[Mining and Metallurgical Enterprise Dynamics] According to Yunnan Chihong Zn & Ge Co., Ltd. (600497), during the Chinese New Year, while families across the country were reuniting, the company's production units nationwide remained busy. Many employees at operations such as Yongchang Lead-Zinc, Hulunbuir Chihong, Huize Mining and Smelting chose to stay at their posts, ensuring safe and stable production during the holiday at high-altitude snowy regions, underground mines thousands of meters deep, beside smelting furnaces, and project sites.

[Lead Smelter Updates] Recently, Yunnan Chihong Zn & Ge Co., Ltd. (600497) stated on an interactive platform that the company primarily focuses on the extraction, enrichment, and efficient recovery technologies of germanium resources associated with lead-zinc mines. By deepening strategic collaboration with its joint venture Chalco Qianxing (Chengdu) Technology Co., Ltd., it continues to provide stable, high-quality germanium raw material supplies. The processing of the mining license and project design optimization for the Jinxin Molybdenum Mine are progressing in an orderly manner. The Huize Mining Mine Plant has not implemented a deep expansion project; instead, it is advancing the optimization of its deep safety system, which is expected to be completed by the end of 2026.

[Lead Smelter Updates] Recently, Yunnan Chihong Zn & Ge Co., Ltd. (600497) responded to investor inquiries on an interactive platform, stating that the Huize mine is currently operating normally. After the completion of the Huize mine safety optimization project, the mine will resume its existing capacity release. The Hulunbuir Chihong rare and precious metals project has already commenced production, with an annual capacity of 380 mt of silver. The Yunnan Chihong comprehensive utilization of resources rare and precious metals project and the zinc alloy capacity expansion project are still in the preliminary planning stage, and whether these projects will ultimately proceed to construction remains uncertain.

[Lead Smelting Enterprise Dynamics] Recently, Yunnan Chihong Zn & Ge Co., Ltd. announced plans to increase capital in its wholly-owned subsidiary, Hulunbuir Chihong Mining Co., Ltd., by 3.3 billion yuan using its own funds. This capital injection will primarily be used to repay internal loans, supplement working capital, and fund projects aimed at enhancing efficiency and unlocking potential in lead and zinc smelting operations.

Recently, Chihong Industrial Development (Shanghai) Co., Ltd., a subsidiary of Yunnan Chihong Zn & Ge Co., Ltd., will conduct a public bidding sale of Yunnan Chihong Zn & Ge Co., Ltd.'s brand zinc ingots for 2025 on the Chihong Zn & Ge e-sales platform, in accordance with its production and operation arrangements. The zinc ingots (99.995) are produced in Anning, with a total quantity of 7,000 mt. The delivery date ranges from June 26, 2025, to December 31, 2025, and they comply with the GB/T470—2008 standard. In terms of the pricing model, the Chihong Zn & Ge (Anning) zinc ingots are priced based on the "monthly average net price of zinc ingots of the corresponding grade on the Shanghai Nonferrous Metals Market (SMM) from the 26th day of the previous month to the 25th day of the current month." Customers will bid on the monthly procurement volume based on the intended delivery location and the "premium/discount" (+ premium, - discount) for the delivery location (the awarded volume equals "monthly bidding volume * 6," and the bidding premium/discount is a fixed amount). The monthly settlement price for awarded customers is the "monthly average net price of zinc ingots of the corresponding grade on the Shanghai Nonferrous Metals Market ( SMM https://www.smm.cn ) for the corresponding pricing period + premium/discount." Customers participating in the bidding must meet the customer admission criteria of Yunnan Chihong Zn & Ge Co., Ltd., complete the registration on the e-sales platform, and pay a credibility deposit of 200,000 yuan (Note: Customers who have already registered and paid the 200,000 yuan credibility deposit can directly participate in the bidding). Here are the specific details:

