2019-04-26 09:03Company Information The company is a China-registered joint-stock limited company listed on the Hong Kong and Shanghai Stock Exchanges, primarily engaged in metal mineral resource operations - Zijin Mining Group Co., Ltd. is a joint-stock limited company registered in China, listed on the Hong Kong Stock Exchange (stock code: 2899) and Shanghai Stock Exchange (stock code: 601899)3 - The company is primarily engaged in the exploration, mining, smelting, processing, and sales of gold, copper, zinc, and other metal mineral resources6 - As of the end of 2018, the Group held 195 exploration rights (covering 2,279.90 sq km) and 233 mining rights (covering 874.45 sq km)6 Financial Highlights This section summarizes the company's key financial performance and position data from 2014 to 2018, including income statement and balance sheet metrics Key Income Statement Data 2014-2018 (RMB) | Indicator | 2018 | 2017 | 2016 | 2015 | 2014 | | :--- | :--- | :--- | :--- | :--- | :--- | | Operating Revenue | 105,994,246,123 | 94,548,619,098 | 78,851,137,811 | 74,303,573,739 | 58,760,533,928 | | Operating Profit | 6,181,371,066 | 5,026,644,755 | 2,312,970,073 | 1,944,488,905 | 3,460,158,957 | | Total Profit | 6,130,179,782 | 4,567,960,193 | 2,126,051,706 | 2,086,172,191 | 3,324,137,990 | | Net Profit | 4,682,676,553 | 3,247,549,197 | 1,687,267,902 | 1,342,687,764 | 2,635,441,991 | | Net Profit Attributable to Parent Company Shareholders | 4,093,773,630 | 3,507,717,627 | 1,839,798,820 | 1,655,671,617 | 2,345,062,669 | Key Balance Sheet Data as of Year-End 2014-2018 (RMB Thousand) | Indicator | 2018 | 2017 | 2016 | 2015 | 2014 | | :--- | :--- | :--- | :--- | :--- | :--- | | Total Assets | 112,879,303 | 89,315,263 | 89,217,700 | 83,914,034 | 75,159,588 | | Total Liabilities | 65,605,591 | 51,672,418 | 58,101,192 | 51,985,779 | 41,490,665 | | Total Equity Attributable to Parent Company Shareholders | 40,455,434 | 34,999,723 | 27,762,475 | 27,537,174 | 28,059,455 | Chairman's Report The Chairman's Report outlines the company's strategic direction, operational achievements, and future outlook, emphasizing internationalization and growth Chairman's Address Chairman Chen Jinghe reviews 2018's asset and revenue breakthroughs and accelerated international development, outlining the future strategy amidst global economic uncertainties - In 2018, the company's total assets and operating revenue both exceeded RMB 100 billion, with strong growth in net profit attributable to the parent company and operating cash flow12 - The company's gold, copper, and zinc resource reserves significantly increased, with copper equity resource reserves nearing 50 million tonnes, gold exceeding 1,700 tonnes, and zinc (lead) approximately 10 million tonnes12 - The 2019 work theme is "grasping reform, stabilizing growth, and promoting development," focusing on advancing management system reform, ensuring performance growth, accelerating major project construction, and emphasizing risk control1213 Company Business Overview The company engages in global exploration, mining, smelting, and sales of gold, copper, and zinc, holding a leading position in China's metal mining industry - The company's business model covers a complete industrial chain from exploration and M&A, mine development, and smelting to technological research and financial trade16 Zijin Mining's Resource Reserves and Production as a Proportion of China's Total | Indicator | Zijin Mining | China's Total Mine Output | Zijin/China's Total | | :--- | :--- | :--- | :--- | | Gold Resource Reserves (tonnes) | 1,727.97 | 13,195.56 | 13.10% | | Mined Gold Production (tonnes) | 36.50 | 345.97 | 10.55% | | Copper Resource Reserves (10,000 tonnes) | 4,952.11 | 10,607.75 | 46.68% | | Mined Copper Production (10,000 tonnes) | 24.86 | 150.60 | 16.51% | | Zinc Resource Reserves (10,000 tonnes) | 836.61 | 18,493.85 | 4.52% | | Mined Zinc Production (10,000 tonnes) | 27.80 | 284.03 | 9.79% | - The company's core competitiveness is reflected in its advantages across various aspects, including institutional mechanisms, strategic development, resource reserves, technological innovation, cost control, industrial synergy, talent, and corporate culture2021 Discussion and Analysis of Operations In 2018, the company achieved significant revenue and net profit growth, driven by increased mined copper production and substantial reserve expansion through strategic international acquisitions, making overseas projects a major growth driver Key Financial Indicators for 2018 | Indicator | 2018 Amount (RMB) | Year-on-Year Growth | | :--- | :--- | :--- | | Sales Revenue | 105,994,246,123 | 12.11% | | Net Profit Attributable to Parent