China Merchants Securities Co., Ltd.
Audit Opinion on Hunan Gold Corporation's Dilution of Immediate Returns and Company Measures for the Restructuring
Hunan Gold Corporation Co., Ltd. (hereinafter referred to as the "Company") plans to acquire 100% equity of Hunan Gold Tianyue Mining Co., Ltd. (hereinafter referred to as "Golden Tianyue") held by Hunan Gold Group Co., Ltd. (hereinafter referred to as "Hunan Gold Group") and Hunan Tianyue Investment Group Co., Ltd., and 100% equity of Hunan Zhongnan Gold Smelting Co., Ltd. (hereinafter referred to as "Zhongnan Smelting") held by Hunan Gold Group, through a share issuance. The Company also plans to raise supporting funds from no more than 35 specific investors through a share issuance (hereinafter referred to as "this Restructuring" or "this Transaction"). China Merchants Securities Co., Ltd. (hereinafter referred to as "this Independent Financial Advisor"), as the independent financial advisor for this Transaction, hereby audits the dilution of immediate returns and the measures taken by the Company for this Transaction as follows:
I. Impact of this Transaction on Earnings Per Share
According to the Company's financial report and the "Review Report" issued by Tianzhi International Certified Public Accountants (Special General Partnership), the comparison of the Company's profitability and shareholder returns before and after this Transaction is as follows:
| Project | 2026 Jan-Mar / 2026 Mar 31 | 2025 Jan-Dec / 2025 Dec 31 |
|---|---|---|
| Before Transaction | After Transaction (Pro Forma) | |
| Net Profit Attributable to Parent Company Owners (RMB 10,000) | 59,554.64 | 69,868.98 |
| Basic Earnings Per Share (RMB/Share) | 0.38 | 0.38 |
Note: The financial data for Hunan Gold Corporation as of March 31, 2026 / January-March 2026 is unaudited.
Upon completion of this Transaction, the target companies Golden Tianyue and Zhongnan Smelting will be included in the consolidated financial statements of the Company, and the net profit attributable to the parent company owners will increase. The Company's basic earnings per share in 2025 will be diluted. This is mainly because most of the mining rights held by Golden Tianyue are still in a state of not being substantially developed, and its performance has not been fully released. Therefore, the Company faces the risk of diluted immediate returns in the short term. In the long run, as the performance of the target companies is released and their profitability continues to improve, and as the synergistic effects between the Company and the target companies in resource development and utilization are fully realized, the Company's industry chain control, profit margin, and strategic position will be enhanced after this Transaction, thereby strengthening its sustainable operating capacity.
II. Measures Taken by the Company to Compensate for Diluted Immediate Returns
To address the expected dilution of the Company's earnings per share due to this Transaction, the Company will strengthen post-acquisition integration, leverage synergistic effects, improve corporate governance, and ensure shareholder returns to mitigate the impact of the diluted immediate returns. The specific measures are as follows:
(I) Accelerate the Integration and Synergy of Target Assets to Enhance Overall Profitability