Regulatory Environment - The PRC government has significant authority to influence the operations of China-based companies, which may affect their ability to conduct business and accept foreign investments [15]. - Recent regulatory actions by the PRC government, including the PRC Data Security Law, impose obligations on data activities that could impact the company's operations and compliance costs [23]. - The Holding Foreign Companies Accountable Act (HFCA Act) may lead to the company's shares being prohibited from trading on U.S. exchanges if audit reports are not from PCAOB-inspected firms for two consecutive years [17]. - The company is required to comply with new filing and reporting procedures for overseas securities offerings as per the Overseas Listing Trial Measures effective March 31, 2023 [23]. - The company has faced risks related to potential regulatory changes that could adversely affect its business and financial condition [16]. - The PCAOB's ability to inspect audit firms in mainland China and Hong Kong is crucial for maintaining compliance with U.S. regulations [17]. - The company is classified as a "Commission-Identified Issuer" under the HFCAA, which subjects it to potential delisting risks if the PCAOB cannot inspect its auditor for two consecutive years [29]. - The PRC government may exert more control over offshore holding companies, which could significantly limit the company's ability to offer securities and adversely affect their value [42]. - The company faces risks related to changes in PRC laws and regulations, which may materially affect its business operations and financial condition [27]. - The approval of PRC government authorities may be required for offshore offerings, creating uncertainty in capital raising efforts [30]. - The company has faced uncertainties regarding the PRC legal system, which could adversely affect its operations and compliance [43]. - Changes in PRC laws and regulations may adversely affect the company's business operations and profitability due to substantial uncertainties in interpretation and enforcement [44]. - PRC regulations on loans and direct investments by offshore holding companies may delay or prevent the company from funding and expanding its PRC subsidiaries, impacting liquidity [45]. - The company is required to maintain compliance with various PRC laws and regulations, and failure to do so could materially affect its business [55]. - The company is subject to the Revised Confidentiality and Archives Administration Provisions, which mandate strict adherence to confidentiality in overseas securities activities [55]. - The company has not received any investigation or sanction from PRC authorities regarding national security issues related to its operations [57]. - The company is subject to uncertainties regarding future regulatory changes that could impact its business operations and financial condition [57]. - The company will monitor the regulatory environment closely to ensure compliance with data security laws and regulations [57]. - The interpretation and implementation of new data security laws remain uncertain, which could materially affect the company's operations and securities [57]. Financial Performance - The company has incurred losses from operations in each of the preceding three fiscal years: 2021, 2022, and 2023, with no assurance of future profitability [36]. - The company incurred operating losses of CNY10.48 million, CNY24.55 million, and CNY9.14 million (US$1.29 million) for the fiscal years 2021, 2022, and 2023 respectively [87]. - The company has generated losses from operations over the past three fiscal years and may continue to incur significant losses in the foreseeable future [86]. - Net loss decreased by CNY9.86 million (US$1.39 million) from CNY22.30 million in 2022 to CNY12.44 million in 2023 [207]. - Profit from discontinued operations decreased by CNY5.15 million (US$0.73 million) from CNY1.04 million in 2022 to a loss of CNY4.11 million in 2023 [207]. - The total net value of property, plant, and equipment for Bayannaoer Mining was approximately CNY0.05 million (US$0.01 million) as of December 31, 2023 [192]. - Administrative expenses decreased by CNY12.37 million (US$1.75 million) from CNY25.25 million in 2022 to CNY12.88 million in 2023 [207]. - Other income increased by CNY3.04 million (US$0.43 million) from CNY0.70 million in 2022 to CNY3.74 million in 2023, primarily due to government compensation for the termination of 5 mine exploration rights [207]. Cash Flow and Dividend Restrictions - Cash and asset transfers between the company and its subsidiaries totaled HK$114,000 (approximately US$16.1 million) in 2023, primarily for working capital [20]. - The company has not made any capital contributions or received dividends from its subsidiaries during the reporting periods [19]. - The PRC subsidiaries are subject to restrictions on paying dividends, which may limit cash availability for distributions to investors [18]. - The company is subject to restrictions on paying dividends and making payments to its offshore holding company, which could impact cash flow [27]. - The company's ability to pay dividends is restricted by PRC regulations, which only allow payments from accumulated profits and require setting aside a portion of after-tax profits as reserve funds [47]. - Government controls on currency conversion may restrict the company's ability to remit foreign currency for dividends or obligations, potentially affecting financial operations [49]. - The company may face