{"url_path":"/sec/chnr/10-k/2026/item-3","section_key":"item-3","section_title":"Item 3 **","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-05-15","source_url":"https://www.sec.gov/Archives/edgar/data/793628/0001553350-26-000083-index.html","accession_number":"0001553350-26-000083","cik":"0000793628","ticker":"CHNR","issuer_name":"CHINA NATURAL RESOURCES INC","edgar_url":"https://www.sec.gov/Archives/edgar/data/793628/0001553350-26-000083-index.html","primary_entity_key":"0000793628","primary_entity_name":"CHINA NATURAL RESOURCES INC"},"word_count":23269,"has_tables":true,"body_markdown":"**ITEM 3.**\n**KEY INFORMATION**\n\n** **\n\nThe PRC government has significant\nauthority to exert influence on the ability of a China-based company, like us, to conduct its business, accept foreign investments or\nbe listed on a U.S. stock exchange. We also face risks associated with recent statements and regulatory actions by the PRC government,\nincluding those related to regulatory approvals of offshore securities offerings, anti-monopoly regulatory investigations and actions,\ncybersecurity and data privacy compliance. See “Item 4. Information on the Company – 4.A. History and Development of the Company\n– Recent Regulatory Development” for more information about these new laws and regulations. If the CSRC, CAC or other PRC\nregulatory agencies determine that prior approval is required for any of our offerings of securities overseas or maintenance of the trading\nstatus of the Common shares, we cannot guarantee that we will be able to obtain such approval in a timely manner, or at all. The CSRC,\nCAC or other PRC regulatory agencies may also take actions requiring us, or making it advisable for us, not to proceed with such offering\nor maintain the trading status of our common shares. If we proceed with any of such offering or maintain the trading status of our common\nshares without obtaining the CSRC’s, CAC’s or other PRC regulatory agencies’ approval to the extent it is required,\nor if we are unable to comply with any new approval requirements which might be adopted for offerings that we have completed, we may face\nregulatory actions or other sanctions from the CSRC, CAC or other PRC regulatory agencies. These regulatory agencies may impose fines\nand penalties on our operations in China, limit our ability to pay dividends outside of China or accept foreign investments, delay or\nrestrict the repatriation of the proceeds from offering of securities overseas into China or take other actions that could have a material\nadverse effect on our business, financial condition, results of operations and prospects, as well as the trading price of the Common shares.\n\n \n\nThe PRC government may also\nintervene with or influence our operations as it deems appropriate to further regulatory, political and societal goals. The PRC government\nhas recently published new policies that affected various industries, and we cannot rule out the possibility that it will in the future\nrelease regulations or policies regarding our industry that could adversely affect our business, financial condition and results of operations.\nWhile we believe that our business operations comply with relevant PRC laws and regulations currently in force in all material respects,\nwe cannot guarantee that new rules or regulations promulgated in the future will not impose any additional requirement on us or otherwise\ntighten the regulations on companies like us. Any such action, once taken by the PRC government, could cause the value of our securities\nto significantly decline or become worthless.\n\n \n\nWe also face risks associated\nwith the Holding Foreign Companies Accountable Act, or the HFCA Act, which was enacted on December 18, 2020. Pursuant to the HFCA Act,\nas amended by the Consolidated Appropriations Act, 2023, or the HFCAA, if the SEC determines that we have filed audit reports issued by\na registered public accounting firm that has not been subject to inspections by the PCAOB for two consecutive years, the SEC will prohibit\nour shares from being traded on a national securities exchange or in the over-the-counter trading market in the United States. On December\n16, 2021, the PCAOB issued a report on its determinations that it was unable to inspect or investigate completely PCAOB-registered public\naccounting firms headquartered in mainland China and in Hong Kong, and our auditor was subject to that determination. On August 26, 2022,\nthe PCAOB signed a Statement of Protocol with the CSRC and the Ministry of Finance of the PRC, taking the first step toward opening access\nfor the PCAOB to inspect and investigate registered public accounting firms headquartered in China completely. On December 15, 2022, the\nPCAOB issued a report that vacated its December 16, 2021 determination and removed mainland China and Hong Kong from the list of jurisdictions\nwhere it is unable to inspect or investigate completely registered public accounting firms. Each year, the PCAOB will determine whether\nit can inspect and investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions. If PCAOB determines\nin the future that it no longer has full access to inspect and investigate completely accounting firms in mainland China or Hong Kong\nand we continue to use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements\nfiled with the SEC, we would be identified as a Commission-Identified Issuer following the filing of the annual report on Form 20-F for\nthe relevant fiscal year. There can be no assurance that we would not be identified as a Commission-Identified Issuer for any future fiscal\nyear, and if we were so identified for two consecutive years, we would become subject to the prohibition on trading under the HFCAA and\nas a result, NASDAQ may determine to delist our securities. See “Item 3.D. Key Information – Risk Factors - Risks Relating\nto Our PRC Operations and Doing Business in the PRC - The PCAOB had historically been unable to inspect our auditor and former auditor\nin relation to their audit work performed for our financial statements and the inability of the PCAOB to conduct inspections in the past\nhas deprived our investors with the benefits of such inspections.” and “- Risks Relating to Our PRC Operations and Doing Business\nin the PRC - Our common shares may be prohibited from trading in the United States under the HFCAA in the future if the PCAOB is unable\nto inspect or investigate completely auditors located in China. The delisting of our common shares, or the threat of their being delisted,\nmay materially and adversely affect the value of your investment.”\n\n \n\n \n\n \n\n \n\n**Transfers of Cash and Assets between Our Company and Our Subsidiaries**\n\n** **\n\nCash and asset transfers through\nthe Group are primarily attributed to shareholder loans from us to our subsidiaries. Our subsidiaries receive substantially all revenue\nin RMB, and the PRC or Hong Kong governments could prevent the RMB maintained in the PRC or Hong Kong from leaving, impose controls on\nits conversion into foreign currencies, restrict deployment of the RMB into the business of our subsidiaries and restrict the ability\nto pay dividends. Our PRC subsidiaries are permitted to pay dividends to their shareholders, and eventually to CHNR, only out of their\nretained earnings, if any, as determined in accordance with PRC accounting standards and regulations. Such payment of dividends by entities\nregistered in China is subject to limitations, which could result in limitations on the availability of cash to fund dividends or make\ndistributions to holders of our securities. For example, our PRC subsidiaries are required to make appropriations to certain statutory\nreserve funds or may make appropriations to certain discretionary funds, which are not distributable as cash dividends except in the event\nof a solvent liquidation of the companies. See, “Item 3.D. Key Information – Risk Factors –Our PRC subsidiaries are\nsubject to restrictions on paying dividends and making other payments to us.” There are no restrictions or limitations imposed by\nthe Hong Kong government on the transfer of capital within, into and out of Hong Kong (including funds from Hong Kong to the PRC), except\nfor the transfer of funds involving money laundering and criminal activities. However, there is no guarantee that the Hong Kong government\nwill not promulgate new laws or regulations that may impose such restrictions in the future. To the extent cash in the business is in\nthe PRC or Hong Kong or our PRC or Hong Kong entities, the funds may not be available to fund operations or for other use outside of the\nPRC or Hong Kong due to interventions in or the imposition of restrictions and limitations on the ability of us or our subsidiaries by\nthe PRC or Hong Kong governments to transfer cash. We cannot assure you that the PRC or Hong Kong governments will not intervene in or\nimpose restrictions on our ability to make intercompany cash transfers.\n\n \n\nAll cash or asset transfers\nbetween us and our subsidiaries for each of the three years ended December 31, 2023, 2024 and 2025, are set forth in the table below.\nThe purpose of the outbound transfers, in the form of shareholder loans, was to pay off the subsidiaries’ expenses and provide working\ncapital for the subsidiaries. The purpose of the inbound transfers, in the form of loan repayments, was to centralize the treasury function\nof the Company and our subsidiaries. There are no fixed repayment terms and we do not expect there to be any tax implications for such\ntransfers. We did not make any capital contributions to, or receive any dividends from, our subsidiaries during these periods. Other than\nthe assets and liabilities of the wastewater treatment business segment transferred to Mr. Li Feilie, our controlling shareholder, as\nthe result of the sale of PST Technology which were accounted for as a deemed distribution of RMB20.38 million (US$2.91 million) to the\ncontrolling shareholder on July 28, 2024 with a corresponding deemed contribution from the controlling shareholder in the same amount\nand repayment of HK$8.4 million shareholder loan in 2024, no transfers, dividends or distributions have been made to investors during\nthese periods. We currently have not maintained any cash management policies that dictate the purpose, amount and procedure of cash transfers\nbetween the Company, our subsidiaries, or the investors. Rather, the funds can be transferred in accordance with the applicable laws and\nregulations in the PRC and other jurisdictions. PRC laws and regulations may restrict our ability to make dividends and distributions\nto investors, including U.S. investors.\n\n \n\n  \n  \nYear ended December 31, \n\nTransferor \nTransferee \n2023  \n2024  \n2025  \n2025 \n\n  \n  \nHK$  \nHK$  \nHK$  \nUS$ \n\n \n\nOutbound Transfers \n\n  \n  \n    \n    \n    \n   \n\nChina Natural Resources, Inc. \nFeishang Mining \n —  \n —  \n 6,000  \n 769 \n\nChina Natural Resources, Inc. \nChina Coal \n 8,000  \n 8,000  \n 8,000  \n 1,026 \n\nChina Natural Resources, Inc. \nFeishang Yongfu \n 8,000  \n 8,000  \n 8,000  \n 1,026 \n\nChina Natural Resources, Inc. \nFeishang Dayun \n 8,000  \n 8,000  \n 8,000  \n 1,026 \n\n  \nTotal \n 24,000  \n 24,000  \n 30,000  \n 3,847 \n\n  \n  \n    \n    \n    \n   \n\nInbound Transfers \n\n  \n\nFeishang Mining \nChina Natural Resources, Inc. \n —  \n —  \n —  \n — \n\nChina Coal \nChina Natural Resources, Inc. \n —  \n —  \n 30,000  \n 3,847 \n\nFeishang Yongfu \nChina Natural Resources, Inc. \n —  \n —  \n —  \n — \n\nFeishang Dayun \nChina Natural Resources, Inc. \n —  \n —  \n —  \n — \n\n  \nTotal \n —  \n —  \n 30,000  \n 3,847 \n\n  \n\n \n**A.**\n**[Reserved]**\n\n \n\n \n**B.**\n**Capitalization and Indebtedness**\n\n  Not applicable.\n\n \n\n \n**C.**\n**Reasons for the Offer and Use of Proceeds**\n\n  Not applicable.\n\n \n\n \n\n2 \n\n \n\n \n**D.**\n**Risk Factors**\n\n \n\nWe are not a Chinese operating\ncompany but a BVI holding company with operations conducted by our subsidiaries established in the PRC and Hong Kong, and which owns equity\ninterests, directly or indirectly, of the operating subsidiaries. See “Item 4.C. INFORMATION ON THE COMPANY – Organizational\nStructure” for further information regarding our subsidiaries’ names, places of incorporation, and equity ownership. We are\nsubject to legal and operational risks associated with being based in the PRC and Hong Kong and having all of our operations in the PRC,\ndiscussed in greater detail below. The legal and operational risks associated with being based in and having operations in mainland China\nalso apply to operations in Hong Kong and Macao. While entities and businesses in Hong Kong and Macao operate under different sets of\nlaws from mainland China, the legal risks associated with being based in and having operations in mainland China could apply to a company’s\noperations in Hong Kong and Macao, if the laws applicable to mainland China become applicable to entities and business in Hong Kong and\nMacao in the future. As of the date of this annual report, we do not have material operations in Hong Kong or Macao. It is management’s\nunderstanding that there are no restrictions, limitations, rules, or regulations under Hong Kong law that are commensurate to those of\nthe PRC with respect to (i) payment of dividends and other distributions from the Company’s subsidiaries to the Company, (ii) currency\nconversion that may affect payment of dividends or foreign currency denominated obligations, (iii) offshore financing activities, (iv)\nanti-monopoly laws, or (v) data protection and cybersecurity, that have impacted or may impact the Company’s ability to conduct\nits business, accept foreign investments, or list on a U.S. or other exchange. The Chinese government may intervene or influence the operation\nof our Hong Kong subsidiaries and PRC subsidiaries and exercise oversight and discretion over the conduct of their business and may intervene\nin or influence their operations or may exert more control over offerings conducted overseas and/or foreign investment in China-based\nissuers, which could result in a material change in our operations and/or the value of our common shares. Further, rules and regulations\nin the PRC can change, and any actions by the Chinese government to exert more oversight and control over offerings that are conducted\noverseas and/or foreign investment in China-based issuers could significantly limit or completely hinder our ability to offer or continue\nto offer securities to investors and cause the value of such securities to significantly decline or be worthless.\n\n \n\nRecent statements and regulatory\nactions by the Chinese government, such as those related to data security or anti-monopoly concerns, could have a significant impact on\nour ability to conduct our business, accept foreign investments, or maintain our listing on the Nasdaq Capital Market (“Nasdaq”)\nor list on another U.S. or foreign exchange. There have not been comparable developments in Hong Kong yet, but such developments may occur.\nFor example, on June 10, 2021, the Standing Committee of the PRC National People’s Congress promulgated the PRC Data Security Law,\nwhich took effect in September 2021. The PRC Data Security Law imposes data security and privacy obligations on entities and individuals\ncarrying out data activities and introduces a data classification and hierarchical protection system based on the importance of data in\neconomic and social development, and the degree of harm it will cause to national security, public interests, or legitimate rights and\ninterests of individuals or organizations when such data is tampered with, destroyed, leaked, illegally acquired or used. The PRC Data\nSecurity Law also provides for a national security review procedure for data activities that may affect national security and imposes\nexport restrictions on certain data an information. We believe that our business is not in an industry related to national security, but\nwe cannot preclude the possibility that PRC government authorities may publish explanations contrary to our understanding or broaden the\nscope of such reviews in the future, in which case our future activities may be closely scrutinized or prohibited. Moreover, given the\nPRC authorities have discretion in interpreting and applying their laws, rules and regulations, if we undertake a transaction in the PRC\nthat involves data security or an industry that the PRC government is focusing on, we could be subject to review by the China Securities\nRegulatory Commission (“CSRC”), Cyberspace Administration of China (“CAC”) or other applicable governmental agencies.\nSuch review could be time consuming, could cause us to incur significant costs in responding to such agencies and/or rectifying any potential\nissues noted by such agencies or completely abandon a potential transaction. Further, on July 6, 2021, the General Office of the Central\nCommittee of the Communist Party of China and the General Office of the State Council jointly issued the Opinions on Strictly Cracking\nDown on Illegal Securities Activities in Accordance with the Law. These opinions emphasized the need to strengthen the administration\nover illegal securities activities and the supervision on overseas listings by China-based companies and proposed to take effective measures,\nsuch as promoting the construction of relevant regulatory systems to deal with the risks and incidents faced by China-based overseas-listed\ncompanies. On February 17, 2023, the CSRC, promulgated the Trial Administrative Measures of Overseas Securities Offering and Listing by\nDomestic Companies (“Overseas Listing Trial Measures”) and five relevant guidelines, which became effective on March 31, 2023.\nPursuant to the Overseas Listing Trial Measures, a filing-based regulatory system will be applied to both “direct” and “indirect”\noverseas offering or listing of PRC domestic companies. As such, in connection with our future overseas securities offering or listing,\nwe may be required to fulfill filing, reporting procedures or other administrative procedures with the CSRC or other PRC government authorities.\nIn addition, we cannot guarantee that new rules or regulations promulgated in the future will not impose any additional requirement on\nus or otherwise to tighten the regulations on PRC companies seeking overseas offering or listing. Any failure to obtain the relevant approval\nor complete the filings and other relevant regulatory procedures may subject us to regulatory actions or other penalties from the CSRC\nor other PRC regulatory authorities, which may have a material adverse effect on our business, operations or financial conditions. See\n“Item 3.D. KEY INFORMATION – Risk Factors – Risks Relating to Doing Business in China – The approval of or filing\nwith the CSRC or other PRC government authorities may be required in connection with our offshore offerings under PRC law, and, if required,\nwe cannot predict whether or for how long we will be able to obtain such approval or complete such filing.”