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Dear Shareholders:


The total comprehensive loss attributable to owners of the Company was approximately RMB261.4 million for the year ended 31 December 2015, representing an increase of approximately RMB182.7 million or approximately 232.1% as compared with total comprehensive loss attributable to owners of the Company of RMB78.7 million for the year ended 31 December 2014.
Facing the pressure of domestic economic downturn and regulatory measures towards the property market, the market sentiment of steel industry in the PRC was dampened in 2015. In response to the global iron concentrate market downturn, the Group principally implemented the following measures:

I. Increase in research and development efforts, and transforming into a national high-tech enterprise from a traditional mining company.
1. In 2015, the cooperation with Siberian Branch of the Russian Academy of Sciences achieved significant progress.
Shandong Ishine cooperated with Siberian Branch of the Russian Academy of Sciences in researching of advanced technology of “introduction of a new processing technology for efficient extraction of titanium from ilmenite”. The cooperation helped to solve the technical bottleneck of the Group by efficient use of lean titanium content ilmenite resources, thereby significantly reducing the cost and energy consumption in titanium production and enhancing the comprehensive recovery rate of ilmenite ore. On 14 July 2015, Shandong Ishine, a wholly-owned subsidiary of the Group, entered into the formal cooperation agreement with Siberian Branch of the Russian Academy of Sciences in relation to “Introduction of a New Processing Technology for Efficient Extraction of Titanium from Ilmenite”, pursuant to which the two parties shall carry out in-depth cooperation in the introduction of a new processing technology for efficient extraction of titanium from ilmenite.
2. Actively enhanced the research support from Institute of Process Engineering of the Chinese Academy of Sciences.
In 2015, based on the so-far achieved results on significant technology, the Group aimed to complete the development and innovation of hydrometallurgy processing of 76%-or-above titanium concentrate as soon as possible. So far, relevant works have progressed well.
3. In 2015, Shandong Academician Workstation was approved for establishment as the basis of closer industry-university-research cooperation for the research on new techniques relating to hydrometallurgy processing of ilmenite and associated elements with furnace method.
4. We transformed ourselves into a national high-tech enterprise from a traditional mining company.
In 2015, Shandong Ishine, a wholly-owned subsidiary of the Group, received 7 computer software copyright registration certificates and 5 utility model patent certificates. On 10 December 2015, after the strict assessment and approval, Shandong Ishine was notified by the Department of Science & Technology of Shandong Province (山東省科學技術廳), Shandong Province Finance Bureau (山東省財政廳), Shandong Provincial Office of State Administration of Taxation (山東省國家稅務局) and Shandong Local Taxation Bureau (山東省地方稅務局) that various approvals were passed, and Shandong Ishine would be formally awarded the national high-tech enterprise qualification. This is the national certification obtained by Shandong Ishine in enterprise core intellectual property rights, transformation of technological achievement, management and organisation level of research and development and the growth of the operating performance. The Group successfully transformed from a traditional mining company to a national high-tech enterprise, thus laying a solid foundation for the future growth of the sustainable profitability of the Group.
II. Close response to the industrial incentive policies of the central government and full utilisation of the Group’s domestic resource advantages to develop the financial leasing business into a new growth drive of the Group
In 2015, the Group established a financial leasing company in Tianjin to carry out financial leasing business, including purchasing leased assets in domestic and overseas markets, disposal and maintenance of leased assets, and consultation and guarantee on lease transactions. Currently, the company is operating smoothly.
III. Active utilisation of re-financing platform to raise fund.
Taking full advantage of the re-financing platform, the Group placed its new shares in due time and raised RMB153.2 million in 2015. The Group has been continuously broadening its shareholder base and increasing the liquidity of its shares to provide financial support for the Group’s development.
IV. Actively seeking for official support such as advance construction funds from government.
The Group actively sought support from government based on the relevant national policy. In 2015, the Group received advance construction funds from the government amounting to RMB7.6 million.
V. Enhancing internal strengths, harmonizing ideas and improving team-building, training and management.
It was high time for the Group to enhance internal strengths and improve training of the staff due to the stagnant market conditions. The Group planned to eliminate non-profitable mines and entities in due time. Based on the conditions of the market and the operating conditions of the Group, the Group reduced the number of employees by conducting performance evaluation to improve operating efficiency. The Group strived for the transformation and survival of the Group. It encouraged the staff to get rid of unrealistic complaints and the habit of “waiting, dependence and delay” and was dedicated to build a winning team through self-improvement and self-empowerment.
VI. Continuously improving corporate management system and strictly implemented safety measures.
Strictly in compliance with relevant safety regulations under the Mineral Resources Law and the Safety Production Law, the Group established and optimised its “3-category” safety production management department and safety management system. It formulated strict production accident prevention and emergency rescue plans. The Group focused on propaganda and education works in respect of safety production. Moreover, the Group regularly conducted training and appraisal on all employees in respect of safety production, and created a safety working environment.
VII. Strengthening the management of prepayments.
In 2015, the Group started to implement a supplier credit rating system. The Group established a rigorous approval and recognition process for prepayments with strict examination on the terms of purchase contracts, timely issuance and acceptance of invoices and recognition after entering into a transaction. In order to avoid late settlement of prepayments, the Group further strengthened the management’s supervision responsibility to follow up prepayments.
VIII. Mergers and acquisitions.
In 2015, the Group continued to make great efforts in planning and implementation of a comprehensive industrial chain, including mining and processing of ilmenite ore and production of titanium concentrates, high titanium slag, titanium tetrachloride and sponge titanium. Apart from the above-mentioned internal research and development of production technology, the cooperation with Chinese Academy of Sciences and the technology transfer cooperation with the Siberian Branch of the Russian Academy of Sciences under the leadership of the Ministry of Science and Technology of China, the Company also conducted a number of due diligence and selection projects in regard to potential mergers and acquisitions of enterprises in the whole titanium business to seize every possible chance of mergers and acquisitions and business opportunities.
IX. Research on clean energy.
In 2015, as a resources holdings company, the Group conducted an in-depth research on new clean energy advocated by national policies, such as wind power and solar power. The Group also cooperated with state-owned enterprises and competent new energy companies on the research towards the feasibility of new energy. Based on the particular geographic location of its mines and availability of resources such as wind and solar energy, the Group planned to enter the clean energy industry at a proper time. Meanwhile, a research towards whether the Group can develop into a national competitor with great potential in the sector was being conducted. If there are feasible plans and well-defined targets, the Group will seize every possible chance to become more competent to maximise returns for investors.
X. Continuous pursuit of technological innovation and development of recycling economy.
The Group persists in technology innovation to enhance production efficiency and develop recycling economy. The Group built a picturesque and attractive lake in the mining and production area, which had become a famous view spot well-known for its flourishing and extensive green surroundings of 200,000 sea buckthorns and 6,000 apricot trees and had become the home for flocks of swans and hundreds of thousands of carps and grass carps. The delicate fragrance of red sweet osmanthus and shades of leaves of a rich variety of trees around the lake had also attracted visitors.

Such achievement can only be made through innovation in technology to improve manufacturing efficiency and reduce energy consumption, therefore accomplishing sustainable recycled economy.

In the upcoming year, the Group will adhere to its tradition of the past and intensify its efforts in the corporate transformation and the fields of high and new technology as well environmental friendly and new green energy, so as to strive for a good performance to reward our investors.

Last but not least, I express sincere gratitude to all the members of the Board for their valuable opinions. I would also like to express my gratitude to the management and all the staff for their dedication and commitment to the Company amidst the challenging environment.

Li Yunde