Lingbao Gold : Interim Report 2020

Lingbao Gold Group Company Ltd.

靈 寶 黃 金 集 團 股 份 有 限 公 司

(A joint stock limited company incorporated in the People's Republic of China with limited liability)

2 0 2 0

I n t e r i m R e p o r t

CONTENTS

2 Corporate Information

1. Management Discussion and Analysis

1. Other Information

1. Review Report
2. Consolidated Statement of Profit or Loss

1. Consolidated Statement of Profit or Loss and Other Comprehensive Income
2. Consolidated Statement of Financial Position

1. Consolidated Statement of Changes in Equity
2. Condensed Consolidated Cash Flow Statement
3. Notes to the Unaudited Interim Financial Report

CORPORATE INFORMATION

DIRECTORS

Executive Directors

Mr. Chen Jianzheng (Chairman)

Mr. Xing Jiangze

Ms. Zhou Xing

Mr. Zeng Xiangxin

Non-executive Directors

Mr. Shi Yuchen

Mr. Zhang Feihu

Mr. Wang Leo

(re-designated from executive Director on 6 July 2020)

Independent Non-executive Directors

Mr. Xu Rong (appointed on 6 July 2020) Mr. Han Qinchun

Mr. Wang Jiheng Mr. Wang Guanghua

Mr. Yang Dongsheng (resigned on 6 July 2020)

SUPERVISORS

Mr. Dai Weitao (Chairman)

(appointed on 8 January 2020)

Mr. Yang Shilei

Mr. Guo Xurang

Mr. Zhao Bingbing

Mr. Jian Zhanxun (Chairman)

(resigned on 8 January 2020)

AUDIT COMMITTEE

Mr. Xu Rong (Chairman) (appointed on 6 July 2020)

Mr. Shi Yuchen

Mr. Han Qinchun

Mr. Wang Jiheng

Mr. Wang Guanghua

Mr. Yang Dongsheng (Chairman)

(resigned on 6 July 2020)

NOMINATION COMMITTEE

Mr. Wang Guanghua (Chairman) Mr. Xing Jiangze

Mr. Zeng Xiangxin (appointed on 6 July 2020) Mr. Han Qinchun

Mr. Wang Jiheng

Mr. Yang Dongsheng (resigned on 6 July 2020)

STRATEGIC COMMITTEE

Mr. Chen Jianzheng (Chairman)

Ms. Zhou Xing

Mr. Wang Leo

Mr. Han Qinchun

Mr. Zeng Xiangxin

Mr. Yang Dongsheng (resigned on 6 July 2020)

REMUNERATION AND REVIEW COMMITTEE

Mr. Wang Jiheng (Chairman)

Mr. Zeng Xiangxin (appointed on 6 July 2020) Mr. Han Qinchun

Mr. Wang Guanghua

Mr. Yang Dongsheng (resigned on 6 July 2020)

COMPANY SECRETARY

Mr. Chui Man Lung Everett

AUTHORISED REPRESENTATIVES

Mr. Chen Jianzheng

Mr. Chui Man Lung Everett

INTERNATIONAL AUDITOR

KPMG

Public Interest Entity Auditor registered

in accordance with the Financial Reporting Council Ordinance

PRC AUDITOR

KPMG Huazhen LLP

Public Interest Entity Auditor recognised

in accordance with the Financial Reporting

Council Ordinance

LEGAL ADVISER

Hong Kong law

Baker Mckenzie

PRC law

King & Wood Mallsons

PRINCIPAL BANKERS

Bank of China, Lingbao City Branch

Agricultural Bank of China, Lingbao City Branch

China Construction Bank, Lingbao City Branch

Industrial and Commercial Bank of China,

Lingbao City Branch

Industrial Bank of China, Zhengzhou Branch

Bank of Communications of China,

Zhengzhou Branch

China Development Bank

Zhongyuan Bank, Sanmenxia Branch

2 LINGBAO GOLD GROUP COMPANY LTD. Interim Report 2020

CORPORATE INFORMATION

SHARE REGISTRAR AND TRANSFER	INVESTOR RELATIONS CONTACT
OFFICE FOR H SHARES	Mr. Xing Jiangze (PRC Office)
Computershare Hong Kong Investor Services Limited	Hangu Road and
17M Floor, Hopewell Centre		Jingshan Road Intersection
183 Queen's Road East, Wanchai	Lingbao City
Hong Kong			Henan Province
REGISTERED OFFICE OF THE	The People's Republic of China
(Postcode: 472500)
COMPANY			Tel: [phone]
Hangu Road and			Email: [e-mail]
Jingshan Road Intersection
Lingbao City			Mr. Chui Man Lung Everett (Hong Kong Office)
Henan Province			Room 1104, 11/F.,
The PRC			Leighton Centre
PRINCIPAL PLACE OF BUSINESS IN	77 Leighton Road
Causeway Bay, Hong Kong
HONG KONG			Email: [e-mail]
Room 1104, 11/F.,
Leighton Centre
77 Leighton Road
Causeway Bay, Hong Kong
STOCK INFORMATION
Stock Code	:	3330
Listing Date	:	12 January 2006
Issued Shares	:	297,274,000 shares (H Shares)
		566,975,091 shares (Domestic shares)
Nominal Value	:	RMB0.20 per share
Stock Name	:	Lingbao Gold
Website	:	www.lbgold.com
Investors' Website	:	www.irasia.com/listco/hk/lingbao

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MANAGEMENT DISCUSSION AND ANALYSIS

MANAGEMENT DISCUSSION AND ANALYSIS

REVIEW OF BUSINESS AND PROSPECT

In the six months ended 30 June 2020 (the "Current Period"), Lingbao Gold Group Company Ltd. ("Lingbao Gold" or the "Company") and its subsidiaries (together with the Company, the "Group") produced approximately 6,843 kg (equivalent to approximately 220,007 ounces) of gold bullion, representing a decrease of approximately 1,322 kg (equivalent to approximately 42,503 ounces) as compared with the corresponding period of the previous year. The main reason for the decrease in production volume of gold bullion was that, in the smelting segment (the gross profit margin of which is relatively lower), the Group reduced the production of gold bullion processed from compound gold purchased from external suppliers. The Group's revenue for the Current Period was approximately RMB2,564,879,000, representing a period- on-period increase of approximately 0.2%. During the Current Period, the net profit of the Group was approximately RMB19,962,000 (six months ended 30 June 2019: net loss of the Group of RMB91,343,000). The basic earnings per share of the Company for the Current Period was RMB0.03 (six months ended 30 June 2019: basic loss per share of the Group of RMB0.10). The main reason for the Group's success in turning losses into profits was attributable to the fact that the Group overcame the impact of the COVID-19 pandemic (the "Pandemic") and strengthened internal management, leading to an increase in the output of gold bullion from gold concentrates in the smelting segment and an increase in the output of gold concentrates in the mining segment as compared with the corresponding period of the previous year, as well as the significant increase in the average selling price of gold bullion during the Current Period. In addition, the Group optimized relevant business processes, introduced relevant supporting reform measures and implemented cost-reduction and efficiency-increasing measures, resulting in a certain degree of reduction in production costs and financial expenses.

The Group's mineral resources are mainly scattered in the regions of Henan, Xinjiang, Inner Mongolia, Jiangxi and Gansu of the People's Republic of China (the "PRC") and Kyrgyz Republic ("KR") with 32 mining and exploration rights as at 30 June 2020, covering 291.6 square kilometers. The total gold reserves and resources as at 30 June 2020 were approximately 133.05 tonnes (4,277,650 ounces).

1. Mining Segment

Revenue and production

Our mining business mainly comprises the sales of gold concentrates and compound gold. Most of the gold concentrates and compound gold were sold to the Group's smelting plant as intra-group sales.

The following table sets forth the analysis on the production and sales volume of the mining segment by product category:

			For the six months ended 30 June
		2020	2019
		Approximate		Approximate
		production	Approximate	production	Approximate
	Unit	volume	sales volume	volume	sales volume
Gold concentrates
(contained gold)	kg	582	493	335	298
Compound gold	kg	546	532	763	656
Total	kg	1,128	1,025	1,098	954
Total	ounce	36,265	32,954	35,301	30,672

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MANAGEMENT DISCUSSION AND ANALYSIS

The Group's total revenue from the mining segment for the Current Period was approximately RMB352,333,000, representing an increase of approximately 28.7% from approximately RMB273,862,000 for the corresponding period in 2019, among which, revenue from Mining - PRC was approximately RMB300,713,000 (six months ended 30 June 2019: RMB261,548,000), and revenue from Mining - KR was approximately RMB51,620,000 (six months ended 30 June 2019: RMB12,314,000). During the Current Period, the revenue in Henan, Xinjiang, Inner Mongolia and KR represented approximately 26.9%, 47.4%, 11.0% and 14.7% of the total revenue from the mining segment respectively. The production of compound gold in the mining segment decreased by approximately 217 kg to approximately 546 kg, while the production of gold concentrates increased by approximately 247 kg to approximately 582 kg.

