and the book value, and the accumulated fair value changes previously recognized in other comprehensive income are transferred to profit or loss for the current period. The intermediary costs for the business combination including the expenses for audit, legal services and consultancy services and other relevant management costs by the merging party and the acquirer shall be recorded into current profit or loss. Equity investments other than long-term equity investment from business combination are initially measured at cost. Such cost is respectively recognized at the purchase price in cash actually paid by the Company, fair value of equity securities issued by the Company, specified value in investment contracts or agreements, fair value or original book value of transferred assets in non-monetary asset exchange and transactions and fair value of the long-term equity investment itself based on different means of acquiring that long-term equity investment. Expenses, taxes and other necessary expenditures directly related to the acquisition of long-term equity investment are also included into investment cost. In case of being able to implement significant influence or common control to the invested entity due to additional investment but which does not constitute control, cost of long-term equity investment shall be the sum of fair value of original held equity investment recognized as per the Accounting Standards for Business Enterprises No.22 - Recognition and Measurement of Financial Instruments and newly increased investment cost.

(2) Subsequent Measurement and Method of Recognition of Profit or Loss Where an investing enterprise can exercise joint control (except those that constitutes the joint operators) or significant influence over the investee, a long-term equity investment shall be accounted for using the equity method. In addition, the Company uses the cost model in the financial statements to calculate long-term equity investment that can control the investee. ʒ Long-term Equity Investment Income Accounted by Cost Method The long-term equity investment accounted by the cost model shall be measured at the initial investment cost. And the additional or recovered investments shall be used to adjust the cost of long-term equity investment. Except for the cash dividends or distributions declared and not yet distributed in the considerations paid to acquire the

– F-237 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail] investment, the cash dividend or distributions declared by the investee that belong to the investee shall be recognized as the investment gains. ʓ Long-term Equity Investment Accounted by Equity Method If the initial cost of a long-term equity investment, accounted by equity method, is more than attributable share of the fair value of the investee’s identifiable net assets for the investment in the investee, the initial cost of the long-term equity investment may not be adjusted; if the initial cost of a long-term equity investment is less than the attributable share of the fair value of the investee’s identifiable net assets for the investment in the investee, the difference shall be recorded into current profit or loss and the cost of the long-term equity investment shall be adjusted simultaneously. When it is accounted by equity method, the investment gains and other comprehensive incomes shall be recognized respectively, and the book value of long-term equity investment shall be adjusted according to the net profit or loss and other comprehensive incomes realized by the investee, which shall be enjoyed or shared. The enjoyed part shall be accounted according to profits or cash dividends announced to be assigned by the investee with the corresponding decrease of the book value of long-term equity investment. For other changes of owners’ equity excluding net profit or loss of investee, other comprehensive income and profits distributed, the book value of long-term equity investments shall be adjusted and included into capital reserve. The Company shall, on the ground of the fair value of all identifiable assets of the investee when it obtains the investment, recognize the attributable share of the net profit or loss of the investee after it adjusts the net profits of the investee. If the accounting policies and accounting period adopted by the investee do not consistent with the investor, the financial statements of the investee shall be adjusted according to the accounting policies and accounting periods of the Company, and according to which the investment profits and other comprehensive incomes shall be recognized. If investment and sales of assets cannot be constructed as business in transactions between the Company, associates and joint ventures, the unrealized profit or loss of internal transaction shall be offset through calculating the part attributable to the Company based on sharing ratio so as to recognize the profit or loss of investment. Where the unrealized losses from the internal transactions between the Company and the invested entity belong to the impairment losses from the transferred assets, they shall not be written off. Where the assets contributed by the Company towards joint ventures or associates constitute business, and the investor acquires long-term equity investment but not the control right thereof, the fair value of the

– F-238 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail] contribution shall be the initial investment cost of the newly added long-term equity investment. The balance of book value between initial investment cost and the contribution shall be recorded into current profit or loss in full amount. If the assets sales, from the Company to joint ventures or associates, constitute business, the total difference between consideration achieved and book value of business shall be recorded into current profit or loss. Where the assets purchased by the Company from associates and joint ventures constitute business, accounting treatment shall be recognize the profit or loss in relation to the transaction in full amount. The Company shall recognize the net losses of the investee until the book value of the long-term equity investment and other long-term equity which substantially forms the net investment made to the investee are reduced to zero. In addition, if the Company has the extra obligation towards its investee to undertake extra losses, the extra obligation shall be recognized as Provisions according to expected obligation and recorded into current profit or loss. If the investee realizes any net profits later, the Company shall, after the amount of its attributable share of profits offsets against its attributable share of the unrecognized losses, resume recognizing its attributable share of profits. ʔ Minority Equity Acquisition When preparing consolidated financial statements, as for the difference between the long-term equity investment increased newly due to purchase minority equity and the net asset proportion continuously calculated from the purchase date (or combination date) by subsidiary based and enjoyed by the Company based on newly increasing shareholding ratio, capital reserve is adjusted. If the capital reserve is insufficient to write down, the retained earnings shall be adjusted. ʕ Disposal of Long-term Equity Investment In the consolidated financial statements, the parent company disposes the long-term equity investment of the subsidiary without losing control right. The difference between the disposing amount and the net asset of the subsidiary enjoyed correspondingly in disposing long-term equity investment is recorded into owner’s equity; If the parent company loses its control right on the subsidiary due to the disposal of the long-term equity investment of the subsidiary, the relevant accounting policy as indicated in Note IV, 5 (2) “Method of Preparation of Consolidated Financial Statements” shall be followed for handling.

– F-239 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

For the disposal of long-term equity investment under other circumstances, regarding the equity disposal, the balance between eh carrying value and the actual price shall be recorded into the current profits and losses. For long-term equity investment measured by equity method and whose resting equity continues to be measured by equity method, during disposal, other comprehensive income originally recorded into the ownership equity shall be treated with corresponding percentage on the same basis of when the investee dispose related assets or liability directly. The ownership equity recognized from other ownership equity change arising not from net profits and losses, other comprehensive income and profits distribution shall be recorded into the current profits and losses under certain ratio. For long-term equity investment measured by cost method and whose resting equity continues to be measured by equity method, other comprehensive income recognized by measurement standards or financial instrument or equity method before gaining the control over the investee, shall be treated on the same basis of when the investee dispose related assets or liability directly, and shall be recorded into the current profits and losses based on certain ration. . The ownership equity recognized from other ownership equity change arising not from net profits and losses, other comprehensive income and profits distribution and measured by equity method shall be recorded into the current profits and losses under certain ratio. In situation where the company loses control over the investee because of partial equity disposal, when consolidating the financial statement, if the company still jointly control or have significant influence over the investee with the resting equity, then such equity investment shall be measured by equity method, and adjust such equity assuming it was measured by equity method at initial recognition; if the company no longer jointly control or have significant influence over the investee with the resting equity, then such equity investment shall be treated as financial instrument and by the relative measurement standards, the balance between the carrying value and fair value of the control losing date shall be recorded into the current profits and losses. For other comprehensive income recognized before the control losing date by equity method or recognized as financial instrument and measured by the relative standards shall be treated on the control losing date the same as how the investee dispose relative assets or liabilities directly , The ownership equity recognized from other ownership equity change arising not from net profits and losses, other comprehensive income and profits distribution and measured by equity method shall be recorded into the current profits and

– F-240 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail] losses. Among them, for resting equity measured by equity method after disposal, other comprehensive income and other ownership equity recognized under certain ratio; for resting equity after disposal recognized as financial instrument and measured by relative standards, other comprehensive income and other ownership equity shall be fully transferred. If the company no longer has joint control or significant influence over the investee after disposal of part of the equity, than the resting equity after disposal shall be recognized as financial instrument and measured by relative standards, the balance between the fair value and carrying value on the date of losing joint control or significant influence shall be recorded into the current profits and losses. Other comprehensive income of the original equity investment measured by equity method shall be treated the same as how the investee dispose relative assets or liabilities directly during de-recognition with equity method. The ownership equity recognized from other ownership equity change arising not from net profits and losses, other comprehensive income and profits distribution shall be recorded fully into the current profits and losses at recognition with equity method. When the company loses control over the subsidy through multiple transaction of subsidy equity disposal, if such transaction qualifies package deal, each transaction shall be treated as one transaction of subsidy equity disposal and losing control over subsidy. The balance between the disposal price of each transaction before losing control and the carrying value of the long-term equity investment of the equity disposed shall be first recognized as other comprehensive income, and transferred to the current profits and losses when losing control.

(3) Confirmation criteria and calculation methods of impairment reserve for long-term equity investment The confirmation criteria and calculation methods of impairment reserve for long-term equity investment are detailed in Note IV.20, "Impairment of non-current non-financial assets".

13. Investment Property Investment property refers to property held for the purpose of gaining rent or capital appreciation. It includes tenured rented, tenure held for the purpose of transfer after appreciation, and building rented.

– F-241 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

The Company adopts cost model for subsequent measurement of investment real estate. Investment real estate is initially measured at cost. Subsequent expenditures related to investment real estate are included in the cost of investment real estate if the economic benefits related to the asset are likely to flow in and the cost can be reliably measured. Other follow-up expenditures shall be included in current profits and losses when they occur. The Company adopts cost model for subsequent measurement of investment real estate and depreciation or amortization in accordance with the policies which consistent with the building or land use rights. The impairment test and provision method of investment real estate are detailed in note IV. 20 "Impairment loss of non-current non-financial assets ". When the investment real estate is disposed of, or permanently withdrawn from use, and it is not expected to obtain economic benefits from its disposal, the confirmation of the investment real estate shall be terminated. The disposal income from the sale, transfer, scrapping or destruction of investment real estate shall be recorded into the current profit and loss after deducting its book value and relevant taxes and fees.

14. Fixed Assets

(1) Recognition Criteria of Fixed Assets Fixed assets refer to the tangible assets that simultaneously possess the features as follows: they are held for the sake of producing commodities, rendering labor service, renting or business management; and their useful life is in excess of one fiscal year. The initial measurement of a fixed asset shall be made at its cost while considering the effect of discard expenses.

(2) The classification, pricing, and depreciation of the fixed assets Fixed assets shall be depreciated within their useful life from the next month when they reach their intended usable state. The service life, estimated net residual value, annual depreciation rate and depreciation methods of various types of fixed assets are as follows: Net residual rate Depreciation rate Depreciation Items years (%) (%) method Buildings and structures 10-45 5 2.11-9.50 straight-line method

Machinery and equipment 8-22 5 4.32-11.88 straight-line method

– F-242 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Net residual rate Depreciation rate Depreciation Items years (%) (%) method Transport 9 5 10.56 straight-line method

Electronic equipment 4-7 5 13.57-23.75 straight-line method

Estimated net residual is to predict that the fixed assets’ estimate useful life at the end of service life of the desired state, the amount the company received from such assets after deducting estimated disposal fee.

(3) Test of impairment loss and method of provision for depreciation Test of impairment loss and method of provision for depreciation see Note IV.-21 “Non-current and non-financial assets depreciation”

(4) The recognition and pricing for fixed assets rented by financial leasing Financial leasing is leasing of all risk ad remuneration related to the assets, whose ownership can be transferred or not as well ultimately. The provision of depreciation of fixed assets rented by financial leasing shall be the same as that of self-owned fixed assets. For assets that can be reasonably obtain the ownership when the lease is due, the provision of depreciation shall be performed within the useful life of such assets; for assets that cannot be reasonably obtain the ownership when the lease is due, the provision of deprecation shall be based on the shorter one among the leasing period and the useful life of such assets.

(5) Others For the subsequent expenditure related to the fixed assets, if the related economic benefit shall goes to the company and can be reliably measured, then it shall be recognized as fixed assets cost, and the carrying value of the part replaced shall be derecognized. Besides this, other subsequent expenditure shall be recorded into the current profits and losses. When the fixed assets is at disposal or cannot produce economic benefit based on estimate, and then the fixed assets shall be derecognized. The disposal income of selling or transfer scraped or damaged asset after deducting the balance between its carrying value and related taxes shall be recorded into the current profits and losses. The company shall re-evaluate the useful life. estimated net residual value and depreciation method at least by the end of the year. Changes occurred shall be recognized as change in accounting estimates.

– F-243 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

15. Construction in progress The construction I progress shall be recognized based on the actual constructional expenditure, including each constructional expenditure occurred during the construction period, the loans of capitalization before the construction reaches service state, and etc. When the construction in progress reaches service state, it is converted into fixed assets. The test method and provision method of impairment loss of the construction in progress see Note. IV-20 “Impairment losses of non-current and non-financial assets.”

16. Borrowing costs Borrowing costs include interest, amortization of discounts or premiums related to borrowings, ancillary costs incurred in connection with the arrangement of borrowings, and exchange differences arising from foreign currency borrowings. Where the borrowing costs incurred to an enterprise can be directly attributable to the acquisition and construction or production of assets eligible for capitalization, they shall be capitalized; it should be stop to be capitalized if the construction or production of assets meet the capitalization conditions which available to use or sale. Other borrowing costs should be recognized as expense when occurred. The amount of interest of specific-purpose borrowings to be capitalized shall be the actual interest expense incurred on that borrowing for the period less any bank interest earned from depositing the borrowed funds before being used on the asset or any investment income on the temporary investment of those funds. An enterprise shall determine the amount of interest to be capitalized on general-purpose borrowings by applying a capitalization rate to the weighted average of the excess amounts of cumulative expenditures on the asset over and above the amounts of specific-purpose borrowings. The capitalization rate shall be the weighted average of the interest rates applicable to the general-purpose borrowings. During the period of capitalization, the exchange differences on foreign currency specific-purpose borrowings shall be all capitalized; the exchange differences on foreign currency general-purposes borrowings shall be recorded into current profit or loss. Assets qualified for casualization are assets (fixed assets, investment property, inventories, etc.) that necessarily take a substantial period of time for acquisition, construction or production to get ready for their intended use or sale. Capitalization of borrowing costs shall be suspended during periods in which the acquisition, construction or production of a qualifying asset is interrupted abnormally,

– F-244 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail] when the interruption is for a continuous period of more than 3 months until the acquisition, construction or production is resumed.

17. Biological assets

(1) Consumable biological assets Consumable biological assets refer to biological assets held for sale or harvested as agricultural products in the future, including growing field crops, vegetables, timber forests, and livestock for sale. Consumable biological assets are initially measured at cost. The cost of a consumable biological asset cultivated, constructed, propagated or farmed on its own is the necessary expenditure directly attributable to the asset before the harvest, including capitalization conditional borrowing costs. Subsequent expenditures such as management and maintenance expenses for consumable biological assets after harvesting are included in the current profit and loss. When the consumable biological assets are harvested or sold, the weighted average method is used to carry forward the cost based on the book value. On the balance sheet date, the expendable biological assets are measured at the lower of cost and net realizable value, and the depreciation reserve for consumable biological assets is calculated and calculated in a manner consistent with the confirmation of the inventory depreciation reserve. If the influencing factors of the impairment have disappeared, the amount of the write-down should be restored and transferred back within the amount of the provision for the depreciation that has been accrued. The amount of the reversal is included in the current profit and loss. If the consumable biological asset changes its use, as a productive biological asset, the cost after changing the use is determined by the book value at the time of changing the use. If the consumable biological assets change their use, as a public welfare biological asset, it is considered to be depreciated according to the “Accounting Standards for Business Enterprises No. 8 – Impairment of Assets”, and the impairment provision is made at the time of impairment, and then The book value after the impairment value is prepared is determined.

(2) Productive biological assets Productive biological assets refer to biological assets held for the purpose of producing agricultural products, providing labor services or renting, including economic forests, firewood forests, livestock production and working animals.

– F-245 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Productive biological assets are initially measured at cost. The cost of a productive biological asset created or propagated by itself is the necessary expenditure that can be directly attributed to the asset before the asset reaches its intended production and operation purpose, including the borrowing cost that meets the capitalization conditions. The company reviews the useful life, expected net residual value and depreciation method of productive biological assets at the end of the year, and treat any changes as accounting estimation change. The difference between the disposal income of the sale, loss, death or damage of public welfare biological assets after deducting the book value and related taxes and expenses is included in the current profit and loss. The company reexamines the consumptive biological assets and the productive biological assets at the balance sheet date; If the assets show signs of impairment, then recoverable amount is to be estimated. The estimated recoverable amount of an asset is based on a single asset. If it is difficult to estimate the recoverable amount of a single asset, the recoverable amount of an asset group is determined on the basis of the asset group to which the asset belongs. If the net realizable value of consumptive biological assets or the productive biological asset's recoverable amount lower than its book value, according to the difference between the recoverable amount and book value, the depreciation of biological assets write-down or impairment, and recorded in the current profit and loss. If a productive biological asset is converted into a consumable biological asset, the cost after the conversion shall be measured as the book value at the time of conversion; If the productive biological assets change their purpose as the public welfare biological assets, the accounting standards for shall be followed to consider whether the impairment occurs. When the impairment occurs, the impairment provision shall be calculated first, and then the book value shall be determined

18. Intangible assets

(1) The recognition and pricing method for intangible assets An intangible asset is the identifiable non-monetary assets possessed or controlled by enterprises which have no physical shape. The initial recognition intangible assets shall be based on costs. Costs related to intangible assets, if the related economic benefits shall be going to the company and can

– F-246 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail] be reliably measured, then the costs shall be recognized as intangible assets costs. Apart from this, other costs shall be counted into the current profits and losses. Land-use right acquired is normally recognized as an intangible asset. For self-developed plants and other buildings, related land use right expenditure and building construction costs are respectively measured as intangible assets and fixed assets. For buildings purchased otherwise, the related prices shall be allocated between the tenure and the building. Those that are hard to be allocated shall be recognized as fixed assets.

(2) Amortization of intangible assets For intangible assets with limited service life, since the date of available for use, the company shall amortize the original value minus the residual value and provision of impairment loss based on straight-line method within its service life, and shall not amortize intangible assets with uncertain service life. The company shall reevaluate the intangible assets with limited service life and its amortization method at the year end. Any changes occurred shall be treated as accounting estimate change. Moreover, the company shall reevaluate intangible assets with uncertain service life. If there is proof that the limit of the economic benefits that such intangible assets brings to the enterprise is foreseeable, then its service life shall be estimated and it shall be amortized as intangible assets with limited service life.

(3) Research and development costs The expenditure of internal research and development projects is divided into research phase expenditure and development stage expenditure. Among them, the research is to acquire and understand new scientific or technical knowledge and ingenious plan of investigation, the best in acquiring knowledge and activities, research or other knowledge of applied research, evaluation and final selection, materials, equipment, products, processes, systems or services research of alternatives, new or improved materials, devices, products, processes, systems or services may substitute for the preparation, design, evaluation and final selection, etc.; Development refers to the commercial production or use, apply findings or other knowledge to a plan or design, in order to produce something new or substantive improved materials, devices, products, etc., such as production or use before the prototype and model of the design, construction and test, have no commercial production economies of scale of the trial production facilities design, construction and operation, etc. Costs at research level shall be recorded into current profit and loss when occurred.

– F-247 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Costs at development level which satisfy the following conditions, shall be recognized as intangible assets, and costs which cannot satisfy the conditions shall be recorded into current profits and losses: a) It is feasible technically to finish intangible assets for use or sale; b) It is intended to finish and use or sell the intangible assets; c) The usefulness of methods for intangible assets to generate economic benefits shall be proved, including being able to prove that there is a potential market for the products manufactured by applying the intangible assets or there is a potential market for the intangible assets itself or the intangible assets will be used internally; d) It is able to finish the development of the intangible assets, and able to use or sell the intangible assets, with the support of sufficient technologies, financial resources and other resources; and e) The development expenditures of the intangible assets can be reliably measured. Costs which cannot be identified whether occur at the research level or development level shall be recorded fully into the current profit and loss.

(4) Impairment test method for intangible assets and accrual method for impairment provision For details see Note IV.-20 “Impairment loss of non-current and non-financial assets”.

19. Long-term prepaid expenses The long-term prepaid expenses of the Company are expenses for current and future periods that have been disbursed but will be amortized over one year (not include 1 year) . Long-term pending expenses are amortized by the straight-line method during the expected benefit period.

20. Impairment loss of non-current and non-financial assets For fixed assets, construction in progress, intangible assets with limited service life, investment property measured by costs, long-term equity investment on the subsidiary, jointly owned or jointly operated enterprises, goodwill and other non-current and non-financial assets, the company shall determine on the balance sheet date if there is signs of impairment loss. If such sign exists, then the company shall estimates the amounts retrievable, and perform test of impairment loss. Goodwill, intangible assets with uncertain service life, and intangible assets that haven’t reached the usable state yet shall

– F-248 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail] be performed test of impairment loss, regardless of the existence of signs of impairment loss. According to the test results, if the asset’s retrievable amount is lower than its carrying cost, then provision of impairment loss shall be made based on the balance and be recorded into impairment loss. The retrievable amount shall be higher one among the asset’s net value of the fair value deducted by disposal fee and the current value of the future cash flow of the asset. The fair value of the asset shall be determined by the contractual price of fair trade; for asset with no selling contract and is in the active market, its fair value can be estimated on the basis of best information receivable. Disposal fee includes legal service, tax, handling fee related to the disposal of the asset and any direct costs for the purpose of making the asset available for sale. The current value of the asset’s future cash flow level shall be determined based on the further cash flow level estimate during its consecutive use and final disposal, and the discounting amount shall be determined based on a proper discounting rate. For provision of assets impairment loss that is measured and recognized as individual asset, if the retrievable amount of the individual asset is hard to be estimated, than the retrievable amount shall be determined based on the assets combination that such asset belongs to. Assets combination is the minimum combination that can generate independent cash flow. For goodwill individually listed in the financial statement, when performing test of impairment loss, its carrying value shall be amortized to assets combination that is going to benefit from the cooperative of business combination as estimated. According to the test result, if the retrievable amount of the assets combination including the amortized goodwill is lower than the carrying value, than the corresponding impairment loss is recognized. The amount of impairment loss shall be first deducted by the carrying value of the goodwill amortized to such assets combination, and then be deducted by the carrying value of all the other assets based on the percentage of the carrying value of each of the other assets besides goodwill in the combination. The impairment loss of assets stated above, once recognized, shall not be returned in the periods afterwards.

21. Employee Compensation Employee compensation of the Company mainly includes short-term employee remuneration, post-services benefits, termination benefits and other long-term employee benefits. Among them:

– F-249 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Short-term remuneration includes wages, bonuses, allowances and subsidies, employee benefits, medical insurance, maternity insurance, work-related injury insurance, housing fund, union funds and employee education expenses, and non-monetary benefits. The short-term employee remuneration actually incurred by the Company during the accounting period in which the employees provide services to the Company shall be recognized as liabilities and included in the current income statement or the cost of related assets. Non-monetary benefits are measured at fair value. Post-service benefits mainly include basic endowment insurance, unemployment insurance and annuities. Post-service benefits plans include a defined contribution plan and a defined benefit pension plan. When using the defined contribution plan, the corresponding payable amount shall be included in the relevant asset cost or current income statement when incurred. During the circumstances of the cancellation of the labor relationship with the employee before the expiration of the labor contract or offered compensation for encouraging the employees to voluntarily accept the layoffs, when the Company cannot unilaterally withdraw the dismissal benefit provided by the plan for canceling the labor relationship or the proposed layoffs, after the Company confirms the costs related to the reorganization involving the dismissal welfare, the employee compensation liability arising from dismiss welfare is recognized and shall be recorded in the current income statement. However, if the dismiss welfare is not fully paid within 12 months after the end of the annual report period, it shall be treated according to other long-term employee compensation. Employee internal retirement plans are handled on the same principle as the above mentioned termination benefits. The Company plans to pay the retired staff salaries and social insurance premiums during the period from the moment employee cease service until the normal retirement date. The salaries and social insurance premiums shall be included in the current income statement (dismiss welfare) when meeting the estimated liabilities confirmation conditions. The accounting shall be based on the defined contribution plan if meets the standards of the plan, otherwise shall be proceeding in accordance with the defined benefit plan.

22. Revenue

(1) Revenue from sales of goods

– F-250 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Revenue from sales of goods is recognized when significant risks and rewards attached to the ownership of the goods sold are passed to the buyer, when neither continual involvement in the rights normally associated with the ownership of the goods sold nor effective control over the goods controls are retained, when revenue arising from the goods sold is reliably measurable, when inflow of future economic benefits is probable, and when cost incurred or to be incurred associated with the goods sold is reliably measurable.

(2) Revenue from the rendering of services Revenue arising from rendering of services is recognized on the balance date using the percentage of completion method when the outcome of the services rendered can be reliably estimated. The percentage of completion of the services rendered is calculated by dividing the cost to date by the budgeted total cost. The outcome of a transaction can be estimated reliably when all the following conditions are satisfied: ķthe amount of revenue can be measured reliably; ĸ it is probable that the economic benefits associated with the transaction will flow to the Company; Ĺthe stage of completion of the transaction can be measured reliably; ĺthe costs incurred for the transaction and the costs to complete the transaction can be measured reliably. When the outcome of the services rendered cannot be reliably estimate, revenue is recognized as cost reimbursement received or to be received, if any, and cost incurred is recognized in profit or loss for the period in which the cost is incurred. No revenue is recognized if cost reimbursement is not probable.

(3) Revenue from the construction contracts Revenue is recognized on an accrual basis in accordance with the relevant contract or agreement.

23. Construction contract Where the results of a construction contract can be reliably estimated, contract revenues and contract costs are recognized on the balance sheet date in accordance with the percentage completion method. The contract completion schedule shall be determined according to the proportion of the contract workload that has been completed to the estimated total contract workload. The result of the construction contract can be reliably estimated to mean that: ķ the total revenue of the contract can be reliably measured;ĸ the economic benefits related

– F-251 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail] to the contract are likely to flow into the enterprise; Ĺ the actual contract costs can be clearly distinguished and reliably measured; ĺThe completion schedule and the costs that still need to be incurred to complete the contract can be reliably determined. If the result of the construction contract cannot be reliably estimated, but the contract cost can be recovered, the contract revenue is recognized according to the actual contract cost that can be recovered, and the contract cost is recognized as the contract expense in the current period in which it occurs; the contract cost cannot be recovered, and it occurs. It is immediately recognized as a contract fee and the contract revenue is not confirmed. If the uncertainties that make the results of the construction contract cannot be reliably estimated cease to exist, the income and expenses related to the construction contract are determined according to the percentage of completion method. If the estimated total cost of the contract exceeds the total contract revenue, the estimated loss is recognized as the current expense. The accumulated costs incurred in the construction contract and the accumulated recognized gross profit (loss) and the settled price are shown in the balance sheet as net offset. The accumulated costs incurred in the construction contract and the sum of the accumulated recognized gross profit (loss) and the excess of the settled price are shown as inventory; the part of the settled price in the construction contract that exceeds the sum of the accumulated costs incurred and the accumulated recognized gross profit (loss) is shown as the advance receipt.

24. Government Grants Government grants are transfer of monetary assets and non-monetary assets from the government to the Company at no consideration, excluding the capital invested by the government as equity owner. Government grant can be classified as grant related to the assets and grants related to the income. The company recognizes the government subsidies obtained for the purpose of constructing long-term assets or formalin the assets by other methods as government grant related to assets, and other government grants are recognized as government grants related to income. If the government documents do not clearly specify the recipients, the subsidy will be divided into government grants related to income and government grants related to assets in the following ways: ķ If government documents specify that the funds must be used for specific project, according to the project’s budget, the ratio of capitalized amount to the expensed amount should be calculated. The ratio needs to be reviewed on each balance sheet date and adjusted if necessary; ĸ If the government documents only have general expression, or doesn’t

– F-252 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail] specify the particular projects, the government grant should be recognized as a government grant related to income. If a government grant is in the form of a transfer of a monetary asset, it is measured at the amount received or receivable. If a government grant is in the form of a non-monetary asset, it is measured at fair value. If the fair value cannot be reliably determined, it is measured at a nominal amount. A government grant measured at a nominal amount is recognized immediately in profit or loss for the period. The company will recognize and measure the government grants according to the actual amount received. However, at the end of the period, if there is conclusive evidence proving that the company can meet the criteria of the financial support policy, and it is expected to receive financial support funds, the government grants should be measured at the amount of the funds receivable. The government subsidies measured at the amount of the funds receivable shall meet all the following conditions: ķ The amount of the funds receivables has been approved by the government department, or could be reasonably estimated according to the relevant provisions of the officially issued financial fund management measures, and It is estimated that there is no major uncertainty in the amount; ĸ It is based on the financial support projects and its financial fund management measures officially publicly released by the local financial department and according to “The Regulations On The Openness Of Government Information” The measures should be inclusive (any enterprise that meets the specified conditions can apply) , rather than specifically for a specific enterprise; Ĺ the relevant government grant approvals has clearly promised the payment period, and the payment of the government grant is guaranteed by the corresponding government budget. Hence, it can be reasonably confirmed that the subsidies can be received within the prescribed time limit; ĺ Other relevant conditions (if any) that should be met according to the specific circumstances of the company and the government grant. A government grant related to an asset is recognized as deferred income, and evenly amortized to profit or loss over the useful life of the related asset in a reasonable and systematic manner. For a government grant related to income, if the grant is a compensation for related expenses or losses to be incurred in subsequent period, the grant is recognized as deferred income, and recognized in profit or loss over the periods in which the related costs are recognized. If the grant is a compensation for related expenses or losses already incurred, the grant is recognized immediately in profit or loss for the period.

– F-253 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Government subsidies including both assets-related parts and income-related parts should be treated separately. If it is difficult to separate, the government subsidies as a whole will be classified as income-related government grants. The government grants related to the daily activities of the Company are included in other income or offset the related costs according to the essence of the economic business. The government grants unrelated to the daily activities are included in the non-operating income and expenses. When government subsidy needs to be returned, if the related deferred income balance exists, the book value of related deferred income shall be offset and the excess part shall be included in the current profit or loss; if it is other cases, it shall be directly carried to the current profits and losses. The company relocated for the public interests of overall urban planning, reservoir construction, shantytown transformation and subsidence area management, and received the relocation compensation directly allocated by the government from the financial budget as a special payable. Among them, if the company compensates for the loss of fixed assets and intangible assets, related expenditure, shutdown losses and newly built assets during the process of relocation and reconstruction, the special payables shall be transferred to the deferred income, and the relocation compensation shall be deducted and transferred according to the nature of the special payables, according to the government subsidies related to assets and the government subsidies related to income. If there is a balance after the amount of deferred income is added, it shall be recognized as capital reserve.

