EQS-News: China Hanking's profit for the year hit a record high, up by 74.55% year on year, and a total dividend of HK$1.288 billion was distributed since its listing

China Hanking's profit for the year hit a record high, up by 74.55% year on year, and a total dividend of HK$1.288 billion was distributed since its listing

(22 March 2022, Hong Kong) China Hanking Holdings Limited ("China Hanking" or the "Group"; stock code: 3788. HK) announces the operating results of the Company and its subsidiaries (the "Group") for the 12 months ended 31 December 2021 (the "Period").

The Group achieved its best performance since its listing and achieved leapfrog growth during the Period. A revenue of RMB3.127 billion (RMB, same below) was achieved, and profit for the year increased significantly by 74.55% to approximately RMB659 million, a record high. This was mainly due to the increase in gross profit of high-purity iron per ton and the increase in gross profit of iron ore concentrate per ton due to the rise in average selling price in 2021, but also due to the Company's continued value creation through technological innovation and extension of the value chain. Earnings per share were RMB0.339, an increase of 62.98% year on year, and the return on net assets was 48.27%, an increase of 10.10 percentage points year on year. In early 2020, the Company has declared an annual return of not less than 30% of the Group's total net profit for the current period directly to shareholders to share the results of the Company's development with them. The Company declared a final dividend of HK$0.12 per share for 2021, taking into account the interim dividend of HK$0.06 per share for 2021, representing an annual dividend payout ratio of 43.86%.

Growth of high purity iron business will become more evident as the increment of the wind power industry is confirmed

China Hanking further extended its industrial value chain from 2019 to become a high-quality material supplier for the wind power industry. In 2021, the sales revenue of the high-purity iron business reached RMB2.49 billion, an increase of 24.05% year on year, accounting for 79.64% of the Group's total revenue. The sales volume was 614,000 tons, and gross profit reached RMB360 million, an increase of 7.20% year on year. Relying on high-quality iron ore concentrate and smelting technology, the Company produced high-purity iron products with excellent performance. Over 85% of the products were sold to downstream wind power casting enterprises, further consolidating the Group's leading position in the wind power ductile iron casting market.

In 2021, the newly installed grid-connection capacity of wind power in China amounted to 47.57GW, of which offshore wind power rose to prominence with 16.90GW of newly installed capacity throughout the year, a year-on-year increase of 452%. With the continuous cost reduction of wind turbines, the wind power industry has entered a phase of rapid development. In 2021, the cumulative installed capacity of China's offshore wind power ranked first in the world. During the "14th Five-Year Plan" period, the increment in offshore wind power is worth looking forward to. According to the plan, Jiangsu, Guangxi, Guangdong, Zhejiang, Tianjin, and Shandong provinces and cities have increased their installed offshore wind power capacity to 43.28GW during the "14th Five-Year Plan" period, which is 5.25 times that of China's "13th Five-Year Plan" offshore wind power increment of 8.25GW. The rapid development of the wind power industry will bring continuous high growth opportunities for the Company's high-purity iron business.

Technological innovation creates value, and the iron ore business has a significant low-cost advantage

The Company has been deeply involved in the iron ore industry for nearly 30 years. In May 2021, the spot iron ore once rose by over RMB1,600/ton, providing a better market environment for the Company. With experienced management and a stable operation team, the Company has improved its management efficiency through the construction of "smart mines" and has been able to control the average cash operating cost per ton of iron ore concentrate at RMB374, maintaining its core competitiveness of low-cost operation. Benefiting from the overall increase in iron ore price and the additional mark-up from downstream customers for the high quality of iron ore concentrate, the average selling price of the Group's iron ore concentrate in 2021 was RMB1,200 per ton, an increase of 46.52% year on year. In turn, the iron ore business achieved a gross profit of RMB840 million, an increase of 37.62% year on year. The iron ore business continued to provide strong cash flow for the Group.

It is worth mentioning that, through continuous technological transformation and management upgrades, both Maogong Mine and Aoniu Mine of the Company were awarded the title of "National Green Mine"(国家绿色矿山) in China. The subsidiary companies of the Company's iron ore business have successively been awarded honorary titles, including "Specialized and Special New Enterprise"(专精特新企业), "Liaoning Provincial Enterprise Technology Center"(辽宁省省级企业技术中心), "National High-tech Enterprise"(国家级"高新技术企业"), "Liaoning Province Iron Ore Resources Comprehensive Utilization Technology Innovation Center"(辽宁省铁矿资源综合利用技术创新中心).

The Australian team's ability to create value has improved, and the Mt Bundy gold mine resource exceeded 3 million ounces

The Group has achieved remarkable results through extensive exploration of the Mt Bundy Gold Project. Total gold resources increased by 67% compared to the time of acquisition, reaching 3.006 million ounces; reserves increased significantly by 703% compared to the time of acquisition, reaching 1.405 million ounces. The project has become one of the undeveloped open-pit mines in Australia with the lowest strip ratio and the largest reserves. In addition, new drilling has indicated a high potential for localized high-grade ore bodies on the project's mineralized zones, and Hanking Australia is planning infill and extended drilling. The Northern Territory Government awarded the project a "Major Project" in 2021, demonstrating the scale of the project and the government's emphasis and strong support for the project.

On the other hand, development preparations for the  mines under the Mt Bundy Gold Project are also progressing simultaneously, with the environmental impact assessment for the Tom's Gully underground gold deposit already approved and the mine plan of operations now in the approval stage. The flagship Rustlers Roost and the satellite Quest 29 open-pit gold deposits are in the final stages of environmental impact assessment approval, and the definitive feasibility study for the Rustlers Roost deposit has completed a significant step up in mineral processing recovery from 85% at the pre-feasibility stage to 91.8% following continued beneficiation process optimization. This will result in an increase in gold production of approximately 4% and a reduction in operating costs per ounce of gold of approximately 4%, but an increase in project capital expenditure of less than 1%, significantly improving the overall economic value of the project. Mine development preparations are also proceeding simultaneously, including the construction of a new bridge, the commencement of drainage from the drainage system, and the maintenance of haul roads.

Looking ahead, in 2022, the Group plans to produce 800,000 tons of high-purity iron, leveraging China Hanking's advantages in resources, production capacity, technology, and market in the field of high-purity iron to expand the production and sales of high-purity iron, provide high-quality raw materials for the wind power industry and develop customers in other high-end manufacturing fields. Meanwhile, the Company will focus on other materials required by the new energy industry, including wind power, and make a layout around new energy materials. For the iron ore business, the Group will continue to implement exploration in the existing mines and surrounding areas, and promote the translation of the existing exploration results into resource reserves. For the gold mining business, the Group will continue to implement exploration to expand the resource reserves of existing mines and focus on the approval of project environmental impact assessment, project feasibility studies, and mine development and utilization plans.

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About China Hanking Holdings Limited (Stock Code: 3788. HK)

China Hanking Holdings Limited (3788. HK), incorporated in the Cayman Islands on 2 August 2010 and listed on the Hong Kong Stock Exchange on 30 September 2011, is a high-quality material supplier for the new energy industry and also engages in the development of gold mine projects in Australia. Relying on its own high-quality iron ore resources, it is the largest supplier of ductile casting iron for wind power in China and provides high-quality raw materials for high-end manufacturing industries in China, such as automobiles, marine engines, and nuclear equipment.