Prospects
In 2023, challenges such as persistent geopolitical and macro-economic uncertainties impacted the global economy, while Mainland China's economy showed signs of recovery from the impact of the COVID-19 pandemic. Against this backdrop, the Group’s priority for 2023 remained to explore investment opportunity to enhance our gold mining portfolio and expand our market share. As part of a major development milestone, the Group acquired the entire equity interest in Grand Gallant Investments Limited and its subsidiaries (the “Grand Gallant Group”) on 21 July 2023. As published in the announcement dated 7 July 2023, Grand Gallant Group is principally engaged in the exploration and mining of gold and related minerals in Subei County and Guazhou County by undergrounds mining method and operates its own processing plants in Subei County.
In response to foreseeable demand and in compliance with new government requirements, the Group suspends the processing plant’s operation in Tongguan County in March 2024 and begins the construction of a new tailings plant in Tongguan County. It is estimated to be completed in about six months. Mining activities in Tongguan County will continue during the suspension of the operation at the processing plant. After the new tailings plant is completed, the processing plant will be resumed at that time and process concentrate gold for sale, thereby minimising the impact on operation. Nevertheless, the production and results of gold mining operation in Tongguan County will be affected by the suspension in year 2024. Moreover, driven by the gold mining business operated by Grand Gallant Group, the Company’s management expects that overall performance of the Group has entered a growth stage in year 2024.
The profitability of the Group is highly dependent on the gold price in domestic and international markets. The market prices of gold (and other precious metals) are correlated to the United States (U.S.) interest rate, global economic environment and stability. As of middle of March 2024, the gold prices hit a record high. According to a report released by World Gold Council, 2023 is another strong year for central bank gold demand. It proved that central banks’ enthusiasm for gold has not stopped, especially amid the intensification of international geopolitical and economic uncertainties, and gold still serves its solid role as a safe-haven asset. In addition, the outbreak and persistence of systemic risks in small and medium-sized banks in the U.S. have exposed the stability of the financial system to risks and uncertainties, prompting investors to reconsider gold's investment value amid financial market fluctuations. At the same time, the market consensus on the peak of U.S. interest rates and expectations of an interest rate cut in year 2024 will continue to be a support point for gold prices. The Group will closely monitor the market trends in commodity prices and take necessary actions to control any potential risks.
The Group is committed to being a responsible corporate citizen and to fulfilling its corporate social responsibility while remaining competitive and sustainable in its business development. Environmental sustainability, safety production and supporting local communities would continue to be the priority tasks of the Group. In response to safety production, the Group adhered to provide safe and healthy working environment, and carried out trainings to all workers and employees to enhance their safety management and technical knowledge skills. To ensure environmental sustainability, the Group continues to monitor and review waste and pollution reduction measures at all of the operating plants to comply with the relevant regulations and requirements. To support the local community, the Group continues to participate in various donation and community activities.
Looking forward, the Company’s management is optimistic about the Group's operating performance in future, while staying vigilant of various ongoing uncertainties. As always, the Group will continue to explore various long-term value-added investment opportunities for shareholders and reiterate its commitment to maximizing shareholder value.