Segment results

The Group's total profit of the mining segment for the Current Period was approximately RMB62,888,000, representing an increase of approximately 18.3% as compared with the total profit of approximately RMB53,181,000 for the corresponding period in 2019, among which, the profit from Mining - PRC was approximately RMB98,580,000 (six months ended 30 June 2019: RMB66,544,000), and the loss from Mining - KR was approximately RMB35,692,000 (six months ended 30 June 2019: a loss of approximately RMB13,363,000). The segment result to segment revenue ratio of the Group's mining segment for the Current Period was approximately 17.8%, compared with approximately 19.4% in the corresponding period in 2019.

Despite the restrictions of safety and environmental protection measures, a subsidiary and a branch in Mining - PRC were shut down in the Current Period, this branch has gradually resumed production in April 2020. Moreover, as the global gold price rose and the subsidiaries within the PRC improved their operating performance, the profit of the Mining - PRC segment increased by approximately 48.1% as compared with that in the corresponding period in 2019. A subsidiary in Mining - KR was shut down from March to May 2020 due to the impact of the Pandemic, resulting in an increase of approximately 167.1% in losses as compared with the corresponding period in 2019.

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MANAGEMENT DISCUSSION AND ANALYSIS

2. Smelting Segment

The Group's existing smelting plant is situated in Henan Province, and is capable of processing gold, silver, copper and sulphuric acid. Its main products include gold bullion, silver, copper products and sulphuric acid. The following table sets forth an analysis on the production and sales volume of the smelting segment by product category:

			For the six months ended 30 June
		2020	2019
		Approximate		Approximate
		production	Approximate	production	Approximate
	Unit	volume	sales volume	volume	sales volume
Gold bullion	kg	4,852	4,556	4,201	4,031
(processed from gold
concentrates)	ounce	155,992	146,475	135,065	129,599
Gold bullion	kg	1,991	1,991	3,964	3,769
(processed from compound
gold)	ounce	64,010	64,010	127,445	121,176
Silver	kg	12,542	11,399	11,828	11,886
	ounce	403,225	366,478	380,278	382,143
Electrolytic coppers	tonne	2,159	1,110	4,509	3,660
Sulphuric acid	tonne	47,328	42,306	38,282	39,782

Sales and production

The Group's total revenue in the smelting segment for the Current Period was approximately RMB2,536,944,000, representing an increase of approximately 3.5% from approximately RMB2,450,063,000 for the same period of 2019. During the Current Period, the increase in total revenue of the smelting segment was mainly attributable to the increase in market prices of gold products.

In view of the low profit generated from the business of processing gold bullion from compound gold purchased externally, in the Current Period, the Group's smelting segment reduced its production of gold bullion processed from compound gold purchased from the external suppliers, which resulted in a decrease of the production of gold bullion for 1,322 kg. The smelting segment strengthened its internal management and control of procurement, and thus the production of gold bullion processed from gold concentrates increased by approximately 15.5% as compared with that in the corresponding period in 2019.

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MANAGEMENT DISCUSSION AND ANALYSIS

Segment results

The Group's total profit of the smelting segment for the Current Period was approximately RMB67,271,000, representing an increase of approximately 145.5% from the profit of approximately RMB27,403,000 for the corresponding period in 2019. The segment results to segment revenue ratio of the Group's smelting business was approximately 2.7% for the Current Period, compared with approximately 1.1% for the corresponding period in 2019.

The increase in profit of the smelting segment was mainly due to the strict implementation of the cost-decreasing and efficiency-increasing regime in the Current Period and the effective control of production costs. It also benefited from the significant increase in the average selling price of gold bullion.

CONSOLIDATED OPERATING RESULTS

Revenue

The following table sets forth the analysis on the Group's sales by product category:

				For the six months ended 30 June
			2020				2019
Product name	Amount	Sales volume	Unit price	Amount	Sales volume	Unit price
				(RMB per kg/					(RMB per kg/
		(RMB'000)		tonne)	(RMB'000)			tonne)
Gold bullion	2,418,318	6,547 kg	369,378	2,255,743		7,800	kg	289,198
Silver	39,353	11,399 kg	3,452	36,503		11,886	kg	3,071
Electrolytic coppers	46,249	1,110 tonnes	41,666	154,658		3,660 tonnes	42,256
Sulphuric acid	39	42,306 tonnes	0.9	3,665		39,782 tonnes	92
Gold concentrates	-	-	-	4,050		16	kg	253,125
Others		61,299			106,491
Revenue before tax		2,565,258			2,561,110
Less: Sales taxes and levies	(379)			(542)
		2,564,879			2,560,568

The Group's revenue for the Current Period was approximately RMB2,564,879,000, representing an increase of approximately 0.2% as compared with the corresponding period in 2019. Although there was an increase in the average selling price of gold bullion, the overall revenue remained stable as the sales of electrolytic coppers decreased significantly and there was a reduction of sales of gold concentrates and other products.

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MANAGEMENT DISCUSSION AND ANALYSIS

OUTLOOK AND PLANNING

In the second half of 2020, the Group has been focusing and will continue to focus on enforcing the exploration and mining work of various mines, accelerating the construction of major projects, and strictly controlling the cost, with an aim to achieve the annual plan of gold production. The Group will carry out various tasks based on their respective targets to increase the economic benefits. Meanwhile, the Group will continue to expand its self-produced gold mining as well as the gold smelting and processing businesses. The market price of gold has increased to a nine-year high, bringing a better market opportunity for the Group to enhance its profitability. The Group will further enhance cost reduction and efficiency management, and expand production capacity to increase economic benefits. Looking into the second half of 2020, the Group will mainly focus on the following aspects:

1. to step up efforts in exploring mine resources, strengthen appraisal and incentive mechanism, and focus on rebalancing mineral exploration and mining
   In the Current Period, the production of processing plant of mines was able to operate steadily, mainly due to the minerals in stock at the beginning of the year, but the minerals in stock in each mine has dropped significantly since then, which indicated the presence of a widespread problem of "emphasising mining over mineral exploration". The Group should properly handle the relationship between mining and mineral exploration in a manner to ensure that the implementation rate of the plan meets the schedule requirements. The human resources department should reform the remuneration package for technical personnel to attract professional and technical personnel and grow the mining technical team, for the purpose of providing talent and technical support for mineral exploration works.

1. to strengthen production organisation, improve management efficiency and duly execute production tasks
   We will resolutely put an end to any work-related accidents by formulating emergency plans for production to improve risk estimation and preventive measures.

1. to strengthen the control on key projects and promote the implementation of major tasks to enhance development potential
   All departments are required to fully cooperate in ensuring the seamless information exchange to achieve the annual goal.

(IV) to focus on product sales and marketing and make up for shortcomings in production to maximize operating profits

Benefited from the rise in gold prices, the Group's profits have improved. In the second half of 2020, we will pay closer attention to the timing of sales and strengthen our capabilities in market analysis and operation while strictly controlling risks.

1. to enhance service awareness, and strengthen work coordination to comprehensively improve corporate governance
   We will establish a coordination and cooperation mechanism between the headquarters and departments to strengthen communication, and reform the management structure and compensation system to encourage and incentivize employees and promote the overall improvement of the overall efficiency of the Group.

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MANAGEMENT DISCUSSION AND ANALYSIS

(VI) to strengthen cost management and create new management measures to improve the quality of corporate operation and development

We will strengthen cost control and implement cost reduction and efficiency enhancement measures in the mining segment. To ensure the efficiency and quality of production, relevant adjustment measures in the performance-based portion of remuneration will be introduced to stimulate the enthusiasm of the construction teams. The project management will also be enhanced to strengthen the quality.

FINANCIAL REVIEW

Liquidity and Financial Resources

The Group generally finances its operations with internally generated funds, bank loans and loans from other financial institutions. The cash and cash equivalents balances as at 30 June 2020 amounted to RMB327,294,000 (31 December 2019: RMB318,671,000).

The total equity attributable to the equity shareholders of the Company as at 30 June 2020 amounted to RMB1,671,214,000 (31 December 2019: RMB1,652,336,000). As at 30 June 2020, the Group had current assets of RMB3,838,392,000 (31 December 2019: RMB2,894,178,000) and current liabilities of RMB5,270,866,000 (31 December 2019: RMB3,871,947,000). The current ratio was 73% (31 December 2019: 75%).

As at 30 June 2020, the Group had total outstanding bank and other borrowings of approximately RMB4,234,811,000 (with interest rates ranging from 2.2% to 5.0% per annum). All loans shall be repayable within one year.

