UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


————————

FORM 20-F

————————

(Mark One)

☐

¨

 REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE

ACT OF 1934

OR

OR

þ

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT

OF 1934

 OF 1934

For the fiscal year ended December 31 2015

, 2023

OR

¨

☐

 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934

For the transition period from: _____________ to _____________

OR

¨

OR
☐

 SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934

Date of event requiring shell company report ___________

Commission file number:0-26046

CHINA NATURAL RESOURCES, INC.

(Exact name of Registrant as specified in its charter)

Not Applicable

(Translation of Registrant’s name into English)

F4British Virgin Islands

(Jurisdiction of incorporation or organization)

Room 2205, 22/F, West Tower, Shun Tak Centre,

168-200 Connaught Road Central, Sheung Wan, Hong Kong122001

(Address of principal executive offices)

Bonaventure Yue,F4Zhu Youyi, Chief Financial Officer

Room 2205, 22/F, West Tower, Shun Tak Centre,

168-200 Connaught Road Central, Sheung Wan, Hong Kong

bonyue@chnr.net122001

01185228107205

zhuyouyi@chnr.net

(Name, telephone number, e-mail and/or facsimile number and address of Registrant’scompany contact person)


Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Common Shares, without par value

CHNR

NASDAQNasdaq Capital Market

Securities registered or to be registered pursuant to Section 12(g) of the Act:None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:None

Indicate the number of outstanding shares of each of the issuer'sissuer’s classes of capital or common stock as of the close of the period covered by the annual report. 24,910,9168,377,897 common shares as of December 31, 2015.2023.

 




Indicate by check mark if the issuer is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes¨☐Noþ☒

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes¨☐Noþ☒

Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yesþ☒  No¨☐

Indicate by check mark whether the registrationregistrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T ($(•232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes¨☒  No¨☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.filer, or an emerging growth company. See definitionthe definitions of “large accelerated filer,” “accelerated filerfiler” and large accelerated filer”“emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer ¨

☐

Accelerated Filer ¨

☐

Non-Accelerated Filerþ

☒		Emerging Growth Company ☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP ¨

☐

International Financial Reporting Standards as issued

Other ¨

☐

By the International Accounting Standards Board þ

☒

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

Item 17¨☐  Item 18¨☐

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes¨☐Noþ☒




 


TABLE OF CONTENTS

Page
PART 1
ITEM 1.IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS1 
ITEM 2.OFFER STATISTICS AND EXPECTED TIMETABLE1 
ITEM 3.KEY INFORMATION1 
ITEM 4.INFORMATION ON THE COMPANY24 
ITEM 4A.UNRESOLVED STAFF COMMENTS41 
ITEM 5.OPERATING AND FINANCIAL REVIEW AND PROSPECTS41 
ITEM 6.DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES51 
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS60 
ITEM 8.FINANCIAL INFORMATION63 
ITEM 9.THE OFFER AND LISTING63 
ITEM 10.ADDITIONAL INFORMATION64 
ITEM 11.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK71 
ITEM 12.DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES71 
PART II
ITEM 13.DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES72 
ITEM 14.MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS72 
ITEM 15.CONTROLS AND PROCEDURES72 
ITEM 16.[Reserved]72 
ITEM 16A.AUDIT COMMITTEE FINANCIAL EXPERT73 
ITEM 16B.CODE OF ETHICS73 
ITEM 16C.PRINCIPAL ACCOUNTANT FEES AND SERVICES74 
ITEM 16D.EXEMPTION FROM THE LISTING STANDARDS FOR THE AUDIT COMMITTEE74 

i 

ITEM 16E.PURCHASE OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS74 
ITEM 16F.CHANGES IN REGISTRANT’S CERTIFYING ACCOUNTANT74 
ITEM 16G.CORPORATE GOVERNANCE74 
ITEM 16H.MINE SAFETY DISCLOSURE75 
ITEM 16I.DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS75 
ITEM 16J.INSIDER TRADING POLICIES 74
ITEM 16K.CYBERSECURITY75
PART III
ITEM 17.FINANCIAL STATEMENTS75 
ITEM 18.FINANCIAL STATEMENTS75 
ITEM 19.EXHIBITS76 
SIGNATURES

77 

ii 

CONVENTIONS

Unless otherwise specified, all references in this Annual Reportannual report on Form 20-F (the “Annual Report”) to "U.S.“U.S. Dollars," "Dollars," "US$” “Dollars,” “US$,"” or "$"“$” are to United States dollars; all references to "Hong Kong Dollars" or "HK$"“HK$” are to Hong Kong dollars; and all references to "Renminbi"“Renminbi,” “RMB” or "CNY"“CNY” are to RenminbiChinese Yuan, which is the lawful currency of the People'sPeople’s Republic of China ("China" or the "PRC").China. The accounts of the Company and its subsidiaries are maintained in either Hong Kong Dollarsdollars or Renminbi. The financial statements of the Company and its subsidiaries are prepared in Renminbi. Translations of amounts from Renminbi to U.S. Dollars, and from Hong Kong Dollarsdollars to U.S. Dollars, are for the convenience of the reader. Unless otherwise indicated, any translations from Renminbi to U.S. Dollars or from U.S. Dollars to Renminbi have been made at the single rate of exchange (the "CNY“CNY Exchange Rate"Rate”) as quoted by www.oanda.comwww.ofx.com on December 31, 2015,2023, which was US$1.00 = CNY6.4917.CNY7.0786. Translations from Hong Kong Dollarsdollars to U.S. Dollars have been made at the official pegged exchange rate of US$1.00 = HK$7.80 as of December 31, 2015.2023, and from Hong Kong dollars to Renminbi have been made at the single rate of exchange as quoted by www.ofx.com on December 31, 2023, which was HK$1.00 = CNY0.9063. The Renminbi is not freely convertible into foreign currencies and no representation is made that the Renminbi or U.S. Dollar amounts referred to herein could have been or could be converted into U.S. Dollars or Renminbi, as the case may be, at the CNY Exchange Rate or at all.

References to "China Resources"the “Acquisition” are to China Resources Development, Inc.the Company’s pending acquisition of the indirect ownership of Williams Minerals (Pvt) Ltd (“Williams Minerals”), which is the company that holds the mining permit for the Zimbabwean lithium mine. At the time of entry into the sale and purchase agreement on February 27, 2023, Feishang Group, the Company’s controlling shareholder, owned 70% of the lithium mine, and the remaining 30% was owned by Top Pacific (China) Limited (“Top Pacific”), a Nevadanon-affiliate (together, the “Sellers”). Completion of the Acquisition is contingent upon the satisfaction of a number of conditions, including, among other things, the transfer of ownership interests in Williams Minerals from the Sellers to the intermediate holding company, the issuance of independent technical reports, the actual quantity of qualified lithium oxide metal resources proven or estimated to exist in each mining area covered by the relevant report, and the predecessorCompany’s full settlement of the purchase consideration in cash and restricted shares. There is no guarantee that the Acquisition will close or be completed at the anticipated valuation and terms, or at all. On December 22, 2023, the Company entered into an amendment agreement (the “Amendment Agreement”) to CHNR.the sale and purchase agreement Dated as of February 27, 2023 by and among Feishang Group and Top Pacific (China) Limited (together, the “Sellers”), and the respective beneficial owner of the Sellers, Mr. Li Feilie and Mr. Yao Yuguang with the parties thereto. As the Sellers are still in the process of satisfying conditions precedent to the closing of the acquisition in accordance with the Zimbabwe SPA, including but not limited to obtaining requisite governmental approvals, the parties entered into the Amendment Agreement to extend the long stop date for closing the acquisition from December 31, 2023 to December 31, 2024.

References to “Bayannaoer Mining” are to Bayannaoer City Feishang Mining Company Limited, a company organized in the PRC and a wholly owned subsidiary of Yangpu Shuanghu.

References to the “Company” or “CHNR”“BVI” are to China Natural Resources, Inc. (formerly known as Billion Luck Company Ltd.), athe British Virgin Islands company, which was the surviving company to a merger between China Resources and CHNR on December 9, 2004 (the “Redomicile Merger”). Unless the context otherwise requires, the Company and/ or CHNR includes the operations of its predecessor and subsidiaries.Islands.

References to "Central Government" refer to the national government of the PRC and its various ministries, agencies, and commissions.

References to “common shares” are to the common shares, without par value, of CHNR after the Redomicile Merger.

References to "common stock" are to the common stock, $0.001 par value, of China Resources.

References to "China Coal"“China Coal” are to China Coal Mining Investment Limited, a company organized in Hong Kong and a wholly-ownedwholly owned subsidiary of CHNR.

References to “Distribution”the “Company,” “CHNR,” “we,” “us,” and “our company” are to China Natural Resources, Inc., a special interim dividend declaredBVI company. CHNR is not a Chinese operating company but a BVI holding company with operations conducted by subsidiaries established in the Company satisfied by way of a distribution in speciePRC and Hong Kong, and which owns equity interests, directly or indirectly, of the entire issued share capital of Feishang Anthracite, being an aggregate of 124,554,580 ordinary sharesoperating subsidiaries. See “Item 3.D. – KEY INFORMATION – Risk Factors – Risks Relating to Our PRC Operations and Doing Business in the capital of Feishang AnthracitePRC” for further information regarding the uncertainties associated with aoperating in the PRC.

References to “common shares” are to the common shares, without par value, of HK$0.01 each.CHNR.

References to “Distribution Record Date” are to January 13, 2014, being the record date for ascertaining entitlements to the Distribution.

References to "Feishang“Feishang Anthracite” and “FARL” are to Feishang Anthracite Resources Limited (formerly known as Wealthy Year Limited), a company organized in the British Virgin IslandsBVI whose ordinary shares arewere listed on the Main Board of The Stock Exchange of Hong Kong Limited (the “Hong Kong Stock Exchange”) on January 22, 2014, and, until January 22, 2014, a wholly-owned subsidiary2014. On August 17, 2020, CHNR acquired 120 million shares of FARL, which were transferred to Feishang Group on July 27, 2021 as part of the Company.consideration for the acquisition of all of the outstanding shares of PST Technology.

References to “Feishang Dayun” are to Feishang Dayun Coal Mining Limited, a company organized in Hong Kong and a wholly-ownedwholly owned subsidiary of Pineboom.

References to “Feishang Enterprise” are to Feishang Enterprise Group Limited,Co., Ltd., a related company organized in the PRC that is our affiliate and is controlled by Mr. Li Feilie, the principal beneficial owner of the Company and its former Chairman and CEO ofCEO.

References to “Feishang Group” are to Feishang Group Limited, CHNR’s principal shareholder and a company organized in the Company.BVI that is ultimately controlled by Mr. Li Feilie.

References to “Feishang Management” are to Shenzhen Feishang Management and Consulting Co., Limited, a company organized in the PRC and a wholly-ownedwholly owned subsidiary of Yunnan Mining.

References to “Feishang Mining” are to Feishang Mining Holdings Limited, a company organized in the British Virgin IslandsBVI and, since February 3, 2006, a wholly-ownedwholly owned subsidiary of CHNR.

iii 

References to “Feishang Yongfu” are to Feishang Yongfu Mining Limited, a company organized in Hong Kong and a wholly owned subsidiary of Newhold.

References to the “five-to-one share combination” are to the five-to-one share combination of the Company’s issued and outstanding common shares, whereby every five issued and outstanding common shares were automatically converted into one issued and outstanding common share at marketing opening on April 3, 2023. The share combination was intended to increase the per share trading price of the Company’s common shares to satisfy the $1.00 minimum bid price requirement for continued listing on the Nasdaq Capital Market. The share combination did not affect the number of total maximum number of common shares which the Company is authorized to issue. As a BVI company, CHNR uses the term “share combination” to describe a reverse stock split.

References to “FMH Services” are to FMH Corporate Services Inc., a company organized in Florida and a wholly-ownedwholly owned subsidiary of CHNR. FMH Services is currently inactive.

References to the “Group” are to the Company and its directlydirect and indirect subsidiaries.

References to “HK” or indirectly owned subsidiaries.



i



“Hong Kong” are to Hong Kong Special Administrative Region.

References to “IFRS” or “IFRSs” are to International Financial Reporting Standards as issued by the International Accounting Standards Board.Board (“IASB”).

References to "Local Governments"“LME” are to governments in the PRC, including governments at all administrative levels below the Central Government, including provincial governments, governments of municipalities directly under the Central Government, municipal governments, county governments, and township governments.London Mercantile Exchange;

References to "Newhold"“Moruogu Tong Mine” are to Wulatehouqi Moruogu Tong Mine in Inner Mongolia;

References to “Newhold” are to Newhold Investments Limited, a company organized in the British Virgin IslandsBVI and a wholly-ownedwholly owned subsidiary of the Company.CHNR.

References to "Pineboom"“Pineboom” are to Pineboom Investments Limited, a company organized in the British Virgin IslandsBVI and a wholly-ownedwholly owned subsidiary of the Company.CHNR.

References to the "PRC"“PRC” or "China" include all territory claimed by“China” are to the People’s Republic of China, and only in the context of describing PRC laws, regulations and other legal or under the control of the Central Government, excepttax matters in this annual report, excludes Taiwan, Hong Kong, Macao, and Taiwan.Macau.

References to "PRC Government" include the Central Government“PST Technology” are to Precise Space-Time Technology Limited, a Hong Kong company and Local Governments.a wholly owned subsidiary of CHNR.

References to "Provinces" include provinces, autonomous regions,the “Related-Party Debtholders” are to the companies affiliated with Mr. Li Feilie, CHNR’s principal beneficial owner, including without limitation, Feishang Enterprise and municipalities directly under the Central Government of the PRC.Feishang Group.

References to “Series B preferred shares”“SHFE” are to the Series B preferred shares, without par value, of CHNR, after the Redomicile Merger.Shanghai Futures Exchange;

References to "Series B preferred stock"“Shanghai Onway” are to Shanghai Onway Environmental Development Co., Limited, a company organized in the Series B preferred stock, $.001 par value,PRC and a 51%-owned subsidiary of China Resources.Shenzhen Qianhai.

References to “Shaoguan Angrui” are to Shaoguan Angrui Environmental Technology Development Co., Limited, a company organized in the PRC and a 55%-owned subsidiary of Shanghai Onway.

References to “shareholders” of CHNR are to the members of China Natural Resources, Inc., a British Virgin Islands corporation.the Company. “Members” under British Virgin IslandsBVI law are the equivalent of “shareholders” under the laws of the several states of the United States.

References to “Silver Moon”“Shenzhen New PST” are to Silver Moon Technologies Limited, a company organized in the British Virgin Islands and an 80%-owned subsidiary of the Company. Silver Moon is currently inactive.

References to “Spin-Off” are to the January 22, 2014 Distirubtion to the Company’s shareholders of the outstanding shares of Feishang Anthracite, which operated the Company’s coal mining and related business prior to January 22, 2014.

References to "Sunwide" are to Sunwide Capital Limited, a company organized in the British Virgin Islands and a wholly-owned subsidiary of the Company. Sunwide is currently inactive.

References to “Wuhu Feishang” are to Wuhu Feishang Mining DevelopmentShenzhen New Precise Space-Time Technology Co., Limited, a company organized in the PRC and a wholly-ownedwholly owned subsidiary of Feishang Mining.PST Technology.

References to “Yangpu Lianzhong”“Shenzhen Qianhai” are to Yangpu Lianzhong MiningShenzhen Qianhai Feishang Environmental Investment Co., Limited, a company organized in the PRC and a wholly-ownedwholly owned subsidiary of China Coal.Shenzhen New PST.

References to “Warrants” are to certain outstanding warrants that we issued to the investors pursuant to a securities purchase agreement dated February 16, 2024 to purchase up to 1,115,903 Common shares at an exercise price equal to $3.00 per share and to the president and the staff of FT Global pursuant to a placement agency agreement dated February 16, 2024 to purchase up to an aggregate of 74,394 Common shares at an exercise price equal to $2.20 per share;

References to “Yangpu Shuanghu” are to Yangpu Shuanghu Industrial Development Co., Limited, a company organized in the PRC and a wholly-ownedwholly owned subsidiary of Feishang Yongfu.

References to “Yunnan Mining” are to Yunnan Feishang Mining Co., Limited, a company organized in the PRC and a wholly-ownedwholly owned subsidiary of Wuhu Feishang.Yangpu Shuanghu.


References to “Zhejiang Xinyu” are to Zhejiang Xinyu Environmental Technology Co., Limited, a company organized in the PRC and a wholly owned subsidiary of Shanghai Onway.



iv 

References to the “Zimbabwean lithium mine” refer to a mining area of 8682 hectares situated in the Mining District of Manicaland, Zimbabwe, to which Williams Minerals owns the right to carry out prospecting/mining operations for lithium under the Special Grant No. 7507 (PART XIX) in accordance with Section 291 of the Mines and Minerals Act [Chapter 21:05]. The legal possession and control of the Zimbabwean lithium mine are the subject of the Acquisition.

iiWe face various risks and uncertainties related to doing business in China. The PRC government has significant authority to exert influence on the ability of a China-based company, such as us, to conduct its business and accept foreign investments. For example, we face risks associated with regulatory approvals on offshore securities offerings, oversight on cybersecurity and data privacy. The PRC government has recently published new policies that significantly affected various industries, and we cannot rule out the possibility that it will in the future further release regulations or policies regarding our industry that could adversely affect our business, financial condition and results of operations. For a detailed description of risks relating to doing business in China, see “Item 3.D. Key Information—Risk Factors—Risks Relating to Our PRC Operations and Doing Business in PRC.”


v 

 


Forward-Looking Statements

This Annual Reportannual report contains statements that constitute forward-looking statements within the meaning of Federalthe U.S. federal securities laws. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. For example, words such as “may,” “will,” “should,” “estimates,” “predicts,” “possible,” “potential,” “continue,” “strategy,” “believes,” “anticipates,” “plans,” “expects,” “intends,” and similar expressions are intended to identify forward-looking statements. These statements appear in a number of places in this Auual Reportannual report and include, without limitation, statements regarding the intent, belief and current expectations of the Company, its directors or its officers with respect to the Company'sCompany’s policies regarding its business development, investments, dispositions, financings, conflicts of interest and other matters;matters, and trends affecting the Company'sCompany’s financial condition or results of operations. Forward-looking statements are not a guarantee of future performance and involve risks and uncertainties, and actual results may differ materially from those in the forward-looking statement as a result of various factors. Among the risks and uncertainties that could cause our actual results to differ from our forward-looking statements are our intent, belief and current expectations as to business operations and operating results, uncertainties concerning our ability to sustain opertions, uncertainties regarding the governmental, economic and political circumstances in the People’s Republic of China, risks and hazards associated with the Company’s mining activities, uncertainties associated with metal price volatility, uncertainties associated with the Company’s reliance on third-party contractors are:

•uncertainties regarding the governmental, economic and political circumstances in the PRC;

•the impact on the Company’s financial position, growth potential and business of the sale of PST Technology and Shanghai Onway specifically;

•uncertainties related to the Company’s ability to identify potential partners or acquisition targets as it considers strategic alternatives in other non-natural resources sectors;

•uncertainties associated with metal price volatility;

•uncertainties concerning the viability of mining and estimates of reserves at the Company’s Moruogu Tong Mine in Inner Mongolia;

•uncertainties regarding our ability to acquire a mining permit and to extract mineral reserves located in the Moruogu Tong Mine in an economically feasible manner;

•uncertainties related to our ability to fund operations and capital expenditures;

uncertainties relating to possible future increases in operating expenses, including coststhe acquisition of labor and materials, and other risks detailed from time to time in the Company’s filings with the Securities and Exchange Commission, including without limitation the information set forth in Item 3.D. of this Annual Report under the heading, "Risk Factors". Williams Minerals that were not discovered by us through our due diligence investigation; 

•uncertainties related to the completion of the acquisition of Williams Minerals which is conditional upon satisfaction or waiver of various conditions;

•failure to complete the acquisition of Williams Minerals may have a material adverse effect on the Company’s business, financial condition and results of operations;

•uncertainties related to the realization of the anticipated benefits associated with it;

•the potential lack of appetite for the Company’s current holdings as consideration for a transaction;

•uncertainties related to geopolitical events and conflicts, such as the conflict between Russia and Ukraine;

•uncertainties regarding the impact of climate change on our operations and business;

•uncertainties related to possible future increases in operating expenses;

•the fluctuations of interest rates and foreign exchange rates;

•uncertainties related to the political situation between the PRC and the United States, and potential negative impacts on companies with operations in the PRC that are listed on exchanges in the United States; and

•other risks detailed from time to time in the Company’s filings with the SEC, including without limitation the information set forth in Item 3.D. of this annual report under the heading “Risk Factors.”

vi 

With respect to forward-looking statements that include a statement of its underlying assumptions or bases, the Company cautions that, while it believes such assumptions or bases to be reasonable and has formed them in good faith, assumed facts or bases almost always vary from actual results, and the differences between assumed facts or bases and actual results can be material depending on the circumstances. When, in any forward-looking statement, the Company, or its management, expresses an expectation or belief as to future results, that expectation or belief is expressed in good faith and is believed to have a reasonable basis, but there can be no assurance that the stated expectation or belief will result or be achieved or accomplished. We qualify all of our forward-looking statements by these cautionary statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. You should read this annual report and the documents that we reference in this annual report completely and with the understanding that our actual future results may be materially different from what we expect.







iii



PART I


ITEM 1.

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS


No disclosure is required in response to this Item.


ITEM 2.

OFFER STATISTICS AND EXPECTED TIMETABLE


No disclosure is required in response to this Item.


ITEM 3.

KEY INFORMATION


A.

Selected FinancialMarket and Industry Data


On February 3, 2006 (the “Acquisition Date”), we consummated the acquisition of all of the issuedThis annual report includes market, economic, and outstanding capital stock of Feishang Mining (the “Acquisition”). Our acquisition of Feishang Mining was accounted for using the purchase method of accounting and was treated as a reverse acquisition because on a post-merger basis, the former Feishang Mining shareholder holds 86.4% of our outstanding common shares. As a result, Feishang Mining is deemed to be the acquirer for accounting purposes. We have retroactively restated our issued share capital to reflect the acquisition by Feishang Mining. The selected financialindustry data are stated in CNY and are derived from the audited consolidated financial statements of the Company for the years ended December 31, 2011, 2012, 2013, 2014 and 2015, prepared and presented in accordance with IFRS. Details of the Company’s acquisition of Feishang Mining are described elsewhere in this Annual Report.


Ernst & Young, our independent registered public accounting firm, has issued an unqualified auditor's report on our consolidated statement of financial position as of December 31, 2014, and the related consolidated statements of profit or loss, statements of comprehensive income, statements of changes in equity and statements of cash flows for the years ended December 31, 2013 and 2014. Ernst & Young Hua Ming LLP, which has been engaged as our independent registered public accounting firm for the year 2015, has issued an unqualified auditor's report on our consolidated statement of financial position as of December 31, 2015, and the related consolidated statement of profit or loss, statement of comprehensive income, statement of changes in equity and statement of cash flows for the year ended December 31, 2015. Details of the changes in our certifying accountant is disclosed in Current Report on Form 6-K furnished September 14, 2015.


The selected financial information as of and for the years ended December 31, 2011, 2012, 2013, 2014 and 2015 set forth below should be read in conjunction with, and is qualified in its entirety by reference to “Item 5. Operating and Financial Review and Prospects”and our audited consolidated financial statements and the notes thereto included elsewhere in this Annual Report.


The statements of profit or loss data for each of the years ended December 31, 2013, 2014 and 2015 and the statements of financial position data as of December 31, 2014 and 2015 are derived from our audited consolidated financial statements included in Part III, Item 18, "Financial Statements" of this Annual Report. The statements of financial position data as of December 31, 2011, 2012 and 2013 and the statements of profit or loss data for the years ended December 31, 2011 and 2012 are derived from our audited consolidated financial statements that are not included in this Annual Report. Our historical results are not necessarily indicative of our results in any future period.  


In accordance with IFRS 5, statements of profit or loss have been restated retrospectively for all periods presented due to the Spin-Off and listing by way of introduction on the Hong Kong Stock Exchange of the Company’s wholly owned subsidiary, Feishang Anthracite, which operated the Company’s coal mining and related business. The Spin-Off was completed on January 22, 2014. The coal mining and related operations are therefore presented as discontinued operations.


 

 

Amounts in thousands, except share amounts and per share data

 

 

 

Year Ended

 

Year Ended

 

Year Ended

 

Year Ended

 

Year Ended

 

 

 

December 31,

 

December 31,

 

December 31,

 

December 31,

 

December 31,

 

 

 

2011

 

2012

 

2013

 

2014

 

2015

 

 

 

CNY

 

CNY

 

CNY

 

CNY

 

CNY

 

Statements of Profit or Loss Data

 

 

 

 

 

 

 

 

   

 

 

Continuing operations

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

42,940

 

14,728

 

41,360

 

8,303

 

18,342

 

Cost of sales

 

(21,245

)

(9,036

)

(25,101

)

(6,563

)

(31,936

)

Gross profit/(loss)

 

21,695

 

5,692

 

16,259

 

1,740

 

(13,594

)

 

 

 

 

 

 

 

 

 

 

 

 

Profit/(loss) before income taxes from continuing operations

 

3,069

 

(15,356

)

857

 

(26,384

)

(34,003

)

 

 

 

 

 

 

 

 

 

 

 

 

Loss for the year from continuing operations attributable to:

 

 

 

 

 

 

 

 

 

 

 

Owners of the Company

 

(1,216

)

(14,391

)

(1,285

)

(33,223

)

(35,507

)

Non-controlling interests

 

—

 

—

 

—

 

—

 

—

 

 

 

(1,216

)

(14,391

)

(1,285

)

(33,223

)

(35,507

)






















 

 

Amounts in thousands, except share amounts and per share data

 

 

 

Year Ended

 

Year Ended

 

Year Ended

 

Year Ended

 

Year Ended

 

 

 

December 31,

 

December 31,

 

December 31,

 

December 31,

 

December 31,

 

 

 

2011

 

2012

 

2013

 

2014

 

2015

 

 

 

CNY

 

CNY

 

CNY

 

CNY

 

CNY

 

Loss from discontinued operations attributable to:

  

 

 

 

 

 

 

 

 

 

  

Owners of the Company

 

(64,759

) 

(75,312

)

(334,119

)

(9,925

)

—

 

Non-controlling interests

 

(141

)

8,256

 

(418

) 

(783

)

—

 

  

 

(64,900

) 

(67,056

)

(334,537

)

(10,708

)

—

 

  

 

 

 

 

 

 

 

 

 

 

 

(Loss)/profit attributable to:

 

 

 

 

 

 

 

 

 

 

 

Owners of the Company

 

(65,975

) 

(89,703

)

(335,404

)

(43,148

)

(35,507

)

Non-controlling interests

 

(141

)

8,256

 

(418

) 

(783

)

—

 

  

 

(66,116

) 

(81,447

)

(335,822

)

(43,931

)

(35,507

)

                                                                   

  

                        

   

                        

   

                        

   

                        

   

                        

   

Loss per share:

Basic

 

 

 

 

 

 

 

 

 

 

 

For loss from continuing operations

 

(0.05

) 

(0.58

)

(0.05

)

(1.33

)

(1.43

)

For loss from discontinued operations

 

(2.74

) 

(3.02

)

(13.41

)

(0.40

)

—

 

  

 

(2.79

) 

(3.60

)

(13.46

)

(1.73

)

(1.43

)

  

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

 

 

 

 

 

 

 

 

 

 

For loss from continuing operations

 

(0.05

) 

(0.58

)

(0.05

)

(1.33

)

(1.43

)

For loss from discontinued operations

 

(2.74

) 

(3.02

)

(13.41

)

(0.40

)

—

 

  

 

(2.79

) 

(3.60

)

(13.46

)

(1.73

)

(1.43

)

  

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding

 

 

 

 

 

 

 

 

 

 

 

Basic

 

23,613,238

 

24,910,916

 

24,910,916

 

24,910,916

 

24,910,916

 

Diluted

 

23,613,238

 

24,910,916

 

24,910,916

 

24,910,916

 

24,910,916

 

  

 

 

 

 

 

 

 

 

 

 

 

Statements of Financial Position Data

 

 

 

 

 

 

 

 

 

 

 

Total assets*

 

2,418,168

 

2,854,260

 

3,024,564

 

80,036

 

51,640

 

Current assets*

 

255,733

 

347,255

 

2,997,211

 

62,524

 

37,387

 

Current liabilities*

 

585,046

 

1,097,879

 

2,568,144

 

37,827

 

59,277

 

Total equity/(deficiency in assets)

 

625,893

 

546,875

 

255,518

 

22,614

 

(12,276

)

Non-controlling interests

 

85,685

 

93,941

 

93,523

 

—

 

—

 

Equity attributable to Owners of the Company

 

540,208

 

452,934

 

161,995

 

22,614

 

(12,276

)

Capital stock

 

312,081

 

312,081

 

312,081

 

312,081

 

312,081

 

———————

*

 In December 2013, the assets and liabilities of the coal mining segment and related business were reclassified to held for distribution, only as at December 31, 2013, and not as at the other year ends in the table.






The Company has not paid any dividends with respect to its common shares and has no present plan to pay any dividends in the foreseeable future. The Company intends to retain its earnings to support the development of its business. Any dividends paid in the future by the Company will be paid at the discretion of the Company’s Board of Directors and will be dependent upon distributions, if any, made by its subsidiaries, and on the Company’s results of operations, its financial condition and other factors deemed relevant by the Board of Directors. In accordance with the relevant PRC regulations and the Articles of Association of companies incorporated in the PRC, appropriations of net income of wholly owned foreign enterprises and sino-foreign joint venture companies as reflected in its statutory financial statements are to be allocated to either (i) each of the general reserve, enterprise expansion reserve and staff bonus and welfare reserve, respectively, or (ii) statutory reserve, as determined by the resolution of the Board of Directors annually. Prior to the Acquisition, the Board of Directors of Wuhu Feishang declared and paid dividends of CNY44.01 million (US$6.78 million) and CNY38.46 million (US$5.92 million) on February 28, 2005 and January 27, 2006, respectively. Wuhu Feishang declared dividends of CNY127.10 million (US$19.58 million) to its parent on April 27, 2012 which were paid in 2013. On June 28, 2013, Feishang Mining declared and paid dividends of HK$155.00 million (US$19.87 million) to the Company. On September 24, 2014, Wuhu Feishang declared dividends of CNY39.24 million (US$6.04 million) to its parent which was paid in 2015. On May 19, 2015, Feishang Mining declared and paid dividends of HK$39.50 million (US$5.06 million) to the Company.

Exchange Rates

The Company’s reporting currency is Renminbi. Translations of amounts from Renminbi to U.S. Dollars are for the convenience of the reader. The following table provides information concerning the exchange rate of Renminbi for U.S. Dollars for each of the preceding five years, and for each month during the preceding six months. The rates of exchange for 2011 to 2014 are the rates quoted by Bloomberg L.P. The rates of exchange for 2015 and the preceding six months are the rates quoted by www.oanda.com. The Renminbi is not freely convertible into foreign currencies and the quotation of exchange rates does not imply convertibility of Renminbi into U.S. Dollars or other currencies. All foreign exchange transactions take place either through the Bank of China or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the People's Bank of China, the PRC’s central bank. No representation is made that the Renminbi or U.S. Dollar amounts referred to herein could have been or could be converted into U.S. Dollars or Renminbi, as the case may be, at the CNY Exchange Rate or at all.

The exchange rate on April 22, 2016 was US$1.00 = CNY6.4913.

The following table reflects the high and low exchange rates for each month during the previous six months:

MONTH

 

Oct-15

 

Nov-15

 

Dec-15

 

Jan-16

 

Feb-16

 

Mar-16

 

 

 

 

 

 

 

 

 

 

 

 

 

High

 

6.3600

 

6.3982

 

6.4917

 

6.6058

 

6.5854

 

6.5543

Low

 

6.3185

 

6.3181

 

6.3980

 

6.5022

 

6.5169

 

6.4494


The following table reflects the average exchange rate for each of the preceding five years, calculated by using the average of the exchange rates on the last day of each month during the period:


YEAR

 

2011

 

2012

 

2013

 

2014

 

2015

 

 

 

 

 

 

 

 

 

 

 

 

 

High

 

6.6350

 

6.3885

 

6.2445

 

6.2598

 

6.4917

 

Low

 

6.2949

 

6.2223

 

6.0543

 

6.0406

 

6.0933

 

Average for period

 

6.4479

 

6.2993

 

6.1417

 

6.1711

 

6.2436

 


B.

Capitalization and Indebtedness

No disclosure is required in response to this Item.

C.

Reasons for the Offer and Use of Proceeds

No disclosure is required in response to this Item.





D.

Risk Factors

Risks Relating to Metal Mining Operations

We have temporarily suspended mineral extraction at our sole operating mine and we cannot predict when extraction will resume.

Due to the depressed market price for iron, it is not currently economical to conduct mineral extraction at Yangchong Mine, the Company’s sole operating mine, and extraction was temporarily suspended on December 27, 2015. We are in the early stages of exploration for additional mineable ore at Yangchong Mine. In March 2016, we engaged Anhui Province Mine Geology Bureau No. 2 Exploration Brigade to survey geology and mineral resources within our licensed zones at Yangchong Mine. Management believes that zinc can currently be mined on a profitable basis and hopes that the survey will confirm that there are additional mineral reserves, including zinc, that can be extracted from Yangchong Mine at costs that justify extraction in light of prevailing market prices for metals. However, the Company cannot accurately predict whether the outcome of the survey will be positive, or whether the outcome of the suvey will justify the expenditure of additional resources to pursue mineral extraction.

Although management expects to resume mineral extraction at current zones of Yongchong Mine when market conditions improve, we cannot predict when market conditions will improve; and the continued depressed market price for iron may adversely affect the results of our operations.  Due to the temporary suspension of mineral extraction at Yangchong Mine, it can be expected that the availability of internally generated funds to sustain operations will decrease until the resumption of mining or the infusion of other revenue-generating assets. If we cannot resume mining operations or we are unable to inject revenue-generating assets into the Company, in the near term, we may be unable to sustain operations.

We depend on our ability to obtain mining rights in order to sustain operations; and various factors impact on our retention of mining rights and the continued availability of minerals which to mine. We may be unable to successfully compete for mineral rights with companies having greater financial resources than we have.

We are currently licensed to conduct mining operations at one mine – Yangchong Mine - and the life of probable iron ore reserves is coming to an end. We estimate that probable iron reserves at the Yangchong Mine will be depleted during the one year period from the resumption of mineral extraction at the mine. Following depletion of probable reserves, we intend to continue mining inferred resources at the Yangchong Mine. Further, we are subject to the jurisdiction of local and provincial governmental authorities that have suspended operations of mines, including mines previously operated by the Company, in furtherance of environmental initiatives by governmental authorites that have led to the designation of certain mines as exploration restricted areas.

For example, prior to November 2013, we conducted exploration and mining operations at four non-ferrous mines located in the PRC, and we submitted our application to renew the exploration rights for three of these mines on their expiry. In November 2013, the Fanchang County Bureau of Land and Resources redesignated the Sichong Mine, the Baiguochong Mine and the Luojiachong Mine as exploration restricted areas. As a result, the Company’s exploration rights at these mines were not renewed and further exploration activities at these mines have ceased. We are dependent on acquiring mining rights in order to generate revenues and the non-renewal of our exploration rights at these mines limits our mining operations unless and until we are able to secure mining rights at additional mines.

For the foregoing and other reasons, many of which are outside of our control, mining permits are difficult to obtain and retain, mines have limited lives and the number of mines at which mining can be conducted is limited. As a result, we seek to expand mineral reserves through the acquisition of additional mining rights. However, as there is a limited supply of desirable mineral deposits in the PRC, we face strong competition for mining rights from other mining companies, some of which have greater financial resources than we have. We may not be able to acquire attractive mineral rights on acceptable terms and, even if we are able to do so, we may be unable to retain the minimg rights. If we are unable to identify, acquire and retain additional mining rights, we may be required to cease operations.

If we are unable to fund our capital expenditure requirements our growth and profitability may be adversely affected.

Our continued growth is dependent upon our ability to generate increased revenue from our existing operations and to raise capital from outside sources. We believe that in order to continue to capture additional market share and generate additional revenue, we will be required to raise additional capital to fund the acquisition of additional mines and mining rights. In the future we may be unable to obtain the necessary financing on a timely basis and on acceptable terms, and our failure to do so may adversely affect our financial position, competitive position, growth and profitability. Our ability to obtain acceptable financing at any time may depend on a number of factors, including:

·

our financial condition and results of operations;





·

the condition of the PRC economy and the mining industry in the PRC; and

·

general conditions in relevant financial markets in the United States, the PRC and elsewhere in the world.

We may not be able to effectively control and manage our growth.

If our business and markets grow and develop, it will be necessary for us to finance and manage expansion in an orderly fashion. We may face challenges in identifying attractive mining sites, additional mining rights and/ or complementary mining businesses, acquiring those rights, sites and/ or businesses, integrating their activities with ours and managing them profitably. Such eventualities will increase demands on our existing management, workforce and facilities. Failure to satisfy such increased demands could interrupt or adversely affect our operations and cause administrative inefficiencies.

In addition, the minable ore at Yangchong Mine will likely be depleted during 2016. At this time, we have no operating assets other than Yangchong Mine. Management is in the process of seeking additional mining licenses, as well as exploring new businesses opportunities, that will enable uscertain statistics and information relating to sustain operations following depletionour business, markets, and other industry data, which we obtained or extrapolated from industry publications, generated through internal estimates, our review and analysis of minable ore at Yangchong Mine. However, to date we have not identified new mining licenses or new business opportunities for acquisition. If we are unable to identifymarket conditions, surveys, customer feedback, and acquire additional mines or new business opportunities, we may be required to cease operations.

We are subject to numerous risksreports provided by various statistics providers, market research organizations, and hazards associated with the mining industry.

Our mining operations are subject to a number of risks and hazards including:

·

environmental hazards;

·

industrial accidents;

·

unusual or unexpected geologic formations;

·

explosive rock failures; and

·

flooding and periodic interruptions due to inclement or hazardous weather conditions.

Such risks could result in:

·

damage to or destruction of mineral properties or production facilities;

·

personnel injury or death;

·

environmental damage;

·

delays in mining;

·

monetary losses; and

·

legal liability.

We emphasize environmental protection in our operations and related activities, and a significant financial commitment has been made towards the construction of environmental protection facilities and the establishment of a sound environmental protection management and monitoring system.others. While we believe that such data is reliable, we have not independently verified such data and cannot guarantee the accuracy or completeness thereof. Additionally, we cannot assure you that any of the assumptions underlying these statements are accurate or correctly reflect our operating subsidiaries are currentlyposition in compliancethe industry, and not all of our internal estimates have been verified by any independent sources. Furthermore, we cannot assure you that a third party using different methods to assemble, analyze, or compute market data would obtain the same results.

vii

PART I

ITEM 1.IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

Not applicable.

ITEM 2.OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3.KEY INFORMATION

The PRC government has significant authority to exert influence on the ability of a China-based company, like us, to conduct its business, accept foreign investments or be listed on a U.S. stock exchange. We also face risks associated with applicable environmental regulations ofrecent statements and regulatory actions by the PRC government, including those related to regulatory approvals of offshore securities offerings, anti-monopoly regulatory investigations and actions, cybersecurity and data privacy compliance. See “Item 4. Information on the Company – 4.A. History and Development of the Company – Recent Regulatory Development” for more information about these new laws and regulations. If the CSRC, CAC or other PRC regulatory agencies determine that prior approval is required for any changesof our offerings of securities overseas or maintenance of the trading status of the Common shares, we cannot guarantee that we will be able to these regulationsobtain such approval in a timely manner, or at all. The CSRC, CAC or other PRC regulatory agencies may increase operating costs and may adversely affectalso take actions requiring us, or making it advisable for us, not to proceed with such offering or maintain the trading status of our resultscommon shares. If we proceed with any of operations.

Duringsuch offering or maintain the coursetrading status of mining activities, we use dangerous materials. Although we have established stringent rules relatingour common shares without obtaining the CSRC’s, CAC’s or other PRC regulatory agencies’ approval to the storage, handling and use of such dangerous materials, thereextent it is no assurance that accidents will not occur. Should we be held liable for any such accident, we may be subject to penalties, and possible criminal proceedings may be brought against our employees.

Our metallic ore is subject to government regulations on the State, provincial and county levels andrequired, or if we are unable to comply with any new approval requirements which might be adopted for offerings that we have completed, we may face regulatory actions or other sanctions from the CSRC, CAC or other PRC regulatory agencies. These regulatory agencies may impose fines and penalties on our operations in China, limit our ability to pay dividends outside of China or accept foreign investments, delay or restrict the repatriation of the proceeds from offering of securities overseas into China or take other actions that could have a material adverse effect on our business, financial condition, results of operations and prospects, as well as the trading price of the Common shares.

The PRC government may also intervene with or influence our operations as it deems appropriate to further regulatory, political and societal goals. The PRC government has recently published new policies that affected various industries, and we cannot rule out the possibility that it will in the future release regulations or policies regarding our industry that could adversely affect our business, financial condition and results of operations. While we believe that our business operations comply with relevant PRC laws and regulations currently in force in all material respects, we cannot guarantee that new rules or regulations promulgated in the future will not impose any additional requirement on us or otherwise tighten the regulations on companies like us. Any such action, once taken by the PRC government, could cause the value of our securities to significantly decline or become worthless.

We also face risks associated with the Holding Foreign Companies Accountable Act, or the HFCA Act, which was enacted on December 18, 2020. Pursuant to the HFCA Act, as amended by the Consolidated Appropriations Act, 2023, or the HFCAA, if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspections by the PCAOB for two consecutive years, the SEC will prohibit our shares from being traded on a national securities exchange or in the over-the-counter trading market in the United States. On December 16, 2021, the PCAOB issued a report on its determinations that it was unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong, and our auditor was subject to that determination. On August 26, 2022, the PCAOB signed a Statement of Protocol with the CSRC and the Ministry of Finance of the PRC, taking the first step toward opening access for the PCAOB to inspect and investigate registered public accounting firms headquartered in China completely. On December 15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination and removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms. Each year, the PCAOB will determine whether it can inspect and investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions. If PCAOB determines in the future that it no longer has full access to inspect and investigate completely accounting firms in mainland China or Hong Kong and we continue to use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed with the SEC, we would be identified as a Commission-Identified Issuer following the filing of the annual report on Form 20-F for the relevant fiscal year. There can be no assurance that we would not be identified as a Commission-Identified Issuer for any reason,future fiscal year, and if we were so identified for two consecutive years, we would become subject to the prohibition on trading under the HFCAA and as a result, NASDAQ may determine to delist our securities. See “Item 3.D. Key Information – Risk Factors - Risks Relating to Our PRC Operations and Doing Business in the PRC - The PCAOB had historically been unable to inspect our auditor in relation to their audit work performed for our financial statements and the inability of the PCAOB to conduct inspections of our auditor in the past has deprived our investors with the benefits of such inspections.” and “- Risks Relating to Our PRC Operations and Doing Business in the PRC - Our common shares may be prohibited from trading in the United States under the HFCAA in the future if the PCAOB is unable to inspect or investigate completely auditors located in China. The delisting of our common shares, or the threat of their being delisted, may materially and adversely affect the value of your investment.”

1 

Transfers of Cash and Assets between Our Company and Our Subsidiaries

Cash and asset transfers through the Group are primarily attributed to shareholder loans from us to our subsidiaries. Our subsidiaries receive substantially all revenue in RMB, and the PRC or Hong Kong governments could prevent the RMB maintained in the PRC or Hong Kong from leaving, impose controls on its conversion into foreign currencies, restrict deployment of the RMB into the business of our subsidiaries and restrict the ability to pay dividends. Our PRC subsidiaries are permitted to pay dividends to their shareholders, and eventually to CHNR, only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. Such payment of dividends by entities registered in China is subject to limitations, which could result in limitations on the availability of cash to fund dividends or make distributions to holders of our securities. For example, our PRC subsidiaries are required to make appropriations to certain statutory reserve funds or may make appropriations to certain discretionary funds, which are not distributable as cash dividends except in the event of a solvent liquidation of the companies. See, “Item 3.D. Key Information – Risk Factors –Our PRC subsidiaries are subject to restrictions on paying dividends and making other payments to us.” There are no restrictions or limitations imposed by the Hong Kong government on the transfer of capital within, into and out of Hong Kong (including funds from Hong Kong to the PRC), except for the transfer of funds involving money laundering and criminal activities. However, there is no guarantee that the Hong Kong government will not promulgate new laws or regulations that may impose such restrictions in the future. To the extent cash in the business is in the PRC or Hong Kong or our PRC or Hong Kong entities, the funds may not be available to fund operations or for other use outside of the PRC or Hong Kong due to interventions in or the imposition of restrictions and limitations on the ability of us or our subsidiaries by the PRC or Hong Kong governments to transfer cash. We cannot assure you that the PRC or Hong Kong governments will not intervene in or impose restrictions on our ability to make intercompany cash transfers.

All cash or asset transfers between us and our subsidiaries for each of the three years ended December 31, 2023, are set forth in the table below. The purpose of the outbound transfers, in the form of shareholder loans, was to pay off the subsidiaries’ expenses and provide working capital for the subsidiaries. The purpose of the inbound transfers, in the form of loan repayments, was to centralize the treasury function of the Company and our subsidiaries. There are no fixed repayment terms and we do not expect there to be any tax implications for such transfers. We did not make any capital contributions to, or receive any dividends from, our subsidiaries during these periods. Other than the assets and liabilities of the wastewater treatment business segment transferred to Mr. Li Feilie, our controlling shareholder, as the result of the sale of PST Technology which were accounted for as a deemed distribution of RMB20.38 million (US$2.88 million) to the controlling shareholder on July 28, 2024 with a corresponding deemed contribution from the controlling shareholder in the same amount, no transfers, dividends or distributions have been made to investors during these periods. We currently have not maintained any cash management policies that dictate the purpose, amount and procedure of cash transfers between the Company, our subsidiaries, or the investors. Rather, the funds can be transferred in accordance with the applicable laws and regulations in the PRC and other jurisdictions. PRC laws and regulations may restrict our ability to make dividends and distributions to investors, including U.S. investors.

    Year ended December 31, 
Transferor Transferee 2021  2022  2023  2023 
    HK$  HK$  HK$  US$ 
 
Outbound Transfers
                   
China Natural Resources, Inc. Feishang Mining  50,000   —   30,000   4,238 
China Natural Resources, Inc. China Coal  8,000   8,000   8,000   1,130 
China Natural Resources, Inc. Feishang Yongfu  8,000   8,000   38,000   5,368 
China Natural Resources, Inc. Feishang Dayun  8,000   8,000   38,000   5,368 
  Total  74,000   24,000   114,000   16,104 
                   
Inbound Transfers
Feishang Mining China Natural Resources, Inc.  —   —   —   — 
China Coal China Natural Resources, Inc.  —   —   —   — 
Feishang Yongfu China Natural Resources, Inc.  30,000   —   —   — 
Feishang Dayun China Natural Resources, Inc.  30,000   —   —   — 
  Total  60,000   —   —   — 

A.[Reserved]

B.Capitalization and Indebtedness

  Not applicable.

C.Reasons for the Offer and Use of Proceeds

  Not applicable.

D.Risk Factors

We are not a Chinese operating company but a BVI holding company with operations conducted by our subsidiaries established in the PRC and Hong Kong, and which owns equity interests, directly or indirectly, of the operating subsidiaries. See “Item 4.C. INFORMATION ON THE COMPANY – Organizational Structure” for further information regarding our subsidiaries’ names, places of incorporation, and equity ownership. We are subject to legal and operational risks associated with being based in the PRC and Hong Kong and having all of our operations in the PRC, discussed in greater detail below. The legal and operational risks associated with being based in and having operations in mainland China also apply to operations in Hong Kong and Macao. While entities and businesses in Hong Kong and Macao operate under different sets of laws from mainland China, the legal risks associated with being based in and having operations in mainland China could apply to a company’s operations in Hong Kong and Macao, if the laws applicable to mainland China become applicable to entities and business in Hong Kong and Macao in the future. As of the date of this annual report, we do not have material operations in Hong Kong or Macao. It is management’s understanding that there are no restrictions, limitations, rules, or regulations under Hong Kong law that are commensurate to those of the PRC with respect to (i) payment of dividends and other distributions from the Company’s subsidiaries to the Company, (ii) currency conversion that may affect payment of dividends or foreign currency denominated obligations, (iii) offshore financing activities, (iv) anti-monopoly laws, or (v) data protection and cybersecurity, that have impacted or may impact the Company’s ability to conduct its business, accept foreign investments, or list on a U.S. or other exchange. The Chinese government may intervene or influence the operation of our Hong Kong subsidiaries and PRC subsidiaries and exercise significant oversight and discretion over the conduct of their business and may intervene in or influence their operations at any time or may exert more control over offerings conducted overseas and/or foreign investment in China-based issuers, which could result in a material change in our operations and/or the value of our common shares. Further, rules and regulations in the PRC can change quickly with little advance notice, and any actions by the Chinese government to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless.

Recent statements and regulatory actions by the Chinese government, such as those related to data security or anti-monopoly concerns, could have a significant impact on our ability to conduct our business, accept foreign investments, or maintain our listing on the Nasdaq Capital Market (“Nasdaq”) or list on another U.S. or foreign exchange. There have not been comparable developments in Hong Kong yet, but such developments may occur. For example, on June 10, 2021, the Standing Committee of the PRC National People’s Congress promulgated the PRC Data Security Law, which took effect in September 2021. The PRC Data Security Law imposes data security and privacy obligations on entities and individuals carrying out data activities and introduces a data classification and hierarchical protection system based on the importance of data in economic and social development, and the degree of harm it will cause to national security, public interests, or legitimate rights and interests of individuals or organizations when such data is tampered with, destroyed, leaked, illegally acquired or used. The PRC Data Security Law also provides for a national security review procedure for data activities that may affect national security and imposes export restrictions on certain data an information. We believe that our business is not in an industry related to national security, but we cannot preclude the possibility that PRC government authorities may publish explanations contrary to our understanding or broaden the scope of such reviews in the future, in which case our future activities may be closely scrutinized or prohibited. Moreover, given the PRC authorities have significant discretion in interpreting and applying their laws, rules and regulations, if we undertake a transaction in the PRC that involves data security or an industry that the PRC government is focusing on, we could be subject to review by the China Securities Regulatory Commission (“CSRC”), Cyberspace Administration of China (“CAC”) or other applicable governmental agencies. Such review could be time consuming, could cause us to incur significant costs in responding to such agencies and/or rectifying any potential issues noted by such agencies or completely abandon a potential transaction. Further, on July 6, 2021, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued the Opinions on Strictly Cracking Down on Illegal Securities Activities in Accordance with the Law. These opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision on overseas listings by China-based companies and proposed to take effective measures, such as promoting the construction of relevant regulatory systems to deal with the risks and incidents faced by China-based overseas-listed companies. On February 17, 2023, the CSRC, promulgated the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (“Overseas Listing Trial Measures”) and five relevant guidelines, which became effective on March 31, 2023. Pursuant to the Overseas Listing Trial Measures, a filing-based regulatory system will be applied to both “direct” and “indirect” overseas offering or listing of PRC domestic companies. As such, in connection with our future overseas securities offering or listing, we may be required to fulfill filing, reporting procedures or other administrative procedures with the CSRC or other PRC government authorities. In addition, we cannot guarantee that new rules or regulations promulgated in the future will not impose any additional requirement on us or otherwise to tighten the regulations on PRC companies seeking overseas offering or listing. Any failure to obtain the relevant approval or complete the filings and other relevant regulatory procedures may subject us to regulatory actions or other penalties from the CSRC or other PRC regulatory authorities, which may have a material adverse effect on our business, operations or financial conditions. See “Item 3.D. KEY INFORMATION – Risk Factors – Risks Relating to Doing Business in China – The approval of or filing with the CSRC or other PRC government authorities may be required in connection with our offshore offerings under PRC law, and, if required, we cannot predict whether or for how long we will be able to obtain such approval or complete such filing.”

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The Public Company Accounting Oversight Board (“PCAOB”) may determine that it is unable to inspect our auditor in relation to its audit work to its satisfaction, and our common shares may be prohibited from trading in the United States under the Holding Foreign Companies Accountable Act, as amended by the Consolidated Appropriations Act, 2023 (“HFCAA”), if the PCAOB is unable to inspect or fully investigate our auditor for two consecutive years. Our independent auditor, Ernst & Young Hua Ming LLP, was subject to the determinations announced by the PCAOB on December 16, 2021 that it was unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong. In June 2022, we were identified by the SEC in its “conclusive list of issuers identified under the HFCAA,” indicating that we were among those companies formally subject to the delisting provisions of the HFCAA (a “Commission-Identified Issuer”). The PCAOB, the CSRC and PRC Ministry of Finance entered into a Statement of Protocol on August 26, 2022, designed to allow the PCAOB to fully investigate auditors located in China. On December 15, 2022, the PCAOB issued a report vacating the previous determinations dated December 16, 2021. Accordingly, until such time as the PCAOB issues any new determination, we are not at risk of having our securities subject to a trading prohibition under the HFCAA because we do not expect to be identified as a Commission-Identified Issuer for a second consecutive year. If in the future the PCAOB determines it no longer can inspect or investigate completely our auditor because of a position taken by an authority in the PRC, the PCAOB will consider issuing a new determination.

An investment in our common shares involves a high degree of risk and should be considered speculative. You should carefully consider the following risks set out below and other information before investing in our common shares. If any event arising from these risks occurs, our business, prospects, financial condition, results of operations or cash flows could be adversely affected, the trading price of our common shares could decline and all or part of your investment may be lost.

Risk Factor Summary

Risks Relating to Our PRC Operations and Doing Business in the PRC

•Changes in China’s economic, political or social conditions or government policies could have a material and adverse effect on our business, financial condition and results of operations.

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Uncertainties with respect to the PRC legal system could adversely affect us. 

•The PRC government may intervene or influence our operations at any time, or may exert more control over the China operations of an offshore holding company and offerings conducted overseas and foreign investment in China-based issuers, such as our PRC subsidiaries. Such control or influence may significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless.

•Changes in PRC laws and regulations may have a material and adverse effect on our business.

•PRC regulation of loans to and direct investment in PRC entities by offshore holding companies may delay or prevent us from making loans or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our ability to fund and expand our business.

•Inflation in the PRC, or a slowing PRC economy, could negatively affect our profitability and growth.

•Our PRC subsidiaries are subject to restrictions on paying dividends and making other payments to us.

•Governmental control of currency conversion may affect payment of any dividends or foreign currency denominated obligations, and it may adversely affect the value of your investment.

•The fluctuation of the Renminbi may materially and adversely affect your investment.

•The PRC SAFE regulations regarding offshore financing activities by PRC residents have undergone changes which may increase the administrative burden we face and create uncertainties that could adversely affect us, and a failure by our shareholders who are PRC residents to make any required applications and filings pursuant to such regulations may prevent us from being able to distribute profits and could expose us and our PRC resident shareholders to liability under PRC law.

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The PCAOB may determine that it is unable to inspect our auditor in relation to its audit work performed for our financial statements to its satisfaction, and any inability of the PCAOB to conduct inspections over our auditor may affect our investors’ ability to benefit from such inspections.

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Our common shares may be prohibited from trading in the United States under the HFCAA if the PCAOB is unable to inspect or fully investigate our auditor for two consecutive years. The delisting of our common shares, or the threat of their being delisted, may materially and adversely affect the value of your investment.

•PRC regulations establish complex procedures for some acquisitions conducted by foreign investors, which could make it more difficult for us to pursue growth through acquisitions in China.
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We and our PRC subsidiaries are required to maintain a series of licenses, permits, and approvals from PRC authorities to operate our business in the PRC, and failure to maintain or renew such licenses, permits, or approvals in a timely manner could materially affect our business.

•The approval of or filing with the CSRC or other PRC government authorities may be required in connection with our offshore offerings under PRC law, and, if required, we cannot predict whether or for how long we will be able to obtain such approval or complete such filing.

•Failure to comply with PRC regulations and other legal obligations concerning data protection and cybersecurity may materially and adversely affect our business, as we routinely collect, store and use data during the conduct of our business.

•We may be classified as a “resident enterprise” for PRC enterprise income tax purposes; such classification could result in unfavorable tax consequences to us and our non-PRC shareholders.

•Any failure to comply with PRC regulations regarding the registration requirements for employee stock incentive plans may subject the PRC plan participants or us to fines and other legal or administrative sanctions.

•Failure to make adequate contributions to mandatory social security plans as required by PRC laws may subject us to penalties.

•Enforcement of stricter labor laws and regulations may increase our labor costs.

•If the chops of our PRC subsidiaries are not kept safely, are stolen or are used by unauthorized persons or for unauthorized purposes, the corporate governance of these entities could be severely and adversely compromised.

Risks Relating to Our Mine Exploration Activities in Inner Mongolia

•The Moruogu Tong Mine is in the exploration stage.

•The northern part of Moruogu Tong Mine is currently being explored under an agreement that reduces our share in any future profits.

•Any estimates of the reserves contained in the Moruogu Tong Mine may be inaccurate.

•There are no assurances that we can produce minerals on a commercially viable basis.

•Volatility in the market prices of metals may adversely affect the results of our operations.

•We are subject to government regulations in various aspects of our exploration activities and our failure to comply with applicable government regulations could adversely affect us.

•We do not have binding agreements with customers to purchase any future output of metals.

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ESG issues, including those related to climate change and sustainability, may have an adverse effect on our business, financial condition, and results of operations, could damage our reputation, and may increase costs.

Risks Relating to the Sale of PST Technology

•We face risks associated with the divesture of our wastewater treatment segment.

Risks Relating to the Potential Closing of the Acquisition of Williams Minerals and the Timing of Such Closing

•There may be unforeseen risks relating to the Acquisition that were not discovered by us through our due diligence investigation prior to our Acquisition.

•Completion of the Acquisition is conditional upon satisfaction or waiver of various conditions. There can be no assurance that the conditions will be fulfilled or waived, or that the Acquisition will be completed

•Failure to complete the Acquisition may have a material adverse effect on the Company’s business, financial condition and results of operations.

•Even if the Acquisition is completed, we may fail to realize the anticipated benefits associated with it, those benefits may take longer to realize than expected, and we may encounter significant difficulties.

Risks Relating to Additional Acquisitions and Expansion into Other Sectors

•We may acquire other businesses or form joint ventures that could negatively affect our operating results, dilute our shareholders’ ownership, increase our debt or cause us to incur significant expense.

•Future acquisitions or strategic investments could be difficult to identify and integrate, divert the attention of management, disrupt our business, dilute shareholder value and adversely affect our business, results of operations, and financial condition.

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Because a majority of our management’s prior business experience has been limited to industries outside of other sectors that we are exploring, they may lack the necessary experience to assess a business combination with a target business in those industries.

•We may become subject to additional extensive and evolving regulatory requirements, noncompliance with which, or changes in which, may materially and adversely affect our business and prospects.

Risks Relating to Our Financial Condition and Business

•We have incurred losses from operations in each of the preceding three fiscal years of 2021, 2022, and 2023 and there is no assurance that we will generate profits from operations in the future.

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We will have to fund operating expenses from other sources until we are able to generate sufficient revenue to pay them.

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The loss of key personnel could affect our business and prospects.

•Any failure to maintain effective internal controls could have an adverse effect on our business, results of operations and the market price of our shares.

 Risks Relating to Foreign Private Issuer Status

•Because our assets are located outside of the United States and all of our directors and officers reside outside of the United States, it may be difficult for you to enforce your rights based on the U.S. federal securities laws against us or our officers and directors or to enforce a judgment of a United States court against us or our officers and directors in the PRC.

•Our status as a foreign private issuer results in less information being available about us than about domestic reporting companies.

•Due to our status as a foreign private issuer, we have adopted IFRS accounting principles, which are different from accounting principles under U.S. generally accepted accounting principles (“U.S. GAAP”).

•As a foreign private issuer we are not subject to certain requirements that other Nasdaq-listed issuers are required to comply with, some of which are designed to provide information to and protect investors.

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Due to an exemption from Nasdaq rules applicable to foreign private issuers, our related party transactions may not receive the type of independent review process that those of other Nasdaq-listed companies receive; the terms of these transactions are not negotiated at arm’s-length and may not be as favorable as could be obtained from unrelated parties.

Risks Relating to Our common shares

•You may experience dilution to the extent that our common shares are issued upon the exercise of outstanding warrants or other securities that we may issue in the future.

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Substantial future sales or perceived potential sales of our common shares in the public market could cause the price of our common shares to decline.

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Certain of the Selling Shareholders may acquire their common shares at a price that is less than the market price of the common shares in the future, may earn a positive rate of return even if the price of the common shares declines and may be willing to sell their common shares at a price less than shareholders that acquired common shares in the public market.

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The price at which common shares are quoted on Nasdaq may increase or decrease due to a number of factors, which may negatively affect the price of the common shares.

•Our principal beneficial owner and his affiliates control us through their share ownership; and their interests may differ from those of other shareholders.

•The rights of our shareholders are governed by BVI law, which may not be as favorable to shareholders as U.S. law, and our directors may take actions with which you disagree without first receiving shareholder approval.

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The elimination of monetary liability against our directors, officers and employees under our Articles and the indemnification of our directors, officers and employees may result in substantial expenditures by us and may discourage lawsuits against our directors, officers and employees.

•We may be classified as a passive foreign investment company, which could result in adverse U.S. federal income tax consequences to U.S. shareholders.

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Risks Relating to Our PRC Operations and Doing Business in the PRC

Changes in China’s economic, political or social conditions or government policies could have a material and adverse effect on our business, financial condition and results of operations.

Currently, all of our business operations are conducted in China. Accordingly, our business, results of operations, financial condition and prospects are affected by economic, political and social conditions in China generally and by continued economic growth in China as a whole.

China’s economy differs from the economies of most developed countries in many respects, including the extent of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. In recent decades, the Chinese government has implemented a series of reform measures, including, among others, the utilization of market forces for economic reform and the establishment of improved corporate governance in business enterprises. In addition, the Chinese government also plays a significant role in regulating industry development and has extensive influence over China’s economic growth through allocating resources, foreign exchange control and setting monetary and fiscal policy.

The growth of China’s economy has been uneven, both geographically and among various sectors of the economy, and the rate of growth has been slowing in recent years. Although growth of China’s economy remained relatively stable, there is a possibility that China’s economic growth may fluctuate or even decline in the near future. Some of the government measures may benefit the overall Chinese economy but may have a negative effect on us. For example, our financial condition and results of operations may be disrupted,adversely affected by government control over capital investments or changes in tax regulations. Any stimulus measures designed to boost the Chinese economy may contribute to higher inflation, which could adversely affect our results of operations and financial condition. For example, certain operating costs and expenses, such as employee compensation and office operating expenses, may increase as a result of higher inflation.

Additionally, the PRC government may promulgate laws, regulations or policies that seek to impose stricter scrutiny over the current regulatory regime in certain industries or in certain activities. Furthermore, the PRC government has also recently indicated an intent to exert more oversight and control over overseas securities offerings and foreign investments in China-based companies. Any such actions may adversely affect our subsidiaries’ operations, and limit our ability to offer or continue to offer securities to investors and cause the value of our securities to decline or be worthless.

Uncertainties with respect to the PRC legal system could adversely affect us.

We conduct our business through our subsidiaries in China. Our operations in China are governed by PRC laws and regulations. Our subsidiaries are generally subject to laws and regulations applicable to foreign investments in China. The PRC legal system is based on written statutes. Prior court decisions may be cited for reference but have limited precedential value.

PRC laws and regulations have significantly enhanced the protections afforded to various forms of foreign investments in China over the past several decades. However, recently enacted laws and regulations may not sufficiently cover all aspects of economic activities in China. In particular, because these laws and regulations are relatively new, and because of the limited volume of published decisions and their nonbinding nature, the interpretation and enforcement of these laws and regulations involve uncertainties.

The PRC government may intervene or influence our operations at any time, or may exert more control over the China operations of an offshore holding company and offerings conducted overseas and foreign investment in China-based issuers, such as our PRC subsidiaries. Such control or influence may significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless.

We conduct our business in China through our operating subsidiaries. Accordingly, our business, results of operations and financial condition may be influenced to a significant degree by the PRC political, economic and social conditions. The PRC government may intervene or influence our subsidiaries’ operations at any time, which could result in a material change in our operations and/or the value of the Company’s securities. We expect the Chinese government to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless.

Additionally, the PRC government may promulgate laws, regulations or policies that seek to impose stricter scrutiny over current regulatory regime in certain industries or in certain activities. For instance, the PRC government has discretion over the business operations in China and may intervene with or influence specific industries or companies as it deems appropriate to further regulatory, political and societal goals, which could have a material and adverse effect on the future growth of the affected industries and the companies operating in such industries. Furthermore, the PRC government has also recently indicated an intent to exert more oversight and control over overseas securities offerings and foreign investments in China-based companies. Any such actions may adversely affect our subsidiaries’ operations, and limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of our securities to decline or be worthless.

Changes in PRC laws and regulations may have a material and adverse effect on our business.

There are substantial uncertainties regarding the interpretation and application of PRC laws and regulations, including, but not limited to, the laws and regulations governing our business, or the enforcement and performance of our arrangements with customers in the event of the imposition of statutory liens, death, bankruptcy and criminal proceedings. Rules and regulations in China can change quickly with little advance notice. We and our current subsidiaries are, and any future subsidiaries will be, considered foreign persons or foreign-invested enterprises under PRC laws, and as a result, we are and will be required to comply with PRC laws and regulations applicable to foreign persons or foreign-invested enterprises. These laws and regulations may be subject to future changes, and their official interpretation and enforcement may involve substantial uncertainty. Exploration and mining operations in the PRC are subject to environmental laws and regulations, and the imposition of more stringent environmental regulations may affect our ability to comply with, or our costs to comply with, such regulations. Such changes, if implemented, may adversely affect our business operations and may reduce our profitability. The effectiveness of newly enacted laws, regulations or amendments may be delayed, resulting in detrimental reliance by foreign investors. New laws and regulations that affect existing and proposed future businesses may also be applied retroactively. We cannot predict what effect the interpretation of existing or new PRC laws or regulations may have on our businesses.

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PRC regulation of loans to and direct investment in PRC entities by offshore holding companies may delay or prevent us from making loans or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our ability to fund and expand our business.

We are an offshore holding company conducting our operations in China. We may make loans to our PRC subsidiaries, or we may make additional capital contributions to our wholly foreign-owned subsidiaries in China. Any loans to our wholly foreign-owned subsidiaries in China, which are treated as foreign-invested enterprises under PRC law, are subject to PRC regulations and foreign exchange loan registration requirements. In addition, a foreign-invested PRC enterprise has limitations upon its uses of capital, including restrictions on such capital being: (i) directly or indirectly used for payments beyond the business scope of the enterprise or payments prohibited by relevant laws and regulations; (ii) used for the granting of loans to non-affiliated enterprises, except where expressly permitted in the foreign-invested PRC enterprise’s business license; and (iii) used for paying expenses related to the purchase of real estate that is not for self-use (except for foreign-invested real estate enterprises). We may also decide to finance our PRC subsidiaries by means of capital contributions, in which case the PRC subsidiary is required to register the details of the capital contribution with the local branch of the State Administration for Market Regulation and submit a report on the capital contribution via the online enterprise registration system to the Ministry of Commerce.

In light of the various requirements imposed by PRC regulations on loans to and direct investment in PRC entities by offshore holding companies, we cannot assure you that we will be able to complete the necessary government registrations or obtain the necessary government approvals or filings on a timely basis, if at all, with respect to future loans by us to our current PRC operating subsidiaries or with respect to future capital contributions by us to our current PRC operating subsidiaries. If we fail to complete such registrations or obtain such approvals, our ability to fund our PRC operations may be negatively affected, which could materially and adversely affect our liquidity and our ability to fund and expand our business.

Inflation in the PRC, or a slowing PRC economy, could negatively affect our profitability and growth.

While the PRC economy has experienced rapid growth, such growth has been uneven among various sectors of the economy and in different geographical areas of the country. Rapid economic growth can lead to growth in the money supply and rising inflation. If prices for our products and services rise at a rate that is insufficient to compensate for the rise in the costs of supplies and services, it may have an adverse effect on our profitability. In order to control inflation in the past, the PRC government has imposed controls on bank credit, limits on loans for fixed assets and restrictions on bank lending. As a result, domestic and global economic conditions may improve, and the markets we intend to serve may grow, at a lower-than-expected rate or even experience a downturn, adversely affecting our future profitability and growth.

Our PRC subsidiaries are subject to restrictions on paying dividends and making other payments to us.

We are a holding company incorporated in the BVI. Under BVI law, we may only pay dividends to investors, including U.S. investors, from surplus (the excess, if any, at the time of the determination of the total assets of our company over the sum of our liabilities, as shown in our books of account, plus our capital), and we must be solvent before and after the dividend payment in the sense that we will be able to satisfy our liabilities as they become due in the ordinary course of business, and the realizable value of assets of our company will not be less than the sum of our total liabilities, other than deferred taxes as shown in our books of account, and our capital. As a result of our holding company structure, dividends and other distributions to our shareholders, including U.S. investors, will depend primarily upon dividend payments from our subsidiaries. However, PRC regulations currently permit the payment of dividends only out of accumulated profits, as determined in accordance with PRC accounting standards and regulations. Our subsidiaries in China are also required to set aside a portion of their after-tax profits as certain reserve funds according to PRC accounting standards and regulations. The PRC government also imposes controls on the conversion of CNY into foreign currencies and the remittance of currency out of China. We may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currency. Furthermore, if our subsidiaries in China incur further debt in the future, debt covenants may restrict their ability to pay dividends or make other payments. If we or our subsidiaries are unable to receive dividends from our operating companies due to contractual or other limitations on the payment of dividends, we may be unable to pay dividends or make other distributions on our common shares.

Governmental control of currency conversion may affect payment of any dividends or foreign currency denominated obligations, and it may adversely affect the value of your investment.

The PRC government imposes controls on the convertibility of CNY into foreign currencies and, in certain cases, the remittance of currency out of the PRC. Shortages in the availability of foreign currency may restrict our ability to remit sufficient foreign currency to pay dividends, or otherwise satisfy foreign currency denominated obligations. Under existing PRC foreign exchange regulations, the CNY is currently convertible under the “current account,” which includes trade and service-related foreign exchange transactions, but not under the “capital account,” which includes foreign direct investment and loans, including loans we may secure from our onshore subsidiaries. Currently, our PRC subsidiaries may purchase foreign currency for settlement of “current account transactions,” without prior approval from SAFE by complying with certain procedural requirements. However, approval from appropriate governmental authorities is required where CNY is to be converted into foreign currency and remitted out of the PRC to pay capital expenses such as the repayment of bank loans denominated in foreign currencies.

The PRC government may also at its discretion restrict access to foreign currencies for current account transactions in the future. If the foreign exchange control system prevents us from obtaining sufficient foreign currency to satisfy our currency demands, we may not be able to pay certain of our expenses as they come due, or pay dividends or make other distributions to investors, including U.S. investors.

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See “Item 10.D. ADDITIONAL INFORMATION – Exchange Controls” for further details regarding exchange controls in the PRC.

The fluctuation of the Renminbi may materially and adversely affect your investment.

The exchange rate of the Renminbi against the U.S. Dollar and other currencies may fluctuate and is affected by, among other things, changes in the PRC’s political and economic conditions. As most of our operating expenses are denominated in Renminbi, or CNY, any significant revaluation of the Renminbi may materially and adversely affect our cash flows and financial condition. Additionally, if we convert our CNY into U.S. Dollars, to pay dividends on our common shares or for other business purposes, depreciation of the CNY against the U.S. Dollar would negatively affect the amount of U.S. Dollars we convert our CNY into. Conversely, to the extent that we need to convert U.S. Dollars we receive from an offering of our securities or otherwise into CNY for our operations, the appreciation of the CNY against the U.S. Dollar could have an adverse effect on our financial condition and result in a charge to our income statement and a reduction in the value of these U.S. Dollar denominated assets.

PRC SAFE regulations regarding offshore financing activities by PRC residents have undergone changes which may increase the administrative burden we face and create regulatory uncertainties that could adversely affect us, and a failure by our shareholders who are PRC residents to make any required applications and filings pursuant to such regulations may prevent us from being able to distribute profits and could expose us and our PRC resident shareholders to liability under PRC law.

In July 2014, SAFE promulgated the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Offshore Investment and Financing and Roundtrip Investment Through Special Purpose Vehicles (“SAFE Circular 37”). SAFE Circular 37 requires PRC residents (including PRC individuals and PRC corporate entities as well as foreign individuals that are deemed PRC residents for foreign exchange administration purposes) to register with SAFE or its local branches in connection with their direct or indirect offshore investment activities. SAFE Circular 37 further requires an amendment to a SAFE registration in the event of any changes with respect to the basic information of the offshore special purpose vehicle, such as a change in the PRC shareholders, the names of such special purpose vehicle, and the operation term of such special purpose vehicle, or any significant changes with respect to the offshore special purpose vehicle, such as an increase or decrease of capital, a share transfer or exchange, or mergers or divisions. SAFE Circular 37 is applicable to our shareholders who are PRC residents and may be applicable to any offshore acquisitions that we make in the future. If our shareholders who are PRC residents fail to make the required SAFE registration or to update a previously filed registration, our PRC subsidiaries may be prohibited from distributing their profits or the proceeds from any capital reduction, share transfer or liquidation to us, and we may also be prohibited from making additional capital contributions to our PRC subsidiaries.

In February 2015, SAFE promulgated a Notice on Further Simplifying and Improving Foreign Exchange Administration Policy on Direct Investment (“SAFE Notice 13”) effective June 2015. Under SAFE Notice 13, applications for foreign exchange registration of inbound foreign direct investments and outbound overseas direct investments, including those required under SAFE Circular 37, shall be filed with qualified banks instead of SAFE. The qualified banks directly examine the applications and accept registrations under the supervision of SAFE. To date, no registration has been filed with SAFE regarding us, and accordingly, SAFE may prohibit distributions from our PRC subsidiaries, which would prevent us from paying dividends and may adversely affect our financial condition and potentially expose us to liability under PRC law.

The PCAOB had historically been unable to inspect our auditor in relation to their audit work performed for our financial statements and the inability of the PCAOB to conduct inspections of our auditor in the past has deprived our investors with the benefits of such inspections.

Our auditor, the independent registered public accounting firm that issues the audit report included in this annual report, as an auditor of companies that are traded publicly in the United States and a firm registered with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with applicable professional standards. Since our auditor is located in China, a jurisdiction where the PCAOB had been previously unable to conduct inspections without the approval of the Chinese authorities, our auditor was subject to the determinations announced by the PCAOB on December 16, 2021 that it was unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong. On December 15, 2022, the PCAOB issued a report vacating the previous determinations dated December 16, 2021. Accordingly, until such time as the PCAOB issues any new determination, we are not at risk of having our securities subject to a trading prohibition under the HFCAA because we do not expect to be a Commission-Identified Issuer for a second consecutive year. If in the future the PCAOB determines it no longer can inspect or investigate completely because of a position taken by an authority in the PRC, the PCAOB will consider issuing a new determination. Any inability of the PCAOB to conduct inspections of auditors in China makes it more difficult to evaluate the effectiveness of our independent registered public accounting firm’s audit procedures or quality control procedures as compared to auditors outside of China that are subject to the PCAOB inspections, which could cause investors and potential investors in our securities to lose confidence in our audit procedures, reported financial information, and the quality of our financial statements.

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Our common shares may be prohibited from trading in the United States under the HFCAA in the future if the PCAOB is unable to inspect or investigate completely auditors located in China. The delisting of our common shares, or the threat of their being delisted, may materially and adversely affect the value of your investment.

Pursuant to the HFCAA, the SEC will identify an issuer as a Commission-Identified Issuer if the issuer has filed an annual report containing an audit report issued by a registered public accounting firm that the PCAOB has determined it is unable to inspect or investigate completely, and will then impose a trading prohibition on an issuer after it is identified as a Commission-Identified Issuer for two consecutive years. On December 16, 2021, the PCAOB issued a report to notify the SEC of its determination that the PCAOB was unable to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong. The PCAOB identified our auditor as one of the registered public accounting firms that the PCAOB was unable to inspect or investigate completely. In June 2022, we were identified by the SEC as a “Commission-Identified Issuer” in their conclusive list of issuers identified under the HFCAA. On December 15, 2022, the PCAOB issued a report vacating the previous determinations dated December 16, 2021. Accordingly, until such time as the PCAOB issues any new determination, we are not at risk of having our securities subject to a trading prohibition under the HFCAA because we do not expect to be identified as a Commission-Identified Issuer for a second consecutive year. If in the future the PCAOB determines it no longer can inspect or investigate completely because of a position taken by an authority in the PRC, the PCAOB will consider issuing a new determination.

Whether the PCAOB will continue to be able to conduct inspections of our auditor is subject to substantial uncertainty and depends on a number of factors out of our, and our auditor’s, control. A trading prohibition would substantially impair your ability to sell or purchase our common shares when you wish to do so, and the risk and uncertainty associated with delisting would have a negative impact on the price of our common shares.

PRC regulations establish complex procedures for some acquisitions conducted by foreign investors, which could make it more difficult for us to pursue growth through acquisitions in China.

The Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (the “M&A Rules”), adopted by six PRC regulatory agencies in August 2006 and amended in June 2009, among other things, established procedures and requirements that could make merger and acquisition activities by foreign investors more time-consuming and complex. In addition, the Provisions of Ministry of Commerce on Implementation of Security Review System for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, issued by the Ministry of Commerce in August 2011, specify that mergers and acquisitions by foreign investors involved in “an industry related to national security” are subject to strict review by the Ministry of Commerce, and prohibit any activities attempting to bypass such security review, including by structuring the transaction through a proxy or contractual control arrangement.

On March 15, 2019, the PRC National People’s Congress enacted the Foreign Investment Law of the PRC (the “Foreign Investment Law”), which became effective on January 1, 2020. The Foreign Investment Law has replaced the previous major laws and regulations governing foreign investment in the PRC, including the Sino-foreign Equity Joint Ventures Enterprises Law of the PRC, the Sino-foreign Co-operative Enterprises Law of the PRC and the Wholly Foreign-invested Enterprise Law of the PRC. According to the Foreign Investment Law, “foreign-invested enterprises” refers to enterprises that are wholly or partly invested by foreign investors and registered under the PRC laws within China, and “foreign investment” refers to any foreign investor’s direct or indirect investment activities in China, including: (i) establishing foreign-invested enterprises in China either individually or jointly with other investors; (ii) obtaining stock shares, equity shares, shares in properties or other similar interests of Chinese domestic enterprises; (iii) investing in new projects in China either individually or jointly with other investors; and (iv) investing through other methods provided by laws, administrative regulations or provisions prescribed by the State Council.

On December 26, 2019, the State Council issued Implementation Regulations for the Foreign Investment Law of the PRC (the “Implementation Rules”) which came into effect on January 1, 2020, and replaced the Implementing Rules of the Sino-foreign Equity Joint Ventures Enterprises Law of the PRC, the Implementing Rules of the Sino-foreign Co-operative Enterprises Law of the PRC and the Implementing Rules of the Wholly Foreign-invested Enterprise Law of the PRC. According to the Implementation Rules, in the event of any discrepancy between the Foreign Investment Law, the Implementation Rules and the relevant provisions on foreign investment promulgated prior to January 1, 2020, the Foreign Investment Law and the Implementation Rules shall prevail. The Implementation Rules also set forth that foreign investors that invest in sectors on the “Negative List” in which foreign investment is restricted shall comply with special management measures with respect to, among others, shareholding and senior management personnel qualification in the Negative List. Pursuant to the Foreign Investment Law and the Implementation Rules, the existing foreign-invested enterprises established prior to the effective date of the Foreign Investment Law are allowed to keep their corporate organization forms for five years from the effectiveness of the Foreign Investment Law before such existing foreign-invested enterprises must change their organization forms and organization structures in accordance with the PRC Company Law, the Partnership Enterprise Law of the PRC and other applicable laws.

After the Foreign Investment Law and the Implementation Rules became effective on January 1, 2020, the provisions of the M&A Rules remained effective to the extent they are not inconsistent with the Foreign Investment Law and the Implementation Rules. We believe that our business is not in an industry related to national security, but we cannot preclude the possibility that the competent PRC government authorities may publish explanations contrary to our understanding or broaden the scope of such security reviews in the future, in which case our future acquisitions and investment in the PRC, including those by way of entering into contractual control arrangements with target entities, may be closely scrutinized or prohibited. Moreover, according to the Anti-Monopoly Law of the PRC, the SAMR shall be notified in advance of any concentration of undertaking if certain filing thresholds are triggered. We may grow our business in part by directly acquiring complementary businesses in China. Complying with the requirements of the laws and regulations mentioned above and other PRC regulations necessary to complete such transactions could be time-consuming, and any required approval processes, including obtaining approval from the SAMR, may delay or inhibit our ability to complete such transactions, which could materially and adversely affect our ability to expand our business or maintain our market share.

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In December 2020, the National Development and Reform Commission and the Ministry of Commerce promulgated the Measures for the Security Review of Foreign Investment, which came into effect on January 18, 2021. According to the Security Review of Foreign Investment, for foreign investments that affect or may affect national security, security review shall be conducted in accordance with the provisions thereof. We cannot assure you that our current or new business operations will remain fully compliant, or that we can adapt our business operations to new regulatory requirements on a timely basis, or at all.

We and our PRC subsidiaries are required to maintain a series of licenses, permits and approvals from PRC authorities to operate our business in the PRC, and failure to maintain or renew such licenses, permits or approvals in a timely manner could materially affect our business.

Prior to the sale of PST Technology, our PRC subsidiaries carried out rural wastewater treatment and metal exploration activities in the PRC. After PST Technology’s disposition, we discontinued the operation in wastewater treatment segment and continue engaging in the exploration and mining business, which is subject to a series of PRC laws and regulations. Such business activities require us to obtain licenses, permits and approvals from different PRC authorities, including an exploration permit from the Natural Resources Department of the Inner Mongolia Autonomous Region with regards to our metal exploration activity and business licenses from local administration for market regulation as required upon company registration. As of the date of this annual report, as far as we are aware and in the judgment of management, we have obtained all necessary licenses, permits and approvals to operate our business in the PRC, and have not been denied any such licenses, permits or approvals. If we or our PRC subsidiaries fail to maintain or renew such licenses, permits and approvals in a timely manner in the future, our business may be materially affected.

The approval of or filing with the CSRC or other PRC government authorities may be required in connection with our offshore offerings under PRC law, and, if required, we cannot predict whether or for how long we will be able to obtain such approval or complete such filing.

The M&A Rules require an overseas special purpose vehicle formed for listing purposes through acquisitions of PRC domestic companies and controlled by PRC persons or entities to obtain the approval of the CSRC prior to the listing and trading of such special purpose vehicle’s securities on an overseas stock exchange. The interpretation and application of the regulations remain unclear, and our offshore offerings may ultimately require approval of the CSRC. If the CSRC approval is required, it is uncertain whether we can or how long it will take us to obtain the approval and, even if we successfully obtain such CSRC approval, the approval could be rescinded. Any failure to obtain or delay in obtaining the CSRC approval for any of our offshore offerings, or a rescission of any successfully obtained approvals, would subject us to sanctions imposed by the CSRC or other PRC regulatory authorities. Sanctions could include fines and penalties on our operations in China, restrictions or limitations on our ability to pay dividends outside of China, and other forms of sanctions that may materially and adversely affect our business, financial condition and results of operations.

On July 6, 2021, PRC government authorities issued the Opinions on Strictly Cracking Down on Illegal Securities Activities in Accordance with the Law. These opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision on overseas listings by China-based companies. They proposed to take measures such as promoting the construction of relevant regulatory systems to deal with the risks and incidents faced by China-based overseas listed companies.

As a follow-up, on February 17, 2023, CSRC issued the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (the “Trial Measures of Overseas Listing”) which have been effective on March 31, 2023. The Trial Measures of Overseas Listing require that 1) where a domestic company seeks to indirectly offer and list securities in overseas markets, the issuer shall designate a major domestic operating entity, which shall, as the domestic responsible entity, file with the CSRC; 2) initial public offerings or listings in overseas markets shall be filed with the CSRC within 3 working days after the relevant application is submitted overseas. And subsequent securities offerings of an issuer in the same overseas market where it has previously offered and listed securities shall be filed with the CSRC within 3 working days after the offering is completed; 3) any overseas offering and listing made by an issuer that meets both the following conditions will be determined as indirect overseas offering and listing: (a) 50% or more of the issuer's operating revenue, total profit, total assets or net assets as documented in its audited consolidated financial statements for the most recent accounting year is accounted for by domestic companies; and (b) the main parts of the issuer's business activities are conducted in the Chinese Mainland, or its main places of business are located in the Chinese Mainland, or the senior managers in charge of its business operation and management are mostly Chinese citizens or domiciled in the Chinese Mainland. The determination as to whether or not an overseas offering and listing by domestic companies is indirect overseas offering and listing, shall be made on a substance over form basis.

Based on the Trial Measures of Overseas Listing, if our company issues new securities in the future, we need to fulfill the abovementioned filing procedures. If our company fails to file in time, we may be punished by the CSRC.

In addition, on February 24, 2023, CSRC, Ministry of Finance; National Administration of State Secrets Protection and National Archives Administration of China issued the Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies (“Revised Confidentiality and Archives Administration Provisions”) which have been effective on March 31, 2023. The Revised Confidentiality and Archives Administration Provisions require that in the overseas issuance and listing activities of domestic enterprises, the securities companies and securities service providers that undertake relevant businesses shall strictly abide by applicable laws and regulations of the PRC and the Revised Confidentiality and Archives Administration Provisions, enhance legal awareness of keeping state secrets and strengthening archives administration, institute a sound confidentiality and archives administration system, take necessary measures to fulfill confidentiality and archives administration obligations, and shall not leak any state secret and working secret of government agencies, or harm national security and public interest.

Based on the Revised Confidentiality and Archives Administration Provisions, if our company violates relevant laws and regulations in the future, we may be punished by the competent authorities.

11 

As of the date of this annual report, as far as we are aware and in the judgment of management, we have received all requisite permissions or approvals in connection with our offshore offerings under PRC law, and have not been denied any such permissions or approvals. However, we cannot assure you that any new rules or regulations promulgated in the future will not impose additional requirements on us. If it is determined in the future that approval from and filing with the CSRC or other regulatory authorities or other procedures are required for our offshore offerings, it is uncertain whether we can or how long it will take us to obtain such approval or complete such filing procedures and any such approval or filing could be rescinded or rejected. Any failure to obtain or delay in obtaining such approval or completing such filing procedures for our offshore offerings, including by our inadvertent conclusion that such approval or filing was not required when in fact it was, or a rescission of any such approval or filing if obtained by us, could subject us to sanctions by the CSRC or other PRC regulatory authorities. These regulatory authorities may impose fines and penalties on our operations in China, limit our ability to pay dividends outside of China, limit our operating privileges in China, delay or restrict the repatriation of the proceeds from our offshore offerings into China or take other actions that could materially and adversely affect our business, financial condition, results of operations and prospects, as well as the trading price of our listed securities. The CSRC or other PRC regulatory authorities also may take actions requiring us, or making it advisable for us, to halt our offshore offerings before settlement and delivery of the securities offered. Consequently, if investors engage in market trading or other activities in anticipation of and prior to settlement and delivery, they do so at the risk that settlement and delivery may not occur. In addition, if the CSRC or other regulatory authorities later promulgate new rules or explanations requiring that we obtain their approvals or accomplish the required filing or other regulatory procedures for our prior offshore offerings, we may be unable to obtain a waiver of such approval requirements, if and when procedures are established to obtain such a waiver. Any uncertainties or negative publicity regarding such approval requirement could materially and adversely affect our business, prospects, financial condition, reputation and the trading price of our listed securities.

Failure to comply with PRC regulations and other legal obligations concerning data protection and cybersecurity may materially and adversely affect our business, as we routinely collect, store and use data during the conduct of our business.

On December 28, 2021, the CAC, together with 12 other departments, adopted the Cybersecurity Review Measures, which became effective on February 15, 2022. The Cybersecurity Review Measures require network platform operators possessing personal information of more than one million individual users to undergo a cybersecurity review by the CAC when they seek a listing on a foreign exchange. The Cybersecurity Review Measures provide that critical information infrastructure operators purchasing network products and services and network platform operators carrying out data processing activities, which affect or may affect national security, shall apply for cybersecurity review to the applicable local cyberspace administration in accordance with the provisions thereunder.

On July 30, 2021, the State Council promulgated the Regulations on Security Protection of Critical Information Infrastructure, which became effective on September 1, 2021. Pursuant to the Regulations on Security Protection of Critical Information Infrastructure, critical information infrastructure shall mean any important network facilities or information systems of an important industry or field, such as public communications and information services, energy, transportation, water conservation, finance, public services, e-government affairs and science and technology and national defense industries, which may seriously endanger national security, peoples’ livelihoods and the public interest in the event of damage, function loss or data leakage. In addition, the relevant administrative departments of each critical industry and sector shall be responsible for formulating eligibility criteria and determining the critical information infrastructure operator in the respective industry or sector. The operators shall be informed about the final determination as to whether they are categorized as critical information infrastructure operators. Among these industries, the energy and telecommunications industries are mandated to take measures to provide key assurances for the safe operation of critical information infrastructure in other industries and fields.

We and our PRC subsidiaries do not carry out business in China through any self-owned network platform and hold personal information of less than one million individuals from PRC operations. We and our PRC subsidiaries have not been identified as critical information infrastructure operators by any PRC authorities. The data collected from our China operations is mainly information related to our production, customers, suppliers and our employees. We believe that we and our PRC subsidiaries do not commit any acts that threaten or endanger the national security of the PRC, and to our knowledge we and our PRC subsidiaries have not received or been subject to any investigation, notice, warning or sanction from any PRC authority with respect to national security issues arising from our business operations. As of the date of this annual report, we do not believe that we need to proactively apply for the cybersecurity review required by the CAC.

Furthermore, the CAC promulgated the Security Assessment Measures for Outbound Data Transfers, which became effective on September 1, 2022, which require that to provide data abroad under any of the following circumstances, a data processor shall declare security assessment for its outbound data transfer to the CAC through the local cyberspace administration at the provincial level: (i) where a data processor provides critical data abroad; (ii) where a key information infrastructure operator or a data processor processing the personal information of more than one million individuals provides personal information abroad; (iii) where a data processor has provided personal information of 100,000 individuals or sensitive personal information of 10,000 individuals in total abroad since January 1 of the previous year; and (iv) in other circumstances prescribed by the CAC for which declaration of a security assessment for outbound data transfers is required. As we and our PRC subsidiaries do not provide any data collected from China operations abroad, we do not believe it is necessary for us to declare any security assessments pursuant to the Security Assessment Measures for Outbound Data Transfers.

However, there remains uncertainty as to how these regulations will be interpreted or implemented and whether the PRC regulatory agencies, including the CAC, may adopt new laws, regulations, rules or detailed implementation and interpretation, and there is no assurance that PRC regulatory agencies, including the CAC, would take the same view as we do. There have not been comparable developments in Hong Kong, but those could occur, and we believe we are currently in compliance with all Hong Kong laws and regulations regarding data security. If any such new laws, regulations, rules or implementation and interpretation come into effect, we will take all reasonable measures and actions to comply and to minimize the adverse effect of such laws on us. However, we cannot assure you that we can fully or timely comply with such laws. In the event that we are subject to any mandatory cybersecurity reviews and/or other requirements of the CAC, we face uncertainty as to whether any clearance or other required actions can be timely completed, or at all. Given such uncertainty, it is possible that we may be required to suspend the relevant business, or face other penalties, which could materially and adversely affect our business, financial condition, results of operations and/or the value of our securities, or could significantly limit or completely hinder our ability to offer or continue to offer securities to investors. As of the date of this annual report, we have not been informed that we have been identified as a critical information infrastructure operator by any governmental authorities. These laws and regulations are still new and there is uncertainty with respect to the interpretation and implementation of these data security laws and regulations. We will closely monitor the relevant regulatory environment and will assess and determine whether we are required to apply for the cybersecurity review.

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We may be classified as a “resident enterprise” for PRC enterprise income tax purposes; such classification could result in unfavorable tax consequences to us and our non-PRC shareholders.

The Enterprise Income Tax Law provides that enterprises established outside of China whose “de facto management bodies” are located in China are considered PRC tax resident enterprises and will generally be subject to the uniform 25% PRC enterprise income tax rate on their global income. In 2009, the State Administration of Taxation (“SAT”) issued the Circular of the State Administration of Taxation on Issues Concerning the Identification of Chinese-Controlled Overseas Registered Enterprises as Resident Enterprises in Accordance with the Standards of Actual Organizational Management (“SAT Circular 82”), which was partially amended by the Announcement on Issues concerning the Determination of Resident Enterprises Based on the Standards of Actual Management Institutions issued by the SAT on January 29, 2014, and further partially amended by the Decision on Issuing the Lists of Invalid and Abolished Tax Departmental Rules and Taxation Normative Documents issued by the SAT on December 29, 2017. SAT Circular 82, as amended, provides certain specific criteria for determining whether the “de facto management body” of a Chinese-controlled offshore-incorporated enterprise is located in China, which include all of the following conditions: (i) the location where senior management members responsible for an enterprise’s daily operations discharge their duties; (ii) the location where financial and human resource decisions are made or approved by organizations or persons; (iii) the location where the major assets and corporate documents are kept; and (iv) the location where more than half (inclusive) of all directors with voting rights or senior management have their habitual residence. SAT Circular 82 further clarifies that the identification of the “de facto management body” must follow the “substance over form” principle. In addition, the SAT issued the Announcement of State Administration of Taxation on Promulgation of the Administrative Measures on Income Tax on Overseas Registered Chinese-funded Holding Resident Enterprises (Trial Implementation) (“SAT Bulletin 45”) on July 27, 2011, effective from September 1, 2011, and partially amended on April 17, 2015, June 28, 2016, and June 15, 2018, providing more guidance on the implementation of SAT Circular 82. SAT Bulletin 45 clarifies matters including resident status determination, post-determination administration and competent tax authorities. Although both SAT Circular 82 and SAT Bulletin 45 only apply to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals or foreign individuals, the determining criteria set forth in SAT Circular 82 and SAT Bulletin 45 may reflect the SAT’s general position on how the “de facto management body” test should be applied in determining the tax resident status of offshore enterprises, regardless of whether they are controlled by PRC enterprises or PRC enterprise groups or by PRC or foreign individuals.

Currently, there are no detailed rules or precedents governing the procedures and specific criteria for determining “de facto management bodies” that are applicable to us or our overseas subsidiaries. We do not believe that CHNR meets all of the conditions for a PRC resident enterprise. The Company is a company incorporated outside the PRC. As a holding company, its key assets are its ownership interests in its subsidiaries, and its key assets are located, and its records (including the resolutions of its board of directors and the resolutions of its shareholders) are maintained, outside the PRC. For the same reasons, we believe our other entities outside of China are not PRC resident enterprises either. However, the tax resident status of an enterprise is subject to determination by the PRC tax authorities, and uncertainties remain with respect to the interpretation of the term “de facto management body.” There can be no assurance that the PRC government will ultimately take a view that is consistent with ours.

However, if the PRC tax authorities determine that CHNR is a PRC resident enterprise for enterprise income tax purposes, we may be required to withhold a 10% withholding tax from dividends we pay to our shareholders that are non-resident enterprises. Such 10% tax rate could be reduced by applicable tax treaties or similar arrangements between China and the jurisdiction of our shareholders. For example, for shareholders eligible for the benefits of the tax treaty between China and Hong Kong, known as the Arrangement between the Mainland of China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income (the “Double Taxation Arrangement”), the tax rate is reduced to 5% for dividends if relevant conditions are met, including without limitation that (a) the Hong Kong resident enterprise must be the beneficial owner of the relevant dividends; and (b) the Hong Kong resident enterprise must directly hold no less than 25% share ownership in the PRC resident enterprise during the 12 consecutive months preceding its receipt of the dividends. In current practice, a Hong Kong resident enterprise must obtain a tax resident certificate from the Hong Kong tax authority to apply for the 5% lower PRC withholding tax rate. As the Hong Kong tax authority will issue such a tax resident certificate on a case-by-case basis, we cannot assure you that we will be able to obtain a tax resident certificate from the relevant Hong Kong tax authority and enjoy the preferential withholding tax rate of 5% under the Double Taxation Arrangement with respect to any dividends paid by our PRC subsidiaries to their immediate holding companies. In addition, non-resident enterprise shareholders may be subject to a 10% PRC tax on gains realized on the sale or other disposition of common equity if such income is treated as sourced from within the PRC. It is unclear whether our non-PRC individual shareholders would be subject to any PRC tax on dividends or gains obtained by such non-PRC individual shareholders in the event we are determined to be a PRC resident enterprise. If any PRC tax were to apply to such dividends or gains, it would generally apply at a rate of 20% unless a reduced rate is available under an applicable tax treaty. However, it is also unclear whether non-PRC shareholders of the Company would be able to claim the benefits of any tax treaties between their country of tax residence and the PRC in the event that the Company is treated as a PRC resident enterprise.

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Provided that CHNR, as a BVI holding company, is not deemed to be a PRC resident enterprise, our shareholders who are not PRC residents will not be subject to PRC income tax on dividends distributed by us or gains realized from the sale or other disposition of our shares. However, under SAT Circular 7, where a non-resident enterprise conducts an “indirect transfer” by transferring taxable assets, including, in particular, equity interests in a PRC resident enterprise, indirectly by disposing of the equity interests of an overseas holding company, the non-resident enterprise, being the transferor, or the transferee or the PRC entity which directly owned such taxable assets may report to the relevant tax authority such indirect transfer. Using a “substance over form” principle, the PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose of reducing, avoiding or deferring PRC tax. As a result, gains derived from such indirect transfer may be subject to PRC enterprise income tax, and the transferee would be obligated to withhold the applicable taxes, currently at a rate of 10% for the transfer of equity interests in a PRC resident enterprise. We and our non-PRC resident investors may be at risk of being required to file a return and being taxed under SAT Circular 7, and we may be required to expend valuable resources to comply with SAT Bulletin 37, or to establish that we should not be taxed under SAT Circular 7 and SAT Bulletin 37.

In addition to the uncertainty in how the new resident enterprise classification could apply, it is also possible that the rules may change in the future, possibly with retroactive effect. If we are required under the Enterprise Income Tax Law to withhold PRC income tax on our dividends payable to our foreign shareholders, including U.S. investors, or if you are required to pay PRC income tax on the transfer of our shares under the circumstances mentioned above, the value of your investment in our shares may be materially and adversely affected. These rates may be reduced by an applicable tax treaty, but it is unclear whether, if we are considered a PRC resident enterprise, holders of our shares would be able to claim the benefit of income tax treaties or agreements entered into between China and other countries or areas. Any such tax may reduce the returns on your investment in our shares.

Any failure to comply with PRC regulations regarding the registration requirements for employee stock incentive plans may subject the PRC plan participants or us to fines and other legal or administrative sanctions.

In February 2012, SAFE promulgated the Notices on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plans of Overseas Publicly-Listed Companies, replacing earlier rules promulgated in March 2007. Pursuant to these rules, PRC citizens and non-PRC citizens who reside in China for a continuous period of not less than one year who participate in any stock incentive plan of an overseas publicly listed company, subject to a few exceptions, are required to register with SAFE through a domestic qualified agent, which could be the PRC subsidiary of such overseas-listed company, and complete certain other procedures related to account establishment, funds transfer and remittance. In addition, an overseas-entrusted institution must be retained to handle matters in connection with the exercise or sale of stock options and the purchase or sale of corresponding shares and interests. We and our executive officers and other employees who have been PRC citizens or who have resided in the PRC for a continuous period of not less than one year and who are granted options or other awards under our equity incentive plan will be subject to these regulations. Failure to complete the SAFE registrations may subject them to fines and legal sanctions and may also limit our ability to contribute additional capital into our PRC subsidiary and limit our PRC subsidiaries’ ability to distribute dividends to us. As at the date of this annual report, we have already completed the SAFE registration and obtained the relevant approval of foreign exchange for our executive officers, consultants and other employees who have been granted options and are subject to the above regulations. We also face regulatory uncertainties that could restrict our ability to adopt additional incentive plans for our directors, executive officers and employees under PRC law.

On July 14, 2022, the board of directors of the Company granted option covering an aggregate of 8,100,000 Common shares of the Company (or 1,620,000 Common shares of the Company as adjusted by a five-to-one share combination on April 3, 2023) to fifteen consultants and employees of the Company under the China Natural Resources, Inc. 2014 Equity Compensation Plan. SAT has issued circulars concerning employee share options, under which certain of our employees and consultants who are PRC tax residents and exercise share options will be subject to PRC individual income tax. The individual income tax of consultant grantees and employees shall be paid according to remuneration for personal services and wages and salaries respectively. Our PRC subsidiaries have obligations to file documents related to employee share options with relevant tax authorities and to withhold individual income taxes of those employees and consultants who exercise their share options. If our employees and consultants fail to pay or if we fail to withhold their individual income tax as required by relevant laws and regulations, we may face sanctions imposed by the PRC tax authorities or other PRC government authorities.

Failure to make adequate contributions to various mandatory social security plans as required by PRC regulations may subject us to penalties.

Under the PRC Social Insurance Law and the Administrative Measures on Housing Fund, our PRC subsidiaries are required to participate in various government sponsored employee benefit plans, including certain social insurance, housing funds and other welfare-oriented payment obligations, and to contribute to the plans in amounts equal to certain percentages of salaries, including bonuses and allowances, of the employees up to a maximum amount specified by the local government from time to time at locations where they operate the businesses. The requirements of employee benefit plans have not been implemented consistently by the local governments in China given the different levels of economic development in different locations. If the local governments deem our subsidiaries’ contribution to be insufficient, our subsidiaries may be subject to late contribution fees or fines in relation to any underpaid employee benefits, and our financial condition and results of operations may be adversely affected.

In Hong Kong, employers are required to select and join a provident fund scheme (“MPF Scheme”) in accordance with the statutory requirements of the Mandatory Provident Fund Schemes Ordinance for all employees in Hong Kong and to make contributions to the MPF Scheme based on the minimum statutory contribution requirement of 5% of the eligible employees’ relevant aggregate income, subject to a capped amount. Any non-compliance with statutory requirements with respect to our employees located in Hong Kong may result in enforcement being taken by the relevant authorities, which could lead to financial penalties or imprisonment.

Our metallic ore mining

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Enforcement of stricter labor laws and regulations may increase our labor costs.

China’s overall economy and the average wage have increased in recent years and are expected to continue to grow. The average wage level for our employees has also increased in recent years. We expect that our labor costs, including wages and employee benefits, will continue to increase. Unless we are able to pass on these increased labor costs to our customers who pay for our services, our profitability and results of operations may be materially and adversely affected. The PRC Labor Contract Law and its implementing rules impose requirements concerning contracts entered into between an employer and its employees and establishes time limits for probationary periods and for how long an employee can be placed in a fixed-term labor contract. We cannot assure you that our or our subsidiaries’ employment policies and practices do not, or will not, violate the Labor Contract Law or its implementing rules or that we will not be subject to related penalties, fines or legal fees. If we or our subsidiaries are subject to government regulations onlarge penalties or fees related to the State, provincial and county levels. These regulations relate to, among other things:

·

Environmental concerns;

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Safety concerns; and





·

Licensing, permitting, taxes and fees.

The State Administration for Environmental Protection is responsible for overall supervision and control of environmental protection in China. It formulates national standards for discharging waste materials and environmental protection and monitors the PRC environmental protection system. Environmental protection bureaus at the county level and above are responsible for environmental protection within their respective areas of jurisdiction. Compliance with State, provincial and county environmental regulations can be costly and disrupt operations; and failure to comply could subject us to fines, penalties and operational suspensions.

Because all of the underlying land on whichLabor Contract Law or its implementing rules, our mines are situated are owned by the State, our mining rights are subject to licensure, license renewal, coal resource taxes and other fees. The licensing and renewal process is subject to a great deal of discretion, particular on the local level, and there is no assurance that our licenses and permits, once granted, will be renewed upon expiry. In addition, coal resource taxes are generally imposed based upon the amount of ore extracted from our mines, and these taxes can be significant.

State and local laws regulating work safety conditions have also been adopted. Compliance with these regulations can be expensive and until compliance is achieved, our mining operations will be delayed or suspended. In addition, it is common for provincial governments to suspend the operations of local mines to investigate mining accidents and to order remedial action to be taken. Production suspensions disrupt our mining operations, delay our receipt of revenues from the suspended operations and otherwise adversely affect ourbusiness, financial condition and results of operations may be materially and adversely affected In addition, according to the Labor Contract Law and its implementing rules, if we intend to enforce the non-compete provision with an employee in a labor contract or non-competition agreement, we have to compensate the employee on a monthly basis during the term of the restriction period after the termination or ending of the labor contract, which may cause extra expenses to us. Furthermore, the Labor Contract Law and its implementation rules require certain terminations to be based upon seniority rather than merit, which significantly affects the cost of reducing workforce for employers. In the event we decide to significantly change or decrease our workforce in the PRC, the Labor Contract Law could adversely affect our ability to enact such changes in a manner that is most advantageous to our circumstances or in a timely and cost-effective manner, thus our results of operations could be adversely affected.

If the chops of our PRC subsidiaries are not kept safely, are stolen or are used by unauthorized persons or for unauthorized purposes, the corporate governance of these entities could be severely and adversely compromised.

In China, a company chop or seal serves as the legal representation of the company towards third parties even when unaccompanied by a signature. Each legally registered company in China is required to maintain a company chop, which must be registered with the local Public Security Bureau. In addition to this mandatory company chop, companies may have several other chops which can be used for specific purposes. The chops of our PRC subsidiaries are generally held securely by personnel designated or approved by us in accordance with our internal control procedures. To the extent those chops are not kept safely, are stolen or are used by unauthorized persons or for unauthorized purposes, the corporate governance of these entities could be severely and adversely compromised and those corporate entities may be bound to abide by the terms of any documents so chopped, even if they were chopped by an individual who lacked the requisite power and authority to do so. In addition, if the chops are misused by unauthorized persons, our PRC subsidiaries could experience disruption to our normal business operations. We may have to take corporate or legal action, which could involve significant time and resources to resolve while distracting management from our operations.

Risks Relating to Our earningsMine Exploration Activities in Inner Mongolia

The Moruogu Tong Mine is in the exploration stage.

One of our operating subsidiaries, Bayannaoer Mining, is in the exploration stage at the Moruogu Tong Mine located in the Inner Mongolia Autonomous Region of the PRC, and, therefore,at this stage, we cannot predict whether ore can be mined on a profitable basis. During the exploration stage, a mine incurs operating expenses but does not generate revenues. We intend to fund mine exploration on the southern part of Moruogu Tong Mine through borrowings from related parties or cash on hand. Pursuant to Bayannaoer Mining’s mutual cooperation agreement (the “Cooperation Agreement”) with Bayannaoer Jijincheng Mining Co., Ltd. (“Jijincheng Mining”), Jijincheng Mining is currently running the exploration program for the northern part of Moruogu Tong Mine. To date, the exploration program of the northern part has indicated the presence of lead and silver, with the prospect that further surveying and exploration may indicate the presence of other ores such as copper. At this stage of exploratory activities, we cannot predict whether sufficient ore of acceptable quality will be found at the Moruogu Tong Mine to warrant further exploration and/or extraction.

The northern part of Moruogu Tong Mine is currently being explored under an agreement that reduces our profitability, are affectedshare in any future profits.

On August 20, 2017, Bayannaoer Mining entered into the Cooperation Agreement with Jijincheng Mining, an unrelated third party. The Cooperation Agreement is intended to provide for financial support for the operating expenses of the northern part of Moruogu Tong Mine during the exploration stage, and the allocation of rights and responsibilities between Bayannaoer Mining and Jijincheng Mining. According to the Cooperation Agreement, Jijincheng Mining is responsible for engaging the exploration team and providing the required funding. Pursuant to the Cooperation Agreement: (i) Bayannaoer Mining contributed the existing exploration results for the northern part of Moruogu Tong Mine; (ii) Jijincheng Mining provides the necessary funds for further exploration at the mine; (iii) Bayannaoer Mining enjoys full rights to any resources already discovered and confirmed by metals price volatility.its independent exploration work conducted prior to commencement of the cooperative exploration project; (iv) Bayannaoer Mining and Jijincheng Mining will each receive a 50% interest in any newly discovered resources from the first 10 drilling holes in the cooperative exploration project; and (v) Bayannaoer Mining and Jijincheng Mining will receive 30% and 70% interests, respectively, in any newly discovered resources from drilling work beyond the first 10 drilling holes in the cooperative exploration project. As of the date of this annual report, 21 holes have been drilled using funding provided by Jijincheng Mining pursuant to the Cooperation Agreement. Other details of the Cooperation Agreement, including allocations and distributions upon completion of exploration work, remain to be negotiated between the parties. There is no assurance that the details of the arrangement that remain to be negotiated will be resolved in a manner satisfactory to the Company. Moreover, because the Cooperation Agreement provides us with a minority interest in the resources discovered as part of the cooperative exploration project, we will not be able to enjoy the full economic benefits of the resources we discover in the northern part of Moruogu Tong Mine for the duration of the Cooperation Agreement.

Any estimates of the reserves contained in the Moruogu Tong Mine may be inaccurate.

The majority of our revenueMoruogu Tong Mine is currently derived from the sale of iron, and as a result, our earnings are directly related to the prevailing prices of iron ore. At present, the price of iron in the PRC, while generally in line with those in the international markets, is relatively low. However, there are many factors influencing the price of metals including expectations for inflation; global and regional demand and production; political and economic conditions; and production costs in major producing regions. These factors are beyond our control and are impossible for us to predict. Changes in the prices of metals may adversely affect our operating results. We do not have any formal hedging policies to manage possible price fluctuations.

Our estimates of “probable” reserves are based upon various assumptions, and if our assumptions prove to be inaccurate, or if minerals are depleted from our mine(s) prior to termination of our mineral rights, our revenues, profitability and the market price for our shares may be adversely affected.

The mines in which we have acquired mineral rights are the subject of a geological surveys performed by licensed valuers in the PRCsurvey prepared in conformity with procedures and protocols recognized in the PRC. While theseThese procedures and protocols are different from the procedures and protocolsthose generally recognized in the United States, they are, with respect to certain of our mining properties, sufficient to support the existence of “probable” reserves. However,States. In addition, reserve estimation is an interpretive process based upon available data and various assumptions that are believed to be reasonable, and the economic value of ore reserves may be adversely affected by price fluctuations in the metal market,metals markets, reduced recovery rates or a rise in production costs as a result of inflation or other technical problems arising in the course of extraction. In addition, ifIf the assumptions upon which our estimates of “probable” reserves are basedwe conduct the reserve study prove to be inaccurate, therewe may reach incorrect conclusions as to the nature and extent of resources present at the Moruogu Tong Mine, and we may not be sufficientable to generate revenues from the Moruogu Tong Mine in an amount that would lead to such activities being profitable or at all.

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There are no assurances that we can produce minerals on a commercially viable basis.

The Company’s ability to generate revenue and profit from the Moruogu Tong Mine is expected to occur, if at all, through the exploration, evaluation, development and operation of that property. The economic feasibility of a project depends on numerous factors, including the cost of mining and production facilities required to extract the desired minerals, the total mineral deposits that can be mined at a given facility, the proximity of the mineral deposits to refining facilities, and the market price of the minerals at the time of sale. There is no assurance that our propertiescurrent or future exploration programs or any acquisitions will result in the identification of deposits that can be mined profitably.

Volatility in the market prices of metals may adversely affect the results of our operations.

The market prices of lead, silver and other metals have experienced significant volatility in recent years. Market prices depend upon many factors beyond our control, which include industry specific factors such as supply and demand and the level of customer inventories, as well as factors such as local and world-wide general economic conditions and disruptions caused by unforeseen domestic or international crises such as the global outbreak of COVID-19, or geopolitical tensions, including the ongoing military conflict between Russia and Ukraine. The uncertainties surrounding the market prices of metals and the costs of extraction may adversely affect our ability to allowoperate on a profitable basis if our mining exploration proves fruitful.

During 2023, the world witnessed the continuation of the Russia-Ukraine conflict, the Israel Hamas war, the Red Sea crisis, persistent high inflation and interest rate in many major economies, which led to disruptions to, and notable fluctuations in, the commodity market worldwide and resulted in high volatility in the market prices of lead, silver and copper. In 2023, the Shanghai Futures Exchange (“SHFE”) lead price hit a low of CNY15,015 (US$2,121) per ton and a high of CNY17,540 (US$2,478) per ton, the SHFE silver price reached a low of CNY4,756 (US$$672) per kilogram (“kg”) and a high of CNY6,343 (US$896) per kg, and the SHFE copper price hit a low of CNY62,690 (US$8,856) per ton and a high of CNY71,500 (US$10,101) per ton, each reflecting high volatility. The extent to which demand and prices will be supported in the future is highly uncertain, as the impacts of the interest rate hikes in major economies, especially the U.S., the ongoing geopolitical tensions and remaining effects of the COVID-19 pandemic continue to cause disruptions to the global economy and to business activities at all levels. Any widespread resurgence of COVID-19 or other pandemics, or further geopolitical tensions, could significantly and adversely impact market sentiment and the broader economy. Aggressive monetary policies of major economies could also cause unexpected consequences beyond mere economic downturns, such as large-scale bankruptcy and even financial crisis, which will have significant and negative impacts on the commodity markets. Therefore, demand and price volatility in the commodity markets may continue for a prolonged period or further deteriorate, which may adversely affect our ability to sell minerals from the Moruogu Tong Mine on a profitable basis.

We are subject to government regulations in various aspects of our exploration activities and our failure to comply with applicable government regulations could adversely affect us.

Bayannaoer Mining, our subsidiary that acquired exploration rights to the Moruogu Tong Mine, is and will continue to be subject to the regulations of various aspects of its operations by a variety of laws, rules and regulations administered by the national and local Chinese government, including laws, rules and regulations relating to: exploration activities; environmental protection; the use and preservation of dangerous substances; employment practices; as well as land use laws and a variety of local business laws and rules. Our failure to comply with applicable laws, rules, and regulations could adversely affect our operations and subject us to extract minerals at current levels for the durationfines and other penalties including suspension or termination of our business permits.

We do not have binding agreements with customers to purchase any future output of metals.

While we believe there is a robust market for lead, silver and other metals not only in China but also in other countries (although our operations are currently limited to the PRC and we are not currently producing any metals), we do not currently have any commitments from any customers to purchase any future output of metals. As a result, we may not be able to sell any metals that we are able to successfully extract at prices that are acceptable to us or at all.

ESG issues, including those related to health, safety, climate change and sustainability, may have an adverse effect on our business, financial condition, and results of operations, could damage our reputation, and may increase costs.

There is an increasing focus from certain investors, customer, partners and other stakeholders concerning ESG matters. Additionally, public interest and legislative pressure related to public companies’ ESG practices continue to grow and change, and may continue to shift based on political conditions in the countries in which we operate and do business. If our ESG practices fail to meet regulatory requirements, our medium- and long-term ESG commitments, or investors, customers, partners or other stakeholders’ evolving expectations and standards for responsible corporate citizenship in areas including environmental stewardship, support for local communities, human capital management, employee health and safety practices, corporate governance and transparency, our reputation, brand and employee retention may be negatively impacted.

Investors, customers, partners and other stakeholders are increasingly focusing on environmental issues, including climate change, dams, energy and water use, and other sustainability concerns. Concern over climate change, in particular, may result in new or increased legal and regulatory requirements to reduce or mitigate impacts to the environment.

If we do not adapt to or comply with new regulations, or if we fail to comply with disclosure requirements and consequently fail to meet evolving regulatory, investor, industry or stakeholder expectations and concerns regarding ESG issues, investors may reconsider their capital investment in us, customers and partners may choose to stop the cooperation with us, which could have a material adverse effect on our reputation, business or financial condition.

In addition, our ESG practices and initiatives may result in increased operational costs, including monitoring and reporting costs, equipment costs, energy costs, and other costs to comply with our developing practices and initiatives. These additional costs could have a material impact on our business, results of operations and financial condition.

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Risks Relating to the Sale of PST Technology

We face risks associated with the divesture of our wastewater treatment segment.

In July 2021, we acquired PST Technology for consideration of three million of the Company’s newly issued restricted common shares, 120 million shares of FARL, and approximately CNY10.3 million (US$1.46 million). Through our acquisition of PST Technology, we obtained a 51% equity interest in Shanghai Onway, a company principally engaged in services related to rural wastewater treatment. In addition to the purchase price, we incurred significant non-recurring expenses in connection with the acquisition, including legal, accounting, financial advisory, integration planning and other expenses, and have incurred integration costs arising out of this transaction.

On July 28, 2023, we entered into a Sale and Purchase Agreement (“SPA”) with Feishang Group Limited (“Feishang Group”), pursuant to which, we agreed to sell 100% equity interest of Precise Space-Time Technology Limited to Feishang Group, together with PST Technology’s outstanding payable owed to us, for consideration of approximately CNY95,761,119 comprising: (i) CNY-34,197,300, the fair value of 100% equity interest of PST Technology as determined by the independent valuation report dated July 28, 2023; and (ii) CNY129,958,419, the book value of PST Technology’s outstanding payable owed to us. After PST Technology’s disposition, we discontinued the operation in wastewater treatment segment and continue engaging in the exploration and mining rights. Ifbusiness. This divestiture may adversely affect our business, results of operations or financial condition if we are unable to extractoffset the dilutive impacts from the loss of revenue associated with the divested waste water treatment business, or otherwise achieve the anticipated benefits or cost savings from the divestiture.

In addition, we may divest in the future businesses as part of ongoing efforts to refine our portfolio and redefine our strategic priorities. We may not be able to successfully achieve the expected benefits of such divestitures and such divestitures may not have the desired effect of enhancing the status of our portfolio of businesses. Our divestitures could result in exposure to contingent or unexpected liabilities, such as litigation, indemnification claims, regulatory claims and earn-out obligations. Furthermore, businesses under consideration for, or otherwise subject to, divestiture may be adversely impacted prior to completion of the divestiture, which could adversely affect our business, results of operations or financial condition.

Risks Relating to the Potential Closing of the Acquisition of Williams Minerals and the Timing of Such Closing

There may be unforeseen risks relating to the Acquisition that were not discovered by us through our due diligence investigation prior to our Acquisition.


       Although we have conducted due diligence in connection with the Acquisition, and such due diligence investigation concluded on April 14, 2023, an unavoidable level of risk remains regarding any undisclosed or unknown issues concerning the prospects of the Zimbabwean lithium mine, including the actual presence and extraction of minerals attherein. We may learn additional information about the current rateZimbabwean lithium mine that could materially adversely affect us. There may be unforeseen risks relating to our ability to locate and execute on strategic opportunities; the presence of lithium or precious minerals in the Zimbabwean lithium mine; the vesting of the legal possession and control of the relevant regions of the Zimbabwean mine and the timing thereof; the level of demand for lithium and other precious minerals; and the availability of internally generated funds and funds for the full durationpayment of our mineraloperating expenses, capital expenditures and the Company’s growth strategy.

Completion of the Acquisition is conditional upon satisfaction or waiver of various conditions. There can be no assurance that the conditions will be fulfilled or waived, or that the acquisition will be completed.


       The completion of the Acquisition is subject to a number of conditions, including, among other things, the transfer of ownership interests in Williams Minerals from the Sellers to the intermediate holding company; the Company’s payment of the first installment of US$140 million, in cash or by way of promissory notes, to the Sellers; the issuance of independent technical reports regarding the amount of qualified measured, indicated and inferred resources quantity of lithium oxide proven to be in each region of the mining area; the settlement of the then-total consideration accumulated in cash and restricted shares, as calculated in reference to the issued independent technical reports; and the transfer of ownership rights our revenues, profitabilityto the Company for each region of the mining area. Pursuant to the Zimbabwe SPA, for each relevant region of the lithium mine, until the Company’s legal possession and possibly,control vests, the Sellers will maintain legal possession and control, including the right of exploration, sale of lithium, and the revenue derived therefrom, as well as liability for operational costs and third-party claims. The Company’s legal possession and control of each relevant region only vests upon its settlement of the then-total consideration accumulated. There can be no certainty, nor can we provide any assurance, that all conditions will be satisfied or waived, or, if satisfied or waived, when they will be satisfied or waived and, accordingly, the acquisition may not be completed. On December 22, 2023, the Company entered into an amendment agreement (the “Amendment Agreement”) to the Zimbabwe SPA with the parties thereto. As the Sellers are still in the process of satisfying conditions precedent to the closing of the Acquisition in accordance with the Zimbabwe SPA, including but not limited to obtaining requisite governmental approvals, the parties entered into the Amendment Agreement to extend the long stop date for closing the acquisition from December 31, 2023 to December 31, 2024. Although we expect that the last independent technical report will be completed, and accordingly ownership rights to the last mining region (as described above) will vest with the Company, in 2026, there is no guarantee that the Acquisition will be completed on such timeline, or at all.

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Failure to complete the Acquisition may have a material adverse effect on the Company’s business, financial condition and results of operations.

If the Acquisition is not completed, the ongoing businesses of the Company may be adversely affected and the Company will be subject to several risks, including (i) having to pay certain costs relating to the Acquisition, such as legal, accounting, and external consultant fees, (ii) the focus of management on the Acquisition instead of on pursuing other opportunities that could be beneficial, (iii) negative reactions from the financial markets, which could cause a decrease in the market price forof our shares, particularly if the market price reflects market assumptions that the Acquisition will be completed or completed on certain terms; and (iv) negative reactions from regulators, rating agencies, prospective customers, counterparties and employees; all without having fully realized the anticipated benefits of the Acquisition. Failure to complete the Acquisition or a change in the terms of the Acquisition could each have a material adverse effect on the Company’s business, financial condition and results of operations, as well as on our ability to attract future acquisition opportunities.

Even if the Acquisition is completed, we may suffer.fail to realize the anticipated benefits associated with it, those benefits may take longer to realize than expected, and we may encounter significant difficulties.

Even if we are successful in completing the Acquisition, we may fail to realize the anticipated benefits of it. The anticipated benefits of the Acquisition and the projected cash costs necessary to achieve these benefits may be affected by changes in the overall economic, political and regulatory environment, including applicable tax regimes and fluctuations in foreign exchange rates, the viability of mining and estimates of reserves at the Zimbabwean lithium mine, the issuance and accuracy of the independent technical reports, the demand for lithium and other precious minerals, and the realization of the other risks relating to our business described herein. The benefits we expect to realize from this Acquisition will depend, in part, on our ability to successfully extract lithium or precious minerals, if found, and to capitalize on our mining expertise and sales and distribution platform. If we are not able to achieve these objectives, the anticipated benefits of the Acquisition may not be realized fully or at all or may take longer to realize than expected.

Risks Relating to Additional Acquisitions and Expansion into Other Sectors

We rely on sub-contractorsmay acquire other businesses or form joint ventures that could negatively affect our operating results, dilute our shareholders’ ownership, increase our debt or cause us to perform mineral extraction and we have little control over their operations.incur significant expense.

We sub-contractare actively seeking opportunities to enter other industries in the non-ferrous ore extractionPRC, as well as other potentially attractive opportunities; however, we cannot offer any assurance that acquisitions of businesses, assets and/or entering into strategic alliances or joint ventures will be successful. We may not be able to third parties. find suitable partners or acquisition candidates and may not be able to complete such transactions on favorable terms, if at all. If we make any acquisitions, we may not be able to integrate these acquisitions successfully into our existing infrastructure. In addition, in the event we acquire any existing businesses we could assume unknown or contingent liabilities.

Any future acquisitions could result in incurrence of debt, contingent liabilities or future write-offs of intangible assets or goodwill, any of which could have a negative impact on our cash flows, financial condition and results of operations. Integration of an acquired company may also disrupt ongoing operations and require management resources that otherwise would be focused on developing and expanding the acquired business. We may experience losses related to potential investments in other companies, which could harm our financial condition and results of operations. Further, we may not realize the anticipated benefits of any acquisition, strategic alliance or joint venture if such investments do not materialize.

