Lingbao Gold Group Company Ltd. Lingbao Gold Group Company Ltd. Lingbao 靈寶黃金集團股份有限公司 靈寶黃金集團股份有限公司 (A joint stock limited company incorporated in the People’s Republic of China with limited liability) Gold G r oup C o m pan y Ltd . 靈寶黃金集團股份有限公 司 2020 2020 年報 Annual Report ANNUAL REPORT 2020 年報 CONTENTS Corporate Information 2 Financial Highlights 4 Corporate Profile 6 Chairman’s Statement 12 Management Discussion and Analysis 16 Profile of Directors, Supervisors and Senior Management 25 Corporate Governance Report 30 Environmental, Social and Governance Report 44 Report of the Supervisory Committee 56 Directors’ Report 57 Independent Auditor’s Report 64 Consolidated Statement of Profit or Loss 73 Consolidated Statement of Profit or Loss and 74 Other Comprehensive Income Consolidated Statement of Financial Position 75 Consolidated Statement of Changes in Equity 77 Consolidated Cash Flow Statement 78 Notes to the Financial Statements 80 Five Years Summary 160 CORPORATE INFORMATION DIRECTORS NOMINATION COMMITTEE Mr. Wang Guanghua (Chairman) Executive Directors Mr. Xing Jiangze Mr. Chen Jianzheng (Chairman) Mr. Han Qinchun Mr. Xing Jiangze Mr. Wang Jiheng Ms. Zhou Xing Mr. Zeng Xiangxin (appointed on 6 July 2020) Mr. Zeng Xiangxin Mr. Yang Dongsheng (resigned on 6 July 2020) Non-executive Directors REMUNERATION AND REVIEW Mr. Shi Yuchen COMMITTEE Mr. Zhang Feihu Mr. Wang Jiheng (Chairman) Mr. Wang Leo (re-designated from executive Director Mr. Han Qinchun on 6 July 2020) Mr. Wang Guanghua Mr. Zeng Xiangxin (appointed on 6 July 2020) Independent Non-executive Directors Mr. Yang Dongsheng (resigned on 6 July 2020) Mr. Han Qinchun Mr. Wang Jiheng COMPANY SECRETARY Mr. Wang Guanghua Mr. Chui Man Lung Everett Mr. Xu Rong (appointed on 6 July 2020) Mr. Yang Dongsheng (resigned on 6 July 2020) AUTHORISED REPRESENTATIVES Mr. Chen Jianzheng SUPERVISORS Mr. Chui Man Lung Everett Mr. Yang Shilei Mr. Guo Xurang INTERNATIONAL AUDITOR Mr. Zhao Bingbing KPMG Mr. Dai Weitao (appointed on 8 January 2020 and Public Interest Entity Auditor registered resigned on 17 March 2021) in accordance with the Financial Reporting Mr. Jian Zhanxun (resigned on 8 January 2020) Council Ordinance STRATEGY COMMITTEE PRC AUDITOR Mr. Chen Jianzheng (Chairman) KPMG Huazhen LLP Ms. Zhou Xing Public Interest Entity Auditor recognised Mr. Wang Leo in accordance with the Financial Reporting Mr. Han Qinchun Council Ordinance Mr. Zeng Xiangxin Mr. Yang Dongsheng (resigned on 6 July 2020) LEGAL ADVISER Hong Kong law AUDIT COMMITTEE Baker Mckenzie Mr. Xu Rong (Chairman) (appointed on 6 July 2020) Mr. Shi Yuchen PRC law Mr. Han Qinchun King & Wood Mallsons Mr. Wang Jiheng Mr. Wang Guanghua Mr. Yang Dongsheng (resigned on 6 July 2020) 2 LINGBAO GOLD GROUP COMPANY LTD. Annual Report 2020 CORPORATE INFORMATION PRINCIPAL BANKERS INVESTOR RELATIONS CONTACT Bank of China, Lingbao City Branch Mr. Xing Jiangze Agricultural Bank of China, Lingbao City Branch PRC Office China Construction Bank, Lingbao City Branch Hangu Road and Industrial and Commercial Bank of China, Jingshan Road Intersection Lingbao City Branch Lingbao Industrial Bank of China, Zhengzhou Branch Henan Bank of Communications of China, Zhengzhou Branch The People’s Republic of China China