25. Deferred tax assets and deferred tax liabilities As for the temporary difference arising from the difference between the book value of some asset or liability and its tax base and the difference between the book value of an item that has not been recognized as an asset or liability with its tax base determined in light of the tax law and its tax base, it is allowed to recognize it as the deferred income tax assets or the deferred income tax liabilities by balance sheet liability method. For temporary differences associated with the initial recognition of goodwill and the initial recognition of an asset or liability arising from a transaction (not a business combination) that affects neither the accounting profit nor taxable profits (or deductible losses) at the time of transaction, no deferred tax asset or liability is recognized. For taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures, no deferred income tax liability related is recognized except

– F-254 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail] where the Company is able to control the timing of reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. All deferred income tax liabilities arising from taxable temporary differences except the ones mentioned above are recognized. Related to the initial recognition of the assets or liabilities arising from the following transactions that is not business combination and the accounting profits will not be affected, nor will the taxable amount (or the deductible loss) be affected at the time of transaction, the deductible temporary differences are not allowed to recognize relevant deferred tax assets. As for the deductible temporary differences related to the investments of subsidiary, associates and joint enterprises, corresponding deferred tax asset shall not be recognized if the temporary differences are unlikely to be reversed in the excepted future and it is likely to acquire any amount of taxable income tax that may be used for making up the deductible temporary differences. Except the above-mentioned cases, the Company shall recognize the deferred tax liabilities arising from a deductible temporary difference to the extent of the amount of the taxable income which it is most likely to obtain, and which can be deducted from the deductible temporary difference. For the deductible losses and tax credit that can be carried forward, deferred tax assets for deductible temporary differences are recognized to the extent that it is probable that taxable profits will be available against which the deductible temporary differences can be utilized. At the balance sheet date, deferred tax assets and liabilities are measured at the tax rates according to tax law, that are expected to apply in the period in which the asset is realized or the liability is settled. At the balance sheet date, the Company reviews the carrying amount of deferred tax assets. If it is no longer probable that sufficient taxable profit will be available in future periods to allow the benefits of the deferred tax assets to be used, the Company reduces the carrying amount of deferred tax assets. The amount of such reduction is reversed when it becomes probable that sufficient taxable profit will be available.

26. Leases A finance lease is a lease that transfers in substance all the risks and rewards incident to ownership of an asset. Title may or may not eventually be transferred. An operating lease is a lease other than a finance lease. If the leasing business meets one or more of the following criteria, it is usually a financial lease: ķ at the expiration of the lease term, the ownership of the leased asset is

– F-255 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail] transferred to the lessee. ĸThe lessee has the option to purchase the leased asset. The purchase price entered into is expected to be much lower than the fair value of the leased asset when the option is exercised. Therefore, it can be reasonably determined at the lease start date that the lessee will exercise this option. Ĺ Even if the ownership of the asset is not transferred, the lease term accounts for the majority of the useful life of the leased asset. ĺ The present value of the minimum lease payment of the lessee on the lease start date is almost equivalent to the fair value of the leased asset on the lease start date; The present value of the minimum lease receivable of the lessor on the lease start date is almost equivalent to the leasehold asset fair on the lease start date. Ļ Lease assets are of a special nature. If no major modifications are made, only the tenant can use them.

(1) Accounting Treatments of Operating Leases as Lessee The rental expenses of operating leases are recognized in the relevant asset costs or current profit or loss on the straight-line method in each period of the lease term. The initial direct costs are recognized in the current profit and loss. Contingent rentals payments are recognized in profit or loss when incurred.

(2) Accounting Treatments of Operating Leases as Lessor Rental income from operating leases is recognized in profit or loss on the straight-line basis. The initial direct expenses of a significant amount are capitalized at the time of occurrence, and are recognized in the current profit and loss on the same basis as the reorganization of rental income. Contingent rentals are recognized in profit or loss when incurred.

(3) Accounting Treatments of Finance Leases as Lessee On the commencement date of the lease term, the lower of the fair value of the leased asset and the present value of the minimum lease payment is taken as the book value of the leased asset, and the minimum lease payment is taken as the book value of the long-term payable. The difference is treated as unrecognized financing charges. In addition, the initial direct costs attributable to the leased item that occur during the lease negotiation and the signing of the lease contract are also included in the value of the leased asset. The balance of the minimum lease payments after deducting the unrecognized financing expenses is presented as long-term liabilities and long-term liabilities mature within one year.

– F-256 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

(4) Accounting Treatments of Finance Leases as Lessor A lessor shall, on the commencement date of the lease term, recognize the sum of the minimum lease receipts on the commencement date and the initial direct costs as the book value in an account of the finance lease values receivable, and record the unguaranteed residual value at the same time. The balance between the sums of the minimum lease receipts, the initial direct costs and the unguaranteed residual value, and the sum of their present values shall be recognized as unrealized financing income. The balance of deducting finance lease receivable with unrealized financing profit is presented in long-term liabilities and long-term liabilities due within one year, respectively. Unrealized financing income is calculated by the effective interest during the lease term, and is recognized as financing income. Contingent rentals are recognized in profit or loss when incurred.

27. Fair value measurement Fair value is the price that a market participant must pay to receive or transfer a liability in an orderly transaction that occurs on the measurement date. Whether the fair value is observable or estimated using valuation techniques, the fair value measured and/or disclosed in these financial statements is determined on this basis.

(1) Initial measurement According to the nature of the transaction and the characteristics of the related assets or liabilities, the company determines whether the fair value of the initial confirmation is equal to the transaction price. The company considers that the transaction price is not equal to the fair value in the following circumstances:ķThe transaction takes place between the related parties, and there is no evidence that the related party transaction is carried out under market conditions. ĸ Transactions are forced. Ĺ The unit of measurement represented by the transaction price is different from that of the relevant assets or liabilities measured at fair value.ĺ The market for trading is not the main market (or the most favorable market) for related assets or liabilities. Other relevant accounting standards require or permit the company to make initial measurement of relevant assets or liabilities at fair value, and the transaction price is not equal to the fair value. The difference between the transaction price and fair value shall be

– F-257 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail] handled in accordance with the requirements of other relevant accounting standards. If other relevant accounting standards do not clearly stipulate this, the company shall include the difference in current profits and losses.

(2) Valuation technique When the Company measures the relevant assets or liabilities at fair value, it uses valuation techniques that are applicable in the current circumstances and that are sufficient to support the use of data and other information. The valuation techniques used mainly include market law, income method and cost method. The Company measures the fair value using one or more of the valuation techniques, and fully considers the reasonableness of each valuation result, and selects the amount that best represents the fair value in the current situation as the fair value. Fair value measurement is based on the observable of the input values and the importance of such inputs to the overall fair value measurement, which are divided into three levels: The first level input value is an unadjusted quote for the same asset or liability that can be obtained on the measurement date in an active market. An active market is a market in which the volume of transactions or transactions of related assets or liabilities is sufficient to continue to provide pricing information. The second level input value is an input value that is directly or indirectly observable for related assets or liabilities other than the first level input value. The second level of input values includes: ķ quotes for similar assets or liabilities in an active market. ĸQuotations for identical or similar assets or liabilities are in a non-active market. Ĺ Observable inputs other than quotes, including interest rates that are observable during the normal quote interval, yield curves, implied volatility, credit spreads, and etc. ĺ Market verified input values. The third level input value is the unobservable input value. The company only uses the third level if there is no market activity in the relevant assets or liabilities or the market activity rarely causes the relevant observable input value to be unavailable or not feasible input value. When the company measures assets and liabilities at fair value, it first uses the first level input value, secondly uses the second level input value, and finally uses the third level input value.

(3) Accounting treatment The Company measures the related assets or liabilities at fair value, whether the changes in fair value should be accounted for in the current profit or loss or other

– F-258 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail] comprehensive income, and other relevant accounting standards that require or allow the Company to measure or disclose using fair value, see this other relevant parts of Note IV.

28. Cost of Safety Production According to the Regulations of the Ministry of Finance and the State Administration of Safety Supervision and Administration on the Extraction and Use of Safety Production Expenses in Enterprises (Accounting firms [2012] No.16) formulated jointly by the Ministry of Finance and the State Administration of Safety Supervision and Administration, safety expenses are extracted, which are specially used to improve and improve the conditions of safety production in enterprises. According to the relevant provisions of Interpretation No. 3 of the Accounting Standards for Enterprises (Accounting [2009]No. 8) of the Ministry of Finance, the production safety fees drawn by the company shall be included in the cost of the relevant products or current profits and losses, as well as in the subject of "special reserve". When the company uses the extracted safety production cost, which belongs to expenditure, it directly deducts the special reserve; if it uses the extracted safety production cost to form fixed assets, it shall collect the expenditure incurred through the subject of "under-construction project", and confirm it as fixed assets when the safety project is completed and achieves its intended usable state; at the same time, it shall deduct the special reserve according to the cost of forming the fixed assets. Prepare and confirm the accumulated depreciation of the same amount. The fixed assets are no longer depreciated in the later period.

V. Explanations for Changes in Accounting Policies, Accounting Estimate, and Correction of Error

1. Changes in Accounting Policies The Ministry of Finance issued the notice on revising and printingt of the consolidated financial statement format (2019 version) in September 2019 (No. [2019] 16) (hereinafter referred to as the "consolidated financial statement format") . Enterprises that implement the accounting standards for business enterprises shall prepare consolidated financial statements in accordance with the accounting standards for business enterprises and the requirements of the notice. Implement the revised consolidated financial statement format: the influence of according to the requirement of the consolidated financial statements format, the

– F-259 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail] company divides "notes receivable and accounts receivable" into "notes receivables" and "accounts receivable", and divides "notes payable and accounts payable" into "notes payable" and "accounts payable". The company has retroactively adjusted the statements for the comparison period accordingly, and the accounting policy change has no impact on the merger and the company's net profit and shareholders' equity.

2. Changes in Accounting Estimates

(1) The impact of changes in current accounting estimates According to the resolution of the thirtieth meeting of the first board of directors of the company in 2018, the company changed the depreciation life of fixed assets and the proportion of provision for bad debts in 2018, as follows: ķChange in the proportion of provision for bad debts receivable

Account Age Before Change (%) After Change (%) Within one year (including one year, the same below) 1-2 years 10.00 10.00

2-3 years 20.00 30.00

3-4years 30.00 50.00

4-5years 30.00 70.00

More than 5 years 100.00 100.00

ĸChange of depreciation life of fixed assets

Categories of fixed assets Before Change (%) After Change (%)

Buildings and structures 10-45 10-45

Machinery and equipment 8-28 8-22

Transport 12 9

Electronic equipment 8-12 4-7

(2) Number of impacts on current and future periods According to the relevant provisions of Accounting Standards for Enterprises No. 28 - Accounting Policy, Accounting Estimate Change and Error Correction, this change of accounting estimate is handled by the future applicable method without retrospective adjustment. At the same time, the impact of this change in accounting estimates on the financial position and operating performance in 2018 is as follows:

– F-260 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Accounting Estimate Change Affected Amount (Reduced by Affected Statement Item Name Content "-") Accounts receivable -204,165,809.47 Change in the proportion of Others receivable -28,290,391.85 allowance for bad debts receivable Loss of assets impairment 232,456,201.31

Fixed assets 214,309,065.93 Change of depreciation life of fixed assets Periodic Cost Subjects -214,309,065.93

VI. Taxes

1. Major taxes and tax rates Type of Tax Tax Rate Sales of gas and water are taxed at 10% and 3% of their sales revenue, some modern service industries and transportation industries are taxed at 6% and 10% of their sales Value Added Tax revenue, and other products are taxed at 17% and 16% of their sales revenue by selling and providing repair and repair services. City Construction Tax According to the actual payment of turnover tax 7%. According to 10%, 15%, 25%, 28% and 30% of the taxable income, the following table Enterprise Income Tax can be used to calculate the tax rate of enterprise income tax for different taxpayers. Resources Tax According to the concentrate sales revenue of 4%, enjoy 50% tax concessions.

The original 17%/11% tax rate is applicable to the taxable sales of VAT or imported goods in our company. According to the Notice of the Ministry of Finance and the State Administration of Taxation on the Adjustment of VAT Tax Rate (Caishui [No. 2018] No. 32) , the applicable tax rate has been adjusted to 16%/10% since May 1, 2018. Income Tax Rates of Enterprises with Different Taxpayers

Taxpayer Name Income Tax Rate

Nickel and Cobalt New Material Innovation Center Co., Ltd. 25%

Jinchuan Group Copper Co., Ltd. 15%

Jinchuan Niedu Industrial Co., Ltd. 25%

Jinchuan Group Nickel Salt Co., Ltd. 25%

Jinchuan Group Powder Material Co., Ltd. 25%

Jinchuan Wire & Cable Factory 25%

Jinchuan Group Precision Copper Material Co., Ltd. 25%

Gansu Jinchang Jinchuan Group Engineering Construction Co., Ltd. 25%

Gansu Jinchuan Chemical New Materials Co., Ltd. 25%

– F-261 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Taxpayer Name Income Tax Rate

Jinchuan Group Automation Engineering Co., Ltd. 15%

Jinchang Credit Engineering Construction Supervision Co., Ltd. 20%

Jinchang Jianheng Engineering Quality Inspection Co., Ltd. 20%

Jinchuan Nickel and Cobalt Research and Design Institute Co., Ltd. 25% Gansu Jinchuan International Economic and Technical Cooperation 25% Co., Ltd. Jinchang Jujia Ecological Agriculture Co., Ltd. 15%

Jinchuan Group Nickel Alloy Co., Ltd. 25%

Gansu Jinchuan Energy Saving Technology Co., Ltd. 25%

Lanzhou Jinchuan Technology Park 25%

Gansu Jinyu Material Co., Ltd. 25%

Jinchuan Group Finance Co., Ltd. 15%

Gansu Jinhui Mining Co., Ltd. 25%

Gansu Jinhe Mining Co., Ltd. 25%

Gansu Guobaoshan Mining Co., Ltd. 25%

Tibet Jinchuan Mining Investment Co., Ltd. 15%

Tibet Xinniu Mineral Development Co., Ltd. 15%

China National Nonferrous Industry Nan Hua Corp. 25%

Beijing Jinchuan Hotel 10% China-Hong Kong Jinbang (Beijing) International Cultural Consulting 15% Co., Ltd. Shenyang Jinhan Materials Co., Ltd. 25%

Jinchuan Group International Trading Co., Ltd 25%

Shanghai Niedu Restaurant 25%

Jinke Nonferrous Metal Co., Ltd. 25%

Guangdong Jinhui Metal Co., Ltd. 25%

Wuhan Jinsheng Material Trade Co., Ltd. 25%

Guangxi Jinchuan Nonferrous Metals Co., Ltd. 15%

Beihai Real Estate Development Co., Ltd. 25%

Jinchuan Group (Hongkong) Resources Holdings Limited 25%

– F-262 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Taxpayer Name Income Tax Rate

China Gold Nickel Industry Co., Ltd. 30%

South Africa Resources Co., Ltd. 28%

2. Tax Preferences and Approval Documents

(1) According to the provisions of Fiscal and Tax Document [2003] No. 86, the company and its subsidiaries implement the policy of VAT immediate refund for platinum produced and sold from May 1, 2003.

(2) The company and its subsidiaries are exempt from VAT for the sale of gold and gold ore by gold production and business units in accordance with the provisions of Financial and Tax Article [2002] No. 142.

(3) According to Article 2 of the Circular of the Ministry of Finance, the General Administration of Customs and the State Administration of Taxation on Tax Policies Concerning the Further Implementation of the Strategy for the Great Development of the West (hereinafter referred to as "Fiscal and Tax [2011] No. 58") , enterprises with encouraging industries located in the Western Region shall be levied at a reduced rate of 15% from January 1, 2011 to December 31, 2020 Income tax". The company pays enterprise income tax at 15% in 2018. The company’s subsidiaries, Jinchuan Group Information and Automation Engineering Co., Ltd., Jinchang Jinchuan Wanfang Industrial Co., Ltd., Lanzhou Jinchuan Precious Metal Materials Co., Ltd. and Lanzhou Jinchuan New Materials Science and Technology Co., Ltd., are based on the Notice of the State Administration of Taxation of the General Administration of Customs and Excise of the Ministry of Finance on Tax Policy Issues Concerning the Further Implementation of the Western Development Strategy (2011) Article 2 of document 58 stipulates that from January 1, 2011 to December 31, 2020, enterprise income tax shall be paid at a rate of 15%.

(4) Lanzhou Jinchuan New Material Technology Co., Ltd., a subsidiary of the company, enjoys export tax rebate for its product Cobalt trioxide according to the Customs Commodity Code-Import and Export Tax Rules of 2015. The customs commodity code is 28220010, the tax rate is 17%, and the rebate rate is 13%. Jinchang Jinchuan Wanfang Industrial Co., Ltd., a subsidiary company of the company, issued a document entitled "Preferential Catalogue of Value-added Tax for

– F-263 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Products and Services of Comprehensive Utilization of Resources" (Fiscal and Tax [2015] 78) according to the Ministry of Finance and the State Tax Administration. The products of fly ash concrete small hollow blocks and magnesia slag powder produced belong to the second category of resources comprehensive utilization products produced by waste slag in the document, and Value tax receives 70% tax rebate. The cement packaging bags (recycled plastic products) produced belong to the third category of resources comprehensive utilization products produced by recycled waste plastics. The VAT enjoys a 50% tax rebate ratio.

(5) According to the Notice of the State Administration of Taxation of the Ministry of Finance on the Preferential Policies of Value Added Tax, Real Estate Tax and Urban Land Use Tax for Heating Enterprises (No. 94 of Finance and Tax [2016]) , the heating income collected by heating enterprises in the "Three North" area will continue to be exempted from VAT, Real Estate Tax and Land Use Tax from January 1, 2016 to the end of the heating period in 2018.

(6) The technology development fees incurred by the company shall be approved by the tax authorities and allowed to deduct the taxable income of the current year by 175% of the actual amount of the technology development fees incurred. In 2017, it is allowed to deduct 150% of the actual amount of technology development expenses from the taxable income of the current year.

(7) The company's investment in purchasing special equipment such as environmental protection, energy saving and water saving, and safety in production can be credited with enterprise income tax at 10% of the investment approved by the tax authorities.

(8) Gansu Jinchuan Energy Conservation Technology Co., Ltd., a subsidiary of the company, is exempted from income from 480,000 tons of technical renovation project of waste heat recovery in sulphuric acid system from July 1, 2015 to July 31, 2002 in accordance with the Announcement of the State Development and Reform Commission of the State Administration of Taxation on Implementing Preferential Income Tax Policy for Energy Conservation Service Enterprises Contract Energy Management Projects. Enterprise Income Tax Payment for income from 780,000 tons of waste heat recovery technology renovation project of sulphuric acid system exempted from enterprise income tax from January 1, 2018 to August 31, 2027

– F-264 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

The company, a subsidiary of Gansu Jinchuan energy saving technology co., LTD. According to the "about promoting energy conservation service industry development of value added tax, business tax and enterprise income tax policy issues notice (caishui [2010] 110 date) regulation, engaged in waste heat recovery technology renovation project of 480,000 tons of sulfuric acid system since July 1, 2015 to July 31, 2022 from value-added tax.The 780,000 tons of sulfuric acid system waste heat recovery technology renovation project will be exempted from VAT from January 1, 2018 to August 31, 2027.

(9) According to the provisions of Article 27 of the Enterprise Income Tax Law of the People's Republic of China and its implementing regulations, Articles 87 and 89, Finance and Tax [2008] No. 116, Finance and Tax [2008] No.46 and State Tax [2009] 80, the income of Dongdatan 200 MW photovoltaic power generation project is exempted from enterprise income tax from 2013 to 2015, 201. Half of the corporate income tax will be paid between 2006 and 2018. The company will pay enterprise income tax at a reduced rate of 7.5%.

(10) The subsidiaries of the company, Tibet Ruicheng Trading Co., Ltd., Tibet Jinchuan Mining Investment Co., Ltd. and Tibet Xinniu Mineral Development Co., Ltd., pay enterprise income tax at 15% tax rate from 2011 to 2020 for all kinds of enterprises (including enterprises outside Tibet) located in Lhasa Economic and Technological Development Zone according to the provisions of document No. 14 of Tibet Zhengfa [2011]. Document No. 51 [2014] stipulates that from January 1, 2015 to December 31, 2017, enterprises in Lhasa Economic and Technological Development Zone will be exempted from paying the local share of the enterprise income tax (6%) .

(11) Machinery Manufacturing Co., Ltd. The company, a subsidiary of Jinchuan Group and its subsidiaries in Gansu Jinchuan Solar Co., Ltd. In October 2012 by the Gansu province science and technology department, financial department, state tax bureau, Gansu province, Gansu province, Gansu province local taxation bureau jointly identified as high-tech enterprises, according to the enterprise income tax law of the People's Republic of China "in paragraph 2, article 28 of the" key countries need support of high-tech enterprises, to enjoy the pay enterprise income tax rate of 15%"

VII. Business combinations and consolidated financial statements

1. Information of subsidiaries

– F-265 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Major Register Nature of No. Enterprise name Level Type Operating ed Place business place Research and Nickel and Cobalt New Lanzhou, Domestic non-financial Jinchang, Development of 1 Material Innovation 2 Gansu subsidiary enterprises Gansu Province New Material Center Co., Ltd. Province Products Jinchuan Group Jinchang, Domestic non-financial Jinchang, Nonferrous Metals 2 Copper Industry Co., 2 Gansu subsidiary enterprises Gansu Province Smelting and Sales Ltd. Province Jinchang, Processing and Jinchuan Niedu Domestic non-financial Jinchang, 3 2 Gansu Sales of Industrial Co., Ltd. subsidiary enterprises Gansu Province Province Nonferrous Metals Jinchuan Jinchang, Domestic non-financial Jinchang, Nonferrous Metal 4 Nickel-Metropolis Mine 3 Gansu subsidiary enterprises Gansu Province Processing Industry Co., Ltd. Province Jinchang Aowei Metal Jinchang, Domestic non-financial Jinchang, Nonferrous Metal 5 Co., Ltd. 4 Gansu subsidiary enterprises Gansu Province Processing Province Processing and Jinchang Jinchuan Jinchang, Production of Wanfang Industrial Domestic non-financial Jinchang, 6 3 Gansu Packaging Co., Ltd. subsidiary enterprises Gansu Province Province Materials and Products Jinchang Jinchuan Jinchang, Domestic non-financial Jinchang, 7 Hotel Co.,Ltd. 3 Gansu Service industry subsidiary enterprises Gansu Province Province Jinchuan Group Jinchang, Domestic non-financial Jinchang, 8 Jinchang Lisheng 3 Gansu Printing subsidiary enterprises Gansu Province Industrial Co., Ltd. Province Jinchuan Group Processing and Jinchang, Machinery Domestic non-financial Jinchang, Production of 9 3 Gansu Manufacturing Co.,Ltd. subsidiary enterprises Gansu Province Casting, Forging, Province General Parts, etc. Gansu Jinchuan Solar Jinchang, Manufacturing and Domestic non-financial Jinchang, 10 Co., Ltd. 4 Gansu Sales of Solar subsidiary enterprises Gansu Province Province Energy Products Jinchang, Gansu Jintai Electric Domestic non-financial Jinchang, 11 4 Gansu Solar power Power Co., Ltd. subsidiary enterprises Gansu Province Province Gansu Jintai Electric Jinchang, Manufacturing and Domestic non-financial Jinchang, 12 Power Co., Ltd. 4 Gansu Sales of Solar subsidiary enterprises Gansu Province Province Energy Products Gansu Jinchuan Jinge Manufacturing and Mining Vehicle Jinchang, Domestic non-financial Jinchang, Sales of 13 Manufacturing Co., 4 Gansu subsidiary enterprises Gansu Province Construction Ltd. Province Machinery Gansu Jinchuan Jinge Mining Vehicle Jinchang, Processing and Domestic non-financial Jinchang, 14 Manufacturing Co., 2 Gansu Sales of Nickel Salt subsidiary enterprises Gansu Province Ltd. Province Products

Jinchuan Group Jinchang, Processing and Domestic non-financial Jinchang, 15 Powder Material Co., 2 Gansu Sales of Powder subsidiary enterprises Gansu Province Ltd. Province Materials

– F-266 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Major Register Nature of No. Enterprise name Level Type Operating ed Place business place Jinchuan Wire & Cable Jinchang, Domestic non-financial Jinchang, Wire and Cable 16 Factory 2 Gansu subsidiary enterprises Gansu Province Sales Province Gansu Jinchuan Aike Jinchang, Development and Domestic non-financial Jinchang, 17 Mineral Insulated 3 Gansu Sales of Wires and subsidiary enterprises Gansu Province Cable Co., Ltd. Province Cables Copper and copper alloy tubes, rods, wires, rows, Jinchuan Group Jinchang, Domestic non-financial Jinchang, moulds, ingots, 18 Precision Copper 2 Gansu subsidiary enterprises Gansu Province fittings, nickel and Material Co., Ltd. Province nickel alloy tubes, rods processing and marketing Gansu Jinchang Construction, Jinchuan Group Jinchang, Domestic non-financial Jinchang, Production and 19 Engineering 2 Gansu subsidiary enterprises Gansu Province Sale of Building Construction Co., Ltd. Province Supplies Gansu Jinchuan Lanzhou, Group Real Estate Domestic non-financial Lanzhou, Development of 20 3 Gansu Development Co., Ltd. subsidiary enterprises Gansu Province Real Estate Province Gansu Jinchuan Jujin Lanzhou, Domestic non-financial Lanzhou, Estate 21 Property Management 3 Gansu subsidiary enterprises Gansu Province management Co., Ltd. Province Gansu Jinchuan Jinchang, Domestic non-financial Jinchang, Sales of Composite 22 Jiuding Composite 3 Gansu subsidiary enterprises Gansu Province Products Material Co., Ltd. Province Labor Jinjianzhongsheng Jinchang, Domestic non-financial Jinchang, subcontracting for 23 Construction Labor 3 Gansu subsidiary enterprises Gansu Province construction Co., Ltd. Province projects Fangchen Fangchenggang Guangxi Jinchuan Domestic non-financial ggang, Real Estate 24 3 , Guangxi Industrial Co., Ltd. subsidiary enterprises Guangxi Property Province Province Obi Island, North Indonesia Jinchuan Overseas North Malugu 25 3 Jakarta, Mining services Construction Co., Ltd. subsidiary enterprises Province, Indonesia Indonesia Gansu Jinchuan Jinchang, Domestic non-financial Jinchang, 26 Chemical New 2 Gansu Chemical industry subsidiary enterprises Gansu Province Materials Co., Ltd. Province Jinchuan Group Jinchang, R&D and Design of Automation Domestic non-financial Jinchang, 27 2 Gansu Automation Engineering Co.,Ltd. subsidiary enterprises Gansu Province Province Products Jinchang Credit Jinchang, Engineering Domestic non-financial Jinchang, Engineering 28 2 Gansu Construction subsidiary enterprises Gansu Province supervision Province Supervision Co., Ltd.

– F-267 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Major Register Nature of No. Enterprise name Level Type Operating ed Place business place Jinchuan Group Jinchang, Domestic non-financial Jinchang, Project Cost 29 Co.,Ltd 3 Gansu subsidiary enterprises Gansu Province Monitoring Province Jinchang Jianheng Jinchang, Domestic non-financial Jinchang, 30 Engineering Quality 2 Gansu Engineering testing subsidiary enterprises Gansu Province Inspection Co., Ltd. Province Jinchuan Nickel and Jinchang, Cobalt Research and Domestic non-financial Jinchang, 31 2 Gansu Designing Design Institute Co., subsidiary enterprises Gansu Province Province Ltd. Gansu Jinchuan Jinchang, International Economic Domestic non-financial Jinchang, 32 2 Gansu project contracting and Technical subsidiary enterprises Gansu Province Province Cooperation Co., Ltd. Jinchang Jujia Jinchang, Domestic non-financial Jinchang, 33 Ecological Agriculture 2 Gansu Dairy production subsidiary enterprises Gansu Province Co., Ltd. Province Lanzhou, Sales of Metal and Jinchuan Group Nickel Domestic non-financial Lanzhou, 34 2 Gansu Alloy Powder Alloy Co., Ltd. subsidiary enterprises Gansu Province Province Materials Gansu Jinchuan Lanzhou, Domestic non-financial Lanzhou, energy 35 Energy Saving 2 Gansu subsidiary enterprises Gansu Province management Technology Co., Ltd. Province Lanzhou Jinchuan Lanzhou, Production and Domestic non-financial Lanzhou, 36 Technology Park 2 Gansu Sale of New subsidiary enterprises Gansu Province Province Energy Materials Lanzhou Jinchuan Research and Lanzhou, Precious Metals Domestic non-financial Lanzhou, Development of 37 3 Gansu Materials Co., Ltd. subsidiary enterprises Gansu Province Precious Metal Province Products Gansu Jingpu Testing Lanzhou, Domestic non-financial Lanzhou, Quality Inspection 38 Technology Co., Ltd. 3 Gansu subsidiary enterprises Gansu Province Technical Service Province Lanzhou Jinchuan Development, Lanzhou, Advanced Materials Domestic non-financial Lanzhou, Production and 39 3 Gansu Technology Co.,Ltd. subsidiary enterprises Gansu Province Sale of Lithium and Province Cobalt Resources Development and Lanzhou Jintong Sale of New Energy Storage Power Domestic non-financial Lanzhou, Lanzhou, Materials for Binary 40 4 New Materials Co., subsidiary enterprises Nantong Gansu Province and Ternary Ltd. Precursors of Lithium Batteries Los Jinchuan Cobalt Overseas Wholesale of Metal 41 4 Angels, Los Angels Products Corp subsidiary enterprises Products USA Gansu Jinyu Material Lanzhou, Domestic non-financial Lanzhou, Nonferrous Metals 42 Co., Ltd. 2 Gansu subsidiary enterprises Gansu Province Trade Province Jinchuan Group Lanzhou, Domestic non-financial Lanzhou, 43 Finance Co., Ltd. 2 Gansu Financial financing subsidiary enterprises Gansu Province Province

– F-268 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Major Register Nature of No. Enterprise name Level Type Operating ed Place business place Gansu Jinhui Mining Lanzhou, Domestic non-financial Lanzhou, Nonferrous Metals 44 Co., Ltd. 2 Gansu subsidiary enterprises Gansu Province Trade Province Gansu Jinhe Mining Lanzhou, Domestic non-financial Lanzhou, Development of 45 Co., Ltd. 2 Gansu subsidiary enterprises Gansu Province Mineral Products Province Tibet Jinchuan Mining Mining investment Domestic non-financial Tibet, 46 Investment Co., Ltd. 2 Tibet, Lhasa and sales of subsidiary enterprises Lhasa mineral products Tibet Xinniu Mineral Domestic non-financial Tibet, Mining of mineral 47 Development Co., Ltd. 2 Tibet, Lhasa subsidiary enterprises Lhasa products China National Nonferrous Industry Domestic non-financial Investment 48 2 Beijing Beijing Nan Hua Corp. subsidiary enterprises management

Beijing Jindu Material Domestic non-financial Nonferrous Metals 49 Trade Co., Ltd. 3 Beijing Beijing subsidiary enterprises Trade Tibet Ruicheng Domestic non-financial Tibet, Nonferrous Metals 50 Trading Co., Ltd. 3 Tibet, Lhasa subsidiary enterprises Lhasa Trade Beijing Jinchuan Hotel Domestic non-financial 51 2 Beijing Beijing Service trade subsidiary enterprises China-Hong Kong Jinbang (Beijing) Domestic non-financial 52 International Cultural 2 Beijing Beijing Servicing subsidiary enterprises Consulting Co., Ltd.