To finance any acquisitions or joint ventures, we may choose to issue common shares, or a large extent, our operations are affected bycombination of debt and equity as consideration, which could significantly dilute the performance of these subcontractors, whose activities are substantially outsideownership of our control.existing shareholders or provide rights to such target shareholders in priority over our common shareholders. Additional funds may not be available on terms that are favorable to us, or at all. If the contractors failprice of our common shares is low or volatile, we may not be able to achieve monthly extraction volumes,acquire other companies or the contractors otherwise failfund a joint venture project using shares as consideration.

Future acquisitions or strategic investments could be difficult to perform their obligations to us, the agreement may be terminated by us; however, termination of the relationship would cause delays in our mineral production, require that we identify and engage other third-party contractors,integrate, divert the attention of management, and otherwisecould disrupt our business, dilute shareholder value and adversely affect our operating results.





We produced no zinc in 2013, 2014business, results of operations, and 2015 due to the inferior quality of zinc at current mining zones and there is no assurance if and when zinc production will continue.financial condition.

As part of our growth strategy, we may acquire or invest in other businesses, assets or technologies that are outside of the sectors we have historically operated in but fit within our strategic goals. Any acquisition or investment may divert the attention of management and require us to use significant amounts of cash, issue dilutive equity securities or incur debt. We produced no zinchave limited experience in 2013, 2014 and 2015 due to the inferior quality of zinc at current mining zones. At this timeacquiring other businesses. In addition, we do not know if and when zinc production will recommence or may be recoverable from further mining zones.exposed to unknown risks, any of which could adversely affect our business, results of operations, and financial condition, including risks arising from:

•difficulties in integrating the operations, technologies, product or service offerings, administrative systems, and personnel of acquired businesses, especially if those businesses operate outside of our core competency or geographies in which we currently operate;

•potential loss of key employees of the acquired business;

•inability to maintain key business relationships and reputation of the acquired business;

•litigation arising from the acquisition or the activities of the acquired business, including claims from terminated employees, customers, former shareholders or other third parties;

•assumption of contractual obligations that contain terms that are not beneficial to us, require us to license, or increase our risk of liability;

•complications in the integration of acquired businesses or diminished prospects, including as a result of the domestic and global economic downturns;

•failure to generate the expected financial results related to an acquisition in a timely manner or at all;

•failure to accurately forecast the impact of an acquisition transaction; and

•implementation or remediation of effective controls, procedures, and policies for acquired businesses.

Risks Relating to Our Financial Condition and Business

We have incurred losses from operations forin each of the preceding three fiscal years of 2021, 2022 and 2023 and there is no assurance that we will generate profits from operations in the future.

For the three years ended December 31, 2013, 20142021, 2022 and 2015,2023, we incurred operating losses from continuing operations of CNY2.88CNY10.48 million, CNY24.55 million and CNY9.14 million (US$0.44 million), CNY27.38 million (US$4.22 million) and CNY34.18 million (US$5.271.29 million), respectively. Our operating losses are attributable, in part, to depressed pricesmainly represent administrative expenses, such as legal and professional fees, payroll expenses, our cost of sales and estimated uncollectible receivables, as well as equity-settled share-based compensation for ore that we mine. Ourcertain eligible individuals under the 2014 Equity Compensation Plan (the “2014 Plan”) granted on July 14, 2022. Any future profitability iswill be dependent upon many factors, including our successful integration and profitable operations of our newly acquired and existing businesses; our ability to fund our exploration and operating expenses, mine ore,successfully produce metal outputs, and sell our production output to third parties.parties; and the successful execution of our plans to pivot to other industries. Other factors, such as uncertainty over the demand and market price for lead, silver and other metals, or the availability of attractive acquisition targets in other industries, are outside of our control. There is no assurance that we will be successful in our efforts to achieve profitability.profitability, and we expect to incur significant losses for the foreseeable future. We can provide no assurance to investors that we will achieve profitable operations in the future.

We will have to fund operating expenses from other sources until we are able to generate sufficient revenue to pay them.

We have generated losses from operations over each of the past three fiscal years, and we have generated revenues from our current operations in recent periods prior to the cessation of these two businesses. We will continue to incur operating expenses in connection with our exploratory activities, and we intend to fund those expenses with internal resource and/or the proceeds of loans from our Related-Party Debtholders, if available, payments pursuant to the Cooperation Agreement and, to the extent deemed necessary and available, further bank borrowings. We may incur substantial expenses in connection with developing our current operations or identifying an additional focus for our business. There is no assurance that we will be able to secure amounts sufficient to fund our operating expenses until such time as we are able to generate revenues sufficient to pay those expenses.

The loss of key personnel could affect our business and prospects.

We believe that our future success depends in part upon our ability to attract, retain and motivate qualified personnel necessary for the development of our business, particularly as our management has limited experience in industries in which we are exploring potential business opportunities. If one or more members of our management team or other key technical personnel become unable or unwilling to continue in their present positions, and if additional key personnel cannot be hired and retained as needed, our business and prospects for growth could be adversely affected. Intense competition for these personnel in these industries could cause our compensation costs to increase, which could have a material adverse effect on our results of operations. Our future success and ability to grow our business will depend in part on the continued service of these individuals and our ability to identify, hire and retain additional qualified personnel. If we are unable to attract and retain qualified employees, we may be unable to meet our business and financial goals.

Any failure to achieve and maintain effective internal controlcontrols could have materialan adverse effect on our business, results of operations and the market price of our shares.

The SEC, as required by Section 404 of the Sarbanes-Oxley Act of 2002 or the Sarbanes-Oxley Act (“SOX”), adopted rules requiring most public companies to include a management report on such company’s internal control over financial reporting in its annual report, which contains management’s assessment of the effectiveness of the company’s internal control over financial reporting. In addition, under certain circumstances,if we become an accelerated or large accelerated filer, as defined in the SEC’s rules, we will be required to provide an annual attestation from an independent registered public accounting firm must report on management’s assessment of the effectiveness of the company’sCompany’s internal control over financial reporting.

Our management has concluded that our internal control over financial reporting as of December 31, 20152023, was effective. However, we cannot assure you that our management will not identify material weaknesses in the future, during the Section 404(a) process or our independent public registered accounting firm will not identify material weaknesses during the Section 404(b) process if it was performedassesses our internal control over financial reporting in the current year or in the future or for other reasons.future. In addition, because of the inherent limitations of any internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. As a result, if we fail to maintain effective internal control over financial reporting or should we be unable to prevent or detect material misstatements due to error or fraud on a timely basis, investors could lose confidence in the reliability of our financial statements, which in turn could harm our business and results of operations, and negatively impact the market price of our shares, and harm our reputation. Furthermore, we have incurred and expect to continue to incur considerable costs and to use significant management time and other resources in an effort to comply with Section 404 of and other requirements of the Sarbanes-Oxley Act.SOX. 

Our operating results may be negatively impacted by amortization policies applicable to mining rights.

Mining rights are amortized based on actual units of production over estimated proven and probable reserves of the mines, subject to impairment. We review the production plans and the reserve levels of our mines periodically. Accordingly, any material change in mining production or modification of reserve levels may have a negative impact on our operating results.

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We face uncertainties with respect to the significant decrease in our assets/ liabilities.

We have discontinued our coal segment and we are currently dependent upon the success of one line of business – mining of iron, and, in the past, zinc and other non-ferrous metal. While this business generates operating revenues, those revenues are not sufficient to offset expenses, resulting in continued losses from operations. Unless we are able to expand our mineral reserves through acquisition of additional mining rights, we will likely continue to incur losses.





Risks Relating to PRC Operations

Investors should consider economic, legal and political factors applicable to investments in the PRC prior to investing in our company.

Since 1979, the PRC government has been making efforts to promote reforms of its economic system. These reforms have brought about marked economic growth and social progress, and the economy of China has shifted from a planned economy to a market-oriented economy. Our PRC subsidiaries have also benefited from the economic reforms implemented by the PRC government and the economic policies and measures. However, economic, legal and social policies in the PRC are not similar to those of Western governments and revisions or amendments may be made to these policies and measures from time to time, and we are not in a position to predict whether any change in the political, economic or social conditions may adversely affect our operating results, and how those changes may impact on us.

The PRC legal system is a statutory law system. Unlike the common law system, decided legal cases have little significance for guidance, and rulings by the court can only be used as reference with little value as precedents. Since 1979, the PRC government has established a commercial law system, and significant progress has been made in promulgating laws and regulations relating to economic affairs. The PRC government is still in the process of developing a comprehensive set of laws and regulations. Examples are the organization of companies and their regulation, foreign investment, commerce, taxation and trade. However, these regulations are relatively new and the availability of public cases as well as the judicial interpretation of them is limited in number. Moreover, as they are not binding, both the implementation and interpretation of these regulations are uncertain in many areas. Also, more stringent environmental regulations may also affect our ability to comply with, or our costs to comply with, such regulations. Such changes, if implemented, may adversely affect our business operations and may reduce our profitability.

The interpretation of PRC laws may also be subject to policy changes reflecting domestic political changes, and new laws, changes to existing laws and the pre-emption of local regulations by national laws may adversely affect foreign investors. The activities of our subsidiaries in China are subject to PRC regulations governing PRC companies.

We face the risk that changes in the policies of the PRC government could have a significant impact upon the business we may be able to conduct in the PRC and the profitability of such business.

The PRC’s economy is in a transition from a planned economy to a market-oriented economy subject to five-year and annual plans adopted by the government that set national economic development goals. Policies of the PRC government can have significant effects on the economic conditions of the PRC. During this transition, we believe that the PRC will continue to strengthen its economic and trading relationships with foreign countries and business development in the PRC will follow market forces. While we believe that this trend will continue, we cannot assure you that this will be the case. A change in policies by the PRC government could adversely affect our interests by, among other factors: changes in laws, regulations or the interpretation thereof, confiscatory taxation, restrictions on currency conversion, imports or sources of supplies, or the expropriation or nationalization of private enterprises. Although the PRC government has been pursuing economic reform policies for more than three decades, we cannot assure you that the government will continue to pursue such policies or that such policies may not be significantly altered, especially in the event of a change in leadership, social or political disruption, or other circumstances affecting the PRC's political, economic and social life.

PRC laws and regulations governing our current business operations are sometimes vague and uncertain. Any changes in such laws and regulations may have a material and adverse effect on our business.

There are substantial uncertainties regarding the interpretation and application of PRC laws and regulations, including, but not limited to, the laws and regulations governing our business, or the enforcement and performance of our arrangements with customers in the event of the imposition of statutory liens, death, bankruptcy and criminal proceedings. We and any future subsidiaries are considered foreign persons or foreign-funded enterprises under PRC laws, and as a result, we are required to comply with PRC laws and regulations. These laws and regulations are sometimes vague and may be subject to future changes, and their official interpretation and enforcement may involve substantial uncertainty. The effectiveness of newly enacted laws, regulations or amendments may be delayed, resulting in detrimental reliance by foreign investors. New laws and regulations that affect existing and proposed future businesses may also be applied retroactively. We cannot predict what effect the interpretation of existing or new PRC laws or regulations may have on our businesses.





A slowdown or other adverse developments in the PRC economy may materially and adversely affect our customers, demand for our services and our business.

We are a holding company. All of our operations are conducted in the PRC, and all of our revenues are generated from sales in the PRC. Although the PRC economy has grown significantly in recent years, more recently the trend is less certain and we cannot assure you that such growth will continue. The mining industry in the PRC is relatively new and growing, but we do not know how sensitive we are to a slowdown in economic growth or other adverse changes in the PRC economy which may affect demand for our products. A slowdown in overall economic growth, an economic downturn or recession or other adverse economic developments in the PRC may materially reduce the demand for our products and adversely affect our business.

Inflation in the PRC could negatively affect our profitability and growth.

While the PRC economy has experienced rapid growth, such growth has been uneven among various sectors of the economy and in different geographical areas of the country. Rapid economic growth can lead to growth in the money supply and rising inflation. If prices for our products rise at a rate that is insufficient to compensate for the rise in the costs of supplies, it may have an adverse effect on our profitability. In order to control inflation in the past, the PRC government has imposed controls on bank credit, limits on loans for fixed assets and restrictions on bank lending. Such an austere policy can lead to a slowing of economic growth, and recent statistics have, indeed, suggested that China’s high annual economic growth will slow down. According to China National Bureau of Statistics released data, China's consumer price index (CPI)remained stable for 2015, rising 1.6 percentyear on year — well below the government's 3.0 percent target. AsCPI is the main gauge of inflation, the lower than targeted CPI increase reflects that inflation in China remains largely in check.

Our PRC subsidiaries are subject to restrictions on paying dividends and making other payments to us.

We are a holding company incorporated in the British Virgin Islands and do not have any assets other than our investments in our subsidiaries in China. As a result of our holding company structure, we rely primarily on dividend payments from our subsidiaries. However, PRC regulations currently permit the payment of dividends only out of accumulated profits, as determined in accordance with PRC accounting standards and regulations. Our subsidiaries in China are also required to set aside a portion of their after-tax profits as certain reserve funds according to PRC accounting standards and regulations. The PRC government also imposes controls on the conversion of CNY into foreign currencies and the remittance of currencies out of China. We may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currency. Furthermore, if our subsidiaries in China incur debt in the future, the debt covenants may restrict their ability to pay dividends or make other payments. If we or our subsidiaries are unable to receive dividend from the operating companies due to contractual or other limitations on the payment of dividends, we may be unable to pay dividends on our common shares.  

Governmental control of currency conversion may affect payment of our obligations and the value of your investment.

The PRC government imposes controls on the convertibility of Renminbi into foreign currencies and, in certain cases, the remittance of currency out of the PRC. We receive all of our revenues in Renminbi, which is currently not a freely convertible currency. Shortages in the availability of foreign currency may restrict our ability to remit sufficient foreign currency to pay dividends, or otherwise satisfy foreign currency dominated obligations. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and expenditures can be made in foreign currencies without prior approval from the PRC State Administration of Foreign Exchange by complying with certain procedural requirements. However, approval from appropriate governmental authorities is required where Renminbi is to be converted into foreign currency and remitted out of the PRC to pay capital expenses such as the repayment of bank loans denominated in foreign currencies.

The PRC government may also at its discretion restrict access to foreign currencies for current account transactions in the future. If the foreign exchange control system prevents us from obtaining sufficient foreign currency to satisfy our currency demands, we may not be able to pay certain of our expenses as they come due.

See Item 10.D. for further details of exchange controls in the PRC.





The fluctuation of the Renminbi may materially and adversely affect your investment.

The exchange rate of the Renminbi against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in the PRC's political and economic conditions. As we rely entirely on revenues earned in the PRC, any significant revaluation of the Renminbi may materially and adversely affect our cash flows, revenues and financial condition. Conversely, if we convert our Renminbi into U.S. dollars, should we determine to pay dividends on our common shares or for other business purposes, appreciation of the Renminbi against the U.S. dollar could affect the amount of U.S. dollars we convert. For example, to the extent that we need to convert U.S. dollars we receive from an offering of our securities into Renminbi for our operations, appreciation of the Renminbi against the U.S. dollar could have a material adverse effect on our business, financial condition and results of operations resulting in a lower income, a charge to our income statement and a reduction in the value of these U.S. assets. 

In 2015, the annual cumulative depreciation of the exchange rate of the Renminbi against the U.S. dollar was 5.60%. Since the beginning of 2016 to late March 2016, the exchange rate of the Renminbi against the U.S. dollar dropped by 1.00%.

Recent PRC State Administration of Foreign Exchange (“SAFE”) Regulations regarding offshore financing activities by PRC residents, have undergone continuous changes which may increase the administrative burden we face and create regulatory uncertainties that could adversely affect the implementation of our acquisition strategy, and a failure by our shareholders who are PRC residents to make any required applications and filings pursuant to such regulations may prevent us from being able to distribute profits and could expose us and our PRC resident shareholders to liability under PRC law.

In 2005, the SAFE promulgated regulations in the form of public notices, which require registrations with, and approval from, the SAFE on direct or indirect offshore investment activities by PRC resident individuals. The SAFE regulations require that if an offshore company directly or indirectly formed by or controlled by PRC resident individuals, known as “SPC,” intends to acquire a PRC company, such acquisition will be subject to strict examination by the SAFE. The regulation also requires PRC resident individuals to repatriate all dividends of the SPC. Without registration with the SAFE by PRC resident individuals, the PRC entity may not be able to remit any of its profits out of the PRC as dividends or otherwise. Violation of the regulation may be deemed an evasion of foreign exchange rules and implicated PRC resident individuals may be liable for a penalty. However, there are uncertainties regarding the interpretation and application of current or future PRC laws and regulations, including the regulations established by the SAFE. To date, no registration has been filed with the SAFE. Even if it is determined that registration with the SAFE is required, management believes that applicable filings with the SAFE can be made at any time, and management does not foresee significant difficulties in obtaining the SAFE’s approval should it be required.

Our auditor, like other independent registered public accounting firms operating in China, is not permitted to be subject to inspection by Public Company Accounting Oversight Board, and as such, investors may be deprived of the benefits of such inspection.

Our independent registered public accounting firm that issues the audit report included in our annual report filed with the SEC, as an auditor of companies that are traded publicly in the United States and a firm registered with the Public Company Accounting Oversight Board (United States), or PCAOB, is required by the laws of the United States to undergo regular inspections byPCAOB to assess its compliance with the laws of the United States and professional standards. Because our auditor is located in China, a jurisdiction where PCAOB is currently unable to conduct inspections without the approval of the PRC authorities, our auditor, like other independent registered public accounting firms operating in China, is currently not inspected by PCAOB. On May 24, 2013, the PCAOB announced that it had entered into a Memorandum of Understanding on Enforcement Cooperation with the China Securities Regulatory Commission (“CSRC”) and the Ministry of Finance of the PRC, which establishes a cooperative framework between the parties for the production and exchange of audit documents relevant to investigations undertaken by PCAOB, the CSRC, or the Ministry of Finance in the United States and the PRC, respectively. PCAOB continues to be in discussions with the CSRC and the Ministry of Finance to permit joint inspections in the PRC of audit firms that are registered with PCAOB and audit Chinese companies that trade on U.S. exchanges.

Inspections of other firms that PCAOB has conducted outside of China have identified deficiencies in those firms’ audit procedures and quality control procedures, which may be addressed as part of the inspection process to improve future audit quality. The inability of PCAOB to conduct inspections of independent registered public accounting firms operating in China makes it more difficult to evaluate the effectiveness of our auditor’s audit or quality control procedure. As a result, investors may be deprived of the benefits of PCAOB inspections.





Proceedings instituted by the SEC against certain PRC-based accounting firms, including our independent registered public accounting firm, could result in financial statements being determined to not be in compliance with the requirements of theSecurities Exchange Actof 1934, as amended, or the Exchange Act.

In December 2012, the SEC brought administrative proceedings against five accounting firms in China, including our independent registered public accounting firm, alleging that they had refused to produce audit work papers and other documents related to certain other China-based companies under investigation by the SEC. On January 22, 2014, an initial administrative law decision was issued, censuring these accounting firms and suspending four of these firms from practicing before the SEC for a period of six months. The decision is neither final nor legally effective unless and until reviewed and approved by the SEC.  On February 12, 2014, four of these PRC-based accounting firms appealed to the SEC against this decision. In February 2015, each of the four PRC-based accounting firms agreed to a censure and to pay a fine to the SEC to settle the dispute and avoid suspension of their ability to practice before the SEC. The settlement requires the firms to follow detailed procedures to seek to provide the SEC with access to Chinese firms’ audit documents via the CSRC. If the firms do not follow these procedures, the SEC could impose penalties such as suspensions, or it could restart the administrative proceedings.

In the event that the SEC restarts the administrative proceedings, depending upon the final outcome, listed companies in the United States with major PRC operations may find it difficult or impossible to retain auditors in respect of their operations in the PRC, which could result in financial statements being determined to not be in compliance with the requirements of the Exchange Act, including possible delisting. Moreover, any negative news about the proceedings against these audit firms may cause investor uncertainty regarding China-based, United States-listed companies and the market price of our stock may be adversely affected.

If our independent registered public accounting firm were denied, even temporarily, the ability to practice before the SEC and we were unable to timely find another registered public accounting firm to audit and issue an opinion on our financial statements, our financial statements could be determined not to be in compliance with the requirements of the Exchange Act. Such a determination could ultimately lead to our delisting from the NASDAQ or deregistration from the SEC, or both, which would substantially reduce or effectively terminate the trading of our stock in the United States.

Substantial uncertainties exist with respect to the enactment timetable, interpretation and implementation of draft PRC Foreign Investment Law and how it may impact the viability of our current corporate structure, corporate governance and business operations.

The Ministry of Commerce published a discussion draft of the proposed Foreign Investment Law in January 2015 aiming to, upon its enactment, replace the trio of existing laws regulating foreign investment in China, namely, the Sino-foreign Equity Joint Venture Enterprise Law, the Sino-foreign Cooperative Joint Venture Enterprise Law and the Wholly Foreign-invested Enterprise Law, together with their implementation rules and ancillary regulations. The draft Foreign Investment Law embodies an expected PRC regulatory trend to rationalize its foreign investment regulatory regime in line with prevailing international practice and the legislative efforts to unify the corporate legal requirements for both foreign and domestic investments. The Ministry of Commerce is currently soliciting comments on this draft and substantial uncertainties exist with respect to its enactment timetable, interpretation and implementation. The draft Foreign Investment Law, if enacted as proposed, may materially impact the viability of our current corporate structure, corporate governance and business operations in many aspects.

Among other things, the draft Foreign Investment Law expands the definition of foreign investment and introduces the principle of “actual control” in determining whether a company should be treated as a foreign-invested enterprise, or an FIE. According to the definition set forth in the draft Foreign Investment Law, FIEs refer to enterprises established in China pursuant to PRC law that are solely or partially invested by foreign investors. The draft Foreign Investment Law specifically provides that entities established in China (without direct foreign equity ownership) but “controlled” by foreign investors, through contract or trust for example, will be treated as FIEs. Once an entity falls within the definition of FIE, it may be subject to foreign investment “restrictions” or “prohibitions” set forth in a “negative list” to be separately issued by the State Council later. If an FIE proposes to conduct business in an industry subject to foreign investment “restrictions” in the “negative list,” the FIE must go through a market entry clearance by the Ministry of Commerce before being established. If an FIE proposes to conduct business in an industry subject to foreign investment “prohibitions” in the “negative list,” it must not engage in the business. However, an FIE, during the market entry clearance process, may apply in writing to be treated as a PRC domestic enterprise if its foreign investor(s) is/are ultimately “controlled” by PRC government authorities and its affiliates and/or PRC citizens. In this connection, “control” is broadly defined in the draft law to cover the following summarized categories: (i) holding 50% of more of the voting rights of the subject entity; (ii) holding less than 50% of the voting rights of the subject entity but having the power to secure at least 50% of the seats on the board or other equivalent decision making bodies, or having the voting power to exert material influence on the board, the shareholders’ meeting or other equivalent decision making bodies; or (iii) having the power to exert decisive influence, via contractual or trust arrangements, over the subject entity’s operations, financial matters or other key aspects of business operations.





The draft Foreign Investment Law, if enacted as proposed, may also materially impact our corporate governance practice and increase our compliance costs. For instance, the draft Foreign Investment Law imposes stringent ad hoc and periodic information reporting requirements on foreign investors and the applicable FIEs. Aside from investment implementation report and investment amendment report that are required at each investment and alteration of investment specifics, an annual report is mandatory, and large foreign investors meeting certain criteria are required to report on a quarterly basis. Any company found to be non-compliant with these information reporting obligations may potentially be subject to fines and/or administrative or criminal liabilities, and the persons directly responsible may be subject to criminal liabilities.

Risks Relating to Foreign Private Issuer Status

Because our assets are located outside of the United States and all of our directors and all our officers reside outside of the United States, it may be difficult for you to enforce your rights based on the U.S. Federal Securities Lawsfederal securities laws against us andor our officers and directors or to enforce a judgment of a United States court against us or our officers and directors in the PRC.

We are a British Virgin IslandsBVI company, andall of our officers and directors are non-residents oflocated outside the United States in Hong Kong, all of our assets and officers are located outside the United States in the PRC, and our operations are conducted in the PRC. We do not maintain a business presence in the United States. Therefore, it may not be possible to effect service of process on such persons in the United States, and it may be difficult to enforce any judgments rendered against us or them. Moreover, there is doubt whether courts in the British Virgin IslandsBVI, the PRC or the PRCHong Kong would enforce (a) judgments of United States courts against us, or our directors or officers based on the civil liability provisions of the securities laws of the UnitesUnited States or any state, or (b) in original actions brought in the British Virgin IslandsBVI, the PRC or the PRC,Hong Kong, liabilities against us or any non-residentsnonresidents based upon the securities laws of the United States or any state.

Our status as a “foreignforeign private issuer”issuer results in less information being available about us than about domestic reporting companies.

We are a foreign private issuer and are not required to file as much information about us as domestic issuers are required to file. In this regard:

•we are not required to file quarterly reports on Form 10-Q and our annual reports on Form 20-F are subject to disclosure requirements that differ from annual reports on Form 10-K;

·

•we are exempt from the provisions of Regulation FD aimed at preventing issuers from making selective disclosures;

we are not required to file quarterly reports on Form 10-Q and our annual reports on Form 20-F are subject to disclosure requirement that differ from Form 10-K;

•the SEC proxy statement and information statement rules do not apply to us; and

·

we are exempt from the provisions of Regulation FD aimed at preventing issuers from making selective disclosures;

·

the SEC proxy statement and information statement rules do not apply to us; and

·

our officers, directors and principal shareholders are not required to file reports detailing their beneficial ownership of our shares.

•our officers, directors and principal shareholder are not required to file reports under Section 16 of the Exchange Act detailing their beneficial ownership of our shares; and they are not subject to the short-swing profit provisions under Section 16.

Since there is generally greater and more timely information available about domestic issuers than about foreign private issuers such as us, you will not be afforded the same protections or information we are not requiredas would be available to provide may make it more difficult to make investment decisions about us.you if you were investing in a U.S. domestic issuer.

OurDue to our status as a “foreignforeign private issuer” allows us to adoptissuer, we have adopted IFRS accounting principles, which are different thanfrom accounting principles under U.S. GAAP.

We have adopted and presented our financial statements in accordance with IFRS accounting principles. IFRS is an internationally recognized body of accounting principles that are used by many companies outside of the United States to prepare their financial statements;statements, and the SEC recently permittedpermits foreign private issuers such as the Company to prepare and file their financial statements in accordance with IFRS rather than U.SU.S. GAAP. IFRS accounting principles are different from those of U.S. GAAP, and SEC rules do not require us to provide a reconciliation of IFRS accounting principles to those of U.SU.S. GAAP. Accordingly, we suggest that readers of our financial statements familiarize themselves with the provisions of IFRS accounting principles in order to better understand the differences between these two sets of principles.





Filers of financial statements under IFRS are not currently subject to the SEC’s XBRL requirements which may provide less information to investors than is provided by filers utilizing XBRL.

The SEC requires most reporting companies to provide financial statements in their periodic reports that include “XBRL tagging” – cross references that provide the reader with a greater understanding of the components of line items contained in financial statements. However, the SEC has not yet developed taxonomy to enable filers of IFRS financial statements, such as the Company, to include XBRL tagging in their financial statements. Until such time as the SEC develops taxonomy to allow IFRS filers to include XBRL tagging, IFRS filers will be relieved of the obligation to provide XBRL tagging with their financial statements, and readers will not have the benefit of XBRL tagging when reviewing our financial statements.

As a “foreignforeign private issuer”issuer we are not subject to certain requirements that other NASDAQ listedNasdaq-listed issuers are required to comply with, some of which are designed to provide information to and protect investors.

Our common shares are currently listed on the NASDAQ Capital MarketNasdaq and, for so long as our securities continue to be listed, we will remain subject to the rules and regulations established by NASDAQNasdaq applicable to listed companies. As permitted under NASDAQ rules applicableHowever, we have elected to claim certain exemptions afforded to foreign private issuers such as China Natural Resources, we have determined to adhere to the exemptions provided by the relevant NASDAQNasdaq rules, and as a result:

•a majority of the members of our board of directors (the “Board of Directors” or the “Board”) are not independent as defined by Nasdaq rules;

·

•our independent directors do not hold regularly scheduled meetings in executive session;

a majority of the members on our Board of Directors are not independent as defined by NASDAQ rules;

•while executive compensation is recommended by our Compensation Committee, which is comprised of independent directors, the compensation of our executive officers is ultimately determined by the Board of Directors rather than an independent committee of the Board or by the independent members of the Board of Directors;

·

•related party transactions are not required to be reviewed or approved by our Audit Committee or other independent body of the Board of Directors;

our independent directors do not hold regularly scheduled meetings in executive session;

•we are not required to solicit shareholder approval of stock plans or issuances of securities, including those in which our officers or directors may participate; share issuances that will result in a change in control; the issuance of our shares in related party transactions or other transactions in which we may issue 20% or more of our outstanding common shares; or below market issuances of 20% or more of our outstanding shares to any person; and

·

while executive compensation is recommended by our Compensation Committee which is comprised of independent directors, the compensation of our executive officers is not determined by an independent committee of the board or by the independent members of the Board of Directors, and our CEO may be present in the deliberations concerning his compensation;

·

related party transactions are not required to be reviewed or approved by our audit committee or other independent body of the Board of Directors;

·

we are not required to solicit shareholder approval of stock plans, including those in which our officers or directors may participate; stock issuances that will result in a change in control; the issuance of our stock in related party acquisitions or other acquisitions in which we may issue 20% or more of our outstanding shares; or, below market issuances of 20% or more of our outstanding shares to any person; and

·

•we are not required to hold an in-person annual meeting to elect directors and transact other business customarily conducted at an annual meeting.

20 

Due to an exemption from NASDAQNasdaq rules applicable to “foreignforeign private issuers,” our related party transactions may not receive the type of independent review process that those of other NASDAQ-listedNasdaq-listed companies receive, andreceive; the terms of these transactions are not negotiated at arm’s-length and may not be as favorable as could be obtained from unrelated parties.

We have historically engaged in a substantial number of transactions with related parties in the ordinary course of business, predominantly with our principal beneficial owner and former Chairman and Chief Executive Officer and/or companies that he owns or controls. These transactions are described in greater detail elsewhere in this Annual Report.annual report. In general, NASDAQNasdaq rules require that related party transactions be reviewed by an audit committee or other committee comprised of independent directors. However, under NASDAQNasdaq rules applicable to foreign private issuers such as our company, we are exempt from certain NASDAQNasdaq requirements, including the requirementrequirements applicable to independent director review of related party transactions. This exemption is available to us because the laws of the British Virgin Islands,BVI, our home jurisdiction, do not mandate independent review of related party transactions.

Notwithstanding the foregoing, non-recurringnonrecurring related party transactions (i.e., related party transactions that are not in the ordinary course of business) are submitted for approval by our Board of Directors, following disclosure of the related party’s interest in the transaction, and, in all cases, boardBoard approval has historically included the unanimous approval of our independent directors. In addition, our annual audited financial statements, including the related party transactions reported therein, are approved by our audit committee,Audit Committee, which is comprised solely of independent directors. However, except to the limited extent described above, these transactions are not individually reviewed or approved solely by independent directors, and our Chairman and Chief Executive Officer is often present during the approval process and is permitted to cast a vote as a board member.directors. While management believes that our related party transactions arehave been on terms at least as favorable to the Company as could be obtained from unrelated parties, there is no assurance that such is the case or will be so in the future, or that shareholders would not be better protected if we were not exempt from, or we chose to voluntarily comply with, the NASDAQ rule.





applicable Nasdaq rules.

Risks RelatedRelating to ourOur Common Shares

You may experience dilution to the extent that our common shares are issued upon the exercise of outstanding warrants or other securities that we may issue in the future.

You may experience dilution to the extent that our common shares are issued upon the exercise of our outstanding warrants, and if we issue additional equity securities, or there are any issuances and subsequent exercises of stock options issued in the future. Up to 1,115,903 Common shares may be issued with the exercise of warrants at a per share exercise price of $3.00 issued to the investors and up to 74,394 Common shares may be issued with the exercise of warrants at a per share exercise price of $2.20 issued to the placement agent in a private placement (the “Private Placement”) in connection with a registered offering of 1,487,870 Common shares to the same investors at a price of $2.20 per Common Share (the “Registered Offering”) in February 2024. Up to 1,620,000 common shares may be issued with the exercise of options at a per share exercise price of $3.115 issued to certain eligible individuals under the Company’s 2014 Plan as adjusted by a five-to-one share combination on April 3, 2023. See, “Item 10.C. Additional Information — Material Contracts.”

Substantial future sales or perceived potential sales of our common shares in the public market could cause the price of our common shares to decline.

Sales of our common shares in the public market, or the perception that these sales could occur, could cause the market price of our common shares to decline. As of the date of this annual report, we have 9,865,767 Common shares issued and outstanding. On February 16, 2024, the Company entered into a securities purchase agreement with certain institutional investors (the “Investors”), pursuant to which the Company agreed to issue and sell, (i) in a registered direct offering, up to an aggregate of 1,487,870 of common shares, no par value of the Company at a per Share purchase price of $2.20, and (ii) in a concurrent private placement, warrants initially exercisable for the purchase of an aggregate of 1,115,903 common shares of the Company (the “Investors Warrants”), for gross proceeds of approximately $3.27 million, before deducting fees to the placement agent and other estimated offering expenses payable by the Company. In connection will the Registered Offering and Private Placement pursuant to the terms of a placement agency agreement, dated February 16, 2024 between the Company and Placement Agent (the “Placement Agent Agreement”), the Company agreed to issue to the Placement Agent warrants to purchase an aggregate of up to 74,394 Common shares at a per share exercise price of $2.20 (the “Placement Agent Warrants”, and together with the Investors Warrants, the “Warrants”). Assuming exercise of all of the Warrants by cash and without adjustment, a maximum of 1,190,297 Common shares underlying the Warrants will be offered for sale, subject to any restrictions as applicable under the Securities Act.

Certain of the Selling Shareholders may acquire their Common shares at a price that is less than the market price of the Common shares in the future, may earn a positive rate of return even if the price of the Common shares declines and may be willing to sell their Common shares at a price less than shareholders that acquired Common shares in the public market.

Certain of our Selling Shareholders may purchase their respective common shares at prices lower than the market prices in the future and may therefore experience a positive rate of return on their investment, even if our public shareholders experience a negative rate of return on their investment. As a result, the Selling Shareholders are able to recognize a greater return on their investment than shareholders that acquired Common shares in the public market. Up to 1,115,903 Common shares may be issued with the exercise of the Investor Warrants at a per share exercise price of $3.00 and up to 74,394 Common shares may be issued with the exercise of the Placement Agent Warrants at a per share exercise price of $2.20. Furthermore, the Selling Shareholders may earn a positive rate of return even if the price of the Common shares declines significantly. As a result, the Selling Shareholders may be willing to sell their shares at a price less than shareholders that acquired their Common shares in the public market or at higher prices than the price paid by such Selling Shareholders, the sale of which would result in the Selling Securityholder realizing a significant gain even if other CHNR shareholders experience a negative rate of return.

21 

There areis a limited number of our common shares in the public float and trading in our shares is not active; therefore, our common shares tend to experience price volatility.

There are currently approximately 9,448,3974,357,828 of our common shares in the public float and, in general, there has not been an active trading market for our shares. Our shares tend to trade along with other shares of public companies whose operations are based in the People’s Republic of China,PRC, and, at times, in tandem with other natural resource companies. These shares tend to exhibit periods of extreme volatility and price fluctuations, even when there are no events peculiar to the Company that appear to warrant price changes. We cannot assure you that price volatility will not continue in the future or, as a result thereof, that market prices will reflect actual values of our company.

As a consequence of this lack of liquidity, the trading of relatively small quantities of shares by our shareholders may disproportionately influence the price of those shares in either direction. The share price could, for example, decline precipitously in the event that a large number of shares are sold on the market without commensurate demand, as compared to a seasoned issuer which could better absorb those sales without adverse impact on its share price.demand. As a consequence of this enhanced risk, more risk-adverse investors may, underdue to the fear of losing all or most of their investment in the event of negative newnews or lack of progress, be more inclined to sell their shares on the market more quickly and at greater discounts than would be in the case withof the stock of a seasoned issuer.issuer, negatively impacting the trading price of our common shares.

The price at which common shares are quoted on Nasdaq may increase or decrease due to a number of factors, which may negatively affect the price of the common shares.

The price at which the common shares are quoted on Nasdaq may increase or decrease due to a number of factors. These factors may cause the common shares to trade at prices above or below the prices at which the common shares were first offered without regard to our operations and financial performance. Some of the factors which may affect the price of the common shares include:

•fluctuations in the domestic and international market for listed stocks;
•general economic conditions, including interest rates, inflation rates, exchange rates, commodity and oil prices;
•changes to government fiscal, monetary or regulatory policies, legislation or regulation;
•inclusion in or removal from market indices;
•acquisition and dilution;
•climate change and pandemic risk;
•the nature of the markets in which we operate; and
•general operational and business risks.

Other factors which may negatively affect investor sentiment and influence the Company, specifically or the stock market more generally include acts of terrorism, an outbreak of international hostilities or tensions, fires, floods, earthquakes, labor strikes, civil wars, natural disasters, outbreaks of disease or other man-made or natural events. We have limited ability to insure against some of the risks mentioned above.

Our Chief Executive Officerprincipal beneficial owner and his affiliates control us through their stockshare ownership; and their interests may differ from those of other shareholders.

Mr. Li Feilie, beneficial owner of a majority of our Chief Executive Officer,outstanding common shares, beneficially owns approximately 59%54.5% of our outstanding common shares, and as a result, Mr. Li is and will continue to be able to influence the outcome of shareholder votes on various matters, including the election of directors and extraordinary corporate transactions such as business combinations. Through his related companies, Mr. Li also provides funding to support the Company’s operating expenses and holds a substantial amount of the Company’s debt (see “Item 7.B. Major Shareholders and Related Party Transactions – Related Party Transactions,” below). Mr. Li’s interests may differ from those of other shareholders. Additional information relating to the beneficial ownership of our securities is contained elsewhere in this Annual Reportannual report under “Security Ownership of Certain Beneficial Owners“Item 6.E. Directors, Senior Management and Management.Employees – Share Ownership.”

The rights of our shareholders are governed by British Virgin IslandsBVI law, the provisions of which may not be as favorable to shareholders as under U.S. law.law, and our directors may take actions with which you disagree without first receiving shareholder approval.

Our directors have the power to take certain actions without shareholder approval, including anthe amendment of our Amended and Restated Memorandum of Association or(the “Memorandum”) and our Articles of Association (unless(the “Articles”) (save and except that such amendment variesamendments may not restrict the rights attachedor power of our shareholders to shares)amend the Memorandum or the Articles, and may not change the percentage of shareholders required to pass a resolution to amend the Memorandum or the Articles, and further that our directors may not amend the Memorandum or the Articles in circumstances where they may not be amended by our shareholders), and also including an increase or reduction in the maximum number of shares which our company is authorized capital,to issue, which would require shareholder approval under the laws of most jurisdictions in the United States. In addition, the directors of a British Virgin IslandsBVI company, subject in certain cases to court approval but without shareholder approval, may, among other things, implement a reorganization, certain mergers or consolidations with a subsidiary, the sale, transfer, exchange or disposition of any assets, property, part of the business, or securities of the company, or any combination (provided the assets do not represent more than 50% of the total assets of the company and the sale is not outside of the usual or ordinary course of the company’s business),foregoing, if they determine it is in the best interests of the company. Our ability to amend our Memorandum of Association and Articles of Association without shareholder approval could allow our directors to implement provisions to those documents that have the effect of delaying, deterring or preventing a change in our control without any further action by the shareholders, including a tender offer to purchase our common shares at a premium over then current market prices.prices, as could the ability of our directors to issue blank check preferred shares.

22 

The elimination of monetary liability against our directors officers and employeesofficers under our articles of associationArticles and the existence of indemnification of our directors officers and employeesofficers may result in substantial expenditures by us and may discourage lawsuits against our directors officers and employees.officers.

Our articles of association containsArticles contain provisions which eliminate the liability ofthat indemnify our directors for monetaryand officers against any liability, action, proceeding, claim, demand, costs, damages or expenses, including legal expenses, whatsoever which they may incur as a result of any act or failure to us andact in carrying out their functions, other than such liability that they may incur by reason of their own actual fraud or wilful default. No such indemnified person shall be liable to our stockholders tocompany for any loss or damage incurred by our company as a result of carrying out their functions unless that liability arises through the maximum extent permitted under the corporate lawsactual fraud or wilful default of the British Virgin Islands.such indemnified person. We may provide contractual indemnification obligations under agreements with our directors, officers and employees. These indemnification obligations could result in our incurring substantial expenditures to cover the cost of settlementsettlements or damage awards against directors, officers and employees, which we may be unable to recoup. These provisions and resultant costs may also discourage us from bringing a lawsuit against directors, officers and employees for breach of their fiduciary duties, and may similarly discourage the filing of derivative litigation by our shareholders against our directors, officers and employees even though such actions, if successful, might otherwise benefit usthe Company and our shareholders.





Risks Related to the Spin-Off

We face uncertainties with respectmay be classified as a passive foreign investment company, which could result in adverse U.S. federal income tax consequences to the applicability of PRC withholding tax on the Distribution.U.S. shareholders.

Pursuant toWe have not made a determination whether we will or will not be a passive foreign investment company (“PFIC”) for U.S. federal income tax purposes in the Noticecurrent tax year or in subsequent tax years. Whether we are a PFIC is determined on Strengthening Administration of Enterprise Income Taxa year-by-year basis, and we cannot assure you that we are not and we will not be a PFIC for Share Transfers by Non-PRC Resident Enterprises (‘‘SAT Circular 698’’) issued by the State Administration of Taxation (‘‘SAT’’) on December 10, 2009 with retroactive effect from January 1, 2008,our future tax years. A non-U.S. corporation is generally a PFIC if a non-PRC resident enterprise transfers its indirect equity interests in a PRC resident enterprise by disposingeither (i) at least 75% of its equity interests in an overseas holding company (‘‘Indirect Transfer’’), and such overseas holding companygross income is located inpassive income for a tax jurisdiction that has an effective tax rateyear or (ii) at least 50% of less than 12.5% or does not tax foreign incomethe value of its residents, the non-PRC resident enterprise, as the transferor, is required to report the Indirect Transfer to the relevant PRC tax authorities.

SAT issuedassets (based on an announcement in February 2015, i.e., the Notice of SAT on Several Issues Concerning the CIT on the Indirect Transfers of Properties by PRC Non-Residents or “Announcement 7,” which stipulates in greater detail how to evaluate the “reasonable commercial substance.”

Using a ‘‘substance over form’’ principle, the PRC tax authorities may disregard the existenceaverage of the overseas holding company if it lacksquarterly values of the assets during a reasonable commercial purpose and was establishedtax year) are attributable to assets that produce or are held for the purposeproduction of avoiding PRC tax, in which case the gains derived from such ‘‘Indirect Transfer’’ may be subject to PRC withholding tax at a rate of up to 10%. SAT Circular 698 also provides that, if a non-PRC resident enterprise transfers its equity interests in a PRC resident enterprise to its related parties at a price lower than the fairpassive income. The market value, the relevant PRC tax authorities have the authority to make reasonable adjustments to the taxable income of the transaction.

There is uncertainty as to the application of SAT Circular 698 and Announcement 7. For example, while the term “Indirect Transfer” is not clearly defined, it is understood that the relevant PRC tax authorities have jurisdiction regarding requests for information over a wide range of foreign entities having no direct contact with the PRC. As a result, there is a risk that the PRC tax authorities would regard the Distribution as an “Indirect Transfer” by CHNR of our PRC subsidiaries to CHNR’s shareholders subject to SAT Circular 698. If SAT Circular 698 were determined to be applicable to the Distribution by the PRC tax authorities, CHNR could be required to withhold taxes at a rate of up to 10% on any gains derived from the Distribution, which may be deemed as the difference between the fair value of our ordinaryassets may be determined to a large extent by the market price of our common shares. If we are treated as a PFIC for any tax year in which U.S. shareholders hold common shares, at the timecertain adverse U.S. federal income tax consequences could apply to such U.S. shareholders. For further discussion of the Distribution and CHNR’s tax basis in our ordinary shares.implications of PFIC status, please refer to “Item 10.E. Additional Information – Taxation – United States Federal Income Taxation.”

It is not possible to foresee all risks that may affect us. Moreover, we cannot predict whether we will successfully effectuate our current business plan.plans. Each prospective purchaser of our common shares is encouraged to carefully analyze the risks and merits of an investment in the common shares and should take into consideration when making such analysis among others, the Risk Factors discussed above.above, among others.


ITEM 4.INFORMATION ON THE COMPANY

ITEM 4.

A.History and Development of the Company

China Natural Resources, Inc. was incorporated in the BVI on December 14, 1993, and is a company limited by shares incorporated under the BVI Business Companies Act. We are not a Chinese operating company but a BVI holding company with operations conducted by our subsidiaries established in the PRC. See, “Risk factors — Risks Relating Our Operations and the Doing Business in the PRC — The PRC government may intervene or influence our operations at any time, or may exert more control over the China operations of an offshore holding company and offerings conducted overseas and foreign investment in China-based issuers, such as our PRC subsidiaries. Such control or influence may significantly limit our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless.”

INFORMATION ON THE COMPANYPrior to the sale of PST Technology in July 2023, the Company operated in two reportable operating segments: wastewater treatment and exploration and mining. During 2021, the Company entered the rural wastewater treatment industry in the PRC by acquiring a 51% equity interest in its operating subsidiary Shanghai Onway. Additionally, the Company is engaged in metal exploration and mining activities in Inner Mongolia Autonomous Region of the PRC, including exploring for lead, silver and other nonferrous metal. After the sale of Precise Space-Time Technology Limited and the disposal of the wastewater treatment segment in July 2023, the Company is solely engaged in metal exploration and mining activities in Inner Mongolia Autonomous Region of the PRC, including exploring for lead, silver and other nonferrous metal.

A.In February 2023, the Company entered into a material definitive agreement with Feishang Group, the Company’s controlling shareholder, and Top Pacific, a non-affiliate, and Mr. Li Feilie and Mr. Yao Yuguang, to acquire Williams Minerals, which owns the mining permit for a Zimbabwean lithium mine. In December 2023, the Company entered into an amendment agreement to the sale and purchase agreement dated as of February 27, 2023 by and among the Company, Feishang Group, the Company’s controlling shareholder, and Top Pacific, a non-affiliate, and Mr. Li Feilie and Mr. Yao Yuguang for the extension of the long stop date for closing the Acquisition from December 31, 2023 to December 31, 2024.

The Company is also actively exploring business opportunities in other non-natural resource sectors.

24 

Acquisition of Williams Minerals

On February 27, 2023, the Company entered into a material definitive agreement (the “Zimbabwe SPA”) with Feishang Group and Top Pacific, as well as Mr. Li Feilie and Mr. Yao Yuguang, to indirectly acquire all interests in Williams Minerals, which owns the mining permit for a Zimbabwean lithium mine. At the time of the entry into the Zimbabwe SPA, Feishang Group owned 70% of Williams Minerals, and Top Pacific, a non-affiliate, owned the remaining 30%. Under the Zimbabwe SPA, it is expected that the Company will indirectly acquire all interests in Williams Minerals in the second fiscal quarter of 2023, and that the Company’s “ownership” (which, as defined in the Zimbabwe SPA, relates to its legal possession and control) of the Zimbabwean lithium mine will vest cumulatively, region by region from 2024 through 2026, contingent upon the issuance of independent technical reports and the Company’s full settlement of the purchase consideration in cash and restricted shares. For each relevant region of the lithium mine, until the Company’s legal possession and control vests, the Sellers will maintain legal possession and control, including the right of exploration, sale of lithium, and the revenue derived therefrom, as well as liability for operational costs and third-party claims.

Subject to the terms and conditions of the Zimbabwe SPA, the Company plans to issue restricted shares as 50% of the consideration for the Acquisition, with the remaining 50% of the consideration comprised of a promissory note and/or cash, for maximum consideration of US$1.75 billion (3.5 million estimated tons of measured, indicated and inferred resources of lithium oxide (grade 1.06% or above in accordance with the standard under the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves) priced at US$500 per ton). The Company may issue restricted CHNR shares at a discount to the market price to secure a portion of the required capital. On April 14, 2023, the Company announced that it completed its due diligence investigation with satisfactory results and decided to proceed with the Acquisition. The Company paid an aggregate of $35 million by way of promissory notes (instead of cash) as a deposit on April 21, 2023, and will pay an aggregate of $140 million by way of promissory notes and/or cash as an initial installment.

Completion of the Acquisition is contingent upon the satisfaction of a number of conditions, including, among other things, the issuance of independent technical reports, the actual quantity of qualified lithium oxide metal resources proven or estimated to exist in each mining area covered by the relevant report, and the Company’s full settlement of the purchase consideration in cash and restricted shares. There is no guarantee that the Acquisition will close or be completed at the anticipated valuation and terms, or at all.

On December 22, 2023, the Company entered into an amendment agreement (the “Amendment Agreement”) to the sale and purchase agreement dated as of February 27, 2023 by and among Feishang Group and Top Pacific (China) Limited (together, the “Sellers”), and the respective beneficial owner of the Sellers, Mr. Li Feilie and Mr. Yao Yuguang with the parties thereto. As the Sellers are still in the process of satisfying conditions precedent to the closing of the acquisition in accordance with the Zimbabwe SPA, including but not limited to obtaining requisite governmental approvals, the parties entered into the Amendment Agreement to extend the long stop date for closing the acquisition from December 31, 2023 to December 31, 2024.

The foregoing description of the Zimbabwe SPA, and the Amendment Agreement thereto, is only a summary and is qualified in its entirety by reference to the sale and purchase agreement dated February 27, 2023, and the amendment agreement to the sale and purchase agreement dated December 22, 2023, by and among the Company, Feishang Group Limited, Top Pacific (China) Limited, Li Feilie, and Yao Yuguang, a copy of each of which is incorporated by reference as Exhibit 4.17 and Exhibit 4.20 to this annual report.

25 

Acquisition and Sale of PST Technology

We diversified our business by entering the environmental protection sector, which provides compelling synergies with our current operations, through the acquisition of PST Technology. On July 27, 2021, the Company entered into a Sale and Purchase Agreement with Li Feilie, pursuant to which the Company issued three million restricted common shares, no par value, and transferred 120 million shares of FARL, as well as approximately CNY10.3 million (US$1.5 million), to Feishang Group, in exchange for all outstanding shares of PST Technology and the transfer to the Company of approximately CNY130.0 million (US$18.4 million) of PST Technology’s outstanding debt previously owed to Mr. Li, which debt was eliminated upon consolidation. PST Technology, through its wholly owned subsidiaries, owns a 51% equity interest in Shanghai Onway. Shanghai Onway is principally engaged in the development of rural wastewater treatment technologies, the provision of equipment and materials for rural wastewater treatment, undertaking EPC projects and public-private partnership (“PPP”) projects in relation to rural wastewater treatment, and the provision of consulting and professional technical services. The total value of the consideration that the Company provided to Mr. Li was approximately CNY104.1 million (US$14.7 million), which amount was a 20% discount to the valuation (including the assigned debt) of PST Technology provided by an independent valuation firm.

On July 28, 2023, the Company entered into a Sale and Purchase Agreement with Feishang Group Limited (“Feishang Group”). Pursuant to the agreement, the Company agreed to sell 100% equity interest of PST Technology to Feishang Group, together with PST Technology’s outstanding payable owed to the Company, for consideration of approximately CNY95,761,119 comprising: (i) CNY -34,197,300, the fair value of 100% equity interest of PST Technology as determined by the independent valuation report dated July 28, 2023; (ii) CNY 129,958,419, the book value of PST Technology’s outstanding payable owed to the Company.

PST Technology, through its wholly owned subsidiaries, owns a 51% equity interest in Shanghai Onway and Shanghai Onway’s subsidiaries which are principally engaged in the development of rural wastewater treatment technologies, the provision of equipment and materials for rural wastewater treatment, undertaking EPC and PPP projects in relation to rural wastewater treatment, and the provision of consulting and professional technical services. After PST Technology’s disposition, the Company discontinued the operation in wastewater treatment segment and continue engaging in the exploration and mining business.

Acquisition of FARL Shares

On August 17, 2020, we acquired 120 million shares of FARL, a company that is traded on the main board of the Hong Kong Stock Exchange under ticker 1738, representing approximately 8.7% of the outstanding equity of that company. On August 17, 2020, the Company entered into a sale and purchase agreement with Feishang Group pursuant to which the Company issued 9,077,166 of the Company’s common shares, no par value, to Feishang Group, in exchange for 120 million shares of FARL, with an approximate aggregate value of HK$87,522,000 (determined at a price of HK$1.006 per share, representing the average closing price of FARL on the five trading days before August 17, 2020, adjusted for a 27.5% discount based on an independent valuation report). Feishang Group is the largest stockholder in the Company, and is wholly owned by Mr. Li Feilie, who also beneficially owns 53.53% of the outstanding equity of FARL. For more information, see “Item 7.B. – Major Shareholders And Related Party Transactions – Related Party Transactions – Acquisition of FARL Shares in Exchange for Newly Issued Company Shares.” The 120 million shares of FARL were transferred as part of the consideration for the acquisition of all the outstanding shares of PST Technology. See, “Item 4.A. Information on the Company - History and Development of the Company — Acquisition and Sale of PST Technology.”

From Inception Until 2006Exploration Activities in Inner Mongolia

China Resources was incorporated as Magenta Corp. on January 15, 1986, in the State of Nevada. China Resources had no operating business until control of it wasIn November 2017, we acquired in December 1994, by the former shareholders of CHNR, who exchanged all of the issued and outstanding shares of capital stock of CHNR for 108,000 shares of China Resources' common stock. As a result of the acquisition, the former shareholders of CHNR acquired 90% of the then issued and outstanding shares of common stock of China Resources, and CHNR became a wholly owned subsidiary of China Resources. CHNR was incorporated in the British Virgin Islands on December 14, 1993.

On December 9, 2004, China Resources merged with and into CHNR (the “Redomicile Merger”). The Redomicile Merger was consummated through an exchange of shares of China Resources for shares of CHNR on a one-for-one basis. As a result of the Redomicile Merger, the Company became domiciled in the British Virgin Islands and CHNR succeeded to the rights and obligations of China Resources under its existing agreements and relationships. Prior to the Redomicile Merger, the Company’s common shares were traded on the NASDAQ Capital Market under the symbol “CHRB”. Following the Redomicile Merger, the trading symbol was changed to “CHNR”.

Until 2006, the Company has sought, acquired and operated various business opportunities that management believed could be operated profitably. From 2003 until 2006, the Company operated an advertising, promotion and public relations business, which was disposed of in July 2006.





Reverse Acquisition of Feishang Mining

On February 3, 2006, the Company consummated the acquisition of all of the issued and outstanding capital stock of FeishangBayannaoer Mining (the “Acquisition”). Feishangfor a purchase price of CNY716,900. Bayannaoer Mining beneficially owns 100%holds an exploration permit issued by the Land and Resources Department of Inner Mongolia Autonomous Region covering the Moruogu Tong Mine, located in Wulatehouqi, Bayannaoer City, Inner Mongolia. The exploration permit evidences Bayannaoer Mining’s right to explore for minerals at the Moruogu Tong Mine. Initial results of the exploration program indicate the presence of lead and silver, with the prospect that further surveying and exploration may indicate the presence of other ores such as copper. We anticipate that our working capital stock of Wuhu Feishang, a company established under the laws of the PRC, which is principally engaged in the mining of zinc, iron and other minerals for distribution in the PRC. We acquired the capital stock of Feishang Mining from Feishang Group Limited (“Feishang Group”), a British Virgin Islands company. Mr. Li Feilie, our Chief Executive Officer and Chairman, is the sole beneficial owner of Feishang Group. In considerationexpenditures for our receipt of the shares of Feishang Mining, the Company issued 9,980,593 of its common shares to Feishang Group, representing approximately 86.4% of the Company’s then issuedexploration activities will be funded by non-interest-bearing loans from our affiliates and outstanding common shares (after giving effectfunds provided pursuant to the exchangeCooperation Agreement. See “Item 4.B. – Information on The Company – Business Overview – Metal Exploration Activities” below for more information and a discussion of 320,000 outstanding preferred shares for 320,000 common shares), and issued to Feishang Group warrants (the "Warrants") to purchase an additional 4,500,000 common shares. Ching Lung Po, director, Chief Executive Officer and Chairman of the Company resigneddevelopments at the closing of the Acquisition, and Li Feilie, Chairman of Feishang Mining, was appointed as director, Chief Executive Officer and Chairman of the Company. The Company’s other directors and executive officers were not changed as a result of the Acquisition.Moruogu Tong Mine.

The Warrants entitled the holder to purchase: 2,000,000 common shares at an exercise price of $4.00 per share for a period of two years from the closing date; 1,500,000 common shares at an exercise price of $4.50 per share for a period of three years from the closing date; and 1,000,000 shares at an exercise price of $5.00 per share for a period of four years from the closing date. The Warrants were fully exercised by Feishang Group, our principal shareholder, and the Company received gross proceeds of US$8,000,000, US$6,750,000 and US$5,000,000 in connection therewith during the years ended December 31, 2008, 2009 and 2010, respectively.

Non-ferrous Metal Exploration and Mining Activities

Wuhu Feishang was established as a Sino-foreign joint stock limited liability company between Wuhu City Feishang Industrial Development Company Limited (“WFID”) (50%) and Feishang International Holdings Limited (“FIH”) in June 2002 with tenure of 20 years from the date of its business license.The tenure can be extended by agreement between the joint venture partners with the necessary approval from the relevant government agencies. The registered capital of Wuhu Feishang is CNY12 million (US$1.85 million), of which CNY6 million (US$0.92 million) was contributed by each of WFID and FIH. In May 2003, Wuhu Feishang acquired the entire business of Anhui Fanchang Zinc and Iron Mine, a state-owned enterprise (“Anhui Fanchang”). In April 2005, WFID and FIH transferred their interests in Wuhu Feishang to Feishang Mining, at cost, and since the date of such transfer, Feishang Mining has been the owner of 100% of the capital stock of Wuhu Feishang.

Yunnan Mining was formed in January 2008 as a wholly-owned subsidiary of Wuhu Feishang with a registered capital of CNY50 million (US$7.70 million). In October 2009, Yunnan Mining acquired exploration rights to the Baiguochong Mine. The Baiguochong Lead-Zinc Mine is located in E Shan Town, Fanchang County, Anhui Province in the PRC, approximately six kilometers south of Fanchang County. On October 8, 2014, in an internal group restructuring, Wuhu Feishang transferred its 100% interest in Yunnan Mining (Including Feishang Management, a wholly owened subsidiary of Yunnan Mining) to Yangpu Shuanghu for consideration of CNY35 million (US$5.39 million).

Yangpu Shuanghu was established as a limited liability company in May 2004 under the laws of the PRC with an initial registered capital of CNY1 million (US$0.15 million) by Wu Tianping and Zhu Zheng, unrelated parties. In March 2008, Wu Tianping and Zhu Zheng transferred their respective equity interests in Yangpu Shuanghu to Zhang Huachun and Yang Haibi, for total consideration of CNY1 million (US$0.15 million). In July 2008, Zhang Huachun and Yang Haibi transferred their respective equity interests in Yangpu Shuanghu to Feishang Yongfu, related parties, at a total consideration of CNY1 million (US$0.15 million), and since the date of such transfer, Feishang Yongfu has been the owner of 100% of the paid-up capital of Yangpu Shuanghu.

Yangpu Lianzhong was established in January 2008 with a registered capital of US$16.37 million (CNY106.27 million) which is a wholly owned by China Coal, a Hong Kong company established in January 2008. Yangpu Lianzhong is currently dormant following disposition of two unconsolidated investees in 2010.

Other MattersForward-Looking Statements

On December 31, 2013,This annual report contains statements that constitute forward-looking statements within the Boardmeaning of Directors approvedthe U.S. federal securities laws. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. For example, words such as “may,” “will,” “should,” “estimates,” “predicts,” “possible,” “potential,” “continue,” “strategy,” “believes,” “anticipates,” “plans,” “expects,” “intends,” and similar expressions are intended to identify forward-looking statements. These statements appear in a conditional special interim dividendnumber of places in this annual report and include, without limitation, statements regarding the belief and current expectations of the Company, its directors or its officers with respect to the shareholdersCompany’s policies regarding its business development, investments, dispositions, financings, conflicts of CHNR satisfiedinterest and other matters, and trends affecting the Company’s financial condition or results of operations. Forward-looking statements are not a guarantee of future performance and involve risks and uncertainties, and actual results may differ materially from those in the forward-looking statement as a result of various factors. Among the risks and uncertainties that could cause our actual results to differ from our forward-looking statements are:

•uncertainties regarding the governmental, economic and political circumstances in the PRC;

•the impact on the Company’s financial position, growth potential and business of the sale of PST Technology and Shanghai Onway specifically;

•uncertainties related to the Company’s ability to identify potential partners or acquisition targets as it considers strategic alternatives in other non-natural resources sectors;

•uncertainties associated with metal price volatility;

•uncertainties concerning the viability of mining and estimates of reserves at the Company’s Moruogu Tong Mine in Inner Mongolia;

•uncertainties regarding our ability to acquire a mining permit and to extract mineral reserves located in the Moruogu Tong Mine in an economically feasible manner;

•uncertainties related to our ability to fund operations and capital expenditures;

uncertainties relating to the acquisition of Williams Minerals that were not discovered by wayus through our due diligence investigation; 

•uncertainties related to the completion of the acquisition of Williams Minerals which is conditional upon satisfaction or waiver of various conditions;

•failure to complete the acquisition of Williams Minerals may have a material adverse effect on the Company’s business, financial condition and results of operations;

•uncertainties related to the realization of the anticipated benefits associated with it;

•the potential lack of appetite for the Company’s current holdings as consideration for a transaction;

•uncertainties related to geopolitical events and conflicts, such as the conflict between Russia and Ukraine;

•uncertainties regarding the impact of climate change on our operations and business;

•uncertainties related to possible future increases in operating expenses;

•the fluctuations of interest rates and foreign exchange rates;

•uncertainties related to the political situation between the PRC and the United States, and potential negative impacts on companies with operations in the PRC that are listed on exchanges in the United States; and

•other risks detailed from time to time in the Company’s filings with the SEC, including without limitation the information set forth in Item 3.D. of this annual report under the heading “Risk Factors.”

vi 

With respect to forward-looking statements that include a statement of a distributionunderlying assumptions or bases, the Company cautions that, while it believes such assumptions or bases to be reasonable and has formed them in specie ofgood faith, assumed facts or bases almost always vary from actual results, and the entire issued share capital of Feishang Anthracite to all shareholders of CHNR in proportion to their respective shareholdings in CHNRdifferences between assumed facts or bases and actual results can be material depending on the Distribution Record Date. The Distribution became unconditional upon successful listingcircumstances. When, in any forward-looking statement, the Company, or its management, expresses an expectation or belief as to future results, that expectation or belief is expressed in good faith and is believed to have a reasonable basis, but there can be no assurance that the stated expectation or belief will result or be achieved or accomplished. We qualify all of our forward-looking statements by waythese cautionary statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of introduction onnew information, future events or otherwise, except as required by law. You should read this annual report and the Main Board ofdocuments that we reference in this annual report completely and with the Hong Kong Stock Exchange of Feishang Anthracite on January 22, 2014.understanding that our actual future results may be materially different from what we expect.

The Company has not been a party to any bankruptcy, receivership or similar proceedings, trade suspensions or cease trade orders by any regulatory authority.Market and Industry Data





The Company’s executive offices are located at Room 2205, 22/F, West Tower, Shun Tak Centre, 168-200 Connaught Road Central, Sheung Wan, Hong Kong, telephone +852 28107205. The Company does not currently maintain an agent in the United States.

B.

Business Overview

Following the January 2014 Spin-OffThis annual report includes market, economic, and listing on the Main Board of the Hong Kong Stock Exchange of the shares of Feishang Anthracite, which had operated our coal mining and related businesses, we intend to continue our acquisition and exploitation of mining rights, including the exploration, mineral extraction, processing and sales of iron, zinc and other nonferrous metals extracted or produced at mines primarily located in Anhui Province in the PRC,industry data as well as certain statistics and information relating to our operationbusiness, markets, and other industry data, which we obtained or extrapolated from industry publications, generated through internal estimates, our review and analysis of related businesses. We conductmarket conditions, surveys, customer feedback, and reports provided by various statistics providers, market research organizations, and others. While we believe that such data is reliable, we have not independently verified such data and cannot guarantee the accuracy or completeness thereof. Additionally, we cannot assure you that any of the assumptions underlying these activities throughstatements are accurate or correctly reflect our indirect wholly-owned subsidiary, Wuhu Feishang.

Prior to November 2013, we conducted exploration and mining operations at four non-ferrous metals mines located in Anhui Provinceposition in the industry, and not all of our internal estimates have been verified by any independent sources. Furthermore, we cannot assure you that a third party using different methods to assemble, analyze, or compute market data would obtain the same results.

vii

PART I

ITEM 1.IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

Not applicable.

ITEM 2.OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3.KEY INFORMATION

The PRC and we submitted our applicationgovernment has significant authority to renewexert influence on the exploration rights for threeability of these mines on their expiry. In November 2013, the Fanchang County Bureau of Land and Resources redesignated the Sichong Mine, the Baiguochong Mine and the Luojiachong Mine as exploration restricted areas. As a result, the Company’s exploration rights at these mines were not renewed and further exploration activities at these mines have ceased.

We currently hold mining rights that allowChina-based company, like us, to mine, processconduct its business, accept foreign investments or be listed on a U.S. stock exchange. We also face risks associated with recent statements and sell non-ferrous metals extractedregulatory actions by the PRC government, including those related to regulatory approvals of offshore securities offerings, anti-monopoly regulatory investigations and actions, cybersecurity and data privacy compliance. See “Item 4. Information on the Company – 4.A. History and Development of the Company – Recent Regulatory Development” for more information about these new laws and regulations. If the CSRC, CAC or producedother PRC regulatory agencies determine that prior approval is required for any of our offerings of securities overseas or maintenance of the trading status of the Common shares, we cannot guarantee that we will be able to obtain such approval in a timely manner, or at Yangchong Mine located in Anhui Province inall. The CSRC, CAC or other PRC regulatory agencies may also take actions requiring us, or making it advisable for us, not to proceed with such offering or maintain the PRC. Historically,trading status of our common shares. If we proceed with any of such offering or maintain the trading status of our common shares without obtaining the CSRC’s, CAC’s or other PRC regulatory agencies’ approval to the extent it is required, or if we are unable to comply with any new approval requirements which might be adopted for offerings that we have extractedcompleted, we may face regulatory actions or produced iron, zinc, micaceous oxideother sanctions from the CSRC, CAC or other PRC regulatory agencies. These regulatory agencies may impose fines and sulphur concentrates at Yangchong Mine. However, we produced no zincpenalties on our operations in 2013, 2014China, limit our ability to pay dividends outside of China or 2015 due toaccept foreign investments, delay or restrict the inferior qualityrepatriation of zinc at current mining zones; and we produced no micaceous oxide in 2013, 2014the proceeds from offering of securities overseas into China or 2015 because ittake other actions that could not be produced and soldhave a material adverse effect on a profitable basis. Sales of sulphur conventrates are not material to our business, financial condition, results of operations.  Due to the depressed market price for iron, it is not currently economical to conduct mineral extraction at Yangchong Mine,operations and extraction was temporarily suspended on December 27, 2015.

We maintain an inventory of iron concentrates and zinc for sale, from time to time, as warranted by market conditions or as otherwise necessary. We are also in the early stages of exploration for additional mineable ore at Yangchong Mine. In March 2016, we engaged Anhui Province Mine Geology Bureau No. 2 Exploration Brigade to survey geology and mineral resources within our licensed zones at Yangchong Mine. Management believes that zinc can currently be mined on a profitable basis and hopes that the survey will confirm that there are additional mineral reserves, including zinc, that can be extracted from Yangchong Mine at costs that justify extraction in light of prevailing market prices for metals. However, the Company cannot accurately predict whether the outcome of the survey will be positive, or whether the outcome of the suvey will justify the expenditure of additional resources to pursue mineral extraction.

Although management expects to resume mineral extraction at current zones of Yongchong Mine when market conditions improve, we cannot predict when market conditions will improve; and the continued depressed market price for iron may adversely affect the results of our operations.  In addition, minable ore at Yongchong Mine will likely be depleted within approximately one year following resumption of extraction.

Management is also exploring new businesses opportunities to contribute to revenues and enhance shareholder values.


BUSINESS SEGMENT - Mining of Iron, Zinc and Other Non-Ferrous Metals

Mining operations include the exploration for, and extraction, production and sale of, non-ferrous metals. Our metal mining operations are conducted by Wuhu Feishang, a PRC company that is wholly-owned by Feishang Mining. Wuhu Feishang is principally engaged in the mining of zinc, iron, and other minerals and nonferrous metals, and their sale in the PRC.

Industry Overview of Our Major Products

Iron

Iron (chemical element symbol Fe) is a lustrous, silvery soft metal. It is the most abundant metal in metallic meteorites. Iron and iron alloys are the most common source of ferromagnetic materials in everyday use. Iron ore is one of the key compounds for producing crude steel which is used mainly by the infrastructure, real estate, shipbuilding and automobile sectors. Most of the world’s production of iron is concentrated in Australia, Brazil, the PRC, India and South Africa, which together account for over 70% of the world’s total.

 In 2015, iron ore price slumped 45%. Iron ore companies including BHP Billiton Limited (Australia), Rio Tinto Plc (Australia) and Companhia Vale do Rio Doce (Brazil) still maintained a large number of production and continued to compress costs. The trend of global macroeconomic decelerated growth also led to the iron ore oversupply. Since major exporters of iron ore suffered large currency devaluation, the cost of iron ore exports was decreased. In addition, the strong U.S. dollar also put downward pressure on price of iron ore.





China produced 1,381 million tonnes of iron-ore in 2015, decreased by 8.8% compared with 2014. China imported 952.7 million tonnes of iron ore in 2015, increased by 2.2% from 932.5 million tonnes in 2014. According to the data disclosed by the China Iron and Steel Association (CISA), the average CIF price of the imported iron ore with grade 62% was US$55.0 (CNY357) per tonne, down US$45.4 (CNY295) per tonne or 45.2% from 2014.

Zinc

Zinc (chemical element symbol Zn) is a silvery metal that quickly tarnishes to a blue-gray appearance and is ideal for anticorrosion, as well as heat and electricity conduction. Since zinc has a relatively high place in the galvanic series of metals and consequently demonstrates excellent resistance to atmospheric corrosion, the major application of zinc is in galvanizing – a zinc coating on steel to prevent corrosion, which accounts for approximately 50% of the total world zinc consumption. Zinc is also the principal material used in dry batteries. Other applications of zinc include production of brass, die-casting zinc annoy, zinc oxide, etc. Zinc products are widely used in the infrastructure, housing, communication, household appliance and automobile sectors. Most of the world’s production is concentrated in Australia, Canada, China and Peru, which together account for 60% of the world’s total. China is the world’s largest zinc producing and consuming country. We produced no zinc in 2013, 2014 or 2015 due to the inferior quality of zinc at current mining zones.

The following table shows the refined production, consumption and prices of zinc in China over the past five years:

 

 

2011

 

2012

 

2013

 

2014

 

2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Metal production (in thousand tonnes)

 

 

5,344

 

 

4,850

 

 

5,300

 

 

5,827

 

 

6,155

 

Consumption (in thousand tonnes)

 

 

5,200

 

 

5,350

 

 

5,950

 

 

6,421

 

 

6,486

 

Average price (CNY/ tonne)

 

 

16,922

 

 

15,249

 

 

15,178

 

 

16,181

 

 

15,169

 

———————

Source: China Non-ferrous Metal Industry Association and ILZSG

Micaceous Iron Oxide

Micaceous Iron Oxide (MIO) (chemical compound symbol Fe2O3) is a crystalline form of iron oxide that differs from the more familiar red, yellow, and brown forms of iron oxide pigments. Like other forms of iron oxide, MIO is a very inert material. It is insoluble in water, organic solvents, and alkalis, and is only slightly soluble in strong acids at elevated temperatures. It is un-reactive to most chemicals and is heat stable up to its melting point of over 1,000 degrees centigrade and is non-toxic, non-oxidizing, non-corrosive, and non-flammable. As a result of its properties, the use of coatings containing MIO pigments is becoming increasingly popular in manufacturing and industries, and for use in products such as durable antiseptic coating paint, primer and finish paint on steel structures. We produced no micaceous iron oxide in 2013, 2014 and 2015.

Wuhu Feishang

Overview of Wuhu Feishang

Wuhu Feishang's principal activity is the mining of zinc, iron and other minerals for distribution in the PRC. Wuhu Feishang currently operates a mine located in Fanchang County, Wuhu City, Anhui Province, the PRC, for which it has acquired mining rights: the Yangchong Mine contains iron and zinc minerals. The mine produced approximately 28,100 tonnes of iron and nil tonnes of zinc in 2014, and approximately 18,600 tonnes of iron and nil tonnes of zinc in 2015. Wuhu Feishang’s acquisition of the entire business of Anhui Fanchang in May 2003, included without limitation, the mining rights to Yangchong Mine, and Zaoyuan Mine which ceased operation in October 2009 due to depletion of all of the mineral ore,prospects, as well as the propertiestrading price of the Common shares.

The PRC government may also intervene with or influence our operations as it deems appropriate to further regulatory, political and societal goals. The PRC government has recently published new policies that affected various industries, and we cannot rule out the possibility that it will in the future release regulations or policies regarding our industry that could adversely affect our business, financial condition and results of operations. While we believe that our business operations comply with relevant PRC laws and regulations currently in force in all material respects, we cannot guarantee that new rules or regulations promulgated in the future will not impose any additional requirement on us or otherwise tighten the regulations on companies like us. Any such action, once taken by the PRC government, could cause the value of our securities to significantly decline or become worthless.

We also face risks associated with the Holding Foreign Companies Accountable Act, or the HFCA Act, which was enacted on December 18, 2020. Pursuant to the HFCA Act, as amended by the Consolidated Appropriations Act, 2023, or the HFCAA, if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspections by the PCAOB for two consecutive years, the SEC will prohibit our shares from being traded on a national securities exchange or in the over-the-counter trading market in the United States. On December 16, 2021, the PCAOB issued a report on its determinations that it was unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong, and our auditor was subject to that determination. On August 26, 2022, the PCAOB signed a Statement of Protocol with the CSRC and the processing facilitiesMinistry of Finance of the mines. Wuhu CityPRC, taking the first step toward opening access for the PCAOB to inspect and investigate registered public accounting firms headquartered in China completely. On December 15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination and removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms. Each year, the PCAOB will determine whether it can inspect and investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions. If PCAOB determines in the future that it no longer has full access to inspect and investigate completely accounting firms in mainland China or Hong Kong and we continue to use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed with the SEC, we would be identified as a Commission-Identified Issuer following the filing of the annual report on Form 20-F for the relevant fiscal year. There can be no assurance that we would not be identified as a Commission-Identified Issuer for any future fiscal year, and if we were so identified for two consecutive years, we would become subject to the prohibition on trading under the HFCAA and as a result, NASDAQ may determine to delist our securities. See “Item 3.D. Key Information – Risk Factors - Risks Relating to Our PRC Operations and Doing Business in the PRC - The PCAOB had historically been unable to inspect our auditor in relation to their audit work performed for our financial statements and the inability of the PCAOB to conduct inspections of our auditor in the past has deprived our investors with the benefits of such inspections.” and “- Risks Relating to Our PRC Operations and Doing Business in the PRC - Our common shares may be prohibited from trading in the United States under the HFCAA in the future if the PCAOB is unable to inspect or investigate completely auditors located in China. The delisting of our common shares, or the northwestern Yangtze River Deltathreat of their being delisted, may materially and adversely affect the value of your investment.”

1 

Transfers of Cash and Assets between Our Company and Our Subsidiaries

Cash and asset transfers through the Group are primarily attributed to shareholder loans from us to our subsidiaries. Our subsidiaries receive substantially all revenue in RMB, and the PRC or Hong Kong governments could prevent the RMB maintained in the PRC or Hong Kong from leaving, impose controls on its conversion into foreign currencies, restrict deployment of the RMB into the business of our subsidiaries and restrict the ability to pay dividends. Our PRC subsidiaries are permitted to pay dividends to their shareholders, and eventually to CHNR, only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. Such payment of dividends by entities registered in China is subject to limitations, which could result in limitations on the availability of cash to fund dividends or make distributions to holders of our securities. For example, our PRC subsidiaries are required to make appropriations to certain statutory reserve funds or may make appropriations to certain discretionary funds, which are not distributable as cash dividends except in the event of a solvent liquidation of the companies. See, “Item 3.D. Key Information – Risk Factors –Our PRC subsidiaries are subject to restrictions on paying dividends and making other payments to us.” There are no restrictions or limitations imposed by the Hong Kong government on the transfer of capital within, into and out of Hong Kong (including funds from Hong Kong to the PRC), except for the transfer of funds involving money laundering and criminal activities. However, there is no guarantee that the Hong Kong government will not promulgate new laws or regulations that may impose such restrictions in the future. To the extent cash in the business is in the approximate center of East China, approximately 384 kilometers from Shanghai. In August 2007, Wuhu Feishang acquired exploration rightsPRC or Hong Kong or our PRC or Hong Kong entities, the funds may not be available to a third mine – the Sichong Mine – but the exploration rights were not renewed after its expiration in 2013.

Wuhu Feishang’s principal activities are conducted in four areas – exploration, mineral extraction, ore processing and sales of processed material. Exploration includes conducting geologic surveys to determine the presence of minable ore, securing mining rights and preparing the minable areafund operations or for mineral extraction. Mining activities consist of opening of ore deposits, cutting and stopping (excavation in successive layers), mine transportation, and planning, designing and construction relating to mining operations. Ore processing is the stage in our operation through which ores are converted into nonferrous metal concentrates (zinc, iron, micaceous iron oxide grey and copper concentrates) as salable products. To produce metal concentrates, we segregate the useful components of ores from useless stones through physical (such as magnetic separation) or chemical methods, or a combinationother use outside of the two,PRC or Hong Kong due to interventions in or the imposition of restrictions and then collectlimitations on the useful metal components through a numberability of concentration methods.





The metallurgical process ofus or our iron and zinc concentrates products are identified below:

MINING CONSISTS OF:

Drilling → Blasting → Ore Drawing → Fragmentation Hauling → Hoisting Transportation

ORE PROCESSING CONSISTS OF:

Crushing → Grinding → Classifying → Flotation

IN THE CASE OF ZINC CONCENTRATES PRODUCT, THE FOLLOWING ADDITIONAL PROCESSES OCCUR FOLLOWING FLOTATION:

Pooling → Mineral Concentrate Dehydration → Finished Zinc Concentrates Product

IN THE CASE OF IRON CONCENTRATES PRODUCT, THE FOLLOWING ADDITIONAL PROCESSES OCCUR FOLLOWING FLOTATION:

Magnetic Separation → Finished Iron Concentrates Product

The metallurgical process of our micaceous iron oxide grey product is as follows:

Raw Ore → Crushing → Ball Milling → Classifying → Two Stages Separation → Swing Bed → Free Setting →
Baking → Powder Screening → Finished Micaceous Iron Oxide Grey Product

Our metal concentrates products are sold to downstream smelting companies for further smelting and refining into respective metals. Additional information relating to our salable products, the markets in which we participate and the determination of market prices is as follows:

Iron: Our iron concentrates product is sold to iron smelting plants located in Anhui Province, the PRC. The price of our iron concentrate is generally negotiated with reference to the regional average purchase price and the information announcedsubsidiaries by China Commodity Marketplace on its website (www.chinaccm.com).

Zinc: We neither produced nor sold zinc during 2015, 2014 or 2013. Historically, our zinc concentrates product is sold in its entirety to Huludao Zinc Industry Co., Ltd., a Shenzhen-listed company which is located in Huludao City, Liaoning Province, the PRC and which is primarily engaged in the zinc smelting business. The price of our zinc concentrates is generally set at 50% (to be adjusted by the grading of the product) of the monthly average price of “#0” electrolytic zinc announced by Shanghai Nonferrous Metals on its website (www.smm.com.cn).

Micaceous Iron Oxide:or Hong Kong governments to transfer cash. We neither produced nor sold MIO during 2015, 2014 or 2013. Historically, our MIO products are primarily sold to chemical and paint manufacturers in East China, Shanghai and Jiangsu Province,cannot assure you that the PRC for manufacturing various types of paints for ships, ocean-engineeringor Hong Kong governments will not intervene in or impose restrictions on our ability to make intercompany cash transfers.

All cash or asset transfers between us and pleasure boats. The price of our MIO is generally negotiated with reference to the demand and supply in the market and the price of competitors. We discontinued the production of MIO during 2012 due to the unsatisfactory economic return of MIO products.

The average selling prices per metric tonne of our major metal productssubsidiaries for each of the three years ended December 31, 2013, 2014 and 2015,2023, are set forth in the following table:

Major Product

 

2013

 

2014

 

2015

 

 

CNY/ MT

 

CNY/ MT

 

CNY/ MT

Iron concentrates (Grade 65% ~ 66%)

 

939

 

851

 

466

Zinc (based on zinc concentrates grade 42% ~ 44%)

 

N/A

 

N/A

 

8,009

Micaceous Iron Oxide Grey (Grade 160, 240, 320)

 

N/A

 

N/A

 

N/A


table below. The purpose of the outbound transfers, in the form of shareholder loans, was to pay off the subsidiaries’ expenses and provide working capital for the subsidiaries. The purpose of the inbound transfers, in the form of loan repayments, was to centralize the treasury function of the Company and our subsidiaries. There are no fixed repayment terms and we do not expect there to be any tax implications for such transfers. We did not make any capital contributions to, or receive any dividends from, our subsidiaries during these periods. Other than the assets and liabilities of the wastewater treatment business segment transferred to Mr. Li Feilie, our controlling shareholder, as the result of the sale of PST Technology which were accounted for as a deemed distribution of RMB20.38 million (US$2.88 million) to the controlling shareholder on July 28, 2024 with a corresponding deemed contribution from the controlling shareholder in the same amount, no transfers, dividends or distributions have been made to investors during these periods. We currently have not maintained any cash management policies that dictate the purpose, amount and procedure of cash transfers between the Company, our subsidiaries, or the investors. Rather, the funds can be transferred in accordance with the applicable laws and regulations in the PRC and other jurisdictions. PRC laws and regulations may restrict our ability to make dividends and distributions to investors, including U.S. investors.




    Year ended December 31, 
Transferor Transferee 2021  2022  2023  2023 
    HK$  HK$  HK$  US$ 
 
Outbound Transfers
                   
China Natural Resources, Inc. Feishang Mining  50,000   —   30,000   4,238 
China Natural Resources, Inc. China Coal  8,000   8,000   8,000   1,130 
China Natural Resources, Inc. Feishang Yongfu  8,000   8,000   38,000   5,368 
China Natural Resources, Inc. Feishang Dayun  8,000   8,000   38,000   5,368 
  Total  74,000   24,000   114,000   16,104 
                   
Inbound Transfers
Feishang Mining China Natural Resources, Inc.  —   —   —   — 
China Coal China Natural Resources, Inc.  —   —   —   — 
Feishang Yongfu China Natural Resources, Inc.  30,000   —   —   — 
Feishang Dayun China Natural Resources, Inc.  30,000   —   —   — 
  Total  60,000   —   —   — 


A.[Reserved]

B.Capitalization and Indebtedness

  Not applicable.

C.Reasons for the Offer and Use of Proceeds

  Not applicable.

D.Risk Factors

The following table summarizesWe are not a Chinese operating company but a BVI holding company with operations conducted by our subsidiaries established in the production quantityPRC and sales quantityHong Kong, and which owns equity interests, directly or indirectly, of the operating subsidiaries. See “Item 4.C. INFORMATION ON THE COMPANY – Organizational Structure” for further information regarding our subsidiaries’ names, places of incorporation, and equity ownership. We are subject to legal and operational risks associated with being based in the PRC and Hong Kong and having all of our metal products for eachoperations in the PRC, discussed in greater detail below. The legal and operational risks associated with being based in and having operations in mainland China also apply to operations in Hong Kong and Macao. While entities and businesses in Hong Kong and Macao operate under different sets of laws from mainland China, the legal risks associated with being based in and having operations in mainland China could apply to a company’s operations in Hong Kong and Macao, if the laws applicable to mainland China become applicable to entities and business in Hong Kong and Macao in the future. As of the years endeddate of this annual report, we do not have material operations in Hong Kong or Macao. It is management’s understanding that there are no restrictions, limitations, rules, or regulations under Hong Kong law that are commensurate to those of the PRC with respect to (i) payment of dividends and other distributions from the Company’s subsidiaries to the Company, (ii) currency conversion that may affect payment of dividends or foreign currency denominated obligations, (iii) offshore financing activities, (iv) anti-monopoly laws, or (v) data protection and cybersecurity, that have impacted or may impact the Company’s ability to conduct its business, accept foreign investments, or list on a U.S. or other exchange. The Chinese government may intervene or influence the operation of our Hong Kong subsidiaries and PRC subsidiaries and exercise significant oversight and discretion over the conduct of their business and may intervene in or influence their operations at any time or may exert more control over offerings conducted overseas and/or foreign investment in China-based issuers, which could result in a material change in our operations and/or the value of our common shares. Further, rules and regulations in the PRC can change quickly with little advance notice, and any actions by the Chinese government to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless.

Recent statements and regulatory actions by the Chinese government, such as those related to data security or anti-monopoly concerns, could have a significant impact on our ability to conduct our business, accept foreign investments, or maintain our listing on the Nasdaq Capital Market (“Nasdaq”) or list on another U.S. or foreign exchange. There have not been comparable developments in Hong Kong yet, but such developments may occur. For example, on June 10, 2021, the Standing Committee of the PRC National People’s Congress promulgated the PRC Data Security Law, which took effect in September 2021. The PRC Data Security Law imposes data security and privacy obligations on entities and individuals carrying out data activities and introduces a data classification and hierarchical protection system based on the importance of data in economic and social development, and the degree of harm it will cause to national security, public interests, or legitimate rights and interests of individuals or organizations when such data is tampered with, destroyed, leaked, illegally acquired or used. The PRC Data Security Law also provides for a national security review procedure for data activities that may affect national security and imposes export restrictions on certain data an information. We believe that our business is not in an industry related to national security, but we cannot preclude the possibility that PRC government authorities may publish explanations contrary to our understanding or broaden the scope of such reviews in the future, in which case our future activities may be closely scrutinized or prohibited. Moreover, given the PRC authorities have significant discretion in interpreting and applying their laws, rules and regulations, if we undertake a transaction in the PRC that involves data security or an industry that the PRC government is focusing on, we could be subject to review by the China Securities Regulatory Commission (“CSRC”), Cyberspace Administration of China (“CAC”) or other applicable governmental agencies. Such review could be time consuming, could cause us to incur significant costs in responding to such agencies and/or rectifying any potential issues noted by such agencies or completely abandon a potential transaction. Further, on July 6, 2021, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued the Opinions on Strictly Cracking Down on Illegal Securities Activities in Accordance with the Law. These opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision on overseas listings by China-based companies and proposed to take effective measures, such as promoting the construction of relevant regulatory systems to deal with the risks and incidents faced by China-based overseas-listed companies. On February 17, 2023, the CSRC, promulgated the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (“Overseas Listing Trial Measures”) and five relevant guidelines, which became effective on March 31, 2023. Pursuant to the Overseas Listing Trial Measures, a filing-based regulatory system will be applied to both “direct” and “indirect” overseas offering or listing of PRC domestic companies. As such, in connection with our future overseas securities offering or listing, we may be required to fulfill filing, reporting procedures or other administrative procedures with the CSRC or other PRC government authorities. In addition, we cannot guarantee that new rules or regulations promulgated in the future will not impose any additional requirement on us or otherwise to tighten the regulations on PRC companies seeking overseas offering or listing. Any failure to obtain the relevant approval or complete the filings and other relevant regulatory procedures may subject us to regulatory actions or other penalties from the CSRC or other PRC regulatory authorities, which may have a material adverse effect on our business, operations or financial conditions. See “Item 3.D. KEY INFORMATION – Risk Factors – Risks Relating to Doing Business in China – The approval of or filing with the CSRC or other PRC government authorities may be required in connection with our offshore offerings under PRC law, and, if required, we cannot predict whether or for how long we will be able to obtain such approval or complete such filing.”

3 

The Public Company Accounting Oversight Board (“PCAOB”) may determine that it is unable to inspect our auditor in relation to its audit work to its satisfaction, and our common shares may be prohibited from trading in the United States under the Holding Foreign Companies Accountable Act, as amended by the Consolidated Appropriations Act, 2023 (“HFCAA”), if the PCAOB is unable to inspect or fully investigate our auditor for two consecutive years. Our independent auditor, Ernst & Young Hua Ming LLP, was subject to the determinations announced by the PCAOB on December 31, 2011, 2012, 2013, 201416, 2021 that it was unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and 2015 included in continuing operations.

 

 

2011

 

2012

 

2013

 

2014

 

2015

 

Production quantity (in tonnes):

    

 

                

    

 

                

    

 

                

    

 

                

    

 

                

 

Iron concentrates (Grade 65% ~ 66%)

 

 

23,200

 

 

13,400

 

 

37,048

 

 

28,100

 

 

18,600

 

Zinc (based on zinc concentrates grade 42% ~ 44%)

 

 

1,160

 

 

100

 

 

—

 

 

—

 

 

—

 

Micaceous iron oxide – grey (Grade 160, 240, 320)

 

 

1,249

 

 

85

 

 

—

 

 

—

 

 

—

 

Sales quantity (in tonnes):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Iron concentrates (Grade 65% ~ 66%)

 

 

21,163

 

 

10,114

 

 

42,123

 

 

8,056

 

 

36,195

 

Zinc (based on zinc concentrates grade 42% ~ 44%)

 

 

1,013

 

 

258

 

 

—

 

 

—

 

 

131

 

Micaceous iron oxide – grey (Grade 160, 240, 320)

 

 

1,424

 

 

428

 

 

—

 

 

—

 

 

—

 


Yangchong Mine

Yangchong Mine is an underground mineHong Kong. In June 2022, we were identified by the SEC in its “conclusive list of issuers identified under the HFCAA,” indicating that we were among those companies formally subject to the delisting provisions of the HFCAA (a “Commission-Identified Issuer”). The PCAOB, the CSRC and PRC Ministry of Finance entered into a Statement of Protocol on August 26, 2022, designed to allow the PCAOB to fully investigate auditors located in Fanyang Town, Fanchang County, Anhui ProvinceChina. On December 15, 2022, the PCAOB issued a report vacating the previous determinations dated December 16, 2021. Accordingly, until such time as the PCAOB issues any new determination, we are not at risk of having our securities subject to a trading prohibition under the HFCAA because we do not expect to be identified as a Commission-Identified Issuer for a second consecutive year. If in the future the PCAOB determines it no longer can inspect or investigate completely our auditor because of a position taken by an authority in the PRC, the centrePCAOB will consider issuing a new determination.

An investment in our common shares involves a high degree of which has a geological coordinate EL 118°08’00”, NL 31°05’40”. The mine is approximately 4.2 kilometers westrisk and should be considered speculative. You should carefully consider the following risks set out below and other information before investing in our common shares. If any event arising from these risks occurs, our business, prospects, financial condition, results of Fanchang Countyoperations or cash flows could be adversely affected, the trading price of our common shares could decline and 13.5 kilometers southeastall or part of Digang Town. Accessyour investment may be lost.

Risk Factor Summary

Risks Relating to Our PRC Operations and Doing Business in the PRC

•Changes in China’s economic, political or social conditions or government policies could have a material and adverse effect on our business, financial condition and results of operations.

•

Uncertainties with respect to the PRC legal system could adversely affect us. 

•The PRC government may intervene or influence our operations at any time, or may exert more control over the China operations of an offshore holding company and offerings conducted overseas and foreign investment in China-based issuers, such as our PRC subsidiaries. Such control or influence may significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless.

•Changes in PRC laws and regulations may have a material and adverse effect on our business.

•PRC regulation of loans to and direct investment in PRC entities by offshore holding companies may delay or prevent us from making loans or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our ability to fund and expand our business.

•Inflation in the PRC, or a slowing PRC economy, could negatively affect our profitability and growth.

•Our PRC subsidiaries are subject to restrictions on paying dividends and making other payments to us.

•Governmental control of currency conversion may affect payment of any dividends or foreign currency denominated obligations, and it may adversely affect the value of your investment.

•The fluctuation of the Renminbi may materially and adversely affect your investment.

•The PRC SAFE regulations regarding offshore financing activities by PRC residents have undergone changes which may increase the administrative burden we face and create uncertainties that could adversely affect us, and a failure by our shareholders who are PRC residents to make any required applications and filings pursuant to such regulations may prevent us from being able to distribute profits and could expose us and our PRC resident shareholders to liability under PRC law.

•

The PCAOB may determine that it is unable to inspect our auditor in relation to its audit work performed for our financial statements to its satisfaction, and any inability of the PCAOB to conduct inspections over our auditor may affect our investors’ ability to benefit from such inspections.

•

Our common shares may be prohibited from trading in the United States under the HFCAA if the PCAOB is unable to inspect or fully investigate our auditor for two consecutive years. The delisting of our common shares, or the threat of their being delisted, may materially and adversely affect the value of your investment.

•PRC regulations establish complex procedures for some acquisitions conducted by foreign investors, which could make it more difficult for us to pursue growth through acquisitions in China.
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We and our PRC subsidiaries are required to maintain a series of licenses, permits, and approvals from PRC authorities to operate our business in the PRC, and failure to maintain or renew such licenses, permits, or approvals in a timely manner could materially affect our business.

•The approval of or filing with the CSRC or other PRC government authorities may be required in connection with our offshore offerings under PRC law, and, if required, we cannot predict whether or for how long we will be able to obtain such approval or complete such filing.

•Failure to comply with PRC regulations and other legal obligations concerning data protection and cybersecurity may materially and adversely affect our business, as we routinely collect, store and use data during the conduct of our business.

•We may be classified as a “resident enterprise” for PRC enterprise income tax purposes; such classification could result in unfavorable tax consequences to us and our non-PRC shareholders.

•Any failure to comply with PRC regulations regarding the registration requirements for employee stock incentive plans may subject the PRC plan participants or us to fines and other legal or administrative sanctions.

•Failure to make adequate contributions to mandatory social security plans as required by PRC laws may subject us to penalties.

•Enforcement of stricter labor laws and regulations may increase our labor costs.

•If the chops of our PRC subsidiaries are not kept safely, are stolen or are used by unauthorized persons or for unauthorized purposes, the corporate governance of these entities could be severely and adversely compromised.

Risks Relating to Our Mine Exploration Activities in Inner Mongolia

•The Moruogu Tong Mine is in the exploration stage.

•The northern part of Moruogu Tong Mine is currently being explored under an agreement that reduces our share in any future profits.

•Any estimates of the reserves contained in the Moruogu Tong Mine may be inaccurate.

•There are no assurances that we can produce minerals on a commercially viable basis.

•Volatility in the market prices of metals may adversely affect the results of our operations.

•We are subject to government regulations in various aspects of our exploration activities and our failure to comply with applicable government regulations could adversely affect us.

•We do not have binding agreements with customers to purchase any future output of metals.

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ESG issues, including those related to climate change and sustainability, may have an adverse effect on our business, financial condition, and results of operations, could damage our reputation, and may increase costs.

Risks Relating to the mine is via Province Road 321 approximately 40 kilometersSale of PST Technology

•We face risks associated with the divesture of our wastewater treatment segment.

Risks Relating to the Potential Closing of the Acquisition of Williams Minerals and the Timing of Such Closing

•There may be unforeseen risks relating to the Acquisition that were not discovered by us through our due diligence investigation prior to our Acquisition.

•Completion of the Acquisition is conditional upon satisfaction or waiver of various conditions. There can be no assurance that the conditions will be fulfilled or waived, or that the Acquisition will be completed

•Failure to complete the Acquisition may have a material adverse effect on the Company’s business, financial condition and results of operations.

•Even if the Acquisition is completed, we may fail to realize the anticipated benefits associated with it, those benefits may take longer to realize than expected, and we may encounter significant difficulties.

Risks Relating to Additional Acquisitions and Expansion into Other Sectors

•We may acquire other businesses or form joint ventures that could negatively affect our operating results, dilute our shareholders’ ownership, increase our debt or cause us to incur significant expense.

•Future acquisitions or strategic investments could be difficult to identify and integrate, divert the attention of management, disrupt our business, dilute shareholder value and adversely affect our business, results of operations, and financial condition.

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Because a majority of our management’s prior business experience has been limited to industries outside of other sectors that we are exploring, they may lack the necessary experience to assess a business combination with a target business in those industries.

•We may become subject to additional extensive and evolving regulatory requirements, noncompliance with which, or changes in which, may materially and adversely affect our business and prospects.

Risks Relating to Our Financial Condition and Business

•We have incurred losses from operations in each of the preceding three fiscal years of 2021, 2022, and 2023 and there is no assurance that we will generate profits from operations in the future.

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We will have to fund operating expenses from other sources until we are able to generate sufficient revenue to pay them.

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The loss of key personnel could affect our business and prospects.

•Any failure to maintain effective internal controls could have an adverse effect on our business, results of operations and the market price of our shares.

 Risks Relating to Foreign Private Issuer Status

•Because our assets are located outside of the United States and all of our directors and officers reside outside of the United States, it may be difficult for you to enforce your rights based on the U.S. federal securities laws against us or our officers and directors or to enforce a judgment of a United States court against us or our officers and directors in the PRC.

•Our status as a foreign private issuer results in less information being available about us than about domestic reporting companies.

•Due to our status as a foreign private issuer, we have adopted IFRS accounting principles, which are different from accounting principles under U.S. generally accepted accounting principles (“U.S. GAAP”).

•As a foreign private issuer we are not subject to certain requirements that other Nasdaq-listed issuers are required to comply with, some of which are designed to provide information to and protect investors.

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Due to an exemption from Nasdaq rules applicable to foreign private issuers, our related party transactions may not receive the type of independent review process that those of other Nasdaq-listed companies receive; the terms of these transactions are not negotiated at arm’s-length and may not be as favorable as could be obtained from unrelated parties.

Risks Relating to Our common shares

•You may experience dilution to the extent that our common shares are issued upon the exercise of outstanding warrants or other securities that we may issue in the future.

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Substantial future sales or perceived potential sales of our common shares in the public market could cause the price of our common shares to decline.

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Certain of the Selling Shareholders may acquire their common shares at a price that is less than the market price of the common shares in the future, may earn a positive rate of return even if the price of the common shares declines and may be willing to sell their common shares at a price less than shareholders that acquired common shares in the public market.

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The price at which common shares are quoted on Nasdaq may increase or decrease due to a number of factors, which may negatively affect the price of the common shares.

•Our principal beneficial owner and his affiliates control us through their share ownership; and their interests may differ from those of other shareholders.

•The rights of our shareholders are governed by BVI law, which may not be as favorable to shareholders as U.S. law, and our directors may take actions with which you disagree without first receiving shareholder approval.

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The elimination of monetary liability against our directors, officers and employees under our Articles and the indemnification of our directors, officers and employees may result in substantial expenditures by us and may discourage lawsuits against our directors, officers and employees.

•We may be classified as a passive foreign investment company, which could result in adverse U.S. federal income tax consequences to U.S. shareholders.

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Risks Relating to Our PRC Operations and Doing Business in the PRC

Changes in China’s economic, political or social conditions or government policies could have a material and adverse effect on our business, financial condition and results of operations.

Currently, all of our business operations are conducted in China. Accordingly, our business, results of operations, financial condition and prospects are affected by economic, political and social conditions in China generally and by continued economic growth in China as a whole.

China’s economy differs from Wuhu City. Yangchong Minethe economies of most developed countries in many respects, including the extent of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. In recent decades, the Chinese government has implemented a total mining areaseries of 0.186 square kilometers. The Yangchong Mine contains ironreform measures, including, among others, the utilization of market forces for economic reform and zinc.the establishment of improved corporate governance in business enterprises. In addition, the Chinese government also plays a significant role in regulating industry development and has extensive influence over China’s economic growth through allocating resources, foreign exchange control and setting monetary and fiscal policy.

The area’s mining history dates backgrowth of China’s economy has been uneven, both geographically and among various sectors of the economy, and the rate of growth has been slowing in recent years. Although growth of China’s economy remained relatively stable, there is a possibility that China’s economic growth may fluctuate or even decline in the near future. Some of the government measures may benefit the overall Chinese economy but may have a negative effect on us. For example, our financial condition and results of operations may be adversely affected by government control over capital investments or changes in tax regulations. Any stimulus measures designed to boost the Chinese economy may contribute to higher inflation, which could adversely affect our results of operations and financial condition. For example, certain operating costs and expenses, such as employee compensation and office operating expenses, may increase as a result of higher inflation.

Additionally, the PRC government may promulgate laws, regulations or policies that seek to impose stricter scrutiny over the current regulatory regime in certain industries or in certain activities. Furthermore, the PRC government has also recently indicated an intent to exert more oversight and control over overseas securities offerings and foreign investments in China-based companies. Any such actions may adversely affect our subsidiaries’ operations, and limit our ability to offer or continue to offer securities to investors and cause the value of our securities to decline or be worthless.

Uncertainties with respect to the early 1990s. An explorationPRC legal system could adversely affect us.

We conduct our business through our subsidiaries in China. Our operations in China are governed by PRC laws and development campaign was completedregulations. Our subsidiaries are generally subject to laws and regulations applicable to foreign investments in China. The PRC legal system is based on written statutes. Prior court decisions may be cited for reference but have limited precedential value.

PRC laws and regulations have significantly enhanced the protections afforded to various forms of foreign investments in China over the past several decades. However, recently enacted laws and regulations may not sufficiently cover all aspects of economic activities in China. In particular, because these laws and regulations are relatively new, and because of the limited volume of published decisions and their nonbinding nature, the interpretation and enforcement of these laws and regulations involve uncertainties.

The PRC government may intervene or influence our operations at any time, or may exert more control over the China operations of an offshore holding company and offerings conducted overseas and foreign investment in China-based issuers, such as our PRC subsidiaries. Such control or influence may significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless.

We conduct our business in China through our operating subsidiaries. Accordingly, our business, results of operations and financial condition may be influenced to a significant degree by Nanchang Engineering & Research Institutethe PRC political, economic and social conditions. The PRC government may intervene or influence our subsidiaries’ operations at any time, which could result in a material change in our operations and/or the value of Nonferrous Metalthe Company’s securities. We expect the Chinese government to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in 1991,China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless.

Additionally, the PRC government may promulgate laws, regulations or policies that seek to impose stricter scrutiny over current regulatory regime in certain industries or in certain activities. For instance, the PRC government has discretion over the business operations in China and may intervene with or influence specific industries or companies as it deems appropriate to further regulatory, political and societal goals, which could have a planned daily mining capacitymaterial and adverse effect on the future growth of approximately 100 tonnes of ore. Full scale ore production started in 1999,the affected industries and the dailycompanies operating in such industries. Furthermore, the PRC government has also recently indicated an intent to exert more oversight and control over overseas securities offerings and foreign investments in China-based companies. Any such actions may adversely affect our subsidiaries’ operations, and limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of our securities to decline or be worthless.

Changes in PRC laws and regulations may have a material and adverse effect on our business.

There are substantial uncertainties regarding the interpretation and application of PRC laws and regulations, including, but not limited to, the laws and regulations governing our business, or the enforcement and performance of our arrangements with customers in the event of the imposition of statutory liens, death, bankruptcy and criminal proceedings. Rules and regulations in China can change quickly with little advance notice. We and our current subsidiaries are, and any future subsidiaries will be, considered foreign persons or foreign-invested enterprises under PRC laws, and as a result, we are and will be required to comply with PRC laws and regulations applicable to foreign persons or foreign-invested enterprises. These laws and regulations may be subject to future changes, and their official interpretation and enforcement may involve substantial uncertainty. Exploration and mining capacity gradually increased to approximately 900 tonnes of ore in 2007.

Since all mineral resourcesoperations in the PRC are ownedsubject to environmental laws and regulations, and the imposition of more stringent environmental regulations may affect our ability to comply with, or our costs to comply with, such regulations. Such changes, if implemented, may adversely affect our business operations and may reduce our profitability. The effectiveness of newly enacted laws, regulations or amendments may be delayed, resulting in detrimental reliance by foreign investors. New laws and regulations that affect existing and proposed future businesses may also be applied retroactively. We cannot predict what effect the interpretation of existing or new PRC laws or regulations may have on our businesses.

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PRC regulation of loans to and direct investment in PRC entities by offshore holding companies may delay or prevent us from making loans or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our ability to fund and expand our business.

We are an offshore holding company conducting our operations in China. We may make loans to our PRC subsidiaries, or we may make additional capital contributions to our wholly foreign-owned subsidiaries in China. Any loans to our wholly foreign-owned subsidiaries in China, which are treated as foreign-invested enterprises under PRC law, are subject to PRC regulations and foreign exchange loan registration requirements. In addition, a foreign-invested PRC enterprise has limitations upon its uses of capital, including restrictions on such capital being: (i) directly or indirectly used for payments beyond the business scope of the enterprise or payments prohibited by relevant laws and regulations; (ii) used for the granting of loans to non-affiliated enterprises, except where expressly permitted in the foreign-invested PRC enterprise’s business license; and (iii) used for paying expenses related to the purchase of real estate that is not for self-use (except for foreign-invested real estate enterprises). We may also decide to finance our PRC subsidiaries by means of capital contributions, in which case the PRC subsidiary is required to register the details of the capital contribution with the local branch of the State Administration for Market Regulation and submit a report on the capital contribution via the online enterprise registration system to the Ministry of Commerce.

In light of the various requirements imposed by PRC regulations on loans to and direct investment in PRC entities by offshore holding companies, we cannot assure you that we will be able to complete the necessary government registrations or obtain the necessary government approvals or filings on a timely basis, if at all, with respect to future loans by us to our current PRC operating subsidiaries or with respect to future capital contributions by us to our current PRC operating subsidiaries. If we fail to complete such registrations or obtain such approvals, our ability to fund our PRC operations may be negatively affected, which could materially and adversely affect our liquidity and our ability to fund and expand our business.

Inflation in the PRC, or a slowing PRC economy, could negatively affect our profitability and growth.

While the PRC economy has experienced rapid growth, such growth has been uneven among various sectors of the economy and in different geographical areas of the country. Rapid economic growth can lead to growth in the money supply and rising inflation. If prices for our products and services rise at a rate that is insufficient to compensate for the rise in the costs of supplies and services, it may have an adverse effect on our profitability. In order to control inflation in the past, the PRC government has imposed controls on bank credit, limits on loans for fixed assets and restrictions on bank lending. As a result, domestic and global economic conditions may improve, and the markets we intend to serve may grow, at a lower-than-expected rate or even experience a downturn, adversely affecting our future profitability and growth.

Our PRC subsidiaries are subject to restrictions on paying dividends and making other payments to us.

We are a holding company incorporated in the BVI. Under BVI law, we may only pay dividends to investors, including U.S. investors, from surplus (the excess, if any, at the time of the determination of the total assets of our company over the sum of our liabilities, as shown in our books of account, plus our capital), and we must be solvent before and after the dividend payment in the sense that we will be able to satisfy our liabilities as they become due in the ordinary course of business, and the realizable value of assets of our company will not be less than the sum of our total liabilities, other than deferred taxes as shown in our books of account, and our capital. As a result of our holding company structure, dividends and other distributions to our shareholders, including U.S. investors, will depend primarily upon dividend payments from our subsidiaries. However, PRC regulations currently permit the payment of dividends only out of accumulated profits, as determined in accordance with PRC accounting standards and regulations. Our subsidiaries in China are also required to set aside a portion of their after-tax profits as certain reserve funds according to PRC accounting standards and regulations. The PRC government also imposes controls on the conversion of CNY into foreign currencies and the remittance of currency out of China. We may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currency. Furthermore, if our subsidiaries in China incur further debt in the future, debt covenants may restrict their ability to pay dividends or make other payments. If we or our subsidiaries are unable to receive dividends from our operating companies due to contractual or other limitations on the payment of dividends, we may be unable to pay dividends or make other distributions on our common shares.

Governmental control of currency conversion may affect payment of any dividends or foreign currency denominated obligations, and it may adversely affect the value of your investment.

The PRC government imposes controls on the convertibility of CNY into foreign currencies and, in certain cases, the remittance of currency out of the PRC. Shortages in the availability of foreign currency may restrict our ability to remit sufficient foreign currency to pay dividends, or otherwise satisfy foreign currency denominated obligations. Under existing PRC foreign exchange regulations, the CNY is currently convertible under the “current account,” which includes trade and service-related foreign exchange transactions, but not under the “capital account,” which includes foreign direct investment and loans, including loans we may secure from our onshore subsidiaries. Currently, our PRC subsidiaries may purchase foreign currency for settlement of “current account transactions,” without prior approval from SAFE by complying with certain procedural requirements. However, approval from appropriate governmental authorities is required where CNY is to be converted into foreign currency and remitted out of the PRC to pay capital expenses such as the repayment of bank loans denominated in foreign currencies.

The PRC government may also at its discretion restrict access to foreign currencies for current account transactions in the future. If the foreign exchange control system prevents us from obtaining sufficient foreign currency to satisfy our currency demands, we may not be able to pay certain of our expenses as they come due, or pay dividends or make other distributions to investors, including U.S. investors.

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See “Item 10.D. ADDITIONAL INFORMATION – Exchange Controls” for further details regarding exchange controls in the PRC.

The fluctuation of the Renminbi may materially and adversely affect your investment.

The exchange rate of the Renminbi against the U.S. Dollar and other currencies may fluctuate and is affected by, among other things, changes in the PRC’s political and economic conditions. As most of our operating expenses are denominated in Renminbi, or CNY, any significant revaluation of the Renminbi may materially and adversely affect our cash flows and financial condition. Additionally, if we convert our CNY into U.S. Dollars, to pay dividends on our common shares or for other business purposes, depreciation of the CNY against the U.S. Dollar would negatively affect the amount of U.S. Dollars we convert our CNY into. Conversely, to the extent that we need to convert U.S. Dollars we receive from an offering of our securities or otherwise into CNY for our operations, the appreciation of the CNY against the U.S. Dollar could have an adverse effect on our financial condition and result in a charge to our income statement and a reduction in the value of these U.S. Dollar denominated assets.

PRC SAFE regulations regarding offshore financing activities by PRC residents have undergone changes which may increase the administrative burden we face and create regulatory uncertainties that could adversely affect us, and a failure by our shareholders who are PRC residents to make any required applications and filings pursuant to such regulations may prevent us from being able to distribute profits and could expose us and our PRC resident shareholders to liability under PRC law.

In July 2014, SAFE promulgated the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Offshore Investment and Financing and Roundtrip Investment Through Special Purpose Vehicles (“SAFE Circular 37”). SAFE Circular 37 requires PRC residents (including PRC individuals and PRC corporate entities as well as foreign individuals that are deemed PRC residents for foreign exchange administration purposes) to register with SAFE or its local branches in connection with their direct or indirect offshore investment activities. SAFE Circular 37 further requires an amendment to a SAFE registration in the event of any changes with respect to the basic information of the offshore special purpose vehicle, such as a change in the PRC shareholders, the names of such special purpose vehicle, and the operation term of such special purpose vehicle, or any significant changes with respect to the offshore special purpose vehicle, such as an increase or decrease of capital, a share transfer or exchange, or mergers or divisions. SAFE Circular 37 is applicable to our shareholders who are PRC residents and may be applicable to any offshore acquisitions that we make in the future. If our shareholders who are PRC residents fail to make the required SAFE registration or to update a previously filed registration, our PRC subsidiaries may be prohibited from distributing their profits or the proceeds from any capital reduction, share transfer or liquidation to us, and we may also be prohibited from making additional capital contributions to our PRC subsidiaries.

In February 2015, SAFE promulgated a Notice on Further Simplifying and Improving Foreign Exchange Administration Policy on Direct Investment (“SAFE Notice 13”) effective June 2015. Under SAFE Notice 13, applications for foreign exchange registration of inbound foreign direct investments and outbound overseas direct investments, including those required under SAFE Circular 37, shall be filed with qualified banks instead of SAFE. The qualified banks directly examine the applications and accept registrations under the supervision of SAFE. To date, no registration has been filed with SAFE regarding us, and accordingly, SAFE may prohibit distributions from our PRC subsidiaries, which would prevent us from paying dividends and may adversely affect our financial condition and potentially expose us to liability under PRC law.

The PCAOB had historically been unable to inspect our auditor in relation to their audit work performed for our financial statements and the inability of the PCAOB to conduct inspections of our auditor in the past has deprived our investors with the benefits of such inspections.

Our auditor, the independent registered public accounting firm that issues the audit report included in this annual report, as an auditor of companies that are traded publicly in the United States and a firm registered with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with applicable professional standards. Since our auditor is located in China, a jurisdiction where the PCAOB had been previously unable to conduct inspections without the approval of the Chinese authorities, our auditor was subject to the determinations announced by the PCAOB on December 16, 2021 that it was unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong. On December 15, 2022, the PCAOB issued a report vacating the previous determinations dated December 16, 2021. Accordingly, until such time as the PCAOB issues any new determination, we are not at risk of having our securities subject to a trading prohibition under the HFCAA because we do not expect to be a Commission-Identified Issuer for a second consecutive year. If in the future the PCAOB determines it no longer can inspect or investigate completely because of a position taken by an authority in the PRC, the PCAOB will consider issuing a new determination. Any inability of the PCAOB to conduct inspections of auditors in China makes it more difficult to evaluate the effectiveness of our independent registered public accounting firm’s audit procedures or quality control procedures as compared to auditors outside of China that are subject to the PCAOB inspections, which could cause investors and potential investors in our securities to lose confidence in our audit procedures, reported financial information, and the quality of our financial statements.

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Our common shares may be prohibited from trading in the United States under the HFCAA in the future if the PCAOB is unable to inspect or investigate completely auditors located in China. The delisting of our common shares, or the threat of their being delisted, may materially and adversely affect the value of your investment.

Pursuant to the HFCAA, the SEC will identify an issuer as a Commission-Identified Issuer if the issuer has filed an annual report containing an audit report issued by a registered public accounting firm that the PCAOB has determined it is unable to inspect or investigate completely, and will then impose a trading prohibition on an issuer after it is identified as a Commission-Identified Issuer for two consecutive years. On December 16, 2021, the PCAOB issued a report to notify the SEC of its determination that the PCAOB was unable to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong. The PCAOB identified our auditor as one of the registered public accounting firms that the PCAOB was unable to inspect or investigate completely. In June 2022, we were identified by the SEC as a “Commission-Identified Issuer” in their conclusive list of issuers identified under the HFCAA. On December 15, 2022, the PCAOB issued a report vacating the previous determinations dated December 16, 2021. Accordingly, until such time as the PCAOB issues any new determination, we are not at risk of having our securities subject to a trading prohibition under the HFCAA because we do not expect to be identified as a Commission-Identified Issuer for a second consecutive year. If in the future the PCAOB determines it no longer can inspect or investigate completely because of a position taken by an authority in the PRC, the PCAOB will consider issuing a new determination.

Whether the PCAOB will continue to be able to conduct inspections of our auditor is subject to substantial uncertainty and depends on a number of factors out of our, and our auditor’s, control. A trading prohibition would substantially impair your ability to sell or purchase our common shares when you wish to do so, and the risk and uncertainty associated with delisting would have a negative impact on the price of our common shares.

PRC regulations establish complex procedures for some acquisitions conducted by foreign investors, which could make it more difficult for us to pursue growth through acquisitions in China.

The Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (the “M&A Rules”), adopted by six PRC regulatory agencies in August 2006 and amended in June 2009, among other things, established procedures and requirements that could make merger and acquisition activities by foreign investors more time-consuming and complex. In addition, the Provisions of Ministry of Commerce on Implementation of Security Review System for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, issued by the Ministry of Commerce in August 2011, specify that mergers and acquisitions by foreign investors involved in “an industry related to national security” are subject to strict review by the Ministry of Commerce, and prohibit any activities attempting to bypass such security review, including by structuring the transaction through a proxy or contractual control arrangement.

On March 15, 2019, the PRC National People’s Congress enacted the Foreign Investment Law of the PRC (the “Foreign Investment Law”), which became effective on January 1, 2020. The Foreign Investment Law has replaced the previous major laws and regulations governing foreign investment in the PRC, including the Sino-foreign Equity Joint Ventures Enterprises Law of the PRC, the Sino-foreign Co-operative Enterprises Law of the PRC and the Wholly Foreign-invested Enterprise Law of the PRC. According to the Foreign Investment Law, “foreign-invested enterprises” refers to enterprises that are wholly or partly invested by foreign investors and registered under the PRC laws within China, and “foreign investment” refers to any foreign investor’s direct or indirect investment activities in China, including: (i) establishing foreign-invested enterprises in China either individually or jointly with other investors; (ii) obtaining stock shares, equity shares, shares in properties or other similar interests of Chinese domestic enterprises; (iii) investing in new projects in China either individually or jointly with other investors; and (iv) investing through other methods provided by laws, administrative regulations or provisions prescribed by the State Council.

On December 26, 2019, the Company's rightState Council issued Implementation Regulations for the Foreign Investment Law of the PRC (the “Implementation Rules”) which came into effect on January 1, 2020, and replaced the Implementing Rules of the Sino-foreign Equity Joint Ventures Enterprises Law of the PRC, the Implementing Rules of the Sino-foreign Co-operative Enterprises Law of the PRC and the Implementing Rules of the Wholly Foreign-invested Enterprise Law of the PRC. According to extract mineralsthe Implementation Rules, in the event of any discrepancy between the Foreign Investment Law, the Implementation Rules and the relevant provisions on foreign investment promulgated prior to January 1, 2020, the Foreign Investment Law and the Implementation Rules shall prevail. The Implementation Rules also set forth that foreign investors that invest in sectors on the “Negative List” in which foreign investment is restricted shall comply with special management measures with respect to, among others, shareholding and senior management personnel qualification in the Negative List. Pursuant to the Foreign Investment Law and the Implementation Rules, the existing foreign-invested enterprises established prior to the effective date of the Foreign Investment Law are allowed to keep their corporate organization forms for five years from the effectiveness of the Foreign Investment Law before such existing foreign-invested enterprises must change their organization forms and organization structures in accordance with the PRC Company Law, the Partnership Enterprise Law of the PRC and other applicable laws.

After the Foreign Investment Law and the Implementation Rules became effective on January 1, 2020, the provisions of the M&A Rules remained effective to the extent they are not inconsistent with the Foreign Investment Law and the Implementation Rules. We believe that our business is not in an industry related to national security, but we cannot preclude the possibility that the competent PRC government authorities may publish explanations contrary to our understanding or broaden the scope of such security reviews in the future, in which case our future acquisitions and investment in the PRC, including those by way of entering into contractual control arrangements with target entities, may be closely scrutinized or prohibited. Moreover, according to the Anti-Monopoly Law of the PRC, the SAMR shall be notified in advance of any concentration of undertaking if certain filing thresholds are triggered. We may grow our business in part by directly acquiring complementary businesses in China. Complying with the requirements of the laws and regulations mentioned above and other PRC regulations necessary to complete such transactions could be time-consuming, and any required approval processes, including obtaining approval from the SAMR, may delay or inhibit our ability to complete such transactions, which could materially and adversely affect our ability to expand our business or maintain our market share.

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In December 2020, the National Development and Reform Commission and the Ministry of Commerce promulgated the Measures for the Security Review of Foreign Investment, which came into effect on January 18, 2021. According to the Security Review of Foreign Investment, for foreign investments that affect or may affect national security, security review shall be conducted in accordance with the provisions thereof. We cannot assure you that our current or new business operations will remain fully compliant, or that we can adapt our business operations to new regulatory requirements on a timely basis, or at Yangchong Mineall.

We and our PRC subsidiaries are required to maintain a series of licenses, permits and approvals from PRC authorities to operate our business in the PRC, and failure to maintain or renew such licenses, permits or approvals in a timely manner could materially affect our business.

Prior to the sale of PST Technology, our PRC subsidiaries carried out rural wastewater treatment and metal exploration activities in the PRC. After PST Technology’s disposition, we discontinued the operation in wastewater treatment segment and continue engaging in the exploration and mining business, which is licensedsubject to Wuhu Feishanga series of PRC laws and regulations. Such business activities require us to obtain licenses, permits and approvals from different PRC authorities, including an exploration permit from the Natural Resources Department of the Inner Mongolia Autonomous Region with regards to our metal exploration activity and business licenses from local administration for market regulation as required upon company registration. As of the date of this annual report, as far as we are aware and in the judgment of management, we have obtained all necessary licenses, permits and approvals to operate our business in the PRC, and have not been denied any such licenses, permits or approvals. If we or our PRC subsidiaries fail to maintain or renew such licenses, permits and approvals in a timely manner in the future, our business may be materially affected.

The approval of or filing with the CSRC or other PRC government authorities may be required in connection with our offshore offerings under PRC law, and, if required, we cannot predict whether or for how long we will be able to obtain such approval or complete such filing.

The M&A Rules require an overseas special purpose vehicle formed for listing purposes through acquisitions of PRC domestic companies and controlled by PRC persons or entities to obtain the approval of the CSRC prior to the listing and trading of such special purpose vehicle’s securities on an overseas stock exchange. The interpretation and application of the regulations remain unclear, and our offshore offerings may ultimately require approval of the CSRC. If the CSRC approval is required, it is uncertain whether we can or how long it will take us to obtain the approval and, even if we successfully obtain such CSRC approval, the approval could be rescinded. Any failure to obtain or delay in obtaining the CSRC approval for any of our offshore offerings, or a rescission of any successfully obtained approvals, would subject us to sanctions imposed by the CSRC or other PRC regulatory authorities. Sanctions could include fines and penalties on our operations in China, restrictions or limitations on our ability to pay dividends outside of China, and other forms of sanctions that may materially and adversely affect our business, financial condition and results of operations.

On July 6, 2021, PRC government authorities issued the Opinions on Strictly Cracking Down on Illegal Securities Activities in Accordance with the Law. These opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision on overseas listings by China-based companies. They proposed to take measures such as promoting the construction of relevant regulatory systems to deal with the risks and incidents faced by China-based overseas listed companies.

As a follow-up, on February 17, 2023, CSRC issued the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (the “Trial Measures of Overseas Listing”) which have been effective on March 31, 2023. The Trial Measures of Overseas Listing require that 1) where a domestic company seeks to indirectly offer and list securities in overseas markets, the issuer shall designate a major domestic operating entity, which shall, as the domestic responsible entity, file with the CSRC; 2) initial public offerings or listings in overseas markets shall be filed with the CSRC within 3 working days after the relevant application is submitted overseas. And subsequent securities offerings of an issuer in the same overseas market where it has previously offered and listed securities shall be filed with the CSRC within 3 working days after the offering is completed; 3) any overseas offering and listing made by an issuer that meets both the following conditions will be determined as indirect overseas offering and listing: (a) 50% or more of the issuer's operating revenue, total profit, total assets or net assets as documented in its audited consolidated financial statements for the most recent accounting year is accounted for by domestic companies; and (b) the main parts of the issuer's business activities are conducted in the Chinese Mainland, or its main places of business are located in the Chinese Mainland, or the senior managers in charge of its business operation and management are mostly Chinese citizens or domiciled in the Chinese Mainland. The determination as to whether or not an overseas offering and listing by domestic companies is indirect overseas offering and listing, shall be made on a substance over form basis.

Based on the Trial Measures of Overseas Listing, if our company issues new securities in the future, we need to fulfill the abovementioned filing procedures. If our company fails to file in time, we may be punished by the CSRC.

In addition, on February 24, 2023, CSRC, Ministry of Finance; National Administration of State Secrets Protection and National Archives Administration of China issued the Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies (“Revised Confidentiality and Archives Administration Provisions”) which have been effective on March 31, 2023. The Revised Confidentiality and Archives Administration Provisions require that in the overseas issuance and listing activities of domestic enterprises, the securities companies and securities service providers that undertake relevant businesses shall strictly abide by applicable laws and regulations of the PRC and the Revised Confidentiality and Archives Administration Provisions, enhance legal awareness of keeping state secrets and strengthening archives administration, institute a sound confidentiality and archives administration system, take necessary measures to fulfill confidentiality and archives administration obligations, and shall not leak any state secret and working secret of government agencies, or harm national security and public interest.