restrictions on dividend payments from its PRC subsidiaries, which can only pay dividends out of retained earnings [130]. Market Conditions and Economic Factors - Inflation in the PRC and a slowing economy could negatively affect the company's profitability and growth, as rising costs may not be compensated by product price increases [46]. - The fluctuation of the Renminbi may materially and adversely affect the company's investment value [27]. - Fluctuations in the Renminbi against the U.S. Dollar may materially impact the company's cash flows and financial condition, especially as most operating expenses are in CNY [52]. - The market prices of metals are influenced by geopolitical tensions and economic conditions, which could adversely affect the company's operations and profitability [66]. - In 2023, lead prices on the Shanghai Futures Exchange fluctuated between CNY15,015 (US$2,121) and CNY17,540 (US$2,478) per ton, while silver prices ranged from CNY4,756 (US$672) to CNY6,343 (US$896) per kg, and copper prices varied from CNY62,690 (US$8,856) to CNY71,500 (US$10,101) per ton, indicating significant market volatility [67]. Corporate Governance and Compliance - The company aims to become a leading multi-resources company in China while complying with high international standards of corporate governance and enhancing cost effectiveness [135]. - The company has obtained all necessary licenses, permits, and approvals to operate its business in China, and has not been denied any such licenses [55]. - The company has completed SAFE registration for its executive officers and employees regarding stock incentive plans, mitigating potential legal and financial risks [59]. - The company faces regulatory uncertainties that could restrict the adoption of additional incentive plans under PRC law, potentially impacting employee retention and motivation [59]. - The company has historically engaged in substantial related party transactions, which may not be as favorable as those with unrelated parties [99]. - The company is exempt from certain Nasdaq requirements, including independent review of related party transactions, due to its status as a foreign private issuer [97]. - The company has incurred considerable costs to comply with Section 404 of the Sarbanes-Oxley Act, which may impact financial resources [91]. Exploration and Mining Activities - The Moruogu Tong Mine is currently in the exploration stage, with no revenues generated yet, and funding for exploration is planned through borrowings or cash on hand [62]. - The company holds an exploration permit for the Moruogu Tong Mine in Inner Mongolia, indicating the presence of lead and silver [123]. - The exploration site of the Moruogu Tong Mine covers an area of approximately 7.81 square kilometers, with indications of lead and silver presence [193]. - The exploration program at the northern part of Moruogu Tong Mine has covered an area of 3.22 square kilometers, involving 76 drilling holes totaling 22,272.86 meters [146]. - Initial results indicate the presence of lead and silver, with the average grade of lead in the deposit being over 1.81% [147][148]. - Future exploration costs for the northern part of Moruogu Tong Mine are estimated at approximately CNY11.38 million (US$1.61 million) [146]. - The company plans to accelerate exploration in the southern part of Moruogu Tong Mine with an initial investment of CNY2.16 million for six additional drilling holes [146]. - The company may face unforeseen risks related to the acquisition of the Zimbabwean lithium mine, including undisclosed issues affecting mineral extraction [77]. Acquisitions and Divestitures - The company entered into a Sale and Purchase Agreement to sell 100% equity interest of Precise Space-Time Technology Limited for approximately CNY95.76 million [74]. - The completion of the acquisition of Williams Minerals is conditional upon various factors, including the payment of US$140 million and the issuance of independent technical reports [79]. - The company has entered into a definitive agreement to acquire Williams Minerals, which owns a mining permit for a Zimbabwean lithium mine, with a maximum consideration of US$1.75 billion [120]. - The acquisition of Williams Minerals is expected to vest cumulatively from 2024 through 2026, contingent upon independent technical reports and full settlement of the purchase consideration [120]. - The divestiture of the wastewater treatment segment may adversely impact the company's business if it cannot offset the loss of revenue from this segment [74]. - The company completed the sale of PST Technology in July 2023, discontinuing its wastewater treatment segment and focusing solely on metal exploration and mining activities [118]. - The total value of consideration for the acquisition of PST Technology was approximately CNY104.1 million (US$14.7 million), reflecting a 20% discount to the independent valuation [121]. Employee and Labor Costs - The average wage level for employees has increased, leading to expected higher labor costs, which may adversely affect profitability if not passed on to customers [61]. - The company may incur penalties if it fails to comply with PRC regulations regarding employee benefits and social security contributions [61]. - The company may experience dilution if additional equity securities are issued or if outstanding warrants are exercised [101]. - Mr. Li Feilie beneficially owns approximately 54.5% of the company's outstanding common shares, allowing him significant influence over shareholder votes [111].