\n\n \n\n \n\n \n\n3 \n\n \n\n \n\n \n\nThe Public Company Accounting\nOversight Board (“PCAOB”) may determine that it is unable to inspect our auditor in relation to its audit work to its satisfaction,\nand our common shares may be prohibited from trading in the United States under the Holding Foreign Companies Accountable Act, as amended\nby the Consolidated Appropriations Act, 2023 (“HFCAA”), if the PCAOB is unable to inspect or fully investigate our auditor\nfor two consecutive years. Our previous independent auditor, Ernst & Young Hua Ming LLP, was subject to the determinations announced\nby the PCAOB on December 16, 2021 that it was unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered\nin mainland China and in Hong Kong. In June 2022, we were identified by the SEC in its “conclusive list of issuers identified under\nthe HFCAA,” indicating that we were among those companies formally subject to the delisting provisions of the HFCAA (a “Commission-Identified\nIssuer”). The PCAOB, the CSRC and PRC Ministry of Finance entered into a Statement of Protocol on August 26, 2022, designed to allow\nthe PCAOB to fully investigate auditors located in China. On December 15, 2022, the PCAOB issued a report vacating the previous determinations\ndated December 16, 2021. Accordingly, until such time as the PCAOB issues any new determination, we are not at risk of having our securities\nsubject to a trading prohibition under the HFCAA because we do not expect to be identified as a Commission-Identified Issuer for a second\nconsecutive year. If in the future the PCAOB determines it no longer can inspect or investigate completely our auditor because of a position\ntaken by an authority in the PRC, the PCAOB will consider issuing a new determination.\n\n \n\nAn investment in our common\nshares involves a high degree of risk and should be considered speculative. You should carefully consider the following risks set out\nbelow and other information before investing in our common shares. If any event arising from these risks occurs, our business, prospects,\nfinancial condition, results of operations or cash flows could be adversely affected, the trading price of our common shares could decline\nand all or part of your investment may be lost.\n\n \n\n**Risk Factor Summary**\n\n \n\n**Risks Relating to Our PRC Operations and\nDoing Business in the PRC**\n\n \n\n \n•\nChanges in China’s economic, political or social conditions or government policies could have a material and adverse effect on our business, financial condition and results of operations.\n\n \n\n \n•\n\nUncertainties with respect to the PRC legal system\ncould adversely affect us. \n\n \n\n \n•\nThe PRC government may intervene or influence our operations at any time, or may exert more control over the China operations of an offshore holding company and offerings conducted overseas and foreign investment in China-based issuers, such as our PRC subsidiaries. Such control or influence may significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless.\n\n \n\n \n•\nChanges in PRC laws and regulations may have a material and adverse effect on our business.\n\n \n\n \n•\nPRC regulation of loans to and direct investment in PRC entities by offshore holding companies may delay or prevent us from making loans or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our ability to fund and expand our business.\n\n \n\n \n•\nInflation in the PRC, or a slowing PRC economy, could negatively affect our profitability and growth.\n\n \n\n \n•\nOur PRC subsidiaries are subject to restrictions on paying dividends and making other payments to us.\n\n \n\n \n•\nGovernmental control of currency conversion may affect payment of any dividends or foreign currency denominated obligations, and it may adversely affect the value of your investment.\n\n \n\n \n•\nThe fluctuation of the Renminbi may materially and adversely affect your investment.\n\n \n\n \n•\nThe PRC SAFE regulations regarding offshore financing activities by PRC residents have undergone changes which may increase the administrative burden we face and create uncertainties that could adversely affect us, and a failure by our shareholders who are PRC residents to make any required applications and filings pursuant to such regulations may prevent us from being able to distribute profits and could expose us and our PRC resident shareholders to liability under PRC law.\n\n \n\n \n•\n\nThe PCAOB may determine that it is unable to inspect\nour auditor in relation to its audit work performed for our financial statements to its satisfaction, and any inability of the PCAOB to\nconduct inspections over our auditor may affect our investors’ ability to benefit from such inspections.\n\n \n\n \n•\n\nOur common shares may be prohibited from trading\nin the United States under the HFCAA if the PCAOB is unable to inspect or fully investigate our auditor for two consecutive years. The\ndelisting of our common shares, or the threat of their being delisted, may materially and adversely affect the value of your investment.\n\n \n\n \n\n \n\n4 \n\n \n\n \n\n \n•\nPRC regulations establish complex procedures for some acquisitions conducted by foreign investors, which could make it more difficult for us to pursue growth through acquisitions in China.\n\n \n \n \n\n \n•\n\nWe and our PRC subsidiaries are required to maintain\na series of licenses, permits, and approvals from PRC authorities to operate our business in the PRC, and failure to maintain or renew\nsuch licenses, permits, or approvals in a timely manner could materially affect our business.\n\n \n\n \n•\nThe approval of or filing with the CSRC or other PRC government authorities may be required in connection with our offshore offerings under PRC law, and, if required, we cannot predict whether or for how long we will be able to obtain such approval or complete such filing.\n\n \n\n \n\n \n\n•\nFailure to comply with PRC regulations and other legal obligations concerning data protection and cybersecurity may materially and adversely affect our business, as we routinely collect, store and use data during the conduct of our business.\n\n \n\n \n•\nWe may be classified as a “resident enterprise” for PRC enterprise income tax purposes; such classification could result in unfavorable tax consequences to us and our non-PRC shareholders.\n\n \n\n \n•\nAny failure to comply with PRC regulations regarding the registration requirements for employee stock incentive plans may subject the PRC plan participants or us to fines and other legal or administrative sanctions.\n\n \n\n \n•\nFailure to make adequate contributions to mandatory social security plans as required by PRC laws may subject us to penalties.\n\n \n\n \n•\nEnforcement of stricter labor laws and regulations may increase our labor costs.\n\n \n\n \n•\nIf the chops of our PRC subsidiaries are not kept safely, are stolen or are used by unauthorized persons or for unauthorized purposes, the corporate governance of these entities could be severely and adversely compromised.\n\n** **\n\n**Risks Relating to Our Mine Exploration Activities\nin Inner Mongolia**\n\n \n\n \n•\nThe Moruogu Tong Mine is in the exploration stage.\n\n \n\n \n•\nThe northern part of Moruogu Tong Mine is currently being explored under an agreement that reduces our share in any future profits.\n\n \n\n \n•\nAny estimates of the reserves contained in the Moruogu Tong Mine may be inaccurate.\n\n \n\n \n•\nThere are no assurances that we can produce minerals on a commercially viable basis.\n\n \n\n \n•\nVolatility in the market prices of metals may adversely affect the results of our operations.\n\n \n\n \n•\nWe are subject to government regulations in various aspects of our exploration activities and our failure to comply with applicable government regulations could adversely affect us.\n\n \n\n \n•\nWe do not have binding agreements with customers to purchase any future output of metals.\n\n \n\n \n\n•\n\n \n\nESG issues, including those related to climate\nchange and sustainability, may have an adverse effect on our business, financial condition, and results of operations, could damage our\nreputation, and may increase costs.\n\n** **\n\n**Risks Relating to the Sale of PST Technology**\n\n \n\n \n•\nWe face risks associated with the divesture of our wastewater treatment segment.\n\n **  **\n\n**Risks Relating to the Potential Closing\nof the Acquisition of Williams Minerals and the Timing of Such Closing**\n\n \n\n \n•\nThere may be unforeseen risks relating to the Acquisition that were not discovered by us through our due diligence investigation prior to our Acquisition.\n\n \n\n \n•\nCompletion of the Acquisition is conditional upon satisfaction or waiver of various conditions. There can be no assurance that the conditions will be fulfilled or waived, or that the Acquisition will be completed\n\n \n\n \n•\nFailure to complete the Acquisition may have a material adverse effect on the Company’s business, financial condition and results of operations.\n\n \n\n \n•\nEven if the Acquisition is completed, we may fail to realize the anticipated benefits associated with it, those benefits may take longer to realize than expected, and we may encounter significant difficulties.\n\n \n\n \n\n5 \n\n \n\n**Risks Relating to Additional Acquisitions\nand Expansion into Other Sectors**\n\n \n\n \n•\nWe may acquire other businesses or form joint ventures that could negatively affect our operating results, dilute our shareholders’ ownership, increase our debt or cause us to incur significant expense.\n\n \n\n \n•\nFuture acquisitions or strategic investments could be difficult to identify and integrate, divert the attention of management, disrupt our business, dilute shareholder value and adversely affect our business, results of operations, and financial condition.\n\n \n\n \n\n \n•\n\nBecause a majority of our management’s prior\nbusiness experience has been limited to industries outside of other sectors that we are exploring, they may lack the necessary experience\nto assess a business combination with a target business in those industries.\n\n \n\n \n•\nWe may become subject to additional extensive and evolving regulatory requirements, noncompliance with which, or changes in which, may materially and adversely affect our business and prospects.\n\n** **\n\n**Risks Relating to Our Financial Condition\nand Business**\n\n \n\n \n•\nWe have incurred losses from operations in each of the preceding three fiscal years of 2023, 2024, and 2025 and there is no assurance that we will generate profits from operations in the future.\n\n \n\n \n\n•\n\n \n\nWe will have to fund operating expenses from other\nsources until we are able to generate sufficient revenue to pay them.\n\n \n\n \n\n•\n\n \n\nThe loss of key personnel could affect our business\nand prospects.\n\n \n\n \n•\nAny failure to maintain effective internal controls could have an adverse effect on our business, results of operations and the market price of our shares.\n\n \n\n** Risks Relating to Foreign Private\nIssuer Status**\n\n \n\n \n•\nBecause our assets are located outside of the United States and all of our directors and officers reside outside of the United States, it may be difficult for you to enforce your rights based on the U.S. federal securities laws against us or our officers and directors or to enforce a judgment of a United States court against us or our officers and directors in the PRC.\n\n \n\n \n•\nOur status as a foreign private issuer results in less information being available about us than about domestic reporting companies.\n\n \n\n \n•\nDue to our status as a foreign private issuer, we have adopted IFRS accounting principles, which are different from accounting principles under U.S. generally accepted accounting principles (“U.S. GAAP”).\n\n \n\n \n•\nAs a foreign private issuer we are not subject to certain requirements that other Nasdaq-listed issuers are required to comply with, some of which are designed to provide information to and protect investors.\n\n \n\n \n\n•\n\n \n\nDue to an exemption from Nasdaq rules applicable\nto foreign private issuers, our related party transactions may not receive the type of independent review process that those of other\nNasdaq-listed companies receive; the terms of these transactions are not negotiated at arm’s-length and may not be as favorable\nas could be obtained from unrelated parties.\n\n** **\n\n**Risks Relating to Our common shares**\n\n \n\n \n•\nYou may experience dilution to the extent that our common shares are issued upon the exercise of outstanding warrants or other securities that we may issue in the future.\n\n \n\n \n\n•\n\n \n\nSubstantial future sales or perceived potential\nsales of our common shares in the public market could cause the price of our common shares to decline.\n\n \n\n \n\n•\n\n \n\nCertain of the Selling Shareholders may acquire\ntheir common shares at a price that is less than the market price of the common shares in the future, may earn a positive rate of return\neven if the price of the common shares declines and may be willing to sell their common shares at a price less than shareholders that\nacquired common shares in the public market.\n\n \n\n \n\n•\n\n \n\nThe price at which common shares are quoted on\nNasdaq may increase or decrease due to a number of factors, which may negatively affect the price of the common shares.\n\n \n\n \n•\nOur principal beneficial owner and his affiliates control us through their share ownership; and their interests may differ from those of other shareholders.\n\n \n\n \n\n6 \n\n \n\n \n\n \n•\nThe rights of our shareholders are governed by BVI law, which may not be as favorable to shareholders as U.S. law, and our directors may take actions with which you disagree without first receiving shareholder approval.\n\n \n\n \n•\n\nThe elimination of monetary liability against\nour directors, officers and employees under our Articles and the indemnification of our directors, officers and employees may result in\nsubstantial expenditures by us and may discourage lawsuits against our directors, officers and employees.\n\n \n\n \n•\nWe may be classified as a passive foreign investment company, which could result in adverse U.S. federal income tax consequences to U.S. shareholders.\n\n** **\n\n \n\n**Risks Relating\nto Our PRC Operations and Doing Business in the PRC**\n\n \n\n**Changes\nin China’s economic, political or social conditions or government policies could have a material and adverse effect on our business,\nfinancial condition and results of operations.**\n\n \n\nCurrently,\nall of our business operations are conducted in China. Accordingly, our business, results of operations, financial condition and prospects\nare affected by economic, political and social conditions in China generally and by continued economic growth in China as a whole.\n\n \n\nChina’s\neconomy may differ from the economies of some developed countries in some respects, including the extent of government involvement, level\nof development, growth rate, control of foreign exchange and allocation of resources. In recent decades, the Chinese government has implemented\na series of reform measures, including, among others, the utilization of market forces for economic reform and the establishment of improved\ncorporate governance in business enterprises. In addition, the Chinese government also plays a significant role in regulating industry\ndevelopment and has extensive influence over China’s economic growth through allocating resources, foreign exchange control and\nsetting monetary and fiscal policy.\n\n \n\nAlthough\ngrowth of China’s economy remained relatively stable, there is a possibility that China’s economic growth may fluctuate or\neven decline in the near future. Some of the government measures may benefit the overall Chinese economy but may have a negative effect\non us. For example, our financial condition and results of operations may be adversely affected by government control over capital investments\nor changes in tax regulations. Any stimulus measures designed to boost the Chinese economy may contribute to higher inflation, which could\nadversely affect our results of operations and financial condition. For example, certain operating costs and expenses, such as employee\ncompensation and office operating expenses, may increase as a result of higher inflation.\n\n \n\nAdditionally,\nthe PRC government may promulgate laws, regulations or policies that seek to impose stricter scrutiny over the current regulatory regime\nin certain industries or in certain activities. Furthermore, the PRC government has also recently indicated an intent to exert more oversight\nand control over overseas securities offerings and foreign investments in China-based companies. Any such actions may adversely affect\nour subsidiaries’ operations, and limit our ability to offer or continue to offer securities to investors and cause the value of\nour securities to decline or be worthless.\n\n \n\n**Uncertainties\nwith respect to the PRC legal system could adversely affect us.**\n\n \n\nWe\nconduct our business through our subsidiaries in China. Our operations in China are governed by PRC laws and regulations. Our subsidiaries\nare generally subject to laws and regulations applicable to foreign investments in China. The PRC legal system is based on written statutes.\nPrior court decisions may be cited for reference but have limited precedential value.\n\n \n\nPRC\nlaws and regulations have significantly enhanced the protections afforded to various forms of foreign investments in China over the past\nseveral decades. However, recently enacted laws and regulations may not sufficiently cover all aspects of economic activities in China.\nIn particular, because these laws and regulations are relatively new, and because of the limited volume of published decisions and their\nnonbinding nature, the interpretation and enforcement of these laws and regulations involve uncertainties.\n\n \n\n**The\nPRC government may intervene or influence our operations at any time, or may exert more control over the China operations of an offshore\nholding company and offerings conducted overseas and foreign investment in China-based issuers, such as our PRC subsidiaries. Such control\nor influence may significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause\nthe value of such securities to significantly decline or be worthless.