Based on the Revised Confidentiality and Archives Administration Provisions, if our company violates relevant laws and regulations in the future, we may be punished by the competent authorities.

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As of the date of this annual report, as far as we are aware and in the judgment of management, we have received all requisite permissions or approvals in connection with our offshore offerings under PRC law, and have not been denied any such permissions or approvals. However, we cannot assure you that any new rules or regulations promulgated in the future will not impose additional requirements on us. If it is determined in the future that approval from and filing with the CSRC or other regulatory authorities or other procedures are required for our offshore offerings, it is uncertain whether we can or how long it will take us to obtain such approval or complete such filing procedures and any such approval or filing could be rescinded or rejected. Any failure to obtain or delay in obtaining such approval or completing such filing procedures for our offshore offerings, including by our inadvertent conclusion that such approval or filing was not required when in fact it was, or a rescission of any such approval or filing if obtained by us, could subject us to sanctions by the CSRC or other PRC regulatory authorities. These regulatory authorities may impose fines and penalties on our operations in China, limit our ability to pay dividends outside of China, limit our operating privileges in China, delay or restrict the repatriation of the proceeds from our offshore offerings into China or take other actions that could materially and adversely affect our business, financial condition, results of operations and prospects, as well as the trading price of our listed securities. The CSRC or other PRC regulatory authorities also may take actions requiring us, or making it advisable for us, to halt our offshore offerings before settlement and delivery of the securities offered. Consequently, if investors engage in market trading or other activities in anticipation of and prior to settlement and delivery, they do so at the risk that settlement and delivery may not occur. In addition, if the CSRC or other regulatory authorities later promulgate new rules or explanations requiring that we obtain their approvals or accomplish the required filing or other regulatory procedures for our prior offshore offerings, we may be unable to obtain a waiver of such approval requirements, if and when procedures are established to obtain such a waiver. Any uncertainties or negative publicity regarding such approval requirement could materially and adversely affect our business, prospects, financial condition, reputation and the trading price of our listed securities.

Failure to comply with PRC regulations and other legal obligations concerning data protection and cybersecurity may materially and adversely affect our business, as we routinely collect, store and use data during the conduct of our business.

On December 28, 2021, the CAC, together with 12 other departments, adopted the Cybersecurity Review Measures, which became effective on February 15, 2022. The Cybersecurity Review Measures require network platform operators possessing personal information of more than one million individual users to undergo a cybersecurity review by the CAC when they seek a listing on a foreign exchange. The Cybersecurity Review Measures provide that critical information infrastructure operators purchasing network products and services and network platform operators carrying out data processing activities, which affect or may affect national security, shall apply for cybersecurity review to the applicable local cyberspace administration in accordance with the provisions thereunder.

On July 30, 2021, the State Council promulgated the Regulations on Security Protection of Critical Information Infrastructure, which became effective on September 1, 2021. Pursuant to the Regulations on Security Protection of Critical Information Infrastructure, critical information infrastructure shall mean any important network facilities or information systems of an important industry or field, such as public communications and information services, energy, transportation, water conservation, finance, public services, e-government affairs and science and technology and national defense industries, which may seriously endanger national security, peoples’ livelihoods and the public interest in the event of damage, function loss or data leakage. In addition, the relevant administrative departments of each critical industry and sector shall be responsible for formulating eligibility criteria and determining the critical information infrastructure operator in the respective industry or sector. The operators shall be informed about the final determination as to whether they are categorized as critical information infrastructure operators. Among these industries, the energy and telecommunications industries are mandated to take measures to provide key assurances for the safe operation of critical information infrastructure in other industries and fields.

We and our PRC subsidiaries do not carry out business in China through any self-owned network platform and hold personal information of less than one million individuals from PRC operations. We and our PRC subsidiaries have not been identified as critical information infrastructure operators by any PRC authorities. The data collected from our China operations is mainly information related to our production, customers, suppliers and our employees. We believe that we and our PRC subsidiaries do not commit any acts that threaten or endanger the national security of the PRC, and to our knowledge we and our PRC subsidiaries have not received or been subject to any investigation, notice, warning or sanction from any PRC authority with respect to national security issues arising from our business operations. As of the date of this annual report, we do not believe that we need to proactively apply for the cybersecurity review required by the CAC.

Furthermore, the CAC promulgated the Security Assessment Measures for Outbound Data Transfers, which became effective on September 1, 2022, which require that to provide data abroad under any of the following circumstances, a data processor shall declare security assessment for its outbound data transfer to the CAC through the local cyberspace administration at the provincial level: (i) where a data processor provides critical data abroad; (ii) where a key information infrastructure operator or a data processor processing the personal information of more than one million individuals provides personal information abroad; (iii) where a data processor has provided personal information of 100,000 individuals or sensitive personal information of 10,000 individuals in total abroad since January 1 of the previous year; and (iv) in other circumstances prescribed by the CAC for which declaration of a security assessment for outbound data transfers is required. As we and our PRC subsidiaries do not provide any data collected from China operations abroad, we do not believe it is necessary for us to declare any security assessments pursuant to the Security Assessment Measures for Outbound Data Transfers.

However, there remains uncertainty as to how these regulations will be interpreted or implemented and whether the PRC regulatory agencies, including the CAC, may adopt new laws, regulations, rules or detailed implementation and interpretation, and there is no assurance that PRC regulatory agencies, including the CAC, would take the same view as we do. There have not been comparable developments in Hong Kong, but those could occur, and we believe we are currently in compliance with all Hong Kong laws and regulations regarding data security. If any such new laws, regulations, rules or implementation and interpretation come into effect, we will take all reasonable measures and actions to comply and to minimize the adverse effect of such laws on us. However, we cannot assure you that we can fully or timely comply with such laws. In the event that we are subject to any mandatory cybersecurity reviews and/or other requirements of the CAC, we face uncertainty as to whether any clearance or other required actions can be timely completed, or at all. Given such uncertainty, it is possible that we may be required to suspend the relevant business, or face other penalties, which could materially and adversely affect our business, financial condition, results of operations and/or the value of our securities, or could significantly limit or completely hinder our ability to offer or continue to offer securities to investors. As of the date of this annual report, we have not been informed that we have been identified as a critical information infrastructure operator by any governmental authorities. These laws and regulations are still new and there is uncertainty with respect to the interpretation and implementation of these data security laws and regulations. We will closely monitor the relevant regulatory environment and will assess and determine whether we are required to apply for the cybersecurity review.

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We may be classified as a “resident enterprise” for PRC enterprise income tax purposes; such classification could result in unfavorable tax consequences to us and our non-PRC shareholders.

The Enterprise Income Tax Law provides that enterprises established outside of China whose “de facto management bodies” are located in China are considered PRC tax resident enterprises and will generally be subject to the uniform 25% PRC enterprise income tax rate on their global income. In 2009, the State Administration of Taxation (“SAT”) issued the Circular of the State Administration of Taxation on Issues Concerning the Identification of Chinese-Controlled Overseas Registered Enterprises as Resident Enterprises in Accordance with the Standards of Actual Organizational Management (“SAT Circular 82”), which was partially amended by the Announcement on Issues concerning the Determination of Resident Enterprises Based on the Standards of Actual Management Institutions issued by the SAT on January 29, 2014, and further partially amended by the Decision on Issuing the Lists of Invalid and Abolished Tax Departmental Rules and Taxation Normative Documents issued by the SAT on December 29, 2017. SAT Circular 82, as amended, provides certain specific criteria for determining whether the “de facto management body” of a Chinese-controlled offshore-incorporated enterprise is located in China, which include all of the following conditions: (i) the location where senior management members responsible for an enterprise’s daily operations discharge their duties; (ii) the location where financial and human resource decisions are made or approved by organizations or persons; (iii) the location where the major assets and corporate documents are kept; and (iv) the location where more than half (inclusive) of all directors with voting rights or senior management have their habitual residence. SAT Circular 82 further clarifies that the identification of the “de facto management body” must follow the “substance over form” principle. In addition, the SAT issued the Announcement of State Administration of Taxation on Promulgation of the Administrative Measures on Income Tax on Overseas Registered Chinese-funded Holding Resident Enterprises (Trial Implementation) (“SAT Bulletin 45”) on July 27, 2011, effective from September 1, 2011, and partially amended on April 17, 2015, June 28, 2016, and June 15, 2018, providing more guidance on the implementation of SAT Circular 82. SAT Bulletin 45 clarifies matters including resident status determination, post-determination administration and competent tax authorities. Although both SAT Circular 82 and SAT Bulletin 45 only apply to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals or foreign individuals, the determining criteria set forth in SAT Circular 82 and SAT Bulletin 45 may reflect the SAT’s general position on how the “de facto management body” test should be applied in determining the tax resident status of offshore enterprises, regardless of whether they are controlled by PRC enterprises or PRC enterprise groups or by PRC or foreign individuals.

Currently, there are no detailed rules or precedents governing the procedures and specific criteria for determining “de facto management bodies” that are applicable to us or our overseas subsidiaries. We do not believe that CHNR meets all of the conditions for a period of years (see “Government Regulation” below).PRC resident enterprise. The Company is a company incorporated outside the only partyPRC. As a holding company, its key assets are its ownership interests in its subsidiaries, and its key assets are located, and its records (including the resolutions of its board of directors and the resolutions of its shareholders) are maintained, outside the PRC. For the same reasons, we believe our other entities outside of China are not PRC resident enterprises either. However, the tax resident status of an enterprise is subject to determination by the PRC tax authorities, and uncertainties remain with respect to the interpretation of the term “de facto management body.” There can be no assurance that the PRC government will ultimately take a view that is consistent with ours.

However, if the PRC tax authorities determine that CHNR is a PRC resident enterprise for enterprise income tax purposes, we may be required to withhold a 10% withholding tax from dividends we pay to our shareholders that are non-resident enterprises. Such 10% tax rate could be reduced by applicable tax treaties or similar arrangements between China and the jurisdiction of our shareholders. For example, for shareholders eligible for the benefits of the tax treaty between China and Hong Kong, known as the Arrangement between the Mainland of China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income (the “Double Taxation Arrangement”), the tax rate is reduced to 5% for dividends if relevant conditions are met, including without limitation that (a) the Hong Kong resident enterprise must be the beneficial owner of the relevant dividends; and (b) the Hong Kong resident enterprise must directly hold no less than 25% share ownership in the PRC resident enterprise during the 12 consecutive months preceding its receipt of the dividends. In current practice, a Hong Kong resident enterprise must obtain a tax resident certificate from the Hong Kong tax authority to apply for the 5% lower PRC withholding tax rate. As the Hong Kong tax authority will issue such a tax resident certificate on a case-by-case basis, we cannot assure you that we will be able to obtain a tax resident certificate from the relevant Hong Kong tax authority and enjoy the preferential withholding tax rate of 5% under the Double Taxation Arrangement with respect to any dividends paid by our PRC subsidiaries to their immediate holding companies. In addition, non-resident enterprise shareholders may be subject to a 10% PRC tax on gains realized on the sale or other disposition of common equity if such income is treated as sourced from within the PRC. It is unclear whether our non-PRC individual shareholders would be subject to any PRC tax on dividends or gains obtained by such non-PRC individual shareholders in the event we are determined to be a PRC resident enterprise. If any PRC tax were to apply to such dividends or gains, it would generally apply at a rate of 20% unless a reduced rate is available under an applicable tax treaty. However, it is also unclear whether non-PRC shareholders of the Company would be able to claim the benefits of any tax treaties between their country of tax residence and the PRC in the event that the Company is treated as a PRC resident enterprise.

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Provided that CHNR, as a BVI holding company, is not deemed to be a PRC resident enterprise, our shareholders who are not PRC residents will not be subject to PRC income tax on dividends distributed by us or gains realized from the sale or other disposition of our shares. However, under SAT Circular 7, where a non-resident enterprise conducts an “indirect transfer” by transferring taxable assets, including, in particular, equity interests in a PRC resident enterprise, indirectly by disposing of the equity interests of an overseas holding company, the non-resident enterprise, being the transferor, or the transferee or the PRC entity which directly owned such taxable assets may report to the relevant tax authority such indirect transfer. Using a “substance over form” principle, the PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose of reducing, avoiding or deferring PRC tax. As a result, gains derived from such indirect transfer may be subject to PRC enterprise income tax, and the transferee would be obligated to withhold the applicable taxes, currently licensedat a rate of 10% for the transfer of equity interests in a PRC resident enterprise. We and our non-PRC resident investors may be at risk of being required to minefile a return and being taxed under SAT Circular 7, and we may be required to expend valuable resources to comply with SAT Bulletin 37, or to establish that we should not be taxed under SAT Circular 7 and SAT Bulletin 37.

In addition to the Yangchong Mine. The Company’s current licenseuncertainty in how the new resident enterprise classification could apply, it is also possible that the rules may change in the future, possibly with retroactive effect. If we are required under the Enterprise Income Tax Law to minewithhold PRC income tax on our dividends payable to our foreign shareholders, including U.S. investors, or if you are required to pay PRC income tax on the Yangchong Mine expirestransfer of our shares under the circumstances mentioned above, the value of your investment in our shares may be materially and adversely affected. These rates may be reduced by an applicable tax treaty, but it is unclear whether, if we are considered a PRC resident enterprise, holders of our shares would be able to claim the benefit of income tax treaties or agreements entered into between China and other countries or areas. Any such tax may reduce the returns on November 24, 2017,your investment in our shares.

Any failure to comply with PRC regulations regarding the registration requirements for employee stock incentive plans may subject the PRC plan participants or us to fines and other legal or administrative sanctions.

In February 2012, SAFE promulgated the Notices on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plans of Overseas Publicly-Listed Companies, replacing earlier rules promulgated in March 2007. Pursuant to these rules, PRC citizens and non-PRC citizens who reside in China for a continuous period of not less than one year who participate in any stock incentive plan of an overseas publicly listed company, subject to a few exceptions, are required to register with SAFE through a domestic qualified agent, which could be the PRC subsidiary of such overseas-listed company, and complete certain other procedures related to account establishment, funds transfer and remittance. In addition, an overseas-entrusted institution must be retained to handle matters in connection with the exercise or sale of stock options and the purchase or sale of corresponding shares and interests. We and our executive officers and other employees who have been PRC citizens or who have resided in the PRC for a continuous period of not less than one year and who are granted options or other awards under our equity incentive plan will be subject to these regulations. Failure to complete the SAFE registrations may subject them to fines and legal sanctions and may be renewed upon expiry.also limit our ability to contribute additional capital into our PRC subsidiary and limit our PRC subsidiaries’ ability to distribute dividends to us. As at the date of this annual report, we have already completed the SAFE registration and obtained the relevant approval of foreign exchange for our executive officers, consultants and other employees who have been granted options and are subject to the above regulations. We also face regulatory uncertainties that could restrict our ability to adopt additional incentive plans for our directors, executive officers and employees under PRC law.

Yangchong Mine is a zinc-iron underground mine. The formations are believed to date fromOn July 14, 2022, the Silurian to Triassic ages, with deposits in limestone and diritic porphyrit contact belt. Ore bodies consistboard of zinc, magnetite and composite iron bed. The general coursedirectors of the mine is N85°E, with NNE inclinationCompany granted option covering an aggregate of 70°. There are three ore bodies found in the area. Ore body I is mainly zinc-iron paragenic deposits. The low side8,100,000 Common shares of the ore body is uncontinuous magnetite deposits. Ore body II consists of zinc-ironparagenic deposits and zinc deposits. Ore body III consists of continuous deposits and iron deposits.





The following diagrams show the geography of Yangchong Mine and its surrounding areas:

[chnr_20f001.jpg]

Wuhu Feishang entered into an agreement with State-owned Assets Supervision and Administration Commission of Fanchang County, Anhui Province in 2002 entitling Wuhu Feishang to use the land covering the 169,172 square meters factory site for 50 years thereafter, and the 184,806 square meters mining site for 20 years thereafter, respectively.

Access to the underground workings at the Yangchong Mine is via a ramp from the surface and connecting numerous levels. At the end of 2006, the exploitationCompany (or 1,620,000 Common shares of the Yangchong Mine 50 meters below sea level was completed. Since early 2007, the principal working levels lay between the elevations of 50 and 150-meters below sea level. The electricity supply in the mining area is mainly provided by East China Grid, with a 500 kilo voltage of transmission base located in 3 kilometers east of Yangchong Mine.

Yangchong Mine is located near the Yangtze River, in which surface and underground water resources are abundant. The source of tap water, which is used for domestic and production purposes, primarily comes from underground water.

Wuhu Feishang outsources its mine extraction to unrelated third parties. From January 1, 2015 through December 31, 2015 Wuhu Feishang outsourced mine extraction at Yangchong Mine to Wenzhou Dongda Mining Engineering Co. Ltd. Under the agreement, the subcontractor charged a service fee of CNY72.10 (US$11.11) per tonne of ore extracted, and CNY6.00 (US$0.92) per tonne of useless stone removal. For the developing of ramps, the subcontractor charged a service fee of CNY3,150.00 (US$485.23) per extra meter of inclined shaft and CNY2,310.00 (US$355.84) per extra meter of flat shaft.  Except for the outsourced mining of raw minerals to an unrelated third party (as described above), all ore processing procedures are performed by Wuhu Feishang. Raw minerals extracted from Yangchong Mine are processed into iron and zinc metals in factories located near the mine.





The operation of Wuhu Feishang was affectedCompany as adjusted by a production suspension order affecting all mines in Wuhu city infive-to-one share combination on April 3, 2023) to fifteen consultants and employees of the fourth quarterCompany under the China Natural Resources, Inc. 2014 Equity Compensation Plan. SAT has issued circulars concerning employee share options, under which certain of 2011our employees and consultants who are PRC tax residents and exercise share options will be subject to PRC individual income tax. The individual income tax of consultant grantees and employees shall be paid according to remuneration for personal services and wages and salaries respectively. Our PRC subsidiaries have obligations to file documents related to employee share options with relevant tax authorities and to withhold individual income taxes of those employees and consultants who exercise their share options. If our employees and consultants fail to pay or if we fail to withhold their individual income tax as required by relevant laws and regulations, we may face sanctions imposed by the Wuhu municipalPRC tax authorities or other PRC government authorities.

Failure to make adequate contributions to various mandatory social security plans as required by PRC regulations may subject us to penalties.

Under the PRC Social Insurance Law and the Administrative Measures on Housing Fund, our PRC subsidiaries are required to participate in various government sponsored employee benefit plans, including certain social insurance, housing funds and other welfare-oriented payment obligations, and to contribute to the plans in amounts equal to certain percentages of salaries, including bonuses and allowances, of the employees up to a maximum amount specified by the local government from time to time at locations where they operate the businesses. The requirements of employee benefit plans have not been implemented consistently by the local governments in China given the different levels of economic development in different locations. If the local governments deem our subsidiaries’ contribution to be insufficient, our subsidiaries may be subject to late contribution fees or fines in relation to any underpaid employee benefits, and our financial condition and results of operations may be adversely affected.

In Hong Kong, employers are required to select and join a provident fund scheme (“MPF Scheme”) in accordance with the statutory requirements of the Mandatory Provident Fund Schemes Ordinance for inspection asall employees in Hong Kong and to make contributions to the MPF Scheme based on the minimum statutory contribution requirement of 5% of the eligible employees’ relevant aggregate income, subject to a capped amount. Any non-compliance with statutory requirements with respect to our employees located in Hong Kong may result in enforcement being taken by the relevant authorities, which could lead to financial penalties or imprisonment.

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Enforcement of stricter labor laws and regulations may increase our labor costs.

China’s overall economy and the average wage have increased in recent years and are expected to continue to grow. The average wage level for our employees has also increased in recent years. We expect that our labor costs, including wages and employee benefits, will continue to increase. Unless we are able to pass on these increased labor costs to our customers who pay for our services, our profitability and results of operations may be materially and adversely affected. The PRC Labor Contract Law and its implementing rules impose requirements concerning contracts entered into between an employer and its employees and establishes time limits for probationary periods and for how long an employee can be placed in a mine accidentfixed-term labor contract. We cannot assure you that our or our subsidiaries’ employment policies and practices do not, or will not, violate the Labor Contract Law or its implementing rules or that we will not be subject to related penalties, fines or legal fees. If we or our subsidiaries are subject to large penalties or fees related to the Labor Contract Law or its implementing rules, our business, financial condition and results of operations may be materially and adversely affected In addition, according to the Labor Contract Law and its implementing rules, if we intend to enforce the non-compete provision with an employee in Wuhu city. The suspension order was lifteda labor contract or non-competition agreement, we have to compensate the employee on a monthly basis during the term of the restriction period after the termination or ending of the labor contract, which may cause extra expenses to us. Furthermore, the Labor Contract Law and its implementation rules require certain terminations to be based upon seniority rather than merit, which significantly affects the cost of reducing workforce for employers. In the event we decide to significantly change or decrease our workforce in the first quarterPRC, the Labor Contract Law could adversely affect our ability to enact such changes in a manner that is most advantageous to our circumstances or in a timely and cost-effective manner, thus our results of 2012.operations could be adversely affected.

If the chops of our PRC subsidiaries are not kept safely, are stolen or are used by unauthorized persons or for unauthorized purposes, the corporate governance of these entities could be severely and adversely compromised.

In China, a company chop or seal serves as the legal representation of the company towards third parties even when unaccompanied by a signature. Each legally registered company in China is required to maintain a company chop, which must be registered with the local Public Security Bureau. In addition Wuhu Feishang ceased its own productionto this mandatory company chop, companies may have several other chops which can be used for mine recoveryspecific purposes. The chops of our PRC subsidiaries are generally held securely by personnel designated or approved by us in accordance with our internal control procedures. To the extent those chops are not kept safely, are stolen or are used by unauthorized persons or for unauthorized purposes, the corporate governance of these entities could be severely and adversely compromised and those corporate entities may be bound to abide by the terms of any documents so chopped, even if they were chopped by an individual who lacked the requisite power and authority to do so. In addition, if the chops are misused by unauthorized persons, our PRC subsidiaries could experience disruption to our normal business operations. We may have to take corporate or legal action, which could involve significant time and resources to resolve while distracting management from June 2012our operations.

Risks Relating to October 2012.Our Mine Exploration Activities in Inner Mongolia

We areThe Moruogu Tong Mine is in the early stagesexploration stage.

One of our operating subsidiaries, Bayannaoer Mining, is in the exploration for additional mineablestage at the Moruogu Tong Mine located in the Inner Mongolia Autonomous Region of the PRC, and, at this stage, we cannot predict whether ore at Yangchong Mine. In March 2016, we engaged Anhui Province Mine Geology Bureau No. 2 Exploration Brigade to survey geology and mineral resources within our licensed zones at Yangchong Mine. Management believes that zinc can currently be mined on a profitable basisbasis. During the exploration stage, a mine incurs operating expenses but does not generate revenues. We intend to fund mine exploration on the southern part of Moruogu Tong Mine through borrowings from related parties or cash on hand. Pursuant to Bayannaoer Mining’s mutual cooperation agreement (the “Cooperation Agreement”) with Bayannaoer Jijincheng Mining Co., Ltd. (“Jijincheng Mining”), Jijincheng Mining is currently running the exploration program for the northern part of Moruogu Tong Mine. To date, the exploration program of the northern part has indicated the presence of lead and hopessilver, with the prospect that further surveying and exploration may indicate the presence of other ores such as copper. At this stage of exploratory activities, we cannot predict whether sufficient ore of acceptable quality will be found at the Moruogu Tong Mine to warrant further exploration and/or extraction.

The northern part of Moruogu Tong Mine is currently being explored under an agreement that reduces our share in any future profits.

On August 20, 2017, Bayannaoer Mining entered into the Cooperation Agreement with Jijincheng Mining, an unrelated third party. The Cooperation Agreement is intended to provide for financial support for the operating expenses of the northern part of Moruogu Tong Mine during the exploration stage, and the allocation of rights and responsibilities between Bayannaoer Mining and Jijincheng Mining. According to the Cooperation Agreement, Jijincheng Mining is responsible for engaging the exploration team and providing the required funding. Pursuant to the Cooperation Agreement: (i) Bayannaoer Mining contributed the existing exploration results for the northern part of Moruogu Tong Mine; (ii) Jijincheng Mining provides the necessary funds for further exploration at the mine; (iii) Bayannaoer Mining enjoys full rights to any resources already discovered and confirmed by its independent exploration work conducted prior to commencement of the cooperative exploration project; (iv) Bayannaoer Mining and Jijincheng Mining will each receive a 50% interest in any newly discovered resources from the first 10 drilling holes in the cooperative exploration project; and (v) Bayannaoer Mining and Jijincheng Mining will receive 30% and 70% interests, respectively, in any newly discovered resources from drilling work beyond the first 10 drilling holes in the cooperative exploration project. As of the date of this annual report, 21 holes have been drilled using funding provided by Jijincheng Mining pursuant to the Cooperation Agreement. Other details of the Cooperation Agreement, including allocations and distributions upon completion of exploration work, remain to be negotiated between the parties. There is no assurance that the survey will confirm that there are additional mineral reserves, including zinc, that can be extracted from Yangchong Mine at costs that justify extraction in light of prevailing market prices for metals. However, the Company cannot accurately predict whether the outcomedetails of the surveyarrangement that remain to be negotiated will be positive, or whetherresolved in a manner satisfactory to the outcomeCompany. Moreover, because the Cooperation Agreement provides us with a minority interest in the resources discovered as part of the suveycooperative exploration project, we will justifynot be able to enjoy the expenditurefull economic benefits of additionalthe resources to pursue mineral extraction.we discover in the northern part of Moruogu Tong Mine for the duration of the Cooperation Agreement.

All equipment, infrastructureAny estimates of the reserves contained in the Moruogu Tong Mine may be inaccurate.

The Moruogu Tong Mine is the subject of a geological survey prepared in conformity with procedures and facilities material to Wuhu Feishang’s operationsprotocols recognized in the PRC. These procedures and protocols are different from those generally recognized in the United States. In addition, reserve estimation is an interpretive process based upon available data and various assumptions that are believed to be reasonable, and the economic value of ore reserves may be adversely affected by price fluctuations in good condition. The plant was constructedthe metals markets, reduced recovery rates or a rise in 1991production costs as a result of inflation or other technical problems arising in the course of extraction. If the assumptions upon which we conduct the reserve study prove to be inaccurate, we may reach incorrect conclusions as to the nature and has been periodically upgraded. The processing plant is capableextent of producing approximately 600 tonnes of finished products per day. The processing facilities process raw oreresources present at the Moruogu Tong Mine, and we may not be able to generate revenues from the Yangchong Mine. All processingMoruogu Tong Mine in an amount that would lead to such activities being profitable or at all.

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There are no assurances that we can produce minerals on a commercially viable basis.

The Company’s ability to generate revenue and profit from the Moruogu Tong Mine is expected to occur, if at all, through the exploration, evaluation, development and operation of that property. The economic feasibility of a project depends on numerous factors, including the cost of mining and production facilities required to extract the desired minerals, the total mineral deposits that can be mined at a given facility, the proximity of the mineral deposits to refining facilities, and equipmentthe market price of Wuhu Feishang werethe minerals at the time of sale. There is no assurance that our current or future exploration programs or any acquisitions will result in the identification of deposits that can be mined profitably.

Volatility in the market prices of metals may adversely affect the results of our operations.

The market prices of lead, silver and other metals have experienced significant volatility in recent years. Market prices depend upon many factors beyond our control, which include industry specific factors such as supply and demand and the level of customer inventories, as well as factors such as local and world-wide general economic conditions and disruptions caused by unforeseen domestic or international crises such as the global outbreak of COVID-19, or geopolitical tensions, including the ongoing military conflict between Russia and Ukraine. The uncertainties surrounding the market prices of metals and the costs of extraction may adversely affect our ability to operate on a profitable basis if our mining exploration proves fruitful.

During 2023, the world witnessed the continuation of the Russia-Ukraine conflict, the Israel Hamas war, the Red Sea crisis, persistent high inflation and interest rate in many major economies, which led to disruptions to, and notable fluctuations in, the commodity market worldwide and resulted in high volatility in the market prices of lead, silver and copper. In 2023, the Shanghai Futures Exchange (“SHFE”) lead price hit a low of CNY15,015 (US$2,121) per ton and a high of CNY17,540 (US$2,478) per ton, the SHFE silver price reached a low of CNY4,756 (US$$672) per kilogram (“kg”) and a high of CNY6,343 (US$896) per kg, and the SHFE copper price hit a low of CNY62,690 (US$8,856) per ton and a high of CNY71,500 (US$10,101) per ton, each reflecting high volatility. The extent to which demand and prices will be supported in the future is highly uncertain, as the impacts of the interest rate hikes in major economies, especially the U.S., the ongoing geopolitical tensions and remaining effects of the COVID-19 pandemic continue to cause disruptions to the global economy and to business activities at all levels. Any widespread resurgence of COVID-19 or other pandemics, or further geopolitical tensions, could significantly and adversely impact market sentiment and the broader economy. Aggressive monetary policies of major economies could also cause unexpected consequences beyond mere economic downturns, such as large-scale bankruptcy and even financial crisis, which will have significant and negative impacts on the commodity markets. Therefore, demand and price volatility in the commodity markets may continue for a prolonged period or further deteriorate, which may adversely affect our ability to sell minerals from the Moruogu Tong Mine on a profitable basis.

We are subject to government regulations in various aspects of our exploration activities and our failure to comply with applicable government regulations could adversely affect us.

Bayannaoer Mining, our subsidiary that acquired from Nanchang Non-ferrous Metallurgy Designing Organization,exploration rights to the Moruogu Tong Mine, is and will continue to be subject to the regulations of various aspects of its operations by a Class-A corporationvariety of laws, rules and regulations administered by the national and local Chinese government, including laws, rules and regulations relating to: exploration activities; environmental protection; the use and preservation of dangerous substances; employment practices; as well as land use laws and a variety of local business laws and rules. Our failure to comply with applicable laws, rules, and regulations could adversely affect our operations and subject us to fines and other penalties including suspension or termination of our business permits.

We do not have binding agreements with customers to purchase any future output of metals.

While we believe there is a robust market for lead, silver and other metals not only in China but also in designingother countries (although our operations are currently limited to the PRC and we are not currently producing any metals), we do not currently have any commitments from any customers to purchase any future output of metals. As a result, we may not be able to sell any metals that we are able to successfully extract at prices that are acceptable to us or at all.

ESG issues, including those related to health, safety, climate change and sustainability, may have an adverse effect on our business, financial condition, and results of operations, could damage our reputation, and may increase costs.

There is an increasing focus from certain investors, customer, partners and other stakeholders concerning ESG matters. Additionally, public interest and legislative pressure related to public companies’ ESG practices continue to grow and change, and may continue to shift based on political conditions in the countries in which we operate and do business. If our ESG practices fail to meet regulatory requirements, our medium- and long-term ESG commitments, or investors, customers, partners or other stakeholders’ evolving expectations and standards for responsible corporate citizenship in areas including environmental stewardship, support for local communities, human capital management, employee health and safety practices, corporate governance and transparency, our reputation, brand and employee retention may be negatively impacted.

Investors, customers, partners and other stakeholders are increasingly focusing on environmental issues, including climate change, dams, energy and water use, and other sustainability concerns. Concern over climate change, in particular, may result in new or increased legal and regulatory requirements to reduce or mitigate impacts to the environment.

If we do not adapt to or comply with new regulations, or if we fail to comply with disclosure requirements and consequently fail to meet evolving regulatory, investor, industry or stakeholder expectations and concerns regarding ESG issues, investors may reconsider their capital investment in us, customers and partners may choose to stop the cooperation with us, which could have a material adverse effect on our reputation, business or financial condition.

In addition, our ESG practices and initiatives may result in increased operational costs, including monitoring and reporting costs, equipment costs, energy costs, and other costs to comply with our developing practices and initiatives. These additional costs could have a material impact on our business, results of operations and financial condition.

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Risks Relating to the Sale of PST Technology

We face risks associated with the divesture of our wastewater treatment segment.

In July 2021, we acquired PST Technology for consideration of three million of the mining industry. All technologyCompany’s newly issued restricted common shares, 120 million shares of FARL, and equipment meetapproximately CNY10.3 million (US$1.46 million). Through our acquisition of PST Technology, we obtained a 51% equity interest in Shanghai Onway, a company principally engaged in services related to rural wastewater treatment. In addition to the industrial standardpurchase price, we incurred significant non-recurring expenses in connection with the acquisition, including legal, accounting, financial advisory, integration planning and other expenses, and have incurred integration costs arising out of this transaction.

On July 28, 2023, we entered into a Sale and Purchase Agreement (“SPA”) with Feishang Group Limited (“Feishang Group”), pursuant to which, we agreed to sell 100% equity interest of Precise Space-Time Technology Limited to Feishang Group, together with PST Technology’s outstanding payable owed to us, for consideration of approximately CNY95,761,119 comprising: (i) CNY-34,197,300, the fair value of 100% equity interest of PST Technology as requireddetermined by the relevant government authorities. Site infrastructure includes roads, water supply system, electric supply system, warehouses, living quarters, dining facilitiesindependent valuation report dated July 28, 2023; and an administration building. At December 31, 2014 and 2015,(ii) CNY129,958,419, the net book value of PST Technology’s outstanding payable owed to us. After PST Technology’s disposition, we discontinued the operation in wastewater treatment segment and continue engaging in the exploration and mining related property, plantbusiness. This divestiture may adversely affect our business, results of operations or financial condition if we are unable to offset the dilutive impacts from the loss of revenue associated with the divested waste water treatment business, or otherwise achieve the anticipated benefits or cost savings from the divestiture.

In addition, we may divest in the future businesses as part of ongoing efforts to refine our portfolio and equipmentredefine our strategic priorities. We may not be able to successfully achieve the expected benefits of Yangchong Mine was approximately nilsuch divestitures and nil, respectively.such divestitures may not have the desired effect of enhancing the status of our portfolio of businesses. Our divestitures could result in exposure to contingent or unexpected liabilities, such as litigation, indemnification claims, regulatory claims and earn-out obligations. Furthermore, businesses under consideration for, or otherwise subject to, divestiture may be adversely impacted prior to completion of the divestiture, which could adversely affect our business, results of operations or financial condition.

AsRisks Relating to the Potential Closing of December 31, 2015, the reserve estimatesAcquisition of Yangchong Mine are as follows:

 

As of December 31, 2015

 

Probable Reserve
(in metal tonnes)

Average quality of ore

Yangchong Mine

 

 

 Iron

13,236

44.76%

 Zinc

4,505

5.82%


Williams Minerals and the Timing of Such Closing

Note:There may be unforeseen risks relating to the Acquisition that were not discovered by us through our due diligence investigation prior to our Acquisition.

The probable reserve as
       Although we have conducted due diligence in connection with the Acquisition, and such due diligence investigation concluded on April 14, 2023, an unavoidable level of December 31, 2015 has been adjusted by removing those reserves extracted byrisk remains regarding any undisclosed or unknown issues concerning the prospects of the Zimbabwean lithium mine, including the actual presence and extraction of minerals therein. We may learn additional information about the Zimbabwean lithium mine that could materially adversely affect us. There may be unforeseen risks relating to our ability to locate and execute on strategic opportunities; the presence of lithium or precious minerals in the Zimbabwean lithium mine; the vesting of the legal possession and control of the relevant regions of the Zimbabwean mine and the timing thereof; the level of demand for lithium and other precious minerals; and the availability of internally generated funds and funds for the payment of operating expenses, capital expenditures and the Company’s past mining activities. Based on 2015 production levels,growth strategy.

Completion of the lengthAcquisition is conditional upon satisfaction or waiver of various conditions. There can be no assurance that the conditions will be fulfilled or waived, or that the acquisition will be completed.


       The completion of the Acquisition is subject to a number of conditions, including, among other things, the transfer of ownership interests in Williams Minerals from the Sellers to the intermediate holding company; the Company’s payment of the first installment of US$140 million, in cash or by way of promissory notes, to the Sellers; the issuance of independent technical reports regarding the amount of qualified measured, indicated and inferred resources quantity of lithium oxide proven to be in each region of the mining activityarea; the settlement of the then-total consideration accumulated in cash and restricted shares, as calculated in reference to the issued independent technical reports; and the transfer of ownership rights to the Company for each region of the mining area. Pursuant to the Zimbabwe SPA, for each relevant region of the lithium mine, until the Company’s legal possession and control vests, the Sellers will maintain legal possession and control, including the right of exploration, sale of lithium, and the revenue derived therefrom, as well as liability for operational costs and third-party claims. The Company’s legal possession and control of each relevant region only vests upon its settlement of the then-total consideration accumulated. There can be no certainty, nor can we provide any assurance, that all conditions will be satisfied or waived, or, if satisfied or waived, when they will be satisfied or waived and, accordingly, the acquisition may not be completed. On December 22, 2023, the Company entered into an amendment agreement (the “Amendment Agreement”) to the Zimbabwe SPA with the parties thereto. As the Sellers are still in the process of satisfying conditions precedent to the closing of the Acquisition in accordance with the Zimbabwe SPA, including but not limited to obtaining requisite governmental approvals, the parties entered into the Amendment Agreement to extend the long stop date for closing the acquisition from December 31, 2023 to December 31, 2024. Although we expect that the last independent technical report will be completed, and accordingly ownership rights to the last mining region (as described above) will vest with the Company, in 2026, there is no guarantee that the Acquisition will be completed on such timeline, or at all.

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Failure to complete the Acquisition may have a material adverse effect on the Company’s business, financial condition and results of operations.

If the Acquisition is not completed, the ongoing businesses of the Company may be adversely affected and the Company will be subject to several risks, including (i) having to pay certain costs relating to the Acquisition, such as legal, accounting, and external consultant fees, (ii) the focus of management on the Acquisition instead of on pursuing other opportunities that could be beneficial, (iii) negative reactions from the financial markets, which could cause a decrease in the market price of our probable reserves for Yangchong mineshares, particularly if the market price reflects market assumptions that the Acquisition will be completed or completed on certain terms; and (iv) negative reactions from regulators, rating agencies, prospective customers, counterparties and employees; all without having fully realized the anticipated benefits of the Acquisition. Failure to complete the Acquisition or a change in the terms of the Acquisition could each have a material adverse effect on the Company’s business, financial condition and results of operations, as well as on our ability to attract future acquisition opportunities.

Even if the Acquisition is approximately one year for iron.completed, we may fail to realize the anticipated benefits associated with it, those benefits may take longer to realize than expected, and we may encounter significant difficulties.

Even if we are successful in completing the Acquisition, we may fail to realize the anticipated benefits of it. The mine dilution lossanticipated benefits of the Acquisition and the projected cash costs necessary to achieve these benefits may be affected by changes in the overall economic, political and regulatory environment, including applicable tax regimes and fluctuations in foreign exchange rates, the viability of mining recovery factorand estimates of Yangchong Mine are approximately 10%reserves at the Zimbabwean lithium mine, the issuance and 90%, respectively. The metallurgical recovery factoraccuracy of zinc and iron are approximately 96% and 87%, respectively.

Suppliers

Wuhu Feishang purchases explosivesthe independent technical reports, the demand for lithium and other auxiliary raw materialprecious minerals, and the realization of the other risks relating to our business described herein. The benefits we expect to realize from suppliers mainly locatedthis Acquisition will depend, in Anhui Province,part, on our ability to successfully extract lithium or precious minerals, if found, and to capitalize on our mining expertise and sales and distribution platform. If we are not able to achieve these objectives, the PRC. For explosives,anticipated benefits of the purchasesAcquisition may not be realized fully or at all or may take longer to realize than expected.

Risks Relating to Additional Acquisitions and Expansion into Other Sectors

We may acquire other businesses or form joint ventures that could negatively affect our operating results, dilute our shareholders’ ownership, increase our debt or cause us to incur significant expense.

We are made on a cash on delivery basis. Foractively seeking opportunities to enter other auxiliary materials, typical credit terms granted by major suppliers range from 30 to 60 days on an open account basis.

For the years ended December 31, 2013, 2014 and 2015, the largest five suppliers accounted for 31%,  52% and 60%, respectively, of Wuhu Feishang’s purchases. For the years ended December 31, 2013, 2014 and 2015, the largest supplier accounted for 15%, 16% and 27%, of Wuhu Feishang’s purchases, respectively.

Customers

Wuhu Feishang sells all of its iron, and historically zinc, products to companiesindustries in the PRC.PRC, as well as other potentially attractive opportunities; however, we cannot offer any assurance that acquisitions of businesses, assets and/or entering into strategic alliances or joint ventures will be successful. We may not be able to find suitable partners or acquisition candidates and may not be able to complete such transactions on favorable terms, if at all. If we make any acquisitions, we may not be able to integrate these acquisitions successfully into our existing infrastructure. In 2012, alladdition, in the event we acquire any existing businesses we could assume unknown or contingent liabilities.

Any future acquisitions could result in incurrence of Wuhu Feishang’s zinc products were solddebt, contingent liabilities or future write-offs of intangible assets or goodwill, any of which could have a negative impact on our cash flows, financial condition and results of operations. Integration of an acquired company may also disrupt ongoing operations and require management resources that otherwise would be focused on developing and expanding the acquired business. We may experience losses related to potential investments in other companies, which could harm our financial condition and results of operations. Further, we may not realize the anticipated benefits of any acquisition, strategic alliance or joint venture if such investments do not materialize.

To finance any acquisitions or joint ventures, we may choose to issue common shares, or a single customer, Huludao Zinc Industry Co., Ltd.,combination of debt and equity as consideration, which could significantly dilute the ownership of our existing shareholders or provide rights to such target shareholders in priority over our common shareholders. Additional funds may not be available on terms that are favorable to us, or at all. If the price of our common shares is low or volatile, we may not be able to acquire other companies or fund a joint venture project using shares as consideration.

Future acquisitions or strategic investments could be difficult to identify and integrate, divert the largest zinc smelterattention of management, and could disrupt our business, dilute shareholder value and adversely affect our business, results of operations, and financial condition.

As part of our growth strategy, we may acquire or invest in Asia. There wasother businesses, assets or technologies that are outside of the sectors we have historically operated in but fit within our strategic goals. Any acquisition or investment may divert the attention of management and require us to use significant amounts of cash, issue dilutive equity securities or incur debt. We have limited experience in acquiring other businesses. In addition, we may be exposed to unknown risks, any of which could adversely affect our business, results of operations, and financial condition, including risks arising from:

•difficulties in integrating the operations, technologies, product or service offerings, administrative systems, and personnel of acquired businesses, especially if those businesses operate outside of our core competency or geographies in which we currently operate;

•potential loss of key employees of the acquired business;

•inability to maintain key business relationships and reputation of the acquired business;

•litigation arising from the acquisition or the activities of the acquired business, including claims from terminated employees, customers, former shareholders or other third parties;

•assumption of contractual obligations that contain terms that are not beneficial to us, require us to license, or increase our risk of liability;

•complications in the integration of acquired businesses or diminished prospects, including as a result of the domestic and global economic downturns;

•failure to generate the expected financial results related to an acquisition in a timely manner or at all;

•failure to accurately forecast the impact of an acquisition transaction; and

•implementation or remediation of effective controls, procedures, and policies for acquired businesses.

Risks Relating to Our Financial Condition and Business

We have incurred losses from operations in each of the preceding three fiscal years of 2021, 2022 and 2023 and there is no zinc productionassurance that we will generate profits from 2013 to 2015.operations in the future.

For the three years ended December 31, 2013,2021, 2022 and 2023, we incurred operating losses of CNY10.48 million, CNY24.55 million and CNY9.14 million (US$1.29 million), respectively. Our operating losses mainly represent administrative expenses, such as legal and professional fees, payroll expenses, our cost of sales and estimated uncollectible receivables, as well as equity-settled share-based compensation for certain eligible individuals under the 2014 Equity Compensation Plan (the “2014 Plan”) granted on July 14, 2022. Any future profitability will be dependent upon many factors, including our successful integration and 2015, Wuhu Feishang’s five largest customers accountedprofitable operations of our newly acquired and existing businesses; our ability to fund our exploration and operating expenses, successfully produce metal outputs, and sell our production output to third parties; and the successful execution of our plans to pivot to other industries. Other factors, such as uncertainty over the demand and market price for 100%lead, silver and other metals, or the availability of attractive acquisition targets in other industries, are outside of our control. There is no assurance that we will be successful in our efforts to achieve profitability, and we expect to incur significant losses for the foreseeable future. We can provide no assurance to investors that we will achieve profitable operations in the future.

We will have to fund operating expenses from other sources until we are able to generate sufficient revenue to pay them.

We have generated losses from operations over each of the past three fiscal years, and we have generated revenues from our current operations in recent periods prior to the cessation of these two businesses. We will continue to incur operating expenses in connection with our exploratory activities, and we intend to fund those expenses with internal resource and/or the proceeds of loans from our Related-Party Debtholders, if available, payments pursuant to the Cooperation Agreement and, to the extent deemed necessary and available, further bank borrowings. We may incur substantial expenses in connection with developing our current operations or identifying an additional focus for our business. There is no assurance that we will be able to secure amounts sufficient to fund our operating expenses until such time as we are able to generate revenues sufficient to pay those expenses.

The loss of key personnel could affect our business and prospects.

We believe that our future success depends in part upon our ability to attract, retain and motivate qualified personnel necessary for the development of our business, particularly as our management has limited experience in industries in which we are exploring potential business opportunities. If one or more members of our management team or other key technical personnel become unable or unwilling to continue in their present positions, and if additional key personnel cannot be hired and retained as needed, our business and prospects for growth could be adversely affected. Intense competition for these personnel in these industries could cause our compensation costs to increase, which could have a material adverse effect on our results of operations. Our future success and ability to grow our business will depend in part on the continued service of these individuals and our ability to identify, hire and retain additional qualified personnel. If we are unable to attract and retain qualified employees, we may be unable to meet our business and financial goals.

Any failure to maintain effective internal controls could have an adverse effect on our business, results of operations and the market price of our shares.

The SEC, as required by Section 404 of the Sarbanes-Oxley Act of 2002 (“SOX”), 100% and 100%adopted rules requiring most public companies to include a management report on such company’s internal control over financial reporting in its annual report, which contains management’s assessment of Wuhu Feishang’s sales, respectively. During the year endedeffectiveness of the company’s internal control over financial reporting. In addition, if we become an accelerated or large accelerated filer, as defined in the SEC’s rules, we will be required to provide an annual attestation from an independent registered public accounting firm on management’s assessment of the effectiveness of the Company’s internal control over financial reporting.

Our management has concluded that our internal control over financial reporting as of December 31, 2013, the three largest customers accounted for 36%, 31% and 19%, respectively, of Wuhu Feishang’s sales. During the year ended December 31, 2014, the three largest customers accounted for 53%, 30% and 17%, respectively, of Wuhu Feishang’s sales. During the year ended December 31, 2015, the three largest customers accounted for 66%, 22% and 6%, respectively, of Wuhu Feishang’s sales.





Competition

Wuhu Feishang faces competition from other smaller mines2023, was effective. However, we cannot assure you that our management will not identify material weaknesses in the region,future, or our independent public registered accounting firm will not identify material weaknesses if it assesses our internal control over financial reporting in the future. In addition, because of the inherent limitations of any internal control over financial reporting, including Fenghuang Minethe possibility of Tongling Multi-metallic Group Limitedcollusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. As a result, if we fail to maintain effective internal control over financial reporting or should we be unable to prevent or detect material misstatements due to error or fraud on a timely basis, investors could lose confidence in the reliability of our financial statements, which in turn could harm our business and results of operations, negatively impact the market price of our shares, and harm our reputation. Furthermore, we have incurred and expect to continue to incur considerable costs and to use significant management time and other resources in an effort to comply with Section 404 of and other requirements of SOX. 

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Risks Relating to Foreign Private Issuer Status

Because our assets are located outside of the United States and all of our directors and officers reside outside of the United States, it may be difficult for you to enforce your rights based on the U.S. federal securities laws against us or our officers and directors or to enforce a judgment of a United States court against us or our officers and directors in the PRC.

We are a BVI company, all of our directors are located outside the United States in Hong Kong, all of our assets and officers are located outside the United States in the PRC, and our operations are conducted in the PRC. We do not maintain a business presence in the United States. Therefore, it may not be possible to effect service of process on such persons in the United States, and it may be difficult to enforce any judgments rendered against us or them. Moreover, there is doubt whether courts in the BVI, the PRC or Hong Kong would enforce (a) judgments of United States courts against us, our directors or officers based on the civil liability provisions of the securities laws of the United States or any state, or (b) in original actions brought in the BVI, the PRC or Hong Kong, liabilities against us or any nonresidents based upon the securities laws of the United States or any state.

Our status as a foreign private issuer results in less information being available about us than about domestic reporting companies.

We are a foreign private issuer and are not required to file as much information about us as domestic issuers are required to file. In this regard:

•we are not required to file quarterly reports on Form 10-Q and our annual reports on Form 20-F are subject to disclosure requirements that differ from annual reports on Form 10-K;

•we are exempt from the provisions of Regulation FD aimed at preventing issuers from making selective disclosures;

•the SEC proxy statement and information statement rules do not apply to us; and

•our officers, directors and principal shareholder are not required to file reports under Section 16 of the Exchange Act detailing their beneficial ownership of our shares; and they are not subject to the short-swing profit provisions under Section 16.

Since there is generally greater and more timely information available about domestic issuers than about foreign private issuers such as us, you will not be afforded the same protections or information as would be available to you if you were investing in a U.S. domestic issuer.

Due to our status as a foreign private issuer, we have adopted IFRS accounting principles, which are different from accounting principles under U.S. GAAP.

We have adopted and presented our financial statements in accordance with IFRS accounting principles. IFRS is an internationally recognized body of accounting principles that are used by many companies outside of the United States to prepare their financial statements, and the SEC permits foreign private issuers such as the Company to prepare and file their financial statements in accordance with IFRS rather than U.S. GAAP. IFRS accounting principles are different from those of U.S. GAAP, and SEC rules do not require us to provide a reconciliation of IFRS accounting principles to those of U.S. GAAP. Accordingly, we suggest that readers of our financial statements familiarize themselves with the provisions of IFRS accounting principles in order to better understand the differences between these two sets of principles.

As a foreign private issuer we are not subject to certain requirements that other Nasdaq-listed issuers are required to comply with, some of which are designed to provide information to and protect investors.

Our common shares are currently listed on Nasdaq and, for so long as our securities continue to be listed, we will remain subject to the rules and regulations established by Nasdaq applicable to listed companies. However, we have elected to claim certain exemptions afforded to foreign private issuers by relevant Nasdaq rules, and as a result:

•a majority of the members of our board of directors (the “Board of Directors” or the “Board”) are not independent as defined by Nasdaq rules;

•our independent directors do not hold regularly scheduled meetings in executive session;

•while executive compensation is recommended by our Compensation Committee, which is comprised of independent directors, the compensation of our executive officers is ultimately determined by the Board of Directors rather than an independent committee of the Board or by the independent members of the Board of Directors;

•related party transactions are not required to be reviewed or approved by our Audit Committee or other independent body of the Board of Directors;

•we are not required to solicit shareholder approval of stock plans or issuances of securities, including those in which our officers or directors may participate; share issuances that will result in a change in control; the issuance of our shares in related party transactions or other transactions in which we may issue 20% or more of our outstanding common shares; or below market issuances of 20% or more of our outstanding shares to any person; and

•we are not required to hold an in-person annual meeting to elect directors and transact other business customarily conducted at an annual meeting.

20 

Due to an exemption from Nasdaq rules applicable to foreign private issuers, our related party transactions may not receive the type of independent review process that those of other Nasdaq-listed companies receive; the terms of these transactions are not negotiated at arm’s-length and may not be as favorable as could be obtained from unrelated parties.

We have historically engaged in a substantial number of transactions with related parties in the ordinary course of business, predominantly with our principal beneficial owner and former Chairman and Chief Executive Officer and/or companies that he owns or controls. These transactions are described in greater detail elsewhere in this annual production capacityreport. In general, Nasdaq rules require that related party transactions be reviewed by an audit committee or other committee comprised of 100,000 tonnesindependent directors. However, under Nasdaq rules applicable to foreign private issuers such as our company, we are exempt from certain Nasdaq requirements, including requirements applicable to independent director review of 63% grade iron concentrate.related party transactions. This exemption is available to us because the laws of the BVI, our home jurisdiction, do not mandate independent review of related party transactions.

Notwithstanding the foregoing, nonrecurring related party transactions (i.e., related party transactions that are not in the ordinary course of business) are submitted for approval by our Board of Directors, following disclosure of the related party’s interest in the transaction, and, in all cases, Board approval has historically included the unanimous approval of our independent directors. In addition, our annual audited financial statements, including the related party transactions reported therein, are approved by our Audit Committee, which is comprised solely of independent directors. However, except to the limited extent described above, these transactions are not individually reviewed or approved solely by independent directors. While management believes that Wuhu Feishang enjoys a competitive advantage based upon its high product quality and purity, and lower cost of production.

Research and Sampling Procedures

In orderour related party transactions have been on terms at least as favorable to examine the anomaliesCompany as could be obtained from unrelated parties, there is no assurance that such is the case or will be so in the exploration areas,future, or that shareholders would not be better protected if we were not exempt from, or we chose to voluntarily comply with, the applicable Nasdaq rules.

Risks Relating to Our Common Shares

You may experience dilution to the extent that our common shares are issued upon the exercise of outstanding warrants or other securities that we may issue in the future.

You may experience dilution to the extent that our common shares are issued upon the exercise of our outstanding warrants, and evaluateif we issue additional equity securities, or there are any issuances and subsequent exercises of stock options issued in the future. Up to 1,115,903 Common shares may be issued with the exercise of warrants at a per share exercise price of $3.00 issued to the investors and up to 74,394 Common shares may be issued with the exercise of warrants at a per share exercise price of $2.20 issued to the placement agent in a private placement (the “Private Placement”) in connection with a registered offering of 1,487,870 Common shares to the same investors at a price of $2.20 per Common Share (the “Registered Offering”) in February 2024. Up to 1,620,000 common shares may be issued with the exercise of options at a per share exercise price of $3.115 issued to certain eligible individuals under the Company’s 2014 Plan as adjusted by a five-to-one share combination on April 3, 2023. See, “Item 10.C. Additional Information — Material Contracts.”

Substantial future sales or perceived potential sales of our common shares in the public market could cause the price of our common shares to decline.

Sales of our common shares in the public market, or the perception that these sales could occur, could cause the market price of our common shares to decline. As of the date of this annual report, we have 9,865,767 Common shares issued and outstanding. On February 16, 2024, the Company entered into a securities purchase agreement with certain institutional investors (the “Investors”), pursuant to which the Company agreed to issue and sell, (i) in a registered direct offering, up to an aggregate of 1,487,870 of common shares, no par value of the Company at a per Share purchase price of $2.20, and (ii) in a concurrent private placement, warrants initially exercisable for the purchase of an aggregate of 1,115,903 common shares of the Company (the “Investors Warrants”), for gross proceeds of approximately $3.27 million, before deducting fees to the placement agent and other estimated offering expenses payable by the Company. In connection will the Registered Offering and Private Placement pursuant to the terms of a placement agency agreement, dated February 16, 2024 between the Company and Placement Agent (the “Placement Agent Agreement”), the Company agreed to issue to the Placement Agent warrants to purchase an aggregate of up to 74,394 Common shares at a per share exercise price of $2.20 (the “Placement Agent Warrants”, and together with the Investors Warrants, the “Warrants”). Assuming exercise of all of the Warrants by cash and without adjustment, a maximum of 1,190,297 Common shares underlying the Warrants will be offered for sale, subject to any restrictions as applicable under the Securities Act.

Certain of the Selling Shareholders may acquire their prospecting potential, comprehensive researchCommon shares at a price that is undertaken substantiallyless than the market price of the Common shares in the future, may earn a positive rate of return even if the price of the Common shares declines and may be willing to sell their Common shares at a price less than shareholders that acquired Common shares in the public market.

Certain of our Selling Shareholders may purchase their respective common shares at prices lower than the market prices in the future and may therefore experience a positive rate of return on their investment, even if our public shareholders experience a negative rate of return on their investment. As a result, the Selling Shareholders are able to recognize a greater return on their investment than shareholders that acquired Common shares in the public market. Up to 1,115,903 Common shares may be issued with the exercise of the Investor Warrants at a per share exercise price of $3.00 and up to 74,394 Common shares may be issued with the exercise of the Placement Agent Warrants at a per share exercise price of $2.20. Furthermore, the Selling Shareholders may earn a positive rate of return even if the price of the Common shares declines significantly. As a result, the Selling Shareholders may be willing to sell their shares at a price less than shareholders that acquired their Common shares in the public market or at higher prices than the price paid by such Selling Shareholders, the sale of which would result in the Selling Securityholder realizing a significant gain even if other CHNR shareholders experience a negative rate of return.

21 

There is a limited number of our common shares in the public float and trading in our shares is not active; therefore, our common shares tend to experience price volatility.

There are currently approximately 4,357,828 of our common shares in the public float and, in general, there has not been an active trading market for our shares. Our shares tend to trade along with other shares of public companies whose operations are based in the PRC, and, at times, in tandem with other natural resource companies. These shares tend to exhibit periods of extreme volatility and price fluctuations, even when there are no events peculiar to the Company that appear to warrant price changes. We cannot assure you that price volatility will not continue in the future or, as follows:a result thereof, that market prices will reflect actual values of our company.

(a)As a consequence of this lack of liquidity, the trading of relatively small quantities of shares by our shareholders may disproportionately influence the price of those shares in either direction. The share price could, for example, decline precipitously in the event that a large number of shares are sold on the market without commensurate demand. As a consequence of this enhanced risk, more risk-adverse investors may, due to the fear of losing all or most of their investment in the event of negative news or lack of progress, be more inclined to sell their shares on the market more quickly and at greater discounts than would be in the case of the stock of a seasoned issuer, negatively impacting the trading price of our common shares.

Conduct field geology work and sample checkThe price at which common shares are quoted on Nasdaq may increase or decrease due to a number of anomalies infactors, which may negatively affect the exploration areaprice of the common shares.

The price at which the common shares are quoted on Nasdaq may increase or decrease due to a number of factors. These factors may cause the common shares to trade at prices above or below the prices at which the common shares were first offered without regard to our operations and studyfinancial performance. Some of the factors which may affect the price of the common shares include:

•fluctuations in the domestic and international market for listed stocks;
•general economic conditions, including interest rates, inflation rates, exchange rates, commodity and oil prices;
•changes to government fiscal, monetary or regulatory policies, legislation or regulation;
•inclusion in or removal from market indices;
•acquisition and dilution;
•climate change and pandemic risk;
•the nature of the markets in which we operate; and
•general operational and business risks.

Other factors which may negatively affect investor sentiment and influence the Company, specifically or the stock market more generally include acts of terrorism, an outbreak of international hostilities or tensions, fires, floods, earthquakes, labor strikes, civil wars, natural disasters, outbreaks of disease or other man-made or natural events. We have limited ability to insure against some of the risks mentioned above.

Our principal beneficial owner and his affiliates control us through their formation. Carry out engineering exerciseshare ownership; and sampling procedure on discovered ore bodies or anomalies found in geochemical prospecting. Analyze the ore body location, mineralization and abnormality distributions.their interests may differ from those of other shareholders.

(b)

Based on the resultsMr. Li Feilie, beneficial owner of geochemical prospecting, carry out mountain land engineering in the anomalous region with highest probability of mineralization. Develop long trench exploration activities on the section line on the targeted area to reveal the anomaly, and set up additional short trench to control the surface if needed.

(c)

Exploration drilling: Based on the distribution data of ore bodies obtained from mountain land engineering, other geological and condition factors, conduct a few shallow drilling to check the anomaly in the targeted mineralization zone in order to obtain the data regarding mineralization distribution, scale and grade. This provides the basis for next step exploration.

A brief descriptionmajority of our sampling proceduresoutstanding common shares, beneficially owns approximately 54.5% of our outstanding common shares, and as a result, Mr. Li is as follows:

(a)

Sample collection: Collect 200g of secondary halo sample from “B” eluvium at a depth of 10-30 cm. Sampling is taken from two different points in a range within 1/4 dot pitch distance from the measuring points. If the sampling cannot be conducted in the area near measuring points due to bed rock or surface water body, then an additional sampling will be picked up within a wide range of 10 meters. The reason for skipped sampling should be documented on the result map.

(b)

Sample preparation: The sample will be dehydrated, sieved through 60-mesh stainless-steel-wire-mesh, and blended in diagonal method. It will then be placed into paper packaging, assigned code, delivered to the laboratory, rotary split and sieved into 0.093mm fractions. Afterwards, it will be screened through 160 mesh sieve. Finally, semi-quantitative spectroscopic analysis will be carried out.

(c)

Sample analysis: There are four analytical methodologies adopted to analyze the samples - direct reading spectrometry; polarographic analysis; chemical spectrometry; and X-ray fluorescence spectrometry.

(d)

Quality examination and analysis: During chemical analysis, those samples with abnormal results or obtained from anomalous sectors will be selected for spot chemical test. Usually, 5% out of the samples will be picked up.

We have developed our exploration program to comply with the following PRC protocols and/ or specifications:

·

Specifications of survey for geological and mineral resources exploration (DZ/ T0091);

·

General requirements for solid mineral exploration (GB/ T13908 - 2002);

·

Specifications for drafting geological report on solid mineral resources & closed pit (DZ/ T0033 - 2002);

·

Geologic exploration standard of iron, manganese and chromium mineral resources (DZ/ T0200 - 2002);

·

Geologic exploration standard of copper, lead, zinc, silver, nickel and molybdenum mineral resources (DZ/ T0214 - 2002); and

·

Rules for data compilation and comprehensive research on geological and mineral resources exploration materials (DZ/ T0079 - 1993).





Government Regulation of Iron/ Zinc/ Non-ferrous Metal Mining Activities

Under the “Mineral Resources Law”, all mineral resources in the PRC are owned by the State. Mining rights are granted by the State permitting recipients to conduct mining activities in a specific mining area during the specified license period. Although Wuhu Feishang believes its licenses will continue to be renewed,able to influence the outcome of shareholder votes on various matters, including the election of directors and extraordinary corporate transactions such as necessary, there canbusiness combinations. Through his related companies, Mr. Li also provides funding to support the Company’s operating expenses and holds a substantial amount of the Company’s debt (see “Item 7.B. Major Shareholders and Related Party Transactions – Related Party Transactions,” below). Mr. Li’s interests may differ from those of other shareholders. Additional information relating to the beneficial ownership of our securities is contained elsewhere in this annual report under “Item 6.E. Directors, Senior Management and Employees – Share Ownership.”

The rights of our shareholders are governed by BVI law, the provisions of which may not be no assuranceas favorable to shareholders as under U.S. law, and our directors may take actions with which you disagree without first receiving shareholder approval.

Our directors have the power to take certain actions without shareholder approval, including the amendment of our Amended and Restated Memorandum of Association (the “Memorandum”) and our Articles of Association (the “Articles”) (save and except that such amendments may not restrict the rights or power of our shareholders to amend the Memorandum or the Articles, and may not change the percentage of shareholders required to pass a resolution to amend the Memorandum or the Articles, and further that our directors may not amend the Memorandum or the Articles in circumstances where they may not be amended by our shareholders), and also including an increase or reduction in the maximum number of shares which our company is authorized to issue, which would require shareholder approval under the laws of most jurisdictions in the United States. In addition, the directors of a BVI company, subject in certain cases to court approval but without shareholder approval, may, among other things, implement a reorganization, certain mergers or consolidations with a subsidiary, the sale, transfer, exchange or disposition of any assets, property, part of the business, or securities of the company, or any combination of the foregoing, if they determine it is in the best interests of the company. Our ability to amend our Memorandum and Articles without shareholder approval could allow our directors to implement provisions to those documents that have the effect of delaying, deterring or preventing a change in our control without any further action by the shareholders, including a tender offer to purchase our common shares at a premium over then current market prices, as could the ability of our directors to issue blank check preferred shares.

22 

The elimination of monetary liability against our directors and officers under our Articles and the indemnification of our directors and officers may result in substantial expenditures by us and may discourage lawsuits against our directors and officers.

Our Articles contain provisions that indemnify our directors and officers against any liability, action, proceeding, claim, demand, costs, damages or expenses, including legal expenses, whatsoever which they may incur as a result of any act or failure to act in carrying out their functions, other than such liability that they may incur by reason of their own actual fraud or wilful default. No such indemnified person shall be liable to our company for any loss or damage incurred by our company as a result of carrying out their functions unless that liability arises through the actual fraud or wilful default of such indemnified person. We may provide contractual indemnification obligations under agreements with our directors, officers and employees. These indemnification obligations could result in our incurring substantial expenditures to cover the cost of settlements or damage awards against directors, officers and employees, which we may be unable to recoup. These provisions and resultant costs may also discourage us from bringing a lawsuit against directors, officers and employees for breach of their fiduciary duties, and may similarly discourage the filing of derivative litigation by our shareholders against our directors, officers and employees even though such actions, if successful, might otherwise benefit the Company and our shareholders.

We may be classified as a passive foreign investment company, which could result in adverse U.S. federal income tax consequences to U.S. shareholders.

We have not made a determination whether we will or will not be a passive foreign investment company (“PFIC”) for U.S. federal income tax purposes in the casecurrent tax year or in subsequent tax years. Whether we are a PFIC is determined on a year-by-year basis, and we cannot assure you that Wuhuwe are not and we will not be a PFIC for our future tax years. A non-U.S. corporation is generally a PFIC if either (i) at least 75% of its gross income is passive income for a tax year or (ii) at least 50% of the value of its assets (based on an average of the quarterly values of the assets during a tax year) are attributable to assets that produce or are held for the production of passive income. The market value of our assets may be determined to a large extent by the market price of our common shares. If we are treated as a PFIC for any tax year in which U.S. shareholders hold common shares, certain adverse U.S. federal income tax consequences could apply to such U.S. shareholders. For further discussion of the implications of PFIC status, please refer to “Item 10.E. Additional Information – Taxation – United States Federal Income Taxation.”

It is not possible to foresee all risks that may affect us. Moreover, we cannot predict whether we will successfully effectuate our current business plans. Each prospective purchaser of our common shares is encouraged to carefully analyze the risks and merits of an investment in the common shares and should take into consideration when making such analysis the Risk Factors discussed above, among others.

ITEM 4.INFORMATION ON THE COMPANY

A.History and Development of the Company

China Natural Resources, Inc. was incorporated in the BVI on December 14, 1993, and is a company limited by shares incorporated under the BVI Business Companies Act. We are not a Chinese operating company but a BVI holding company with operations conducted by our subsidiaries established in the PRC. See, “Risk factors — Risks Relating Our Operations and the Doing Business in the PRC — The PRC government may intervene or influence our operations at any time, or may exert more control over the China operations of an offshore holding company and offerings conducted overseas and foreign investment in China-based issuers, such as our PRC subsidiaries. Such control or influence may significantly limit our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless.”

Prior to the sale of PST Technology in July 2023, the Company operated in two reportable operating segments: wastewater treatment and exploration and mining. During 2021, the Company entered the rural wastewater treatment industry in the PRC by acquiring a 51% equity interest in its operating subsidiary Shanghai Onway. Additionally, the Company is engaged in metal exploration and mining activities in Inner Mongolia Autonomous Region of the PRC, including exploring for lead, silver and other nonferrous metal. After the sale of Precise Space-Time Technology Limited and the disposal of the wastewater treatment segment in July 2023, the Company is solely engaged in metal exploration and mining activities in Inner Mongolia Autonomous Region of the PRC, including exploring for lead, silver and other nonferrous metal.

In February 2023, the Company entered into a material definitive agreement with Feishang Group, the Company’s controlling shareholder, and Top Pacific, a non-affiliate, and Mr. Li Feilie and Mr. Yao Yuguang, to acquire Williams Minerals, which owns the mining permit for a Zimbabwean lithium mine. In December 2023, the Company entered into an amendment agreement to the sale and purchase agreement dated as of February 27, 2023 by and among the Company, Feishang Group, the Company’s controlling shareholder, and Top Pacific, a non-affiliate, and Mr. Li Feilie and Mr. Yao Yuguang for the extension of the long stop date for closing the Acquisition from December 31, 2023 to December 31, 2024.

The Company is also actively exploring business opportunities in other non-natural resource sectors.

24 

Acquisition of Williams Minerals

On February 27, 2023, the Company entered into a material definitive agreement (the “Zimbabwe SPA”) with Feishang Group and Top Pacific, as well as Mr. Li Feilie and Mr. Yao Yuguang, to indirectly acquire all interests in Williams Minerals, which owns the mining permit for a Zimbabwean lithium mine. At the time of the entry into the Zimbabwe SPA, Feishang Group owned 70% of Williams Minerals, and Top Pacific, a non-affiliate, owned the remaining 30%. Under the Zimbabwe SPA, it is expected that the Company will be ableindirectly acquire all interests in Williams Minerals in the second fiscal quarter of 2023, and that the Company’s “ownership” (which, as defined in the Zimbabwe SPA, relates to exploitits legal possession and control) of the entire mineralZimbabwean lithium mine will vest cumulatively, region by region from 2024 through 2026, contingent upon the issuance of independent technical reports and the Company’s full settlement of the purchase consideration in cash and restricted shares. For each relevant region of the lithium mine, until the Company’s legal possession and control vests, the Sellers will maintain legal possession and control, including the right of exploration, sale of lithium, and the revenue derived therefrom, as well as liability for operational costs and third-party claims.

Subject to the terms and conditions of the Zimbabwe SPA, the Company plans to issue restricted shares as 50% of the consideration for the Acquisition, with the remaining 50% of the consideration comprised of a promissory note and/or cash, for maximum consideration of US$1.75 billion (3.5 million estimated tons of measured, indicated and inferred resources of lithium oxide (grade 1.06% or above in accordance with the standard under the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves) priced at US$500 per ton). The Company may issue restricted CHNR shares at a discount to the market price to secure a portion of the required capital. On April 14, 2023, the Company announced that it completed its mines during its license period. If Wuhu Feishang failsdue diligence investigation with satisfactory results and decided to renew itsproceed with the Acquisition. The Company paid an aggregate of $35 million by way of promissory notes (instead of cash) as a deposit on April 21, 2023, and will pay an aggregate of $140 million by way of promissory notes and/or cash as an initial installment.

Completion of the Acquisition is contingent upon the satisfaction of a number of conditions, including, among other things, the issuance of independent technical reports, the actual quantity of qualified lithium oxide metal resources proven or estimated to exist in each mining rights upon expiry or if it cannot effectively utilize the resources within a license period, the operation and performance of Wuhu Feishang may be adversely affected.

Wuhu Feishang’s mining rights entitle it to undertake mining activities and infrastructure and ancillary work, in compliance with applicable laws and regulations, within the specific area covered by the license duringrelevant report, and the license period. Wuhu FeishangCompany’s full settlement of the purchase consideration in cash and restricted shares. There is required to submit a mining proposalno guarantee that the Acquisition will close or be completed at the anticipated valuation and feasibility studiesterms, or at all.

On December 22, 2023, the Company entered into an amendment agreement (the “Amendment Agreement”) to the relevant government authority;sale and purchase agreement dated as of February 27, 2023 by and among Feishang Group and Top Pacific (China) Limited (together, the “Sellers”), and the respective beneficial owner of the Sellers, Mr. Li Feilie and Mr. Yao Yuguang with the parties thereto. As the Sellers are still in the process of satisfying conditions precedent to the closing of the acquisition in accordance with the Zimbabwe SPA, including but not limited to obtaining requisite governmental approvals, the parties entered into the Amendment Agreement to extend the long stop date for closing the acquisition from December 31, 2023 to December 31, 2024.

The foregoing description of the Zimbabwe SPA, and the Amendment Agreement thereto, is only a summary and is also obligated to pay a resources compensation feequalified in its entirety by reference to the State in an amount equal to 2% of annual sales of zincsale and iron concentrates. Resources compensation fees of CNY187,300 (US$28,852), CNY166,000 (US$25,571) and CNY367,000 (US$56,533) were paid in 2013, 2014 and 2015, respectively. The natural resources fee for the renewal of the mining rights to Yangchong Mine of CNY3,002,900 (US$462,575) was paid in December 2005.

The State Environmental Protection Administration Bureau is responsible for the supervision of environmental protection in, the implementation of national standards for environmental quality and discharge of pollutants for,purchase agreement dated February 27, 2023, and the supervisionamendment agreement to the sale and purchase agreement dated December 22, 2023, by and among the Company, Feishang Group Limited, Top Pacific (China) Limited, Li Feilie, and Yao Yuguang, a copy of the environmental management systemeach of the PRC. Environmental protection bureaus at the county level or above are responsible for environmental protection within their jurisdictions.which is incorporated by reference as Exhibit 4.17 and Exhibit 4.20 to this annual report.

The laws

25 

Acquisition and regulations governing environmental protection require each company to lodge environmental impact statements for a construction project withSale of PST Technology

We diversified our business by entering the environmental protection bureaus atsector, which provides compelling synergies with our current operations, through the county level. These statements must be filed prioracquisition of PST Technology. On July 27, 2021, the Company entered into a Sale and Purchase Agreement with Li Feilie, pursuant to which the Company issued three million restricted common shares, no par value, and transferred 120 million shares of FARL, as well as approximately CNY10.3 million (US$1.5 million), to Feishang Group, in exchange for all outstanding shares of PST Technology and the transfer to the commencementCompany of construction, expansion or modificationapproximately CNY130.0 million (US$18.4 million) of a project. The environmental protection bureaus inspect new production facilities and determine compliance with applicable environmental standards, priorPST Technology’s outstanding debt previously owed to the commencement of operations.

The “Environmental Protection Law” requires production facilities that may cause pollution or produce other toxic materials to take steps to protect the environment and establish an environmental protection and management system. The system includes the adoption of effective measures to prevent and control exhaust gas, sewage, waste residues, dust or other waste materials. Entities discharging pollutants must register with the relevant environmental protection authorities.

Penalties for breaching the Environmental Protection Law include a warning, payment of a penalty calculated on the damage incurred, or payment of a fine. When an entity fails to adopt preventive measures or control facilities that meet the requirements of environmental protection standards, it is subject to suspension of production or operations and for payment of a fine. Material violations of environmental laws and regulations causing property damage or casualties may result in criminal liabilities.

Management believes that Wuhu Feishang is in material compliance with all applicable environmental protection requirements of the State.

NON BUSINESS SEGMENT – Corporate Activities

Feishang Management

Feishang ManagementMr. Li, which debt was incorporated in the PRC in October 2008. It is aeliminated upon consolidation. PST Technology, through its wholly owned subsidiary of Yunnan Mining andsubsidiaries, owns a 51% equity interest in Shanghai Onway. Shanghai Onway is principally engaged in the development of rural wastewater treatment technologies, the provision of managementequipment and materials for rural wastewater treatment, undertaking EPC projects and public-private partnership (“PPP”) projects in relation to rural wastewater treatment, and the provision of consulting servicesand professional technical services. The total value of the consideration that the Company provided to Mr. Li was approximately CNY104.1 million (US$14.7 million), which amount was a 20% discount to the other companies invaluation (including the group.

FMH Services

FMH Services is a Florida company incorporated in November 2007 in connection with a proposed transaction that was not consummated. FMH Services, which is wholly ownedassigned debt) of PST Technology provided by CHNR, is currently dormant.

Sunwide

Sunwide was incorporated in the British Virgin Islands in January 2001. Sunwide is a wholly owned subsidiary of CHNR and is currently dormant.

Silver Moon

Silver Moon is a British Virgin Islands company incorporated in March 2000. Silver Moon, which is 80%-owned by CHNR, is not currently engaged in active business operations.





DISCONTINUED SEGMENT - Coal-Mining and Related Businessesan independent valuation firm.

On December 31, 2013,July 28, 2023, the Board of Directors approvedCompany entered into a conditional special interim dividend to the shareholders of CHNR satisfied by way of a distribution in specie of the entire issued share capital ofSale and Purchase Agreement with Feishang Anthracite to all shareholders of CHNR in proportion to their respective shareholdings in CHNR on the Distribution Record Date.Group Limited (“Feishang Group”). Pursuant to the Distribution, each shareholderagreement, the Company agreed to sell 100% equity interest of CHNR became entitledPST Technology to fiveFeishang Group, together with PST Technology’s outstanding payable owed to the Company, for consideration of approximately CNY95,761,119 comprising: (i) CNY -34,197,300, the fair value of 100% equity interest of PST Technology as determined by the independent valuation report dated July 28, 2023; (ii) CNY 129,958,419, the book value of PST Technology’s outstanding payable owed to the Company.

PST Technology, through its wholly owned subsidiaries, owns a 51% equity interest in Shanghai Onway and Shanghai Onway’s subsidiaries which are principally engaged in the development of rural wastewater treatment technologies, the provision of equipment and materials for rural wastewater treatment, undertaking EPC and PPP projects in relation to rural wastewater treatment, and the provision of consulting and professional technical services. After PST Technology’s disposition, the Company discontinued the operation in wastewater treatment segment and continue engaging in the exploration and mining business.

Acquisition of FARL Shares

On August 17, 2020, we acquired 120 million shares of Feishang Anthracite for every share of CHNR heldFARL, a company that is traded on the Distribution Record Date. After the completion of the Distribution, CHNR no longer holds any shares in Feishang Anthracite.

The Spin-Off did not involve any offering of new shares of Feishang Anthracite or a public offering of any other securities and no funds were raised pursuant to the Spin-Off. The Distribution became unconditional upon successful listing by way of introduction on the Main Boardmain board of the Hong Kong Stock Exchange of Feishang Anthracite on January 22, 2014.

In preparation for the Distribution, the Board of Directors passed resolutions in writing on December 6, 2013 to approve the following matters:

-

changeunder ticker 1738, representing approximately 8.7% of the authorized share capitaloutstanding equity of Feishang Anthracite from US$50,000 divided into 50,000 ordinary shares of US$1.00 each to HK$10,000,000 divided into 1,000,000,000 Shares of HK$0.01 each;

-

repurchase and cancellation of all issued shares of US$1.00 each from CHNR for US$1.00; and

-

issue of a total of 124,554,580 Shares of HK$0.01 each to CHNR for HK$98,380,000.

These transactions were completed on December 12, 2013.

Prior to the Spin-Off, Feishang Anthracite and its direct and indirect subsidiaries operated the Company’s coal segment, including the exploration, construction, development and operation of coal mines located in Guizhou Province, the PRC.

C.

Organizational Structure

China Natural Resources is a holding company owning the following subsidiaries, with the interests indicated (as of April 22, 2016):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CHNR

(BVI)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

100%

 

 

 

 

100%

 

 

 

 

80%

 

 

 

 

 

100%

 

 

 

 

100%

 

 

 

 

100%

 

 

 

 

100%

 

 

 

FMH Services

(Florida, US)

 

Feishang Mining

(BVI)

 

Silver Moon

(BVI)

 

 

China Coal

(HK)

 

Sunwide

(BVI)

 

Newhold

(BVI)

 

Pineboom

(BVI)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

100%

 

 

 

 

 

 

 

 

 

 

100%

 

 

 

 

 

 

 

 

 

100%

 

 

 

 

100%

 

 

 

 

 

 

 

 

Wuhu Feishang*

(PRC)

 

 

 

 

 

 

 

Yangpu
Lianzhong

(PRC)

 

 

 

 

 

Feishang

Yongfu

(HK)

 

Feishang

Dayun

(HK)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

100%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Yangpu
Shuanghu

(PRC)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

100%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Yunnan Mining

(PRC)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

100%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Feishang Management

(PRC)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

*  All current operations are conducted by Wuhu Feishang.


See Item 4.B. above and Exhibit 8 for descriptions of the Company’s subsidiaries.





D.

Property, Plant and Equipment

The Company’s administrative offices and its principal subsidiaries are located in Hong Kong, Wuhu (Anhui Province) and Shenzhen (Guangdong Province) in the PRC.that company. On July 1, 2008, the Company and Anka Consultants Limited (“Anka”), a private Hong Kong company that is owned by certain directors ofAugust 17, 2020, the Company entered into a licensesale and purchase agreement in respect of the Company’s head office in Hong Kong. The total area of the office was approximately 368 square meters in which the Company shared 238 square meters. The license agreement provided that the Company shared certain costs and expenses in connection with its use of the office, in addition to accounting and secretarial services and day-to-day office administration provided by Anka. On September 1, 2013, the Company and Feishang Anthracite entered into new license agreements with Anka, respectively,Group pursuant to which the Company andissued 9,077,166 of the Company’s common shares, no par value, to Feishang AnthraciteGroup, in exchange for 120 million shares of FARL, with an approximate aggregate value of HK$87,522,000 (determined at a price of HK$1.006 per share, representing the office premisesaverage closing price of 238 square metresFARL on the five trading days before August 17, 2020, adjusted for a 27.5% discount based on an equal basis. The agreements also provide thatindependent valuation report). Feishang Group is the largest stockholder in the Company, and Feishang Anthracite shall share certain costs and expenses in connection with their useis wholly owned by Mr. Li Feilie, who also beneficially owns 53.53% of the office. In addition, Anka continues to provide accounting and secretarial services and day-to-day office administration to the Company.outstanding equity of FARL. For more information, see “Item 7.B. – Major Shareholders And Related Party Transactions – Related Party Transactions – Acquisition of FARL Shares in Exchange for Newly Issued Company Shares.” The intial term120 million shares of FARL were transferred as part of the agreement was from September 1, 2013 to June 30, 2014 and its terms shall remain effectiveconsideration for the acquisition of all subsequent extensionthe outstanding shares of leases. The lease was extended for two years from July 1, 2014 to June 30, 2016. For the years ended December 31, 2013, 2014 and 2015,PST Technology. See, “Item 4.A. Information on the Company paid its share- History and Development of rental expensesthe Company — Acquisition and rates to Anka amounting to approximately CNY956,000 (US$147,265), CNY565,000 (US$87,034) and CNY560,000 (US$86,264), respectively.Sale of PST Technology.”

The offices, mining sites and other processing facilities of Wuhu Feishang are all locatedExploration Activities in Wuhu City, Anhui Province in the PRC. Wuhu Feishang’s office premises, processing facilities and warehouses cover a total gross area of approximately 26,000 square meters. As is typical in the PRC, the PRC government ownsInner Mongolia

In November 2017, we acquired all of the land on whichissued and outstanding capital stock of Bayannaoer Mining for a purchase price of CNY716,900. Bayannaoer Mining holds an exploration permit issued by the improvementsLand and mines are situated. Wuhu Feishang assumedResources Department of Inner Mongolia Autonomous Region covering the rightsMoruogu Tong Mine, located in Wulatehouqi, Bayannaoer City, Inner Mongolia. The exploration permit evidences Bayannaoer Mining’s right to useexplore for minerals at the landMoruogu Tong Mine. Initial results of the exploration program indicate the presence of lead and its leasehold properties when it acquiredsilver, with the entire businessprospect that further surveying and exploration may indicate the presence of Anhui Fanchang, Wuhu Feishang’s predecessor.

For the years ended December 31, 2013, 2014,other ores such as copper. We anticipate that our working capital and 2015, the Company incurred capital expenditures (excluding fees for renewalour exploration activities will be funded by non-interest-bearing loans from our affiliates and funds provided pursuant to the Cooperation Agreement. See “Item 4.B. – Information on The Company – Business Overview – Metal Exploration Activities” below for more information and a discussion of mining rights) of CNY300.59 million (US$46.30 million), CNY54.53 million (US$8.40 million) and CNY6.25 million (US$0.96 million), respectively.

See Item 4.B. fordevelopments at the details of the property, plants and equipment used by each of the mines and Item 5.B. for the Company’s material commitments for capital expenditures.Moruogu Tong Mine.

ITEM 4A.

UNRESOLVED STAFF COMMENTS

None.

ITEM 5.

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

Forward-Looking Statements

The following discussionThis annual report contains statements that constitute forward-looking statements within the meaning of Federalthe U.S. federal securities laws. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. For example, words such as “may,” “will,” “should,” “estimates,” “predicts,” “possible,” “potential,” “continue,” “strategy,” “believes,” “anticipates,” “plans,” “expects,” “intends,” and similar expressions are intended to identify forward-looking statements. These statements appear in a number of places in this annual report and include, without limitation, statements regarding the intentions, beliefsbelief and current expectations of the Company, managementits directors or its officers with respect to the Company'sCompany’s policies regarding its business development, investments, dispositions, financings, conflicts of interest and other matters;matters, and trends affecting the Company'sCompany’s financial condition or results of operations. Forward-looking statements are not a guarantee of future performance and involve risks and uncertainties, and actual results may differ materially from those in the forward-looking statement as a result of various factors. Among the risks and uncertainties that could cause our actual results to differ from our forward-looking statements are our intent, belief and current expectations as to business operations and operating results, uncertainties regarding the governmental, economic and political circumstances in the People’s Republic of China, risks and hazards associated with the Company’s mining activities, uncertainties associated with metal and coal price volatility, uncertainties associated with the Company’s reliance on third-party contractors, are:

•uncertainties regarding the governmental, economic and political circumstances in the PRC;

•the impact on the Company’s financial position, growth potential and business of the sale of PST Technology and Shanghai Onway specifically;

•uncertainties related to the Company’s ability to identify potential partners or acquisition targets as it considers strategic alternatives in other non-natural resources sectors;

•uncertainties associated with metal price volatility;

•uncertainties concerning the viability of mining and estimates of reserves at the Company’s Moruogu Tong Mine in Inner Mongolia;

•uncertainties regarding our ability to acquire a mining permit and to extract mineral reserves located in the Moruogu Tong Mine in an economically feasible manner;

•uncertainties related to our ability to fund operations and capital expenditures;

uncertainties relating to possible future increases in operating expenses, including coststhe acquisition of labor and materials, and other risks detailed from time to time in the Company’s filings with the Securities and Exchange Commission, including without limitation the information set forth in Item 3.D. of this Annual Report under the heading, "Risk Factors." Williams Minerals that were not discovered by us through our due diligence investigation; 

•uncertainties related to the completion of the acquisition of Williams Minerals which is conditional upon satisfaction or waiver of various conditions;

•failure to complete the acquisition of Williams Minerals may have a material adverse effect on the Company’s business, financial condition and results of operations;

•uncertainties related to the realization of the anticipated benefits associated with it;

•the potential lack of appetite for the Company’s current holdings as consideration for a transaction;

•uncertainties related to geopolitical events and conflicts, such as the conflict between Russia and Ukraine;

•uncertainties regarding the impact of climate change on our operations and business;

•uncertainties related to possible future increases in operating expenses;

•the fluctuations of interest rates and foreign exchange rates;

•uncertainties related to the political situation between the PRC and the United States, and potential negative impacts on companies with operations in the PRC that are listed on exchanges in the United States; and

•other risks detailed from time to time in the Company’s filings with the SEC, including without limitation the information set forth in Item 3.D. of this annual report under the heading “Risk Factors.”

vi 

With respect to forward-looking statements that include a statement of its underlying assumptions or bases, the Company cautions that, while it believes itssuch assumptions or bases areto be reasonable and havehas formed them in good faith, assumed facts or bases almost always vary from actual results, and the differences between assumed facts or bases and actual results can be material depending on the circumstances. When, in any forward-looking statement, the Company, or its management, expresses an expectation or belief as to future results, that expectation or belief is expressed in good faith and is believed to have a reasonable basis, but there can be no assurance that the stated expectation or belief will result or be achieved or accomplished. We qualify all of our forward-looking statements by these cautionary statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. You should read this annual report and the documents that we reference in this annual report completely and with the understanding that our actual future results may be materially different from what we expect.



Market and Industry Data

This annual report includes market, economic, and industry data as well as certain statistics and information relating to our business, markets, and other industry data, which we obtained or extrapolated from industry publications, generated through internal estimates, our review and analysis of market conditions, surveys, customer feedback, and reports provided by various statistics providers, market research organizations, and others. While we believe that such data is reliable, we have not independently verified such data and cannot guarantee the accuracy or completeness thereof. Additionally, we cannot assure you that any of the assumptions underlying these statements are accurate or correctly reflect our position in the industry, and not all of our internal estimates have been verified by any independent sources. Furthermore, we cannot assure you that a third party using different methods to assemble, analyze, or compute market data would obtain the same results.

vii



PART I

ITEM 1.IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

Not applicable.

ITEM 2.OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3.KEY INFORMATION

The PRC government has significant authority to exert influence on the ability of a China-based company, like us, to conduct its business, accept foreign investments or be listed on a U.S. stock exchange. We also face risks associated with recent statements and regulatory actions by the PRC government, including those related to regulatory approvals of offshore securities offerings, anti-monopoly regulatory investigations and actions, cybersecurity and data privacy compliance. See “Item 4. Information on the Company – 4.A. History and Development of the Company – Recent Regulatory Development” for more information about these new laws and regulations. If the CSRC, CAC or other PRC regulatory agencies determine that prior approval is required for any of our offerings of securities overseas or maintenance of the trading status of the Common shares, we cannot guarantee that we will be able to obtain such approval in a timely manner, or at all. The CSRC, CAC or other PRC regulatory agencies may also take actions requiring us, or making it advisable for us, not to proceed with such offering or maintain the trading status of our common shares. If we proceed with any of such offering or maintain the trading status of our common shares without obtaining the CSRC’s, CAC’s or other PRC regulatory agencies’ approval to the extent it is required, or if we are unable to comply with any new approval requirements which might be adopted for offerings that we have completed, we may face regulatory actions or other sanctions from the CSRC, CAC or other PRC regulatory agencies. These regulatory agencies may impose fines and penalties on our operations in China, limit our ability to pay dividends outside of China or accept foreign investments, delay or restrict the repatriation of the proceeds from offering of securities overseas into China or take other actions that could have a material adverse effect on our business, financial condition, results of operations and prospects, as well as the trading price of the Common shares.

The PRC government may also intervene with or influence our operations as it deems appropriate to further regulatory, political and societal goals. The PRC government has recently published new policies that affected various industries, and we cannot rule out the possibility that it will in the future release regulations or policies regarding our industry that could adversely affect our business, financial condition and results of operations. While we believe that our business operations comply with relevant PRC laws and regulations currently in force in all material respects, we cannot guarantee that new rules or regulations promulgated in the future will not impose any additional requirement on us or otherwise tighten the regulations on companies like us. Any such action, once taken by the PRC government, could cause the value of our securities to significantly decline or become worthless.

We also face risks associated with the Holding Foreign Companies Accountable Act, or the HFCA Act, which was enacted on December 18, 2020. Pursuant to the HFCA Act, as amended by the Consolidated Appropriations Act, 2023, or the HFCAA, if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspections by the PCAOB for two consecutive years, the SEC will prohibit our shares from being traded on a national securities exchange or in the over-the-counter trading market in the United States. On December 16, 2021, the PCAOB issued a report on its determinations that it was unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong, and our auditor was subject to that determination. On August 26, 2022, the PCAOB signed a Statement of Protocol with the CSRC and the Ministry of Finance of the PRC, taking the first step toward opening access for the PCAOB to inspect and investigate registered public accounting firms headquartered in China completely. On December 15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination and removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms. Each year, the PCAOB will determine whether it can inspect and investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions. If PCAOB determines in the future that it no longer has full access to inspect and investigate completely accounting firms in mainland China or Hong Kong and we continue to use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed with the SEC, we would be identified as a Commission-Identified Issuer following the filing of the annual report on Form 20-F for the relevant fiscal year. There can be no assurance that we would not be identified as a Commission-Identified Issuer for any future fiscal year, and if we were so identified for two consecutive years, we would become subject to the prohibition on trading under the HFCAA and as a result, NASDAQ may determine to delist our securities. See “Item 3.D. Key Information – Risk Factors - Risks Relating to Our PRC Operations and Doing Business in the PRC - The PCAOB had historically been unable to inspect our auditor in relation to their audit work performed for our financial statements and the inability of the PCAOB to conduct inspections of our auditor in the past has deprived our investors with the benefits of such inspections.” and “- Risks Relating to Our PRC Operations and Doing Business in the PRC - Our common shares may be prohibited from trading in the United States under the HFCAA in the future if the PCAOB is unable to inspect or investigate completely auditors located in China. The delisting of our common shares, or the threat of their being delisted, may materially and adversely affect the value of your investment.”

1 

Transfers of Cash and Assets between Our Company and Our Subsidiaries

Cash and asset transfers through the Group are primarily attributed to shareholder loans from us to our subsidiaries. Our subsidiaries receive substantially all revenue in RMB, and the PRC or Hong Kong governments could prevent the RMB maintained in the PRC or Hong Kong from leaving, impose controls on its conversion into foreign currencies, restrict deployment of the RMB into the business of our subsidiaries and restrict the ability to pay dividends. Our PRC subsidiaries are permitted to pay dividends to their shareholders, and eventually to CHNR, only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. Such payment of dividends by entities registered in China is subject to limitations, which could result in limitations on the availability of cash to fund dividends or make distributions to holders of our securities. For example, our PRC subsidiaries are required to make appropriations to certain statutory reserve funds or may make appropriations to certain discretionary funds, which are not distributable as cash dividends except in the event of a solvent liquidation of the companies. See, “Item 3.D. Key Information – Risk Factors –Our PRC subsidiaries are subject to restrictions on paying dividends and making other payments to us.” There are no restrictions or limitations imposed by the Hong Kong government on the transfer of capital within, into and out of Hong Kong (including funds from Hong Kong to the PRC), except for the transfer of funds involving money laundering and criminal activities. However, there is no guarantee that the Hong Kong government will not promulgate new laws or regulations that may impose such restrictions in the future. To the extent cash in the business is in the PRC or Hong Kong or our PRC or Hong Kong entities, the funds may not be available to fund operations or for other use outside of the PRC or Hong Kong due to interventions in or the imposition of restrictions and limitations on the ability of us or our subsidiaries by the PRC or Hong Kong governments to transfer cash. We cannot assure you that the PRC or Hong Kong governments will not intervene in or impose restrictions on our ability to make intercompany cash transfers.

All cash or asset transfers between us and our subsidiaries for each of the three years ended December 31, 2023, are set forth in the table below. The purpose of the outbound transfers, in the form of shareholder loans, was to pay off the subsidiaries’ expenses and provide working capital for the subsidiaries. The purpose of the inbound transfers, in the form of loan repayments, was to centralize the treasury function of the Company and our subsidiaries. There are no fixed repayment terms and we do not expect there to be any tax implications for such transfers. We did not make any capital contributions to, or receive any dividends from, our subsidiaries during these periods. Other than the assets and liabilities of the wastewater treatment business segment transferred to Mr. Li Feilie, our controlling shareholder, as the result of the sale of PST Technology which were accounted for as a deemed distribution of RMB20.38 million (US$2.88 million) to the controlling shareholder on July 28, 2024 with a corresponding deemed contribution from the controlling shareholder in the same amount, no transfers, dividends or distributions have been made to investors during these periods. We currently have not maintained any cash management policies that dictate the purpose, amount and procedure of cash transfers between the Company, our subsidiaries, or the investors. Rather, the funds can be transferred in accordance with the applicable laws and regulations in the PRC and other jurisdictions. PRC laws and regulations may restrict our ability to make dividends and distributions to investors, including U.S. investors.

    Year ended December 31, 
Transferor Transferee 2021  2022  2023  2023 
    HK$  HK$  HK$  US$ 
 
Outbound Transfers
                   
China Natural Resources, Inc. Feishang Mining  50,000   —   30,000   4,238 
China Natural Resources, Inc. China Coal  8,000   8,000   8,000   1,130 
China Natural Resources, Inc. Feishang Yongfu  8,000   8,000   38,000   5,368 
China Natural Resources, Inc. Feishang Dayun  8,000   8,000   38,000   5,368 
  Total  74,000   24,000   114,000   16,104 
                   
Inbound Transfers
Feishang Mining China Natural Resources, Inc.  —   —   —   — 
China Coal China Natural Resources, Inc.  —   —   —   — 
Feishang Yongfu China Natural Resources, Inc.  30,000   —   —   — 
Feishang Dayun China Natural Resources, Inc.  30,000   —   —   — 
  Total  60,000   —   —   — 

A.[Reserved]

B.Capitalization and Indebtedness

  Not applicable.

C.Reasons for the Offer and Use of Proceeds

  Not applicable.

D.Risk Factors

We are not a Chinese operating company but a BVI holding company with operations conducted by our subsidiaries established in the PRC and Hong Kong, and which owns equity interests, directly or indirectly, of the operating subsidiaries. See “Item 4.C. INFORMATION ON THE COMPANY – Organizational Structure” for further information regarding our subsidiaries’ names, places of incorporation, and equity ownership. We are subject to legal and operational risks associated with being based in the PRC and Hong Kong and having all of our operations in the PRC, discussed in greater detail below. The legal and operational risks associated with being based in and having operations in mainland China also apply to operations in Hong Kong and Macao. While entities and businesses in Hong Kong and Macao operate under different sets of laws from mainland China, the legal risks associated with being based in and having operations in mainland China could apply to a company’s operations in Hong Kong and Macao, if the laws applicable to mainland China become applicable to entities and business in Hong Kong and Macao in the future. As of the date of this annual report, we do not have material operations in Hong Kong or Macao. It is management’s understanding that there are no restrictions, limitations, rules, or regulations under Hong Kong law that are commensurate to those of the PRC with respect to (i) payment of dividends and other distributions from the Company’s subsidiaries to the Company, (ii) currency conversion that may affect payment of dividends or foreign currency denominated obligations, (iii) offshore financing activities, (iv) anti-monopoly laws, or (v) data protection and cybersecurity, that have impacted or may impact the Company’s ability to conduct its business, accept foreign investments, or list on a U.S. or other exchange. The Chinese government may intervene or influence the operation of our Hong Kong subsidiaries and PRC subsidiaries and exercise significant oversight and discretion over the conduct of their business and may intervene in or influence their operations at any time or may exert more control over offerings conducted overseas and/or foreign investment in China-based issuers, which could result in a material change in our operations and/or the value of our common shares. Further, rules and regulations in the PRC can change quickly with little advance notice, and any actions by the Chinese government to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless.

Recent statements and regulatory actions by the Chinese government, such as those related to data security or anti-monopoly concerns, could have a significant impact on our ability to conduct our business, accept foreign investments, or maintain our listing on the Nasdaq Capital Market (“Nasdaq”) or list on another U.S. or foreign exchange. There have not been comparable developments in Hong Kong yet, but such developments may occur. For example, on June 10, 2021, the Standing Committee of the PRC National People’s Congress promulgated the PRC Data Security Law, which took effect in September 2021. The PRC Data Security Law imposes data security and privacy obligations on entities and individuals carrying out data activities and introduces a data classification and hierarchical protection system based on the importance of data in economic and social development, and the degree of harm it will cause to national security, public interests, or legitimate rights and interests of individuals or organizations when such data is tampered with, destroyed, leaked, illegally acquired or used. The PRC Data Security Law also provides for a national security review procedure for data activities that may affect national security and imposes export restrictions on certain data an information. We believe that our business is not in an industry related to national security, but we cannot preclude the possibility that PRC government authorities may publish explanations contrary to our understanding or broaden the scope of such reviews in the future, in which case our future activities may be closely scrutinized or prohibited. Moreover, given the PRC authorities have significant discretion in interpreting and applying their laws, rules and regulations, if we undertake a transaction in the PRC that involves data security or an industry that the PRC government is focusing on, we could be subject to review by the China Securities Regulatory Commission (“CSRC”), Cyberspace Administration of China (“CAC”) or other applicable governmental agencies. Such review could be time consuming, could cause us to incur significant costs in responding to such agencies and/or rectifying any potential issues noted by such agencies or completely abandon a potential transaction. Further, on July 6, 2021, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued the Opinions on Strictly Cracking Down on Illegal Securities Activities in Accordance with the Law. These opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision on overseas listings by China-based companies and proposed to take effective measures, such as promoting the construction of relevant regulatory systems to deal with the risks and incidents faced by China-based overseas-listed companies. On February 17, 2023, the CSRC, promulgated the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (“Overseas Listing Trial Measures”) and five relevant guidelines, which became effective on March 31, 2023. Pursuant to the Overseas Listing Trial Measures, a filing-based regulatory system will be applied to both “direct” and “indirect” overseas offering or listing of PRC domestic companies. As such, in connection with our future overseas securities offering or listing, we may be required to fulfill filing, reporting procedures or other administrative procedures with the CSRC or other PRC government authorities. In addition, we cannot guarantee that new rules or regulations promulgated in the future will not impose any additional requirement on us or otherwise to tighten the regulations on PRC companies seeking overseas offering or listing. Any failure to obtain the relevant approval or complete the filings and other relevant regulatory procedures may subject us to regulatory actions or other penalties from the CSRC or other PRC regulatory authorities, which may have a material adverse effect on our business, operations or financial conditions. See “Item 3.D. KEY INFORMATION – Risk Factors – Risks Relating to Doing Business in China – The approval of or filing with the CSRC or other PRC government authorities may be required in connection with our offshore offerings under PRC law, and, if required, we cannot predict whether or for how long we will be able to obtain such approval or complete such filing.”

3 

The Public Company Accounting Oversight Board (“PCAOB”) may determine that it is unable to inspect our auditor in relation to its audit work to its satisfaction, and our common shares may be prohibited from trading in the United States under the Holding Foreign Companies Accountable Act, as amended by the Consolidated Appropriations Act, 2023 (“HFCAA”), if the PCAOB is unable to inspect or fully investigate our auditor for two consecutive years. Our independent auditor, Ernst & Young Hua Ming LLP, was subject to the determinations announced by the PCAOB on December 16, 2021 that it was unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong. In June 2022, we were identified by the SEC in its “conclusive list of issuers identified under the HFCAA,” indicating that we were among those companies formally subject to the delisting provisions of the HFCAA (a “Commission-Identified Issuer”). The PCAOB, the CSRC and PRC Ministry of Finance entered into a Statement of Protocol on August 26, 2022, designed to allow the PCAOB to fully investigate auditors located in China. On December 15, 2022, the PCAOB issued a report vacating the previous determinations dated December 16, 2021. Accordingly, until such time as the PCAOB issues any new determination, we are not at risk of having our securities subject to a trading prohibition under the HFCAA because we do not expect to be identified as a Commission-Identified Issuer for a second consecutive year. If in the future the PCAOB determines it no longer can inspect or investigate completely our auditor because of a position taken by an authority in the PRC, the PCAOB will consider issuing a new determination.

An investment in our common shares involves a high degree of risk and should be considered speculative. You should carefully consider the following risks set out below and other information before investing in our common shares. If any event arising from these risks occurs, our business, prospects, financial condition, results of operations or cash flows could be adversely affected, the trading price of our common shares could decline and all or part of your investment may be lost.

Risk Factor Summary

Risks Relating to Our PRC Operations and Doing Business in the PRC

•Changes in China’s economic, political or social conditions or government policies could have a material and adverse effect on our business, financial condition and results of operations.

•

Uncertainties with respect to the PRC legal system could adversely affect us. 

•The PRC government may intervene or influence our operations at any time, or may exert more control over the China operations of an offshore holding company and offerings conducted overseas and foreign investment in China-based issuers, such as our PRC subsidiaries. Such control or influence may significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless.

•Changes in PRC laws and regulations may have a material and adverse effect on our business.

•PRC regulation of loans to and direct investment in PRC entities by offshore holding companies may delay or prevent us from making loans or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our ability to fund and expand our business.

•Inflation in the PRC, or a slowing PRC economy, could negatively affect our profitability and growth.

•Our PRC subsidiaries are subject to restrictions on paying dividends and making other payments to us.

•Governmental control of currency conversion may affect payment of any dividends or foreign currency denominated obligations, and it may adversely affect the value of your investment.

•The fluctuation of the Renminbi may materially and adversely affect your investment.

•The PRC SAFE regulations regarding offshore financing activities by PRC residents have undergone changes which may increase the administrative burden we face and create uncertainties that could adversely affect us, and a failure by our shareholders who are PRC residents to make any required applications and filings pursuant to such regulations may prevent us from being able to distribute profits and could expose us and our PRC resident shareholders to liability under PRC law.

•

The PCAOB may determine that it is unable to inspect our auditor in relation to its audit work performed for our financial statements to its satisfaction, and any inability of the PCAOB to conduct inspections over our auditor may affect our investors’ ability to benefit from such inspections.

•

Our common shares may be prohibited from trading in the United States under the HFCAA if the PCAOB is unable to inspect or fully investigate our auditor for two consecutive years. The delisting of our common shares, or the threat of their being delisted, may materially and adversely affect the value of your investment.

•PRC regulations establish complex procedures for some acquisitions conducted by foreign investors, which could make it more difficult for us to pursue growth through acquisitions in China.
•

We and our PRC subsidiaries are required to maintain a series of licenses, permits, and approvals from PRC authorities to operate our business in the PRC, and failure to maintain or renew such licenses, permits, or approvals in a timely manner could materially affect our business.

•The approval of or filing with the CSRC or other PRC government authorities may be required in connection with our offshore offerings under PRC law, and, if required, we cannot predict whether or for how long we will be able to obtain such approval or complete such filing.

•Failure to comply with PRC regulations and other legal obligations concerning data protection and cybersecurity may materially and adversely affect our business, as we routinely collect, store and use data during the conduct of our business.

•We may be classified as a “resident enterprise” for PRC enterprise income tax purposes; such classification could result in unfavorable tax consequences to us and our non-PRC shareholders.

•Any failure to comply with PRC regulations regarding the registration requirements for employee stock incentive plans may subject the PRC plan participants or us to fines and other legal or administrative sanctions.

•Failure to make adequate contributions to mandatory social security plans as required by PRC laws may subject us to penalties.

•Enforcement of stricter labor laws and regulations may increase our labor costs.

•If the chops of our PRC subsidiaries are not kept safely, are stolen or are used by unauthorized persons or for unauthorized purposes, the corporate governance of these entities could be severely and adversely compromised.

Risks Relating to Our Mine Exploration Activities in Inner Mongolia

•The Moruogu Tong Mine is in the exploration stage.

•The northern part of Moruogu Tong Mine is currently being explored under an agreement that reduces our share in any future profits.

•Any estimates of the reserves contained in the Moruogu Tong Mine may be inaccurate.

•There are no assurances that we can produce minerals on a commercially viable basis.

•Volatility in the market prices of metals may adversely affect the results of our operations.

•We are subject to government regulations in various aspects of our exploration activities and our failure to comply with applicable government regulations could adversely affect us.

•We do not have binding agreements with customers to purchase any future output of metals.

•

ESG issues, including those related to climate change and sustainability, may have an adverse effect on our business, financial condition, and results of operations, could damage our reputation, and may increase costs.

Risks Relating to the Sale of PST Technology

•We face risks associated with the divesture of our wastewater treatment segment.

Risks Relating to the Potential Closing of the Acquisition of Williams Minerals and the Timing of Such Closing

•There may be unforeseen risks relating to the Acquisition that were not discovered by us through our due diligence investigation prior to our Acquisition.

•Completion of the Acquisition is conditional upon satisfaction or waiver of various conditions. There can be no assurance that the conditions will be fulfilled or waived, or that the Acquisition will be completed

•Failure to complete the Acquisition may have a material adverse effect on the Company’s business, financial condition and results of operations.

•Even if the Acquisition is completed, we may fail to realize the anticipated benefits associated with it, those benefits may take longer to realize than expected, and we may encounter significant difficulties.

Risks Relating to Additional Acquisitions and Expansion into Other Sectors

•We may acquire other businesses or form joint ventures that could negatively affect our operating results, dilute our shareholders’ ownership, increase our debt or cause us to incur significant expense.

•Future acquisitions or strategic investments could be difficult to identify and integrate, divert the attention of management, disrupt our business, dilute shareholder value and adversely affect our business, results of operations, and financial condition.

•

Because a majority of our management’s prior business experience has been limited to industries outside of other sectors that we are exploring, they may lack the necessary experience to assess a business combination with a target business in those industries.

•We may become subject to additional extensive and evolving regulatory requirements, noncompliance with which, or changes in which, may materially and adversely affect our business and prospects.

Risks Relating to Our Financial Condition and Business

•We have incurred losses from operations in each of the preceding three fiscal years of 2021, 2022, and 2023 and there is no assurance that we will generate profits from operations in the future.

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We will have to fund operating expenses from other sources until we are able to generate sufficient revenue to pay them.

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The loss of key personnel could affect our business and prospects.

•Any failure to maintain effective internal controls could have an adverse effect on our business, results of operations and the market price of our shares.

 Risks Relating to Foreign Private Issuer Status

•Because our assets are located outside of the United States and all of our directors and officers reside outside of the United States, it may be difficult for you to enforce your rights based on the U.S. federal securities laws against us or our officers and directors or to enforce a judgment of a United States court against us or our officers and directors in the PRC.

•Our status as a foreign private issuer results in less information being available about us than about domestic reporting companies.

•Due to our status as a foreign private issuer, we have adopted IFRS accounting principles, which are different from accounting principles under U.S. generally accepted accounting principles (“U.S. GAAP”).

•As a foreign private issuer we are not subject to certain requirements that other Nasdaq-listed issuers are required to comply with, some of which are designed to provide information to and protect investors.

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Due to an exemption from Nasdaq rules applicable to foreign private issuers, our related party transactions may not receive the type of independent review process that those of other Nasdaq-listed companies receive; the terms of these transactions are not negotiated at arm’s-length and may not be as favorable as could be obtained from unrelated parties.

Risks Relating to Our common shares

•You may experience dilution to the extent that our common shares are issued upon the exercise of outstanding warrants or other securities that we may issue in the future.

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Substantial future sales or perceived potential sales of our common shares in the public market could cause the price of our common shares to decline.

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Certain of the Selling Shareholders may acquire their common shares at a price that is less than the market price of the common shares in the future, may earn a positive rate of return even if the price of the common shares declines and may be willing to sell their common shares at a price less than shareholders that acquired common shares in the public market.

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The price at which common shares are quoted on Nasdaq may increase or decrease due to a number of factors, which may negatively affect the price of the common shares.

•Our principal beneficial owner and his affiliates control us through their share ownership; and their interests may differ from those of other shareholders.

•The rights of our shareholders are governed by BVI law, which may not be as favorable to shareholders as U.S. law, and our directors may take actions with which you disagree without first receiving shareholder approval.

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The elimination of monetary liability against our directors, officers and employees under our Articles and the indemnification of our directors, officers and employees may result in substantial expenditures by us and may discourage lawsuits against our directors, officers and employees.

•We may be classified as a passive foreign investment company, which could result in adverse U.S. federal income tax consequences to U.S. shareholders.

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Risks Relating to Our PRC Operations and Doing Business in the PRC

Changes in China’s economic, political or social conditions or government policies could have a material and adverse effect on our business, financial condition and results of operations.

Currently, all of our business operations are conducted in China. Accordingly, our business, results of operations, financial condition and prospects are affected by economic, political and social conditions in China generally and by continued economic growth in China as a whole.

China’s economy differs from the economies of most developed countries in many respects, including the extent of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. In recent decades, the Chinese government has implemented a series of reform measures, including, among others, the utilization of market forces for economic reform and the establishment of improved corporate governance in business enterprises. In addition, the Chinese government also plays a significant role in regulating industry development and has extensive influence over China’s economic growth through allocating resources, foreign exchange control and setting monetary and fiscal policy.

The growth of China’s economy has been uneven, both geographically and among various sectors of the economy, and the rate of growth has been slowing in recent years. Although growth of China’s economy remained relatively stable, there is a possibility that China’s economic growth may fluctuate or even decline in the near future. Some of the government measures may benefit the overall Chinese economy but may have a negative effect on us. For example, our financial condition and results of operations may be adversely affected by government control over capital investments or changes in tax regulations. Any stimulus measures designed to boost the Chinese economy may contribute to higher inflation, which could adversely affect our results of operations and financial condition. For example, certain operating costs and expenses, such as employee compensation and office operating expenses, may increase as a result of higher inflation.

Additionally, the PRC government may promulgate laws, regulations or policies that seek to impose stricter scrutiny over the current regulatory regime in certain industries or in certain activities. Furthermore, the PRC government has also recently indicated an intent to exert more oversight and control over overseas securities offerings and foreign investments in China-based companies. Any such actions may adversely affect our subsidiaries’ operations, and limit our ability to offer or continue to offer securities to investors and cause the value of our securities to decline or be worthless.

Uncertainties with respect to the PRC legal system could adversely affect us.

We conduct our business through our subsidiaries in China. Our operations in China are governed by PRC laws and regulations. Our subsidiaries are generally subject to laws and regulations applicable to foreign investments in China. The PRC legal system is based on written statutes. Prior court decisions may be cited for reference but have limited precedential value.

PRC laws and regulations have significantly enhanced the protections afforded to various forms of foreign investments in China over the past several decades. However, recently enacted laws and regulations may not sufficiently cover all aspects of economic activities in China. In particular, because these laws and regulations are relatively new, and because of the limited volume of published decisions and their nonbinding nature, the interpretation and enforcement of these laws and regulations involve uncertainties.

The PRC government may intervene or influence our operations at any time, or may exert more control over the China operations of an offshore holding company and offerings conducted overseas and foreign investment in China-based issuers, such as our PRC subsidiaries. Such control or influence may significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless.

We conduct our business in China through our operating subsidiaries. Accordingly, our business, results of operations and financial condition may be influenced to a significant degree by the PRC political, economic and social conditions. The PRC government may intervene or influence our subsidiaries’ operations at any time, which could result in a material change in our operations and/or the value of the Company’s securities. We expect the Chinese government to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless.

Additionally, the PRC government may promulgate laws, regulations or policies that seek to impose stricter scrutiny over current regulatory regime in certain industries or in certain activities. For instance, the PRC government has discretion over the business operations in China and may intervene with or influence specific industries or companies as it deems appropriate to further regulatory, political and societal goals, which could have a material and adverse effect on the future growth of the affected industries and the companies operating in such industries. Furthermore, the PRC government has also recently indicated an intent to exert more oversight and control over overseas securities offerings and foreign investments in China-based companies. Any such actions may adversely affect our subsidiaries’ operations, and limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of our securities to decline or be worthless.

Changes in PRC laws and regulations may have a material and adverse effect on our business.

There are substantial uncertainties regarding the interpretation and application of PRC laws and regulations, including, but not limited to, the laws and regulations governing our business, or the enforcement and performance of our arrangements with customers in the event of the imposition of statutory liens, death, bankruptcy and criminal proceedings. Rules and regulations in China can change quickly with little advance notice. We and our current subsidiaries are, and any future subsidiaries will be, considered foreign persons or foreign-invested enterprises under PRC laws, and as a result, we are and will be required to comply with PRC laws and regulations applicable to foreign persons or foreign-invested enterprises. These laws and regulations may be subject to future changes, and their official interpretation and enforcement may involve substantial uncertainty. Exploration and mining operations in the PRC are subject to environmental laws and regulations, and the imposition of more stringent environmental regulations may affect our ability to comply with, or our costs to comply with, such regulations. Such changes, if implemented, may adversely affect our business operations and may reduce our profitability. The effectiveness of newly enacted laws, regulations or amendments may be delayed, resulting in detrimental reliance by foreign investors. New laws and regulations that affect existing and proposed future businesses may also be applied retroactively. We cannot predict what effect the interpretation of existing or new PRC laws or regulations may have on our businesses.

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PRC regulation of loans to and direct investment in PRC entities by offshore holding companies may delay or prevent us from making loans or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our ability to fund and expand our business.

We are an offshore holding company conducting our operations in China. We may make loans to our PRC subsidiaries, or we may make additional capital contributions to our wholly foreign-owned subsidiaries in China. Any loans to our wholly foreign-owned subsidiaries in China, which are treated as foreign-invested enterprises under PRC law, are subject to PRC regulations and foreign exchange loan registration requirements. In addition, a foreign-invested PRC enterprise has limitations upon its uses of capital, including restrictions on such capital being: (i) directly or indirectly used for payments beyond the business scope of the enterprise or payments prohibited by relevant laws and regulations; (ii) used for the granting of loans to non-affiliated enterprises, except where expressly permitted in the foreign-invested PRC enterprise’s business license; and (iii) used for paying expenses related to the purchase of real estate that is not for self-use (except for foreign-invested real estate enterprises). We may also decide to finance our PRC subsidiaries by means of capital contributions, in which case the PRC subsidiary is required to register the details of the capital contribution with the local branch of the State Administration for Market Regulation and submit a report on the capital contribution via the online enterprise registration system to the Ministry of Commerce.

In light of the various requirements imposed by PRC regulations on loans to and direct investment in PRC entities by offshore holding companies, we cannot assure you that we will be able to complete the necessary government registrations or obtain the necessary government approvals or filings on a timely basis, if at all, with respect to future loans by us to our current PRC operating subsidiaries or with respect to future capital contributions by us to our current PRC operating subsidiaries. If we fail to complete such registrations or obtain such approvals, our ability to fund our PRC operations may be negatively affected, which could materially and adversely affect our liquidity and our ability to fund and expand our business.

Inflation in the PRC, or a slowing PRC economy, could negatively affect our profitability and growth.

While the PRC economy has experienced rapid growth, such growth has been uneven among various sectors of the economy and in different geographical areas of the country. Rapid economic growth can lead to growth in the money supply and rising inflation. If prices for our products and services rise at a rate that is insufficient to compensate for the rise in the costs of supplies and services, it may have an adverse effect on our profitability. In order to control inflation in the past, the PRC government has imposed controls on bank credit, limits on loans for fixed assets and restrictions on bank lending. As a result, domestic and global economic conditions may improve, and the markets we intend to serve may grow, at a lower-than-expected rate or even experience a downturn, adversely affecting our future profitability and growth.

Our PRC subsidiaries are subject to restrictions on paying dividends and making other payments to us.

We are a holding company incorporated in the BVI. Under BVI law, we may only pay dividends to investors, including U.S. investors, from surplus (the excess, if any, at the time of the determination of the total assets of our company over the sum of our liabilities, as shown in our books of account, plus our capital), and we must be solvent before and after the dividend payment in the sense that we will be able to satisfy our liabilities as they become due in the ordinary course of business, and the realizable value of assets of our company will not be less than the sum of our total liabilities, other than deferred taxes as shown in our books of account, and our capital. As a result of our holding company structure, dividends and other distributions to our shareholders, including U.S. investors, will depend primarily upon dividend payments from our subsidiaries. However, PRC regulations currently permit the payment of dividends only out of accumulated profits, as determined in accordance with PRC accounting standards and regulations. Our subsidiaries in China are also required to set aside a portion of their after-tax profits as certain reserve funds according to PRC accounting standards and regulations. The PRC government also imposes controls on the conversion of CNY into foreign currencies and the remittance of currency out of China. We may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currency. Furthermore, if our subsidiaries in China incur further debt in the future, debt covenants may restrict their ability to pay dividends or make other payments. If we or our subsidiaries are unable to receive dividends from our operating companies due to contractual or other limitations on the payment of dividends, we may be unable to pay dividends or make other distributions on our common shares.

Governmental control of currency conversion may affect payment of any dividends or foreign currency denominated obligations, and it may adversely affect the value of your investment.

The PRC government imposes controls on the convertibility of CNY into foreign currencies and, in certain cases, the remittance of currency out of the PRC. Shortages in the availability of foreign currency may restrict our ability to remit sufficient foreign currency to pay dividends, or otherwise satisfy foreign currency denominated obligations. Under existing PRC foreign exchange regulations, the CNY is currently convertible under the “current account,” which includes trade and service-related foreign exchange transactions, but not under the “capital account,” which includes foreign direct investment and loans, including loans we may secure from our onshore subsidiaries. Currently, our PRC subsidiaries may purchase foreign currency for settlement of “current account transactions,” without prior approval from SAFE by complying with certain procedural requirements. However, approval from appropriate governmental authorities is required where CNY is to be converted into foreign currency and remitted out of the PRC to pay capital expenses such as the repayment of bank loans denominated in foreign currencies.

The PRC government may also at its discretion restrict access to foreign currencies for current account transactions in the future. If the foreign exchange control system prevents us from obtaining sufficient foreign currency to satisfy our currency demands, we may not be able to pay certain of our expenses as they come due, or pay dividends or make other distributions to investors, including U.S. investors.

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See “Item 10.D. ADDITIONAL INFORMATION – Exchange Controls” for further details regarding exchange controls in the PRC.

The fluctuation of the Renminbi may materially and adversely affect your investment.

The exchange rate of the Renminbi against the U.S. Dollar and other currencies may fluctuate and is affected by, among other things, changes in the PRC’s political and economic conditions. As most of our operating expenses are denominated in Renminbi, or CNY, any significant revaluation of the Renminbi may materially and adversely affect our cash flows and financial condition. Additionally, if we convert our CNY into U.S. Dollars, to pay dividends on our common shares or for other business purposes, depreciation of the CNY against the U.S. Dollar would negatively affect the amount of U.S. Dollars we convert our CNY into. Conversely, to the extent that we need to convert U.S. Dollars we receive from an offering of our securities or otherwise into CNY for our operations, the appreciation of the CNY against the U.S. Dollar could have an adverse effect on our financial condition and result in a charge to our income statement and a reduction in the value of these U.S. Dollar denominated assets.

PRC SAFE regulations regarding offshore financing activities by PRC residents have undergone changes which may increase the administrative burden we face and create regulatory uncertainties that could adversely affect us, and a failure by our shareholders who are PRC residents to make any required applications and filings pursuant to such regulations may prevent us from being able to distribute profits and could expose us and our PRC resident shareholders to liability under PRC law.

In July 2014, SAFE promulgated the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Offshore Investment and Financing and Roundtrip Investment Through Special Purpose Vehicles (“SAFE Circular 37”). SAFE Circular 37 requires PRC residents (including PRC individuals and PRC corporate entities as well as foreign individuals that are deemed PRC residents for foreign exchange administration purposes) to register with SAFE or its local branches in connection with their direct or indirect offshore investment activities. SAFE Circular 37 further requires an amendment to a SAFE registration in the event of any changes with respect to the basic information of the offshore special purpose vehicle, such as a change in the PRC shareholders, the names of such special purpose vehicle, and the operation term of such special purpose vehicle, or any significant changes with respect to the offshore special purpose vehicle, such as an increase or decrease of capital, a share transfer or exchange, or mergers or divisions. SAFE Circular 37 is applicable to our shareholders who are PRC residents and may be applicable to any offshore acquisitions that we make in the future. If our shareholders who are PRC residents fail to make the required SAFE registration or to update a previously filed registration, our PRC subsidiaries may be prohibited from distributing their profits or the proceeds from any capital reduction, share transfer or liquidation to us, and we may also be prohibited from making additional capital contributions to our PRC subsidiaries.

In February 2015, SAFE promulgated a Notice on Further Simplifying and Improving Foreign Exchange Administration Policy on Direct Investment (“SAFE Notice 13”) effective June 2015. Under SAFE Notice 13, applications for foreign exchange registration of inbound foreign direct investments and outbound overseas direct investments, including those required under SAFE Circular 37, shall be filed with qualified banks instead of SAFE. The qualified banks directly examine the applications and accept registrations under the supervision of SAFE. To date, no registration has been filed with SAFE regarding us, and accordingly, SAFE may prohibit distributions from our PRC subsidiaries, which would prevent us from paying dividends and may adversely affect our financial condition and potentially expose us to liability under PRC law.

The PCAOB had historically been unable to inspect our auditor in relation to their audit work performed for our financial statements and the inability of the PCAOB to conduct inspections of our auditor in the past has deprived our investors with the benefits of such inspections.

Our auditor, the independent registered public accounting firm that issues the audit report included in this annual report, as an auditor of companies that are traded publicly in the United States and a firm registered with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with applicable professional standards. Since our auditor is located in China, a jurisdiction where the PCAOB had been previously unable to conduct inspections without the approval of the Chinese authorities, our auditor was subject to the determinations announced by the PCAOB on December 16, 2021 that it was unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong. On December 15, 2022, the PCAOB issued a report vacating the previous determinations dated December 16, 2021. Accordingly, until such time as the PCAOB issues any new determination, we are not at risk of having our securities subject to a trading prohibition under the HFCAA because we do not expect to be a Commission-Identified Issuer for a second consecutive year. If in the future the PCAOB determines it no longer can inspect or investigate completely because of a position taken by an authority in the PRC, the PCAOB will consider issuing a new determination. Any inability of the PCAOB to conduct inspections of auditors in China makes it more difficult to evaluate the effectiveness of our independent registered public accounting firm’s audit procedures or quality control procedures as compared to auditors outside of China that are subject to the PCAOB inspections, which could cause investors and potential investors in our securities to lose confidence in our audit procedures, reported financial information, and the quality of our financial statements.

