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(Extracted from Annual Report 2016)

On behalf of the Board of China Mining International Limited (the "Company"), I present herewith the financial and operation reviews of the Company and its subsidiaries (the "Group") for the financial year ended 31 December 2016 ("FY2016").

FINANCIAL REVIEW

The Group achieved a turnover of RMB16.4 million in FY2016, representing a decrease of RMB693,000 or 4% from that of RMB17.1 million attained in FY2015. The decrease was principally attributed to fewer completed units being delivered to the buyers in respect of the Group's Xinxiang Sunny Town Project (新乡阳光新城项目).

Albeit maintaining a gross profit margin of about 23%, the Group registered a lower gross profit of RMB3.8 million in FY2016 compared to that of RMB3.9 million in FY2015.

In line with decreased business activities and coupled with the concerted cost-control efforts carried out by the Group, the general and administrative expenses as well as other expenses of the Group decreased respectively by RMB18.1 million or 41% from RMB44.0 million in FY2015 to RMB25.9 million in FY2016 and by RMB19.6 million or 70% from RMB28.1 million in FY2015 to RMB8.5 million in FY2016.

Consequence to the above, the Group drastically reduced its net loss by RMB32.1 million or 75% from RMB43.0 million in FY2015 to RMB10.9 million in FY2016.

OPERATION REVIEW

In FY2016, the following subsidiaries were deregistered/ disposed with a view to streamline the operations of the Group:

  1. Zhengzhou Elegant Jade Changqi Investment Co., Ltd (郑州美基昌奇投资有限公司), a dormant company held by the Company's wholly-owned subsidiary, Henan Sunshine Elegant Jade Real Estate Co., Ltd (河 南阳光美基置业有限公司);
  2. Henan Zhong Neng Mining Co., Ltd (河南中能矿业有 限公司), a dormant company owned 70% and 30% via the Company's wholly-owned subsidiaries, Henan Sunshine Elegant Jade Real Estate Co., Ltd (河南阳光 美基置业有限公司) and Xinxiang Huilong Real Estate Co., Ltd (新乡辉龙置业有限公司) respectively; and
  3. Whitewood Property Corporation (辉活房地产有限公 司), a dormant and loss-making subsidiary held by the Company's wholly-owned subsidiary, Elegant Jade Enterprises Limited (美基企业有限公司).

Albeit the abovementioned challenging environment, the Group, while continue seeking for new investment opportunities, including but not limited to resource related and property related businesses. The objective is to broaden the Group's revenue stream and enhance long term Shareholders' value and returns.

THE PROPOSED REVERSE TAKEOVER TRANSACTION

With regard to the reverse takeover transaction as first announced by the Company on 11 July 2013 and periodically thereafter on its progress, the latest being on 30 June 2016 (the "Proposed RTO"), the relevant parties to the amended and restated conditional sale and purchase agreement entered into on 31 December 2014 in respect of the Proposed RTO (the "Amended and Restated SPA") have entered into a supplementary agreement in extending the long-stop date for the completion of the Proposed RTO from 30 June 2016 to 30 June 2017. The relevant parties currently still await for certain technical reports to be completed in order that they may work out possible revised terms to the Amended and Restated SPA, 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.

THE PROPOSED INVESTMENT IN AN IRON MINE LOCATED IN SOUTH AFRICA

As regards the proposed investment in an iron ore mine located in the Thabazimbi, Limpopo Province, South Africa (the "Thabazimbi Project") as first announced by the Company on 25 April 2016 and periodically thereafter with the latest being made on 28 March 2017 (the "Announcement"), we are pleased that, with the necessary independent qualified persons' technical reports and valuation report concerning the Thabazimbi Project having been recently finalized by the appointed professionals, the Company and Sino-Africa Mining International Limited (the "Vendor") had on 28 March 2017 entered into a conditional Sale and Purchase Agreement (the "Agreement") for the sale by the Vendor and the purchase by the Company of 8,030 shares of a Luxembourg company, Sino Feng Mining International S.à r.l. (the "Target Company"), with the nominal value of US$1 each, constituting 40.15% of the total issued share capital of the Target Company (the "Proposed Investment"). Upon the completion of the Proposed Investment (which expects to complete in financial year 2017), the Company will, via the Target Company, hold an effective interest of 16.06% of the total issued share capital of a South African company, Aero Wind Properties (Pty) Ltd ("AWP"), which is the holder of a prospecting right granted by the relevant South African authority with an effective date of 4 February 2015, for a duration of 5 years, expiring on 3 February 2020, in respect of iron mineral over the Thabazimbi Project. Further details about the Proposed Investment and the Thabazimbi Project are available in the Announcement.

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