**\n\n \n\nWe\nconduct our business in China through our operating subsidiaries. Accordingly, our business, results of operations and financial condition\nmay be influenced to a significant degree by the PRC political, economic and social conditions. The PRC government may intervene or influence\nour subsidiaries’ operations, which could result in a material change in our operations and/or the value of the Company’s\nsecurities. We expect the Chinese government to exert more oversight and control over offerings that are conducted overseas and/or foreign\ninvestment in China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities\nto investors and cause the value of such securities to significantly decline or be worthless.\n\n \n\n \n\n7 \n\n \n\nAdditionally,\nthe PRC government may promulgate laws, regulations or policies that seek to impose stricter scrutiny over current regulatory regime in\ncertain industries or in certain activities. For instance, the PRC government has discretion over the business operations in China and\nmay intervene with or influence specific industries or companies as it deems appropriate to further regulatory, political and societal\ngoals, which could have a material and adverse effect on the future growth of the affected industries and the companies operating in such\nindustries. Furthermore, the PRC government has also recently indicated an intent to exert more oversight and control over overseas securities\nofferings and foreign investments in China-based companies. Any such actions may adversely affect our subsidiaries’ operations,\nand limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of our securities\nto decline or be worthless.\n\n \n\n**Changes\nin PRC laws and regulations may have a material and adverse effect on our business.**\n\n \n\nThere\nare substantial uncertainties regarding the interpretation and application of PRC laws and regulations, including, but not limited to,\nthe laws and regulations governing our business, or the enforcement and performance of our arrangements with customers in the event of\nthe imposition of statutory liens, death, bankruptcy and criminal proceedings. Rules and regulations in China may change. We and our current\nsubsidiaries are, and any future subsidiaries will be, considered foreign persons or foreign-invested enterprises under PRC laws, and\nas a result, we are and will be required to comply with PRC laws and regulations applicable to foreign persons or foreign-invested enterprises.\nThese laws and regulations may be subject to future changes, and their official interpretation and enforcement may involve substantial\nuncertainty. Exploration and mining operations in the PRC are subject to environmental laws and regulations, and the imposition of more\nstringent environmental regulations may affect our ability to comply with, or our costs to comply with, such regulations. Such changes,\nif implemented, may adversely affect our business operations and may reduce our profitability. The effectiveness of newly enacted laws,\nregulations or amendments may be delayed, resulting in detrimental reliance by foreign investors. New laws and regulations that affect\nexisting and proposed future businesses may also be applied retroactively. We cannot predict what effect the interpretation of existing\nor new PRC laws or regulations may have on our businesses.\n\n \n\n \n\n**PRC\nregulation of loans to and direct investment in PRC entities by offshore holding companies may delay or prevent us from making loans or\nadditional capital contributions to our PRC subsidiaries, which could materially and adversely affect our ability to fund and expand our\nbusiness.**\n\n \n\nWe\nare an offshore holding company conducting our operations in China. We may make loans to our PRC subsidiaries, or we may make additional\ncapital contributions to our wholly foreign-owned subsidiaries in China. Any loans to our wholly foreign-owned subsidiaries in China,\nwhich are treated as foreign-invested enterprises under PRC law, are subject to PRC regulations and foreign exchange loan registration\nrequirements. In addition, a foreign-invested PRC enterprise has limitations upon its uses of capital, including restrictions on such\ncapital being: (i) directly or indirectly used for payments beyond the business scope of the enterprise or payments prohibited by\nrelevant laws and regulations; (ii) used for the granting of loans to non-affiliated enterprises, except where expressly permitted\nin the foreign-invested PRC enterprise’s business license; and (iii) used for paying expenses related to the purchase of real\nestate that is not for self-use (except for foreign-invested real estate enterprises). We may also decide to finance our PRC subsidiaries\nby means of capital contributions, in which case the PRC subsidiary is required to register the details of the capital contribution with\nthe local branch of the State Administration for Market Regulation and submit a report on the capital contribution via the online enterprise\nregistration system to the Ministry of Commerce.\n\n \n\nIn\nlight of the various requirements imposed by PRC regulations on loans to and direct investment in PRC entities by offshore holding companies,\nwe cannot assure you that we will be able to complete the necessary government registrations or obtain the necessary government approvals\nor filings on a timely basis, if at all, with respect to future loans by us to our current PRC operating subsidiaries or with respect\nto future capital contributions by us to our current PRC operating subsidiaries. If we fail to complete such registrations or obtain such\napprovals, our ability to fund our PRC operations may be negatively affected, which could materially and adversely affect our liquidity\nand our ability to fund and expand our business.\n\n \n\n**Inflation\nin the PRC, or a slowing PRC economy, could negatively affect our profitability and growth.**\n\n \n\nThe\nPRC economy has experienced rapid growth. Rapid economic growth can lead to growth in the money supply and rising inflation. If prices\nfor our products and services rise at a rate that is insufficient to compensate for the rise in the costs of supplies and services, it\nmay have an adverse effect on our profitability. In order to control inflation in the past, the PRC government has imposed controls on\nbank credit, limits on loans for fixed assets and restrictions on bank lending. As a result, domestic and global economic conditions may\nimprove, and the markets we intend to serve may grow, at a lower-than-expected rate or even experience a downturn, adversely affecting\nour future profitability and growth.\n\n \n\n**Our\nPRC subsidiaries are subject to restrictions on paying dividends and making other payments to us.**\n\n \n\nWe\nare a holding company incorporated in the BVI. Under BVI law, we may only pay dividends to investors, including U.S. investors, from surplus\n(the excess, if any, at the time of the determination of the total assets of our company over the sum of our liabilities, as shown in\nour books of account, plus our capital), and we must be solvent before and after the dividend payment in the sense that we will be able\nto satisfy our liabilities as they become due in the ordinary course of business, and the realizable value of assets of our company will\nnot be less than the sum of our total liabilities, other than deferred taxes as shown in our books of account, and our capital. As a result\nof our holding company structure, dividends and other distributions to our shareholders, including U.S. investors, will depend primarily\nupon dividend payments from our subsidiaries. However, PRC regulations currently permit the payment of dividends only out of accumulated\nprofits, as determined in accordance with PRC accounting standards and regulations. Our subsidiaries in China are also required to set\naside a portion of their after-tax profits as certain reserve funds according to PRC accounting standards and regulations. The PRC government\nalso imposes controls on the conversion of CNY into foreign currencies and the remittance of currency out of China. We may experience\ndifficulties in completing the administrative procedures necessary to obtain and remit foreign currency. Furthermore, if our subsidiaries\nin China incur further debt in the future, debt covenants may restrict their ability to pay dividends or make other payments. If we or\nour subsidiaries are unable to receive dividends from our operating companies due to contractual or other limitations on the payment of\ndividends, we may be unable to pay dividends or make other distributions on our common shares.\n\n \n\n****\n\n8 \n\n \n\n**Governmental\ncontrol of currency conversion may affect payment of any dividends or foreign currency denominated obligations, and it may adversely affect\nthe value of your investment.**\n\n \n\nThe\nPRC government imposes controls on the convertibility of CNY into foreign currencies and, in certain cases, the remittance of currency\nout of the PRC. Shortages in the availability of foreign currency may restrict our ability to remit sufficient foreign currency to pay\ndividends, or otherwise satisfy foreign currency denominated obligations. Under existing PRC foreign exchange regulations, the CNY is\ncurrently convertible under the “current account,” which includes trade and service-related foreign exchange transactions,\nbut not under the “capital account,” which includes foreign direct investment and loans, including loans we may secure from\nour onshore subsidiaries. Currently, our PRC subsidiaries may purchase foreign currency for settlement of “current account transactions,”\nwithout prior approval from SAFE by complying with certain procedural requirements. However, approval from appropriate governmental authorities\nis required where CNY is to be converted into foreign currency and remitted out of the PRC to pay capital expenses such as the repayment\nof bank loans denominated in foreign currencies.\n\n \n\nThe\nPRC government may also at its discretion restrict access to foreign currencies for current account transactions in the future. If the\nforeign exchange control system prevents us from obtaining sufficient foreign currency to satisfy our currency demands, we may not be\nable to pay certain of our expenses as they come due, or pay dividends or make other distributions to investors, including U.S. investors.\n\n \n\n \n\nSee\n“Item 10.D. ADDITIONAL INFORMATION – Exchange Controls” for further details regarding exchange controls in the PRC.\n\n \n\n**The\nfluctuation of the Renminbi may materially and adversely affect your investment.**\n\n \n\nThe\nexchange rate of the Renminbi against the U.S. Dollar and other currencies may fluctuate and is affected by, among other things, changes\nin the PRC’s political and economic conditions. As most of our operating expenses are denominated in Renminbi, or CNY, any significant\nrevaluation of the Renminbi may materially and adversely affect our cash flows and financial condition. Additionally, if we convert our\nCNY into U.S. Dollars, to pay dividends on our common shares or for other business purposes, depreciation of the CNY against the U.S.\nDollar would negatively affect the amount of U.S. Dollars we convert our CNY into. Conversely, to the extent that we need to convert U.S.\nDollars we receive from an offering of our securities or otherwise into CNY for our operations, the appreciation of the CNY against the\nU.S. Dollar could have an adverse effect on our financial condition and result in a charge to our income statement and a reduction in\nthe value of these U.S. Dollar denominated assets.\n\n \n\n**PRC\nSAFE regulations regarding offshore financing activities by PRC residents have undergone changes which may increase the administrative\nburden we face and create regulatory uncertainties that could adversely affect us, and a failure by our shareholders who are PRC residents\nto make any required applications and filings pursuant to such regulations may prevent us from being able to distribute profits and could\nexpose us and our PRC resident shareholders to liability under PRC law.**\n\n \n\nIn\nJuly 2014, SAFE promulgated the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Offshore\nInvestment and Financing and Roundtrip Investment Through Special Purpose Vehicles (“SAFE Circular 37”). SAFE Circular 37\nrequires PRC residents (including PRC individuals and PRC corporate entities as well as foreign individuals that are deemed PRC residents\nfor foreign exchange administration purposes) to register with SAFE or its local branches in connection with their direct or indirect\noffshore investment activities. SAFE Circular 37 further requires an amendment to a SAFE registration in the event of any changes with\nrespect to the basic information of the offshore special purpose vehicle, such as a change in the PRC shareholders, the names of such\nspecial purpose vehicle, and the operation term of such special purpose vehicle, or any significant changes with respect to the offshore\nspecial purpose vehicle, such as an increase or decrease of capital, a share transfer or exchange, or mergers or divisions. SAFE Circular\n37 is applicable to our shareholders who are PRC residents and may be applicable to any offshore acquisitions that we make in the future.\nIf our shareholders who are PRC residents fail to make the required SAFE registration or to update a previously filed registration, our\nPRC subsidiaries may be prohibited from distributing their profits or the proceeds from any capital reduction, share transfer or liquidation\nto us, and we may also be prohibited from making additional capital contributions to our PRC subsidiaries.\n\n \n\nIn\nFebruary 2015, SAFE promulgated a Notice on Further Simplifying and Improving Foreign Exchange Administration Policy on Direct Investment\n(“SAFE Notice 13”) effective June 2015. Under SAFE Notice 13, applications for foreign exchange registration of inbound\nforeign direct investments and outbound overseas direct investments, including those required under SAFE Circular 37, shall be filed with\nqualified banks instead of SAFE. The qualified banks directly examine the applications and accept registrations under the supervision\nof SAFE. To date, no registration has been filed with SAFE regarding us, and accordingly, SAFE may prohibit distributions from our PRC\nsubsidiaries, which would prevent us from paying dividends and may adversely affect our financial condition and potentially expose us\nto liability under PRC law. \n\n \n\n** **\n\n****\n\n9 \n\n \n\n**The PCAOB had historically been unable\nto inspect our former auditors in relation to their audit work performed for our financial statements and the inability of the PCAOB\nto conduct inspections in the past has deprived our investors with the benefits of such inspections.**\n\n \n\nOur\nformer auditors, Ernst & Young Hua Ming LLP (“EY”), the independent registered public accounting firm that issued the\naudit report for the fiscal year ended December 31, 2023, and ARK Pro CPA & Co, the independent registered public accounting firm\nthat issued the audit report for the fiscal year ended December 31, 2024, which are included in this annual report, as auditors of companies\nthat are traded publicly in the United States and a firm registered with the PCAOB, is subject to laws in the United States pursuant to\nwhich the PCAOB conducts regular inspections to assess such firms’ compliance with the applicable professional standards. On January\n29, 2026, we engaged HYYH CPA. LLC (“HYYH”), which is headquartered in Baltimore, Maryland in the United States, as our independent\nregistered public accounting firm for the fiscal year ended December 31, 2025 that issues the audit report in our SEC filings, and as\nan auditor of companies that are traded publicly in the United States and a firm registered with the PCAOB. HYYH is subject to laws in\nthe United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards.\nFor more details, see “Item 16F. Changes in Registrant’s Certifying Accountant.”\n\n \n\nSince\nour former auditors are located in China and Hong Kong, which are jurisdictions where the PCAOB had been previously unable to conduct\ninspections without the approval of the Chinese authorities, our former auditors and auditor were subject to the determinations announced\nby the PCAOB on December 16, 2021 that it was unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered\nin mainland China and in Hong Kong. On December 15, 2022, the PCAOB issued a report vacating the previous determinations dated December\n16, 2021. Accordingly, until such time as the PCAOB issues any new determination, we are not at risk of having our securities subject\nto a trading prohibition under the HFCAA because we do not expect to be a Commission-Identified Issuer for a second consecutive year.\nHowever, the inability of the PCAOB to conduct inspections of our former auditors in mainland China and Hong Kong in the past made it\nmore difficult to evaluate the effectiveness of our independent registered public accounting firm’s audit procedures or quality\ncontrol procedures as compared to auditors outside of mainland China and Hong Kong that have been subject to the PCAOB inspections, which\ncould cause investors and potential investors in our securities to lose confidence in our audit procedures and reported financial information\nand the quality of our financial statements.\n\n \n\n**Our\ncommon shares may be prohibited from trading in the United States under the HFCAA in the future if the PCAOB is unable to inspect or investigate\ncompletely auditors located in China. The delisting of our common shares, or the threat of their being delisted, may materially and adversely\naffect the value of your investment.**\n\n \n\nPursuant\nto the HFCAA, the SEC will identify an issuer as a Commission-Identified Issuer if the issuer has filed an annual report containing an\naudit report issued by a registered public accounting firm that the PCAOB has determined it is unable to inspect or investigate completely,\nand will then impose a trading prohibition on an issuer after it is identified as a Commission-Identified Issuer for two consecutive years.