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Our common shares may be prohibited from trading in the United States under the HFCAA in the future if the PCAOB is unable to inspect or investigate completely auditors located in China. The delisting of our common shares, or the threat of their being delisted, may materially and adversely affect the value of your investment.

Pursuant to the HFCAA, the SEC will identify an issuer as a Commission-Identified Issuer if the issuer has filed an annual report containing an audit report issued by a registered public accounting firm that the PCAOB has determined it is unable to inspect or investigate completely, and will then impose a trading prohibition on an issuer after it is identified as a Commission-Identified Issuer for two consecutive years. On December 16, 2021, the PCAOB issued a report to notify the SEC of its determination that the PCAOB was unable to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong. The PCAOB identified our auditor as one of the registered public accounting firms that the PCAOB was unable to inspect or investigate completely. In June 2022, we were identified by the SEC as a “Commission-Identified Issuer” in their conclusive list of issuers identified under the HFCAA. On December 15, 2022, the PCAOB issued a report vacating the previous determinations dated December 16, 2021. Accordingly, until such time as the PCAOB issues any new determination, we are not at risk of having our securities subject to a trading prohibition under the HFCAA because we do not expect to be identified as a Commission-Identified Issuer for a second consecutive year. If in the future the PCAOB determines it no longer can inspect or investigate completely because of a position taken by an authority in the PRC, the PCAOB will consider issuing a new determination.

Whether the PCAOB will continue to be able to conduct inspections of our auditor is subject to substantial uncertainty and depends on a number of factors out of our, and our auditor’s, control. A trading prohibition would substantially impair your ability to sell or purchase our common shares when you wish to do so, and the risk and uncertainty associated with delisting would have a negative impact on the price of our common shares.

PRC regulations establish complex procedures for some acquisitions conducted by foreign investors, which could make it more difficult for us to pursue growth through acquisitions in China.

The Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (the “M&A Rules”), adopted by six PRC regulatory agencies in August 2006 and amended in June 2009, among other things, established procedures and requirements that could make merger and acquisition activities by foreign investors more time-consuming and complex. In addition, the Provisions of Ministry of Commerce on Implementation of Security Review System for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, issued by the Ministry of Commerce in August 2011, specify that mergers and acquisitions by foreign investors involved in “an industry related to national security” are subject to strict review by the Ministry of Commerce, and prohibit any activities attempting to bypass such security review, including by structuring the transaction through a proxy or contractual control arrangement.

On March 15, 2019, the PRC National People’s Congress enacted the Foreign Investment Law of the PRC (the “Foreign Investment Law”), which became effective on January 1, 2020. The Foreign Investment Law has replaced the previous major laws and regulations governing foreign investment in the PRC, including the Sino-foreign Equity Joint Ventures Enterprises Law of the PRC, the Sino-foreign Co-operative Enterprises Law of the PRC and the Wholly Foreign-invested Enterprise Law of the PRC. According to the Foreign Investment Law, “foreign-invested enterprises” refers to enterprises that are wholly or partly invested by foreign investors and registered under the PRC laws within China, and “foreign investment” refers to any foreign investor’s direct or indirect investment activities in China, including: (i) establishing foreign-invested enterprises in China either individually or jointly with other investors; (ii) obtaining stock shares, equity shares, shares in properties or other similar interests of Chinese domestic enterprises; (iii) investing in new projects in China either individually or jointly with other investors; and (iv) investing through other methods provided by laws, administrative regulations or provisions prescribed by the State Council.

On December 26, 2019, the State Council issued Implementation Regulations for the Foreign Investment Law of the PRC (the “Implementation Rules”) which came into effect on January 1, 2020, and replaced the Implementing Rules of the Sino-foreign Equity Joint Ventures Enterprises Law of the PRC, the Implementing Rules of the Sino-foreign Co-operative Enterprises Law of the PRC and the Implementing Rules of the Wholly Foreign-invested Enterprise Law of the PRC. According to the Implementation Rules, in the event of any discrepancy between the Foreign Investment Law, the Implementation Rules and the relevant provisions on foreign investment promulgated prior to January 1, 2020, the Foreign Investment Law and the Implementation Rules shall prevail. The Implementation Rules also set forth that foreign investors that invest in sectors on the “Negative List” in which foreign investment is restricted shall comply with special management measures with respect to, among others, shareholding and senior management personnel qualification in the Negative List. Pursuant to the Foreign Investment Law and the Implementation Rules, the existing foreign-invested enterprises established prior to the effective date of the Foreign Investment Law are allowed to keep their corporate organization forms for five years from the effectiveness of the Foreign Investment Law before such existing foreign-invested enterprises must change their organization forms and organization structures in accordance with the PRC Company Law, the Partnership Enterprise Law of the PRC and other applicable laws.

After the Foreign Investment Law and the Implementation Rules became effective on January 1, 2020, the provisions of the M&A Rules remained effective to the extent they are not inconsistent with the Foreign Investment Law and the Implementation Rules. We believe that our business is not in an industry related to national security, but we cannot preclude the possibility that the competent PRC government authorities may publish explanations contrary to our understanding or broaden the scope of such security reviews in the future, in which case our future acquisitions and investment in the PRC, including those by way of entering into contractual control arrangements with target entities, may be closely scrutinized or prohibited. Moreover, according to the Anti-Monopoly Law of the PRC, the SAMR shall be notified in advance of any concentration of undertaking if certain filing thresholds are triggered. We may grow our business in part by directly acquiring complementary businesses in China. Complying with the requirements of the laws and regulations mentioned above and other PRC regulations necessary to complete such transactions could be time-consuming, and any required approval processes, including obtaining approval from the SAMR, may delay or inhibit our ability to complete such transactions, which could materially and adversely affect our ability to expand our business or maintain our market share.

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In December 2020, the National Development and Reform Commission and the Ministry of Commerce promulgated the Measures for the Security Review of Foreign Investment, which came into effect on January 18, 2021. According to the Security Review of Foreign Investment, for foreign investments that affect or may affect national security, security review shall be conducted in accordance with the provisions thereof. We cannot assure you that our current or new business operations will remain fully compliant, or that we can adapt our business operations to new regulatory requirements on a timely basis, or at all.

We and our PRC subsidiaries are required to maintain a series of licenses, permits and approvals from PRC authorities to operate our business in the PRC, and failure to maintain or renew such licenses, permits or approvals in a timely manner could materially affect our business.

Prior to the sale of PST Technology, our PRC subsidiaries carried out rural wastewater treatment and metal exploration activities in the PRC. After PST Technology’s disposition, we discontinued the operation in wastewater treatment segment and continue engaging in the exploration and mining business, which is subject to a series of PRC laws and regulations. Such business activities require us to obtain licenses, permits and approvals from different PRC authorities, including an exploration permit from the Natural Resources Department of the Inner Mongolia Autonomous Region with regards to our metal exploration activity and business licenses from local administration for market regulation as required upon company registration. As of the date of this annual report, as far as we are aware and in the judgment of management, we have obtained all necessary licenses, permits and approvals to operate our business in the PRC, and have not been denied any such licenses, permits or approvals. If we or our PRC subsidiaries fail to maintain or renew such licenses, permits and approvals in a timely manner in the future, our business may be materially affected.

The approval of or filing with the CSRC or other PRC government authorities may be required in connection with our offshore offerings under PRC law, and, if required, we cannot predict whether or for how long we will be able to obtain such approval or complete such filing.

The M&A Rules require an overseas special purpose vehicle formed for listing purposes through acquisitions of PRC domestic companies and controlled by PRC persons or entities to obtain the approval of the CSRC prior to the listing and trading of such special purpose vehicle’s securities on an overseas stock exchange. The interpretation and application of the regulations remain unclear, and our offshore offerings may ultimately require approval of the CSRC. If the CSRC approval is required, it is uncertain whether we can or how long it will take us to obtain the approval and, even if we successfully obtain such CSRC approval, the approval could be rescinded. Any failure to obtain or delay in obtaining the CSRC approval for any of our offshore offerings, or a rescission of any successfully obtained approvals, would subject us to sanctions imposed by the CSRC or other PRC regulatory authorities. Sanctions could include fines and penalties on our operations in China, restrictions or limitations on our ability to pay dividends outside of China, and other forms of sanctions that may materially and adversely affect our business, financial condition and results of operations.

On July 6, 2021, PRC government authorities issued the Opinions on Strictly Cracking Down on Illegal Securities Activities in Accordance with the Law. These opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision on overseas listings by China-based companies. They proposed to take measures such as promoting the construction of relevant regulatory systems to deal with the risks and incidents faced by China-based overseas listed companies.

As a follow-up, on February 17, 2023, CSRC issued the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (the “Trial Measures of Overseas Listing”) which have been effective on March 31, 2023. The Trial Measures of Overseas Listing require that 1) where a domestic company seeks to indirectly offer and list securities in overseas markets, the issuer shall designate a major domestic operating entity, which shall, as the domestic responsible entity, file with the CSRC; 2) initial public offerings or listings in overseas markets shall be filed with the CSRC within 3 working days after the relevant application is submitted overseas. And subsequent securities offerings of an issuer in the same overseas market where it has previously offered and listed securities shall be filed with the CSRC within 3 working days after the offering is completed; 3) any overseas offering and listing made by an issuer that meets both the following conditions will be determined as indirect overseas offering and listing: (a) 50% or more of the issuer's operating revenue, total profit, total assets or net assets as documented in its audited consolidated financial statements for the most recent accounting year is accounted for by domestic companies; and (b) the main parts of the issuer's business activities are conducted in the Chinese Mainland, or its main places of business are located in the Chinese Mainland, or the senior managers in charge of its business operation and management are mostly Chinese citizens or domiciled in the Chinese Mainland. The determination as to whether or not an overseas offering and listing by domestic companies is indirect overseas offering and listing, shall be made on a substance over form basis.

Based on the Trial Measures of Overseas Listing, if our company issues new securities in the future, we need to fulfill the abovementioned filing procedures. If our company fails to file in time, we may be punished by the CSRC.

In addition, on February 24, 2023, CSRC, Ministry of Finance; National Administration of State Secrets Protection and National Archives Administration of China issued the Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies (“Revised Confidentiality and Archives Administration Provisions”) which have been effective on March 31, 2023. The Revised Confidentiality and Archives Administration Provisions require that in the overseas issuance and listing activities of domestic enterprises, the securities companies and securities service providers that undertake relevant businesses shall strictly abide by applicable laws and regulations of the PRC and the Revised Confidentiality and Archives Administration Provisions, enhance legal awareness of keeping state secrets and strengthening archives administration, institute a sound confidentiality and archives administration system, take necessary measures to fulfill confidentiality and archives administration obligations, and shall not leak any state secret and working secret of government agencies, or harm national security and public interest.

Based on the Revised Confidentiality and Archives Administration Provisions, if our company violates relevant laws and regulations in the future, we may be punished by the competent authorities.

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As of the date of this annual report, as far as we are aware and in the judgment of management, we have received all requisite permissions or approvals in connection with our offshore offerings under PRC law, and have not been denied any such permissions or approvals. However, we cannot assure you that any new rules or regulations promulgated in the future will not impose additional requirements on us. If it is determined in the future that approval from and filing with the CSRC or other regulatory authorities or other procedures are required for our offshore offerings, it is uncertain whether we can or how long it will take us to obtain such approval or complete such filing procedures and any such approval or filing could be rescinded or rejected. Any failure to obtain or delay in obtaining such approval or completing such filing procedures for our offshore offerings, including by our inadvertent conclusion that such approval or filing was not required when in fact it was, or a rescission of any such approval or filing if obtained by us, could subject us to sanctions by the CSRC or other PRC regulatory authorities. These regulatory authorities may impose fines and penalties on our operations in China, limit our ability to pay dividends outside of China, limit our operating privileges in China, delay or restrict the repatriation of the proceeds from our offshore offerings into China or take other actions that could materially and adversely affect our business, financial condition, results of operations and prospects, as well as the trading price of our listed securities. The CSRC or other PRC regulatory authorities also may take actions requiring us, or making it advisable for us, to halt our offshore offerings before settlement and delivery of the securities offered. Consequently, if investors engage in market trading or other activities in anticipation of and prior to settlement and delivery, they do so at the risk that settlement and delivery may not occur. In addition, if the CSRC or other regulatory authorities later promulgate new rules or explanations requiring that we obtain their approvals or accomplish the required filing or other regulatory procedures for our prior offshore offerings, we may be unable to obtain a waiver of such approval requirements, if and when procedures are established to obtain such a waiver. Any uncertainties or negative publicity regarding such approval requirement could materially and adversely affect our business, prospects, financial condition, reputation and the trading price of our listed securities.

Failure to comply with PRC regulations and other legal obligations concerning data protection and cybersecurity may materially and adversely affect our business, as we routinely collect, store and use data during the conduct of our business.

On December 28, 2021, the CAC, together with 12 other departments, adopted the Cybersecurity Review Measures, which became effective on February 15, 2022. The Cybersecurity Review Measures require network platform operators possessing personal information of more than one million individual users to undergo a cybersecurity review by the CAC when they seek a listing on a foreign exchange. The Cybersecurity Review Measures provide that critical information infrastructure operators purchasing network products and services and network platform operators carrying out data processing activities, which affect or may affect national security, shall apply for cybersecurity review to the applicable local cyberspace administration in accordance with the provisions thereunder.

On July 30, 2021, the State Council promulgated the Regulations on Security Protection of Critical Information Infrastructure, which became effective on September 1, 2021. Pursuant to the Regulations on Security Protection of Critical Information Infrastructure, critical information infrastructure shall mean any important network facilities or information systems of an important industry or field, such as public communications and information services, energy, transportation, water conservation, finance, public services, e-government affairs and science and technology and national defense industries, which may seriously endanger national security, peoples’ livelihoods and the public interest in the event of damage, function loss or data leakage. In addition, the relevant administrative departments of each critical industry and sector shall be responsible for formulating eligibility criteria and determining the critical information infrastructure operator in the respective industry or sector. The operators shall be informed about the final determination as to whether they are categorized as critical information infrastructure operators. Among these industries, the energy and telecommunications industries are mandated to take measures to provide key assurances for the safe operation of critical information infrastructure in other industries and fields.

We and our PRC subsidiaries do not carry out business in China through any self-owned network platform and hold personal information of less than one million individuals from PRC operations. We and our PRC subsidiaries have not been identified as critical information infrastructure operators by any PRC authorities. The data collected from our China operations is mainly information related to our production, customers, suppliers and our employees. We believe that we and our PRC subsidiaries do not commit any acts that threaten or endanger the national security of the PRC, and to our knowledge we and our PRC subsidiaries have not received or been subject to any investigation, notice, warning or sanction from any PRC authority with respect to national security issues arising from our business operations. As of the date of this annual report, we do not believe that we need to proactively apply for the cybersecurity review required by the CAC.

Furthermore, the CAC promulgated the Security Assessment Measures for Outbound Data Transfers, which became effective on September 1, 2022, which require that to provide data abroad under any of the following circumstances, a data processor shall declare security assessment for its outbound data transfer to the CAC through the local cyberspace administration at the provincial level: (i) where a data processor provides critical data abroad; (ii) where a key information infrastructure operator or a data processor processing the personal information of more than one million individuals provides personal information abroad; (iii) where a data processor has provided personal information of 100,000 individuals or sensitive personal information of 10,000 individuals in total abroad since January 1 of the previous year; and (iv) in other circumstances prescribed by the CAC for which declaration of a security assessment for outbound data transfers is required. As we and our PRC subsidiaries do not provide any data collected from China operations abroad, we do not believe it is necessary for us to declare any security assessments pursuant to the Security Assessment Measures for Outbound Data Transfers.

However, there remains uncertainty as to how these regulations will be interpreted or implemented and whether the PRC regulatory agencies, including the CAC, may adopt new laws, regulations, rules or detailed implementation and interpretation, and there is no assurance that PRC regulatory agencies, including the CAC, would take the same view as we do. There have not been comparable developments in Hong Kong, but those could occur, and we believe we are currently in compliance with all Hong Kong laws and regulations regarding data security. If any such new laws, regulations, rules or implementation and interpretation come into effect, we will take all reasonable measures and actions to comply and to minimize the adverse effect of such laws on us. However, we cannot assure you that we can fully or timely comply with such laws. In the event that we are subject to any mandatory cybersecurity reviews and/or other requirements of the CAC, we face uncertainty as to whether any clearance or other required actions can be timely completed, or at all. Given such uncertainty, it is possible that we may be required to suspend the relevant business, or face other penalties, which could materially and adversely affect our business, financial condition, results of operations and/or the value of our securities, or could significantly limit or completely hinder our ability to offer or continue to offer securities to investors. As of the date of this annual report, we have not been informed that we have been identified as a critical information infrastructure operator by any governmental authorities. These laws and regulations are still new and there is uncertainty with respect to the interpretation and implementation of these data security laws and regulations. We will closely monitor the relevant regulatory environment and will assess and determine whether we are required to apply for the cybersecurity review.

12 

We may be classified as a “resident enterprise” for PRC enterprise income tax purposes; such classification could result in unfavorable tax consequences to us and our non-PRC shareholders.

The Enterprise Income Tax Law provides that enterprises established outside of China whose “de facto management bodies” are located in China are considered PRC tax resident enterprises and will generally be subject to the uniform 25% PRC enterprise income tax rate on their global income. In 2009, the State Administration of Taxation (“SAT”) issued the Circular of the State Administration of Taxation on Issues Concerning the Identification of Chinese-Controlled Overseas Registered Enterprises as Resident Enterprises in Accordance with the Standards of Actual Organizational Management (“SAT Circular 82”), which was partially amended by the Announcement on Issues concerning the Determination of Resident Enterprises Based on the Standards of Actual Management Institutions issued by the SAT on January 29, 2014, and further partially amended by the Decision on Issuing the Lists of Invalid and Abolished Tax Departmental Rules and Taxation Normative Documents issued by the SAT on December 29, 2017. SAT Circular 82, as amended, provides certain specific criteria for determining whether the “de facto management body” of a Chinese-controlled offshore-incorporated enterprise is located in China, which include all of the following conditions: (i) the location where senior management members responsible for an enterprise’s daily operations discharge their duties; (ii) the location where financial and human resource decisions are made or approved by organizations or persons; (iii) the location where the major assets and corporate documents are kept; and (iv) the location where more than half (inclusive) of all directors with voting rights or senior management have their habitual residence. SAT Circular 82 further clarifies that the identification of the “de facto management body” must follow the “substance over form” principle. In addition, the SAT issued the Announcement of State Administration of Taxation on Promulgation of the Administrative Measures on Income Tax on Overseas Registered Chinese-funded Holding Resident Enterprises (Trial Implementation) (“SAT Bulletin 45”) on July 27, 2011, effective from September 1, 2011, and partially amended on April 17, 2015, June 28, 2016, and June 15, 2018, providing more guidance on the implementation of SAT Circular 82. SAT Bulletin 45 clarifies matters including resident status determination, post-determination administration and competent tax authorities. Although both SAT Circular 82 and SAT Bulletin 45 only apply to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals or foreign individuals, the determining criteria set forth in SAT Circular 82 and SAT Bulletin 45 may reflect the SAT’s general position on how the “de facto management body” test should be applied in determining the tax resident status of offshore enterprises, regardless of whether they are controlled by PRC enterprises or PRC enterprise groups or by PRC or foreign individuals.

Currently, there are no detailed rules or precedents governing the procedures and specific criteria for determining “de facto management bodies” that are applicable to us or our overseas subsidiaries. We do not believe that CHNR meets all of the conditions for a PRC resident enterprise. The Company is a company incorporated outside the PRC. As a holding company, its key assets are its ownership interests in its subsidiaries, and its key assets are located, and its records (including the resolutions of its board of directors and the resolutions of its shareholders) are maintained, outside the PRC. For the same reasons, we believe our other entities outside of China are not PRC resident enterprises either. However, the tax resident status of an enterprise is subject to determination by the PRC tax authorities, and uncertainties remain with respect to the interpretation of the term “de facto management body.” There can be no assurance that the PRC government will ultimately take a view that is consistent with ours.

However, if the PRC tax authorities determine that CHNR is a PRC resident enterprise for enterprise income tax purposes, we may be required to withhold a 10% withholding tax from dividends we pay to our shareholders that are non-resident enterprises. Such 10% tax rate could be reduced by applicable tax treaties or similar arrangements between China and the jurisdiction of our shareholders. For example, for shareholders eligible for the benefits of the tax treaty between China and Hong Kong, known as the Arrangement between the Mainland of China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income (the “Double Taxation Arrangement”), the tax rate is reduced to 5% for dividends if relevant conditions are met, including without limitation that (a) the Hong Kong resident enterprise must be the beneficial owner of the relevant dividends; and (b) the Hong Kong resident enterprise must directly hold no less than 25% share ownership in the PRC resident enterprise during the 12 consecutive months preceding its receipt of the dividends. In current practice, a Hong Kong resident enterprise must obtain a tax resident certificate from the Hong Kong tax authority to apply for the 5% lower PRC withholding tax rate. As the Hong Kong tax authority will issue such a tax resident certificate on a case-by-case basis, we cannot assure you that we will be able to obtain a tax resident certificate from the relevant Hong Kong tax authority and enjoy the preferential withholding tax rate of 5% under the Double Taxation Arrangement with respect to any dividends paid by our PRC subsidiaries to their immediate holding companies. In addition, non-resident enterprise shareholders may be subject to a 10% PRC tax on gains realized on the sale or other disposition of common equity if such income is treated as sourced from within the PRC. It is unclear whether our non-PRC individual shareholders would be subject to any PRC tax on dividends or gains obtained by such non-PRC individual shareholders in the event we are determined to be a PRC resident enterprise. If any PRC tax were to apply to such dividends or gains, it would generally apply at a rate of 20% unless a reduced rate is available under an applicable tax treaty. However, it is also unclear whether non-PRC shareholders of the Company would be able to claim the benefits of any tax treaties between their country of tax residence and the PRC in the event that the Company is treated as a PRC resident enterprise.

13 

Provided that CHNR, as a BVI holding company, is not deemed to be a PRC resident enterprise, our shareholders who are not PRC residents will not be subject to PRC income tax on dividends distributed by us or gains realized from the sale or other disposition of our shares. However, under SAT Circular 7, where a non-resident enterprise conducts an “indirect transfer” by transferring taxable assets, including, in particular, equity interests in a PRC resident enterprise, indirectly by disposing of the equity interests of an overseas holding company, the non-resident enterprise, being the transferor, or the transferee or the PRC entity which directly owned such taxable assets may report to the relevant tax authority such indirect transfer. Using a “substance over form” principle, the PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose of reducing, avoiding or deferring PRC tax. As a result, gains derived from such indirect transfer may be subject to PRC enterprise income tax, and the transferee would be obligated to withhold the applicable taxes, currently at a rate of 10% for the transfer of equity interests in a PRC resident enterprise. We and our non-PRC resident investors may be at risk of being required to file a return and being taxed under SAT Circular 7, and we may be required to expend valuable resources to comply with SAT Bulletin 37, or to establish that we should not be taxed under SAT Circular 7 and SAT Bulletin 37.

In addition to the uncertainty in how the new resident enterprise classification could apply, it is also possible that the rules may change in the future, possibly with retroactive effect. If we are required under the Enterprise Income Tax Law to withhold PRC income tax on our dividends payable to our foreign shareholders, including U.S. investors, or if you are required to pay PRC income tax on the transfer of our shares under the circumstances mentioned above, the value of your investment in our shares may be materially and adversely affected. These rates may be reduced by an applicable tax treaty, but it is unclear whether, if we are considered a PRC resident enterprise, holders of our shares would be able to claim the benefit of income tax treaties or agreements entered into between China and other countries or areas. Any such tax may reduce the returns on your investment in our shares.

Any failure to comply with PRC regulations regarding the registration requirements for employee stock incentive plans may subject the PRC plan participants or us to fines and other legal or administrative sanctions.

In February 2012, SAFE promulgated the Notices on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plans of Overseas Publicly-Listed Companies, replacing earlier rules promulgated in March 2007. Pursuant to these rules, PRC citizens and non-PRC citizens who reside in China for a continuous period of not less than one year who participate in any stock incentive plan of an overseas publicly listed company, subject to a few exceptions, are required to register with SAFE through a domestic qualified agent, which could be the PRC subsidiary of such overseas-listed company, and complete certain other procedures related to account establishment, funds transfer and remittance. In addition, an overseas-entrusted institution must be retained to handle matters in connection with the exercise or sale of stock options and the purchase or sale of corresponding shares and interests. We and our executive officers and other employees who have been PRC citizens or who have resided in the PRC for a continuous period of not less than one year and who are granted options or other awards under our equity incentive plan will be subject to these regulations. Failure to complete the SAFE registrations may subject them to fines and legal sanctions and may also limit our ability to contribute additional capital into our PRC subsidiary and limit our PRC subsidiaries’ ability to distribute dividends to us. As at the date of this annual report, we have already completed the SAFE registration and obtained the relevant approval of foreign exchange for our executive officers, consultants and other employees who have been granted options and are subject to the above regulations. We also face regulatory uncertainties that could restrict our ability to adopt additional incentive plans for our directors, executive officers and employees under PRC law.

On July 14, 2022, the board of directors of the Company granted option covering an aggregate of 8,100,000 Common shares of the Company (or 1,620,000 Common shares of the Company as adjusted by a five-to-one share combination on April 3, 2023) to fifteen consultants and employees of the Company under the China Natural Resources, Inc. 2014 Equity Compensation Plan. SAT has issued circulars concerning employee share options, under which certain of our employees and consultants who are PRC tax residents and exercise share options will be subject to PRC individual income tax. The individual income tax of consultant grantees and employees shall be paid according to remuneration for personal services and wages and salaries respectively. Our PRC subsidiaries have obligations to file documents related to employee share options with relevant tax authorities and to withhold individual income taxes of those employees and consultants who exercise their share options. If our employees and consultants fail to pay or if we fail to withhold their individual income tax as required by relevant laws and regulations, we may face sanctions imposed by the PRC tax authorities or other PRC government authorities.

Failure to make adequate contributions to various mandatory social security plans as required by PRC regulations may subject us to penalties.

Under the PRC Social Insurance Law and the Administrative Measures on Housing Fund, our PRC subsidiaries are required to participate in various government sponsored employee benefit plans, including certain social insurance, housing funds and other welfare-oriented payment obligations, and to contribute to the plans in amounts equal to certain percentages of salaries, including bonuses and allowances, of the employees up to a maximum amount specified by the local government from time to time at locations where they operate the businesses. The requirements of employee benefit plans have not been implemented consistently by the local governments in China given the different levels of economic development in different locations. If the local governments deem our subsidiaries’ contribution to be insufficient, our subsidiaries may be subject to late contribution fees or fines in relation to any underpaid employee benefits, and our financial condition and results of operations may be adversely affected.

In Hong Kong, employers are required to select and join a provident fund scheme (“MPF Scheme”) in accordance with the statutory requirements of the Mandatory Provident Fund Schemes Ordinance for all employees in Hong Kong and to make contributions to the MPF Scheme based on the minimum statutory contribution requirement of 5% of the eligible employees’ relevant aggregate income, subject to a capped amount. Any non-compliance with statutory requirements with respect to our employees located in Hong Kong may result in enforcement being taken by the relevant authorities, which could lead to financial penalties or imprisonment.

14 

Enforcement of stricter labor laws and regulations may increase our labor costs.

China’s overall economy and the average wage have increased in recent years and are expected to continue to grow. The average wage level for our employees has also increased in recent years. We expect that our labor costs, including wages and employee benefits, will continue to increase. Unless we are able to pass on these increased labor costs to our customers who pay for our services, our profitability and results of operations may be materially and adversely affected. The PRC Labor Contract Law and its implementing rules impose requirements concerning contracts entered into between an employer and its employees and establishes time limits for probationary periods and for how long an employee can be placed in a fixed-term labor contract. We cannot assure you that our or our subsidiaries’ employment policies and practices do not, or will not, violate the Labor Contract Law or its implementing rules or that we will not be subject to related penalties, fines or legal fees. If we or our subsidiaries are subject to large penalties or fees related to the Labor Contract Law or its implementing rules, our business, financial condition and results of operations may be materially and adversely affected In addition, according to the Labor Contract Law and its implementing rules, if we intend to enforce the non-compete provision with an employee in a labor contract or non-competition agreement, we have to compensate the employee on a monthly basis during the term of the restriction period after the termination or ending of the labor contract, which may cause extra expenses to us. Furthermore, the Labor Contract Law and its implementation rules require certain terminations to be based upon seniority rather than merit, which significantly affects the cost of reducing workforce for employers. In the event we decide to significantly change or decrease our workforce in the PRC, the Labor Contract Law could adversely affect our ability to enact such changes in a manner that is most advantageous to our circumstances or in a timely and cost-effective manner, thus our results of operations could be adversely affected.

If the chops of our PRC subsidiaries are not kept safely, are stolen or are used by unauthorized persons or for unauthorized purposes, the corporate governance of these entities could be severely and adversely compromised.

In China, a company chop or seal serves as the legal representation of the company towards third parties even when unaccompanied by a signature. Each legally registered company in China is required to maintain a company chop, which must be registered with the local Public Security Bureau. In addition to this mandatory company chop, companies may have several other chops which can be used for specific purposes. The chops of our PRC subsidiaries are generally held securely by personnel designated or approved by us in accordance with our internal control procedures. To the extent those chops are not kept safely, are stolen or are used by unauthorized persons or for unauthorized purposes, the corporate governance of these entities could be severely and adversely compromised and those corporate entities may be bound to abide by the terms of any documents so chopped, even if they were chopped by an individual who lacked the requisite power and authority to do so. In addition, if the chops are misused by unauthorized persons, our PRC subsidiaries could experience disruption to our normal business operations. We may have to take corporate or legal action, which could involve significant time and resources to resolve while distracting management from our operations.

Risks Relating to Our Mine Exploration Activities in Inner Mongolia

The Moruogu Tong Mine is in the exploration stage.

One of our operating subsidiaries, Bayannaoer Mining, is in the exploration stage at the Moruogu Tong Mine located in the Inner Mongolia Autonomous Region of the PRC, and, at this stage, we cannot predict whether ore can be mined on a profitable basis. During the exploration stage, a mine incurs operating expenses but does not generate revenues. We intend to fund mine exploration on the southern part of Moruogu Tong Mine through borrowings from related parties or cash on hand. Pursuant to Bayannaoer Mining’s mutual cooperation agreement (the “Cooperation Agreement”) with Bayannaoer Jijincheng Mining Co., Ltd. (“Jijincheng Mining”), Jijincheng Mining is currently running the exploration program for the northern part of Moruogu Tong Mine. To date, the exploration program of the northern part has indicated the presence of lead and silver, with the prospect that further surveying and exploration may indicate the presence of other ores such as copper. At this stage of exploratory activities, we cannot predict whether sufficient ore of acceptable quality will be found at the Moruogu Tong Mine to warrant further exploration and/or extraction.

The northern part of Moruogu Tong Mine is currently being explored under an agreement that reduces our share in any future profits.

On August 20, 2017, Bayannaoer Mining entered into the Cooperation Agreement with Jijincheng Mining, an unrelated third party. The Cooperation Agreement is intended to provide for financial support for the operating expenses of the northern part of Moruogu Tong Mine during the exploration stage, and the allocation of rights and responsibilities between Bayannaoer Mining and Jijincheng Mining. According to the Cooperation Agreement, Jijincheng Mining is responsible for engaging the exploration team and providing the required funding. Pursuant to the Cooperation Agreement: (i) Bayannaoer Mining contributed the existing exploration results for the northern part of Moruogu Tong Mine; (ii) Jijincheng Mining provides the necessary funds for further exploration at the mine; (iii) Bayannaoer Mining enjoys full rights to any resources already discovered and confirmed by its independent exploration work conducted prior to commencement of the cooperative exploration project; (iv) Bayannaoer Mining and Jijincheng Mining will each receive a 50% interest in any newly discovered resources from the first 10 drilling holes in the cooperative exploration project; and (v) Bayannaoer Mining and Jijincheng Mining will receive 30% and 70% interests, respectively, in any newly discovered resources from drilling work beyond the first 10 drilling holes in the cooperative exploration project. As of the date of this annual report, 21 holes have been drilled using funding provided by Jijincheng Mining pursuant to the Cooperation Agreement. Other details of the Cooperation Agreement, including allocations and distributions upon completion of exploration work, remain to be negotiated between the parties. There is no assurance that the details of the arrangement that remain to be negotiated will be resolved in a manner satisfactory to the Company. Moreover, because the Cooperation Agreement provides us with a minority interest in the resources discovered as part of the cooperative exploration project, we will not be able to enjoy the full economic benefits of the resources we discover in the northern part of Moruogu Tong Mine for the duration of the Cooperation Agreement.

Any estimates of the reserves contained in the Moruogu Tong Mine may be inaccurate.

The Moruogu Tong Mine is the subject of a geological survey prepared in conformity with procedures and protocols recognized in the PRC. These procedures and protocols are different from those generally recognized in the United States. In addition, reserve estimation is an interpretive process based upon available data and various assumptions that are believed to be reasonable, and the economic value of ore reserves may be adversely affected by price fluctuations in the metals markets, reduced recovery rates or a rise in production costs as a result of inflation or other technical problems arising in the course of extraction. If the assumptions upon which we conduct the reserve study prove to be inaccurate, we may reach incorrect conclusions as to the nature and extent of resources present at the Moruogu Tong Mine, and we may not be able to generate revenues from the Moruogu Tong Mine in an amount that would lead to such activities being profitable or at all.

15 

There are no assurances that we can produce minerals on a commercially viable basis.

The Company’s ability to generate revenue and profit from the Moruogu Tong Mine is expected to occur, if at all, through the exploration, evaluation, development and operation of that property. The economic feasibility of a project depends on numerous factors, including the cost of mining and production facilities required to extract the desired minerals, the total mineral deposits that can be mined at a given facility, the proximity of the mineral deposits to refining facilities, and the market price of the minerals at the time of sale. There is no assurance that our current or future exploration programs or any acquisitions will result in the identification of deposits that can be mined profitably.

Volatility in the market prices of metals may adversely affect the results of our operations.

The market prices of lead, silver and other metals have experienced significant volatility in recent years. Market prices depend upon many factors beyond our control, which include industry specific factors such as supply and demand and the level of customer inventories, as well as factors such as local and world-wide general economic conditions and disruptions caused by unforeseen domestic or international crises such as the global outbreak of COVID-19, or geopolitical tensions, including the ongoing military conflict between Russia and Ukraine. The uncertainties surrounding the market prices of metals and the costs of extraction may adversely affect our ability to operate on a profitable basis if our mining exploration proves fruitful.

During 2023, the world witnessed the continuation of the Russia-Ukraine conflict, the Israel Hamas war, the Red Sea crisis, persistent high inflation and interest rate in many major economies, which led to disruptions to, and notable fluctuations in, the commodity market worldwide and resulted in high volatility in the market prices of lead, silver and copper. In 2023, the Shanghai Futures Exchange (“SHFE”) lead price hit a low of CNY15,015 (US$2,121) per ton and a high of CNY17,540 (US$2,478) per ton, the SHFE silver price reached a low of CNY4,756 (US$$672) per kilogram (“kg”) and a high of CNY6,343 (US$896) per kg, and the SHFE copper price hit a low of CNY62,690 (US$8,856) per ton and a high of CNY71,500 (US$10,101) per ton, each reflecting high volatility. The extent to which demand and prices will be supported in the future is highly uncertain, as the impacts of the interest rate hikes in major economies, especially the U.S., the ongoing geopolitical tensions and remaining effects of the COVID-19 pandemic continue to cause disruptions to the global economy and to business activities at all levels. Any widespread resurgence of COVID-19 or other pandemics, or further geopolitical tensions, could significantly and adversely impact market sentiment and the broader economy. Aggressive monetary policies of major economies could also cause unexpected consequences beyond mere economic downturns, such as large-scale bankruptcy and even financial crisis, which will have significant and negative impacts on the commodity markets. Therefore, demand and price volatility in the commodity markets may continue for a prolonged period or further deteriorate, which may adversely affect our ability to sell minerals from the Moruogu Tong Mine on a profitable basis.

We are subject to government regulations in various aspects of our exploration activities and our failure to comply with applicable government regulations could adversely affect us.

Bayannaoer Mining, our subsidiary that acquired exploration rights to the Moruogu Tong Mine, is and will continue to be subject to the regulations of various aspects of its operations by a variety of laws, rules and regulations administered by the national and local Chinese government, including laws, rules and regulations relating to: exploration activities; environmental protection; the use and preservation of dangerous substances; employment practices; as well as land use laws and a variety of local business laws and rules. Our failure to comply with applicable laws, rules, and regulations could adversely affect our operations and subject us to fines and other penalties including suspension or termination of our business permits.

We do not have binding agreements with customers to purchase any future output of metals.

While we believe there is a robust market for lead, silver and other metals not only in China but also in other countries (although our operations are currently limited to the PRC and we are not currently producing any metals), we do not currently have any commitments from any customers to purchase any future output of metals. As a result, we may not be able to sell any metals that we are able to successfully extract at prices that are acceptable to us or at all.

ESG issues, including those related to health, safety, climate change and sustainability, may have an adverse effect on our business, financial condition, and results of operations, could damage our reputation, and may increase costs.

There is an increasing focus from certain investors, customer, partners and other stakeholders concerning ESG matters. Additionally, public interest and legislative pressure related to public companies’ ESG practices continue to grow and change, and may continue to shift based on political conditions in the countries in which we operate and do business. If our ESG practices fail to meet regulatory requirements, our medium- and long-term ESG commitments, or investors, customers, partners or other stakeholders’ evolving expectations and standards for responsible corporate citizenship in areas including environmental stewardship, support for local communities, human capital management, employee health and safety practices, corporate governance and transparency, our reputation, brand and employee retention may be negatively impacted.

Investors, customers, partners and other stakeholders are increasingly focusing on environmental issues, including climate change, dams, energy and water use, and other sustainability concerns. Concern over climate change, in particular, may result in new or increased legal and regulatory requirements to reduce or mitigate impacts to the environment.

If we do not adapt to or comply with new regulations, or if we fail to comply with disclosure requirements and consequently fail to meet evolving regulatory, investor, industry or stakeholder expectations and concerns regarding ESG issues, investors may reconsider their capital investment in us, customers and partners may choose to stop the cooperation with us, which could have a material adverse effect on our reputation, business or financial condition.

In addition, our ESG practices and initiatives may result in increased operational costs, including monitoring and reporting costs, equipment costs, energy costs, and other costs to comply with our developing practices and initiatives. These additional costs could have a material impact on our business, results of operations and financial condition.

16 

Risks Relating to the Sale of PST Technology

We face risks associated with the divesture of our wastewater treatment segment.

In July 2021, we acquired PST Technology for consideration of three million of the Company’s newly issued restricted common shares, 120 million shares of FARL, and approximately CNY10.3 million (US$1.46 million). Through our acquisition of PST Technology, we obtained a 51% equity interest in Shanghai Onway, a company principally engaged in services related to rural wastewater treatment. In addition to the purchase price, we incurred significant non-recurring expenses in connection with the acquisition, including legal, accounting, financial advisory, integration planning and other expenses, and have incurred integration costs arising out of this transaction.

On July 28, 2023, we entered into a Sale and Purchase Agreement (“SPA”) with Feishang Group Limited (“Feishang Group”), pursuant to which, we agreed to sell 100% equity interest of Precise Space-Time Technology Limited to Feishang Group, together with PST Technology’s outstanding payable owed to us, for consideration of approximately CNY95,761,119 comprising: (i) CNY-34,197,300, the fair value of 100% equity interest of PST Technology as determined by the independent valuation report dated July 28, 2023; and (ii) CNY129,958,419, the book value of PST Technology’s outstanding payable owed to us. After PST Technology’s disposition, we discontinued the operation in wastewater treatment segment and continue engaging in the exploration and mining business. This divestiture may adversely affect our business, results of operations or financial condition if we are unable to offset the dilutive impacts from the loss of revenue associated with the divested waste water treatment business, or otherwise achieve the anticipated benefits or cost savings from the divestiture.

In addition, we may divest in the future businesses as part of ongoing efforts to refine our portfolio and redefine our strategic priorities. We may not be able to successfully achieve the expected benefits of such divestitures and such divestitures may not have the desired effect of enhancing the status of our portfolio of businesses. Our divestitures could result in exposure to contingent or unexpected liabilities, such as litigation, indemnification claims, regulatory claims and earn-out obligations. Furthermore, businesses under consideration for, or otherwise subject to, divestiture may be adversely impacted prior to completion of the divestiture, which could adversely affect our business, results of operations or financial condition.

Risks Relating to the Potential Closing of the Acquisition of Williams Minerals and the Timing of Such Closing

There may be unforeseen risks relating to the Acquisition that were not discovered by us through our due diligence investigation prior to our Acquisition.


       Although we have conducted due diligence in connection with the Acquisition, and such due diligence investigation concluded on April 14, 2023, an unavoidable level of risk remains regarding any undisclosed or unknown issues concerning the prospects of the Zimbabwean lithium mine, including the actual presence and extraction of minerals therein. We may learn additional information about the Zimbabwean lithium mine that could materially adversely affect us. There may be unforeseen risks relating to our ability to locate and execute on strategic opportunities; the presence of lithium or precious minerals in the Zimbabwean lithium mine; the vesting of the legal possession and control of the relevant regions of the Zimbabwean mine and the timing thereof; the level of demand for lithium and other precious minerals; and the availability of internally generated funds and funds for the payment of operating expenses, capital expenditures and the Company’s growth strategy.

Completion of the Acquisition is conditional upon satisfaction or waiver of various conditions. There can be no assurance that the conditions will be fulfilled or waived, or that the acquisition will be completed.


       The completion of the Acquisition is subject to a number of conditions, including, among other things, the transfer of ownership interests in Williams Minerals from the Sellers to the intermediate holding company; the Company’s payment of the first installment of US$140 million, in cash or by way of promissory notes, to the Sellers; the issuance of independent technical reports regarding the amount of qualified measured, indicated and inferred resources quantity of lithium oxide proven to be in each region of the mining area; the settlement of the then-total consideration accumulated in cash and restricted shares, as calculated in reference to the issued independent technical reports; and the transfer of ownership rights to the Company for each region of the mining area. Pursuant to the Zimbabwe SPA, for each relevant region of the lithium mine, until the Company’s legal possession and control vests, the Sellers will maintain legal possession and control, including the right of exploration, sale of lithium, and the revenue derived therefrom, as well as liability for operational costs and third-party claims. The Company’s legal possession and control of each relevant region only vests upon its settlement of the then-total consideration accumulated. There can be no certainty, nor can we provide any assurance, that all conditions will be satisfied or waived, or, if satisfied or waived, when they will be satisfied or waived and, accordingly, the acquisition may not be completed. On December 22, 2023, the Company entered into an amendment agreement (the “Amendment Agreement”) to the Zimbabwe SPA with the parties thereto. As the Sellers are still in the process of satisfying conditions precedent to the closing of the Acquisition in accordance with the Zimbabwe SPA, including but not limited to obtaining requisite governmental approvals, the parties entered into the Amendment Agreement to extend the long stop date for closing the acquisition from December 31, 2023 to December 31, 2024. Although we expect that the last independent technical report will be completed, and accordingly ownership rights to the last mining region (as described above) will vest with the Company, in 2026, there is no guarantee that the Acquisition will be completed on such timeline, or at all.

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Failure to complete the Acquisition may have a material adverse effect on the Company’s business, financial condition and results of operations.

If the Acquisition is not completed, the ongoing businesses of the Company may be adversely affected and the Company will be subject to several risks, including (i) having to pay certain costs relating to the Acquisition, such as legal, accounting, and external consultant fees, (ii) the focus of management on the Acquisition instead of on pursuing other opportunities that could be beneficial, (iii) negative reactions from the financial markets, which could cause a decrease in the market price of our shares, particularly if the market price reflects market assumptions that the Acquisition will be completed or completed on certain terms; and (iv) negative reactions from regulators, rating agencies, prospective customers, counterparties and employees; all without having fully realized the anticipated benefits of the Acquisition. Failure to complete the Acquisition or a change in the terms of the Acquisition could each have a material adverse effect on the Company’s business, financial condition and results of operations, as well as on our ability to attract future acquisition opportunities.

Even if the Acquisition is completed, we may fail to realize the anticipated benefits associated with it, those benefits may take longer to realize than expected, and we may encounter significant difficulties.

Even if we are successful in completing the Acquisition, we may fail to realize the anticipated benefits of it. The anticipated benefits of the Acquisition and the projected cash costs necessary to achieve these benefits may be affected by changes in the overall economic, political and regulatory environment, including applicable tax regimes and fluctuations in foreign exchange rates, the viability of mining and estimates of reserves at the Zimbabwean lithium mine, the issuance and accuracy of the independent technical reports, the demand for lithium and other precious minerals, and the realization of the other risks relating to our business described herein. The benefits we expect to realize from this Acquisition will depend, in part, on our ability to successfully extract lithium or precious minerals, if found, and to capitalize on our mining expertise and sales and distribution platform. If we are not able to achieve these objectives, the anticipated benefits of the Acquisition may not be realized fully or at all or may take longer to realize than expected.

Risks Relating to Additional Acquisitions and Expansion into Other Sectors

We may acquire other businesses or form joint ventures that could negatively affect our operating results, dilute our shareholders’ ownership, increase our debt or cause us to incur significant expense.

We are actively seeking opportunities to enter other industries in the PRC, as well as other potentially attractive opportunities; however, we cannot offer any assurance that acquisitions of businesses, assets and/or entering into strategic alliances or joint ventures will be successful. We may not be able to find suitable partners or acquisition candidates and may not be able to complete such transactions on favorable terms, if at all. If we make any acquisitions, we may not be able to integrate these acquisitions successfully into our existing infrastructure. In addition, in the event we acquire any existing businesses we could assume unknown or contingent liabilities.

Any future acquisitions could result in incurrence of debt, contingent liabilities or future write-offs of intangible assets or goodwill, any of which could have a negative impact on our cash flows, financial condition and results of operations. Integration of an acquired company may also disrupt ongoing operations and require management resources that otherwise would be focused on developing and expanding the acquired business. We may experience losses related to potential investments in other companies, which could harm our financial condition and results of operations. Further, we may not realize the anticipated benefits of any acquisition, strategic alliance or joint venture if such investments do not materialize.

To finance any acquisitions or joint ventures, we may choose to issue common shares, or a combination of debt and equity as consideration, which could significantly dilute the ownership of our existing shareholders or provide rights to such target shareholders in priority over our common shareholders. Additional funds may not be available on terms that are favorable to us, or at all. If the price of our common shares is low or volatile, we may not be able to acquire other companies or fund a joint venture project using shares as consideration.

Future acquisitions or strategic investments could be difficult to identify and integrate, divert the attention of management, and could disrupt our business, dilute shareholder value and adversely affect our business, results of operations, and financial condition.

As part of our growth strategy, we may acquire or invest in other businesses, assets or technologies that are outside of the sectors we have historically operated in but fit within our strategic goals. Any acquisition or investment may divert the attention of management and require us to use significant amounts of cash, issue dilutive equity securities or incur debt. We have limited experience in acquiring other businesses. In addition, we may be exposed to unknown risks, any of which could adversely affect our business, results of operations, and financial condition, including risks arising from:

•difficulties in integrating the operations, technologies, product or service offerings, administrative systems, and personnel of acquired businesses, especially if those businesses operate outside of our core competency or geographies in which we currently operate;

•potential loss of key employees of the acquired business;

•inability to maintain key business relationships and reputation of the acquired business;

•litigation arising from the acquisition or the activities of the acquired business, including claims from terminated employees, customers, former shareholders or other third parties;

•assumption of contractual obligations that contain terms that are not beneficial to us, require us to license, or increase our risk of liability;

•complications in the integration of acquired businesses or diminished prospects, including as a result of the domestic and global economic downturns;

•failure to generate the expected financial results related to an acquisition in a timely manner or at all;

•failure to accurately forecast the impact of an acquisition transaction; and

•implementation or remediation of effective controls, procedures, and policies for acquired businesses.

Risks Relating to Our Financial Condition and Business

We have incurred losses from operations in each of the preceding three fiscal years of 2021, 2022 and 2023 and there is no assurance that we will generate profits from operations in the future.

For the three years ended December 31, 2021, 2022 and 2023, we incurred operating losses of CNY10.48 million, CNY24.55 million and CNY9.14 million (US$1.29 million), respectively. Our operating losses mainly represent administrative expenses, such as legal and professional fees, payroll expenses, our cost of sales and estimated uncollectible receivables, as well as equity-settled share-based compensation for certain eligible individuals under the 2014 Equity Compensation Plan (the “2014 Plan”) granted on July 14, 2022. Any future profitability will be dependent upon many factors, including our successful integration and profitable operations of our newly acquired and existing businesses; our ability to fund our exploration and operating expenses, successfully produce metal outputs, and sell our production output to third parties; and the successful execution of our plans to pivot to other industries. Other factors, such as uncertainty over the demand and market price for lead, silver and other metals, or the availability of attractive acquisition targets in other industries, are outside of our control. There is no assurance that we will be successful in our efforts to achieve profitability, and we expect to incur significant losses for the foreseeable future. We can provide no assurance to investors that we will achieve profitable operations in the future.

We will have to fund operating expenses from other sources until we are able to generate sufficient revenue to pay them.

We have generated losses from operations over each of the past three fiscal years, and we have generated revenues from our current operations in recent periods prior to the cessation of these two businesses. We will continue to incur operating expenses in connection with our exploratory activities, and we intend to fund those expenses with internal resource and/or the proceeds of loans from our Related-Party Debtholders, if available, payments pursuant to the Cooperation Agreement and, to the extent deemed necessary and available, further bank borrowings. We may incur substantial expenses in connection with developing our current operations or identifying an additional focus for our business. There is no assurance that we will be able to secure amounts sufficient to fund our operating expenses until such time as we are able to generate revenues sufficient to pay those expenses.

The loss of key personnel could affect our business and prospects.

We believe that our future success depends in part upon our ability to attract, retain and motivate qualified personnel necessary for the development of our business, particularly as our management has limited experience in industries in which we are exploring potential business opportunities. If one or more members of our management team or other key technical personnel become unable or unwilling to continue in their present positions, and if additional key personnel cannot be hired and retained as needed, our business and prospects for growth could be adversely affected. Intense competition for these personnel in these industries could cause our compensation costs to increase, which could have a material adverse effect on our results of operations. Our future success and ability to grow our business will depend in part on the continued service of these individuals and our ability to identify, hire and retain additional qualified personnel. If we are unable to attract and retain qualified employees, we may be unable to meet our business and financial goals.

Any failure to maintain effective internal controls could have an adverse effect on our business, results of operations and the market price of our shares.

The SEC, as required by Section 404 of the Sarbanes-Oxley Act of 2002 (“SOX”), adopted rules requiring most public companies to include a management report on such company’s internal control over financial reporting in its annual report, which contains management’s assessment of the effectiveness of the company’s internal control over financial reporting. In addition, if we become an accelerated or large accelerated filer, as defined in the SEC’s rules, we will be required to provide an annual attestation from an independent registered public accounting firm on management’s assessment of the effectiveness of the Company’s internal control over financial reporting.

Our management has concluded that our internal control over financial reporting as of December 31, 2023, was effective. However, we cannot assure you that our management will not identify material weaknesses in the future, or our independent public registered accounting firm will not identify material weaknesses if it assesses our internal control over financial reporting in the future. In addition, because of the inherent limitations of any internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. As a result, if we fail to maintain effective internal control over financial reporting or should we be unable to prevent or detect material misstatements due to error or fraud on a timely basis, investors could lose confidence in the reliability of our financial statements, which in turn could harm our business and results of operations, negatively impact the market price of our shares, and harm our reputation. Furthermore, we have incurred and expect to continue to incur considerable costs and to use significant management time and other resources in an effort to comply with Section 404 of and other requirements of SOX. 

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Risks Relating to Foreign Private Issuer Status

Because our assets are located outside of the United States and all of our directors and officers reside outside of the United States, it may be difficult for you to enforce your rights based on the U.S. federal securities laws against us or our officers and directors or to enforce a judgment of a United States court against us or our officers and directors in the PRC.

We are a BVI company, all of our directors are located outside the United States in Hong Kong, all of our assets and officers are located outside the United States in the PRC, and our operations are conducted in the PRC. We do not maintain a business presence in the United States. Therefore, it may not be possible to effect service of process on such persons in the United States, and it may be difficult to enforce any judgments rendered against us or them. Moreover, there is doubt whether courts in the BVI, the PRC or Hong Kong would enforce (a) judgments of United States courts against us, our directors or officers based on the civil liability provisions of the securities laws of the United States or any state, or (b) in original actions brought in the BVI, the PRC or Hong Kong, liabilities against us or any nonresidents based upon the securities laws of the United States or any state.

Our status as a foreign private issuer results in less information being available about us than about domestic reporting companies.

We are a foreign private issuer and are not required to file as much information about us as domestic issuers are required to file. In this regard:

•we are not required to file quarterly reports on Form 10-Q and our annual reports on Form 20-F are subject to disclosure requirements that differ from annual reports on Form 10-K;

•we are exempt from the provisions of Regulation FD aimed at preventing issuers from making selective disclosures;

•the SEC proxy statement and information statement rules do not apply to us; and

•our officers, directors and principal shareholder are not required to file reports under Section 16 of the Exchange Act detailing their beneficial ownership of our shares; and they are not subject to the short-swing profit provisions under Section 16.

Since there is generally greater and more timely information available about domestic issuers than about foreign private issuers such as us, you will not be afforded the same protections or information as would be available to you if you were investing in a U.S. domestic issuer.

Due to our status as a foreign private issuer, we have adopted IFRS accounting principles, which are different from accounting principles under U.S. GAAP.

We have adopted and presented our financial statements in accordance with IFRS accounting principles. IFRS is an internationally recognized body of accounting principles that are used by many companies outside of the United States to prepare their financial statements, and the SEC permits foreign private issuers such as the Company to prepare and file their financial statements in accordance with IFRS rather than U.S. GAAP. IFRS accounting principles are different from those of U.S. GAAP, and SEC rules do not require us to provide a reconciliation of IFRS accounting principles to those of U.S. GAAP. Accordingly, we suggest that readers of our financial statements familiarize themselves with the provisions of IFRS accounting principles in order to better understand the differences between these two sets of principles.

As a foreign private issuer we are not subject to certain requirements that other Nasdaq-listed issuers are required to comply with, some of which are designed to provide information to and protect investors.

Our common shares are currently listed on Nasdaq and, for so long as our securities continue to be listed, we will remain subject to the rules and regulations established by Nasdaq applicable to listed companies. However, we have elected to claim certain exemptions afforded to foreign private issuers by relevant Nasdaq rules, and as a result:

•a majority of the members of our board of directors (the “Board of Directors” or the “Board”) are not independent as defined by Nasdaq rules;

•our independent directors do not hold regularly scheduled meetings in executive session;

•while executive compensation is recommended by our Compensation Committee, which is comprised of independent directors, the compensation of our executive officers is ultimately determined by the Board of Directors rather than an independent committee of the Board or by the independent members of the Board of Directors;

•related party transactions are not required to be reviewed or approved by our Audit Committee or other independent body of the Board of Directors;

•we are not required to solicit shareholder approval of stock plans or issuances of securities, including those in which our officers or directors may participate; share issuances that will result in a change in control; the issuance of our shares in related party transactions or other transactions in which we may issue 20% or more of our outstanding common shares; or below market issuances of 20% or more of our outstanding shares to any person; and

•we are not required to hold an in-person annual meeting to elect directors and transact other business customarily conducted at an annual meeting.

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Due to an exemption from Nasdaq rules applicable to foreign private issuers, our related party transactions may not receive the type of independent review process that those of other Nasdaq-listed companies receive; the terms of these transactions are not negotiated at arm’s-length and may not be as favorable as could be obtained from unrelated parties.

We have historically engaged in a substantial number of transactions with related parties in the ordinary course of business, predominantly with our principal beneficial owner and former Chairman and Chief Executive Officer and/or companies that he owns or controls. These transactions are described in greater detail elsewhere in this annual report. In general, Nasdaq rules require that related party transactions be reviewed by an audit committee or other committee comprised of independent directors. However, under Nasdaq rules applicable to foreign private issuers such as our company, we are exempt from certain Nasdaq requirements, including requirements applicable to independent director review of related party transactions. This exemption is available to us because the laws of the BVI, our home jurisdiction, do not mandate independent review of related party transactions.

Notwithstanding the foregoing, nonrecurring related party transactions (i.e., related party transactions that are not in the ordinary course of business) are submitted for approval by our Board of Directors, following disclosure of the related party’s interest in the transaction, and, in all cases, Board approval has historically included the unanimous approval of our independent directors. In addition, our annual audited financial statements, including the related party transactions reported therein, are approved by our Audit Committee, which is comprised solely of independent directors. However, except to the limited extent described above, these transactions are not individually reviewed or approved solely by independent directors. While management believes that our related party transactions have been on terms at least as favorable to the Company as could be obtained from unrelated parties, there is no assurance that such is the case or will be so in the future, or that shareholders would not be better protected if we were not exempt from, or we chose to voluntarily comply with, the applicable Nasdaq rules.

Risks Relating to Our Common Shares

You may experience dilution to the extent that our common shares are issued upon the exercise of outstanding warrants or other securities that we may issue in the future.

You may experience dilution to the extent that our common shares are issued upon the exercise of our outstanding warrants, and if we issue additional equity securities, or there are any issuances and subsequent exercises of stock options issued in the future. Up to 1,115,903 Common shares may be issued with the exercise of warrants at a per share exercise price of $3.00 issued to the investors and up to 74,394 Common shares may be issued with the exercise of warrants at a per share exercise price of $2.20 issued to the placement agent in a private placement (the “Private Placement”) in connection with a registered offering of 1,487,870 Common shares to the same investors at a price of $2.20 per Common Share (the “Registered Offering”) in February 2024. Up to 1,620,000 common shares may be issued with the exercise of options at a per share exercise price of $3.115 issued to certain eligible individuals under the Company’s 2014 Plan as adjusted by a five-to-one share combination on April 3, 2023. See, “Item 10.C. Additional Information — Material Contracts.”

Substantial future sales or perceived potential sales of our common shares in the public market could cause the price of our common shares to decline.

Sales of our common shares in the public market, or the perception that these sales could occur, could cause the market price of our common shares to decline. As of the date of this annual report, we have 9,865,767 Common shares issued and outstanding. On February 16, 2024, the Company entered into a securities purchase agreement with certain institutional investors (the “Investors”), pursuant to which the Company agreed to issue and sell, (i) in a registered direct offering, up to an aggregate of 1,487,870 of common shares, no par value of the Company at a per Share purchase price of $2.20, and (ii) in a concurrent private placement, warrants initially exercisable for the purchase of an aggregate of 1,115,903 common shares of the Company (the “Investors Warrants”), for gross proceeds of approximately $3.27 million, before deducting fees to the placement agent and other estimated offering expenses payable by the Company. In connection will the Registered Offering and Private Placement pursuant to the terms of a placement agency agreement, dated February 16, 2024 between the Company and Placement Agent (the “Placement Agent Agreement”), the Company agreed to issue to the Placement Agent warrants to purchase an aggregate of up to 74,394 Common shares at a per share exercise price of $2.20 (the “Placement Agent Warrants”, and together with the Investors Warrants, the “Warrants”). Assuming exercise of all of the Warrants by cash and without adjustment, a maximum of 1,190,297 Common shares underlying the Warrants will be offered for sale, subject to any restrictions as applicable under the Securities Act.

Certain of the Selling Shareholders may acquire their Common shares at a price that is less than the market price of the Common shares in the future, may earn a positive rate of return even if the price of the Common shares declines and may be willing to sell their Common shares at a price less than shareholders that acquired Common shares in the public market.

Certain of our Selling Shareholders may purchase their respective common shares at prices lower than the market prices in the future and may therefore experience a positive rate of return on their investment, even if our public shareholders experience a negative rate of return on their investment. As a result, the Selling Shareholders are able to recognize a greater return on their investment than shareholders that acquired Common shares in the public market. Up to 1,115,903 Common shares may be issued with the exercise of the Investor Warrants at a per share exercise price of $3.00 and up to 74,394 Common shares may be issued with the exercise of the Placement Agent Warrants at a per share exercise price of $2.20. Furthermore, the Selling Shareholders may earn a positive rate of return even if the price of the Common shares declines significantly. As a result, the Selling Shareholders may be willing to sell their shares at a price less than shareholders that acquired their Common shares in the public market or at higher prices than the price paid by such Selling Shareholders, the sale of which would result in the Selling Securityholder realizing a significant gain even if other CHNR shareholders experience a negative rate of return.

21 

There is a limited number of our common shares in the public float and trading in our shares is not active; therefore, our common shares tend to experience price volatility.

There are currently approximately 4,357,828 of our common shares in the public float and, in general, there has not been an active trading market for our shares. Our shares tend to trade along with other shares of public companies whose operations are based in the PRC, and, at times, in tandem with other natural resource companies. These shares tend to exhibit periods of extreme volatility and price fluctuations, even when there are no events peculiar to the Company that appear to warrant price changes. We cannot assure you that price volatility will not continue in the future or, as a result thereof, that market prices will reflect actual values of our company.

As a consequence of this lack of liquidity, the trading of relatively small quantities of shares by our shareholders may disproportionately influence the price of those shares in either direction. The share price could, for example, decline precipitously in the event that a large number of shares are sold on the market without commensurate demand. As a consequence of this enhanced risk, more risk-adverse investors may, due to the fear of losing all or most of their investment in the event of negative news or lack of progress, be more inclined to sell their shares on the market more quickly and at greater discounts than would be in the case of the stock of a seasoned issuer, negatively impacting the trading price of our common shares.

The price at which common shares are quoted on Nasdaq may increase or decrease due to a number of factors, which may negatively affect the price of the common shares.

The price at which the common shares are quoted on Nasdaq may increase or decrease due to a number of factors. These factors may cause the common shares to trade at prices above or below the prices at which the common shares were first offered without regard to our operations and financial performance. Some of the factors which may affect the price of the common shares include:

•fluctuations in the domestic and international market for listed stocks;
•general economic conditions, including interest rates, inflation rates, exchange rates, commodity and oil prices;
•changes to government fiscal, monetary or regulatory policies, legislation or regulation;
•inclusion in or removal from market indices;
•acquisition and dilution;
•climate change and pandemic risk;
•the nature of the markets in which we operate; and
•general operational and business risks.

Other factors which may negatively affect investor sentiment and influence the Company, specifically or the stock market more generally include acts of terrorism, an outbreak of international hostilities or tensions, fires, floods, earthquakes, labor strikes, civil wars, natural disasters, outbreaks of disease or other man-made or natural events. We have limited ability to insure against some of the risks mentioned above.

Our principal beneficial owner and his affiliates control us through their share ownership; and their interests may differ from those of other shareholders.

Mr. Li Feilie, beneficial owner of a majority of our outstanding common shares, beneficially owns approximately 54.5% of our outstanding common shares, and as a result, Mr. Li is and will continue to be able to influence the outcome of shareholder votes on various matters, including the election of directors and extraordinary corporate transactions such as business combinations. Through his related companies, Mr. Li also provides funding to support the Company’s operating expenses and holds a substantial amount of the Company’s debt (see “Item 7.B. Major Shareholders and Related Party Transactions – Related Party Transactions,” below). Mr. Li’s interests may differ from those of other shareholders. Additional information relating to the beneficial ownership of our securities is contained elsewhere in this annual report under “Item 6.E. Directors, Senior Management and Employees – Share Ownership.”

The rights of our shareholders are governed by BVI law, the provisions of which may not be as favorable to shareholders as under U.S. law, and our directors may take actions with which you disagree without first receiving shareholder approval.

Our directors have the power to take certain actions without shareholder approval, including the amendment of our Amended and Restated Memorandum of Association (the “Memorandum”) and our Articles of Association (the “Articles”) (save and except that such amendments may not restrict the rights or power of our shareholders to amend the Memorandum or the Articles, and may not change the percentage of shareholders required to pass a resolution to amend the Memorandum or the Articles, and further that our directors may not amend the Memorandum or the Articles in circumstances where they may not be amended by our shareholders), and also including an increase or reduction in the maximum number of shares which our company is authorized to issue, which would require shareholder approval under the laws of most jurisdictions in the United States. In addition, the directors of a BVI company, subject in certain cases to court approval but without shareholder approval, may, among other things, implement a reorganization, certain mergers or consolidations with a subsidiary, the sale, transfer, exchange or disposition of any assets, property, part of the business, or securities of the company, or any combination of the foregoing, if they determine it is in the best interests of the company. Our ability to amend our Memorandum and Articles without shareholder approval could allow our directors to implement provisions to those documents that have the effect of delaying, deterring or preventing a change in our control without any further action by the shareholders, including a tender offer to purchase our common shares at a premium over then current market prices, as could the ability of our directors to issue blank check preferred shares.

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The elimination of monetary liability against our directors and officers under our Articles and the indemnification of our directors and officers may result in substantial expenditures by us and may discourage lawsuits against our directors and officers.

Our Articles contain provisions that indemnify our directors and officers against any liability, action, proceeding, claim, demand, costs, damages or expenses, including legal expenses, whatsoever which they may incur as a result of any act or failure to act in carrying out their functions, other than such liability that they may incur by reason of their own actual fraud or wilful default. No such indemnified person shall be liable to our company for any loss or damage incurred by our company as a result of carrying out their functions unless that liability arises through the actual fraud or wilful default of such indemnified person. We may provide contractual indemnification obligations under agreements with our directors, officers and employees. These indemnification obligations could result in our incurring substantial expenditures to cover the cost of settlements or damage awards against directors, officers and employees, which we may be unable to recoup. These provisions and resultant costs may also discourage us from bringing a lawsuit against directors, officers and employees for breach of their fiduciary duties, and may similarly discourage the filing of derivative litigation by our shareholders against our directors, officers and employees even though such actions, if successful, might otherwise benefit the Company and our shareholders.

We may be classified as a passive foreign investment company, which could result in adverse U.S. federal income tax consequences to U.S. shareholders.

We have not made a determination whether we will or will not be a passive foreign investment company (“PFIC”) for U.S. federal income tax purposes in the current tax year or in subsequent tax years. Whether we are a PFIC is determined on a year-by-year basis, and we cannot assure you that we are not and we will not be a PFIC for our future tax years. A non-U.S. corporation is generally a PFIC if either (i) at least 75% of its gross income is passive income for a tax year or (ii) at least 50% of the value of its assets (based on an average of the quarterly values of the assets during a tax year) are attributable to assets that produce or are held for the production of passive income. The market value of our assets may be determined to a large extent by the market price of our common shares. If we are treated as a PFIC for any tax year in which U.S. shareholders hold common shares, certain adverse U.S. federal income tax consequences could apply to such U.S. shareholders. For further discussion of the implications of PFIC status, please refer to “Item 10.E. Additional Information – Taxation – United States Federal Income Taxation.”

It is not possible to foresee all risks that may affect us. Moreover, we cannot predict whether we will successfully effectuate our current business plans. Each prospective purchaser of our common shares is encouraged to carefully analyze the risks and merits of an investment in the common shares and should take into consideration when making such analysis the Risk Factors discussed above, among others.

ITEM 4.INFORMATION ON THE COMPANY

A.History and Development of the Company

China Natural Resources, Inc. was incorporated in the BVI on December 14, 1993, and is a company limited by shares incorporated under the BVI Business Companies Act. We are not a Chinese operating company but a BVI holding company with operations conducted by our subsidiaries established in the PRC. See, “Risk factors — Risks Relating Our Operations and the Doing Business in the PRC — The PRC government may intervene or influence our operations at any time, or may exert more control over the China operations of an offshore holding company and offerings conducted overseas and foreign investment in China-based issuers, such as our PRC subsidiaries. Such control or influence may significantly limit our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless.”

Prior to the sale of PST Technology in July 2023, the Company operated in two reportable operating segments: wastewater treatment and exploration and mining. During 2021, the Company entered the rural wastewater treatment industry in the PRC by acquiring a 51% equity interest in its operating subsidiary Shanghai Onway. Additionally, the Company is engaged in metal exploration and mining activities in Inner Mongolia Autonomous Region of the PRC, including exploring for lead, silver and other nonferrous metal. After the sale of Precise Space-Time Technology Limited and the disposal of the wastewater treatment segment in July 2023, the Company is solely engaged in metal exploration and mining activities in Inner Mongolia Autonomous Region of the PRC, including exploring for lead, silver and other nonferrous metal.

In February 2023, the Company entered into a material definitive agreement with Feishang Group, the Company’s controlling shareholder, and Top Pacific, a non-affiliate, and Mr. Li Feilie and Mr. Yao Yuguang, to acquire Williams Minerals, which owns the mining permit for a Zimbabwean lithium mine. In December 2023, the Company entered into an amendment agreement to the sale and purchase agreement dated as of February 27, 2023 by and among the Company, Feishang Group, the Company’s controlling shareholder, and Top Pacific, a non-affiliate, and Mr. Li Feilie and Mr. Yao Yuguang for the extension of the long stop date for closing the Acquisition from December 31, 2023 to December 31, 2024.

The Company is also actively exploring business opportunities in other non-natural resource sectors.

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Acquisition of Williams Minerals

On February 27, 2023, the Company entered into a material definitive agreement (the “Zimbabwe SPA”) with Feishang Group and Top Pacific, as well as Mr. Li Feilie and Mr. Yao Yuguang, to indirectly acquire all interests in Williams Minerals, which owns the mining permit for a Zimbabwean lithium mine. At the time of the entry into the Zimbabwe SPA, Feishang Group owned 70% of Williams Minerals, and Top Pacific, a non-affiliate, owned the remaining 30%. Under the Zimbabwe SPA, it is expected that the Company will indirectly acquire all interests in Williams Minerals in the second fiscal quarter of 2023, and that the Company’s “ownership” (which, as defined in the Zimbabwe SPA, relates to its legal possession and control) of the Zimbabwean lithium mine will vest cumulatively, region by region from 2024 through 2026, contingent upon the issuance of independent technical reports and the Company’s full settlement of the purchase consideration in cash and restricted shares. For each relevant region of the lithium mine, until the Company’s legal possession and control vests, the Sellers will maintain legal possession and control, including the right of exploration, sale of lithium, and the revenue derived therefrom, as well as liability for operational costs and third-party claims.

Subject to the terms and conditions of the Zimbabwe SPA, the Company plans to issue restricted shares as 50% of the consideration for the Acquisition, with the remaining 50% of the consideration comprised of a promissory note and/or cash, for maximum consideration of US$1.75 billion (3.5 million estimated tons of measured, indicated and inferred resources of lithium oxide (grade 1.06% or above in accordance with the standard under the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves) priced at US$500 per ton). The Company may issue restricted CHNR shares at a discount to the market price to secure a portion of the required capital. On April 14, 2023, the Company announced that it completed its due diligence investigation with satisfactory results and decided to proceed with the Acquisition. The Company paid an aggregate of $35 million by way of promissory notes (instead of cash) as a deposit on April 21, 2023, and will pay an aggregate of $140 million by way of promissory notes and/or cash as an initial installment.

Completion of the Acquisition is contingent upon the satisfaction of a number of conditions, including, among other things, the issuance of independent technical reports, the actual quantity of qualified lithium oxide metal resources proven or estimated to exist in each mining area covered by the relevant report, and the Company’s full settlement of the purchase consideration in cash and restricted shares. There is no guarantee that the Acquisition will close or be completed at the anticipated valuation and terms, or at all.

On December 22, 2023, the Company entered into an amendment agreement (the “Amendment Agreement”) to the sale and purchase agreement dated as of February 27, 2023 by and among Feishang Group and Top Pacific (China) Limited (together, the “Sellers”), and the respective beneficial owner of the Sellers, Mr. Li Feilie and Mr. Yao Yuguang with the parties thereto. As the Sellers are still in the process of satisfying conditions precedent to the closing of the acquisition in accordance with the Zimbabwe SPA, including but not limited to obtaining requisite governmental approvals, the parties entered into the Amendment Agreement to extend the long stop date for closing the acquisition from December 31, 2023 to December 31, 2024.

The foregoing description of the Zimbabwe SPA, and the Amendment Agreement thereto, is only a summary and is qualified in its entirety by reference to the sale and purchase agreement dated February 27, 2023, and the amendment agreement to the sale and purchase agreement dated December 22, 2023, by and among the Company, Feishang Group Limited, Top Pacific (China) Limited, Li Feilie, and Yao Yuguang, a copy of each of which is incorporated by reference as Exhibit 4.17 and Exhibit 4.20 to this annual report.

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Acquisition and Sale of PST Technology

We diversified our business by entering the environmental protection sector, which provides compelling synergies with our current operations, through the acquisition of PST Technology. On July 27, 2021, the Company entered into a Sale and Purchase Agreement with Li Feilie, pursuant to which the Company issued three million restricted common shares, no par value, and transferred 120 million shares of FARL, as well as approximately CNY10.3 million (US$1.5 million), to Feishang Group, in exchange for all outstanding shares of PST Technology and the transfer to the Company of approximately CNY130.0 million (US$18.4 million) of PST Technology’s outstanding debt previously owed to Mr. Li, which debt was eliminated upon consolidation. PST Technology, through its wholly owned subsidiaries, owns a 51% equity interest in Shanghai Onway. Shanghai Onway is principally engaged in the development of rural wastewater treatment technologies, the provision of equipment and materials for rural wastewater treatment, undertaking EPC projects and public-private partnership (“PPP”) projects in relation to rural wastewater treatment, and the provision of consulting and professional technical services. The total value of the consideration that the Company provided to Mr. Li was approximately CNY104.1 million (US$14.7 million), which amount was a 20% discount to the valuation (including the assigned debt) of PST Technology provided by an independent valuation firm.

On July 28, 2023, the Company entered into a Sale and Purchase Agreement with Feishang Group Limited (“Feishang Group”). Pursuant to the agreement, the Company agreed to sell 100% equity interest of PST Technology to Feishang Group, together with PST Technology’s outstanding payable owed to the Company, for consideration of approximately CNY95,761,119 comprising: (i) CNY -34,197,300, the fair value of 100% equity interest of PST Technology as determined by the independent valuation report dated July 28, 2023; (ii) CNY 129,958,419, the book value of PST Technology’s outstanding payable owed to the Company.

PST Technology, through its wholly owned subsidiaries, owns a 51% equity interest in Shanghai Onway and Shanghai Onway’s subsidiaries which are principally engaged in the development of rural wastewater treatment technologies, the provision of equipment and materials for rural wastewater treatment, undertaking EPC and PPP projects in relation to rural wastewater treatment, and the provision of consulting and professional technical services. After PST Technology’s disposition, the Company discontinued the operation in wastewater treatment segment and continue engaging in the exploration and mining business.

Acquisition of FARL Shares

On August 17, 2020, we acquired 120 million shares of FARL, a company that is traded on the main board of the Hong Kong Stock Exchange under ticker 1738, representing approximately 8.7% of the outstanding equity of that company. On August 17, 2020, the Company entered into a sale and purchase agreement with Feishang Group pursuant to which the Company issued 9,077,166 of the Company’s common shares, no par value, to Feishang Group, in exchange for 120 million shares of FARL, with an approximate aggregate value of HK$87,522,000 (determined at a price of HK$1.006 per share, representing the average closing price of FARL on the five trading days before August 17, 2020, adjusted for a 27.5% discount based on an independent valuation report). Feishang Group is the largest stockholder in the Company, and is wholly owned by Mr. Li Feilie, who also beneficially owns 53.53% of the outstanding equity of FARL. For more information, see “Item 7.B. – Major Shareholders And Related Party Transactions – Related Party Transactions – Acquisition of FARL Shares in Exchange for Newly Issued Company Shares.” The 120 million shares of FARL were transferred as part of the consideration for the acquisition of all the outstanding shares of PST Technology. See, “Item 4.A. Information on the Company - History and Development of the Company — Acquisition and Sale of PST Technology.”

Exploration Activities in Inner Mongolia

In November 2017, we acquired all of the issued and outstanding capital stock of Bayannaoer Mining for a purchase price of CNY716,900. Bayannaoer Mining holds an exploration permit issued by the Land and Resources Department of Inner Mongolia Autonomous Region covering the Moruogu Tong Mine, located in Wulatehouqi, Bayannaoer City, Inner Mongolia. The exploration permit evidences Bayannaoer Mining’s right to explore for minerals at the Moruogu Tong Mine. Initial results of the exploration program indicate the presence of lead and silver, with the prospect that further surveying and exploration may indicate the presence of other ores such as copper. We anticipate that our working capital and capital expenditures for our exploration activities will be funded by non-interest-bearing loans from our affiliates and funds provided pursuant to the Cooperation Agreement. See “Item 4.B. – Information on The Company – Business Overview – Metal Exploration Activities” below for more information and a discussion of developments at the Moruogu Tong Mine.

Other Matters

We made capital expenditures of CNY0.09 million, CNY0.02 million and CNY0.01 million (US$1,729) in 2021, 2022 and 2023, respectively. Our capital expenditures for 2021, 2022 and 2023 consisted primarily of the purchase of property, plant and equipment for office use.

Recent Regulatory Development

Cybersecurity Review

On December 28, 2021, the Cyberspace Administration of China (the “CAC”), and 12 other PRC government authorities jointly published the amended Cybersecurity Review Measures, which came into effect on February 15, 2022. The final Cybersecurity Review Measures provide that a “network platform operator” that possesses personal information of more than one million users and seeks a listing in a foreign country must apply for a cybersecurity review. Any network product or service or any data processing activity that affects or may affect national security as deemed by member organizations of the cybersecurity review mechanism shall be reviewed under the Cybersecurity Review Measures after the Cybersecurity Review Office reports it to the Central Cyberspace Affairs Commission for review, as per the procedure..

We and our PRC subsidiaries do not carry out business in China through any self-owned network platform and hold personal information of less than one million individuals from PRC operations. We and our PRC subsidiaries have not been identified as critical information infrastructure operators by any PRC authorities. The data collected from our China operations is mainly information related to our production, customers, suppliers and our employees. We believe that we and our PRC subsidiaries do not commit any acts that threaten or endanger the national security of the PRC, and to our knowledge we and our PRC subsidiaries have not received or been subject to any investigation, notice, warning or sanction from any PRC authority with respect to national security issues arising from our business operations. As of the date of this annual report, we do not believe that we need to proactively apply for the cybersecurity review required by the CAC. See, “Item 3.D. Risk Factors —  Risks Relating to Our PRC Operations and Doing Business in the PRC — Failure to comply with PRC regulations and other legal obligations concerning data protection and cybersecurity may materially and adversely affect our business, as we routinely collect, store and use data during the conduct of our business.”

CSRC Filing Requirements

On February 17, 2023, the CSRC promulgated Trial Administrative Measures of the Overseas Securities Offering and Listing by Domestic Companies, along with five supporting guidelines, or the New Overseas Listing Rules. These regulations became effective on March 31, 2023. According to the New Overseas Listing Rules, PRC domestic companies that seek to offer and list securities in overseas markets, either through direct or indirect means, are required to complete the filing procedure with the CSRC and report relevant information.

The New Overseas Listing Rules provide that if the issuer meets the following criteria at the same time, the overseas securities offering and listing conducted by such issuer will be deemed as an indirect overseas offering subject to the filing procedures as set forth under the New Overseas Listing Rules: (i) 50% or more of the issuer’s operating revenue, total profit, total assets or net assets as documented in its audited combined financial statements for the most recent accounting year is accounted for by domestic companies; and (ii) the main parts of the issuer’s business activities are conducted in the mainland China, or its main place(s) of business are located in the mainland China, or the senior managers in charge of its business operations and management are mostly Chinese citizens or domiciled in the mainland China.

According to the New Overseas Listing Rules, issuers shall file with the CSRC within three business days after the initial submission of the registration statement to the SEC for its nonpublic review and to report to the CSRC upon the completion of the reported offering. Moreover, the New Overseas Listing Rules mandate that overseas-listed issuers conducting follow-on securities offerings in the same overseas market must file with the CSRC within three business days after the completion of such offering. Additionally, issuers listed overseas are required to report “material events” to the CSRC within three business days following the occurrence and public announcement of such events. These material events include change of control, voluntary delisting or being ordered to delist, and investigations or penalties by overseas securities regulatory bodies, among other things. Failure to fulfill these obligations to make timely filings or reports to the CSRC may result in fines, legal or administrative sanctions and other adverse consequences and could materially and adversely affect our ability to raise funds in overseas markets. For details of the associated risks, see “Item 3.D. Risk Factors — Risks Relating to Our PRC Operations and Doing Business in the PRC — The filing with the CSRC or other PRC government authorities may be required in connection with our offshore offerings under PRC law, and, if required, we cannot predict whether or for how long we will be able to complete such filing.” We have been closely monitoring regulatory developments in China regarding any necessary approvals from the CSRC, the CAC, or other PRC regulatory authorities required for overseas listings and securities offerings. As of the date of this annual report, we have not received any inquiry, notice, warning, sanctions or regulatory objection from the CSRC in this regard.

On February 24, 2023, the Provisions on Strengthening the Confidentiality and Archives Administration of Overseas Securities Issuance and Listing by Domestic Enterprises was promulgated, or the Provision on Confidentiality, which became effective on March 31, 2023. Pursuant to the Provision on Confidentiality, where a domestic enterprise publicly discloses or provides documents and materials involving state secrets and working secrets of state organs, or Relevant Documents and Materials, to the relevant securities companies, securities service institutions, overseas regulatory authorities and other entities and individuals, or provides or publicly discloses Relevant Documents and Materials through its overseas listing subjects, it shall report to the competent department with the examination and approval authority for approval in accordance with the law, and submit to the secrecy administration department of the same level for filing. Where a domestic enterprises provides accounting archives or copies of such archives to entities and individuals such as securities companies, securities service institutions and overseas regulatory authorities, it shall complete the corresponding procedures pursuant to relevant rules of the State. The working materials formed within the territory of the PRC by the securities companies and securities service institutions that provide corresponding services for the overseas issuance and listing of domestic enterprises shall be kept within the territory of the PRC, and outbound transfers of such materials shall go through approval procedures in accordance with relevant rules of the State.

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Material Licenses and Permits

Except as disclosed in “Item 3.D. Risk Factors — Risk Related to Our PRC Operations and Doing Business in the PRC — We and our PRC subsidiaries are required to maintain a series of licenses, permits and approvals from PRC authorities to operate our business in the PRC, and failure to maintain or renew such licenses, permits or approvals in a timely manner could materially affect our business,” We believe that as of the date of this annual report, we and our subsidiaries have received from the PRC authorities all requisite licenses, permissions, and approvals needed to engage in the businesses currently conducted in the PRC, which solely include the business licenses that authorize the scope of business operations, and no permission or approval has been denied. These licenses, permits and filings include, exploration and mining licenses, among others. Given the changes and developments of interpretation and implementation of relevant laws and regulations and the enforcement practice by relevant government authorities, we may be required to obtain additional licenses, permits, or approvals or complete additional filings for our and our subsidiaries’ business operations in the future. If we or any of our subsidiaries is found to be in violation of any existing or future PRC laws or regulations, or fail to obtain or maintain any of the required permits or approvals in a timely manner, or at all, the competent PRC regulatory authorities would have discretion to take action regarding such violations or failures. In addition, if we had inadvertently concluded that any approvals, permits, registrations or filings were not required, or if applicable laws, regulations or interpretations change in a way that requires us to obtain additional approvals, permits, registrations or filings in the future, we may be unable to obtain such necessary approvals, permits, registrations or filings in a timely manner, or at all. Such approvals, permits, registrations or filings may be rescinded even if obtained. Any such circumstance may subject us to fines and other regulatory, civil or criminal liabilities, and we may be ordered by the competent government authorities to suspend relevant operations, which will materially and adversely affect our business operations. For risks relating to licenses and approvals required for our operations in China, see “Item 3.D. Risk Factors — Risk Related to Our PRC Operations and Doing Business in the PRC — We and our PRC subsidiaries are required to maintain a series of licenses, permits and approvals from PRC authorities to operate our business in the PRC, and failure to maintain or renew such licenses, permits or approvals in a timely manner could materially affect our business.”

Transfers of Cash and Assets between Our Company and Our Subsidiaries

Cash and asset transfers through the Group are primarily attributed to shareholder loans from us to our subsidiaries. Our subsidiaries receive substantially all revenue in RMB, and the PRC or Hong Kong governments could prevent the RMB maintained in the PRC or Hong Kong from leaving, impose controls on its conversion into foreign currencies, restrict deployment of the RMB into the business of our subsidiaries and restrict the ability to pay dividends. Our PRC subsidiaries are permitted to pay dividends to their shareholders, and eventually to CHNR, only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. Such payment of dividends by entities registered in China is subject to limitations, which could result in limitations on the availability of cash to fund dividends or make distributions to holders of our securities. For example, our PRC subsidiaries are required to make appropriations to certain statutory reserve funds or may make appropriations to certain discretionary funds, which are not distributable as cash dividends except in the event of a solvent liquidation of the companies. See, “Item 3.D. Risk Factors – Our PRC subsidiaries are subject to restrictions on paying dividends and making other payments to us.” There are no restrictions or limitations imposed by the Hong Kong government on the transfer of capital within, into and out of Hong Kong (including funds from Hong Kong to the PRC), except for the transfer of funds involving money laundering and criminal activities. However, there is no guarantee that the Hong Kong government will not promulgate new laws or regulations that may impose such restrictions in the future. To the extent cash in the business is in the PRC or Hong Kong or our PRC or Hong Kong entities, the funds may not be available to fund operations or for other use outside of the PRC or Hong Kong due to interventions in or the imposition of restrictions and limitations on the ability of us or our subsidiaries by the PRC or Hong Kong governments to transfer cash. We cannot assure you that the PRC or Hong Kong governments will not intervene in or impose restrictions on our ability to make intercompany cash transfers.

All cash or asset transfers between us and our subsidiaries for each of the three years ended December 31, 2023, are set forth in the table below. The purpose of the outbound transfers, in the form of shareholder loans, was to pay off the subsidiaries’ expenses and provide working capital for the subsidiaries. The purpose of the inbound transfers, in the form of loan repayments, was to centralize the treasury function of the Company and our subsidiaries. There are no fixed repayment terms and no tax implication for these transfers. We did not make any capital contributions to, or receive any dividends from, our subsidiaries during these periods. Other than the assets and liabilities of the wastewater treatment business segment transferred to Mr. Li Feilie, our controlling shareholder, as the result of the sale of PST Technology which were accounted for as a deemed distribution of RMB20.38 million (US$2.88 million) to the controlling shareholder on July 28, 2024 with a corresponding deemed contribution from the controlling shareholder in the same amount, no transfers, dividends or distributions have been made to investors during these periods. We currently have not maintained any cash management policies that dictate the purpose, amount and procedure of cash transfers between the Company, our subsidiaries, or the investors. Rather, the funds can be transferred in accordance with the applicable laws and regulations in the PRC and other jurisdictions. PRC laws and regulations may restrict our ability to make dividends and distributions to investors, including U.S. investors.

    Year ended December 31, 
Transferor Transferee 2021  2022  2023  2023 
    HK$  HK$  HK$  US$ 
 
Outbound Transfers
                   
China Natural Resources, Inc. Feishang Mining  50,000   —   30,000   4,238 
China Natural Resources, Inc. China Coal  8,000   8,000   8,000   1,130 
China Natural Resources, Inc. Feishang Yongfu  8,000   8,000   38,000   5,368 
China Natural Resources, Inc. Feishang Dayun  8,000   8,000   38,000   5,368 
  Total  74,000   24,000   114,000   16,104 
                   
Inbound Transfers
Feishang Mining China Natural Resources, Inc.  —   —   —   — 
China Coal China Natural Resources, Inc.  —   —   —   — 
Feishang Yongfu China Natural Resources, Inc.  30,000   —   —   — 
Feishang Dayun China Natural Resources, Inc.  30,000   —   —   — 
  Total  60,000   —   —   — 

Implications of the Holding Foreign Companies Accountable Act

Pursuant to the Holding Foreign Companies Accountable Act, as amended by the Consolidated Appropriations Act, 2023, or the HFCAA, if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspections by the PCAOB for two consecutive years, the SEC will prohibit our shares from being traded on a national securities exchange or in the over-the-counter trading market in the United States. On December 16, 2021, the PCAOB issued a report on its determinations that it was unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong, and our auditor was subject to that determination. On December 15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination and removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms. Each year, the PCAOB will determine whether it can inspect and investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions. If PCAOB determines in the future that it no longer has full access to inspect and investigate completely accounting firms in mainland China or Hong Kong and we continue to use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed with the SEC, we would be identified as a Commission-Identified Issuer following the filing of the annual report on Form 20-F for the relevant fiscal year. There can be no assurance that we would not be identified as a Commission-Identified Issuer for any future fiscal year, and if we were so identified for two consecutive years, we would become subject to the prohibition on trading under the HFCAA and as a result, NASDAQ may determine to delist our securities. See “Item 3.D. Risk Factors - Risks Relating to Our PRC Operations and Doing Business in the PRC - The PCAOB may determine that it is unable to inspect our auditor in relation to its audit work performed for our financial statements to its satisfaction, and the inability of the PCAOB to conduct inspections over our auditor may affect our investors’ ability to benefit from such inspections.”, “— Risk Factors - Risks Relating to Our PRC Operations and Doing Business in the PRC - Our common shares may be prohibited from trading in the United States under the HFCAA in the future if the PCAOB is unable to inspect or investigate completely auditors located in China. The delisting of our common shares, or the threat of their being delisted, may materially and adversely affect the value of your investment.” and “— Risks Relating to Our PRC Operations and Doing Business in the PRC - Our common shares may be prohibited from trading in the United States under the HFCAA if the PCAOB is unable to inspect or fully investigate our auditor for three consecutive years, or two consecutive years if proposed changes to the HFCAA are enacted. The delisting of our common shares, or the threat of their being delisted, may materially and adversely affect the value of your investment.”

B.Business Overview

We are dedicated to becoming a leading multi-resources company in China, and is devoted to exploring the opportunities presented by other sectors as well, through complying with high international standards of corporate governance, continually expanding operations with profit growth potentials, enhancing overall cost effectiveness and productivity performance, collaborating with governments, communities and non-governmental organizations, optimizing our technical talent teams and innovation programs and maintaining responsible environmental practices.

We are committed to:

·delivering superior long-term value to our shareholders;
·providing a safe, healthy and fulfilling work environment for our employees while improving production efficiency and operating effectiveness;
·contributing to the economic and social development of the regions where we operate; and
·responsibly managing the environmental impact of all our operations.

We are principally engaged in exploration for lead, silver and other metals in the Inner Mongolia Autonomous Region of the PRC and exploration of attractive opportunities in other sectors. Our operating subsidiary, Bayannaoer City Feishang Mining Company Limited (“Bayannaoer Mining”) holds an exploration permit issued by the Land and Resources Department of Inner Mongolia Autonomous Region covering the Moruogu Tong Mine, located in Wulatehouqi, Bayannaoer City, Inner Mongolia. The exploration permit evidences Bayannaoer Mining’s right to explore for minerals at the Moruogu Tong Mine. Initial results of the exploration program indicate the presence of lead and silver, with the prospect that further surveying and exploration may indicate the presence of other ores such as copper. We are also actively seeking opportunities of exploration and mining of other metals outside of the PRC. See, “Corporate History and Structure — Acquisition of Williams Minerals.”

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We continuously pivot our business by exploring new opportunities for growth or diversification. Between July 2021 and July 2023, we also engaged in the rural wastewater treatment business in China through the acquisition of PST Technology, which held 51% equity interest of Shanghai Onway, a PRC company which is principally engaged in the development of rural wastewater treatment technologies, the provision of equipment and materials for rural wastewater treatment, undertaking EPC and PPP projects in relation to rural wastewater treatment, and the provision of consulting and professional technical services. We ceased the wastewater treatment business segment following the disposition of PST Technology in July 2023. See “Item 4.A. Information on the Company - History and Development of the Company — Acquisition and Sale of Precise Space-Time Technology Limited.” 

Metal Exploration Activities

Lead, Silver and Copper Industry and Market

Lead (chemical element symbol Pb) is a supple and ductile heavy metal that is denser than most common materials. In its pure state, lead is bluish-white and tarnishes to a dull gray color when exposed to air. It is extensively used in construction, plumbing, batteries, bullets and shot, weights, solders, pewters, fusible alloys, white paints, leaded gasoline, and radiation shielding. Lead’s properties of high density, low melting point, ductility and relative inertness to oxidation allow it to be used in a wide range of applications, of which use in lead-acid batteries is by far the most prevalent. The reactions in the battery between lead, lead dioxide, and sulfuric acid provide a reliable source of voltage. Despite having lower energy density and charge-discharge efficiency than lithium-ion batteries, lead-acid batteries have stable electromotive force when discharging and steady working voltage, while being significantly cheaper. These properties and their ability to supply high surge currents and operate under a wide range of temperatures make them useful in the automobile industry.

Lead is an internationally traded commodity, the price of which is established on commodity markets throughout the world. During 2023, the world witnessed the continuation of the Russia-Ukraine conflict, the Israel Hamas war, the Red Sea crisis, persistent high inflation and interest rate in many major economies, which led to disruptions to, and notable fluctuations in, the commodity market worldwide. During the year, lead prices have been volatile due to global uncertainty. World refined lead usage increased further, but world refined lead production increased more, which reversed the previous lead supply deficit and led to a decline in lead price. In 2023, the SHFE lead price started the year at CNY16,050 (US$2,267) per ton, but dropped gradually and reached an annual low of CNY15,015 (US$2,121) per ton in early June 2023. It then rose quickly until mid-September 2023 and hit an annual high of CNY17,540 (US$2,478) per ton. After that, lead price fluctuated and declined notably due to an increase in supply. The closing price at the end of 2023 was CNY15,875 (US$2,243) per ton, representing an annual decrease of approximately 0.31%.

 The following table shows the world refined lead supply and usage over the past five years:

  2019  2020  2021  2022  2023 
                
World mine production (thousand tons)  4,697   4,441   4,540   4,448   4,499 
World refined production (thousand tons)  12,589   12,301   12,718   12,506   12,853 
World refined usage (thousand tons)  12,591   12,139   12,659   12,640   12,761 
London Mercantile Exchange (“LME”) average price (US$/ton)*  1,927   1,994   2,304   2,293   N/A 
SHFE average price (CNY/ton)  15,115   14,745   15,370   15,930   15,860 
                     

———————

Source: International Lead and Zinc Study Group, LME, SHFE.

*LME average price is not available for 2023.

Silver (chemical element symbol Ag) is a soft, ductile, and malleable metal with the highest electrical conductivity, thermal conductivity and reflectivity of any metal. It has a brilliant white metallic luster that can take a high polish and has similar physical and chemical properties with copper and gold. Most silver is produced as a byproduct during refining of copper, gold, lead, or zinc. Despite being more abundant than gold, silver has long been valued as a precious metal and used in currency and as an investment medium (bullion coins) alongside gold. It is also used as an industrial metal in jewelry, silverware, medicine, electronics, brazing alloys, chemical equipment, catalysis, photography, etc.

Silver is an internationally traded commodity, the price of which is established on commodity markets throughout the world. Silver tends to trend in lockstep with gold, but it also has its own unique market trend because it has stronger industrial attributes compared with gold. During 2023, world silver mine production increased to 842.1 million ounces, highest in the past five years, but a supply deficit still existed. Although the world economy faced many risks and uncertainties caused by the Russia-Ukraine conflict, the Israel Hamas war, the Red Sea crisis, and persistent high inflation and interest rate in many major economies, global industrial demand for silver still reached a record high in 2023. This was mainly attributed to structural reasons, especially a rapidly developing and prosperous photovoltaic industry. The price of silver was, on the one hand, supported by an increase in industrial demand, and on the other hand, pressured by a decrease in investment demand and strong US Dollar index and US Treasury yields. During the year, the SHFE silver price started out at CNY5,372 (US$759) per kg and dropped to its annual low of CNY4,756 (US$672) per kg in March 2023. After that, silver price saw a notable rebound until the end of the year. The closing price at the end of 2023 was CNY5,976 (US$844) per kg, representing an annual increase of approximately 11.43%.

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The following table shows the world silver supply and demand over the past five years:

  2019  2020  2021  2022  2023 
                
World mine production (million ounces)  836.6   782.2   827.6   822.4   842.1 
World total supply (million ounces)  999.5   957.9   1,004.5   1,004.7   1,024.9 
World total demand (million ounces)  990.0   901.9   1,055.6   1,242.4   1,167.0 
COMEX average price (US$/oz)  17.9   26.4   23.4   24.0   24.1 
SHFE average price (CNY/kg)  4,368   5,585   4,845   5,349   6,012 

———————

Source: Silver Institute, COMEX, SHFE.

Copper (chemical element symbol Cu) is a ductile metal with excellent electric conductivity and is rather supple in its pure state and has a pinkish luster. Copper was one of the first metals used by man. It is now primarily used as a heat conductor, an electrical conductor, a building material, and a constituent of various metal alloys. Copper alloys have excellent mechanical properties and low resistivity, among which bronze and brass are the most important. Copper is also a durable metal that can be recycled many times without losing its mechanical properties. Copper’s properties of high electrical and thermal conductivity, together with good workability, allow it to be used in a wide range of applications, of which wire and cable and other electrical uses are by far the most prevalent. The primary uses of copper are in electrical and electronic products, the building and construction industry and, to a lesser extent, industrial machinery and equipment, consumer and general products and transportation.

Copper is an internationally traded commodity, the price of which is established on commodity markets throughout the world. Traditionally, the price of copper is closely related to economic cycles and largely determined by supply and demand. China has relatively small copper reserves, yet has the greatest copper demand globally, so it relies on copper imports to meet that demand. Demand for copper in China and the U.S. plays a major role in global price determination. Global consumption of refined copper has increased annually, and there continues to be a shortage of supply. During 2023, SHFE copper price fluctuated at relatively high levels, supported by a prosperous photovoltaic industry but pressured by uncertain economic outlook in China, especially the real estate sector, a strong US dollar and high interest rates. The SHFE copper price saw strong gains in the early part of 2023, increasing from CNY66,160 (US$9,346) per ton to all-year high of CNY71,500 (US$10,101) per ton in mid-January, and then price exhibited a V-shape and reached an annual low of CNY62,690 (US$8,856) per ton in the second quarter of 2023. Price sunk again since mid-September, but growth in the fourth quarter allowed the SHFE copper price to close the year at CNY68,920 (US$9,736) per ton, representing an annual increase of approximately 4.01%.

The following table shows the world refined copper production and usage over the past five years:

  2019  2020  2021  2022  2023 
                
World mine production (thousand tons)  20,669   20,768   21,301   21,950   22,063 
World refined production (thousand tons)  24,159   24,672   24,964   25,401   26,927 
World refined usage (thousand tons)  24,321   24,953   25,216   25,835   27,013 
China’s refined production (thousand tons)  9,784   10,025   10,487   11,063   12,988 
China’s refined usage (thousand tons)  12,800   14,229   13,840   14,027   14,703 
LME average price (US$/ton)*  6,174   7,766   9,721   8,372   N/A 
SHFE average price (CNY/ton)  49,280   57,970   70,120   66,120   68,970 

———————

Source: International Copper Study Group, LME, SHFE.

*LME average price is not available for 2023.

Overview of Bayannaoer Mining

Bayannaoer Mining was established in 2005 to engage in mineral exploration activities in Bayannaoer City, located in the Inner Mongolia Autonomous Region of the PRC. The registered capital of Bayannaoer Mining is CNY59.48 million.

In 2005, Bayannaoer Mining obtained 11 exploration rights from the Land and Resources Department of Inner Mongolia Autonomous Region. Following completion of preliminary exploration activities and evaluation, management determined to retain exploration rights solely to the Moruogu Tong Mine; and, to date, has received a series of license renewals. Total exploration expenses related to these 11 exploration rights (exclusive of capitalized expenses that have not yet fully depreciated or amortized and administrative expenses) borne by Bayannaoer Mining incurred to date amount to approximately CNY35.60 million (US$5.03 million). The current exploration permit for the Moruogu Tong Mine runs until September 2026 and covers a site area of 7.81 square kilometers.

The Moruogu Tong Mine is located in Wulatehouqi, Bayannaoer City, in the Inner Mongolia Autonomous Region of the PRC. In 2006, Bayannaoer Mining engaged the Land and Resources Exploration and Development Institute of Inner Mongolia to carry out prospecting, including geophysical and drilling works. To date, exploration expenses of approximately CNY23.54 million (US$3.33 million), inclusive of amounts paid by Jijincheng Mining, have been incurred for the Moruogu Tong Mine, which were paid for by Bayannaoer Mining with self-owned capital, loans from a related party, and funds received pursuant to its Cooperation Agreement with Jijincheng Mining of approximately CNY6.72 million (US$0.95 million).

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Pursuant to the Cooperation Agreement, Jijincheng Mining is responsible for engaging the exploration team for the northern part of Moruogu Tong Mine and providing the required funding. During the field exploration process, Bayannaoer Mining did not have its own exploration equipment. The exploration equipment – drilling machines – used at the Moruogu Tong Mine was provided and operated by third-party contractors until drilling work was done. Drilling machines at the mine were mainly powered by a diesel generator set, and a state power substation near the mine area. To date, the exploration program at the northern part of Moruogu Tong Mine has primarily involved the completion of mine geological surveying and mapping at 1:2000 covering an area of 3.22 square kilometers, which included trenching exploration works totaling 2,291.88 cubic meters in 16 trenches and 76 drilling holes (of which 55 predate the Collaboration Agreement) for a total of 22,272.86 meters. 1,641 different samples, including basic analysis samples, chemical analysis samples, spectra samples and aqueous analysis samples, etc., have been collected thus far during the exploration program.

 Initial results of the northern part exploration program indicate the presence of lead and silver, with the prospect that further surveying and exploration may indicate the presence of other ores such as copper. During 2021, activities at the Moruogu Tong Mine included the taking of five additional basic analysis samples and ten additional combined analysis samples; in addition, the exploration report was completed and approved by the government. The report reviews the geology of the mine and the previous exploration work, and evaluates the resources of 13 ore bodies in the mine, which are confirmed to contain lead and silver. At this stage of exploratory activities, we cannot predict whether sufficient ore of acceptable quality will be found at the Moruogu Tong Mine to warrant further exploration and/or extraction.

The current exploration work stage of the northern part of Moruogu Tong Mine has been completed. The future amount for the exploration project, including drilling expenses, site construction costs, grassland compensation fees and simple infrastructure construction costs in order to apply for a mining rights permit, is anticipated to be approximately CNY11.38 million (US$1.61 million). Bayannaoer Mining and Jijincheng Mining intend to seek other investors to play roles similar to those of Jijincheng Mining in order to proceed with the further exploration and analysis of the northern part of Moruogu Tong Mine, with an aim to apply for a mining rights permit. This exploration project is expected to be financed by funds received pursuant to the Cooperation Agreement and/or any new or similar cooperation agreement, and loans from a related party. While the results of preliminary prospecting suggest that the northern part of Moruogu Tong Mine contains mineable quantities of lead and silver, until further exploration and analysis is completed, the Company cannot predict the nature and extent of minerals contained at the mine or the commercial viability of pursuing a plan of extraction. It is possible that further exploration and analysis will not confirm initial findings and that continued activities in furtherance of mining operations will cease.

Exploration conducted in 2013 revealed geochemical anomalies associated with nickel and gold in the southern part of Moruogu Tong Mine but did not indicate any concentration. No exploration work has been carried out since 2013 in the southern part of the mine area with nickel and gold anomalies. Bayannaoer Mining plans to accelerate exploration progress and increase capital expenditures by another six drilling holes of 600 meters deep with an expected initial investment of CNY2.16 million in the southern part of the Moruogu Tong Mine to continue to explore the presence of nickel and other minerals.

Moruogu Tong Mine

The Moruogu Tong Mine is a concealed deposit or an underground mine, with minimum depth of about 40 meters below ground.

The main outcrop strata in and around the mine area are the third lithological member of Agulugou Formation of Zhaertaishan Group in the middle and upper Proterozoic, followed by the quaternary Holocene strata. There is no magmatic rock in the exploration area, and Permian granodiorite is found locally. In addition, gabbro dike, diabase dike and quartz dike are found in the area. The geotectonic location of the mine area is in the north wing of the Wolf Mountain anticline, with frequent tectonic activities and multiple periods of magma intrusion. The strata of the mine area are damaged by transformation, and the fold structure is not complete. The outcrop strata in the mine area are relatively simple, which are a monoclinal structure with a northeast-to-southwest strike and a southeastern tilt.

The Moruogu Tong Mine is located in the fault bundle of the Huogeqi dome at the north wing of the Haorige Mountain syncline. Monoclinal structures predominates and the strike is north-eastern. The lead ore (mineralized) bodies are produced in the third lithological member of Agulugou Formation, where quartzite and quartz schist with strong silicification are the main host rocks. The ore bodies are distributed in an area of 3,000 meters long from east to west and 1,000 meters wide from south to north, and 14 lead ore bodies have been delineated with orebody numbers of I-1, I-2, II-1, II-2, II-3, III, IV-1, IV-2, IV-3, IV-4, IV-5, IV-6, IV-7, and V.

The Moruogu Tong Mine is mainly a lead deposit associated with silver. The ore bodies occur in certain strata, whose genetic type belongs to air-exhaled sedimentary type, with lead deposit then transformed by hydrothermal process. The ore mineral compositions mainly include galena, sphalerite, pyrite, chalcopyrite, arsenopyrite and gangue mineral quartz, calcite, and mica, etc. The depth of the oxidized zone and mixed zone in this mine area is about 15 meters below ground. The primary zone is below 15 meters underground. The lead ore bodies delineated in this deposit are all in the primary zone, and the natural type of the ore is primary lead sulfide ore. Because the main useful constituent of this deposit is lead, with an associated useful constituent of silver, it is classified as a lead and silver deposit.

The key industrial indicators of the deposit are as follows:

•Cutoff grade: Pb>0.3%;

•Minimum industrial grade: Pb>0.7%;

•Minimum minable thickness: >1.0m;

•Average grade of deposit: Pb>1.81%;

•Band rejected thickness: >2m;

•When the orebody thickness is less than the minable thickness and the grade is high, meter percentage can be used as an indicator: Pb>0.70 meter percentage; and

•Industrial grade of associated useful constituent: Ag>2g/t.

Cooperation Agreement

On August 20, 2017, Bayannaoer Mining entered into the Cooperation Agreement with Jijincheng Mining, an unrelated third party. The Cooperation Agreement is intended to provide for financial support by Jijincheng Mining for the exploration and operating expenses of the northern part of Moruogu Tong Mine during the exploration stage such that Bayannaoer Mining is not required to make any further capital contribution for exploration activities, and for the allocation of rights and responsibilities between Bayannaoer Mining and Jijincheng Mining. According to the Cooperation Agreement, Jijincheng Mining is also responsible for engaging the exploration team and directing their activities. Pursuant to the Cooperation Agreement: (i) Bayannaoer Mining contributed the existing exploration results for the northern part of Moruogu Tong Mine; (ii) Jijincheng Mining provides the necessary funds for further exploration at the mine; (iii) Bayannaoer Mining enjoys full rights to any resources already discovered and confirmed by its independent exploration works conducted prior to commencement of the cooperative exploration project; (iv) Bayannaoer Mining and Jijincheng Mining will each receive a 50% interest in any newly discovered resources from the first 10 drilling holes in the cooperative exploration project; and (v) Bayannaoer Mining and Jijincheng Mining will receive 30% and 70% interests, respectively, in any newly discovered resources from drilling works beyond the first 10 drilling holes in the cooperative exploration project. Other details of the Cooperation Agreement, including allocations and distributions upon completion of exploration works, remain the subject of continuing discussion between the parties. To date, the total exploration expenses paid by Jijincheng Mining amount to approximately CNY6.72 million (US$0.95 million).

The foregoing description of the Cooperation Agreement is only a summary and is qualified in its entirety by reference to the Cooperation Agreement, a copy of which has been translated into English and incorporated by reference as Exhibit 4.5 to this annual report.

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Geography

The following map shows the geography of Bayannaoer Mining’s exploration site and its surrounding areas:

The Moruogu Tong Mine of Bayannaoer Mining is located in Wulatehouqi, Bayannaoer City, in the Inner Mongolia Autonomous Region of the PRC. The mine is approximately 45 kilometers to Chaogewenduer Town and 40 kilometers to Qingshan Town. The Qingxian Road passes through the southern part of the mine and transportation is very convenient. Connectivity to water, electric and other necessary services will be addressed at the time of mine construction and development.

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Government Regulation of Mineral Exploration Activities

Under the Mineral Resources Law of the PRC, all mineral resources in the PRC are owned by the state. Exploration and mining rights granted by the state permit recipients to conduct exploration or mining activities in a specific mining area during the specified license period. Although Bayannaoer Mining believes its exploration licenses will continue to be renewed as necessary, there can be no assurance that such will be the case or that Bayannaoer Mining will be able to obtain a mining license in the future and exploit the entire mineral resources of the Moruogu Tong Mine during its license period. If Bayannaoer Mining fails to renew its exploration rights upon expiry or if it cannot obtain a mining license and effectively extract the resources within the license period, the operation and performance of Bayannaoer Mining will be adversely affected.

Bayannaoer Mining’s exploration permit entitles it to undertake exploration activities in compliance with applicable laws and regulations, within the specific area covered by the license during the license period. Bayannaoer Mining is required to complete a prospecting report and a final appraisal and file with the relevant government authority before it can apply for mining rights and proceed to mine construction. A mining rights permit entitles the holder to undertake mining activities and infrastructure and ancillary work, in compliance with applicable laws and regulations, within the specific area covered by the license during the license period. Entities seeking mining rights are also obligated to pay natural resources fees in relation to sales of metal concentrates.

The competent department of environmental protection under the State Council shall supervise and manage environmental protection work throughout the country in a consistent manner. The competent departments of environmental protection of the local governments at the county level or above shall supervise and manage environmental protection work within their respective administrative areas in a consistent manner.

The state practices classified control over the environmental protection in construction projects based on the extent of environmental impact of construction projects in accordance with the following provisions:

(1) an environmental impact report shall be compiled for a construction project that may have a material impact on the environment, giving comprehensive and detailed evaluation of the pollution to be generated and environmental impact to be caused by the construction project;

(2) an environmental impact statement shall be compiled for a construction project that may have a non-material impact on the environment, providing analysis or special-purpose evaluation of the pollution to be generated and environmental impact to be caused by the construction project; and

(3) a registration form shall be filled out and submitted for a construction project that may have a minor impact on the environment and necessitates no environmental impact evaluation.

The pollution prevention and control facilities in construction projects shall be designed, built and commissioned along with the project simultaneously. The pollution prevention and control facilities shall meet the requirements specified in the approved documents regarding the environmental impact assessment and shall not be dismantled or left idle without authorization.

The State implements the pollution discharge license management system in accordance with the law. Enterprises, public institutions and other producers and operators that implement the pollution discharge license management shall discharge pollutants in accordance with the requirements of the pollution discharge license; those that fail to obtain the pollution discharge license shall not discharge pollutants. Where enterprises, public institutions and other producers and operators discharge pollutants in violation of the law without obtaining the pollutant discharge license refuse to stop such violations after suspension order has been delivered, besides the penalty in accordance with the provisions of the relevant laws and regulations, the competent departments of environmental protection of the local governments at the county level or above and other departments responsible for supervision and management on environmental protection shall transfer the case to the public security authority and impose a detention for not less than ten days and not more than 15 days on the persons directly in charge and other persons directly responsible; if the consequences of such violations are less severe, a detention for not less than five days and not more than ten days shall be imposed.

Management believes that Bayannaoer Mining is in material compliance with all applicable environmental protection requirements of the state.

Copper Trading Activities

We no longer trade copper ore, which was our sole revenue-generating operation before we engaged in the rural wastewater treatment segment. Beginning from 2019, we had traded copper ore and enjoyed related revenues of CNY12.97 million in 2019 and approximately CNY6.87 million in the first half of 2020. We discontinued our copper ore trading activities in the second half of 2020, due to volatile fluctuations in the price of copper. Our copper ore trading activities were not affected by seasonality.

DISCONTINUED SEGMENT - Rural Wastewater Treatment Activities

Acquisition and Sale of PST Technology

We no longer operate in the rural wastewater treatment segment following the sale of PST Technology in July 2023, which was one of our two reportable operating segments in addition to exploration and mining.

We diversified our business by entering the environmental protection sector through the acquisition of PST Technology in 2021. PST Technology, through its wholly owned subsidiaries, owns a 51% equity interest in Shanghai Onway and Shanghai Onway’s subsidiaries which are principally engaged in the development of rural wastewater treatment technologies, the provision of equipment and materials for rural wastewater treatment, undertaking EPC and PPP projects in relation to rural wastewater treatment, and the provision of consulting and professional technical services. After PST Technology’s disposition, the Company discontinued the operation in wastewater treatment segment and continue engaging in the exploration and mining business. For details, see “Corporate History and Structure — Acquisition and Sale of PST Technology.”

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Overview of Shanghai Onway

Shanghai Onway is an environmental protection technology enterprise incorporated in July 2015 in the PRC. The registered capital of Shanghai Onway is approximately CNY20.41 million. It is currently 51% owned by Shenzhen Qianhai (an indirect wholly owned subsidiary of the Company prior to the sale of PST Technology in July 2023), 25% owned by Anxon Envirotech Pte. Ltd (a direct wholly owned subsidiary of AnnAik Limited, which is listed on the Singapore Stock Exchange under ticker “A52”), and 24% owned by Shanghai Xingyu Environment Engineering Co., Ltd. Shanghai Onway is principally engaged in the development of rural wastewater treatment technologies, the provision of equipment and materials for rural wastewater treatment, undertaking EPC and PPP projects in relation to rural wastewater treatment, and the provision of consulting and professional technical services.

During its time as a subsidiary of the Company, Shanghai Onway had a team of well-regarded experts with deep industry experience in the field of wastewater treatment and carries out its rural wastewater treatment business using proprietary wastewater treatment technologies including five patents, namely (i) bio-trickling filter packing frame with uniform water distribution and automatic reoxygenation effects; (ii) wastewater reinforced phosphorous removal packing and preparation method thereof; (iii) shore bank step combination formula non-point source pollution control system; (iv) modularization ecological substrate composite biological chinampa with primary and secondary connector link; and (v) water distributor.

Since its incorporation, Shanghai Onway has leveraged its proprietary wastewater treatment technologies to undertake 258 EPC projects, mainly in Zhejiang province, Jiangsu province and Shanghai, among which 3 projects are currently in progress as of July 2023, the date on which Shanghai Onway ceased to be our subsidiary. In July 2018, Shanghai Onway was awarded its maiden PPP project, Wujiang District Rural Domestic Waste and Wastewater Treatment Infrastructure, by the Housing and Urban-Rural Development Bureau (“HURDB”) of Wujiang District in Shaoguan City, Guangdong province of the PRC (the “Wujiang Project”). In 2021, 2022, and for the period from January 1, 2023 to July 31, 2023, revenues derived from the EPC projects amounted to CNY12.39 million, CNY14.63 million, and CNY9.12 million (US$1.29 million) respectively, and those derived from the Wujiang Project were CNY6.35 million, CNY5.51 million and CNY3.63 million (US$0.51 million), respectively.

Government Regulation and National Policy of Rural Wastewater Treatment Industry

The development of the rural wastewater treatment industry is highly supported by national policies in the PRC. Some of the regulations and policies are summarized below.

In 2010, in order to promote domestic wastewater treatment in rural areas of the PRC, the Ministry of Housing and Urban-Rural Development issued the “Technical Guidelines for Rural Domestic Wastewater Treatment by Regions.” The document set out the characteristics, discharge requirements and drainage systems of rural domestic wastewater in each region of the PRC, as well as rural domestic wastewater treatment technologies (including parameters and schematic diagrams), selection of technologies, management of facilities and engineering examples.

In 2010, the Ministry of Environmental Protection issued the “Technical Specifications for Control of Domestic Pollution in Rural Areas” and the “Technical Policy on Prevention and Control of Domestic Pollution in Rural Areas.” The former document introduced several technologies for controlling rural domestic wastewater pollution, including source control, household biogas digesters, decentralized wastewater treatment with low energy consumption, centralized wastewater treatment, and rainwater collection and discharge. The latter document set out that the technical route of rural domestic pollution prevention and control should be based on source control, decentralized treatment with some support of centralized treatment, and resource reutilization.

In 2014, the Eighth Session of the Standing Committee of the Twelfth National People’s Congress of the PRC revised the “Environmental Protection Law of the People’s Republic of China.” The document sets out that governments at all levels in the PRC should allocate funds in their budgets to support environmental protection work, including protection of rural drinking water sources, treatment of domestic wastewater and other waste, prevention and control of pollution from livestock and poultry breeding, prevention and control of soil pollution and control of pollution from rural industries and mines.

In 2014, the “Guiding Opinions of the General Office of the State Council on Improving the Rural Living Environment” proposed to accelerate comprehensive improvement of the rural environment focusing on the treatment of rural waste and wastewater. Where conditions permit, urban waste and wastewater treatment facilities and services may be extended to rural areas. For villages with large populations far away from cities and towns, village-level centralized wastewater treatment facilities may be built, and for villages with small populations, household wastewater treatment facilities may be built.

In 2017, the “Thirteenth Five-Year Plan for Comprehensive Improvement of the National Rural Environment” highlighted the importance of protection of rural drinking water sources and treatment of domestic waste and wastewater. In 2018, the “Three-Year Action Plan for the Improvement of Rural Living Environment” promoted the treatment of rural domestic wastewater using technologies with low costs, low energy consumption, easy maintenance and high efficiency, and encouraged the adoption of ecological treatment technologies.

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In 2018, the Ministry of Ecology and Environment and the Ministry of Housing and Urban-Rural Development issued the “Notice on Accelerating the Formulation of Rural Domestic Wastewater Discharge Standards by Regions.” Local governments were encouraged to speed up the formulation of standards for rural wastewater treatment and discharge according to local conditions. In 2019, the “Technical Standards for Rural Domestic Wastewater Treatment Projects” issued by the Ministry of Housing and Urban-Rural Development optimized the specific technical parameters of rural wastewater treatment to adapt to the characteristics of rural wastewater in China.

In 2020, a group of three standards were set up, namely the “Standard for Small Domestic Wastewater Treatment Equipment,” the “Evaluation Specification for Small Domestic Wastewater Treatment Equipment,” and the “Technical Regulations for Operation and Maintenance of Village Domestic Wastewater Treatment Facilities.” The first document set out some standardized information for small-scale domestic wastewater treatment equipment, including information registration, design, manufacturing, transportation and installation. The second document set out a standardized evaluation process suitable for China’s national conditions for small-scale wastewater treatment equipment, after considering the experience of such evaluation systems in developed countries and the relevant climatic, geographical and economic conditions of different regions in China. The third document set out the operation and maintenance standards on the operation and maintenance of facilities (collection systems and treatment facilities), operation and maintenance process, operation and maintenance personnel, and operation and maintenance service organization, among other standards.

In 2021, the “Guidelines on Accelerating the Modernization of Rural Houses and Villages” highlighted the importance of promoting rural domestic wastewater treatment in accordance with local conditions. Rural areas should adopt small-scale, ecological and decentralized wastewater treatment models and processes, set appropriate discharge standards, and promote local resource reutilization of rural domestic wastewater.

In 2022, the “Opinions of the CPC Central Committee and the State Council on Completing the Key Work of Comprehensively Promoting Rural Revitalization in 2022” set out that a five-year campaign to improve rural living environment should continue to be carried out. Toilets in rural areas should be upgraded based on the actual needs of farmers, and efforts should be coordinated to ensure water supply and sewage treatment. The treatment of domestic sewage in rural areas should be promoted on a case-by-case basis in accordance with local conditions. Priority should be given to sewage treatment in densely populated villages, and for those areas that are not suitable for centralized treatment, miniaturized ecological treatment and sewage resource utilization should be promoted. Efforts to control black and odorous water bodies in rural areas should be accelerated. Household waste should be reduced and classified at source, and the construction of facilities for the comprehensive disposal and utilization of organic waste in villages should be strengthened to promote the use and treatment of organic waste in situ.

Cybersecurity

As an exploration company, we have limited digital operations and our business activity to date has been identifying, acquiring, and exploring mineral properties, and we have not yet adopted formal cybersecurity risk management programs or formal processes for assessing cybersecurity risks. We understand the importance of managing material risks from cybersecurity threats and are committed, as part of our continuing growth, to implementing and maintaining an adequate information security program to manage such risks and safeguard our systems and data.

We currently manage our cybersecurity risk through a variety of practices that are applicable to all users of our information technology and information assets, including our employees and contractors. We use a combination of technology, policies, training, and monitoring to promote security awareness and prevent security incidents.

We believe we have limited exposure to cyber threats other than emails and project data storage. Financial transactions are enabled through well-stablished financial institutions and accounting and employee information storage are outsourced to an external accounting firm.

We have not, as of the date of this prospectus, experienced a cybersecurity threat or incident in the last three years, that materially affected or is reasonably likely to affect our business, results of operations, or financial condition. However, there can be no guarantee that we will not experience such an incident in the future. For more information,

Our board of directors oversees cybersecurity risk as part of its role of overseeing enterprise-wide risk.

Environmental, Social and Governance (ESG) Initiatives

ESG is an important imperative for us.  We have focused our ESG initiatives on the following areas:

•Environment: We will pay close attention to the impacts of our operations on biodiversity, ecosystem services, water management, mine waste/ tailings, air, noise, energy, climate change (carbon footprint, greenhouse gas), hazardous substances, and mine closure;

•Social: We will evaluate the impacts of our actions in the fields, such as human rights, land use, resettlement, vulnerable people, gender, labour practices, worker/community health & safety, security, artisanal miners, and mine closure / after use.

•Governance: We will assess our activities from the perspectives of legal compliance, ethics, anti-bribery and corruption, and transparency.

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In particular, we will consider whether there are environmental, social or governance risks that may affect our ability to raise capital, obtain permits, work with communities, regulators and NGOs, and protect our assets from impairments. And then there may be opportunities for us to reduce energy and water bills or carbon emissions, improve operational performance, enhance community and regulatory relationships and manage closure viability.

As an exploration company, we do not carry out any mining operation. However, we prioritize initiatives that not only align with our corporate values but also contribute to sustainable development, stakeholder trust, and long-term profitability. We will implement environmentally responsible mining practices, such as reducing water and energy consumption, minimizing waste generation and rehabilitating mined areas post-extraction, to mitigate ecological degradation. We will also implement efficient water management strategies, including recycling and treating mine water, to minimize water usage and prevent contamination of local water sources. Furthermore, we will invest in community development projects that address pressing social needs, such as education, healthcare, infrastructure, and economic diversification. We will also develop robust risk management frameworks to identify, assess and mitigate ESG-related risks associated with our operations.

Enforcement of Civil Liabilities

British Virgin Islands

We are incorporated in the BVI to take advantage of certain benefits associated with being an exempted BVI company, such as:

•political and economic stability;

•an effective judicial system;

•a favorable tax system;

•the absence of exchange control or currency restrictions; and

•the availability of professional and support services.

However, certain disadvantages accompany incorporation in the BVI. These disadvantages include:

•the BVI has a less developed body of securities laws as compared to the United States and these securities laws provide significantly less protection to investors; and

•BVI companies do not have standing to sue before the federal courts of the United States.

Our Articles provide that any differences between us and our shareholders or their executors, administrators or assigns relating to the intent, construction, incidences or consequences of our Articles or the BVI Business Companies Act (as amended), including any breach or alleged breach of our Articles or the BVI Business Companies Act (as amended), or relating to our affairs, shall be resolved by arbitration before two arbitrators (unless the parties agree to arbitrate before one arbitrator), who shall jointly appoint an umpire.