SMM reported on May 21: In the first ten days of May, Yunnan Chihong Zn & Ge Co., Ltd. released the record of investor relations activities for April and Q1. It was reported that in 2024, the company achieved a total metal production of 289,800 mt of lead-zinc concentrates from mines and 651,400 mt of smelted lead-zinc products. Among them, the output of zinc alloy was 193,500 mt, up 31.54% YoY, reaching a new historical high. The company achieved an operating revenue of RMB 18.803 billion, a net profit attributable to shareholders of publicly listed firms of RMB 1.293 billion, and an operating net cash flow of RMB 2.366 billion. All its smelters achieved comprehensive profitability for the first time. According to public information, Yunnan Chihong Zn & Ge Co., Ltd. is a state-owned A-share publicly listed firm primarily engaged in the lead-zinc-germanium industry, integrating geological exploration, mining, beneficiation, smelting, chemical engineering, deep processing, logistics, trading, and scientific research. By the end of 2024, the company had a comprehensive production capacity of 420,000 mt/year of lead-zinc concentrate metal, 630,000 mt/year of refined lead-zinc, 60 mt/year of germanium-containing germanium products, and over 1,000 mt/year of precious and rare metals such as gold, silver, cadmium, bismuth, and antimony. In terms of lead-zinc concentrate production in 2024, the company produced a total of 289,800 mt (metal content) of lead-zinc concentrates, a decrease of 50,800 mt (metal content) YoY. The main reasons for the decline were as follows: Firstly, in response to the national policy call for "green mines and intelligent upgrades" and to further optimize production processes, the Huize Mining's 2024 safety benchmark mine construction project and the deep safety system optimization project affected the annual output. Secondly, due to issues with the safety production license application at Rongda Mining, some production systems at the Jiawula mining area were shut down for renovation from January to August 2024 and only resumed production in September. The Yishengyuan mining area required technological transformation of some existing production systems, and the rectification work is still actively underway, with production yet to resume. Regarding the cost situation at the company's lead-zinc mine and smelting ends, Yunnan Chihong Zn & Ge Co., Ltd. stated that since 2024, the company has thoroughly implemented the "five-dimensional" closed-loop cost management, continuously carried out comprehensive benchmarking and cost reduction across all elements, maintaining the full cost of lead-zinc concentrates from mines at the forefront of the industry. The full processing cost of smelted zinc products has achieved "five consecutive years of decline," reaching the best level in history. Taking zinc prices as an example, reviewing the zinc prices in 2024, under the backdrop of strong favourable macro front and supply-demand mismatch in the zinc ore market, zinc prices fluctuated upward in 2024, with a closing price of RMB 25,460/mt on December 31, 2024, representing a significant annual increase of 18.36%. The performance of spot prices was also not to be outdone. According to SMM spot quotes, as of December 31, 2024, the average spot price of SMM #0 zinc ingot was reported at RMB 25,900/mt, an increase of RMB 4,280/mt from RMB 21,620/mt at the end of 2023, representing a growth rate of 19.8%. Entering 2025, according to announcements, Yunnan Chihong Zn & Ge Co., Ltd. achieved a total operating revenue of RMB 5.144 billion in Q1 2025, up 10.10% YoY. Net profit attributable to shareholders of the publicly listed firm was RMB 494 million, up 1.40% YoY. In Q1 2025, the company's lead-zinc concentrate production was 69,600 mt in metal content, a decrease of 17,400 mt in metal content YoY. This was mainly due to the impact of the deep safety system optimization project implemented by Huize Mining on current production. Specifically, regarding the reasons for the decline in Q1 production, Yunnan Chihong Zn & Ge Co., Ltd. stated that the decrease in lead-zinc concentrate production from the company's mines in Q1 2025 was primarily due to actively responding to the national policy call for "green mines and intelligent upgrades" and further optimizing production processes. Huize Mining began implementing the deep safety system optimization project at the end of 2024, and the project's construction affected Q1 production. The decrease in lead-zinc smelting product production was mainly due to the impact of annual maintenance conducted by Chihong Comprehensive Utilization and Hulunbuir Chihong. Looking back at zinc prices in Q1 2025, in the futures market, the main SHFE zinc contract generally exhibited a weak and fluctuating trend. As of March 31, the main SHFE zinc contract was reported at RMB 23,455/mt, with a quarterly decline of 7.33%. Breaking it down by stage, in January, the growth in zinc ingot supply was limited, but downstream demand significantly weakened, providing insufficient fundamental support for zinc prices. Additionally, the domestic zinc ore market gradually loosened, causing zinc prices to decline throughout January. In February, coinciding with the Chinese New Year holiday, the post-holiday inventory buildup in China fell short of expectations. Coupled with the downstream sector's relatively optimistic expectations for subsequent consumption, zinc prices saw a rally amid a favourable macro environment. However, as domestic and overseas inventories increased simultaneously, and with actual end-user consumption still requiring time to materialize, the center of SHFE zinc prices continued to shift downward in February. In March, zinc prices maintained a fluctuating trend, with downstream consumption recovery still falling short of expectations. Nevertheless, social inventory remained at a low level. Coupled with favourable macro factors from the Two Sessions and expectations for production cuts at overseas smelters, zinc prices rose significantly. However, in March, the international escalation of Trump's tariff policies led to a decline in market risk appetite, which in turn put pressure on zinc price movements. In terms of spot prices, according to SMM spot quotes, zinc prices generally exhibited a downward fluctuating trend in Q1. As of March 31, the SMM #0 zinc ingot spot quote fell to RMB 23,370/mt, a decrease of RMB 2,530/mt from RMB 25,900/mt at the end of 2024, representing a decline of 9.77%. 》Click to view SMM spot quotes for zinc products On March 28, Yunnan Chihong Zn & Ge Co., Ltd. announced that due to significant price fluctuations in non-ferrous metal products and raw materials influenced by various factors such as domestic and overseas economic and policy conditions, in order to effectively reduce commodity market risks and hedge against the adverse impacts of price fluctuations in major raw materials and products on the company's production and operations, and based on judgments regarding macroeconomic trends, changes in industrial structure supply and demand, and trends in product and raw material prices, as well as the company's 2025 production plan, the company intends to utilize the hedging functions of options and futures instruments for risk control. The varieties involved in hedging include lead, zinc, and silver. When asked about the main drivers of the company's future profit growth, Yunnan Chihong Zn & Ge Co., Ltd. stated the following: First, the company adheres to a resource-first strategy. As of now, it has retained over 32 million mt of lead-zinc resources and owns two world-class high-grade lead-zinc mines. By pursuing both internal exploration and external mergers and acquisitions, the company has achieved resource reserves growth exceeding consumption for several consecutive years, forming a resource reserve scale that is safe, controlled, ensures supply stability, and supports continuous operations. Second, in recent years, the company has accelerated the layout of the zinc alloy and germanium deep-processing industry chain. By the end of 2024, the zinc alloy capacity had surged to 220,000 mt/year, and the market share of zinc alloy products has been increasing year by year. Third, the company focuses on the integration of digitalization and intelligence, with steady progress in the construction of smart mines and intelligent factories. In recent years, it has achieved significant breakthroughs in a number of key and original technologies, and multiple technical and economic indicators in mining, beneficiation, and smelting have taken the lead in the industry. Fourth, the company has established an efficient operational model integrating mining and smelting, as well as combined lead-zinc smelting. It continues to implement the "five integrations" closed-loop cost management and carry out comprehensive benchmarking for cost reduction, maintaining the full cost of lead-zinc concentrates from mines at the forefront of the industry and achieving a continuous five-year decline in the full processing cost of smelted zinc products.