\nOn December 16, 2021, the PCAOB issued a report to notify the SEC of its determination that the PCAOB was unable to inspect or investigate\ncompletely registered public accounting firms headquartered in mainland China and Hong Kong. In June 2022, we were identified by the SEC\nas a “Commission-Identified Issuer” in their conclusive list of issuers identified under the HFCAA. On December 15, 2022,\nthe PCAOB issued a report vacating the previous determinations dated December 16, 2021. Our current auditor, HYYH, the independent registered\npublic accounting firm that issued the audit report included elsewhere in this annual report, is headquartered in Baltimore, Maryland,\nthe United States, and has been subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess\nits compliance with the applicable professional standards. HYYH is not subject to the determinations announced by the PCAOB in December\n2021. Accordingly, until such time as the PCAOB issues any new determination, we are not at risk of having our securities subject to a\ntrading prohibition under the HFCAA because we do not expect to be identified as a Commission-Identified Issuer for a second consecutive\nyear. However, the PCAOB may change its determinations under the HFCAA at any point in the future. We cannot assure you that the PCAOB\nwill always have complete access to inspect and investigate our auditor, or that we will not be identified as a Commission-Identified\nIssuer again in the future.\n\n \n\nWhether\nthe PCAOB will continue to be able to conduct inspections of our auditor is subject to substantial uncertainty and depends on a number\nof factors out of our, and our auditor’s, control. A trading prohibition would substantially impair your ability to sell or purchase\nour common shares when you wish to do so, and the risk and uncertainty associated with delisting would have a negative impact on the price\nof our common shares.\n\n \n\n**PRC\nregulations establish complex procedures for some acquisitions conducted by foreign investors, which could make it more difficult for\nus to pursue growth through acquisitions in China.**\n\n \n\nThe\nRegulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (the “M&A Rules”), adopted by six\nPRC regulatory agencies in August 2006 and amended in June 2009, among other things, established procedures and requirements that could\nmake merger and acquisition activities by foreign investors more time-consuming and complex. In addition, the Provisions of Ministry of\nCommerce on Implementation of Security Review System for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, issued\nby the Ministry of Commerce in August 2011, specify that mergers and acquisitions by foreign investors involved in “an industry\nrelated to national security” are subject to strict review by the Ministry of Commerce, and prohibit any activities attempting to\nbypass such security review, including by structuring the transaction through a proxy or contractual control arrangement.\n\n \n\nOn\nMarch 15, 2019, the PRC National People’s Congress enacted the Foreign Investment Law of the PRC (the “Foreign Investment\nLaw”), which became effective on January 1, 2020. The Foreign Investment Law has replaced the previous major laws and regulations\ngoverning foreign investment in the PRC, including the Sino-foreign Equity Joint Ventures Enterprises Law of the PRC, the Sino-foreign\nCo-operative Enterprises Law of the PRC and the Wholly Foreign-invested Enterprise Law of the PRC. According to the Foreign Investment\nLaw, “foreign-invested enterprises” refers to enterprises that are wholly or partly invested by foreign investors and registered\nunder the PRC laws within China, and “foreign investment” refers to any foreign investor’s direct or indirect investment\nactivities in China, including: (i) establishing foreign-invested enterprises in China either individually or jointly with other investors;\n(ii) obtaining stock shares, equity shares, shares in properties or other similar interests of Chinese domestic enterprises; (iii) investing\nin new projects in China either individually or jointly with other investors; and (iv) investing through other methods provided by laws,\nadministrative regulations or provisions prescribed by the State Council.\n\n \n\n10 \n\n \n\nOn\nDecember 26, 2019, the State Council issued Implementation Regulations for the Foreign Investment Law of the PRC (the “Implementation\nRules”) which came into effect on January 1, 2020, and replaced the Implementing Rules of the Sino-foreign Equity Joint Ventures\nEnterprises Law of the PRC, the Implementing Rules of the Sino-foreign Co-operative Enterprises Law of the PRC and the Implementing Rules\nof the Wholly Foreign-invested Enterprise Law of the PRC. According to the Implementation Rules, in the event of any discrepancy between\nthe Foreign Investment Law, the Implementation Rules and the relevant provisions on foreign investment promulgated prior to January 1,\n2020, the Foreign Investment Law and the Implementation Rules shall prevail. The Implementation Rules also set forth that foreign investors\nthat invest in sectors on the “Negative List” in which foreign investment is restricted shall comply with special management\nmeasures with respect to, among others, shareholding and senior management personnel qualification in the Negative List. Pursuant to the\nForeign Investment Law and the Implementation Rules, the existing foreign-invested enterprises established prior to the effective date\nof the Foreign Investment Law are allowed to keep their corporate organization forms for five years from the effectiveness of the Foreign\nInvestment Law before such existing foreign-invested enterprises must change their organization forms and organization structures in accordance\nwith the PRC Company Law, the Partnership Enterprise Law of the PRC and other applicable laws.\n\n \n\nAfter\nthe Foreign Investment Law and the Implementation Rules became effective on January 1, 2020, the provisions of the M&A Rules remained\neffective to the extent they are not inconsistent with the Foreign Investment Law and the Implementation Rules. We believe that our business\nis not in an industry related to national security, but we cannot preclude the possibility that the competent PRC government authorities\nmay publish explanations contrary to our understanding or broaden the scope of such security reviews in the future, in which case our\nfuture acquisitions and investment in the PRC, including those by way of entering into contractual control arrangements with target entities,\nmay be closely scrutinized or prohibited. Moreover, according to the Anti-Monopoly Law of the PRC, the SAMR shall be notified in advance\nof any concentration of undertaking if certain filing thresholds are triggered. We may grow our business in part by directly acquiring\ncomplementary businesses in China. Complying with the requirements of the laws and regulations mentioned above and other PRC regulations\nnecessary to complete such transactions could be time-consuming, and any required approval processes, including obtaining approval from\nthe SAMR, may delay or inhibit our ability to complete such transactions, which could materially and adversely affect our ability to expand\nour business or maintain our market share.\n\n \n\nIn\nDecember 2020, the National Development and Reform Commission and the Ministry of Commerce promulgated the Measures for the Security\nReview of Foreign Investment, which came into effect on January 18, 2021. According to the Security Review of Foreign Investment, for\nforeign investments that affect or may affect national security, security review shall be conducted in accordance with the provisions\nthereof. We cannot assure you that our current or new business operations will remain fully compliant, or that we can adapt our business\noperations to new regulatory requirements on a timely basis, or at all.\n\n \n\n**We\nand our PRC subsidiaries are required to maintain a series of licenses, permits and approvals from PRC authorities to operate our business\nin the PRC, and failure to maintain or renew such licenses, permits or approvals in a timely manner could materially affect our business.**\n\n \n\nPrior\nto the sale of PST Technology, our PRC subsidiaries carried out rural wastewater treatment and metal exploration activities in the PRC.\nAfter PST Technology’s disposition, we discontinued the operation in wastewater treatment segment and continue engaging in the exploration\nand mining business, which is subject to a series of PRC laws and regulations. Such business activities require us to obtain licenses,\npermits and approvals from different PRC authorities, including an exploration permit from the Natural Resources Department of the Inner\nMongolia Autonomous Region with regards to our metal exploration activity and business licenses from local administration for market regulation\nas required upon company registration. As of the date of this annual report, as far as we are aware and in the judgment of management,\nwe have obtained all necessary licenses, permits and approvals to operate our business in the PRC, and have not been denied any such licenses,\npermits or approvals. If we or our PRC subsidiaries fail to maintain or renew such licenses, permits and approvals in a timely manner\nin the future, our business may be materially affected.\n\n \n\n**The\napproval of or filing with the CSRC or other PRC government authorities may be required in connection with our offshore offerings under\nPRC law, and, if required, we cannot predict whether or for how long we will be able to obtain such approval or complete such filing.**\n\n \n\nThe\nM&A Rules require an overseas special purpose vehicle formed for listing purposes through acquisitions of PRC domestic companies and\ncontrolled by PRC persons or entities to obtain the approval of the CSRC prior to the listing and trading of such special purpose vehicle’s\nsecurities on an overseas stock exchange. The interpretation and application of the regulations remain unclear, and our offshore offerings\nmay ultimately require approval of the CSRC. If the CSRC approval is required, it is uncertain whether we can or how long it will take\nus to obtain the approval and, even if we successfully obtain such CSRC approval, the approval could be rescinded. Any failure to obtain\nor delay in obtaining the CSRC approval for any of our offshore offerings, or a rescission of any successfully obtained approvals, would\nsubject us to sanctions imposed by the CSRC or other PRC regulatory authorities. Sanctions could include fines and penalties on our operations\nin China, restrictions or limitations on our ability to pay dividends outside of China, and other forms of sanctions that may materially\nand adversely affect our business, financial condition and results of operations.\n\n \n\nOn\nJuly 6, 2021, PRC government authorities issued the Opinions on Strictly Cracking Down on Illegal Securities Activities in Accordance\nwith the Law. These opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision\non overseas listings by China-based companies. They proposed to take measures such as promoting the construction of relevant regulatory\nsystems to deal with the risks and incidents faced by China-based overseas listed companies.\n\n \n\nAs\na follow-up, on February 17, 2023, CSRC issued the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic\nCompanies (the “Trial Measures of Overseas Listing”) which have been effective on March 31, 2023. The Trial Measures of Overseas\nListing require that 1) where a domestic company seeks to indirectly offer and list securities in overseas markets, the issuer shall designate\na major domestic operating entity, which shall, as the domestic responsible entity, file with the CSRC; 2) initial public offerings or\nlistings in overseas markets shall be filed with the CSRC within 3 working days after the relevant application is submitted overseas.\nAnd subsequent securities offerings of an issuer in the same overseas market where it has previously offered and listed securities shall\nbe filed with the CSRC within 3 working days after the offering is completed; 3) any overseas offering and listing made by an issuer that\nmeets both the following conditions will be determined as indirect overseas offering and listing: (a) 50% or more of the issuer's operating\nrevenue, total profit, total assets or net assets as documented in its audited consolidated financial statements for the most recent accounting\nyear is accounted for by domestic companies; and (b) the main parts of the issuer's business activities are conducted in the Chinese Mainland,\nor its main places of business are located in the Chinese Mainland, or the senior managers in charge of its business operation and management\nare mostly Chinese citizens or domiciled in the Chinese Mainland. The determination as to whether or not an overseas offering and listing\nby domestic companies is indirect overseas offering and listing, shall be made on a substance over form basis.\n\n \n\n11 \n\n \n\nBased\non the Trial Measures of Overseas Listing, if our company issues new securities in the future, we need to fulfill the abovementioned filing\nprocedures. If our company fails to file in time, we may be punished by the CSRC.\n\n \n\nIn\naddition, on February 24, 2023, CSRC, Ministry of Finance; National Administration of State Secrets Protection and National Archives Administration\nof China issued the Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing\nby Domestic Companies (“Revised Confidentiality and Archives Administration Provisions”) which have been effective on March\n31, 2023. The Revised Confidentiality and Archives Administration Provisions require that in the overseas issuance and listing activities\nof domestic enterprises, the securities companies and securities service providers that undertake relevant businesses shall strictly abide\nby applicable laws and regulations of the PRC and the Revised Confidentiality and Archives Administration Provisions, enhance legal awareness\nof keeping state secrets and strengthening archives administration, institute a sound confidentiality and archives administration system,\ntake necessary measures to fulfill confidentiality and archives administration obligations, and shall not leak any state secret and working\nsecret of government agencies, or harm national security and public interest.\n\n \n\nBased\non the Revised Confidentiality and Archives Administration Provisions, if our company violates relevant laws and regulations in the future,\nwe may be punished by the competent authorities.\n\n \n\nAs\nof the date of this annual report, as far as we are aware and in the judgment of management, we have received all requisite permissions\nor approvals in connection with our offshore offerings under PRC law, and have not been denied any such permissions or approvals. However,\nwe cannot assure you that any new rules or regulations promulgated in the future will not impose additional requirements on us. If it\nis determined in the future that approval from and filing with the CSRC or other regulatory authorities or other procedures are required\nfor our offshore offerings, it is uncertain whether we can or how long it will take us to obtain such approval or complete such filing\nprocedures and any such approval or filing could be rescinded or rejected. Any failure to obtain or delay in obtaining such approval or\ncompleting such filing procedures for our offshore offerings, including by our inadvertent conclusion that such approval or filing was\nnot required when in fact it was, or a rescission of any such approval or filing if obtained by us, could subject us to sanctions by the\nCSRC or other PRC regulatory authorities. These regulatory authorities may impose fines and penalties on our operations in China, limit\nour ability to pay dividends outside of China, limit our operating privileges in China, delay or restrict the repatriation of the proceeds\nfrom our offshore offerings into China or take other actions that could materially and adversely affect our business, financial condition,\nresults of operations and prospects, as well as the trading price of our listed securities. The CSRC or other PRC regulatory authorities\nalso may take actions requiring us, or making it advisable for us, to halt our offshore offerings before settlement and delivery of the\nsecurities offered. Consequently, if investors engage in market trading or other activities in anticipation of and prior to settlement\nand delivery, they do so at the risk that settlement and delivery may not occur. In addition, if the CSRC or other regulatory authorities\nlater promulgate new rules or explanations requiring that we obtain their approvals or accomplish the required filing or other regulatory\nprocedures for our prior offshore offerings, we may be unable to obtain a waiver of such approval requirements, if and when procedures\nare established to obtain such a waiver. Any uncertainties or negative publicity regarding such approval requirement could materially\nand adversely affect our business, prospects, financial condition, reputation and the trading price of our listed securities.\n\n \n\n**Failure\nto comply with PRC regulations and other legal obligations concerning data protection and cybersecurity may materially and adversely affect\nour business, as we routinely collect, store and use data during the conduct of our business.**\n\n \n\nOn\nDecember 28, 2021, the CAC, together with 12 other departments, adopted the Cybersecurity Review Measures, which became effective on February\n15, 2022. The Cybersecurity Review Measures require network platform operators possessing personal information of more than one million\nindividual users to undergo a cybersecurity review by the CAC when they seek a listing on a foreign exchange. The Cybersecurity Review\nMeasures provide that critical information infrastructure operators purchasing network products and services and network platform operators\ncarrying out data processing activities, which affect or may affect national security, shall apply for cybersecurity review to the applicable\nlocal cyberspace administration in accordance with the provisions thereunder.\n\n \n\nOn\nJuly 30, 2021, the State Council promulgated the Regulations on Security Protection of Critical Information Infrastructure, which became\neffective on September 1, 2021. Pursuant to the Regulations on Security Protection of Critical Information Infrastructure, critical information\ninfrastructure shall mean any important network facilities or information systems of an important industry or field, such as public communications\nand information services, energy, transportation, water conservation, finance, public services, e-government affairs and science and technology\nand national defense industries, which may seriously endanger national security, peoples’ livelihoods and the public interest in\nthe event of damage, function loss or data leakage. In addition, the relevant administrative departments of each critical industry and\nsector shall be responsible for formulating eligibility criteria and determining the critical information infrastructure operator in the\nrespective industry or sector. The operators shall be informed about the final determination as to whether they are categorized as critical\ninformation infrastructure operators. Among these industries, the energy and telecommunications industries are mandated to take measures\nto provide key assurances for the safe operation of critical information infrastructure in other industries and fields.