Service of process upon us and upon our directors, all of whom reside outside the United States, may be difficult to obtain within the United States. Furthermore, because all of our directors are located outside the United States in Hong Kong, and all of our assets and officers are located outside the United States in the PRC (other than Mr. Wong Wah On Edward, our Chairman and Chief Executive Officer, who is located in Hong Kong), any judgment obtained in the United States against us or any of our directors and officers may not be collectible within the United States.

There is doubt as to the enforceability of civil liabilities under the Securities Act and the Exchange Act in original actions instituted in the PRC. PRC courts may refuse to hear a claim based on a violation of U.S. securities laws, including because the PRC is not the most appropriate forum to bring such a claim. In addition, even if a PRC court agrees to hear a claim, it may determine that PRC law, and not U.S. law, is applicable to the claim. If U.S. law is found to be applicable, the content of applicable U.S. law may have to be proven in court as a fact, which can be a time-consuming and costly process. Certain matters of procedure will also be governed by PRC law. There is little binding case law in the PRC addressing the matters described above. Many of the same doubts apply to similar suits that may be brought in the BVI or Hong Kong and as to the enforceability of any judgment rendered by a court in the BVI or Hong Kong. Moreover, we have no assets in the BVI that may be used to satisfy a judgment rendered by a court located there.

We have appointed Puglisi & Associates, located at 850 Library Avenue, Suite 204, Newark, Delaware 19711, as our agent upon whom process may be served in any action brought against us under the securities laws of the United States.

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PRC

We have been advised by Commerce & Finance Law Offices, our PRC legal advisor, that there is uncertainty as to whether the courts of the PRC would enforce judgments of United States courts or British Virgin Islands courts obtained against us or these persons predicated upon the civil liability provisions of the United States federal and state securities laws. Commerce & Finance Law Offices has further advised us that the recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedures Law. If a legally effective judgment or ruling made by a foreign court requires recognition and enforcement by the PRC People's Court, the parties may directly apply to the intermediate people's court with jurisdiction for recognition and enforcement, or the foreign court may request recognition and enforcement by the PRC People's Court in accordance with the provisions of international treaties concluded or participated in by the country and the PRC, or in accordance with the principle of reciprocity. In addition, according to the PRC Civil Procedures Law, courts in the PRC will not enforce a foreign judgment if they decide that the judgment violates the basic principles of the PRC law or national sovereignty, security or public interest. As a result, it is uncertain whether and on what basis a PRC court would enforce a judgment rendered by a court in the United States or in the British Virgin Islands. Under the PRC Civil Procedures Law, foreigners, foreign enterprises and organizations who bring or respond to lawsuits in the PRC People's Court shall have the same litigation rights and obligations as citizens, legal persons and other organizations of the PRC. Where foreign courts impose restrictions on the civil litigation rights of citizens, legal persons and other organizations of the PRC, the People's courts of the PRC shall apply the principle of reciprocity to the civil litigation rights of citizens, enterprises and organizations of that country. In a foreign-related civil case accepted by the PRC People's Court, if the defendant raises an objection to jurisdiction, and the following circumstances occur at the same time, it may rule to reject the suit and inform the plaintiff to file a suit in a more convenient foreign court: (1) The basic facts of the dispute do not occur within the territory of the PRC, and it is obviously inconvenient for the PRC People’s Court to try the case and for the parties to participate in the proceedings; (2) There is no agreement between the parties to choose the jurisdiction of the PRC People's Court; (3) the case does not fall under the exclusive jurisdiction of the PRC People's Court; (4) The case does not involve the sovereignty, security or public interests of the PRC; (5) It is more convenient for foreign courts to hear cases.

C.Organizational Structure

CHNR is a holding company directly or indirectly owning the following subsidiaries, to the extent indicated (as of December 31, 2023):

All current operations are conducted by Bayannaoer Mining. See “Item 4.B. INFORMATION ON THE COMPANY – Business Overview” for further information regarding Bayannoer Mining.

Feishang Management

Feishang Management was incorporated in the PRC in October 2008. It is a wholly owned subsidiary of Yunnan Mining and is engaged in providing management and consulting services to the other companies in the Group. Feishang Management currently serves as a cost center for the Group.

39 

Inactive Subsidiaries

The following subsidiaries are not currently engaged in active operations but remain in good standing in their home jurisdictions and are poised to participate in future opportunities, should they arise:

China Coal

China Coal was incorporated in Hong Kong in January 2008. It is a wholly owned subsidiary of CHNR.

Feishang Dayun

Feishang Dayun was incorporated in Hong Kong in June 2008. It is a wholly owned subsidiary of Pineboom.

Feishang Mining

Feishang Mining was incorporated in the BVI in September 2004. It is a wholly owned subsidiary of CHNR.

Feishang Yongfu

Feishang Yongfu was incorporated in Hong Kong in June 2008. It is a wholly owned subsidiary of Newhold.

FMH Services

FMH Services is a Florida company incorporated in November 2007 in connection with a proposed transaction that was not consummated. FMH Services, which is wholly owned by CHNR, is currently dormant.

Newhold

Newhold was incorporated in the BVI in July 2008. It is a wholly owned subsidiary of CHNR.

Pineboom

Pineboom was incorporated in the BVI in May 2008. It is a wholly owned subsidiary of CHNR.

Yangpu Shuanghu

Yangpu Shuanghu was incorporated in the PRC in May 2004. It is a wholly owned subsidiary of Feishang Yongfu.

Yunnan Mining

Yunnan Mining was incorporated in the PRC in June 2007. It is a wholly owned subsidiary of Yangpu Shuanghu.

D.Property, Plant and Equipment

        The Company’s administrative offices and its principal subsidiaries are located in Hong Kong, Shenzhen (Guangdong province) and Bayannaoer City (Inner Mongolia Autonomous Region) in the PRC.

On April 1, 2017, the Company signed an office sharing agreement with Anka Consultants Ltd. (“Anka”), a related party, which superseded all previously signed agreements between the parties, pursuant to which the Company shares 184 square meters of the total area of the office premises. The agreement also provides that the Company shares certain costs and expenses in connection with its use of the office, in addition to certain accounting and secretarial services and day-to-day office administration services provided by Anka. Anka’s current lease with the unrelated landlord is for two years, from July 1, 2022, to June 30, 2024. For the years ended December 31, 2021, 2022 and 2023, the Company paid its share of rental expenses and rates to Anka amounting to approximately CNY752,650, CNY776,086 and CNY730,149 (US$103,149), respectively.

On January 1, 2018, Feishang Management signed an office sharing agreement with Feishang Enterprise. On October 1, 2023, Feishang Management signed a new contract with Feishang Enterprise, which expired on September 30, 2024. Pursuant to the agreement, Feishang Management shared 40 square meters of the office premises, and annual rent was CNY165,600, CNY165,600 and CNY165,600 (US$23,394) for the years ended December 31, 2021, 2022 and 2023, respectively.

Bayannaoer Mining

The offices and exploration site of Bayannaoer Mining are located in Bayannaoer City, Inner Mongolia Autonomous Region in the PRC. The property, plant and equipment of Bayannaoer Mining mainly includes buildings, vehicles, office equipment and furniture, with a total net value as of December 31, 2023, of approximately CNY0.05 million (US$0.01 million). On May 8, 2023, Bayannaoer Mining signed an annual lease agreement with private individuals pursuant to which Bayannaoer Mining leases office premises located at 9/F, Huaao Building, Shengli North Road in Bayannaoer City. The office covers an area of 162 square meters, and annual rent is CNY24,300 (US$3,433).

40 

The Moruogu Tong Mine exploration site is located in Northwestern Qingshan Town, Wulatehouqi in Bayannaoer City and covers an area of approximately 7.81 square kilometers. As is typical in the PRC, the PRC government owns all of the land on which the exploration activities are carried out. Bayannaoer Mining assumed the rights to use the land when it obtained the exploration right from the Land and Resources Department of Inner Mongolia Autonomous Region in 2005. We are still in the exploration stage of mining the Moruogu Tong Mine, and have not yet produced any silver, lead or copper. To date, the exploration program has indicated the presence of lead and silver, with the prospect that further surveying and exploration may indicate the presence of other ores such as copper.

In the event we determine to pursue a mining permit and thereafter engage in mining at the Moruogu Tong Mine, we will be required, among other things, to construct and develop the mine, including roads and making provision for water and electricity at the mine site. There will be significant capital expense for these and other projects. We intend to fund those capital expenditures from internal resource and/ or the proceeds of loans from our Related-Party Debtholders, if available, payments pursuant to the Cooperation Agreement and, to the extent deemed necessary, bank borrowings.

See “Item 4.B. INFORMATION ON THE COMPANY – Business Overview – Government Regulation of Mineral Exploration Activities,” above, for a discussion of environmental laws affecting the Moruogu Tong Mine.

ITEM 4A.UNRESOLVED STAFF COMMENTS

None.

ITEM 5.OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion and analysis of the results of operations and the Company’s financial position should be read in conjunction with the audited consolidated financial statements and accompanying notes for the years ended December 31, 2013, 2014 and 2015 included elsewhere herein. The consolidated financial statements of the Company have been prepared in accordance with International Financial Reporting Standards (“IFRS”)IFRS as issued by the International Accounting Standards Board (“IASB”).

A.

Operating Results

Continuing operations

On December 31, 2013,IASB. This section contains certain “forward-looking statements” within the Board of Directors approved a conditional special interim dividend to the shareholders of CHNR satisfied by way of a distribution in speciemeaning of the entireUnited States Private Securities Litigation Reform Act of 1995. Forward-looking statements are not guarantees of our future performance or results and our actual results could materially differ from those disclosed in the forward-looking statements. In evaluating our business, you should carefully consider the information provided in “Item 3.D. Key Information – Risk Factors.”

A.Operating Results

Overview

We are principally engaged in exploration for lead, silver and other metals in the Inner Mongolia Autonomous Region of the PRC and exploration of attractive opportunities in other sectors in the PRC. Our operating subsidiary, Bayannaoer City Feishang Mining Company Limited (“Bayannaoer Mining”) holds an exploration permit issued share capitalby the Land and Resources Department of Feishang AnthraciteInner Mongolia Autonomous Region covering the Moruogu Tong Mine, located in Wulatehouqi, Bayannaoer City, Inner Mongolia. The exploration permit evidences Bayannaoer Mining’s right to all shareholdersexplore for minerals at the Moruogu Tong Mine. Initial results of CHNR in proportion to their respective shareholdings in CHNRthe exploration program indicate the presence of lead and silver, with the prospect that further surveying and exploration may indicate the presence of other ores such as copper. We are also actively seeking opportunities of exploration and mining of other metals outside of the PRC. See, “Item 4.A. Information on the Distribution Record Date. Pursuant to the Distribution, each shareholder of CHNR became entitled to five shares of Feishang Anthracite for every share of CHNR held on the Distribution Record Date. After the completionCopany – History and Development of the Distribution, CHNR no longer holds any shares in Feishang Anthracite.Company — Acquisition of Williams Minerals.”

The Spin-Off did not involve any offering ofWe continuously pivot our business by exploring new shares of Feishang Anthraciteopportunities for growth or a public offering of any other securitiesdiversification. Between July 2021 and no funds were raised pursuant to the Spin-Off. The Distribution became unconditional upon successful listing by way of introduction on the Main Board of the Hong Kong Stock Exchange of Feishang Anthracite on January 22, 2014.

Before the Spin-Off,July 2023, we werealso engaged in the following businessesrural wastewater treatment business in China through our operating subsidiaries:

·

Thethe acquisition and exploitation of mining rights, including the exploration, mineral extraction, processing and salesPST Technology, which held 51% equity interest of iron, zinc and other nonferrous metals extracted or produced at mines primarily located in Anhui ProvinceShanghai Onway, a PRC company which is principally engaged in the PRC;development of rural wastewater treatment technologies, the provision of equipment and

·

The acquisition materials for rural wastewater treatment, undertaking EPC and exploitationPPP projects in relation to rural wastewater treatment, and the provision of mining rights, including the exploration, construction, developmentconsulting and operation of coal mines located in Guizhou Province, the PRC.professional technical services.

We currently hold mining rights that allow us to mine, process and sell non-ferrous metals extracted or produced at Yangchong Mine locatedceased the wastewater treatment business segment following the disposition of PST Technology in Anhui Province in the PRC. Historically, we have extracted or produced iron, zinc, micaceous oxide and sulphur concentrates at Yangchong Mine. However, we produced no zinc in 2013, 2014 or 2015 due to the inferior quality of zinc at current mining zones; and we produced no micaceous oxide in 2013, 2014 or 2015 because it could not be produced and soldJuly 2023. See “Item 4.A. Information on a profitable basis. Sales of sulphur conventrates are not material to our results of operations.  Due to the depressed market price for iron, it is not currently economical to conduct mineral extraction at Yangchong Mine, and extraction was temporarily suspended on December 27, 2015.

We maintain an inventory of iron concentrates and zinc for sale, from time to time, as warranted by market conditions or as otherwise necessary. We are also in the early stages of exploration for additional mineable ore at Yangchong Mine. In March 2016, we engaged Anhui Province Mine Geology Bureau No. 2 Exploration Brigade to survey geology and mineral resources within our licensed zones at Yangchong Mine. Management believes that zinc can currently be mined on a profitable basis and hopes that the survey will confirm that there are additional mineral reserves, including zinc, that can be extracted from Yangchong Mine at costs that justify extraction in light of prevailing market prices for metals. However, the Company cannot accurately predict whether the outcome of the survey will be positive, or whether the outcome of the suvey will justify the expenditure of additional resources to pursue mineral extraction.  


The following discussion reflects only the continuing operations- History and Development of the Company following the Spin-Off:— Acquisition and Sale of Precise Space-Time Technology Limited.”


Continuing Operations

Revenues and Gross Profit

Revenue for sales of all products is recognized when title passes to the customer in accordance with the relevant sales agreement, generally upon product acceptance by the customer.

2015 vs 2014

The sales from our metal segment’s operation increased by CNY10.04 million (US$1.55 million), or 120.91%, to CNY18.34 million (US$2.83 million) for the year ended December 31, 2015 from CNY8.30 million (US$1.28 million) for the year ended December 31, 2014. The increase was mainly contributed by an increase in the sales volume of zinc concentrates produced in prior years and iron concentrates produced in 2014 and 2015, partially offset by the drop of  the average selling price per tonne of iron concentrates.





Sales were mainly derived from sales of zinc concentrates,  iron concentrates and sulfur concentrates. Sales of zinc concentrates increased by CNY1.05 million (US$0.16 million), from nil in 2014 to CNY1.05 million (US$0.16 million) in 2015. Sales of iron concentrates also increased by CNY10.01 million (US$1.54 million), or 146.04%, from CNY6.86 million (US$1.06 million) in 2014 to CNY16.87 million (US$2.60 million) in 2015. The increase in iron concentrates sales was mainly contributed by an increase  in the iron sales volume in 2015 from 8,056 tonnes in 2014 to 36,195 tonnes in 2015. Iron concentrates production decreased by 9,500 tonnes, or about 33.81% in response to the falling sales price. The average selling price of iron was CNY466 (US$72) per tonne in 2015, representing a drop of CNY385 (US$59), or 45.24%, from CNY851 (US$131) in 2014. Sales of sulfur concentrates decreased by CNY1.02 million (US$0.16 million), or 70.83%, from CNY1.44 million (US$0.22 million) in 2014 to CNY0.42 million (US$0.06 million) in 2015. We sold 1,530 tonnes of sulfur concentrates in 2015, representing a decrease of 3,620 tonnes, or 70.29% from 5,150 tonnes in 2014. The average selling price of sulfur concentrates decreased by CNY7 (US$1) per tonne, or 2.49%, from CNY281 (US$43) in 2014 to CNY274 (US$42) in 2015.

Gross loss for the year ended December 31, 2015 was CNY13.59 million (US$2.09 million) with a gross loss margin of 20.99%, as compared to a gross profit of CNY1.74 million (US$0.27 million) with a gross profit margin of 20.95% for the year ended December 31, 2014. The approximately CNY15.33 million (US$2.36 million), or 881.64%, drop in gross profit, was mainly due to the decline in selling prices of iron concentrates compared to the prior year’s.

The gross profit on sales of zinc for the year ended December 31, 2015 was CNY0.08 million (US$0.01 million), compared to zero for the same period in 2014.

The gross loss or gross loss margin on sales of iron for the year ended December 31, 2015 was CNY13.58 million (US$2.09 million), or approximately 80.55%, as compared to a gross profit of CNY1.81 million (US$0.28 million), or a gross profit margin of 26.32% for the same period in 2014. The drop in gross profit was primarily caused by the decline in the selling price of iron concentrates.

The gross loss was CNY0.09 million (US$0.01 million) on sales of sulfur concentrates for the year ended December 31, 2015, compared to CNY0.07 million (US$0.01 million) for the same period in 2014. The increase in gross loss was primarily caused by the drop in both volume sold and selling price of sulfur concentrates.

2014 vs 2013

The sales from our metal segment’s operation decreased by CNY33.06 million (US$5.09 million), or 79.93%, to CNY8.30 million (US$1.28 million) for the year ended December 31, 2014 from CNY41.36 million (US$6.37 million) for the year ended December 31, 2013. The drop was mainly caused by a decrease in the production volume and the average selling price per tonne of iron concentrates.

Sales were mainly derived from sales of iron concentrates and sulfur concentrates. Sales of iron concentrates also dropped by CNY32.71 million (US$5.04 million), or 82.67%, from CNY39.57 million (US$6.10 million) in 2013 to CNY6.86 million (US$1.06 million) in 2014. The decrease in iron concentrates sales was mainly caused by a decline in both the iron sales volume and the sales price of iron in 2014. The sales volume of iron decreased by 34,067 tonnes from 42,123 tonnes in 2013 to 8,056 tonnes in 2014. Iron concentrates production decreased by 8,948 tonnes, or about 24.15% in response to the falling sales price. The average selling price of iron was CNY851 (US$131) per tonne in 2014, representing a drop of CNY88 (US$14), or 9.37%, from CNY939 (US$145) in 2013. Sales of sulfur concentrates decreased by CNY0.35 million (US$0.05 million), or 19.55%, from CNY1.79 million (US$0.28 million) in 2013 to CNY1.44 million (US$0.22 million) in 2014. We sold 5,150 tonnes of sulfur concentrates in 2014, representing a decrease of 659 tonnes, or 11.34% from 5,809 tonnes in 2013. The average selling price of sulfur concentrates decreased by CNY27 (US$5) per tonne, or 8.77%, from CNY308 (US$47) in 2013 to CNY281 (US$43) in 2014.

Gross profit for the year ended December 31, 2014 decreased to CNY1.74 million (US$0.27 million) with a gross profit margin of 20.95%, compared to CNY16.26 million (US$2.50 million) with a gross profit margin of 39.31% for the year ended December 31, 2013. The approximately CNY14.52 million (US$2.24 million), or 89.30%, drop in gross profit, was mainly due to the decline in selling prices and production volume of iron concentrates compared to the prior year.

The gross profit or gross profit margin on sales of iron for the year ended December 31, 2014 was CNY1.81 million (US$0.28 million), or approximately 26.32%, compared to CNY16.11 million (US$2.48 million), or 40.70% for the same period in 2013. The drop in gross profit was primarily caused by the decline in both the volume sold and selling price of iron concentrates.

The gross loss was CNY0.07 million (US$0.01 million) on sales of sulfur concentrates for the year ended December 31, 2014, as compared to a gross profit of CNY0.12 million (US$0.02 million) for the same period in 2013. The decrease in gross profit was primarily caused by the drop in both volume sold and selling price of sulfur concentrates.





Administrative Expenses

2015 vs 2014

Administrative expenses are mainly comprisedprimarily consist of salaries and staff welfare expenses, contribution to retirement fund, termination benefit, utilities, depreciation expenses, legal and professional service fees, travel and entertainment expenses, losses on suspension of productiondepreciation and officeamortization, option awards granted to certain eligible parties and other general corporate function related expenses.

Administrative expenses in 2015 increased by CNY6.67 million (US$1.03 million), or 54.54% to CNY18.89 million (US$2.91 million) from CNY12.23 million (US$1.88 million) in 2014. The increase in administrative expenses was primarily caused by the termination benefit arising from the streamlined exercise and the temporary suspension of extraction activities in late December 2015.

2014 vs 2013

Administrative expenses in 2014 decreased by CNY5.68 million (US$0.87 million), or 31.71% to CNY12.23 million (US$1.88 million) from CNY17.91 million (US$2.76 million) in 2013. The decrease in administrative expenses was primarily caused by the reduction in legal and professional fees as there were no further Spin-Off expenses incurred in 2014.

Impairment Loss on Property, Plant and Equipment

An impairment loss on property, plant and equipment of CNY7.54 million (US$1.16 million) was made for 2015, compared to CNY8.07 million (US$1.24 million) was made for 2014 in connection with the price decline of iron concentrates in the period. The recoverable value of Yangchong Mine was determined based on the mine’s value-in-use (“VIU”) using pre-tax cash flow projections, adopting certain assumptions based on the mine’s past performance and our expectations on market development, applying an pre-tax discount rate of 16.00%.


There was no impairment loss in 2013.


Write-down/(Reversal of write-down) of Inventories to Net Realizable Value, net

The reversal of write-down of inventories to net realizable value of CNY5.47 million (US$0.84 million) was recorded in 2015 along with the sales of finish goods which has been provided write-down of CNY11.12 million (US$1.71 million) previously. CNY5.65 million (US$0.87 million) written-down of inventories was provided in 2015, as compared to CNY9.30 million (US$1.43 million) provided in 2014, the decrease was mainly caused by the decrease of inventory balances as of December 31, 2015 as compared to December 31, 2014.

There was no write-down of inventories to net realizable value in 2013.


Other Operating Income (Expenses), net

2015 vs 2014Income/(Losses)

Other operating income in 2015 mainly represented theincome/(loss) primarily consists of government reimbursements, grants for enterprise development of a monitoring system at Yangchong Mine.

2014 vs 2013

Other operating income in 2014 mainly represented consulting income. There was no mine recovery fee in 2014.

Non-operating Income (Expenses), net

2015 vs 2014

There was no material fluctuation in theand tax refunds, and other non-operating income (expenses),or expenses.

Fair Value Gain/(Loss) on Financial Instruments, net

Fair value gain or loss on financial instruments, the net changes in fair value of CNY0.11 million (US$0.02 million) in 2015 as comparedwarrants issued to CNY0.22 million (US$0.03 million) in 2014.investors on January 20, 2021.

2014 vs 2013Finance Costs

There was no material fluctuation inFinance costs consist primarily of interest expense on loans and lease liabilities, and foreign currency exchange differences.

41 

Finance Income

Finance income consists primarily of interest income on loans to related parties and third parties, and interest income derived from revenue contracts with a significant financing component and from the non-operatingservice concession arrangement, which arise under IFRS due to the imputed credit terms attendant to the delayed payment terms we offer our customers. Imputed finance income (expenses),under our service concession arrangement is recognized on an accrual basis using the effective interest rate method by applying the rate that discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter period, when appropriate, to the net carrying amount of CNY0.22 million (US$0.03 million) in 2014 as comparedthe financial asset. See “Item 7.B. – MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS – Related Party Transactions” for further information regarding loans to CNY0.17 million (US$0.03 million) in 2013.and from related parties.





Income Tax ExpensesExpense

Management believes that theThe Company is not subject to taxes in the United States.

Under the current laws of the BVI, dividends and capital gains arising from the Company’s investments in the BVI are not subject to income or capital gains taxes and no withholding tax is imposed on payments of dividends to the Company.

The Company’s subsidiaries in Hong Kong are subject to the Hong Kong Profits Tax rate of 16.5%, while foreign-derived income is exempted from income tax. There is no withholding tax in Hong Kong on the remittance of dividends.

The Company’s subsidiaries in the PRC are subject to a PRC enterprise income tax rate of 25% applicable to both foreign investmentinvested enterprises and domestic companies.

2015 vs 2014

Income Shanghai Onway was subject to a tax expenses decreased  from CNY6.84 million (US$1.05 million) in 2014 to CNY1.50 million (US$0.23 million) in 2015. The decrease was mainly contributed by (i) the income tax expenses amounting to CNY3.53 million (US$0.54 million) attributable to the profit distribution by Wuhu Mining in 2014; and (ii) the deferred tax expenses amounting to CNY1.53 million (US$0.24 million) arising from the valuation allowancerate of deferred tax assets of Wuhu Mining in 2014, no deferred tax expenses were recognized in 2015.

2014 vs 2013

Income tax expenses increased  from CNY2.14 million (US$0.33 million) in 2013 to CNY6.84 million (US$1.05 million) in 2014. The increase was mainly contributed by (i) the income tax expenses amounting to CNY3.53 million (US$0.54 million) attributable to the profit distribution by Wuhu Mining in 2014; and (ii) the deferred tax expenses amounting to CNY1.53 million (US$0.24 million) arising from the valuation allowance of deferred tax assets of Wuhu Mining.

Profit/(Loss) from the Continuing Operations

2015 vs 2014

Loss from continuing operations increased from CNY33.22 million (US$5.12 million) in 2014 to CNY35.51 million (US$5.47 million) in 2015. The increased loss was mainly due to (i) a CNY15.33 million (US$2.36 million) decrease in gross profit compared to25% for the year ended December 31, 2014;2021 and (ii) the termination benefitthereafter. Shaoguan Angrui was fully exempted from the streamline operation amounting to CNY5.51 million (US$0.85 million) in 2015, partially offset by (i) the decrease of income tax expenses amounting to CNY5.34 million (US$0.82 million) attributableaccording to the profit distribution by Wuhu Mining in 2014;PRC corporate income tax laws and (ii) a  CNY14.77 million (US$2.28 million) decrease  in write-down of inventories to net realizable value compared torelated regulations for the year ended December 31, 2014.2021. Shaoguan Angrui enjoyed a preferential tax rate of 12.5% for the years ended December 31, 2022, and 2023.

2014 vs 2013Discontinued Operations

LossRevenue

Revenue from continuingour discontinued operations increasedprimarily consists of revenue from CNY1.29construction contracts, operation and maintenance services, operation services and construction services for the Wujiang Project, which we refer to as the “service concession arrangement.”

Cost of Sales

Cost of sales of our discontinued operations primarily consists of costs relating to the construction of water treatment facilities, such as raw materials, spare parts, consumables, and outsourced costs charged by subcontractors.

Selling and Distribution Expenses

Selling and distribution expenses primarily consist of business development expenses, payroll, travel expenses and related expenses for employees involved in selling and distribution activities.

Profit/(loss) for the year from discontinued operations, net of tax

Profit/(loss) for the year from discontinued operations, net of tax represents operating results from PST Technology and its subsidiaries until its disposition on July 28, 2023.

Results of Operations

The following table sets out our consolidated results of operations for the periods indicated:

  Year Ended December 31, 
  (Amounts in thousands, except per share data) 
  2021  2022  2023  2023 
  CNY  CNY  CNY  US$ 

Consolidated Statements of Profit or Loss Data

 

CONTINUING OPERATIONS

            
Administrative expenses  (11,076)  (25,248)  (12,883)  (1,820)
Other income  599   699   3,742   529 
Fair value (loss)/gain on financial instruments, net  (38,349)  1,007   847   120 
Finance costs  (166)  191   (48)  (7)
Finance income  13   13   5   1 
                 
LOSS BEFORE INCOME TAX  (48,979)  (23,338)  (8,337)  (1,177)
                 
Income tax expense  5,095   —   —   — 
                 
LOSS FOR THE YEAR FROM CONTINUING OPERATIONS  (43,884)  (23,338)  (8,337)  (1,177)
 DISCONTINUED OPERATIONS                
(Loss)/profit for the year from discontinued operations, net of tax  (11,087)  1,042   (4,106)  (580)
                 
LOSS FOR THE YEAR  (54,971)  (22,296)  (12,443)  (1,757)
                 
ATTRIBUTABLE TO:                
Owners of the Company                
From continuing operations  (43,884)  (23,338)  (8,337)  (1,177)
From discontinued operations  (4,268)  (1,285)  (5,504)  (777)
Non-controlling interests  (6,819)  2,327   1,398   197 
                 
   (54,971)  (22,296)  (12,443)  (1,757)
                 
LOSS PER SHARE ATTRIBUTABLE TO OWNERS OF THE COMPANY:                
Basic and diluted                
- For loss from continuing operations  (5.39)  (2.85)  (1.01)  (0.15)
- For loss from discontinued operations  (0.52)  (0.15)  (0.67)  (0.09)
Loss per share  (5.91)  (3.00)  (1.68)  (0.24)
                 

Years Ended December 31, 2023 and 2022

Administrative Expenses. Administrative expenses decreased by CNY12.37 million (US$0.201.75 million) in 2013 to CNY33.22from CNY25.25 million (US$5.12 million) in 2014. The increased loss was mainly due to (i) a CNY14.52 million (US$2.24 million) decrease in gross profit compared tofor the year ended December 31, 2013;2022 to CNY12.88 million (US$1.82 million) for the year ended December 31, 2023. The decrease was mainly caused by the one-off option awards granted on July 14, 2022 to certain eligible individuals covering an aggregate of 8,100,000 of the Company’s common shares under the 2014 Plan.

Other Income. Other income increased by CNY3.04 million (US$0.43 million) from CNY0.70 million for the year ended December 31, 2022 to CNY3.74 million (US$0.53 million) for the year ended December 31, 2023. The increase was mainly caused by government compensation received in 2023 for termination of 5 mine exploration rights in Dengkou County, Inner Mongolia Autonomous Region.

Fair Value Gain/(Loss) on Financial Instruments, net. Fair value gain on financial instruments, net decreased by CNY0.16 million (US$0.02 million) from CNY1.01 million for the year ended December 31, 2022 to CNY0.85 million (US$0.12 million) for the year ended December 31, 2023. The decrease was caused by the fluctuation of fair values of the Company’s outstanding warrants.

Profit/(loss) for the year from discontinued operations, net of tax. The profit for the year from discontinued operations, net of tax decreased by CNY5.15 million (US$0.73 million) from CNY1.04 million for the year ended December 31, 2022 to a loss of CNY4.11 million (US$0.58 million) for the period ended July 31, 2023. The loss in 2023 was the result of an expected credit loss assessment of receivables and (ii)contract assets, due to the fact that the amount of uncollected and aged receivables and contract assets was relatively higher than the amount in 2022.

Net Profit/(Loss). As a result of the foregoing, our net loss decreased by CNY9.86 million (US$1.39 million) from CNY22.30 million for the year ended December 31, 2022 to CNY12.44 million (US$1.76 million) for the year ended December 31, 2023.

Years Ended December 31, 2022 and 2021

Administrative Expenses. Administrative expenses increased by CNY14.17 million from CNY11.08 million for the year ended December 31, 2021 to CNY25.25 million for the year ended December 31, 2022. The increase was mainly caused by the option awards granted on July 14, 2022 to certain eligible individuals covering an aggregate of 8,100,000 of the Company’s common shares under the 2014 Plan.

Other Income. Other income increased by CNY0.10 million from CNY0.60 million for the year ended December 31, 2021 to CNY0.70 million for the year ended December 31, 2022. The increase in other income was mainly caused by other income relating to impairment reversal of other receivables, which were fully impaired and written off in prior years but collected in 2022, and other loss relating to the return of tax refund to tax authorities in 2021.

Fair Value Gain/(Loss) on property, plantFinancial Instruments, net. Fair value gain on financial instruments, net increased by CNY39.36 million from CNY38.35 million of loss for the year ended December 31, 2021 to CNY1.01 million of gain for the year ended December 31, 2022. The increase was caused by the fluctuation of fair values of the Company’s outstanding warrants in both years and equipment amountingthe disposition of the FARL shares in 2021.

Finance Costs. Finance costs increased by CNY0.36 million from a negative of CNY0.17 million for the year ended December 31, 2021 to CNY8.07CNY0.19 million for the year ended December 31, 2022. This was mainly due to exchange gain/(loss) on the appreciation/(depreciation) of foreign currency deposits.

Finance Income. Finance income was CNY0.01 million for the year ended December 31, 2021, and the same for the year ended December 31, 2022.

Income Tax Expense. Income tax expense decreased by CNY5.10 million from CNY5.10 million for the year ended December 31, 2021 to nil for the year ended December 31, 2022. The decrease was due to no revenue generated from continued operations in 2022.

Profit/(loss) for the year from discontinued operations, net of tax. The profit for the year from discontinued operations, net of tax increased by CNY12.13 million from a loss of CNY11.09 million for the year ended December 31, 2021 to a profit of CNY1.04 million for the period ended July 31, 2022. The increase of profit was due to higher revenue and gross profit margin in 2022.

Net Loss. As a result of the foregoing, our net loss decreased by CNY32.67 million, from CNY54.97 million for the year ended December 31, 2021 to CNY22.30 million for the year ended December 31, 2022.

Results of Operations – Discontinued Operations

The following table sets out the results of operations of our discontinued operations for the periods indicated:

  Year Ended December 31, 
  (Amounts in thousands, except per share data) 
  2021  2022  

For the period from January 1, 2023 to July 28,

2023

 
  CNY  CNY  CNY 
Revenue  18,735   20,306   12,748 
Cost of sales  (18,494)  (14,485)  (5,872)
Gross profit  241   5,821   6,876 
Selling and distribution expenses  (922)  (700)  (442)
Administrative expenses  (11,793)  (11,501)  (5,699)
Other (losses)/income  (782)  205   142 
Impairment (losses)/reversal on financial assets  (3,330)  1,073   (9,931)
Finance costs  (4,193)  (3,586)  (1,906)
Finance income  16,922   15,594   8,785 
             
(LOSS)/PROFIT BEFORE INCOME TAX  (3,857)  6,906   (2,175)
             
Income tax expense  (7,230)  (5,864)  (1,931)
             
(LOSS)/PROFIT FOR THE YEAR/PERIOD FROM THE DISCONTINUED OPERATIONS  (11,087)  1,042   (4,106)
Attributable to:            
Owners of the company  (4,268)  (1,285)  (5,504)
Non-controlling interests  (6,819)  2,327   1,398 

The Period Ended July 28, 2023 and The Year Ended December 31, 2022

Revenue. Revenue from discontinued operations decreased by CNY7.56 million (US$1.07 million) from CNY20.31 million for the year ended December 31, 2022 to CNY12.75 million (US$1.80 million) for the period ended July 28, 2023. The decrease in revenues was mainly caused by the shorter operating period of the discontinued operations due to our disposal of PST Technology in July 2023.

Cost of sales. Cost of sales from discontinued operations decreased by CNY8.62 million (US$1.22 million) from CNY14.49 million for the year ended December 31, 2022 to CNY5.87 million (US$0.83 million) for the period ended July 28, 2023. The decrease in cost of sales was mainly caused by the shorter operating period of the discontinued operations due to our disposal of PST Technology in July 2023.

Selling and Distribution Expenses. Selling and distribution expenses from discontinued operations decreased by CNY0.26 million (US$0.04 million) from CNY0.70 million for the year ended December 31, 2022 to CNY0.44 million (US$0.06 million) for the period ended July 28, 2023. The decrease was mainly due to tighter expense control efforts in 2023 and the shorter operating period of the discontinued operations due to our disposal of PST Technology in July 2023.

Administrative Expenses. Administrative expenses from discontinued operations decreased by CNY5.80 million (US$0.82 million) from CNY11.50 million for the year ended December 31, 2022 to CNY5.70 million (US$0.81 million) for the period ended July 28, 2023. The decrease was mainly caused by one-off technology consultancy fees incurred in 2022 for certain water treatment projects.

Other Income/(Losses). Other income/(loss) from discontinued operations decreased by CNY0.07 million (US$0.01 million) from CNY0.21 million of loss for the year ended December 31, 2022 to CNY0.14 million (US$0.02 million) of income for the period ended July 28, 2023. No material fluctuation was noted.

Impairment (Losses)/Reversal on Financial Assets. Impairment (losses)/reversal on financial assets from discontinued operations decreased by CNY11.00 million (US$1.55 million) from CNY1.07 million of reversal for the year ended December 31, 2022 to a loss of 9.93 million (US$1.40 million) for the period ended July 28, 2023. The decrease was the result of an expected credit loss assessment of receivables and contract assets, due to the fact that the amount of uncollected and aged receivables and contract assets was relatively higher than the amount in 2022.

Finance Costs. Finance costs from discontinued operations decreased by CNY1.68 million (US$0.24 million) from CNY3.59 million for the year ended December 31, 2022 to CNY1.91 million (US$0.27 million) for the period ended July 28, 2023. This was mainly due to the shorter operating period of the discontinued operations due to our disposal of PST Technology in July 2023.

Finance Income. Finance income from discontinued operations decreased by CNY6.80 million (US$0.96 million) from CNY15.59 million for the year ended December 31, 2022 to CNY8.79 million (US$1.24 million) for the period ended July 28, 2023. The decrease in finance income was mainly due to the decrease of interest income from the service concession arrangement relating to a financing component, which arose due to a guaranteed 28-year-long collection period for construction services for the Wujiang Project and the write downshorter operating period of inventory amountingthe discontinued operations due to CNY9.30 million (US$1.43 million)our disposal of PST Technology in 2014.July 2023.

Discontinued OperationsIncome Tax Expense

Discontinued operations represented the Company’s coal mining and related business operated and owned by Feishang Anthracite, in which the Company’s shares were distributed to the Company’s shareholders on January 22, 2014.

Net loss. Income tax expense from discontinued operations dropped substantiallydecreased by CNY3.93 million (US$0.56 million) from 2013CNY5.86 million for the year ended December 31, 2022 to 2014 becauseCNY1.93 million (US$0.27 million) for the period ended July 28, 2023. The decrease was mainly caused by lower revenue in 2023.

(Loss)/Profit. As a result of the foregoing, profit for discontinued operations decreased by CNY5.15 million (US$0.73 million), from CNY1.04 million of profit for the year ended December 31, 2022 to CNY4.11 million (US$0.58 million) of loss for the period ended July 28, 2023.

Years Ended December 31, 2022 and 2021

Revenue. Revenue from discontinued operations increased by CNY1.57 million from CNY18.74 million for the year ended December 31, 2021 to CNY20.31 million for the year ended December 31, 2022. The increase in 2014 represented only one month’s operationrevenues was mainly caused by the confirmed progress of Feishang Anthracite.services provided for constructions projects commenced in prior years.


Cost of sales. Cost of sales from discontinued operations decreased by CNY4.00 million from CNY18.49 million for the year ended December 31, 2021 to CNY14.49 million for the year ended December 31, 2022. This decrease was mainly due to the deferral in the execution of some new or ongoing projects during the first half of 2022 as a result of the then strict pandemic controls in Shanghai.

Critical AccountingSelling and Distribution Expenses. Selling and distribution expenses from discontinued operations decreased by CNY0.22 million from CNY0.92 million for the year ended December 31, 2021 to CNY0.70 million for the year ended December 31, 2022. The decrease was mainly due to tighter expense control efforts in 2022.

Administrative Expenses. Administrative expenses from discontinued operations decreased by CNY0.29 million from CNY11.79 million for the year ended December 31, 2021 to CNY11.50 million for the year ended December 31, 2022. No material fluctuation was noted for the year 2021 and 2022.

Other Income/(Losses). Other income from discontinued operations increased by CNY0.99 million from CNY0.78 million of loss for the year ended December 31, 2021 to CNY0.21 million of income for the year ended December 31, 2022. The increase in other income was mainly caused by other income relating to impairment reversal of other receivables, which were fully impaired and written off in prior years but collected in 2022, and other loss relating to the return of tax refund to tax authorities in 2021.

Impairment (Losses)/Reversal on Financial Assets. Impairment losses on financial assets from discontinued operations decreased by CNY4.40 million from CNY3.33 million of loss for the year ended December 31, 2021 to CNY1.07 million of reversal for the year ended December 31, 2022. The decrease was the result of an expected credit loss assessment of receivables and contract assets, due to the fact that the amount of collection of aged trade receivables related to construction contracts was relatively higher than the amount of origination of new trade receivables related to construction contracts in 2022.

Finance Costs. Finance costs from discontinued operations decreased by CNY0.60 million from CNY4.19 million for the year ended December 31, 2021 to CNY3.59 million for the year ended December 31, 2022. This was mainly due to exchange gain on the appreciation of foreign currency deposits in 2022, and decreased interest expenses on bank loans as our outstanding borrowing balance decreased.

Finance Income. Finance income from discontinued operations decreased by CNY1.33 million from CNY16.92 million for the year ended December 31, 2021 to CNY15.59 million for the year ended December 31, 2022. The decrease in finance income was mainly due to the decrease of interest income from the service concession arrangement relating to a financing component, which arose due to a guaranteed 28-year-long collection period for construction services for the Wujiang Project.

Income Tax Expense. Income tax expense from discontinued operations decreased by CNY1.37 million from CNY7.23 million for the year ended December 31, 2021 to CNY5.86 million for the year ended December 31, 2022. The decrease was mainly caused by additional recognition of deferred tax benefits in 2022.

(Loss)/Profit. As a result of the foregoing, our profit from discontinued operations increased by CNY12.13 million, from CNY11.09 million of loss for the year ended December 31, 2021 to CNY1.04 million of profit for the year ended December 31, 2022.

Impact of Government Policies on the Company’s Operations


In 2023, impacts of the pandemic receded, and the government stepped up policy efforts to stabilize the economy and speed up recovery. Macroeconomic policies will largely impact economic cycles, growth rates, inflation and interest rates, and eventually result in changes in supply and demand dynamics and price fluctuations in the markets we intend to serve. Industrial policies will more directly impact specific industries and to some extent determine market access, market potential, intensity of competition and profitability.

Our financial statements reflectmetals exploration activities are subject to government regulations in various aspects, including but not limited to laws, rules and regulations relating to exploration activities; environmental protection; the selectionuse and applicationpreservation of accounting policies which require managementdangerous substances; employment practices; as well as land use laws and a variety of local business laws and rules. Our failure to make significant estimatescomply with applicable government regulations could adversely affect our operations and assumptions. We believe that the following are somesubject us to fines and other penalties including suspension or termination of our business permits. For further details of the more significant judgment areasimpact of governmental policies on our metals exploration activities, please refer to “Item 3.D. KEY INFORMATION – Risk Factors – Risks Relating to Our Mine Exploration Activities in Inner Mongolia – We are subject to government regulations in various aspects of our exploration activities and our failure to comply with applicable government regulations could adversely affect us,” “Item 4.B. INFORMATION ON THE COMPANY – Business Overview – Government Regulation of Mineral Exploration Activities,” and “Item 5.D. – OPERATING AND FINANCIAL REVIEW AND PROSPECTS – Trend Information”.

Similarly, if we are successful in completing the acquisition of Williams Minerals, which holds the lithium mine in Zimbabwe, our ability to realize the anticipated benefits of it may be affected by changes in the application of our accounting policies that currently affect our financial conditionoverall economic, political and results of operations.





Revenue recognition


The Group sells its products pursuantregulatory environment, including but not limited to sales contracts entered into with its customers. Revenue for all products is recognized when the significant risksapplicable tax regimes, fluctuations in prices and rewards of ownership have passed to the customerforeign exchange rates, import and when collectability is reasonably assured. The passing of the significant risksexport regulations, local rules and rewards of ownership to the customer is based on the terms of the sales contract, generally upon delivery and acceptance of the product by the customer.

In accordance with the relevant tax laws in the PRC, value-added taxes (“VAT”) is levied on the invoiced value of sales and is payable by the purchaser. The Group is required to remit the VAT it collects to the tax authority, but may deduct the VAT it has paid on eligible purchases. The difference between the amounts collected and paid is presented as VAT recoverable or payable balance in the consolidated statements of financial position.


Property, plant and equipment


Property, plant and equipment is comprised of buildings, mining structures, mining rights, machinery and equipments, motor vehicle, exploration rights and construction in progress.

Exploration rights are capitalized and amortized over the term of the license granted to the Group by the authorities.

When proved and probable reserves have been determined, costs incurred to develop coal mines are capitalized as part of the cost of the mining structures.

Buildings, mining structures, machinery and equipment, and motor vehicles are stated at cost less accumulated depreciation and any impairment losses. Expenditures for routine repairs and maintenance are expensed as incurred.

Mining rights are stated at cost less accumulated amortization and any impairment losses. The costs of mining rights are initially capitalized when purchased. If proven and probable reserves are established for a property and it has been determined that a mineral property can be economically developed, costs are capitalized and are amortized upon productions based on actual units of production over the estimated proven and probable reserves of the mines. For mining rights in which proven and probable reserves have not yet been established, the Group assesses the carrying value for impairment at the end of each reporting period. The Group’s rights to extract minerals are contractually limited by time. However, the Group believes that it will be able to extend licenses, as it has in the past.

Mining related buildings & mining structures and mining related machinery & equipment are stated at cost less accumulated depreciation and any impairment losses. Those mining related assets for which probable reserves have been established are depreciated upon production based on actual units of production over the estimated proven and probable reserves of the mines.

When an item of property, plant and equipment is classified as held for distribution or when it is part of a disposal group classified as held for distribution, it is not depreciated and is accounted for in accordance with IFRS 5, as further explained below.  

Reserve estimates are reviewed when information becomes available that indicates a reserve change is needed, or at a minimum once a year. Any material effect from changes in estimates is considered in the period the change occurs.

Depreciation is calculated on the straight-line basis over each asset’s estimated useful life down to the estimated residual value of each asset. Estimated useful lives are as follows:

Non-mining related buildings

15 - 35 years

Non-mining related machinery and equipment

3 - 15 years

Motor vehicles

4 - 8 years


Residual values, useful lives and the depreciation method are reviewed and, adjusted if appropriate, at each reporting date.

When properties are retired or otherwise disposed, the related cost and accumulated depreciation are removed from the respective accounts and any profit or loss on disposition is recognized in the statement of profit or loss.





Construction in progress is carried at cost and is to be depreciated when placed into service over the estimated useful lives or units of production of those assets. Construction costs are capitalized as incurred. Interest is capitalized as incurred during the construction period.

Exploration and evaluation costs

Exploration and evaluation assets include topographical and geological surveys, exploratory drilling, sampling and trenching and activitiesregulations in relation to commercial and technical feasibility studies, and expenditure incurred to secure further mineralization in existing coal bodies and to expand the capacity of a mine. Expenditure incurred prior to acquiring legal rights to explore an area is expensed as incurred.

Once the exploration right to explore has been acquired, exploration and evaluation expenditure is charged to statements of profit or loss as incurred, unlessmining activities, and a future economic benefit is more likely than not to be realized. Exploration and evaluation assets acquired in a business combination are initially recognized at fair value. They are subsequently stated at cost less accumulated impairment.

When it can be reasonably ascertained that a mining property is capable of commercial production, exploration and evaluation costs are transferred to tangible or intangible assets according to the nature of the exploration and evaluation assets. If any project is abandoned during the evaluation stage, the total expenditure thereon will be written off.

Income taxes

Income tax comprises current and deferred tax. Income tax is recognized in the consolidated statements of profit or loss or consolidated statements of comprehensive income, either as an expense as it relates to operating activities or as a component of the applicable categoriesvariety of other comprehensive incomelocal business laws and rules. Our failure to comply with applicable government regulations could adversely affect our operations and subject us to fines and other penalties including suspension or loss.termination of our business permits.

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantially enacted, by the reporting date, in the countries where the Group operates and generates taxable income.Non-GAAP Financial Measures

Deferred tax is provided, using the liability method, on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognized for all taxable temporary differences, except:

·

where the deferred tax liability arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

·

in respect of taxable temporary differences associated with investments in subsidiaries, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognized for all deductible temporary differences, carryforward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carryforward of unused tax credits and unused tax losses can be utilized, except:

·

where the deferred tax assets relating to the deductible temporary differences arise from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

·

in respect of deductible temporary differences associated with investments in subsidiaries deferred tax assets are only recognized to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are reassessed at each reporting date and are recognized to the extent that it is probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized.



Not applicable.


46 


Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

Asset retirement obligations

The Group’s legal or constructive obligations associated with the retirement of non-financial assets are recognized at fair value at the time the obligations are incurred and if it is probable that an outflow of resources will be required to settle the obligation, and a reasonable estimate of fair value can be made. Upon initial recognition of a liability, a corresponding amount is capitalized as part of the carrying amount of the related property, plant and equipment. Asset retirement obligations are regularly reviewed by management and are revised for changes in future estimated costs and regulatory requirements. Changes in the estimated timing of retirement or future estimated costs are dealt prospectively by recording an adjustment against the carrying value of the provision and a corresponding adjustment to property and equipment. Depreciation of the capitalized asset retirement cost is generally determined on a units-of-production basis. Accretion of the asset retirement obligation is recognized over time and generally will escalate over the life of the producing asset, typically as production declines. Accretion is included in the finance cost in the consolidated statements of profit or loss. Any difference between the recorded obligation and the actual costs of reclamation is recorded in statements of profit or loss in the period the obligation is settled.

Non-current assets and disposal groups held for distribution

Non-current assets and disposal groups are classified as held for distribution when the Group is committed to distribute the asset or disposal group to its owners. For this to be the case, the asset or disposal group must be available for immediate distribution in its present condition and its distribution must be highly probable.

Non-current assets and disposal groups (other than financial assets) classified as held for distribution are measured at the lower of their carrying amounts and fair values less costs to sell. Property, plant and equipment classified as held for distribution are not depreciated or amortized.

Impairments of long-lived assets

Long-lived assets to be held and used, such as property, plant and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. An impairment loss is recognized for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs of disposal and value in use. In estimating the recoverable amounts of assets, various assumptions, including future cash flows to be associated with the non-current assets and discount rates, are made. If future events do not correspond to such assumptions, the recoverable amounts will need to be revised, and this may have an impact on the Group's results of operations or financial position.

Changes in Accounting Policy and Disclosures

The Group has adopted the following new and revised standards for the first time for the current year's financial statements.

Amendments to IAS 19

Defined Benefit Plans: Employee Contributions

Annual Improvements

2010-2012 Cycle

B.

Amendments to a number of IFRSs

Annual Improvements

2011-2013 Cycle

Amendments to a number of IFRSs


The nature and the impact of each amendment is described below:

(a)

Amendments to IAS 19 apply to contributions from employees or third parties to defined benefit plans. The amendments simplify the accounting for contributions that are independent of the number of years of employee service, for example, employee contributions that are calculated according to a fixed percentage of salary. If the amount of the contributions is independent of the number of years of service, an entity is permitted to recognize such contributions as a reduction of service cost in the period in which the related service is rendered. The amendments have had no impact on the Group as the Group does not have defined benefit plans.





(b)

TheAnnual Improvements to IFRSs 2010-2012 Cycle issued in December 2013 sets out amendments to a number of IFRSs. Details of the amendments that are effective for the current year are as follows:


IFRS 8Operating Segments: Clarifies that an entity must disclose the judgments made by management in applying the aggregation criteria in IFRS 8, including a brief description of operating segments that have been aggregated and the economic characteristics used to assess whether the segments are similar. The amendments also clarify that a reconciliation of segment assets to total assets is only required to be disclosed if the reconciliation is reported to the chief operating decision maker. The amendments have had no impact on the Group.


IAS 16Property, Plant and Equipment and IAS 38 Intangible Assets: Clarifies the treatment of the gross carrying amount and accumulated depreciation or amortization of revalued items of property, plant and equipment and intangible assets. The amendments have had no impact on the Group as the Group does not apply the revaluation model for the measurement of these assets.


IAS 24 Related Party Disclosures: Clarifies that a management entity (i.e., an entity that provides key management personnel services) is a related party subject to related party disclosure requirements. In addition, an entity that uses a management entity is required to disclose the expenses incurred for management services. The amendment has had no impact on the Group as the Group does not receive any management services from other entities.


(c)

TheAnnual Improvements to IFRSs 2011-2013 Cycle issued in December 2013 sets out amendments to a number of IFRSs. Details of the amendments that are effective for the current year are as follows:


IFRS 3Business Combinations: Clarifies that joint arrangements but not joint ventures are outside the scope of IFRS 3 and the scope exception applies only to the accounting in the financial statements of the joint arrangement itself. The amendment is applied prospectively. The amendment has had no impact on the Group as the Company is not a joint arrangement and the Group did not form any joint arrangement during the year.


IFRS 13Fair Value Measurement: Clarifies that the portfolio exception in IFRS 13 can be applied not only to financial assets and financial liabilities, but also to other contracts within the scope of IFRS 9 or IAS 39 as applicable. The amendment is applied prospectively from the beginning of the annual period in which IFRS 13 was initially applied. The amendment has had no impact on the Group as the Group does not apply the portfolio exception in IFRS 13.


IAS 40Investment Property: Clarifies that IFRS 3, instead of the description of ancillary services in IAS 40 which differentiates between investment property and owner-occupied property, is used to determine if the transaction is a purchase of an asset or a business combination. The amendment is applied prospectively for acquisitions of investment properties. The amendment has had no impact on the Group as the Group has no investment properties.


Issued but not yet effective International Financial Reporting Standards

The Group has not applied the following new and revised IFRSs, that have been issued but are not yet effective, in the current year's financial statements:

IFRS 9

Financial Instruments3

Amendments to IFRS 10 and IAS 28

Sale or Contribution of Assets between an Investor and its Associate or Joint Venture6

Amendments to IFRS 10, IFRS 12 and IAS 28

Investment Entities: Applying the Consolidation Exception1

Amendments to IFRS 11

Accounting for Acquisitions of Interests in Joint Operations1

IFRS 14

Regulatory Deferral Accounts5

IFRS 15

Revenue from Contracts with Customers3

IFRS 16

Leases4

Amendments to IAS 1

Disclosure Initiative1

Amendments to IAS 7

Disclosure Initiative2

Amendments to IAS 12

Deferred Tax: Recovery of Underlying Assets2

Amendments to IAS 16 and IAS 38

Clarification of Acceptable Methods of Depreciation and Amortization1

Amendments to IAS 16 and IAS 41

Agriculture: Bearer Plants1








Amendments to IAS 27

Equity Method in Separate Financial Statements1

Annual Improvements

2012-2014 Cycle

Amendments to a number of IFRSs1

———————

1

Effective for annual periods beginning on or after January 1, 2016

2

Effective for annual periods beginning on or after January 1, 2017

3

Effective for annual periods beginning on or after January 1, 2018

4

Effective for annual periods beginning on or after January 1, 2019

5

Effective for an entity that first adopts IFRSs for its annual financial statements beginning on or after 1 January 2016 and therefore is not applicable to the Group

6

In December 2015, the IASB postponed the effective date indefinitely pending the outcome of its research project on the equity method of accounting


Further information about those changes that are expected to be applicable to the Group is as follows:

In July 2014, the IASB issued the final version of IFRS 9, bringing together all phases of the financial instruments project to replace IAS 39 and all previous versions of IFRS 9. The standard introduces new requirements for classification and measurement, impairment and hedge accounting. The Group expects to adopt IFRS 9 from January 1, 2018. The Group expects that the adoption of IFRS 9 will have an impact on the classification and measurement of the Group’s financial assets and is currently assessing the impact.

The amendments to IFRS 10 and IAS 28 address an inconsistency between the requirements in IFRS 10 and in IAS 28 in dealing with the sale or contribution of assets between an investor and its associate or joint venture. The amendments require a full recognition of a gain or loss when the sale or contribution of assets between an investor and its associate or joint venture constitutes a business. For a transaction involving assets that do not constitute a business, a gain or loss resulting from the transaction is recognized in the investor’s profit or loss only to the extent of the unrelated investor’s interest in that associate or joint venture. The amendments are to be applied prospectively.

The amendments to IFRS 11 require that an acquirer of an interest in a joint operation in which the activity of the joint operation constitutes a business must apply the relevant principles for business combinations in IFRS 3. The amendments also clarify that a previously held interest in a joint operation is not remeasured on the acquisition of an additional interest in the same joint operation while joint control is retained. In addition, a scope exclusion has been added to IFRS 11 to specify that the amendments do not apply when the parties sharing joint control, including the reporting entity, are under common control of the same ultimate controlling party. The amendments apply to both the acquisition of the initial interest in a joint operation and the acquisition of any additional interests in the same joint operation. The amendments are not expected to have any impact on the financial position or performance of the Group upon adoption on January 1, 2016.

IFRS 15 establishes a new five-step model that will apply to revenue arising from contracts with customers. Under IFRS 15, revenue is recognized at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. The principles in IFRS 15 provide a more structured approach for measuring and recognizing revenue. The standard also introduces extensive qualitative and quantitative disclosure requirements, including disaggregation of total revenue, information about performance obligations, changes in contract asset and liability account balances between periods and key judgements and estimates. The standard will supersede all current revenue recognition requirements under IFRSs. The Group expects to adopt IFRS 15 on January 1, 2018 and is currently assessing the impact of IFRS 15 upon adoption.

Amendments to IAS 1 include narrow-focus improvements in respect of the presentation and disclosure in financial statements. The amendments clarify:

(i)

the materiality requirements in IAS 1;

(ii)

that specific line items in the statement of profit or loss and the statement of financial position may be disaggregated;

(iii)

that entities have flexibility as to the order in which they present the notes to financial statements; and

(iv)

that the share of other comprehensive income of associates and joint ventures accounted for using the equity method must be presented in aggregate as a single line item, and classified between those items that will or will not be subsequently reclassified to profit or loss.





Furthermore, the amendments clarify the requirements that apply when additional subtotals are presented in the statement of financial position and the statement of profit or loss. The Group expects to adopt the amendments from January 1, 2016. The amendments are not expected to have any significant impact on the Group’s financial statements.

The amendments to IAS 7 require that an entity disclose, as necessary, the following changes in liabilities arising from financing activities: (a) changes from financing cash flows; (b) changes arising from obtaining or losing control of subsidiaries or other businesses; (c) the effect of changes in foreign exchange rates; (d) changes in fair values; and (e) other changes. The IASB defines liabilities arising from financing activities as liabilities “for which cash flows were, or future cash flows will be, classified in the statement of cash flows as cash flows from financing activities.” The amendments indicate that the new disclosure requirements also apply to changes in financial assets that meet this definition. The amendments state that one way to meet the new disclosure requirements is to provide “a reconciliation between the opening and closing balances in the statement of financial position for liabilities arising from financing activities.” The Group expects to adopt the amendment on January 1, 2017 and is currently assessing the impact upon adoption.

Amendments to IAS 16 and IAS 38 clarify the principle in IAS 16 and IAS 38 that revenue reflects a pattern of economic benefits that are generated from operating business (of which the asset is part) rather than the economic benefits that are consumed through the use of the asset. As a result, a revenue-based method cannot be used to depreciate property, plant and equipment and may only be used in very limited circumstances to amortize intangible assets. The amendments are to be applied prospectively. The amendments are not expected to have any impact on the financial position or performance of the Group upon adoption on January 1, 2016 as the Group has not used a revenue-based method for the calculation of depreciation of its non-current assets.

The IASB issued IFRS 16Leases on January 13, 2016. The scope of the new standard includes leases of all assets, with certain exceptions. A lease is defined as a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration. The new standard requires lessees to account for all leases under a single on-balance sheet model (subject to certain exemptions) in a similar way to finance leases under IAS 17.  Lessees recognize a liability to pay rentals with a corresponding asset, and recognize interest expense and depreciation separately. The new standard includes two recognition exemptions for lessees – leases of ’low-value’ assets (e.g., personal computer) and short-term leases (i.e., leases with a lease term of 12 months or less). Reassessment of certain key considerations (e.g., lease term, variable rents based on an index or rate, discount rate) by the lessee is required upon certain events. Lessor accounting is substantially the same as today’s lessor accounting, using IAS 17’s dual classification approach. Early application is permitted, but not before an entity applies IFRS 15. The new standard permits a lessee to choose either a full retrospective or a modified retrospective transition approach. The new standard’s transition provisions permit certain reliefs. The Group expects to adopt IFRS 16 on January 1, 2019 and is currently assessing the impact of IFRS 16 upon adoption.

B.

Liquidity and Capital Resources

The Company’s primary liquidity needs are to fund operating expenses, capital expenditures and acquisitions. To date,As of December 31, 2023, the Company has financed its working capital requirements and capital expenditures through internally generated cash and non-interest bearingfrom prior years, our Bank Loan (as described in greater detail below), non-interest-bearing loans from the Shareholder and its affiliates. DueRelated-Party Debtholders, funds provided pursuant to the temporary suspensionCooperation Agreement, and the sale of mineral extraction3,960,000 common shares and associated warrants to purchase up to 1,980,000 common shares at Yangchongan offering price of US$1.85 per share in January 2021. See “Item 10.C. ADDITIONAL INFORMATION – Material Contracts.” In view of the cessation of the wastewater treatment business and the pre-revenue exploration stage of the Moruogu Tong Mine, the Company’s sole non-ferrous mine, it can be expectedCompany expects that the availability of internally generated funds to sustain operations will decrease for the foreseeable future. As we are actively exploring new business opportunities in lithium resources in Zimbabwe, we may face growing shortage of working capital in the near future. Although we believe that our working capital is sufficient for our present requirements and to continue our current operations over the next 12 months, we envisage engaging in further capital-raising activities in pursuit of other business opportunities in the PRC to diversify our operations as we move into our next phase of growth.

We have received letters from Feishang Group and Feishang Enterprise, entities controlled by Mr. Li Feilie, the principal beneficial shareholder of the Company, which state that Feishang Group and Feishang Enterprise will provide continuous financial support to the Group in relation to the going concern of its operations, and will not recall any amounts due to them until the resumption of mining or the infusion of other revenue-generating assets. In orderGroup has sufficient liquidity to curtail costsfinance its operations, and to the extent deemed necessary, we have laid-off personel and entered into related severance agreements with the affected employees. However, during the temporary suspension the Companythat Feishang Enterprise will continue to incur operating expenses, albeit to a lesser extent than prior to the suspension, for various functions including maintenance of normal backup systems, mine maintenance, exploration activities, mine safety maintenance and inventory sales. Feishang Group, an affiliatepay debts on behalf of the Shareholder, has confirmedGroup when needed. As such, we believe that we will be able to obtain adequate amounts of cash to meet our requirements beyond the balance due to Feishang Group as at December 31, 2015 is not required to be settled in the ensuingnext 12 months.

See Item 5.F. for a summary of our contractual obligations for future cash payments at December 31, 2015.

RevenueThe revenue and expenses of our PRC subsidiaries are denominated in Renminbi. We pay our corporate expenses in either Hong Kong dollars or US dollars. ConversionU.S. Dollars. The conversion of Renminbi into other currencies is strictly regulated by the Chinese Government. Under PRC foreign exchange rulesgovernment. See “Item 3.D. – KEY INFORMATION – Risk Factors” and regulations, payment of routine transactions under current accounts, including trade and service transactions and payment of dividends, may be made in foreign currencies without prior approval from the SAFE but are subject to procedural requirements. Strict foreign exchange control continues to apply to capital account transactions, such as direct investment and capital contribution. These transactions must be approved by the SAFE. See Item“Item 10.D. ADDITIONAL INFORMATION – Exchange Controls” for a further discussion of exchange controls in the PRC.





Under PRC laws and regulations, we are subject to various restrictions on intercompany fund transfers and foreign exchange controls. See “Item 3.D. KEY INFORMATION – Transfers of Cash and Assets Between Our Company and Our Subsidiaries” for further details of impacts on liquidity and capital resources as a result of cash and assets transfer restrictions and limitations.

As of December 31, 2015,2023, the breakdown of cash (in thousands) held in different currencies areis as follows:


Currency and Amount

 

CNY Equivalent

 

US$ Equivalent

CNY19,186

 

 

19,186

 

 

 

2,956

 

HK$14,213

 

 

11,905

 

 

 

1,834

 

US$269

 

 

1,749

 

 

 

269

 

Total

 

 

32,840

 

 

 

5,059

 

Currency and Amount   CNY Equivalent   US$ Equivalent 
CNY3,673   3,673   518 
HK$351   318   45 
US$108   762   108 
Total   4,753   671 

The Company expects to maintain a balanced portfolio of foreign currencies in order to meet its cash obligations in different currencies for its expenses, capital expenditures and acquisitions. Management does not anticipate the payment of dividends or any similar profit distribution from the Company’s PRC subsidiaries in the foreseeable future.

Cash Flows

The following table sets forth the Company’s cash flowflows (in thousands) for each of the three years ended December 31, 2013, 20142021, 2022, and 2015 including2023:

  Years Ended December 31, 
  2021  2022  2023 
  CNY  CNY  CNY  US$ 
Cash and cash equivalents at beginning of year  56,580   58,359   31,695   4,478 
Net cash (used in)/from operating activities  (12,068)  (12,786)  13,328   1,884 
Net cash from/(used in) investing activities  53,352   7,050   (1,054)  (149)
Net cash (used in)/from financing activities  (38,786)  (22,833)  (37,930)  (5,359)
Net increase/(decrease) in cash and cash equivalents  2,498   (28,569)  (25,656)  (3,624)
Effect of exchange rate changes on cash  (719)  1,905   (1,286)  (183)
Cash and cash equivalents at end of year  58,359   31,695   4,753   671 

Operating Activities

Net cash flowsgenerated from discontinued operations:

 

Years Ended December 31,

 

 

2013

 

2014

 

2015

 

 

CNY'000

 

CNY'000

 

 

CNY'000

 

Cash and cash equivalent at beginning of year

210,944

 

 

223,474

 

 

48,263

 

Net cash used in operating activities

(149,555

)

 

(60,214

)

 

(11,385

)

Net cash used in investing activities

(296,701

)

 

(39,753

)

 

(5,021

)

Net cash provided by/(used in) financing activities

462,197

 

 

(75,784

)

 

(1,415

)

Net (decrease) increase in cash

15,941

 

 

(175,751

)

 

(17,821

)

Effect of exchange rate changes on cash

(3,411

)

 

540

 

 

2,398

 

Cash and cash equivalent at end of year

*223,474

 

 

48,263

 

 

32,840

 

——————

*

Includeoperating activities was CNY13.33million (US$1.88 million) in 2023, compared to net cash andused in operating activities of CNY12.79 million in 2022.The increase of cash equivalentinflows from operations in 2023 was mainly attributable to a discontinued operation amounting to CNY146,883 (US$22,626).

The following table sets forth the Company’s financial condition and liquidity at the dates indicated:

 

Years Ended December 31,

 

 

2013

 

2014

 

2015

 

Current ratio

1.17x

 

 

1.65x

 

 

0.63x

 

Working capital (CNY'000)

429,067

 

 

24,697

 

 

(21,890

)

Gearing ratio

—

 

 

—

 

 

—

 


2015 vs 2014decreased operating loss in 2023.

Net cash used byin operating activities was CNY11.39CNY12.79 million (US$1.75 million) in 2015 and CNY60.212022, compared to CNY12.07 million (US$9.27 million) in 2014. They were mainly caused by the operating losses2021. No material fluctuation was noted for the corresponding years.year ended 2022 and 2021.

47 

Investing Activities

Net cash used in investing activities was CNY5.02CNY1.05 million (US$0.770.15 million) in 2015,2023, as compared with CNY39.75 million (US$6.12 million) in 2014. Theto net cash usedfrom investing activities of CNY7.05 million in 2022. The cash inflows from investing activities in 2022 mainly represents loan interests received from loan due from Shenzhen Chaopeng Investment Co., Limited (“Shenzhen Chaopeng”), an unrelated company.

Net cash from investing activities was primarily comprisedCNY7.05 million in 2022, compared to CNY53.35 million in 2021. The cash inflows in 2022 mainly represents loan interests received from loan due from Shenzhen Chaopeng, an unrelated company. The cash inflows in 2021 mainly represents repayments from Xizang Xingwang, a related party, of the payment for the acquisition of property and equipment.an unsecured, non-interest bearing loan extended by Shenzhen Qianhai, our wholly owned subsidiary until July 28, 2023.

Financing Activities

Net cash used in financing activities was CNY1.42CNY37.93 million (US$0.225.36 million) in 2015,2023, as compared with CNY75.78 million (US$11.67 million) net cash provided in 2014. Theto net cash used in financing activities was primarily comprised of the net repayment to the related parties.

2014 vs 2013

NetCNY22.83 million in 2022. The increase in cash used by operatingoutflows in financing activities was CNY60.21 million (US$9.27 million)the combined effect of a decrease in 2014the amount of net repayments to related parties in 2023 and CNY149.56 million (US$23.04 million) in 2013. They were mainly caused by the operating losses for the corresponding years. The net cash used in 2013 included CNY150.10 million (US$23.12 million) by the discontinued Coal segment spun offoutflows as a result of disposal of PST Technology on January 22, 2014.

Net cash used in investing activities was CNY39.75 million (US$6.12 million) in 2014, as compared with CNY296.70 million (US$45.70 million) in 2013. The net cash used in investing activities was primarily comprised of the payment for the acquisition of property and equipment, including CNY293.39 million (US$45.19 million) for the year of 2013 by the discontinued Coal segment spun off on January 22, 2014.





July 28, 2023.

Net cash used in financing activities was CNY75.78CNY22.83 million (US$11.67 million) in 2014, as2022, compared with CNY462.20to CNY38.79 million (US$71.20 million) net cash provided in 2013.2021. The netdecrease in cash used in financing activities was a result of a decrease in 2014 was primarily comprisedthe amount of the net cash paid during the distribution of CHNR's 100% equity interest of Feishang Anthracite amountingrepayments to CNY96.81 million (US$14.91 million), partlyrelated parties in 2022, partially offset by the proceeds from our registered public offering of common shares and concurrent private placement of warrants in January 2021.

Equity Financing

On February 20, 2024, we raised approximately US$3.01 million in net proceeds from interest-bearing loans amounting to CNY35.00through our registered direct offering of common shares and private placement of warrants after deducting placement agent’s fees and other fees and expenses. On January 20, 2021, we raised approximately US$6.37 million in net proceeds through our registered direct offering of common shares and private placement of warrants after deducting placement agent’s fees and other fees and expenses. See “Item 10.C. ADDITIONAL INFORMATION – Material Contracts.”

Capital Expenditures

Our capital expenditures were incurred primarily in connection with the purchase of property, plant and equipment for office use. Our capital expenditures were CNY0.09 million, CNY0.02 million and CNY0.01 million (US$5.39 million). The net1,729) in 2021, 2022 and 2023, respectively. We will continue to make capital expenditures to meet the expected growth of our operations and expect cash providedgenerated from internally generated cash from prior years, bank loans, non-interest-bearing loans from the Related-Party Debtholders, and the proceeds from private placements in financing2021 and 2024 will continue to meet our capital expenditure needs in the foreseeable future. However, as we are actively exploring new business opportunities in lithium resources in Zimbabwe, we may face growing shortage of working capital in the near future, and we envisage engaging in further capital-raising activities in 2013 was primarily comprisedpursuit of other business opportunities in the PRC to diversify our operations as we move into our next phase of growth. In addition, Feishang Group Limited and Feishang Enterprise Group Company Limited, related parties which have provided non-interest-bearing loans, have confirmed they will not recall any amounts due to them until the Group is in a position to settle the amounts due without having a detrimental impact on the financial resources of the netGroup.

Material Cash Requirement

Other than the ordinary cash provided byrequirements for our operations and capital expenditures, our material cash requirements as of December 31, 2023 primarily include our contractual obligations.

In February 2023, the discontinued Coal segment spun off on January 22, 2014.

AfterCompany entered into the Spin-Off in January 2014,Zimbabwe SPA with Feishang Group, Top Pacific, Mr. Li Feilie and Mr. Yao Yuguang to acquire Williams Minerals, which owns the mining permit for a Zimbabwean lithium mine for maximum consideration of US$1.75 billion (subject to the terms and conditions of the Zimbabwe SPA). The Company does not hold any interest-bearing loans and mining rights payables.have the adequate cash to pay for the purchase consideration. In addition we do not expect material capital expenditures for the existing non-ferrous mines. As such, the absence of cash flows from discontinued operations is considered positive to the Company’s future liquidity and capital resources.promissory note payment arrangement as contemplated by the Zimbabwe SPA, the Company may issue restricted or non-restricted CHNR shares at a discount to the market price if market sentiment permits.


Contractual Obligations

The following table summarizes our contractual obligations (in thousands) as of December 31, 2023:

  Payments due by period 
  Total  Within 1 year  1 to 3 years  3 to 5 years  Thereafter 
  CNY  CNY  CNY  CNY  CNY 
                
Lease liabilities  366   366   —   —   — 
Long-term debt obligations, including current portion    —   —   —   —   — 
   366   366   —   —   — 

Our liquidity, includingprimary lease liabilities are composed of motor vehicles and office and warehouse rent expenses. For details about our working capital, has been affected by many factors including:long-term debt obligations, see “Item 7.B. – MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS – Related Party Transactions.” 

·Other Known Contractual and Other Obligations

Funding of our on-going mining activities through internally generated funds;

·

The timing of expenditures in relationPlease refer to when our accounts receivable are paid;

·

Our ability to secure bank financing as and when required, on acceptable terms;

·

Our difficulty in accessing US capital markets to fund PRC operations; and

·

A lack of development of US trading markets for our securities, which has hampered our ability to use our securities as currency to fund acquisitions, business combinations and similar transactions.


See Item 5.F.“Item 7.B. – MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS – Related Party Transactions” for a tabular payment schedulediscussion of capital commitments of the Company.amounts due to and from our affiliates.

Except as disclosed above and discussed under “Item 7.B. – MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS – Related Party Transactions – Acquisition of FARL Shares in Exchange for Newly Issued Company Shares,” “Item 7.B. – MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS – Related Party Transactions – Acquisition of PST Technology,” “Item 7.B. – MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS – Related Party Transactions –Acquisition of Williams Minerals,” and “Item 7.B. – MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS – Related Party Transactions –Sale of PST Technology,” there have been no significant changes in the Company’s financial condition and liquidity during the years ended December 31, 2013, 20142021, 2022 and 2015. The2023.

Under the Cooperation Agreement, Jijincheng Mining, rather than the Company, believes that its internally generated fundsis the party to any contracts relating to exploratory work relating to the northern part of Moruogu Tong Mine. In the event we determine to pursue a mining permit and thereafter engage in mining at the Moruogu Tong Mine, we will be sufficientrequired, among other things, for mine construction and development, to satisfy its anticipated working capital needsbuild roads and make provision for water and electricity at least the next 12 months. However, we continue to evaluate expansion and growth prospects as they are presented to us from time to time and will continue to do so in the ordinary course. We anticipate that theremine site. There will be significant capital expense for these and other projects. We intend to fund those capital expenditures ahead infrom the eventproceeds of additional acquisitions.loans from our Related-Party Debtholders, if available, payments pursuant to the Cooperation Agreement and, to the extent deemed necessary, bank borrowings.

C.

Research and development, patents and licenses, etc.Off Balance Sheet Arrangements

The Company did not incur any significant amounts on company-sponsored research and development activities during each of the last three fiscal years.

D.

Trend information

Except as set forth in the following paragraph, the Company does not believe that there have been recent trends in production, sales and inventory, the state of the order book and costs and selling prices since the latest financial year, nor any known trends, uncertainties, demands, commitments or events that are reasonably likely to have a material effect of the Company’s net sales or revenues, income from continuing operations, profitability, liquidity or capital resources, or that would cause reported financial information not necessarily to be indicative of future operating results or financial condition.

Management is cautiously optimistic about the PRC economy, although it is difficult to predict the demand for and the future price trend of iron and other ore, and recent trend information suggests a less than robust less optimism for the price of metals in the near term. These uncertainties may continue to have an impact on the current and future operating results and the financial condition of the Company.

E.

Off balance sheet arrangements

Under SEC regulations, we are required to disclose ourhas no off-balance sheet arrangements that have had or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that arewould be material to investors. An off-balance sheet arrangement means a transaction, agreement or contractual arrangement to which

C.Research and Development, Patents and Licenses, Etc.

The Company did not make any entity that is not consolidated with us is a party, under which we have:

·

Obligations under certain guarantee contracts;

·

A retained or contingent interest in assets transferred to an unconsolidated entity or similar arrangement that serves as credit, liquidity or market risk support to that entity for such assets;

·

Any obligation under a derivative instrument that is both indexed to our stock and classified in stockholder’s equity, or not reflected, in our statement of financial position; and





·

Any obligation arising out of a material variable interest held by us in an unconsolidated entity that provides financing, liquidity, market risk or credit risk support to us, or engages in leasing, hedging orsignificant expenditures on Company-sponsored research and development servicesactivities during each of the last three fiscal years.

D.Trend Information

We believe that the following factors which impact our various revenue and expense items (as described below) have had, and will continue to have, a significant effect on the development of our business, financial position and results of operation.

In February 2023, the Company entered into the Zimbabwe SPA with us.Feishang Group, Top Pacific, Mr. Li Feilie and Mr. Yao Yuguang to acquire Williams Minerals, which owns the mining permit for a Zimbabwean lithium mine. Under the Zimbabwe SPA, it is expected that the Company will indirectly acquire all interests in Williams Minerals in the second fiscal quarter of 2023, and that the Company’s “ownership” (as defined in the Zimbabwe SPA) of the Zimbabwean lithium mine will vest cumulatively, region by region from 2024 through 2026, contingent upon the issuance of independent technical reports and the Company’s full settlement of the purchase consideration in cash and restricted shares. For each relevant region of the lithium mine, until the Company’s ownership vests, the Sellers will maintain legal possession and control, including the right of exploration, sale of lithium, and the revenue derived therefrom, as well as liability for operational costs and third-party claims. On April 14, 2023, the Company announced that it completed its due diligence investigation with satisfactory results and decided to proceed with the Acquisition. The Company paid an aggregate of $35 million by way of promissory notes (instead of cash) as a deposit on April 21, 2023, and will pay an aggregate of $140 million by way of promissory notes and/or cash as an initial installment. Completion of the Acquisition is contingent upon the satisfaction of a number of conditions, including, among other things, the transfer of ownership interests in Williams Minerals from the Sellers to the intermediate holding company; the issuance of independent technical reports, the actual quantity of qualified lithium oxide metal resources proven or estimated to exist in each mining area covered by the relevant report, and the Company’s full settlement of the purchase consideration in cash and restricted shares. There is no guarantee that the Acquisition will close or be completed at the anticipated valuation and terms, or at all.

On December 22, 2023, the Company entered into the Amendment Agreement to the Zimbabwe SPA by and among Feishang Group and Top Pacific (China) Limited (together, the “Sellers”), and the respective beneficial owner of the Sellers, Mr. Li Feilie and Mr. Yao Yuguang with the parties thereto. As the Sellers are still in the process of satisfying conditions precedent to the closing of the Acquisition in accordance with the Zimbabwe SPA, including but not limited to obtaining requisite governmental approvals, the parties entered into the Amendment Agreement to extend the long stop date for closing the Acquisition from December 31, 2015,2023 to December 31, 2024.

49 

Our exploration and mining operations are highly speculative due to the high-risk nature of our exploration and mining business, which may include the acquisition, financing, exploration, and development of mineral properties and operation of mines. There is no assurance that our current or future exploration programs at the Zimbabwean lithium mine, the Moruogu Tong Mine or any future acquisitions will result in the identification of deposits that can be mined profitably. The economic viability of a mining project may be adversely affected by many factors, including failure to identify sufficient ore reserves, reduced recovery rates, a rise in production costs as a result of inflation or other technical problems, and significant price fluctuations in the commodities markets. There is no guarantee that the Acquisition of the Zimbabwean lithium mine will close or be completed at the anticipated valuation and terms, or at all. In addition, the fact that the northern part of Moruogu Tong Mine is currently being explored under a Cooperation Agreement means that our share in any future profits from mineral extraction at the mine is effectively reduced, the details of which are still subject to negotiation. We currently do not generate revenues from our exploration and mining operations, and we will have to fund exploration expenses until we are able to generate sufficient revenue to pay them.

During 2023, the world witnessed the continuation of the Russia-Ukraine conflict, the Israel Hamas war, the Red Sea crisis, persistent high inflation and interest rate in many major economies, which led to disruptions to and notable fluctuations in the commodity market worldwide. The impacts of the pandemic faded away, and the Chinese government stepped up policy efforts to stabilize the economy and speed up recovery. Macroeconomic policies will largely impact economic cycles, growth rates, inflation and interest rates, and eventually result in changes in supply and demand dynamics and price fluctuations in the markets we intend to serve. Industrial policies will more directly impact specific industries and to some extent determine market access, market potential, intensity of competition and profitability. In the near future, we are likely to see a series of highly supportive macroeconomic and industrial policies in various fields, but the extent and speed of economic recovery remains highly uncertain due to risks relating to the real estate sector, local government debt, the ongoing geopolitical tensions and high interest rates of major economies, which might adversely affect our business operations and profitability. For further details on the impact of the pandemic, government policies, market uncertainties and interest rate hikes, please refer to “Item 3.D. KEY INFORMATION – Risk Factors – Risks Relating to Our Mine Exploration Activities in Inner Mongolia – Volatility in the market prices of metals may adversely affect the results of our operations,” and “Item 5.A. OPERATING AND FINANCIAL REVIEW AND PROSPECTS – Operating Results – Impact of Government Policies on the Company’s Operations.”

Other than as disclosed above and elsewhere in this annual report, the Company has no off-balance sheet arrangementsdoes not believe that there have been any other recent known trends, uncertainties, demands, commitments or events that are reasonably likely to have a current or futurematerial effect on our financial condition, changes in financial condition,the Company’s revenues, or expenses, results ofincome from continuing operations, profitability, liquidity capital expenditures or capital resources, or that is materialwould cause reported financial information not necessarily to investors.be indicative of future operating results or financial condition.

E.Critical Accounting Estimates


Not applicable. 

F.New IFRS Pronouncements

Tabular disclosure

For a detailed discussion of contractual obligations

Contractual Obligations as at December 31, 2015

 

Payments due by period

 

Total

 

2016

 

2017-2018

 

2019-2020

 

Later years

 

 

CNY’000

 

CNY’000

 

CNY’000

 

CNY’000

 

CNY’000

Operating lease obligations

 

362

 

362

 

—

 

—

 

—

Assets retirement obligations

 

4,639

 

—

 

—

 

—

 

4,639

Total

 

5,001

 

362

 

—

 

—

 

4,639


new accounting pronouncements, please see Notes 2.4 and 2.5 to our audited consolidated financial statements.

G.

Safe Harbor

50 

The safe harbor provided in Section 27A of the Securities Act and Section 21E of the Exchange Act, or the statutory safe harbors, applies to forward-looking information provided pursuant to Item 5.F above. For our cautionary statement on the use of forward looking statements in this Annual Report, see “Forward-Looking Statements” on page iii of this Annual Report.

ITEM 6.DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

ITEM 6.

A.Directors and Senior Management

DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A.

Directors and Senior Management

Executive Officers and Directors

The following table identifies the current directors and executive officers of the Company, and sets forth their ages and positions with the Company:

NameAgePosition

Name

Age

Position

Wong Wah On Edward

60

Li Feilie

50

Chairman of the Board of Directors, President and Chief Executive Officer

Tam Cheuk Ho

53

61

Director

Wong Wah On Edward

Zhu Youyi

52

43

Director

Lam Kwan Sing

46

Non-employee Director

Ng Kin Sing

53

Non-employee Director

Yip Wing Hang

49

Non-employee Director

Yue Ming Wai Bonaventure

48

Chief Financial Officer and Corporate Secretary

Zou Yu45Vice President
Peng Wenlie56Vice President
Lam Kwan Sing54Non-employee Director
Ng Kin Sing61Non-employee Director
Yip Wing Hang57Non-employee Director
Li Feilie58Director of Subsidiaries


Mr. Li Feilie was appointed as a director, Chief Executive Officer and Chairman of the Board in February 2006 following consummation of the acquisition of Feishang Mining. He has served as a director of Feishang Anthracite since January 2010, its Chairman since December 2013, and its Chief Executive Officer from December 2013 to March 2016. Mr. Li has served as a director of Feishang Mining since September 2004. He served as director of Wuhu Feishang from December 2001 to July 2011. Mr. Li has been the chairman of Feishang Enterprise, WFID and Wuhu Port Co., Ltd., companies beneficially owned by him, since June 2000, from December 2001 to July 2011 and since October 2002, respectively. He also served as director of Pingxiang Iron & Steel Co., Limited from July 2003 to December 2012. From March 2002 to April 2004, Mr. Li served as the chairman of Fujian Dongbai (Group) Co. Ltd. Mr. Li graduated from Peking University with a Bachelor’s degree and a Master’s degree in Economics.





Mr. Tam Cheuk Ho was appointed as a director in April 2015. Mr. Tam has served as the director of Feishang Anthracite since February 2013. He served as a director of the Company from December 1993 to December 1994 and from December 1997 to January 2014. He was also the chief financial officer and executive vice president of the Company, from December 2004 to January 2008, and from January 2008 to January 2014, respectively. He served as the chief financial officer and a director of China Resources from December 1994 to December 2004. From July 1984 through December 1991, he worked at Ernst & Young, Hong Kong where his most recent position was audit manager, and from February 1992 through September 1992, as financial controller of China Nuclear Industry 23 International Corporation Limited, a listed company in Hong Kong, where he was responsible for accounting and financial functions. From October 1992 through December 1994, Mr. Tam was finance director of Hong Wah (Holdings) Limited. He is a fellow member of both the Hong Kong Institute of Certified Public Accountants and the Association of Chartered Certified Accountants. He is also a certified public accountant (practising) in Hong Kong. He holds a Bachelor of Business Administration degree from the Chinese University of Hong Kong.

Mr. Wong Wah On Edward was appointed as a director in April 2015.2015, and as Chairman of the Board of Directors, President and Chief Executive Officer in August 2016. Mr. Wong has served as the director of Feishang Anthracite since February 2013. He served as a director of the Company from January 1999 to January 2014, as its financial controller from December 2004 to January 2008, as its secretary from February 1999 to January 2014, and as its chief financial officer from January 2008 to January 2014. He servedMr. Wong is a co-owner and has been principally employed as secretary, financial controller and a director of China Resources from December 1997 to December 2004.Anka, a privately held company, since April 2008. Mr. Wong ishas also served as an independent non-executive director of Quali-Smart Holdings Limited, a company listed in Hong Kong since September 2015. From July 1988 through October 1992, he worked at Ernst & Young, Hong Kong where his most recent position was audit supervisor. From October 1992 through December 1994, Mr. Wong was the deputy finance director of Hong Wah (Holdings) Limited. He received a professional diploma in Company Secretaryship and Administration from the Hong Kong Polytechnic University. He is a fellow member of both the Hong Kong Institute of Certified Public Accountants and the Association of Chartered Certified Accountants, and an associate member of the Hong Kong Institute of Chartered Secretaries. He is also a certified public accountant (practising)(practicing) in Hong Kong.


Mr. Tam Cheuk Ho was appointed as a director in April 2015. Mr. Tam has served as the director of Feishang Anthracite since February 2013. He served as a director of the Company from December 1993 to December 1994 and from December 1997 to January 2014. He was also the Chief Financial Officer and Executive Vice President of the Company, from December 2004 to January 2008, and from January 2008 to January 2014, respectively. Mr. Tam is also a director and co-owner of Anka. He is a fellow member of both the Hong Kong Institute of Certified Public Accountants and the Association of Chartered Certified Accountants. He is also a certified public accountant (practicing) in Hong Kong. He holds a Bachelor of Business Administration degree from the Chinese University of Hong Kong.

Mr. Zhu Youyi joined the Company in 2009 and has served the Company for over 10 years with various roles in accounting, internal audit and compliance functions. He was appointed as Chief Financial Officer and Corporate Secretary in July 2020. Prior to joining the Company, Mr. Zhu worked at the audit department of an international certified public accountant firm, providing audit services to clients in a variety of business sectors. Mr. Zhu holds a bachelor’s degree in Accountancy from Southwestern University of Finance and Economics, and is a member of the Chinese Institute of Certified Public Accountants.

Mr. Zou Yu joined the Company as a Vice President in October 2020. From March 2015 to September 2020, Mr. Zou served as the general manager of the investment management center of Feishang Enterprise, where he was responsible for mergers and acquisitions in the healthcare sector involving projects aggregating approximately CNY800 million. From May 2011 to May 2014, he served as assistant to the chairman and the head of the business development department of Shanghai American-Sino Medical Group, where he was in charge of the investment in and operation of premier private hospitals. Mr. Zou has also worked with several private equity funds. Mr. Zou has more than 10 years of experience working and investing in the healthcare sector, and has participated in projects involving acquisitions, mergers and divestments with an aggregate value exceeding CNY3 billion. Mr. Zou graduated from Sun Yat-Sen University in June 2007, with a Master of Business Administration degree. He also holds a bachelor’s degree in Economics from the Tianjin University of Commerce.

Dr. Peng Wenlie joined the Company as a Vice President in March 2021. Dr. Peng has been engaged in the development of natural medicines and investment consulting for more than 20 years. He currently serves as director of Guangxi Huaxia Herbal Medicine Co. Ltd., and as director of Guangxi Huaxia Herbal Medicine Sales Co. Ltd. He previously served as Director of the Biomedicine Investment Department of Feishang Enterprise. While at Feishang Enterprise, Dr. Peng led the selection of target companies for investment in the biomedical space, conducting due diligence and appraising risks and returns as part of the investment decisions. Earlier in his career, Dr. Peng was a professor in the Life Sciences School of Sun Yat-Sen University. He was awarded a Doctor of Science degree from Sun Yat-Sen University in 1999 and a Master of Science degree in 1996.

Mr. Lam Kwan Sing has been a non-employee director and a member of CHNR’s audit committeeAudit Committee and nominatingNominating and governanceGovernance committee since December 2004, and a member of its compensation committeeCompensation Committee since November 2007. He served as a director and a member of the audit committee of China Resources from March 2003 until completion of the Redomicile Merger. From August 2010 to present, Mr. Lam has been the executivean independent non-executive director of Rising DevelopmentSummit Ascent Holdings Limited, a Hong Kong listed company, where he is responsible for corporate development.since June 2019. From May 2008November 2016 to July 2010,June 2022, Mr. Lam was the chief executive officer and executive director of Neo-China Land Group (Holdings) Limited,SFund International Holdings Ltd., a Hong Kong listed company. In 2007, Mr. Lam served as the executiveHe is also an independent non-executive director of ForefrontAceso Life Science Group, a Hong Kong listed company. From 2002 to 2006, Mr. Lam served as the executive director of New Times Group Holdings Limited, a Hong Kong listed company. From 2000 to 2002, Mr. Lam was the business development manager of China Development Corporation Limited, a Hong Kong listed company. From 1997 to 2000, he was the business development manager of Chung Hwa Development Holdings Limited, a Hong Kong listed company. From 1995 to 1997, Mr. Lam was the assistant manager (Intermediaries supervision) of Hong Kong Securities and Futures Commission.company, since August 2012. Mr. Lam holds a Bachelor’sbachelor’s degree in Accountancy from the City University of Hong Kong.

Mr. Ng Kin Sing has been a non-employee director and a member of CHNR’s audit committeeAudit Committee and nominatingNominating and governance committeeGovernance Committee since December 2004, and a member of its compensation committeeCompensation Committee since November 2007. He served as a director and a member of the audit committee of China Resources from February 1999 until completion of the Redomicile Merger. From March 2012 to present,March 2023, Mr. Ng has beenwas the director of Sky Innovation Limited, a private investment company. From April 1998 to February 2012, Mr. Ng was the managing director of Action Plan Limited, a private securities investment company. From November 1995 until March 1998, Mr. Ng was sales and dealing director for NatWest Markets (Asia) Limited; and from May 1985 until October 1996, he was the dealing director of BZW Asia Limited, an international securities brokerage house. Mr. Ng holds a Bachelor’sbachelor’s degree in Business Administration from the Chinese University of Hong Kong.

Mr. Yip Wing Hang has been a non-employee director and a member of CHNR’s audit committeeAudit Committee and nominatingNominating and governance committeeGovernance Committee since June 2006, and a member of its compensation committeeCompensation Committee since November 2007. From October 2010January 2018 to the present, Mr. Yip has been the senior director of Winsome Asset Management Ltd., where he is responsible for managing high-net-worth clients’ assets on a discretionary basis. Mr. Yip has served as adjunct associate professor at the Institute of China Business, the University of Hong Kong SPACE since 2013. From October 2010 to December 2017, Mr. Yip was the marketing director of Athena Financial Services Limited where he iswas responsible for the sale and distribution of financial products. From February 2002 to September 2010, he was the marketing director of Hantec Investment Consultant Limited. From May 1997 to February 2002, Mr. Yip was the senior manager of CCIC Finance Limited. Mr. Yip holds a Mastersmaster’s degree in Sustainability from the University of Cambridge and a master’s degree in Accounting and Finance from the Lancaster University, UK.





United Kingdom. He is also a Chartered Banker in the United Kingdom.

Mr. Yue Ming Wai Bonaventure was appointed as the Chief Financial Officer and Corporate Secretary in April 2015. Mr. Yue has been the chief financial officer and the company secretary of Feishang Anthracite since January 2014. He served as the financial controller of the Company from April 2008 to January 2014. From July 1990 to December 1992, Mr. Yue worked in the audit department of Ernst & Young, Hong Kong. From December 1992 to August 1993, he worked as an accountant in Sun Hung Kai & Co. Limited, a company listed in Hong Kong. From January 1995 to August 1996, he was the assistant financial controller and the company secretary of Nam Hing Holdings Limited, a company listed in Hong Kong. From August 1996 to April 1998, Mr. Yue served as an accounting manager of Leading Spirit (Holdings) Company Limited, a company then listed in Hong Kong. From November 1998 through April 2003, Mr. Yue was an associate director of a private registered investment advisory company. From April 2003 through October 2007, he served as the chief financial officer and the company secretary of a public manufacturing company. He has alsoLi Feilie served as a director, Chief Executive Officer and Chairman of the Board of CHNR from February 2006 to August 2016. He currently serves as director of Feishang Mining, Newhold, Pineboom, China Coal, Feishang Dayun, Feishang Yongfu and FMH Services, each of which is a subsidiary of CHNR. While Mr. Li is not an officer or director of the Company, he ultimately controls the Company through his services as an officer and/or director of certain of the Company’s subsidiaries, his beneficial ownership of the Company’s shares, his ability to elect the Board of Directors and his direct ownership of a private company engagingsubstantial amount of Company debt. In addition to his directorships, Mr. Li provides strategic guidance relating to the various businesses in which he and his controlled companies invest. Through his related companies, Mr. Li also provides funding to support the provisionCompany’s operating expenses and indirectly holds a substantial amount of corporate services since March 2003. From September 2007 to April 2008,the Company’s debt (see “Item 7.B. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS – Related Party Transactions,” below). Mr. Yue wasLi has been the financial controller of Enerchina Holdings Limited, a listed company in Hong Kong. He has also been appointed as the company secretarychairman of Feishang Non-metal Materials Technology Limited, a related company listed on the Growth Enterprise, Market of Hong KongWuhu City Feishang Industrial Co., Ltd. and Wuhu Feishang Port Co., Ltd., companies beneficially owned by him, since June 2000, from December 2001 to July 2015,2011 and an independent non-executive director of A.Plus Group Holdings Limited, a company listed on the Growth Enterprise Market of Hong Kong since March 2016.October 2002, respectively. Mr. YueLi graduated from Hong Kong BaptistPeking University with a Bachelor of Business Administrationbachelor’s degree and was awarded a Master of Sciencemaster’s degree in accounting and finance from the University of Manchester. He is a fellow member of the Hong Kong Institute of Chartered Secretaries, the Hong Kong Institute of Certified Public Accountants, and the Institute of Chartered Accountants in England & Wales. Mr. Yue is also a member of Chartered Accountants Australia & New Zealand, and a member accredited in business valuation of the American Institute of Certified Public Accountants.Economics.


Key Employees

The following table identifies the senior management of the metal segment,Bayannaoer Mining, and his agetheir ages and position with the Company:


positions:

NameAgePosition

Name

Age

Position

Yu Jun

56

Xu Chengyin

54

Director and General Manager of Wuhu Feishang

Bayannaoer Mining
Yao Yangli59Deputy Chief Engineer of Bayannaoer Mining


Mr. Xu obtained graduate certificatesYu Jun was appointed as general manager of Bayannaoer Mining in heavy metal smeltingJanuary 2015. He has served as finance manager and chief financial officer of Bayannaoer Mining since 2005. Mr. Yu has over 25 years of experience in corporate finance. Prior to joining Bayannaoer Mining, he served in the positions of finance manager and financial controller of several companies including subsidiary companies of Sichuan University. Mr. Yu graduated from Changsha Metallurgical Industry School in July 1981, industrial enterprise management from Wuhu Branchthe University of the Economic Management Correspondence United Institute in December 1988Electronic Science and economic management from Correspondence Institute of the Party School of the Central Committee of the Communist PartyTechnology of China in December 1999. Mr. Xu1989 and was awarded the qualificationsa bachelor’s degree from Southwestern University of smeltingFinance and Economics in 2004.

Mr. Yao Yangli was appointed as deputy chief engineer by Wuhu City Title Reform Leading Committeeof Bayannaoer Mining in September 1993, senior economist by Wuhu City Personnel Bureaucharge of exploration work in January 2009 and senior professional manager by Research Center for Professional ManagersApril 2012. Mr. Yao has almost 30 years of experience in March 2010.mineral exploration. Prior to joining Wuhu Feishang,Bayannaoer Mining, he served as chief geological prospecting engineer, exploration project leader and chief engineer in several companies. Mr. Xu was the Deputy General Manager of Anhui Xinke New Materials Co., Ltd., which is a China “A” share listed company. Mr. Xu has more than twenty years experience in the metal smelting industry. Mr. Xu ChengyinYao has been appointed as distinguished geologist consultant for the DirectorLand and General ManagerResources Department of Wuhu FeishangBayannaoer Municipal Government since November 2011. He has been the chairman, executive director2012. Mr. Yao graduated from Guilin College of Geology (now known as Guilin University of Technology) with a bachelor’s degree in 1988 and chief executive officer of Feishang Non-metal Materials Technology Limited,holds a related company listed on the Growth Enterprise Market of Hong Kong since July 2015.senior engineer accreditation.


52 

Family Relationships and Other Arrangements


Except as set forth above, thereThere are no family relationships between any of the individuals identified above. There are no arrangements or understandings between major shareholders, customers, suppliers or others pursuant to which any of the individuals identified above was selected as a director or member of senior management.management, other than the fact that each was elected by Mr. Li Feilie.






Board Diversity

B.

CompensationOn August 6, 2021, the SEC approved Nasdaq’s proposal to amend its listing standards to encourage greater board diversity and to require board diversity disclosures for Nasdaq-listed companies. Pursuant to the amended listing standards, CHNR, as a foreign private issuer, is required to have at least one diverse board member or explain the reasons for not meeting this objective by 2023. Furthermore, a board diversity matrix is required to be included in a foreign private issuer’s annual report on Form 20-F, containing certain demographic and other information regarding members of our Board of Directors. The board diversity matrix is set out below.


Board Diversity Matrix (As of April 30, 2023)
Country of Principal Executive OfficesHong Kong
Foreign Private IssuerYes
Disclosure Prohibited under Home Country LawNo
Total Number of Directors5

             
           Did Not Disclose 
  Female  Male  Non-Binary  Gender 
Part I: Gender Identity            
Directors 0  5  0  0 
             
Part II: Demographic Background     0      
Underrepresented Individual in Home Country Jurisdiction     0      
LGBTQ+     0      
Did Not Disclose Demographic Background            

Disclosure Pursuant to Rule 5605(f)(3) of the Nasdaq Listing Rules

Rule 5605(f)(2)(B) of the Nasdaq Listing Rules requires us to have, or to explain why we do not have, at least two members of our Board of Directors who are “Diverse” directors, at least one of whom self-identifies as “Female,” subject to transition periods specified by Rule 5605(f)(7) of the Nasdaq Listing Rules. For purposes of Rule 5605(f)(2)(B), the term “Diverse” means an individual who self-identifies as one or more of Female, LGBTQ+, or an underrepresented individual based on national, racial, ethnic, indigenous, cultural, religious or linguistic identity in the country of our principal executive offices; and the term “Female” means an individual who self-identifies her gender as a woman, without regard to the individual’s designated sex at birth.

Rule 5605(f)(7) of the Nasdaq Listing Rules requires us to have, or explain why we do not have, (i) by December 31, 2023, at least one Diverse director and (ii) by December 31, 2025, at least two Diverse directors, at least one of whom self-identifies as Female.

As of the date of this annual report, our Board of Directors has determined that we will satisfy the requirements of Rule 5605(f)(2)(B) of the Nasdaq Listing Rules by explaining why we will not have any Diverse directors by December 31, 2023.

We acknowledge and support the general principles behind the diversity objectives set forth in Rule 5606(f)(2)(B) of the Nasdaq Listing Rules. However, we believe that, for business reasons, it would not be appropriate for us to seek to change the current composition of our Board of Directors for the purpose of meeting those objectives, in view of the current state of our business and the competitive environment we face. The industry in the Chinese mainland market in which we operate is fragmented and competitive. In addition, we have faced in the past few years, and may continue to face in the future, significant uncertainties due to the negative impact of the COVID-19 pandemic on the Chinese economy in general, and on our business operations in particular. Accordingly, we believe that maintaining a stable and efficient Board of Directors is critical for us to meet these challenges and ensure our long-term success. We believe that our current corporate governance structure, in particular as to the composition of our Board of Directors, is suitable for the current scale of and goals for our business and operations. All members of our Board of Directors have served as our directors for a number of years and are familiar with our company’s history and business operations; provide us with a variety of personal, professional and industry backgrounds, with appropriate experience and skill sets for a business enterprise such as ours; and have track records over the years of having made sound business decisions that have served the best interests of our company and shareholders. We intend to continually assess our industry and the status of our business and may decide in the future, should future circumstances make it appropriate, to seek to meet the diversity objectives contemplated by Rule 5606(f)(2)(B) of the Nasdaq Listing Rules.

B.Compensation

Executive Compensation


The following table sets forth the amount of compensation that was paid, earned and/or accrued and awards made under the Company’s equity compensation plan during the fiscal year ended December 31, 2015,2023, to each of the individuals identified in Item 6(A)“Item 6.A. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES – Directors and Senior Management” above.


Name

Name

Compensation

(US$)

Number of
options

to purchase

Common Sharescommon shares

Exercise price

(US$(US$/share)

Expiration

date

Directors and Executive Officers

Li Feilie

Lam Kwan Sing

1

15,385

—

—

—

Li Feilie1

1———
Ng Kin Sing15,385———
Peng Wenlie1———
Tam Cheuk Ho

2

1

—

—

—

Wong Wah On Edward

2

1

—

—

—

Yue Ming Wai Bonaventure

1

—

—

—

Lam Kwan Sing

7,692

—

—

—

Ng Kin Sing

7,692

—

—

—

Yip Wing Hang

7,692

15,385

—

—

—

Senior Management

Zhu Youyi

28,466

—

—

—

Xu Chengyin*

Zou Yu

16,664

1

—

—

—

Key Employees
Yu Jun10,948———
Yao Yangli26,996———

* On January 8, 2016, Mr. Xu Chengyin resigned as general manager of Wuhu Feishang and Mr. Li Suming, the director and duputy general manager of Wuhu Feishang, was appointed as the general manager of Wuhu Feishang.———————

1Mr. Li serves as director of certain subsidiaries of the Company. The amount does not include payments under an office sharing agreement pursuant to which Feishang Enterprise, a company controlled by Mr. Li, provides our subsidiary Feishang Management with certain shared office space (see “Item 7.B. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS – Related Party Transactions – Commercial Transactions with Related Companies,” below).

The Company and its subsidiaries have not set aside or accrued any amounts to provide pension, retirement or similar benefits to the Company’s officers.

On October 1, 2008, we entered into a Service Agreement with Li Feilie, our Chairman and Chief Executive Officer with an intital term of three years and shall continue thereafter unless and until terminated by a party on not less than three months’ notice, with an annual fee of US$1.00, plus such equity awards as may from time to time be determined by our Compensation Committee.

2The amounts do not include payments to Anka under an office sharing agreement pursuant to which Anka provides certain accounting, administrative and secretarial services to the Company (see “Item 7.B. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS – Related Party Transactions – Commercial Transactions with Related Companies,” below). Anka is jointly owned by Messrs. Wong Wah On Edward and Tam Cheuk Ho.

On April 2, 2015, we entered into Service Agreementsservice agreements with each of Yue Ming Wai Bonaventure, our Chief Financial Officer, andMr. Tam Cheuk Ho (a director) and Mr. Wong Wah On Edward our directors, with(our Chairman, Chief Executive Officer and President). Each of the agreements is for an initial term of one year and, thereafter, shall continuecontinues unless and until terminated by aeither party on not less than one months’month’s notice. Each of the agreements also provides for the payment to eachthe individual of an annual fee of US$1.00, plus such equity awards as may from time to time be determined by our Compensation Committee.

On March 7, 2019, we entered into an employment agreement with Mr. Yu Jun for his services as general manager of Bayannaoer Mining for a term of one year expiring on March 6, 2020. The agreement was renewed on March 7, 2020, March 7, 2021, and March 7, 2022, respectively, with the same initial terms. For his services, Mr. Yu receives a basic salary at the rate of CNY5,000 (US$706) per month, and is eligible for a bonus. Mr. Yu also enjoys certain perquisites and is eligible for bonuses. These amounts are included in the table above.

On April 23, 2019, we entered into an employment agreement with Mr. Yao Yangli for his services as deputy chief engineer of Bayannaoer Mining for a term of one year expiring on April 22, 2020. The agreement was renewed on April 23, 2020, March 23, 2021, and March 23, 2022, respectively, with the same initial terms. For his services, Mr. Yao receives a basic salary at the rate of CNY14,666 (US$2,072) per month, and is eligible for a bonus. Mr. Yao also enjoys certain perquisites and is eligible for bonuses. These amounts are included in the table above.

On July 14, 2020, we entered into a service agreement with Mr. Zhu Youyi (our Chief Financial Officer and Corporate Secretary). The agreement is for an initial term of one year and, thereafter, continues unless and until terminated by either party on not less than one month’s notice. The agreement also provides for the payment of an annual fee of US$1.00, plus such equity awards as may from time to time be determined by our Compensation Committee.

On October 22, 2020, we entered into a service agreement with Mr. Zou Yu (Vice President). The agreement is for an initial term of one year and, thereafter, continues unless and until terminated by either party on not less than one month’s notice. The agreement also provides for the payment of an annual fee of US$1.00, plus such equity awards as may from time to time be determined by our Compensation Committee.

On March 22, 2021, we entered into a service agreement with Dr. Peng Wenlie (Vice President). The agreement is for an initial term of one year and, thereafter, continues unless and until terminated by either party on not less than one month’s notice. The agreement also provides for the payment of an annual fee of US$1.00, plus such equity awards as may from time to time be determined by our Compensation Committee.

On January 1, 2019, we entered into an employment agreement with Mr. Ma Xiongbing for his services as general manager of Shanghai Onway for a term of five years expiring on December 31, 2024. For his services, Mr. Ma receives a basic salary at the rate of CNY31,200 (US$4,408) per month. Mr. Ma Xiongbing is no longer considered as an executive officer of the Company after the sale of PST Technology.

There are no current contracts, agreements or understandings to increase the annual cash compensation payable to any of our executive officers or directors. For each of the three years ended December 31, 2015,2021, 2022 and 2023, no increases in cash compensation were determined by the Compensation Committee under the Service Agreements,service agreements, and we paid or accrued $nil, $nilnil, nil and $nil,nil, respectively, for cash compensation to our executive officers for their services as such.

The Company has no other employment contracts with any of its executive officers or directors and maintains no retirement, fringe benefit or similar plans for the benefit of its executive officers or directors. The Company may, however, enter into employment contracts with its officers and key employees, adopt various benefit plans and begin paying compensation to its officers and directors as it deems appropriate to attract and retain the services of such persons. The Company and its subsidiaries have not set aside or accrued any amounts to provide pension, retirement or similar benefits to the Company’s directors.





Non-Employee Director Compensation

We pay our independent directors a monthly director’s fee equal to HK$10,000 (US$1,282). We do not otherwise pay fees to directors for their attendance at meetings of the Board of Directors or of committees; however, we may adopt a policy of making such payments in the future. We reimburse out-of-pocket expenses incurred by directors in attending Board and committee meetings. During the fiscal year ended December 31, 2023, no long-term incentive plans or pension plans were in effect with respect to any of the Company’s executive officers or directors.

Securities Authorized for Issuance Under Equity Compensation Plans

The following table sets forth information relating to our outstanding stock option plans as of December 31, 2015:the date of this annual report:

Plan Category

Number of
Securities to be

issued upon exercise of

outstanding options,
warrants

and rights

(a)

Weighted-average
exercise price of
outstanding options,

warrant and rights

Number of
securities remaining
available for future

issuance under equity

compensation

plans (excluding
securities reflected
in column (a))

Equity compensation plans approved by security holders

2003 Equity Compensation Plan

—

N/A

—

2014 Equity Compensation Plan

—

N/A

4,982,183

Equity compensation plans not approved by security holders

—

N/A

—

Total

—

N/A

4,982,183


Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights
(a)		  Weighted-average exercise price of outstanding options, warrants and rights  Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) 
Equity compensation plans approved by security holders            
2014 Equity Compensation Plan  1,620,000  $3.115   353,153 
Equity compensation plans not approved by security holders  —   N/A   — 
Total  1,620,000  $3.115   353,153 

Stock Option PlansPlan

The 2014 Equity Compensation Plan (the “2014 Plan”) was authorized by our Board of Directors on June 20, 2014, and was ratified and approved by members on July 21, 2014.

The purposes of the 2014 Plan are to:

•Encourage ownership of our common shares by our officers, directors, employees and advisors;

·

•Provide additional incentive for them to promote our success and our business; and

Encourage ownership of our common stock by our officers, directors, employees and advisors;

·

Provide additional inventive for them to promote our success and our business; and

·

•Encourage them to remain in our employ by providing them with the opportunity to benefit from any appreciation of our common shares.

The 2014 Plan is administered by the Board of Directors or a committee designated by the Board (the “Plan Committee”). The 2014 Plan allows the Board or Plan Committee to grant various incentive equity awards not limited to stock options. The Company has reserved a number of common shares equal to 20% of the issued and outstanding common shares of the Company, from time-to-time,time to time, for issuance pursuant to options granted (“Plan Options”) or for restricted stock awarded (“Stock Grants”) under the 2014 Plan. Stock Appreciation Rightsappreciation rights may be granted as a means of allowing participants to pay the exercise price of Plan Options. Stock Grants may be made upon such terms and conditions as the Board or Plan Committee determines. Stock Grants may include deferred stock awards under which receipt of Stock Grants is deferred, with vesting to occur upon such terms and conditions as the Board or Plan Committee determines.

The Board or Plan Committee willmay determine, from time to time, those of our officers, directors, employees and consultants to whom Stock Grants and Plan Options will be granted, the terms and provisions of the respective Stock Grants and Plan Options, the dates such Plan Options will become exercisable, the number of shares subject to each Plan Option, the purchase price of such shares and the form of payment of such purchase price. Plan Options and Stock Grants will be awarded based upon the fair market value of our common shares at the time of the award. All questions relating to the administration of the 2014 Plan and the interpretation of the provisions thereof are to be resolved at the sole discretion of the Board or Plan Committee.

4,982,183A total of 1,675,579 common shares (as adjusted by a five-to-one share combination on April 3, 2023) have been reserved for issuance under the 2014 Plan. NoPlan as of December 31, 2023. On July 14, 2022, option awards have yet been madegranted to certain eligible individuals covering an aggregate of 1,620,000 (as adjusted by a five-to-one share combination on April 3, 2023) of the Company’s common shares under the 2014 Plan. The 2014 Plan terminates on June 19, 2024.

The 2003 Equity Compensation Plan (the “2003 Plan”) terminated on December 13, 2013. There are no outstanding (unexercised) uptions under the 2003 Plan. During the years ended December 31, 2011, 2012 and 2013, the Committee did not grant any options to employees and officers to purchase the Company’s common shares under the 2003 Plan.

55 

C.

C.Board Practices

As provided by our AmendedMemorandum and RestatedArticles, each director is to hold office for a three-year term expiring immediately followingat the annual meeting of shareholders held three years followingin the annual meeting at which hethird year after his or she was elected.





In April 2015, Ms. Ma Sin Ling and Ms. Woo Ming Yee resigned as Class III directors and Messrs. Tam Cheuk Ho and Wong Wah On Edward were appointed as Class III directors to fill the vacancies created by the resignations of Ms. Ma and Ms. Woo. The resignations of Ms. Ma and Ms. Woo did not result from any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.her appointment.

At the annual meeting of shareholders in 2015,2023, Messrs. Ng Kin Sing were elected to serve as Class I director until the annual meeting to be held in 2026. Messrs. Lam Kwan Sing and Yip Wing Hang were elected to serve as Class II directors until immediately following the annual meeting to be held in 20182024. Messrs. Wong Wah On Edward and until their successors have been duly elected and qualified. Messrs. Li Feilie and Ng Kin SingTam Cheuk Ho serve as Class IIII directors until immediately following the annual meeting to be held in 2017 and until their successors have been duly elected and qualified. Messrs. Tam Cheuk Ho and Wong Wah On Edward serve as Class III directors until immediately following the annual meeting to be held in 2016 and until their successors have been duly elected and qualified.2025.

Messrs. Lam Kwan Sing, Yip Wing Hang and Ng Kin Sing isare each an “independent” director“independent director” as such term is used in applicable rules and regulations of the Securities and Exchange CommissionSEC and in NASDAQNasdaq Marketplace Rule 5605(a)(2). We are not required to maintain a Board of Directors consisting of a majority of independent directors based upon an exemption from NASDAQNasdaq requirements applicable to foreign private issuers whose home jurisdiction does not require the board of directors to consist of a majority of independent directors.

Our officers are elected annually at the meeting of the Board of Directors meeting following each annual meeting of shareholders, and hold office until their respective successors are duly elected and qualified, subject to their earlier death, resignation or removal, and the terms of applicable employment agreements.

Commencing July 1, 2006, we payPlease see “Item 6.B. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES – Compensation – Executive Compensation,” above, for information regarding our independent directors a monthly directors’ fee equal to HK$5,000 (US$641). We do not otherwise pay fees to directors for their attendance at meetings of the Board of Directors or of committees; however, we may adopt a policy of making such payments in the future. We will reimburse out-of-pocket expenses incurred by directors in attending boardservice contracts with Messrs. Tam Cheuk Ho and committee meetings. During the fiscal year ended December 31, 2015, no long-term incentive plans or pension plans were in effect with respect to any of the Company’s executive officers or directors.Wong Wah On Edward.

Audit Committee

Our Board of Directors has established an audit committeeAudit Committee that operates pursuant to a written charter. Our audit committee,Audit Committee, whose members currently consistsconsist of Yip Wing Hang, Lam Kwan Sing and Ng Kin Sing, is principally responsible for ensuring the accuracy and effectiveness of the annual audit of the financial statements. The duties of the audit committeeAudit Committee include, but are not limited to:

•Appointing and supervising our independent registered public accounting firm;

·

•Assessing the organization and scope of the company’s interim audit function;

appointing and supervising our independent registered public accounting firm;

•Reviewing the scope of audits to be conducted, as well as the results thereof;

·

•Approving audit and non-audit services provided to us by our independent registered public accounting firm; and

assessing the organization and scope of the company’s interim audit function;

·

reviewing the scope of audits to be conducted, as well as the results thereof;

·

approving audit and non-audit services provided to us by our independent registered public accounting firm; and

·

overseeing our financial reporting activities, including our internal controls and procedures and the accounting standards and principles applied.

•Overseeing our financial reporting activities, including our internal controls and procedures and the accounting standards and principles applied.

Each member of the Audit Committee is an independent“independent director,” as such term is used in applicable rules and regulations of the Securities and Exchange CommissionSEC and in NASDAQNasdaq Marketplace Rule 5605(a)(2).

Nominating and Corporate Governance Committee; Shareholder Nominees for Director

Our Board of Directors has established a Nominating and Corporate Governance Committee that operates pursuant to a written charter. The current members of the Nominating and Corporate Governance Committee are Ng Kin Sing, Lam Kwan Sing and Yip Wing Hang. Each member of the Nominating and Corporate Governance Committee is an independent“independent director,” as such term is used in NASDAQNasdaq Marketplace Rule 5605(a)(2).

The Nominating and Corporate Governance Committee is responsible for providing oversight on a broad range of issues surrounding the composition and operation of our Board of Directors. In particular, the responsibilities of the Nominating and Corporate Governance Committee include:

•Identifying individuals qualified to become members of the Board of Directors;

·

•Determining the slate of nominees to be recommended for election to the Board of Directors;

•Reviewing corporate governance principles applicable to us, including recommending corporate governance principles to the Board of Directors and administering our Code of Ethics;

•Assuring that at least one Audit Committee member is an “audit committee financial expert” within the meaning of regulatory requirements; and

•Carrying out such other duties and responsibilities as may be determined by the Board of Directors.

identifying individuals qualified to become members of the Board of Directors;

·

determining the slate of nominees to be recommended for election to the Board of Directors;

·

reviewing corporate governance principles applicable to us, including recommending corporate governance principles to the Board of Directors and administering our Code of Ethics;




56 


·

assuring that at least one Audit Committee member is an “audit committee financial expert” within the meaning of regulatory requirements; and

·

carrying out such other duties and responsibilities as may be determined by the Board of Directors.

The Nominating and Corporate Governance Committee is required to meet at least once annually, and more frequently if the committee deems it to be appropriate. The committee may delegate authority to one or more members of the committee;committee, provided that any decisions made pursuant to such delegated authority are presented to the full committee at its next scheduled meeting. Discussions pertaining to the nomination of directors are required to be held in executive session.

The Nominating and Corporate Governance Committee will consider candidates for directors proposed by shareholders, although no formal procedures for submitting the names of candidates for inclusion on management’s slate of director nominees have been adopted. Until otherwise determined by the Nominating and Corporate Governance Committee, a member who wishes to submit the name of a candidate to be considered for inclusion on management’s slate of nominees at the next annual meeting of shareholders must notify our Corporate Secretary, in writing, no later than June 30 of the year in question of its desire to submit the name of a director nominee for consideration. The written notice must include information about each proposed nominee, including name, age, business address, principal occupation, telephone number, shares beneficially owned and a statement describing why inclusion of the candidate would be in our best interests. The notice must also include the proposing member’s name and address, as well as the number of shares beneficially owned. A statement from the candidate must also be furnished, indicating the candidate’s desire and ability to serve as a director. Adherence to these procedures is a prerequisite to the board’sBoard’s consideration of the shareholder’s candidate. Once a candidate has been identified, the Nominating and Corporate Governance Committee reviews the individual’s experience and background, and may discuss the proposed nominee with the source of the recommendation. If the Nominating and Corporate Governance Committee believes it to be appropriate, committee members may meet with the proposed nominee before making a final determination whether to include the proposed nominee as a member of management’s slate of director nominees to be submitted for election to the board.Board.

Compensation Committee

Our Board of Directors has established a Compensation Committee that operates pursuant to a written charter. The current members of the Compensation Committee are Ng Kin Sing, Lam Kwan Sing and Yip Wing Hang. Each member of the Compensation Committee is an independent“independent director,” as such term is used in NASDAQNasdaq Marketplace Rule 5605(a)(2).

The Compensation Committee is responsible for:

•Formulating corporate goals and objectives relevant to compensation payable to the CEO and other executive officers;

·

•Evaluating the performance of the CEO and other executive officers in light of these goals and objectives;

Formulating corporate goals and objectives relevant to compensation payable to the CEO and other executive officers;

•Recommending to the Board for its adoption and approval compensation payable to the CEO and other executive officers, including (a) annual base salary level, (b) annual incentive opportunity level, (c) long-term incentive opportunity level, (d) employment agreements, severance arrangements, and change in control agreement/provisions, in each case as, when and if appropriate, and (e) any special or supplemental benefits;

·

•Administering and supervising the Company’s incentive compensation plans, including equity compensation plans;

Evaluating the performance of the CEO and other executive officers in light of these goals and objectives;

•Recommending to the Board for its adoption and approval awards to be made under the Company’s incentive compensation plans, including equity compensation plans; and

·

Recommending to the board for its adoption and approval, compensation payable to the CEO and other executive officers, including (a) annual base salary level, (b) annual incentive opportunity level, (c) long-term incentive opportunity level, (d) employment agreements, severance arrangements, and change in control agreement/provisions, in each case as, when and if appropriate, and (e) any special or supplemental benefits;

·

Administering and supervising the Company’s incentive compensation plans, including equity compensation plans;

·

Recommending to the board for its adoption and approval, awards to be made under the Company’s incentive compensation plans, including equity compensation plans; and

·

•Generally supporting the Board of Directors in carrying out its overall responsibilities relating to executive compensation.

The Compensation Committee is required to meet at least once annually, and more frequently if the committee deems it to be appropriate. The committee may delegate authority to one or more members of the committee; provided, that any decisions made pursuant to such delegated authority are promptly communicated to all other committee members. The committee’s current compensation decisions are reflective of our current financial position.

NASDAQNasdaq Requirements

Our common shares are currently listed on the NASDAQNasdaq Capital Market and, for so long as our securities continue to be listed, we will remain subject to the rules and regulations established by NASDAQNasdaq Stock Market as being applicable to listed companies. NASDAQNasdaq has adopted, and from time-to-timetime to time adopts, amendments to its Marketplace Rule 5600 that imposesimpose various corporate governance requirements on issuers of listed securities. Section (a)(3) of Marketplace Rule 5615 provides that foreign private issuers such as our company are required to comply with certain specific requirements of Marketplace Rule 5600, but, as to the balance of Marketplace Rule 5600, foreign private issuers are not required to comply if the laws of their home jurisdiction do not otherwise mandate compliance with the same or substantially similar requirement.





We currently comply with thosethe applicable specifically mandated provisions of Marketplace Rule 5600. In addition, we have elected to voluntarily comply with certain other requirementsprovisions of Marketplace Rule 5600, notwithstanding that our home jurisdiction does not mandate compliance with the same or substantially similar requirements; although we may in the future determine to cease voluntary compliance with those provisions of Marketplace Rule 5600 that are not mandatory. However, we have elected not to comply with the following provisions of Marketplace Rule 5600, since the laws of the British Virgin IslandsBVI do not require compliance with the same or substantially similar requirements:

•A majority of our directors are not independent as defined by Nasdaq rules;

·

•Our independent directors do not hold regularly scheduled meetings in executive session (rather, all Board members may attend all meetings of the Board of Directors);

a majority of our directors are not independent as defined by NASDAQ rules (rather, one-half of the members of our Board of Directors are independent);

•The compensation of our executive officers is recommended but not determined by an independent committee of the Board or by the independent members of the Board of Directors; and our CEO is not prevented from being present in the deliberations concerning his compensation;

·

•Related party transactions are not required to be reviewed;

our independent directors do not hold regularly scheduled meetings in executive session (rather, all board members may attend all meetings of the Board of Directors);

•We are not required to solicit member approval of stock plans or securities issuances, including those in which our officers or directors may participate; share issuances that will result in a change in control; the issuance of our shares in related party acquisitions or other acquisitions in which we may issue 20% or more of our outstanding shares; or below market price issuances of 20% or more of our outstanding shares to any person; and

·

the compensation of our executive officers is recommended but not determined by an independent committee of the board or by the independent members of the Board of Directors; and our CEO may be present in the deliberations concerning his compensation;

·

related party transactions are not required to be reviewed and we are not required to solicit member approval of stock plans, including: those in which our officers or directors may participate; stock issuances that will result in a change in control; the issuance of our stock in related party acquisitions or other acquisitions in which we may issue 20% or more of our outstanding shares; or, below market issuances of 20% or more of our outstanding shares to any person; and

·

we are not required to hold an in-person annual meeting to elect directors and transact other business customarily conducted at an annual meeting (rather, we complete these actions by written consent of holders of a majority of our voting securities).

•We are not required to hold an in-person annual meeting to elect directors and transact other business customarily conducted at an annual meeting (rather, we complete these actions by written consent of holders of a majority of our voting securities).

We may in the future determine to voluntarily comply with one or more of the foregoing provisions of Marketplace Rule 5600.

D.Employees

D.

Employees

As of December 31, 2015 (a) mining operationsthe date of this annual report, we employed 117 personsa total of nine employees on a full timefull-time basis consisting of six employees engaged in metal exploration, and (b) thethree executive and administrative employees in corporate segment employed seven persons on a full time basis.services. The Company believes that its relations with employees are generally good.