As at 30 June 2020, the gearing ratio (calculated as total borrowings divided by total assets) was 61.1% (31 December 2019: 57.6%); the debt ratio (calculated as total liabilities divided by total assets) was 78.2% (31 December 2019: 74.7%); and the gearing ratio (calculated as total lease liabilities and bank and other borrowings, divided by total equity) was 280.9% (31 December 2019: 228.2%).

As at 30 June 2020, the Group had net current liabilities of RMB1,432,474,000, total borrowings of RMB4,234,811,000 and capital commitments of RMB197,693,000. In assessing whether the Group will have sufficient financial resources to continue as a going concern, the directors of the Company (the "Directors") have taken into consideration the future liquidity of the Group and its available sources of financing, including banking facilities and cash flow projection of the Group. As at 30 June 2020, the Group had unutilised banking facilities of approximately RMB1,368,008,000. Based on the past experience and the communication with banks, the Directors believe that the Company has the ability to renew or secure banking facilities upon maturity.

In order to effectively lower the debt ratio and improve the financing ability of the Group, the Group will proactively consider the following measures:

1.) to increase the production volume of the gold bullion and generate cash flows from operating activities by capturing the opportunities arising from the rising gold prices, strengthening internal management and optimizing cost reduction and efficiency enhancement measures, and increasing the output of gold bullion processed from gold concentrates;

2.) to secure certain funding by enhancing the communication and promoting mutual trust between the Group and banks and other financial institutions as well as taking advantage of the state's relatively loose financing policies;

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MANAGEMENT DISCUSSION AND ANALYSIS

3.) to increase supply chain financing by taking full advantage of the attribute of high liquidity of inventories in the gold mining industry; and

4.) to increase the liquidity and reduce short-term borrowings, the Group will seek for secured long-term loan facilities at lower interest rates by the collateralisation of property, plant and equipment of the Group.

Security

As at 30 June 2020, the Group or the Company did not provide any guarantees which would expose the Group to credit risk (31 December 2019: Nil).

Market Risks

The Group is exposed to various types of market risks, including fluctuations in gold price and other commodity prices, as well as changes in interest rates, foreign exchange rates and inflation.

Gold price and other commodities price risk

The Group's revenue and profit for the Current Period were affected by fluctuations in the gold prices and other commodities price as all our products were sold at market prices and such fluctuations in prices were beyond our control. The Group does not use and strictly prohibits the use of commodity derivative instruments or futures for speculative purposes. All commodity derivative instruments are used to minimise the potential price fluctuations of gold and other commodities.

Interest rate risk

The Group is exposed to risks associated with the fluctuations in interest rates on our debt obligations. The Group undertakes debt obligations for general corporate purposes such as support of capital expenditure and working capital. The Group's bank loans bear interest rates that are subject to adjustment made by our lenders in accordance with changes of the relevant regulations of the People's Bank of China. If the People's Bank of China increases the interest rates, our finance cost will increase accordingly. In addition, to the extent that we need to raise our debt financing in the future, upward fluctuations in interest rates will increase the cost of new debt.

Exchange rate risk

The Group's transactions are mainly denominated in Renminbi. As such, fluctuations in exchange rates may affect the international and domestic gold prices, and our operational results may be affected. Renminbi is not freely convertible and could fluctuate against a basket of currencies. The PRC government may take further actions and implement new measures on free conversion of Renminbi.

In addition to the foregoing, the exchange rate risks to which the Group exposes mainly arise from certain bank deposits, trade and other receivables, trade and other payables and bank loans, which are denominated in foreign currencies. The currency risk is primarily United States dollars.

Fluctuations in exchange rates may adversely affect the value of our net assets, earnings and any dividends we declare when they are being converted or translated into Hong Kong dollars.

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MANAGEMENT DISCUSSION AND ANALYSIS

Contractual Obligations

As at 30 June 2020, the Group's total capital commitments in respect of the contracted construction costs and the authorised but not contracted construction costs which were not provided for in the financial statements were approximately RMB52,843,000 (31 December 2019: RMB25,542,000) and RMB144,850,000 (31 December 2019: RMB254,281,000), respectively, representing an increase of approximately RMB27,301,000 and a decrease of approximately RMB109,431,000, respectively.

Capital Expenditure

As at 30 June 2020, the Group's capital expenditure was approximately RMB124,257,000, representing a decrease of approximately 58.9% from approximately RMB302,400,000 as at 31 December 2019.

The Group's capital expenditure mainly relates to the construction of mining shafts, expansion of project equipment and upgrading of production equipment.

Contingent Liabilities

As at 30 June 2020, the Group had no material contingent liabilities.

Human Resources

For the six months ended 30 June 2020, the average number of employees of the Group was 4,070. The Company highly treasures its human resources and provides its employees with competitive remuneration and training programs.

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OTHER INFORMATION

SHARE CAPITAL

As at 30 June 2020, there was a total of share capital of 864,249,091 shares of the Company which includes:

			Approximate
			percentage of
		Number of	total share
		shares	capital
Domestic share	566,975,091	65.60%
H Shares	297,274,000	34.40%
Total	864,249,091	100.00%

PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES OF THE COMPANY

There was no purchase, sale or redemption of the Company's shares by the Group during the period ended 30 June 2020.

DIRECTORS', SUPERVISORS' AND CHIEF EXECUTIVE'S INTERESTS AND SHORT POSITIONS IN SHARES OF THE COMPANY

The Directors, supervisors (the "Supervisors") and chief executive of the Company did not hold any interests or short positions in the shares, underlying shares or debentures of the Company or any of its associated corporations as defined in the Securities and Futures Ordinance ("SFO") as at 30 June 2020 that are required to be (i) notified to the Company and The Stock Exchange of Hong Kong Limited (the "Hong Kong Stock Exchange") pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); (ii) recorded in the register required to be kept under section 352 of the SFO; or (iii) notified to the Company and the Hong Kong Stock Exchange under the Model Code for Securities Transactions by directors of listed issuers as set out in Appendix 10 of the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited ("Listing Rules").

12 LINGBAO GOLD GROUP COMPANY LTD. Interim Report 2020

OTHER INFORMATION

SUBSTANTIAL SHAREHOLDERS' INTERESTS IN SHARES OF THE COMPANY

As at 30 June 2020, as far as the Directors are aware of, the following persons, other than the Directors, Supervisors and chief executive of the Company, had an interest in the shares of the Company as recorded in the register required to be kept under section 336 of the SFO:

			Approximate
			percentage	Approximate
			of the total	percentage
	Number of		issued	of the total
	domestic		domestic	issued share
Name of shareholders	shares	Nature of interest	share capital	capital
D&R Asset Management Group	185,339,000	Beneficial owner	32.69%	21.45%
Company Limited
Lingbao State-owned Assets	73,540,620	Beneficial owner	12.97%	8.50%
Operation Limited Liability
Company (靈寶市國有資產經營
有限責任公司)
Shanghai Zhengxi Investment	57,000,000	Beneficial owner	10.05%	6.60%
Management Partnership (Limited
Partnership)

Save as disclosed above, as at 30 June 2020, the Company had not been notified of any other persons who had interests or short positions in the shares or underlying shares of the Company as recorded in the register required to be kept pursuant to Section 336 of the SFO.

CHANGE IN INFORMATION OF DIRECTORS AND SUPERVISORS

The change of Director's and Supervisor's information as required to be disclosed pursuant to Rule 13.51B of the Listing Rules is set out below:

• Mr. Jian Zhanxun resigned as a Supervisor and the chairman of the supervisory committee of the Company with effect from 8 January 2020;
• Mr. Dai Weitao has been appointed as an employee representative supervisor of the Company and the chairman of the supervisory committee of the Company with effect from 8 January 2020;
• Mr. Xing Jiangze has been appointed as an independent non-executive director of Xinjiang La Chapelle Fashion Co., Ltd. (formerly known as Shanghai La Chapelle Fashion Co., Ltd.) (the A shares of which are listed on Shanghai Stock Exchange, stock code：603157 and the H shares of which are listed on Hong Kong Stock Exchange, stock code: 6116) with effect from 8 May 2020;
• Mr. Yang Dongsheng resigned as an independent non-executive Director, the chairman of the audit committee (the "Audit Committee"), a member of strategic committee, nomination committee and remuneration and review committee of the Company with effect from 6 July 2020;

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OTHER INFORMATION

• Mr. Xu Rong has been appointed as an independent non-executive Director and the chairman of the Audit Committee with effect from 6 July 2020;
• Mr. Zeng Xiangxin has been appointed as a member of nomination committee and remuneration and review committee of the Company with effect from 6 July 2020;
• Mr. Wang Leo has been re-designated from an executive Director to a non-executive Director with effect from 6 July 2020.

INTERIM DIVIDEND

The Board does not recommend the payment of interim dividend for the six months ended 30 June 2020 (six months ended 30 June 2019: Nil).

