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Primary Strategic Investments

Our Primary Strategic Investments are in Mount Gibson (ASX: MGX) and Tanami Gold NL (“Tanami Gold”) (ASX: TAM), both are listed and operating in Australia. During the year, APAC has increased its shareholding in Metals X Limited (“Metals X”) (ASX: MLX) to approximately 21.2% as at 30 June 2023, which is also listed on the Australian Securities Exchange (“ASX”), turning it to become an associate. The net attributable loss from our Primary Strategic Investments for FY2023 was HK$10,632,000 (FY2022: Net loss of HK$340,418,000).

In October 2022, our shareholding in Prodigy Gold NL (“Prodigy Gold”), a gold exploration company listed on ASX increased to 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. In FY2023, the post-acquisition attributable loss from Prodigy Gold amounted to HK$9,721,000.

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 2019. The restart project had 21 million tonnes of 65.5% Fe reserves. Mount Gibson has reached the end of a planned elevated waste mining phase, which will enable increased production from the year ending 30 June 2023 onwards.

Mount Gibson reported a net profit after tax of A$5 million for FY2023 from sales of 3 million tonnes of iron ore. Operating costs improved in FY2023 as the company completed its elevated stripping phase at Koolan Island and repairs were completed at the crushing plant. Mount Gibson financials were impacted by a non-cash impairment for the carrying value of both Koolan Island and its Mid West assets, for a combined impact of A$75 million.

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

Mount Gibson cash reserve, including term deposits and tradable investments and net of debt, was A$139 million or an equivalent of A$0.115 per share at the end of FY2023.The Platts IODEX 62% CFR China index has been volatile in FY2023, it averaged US$103 per dry metric tonne (“dmt”) but bottomed in late October 2022 at US$73 before trading up to US$127 per dmt in February 2023 and by late August 2023, traded back to US$115 per dmt. Iron ore prices have generally fluctuated with sentiment related to China’s economy. It saw a sharp rebound after the end of its zero covid policy, then weakened on concerns of weak property sales and construction activity.


Tanami Gold

We currently own 46.3% of Tanami Gold.

Tanami Gold’s principal business activity is gold exploration. It holds 50% of the Central Tanami Project and has a cash balance of A$31 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. Northern Star agreed to pay A$15 million cash to increase its ownership in the project from 40% to 50%, and going forward both parties will be jointly responsible for funding exploration and development activities. This agreement was completed and Tanami Gold paid A$5 million cash to fund its share of the joint venture activity.

Metals X  

APAC owns 21.2% of Metals X as at 30 June 2023.

Metals X is focused on implementing its life of mine plan at Renison mine, including development of the high grade Area 5 deposit. During FY2023, the Renison mine produced 4,023 tonnes of tin (net 50% basis) down 15% year-on-year (“YoY”), and the average realised tin price of A$36,429 per tonne was down 24% YoY.

After its sharp peak in early 2022, tin prices have moderated due to weaker demand as reflected in a drop in semiconductor orders and lower demand for electronic consumer products in the face of a weakening global economy. In FY2023 the tin price averaged US$24,420 per tonne. More recently, concerns about supply issues, including weaker production from Indonesia and potential ban on mining activity in Myanmar has provided some support for prices, and at the time of writing the tin price is around US$25,000 per tonne. We remain comfortable with the medium term 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$12.1 million with net assets of approximately A$331.7 million at 30 June 2023.

Prodigy Gold 

APAC owns 49.8% of Prodigy Gold.


Prodigy 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$5.2 million for FY2023. At the end of June 2023, Prodigy Gold has a cash balance of A$6.1 million. The focus of Prodigy Gold for 2023 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 its Resource Investment. As at 30 June 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). 

Significant Investments


Our investment in Shougang Fushan generated a fair value loss of HK$156,316,000 with carrying value as at 30 June 2023 of HK$265,375,000.

Shougang Fushan is a coking coal producer listed on The Stock Exchange of Hong Kong Limited. Its principal businesses are coking coal mining, production and sales of coking coal products in China. It has 3 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 raw coking coal which is consistent with its 2023 guidance of 5.25 million tonnes of raw coking coal.

For the six months ended 30 June 2023, Shougang Fushan generated EBITDA of HK$2,373,000,000 and net profit after tax of HK$1,519,000,000. The market capitalisation of Shougang Fushan in September 2023 is around HK$11.4 billion, while its working capital reported at 30 June 2023 is HK$7.4 billion. In July 2023 Shougang Fushan announced it plans to buyback 125 million shares at HK$2.40 per share as a means to provide liquidity given that the company is trading at a discount to its net asset value. Since the announcement Shougang Fushan’s share price has traded consistently below this buyback level.

The average benchmark market selling prices of its clean coking coal products in the first half of 2023 was down 30% YoY and Shougang Fushan’s realized price was down 22%. The outlook for Chinese steel demand remains uncertain given the weakness seen in the housing market and speculation that there will be steel production cuts.

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, namely energy, bulk commodities, base metals and precious metals.

Resource Investment posted a fair value gain of HK$16,813,000 in FY2023 (FY2022: HK$169,137,000), which after accounting for segment related dividend and other investment income and expenses, resulted in a segment profit of HK$92,801,000 in FY2023 (FY2022: HK$171,572,000).

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 to 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.