Shenyan Shenyang Jinhan Shenyang, Domestic non-financial g, Nonferrous Metals 53 Materials Co.,Ltd. 2 Liaoning subsidiary enterprises Liaoning Trade province province Jinchuan Group International Trading Domestic non-financial Nonferrous Metals 54 2 Shanghai Shanghai Co.,Ltd subsidiary enterprises Trade

Shanghai Jinchuan Group International Domestic non-financial Nonferrous Metals 55 3 Shanghai Shanghai Trading Co.,Ltd subsidiary enterprises Trade

Luoyang Longchang Luoyang, Copper Industry Co., Domestic non-financial Luoyang, Nonferrous Metals 56 4 Henan Ltd. subsidiary enterprises Henan province Trade province Jinchuan Maike Metal Domestic non-financial Nonferrous Metals 57 Resources Co.,Ltd. 3 Shanghai Shanghai subsidiary enterprises Trade Jinheng (Shanghai) Finance Leasing Co., Domestic non-financial 58 4 Shanghai Shanghai finance lease Ltd. subsidiary enterprises

– F-269 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Major Register Nature of No. Enterprise name Level Type Operating ed Place business place Shanghai Hongding Domestic non-financial 59 Real Estate Co., Ltd. 4 Shanghai Shanghai Property agency subsidiary enterprises Shanghai Hongmao Domestic non-financial 60 Real Estate Co., Ltd. 4 Shanghai Shanghai Property agency subsidiary enterprises Shanghai Hongsheng Domestic non-financial 61 Real Estate Co., Ltd. 4 Shanghai Shanghai Property agency subsidiary enterprises Hong SKY HERO(HONG Overseas Hong Kong, Nonferrous Metals 62 4 Kong, KONG) Limited subsidiary enterprises China Trade China Jinchuan MAIKE METAL RESOURCES Overseas Singapor Nonferrous Metals 63 4 Singapore CO.,LTD. subsidiary enterprises e Trade

Shanghai Niedu Domestic non-financial 64 Restaurant 2 Shanghai Shanghai Service industry subsidiary enterprises Jinke Nonferrous Kunshan, Kunshan, Domestic non-financial Calendering of 65 Metal Co.,Ltd. 2 Jiangsu Jiangsu subsidiary enterprises Nonferrous Metals province province Guangzh Guangdong Jinhui ou, Guangzhou, Domestic non-financial Nonferrous Metals 66 Metal Co., Ltd. 2 Guangdo Guangdong subsidiary enterprises Trade ng Province Province Jiangsu Jinrong Metal Nantong, Domestic non-financial Nonferrous Metals 67 Material Co., Ltd. 3 Jiangsu Shanghai subsidiary enterprises Trade Province Guangxi Jinchuan Fangchen Nonferrous Metals Domestic non-financial ggang Fangchenggang Nonferrous Metals 68 2 Co., Ltd. subsidiary enterprises City, City, Guangxi Smelting and Sales Guangxi Guangxi Hangyang Fangchen Jinchuan Xinrui Gas Domestic non-financial ggang Fangchenggang Gas production and 69 3 Co.,Ltd. subsidiary enterprises City, City, Guangxi sales Guangxi Guangxi Jinchuan Shangsi Shangsi Mineral Domestic non-financial 70 Jinda Mining Co., Ltd. 3 County, County, Development and subsidiary enterprises Guangxi Guangxi Purchase and Sale Fangchen Guangxi Jinchuan Domestic non-financial ggang Fangchenggang Energy production 71 Energy Co., Ltd. 3 subsidiary enterprises City, City, Guangxi and marketing Guangxi Beihai Jinchuan Real Development and Estate Development Domestic non-financial Beihai, 72 2 Beihai, Guangxi Management of Co., Ltd. subsidiary enterprises Guangxi Real Estate

– F-270 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Major Register Nature of No. Enterprise name Level Type Operating ed Place business place Jinchuan Group (Hongkong) Hong Development and Overseas Hong Kong, 73 Resources Holdings 2 Kong, sales of Mineral subsidiary enterprises China Limited China Products

Australian Gold and Overseas Sydney, Sydney, Sales of Mineral 74 Nickel Company 2 subsidiary enterprises Australia Australia Products Australian Golden Overseas Perth, 75 Field Nickel Company 2 Perth, Australia Sales subsidiary enterprises Australia Jinchuan(USA) Inc. Overseas 76 2 America America Sales subsidiary enterprises Johannes South Africa Overseas burg, Johannesburg, 77 Resources Co.,Ltd. 2 Sales subsidiary enterprises South South Africa Africa Canada Jinchuan Overseas Toronto, Toronto, Development of 78 Resources Co.,Ltd. 2 subsidiary enterprises Canada Canada Mineral Products

(continued) Paid-in Capital Sharehol Investment Voting rate Acquire No. Enterprise name (ten thousand ding rate (ten thousand (%) method yuan) (%) yuan) Nickel and Cobalt New 1 Material Innovation Center 100.00 100.00 Investment Co., Ltd. Jinchuan Group Copper 2 400,000.00 100.00 100.00 400,000.00 Investment Industry Co., Ltd. Jinchuan Niedu Industrial Business 3 73,243.97 100.00 100.00 141,791.12 Co., Ltd. combination Jinchuan 4 Nickel-Metropolis Mine 25,786.63 100.00 100.00 29,770.76 Investment Industry Co., Ltd. Jinchang Aowei Metal Co., 5 300.00 66.67 66.67 200.00 Investment Ltd. Jinchang Jinchuan 6 Wanfang Industrial Co., 12,493.47 100.00 100.00 14,361.78 Investment Ltd. Jinchang Jinchuan Hotel 7 1,986.88 100.00 100.00 3,804.65 Investment Co.,Ltd. Jinchuan Group Jinchang 8 Lisheng Industrial Co., 2,319.00 100.00 100.00 3,701.53 Investment Ltd. Jinchuan Group 9 Machinery Manufacturing 44,406.19 100.00 100.00 44,420.28 Investment Co.,Ltd. Gansu Jinchuan Solar 10 7,000.00 98.57 98.57 6,900.00 Investment Co., Ltd. Gansu Jintai Electric 11 40,000.00 40.00 40.00 16,000.00 Investment Power Co., Ltd.

– F-271 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Paid-in Capital Sharehol Investment Voting rate Acquire No. Enterprise name (ten thousand ding rate (ten thousand (%) method yuan) (%) yuan) Gansu Jintai Electric 12 1,000.00 35.00 35.00 350.00 Investment Power Co., Ltd. Gansu Jinchuan Jinge 13 Mining Vehicle 1,500.00 64.90 64.90 973.50 Investment Manufacturing Co., Ltd. Gansu Jinchuan Jinge 14 Mining Vehicle 10,000.00 100.00 100.00 41,671.87 Investment Manufacturing Co., Ltd. Jinchuan Group Powder 15 10,000.00 100.00 100.00 15,191.09 Investment Material Co., Ltd. Jinchuan Wire & Cable 16 35,000.00 100.00 100.00 84,916.40 Investment Factory Gansu Jinchuan Aike 17 Mineral Insulated Cable 2,000.00 51.00 51.00 1,020.00 Investment Co., Ltd. Jinchuan Group Precision 18 5,000.00 100.00 100.00 99,072.43 Investment Copper Material Co., Ltd. Gansu Jinchang Jinchuan 19 Group Engineering 43,642.78 100.00 100.00 46,694.61 Investment Construction Co., Ltd. Gansu Jinchuan Group 20 Real Estate Development 5,000.00 100.00 100.00 5,000.00 Investment Co., Ltd. Gansu Jinchuan Jujin 21 Property Management 500.00 100.00 100.00 500.00 Investment Co., Ltd. Gansu Jinchuan Jiuding 22 Composite Material Co., 3,500.00 51.00 51.00 1,785.00 Investment Ltd. Jinjianzhongsheng 23 Construction Labor Co., 500.00 100.00 100.00 500.00 Investment Ltd. Guangxi Jinchuan 24 10,000.00 100.00 100.00 9,474.95 Investment Industrial Co., Ltd. Indonesia Jinchuan 25 63,845.00 67.00 67.00 63,845.00 Investment Construction Co., Ltd. Gansu Jinchuan Chemical 26 40,000.00 70.00 70.00 28,000.00 Investment New Materials Co., Ltd. Jinchuan Group 27 Automation Engineering 6,000.00 85.74 85.74 4,287.20 Investment Co.,Ltd. Jinchang Credit 28 Engineering Construction 400.00 100.00 100.00 400.00 Investment Supervision Co., Ltd. 29 Jinchuan Group Co.,Ltd 200.00 100.00 100.00 400.00 Investment Jinchang Jianheng 30 Engineering Quality 100.00 100.00 100.00 120.43 Investment Inspection Co., Ltd. Jinchuan Nickel and 31 Cobalt Research and 5,000.00 100.00 100.00 13,899.53 Investment Design Institute Co., Ltd.

– F-272 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Paid-in Capital Sharehol Investment Voting rate Acquire No. Enterprise name (ten thousand ding rate (ten thousand (%) method yuan) (%) yuan) Gansu Jinchuan International Economic 32 9,595.19 89.58 89.58 8,595.19 Investment and Technical Cooperation Co., Ltd. Jinchang Jujia Ecological 33 3,000,00 100.00 100.00 4,042.83 Investment Agriculture Co., Ltd. Jinchuan Group Nickel 34 60,000.00 100.00 100.00 147,683.84 Investment Alloy Co., Ltd. Gansu Jinchuan Energy 35 Saving Technology Co., 500.00 100.00 100.00 500.00 Investment Ltd. Lanzhou Jinchuan 36 254,000.00 100.00 100.00 320,533.16 Investment Technology Park Lanzhou Jinchuan 37 Precious Metals Materials 1,800.00 87.78 87.78 1,580.00 Investment Co., Ltd. Gansu Jingpu Testing 38 760.96 100.00 100.00 760.96 Investment Technology Co., Ltd. Lanzhou Jinchuan 39 Advanced Materials 1,065,37.70 92.44 92.44 231,155.50 Investment Technology Co.,Ltd. Lanzhou Jintong Energy 40 Storage Power New 20,000.00 100.00 100.00 20,000.00 Investment Materials Co., Ltd. Jinchuan Cobalt Products 41 326.71 100.00 100.00 326.71 Investment Corp Gansu Jinyu Material Co., 42 1,000.00 80.00 80.00 1,083.59 Investment Ltd. Jinchuan Group Finance 43 100,000.00 95.00 95.00 95,000.00 Investment Co., Ltd. Gansu Jinhui Mining Co., 44 1,000.00 55.00 55.00 550.00 Investment Ltd. Gansu Jinhe Mining Co., 45 6,667.00 75.00 75.00 5,000.25 Investment Ltd. Tibet Jinchuan Mining 46 25,000.00 100.00 100.00 25,000.00 Investment Investment Co., Ltd. Tibet Xinniu Mineral 47 11,111.00 55.00 55.00 6,111.00 Investment Development Co., Ltd. China National Nonferrous 48 43,500.00 100.00 100.00 41,025.00 Investment Industry Nan Hua Corp. Beijing Jindu Material 49 2,100.00 90.00 90.00 11,025.30 Investment Trade Co., Ltd. Tibet Ruicheng Trading 50 5,000.00 100.00 100.00 5,000.00 Investment Co., Ltd. 51 Beijing Jinchuan Hotel 71.38 100.00 100.00 71.38 Investment China-Hong Kong Jinbang (Beijing) International 52 2,000.00 100.00 100.00 2,000.00 Investment Cultural Consulting Co., Ltd. Shenyang Jinhan 53 800.00 100.00 100.00 800.00 Investment Materials Co.,Ltd.

– F-273 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Paid-in Capital Sharehol Investment Voting rate Acquire No. Enterprise name (ten thousand ding rate (ten thousand (%) method yuan) (%) yuan) Jinchuan Group 54 International Trading 100,000.00 99.75 99.75 99,750.00 Investment Co.,Ltd Shanghai Jinchuan Group International Trading 55 100,000.00 60.00 60.00 6,000.00 Investment Co.,Ltd

Luoyang Longchang 56 Copper Industry Co., Ltd. 900.00 100.00 100.00 900.00 Investment

Jinchuan Maike Metal 57 100,000.00 70.00 70.00 70,000.00 Investment Resources Co.,Ltd. Jinheng (Shanghai) 58 100.00 100.00 Investment Finance Leasing Co., Ltd. Shanghai Hongding Real 59 500.00 100.00 100.00 500.00 Investment Estate Co., Ltd. Shanghai Hongmao Real 60 500.00 100.00 100.00 500.00 Investment Estate Co., Ltd. Shanghai Hongsheng 61 500.00 100.00 100.00 500.00 Investment Real Estate Co., Ltd. SKY HERO(HONG 62 3,050.35 100.00 100.00 3,050.35 Investment KONG) Limited Jinchuan MAIKE METAL 63 18,930.83 100.00 100.00 18,930.83 Investment RESOURCES CO.,LTD. Shanghai Niedu 64 1,500.00 100.00 100.00 2,623.58 Investment Restaurant Jinke Nonferrous Metal 65 5,357.20 100.00 100.00 6,328.76 Investment Co.,Ltd. Guangdong Jinhui Metal 66 2,000.00 100.00 100.00 2,000.00 Investment Co., Ltd. Jiangsu Jinrong Metal 67 500.00 100.00 100.00 500.00 Investment Material Co., Ltd. Guangxi Jinchuan 68 Nonferrous Metals Co., 300,000.00 70.00 70.00 210,000.00 Investment Ltd. Guangxi Hangyang 69 Jinchuan Xinrui Gas 17,654.00 65.00 65.00 13,071.90 Investment Co.,Ltd. Guangxi Jinchuan Jinda 70 600.00 51.00 51.00 306.00 Investment Mining Co., Ltd. Guangxi Jinchuan Energy 71 2,000.00 100.00 100.00 2,000.00 Investment Co., Ltd. Beihai Jinchuan Real 72 Estate Development Co., 500.00 100.00 100.00 500.00 Investment Ltd. Jinchuan Group 73 (Hongkong) Resources 1,144,470.74 100.00 100.00 1,144,470.74 Investment Holdings Limited Australian Gold and Nickel 74 581.50 60.00 60.00 348.90 Investment Company Australian Golden Field 75 6,456.25 98.75 98.75 6,375.54 Investment Nickel Company

– F-274 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Paid-in Capital Sharehol Investment Voting rate Acquire No. Enterprise name (ten thousand ding rate (ten thousand (%) method yuan) (%) yuan) 76 Jinchuan(USA) Inc. 4,959.88 100.00 100.00 5,796.90 Investment South Africa Resources 77 0.11 100.00 100.00 3,519.61 Investment Co.,Ltd. Canada Jinchuan 78 173,399.32 100.00 100.00 173,399.32 Investment Resources Co.,Ltd.

2. Reasons for existence of control when the parent company owns less than half of the voting rights over the investee Reasons for not Le Shareholding Voting Paid-in Investm being included in No. Enterprise name ve rate(%) rate(%) capital ent the scope of l merger 0.714 Gansu Jinyuan Coal 1 billion 1 51.00 51.00 billion 2 Note Industry Co., Ltd. yuan yuan Note: According to the constitution of Gansu Jinyuan Coal Industry Co., Ltd., Jingyuan Coal Industry Group Co., Ltd. will play its own industry advantages and be responsible for project development and operation. Jingyuan Coal Industry Group Co., Ltd. merged the statements of Gansu Jinyuan Coal Industry Co., Ltd., so the company did not include them in the merger scope.

3. Information of important partly-owned subsidiaries

(1) Minority shareholder Profit and loss Cumulative Dividend paid to Minority attributable to minority minority No. Name of company Shareholdi minority shareholders' shareholders in ng rate(%) shareholders in equity at the end of 2018 2018 the year 2018 Lanzhou Jinchuan Advanced Materials 1 7.56 -108,472,714.91 18,122,879.86 46,963,148.61 Technology Co., Ltd.

Beijing Jindu Material 2 10.00 439,458.62 -264,456,357.11 Trade Co., Ltd. Jinchuan Group 3 International Trading 0.25 -249,424,929.53 455,850,379.00 Co., Ltd Guangxi Jinchuan 4 Nonferrous Metals Co., 30.00 75,496,995.56 18,111,977.34 94,777,219.08 Ltd.

(2) Major financial information

– F-275 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

2018 Lanzhou Jinchuan Guangxi Item Advanced Beijing Jindu Jinchuan Group Jinchuan Materials Material Trade Co., International Nonferrous Technology Co., Ltd. Trading Co., Ltd Metals Co., Ltd. Ltd. Current assets 2,636,030,126.04 89,460,451.24 5,899,167,660.21 4,208,727,815.83

Non-current assets 1,635,085,287.88 16,274,086.13 2,356,353,660.50 7,970,164,901.87

Total assets 4,271,115,413.92 105,734,537.37 8,255,521,320.71 12,178,892,717.70

Current liability 3,410,095,421.35 2,750,298,108.60 6,910,272,217.05 7,313,551,691.19

Non-Current liability 154,273,186.77 1,392,512,397.77 1,316,285,734.24

Total liability 3,564,368,608.12 2,750,298,108.60 8,302,784,614.82 8,629,837,425.43

Revenues 4,843,316,566.22 123,792,108,577.71 22,361,976,311.54

Net profit -1,439,765,414.00 4,394,586.16 -1,051,322,926.79 215,490,973.27 Total comprehensive -1,440,402,922.04 4,394,586.16 -1,051,322,926.79 215,490,973.27 income Cash flow from -782,544,957.07 -5,122,861.95 956,921,190.73 1,973,611,885.97 operating activities (Continued)

2017 Lanzhou Jinchuan Guangxi Item Advanced Beijing Jindu Jinchuan Group Jinchuan Materials Material Trade Co., International Nonferrous Technology Ltd. Trading Co., Ltd Metals Co., Ltd. Co. ,Ltd. Current assets 2,631,240,026.06 239,599,871.45 7,785,539,260.35 7,147,559,174.16

Non-current assets 1,121,951,784.93 16,863,770.86 2,224,982,355.20 8,441,540,477.02

Total assets 3,753,191,810.99 256,463,642.31 10,010,521,615.55 15,589,099,651.18

Current liability 1,339,034,884.30 2,905,421,799.70 7,593,200,391.73 11,362,558,170.03

Non-Current liability 10,000,000.00 1,395,932,355.03 909,268,678.89

Non-Current liability 1,349,034,884.30 2,905,421,799.70 8,989,132,746.76 12,271,826,848.92

Total liability 4,216,586,277.02 997,379,508.76 134,244,735,621.81 20,297,956,730.40

Revenues 902,283,964.43 -251,972,027.75 -419,876,731.77 188,466,954.87

Net profit 902,284,024.14 -251,972,027.75 -419,876,731.77 188,466,954.87 Total comprehensive 507,654,375.71 23,859,180.21 1,819,894,904.26 253,508,409.21 income

4. Entities newly included and not included in the scope of consolidation

– F-276 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

(1) The situation of subsidiaries which are newly included in the scope of consolidation this year

No. Company Name Net assets by 12-31-2018 Net profit by -2018

1 Jinchuan Group Copper Co., Ltd. 4,056,239,594.34 56,239,594.34 Gansu Jinchuan Aike Mineral Insulated 2 19,798,812.80 -201,187.20 Cable Co., Ltd. Indonesia Jinchuan Construction Co., 3 9,384,513.69 3,000,013.69 Ltd. 4 Guangxi Jinchuan Energy Co., Ltd. 20,019,687.28 19,687.28 Shanghai Jinchuan Junhe Economic 5 255,049,179.38 5,005,951.38 Development Co., Ltd.

(2) The subject of the new merger in 2017

No. Company Name Net assets by 12-31-2017 Net profit by 2017

1 Luoyang longchang copper co. LTD 9,867,448.02 848,634.73

(3) Subsidiaries no longer included in the scope of consolidation this year ķThe situation of subsidiaries which are not included in the scope of consolidation this year Proportion of The Proportion Registratio Nature of Reasons in Company Name Shareholding of voting rights n Location Business 2018 (%) (%) Wuhan, Wuhan Jinsheng Hubei Business trade 100.00 100.00 Write-off Material Trade Co., Ltd. Province Development Guazhou, Gansu Guobaoshan and Processing Gansu 80.00 80.00 Write-off Mining Co., Ltd. of Rubidium Province Ore ĸThe financial position of subsidiaries on the date of disposal and the balance sheet date of the last accounting period

Date of disposal Company Name Date of disposal Total asset Total liabilities Total owner’s equity Wuhan Jinsheng Material Trade Co., 2018.9.30 16,171,508.44 114,655,825.88 -98,484,317.44 Ltd. Gansu Guobaoshan 2018.8.31 20,288,700.00 20,288,700.00 Mining Co., Ltd. (Continued)

2017/12/31 Company Name Date of disposal Total asset Total liabilities Total owner’s equity

– F-277 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

2017/12/31 Company Name Date of disposal Total asset Total liabilities Total owner’s equity Wuhan Jinsheng Material Trade Co., 2018.9.30 16,432,349.51 114,656,440.78 -98,224,091.27 Ltd. Gansu Guobaoshan 2018.8.31 20,083,089.12 20,083,089.12 Mining Co., Ltd. Ĺ The operating results of subsidiaries from the beginning of the year to the disposal date From beginning of the year to the date of Date of disposal Subsidiary name disposal Revenue Cost Net profit s Wuhan Jinsheng Material Trade Co., Ltd. 2018.9.30 -260,226.17 -260,226.17

Gansu Guobaoshan Mining Co., Ltd. 2018.8.31 211,887.20 211,887.20

(4) The subject of the merger will no longer be included in 2017 ķThe situation of atomic companies no longer included in the scope of merger in 2017 The Proportio Proportio Nature of n of Subsidiary name Registration Location n of Reasons Business Sharehold voting ing(%) rights(%) Mineral Yiwu County Summoning products Yiwu county, xinjiang Metal Mining and processing 80.00 80.00 Cancellation province Selection Co. Ltd and marketing and trade Lianyungang Gold Well Non-ferrous lianyungang 51.00 51.00 Cancellation Mining Co. Ltd metal Congo King Kong Mining Lubenbrazile, Congo sales 100.00 100.00 Cancellation Co. Ltd (DRC) Gansu Jinao Mining Lanzhou city, Gansu Non-ferrous 99.38 99.38 Cancellation Resources Co. Ltd province metal ĸ The financial position of atomics on the disposal date and the balance sheet date of the previous accounting period in 2017

Date of disposal Company Name Date of disposal Total asset Total liabilities Total owner’s equity Yiwu County Summoning Metal 2017.12.18 22,924.25 25,963.07 -3,038.82 Mining and Selection Co. Ltd Lianyungang Gold 2017.10.25 7,600,344.94 7,600,344.94 Well Mining Co. Ltd

– F-278 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Date of disposal Company Name Date of disposal Total asset Total liabilities Total owner’s equity Congo King Kong 2017.12.31 350,619.70 350,619.70 Mining Co. Ltd Gansu Jinao Mining 2017.12.31 3,369,704.55 3,369,704.55 Resources Co. Ltd (Continued)

31-12-2016 Company Name Date of disposal Total asset Total liabilities Total owner’s equity Yiwu County Summoning Metal 2017.12.18 22,924.25 25,963.07 -3,038.82 Mining and Selection Co. Ltd Lianyungang Gold 2017.10.25 7,600,344.94 7,600,344.94 Well Mining Co. Ltd Congo King Kong 2017.12.31 350,619.70 350,619.70 Mining Co. Ltd Gansu Jinao Mining 2017.12.31 3,348,855.30 3,348,855.30 Resources Co. Ltd ĹThe operating results of atomics from the beginning of this year to the disposal date in 2017

Early this year to disposal date Company Name Date of disposal Revenues Cost Net profit Yiwu County Summoning Metal Mining 2017.12.18 and Selection Co. Ltd Lianyungang Gold Well Mining Co. Ltd 2017.10.25

Congo King Kong Mining Co. Ltd 2017.12.31 245,109.49 -245,109.49

Gansu Jinao Mining Resources Co. Ltd 2017.12.31 28,099.97 7,250.72 20,849.25

VIII. Detailed information to important items of consolidation financial statements Those items (including the main items in financial statements) use yuan as one unit unless otherwise stated;

1. Cash and Cash equivalents Items 31-12-2018 31-12-2017

Cash 263,936.41 1,533,542.09

Bank Deposit 6,526,512,035.89 6,215,082,304.44

Other monetary asset 1,347,485,285.05 244,937,757.62

– F-279 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Items 31-12-2018 31-12-2017

Total 7,874,261,257.35 6,461,553,604.15 Includong: Total amount deposited outside 3,377,815,105.51 2,226,674,909.74 PRC Note: Restricted cash and cash equivalents like mortgage, pledge or freeze which mentioned above may detailed in note VIII. No. 57 “Assets with restricted ownership or use rights”.

2. Financial assets with fair value through profit and loss Items 31-12-2018 31-12-2017 Financial assets designated to be measured at fair value and whose changes are included in 114,854,722.14 1,415,563.17 current profits and losses. including˖Debt Instrument Investment

Equity instrument investment

Derivative financial products 114,854,722.14 1,415,563.17

Total 114,854,722.14 1,415,563.17

3. Note Receivable

(1) Classification of note receivable

31-12-2018 31-12-2017 Provi Provi sion Items sion for Book balance for Book value Book balance Book value bad bad debt debts s Bank accepta 941,118,153.55 941,118,153.55 1,146,135,266.37 1,146,135,266.37 nce bills Comme rcial 107,370,989.47 107,370,989.47 262,811,919.10 262,811,919.10 accepta nce bills Total 1,048,489,143.02 1,048,489,143.02 1,408,947,185.47 1,408,947,185.47

(2) The notes receivable that has been pledged by the company at end of 2018

Items The pledged amount on 31-12- 2018

Bank acceptance bills 214,393,412.92

Total 214,393,412.92

– F-280 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Note: Notes receivable with restricted ownership are detailed in Notes VIII, 57, assets with restricted ownership and use rights.

(3) Notes receivable endorsed or discounted at the end of the year and not yet due on the balance sheet date Termination of Confirmation Unterminated Confirmation Items Amount on 31-12-2018 Amount on 31-12-2018 Bank acceptance bills 146,568,906.63

Total 146,568,906.63

4. Accounts Receivable 31-12-2018

Classification Book balance Book balance Proportion Proportion Amount Amount (%) (%) Individually significant and assessed for 1,078,654,772.92 23.87 1,078,654,772.92 100.00 impairment individually According to the credit risk characteristics of the combination of provision for bad 3,411,486,352.50 75.49 461,899,893.82 13.54 debts to receivables Including: Age combination 3,411,486,352.50 75.49 461,899,893.82 13.54 Association Combination within Merge Range Individually insignificant but assessed for 28,946,853.70 0.64 28,946,853.70 100.00 impairment individually Total 4,519,087,979.12 100.00 1,569,501,520.44 —

(Continued)

31-12-2017

Classification Book balance Book balance Proportion Proportion Amount Amount (%) (%) Individually significant and assessed for 1,288,791,800.11 27.48 1,190,451,733.92 92.37 impairment individually According to the credit risk characteristics of the combination of provision for bad 3,391,011,408.50 72.32 250,274,559.29 7.38 debts to receivables Including: Age combination 3,391,011,408.50 72.32 250,274,559.29 7.38 Association Combination within Merge Range Individually insignificant but assessed for 9,481,675.44 0.20 9,087,040.63 95.84 impairment individually Total 4,689,284,884.05 100.00 1,449,813,333.84 —

– F-281 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

(1) Accounts receivable of individual significance subject to individually assessment for impairment at the end of year Book value on Name of debtors Bad debt Age Rate (%) Reasons 31-12-2018 Tibet Huili Investment Above 5 Less possibility 297,912,168.04 297,912,168.04 100.00 Co., Ltd. years of recovery. Jiangxi Pansen Less possibility 209,878,336.20 209,878,336.20 4-5 years 100.00 Trading Co., Ltd. of recovery. Shanghai Jitian 2-3 years Less possibility Investment Group 175,203,420.10 175,203,420.10 3-4 years 100.00 of recovery. Co., Ltd. 4-5 years Hangzhou Fuyun 2-3 years Less possibility Industry& Trade Co., 158,637,555.50 158,637,555.50 Above 5 100.00 of recovery. Ltd. years Tibet Jiaxu Material Above 5 Less possibility 140,442,768.00 140,442,768.00 100.00 Trade Co., Ltd. years of recovery. Shanghai Jinjin Less possibility 32,253,541.25 32,253,541.25 4-5 years 100.00 Industry Co., Ltd. of recovery. Gansu Xinchuan Above 5 Less possibility 32,313,885.42 32,313,885.42 100.00 Chemical Co., Ltd. years of recovery. Jiangxi Jiangli Less possibility 32,013,098.41 32,013,098.41 4-5 years 100.00 Sic-Tech Co., Ltd. of recovery. Total 1,078,654,772.92 1,078,654,772.92 — — —

(2) Accounts receivable portfolio subject to impairment by credit risk Aging analysis method

31-12-2018

Aging Book value Bad debt provisions Amount Rate (%)

Within 1 year (inclusive) 2,480,763,117.22 72.72

1-2 years (inclusive) 262,850,581.01 7.70 26,285,058.10

2-3 years (inclusive) 122,430,582.19 3.59 36,729,174.67

3-4 years 7,469,564.59 0.22 3,734,782.30

4-5 years 476,072,095.81 13.95 333,250,467.07

Over 5 years 61,900,411.68 1.82 61,900,411.68

Total 3,411,486,352.50 100.00 461,899,893.82

(Continued)

31-12-2017

Aging Book value Bad debt provisions Amount Rate (%)

– F-282 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

31-12-2017

Aging Book value Bad debt provisions Amount Rate (%)

Within 1 year (inclusive) 2,443,563,134.85 72.06

1-2 years (inclusive) 255,214,241.50 7.53 25,521,424.15

2-3 years (inclusive) 35,564,832.43 1.05 7,112,966.49

3-5 years 627,184,330.08 18.50 188,155,299.01

Over 5 years 29,484,869.64 0.86 29,484,869.64

Total 3,391,011,408.50 100.00 250,274,559.29

(3) Accounts receivable with provision for bad debts at the end of the year, though not significant. Book value Name of debtors on Bad debt Age Rate (%) Reasons 31-12-2018 The debtor is involved in legal Tianjin Xinsheng Hongta New 2-3 years 9,750,074.84 9,750,074.84 100.00 disputes and Materials Technology Co., Ltd. the assets are frozen Less than Ningxia Kejie Lithium Battery Co., Less possibility 5,281,285.27 5,281,285.27 1 year 100.00 Ltd. of recovery. 1-2years Nantong Ruixiang New Materials Less possibility 3,679,139.00 3,679,139.00 3-4 years 100.00 Co., Ltd. of recovery. Shanghai Tenghang Metal Less possibility 3,517,163.42 3,517,163.42 4-5 years 100.00 Materials Co., Ltd. of recovery. Less possibility Liaoning Yike Copper Co., Ltd. 2,988,706.58 2,988,706.58 4-5 years 100.00 of recovery. Chengdu Jingyuan New Less possibility 1,609,000.00 1,609,000.00 3-4 yearss 100.00 Materials Technology Co., Ltd. of recovery. 2-3 years Less possibility Reshine(H.K) Industrial Co.Ltd 877,096.37 877,096.37 100.00 of recovery. Less possibility Finland nickel industry 759,552.43 759,552.43 1-2 years 100.00 of recovery. Hubei Qiheng Commerce and Less possibility 423,332.45 423,332.45 4-5 years 100.00 Trade Co., Ltd. of recovery. Haian Jinquan Electrical Less possibility 61,503.34 61,503.34 1-2 years 100.00 Equipment Co., Ltd. of recovery. 28,946,853.7 Total 28,946,853.70 — — — 0

(4) Preparedness for bad debts recovered or returned

– F-283 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Reasons and Accumulated provision Return or recover methods of Name of debtors for bad debts before amount turning back or return or recovery retrieving Matrix metal Resources Pte. The debts have 40,037,344.74 40,037,344.74 Ltd been recovered The debts have Shanghai Jitian Investment 25,117,817.79 25,117,817.79 been recovered Group Co., Ltd. partially Blue Star Silicon Materials The debts have 2,107,692.00 2,107,692.00 Co., Ltd. been recovered Total 67,262,854.53 67,262,854.53

(5) Actual write-off of accounts receivable in the year of 2018 Write-off If it is due The nature of procedures to related Write off Write off Name of Debtors accounts for party amount reason receivable performanc transaction e s Sunan Yugur Salon Mining Approved by Debt 11,049,148.00 Uncollectible No Company the Board Xining Special Steel Co., Maintenance Approved by 697,538.26 Uncollectible No Ltd fund the Board Approval by Lanzhou Yuanda General 498,097.31 Uncollectible No Technology Co., Ltd. Debt Manager's Office Wenzhou Kaiyi Metal Co., Approved by Debt 337,527.74 Uncollectible No Ltd. the Board Linze Branch of Beijing Maintenance Approved by Aurigin Seed Industry Co., 96,000.00 Uncollectible No fund the Board Ltd. Approval by Shanghai Chaoneng General Debt 46,918.49 Uncollectible No Industrial Co., Ltd. Manager's Office Yongchang Distribution Approved by Debt 5,739.55 Uncollectible No Center-Cui Zhiping the Board Approval by Taian Pulead Technology General Industry Co., Ltd. Debt 686.23 Uncollectible No Manager's Office Total 12,731,655.58

(6) Status of accounts receivable in the top five of the year-end balances collected by the debtor. Percentage in Book value on Bad debt Name of Debtors total accounts 31-12-2018 provision receivable Changtaixing (Shanghai) Investment 861,467,812.81 19.06 Management Co., Ltd. Tibet Huili Investment Co., Ltd. 297,912,168.04 6.59 297,912,168.04

– F-284 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Percentage in Book value on Bad debt Name of Debtors total accounts 31-12-2018 provision receivable State Grid Gansu Electric Power 269,163,855.38 5.96 Company Jiangxi Pansen Trading Co., Ltd. 209,878,336.20 4.64 209,878,336.20 Shanghai Qichang Metal Trading Co., 185,537,125.68 4.11 129,875,987.98 Ltd. Total 1,823,959,298.11 40.36 637,666,492.22

(7) Accounts receivable that are not confirmed by the transfer of financial assets at the end of the year.