Registration No. 333 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM F-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 CHINA NATURAL RESOURCES, INC. (Exact name of Registrant as specified in its charter) Not Applicable (Translation of Registrant's name into English) British Virgin Islands 1040 Not Applicable (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial (I.R.S. Employer Identification number) Room 2205, 22/F, West Tower, Sh ...

Group 1 - China Natural Resources, Inc. closed a registered direct placement of approximately $3.27 million, issuing 1,487,870 common shares at a price of $2.20 per share [1] - The company also issued warrants for the purchase of up to 1,115,903 common shares at an exercise price of $3.00 per share, with a term of 42 months [1] - Net proceeds from the offering will be used for general corporate purposes [1] Group 2 - The common shares are offered through a prospectus supplement as part of the company's effective shelf registration statement [2] - The shelf registration statement was declared effective by the SEC on February 10, 2023 [2] Group 3 - China Natural Resources operates in two segments: wastewater treatment and exploration and mining [3] - The company is engaged in acquiring mining rights in Inner Mongolia and exploring for lead, silver, and other nonferrous metals [3] - The company plans to acquire Williams Minerals, which operates a lithium mine in Zimbabwe, for a maximum consideration of $1.75 billion, expected to close in 2024 [3]

Group 1 - China Natural Resources, Inc. has entered into a securities purchase agreement for a registered direct placement of approximately $3.27 million of common shares at a price of $2.20 per share, issuing a total of 1,487,870 common shares [1] - In a concurrent private placement, the company will issue common share warrants initially exercisable for the purchase of up to 1,115,903 common shares at an exercise price of $3.00 per share, with a term of 42 months [1] - The net proceeds from this offering will be used for general working capital purposes, with completion expected on or about February 21, 2024, subject to customary closing conditions [1] Group 2 - FT Global Capital, Inc. acted as the exclusive placement agent for the transaction [2] - The common shares are being offered through a prospectus supplement as part of the company's effective shelf registration statement filed with the SEC [2] Group 3 - China Natural Resources operates in two reportable segments: wastewater treatment and exploration and mining, and is engaged in acquiring mining rights in Inner Mongolia [3] - The company recently agreed to acquire Williams Minerals, which operates a lithium mine in Zimbabwe, for a maximum consideration of $1.75 billion, with the acquisition expected to close in 2024 [3]

Group 1 - China Natural Resources (CHNR) stock is experiencing significant trading activity, with over 4.6 million shares traded compared to its daily average of approximately 62,000 shares [1] - The stock has surged by 201.8% as of Thursday morning, indicating a substantial price increase [2] - CHNR is classified as a penny stock, with a previous closing price of $1.03 and a market capitalization of around $8.454 million [1][2] Group 2 - The volatility of stocks based in China has been noted, which may contribute to the current trading dynamics of CHNR [1] - Penny stocks like CHNR are susceptible to manipulation by retail and day traders, which can lead to rapid price increases followed by sharp declines [2] - Investors are advised to be cautious, as the current rise in CHNR stock may be driven by speculative trading rather than fundamental value [2]

Acquisition and Expansion - The company is in the process of acquiring Williams Minerals, which holds the mining permit for a lithium mine in Zimbabwe, with a completion contingent on several conditions[11]. - The acquisition involves a 70% ownership by the controlling shareholder and a 30% ownership by a non-affiliate, with no guarantee of closing at anticipated terms[11]. - The company is focused on expanding its operations in the wastewater treatment sector through the acquisition of PST Technology and Shanghai Onway[24]. - The company is assessing strategic alternatives, including potential partnerships and acquisitions in non-natural resources sectors[24]. - The company has diversified into the environmental protection sector by acquiring PST Technology, with a total consideration of approximately CNY104.1 million (US$15.1 million), which was a 20% discount to the independent valuation[209]. - The company is actively exploring business opportunities in the healthcare and other non-natural resource sectors[206]. - The company plans to pay the first installment of US$140 million in cash or promissory notes for the acquisition of Williams