Development strategies of the Company

The Board considers that the Company accomplished the second step of its strategic goal to “achieve a leading position in domestic metal mining industry” in 2013, and now possesses strong competitive strength and capabilities to advance the next target of becoming one of the top international mining companies. The Company has begun a new round of business development characterised by internationalisation, project upsizing and asset securitisation, with the ultimate goals of ascending to the league of top international miners by year 2030, and becoming an “extra-large scale international mining group with high technology and efficiency”.

In this regard, the Board is of the view that the Company ought to have strong faith in its strategic goals, capability and corporate culture, unflaggingly take its own path for innovation and development, continue to promote innovation in technology and management, strengthen core competitiveness, and relentlessly seek breakthrough; on strategic positioning, the Company ought to adhere to a combination of: its core business, being gold and copper, with other types of metal mineral businesses; the integration of mining, finance and trade; priority to resources with structural optimisation; proactivity with rigour in risk control; marketisation reform with scientific management; innovation and development with compliant operation; human-orientation with value creation; and Zijin corporate culture with international norms and projects’ local actual conditions.

 

Specific business strategies for 2017

Under the leadership of a new term of the Board and management, the Company will continue to focus on “clinging to reforms, maintaining growth and boosting development”, deepen economic accountability and appraisal, strengthen management over net operating cash flow in addition to the pursuit of better volume, cost and profit, improve assessment of sustainability indicators, and fully accomplish the operating and production targets for 2017.

■ Carry on thorough reform of management, stimulate corporate vitality for further development

The Company will follow market standards and focus on value creation principle to carry on and improve the reform of management, and stimulate corporate vitality for further development. It will also keep modifying corporate governance structure, fully motivate the enthusiasm and creativity of all members, constantly improve management system to ensure scientific decisionmaking, strong execution, efficacious supervision and effective regulation, promote the value creation ability of construction and logistic management, thoroughly incorporate informatisation and automation to the operation and management of mining business, enhance the quality of operation and management, and raise the efficiency of production and operation.

■ Fully implement all the measures for maintaining growth, ensure achievement of operational and production

Targets for the year Mining entities: endeavor to achieve the production and efficiency targets and standards for a number of projects, namely the Zijinshan copper mine 25,000 tonnes flotation processing plant, Wulatehouqi Zijin 10,000 tonnes processing plant, Duobaoshan Copper, Guizhou Zijin hot pressure pre-oxidation, etc., accelerate the phase 2 expansion of Duobaoshan copper mine and new technological innovation project for comprehensive utilisation of low-grade resources at Wulagen lead and zinc mine. Each and every mining entities will strive to achieve the targets pragmatically to tap and raise efficiency, strengthen the awareness of better planning and development according to life cycle of mines, strike good balance between short-term benefits and long-term goals, and carry out mining development and construction in accordance with a holistic, scientific and high-level roadmap.

Refining and processing entities: benchmark against best practices, advance technological upgrade and intelligent transformation, enhance management at the base level, and seek efficiency from the management of details; control inventory level by the strictest standards, tighten capital and liquidity management and reduce financing costs; make good use of financial

instruments to secure profits.

Overseas entities: operating entities such as the Porgera gold mine in Papua New Guinea, ZGC gold mine in Tajikistan, Zuoan gold mine in Kyrgyzstan and zinc multi-metals mine in Tuva, Russia should strive to achieve year-on-year growth in production volume; the Kolwezi copper mine in the DR Congo should ensure smooth commencement of production; and Norton should endeavour to achieve material breakthroughs in the processing of low-grade gold resources. Overseas projects will continue to make profound contributions to the Company’s “maintaining growth” target.

Other types of entities: further optimise management structure, allocate resources by market standard and enhance management efficiency; entities that meet the marketisation conditions should realise self-reliance.

■ Actively advance and accelerate internationalisation, lay a solid foundation in resources for further development

The Company will enhance the operation and management of overseas entities in all aspects. When it comes to merger and acquisition, consideration will be first given to projects of enormous resources volume, which have real production, promising profitability and low P/E ratios. Those capable of making immediate contribution to the Company’s operating results and enhancing its stock value are preferred. Moreover, to ensure good value of investment, the Company will also put more effort to seek for new deposits through the presently owned mines, and carry out supplementary surveys on the developable areas in the deep border and outer ring of those mines.

■ Enhance finance management, asset management and asset securitisation, improve capital efficiency

The Company will continue to uphold the management concept of “making financial management the core of corporate management, and making capital management the core of financial management”. It will also fully improve asset management by following market criteria in measuring asset efficiency and profitability, maintain tight control on inventory level, and revive obsolete assets. Moreover, asset structure will be constantly improved by focusing on the big targets and forgoing the small operations, and maintaining flexibility in accelerating the disposal of minor projects, especially the small-size non-mining projects which fail to meet the Company’s development needs. By eliminating projects that are unable to create value for the Company firmly, efficiency of assets can be improved. Additionally, more efforts will be made to enhance asset securitisation and motivate the deep integration of mining, finance and capital.

■ Adhere to innovation and development belief, improve technology and management abilities

The Company will unswervingly pursue its course of innovation and development. Technological innovation should be achieved by seeking breakthroughs in key technology and extensive application of successful outcomes. Perfection and innovation of engineering projects should follow and comply with rules of science. Infrastructure for innovation will be provided both in policy and application aspects, an innovative atmosphere will be encouraged, and the idea of sharing outcomes with the value creators will be promoted. Moreover, staff engaged in innovation development will be protected with exemption from liability. If their work involves innovation of immense value, trial and error will be encouraged. The focus of work assessment will depend on the extent of efficiency enhancement by technological innovation and managerial innovation, and value creation.

■ Emphasise safety and environmental protection, and ensure compliance in operation

Achievement of “zero work casualty, zero environmental incident”, and ensuring the meeting of intrinsic safety and environmental protection standards are the basic requirements which the Company reinforces and cautiously carries out to ensure safety and environmental protection. Accordingly, multiple steps will be taken by the Company, which include extension of the production safety score-based system to all employees, continuing to standardise the requirements for safety, occupational health and safety management system, advancing eco-mining, and incorporating maintenance of environmental orderliness as part of the Company’s ordinary function. Outsourcing contractors are also included in the Company’s safety management system, their safety track record will become one of the Company’s key considerations when seeking cooperation, and their performance is measured according to stipulations in economic contracts. Overall, the Company will strengthen the discharge of obligations, emphasise appraisal, rewards and penalties, and ensure performance align with the Company’s economic responsibility system. Application of licences and completion of formalities will be closely monitored, and compliance in operation will be the key criterion for assessing management performance in various entities.