Chongyi Zhangyuan Tungsten Co., Ltd.

(I) Main business and products of Our company Our company has established an integrated production system spanning upstream tungsten prospecting, mining, and mineral processing, midstream smelting and powder production, as well as downstream deep processing, making it one of the domestic manufacturers with complete tungsten industry chain . 1. Upstream Business and Products Our company's upstream operations focus on tungsten ore exploration, mining, and mineral processing. It holds 10 mines’ areas with exploration rights (including Dongfeng, Longtanmian, Bikeng, Shizuinao, Xikengkou, Nikeng, Daqiao, Dapaishang, Gaosha, and Tanjiaoli) and 6 mines with mining rights (Taoxikeng Tungsten Mine, Xin'anzi Tungsten-Tin Mine, Dayu Shilei Tungsten Mine, Tianjingwo Tungsten Mine, Huangzhulong Tungsten Mine, and Changliukeng Copper Mine). The primary upstream product is tungsten concentrate, which serves as raw material for ammonium paratungstate (APT) production. By-products such as tin concentrate and copper concentrate are sold externally. 2. Midstream Business and Products The midstream operations specialize in producing tungsten powder products across a full spectrum of specifications, including: Ultra-fine, fine, medium, coarse, ultra-coarse and Ultra-pure tungsten powder. These products are tailored to meet diverse industrial demands. 3. Downstream Business and Products Cemented carbide, a downstream tungsten product, is developed through three subsidiaries: the parent company, Ganzhou Achteck, and Zhangyuan Thermal Spraying, forming a comprehensive product and service ecosystem. (1) Parent Company's Downstream Operations Produces a wide range of cemented carbide products, including: Button bits, traditional cutting inserts, special parts, Cold heading dies, brazing plates, and thermal spray powders. (2) Ganzhou Achteck 's Business Specializes in machining tools, covering all major categories of mechanical cutting tools. • Positioned as a "THE EXPERT OF DIFFICULT MACHINING" • Provides tooling system solutions for industries such as automotive, construction machinery, rail transit, aerospace, medical, and new energy. (3) Zhangyuan Thermal Spraying's Business Offers surface coating services for critical industrial components, including: • Battery electrode calendaring rollers and drive rollers (new energy sector) • Mud motor rotors, valve seats, valve plates, and valve balls (oilfield and petrochemical machinery) (II) Company Business Model 1. Production Model (1) Upstream Operations Our company's mining operations adhere to the "Notice on Issuing the 2024 Annual Total Control Targets for Tungsten Mining" (Ganzi Natural Resources [2024] No. 3) issued by the Ganzhou Municipal Bureau of Natural Resources. Our company’s mines primarily extract quartz-vein-type wolframite, which contains associated metal elements such as tin, copper, iron, and zinc. Through processes including crushing, intelligent beneficiation, gravity separation, and refining, Our company produces tungsten concentrate and associated concentrates (e.g., tin, copper). (2) Midstream Operations Our company actively promotes digital transformation, establishing intelligent, efficient, high-quality, and safe smart manufacturing facilities. By optimizing production processes and enhancing technical capabilities, it ensures consistent quality of specialized powder products to meet customer demands. (3) Downstream Operations Ganzhou Achteck’s cemented carbide tools (e.g., turning tools, milling cutters, drills, grooving tools) cater to industrial processing needs in sectors such as automotive parts, equipment manufacturing, construction machinery, aerospace, energy/power, and electronics. These tools serve as critical components for CNC machine tools. 2. Procurement Model Our company uses 100% of its self-produced tungsten concentrate internally, with a self-sufficiency rate of approximately 20%. To meet mid- and downstream production demands, it procures additional tungsten concentrate or ammonium paratungstate (APT) externally. To standardize procurement and ensure supply chain stability, Our company has established the "Procurement Business Management System" and "Supplier Management Regulations", alongside a rigorous supplier screening and evaluation framework. By fostering long-term partnerships with high-quality suppliers, it secures stable supplies of raw and auxiliary materials. Our company regularly publishes long-term contract procurement pricing for key tungsten materials on our WeChat Official Account. 3. Sales Model Our company adopts differentiated sales strategies based on product categories: • Powder Products: Primarily sold via direct sales, leveraging consistent quality and rapid delivery to build long-term client relationships. • Deep-Processed Products: Utilize a hybrid of direct sales and distribution channels. Key industry clients receive customized system solutions through direct sales, while smaller clients are served via an extensive distributor network. (III) Key Performance Drivers 1. Upstream Drivers Our company continues to advance resource exploration and consolidation in its mining operations, focusing on deep-level development and supporting infrastructure construction to gradually achieve reserve expansion and production scaling. Concurrently, it accelerates safe and efficient mechanized mining, improves mining efficiency and beneficiation recovery rates, and increases the output of tungsten, tin, copper, and other concentrates, thereby enhancing the mines’ contribution to overall performance. 2. Midstream Drivers Our company implements green production process management, integrating automated equipment and advanced production information management systems to boost operational efficiency and per capita output. By optimizing production processes and enforcing stringent quality controls, it elevates the quality of powder products while reducing energy consumption and production costs, driving greater economic benefits for the midstream segment. 3. Downstream Drivers Downstream performance is primarily driven by Ganzhou Achteck, a key subsidiary. Adhering to a brand development strategy, Ganzhou Achteck continuously invests in R&D for new technologies and processes, enhancing product performance and quality. By launching a series of high-end cutting tools and adopting a market-driven approach to precisely target customer needs, it has significantly strengthened its brand influence in critical industries. These efforts have fueled market expansion and generated robust growth momentum for the downstream segment. (IV) Mineral Exploration Status During the Reporting Period 1. The "Verification Report on Tungsten Resource Reserves for the Taoxikeng Mining Area (Expanded Boundary) in Chongyi County, Jiangxi Province (as of June 30, 2024)" for Our company’s Taoxikeng Tungsten Mine and Dongfeng Mine has been reviewed and approved by the Ministry of Natural Resources. According to the certified data, the retained resource reserves within the designated mining area are as follows: • Tungsten (WO₃): 33,000 metric tons • Tin: 1,200 metric tons • Copper: 2,500 metric tons. 2. As of the end of the reporting period, Our company’s total retained resource reserves are: • Tungsten (WO₃): 79,400 metric tons • Tin: 17,600 metric tons • Copper: 11,300 metric tons.