\n\n \n\nWe\nand our PRC subsidiaries do not carry out business in China through any self-owned network platform and hold personal information of less\nthan one million individuals from PRC operations. We and our PRC subsidiaries have not been identified as critical information infrastructure\noperators by any PRC authorities. The data collected from our China operations is mainly information related to our production, customers,\nsuppliers and our employees. We believe that we and our PRC subsidiaries do not commit any acts that threaten or endanger the national\nsecurity of the PRC, and to our knowledge we and our PRC subsidiaries have not received or been subject to any investigation, notice,\nwarning or sanction from any PRC authority with respect to national security issues arising from our business operations. As of the date\nof this annual report, we do not believe that we need to proactively apply for the cybersecurity review required by the CAC.\n\n \n\n12 \n\n \n\nFurthermore,\nthe CAC promulgated the Security Assessment Measures for Outbound Data Transfers, which became effective on September 1, 2022, which require\nthat to provide data abroad under any of the following circumstances, a data processor shall declare security assessment for its outbound\ndata transfer to the CAC through the local cyberspace administration at the provincial level: (i) where a data processor provides critical\ndata abroad; (ii) where a key information infrastructure operator or a data processor processing the personal information of more than\none million individuals provides personal information abroad; (iii) where a data processor has provided personal information of 100,000\nindividuals or sensitive personal information of 10,000 individuals in total abroad since January 1 of the previous year; and (iv) in\nother circumstances prescribed by the CAC for which declaration of a security assessment for outbound data transfers is required. As we\nand our PRC subsidiaries do not provide any data collected from China operations abroad, we do not believe it is necessary for us to declare\nany security assessments pursuant to the Security Assessment Measures for Outbound Data Transfers.\n\n \n\nHowever,\nthere remains uncertainty as to how these regulations will be interpreted or implemented and whether the PRC regulatory agencies, including\nthe CAC, may adopt new laws, regulations, rules or detailed implementation and interpretation, and there is no assurance that PRC regulatory\nagencies, including the CAC, would take the same view as we do. There have not been comparable developments in Hong Kong, but those could\noccur, and we believe we are currently in compliance with all Hong Kong laws and regulations regarding data security. If any such new\nlaws, regulations, rules or implementation and interpretation come into effect, we will take all reasonable measures and actions to comply\nand to minimize the adverse effect of such laws on us. However, we cannot assure you that we can fully or timely comply with such laws.\nIn the event that we are subject to any mandatory cybersecurity reviews and/or other requirements of the CAC, we face uncertainty as to\nwhether any clearance or other required actions can be timely completed, or at all. Given such uncertainty, it is possible that we may\nbe required to suspend the relevant business, or face other penalties, which could materially and adversely affect our business, financial\ncondition, results of operations and/or the value of our securities, or could significantly limit or completely hinder our ability to\noffer or continue to offer securities to investors. As of the date of this annual report, we have not been informed that we have been\nidentified as a critical information infrastructure operator by any governmental authorities. These laws and regulations are still new\nand there is uncertainty with respect to the interpretation and implementation of these data security laws and regulations. We will closely\nmonitor the relevant regulatory environment and will assess and determine whether we are required to apply for the cybersecurity review.\n\n** **\n\n**We may be classified as a “resident\nenterprise” for PRC enterprise income tax purposes; such classification could result in unfavorable tax consequences to us and\nour non-PRC shareholders.**\n\n \n\nThe\nEnterprise Income Tax Law provides that enterprises established outside of China whose “de facto management bodies” are located\nin China are considered PRC tax resident enterprises and will generally be subject to the uniform 25% PRC enterprise income tax rate on\ntheir global income. In 2009, the State Administration of Taxation (“SAT”) issued the Circular of the State Administration\nof Taxation on Issues Concerning the Identification of Chinese-Controlled Overseas Registered Enterprises as Resident Enterprises in Accordance\nwith the Standards of Actual Organizational Management (“SAT Circular 82”), which was partially amended by the Announcement\non Issues concerning the Determination of Resident Enterprises Based on the Standards of Actual Management Institutions issued by the\nSAT on January 29, 2014, and further partially amended by the Decision on Issuing the Lists of Invalid and Abolished Tax Departmental\nRules and Taxation Normative Documents issued by the SAT on December 29, 2017. SAT Circular 82, as amended, provides certain specific\ncriteria for determining whether the “de facto management body” of a Chinese-controlled offshore-incorporated enterprise is\nlocated in China, which include all of the following conditions: (i) the location where senior management members responsible for an enterprise’s\ndaily operations discharge their duties; (ii) the location where financial and human resource decisions are made or approved by organizations\nor persons; (iii) the location where the major assets and corporate documents are kept; and (iv) the location where more than half (inclusive)\nof all directors with voting rights or senior management have their habitual residence. SAT Circular 82 further clarifies that the identification\nof the “de facto management body” must follow the “substance over form” principle. In addition, the SAT issued\nthe Announcement of State Administration of Taxation on Promulgation of the Administrative Measures on Income Tax on Overseas Registered\nChinese-funded Holding Resident Enterprises (Trial Implementation) (“SAT Bulletin 45”) on July 27, 2011, effective from September\n1, 2011, and partially amended on April 17, 2015, June 28, 2016, and June 15, 2018, providing more guidance on the implementation of SAT\nCircular 82. SAT Bulletin 45 clarifies matters including resident status determination, post-determination administration and competent\ntax authorities. Although both SAT Circular 82 and SAT Bulletin 45 only apply to offshore enterprises controlled by PRC enterprises or\nPRC enterprise groups, not those controlled by PRC individuals or foreign individuals, the determining criteria set forth in SAT Circular\n82 and SAT Bulletin 45 may reflect the SAT’s general position on how the “de facto management body” test should be applied\nin determining the tax resident status of offshore enterprises, regardless of whether they are controlled by PRC enterprises or PRC enterprise\ngroups or by PRC or foreign individuals.\n\n \n\nCurrently,\nthere are no detailed rules or precedents governing the procedures and specific criteria for determining “de facto management bodies”\nthat are applicable to us or our overseas subsidiaries. We do not believe that CHNR meets all of the conditions for a PRC resident enterprise.\nThe Company is a company incorporated outside the PRC. As a holding company, its key assets are its ownership interests in its subsidiaries,\nand its key assets are located, and its records (including the resolutions of its board of directors and the resolutions of its shareholders)\nare maintained, outside the PRC. For the same reasons, we believe our other entities outside of China are not PRC resident enterprises\neither. However, the tax resident status of an enterprise is subject to determination by the PRC tax authorities, and uncertainties remain\nwith respect to the interpretation of the term “de facto management body.” There can be no assurance that the PRC government\nwill ultimately take a view that is consistent with ours.\n\n \n\n13 \n\n \n\nHowever,\nif the PRC tax authorities determine that CHNR is a PRC resident enterprise for enterprise income tax purposes, we may be required to\nwithhold a 10% withholding tax from dividends we pay to our shareholders that are non-resident enterprises. Such 10% tax rate could be\nreduced by applicable tax treaties or similar arrangements between China and the jurisdiction of our shareholders. For example, for shareholders\neligible for the benefits of the tax treaty between China and Hong Kong, known as the Arrangement between the Mainland of China and the\nHong Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes\non Income (the “Double Taxation Arrangement”), the tax rate is reduced to 5% for dividends if relevant conditions are met,\nincluding without limitation that (a) the Hong Kong resident enterprise must be the beneficial owner of the relevant dividends; and (b)\nthe Hong Kong resident enterprise must directly hold no less than 25% share ownership in the PRC resident enterprise during the 12 consecutive\nmonths preceding its receipt of the dividends. In current practice, a Hong Kong resident enterprise must obtain a tax resident certificate\nfrom the Hong Kong tax authority to apply for the 5% lower PRC withholding tax rate. As the Hong Kong tax authority will issue such a\ntax resident certificate on a case-by-case basis, we cannot assure you that we will be able to obtain a tax resident certificate from\nthe relevant Hong Kong tax authority and enjoy the preferential withholding tax rate of 5% under the Double Taxation Arrangement with\nrespect to any dividends paid by our PRC subsidiaries to their immediate holding companies. In addition, non-resident enterprise shareholders\nmay be subject to a 10% PRC tax on gains realized on the sale or other disposition of common equity if such income is treated as sourced\nfrom within the PRC. It is unclear whether our non-PRC individual shareholders would be subject to any PRC tax on dividends or gains obtained\nby such non-PRC individual shareholders in the event we are determined to be a PRC resident enterprise. If any PRC tax were to apply to\nsuch dividends or gains, it would generally apply at a rate of 20% unless a reduced rate is available under an applicable tax treaty.\nHowever, it is also unclear whether non-PRC shareholders of the Company would be able to claim the benefits of any tax treaties between\ntheir country of tax residence and the PRC in the event that the Company is treated as a PRC resident enterprise.\n\n \n\nProvided\nthat CHNR, as a BVI holding company, is not deemed to be a PRC resident enterprise, our shareholders who are not PRC residents will not\nbe subject to PRC income tax on dividends distributed by us or gains realized from the sale or other disposition of our shares. However,\nunder the Announcement of the State Administration of Taxation on Several Issues Relating to Enterprise Income Tax on Transfer of Assets\nbetween Non-resident Enterprises (the “SAT\nCircular 7”) issued by the SAT on February 3, 2015, where a non-resident enterprise conducts an “indirect transfer”\nby transferring taxable assets, including, in particular, equity interests in a PRC resident enterprise, indirectly by disposing of the\nequity interests of an overseas holding company, the non-resident enterprise, being the transferor, or the transferee or the PRC entity\nwhich directly owned such taxable assets may report to the relevant tax authority such indirect transfer. Using a “substance over\nform” principle, the PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonable commercial\npurpose and was established for the purpose of reducing, avoiding or deferring PRC tax. As a result, gains derived from such indirect\ntransfer may be subject to PRC enterprise income tax, and the transferee would be obligated to withhold the applicable taxes, currently\nat a rate of 10% for the transfer of equity interests in a PRC resident enterprise. We and our non-PRC resident investors may be at risk\nof being required to file a return and being taxed under SAT Circular 7, and we may be required to expend valuable resources to comply\nwith SAT Circular 7, or to establish that we should not be taxed under SAT Circular 7.\n\n \n\nIn\naddition to the uncertainty in how the new resident enterprise classification could apply, it is also possible that the rules may change\nin the future, possibly with retroactive effect. If we are required under the Enterprise Income Tax Law to withhold PRC income tax on\nour dividends payable to our foreign shareholders, including U.S. investors, or if you are required to pay PRC income tax on the transfer\nof our shares under the circumstances mentioned above, the value of your investment in our shares may be materially and adversely affected.\nThese rates may be reduced by an applicable tax treaty, but it is unclear whether, if we are considered a PRC resident enterprise, holders\nof our shares would be able to claim the benefit of income tax treaties or agreements entered into between China and other countries or\nareas. Any such tax may reduce the returns on your investment in our shares.\n\n \n\n**Any\nfailure to comply with PRC regulations regarding the registration requirements for employee stock incentive plans may subject the PRC\nplan participants or us to fines and other legal or administrative sanctions.**\n\n \n\nIn\nFebruary 2012, SAFE promulgated the Notices on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating\nin Stock Incentive Plans of Overseas Publicly-Listed Companies, replacing earlier rules promulgated in March 2007. Pursuant to these rules,\nPRC citizens and non-PRC citizens who reside in China for a continuous period of not less than one year who participate in any stock incentive\nplan of an overseas publicly listed company, subject to a few exceptions, are required to register with SAFE through a domestic qualified\nagent, which could be the PRC subsidiary of such overseas-listed company, and complete certain other procedures related to account establishment,\nfunds transfer and remittance. In addition, an overseas-entrusted institution must be retained to handle matters in connection with the\nexercise or sale of stock options and the purchase or sale of corresponding shares and interests. We and our executive officers and other\nemployees who have been PRC citizens or who have resided in the PRC for a continuous period of not less than one year and who are granted\noptions or other awards under our equity incentive plan will be subject to these regulations. Failure to complete the SAFE registrations\nmay subject them to fines and legal sanctions and may also limit our ability to contribute additional capital into our PRC subsidiary\nand limit our PRC subsidiaries’ ability to distribute dividends to us. As at the date of this annual report, we have already completed\nthe SAFE registration and obtained the relevant approval of foreign exchange for our executive officers, consultants and other employees\nwho have been granted options and are subject to the above regulations. We also face regulatory uncertainties that could restrict our\nability to adopt additional incentive plans for our directors, executive officers and employees under PRC law.\n\n \n\n \n\n14 \n\n \n\nFrom time to time, the Company may grant share options to its\nemployees and consultants under its equity compensation plan. SAT has issued circulars concerning employee share options, under which\ncertain of our employees and consultants who are PRC tax residents and exercise share options will be subject to PRC individual income\ntax. The individual income tax of consultant grantees and employees shall be paid according to remuneration for personal services and\nwages and salaries respectively. Our PRC subsidiaries have obligations to file documents related to employee share options with relevant\ntax authorities and to withhold individual income taxes of those employees and consultants who exercise their share options. If our employees\nand consultants fail to pay or if we fail to withhold their individual income tax as required by relevant laws and regulations, we may\nface sanctions imposed by the PRC tax authorities or other PRC government authorities.\n\n \n\n**Failure\nto make adequate contributions to various mandatory social security plans as required by PRC regulations may subject us to penalties.**\n\n \n\nUnder\nthe PRC Social Insurance Law and the Administrative Measures on Housing Fund, our PRC subsidiaries are required to participate in various\ngovernment sponsored employee benefit plans, including certain social insurance, housing funds and other welfare-oriented payment obligations,\nand to contribute to the plans in amounts equal to certain percentages of salaries, including bonuses and allowances, of the employees\nup to a maximum amount specified by the local government from time to time at locations where they operate the businesses. The requirements\nof employee benefit plans have not been implemented consistently by the local governments in China given the different levels of economic\ndevelopment in different locations. If the local governments deem our subsidiaries’ contribution to be insufficient, our subsidiaries\nmay be subject to late contribution fees or fines in relation to any underpaid employee benefits, and our financial condition and results\nof operations may be adversely affected.