On the evening of March 30, Shandong Gold disclosed its 2020 annual report. Despite the impact of the pandemic on production and operations, Shandong Gold still delivered outstanding annual performance, consolidating its leading position in the industry. Data shows that Shandong Gold achieved operating revenue of 63.664 billion yuan in 2020, a year-on-year increase of 1.65%; the net profit for the year reached 2.257 billion yuan, a year-on-year increase of 75.05%.

2020 Business Review

In 2020, Shandong Gold focused on global business layout, coordinated pandemic prevention and control with social and economic development, and achieved a counter-trend rise in operating performance, with new breakthroughs in various work, creating a new situation of high-quality development, successfully concluding the 13th Five-Year Plan.2020PublicThe total assets of the company amounted to 63.859 billion yuan, an increase of 9.81%;The total liabilities amounted to 32.207 billion yuan, a decrease of 0.40%;The asset-liability ratio was 50.43%, a decrease of 5.17.

In 2020, the company achieved operating revenue of 63.664 billion yuan, a year-on-year increase of 1.65%; achieved a total profit of 3.392 billion yuan, a year-on-year increase of 60.18%; the net profit attributable to shareholders of the listed company was 2.257 billion yuan, with an increase of 75.05%.

Affected by the COVID-19 pandemic, Shandong Gold's gold production in 2020 decreased to 37.80 tons (1,215.2 thousand ounces). The processing volume of ore (heap leaching) reached 29.45 million tons, an increase of 730,000 tons year-on-year, an increase of 2.54%. Among them: the domestic ore processing volume reached 17.43 million tons, an increase of 2.3 million tons year-on-year, an increase of 15.19%; the heap leaching processing volume of the Veladero gold mine in Argentina reached 12.01 million tons, a decrease of 1.57 million tons year-on-year, a decrease of 11.55%. The grade of raw ore was 1.48g/t, a decrease of 0.05g/t year-on-year, a decrease of 3.05%. The decrease in the grade of raw ore was mainly due to the selection of domestic enterprises, which lowered the overall grade of the company. The gold recovery rate of domestic gold mines was 91.45%, an increase of 0.38 percentage points year-on-year, an increase of 0.42%; the gold recovery rate of the Veladero gold mine in Argentina was 73.26%, a decrease of 4.45 percentage points year-on-year, a decrease of 5.73%.

The table below shows the ore mining volume, ore processing volume, and gold production of Shandong Gold's various mines from 2019 to 2020:

2021 Business Plan and Measures

Due to the impact of safety accidents that occurred at the Huashan gold mine in Qixia City and the Caojiaba gold mine in Zhaoyuan (both are local enterprises and not owned by Shandong Gold) at the beginning of 2021, Shandong Gold's mines in Shandong Province began safety inspections in February 2021 according to the requirements of local authorities. As of March 29, 2021, Shandong Gold's subsidiaries, Shandong Gold Mining (Laixi) Co., Ltd. and Shandong Jinzhao Mining Group Co., Ltd., have resumed normal production; the main mining areas of the Sanshandao gold mine, the Dongfeng mining area of the Linglong gold mine, and the Xincheng gold mine and Jiaojia gold mine have passed the resumption inspection and are gradually resuming production; four enterprises including Yinan gold mine, Penglai gold mine, Guailaizhuang gold mine, and Xinhui gold mine, as well as other mining areas of Linglong gold mine, are coordinating to promote resumption of work and production, with specific resumption dates yet to be determined.

The Sanshandao gold mine, Jiaojia gold mine, Xincheng gold mine, and Linglong gold mine are the main mines of Shandong Gold in the country, with a combined production in 2020 accounting for about 61% of Shandong Gold's gold production. The four enterprises that have not yet passed the resumption inspection, including Yinan gold mine, Penglai gold mine, Guailaizhuang gold mine, and Xinhui gold mine, accounted for about 9% of Shandong Gold's gold production in 2020. The safety inspections due to the aforementioned production stoppages have significantly impacted the company's production capacity. Currently, Shandong Gold has not yet determined the gold production plan for 2021 and will follow up and determine the production plan in a timely manner based on the resumption of mining.

2021 is the first year of the 14th Five-Year Plan. Shandong Gold will take the following seven measures to lay a solid foundation for the realization of the 14th Five-Year Strategy: First, focus on production organization and actively respond to new situations; second, focus on innovation-driven development and upgrade development momentum; third, focus on tapping potential and addressing shortcomings to improve quality and efficiency; fourth, focus on supply-side structural reform to enhance development quality; fifth, focus on state-owned enterprise reform to stimulate the vitality of the main body; sixth, focus on open cooperation to upgrade the construction of world-class enterprises; seventh, solidify safety foundations, emphasize environmental protection construction, and strengthen the corporate brand image.

14th Five-Year Strategy Goals

In 2021, Shandong Gold proposed the strategic goal of becoming globally leading and entering the top five in the world during the 14th Five-Year Plan. To this end, Shandong Gold will always adhere to the main business positioning of "mining as the foundation, gold as the root," further highlighting, focusing on, and optimizing its main business. Focusing on the gold main business, accumulating resources to empower enhancement, cultivating global leading advantages, and striving to enter the top five in the world as soon as possible.

Phase One (2021-2023)

Complete 1-2 overseas mineral acquisitions, increasing annual production by about 13 tons; steadily promote the construction of a world-class gold production base in Laizhou; increase resource volume by about 300 tons through self-exploration activities, and increase resource volume by about 350 tons through resource mergers and acquisitions.

Phase Two (2024-2025)

Complete 1-2 overseas mineral acquisitions, increasing annual production by about 10 tons; the new production at the Laizhou base reaches 12-13 tons; increase resource volume by 400 tons through joint exploration and resource mergers and acquisitions; strive for 1-2 individual mines to enter the global top 30.

At the same time, Shandong Gold also stated that it will strengthen the financial business of the industrial chain, adhere to both industrial synergy and profit output, improve the risk control system, enhance risk management capabilities, and expand external business related to gold and non-ferrous metal sectors, including industrial investment, asset management, exploration funds, etc.; moderately develop derivative trading and gold leasing businesses with good synergy; steadily develop internal financial services such as metal sales and fund settlement; prudently develop supply chain finance and leasing businesses with low synergy; and adjust metal trading, non-standard trading, and gold brokerage businesses in a timely manner.

Source: Shandong Gold 2020 Annual Report