The following table sets out the number of employees (excluding the discontinued coal mine segment) at the endas of each of the past two financial years,December 31, 2021, 2022, and 2023, including their principal category of activity and geographic location.

 

 

 

Years Ended December 31,

 

   Years Ended December 31, 

 

 

 

2014

 

2015

 

   2021 2022 2023 

 

 

 

 

 

 

 

 

       

Hong Kong

 

Accounting, administration and management

 

 3

 

 

 3

 

 Accounting, administration and management  2   2   2 

 

 

 

 3

 

 

 3

 

   2   2   2 

 

 

 

 

 

 

 

 

            

The PRC

 

Accounting, administration and management

 

 38

 

 

 18

 

 Accounting, administration and management (Shenzhen)  1   1   1 

 

Sales and quality inspection

 

 5

 

 

 5

 

 Accounting, administration and management (Bayannaoer)  4   4   4 

 

Purchasing and supplies

 

 12

 

 

 8

 

 Accounting, administration and management (Shanghai Onway)  40   36   — 

 

Production

 

 217

 

 

 76

 

 Sales and purchasing  4   3   — 

 

Cashier

 

 1

 

 

 1

 

 Cashier  4   4   1 

 

Others

 

 27

 

 

 13

 

 Construction management  19   16   — 

 

 

 

 300

 

 

121

 

 Mining exploration  1   1   1 

 

 

 

 

 

 

 

 

   73   65   9 

Total

 

 

 

303

 

 

124

 

   75   67   9 






E.

E.Share Ownership

The following table sets forth, as of April 22, 2016,3, 2024, the share ownership of the Company’s common shares by each of our directors, executive officers and key employees.by:

·each of the individuals disclosed in response to Item 6.B. of this annual report; and
·each person known to us to beneficially own more than 5% of our common shares.

As of April 22, 2016, there were 24,910,916The calculations in the table below are based on 9,865,767 common shares issued and outstanding. outstanding as of April 3, 2024, excluding a total of 1,190,297 common shares that represent common shares underlying the Warrants that are issuable upon exercise of the Warrants by cash and without adjustment.

58 

Unless otherwise indicated, each person has sole investment and voting power with respect to all shares shown as beneficially owned. The term “beneficial owner” of securities refers to any person who, even if not the record owner of the securities, has or shares the underlying benefits of ownership. These benefits include the power to direct the voting or the disposition of the securities or to receive the economic benefit of ownership of the securities. A person also is considered to be the “beneficial owner” of securities that the person has the right to acquire within 60 days by option or other agreement. Beneficial owners include persons who hold their securities through one or more trustees, brokers, agents, legal representatives or other intermediaries, or through companies in which they have a “controlling interest”,interest,” which means the direct or indirect power to direct the management and policies of the entity. The Company’s directors and executive officers, and Mr. Li Feilie, do not have different voting rights than other shareholders of the Company.

Name of Beneficial Owner

 

Amount and Nature of
Beneficial Ownership

 

Percent of Class

 

 

 

 

 

 

 

 

Li Feilie

 

 

14,780,593

(1)

 

 

59.33%

 

 

Tam Cheuk Ho

 

 

281,926

 

 

 

  1.13%

 

 

Wong Wah On Edward

 

 

400,000

 

 

 

  1.61%

 

 

Lam Kwan Sing

 

 

—

 

 

 

—

 

 

Ng Kin Sing

 

 

—

 

 

 

—

 

 

Yip Wing Hang

 

 

—

 

 

 

—

 

 

Xu Chengyin

 

 

—

 

 

 

—

 

 

Yue Ming Wai Bonaventure

 

 

—

 

 

 

—

 

 

Officers and directors as a group (8 persons)

 

 

15,462,519

 

 

 

62.07%

 

 

———————

Name of Beneficial Owner Amount and Nature of
Beneficial Ownership		  Percentage of Class 
Directors and Executive Officers        
Li Feilie  5,371,553(1)  54.45%
Wong Wah On Edward  80,000   0.81%
Tam Cheuk Ho  56,386   0.57%
Lam Kwan Sing  —   — 
Ng Kin Sing  —   — 
Peng Wenlie  —   — 
Yao Yangli  —   — 
Yip Wing Hang  —   — 
Yu Jun  —   — 
Zhu Youyi  —   — 
Zou Yu  —   — 
Officers and directors as a group (11 persons)  5,507,939   55.83%
Principal Shareholders        
Li Feiwen  770,773(2)  7.36%
Woo Chun Kei Kackie  740,000(3)  6.98%
Alto Opportunity Master Fund, SPC – Segregated Master Portfolio B  649,806(4)  6.23%

(1)

Consists† For each person and group included in this column, percentage ownership is calculated by dividing the number of (a) 14,480,593 outstanding common shares held in the name of Feishang Group, a British Virgin Islands corporation that is whollybeneficially owned by Mr. Li,such person or group by the sum of the total number of shares outstanding and (b) 300,000 outstanding commonthe number of shares held by Mr. Li.such person or group has the right to acquire upon exercise of option, warrant or other right within 60 days after the date of this Annual Report.


ITEM 7.Except as indicated otherwise below, the business address of our directors and executive officers is Room 2205, 22/F, West Tower, Shun Tak Centre,168-200 Connaught Road Central, Sheung Wan, Hong Kong, People’s Republic of China.

MAJOR SHAREHOLDERS

(1)Mr. Li is not an officer or director of CHNR but is an officer and/or director of certain of our subsidiaries, and ultimately controls the Company through his beneficial ownership of our shares, his ability to elect the Board of Directors and his ownership of a substantial amount of Company debt. This number consists of (a) 5,311,553 outstanding common shares held in the name of Feishang Group, a BVI corporation that is wholly owned by Mr. Li, and (b) 60,000 outstanding common shares held by Mr. Li.

(2)This number consists of (a) 170,773 outstanding common shares held in the name of Mr. Li, and (b) 600,000 options held in his name that is exercisable within 60 days of April 30, 2024.

(3)This number consists of 740,000 options held in the name of Mr. Woo that is exercisable within 60 days of April 30, 2024.

(4)This number represents (a) 91,855 outstanding common shares held in the name of Alto Opportunity Master Fund, SPC - Segregated Master Portfolio B, a hedge fund raised by Ayrton Capital LLC, and (b) 557,951 common shares issuable upon exercise of certain warrants held by Alto Opportunity Master Fund, SPC - Segregated Master Portfolio B. Ayrton Capital LLC, the investment manager to Alto Opportunity Master Fund, SPC – Segregated Master Portfolio B, has discretionary authority to vote and dispose of the shares held by Alto Opportunity Master Fund, SPC - Segregated Master Portfolio B and may be deemed to be the beneficial owner of these shares. Waqas Khatri, in his capacity as Managing Member of Ayrton Capital LLC, may also be deemed to have investment discretion and voting power over the shares held by Alto Opportunity Master Fund, SPC - Segregated Master Portfolio B. Alto Opportunity Master Fund, SPC - Segregated Master Portfolio B and Mr. Khatri each disclaim any beneficial ownership of these shares. The address of Ayrton Capital LLC is 55 Post Rd West, 2nd Floor, Westport, CT 06880.

Please refer to the discussion of our equity compensation plan and securities authorized for issuance thereunder under “Item 6.B. DIRECTORS, SENIOR MANAGEMENT AND RELATED PARTY TRANSACTIONSEMPLOYEES – Compensation – Securities Authorized for Issuance Under Equity Compensation Plans” above.

A.F.       Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation

Not Applicable.

ITEM 7.MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A.Major Shareholders

Major Shareholders

Major Shareholders

The following table sets forth, as of April 22, 2016,Please refer to the knowledge of management, the share ownership of each person who is the beneficial owner of more than 5% of our outstanding common shares.

As of April 22, 2016, there were 24,910,916 common shares issued and outstanding. Unless otherwise indicated, each person has sole investment and voting power with respect to all shares shown as beneficially owned. The term “beneficial owner” of securities refers to any person who, even if not the record owner of the securities, has or shares the underlying benefits of ownership. These benefits include the power to direct the voting or the disposition of the securities or to receive the economic benefit of ownership of the securities. A person also is considered to be the “beneficial owner” of securities that the person has the right to acquire within 60 days by option or other agreement. Beneficial owners include persons who hold their securities through one or more trustees, brokers, agents, legal representatives or other intermediaries, or through companies in which they have a “controlling interest”, which means the direct or indirect power to direct the management and policies of the entity. The Company’s major shareholders do not have different voting rights than other shareholders of the Company.


Name of Beneficial Owner

 

Amount and Nature of
Beneficial Ownership

 

Percent of Class

 

 

 

 

 

 

 

 

Li Feilie

 

 

14,780,593

(1)

 

 

59.33%

 

 

———————

(1)

Consists of (a) 14,480,593 outstanding common shares held in the name of Feishang Group, a British Virgin Islands corporation that is wholly owned by Mr. Li, and (b) 300,000 outstanding common shares held by Mr. Li.





“Item 6.E. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES – Share Ownership.”

Significant Changes in Ownership

TheIn January 2021, we issued 3.96 million common shares in a registered offering, and concurrently privately placed warrants exercisable for up to 1.98 million common shares. See “Item 10.C. ADDITIONAL INFORMATION – Material Contracts.” In July 2021, we issued 3.0 million common shares, and transferred our 120 million shares of Feishang Anthracite, as well as approximately CNY10.3 million (US$1.5 million), to Feishang Group in exchange for all outstanding shares of PST Technology and the transfer to us of approximately CNY130.0 million (US$18.4 million) of PST Technology’s outstanding debt previously owed to Mr. Li Feilie. On July 28, 2023, we transferred 100% equity interest of PST Technology to Feishang Group, together with PST Technology’s outstanding payable owned to the Company, was advised that in December 2014, Rosetta Stone Capital Limited, whose 2,250,000 shares then representedfor consideration of approximately 9.03%CNY95,761,119, comprising: (i) CNY-34,197,300, the fair value of 100% equity interest of PST Technology as determined by the independent valuation report dated July 28, 2023; (ii) CNY 129,958,419, the book value of PST Technology’s outstanding payable owed to the Company. See “Item 4.A. – Information on the Company – History and Development of the Company’s outstandingCompany – Acquisition and Sale of PST Technology.” In February 2024, we issued 1.49 million common shares disposed of its sharesin a registered offering, and concurrently privately placed warrants exercisable for up to two unrelated third parties. There1.19 million common shares. See “Item 10.C. ADDITIONAL INFORMATION – Material Contracts.” Other than the foregoing events, there have been no other significant changes in the percentage of ownership held by anythe major shareholder during the past three years.

Geographic Breakdown of Shareholders

Based upon a review of our shareholder records as of December 31, 2015,April 4, 2024, on that date our common shares were held of record by approximately 173180 persons, 149158 of whom, who heldholding approximately 28.9%37.8% of our outstanding common shares on that date, were located in the United States (host country). Shares registered in the name(s) of intermediaries were assumed to be held by residents of the same country in which the intermediary was located.

Control

To our knowledge, (a) there are no arrangements the operation of which may, at a subsequent date, result in a change in control of the Company, and, (b) except as otherwise disclosed in this Annual Report,annual report, we are not directly or indirectly owned or controlled by any other corporation, by any foreign government or by any other natural or legal person, severally or jointly.

B.

B.Related Party Transactions

Employment Agreements and Indemnification Agreements

See “Item 6. Directors, Senior Management and Employees—6.B. Compensation—Employment Agreements and Indemnification Agreements.”

Share Incentives

See “Item 6. Directors, Senior Management and Employees—6.B. Compensation—Share Incentive Plan.”

Other Related Party Transactions

In 2023, we received an aggregate amount of CNY78,52 million (US$12.11 million) from Feishang Group, one of our principal shareholders, in the form of interest-free loans to us.

We have received letters from Feishang Group and Feishang Enterprise, entities controlled by Mr. Li Feilie, the principal beneficial shareholder of the Company, both dated May 15, 2023 which state that Feishang Group and Feishang Enterprise will provide continuous financial support (in the form of interest-free loans) to us in relation to the going concern of our operations, including not recalling any amounts due to them until we are in a position to settle the amounts due without having a detrimental impact on our financial resources, and that Feishang Enterprise will pay debts on our behalf when needed. As far as the Company understands, there are no limitations on the amount, provision or duration of support from Feishang Group or Feishang Enterprise.

Feishang Enterprise and Feishang Group are each beneficially owned by Mr. Li Feilie, the principal beneficial owner of the Company, and members of his family. Mr. Li is also the former Chief Executive Officer and Chairman of the Company and currently serves as a director of certain subsidiaries of the Company. Mr. Wong Wah On Edward, the Chief Executive Officer and Chairman of the Company, is also a director of certain affiliates of Feishang Group.

60 

Acquisition of FARL Shares in Exchange for Newly Issued Company Shares

On August 17, 2020, the Company entered into a sale and purchase agreement with Feishang Group pursuant to which the Company issued 9,077,166 of the Company’s common shares, no par value, to Feishang Group, in exchange for 120 million shares of FARL, with an approximate aggregate value of HK$87,522,000 (determined at a price of HK$1.006 per share, representing the average closing price of FARL on the five trading days before August 17, 2020, adjusted for a 27.5% discount based on an independent valuation report). Feishang Group is the largest stockholder in the Company, and is wholly owned by Mr. Li Feilie, who also beneficially owns 53.53% of the outstanding equity of FARL. The 120 million shares of FARL were transferred as part of the consideration for the acquisition of all the outstanding shares of PST Technology in July 2021.

Transfer of Equity Interests of Yangpu Lianzhong

On April 28, 2021, the Company’s subsidiary China Coal entered into an equity transfer agreement to transfer 100% of the equity interests of Yangpu Lianzhong Mining Co., Limited (“Yangpu Lianzhong”) to the Company’s external related party, Shenzhen Feishang Energy Investment Co., Limited (“Feishang Energy”), for a total consideration of CNY103.767 million (US$14.66 million). Rather than receiving cash as a result of this transaction, the consideration offset amounts due to Feishang Energy under a series of creditor right transfer agreements. Please see Note 28 of our audited consolidated financial statements for more information. Feishang Energy is a wholly owned subsidiary of Feishang Enterprise, which is controlled by our principal beneficial owner Mr. Li Feilie. Because of the transfer of the equity interests, Yangpu Lianzhong is no longer a subsidiary of the Company.

Acquisition and Sale of PST Technology

On July 27, 2021, the Company entered into the PST Technology SPA with Mr. Li Feilie pursuant to which the Company issued three million restricted shares of the Company’s common shares, and transferred its 120 million shares of Feishang Anthracite, as well as approximately CNY10.3 million (US$1.5 million), to Feishang Group in exchange for all outstanding shares of PST Technology Limited and the transfer to the Company of approximately CNY130.0 million (US$18.4 million) of PST Technology’s outstanding debt previously owed to Mr. Li, which debt was eliminated upon consolidation. PST Technology, through its wholly owned subsidiaries, owns a 51% equity interest in Shanghai Onway. Shanghai Onway is principally engaged in the development of rural wastewater treatment technologies, the provision of equipment and materials for rural wastewater treatment, undertaking EPC projects and PPP projects in relation to rural wastewater treatment, and the provision of consulting and professional technical services. The total value of the consideration that the Company provided to Mr. Li was approximately CNY104.1 million (US$14.7 million), which amount was a 20% discount to the valuation (including the assigned debt) of PST Technology provided by an independent valuation firm.

On July 28, 2023, the Company entered into a Sale and Purchase Agreement with Feishang Group Limited (“Feishang Group”). Pursuant to the agreement, the Company agreed to sell 100% equity interest of PST Technology to Feishang Group, together with PST Technology’s outstanding payable owed to the Company, for consideration of approximately CNY95,761,119 comprising: (i) CNY -34,197,300, the fair value of 100% equity interest of PST Technology as determined by the independent valuation report dated July 28, 2023; (ii) CNY 129,958,419, the book value of PST Technology’s outstanding payable owed to the Company.

PST Technology, through its wholly owned subsidiaries, owns a 51% equity interest in Shanghai Onway and Shanghai Onway’s subsidiaries which are principally engaged in the development of rural wastewater treatment technologies, the provision of equipment and materials for rural wastewater treatment, undertaking EPC and PPP projects in relation to rural wastewater treatment, and the provision of consulting and professional technical services. After PST Technology’s disposition, the Company discontinued the operation in wastewater treatment segment and continue engaging in the exploration and mining business.

The description of the PSTT SPA is qualified in its entirety by reference to the PST SPA and the letter between Feishang Group and the Company, dated July 28, 2023, a copy of which has been filed as Exhibit 4.18.

Acquisition of Williams Minerals

On February 27, 2023, the Company entered into the Zimbabwe SPA with Feishang Group, Top Pacific, Mr. Li Feilie and Mr. Yao Yuguang, to indirectly acquire all interests in Williams Minerals, which owns the mining permit for a Zimbabwean lithium mine. At the time of the entry into the Zimbabwe SPA, Feishang Group owned 70% of Williams Minerals, and Top Pacific, a non-affiliate, owned the remaining 30%. Under the Zimbabwe SPA, it is expected that the Company will indirectly acquire all interests in Williams Minerals in the second fiscal quarter of 2023, and that the Company’s “ownership” (which, as defined in the Zimbabwe SPA, relates to its legal possession and control) of the Zimbabwean lithium mine will vest cumulatively, region by region from 2024 through 2026, contingent upon the issuance of independent technical reports and the Company’s full settlement of the purchase consideration in cash and restricted shares. For each relevant region of the lithium mine, until the Company’s legal possession and control vests, the Sellers will maintain legal possession and control, including the right of exploration, sale of lithium, and the revenue derived therefrom, as well as liability for operational costs and third-party claims.

Subject to the terms and conditions of the Zimbabwe SPA, the Company plans to issue restricted shares as 50% of the consideration for the Acquisition, with the remaining 50% of the consideration comprised of a promissory note and/or cash, for maximum consideration of US$1.75 billion (3.5 million estimated tons of measured, indicated and inferred resources of lithium oxide (grade 1.06% or above in accordance with the standard under the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves) priced at US$500 per ton). The Company may issue restricted CHNR shares at a discount to the market price to secure a portion of the required capital. On April 14, 2023, the Company announced that it completed its due diligence investigation with satisfactory results and decided to proceed with the Acquisition. The Company paid an aggregate of $35 million by way of promissory notes (instead of cash) as a deposit as a deposit on April 21, 2023, and will pay an aggregate of $140 million by way of promissory notes and/or cash as an initial installment.

Completion of the Acquisition is contingent upon the satisfaction of a number of conditions, including, among other things, the transfer of ownership interests in Williams Minerals from the Sellers to the intermediate holding company; the issuance of independent technical reports, the actual quantity of qualified lithium oxide metal resources proven or estimated to exist in each mining area covered by the relevant report, and the Company’s full settlement of the purchase consideration in cash and restricted shares. There is no guarantee that the Acquisition will close or be completed at the anticipated valuation and terms, or at all.

61 

On December 22, 2023, the Company entered into an amendment agreement (the “Amendment Agreement”) to the sale and purchase agreement Dated as of February 27, 2023 by and among Feishang Group and Top Pacific (China) Limited (together, the “Sellers”), and the respective beneficial owner of the Sellers, Mr. Li Feilie and Mr. Yao Yuguang with the parties thereto. As the Sellers are still in the process of satisfying conditions precedent to the closing of the acquisition in accordance with the Zimbabwe SPA, including but not limited to obtaining requisite governmental approvals, the parties entered into the Amendment Agreement to extend the long stop date for closing the acquisition from December 31, 2023 to December 31, 2024.

The foregoing description of the Zimbabwean SPA, as amended, is only a summary and is qualified in its entirety by reference to the Sale and Purchase Agreement dated February 27, 2023, and the Amendment Agreement thereto dated December 22, 2023, by and among China Natural Resources, Inc., Feishang Group Limited, Top Pacific (China) Limited, Li Feilie and Yao Yuguang, a copy of each of which has been incorporated by reference as Exhibit 4.17 and Exhibit 4.20 to this annual report.

Commercial Transactions with Related Companies

Commercial transactions with related companies (in thousands) are summarized as follows:

 

 

Years Ended December 31,

 

 

 

2013

 

2014

 

2015

 

 

 

CNY’000

 

CNY’000

 

CNY’000

 

CHNR’s payment of its share of office rental, rates and others to Anka Consultants Limited (“Anka”) (1)

 

1,502

 

 

920

 

 

918

 

  Year Ended December 31, 
  2021  2022  2023  2023 
  CNY  CNY  CNY  US$ 
             
Interest income received from Feishang Enterprise (1)  3,396   —   —   — 
CHNR’s share of office rental, rates and others to Anka (2)  1,343   1,175   445   63 
Feishang Management’s share of office rental to Feishang Enterprise (3)  166   166   166   23 
Shenzhen New PST’s share of office rental to Feishang Enterprise (4)  90   90   53   7 

———————

(1)The Company’s then subsidiary, Shanghai Onway, entered into a series of contracts to provide a loan amounting to CNY80,000 at an interest rate of 9% per annum to Feishang Enterprise from March 2, 2018 to June 30, 2021.

(1)

(2)The Company signed a contract with Anka to lease 184 square meters of office premises for 2 years, from July 1, 2018 to June 30, 2020, subsequently extended to June 30, 2024. The agreement also provides that the Company shares certain costs and expenses in connection with its use of the office, in addition to some of the accounting and secretarial services and day-to-day office administration services provided by Anka. Costs presented here include both rent and services.

On July 1, 2008, the Company and Anka, a private Hong Kong company that is owned by certain directors of the Company, entered into a license agreement in respect of the Company’s head office in Hong Kong. The total area of the office was approximately 368 square meters inwhich the Company shared 238 square meters. The license agreement also provided that the Company shared certain costs and expenses in connection with its use of the office, in addition to accounting and secretarial services and day-to-day office administration provided by Anka.On September 1, 2013, the Company and Feishang Anthracite entered into new license agreements with Anka, respectively. Pursuant to the new agreements, the Company and Feishang Anthracite share the office premises consisting of 238 square metres on an equal basis. The agreements also provide that the Company and Feishang Anthracite shall share certain costs and expenses in connection with their use of the office. In addition, Anka continues to provide accounting and secretarial services and day-to-day office administration to the Company. The initial term of the agreements was from September 1, 2013 to June 30, 2014 and shall be effective for all subsequent extension of leases. The lease was extended for 2 years from July 1, 2014 to June 30, 2016.

(3)On January 1, 2018, Feishang Management signed an office sharing agreement with Feishang Enterprise. Pursuant to the agreement, Feishang Management shares 40 square meters of office premises for 33 months. Feishang Management signed a new contract with Feishang Enterprise in October 2023, which will expire on September 30, 2024.


(4)The Company’s then subsidiary, Shenzhen New PST, signed a contract with Feishang Enterprise to lease 96 square meters of office premises for 12-month period from March 14, 2022 to March 13, 2023 and renewed the contract with same terms for another 12-month period from March 14, 2023 to March 13, 2024.

Balances with Related Parties

 (Amounts in thousands) 

 

 

 

As of December 31,

 

 As of December 31, 

 

2013

 

2014

 

2015

 

 2021 2022 2023 2023 

 

CNY’000

 

CNY’000

 

CNY’000

 

 CNY CNY CNY US$ 

Payables to related parties

 

 

 

 

 

 

 

 

 

                

Feishang Enterprise (1)(2)

 

6,453

 

 

—

 

 

3,932

 

  3,019   495   6,078   858 

Feishang Group (2)(3)

 

197,062

 

 

15,374

 

 

11,752

 

  14,050   7,153   85,673   12,103 
Anka Capital Limited (“Anka Capital”) (4)  2,691   2,913   2,991   423 
                
Dividend payable to related parties                
Qianhai Industrial (1)(5)  5,048   —   —   — 
                
Lease liabilities to related parties                
Anka (4)  372   1,022   360   51 

———————

(1)Feishang Enterprise, Feishang Group and Qianhai Industrial are entities controlled by Mr. Li Feilie, who is the principal beneficial owner of the Company.

(1)

(2)The payable to Feishang Enterprise by Feishang Management represents the net amount of advances from Feishang Enterprise. The balance is unsecured and interest-free. The balance is repayable when the Group is in a position to settle the amounts due without having a detrimental impact on the financial resources of the Group.

Payable to Feishang Enterprise by Feishang Management for the net amount of a loan from Feishang Enterprise. The balance is unsecured, interest-free. The balance is not repayable within one year as of December 31, 2014. The balance is repayable when funds are available as of December 31, 2015.

(3)The payable to Feishang Group represents the net amount of advances from Feishang Group. The balance is unsecured and interest-free. The balance is repayable when the Group is in a position to settle the amounts due without having a detrimental impact on the financial resources of the Group.

(4)Anka Capital and Anka are each jointly owned by Messrs. Wong Wah On Edward and Tam Cheuk Ho, who are officers of the Company. The payable to Anka Capital represents the net amount of advances from Anka Capital. The balance is unsecured and interest-free. The balance is repayable when the Group is in a position to settle the amounts due without having a detrimental impact on the financial resources of the Group.

(5)The dividend payable to Qianhai Industrial represents the declared dividend which was approved at the shareholder meeting of Shenzhen Qianhai on June 22, 2021, prior to the acquisition of Shenzhen Qianhai by the Group. It was paid by Shenzhen Qianhai as of December 31, 2022.

C.Interests of Experts and Counsel

(2)Not applicable. 

ITEM 8.FINANCIAL INFORMATION

Payable to Feishang Group for the acquisition of Feishang Anthracite. The balance is unsecured, interest-free and not repayable with in one year as of December 31, 2014. The balance is repayable when funds are available as of December 31, 2015.

Feishang Enterprise and Feishang Group are entities controlled by Mr. Li Feilie who is also an executive officer, director, and principal beneficial owner of the Company.





C.

Interests of Experts and Counsel

No disclosure is required in response to this Item.

ITEM 8.

FINANCIAL INFORMATION

A.

A.Consolidated Statements and Other Financial Information

The Company's Consolidated Financial Statements for the fiscal years ended December 31, 2013, 2014 and 2015Company’s audited consolidated financial statements filed as part of this annual report on Form 20-F are included herewith as Appendix A and are incorporated herein by reference.

We have no direct business operations, other than through the ownership of our subsidiaries. Prior to December 31, 2013, we had not paid any dividends on our common shares. On December 31, 2013, the Board of Directors approved a conditional special interim dividend to the shareholders of CHNR satisfied by way of a distribution in specie of the entire issued share capital of Feishang Anthracite to all shareholders of CHNR in proportion to their respective shareholdings in CHNR on the Distribution Record Date. Pursuant to the Distribution, each shareholder of CHNR became entitled to five shares of Feishang Anthracite for every share of CHNR held on the Distribution Record Date. After the completion of the Distribution, CHNR no longer holds any shares in Feishang Anthracite.

See Item 4.A for the details of the Distribution and Spin-Off.

Should we, as a holding company, decide in the future to pay any additional dividends, they will be paid at the discretion of the Company’s Board of Directors and will be dependent upon distributions, if any, made by its subsidiaries, and on the Company’s results of operations, its financial condition and other factors deemed relevant by the Board of Directors. In addition, our operating subsidiaries are subject to restrictions on their ability to make distributions to us, including as a result of restrictions imposed under PRC law.

See Item 3.A. for the details of reserve allocation of PRC’s subsidiaries.Legal Proceedings

There are no legal or arbitration proceedings (including governmental proceedings pending or known to be contemplated), including those relating to bankruptcy, receivership or similar proceedings and those involving any third party, which may have, or have had in the recent past, significant effects on the Company’s financial position or profitability. Moreover, there are no material proceedings in which any director, any member of senior management, or any of our affiliates is either a party adverse to us or our subsidiaries or has a material interest adverse to us or our subsidiaries.

B.Dividend Policy

The Company has not paid any dividends with respect to its common shares and has no present plan to pay any dividends in the foreseeable future. The Company intends to retain its earnings to support the development of its business. Any dividends paid in the future by the Company will be paid at the discretion of the Board of Directors and will be dependent upon distributions, if any, made by its subsidiaries, and on the Company’s results of operations, its financial condition and other factors deemed relevant by the Board of Directors. In accordance with the relevant PRC regulations and the Articles of Association of companies incorporated in the PRC, appropriations of net income of wholly owned foreign enterprises and Sino-foreign joint venture companies as reflected in their statutory financial statements are to be allocated to either (i) each of the general reserve, the enterprise expansion reserve and the staff bonus and welfare reserve, respectively, or (ii) the statutory reserve, as determined by the resolution of the Board of Directors annually.

B.Significant Changes

ThereExcept as otherwise disclosed in this annual report, we have been nonot experienced any significant changes that have occurred since the date of the annual financial statements included in this Annual Report.herein.

ITEM 9.THE OFFER AND LISTING


ITEM 9.

THE OFFER AND LISTING

A.

A.Offer and Listing Details

The following table sets forth the annual high and low last trade prices ofprincipal United States market for our common shares, as reported by The NASDAQ Stockour only class of outstanding equity securities, is the Nasdaq Capital Market. Our common shares are traded on the Nasdaq Capital Market under the symbol “CHNR.” We are not aware of any principal market for eachany of our securities outside of the five preceding fiscal years. The prices are inter-dealer prices, without retail markup, markdown or commission.

Period

 

High

 

Low

 

 

 

 

 

 

 

Fiscal Year ended:

 

 

 

 

 

 

December 31, 2015

 

$

2.77

 

$

1.26

December 31, 2014

 

$

10.80

 

$

1.89

December 31, 2013

 

$

6.18

 

$

3.15

December 31, 2012

 

$

9.06

 

$

3.61

December 31, 2011

 

$

17.05

 

$

6.80






The following table sets forthUnited States. There is no established trading market for the highWarrants and low last trade prices of our common shares as reported by The NASDAQ Stock Market for each fiscal quarter of 2014 and 2015. The prices are inter-dealer prices, without retail markup, markdown or commission.

Period

 

High

 

Low

 

 

 

 

 

 

 

2015 Fiscal Year, quarter ended:

 

 

 

 

 

 

March 31, 2015

 

$

2.77

 

$

1.55

June 30, 2015

 

$

2.61

 

$

1.60

September 30, 2015

 

$

2.26

 

$

1.26

December 31, 2015

 

$

2.34

 

$

1.27

 

 

 

 

 

 

 

2014 Fiscal Year, quarter ended:

 

 

 

 

 

 

March 31, 2014

 

$

10.80

 

$

4.20

June 30, 2014

 

$

4.30

 

$

3.21

September 30, 2014

 

$

4.55

 

$

3.24

December 31, 2014

 

$

3.65

 

$

1.89


The following table sets forth the monthly high and low last trade prices of our common shares as reported by The NASDAQ Stock Market for each month during the six months preceding the date of this Annual Report. The prices are inter-dealer prices, without retail markup, markdown or commission, andwe do not necessarily reflect actual transactions.intend to list the Warrants on any exchange or other trading system.

B.Plan of Distribution


Period

 

High

 

Low

 

 

 

 

 

 

 

Month Ended:

 

 

 

 

 

 

March 31, 2016

 

$

2.58

 

$

1.03

February 29, 2016

 

$

0.99

 

$

0.75

January 31, 2016

 

$

1.41

 

$

0.88

December 31, 2015

 

$

1.85

 

$

1.37

November 30, 2015

 

$

2.13

 

$

1.56

October 31, 2015

 

$

2.34

 

$

1.27


Not applicable.

B.

C.Markets

Plan of Distribution

No disclosure is required in response to this Item.

C.

Markets

Our common shares have been listed on the NASDAQNasdaq Capital Market since November 22, 2004, under the symbol “CHNR”.“CHNR.” From August 7, 1995, until November 22, 2004, our common stock wasshares were listed on the NASDAQ Small Cap marketNasdaq SmallCap Market under the symbol “CHRB”.“CHRB.”

D.As previously announced, we received a notification letter from Nasdaq on April 27, 2022, advising the Company that we were not in compliance with the minimum bid price requirements set forth in Nasdaq Listing Rule 5550(a)(2) for continued listing on Nasdaq. Nasdaq Listing Rule 5550(a)(2) requires listed securities to maintain a minimum bid price of $1.00 per share, and Nasdaq Listing Rule 5810(c)(3)(A) provides that a failure to meet the minimum bid price requirement exists if the deficiency continues for a period of 30 consecutive business days. The notification letter provided that the Company had 180 calendar days, or until October 24, 2022, to regain compliance with Nasdaq Listing Rule 5550(a)(2). To regain compliance, the Company’s common shares must have a closing bid price of at least $1.00 per share for a minimum of 10 consecutive business days.

Selling ShareholdersOn October 25, 2022, we received a second notice letter from Nasdaq, in which Nasdaq granted us an additional 180 days, or until April 24, 2023, to regain compliance, because the Company met the continued listing requirement for market value of publicly held shares and all other applicable requirements, except the bid price requirement.

No disclosure is required in responseOn April 3, 2023, we effected a five-to-one share combination of issued and outstanding shares, which was intended to this Item.

E.

Dilution

No disclosure is required in response to this Item.

F.

Expensesincrease the per share trading price of the IssueCompany’s common shares to satisfy the $1.00 minimum bid price required for continued listing on Nasdaq.

No disclosure is required in response to this Item.On April 18, 2023, we received a notice letter from Nasdaq confirming that the Company had regained compliance with Nasdaq Listing Rule 5550(a)(2).

D.Selling Shareholders

ITEM 10.Not applicable.

E.Dilution

ADDITIONAL INFORMATIONNot applicable.

F.Expenses of the Issue

A.Not applicable.

ITEM 10.ADDITIONAL INFORMATION

A.Share Capital

No disclosure is required in response to this Item.Not applicable.

B.Memorandum and Articles of Association





B.

Amended and Restated Memorandum and Articles of Association

Charter

Our charter documents consist of our Amended and Restated Memorandum of Association (“Memorandum of Association”) and our Amended and Restated Articles of Association (“Articles of Association”).

The Memoranduminformation contained in our Registration Statement on Form F-3 (File No. 333-268454), declared effective by the SEC on February 10, 2023, under the heading “Our Charter and Certain Provisions of Association loosely resemblesBVI Law” is hereby incorporated by reference.

C.Material Contracts

On January 20, 2021, the Articles or Certificate of Incorporation ofCompany entered into a Untied States corporation, andSecurities Purchase Agreement with certain institutional investors (the “Investors”), pursuant to which the Articles of Association loosely resembles the bylaws of a United States corporation. A brief description of our Memorandum of Association and Articles of Association follows, including a summary of material differences between the corporate laws of the United States and those of the British Virgin Islands. This description and summary does not purport to be complete and does not address all differences between United States and British Virgin Islands corporate laws. Copies of our Memorandum of Association and Articles of Association have been filed as exhibits to this Annual Report and readers are urged to review these exhibits in their entirety for a complete understanding of the provisions of our charter documents.

Memorandum of Association

Corporate Powers

We have been registered in the British Virgin Islands since December 14, 1993, with company number 102930. Clause 46 of our Memorandum of Association states that the objects for which we are established are unrestricted and we shall have full power and authority to carry out any object which is not prohibited by any laws in force in the British Virgin Islands.

Authorized Shares

We are authorizedCompany agreed to issue and sell, (i) in a maximumregistered direct offering, up to an aggregate of 210,000,000 shares of no par value, of which, 2003.96 million shall be common shares and 10 million shall be preferred shares. The directors of the Company or our shareholders may increase or decrease the maximum number of authorized shares by amending the Memorandum of Association as provided by law.

Each common share is entitled to one vote on each matter submitted to a vote of shareholders. Common shares may be redeemed by the Company for fair value. Common shares shall be entitled to receive such dividends and distributions as may be authorized by the directors. Subject to the rights of holders of other classes of shares, the directors may declare and pay dividends on the common shares. Holders of common shares shall be entitled to share in the assets of the Company available for distribution upon liquidation. Preferred shares shall carry such designations, powers, preferences and rights, qualifications, limitations and restrictions as may be determined by the directors at the time of issuance.

In accordance with our Memorandum of Association, our Board of Directors has designated a series of preferred shares, consisting of 320,000 shares and designated Series B preferred shares. Series B preferred shares are entitled to one vote for each share, shall be entitled to vote on each matter that is submitted for a vote of common shareholders and shall be aggregated with outstanding common shares for all voting purposes. Series B preferred shares have no preemptive or other subscription rights and are not subject to future calls or assessments. There are no redemption or sinking fund provisions applicable to the Series B preferred shares and holders thereof have no rights whatsoever to dividends or to distributions upon our liquidation. No Series B preferred shares are outstanding.

Amendments to Memorandum and Articles of Association

Subject to the laws of the British Virgin Islands and certain limited exceptions contained in the Memorandum of Association, the Memorandum of Association and the Articles of Association may each be amended by a majority vote of members or by the directors.

Articles of Association

Issuance of Shares

The unissued shares of the Company shall be issued at a per share purchase price of $1.85 (the “Registered Offering”), and (ii) in a concurrent private placement, warrants initially exercisable for the discretionpurchase of an aggregate of 1,584,000 common shares of the directors, who may determine whetherCompany (the “Investors Warrants”), for gross proceeds of approximately $7.3 million, before deducting fees to issue shares, grant options over or otherwise dispose of them, at such timesthe placement agent and for such consideration (which may not be less than par value (if any)other estimated offering expenses payable by the Company. The Registered Offering closed on January 22, 2021.

The Investors Warrants are exercisable immediately as of the shares) asdate of issuance until 36 months after the directors determine. Consideration may take any form acceptabledate of issuance at an initial exercise price of $2.35 per share. The exercise price of the Investors Warrants is subject to the directors, including money, promissory note, service rendered or services to be rendered; provided thatfull-ratchet anti-dilution adjustment in the case of consideration other than money,future issuances of common shares of the directors must adoptCompany below the Investors Warrants’ exercise price then in effect, as well as customary adjustment in case of share splits, share dividends, share combinations and similar recapitalization transactions. On July 14, 2022, the exercise price has been reduced to $0.623. A holder of the Investors Warrants also will have the right to exercise such warrants on a resolution stating (a)cashless basis if a registration statement or Annual Report contained therein is not available for the amount to be credited for issuance of theall common shares (b) a reasonable determinationissuable upon exercise thereof. The exercisability of the present cash valueInvestors Warrants may also be limited if, upon exercise, the holder and its affiliates would in aggregate beneficially own more than 4.99% or 9.99% of the non-monetary considerationCompany’s common shares, which percentage shall be elected by the holder on or prior to the issuance date.

FT Global Capital, Inc. (the “Placement Agent”) acted as the exclusive placement agent in connection with the Registered Offering and (c) that, in their opinion, the presentprivate placement pursuant to the terms of a placement agency agreement, dated January 20, 2021, between the Company and the Placement Agent (the “Placement Agent Agreement”). Pursuant to the Placement Agent Agreement, the Company agreed to pay the Placement Agent a cash valuefee equal to 8% of the non-monetary consideration is not lessaggregate proceeds received by the amountCompany from the sale of its securities to be creditedinvestors introduced to the Company by the Placement Agent. In addition to the cash fee, the Company agreed to issue to the Placement Agent warrants to purchase an aggregate of up to 10% of the aggregate number of shares sold in the Registered Offering (the “Placement Agent Warrants”). The Placement Agent Warrants are on the same terms and conditions as the Investors Warrants, exercisable at a price of $2.35 per share, subject to a 180-day delay in the exercise period. On July 14, 2022, the exercise price has also been reduced to $0.623. 

On June 30, 2021, Shenzhen Qianhai signed a loan agreement with Shenzhen Chaopeng, pursuant to which Shenzhen Chaopeng borrowed CNY80.0 million from Shenzhen Qianhai with an annual interest rate of 9% and a term of one year. The loan agreement was renewed for another year on June 30, 2022. See “Item 5.B. – OPERATING AND FINANCIAL REVIEW AND PROSPECTS – Liquidity and Capital Resources – Other Receivables” for additional information.

64 

On July 21, 2021, we issued 3.0 million common shares, and transferred our 120.0 million shares of Feishang Anthracite, as well as approximately CNY10.3 million (US$1.5 million), to Feishang Group in exchange for all outstanding shares of PST Technology and the transfer to us of approximately CNY130.0 million (US$18.4 million) of PST Technology’s outstanding debt previously owed to Li Feilie. See “Item 7.B. – MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS – Related Party Transactions – Acquisition and Sale of PST Technology” for additional information.

On February 27, 2023, the Company entered into the Zimbabwe SPA with Feishang Group, Top Pacific, Li Feilie and Yao Yuguang, to acquire the entire share issuance.capital of Williams Minerals. See “Item 4.A. – INFORMATION OF THE COMPANY – History and Development of the Company – Acquisition of Williams Minerals” for additional information.





Redemption of Shares

The Company mayis a beneficiary of letters from Feishang Group and Feishang Enterprise regarding their provision of financial support to the Company, executed on May 15, 2023, copies of which are incorporated by reference as Exhibit 4.7 and 4.8 to this annual report.

On July 28, 2023, the Company entered into a sale and purchase redeem or acquire its own sharesagreement with Feishang Group. Pursuant to the agreement, the Company agreed to sell 100% equity interest of PST Technology to Feishang Group, together with PST Technology’s outstanding payable owed to the Company, for such consideration of approximately CNY95,761,119 comprising: (i) CNY-34,197,300, the fair value of 100% equity interest of PST Technology as may be determined by the directors,independent valuation report dated July 28, 2023; (ii) CNY129,958,419, the book value of PST Technology’s outstanding payable owed to the Company. See “Item 4.A. – INFORMATION OF THE COMPANY – History and such shares may, at the directionDevelopment of the directors, be cancelled or held as treasury shares; provided, however, thatCompany – Acquisition and Sale of PST Technology” for additional information.

On August 3, 2023, the Company mayentered into a set-off letter with Feishang Group, the Company’s controlling shareholder, pursuant to which the Company and Feishang Group agreed to set off the amount of CNY95,761,119 payable from the Company to Feishang Group under the PST Technology sale and purchase agreement against the promissory note in the amount of US$245,000,000 the Company issued to Feishang Group on April 23, 2023 at a exchange rate of US$1.00 = CNY7.1427 such that a sum of US$13,406,852 shall be deducted from the principal amount due under the promissory note.

On December 22, 2023, the Company entered into an amendment agreement (the “Amendment Agreement”) to the Zimbabwe SPA with the parties thereto. As the Sellers are still in the process of satisfying conditions precedent to the closing of the Acquisition in accordance with the Zimbabwe SPA, including but not limited to obtaining requisite governmental approvals, the parties entered into the Amendment Agreement to extend the long stop date for closing the acquisition from December 31, 2023 to December 31, 2024. See “Item 4.A. – INFORMATION OF THE COMPANY – History and Development of the Company – Acquisition of Williams Minerals” for additional information.

On February 16, 2024, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain institutional investors (the “Investors”), pursuant to which the Company agreed to issue and sell, (i) in a registered direct offering, up to an aggregate of 1,487,870 of common shares, no par value (the “Shares”) of the Company at a per Share purchase redeem or acquire its shares unless, immediately followingprice of $2.20 (the “Registered Offering”), and (ii) in a concurrent private placement, warrants initially exercisable for the purchase redemptionof an aggregate of 1,115,903 common shares of the Company (the “Investors Warrants”), for gross proceeds of approximately $3.01 million, before deducting fees to the placement agent and other estimated offering expenses payable by the Company.

The Investors Warrants are exercisable immediately as of the date of issuance until 42 months after the date of issuance at an initial exercise price of $3.00 per share. The exercise price of the Investors Warrants is subject to full-ratchet anti-dilution adjustment in the case of future issuances of common shares of the Company below the Investors Warrants’ exercise price then in effect, as well as customary adjustment in case of stock splits, stock dividends, stock combinations and similar recapitalization transactions. A holder of the Investors Warrants also will have the right to exercise such warrants on a cashless basis if the registration statement or acquisition (a)prospectus contained therein is not available for the valueissuance of all common shares issuable upon exercise thereof. The exercisability of the Investors Warrants may also be limited if, upon exercise, the holder and its affiliates would in aggregate beneficially own more than 4.99% or 9.99% of the Company’s assets exceeds its liabilities and (b)common shares, which percentage shall be elected by the Company is ableholder on or prior to pay its debts as they become due.the issuance date.

Meetings of Shareholders

The directors may convene meetings of our shareholders at such times and in such manner and places asPursuant to the directors consider necessary or desirable. The directors shall convene such a meeting upon the written request of shareholders holding 30 percent or more of our outstanding voting shares. At least seven days’ noticeprovisions of the meeting shall be given to the shareholders whose names appear on the share register. A majority of our outstanding shares entitled to vote must be present at a meeting of shareholders, in person or by proxy, in order to constitute a quorum and the affirmative vote of a majority of those present and entitled to vote shall be required in order to approve action by shareholders. However, in the event a meeting of shareholders is adjourned due to the absence of a quorum, the minimum number of shares that must be present in order to constitute a quorum shall be reduced to one-third. Our Articles of Association provides that any action that may be taken at a meeting of shareholders may be taken without a meeting if the action is approved by a written consent of shareholders.

Directors

Our Articles of Association provides that our Board of Directors shall consist of not less than three nor more than 25 directors; and directors, solely for purposes of determining the term for which they will serve, are classified as Class I, Class II and Class III directors, with approximately one-third of the total number of directors being allocated to each Class. Each director is to hold office for a three-year term expiring immediately following the annual meeting of shareholders held three years following the annual meeting at which he or she was elected. Directors may be removed by the shareholders, with or without cause, and by the directors, only with cause.

With the prior or subsequent approval by a resolution of shareholders, the directors may, by a resolution of directors, fix the emoluments of directors with respect to services to be rendered in any capacity to us. At the annual meeting of shareholders held in 2008, the shareholders adopted resolutions providing that (a) all emoluments to directors previously fixed by the Board of Directors are approved and ratified and (b) the Board of Directors is empowered and authorized to fix all future emoluments to directors, for their services in all capacities to the Company, without further approval or ratification by shareholders.

The directors may, by a resolution of directors, exercise all the powers of the Company to borrow money. There is no age limit requirement for retirement or non-retirement of directors. A director shall not require a share qualification. Directors may be natural persons who have attained the age of 18 years and are not undischarged bankrupts; or companies, in which event the company may designate a person as its representative as director.

A director may, from time to time, appoint (and revoke the appointment of) another director or another person who is not a director, but who is not disqualified from serving as a director, to be his or her alternate to exercise his or her powers and discharge his or her responsibilities. In addition, in the event of resignation, a director may appoint his or her successor.

Directors are not disqualified from entering into contracts withPurchase Agreement, the Company and no such contract shall be voidthe Investors have agreed that: (i) subject to certain exceptions, the Company will not, within the 60 calendar days following the closing of this offering enter into any agreement to issue or requireannounce the interested director to account forissuance or disposition or proposed issuance or disposition of any profit under any such contract, provided thatsecurities (each, a “Subsequent Placement”); (ii) within one year following the factexecution of the director’s interestPurchase Agreement, the Company will not enter into an agreement to effect a “Variable Rate Transaction,” as that term is defined in the transaction is disclosed toPurchase Agreement; and (iii) within one year following the board. A director who is interested in a contract withclosing of this offering, the Company may, nevertheless, attend meetings ofshall not effect any Subsequent Placement unless the board at which the interested transaction is discussed and/or approved, be counted towardsInvestors are offered a quorum at any such meeting and vote in favor of such transaction.

At least one-half the number of directors must be present for a duly constituted meeting. Action of directors shall require the affirmative vote of a majority of the directors present in person or by alternate and entitled to vote on the resolution. Directors may act by written consent in lieu of meeting provided that such consent is received from all of the directors. Subjectparticipation right, subject to certain limitationsterms and conditions as set forth in the Articles of Association, directors may appoint committees and agents. Directors do not have the authorityPurchase Agreement, to appoint new auditors – such appointment must be made by the shareholders.





Indemnification

The Company shall indemnify every officer and directorsubscribe, on a pro rata basis, up to 35% of the Company against any liability, action, proceeding, claim, demand, costs, damages or expenses incurred as a result of any act or failure to act in carrying out their functions, except those incurred by reason of their own fraud or wilful default. No indemnified person shall be liable to the Company for any loss or damage except due to the fraud or wilful default of the indemnified person. Fraud or wilful default may only be found to exist by a court of competent jurisdiction. The Company must advance reasonable attorneys fees and other expenses to an indemnified person provided that the indemnified person executes an agreement to reimburse the Company if a court of competent jurisdiction determines that indemnification was not available under the circumstances.

Dividends and Distribution

The directors may authorize the payment of dividends or other distributions to shareholders, if, the directors are satisfied, on a reasonable grounds that, immediately following the dividend or other distribution (a) the value of the Company’s assets exceeds its liabilities and (b) the Company is able to pay its debts as they become due. Distributions, including dividends, may be declared and paid in cash, or in specie, in shares or other assets.

Restrictions on Rights to Own Securities

There are no limitations on the rights to own our securities.

Change in Control Provisions

There are no provisions of our Memorandum of Association or Articles of Association that would have an effect of delaying, deferring or preventing a change in our control and that would operate only with respect to a merger, acquisition or corporate restructuring involving us.

Disclosure of Share Ownership

There are no provisions of our Memorandum of Association or Articles of Association governing the ownership threshold above which shareholder ownership must be disclosed.

Changes in Capital

Requirements to effect changes in capital are not more stringent than is required by law.

Arbitration

Our Articles of Association provides that any differences between us and our shareholders or their legal representatives relating to the intent, construction, incidences or consequences of our Articles of Association or the British Virgin Islands Business Companies Act, including any breach or alleged breach of our Articles of Association or the Business Companies Act, or relating to our affairs shall be resolved by arbitration before two arbitrators (unless the parties agree to arbitrate before one arbitrator), who shall jointly appoint an umpire.

Discussion of Law

Under the laws of most jurisdictionssecurities offered in the United States, majority and controlling shareholders generally have certain fiduciary responsibilities to the minority shareholders. Shareholder action must be taken in good faith and actions by controlling shareholders which are obviously unreasonable may be declared null and void. British Virgin Islands law protecting the interests of minority shareholders may not be as protective in all circumstancesSubsequent Placement.

FT Global Capital, Inc. (the “Placement Agent”) acted as the law protecting minority shareholders under most jurisdictions in the United States.

While British Virgin Islands law does permit a shareholder of a British Virgin Islands company to sue its directors derivatively, that is, in the name of, and for the benefit of, our Company and to sue a company and its directors for his benefit and for the benefit of others similarly situated, the circumstances in which any such action may be brought, and the procedures and defenses that may be available in respect of any such action, may result in the rights of shareholders of a British Virgin Islands company being more limited than those of shareholders of a company organized in the United States.





Our directors have the power to take certain actions without shareholder approval, including an amendment of our Memorandum of Association or Articles of Association (unless such amendment varies the rights attached to shares) or an increase or decrease of the maximum number of shares that we are authorized to issue, which would require shareholder approval under the laws of most jurisdictions in the United States. In addition, the directors of a British Virgin Islands company, subject in certain cases to court approval but without shareholder approval, may, among other things, implement a reorganization, certain mergers or consolidations with a subsidiary, the sale, transfer, exchange or disposition of any assets, property, part of the business, or securities of the company, or any combination (provided the assets do not represent more than 50% of the total assets of the company and the sale is not outside of the usual or ordinary course of the company’s business), if they determine it is in the best interests of the company. Our ability to amend our Memorandum of Association and Articles of Association without shareholder approval could have the effect of delaying, deterring or preventing a change in our control without any further action by the shareholders, including a tender offer to purchase our common shares at a premium over then current market prices.

The Business Companies Act of the British Virgin Islands permits the creation in our Memorandum and Articles of Association of staggered terms of directors, cumulative voting, shareholder approval of corporate matters by written consent, and the issuance of preferred shares. Currently, our Memorandum and Articles of Association provide for (a) shareholder approval of corporate matters by majority written consent, (b) staggered terms of directors and (c) the issuance of preferred shares.

As in most United States’ jurisdictions, the Board of Directors of a British Virgin Islands company is charged with the management of the affairs of the company. In most jurisdictions in the United States, directors owe a fiduciary duty to the corporation and its shareholders, including a duty of care, under which directors must properly apprise themselves of all reasonably available information, and a duty of loyalty, under which they must protect the interests of the corporation and refrain from conduct that injures the corporation or its shareholders or that deprives the corporation or its shareholders of any profit or advantage. Many US jurisdictions have enacted various statutory provisions which permit the monetary liability of directors to be eliminated or limited.

Under British Virgin Islands law, liability of a corporate director to the corporation is primarily limited to cases of willful malfeasance in the performance of his duties or to cases where the director has not acted honestly and in good faith and with a view to the best interests of the company. However, under our Memorandum of Association, we are authorized to indemnify any director or officer who is made or threatened to be made a party to a legal or administrative proceeding by virtue of being one of our directors or officers, provided such person acted honestly and in good faith and with a view to our best interests and, in the case of a criminal proceeding, such person had no reasonable cause to believe that his conduct was unlawful. Our Memorandum of Association also enable us to indemnify any director or officer who was successful in such a proceeding against expenses and judgments, fines and amounts paid in settlement and reasonably incurredexclusive placement agent in connection with the proceeding.

Unlike most corporate lawsRegistered Offering and the Private Placement pursuant to the terms of a placement agency agreement, dated February 16, 2024, between the Company and Placement Agent (the “Placement Agency Agreement”). Pursuant to the Placement Agency Agreement, the Company agreed to pay Placement Agent a cash fee equal to eight percent (8%) of the aggregate proceeds received by the Company from the sale of its securities to investors introduced to the Company by the Placement Agent. Placement Agent is also entitled to additional tail compensation for any financings consummated within the 12-month period following the termination of the Placement Agent Agreement to the extent that such financing is provided to the Company by investors that the Placement Agent had introduced to the Company. In addition to the cash fee, the Company agreed to issue to the Placement Agent warrants to purchase an aggregate of up to five percent (5%) of the aggregate number of Shares sold in the United States, directors of a British Virgin Islands company mayRegistered Offering (the “Placement Agent Warrants”). The Placement Agent Warrants shall generally be companies. Moreover, any director may appoint an alternate to attend meetings and vote in the place and stead of the director appointing the alternate. It is unclear of the effect of such an appointment on the fiduciary obligationssame terms and conditions as the Investors Warrants except that they will be exercisable at a price of the director making the appointment.$2.20 per share.

The foregoing discussion of British Virgin Islands law does not purport to present a complete description of the differences between

D.Exchange Controls

There is no exchange control legislation under British Virgin Islands law and the corporate laws of the several United States.

C.

Material Contracts

Other than contracts entered into the ordinary course of business, during the two preceding fiscal years the Company has entered into the following material contracts (which are included as exhibits to this Annual Report):

·

Sales and Purchase Master Contract dated January 1, 2014 by and between Anhui Tianchen Renewable Resource Co., Ltd. and Wuhu Feishang.

·

Sales and Purchase Master Contract dated January 1, 2015 by and between Fanchang County Jinfeng Mining Ltd. and Wuhu Feishang.





D.

Exchange Controls

Thereaccordingly there are no materialexchange control regulations imposed under British Virgin Islands laws, decrees, regulationslaw. Our company and all dividends, interest, rents, royalties, compensation and other amounts paid by our company to persons who are not resident in the BVI and any capital gains realised with respect to any shares, debt obligations, or other legislation that impose foreign exchange controls on us or that affect our payment of dividends, interest or other payments to non-resident holderssecurities of our shares. British Virgin Islandscompany by persons who are not resident in the BVI are exempt from all provisions of the Income Tax Ordinance in the BVI. BVI law and our Memorandum of Association and Articles of Association impose no limitations on the right of non-residentnonresident or foreign owners to hold or vote our common shares. However, we operate through subsidiaries located in the PRC, and the payment of dividends by PRC companies is subject to numerouscertain restrictions imposed under PRC law, including restrictions on the conversionlaw. See “Item 3.D. – KEY INFORMATION – Transfers of local currency into United States dollarsCash and other currenciesAssets Between Our Company and the expatriation of local currency out of the PRC.Our Subsidiaries” for further information.

The principal regulationregulations governing foreign currency exchange in the PRC isChina are the Foreign CurrencyExchange Administration Rules (1996) as amended. Conversion of Renminbi is strictly regulated byRegulations, most recently amended in August 2008. Under the PRC Government. Under PRC foreign exchange rulesregulations, payments of current account items, such as profit distributions and regulations, payment of routine transactions under current accounts, including trade and serviceservice-related foreign exchange transactions, and payment of dividends, maycan be made in foreign currencies without prior approval from the SAFE but are subject toby complying with certain procedural requirements. StrictBy contrast, approval from or registration with appropriate government authorities is required where RMB is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of foreign currency-denominated loans.

In November 2012, SAFE promulgated the Circular of Further Improving and Adjusting Foreign Exchange Administration Policies on Foreign Direct Investment, which substantially amends and simplifies the current foreign exchange control continues to apply to capital account transactions, such as direct investment, loans or investments in securities outside the PRC and capital contribution. These transactions must be approved by the SAFE.

procedure. Pursuant to this circular, the Foreign Currency Administration Rules, foreign-invested enterprisesopening of various special purpose foreign exchange accounts, the reinvestment of lawful income derived by foreign investors in the PRC may(e.g. profits, the proceeds of a sale of equity, a capital reduction, liquidation or the early repatriation of an investment), and purchase and remittance of foreign exchange withoutas a result of such lawful income in a foreign-invested enterprise no longer requires SAFE approval, and multiple capital accounts for the approvalsame entity may be opened in different provinces, which was not possible before. In addition, SAFE promulgated the Circular on Printing and Distributing the Provisions on Foreign Exchange Administration over Domestic Direct Investment by Foreign Investors and the Supporting Documents in May 2013, specifying that the administration by SAFE or its local branches over direct investment by foreign investors in the PRC shall be conducted by way of the SAFE for traderegistration and service-related exchange transactions by providing commercial documents evidencing these transactions. They may also retainbanks shall process foreign exchange subjectbusiness relating to a cap approveddirect investment in the PRC based on the registration information provided by SAFE and its branches.

In February 2015, SAFE promulgated the Circular on Further Simplifying and Improving Policies for Foreign Exchange Administration for Direct Investment (“SAFE Circular 13”), which took effect on June 1, 2015. Under SAFE Circular 13, the foreign exchange procedures are further simplified, and foreign exchange registrations of direct investment will be handled by the SAFE, to satisfybanks designated by the foreign exchange liabilities or to pay dividends.authority instead of SAFE and its branches. However, the relevant PRC authorities may limitforeign invested enterprises were still prohibited by SAFE Circular 13 to use the RMB converted from foreign currency-registered capital to extend entrustment loans, repay bank loans or eliminateinter-company loans.

In October 2019, SAFE issued the abilityCircular on Further Promoting the Facilitation of Cross Border Trade and Investment, which allows noninvestment foreign-invested enterprises to purchaseuse their capital funds to make equity investments in China, provided that such investments do not violate the negative list and retain foreign currenciesthe target investment projects are genuine and in the future.

The principal regulations governing distribution of dividends by foreign-invested companies include:

·

The Sino-foreign Equity Joint Venture Law (1979), as amended;

·

The Regulations of Implementation of the Sino-foreign Equity Joint Venture Law (1983) as amended;

·

The Foreign Investment Enterprise Law (1986) as amended; and

·

The Regulations of Implementation of the Foreign Investment Enterprise Law (1990) as amended.

Under these regulations, foreign-invested enterprises in the PRC may pay dividends only out of their accumulated profits, if any, determined in accordancecompliance with PRC accounting standards and regulations. In addition, wholly foreign-owned enterprises in the PRC are required to set aside at least 10% of their respective accumulated profits each year, if any, to fund certain reserve funds unless such reserve funds have reached 50% of their respective registered capital. These reserves are not distributable as cash dividends.laws.

In addition, our wholly owned subsidiaries are required to allocate portions ofdistribute their after-tax profits to their enterprise expansion funds and staff welfare and bonus funds atfor the discretioncurrent financial year. They shall reserve 10% of their boardsprofits as the company's statutory common reserve, provided that a company with an aggregate common reserve of directors. Allocationsmore than 50% of the company's registered capital may elect not to thesemake additional statutory common reserves. Where any company has made a statutory common reserve from its after-tax profits, it may, subject to a resolution of the shareholders' meeting or the general meeting of shareholders, draw a discretionary common reserve from its after-tax profits. A company's common reserves and funds can onlyshall be used for specific purposesto cover losses made in past years, to enhance the company's productivity and areexpand its business or to increase its registered capital; however a company's capital reserve shall not transferablebe used to us incover the forms of loans, advances or cash dividends.company's losses.

E.Taxation

E.

Taxation

The following is a general summary of anticipatedcertain material U.S. federal income and British Virgin Islandstax considerations applicable to a U.S. Holder (as defined below), BVI tax consequences of an investment in our common shares. The summary has been prepared based upon management’s understanding of applicable tax consequences, but has not been reviewed by counsel or other experts in U.S. or British Virgin Islands taxation. The summary does not address all possible tax consequences relating to an investment in our common shares, and does not purport to deal with thePRC tax consequences applicable to all categories of investors, some of which, such as dealers in securities, insurance companies and tax-exempt entities, may be subject to special rules. In particular, the discussion does not address the tax consequences under state, local and other non-U.S. and non-British Virgin Islands tax laws. Accordingly, each prospective investor should consult its own tax advisor regarding the particular tax consequences to it of an investment in the common shares. The discussion below is based upon laws and relevant interpretations in effect as of the date of this Annual Report, all of which are subject to change.considerations.





CHNR effected the Spin-Off by way of a distribution in specie of the entire issued share capital of Feishang Anthracite to the holders of the common shares of CHNR (the “Distribution”). It is not clear whether the Distribution should be treated as a tax-free spin-off under Section 355 of the Code or as a taxable distribution of property. If we are required to report the Distribution to the IRS, we intend to take the view that the Distribution will be treated as a taxable distribution. Under this treatment, for U.S. Federal income tax purposes, the Distribution should be a taxable event for holders of CHNR common shares on the Distribution Record Date. Accordingly, subject to the passive foreign investment company rules discussed below, a U.S. Holder:

·

should generally be treated as having received (at the time of receipt of the Feishang Anthracite ordinary shares) a taxable distribution in an amount equal to the fair market value of the Feishang Anthracite ordinary shares received in the Distribution,

·

should have a tax basis in its Feishang Anthracite ordinary shares equal to their fair market value on the date of the Distribution, and

·

should have a holding period in its Feishang Anthracite ordinary shares that will commence on the day after the date of the Distribution.

The amount distributed by CHNR to a U.S. Holder should be taxed as a “dividend” to the extent of such holder’s proportionate share of CHNR’s current and accumulated earnings and profits (if any), and should otherwise be (i) a tax-free return of capital to the extent of such holder’s adjusted tax basis in his or her CHNR common shares and (ii) thereafter as a capital gain. CHNR does not maintain calculations of its earnings and profits in accordance with U.S. Federal income tax principles; accordingly holders should assume that the entire amount of the Distribution should be taxable as a dividend. CHNR intends to treat the distribution of Feishang Anthracite ordinary shares as a taxable dividend for U.S. Federal income tax purposes, and the remainder of the disclosure assumes such treatment.

The dividend amount generally will be treated as foreign source ordinary dividend income, and generally will be eligible for reduced rates of taxation applicable to qualified dividend income applicable to certain non-corporate U.S. Holders, but will not be eligible for the dividends received deduction allowed to corporations. The dividend will be includable in “net investment income” for purposes of the Medicare contribution tax applicable to certain non-corporate U.S. Holders.

United States Federal Income Taxation

General

The following is a general discussion addresses onlyof certain material U.S. federal income tax considerations applicable to U.S. Holders (as defined below) with respect to their ownership and disposition of Common shares. This summary is limited to U.S. federal income tax considerations relevant to U.S. Holders that hold Common shares as “capital assets” within the materialmeaning of Section 1221 of the Internal Revenue Code of 1986, as amended (the “Code”) (generally, property held for investment). For purposes of this discussion, the term “U.S. Holder” means a beneficial owner of Common shares that is for U.S. federal income tax purposes:

·An individual who is a U.S. citizen or resident;

·A corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the U.S., any state thereof or the District of Columbia;

·An estate the income of which is subject to U.S. federal income taxation regardless of its source; or

·A trust that (a) is subject to the primary supervision of a court within the U.S. and the control of one or more U.S. persons for all substantial decisions or (b) has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person.

This discussion is based on current provisions of the Code, existing, temporary and proposed Treasury Regulations promulgated thereunder, published administrative pronouncements of the Internal Revenue Service (the “IRS”), and other applicable authorities, all of which are subject to change or to differing interpretation, possibly with retroactive effect. Any such change or differing interpretation could alter the tax consequences described in this discussion. There can be no assurance that the IRS will not challenge one or more of the tax consequences described herein, and we have not obtained, nor do we intend to obtain, a ruling with respect to the U.S. federal income tax consequences to a U.S. person, defined as a U.S. citizenHolder of the ownership or resident, a U.S. corporation, or an estate or trust subject todisposition of Common Stock.

This summary does not address the U.S. federal income tax on allconsiderations of its income regardlessownership or disposition of source, making anCommon shares by U.S. Holders that are subject to special provisions under the Code, including, but not limited to, the following: (a) tax-exempt organizations, qualified retirement plans, individual retirement accounts, or other tax-deferred accounts; (b) financial institutions, underwriters, insurance companies, real estate investment trusts, or regulated investment companies; (c) broker-dealers, dealers, or traders in securities or currencies that elect to apply a “mark-to-market” accounting method; (d) U.S. Holders that have a “functional currency” other than the common shares. For taxable years beginning after December 31, 1996,U.S. dollar; (e) U.S. Holders that own Common shares as part of a trust will bestraddle, hedging transaction, conversion transaction, constructive sale, or other arrangement involving more than one position; (f) U.S. Holders that acquire Common shares in connection with the exercise of employee stock options or otherwise as compensation for services; (g) U.S. Holders that hold Common shares other than as a U.S. person only if:

·

a courtcapital asset within the United States is able to exercise primary supervision over its administration; and

·

onemeaning of Section 1221 of the Code (generally, property held for investment purposes); (h) U.S. Holders that own directly, indirectly, or by attribution, 10% or more, United States persons haveby voting power or value, of the authorityoutstanding stock of the Company; (i) U.S. Holders subject to controlSection 451(b) of the Code; and (j) U.S. expatriates or former long-term residents of the U.S. U.S. Holders that are subject to special provisions under the Code, including U.S. Holders described immediately above, should consult their own tax advisors regarding all U.S. federal, U.S. state and local, and non-U.S. tax consequences (including the potential application and operation of its substantial decisions.

In addition,any income tax treaties) relating to the following discussionacquisition, ownership, or disposition of Common shares. Except to the extent described below, this summary also does not address the U.S. federal income tax consequences to a person who holdsconsiderations of ownership or will hold, directlydisposition of the Warrants by U.S. Holders.

If an entity or indirectly, 10% or more of our common shares, which we refer toarrangement that is classified as a “10% Shareholder”partnership (or other “pass-through” entity) for U.S. federal income tax purposes holds Common shares, the U.S. federal income tax considerations to such partnership and the partners (or other owners) of such partnership of the ownership, or disposition of the Common shares generally will depend on the activities of the partnership and the status of such partners (or other owners). Non-U.S. personsThis summary does not address the U.S. federal income tax considerations for any such partner or partnership (or other “pass-through” entity or its owners). Owners of entities and 10% Shareholdersarrangements that are advised toclassified as partnerships (or other “pass-through” entities) for U.S. federal income tax purposes should consult their own tax advisors regarding the U.S. federal income tax considerations incidentof the ownership or disposition of Common shares.

THIS SUMMARY DOES NOT PURPORT TO BE A COMPREHENSIVE ANALYSIS OR DESCRIPTION OF ALL POTENTIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS OF ACQUIRING, OWNING AND DISPOSING OF COMMON SHARES. HOLDERS OF COMMON SHARES SHOULD CONSULT WITH THEIR TAX ADVISORS REGARDING THE PARTICULAR TAX CONSIDERATIONS TO THEM OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF COMMON SHARES, INCLUDING THE APPLICABILITY AND EFFECTS OF U.S. FEDERAL, STATE, LOCAL, AND OTHER TAX LAWS.

Taxation of Distributions

Subject to an investment in our common shares.

Athe possible applicability of the PFIC rules discussed below, a U.S. investor receiving a distribution of our common sharesHolder generally will be required to include such distribution in gross income as a taxable dividend the amount of any distribution paid on Common shares to the extent the distribution is paid out of our current or accumulated earnings and profits as(as determined under U.S. federal income tax principles. Anyprinciples). Such dividends paid by us will be taxable to a corporate U.S. Holder at regular rates and will not be eligible for the dividends-received deduction generally allowed to domestic corporations in respect of dividends received from other domestic corporations. Subject to the PFIC rules described below, distributions in excess of oursuch earnings and profits generally will first be treated, forapplied against and reduce the U.S. federal income tax purposes, as a nontaxable return of capital,Holder’s basis in Common shares (but not below zero) and, to the extent in excess of the U.S. investor’s adjusted taxsuch basis, in our common shares, and thenwill be treated as gain from the sale or exchange of a capital asset, provided that our common shares constitutes a capital asset in the hands of the U.S. investor. U.S. corporate shareholders willsuch Common shares. We do not be entitledexpect to any deduction for distributions received as dividends on our common shares.

Gain or loss on the sale or exchangemaintain calculations of our common sharesearnings and profits in accordance with U.S. federal income tax principles. You therefore should expect that distributions generally will be treated as dividends for U.S. federal income tax purposes.

With respect to non-corporate U.S. Holders, under tax laws currently in effect and subject to certain exceptions (including, but not limited to, dividends treated as investment income for purposes of investment interest deduction limitations), dividends generally will be taxed at the lower applicable long-term capital gains rate provided that Common shares are readily tradable on an established securities market in the United States, and we are not treated as a PFIC in the year the dividend is paid or in the preceding year and certain holding period and other requirements are met. U.S. Treasury Department guidance indicates that shares listed on Nasdaq (on which Common shares are listed) will be considered readily tradable on an established securities market in the United States. Even if the Common shares are listed on the Nasdaq, there can be no assurance that the Common shares will be considered readily tradable on an established securities market in future years. U.S. Holders should consult their tax advisors regarding the availability of such lower rate for any dividends paid with respect to Common shares.

67 

Sale or Other Taxable Disposition of Common shares

Subject to the PFIC rules discussed below, upon the sale or other taxable disposition of Common shares, a U.S. Holder generally will recognize a capital gain or loss if our common shares is held as a capital asset byin an amount equal to the difference between the amount realized and such U.S. investor. SuchHolder’s adjusted tax basis in such Common shares. Any such capital gain or loss generally will be long-term capital gain or loss if the U.S. investor has held our commonHolder’s holding period in such Common shares for more thanexceeds one yearyear. Long-term capital gain realized by a non-corporate U.S. Holder is currently eligible to be taxed at reduced rates. The deduction of capital losses is subject to certain limitations.

Exercise or Lapse of a Warrant

Subject to the timePFIC rules discussed below, and except as discussed below with respect to the cashless exercise of a warrant, a U.S. Holder generally will not recognize gain or loss upon the acquisition of Common shares on the exercise of a Warrant. A U.S. Holder’s tax basis in Common shares received upon exercise of the saleWarrant generally will be an amount equal to the sum of the U.S. Holder’s tax basis in the Warrant exchanged therefor and the exercise price. The U.S. Holder’s holding period for a Common shares received upon exercise of the Warrant will begin on the date following the date of exercise (or possibly the date of exercise) of the Warrant and will not include the period during which the U.S. Holder held the Warrant. If a Warrant is allowed to lapse unexercised, a U.S. Holder generally will recognize a capital loss equal to such holder’s tax basis in the Warrant.

The tax consequences of a cashless exercise of a warrant are not clear under current law. Subject to the PFIC rules discussed below, a cashless exercise may not be taxable, either because the exercise is not a realization event or exchange.because the exercise is treated as a “recapitalization” for U.S. federal income tax purposes. Although we expect a U.S. Holder’s cashless exercise of our warrants (including after we provide notice of our intent to redeem Warrants for cash) to be treated as a recapitalization, a cashless exercise could alternatively be treated as a taxable exchange in which gain or loss would be recognized.



Because of the absence of authority on the U.S. federal income tax treatment of a cashless exercise, a U.S. Holder should consult its tax advisor regarding the tax consequences of a cashless exercise.



PFIC Status of the Company

The Company has not performed an analysis of whether or not it will be deemed a “passive foreign investment company” within the meaning of Section 1297 of the Code (“PFIC”) for its current taxable year. If the Company is or becomes a PFIC, the foregoing description of the U.S. federal income tax considerations to U.S. Holders of the acquisition, ownership and disposition of Common shares could be materially different. The U.S. federal income tax consequences of owning and disposing of Common shares if the Company is or becomes a PFIC are described below under the heading “Tax Consequences if the Company is a PFIC.”

A holdernon-U.S. corporation is a PFIC for each tax year in which (i) 75% or more of commonits gross income is passive income (as defined for U.S. federal income tax purposes) (the “income test”) or (ii) 50% or more (by value) of its assets (based on an average of the quarterly values of the assets during such tax year) either produce or are held for the production of passive income (the “asset test”). For purposes of the PFIC provisions of the Code, “passive income” generally includes dividends, interest, certain rents and royalties, certain gains from commodities or securities transactions and the excess of gains over losses from the disposition of certain assets which produce passive income. If a non-U.S. corporation owns at least 25% (by value) of the stock of another corporation, the non-U.S. corporation is treated, for purposes of the income test and asset test, as owning its proportionate share of the assets of the other corporation and as receiving directly its proportionate share of the other corporation’s income. 

Under certain attribution and indirect ownership rules, if the Company is a PFIC, U.S. Holders will generally be deemed to own their proportionate share of the Company’s direct or indirect equity interest in any company that is also a PFIC (a “Subsidiary PFIC”), and will be subject to U.S. federal income tax on their proportionate share of (a) any “excess distributions,” as described below, on the stock of a Subsidiary PFIC and (b) a disposition or deemed disposition of the stock of a Subsidiary PFIC by the Company or another Subsidiary PFIC, both as if such U.S. Holders directly held the shares of such Subsidiary PFIC. In addition, U.S. Holders may be subject to U.S. federal income tax on any indirect gain realized on the stock of a Subsidiary PFIC on the sale or disposition of Common shares. Accordingly, U.S. Holders should be aware that they could be subject to tax even if no distributions are received and no redemptions or other dispositions of Common shares are made.

The determination of PFIC status is inherently factual, is subject to a number of uncertainties, and can be determined only annually at the close of the tax year in question. Additionally, the analysis depends, in part, on the application of complex U.S. federal income tax rules, which are subject to differing interpretations. There can be no assurance that the Company will or will not be determined to be a PFIC for the current tax year or any prior or future tax year, and no opinion of legal counsel or ruling from the IRS concerning the status of the Company as a PFIC has been obtained or will be requested. U.S. Holders should consult their own U.S. tax advisors regarding the PFIC status of the Company.

68 

Tax Consequences if the Company is a PFIC

If we are determined to be a PFIC for any taxable year (or portion thereof) that is included in the holding period of a U.S. Holder of Common shares and, in the case of Common shares, the U.S. Holder did not make a qualified electing fund (“QEF”) election or a “mark-to-market” election (within the meaning of Section 1296 of the Code), such U.S. Holder generally would be subject to special and adverse rules with respect to (i) any gain recognized by the U.S. Holder on the sale or other disposition of its Common shares and (ii) any “excess distribution” made to the U.S. Holder (generally, any distributions to such U.S. Holder during a taxable year of the U.S. Holder that are greater than 125% of the average annual distributions received by such U.S. Holder in respect of the Common shares during the three preceding taxable years of such U.S. Holder or, if shorter, such U.S. Holder’s holding period for the Common shares).

Under the default PFIC rules:

·the U.S. Holder’s gain or excess distribution will be allocated ratably over the U.S. Holder’s holding period for the Common shares;
·the amount allocated to the U.S. Holder’s taxable year in which the U.S. Holder recognized the gain or received the excess distribution, or to the period in the U.S. Holder’s holding period before the first day of the first taxable year in which we were a PFIC, will be taxed as ordinary income;
·the amount allocated to other taxable years (or portions thereof) of the U.S. Holder and included in its holding period will be taxed at the highest tax rate in effect for that year and applicable to the U.S. Holder; and
·an additional tax equal to the interest charge generally applicable to underpayments of tax will be imposed on the U.S. Holder with respect to the tax attributable to each such other taxable year of the U.S. Holder.

In general, a U.S. Holder may avoid the adverse PFIC tax consequences described above in respect of the Common shares by making and maintaining a timely and valid QEF election (if eligible to do so) to include in income its pro rata share of our net capital gains (as long-term capital gain) and other earnings and profits (as ordinary income), on a current basis, in each case whether or not distributed, in the taxable year of the U.S. Holder in which or with which our taxable year ends. A U.S. Holder must make a QEF election for the Company and each Subsidiary PFIC if it wishes to have this treatment. To make a QEF election, a U.S. Holder will need to have an annual information statement from the Company setting forth the ordinary earnings and net capital gains for the year and the Company may not provide this statement, in which case a QEF election cannot be made.

In general, a U.S. Holder must make a QEF election on or before the due date for filing its income tax return for the first year to which the QEF election will apply. Under applicable Treasury Regulations, a U.S. Holder will be permitted to make retroactive elections in particular, but limited, circumstances, including if it had a reasonable belief that the Company was not a PFIC and filed a protective election. If a U.S. Holder owns PFIC stock indirectly through another PFIC, separate QEF elections must be made for the PFIC in which the U.S. Holder is a direct shareholder and the Subsidiary PFIC for the QEF rules to apply to both PFICs. U.S. Holders should be aware that there can be no assurance that the Company has satisfied or will satisfy the recordkeeping requirements that apply to a QEF or that the Company has supplied or will supply U.S. Holders with information such U.S. Holders require to report under the QEF rules in the event that the Company is a PFIC for any tax year.

Alternatively, if we are a PFIC and the Common shares constitute “marketable stock,” a U.S. Holder may avoid the adverse PFIC tax consequences discussed above if such U.S. Holder, at the close of the first taxable year in which it holds (or is deemed to hold) Common shares, makes a mark-to-market election with respect to such shares for such taxable year. Such U.S. Holder generally will include for each of its taxable years as ordinary income the excess, if any, of the fair market value of its Common shares at the end of such year over its adjusted basis in its Common shares. The U.S. Holder also will recognize an ordinary loss in respect of the excess, if any, of its adjusted basis of its Common shares over the fair market value of its Common shares at the end of its taxable year (but only to the extent of the net amount of previously included income as a result of the mark-to-market election). The U.S. Holder’s basis in its Common shares will be adjusted to reflect any such income or loss amounts, and any further gain recognized on a sale or other taxable disposition of its Common shares will be treated as ordinary income. Currently, a mark-to-market election may not be made with respect to Warrants.

The mark-to-market election is available only for “marketable stock,” generally, stock that is regularly traded on a national securities exchange that is registered with the SEC, including Nasdaq (on which Common Shares are listed), or on a foreign exchange or market that the IRS determines has rules sufficient to ensure that the market price represents a legitimate and sound fair market value. However, there is no assurance that the Common Shares will remain “regularly traded” for this purpose. Moreover, a mark-to-market election made with respect to Common Shares would not apply to a U.S. Holder’s indirect interest in any Subsidiary PFIC in which we own an equity interest. U.S. Holders should consult their tax advisors regarding the availability and tax consequences of a mark-to-market election with respect to Common Shares under their particular circumstances.

Each U.S. Holder should consult its own tax advisor regarding the availability and desirability of, and procedure for, making a timely and effective QEF election (including a “pedigreed” QEF election where necessary) for the Company and any Subsidiary PFIC.

Receipt of Foreign Currency

The amount of any distribution or proceeds paid in any currency other than U.S. dollars to a U.S. Holder in connection with the ownership of Common Shares, or on the sale or other taxable disposition of Common Shares will be included in the gross income of a U.S. Holder as translated into U.S. dollars calculated by reference to the exchange rate prevailing on the date of actual or constructive receipt of the payment, regardless of whether the currency is converted into U.S. dollars at that time. If the currency received is not converted into U.S. dollars on the date of receipt, a U.S. Holder will have a basis in the currency equal to its U.S. dollar value on the date of receipt. Any U.S. Holder who receives payment in non-U.S. currency and engages in a subsequent conversion or other disposition of the currency may have a foreign currency exchange gain or loss that would generally be treated as ordinary income or loss, and generally will be U.S. source income or loss for foreign tax credit purposes. Different rules apply to U.S. Holders who use the accrual method with respect to foreign currency.

69 

Each U.S. Holder should consult its own U.S. tax advisor regarding the U.S. federal income tax consequences of receiving, owning, and disposing of non-U.S. currency.

Information Reporting; Backup Withholding

Under U.S. federal income tax law, certain categories of U.S. Holders must file information returns with respect to their investment in, or involvement in, a non-U.S. corporation. For example, U.S. return disclosure obligations (and related penalties) are imposed on individuals who are U.S. Holders that hold certain specified foreign financial assets in excess of certain threshold amounts. The definition of “specified foreign financial assets” includes not only financial accounts maintained in non-U.S. financial institutions, but also, if held for investment and not in an account maintained by certain financial institutions, any stock or security issued by a non-U.S. person, any financial instrument or contract that has an issuer or counterparty other than a U.S. person and any interest in a non-U.S. entity. A U.S. Holder may be subject to these reporting requirements unless such U.S. Holder’s Common Shares are held in an account at certain financial institutions. Penalties for failure to file certain of these information returns are substantial. U.S. Holders should consult with their own tax advisors regarding the requirements of filing information returns on IRS Form 8938, and, if applicable, filing obligations relating to the PFIC rules, including possible reporting on an IRS Form 8621. Failure to do so, if required, will extend the statute of limitations until such required information is furnished to the IRS.

A U.S. Holder of Common Shares may be subject to information reporting and “backup withholding”withholding,” currently at the rate of 31%24%, with respect to dividends(a) distributions paid on our common sharesCommon Shares and (b) proceeds arising from the sale or other taxable disposition of Common Shares, in each case if the dividendsdistribution or proceeds are paid by a paying agent, broker or other intermediary in the United States or by a U.S. broker or certain United States-related brokers to the holder outside the United States. In addition, the proceeds of the sale, exchange or redemption of common shares may be subject to backup withholding, if such proceeds are paid by a paying agent, broker or other intermediary in the United States.

Backup withholding may be avoided by the holder of common sharesCommon Shares if such holder:

·

is a corporation or comes within other exempt categories; or

·

·is a corporation or comes within other exempt categories; or
·provides a correct taxpayer identification number, certifies that such holder is not subject to backup withholding and otherwise complies with the backup withholding rules.

Backup withholding is not subject to backup withholding and otherwise complies with the backup withholding rules.

In addition, holders of common shares who are not U.S. persons are generally exempt from backup withholding, although they may be required to comply with certification and identification procedures in order to prove their exemption.

Anyan additional tax. Rather, any amounts withheld under the backup withholding rules from a payment to a holder will be refunded or credited against the holder’sU.S. Holder’s U.S. federal income tax liability, if any, provided that amount withheld is claimed as federal taxes withheld on the holder’sU.S. Holder’s U.S. federal income tax return relating to the year in which the backup withholding occurred.occurred and the requisite information is timely furnished to the IRS. A holderU.S. Holder who is not otherwise required to file a U.S. income tax return must generally file a claim for refundrefund.

The discussion of reporting requirements set forth above is not intended to constitute an exhaustive description of all reporting requirements that may apply to a U.S. Holder. A failure to satisfy certain reporting requirements may result in an extension of the time period in which the IRS can assess a tax, and, under certain circumstances, such an extension may apply to assessments of amounts unrelated to any unsatisfied reporting requirement. Each U.S. Holder should consult its own tax advisor regarding the information reporting and backup withholding rules.

THE ABOVE SUMMARY IS NOT INTENDED TO CONSTITUTE A COMPLETE ANALYSIS OF ALL U.S. TAX CONSIDERATIONS APPLICABLE TO U.S. HOLDERS WITH RESPECT TO THE OWNERSHIP, EXERCISE OR DISPOSITION OF COMMON SHARES. U.S. HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE TAX CONSIDERATIONS APPLICABLE TO THEM IN THEIR PARTICULAR CIRCUMSTANCES.

BVI Taxation

This summary has been prepared based upon management’s understanding of applicable tax consequences, but has not been reviewed by counsel or other experts in U.S. or BVI taxation. This summary does not address all possible tax consequences relating to an investment in our common shares and does not purport to deal with the tax consequences applicable to all categories of investors, some of which, such as dealers in securities, insurance companies and tax-exempt entities, may be subject to special rules. In particular, the discussion does not address the tax of non-BVI tax laws, except to the extent described above under “Taxation – United Stated Federal Income Taxation.” Accordingly, each prospective investor should consult its own tax advisor regarding the particular tax consequences to it of an investment in the casecommon shares. The discussion below is based upon laws and relevant interpretations in effect as of non-U.S. holders, an income tax return in orderthe date of this prospectus, all of which are subject to claim refunds of withheld amounts.

British Virgin Islands Taxation

change. Under the BVI Business Companies Act of the British Virgin Islands(as amended) as currently in effect, companies incorporated or registered under the BVI Business Companies Act are currently exempt from income and corporate tax. In addition, the British Virgin IslandsBVI currently does not levy capital gains tax on companies incorporated or registerdregistered under the BVI Business Companies Act.

70 

A holder of our common shares who is not a resident of British Virgin IslandsBVI is exempt from British Virgin IslandsBVI income tax on dividends paid with respect to the common shares and any capital gains realized with respect to any common shares. In addition, the common shares are not subject to transfer taxes, stamp duties or similar charges for so long as we do not hold an interest in real estate in the British Virgin Islands.BVI.

There are no estate, gift or inheritance taxes levied by the British Virgin IslandsBVI on companies incorporated or registered under the BVI Business Companies Act.

There is no income tax treaty or convention currently in effect between the United States and the British Virgin IslandsBVI that reis applicable to any payments made by or to a company incorporated or registered under the BVI Business Companies ActAct.

PRC Taxation

If the PRC tax authorities determine that we are a “resident enterprise” for PRC enterprise income tax purposes, a withholding tax of 10% may be imposed by us on any dividends that non-PRC resident holders of our common shares receive from us and on gains realized on their sale or other disposition of common shares, if such income is considered as income derived from within the British Virgin Islands.PRC.

F.

Dividends and Paying Agents

No disclosure is required in response to this Item.Not applicable.

G.

Statement by Experts

No disclosure is required in response to this Item.Not applicable.

H.

Documents on Display

The documents concerning the Company that are referred to in this Annual Reportannual report may be inspected at the Company’s principal executive offices at Room 2205, 22/F, West Tower, Shun Tak Centre, 168-200 Connaught Road Central, Sheung Wan, Hong Kong. The Company does not currently maintain an agent in the United States. Certain documents described in response to Item 1919. of this Annual Reportannual report are filed with this Annual Reportannual report and others are incorporated by reference to documents previously filed by the Company with the United States Securities and Exchange Commission.SEC. The documents that are filed herewith or incorporated by reference can be viewed on the SEC’s web sitewebsite at www.sec.gov.

I.

Subsidiary Information

See Exhibit 8 for further information about our subsidiaries.Not applicable.





ITEM 11.

ITEM 11.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Equity Price Risk

We were not exposed to equity price risk as of December 31, 2023, following the disposal of FARL’s equity securities in July 2021.

Foreign currency exchange rate riskCurrency Exchange Rate Risk

AllRevenue and expenses of the Company’s sales and purchases are made domestically andour PRC subsidiaries are denominated in Renminbi. The administrative expenses of the Company’s head office in Hong Kong are denominated either in United States dollars or Hong Kong dollars. As the reporting currency of the Company’s consolidated financial statements is Renminbi, the Company has material market risk with respect to currency fluctuation between Hong Kong dollars and United States dollars to Renminbi and translation difference may arise on consolidation. The Company may also suffer an exchange loss when it converts Renminbi to other currencies, such as Hong Kong dollars or United States dollars. If market conditions allow, the Company endeavors to match the currency used in operating/investing activities with that used in financing activities. We have not engaged any foreign currency contractcontracts to hedge our potential foreign currency exchange exposure, if any.

Interest rate riskRate Risk

InterestNone of our outstanding debt bears interest at a floating rate. Our exposure to interest rate risk primarily relates to the interest income generated by excess cash, which is the risk that the fair value or future cash flowsmostly held in interest-bearing bank accounts. We have not used derivative financial instruments in our investment portfolio. Interest earning instruments carry a degree of a financial instrument will fluctuate because ofinterest rate risk. We have not been exposed to, nor do we anticipate being exposed to, material risks due to changes in market interest rates. However, our future interest income may fall short of expectations due to changes in market interest rates.

Commodity Price Risk

We arewere not exposed to interest ratecommodity price risk as of December 31, 2023, as we dodid not have any outstanding interest-bearing financial instruments.copper ore in inventory on that date.

Commodity price risk

ITEM 12.DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

The Company is exposed to fluctuation in the prices of iron and, historically, other metals. These commodity prices can fluctuate widely and are affected by factors beyond our control which affect our earnings and cash flows. We have not engaged in any formal hedging transactions to manage possible price fluctuations.Not applicable.

The following table sets forth the sensitivity analysis of the commodity price change to the Company’s sales revenue and gross profit:


 

2015

Iron Price

 

Zinc Price

 

Actual

10%

-10%

 

10%

-10%

 

(CNY in millions, except percentage)

 

 

 

Total Sale

18.34

1.69

(1.69)

 

0.11

(0.11)

% Change

 

9.21

(9.21)

 

0.60

(0.60)

 

 

 

 

 

 

 

Gross Profit

(13.59)

1.69

(1.69)

 

0.11

(0.11)

% Change

 

(12.41)

12.41

 

(0.77)

0.77


ITEM 12.

DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

No disclosure is required in response to this Item.








71 


PART II

ITEM 13.DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIESNone.

ITEM 14.MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

There are no defaults, dividend arrearages and delinquencies or other information required to be disclosed in response to this Item.None.

ITEM 15.CONTROLS AND PROCEDURES

ITEM 14.

MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

There have been no modifications to the rights of security holders and there is no other information to disclose in response to this Item.

ITEM 15.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company maintains “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”).Act. As of December 31, 2015,2023, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures.

In designing and evaluating its disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Based upon that evaluation and subsequent evaluations conducted in connection with the audit of the Company’s consolidated financial statements for the year ended December 31, 2015,2023, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective to ensure that information required to be disclosed in our periodic reports filed under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified by the Securities and Exchange Commission’sSEC’s rules and regulations.

Management’s Report on Internal Control over Financial Reporting

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Exchange Act defines internal control over financial reporting as a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers and effected by the Company’s Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with International Financial Reporting StandardsIFRS issued by the International Accounting Standards BoardIASB and includes those policies and procedures that:

•Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;

·

•Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS issued by IASB, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;

•Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

·

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

·

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.





All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2015.2023. In making this assessment, we used the criteria established in the 2013 Internal Control – Integrated Framework issued by the Committee of Sponsoring Organization of the Treadway Commission (“COSO”) (2013 framework) (the COSO criteria)“COSO criteria”). Based on our evaluation and the COSO criteria, we determined that, as of December 31, 2015,2023, the Company’s internal control over financial reporting was effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with IFRS.

Since the Company is not an accelerated filer, the auditor’s attestation report pursuant to SOX Section 404(b) is not required in this Annual Report.annual report.

Changes in Internal Control over Financial Reporting

There has been no change in the Company’s internal control over financial reporting that occurred during the fiscal year 20152023 and that has materially affected, or is reasonably likely to affect, the Company’s internal control over financial reporting.

ITEM 16.

ITEM 16.[Reserved]

[Reserved]

ITEM 16A.

AUDIT COMMITTEE FINANCIAL EXPERT

ITEM 16A.AUDIT COMMITTEE FINANCIAL EXPERT

In general, an “audit committee financial expert” within the meaning of Item 407(d)(5)16.A. of Regulation S-K,Form 20-F is an individual member of the Audit Committee who:

·

understands generally accepted accounting principles and financial statements,

·

•understands generally accepted accounting principles and financial statements;

 is able to assess the general application of such principles in connection with accounting for estimates, accruals and reserves,

•is able to assess the general application of such principles in connection with accounting for estimates, accruals and reserves;

·

•has experience preparing, auditing, analyzing or evaluating financial statements comparable to the breadth and complexity of our financial statements, or experience actively supervising one or more persons engaging in such activities;

has experience preparing, auditing, analyzing or evaluating financial statements comparable to the breadth and complexity to the our financial statements,

•understands internal controls over financial reporting; and

·

understands internal controls over financial reporting, and

·

•understands audit committee functions.

An “audit committee financial expert” may acquire the foregoing attributes through:

•education and experience as a principal financial officer, principal accounting officer, controller, public accountant, auditor or person serving similar functions;

·

•experience actively supervising a principal financial officer, principal accounting officer, controller, public accountant, auditor or person serving similar functions;

education and experience as a principal financial officer, principal accounting officer, controller, public accountant, auditor or person serving similar functions;

•experience overseeing or assessing the performance of companies or public accounts with respect to the preparation, auditing or evaluation of financial statements; or

·

experience actively supervising a principal financial officer, principal accounting officer, controller, public accountant, auditor or person serving similar functions; experience overseeing or assessing the performance of companies or public accounts with respect to the preparation, auditing or evaluation of financial statements; or

·

•other relevant experience.

Our Board of Directors has determined that Mr. Yip Wing Hang and Mr. Lam Kwan Sing areis each an “audit committee financial expert” within the meaning of Item 407(d)(5)16A of Regulation S-K.Form 20-F. Each of our “audit committee financial experts” is independent as that term is used in NASDAQNasdaq Marketplace Rule 5605(a)(2).





Item 16B.

ITEM 16B.CODE OF ETHICS

A Code of Ethics is a written standard designed to deter wrongdoing and to promote:

•honest and ethical conduct,

·

•full, fair, accurate, timely and understandable disclosure in regulatory filings and public statements,

honest and ethical conduct,

•compliance with applicable laws, rules and regulations,

·

•the prompt reporting violation of the code, and

full, fair, accurate, timely and understandable disclosure in regulatory filings and public statements,

·

compliance with applicable laws, rules and regulations,

·

the prompt reporting violation of the code, and

·

•accountability for adherence to the Code of Ethics.

We have adopted a Code of Business Conduct and Ethics that is applicable to all of our employees, and also contains provisions that apply only to our Chief Executive Officer, principal financial and accounting officers and persons performing similar functions. A copyIt is a “Code of ourEthics” as defined in Item 16B of Form 20-F promulgated by the SEC. The full text of the Code of Business Conduct and Ethics is posted on our website at https://www.chnr.net/CorporateGovernance/39.html, and a copy is incorporated by reference as an exhibitExhibit 11 to this Annual Report.annual report. Information contained on, or that can be accessed through, our website does not constitute a part of this a part of this annual report and is not incorporated by reference herein. If we make any amendment to the Code of Business Conduct and Ethics or grant any waivers, including any implicit waiver, from a provision of the Code of Business Conduct and Ethics, we will disclose the nature of such amendment or waiver on our website to the extent required by the rules and regulations of the SEC. We have not granted any waivers under our Code of Business Conduct and Ethics.

ITEM 16C.

ITEM 16C.PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following table shows the fees that we paid for audit and other services provided by Ernst & Young Hua Ming LLP (PCAOB ID No. 1408), Beijing, China, our former independent registered public accounting firm, for fiscal 2014,years 2022 and the fees that we paid for audit services provided by Ernst & Young Hua Ming LLP for fiscal year 2015.2023.

Fiscal 2014

Fiscal 2015

Audit Fees

US$128,918

US$123,234

Audit-Related Fees

US$4,000

—

Tax Fees

—

—

All Other Fees

—

—

Total

US$132,918

US$123,234

  Fiscal Year 2022 Fiscal Year 2023
     
Audit Fees US$  351,125  US$  395,766 
Audit-Related Fees US$  180,000  US$  — 
Tax Fees    —  US$  35,337 
All Other Fees    —     — 
             
Total US$  531,125  US$  431,103 

 

Audit Fees —This– This category includes the audit of our annual financial statements and services that are normally provided by the independent auditors in connection with engagements for those fiscal years.

Audit-Related Fees —– This category consists of assurance and related services byincludes the independent auditors that are reasonably related to the performance of the audit or review of our financial statements and are not reported above under “Audit Fees.” The amount in 2014 represented the auditor’s remunerationfees for the services providedrelated filing of a resale registration statement on Form F-3 and Form S-8 in review of the Company’s Form F-3.2022 and 2023.

Tax Fees —– This category consistsincludes the aggregate fees billed or to be billed in each of the last two fiscal years for professional services rendered by the Company’s independent registered public accounting firmprincipal accountant for tax compliance, tax advice, and tax advice. The services for the fees disclosed under this category include tax return preparation and technical tax advice.planning.

All Other Fees —Fee – This category consistsincludes the aggregate fees billed or to be billed in each of feesthe last two fiscal years for products and services provided by the principal accountant, other miscellaneous items.than the services reported above.

The Audit Committee has adopted a procedure for pre-approval of all fees charged by the Company’s independent registered public accounting firm. Under the procedure, the Audit Committee approves the engagement letter with respect to audit, tax and review services. Other fees are subject to pre-approval by the entire Audit Committee, or, in the period between meetings, by a designated member of the Audit Committee. Any such approval by the designated member is disclosed to the entire Audit Committee at the next meeting. TheAll the audit fees, audit related fees and tax fees paid to Ernst & Young Hua Ming LLP with respect to fiscal year 2015years 2022 and 2023 were approved by the Audit Committee.

ITEM 16D.EXEMPTION FROM THE LISTING STANDARDS FOR THE AUDIT COMMITTEE

EXEMPTION FROM THE LISTING STANDARDS FOR THE AUDIT COMMITTEENot applicable.

ITEM 16E.PURCHASE OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

There have been no exemptions from listing standards required to be disclosed in response to this Item.None.

ITEM 16F.CHANGES IN REGISTRANT’S CERTIFYING ACCOUNTANT

ITEM 16E.Not applicable.

PURCHASE OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

There have been no purchases of equity securities required to be disclosed in response to this Item.

ITEM 16F.

CHANGES IN REGISTRANT’S CERTIFYING ACCOUNTANT

Information in response to this Item has been previously reported.





ITEM 16G.

ITEM 16G.CORPORATE GOVERNANCE

Our common shares are currently listed on the NASDAQNasdaq Capital Market and, for so long as our securities continue to be listed, we will remain subject to the rules and regulations established by the NASDAQNasdaq Stock Market that apply to listed companies. NASDAQNasdaq rules include various corporate governance requirements applicable to listed securities. While all NASDAQ-listedNasdaq-listed companies are subject to certain of these corporate governance requirements, foreign private issuers such as our company are exempt from other corporate governance requirements if the laws of their home jurisdiction do not otherwise require compliance. Since our home jurisdiction does not mandate compliance with some of these NASDAQNasdaq rules, we have opted out of compliance with them. A more detailed description of the NASDAQNasdaq requirements that we are not subject to is contained elsewhere in this Annual Reportannual report under Item 6.C“Item 6.C. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES – “Board Practices; NASDAQBoard Practices – Nasdaq Requirements.”

ITEM 16H.MINE SAFETY DISCLOSURE

MINE SAFETY Not applicable.

ITEM 16I.DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

AllNot applicable.

ITEM 16J.INSIDER TRADING POLICIES

Not applicable.

74 

ITEM 16K.CYBERSECURITY

As an exploration company, we have limited digital operations and our business activity to date has been identifying, acquiring, and exploring mineral properties, and we have not yet adopted formal cybersecurity risk management programs or formal processes for assessing cybersecurity risks. We understand the importance of managing material risks from cybersecurity threats and are committed, as part of our continuing growth, to implementing and maintaining an adequate information security program to manage such risks and safeguard our systems and data.

We currently manage our cybersecurity risk through a variety of practices that are applicable to all users of our information technology and information assets, including our employees and contractors. We use a combination of technology, policies, training, and monitoring to promote security awareness and prevent security incidents.

We believe we have limited exposure to cyber threats other than emails and project data storage. Financial transactions are enabled through well-stablished financial institutions and accounting and employee information storage are outsourced to an external accounting firm.

We have not, as of the Company’s mining rights cover mines locateddate of this prospectus, experienced a cybersecurity threat or incident in the People’s Republiclast three years, that materially affected or is reasonably likely to affect our business, results of China and, accordingly,operations, or financial condition. However, there can be no disclosure is requiredguarantee that we will not experience such an incident in response to this Item.the future. For more information,




Our board of directors oversees cybersecurity risk as part of its role of overseeing enterprise-wide risk.



PART III

ITEM 17.

FINANCIAL STATEMENTS

No disclosure is required in response to this Item.

ITEM 18.

ITEM 17.FINANCIAL STATEMENTS

We have elected to provide financial statements pursuant to Item 18.

ITEM 18.FINANCIAL STATEMENTS

Our audited consolidated financial statements are attached hereto as Appendix A beginning on page F-1 of this annual report.  

ITEM 19.EXHIBITS

The following financial statements are filed as a part of this Form 20-F in Appendix A hereto:

Reports of Independent Registered Public Accounting Firm, together with consolidated financial statements for the Company and subsidiaries, including:

a.

Consolidated statements of financial position as of December 31, 2014 and 2015

b.

Consolidated statements of profit or loss for the years ended December 31, 2013, 2014 and 2015

c.

Consolidated statements of comprehensive income for the years ended December 31, 2013, 2014 and 2015

d.

Consolidated statements of changes in equity for the years ended December 31, 2013, 2014 and 2015

e.

Consolidated statements of cash flows for the years ended December 31, 2013, 2014 and 2015

f.

Notes to consolidated financial statements.

ITEM 19.

EXHIBITS

The following Exhibitsexhibits are filed as part of this annual report on Form 20-F:20-F. Certain exhibits have been previously filed with the SEC pursuant to the Exchange Act, as amended (Commission File Number 000-26046).

Exhibit No.

Exhibit Description

1.1

Amended and Restated Memorandum and Articles of Association of the Registrant(included as Exhibit 99.1 to Form 6K filed January 29, 2014, and incorporated herein by reference).

1.2

Board of Directors Resolutions Designating Series B Preferred Stock and Establishing Rights, Preferences and Limitations(included as Exhibit 1.3 to Annual Report on Form 20-F for the fiscal year ended December 31, 2004, and incorporated herein by reference).

4.1

Acquisition Agreement dated January 24, 2006 by and between China Natural Resources, Inc., Feishang Mining Holdings Limited and Feishang Group Limited(included as Exhibit 10.1 to the Current Report on Form 6-K furnished January 25, 2006,30, 2014, and incorporated herein by reference).

4.2

2.1

Agreement for the Sale and PurchaseDescription of the Entire Issued Share Capital in Pineboom Investments Limited dated July 11, 2008 by and between Feishang Group Limited and China Natural Resources, Inc.’s Securities Registered under Section 12 of the Securities Exchange Act of 1934, as Amended(included as Exhibit 10.1 to the Current Report on Form 6-K furnished July 15, 2008, and incorporated herein by reference).

4.3

Agreement for the Sale and Purchase of the Entire Issued Share Capital in Newhold Investments Limited dated August 11, 2008 by and between Feishang Group Limited and China Natural Resources, Inc.(included as Exhibit 10.1 to the Current Report on Form 6-K furnished August 13, 2008, and incorporated herein by reference).

4.4

Service Agreement dated as of October 1, 2008 by and between the Company and Li Feilie(included as Exhibit 99.2 to the Current Report on Form 6-K furnished November 10, 2008, and incorporated herein by reference).

4.5

Service Agreement dated as of October 1, 2008 by and between the Company and Tam Cheuk Ho(included as Exhibit 99.3 to the Current Report on Form 6-K furnished November 10, 2008, and incorporated herein by reference).

4.6

Service Agreement dated as of October 1, 2008 by and between the Company and Wong Wah On Edward(included as Exhibit 99.4 to the Current Report on Form 6-K furnished November 10, 2008, and incorporated herein by reference).

4.7

Letter Agreement dated January 12, 2009 by and between Feishang Group Limited and China Natural Resources, Inc.(included as Exhibit 10.2 to the Current Report on Form 6-K furnished January 20, 2009, and incorporated herein by reference).























Exhibit No.

Exhibit Description

4.8

Letter Agreement dated July 10, 2009 by and between Feishang Group Limited and China Natural Resources, Inc.(included as Exhibit 10.2 to the Current Report on Form 6-K furnished July 16, 2009, and incorporated herein by reference).

4.9

Agreement for the Sale and Purchase of the Entire Issued Share Capital in Wealthy Year Limited dated April 30, 2010 by and between Feishang Group Limited and China Natural Resources, Inc.(included as Exhibit 4.1 to the Current Report on Form 6-K furnished May 11, 2010, and incorporated herein by reference).

4.10

Sales and Purchase Master Contract dated June 1, 2011 by and between Huludao Zinc Industry Co., Ltd. And Wuhu Feishang Mining Development Co., Ltd(included as Exhibit 4.242.1 to the Annual Report on Form 20-F filed June 30, 2011,12, 2020, and incorporated herein by reference).

4.11

2.2

Service Agreement dated asForm of January 22, 2014 by and between the Company and Woo Ming YeeInvestors Warrant(included as Exhibit 99.32.1 to the Current Report on Form 6-K furnished January 29, 2014,February 21, 2024, and incorporated herein by reference)..

4.12

2.3

Service Agreement dated asForm of January 22, 2014 by and between the Company and Ma Sin LingPlacement Agent Warrant (included as Exhibit 99.22.2 to the Current Report on Form 6-K furnished January 29, 2014,February 21, 2024, and incorporated herein by reference)..

4.13

4.1

Sales and Purchase Master Contract dated January 1, 2014 by and between Anhui Tianchen Renewable Resource Co., Ltd. And Wuhu Feishang Mining Development Co., Ltd.(included as Exhibit 4.14 to the Annual Report on Form 20-F furnished April 27, 2015, and incorporated herein by reference).

4.14

2014 Equity Compensation Plan(included as Annex A of Exhibit 99.1 to the Current Report on Form 6-K furnished August 13, 2014, and incorporated herein by reference).

4.15

4.2

Service Agreement dated as of April 2, 2015, by and between the Company and Tam Cheuk Ho(included as Exhibit 99.1 to the Current Report on Form 6-K furnished April 6, 2015, and incorporated herein by reference).

4.16

4.3

Service Agreement dated as of April 2, 2015, by and between the Company and Wong Wah On Edward(included as Exhibit 99.2 to the Current Report on Form 6-K furnished April 6, 2015, and incorporated herein by reference).

4.17

4.4

Sales and Purchase Master ContractLicense Agreement dated JanuaryApril 1, 20152017, by and between Fanchang County JinfengAnka Consultants Limited and China Natural Resources, Inc.(included as Exhibit 4.15 to the Annual Report on Form 20-F filed June 19, 2017, and incorporated herein by reference).

4.5Inner Mongolia Wulatehouqi Moruogu Tong Mine Cooperation Agreement on Mineral Exploration dated August 20, 2017, by and between Bayannaoer City Feishang Mining Company Limited and Bayannaoer Jijincheng Mining Co., Ltd.(included as Exhibit 4.25 to the Annual Report on Form 20-F filed April 30, 2018, and incorporated herein by reference).
4.6Sale and Purchase Agreement dated July 27, 2021, by and between China Natural Resources, Inc. and Li Feilie(included as Exhibit 4.1 to the Current Report on Form 6-K furnished July 27, 2021, and incorporated herein by reference).
4.7Confirmation of Financial Support to China Natural Resources, Inc., dated May 15, 2023, from Feishang Group Ltd.(included as Exhibit 4.7 to the Annual Report on Form 20-F filed May 15, 2023, and incorporated herein by reference).
4.8Confirmation of Financial Support to China Natural Resources, Inc., dated May 15 2023, from Feishang Enterprise Group Co., Ltd. And Wuhu Feishang Mining(included as Exhibit 4.8 to the Annual Report on Form 20-F filed May 15, 2023, and incorporated herein by reference).
4.9Domestic Garbage and Sewage Treatment Infrastructure at Villages and Towns, Wujiang District, Whole PPP Project Package, PPP Project Contract – Purchaser: Housing and Urban-Rural Development Bureau of Wujiang District, Shaoguan City, by and among Shanghai Onway Environmental Development Co., Ltd., Guangzhou Ruiyi Environmental Protection Technology Co., Ltd., Guangdong Xifu Environmental Protection Technology Co., Ltd., Guangdong Xinzhen Construction Engineering Co., Ltd., and Shaoguan Angrui Environmental Technology Development Co. Ltd., dated August 2018(included as Exhibit 4.9 to the Annual Report on Form 20-F filed herewith)May 17, 2022, and incorporated herein by reference).

6

4.10

ComputationFixed Assets Loan Contract, between the Bank of Earnings Per Share for Fiscal Year ended December 31, 2015Communications Co., Ltd. and Shaoguan Angrui Environmental Technology Development Co. Ltd., dated August 29, 2019(contained in Financial Statementsincluded as Exhibit 4.10 to the Annual Report on Form 20-F filed herewith)May 17, 2022, and incorporated herein by reference).

7

4.11

ComputationGuarantee Contract, between Bank of RatiosCommunications Co., Ltd. and Feishang Enterprise Group Co., Ltd., dated August 29, 2019(included as Exhibit 4.11 to the Annual Report on Form 20-F filed May 17, 2022, and incorporated herein by reference).

4.12Guarantee Contract, between Bank of Communications Co., Ltd. and Shanghai Onway Environmental Development Co., Ltd., dated August 29, 2019(included as Exhibit 4.12 to the Annual Report on Form 20-F filed May 17, 2022, and incorporated herein by reference).
4.13Accounts Receivable Pledge Contract, between Bank of Communications Co., Ltd. and Shaoguan Angrui Environmental Technology Development Co., Ltd., dated August 29, 2019(included as Exhibit 4.13 to the Annual Report on Form 20-F filed May 17, 2022, and incorporated herein by reference).
4.14Equity Pledge Contract, between Bank of Communications Co., Ltd. and Shanghai Onway Environmental Development Co., Ltd., dated August 29, 2019(included as Exhibit 4.14 to the Annual Report on Form 20-F filed May 17, 2022, and incorporated herein by reference).
4.15Loan Agreement, between Shenzhen Qianhai Feishang Environmental Investment Co., Ltd and Shenzhen Chaopeng Investment Co., Ltd, dated June 30, 2021(included as Exhibit 4.15 to the Annual Report on Form 20-F filed May 17, 2022, and incorporated herein by reference ).
4.16Irrevocable Letter of Guarantee for Fiscal Years endedJoint and Several Liability, dated June 30, 2021, from Shenzhen Feishang Investment Co., Ltd.(included as Exhibit 4.16 to the Annual Report on Form 20-F filed May 15, 2023, and incorporated herein by reference).
4.17Sale and Purchase Agreement dated February 27, 2023, by and among the Company, Feishang Group Limited, Top Pacific (China) Limited, Li Feilie and Yao Yuguang(included as Exhibit 99.2 to the Current Report on Form 6-K furnished February 28, 2023, and incorporated herein by reference).
4.18Sale and Purchase Agreement dated July 28, 2023 by and between the Company and Feishang Group Limited (incorporated by reference to Exhibit 99.1 to our Form 6-K filed on July 28, 2023)
4.19Set-off letter dated August 3, 2023 by and between the Company and Feishang Group Limited
4.20Amendment Agreement dated as of December 31, 2013, 201422, 2023 to Sale and 2015Purchase Agreement dated as of February 27, 2023 by and among the Company, Feishang Group and Top Pacific (China) Limited, Li Feilie and Yao Yuguang (incorporated by reference to Exhibit 99.1 to our Form 6-K filed on December 22,2023)
4.21Form of Securities Purchase Agreement by and between the Company and the Investors (incorporated by reference to Exhibit 4.1 to our Form 6-K filed on February 21, 2024)
4.22Placement Agency Agreement dated February 15, 2024 by and between the Company and FT Global Capital, Inc. (incorporated by reference to Exhibit 4.2 to our Form 6-K filed on February 21, 2024)
8Subsidiaries of the Registrant(filed herewith).

8

11

Subsidiaries of the Registrant(filed herewith).

11

Code of Business Conduct and Ethics(includedfiled as Exhibit 14 to Annual Report on Form 10-KSB for the fiscal year ended December 31, 2003,filed March 30, 2004, and incorporated herein by reference).

12.1

CEO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002(filed herewith).

12.2

CFO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002(filed herewith).

13.1

CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002(filedfurnished herewith).

13.2

CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002(filedfurnished herewith).

15.1

Consent of Ernst & Young Hua Ming LLP to incorporation of audit report(filed herewith).

15.2Press Release dated April 28, 2016 into registration statement on Form F-3 (SEC File No. 333-197278)30, 2024(filed herewith).

15.2

97

Consent of Ernst & Young to incorporation of audit report dated April 27, 2015  into registration statement on Form F-3 (SECClawback Policy

101.INSInline XBRL Instance Document. The instance document does not appear in the Interactive Data File No. 333-197278)(filed herewith)

because its XBRL tags are embedded within the Inline XBRL document.
101.SCHInline XBRL Taxonomy Extension Schema Document.
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document.
101.LABInline XBRL Taxonomy Extension Label Linkbase Document.
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document.
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).








SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this Annual Reportannual report on its behalf.

CHINA NATURAL RESOURCES, INC.

Date: April 28, 2016

30, 2024

By:

/s/ LI FEILIE

WONG WAH ON EDWARD

Li Feilie,Wong Wah On Edward, CEO




77 





APPENDIX A

APPENDIX A


CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firms,Firm, together with the consolidated financial statements for the Company and its subsidiaries, including:

a.

a.Consolidated statements of profit or loss for the years ended December 31, 2021, 2022 and 2023

Consolidated statements of financial position as of December 31, 2014 and 2015

b.Consolidated statements of comprehensive income for the years ended December 31, 2021, 2022 and 2023

b.

c.Consolidated statements of financial position as of January 1, 2021, December 31, 2022 and 2023

Consolidated statements of profit or loss for the years ended December 31, 2013, 2014 and 2015

d.Consolidated statements of changes in equity for the years ended December 31, 2021, 2022 and 2023

c.

e.Consolidated statements of cash flows for the years ended December 31, 2021, 2022 and 2023

Consolidated statements of comprehensive income for the years ended December 31, 2013, 2014 and 2015

d.

Consolidated statements of changes in equity for the years ended December 31, 2013, 2014 and 2015

e.

Consolidated statements of cash flows for the years ended December 31, 2013, 2014 and 2015

f.

Notes to consolidated financial statements.











f.Notes to the consolidated financial statements

 


CHINA NATURAL RESOURCES, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015

Pages

Pages

Report of Independent Registered Public Accounting Firm(PCAOB ID: 1408)

F-2

Report of independent registered public accounting firm

F-2 – F-3

Consolidated statements of financial position

F-4 – F-5

Consolidated statements of profit or loss

for the years ended December 31, 2021, 2022 and 2023

F-6 – F-7

F-3

Consolidated statements of comprehensive income

for the years ended December 31, 2021, 2022 and 2023

F-8

F-4

Consolidated statements of financial position as of December 31, 2022 and 2023

F-5 – F-6
Consolidated statements of changes in equity

for the years ended December 31, 2021, 2022 and 2023

F-9

F-7

Consolidated statements of cash flows

for the years ended December 31, 2021, 2022 and 2023

F-10F-8 – F-11

F-9

Notes to the consolidated financial statements

F-12F-10 – F-56

F-85








REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


TheTo the Shareholders and the Board of Directors and Shareholders of

China Natural Resources, Inc.


Opinion on the Financial Statements

We have audited the accompanying consolidated statementstatements of financial position of China Natural Resources, Inc. (the “Company”)Company) as of December 31, 2015,2023 and 2022, the related consolidated statementstatements of profit or loss, statement of comprehensive income, statement of changes in equity and statement of cash flows for each of the year then ended. three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022 and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Basis for Opinion

These financial statements are the responsibility of the Company'sCompany’s management. Our responsibility is to express an opinion on thesethe Company’s financial statements based on our audit.audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.


We conducted our auditaudits in accordance with the standards of the Public Company Accounting Oversight Board (United States).PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. Wemisstatement, whether due to error or fraud. The Company is not required to have, nor were notwe engaged to perform, an audit of the Company'sits internal control over financial reporting. Our audit included considerationAs part of our audits, we are required to obtain an understanding of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company'sCompany’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supportingregarding the amounts and disclosures in the financial statements, assessingstatements. Our audits also included evaluating the accounting principles used and significant estimates made by management, andas well as evaluating the overall financial statement presentation. We believe that our audit provide a reasonable basis for our opinion.


In our opinion,presentation of the financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2015 and the consolidated results of its operations and its cash flows for the year then ended, in conformity withInternational Financial Reporting Standards as issued by the International Accounting Standards Board.



/s/ Ernst & Young Hua Ming LLP

Beijing, People’s Republic of China


April 28, 2016





REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


The Board of Directors and Shareholders of

China Natural Resources, Inc.


We have audited the accompanying consolidated statement of financial position of China Natural Resources, Inc. (the “Company”) as of December 31, 2014, and the related consolidated statements of profit or loss, statements of comprehensive income, statements of changes in equity and statements of cash flows for each of the two years in the period ended December 31, 2014. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.


We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation.statements. We believe that our audits provide a reasonable basis for our opinion.


In our opinion,Critical Audit Matters

Critical audit matters are matters arising from the current period audit of the financial statements referredthat were communicated or required to above present fairly, in allbe communicated to the audit committee and that: (1) relate to accounts or disclosures that are material respects,to the consolidated financial position of the Company as of December 31, 2014statements and the consolidated results of its operations and its cash flows for each of the two years in the period ended December 31, 2014, in conformity withInternational Financial Reporting Standards as issued by the International Accounting Standards Board.(2) involved our especially challenging, subjective or complex judgments. We determined that there are no critical audit matters.



/s/ Ernst & Young Hua Ming LLP

Hong KongWe have served as the Company’s auditor since 2015.


Beijing, the People’s Republic of China

April 27, 201530, 2024







CHINA NATURAL RESOURCES, INC.

CONSOLIDATED STATEMENTS OF PROFIT OR LOSS

FOR THE YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

                
     Year Ended December 31, 
     2021  2022  2023  2023 
     CNY  CNY  CNY  US$ 
  Notes             
                
CONTINUING OPERATIONS                    
Administrative expenses      (11,076)  (25,248)  (12,883)  (1,820)
Other income      599   699   3,742   529 
Fair value (loss)/gain on financial instruments, net      (38,349)  1,007   847   120 
Finance costs      (166)  191   (48)  (7)
Finance income      13   13   5   1 
                     
LOSS BEFORE INCOME TAX  5   (48,979)  (23,338)  (8,337)  (1,177)
                     
Income tax expense  7   5,095   —   —   — 
                     
LOSS FOR THE YEAR FROM CONTINUING OPERATIONS      (43,884)  (23,338)  (8,337)  (1,177)
                     
DISCONTINUED OPERATIONS                    
(Loss)/profit for the year from discontinued operations, net of tax      (11,087)  1,042   (4,106)  (580)
                     
LOSS FOR THE YEAR      (54,971)  (22,296)  (12,443)  (1,757)
                     
ATTRIBUTABLE TO:                    
Owners of the Company                    
From continuing operations      (43,884)  (23,338)  (8,337)  (1,177)
From discontinued operations      (4,268)  (1,285)  (5,504)  (777)
Non-controlling interests                    
From continuing operations      —   —   —   — 
From discontinued operations      (6,819)  2,327   1,398   197 
                     
LOSS FOR THE YEAR      (54,971)  (22,296)  (12,443)  (1,757)
                     
LOSS PER SHARE ATTRIBUTABLE TO OWNERS OF THE COMPANY:                    
Basic and diluted                    
- For loss from continuing operations  8   (5.39)  (2.85)  (1.01)  (0.15)
- For loss from discontinued operations  8   (0.52)  (0.15)  (0.67)  (0.09)
- Loss per share  8   (5.91)  (3.00)  (1.68)  (0.24)

F-3 

CHINA NATURAL RESOURCES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands)

             
  Year Ended December 31, 
  2021  2022  2023  2023 
  CNY  CNY  CNY  US$ 
             
LOSS FOR THE YEAR  (54,971)  (22,296)  (12,443)  (1,757)
                 
Other comprehensive income/(loss) that will be reclassified to profit or loss in subsequent periods:                
Foreign currency translation adjustments of the subsidiaries  3,252   (8,094)  (2,810)  (396)
Other comprehensive (loss)/income that will not be reclassified to profit or loss in subsequent periods:                
Foreign currency translation adjustments of the Company  (10,909)  9,593   1,421   201
                 
Total other comprehensive (loss)/income for the year, net of tax  (7,657)  1,499   (1,389)  (195)
                 
TOTAL COMPREHENSIVE LOSS FOR THE YEAR  (62,628)  (20,797)  (13,832)  (1,952)
                 
Attributable to:                
Owners of the Company                
From continuing operations  (51,542)  (21,839)  (9,726)  (1,371)
From discontinued operations  (4,267)  (1,285)  (5,504)  (778)
Non-controlling interests                
From continuing operations  —   —   —   — 
From discontinued operations  (6,819)  2,327   1,398   197 
                 
TOTAL COMPREHENSIVE LOSS FOR THE YEAR  (62,628)  (20,797)  (13,832)  (1,952)

F-4 

CHINA NATURAL RESOURCES, INC.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

AS OF DECEMBER 31, 20142022 AND 20152023

(Amounts in thousands)


         
    December 31, 
    2022 2023 2023 

 

 

 

December 31,

 

    CNY CNY US$ 

 

 

 

2014

 

2015

 

 

2015

 

 Notes        

 

Notes

 

CNY

 

CNY

 

 

US$

 

         

ASSETS

  

                    

  

                    

  

                    

  

  

                    

  

               

NON-CURRENT ASSETS

 

 

 

 

 

 

 

 

 

 

               

Property, plant and equipment

 

4

 

 

13,632

 

 

10,296

 

 

 

1,586

 

  9   424   53   7 

Rehabilitation fund

 

5

 

 

3,850

 

 

3,957

 

 

 

610

 

Prepayments

 

 

 

 

30

 

 

—

 

 

 

—

 

Intangible assets  10   19,381   —   — 
Right-of-use assets  11   2,993   346   49 
Trade receivables  12   10,520   —   — 
Contract assets  13   89,713   —   — 
Other non-current assets  14   4   247,530   34,969 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

               

TOTAL NON-CURRENT ASSETS

 

 

 

 

17,512

 

 

 

14,253

 

 

 

2,196

 

     123,035   247,929   35,025 

 

 

 

 

 

 

 

 

 

 

 

 

 

               

CURRENT ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

               

Inventories

 

6

 

 

13,511

 

 

3,923

 

 

 

604

 

     729   —   — 
Trade receivables  12   46,760   —   — 
Bills receivable     8,500   —   — 
Contract assets  13   21,647   —   — 

Prepayments

 

 

 

 

136

 

 

136

 

 

 

21

 

     1,732   1,107   156 

Other receivables

 

 

 

 

614

 

 

488

 

 

 

75

 

  15   82,733   18   3 
Other current assets     3,160   —   — 

Cash and cash equivalents

 

 

 

 

48,263

 

 

 

32,840

 

 

 

5,059

 

  16   31,695   4,753   671 

 

 

 

 

 

 

 

 

 

 

 

 

 

               

TOTAL CURRENT ASSETS

 

 

 

 

62,524

 

 

 

37,387

 

 

 

5,759

 

     196,956   5,878   830 

 

 

 

 

 

 

 

 

 

 

 

 

 

               

TOTAL ASSETS

 

 

 

 

80,036

 

 

 

51,640

 

 

 

7,955

 

     319,991   253,807   35,855 






The accompanying notes are an integral part of these consolidated financial statements.