Minerals[160]. - The completion of the acquisition of Williams Minerals is conditional upon various conditions, with no assurance that these will be fulfilled[50]. - The acquisition of PST Technology has resulted in substantial costs, with future integration costs potentially exceeding initial estimates[49]. - The anticipated benefits of the acquisition may be affected by changes in the economic, political, and regulatory environment, including fluctuations in foreign exchange rates and demand for lithium[164]. Financial Performance and Risks - The company has incurred losses from operations in each of the preceding three fiscal years, with no assurance of future profitability[51]. - The company incurred operating losses of CNY 14.71 million, CNY 23.73 million, and CNY 30.72 million (US$4.45 million) for the fiscal years 2020, 2021, and 2022 respectively[178]. - The company acknowledges potential fluctuations in interest rates and foreign exchange rates that could affect financial performance[26]. - The company is exposed to risks related to geopolitical events, including the conflict between Russia and Ukraine, which may impact operations[24]. - The company is subject to risks associated with cost overruns in fixed-price contracts for EPC projects, which could materially affect financial results[128]. - The company faces uncertainties regarding the viability of mining and estimates of reserves at both the Moruogu Tong Mine and the Zimbabwean lithium mine[24]. - The company has faced challenges in retaining key personnel, which could impact its future success and growth prospects[180]. - The company has incurred significant expenses related to the acquisition, including legal and accounting fees, which could adversely affect its financial condition[162]. Regulatory and Compliance Issues - The company is subject to PRC laws and regulations that may restrict its ability to make dividends and distributions to investors, including U.S. investors[32]. - Recent regulatory actions by the Chinese government, including the PRC Data Security Law, could significantly impact the company's ability to conduct business and accept foreign investments[38]. - The company was identified as a "Commission-Identified Issuer" under the Holding Foreign Companies Accountable Act, which may lead to trading prohibitions if the PCAOB cannot inspect its auditor for two consecutive years[39]. - The company is subject to uncertainties regarding the interpretation and application of PRC laws and regulations, which may impact business operations[62]. - The company must maintain various licenses and permits from PRC authorities to operate, and failure to do so could materially affect its business[44]. - The approval or filing with the CSRC or other PRC government authorities may be required for offshore offerings, creating uncertainty regarding compliance[92]. - The company is subject to potential sanctions by the CSRC or other PRC regulatory authorities if it fails to comply with filing requirements for offshore offerings[100]. - The company faces uncertainty regarding compliance with new PRC data protection regulations, which could materially affect its business operations[184]. Market and Economic Conditions - The rural wastewater treatment industry in the PRC is highly competitive and fragmented, posing challenges for the company's operations[46]. - Inflation in China and a slowing economy could negatively impact the company's profitability and growth[66]. - The COVID-19 pandemic severely disrupted operations in 2022, leading to a lower-than-anticipated revenue increase due to project delays and reduced market demand[203]. - Local government budget constraints and delayed payments have historically impacted cash flows, with potential future delays expected[135]. - The environmental protection industry in China is fragmented and competitive, with significant barriers to entry in certain regions[133][134]. Intellectual Property and Technology - The company owns five patents in China related to wastewater treatment technology, but the effectiveness of intellectual property protection in China is uncertain[83]. - The company may face challenges in protecting its intellectual property rights due to ambiguities in Chinese laws and enforcement difficulties[84]. Shareholder and Corporate Governance - The beneficial owner, Mr. Li Feilie, controls approximately 65.6% of the outstanding common shares, influencing shareholder votes and corporate decisions[194]. - The company’s ability to amend its Memorandum and Articles without shareholder approval could delay or prevent changes in control, including tender offers[196]. - The company is exempt from certain Nasdaq requirements, including independent review of related party transactions, which may not be as favorable as those of other Nasdaq-listed companies[189].

