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(Extracted from Annual Report 2015)

On behalf of the Board of Directors, I am pleased to present to you the annual report of China Mining International Limited (the "Company") for the financial year ended 31 December 2015 ("FY2015").

FINANCIAL REVIEW

The overall turnover of the Company and its subsidiaries (the “Group”), generated mainly from the sales of developed properties, decreased by RMB16.9 million from RMB34.1 million for the financial year ended 31 December 2014 (“FY2014”) to RMB17.1 million for FY2015. The decrease was principally attributed to the Xinxiang Sunny Town Project (新乡阳光新城项目), which saw fewer completed units being delivered to the buyers in FY2015 relative to FY2014.

Though the Group registered a lower gross profit of RMB3.9 million in FY2015 compared to that of RMB5.4 million in FY2014, it grossed a higher gross profit margin of about 23% in FY2015 compared to that of about 16% in FY2014.

The increased gross profit margin was attributed primarily to the increase in average selling price for the property units sold in FY2015 compared to the units sold in FY2014, in part due to the fact that the units sold in FY2015 comprised more villa-type of residential units which generally command higher gross profit margins relative to those apartment units sold in FY2014.

Attributed largely to impairment losses on completed properties for sale and investment in joint ventures, our Group registered a net loss of RMB43.0 million for FY2015 compared to a net loss of RMB112.7 million for FY2014.

The impairment loss on completed properties for sale of RMB6.4 million in FY2015 (FY2014: RMB2.6 million) was attributed principally to impairment on the net book values of the basement storage rooms and completed properties in respect of the Xinxiang Sunny Town Project (新乡阳光新 城项目) chiefly as a result of sluggish sales of these units. The impairment loss on investment in joint venture of RMB16.0 million in FY2015 (the “JV Impairment”) (FY2014: RMB66.9 million) was in relation to the Company’s 50% equity interest in Tian Cheng Holdings Limited (天晟控 股有限公司) (“Tian Cheng”), which, through its whollyowned subsidiaries, namely Zhengzhou Bidi Trading Co., Ltd (郑州必砥商贸有限公司) (“Zhengzhou Bidi”) and Zhengzhou Mai Yong Trading Co., Ltd (郑州迈永商贸 有限公司) (“Zhengzhou Mai Yong”), wholly-owned the exploration rights to an iron ore mine located in the Xinjiang Province of China and 99.9%-owned the exploration rights to another iron ore mine located in the Henan Province of China (collectively, the “Mining Joint Ventures”) (the “Iron Mines”). The JV Impairment, derived based on the valuation report issued by an independent Hong Kong-based valuation company, Roma Appraisals Limited, was due principally to the significant decline in the price of iron ore, where the trailing 2-year average price was about RMB652 per ton as at 31 December 2015 compared to that of about RMB863 per ton as at 31 December 2014. The decrease in iron ore price was largely a result of the continuing decrease in market demand for iron ore amidst the slow-down of the Chinese economy in FY2015.

OPERATION REVIEW

The property markets in China, particular of the non-first tier cities, are showing some signs of improvement as the Chinese government gradually loosens some of the austerity measures and credit tightening initiatives it introduced a few years ago to curb property speculation. To take advantage of the window of opportunities, an investment of RMB65.0 million was made in November 2015 in an integrated property project, Yi Feng Holiday Plaza Project (懿丰假日广场项目) (the “Yi Feng Project”), located at Henan Province Zhu Ma Dian City Sui Ping County (河南 省驻马店逐平县), for a share of profit of 10% thereof. Consequence to this investment, a fair value gain of RMB3.6 million derived based on the discounted cash flow stream of the Yi Feng Project was recognised in FY2015.

THE PROPOSED REVERSE TAKEOVER TRANSACTION

In relation to the proposed reverse takeover transaction as announced by the Company on 1 April 2014, 31 December 2014, 26 January 2015 and 30 June 2015, entailing the proposed acquisition by the Company of the entire issued and paid-up share capital of China Minerals Energy Limited (中国矿产能源有限公司) from Guide True Limited, China Geological Exploration Holdings Limited (中国地质 勘查控股有限公司) (“CGE”), China Shoushan Wealth Management Group Co., Limited (中国首善财富管 理集团有限公司) and Violet Enterprises (Canada) Inc (the “Proposed RTO”), the internal restructuring by China Minerals Energy Limited has resulted in the parties to the Proposed RTO requiring further time to work out possible revised terms, which may include, but not limited to, the portfolio of the exploration and mining projects that will form part of the group of companies to be acquired by the Company pursuant to the Proposed RTO. Appropriate announcement concerning the Proposed RTO will be made as and when there is any significant development.

While waiting for the completion of the Proposed RTO, we will seek out and leverage on opportunities accorded by the property markets and the improving commodities prices in China to spur our growth and create a better value for shareholder.

SHARE CONSOLIDATION

On 21 September 2015, the Company carried out a share consolidation exercise, such that every eight existing ordinary shares of par value S$0.001 each in the share capital of the Company (the “Existing Shares”) were consolidated into one ordinary share of par value S$0.008 in the share capital of the Company (the “Consolidated Shares”) (the “Share Consolidation”), resulting in the number of shares of the Company being reduced from 1,173,600,000 Existing Shares (including 92,000 treasury shares) to 146,700,000 Consolidated Shares (including 11,500 treasury shares) with the issued and paid-up share capital of the Company remain at RMB5,897,000. The Share Consolidation was in response to the minimum trading price requirement of S$0.20 per share set by the Singapore Exchange Securities Trading Limited (“SGX-ST”) for companies listed on the Mainboard of the SGX-ST.

ACKNOWLEDGEMENTS

In closing, I would like to express my sincere appreciation to the management and staff for their hard work, contribution, commitment and dedication and say a big thank you to our suppliers, customers and bankers for their strong support over the years. I would also like to express my gratitude to my fellow Directors for their contributions and guidance in helping the Group to overcome the many challenges over the past year.

Last but not least, I would like to thank our Shareholders for the patience and trust as well as for standing by us throughout the past year, and I look forward to their continued support as we strive to transit into a new chapter.

Guo Yinghui
Chairman and Executive Director