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Primary Strategic Investments

Our Primary Strategic Investments are in Mount Gibson Iron Limited (“Mount Gibson”) (ASX: MGX), Tanami Gold NL (“Tanami Gold”) (ASX: TAM), Metals X Limited (“Metals X”) (ASX: MLX) and Prodigy Gold NL (“Prodigy Gold”) (ASX: PRX), which are operating in Australia and listed on the Australian Securities Exchange (“ASX”). During the period, APAC has increased its shareholding in Metals X to approximately 22.7% as at 31 December 2023. The net attributable profit shared from Mount Gibson, Tanami Gold and Metals X which are accounted for as the Group’s associates for 1H FY2024 was HK$298,065,000 (1H FY2023: Net attributable profit of HK$2,057,000).

In October 2022, our shareholding in Prodigy Gold, a gold exploration company listed on ASX increased to approximately 49.9%. In accordance with Hong Kong Financial Reporting Standards, APAC is deemed to have control over it and commence accounting for it as a subsidiary. APAC owns approximately 49.8% of Prodigy Gold at 31 December 2023. In 1H FY2024, the post-acquisition attributable loss from Prodigy Gold amounted to HK$20,562,000.

Mount Gibson

Mount Gibson is an Australian producer of direct shipping grade iron ore products. Mount Gibson owns the Koolan Island mine off the Kimberley coast in the remote north-west of Western Australia. Mount Gibson developed the Shine Iron Ore Project, located 85km north of Extension Hill, but suspended operations in November 2021 due to the widening discount for low-grade iron ore and the high freight costs.

Ore sales at the Koolan Island Restart Project started in April 2019 and achieved commercial production in the June quarter of 2019. The restart project had 21 million tonnes of 65.5% Fe reserves. Mount Gibson has completed a planned waste mining phase, enabling increased production from 2023 onwards.

Mount Gibson reported a net profit after tax of A$139 million for 1H FY2024 from sales of 2.5 million tonnes of iron ore. Operating costs improved in 1H FY2024 after the completion of its elevated stripping phase at Koolan Island and are on track with the company’s FY2024 guidance during the period.

Sales guidance for the year ending 30 June 2024 (“FY2024”) is 3.8 million to 4.2 million tonnes.

Mount Gibson’s cash reserve including term deposits was A$354 million at the end of 1H FY2024.

The Platts IODEX 62% CFR China index has risen in 1H FY2024 generally, from lows near US$105 per dry metric tonne (“dmt”) in August and ending the year near US$140 per dmt. The price is currently around US$130 per dmt. Iron ore prices have generally fluctuated with sentiment related to China’s economy. China’s stimulus measures drove recent improvement in market expectations.

Tanami Gold

APAC owns approximately 46.3% of Tanami Gold at 31 December 2023.

Tanami Gold’s principal business activity is gold exploration. It holds 50% of the Central Tanami Project and has a cash balance of A$26 million. In May 2021, Tanami Gold entered into a binding agreement with Northern Star Resources Limited (“Northern Star”) (ASX: NST) to establish a new 50-50 Joint Venture covering the Central Tanami Project.

Metals X

APAC owns approximately 22.7% of Metals X at 31 December 2023.

Metals X is focused on implementing its life of mine plan at Renison mine, including the development of the high-grade Area 5 deposit. During 1H FY2024, the Renison mine produced 2,630 tonnes of tin (net 50% basis), up 39% year-on-year.

Tin prices have moderated slightly in 1H FY2024 due to softer demand expectations and China tin production remaining robust despite continued supply concerns in Myanmar. At the time of writing, the tin price was around US$26,000 per tonne. We remain comfortable with the medium outlook for tin due to the lack of significant supply growth and new demand for tin from the growing electrical vehicle and energy storage industries.

For the six months ended 30 June 2023, Metals X generated a net profit after tax of A$12 million with net assets of approximately A$332 million at 30 June 2023.

Prodigy Gold

APAC owns approximately 49.8% of Prodigy Gold at 31 December 2023.

Prodigy Gold is a gold exploration company listed on the ASX. It holds a large footprint of exploration tenements in the Tanami region in the Northern Territory, Australia. Some of its tenements are held in joint venture with partners such as Newmont Corporation and IGO Limited. Prodigy Gold restarted its exploration activities in 2022 after several years of restrictions related to the COVID-19 pandemic. Prodigy Gold reported a net loss after tax of A$8.1 million for 1H FY2024. At the end of December 2023, Prodigy Gold has a cash balance of A$2.8 million.

