Future Development

Our Business Strategies

Increase mining and processing capacities and optimize our Company’s vertically-integrated operations by ramping up processing capacity.

To increase our mining and iron ore concentrate processing capacities, we intend to:

• Increase mining capacity through on-going slope correction and stripping engineering;
• Increase processing capacity through technical upgrades and building new processing plants and tailings dams to complement the mining production ramp-up;

Continue to improve operational efficiency and reduce costs

Efficiency and cost control are critical to maximizing our profitability and maintaining our long term competitiveness. In order to further improve operational efficiency and reduce costs, we intend to:

• Expand our mining and processing capacities to enhance economies of scale;
• Increase investment in upgrading dry processing technology to decrease the grain size and increase the grade of the preliminary concentrates, which would in turn allow higher recovery and grinding efficiency, decrease tailings and waste and reduce operation costs during wet processing and extend the life of tailings dams;
• Improve our mining and processing efficiency, reduce the consumption of raw materials and utilities and reduce the labor inputs and costs, through innovations in processing and equipment upgrades;
• Provide regular training to our employees to improve productivity;
• Improve our internal controls; and
• Improve our business planning and budgeting.

Expand our customer base and continue to explore strategic relationships with steel mills

According to the CPR,we intend to further expand our customer base into areas of Hebei Province and Shanxi Province with high iron ore concentrate demand along the transportation networks located near our mines. According to the AME Report, the iron ore consumption in Shanxi Province amounted to 61.3 million tonnes in 2012, of which only 22.1 million tonnes were sourced locally. We will continue to explore more strategic arrangements with steel mill customers to solidify our relationships with them. As of the Latest Practicable Date, we have entered into strategic cooperation agreements with reputable steel mills in Hebei Province. According to AME, within the key demand areas of Hebei Province, there is a sizable portion of privately-owned capacity. Private steel mills generally rely more on contractual agreements than spot markets while state-owned steel mills often have captive iron ore supply.

Therefore, there may be more off-take opportunities with private steel mills than state-owned steel mills.

Expand our resources and reserves through exploration and acquisitions

Resources and reserves are the foundation of our business growth. In order to expand our resources and reserves, we intend to conduct further exploration work at existing mines and surrounding mineralized zones, as well as to acquire high quality mines in China and overseas when we deem appropriate. We will take various factors into account when we determine the target, including, among other things, quality, grade and size of resource and reserve, location and transportation conditions, complexity of the geology conditions, stage of the development, relationship with local communities and integration of the target with our overall development strategy.

Our existing mines are located in the Dushancheng mining area and the Zhijiazhuang mining area. According to the CPR, there is potential to identify more geological resources and reserves at these mines through further exploration because the ore bodies at these mines are open at depth. As there is evidence of iron mineralization surrounding the main mineralized zones of Zhijiazhuang Mine, more drilling around the mineralization anomaly may increase resource tonnages. We plan to conduct exploration in  within the areas stated on our relevant permits.

Leveraging our status as a consolidation principal in Laiyuan County, we believe we are well-positioned to acquire nearby resources adjacent to our existing mines to optimize the integration and maximize the value of our existing operating facilities.

Such acquisitions and integration will be executed by a management team with substantial experience in identifying mine areas with iron ore reserves and resources and navigating through the approval process.

Actively promote green building materials business

In 2020, Xiong’an New Area is expected to continue a promising development in its construction. It requires a guaranteed supply of enormous amounts of sand and gravel for construction to continue the undertaking of the non-capital functional planning at a high starting point and to continue the construction of a green and smart new city of Xiong’an New Area as well as the construction of urban transportation and municipal infrastructure. As required by environmental protection policies, however, the exploitation of natural sand and gravel has been banned. The government encourages and supports the construction of production bases for machine-processed sand and gravel using such resources as tailings and solid wastes. The Group will take full advantage of the opportunity to actively promote the solid waste comprehensive utilization project of Jiheng Mining, reduce operating costs and raise production efficiency through improvement of technical process or other effective measures, so as to consolidate the competitive advantage of the Group’s sand and gravel business. The Group will also deeply explore and extend the industry chain of the solid waste comprehensive utilization project of Jiheng Mining and make full use of the recycled tailings and solid wastes to process other derivative green construction materials products, so as to maximize the value of resources. The Group will transform Jiheng Mining into a green construction materials industry base and achieve green development of industrial integration, with a view to contributing to the coordinated development of Beijing- Tianjin-Hebei and the construction of Xiong’an New Area, as well as providing new impetus to the local ecological environment restoration and governance, and maximizing value return for the Shareholders.

As Xiong’an New Area officially enters the construction stage, 67 key projects including the Beijing-Xiong’an Intercity Railway and the Beijing-Xiong’an Expressway have started construction in the Year, and a large amount of human and material resources have been put into the construction of the New Area. The Group will continue to pay close heed to the development status and policy trend of Xiong’an New Area, grasp the development opportunities so presented, and further explore and expand the market potential of the Group’s businesses.

Continue to adhere to high health and safety, environmental and corporate responsibility standards

Workers’ health and production safety will remain our paramount to us. We will continue to focus on preventive measures and take a comprehensive approach to ensure workers’ health and safety, including continuous investments in production safety and the construction of production safety facilities; strict implementation of safety rules and policies; safety training for our employees to promote awareness; and strict implementation of on-site control and process management.

Adhering to the principle of “ecology first”, practicing the concept of “green development”, and taking the construction of “green mines” as our mission, the Group strictly comply with local laws and regulations. To avoid and minimize the impact of business operation on the environment and the potential risks associated with environmental protection issues, the Company has established and implemented such effective environmental protection mechanisms as Environmental Protection Management System, Energy Management System, so as to strengthen the environmental protection awareness of all employees, establish a sustainable development concept, and strive to achieve a balance between business development and environmental protection.In addition，Through the investment of Jiheng Mining in the construction of solid waste comprehensive utilization project, the Group used the tailings and solid wastes to process sand and gravel for construction, to further increase resource utilization, which can not only effectively carry out governance and recovery of regional ecological environment, but also realize sustainable development of mine resources.