Recently, the National Development and Reform Commission (NDRC) announced the list of the 31st batch of newly recognized national enterprise technology centers. Among them, Yunnan Chihong Zn & Ge Co., Ltd. (hereinafter referred to as "Chihong Zn & Ge") successfully obtained this recognition. This is a national-level platform that Chihong Zn & Ge has further upgraded to obtain, on the basis of having secured a series of provincial-level scientific and technological innovation platforms in Yunnan Province, such as key laboratories, technological innovation centers, and engineering research centers. It marks a new breakthrough for the company in the construction of innovation platforms. As one of the highest-specification and most influential technological innovation platforms in China, the national enterprise technology center is a recognition granted by the state to eligible enterprise technology centers with strong innovation capabilities, sound innovation mechanisms, significant leading and demonstrative effects, in line with the requirements of innovation-driven development and the needs of economic restructuring. The aim is to encourage key enterprises in the industry to lead and drive technological progress and innovation capacity enhancement in the industry. Obtaining the recognition of a national enterprise technology center is a high affirmation of Chihong Zn & Ge's innovation capabilities and scientific research achievements, and is of great significance for comprehensively enhancing its core functions and improving its core competitiveness. Chihong Zn & Ge will rely on the national enterprise technology center as a platform to vigorously implement the innovation-driven development strategy, continuously carry out breakthroughs in key core technologies, new product R&D, and the transformation of scientific research achievements, cultivate new quality productive forces, and empower high-quality development.

