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SD-Gold Becomes the National Gold Production Champion 2017

At the end of January 2018, the China Gold Association announced the gold production of China's main gold enterprises in 2017. Shandong Gold Group (SD-Gold) ranked first with 43.93 tons of gold production, up by 18.47% year-on-year. SD-Gold's gold production exceeded that of China National Gold Group Corporation for the first time, and was far ahead that of Zijin Mining Group and Zhaojin Group.

Meanwhile, SD-Gold's total assets broke the RMB 100 billion mark to reach RMB 105. 855 billion, up by 23.09% year-on-year, its revenue recorded RMB 77.161 billion, up by 5.43% year-on-year and its profit 1. 839 billion, up by 68.01% year-on-year.

The China Securities Journal reporter learned that since 2017, SD-Gold has made a number of new achievements including discovering the largest single gold mine, successfully conducting overseas mergers and acquisitions, producing more than 100 tons of gold at each of its two single mines, and becoming the national annual gold production champion. Many of these achievements have important significance for the development of China's gold mining industry.

In March 2017, SD-Gold's Chairman Chen Yumin announced that the "Xiling Gold Mine of Sanshandao Mining Area", discovered by the company, has registered 382.58 tons of gold and is expected to deliver more than 550 tons of gold after completion of the exploration and that it has become China's largest single gold mine ever with a potential economic value of RMB 150 billion. This exploration achievement was included in the ten major news of both China's mining industry 2017 and China's gold industry 2017.

At the end of June, Shandong Gold Mining Co., Ltd., a listed company in which SD-Gold holds a stake, acquired a 50% stake in the world's largest gold company Barrick Gold Corp's Veladero gold mine, the largest mine in Argentina and the second largest mine in South America at a price of USD 960 million.

In November, SD-Gold's subsidiaries Jiaojia Gold Mine and Linglong Gold Mine recorded a cumulative gold production of more than 100 tons one after another, setting a new record in the history of China's gold mining industry.

In January 2018, SD-Gold overtook China National Gold Group Corporation to become the largest gold producer in China, making a new historical breakthrough.

In its 13th Five-Year plan, SD-Gold has clearly set the goal of producing more than 55 tons of gold and generating revenues of more than RMB 100 billion by 2020. The China Securities Journal reporter learned that with the acquisition of mining rights and deep exploitation of existing mines, SD-Gold is expected to meet its 13th Five Year Plan goal of leading domestic gold production enterprises and becoming a global top 10 gold mining enterprise by comprehensive strength in advance.

It's reported that in addition to the existing gold reserves of the listed company Shandong Gold Mining, SD-Gold has more than 1,000 tons of gold reserves. A relevant director of SD-Gold said that the group will give priority to the listed company after the existing resources are ripe for allocation. At the same time, the listed company itself has actively carried out overseas acquisitions to expand resource reserves.

As China's only listed company exclusively specializing in gold, Shandong Gold Mining completed the acquisition of a 50% stake in the Veladero gold mine, the largest gold mine in Argentina and the second largest gold mine in South America in 2017. The acquisition will increase the company's gold production by more than 10 tons per year, exceeding the annual output of the domestic highest-yielding gold mine.

Recently, a source related to SD-Gold told the China Securities Journal reporter that in half a year from the end of June, 2017 to the end of 2017, the Veladero gold mine was expected to increase SD-Gold's gold production by about 6.5 tons, achieving successful acquisition, desired outcomes and combined statements in the same year.

It's learned that this acquisition project, from negotiation over core terms to project delivery at USD 960 million, took a little more than 7 months. The entire project is compact and efficient. After completion of the acquisition, the Veladero gold mine has been jointly operated and managed by Shandong Gold Mining and Barrick Gold Corp. The two sides have achieved high synergy in the cooperation process. Shandong Gold Mining has even integrated the development concept of ecological mining into its management process, further strengthened environmental investment by taking a series of measures in key aspects such as industrial "three wastes" control, glacial protection, ecological monitoring, cyanide management and water balance, receiving wide recognition from the government of Argentina, the local community and environmentalists.

For gold mining enterprises, an adequate capital chain has become a necessary condition for them to quickly and steadily enter the international mining industry and successfully conduct overseas mineral M & A projects. SD-Gold has determined five business divisions including gold and finance, looked at and promoted the financial business of enterprises from the perspective of the group's strategic development.

Shandong Gold Financial Holdings Group (Hong Kong), a subsidiary of SD-Gold, has constantly innovated the investment business model and improved industrial synergy. The subsidiary's gold price was RMB 2.85 higher per gram than the average price of the Shanghai Gold Exchange. Its asset management performance was industry-leading. The subsidiary issued private bills of USD 300 million in Hong Kong, effectively consolidating the international financial operation platform. Shandong Gold Futures was upgraded from BB in 2016 to BBB in 2017 and has become a member of the Shanghai International Energy Exchange. Shandong Gold Finance has provided custom financial services for SD-Gold's 27 enterprises and granted loans of RMB 5.362 billion on its own initiative in 2017. Shandong Gold Venture Capital has adopted a multi-industry investment portfolio, and achieved a steady return on investment.

In addition, by cooperating with financial institutions on market-oriented debt-to-equity swaps, SD-Gold has greatly reduced the leverage ratio of enterprises, effectively enhanced their capital strength, promoted the diversification of their ownership structures, and improved their corporate governance mechanisms.

It's learned that SD-Gold has innovatively proposed to create an international first-class demonstration mine as a breakthrough in fostering international first-class enterprises with global competitiveness. Specifically, SD-Gold will operate the Sanshandao Gold Mine, one of its key mines, as a pilot project, and adhere to global vision, open thinking and international standards to fully upgrade existing mines into digital, intelligent, network-based and information-based ones, dramatically improve labor productivity, comprehensive utilization of resources and the level of ecological mining construction, develop specific standards and complete experience of international first-class mines that can be applied, copied, and promoted, and comprehensively boost the overall construction and international operations of the group's mines.