China Daye Announces 2013 Interim Results

HONG KONG, Aug. 30, 2013 /PRNewswire/ --

Results Highlights:

China Daye Non-Ferrous Metals Mining Limited

• Revenue was approximately RMB16,944 million, up 15.1% year-on-year.
• Gross profit was approximately RMB456 million, up 10.3% year-on-year.
• Gross profit margin stabilized at around 2.7%.
• Loss attributable to controlling equity holders was RMB2,066 million. Excluding the non-cash impairment of goodwill and mining rights, profit attributable to shareholders was RMB48.3 million.
• Basic loss per share was RMB11.92 cent.

("China Daye" or the "Company") (Stock Code: 00661.HK) announced its unaudited consolidated interim results of the Company and its subsidiaries (the "Group") for the six months ended 30 June 2013 (the "Period").

In the first half of 2013, the global economy remained uncertain while the previously rapid growth of China's economy slowed down. However, faced with such a grim operating environment, the Group still recorded growth in revenue thanks to its flexibility in response to the market conditions and a stable production capacity of mines. During the Period, the Group's revenue rose by 15.1% year-on-year to RMB16,944 million, which was mainly attributable to the increase in trading of metals. In face of market changes, the prices of major products of the Group such as gold, silver and copper dropped substantially as compared with the corresponding period of the previous year, which resulted in a profit plunge of the Group in the first half of the year. However, gross margin stabilized at 2.7% by reducing costs and increasing production capacity as well as efficiency. The Group's EBITDA for the Period amounted to RMB531.3 million, representing an increase of RMB81.2 million from RMB450.1 million for the same period of last year. Loss attributable to controlling equity holders was RMB2,066 million. The significant decrease of results was mainly attributable to the impairment of goodwill and mining rights for the Period amounting to RMB2,115 million. Without taking into account of these impairment losses, the Group recorded profit attributable to equity holders of RMB48.3 million, mainly due to the drop in prices of the Group's products and increases in finance costs.

Mr. Zhang Lin, Chairman of China Daye said, "The Group faced with unprecedented challenges in its operating environment for the first half of 2013, as the global economy was uncertain and the growth of China's GDP slowed down. According to the General Administration of Customs of the PRC, imported copper of China amounted to approximately 2,002,000 tonnes in the first half of 2013, representing a decrease of 20% year-on-year. Moreover, the prices of major products such as gold, silver and copper dropped substantially by 9%, 14% and 6% year-on-year. Furthermore, the prices of by-products such as selenium dioxide also decreased at varying rates since the beginning of the year. At this crucial moment, we shall increase production capacity and strive to enhance efficiency while reducing costs. We will be committed to achieving our annual targets despite the adverse environment."

Optimizing production processes to achieve annual targets

Under structural adjustment and industrial transformation, the Group carried out restructuring based on environmental protection regulations and in line with the increasing awareness of energy conservation and emission reduction. During the Period, by optimizing our production processes, the Group operated mines at full capacity and maintained stability of the metallurgical system. The Group produced a total of 183,100 tonnes of copper cathode, up by 50.10 % year-on-year; 235.6 tonnes of precious metals (including approximately 4,145 kg of gold, 231 tonnes of silver, 8 kg of platinum and 97 kg of palladium), up by approximately 32.06% year-on-year; 504,838 tonnes of chemical products (including 504,220 tonnes of sulfuric acid, 223 kg of ammonium perrhenate, 64 tonnes of selenium dioxide and 7 tonnes of tellurium), up by approximately 50.76% year-on-year and 120,770 tonnes of iron concentrate, up by approximately 1.5% year-on-year.

The issuance of convertible bonds reinforces the Group's financial position and drives the development and expansion of its overall operations

At the end of May, 2013, the Group successfully issued convertible bonds of RMB820 million which are settled in the US dollar with a term of five years, the net proceeds of which amounted to RMB806 million and will be used as the Group's working capital as well as for general purposes. The issuance of such convertible bonds marked a significant move of the Company to attract independent significant shareholders who shared similar vision with the Company and may introduce the best international practice to the business strategies and corporate governance of China Daye. In addition, it also created favorable opportunities for the Company to attract more quality institutional investors and expand and diversify its shareholder base. Moreover, it improved liquidity level and reduced financing cost of the Group.

An analysis of the Group's revenue by major product and service categories:

Business outlook

Looking ahead, the global economy remains uncertain while China's economy continues to undergo structural adjustments. The Group will consolidate its "market-oriented and efficiency-focused" operation principle so as to enhance marketing and trading operation. Meanwhile, the Group will strive to reduce costs and expenses while optimizing the organization of production units. Focusing on major cost items such as energy consumption and consumption of materials, it will improve cost monitoring means and measures. By choosing the most economical production process, the Group will refine and optimize cost and expense control and formulate stringent management measures. The Group will formulate and improve the Administrative Measures on Risk Control, thus the overall process of risk identification, analysis, evaluation, accountability and appraisal shall be streamlined.

Mr. Zhang Lin concluded, "It will lay a foundation for ensuring the accelerated growth of the Group when we maintain an overall stability and harmonious organization. The Group will take good advantage of the development opportunities brought by reforms. By broadening the horizon and capacity of key personnel, we will implement centralized decision making and planning as well as expedited reform so as to realize synergistic growth. We believe that by capitalizing on the efforts of every employee and the support from society, the Group will achieve sustainable and rapid development."

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About the Parent Company

Daye Nonferrous Metals Corporation Holdings Limited ("Daye Nonferrous Metals") was founded by the State-owned Assets Supervision and Administration Commission of Hubei Provincial People's Government and China Nonferrous Metal Mining (Group) Co., Ltd. After several years of development, it evolved into a leading state-owned integrated copper enterprise with a value chain encompassing exploration, mining, smelting, chemicals, rolling processing, waste heat power generation, waste recycling, research and design, geological survey, shaft engineering, construction and installation, machinery repair and manufacturing and transportation. In 2010, it was selected as a major enterprise promoted by the government in the demonstration zone for the materials industry and newly industrialized enterprises in the central China. Daye Nonferrous Metals has a global business network that is spread around the world. It currently has over 20 wholly owned subsidiaries, associates and holding companies in southeastern Hubei, the Yangtze River Delta, the Pearl River Delta, Hunan, Xinjiang, Hong Kong, Kyrgyzstan and Mongolia.

About China Daye

China Daye and its subsidiaries are mainly engaged in exploration, mining and trading of non-ferrous metals.

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