(8) At the end of the year, there is no transfer of accounts receivable, such as securitization, factoring, etc., and the assets and liabilities formed continue to be involved.

5. Prepayments

(1) Aging of prepayments

31-12-2018 31-12-2017 Aging Book value Bad Debt Book value Bad debt

Amount Rate (%) Amount Rate (%) Within 1 year 1,910,523,698.94 93.48 1,484,943,010.57 82.66 (inclusive) 1-2 years 42,106,467.85 2.06 162,178,231.97 9.03 (inclusive) 2-3 years 13,795,590.23 0.67 25,878,243.23 1.44 (inclusive) Over 3 years 77,425,577.11 3.79 57,863,115.90 123,386,612.02 6.87 65,084,487.11

Total 2,043,851,334.13 100.00 57,863,115.90 1,796,386,097.79 100.00 65,084,487.11

(2) Large amount of advance payment with aging over 1 year Reasons for Unsettled Name of debtors Balance on 31-12-2018 Aging Settlements Tongmen County Government 30,000,000.00 1-2 year Land advance payments Congo International Mining Advance Trade Working 18,902,700.00 Over 5 years Corporation Capital Zhejiang Xinrui Air Separation Plant Advance payment for 18,543,192.77 Over 5 years Co. Ltd. equipment Jinan Junmu Copper Industry Co., 13,613,829.95 2-3years Uncollected goods Ltd. SADRC 11,636,823.21 Over 5 years There are legal disputes

Total 92,696,545.93 ——

– F-285 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

(3) The top five prepayments classified by debtors are as follows: Balance on Proportion Provision for bad Name of debtors 31-12-2018 (%) debt Zhongyi Knitting Import and Export 226,667,703.74 11.41 Corporation Shanghai HuaYi Engineering Co. Ltd (HYEC) 96,024,538.00 4.84

ABN AMRO Bank N .V 67,738,070.40 3.41

Beijing Tietong International Trade Co., Ltd. 55,157,696.13 2.78

Fujian Youxixiongfeng Mining Co., Ltd. 36,802,834.68 1.85

Total 482,390,842.95 24.29

6.Other Receivable Item Balance on 31-12-2018 Balance on 31-12-2017

Interest receivable 10,427,380.06 12,186,293.74

Dividend receivable 13,883,150.83 6,000,000.00

Other receivable 10,055,684,325.94 8,096,334,948.18

Total 10,079,994,856.83 8,114,521,241.92

(1) Interest Receivable ķ Interest Receivable classification

Items 31-12-2018 31-12-2017

Fixed deposit 1,500,562.18 127,891.21

Entrusted loan 622,772.11 104,500.00

Others 8,304,045.77 11,953,902.53

Total 10,427,380.06 12,186,293.74

ĸ There is no significant overdue interest at the end of the year.

(2) Dividends receivable Whether the Reason impairment Item 31-12-2018 31-12-2017 for not occurs and the collecting basis for its judgment Aging within one year 7,883,150.83 6,000,000.00 including: Baotou Huading Copper 7,883,150.83 6,000,000.00 Development CO.LTD. Aging over one year 6,000,000.00

– F-286 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Whether the Reason impairment Item 31-12-2018 31-12-2017 for not occurs and the collecting basis for its judgment Including˖Baotou Huading Copper 6,000,000.00 Development CO.LTD. Total 13,883,150.83 6,000,000.00 — —

(3) Other receivables

31-12-2018

Book balance Provision for bad debt Types Amount Rate(%) Amount Rate(%) Individually significant and assessed for impairment 5,791,062,954.23 54.22 187,314,895.25 3.92 individually According to the credit risk characteristics of the portfolio of provision for bad debts to other account 4,890,500,992.33 45.78 438,564,725.37 7.43 receivables Including: Age combination 4,890,500,992.33 45.78 438,564,725.37 7.43

Association Combination within Merge Range Individually insignificant but assessed for impairment individually Total 10,681,563,946.56 — 625,879,620.62 —

(Continued)

31-12-2017

Types Book balance Provision for bad debt

Amount Rate(%) Amount Rate(%) Individually significant and assessed for impairment 4,117,548,036.31 46.62 62,160,400.00 1.51 individually According to the credit risk characteristics of the portfolio of provision for bad debts to other account 4,715,167,206.45 53.38 674,219,894.58 14.30 receivables Including: Age combination 4,715,167,206.45 53.38 674,219,894.58 14.30

Association Combination within Merge Range Individually insignificant but assessed for impairment individually Total 8,832,715,242.76 100.00 736,380,294.58 —

ķ Other account receivable of individual significance subject to individually assessment for impairment at the end of year Balance by Bad debt Rate Name of Debtors Aging Reasons 31-12-2018 provision (%)

– F-287 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Balance by Bad debt Rate Name of Debtors Aging Reasons 31-12-2018 provision (%) Gansu Province Xinye Within 1 year, 1-2 Assets Management 5,065,585,760.00 years Co., Ltd. Luoyang Xingyuan Investment Copper Industry Co., 366,993,882.73 Within 1 year fund Ltd. Within 1 yearˈ less Headquarters of 1-2years. 187,314,895.25 187,314,895.25 100.00 possibility of Jinchuan Company 2-3yearsˈ recovery. 3-4years Within 1 yearˈ 1-2yearsˈ Staff Hospital of 2-3yearsˈ 171,168,416.25 Jinchuan Company 3-4yearsˈ 4-5yearsˈOver 5 years Total 5,791,062,954.23 187,314,895.25 — — —

ĸ Other account receivable portfolio subject to impairment by credit risk. A. Aging analysis of provision for bad debts of other receivables

Balance by 31-12-2018

Aging Book balance Provision for bad debts Amount Rate (%)

Within 1 year (inclusive) 4,025,937,388.02 82.31

1-2 years (inclusive) 429,631,156.71 8.79 42,965,290.67

2-3 years (inclusive) 21,389,588.43 0.44 6,416,876.54

3-4 years 13,565,556.90 0.28 6,782,778.45

4-5 years 58,590,956.00 1.20 41,013,669.20

Over 5 years 341,386,346.27 6.98 341,386,110.51

Total 4,890,500,992.33 100.00 438,564,725.37

(Continued)

Balance by 31-12-2017

Aging Book balance Provision for bad debts Amount Rate (%)

Within 1 year (inclusive) 3,562,941,345.24 75.56 -

1-2 years (inclusive) 120,707,648.92 2.56 12,070,764.90

2-3 years (inclusive) 129,013,247.12 2.74 25,802,649.42

– F-288 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Balance by 31-12-2017

Aging Book balance Provision for bad debts Amount Rate (%)

3-5 years 380,226,407.02 8.06 114,067,922.11

Over 5 years 522,278,558.15 11.08 522,278,558.15

Total 4,715,167,206.45 100.00 674,219,894.58

ĹOther receivables in the top five of the year-end amounts collected by the debtor Percentage Nature of Balance by of other Bad debt Name of debtors Aging fund 31-12-2018 receivables provision (%) Gansu Province Exchange and Xinye Assets transfer of 5,065,585,760.00 1-2years 47.42 Management Co.ˈ equity Ltd Gansu Province Economy Transfer of 996,059,440.00 Within1 year 9.33 Cooperation equity Corporation Within 1 year, Gansu Jinyuan 1-2years, Intercourse Coal Industry Co., 451,197,436.58 2-3years, 4.22 54,750,564.60 funds Ltd. 3-4years, 4-5years Luoyang Xingyuan Intercourse Copper Industry 366,993,882.73 Within 1 year 3.44 funds Co., Ltd. China Gold Group Intercourse Yangshan Gold 255,601,584.90 Over 5 years 2.39 255,601,584.90 funds Mine Co., Ltd. Total — 7,135,438,104.21 66.80 310,352,149.50

ĺThe actual write-off of other receivables in the current year Write-off Nature of If it is due to Write off Reason for procedures Name od debtors other related party amount write-off for receivables transactions performance Triway International Approved by Debts 62,160,400.00 Uncollectible No Ltd the Board Total 62,160,400.00

7. Inventories

(1) Classification of Inventories

31-12-2018 Items Impairment Book balance Book value provision

– F-289 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

31-12-2018 Items Impairment Book balance Book value provision In-transit Material/Material Procurement 2,727,497,523.02 133,138,374.04 2,594,359,148.98

Raw Materials 3,046,059,855.77 716,860,031.12 2,329,199,824.65

In products 548,128,581.28 190,186,076.03 357,942,505.25

Self-made semi-finished products 6,186,957,660.24 51,346,470.68 6,135,611,189.56

Inventory goods 6,786,864,732.20 758,610,362.55 6,028,254,369.65 Turnover materials (packaging, low 168,285.52 168,285.52 value consumables, etc.) Entrusted processing materials 93,757,204.54 285,617.04 93,471,587.50

Goods sold 253,066,666.36 90,971,589.29 162,095,077.07

Developing products under construction 1,587,200,832.86 1,587,200,832.86 engineering construction 108,164,751.32 108,164,751.32

Consumable biological assets 2,354,936.22 2,354,936.22

Total 21,340,221,029.33 1,941,398,520.75 19,398,822,508.58

(Continued)

31-12-2017 Items Impairment Book balance Book value provision In-transit Material/Material Procurement 2,554,150,771.63 2,554,150,771.63

Raw Materials 2,033,783,983.99 1,151,662.42 2,032,632,321.57

In products 574,928,479.73 19,906,017.61 555,022,462.12

Self-made semi-finished products 7,125,740,691.96 128,834,276.13 6,996,906,415.83

Inventory goods 6,868,960,615.35 256,350,902.23 6,612,609,713.12 Turnover materials (packaging, low 40,580,346.53 40,580,346.53 value consumables, etc.) Entrusted processing materials 1,774,218,870.64 1,774,647,270.45

Goods sold 582,369,267.93 103,282,607.39 479,086,660.54

Developing products under construction 1,662,629,964.24 1,662,629,964.24

Engineering construction 179,586,962.19 179,586,962.19

Consumable biological assets 428,399.81 428,399.81

Total 23,397,378,354.00 509,525,465.78 22,887,852,888.22

– F-290 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Note: The inventory with restricted ownership is detailed in Notes VIII, 57, and the assets with restricted ownership and use rights.

8. Other current assets Items 31-12-2018 31-12-2017 Relevant taxes and fees to be 1,882,951,832.56 1,341,489,423.20 deducted and paid Interest liabilities margin 942,224,564.38 Financial Products Purchased and 62,890,000.00 700,581,523.92 Structural Deposits Others 2,923.87 176,156,587.72

Total 1,945,844,756.43 3,160,452,099.22

9. Available for sale financial assets

(1) Available-for-sale financial assets classification

31-12-2018 31-12-2017 Items Depreciation Depreciation Book balance Book value Book balance Book value reserves reserves Debt instrument

Equity instrument 3,307,453,125.17 342,915,767.91 2,964,537,357.26 2,884,763,568.88 342,915,767.91 2,541,847,800.97 Include˖Measured 1,797,813,218.72 341,343,838.58 1,456,469,380.14 636,854,006.85 341,343,838.58 295,510,168.27 at fair value Measured at cost 1,509,639,906.45 1,571,929.33 1,508,067,977.12 2,247,909,562.03 1,571,929.33 2,246,337,632.70

Others

Total 3,307,453,125.17 342,915,767.91 2,964,537,357.26 2,884,763,568.88 342,915,767.91 2,541,847,800.97

(2) Details of financial assets available for sale Increase for the Decrease for the Items 31-12-2017 31-12-2018 current year current year Beijing Zhongse Hi-Tech Investment 624,249.05 624,249.05 Development Co., Ltd. Tibet Jindewang Mining Industry Co., 4,000,000.00 4,000,000.00 Ltd. Zhongse International Mining Co., Ltd. 6,000,000.00 6,000,000.00

China ENFI Engineering Corporation 101,752,266.67 101,752,266.67 China Metallurgical Jilin Mining 216,060,000.00 216,060,000.00 Development Co., Ltd. Shanxi Taiganag Stainless Steel 5,700,000.00 5,700,000.00 Precision Strip Co., Ltd. Zhongyanyabulai Salination Group Co., 560,000.00 560,000.00 Ltd

– F-291 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Increase for the Decrease for the Items 31-12-2017 31-12-2018 current year current year Harbin Dongqing Special Materials Co., 8,000,000.00 8,000,000.00 Ltd. Shaanxi Jianchaling Nickel Industry 35,000,000.00 35,000,000.00 Co., Ltd. Wanbao Resources (Hong Kong) Co., 18,182,337.98 18,182,337.98 Ltd. National Engineering Research Center of Advanced Energy Storage Materials 10,000,000.00 10,000,000.00 Co., L Bank Of Tibet Co., Ltd 45,000,000.00 45,000,000.00

Gansu Jinyuan Coal Industry Co., Ltd. 714,000,000.00 714,000,000.00

Gansu Bank Co., Ltd. 734,388,779.00 576,559,436.26 1,310,948,215.26 Gansu Jiu Steel Group Hongxing Iron 15,080,002.08 5,009,091.60 10,070,910.48 and Steel Co., Ltd. Canada Gobi Mining Co., Ltd. 17,545,236.15 8,829,323.15 8,715,913.00 Australian Red Stone Resources Co., 47,627.87 3,941.72 51,569.59 Ltd. Australian Metal X Co., Ltd. 233,046,528.00 142,819,028.00 90,227,500.00

Australian Fox company 335,106.24 17,621.24 317,485.00 New Zealand Asian Mineral Resources 728,126.00 6,325,214.00 7,053,340.00 Co.,Ltd. Dunhuang Wenbo Investment Co., Ltd. 100,000,000.00 100,000,000.00 China Gold International Resources 18,729,352.52 4,200,744.95 14,528,607.57 Corp. Ltd. Maseve Ltd 9,998,189.41 5,593,349.07 4,404,840.34 Runbo (Tianjin) Equity Investment Fund 100,000,000.00 100,000,000.00 Partnership (Limited Partnership) Zhejiang Xinrui Air Separation Plant 11,770,000.00 11,770,000.00 Co.Ltd. Gansu Jinchuan Shenwu Resources Comprehensive Utilization Technology 35,000,000.00 35,000,000.00 Co., Ltd. Haitong Qidong (Weihai) Equity 300,000.00 300,000.00 Investment Fund Management Co., Ltd. Haitong Qidong (Weihai) Equity Investment Fund Partnership (Limited 100,000,000.00 8,922,000.00 91,078,000.00 Partnership) Belvedere Company 10,150,998.90 10,150,998.90 Guojin Metal Network Information 5,041,123.42 5,041,123.42 Technology Co., Ltd. Total. 2,541,847,800.97 598,080,714.30 175,391,158.01 2,964,537,357.26

(3) Saleable financial assets measured at fair value at the end of the year Available-for-sal Available-for-sal Othe Items e equity e Total r instrument Debt instrument

100

– F-292 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Available-for-sal Available-for-sal Othe Items e equity e Total r instrument Debt instrument The cost of equity instrument /amortized cost 1,894,395,386.61 1,894,395,386.61 of debt instruments Fair value 1,456,469,380.14 1,456,469,380.14 Amount of changes in fair value that are -96,582,167.89 -96,582,167.89 included in other comprehensive income The amount of impairment provision 341,343,838.58 341,343,838.58

10.Long-term receivables

(1) The situation of Long-term receivables End-of-y ear 31-12-2018 31-12-2017 discount rate Items interval Provision Provision Book balance for bad Book value Book balance for bad Book value debts debts BT project 89,381,054.04 89,381,054.04 54,806,101.35 54,806,101.35 project payment Finance lease 42,000,000.00 42,000,000.00 deposit Others 623,373.58 623,373.58

Total 131,381,054.04 131,381,054.04 55,429,474.93 55,429,474.93

(2) Long-term receivables which are not terminated due to the transfer of financial assets at the end of the year.

(3) Assets and liabilities formed by non-transferring long-term receivables and continuing involvement at the end of the year.

11. Long-term equity investment

(1) Classification of long-term equity investment Items 01-01-2018 Increasing Decreasing 31-12-2018

Investment in joint venture 12,112,969.78 52,628.30 12,165,598.08

Investment in join ownership 1,022,157,814.55 413,396,371.17 101,144,978.18 1,334,409,207.54

Others 175,670.10 175,670.10

Subtotal 1,034,446,454.43 413,448,999.47 101,320,648.28 1,346,574,805.62 Less ˖impairment provision for long-term equity investment Total 1,034,446,454.43 413,448,999.47 101,320,648.28 1,346,574,805.62

101

– F-293 – other income Adjustment on on Adjustment comprehensive comprehensive Jinchuan Ltd. Co., Group 52,628.30 52,628.30 355,207.68 -549,724.31 -408,578.97 -8,618,198.02 54,388,504.53 -25,764,098.70 -11,037,922.12 equity method equity Profit or loss on or loss Profit investment under investment under Changes in current year Changes in current Credit 46,883,305.23 Notes to the Financial Statements from 01-01-2017 to 12-31-2018 to 01-01-2017 from Statements Financial the to Notes Debit 10,400,000.00 102 6,000,000.00 6,277,173.76 5,300,000.00 12,112,969.78 5,300,000.00 12,112,969.78 49,500,000.00 46,883,305.23 15,000,000.00 360,000,000.00 326,166,234.22 120,000,000.00 120,000,000.00 249,900,000.00 255,173,147.57 148,000,000.00 143,185,156.54 60,000,000.00 1,331,246,117.24 1,022,157,814.55 306,912,500.00 46,883,305.23 8,365,190.09 51,740,158.96 1,336,721,279.74 1,034,446,454.43 306,912,500.00 47,058,975.33 8,417,818.39 51,740,158.96 Investment costInvestment 01-01-2018 [English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, English and the Chinese between inconsistency be any there Should only. purpose for shall is translation prevail] version the version [English Chinese Co., Ltd. 10,400,000.00 Co., Ltd. Total Invested Units (2) Details for long-term equity investment 1. Joint Venture Gansu Jinchuan Jindinghui Material 2. Association China Gold Group Yangshan Gold Mine Co., Ltd. Gansu Electricity Publishing and Co., Ltd.Selling Lanzhou Jinchuan Keliyuan Battery Co., Ltd. Gansu Jinni Chemical Co., Ltd. Huading CopperBaotou Development Co.,Ltd. Tibet Jiaxu Material Trade Co., Ltd. Zhejiang Zhongjin Gepai Lithium IndustryElectricity Co., Ltd. Gansu Jinchuan Hengxin Polymer Technology Co., LtdGansu Jinchuan Zhanggu Fluid Technology 6,000,000.00 4,758,777.70

– F-294 – other income 51,740,158.96 Adjustment on on Adjustment comprehensive comprehensive for impairment Jinchuan Ltd. Co., Group Closing balance for provision provision for balance Closing equity method equity Profit or loss on or loss Profit investment under investment under 6,632,381.44 12,165,598.08 12,165,598.08 300,402,135.52 246,554,949.55 1,334,409,207.54 1,361,574,805.62 31-12-2018 Changes in current year Changes in current 175,670.10 175,670.10 Credit other Notes to the Financial Statements from 01-01-2017 to 12-31-2018 to 01-01-2017 from Statements Financial the to Notes Debit 236,512,500.00 impairment Provision for Provision 103 7,883,150.83 7,883,150.83 Change in current year Change in current Cash Dividend 175,162.50 175,670.10 175,162.50 175,670.10 236,512,500.00 129,933,617.24 119,714,019.53 Investment costInvestment 01-01-2018 changes Other equity [English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, English and the Chinese between inconsistency be any there Should only. purpose for shall is translation prevail] version the version [English Chinese Ltd. Ltd. Co., Ltd. Co., Ltd. 2. Association 1. Joint Venture Invested Units Total Invested Units Invested (Continued) (Continued) Gansu Electricity Publishing and Selling China Gold Group Yangshan Gold Mine Lanzhou Jinchuan Keliyuan Battery Co., Gansu Jinchuan Jindinghui Material Co., Indonesia PT Rimba Indonesia PT Alam Kurnia Hunan Rexiang New Material Co., Ltd. 3.Other companies Mining Company Xinka-China

– F-295 – for impairment Jinchuan Ltd. Co., Group Closing balance for provision provision for balance Closing 9,850,275.69 4,350,198.73 236,512,500.00 108,962,077.88 249,690,510.24 171,454,178.49 31-12-2018 other Notes to the Financial Statements from 01-01-2017 to 12-31-2018 to 01-01-2017 from Statements Financial the to Notes impairment Provision for Provision 104 7,883,150.83 Change in current year Change in current Cash Dividend changes Other equity [English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, English and the Chinese between inconsistency be any there Should only. purpose for shall is translation prevail] version the version [English Chinese Co.,Ltd. Technology Co., Ltd Technology Co., Ltd. 3.Other companies Electricity IndustryElectricity Co., Ltd. Invested Units Invested Xinka-China MiningXinka-China Company Gansu Jinni Chemical Co., Ltd. Gansu Jinchuan Zhanggu Fluid Zhejiang Zhongjin Gepai Lithium Indonesia PT Rimba Indonesia PT Alam Kurnia Gansu Jinchuan Hengxin Polymer Tibet Jiaxu Material Trade Co., Ltd. Baotou Huading CopperBaotou Development Hunan Rexiang New Material Co., Ltd.

– F-296 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

12. Investment properties

(1) Investment Real Estate calculated by cost Increase in Decline in Items 01-01-2018 31-12-2018 current year current balance Original book value 2,582,635,186.35 124,692.37 478,791,522.76 2,103,968,355.96

Including: House, buildings 2,582,635,186.35 124,692.37 478,791,522.76 2,103,968,355.96 Accumulated depreciation 74,869,497.91 47,502,964.41 10,107,821.04 112,264,641.28 (amortization) Including: House, buildings 74,869,497.91 47,502,964.41 10,107,821.04 112,264,641.28 Net book value of investment 2,507,765,688.44 1,991,703,714.68 property Including: House, buildings 2,507,765,688.44 1,991,703,714.68 Accumulative amount of investment property Including: House, buildings Book value of investment 2,507,765,688.44 1,991,703,714.68 property Including: House, buildings 2,507,765,688.44 1,991,703,714.68

Note: For details of investment real estate whose ownership is restricted, such as mortgage and pledge, see Notes VIII, 57, and assets whose ownership and right to use are restricted.

(2) Details of Investment Real Estate without property licenses at the end of the year 2018

User of the real estate Original book value depreciation Net book value Shanghai Hongding Real 653,635,666.59 13,798,975.18 639,836,691.41 Estate Co., Ltd. Shanghai Hongmao Real 1,036,294,999.84 21,877,338.89 1,014,417,660.95 Estate Co., Ltd.

13. Fixed assets Items 31-12-2018 31-12-2017

Fixed Asset 42,846,731,473.13 38,413,222,836.46

Total 42,846,731,473.13 38,413,222,836.46

(1) Details of fixed assets Items 01-01-2018 Addition Reduction 31-12-2018

Original book value 62,375,743,091.70 8,403,993,262.78 1,626,733,873.84 69,153,002,480.64

Including: Land assets 35,193,485.64 35,193,485.64

105

– F-297 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Items 01-01-2018 Addition Reduction 31-12-2018

House and buildings 35,875,679,215.65 5,096,578,750.73 1,189,813,890.08 39,782,444,076.30

Machinery equipment 25,863,796,057.94 3,293,266,431.19 423,129,432.82 28,733,933,056.31 Transportation 601,074,332.47 14,148,080.86 13,790,550.94 601,431,862.39 equipment Accumulated 23,726,031,539.25 2,734,562,576.10 616,628,395.12 25,843,965,720.23 depreciation Including: Land assets

House and buildings 11,777,317,504.47 989,684,234.77 342,624,758.21 12,424,376,981.03

Machinery equipment 11,526,308,258.92 1,726,296,126.46 261,485,082.96 12,991,119,302.42 Transportation 422,405,775.86 18,582,214.87 12,518,553.95 428,469,436.78 equipment Net book value of fixed 38,649,711,552.45 43,309,036,760.41 assets Including: Land assets 35,193,485.64 35,193,485.64

House and buildings 24,098,361,711.18 27,358,067,095.27

Machinery equipment 14,337,487,799.02 15,742,813,753.89 Transportation 178,668,556.61 172,962,425.61 equipment Provision for impairment 236,488,715.99 226,292,906.05 476,334.76 462,305,287.28 of fixed assets Including: Land assets

House and buildings 47,169,881.62 47,169,881.62

Machinery equipment 185,353,041.05 226,292,906.05 476,334.76 411,169,612.34 Transportation 3,965,793.32 3,965,793.32 equipment Book value of fixed 38,413,222,836.46 42,846,731,473.13 assets Including: Land assets 35,193,485.64 35,193,485.64

House and buildings 24,051,191,829.56 27,310,897,213.65

Machinery equipment 14,152,134,757.97 15,331,644,141.55 Transportation 174,702,763.29 168,996,632.29 equipment Note: The situation of the fixed assets whose ownership is restricted such as mortgage and pledge is detailed in Notes VIII 57, and the assets whose ownership and right of use are restricted.