In Q1, Yunnan Chihong Zn & Ge Co., Ltd. (hereinafter referred to as "Chihong Zn & Ge") adhered to the principle of maximizing benefits, implemented the "Iron-blooded Cost Reduction" initiative, and further enhanced the profitability of its core businesses. In Q1, the company achieved operating revenue of 5.144 billion yuan, up 10.10% YoY; net profit attributable to the parent company of 494 million yuan, up 1.40% YoY; and non-GAAP net profit of 485 million yuan, up 5.38% YoY. Since the beginning of this year, Chihong Zn & Ge has comprehensively implemented Chalco Group's new strategic execution system of "4+4+N+Annual Key Special Projects," efficiently compiled the annual business white paper, matched it with a precise performance evaluation system, and organized production in a refined manner. In the mining sector, a production operation supervision working group was established to identify key, difficult, and bottleneck issues of each mining enterprise point-to-point, formulate promotion plans, and conduct full-process supervision, tracking, inspection, and evaluation. The production of major products in the mines exceeded the plan, and five key technical and economic indicators of three mining enterprises reached record highs. In the smelting sector, the company adhered to the "one enterprise, one policy" approach, established a production organization profit model for smelters, fully leveraged the advantages of lead-zinc joint production and comprehensive recovery, and increased the total recovery rate of zinc smelting by 0.14 percentage points YoY. In deep processing, production plans for zinc alloys and plates were formulated, and key tasks such as cost reduction, efficiency improvement, and inventory control were carried out effectively, enhancing the comprehensive profitability of zinc alloys. Sales of zinc alloys increased by 8.96% YoY, and plate production rose by 59.90% YoY. In germanium materials, the recovery rate from germanium concentrate to zone-refined germanium exceeded the plan by 0.11%, and the primary purification rate of zone-refined germanium exceeded the plan by 4.08%. In marketing, the company stabilized existing cooperative channels, continuously developed strategic end-user customers, optimized inventory management, accelerated product exports, and successfully achieved revenue growth. Net cash flow from operating activities increased by 58.97% YoY. Driven by the dual factors of high volatility in lead-zinc prices and the release of demand from emerging industries, Chihong Zn & Ge is expected to continue benefiting from the industry's prosperous cycle and move towards broader growth space.

[SMM News] According to the Q1 report of Yunnan Chihong Zn & Ge Co., Ltd., the company's lead-zinc concentrates production in Q1 was 69,600 mt in metal content, a YoY decrease of 17,400 mt in metal content, mainly due to the impact of the deep safety system optimization project implemented by Huize Mining on the current period's production.

[SMM News] According to the Q1 report of Yunnan Chihong Zn & Ge Co., Ltd., the company's lead-zinc concentrates production in Q1 was 69,600 mt in metal content, a YoY decrease of 17,400 mt in metal content, mainly due to the impact of the deep safety system optimization project implemented by Huize Mining on the current period's production.