The focus of Prodigy Gold for 2024 will be exploration on the Northern Tanami project area and continue with its strategy to divest non-core assets.

Financial Assets at Fair Value through Profit or Loss

Financial assets at fair value through profit or loss comprise mainly the Group’s Resource Investment. As at 31 December 2023, APAC had significant investment representing 5% or more of the Group’s total assets in Shougang Fushan Resources Group Limited (“Shougang Fushan”) (HKEX: 639).

Our investment in Shougang Fushan generated a fair value gain of HK$122,686,000 with carry value as at 31 December 2023 of HK$388,328,000.

Shougang Fushan is a coking coal producer listed on The Stock Exchange of Hong Kong Limited. Its principal businesses are coking coal mining and the production and sales of coking coal products in China. It has three mines located in China with reserves of 64 million tonnes of raw coking coal at 31 December 2022 and during six months ended 30 June 2023 Shougang Fushan produced 2.7 million tonnes of raw coking coal, which is consistent with its 2023 guidance of 5.25 million tonnes of raw coking coal.

Its results for the year ended 31 December 2023 are not yet available at the time of writing. The market capitalisation of Shougang Fushan in February 2024 is around HK$15.1 billion. The company generated EBITDA of HK$2,372,560,000 and net profit after tax of HK$1,519,093,000 while its working capital reported at 30 June 2023 is HK$7.4 billion.

Coking coal prices rebounded in 1H FY2024 due to better sentiment around China’s stimulus measures, incremental supply tightness and restocking activities on the back of low inventories.

Resource Investment

The investments in this division comprise mostly minor and liquid holdings in various natural resource companies listed on major stock exchanges, including Australia, Canada, Hong Kong, the United Kingdom and the United States. Our investments focus on select commodities within several commodity segments: energy, bulk commodities, base metals and precious metals.

Resource Investment posted a fair value gain of HK$214,274,000 in 1H FY2024 (1H FY2023: HK$54,447,000), which, after accounting for segment-related dividends and other investment income and expenses, resulted in a segment profit of HK$237,951,000 (1H FY2023: HK$114,919,000).

Our Resource Investment division includes, among other investing strategies, the two resource portfolios announced in August 2016, with additional natural resource-focused strategies subsequently established and focused on large caps and specialist opportunities. The aim of the portfolios is to produce a positive return using the Company’s funds as well as to create a track record to attract potential third-party investments in the future. These various portfolios are managed under the Resource Investment segment of the Company, which is separate from the Company’s large strategic stakes. Our portfolios have a global long-only mandate (cannot short stocks) and strict parameters on market capitalisation, liquidity, development stage (exploration through to production) and jurisdiction to manage risk.

The Small and Midcap Mining Portfolio (P1) focuses on investments in junior and intermediate companies involved in battery metals, base metals, precious metals, uranium, bulks and other hard rock commodities. Since its inception on 1 October 2016, the Mining Portfolio has delivered a return on investment of 508.4% to 31 December 2023, which is an outperformance of 508.2% against its benchmark (currency-adjusted equal weighting of ASX 200 Smallcap Resources, FTSE AIM All Share Basic Resources and TSX Venture Composite) return of 0.2%. A full breakdown of the Mining Portfolio’s (P1) periodic performance against its benchmark is presented in the table below.

For the half year ended 31 December 2023, the Mining Portfolio generated a return of 8.4%, which was 10.2% above the benchmark return of -1.7%. Despite the Magnificent 7 dragging the S&P 500 higher late in the half, it was another tricky period for resources investors, with most commodities dragged lower on increasing concerns around the Chinese economy particularly the ongoing property crisis. Portfolio outperformance was generated by a) a very large overweight in uranium names like National Atomic Company Kazatomprom JSC, Boss Energy Limited, Paladin Energy Limited, Denison Mines Corp. and Peninsula Energy Limited, with spot uranium prices increasing from US$56/lb to US$91/lb and propelling the sector higher, b) reducing lithium exposure during 1H FY2024 and largely avoiding the big sell-offs in the sector, and c) a number of significant stock-specific wins, including Azure Minerals Limited (takeover), Galiano Gold Inc. (acquisition rerate) and Founders Metals Inc. (gold discovery). The portfolio remains tight and focused with 36 names and continues to prioritise investments in cashflow and production over earlier stage companies. The largest detractor to performance continued to be the large cash position, which averaged 52% of the portfolio during the period.