One of the mining portfolios focuses on investments in Small and Mid-cap 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 461.2% to 30 June 2023, which is an outperformance of 459.2% against its benchmark (currency adjusted equal weighting of ASX 200 Smallcap Resources, FTSE AIM All Share Basic Resources and TSX Venture Composite) return of 2.0%.

A full breakdown of the Small and Midcap Mining Portfolio’s (P1) annual performance against its benchmark is presented in the table below.

For the year ended 30 June 2023, this strategy generated a return of 16.3%, which was 19.5% above the benchmark return of –3.2%. Alpha was generated by a) larger positions in lithium and thermal names in the first half of the year, before pivoting to more gold and uranium exposure in the second half of the year, b) reweighting the portfolio towards cashflow generating production and cutting more early stage and speculative positions (total holdings reduced from 46 to 38 stocks), and c) early investments into Meteoric Resources NL and Azure Minerals Limited. The largest detractor to performance was maintaining a cash position that averaged 30% over the year. This cash position is currently higher given the portfolio manager’s near-term bearish macro outlook.

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 broadened sector of investments, in the last 3.5 years from February 2020 (before the full impact of the COVID-19 Pandemic) to August 2023, the Energy Portfolio has generated a return on investment of 103%.

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.


Precious metals (majority gold exposure) generated a net fair value gain of HK$98,194,000 in FY2023. As at 30 June 2023, the carrying value of the Precious segment was HK$267,232,000 (As at 30 June 2022: HK$319,354,000).Our largest gold investment in the Resource Investment division is in Northern Star (ASX: NST) which generated a fair value gain of HK$45,544,000 with carrying value as at 30 June 2023 of HK$76,837,000. We also own Westgold Resources Limited (ASX: WGX) which generated a fair value gain of HK$9,703,000 with carrying value as at 30 June 2023 of HK$44,114,000. Other notable fair value gains include HK$7,387,000 generated from our investment in Centerra Gold Inc. (CSE: CG).

Northern Star is the second largest gold company in Australia and owns high grade underground mines in Western Australian and Alaska. In FY2023 its production was 1,563,000 ounces of gold, and it generated free cash flow of A$359 million. In FY2024 its production target is 1,600,000 – 1,750,000 ounces of gold.

Gold price generally strengthened in 2H FY2023 and traded above US$2,000 per ounce in April and May but have since traded back down as expectations for the timing of US Federal Reserve interest rate cuts were pushed out. It has recently traded in a range of approximately US$1,900 per ounce to US$1,950 per ounce.


Bulk commodities segment generated a net fair value loss of HK$129,409,000 in FY2023. As at 30 June 2023, the carrying value was HK$324,588,000 (As at 30 June 2022: HK$552,081,000). Our largest investment in this segment during FY2023 is in Shougang Fushan (HKEX: 639), which generated a fair value loss of HK$156,316,000 and had a carrying value as at 30 June 2023 of HK$265,375,000.

Base Metals

Base Metals segment (a mix of copper, nickel and zinc companies) delivered a net fair value loss of HK$742,000 in FY2023. The copper price fell by 0.4%, nickel by 13% and zinc by 27%. The Base Metals segment includes our investment in China Hongqiao Group Limited (HKEX: 1378) which had a carrying value as at 30 June 2023 of HK$10,812,000.


The Energy segment (mix of oil and gas, uranium and renewables) had a net fair value gain of HK$8,206,000 in FY2023. Our significant Energy investments include National Atomic Company Kazatomprom JSC (LSE: KAP), which generated a fair value gain of HK$1,062,000 and had a carrying value as at 30 June 2023 of HK$33,622,000.


We also have a net fair value gain of HK$5,335,000 from the remaining commodity (diamonds, manganese, rare earths, lithium and mineral sands among others) and non-commodity investments in FY2023 and had a carrying value as at 30 June 2023 of HK$113,025,000 (As at 30 June 2022: HK$177,578,000). This includes our investment in Azure Minerals Limited (ASX: AZS), which generated a fair value gain of HK$6,018,000 and had a carrying value as at 30 June 2023 of HK$15,629,000.

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 FY2023, our Commodity Business generated a segment profit of HK$3,470,000 (FY2022: profit of HK$53,649,000.

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 FY2023, this segment recognized a loss of HK$17,635,000 (FY2022: Profit of HK$32,466,000).

Money Lending

The Group engaged in money lending activities under the Money Lenders Ordinance of Hong Kong. For FY2023, the revenue and profits generated from money lending formed part of results of the Principal Investment and Financial Services segment.

Outstanding loan receivables net of loss allowances as at 30 June 2023 amounted to approximately HK$346,074,000 (As at 30 June 2022: HK$362,698,000). During the year, the Group has provided for impairment losses on its loan receivables of approximately HK$11,715,000 (FY2022: Impairment losses written back of HK$1,613,000).

Forward Looking Observations

We are concerned about the near term outlook for the global economy and therefore the impact of slower growth on commodities and equities. While equity markets focus on when the US Federal Reserve will reduce interest rates, we expect this to only occur once we see weakness in economic conditions. While China’s economy is impacted by a lack of consumer confidence and concerns about the housing sector, we cannot rule out a large stimulus package which would be a positive for most commodities. We see opportunities in select commodities and aim to be nimble with our investments in the near term, and continue to look for high quality opportunities which 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 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.

(update as of 26 September 2023)
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