MGX

APAC Resources owns 38.4% of MGX at 31 December 2025. MGX is undergoing a business transition from an iron ore producer to a gold developer, with the scheduled end of Koolan Island operation in 2026 and completed acquisition of 50% interest in the Central Tanami Gold Project Joint Venture. MGX owns the Koolan Island mine off the Kimberley coast in the remote north-west of Western Australia.  

Due to a significant rockfall on the eastern footwall of the main pit at Koolan Island in October 2025, mining was suspended. The investment required to remediate the mine was not economically justified, especially noting that mining was scheduled to conclude around September 2026. For now, the operations are focused on the monetization of lower grade stockpiles, with processing and shipping of low-grade material expected to continue to late in the June quarter of 2026.  

MGX generated A$15 million free cash flow in the December quarter of 2025 with the sales of 798,000 wet metric tonnes (“wmt”) of iron ore (319,000 wmt of average 62.6% Fe iron ore and 479,000 wmt of average 49.6% Fe iron ore). For the coming two quarters, MGX targets to process and ship a further 1 million wmt of low grade (42-45% Fe iron ore) stockpiled material, followed by a full depletion of the mine stocks.   Sales guidance for the year ending 30 June 2026 (“FY25/26”) was withdrawn on 24 October 2025. MGX’s cash and investment reserves was A$497 million at the end of 1H FY25/26, although this doesn’t include the A$50 million payment made in February 2026 upon acquisition of the Central Tanami Gold Project Joint Venture. Pro-forma MGX has A$447 million cash and investment reserves.  

The Platts Iron Ore Index 62% CFR China index traded strongly in 1H FY25/26, from mid-US$90s per dry metric tonne (“dmt”) in July to circa US$108 per dmt in late December 2025. At time of writing in early February 2026, the price is around US$100 per dmt. Iron ore prices have been supported by strong Indian and United states (“U.S.”) steel output, while China, Russia, and European steel production has declined due to weak economic growth. Iron ore prices are expected to fluctuate with sentiment related to China and India’s economy.

Tanami Gold

APAC Resources owns 46.3% of Tanami Gold at 31 December 2025. Tanami Gold’s principal business activity is gold exploration. It holds 50% of the Central Tanami Project and has a cash balance of A$14 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 Gold Project Joint Venture. On 3 December 2025, MGX reported that it received approval from the Foreign Investment Review Board for an acquisition for Northern Star’s 50% interest in Central Tanami Gold Project Joint Venture, and the transaction was completed in February 2026.

Metals X

APAC Resources owns 23.3% of Metals X as at 31 December 2025. Metals X is focused on implementing its life of mine plan at Renison mine, including the development of the high-grade Area 5 deposit. In the six months ended 31 December 2025, the Renison mine produced 2,796 tonnes of tin (net 50% basis), down 10% year-on-year, as September quarter mill throughput was impacted by operational downtime and equipment failures. However, production rebounded significantly in the December quarter due to notably higher grades and recoveries as plant operations were more stable. Production improved in December quarter by 46% quarter-on-quarter.  

Tin prices have rallied from circa A$34,000 per tonne in early July 2025 to circa A$48,000 per tonne at the time of writing in late February 2026. Demand for critical mineral stockpiling, supply challenges such as Indonesia illegal tin mine shut-downs and Myanmar shipment delays and speculative trading activities have all contributed to strong tin prices. We remain comfortable with the outlook for tin due to the lack of supply growth, growing demand for tin from the electrification trend, and growth from semiconductors and energy storage industries.

