Chifeng Gold (06693): Suspension of operation of the Mengkang rare earth project in Laos

Zhitong Finance App News, Chifeng Gold (06693) announced that in 2022, the company and Xiamen Tungsten Industry Co., Ltd. will establish a joint venture, Chijinxia Tungsten (formerly known as Shanghai Chijinxia Tungsten Metal Resources Co., Ltd.) (the company holds 51% of the shares of Chijinxia Tungsten), with the aim of making full use of the respective advantages of both parties to build a cooperative development platform for rare earth resources, enhance the company's comprehensive competitiveness in rare earth resource development, and promote the implementation and development of the company's rare earth resources development business in Laos.

On March 4, 2024, Chijinxia Tungsten (as the guarantor) and its wholly-owned subsidiary Chixia Laos (as the buyer) signed an “Equity Transfer Agreement” with China Investment (Real Estate) Co., Ltd. (China Investment Real Estate) (as seller). Chixia Laos acquired China Investment (Laos) Mining Limited (now renamed as: Chixia Mining (Laos) Co., Ltd.) (Chixia Mining) on March 25, 2025. Chixia Mining mainly operates the Mengkang Rare Earth Project (Mengkang Rare Earth Project) in Mengkang County, Xieng Khouang Province, Laos. Other than this project, Chijinxia Tungsten and its holding subsidiaries do not operate any other rare earth projects. Since the transaction was completed, the project is currently in trial production.

As the national rare earth resources policy system becomes more and more perfect, Chijinxia Tungsten comprehensively reviews and optimizes related businesses to ensure that all business activities comply with the law. In order to respond to and strictly comply with the relevant policy requirements for rare earth resource development and effectively fulfill corporate social responsibilities, after careful research and evaluation, Chijinxia Tungsten decided to suspend the operation of the Mengkang Rare Earth Project. In the future, it will closely follow up on relevant policy changes and actively seek solutions.

The Mengkang rare earth project is still in the trial mining stage. In 2025, Chijinxia tungsten produced 998.56 tons of rare earth products, attributable to Chifeng Gold's net loss of RMB 540.67 million (audited). The absolute value accounts for -1.75% (audited) of Chifeng Gold's consolidated net profit attributable to shareholders of the parent company in 2025. In the first quarter of 2026, Chijinxia Tungsten produced 63.60 tons of rare earth products, attributable to Chifeng Gold's net profit of RMB 372,800 (unaudited), accounting for 0.04% (unaudited) of the consolidated net profit attributable to shareholders of the parent company in the first quarter of 2026. The suspension of operations is expected to have little impact on the company's overall operating performance. The details are subject to the company's audited financial report. Currently, Chijinxia Tungsten is uncertain when the project will resume operations. The company will continue to monitor related policy changes and project progress in the future.

The company's main businesses, such as gold and electrolytic copper, are operating well, and the financial situation is healthy and stable. The balance ratio is at a low level in the industry, providing a solid guarantee against all kinds of force majeure. The company will actively respond to and do its best to mitigate the adverse effects of the suspension of rare earth development on the company; at the same time, the company will continue to focus on its main business, increase investment and speed up project progress in resource exploration, technological transformation and new construction and expansion projects, and lay a solid foundation for achieving the company's medium- to long-term strategic goals.