CORPORATE GOVERNANCE

The Company has complied with all the corporate governance codes (the "CG Code") as set out in Appendix 14 to the Listing Rules during the Current Period, save for the following:

Under provision A.2.1 of the CG Code, the roles of chairman and chief executive officer should be separate and should not be performed by the same individual.

Mr. Chen Jianzheng is the chairman and the chief executive officer of the Company. According to Article 145 of the Articles of Association of the Company, currently, the management executive committee of the Company (the "Management Executive Committee") exercises the operation and management rights of the Company (including the whole or part of the powers of the President of the Company). The Management Executive Committee has two rotating chairmen, being Mr. Chen Jianzheng and Mr. Zeng Xiangxin, and they are responsible for the daily operation and management affairs of the Company. Therefore, the Board believes that the Company already has a strong corporate governance structure appropriate for its circumstances in place to ensure effective oversight of the management. Given Mr. Chen Jianzheng's considerable industry experience and with the support of the management, the Board is of the view that it is in the best interest of the Group to have Mr. Chen Jianzheng taking up both roles for effective management and business development.

MODEL CODE FOR SECURITIES TRANSACTIONS

The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the "Model Code") as set out in Appendix 10 of the Listing Rules as the Company's code of conduct regarding securities transactions by the Directors. Based on specific enquiry of the Directors, the Directors complied with the required standard set out in the Model Code throughout the Current Period.

AUDIT COMMITTEE

The Audit Committee comprises four independent non-executive Directors and one non-executive Director, namely, Mr. Xu Rong, Mr. Han Qinchun, Mr. Wang Jiheng, Mr. Wang Guanghua and Mr. Shi Yuchen. An Audit Committee meeting was held on 13 August 2020 to review the unaudited interim financial report for the six months ended 30 June 2020. KPMG, the Group's external auditor, has carried out a review of the interim financial report for the six months ended 30 June 2020 in accordance with the Hong Kong Standard on Review Engagements 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the HKICPA.

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OTHER INFORMATION

EVENTS AFTER THE REPORTING PERIOD

There were no material events occurred after the Current Period.

By order of the Board

Mr. Chen Jianzheng

Chairman

Lingbao City, Henan Province, The PRC

13 August 2020

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REVIEW REPORT

Review report to the board of Directors of

Lingbao Gold Group Company Ltd.

(Incorporated in the People's Republic of China with limited liability)

INTRODUCTION

We have reviewed the interim financial report set out on pages 17 to 42 which comprises the consolidated statement of financial position of Lingbao Gold Group Company Ltd. (the "Company") as of 30 June 2020 and the related consolidated statement of profit or loss, statement of profit or loss and other comprehensive income and statement of changes in equity and condensed consolidated cash flow statement for the six month period then ended and explanatory notes. The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited require the preparation of an interim financial report to be in compliance with the relevant provisions thereof and Hong Kong Accounting Standard 34, Interim financial reporting, issued by the Hong Kong Institute of Certified Public Accountants. The Directors are responsible for the preparation and presentation of the interim financial report in accordance with Hong Kong Accounting Standard 34.

Our responsibility is to form a conclusion, based on our review, on the interim financial report and to report our conclusion solely to you, as a body, in accordance with our agreed terms of engagement, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

SCOPE OF REVIEW

We conducted our review in accordance with Hong Kong Standard on Review Engagements 2410, Review of interim financial information performed by the independent auditor of the entity, issued by the Hong Kong Institute of Certified Public Accountants. A review of the interim financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly we do not express an audit opinion.

CONCLUSION

Based on our review, nothing has come to our attention that causes us to believe that the interim financial report as at 30 June 2020 is not prepared, in all material respects, in accordance with Hong Kong Accounting Standard 34, Interim financial reporting.

KPMG

Certified Public Accountants

8th Floor, Prince's Building 10 Chater Road

Central, Hong Kong

13 August 2020

16 LINGBAO GOLD GROUP COMPANY LTD. Interim Report 2020

Equity shareholders of the Company Non-controllinginterests

Profit/(loss) for the period

Basic and diluted earnings/(loss) per share

(RMB cents)7 The notes on pages 23 to 42 form part of this interim financial report.

lnterim Report 2020

Profit/(loss) for the period

Attributable to:

Income tax

Finance costs

Profit from operations

Gross profit

Cost of sales

Revenue

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

For the six months ended 30 June 2020 - unaudited (Expressed in Renminbi Yuan)

		Six months	Six months
		ended	ended
		30 June 2020	30 June 2019
	Note	RMB'000	RMB'000
	4	2,564,879	2,560,568
		(2,330,833)	(2,430,198)
		234,046	130,370
Other revenue		27,334	23,894
Other net loss	5(b)	(3,069)	(9,921)
Selling and distribution expenses		(5,591)	(2,909)
Administrative expenses and other operating expenses		(139,221)	(116,634)
		113,499	24,800
	5(a)	(61,962)	(82,184)
Profit/(loss) before taxation	5	51,537	(57,384)
	6	(31,575)	(33,959)
		19,962	(91,343)

28,217 (83,478)

(8,255)(7,865)

19,962 (91,343)

3.3(9.7)

LINGBAO GOLD GROUP COMPANY LTD. 17

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the six months ended 30 June 2020 - unaudited (Expressed in Renminbi Yuan)

Profit/(loss) for the period

Other comprehensive income for the period (after tax and reclassification adjustments)

Item that may be reclassified subsequently to profit or loss:

Exchange differences on translation of financial statements of overseas subsidiaries

Total comprehensive income for the period

Attributable to:

Equity shareholders of the Company

Non-controlling interests

Six months	Six months
ended	ended
30 June 2020	30 June 2019
RMB'000	RMB'000
19,962	(91,343)

(11,568)(827)

8,394 (92,170)

18,878 (84,090)

(10,484)(8,080)

Total comprehensive income for the period	8,394	(92,170)

The notes on pages 23 to 42 form part of this interim financial report.

18 LINGBAO GOLD GROUP COMPANY LTD. Interim Report 2020

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 30 June 2020 - unaudited (Expressed in Renminbi Yuan)

			At 30 June	At 31 December
			2020	2019
	Note	RMB'000	RMB'000
Non-current assets
Property, plant and equipment	8		1,320,710	1,320,365
Construction in progress	8		595,805	534,101
Intangible assets	9		642,057	644,497
Goodwill			4,717	4,717
Right-of-use assets			131,353	133,756
Interest in associates			22,531	22,531
Other financial assets			4,520	4,520
Investment deposits			18,800	18,800
Non-current prepayments			10,005	2,353
Deferred tax assets			333,194	338,171
Other non-current assets			8,236	14,265
			3,091,928	3,038,076
Current assets
Inventories	10		1,694,874	1,477,971
Trade and other receivables, deposits and prepayments	11		249,176	214,401
Current tax recoverable			11,043	11,043
Pledged deposits			1,556,005	872,092
Cash and cash equivalents	12		327,294	318,671
			3,838,392	2,894,178
Current liabilities
Bank and other borrowings	13		4,234,811	3,011,262
Trade and other payables	14		979,429	811,026
Contract liabilities			5,565	6,796
Lease liabilities			2,163	3,255
Current tax payable			48,898	39,608
			5,270,866	3,871,947
Net current liabilities			(1,432,474)	(977,769)
Total assets less current liabilities			1,659,454	2,060,307

lnterim Report 2020 LINGBAO GOLD GROUP COMPANY LTD. 19

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 30 June 2020 - unaudited (Expressed in Renminbi Yuan)

		At 30 June	At 31 December
		2020	2019
	Note	RMB'000	RMB'000
Non-current liabilities
Bank and other borrowings	13	-	406,015
Other payables	14	130,349	132,009
Lease liabilities		8,215	9,005
Deferred tax liabilities		9,474	10,256
		148,038	557,285
NET ASSETS		1,511,416	1,503,022
CAPITAL AND RESERVES	15
Share capital		172,850	172,850
Reserves		1,498,364	1,479,486
Total equity attributable to equity shareholders of
the Company		1,671,214	1,652,336
Non-controlling interests		(159,798)	(149,314)
TOTAL EQUITY		1,511,416	1,503,022

Approved and authorised for issue by the Board of Directors on 13 August 2020.

Zeng Xiangxin	Xing Jiangze
Executive director	Executive director

The notes on pages 23 to 42 form part of this interim financial report.