14. Constructions in Progress Items 31-12-2018 31-12-2017

Construction in progress 9,572,928,531.77 13,765,502,662.42

Project goods and materials 387,769,446.06 71,945,070.32

Total 9,960,697,977.83 13,837,447,732.74

106

– F-298 – - 972,987.69 93,410,817.66 844,739,785.63 883,586,148.59 395,909,884.27 398,166,351.52 129,325,758.79 804,491,549.95 Book value Book 1,162,802,819.38 1,707,715,662.86 1,537,303,677.76 3,687,694,617.67 Jinchuan Ltd. Co., Group impairment 31-12-2017 Provision for Provision 972,987.69 1,162,802,819.38 Notes to the Financial Statements from 01-01-2017 to 12-31-2018 to 01-01-2017 from Statements Financial the to Notes 68,868,951.93 129,325,758.79 10,589,057.19 804,491,549.95 70,790,966.50 55,834,678.08 140,867,200.64 93,410,817.66 426,190,714.05 844,739,785.63 689,442,479.05416,075,191.94 883,586,148.59 340,828,118.76 395,909,884.27 522,537,872.38 398,166,351.52 123,305,217.00 1,707,715,662.86 1,537,303,677.76 4,266,172,458.91 3,687,694,617.67 Book valueBook balance Book 107 31-12-2018 impairment Provision for Provision 68,868,951.93 10,589,057.19 70,790,966.50 55,834,678.08 426,190,714.05 689,442,479.05 416,075,191.94 340,828,118.76 522,537,872.38 123,305,217.00 140,867,200.64 4,266,172,458.91 Book balance Book [English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, English and the Chinese between inconsistency be any there Should only. purpose for shall is translation prevail] version the version [English Chinese Project name Project (1) Details of Construction in Progress: in Progress: Construction of (1) Details 850 Project in No.2 Mining850 Project Area 400,000 tons copper smelting in Fangchenggang, Guangxi Mining of lean ore in Western Longshou Coal Mine 300 kt/apvc project newly built in chemical plant in Lean Mine Mining Project Eastern Jinchuan 400 kt/a ion-exchange membrane caustic soda II) (Phase Development and Utilization of No.3 Mining Area General technical renovation projects Metterius Project project Siveplatin for Project 100kt/a Body Precursor Ternary Lithium Ion Power (PhaseBatteries I) Deep Mining Engineering in No.2 Mining Area 35,000 tons of nickel sulfate technical transformation project

– F-299 – - - 661,696.28 328,301.88 7,881,616.69 2,530,090.57 463,286,446.82 Book value Book 1,644,694,448.41 13,765,502,662.42 Jinchuan Ltd. Co., Group impairment 31-12-2017 Provision for Provision 80,815,507.65 162,207.44 68,868,951.93 661,696.28 328,301.88 7,881,616.69 2,530,090.57 Notes to the Financial Statements from 01-01-2017 to 12-31-2018 to 01-01-2017 from Statements Financial the to Notes 30,246,726.01 25,409,281.15 11,118,520.45 60,134,912.55 18,537,343.02 44,741,039.72 20,302,031.45 1,442,554,001.73 463,286,446.82 Book valueBook balance Book 108 31-12-2018 impairment Provision for Provision Budget 01-01-2018 Increasing assets to fixed Transfer Decreasing 31-12-2018 409,215,000.00 129,325,758.79 20,520,908.23 1,550,000,000.00 1,162,802,819.38 64,889,981.15 1,227,692,800.53 44,741,039.72 20,302,031.45 60,134,912.55 30,246,726.01 18,537,343.02 25,409,281.15 11,118,520.45 830,050,546.58 41,668,777.32 788,381,769.26 1,644,694,448.41 1,442,554,001.73 9,614,597,309.09 41,668,777.32 9,572,928,531.77 13,765,502,662.42 Book balance Book [English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, English and the Chinese between inconsistency be any there Should only. purpose for shall is translation prevail] version the version [English Chinese Project Name Project Total Project name Project (2)Important construction in projects changes in the current period current in the changes projects in construction (2)Important 3 960 t/a Extension to 50 000 t/a to 50 000 3 960 t/a Extension Ternary Lithium Ion and for Power Precursor Batteries Sulfate Project 110 000 t/a Sodium by-product I) (Phase Copper 5000 t/a Special-shaped Project Strip Lead Frame for Electronic Ultra-low Emission Technological Revamping of 2*150MW Unit in Jinchuan Group Co., Ltd. II ProjectPhase of Low Temperature Waste Heat Utilization of Circulating Cooling Water for 2*150 MW Cogeneration Unit Upgrading of wastewater treatment system containing nickel and cobalt Extension4000t Ternary Precursor Project Resource Disposal of Hazardous Wastes in GansuCity, Jinchang Province Indonesia project Other items 850 Project in No.2 Mining850 Project Area 400,000 tons copper smelting in Fangchenggang, Guangxi

– F-300 – 55,834,678.08 44,741,039.72 18,537,343.02 10,589,057.19 20,302,031.45 30,246,726.01 60,134,912.55 70,790,966.50 340,828,118.76 416,075,191.94 140,867,200.64 689,442,479.05 123,305,217.00 426,190,714.05 4,266,172,458.91 Jinchuan Ltd. Co., Group 8,904,761.00 67,105,843.37 827,031,735.04 356,537,286.51 512,790,540.34 Notes to the Financial Statements from 01-01-2017 to 12-31-2018 to 01-01-2017 from Statements Financial the to Notes 55,834,678.08 44,741,039.72 20,302,031.45 30,246,726.01 109 30,000,000.00 66,484,600.00 71,690,000.00 328,301.88 18,209,041.14 Budget 01-01-2018 Increasing assets to fixed Transfer Decreasing 31-12-2018 817,500,000.00 395,909,884.27979,690,000.00 20,165,307.67 398,166,351.52 9,767,610.61 218,510,200.00 650,000,000.00 140,000,000.00 661,696.28 59,473,216.27 1,039,300,000.00 844,739,785.632,190,475,500.00 94,241,468.76 804,491,549.951,650,330,000.00 33,129,242.28 883,586,148.59 162,393,616.97 3,030,465,668.32 1,707,715,662.864,508,170,000.00 96,619,905.58 1,537,303,677.765,655,010,000.00 219,998,491.74 3,687,694,617.672,568,380,600.00 1,228,871,595.45 578,477,841.23 52,926,100.611,693,500,000.00 1,633,996,952.50 522,537,872.38 972,987.69 93,410,817.66 69,817,978.81 56,361,143.98 [English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, English and the Chinese between inconsistency be any there Should only. purpose for shall is translation prevail] version the version [English Chinese Project Name Project Mining of lean ore in Western Longshou Coal Mine 300 kt/apvc project newly built in chemical plant in Lean Mine Mining Project Eastern Jinchuan II)400 kt/a ion-exchange membrane caustic soda (Phase Development and Utilization of No.3 Mining Area General technical renovation projects Metterius Project Project Siveplatin for Ion Lithium Project Power 100kt/a Body Ternary Precursor I) (Phase Batteries Deep Mining Engineering in No.2 Mining Area 35,000 tons of nickel sulfate technical transformation project to 50 000 t/a Lithium for Power 3 960 t/a Extension Ternary Precursor Project and 110 000 t/a Sodium by-product Ion Batteries Sulfate I) (Phase Copper for 5000 t/a Special-shaped Project Lead Strip Electronic Frame Ultra-low Emission TechnologicalRevamping of 2*150MW Unit in Jinchuan Group Co., Ltd. II ProjectPhase of Low Temperature Waste Heat Utilization of Circulating Cooling Water for 2*150 MW Cogeneration Unit Upgrading of wastewater treatment system containing nickel and cobalt

– F-301 – 25,409,281.15 11,118,520.45 1,442,554,001.73 Sources of funds Sources Owned funds/loans Owned funds/loans Jinchuan Ltd. Co., Group 4.35 Owned funds/loans rate (%) Year Interest Year capitalization capitalization 15,451,579.87 this year Including: interest Including: interest capitalization amount amount capitalization Notes to the Financial Statements from 01-01-2017 to 12-31-2018 to 01-01-2017 from Statements Financial the to Notes of interest capitalized interest of The cumulative amount The cumulative amount 110 (%) (%) Project Project progress progress 40.76 100.00 43,044,085.25 7,869,246.97 4.35 Owned funds/loans 50.90 51.0038.98 51,123,356.74 40.00 16,351,835.60 4.35 Owned funds/loans 90.35 90.35 201,802,457.0241.64 43,106,800.00 46.00 4.35 Owned funds/loans 100,078,467.58 9,767,600.00 4.35 Owned funds/loans 64.09 64.0942.00 107,330,196.92 42.00 10,454,040.85 41,249,013.29 4.35 Owned funds/loans 16,309,762.62 4.35 Owned funds/loans 95.00 97.00 14,900,000.0068,090,000.00 7,881,616.69 17,527,664.46 2,530,090.57 8,588,429.88 Budget 01-01-2018 Increasing assets to fixed Transfer Decreasing 31-12-2018 157.78 100.00 198,759,132.39 3,762,000,000.00 463,286,446.825,065,315,323.40 1,644,694,448.41 994,719,134.78 532,000,293.05 1,346,644,194.88 41,668,777.32 788,381,769.26 36,179,026,891.72 13,765,502,662.42 3,208,025,751.86 7,305,842,797.14 94,757,085.37 9,572,928,531.77 budget (%) investment Project total Project proportion of the of the proportion [English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, English and the Chinese between inconsistency be any there Should only. purpose for shall is translation prevail] version the version [English Chinese Total Project Name Project Project Name Project (Continued) (Continued) 4000t Ternary Precursor Extension4000t Ternary Precursor Project Resource Disposal of Hazardous Wastes in Jinchang City, Gansu Province Indonesia project Other items in No.2 Mining850 Project Area 400,000 tons copper smelting in Fangchenggang, Guangxi Mining of lean ore in Western Longshou Coal Mine 300 kt/apvc project newly built in plant chemical in Lean Mine Mining Project Eastern Jinchuan 400 kt/a ion-exchange membrane caustic soda (Phase II) Development and Utilization of No.3 Mining Area General technical renovation projects Metterius Project

– F-302 – Sources of funds Sources Owned funds Owned funds/loans Owned funds Owned funds Owned funds Owned funds Owned funds Owned funds/loans Owned funds Owned Jinchuan Ltd. Co., Group rate (%) Year Interest Year capitalization capitalization 96,675.55 4.35 Owned funds/loans 799,935.03226,890.93 4.35 Owned funds/loans 4.35 Owned funds/loans this year Including: interest Including: interest capitalization amount amount capitalization Notes to the Financial Statements from 01-01-2017 to 12-31-2018 to 01-01-2017 from Statements Financial the to Notes 96,675.55 799,935.03 226,890.93 830,937,443.31 180,587,540.68 of interest capitalized interest of The cumulative amount The cumulative amount 111 (%) (%) Project Project progress progress 8.84 8.84 3.11 4.00 7.69 8.00 7.00 0.07 86,427,232.61 75,604,753.13 4.35 Owned funds/loans 1.71 2.00 75.44 76.00 25.55 26.00 67.6769.12 70.00 70.00 45.49 46.00 25.86 28.00 16.3342.53 18.00 45.00 budget (%) investment Project total Project proportion of the of the proportion [English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, English and the Chinese between inconsistency be any there Should only. purpose for shall is translation prevail] version the version [English Chinese Total ter for 2*150 MW Cogeneration Project Name Project SIVEPLATIN SIVEPLATIN PROJECT for Lithium Project 100kt/a Power Body Ternary Precursor I) (Phase Ion Batteries Deep Mining Engineering in No.2 Mining Area 35,000 tons of nickel sulfate technical transformation project to 50 000 t/a for 3 960 t/a Extension Ternary Precursor Lithium Ion and Power Batteries t/a Sodium 000 110 (Phase by-product Project Sulfate I) Copper for 5000 t/a Special-shaped Project Strip Electronic Lead Frame Ultra-low Emission Technological Revamping of 2*150MW Unit in Jinchuan Group Co., Ltd. II ProjectPhase of Low Temperature Waste Heat Utilization Coolingof Circulating Wa Upgrading of wastewater treatment system containing cobalt and nickel Extension4000t Ternary Precursor Project Resource Disposal of Hazardous Wastes in Jinchang City, Gansu Province Indonesia project Other items Unit

– F-303 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

(3) At the end of the year, the vacuum magnetron solar coating production line of Gansu Jinchuan Solar Energy Company could not achieve normal production because of the technical bottleneck. It was sealed in the workshop and left idle. The production line was deducted by 41,668,777.32 yuan.

(4) Project goods and materials

Item 31-12-2018 31-12-2017

Project materials 186,785,497.65 71,945,070.32 special equipment 200,983,948.41

Total 387,769,446.06 71,945,070.32

15. Productive biological assets

(1) The opening and closing balance of book value of biological assets subsequently measured at cost

31-12-2018 Increase Items 01-01-2018 Decline amount amount Amount quantity

Animal husbandry 1,570,800.00 2,452,598.96 554,400.00 3,468,998.96

Total 1,570,800.00 2,452,598.96 554,400.00 3,468,998.96

(2) Depreciation and impairment of productive biological assets at cost Balance of Estimated Estimated Depreciation accumulated Items net residual Items using life method depreciation by value 31-12-2018 Straight line Animal husbandry 1,755,600.00 method Total — — — 1,755,600.00

16. Intangible Assets Items 01-01-2018 Additional value Reduction value 31-12-2018

Original book value 14,318,350,497.93 175,063,433.26 92,656,477.23 14,400,757,453.96

Including: land use right 2,121,365,474.01 100,974,623.27 37,827,389.56 2,184,512,707.72

exploration rights 1,629,975,605.66 6,456,690.69 1,623,518,914.97

Prospecting right 10,445,250,250.80 73,548,851.00 48,372,396.98 10,470,426,704.82

Right to use sea area 84,638,490.00 84,638,490.00

112

– F-304 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Items 01-01-2018 Additional value Reduction value 31-12-2018

Proprietary technology 35,815,412.07 35,815,412.07

Software 1,305,265.39 539,958.99 1,845,224.38 Accumulative 4,101,431,005.71 129,710,972.91 33,354,883.14 4,197,787,095.48 amortization amount Including: land use right 233,381,743.44 16,030,668.79 32,141,663.18 217,270,749.05

Exploration rights 512,709,861.78 42,450,212.49 1,186,798.20 553,973,276.07

Prospecting right 3,311,296,372.22 68,755,000.00 26,421.76 3,380,024,950.46

Right to use sea area 10,390,513.15 1,692,769.80 12,083,282.95

Proprietary technology 33,320,945.93 249,446.64 33,570,392.57

Software 331,569.19 532,875.19 864,444.38 Amount of provision for impairment of intangible 815,484,200.18 6,240,414.97 809,243,785.21 assets Including: land use right 301,691,255.59 4,087,947.22 297,603,308.37

exploration rights 152,318,214.12 2,063,927.30 150,254,286.82

Prospecting right 361,474,730.47 88,540.45 361,386,190.02

Right to use sea area

Proprietary technology

software

Book value 9,401,435,292.04 9,393,726,573.27

Including: land use right 1,586,292,474.98 — 1,669,638,650.30

exploration rights 964,947,529.76 — 919,291,352.08

Prospecting right 6,772,479,148.11 — 6,729,015,564.34

Right to use sea area 74,247,976.85 — 72,555,207.05

Proprietary technology 2,494,466.14 — 2,245,019.50

software 973,696.20 — 980,780.00

Note: For details of intangible assets, whose ownership is restricted, such as mortgage and pledge, see Notes VIII 57, and assets whose ownership and right to use are restricted.

17. Goodwill Name of investee or events which Additional Reduced 01-01-2018 31-12-2018 formed goodwill value value Merger of Nickel Capital Industrial 267,508,495.91 267,508,495.91 Company under Different Control

113

– F-305 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Name of investee or events which Additional Reduced 01-01-2018 31-12-2018 formed goodwill value value Total 267,508,495.91 267,508,495.91

18. Long-term prepaid expenses Other Other Opening Additional reduce Closing reasons Items Amortization balance value d balance for amount reduction Land rental fee for new tailings 12,160,000.08 3,040,000.08 9,120,000.00 reservoir North Reservoir 45,823,491.7 Decoration fee 1,964,895.17 1,094,459.88 46,693,927.06 7 45,823,491.7 Total 14,124,895.25 4,134,459.96 55,813,927.06 7

19. Deferred Income Tax Assets and Deferred Income Tax Liabilities

(1) Confirmed deferred income tax assets and deferred income tax liabilities

31-12-2018 31-12-2017 Items Deferred income Deductible /taxable Deferred income Deductible /taxable tax temporary tax temporary assets/liabilities difference assets/liabilities difference 1.Deferred income tax 1,424,448,129.82 8,726,062,853.34 1,886,287,669.20 14,969,945,143.63 assets Asset impairment 472,211,464.12 2,660,609,044.48 310,078,053.47 1,796,141,915.96 provision Long-term salary 585,884,567.75 3,905,897,118.30 598,724,430.86 3,991,496,205.69 payable provision Floating profit and 1,646,202.69 6,584,810.76 32,114,826.64 136,844,740.67 loss of futures Estimated debts 167,512,912.11 1,116,752,747.40 167,512,912.11 1,116,752,747.40 Offset unrealized profits from internal 54,531,341.22 362,961,573.43 787,310.96 6,033,910.82 transactions Deductible loss 114,910,014.18 579,163,753.38 776,881,944.08 5,048,937,465.24

Other 27,751,627.75 94,093,805.59 188,191.08 627,303.60 2. Deferred Income 3,501,372,577.28 11,938,806,680.14 3,181,889,682.61 10,670,703,996.72 Tax Liabilities Changes in Fair Value of Transactional 4,353,054.30 17,412,217.21 Financial Assets Changes in the fair value of financial 67,819,426.24 452,129,508.24 8,012,728.87 53,418,192.46 assets available for sale Floating profit and 4,881,074.49 23,086,583.32 5,932,355.03 23,729,420.12 loss of futures

114

– F-306 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

31-12-2018 31-12-2017 Items Deferred income Deductible /taxable Deferred income Deductible /taxable tax temporary tax temporary assets/liabilities difference assets/liabilities difference Appreciation of evaluation of fixed 51,145,959.33 202,268,161.62 33,552,987.04 145,584,345.24 assets Others 3,373,173,062.92 11,243,910,209.75 3,134,391,611.67 10,447,972,038.90

Unconfirmed deferred income tax assets

Items 31-12-20018 31-12-2017

Deductible temporary differences 1,613,053,280.57 2,359,550,349.43

Deductible losses 5,221,092,422.95 4,744,533,465.59

Total 6,834,145,703.52 7,104,083,815.02

(2) Unconfirmed deferred income tax assets deductible losses will be expired in the following year

Year 31-12-2018 31-12-2017

2018 7,959,817.17 506,528,711.02

2019 885,633,815.69 943,901,180.13

2020 868,274,551.75 938,063,457.51

2021 1,856,977,615.00 1,888,904,763.42

2022 289,882,798.17 467,135,353.51

2023 1,312,363,825.17

Total 5,221,092,422.95 4,744,533,465.59

20. Other Non-current Assets Items 31-12-2018 31-12-2017

Deposit of Capital Discounted 128,380,439.78 709,559,493.82

Exploration expenditure 39,597,334.59 44,811,374.37

Other (Hong Kong Resources) 119,475,761.25 146,587,530.59

Deposit on Purchase of Equity 26,000,000.00

Engineering Equipment Section 106,469,055.33

Total 419,922,590.95 900,958,398.78

115

– F-307 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

21. Short-term Loans

(1) Classification of short-term loan

Item 31-12-2018 31-12-2017

Pledge loan 402,135,697.98 1,029,609,954.21

Mortgage loan 52,920,495.17 115,781,030.42

Guaranteed loan 150,000,000.00 987,987,385.86

Credit loan 22,493,230,664.37 23,121,269,408.26

Total 23,098,286,857.52 25,254,647,778.75

Note: Among the pledged loans at the end of the year 2018, CNY 402,135,697.98 of pledge material is worth CNY 24,134,942.44 of inventory and CNY 427,882,600.00 of performance bond At the end of the year 2018, CNY 52,920,495.17 of mortgage loan were: CNY 46,920,495.17 of mortgage loan mortgage system value CNY 46,920,495.17 of inventory;CNY 6,000,000.00 of mortgage system value CNY 167,027,029.17 of fixed assets. At the end of the year 2018, the guarantor of the loan of CNY 150,000,000.00 obtained by Shanghai Jinchuan International Trade Co., Ltd., a subsidiary of the company, is Jinchuan Group International Trade Co., Ltd.

(2) There are no short-term loans overdue at the end of the year 2018.

22. Financial liabilities measured at fair value and recorded in current profits and losses Items 31-12-2018 31-12-2017

Transactional financial liabilities 17,604,835.36 24,165,680.98

Total 17,604,835.36 24,165,680.98

23. Notes payables Items 31-12-2018 31-12-2017

Letter of credit 1,024,285,158.54 1,587,985,720.58

Banker's acceptance bill 1,577,203,248.24 2,111,642,799.08

Total 2,601,488,406.78 3,699,628,519.66

Note: At the end of the year, there is no unpaid notes payable due.

24. Account payables Aging 31-12-2018 31-12-2017

116

– F-308 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Aging 31-12-2018 31-12-2017

Within 1 year (inclusive) 3,465,492,774.00 4,036,312,703.50

1-2 years (inclusive) 1,693,142,530.47 2,714,032,355.72

2-3 years (inclusive) 1,562,851,164.75 1,533,875,539.80

Over 3 years 1,219,859,455.38 175,563,053.36

Total 7,941,345,924.60 8,459,783,652.38

Details for important payables aging over 1 year

Creditors 31-12-2018 Reason for unpaid

Provisional estimate of raw materials 2,801,888,699.12 Not settled yet Gansu Hengchang Construction 67,767,752.37 The project is not completed Engineering Co., Ltd. Shao Fuyuan 15,752,305.99 The project is not completed

Total 2,885,408,757.48 —

25. Advance receipts

(1) Age of Advances

Aging 31-12-2018 31-12-2017

Within 1 year (inclusive) 2,479,967,078.20 2,083,681,375.74

Over 1 year 426,531,647.38 247,344,839.83

Total 2,906,498,725.58 2,331,026,215.57

(2) Important advances over 1 year

Creditors 31-12-2018 Reason for uncarried Wuxi Jisheng Metal Material Co., 10,000,000.00 The contract is not yet executed Ltd. Foshan Judefu Steel Industry Co., 7,450,000.00 The contract is not yet executed Ltd. Gansu Senbo Mining Co., Ltd. 5,750,000.00 The contract is not yet executed Wuxi Daxinli International Trade Co., 4,360,120.00 The contract is not yet executed Ltd. Total 27,560,120.00 —

26. Payroll payable

(1) Salary payable list

Items 01-01-2018 Increase Decrease 31-12-2018

117

– F-309 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Items 01-01-2018 Increase Decrease 31-12-2018 1. Short-term employee salary 6,920,134.58 3,619,944,708.88 3,620,815,530.98 6,049,312.48 payable 2. Post-employment benefits- 30,115.89 522,072,016.05 522,102,131.94 Setting up Deposit Plan 3. Termination benefits 805,306.80 805,306.80 4. Other benefits due within one year 5. Other 75,992.00 75,992.00

Total 6,950,250.47 4,142,898,023.73 4,143,798,961.72 6,049,312.48

(2) List of short-term employee salary payable Increase during Decrease during Items 01-01-2018 31-12-2018 the year the year Salaries, bonuses, allowances and 5,765,876.81 2,757,989,972.32 2,759,053,977.67 4,701,871.46 subsidies Welfare 126,374,116.57 126,374,116.57

Social insurance 4,659.85 167,517,379.05 167,522,038.90

Including: Medical insurance 126,917,391.32 126,917,391.32 Supplementary medical insurance 21,531.29 21,531.29 premium Industrial injury insurance premium 3,269.67 39,138,158.98 39,141,428.65

Maternity insurance premium 1,390.18 1,195,843.30 1,197,233.48

Catastrophic sickness relief fund 38,593.76 38,593.76

Other premiums 205,860.40 205,860.40

Housing Provident Fund 41,848.00 228,796,319.96 228,784,151.06 54,016.90 Trade Union Funds and Employee 1,101,847.37 60,001,612.16 59,869,831.23 1,233,628.30 Education Funds 7. Non-monetary Welfare 899,886.00 899,886.00

Labor Service Expenses 275,418,336.61 275,418,336.61 12. Other short-term employee 5,902.55 2,947,086.21 2,893,192.94 59,795.82 salary Total 6,920,134.58 3,619,944,708.88 3,620,815,530.98 6,049,312.48

(3) List of details of Deposit Plan Increase Decrease Items 01-01-2018 31-12-2018 during the year during the year 1. Pension insurance 24,541.30 390,725,353.14 390,749,894.44

2. Employment insurance 5,574.59 14,027,685.28 14,033,259.87

118

– F-310 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Increase Decrease Items 01-01-2018 31-12-2018 during the year during the year 3. Enterprise annuity payment 117,318,977.63 117,318,977.63

Total 30,115.89 522,072,016.05 522,102,131.94

27. Taxes Payable Should be paid in Tax Items 01-01-2018 Paid in current year 31-12-2018 current year VAT 824,183,470.36 2,199,814,814.89 2,995,548,747.75 28,449,537.50

Corporate income tax 174,721,322.42 461,104,275.83 244,506,371.55 391,319,226.70

City construction tax 40,838,766.57 133,140,228.71 155,466,626.00 18,512,369.28

Education surcharges 17,506,541.82 57,147,561.97 66,745,720.01 7,908,383.78 Local education 11,669,829.24 36,966,249.26 43,562,818.67 5,073,259.83 surcharges Price Control Fund 13.14 13.14

House property tax 3,743,118.69 132,552,754.28 120,826,787.83 15,469,085.14

Land use tax 848,401.14 93,059,538.37 93,897,564.51 10,375.00 Vehicle and Vessel 14,106.72 817,993.95 832,100.67 Use Tax stamp duty 11,786,611.42 65,442,477.87 60,867,492.13 16,361,597.16

Resource tax 14,331,851.00 102,803,874.40 107,288,611.53 9,847,113.87

Individual income tax 10,122,924.94 75,924,967.73 82,796,716.08 3,251,176.59

Land tax 15,888,335.34 15,099,748.76 788,586.58

Deed tax 1,397,412.42 1,397,412.42 Environmental 7,620,160.26 4,979,348.31 2,640,811.95 Protection Tax Water conservancy 5,672,712.52 5,672,712.52 fund Other 1,537,299.90 8,829,722.06 10,329,324.17 37,697.79

Total 1,111,304,244.22 3,398,183,093.00 4,009,818,116.05 499,669,221.17

28. Other Payables Items 31-12-2018 31-12-2017

Interest Payables 255,041,671.41 188,347,004.10

Dividend Payables 579,450,379.87 550,646,149.91

Other Payables 3,641,258,131.18 2,974,123,657.47

119

– F-311 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Total 4,475,750,182.46 3,713,116,811.48

(1) Interests Payable

Items 31-12-2018 31-12-2017 Amortization interest on a long-term loan that is 20,882,422.37 36,545,584.07 repaid at maturity Corporate bond interest 4,054,722.21 69,516,666.68

Interest is payable on short-term borrowings 204,530,974.69 82,284,753.35 Preferred Stock/Sustainable Debt Interest Divided into Financial Liabilities Other interest 25,573,552.14

Total 255,041,671.41 188,347,004.10

(2) Dividends Payables

Items 31-12-2018 31-12-2017

Common stock dividend 579,450,379.87 550,646,149.91

Total 579,450,379.87 550,646,149.91

(3) Other Payables ķOther accounts payable by nature

Items 31-12-2018 31-12-2017

Come-and-go money 2,869,290,020.77 2,457,973,102.18

Retention Money 280,062,913.57 162,127,263.83

The deposit 57,128,644.78

Deduction of Social Security and Personal Tax 1,755,087.01

Substitute money 1,009,335.94 17,575,888.19

Net Liabilities of Commodity Futures Contracts 210,432,492.35

Other 221,579,636.76 336,447,403.27

Total 3,641,258,131.18 2,974,123,657.47

ĸOther payable with ages over 1 year Reason for Outstanding or Company 31-12-2018 not carried forward Cooperative development Gansu Hongyi Industry and Trade Co., Ltd. 214,750,000.00 project not ended Liuzhou Junhai Science and Trade Co., Ltd. 5,000,000.00 Performance bond

120

– F-312 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Reason for Outstanding or Company 31-12-2018 not carried forward Total 219,750,000.00 —

29. Non-current liabilities due within 1 year Items 31-12-2018 31-12-2017

Long-term loans due within 1 year(see note VIII. 31) 4,055,600,000.00 5,973,293,990.80

Bonds payable within 1 year(see note VIII. 32) 6,000,000,000.00

Long-term payables due within 1 year 117,140,608.01

Other long-term liability due within 1 year

Total 4,172,740,608.01 11,973,293,990.80

30. Other current liabilities Items 31-12-2018 31-12-2017

Short-term bonds payable

Other 113,256,771.99 85,697,068.62

Total 113,256,771.99 85,697,068.62

31. Long term loans Interest Rate in Items 31-12-2018 31-12-2017 2018 Mortgage loan 1,377,100,000.00 1,396,600,000.00 4.900%-5.047%

Credit guaranteed 1,311,000,000.00 206,000,000.00 4.500%

Credit loan 19,054,596,843.33 17,848,402,428.96 1.330%-4.275% subtotal 21,742,696,843.33 19,451,002,428.96 Less: long-term loans due within 1 4,055,600,000.00 5,973,293,990.80 1.330%-4.275% year(see note VIII. 27) Total 17,687,096,843.33 13,477,708,438.16

Note: At the end of the year 2018, 1,377,100,000.00 yuan of mortgage loan collateral is the book value of 1,689,930,666.43 yuan of investment real estate, 13,200,982.00 yuan of fixed assets and 4,240,799.71 yuan of intangible assets. At the end of the year 2018, the guarantee loan of 111,000,000.00 yuan was made by Guangxi Jinchuan Nonferrous Metals Co., Ltd. and the guarantee of 1,200,000,000.00 yuan was made by Jinchuan Group Co., Ltd.

32. Bonds Payable

(1) Bonds payable

121

– F-313 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Items 31-12-2018 31-12-2017

Medium-term note 1,000,000,000.00 6,000,000,000.00

Subtotal 1,000,000,000.00 6,000,000,000.00

Less: bonds payable due within 1 year (see note VIII. 29) 6,000,000,000.00

Total 1,000,000,000.00

(2) Movement of bonds (Excluding preference shares classified as: financial liabilities, perpetual bonds and other financial instruments)

Bond name Face value Issue date Term to Bond name 01-01-2018

15 Jinchuan MTN001 500,000,000.00 2015.6.12 3 years 500,000,000.00 500,000,000.00

15 Jinchuan MTN002 500,000,000.00 2015.6.12 3 years 500,000,000.00 500,000,000.00

15 Jinchuan MTN003 2,500,000,000.00 2015.10.19 3 years 2,500,000,000.00 2,500,000,000.00

15 Jinchuan MTN004 2,500,000,000.00 2015.10.19 3 years 2,500,000,000.00 2,500,000,000.00

18 Jinchuan MTN001 500,000,000.00 2018.12.12 3 years 500,000,000.00

18 Jinchuan MTN002 500,000,000.00 2018.11.13 3 years 500,000,000.00 Less ˖bonds payable due within 1 year (see 6,000,000,000.00 note VIII. 27) ) Total 7,500,000,000.00 7,500,000,000.00

(Continued) Provision for Amortization Current year Bond name Amount on offer 31-12-2018 interest at of discount repayment par 15 Jinchuan MTN001 500,000,000.00

15 Jinchuan MTN002 500,000,000.00

15 Jinchuan MTN003 2,500,000,000.00

15 Jinchuan MTN004 2,500,000,000.00

18 Jinchuan MTN001 500,000,000.00 500,000,000.00

18 Jinchuan MTN002 500,000,000.00 500,000,000.00 Less ˖bonds payable due within 1 year (see note VIII. 27) ) Total 1,000,000,000.00 6,000,000,000.00 1,000,000,000.00

33. Long-term payable

122

– F-314 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Item 01-01-2018 Addition Reduction 31-12-2018

Long-term Payable 207,991,104.74 409,592,934.46 256,348,942.99 361,235,096.21

Special Payable 738,043,814.63 523,678,415.43 970,099,160.95 291,623,069.11

Total 946,034,919.37 933,271,349.89 1,226,448,103.94 652,858,165.32

(1) The top 5 of special accounts payable on closing balance:

Items 31-12-2018 31-12-2017

Total 361,235,096.21 207,991,104.74

Among them: 1. Financing leases payable 142,516,871.27

2. Cost of mine rehabilitation 218,718,224.94 207,991,104.74

(2) Special Payable

Items 01-01-2018 Addition Reduction 31-12-2018

Total 738,043,814.63 523,678,415.43 970,099,160.95 291,623,069.11 Including: 1.Supplementary funds for low-rent housing 114,769,311.39 17,139,206.43 25,448,310.95 106,460,206.87 construction 2. Management Expenses of Housing Provident Fund 5,734,503.24 2,800,000.00 3,500,000.00 5,034,503.24 Center 3. 12 # Residential Building Project in Shantytowns of 3,570,000.00 3,570,000.00 State-owned Industry and Mines 4. Transfer of "Three Suppliers and One Property" to the Special 613,970,000.00 613,970,000.00 Subsidy Fund of the Central Finance 5. Supporting Infrastructure Construction of Safe 497,796,700.00 327,180,850.00 170,615,850.00 Housing Project 6. Gobi Vanilla Garden 5,942,509.00 5,942,509.00 Project

34. Long-term Employee Payables Items 01-01-2018 Addition Reduction 31-12-2018 1. Net Liabilities of Benefit Plans for Post-Service Welfare Settings 2. Dismissal benefits

3.Other long-term benefits 3,991,496,205.69 152,040,000.00 237,639,087.39 3,905,897,118.30

123

– F-315 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Items 01-01-2018 Addition Reduction 31-12-2018 Among them: Retirement and Survivors' Overall 2,893,440,691.05 152,040,000.00 174,274,866.60 2,871,205,824.45 Expenses Intermediate Person Transition Compensation 1,098,055,514.64 63,364,220.79 1,034,691,293.85 Fund Total 3,991,496,205.69 152,040,000.00 237,639,087.39 3,905,897,118.30

35. Estimated Liabilities Items 31-12-2018 01-01-2018

Reclamation fee 400,952,668.74 382,771,044.14

Loss contract to be executed 1,116,752,747.40 1,116,752,747.40

Total 1,517,705,416.14 1,499,523,791.54

36. Deferred Income Reduction Items 01-01-2018 31-12-2018 Addition Profit of loss Return Comprehensive System for Deep 3,066,000.00 1,533,000.00 1,533,000.00 Development of Super Large Deposits Demonstration Project of Energy Management Center 10,000,000.00 500,000.00 9,500,000.00 Construction in Industrial Enterprises 10kt/a Base Nickel High-tech 5,000,000.00 250,000.00 4,750,000.00 Industrialization Project Conservation and Comprehensive 22,000,000.00 2,000,000.00 20,000,000.00 Utilization of Mineral Resources