Company Shareholders | 4,093,773,630 | 16.71% | | Total Assets (Year-End) | 112,879,303,842 | 26.38% | Major Mineral Product Production 2016-2018 | Product | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | | Mined Gold (tonnes) | 36.50 | 37.48 | 42.55 | | Mined Copper (10,000 tonnes) | 24.86 | 20.80 | 15.50 | | Mined Zinc (10,000 tonnes) | 27.80 | 27.00 | 25.00 | - In 2018, the company's overseas projects accounted for 52.26% of the Group's total mined gold production, 24.19% of mined copper, and 35.94% of mined zinc; resource reserves percentages were even higher at 65.50%, 78.34%, and 25.29% respectively, with overseas business expected to surpass domestic operations within 2-3 years47 Equity Resource Reserves of Major Minerals as of Year-End 2018 | Mineral Type | Unit | 2018 Year-End | 2017 Year-End | Growth Rate (%) | | :--- | :--- | :--- | :--- | :--- | | Gold Ore | Metal Tonnes | 1,727.97 | 1,320.07 | 30.90 | | Copper Ore | Metal 10,000 Tonnes | 4,952.11 | 3,147.51 | 57.33 | | Zinc Ore | Metal 10,000 Tonnes | 836.61 | 783.04 | 6.84 | Discussion and Analysis of Company's Future Development The company aims to become a "high-tech, high-efficiency, large-scale international mining group" by 2030, focusing on internationalization, large-scale projects, and asset securitization, with plans for significant production increases in copper and zinc 2019 Major Mineral Product Production Plan | Product | 2019 Planned Production | Year-on-Year Growth | | :--- | :--- | :--- | | Mined Gold | 40 tonnes | 9.6% | | Mined Copper | 35 10,000 tonnes | 41.1% | | Mined Zinc | 38 10,000 tonnes | 36.7% | | Mined Silver | 275 tonnes | 24.6% | - The core of the 2019 business strategy is "grasping reform, stabilizing growth, and promoting development," with key focuses including: continuous deepening of reform, strengthening production and operation management, firm international development, promoting A-share public offering, cultivating international talent, solidifying safety and environmental protection foundations, and adhering to innovation-driven and resource-priority strategies62636465666768697071 - The main risks faced by the company include metal price risk, financial market risk, safety and environmental risk, and country and community risks associated with overseas projects72 - The total capital expenditure plan for 2019 is RMB 11.4 billion, including RMB 6 billion for project construction, RMB 5 billion for investment and M&A, and RMB 400 million for geological exploration73 Management Discussion and Analysis This section analyzes the company's financial performance, operational results, and financial position, highlighting key drivers and changes in revenue, costs, and profitability Analysis of Principal Business In 2018, the Group's sales revenue reached RMB 105.99 billion, a 12.11% increase, driven by higher sales volumes and prices of mined copper and refined copper, while maintaining a stable capital-to-debt ratio 2018 Sales by Product (RMB 10,000) | Product Name | Sales Amount | 2017 Sales Amount | Unit Price Change (%) | | :--- | :--- | :--- | :--- | | Mined Gold | 910,774 | 932,029 | 1.08% | | Refined Gold | 5,559,990 | 4,843,690 | -1.59% | | Mined Copper | 881,965 | 716,280 | 2.75% | | Refined Copper | 1,896,420 | 1,806,051 | 3.85% | | Mined Zinc | 401,176 | 406,671 | -2.48% | | Refined Zinc | 368,919 | 396,876 | 1.04% | 2018 Gross Profit Margin by Product | Product Name | 2018 Gross Profit Margin (%) | 2017 Gross Profit Margin (%) | | :--- | :--- | :--- | | Mined Gold | 31.37 | 33.95 | | Mined Copper | 49.95 | 50.61 | | Mined Zinc | 65.34 | 66.74 | | Overall Gross Profit Margin | 12.59 | 13.94 | | Overall Gross Profit Margin (Excluding Smelting) | 46.31 | 47.24 | - Financial expenses decreased by 37.69% year-on-year, primarily due to exchange gains recorded this year compared to exchange losses last year; investment income significantly increased by 581.26% year-on-year, mainly from increased equity-accounted long-term equity investments and gains from disposal of financial assets8182 - As of the end of 2018, the Group's total borrowings increased to RMB 47.148 billion from RMB 37.019 billion at the end of 2017; the capital-to-debt ratio (total liabilities/total equity) was 1.388, largely consistent with 1.373 in 2017106107 Biographies of Directors, Supervisors, and Senior Management This section provides an overview of the company's leadership, highlighting the professional backgrounds and expertise of its directors, supervisors, and senior management team - The company's core management possesses deep professional backgrounds in geology, mining, and management; Chairman Mr. Chen Jinghe is a professor-level senior