20 LINGBAO GOLD GROUP COMPANY LTD. Interim Report 2020

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 June 2020 - unaudited (Expressed in Renminbi Yuan)

			Attributable to equity shareholders of the Company
				PRC					Non-
		Share	Share	Statutory	Exchange	Other	Retained		controlling	Total
		capital	premium	reserves	reserve	reserve	profits	Total	interests	equity
		RMB'000	RMB'000	RMB'000	RMB'000	RMB'000	RMB'000	RMB'000	RMB'000	RMB'000
Balance at 1 January 2019		172,850	891,926	160,878	(30,876)	(858)	872,529	2,066,449	(129,023)	1,937,426
Changes in equity for the six months ended
30 June 2019:
Loss for the period		-	-	-	-	-	(83,478)	(83,478)	(7,865)	(91,343)
Other comprehensive income		-	-	-	(612)	-	-	(612)	(215)	(827)
Total comprehensive income for the period		-	-	-	(612)	-	(83,478)	(84,090)	(8,080)	(92,170)
Dividends approved in respect of the previous year
(note 15(b))		-	-	-	-	-	(172,850)	(172,850)	-	(172,850)
Appropriation of safety production fund (note 15(c))		-	-	14,483	-	-	(14,483)	-	-	-
Utilisation of safety production fund (note 15(c))		-	-	(14,483)	-	-	14,483	-	-	-
Balance at 30 June 2019 and 1 July 2019
	172,850	891,926	160,878	(31,488)	(858)	616,201	1,809,509	(137,103)	1,672,406
Changes in equity for the six months ended
31 December 2019:
Loss for the period		-	-	-	-	-	(150,024)	(150,024)	(10,474)	(160,498)
Other comprehensive income		-	-	-	(7,149)	-	-	(7,149)	(1,737)	(8,886)
Total comprehensive income for the period		-	-	-	(7,149)	-	(150,024)	(157,173)	(12,211)	(169,384)
Appropriation of safety production funds (note 15(c))		-	-	31,932	-	-	(31,932)	-	-	-
Utilisation of safety production funds (note 15(c))		-	-	(31,932)	-	-	31,932	-	-	-
Balance at 31 December 2019
	172,850	891,926	160,878	(38,637)	(858)	466,177	1,652,336	(149,314)	1,503,022
Balance at 1 January 2020		172,850	891,926	160,878	(38,637)	(858)	466,177	1,652,336	(149,314)	1,503,022
Changes in equity for the six months ended
30 June 2020:
Profit/(loss) for the period		-	-	-	-	-	28,217	28,217	(8,255)	19,962
Other comprehensive income		-	-	-	(9,339)	-	-	(9,339)	(2,229)	(11,568)
Total comprehensive income for the period		-	-	-	(9,339)	-	28,217	18,878	(10,484)	8,394
Appropriation of safety production fund (note 15(c))		-	-	17,265	-	-	(17,265)	-	-	-
Utilisation of safety production fund (note 15(c))		-	-	(17,265)	-	-	17,265	-	-	-
Balance at 30 June 2020		172,850	891,926	160,878	(47,976)	(858)	494,394	1,671,214	(159,798)	1,511,416

The notes on pages 23 to 42 form part of this interim financial report.

lnterim Report 2020 LINGBAO GOLD GROUP COMPANY LTD. 21

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

For the six months ended 30 June 2020 - unaudited (Expressed in Renminbi Yuan)

Operating activities

Cash generated from/(used in) operations

PRC income tax paid

Net cash used in operating activities

Investing activities

Payment for construction in progress

Proceeds from disposal of discontinued operations Payment for purchase of property, plant and equipment Advance to related parties

Other cash flows arising from investing activities

Net cash (used in)/generated from investing activities

Financing activities

Proceeds from bank and other borrowings Repayment of bank and other borrowings Pledged deposits placed for borrowings Capital element of lease rentals paid Interest element of lease rentals paid

Other cash flows arising from financing activities

Net cash generated from/(used in) financing activities

Net increase/(decrease) in cash and cash equivalents

Cash and cash equivalents at 1 January Effect of foreign exchange rate changes Cash and cash equivalents at 30 June

Six months	Six months
ended	ended
30 June 2020	30 June 2019
RMB'000	RMB'000

11,520 (142,882)

(18,091) (97,626)

(6,571) (240,508)

(94,247) (89,444)

10,277 1,029,666

(36,394) (77,214)

• (31,614)
  10,6412,899

(109,723) 834,293

2,590,500 1,491,378

(1,783,389) (2,038,333)

(622,000) (397,638)

1. (120)

1. (240)
   (60,007) (90,443)

124,787 (1,035,396)

8,493 (441,611)

318,671 811,237

13032

327,294 369,658

The notes on pages 23 to 42 form part of this interim financial report.

22 LINGBAO GOLD GROUP COMPANY LTD. Interim Report 2020

NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT

(Expressed in Renminbi Yuan unless otherwise indicated)

1 BASIS OF PREPARATION

This interim financial report has been prepared in accordance with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, including compliance with Hong Kong Accounting Standard (HKAS) 34, Interim financial reporting , issued by the Hong Kong Institute of Certified Public Accountants (HKICPA). It was authorised for issue on 13 August 2020.

The interim financial report has been prepared in accordance with the same accounting policies adopted in the 2019 annual financial statements.

The preparation of an interim financial report in conformity with HKAS 34 requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses on a year to date basis. Actual results may differ from these estimates.

This interim financial report contains condensed consolidated financial statements and selected explanatory notes. The notes include an explanation of events and transactions that are significant to an understanding of the changes in financial position and performance of Lingbao Gold Group Company Ltd. (the "Company") and its subsidiaries (together "the Group") since the 2019 annual financial statements. The condensed consolidated interim financial statements and notes thereon do not include all of the information required for full set of financial statements prepared in accordance with Hong Kong Financial Reporting Standards ("HKFRSs").

As at 30 June 2020, the Group had net current liabilities of RMB1,432 million, total borrowings of RMB4,235 million and capital commitments of RMB198 million. In view of these circumstances, the Directors of the Company have given consideration to the future liquidity of the Group and its available sources of finance including banking facilities in assessing whether the Group will have sufficient financial resources to continue as a going concern. As at 30 June 2020, taking into account the Group's cash flow projection, including the Group's unutilised banking facilities of RMB1,368 million, the ability to obtain new banking and other financing facilities, the ability to renew or refinance the banking facilities upon maturity, the ability to adjust the scheduled capital commitments and with the continuing efforts taken to improve operation efficiency, the Directors of the Company consider that the Group has sufficient working capital to meet in full its financial obligations as they fall due for at least the next twelve months from the end of the reporting period and there are no material uncertainties related to events or conditions which, individually or collectively, may cast significant doubt on the Group's ability to continue as a going concern. Should the Group not be able to continue to operate as a going concern, adjustments would have to be made to write down the value of assets to their recoverable amounts, to provide for further liabilities which might arise and to reclassify non-current assets and non-current liabilities as current assets and current liabilities respectively.

The interim financial report is unaudited, but has been reviewed by KPMG in accordance with Hong Kong Standard on Review Engagements 2410, Review of interim financial information performed by the independent auditor of the entity , issued by the HKICPA. KPMG's independent review report to the Board of Directors is included on page 16.

lnterim Report 2020 LINGBAO GOLD GROUP COMPANY LTD. 23

NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT

(Expressed in Renminbi Yuan unless otherwise indicated)

2 CHANGE IN ACCOUNTING POLICIES

The HKICPA has issued several amendments to HKFRSs that are first effective for the current accounting period of the Group. None of these developments has had a material effect on how the Group's results and financial position for the current or prior periods have been prepared or presented in this interim financial report.

The Group has not applied any new standard or interpretation that is not yet effective for the current accounting period.

3 SEGMENT REPORTING

The Group manages its businesses by divisions, which are organised by a mixture of business lines (production processes, products and services) and geography. In a manner consistent with the way in which information is reported internally to the Group's most senior executive management for the purposes of resource allocation and performance assessment, the Group has identified three reportable segments for the six months ended 30 June 2020 (2019: three reportable segments). Operating segments with similar nature of the production process, products and services have been aggregated to form the following reportable segments.

Mining - PRC	- Gold mining and mineral ores processing operations in the PRC.
Mining - KR	-	Gold mining and mineral ores processing operations in the Kyrgyz
		Republic ("KR").
Smelting	-	Gold and other metal smelting and refinery operations carried out in the
		PRC.

24 LINGBAO GOLD GROUP COMPANY LTD. Interim Report 2020

NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT

(Expressed in Renminbi Yuan unless otherwise indicated)

3 SEGMENT REPORTING (continued)

1. Segment results, assets and liabilities
   Information regarding the Group's reportable segments as provided to the Group's most senior executive management for the purposes of resource allocation and assessment of segment performance for the periods is set out below.