Development Bank (Postcode: 472500) Zhongyuan Bank, Sanmenxia Branch Tel: (86-398) 8860-166 Email: [email protected] SHARE REGISTRAR AND TRANSFER OFFICE FOR H SHARES Mr. Chui Man Lung Everett Computershare Hong Kong Investor Services Limited Hong Kong Office 17M Floor, Hopewell Centre Room 1104, 11/F 183 Queen’s Road East Leighton Centre Wanchai 77 Leighton Road Hong Kong Causeway Bay, Hong Kong Email: [email protected] REGISTERED OFFICE OF THE COMPANY Hangu Road and Jingshan Road Intersection Lingbao City Henan Province The PRC PRINCIPAL PLACE OF BUSINESS IN HONG KONG Room 1104, 11/F Leighton Centre 77 Leighton Road Causeway Bay, Hong Kong STOCK INFORMATION Stock Code : 3330 Listing Date : 12 January 2006 Issued Shares : 297,274,000 shares (H Shares) 566,975,091 shares (Domestic Shares) Nominal Value : RMB0.20 per share Stock Name : Lingbao Gold Website of the Company : www.lbgold.com Investors’ website : www.irasia.com/listco/hk/lingbao Annual Report 2020 LINGBAO GOLD GROUP COMPANY LTD. 3 FINANCIAL HIGHLIGHTS PROFIT/(LOSS) FOR THE YEAR — REVENUE — CONTINUING OPERATIONS CONTINUING OPERATIONS RMB’000 RMB’000 2020 5,599,947 2020 57,321 2019 5,874,357 2019 (251,841) 2018 3,781,660 2018 (1,178,925) 2017 4,176,572 2017 (205,182) Year Year 4 LINGBAO GOLD GROUP COMPANY LTD. Annual Report 2020 FINANCIAL HIGHLIGHTS SALES ANALYSIS BY PRODUCTS 0.01% 0.10% 4.07% 1.48% 6.37% 1.48% 2.16% 1.64% 2020 92.28% 2019 90.41% Gold Bullion Gold concentrates Copper products Sulphuric acid Silver CAPITAL RESOURCES 2020 2019 2018 2017 RMB’000 RMB’000 RMB’000 RMB’000 Total assets 6,704,690 5,932,254 8,212,816 7,946,667 Cash and cash equivalent 132,709 318,671 811,237 455,427 Bank and other borrowings 3,760,615 3,417,277 4,569,951 4,893,411 Total equity attributable to equity shareholders of the Company 1,783,148 1,652,336 2,066,449 1,223,931 Annual Report 2020 LINGBAO GOLD GROUP COMPANY LTD. 5 CORPORATE PROFILE Lingbao Gold Group Company Ltd. (“Lingbao Gold” or the “Company” and together with its subsidiaries, the “Group”) is listed on the Main Board of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) since 12 January 2006. The Group is an integrated gold mining enterprise in the People’s Republic of China (“PRC”), and is mainly engaged in gold mining, smelting and refining. The products of the Group are gold, silver, copper products and sulphuric acid. The Shanghai Gold Exchange certified the Group as a standard gold bullion production enterprise. The Group’s mineral resources are scattered in the PRC regions of Henan, Xinjiang, Jiangxi, Inner Mongolia, Gansu and Kyrgyz Republic (“KR”) with 31 mining and exploration rights with a total area of 289.2 sq. km. The total gold reserve and resources as at 31 December 2020 were approximately 39.69 tonnes (approximately 1,276,033 ounce) and 92.02 tonnes (approximately 2,958,443 ounce) respectively. The gold reserve and resources report is prepared in accordance with PRC GB/T17766–2020, “Solid Mineral Resources/Reserves Classification”, GB/T13908–2020 “General Requirements for Solid Mineral Geological Exploration” and DZ/T0205–2020 “Geological Exploration Requirements for Hard-Rock Gold”. In 2020, approximately 13,778 kg (approximately 442,972 ounce) of gold was produced, and