124

– F-316 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Reduction Items 01-01-2018 31-12-2018 Addition Profit of loss Return Funds for Construction of Demonstration Base for Comprehensive Utilization of Mineral Resources (Demonstration Base 531,700,000.00 30,500,000.00 501,200,000.00 for Comprehensive Utilization of Copper-Nickel Polymetallic Mineral Resources in Jinchuan, Gansu Province) Award Funds for Conservation and Comprehensive Utilization of Copper 10,000,000.00 500,000.00 9,500,000.00 and Nickel Sulfide Mineral Resources in Longshou Mine Longshou Mountain Mine Geological 30,000,000.00 1,500,000.00 28,500,000.00 Environment Control Project High Skilled Talents 5,600,000.00 2,600,000.00 3,000,000.00 Training Base Project Land for the third phase of project 9,110,000.00 455,500.00 8,654,500.00 construction Low Temperature Waste Heat Project of Circulating Cooling 9,100,000.00 455,000.00 8,645,000.00 Water in No. 2 Thermoelectric Workshop (2112044) Mining Project of 850 Middle Section in 48,000,000.00 2,400,000.00 45,600,000.00 No.2 Mining Area (2041002) Development of High Efficiency Utilization 16,700,000.00 835,000.00 15,865,000.00 Technology for Rare and Precious Metals Central Finance Fund for Heavy Metal 15,000,000.00 750,000.00 14,250,000.00 Pollution Projects in 2013 Provincial Special Fund for Pollution 2,000,000.00 100,000.00 1,900,000.00 Reduction in 2013

125

– F-317 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Reduction Items 01-01-2018 31-12-2018 Addition Profit of loss Return Major Demonstration Projects of Circular Economy and Resource Saving and 5,700,000.00 285,000.00 5,415,000.00 Key Industrial Pollution Control Projects in 2013 Supporting Funds for Relocation and 992,000.00 992,000.00 - Expansion Project of Home Dairy Factory Government Subsidy Fund for Recycling and Renovation of Gansu Park in 2012 6,500,000.00 325,000.00 6,175,000.00 (Comprehensive Utilization of Nickel Anode Sludge Project) Special fund for recycling and renovation of the park 4,000,000.00 200,000.00 3,800,000.00 (Phase II of 400,000 tons ionic membrane caustic soda) Special Fund of the Central Government for the Prevention and 18,000,000.00 900,000.00 17,100,000.00 Control of Heavy Metal Pollution in 2014 Provincial Level of Pollution Reduction in 2014 Replaces Pre-allocated Funds with Awards Project 1,800,000.00 90,000.00 1,710,000.00 for Boiler Denitrification in Thermoelectric Workshop II) Special Provincial Finance Fund for Recycling Economy Development in 2014 (60,000 tons of Nickel Electrolysis 5,000,000.00 250,000.00 4,750,000.00 Expansion Technology Remaining Chlorine Absorption Technology Reform Project)

126

– F-318 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Reduction Items 01-01-2018 31-12-2018 Addition Profit of loss Return Major Demonstration Projects of Circular Economy and Resource Saving and 10,000,000.00 500,000.00 9,500,000.00 Key Industrial Pollution Control Projects in 2014 (Sixth) Funds for Industrial Transformation and Upgrading Project of State-owned 8,000,000.00 4,000,000.00 4,000,000.00 Enterprises in 2014 (15000 tons/year Sponge Titanium Smelting Project) Retrofit of High 10,000,000.00 500,000.00 9,500,000.00 Pressure Fan Revamping of Boiler Out-of-Sale in No.2 19,400,000.00 970,000.00 18,430,000.00 Thermoelectric Workshop Environmental Protection Gas Collection and Standard 1,600,000.00 80,000.00 1,520,000.00 Achievement Control Project of Copper Smelting Self-Heating Furnace Area Environmental Protection Gas Collection and Achievement of 30,400,000.00 30,400,000.00 Standards in Top Blowing Furnace Area of Nickel Smelting 42kt/a Nickel Anode Sludge Sulphur 9,000,000.00 450,000.00 8,550,000.00 Recovery Technology Revamping Project Environmental Protection Technology Renovation Project of 9,000,000.00 450,000.00 8,550,000.00 No.1 Thermoelectric Workshop Pollution Control Projects such as Water Spraying and 1,000,000.00 1,000,000.00 Dust Suppression in Factory Area

127

– F-319 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Reduction Items 01-01-2018 31-12-2018 Addition Profit of loss Return In 2014, municipal pollution prevention and control and special subsidy fund (desulfurization project of nickel flash 1,000,000.00 50,000.00 950,000.00 furnace drying kiln, online renovation project of thermal power company and chemical plant) Provincial Special Fund for Industry and 3,000,000.00 3,000,000.00 Information Technology in 2016 High Selective Permeability Membrane and Membrane Refining 3,458,921.69 3,458,921.69 Industrialization Technology Development Cost Producing Copper Electro winning 2,146,000.00 2,146,000.00 Project with Black Copper Slag Central Finance Fund for Heavy Metal 2,200,000.00 2,200,000.00 Pollution Control Provincial air pollution prevention and control in 2016 with awards instead of supplementary funds 2,400,000.00 120,000.00 2,280,000.00 (Longshou Coal Mine West Second Mining Heat Source Boiler House Replacement Project) Research funds 520,628.72 1,748,250.00 2,268,878.72 Reconstruction Project of Old Buildings and 22,637,143.39 12,071,943.39 10,565,200.00 Shantytowns in District 2 and 3 of Jinchuan Company State subsidy fund for recycling and renovation of 300,000 9,500,000.00 4,045,283.02 1,900,000.00 11,645,283.02 tons/year PVC project Park

128

– F-320 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Reduction Items 01-01-2018 31-12-2018 Addition Profit of loss Return 300,000 tons copper deep processing 20,400,000.00 6,800,000.00 13,600,000.00 project Project Subsidy of Jinchang Finance 2,680,000.00 670,000.00 2,010,000.00 Bureau Solar Vacuum Coating Production 1,823,072.46 1,823,072.46 Line Project 10,000 tons FRP 800,000.00 400,000.00 400,000.00 project 5,000-ton phosphorus-copper 2,061,994.05 11,550,200.00 730,833.33 12,881,360.72 ball reconstruction project Funds for Infrastructure Construction of Land 11,049,614.74 1,104,961.47 9,944,653.27 Bureau of Yuzhong County Construction of Innovation and 3,620,606.04 3,620,606.04 Entrepreneurship Demonstration Park Provincial State-owned Enterprises Industrial 5,345,000.00 400,000.00 1,001,611.42 5,600.00 4,737,788.58 Transformation and Upgrading Project Funds Research Project Funds of Jinchuan 3,618,898.60 603,148.60 3,015,750.00 Group 100 kt/a ternary 10,000,000.00 1,756,315.50 11,756,315.50 project Development of Standard Samples for Spectral Analysis of 690,000.00 690,000.00 Nickel, Cobalt and Copper Development of Nickel Cobalt Lithium 800,000.00 800,000.00 Aluminate (NCA) Ternary Materials Subsidies for stabilizing posts in 2,000,000.00 2,000,000.00 Jinchang Social Security Center

129

– F-321 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Reduction Items 01-01-2018 31-12-2018 Addition Profit of loss Return Comprehensive Furnace Area Environmental Protection Gas 39,134,338.00 4,821,754.80 34,312,583.20 Collection Achieving Standard Control Project Provincial Special Funds of 10 million Yuan Nickel-Cobalt 10,000,000.00 3,005,187.19 6,994,812.81 New Material Innovation Center Project 2*150 Unit Ultra-low Emission Technology Reform Project 3,600,000.00 3,600,000.00 Environmental Protection Funds Introduction And Application Of Technology And Equipment For Industrial Production 4,700,000.00 4,700,000.00 Of Carbonyl Nickel Pellets In Carbonization Metallurgical Plant Study on Green Cooperative Smelting Technology and Complete Equipment 6,400,000.00 6,400,000.00 for Complex Copper-based Polymetallic Solid Waste Jinchang Hazardous Waste Resource 8,460,000.00 8,460,000.00 Disposal Project (Phase I Project) Other sporadic 80,031,727.26 24,554,886.33 5,807,835.46 98,778,778.13 projects Total 1,047,451,606.95 118,349,272.85 126,680,848.12 4,351,600.00 1,034,768,431.68

37. Paid-in capital 01-01-2018 Addition Reduction 31-12-2018 Investors Rate Rate Amount Amount (%) (%) Total 22,946,544,651.00 100.00 160,771,700.00 160,771,700.00 22,946,544,651.00 100.00

130

– F-322 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

01-01-2018 Addition Reduction 31-12-2018 Investors Rate Rate Amount Amount (%) (%) State-owned Assets Supervision and Administration 2,957,627,874.00 12.89 2,957,627,874.00 12.89 Commission of Gansu Provincial People's Government Gansu State-owned Assets Investment 11,168,391,788.00 48.67 160,771,700.00 11,007,620,088.00 47.97 Group Co., Ltd. Gansu Xinglong Capital 160,771,700.00 160,771,700.00 0.70 Management Co., Ltd. Guokai Finance Co., 3,104,835,448.00 13.53 3,104,835,448.00 13.53 Ltd. China Baowu Iron and 1,116,773,122.00 4.87 1,116,773,122.00 4.87 Steel Group Co., Ltd. Taiyuan Iron and Steel 1,116,773,122.00 4.87 1,116,773,122.00 4.87 (Group) Co., Ltd. Gansu Industrial Transportation 322,437,195.00 1.41 322,437,195.00 1.41 Investment Company Jiuquan Iron and Steel 321,543,408.00 1.40 321,543,408.00 1.40 (Group) Co., Ltd. Gansu Electric Power Investment Group Co., 382,204,580.00 1.67 382,204,580.00 1.67 Ltd. Shenzhen Ping'an Innovation Capital 321,543,408.00 1.40 321,543,408.00 1.40 Investment Co., Ltd. China-Africa Development Fund Co., 321,543,408.00 1.40 321,543,408.00 1.40 Ltd. Runbo (Tianjin) Equity Investment Fund 284,565,916.00 1.24 284,565,916.00 1.24 Partnership Zhejiang Hailiang Co., 257,234,726.00 1.12 257,234,726.00 1.12 Ltd. Shanghai SAIC Huankai Investment 257,220,000.00 1.12 257,220,000.00 1.12 Management Co., Ltd. China Oriental Asset 160,780,000.00 0.70 160,780,000.00 0.70 Management Co., Ltd. Jingyuan Coal Industry 160,771,700.00 0.70 160,771,700.00 0.70 Group Co., Ltd. China Xinda Asset 160,771,700.00 0.70 160,771,700.00 0.70 Management Corp Guangda Gold Control (Lanzhou) Jinnie 156,401,211.00 0.68 156,401,211.00 0.68 Investment Co., Ltd. Gansu Rare Earth New 100,000,000.00 0.44 100,000,000.00 0.44 Materials Co., Ltd.

131

– F-323 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

01-01-2018 Addition Reduction 31-12-2018 Investors Rate Rate Amount Amount (%) (%) China Investment High-tech Industry 192,926,045.00 0.84 192,926,045.00 0.84 Investment Corporation Jincheng Capital 50,000,000.00 0.22 50,000,000.00 0.22 Management Co., Ltd. Tibet Mining 32,200,000.00 0.14 32,200,000.00 0.14 Development Co., Ltd. (Continued)

01-01-2017 Addition Reduction 31-12-2017 Investors Rate Rate Amount Amount (%) (%) Total 22,946,544,651.00 100.00 22,946,544,651.00 100.00 State-owned Assets Supervision and Administration 2,957,627,874.00 12.89 2,957,627,874.00 12.89 Commission of Gansu Provincial People's Government Gansu State-owned Assets Investment 11,168,391,788.00 48.67 11,168,391,788.00 48.67 Group Co., Ltd. Gansu Xinglong Capital Management 3,104,835,448.00 13.53 3,104,835,448.00 13.53 Co., Ltd. Guokai Finance Co., 1,116,773,122.00 4.87 1,116,773,122.00 4.87 Ltd. China Baowu Iron and Steel Group Co., 1,116,773,122.00 4.87 1,116,773,122.00 4.87 Ltd. Taiyuan Iron and Steel (Group) Co., 322,437,195.00 1.41 322,437,195.00 1.41 Ltd. Gansu Industrial Transportation 321,543,408.00 1.40 321,543,408.00 1.40 Investment Company Jiuquan Iron and Steel (Group) Co., 382,204,580.00 1.66 382,204,580.00 1.66 Ltd. Gansu Electric Power Investment Group 321,543,408.00 1.40 321,543,408.00 1.40 Co., Ltd. Shenzhen Ping'an Innovation Capital 321,543,408.00 1.40 321,543,408.00 1.40 Investment Co., Ltd. China-Africa Development Fund 284,565,916.00 1.24 284,565,916.00 1.24 Co., Ltd.

132

– F-324 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

01-01-2017 Addition Reduction 31-12-2017 Investors Rate Rate Amount Amount (%) (%) Runbo (Tianjin) Equity Investment 257,234,726.00 1.12 257,234,726.00 1.12 Fund Partnership Zhejiang Hailiang 257,220,000.00 1.12 257,220,000.00 1.12 Co., Ltd. Shanghai SAIC Huankai Investment 160,780,000.00 0.70 160,780,000.00 0.70 Management Co., Ltd. China Oriental Asset Management Co., 160,771,700.00 0.70 160,771,700.00 0.70 Ltd. Jingyuan Coal Industry Group Co., 160,771,700.00 0.70 160,771,700.00 0.70 Ltd. China Xinda Asset 156,401,211.00 0.68 156,401,211.00 0.68 Management Corp National Development and 128,617,363.00 0.56 128,617,363.00 Investment Corporation Gansu Rare Earth New Materials Co., 100,000,000.00 0.44 100,000,000.00 0.44 Ltd. China Investment High-tech Industry 64,308,682.00 0.28 128,617,363.00 192,926,045.00 0.84 Investment Corporation Jincheng Capital Management Co., 50,000,000.00 0.22 50,000,000.00 0.22 Ltd. Tibet Mining Development Co., 32,200,000.00 0.14 32,200,000.00 0.14 Ltd. Note: The increase and decrease of the paid in capital in 2017 is in accordance with the resolution 10 of the 2016 general meeting of shareholders of Jinchuan Group Co., Ltd. and the agreement on free transfer of equity of Jinchuan Group Co., Ltd. signed in February 2017. National Development and Investment Corporation transferred its CNY 128,617,363.00 equity interest in Jinchuan Company to China Investment High-tech Industry Investment Corporation. After the transfer, the shareholding ratio of National Development and Investment Corporation to Jinchuan Company was 0%, and that of China Investment High-tech Industry Investment Corporation was 0.84%.

38. Capital reserve Items 01-01-2018 Increase Decrease 31-12-2018

Capital surplus 15,780,846,031.83 15,780,846,031.83

Other capital reserve 1,521,004,721.81 1,179,718,930.88 54,289,314.61 2,646,434,338.08

133

– F-325 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Total 17,301,850,753.64 1,179,718,930.88 54,289,314.61 18,427,280,369.91

(Continued)

Items 01-01-2017 Increase Decrease 31-12-2017

Capital surplus 16,504,250,584.51 16,504,250,584.51 Other capital 627,392,984.31 172,728,180.60 2,520,995.78 797,600,169.13 reserve Total 17,131,643,568.82 172,728,180.60 2,520,995.78 17,301,850,753.64

Note: In 2018, the capital reserve of Lanzhou Jinchuan Science and Technology Park Co., Ltd., a subsidiary of the company, was reduced by CNY 17,516,723.64, according to document No. 62 of Finance and Enterprises [2005]. The others were formed by Lanzhou Jinchuan New Material Science and Technology Co., Ltd. acquiring minority shares of subsidiaries and the company acquiring minority shares of China Jinchuan Investment Holding Co., Ltd. In 2017, the increase in capital reserves was caused by the transfer of CNY 172,728,180.60 from Jinchuan Hong Kong's disposal of Jinchuan international's equity into capital reserves without the loss of control rights;The reduction is due to changes in the shareholding ratio of minority shareholders and the disposal of subsidiaries.

39. Special Reserve N 01-01-2018 31-12-2018 ot e Including: Increase in Decline in Including:bel Items Including: Including:bel belonging to the current year current year onging to the belonging to onging to shareholders of shareholders minority minority the parent of the parent shareholders shareholders company company Secure producti 188,262,362.35 48,445,080.09 293,071,553.94 323,772,186.98 166,788,350.59 39,218,458.81 on fee Total 188,262,362.35 48,445,080.09 293,071,553.94 323,772,186.98 166,788,350.59 39,218,458.81 —

(Continued)

01-01-2017 31-12-2017 Including: N Including:bel belonging to Including: Increase in Decline in Including:bel o Items onging to the the belonging to current year current year onging to t shareholders shareholders minority minority e of the parent of the parent shareholders shareholders company company Secur e produc 131,044,065.95 40,561,756.33 117,379,529.19 52,277,909.03 188,262,362.35 48,445,080.09 tion fee Total 131,044,065.95 40,561,756.33 117,379,529.19 52,277,909.03 188,262,362.35 48,445,080.09

134

– F-326 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

40. Surplus reserve Increas Items 01-01-2018 Decrease 31-12-2018 Reason e Statutory surplus Transfer of assets 477,874,021.11 320,135,897.98 157,738,123.13 reserve for three suppliers and one property Discretionary 477,874,021.11 477,874,021.11 to offset surplus surplus reserve reserve Total 955,748,042.22 798,009,919.09 157,738,123.13 —

(Continued)

Items 01-01-2017 Increase Decrease 31-12-2017 Reason Statutory surplus 477,874,021.11 477,874,021.11 reserve Discretionary 477,874,021.11 477,874,021.11 surplus reserve Total 955,748,042.22 955,748,042.22 —

The 2018 year's reduction of surplus reserve is the transfer of assets of our company and its subsidiary Lanzhou Jinchuan New Materials Technology Co., Ltd. According to document No. 62 of Finance and Enterprises [2005], the surplus reserve is reduced by CNY 798,009,919.09.

41. Undistributed profit Items 31-12-2018 31-12-2017

Opening balance of the current year -9,384,940,178.25 -9,985,076,279.95

Increasing in current year 1,548,038,806.25 600,136,101.70

Including: Transfer of current year's net profit 1,548,038,806.25 600,136,101.70

Other adjustments

Decreasing in the current year 1,943,480.92 Including: Surplus reserve is drawn this year (Note VIII, 38) Extraction of General Risk Preparedness for the 1,943,480.92 Year Distribution of cash dividends for the current year

Transferred Capital (Notes VIII, 35)

Other decreases

Closing balance of the current year -7,838,844,852.92 -9,384,940,178.25

42. Operating revenue and costs

135

– F-327 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

(1) Details for Operating income and costs

2018 2017 Items Revenue costs Revenue costs Subtotal of principle 219,822,694,348.40 209,760,579,547.04 216,337,821,935.02 208,441,107,756.56 operating activities Nickel series 13,810,276,821.49 9,990,974,241.84 10,382,480,434.18 7,756,753,879.82 products Copper series 41,373,564,662.99 38,686,711,554.85 34,314,687,500.22 32,307,752,564.98 products Cobalt series 3,651,625,143.03 3,314,993,836.18 2,673,184,334.11 1,754,181,740.75 products Precious Metal 4,152,232,149.43 3,404,042,303.40 4,203,817,748.11 3,459,395,356.35 Products Trade 149,231,828,779.22 149,067,491,285.27 159,912,386,979.39 160,445,709,683.88

Other 7,603,166,792.24 5,296,366,325.50 4,851,264,939.01 2,717,314,530.78 Other business 1,052,438,051.46 616,091,380.11 704,567,943.87 641,607,418.21 subtotals Total 220,875,132,399.86 210,376,670,927.15 217,042,389,878.89 209,082,715,174.77

(2) Construction contracts ķ The top ten construction contracts with the largest amount of revenue confirmed in 2018 are as follows The total Completio Accumulative The total cost Accumulative Items amount of the n progress contract of the contract contract cost contract (%) revenue 1. Fixed cost contract

Including: Construction of Renovation Project of 104,754,517.6 Beiguan Garden Shanty 297,120,671.45 256,712,260.13 29.60 87,942,692.87 8 Town in Yuzhong County (Section 1) Renovation Project of Old Buildings and 87,422,069.76 76,319,466.90 67.68 59,163,636.36 57,836,896.85 Shantytowns in Area 5 Construction project of comprehensive building 41,104,089.59 36,623,743.82 78.58 32,298,653.70 31,164,344.21 of inpatient department of Gulang People's Hospital Comprehensive recovery project of rare and 130,949,446.1 178,176,857.00 130,949,446.14 100.00 175,696,558.31 precious metals from 4 copper anode slime

136

– F-328 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

The total Completio Accumulative The total cost Accumulative Items amount of the n progress contract of the contract contract cost contract (%) revenue Construction Project of Baiyin Municipal Public Security Bureau's 33,931,385.30 29,622,099.37 67.09 22,764,587.71 19,812,224.52 Compulsory Isolation Drug Rehabilitation Center Construction Project of Lanzhou Cogeneration of Electricity and Heat with Large Pressure and Small Pressure in Different Places-Second 61,431,698.21 53,629,872.54 32.66 20,063,881.09 25,894,538.67 Bid Section of Construction of Long-distance Transmission and Heating Trunk Line Project Jinchuan District 2018 Changhuali (15 District) 21,090,000.00 20,457,300.00 85.05 17,936,363.64 13,436,391.30 Old Shantytown Renovation Project Gansu Property Group Lanzhou Logistics Park Co., Ltd. Lanzhou Highway Logistics Park 46,711,097.92 40,778,788.48 81.67 38,149,524.57 37,055,158.16 Warehouse 2 and supporting facilities project Construction Project of School Building and Sports Stadium of 15,050,098.71 13,138,736.17 90.45 13,613,431.62 12,551,607.15 Dingning Central Primary School in Gulang County Renovation of Huatai Shengjing Area A (Phase I) Resettlement Building 50,000,000.00 44,550,000.00 27.18 13,592,233.00 12,986,267.21 in Xisi Shanty Town of Huixian County (Continued) The Current Accumulated carry-over Current Accumulated confirmation of Items recognized price has confirmation of receipts contract gross profit been contract costs income processed Fixed cost contract

Including:

137

– F-329 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

The Current Accumulated carry-over Current Accumulated confirmation of Items recognized price has confirmation of receipts contract gross profit been contract costs income processed Construction of Renovation Project of Beiguan Garden Shanty -16,811,824.81 96,736,962.00 96,736,962.00 87,942,692.87 104,754,517.68 Town in Yuzhong County (Section 1) Renovation Project of Old Buildings and 1,326,739.51 65,080,000.00 65,080,000.00 59,163,636.36 57,836,896.85 Shantytowns in Area 5 Construction project of comprehensive building of inpatient department 1,134,309.49 35,528,519.00 35,528,519.00 32,298,653.70 31,164,344.21 of Gulang People's Hospital Comprehensive recovery project of rare and 175,696,558.3 44,747,112.17 149,617,004.31 71,430,441.81 3,744,104.38 precious metals from 1 copper anode slime Construction Project of Baiyin Municipal Public Security Bureau's 2,952,363.19 25,041,046.00 25,041,046.00 22,764,587.71 19,812,224.52 Compulsory Isolation Drug Rehabilitation Center Construction Project of Lanzhou Cogeneration of Electricity and Heat with Large Pressure and Small Pressure in Different Places-Second -5,830,657.58 30,183,889.00 30,183,889.00 20,063,881.09 25,894,538.67 Bid Section of Construction of Long-distance Transmission and Heating Trunk Line Project Jinchuan District 2018 Changhuali (15 District) 4,499,972.34 19,730,000.00 19,730,000.00 17,936,363.64 13,436,391.30 Old Shantytown Renovation Project Gansu Property Group Lanzhou Logistics Park Co., Ltd. Lanzhou Highway Logistics Park 1,094,366.41 38,967,577.00 38,967,577.00 13,661,730.64 37,055,158.16 Warehouse 2 and supporting facilities project Construction Project of School Building and Sports Stadium of 1,061,824.47 14,974,775.00 14,974,775.00 13,613,431.62 12,551,607.15 Dingning Central Primary School in Gulang County

138

– F-330 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

The Current Accumulated carry-over Current Accumulated confirmation of Items recognized price has confirmation of receipts contract gross profit been contract costs income processed Renovation of Huatai Shengjing Area A (Phase I) Resettlement Building 605,965.79 14,000,000.00 14,000,000.00 13,592,233.00 12,986,267.21 in Xisi Shanty Town of Huixian County

43. Sales expense, Administrative Expenses, Financial Expenses

(1) Sales expense

Items 2018 2017

Transportation fee 685,495,508.61 620,538,672.38

Salary expense 77,550,602.92 61,256,649.02

Storage and packing fees 71,207,062.43 97,330,545.46 Laboratory, Insurance, 20,724,525.56 13,748,886.83 Commodity Inspection, etc. Travel expenses 8,507,248.96 5,502,171.52

Litigation costs 8,012,774.21 2,536,687.02 Advertising, publicity and 6,069,983.66 6,162,706.52 exhibition fees Administrative expenses 4,765,572.33 3,992,934.42

Depreciation fee 1,736,411.81 1,856,812.28

Other 38,774,020.75 27,370,790.29

Total 922,843,711.24 840,296,855.74

(2) Administrative expenses

Items 2018 2017

Salary expense 667,777,109.05 546,829,626.78

Depreciation fee 449,125,483.85 388,755,784.97

Auditing consulting fee 108,788,421.97 48,432,278.39

Rental heating fee, etc. 80,519,936.48 48,314,701.49 Material Consumption of 43,496,279.42 18,615,765.41 Hydroelectric Machines Travel expenses 35,916,597.71 25,310,151.08

Information System Fee 27,612,996.56 24,767,285.48

139

– F-331 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Items 2018 2017

Office and conference hospitality 26,668,156.25 26,285,638.43

Transport insurance premium, etc. 25,851,213.10 28,280,941.10

Repair cost 25,432,143.48 26,720,317.90

Greening fee 16,379,756.21 4,558,558.17

Sewage charges 12,846,512.90 40,435,302.21

Downtime loss 10,500,586.30 12,498,484.84 Party Fees of Group and League 9,874,342.33 3,283,801.90 Committees Design inspection fee, etc. 7,403,294.15 7,738,128.61

Inventory profit and loss 3,205,152.18 40,743,012.83

Other 188,141,832.15 156,770,162.87

Total 1,739,539,814.09 1,448,339,942.46

(3) Financial Expenses

Items 2018 2017

Interest expense 1,871,791,597.76 1,936,351,295.92

Less: Interest revenue 174,867,416.74 279,449,134.82

Exchange gains and losses 69,813,856.56 1,078,951.13

Bank charges 231,268,460.00 210,061,263.90

Total 1,998,006,497.58 1,868,042,376.13

44. Research and Development Expenses Items 2018 2017

R&D expenses 316,961,824.70 156,502,927.42

Total 316,961,824.70 156,502,927.42

45. Impairment loss of assets Items 2018 2017

Bad debts loss 74,750,505.01 1,278,638,843.18

Inventory impairment loss 1,800,338,943.81 91,056,685.90

Impairment on available-for-trade financial assets 341,343,838.58

140

– F-332 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Items 2018 2017

Fixed assets impairment loss 226,292,906.05 35,325,930.04

Impairment on construction in progress 41,668,777.32

Impairment on intangible assets 128,598,975.77

Other impairment loss -31,903,790.67

Total 2,143,051,132.19 1,843,060,482.80

46. Other incomes Amount recognized in Items 2018 2017 extraordinary Profit and Loss Pension Return of the Finance Bureau of the 46,167,305.30 46,167,305.30 Development Zone Funds for Construction of Demonstration Base for Comprehensive Utilization of Mineral Resources (Demonstration Base for 30,500,000.00 30,500,000.00 Comprehensive Utilization of Copper-Nickel Polymetallic Mineral Resources in Jinchuan, Gansu Province) Platinum tax refund 19,855,344.73 65,514,844.97 19,855,344.73 Government Subsidy Fund for "Processing Trade Logistics Expense Project of 13 million Yuan in 16,000,000.00 16,000,000.00 2018; Structural Loan Discount Project of Steady Growth of Foreign Trade of 3 million Yuan" Government Subsidy Fund for Undertaking Gradient Transfer Logistics Cost Project of 15,000,000.00 15,000,000.00 Processing Trade in 2017 Special Funds for Foreign Economic and Trade 9,990,000.00 9,990,000.00 Development Government Subsidies (Social Security 7,619,444.00 7,619,444.00 Subsidies) 300,000 tons copper deep processing project 6,800,000.00 6,800,000.00 6,800,000.00 Insurance Subsidies for New Material 6,494,400.00 6,494,400.00 Applications Subsidies for stabilizing posts in Jinchang Social 6,294,408.09 1,014,040.56 6,294,408.09 Security Center National Local Joint Engineering Laboratory of 6,001,611.42 800,000.00 6,001,611.42 High Performance Battery Materials Environmental Protection Gas Collection Standard Control in Top Blowing Furnace Area 4,817,333.33 4,817,333.33 of Nickel Smelting Municipal Government Electricity Subsidies 4,604,000.00 754,300.00 4,604,000.00 Funds for Industrial Transformation and Upgrading Project of State-owned Enterprises in 4,000,000.00 4,000,000.00 4,000,000.00 2014 (15000 tons/year Sponge Titanium Smelting Project)

141

– F-333 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Amount recognized in Items 2018 2017 extraordinary Profit and Loss Environmental Protection Gas Collection Standard Control in Flash Furnace and Casting 3,133,333.33 2,520,000.00 3,133,333.33 Area of Nickel Smelting Provincial Special Funds of 10 million Yuan Nickel-Cobalt New Material Innovation Center 3,005,187.19 3,005,187.19 Project Policy incentives 2,817,198.00 2,817,198.00

High Skilled Talents Training Base Project 2,600,000.00 3,900,000.00 2,600,000.00 Mining Project of 850 Middle Section in No.2 2,400,000.00 2,400,000.00 Mining Area Central Finance Fund for Heavy Metal Pollution 2,200,000.00 2,200,000.00 2,200,000.00 Control Projects of Copper Electrowinning from Black 2,146,000.00 2,146,000.00 2,146,000.00 Copper Slag Development of Industrialized Technology for High Selective Penetration Membrane and 2,044,490.74 3,926,393.31 2,044,490.74 Membrane Refining Conservation and Comprehensive Utilization of 2,000,000.00 2,000,000.00 Mineral Resources Subsidized Project Funds for Steady Growth, Structural Adjustment, Transformation and 2,000,000.00 2,000,000.00 Upgrading in Gansu Province 300,000 tons/year new chemical material PVC 1,900,000.00 1,900,000.00 project Technological Reform and Capacity Expansion 1,600,000.00 400,000.00 1,600,000.00 and Production Increase Projects in 2017 Comprehensive System for Deep Development 1,533,000.00 1,334,000.00 1,533,000.00 of Super Large Deposits Longshou Mountain Mine Geological 1,500,000.00 1,500,000.00 Environment Control Project Research and Industrialization of Key 1,243,416.67 495,833.33 1,243,416.67 Technologies in Nickel Industry Chain Infrastructure construction funds 1,104,961.47 2,804,674.08 1,104,961.47 Intelligent Workshop Project for Selecting High-end Materials of Nickel, Cobalt and Rare 1,000,000.00 1,000,000.00 and Precious Metals Supporting Funds for Relocation and Expansion 992,000.00 1,488,000.00 992,000.00 Project of Home Dairy Factory Revamping of Boiler Out-of-Sale in No.2 970,000.00 970,000.00 Thermoelectric Workshop Special Fund of the Central Government for the Prevention and Control of Heavy Metal Pollution 900,000.00 900,000.00 in 2014 Development of High Efficiency Utilization 835,000.00 835,000.00 Technology for Rare and Precious Metals Withholding and paying a tax Commission 808,094.52 91,470.42 808,094.52 Project Funds of Yuzhong County Industry and 770,000.00 770,000.00 Information Bureau