			Mining - PRC	Mining - KR	Smelting	Total
	2020	2019	2020	2019	2020	2019	2020	2019
			RMB'000	RMB'000	RMB'000	RMB'000	RMB'000	RMB'000	RMB'000	RMB'000
For the six months ended
30 June
Revenue from external customers			-	98,226	28,053	12,314	2,537,205	2,450,570	2,565,258	2,561,110
Inter-segment revenue	300,831	163,357	23,567	-	-	-	324,398	163,357
Sales taxes and levies	(118)	(35)	-	-	(261)	(507)	(379)	(542)
Reportable segment revenue	300,713	261,548	51,620	12,314	2,536,944	2,450,063	2,889,277	2,723,925
Reportable segment profit/
(loss)	98,580	66,544	(35,692)	(13,363)	67,271	27,403	130,159	80,584
(Provision)/reversal of impairment
on:
- trade and other receivables			-	324	-	(1,264)	-	-	-	(940)
- purchase deposits			-	-	-	-	317	1,811	317	1,811
As at 30 June/31 December
Reportable segment assets	2,471,007	2,273,075	708,690	710,888	2,662,948	2,018,030	5,842,645	5,001,993
Reportable segment liabilities	1,945,332	1,703,108	1,518,726	1,444,621	1,986,024	1,476,616	5,450,082	4,624,345

lnterim Report 2020 LINGBAO GOLD GROUP COMPANY LTD. 25

NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT

(Expressed in Renminbi Yuan unless otherwise indicated)

3 SEGMENT REPORTING (continued)

1. Reconciliations of reportable segment revenues, profit or loss

		Six months	Six months
		ended	ended
		30 June 2020	30 June 2019
		RMB'000	RMB'000
Revenue
Reportable segment revenue		2,889,277	2,723,925
Elimination of inter-segment revenue		(324,398)	(163,357)
Consolidated revenue		2,564,879	2,560,568
Profit or loss
Reportable segment profit		130,159	80,584
Elimination of inter-segment profit/(loss)		5,106	(6,364)
Reportable segment profit derived from the
Group's external customers		135,265	74,220
Other net loss		(3,069)	(9,921)
Finance costs		(61,962)	(82,184)
Unallocated head office and corporate
expenses		(18,697)	(39,499)
Consolidated profit/(loss) before taxation		51,537	(57,384)
Income tax		(31,575)	(33,959)
Profit/(loss) for the period		19,962	(91,343)

26 LINGBAO GOLD GROUP COMPANY LTD. Interim Report 2020

NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT

(Expressed in Renminbi Yuan unless otherwise indicated)

4 REVENUE

The principal activities of the Group are mining, processing, smelting and sales of gold and other metallic products in the PRC.

Revenue represents the sales value of goods sold to customers, net of sales tax and value added tax.

Disaggregation of Revenue

Disaggregation of revenue from contracts with customers by major products lines is as follow:

			Six months	Six months
			ended	ended
			30 June 2020	30 June 2019
			RMB'000	RMB'000
Revenue from contracts with customers
within the scope of HKFRS 15
Disaggregated by major products lines
- Sales of gold		2,479,636	2,359,792
- Sales of other metals		85,602	191,162
- Others		20	10,156
Less: Sales taxes and levies		(379)	(542)
			2,564,879	2,560,568

All revenue was recognised at a point in time under HKFRS 15.

lnterim Report 2020 LINGBAO GOLD GROUP COMPANY LTD. 27

NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT

(Expressed in Renminbi Yuan unless otherwise indicated)

5 (PROFIT)/LOSS BEFORE TAXATION

(Profit)/loss before taxation is arrived at after charging/(crediting):

Six months	Six months
ended	ended
30 June 2020	30 June 2019
RMB'000	RMB'000

1. Finance costs:

	Interest expenses on bank loans	40,465	70,905
	Interest expenses on lease liabilities	237	240
	Other borrowing costs	21,260	11,039
		61,962	82,184
(b)	Other net loss:
	Net realised and unrealised losses on
	financial instruments at fair value	12,664	9,058
	Net foreign exchange gain	(8,759)	(3,142)
	Others	(836)	4,005
		3,069	9,921
(c)	Other items:
	Depreciation of right-of-use assets	2,403	2,374
	Amortisation of intangible assets	5,962	7,523
	Depreciation of property, plant and
	equipment	60,627	59,878
	Less: Depreciation capitalised into
	construction in progress	(256)	(133)
		60,371	59,745
	(Reversal)/provision of impairment losses in
	administrative expenses and other
	operating expenses on:
	- trade and other receivables	-	2,940
	- purchase deposits	(317)	(1,811)
	- investment deposits	-	(772)
	Government grants	1,112	1,331
	Bank interest income	16,243	7,739
	Guarantee income	-	2,895

28 LINGBAO GOLD GROUP COMPANY LTD. Interim Report 2020

NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT

(Expressed in Renminbi Yuan unless otherwise indicated)

6 INCOME TAX IN THE CONSOLIDATED STATEMENT OF PROFIT OR LOSS

Taxation in the consolidated statement of profit or loss represents:

		Six months	Six months
		ended	ended
		30 June 2020	30 June 2019
		RMB'000	RMB'000
Current tax - PRC income tax
Provision for the period		32,149	30,718
(Over)/under-provision in respect of prior years		(4,768)	517
Deferred taxation		4,194	2,724
		31,575	33,959

1. Under the Corporate Income Tax Law of the PRC (the "CIT Law"), which was passed by the Fifth Plenary Session of the Tenth National People's Congress, effective from 1 January 2008, the Company and its PRC subsidiaries are subject to income tax at the statutory rate of 25%, unless otherwise specified.
2. Hong Kong profits tax rate for 2020 is 16.5% (2019: 16.5%). No provision for Hong Kong profits tax is made as the subsidiary located in Hong Kong did not earn any income which is subject to Hong Kong profits tax.
3. Kyrgyzstan corporate income tax rate ("KR CIT") in 2020 is 0% (2019: 0%).

On 9 August 2012, the Parliament of Kyrgyz Republic passed the law on amendments and additions to the Tax Code of the Kyrgyz Republic ("Amended Tax Code") which became effective from 1 January 2013. In accordance with the Amended Tax Code, starting from 1 January 2013 the KR CIT rate for gold mining companies is set at 0% and a revenue-based tax is introduced. Such revenue-based tax is recognised in "sales taxes and levies".

7 EARNINGS/(LOSS) PER SHARE

1. Basic earnings/(loss) per share
   The calculation of basic earnings/(loss) per share for the six months ended 30 June 2020 is based on the earnings attributable to equity shareholders of the Company of RMB28,217,000 (six months ended 30 June 2019: loss of RMB83,478,000) and 864,249,091 ordinary shares in issue during the period ended 30 June 2020 (six months ended 30 June 2019: 864,249,091 ordinary shares).
2. Diluted earnings/(loss) per share
   The diluted earnings/(loss) per share for the six months ended 30 June 2020 and 2019 are the same as the basic earnings/(loss) per share as there are no dilutive potential ordinary shares during the periods.

lnterim Report 2020 LINGBAO GOLD GROUP COMPANY LTD. 29

NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT

(Expressed in Renminbi Yuan unless otherwise indicated)

8 PROPERTY, PLANT AND EQUIPMENT AND CONSTRUCTION IN PROGRESS

Acquisitions and disposals of owned assets

During the six months ended 30 June 2020, acquisitions of property, plant and equipment and additions of construction in progress of the Group amounted to RMB40,409,000 (six months ended 30 June 2019: RMB82,702,000) and RMB81,883,000 (six months ended 30 June 2019: RMB66,531,000), respectively. Items of property, plant and equipment and construction in progress with an aggregate net book value of RMB3,766,000 were disposed of during the six months ended 30 June 2020 (six months ended 30 June 2019: RMB302,000), resulting in a gain on disposal of RMB204,000 (six months ended 30 June 2019: gain on disposal of RMB168,000).

9 INTANGIBLE ASSETS

Acquisitions and disposals

During the six months ended 30 June 2020, additions of exploration and evaluation assets and mining rights made by the Group amounted to RMB1,341,000 and Nil respectively (six months ended 30 June 2019: RMB901,000 and RMB Nil respectively). No intangible assets were disposed of during the six months ended 30 June 2020 (six months ended 30 June 2019: Nil).