Share Combination - China Natural Resources announced a 5-to-1 share combination to increase the per share trading price to meet the $1.00 minimum bid price requirement for Nasdaq listing[3] - Following the share combination, approximately 8,189,617 common shares will be issued and outstanding[3] - The share combination will not alter any shareholder's percentage interest in the company's outstanding common shares[2] - All outstanding options, warrants, and other rights to purchase common shares will be adjusted proportionately due to the share combination[2] Acquisition - The company agreed to acquire Williams Minerals, which operates a lithium mine in Zimbabwe, for a maximum consideration of $1.75 billion[4] - The acquisition of Williams Minerals is expected to close in the second fiscal quarter of 2023[4] Business Strategy - The company is engaged in the wastewater treatment industry and exploring further business opportunities in the healthcare and natural resources sectors[4] - The company aims to enhance its financial position and growth potential through strategic acquisitions in the natural resources sector[5] Risks and Uncertainties - The company faces risks related to geopolitical turmoil, metal price volatility, and compliance with Nasdaq listing rules[5] - Forward-looking statements indicate uncertainties regarding the company's ability to fund operations and capital expenditures[5]

Financial Performance - Revenue decreased by CNY 23.76 million (US$ 3.74 million) from CNY 42.50 million in 2020 to CNY 18.74 million in 2021, primarily due to the completion of the Wujiang Project and cessation of copper ore trading [274]. - Cost of sales decreased by CNY 20.73 million (US$ 3.26 million) from CNY 39.22 million in 2020 to CNY 18.49 million in 2021, attributed to the completion of the Wujiang Project [275]. - The operating loss for 2021 was CNY 23.73 million (US$ 3.73 million), compared to an operating loss of CNY 14.71 million in 2020 [273]. - The net loss for the year 2021 was CNY 54.97 million (US$ 8.65 million), compared to a profit of CNY 22.92 million in 2020 [273]. - Net loss increased by CNY 77.89 million (US$ 12.25 million) from net profits of CNY 22.92 million (US$ 3.56 million) in 2020 to a net loss of CNY 54.97 million (US$ 8.65 million) in 2021 [281]. Expenses - Selling and distribution expenses increased by CNY 0.16 million (US$ 0.03 million) from CNY 0.76 million in 2020 to CNY 0.92 million in 2021, due to enhanced business development efforts [276]. - Administrative expenses rose by CNY 4.02 million (US$ 0.63 million) from CNY 18.85 million in 2020 to CNY 22.87 million in 2021, mainly due to professional service fees related to private placement and acquisition of PST Technology [276]. - Finance costs increased by CNY 0.61 million (US$ 0.10 million) from CNY 3.75 million in 2020 to CNY 4.36 million in 2021, due to interest expense from a bank loan related to the Wujiang Project [279]. Cash Flow - Net cash used in operating activities was CNY 12.07 million (US$ 1.90 million) in 2021, a decrease from CNY 46.53 million in 2020, due to fewer payments related to completed projects [299]. - Net cash from investing activities was CNY 53.35 million (US$ 8.40 million) in 2021, compared to a cash outflow of CNY 5.17 million in 2020, mainly from loan repayments [300]. - Net cash used in financing activities was CNY 38.79 million (US$ 6.10 million) in 2021, compared to net cash from financing activities of CNY 48.60 million in 2020, due to repayments to related parties [301]. Corporate Structure and Governance - The company has a total of 5 directors, all of whom are male, with no female or non-binary representation on the board [337]. - The company has a Compensation Committee responsible for evaluating executive compensation and formulating corporate goals [361]. - The Audit Committee ensures the accuracy and effectiveness of the annual audit of the financial statements [357]. - The company is subject to Nasdaq's corporate governance requirements and has elected to comply with certain provisions voluntarily [362]. Related Party Transactions - The company issued 9,077,166 common shares to Feishang Group in exchange for 120 million shares of FARL, valued at approximately HK$87,522,000 [374]. - Payables to Feishang Group increased significantly to CNY 14,050,000 in 2021 from CNY 7,149,000 in 2020 [382]. - The company received letters from Feishang Group and Feishang Enterprise, stating they will provide continuous financial support in the form of interest-free loans [372]. Taxation and Regulatory Environment - The company’s subsidiaries in the PRC are subject to a corporate income tax rate of 25%, with certain subsidiaries enjoying preferential rates [271]. - The Company is exempt from income and corporate tax under the BVI Business Companies