142

– F-334 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Amount recognized in Items 2018 2017 extraordinary Profit and Loss Central Finance Fund for Heavy Metal Pollution 750,000.00 750,000.00 Projects in 2013 Environmental Protection Gas Collection Standard Control in Copper Smelting 736,666.66 736,666.66 Self-Heating Furnace Area 5,000-ton phosphorus-copper ball reconstruction 730,833.33 130,505.95 730,833.33 project Project Subsidy of Jinchang Finance Bureau 670,000.00 670,000.00 670,000.00

Research Project Funds of Jinchuan Group 603,148.60 315,838.26 603,148.60

Innovation Driven Project Development Funds 528,000.00 3,200,000.00 528,000.00 Development and Industrialization of a New Green and Environment-friendly Palladium 500,626.60 125,000.00 500,626.60 Electroplating Salt and Its Complete Coupling System Demonstration Project of Energy Management 500,000.00 500,000.00 Center Construction in Industrial Enterprises Award Funds for Conservation and Comprehensive Utilization of Copper and Nickel 500,000.00 500,000.00 Sulfide Mineral Resources in Longshou Mine Major Demonstration Projects of Circular Economy and Resource Conservation for Key Energy Conservation Projects in 2014 and Key Industrial Pollution Control Projects (Sixth Batch) 500,000.00 500,000.00 - Technological Reform of Preparation of Carbonyl Nickel and Platinum Group Metals Raw Materials High Pressure Fan Renovation Project 500,000.00 500,000.00 Foreign Trade Stability Growth and Structural Adjustment Project Funds of Jinchuan District 500,000.00 500,000.00 Business Bureau of Jinchang City On-demand VAT refund 484,697.88 3,989,659.01 484,697.88 Remaining Subsidy Funds for Demonstration Pilot of Recycling Reform of National Park (First 475,000.00 475,000.00 batch) (Technical Reform Project for Comprehensive Treatment of Smelting Flue Gas) Land use funds for the third phase of project 455,500.00 455,500.00 construction Low Temperature Waste Heat Project of Circulating Cooling Water in No.2 Thermoelectric 455,000.00 455,000.00 Workshop Technical transformation project of sulfur 450,000.00 450,000.00 recovery from 2kt/a nickel anode slime Environmental Protection Technology Renovation Project of No.1 Thermoelectric 450,000.00 450,000.00 Workshop Upgrading of Flash Furnace Drying Flue Gas to 450,000.00 450,000.00 Standard

143

– F-335 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Amount recognized in Items 2018 2017 extraordinary Profit and Loss Comprehensive Furnace Area Environmental Protection Gas Collection Achieving Standard 440,000.00 440,000.00 Control Project Special Funds for Training Talents in Powder 400,000.00 400,000.00 Preparation Research and Development 5000T/A FRP Composite Production Plant 400,000.00 400,000.00 400,000.00

Risk margin 376,919.00 376,919.00 Remaining Subsidy Funds for Demonstration Points of National Park Recycling Reform (First 362,500.00 362,500.00 batch) (1.1 million tons/year copper smelting slag separation project) Government Subsidy Fund for Recycling and Renovation of Gansu Park in 2012 325,000.00 1,100,000.00 325,000.00 (Comprehensive Utilization of Nickel Anode Sludge Project) Double Venture Capital High-tech Enterprises 300,000.00 300,000.00 Science and Technology Funds Jinchang Finance Bureau's Special Fund for 300,000.00 309,433.96 300,000.00 Innovation and Entrepreneurship Major Demonstration Projects of Circular Economy and Resource Saving and Key Industrial Pollution Control Projects in 2013 285,000.00 285,000.00 (Comprehensive Utilization of Underground Wastewater in West No.2 Mining Area of Longshou Coal Mine) Remaining Subsidy Funds for Demonstration Pilot of Cyclic Renovation of National Park (First batch) (Technical Renovation Project of White 275,000.00 275,000.00 Ash Comprehensive Utilization and Capacity Expansion) 10kt/a Base Nickel High-tech Industrialization 250,000.00 250,000.00 Project Special Provincial Finance Fund for Recycling Economy Development in 2014 (60,000 tons of Nickel Electrolysis Expansion Technology - 250,000.00 250,000.00 Remaining Chlorine Absorption Technology Reform Project) 4.1 Preparation Technology of Ultra-Pure 216,878.50 216,878.50 Rare/Precious Metals Special fund for recycling and renovation of the park (Phase II of 400,000 tons ionic membrane 200,000.00 200,000.00 caustic soda) Some Measures for Scientific and Technological Innovation of the Finance Bureau of 200,000.00 200,000.00 Zhuanjinchang City, Gansu Province CNY 700,000 of nickel and cobalt resources comprehensive utilization and specialized public 196,754.91 196,754.91 space construction Special Funds for Industrial Green Development 188,571.42 188,571.42

144

– F-336 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Amount recognized in Items 2018 2017 extraordinary Profit and Loss Upgrading of Environmental Protection 183,333.33 183,333.33 Monitoring Facilities for Acid-making Tail Gas Study on the Construction of CIose-Loop Cycle System for Secondary Resources of Precious 180,000.00 180,000.00 Metals Comprehensive recovery project of copper 160,000.00 160,000.00 anode slime Finance of Science and Technology Project of Jinchang Finance Bureau (Bismuth Tellurium 150,000.00 150,000.00 Based Thermoelectric Material Preparation Technology Project) Subsidies from Jinchang Science and 150,000.00 150,000.00 Technology Bureau Scientific Research Projects of New Dam-building Technology and Equipment for 127,600.00 127,600.00 Large and Ultra-fine Tailings Dam Funds for environmental protection 120,000.00 120,000.00 Business Bureau of Jinchuan District, Jinchang City, adjusting the structure of stable growth of foreign trade in 2018 and subsidizing funds for 120,000.00 120,000.00 inland transportation fees for new projects of promoting primary education Remaining Subsidy Funds for Demonstration Points of National Park Recycling Reform (First 105,000.00 1,400,000.00 105,000.00 batch) (Utilization Project of Waste Acids from Smelting Copper-bearing Slag) Special Funds for Welding Wire Product Development Project of Nickel-based Super alloy 100,000.00 100,000.00 Incone1718 Other 943,932.90 8,951,734.32 943,932.90

Total 241,192,491.92 120,781,728.17 241,192,491.92

47. Investment income Items 2018 2017 Long term equity investment revenue by using equity 8,417,818.39 -29,700,109.64 method Income from disposal of long-term equity investment -93,094,661.77 1,137,328.34 Income from holding to maturity investments during holding Revenue from available-to-sell financial assets investment 16,560,978.21 20,345,280.93

Gains from disposal of available-to-sale financial assets 105,210,848.28

Futures liquidation gains and losses -155,816,067.32 -1,363,279,075.32

Investment income from entrusted loans 1,819,022.98 159,784,159.81

145

– F-337 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Items 2018 2017

Others 65,389,077.03 129,376,333.08

Total -156,723,832.48 -977,125,234.52

48. Gains from changes in fair value Sources of income from changes in fair value 2018 2017 Financial assets measured at fair value and their changes 1,415,563.17 included in current profits and losses Derivative financial assets Financial liabilities measured at fair value and recorded in -7,988,739.01 69,632,460.05 current profits and losses Floating profit and loss of futures 138,954,822.78 1,001,011,909.15

Commodity swap transactions - unrealized gains 297,404.61 Gain and loss of fair value changes embedded in -12,147,829.74 derivative financial instruments Other -10,789,368.61 -96,125,975.94

Total 108,326,290.03 975,933,956.43

49. Gains on disposal of assets Amount recognized Items 2018 2017 in extraordinary Profit and Loss Disposal is not divided into disposal gains or losses arising from holding -8,425,607.55 8,100,414.13 -8,425,607.55 non-current assets for sale Total -8,425,607.55 8,100,414.13 -8,425,607.55

50. Non-operating income

(1) Classification of Non-operating Revenue Amount recognized in Items 2018 2017 extraordinary Profit and Loss Gains on disposal of non-current assets 8,028,809.44 8,028,809.44

Government subsidies(details as below) 30,021,577.47 124,203,713.74 30,021,577.47

Default compensation 99,866,359.83 35,915,693.82 99,866,359.83

Other 33,614,878.01 92,756,354.02 33,614,878.01

Total 171,531,624.75 252,875,761.58 171,531,624.75

(2) Details for government grants

146

– F-338 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Items 2018 2017 Refund of the over payment of income tax fees by the State Tax Bureau 10,767,863.63 of the Port Area Autonomous Region Import Discount in 8.21 of 2018 2,588,899.20 Provincial Department of Commerce Foreign Economic and Trade 2,330,000.00 Project Funds in 2017 Solar Vacuum Coating Production Line Project 2,109,916.64 Subsidies for Key Research and Development Program No. 66 of Guangxi Zhuang Autonomous Region Science and Technology 620,000.00 Department in 2018 Tourism Development Fund of Jinchang Finance Bureau 600,000.00 Preliminary Subsidies for 50,000 tons and 150,000 tons of Copper 500,000.00 Concentrate from Fangchenggang Finance Bureau Subsidies for High-tech Enterprises Recognized by the Science and 500,000.00 Technology Department of Guangxi Zhuang Autonomous Region Funds allocated by Fangchenggang Development and Reform Commission for energy conservation, emission reduction and pollution 350,000.00 reduction in 2018 Jinchang Finance Bureau's Special Fund for Innovation and 300,000.00 Entrepreneurship Logistics Subsidy Fund for the Office of the Construction and Management Committee of North Gulf Economic Zone, Fangchenggang 163,200.00 City, 8.03 Department of Science and Technology Award 100,000.00 800,000.00 Funds Subsidy for Energy-saving Technological Renovation, 93,000.00 Fangchenggang Finance Bureau, 2013-2016, 9.26 Awards for High-tech Enterprises Affirmed by Fangchenggang Bureau of 50,000.00 Science, Technology and Intellectual Property Stable subsidy 30,899.34 35,782,457.00 Funds for Construction of Demonstration Base for Comprehensive Utilization of Mineral Resources (Demonstration Base for 30,500,000.00 Comprehensive Utilization of Copper-Nickel Polymetallic Mineral Resources in Jinchuan, Gansu Province) Environmental subsidy 17,706,815.48

Finance Bureau allocates special funds for environmental protection 9,000,000.00 Jinchuan Company's First Phase Dust Collection System 5,804,800.00 Comprehensive Technical Renovation Project Funds for Industrial Transformation and Upgrading Project of State-owned Enterprises in 2014 (15000 tons/year Sponge Titanium 4,000,000.00 Smelting Project) High Skilled Talents Training Base Project 3,900,000.00 Subsidies for Key Projects of Resource Conservation and Recycling in 2,300,000.00 2016 Fangchenggang Municipal Finance Bureau allocates the second batch 2,200,000.00 of funds for technological transformation in the Autonomous Region Conservation and Comprehensive Utilization of Mineral Resources 2,000,000.00

147

– F-339 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Items 2018 2017 Fangchenggang Municipal Finance Bureau's Funds for Foreign Trade 1,489,204.00 Development in Guangxi in 2017 Supporting Funds for Jujia Dairy Relocation and Expansion Project 1,488,000.00

Comprehensive System for Deep Development of Super Large Deposits 1,334,000.00

High Efficiency Utilization Project of Secondary Resources 4,323.63 1,136,140.30 Power Generation Project with Waste Heat from Nickel-Copper Smelting 994,000.00 Furnace System Provincial incentive funds for eliminating backward capacity projects in 750,000.00 industry in 2013 Section 60 (Seventh installment) of Guicai Education Letter No. 421, Section 60 (Seventh Batch) of Key Project No. 421 of Guicai Education 730,000.00 Letter [2017] of Guangxi Zhuang Autonomous Region Science and Technology Department, 12.28 Policy incentives 7,815,000.00 561,376.76 Fangchenggang Finance Bureau's Outstanding Enterprise Award in 500,000.00 2016 Other 1,098,475.03 1,226,920.20

Total 30,021,577.47 124,203,713.74

51. Non-operating Expenses Amount recognized in Items 2018 2017 extraordinary Profit and Loss Losses on disposal of non-current 85,991,127.29 254,971,001.89 85,991,127.29 assets Donations expenses 8,281,456.42 2,588,343.53 8,281,456.42

Fine expenses 16,611,302.29 8,931,675.40 16,611,302.29

Others 449,195,590.68 32,976,857.54 449,195,590.68

Total 560,079,476.68 299,467,878.36 560,079,476.68

Other expenses mainly for the cancellation of general school expenditure are 351,893,752.91 yuan.

52. Income Tax expense

(1) Income Tax Form

Items 2018 2017

Income tax in current period 411,287,325.18 289,353,918.57

Adjustment for deferred tax 736,783,369.80 35,197,621.32

148

– F-340 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Items 2018 2017

Total 1,148,070,694.98 324,551,539.89

(2) Accounting profit and adjustment process of accounting profit and income tax expense

Items 2018

Profit before tax 2,513,859,134.22

Income tax expense calculated at the statutory / applicable tax rate 377,078,870.13

The impact of different tax rates on subsidiaries 352,624,277.72

Adjust the effect of income taxes in the previous period 15,424,984.51

The impact of non-taxable income -135,012,747.45

Nondeductible costs, fee, and losses impact 135,239,989.93 The impact of deductible loss on deferred income tax assets not 169,106,109.30 recognized in the prior period of use The impact of deductible temporary differences or deductible losses 232,102,346.71 on deferred income tax assets not recognized this year Tax adjustment leads to changes in deferred income tax 1,506,864.13 assets/liabilities balance at the beginning of the year Income tax expenses 1,148,070,694.98

149

– F-341 – -568,859,623.57 -568,859,623.57 Jinchuan Ltd. Co., Group 2017 efore income taxefore income tax Income tax income After Notes to the Financial Statements from 01-01-2017 to 12-31-2018 to 01-01-2017 from Statements Financial the to Notes 59,570,476.37 -568,859,623.57 59,570,476.37 -568,859,623.57 150 2018 59,570,476.37 59,570,476.37 458,281,792.15398,711,315.78 58,512,017.81 58,512,017.81 399,769,774.34 340,199,297.97 -102,162,057.04 70,004,634.98 466,697,566.53 -172,166,692.02 70,004,634.98 396,692,931.55 398,711,315.78 58,512,017.81 340,199,297.97 466,697,566.53 70,004,634.98 396,692,931.55 -857,038,207.85 -97,835,347.02 -759,202,860.83 194,153,012.16 148,430,566.11 45,722,446.05 -1,315,320,000.00 -156,347,364.83-1,315,320,000.00 -1,158,972,635.17 -156,347,364.83 -1,158,972,635.17 296,315,069.20 78,425,931.13 296,315,069.20 217,889,138.07 78,425,931.13 217,889,138.07 Before Before income tax Income tax After income tax B [English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, English and the Chinese between inconsistency be any there Should only. purpose for shall is translation prevail] version the version [English Chinese Items Subtotal Subtotal (1) Other comprehensive income projects and their income tax impact and transferred profits and losses and profits and transferred impact tax income and their projects income comprehensive (1) Other Adjustment(2) income comprehensive other for 53. Other comprehensive income comprehensive 53. Other I. Other comprehensive income that cannot be reclassified into profit or loss amount of change the 1. Re-measure and set benefit plan II. Reclassified into profit and loss of other comprehensive income and loss of fair value 1. Profit changes of financial assets available for sale Less: other comprehensive income in the early period into the current profit and loss 2.Translation of foreign currency financial statements Less: other comprehensive income in the early period into the current profit and loss III. Total other comprehensive income

– F-342 – 05,681.86 2018 228,583,017.37 Closing balance in Closing Jinchuan Ltd. Co., Group Amount of Amount increase or for reduction) (marked with "-" decrease in 2018 2018 228,583,017.37 Opening Balance in Notes to the Financial Statements from 01-01-2017 to 12-31-2018 to 01-01-2017 from Statements Financial the to Notes Amount of Amount increase or for reduction) (marked with "-" decrease in 2017 151 Opening Opening 541,313,452.34 396,692,931.55 938,006,383.89 340,199,297.97 1,278,2 228,583,017.37 961,645,690.62 -474,412,838.62 -1,436,058,529.24 76,504,569.01 -1,359,553,960.23 -357,120,000.00 217,889,138.07 -139,230,861.93 -1,158,972,635.17 -1,298,203,497.10 -548,869,220.91 140,169,231.00 -408,699,989.91 -742,268,768.19 -1,150,968,758.10 - balance in 2017 lable for sale [English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, English and the Chinese between inconsistency be any there Should only. purpose for shall is translation prevail] version the version [English Chinese Total Items Reset the amount of benefit plan plan Reset the amount of benefit change Other comprehensive income that under the equity transferred cannot be method Changes in the fair value of invest ment in other equity instruments [application of new financial instrument criteria] Change of fair value enterprise's own credit risk [application of new financial instrument criteria] Other comprehensive income that under the equity can be transferred method Changes in the fair value of other debt investments [application of new financial instrument criteria] Changes in the fair value of financial assets avai The amount of financial assets reclassified into other comprehensive income [application of new financial instrument criteria] Hold-to-maturity investments are reclassified as gains and losses on financial assets available for sale Other credit impairment provision for debt investment [application of new financial instrument standards] Cash flow hedging reserve (effective part of cash flow hedging profit and loss) Translation of foreign currency financial statements Others

– F-343 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

54. Borrowing Costs Amount of Capitalization rate in borrowing costs 2018(Only refers to Capitalized Asset Projects capitalized during general borrowing the year 2018 capitalization) Phase II Construction of Heat Source in No.3 Plant Area 45,241,698.81 4.35 Ultra-low Emission Technological Revamping of 2*150MW 799,935.03 4.35 Unit in Jinchuan Group Co., Ltd. Phase II Project of Low Temperature Waste Heat Utilization of Circulating Cooling Water for 2*150 MW Cogeneration 226,890.93 4.35 Unit Upgrading of acid wastewater treatment system - impurity removal and concentration of acid wastewater in nickel 22,201.86 4.35 smelting and acid making system Upgrading of wastewater treatment system containing nickel 96,675.55 4.35 and cobalt 10kt/a Nickel Carbonyl Project 3,717,890.20 4.35 Follow-up Upgrading Project of 15 kt/a Sponge Titanium 5,131,311.84 4.35 Smelting Technological Reform Project of Energy Expansion and 9,698,350.31 4.35 Consumption Reduction in Second Election Lean Mine Mining Project in the West of Longshou Coal 43,106,800.00 4.35 Mine 1100 Horizontal Filling Air Return Project in East Mining 403,900.00 4.35 Area Middle Section 980 Development Project in East Mining 822,400.00 4.35 Area Development and Utilization Projects of Three Mines 9,767,600.00 4.35 Supplementary Infrastructure Exploration Reserved Sub 200,600.00 4.35 items for Upper Plate Ore body Below Middle Section 1220 New West Second Class 11 # Filling Borehole in Longshou 117,600.00 4.35 Coal Mine Lean Mine Mining Project in Eastern Jinchuan 10,454,040.85 4.35 Upgrading and Revamping Project of Acid Wastewater 635,498.61 4.35 Treatment System in Chemical Plant Renovation of 700,000 tons sulphuric acid trestle 87,518.42 4.35 Comprehensive recovery of precious metals from copper 25,833,445.70 4.35 anode slime 300 kt/a PVC project newly built in chemical plant 7,869,246.97 4.35

400 kt/a ion-exchange membrane caustic soda (Phase II) 16,351,835.60 4.35 Safety Performance Improvement Project of Liquid Chlorine 2,100.00 4.35 Filling Station Total 180,587,540.68 4.35

55. Consolidated cash flow statement

(1) Indirect method to adjust net profit to cash flows from operating activities

152

– F-344 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Additional Material 2018 2017 1. Reconciliation of net profit to cash flows from operating — — activities: Net profit 1,365,788,439.24 829,603,677.49

Add: Provision for impairment loss of assets 2,143,051,132.19 1,843,060,482.80

Depreciation of fixed assets, bio-assets, and natural gas 2,782,619,940.51 2,367,651,663.77

Amortization of intangible assets 129,710,972.91 454,271,877.66

Amortization of long-term deferred expenses 4,134,459.96 21,801,052.96 Losses on disposal of fixed assets, intangible assets and other 8,425,607.55 -8,100,414.13 long-term assets (revenue use”-“) Losses on scrapping of fixed assets (revenue use”-“) 77,962,317.85 254,971,001.89

Losses of fair value variation (revenue use”-“) -108,326,290.03 -975,933,956.43

Financial expenses (revenue use”-“) 1,941,605,454.32 1,906,343,329.65

Losses from investments (revenue use”-“) 156,723,832.48 977,125,234.52

Decrease in deferred tax assets (revenue use”-“) 477,107,172.50 85,233,160.08

Increase in deferred tax liabilities (revenue use”-“) 259,676,197.30 -50,035,538.76

Decrease in inventories (revenue use”-“) 2,057,157,324.67 2,990,504,905.41

Decrease in operating receivables (revenue use”-“) ) -427,002,436.48 104,355,599,340.53

Increase in operating payables (revenue use”-“) 909,180,073.28 -105,321,001,661.15

Others -21,474,011.76 251,124,617.98

Net cash flows from operating activities 11,756,340,186.49 9,982,218,774.27 2. Investing and financing activities that do not affect cash — — receipt and payment: Liabilities converted capital Reclassify convertible bonds to be expired within one year as current liability Fixed assets subject to finance leases

3. Net increase in cash and cash equivalents: — —

Cash at the end of the period 6,295,074,435.82 6,216,625,846.53

Less: Opening balance of cash and cash equivalents 6,216,625,846.53 6,598,610,990.86

Add: cash equivalents at the end of the period

Less: cash equivalents at the beginning of the period

Net increase in cash and cash equivalents 78,448,589.29 -381,985,144.33

153

– F-345 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

(2) Information of acquisition or disposal of subsidiaries and other business

Items 2018 1. Cash and cash equivalents paid to acquire subsidiaries and business units Less: Cash and cash equivalents held by subsidiaries and business units

Add: Net cash outflow on acquisition of subsidiaries and business units

Net assets of the acquired subsidiaries 2. Cash and cash equivalents received from disposal subsidiaries and 16,294,976.32 business units Less: Cash and cash equivalents held by subsidiaries and business units

Add: Net cash inflow on disposal of subsidiaries and business units

Net assets of the disposed subsidiaries 16,294,976.32

(3) Information of cash and cash equivalents

Items 31-12-2018 31-12-2017

Cash 6,295,074,435.82 6,216,625,846.53

Including: Cash on hand 263,936.41 1,533,542.09

Bank deposits 6,294,810,499.41 6,215,082,304.44

Other monetary funds 10,000.00

Payable deposits with the Central Bank

Deposit interbank funds

Inter-bank dismantlement

Cash equivalents Including: Investments in debt securities due within three months Closing balance of cash and cash equivalents 6,295,074,435.82 6,216,625,846.53 Including: Restricted cash and cash equivalent of the Company and subsidiaries within the Group

56. Foreign currency monetary items Items Balance by 31-12-2018 in CNY

Cash and cash equivalent 3,948,335,265.37

Account Receivable 1,234,090,284.01

Interests receivable 600,234.56

154

– F-346 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Items Balance by 31-12-2018 in CNY

Other receivable 3,020,976,475.66

Short-term loans 5,228,352,046.33

Account payable 1,711,799,047.79

Other payable 2,319,041,906.27

Interests payable 147,238,371.38

Long-term loans 8,169,977,523.33

Long-term payable 218,718,224.94

57. Assets with restricted ownership or use rights Items 31-12-2018 Reasons for restrictions Bank acceptance of draft deposits of CNY 463.525 million; letter of credit deposits of CNY 381.333 million; performance Cash and cash equivalent 1,579,186,821.53 bonds of CNY 427.882 million; frozen investment funds of CNY 225.948 million; futures account deposits of CNY 74.676 million; other CNY 5.823 million. Payment of notes payable under pledge amounted to CNY Notes receivables 214,393,412.92 236.025 million Mortgage obtains CNY 449.056 million of short-term loans Inventories 106,935,661.58 and pledge obtains CNY 35.176 million of futures margin. Mortgage obtains CNY 6.00 million short-term loan from Fixed assets 180,228,011.17 Gansu Bank and CNY 9.60 million long-term loan from Jinchang Branch of China Agricultural Development Bank. Mortgage Obtained CNY 9.6 million long-term loan from Intangible assets 4,240,799.71 Jinchang Branch of China Agricultural Development Bank. Mortgage obtains Hangzhou Bank's CNY 1.390 billion Investment property 1,689,930,666.43 long-term loan.

IX. Contingencies As of December 31, 2018 and before, the company does not need to disclose major contingencies.

X. Events after balance sheet date The company has no need to disclose the balance sheet date.

XI. Related parties relationship & transactions

1. The basic situation of the parent company

155

– F-347 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

The proportion of The voting Place of R\Registe the parent rights of the Name of the parent Nature of registratio red company's parent company company business n capital ownership of the to the enterprise enterprise (%) (%) Gansu Provincial Investment and CNY State-owned Assets Lanzhou, Financing 11.971 47.97 47.97 Investment Group Gansu Management billion Co., Ltd.

2. Subsidiaries of the Company Detailed information is provided in Note VII. Business consolidation and consolidated financial statements.

3. Joint venture and associated companies of the Company Detailed information is provided in Note VIII, No.11., “Long-term investment”.

4. Other related party Name of related party Relation to the Company Other Enterprises Controlled by Shareholders, Gansu Xinye Asset Management Co., Ltd. shareholder of subsidiaries

5. Related party transactions

(1) Pricing policies

Name of related party Name of counterparty Transaction category Pricing principle Baotou Huading Copper Our company, Copper Purchasing goods and Market value Development Co., Ltd. Company providing funds China Gold Group Yangshan Gold Mine Co., Our company Funding contractual stipulation Ltd. Jinchuan Science and Lanzhou Jinchuan Technology Park, Selling and purchasing Market value Keliyuan Battery Co., Ltd Engineering Construction, goods Powder Materials Tibet Jiaxu Material Trade Our company, Guangdong Selling and purchasing Market value Co., Ltd. Jinhui goods Engineering Construction Gansu Jinchuan Hengxin and Thermal Power Merchandise sales Market value Polymer Material Co., Ltd. Company Gansu Jinchuan Jinding Powder Material, Copper Hui New Material Merchandise sales Market value Company Technology Co., Ltd. Gansu Jinni Chemical Co., Wire and cable Merchandise sales Market value Ltd.

156

– F-348 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Name of related party Name of counterparty Transaction category Pricing principle Jinchuan Hong kong, Jinchuan Group Marketing Company, Shanghai Gansu Xinye Asset Selling and purchasing Jinchuan, Jiangsu Jinrong, Market value Management Co., Ltd. goods Jinchuan Nickel Salt Company, Jinke Nonferrous Metals Co.

(2) Related party transactions ķSale of goods

2018 2017 Name of related party Amount Rate (%) Amount Rate(%) Gansu Jinchuan Jindinghui New Material 2,674,728.05 0.01 Technology Co., Ltd. Gansu Jinchuan Hengxin Polymer Material 1,715,723.98 Co., Ltd. Lanzhou Jinchuan Keliyuan Battery Co., Ltd. 1,869,331.48 6,831,461.57

Gansu Jinni Chemical Co., Ltd. 26,587.28

Tibet Jiaxu Material Trade Co., Ltd. 322,250,051.56 0.15 China Gold Group Yangshan Gold Mine Co., 527,716.00 Ltd. Baotou Huading Copper Industry Development 66,616.22 Co., Ltd. Gansu Xinye Asset Management Co., Ltd. 1,311,198,880.31 2.89 312,254,037.41

ĸPurchase of goods

2018 2017 Name of related party Amount Rate (%) Amount Rate (%) Baotou Huading Copper Industry 90,473,939.34 0.24 60,529,914.53 0.03 Development Co., Ltd. Lanzhou Jinchuan Keliyuan Battery Co., Ltd. 612,405.64

Tibet Jiaxu Material Trade Co., Ltd. 1,871,794.86 15,384,615.35 0.01

Gansu Xinye Asset Management Co., Ltd. 458,122,987.80 0.01 270,338,405.85 0.11

ĹGuarantee Guarantor Guarantee Start date of Ending date of Whether the guarantee Secured party s amount in 2018 the Guarantee the Guarantee been fulfilled Jinchuan Gansu Jinchuan Shenwu Group Co., Resources Comprehensive 227,500,000.00 2015.09.09 2022.09.09 Yes Ltd. Utilization Technology Co., Ltd. Jinchuan Dunhuang Wenbo Investment Group Co., 200,000,000.00 2017.01.23 2032.01.23 No Company Ltd.