10 INVENTORIES

		At 30 June	At 31 December
		2020	2019
		RMB'000	RMB'000
Raw materials		1,078,811	1,062,284
Work in progress		135,606	116,594
Finished goods		388,016	214,469
Spare parts and materials		92,441	84,624
		1,694,874	1,477,971

The analysis of the amount of inventories recognised as an expense and included in profit and loss is as follows:

		Six months	Six months
		ended	ended
		30 June 2020	30 June 2019
		RMB'000	RMB'000
Carrying amount of inventories sold		2,322,786	2,432,089
Write down of inventories		8,047	-
Reversal of write down of inventories		-	(1,891)
		2,330,833	2,430,198

30 LINGBAO GOLD GROUP COMPANY LTD. Interim Report 2020

NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT

(Expressed in Renminbi Yuan unless otherwise indicated)

11 TRADE AND OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS

As of the end of the reporting period, the ageing analysis of trade debtors and bills receivable (which are included in trade and other receivables), based on the invoice date and net of loss allowance, is as follows:

			At 30 June	At 31 December
			2020	2019
	Note	RMB'000	RMB'000
Within 3 months			30,263	68,159
Over 3 months but within 6 months			310	4,080
Over 6 months but within 1 year			121	-
Over 1 year			-	3,900
Trade debtors and bills receivable,
net of loss allowance	(a)	30,694	76,139
Other receivables, net of loss allowance			65,357	59,729
Amounts due from related parties	18		10,000	20,277
Financial assets measured at amortised cost			106,051	156,145
Deposits and prepayments			109,906	47,335
Purchase deposits, net of allowance for
non-delivery	(b)	33,219	10,921
			249,176	214,401

lnterim Report 2020 LINGBAO GOLD GROUP COMPANY LTD. 31

NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT

(Expressed in Renminbi Yuan unless otherwise indicated)

11 TRADE AND OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS (continued)

Transfers of financial assets

Transferred financial assets that are derecognised in their entirety

As at 30 June 2020, the Group discounted certain bank acceptance bills to banks for cash proceeds and endorsed certain bank acceptance bills to suppliers for settling trade payables of the same amount on a full recourse basis. The Group has derecognised these bills receivable and the payables to suppliers in their entirety. These derecognised bank acceptance bills had a maturity date less than twelve months from the end of the reporting period. The Group's management determined that the Group has transferred substantially all the risks and rewards of ownership of these bills to its suppliers, and the Group has limited exposure in respect of the settlement obligation of these bills receivable under the relevant PRC rules and regulations should the issuing banks fail to settle the bills on maturity date. The Group considered the issuing banks of the bills are of good credit rating and the non-settlement of these bills by the issuing banks on maturity is not probable.

As at 30 June 2020, the Group's maximum exposure to loss and undiscounted cash outflow, which is same as the amount payable by the Group to banks or suppliers in respect of the discounted bills and endorsed bills, should the issuing banks fail to settle the bills on maturity date, amounted to RMB10,000,000 and RMB200,000 (31 December 2019: RMB149,584,000 and RMB10,500,000) respectively.

1. For sales of gold, the Group requests customers to pay cash in full immediately upon the delivery. For sales of other metallic products, trade and bills receivables are due within 30 days to 180 days from the date of billing.
2. Purchase deposits represent the amounts paid by the Group in advance to suppliers to secure timely and stable supply of mineral sand for the purposes of refining in future periods. The Directors of the Company consider that appropriate procedures have been taken by the Group to assess the capabilities of the suppliers to supply mineral sand, and expect that the purchase deposits would be gradually recovered through future purchases of mineral sand from the respective suppliers.

12 CASH AND CASH EQUIVALENTS

		At 30 June	At 31 December
		2020	2019
		RMB'000	RMB'000
Cash and cash equivalents in the condensed
consolidated cash flow statement		327,294	318,671

32 LINGBAO GOLD GROUP COMPANY LTD. Interim Report 2020

NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT

(Expressed in Renminbi Yuan unless otherwise indicated)

13 BANK AND OTHER BORROWINGS

The analysis of the carrying amount of bank and other borrowings is as follows:
		At 30 June	At 31 December
		2020	2019
		RMB'000	RMB'000
Short-term bank and other borrowings:
- Short-term bank loans		3,520,489	2,698,378
- Add: Current portion of long-term bank and
other borrowings		714,322	312,884
		4,234,811	3,011,262
Long-term bank and other borrowings:
- long-term bank loans		714,322	718,899
- Less: Current portion of long-term bank and
other borrowings		(714,322)	(312,884)
		-	406,015
		4,234,811	3,417,277

At 30 June 2020, the bank and other borrowings were repayable as follows:

		At 30 June	At 31 December
		2020	2019
		RMB'000	RMB'000
Within one year or on demand		4,234,811	3,011,262
Over one year but within two years		-	367,646
Over two years but within five years		-	38,369
		-	406,015
		4,234,811	3,417,277

lnterim Report 2020 LINGBAO GOLD GROUP COMPANY LTD. 33

NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT

(Expressed in Renminbi Yuan unless otherwise indicated)

13 BANK AND OTHER BORROWINGS (continued)

At 30 June 2020, the bank and other borrowings were secured as follows:
		At 30 June	At 31 December
		2020	2019
		RMB'000	RMB'000
Bank and other borrowings
- Guaranteed		637,155	627,858
- Unsecured		3,597,656	2,789,419
		4,234,811	3,417,277

At 30 June 2020, a bank loan of the Group amounting to RMB637,155,000 (31 December 2019: RMB627,858,000) were guaranteed by Lingbao State-owned Assets Operation Company Limited ("Lingbao State-owned Assets"), a shareholder of the Group.

Certain of the Group's bank loan agreements were subject to the fulfilment of covenants imposing certain specific performance requirements on the Group. If the Group were to breach the covenants, bank loans drawn down would become payable on demand.

As at 30 June 2020, certain covenants of two bank loan agreements were breached by the Group. The Group obtained waiver letters from these two banks, confirming that they do not treat the Group has breached the relevant covenants under the existing loan agreements.

34 LINGBAO GOLD GROUP COMPANY LTD. Interim Report 2020

NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT

(Expressed in Renminbi Yuan unless otherwise indicated)

14 TRADE AND OTHER PAYABLES

As of the end of the reporting period, the ageing analysis of trade creditors and bills payable (which are included in trade and other payables), based on the invoice date, is as follows:

		At 30 June	At 31 December
		2020	2019
	Note	RMB'000	RMB'000
Current
Within 3 months		393,246	221,201
Over 3 months but within 6 months		123	5,859
Over 6 months but within 1 year		1,543	38,485
Over 1 year but within 2 years		1,648	3,585
Over 2 years		11,433	14,292
Total trade creditors		407,993	283,422
Bills payable		60,000	-
Other payables and accruals		304,664	331,438
Total creditors and bills payable		772,657	614,860
Interest payables		4,755	2,888
Payable for mining rights		86,193	84,935
Deferred income	(a)	80,428	80,416
Payable to non-controlling interests	(b)	23,280	23,021
Dividend payable		4,758	4,758
Financial liabilities measured at amortised cost		972,071	810,878
Financial liabilities at fair value through profit or
loss		7,358	148
		979,429	811,026
Non-current other payables
Decommissioning costs	(c)	54,981	55,528
Deferred income	(a)	75,368	76,481
		130,349	132,009

lnterim Report 2020 LINGBAO GOLD GROUP COMPANY LTD. 35

NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT

(Expressed in Renminbi Yuan unless otherwise indicated)

14 TRADE AND OTHER PAYABLES (continued)

Notes:

1. Deferred income represents grants received from the government for the exploration of mines and construction of mining related assets. When certain conditions are met, the government grants are recognised as income over the periods necessarily to match them with the related costs of assets constructed which they are intended to compensate over the periods and in the proportion in which depreciation on those assets is charged.
2. Payable to non-controlling interests is unsecured, interest-free and repayable on demand.
3. The decommissioning costs relate to reclamation and closure costs relating to the Group's mine operations. The decommissioning costs are calculated as the net present value of estimated future net cash flows of the reclamation and closure costs, discounted at 4.9%, which amounted to RMB54,981,000 (31 December 2019: RMB55,528,000) in total as at 30 June 2020.

15 CAPITAL AND RESERVE

(a) Share capital

		Number
		of shares	Amount
			RMB'000
As at 31 December 2019, 1 January 2020
and 30 June 2020
Registered, issued and fully paid:
Domestic shares of RMB0.20 each		566,975,091	113,395
H shares of RMB0.20 each		297,274,000	59,455
Total		864,249,091	172,850

All Domestic shares and H shares are ordinary shares and rank pari passu with the same rights and benefits.

1. Dividends
2. 1. Dividends payable to equity shareholders attributable to the interim period
      The Directors of the Company do not recommend the payment of an interim dividend for the six months ended 30 June 2020 (six months ended 30 June 2019: RMB Nil).
   2. Dividends payable to equity shareholders attributable to the previous financial year, approved during the interim period
      No final dividend in respect of the previous financial year has been approved during the interim period (six months ended 30 June 2019: RMB172,850,000).