Act, and there is no capital gains tax for companies registered under this act [429]. - If deemed a "resident enterprise" by PRC tax authorities, a 10% withholding tax may apply to dividends paid to non-PRC resident holders [431]. Market and Competition - The company faces intense market competition in the environmental protection sector, which may affect Shanghai Onway's profitability due to potential advancements by competitors and stricter government standards [312]. - The company is highly dependent on government policies for its rural wastewater treatment business, which could significantly impact its operations [290]. Management and Personnel - Mr. Ma Xiongbing has been the General Manager of Shanghai Onway since May 2017, with over 20 years of experience in administration and finance [329]. - Mr. Yu Jun has served as General Manager of Bayannaoer Mining since January 2015, with over 25 years of experience in corporate finance [332]. - The company employed a total of 75 full-time employees, with 66 in rural wastewater treatment, 6 in metal exploration, and 3 in corporate services [364]. Financial Instruments and Risks - The company has not used derivative financial instruments in its investment portfolio, indicating a conservative approach to managing financial risks [437]. - The company has not been exposed to material interest rate risks, as none of its outstanding debt bears interest at a floating rate [437]. - As of December 31, 2021, the company had no exposure to commodity price risk, with no copper ore in inventory [438]. Audit and Internal Controls - The total audit fees paid to Ernst & Young Hua Ming LLP for fiscal year 2021 amounted to $694,222, a significant increase from $160,781 in fiscal year 2020 [454]. - The company's internal control over financial reporting was assessed as effective as of December 31, 2021, providing reasonable assurance regarding the reliability of financial reporting [446]. - There were no changes in the company's internal control over financial reporting during fiscal year 2021 that materially affected its effectiveness [447].

Capital Expenditures and Investments - China Natural Resources plans to increase capital expenditures for nickel exploration at the Moruogu Tong Mine in Inner Mongolia in 2022[1] - The company intends to fund six additional drilling holes, with an initial investment of CNY 2.16 million, to expedite resource capture in the southern part of the mine[2] Market Conditions and Strategic Evaluation - Chairman Mr. Wong Wah On Edward highlighted the high commodity prices and increasing demand for raw materials, particularly in sectors like electric vehicles and electronics[3] - The company is evaluating strategic options with other natural resource mines, including copper, vanadium, and kaolin mines, to enhance asset monetization for shareholders[3] Diversification and Opportunities - China Natural Resources is also exploring opportunities in the wastewater treatment industry and the healthcare sector[4] Risks and Challenges - The company faces various risks, including potential lack of appetite for current holdings and uncertainties related to metal price volatility and mining permits[5]

Financial Performance - The company reported a loss for the year from continuing operations attributable to owners of the Company of CNY 25,579,000 in 2020, compared to a loss of CNY 5,645,000 in 2019[15]. - Total revenue for the year ended December 31, 2020, was CNY 138,674,000, a significant increase from CNY 7,468,000 in 2019[16]. - The basic and diluted loss per share attributable to owners of the Company from continuing operations was CNY 0.90 in 2020, compared to CNY 0.23 in 2019[15]. - Profit for the year 2020 was CNY 25.58 million (US$ 3.92 million), compared to a loss of CNY 5.65 million in 2019, primarily due to a CNY 31.33 million (US$ 4.80 million) fair value gain on Feishang Anthracite shares[97]. - Revenue decreased by CNY 6.10 million (US$0.93 million) for the year ended December 31, 2020, primarily due to the cessation of copper ore trading[93]. - Gross profit for the year ended December 31, 2020, was CNY 13,591 (US$2,081), with a gross profit margin of 0.20%[93]. - Total comprehensive income for the year was CNY 26,282 million in 2020, compared to a loss of CNY 5,756 million in 2019[214]. - Cash and cash equivalents decreased from CNY 3,444 million in 2019 to CNY 2,450 million in 2020, a decline of about 29%[206]. Business Strategy and Operations - The company is actively seeking opportunities to enter the healthcare industry in the PRC, indicating a strategic pivot from its previous operations[16]. - The company has ceased trading of copper ore, which was its sole revenue-generating activity, highlighting a shift in business focus[16]. - The company may incur significant losses in the foreseeable future