157

– F-349 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

ĺ Funding Providing funds to Related Parties providing funds Name of related party related parties in to the Company the the C 2018 China Gold Group Yangshan Gold Mine Co., Ltd. 255,601,584.90 Baotou Huading Copper Industry Development 50,000,000.00 Co., Ltd Ļ Other transactions Transfer of Permanent Subprime Convertible Securities Name of related party (PSCS) Securities (PSCS) Gansu Xinye Asset Management Co., Ltd. 1,014,335,760.00

ļRelevant Party's Balance of Receivables and Payables

31-12-2018 31-12-2017 Proporti Proporti Items on of the Provision for on of the Provision for Amount Amount balance bad debts balance bad debts (%) (%) Accounts receivable Baotou Huading Copper Industry 9,262.84 Development Co., Ltd. Gansu Jinchuan Hengxin Polymer 3,500,000.00 0.08 1,320,000.00 4,400,000.00 0.09 440,000.00 Material Co., Ltd. Lanzhou Jinchuan Keliyuan Battery Co., 761,219.78 0.02 810,392.88 0.02 Ltd. Tibet Jiaxu Material 140,442,768.00 3.11 140,442,768.00 140,442,768.00 2.99 140,442,768.00 Trade Co., Ltd. Nantong Ruixiang New 3,679,139.00 0.08 3,679,139.00 Materials Co., Ltd. China Gold Group Yangshan Gold Mine 121,400.00 Co., Ltd. Total 148,513,789.62 3.29 145,441,907.00 145,653,160.88 3.10 140,882,768.00

Advance receipts Tibet Jiaxu Material 318,205.13 0.02 Trade Co., Ltd. Baotou Huading Copper Industry 23,000,000.00 1.13 Development Co., Ltd. Total 23,000,000.00 1.13 - 318,205.13 0.02

Other receivables Gansu Xinye Asset 5,065,585,760.0 47.42 4,051,250,000.00 45.87 Management Co., Ltd. 0

158

– F-350 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

31-12-2018 31-12-2017 Proporti Proporti Items on of the Provision for on of the Provision for Amount Amount balance bad debts balance bad debts (%) (%) Gansu Jinyuan Coal 451,197,436.58 4.22 54,750,564.60 426,771,479.32 4.83 6,036,708.33 Industry Co., Ltd. China Gold Group Yangshan Gold Mine 255,601,584.90 2.39 255,601,584.90 267,828,000.00 3.03 267,828,000.00 Co., Ltd. Gansu Jinchuan Hengxin Polymer 13,100,000.00 0.12 2,756,613.48 Technology Co., Ltd. Lanzhou Jinchuan Keliyuan Battery Co., 1,119.83 20,206.42 Ltd. 5,785,485,901.3 Total 54.15 313,108,762.98 4,745,869,685.74 53.73 273,864,708.33 1 Accounts payable Baotou Huading Copper Industry 1,411,847.42 0.02 Development Co., Ltd. Gansu Jinchuan Hengxin Polymer 594,491.00 Technology Co., Ltd. Total 2,006,338.42 0.02

Advance receipts Gansu Jinchuan Jinding Hui New 616,243.52 0.02 Material Technology Co., Ltd. Total 616,243.52 0.02

XII. Notes to the financial statements of Parent Company

1ǃClassification of notes receivable 31-12-2018 31-12-2017 Provi Provi sion Classification sion for Book balance Book value Book balance for Book value bad bad debt debts s Bank 134,474,749.66 134,474,749.66 300,988,895.35 300,988,895.35 acceptance bill Commercial acceptance bill Total 134,474,749.66 134,474,749.66 300,988,895.35 300,988,895.35

159

– F-351 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

(1) Notes receivable endorsed or discounted at the end of the year and has not reached maturity on the balance sheet date By 31-12-2018 termination of By 31-12-2018 undetermined Classification confirmation Amount confirmation Amount Bank acceptance bill 1,800,000.00

Commercial acceptance bill

Total 1,800,000.00

2. Accounts receivable 31-12-2018

Classification Book balance Bad debts Proportion Proportion Amount Amount (%) (%) Individually significant and assessed for 294,075,251.97 23.30 294,075,251.97 100.00 impairment individually According to the credit risk characteristics of the combination of provision for bad 967,167,637.66 76.64 112,739,639.55 11.66 debts to receivables Including: Age combination 73,766,514.50 5.85 1,210,819.09 1.64 Association Combination within Merge 893,401,123.16 70.79 111,528,820.46 12.48 Range Individually insignificant but assessed for 759,552.43 0.06 759,552.43 100.00 impairment individually Total 1,262,002,442.06 100.00 407,574,443.95 —

(Continued)

31-12-2017

Classification Book balance Bad debts Proportion Amount Amount Proportion (%) (%) Individually significant and assessed 611,905,237.80 26.17 581,905,237.80 95.08 for impairment individually According to the credit risk characteristics of the combination of 1,726,626,390.72 73.83 41,331,733.74 2.39 provision for bad debts to receivables Including: Age combination 193,131,503.90 8.26 41,331,733.74 21.40 Association Combination within Merge 1,533,494,886.82 65.57 Range Individually insignificant but assessed for impairment individually Total 2,338,531,628.52 100.00 623,236,971.54 —

(1) Accounts receivable of which provision for bad debts is of individually insignificant

160

– F-352 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Provision for Book balance by Proportio Reasons for Name of debtors bad debts by Aging 31-12-2018 n (%) provision 31-12-2018 Shanghai Jitian Possibility of 2-3 years. Investment Group Co., 47,994,928.47 47,994,928.47 100.00 recovery may 3-4 years Ltd. be small Hangzhou Fuyun Possibility of Industry and Trade Co., 105,637,555.50 105,637,555.50 2-3years 100.00 recovery may Ltd. be small Possibility of Tibet Jiaxu Material More than 140,442,768.00 140,442,768.00 100.00 recovery may Trade Co., Ltd. 5 years be small Total 294,075,251.97 294,075,251.97 — — —

(2) Other account receivable portfolio subject to impairment by credit risk AˊAging analysis of provision for bad debts of Other receivables

31-12-2018

Aging Book value Provision for bad debts Closing balance Rate(%) Within 1 year 72,326,197.86 98.05 (inclusive) 1-2 years (inclusive) 134,652.02 0.18 13,465.20

2-3 years (inclusive) 154,729.62 0.21 46,418.89

3-4 years (inclusive)

4-5 years (inclusive)

Over 5 years 1,150,935.00 1.56 1,150,935.00

Total 73,766,514.50 100.00 1,210,819.09

B. Other credit combination of provision for bad debts of Other receivables 31-12-2017

Aging Book value Provision for bad debts Closing balance Rate(%) Within 1 year 57,714,841.30 29.88 (inclusive) 1-2 years (inclusive) 181,283.58 0.09 18,128.36

2-3 years (inclusive) 626,628.22 0.32 125,325.64

3-5 years (inclusive) 133,457,815.80 69.11 40,037,344.74

Over 5 years 1,150,935.00 0.60 1,150,935.00

Total 193,131,503.90 100.00 41,331,733.74

161

– F-353 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

(3) Other receivables that are not significant at the end of year are individually provision for bad debts Bad debt Proportio Book balance Name of debtors provision by Aging n Reason by 31-12-2018 31-12-2018 (%) Possibility of Finland Nickel Industry 759,552.43 759,552.43 1-2 years 100.00 recovery may be Company small Total 759,552.43 759,552.43 — — —

(4) Provision for bad debts recovered or returned Accumulated provision for Reasons and ways Recovered or Name of debtors bad debts before return or of returning or returned amount recovery retrieving Matrix Metal Resources Pte. Ltd. 40,037,344.74 40,037,344.74 Withdrawal of funds

Total 40,037,344.74 40,037,344.74 —

(5) The top 5 accounts receivable at the end of the year Bad debt provision Name of debtors Balance on 31-12-2018 Rate (%) on 31-12-2018 Lanzhou Jinchuan New Materials Technology 212,457,683.33 16.83 Co., Ltd. Tibet Jiaxu Material Trade Co., Ltd. 140,442,768.00 11.13 140,442,768.00

Hangzhou Fuyun Industry and Trade Co., Ltd. 105,637,555.50 8.37 105,637,555.50

Beijing Jindu Material Trade Co., Ltd. 75,833,952.94 6.01 75,833,952.94

Shanghai Jitian Investment Group Co., Ltd. 47,994,928.47 3.80 47,994,928.47

Total 582,366,888.24 46.14 369,909,204.91

3. Other Receivable Items 31-12-2018 31-12-2017

Interest receivable 52,261,203.87 1,769,467.93

Dividend receivable 124,425,993.18

Other receivable 13,086,351,864.70 10,698,469,989.92

Total 13,263,039,061.75 10,700,239,457.85

(1) Interest Receivable Interest Receivable classification Items 31-12-2018 31-12-2017 Fixed deposit 60,778.28 Others 52,200,425.59 1,769,467.93 Total 52,261,203.87 1,769,467.93

162

– F-354 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

(2) Dividends receivable Whether the impairment Reason occurs and Items 31-12-2018 31-12-2017 for not the basis collecting for its judgment Aging within one year 124,425,993.18

Including: (1) Jinchuan American Co., Ltd. 74,740,770.56

(2) Jinke Nonferrous Metals Co., Ltd. 49,685,222.62

Aging over one year

Total 124,425,993.18 — —

(3) Other receivables 31-12-2018

Types Book balance Provision for bad debt

Amount Rate(%) Amount Rate(%) Individually significant and assessed for 4,409,733,311.50 26.41 187,314,895.25 4.25 impairment individually According to the credit risk characteristics of the portfolio of provision for bad debts to other 12,284,726,089.40 73.59 3,420,792,640.95 27.85 account receivables Including: Age combination 1,679,362,196.98 10.06 423,586,875.00 25.22

Association Combination within Merge Range 10,605,363,892.42 63.53 2,997,205,765.95 28.26 Individually insignificant but assessed for impairment individually Total 16,694,459,400.90 — 3,608,107,536.20 —

(Continued) 31-12-2017

Types Book balance Provision for bad debt

Amount Rate(%) Amount Rate(%) Individually significant and assessed for 4,611,528,981.87 32.02 560,278,981.87 12.15 impairment individually According to the credit risk characteristics of the portfolio of provision for bad debts to other 9,791,334,382.35 67.98 3,144,114,392.43 32.11 account receivables Including: Age combination 2,334,217,741.14 16.21 665,585,608.35 28.51

Association Combination within Merge Range 7,457,116,641.21 51.78 2,478,528,784.08 33.24 Individually insignificant but assessed for impairment individually Total 14,402,863,364.22 100.00 3,704,393,374.30 ——

163

– F-355 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

ķ Other account receivable of individual significance subject to individually assessment for impairment at the end of year Bad debt Amount by Rate Name of debtors provision on Aging Reasons 31-12-2018 (%) 31-12-2018 Gansu Province Xinye Less than 1 year. Assets Management 4,051,250,000.00 1-2 years Co. Ltd. Less than 1 year. less Headquarters of 1-2years. 187,314,895.25 187,314,895.25 100.00 possibility of Jinchuan Company 2-3years. recovery. 3-4years Less than 1 year. 1-2years. Conversion Staff Hospital of 2-3years. 171,168,416.25 to Jinchuan Company 3-4years. investment 4-5years. more than 5 years Total 4,409,733,311.50 187,314,895.25 — — —

ĸ Other account receivable portfolio subject to impairment by credit risk A. Aging analysis of provision for bad debts of other receivables 31-12-2018

Aging Book balance Provision for bad debts Amount Rate (%)

Within 1 year (inclusive) 861,749,879.28 51.31

1-2 years (inclusive) 413,453,194.77 24.62 41,347,494.48

2-3 years (inclusive) 1,418,813.25 0.08 425,643.98

3-4 years (inclusive) 6,637,656.67 0.40 3,288,370.33

4-5 years (inclusive) 58,590,956.00 3.49 41,013,669.20

Over 5 years 337,511,697.01 20.10 337,511,697.01

Total 1,679,362,196.98 100.00 423,586,875.00

(Continued) 31-12-2017 Aging Book balance Provision for bad debts Amount Rate (%) Within 1 year (inclusive) 1,229,768,537.45 52.68 1-2 years (inclusive) 86,151,113.91 3.69 8,615,111.39 2-3 years (inclusive) 123,432,962.21 5.29 24,686,592.44 3-5 years (inclusive) 375,116,032.92 16.07 112,534,809.87 Over 5 years 519,749,094.65 22.27 519,749,094.65 Total 2,334,217,741.14 100.00 665,585,608.35

164

– F-356 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Ĺ Provision for bad debts recovered or returned Recovered or Accumulated provision Reasons and ways Name of debtor returned amount for bad debts before of returning or in 2018 return or recovery in 2018 retrieving Gansu Jinyu Material Co., Ltd. 62,000,000.00 62,000,000.00 Receipt of funds China Gold Group Yangshan Gold Partial payments 12,226,415.10 12,226,415.10 Mine Co., Ltd. received Gansu Provincial Safety Production Receiving a refund Supervision and Administration 2,000,000.00 2,000,000.00 of the risk mortgage Bureau Total 76,226,415.10 76,226,415.10 —

ĺOther receivables in the top five of the year-end amounts collected by the debtor Percentage of Bad debt Balance on Name of debtors other receivables provision on 31-12-2018 (%) 31-12-2018 Gansu Xinye Asset Management Co., Ltd. 4,051,250,000.00 24.27

Beijing Jindu Material Trade Co., Ltd. 2,551,487,265.95 15.28 2,551,487,265.95

Gansu Jinchuan Chemical Materials Co., Ltd. 1,339,720,617.77 8.02

Jinchuan Group International Trade Co., Ltd. 988,271,953.95 5.92

Gansu Jinyuan Coal Industry Co., Ltd. 451,197,436.58 2.70 54,750,564.60

Total 9,381,927,274.25 56.19 2,606,237,830.55

4. Long-term equity investment

(1) Classification of long-term equity investment Balance on Balance on Items Increasing Decreasing 01-01-2018 31-12-2018 Investment in 27,718,353,530.88 3,971,183,437.91 24,000,000.00 31,665,536,968.79 Subsidiaries Investment in joint venture Investment in join 332,443,407.98 25,408,891.02 307,034,516.96 ownership Subtotal 28,050,796,938.86 3,971,183,437.91 49,408,891.02 31,972,571,485.75 Less ˖impairment provision for long-term 57,166,562.09 42,666,562.09 14,500,000.00 equity investment Total 27,993,630,376.77 3,971,183,437.91 6,742,328.93 31,958,071,485.75

165

– F-357 – - other income Adjustment on on Adjustment comprehensive comprehensive - Jinchuan Ltd. Co., Group equity method equity Profit or loss on or loss Profit investment under investment under Changes in current year Changes in current Notes to the Financial Statements from 01-01-2017 to 12-31-2018 to 01-01-2017 from Statements Financial the to Notes Debit Credit 166 01-01-2018 Balance on 2,000,000.002,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 -2,000,000.00 42,872,000.00 42,872,000.00 85,951,872.55 85,951,872.55 416,718,691.09 416,718,691.09 974,446,485.66 974,446,485.66 443,464,718.45 849,164,000.46 849,164,000.46 151,910,937.97 151,910,937.97 138,995,256.09 138,995,256.09 31,807,168,057.37 27,718,353,530.88 3,971,183,437.91 24,000,000.00 32,175,668,057.37 28,050,796,938.86 3,971,183,437.91 24,000,000.00 -25,408,891.02 Investment cost Investment [English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, English and the Chinese between inconsistency be any there Should only. purpose for shall is translation prevail] version the version [English Chinese Total Invested units Invested (2) Details for long-term equity investment Subsidiaries Jinchuan Niedu Industrial Co., Ltd. Jinchuan Nickel Salt Co., Ltd. Jinchuan Group Wire and Cable Co., Ltd. Jinchuan Group Precision Copper Material Co., Ltd.Jinchuan Powder Materials Co., Ltd. 990,724,252.54Jinchuan Group Machinery Manufacturing Co., Ltd.Jinchuan 990,724,252.54 Group Engineering Construction Co., Ltd.Jinchang Credit Engineering Construction 443,464,718.45 Co., Ltd. Supervision Jinchuan Group Jinchang Engineering Cost 378,973,908.64 443,464,718.45Consulting Co., Ltd. -443,464,718.45 Jinchuan 378,973,908.64 Group Automation Engineering Co., Ltd. Jinchuan Nickel and Cobalt Research and Design Institute Co., Ltd. Gansu Jinchuan International Economic and Technical Cooperation Co., Ltd.

– F-358 – other income Adjustment on on Adjustment comprehensive comprehensive Jinchuan Ltd. Co., Group equity method equity Profit or loss on or loss Profit investment under investment under Changes in current year Changes in current 16,000,000.00 Notes to the Financial Statements from 01-01-2017 to 12-31-2018 to 01-01-2017 from Statements Financial the to Notes Debit Credit 167 01-01-2018 Balance on 713,813.47 713,813.47 5,500,000.00 5,500,000.00 6,500,000.00 6,500,000.00 8,000,000.00 8,000,000.00 5,000,000.00 5,000,000.00 26,235,779.00 26,235,779.00 50,002,500.00 50,002,500.00 16,000,000.00 16,000,000.00 18,904,310.57 18,904,310.57 20,000,000.00 20,000,000.00 404,400,000.00 404,400,000.00 5,850,000.00 280,000,000.00 280,000,000.00 923,000,000.00 923,000,000.00 997,500,000.00 997,500,000.00 1,476,838,415.00 1,476,838,415.00 3,205,331,554.76 3,205,331,554.76 Investment cost Investment [English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, English and the Chinese between inconsistency be any there Should only. purpose for shall is translation prevail] version the version [English Chinese Invested units Invested Gansu Jinchuan Technology Saving Energy Co., Ltd. Gansu Guobaoshan Mining Co., Ltd. Gansu Jinyu Material Co., Ltd. Gansu Jinchuan Chemical Materials Co., Ltd. Jinchuan Group Nickel Alloy Co., Ltd. Jinchuan Group Finance Co., Ltd. Lanzhou Jinchuan Science Co., Ltd. Park Gansu Jinhui Mining Co., Ltd. Gansu Jinhe Mining Co., Ltd. JinbangChina-Hong Kong (Beijing) International Cultural Consulting Co., Ltd. China Jinchuan Investment Holding Co., Ltd. Jinchuan Beijing Hotel Ltd. Co., Jinhan Material Shenyang Co., Ltd. Jinchuan Group International Trade Co., Ltd. Niedu Shanghai Hotel Co., Ltd. Jinke Nonferrous Metals Co., Ltd.

– F-359 – other income Adjustment on on Adjustment comprehensive comprehensive Jinchuan Ltd. Co., Group equity method equity Profit or loss on or loss Profit investment under investment under Changes in current year Changes in current 8,000,000.00 Notes to the Financial Statements from 01-01-2017 to 12-31-2018 to 01-01-2017 from Statements Financial the to Notes Debit Credit 4,000,000,000.00 168 01-01-2018 Balance on 3,489,028.43 3,089,070.69 5,000,000.00 5,000,000.00 8,000,000.00 8,000,000.00 63,755,420.83 63,755,420.83 399,957.74 40,428,300.00 40,428,300.00 57,969,028.73 57,969,028.73 20,000,000.00 20,000,000.00 35,196,105.00 35,196,105.00 260,479,366.59 118,481,397.84 -118,481,397.84 250,000,000.00 250,000,000.00 330,000,000.00 1,733,993,209.72 1,733,993,209.72 2,100,000,000.00 2,100,000,000.00 4,000,000,000.00 10,977,709,101.82 11,361,292,501.82 83,414,878.01 Investment cost Investment [English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, English and the Chinese between inconsistency be any there Should only. purpose for shall is translation prevail] version the version [English Chinese Invested units Invested Tibet Jinchuan Mining Investment Co., Ltd. Wuhan Jinsheng Material Wuhan Jinsheng Co., Ltd. Guangdong Jinhui Metal Co., Ltd. Guangxi Jinchuan Nonferrous Metals Co., Ltd. JinchuanBeihai Real DevelopmentEstate Co., Ltd. Mineral DevelopmentTibet Xinniu Co., Ltd. Jinchuan Group (Hong Kong) Resources Holding Co., Ltd. China Gold Nickel Industry Co., Ltd. Jintian Nickel Industry Co., Ltd. (Australia) Jinchuan Company American Jinchuan Africa South Resources Co., Ltd. Canadian Jinchuan Resources Co., Ltd. AustraliaAbyton Co., Ltd. Jinchuan Group Copper Industry Co., Ltd. Jinchang Jujia Ecological Agriculture Co., Ltd. 2. Joint Ventures

– F-360 – other income Adjustment on on Adjustment comprehensive comprehensive 31-12-2018 Balance for provision for impairment on Jinchuan Ltd. Co., Group 355,207.68 -25,408,891.02 -25,764,098.70 equity method equity 416,718,691.09 849,164,000.46 990,724,252.54 151,910,937.97 Profit or loss on or loss Profit 31-12-2018 investment under investment under 1,417,911,204.11 31,972,571,485.75 14,500,000.00 31,665,536,968.79 14,500,000.00 Changes in current year Changes in current other Notes to the Financial Statements from 01-01-2017 to 12-31-2018 to 01-01-2017 from Statements Financial the to Notes impairment Provision for Provision Debit Credit Cash dividend Change in current year Change in current 169 changes 01-01-2018 Balance on Other equity 6,000,000.00 6,277,173.76 2,500,000.00 368,500,000.00 332,443,407.98 360,000,000.00 326,166,234.22 Investment cost Investment [English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, English and the Chinese between inconsistency be any there Should only. purpose for shall is translation prevail] version the version [English Chinese Total Invested units Invested units Invested (Continued) (Continued) 3. Associates Guangzhou Longyuan Metal Co., Ltd. China Gold Group Yangshan Gold Mine Co., Ltd. Gansu Electricity Publishing and Co., Ltd.Selling 1. Subsidiaries Jinchuan Nickel Metropolitans Industrial Co., Ltd. Jinchuan Nickel Salt Co., Ltd. Jinchuan Group Wire and Cable Co., Ltd. Jinchuan Group Precision Copper Material Co., Ltd. Jinchuan Powder Materials Co., Ltd. Jinchuan Group Machinery Manufacturing Co., Ltd.

– F-361 – 31-12-2018 Balance for provision for impairment on Jinchuan Ltd. Co., Group 4,000,000.00 6,500,000.00 6,500,000.00 5,000,000.00 5,500,000.00 20,000,000.00 85,951,872.55 42,872,000.00 50,002,500.00 138,995,256.09 378,973,908.64 280,000,000.00 923,000,000.00 31-12-2018 1,476,838,415.00 3,205,331,554.76 other Notes to the Financial Statements from 01-01-2017 to 12-31-2018 to 01-01-2017 from Statements Financial the to Notes impairment Provision for Provision Cash dividend Change in current year Change in current 170 changes Other equity [English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, English and the Chinese between inconsistency be any there Should only. purpose for shall is translation prevail] version the version [English Chinese Invested units Jinchuan Group Engineering Construction Co., Ltd. Jinchang Credit Engineering Construction Supervision Co., Ltd. Jinchuan Group Jinchang Engineering Cost Consulting Co., Ltd. Jinchuan Group Automation Engineering Co., Ltd. Jinchuan Nickel and Cobalt Research and Design Institute Co., Ltd. Gansu Jinchuan International Economic and Technical Cooperation Co., Ltd. Gansu Guobaoshan Mining Co., Ltd. Gansu Jinyu Material Co., Ltd. Gansu Jinchuan Chemical Materials Co., Ltd. Gansu Jinchuan Technology Saving Energy Co., Ltd. Jinchuan Group Nickel Alloy Co., Ltd. Jinchuan Group Finance Co., Ltd. Lanzhou Jinchuan Science Co., Ltd. Park Gansu Jinhui Mining Co., Ltd. Gansu Jinhe Mining Co., Ltd. JinbangChina-Hong Kong (Beijing) International Cultural Consulting Co., Ltd.

– F-362 – 31-12-2018 Balance for provision for impairment on Jinchuan Ltd. Co., Group - - 713,813.47 8,000,000.00 8,000,000.00 5,000,000.00 3,089,070.69 26,235,779.00 18,904,310.57 20,000,000.00 64,155,378.57 57,969,028.73 410,250,000.00 997,500,000.00 250,000,000.00 31-12-2018 2,100,000,000.00 11,444,707,379.83 other Notes to the Financial Statements from 01-01-2017 to 12-31-2018 to 01-01-2017 from Statements Financial the to Notes impairment Provision for Provision Cash dividend Change in current year Change in current 171 changes Other equity [English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, English and the Chinese between inconsistency be any there Should only. purpose for shall is translation prevail] version the version [English Chinese Invested units China Jinchuan Investment Holding Co., Ltd. Jinchuan Beijing Hotel Ltd. Co., Jinhan Material Shenyang Co., Ltd. Jinchuan Group International Trade Co., Ltd. Nidu Shanghai Hotel Co., Ltd. Jinke Nonferrous Metals Co., Ltd. Wuhan Jinsheng Material Co., Ltd. Guangdong Jinhui Metal Co., Ltd. Guangxi Jinchuan Nonferrous Metals Co., Ltd. JinchuanBeihai Real DevelopmentEstate Co., Ltd. Tibet Jinchuan Mining Investment Co., Ltd. Mineral DevelopmentTibet Xinniu Co., Ltd. Jinchuan Group (Hong Kong) Resources Holding Co., Ltd. CHINA GOLD NICKEL INDUSTRY CO., LTD. Jintian Nickel Ltd. (Australia) Co., Industry Jinchuan Company American

– F-363 – 31-12-2018 Balance for provision for impairment on Jinchuan Ltd. Co., Group 6,632,381.44 35,196,105.00 40,428,300.00 307,034,516.96 300,402,135.52 31-12-2018 1,733,993,209.72 4,000,000,000.00 other Notes to the Financial Statements from 01-01-2017 to 12-31-2018 to 01-01-2017 from Statements Financial the to Notes impairment Provision for Provision Cash dividend Change in current year Change in current 172 changes Other equity [English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, English and the Chinese between inconsistency be any there Should only. purpose for shall is translation prevail] version the version [English Chinese Invested units South Africa Jinchuan Africa South Resources Co., Ltd. Canadian Jinchuan Resources Co., Ltd. AustraliaAbyton Co., Ltd. Jinchuan Group Copper Industry Co., Ltd. Jujia Jinchang Ecological Agriculture Ltd. Co., 2. Joint Ventures 3.Associates Guangzhou Longyuan Metal Co., Ltd. China Gold Group Yangshan Gold Mine Co., Ltd. Gansu Electricity Publishing and Co., Ltd.Selling

– F-364 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

5. Operating revenue and costs Details for Operating income and costs

2018 2017 Items Revenue costs Revenue Income Subtotal of principle 45,182,486,883.49 38,060,532,674.83 32,680,364,021.73 28,536,255,110.50 operating activities Nickel series 12,184,853,183.77 8,290,071,696.88 8,977,654,662.48 6,661,653,396.27 products Copper series 12,484,310,086.74 10,516,002,293.71 9,680,540,040.98 7,639,305,776.29 products Cobalt series 592,028,909.54 557,633,082.99 297,288,689.19 117,874,527.58 products Precious Metal 3,151,515,991.39 3,137,364,832.41 3,225,293,165.80 3,184,419,018.87 Products Trade 9,434,206,316.89 9,353,160,189.31 8,818,757,327.49 9,783,924,309.49

Other 7,335,572,395.16 6,206,300,579.53 1,680,830,135.79 1,149,078,082.00 Other business 242,517,374.20 197,980,057.98 289,634,113.22 168,884,224.77 subtotals Total 45,425,004,257.69 38,258,512,732.81 32,969,998,134.95 28,705,139,335.27

6. Investment income Items 2018 2017 Long-term equity investment income accounted -25,408,891.02 -10,119,458.91 by equity method Investment income from disposal of long-term 294,976.32 -1,295,331.12 equity investment Income from holding to maturity investments during holding Disposal of investment returns from holding to maturity investments Revenue from available-to-sell financial assets 1,346,226.83 2,717,592.43 investment Investment gains from disposal of financial 105,210,848.28 assets available for sale When controlling rights are acquired, the profits generated by the recounting of equity at fair value After the loss of control right, the residual equity gains will be recalculated at fair value Futures liquidation gains and losses 18,104,368.09 -1,038,533,616.36

Investment income from entrusted loans 159,071,985.07

Subsidiary dividend and others 293,411,229.51 389,681,052.53

Total 287,747,909.73 -393,266,928.08

173

– F-365 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

7.Cash flow statement

(1) Indirect method to adjust net profit to cash flows from operating activities

Supplementary information 2018 2017

Reconciliation of net profit to cash flows from operating activities: — —

Net profit 3,354,991,775.41 108,001,510.68

Add: Provision for impairment loss of assets 277,044,387.45 1,676,612,930.41

Depreciation of fixed assets, bio-assets, and natural gas 1,335,025,544.46 1,363,800,204.61

Amortization of intangible assets 83,275,286.98 83,091,335.60

Amortization of long-term deferred expenses 3,040,000.08 3,040,000.08 Losses on disposal of fixed assets, intangible assets and other 176,722.22 -1,228,959.90 long-term assets (revenue use”-“) Losses on scrapping of fixed assets (revenue use”-“) 23,662,636.43 237,472,274.28

Losses of fair value variation (revenue use”-“) -27,988,744.24 -790,842,015.04

Financial expenses (revenue use”-“) 1,444,970,686.31 1,503,674,533.59

Losses from investments (revenue use”-“) -287,747,909.73 393,266,928.08

Decrease in deferred tax assets (revenue use”-“) 710,906,671.10 -1,199,579.00

Increase in deferred tax liabilities (revenue use”-“) 1,318,888.37 -246,779.56

Decrease in inventories (revenue use”-“) 3,161,124,762.95 3,019,267,482.52

Decrease in operating receivables (revenue use”-“) ) -1,255,280,483.53 -1,617,332,091.00

Increase in operating payables (revenue use”-“) -2,473,204,587.23 2,046,332,832.61

Others

Net cash flows from operating activities 6,351,315,637.03 8,023,710,607.96 Investing and financing activities that do not affect cash receipt and payment: Liabilities converted capital Reclassify convertible bonds to be expired within one year as current liability Fixed assets subject to finance leases

3. Net increase in cash and cash equivalents:

Cash at the end of the period 1,767,006,017.33 2,597,925,231.98

Less: Opening balance of cash and cash equivalents 2,597,925,231.98 2,075,858,349.88

Add: cash equivalents at the end of the period

174

– F-366 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Supplementary information 2018 2017

Less: cash equivalents at the beginning of the period

Net increase in cash and cash equivalents -830,919,214.65 522,066,882.10

(2) Net cash balance of acquisition or disposal of subsidiaries

Items 2018 1. Cash and cash equivalents paid to acquire subsidiaries and business units Less: Cash and cash equivalents held by subsidiaries and business units

Add: Net cash outflow on acquisition of subsidiaries and business units

Add: Net cash inflow on disposal of subsidiaries and business units

Net assets of the disposed subsidiaries 16,294,976.32

(3) Information of cash and cash equivalents

Items 31-12-2018 31-12-2017

Cash 1,767,006,017.33 2,597,925,231.98

Including: Cash in stock 80,468.23 107,423.89

Bank deposits ready for payment 1,766,925,549.10 2,597,807,808.09

Other monetary fund’s ready for payment 10,000.00

Payable deposits with the Central Bank

Deposit interbank funds

Interbank dismantlement

Cash equivalents

Including: Bond investments maturing within 3 months

Closing balance of cash and cash equivalents 1,767,006,017.33 2,597,925,231.98

175

– F-367 – Jinchuan Group Co., Ltd. Notes to the Financial Statements from 01-01-2017 to 12-31-2018

[English version is for translation purpose only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail]

Jinchuan Group Co., Ltd. 28-04-2020

The notes to the financial statements on pages 17 to 176 are signed by the following responsible persons

Legal Representative Chief Financial Officer Financial Controller

Signature: ______Signature: ______Signature: ______

Date: ______Date: ______Date: ______

176

– F-368 – ISSUER

Jinchuan Golden Ocean Capital Limited (金川金海資本有限公司) Unit 3101, 31st Floor, United Centre 95 Queensway, Admiralty Hong Kong

GUARANTOR

Jinchuan Group Co., Ltd. (金川集團股份有限公司) No. 98, Jinchuan Road Jinchuan District, Jinchang City Gansu Province PRC

TRUSTEE

China Construction Bank (Asia) Corporation Limited (中國建設銀行(亞洲)股份有限公司) 28/F, CCB Tower 3 Connaught Road Central Central Hong Kong

REGISTRAR AND TRANSFER AGENT PRINCIPAL PAYING AGENT

China Construction Bank (Asia) China Construction Bank (Asia) Corporation Limited Corporation Limited (中國建設銀行(亞洲)股份有限公司) (中國建設銀行(亞洲)股份有限公司) 28/F, CCB Tower 28/F, CCB Tower 3 Connaught Road Central 3 Connaught Road Central Central Central Hong Kong Hong Kong

LEGAL ADVISORS

To the Issuer and Guarantor To the Issuer and Guarantor as to English law and Hong Kong law as to PRC law

Clifford Chance JiaYuan Law Offices 27th Floor, Jardine House F408, Ocean Plaza, 158 Fuxing Men Nei Street, One Connaught Place Hong Kong Xicheng District, Beijing 100031, People’s Republic of China

To the Joint Lead Managers and the Trustee To the Joint Lead Managers as to PRC law as to English law and Hong Kong law

Linklaters Commerce & Finance Law Offices 11th Floor, Alexandra House 6/F, NCI Tower, A12 Jianguomenwai Avenue, Chater Road Chaoyang District, Beijing Hong Kong 100022, People’s Republic of China

AUDITORS OF THE GUARANTOR

WUYIGE Certified Public Accountants LLP 22F Xueyuan International Tower, No. 1 Zhichun Road, Haidian District, Beijing