Dragon Mining

APAC Resources owns 24.7% of Dragon Mining at 31 December 2025. The principal activity of Dragon Mining is gold exploration, mining, and processing in the Nordic region. Dragon Mining operates gold mines and processing facilities in Finland and Sweden. In Finland, the Vammala Production Centre consists of a conventional 300,000 tonnes per annum crushing, milling and flotation plant, the Jokisivu Gold mine, the Orivesi Gold mine which ceased production in June 2019, and the Kaapelinkulma Gold mine which ceased production in April 2021, and the Uunimäki Gold project. Annual production from Dragon Mining is in the range of 20,000 to 30,000 ounces of gold in concentrate depending on the grade of ore and gold concentrate feed. In Sweden, the operation is known as the Svartliden Production Centre, consisting of a 300,000 tonnes per annum carbon-in leach processing plant together with the closed Svartliden Gold mine (mining completed in 2013), and the Fäboliden Gold mine where a campaign of test-mining was completed in September 2020. On 1 April 2025, Allied Properties Resources Limited (“APRL”), a wholly-owned subsidiary of APAC Resources, announced a pre-conditional voluntary cash offer of HK$2.20 per share for all issued shares of Dragon Mining not owned by APRL and its concert parties. On 19 May 2025, Wah Cheong Development (B.V.I.) Limited (“Wah Cheong”), an indirect wholly-owned subsidiary of Allied Group Limited (a substantial shareholder of APAC Resources), announced a conditional voluntary cash offer of HK$2.60 per share for all issued shares of Dragon Mining not owned by Wah Cheong and its concert parties. On 2 June 2025, APRL’s offer was withdrawn. On 22 September 2025, Dragon Mining raised HK$172.8 million via a placement of over 31.6 million shares at HK$5.61 per share.

Prodigy Gold

APAC Resources owns 30.7% of Prodigy Gold at 31 December 2025.  

Prodigy Gold is a gold exploration company listed on the Australian Securities Exchange. It holds a large footprint of exploration tenements in the Tanami region in the Northern Territory, Australia, and a JORC resource of 1.03 million ounces across its Hyperion, Tregony, Buccaneer and Old Pirate projects. Some of its tenements are held in joint venture with partners such as Newmont Corporation (ASX: NEM) and IGO Limited (ASX: IGO). At the end of December 2025, Prodigy Gold has a cash balance of A$5.2 million. The focus of Prodigy Gold for 2026 will be exploration on the Tanami North 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 2025, within the Resources Investment APAC Resources had significant investment representing 5% or more of the Group’s total assets in Shougang Fushan Resources Group Limited (“Shougang Fushan”) (HKEX: 639).

Significant Investment

Resource Investment

Small and Mid-Cap Mining Portfolio

This portfolio is focused on investments in small and mid-cap companies involved in the exploration, development and production of battery metals, base metals, precious metals, uranium, bulks and other hard rock commodities. Managed by the same portfolio manager since its inception in October 2016, the Small and Mid-Cap Mining Portfolio delivered a return of 78.4% in the six months ended 31 December 2025, which is an outperformance of 35.0% against its benchmark, which is a currency adjusted equal weighting of the ASX 200 Small Cap Resources, FTSE AIM All Share Basic Resources and TSX Venture Composite indices.  

Over its full investment lifetime of October 2016 to December 2025, the portfolio has now delivered a return of 1,418%, which is a substantial outperformance of 1,335% against its benchmark return of 82%. A full breakdown of the Small and Mid-Cap Mining Portfolio’s annual performance against its benchmark is presented in the table below  

Energy Portfolio

This portfolio is primarily focused on the oil, gas, power and renewables sectors. At the end of 2019, the mandate for this portfolio was expanded to include investments in renewables, and with a broader sector of investments, from February 2020 (before the full impact of the Covid-19 Pandemic) to January 2026, the Energy Portfolio has generated a return on investment of 197%.  

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. 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. During 1H FY25/26, we have continued to focus on companies that support base load power (predominantly natural gas in certain countries and uranium) and added select names that were leveraged specifically to the power demand part of the artificial intelligent (“AI”) Data Centre thematic. At the same time, we reduced oil exposure significantly, on the assumption that we would see oversupply given OPEC+ laid out a path to unwind production cuts. In 1H FY25/26, oil price fell 7%, although admittedly oil price performance was not as bad as we initially feared given restocking demand from the U.S. Strategic Petroleum Reserve, plus ongoing Chinese purchases as both strategic and commercial stockpiles continued to grow. The energy transition continues, particularly in select areas like Energy Storage System. At the time of writing in February 2026, we are starting to see some greenshoots in parts of the solar value chain as it appears the policy overhang is starting to clear up.