engineer, the discoverer of Zijinshan Gold-Copper Mine, and the company's founder121 - Most of the executive director team members are internally cultivated, possessing rich industry practical experience and long-term service to the company121122 - Independent non-executive directors include experts from various fields such as accounting, finance, law, and mining engineering (including academicians of the Chinese Academy of Engineering), providing professional support for corporate governance124125 Board of Directors' Report The Board of Directors' Report details the company's strategic investments, profit distribution plans, employee information, and share capital structure, reflecting key governance and operational decisions Analysis of Investment Status In 2018, the company completed two significant overseas acquisitions, RTB BOR Group and Nevsun, under its internationalization strategy, substantially enhancing its gold, copper, and zinc resource reserves - The company increased capital by USD 350 million in cash to acquire a 63% equity stake in Serbia's state-owned copper company RTB BOR Group, with plans to cumulatively invest approximately USD 1.26 billion over 6 years for technical upgrades and expansion132 - The company acquired 100% equity in Canadian listed company Nevsun Resources Ltd. through a cash tender offer of approximately CAD 1.858 billion (approximately RMB 9.363 billion), gaining its two core assets: the Timok copper-gold mine in Serbia and the Bisha copper-zinc mine in Eritrea132 - Following capital increase and equity transfer, the company's shareholding in Xiamen Zijin Tongguan, the main entity of the White River Copper-Molybdenum Mine project in Peru, increased from 45% to 51%, achieving controlling interest133 Profit Distribution Plan The company's 2018-2020 shareholder return plan targets annual cash dividends of no less than 25% of distributable profit, with a proposed 2018 dividend of RMB 1.0 per 10 shares, totaling approximately RMB 2.303 billion Dividend Distribution Plans for the Past Three Years (RMB) | Dividend Year | Dividend per 10 Shares (RMB, pre-tax) | Cash Dividend Amount (RMB, pre-tax) | Ratio to Net Profit Attributable to Listed Company Shareholders (%) | | :--- | :--- | :--- | :--- | | 2018 | 1.0 | 2,303,121,889 | 56.26 | | 2017 | 0.9 | 2,072,809,700 | 59.09 | | 2016 | 0.6 | 1,381,873,133 | 75.11 | Employee Information As of the reporting period end, the company had 19,226 employees, with production personnel being the largest group, and approximately 40% holding college degrees or higher, supported by a "lean and well-paid" compensation strategy Employee Professional Composition | Professional Category | Number of People | | :--- | :--- | | Production Personnel | 8,613 | | Sales Personnel | 268 | | Technical Personnel | 5,645 | | Financial Personnel | 509 | | Administrative Personnel | 4,191 | | Total | 19,226 | Share Capital and Shareholder Information As of the end of 2018, the company had 721,545 shareholders, with Minxi Xinghang State-owned Assets Investment and Operation Co., Ltd. as the controlling shareholder holding 25.88% and HKSCC Nominees Limited holding 24.80% of H shares Top Ten Shareholders' Shareholding (as of December 31, 2018) | Rank | Shareholder Name | Share Class | Number of Shares Held (shares) | Percentage of Total Share Capital | | :--- | :--- | :--- | :--- | :--- | | 1 | Minxi Xinghang State-owned Assets Investment and Operation Co., Ltd. | Domestic Shares | 5,960,742,247 | 25.88% | | 2 | HKSCC Nominees Limited | H Shares | 5,711,416,190 | 24.80% | | 3 | China Securities Finance Corporation Limited | Domestic Shares | 691,190,823 | 3.00% | Independent Directors' Report Independent directors diligently fulfilled their duties in 2018, providing professional opinions on strategic planning, financial reports, and executive compensation, ensuring compliance and fairness in major transactions - Independent directors diligently performed their duties in 2018, attending most board and shareholder meetings, and providing professional opinions on company strategic planning, periodic report reviews, and executive compensation assessments through their work in specialized committees216217218220 - Independent directors reviewed significant matters such as related party transactions, external guarantees, use of raised funds, and changes in accounting policies, issuing independent opinions that these matters followed legal procedures, had fair pricing, and did not harm the interests of the company or minority shareholders221222223 - Independent directors conducted on-site investigations of subsidiaries to gain in-depth understanding of the company's operations, safety, and