The speech given by Chairman Chen Jinghe
at the closing ceremony of 2013 Annual Work Conference of Zijin Mining Group
22 Feb 2013.

Fellow colleagues:

Here I would like to make a brief conclusion for 2013 annual work conference.

The three-day conference has been successfully completed. During the conference, President Luo Yingnan gave an annual work report that systematically concludes the main work done in 2012 and past three years, objectively summaries the major achievements, fully analyzed the existed problems during our operations and management, restate grand goals for new round undertaking and the company' third step development, and arrange the operational tasks and measures in 2013 and next three years. Meanwhile, another eight major leaders of the company made speeches respectively, Vice-president Lin Hongfu gave a presentation in marketization operation, which provide important guidance for company's further development; we also invited Vice-president Qiu Xiaohua and Professor Liu Zhenyu from Xiamen University to give lectures about macro-economic situation and the construction of ERP information system, which make us learn more about current macro-economic situation and the importance of information construction for an enterprise; the speeches given by the leaders and representative from regional companies were also very targeted and concise.

During the conference, we also conducted warm and fruitful discussions, which provide opinions and ideas for us to learn and consider.

1. Summary of history and experiences for the group's development in the past two decades

The year 2012 is the 20th year for Zijin since it was established and started exploration of Zijinshan Gold and Copper Mine in 1993. I would like to make a brief review here: in 1992, the total asset was 3.51 million Yuan (equivalent to USD 559,104), sales revenue was 1.69 million (equivalent to USD 269,198), total profit was 48,700 Yuan (equivalent to USD 7,757), net profit was 30,000 (equivalent to USD 4,778) Yuan, and gold output was 8kg. through 20 years' development, in 2012, the total asset of the group reached 65.2 billion Yuan(equivalent to USD 10.39 billion), increased by 18,524 times when compared with that in 1992; sales revenue reached 48.7 billion Yuan(equivalent to USD 7.76 billion), increased by 28771 times; total profit was 8.55 billion Yuan(equivalent to USD 1.36 billion), increased by 175,000 times; net profit was 5.25 billion(equivalent to USD 836.267 million), increased by 160,000 times; the gold output was 32 tonnes, increased by 3,984 times. In the past two decades, the accumulative sales revenue amounted to 188.4 billion Yuan(equivalent to USD 30.01 billion), total profit 44.7 billion Yuan(equivalent to USD 7.12 billion), net profit 28.4 billion Yuan(equivalent to USD 4.52 billion), increased by 67%, 83% and 82% respectively at an average annual rate. The total output of mine-produced gold was 255 tonnes, mine-produced copper 540,000 tonnes, and mined-produced zinc 240,000 tonnes, increased by 51%, 74% and 59% respectively at an average annual rate. The total amount of various taxes paid amounted to 8.4 billion Yuan, increased by 28% at an average annual rate. Received dividends reached almost 10 billion Yuan (equivalent to USD 1.59 billion).

We are really pride of the remarkable achievements that have been made in the past two decades. Currently, Zijin has grown into one of the best enterprises in metal and mining industry in China. The proven output of mine-produced gold ranks No.1 domestically, comprehensive indexes and competitiveness are among the best in national metal and mining industry. Those outstanding achievements are realized due to the following aspects:

Firstly, we have these generous shareholders, the local government as the large shareholder and others private shareholders have been constantly providing huge supports for Zijin's development. Without encouragement and support to reform in shareholding system and "go global" by large shareholders, the deep trust they placed on our management, and the implementation of separation of ownership and management rights, Zijin is impossible to obtain today's achievements. This is the most crucial reason for us to grow from a County-level-enterprise to a well-known international mining group, and it is also the decisive reason for Zijin's development. Here I would like to extend our sincere thanks to large and other private shareholders for their huge supports.

Secondly, we own a great work team full of entrepreneurial passion. Due to weak material base and extreme lack of talents, technologies and funds in the early stage, the entrepreneurial passion of the leader team is the only motivation to encourage us to work hard while studying. It is the most significant factor for company to complete accumulation of capital in a very short time in early stage, and also the most crucial factor for company's future development.

Thirdly, the innovation in system, management and technologies. In the past, Zijinshan Gold and Copper Mine was considered as a small mine with low grade ores. However, after the constant trials and innovation in technologies and management, it gradually grew into the largest gold mine in China. It's our innovation spirit that makes us succeed, stand out and become the best in national mining industry.

Fourthly, the strategy of "resources the priority". Zijin adheres to development strategy of "focus on mining with resources the priority", and considers the mineral resources as the most important asset for an enterprise. In 2001, according to this strategy, the company made a bold decision to acquire a batch of high-quality mines in great resources potential with comparable low price in China. Currently, those mining enterprises with long service life and steady development in every economic index have become core enterprises and powerful force for company's development. So we can say that this strategic decision we made is very correct and successful.

Fifthly, capital market. Zijin was restructured from a wholly state-owned enterprise to a limited liability company In 1999, and transformed into a limited company in 2000; In 2003, the company was successfully listed in HK exchange with issuing approximately 30% shares and financing about 1.3 billion Yuan; in 2008, the company was listed in SH exchange with issuing approximately 10% shares and financing almost 10 billion Yuan. The successful operations in capital market lay a solid foundation for the company's development, realize the substantial increase in the value of national asset and greatly improve company's reputation.

Sixthly, the advantaged resource base in Zijinshan. Zijinshan Gold and Copper Mine is the birth place and also the strong backup force of the company, it now still creates a majority of profits for Zijin. The large economic and social benefit created by Zijinshan makes us "go global" with full confident and constantly achieve the merger and acquisition of important projects at home and abroad.

Seventhly, great market opportunity. The increase in price of base metals such as gold and copper in China provided us good opportunities for us to compete in the market.

