Announcement on Disposal of Part of Assets by Wholly-owned Subsidiary and Related Party Transaction
Company Code: 001203 Bond Code: 127070 Company Short Name: Dazhong Mining Bond Short Name: Dazhong Convertible Bond Announcement No.: 2026-067
Dazhong Mining Co., Ltd.
The company and the board of directors guarantee that the information disclosed is true, accurate, and complete, and contains no false records, misleading statements, or major omissions.
I. Overview of Related Party Transaction
- Dongwufenzi Beneficiation Plant Faces Long-term Insufficient Capacity and High Beneficiation Costs
Dazhong Mining Co., Ltd. (hereinafter referred to as "the Company") Dongwufenzi iron ore beneficiation plant was put into operation in 2007. Its designed raw ore processing capacity is 1.5 million tons/year, and it has been in continuous operation for 19 years. In recent years, the supply of raw ore from Dongwufenzi iron ore has gradually decreased, and its beneficiation plant has been operating in a saturated state for a long time, resulting in insufficient capacity utilization and high operating costs.
From 2023 to 2025, the beneficiation volume and beneficiation costs of the Dongwufenzi iron ore beneficiation plant are as follows:
| Year | Beneficiation Volume (10,000 tons) | Capacity Utilization Rate (%) | Raw Ore Beneficiation Cost (RMB/ton) |
|---|---|---|---|
| 2025 | 49.65 | 33.10 | 73.67 |
| 2024 | 98.73 | 65.82 | 60.17 |
| 2023 | 118.35 | 78.90 | 61.75 |
Note: The raw ore beneficiation cost mainly includes labor and manufacturing costs; the above data has been reviewed by Zhonghui Certified Public Accountants.
In 2023 and 2024, the beneficiation cost per ton of raw ore at the Dongwufenzi iron ore beneficiation plant was RMB 61.75 and RMB 60.17, respectively. In 2025, due to the significant decrease in the beneficiation volume of Dongwufenzi iron ore, the capacity utilization rate will only be 33.10%, and the beneficiation cost per ton of raw ore will increase to RMB 73.67.
- Centralized Beneficiation of Dongwufenzi Iron Ore Raw Ore at Shujigou Beneficiation Plant Has Lower Costs
After technical upgrades, the Shujigou iron ore beneficiation plant has a capacity of 5.3 million tons/year, which is much larger than the raw ore output of Shujigou iron ore. The beneficiation process at Shujigou Beneficiation Plant after the technical upgrade is more advanced and has lower operating costs. In 2025, the beneficiation cost per ton of raw ore at Shujigou Beneficiation Plant will be RMB 47.91 (this data has been reviewed by Zhonghui Certified Public Accountants). Dongwufenzi iron ore and Shujigou Beneficiation Plant are about 16 kilometers apart, and the raw ore transportation cost is about RMB 5.96/ton. Centralized beneficiation of Dongwufenzi iron ore raw ore at Shujigou Beneficiation Plant can save nearly RMB 20 per ton of raw ore in operating costs. To integrate management resources and reduce overall operating costs, the company has decided to transport the raw ore from Dongwufenzi iron ore to Shujigou Beneficiation Plant for centralized processing in the second half of 2025.
- Selling the Dongwufenzi Beneficiation Plant Helps Revitalize Idle Assets
After the raw ore from Dongwufenzi iron ore is transported to Shujigou Beneficiation Plant for centralized processing, the Dongwufenzi iron ore beneficiation plant will become idle. To effectively revitalize idle assets, the Company and its wholly-owned subsidiary Inner Mongolia Dazhong Mining Co., Ltd. (hereinafter referred to as "Dazhong Limited") plan to sell the Dongwufenzi iron ore beneficiation plant and related surface assets to Inner Mongolia Taixinxiang Mining Co., Ltd. (hereinafter referred to as "Taixinxiang Mining"). The assets include the land occupied by the beneficiation plant, buildings, production machinery, and related electronic equipment. This asset transfer does not include the mining rights of Dongwufenzi iron ore.