environmental protection, offering suggestions to the Board to promote scientific decision-making and standardized operations225 Supervisors' Report In 2018, the Supervisory Board held six meetings, overseeing the company's legal operations, financial status, major acquisitions, related party transactions, and internal controls, concluding that decisions were compliant and financial reports were fair - In 2018, the Supervisory Board held 6 meetings, overseeing the company's legal operations, financial status, major asset acquisitions, related party transactions, and internal controls, concluding that the company's decision-making procedures were legal and compliant, financial reports were true and fair, and no actions harming shareholders' or company interests were found230234 - The Supervisory Board performed its oversight duties by attending Board meetings and conducting in-depth investigations of subsidiaries, while also strengthening leadership over the Supervision and Audit Department, focusing on key sensitive areas to prevent fraud risks233 - In 2019, the Supervisory Board will continue to focus on the company's core tasks of "grasping reform, stabilizing growth, and promoting development," emphasizing oversight of high-risk businesses and overseas investment and M&A, and intensifying anti-corruption efforts236237 Social Responsibility Performance This section details the company's commitment to social responsibility, including targeted poverty alleviation efforts and environmental protection initiatives, demonstrating its dedication to sustainable development Targeted Poverty Alleviation Efforts The company actively engaged in targeted poverty alleviation around mining areas in 2018, investing over RMB 101 million and helping 773 registered impoverished individuals through industrial, employment, and educational initiatives Summary of 2018 Targeted Poverty Alleviation Achievements (RMB 10,000) | Indicator | Quantity and Implementation Status | | :--- | :--- | | Total Funds Invested | 10,144.90 | | Number of People Helped Out of Poverty (persons) | 773 | | Investment in Industrial Poverty Alleviation | 726 | | Investment in Education for Poverty Alleviation | 784 (Student Sponsorship 262.7 + Education Resource Improvement 521.3) | | Investment in Ecological Protection for Poverty Alleviation | 2,813.37 | Environmental Information The company adheres to environmental regulations, investing RMB 663 million in 2018 for ecological protection, restoring 399.4 hectares of vegetation, and ensuring stable compliance with discharge standards across its 20 key polluting subsidiaries - In 2018, 20 of the company's subsidiaries were designated as key polluting units, all of which strictly adhered to national and local emission standards, achieving stable compliance with discharge requirements251 - Throughout the year, RMB 663 million was invested in environmental and ecological funds, restoring 399.4 hectares of vegetation and planting 602,000 thousand plants266 - All construction projects under the company strictly implemented environmental impact assessments and the "three simultaneous" system; in 2018, 14 projects obtained environmental assessment approvals, and 7 projects passed self-inspections for environmental completion261 Corporate Governance Report The company maintains high corporate governance standards, largely complying with the Hong Kong Corporate Governance Code, with a board composed of 11 directors and four specialized committees to enhance decision-making - The company is committed to maintaining a high level of corporate governance, with its practices formulated in accordance with the Hong Kong "Corporate Governance Code"; during the reporting period, the company complied with most of the code's provisions276 - The Board of Directors consists of 11 directors, including 6 executive directors, 1 non-executive director, and 4 independent non-executive directors, with a composition that meets domestic and overseas listing rules; the roles of Chairman and President are held by different individuals278279 - The Board of Directors has four specialized committees: the Strategy Committee, Executive and Investment Committee, Audit and Internal Control Committee, and Nomination and Remuneration Committee, to improve decision-making mechanisms; each committee held meetings and fulfilled its respective responsibilities during the reporting period286300304308309 Audit Report Ernst & Young Hua Ming LLP issued an unqualified audit opinion on the company's 2018 financial statements, confirming their fair presentation, with key audit matters including non-current asset impairment, business combinations, and impairment assessment of