\n\n \n\nIn\nHong Kong, employers are required to select and join a provident fund scheme (“MPF Scheme”) in accordance with the statutory\nrequirements of the Mandatory Provident Fund Schemes Ordinance for all employees in Hong Kong and to make contributions to the MPF Scheme\nbased on the minimum statutory contribution requirement of 5% of the eligible employees’ relevant aggregate income, subject to a\ncapped amount. Any non-compliance with statutory requirements with respect to our employees located in Hong Kong may result in enforcement\nbeing taken by the relevant authorities, which could lead to financial penalties or imprisonment.\n\n \n\n**Enforcement\nof stricter labor laws and regulations may increase our labor costs.**\n\n \n\nChina’s\noverall economy and the average wage have increased in recent years and are expected to continue to grow. The average wage level for our\nemployees has also increased in recent years. We expect that our labor costs, including wages and employee benefits, will continue to\nincrease. Unless we are able to pass on these increased labor costs to our customers who pay for our services, our profitability and results\nof operations may be materially and adversely affected. The PRC Labor Contract Law and its implementing rules impose requirements concerning\ncontracts entered into between an employer and its employees and establishes time limits for probationary periods and for how long an\nemployee can be placed in a fixed-term labor contract. We cannot assure you that our or our subsidiaries’ employment policies and\npractices do not, or will not, violate the Labor Contract Law or its implementing rules or that we will not be subject to related penalties,\nfines or legal fees. If we or our subsidiaries are subject to large penalties or fees related to the Labor Contract Law or its implementing\nrules, our business, financial condition and results of operations may be materially and adversely affected. In addition, according to\nthe Labor Contract Law and its implementing rules, if we intend to enforce the non-compete provision with an employee in a labor contract\nor non-competition agreement, we have to compensate the employee on a monthly basis during the term of the restriction period after the\ntermination or ending of the labor contract, which may cause extra expenses to us. Furthermore, the Labor Contract Law and its implementation\nrules require certain terminations to be based upon seniority rather than merit, which significantly affects the cost of reducing workforce\nfor employers. In the event we decide to significantly change or decrease our workforce in the PRC, the Labor Contract Law could adversely\naffect our ability to enact such changes in a manner that is most advantageous to our circumstances or in a timely and cost-effective\nmanner, thus our results of operations could be adversely affected.\n\n \n\n15 \n\n \n\n**If\nthe chops of our PRC subsidiaries are not kept safely, are stolen or are used by unauthorized persons or for unauthorized purposes, the\ncorporate governance of these entities could be severely and adversely compromised.**\n\n \n\nIn\nChina, a company chop or seal serves as the legal representation of the company towards third parties even when unaccompanied by a signature.\nEach legally registered company in China is required to maintain a company chop, which must be registered with the local Public Security\nBureau. In addition to this mandatory company chop, companies may have several other chops which can be used for specific purposes. The\nchops of our PRC subsidiaries are generally held securely by personnel designated or approved by us in accordance with our internal control\nprocedures. To the extent those chops are not kept safely, are stolen or are used by unauthorized persons or for unauthorized purposes,\nthe corporate governance of these entities could be severely and adversely compromised and those corporate entities may be bound to abide\nby the terms of any documents so chopped, even if they were chopped by an individual who lacked the requisite power and authority to do\nso. In addition, if the chops are misused by unauthorized persons, our PRC subsidiaries could experience disruption to our normal business\noperations. We may have to take corporate or legal action, which could involve significant time and resources to resolve while distracting\nmanagement from our operations.\n\n \n\n**Risks Relating to Our Mine Exploration Activities in Inner Mongolia**\n\n \n\n**The Moruogu Tong Mine is in the exploration\nstage.**\n\n \n\nOne of our operating subsidiaries,\nBayannaoer Mining, is in the exploration stage at the Moruogu Tong Mine located in the Inner Mongolia Autonomous Region of the PRC, and,\nat this stage, we cannot predict whether ore can be mined on a profitable basis. During the exploration stage, a mine incurs operating\nexpenses but does not generate revenues. We intend to fund mine exploration on the southern part of Moruogu Tong Mine through borrowings\nfrom related parties or cash on hand. Pursuant to Bayannaoer Mining’s mutual cooperation agreement (the “Cooperation Agreement”)\nwith Bayannaoer Jijincheng Mining Co., Ltd. (“Jijincheng Mining”), Jijincheng Mining is currently running the exploration\nprogram for the northern part of Moruogu Tong Mine. To date, the exploration program of the northern part has indicated the presence of\nlead and silver, with the prospect that further surveying and exploration may indicate the presence of other ores such as copper. At this\nstage of exploratory activities, we cannot predict whether sufficient ore of acceptable quality will be found at the Moruogu Tong Mine\nto warrant further exploration and/or extraction.\n\n \n\n**The northern part of Moruogu Tong Mine\nis currently being explored under an agreement that reduces our share in any future profits.**\n\n \n\nOn August 20, 2017, Bayannaoer\nMining entered into the Cooperation Agreement with Jijincheng Mining, an unrelated third party. The Cooperation Agreement is intended\nto provide for financial support for the operating expenses of the northern part of Moruogu Tong Mine during the exploration stage, and\nthe allocation of rights and responsibilities between Bayannaoer Mining and Jijincheng Mining. According to the Cooperation Agreement,\nJijincheng Mining is responsible for engaging the exploration team and providing the required funding. Pursuant to the Cooperation Agreement:\n(i) Bayannaoer Mining contributed the existing exploration results for the northern part of Moruogu Tong Mine; (ii) Jijincheng Mining\nprovides the necessary funds for further exploration at the mine; (iii) Bayannaoer Mining enjoys full rights to any resources already\ndiscovered and confirmed by its independent exploration work conducted prior to commencement of the cooperative exploration project; (iv) Bayannaoer\nMining and Jijincheng Mining will each receive a 50% interest in any newly discovered resources from the first 10 drilling holes in\nthe cooperative exploration project; and (v) Bayannaoer Mining and Jijincheng Mining will receive 30% and 70% interests, respectively,\nin any newly discovered resources from drilling work beyond the first 10 drilling holes in the cooperative exploration project. As of\nthe date of this annual report, 21 holes have been drilled using funding provided by Jijincheng Mining pursuant to the Cooperation Agreement.\nOther details of the Cooperation Agreement, including allocations and distributions upon completion of exploration work, remain to be\nnegotiated between the parties. There is no assurance that the details of the arrangement that remain to be negotiated will be resolved\nin a manner satisfactory to the Company. Moreover, because the Cooperation Agreement provides us with a minority interest in the resources\ndiscovered as part of the cooperative exploration project, we will not be able to enjoy the full economic benefits of the resources we\ndiscover in the northern part of Moruogu Tong Mine for the duration of the Cooperation Agreement.\n\n \n\n \n\n****\n\n16 \n\n \n\n**Any estimates of the reserves contained\nin the Moruogu Tong Mine may be inaccurate.**\n\n \n\nThe Moruogu Tong Mine is the\nsubject of a geological survey prepared in conformity with procedures and protocols recognized in the PRC. These procedures and protocols\nare different from those generally recognized in the United States. In addition, reserve estimation is an interpretive process based upon\navailable data and various assumptions that are believed to be reasonable, and the economic value of ore reserves may be adversely affected\nby price fluctuations in the metals markets, reduced recovery rates or a rise in production costs as a result of inflation or other technical\nproblems arising in the course of extraction. If the assumptions upon which we conduct the reserve study prove to be inaccurate, we may\nreach incorrect conclusions as to the nature and extent of resources present at the Moruogu Tong Mine, and we may not be able to generate\nrevenues from the Moruogu Tong Mine in an amount that would lead to such activities being profitable or at all.\n\n \n\n**There are no assurances that we can produce\nminerals on a commercially viable basis.**\n\n \n\nThe Company’s ability\nto generate revenue and profit from the Moruogu Tong Mine is expected to occur, if at all, through the exploration, evaluation, development\nand operation of that property. The economic feasibility of a project depends on numerous factors, including the cost of mining and production\nfacilities required to extract the desired minerals, the total mineral deposits that can be mined at a given facility, the proximity of\nthe mineral deposits to refining facilities, and the market price of the minerals at the time of sale. There is no assurance that our\ncurrent or future exploration programs or any acquisitions will result in the identification of deposits that can be mined profitably.\n\n \n\n**Volatility in the market prices of metals may adversely affect\nthe results of our operations.**\n\n \n\nThe market prices of lead,\nsilver and other metals have experienced significant volatility in recent years. Market prices depend upon many factors beyond our control,\nwhich include industry specific factors such as supply and demand and the level of customer inventories, as well as factors such as local\nand world-wide general economic conditions and disruptions caused by unforeseen domestic or international crises such as the global outbreak\nof COVID-19, or geopolitical tensions, including the ongoing military conflict between Russia and Ukraine. The uncertainties surrounding\nthe market prices of metals and the costs of extraction may adversely affect our ability to operate on a profitable basis if our mining\nexploration proves fruitful.\n\n \n\nDuring 2025, prolonged geopolitical\nconflicts, elevated interest rates across major economies, and ongoing Sino-US tensions continued to weigh on the global economy and businesses.\nIn addition, tensions in the Middle East, particularly between the United States and Iran, have escalated in recent years and may continue\nto pose risks to our business. These factors disrupted the global commodity market, causing significant volatility in the prices of lead,\nsilver and copper. In 2025, the Shanghai Futures Exchange (“SHFE”) lead price hit a low of CNY15,885 (US$2,270) per ton and\na high of CNY17,840 (US$2,550) per ton, the SHFE silver price reached a low of CNY7,502 (US$1,072) per kilogram (“kg”) and\na high of CNY19,998 (US$2,858) per kg, and the SHFE copper price hit a low of CNY71,320 (US$10,194) per ton and a high of CNY102,660 (US$14,673)\nper ton, each reflecting high volatility. The extent to which demand and prices will be supported in the future is highly uncertain, as\npersistent high interest rates, particularly in the U.S., the ongoing geopolitical tensions, the newly imposed U.S. tariffs and the renewed\nhostilities in the Middle East in early 2026 continue to cause disruptions to the global economy and to business activities at all levels.\nIntensifying trade frictions or further geopolitical tensions could significantly and adversely impact market sentiment and the real economy,\nleading to a sharp decline in global trade, major supply chain disruptions, a surge in oil prices and broad-based downturns in industrial\nmetals prices and economic growth. Aggressive monetary policies of major economies could also cause unexpected consequences beyond mere\neconomic downturns, such as large-scale bankruptcy and even financial crisis, which will have significant and negative impacts on the\ncommodity markets. Therefore, demand and price volatility in the commodity markets may continue for a prolonged period or further deteriorate,\nwhich may adversely affect our ability to sell minerals from the Moruogu Tong Mine on a profitable basis.\n\n  \n\n**We are subject to government regulations\nin various aspects of our exploration activities and our failure to comply with applicable government regulations could adversely affect\nus.**\n\n \n\nBayannaoer Mining, our subsidiary\nthat acquired exploration rights to the Moruogu Tong Mine, is and will continue to be subject to the regulations of various aspects of\nits operations by a variety of laws, rules and regulations administered by the national and local Chinese government, including laws,\nrules and regulations relating to: exploration activities; environmental protection; the use and preservation of dangerous substances;\nemployment practices; as well as land use laws and a variety of local business laws and rules. Our failure to comply with applicable laws,\nrules, and regulations could adversely affect our operations and subject us to fines and other penalties including suspension or termination\nof our business permits.\n\n \n\n**We do not have binding agreements with customers\nto purchase any future output of metals.**\n\n \n\nWhile we believe there is\na robust market for lead, silver and other metals not only in China but also in other countries (although our operations are currently\nlimited to the PRC and we are not currently producing any metals), we do not currently have any commitments from any customers to purchase\nany future output of metals. As a result, we may not be able to sell any metals that we are able to successfully extract at prices that\nare acceptable to us or at all.\n\n \n\n \n\n17 \n\n \n\n**ESG issues, including those related to health,\nsafety, climate change and sustainability, may have an adverse effect on our business, financial condition, and results of operations,\ncould damage our reputation, and may increase costs.**\n\n \n\nThere is an increasing focus\nfrom certain investors, customer, partners and other stakeholders concerning ESG matters. Additionally, public interest and legislative\npressure related to public companies’ ESG practices continue to grow and change, and may continue to shift based on political conditions\nin the countries in which we operate and do business. If our ESG practices fail to meet regulatory requirements, our medium- and long-term\nESG commitments, or investors, customers, partners or other stakeholders’ evolving expectations and standards for responsible corporate\ncitizenship in areas including environmental stewardship, support for local communities, human capital management, employee health and\nsafety practices, corporate governance and transparency, our reputation, brand and employee retention may be negatively impacted.\n\n \n\nInvestors, customers, partners\nand other stakeholders are increasingly focusing on environmental issues, including climate change, dams, energy and water use, and other\nsustainability concerns. Concern over climate change, in particular, may result in new or increased legal and regulatory requirements\nto reduce or mitigate impacts to the environment.\n\n \n\nIf we do not adapt to or comply\nwith new regulations, or if we fail to comply with disclosure requirements and consequently fail to meet evolving regulatory, investor,\nindustry or stakeholder expectations and concerns regarding ESG issues, investors may reconsider their capital investment in us, customers\nand partners may choose to stop the cooperation with us, which could have a material adverse effect on our reputation, business or financial\ncondition.\n\n \n\nIn addition, our ESG practices\nand initiatives may result in increased operational costs, including monitoring and reporting costs, equipment costs, energy costs, and\nother costs to comply with our developing practices and initiatives. These additional costs could have a material impact on our business,\nresults of operations and financial condition.\n\n \n\n**Risks Relating to the Sale of PST Technology**\n\n \n\n**We face risks associated\nwith the divesture of our wastewater treatment segment.**\n\n \n\nIn July 2021, we acquired\nPST Technology for consideration of three million of the Company’s newly issued restricted common shares, 120 million shares of\nFARL, and approximately CNY10.3 million (US$1.47 million). Through our acquisition of PST Technology, we obtained a 51% equity interest\nin Shanghai Onway, a company principally engaged in services related to rural wastewater treatment. In addition to the purchase price,\nwe incurred significant non-recurring expenses in connection with the acquisition, including legal, accounting, financial advisory, integration\nplanning and other expenses, and have incurred integration costs arising out of this transaction.\n\n \n\nOn July 28, 2023, we entered\ninto a Sale and Purchase Agreement (“SPA”) with Feishang Group Limited (“Feishang Group”), pursuant to which,\nwe agreed to sell 100% equity interest of Precise Space-Time Technology Limited to Feishang Group, together with PST Technology’s\noutstanding payable owed to us, for consideration of approximately CNY95,761,119 comprising: (i) CNY-34,197,300, the fair value of 100%\nequity interest of PST Technology as determined by the independent valuation report dated July 28, 2023; and (ii) CNY129,958,419, the\nbook value of PST Technology’s outstanding payable owed to us. After PST Technology’s disposition, we discontinued the operation\nin wastewater treatment segment and continue engaging in the exploration and mining business. This divestiture may adversely affect our\nbusiness, results of operations or financial condition if we are unable to offset the dilutive impacts from the loss of revenue associated\nwith the divested waste water treatment business, or otherwise achieve the anticipated benefits or cost savings from the divestiture.\n\n \n\nIn addition, we may divest\nin the future businesses as part of ongoing efforts to refine our portfolio and redefine our strategic priorities. We may not be able\nto successfully achieve the expected benefits of such divestitures and such divestitures may not have the desired effect of enhancing\nthe status of our portfolio of businesses. Our divestitures could result in exposure to contingent or unexpected liabilities, such as\nlitigation, indemnification claims, regulatory claims and earn-out obligations. Furthermore, businesses under consideration for, or otherwise\nsubject to, divestiture may be adversely impacted prior to completion of the divestiture, which could adversely affect our business, results\nof operations or financial condition.