F-5 


CHINA NATURAL RESOURCES, INC.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (CONTINUED)

AS OF DECEMBER 31, 20142022 AND 20152023

(Amounts in thousands)


         
    December 31, 
    2022 2023 2023 

 

 

 

 

December 31,

 

    CNY CNY US$ 

 

 

 

 

2014

 

2015

 

2015

 

 Notes        

 

Notes

 

 

CNY

 

CNY

 

US$

 

         

LIABILITIES AND EQUITY

  

                    

  

  

                    

  

                    

  

                    

  

               

 

 

 

 

 

 

 

 

 

 

               

CURRENT LIABILITIES

 

 

 

 

 

 

 

 

 

 

               

Trade payables

 

7

 

 

 

1,462

 

 

921

 

 

 

142

 

  17   20,326   100   14 

Other payables and accrued liabilities

 

8

 

 

 

16,151

 

 

20,097

 

 

 

3,096

 

Taxes payable

 

 

 

 

 

20,214

 

 

22,288

 

 

 

3,433

 

Due to a related company

 

20

 

 

 

—

 

 

3,932

 

 

606

 

Contract liabilities     690   —   — 
Other payables and accruals  18   16,724   82,610   11,669 
Income tax payable     10,732   —   — 
Provisions  19   494   —   — 
Interest-bearing loans and borrowings  20   3,000   —   — 
Derivative financial liabilities     824   —   — 
Lease liabilities  11   1,317   360   51 
Due to related companies     3,408   9,069   1,281 

Due to the Shareholder

 

20

 

 

 

—

 

 

 

11,752

 

 

1,810

 

     7,153   85,673   12,103 

Deferred income

 

9

 

 

 

—

 

 

 

287

 

 

 

44

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

               

TOTAL CURRENT LIABILITIES

 

 

 

 

 

37,827

 

 

 

59,277

 

 

 

9,131

 

     64,668   177,812   25,118 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

               

NON-CURRENT LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

               

Due to the Shareholder

 

20

 

 

 

15,374

 

 

—

 

 

 

—

 

Asset retirement obligations

 

10

 

 

 

4,221

 

 

 

4,639

 

 

 

715

 

Deferred tax liabilities  23   5,276   —   — 
Lease liabilities  11   1,598   —   — 
Interest-bearing loans and borrowings  20   71,000   —   — 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

               

TOTAL NON-CURRENT LIABILITIES

 

 

 

 

 

19,595

 

 

 

4,639

 

 

 

715

 

     77,874   —   — 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

               

TOTAL LIABILITIES

 

 

 

 

 

57,422

 

 

 

63,916

 

 

 

9,846

 

     142,542   177,812   25,118 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

               

EQUITY / (DEFICIENCY IN ASSETS)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EQUITY               

Issued capital

 

21

 

 

 

312,081

 

 

312,081

 

 

 

48,074

 

  24   450,782   450,782   63,682 

Other capital reserves

 

21

 

 

 

636,960

 

 

 636,960

 

 

 

 98,119

 

  24   735,319   758,775   107,194 

Reserves

 

 

 

 

 

58,171

 

 

 63,607

 

 

 

 9,798

 

Accumulated losses

 

 

 

 

 

(980,085

)

 

 

(1,021,028

)

 

 

(157,282

)

     (1,109,010)  (1,122,851)  (158,626)

Other comprehensive loss

 

 

 

 

 

(4,513

)

 

 

 (3,896

)

 

 

 (600

)

Other comprehensive losses     (9,322)  (10,711)  (1,513)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

               

TOTAL EQUITY / (DEFICIENCY IN ASSETS)

 

 

 

 

 

22,614

 

 

 

(12,276

)

 

 

(1,891

)

EQUITY ATTRIBUTABLE TO OWNERS
OF THE COMPANY		     67,769   75,995   10,737 
NON-CONTROLLING INTERESTS     109,680   —   — 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

               

TOTAL LIABILITIES AND EQUITY / (DEFICIENCY IN ASSETS)

 

 

 

 

 

80,036

 

 

 

51,640

 

 

 

7,955

 

TOTAL EQUITY     177,449   75,995   10,737 
               
TOTAL LIABILITIES AND EQUITY     319,991   253,807   35,855 





The accompanying notes are an integral part of these consolidated financial statements.




CHINA NATURAL RESOURCES, INC.

CONSOLIDATED STATEMENTS OF PROFIT OR LOSS

YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015

(Amounts in thousands, except share and per share data)


 

 

 

 

 

Year Ended December 31,

 

 

 

 

 

 

2013

 

 

2014

 

 

2015

 

 

2015

 

 

 

Notes

 

 

CNY

 

 

CNY

 

 

CNY

 

 

US$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONTINUING OPERATIONS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

11

 

 

 

41,360

 

 

 

8,303

 

 

 

18,342

 

 

 

2,825

 

Cost of sales

 

12

 

 

 

(25,101

)

 

 

(6,563

)

 

 

(31,936

)

 

 

(4,919

)

Gross profit / (loss)

 

 

 

 

 

16,259

 

 

 

1,740

 

 

 

(13,594

)

 

 

(2,094

)

Selling and distribution expenses

 

 

 

 

 

(124

)

 

 

(80

)

 

 

(31

)

 

 

(5

)

Administrative expenses

 

 

 

 

 

(17,906

)

 

 

(12,226

)

 

 

(18,894

)

 

 

(2,910

)

Impairment loss on property, plant and equipment

 

15

 

 

 

—

 

 

 

(8,065

)

 

 

 (7,542

)

 

 

(1,162

)

Write-down/(Reversal of write-down) of inventories to net realizable value, net

 

15

 

 

 

—

 

 

 

(9,299

)

 

 

5,474

 

 

 

843

 

Other operating (expenses) / income, net

 

 

 

 

 

(1,104

)

 

 

554

 

 

 

  412

 

 

 

  63

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING LOSS

 

 

 

 

 

(2,875

)

 

 

(27,376

)

 

 

(34,175

)

 

 

(5,265

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Finance costs

 

13

 

 

 

(360

)

 

 

(392

)

 

 

(424

)

 

 

(65

)

Foreign exchange difference, net

 

 

 

 

 

2,445

 

 

 

—

 

 

 

(354

)

 

 

(55

)

Interest income

 

 

 

 

 

1,814

 

 

 

1,602

 

 

 

1,056

 

 

 

163

 

Non-operating  expenses, net

 

14

 

 

 

(167

)

 

 

(218

)

 

 

(106

)

 

 

(17

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PROFIT / (LOSS) BEFORE INCOME TAX FROM CONTINUING OPERATIONS

 

15

 

 

 

857

 

 

 

(26,384

)

 

 

(34,003

)

 

 

(5,239

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME TAX EXPENSE

 

17

 

 

 

(2,142

)

 

 

(6,839

)

 

 

(1,504

)

 

 

(232

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOSS FOR THE YEAR FROM CONTINUING OPERATIONS

 

 

 

 

 

(1,285

)

 

 

(33,223

)

 

 

(35,507

)

 

 

(5,471

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DISCONTINUED OPERATIONS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss for the year from discontinued operations, net of tax

 

3

 

 

 

(334,537

)

 

 

(10,708

)

 

 

—

 

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOSS FOR THE YEAR

 

 

 

 

 

(335,822

)

 

 

(43,931

)

 

 

(35,507

)

 

 

(5,471

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ATTRIBUTABLE TO:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Owners of the Company

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

From continuing operations

 

 

 

 

 

(1,285

)

 

 

(33,223

)

 

 

(35,507

)

 

 

(5,471

)

From discontinued operations

 

 

 

 

 

(334,119

)

 

 

(9,925

)

 

 

—

 

 

 

—

 

 

 

 

 

 

 

(335,404

)

 

 

(43,148

)

 

 

(35,507

)

 

 

(5,471

)

Non-controlling interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

From continuing operations

 

 

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

From discontinued operations

 

 

 

 

 

(418

)

 

 

(783

)

 

 

—

 

 

 

—

 

 

 

 

 

 

 

(418

)

 

 

(783

)

 

 

—

 

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(335,822

)

 

 

(43,931

)

 

 

(35,507

)

 

 

(5,471

)






The accompanying notes are an integral part of these consolidated financial statements.




CHINA NATURAL RESOURCES, INC.

CONSOLIDATED STATEMENTS OF PROFIT OR LOSS (CONTINUED)

YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015

(Amounts in thousands, except share and per share data)


 

 

 

 

 

Year Ended December 31,

 

 

 

 

 

 

2013

 

 

2014

 

 

2015

 

 

2015

 

 

 

Notes

 

 

CNY

 

 

CNY

 

 

CNY

 

 

US$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOSS PER SHARE ATTRIBUTABLE TO OWNERS OF THE COMPANY:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- For loss from continuing operations

 

18

 

 

 

(0.05

)

 

 

(1.33

)

 

 

(1.43

)

 

 

  (0.22

)

- For loss from discontinued operations

 

18

 

 

 

(13.41

)

 

 

(0.40

)

 

 

—

 

 

 

—

 

- Net loss per share

 

 

 

 

 

(13.46

)

 

 

(1.73

)

 

 

(1.43

)

 

 

(0.22

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- For loss from continuing operations

 

18

 

 

 

(0.05

)

 

 

(1.33

)

 

 

(1.43

)

 

 

 (0.22

)

- For loss from discontinued operations

 

18

 

 

 

(13.41

)

 

 

(0.40

)

 

 

—

 

 

 

—

 

- Net loss per share

 

 

 

 

 

(13.46

)

 

 

(1.73

)

 

 

(1.43

)

 

 

(0.22

)






The accompanying notes are an integral part of these consolidated financial statements.




CHINA NATURAL RESOURCES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015

(Amounts in thousands)


 

 

Year Ended December 31,

 

 

 

2013

 

 

2014

 

 

2015

 

 

2015

 

 

 

CNY

 

 

CNY

 

 

CNY

 

 

US$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOSS FOR THE YEAR

 

 

(335,822

)

 

 

(43,931

)

 

 

(35,507

)

 

 

(5,471

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income to be reclassified to profit or loss in subsequent periods:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

3,445

 

 

 

(3,388

)

 

 

617

 

 

 

95

 

Available-for-sale investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Changes in fair value

 

 

—

 

 

 

—

 

 

 

631

 

 

 

97

 

Reclassification adjustments for gains included in the

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

consolidated statement of profit or loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-gain on disposal

 

 

—

 

 

 

—

 

 

 

(631

)

 

 

(97

)

Total other comprehensive income / (loss) for the year, net of tax

 

 

3,445

 

 

 

(3,388

)

 

 

617

 

 

 

95

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL COMPREHENSIVE LOSS FOR THE YEAR, NET OF TAX

 

 

(332,377

)

 

 

(47,319

)

 

 

(34,890

)

 

 

(5,376

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Owners of the Company

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

From continuing operations

 

 

1,253

 

 

 

(36,626

)

 

 

(34,890

)

 

 

(5,376

)

From discontinued operations

 

 

(333,212

)

 

 

(9,910

)

 

 

—

 

 

 

—

 

 

 

 

(331,959

)

 

 

(46,536

)

 

 

(34,890

)

 

 

(5,376

)

Non-controlling interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

From continuing operations

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

From discontinued operations

 

 

(418

)

 

 

(783

)

 

 

—

 

 

 

—

 

 

 

 

(418

)

 

 

(783

)

 

 

—

 

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(332,377

)

 

 

(47,319

)

 

 

(34,890

)

 

 

(5,376

)







The accompanying notes are an integral part of these consolidated financial statements.




CHINA NATURAL RESOURCES, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2013, 20142021, 2022 AND 20152023

(Amounts in thousands)

 

 

Attributable to owners of the Company

 

 

 

 

 

 

 

 

Issued
capital

(Note 21)

 

 

Other capital
reserves

 

 

Reserves

 

 

Accumulated losses

 

 

Other

Compre-hensive
(loss) / income

 

 

Total

 

 

Non-controlling interests

 

 

Total

 

 

 

CNY

 

 

CNY

 

 

CNY

 

 

CNY

 

 

CNY

 

 

CNY

 

 

CNY

 

 

CNY

 

At January 1, 2013

 

 

312,081

 

 

 

536,872

 

 

 

49,793

 

 

 

(443,001

)

 

 

(2,811

)

 

 

452,934

 

 

 

93,941

 

 

 

546,875

 

Loss for the year

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(335,404

)

 

 

—

 

 

 

(335,404

)

 

 

(418

)

 

 

(335,822

)

Foreign currency translation adjustments

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

3,445

 

 

 

3,445

 

 

 

—

 

 

 

3,445

 

Total comprehensive (loss) / income

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(335,404

)

 

 

3,445

 

 

 

(331,959

)

 

 

(418

)

 

 

(332,377

)

Deemed contribution from the Shareholder of the Company (Note 21(b))

 

 

—

 

 

 

41,020

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

41,020

 

 

 

—

 

 

 

41,020

 

Appropriation and utilization of safety fund and production maintenance fund, net

 

 

—

 

 

 

—

 

 

 

3,266

 

 

 

(3,266

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

At December 31, 2013

 

 

312,081

 

 

 

577,892

 

 

 

53,059

 

 

 

(781,671

)

 

 

634

 

 

 

161,995

 

 

 

93,523

 

 

 

255,518

 

Loss for the year

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(43,148

)

 

 

—

 

 

 

(43,148

)

 

 

(783

)

 

 

(43,931

)

Foreign currency translation adjustments

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(3,388

)

 

 

(3,388

)

 

 

—

 

 

 

(3,388

)

Total comprehensive loss

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(43,148

)

 

 

(3,388

)

 

 

(46,536

)

 

 

(783

)

 

 

(47,319

)

Deemed contribution from the Shareholder of the Company (Note 21(b))

 

 

—

 

 

 

59,068

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

59,068

 

 

 

—

 

 

 

59,068

 

Spin-Off of Feishang Anthracite Resources Limited (Note 3)

 

 

—

 

 

 

—

 

 

 

(7,244

)

 

 

(142,910

)

 

 

(1,759

)

 

 

(151,913

)

 

 

(92,740

)

 

 

(244,653

)

Appropriation of general reserve (Note 21(c))

 

 

—

 

 

 

—

 

 

 

3,925

 

 

 

(3,925

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Appropriation of enterprise expansion fund (Note 21(c))

 

 

—

 

 

 

—

 

 

 

3,925

 

 

 

(3,925

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Appropriation and utilization of safety fund and production maintenance fund, net

 

 

—

 

 

 

—

 

 

 

4,506

 

 

 

(4,506

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

At December 31, 2014

 

 

312,081

 

 

 

636,960

 

 

 

58,171

 

 

 

(980,085

)

 

 

(4,513

)

 

 

22,614

 

 

 

—

 

 

 

22,614

 

Loss for the year

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(35,507

)

 

 

—

 

 

 

 (35,507

)

 

 

—

 

 

 

 (35,507

)

Change in fair value of available-for-sale investments, net of tax

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

631

 

 

 

631

 

 

 

—

 

 

 

631

 

Reclassification adjustments for gains on diposal included in the consolidated statement of profit or loss

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(631

)

 

 

(631

)

 

 

—

 

 

 

(631

)

Foreign currency translation adjustments

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

617

 

 

 

 617

 

 

 

—

 

 

 

 617

 

Total comprehensive (loss) / income

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(35,507

)

 

 

617

 

 

 

(34,890

)

 

 

—

 

 

 

(34,890

)

Appropriation and utilization of safety fund and production maintenance fund, net

 

 

—

 

 

 

—

 

 

 

5,436

 

 

 

(5,436

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

At December 31, 2015

 

 

312,081

 

 

 

636,960

 

 

 

63,607

 

 

 

(1,021,028

)

 

 

(3,896

)

 

 

(12,276

)

 

 

—

 

 

 

(12,276

)

At December 31, 2015 (US$)

 

 

48,074

 

 

 

98,119

 

 

 

9,798

 

 

 

(157,282

)

 

 

(600

)

 

 

(1,891

)

 

 

—

 

 

 

(1,891

)

                      
  Attributable to Owners of the Company       
  Issued
capital		  Other capital
reserves		  

Accumulated

losses

  

Other

comprehensive (loss)/income

  Total  Non-controlling interests  Total equity 
  CNY  CNY  CNY  CNY  CNY  CNY  CNY 
Balance as of January 1, 2021  419,091   787,987   (1,031,187)  (3,164)  172,727   119,072   291,799 
Loss for the year  —   —   (48,152)  —   (48,152)  (6,819)  (54,971)
Foreign currency translation adjustments  —   —   —   (7,657)  (7,657)  —   (7,657)
Total comprehensive loss for the year  —   —   (48,152)  (7,657)  (55,809)  (6,819)  (62,628)
Deemed distribution to the controlling shareholder  —   (75,651)  —   —   (75,651)  —   (75,651)
Dividends declared  —   —   (5,048)  —   (5,048)  —   (5,048)
Dividends paid to non-controlling shareholders  —   —   —   —   —   (4,900)  (4,900)
Issuance of shares  31,691   —   —   —   31,691   —   31,691 
Equity-settled share-based payments  —   2,311   —   —   2,311   —   2,311 
Others  —   4,463   —   —   4,463   —   4,463 
Balance as of December 31, 2021  450,782   719,110   (1,084,387)  (10,821)  74,684   107,353   182,037 
                             
Balance as of January 1, 2022  450,782   719,110   (1,084,387)  (10,821)  74,684   107,353   182,037 
(Loss)/income for the year  —   —   (24,623)  —   (24,623)  2,327   (22,296)
Foreign currency translation adjustments  —   —   —   1,499   1,499   —   1,499 
Total comprehensive (loss)/income for the year  —   —   (24,623)  1,499   (23,124)  2,327   (20,797)
Equity-settled share-based payments (Note 26)  —   16,209   —   —   16,209   —   16,209 
Balance as of December 31, 2022  450,782   735,319   (1,109,010)  (9,322)  67,769   109,680   177,449 
                             
Balance as of January 1, 2023  450,782   735,319   (1,109,010)  (9,322)  67,769   109,680   177,449 
(Loss)/income for the year  —   —   (13,841)  —   (13,841)  1,398   (12,443)
Foreign currency translation adjustments  —   —   —   (1,389)  (1,389)  —   (1,389)
Total comprehensive (loss)/income for the year  —   —   (13,841)  (1,389)  (15,230)  1,398   (13,832)
Disposal of PSTT (Note 3)  —   20,382   —   —   20,382   (111,078)  (90,696)
Equity-settled share-based payments (Note 26)  —   3,074   —   —   3,074   —   3,074 
Balance as of December 31, 2023  450,782   758,775   (1,122,851)  (10,711)  75,995   —   75,995 
Balance as of December 31, 2023 (US$)  63,682   107,194   (158,626)  (1,513)  10,737   —   10,737 





The accompanying notes are an integral part of these consolidated financial statements.




CHINA NATURAL RESOURCES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2013, 20142021, 2022 AND 20152023

(Amounts in thousands)


 

 

Year Ended December 31,

 

 

 

2013

 

 

2014

 

 

2015

 

 

2015

 

 

 

CNY

 

 

CNY

 

 

CNY

 

 

US$

 

OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

 

 

 

 

Loss for the year

 

 

 

 

 

 

 

 

 

 

 

 

From continuing operations

 

 

(1,285

)

 

 

(33,223

)

 

 

(35,507

)

 

 

(5,471

)

From discontinued operations

 

 

(334,537

)

 

 

(10,708

)

 

 

—

 

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments for:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

27,502

 

 

 

9,115

 

 

 

1,830

 

 

 

282

 

Provision for impairment of property, plant and equipment

 

 

184,417

 

 

 

8,065

 

 

 

7,542

 

 

 

1,162

 

Provision for impairment of receivables

 

 

140

 

 

 

—

 

 

 

—

 

 

 

—

 

Loss / (Gain) on disposal of property, plant and equipment

 

 

—

 

 

 

35

 

 

 

(2

)

 

 

—

 

Write-down/(Reversal of write-down) of inventories to net realizable value, net

 

 

—

 

 

 

9,299

 

 

 

(5,474

)

 

 

(843

)

Accretion expenses

 

 

1,070

 

 

 

447

 

 

 

418

 

 

 

64

 

Deferred income tax (benefit) / expense

 

 

(55,134

)

 

 

2,098

 

 

 

—

 

 

 

—

 

Decrease in deferred income

 

 

—

 

 

 

—

 

 

 

(263

)

 

 

(41

)

Investment income realized from the available-for-sale investments

 

 

—

 

 

 

—

 

 

 

(631

)

 

 

(97

)

Changes in working capital:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rehabilitation fund

 

 

(7,546

)

 

 

3,368

 

 

 

(107

)

 

 

(16

)

Trade and bills receivables

 

 

(24,424

)

 

 

17,889

 

 

 

—

 

 

 

—

 

Inventories

 

 

(687

)

 

 

(20,564

)

 

 

15,062

 

 

 

2,320

 

Prepayments

 

 

94

 

 

 

(136

)

 

 

59

 

 

 

9

 

Other receivables

 

 

(22

)

 

 

(2,683

)

 

 

126

 

 

 

19

 

Trade payables

 

 

2,005

 

 

 

(13,683

)

 

 

(434

)

 

 

(67

)

Other payables and accrued liabilities

 

 

45,036

 

 

 

(27,755

)

 

 

3,922

 

 

 

605

 

Interest payable

 

 

3,763

 

 

 

2,526

 

 

 

—

 

 

 

—

 

Taxes payable

 

 

10,053

 

 

 

(4,304

)

 

 

2,074

 

 

 

320

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash flows used in operating activities

 

 

(149,555

)

 

 

(60,214

)

 

 

(11,385

)

 

 

(1,754

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Prepayment for purchase of a land use right

 

 

(12,243

)

 

 

—

 

 

 

—

 

 

 

—

 

Purchases of property, plant and equipment

 

 

(288,350

)

 

 

(54,239

)

 

 

(6,247

)

 

 

(962

)

Net proceeds from disposal of property, plant and equipment

 

 

—

 

 

 

38

 

 

 

45

 

 

 

7

 

Advances to a related party

 

 

—

 

 

 

(159,553

)

 

 

—

 

 

 

—

 

Repayments from related companies

 

 

 

 

 

 

170,243

 

 

 

—

 

 

 

—

 

Purchase of available-for-sale investments

 

 

—

 

 

 

—

 

 

 

(124,009

)

 

 

(19,103

)

Proceed from disposal of the available-for-sale investments

 

 

—

 

 

 

—

 

 

 

124,640

 

 

 

19,200

 

Increase in a pledged deposit

 

 

(16,000

)

 

 

—

 

 

 

—

 

 

 

—

 

Net cash proceeds for term deposits with an original maturity over three months

 

 

19,892

 

 

 

3,758

 

 

 

—

 

 

 

—

 

Receipt of government grants

 

 

—

 

 

 

—

 

 

 

550

 

 

 

85

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash flows used in investing activities

 

 

(296,701

)

 

 

(39,753

)

 

 

(5,021

)

 

 

(773

)

                
     2021  2022  2023  2023 
      CNY   CNY   CNY   US$ 
  Notes                 
                    
OPERATING ACTIVITIES                   
Loss before income tax for the year     (52,836)  (16,432)  (10,512)  (1,484)
From continuing operations     (48,979)  (23,338)  (8,337)  (1,177)
From discontinued operations     (3,857)  6,906   (2,175)  (307)
                    
Adjustments for:                   
Interest expenses     4,128   4,015   1,977   279 
Interest income     (7,358)  (6,883)  (4,013)  (566)
Gain on disposal of property, plant and equipment     —   (5)  —   — 
Consultants share-based payment expenses 5   —   16,152   3,074   435 
Expenses related to issuance of shares 5   1,579   —   —   — 
Fair value loss/(gain) on financial instruments, net 5   38,349   (1,007)  (847)  (120)
Depreciation of property, plant and equipment 5   510   304   100   15 
Depreciation of right-of-use assets 5   1,366   1,413   1,050   148 
Amortization of intangible assets 5   884   813   460   65 
Impairment losses/(reversal) on trade receivables 5   3,840   (3,989)  383   54 
Impairment losses on contract assets 5   357   171   3,545   501 
Impairment losses on other receivables 5   239   2,745   6,003   848 
Impairment reversal on amounts due from related companies 5   (1,106)  —   —   — 
                    
Changes in working capital                   
Inventories     (148)  257   (182)  (26)
Trade and bills receivables     6,580   (10,764)  4,406   622 
Contract assets     (780)  (5,165)  1,550   219 
Prepayments     (1,852)  504   765   108 
Other receivables     (930)  321   18   3 
Other current assets     1,805   1,829   —   — 
Trade payables     (7,507)  (792)  1,297   182 
Other payables and accruals     813   3,280   5,749   812 
Provisions     —   494   (494)  (70)
                    
Cash (used in)/from operations     (12,067)  (12,739)  14,329   2,025 
                    
Income tax paid     (1)  (47)  (1,001)  (141)
                    
Net cash flows (used in)/from operating activities     (12,068)  (12,786)  13,328   1,884 
                    
INVESTING ACTIVITIES                   
Interest received     3,760   7,291   —   — 
Additions of service concession right     (68)  —   —     
Purchase of property, plant and equipment     (28)  (17)  (12)  (2)
Purchase of intangible assets     —   (5)  —   — 
Prepayment for right-of-use assets     (55)  (228)  —   — 
Purchase of structured deposit products     (60,000)  —   —   — 
Disposal of property, plant and equipment     6   9   —   — 
Disposal of a subsidiary     (263)  —   —   — 
Loan to an unrelated company     (80,000)  —   —   — 
Repayment from loans due from related companies     125,000   —   —   — 
Proceeds from maturity of structured deposit products     65,000   —   —   — 
Expenditures on mine development     —   —   (1,042)  (147)
                    
Net cash flows from /(used in) investing activities     53,352   7,050   (1,054)  (149)
                    





The accompanying notes are an integral part of these consolidated financial statements.



F-8 


CHINA NATURAL RESOURCES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2013, 20142021, 2022 AND 20152023

(Amounts in thousands)


 

 

Year Ended December 31,

 

 

 

2013

 

 

2014

 

 

2015

 

 

2015

 

 

 

CNY

 

 

CNY

 

 

CNY

 

 

US$

 

FINANCING ACTIVITIES

  

                    

  

  

                    

  

  

                    

  

  

                    

  

Proceeds from interest-bearing loans

 

 

1,379,600

 

 

 

90,000

 

 

 

—

 

 

 

—

 

Net cash paid for the distribution of CHNR's 100% equity interest in Feishang Anthracite

 

 

—

 

 

 

(96,811

)

 

 

—

 

 

 

—

 

Repayments of interest-bearing loans

 

 

(489,350

)

 

 

(55,000

)

 

 

—

 

 

 

—

 

Increase in restricted bank deposits

 

 

(1,782

)

 

 

(1,278

)

 

 

—

 

 

 

—

 

Repayments to the shareholder

 

 

(26,571

)

 

 

(6,242

)

 

 

(33,209

)

 

 

(5,116

)

Repayments to related companies

 

 

(673,874

)

 

 

(6,453

)

 

 

(47,193

)

 

 

(7,270

)

Advances from the shareholder

 

 

4,758

 

 

 

—

 

 

 

31,786

 

 

 

4,896

 

Advances from related companies

 

 

269,416

 

 

 

—

 

 

 

47,201

 

 

 

7,271

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash flows from / (used in) financing activities

 

 

462,197

 

 

 

(75,784

)

 

 

(1,415

)

 

 

(219

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS

 

 

15,941

 

 

 

(175,751

)

 

 

(17,821

)

 

 

(2,746

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET FOREIGN EXCHANGE DIFFERENCE

 

 

(3,411

)

 

 

540

 

 

 

2,398

 

 

 

370

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR

 

 

210,944

 

 

 

223,474

 

 

 

48,263

 

 

 

7,435

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS AT END OF YEAR

 

 

223,474

 

 

 

48,263

 

 

 

32,840

 

 

 

5,059

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplementary disclosures of cash flow information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash receipt of government grants

 

 

350

 

 

 

79

 

 

 

660

 

 

 

102

 

Cash paid for income taxes

 

 

9,017

 

 

 

5,737

 

 

 

—

 

 

 

—

 

Cash receipt of interest

 

 

2,916

 

 

 

1,688

 

 

 

425

 

 

 

66

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Major non-cash transactions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deemed contribution from the Shareholder of the Company (Note 21(b))

 

 

41,020

 

 

 

59,068

 

 

 

—

 

 

 

—

 

Net off of balances between a related party and the Shareholder

 

 

—

 

 

 

120,310

 

 

 

—

 

 

 

—

 

 

 

 

41,020

 

 

 

179,378

 

 

 

—

 

 

 

—

 

                
     Year Ended December 31, 
     2021  2022  2023  2023 
     CNY  CNY  CNY  US$ 
  Notes             
                
FINANCING ACTIVITIES                    
Proceeds from issuance of shares      41,996   —   —   — 
Repayments of bank loans      (3,000)  (3,000)  (1,500)  (212)
Advances from related companies      360   —   3,932   555 
Repayment to related companies      (50,148)  (2,765)  —   — 
Repayments to the Shareholder      (7,149)  (6,885)  —   — 
Payment of principal portion of lease liabilities      (1,463)  (1,120)  (925)  (131)
Payment of interest expenses on lease liabilities      (150)  (133)  (99)  (14)
Deemed distribution to the controlling shareholder      (10,297)  —   —   — 
Dividends paid to non-controlling shareholders      (4,900)  —   —   — 
Dividends paid to former non-controlling shareholders      —   (5,048)  —   — 
Net cash outflow for the distribution of CHNR's 100% equity interest of PSTT      —   —   (37,460)  (5,292)
Interest paid      (4,035)  (3,882)  (1,878)  (265)
                     
Net cash flows used in financing activities      (38,786)  (22,833)  (37,930)  (5,359)
                     
NET INCREASE/ (DECREASE) IN CASH AND CASH EQUIVALENTS      2,498   (28,569)  (25,656)  (3,624)
                     
NET FOREIGN EXCHANGE DIFFERENCE      (719)  1,905   (1,286)  (183)
                     
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR      56,580   58,359   31,695   4,478 
                     
CASH AND CASH EQUIVALENTS AT END OF YEAR  16   58,359   31,695   4,753   671 


 

 

Year Ended December 31,

 

 

 

2013

 

 

2014

 

 

2015

 

 

2015

 

 

 

CNY

 

 

CNY

 

 

CNY

 

 

US$

 

ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS

  

                    

  

  

                    

  

  

                    

  

  

                    

  

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and bank balances

 

 

76,591

 

 

 

48,263

 

 

 

32,840

 

 

 

5,059

 

Cash and short term deposits attributable to discontinued operations

 

 

146,883

 

 

 

—

 

 

 

—

 

 

 

—

 

Cash and cash equivalents as stated in the statement of cash flows

 

 

223,474

 

 

 

48,263

 

 

 

32,840

 

 

 

5,059

 




                
     Year Ended December 31, 
     2021  2022  2023  2023 
     CNY  CNY  CNY  US$ 
               
                
ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS                    
Cash and bank balances attributable to continued operations     18,535   6,040   4,753   671 
Cash, bank balances and short-term deposits attributable to discontinued operations      39,824   25,655   —   — 
Cash and cash equivalents as stated in the statement of cash flows      58,359   31,695   4,753   671 

The accompanying notes are an integral part of these consolidated financial statements.


F-11


CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 2013, 20142021, 2022 AND 20152023

(Amounts in thousands, except share and per share data)



1.ORGANIZATION AND PRINCIPAL ACTIVITIES

1.

ORGANIZATION AND PRINCIPAL ACTIVITIES


China Natural Resources, Inc. (“CHNR” or the “Company”) is a British Virgin Islands (“BVI”) holding company incorporated in 1993. The address of the principal executive office is Room 2205, 22/F, West Tower, Shun Tak Centre, 168-200 Connaught Road Central, Sheung Wan, Hong Kong.The Company does not conduct any substantive operations on its own and conducts its primary business operations through itsCompany’s principal activity is investment holding. The Company’s subsidiaries (collectively with CHNR, the “Group”). A list are primarily involved in the exploration and mining and wastewater treatment businesses in the People’s Republic of the Company's subsidiariesChina (“PRC”).

CHNR’s principal shareholder is included in Note 20.


CHNR's principal shareholder isFeishang Group Limited (“Feishang Group” or “the Shareholder”the “Shareholder”), a British Virgin IslandsBVI corporation. Mr. Li Feilie is the controlling shareholder of Feishang Group. In the opinion of the directors of the Company (the “Directors”), the ultimate parent of CHNR is Laitan Investment Limited, a British Virgin IslandsBVI corporation. Mr. Li Feilie, director

As of 31 December 2023 , the Company had direct and beneficial ownerindirect interests in the following subsidiaries, the particulars of the Shareholder, is the Chairman and Chief Executive Officer (“CEO”) of CHNR.which are set out below:

Schedule of direct and indirect interests in subsidiaries

Place of
incorporation/

registration and
operations

Nominal value
of issued
common/
registered
share capital

Percentage

of equity
attributable to
the Company

Principal

activities

NameDirectIndirect
China Coal Mining Investment Limited (“China Coal”)Hong Kong*100—Investment holding
FMH Corporate Services Inc.United States*100—Dormant
Feishang Dayun Coal Mining LimitedHong Kong*—100Investment holding
Feishang Mining Holdings LimitedBVI*100—Investment holding
Feishang Yongfu Mining LimitedHong Kong*—100Investment holding
Newhold Investments LimitedBVI*100—Investment holding
Pineboom Investments LimitedBVI*100—Investment holding
Shenzhen Feishang Management and Consulting Co., Limited (“Feishang Management”)PRC/Mainland ChinaCNY10,000—100Provision of management and consulting services to other companies in the Group
Yangpu Shuanghu Industrial Development Co., LimitedPRC/Mainland ChinaCNY1,000—100Investment holding
Yunnan Feishang Mining Co., LimitedPRC/Mainland ChinaCNY50,000—100Investment holding
Bayannaoer City Feishang Mining Company LimitedPRC/Mainland ChinaCNY59,480—100Exploration and development of lead mines


*  Insignificant

The consolidated financial statements of the Group for the year ended December 31, 20152023 were authorized for issuance in accordance with a resolution of the directorsDirectors executed on April 28, 2016.30, 2024.


As at December 31, 2014 and 2015, the Company and its subsidiaries had net current assets of CNY24,697 and net current liabilities of CNY21,890 (US$3,372), respectively, and total assets less current liabilities of CNY42,209 and CNY7,637 (US$1,176), respectively.

F-10 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)


2.1BASIS OF PREPARATION

On January 22, 2014, CHNR completed the spin-off of the coal business held by Feishang Anthracite Resources Limited (“Feishang Anthracite”, formerly known as “Wealthy Year Limited”) by distribution of CHNR’s 100% equity interest in Feishang Anthracite, pro rata to all its shareholders (the “Distribution” or “Spin-Off”), and completed the listing of the shares of Feishang Anthracite by introduction on the Main Board of The Stock Exchange of Hong Kong Limited (the “Hong Kong Stock Exchange”).


2.1

BASIS OF PREPARATION


The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRSs”) as issued by the International Accounting Standards Board (“IASB”).


The consolidated financial statements have been prepared on a historical cost basis.basis, except for structured deposit, derivative financial liabilities and equity financial assets that have been measured at fair value. The consolidated financial statements are presented in Chinese Yuan (“CNY”) and all values are rounded to the nearest thousand, except when otherwise indicated. US$ indicates U.S. dollars. The Group has prepared the financial statements on the basis that it will continue to operate as a going concern.

2.1.1.GOING CONCERN BASIS


The Group incurred net losses for the years ended December 31, 2022 and 2023, respectively and net cash used in operating activities was CNY13 million 12,786 for the year ended December 31, 2022 and net cash from operating activities was CNY13 million 13,328 for the year ended December 31 2023. The Group assesses its liquidity by its ability to generate cash from operating activities and attract additional capital and/or finance funding.

BasisDuring the year ended December 31, 2023, the Group has, through its subsidiary, sold all its water treatment segment assets and liabilities. This means there will be no revenues, but administrative and other operating expenses incurred in the near future as the mining and exploration segment is still at a developing stage. As of consolidationDecember 31, 2023, the Group had net current liabilities of CNY172 million and cash and cash equivalents of CNY5 4,753 million.


The Group expects that its existing cash and cash equivalents and subsequent equity financing (see Note 24) will be sufficient to fund its operations and meet all of its obligations as they fall due for at least twelve months from the date of the consolidated financial statements. In addition, the Group has received a financial support letter from its major shareholder. The Group’s ability to continue as a going concern is dependent on management’s ability to successfully execute its business plan, which includes increasing revenues while controlling operating costs and expenses, generating operational cash flows as well as continuing to gain support from outside sources of financing. Based on the above considerations, the Group’s consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. 

F-11 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

2.2BASIS OF CONSOLIDATION

The consolidated financial statements includecomprise the financial statements of the Company and its subsidiaries for the yearyears ended December 31, 2015.


31. A subsidiary is an entity (including a structured entity), directly or indirectly, controlled by the Company. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee (i.e., existing rights that give the Group the current ability to direct the relevant activities of the investee).


Generally, there is a presumption that a majority of voting rights results in control. When the Company has directly or indirectly, less than a majority of the voting or similar right of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:


(a)

(a)the contractual arrangement with the other vote holders of the investee;
(b)rights arising from other contractual arrangements; and
(c)the Group’s voting rights and potential voting rights.

 the contractual arrangement with the other vote holders of the investee;

(b)

 rights arising from other contractual arrangements; and

(c)

 the Group’s voting rights and potential voting rights.




F-12


CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015

(Amounts in thousands, except share and per share data)



2.1

BASIS OF PREPARATION (CONTINUED)


The financial statements of the subsidiaries are prepared for the same reporting period as the Company, using consistent accounting policies.The results of subsidiaries are consolidated from the date on which the Group obtainedobtains control and continue to be consolidated until the date that such control ceases.All significant intercompany accounts and transactions have been eliminated in full.


Profit or loss and each component of other comprehensive income are attributed to the owners of the parent of the GroupCompany and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.


The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control described in the accounting policy for subsidiaries below.above. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.


If the Group loses control over a subsidiary, it derecognizes (i)derecognises the related assets (including goodwill) and, liabilities, of the subsidiary, (ii) the carrying amount of any non-controlling interest and (iii) the cumulative translation differences recorded in equity;exchange fluctuation reserve; and recognizes (i) the fair value of the consideration received, (ii)recognises the fair value of any investment retained and (iii) any resulting surplus or deficit in profit or loss. The Group’s share of components previously recognizedrecognised in other comprehensive income is reclassified to profit or loss or retained earnings,profits, as appropriate, on the same basis as would be required if the Group had directly disposed of the related assets or liabilities.


2.3CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES

Going concern


As of December 31, 2015, the Group had net current liabilities of CNY21.9 million (US$3.37 million) and shareholders’ deficit of CNY12.3 million (US$1.89 million). In view of these circumstances, the Directors have given consideration to the future liquidity and performance of the Group and its available sources of finance in assessing whether the Group will have sufficient financial resources to continue as a going concern. In order to improve the Group’s liquidity and cash flows to sustain the Group as a going concern, the directors of the Company have undertaken cetain measures to improve the cash flows of the Group, which include but are not limited to the following: (i) the Group has obtained confirmations of continuous financial support from Feishang Group and Feishang Enterprise Group Limited (“Feishang Enterprise”), an entity controlled by Mr. Li Feilie who is also an officer, director and the principal beneficial shareholder of the Company; (ii) the Group expects to resume production at current zones of the Yangchong Mine when market conditions improve; and (iii) the Group is pursuing potential new business development opportunities.




F-13


CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015

(Amounts in thousands, except share and per share data)



2.2

CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES


The Group has adopted the following new and revised standardsIFRSs for the first time for the current year'syear’s consolidated financial statements.statements:


Amendments to IAS 19

1 and IFRS Practice Statement 2

Defined Benefit Plans: Employee ContributionsDisclosure of Accounting Policies

Annual Improvements

    2010-2012 Cycle

Amendments to a number of IFRSs

Annual Improvements

    2011-2013 Cycle

IAS 12

Amendments to a number of IFRSs

International Tax Reform – Pillar Two Model Rules


The nature and the impact of each amendment isthe new and revised IFRSs that are applicable to the Group are described below:


(a)Amendments to IAS 1 require entities to disclose their material accounting policy information rather than their significant accounting policies. Accounting policy information is material if, when considered together with other information included in an entity’s financial statements, it can reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements. Amendments to IFRS Practice Statement 2 Making Materiality Judgements provide non-mandatory guidance on how to apply the concept of materiality to accounting policy disclosures. The Group has disclosed the material accounting policy information in note 2.5 to the financial statements. The amendments did not have any impact on the measurement, recognition or presentation of any items in the Group’s financial statements.

(a)

(b)Since the Group did not fall within the scope of the Pillar Two model rules, the amendments did not have any impact to the Group.

F-12 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

Amendments to IAS 19 apply to contributions from employees or third parties to defined benefit plans. The amendments simplify the accounting for contributions that are independent of the number of years of employee service, for example, employee contributions that are calculated according to a fixed percentage of salary. If the amount of the contributions is independent of the number of years of service, an entity is permitted to recognize such contributions as a reduction of service cost in the period in which the related service is rendered. The amendments have had no impact on the Group as the Group does not have defined benefit plans.

2.4ISSUED BUT NOT YET EFFECTIVE INTERNATIONAL FINANCIAL REPORTING STANDARDS


(b)

TheAnnual Improvements to IFRSs 2010-2012 Cycle issued in December 2013 sets out amendments to a number of IFRSs. Details of the amendments that are effective for the current year are as follows:


·

IFRS 8Operating Segments: Clarifies that an entity must disclose the judgments made by management in applying the aggregation criteria in IFRS 8, including a brief description of operating segments that have been aggregated and the economic characteristics used to assess whether the segments are similar. The amendments also clarify that a reconciliation of segment assets to total assets is only required to be disclosed if the reconciliation is reported to the chief operating decision maker. The amendments have had no impact on the Group.


·

IAS 16Property, Plant and Equipment and IAS 38Intangible Assets: Clarifies the treatment of the gross carrying amount and accumulated depreciation or amortization of revalued items of property, plant and equipment and intangible assets. The amendments have had no impact on the Group as the Group does not apply the revaluation model for the measurement of these assets.


·

IAS 24Related Party Disclosures: Clarifies that a management entity (i.e., an entity that provides key management personnel services) is a related party subject to related party disclosure requirements. In addition, an entity that uses a management entity is required to disclose the expenses incurred for management services. The amendment has had no impact on the Group as the Group does not receive any management services from other entities.




F-14


CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015

(Amounts in thousands, except share and per share data)



2.2

CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (CONTINUED)


(c)

TheAnnual Improvements to IFRSs 2011-2013 Cycle issued in December 2013 sets out amendments to a number of IFRSs. Details of the amendments that are effective for the current year are as follows:


·

IFRS 3Business Combinations: Clarifies that joint arrangements but not joint ventures are outside the scope of IFRS 3 and the scope exception applies only to the accounting in the financial statements of the joint arrangement itself. The amendment is applied prospectively. The amendment has had no impact on the Group as the Company is not a joint arrangement and the Group did not form any joint arrangement during the year.


·

IFRS 13Fair Value Measurement: Clarifies that the portfolio exception in IFRS 13 can be applied not only to financial assets and financial liabilities, but also to other contracts within the scope of IFRS 9 or IAS 39 as applicable. The amendment is applied prospectively from the beginning of the annual period in which IFRS 13 was initially applied. The amendment has had no impact on the Group as the Group does not apply the portfolio exception in IFRS 13.


·

IAS 40Investment Property: Clarifies that IFRS 3, instead of the description of ancillary services in IAS 40 which differentiates between investment property and owner-occupied property, is used to determine if the transaction is a purchase of an asset or a business combination. The amendment is applied prospectively for acquisitions of investment properties. The amendment has had no impact on the Group as the Group has no investment properties.


2.3

ISSUED BUT NOT YET EFFECTIVE INTERNATIONAL FINANCIAL REPORTING STANDARDS


The Group has not applied the following new and revised IFRSs, that have been issued but are not yet effective, in the current year'sthese financial statements:statements. The Group intends to apply these revised IFRSs, if applicable, when they become effective.


IFRS 9

Financial Instruments3

Amendments to IFRS 10 and IAS 28

Sale or Contribution of Assets between an Investor and its Associate or Joint Venture63

Amendments to IFRS 10, IFRS 1216

Lease Liability in a Sale and IAS 28

Investment Entities: Applying the Consolidation ExceptionLeaseback1

Amendments to IFRS 11

Accounting for Acquisitions of Interests in Joint Operations1

IFRS 14

Regulatory Deferral Accounts5

IFRS 15

Revenue from Contracts with Customers3

IFRS 16

Leases4

Amendments to IAS 1

Disclosure InitiativeClassification of Liabilities as Current or Non-current (the “2020 Amendments”)1

Amendments to IAS 1

Non-current Liabilities with Covenants (the “2022 Amendments”)1
Amendments to IAS 7

and IFRS 7

Disclosure InitiativeSupplier Finance Arrangements21

Amendments to IAS 12

21

Deferred Tax: RecoveryLack of Underlying AssetsExchangeability2

1Effective for annual periods beginning on or after 1 January 2024

Amendments to IAS 16 and IAS 38

2

Clarification of Acceptable Methods of Depreciation and Amortization

Effective for annual periods beginning on or after 1

January 2025

Amendments to IAS 16 and IAS 41

3

Agriculture: Bearer Plants1

Amendments to IAS 27

Equity Method in Separate Financial Statements1

Annual Improvements

2012-2014 Cycle

Amendments to a number of IFRSs1

———————

No mandatory effective date yet determined but available for adoption

1

Effective for annual periods beginning on or after January 1, 2016

2

Effective for annual periods beginning on or after January 1, 2017

3

Effective for annual periods beginning on or after January 1, 2018

4

Effective for annual periods beginning on or after January 1, 2019

5

Effective for an entity that first adopts IFRSs for its annual financial statements beginning on or after 1 January 2016 and therefore is not applicable to the Group

6

In December 2015, the IASB postponed the effective date indefinitely pending the outcome of its research project on the equity method of accounting



F-15


CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015

(Amounts in thousands, except share and per share data)



2.3

ISSUED BUT NOT YET EFFECTIVE INTERNATIONAL FINANCIAL REPORTING STANDARDS (CONTINUED)


Further information about those changesIFRSs that are expected to be applicable to the Group is as follows:described below.


(a)Amendments to IFRS 10 and IAS 28 address an inconsistency between the requirements in IFRS 10 and in IAS 28 in dealing with the sale or contribution of assets between an investor and its associate or joint venture. The amendments require a full recognition of a gain or loss resulting from a downstream transaction when the sale or contribution of assets constitutes a business. For a transaction involving assets that do not constitute a business, a gain or loss resulting from the transaction is recognised in the investor’s profit or loss only to the extent of the unrelated investor’s interest in that associate or joint venture. The amendments are to be applied prospectively. The amendments are not expected to have any significant impact on the Group’s financial statements.

(b)Amendments to IFRS 16 specify the requirements that a seller-lessee uses in measuring the lease liability arising in a sale and leaseback transaction to ensure the seller-lessee does not recognise any amount of the gain or loss that relates to the right of use it retains. The amendments are effective for annual periods beginning on or after 1 January 2024 and shall be applied retrospectively to sale and leaseback transactions entered into after the date of initial application of IFRS 16 (i.e., 1 January 2019). Earlier application is permitted. The amendments are not expected to have any significant impact on the Group’s financial statements.

In July 2014, the IASB issued the final version of IFRS 9, bringing together all phases of the financial instruments project to replace IAS 39 and all previous versions of IFRS 9. The standard introduces new requirements for classification and measurement, impairment and hedge accounting. The Group expects to adopt IFRS 9 from January 1, 2018. The Group expects that the adoption of IFRS 9 will affect the classification and measurement of the Group’s financial assets and is currently assessing the impact.

F-13 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)


2.4ISSUED BUT NOT YET EFFECTIVE INTERNATIONAL FINANCIAL REPORTING STANDARDS (CONTINUED)

(c)The 2020 Amendments clarify the requirements for classifying liabilities as current or non-current, including what is meant by a right to defer settlement and that a right to defer must exist at the end of the reporting period. Classification of a liability is unaffected by the likelihood that the entity will exercise its right to defer settlement. The amendments also clarify that a liability can be settled in its own equity instruments, and that only if a conversion option in a convertible liability is itself accounted for as an equity instrument would the terms of a liability not impact its classification. The 2022 Amendments further clarify that, among covenants of a liability arising from a loan arrangement, only those with which an entity must comply on or before the reporting date affect the classification of that liability as current or non-current. Additional disclosures are required for non-current liabilities that are subject to the entity complying with future covenants within 12 months after the reporting period. The amendments shall be applied retrospectively with early application permitted. An entity that applies the 2020 Amendments early is required to apply simultaneously the 2022 Amendments, and vice versa. The Group is currently assessing the impact of the amendments and whether existing loan agreements may require revision. Based on a preliminary assessment, the amendments are not expected to have any significant impact on the Group’s financial statements.

(d)Amendments to IAS 7 and IFRS 7 clarify the characteristics of supplier finance arrangements and require additional disclosure of such arrangements. The disclosure requirements in the amendments are intended to assist users of financial statements in understanding the effects of supplier finance arrangements on an entity’s liabilities, cash flows and exposure to liquidity risk. Earlier application of the amendments is permitted. The amendments provide certain transition reliefs regarding comparative information, quantitative information as at the beginning of the annual reporting period and interim disclosures. The amendments are not expected to have any significant impact on the Group’s financial statements.

(e)Amendments to IAS 21 specify how an entity shall assess whether a currency is exchangeable into another currency and how it shall estimate a spot exchange rate at a measurement date when exchangeability is lacking. The amendments require disclosures of information that enable users of financial statements to understand the impact of a currency not being exchangeable. Earlier application is permitted. When applying the amendments, an entity cannot restate comparative information. Any cumulative effect of initially applying the amendments shall be recognised as an adjustment to the opening balance of retained profits or to the cumulative amount of translation differences accumulated in a separate component of equity, where appropriate, at the date of initial application. The amendments are not expected to have any significant impact on the Group’s financial statements.

The amendments to IFRS 10 and IAS 28 address an inconsistency between the requirements in IFRS 10 and in IAS 28 in dealing with the sale or contribution of assets between an investor and its associate or joint venture. The amendments require a full recognition of a gain or loss when the sale or contribution of assets between an investor and its associate or joint venture constitutes a business. For a transaction involving assets that do not constitute a business, a gain or loss resulting from the transaction is recognized in the investor’s profit or loss only to the extent of the unrelated investor’s interest in that associate or joint venture. The amendments are to be applied prospectively.

F-14 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)


2.5MATERIAL ACCOUNTING POLICIES

The amendments to IFRS 11 require that an acquirer of an interest in a joint operation in which the activity of the joint operation constitutes a business must apply the relevant principles for business combinations in IFRS 3. The amendments also clarify that a previously held interest in a joint operation is not remeasured on the acquisition of an additional interest in the same joint operation while joint control is retained. In addition, a scope exclusion has been added to IFRS 11 to specify that the amendments do not apply when the parties sharing joint control, including the reporting entity, are under common control of the same ultimate controlling party. The amendments apply to both the acquisition of the initial interest in a joint operation and the acquisition of any additional interests in the same joint operation. The amendments are not expected to have any impact on the financial position or performance of the Group upon adoption on January 1, 2016.

(a)Business combinations and goodwill


IFRS 15 establishes a new five-step model that will apply to revenue arising from contracts with customers. Under IFRS 15, revenue is recognized at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. The principles in IFRS 15 provide a more structured approach for measuring and recognizing revenue. The standard also introduces extensive qualitative and quantitative disclosure requirements, including disaggregation of total revenue, information about performance obligations, changes in contract asset and liability account balances between periods and key judgments and estimates. The standard will supersede all current revenue recognition requirements under IFRSs. The Group expects to adopt IFRS 15 on January 1, 2018 and is currently assessing the impact of IFRS 15 upon adoption.


Amendments to IAS 1 include narrow-focus improvements in respect of the presentation and disclosure in financial statements. The amendments clarify:


(i)

the materiality requirements in IAS 1;

(ii)

that specific line items in the statement of profit or loss and the statement of financial position may be disaggregated;

(iii)

that entities have flexibility as to the order in which they present the notes to financial statements; and

(iv)

that the share of other comprehensive income of associates and joint ventures accounted for using the equity method must be presented in aggregate as a single line item, and classified between those items that will or will not be subsequently reclassified to profit or loss.


Furthermore, the amendments clarify the requirements that apply when additional subtotals are presented in the statement of financial position and the statement of profit or loss. The Group expects to adopt the amendments from January 1, 2016. The amendments are not expected to have any significant impact on the Group’s financial statements.



F-16


CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015

(Amounts in thousands, except share and per share data)



2.3

ISSUED BUT NOT YET EFFECTIVE INTERNATIONAL FINANCIAL REPORTING STANDARDS (CONTINUED)


The amendments to IAS 7 require that an entity disclose, as necessary, the following changes in liabilities arising from financing activities: (i) changes from financing cash flows; (ii) changes arising from obtaining or losing control of subsidiaries or other businesses; (iii) the effect of changes in foreign exchange rates; (d) changes in fair values; and (iv) other changes. The IASB defines liabilities arising from financing activities as liabilities “for which cash flows were, or future cash flows will be, classified in the statement of cash flows as cash flows from financing activities.” The amendments indicate that the new disclosure requirements also apply to changes in financial assets that meet this definition. The amendments state that one way to meet the new disclosure requirements is to provide “a reconciliation between the opening and closing balances in the statement of financial position for liabilities arising from financing activities.” The Group expects to adopt the amendment on January 1, 2017 and is currently assessing the impact upon adoption.


Amendments to IAS 16 and IAS 38 clarify the principle in IAS 16 and IAS 38 that revenue reflects a pattern of economic benefits that are generated from operating business (of which the asset is part) rather than the economic benefits that are consumed through the use of the asset. As a result, a revenue-based method cannot be used to depreciate property, plant and equipment and may only be used in very limited circumstances to amortize intangible assets. The amendments are to be applied prospectively. The amendments are not expected to have any impact on the financial position or performance of the Group upon adoption on January 1, 2016 as the Group has not used a revenue-based method for the calculation of depreciation of its non-current assets.


The IASB issued IFRS 16Leaseson January 13, 2016. The scope of the new standard includes leases of all assets, with certain exceptions. A lease is defined as a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration. The new standard requires lessees to account for all leases under a single on-balance sheet model (subject to certain exemptions) in a similar way to finance leases under IAS 17.  Lessees recognize a liability to pay rentals with a corresponding asset, and recognize interest expense and depreciation separately. The new standard includes two recognition exemptions for lessees – leases of ’low-value’ assets (e.g., personal computer) and short-term leases (i.e., leases with a lease term of 12 months or less). Reassessment of certain key considerations (e.g., lease term, variable rents based on an index or rate, discount rate) by the lessee is required upon certain events. Lessor accounting is substantially the same as today’s lessor accounting, using IAS 17’s dual classification approach. Early application is permitted, but not before an entity applies IFRS 15. The new standard permits a lessee to choose either a full retrospective or a modified retrospective transition approach. The new standard’s transition provisions permit certain reliefs. The Group expects to adopt IFRS 16 on January 1, 2019 and is currently assessing the impact of IFRS 16 upon adoption.




F-17


CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015

(Amounts in thousands, except share and per share data)



2.4

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


(a)

Business combinations and goodwill


The acquisition of subsidiaries and businesses under common control, where applicable, has been accounted for using merger accounting. The financial statements of the combining entities or businesses under common control are prepared for the same reporting period as the Company, using consistent accounting policies.


The merger method of accounting involves incorporating the financial statement items of the combining entities or businesses in which the common control combination occurs as if they had been combined from the date when the combining entities or businesses first came under the control of the controlling shareholder. The net assets of the combining entities or businesses are combined using the existing book values from the controlling shareholder's perspective. No amount is recognized in respect of goodwill or the excess of the acquirers' interest in the net fair value of acquirees' identifiable assets, liabilities and contingent liabilities over the cost of investment at the time of common control combination.


The consolidated statement of profit or loss includes the results of each of the combining entities or businesses from the earliest date presented or since the date when the combining entities or businesses first came under common control or since their respective dates of incorporation/establishment, where this is a shorter period, regardless of the date of the common control combination. All intra-group balances, transactions, unrealized gains and losses resulting from intra-group transactions and dividends are eliminated on consolidation.


Business combinations other than business combinations under common control, are accounted for using the acquisition method. The consideration transferred is measured at the acquisition date fair value which is the sum of the acquisition date fair values of assets transferred by the Group, liabilities assumed by the Group to the former owner of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree. For each business combination, the Group elects whether to measure the non-controlling interests in the acquiree that are present ownership interests and entitle their holders to a proportionate share of net assets in the event of liquidation at fair value or at the proportionate share of the acquiree'sacquiree’s identifiable net assets. All other components of non-controlling interests are measured at fair value. Acquisition-related costs are expensed as incurred.


The Group determines that it has acquired a business when the acquired set of activities and assets includes an input and a substantive process that together significantly contribute to the ability to create outputs.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as atof the acquisition date. This includes the separation of embedded derivatives in host contracts of the acquiree.


If the business combination is achieved in stages, the previously held equity interest is remeasured at its acquisition date fair value of the acquirer's previously held equity interestand any resulting gain or loss is recognized in the acquiree is remeasured to fair value at the acquisition date through the statement of profit or loss.


Any contingent consideration to be transferred by the acquirer is recognized at fair value at the acquisition date. Contingent consideration classified as an asset or liability is measured at fair value with changes in fair value recognized in profit or loss. If the contingent consideration is not within the scope of IFRS 9, it is measured in accordance with the appropriate IFRSs. Contingent consideration that is classified as equity is not remeasured and subsequent settlement is accounted for within equity.


Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred, the amount recognized for non-controlling interests and any fair value of the Group'sGroup’s previously held equity interests in the acquiree over the identifiable net assets acquired and liabilities assumed. If the sum of this consideration and other items is lower than the fair value of the net assets of the subsidiary acquired, the difference is, after reassessment, recognized in the statement of profit or loss as a gain on bargain purchase.



F-18


CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015

(AmountsAfter initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is tested for impairment annually or more frequently if events or changes in thousands, except share and per share data)



2.4

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


(b)

Related parties


A partycircumstances indicate that the carrying value may be impaired. The Group performs its annual impairment test of goodwill as of December 31. For the purpose of impairment testing, goodwill acquired in a business combination is, consideredfrom the acquisition date, allocated to be related to the Group if:


(1)

the party is a person or a close member of that person's family and that person


(i)

has control or joint control over the Group;

(ii)

has significant influence over the Group; or

(iii)

is a membereach of the key management personnelGroup’s cash-generating units, or groups of cash-generating units, that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those units or groups of a parentunits.

Impairment is determined by assessing the recoverable amount of the Group;


or


(2)

cash-generating unit (group of cash-generating units) to which the party is an entity where anygoodwill relates. Where the recoverable amount of the following conditions applies:cash-generating unit (group of cash-generating units) is less than the carrying amount, an impairment loss is recognized. An impairment loss recognized for goodwill is not reversed in a subsequent period.


(i)

F-15 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

the entity and the Group are members of the same group;

2.5MATERIAL ACCOUNTING POLICIES (CONTINUED)

(a)Business combinations and goodwill (continued)

(ii)

one entity is an associate or joint venture of the other entityWhere goodwill has been allocated to a cash-generating unit (or of a parent, subsidiary or fellow subsidiary of the other entity);

(iii)

the entity and the Group are joint ventures of the same third party;

(iv)

one entity is a joint venture of a third entity and the other entity is an associate of the third entity;

(v)

the entity is a post-employment benefit plan for the benefit of employees of either the Group or an entity related to the Group;

(vi)

the entity is controlled or jointly controlled by a person identified in (1);

(vii)

a person identified in (1)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity) ; and

(viii)

the entity, or any member of a group of which it is a part, provides key management personnel services to the Group or to the parent of the Group.


(c)

Property, plantcash-generating units) and equipment and depreciation


Property, plant and equipment comprise buildings, mining structures, mining rights, machinery and equipment, motor vehicles, exploration rights and construction in progress.


Exploration rights are capitalized and amortized over the term of the license granted to the Company by the authorities.


When proved and probable coal reserves have been determined, costs incurred to develop coal mines are capitalized as part of the costoperation within that unit is disposed of, the mining structures.


Buildings, mining structures, machinery and equipment, and motor vehicles are stated at cost less accumulated depreciation and any impairment losses. Expenditures for routine repairs and maintenance are expensed as incurred.


Mining rights are stated at cost less accumulated amortization and any impairment losses. The costsgoodwill associated with the operation disposed of mining rights are initially capitalizedis included in the carrying amount of the operation when purchased. If proved and probable reserves are established for a property and it has been determined that a mineral property can be economically developed, costs are capitalized and are amortized upon productiondetermining the gain or loss on the disposal. Goodwill disposed of in these circumstances is measured based on actual units of production over the estimated proved and probable reservesrelative value of the mines. For mining rights in which provedoperation disposed of and probable reserves have not yet been established, the portion of the cash-generating unit retained.

(b)Fair value measurement

The Group assesses the carryingmeasures equity investments and derivative financial liabilities at fair value for impairment at the end of each reporting period. The Group's rights to extract minerals are contractually limited by time. However, the Group believes that it will be able to extend its licenses.


Mining related buildings, mining structures and mining related machinery and equipment are stated at cost less accumulated depreciation and any impairment losses. Those mining related assets for which proved and probable reserves have been established are depreciated upon production based on actual units of production over the estimated proved and probable reserves of the mines.



F-19


CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015

(Amounts in thousands, except share and per share data)



2.4

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


(c)

Property, plant and equipment(continued)


When an item of property, plant and equipment is classified as held for distribution or when it is part of a disposal group classified as held for distribution, it is not depreciated and is accounted for in accordance with IFRS 5, as further explained in Note 2.4(w).


Reserve estimates are reviewed when information becomes available that indicates a reserve change is needed, or at a minimum once a year. Any material effect from changes in estimates is considered in the period the change occurs.


Depreciation for the following items is calculated on the straight-line basis over each asset's estimated useful life down to the estimated residual value of each asset.


Estimated useful lives are as follows:


Non-mining related buildings

15 - 35 years

Non-mining related machinery and equipment

3 - 15 years

Motor vehicles

4 - 8 years


Residual values, useful lives and the depreciation method are reviewed and, adjusted if appropriate, at each reporting date.


When properties are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts and any profit or loss on disposition is recognized in the statement of profit or loss.

Construction in progress is carried at cost and is to be depreciated when placed into service over the estimated useful lives or units of production of those assets. Construction costs are capitalized as incurred. Interest is capitalized as incurred during the construction period.


(d)

Fair value measurement


Fair value is the price that would be received to dispose ofsell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to dispose ofsell the asset or transfer the liability takes place either in the principal market for the asset or liability, or in the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible by the Group. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.


A fair value measurement of a non-financial asset takes into account a market participant'sparticipant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.


The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.




F-20


CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015

(Amounts in thousands, except share and per share data)



2.4

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


(d)

Fair value measurement(continued)


All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest levellowest-level input that is significant to the fair value measurement as a whole:


Level 1 – based on quoted prices (unadjusted) in active markets for identical assets or liabilitiesliabilities;

Level 2 – based on valuation techniques for which the lowest levellowest-level input that is significant to the fair value measurement is observable, either directly or indirectlyindirectly;

Level 3 – based on valuation techniques for which the lowest levellowest-level input that is significant to the fair value measurement is unobservableunobservable.


For assets and liabilities that are recognized in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by reassessing categorization (based on the lowest levellowest-level input that is significant to the fair value measurement as a whole) at the end of each reporting period.


As

F-16 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

2.5MATERIAL ACCOUNTING POLICIES (CONTINUED)

(c)Related parties

A party is considered to be related to the Group if:

(1)the party is a person or a close member of that person’s family and that person

(i)has control or joint control over the Group;
(ii)has significant influence over the Group; or
(iii)is a member of the key management personnel of the Group or of a parent of the Group;

or

(2)the party is an entity where any of the following conditions applies:

(i)the entity and the Group are members of the same group;
(ii)one entity is an associate or joint venture of the other entity (or of a parent, subsidiary or fellow subsidiary of the other entity);
(iii)the entity and the Group are joint ventures of the same third party;
(iv)one entity is a joint venture of a third entity and the other entity is an associate of the third entity;
(v)the entity is a post-employment benefit plan for the benefit of employees of either the Group or an entity related to the Group;
(vi)the entity is controlled or jointly controlled by a person identified in (1);
(vii)a person identified in (1)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity); and
(viii)the entity, or any member of a group of which it is a part, provides key management personnel services to the Group or to the parent of the Group.

(d)Property, plant and equipment and depreciation

Property, plant and equipment comprise buildings, machinery and equipment, motor vehicles and office and other equipment. The cost of December 31, 2014an item of property, plant and 2015,equipment comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use.

Buildings, machinery and equipment, motor vehicles and office and other equipment are stated at cost less accumulated depreciation and any impairment losses. Expenditures for routine repairs and maintenance are expensed as incurred.

Depreciation for the following items is calculated on the straight-line basis over each asset’s estimated useful life down to the estimated residual value of each asset.

Estimated useful lives are as follows:

Schedule of estimated useful lives of property, plant and equipment
Buildings8–35 years
Machinery and equipment3–15 years
Motor vehicles4–8 years
Office and other equipment4–8 years

Residual values, useful lives and the depreciation method are reviewed and adjusted, if appropriate, at each reporting date.

F-17 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

2.5MATERIAL ACCOUNTING POLICIES (CONTINUED)

(d)Property, plant and equipment and depreciation (continued)

Expenditure incurred after items of property, plant and equipment have been put into operation, such as repairs and maintenance, is normally charged to the statement of profit or loss in the period in which it is incurred. In situations where the recognition criteria are satisfied, the expenditure for a major inspection is capitalized in the carrying amount of the asset as a replacement. Where significant parts of property, plant and equipment are required to be replaced at intervals, the Group recognizes such parts as individual assets with specific useful lives and depreciates them accordingly.

An item of property, plant and equipment including any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on disposal or retirement recognized in the statement of profit or loss in the year the asset is derecognized is the difference between the net sales proceeds and the carrying amount of the relevant asset.

(e)Intangible assets (other than goodwill)

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is the fair value at the date of acquisition. The useful lives of intangible assets are assessed to be finite. Intangible assets with finite lives are subsequently amortized over the useful economic life and assessed for impairment whenever there wasis an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at each financial year end.

The following intangible assets are amortized from the date they are available for use and their estimated useful lives are as follows:

Schedule of estimated useful lives of intangible assets
Concession right28 years
Patents18 years
Software5 years

The useful life of the patents of the Group is determined based on the shorter of their statutory validity periods and the expected benefit periods.

An intangible asset is derecognized on disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising upon derecognition (calculated as the difference between the net sale proceeds and the carrying amount of the relevant intangible asset) is included in the statement of profit or loss.

F-18 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

2.5MATERIAL ACCOUNTING POLICIES (CONTINUED)

(f)Leases

The Group assesses at contract inception whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

Group as a lessee

The Group applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Group recognizes lease liabilities for obligations to make lease payments and right-of-use assets representing the right to use the underlying assets.

At inception or liabilityon reassessment of a contract that contains a lease component and a non-lease component, the Group adopts the practical expedient not to separate the non-lease component and to account for the lease component and the associated non-lease component (e.g., property management services for leases of properties) as a single lease component.

(1) Right-of-use assets

Right-of-use assets are recognized at the commencement date of the lease (that is, the date the underlying asset is available for use). Right-of-use assets are measured at fair value.cost, less any accumulated depreciation and any impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease terms and the estimated useful lives of the assets as follows:


Schedule of estimated useful lives of right-of-use assets

Offices and warehouses2–5 years
Motor vehicles2–10 years

(e)If ownership of the leased asset transfers to the Group by the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.

(2) Lease liabilities

Lease liabilities are recognized at the commencement date of the lease at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for termination of a lease, if the lease term reflects the Group exercising the option to terminate the lease. The variable lease payments that do not depend on an index or a rate are recognized as an expense in the period in which the event or condition that triggers the payment occurs.

In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in lease payments (e.g., a change to future lease payments resulting from a change in an index or rate) or a change in assessment of an option to purchase the underlying asset.

F-19 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

2.5MATERIAL ACCOUNTING POLICIES (CONTINUED)

(f)Leases (continued)

Group as a lessee (continued)

(3) Short-term leases

Exploration

The Group applies the short-term lease recognition exemption to its short-term leases of buildings (that is those leases that have a lease term of 12 months or less from the commencement date and evaluation costsdo not contain a purchase option).

Lease payments on short-term leases are recognized as an expense on a straight-line basis over the lease term.

(g)Exploration and evaluation costs


Exploration and evaluation assets include topographical and geological surveys, exploratory drilling, sampling and trenching and activities in relation to commercial and technical feasibility studies, and expenditure incurred to secure further mineralization in existing coal bodies and to expand the capacity of a mine. Expenditure incurred prior to acquiring legal rights to explore an area is expensed as incurred.


Once the exploration right to explore has been acquired, exploration and evaluation expenditure isexpenditures are charged to the statement of profit or loss as incurred, unless a future economic benefit is more likely than not to be realized. Exploration and evaluation assets acquired in a business combination are initially recognized at fair value. They are subsequently stated at cost less accumulated impairment.


When it can be reasonably ascertained that a mining property is capable of commercial production, exploration and evaluation costs are transferred to tangible or intangible assets according to the nature of the exploration and evaluation assets. If any project is abandoned during the evaluation stage, the total expenditure thereon will be written off.


(h)Impairment of non-financial assets

(f)

Impairment of non-financial assets


Where an indication of impairment exists, or when annual impairment testing for an asset is required (other than inventories, financial assets, etc.)deferred tax assets and contract assets), the asset'sasset’s recoverable amount is estimated.


An impairment exists when the carrying value of an asset or cash-generating unit exceeds itsasset’s recoverable amount which is the higher of the asset’s or cash-generating unit’s value in use and its fair value less costs of disposal, and its value in use, and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case the recoverable amount is determined for the cash-generating unit to which the asset belongs. The calculation of fair value less costs of disposal is based on available data from binding sales transactions in arm's length transactions of similar assets or observable market prices less incremental costsIn testing a cash-generating unit for disposingimpairment, a portion of the carrying amount of a corporate asset (e.g., a headquarters building) is allocated to an individual cash-generating unit if it can be allocated on a reasonable and consistent basis or, other appropriate valuation techniques. Theotherwise, to the smallest group of cash-generating units.

An impairment loss is recognized only if the carrying amount of an asset exceeds its recoverable amount. In assessing value in use, calculation is based on athe estimated future cash flows are discounted cash flow model,to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. An impairment loss is charged to the statement of profit or loss in the period in which it arises in those expense categories consistent with the function of the impaired asset.




F-21


CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015

(Amounts in thousands, except share and per share data)



2.4

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


(f)

Impairment of non-financial assets(continued)


An assessment is made at the end of each reporting period as to whether there is an indication that previously recognized impairment losses may no longer exist or may have decreased. If such an indication exists, the recoverable amount is estimated. A previously recognized impairment loss of an asset other than goodwill is reversed only if there has been a change in the estimates used to determine the recoverable amount of that asset, but not to an amount higher than the carrying amount that would have been determined (net of any depreciation/amortization) had no impairment loss been recognized for the asset in prior years. A reversal of such an impairment loss is credited to the statement of profit or loss in the period in which it arises.


(g)

F-20 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

2.5MATERIAL ACCOUNTING POLICIES (CONTINUED)

(i)Investments and other financial assets

Initial recognition and measurement

Financial assets are classified, at initial recognition, as subsequently measured at amortized cost, fair value through other comprehensive income, and fair value through profit or loss.


AsThe classification of December 31, 2014 and 2015, the Group's financial assets withinat initial recognition depends on the scopefinancial asset’s contractual cash flow characteristics and the Group’s business model for managing them. With the exception of IAS 39 were all classified as loans and receivables. Alltrade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient of not adjusting the effect of a significant financing component, the Group initially measures a financial assets are recognized initiallyasset at its fair value, plus in the case of a financial asset not at fair value plusthrough profit or loss, transaction costscosts. Trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient are measured at the transaction price determined under IFRS 15 in accordance with the policies set out in Note 2.5(aa) below.

In order for a financial asset to be classified and measured at amortized cost or fair value through other comprehensive income, it needs to give rise to cash flows that are attributable tosolely payments of principal and interest (“SPPI”) on the acquisitionprincipal amount outstanding. Financial assets with cash flows that are not SPPI are classified and measured at fair value through profit or loss, irrespective of the financial assets.business model.


All regular way purchases and sales ofThe Group’s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both. Financial assets classified and measured at amortized cost are recognized onheld within a business model with the trade date, that is,objective to hold financial assets in order to collect contractual cash flows, while financial assets classified and measured at fair value through other comprehensive income are held within a business model with the date thatobjective of both holding to collect contractual cash flows and selling. Financial assets which are not held within the Group commits to purchaseaforementioned business models are classified and measured at fair value through profit or sell the asset. Regular way purchases or sales are purchasesloss.

Purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace.marketplace are recognised on the trade date, that is, the date that the Group commits to purchase or sell the asset.


Subsequent measurement

The subsequent measurement of loans and receivables


Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in currentdepends on their classification as follows:

Financial assets except for maturities greater than 12 months after the reporting date, which are classified as non-current assets. Loans and receivables are included in “trade and bills receivables”, “prepayments”, “other receivables”, “term deposits with an original maturity over three months”, “cash and cash equivalents”, “rehabilitation fund” and “due from a related company” in the consolidated statements of financial position. These assets are subsequently carried at amortized cost (debt instruments)

Financial assets at amortized cost are subsequently measured using the effective interest rate method (“EIR”) less any provision forand are subject to impairment. Gains and losses are recognized in interest income or finance costs in the consolidated statement of profit or loss when the loans and receivables are derecognized as well as through the amortization process.


Subsequent measurement of available-for-sale financial investments


Available-for-sale financial investments are non-derivative financial assets in listed and unlisted equity investments and debt securities.  Equity investments classified as available for sale are those which are neither classified as held for trading nor designated as at fair value through profit or loss.  Debt securities in this category are those which are intended to be held for an indefinite period of time and which may be sold in response to needs for liquidity or in response to changes in market conditions.


After initial recognition, available-for-sale financial investments are subsequently measured at fair value, with unrealized gains or losses recognized as other comprehensive income in the available-for-sale investment revaluation reserve until the investment is derecognized, at which time the cumulative gain or loss is recognized in the statement of profit or loss in other income, or until the investment is determined to be impaired, when the cumulative gain or loss is reclassified from the available-for-sale investment revaluation reserve to the statement of profit or loss in other gains or losses.  Interest and dividends earned whilst holding the available-for-sale financial investments are reported as interest income and dividend income, respectively and are recognized in the statement of profit or loss as other income in accordance withwhen the policies set out for “Revenue recognition” below.asset is derecognized, modified or impaired.



F-22


CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015

(Amounts in thousands, except share and per share data)



2.4

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


(g)

Financial assets(continued)


Subsequent measurement of available-for-sale financial investments


When the at fair value of unlisted equitythrough other comprehensive income (debt instruments)

For debt investments cannot be reliably measured because (a) the variabilityat fair value through other comprehensive income, interest income, foreign exchange revaluation and impairment losses or reversals are recognized in the rangestatement of reasonable fair value estimates is significant for that investment or (b) the probabilities of the various estimates within the range cannot be reasonably assessed and used in estimating fair value, such investments are stated at cost less any impairment losses.


The Group evaluates whether the ability and intention to sell its available-for-sale financial assets in the near term are still appropriate.  When, in rare circumstances, the Group is unable to trade these financial assets due to inactive markets, the Group may elect to reclassify these financial assets if management has the ability and intention to hold the assets for the foreseeable future or until maturity.


For a financial asset reclassified from the available-for-sale category, the fair value carrying amount at the date of reclassification becomes its new amortized cost and any previous gain or loss on that asset that has been recognized in equity is amortized to profit or loss overand computed in the same manner as for financial assets measured at amortized cost. The remaining life offair value changes are recognized in other comprehensive income. Upon derecognition, the investment using the effective interest rate.  Any difference between the new amortized cost and the maturity amountcumulative fair value change recognized in other comprehensive income is also amortized over the remaining life of the asset using the effective interest rate.  If the asset is subsequently determined to be impaired, then the amount recorded in equity is reclassifiedrecycled to the statement of profit or loss.


Fair value of loans and receivables

F-21 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)


As of December 31, 2014 and 2015, the carrying amounts of rehabilitation fund were not materially different from their fair values. The carrying values of other financial assets approximated to their fair values due to the short-term maturities of these instruments.


Impairment of loans and receivables


The Group assesses at the end of each reporting date whether there is objective evidence that the loans and receivables are impaired. The Group first assesses whether impairment exists individually for loans and receivables that are individually significant, or collectively for loans and receivables that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed loans and receivables, whether significant or not, it includes the asset in a group of loans and receivables with similar credit risk characteristics and collectively assesses them for impairment. Loans and receivables that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognized are not included in a collective assessment of impairment.

 

2.5MATERIAL ACCOUNTING POLICIES (CONTINUED)

The amount of any impairment

(i)Investments and other financial assets (continued)

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss identified is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not yet been incurred). The present value of the estimated future cash flows is discounted at the financial asset's original effective interest rate (i.e., the effective interest rate computed at initial recognition). The carrying amount of the asset is reduced through the use of an allowance account and the loss is recognizedare carried in the statement of profit or loss. Interest income continues to be accrued on the reduced carrying amount using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. Loans and receivables togetherfinancial position at fair value with any associated allowance are written off when there is no realistic prospect of future recovery and all collateral has been realized or has been transferred to the Group.



F-23


CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015

(Amounts in thousands, except share and per share data)



2.4

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


(g)

Financial assets(continued)


Impairment of loans and receivables


If, in a subsequent year, the amount of the estimated impairment loss increases or decreases and the decrease because of an event occurring after the impairment was recognized, the previously recognized impairment loss is increased or reduced by adjusting the allowance account. Any subsequent reversal of an impairment loss is recognized in the consolidated statement of profit or loss, to the extent that the carrying value of the asset does not exceed amortized cost at the reversal date.


In relation to trade and other receivables, a provision for impairment is made when there is objective evidence (such as the probability of insolvency or significant financial difficulties of the debtor and significantnet changes in the technological, market, economic or legal environment that have an adverse effect on the debtor) that the Group will not be able to collect all of the amounts due under the original terms of an invoice.


Impairment of available-for-sale financial investments


For available-for-sale financial investments, the Group assesses at the end of each reporting period whether there is objective evidence that an investment or a group of investments is impaired.


If an available-for-sale asset is impaired, an amount comprising the difference between its cost (net of any principal payment and amortization) and its current fair value less any impairment loss previously recognized in the statement of profit or loss, is removed from other comprehensive income and recognized in the statement of profit or loss.


In the case ofThis category includes derivative instruments and equity investments classified as available for sale, objective evidence would include a significant or prolonged decline inwhich the Group had not irrevocably elected to classify at fair value of an investment below its cost. “Significant” is evaluated againstthrough other comprehensive income. Dividends on the original cost of the investment and “prolonged” against the period in which the fair value has been below its original cost. Where there is evidence of impairment, the cumulative loss – measuredequity investments are also recognized as the difference between the acquisition cost and the current fair value, less any impairment loss on that investment previously recognizedother income in the statement of profit or loss – is removed from other comprehensive income and recognized inwhen the statementright of profit or loss. Impairment losses on equity instruments classified as available for sale are not reversed through the statement of profit or loss. Increases in their fair value after impairment are recognized directly in other comprehensive income.payment has been established.


(j)Derecognition of financial assets

The determination of what is “significant” or “prolonged” requires judgment. In making this judgment, the Group evaluates, among other factors, the duration or extent to which the fair value of an investment is less than its cost.




F-24


CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015

(Amounts in thousands, except share and per share data)



2.4

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


(g)

Financial assets(continued)


Derecognition of loans and receivables


For financial assets classified as loans and receivables, theA financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognized (i.e., removed from the Group's consolidatedGroup’s statement of financial position) when:

 

•the rights to receive cash flows from the asset have expired; or
•the Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a “pass-through” arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset but has transferred control of the asset.

(i)

the rights to receive cash flows from the asset have expired; or

(ii)

the Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a “pass-through” arrangement; and either (a) has transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.


When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if, and to what extent, it has retained the risksrisk and rewards of ownership.ownership of the asset. When it has neither transferred nor retained substantially all of the risks and rewards of the asset nor transferred control of the asset, the Group continues to recognize the transferred asset to the extent of the Group'sGroup’s continuing involvement. In that case, the Group also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.


Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay.


(k)Impairment of financial assets

(h)The Group recognizes an allowance for expected credit losses (“ECLs”) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

F-22 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

2.5MATERIAL ACCOUNTING POLICIES (CONTINUED)

(k)Impairment of financial assets (continued)

General approach

ECLs are recognized in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12 months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).

At each reporting date, the Group assesses whether the credit risk on a financial instrument has increased significantly since initial recognition. When making the assessment, the Group compares the risk of a default occurring on the financial instrument as of the reporting date with the risk of a default occurring on the financial instrument as of the date of initial recognition and considers reasonable and supportable information that is available without undue cost or effort, including historical and forward-looking information.

The Group considers a financial asset in default based on historical patterns and the credit risk management practices of the Group. However, in certain cases, the Group may also consider a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group.

A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.

Financial assets at amortized cost excluding trade receivables and contract assets are subject to impairment under the general approach, and they are classified within the following stages for measurement of ECLs except for trade receivables and contract assets which apply the simplified approach as detailed below:

Stage 1 – Financial instruments for which credit risk has not increased significantly since initial recognition and for which the loss allowance is measured at an amount equal to 12-month ECLs;

Stage 2 – Financial instruments for which credit risk has increased significantly since initial recognition but that are not credit-impaired financial assets and for which the loss allowance is measured at an amount equal to lifetime ECLs.

Stage 3 – Financial assets that are credit-impaired at the reporting date (but that are not purchased or originated credit-impaired) and for which the loss allowance is measured at an amount equal to lifetime ECLs;

Simplified approach

For trade receivables and contract assets including those containing a significant financing component, the Group applies the simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead recognizes a loss allowance based on lifetime ECLs at each reporting date. The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.

(l)Financial liabilities

Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.

All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.

F-23 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

2.5MATERIAL ACCOUNTING POLICIES (CONTINUED)

(l)Financial liabilities (continued)

The Group’s financial liabilities include trade payables, financial liabilities included in other payables and accruals, dividends payable, derivative financial liabilities, interest-bearing loans and borrowings, due to related companies and due to the shareholders.

Subsequent measurement

The subsequent measurement of financial liabilities depends on their classification as follows:

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.

Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by IFRS 9. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on liabilities held for trading are recognized in the statement of profit or loss. The net fair value gain or loss recognized in the statement of profit or loss does not include any interest charged on these financial liabilities.

Financial liabilities designated upon initial recognition as at fair value through profit or loss are designated at the initial date of recognition, and only if the criteria in IFRS 9 are satisfied. Gains or losses on liabilities designated at fair value through profit or loss are recognized in the statement of profit or loss, except for the gains or losses arising from the Group’s own credit risk which are presented in other comprehensive income with no subsequent reclassification to the statement of profit or loss. The net fair value gain or loss recognized in the statement of profit or loss does not include any interest charged on these financial liabilities.

Financial liabilities at amortized cost


FinancialAfter initial recognition, lease liabilities including trade payables, amounts due to a related company and the Shareholder, and other payables and certain accrued liabilities, are initially stated at fair value less directly attributable transaction costs and are subsequently measured at amortized cost, using the effective interest rate. The related interest expense is recognized within “finance costs”rate method unless the effect of discounting would be immaterial, in the consolidated statement of profit or loss.


which case they are stated at cost. Gains and losses are recognized in the consolidated statement of profit or loss when the liabilities are derecognized as well as through the effective interest rate amortization process.


Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate. The effective interest rate amortization is included in finance costs in the statement of profit or loss.


(m)Derecognition of financial liabilities



F-25


CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015

(Amounts in thousands, except share and per share data)



2.4

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


(h)

Financial liabilities at amortized cost(continued)


Fair value


As of December 31, 2014 and 2015, the carrying values of these financial liabilities approximate their fair values due to the short-term maturities of these instruments.


The Group had no financial liabilities measured at fair value on a recurring or a non-recurring basis as of December 31, 2014 and 2015.


Derecognition of financial liabilities


A financial liability is derecognized when the obligation under the liability is discharged cancelled,or canceled, or expires.


When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and a recognition of a new liability, and the difference between the respective carrying amounts is recognized in the consolidated statement of profit or loss.


(n)Offsetting of financial instruments

Offsetting of financial instruments


Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statementsstatement of financial position if and only if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.


(i)

F-24 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

2.5MATERIAL ACCOUNTING POLICIES (CONTINUED)

Financial guarantee contracts

(o)Inventories


Financial guarantee contracts issued by the Group are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognized initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequent to initial recognition, the liability is measured at the higher of the best estimate of the expenditure required to settle the present obligation at the reporting dateInventories include materials and the amount initially recognized less, when appropriate, cumulative amortization.


(j)

Inventories


Inventoriesspare parts and are stated at the lower of cost and net realizable value.values. Cost is determined by the weighted-average method.on a weighted average cost basis and comprises costs of purchase and transportation costs. Net realizable value isvalues are based on the estimated selling pricesexpenses less any estimated costscost to be incurred to completion and disposal. Major types of inventories include:


(p)Cash and cash equivalents

·

Materials and supplies which consist of extracted raw ore, auxiliary materials, spare parts and other consumables; and

·

Finished goods.




F-26


CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015

(Amounts in thousands, except share and per share data)



2.4

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


(k)

Cash and cash equivalents in the statement of financial position comprise cash on hand and at banks, and short-term highly liquid deposits with a maturity of generally within three months that are readily convertible into known amounts of cash, subject to an insignificant risk of changes in value held for the purpose of meeting short-term cash commitments.


For the purpose of the consolidated statement of cash flows, cash and cash equivalents comprise cash on hand and demandat banks, and short-term deposits and short term highly liquid investments that are readily convertible into known amounts of cash, are subject to an insignificant risk of changes in value, and have a short maturity of generally within three months when acquired,as defined above, less bank overdrafts which are repayable on demand and form an integral part of the Group'sGroup’s cash management.


For the purpose of the consolidated statement of financial position, cash and cash equivalents comprise cash on hand and at banks, including term deposits, and assets similar in nature to cash, which are not restricted as to use.


(l)

(q)Employee benefits


Pension obligations


The Group contributes on a monthly basis to various defined contribution retirement benefit plans administered by the PRC government. The relevant government agencies undertake to assume the retirement benefit obligation payable to all existing and future retired employees under these plans and the Group has no further obligation for post-retirement benefits beyond the contributions made. Further information is set out in Note 16.


6 to the consolidated financial statements.

Housing funds


All full-time employees of the Group in mainland China are entitled to participate in various government-sponsored housing funds. The Group contributes on a monthly basis to these funds based on certain percentages of the salaries of the employees. The Group's liability inwith respect ofto these funds is limited to the contributions payable in each year.


(m)

(r)Share-based payments

Asset retirement obligations


The Group's legal or constructive obligations associated with the retirement of non-financial assets are recognized at fair value at the time the obligations are incurred and if it is probable that an outflow of resources will be required to settle the obligation, and a reasonable estimate of fair value can be made. Upon initial recognition of a liability, a corresponding amount is capitalized as part of the carrying amount of the related property, plant and equipment. Asset retirement obligations are regularly reviewed by management and are revised for changes in future estimated costs and regulatory requirements. Changes in the estimated timing of retirement or future estimated costs are dealt prospectively by recording an adjustment against the carrying value of the provision and a corresponding adjustment to property and equipment. Depreciation of the capitalized asset retirement cost is generally determined on a units-of-production basis. Accretion of the asset retirement obligation is recognized over time and generally will escalate over the life of the producing asset, typically as production declines. Accretion is included in finance costs in the consolidated statement of profit or loss. Any difference between the recorded obligation and the actual costs of reclamation is recorded in the consolidated statement of profit or loss in the period the obligation is settled.


(n)

Borrowing costs


Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing costs directly relating to the acquisition, construction or production of a qualifying asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective assets. The capitalization of such borrowing costs ceases when the assets are substantially ready for their intended use or sale. All other borrowing costs are expensed in the period in which they are incurred.




F-27


CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015

(Amounts in thousands, except share and per share data)



2.4

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


(o)

Revenue recognition


The Group sells its products pursuant to sales contracts entered into with its customers. Revenue for all products is recognized when the significant risks and rewards of ownership have been passed to the customer, provided that the Group does not maintain neither managerial involvement to the degree usually associated with ownership nor effective control over the goods sold, and when collectability is reasonably assured. The passing of the significant risks and rewards of ownership to the customer is based on the terms of the sales contract, generally upon delivery and acceptance of the product by the customer.


In accordance with the relevant tax laws in the PRC, value-added tax (“VAT”) is levied on the invoiced value of sales and is payable by the purchaser. The Group is required to remit the VAT it collects to the tax authority, but may deduct the VAT it has paid on eligible purchases. The difference between the amounts collected and paid is presented as VAT recoverable or payable in the consolidated statement of financial position. VAT on sales from continuing operations amounted to CNY7,031, CNY1,412 and CNY3,118 (US$480) for the years ended December 31, 2013, 2014 and 2015, respectively. The Group recognizes revenues net of VAT.


(p)

Government grants


Government grants are recognized at their fair value where there is reasonable assurance that the grant will be received and all attaching conditions will be complied with. When the grant relates to an expense item, it is recognized as income on a systematic basis over the period that the costs, which it is intended to compensate, are expensed.


Where the grant relates to an asset, the fair value is credited to a deferred income account and is released to the statement of profit or loss over the expected useful life of the relevant asset by equal annual instalments or deducted from the carrying amount of the asset and released to the statement of profit or loss by way of a reduced depreciation charge.


(q)

Income taxes


Income tax comprises current and deferred tax.


Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, by the reporting date, taking into consideration interpretations and practices prevailing in the countries where the Group operates and generates taxable income.


Income tax relating to items recognized outside the consolidated statements of profit or loss is recognized outside the consolidated statement of profit or loss, either as other comprehensive income or loss or directly in equity.


Deferred tax is provided, using the liability method, on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.




F-28


CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015

(Amounts in thousands, except share and per share data)



2.4

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


(q)

Income taxes (continued)


Deferred tax liabilities are recognized for all taxable temporary differences, except:


·

when the deferred tax liability arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

·

in respect of taxable temporary differences associated with investments in subsidiaries, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.


Deferred tax assets are recognized for all deductible temporary differences, carryforward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carryforward of unused tax credits and unused tax losses can be utilized, except:


·

when the deferred tax assets relating to the deductible temporary differences arise from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

·

in respect of deductible temporary differences associated with investments in subsidiaries, deferred tax assets are only recognized to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are reassessed at each reporting date and are recognized to the extent that it is probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be recovered.


Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.


Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.




F-29


CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015

(Amounts in thousands, except share and per share data)



2.4

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


(r)

Share-based payment transactions


The Company operates a share option scheme for the purpose of providing incentives and rewards to eligible participantsemployees (including directors) and consultants who contribute to the success of the Group's operations. Employees (including directors)business and grants warrants for the Company’s shares for the purpose of paying fees to the placement agent who provided the professional services during the Company’s private placement. The employees and consultants (collectedly with placement agent, the “grantees”) of the Group receive remuneration in the form of share-based payment transactions,payments, whereby employeesthe grantees render services as considerationin exchange for equity instruments (“equity-settled transactions”).


The cost of equity-settled transactions with employees is measured by reference to the fair value at the date at which they are granted. The fair value is determined by using the Black-Scholes option pricing model.


F-25 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

2.5MATERIAL ACCOUNTING POLICIES (CONTINUED)

(r)Share-based payments (continued)

The cost of equity-settled transactions is recognized in employee benefitadministrative expense, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled. The cumulative expense recognized for equity-settled transactions at the end of each reporting period until the vesting date reflects the extent to which the vesting period has expired and the Group'sGroup’s best estimate of the number of equity instruments that will ultimately vest. The charge or credit to the statement of profit or loss for a period represents the movement in the cumulative expense recognized as at the beginning and end of that period.


Service and non-market performance conditions are not taken into account when determining the grant date fair value of awards, but the likelihood of the conditions being met is assessed as part of the Group’s best estimate of the number of equity instruments that will ultimately vest. Market performance conditions are reflected within the grant date fair value. Any other conditions attached to an award, but without an associated service requirement, are considered to be non-vesting conditions. Non-vesting conditions are reflected in the fair value of an award and lead to an immediate expensing of an award unless there are also service and/or performance conditions.


For awards that do not ultimately vest because non-market performance andand/or service conditions have not been met, no expense is recognized. Where awards include a market or non-vesting condition, the transactions are treated as vesting irrespective of whether the market or non-vesting condition is satisfied, provided that all other performance andand/or service conditions are satisfied.

(s)

Where the terms of an equity-settled award are modified, as a minimum an expense is recognized as if the terms had not been modified, if the original terms of the award are met. In addition, an expense is recognized for any modification that increases the total fair value of the share-based payments, or is otherwise beneficial to the employee as measured at the date of modification.

Where an equity-settled award is canceled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognized for the award is recognized immediately. This includes any award where non-vesting conditions within the control of either the Group or the employee are not met. However, if a new award is substituted for the canceled award, and is designated as a replacement award on the date that it is granted, the cancelled and new awards are treated as if they were a modification of the original award, as described in the previous paragraph.

The dilutive effect of outstanding options is reflected as additional share dilution in the computation of earnings per share.

(s)Borrowing costs

Borrowing costs directly relating to the acquisition, construction or production of a qualifying asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of those assets. The capitalization of such borrowing costs ceases when the asset is substantially ready for its intended use or sale. All other borrowing costs are expensed in the period in which they are incurred. Borrowing costs consist of interest and other costs that an entity incurred in connection with the borrowing funds.

F-26 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

2.5MATERIAL ACCOUNTING POLICIES (CONTINUED)

Foreign currencies

(t)Income taxes


Income tax comprises current and deferred tax. Income tax relating to items recognized outside profit or loss is recognized outside profit or loss, either as other comprehensive income or loss, or directly in equity.

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantially enacted by the end of the reporting date, taking into consideration interpretations and practices prevailing in the countries in which the Group operates.

Deferred tax is provided, using the liability method, on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognized for all taxable temporary differences, except:

·When the deferred tax liability arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss and does not give rise to equal taxable and deductible temporary differences; and

·In respect of taxable temporary differences associated with investments in subsidiaries, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognized for all deductible temporary differences, and the carryforward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carryforward of unused tax credits and unused tax losses can be utilized, except:

·Where the deferred tax assets relating to the deductible temporary differences arise from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss and does not give rise to equal taxable and deductible temporary differences; and

·In respect of deductible temporary differences associated with investments in subsidiaries, deferred tax assets are only recognized to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are reassessed at each reporting date and are recognized to the extent that it has become probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax assets and deferred tax liabilities are offset if and only if the Group has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realize the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

F-27 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

2.5MATERIAL ACCOUNTING POLICIES (CONTINUED)

(u)Foreign currencies

The functional currency of the Company is the Hong Kong dollars. The functional currency of substantially all the operations of the Group is the CNY, the national currency of the PRC. Transactions denominated in currencies other than the CNY recorded by the entities of the Group are initially recorded using their respective functional currency rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in other currencies have been translated into CNY at the functional currency rates of exchange prevailing at the end of the reporting period. The resulting exchange gains or losses are credited or charged to the consolidated statementstatements of profit or loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the date of the initial transactions.


The consolidated financial statements of certain overseas subsidiary operations with a functional currency other than the CNY have been translated into CNY. The assets and liabilities of these entities have been translated using the exchange rates prevailing at the reporting date and their consolidated statements of profit or loss have been translated using the weighted average exchange rate for the year. Resulting translation adjustments are reported as a separate component of other comprehensive income.


On disposal of a foreign operation, the deferred cumulative amount recognized in equity relating to that particular foreign operation is recognized in the consolidated statementstatements of profit or loss.


(v)Convenience translation




F-30


CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015

(Amounts in thousands, except share and per share data)



2.4

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


(t)

Convenience translation


The consolidated financial statements are stated in CNY. The translation of amounts from CNY into US$ is supplementary information and is included solely for the convenience of the readers and has been made at the rate of exchange quoted by Bloomberg Finance L.P. (“Bloomberg”)www.ofx.com on December 31, 20152023 of US$1.00 = CNY6.4917.CNY7.0786. No representation is made that the CNY amounts could have been, or could be, converted into US$ at that rate on December 31, 20152023 or at any other date.


(w)Provisions

(u)

Provisions


A provision is recognized when a present obligation (legal or constructive) has arisen as a result of a past event and it is probable that a future outflow of resources will be required to settle the obligation, provided that a reliable estimate can be made of the amount of the obligation.


When the Group expects some or all of a provision to be reimbursed, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the statement of profit or loss net of any reimbursement.

When the effect of discounting is material, the amount recognized for a provision is the present value at the end of the reporting period of the future expenditures expected to be required to settle the obligation. The increase in the discounted present value amount arising from the passage of time is included in finance costs in the consolidated statement of profit or loss.


(x)Dividends

(v)

Leases


Leases that transfer substantially all the rewards and risks of ownership of assets to the Group, other than legal title, are accounted for as finance leases. At the inception of a finance lease, the cost of the leased asset is capitalized at the lower of its fair value of the present value of the minimum lease payments and recorded together with the obligation, excluding the interest element, to reflect the purchase and financing. Assets held under capitalized finance leases are included in property, plant and equipment, and depreciated over the shorter of the lease terms and the estimated useful lives of the assets. The finance costs of such leases are charged to the consolidated statement of profit or loss so as to provide a constant periodic rate of charge over the lease terms.


Leases where substantially all the rewards and risks of ownership of assets remain with the lessor are accounted for as operating leases. Rentals payable under operating leases net of any incentives received from the lessor are charged to the consolidated statement of profit or loss on the straight-line basis over the lease terms.


Prepaid land lease payments under operating leases are initially stated at cost and subsequently recognized on the straight-line basis over the lease terms.


(w)

Non-current assets and disposal groups held for distribution


Non-current assets and disposal groups are classified as held for distribution when the Group is committed to distribute the asset or disposal group to its owners. For this to be the case, the asset or disposal group must be available for immediate distribution in its present condition and its distribution must be highly probable.


Non-current assets and disposal groups (other than financial assets) classified as held for distribution are measured at the lower of their carrying amounts and fair values less costs to sell. Property, plant and equipment classified as held for distribution are not depreciated or amortized.


(x)

Dividend


Final dividends are recognized as a liability when they are approved by the shareholdersDirectors in a general meeting.

Interim dividends are simultaneously proposed and declared, because the Company'sCompany’s memorandum and articles of association grant the directorsDirectors the authority to declare interim dividends. Consequently, interim dividends are recognized immediately as a liability when they are proposed and declared.




F-31

F-28 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)


2.5MATERIAL ACCOUNTING POLICIES (CONTINUED)

CHINA NATURAL RESOURCES, INC.

(y)Government grants

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)Government grants are recognized at their fair value where there is reasonable assurance that the grant will be received and all attaching conditions will be complied with. When the grant relates to an expense item, it is recognized as income on a systematic basis over the period in which the costs, for which it is intended to compensate, are expensed.

YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015

(z)Service concession arrangement – Discontinued Operations

(AmountsThe Group has entered into Public-Private Partnership (“PPP”) projects under Build-Operate-Transfer (“BOT”) arrangements with the governmental entity of Guangdong Shaoguan Wujiang District. The BOT arrangement is a service concession arrangement under IFRIC 12 Service Concession Arrangements, because the local government controls and regulates the services that the Group must provide with the infrastructure at a pre-determined service charge and, upon expiration of concession right agreements, the infrastructure has to be transferred to the local government at nil consideration.

Under this service concession arrangement:

- the grantor controls or regulates the services the Group must provide with the infrastructure, to whom it must provide them, and at what price; and

- the grantor controls, through ownership, beneficial entitlement or otherwise, any significant residual interest in thousands, except sharethe infrastructure at the end of the term of the arrangement, or the infrastructure is used for its entire useful life under the arrangements, or both the Group’s practical ability to sell or pledge the infrastructure is restricted and per share data)continuing right of use of the infrastructure is given to the grantor throughout the period of the arrangements.



A financial asset (receivable under a service concession arrangement) is recognized to the extent that (a) the Group has an unconditional right to receive cash or another financial asset from or at the direction of the grantor for the construction services rendered and/or the consideration paid and payable by the Group for the right to charge users of the public service; and (b) the grantor has little, if any, discretion to avoid payment, usually because the agreement is enforceable by law. The Group has an unconditional right to receive cash or another financial asset if nothing other than the passage of time is required before payment of the consideration is due and the grantor contractually guarantees to pay the Group (a) specified or determinable amounts or (b) the shortfall, if any, between amounts received from users of the public service and specified or determinable amounts, even if the payment is contingent on the Group ensuring that the infrastructure meets specified quality of efficiency requirements. The financial asset (receivable under service concession arrangement) is accounted for in accordance with the policy set out for loans and receivables under “(i) Investments and other financial assets”.

2.5

SIGNIFICANT ACCOUNTING ESTIMATES AND ASSUMPTIONSAn intangible asset (concession right) is recognized to the extent that the Group receives a right to charge users of the public service, which is not an unconditional right to receive cash because the amounts are contingent on the extent that the public uses the service. The intangible asset (concession right) is accounted for in accordance with the policy set out for “(e) Intangible assets (other than goodwill)”.


Construction services

If the Group is paid partly with a financial asset and partly with an intangible asset, each component of the consideration is accounted for separately and the consideration received or receivable for both components will be recognized initially at the fair value of the consideration received or receivable.

Revenue relating to construction is accounted for in accordance with the policy set out for “Revenue from contracts with customers - Construction services” below.

F-29 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

2.5MATERIAL ACCOUNTING POLICIES (CONTINUED)

(z)Service concession arrangement - Discontinued Operations (continued)

Operating services

Revenue relating to operating services is accounted for in accordance with the policy for “(aa) Revenue recognition-Revenue from contracts with customers-Operation services of service concession arrangements” below. Costs for operating services are expensed in the period in which they are incurred.

(aa)Revenue recognition – Discontinued Operations

Revenue from contracts with customers

Revenue from contracts with customers is recognized when control of goods or services is transferred to the customers at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods or services.

When the consideration in a contract includes a variable amount, the amount of consideration is estimated to be that to which the Group will be entitled in exchange for transferring the goods or services to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognized will not occur when the associated uncertainty with the variable consideration is subsequently resolved.

When the contract contains a financing component which provides the customer with a significant benefit of financing the transfer of goods or services to the customer for more than one year, revenue is measured at the present value of the amount receivable, discounted using the discount rate that would be reflected in a separate financing transaction between the Group and the customer at contract inception. When the contract contains a financing component which provides the Group with a significant financial benefit for more than one year, revenue recognized under the contract includes the interest expense accreted on the contract liability under the effective interest method. For a contract where the period between the payment by the customer and the transfer of the promised goods or services is one year or less, the transaction price is not adjusted for the effects of a significant financing component, using the practical expedient in IFRS 15.

The Group satisfies a performance obligation and recognizes revenue over time, if one of the following criteria is met:

– The customer simultaneously receives and consumes the benefits provided by the Group’s performance as the Group performs.

– The Group’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced.

– The Group’s performance does not create an asset with an alternate use to the Group and the Group has an enforceable right to payment for performance completed to date.

If none of the above conditions are met, the Group recognizes revenue at the point in time at which the performance obligation is satisfied.

The progress towards complete satisfaction of the performance obligation is measured based on the Group’s efforts or inputs to the satisfaction of the performance obligation, by reference to the surveyors’ assessment of work performed and the costs incurred up to the end of the reporting period as a percentage of total estimated costs for each contract.

When the Group provides more than one service in a service concession arrangement, the transaction price will be allocated to each performance obligation by reference to their relative stand-alone selling prices. In determining the transaction price, the Group adjusts the promised amount of consideration for the effect of a financing component if it is significant.

F-30 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

2.5MATERIAL ACCOUNTING POLICIES (CONTINUED)

(aa)Revenue recognition – Discontinued Operations (continued)

Revenue from contracts with customers (continued)

Construction services

The Group’s performance with respect to construction services creates or enhances an asset or work in progress that the customer controls as the asset is created or enhanced. The Group satisfies the performance obligation and recognizes revenue over time, by reference to completion of the specific transaction assessed on the basis of either the surveyors’ assessment of work performed for Engineering Procurement Construction (EPC) contracts or the costs incurred up to the end of the reporting period as a percentage of total estimated costs for certain contracts solely associated with equipment installation.

In some circumstances, the Group as subcontractor of the construction service may not be able to reasonably measure the outcome of a performance obligation in the early states of a contract. The Group recognizes revenue only to the extent of the costs incurred until such time that it can reasonably measure the outcome of the performance obligation.

The fair value of the construction services under a service concession arrangement is initially estimated at the date of the agreement based on a cost-plus-margin basis with reference to the prevailing market rate of gross margin applicable to similar construction services rendered

Operation services of service concession arrangements

Operation revenue from service concession arrangements is recognized over the period of time that the services are rendered, and the benefits are received and consumed simultaneously by the customers.

Sales of water treatment equipment

Revenue from the sales of water treatment equipment is recognized at the point in time when control of the asset is transferred to the customer. Control is generally transferred when: (i) the customer obtains the physical possession or the legal title of water treatment equipment; and (ii) the Group has a present right to payment and the collection of the consideration is probable.

Maintenance services

Revenue from maintenance services is recognized over the period of time that the services are rendered, and the benefits are received and consumed simultaneously by the customers.

Trading of copper ores

The Group purchased copper ores from third-party suppliers and then resells to a third-party trading company. The Group controlled the copper ores prior to selling them to customers. Revenue was recognized on a gross basis, and at the point in time when control of the asset was transferred to the customer, upon delivery of the copper ores to the customers.

F-31 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

2.5MATERIAL ACCOUNTING POLICIES (CONTINUED)

(aa)Revenue recognition -Discontinued Operations (continued)

Other income

Imputed finance income under a service concession arrangement is recognized on an accrual basis using the effective interest rate method by applying the rate that discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter period, when appropriate, to the net carrying amount of the financial asset.

Interest income is recognized on an accrual basis using the effective interest method by applying the rate that discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter period, when appropriate, to the net carrying amount of the financial asset.

(ab)Contract assets and contract liabilities – Discontinued Operations

Contract assets

If the Group performs by transferring services or goods to a customer before being unconditionally entitled to the consideration under the contract terms, a contract asset is recognized for the earned consideration that is conditional. Contract assets are subject to impairment assessment according to the policy set out for “(k) Impairment of financial assets” above. They are reclassified to trade receivables when the right to the consideration becomes unconditional.

Contract liabilities

A contract liability is the obligation to transfer services or goods to a customer from which the Group has received consideration (or from which an amount of consideration is unconditionally due) from the customer. If a customer pays consideration before the Group transfers services or goods to the customer, a contract liability is recognized when the payment is made or the payment is unconditionally due (whichever is earlier). Contract liabilities are recognized as revenue when the Group performs under the contract.

F-32 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

2.6SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES

The preparation of the consolidated financial statements in conformity with IFRSs requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.

Estimates and assumptions

Judgments

In the process of applying the Group’s accounting policies, management has made the following judgments, apart from those involving estimations, which have the most significant effects on the amounts recognized in the financial statements.

Income taxes

The key assumptions concerningGroup is subject to income taxes in Hong Kong and the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.PRC. The Group has basedcarefully evaluates tax implications of its assumptionstransactions in accordance with prevailing tax regulations and estimates on parameters available whenmakes tax provision accordingly. However, judgment is required in determining the consolidated financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond the control of the Group. Such changesGroup’s provision for income taxes as there are reflected in the assumptions when they occur.

(i)

Impairment of property, plant and equipment

Long-lived assets to be held and used, such as property, plant and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. An impairment loss is recognized for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs of disposal and value in use. In estimating the recoverable amounts of assets, various assumptions, including future cash flows to be associated with the non-current assets and discount rates, are made. If future events do not correspond to such assumptions, the recoverable amounts will need to be revised, and this may have an impact on the Group's results of operations or financial position.


Other than those disclosed in note 4, there were no impairments recognized for the year.


(ii)

Reserve estimates


Non-ferrous metal reserves


Estimates of proved and probable non-ferrous metal reserves are subject to considerable uncertainty. Such estimates are, to a large extent, based on the price of metal and ore and interpretations of geologic data obtained from drill holes and other exploration techniques. The Group uses feasibility studies to derive estimates of capital and operating costs based upon anticipated tonnage and grades of ore to be mined and processed, the predicted configuration of the ore body, expected recovery rates of metals from the ore, the costs of comparable facilities, the costs of operating and processing equipment and other factors.


(iii)

Income taxes


There are certainmany transactions and calculations, forof which the ultimate tax determination is uncertain, during the ordinary course of business. The Group recognizes liabilities based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, thesuch differences will be reflected inimpact on the income tax and deferred tax provisionsprovision in the periodperiods in which thesuch determination is made.




Estimation uncertainty

F-32


CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015

(Amounts in thousands, except shareContract asset and per share data)



2.5

SIGNIFICANT ACCOUNTING ESTIMATES AND ASSUMPTIONS (CONTINUED)


(iv)

Provision forintangible asset retirement obligations


under IFRIC 12 Service Concession Arrangements – Discontinued Operations

The provisionGroup recognizes the consideration received or receivable in exchange for the construction services as a contract asset retirement obligationsand an intangible asset under a service concession arrangement. However, if the Group is paid for the construction services partly by a cash consideration and partly by an intangible asset, it is necessary to separately account for each component of the operator’s consideration. Both components of consideration received or receivable initially are recognized at their respective fair values.

The segregation of the consideration for a service concession arrangement between the contract asset component and the intangible asset component, if any, requires the Group to make an estimate of a number of factors, which include, the fair value of the construction services, expected future water treatment volume of the relevant water treatment plant over its service concession period, future guaranteed receipts and unguaranteed receipts, and a discount rate in order to calculate the present value of those cash flows. These estimates, including revenue recognition of the contract asset and intangible asset components are determined by the Group’s management based on the pasttheir experience and bestassessment of current and future market conditions. The carrying amounts of the intangible asset (“concession right”) and contract asset at the end of the reporting period are disclosed in Notes 10 and 13, respectively.

Provision for expected credit losses on financial assets at amortized cost and contract assets – Discontinued Operations

The policy for provision for ECLs on contract assets and financial assets at amortized cost including trade receivables, other receivables and amounts due from related parties is based on an ECL model. A considerable amount of estimation is required in assessing the available information which includes past collection history, age of balances, customer type and forecasts of future expenditures, taking into account existing relevant PRC regulations. However, insofar aseconomic conditions to estimate the effectECLs. The amount of ECLs is sensitive to changes in circumstances and of forecast economic conditions. The Group’s historical credit loss experience and forecast of economic conditions may also not be representative of a customers’ actual default in the future. The information about the ECLs on the landGroup’s contract assets and the environment from current mining activities becomes apparentfinancial assets at amortized cost is disclosed in future years, the estimate of the associated costs may be subject to revision from time to time.Notes 12, 13 and 15.


3.

F-33 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

DISCONTINUED OPERATIONS


3.DISCONTINUED OPERATIONS

On December 31, 2013,July 28, 2023, the Company announced that itsCompany’s board of directors had approved the Spin-OffSale and listingPurchase Agreement (“SPA") with Feishang Group. Pursuant to the SPA, the Company agreed to sell 100% equity interest of Precise Space-Time Technology Limited ("PSTT") to Feishang Group, together with PSTT's outstanding payable owed to the Company, for consideration of approximately CNY95,761 comprising: (i) CNY-34,197, the fair value of 100% equity interest of PSTT as determined by waythe independent valuation report dated July 28, 2023. (ii) CNY129,958, the book value of introduction onPSTT's outstanding payable owed to the Hong Kong Stock ExchangeCompany (referred as Disposal of its wholly-owned subsidiary, Feishang Anthracite, whichPSTT). PSTT operated the Company's coal mining and related businesses. The Spin-Off was effected by way of a distribution in specie by the Company of all of Feishang Anthracite's issued and outstanding ordinary shares at par value of HK$0.01 per share ("Ordinary Shares"), to the holders of the Company's common shares ("Common Shares") on a pro rata basis. On January 22, 2014, the Company completed the Spin-Off and listing by way of introduction on the Hong Kong Stock Exchange of Feishang Anthracite.wastewater treatment segment. After the Spin-Off,disposal, the Company will not operate any coal miningwastewater treatment business and will continue operating its non-ferrous metalsexploration and mining business.

The disposal of PST Technology was accounted for as an equity transaction of entities under common control. The consideration received by the Company for the disposal has been accounted for as a deemed contribution from the controlling shareholder in the consolidated statement of changes in equity. The assets and related businesses.liabilities of the wastewater treatment transferred to Mr. Li Feilie were accounted for as a deemed distribution to the controlling shareholder on the closing date of the transaction.


The results of Feishang AnthracitePSTT for the years/period are presented below:below.


 

 

2013

 

 

For the period from January 1, 2014 to January 22,

2014

 

 

 

CNY

 

 

CNY

 

Revenue

 

 

178,501

 

 

 

21,157

 

Cost of sales

 

 

(108,242

)

 

 

(10,399

)

Gross profit

 

 

70,259

 

 

 

10,758

 

Selling and distribution expenses

 

 

(6,110

)

 

 

(506

)

Administrative expense

 

 

(142,064

)

 

 

(8,633

)

Impairment loss on property, plant and equipment

 

 

(184,417

)

 

 

—

 

Other operating expenses

 

 

(6,003

)

 

 

—

 

 

 

 

 

 

 

 

 

 

OPERATING (LOSS) / INCOME

 

 

(268,335

)

 

 

1,619

 

 

 

 

 

 

 

 

 

 

Finance costs

 

 

(115,253

)

 

 

(11,571

)

Interest income

 

 

1,102

 

 

 

86

 

Non-operating (expense) / income, net

 

 

132

 

 

 

(100

)

 

 

 

 

 

 

 

 

 

LOSS BEFORE INCOME TAX

 

 

(382,354

)

 

 

(9,966

)

 

 

 

 

 

 

 

 

 

Income tax benefit / (expense)

 

 

47,817

 

 

 

(742

)

 

 

 

 

 

 

 

 

 

LOSS FOR THE YEAR / PERIOD FROM THE DISCONTINUED OPERATIONS

 

 

(334,537

)

 

 

(10,708

)

 

 

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

 

 

 

Owners of the company

 

 

(334,119

)

 

 

(9,925

)

Non-controlling interests

 

 

(418

)

 

 

(783

)

 

 

 

(334,537

)

 

 

(10,708

)

Schedule of disposal pstt            
  2021  2022  

For the period from January 1, 2023 to July 28,

2023

 
   CNY   CNY   CNY 
Revenue  18,735   20,306   12,748 
Cost of sales  (18,494)  (14,485)  (5,872)
Gross profit  241   5,821   6,876 
Selling and distribution expenses  (922)  (700)  (442)
Administrative expenses  (11,793)  (11,501)  (5,699)
Other (losses)/income  (782)  205   142 
Impairment (losses)/reversal on financial assets  (3,330)  1,073   (9,931)
Finance costs  (4,193)  (3,586)  (1,906)
Finance income  16,922   15,594   8,785 
             
(LOSS)/PROFIT BEFORE INCOME TAX  (3,857)  6,906   (2,175)
             
Income tax expense  (7,230)  (5,864)  (1,931)
             
(LOSS)/PROFIT FOR THE YEAR/PERIOD FROM THE DISCONTINUED OPERATIONS  (11,087)  1,042   (4,106)
Attributable to:            
Owners of the company  (4,268)  (1,285)  (5,504)
Non-controlling interests  (6,819)  2,327   1,398 



F-33


F-34 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

3.DISCONTINUED OPERATIONS (CONTINUED)

YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015

(Amounts in thousands, except share and per share data)



3.

DISCONTINUED OPERATIONS (CONTINUED)


The major classes of assets and liabilities of Feishang AnthracitePSTT as at December 31, 20132022 and January 22, 2014July 31, 2023 are as follows:

Schedule of major classes of assets and liabilities        
  December 31, 2022  July 28, 2023 
   CNY   CNY 
ASSETS        
NON-CURRENT ASSETS        
Property, plant and equipment  367   282 
Intangible assets  19,381   18,921 
Right-of-use Assets  1,980   1,621 
Trade receivables  10,520   4,714 
Contract assets  89,713   88,423 
         
TOTAL NON-CURRENT ASSETS  121,961   113,961 
         
CURRENT ASSETS        
Inventories  729   911 
Trade receivables - current  46,760   56,277 
Bills receivable  8,500   — 
Contract assets - current  21,647   17,842 
Prepayments  1,723   902 
Other receivable  84,865   82,857 
Other current assets  3,160   3,160 
Cash and cash equivalents  25,655   37,460 
         
TOTAL CURRENT ASSETS  193,039   199,409 
         
TOTAL ASSETS  315,000   313,370 
         
LIABILITIES        
CURRENT LIABILITIES        
Trade payables  20,225   21,522 
Contract Liability  690   690 
Other payables and accruals  141,136   143,067 
Income tax payable  10,732   11,673 
Interest-bearing loans and borrowings - current  3,000   3,500 
Lease liabilities - current  645   584 
Due to related companies  444   496 
         
TOTAL CURRENT LIABILITIES  176,872   181,532 
         
NON-CURRENT LIABILITIES        
Deferred tax liabilities  5,276   5,266 
Lease liabilities - non current  1,248   1,073 
Interest-bearing loans and borrowings  71,000   69,000 
         
TOTAL NON-CURRENT LIABILITIES  77,524   75,339 
         
TOTAL LIABILITIES  254,396   256,871 
         
NET ASSETS  60,604   56,499 
         
Equity attributable to owners of the Company  (49,076)  (54,579) 
Non-controlling interests  109,680   111,078 


 

 

December 31,

 

 

January 22,

 

 

 

2013

 

 

2014

 

 

 

CNY

 

 

CNY

 

ASSETS

 

 

 

 

 

 

NON-CURRENT ASSETS

 

 

 

 

 

 

Property, plant and equipment

 

 

2,461,963

 

 

 

2,460,311

 

Rehabilitation fund

 

 

37,350

 

 

 

33,380

 

Prepayments, deposits and other receivables

 

 

100,658

 

 

 

112,422

 

Deferred tax assets

 

 

9,830

 

 

 

41,516

 

 

 

 

2,609,801

 

 

 

2,647,629

 

CURRENT ASSETS

 

 

 

 

 

 

 

 

Inventories

 

 

14,363

 

 

 

16,844

 

Trade and bills receivables

 

 

68,059

 

 

 

55,670

 

Corporate income tax refundable

 

 

12,007

 

 

 

12,417

 

Prepayments, deposits and other receivables

 

 

30,584

 

 

 

41,308

 

Pledged and restricted bank deposits

 

 

24,864

 

 

 

26,142

 

Cash and cash equivalents

 

 

146,883

 

 

 

96,811

 

 

 

 

296,760

 

 

 

249,192

 

Total assets classified as held for distribution

 

 

2,906,561

 

 

 

2,896,821

 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

 

Trade payables

 

 

143,246

 

 

 

104,957

 

Other payables and accrued liabilities

 

 

117,315

 

 

 

80,472

 

Interest-bearing bank and other borrowings

 

 

1,018,550

 

 

 

1,018,550

 

Interest payable

 

 

15,102

 

 

 

24,283

 

Income tax payable

 

 

879

 

 

 

10,610

 

Mining rights payable

 

 

38,876

 

 

 

28,169

 

 

 

 

1,333,968

 

 

 

1,267,041

 

NON-CURRENT LIABILITIES

 

 

 

 

 

 

 

 

Interest-bearing bank and other borrowings

 

 

889,504

 

 

 

924,799

 

Interest payable

 

 

16,729

 

 

 

17,028

 

Deferred tax liabilities

 

 

216,320

 

 

 

248,569

 

Mining rights payables

 

 

55,442

 

 

 

55,442

 

Asset retirement obligation

 

 

8,222

 

 

 

8,289

 

TOTAL NON-CURRENT LIABILITIES

 

 

1,186,217

 

 

 

1,254,127

 

Total liabilities directly associated with the assets classified as held for distribution

 

 

2,520,185

 

 

 

2,521,168

 

 

 

 

 

 

 

 

 

 

NET ASSETS

 

 

386,376

 

 

 

375,653

 



F-34

F-35 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)


CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015

3.DISCONTINUED OPERATIONS (CONTINUED)

(Amounts in thousands, except share and per share data)



3.

DISCONTINUED OPERATIONS (CONTINUED)


The net cash flows incurred by Feishang AnthracitePSTT are as follows:


 

 

2013

 

 

For the
period from
January 1,
2014 to
January 22,
2014

 

 

 

CNY

 

 

CNY

 

Operating activities

 

 

(150,099

)

 

 

(29,603

)

Investing activities

 

 

(293,389

)

 

 

(54,472

)

Financing activities

 

 

428,996

 

 

 

34,018

 

Net increase / (decrease) in cash and cash equivalents

 

 

(14,492

)

 

 

(50,057

)

Loss per share (CNY per share):

 

 

 

 

 

 

 

 

Basic, from the discontinued operations

 

 

(13.41

)

 

 

(0.40

)

Diluted, from the discontinued operations

 

 

(13.41

)

 

 

(0.40

)

Schedule of discontinued operations cash flow            
  2021  2022  For the period from January 1, 2023 to July 28, 2023 
   CNY   CNY   CNY 
Operating activities  (11,166)  (2,255)  15,162 
Investing activities  8,835   (13)  (12)
Financing activities  (11,936)  (11,930)  (3,378)
Net foreign exchange difference  (9)  —   33 
Net (decrease) /increase in cash and cash equivalents  (14,276)  (14,198)  11,805 
             
Loss per share            
– Basic, from the discontinued operations  (0.52)  (0.15)  (0.67)
– Diluted, from the discontinued operations  (0.52)  (0.15)  (0.67)


The calculations of basic and diluted earnings per share from discontinued operations are based on:


 

 

 

2013

 

 

For the
period from
January 1,
2014 to
January 22,
2014

 

 

 

 

CNY

 

 

CNY

 

Loss for the year attributable to owners of the Company from discontinued operations

 

 

 

(334,119

)

 

 

(9,925

)

Weighted average number of ordinary shares in issue during the year / period used in the basic earnings per share calculation (Note 18)

 

 

 

24,910,916

 

 

 

24,910,916

 

Weighted average number of ordinary shares used in the diluted earnings per share calculation (Note 18)

 

 

 

24,910,916

 

 

 

24,910,916

 

  2021  2022  For the period from January 1, 2023 to July 28, 2023 
   CNY   CNY   CNY 
Loss for the year attributable to owners of the Company from discontinued operations  (4,268)  (1,285)  (5,504)
Weighted average number of ordinary shares in issue during the year / period used in the basic and diluted earnings per share calculation (note 8)  8,144,050   8,189,617   8,222,658 




F-35


F-36 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

4.SEGMENT INFORMATION

YEARS ENDED DECEMBEROperating segments are identified on the basis of internal reports about components of the Group that are regularly reviewed by the Group’s management and the Company’s Board of Directors for the purpose of resource allocation and performance assessment.

Management assesses the performance of operating segments based on profit or loss before income tax in related periods. The manner of assessment is consistent with that applied in these financial statements.

Prior to July 31, 2013, 2014 AND 20152023, the Group’s two reportable operating segments are summarized below:

(Amounts

- Wastewater treatment segment, which consists of sales of assembled equipment, provision of construction service and participating in thousands, except sharePPP projects as operator;

- Exploration and per share data)mining segment, which consists of the exploration of lead, silver and other metals in the Inner Mongolia Autonomous Region of the PRC and the trading of copper ores products;



Deferred tax assets, income tax payable and deferred tax liabilities are excluded from segment assets and segment liabilities. The Group had neither sales of products nor provisions of services between the operating segments.

4.After the disposal of PSTT in July 2023, the Group only operates in one operating segment: exploration and mining. Segment performance is evaluated based on reportable segment profit / (loss), which is a measure of adjusted profit / (loss) before tax from continuing operations. The segment analysis below is provided for the Group's continuing operations and does not include any amount from a discontinued operation, namely the wastewater treatment (see Note 3 for information on discontinued operations).

