Evaluación del Posible Impacto Social, Ambiental y Financiero del CDCA

One of the largest gold production companies in the PRC with a leading industry position

The Group primarily engages in the exploration, mining, smelting, processing and trading of gold. The Group is one of the largest gold production companies in the PRC in terms of scale of production, resources and reserves and research and development technologies. For the year ended 30 June 2015, the Group’s sales volume of gold amounted to 100.60 tonnes.

In 2012, the Group ranked first in the PRC gold industry in the China Gold Yearbook in terms of gold production and ranked 13th on the Forbes List of Global Gold Industries. In 2013, the Group ranked first in the gold industry as one of the “Top 500 listed companies in China” as recognised by Fortune China. In 2014, the Group signed a strategic cooperation agreement with the Shanghai Stock Exchange.

As at 30 June 2015, the Group believes that it is one of the most advanced gold ore processing enterprises in the world in terms of scale of production, utilisation of ores and research and development capability. The Group has maintained its leading position in the gold production industry in the PRC in terms of quality management, profitability, and return on investment and construction cycles. As at 30 June 2015, the Group has obtained 29 national and provincial level science and technology awards, as well as a total of 121 awards from China’s Industry Association.

A market leader in gold reserves with ample resources

The Group has one of the most extensive network of gold production and reserves in the PRC, with a coverage to eight provinces, including Shandong, Inner Mongolia, Gansu, Hainan, Henan, Shaanxi, Fujian and Qinghai. The Group’s primary mines are located in gold concentration areas in the Shandong province such as the San Shan Dao and the Jiao Jia metallogenic belt region, possessing approximately 1,000 tonnes of gold resources within the coverage of less than 200 square kilometres. Four of the Group’s mines individually contain over 100 tonnes of resources, and together comprise more than 67 per cent. of the Group’s mine-produced gold output and over 70 per cent. of the Group’s profit.

The Group’s reserves as at 30 June 2015 comprised of: 1,530 tonnes of gold, 2,636 tonnes of silver, 60,000 tonnes of copper, 2.28 million tonnes of lead and zinc, and 189.82 million tonnes of iron ore. In recent years, the Group has also been expanding its reserves by carrying out explorations and acquiring mining assets in the PRC in order to support the Group’s long term and sustainable development.

As at 30 June 2015, the Group owned 392 exploration rights and mining rights, involving over 3,405 square kilometres of mining area. In recent years, with a relatively strong balance sheet and a steady income stream, the Group has also been increasing its gold reserves by carrying out explorations and acquiring mining assets in the PRC in order to support the Group’s long term and sustainable development.

Integrated business model covering the entire value chain of the mining industry

The Group has established an integrated business model covering key sections of value chain of the mining industry, including the development of mining resources, manufacturing and processing of minerals, refinery, marketing services and technology. In particular, the Group's Chifeng Shanjin Silver Lead (赤峰山 金銀鉛) Refinery is the biggest lead refinery in the Chifeng area in terms of scale of productions. The Group has managed to secure abundant resources through its own large-scale mines, and believes that its integrated business model allows it to maximise the profit along the entire value chain of relevant minerals and metals and to mitigate the risks associated with operating a single product line or negative impact from the economic cycle.

The Group also has one of the largest refining businesses in Asia. The Group’s 1,200 tonnes/day integrated gold refining and recycling project successfully reached its designed production capacity on 20 March 2012. This project has four centralised subordinated cyaniding locations in the Jiao Jia, Xin Cheng, San Shan Dao, and the Ling Long Gold Mine. This integrated gold refining and recycling project has improved the recovery rate of yellow and white gold, and achieved comprehensive recovery and utilisation for copper, lead, zinc, sulfur, and other elements of the gold mines.

Commitment to environmental protection through engagement in ecological mining construction and also dedication to social responsibility

The Group is committed to the adoption of various models for environmental protection and sustainable development of its operations. It currently operates 11 mines that are designated by the China Mining Association (中國礦業聯合會) as green mines. With the benefit of advanced technology, the models aim to engage in ecological mining construction by lowering resource consumption and minimising pollution. The Group has also invested in various environmental protection projects and has made great achievements. For example, some of the Group’s mines have been recognised as the “National Advanced Mining Enterprise Properly Developing and Utilising Mineral Resources” (全國礦產資源合理開發利用先進礦山企業), “National Green Mining Pilot Unit” (國家級綠色礦山試點企業), and the only “National Environmentally-friendly Enterprise” (國家環境友好企業) among the mining enterprises across the country. The Group has also been vigorously promoting popularisation and application of new safety technologies, new equipment, renovating mine safety systems, stepping up efforts to prevent occupational disease, actively using water recycling, waste water purification, geothermal energy development, and other ecological and energy saving technologies. In March 2014, the Group was awarded the first prize of the Shandong Enterprise Management Innovation Award (山東省企業管理創新成果一等獎) by the Shandong SASAC and the Shandong Economic and Information Technology Committee for its ecological mining construction methods.

The Group is also dedicated in taking up corporate social responsibility by participating in various charities, caring and sharing with its employees and reaching out to the community. In April 2013 and December 2014, the Group was awarded with the China Charity Award (中華慈善獎) by the Ministry of Civil Affairs of the PRC and the Shandong Charity Award (山東慈善獎) by the Department of Civil Affairs of Shandong Province, respectively.