** **\n\n \n\n**Risks Relating to the Potential Closing of the Acquisition\nof Williams Minerals and the Timing of Such Closing**\n\n \n\n**There may be unforeseen risks relating\nto the Acquisition that were not discovered by us through our due diligence investigation prior to our Acquisition.**\n\n \n\n       Although we have conducted due diligence in connection with the Acquisition, and such due diligence\ninvestigation concluded on April 14, 2023, an unavoidable level of risk remains regarding any undisclosed or unknown issues concerning\nthe prospects of the Zimbabwean lithium mine, including the actual presence and extraction of minerals therein. We may learn additional\ninformation about the Zimbabwean lithium mine that could materially adversely affect us. There may be unforeseen risks relating to our\nability to locate and execute on strategic opportunities; the presence of lithium or precious minerals in the Zimbabwean lithium mine;\nthe vesting of the legal possession and control of the relevant regions of the Zimbabwean mine and the timing thereof; the level of demand\nfor lithium and other precious minerals; and the availability of internally generated funds and funds for the payment of operating expenses,\ncapital expenditures and the Company’s growth strategy.\n\n \n\n** **\n\n****\n\n18 \n\n \n\n**Completion of the Acquisition is\nconditional upon satisfaction or waiver of various conditions. There can be no assurance that the conditions will be fulfilled or waived,\nor that the acquisition will be completed.**\n\n \n\nThe completion of the\nAcquisition is subject to a number of conditions, including, among other things, the transfer of ownership interests in Williams Minerals\nfrom the Sellers to the intermediate holding company; the Company’s payment of the first installment of US$140 million, in cash\nor by way of promissory notes, to the Sellers; the issuance of independent technical reports regarding the amount of qualified measured,\nindicated and inferred resources quantity of lithium oxide proven to be in each region of the mining area; the settlement of the then-total\nconsideration accumulated in cash and restricted shares, as calculated in reference to the issued independent technical reports; and the\ntransfer of ownership rights to the Company for each region of the mining area. Pursuant to the Zimbabwe SPA, for each relevant region\nof the lithium mine, until the Company’s legal possession and control vests, the Sellers will maintain legal possession and control,\nincluding the right of exploration, sale of lithium, and the revenue derived therefrom, as well as liability for operational costs and\nthird-party claims. The Company’s legal possession and control of each relevant region only vests upon its settlement of the then-total\nconsideration accumulated. There can be no certainty, nor can we provide any assurance, that all conditions will be satisfied or waived,\nor, if satisfied or waived, when they will be satisfied or waived and, accordingly, the acquisition may not be completed. On December\n22, 2023, the Company entered into an amendment agreement (the “Amendment Agreement”) to the Zimbabwe SPA with the parties\nthereto. As the Sellers are still in the process of satisfying conditions precedent to the closing of the Acquisition in accordance with\nthe Zimbabwe SPA, including but not limited to obtaining requisite governmental approvals, the parties entered into the Amendment Agreement\nto extend the long stop date for closing the acquisition from December 31, 2023 to December 31, 2024. In addition, the parties entered\ninto the Amendment Agreement II to extend the long stop date for closing the acquisition from December 31, 2024 to December 31, 2025,\nand Amendment Agreement III to further extend the long stop date for closing the acquisition from December 31, 2025 to December 31, 2026.\nSee “Item 4.A. – INFORMATION OF THE COMPANY – History and Development of the Company – Acquisition of Williams\nMinerals” for additional information. Although we expect that the last independent technical report will be completed, and accordingly\nownership rights to the last mining region (as described above) will vest with the Company, in 2026, there is no guarantee that the Acquisition\nwill be completed on such timeline, or at all.\n\n** **\n\n**Failure to complete the Acquisition\nmay have a material adverse effect on the Company’s business, financial condition and results of operations.**\n\n** **\n\nIf the Acquisition\nis not completed, the ongoing businesses of the Company may be adversely affected and the Company will be subject to several risks, including\n(i) having to pay certain costs relating to the Acquisition, such as legal, accounting, and external consultant fees, (ii) the focus of\nmanagement on the Acquisition instead of on pursuing other opportunities that could be beneficial, (iii) negative reactions from the financial\nmarkets, which could cause a decrease in the market price of our shares, particularly if the market price reflects market assumptions\nthat the Acquisition will be completed or completed on certain terms; and (iv) negative reactions from regulators, rating agencies, prospective\ncustomers, counterparties and employees; all without having fully realized the anticipated benefits of the Acquisition. Failure to complete\nthe Acquisition or a change in the terms of the Acquisition could each have a material adverse effect on the Company’s business,\nfinancial condition and results of operations, as well as on our ability to attract future acquisition opportunities.\n\n** **\n\n**Even if the Acquisition is completed,\nwe may fail to realize the anticipated benefits associated with it, those benefits may take longer to realize than expected, and we may\nencounter significant difficulties.**\n\n** **\n\nEven if we are successful\nin completing the Acquisition, we may fail to realize the anticipated benefits of it. The anticipated benefits of the Acquisition and\nthe projected cash costs necessary to achieve these benefits may be affected by changes in the overall economic, political and regulatory\nenvironment, including applicable tax regimes and fluctuations in foreign exchange rates, the viability of mining and estimates of reserves\nat the Zimbabwean lithium mine, the issuance and accuracy of the independent technical reports, the demand for lithium and other precious\nminerals, and the realization of the other risks relating to our business described herein. The benefits we expect to realize from this\nAcquisition will depend, in part, on our ability to successfully extract lithium or precious minerals, if found, and to capitalize on\nour mining expertise and sales and distribution platform. If we are not able to achieve these objectives, the anticipated benefits of\nthe Acquisition may not be realized fully or at all or may take longer to realize than expected.\n\n** **\n\n****\n\n19 \n\n \n\n**Risks Relating to Additional Acquisitions and Expansion into\nOther Sectors**\n\n \n\n**We may acquire other businesses or form\njoint ventures that could negatively affect our operating results, dilute our shareholders’ ownership, increase our debt or cause\nus to incur significant expense.**\n\n \n\nWe are actively seeking opportunities\nto enter other industries in the PRC, as well as other potentially attractive opportunities; however, we cannot offer any assurance that\nacquisitions of businesses, assets and/or entering into strategic alliances or joint ventures will be successful. We may not be able to\nfind suitable partners or acquisition candidates and may not be able to complete such transactions on favorable terms, if at all. If we\nmake any acquisitions, we may not be able to integrate these acquisitions successfully into our existing infrastructure. In addition,\nin the event we acquire any existing businesses we could assume unknown or contingent liabilities.\n\n \n\nAny future acquisitions could\nresult in incurrence of debt, contingent liabilities or future write-offs of intangible assets or goodwill, any of which could have a\nnegative impact on our cash flows, financial condition and results of operations. Integration of an acquired company may also disrupt\nongoing operations and require management resources that otherwise would be focused on developing and expanding the acquired business.\nWe may experience losses related to potential investments in other companies, which could harm our financial condition and results of\noperations. Further, we may not realize the anticipated benefits of any acquisition, strategic alliance or joint venture if such investments\ndo not materialize.\n\n \n\nTo finance any acquisitions\nor joint ventures, we may choose to issue common shares, or a combination of debt and equity as consideration, which could significantly\ndilute the ownership of our existing shareholders or provide rights to such target shareholders in priority over our common shareholders.\nAdditional funds may not be available on terms that are favorable to us, or at all. If the price of our common shares is low or volatile,\nwe may not be able to acquire other companies or fund a joint venture project using shares as consideration.\n\n \n\n**Future acquisitions or strategic investments\ncould be difficult to identify and integrate, divert the attention of management, and could disrupt our business, dilute shareholder value\nand adversely affect our business, results of operations, and financial condition.**\n\n \n\nAs part of our growth strategy,\nwe may acquire or invest in other businesses, assets or technologies that are outside of the sectors we have historically operated in\nbut fit within our strategic goals. Any acquisition or investment may divert the attention of management and require us to use significant\namounts of cash, issue dilutive equity securities or incur debt. We have limited experience in acquiring other businesses. In addition,\nwe may be exposed to unknown risks, any of which could adversely affect our business, results of operations, and financial condition,\nincluding risks arising from:\n\n \n\n \n•\ndifficulties in integrating the operations, technologies, product or service offerings, administrative systems, and personnel of acquired businesses, especially if those businesses operate outside of our core competency or geographies in which we currently operate;\n\n \n\n \n•\npotential loss of key employees of the acquired business;\n\n \n\n \n•\ninability to maintain key business relationships and reputation of the acquired business;\n\n \n\n \n•\nlitigation arising from the acquisition or the activities of the acquired business, including claims from terminated employees, customers, former shareholders or other third parties;\n\n \n\n \n•\nassumption of contractual obligations that contain terms that are not beneficial to us, require us to license, or increase our risk of liability;\n\n \n\n \n•\ncomplications in the integration of acquired businesses or diminished prospects, including as a result of the domestic and global economic downturns;\n\n \n\n \n•\nfailure to generate the expected financial results related to an acquisition in a timely manner or at all;\n\n \n\n \n•\nfailure to accurately forecast the impact of an acquisition transaction; and\n\n \n\n \n•\nimplementation or remediation of effective controls, procedures, and policies for acquired businesses.\n\n \n\n \n\n20 \n\n \n\n**Risks Relating to Our Financial Condition\nand Business**\n\n \n\n**We have incurred losses from operations\nin each of the preceding three fiscal years of 2023, 2024 and 2025 and there is no assurance that we will generate profits from operations\nin the future.**\n\n \n\nFor the three years ended\nDecember 31, 2023, 2024 and 2025, we incurred operating losses of CNY9.14 million, CNY7.20 million and CNY3.27 million (US$0.47 million),\nrespectively. Our operating losses mainly represent administrative expenses, such as legal and professional fees, payroll expenses and\ntravelling expenses. Any future profitability will be dependent upon many factors, including our successful integration and profitable\noperations of our newly acquired and existing businesses; our ability to fund our exploration and operating expenses, successfully produce\nmetal outputs, and sell our production output to third parties; and the successful execution of our plans to pivot to other industries.\nOther factors, such as uncertainty over the demand and market price for lead, silver and other metals, or the availability of attractive\nacquisition targets in other industries, are outside of our control. There is no assurance that we will be successful in our efforts to\nachieve profitability, and we expect to incur significant losses for the foreseeable future. We can provide no assurance to investors\nthat we will achieve profitable operations in the future.\n\n \n\n**We will have to fund operating expenses\nfrom other sources until we are able to generate sufficient revenue to pay them.**\n\n \n\nWe have generated losses from\noperations over each of the past three fiscal years. We will continue to incur operating expenses in connection with our exploratory activities,\nand we intend to fund those expenses with internal resource and/or the proceeds of loans from our Related-Party Debtholders, if available,\npayments pursuant to the Cooperation Agreement and, to the extent deemed necessary and available, further bank borrowings. We may incur\nsubstantial expenses in connection with developing our current operations or identifying an additional focus for our business. There is\nno assurance that we will be able to secure amounts sufficient to fund our operating expenses until such time as we are able to generate\nrevenues sufficient to pay those expenses.\n\n \n\n**The loss of key personnel could affect our business and prospects.**\n\n \n\nWe believe that our future\nsuccess depends in part upon our ability to attract, retain and motivate qualified personnel necessary for the development of our business,\nparticularly as our management has limited experience in industries in which we are exploring potential business opportunities. If one\nor more members of our management team or other key technical personnel become unable or unwilling to continue in their present positions,\nand if additional key personnel cannot be hired and retained as needed, our business and prospects for growth could be adversely affected.\nIntense competition for these personnel in these industries could cause our compensation costs to increase, which could have a material\nadverse effect on our results of operations. Our future success and ability to grow our business will depend in part on the continued\nservice of these individuals and our ability to identify, hire and retain additional qualified personnel. If we are unable to attract\nand retain qualified employees, we may be unable to meet our business and financial goals.\n\n \n\n**Any failure to maintain effective internal\ncontrols could have an adverse effect on our business, results of operations and the market price of our shares.**\n\n \n\nThe SEC, as required by Section 404\nof the Sarbanes-Oxley Act of 2002 (“SOX”), adopted rules requiring most public companies to include a management report on\nsuch company’s internal control over financial reporting in its annual report, which contains management’s assessment of the\neffectiveness of the company’s internal control over financial reporting. In addition, if we become an accelerated or large accelerated\nfiler, as defined in the SEC’s rules, we will be required to provide an annual attestation from an independent registered public\naccounting firm on management’s assessment of the effectiveness of the Company’s internal control over financial reporting.\n\n \n\nOur management has concluded\nthat our internal control over financial reporting as of December 31, 2025, was effective. However, we cannot assure you that our\nmanagement will not identify material weaknesses in the future, or our independent public registered accounting firm will not identify\nmaterial weaknesses if it assesses our internal control over financial reporting in the future. In addition, because of the inherent limitations\nof any internal control over financial reporting, including the possibility of collusion or improper management override of controls,\nmaterial misstatements due to error or fraud may not be prevented or detected on a timely basis. As a result, if we fail to maintain effective\ninternal control over financial reporting or should we be unable to prevent or detect material misstatements due to error or fraud on\na timely basis, investors could lose confidence in the reliability of our financial statements, which in turn could harm our business\nand results of operations, negatively impact the market price of our shares, and harm our reputation. Furthermore, we have incurred and\nexpect to continue to incur considerable costs and to use significant management time and other resources in an effort to comply with\nSection 404 of and other requirements of SOX.\n\n \n\n**Risks Relating to Foreign Private Issuer Status**\n\n \n\n**Because our assets are located outside of\nthe United States and all of our directors and officers reside outside of the United States, it may be difficult for you to enforce your\nrights based on the U.S. federal securities laws against us or our officers and directors or to enforce a judgment of a United States\ncourt against us or our officers and directors in the PRC.**\n\n \n\nWe are a BVI company, all\nof our directors are located outside the United States in Hong Kong, all of our assets and officers are located outside the United States\nin the PRC, and our operations are conducted in the PRC. We do not maintain a business presence in the United States. Therefore, it may\nnot be possible to effect service of process on such persons in the United States, and it may be difficult to enforce any judgments rendered\nagainst us or them. Moreover, there is doubt whether courts in the BVI, the PRC or Hong Kong would enforce (a) judgments of United States\ncourts against us, our directors or officers based on the civil liability provisions of the securities laws of the United States or any\nstate, or (b) in original actions brought in the BVI, the PRC or Hong Kong, liabilities against us or any nonresidents based upon the\nsecurities laws of the United States or any state.