Large-Cap Resources Portfolio

This portfolio is strategically focused on high-quality investments across the broader resources sector, encompassing leading metals miners and developers, royalty companies, downstream material producers and physical commodities holding vehicles. In the six months ended 31 December 2025, the Large-Cap Resources Portfolio delivered an impressive return of 57.6%, reflecting the powerful tailwinds in the sector during this period.  

The exceptional performance was primarily driven by a strong allocation to the precious metals sector, underpinned by a firmly positive outlook on gold and silver (as highlighted in our Small and Mid-Cap Mining Portfolio section). During the period, the portfolio focused on high quality gold and silver developers, where Hycroft Mining (NASDAQ: HYMC) and NovaGold Resources (NYSE: NG) have been the top contributors of the portfolio’s performance. Holdings of established precious metals producers, including Coeur Mining (NYSE: CDE), Equinox Gold (NYSE: EQX), IAMGOLD (NYSE: IAG), Newmont Corporation (NYSE: NEM), also contributed to the portfolio’s extraordinary return in the period.  

During the period, there were a few loss-making positions, including Asante Gold (TSX: ASE) and Allied Gold (TSX: AAUC), which had experienced volatility driven by risks associated with operating in less stable jurisdictions such as Ghana and Mali. However, we see asymmetric risk-reward with the compelling company valuations, considering the massive cash flow generated under a resilient gold and silver price environment.  

Looking ahead, the portfolio will maintain its emphasis on sectors experiencing a cyclical upturn, with a selective, rigorous approach to identifying high quality companies that offer attractive risk reward profiles. This disciplined strategy positions the portfolio to continue capitalizing on the favorable dynamics in resources and precious metals.

Precious Metals

Precious Metals (majority gold exposure) generated a net fair value gain of HK$1,139,861,000 in 1H FY25/26 (1H FY24/25: HK$55,082,000). As at 31 December 2025, the carrying value of the Precious Metals segment was HK$2,110,989,000 (As at 30 June 2025: HK$1,045,084,000). Our largest gold investment in the Resource Investment segment is in Northern Star (ASX: NST) which generated a fair value gain of HK$44,123,000 with a carrying value as at 31 December 2025 of HK$139,310,000. We also own Westgold Resources (ASX: WGX) which generated a fair value gain of HK$56,510,000 with a carrying value as at 31 December 2025 of HK$100,691,000. Northern Star is the largest gold company in Australia and owns high-grade underground mines in Western Australia and Alaska. In 1H FY25/26, its production was 728,000 ounces of gold, and it generated a net mine cash flow of A$313 million. In FY25/26, its production target is 1,600,000 - 1,700,000 ounces.  

The gold price had a strong rally in 1H FY25/26 from approximately US$3,300 per ounce and reached a high of US$4,500 per ounce before ending the year at around US$4,300 per ounce. There is speculation that the strong gold price has been driven by central bank purchases, safe haven demand amid worries on geopolitical tensions and expectations that global monetary policies would loosen.

Bulk Commodities

The Bulk Commodities segment generated a net fair value gain of HK$47,222,000 in 1H FY25/26 (1H FY24/25: net loss of HK$128,771,000). As at 31 December 2025, the carrying value was HK$539,379,000 (As at 30 June 2025: HK$492,600,000). Our largest investment in this segment during 1H FY25/26 is in Shougang Fushan (HKEX: 639), which generated a fair value gain of HK$9,985,000 and had a carrying value as at 31 December 2025 of HK$409,174,000.