36 LINGBAO GOLD GROUP COMPANY LTD. Interim Report 2020

NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT

(Expressed in Renminbi Yuan unless otherwise indicated)

1. CAPITAL AND RESERVE (continued)
2. 1. PRC statutory reserves
      Transfers from retained earnings to the PRC statutory reserves were made in accordance with the relevant PRC rules and regulations and articles of association of the Company and its subsidiaries incorporated in the PRC.
      The Company and the subsidiaries incorporated in the PRC are required to transfer 10% of their net profit, as determined in accordance with the PRC accounting standards and regulations, to the statutory surplus reserve (the "SSR") until the reserve balance reaches 50% of the registered capital. Subject to certain restrictions as set out in the relevant PRC regulations, the SSR may be converted to increase the share capital of the Company, provided that the remaining balance after the capitalisation is not less than 25% of the registered share capital.
      Pursuant to the relevant regulations in the PRC, the Group is required to provide for safety production fund based on volume of ores excavated and sales amount of certain products.
      For the six months ended 30 June 2020, the Group transferred RMB17,265,000 (six months ended 30 June 2019: RMB14,483,000) from retained profits to specific reserve provision for the safety production fund and transferred RMB17,265,000 (six months ended 30 June 2019: RMB14,483,000) from specific reserve to retained earnings for the utilisation.
3. FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS
4. 1. Financial assets and liabilities measured at fair value
   2. 1. Fair value hierarchy
         The following table presents the fair value of the Group's financial instruments measured at the end of the reporting period on a recurring basis, categorised into the three-level fair value hierarchy as defined in HKFRS 13, Fair value measurement . The level into which a fair value measurement is classified is determined with reference to the observability and significance of the inputs used in the valuation technique as follows:
      2. • Level 1 valuations: Fair value measured using only Level 1 inputs i.e. unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date
         • Level 2 valuations: Fair value measured using Level 2 inputs i.e. observable inputs which fail to meet Level 1, and not using significant unobservable inputs. Unobservable inputs are inputs for which market data are not available
         • Level 3 valuations: Fair value measured using significant unobservable inputs

lnterim Report 2020 LINGBAO GOLD GROUP COMPANY LTD. 37

NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT

(Expressed in Renminbi Yuan unless otherwise indicated)

16 FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS (continued)

1. Financial assets and liabilities measured at fair value (continued)
2. 1. Fair value hierarchy (continued)
      The Group has a team headed by the finance manager performing valuations review for the financial instruments. The team reports directly to the chief financial officer. A valuation report with analysis of changes in fair value measurement is prepared by the team at each interim and annual reporting date, and is reviewed and approved by the chief financial officer. Discussion of the valuation process and results with the chief financial officer, to coincide with the reporting dates.

			Fair value measurements as at
			30 June 2020
			categorised into
		Fair value at
		30 June
		2020	Level 1	Level 2	Level 3
		RMB'000	RMB'000	RMB'000	RMB'000
Recurring fair value
measurement
Financial assets at fair value through
profit or loss:
- Unlisted equity securities		4,520	-	-	4,520
Financial liabilities at fair value
through profit or loss:
- Futures commodity contracts		(6,946)	(6,946)	-	-
- Interest rate swaps		(413)	-	(413)	-
			Fair value measurements as at
			31 December 2019
			categorised into
		Fair value at
		31 December
		2019	Level 1	Level 2	Level 3
		RMB'000	RMB'000	RMB'000	RMB'000
Recurring fair value
measurement
Financial assets at fair value through
profit or loss:
- Unlisted equity securities		4,520	-	4,520	-
Financial liabilities at fair value
through profit or loss:
- Interest rate swaps		(148)	-	(148)	-

38 LINGBAO GOLD GROUP COMPANY LTD. Interim Report 2020

NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT

(Expressed in Renminbi Yuan unless otherwise indicated)

16 FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS (continued)

1. Financial assets and liabilities measured at fair value (continued)
2. 1. Fair value hierarchy (continued)
      During the six months ended 30 June 2020, there were no transfers between Level 1 and Level 2 (2019: RMB Nil). As at 30 June 2020, the unlisted equity securities amounting to RMB4,520,000 were transferred out from level 2 to level 3 since no quoted price could be obtained and unobservable inputs were applied in valuation of the unlisted equity securities (31 December 2019: RMB Nil).
      The Group's policy is to recognise transfers between levels of fair value hierarchy as at the end of the reporting period in which they occur.
   2. Valuation techniques and inputs used in Level 2 fair value measurements
      The fair value of interest rate swaps is the estimated amount that the Group would receive or pay to terminate the swap at the end of the reporting period, taking into account current interest rates and the current creditworthiness of the swap counterparties.
   3. Information about Level 3 fair value measurements
      The movement during the period in the balance of Level 3 fair value measurements is as follows:

		At 30 June	At 30 June
		2020	2019
		RMB'000	RMB'000
Unlisted equity securities
At 1 January		-	-
Transfer out of Level 2		4,520	-
At 30 June		4,520	-

The fair value of unlisted equity securities is determined using the price/sales ratios of comparable listed companies adjusted for lack of marketability discount. The fair value measurement is negatively correlated to the discount for lack of marketability.

		Significant
	Valuation techniques	unobservable inputs
Unlisted equity securities	Market comparable	Discount for lack of
	companies	marketability

1. Fair values of financial assets and liabilities carried at other than fair value
   The carrying amounts of the Group's financial instruments carried at cost or amortised cost are not materially different from their fair values as at 31 December 2019 and 30 June 2020.

lnterim Report 2020 LINGBAO GOLD GROUP COMPANY LTD. 39

NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT

(Expressed in Renminbi Yuan unless otherwise indicated)

17 COMMITMENTS

Capital commitments outstanding at 30 June 2020 not provided for in the interim financial report

		At 30 June	At 31 December
		2020	2019
		RMB'000	RMB'000
Contracted for		52,843	25,542
Authorised but not contracted for		144,850	254,281
		197,693	279,823

18 RELATED PARTY TRANSACTIONS

During the period ended 30 June 2020, the Directors are of the view that the following companies are related parties of the Group:

Name of party	Relationship
Lingbao Wason Copper-Foil Company Limited	Entity controlled by a major shareholder of the
("Wason Copper-Foil")	Group, D&R Asset Management Group Company
靈寶華鑫銅箔有限責任公司	Limited 達仁投資管理集團股份有限公司
	("D&R Investment")
Lingbao Hongyu Electronics Company Limited	Entity controlled by D&R Investment
("Hongyu Electronics")
靈寶鴻宇電子有限責任公司

1. The English translation of the names is for reference only. The official names of these entities are in Chinese.

40 LINGBAO GOLD GROUP COMPANY LTD. Interim Report 2020

NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT

(Expressed in Renminbi Yuan unless otherwise indicated)

18 RELATED PARTY TRANSACTIONS (continued)

1. Transactions with related parties

		Six months	Six months
		ended	ended
		30 June 2020	30 June 2019
		RMB'000	RMB'000
Sales of other metals
Wason Copper-Foil		391	499
Interest expenses
Wason Copper-Foil		-	2,416
Office rental service obtained
Hongyu Electronics		-	2
Guarantee income
Wason Copper-Foil		-	2,895
Advance to related parties
Wason Copper-Foil		-	31,614

1. Balances with related parties
   As at the end of each reporting period, the Group had the following balances with related parties:

		At 30 June	At 31 December
		2020	2019
		RMB'000	RMB'000
Amount due from related parties
Wason Copper-Foil		10,000	20,277
		10,000	20,277
Amount due to related parties
Wason Copper-Foil		6	-
		6	-

lnterim Report 2020 LINGBAO GOLD GROUP COMPANY LTD. 41

NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT

(Expressed in Renminbi Yuan unless otherwise indicated)

18 RELATED PARTY TRANSACTIONS (continued)

1. Key management personnel remuneration
   Remuneration for key management personnel of the Group, including amounts paid to the Company's Directors and supervisors is as follows:

Short-term employee benefits Post-employment benefits

Six months	Six months
ended	ended
30 June 2020	30 June 2019
RMB'000	RMB'000
2,930	4,328
109	94

19 IMPACTS OF COVID-19 PANDEMIC

The COVID-19 pandemic since early 2020 has brought about additional uncertainties in the Group's operating environment and has impacted the Group's operations and financial position. COVID-19 may have certain impact on the Group's production and operation. The impact will largely depend on duration of the outbreak and implementation of regulatory policies thereafter.

As far as the Group's businesses are concerned, unprecedented measures were taken by the government including the lockdown of cities and the extension of the Spring Festival holiday in mainland China.

Except for the mining segment - KR, the production activities in other segments were not significantly impacted by COVID-19 during the six months ended 30 June 2020. A subsidiary of the mining segment - KR, Full Gold Mining Limited Liability Company responded the call by the Kyrgyz Republic government on the pause of production in the middle of March, and has gradually resumed production in early May when the situation got under control.

Under these circumstances, the Group has been closely monitoring the impact of the developments on the Group's businesses and will further enhance the countermeasures, strengthen the tracking and forecast on the prices of gold and other metals, strive to ensure steady production and operation, and minimize the negative impact of COVID-19 on the Group's production and operation as much as possible.

42 LINGBAO GOLD GROUP COMPANY LTD. Interim Report 2020