Dedicated management team with extensive industry experience and global vision with strong support from a team of talented professionals

Through over 19 years of efforts in the PRC and overseas, the Group has forged a dedicated management team with extensive industry experience and global vision, which can quickly capture the ever-changing market opportunities. The Company’s senior management team has significant experience in the gold and non-ferrous metals industry and global mining and metals industry, strong technical and operational expertise in mining operations, as well as processing, manufacturing and marketing of minerals and metals. Many members of the senior management of the Company have extensive working experience within the Group for over five years, which allows them to master industry knowledge and skills in managing the Group’s business operations.

In addition, many members of the Group’s management team have received education or on-position training. As at 31 July 2015, the Group had 24,280 employees, 7,482 of which were university or tertiary educated or above. As a result, the Group’s management team has accumulated valuable experience in managing and operating overseas investment or production projects. The significant experiences and proven track record of the Group’s successful development provide the Group’s senior management team with an in-depth understanding of the metals and mining market, allowing them to develop a long-term strategy to

enhance the Group’s leading position and lead its future development. Furthermore, the Group has a highly proficient professional workforce and therefore the Group views its employees as key to its sustainable development and future success and is committed to maintain and enhance its team of professionals.

A leader in mining, exploration and refining technologies

Technologies and equipments in the gold mining metal material processing industry are generally required to be suitable for practical, flexible and efficient applications. The development of such technologies and equipments requires multi-disciplinary and integrated cooperation, while the implementation and elevation of such technologies and equipments are achieved through a significant amount of engineering practice and continuous technological innovation. The Group is an industry leader in gold mining and processing in the PRC and possesses a number of technological advantages in respect of its gold mining operations. The Group believes that its strong capacity for continuous technological innovation ensures that it maintains a leading position in terms of technologies in the gold industry.

The Group has invested substantially in terms of technological research and development, and has successfully created various high-level technological research platforms which are well recognised by governmental organisations and bodies. As at 30 June 2015, the Group owned six professional institutes and one A-grade gold design institute. In 2012, the Group was recognised as a “National Enterprise Technology Centre”（國家級企業技術中心）by the NDRC and the Ministry of Science and Technology of the PRC; in 2015, the Group was recognised as a “State-owned Excellent Innovative Team” (山東省管企業優秀創新團 隊) by the Shandong SASAC for its deep mining technologies; in 2011, the Group was recognised as the “Shandong Provincial Seabed Mining Technologies Research Centre” (山東省海底深部生態採全工程技術 研究中心) by the Department of Science and Technology of the Shandong Province.

The Group was further recognised as an “Academian Workstation" (院士工作站) in 2011 by the Department of Science and Technology of the Shandong Province and the Shandong Provincial Organisation Department of the Chinese Communist Party and a “Post-doctoral Workstation” (博士後工作站) in 2008 by the Ministry of Human Resources and Social Security of the PRC.

As at 30 June 2015, the Group’s investment in research and development amounted to approximately RMB 81.91 million and has won several awards for its research and development achievements, including the second prize of the “National Scientific and Technological Improvement Award” (國家科技進步二等獎) by the State Council of the PRC (the “State Council”) for both its large scale under-sea metal mining and critical safety assurance technologies in 2012; and its hard rock responsive hazards creation process mechanism and dynamic control technologies in 2013; and the first prize of the “Shandong Provincial Scientific and Technological Improvement Award” (山東省科技進步一等獎) by the Shandong Provincial People’s Government in 2012 for its rock-crushing and earthquake prediction and control technologies.

As a result of its ability to rely on various post-doctoral scientific research workstations, academia workstations, and enterprise technology centres recognised by the PRC government, the Seabed Ecological Gold Mining Engineering and Technology Research Centre of the Shandong Province and other comprehensive development platforms, and co-operation with domestic and foreign research institutes, the Group is able to incorporate and develop independently various technologies such as intelligent mining technologies, undersea and deep mining, intelligent beneficiation, zero discharge of wastewater technologies and processes, and other gold beneficiation and refining technologies.

Diversified financing channels able to optimise capital structure and liquidity

Leveraging the credit advantages available to state-owned enterprises, the Group benefits from access to diversified funding sources, including the capital markets in China, through domestic medium term and short term bond offerings, as well as its long-standing relationships with Chinese commercial banks, all of which

help the Group to acquire low cost financing with relatively long repayment periods. In addition, the Group has access to equity markets in the PRC and overseas through its listed subsidiary Shandong Gold Mining Co., Ltd (SH: 600547). Capitalising on its strong financing capacities and experienced fund management team, the Group believes that it is well positioned to increase its capital reserves, further expand its business operations and capture potential growth opportunities in future.

The Group adopts a prudent approach to financial management and proactively manages its debt exposure closely, and as a result it has historically enjoyed a well-balanced debt maturity profile. Along with business expansion, the Group has increased its focus on managing leverage, including setting appropriate target leverage ratios and enhancing its debt maturities profile to reduce risk. During the years ended 31 December 2012, 2013 and 2014, the Group had continually improved its financial performance. The cash flow from operations achieved steady growth while the revenue, EBITDA, and EBITDA margin remained stable during the years ended 31 December 2012, 2013 and 2014. As a result, the Group’s credit metrics continually improved during the years ended 31 December 2012, 2013 and 2014.