2. The significant changes in company's internal and external environment

Throughout 20 years' development, Zijin has laid a solid material foundation in human resources, funds, technologies and mineral resources. We own a batch of high-quality mines with low cost and high profit, which help us to resist market risk, survive, develop and make profit. Therefore, we should proceed with full confidence, unswervingly implement the development strategies of "new-round undertaking "and "go global", and make constant efforts to achieve the ambitious goal of doubling the main economic indexes in 2012 based on 2010.

Looking back the remarkable achievements and huge efforts we made, we must also be keenly aware that the future development environment we face has been changed dramatically.

First of all, huge changes have been made in macro economic situation. The rapid growth period of Chinese economy has left us behind, we are now experiencing economic growth at a slower pace, so as the same in mining industry; meanwhile, the lower security of mineral resources at home and the insoluble contradiction in supply and demand make the situation of 'supply exceeding demand' continue to worse. Secondly, significant changes have been made in social environment. The awareness of ecological civilization, safety and environmental protection has been gradually enhanced, network environment and social opinion are complex and volatile. Therefore, we must carry out stricter management during the new-round development. It is the internal requirement for the company's development, and also the basic duty and responsibility for us as mangers and leaders of an enterprise. In addition, changes have been made in company's internal environment. The degradation of enterprising spirit and sense of innovation, and the decline of the company's core competitiveness deserve our greater attention.

There is an important question we need to think: facing the changes in the company's internal and external environment, what we should do to create another brilliant achievement, realize the grand goal of "new-round undertaking" and the third-step development in 2020?

Firstly, we should be confident about our strong competitiveness and comprehensive strength. Currently, as the company having a solid material foundation, large shareholders are encouraging us to "go global", and the government of Fujian Province and the local governments are willing to provide supports for our development, hoping that we can achieve the large-scale mining development under conditions of safety and environmental protection. In addition, the entrepreneurial passion among our major leaders and work team is also the key element for company's success. Here, I would like to say, I am willing to fight with all of you to create the second brilliant achievement for Zijin.

Secondly, the real success of a company depends on its degree of internationalization. We owns a batch of overseas projects with considerable amount of resources such as Norton Gold Field, which can make great profit for the company in the next few years and provide a good platform for the company's exchanges in international talents, technologies and management experiences. When we manage and operate better in overseas projects than western people, it will to large extent enhance our confident and determination to develop and realize internationalization.

Therefore, we must unswervingly carry forward the grand goal of new-round undertaking, and at the same time, be aware of its difficulties. I believe that as long as the management team and all the staffs work hard together, we will definitely realize our goals.

3. Implement the important spirit of 2013 Annual Work Conference

Finally, I would like to stress about how to implement the important spirit of this conference:

Firstly, we must work hard to guarantee the growth. The net profit of the company this year showed the negative growth for the first time, but we should proceed with strong confident to strive to realize a faster growth in total profit base on that of last year after one year effort. Meanwhile, the smelting and processing enterprises must try every effort to turn from deficits to profit; the managers must eliminate those negative ideas, actively open up new markets, try to improve technologies, be confident to learn the successful experiences from other enterprises and work hard together to complete tasks and create benefits. In addition, enterprises with mines in operation must give top priority to guarantee growth and control cost; enterprises with mines newly put into operation must realize their planned capacity as soon as can to help create profit for the group; Board of directors of project company should further display their functions, especially in supervision of design and implementation of planned budgets, and make detail monthly-based plan and budget for very project; presidents of ownership company as the representative of shareholders should fully display the functions of board of directors.

Secondly, pay great attention to safety production. Practical and effective measures must be taken to fully strengthen the management and assessment in safety production. We must realize that safety is the top priority during operation, and regularly launch the activities of safety education. Meanwhile, use scientific and effective assessment mechanisms to do a good job in safety production and realize long term stability.

Thirdly, enhance the management in grass roots construction, the basic management and the training of basic skills in every unit, which include the construction of ERP information system and employee training of basic skills.ect, in order to improve the work efficiency.

Fourthly, firmly promote marketization operation. Marketization is one of the key points stressed in this conference. Under the market economy, enterprises must follow the market regulations, establish and fully utilize the market mechanism to inject stronger vitality to the company; meanwhile, use economic responsibility system as an important method of managing an enterprise to address the existing problems; in addition, the group should encourage subsidiary enterprises in the area of smelting, process, supervision, design, real estate and hotel management to operate marketization appropriately and delegate more powers to lower units, and encourage staffs to obtain more and even higher wages and bonus than major mangers through marketization operation. The value obtained from marketization should be shared between enterprises and staffs.

Fifthly, about construction management. Every year, we have projects worth approximately 10 billion Yuan (equivalent to USD 1.59 billion) in the group needed to be completed. Therefore, it's imperative to integrate the companies in constructions and design into a general contraction construction group. After integration, we need to get the qualification as soon as possible, and put Supervision Company and Real estate Company into this group as well; adjust the current management mode, reduce stress on construction management and further improve its level and efficiency. In addition, close attention must be paid to the talent training, and Group Company, relevant units and departments must give strong supports.

Sixthly, about supervisory activities. The group always pays great attentions to the work of supervision and auditing. In the future, we must continue to strengthen the construction of profession team in supervision and auditing and introduce more talents. Meanwhile the group will give full support for its development. For those people and units who offer or accept bribes, we must give serious punishment; for those suppliers and mangers who offer or accept bribes, we must firmly list them into "blacklist". In addition, we must comprehensive enhance the work of supervision through to a largest extent preventing and fighting against the illegal behavior.

In summary, this conference is very successful, I hope that we can work hard together to realize the grand goal of become one of top mining enterprise in international mining industry. Thank you


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