Base Metals

The Base Metals segment (a mix of copper, nickel, zinc, aluminium, tin and cobalt companies) delivered a net fair value gain of HK$88,407,000 in 1H FY25/26 (1H FY24/25: net loss of HK$21,592,000). As at 31 December 2025, the carrying value was HK$300,619,000 (As at 30 June 2025: HK$112,239,000). During the period, base metal prices were strong, with copper prices up 24.3%, nickel prices up 10.2%, and zinc prices up 12.7%. The Base Metals segment includes our investment in Lundin Mining Corp (TSX: LUN) which generated a fair value gain of HK$29,911,000 and had a carrying value as at 31 December 2025 of HK$58,674,000.

Energy

The Energy segment (mix of oil and gas, uranium and renewables) had a net fair value gain of HK$47,444,000 in 1H FY25/26 (1H FY24/25: net loss of HK$61,989,000). As at 31 December 2025, the carrying value was HK$232,745,000 (As at 30 June 2025: HK$163,539,000). Our significant Energy investments include Paladin Energy Limited (ASX: PDN), which generated a fair value gain of HK$24,778,000 and had a carrying value as at 31 December 2025 of HK$63,734,000.

Others

We also have a net fair value gain of HK$114,501,000 from the remaining commodity (diamonds, manganese, rare earths, lithium and mineral sands among others) and non commodity investments in 1H FY25/26 (1H FY24/25: net loss of HK$42,952,000). As at 31 December 2025, the carrying value was HK$254,863,000 (As at 30 June 2025: HK$113,034,000).

Commodity Business

We have an iron ore offtake at Koolan Island, and we continue to look for new offtake opportunities across a range of commodities. For 1H FY25/26, our Commodity Business generated a segment gain of HK$44,040,000 (1H FY24/25: loss of HK$6,468,000).  

Principal Investment and Financial Services

The Principal Investment and Financial Services segment, which covers the income generated from loan receivables and other financial assets. For 1H FY25/26, this segment recognised a profit of HK$5,732,000 (1H FY24/25: profit of HK$3,597,000).

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 FY25/26, customer of the Group’s lending business included a Hong Kong listed company for an unsecured loan.  

Outstanding loan receivables net of loss allowances as at 31 December 2025 amounted to HK$7,298,000 (As at 30 June 2025: HK$83,578,000). During the period, the Group has written back impairment losses on its loan receivables of HK$5,683,000 (1H FY24/25: impairment losses of HK$588,000). Details of a loan outstanding as at 31 December 2025 are disclosed in note 15 to the interim condensed consolidated financial information.

Risk Management Policies

Loan Impairment Policies

The Company adopts expected 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 is 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

For FY25/26, we remain cautious on the near-term macro outlook, anticipating a prolonged period of high market volatility given fluctuations in U.S. trade policies, geopolitical tensions, fiscal and monetary decisions around the globe. While the U.S. economy has shown resilience driven by strong AI investments, the slowing income growth and weak labor market have driven concern of a gradual turnaround for the economy’s strength. Mixed economic data points lead to difficulties in an interest rate cut decision. At the same time, while China achieved the strong GDP target in 2025, the sustainability of the growth rate is unclear to us, as a strong revival in Chinese domestic consumption and property sector is yet to be seen. We would not discount a potential strong policy response from the Chinese government to boost the domestic economy although this doesn’t appear to be a high priority right now. We believe that precious metals investment demand will continue to be strong amid the uncertainties around global economy and rising U.S. debt levels. At the same time, we take a selective approach on other commodities, which benefit from structural trends such as energy transition and increasing AI activity and supportive medium term policies changes, such as increasing critical metals investment, expansion of strategic reserves and loosening policy constrains (for example on nuclear plants). By investing in high quality opportunities, we aim to deliver attractive returns over the long run with our mining and energy investment portfolios. We are also excited in the business transition of our largest investment, MGX, from an iron ore producer to a gold developer via the recent acquisition of the 50% interest in the Central Tanami Gold Project Joint Venture, which could unlock value by advancing the project with 2.8 million ounces high grade gold resources.