The Energy Portfolio is primarily focused on the oil, gas and renewables sectors. At the end of 2019, the mandate for this portfolio was expanded to include investments in renewables, and with a broaden sector of investments, in the last four years from February 2020 (before the full impact of the Covid-19 Pandemic) to February 2024, the Energy Portfolio has generated a return on investment of 113%.

The investment choices in the Energy Portfolio are selected through a combination of fundamental bottom up valuation and analysis of the prospects for different sectors. For instance, during the early days of the COVID-19 pandemic, the investments were focused in companies in the green energy sector given that the low interest rate environment was supportive of stocks with significant growth potential. More recently investments have focused on energy companies given the impact of high interest rates on the green energy sector, plus robust oil prices supported by OPEC+ production cuts. We remain cautious on the outlook for both sub-segments, the potential weaker economic outlook globally is likely to put pressure on energy prices. While energy transition continues, the market’s appetite for non-profitable companies has waned significantly and sentiment about what happens to the proposed IRA funding in the US given the potential changes from the election, will weigh on the sector as well.


Precious Metals (majority gold exposure) generated a net fair value gain of HK$53,315,000 in 1H FY2024. As at 31 December 2023, the carrying value of the Precious Metals segment was HK$382,712,000 (As at 30 June 2023: HK$267,232,000). Our largest gold investment in the Resource Investment division is in Northern Star (ASX: NST) which generated a fair value gain of HK$12,520,000 with a carrying value as at 31 December 2023 of HK$89,357,000. We also own Westgold Resources Limited (ASX: WGX) which generated a fair value gain of HK$16,606,000 with a carrying value as at 31 December 2023 of HK$37,861,000.

Northern Star is the second-largest gold company in Australia and owns high-grade underground mines in Western Australia and Alaska. In 1H FY2024, its production was 797,000 ounces of gold, and it generated a net mine cash flow of A$237 million. In FY2024, its production target is 1,600,000 - 1,750,000 ounces.

Gold price range bounded between US$1,800 - US$2,050 per ounce in 1H FY2024 and ended the calendar year above US$2,000 per ounce after the US Federal Reserve took a more dovish stance on the outlook for interest rates in December. Gold price has recently hovered around US$2,000 to US$2,050 per ounce.


Bulk commodities segment generated a fair value gain of HK$129,376,000 in 1H FY2024. As at 31 December 2023, the carrying value was HK$487,151,000 (As at 30 June 2023: HK$324,588,000). Our largest investment in this segment during 1H FY2024 is in Shougang Fushan (HKEX: 639), which generated a fair value gain of HK$122,686,000 and had a carrying value as at 31 December 2023 of HK$388,328,000.

Base Metals

Base Metals segment (a mix of copper, nickel and zinc companies) delivered a fair value loss of HK$8,309,000 in 1H FY2024. During the period, copper prices stayed mostly flat; nickel prices fell 19%, while zinc prices rose 12%. The Base Metals segment includes our investment in China Hongqiao Group Limited (HKEX: 1378) which had a carrying value as at 31 December 2023 of HK$10,863,000.


The Energy segment (mix of oil and gas, uranium and renewables) had a fair value gain of HK$36,298,000 in 1H FY2024. Our significant Energy investments include National Atomic Company Kazatomprom JSC (LSE: KAP), which generated a fair value gain of HK$17,825,000 and had a carrying value as at 31 December 2023 of HK$71,905,000.


We also have a fair value gain of HK$7,147,000 from the remaining commodity (diamonds, manganese, rare earths, lithium and mineral sands among others) and non-commodity investments in 1H FY2024 and had a carrying value as at 31 December 2023 of HK$120,520,000 (As at 30 June 2023: HK$113,025,000).

Commodity Business

Our iron ore offtake at Koolan Island recommenced as the mine restarted operations, and we continue to look for new offtake opportunities across a range of commodities. For 1H FY2024, our Commodity Business generated a segment profit of HK$69,373,000 (1H FY2023: HK$6,993,000).

Principal Investment and Financial Services

The Principal Investment and Financial Services segment, which covers the income generated from loan receivables, loan notes and other financial assets. For 1H FY2024, this segment reported a profit of HK$35,856,000 (1H FY2023: Loss of HK$15,957,000).