receivables - Ernst & Young Hua Ming LLP issued a standard unqualified audit opinion on the company's 2018 financial statements, deeming them to fairly reflect the company's financial position, operating results, and cash flows in all material respects329 - Key audit matters include: - Impairment of Non-current Assets: Impairment testing of property, plant and equipment, construction in progress, intangible assets, and goodwill involves significant judgments on key assumptions such as future cash flows and discount rates331333 - Business Combinations Not Under Common Control: Acquisitions of RTB BOR Group in Serbia, Nevsun Resources in Canada, and Xiamen Zijin Tongguan involved complex accounting treatments such as determining the acquisition date and fair value assessment335 - Impairment Assessment of Receivables: Assessing the impairment of accounts receivable and other receivables using the expected credit loss model involves significant management accounting estimates340 Financial Statements and Notes This section presents the company's consolidated and parent company financial statements, along with detailed notes explaining accounting policies, significant estimates, and specific financial item breakdowns Consolidated Financial Statements The consolidated financial statements present the Group's overall financial position and operating results, showing total assets of RMB 112.879 billion, total liabilities of RMB 65.606 billion, operating revenue of RMB 105.994 billion, and net profit attributable to parent company shareholders of RMB 4.094 billion for 2018 Consolidated Balance Sheet Summary (December 31, 2018) | Item | Amount (RMB) | | :--- | :--- | | Total Current Assets | 30,448,688,235 | | Total Non-current Assets | 82,430,615,607 | | Total Assets | 112,879,303,842 | | Total Current Liabilities | 37,223,097,530 | | Total Non-current Liabilities | 28,382,493,610 | | Total Liabilities | 65,605,591,140 | | Total Equity Attributable to Parent Company Shareholders | 40,455,434,274 | | Total Shareholders' Equity | 47,273,712,702 | Consolidated Income Statement Summary (2018) | Item | Amount (RMB) | | :--- | :--- | | Operating Revenue | 105,994,246,123 | | Operating Cost | 92,651,374,475 | | Operating Profit | 6,181,371,066 | | Total Profit | 6,130,179,782 | | Net Profit | 4,682,676,553 | | Net Profit Attributable to Parent Company Shareholders | 4,093,773,630 | Consolidated Cash Flow Statement Summary (2018) | Item | Amount (RMB) | | :--- | :--- | | Net Cash Flow from Operating Activities | 10,233,009,701 | | Net Cash Flow from Investing Activities | (13,640,210,446) | | Net Cash Flow from Financing Activities | 7,655,168,438 | | Net Increase in Cash and Cash Equivalents | 4,178,494,196 | Company Financial Statements The parent company's financial statements show total assets of RMB 62.220 billion and total liabilities of RMB 30.266 billion as of year-end 2018, with operating revenue of RMB 4.086 billion and net profit of RMB 2.374 billion, primarily driven by investment income Company Balance Sheet Summary (December 31, 2018) | Item | Amount (RMB) | | :--- | :--- | | Total Assets | 62,219,598,738 | | Total Liabilities | 30,266,483,302 | | Total Shareholders' Equity | 31,953,115,436 | Company Income Statement Summary (2018) | Item | Amount (RMB) | | :--- | :--- | | Operating Revenue | 4,085,832,610 | | Operating Profit | 2,497,338,945 | | Investment Income | 1,939,227,308 | | Net Profit | 2,373,747,350 | Notes to Financial Statements The notes detail the company's basic information, financial statement preparation basis, significant accounting policies, and estimates, including changes due to new financial instrument and revenue standards, consolidation scope changes, and segment reporting - The company adopted the newly revised financial instrument and revenue standards from January 1, 2018, and retrospectively adjusted opening balances according to transition provisions, primarily impacting financial asset classification, impairment models, and revenue recognition methods471472479 - The notes provide detailed disclosure of the accounting treatment for business combinations not under common control completed in 2018, including the acquisitions of RTB BOR Group, Nevsun Resources, Zijin Tongguan, and Beijing Anchuang, covering the fair value of identifiable assets and liabilities at the acquisition date774778783789 - Segment reporting is categorized by product type into multiple segments including gold bullion, copper, zinc, concentrates, and trading; in 2018, the copper concentrate and gold concentrate segments contributed the highest profits, while the smelting and trading gold segment contributed the largest revenue891892