PROPERTY, PLANT AND EQUIPMENT


 

 

Buildings

 

 

Mining structures and mining rights

 

 

Machinery and equipment

 

 

Motor vehicles

 

 

Construction in progress

 

 

Total

 

 

 

CNY

 

 

CNY

 

 

CNY

 

 

CNY

 

 

CNY

 

 

CNY

 

Cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At January 1, 2014

 

23,730

 

 

 

25,465

 

 

 

6,265

 

 

 

2,589

 

 

 

—

 

 

 

58,049

 

Additions

 

92

 

 

 

901

 

 

 

190

 

 

 

—

 

 

 

2,113

 

 

 

3,296

 

Transfer

 

930

 

 

 

545

 

 

 

638

 

 

 

—

 

 

 

(2,113

)

 

 

—

 

Disposals

 

(10

)

 

 

(161

)

 

 

(331

)

 

 

—

 

 

 

—

 

 

 

(502

)

Exchange adjustment

 

18

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

18

 

Reclassification

 

(1,820

)

 

 

966

 

 

 

878

 

 

 

(24

)

 

 

—

 

 

 

—

 

At December 31, 2014

 

22,940

 

 

 

27,716

 

 

 

7,640

 

 

 

2,565

 

 

 

—

 

 

 

60,861

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additions

 

—

 

 

 

122

 

 

 

2

 

 

 

148

 

 

 

5,807

 

 

 

6,079

 

Transfer

 

—

 

 

 

5,807

 

 

 

—

 

 

 

—

 

 

 

(5,807

)

 

 

—

 

Disposals

 

—

 

 

 

(37

)

 

 

(33

)

 

 

(487

)

 

 

 

 

 

 

(557

)

Exchange adjustment

 

56

 

 

 

—

 

 

 

1

 

 

 

—

 

 

 

—

 

 

 

57

 

At December 31, 2015

 

22,996

 

 

 

33,608

 

 

 

7,610

 

 

 

2,226

 

 

 

—

 

 

 

66,440

 

At December 31, 2015 (US$)

 

3,542

 

 

 

5,177

 

 

 

1,172

 

 

 

343

 

 

 

—

 

 

 

10,234

 


Accumulated depreciation and amortization and impairment losses


At January 1, 2014

 

 

(10,644

)

 

 

(18,565

)

 

 

(5,404

)

 

 

(1,948

)

 

 

—

 

 

 

(36,561

)

Depreciation charge

 

 

(1,212

)

 

 

(1,196

)

 

 

(407

)

 

 

(199

)

 

 

—

 

 

 

(3,014

)

Impairment losses

 

 

—

 

 

 

(8,065

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(8,065

)

Disposals

 

 

5

 

 

 

110

 

 

 

314

 

 

 

—

 

 

 

—

 

 

 

429

 

Exchange adjustment

 

 

(18

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(18

)

At December 31, 2014

 

 

(11,869

)

 

 

(27,716

)

 

 

(5,497

)

 

 

(2,147

)

 

 

—

 

 

 

(47,229

)

Depreciation charge

 

 

(1,281

)

 

 

—

 

 

 

(377

)

 

 

(172

)

 

 

—

 

 

 

(1,830

)

Impairment losses (Note 15)

 

 

—

 

 

 

(5,902

)

 

 

(1,640

)

 

 

—

 

 

 

—

 

 

 

(7,542

)

Disposals

 

 

—

 

 

 

10

 

 

 

31

 

 

 

473

 

 

 

—

 

 

 

514

 

Exchange adjustment

 

 

(56

)

 

 

—

 

 

 

(1

)

 

 

—

 

 

 

—

 

 

 

(57

)

At December 31, 2015

 

 

(13,206

)

 

 

(33,608

)

 

 

(7,484

)

 

 

(1,846

)

 

 

—

 

 

 

(56,144

)

At December 31, 2015 (US$)

 

 

(2,034)

 

 

 

(5,177)

 

 

 

(1,153)

 

 

 

(284)

 

 

 

—

 

 

 

(8,648)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net carrying amount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At December 31, 2014

 

 

11,071

 

 

 

—

 

 

 

2,143

 

 

 

418

 

 

 

—

 

 

 

13,632

 

At December 31, 2015

 

 

9,790

 

 

 

—

 

 

 

126

 

 

 

380

 

 

 

—

 

 

 

10,296

 

At December 31, 2015 (US$)

 

 

1,508

 

 

 

—

 

 

 

19

 

 

 

59

 

 

 

—

 

 

 

1,586

 

As of December 31, 2014 and 2015, accumulated depreciation and amortization included accumulated amortization of mining rights of CNY10,130 and CNY10,130 (US$1,560), respectively.




F-36


CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015

(Amounts in thousands, except share and per share data)



4.

PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

There were no exploration costs incurred during the years ended December 31, 2014 and 2015.

An impairment loss on property, plant and equipment of CNY7,542 (US$1,162) of Yangchong Mine was recorded for the year ended December 31, 20152023, the segment results were as follows:

Schedule of segment results         
  CNY 
  Exploration
and mining		  Corporate
activities		  Total 
Depreciation and amortization  (4)  (692)  (696)
Interest income  1   4   5 
Finance costs  (1)  (47)  (48)
Fair value gain on financial instruments, net  —   847   847 
Profit/(loss) before income tax  1,263   (9,600)  (8,337)
Other income*  3,742 *  —   3,742 
Profit/(loss) for the year from continuing operations  1,263   (9,600)  (8,337)
Total assets  252,133   1,674   253,807 
Total liabilities  159,285   18,527   177,812 
             

*In 2023, the Company received RMB3,742 from government of Dengkou County, Inner Mongolia Autonomous Region as reimbursement payments for discontinuing the exploration and development activities in connection withcertain nature reserve areas. The amount is recognized in other income as the decline of average selling prices of iron concentrates. Yangchong Mine was designated as a single cash generating unit (“CGU”), which was based predominantlyexpenditure on the value-in-use (“VIU”) approach. VIU calculations use pre-tax cash flow projections. Other key assumptions appliedexploration and development have been fully expensed before 2023.

F-37 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

4.SEGMENT INFORMATION(CONTINUED)

As of and for the impairment tests include the production volume, expected iron price, product cost and related expenses. Management determined that these key assumptions were based on past performance and their expectations on market development. Further, atyear ended December 31, 2015,2023, the Group adopted a pre-tax rate of 16.00% (2014: 16.00%) that reflects specific risks related to the CGU,segment results were as the discount rate.follows (continued):

          
  US$ 
  Exploration
and mining		  Corporate
activities		  Total 
Depreciation and amortization  —   (99)  (99)
Interest income  —   1   1 
Finance costs  —   (7)  (7)
Fair value gain on financial instruments, net  —   120   120 
Profit/(loss) before income tax  178   (1,355)  (1,177)
Other income  529   —   529 
Profit/(loss) for the year from continuing operations  178   (1,355)  (1,177)
Total assets  35,619   236   35,855 
Total liabilities  22,502   2,616   25,118 

 

5.As of and for the year ended December 31, 2022, the segment results were as follows:

REHABILITATION FUND

             
  CNY 
  Exploration
and mining		  Corporate
activities		  Total 
Depreciation and amortization  (28)  (701)  (729)
Interest income  —   13   13 
Finance costs  (1)  192   191 
Fair value gain on financial instruments, net  —   1,007   1,007 
Loss before income tax  (39)  (23,299)  (23,338)
Other income  698   1   699 
Loss for the year from continuing operations  (39)  (23,299)  (23,338)
Total assets  36,015   213,891   249,906 
Total liabilities  38,306   59,296   97,602 
             

F-38 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

4.SEGMENT INFORMATION(CONTINUED)

As of and for the year ended December 31, 2021, the segment results were as follows:

             
  CNY 
  Exploration
and mining		  Corporate
activities		  Total 
Depreciation and amortization  (64)  (717)  (781)
Interest income  1   12   13 
Finance costs  (1)  (165)  (166)
Fair value loss on financial instruments, net  —   (38,349)  (38,349)
Loss before income tax  (161)  (48,818)  (48,979)
Other income/(losses)  600   (1)  599 
Income tax benefit  —   5,095   5,095 
Loss for the year from continuing operations  (161)  (43,723)  (43,884)
Total assets  39,018   179,024   218,042 
Total liabilities  41,251   60,417   101,668 

The rehabilitation fund represents restricted cash set aside by the Group in banks and cash placed with authorities for the purposereconciliation of future environment rehabilitation as well as the settlement of asset retirement obligations.


6.

INVENTORIES

Inventories, net of provision for inventories, are summarized as follows:

 

 

December 31,

 

 

 

2014

 

 

2015

 

 

2015

 

 

 

CNY

 

 

CNY

 

 

US$

 

Materials and supplies

 

 

3,482

 

 

 

 2,575

 

 

 

 396

 

Finished goods

 

 

10,029

 

 

 

 1,348

 

 

 

 208

 

 

 

 

13,511

 

 

 

3,923

 

 

 

604

 


7.

TRADE PAYABLES

 

 

December 31,

 

 

 

2014

 

 

2015

 

 

2015

 

 

 

CNY

 

 

CNY

 

 

US$

 

 

 

 

 

 

 

 

 

 

 

Trade payables

 

 

1,462

 

 

 

921

 

 

 

142

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,462

 

 

 

921

 

 

 

142

 

Trade payables are non-interest-bearing and are normally settled within six months.


The aging analysis of trade payables as at December 31, 2014 and 2015segment assets to total assets is as follows:


 

 

December 31,

 

 

 

2014

 

 

2015

 

 

2015

 

 

 

CNY

 

 

CNY

 

 

US$

 

 

 

 

 

 

 

 

 

 

 

Within 1 year

 

 

1,354

 

 

 

527

 

 

 

81

 

1 to 2 years

 

 

37

 

 

 

322

 

 

 

50

 

Over 2 years

 

 

71

 

 

 

72

 

 

 

11

 

 

 

 

1,462

 

 

 

921

 

 

 

142

 

             
  2022  2023  2023 
   CNY   CNY   US$ 
Segment assets  249,906   253,807   35,855 
Assets of segment – Wastewater treatment  315,000   —   — 
Net off  (244,915)  —   — 
Total assets  319,991   253,807   35,855 



F-37


CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015

(Amounts in thousands, except share and per share data)



8.

OTHER PAYABLES AND ACCRUED LIABILITIES

 

 

December 31,

 

 

 

2014

 

 

2015

 

 

2015

 

 

 

CNY

 

 

CNY

 

 

US$

 

 

 

 

 

 

 

 

 

 

 

Natural resources fee (a)

 

 

8,577

 

 

 

 8,489

 

 

 

 1,308

 

Staff compensation fund (b)

 

 

2,419

 

 

 

 2,304

 

 

 

 355

 

Social security payable (c)

 

 

1,046

 

 

 

 1,178

 

 

 

 181

 

Payroll payable

 

 

1,394

 

 

 

 5,319

 

 

 

 819

 

Welfare payable

 

 

529

 

 

 

 529

 

 

 

 81

 

Advances from customers

 

 

76

 

 

 

 47

 

 

 

 7

 

Accrued expenses

 

 

600

 

 

 

 999

 

 

 

 154

 

Others

 

 

1,510

 

 

 

 1,232

 

 

 

 191

 

 

 

 

16,151

 

 

 

20,097

 

 

 

3,096

 

———————

(a)

The natural resources fee represents fees payablereconciliation of segment liabilities to the PRC Government andtotal liabilities is calculated as a percentage of sales.follows:

(b)

             
  2022  2023  2023 
   CNY   CNY   US$ 
Segment liabilities  97,602   177,812   25,118 
Liabilities of segment - Wastewater treatment  254,396   —   — 
Net off  (209,456)  —   — 
Total liabilities  142,542   177,812   25,118 

The staff compensation fund represents one-off cash receivedreconciliation from the PRC government to compensate employees of Wuhu Feishang Mining Development Co., Limited (“Wuhu Feishang”) through the Grouploss for the loss of their state sponsored pension and post-employment benefits. The fund is to be distributed to employees at the termination of their employment with Wuhu Feishang. Wuhu Feishang is not required to make any additional contributions to the fund.

(c)

The social security represents amount payable to PRC government-managed retirement insurance, medical insurance, maternity insurance, employment injury insurance and unemployment insurance for the benefit of the Group's employees.


9.

DEFERRED INCOME

 

 

Amount

 

Amount

 

 

 

CNY

 

US$

 

At January 1, 2014, December 31 2014 and January 1, 2015

 

 

—   

    

—

 

Recognized during the year

 

 

550

 

85

 

Released to the statement of profit or loss

 

 

(263

)

(41

)

At December 31, 2015

 

 

287

 

44

 


Government grants were received in 2015 for certain underground construction projects in Wuhu Feishang. The amount was included in deferred income in the statement of financial positions, which was recognized in the statement of profit or loss along with the depreciation of related assets over their useful lives.




F-38


CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015

(Amounts in thousands, except share and per share data)



10.

ASSET RETIREMENT OBLIGATIONS

Asset retirement obligations primarily relate to the closure of mines, which includes dismantlement of mining related structure and the reclamation of land upon exhaustion of coal or metal reserves.

The following table describes the changes to the Group's asset retirement obligation liability:

 

 

Amount

 

 

Amount

 

 

 

CNY

 

 

US$

 

At January 1, 2014

 

 

3,840

 

 

 

592

 

Accretion expenses (Note 13)

 

 

381

 

 

 

59

 

At December 31, 2014 and January 1, 2015

 

 

4,221

 

 

 

651

 

Accretion expenses (Note 13)

 

 

 418

 

 

 

 64

 

At December 31, 2015

 

 

 4,639

 

 

 

 715

 


The inflation rate, discount rate and market risk premium used for estimating provision for asset retirement obligations at December 31, 2015 and 2014 were 2.53%, 9.91% and 6.09%, respectively. There were no material changes to those rates used in subsequent periods.


11.

REVENUES


Revenuesyear from continuing operations comprise the following:

 

 

Year Ended December 31,

 

 

 

2013

 

 

2014

 

 

2015

 

 

2015

 

 

 

CNY

 

 

CNY

 

 

CNY

 

 

US$

 

Zinc

 

 

—

 

 

 

—

 

 

 

 1,053

 

 

 

 162

 

Iron

 

 

39,568

 

 

 

6,857

 

 

 

 16,870

 

 

 

 2,598

 

Others

 

 

1,792

 

 

 

1,446

 

 

 

 419

 

 

 

 65

 

 

 

 

41,360

 

 

 

8,303

 

 

 

18,342

 

 

 

2,825

 


to net loss is as follows:

12.

Schedule of reconciliation from loss                
  2021  2022  2023  2023 
   CNY   CNY   CNY   US$ 
Loss for the year from continuing operations  (43,884)  (23,338)  (8,337)  (1,177)
Loss for the year from discontinued operations  (11,087)  1,042   (4,106)  (580)
Net loss (including non-controlling interests)  (54,971)  (22,296)  (12,443)  (1,757)

COST OF SALES


Cost of sales from continuing operations comprise the following:

 

 

Year Ended December 31,

 

 

 

2013

 

 

2014

 

 

2015

 

 

2015

 

 

 

CNY

 

 

CNY

 

 

CNY

 

 

US$

 

Zinc

 

 

—

 

 

 

—

 

 

 

 971

 

 

 

 150

 

Iron

 

 

23,461

 

 

 

5,009

 

 

 

 30,459

 

 

 

4,692

 

Others

 

 

1,640

 

 

 

1,554

 

 

 

 506

 

 

 

 78

 

 

 

 

25,101

 

 

 

6,563

 

 

 

31,936

 

 

 

4,920

 

F-39 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)




4.SEGMENT INFORMATION (CONTINUED)

F-39Geographical information


(a)Non-current assets
 Schedule of non-current assets         
  December 31, 
  2022  2023  2023 
  CNY  CNY  US$ 
          
Mainland China  122,023   162   23 
Hong Kong  1,012   247,767   35,002 
             
Total  123,035   247,929   35,025 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015

(Amounts in thousands, except share and per share data)



13.

FINANCE COSTS


Finance costs from continuing operations comprise the following:


 

 

Year Ended December 31,

 

 

 

2013

 

 

2014

 

 

2015

 

 

2015

 

 

 

CNY

 

 

CNY

 

 

CNY

 

 

US$

 

Bank charges

 

 

14

 

 

 

11

 

 

 

6

 

 

 

1

 

Accretion expenses (Note 10)

 

 

346

 

 

 

381

 

 

 

418

 

 

 

64

 

 

 

 

360

 

 

 

392

 

 

 

424

 

 

 

65

 


14.

NON-OPERATING EXPENSES, NET


Non-operating expenses from continuing operations comprise the following:


 

 

Year Ended December 31,

 

 

 

2013

 

 

2014

 

 

2015

 

 

2015

 

 

 

CNY

 

 

CNY

 

 

CNY

 

 

US$

 

Loss / (Gain) on disposal of property, plant and equipment

 

 

—

 

 

 

35

 

 

 

(2

)

 

 

—

 

Donation

 

 

—

 

 

 

14

 

 

 

140

 

 

 

21

 

Others

 

 

167

 

 

 

169

 

 

 

(32

)

 

 

(4

)

 

 

 

167

 

 

 

218

 

 

 

106

 

 

 

17

 




F-40


CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015

(Amounts in thousands, except share and per share data)



15.

PROFIT / (LOSS) BEFORE INCOME TAX FROM CONTINUING OPERATIONS

The Group's profit /non-current assets information above is based on the locations of the assets and excludes financial instruments and deferred tax assets.

F-40 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

5.LOSS BEFORE INCOME TAX

The Group’s loss before tax from continuing operations is arrived at after charging (crediting)/ (crediting):

 

 

Year Ended December 31,

 

 

 

2013

 

 

2014

 

 

2015

 

 

2015

 

 

 

CNY

 

 

CNY

 

 

CNY

 

 

US$

 

Crediting:

 

 

 

 

 

 

 

 

 

 

 

 

Interest income on bank deposits

 

 

1,814

 

 

 

1,602

 

 

 

425

 

 

 

66

 

Investment income realized from the available-for-sale

 

 

—

 

 

 

—

 

 

 

631

 

 

 

97

 

Reversal of write-down of inventories to net realizable value, net (a)

 

 

—

 

 

 

—

 

 

 

5,474

 

 

 

843

 

Gain on disposal of property, plant and equipment

 

 

—

 

 

 

—

 

 

 

2

 

 

 

—

 

Government grants (b)

 

 

350

 

 

 

79

 

 

 

373

 

 

 

57

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Charging:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Auditors' remuneration:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- Audit fee

 

 

3,300

 

 

 

800

 

 

 

800

 

 

 

123

 

- Audit related fee

 

 

—

 

 

 

25

 

 

 

—

 

 

 

—

 

Sub-total

 

 

3,300

 

 

 

825

 

 

 

800

 

 

 

123

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of inventories sold (c)

 

 

22,395

 

 

 

5,106

 

 

 

31,467

 

 

 

4,847

 

Sales tax and surcharge

 

 

540

 

 

 

72

 

 

 

107

 

 

 

17

 

Utilization of safety fund and production maintenance fund

 

 

2,166

 

 

 

1,385

 

 

 

362

 

 

 

56

 

Cost of sales (Note 12)

 

 

25,101

 

 

 

6,563

 

 

 

31,936

 

 

 

4,920

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Employee benefit expenses (Note 16)

 

 

10,004

 

 

 

5,101

 

 

 

15,794

 

 

 

2,433

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Write-down of inventories to net realizable value

 

 

—

 

 

 

9,299

 

 

 

—

 

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- Property, plant and equipment

 

 

2,361

 

 

 

3,014

 

 

 

1,830

 

 

 

282

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating lease rental:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- Office properties

 

 

1,148

 

 

 

779

 

 

 

805

 

 

 

124

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss on disposal of property, plant and equipment

 

 

—

 

 

 

35

 

 

 

—

 

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Repairs and maintenance

 

 

176

 

 

 

247

 

 

 

306

 

 

 

47

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for impairment for property, plant and equipment (Note 4)

 

 

—

 

 

 

8,065

 

 

 

7,542

 

 

 

1,162

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for impairment for receivables

 

 

140

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Losses arising from temporary suspension of production (d)

 

 

—

 

 

 

—

 

 

 

830

 

 

 

128

 



charging:

F-41

 Schedule of loss before tax from continuing operations is arrived at after (crediting)/charging            
  Year Ended December 31, 
  2021  2022  2023  2023 
  CNY  CNY  CNY  US$ 
             
Crediting:                
Finance income  (13)  (13)  (5)  (1)
                 
Depreciation                
- Property, plant and equipment (Note 9)  62   29   5   1 
- Right-of-use assets (Note 11)  719   700   691   98 
Expense relating to short-term leases (Note 11)  601   353   194   28 
Fair value (gain)/loss on financial instruments:                
- Financial assets at fair value through profit or loss  45,816   —   —   — 
- Derivative financial liabilities  (7,467)  (1,007)  (847)  (120)
Expenses related to share-based payment  —   —   3,074   435 
Consultants share option expense  —   16,152   —   — 
Issuance expense related to placement  1,579   —   —   — 
Other income  (599)  (699)  (3,742)  (529)
Finance costs  166   (191)  48   7 
                 
Employee benefit expenses** (Note 6)  1,517   1,171   1,192   168 


F-41 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

5.LOSS BEFORE INCOME TAX (CONTINUED)

YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015The Group’s loss before tax from discontinuing operations is arrived at after (crediting)/charging:

             
  Year Ended December 31, 
  2021  2022  2023  2023 
  CNY  CNY  CNY  US$ 
             
Crediting:                
Finance income  (16,922)  (15,594)  (8,785)  (1,241)
                 
Charging:                
Cost of sales                
- Sales of water treatment equipment  —   94   —   — 
- Construction service  12,876   8,580   2,435   345 
- Operation and maintenance services  162   —   307   43 
- Operation services related to service concession arrangement  5,067   5,811   3,130   442 
- Construction services related to service concession arrangement  389   —   —   — 
 Cost of sales  18,494   14,485   5,872   830 
                 
Depreciation                
- Property, plant and equipment (Note 9)  448   275   95   14 
- Right-of-use assets (Note 11)  647   713   359   50 
Amortization of intangible assets* (Note 10)  884   813   460   65 
Expense relating to short-term leases (Note 11)  —   137   129   18 
Impairment losses/(reversal) on financial assets:                
- Trade receivables  3,840   (3,989)  383   54 
- Contract assets  357   171   3,545   501 
- Other receivables  239   2,745   6,003   848 
- Amounts due from related companies  (1,106)  —   —   — 
Other losses / (income)  782   (205)  142   20 
Finance costs  4,193   3,586   1,906   270 
                 
Employee benefit expenses**  9,979   9,416   4,960   701 

(Amounts in thousands, except share and per share data)

*The amortization of intangible assets allocated to cost of sales amounted to CNY730, CNY730 and CNY425 (US$60) and administrative expenses amounted to CNY154, CNY83 and CNY35 (US$5) on the consolidated statements of profit or loss for the years ended December 31, 2021, 2022 and 2023.

**The employee benefit expenses allocated to cost of sales amounted to CNY2,772, CNY1,418 and CNY870 (US$123), selling and distribution expenses amounted to CNY159, CNY111, CNY70 (US$10) and administrative expenses amounted to CNY8,565, CNY9,058 and CNY5,212 (US$736) on the consolidated statements of profit or loss for the years ended December 31, 2021, 2022 and 2023.



F-42 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

15.

6.EMPLOYEE BENEFITS

PROFIT / (LOSS) BEFORE INCOME TAX FROM CONTINUING OPERATIONS (CONTINUED)


(a)

Reversal of write-down of inventories to net realizable value arising from an increase in net realizable value due to selling prices in 2015 was higher than the net realizable value as of December 31, 2014.

(b)

Government grants amounting to CNY550 (US$85) were received in 2015 for certain underground construction projects in Wuhu Feishang. The amount was included in deferred income in the statement of financial position, which will be recognized in the statement of profit or loss along with the depreciation of related assets over their useful lives.

A government grant amounting to CNY110 (US$17) has been fully recognized in “Other operating expenses, net” in the consolidated statements of profit or loss since all related expenditure has been incurred and recognized in the consolidated statements of profit or loss. There are no unfulfilled conditions or contingencies relating to the grant.

(c)

Included in the cost of inventories sold were CNY3,302, CNY1,908 and CNY2,751 (US$424) for the years ended December 31, 2013, 2014 and 2015, respectively, relating to employee benefit expenses, and depreciation and amortization; these amounts are also included in the respective amounts disclosed separately above for each type of expense.

(d)

Due to the depressed market condition of iron concentrates, the exploitation of Yangchong Mine has been temporarily suspended since December 27, 2015 up to the date of this report. The amount represented the overhead costs incurred during the period of temporary suspension of production.

16.

EMPLOYEE BENEFITS


The Group’s employee benefits from continuing operationsoperation comprise the following:


Schedule of employee benefits         
 Year Ended December 31, 

 

Year Ended December 31,

 

 2021 2022 2023 2023 

 

2013

 

2014

 

 

2015

 

2015

 

 CNY CNY CNY US$ 

 

CNY

 

CNY

 

 

CNY

 

US$

 

         

Wages, salaries and allowances

 

7,126

 

6,095

 

 

7,687

 

1,184

 

  1,269   1,042   1,073   151 

Termination benefit

 

—

 

—

 

 

5,508

 

848

 

Housing funds (a)

 

115

 

535

 

 

446

 

 69

 

  113   16   12   2 

Contribution to pension plans (a)

 

1,326

 

1,566

 

 

1,315

 

203

 

  102   67   70   10 

Welfare and other expenses

 

 

1,503

 

 

 

1,644

 

 

 

1,442

 

 

 

222

 

  33   46   37   5 

 

 

10,070

 

 

 

9,840

 

 

 

16,398

 

 

 

2,526

 

                
Total employee benefits  1,517   1,171   1,192   168 

———————

(a)According to the Mainland China state regulations, the employees of the Group's subsidiaries which operate in Mainland China are required to participate in a central pension scheme operated by the local municipal government and government-sponsored housing funds. These subsidiaries are required to contribute a certain percentage of their payroll costs for those qualified urban employees to the central pension scheme as well as to housing funds.

(a)

As stipulated by the PRC state regulations, the employees of the Group's subsidiaries which operate in Mainland China are required to participate in a central pension scheme operated by the local municipal government and government-sponsored housing funds. These subsidiaries are required to contribute a certain percentage of their payroll costs for those qualified urban employees to the central pension scheme as well as the housing funds.


Employee benefits chargedbenefit expenses include remuneration payables to the consolidated statements of profit or loss from continuing operations are analyzedDirectors and senior management as follows:

 

 

Year Ended December 31,

 

 

 

2013

 

 

2014

 

 

2015

 

 

2015

 

 

 

CNY

 

 

CNY

 

 

CNY

 

 

US$

 

Total employee benefits accrued for the year

 

 

10,070

 

 

 

9,840

 

 

 

16,398

 

 

 

2,526

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amount included in inventories

 

 

66

 

 

 

4,739

 

 

 

604

 

 

 

93

 

Amount charged to consolidated statements of profit or loss (Note 15)

 

 

10,004

 

 

 

5,101

 

 

 

15,794

 

 

 

2,433

 


set out in Note 25(d).



F-42


F-43 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7.INCOME TAX EXPENSE

YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015

(Amounts in thousands, except share and per share data)



17.

INCOME TAX (BENEFIT) / EXPENSE

The Company is incorporated in the British Virgin Islands (“BVI”)BVI and conducts its primary business operations through its subsidiaries in the PRC. It also has intermediate holding companies in the BVI and Hong Kong. Under the current laws of the BVI, the Company and its subsidiaries incorporated in the BVI are not subject to tax on income or capital gains. The Hong Kong Profits Tax rate is 16.50%. The Company'sCompany’s Hong Kong subsidiaries have both Hong Kong-sourcedKong–sourced and non-Hong Kong-sourced incomes.Kong–sourced income. The latter is not subject to Hong Kong Profits Tax and the related expenses are non-tax-deductible. For the Hong Kong-sourcedKong–sourced income, no provision for Hong Kong Profits Tax was made as such operations sustained tax lossesduringlosses during the years ended December 31, 2013, 20142021, 2022 and 2015.Furthermore,2023. Furthermore, there are no withholding taxes in Hong Kong on the remittance of dividends. No United States corporate income taxes are provided for in these consolidated financial statements, as management believes that the Company is not subject to United States income taxes.

China

Effective from January 1, 2008,Under the PRC's statutorylaw of the PRC on corporate income tax (“CIT”and the Implementation Regulation of the Corporate Income Tax Law (collectively, the “CIT Law”) rate is 25%. The Company's, the Company’s PRC subsidiaries are generally subject to PRC corporate income tax at the statutory rate of 25% on their respective taxable incomes as calculated in accordance withestimated assessable profits for the CIT Lawyears ended December 31, 2021, 2022 and its relevant regulations.2023.

Under the prevailing CIT Law and its relevant regulations, any dividends paid by the Company'sCompany’s PRC subsidiaries from their earnings derived after January 1, 2008 to the Company'sCompany’s Hong Kong subsidiaries are subject to the PRC dividend withholding tax at a tax rate of 5% or 10%, depending on the applicability of the Sino-Hong Kong tax treaty.

Profit / (Loss) before income tax from continuing operations consists of:

 

 

Year Ended December 31,

 

 

 

2013

 

 

2014

 

 

2015

 

 

2015

 

 

 

CNY

 

 

CNY

 

 

CNY

 

 

US$

 

PRC

 

 

4,872

 

 

 

(23,754

)

 

 

(31,335

)

 

 

(4,828

)

BVI

 

 

(3,969

)

 

 

(2,575

)

 

 

(2,625

)

 

 

(404

)

HK

 

 

(46

)

 

 

(55

)

 

 

(43

)

 

 

(7

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

857

 

 

 

(26,384

)

 

 

(34,003

)

 

 

(5,239

)


The current and deferred components of income tax expense from continuing operations on the consolidated statements of profit or lossbenefit are as follows:

Schedule of current and deferred components of income tax expense         

 

Year Ended December 31,

 

 Year Ended December 31, 

 

2013

 

 

2014

 

2015

 

2015

 

 2021 2022 2023 2023 

 

CNY

 

 

CNY

 

CNY

 

US$

 

 CNY CNY CNY US$ 

 

 

 

 

 

 

 

 

 

 

                

Current income tax expense

 

 

514

 

 

5,303

 

1,504

 

232

 

  —   —   —   — 

Deferred income tax expense

 

 

1,628

 

 

 

1,536

 

 

 

—

 

 

 

—

 

 

 

2,142

 

 

 

6,839

 

 

 

1,504

 

 

 

232

 

Deferred income tax benefit  (5,095)  —   —   — 
Total tax credit for the year from continuing operations  (5,095)  —   —   — 
Total tax charge for the year from a discontinued operation  7,230   5,864   1,931   272 
Total  2,135  5,864   1,931   272 




F-43(Loss)/profit before income tax from continuing and discontinued operations consists of the following:

 Schedule of Profit/(loss) before income tax            
  Year Ended December 31, 
  2021  2022  2023  2023 
  CNY  CNY  CNY  US$ 
             
PRC  (4,669)  6,406  (1,718)   (243) 
BVI  (48,106)  (22,776)  (8,738)  (1,233)
Hong Kong  (61)  (62)  (56)  (8)
                 
Total loss before income tax for the year  (52,836)  (16,432)  (10,512)  (1,484)


CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

F-44 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015

(Amounts in thousands, except share and per share data)



17.

7.INCOME TAX (BENEFIT) / EXPENSE (CONTINUED)

A reconciliation of the income taxes from continuing and discontinued operations computed at the PRC statutory tax rate of 25% to the actual income tax expense / (benefit) is as follows:

 

 

Year Ended December 31,

 

 

 

2013

 

 

2014

 

 

2015

 

 

2015

 

 

 

CNY

 

 

CNY

 

 

CNY

 

 

US$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit / (loss) for the year

 

 

857

 

 

 

(26,384

)

 

 

 (34,003

)

 

 

 (5,239

)

PRC statutory tax rate

 

 

25

%

 

 

25

%

 

 

25

%

 

 

25

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Computed income tax expense / (benefit)

 

 

214

 

 

 

(6,596

)

 

 

 (8,501

)

 

 

(1,310

)

Effect of different tax rates for the Company and overseas subsidiaries

 

 

997

 

 

 

650

 

 

 

 661

 

 

 

102

 

Effect of the deemed interest income

 

 

—

 

 

 

1,478

 

 

 

1,112

 

 

 

171

 

PRC dividend withholding tax

 

 

—

 

 

 

3,532

 

 

 

—

 

 

 

—

 

Tax losses not recognized

 

 

931

 

 

 

1,521

 

 

 

4,370

 

 

 

674

 

Deferred tax assets not recognized

 

 

—

 

 

 

5,845

 

 

 

3,407

 

 

 

525

 

Non-deductible expenses

 

 

—

 

 

 

115

 

 

 

 63

 

 

 

10

 

Others

 

 

—

 

 

 

294

 

 

 

 392

 

 

 

60

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

2,142

 

 

 

6,839

 

 

 

1,504

 

 

 

232

 

 Schedule of reconciliation of the income tax expenses            
  Year Ended December 31, 
  2021  2022  2023  2023 
  CNY  CNY  CNY  US$ 
             
Loss before income tax for the year from continuing operations  (48,979)  (23,338)  (8,337)  (1,177)
(Loss)/profit before income tax for the year from a discontinued operation  (3,857)  6,906   (2,175)  (307)
Total  (52,836)  (16,432)  (10,512)  (1,484)
Tax at the statutory tax rate  25%  25%  25%  25%
Computed income tax benefit  (13,209)  (4,108)  (2,628)  (371)
Effect of different tax rates of the Company and certain subsidiaries  6,937   5,699   2,190   309 
Tax losses with no deferred tax assets recognized  1,770   420   290  41 
Non-deductible expenses  122   983   617   87 
Statutory income  —   (201)  —   — 
Deductible temporary differences with no deferred tax assets recognized  —   971   2,430   343 
Utilization of previously unrecognized deductible temporary differences and tax losses  (150)  (1,774)   

(2,021

)   (286) 
Write-off of unrecoverable deferred tax assets previously recognized  2,987   2,272   —   — 
Preferential tax rate  2,215   14   95   13 
Others  1,463   1,588   958   136 
                 
Total tax credit for the year from continuing operations  (5,095)  —   —   — 
Total tax charge for the year from a discontinued operation  7,230   5,864   1,931   272 
Income tax benefit  2,135  5,864   1,931   272 


As of December 31, 2015 and 2014,

F-45 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

8.LOSS PER SHARE

Basic loss per share is calculated by dividing the Group had no recognized deferred tax assets, or deferred tax liabilities.


On September 24, 2014, Wuhu Feishang declared a dividend of CNY39,242loss for the period attributable to its parent, relating to the post-2007 profits of Wuhu Feishang. As of December 31, 2015, there were no post-2007 undistributed profits of the PRC subsidiariesordinary equity holders of the Company and therefore,by the Group did not recognize deferred tax liabilities for withholding taxesweighted average number of common shares outstanding during the period.

Diluted loss per share is calculated by dividing the loss attributable to ordinary equity holders of the Company by the weighted average number of common shares outstanding during the period plus the weighted average number of common shares that would be payableissued on the unremitted earnings that are subject to withholding taxesconversion of the Group's subsidiaries established in Mainland China.all outstanding dilutive securities into common shares.


The total amounts of unused tax losses for which no deferred tax assets were recognized were CNY21,449 and CNY38,318 (US$5,903) as of December 31, 2014 and 2015, respectively. As of December 31, 2015, unused tax losses of CNY3,690 (US$568),  CNY2,715 (US$418), CNY4,820 (US$742), CNY6,056 (US$933) and CNY21,037 (US$3,242), if unused, will expire by the end of 2016, 2017, 2018, 2019, and 2020 respectively.


As of December 31, 2015, the Group did not recognize deferred tax assets on temporary differences mainly in respect of provision for write-down of inventories to net realizable amounting to CNY5,650 (US$870), provision for impairment of property, plant and equipment amounting to CNY7,542 (US$1,162) and other temporary differences amounting to CNY436 (US$67) as based on the prevailing facts and circumstances since it was not probable that taxable profits would be available for their future utilization.



F-44


CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015

(Amounts in thousands, except share and per share data)



17.

INCOME TAX (BENEFIT) / EXPENSE (CONTINUED)


The gross movements on the deferred tax assets account are as follows:


 

 

2014

 

 

2015

 

 

2015

 

 

 

CNY

 

 

CNY

 

 

US$

 

At beginning of the year

 

 

1,536

 

 

 

—

 

 

 

—

 

Discontinued operations

 

 

—

 

 

 

—

 

 

 

—

 

Credited to consolidated statements of profit or loss

 

 

(1,536

)

 

 

—

 

 

 

—

 

At end of the year

 

 

—

 

 

 

—

 

 

 

—

 


18.

LOSS PER SHARE


Basic and diluted net loss per share for the years ended December 31, 2013, 20142021, 2022 and 20152023 are calculated as follows:

 Schedule of basic and diluted net loss per share            
  Year Ended December 31, 
  2021  2022  2023  2023 
  CNY  CNY  CNY  US$ 
             
Loss for the year attributable to owners of the Company                
From continuing operations  (43,884)  (23,338)  (8,337)  (1,177)
From discontinued operations  (4,268)  (1,285)  (5,504)  (777)
                 
Weighted average number of ordinary shares for basic and diluted earnings per share*  8,144,050   8,189,617   8,222,658   8,222,658 
                 
Loss per share:                
Basic and diluted                
For loss from continuing operations  (5.39)  (2.85)  (1.01)  (0.15)
For loss from discontinued operations  (0.52)  (0.15)  (0.67)  (0.09)
Loss per share  (5.91)  (3.00)  (1.68)  (0.24)

 

 

 

Year Ended December 31,

 

 

 

2013

 

 

2014

 

 

2015

 

 

2015

 

 

 

CNY

 

 

CNY

 

 

CNY

 

 

US$

 

Loss for the year attributable to owners of the Company:

 

 

 

 

 

 

 

 

 

 

 

 

From continuing operations

 

 

(1,285

)

 

 

(33,223

)

 

 

(35,507

)

 

 

(5,470

)

From discontinued operations

 

 

(334,119

)

 

 

(9,925

)

 

 

—

 

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

24,910,916

 

 

 

24,910,916

 

 

 

24,910,916

 

 

 

24,910,916

 

Diluted

 

 

24,910,916

 

 

 

24,910,916

 

 

 

24,910,916

 

 

 

24,910,916

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss per share attributable to owners of the Company:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

From continuing operations

 

 

(0.05

)

 

 

(1.33

)

 

 

(1.43

)

 

 

(0.22

)

From discontinued operations

 

 

(13.41

)

 

 

(0.40

)

 

 

—

 

 

 

—

 

Diluted:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

From continuing operations

 

 

(0.05

)

 

 

(1.33

)

 

 

(1.43

)

 

 

(0.22

)

From discontinued operations

 

 

(13.41

)

 

 

(0.40

)

 

 

—

 

 

 

—

 

*The basic and diluted loss per ordinary share has been adjusted retrospectively for the Share Combination which became effective on April 3, 2023. Refer to Note 24 for further details.


The Company did not have any potentialFor the years ended December 31, 2021，2022 and 2023, the effects of the outstanding warrants and share options were anti-dilutive and excluded from the computation of diluted shares throughout the year.loss per share. Accordingly, the diluted loss per share amount wasamounts are the same as the basic loss per share amount.amounts for the periods presented.


19.

F-46 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

DIVIDEND

9.PROPERTY, PLANT AND EQUIPMENT

 Schedule of property plant and equipment               
  Buildings  Machinery and equipment  Motor vehicle  Office and other equipment  Total 
   CNY   CNY   CNY   CNY   CNY 
Cost                    
As of January 1, 2022  46   1,177   2,486   728   4,437 
Additions  —   8   —   9   17 
Disposal  —   —   (16)  (93)  (109)
As of December 31, 2022  46   1,185   2,470   644   4,345 
                     
Accumulated depreciation                    
As of January 1, 2022  (12)  (1,122)  (2,014)  (574)  (3,722)
Depreciation charge  (3)  (22)  (259)  (20)  (304)
Disposal  —   —   15   90   105 
   (15)  (1,144)  (2,258)  (504)  (3,921)
Net book value                    
As of January 1, 2022  34   55   472   154   715 
As of December 31, 2022  31   41   212   140   424 
                     
Cost                    
As of January 1, 2023  46   1,185   2,470   644   4,345 
Additions  —   11   —   —   11 
Disposal of PSTT  —   (100)  (1,869)  (738)  (2,707)
As of December 31, 2023  46   1,096   601   (94)  1,649 
                     
Accumulated depreciation                    
As of January 1, 2023  (15)  (1,144)  (2,258)  (504)  (3,921)
Depreciation charge  (3)  (30)  (60)  (7)  (100)
Disposal of PSTT  —   91   1,735   599   2,425 
   (18)  (1,083)  (583)  88   (1,596)
Net book value                    
As of December 31, 2023  28   13   18   (6)  53 
As of December 31, 2023 (US$)  4   2   2   (1)  7 


There was no impairment loss on property, plant and equipment for the years ended December 31, 2021, 2022 and 2023.

No dividend has been paid or declared by

F-47 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

10.INTANGIBLE ASSETS

Schedule of Intangible assets             
  Patent  

Concession

right

  Software  Total 
   CNY   CNY   CNY   CNY 
                 
Cost                
As of January 1, 2022  22,878   20,430   274   43,582 
Additions  —   —   5   5 
As of December 31, 2022  22,878   20,430   279   43,587 
                 
Accumulated amortization and impairment                
As of January 1, 2022  (22,493)  (730)  (170)  (23,393)
Amortization charge  (36)  (730)  (47)  (813)
As of December 31, 2022  (22,529)  (1,460)  (217)  (24,206)
                 
Net carrying amount                
As of December 31, 2022  349   18,970   62   19,381 
As of December 31, 2022 (US$)  51   2,750   9   2,810 
                 
Cost                
As of January 1, 2023  22,878   20,430   279   43,587 
Additions  —   —   —   — 
Disposal of PSTT  (22,878)  (20,430)  (279)  (43,587)
As of December 31, 2023  —   —   —   — 
                 
Accumulated amortization and impairment                
As of January 1, 2023  (22,529)  (1,460)  (217)  (24,206)
Amortization charge  (18)  (425)  (17)  (460)
Disposal of PSTT  22,547   1,885   234   24,666 
As of December 31, 2023  —   —   —   — 
                 
Net carrying amount                
As of December 31, 2023  —   —   —   — 
As of December 31, 2023 (US$)  —   —   —   — 

There was no impairment loss on intangible assets for the Company since its incorporation.years ended December 31, 2021, 2022 and 2023.




F-45

F-48 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)


11.LEASES

CHINA NATURAL RESOURCES, INC.

(a)Right-of-use assets

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015

(Amounts in thousands, except share and per share data)



20.

RELATED PARTY BALANCES AND TRANSACTIONS


The consolidated financial statements include the financial statementscarrying amounts of the CompanyGroup’s right-of-use assets and the subsidiaries listedmovements during the years indicated are as follows:

 Schedule of right-of-use assets         
  

Motor

vehicles

  

Offices and

warehouses

  Total 
   CNY   CNY   CNY 
             
As of January 1, 2022  245   2,106   2,351 
Addition  361   1,648   2,009 
Depreciation charge  (181)  (1,232)  (1,413)
Foreign currency translation difference  —   46   46 
             
As of December 31, 2022  425   2,568   2,993 
             
As of January 1, 2023  425   2,568   2,993 
Addition  —   —   — 
Depreciation charge  (100)  (950)  (1,050)
Foreign currency translation difference  —   24   24 
Disposal of PSTT  (325)  (1,296)  (1,621)
             
As of December 31, 2023  —   346   346 
As of December 31, 2023 (US$)  —   49   49 

There was no impairment loss on right-of-use assets for the years ended December 31, 2021, 2022 and 2023.

F-49 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

11.LEASES (CONTINUED)

(b)Lease liabilities

The carrying amount of lease liabilities and the movements during the years are as follows:

 Schedule of Lease Liabilities            
  

Motor

vehicles

  Offices and warehouses  Total 
   CNY   CNY   CNY 
             
As of January 1, 2022  155   2,034   2,189 
Addition  265   1,516   1,781 
Accretion of interest recognized during the year  14   119   133 
Payments  (112)  (1,141)  (1,253)
Foreign currency translation difference  —   65   65 
             
As of December 31, 2022  322   2,593   2,915 
Analyzed into:            
Current portion  48   1,269   1,317 
Non-current portion  274   1,324   1,598 

             
  

Motor

vehicles

  Offices and warehouses  Total 
   CNY   CNY   CNY 
             
As of January 1, 2023  322   2,593   2,915 
Addition  —   —   — 
Accretion of interest recognized during the year  13   86   99 
Payments  (60)  (964)  (1,024)
Foreign currency translation difference  —   27   27 
Disposal of PSTT  (275)  (1,382)  (1,657)
             
As of December 31, 2023  —   360   360 
Analyzed into:            
Current portion  —   360   360 
Non-current portion  —   —   — 
             
As of December 31, 2023 (US$)  —   51   51 
Current portion (US$)  —   51   51 
Non-current portion (US$)  —   —   — 

F-50 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

11.LEASES (CONTINUED)

(c)Lease-related expenses

The amounts recognized in profit or loss in relation to leases are, as follows:

 Schedule of lease-related expenses            
  Year Ended December 31, 
  2021  2022  2023  2023 
  CNY  CNY  CNY  US$ 
             
Depreciation expense of right-of-use assets  1,366   1,413   1,050   148 
Interest on lease liabilities  150   133   99   14 
Expense relating to short-term leases  601   490   323   46 
                 
Total amounts recognized in profit or loss  2,117   2,036   1,472   208 

(d)The total cash outflow for leases is disclosed in Note 28(c) to the financial statements.

F-51 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

12.TRADE RECEIVABLES

 Schedule of trade receivables         
  December 31, 
  2022  2023  2023 
  CNY  CNY  US$ 
          
Non-current            
Trade receivables from construction contracts  13,128   —   — 
Less: Impairment allowance  (2,608)  —   — 
 Total of Non-current trade receivables  10,520   —   — 
             
Current            
Trade receivables from service concession agreement  22,927   —   — 
Trade receivables from construction contracts  34,850   —   — 
Less: Impairment allowance  (11,017)  —   — 
 Total of current trade receivables  46,760   —   — 
             
Total  57,280   —   — 

The Group’s trade receivables arise from the provision of construction services for wastewater treatment projects, sale of wastewater treatment equipment, and operation service of the service concession arrangement. The majority of the Group’s customers are town/village government entities or main contractors of the governmental infrastructure projects whose time of payment for the service or goods received from the Group depend on the appropriation and approval of the fiscal funds. Accordingly, the Group granted various credit terms to different customers, depending on the nature and background of the customers and projects. The Group generally granted customers a credit period of one month to three months, except for some of the customers for construction services, sales of wastewater treatment equipment and maintenance services who will generally settle the amounts owed to the Group in a number of specified installments covering periods ranging from one year to five years. Apart from the trade receivables related to the service concession arrangement which bear no interest, the trade receivables of construction services, operation and maintenance services and sale of wastewater treatment equipment bear an imputed interest rate of 4.75% per annum.

An aging analysis of the trade receivables as of the end of the reporting period, based on the invoice date and net of loss allowance, is as follows:

 Schedule of aging analysis of trade receivables         
  December 31, 
  2022  2023  2023 
  CNY  CNY  US$ 
          
Within 1 year  18,401   —   — 
Between 1-2 years  13,896   —   — 
Between 2-3 years  4,518   —   — 
Over 3 years  20,465   —   — 
             
Total  57,280   —   — 

F-52 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

12.TRADE RECEIVABLES (CONTINUED)

The movement in the following table:loss allowance for trade receivables during the years indicated are as follows:

 

 

 

Place of
incorporation /

registration and
operations

 

Nominal value
of issued
ordinary /
registered
share capital
(CNY)

 

Percentage

of equity
attributable to
the Company

 

Principal

activities

 

 

Name

 

 

 

Direct

 

Indirect

 

 

 

China Coal Mining Investment Limited

 

Hong Kong

 

—

 

100

 

—

 

Investment holding

 

 

FMH Corporate Services Inc.

 

United States

 

—

 

100

 

—

 

Dormant

 

 

Feishang Dayun Coal Mining Limited

 

Hong Kong

 

—

 

—

 

100

 

Investment holding

 

 

Feishang Mining Holdings Limited

 

British Virgin Islands

 

—

 

100

 

—

 

Investment holding

 

 

Feishang Yongfu Mining Limited

 

Hong Kong

 

—

 

—

 

100

 

Investment holding

 

 

Newhold Investments Limited

 

British Virgin Islands

 

—

 

100

 

—

 

Investment holding

 

 

Pineboom Investments Limited

 

British Virgin Islands

 

—

 

100

 

—

 

Investment holding

 

 

Shenzhen Feishang Management and Consulting Co., Limited ("Feishang Management")

 

Mainland China

 

10,000

 

—

 

100

 

Provision for management and consulting services to other companies in the Group

 

 

Silver Moon Technologies Limited

 

British Virgin Islands

 

1

 

80

 

—

 

Dormant

 

 

Sunwide Capital Limited

 

British Virgin Islands

 

—

 

100

 

—

 

Dormant

 

 

Wuhu Feishang Mining Development Co., Limited

 

Mainland China

 

12,000

 

—

 

100

 

Exploration and mining of zinc, iron and other non-ferrous metals

 

 

Yangpu Lianzhong Mining Co., Limited

 

Mainland China

 

115,008

 

—

 

100

 

Investment holding

 

 

Yangpu Shuanghu Industrial Development Co., Limited

 

Mainland China

 

1,000

 

—

 

100

 

Investment holding

 

 

Yunnan Feishang Mining Co., Limited

 

Mainland China

 

50,000

 

—

 

100

 

Exploration of non-ferrous metals

 

 Schedule of the movement in the loss allowance for trade receivables         
  December 31, 
  2022  2023  2023 
  CNY  CNY  US$ 
          
Beginning of the year  17,614   13,625   1,925 
(Reversal)/provision for expected credit losses, net  (3,989)  383   54 
Disposal of PSTT  —   (14,008)  (1,979)
             
End of the year  13,625   —   — 


In addition to the transactions detailed elsewhereA decrease in the financial statements,loss allowance of CNY139 (US$20) (2022: increase CNY3,992) was the result of a net decrease (2022: a net increase) in the gross carrying amount after the settlement of trade receivables of construction contracts and origination of new trade receivables of construction contracts.

The Group haselected to apply the following transactions and balances with related parties:

(a)

Commercial transactions with a related party

 

 

Year Ended December 31,

 

 

 

2013

 

 

2014

 

 

2015

 

 

2015

 

 

 

CNY

 

 

CNY

 

 

CNY

 

 

US$

 

CHNR's share of office rental to Anka Consultants Limited ("Anka")

 

 

1,285

 

 

 

859

 

 

 

918

 

 

 

141

 

Feishang Anthracite's share of office rental to Anka

 

 

217

 

 

 

61

 

 

 

—

 

 

 

—

 

 

 

 

1,502

 

 

 

920

 

 

 

918

 

 

 

141

 




F-46


CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015

(Amounts in thousands, except share and per share data)



20.

RELATED PARTY BALANCES AND TRANSACTIONS (CONTINUED)


(a)

Commercial transactions with a related party (continued)

Prior to September 2013,simplified approach for providing impairment for ECLs prescribed by IFRS 9, which permits the Company and Anka, a private Hong Kong company that is owned by certain directors of the Company, entered into an office sharing agreement (the “Original Office Sharing Agreement”), whereby the Company’s head office in Hong Kong was shared on an equal basis between the two parties. The Original Office Sharing Agreement also provided that the Company and Anka should share certain costs and expenses in connection with their use of the office, in addition to some of the accounting and secretarial services and day-to-day office administration provided by Anka. The Original Office Sharing Agreement ended on August 31, 2013.


On September 1, 2013, the Company and Feishang Anthracite entered into new license agreements with Anka, respectively, pursuant to which the Company and Feishang Anthracite share the office premises of 238 square meters on an equal basis. The agreements also provide that the Company and Feishang Anthracite shall share certain costs and expenses in connection with their use of the office. In addition, Anka continues to provide accounting and secretarial services and day-to-day office administration to the Company. The initial term of the agreements was from September 1, 2013 to June 30, 2014 and shall be effectivelifetime expected loss provision for all subsequent extension of leases. The lease was extended for two years from July 1, 2014 to June 30, 2016.


(b)

Balances with related parties

The Group has payables with related parties, which are all unsecured and non-interest-bearing. Balances with related companies are summarized as follows:

 

 

December 31,

 

 

 

2014

 

 

2015

 

 

2015

 

 

 

CNY

 

 

CNY

 

 

US$

 

Current:

 

 

 

 

 

 

 

 

 

 

 

 

Long-term payable to a related company:

 

 

 

 

 

 

 

 

 

 

 

 

Feishang Enterprise (1)

 

 

—

 

 

 

3,932

 

 

 

606

 

Long-term payable to the Shareholder:

 

 

 

 

 

 

 

 

 

 

 

 

Feishang Group (2)

 

 

—

 

 

 

11,752

 

 

 

1,810

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-current:

 

 

 

 

 

 

 

 

 

 

 

 

Long-term payable to the Shareholder:

 

 

 

 

 

 

 

 

 

 

 

 

Feishang Group (2)

 

 

15,374

 

 

 

—

 

 

 

—

 

Feishang Enterprise and Feishang Group are controlled by Mr. Li Feilie who is also an officer, directortrade receivables. To measure the ECLs, trade receivables were grouped based on the shared credit risk characteristics and the principal beneficial shareholder of the Company.

(1)

Payable to Feishang Enterprise by Feishang Management for the net amount of a loan from Feishang Enterprise.days past due. The balance is not repayable within one yearECLs below also incorporate forward-looking information. The impairment as of December 31, 2014. 2022 was determined as follows:

 Schedule of impairment                  
   Past due 
   Current   Within 1 year   1-2 years   2-3 years   Over 3 years   Total 
As of December 31, 2021:                        
Expected credit loss rate:  —   6%  26%  13%  48%  26%
Gross carrying amount (CNY)  3,670   16,311   6,865   14,712   27,083   68,641 
Impairment allowances (CNY)  —   955   1,759   1,916(i)  12,984(ii)  17,614 
                         
As of December 31, 2022:                        
Expected credit loss rate:  —   0%  9%  29%  34%  19%
Gross carrying amount (CNY)  —   18,406   15,195   6,399   30,905   70,905 
Impairment allowances (CNY)  —   5   1,299   1,881   10,440(ii)  13,625 

(i)The impairment allowances included CNY221 as of December 31, 2021, for specific trade receivables which were considered to be in default due to conditions which indicated that the Group was unlikely to receive the outstanding contractual amounts in full.

(ii)The impairment allowances included an amount of CNY4,600 and nil as of December 31, 2022 for specific trade receivables which were considered to be in default due to conditions which indicated that the Group was unlikely to receive the outstanding contractual amounts in full.

F-53 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

13.CONTRACT ASSETS
 Schedule of contract assets            
     December 31, 
     2022  2023  2023 
     CNY  CNY  US$ 
             
Non-current                
Service concession assets  (a)   89,740   —   — 
Less: impairment allowance      (27)  —   — 
       89,713   —   — 
                 
Current                
Service concession assets  (a)   7,423   —   — 
Other contract assets  (b)   14,930   —   — 
Less: impairment allowance      (706)  —   — 
       21,647   —   — 
                 
Total      111,360   —   — 

(a)Service concession assets bearing an imputed interest of 7% arose from the Group's revenue from construction service under a BOT arrangement rendered by the Group's subsidiary, Shaoguan Angrui. The facilities that the service concession arrangement relate to were under construction phases from June 2018 to January 2021 and commenced operation in January 2021.

The balanceamounts for the service concession arrangement are not yet due for payment and will be settled by revenue to be generated during the operating periods of the service concession arrangement. Amounts billed will be transferred to trade receivables.

As of December 31, 2022, the Group’s concession rights and assets associated with the environmental water projects (comprising intangible asset, contract assets and trade receivables) with aggregate gross carrying amounts of CNY139,060, were pledged to secure bank loans from Bank of Communications with outstanding balances of CNY74,000. Please refer to Note 20 for further details.

(b)The balances as of December 31, 2022 comprised contract assets arising from performance under a water treatment plant construction service contract. Such contracts include payment schedules that require progress payments over the service periods when milestones are reached.

F-54 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

13.CONTRACT ASSETS (CONTINUED)

The movements in the provision for impairment of contract assets are as follows:

 Schedule of the movements in the provision for impairment of contract assets         
  December 31, 
  2022  2023  2023 
  CNY  CNY  US$ 
          
Beginning of the year  562   733   104 
Provision for expected credit losses, net  171   3,545   501 
Disposal of PSTT  —   (4,278)  (605)
             
End of the year  733   —   — 

An impairment analysis is repayable when fundsperformed at each reporting date using the probability-of-default approach to measure ECL. The probability of default rates are estimated based on comparable entities with published credit ratings. The calculation reflects the probability-weighted outcome, the time value of money and reasonable and supportable information that is available at the reporting date about past events, current conditions and forward-looking credit risk information. As of December 31, 2022, the assumed default rate ranged from 0.03% to 43.51%, respectively. The contract assets as part of the wastewater treatment business were disposed together by the Company on July 28, 2023 (Note 3), with an assumed default rate ranging from 0.03% to 76.67%.

14.OTHER NON-CURRENT ASSETS

Schedule of other non-current assets         
  December 31, 
  2022  2023  2023 
  CNY  CNY  US$ 
          
Zimbabwe lithium deposits (i)  —   247,420   34,953 
Others  4   110   16 
             
Total  4   247,530   34,969 

(i) Please refer to Note 25 (b) for more details.

F-55 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

15.OTHER RECEIVABLES

 Schedule of other receivables         
  December 31, 
  2022  2023  2023 
  CNY  CNY  US$ 
          
Financial assets            
Loans to an unrelated company (i)  83,600   —   — 
Deposits  790   3   — 
Others  1,000   —   — 
Financials asset  85,390   3   — 
             
Staff advance  237   12   3 
Others  90   3   — 
Total amount  327   15   3 
             
Impairment allowance  (2,984)  —   — 
             
Total  82,733   18   3 

(i)The balance as of December 31, 2022 consisted of a loan in the amount of CNY80,000 (US$11,599) and the corresponding interest receivable amounted to CNY 3,600 (US$521) from Shenzhen Qianhai, a subsidiary of the Company, to an unrelated company, Shenzhen Chaopeng Investment Co., Ltd. The loan was originally provided on June 30, 2021, and will mature in one year. On June 30, 2022, the loan was extended for another year to June 30, 2023. The loan is interest-bearing at a rate of 9% per annum and guaranteed by Shenzhen Feishang Investment Co., Limited, a company unrelated to the Group. During year 2023, the loan was derecognized as it was part of the wastewater treatment segment which was disposed by the Company (Note 3).

The movements in the loss allowance for other receivables during the years indicated are as follows:

 Schedule of movements in the loss allowance for other receivables         
  December 31, 
  2022  2023  2023 
  CNY  CNY  US$ 
          
Beginning of the year  239   2,984   423 
Provision for expected credit losses, net  2,745   6,003   848 
Disposal of PSTT  —   (8,987)  (1,271)
             
End of the year  2,984   —   — 

For the financial assets included above, an impairment analysis is performed at each reporting date using the probability-of-default approach to measure ECL. The probability of default rates are estimated based on comparable companies with published credit ratings. The calculation reflects the probability weighted outcome, the time value of money and reasonable and supportable information that is available at the reporting date about past events, current conditions, and forward-looking credit risk information. As of December 31, 2023, the probability of default applied was nil, and the loss given default was nil. The loans to a unrelated company included in other receivables as part of the wastewater treatment business were disposed together by the Company on July 28, 2023 (Note 3), with the probability of default applied was 14.97% (5.51% as of December 31, 2015.

(2)

Payable to Feishang Group for2022), and the acquisition of Feishang Anthracite. The balance is not repayable with in one yearloss given default was 64.90% (62.26% as of December 31, 2014. The balance is repayable when funds2022).

F-56 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

16.CASH AND CASH EQUIVALENTS

Cash and cash equivalents are availableset out below as of December 31, 20152022 and 2023:

 Schedule of cash and cash equivalents         
  December 31, 
  2022  2023  2023 
  CNY  CNY  US$ 
          
Cash and cash equivalents            
- Cash on hand  71   2   — 
- Cash at bank  31,154   4,751   671 
- Short-term deposits  470   —   — 
             
 Total Cash and cash equivalent  31,695   4,753   671 


The carrying amounts of the Group’s cash and cash equivalents are denominated in the following currencies:

 Schedule of cash and cash equivalents denominated in different currencies         
  December 31, 
  2022  2023  2023 
  CNY  CNY  US$ 
          
CNY  24,709   3,673   518 
US$  6,255   762   108 
HK$  731   318   45 
             
   31,695   4,753   671 



F-47


CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015

(Amounts in thousands, except shareCash at banks earns interest at floating rates based on daily bank deposit rates. The bank balances and per share data)



20.

RELATED PARTY BALANCES AND TRANSACTIONS (CONTINUED)time deposits are deposited with creditworthy banks with no recent history of default.

 

(c)As of December 31, 2022, the Group has pledged its short-term deposits to fulfil collateral requirements of a bank guarantee related to a new bidding associated with a potential business opportunity of construction projects.

Compensation

F-57 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

17.TRADE PAYABLES

 Schedule of trade payables         
  December 31, 
  2022  2023  2023 
   CNY   CNY   US$ 
             
Trade payables  20,326   100   14 

The aging analysis of key management personneltrade payables as of December 31, 2022 and 2023 is as follows:

 Schedule of aging analysis of trade payables         
  December 31, 
  2022  2023  2023 
  CNY  CNY  US$ 
          
Within 1 year  4,139   —   — 
Between 1 and 2 years  5,438   —   — 
Over 2 years  10,749   100   14 
             
Total  20,326   100   14 

Trade payables are mainly due to subcontractors of construction services and the vendors of labor service.

18.OTHER PAYABLES AND ACCRUALS

 Schedule of other payables and accruals         
  December 31, 
  2022  2023  2023 
  CNY  CNY  US$ 
          
Financial liabilities            
Accrued expenses  6,444   7,748   1,095 
Deposits from customers  305   116   16 
  6,749   7,864   1,111 
             
Accrued payroll  3,108   156   21 
Penalties related to income tax  4,611   —   — 
Taxes other than income tax payable (a)  1,885   2   — 
Transaction deposit of mining right acquisition  (Note 25 (b))  —   74,322   10,500 
Others  371   266   37 
  9,975   74,746   10,558 
             
Total  16,724   82,610   11,669 

(a)Taxes other than income taxes payable mainly comprise accruals for output value-added tax, city construction tax and education surcharge.

F-58 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

19.PROVISIONS

In June 2022, the wastewater treatment infrastructure of the Groupservice concession arrangement operated by the Company’s subsidiary, Shaoguan Angrui was partially destroyed due to flooding. Shaoguan Angrui has committed to repair the infrastructure to restore the original production capacity of the infrastructure in 2023. A provision amounted to CNY494 has been recognized for the expected expenditures associated with the repair in year 2022 and was utilized in year 2023.


 

 

Year Ended December 31,

 

 

 

2013

 

 

2014

 

 

2015

 

 

2015

 

 

 

CNY

 

 

CNY

 

 

CNY

 

 

US$

 

Wages, salaries and allowances

 

 

853

 

 

 

320

 

 

 

222

 

 

 

 34

 

Housing subsidies

 

 

4

 

 

 

4

 

 

 

 4

 

 

 

 1

 

Contribution to pension plans

 

 

38

 

 

 

33

 

 

 

 44

 

 

 

 7

 

 

 

 

895

 

 

 

357

 

 

 

270

 

 

 

42

 

20.INTEREST-BEARING LOANS AND BORROWINGS


 Schedule of interest-bearing loans and borrowings               
        December 31, 
        2022  2023  2023 
        CNY  CNY  US$ 
  Interest rate  Maturity          
                
Non-current interest-bearing loans                    
Bank loan-secured and guaranteed  5.05%  2023 to 2038   71,000   —   — 
                     
Current interest-bearing loans                    
Bank loan-secured and guaranteed  5.05%  2022 to 2023   3,000   —   — 
                     
Total          74,000   —   — 

The amounts disclosed in the table are the amounts recognized as expenses during the year related to key management personnel.


21.

EQUITY


(a)

Issued capital

 

 

December 31,

 

 

 

2013

 

 

2014

 

 

2015

 

 

2015

 

 

 

CNY

 

 

CNY

 

 

CNY

 

 

US$

 

Authorized:

 

 

 

 

 

 

 

 

 

 

 

 

10,000,000 preferred shares, no par

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

200,000,000 ordinary shares, no par

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issued and fully paid:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares, no par

 

 

312,081

 

 

 

312,081

 

 

 

312,081

 

 

 

48,074

 


(b)

Other capital reserves

 

 

Number of shares issued

 

 

Other capital reserves

 

 

 

 

 

 

CNY

 

At January 1, 2013

 

 

24,910,916

 

 

 

536,872

 

Deemed contribution from the Shareholder of the Company

 

 

—

 

 

 

41,020

 

At December 31, 2013

 

 

24,910,916

 

 

 

577,892

 

Deemed contribution from the Shareholder of the Company

 

 

—

 

 

 

59,068

 

At December 31, 2014, January 1, 2015 and December 31, 2015

 

 

24,910,916

 

 

 

636,960

 

At December 31, 2015 (US$)

 

 

24,910,916

 

 

 

98,119

 


(c)

Dividend restrictions and reserves


Duebank loan is due to the Group's structure,Bank of Communications and denominated in CNY.

As of December 31, 2022, the payment of dividendsloan is subject to numerous controls imposed under PRC law, including foreign exchange control on the conversion of local currency into United States dollarssecured by collection right (including intangible assets, trade receivables and other currencies.




F-48


CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015

(Amountscontract assets) in thousands, except share and per share data)



21.

EQUITY (CONTINUED)


(c)

Dividend restrictions and reserves(continued)


In accordanceconnection with the relevant PRC regulationsGroup's service concession arrangement (Note 10, 12 and the Articles of Association of Wuhu Feishang, appropriations of net income as reflected in its PRC statutory financial statements are to be allocated to each13) and 80% equity interest of the general reserveCompany's subsidiary, Shaoguan Angrui. The loan is also guaranteed by Shanghai Onway, the Company's subsidiary, and enterprise expansion reserve, respectively,Feishang Enterprise Group Co., Ltd. (“Feishang Enterprise”), a related company of the Group. The loan was derecognized as it was part of the wastewater treatment business disposed by the Company in year 2023 (Note 3).

F-59 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

21.FINANCIAL INSTRUMENTS

(a)Financial assets

Set out below is an overview of financial assets, other than cash and short-term deposits, held by the Group as of December 31, 2022 and 2023:

 Schedule of financial assets         
  December 31, 
  2022  2023  2023 
  CNY  CNY  US$ 
          
Debt instruments at amortized cost:            
Trade receivables: current  46,760   —   — 
Trade receivables: non-current  10,520   —   — 
Financial assets included in other receivables  82,406   3   — 
Financial assets at fair value through other comprehensive income:            
Bills receivable  8,500   —   — 
             
Total  148,186   3   — 
             
Total current  137,666   3   — 
Total non-current  10,520   —   — 

F-60 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

21.FINANCIAL INSTRUMENTS (CONTINUED)

(b)Financial liabilities

Set out below is an overview of financial liabilities of the Group as of December 31, 2022 and 2023：

 Schedule of financial liabilities         
  December 31,  December 31,  December 31, 
  2022  2023  2023 
   CNY   CNY   US$ 
             
Derivatives not designated as hedging instruments:            
Derivative financial liabilities (i)  824   —   — 
Financial liabilities at amortized cost:            
Trade payables  20,326   100   14 
Financial liabilities in other payables and accruals  6,749   7,864   1,111 
Lease liabilities  2,915   360   51 
Due to related companies  3,408   9,069   1,281 
Due to the Shareholder  7,153   85,673   12,103 
Interest-bearing loans and borrowings  74,000   —   — 
             
Total  115,375   103,066   14,560 
             
Total current  42,777   103,066   14,560 
Total non-current  72,598   —   — 

(i)

This represents certain warrants issued to institutional investors on January 20, 2021, which was recognized as derivative financial liabilities (not designated as hedging instruments) with a fair value of CNY9,246 (US$1,427)* on the issue date as the investors have the right to exercise their warrants on a cashless basis. In accordance with IAS 32, a contract settled by a single net payment (generally referred to as net cash-settled or net equity-settled as the case may be) is a financial liability and not an equity instrument. The fair value gain of derivative financial liabilities for the years ended December 31, 2021, 2022 and 2023 was CNY7,467 and CNY1,007, CNY847 (US$120), respectively.

F-61 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

21.FINANCIAL INSTRUMENTS (CONTINUED)

(c)Fair value

Set out below is a comparison, by class, of the carrying amounts and fair values of the Group’s financial instruments, other than those with carrying amounts that are reasonable approximations of fair values:

 Schedule of the carrying amounts and fair values of the Group’s financial instruments other than those with carrying amounts                  
  December 31, 
  2022  2023  2023 
  CNY  CNY  US$ 
  

Carrying

amount

  

Fair

value

  

Carrying

amount

  

Fair

value

  

Carrying

amount

  

Fair

value

 
                         
Financial liabilities                        
Interest-bearing loans and borrowings  74,000   77,636   —   —   —   — 

The following table provides the fair value measurement hierarchy of the Group’s financial assets and financial liabilities as of December 31, 2022:

Schedule of the fair value measurement hierarchy of the Group’s financial assets and financial liabilities                
As of December 31, 2022 Fair value measurement using 
  

Quoted prices in active markets

(Level 1)

  

Significant observable inputs

(Level 2)

  

Significant

unobservable inputs

(Level 3)

  Total 
  CNY  CNY  CNY  CNY 
Recurring fair value measurement:                
Financial assets                
Bills receivable  —   8,500   —   8,500 
Financial liabilities                
Derivative financial liabilities  —   824   —   824 

There are no financial assets measured at fair value as of December 31, 2021 and 2023.

F-62 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

21.FINANCIAL INSTRUMENTS (CONTINUED)

Level 2:

Bills receivable

The fair value valuation of bills receivable is based on directly or indirectly observable inputs (such as recent bill discount rate) through valuation techniques.

Derivative financial liabilities

The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation techniques maximize the resolutionuse of relevant observable inputs and minimize the use of unobservable inputs. If all significant inputs required to fair value an instrument are observable, the instrument is included in Level 2. 

There is no established public trading market for the warrants issued to investors on January 22, 2021. As of December 31, 2022, the Group measured the fair value of those warrants on a recurring basis using a binomial lattice pricing model with significant inputs including, among other relevant observable inputs, the underlying spot price of the BoardCompany’s common shares, exercise price, time to expiration, risk-free rate and equity volatility.

During the years ended 2022 and 2023, there were no transfers of Directors annually. No general reservefair value measurements between Level 1 and enterprise expansion reserve have been appropriated in 2015Level 2 and 2013. In September 2014, the Boardno transfers into or out of Directors of Wuhu Feishang determined to appropriate the general reserveLevel 3 for both financial assets and enterprise expansion reserve of CNY3,925 and CNY3,925, respectively.liabilities.


22.

F-63 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

22.FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES


FinancialThe financial instruments of the Group primarily include cash certainand cash equivalents, trade receivables, bills receivable at fair value through other currentcomprehensive income, other receivables, contract assets, trade payables, other payables, and certain accrued liabilities, amounts due from and due to related parties, and an amountcompanies, amounts due to Shareholder.the Shareholder, derivative financial liabilities, and interest-bearing loans and borrowings.


The Group is exposed to credit risk, commodity risk, foreign currency risk, interest rate risk, business and economyeconomic risk and liquidity risk. The Group has not used any derivatives and other instruments for hedging purposes. The Group does not hold or issue derivative financial instrumentsliabilities for trading purposes. The Group reviews and agrees policies for managing each of these risks and they are summarized below.


(a)Credit risk

(a)Management has a credit policy in place and the exposures to credit risk are monitored on an ongoing basis. Debts are usually due within 30 to 90 days from the date of billing.

Credit

Trade receivables of the Group mainly represent receivables with respect to revenue from construction services for wastewater treatment plant and sales of wastewater treatment equipment, which are settled through progress billing, and operation services of service concession arrangement, which are settled on a quarterly basis. In addition, the Group has contract assets relating to the service concession arrangement and construction service.

As of December 31, 2022, “Trade receivables” and “Contract assets” before allowances in the aggregate amounted to CNY182,998, of which CNY120,090 were due from the largest customer and CNY134,930 were due from the five largest customers in the aggregate of the Group. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the consolidated statements of financial position. Since the counterparty to the BOT arrangement is a local government authority in the PRC, the Group considers credit risk is low as of December 31, 2022. The Group does not hold any collateral over these balances.

Management groups financial instruments based on shared credit risk characteristics, such as instrument type and credit risk ratings for the purpose of determining significant increase in credit risk and calculation of impairment. The carrying amountsamount of each financial asset in the Group's cash and cash equivalents, time deposits and other current assets, except for prepayments, representconsolidated statements of financial position represents the Group'sGroup’s maximum exposure to credit risk in relation to its financial assets.

For

F-64 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

22.FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

(a)Credit risk (continued)

A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of that financial asset have occurred. Evidence that a financial asset is credit-impaired includes observable data about the following events:

- significant financial difficulty of the debtor;

- a breach of contract such as a default or past due event;

- it is probable that the debtor will enter bankruptcy or other financial reorganization

To manage credit risk arising from trade receivables each customer has a maximumand contract assets, the Group assesses the credit limit.quality of the debtors, taking into account their financial position, historical settlement records, past experience and other factors. The Group seeksapplies the simplified approach to maintain strict controlprovide for ECLs prescribed by IFRS 9, which permits the use of lifetime expected loss provision for all trade receivables. The ECLs also incorporated forward-looking information.

For financial assets assessed for impairment under the general approach, the Group established a policy to perform an assessment at the end of each reporting period of whether a financial instrument’s credit risk has increased significantly since initial recognition, by considering the change in the risk of default occurring over the remaining life of the financial instrument. The Group groups its outstandingother receivables into Stage 1, Stage 2 and Stage 3, as described below:

Stage 1 – When other receivables are first recognized, the Group recognized an allowance based on 12 months’ ECLs.

Stage 2 – When other receivables have shown a significant increase in credit risk since origination, the Group records an allowance for the lifetime ECLs.

Stage 3 – Other receivables are considered credit-impaired. The Group records an allowance for the lifetime ECLs.

Management also makes periodic collective assessments for other receivables and has a credit control department to minimizeamounts due from related companies as well as individual assessments of the recoverability of other receivables based on historical settlement records, past experience and other factors. The Group classified other receivables and amounts due from related companies in Stage 1 and continuously monitored their credit risk. Overdue balances are reviewed regularly by senior management. Management believes that there is no material credit risk inherent in the Group’s outstanding balance of other receivables as of December 31, 2022 and 2023.

The Group does not holdprovide any collateral or otherguarantees that would expose the Group to credit enhancements over its trade receivable balances. Trade receivablesrisk. Further quantitative disclosures with respect to the Group’s exposure to credit risk arising from financial assets are non-interest-bearing.set out in Notes 12, 13 and 15 to the financial statements.

Cash and cash depositsequivalents

The Group maintains its cash and cash depositsequivalents primarily with various PRC State-ownedstate-owned banks and Hong Kong-basedKong based financial institutions, which management believes are of high credit quality. The Group performs periodic evaluations of the relative credit standing of those financial institutions.

Trade receivables

The Group sells zinc and iron products to companies in the PRC. Trade receivables are typically unsecured and are mainly derived from revenue earned from customers in the PRC. The risk with respect to accounts receivable is mitigated by credit evaluations that the Group performs on its customers and its ongoing monitoring of outstanding balances. The Group provides impairment for trade receivables primarily based on the age of the balances and factors surrounding the customer's credit-worthiness. At December 31, 2014 and 2015, the carrying amounts of trade receivables were nil and nil, respectively.

F-65 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

During the year ended December 31, 2015, sales to two customers in the “exploration and mining – non-ferrous metals” segment accounted for 66% and 22% of the consolidated net sales, respectively. During the year ended December 31, 2014, sales to three customers in the “exploration and mining – non-ferrous metals” segment accounted for 53%, 30% and 17% of the consolidated net sales, respectively.

22.FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

The concentration of iron concentrate customers is expected to subside as production volume increases.




F-49


CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015

(Amounts in thousands, except share and per share data)



22.

FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)


(b)

Commodity risk

The Group was exposed to fluctuations in the prices of iron and zinc for the year ended December 31, 2015. These commodity prices can fluctuate widely and are affected by factors beyond the control of the Group which affect earnings and cash flows. The Group has not engaged in any formal hedging transactions to manage possible price fluctuations.

The following table sets forth the sensitivity analysis of the commodity price change to the Group's sales revenue and gross profit:


 

2015

Actual

Iron Price

Zinc Price

+ 10%

- 10%

+ 10%

- 10%

(CNY in millions, except percentage)

Total Sales

18.34

1.69

(1.69)

0.11

(0.11)

% Change

 

9.21

(9.21)

0.60

(0.60)

Gross Profit

(13.59)

1.69

(1.69)

0.11

(0.11)

% Change

 

(12.41)

12.41

(0.77)

0.77


(c)

(b)Foreign currency risk

Foreign currency risk primarily arises from certain significant foreign currency deposits denominated in US$ and HK$ and related exposures are disclosed in Note 16. The Group treasury closely monitors the change of exchange rates on the international foreign currency market and takes these into consideration when investing in foreign currency deposits and borrowing loans.

The CNY is not freely convertible into foreign currencies. The State Administration for Foreign Exchange, under the authority of the People's Bank of China, controls the conversion of the CNY into foreign currencies. The value of the CNY is subject to changes in PRC government policies and to international economic and political developments affecting the supply and demand in the China Foreign Exchange Trading System market. All foreign exchange transactions continue to take place either through the People's Bank of China or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the People'sPeople’s Bank of China.

(d)

There is no significant exposure to foreign currency risk as of December 31, 2023 and 2022 for the Company.

(c)Interest rate risk

The fair value interest rate risk

Interest of the Group mainly arises from long-term loans at fixed rates (see Note 20). As fluctuation of the comparable interest rate (Loan Prime Rate of PRC market) with similar terms was relatively low, the Directors are of the opinion that the Group is not exposed to any significant fair value interest rate risk is the risk that the fair value or future cash flowsfor its fixed interest rate borrowings held as of a financial instrument will fluctuate because of changes in market interest rates. The Group has no exposure to the risk of changes in market interest rates since the Group has no long-term debt obligations with floating interest rates.  December 31, 2022 and 2023.

(e)

(d)Business and economic risk

Business and economic risk


The Group's operations may be adversely affected by significant political, economic and social uncertainties in the PRC. Although the PRC government has been pursuing economic reform policies for more than 3040 years, no assurance can be given that the PRC government will continue to pursue such policies or that such policies may not be significantly altered, especially in the event of a change in leadership, social or political disruption or unforeseen circumstances affecting the PRC's political, economic and social conditions.conditions in the PRC. There is also no guarantee that the PRC government'sgovernment’s pursuit of economic reforms will be consistent or effective.



F-66 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

F-50

22.FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)


(e)Liquidity risk

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015

(Amounts in thousands, except share and per share data)



22.

FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)


(f)

Liquidity risk


The Group manages its liquidity risk by regularly monitoring its liquidity requirements and its compliance with debt covenants to ensure that it maintains sufficient cash and cash equivalents, andas well as adequate time deposits, to meet its liquidity requirements in the short and long term.


The Group expects that its existing cash and cash equivalents, shareholder financial support and subsequent equity financing (see Note 24) will be sufficient to fund its operations and meet all of its obligations as they fall due for at least twelve months from the date of financial statements. See Note 2.1.1 for details related to going concern basis.

The table below summarizes the maturity profile of the Group'sGroup’s financial liabilities and lease liabilities based on contractual undiscounted payments:


December 31, 2015

 

On demand

 

Less than
1 year

 

1 to 5 years

 

More than
5 years

 

Total

 

Summary the maturity profile of financial liabilities and lease liabilities           
December 31, 2022 On demand Less than
1 year		 1 to 5 years More than
5 years		 Total 

 

CNY

 

CNY

 

CNY

 

CNY

 

CNY

 

 CNY CNY CNY CNY CNY 

 

 

 

 

 

 

 

 

 

 

 

                    
Derivative financial liabilities  824   —   —   —   824 

Trade payables

 

 

—

 

921

 

—

 

—

 

921

 

  —   20,326   —   —   20,326 

Other payables and accrued liabilities

 

 

—

 

10,767

 

—

 

—

 

10,767

 

Financial liabilities in other payables and accruals  —   6,749   —   —   6,749 

Due to related companies

 

 

—

 

 

 

15,684

 

 

 

—

 

 

 

—

 

 

 

15,684

 

  —   3,408   —   —   3,408 
Due to the Shareholder  —   7,153   —   —   7,153 
Lease liabilities  —   1,387   1,691   243   3,321 
Interest-bearing loans and
borrowings		  —   6,729   29,005   71,197   106,931 

 

 

—

 

 

 

27,372

 

 

 

—

 

 

 

—

 

 

 

27,372

 

      　   　   　     
Trade and other payables  824   45,752   30,696   71,440   148,712 


December 31, 2015

 

On demand

 

 

Less than
1 year

 

 

1 to 5 years

 

 

More than
5 years

 

 

Total

 

 

 

US$

 

 

US$

 

 

US$

 

 

US$

 

 

US$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade payables

 

 

—

 

 

 

142

 

 

 

—

 

 

 

—

 

 

 

142

 

Other payables and accrued liabilities

 

 

—

 

 

 

1,660

 

 

 

—

 

 

 

—

 

 

 

1,660

 

Due to related companies

 

 

—

 

 

 

2,416

 

 

 

—

 

 

 

—

 

 

 

2,416

 

 

 

 

—

 

 

 

4,218

 

 

 

—

 

 

 

—

 

 

 

4,218

 


December 31, 2014

 

On demand

 

 

Less than
1 year

 

 

1 to 5 years

 

 

More than
5 years

 

 

Total

 

 

 

CNY

 

 

CNY

 

 

CNY

 

 

CNY

 

 

CNY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade payables

 

 

—

 

 

 

1,462

 

 

 

—

 

 

 

—

 

 

 

1,462

 

Other payables and accrued liabilities

 

 

—

 

 

 

10,763

 

 

 

—

 

 

 

—

 

 

 

10,763

 

Due to a related company

 

 

—

 

 

 

—

 

 

 

15,374

 

 

 

—

 

 

 

15,374

 

 

 

 

—

 

 

 

12,225

 

 

 

15,374

 

 

 

—

 

 

 

27,599

 




F-51

F-67 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)


22.FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

CHINA NATURAL RESOURCES, INC.

(e)Liquidity risk (continued)

                
December 31, 2023 On demand  Less than
1 year		  1 to 5 years  More than
5 years		  Total 
   CNY   CNY   CNY   CNY   CNY 
                     
Trade payables  100   —   —   —   100 
Financial liabilities in other payables and accruals  —   7,864   —   —   7,864 
Due to related companies  —   9,069   —   —   9,069 
Due to the shareholder  —   85,673   —   —   85,673 
Lease liabilities  —   366   —   —   366 
                     
   100   102,972   —   —   103,072 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                
December 31, 2023 On demand  Less than
1 year		  1 to 5 years  More than
5 years		  Total 
   US$   US$   US$   US$   US$ 
                     
Trade payables  14   —   —   —   14 
Financial liabilities in other payables and accruals  —   1,111   —   —   1,111 
Due to related companies  —   1,281   —   —   1,281 
Due to the shareholder  —   12,103   —   —   12,103 
Lease liabilities  —   52   —   —   52 
                     
   14   14,547   —   —   14,561 

YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015

(Amounts in thousands, except share and per share data)



22.

FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

(g)

(f)Capital management

Capital management

The primary objectives of the Group's capital management were to safeguard the Group's ability to continue as a going concern and to maintain healthy capital ratios in order to support its business and maximize shareholders' value.

The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may return capital to shareholders, raise new debt or issue new shares. No changes were made in the objectives, policies or processes for managing capital during the years ended December 31, 2014 and 2015.

The Group monitors capital on the basis of the debt to capital ratio (Gearing(gearing ratio), which is calculated as interest-bearing debtsdebt divided by total capital (totalcapital. Interest-bearing debt mainly includes lease liabilities and interest-bearing loans and borrowings as of December 31, 2022 and mainly includes lease liabilities as of December 31, 2023. Capital includes total equity plusand interest-bearing debts).

 

 

2014

 

 

2015

 

 

 

CNY

 

 

CNY

 

Interest-bearing debts

 

 

—

 

 

 

—

 

 

 

 

 

 

 

 

 

 

Total equity/(deficiency in assets)

 

 

22,614

 

 

 

(12,276

)

 

 

 

 

 

 

 

 

 

Total capital

 

 

22,614

 

 

 

(12,276

)

 

 

 

 

 

 

 

 

 

Gearing ratio

 

 

—

 

 

 

—

 


debt. The gearing ratio was 30.24% as of December 31, 2022 and 0.47% as of December 31, 2023, respectively.

23.

COMMITMENTS

F-68 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

(a)

23.DEFERRED TAX ASSETS AND LIABILITIES

Operating lease

(a)Deferred tax balance

AtNet deferred tax assets and liabilities recognized in the endconsolidated statements of the reporting period, the Group had commitments for future minimum lease payments under a non-cancellable operating lease in respect of the rented premises which fall duefinancial position are as follows:

 

 

December 31,

 

 

 

2014

 

 

2015

 

 

2015

 

 

 

CNY

 

 

CNY

 

 

US$

 

Within the first year

 

 

781

 

 

 

362

 

 

 

56

 

After one year but not more than five years

 

 

350

 

 

 

—

 

 

 

—

 

 

 

 

1,131

 

 

 

362

 

 

 

56

 

Schedule of net deferred tax assets and liabilities         
  As of 
  December 31, 
  2022  2023  2023 
  CNY  CNY  US$ 
          
Deferred tax assets  488   —   — 
Offset amount  (488)  —   — 
Deferred tax assets after offsetting  —   —   — 
             
Deferred tax liabilities before offsetting  5,764   —   — 
Offset amount  (488)  —   — 
             
Deferred tax liabilities after offsetting  5,276   —   — 


(b)Gross movement on the deferred tax account

(b)

Capital commitments

As at December 31, 2014 and 2015, the Group did not have any significant capital commitments.




F-52


CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015

(Amounts in thousands, except share and per share data)



24.

SEGMENT INFORMATION

Prior to January 22, 2014, the Group operated in two operating segments: exploration and mining – non-ferrous metals, and exploration and mining – coal. After the Spin-Off of Feishang Anthracite in January 2014, the Group only operates in one operating segment: exploration and mining – non-ferrous metals. The accounting policies for the two segments were the same, and were as described in the summary of significant accounting policies. The Group evaluates performance based on operating earnings of the respective business unit. The Group's non-financial assets and revenue are substantially all located in and derived from the PRC. The segment analysis below is provided for the Group's continuing operations, and does not include any amount for discontinued operations, namely the exploration and mining – coal.

Management monitors the results of the Group's operating segments separately for the purpose of making decisions about resources allocation and performance assessment. Segment performance is evaluated based on reportable segment profit / loss, which is a measure of adjusted profit / loss before tax from continuing operations. The adjusted profit / loss before tax from continuing operations is measured consistently with the Group's profit / loss before tax from continuing operations except that interest income, finance costs as well as head office and corporate expenses are excluded from such measurement.

For comparability purposes, and in conformity with its current practice, the Company has revised certain of its disclosures for prior years.

As of and for the year ended December 31, 2015, the segment results were as follows:

 

 

CNY

 

 

 

Exploration
and mining
– non-
ferrous
metals

 

 

Corporate
activities

 

 

Total

 

Revenues from external customers

 

 

18,342

 

 

 

—

 

 

 

18,342

 

Depreciation and amortization

 

 

1,826

 

 

 

4

 

 

 

1,830

 

Operating loss

 

 

30,639

 

 

 

3,536

 

 

 

34,175

 

Interest income

 

 

892

 

 

 

164

 

 

 

1,056

 

Finance costs

 

 

422

 

 

 

2

 

 

 

424

 

Income tax expense

 

 

1,504

 

 

 

—

 

 

��

1,504

 

Loss for the year

 

 

32,133

 

 

 

3,374

 

 

 

35,507

 

Capital expenditure

 

 

6,247

 

 

 

—

 

 

 

6,247

 

Total assets

 

 

35,117

 

 

 

16,523

 

 

 

51,640

 

Total liabilities

 

 

41,828

 

 

 

22,088

 

 

 

63,916

 


 

 

US$

 

 

 

Exploration
and mining

– non-
ferrous
metals

 

 

Corporate
activities

 

 

Total

 

Revenues from external customers

 

 

2,825

 

 

 

—

 

 

 

2,825

 

Depreciation and amortization

 

 

281

 

 

 

1

 

 

 

282

 

Operating loss

 

 

4,720

 

 

 

545

 

 

 

5,265

 

Interest income

 

 

138

 

 

 

25

 

 

 

163

 

Finance costs

 

 

65

 

 

 

—

 

 

 

65

 

Income tax expense

 

 

232

 

 

 

—

 

 

 

232

 

Loss for the year

 

 

4,951

 

 

 

520

 

 

 

5,471

 

Capital expenditure

 

 

962

 

 

 

—

 

 

 

962

 

Total assets

 

 

5,410

 

 

 

2,545

 

 

 

7,955

 

Total liabilities

 

 

6,443

 

 

 

3,403

 

 

 

9,846

 




F-53


CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015

(Amounts in thousands, except share and per share data)



24.

SEGMENT INFORMATION (CONTINUED)


As of and for the year ended December 31, 2014, the segment results were as follows:


 

 

CNY

 

From continuing operations:

 

Exploration
and mining
– non-
ferrous
metals

 

 

Corporate
activities

 

 

Total

 

Revenues from external customers

 

 

8,303

 

 

 

—

 

 

 

8,303

 

Depreciation and amortization

 

 

3,010

 

 

 

4

 

 

 

3,014

 

Operating Loss

 

 

23,878

 

 

 

3,498

 

 

 

27,376

 

Interest income

 

 

1,550

 

 

 

52

 

 

 

1,602

 

Finance costs

 

 

390

 

 

 

2

 

 

 

392

 

Income tax expense

 

 

6,839

 

 

 

—

 

 

 

6,839

 

Loss for the year from continuing operations

 

 

28,298

 

 

 

4,925

 

 

 

33,223

 

Capital expenditure

 

 

1,914

 

 

 

—

 

 

 

1,914

 

Total assets

 

 

60,997

 

 

 

19,039

 

 

 

80,036

 

Total liabilities

 

 

39,047

 

 

 

18,375

 

 

 

57,422

 


As of and for the year ended December 31, 2013, the segment results were as follows:


 

 

CNY

 

 

 

Exploration
and mining
– non-
ferrous
metals

 

 

Corporate
activities

 

 

Total

 

Revenues from external customers

 

 

41,360

 

 

 

—

 

 

 

41,360

 

Depreciation and amortization

 

 

2,344

 

 

 

17

 

 

 

2,361

 

Operating income / (loss)

 

 

6,935

 

 

 

(9,810

)

 

 

(2,875

)

Interest income

 

 

1,534

 

 

 

280

 

 

 

1,814

 

Finance costs

 

 

355

 

 

 

5

 

 

 

360

 

Income tax expense

 

 

2,142

 

 

 

—

 

 

 

2,142

 

Profit / (loss) for the year from continuing operations

 

 

5,925

 

 

 

(7,210

)

 

 

(1,285

)

Capital expenditure

 

 

3,204

 

 

 

—

 

 

 

3,204

 

Total assets

 

 

77,723

 

 

 

40,280

 

 

 

118,003

 

Total liabilities

 

 

4,073

 

 

 

244,788

 

 

 

248,861

 


The reconciliation from loss forgross movement on the year from continuing operations to net lossdeferred income tax accounts is as follows:

 Schedule of gross movement of the deferred tax account         
  2022  2023  2023 
   CNY   CNY   US$ 
             
As of January 1  2,478   5,276   744 
Charged/(credited) to the consolidated statements of profit or loss during the year  2,798   (10)  (1)
Disposal of PSTT  —   (5,266)  (743)
             
As of December 31  5,276   —   — 


 

 

 

2013

 

 

2014

 

 

2015

 

 

2015

 

 

 

 

CNY

 

 

CNY

 

 

CNY

 

 

US$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss for the year from continuing operations

 

 

 

(1,285

)

 

 

(33,223

)

 

 

(35,507

)

 

 

(5,470

)

Loss for the year from discontinued operations

 

 

 

(334,537

)

 

 

(10,708

)

 

 

—

 

 

 

—

 

Net loss (including non-controlling interests)

 

 

 

(335,822

)

 

 

(43,931

)

 

 

(35,507

)

 

 

(5,470

)


25.

SUBSEQUENT EVENTS

F-69 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)


23.DEFERRED TAX ASSETS AND LIABILITIES (CONTINUED)

In March 2016, Wuhu Feishang reached an agreement with Anhui Province Mine Geology Bureau No.2 Exploration Brigade to survey geology and mineral resources at Yangchong Mine.

(c)Deferred tax assets




F-54


CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015

(Amounts in thousands, except share and per share data)



26.

CONDENSED FINANCIAL INFORMATION OF THE COMPANY


The following iscomponents of deferred tax assets and their movements during the condensed financial informationyears indicated, without taking into consideration the offsetting of balances within the Company on a non-consolidated basis:same tax jurisdictions, are as follows:

 Schedule of deferred tax assets               
  Provision for loss allowance  Significant financing component of the contract with customers  Lease liabilities  Losses available for offsetting against future taxable profits  Total 
   CNY   CNY   CNY       CNY 
                     
As of January 1, 2022  2,143   540   454   154   3,291 
Charged to the consolidated statements of profit or loss during the year  (2,136)  (478)  (35)  (154)  (2,803)
As of December 31, 2022  7   62   419   —   488 
As of January 1, 2023  7   62   419   —   488 
Charged to the consolidated statements of profit or loss during the year  —   (22)  (57)  —   (79)
Disposal of PSTT  (7)  (40)   (362)  —   (409)
As of December 31, 2023  —   —   —   —   — 
As of December 31, 2023 US$  —   —   —   —   — 

CONDENSED STATEMENTS OF FINANCIAL POSITION

 

 

December 31,

 

 

 

2014

 

 

2015

 

 

2015

 

 

 

CNY

 

 

CNY

 

 

US$

 

ASSETS

 

 

 

 

 

 

 

 

 

NON-CURRENT ASSETS

 

 

 

 

 

 

 

 

 

Investments in subsidiaries

 

 

25,335

 

 

 

—

 

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Amounts due from subsidiaries

 

 

100,484

 

 

 

9,691

 

 

 

1,493

 

Cash and cash equivalents

 

 

14,484

 

 

 

13,062

 

 

 

2,012

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL CURRENT ASSETS

 

 

114,968

 

 

 

22,753

 

 

 

3,505

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

 

140,303

 

 

 

22,753

 

 

 

3,505

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

Other payables and accrued liabilities

 

 

572

 

 

 

 977

 

 

 

 151

 

Due to the Shareholder

 

 

—

 

 

 

11,752

 

 

 

1,810

 

Due to a subsidiary

 

 

120,310

 

 

 

—

 

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL CURRENT LIABILITIES

 

 

120,882

 

 

 

12,729

 

 

 

1,961

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NON-CURRENT LIABILITY

 

 

 

 

 

 

 

 

 

 

 

 

Due to the Shareholder

 

 

15,374

 

 

 

—

 

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES

 

 

136,256

 

 

 

12,729

 

 

 

1,961

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

Issued capital

 

 

290,179

 

 

 

 290,179

 

 

 

 44,700

 

Other capital reserves

 

 

823,581

 

 

 

 823,581

 

 

 

 126,867

 

Accumulated losses

 

 

(1,087,956

)

 

 

(1,086,682

)

 

 

(167,396

)

Other comprehensive losses

 

 

(21,757

)

 

 

(17,054

)

 

 

(2,627

)

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL EQUITY

 

 

4,047

 

 

 

10,024

 

 

 

1,544

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND EQUITY

 

 

140,303

 

 

 

22,753

 

 

 

3,505

 

(d)Deferred tax liabilities




F-55


CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015

(Amounts in thousands, except share and per share data)



26.

CONDENSED FINANCIAL INFORMATION OF THE COMPANY (CONTINUED)


CONDENSED STATEMENT OF PROFIT OR LOSS


 

 

December 31,

 

 

 

2013

 

 

2014

 

 

2015

 

 

2015

 

 

 

CNY

 

 

CNY

 

 

CNY

 

 

US$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ADMINISTRATIVE EXPENSES

 

 

(7,586

)

 

 

(2,560

)

 

 

(2,380

)

 

 

(367

)

IMPAIRMENT OF INVESTMENTS IN SUBSIDIARIES

 

 

—

 

 

 

(728,912

)

 

 

(25,335

)

 

 

(3,903

)

IMPAIRMENT OF DUE FROM A SUBSIDIARY

 

 

—

 

 

 

—

 

 

 

(2,821

)

 

 

(435

)

DIVIDEND INCOME

 

 

123,643

 

 

 

—

 

 

 

31,680

 

 

 

4,880

 

INTEREST INCOME

 

 

—

 

 

 

—

 

 

 

130

 

 

 

20

 

PROFIT / (LOSS) BEFORE INCOME TAX

 

 

116,057

 

 

 

(731,472

)

 

 

1,274

 

 

 

195

 

PROFIT / (LOSS)FOR THE YEAR

 

 

116,057

 

 

 

(731,472

)

 

 

1,274

 

 

 

195

 


CONDENSED STATEMENTS OF CASH FLOWS


 

 

December 31,

 

 

 

2013

 

 

2014

 

 

2015

 

 

2015

 

 

 

CNY

 

 

CNY

 

 

CNY

 

 

US$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash flows used in operating activities

 

 

(13,240

)

 

 

(5,485

)

 

 

(1,851

)

 

 

(285

)

Net cash flows from investing activities

 

 

46,811

 

 

 

—

 

 

 

31,681

 

 

 

4,880

 

Net cash flows used in financing activities

 

 

(12,357

)

 

 

(6,242

)

 

 

(33,210

)

 

 

(5,116

)

NET (DECREASE) / INCREASE IN CASH

 

 

21,214

 

 

 

(11,727

)

 

 

(3,380

)

 

 

(521

)

CASH AT BEGINNING OF THE YEAR

 

 

6,149

 

 

 

25,675

 

 

 

14,484

 

 

 

2,231

 

Net foreign exchange difference

 

 

(1,688

)

 

 

536

 

 

 

1,958

 

 

 

302

 

CASH AT END OF THE YEAR

 

 

25,675

 

 

 

14,484

 

 

 

13,062

 

 

 

2,012

 


The above financial statements have been provided pursuant tocomponents of deferred tax liabilities and their movements during the requirementsyears indicated, without taking into consideration the offsetting of Rule 12-04(a) and 4-08(e)(3) of Regulation S-X, which require condensed financial information as to financial position, results of operations and cash flows of a parent company as ofbalances within the same dates and for the same periods for which audited consolidated financial statements have been presented when the restricted net assets of the consolidated and unconsolidated subsidiaries and the parent's equity in the undistributed earnings of 50 percent or less owned persons, accounted for by the equity method, together exceed 25 percent of the consolidated net assetstax jurisdictions, are as of end of the most recently completed fiscal year. follows:

 Schedule of deferred tax liabilities            
  Temporary difference on assets recognized under IFRIC 12  Right-of-use assets  Total 
   CNY   CNY   CNY 
             
As of January 1, 2022  5,270   499   5,769 
Credited to the consolidated statements of profit or loss during the year  —   (5)  (5)

As of December 31, 2022

  5,270   494   5,764 

As of January 1, 2023

  5,270   494   5,764 
Credited to the consolidated statements of profit or loss during the year  —   (89)  (89)
Disposal of PSTT  (5,270)  (405)  (5,675)

As of December 31, 2023

  —   —   — 
As of December 31, 2023 US$  —   —   — 

F-70 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

23.DEFERRED TAX ASSETS AND LIABILITIES (CONTINUED)

(e)Deferred tax not recognized

As of December 31, 2015, CNY11,800 (US$1,818)2022 and 2023, the total amounts of deductible temporary differences and unused tax losses for which no deferred tax assets were recognized with respect to certain deductible temporary differences and accumulated tax losses of the restrictedCompany’s subsidiaries established in Mainland China and Hong Kong that can be carried forward against future taxable income are as follows

 Schedule of deferred tax not recognized         
  December 31, 
  2022  2023  2023 
  CNY  CNY  US$ 
          
Deductible temporary differences with no deferred tax assets recognized  21,929   1,200   170 
Tax losses with no deferred tax assets recognized  16,073   6,077   859 
             
Total  38,002   7,277   1,029 

(f)Expiration dates of the tax losses

The tax losses in Mainland China can be carried forward for five years to offset future taxable profit. The expiration dates of the unused tax losses of the subsidiaries established in Mainland China for which no deferred tax assets were recognized are summarized as follows:

 Schedule of expiration dates of the tax losses         
  December 31, 
  2022  2023  2023 
  CNY  CNY  US$ 
          
 Year of expiration            
 2022  —   —   — 
 2023  2,318   —   — 
 2024  1,835   1,745   247 
 2025  2,476   1,462   207 
 2026  7,040   1,411   199 
 2027  2,302   499   70 
 2028  —   828   117 
              
 Total  15,971   5,945   840 

F-71 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

24.EQUITY

(a)Issued capital

schedule of issued capital         
  December 31, 
  2022  2023  2023 
  CNY  CNY  US$ 
          
Authorized:            
10,000,000 preferred shares, no par value  —   —   — 
200,000,000 common shares, no par value  —   —   — 
             
Common shares issued and fully paid:            
December 31, 2023: 8,377,897 (December 31, 2022: 40,948,082*) common shares, no par value  450,782   450,782   63,682 

schedule of issued capital shares combination         
  Number of shares  Share capital 
     CNY  US$ 
             
As of January 1, 2022，December 31, 2022 and January 1, 2023  40,948,082   450,782   63,682 
             
Effect of Five-to-One Share Combination*  (32,750,185)  —   — 
             
Equity-settled share-based payments  180,000   —   — 
             
As of December 31, 2023  8,377,897   450,782   63,682 

*The numbers of common shares above are before giving effect to the Share Combination which became effective on April 3, 2023. On April 3, 2023, the Company effected a share combination in which all of the Company's issued and outstanding ordinary shares were combined on a 5-to-1 basis. The basic and diluted earnings/(loss) per ordinary share has been retrospectively adjusted to reflect the impact of the share combination. All outstanding options, warrants and other rights to purchase the Company's common shares were adjusted proportionately as a result of the share combination.

F-72 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

24.EQUITY(CONTINUED)

(b)Other capital reserves

Schedule of other capital reserves        
   Other capital reserves 
   CNY   US$ 
         
As of January 1, 2022  719,110   101,589 
         
Equity inventive share-based payment (Note 26)  16,209   2,290 
         
As of December 31, 2022  735,319   103,879 
         
As of January 1, 2023  735,319   103,879 
         
Deemed distribution from the controlling shareholder (Note 3)  20,382   2,880 
         
Equity-settled share-based payments  3,074   435 
         
As of December 31, 2023  758,775   107,194 

Other capital and reserves were not available for distribution, and therefore, the condensed financial information of the Company are mainly for equity-settled share-based compensation, the exercise of stock options, the exercise of warrants, the business combination and the deemed contribution from the Shareholder and related companies.

(c)Dividend restrictions and reserves

Due to the Group's structure, the payment of dividends is subject to numerous controls imposed under PRC law, including foreign exchange control on the conversion of the local currency into U.S. dollars and other currencies.

In accordance with the relevant PRC regulations, appropriations of net income as reflected in its PRC statutory financial statements are to be allocated to each of the general reserve and enterprise expansion reserve, respectively, as determined by the resolution of the Board of Directors annually.

F-73 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

25.RELATED PARTY BALANCES AND TRANSACTIONS

In addition to the transactions detailed elsewhere in the consolidated financial statements, the Group had the following transactions and balances with related companies:

(a)Commercial transactions with related companies

Schedule of commercial transactions with related companies               
     Year Ended December 31, 
     2021  2022  2023  2023 
     CNY  CNY  CNY  US$ 
                
Interest income received from Feishang Enterprise(a)  (i)   3,396   —   —   — 
                     
CHNR’s share of office rental, rates and others to Anka Consultants Limited (“Anka”)(b)  (ii)   1,343   1,175   445   63 
Feishang Management's share of office rental to Feishang Enterprise(a)  (iii)   166   166   166   23 
Shenzhen New PST’s share of office rental to Feishang Enterprise(a)  (iv)   90   90   53   7 

(i)The Company's subsidiary, Shanghai Onway, entered into a series of contracts to provide a loan amounting to CNY80,000 at an interest rate of 9% per annum to Feishang Enterprise from March 2, 2018 to June 30, 2021.

(ii)The Company signed a contract with Anka to lease 184 square meters of office premises for two years from July 2018 to June 30, 2020, and extended it to June 30, 2024. The agreement also provides that the Company shares certain costs and expenses in connection with its use of the office, in addition to some of the accounting and secretarial services and day-to-day office administration services provided by Anka.

(iii)On January 1, 2018, Feishang Management signed an office-sharing agreement with Feishang Enterprise. Pursuant to the agreement, Feishang Management shares 40 square meters of office premises for 33 months. Feishang Management signed a new contract with Feishang Enterprise in October 2023, which will expire on September 30, 2024.

(iv)Shenzhen New PST signed a contract with Feishang Enterprise to lease 96 meters of office premises for 12-month period from March 14, 2022 to March 13, 2023 and renewed the contract with same terms for another 12-month period from March 14, 2023 to March 13, 2024. Due to the disposal of PSTT, the transaction amount in 2023 contains 7 months rentals.

(a)Feishang Enterprise is controlled by Mr. Li Feilie, who is the controlling shareholder of the Company.

(b)Anka is jointly owned by Mr. Wong Wah On Edward and Mr. Tam Cheuk Ho, who are officers of the Company.

F-74 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

25.RELATED PARTY BALANCES AND TRANSACTIONS (CONTINUED)

(b)Other transactions with related parties

On February 27, 2023, the Company entered into a sale and purchase agreement (the “SPA”) with Feishang Group and Top Pacific (China) Limited (together, the “Sellers”), and the respective beneficial owner of the sellers, Mr. Li Feilie and Mr. Yao Yuguang, to acquire 100% equity interests of Greatfame Investments Limited, which owns 100% equity interest in Williams Minerals (Pvt) Ltd (“Williams Minerals”) (the “Acquisition”). Williams Minerals owns the mining permit for the Zimbabwean lithium mine. The consideration to be paid by the Company for the Acquisition will be calculated by multiplying the qualified measured, indicated and inferred resources quantity of lithium oxide proven to be in the mine by independent technical reports by a unit price of US$500 per ton, less certain due diligence costs and expenses incurred by the Company for the issuance of the independent technical reports.

According to the SPA, the Company issued a US$24,500 promissory note (Promissory Note No. 1) and a US$10,500 promissory note to Feishang Group and Top Pacific (China) Limited respectively on April 14, 2023 to proceed with the acquisition. The Company recognized a liability due to shareholders amounted to US$24,500 and other payable amounted to US$10,500 respectively for the present obligations of these two promissory notes with corresponding non-current assets amounted to US$35,000.

On August 3, 2023, the Company entered into a set-off letter with Feishang Group, pursuant to the letter, the consideration of CNY95,761 liable to be paid by Feishang Group pursuant to the SPA for the disposal of the water treatment segment (Note 3) shall be set off against Promissory Note No. 1 using the exchange rate CNY1.00 = US$0.1400 such that a sum of US$13,407 shall be deducted from the Principal Amount as defined in Promissory Note No. 1. According to the letter, the Company derecognized the receivables from Feishang Group amounted to CNY95,761 and a liability due to shareholders amounted to CNY95,761.

(c)Balances with related companies

The Group’s balances with related companies are unsecured and non-interest bearing. Feishang Enterprise and the Shareholder have provided letters stating their continuous financial support to the Group and that they will not recall any amounts due to them until the Group has been presentedsufficient liquidity to finance its operations. The balances are summarized as follows:

Schedule of balances with related companies            
     December 31, 
     2022  2023  2023 
     CNY  CNY  US$ 
             
Current:                
Payable to related companies:                
Feishang Enterprise(a)  (i)   495   6,078   858 
Anka Capital Ltd. (“Anka Capital”)(b)  (iii)   2,913   2,991   423 
       3,408   9,069   1,281 
                 
Payable to the Shareholder:                
Feishang Group Ltd.(a)  (ii)   7,153   7,153   1,010 
Feishang Group Ltd.(a)      —   78,520   11,093 
       7,153   85,673   12,103 
                 
Lease liabilities to related parties:                
Anka(b)      1,022   360   51 
       1,022   360   51 

F-75 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

25.RELATED PARTY BALANCES AND TRANSACTIONS (CONTINUED)

(c)Balances with related companies (continued)

(i)The payable to Feishang Enterprise by Feishang Management represents the net amount of advances from Feishang Enterprise. The balance is unsecured and interest-free. The balance is repayable when the Group is in a position to settle the amounts due without having a detrimental impact on the financial resources of the Group.

(ii)The payable to Feishang Group represents the net amount of advances from Feishang Group. The balance is unsecured and interest-free. The balance is repayable when the Group is in a position to settle the amounts due without having a detrimental impact on the financial resources of the Group.

(iii)The payable to Anka Capital represents the net amount of advances from Anka Capital. The balance is unsecured and interest-free. The balance is repayable when the Group is in a position to settle the amounts due without having a detrimental impact on the financial resources of the Group.

(a)Feishang Enterprise and Feishang Group are controlled by Mr. Li Feilie, who is the controlling shareholder of the Company.

(b)Anka Capital and Anka are each jointly owned by Mr. Wong Wah On Edward and Mr. Tam Cheuk Ho, who are officers of the Company.

F-76 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

25.RELATED PARTY BALANCES AND TRANSACTIONS (CONTINUED)

(d)Compensation of key management personnel of the Group

 Schedule of compensation of key management personnel of the group            
    
  Year Ended December 31, 
  2022  2023  2023 
  CNY  CNY  US$ 
Wages, salaries and allowances  1,171   1,014   143 
Housing funds  16   16   2 
Contribution to pension plans  65   64   9 
             
  1,252   1,094   154 

The amounts disclosed in the table are the amounts recognized as expenses during the respective period related to key management personnel.

26.SHARE-BASED PAYMENTS

Warrants to the placement agent

The Company issued and sold an aggregate of 3,960,000 of its common shares at a price of US$1.85 per share to certain institutional investors on January 22, 2021 through a private placement. In a concurrent private placement, the Company issued the warrants:

(i)to the institutional investors (the “investor warrants”), which gave the right to purchase an aggregate of 1,584,000 common shares of the Company with an exercise price of US$2.35 per share. The investor warrants are exercisable up to three years after January 22, 2021. The Company recognized the investor warrants issued as derivative financial liabilities as the investors have the right to exercise their warrants on a cashless basis according to the agreement clause.

(ii)to the placement agent (the “agent warrants”) as part of placement service fees, which gave the right to purchase an aggregate of 396,000 common shares with an exercise price of US$2.35 per share. The agent warrants are exercisable up to three years after July 21, 2021. There are no cash settlement alternatives. The Group does not have a past practice of cash settlement for the warrants. The Group accounts for the warrants as equity-settled share-based payment.

The fair value of the agent warrants is estimated at the grant date using a binomial option pricing model. The amount was allocated to the issuance of the common shares and the investor warrants according to their fair value at the date of issuance, and CNY1,862 (US$287*) and CNY449 (US$70*) were charged to share capital and administrative expenses respectively.

*As the changes in equity from this private placement transaction are denominated in US$, all the amounts in US$ in this disclosure paragraph are actual transaction amounts and the corresponding amounts in CNY were translated from US$ at the applicable exchange rate on the transaction date, January 22, 2021.

F-77 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

26.SHARE-BASED PAYMENT (CONTINUED)

Share options

On July 14, 2022, the Board of Directors of the Company approved to grant option awards for an aggregate of 8,100,000 common shares, without par value, of the Company (the “share options”) to certain individuals under the China Natural Resources, Inc. 2014 Equity Compensation Plan for certain strategic consultant services. The share options vested immediately upon grant and are exercisable up to three years from July 19, 2022. The exercise price for the options is $0.623 per share.

The fair value of the share options is estimated at the grant date using a binomial option pricing model, taking into account the terms and conditions on which the share options were granted. The Group accounts for share options 2022 as an equity-settled share-based payment and recognize administrative expenses associated with the consultant service reward with a corresponding increase in equity.

Share-based payment

On June 26, 2023, the Board of Directors of the Company approved to grant share-based payment of 180,000 common shares for consultant’s service between June 26 to December 25, 2023. As the Group cannot measure reliably the fair value of the service received, it is based on the fair value of the common shares granted measured over the period the services is received. The Group recognized administrative expenses associated with the consultant service reward with a corresponding increase in equity using the average fair value of the common shares over the service period. The 180.000 common shares were vested and issued in 2023.

(a)Expense arising from share-based payment transactions

The expense recognized during the year for above share-based payments is shown in the following table:

Schedule of expense arising from share-based payments            
  Year Ended December 31, 
  2021  2022  2023  2023 
  CNY  CNY  CNY  US$ 
             
Issuance expense related to agent warrants  447   —   —   — 
Consultants share option expense (Note 5)  —   16,152   —   — 
Consultants share-based payment expense (Note 5)  —   —   3,074   435 
                 
Total  447   16,152   3,074   435 

F-78 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

26.SHARE-BASED PAYMENT (CONTINUED)

(b)Movements during the year

The following table illustrates the number of, and movements in, agent warrants during the year:

Schedule of agent warrants      
  Number of shares  Exercise price per share 
       US$ 
         
Outstanding at January, 2021  —   — 
Granted during the year  396,000   2.35 
Outstanding as of December 31, 2021  396,000   2.35 
Outstanding as of December 31, 2022  396,000   0.623*
Effect of Five-to-One Share Combination (Note 24)  (316,800)  — 
Outstanding as of December 31, 2023  79,200   3.115**

The remaining contractual life for the agent warrants as of December 31, 2023 and 2022, were 0.06 years and 1.06 years, respectively.

*The exercise price was revised to $0.623 per share in July, 2022.

**The exercise price was revised to $3.115 per share in March, 2023.

The following table illustrates the number of, and movements in share options during the year:

Schedule of share options      
  Number of shares  Exercise price per share 
       US$ 
         
Outstanding as of January, 2021 and December 31, 2021  —   — 
Granted during the year  8,100,000   0.623 
Outstanding as of December 31, 2022*  8,100,000   0.623 
Granted during the year  —   — 
Effect of Five-to-One Share Combination (Note 24)  (6,480,000)  — 
Outstanding as of December 31, 2023  1,620,000   3.115 

*The share option numbers above are before giving effect to the Share Combination which became effective on April 3, 2023. Refer to Note 24 for further details.

The remaining contractual life for the share option as of December 31, 2023 and 2022, were 1.53 years and 2.53 years, respectively.

F-79 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

26.SHARE-BASED PAYMENT (CONTINUED)

(c)Inputs to the models

The following tables list the inputs to the models used for agent warrants and share options for the years ended December 31, 2013, 20142021 and 2015.2022, respectively:

Schedule of inputs to the models for fair value      
  Agent warrants  Share options 
   2021   2022 
         
Fair value at the measurement date (US$)  70   2,400 
Fair value at the measurement date (CNY)  449   16,209 
Expected volatility (%)  93.67   93.50 
Risk-free interest rate (%)  0.19   3.16 
Expected life (years)  2.50   3 
Share price (US$)  0.901   0.623 

In the parent-company-only financial statements, the Company's investments in subsidiaries are stated at cost. The parent-company-only financial statements should be read in conjunction with the Company's consolidated financial statements.

The expected life of the agent warrants and share options is based on historical data and current expectations and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility over a period similar to the life of the options is indicative of future trends, which may not necessarily be the actual outcome.

F-80 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

27.PARTLY OWNED SUBSIDIARY WITH MATERIAL NON-CONTROLLING INTERESTS

On July 27, 2021, the Company does not have any significant commitments or long-term obligationsacquired 100% of the equity interests of PST Technology which held 51% equity interests in Shanghai Onway and its subsidiaries (“Shanghai Onway Group”), and Shanghai Onway Group became partly owned subsidiary with material non-controlling interests. During the year 2023, Shanghai Onway Group as part of the water treatment business was disposed (Note 3), therefore non-controlling interests was derecognized.

Financial information of Shanghai Onway Group which that has material non-controlling interests is provided below:

Proportion of equity interest held by non-controlling interests as of anyDecember 31, 2021 and 2022:

 Schedule of equity interest held by non-controlling interests        
Name Country of incorporation and operation  2021   2022 
           
Shanghai Onway Group PRC/Mainland China  49%  49%
           

       
  2021  2022 
   CNY   CNY 
         
(Loss)/profit for the year allocated to non-controlling interests:        
         
Shanghai Onway Group  (6,819)  2,327 
         
Dividends paid to non-controlling interests:        
         
Shanghai Onway Group  4,900   — 
         
Accumulated balances of non-controlling interest:        
         
Shanghai Onway Group  107,353   109,680 
         

F-81 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

27.PARTLY OWNED SUBSIDIARY WITH MATERIAL NON-CONTROLLING INTERESTS (CONTINUED)

The summarized financial information of the years presented, except for those disclosed in the consolidated financial statements.Shanghai Onway Group is provided below. This information is based on amounts before inter-company eliminations. 

 Schedule of financial information      
2021 Shanghai Onway Group 
  CNY  US$ 
       
Revenue  18,735   2,948 
Other income/(losses)  (32,312)  (5,084)
Loss for the year  (13,577)  (2,136)
Total comprehensive income loss for year  (13,577)  (2,136)
         
         
Current assets  187,619   29,519 
Non-current assets  126,573   19,914 
Current liabilities  (40,716)  (6,406)
Non-current liabilities  (40,259)  (6,334)
         
         
Net cash flows used in operating activities  (8,758)  (1,378)
Net cash flows used in investing activities  (1,509)  (237)
Net cash flows used in financing activities  (3,972)  (625)
         
Net decrease in cash and cash equivalents  (14,239)  (2,240)
         

F-82 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

27.PARTLY OWNED SUBSIDIARY WITH MATERIAL NON-CONTROLLING INTERESTS (CONTINUED)

       
2022 Shanghai Onway Group 
  CNY  US$ 
       
Revenue  20,306   2,944 
Other income/(losses)  (15,504)  (2,248)
Profit for the year  4,802   696 
Total comprehensive income loss for year  4,802   696 
         
         
Current assets  197,468   28,625 
Non-current assets  121,961   17,681 
Current liabilities  (44,602)  (6,466)
Non-current liabilities  (77,524)  (11,239)
         
         
Net cash flows used in operating activities  (6,588)  (956)
Net cash flows from investing activities  157   23 
Net cash flows used in financing activities  (7,743)  (1,122)
         
Net decrease in cash and cash equivalents  (14,174)  (2,055)
         

F-83 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

28.NOTES TO THE CONSOLIDATED STATEMENTS OF CASH FLOWS

(a)Major non-cash transactions

During the years endedyear, the Group had non-cash additions to right-of-use assets and lease liabilities of nil 0 (2022: CNY1,781) and nil 0 (2022: CNY1,781), respectively, with respect to lease arrangements for motor vehicles, offices and warehouses. On February 27, 2023, the Company entered into a sale and purchase agreement of Zimbabwean lithium mine, which is a non-cash transaction (Note 25 (b)) for more details. On July 28, 2023, the Group had non-cash disposal of PSTT (Note3). On August 3, 2023, the Company entered into a set-off letter with Feishang to net off the consideration of the disposal of PSTT and promissory note issued under the SPA of the sale and purchase agreement of Zimbabwean lithium mine (Note 25 (b)).

(b)Changes in liabilities arising from financing activities
 Schedule of changes in liabilities arising from financing activities               
Year Ended December 31, 2022 Interest-bearing loans and borrowings  

Dividends

payable

  Due to related companies  Due to the Shareholder  

Lease

liabilities

 
   CNY   CNY   CNY   CNY   CNY 
                     
As of January 1, 2022  77,000   5,048   5,710   14,050   2,189 
Changes from financing cash flows  (6,882)  (5,048)  (2,765)  (6,885)  (1,253)
New leases  —   —   —   —   1,781 
Interest expenses  3,882   —   —   —   133 
Other changes  —   —   463   (12)  65 
           　   　   　 
As of December 31, 2022  74,000   —   3,408   7,153   2,915 

                
Year Ended December 31, 2023 Interest-bearing loans and borrowings  

Dividends

payable

  Due to related companies  Due to the Shareholder  

Lease

liabilities

 
   CNY   CNY   CNY   CNY   CNY 
                     
As of January 1, 2023  74,000   —   3,408   7,153   2,915 
Changes from financing cash flows  (3,378)  —   3,932   78,520   (1,024)
Foreign exchange difference  —   —   78   —   27 
Interest expenses  1,878   —   —   —   99 
Disposal of PSTT  (72,500)  —   1,651   —   (1,657)
                     
As of December 31, 2023  —   —   9,069   85,673   360 

                
Year Ended December 31, 2023 Interest-bearing loans and borrowings  

Dividends

payable

  Due to related companies  Due to the Shareholder  

Lease

liabilities

 
   US$   US$   US$   US$   US$ 
                     
As of January 1, 2023  10,728   —   494   1,037   422 
Changes from financing cash flows  (477)  —   555   11,066   (145)
Foreign exchange difference  —   —   11   —   4 
Interest expenses  265   —   —   —   14 
Disposal of PSTT  (10,516)  —   221   —   (244)
                     
As of December 31, 2023  —   —   1,281   12,103   51 

F-84 

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023

(Amounts in thousands, except share and per share data)

28.NOTES TO THE CONSOLIDATED STATEMENTS OF CASH FLOWS(CONTINUED)

(c)Total cash outflow for leases

 Schedule of Cash Outflow for Leases         
  2022  2023  2023 
   CNY   CNY   US$ 
             
Within operating activities  (250)  (323)  (46)
Within financing activities  (1,253)  (1,024)  (145)
 Total cash outflow for leases  (1,503)  (1,347)  (191)

29.COMMITMENTS

At December 31 2013, 20142023, the Company had capital commitments of CNY2,432 (December 31 2022: Nil 0) associated with mineral exploration for the Zimbabwean lithium mine. The corresponding capital expenditures will be paid along with the progress of the exploration works once the mine formally enters into the exploration phase.

30.SUBSEQUENT EVENTS

Direct Placement of Common Shares and 2015,Private Placement Warrants

On February 16, 2024, the Company entered into a securities purchase agreement with certain institutional investors, pursuant to which the Company agreed to issue and sell, (i) in a registered direct offering, up to an aggregate of 1,487,870 of common shares with no cash dividends were declaredpar value  of the Company at a per share purchase price of US$2.20 (the “Registered Offering”), and paid(ii) in a concurrent private placement, warrants initially exercisable for the purchase of an aggregate of 1,115,903 common shares of the Company at an exercise price of $3.00 per share, for gross proceeds of approximately US$3.01 million, before deducting fees to the placement agent and other estimated offering expenses payable by the Company. The Registered Offering was closed on February 21, 2024.




F-85





EXHIBIT INDEX

 Exhibit No.

 

Exhibit Description

4.17

Sales and Purchase Master Contract dated January 1, 2015 by and between Fanchang County Jinfeng Mining Ltd.  and Wuhu Feishang Mining Development Co., Ltd.

6

Computation of Earnings Per Share for Fiscal Year ended December 31, 2015(contained in Financial Statements).

7

Computation of Ratios for Fiscal Years ended December 31, 2013, 2014 and 2015.

8

Subsidiaries of the Registrant.

12.1

CEO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

12.2

CFO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

13.1

CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

13.2

CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

15.1

Consent of Ernst & Young Hua Ming LLP to incorporation of audit report dated April 28, 2016 into registration statement on Form F-3 (SEC File No. 333-197278)

15.2

Consent of Ernst & Young to incorporation of audit report dated April 27, 2015 into registration statement on Form F-3 (SEC File No. 333-197278)