Money Lending

Business Model and Customer Profile

The Group provides both secured and unsecured term loans to its customers under its principal investment and financial services segment. Money lending activities diversifies the income stream and business risks of the Group, and generates a stable return with the Group’s available financial resources on hand from time to time. The Group mainly financed its money lending business by its internal resources.

The Group does not set a specific target for the industry, business or level of annual revenue to corporate borrowers. The customers of the Group’s lending business were referred to the Group through its corporate or business networks. For 1H FY2024, customers of the Group’s lending business include subsidiaries of Hong Kong listed companies for unsecured loans, and private companies for secured loans.

Outstanding loan receivables net of loss allowances as at 31 December 2023 amounted to approximately HK$193,885,000 (As at 30 June 2023: HK$346,074,000). During the period, the Group has reversal of impairment losses on its loan receivables of approximately HK$24,110,000 (1H FY2023: Impairment loss of HK$8,676,000). Details of each of the loans outstanding as at 31 December 2023 are disclosed in note 15 to the consolidated financial statements.

Risk Management Policies

The Group adopts a thorough credit assessment and approval process, and will assess and approve each loan transaction on a case-by-case basis. The finance department of the Group (the “Finance Department”) is responsible for conducting a background check on the prospective borrower in compliance with the applicable laws and regulations, reviewing the background and financial strength of such borrower and where applicable, the guarantor, and enquiring the prospective borrower about the purpose of the loan and the expected source of funds for loan repayment. To support its analysis, the Group will obtain corporate documents, financial statements and search reports of the borrower and/or the guarantor, and thereafter, assess the credit risk of the loan and negotiate the terms thereof after considering (i) the background and financial position of the borrower or the guarantor (if applicable), including net asset value and gearing ratio; and (ii) the value of the securities, if any.

Each loan transaction will be approved by either the board (the “Board”) of directors of the Company, or if the loan principal does not exceed the threshold set by the Board, by the executive committee of the Board.

The Finance Department monitors the loan and interest repayment regularly and reviews the annual financial statements of the borrowers and guarantors (if applicable). It would promptly report to the chief executive or chief financial officer of the Group for any delay or default in repayment upon maturity, who would then formulate plans for loan collection, including but not limited to requesting for additional securities or initiating legal actions.

Loan Impairment Policies

The Company adopts estimated credit loss allowances (“ECLs”) according to the requirements of Hong Kong Financial Reporting Standard 9 issued by the Hong Kong Institute of Certified Public Accountants. Accordingly, it shall review the recoverable amount of each loan at the end of each reporting period to ensure that adequate impairment losses are made. The Group applies a general approach on loan receivables to assess for the ECLs. Assessment are done based on the Group’s historical credit loss experience, adjusted for factors that are specific to the borrower. In order to measure the ECLs of loan receivables, the Group will apply a credit rating for each of its borrowers by reference to each borrower’s past default records, current past due exposure, an analysis of its current financial position, likelihood or risk of a default, an assessment on any significant increase in credit risk, and fair value of collaterals (if any), and adjust for forward-looking information that is available without undue cost or effort, such as the current and forecasted global economy and the general economic conditions of the industry in which the borrower operates.

The Group regularly monitors the effectiveness of the criteria used to identify whether there has been a significant increase in credit risk and revises them as appropriate to ensure that the criteria are capable of identifying any significant increase in credit risk before the loan amount becomes past due.

Forward Looking Observations

We have a moderate near-term outlook for the global economy and commodities. The US economy has seen continued resilience but is nonetheless entering a soft patch. The market continues to seek confirmation of an economic soft landing and will primarily focus on the pace of potential interest rate cuts in 2024. Meanwhile, structural issues continue to affect China’s economy. However, we have seen an acceleration of stimulus rollouts recently, which will be positive for commodities and provide support from a cyclical perspective. We see opportunities in select commodities that are positively exposed to the changing macro environment or are long-term beneficiaries of secular trends such as energy transition. We remain selective with our investments in the near term and continue to look for high-quality opportunities that will generate attractive returns over the long run. Our mining and energy investment portfolios are the platform for future mining and energy investments. Our largest investment is in Mount Gibson, which has successfully ramped up production at the Koolan Island mine after completing its large waste stripping program and is now in a position to generate free cash flow in the coming years and take advantage of a surprisingly resilient iron ore price.


(update as of 23 February 2024)
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