the basic and diluted earnings per share for the year amounted to RMB0.10. The objective of the Group’s strategy in the future is continuous expansion, to become the leading integrated gold mining enterprise in the PRC and gradually promote our brand in the international market. The Group will focus on the exploration and expansion of production scale and continue to acquire gold resources with potential. The following is a table of gold resources and reserves of the Group as at 31 December 2020: Proven+ No. Mine (Project) Name Minerals Unit Indicated Inferred Total 1 Henan Lingjin No. 1 Mine Gold Ore (t) 609,375 123,428 732,803 Grade (g/t) 5.34 6.18 5.48 Gold Contained (kg) 3,256 763 4,019 2 Deep exploration area of Henan Gold Ore (t) 2,772,542 3,433,447 6,205,989 Lingjin No. 1 Mine Grade (g/t) 4.09 5.10 4.65 Gold Contained (kg) 11,348 17,521 28,869 3 Henan Hongtuling Gold Mine Gold Ore (t) 116,856 113,120 229,976 Grade (g/t) 4.79 4.75 4.77 Gold Contained (kg) 560 537 1,097 4 Henan Hongxin No. 1 Mine Gold Ore (t) 113,027 36,065 149,092 Grade (g/t) 4.41 3.88 4.29 Gold Contained (kg) 499 140 639 5 Henan Lingjin No. 2 Mine Gold Ore (t) 691,058 364,941 1,055,999 Grade (g/t) 7.44 7.42 7.43 Gold Contained (kg) 5,144 2,707 7,851 6 Henan Lingjin No. 3 Mine Gold Ore (t) 126,395 131,354 257,749 Grade (g/t) 5.60 4.62 5.10 Gold Contained (kg) 708 607 1,315 6 LINGBAO GOLD GROUP COMPANY LTD. Annual Report 2020 CORPORATE PROFILE Proven+ No. Mine (Project) Name Minerals Unit Indicated Inferred Total 7 Henan Pengjialaozhuang Gold Mine Gold Ore (t) 62,891 545,992 608,883 Grade (g/t) 4.47 4.69 4.66 Gold Contained (kg) 281 2,558 2,839 8 Henan Shangshanghe Gold Mine Gold Ore (t) 513,999 320,317 834,316 Grade (g/t) 4.76 4.78 4.77 Gold Contained (kg) 2,448 1,532 3,980 9 Periphery of Henan Shangshanghe Gold Ore (t) 388,920 3,012,545 3,401,465 Gold Mine Grade (g/t) 5.53 4.81 4.89 Gold Contained (kg) 2,151 14,485 16,636 10 Henan Laowan Gold Mine Gold Ore (t) 138,124 116,534 254,658 Grade (g/t) 4.32 3.42 3.91 Gold Contained (kg) 597 399 996 11 Henan Eastern Laowan Gold Mine Gold Ore (t) 66,491 267,701 334,192 Grade (g/t) 5.46 6.37 6.19 Gold Contained (kg) 363 1,705 2,068 12 Xinjiang Duolanasayi Gold Mine Gold Ore (t) 249,434 1,079,225 1,328,659 Grade (g/t) 3.97 4.72 4.58 Gold Contained (kg) 990 5,092 6,082 13 Deep part of Xinjiang Duolanasayi Gold Ore (t) 552,396 552,396 Gold Mine Grade (g/t) 6.27 6.27 Gold Contained (kg) 3,461 3,461 14 Periphery of Xinjiang Duolanasayi Gold Ore (t) 129,803 129,803 Gold Mine Grade (g/t) 5.18 5.18 Gold Contained (kg) 672 672 15 Xinjiang Tuokuzibayi Gold Mine Gold Ore (t) 84,558 95,231 179,789 Grade (g/t) 4.84 8.81 6.94 Gold Contained (kg) 409 839 1,248 16 Deep part of Xinjiang Tuokuzibayi Gold Ore (t) 21,828 318,909 340,737 Gold Mine Grade (g/t) 4.76 4.90 4.89 Gold Contained (kg) 104 1,563 1,667 17 Jinchanshan Gold Mine of Inner Gold Ore (t) 616,105 291,140 907,245 Mongolia Grade (g/t) 5.07 4.98 5.04 Gold Contained (kg) 3,125 1,451 4,576 18 Jinchanshan Shuiquan Gou Gold Mine Gold Ore (t) 746,112 746,112 of Inner Mongolia Grade (g/t) 10.13 10.13 Gold Contained (kg) 7,560 7,560 Total of gold contained — Domestic 31,983 63,592 95,575 Annual Report 2020 LINGBAO GOLD GROUP COMPANY LTD.