as it pivots to a new sector to generate revenues[16]. - The management has limited experience in acquiring businesses outside of their historical sectors, which may pose risks to future acquisitions[20]. - The company’s primary asset available for business combinations is 120,000,000 shares of FARL, which may not be attractive to potential targets due to liquidity concerns[20]. - The company is exploring potential investments in the healthcare sector in the PRC, driven by an aging population and increasing healthcare expenditures[63]. Exploration and Mining Activities - The exploration program at the Moruogu Tong Mine has indicated the presence of lead and silver, with potential for discovering other ores such as copper[23]. - The Moruogu Tong Mine's exploration is subject to geological survey protocols recognized in the PRC, which differ from those in the United States, potentially affecting reserve estimates[24]. - The exploration program at the Moruogu Tong Mine has involved 76 drill holes totaling 22,272.86 meters, with 1,467 samples collected[72]. - The Moruogu Tong Mine exploration program has identified lead and silver deposits, with an average grade of lead at 1.81%[75]. - Bayannaoer Mining incurred exploration expenses of approximately CNY 35.58 million (US$5.45 million) related to its exploration rights, with the current exploration permit for the Moruogu Tong Mine valid until September 2021[69]. Regulatory and Economic Environment - The company faces risks related to government regulations in the PRC, which could adversely affect operations and lead to penalties[29]. - The PRC government imposes restrictions on dividend payments from subsidiaries, which can affect the company's ability to distribute profits to shareholders[39]. - The effectiveness of newly enacted laws and regulations in the PRC may be delayed, creating uncertainties for foreign investors[36]. - The PRC economy has experienced a significant slowdown since the outbreak of COVID-19, impacting growth and profitability[37]. - The company faces regulatory uncertainties due to recent changes in SAFE regulations regarding offshore financing activities by PRC residents[41]. Financial Position and Liquidity - As of December 31, 2020, total cash and cash equivalents amounted to CNY 2,450,000 (US$ 375,000), down from CNY 3,444,000 in 2019[110]. - Net cash used in operating activities for 2020 was CNY 4,561,000, compared to CNY 3,333,000 in 2019[110]. - The current ratio improved significantly from 0.21x in 2019 to 4.57x in 2020, indicating enhanced liquidity[111]. - The company intends to fund future capital expenditures through loans from related-party debtholders and bank borrowings[90]. - The company has experienced difficulty in developing an active trading market for its securities, limiting its ability to use them for acquisitions[111]. Shareholder and Corporate Governance - The company is classified as a foreign private issuer, resulting in less information being available compared to domestic reporting companies[48]. - The company has adopted IFRS accounting principles, which differ from U.S. GAAP, and is not required to reconcile these principles[48]. - The company has not set aside or accrued any amounts for pension or retirement benefits for its directors[127]. - The Audit Committee is responsible for ensuring the accuracy and effectiveness of the annual audit of the financial statements[133]. - The company has a total of 24,539,685 shares beneficially owned by its officers and directors as a group, representing 64.66% of the class[141]. Market Conditions and Commodity Prices - The market prices for lead, silver, and copper have shown significant volatility, with SHFE lead prices ranging from CNY12,620 (US$1,932) to CNY16,585 (US$2,540) per ton in 2020[27]. - The average price of lead on the SHFE was CNY14,745 per ton at the end of 2020, reflecting a decline of approximately 3% compared to the beginning of the year[65]. - The average price of silver on the SHFE reached an annual high of CNY6,877 (US$1,053) per kg in mid-August 2020, following a significant drop earlier in the year[65]. - The average SHFE copper price reached CNY57,970 (US$8,843) per ton in 2020, representing an increase of approximately 17% compared to the opening price at the beginning of the year[68]. - World refined copper production in 2020 was 24,426 thousand tons, while global demand was 24,982 thousand tons, indicating a supply-demand imbalance[70]. COVID-19 Impact - The COVID-19 pandemic caused significant disruptions to operations, including restrictions on employee movement and delays in supply chains, impacting financial performance[60]. - The company experienced significant operational impacts due to COVID-19, including restrictions on employee movement and a slowdown in exploratory activities[97].