The Company was incorporated in Bermuda on 10 April 1995 under the
Companies Act 1981 of Bermuda (as amended) as an exempted company with limited
liability. The shares of the Company are listed on The Stock Exchange of Hong Kong
Limited (the “Stock Exchange”). The registered office of the Company is located
at Clarendon House, 2 Church Street, Hamilton HM11, Bermuda. The principal
place of business of the Company is located at Room 1505-07, 15/F., Shui On
Cerntre, 6-8 Harbour Road, Wanchai, Hong Kong.
The principal activities of the Group are i) mining operations – exploitation and trading of mineral resources; (ii) property management operations; (iii) chemical trading operations – manufacturing and sale of chemical products and; (iv) security technologies operations – research, development and sale of security technologies products.
Mining Operations – Exploitation and Exploration and Trading of Mineral Resources
During the period under review, the volume of molybdenum concentrate produced was about 1,461 tonnes (30 June 2017: 1,104 tonnes), whereas the grade of molybdenum concentrate was approximately 45%-50%. The average selling price of molybdenum concentrate was approximately HK$84,154 per tonne. During the period under review, the mining operation contributed a revenue of approximately HK$126,315,000 (30 June 2017: approximately HK$84,621,000) to the Group, of which approximately HK$122,736,000 was contributed by sales of molybdenum concentrate (30 June 2017: approximately HK$83,133,000) and approximately HK$3,579,000 was contributed by sales of sulfuric acid and iron concentrate (30 June 2017: approximately HK$1,488,000). During the six
months ended 30 June 2018, the Group recognised an amortisation of mining rights of approximately HK$24,726,000 (30 June 2017: approximately HK$17,141,000).
Property management operations
During the period under review, the performance of the Group’s property management operations was relatively stable. For the six months ended 30 June 2018, the turnover generated from the property management operation was approximately HK$3,319,000, representing similar to the corresponding period of last year of HK$3,555,000.
Chemical trading operations
The Group’s chemical trading operations mainly includes manufacturing and sale of chemical products in the PRC. Our chemical products were produced by Anhui Tongxi Chemical Company Limited, a non-wholly owned subsidiary acquired on 19 September 2017. For the six months ended 30 June 2018, revenue generated from this segment to theGroup was approximately HK$173,548,000.
Security technologies operations
The Group’s security technologies operations mainly includes research and development of face recognition technologies in the PRC. Our security technologies and service were provided by Xinjinag Casiavision Security Technology Company Limited and Xinjiang Xintongxing Telecommunication Engineering Company Limited, which were wholly owned subsidiaries acquired on 7 September 2017. For the six months ended 30 June 2018, revenue generated from this segment to the Group was approximately HK$13,814,000.
Termination of Joint Venture
On 9 April 2018, the Company and Mr. Xu Zi Jing (“Mr. Xu”) (“Parties”) entered into the Joint Venture Agreement pursuant to which the Parties agreed to form a Joint Venture for the purpose of the establishment, operation, promotion and maintenance of blockchain asset trading platform and the research and development and application of blockchain related technology.
After careful consideration of all the circumstances surrounding the Joint Venture and the Company’s right under the Joint Venture Agreement, the Company and Mr. Xu have mutually agreed to terminate the Joint Venture Agreement and have entered into a termination agreement on 12 June 2018 (the “Termination Agreement”) to terminate the Joint Venture Agreement with immediate effect. The Board considers that the termination of the Joint Venture Agreement will not have any material adverse impact on the financial and operational position of the Group.
FUND RAISING EXERCISE
During the period under review, there was no fund raising exercise carried out by the Group.
Looking forward, despite the challenges faced by global economy, the global economy is improving in the long term. The space for development of China’s economy is wider than ever. In 2017, the Chinese Gross Domestic Product (“GDP”) grew by approximately 6.9%, which is 0.2% higher than that of 2016. It is expected that China’s economy will continue to grow steadily.
Under the influence of the reform on the suppliers’ side and the normalization of environmental protection control, production of stainless steel in the steel industry continues to increase. Corporates’ business environment improved where their demand for Molybdenum raw materials increased in phases. It is expected that the price of Molybdenum concentrate in the second half of 2018 will steadily increase.
According to a survey conducted by the Ministry of Agriculture of the People’s Republic of China, approximately 80% of arable land in the PRC is in lack of potassium, which will contribute to the rising demand for potassium fertilizer. It is expected that price of potassium in the future will remain stable and positive in the second half of 2018.
Security business market
Xinjiang’s local law and order has always been a concern to the Chinese government and the existing security system is required to be gradually upgraded to a higher standard. This increases the demand for security systems. An optimistic future prospect of the security business market is expected.
Chemical business market
The Group invested in a chemical company that engages in the research, sale and technical services of non-dangerous chemical products in the second half of 2017 in order to diversify its business portfolio. It is expected that it will continue to provide the Group with an alternative source of revenue.
The Group will endeavor to keep abreast of the changing market conditions, proactively looking for investment opportunities and expand its mineral resources in order to broaden the revenue base of the Group, enhance its future financial performance and profitability, and fine tune its business strategies when the directors of the Company (the “Directors”) think appropriate. Moreover, the Group is seeking further operating efficiencies across the business. We are confident in the future and committed to continued Company growth.