\n\n \n\n**Our status as a foreign private issuer results\nin less information being available about us than about domestic reporting companies.**\n\n \n\nWe are a foreign private issuer\nand are not required to file as much information about us as domestic issuers are required to file. In this regard:\n\n \n\n \n•\nwe are not required to file quarterly reports on Form 10-Q and our annual reports on Form 20-F are subject to disclosure requirements that differ from annual reports on Form 10-K;\n\n \n\n \n•\nwe are exempt from the provisions of Regulation FD aimed at preventing issuers from making selective disclosures;\n\n \n\n \n•\nthe SEC proxy statement and information statement rules do not apply to us; and\n\n \n \n \n\n \n•\nour officers and directors are exempt from the short-swing rules contained in Section 16 of the Exchange Act, and our principal shareholders are exempt from the reporting and short-swing rules contained in Section 16 of the Exchange Act.\n\n \n\nSince there is generally greater\nand more timely information available about domestic issuers than about foreign private issuers such as us, you will not be afforded the\nsame protections or information as would be available to you if you were investing in a U.S. domestic issuer.\n\n \n\n**Due to our status as a foreign private\nissuer, we have adopted IFRS accounting principles, which are different from accounting principles under U.S. GAAP.**\n\n \n\nWe have adopted and presented\nour financial statements in accordance with IFRS accounting principles. IFRS is an internationally recognized body of accounting principles\nthat are used by many companies outside of the United States to prepare their financial statements, and the SEC permits foreign private\nissuers such as the Company to prepare and file their financial statements in accordance with IFRS rather than U.S. GAAP. IFRS accounting\nprinciples are different from those of U.S. GAAP, and SEC rules do not require us to provide a reconciliation of IFRS accounting principles\nto those of U.S. GAAP. Accordingly, we suggest that readers of our financial statements familiarize themselves with the provisions of\nIFRS accounting principles in order to better understand the differences between these two sets of principles.\n\n \n\n21 \n\n \n\n**As a foreign private issuer we are not subject\nto certain requirements that other Nasdaq-listed issuers are required to comply with, some of which are designed to provide information\nto and protect investors.**\n\n \n\nOur common shares are currently\nlisted on Nasdaq and, for so long as our securities continue to be listed, we will remain subject to the rules and regulations established\nby Nasdaq applicable to listed companies. However, we have elected to claim certain exemptions afforded to foreign private issuers by\nrelevant Nasdaq rules, and as a result:\n\n \n\n \n•\na majority of the members of our board of directors (the “Board of Directors” or the “Board”) are not independent as defined by Nasdaq rules;\n\n \n\n \n•\nour independent directors do not hold regularly scheduled meetings in executive session;\n\n \n\n \n•\nwhile executive compensation is recommended by our Compensation Committee, which is comprised of independent directors, the compensation of our executive officers is ultimately determined by the Board of Directors rather than an independent committee of the Board or by the independent members of the Board of Directors;\n\n \n\n \n•\nrelated party transactions are not required to be reviewed or approved by our Audit Committee or other independent body of the Board of Directors;\n\n \n\n \n•\nwe are not required to solicit shareholder approval of stock plans or issuances of securities, including those in which our officers or directors may participate; share issuances that will result in a change in control; the issuance of our shares in related party transactions or other transactions in which we may issue 20% or more of our outstanding common shares; or below market issuances of 20% or more of our outstanding shares to any person; and\n\n \n\n \n•\nwe are not required to hold an in-person annual meeting to elect directors and transact other business customarily conducted at an annual meeting.\n\n  \n\n \n\n**Due to an exemption from Nasdaq rules applicable\nto foreign private issuers, our related party transactions may not receive the type of independent review process that those of other\nNasdaq-listed companies receive; the terms of these transactions are not negotiated at arm’s-length and may not be as favorable\nas could be obtained from unrelated parties.**\n\n \n\nWe have historically engaged\nin a substantial number of transactions with related parties in the ordinary course of business, predominantly with our principal beneficial\nowner and former Chairman and Chief Executive Officer and/or companies that he owns or controls. These transactions are described in greater\ndetail elsewhere in this annual report. In general, Nasdaq rules require that related party transactions be reviewed by an audit committee\nor other committee comprised of independent directors. However, under Nasdaq rules applicable to foreign private issuers such as our company,\nwe are exempt from certain Nasdaq requirements, including requirements applicable to independent director review of related party transactions.\nThis exemption is available to us because the laws of the BVI, our home jurisdiction, do not mandate independent review of related party\ntransactions.\n\n \n\nNotwithstanding the foregoing,\nnonrecurring related party transactions (i.e., related party transactions that are not in the ordinary course of business) are submitted\nfor approval by our Board of Directors, following disclosure of the related party’s interest in the transaction, and, in all cases,\nBoard approval has historically included the unanimous approval of our independent directors. In addition, our annual audited financial\nstatements, including the related party transactions reported therein, are approved by our Audit Committee, which is comprised solely\nof independent directors. However, except to the limited extent described above, these transactions are not individually reviewed or approved\nsolely by independent directors. While management believes that our related party transactions have been on terms at least as favorable\nto the Company as could be obtained from unrelated parties, there is no assurance that such is the case or will be so in the future, or\nthat shareholders would not be better protected if we were not exempt from, or we chose to voluntarily comply with, the applicable Nasdaq\nrules.\n\n \n\n22 \n\n \n\n**Risks Relating to Our Common Shares**\n\n \n\n**You may experience dilution to the extent\nthat our common shares are issued upon the exercise of outstanding warrants or other securities that we may issue in the future.**\n\n \n\nYou may experience dilution to the extent that our common shares\nare issued upon the exercise of our outstanding warrants, and if we issue additional equity securities, or there are any issuances and\nsubsequent exercises of stock options issued in the future. Up to 139,488 Common shares may be issued with the exercise of warrants at\na per share exercise price of $24.00 issued to the investors and up to 9,300 Common shares may be issued with the exercise of warrants\nat a per share exercise price of $17.60 issued to the placement agent in a private placement (the “Private Placement”) in\nconnection with a registered offering of 1,487,870 Common shares to the same investors at a price of $2.20 per Common Share (the “Registered\nOffering”) in February 2024. See, “Item 10.C. Additional Information — Material Contracts.”\n\n \n\n**Substantial future sales or perceived potential\nsales of our common shares in the public market could cause the price of our common shares to decline.**\n\n \n\nSales of our common shares\nin the public market, or the perception that these sales could occur, could cause the market price of our common shares to decline. As\nof the date of this annual report, we have 1,256,388 (as adjusted) Common shares issued and outstanding. On February 16, 2024, the Company\nentered into a securities purchase agreement with certain institutional investors (the “Investors”), pursuant to which the\nCompany agreed to issue and sell, (i) in a registered direct offering, up to an aggregate of 1,487,870 of common shares, no par value\nof the Company at a per Share purchase price of $2.20, and (ii) in a concurrent private placement, warrants initially exercisable for\nthe purchase of an aggregate of 1,115,903 (139,488 as adjusted) common shares of the Company (the “Investors Warrants”), for\ngross proceeds of approximately $3.27 million, before deducting fees to the placement agent and other estimated offering expenses payable\nby the Company. In connection will the Registered Offering and Private Placement pursuant to the terms of a placement agency agreement,\ndated February 16, 2024 between the Company and Placement Agent (the “Placement Agent Agreement”), the Company agreed to issue\nto the Placement Agent warrants to purchase an aggregate of up to 74,394 (9,300 as adjusted) Common shares at a per share exercise price\nof $2.20 ($17.6 as adjusted) (the “Placement Agent Warrants”, and together with the Investors Warrants, the “Warrants”).\nAssuming exercise of all of the Warrants by cash and without adjustment, a maximum of 1,190,297 (148,788 as adjusted) Common shares underlying\nthe Warrants will be offered for sale, subject to any restrictions as applicable under the Securities Act.\n\n \n\n**Certain of the Selling Shareholders may\nacquire their Common shares at a price that is less than the market price of the Common shares in the future, may earn a positive rate\nof return even if the price of the Common shares declines and may be willing to sell their Common shares at a price less than shareholders\nthat acquired Common shares in the public market.**\n\n \n\nCertain of our Selling Shareholders\nmay purchase their respective common shares at prices lower than the market prices in the future and may therefore experience a positive\nrate of return on their investment, even if our public shareholders experience a negative rate of return on their investment. As a result,\nthe Selling Shareholders are able to recognize a greater return on their investment than shareholders that acquired Common shares in the\npublic market. Up to 1,115,903 (139,488 as adjusted) Common shares may be issued with the exercise of the Investor Warrants at a per share\nexercise price of $3.00 ($24.0 as adjusted) and up to 74,394 (9,300 as adjusted) Common shares may be issued with the exercise of the\nPlacement Agent Warrants at a per share exercise price of $2.20 ($17.6 as adjusted). Furthermore, the Selling Shareholders may earn a\npositive rate of return even if the price of the Common shares declines significantly. As a result, the Selling Shareholders may be willing\nto sell their shares at a price less than shareholders that acquired their Common shares in the public market or at higher prices than\nthe price paid by such Selling Shareholders, the sale of which would result in the Selling Securityholder realizing a significant gain\neven if other CHNR shareholders experience a negative rate of return.\n\n \n\n \n\n23 \n\n \n\n**There is a limited number of our common\nshares in the public float and trading in our shares is not active; therefore, our common shares tend to experience price volatility.**\n\n** **\n\nThere are currently approximately\n567,894 of our common shares in the public float and, in general, there has not been an active trading market for our shares. Our shares\ntend to trade along with other shares of public companies whose operations are based in the PRC, and, at times, in tandem with other natural\nresource companies. These shares tend to exhibit periods of extreme volatility and price fluctuations, even when there are no events peculiar\nto the Company that appear to warrant price changes. We cannot assure you that price volatility will not continue in the future or, as\na result thereof, that market prices will reflect actual values of our company.\n\n \n\nAs a consequence of this lack\nof liquidity, the trading of relatively small quantities of shares by our shareholders may disproportionately influence the price of those\nshares in either direction. The share price could, for example, decline precipitously in the event that a large number of shares are sold\non the market without commensurate demand. As a consequence of this enhanced risk, more risk-adverse investors may, due to the fear of\nlosing all or most of their investment in the event of negative news or lack of progress, be more inclined to sell their shares on the\nmarket more quickly and at greater discounts than would be in the case of the stock of a seasoned issuer, negatively impacting the trading\nprice of our common shares.\n\n \n\n**The price at which common shares are quoted\non Nasdaq may increase or decrease due to a number of factors, which may negatively affect the price of the common shares.**\n\n \n\nThe price at which the common\nshares are quoted on Nasdaq may increase or decrease due to a number of factors. These factors may cause the common shares to trade at\nprices above or below the prices at which the common shares were first offered without regard to our operations and financial performance.\nSome of the factors which may affect the price of the common shares include:\n\n \n\n•\n \nfluctuations in the domestic and international market for listed stocks;\n\n•\n \ngeneral economic conditions, including interest rates, inflation rates, exchange rates, commodity and oil prices;\n\n•\n \nchanges to government fiscal, monetary or regulatory policies, legislation or regulation;\n\n•\n \ninclusion in or removal from market indices;\n\n•\n \nacquisition and dilution;\n\n•\n \nclimate change and pandemic risk;\n\n•\n \nthe nature of the markets in which we operate; and\n\n•\n \ngeneral operational and business risks.\n\n \n\nOther factors which may negatively\naffect investor sentiment and influence the Company, specifically or the stock market more generally include acts of terrorism, an outbreak\nof international hostilities or tensions, fires, floods, earthquakes, labor strikes, civil wars, natural disasters, outbreaks of disease\nor other man-made or natural events. In addition, during 2025, prolonged geopolitical conflicts, elevated interest rates across major\neconomies, and ongoing Sino-US tensions continued to weigh on the global economy and businesses and have disrupted the global commodity\nmarket. In addition, tensions in the Middle East, particularly between the United States and Iran, have escalated in recent years and\nmay continue to pose risks to our business. See “Item 3.D. Risk Factors — Risks Relating to Our Mine Exploration Activities\nin Inner Mongolia — Volatility in the market prices of metals may adversely affect the results of our operations.” We have\nlimited ability to insure against some of the risks mentioned above.\n\n \n\n \n\n24 \n\n \n\n**Our principal beneficial owner and his affiliates\ncontrol us through their share ownership; and their interests may differ from those of other shareholders.**\n\n \n\nMr. Li Feilie, beneficial\nowner of a majority of our outstanding common shares, beneficially owns approximately 53.44% of our outstanding common shares, and as\na result, Mr. Li is and will continue to be able to influence the outcome of shareholder votes on various matters, including the\nelection of directors and extraordinary corporate transactions such as business combinations. Through his related companies, Mr. Li also\nprovides funding to support the Company’s operating expenses and holds a substantial amount of the Company’s debt (see “Item\n7.B. Major Shareholders and Related Party Transactions – Related Party Transactions,” below). Mr. Li’s interests\nmay differ from those of other shareholders. Additional information relating to the beneficial ownership of our securities is contained\nelsewhere in this annual report under “Item 6.E. Directors, Senior Management and Employees – Share Ownership.”\n\n \n\n**The rights of our shareholders are governed\nby BVI law, the provisions of which may not be as favorable to shareholders as under U.S. law, and our directors may take actions with\nwhich you disagree without first receiving shareholder approval.**\n\n \n\nOur directors have the power\nto take certain actions without shareholder approval, including the amendment of our Amended and Restated Memorandum of Association (the\n“Memorandum”) and our Articles of Association (the “Articles”) (save and except that such amendments may not restrict\nthe rights or power of our shareholders to amend the Memorandum or the Articles, and may not change the percentage of shareholders required\nto pass a resolution to amend the Memorandum or the Articles, and further that our directors may not amend the Memorandum or the Articles\nin circumstances where they may not be amended by our shareholders), and also including an increase or reduction in the maximum number\nof shares which our company is authorized to issue, which would require shareholder approval under the laws of most jurisdictions in the\nUnited States. In addition, the directors of a BVI company, subject in certain cases to court approval but without shareholder approval,\nmay, among other things, implement a reorganization, certain mergers or consolidations with a subsidiary, the sale, transfer, exchange\nor disposition of any assets, property, part of the business, or securities of the company, or any combination of the foregoing, if they\ndetermine it is in the best interests of the company. Our ability to amend our Memorandum and Articles without shareholder approval could\nallow our directors to implement provisions to those documents that have the effect of delaying, deterring or preventing a change in our\ncontrol without any further action by the shareholders, including a tender offer to purchase our common shares at a premium over then\ncurrent market prices, as could the ability of our directors to issue blank check preferred shares.\n\n \n\n \n\n25 \n\n \n\n**The elimination of monetary liability against\nour directors and officers under our Articles and the indemnification of our directors and officers may result in substantial expenditures\nby us and may discourage lawsuits against our directors and officers.**\n\n \n\nOur Articles contain provisions\nthat indemnify our directors and officers against any liability, action, proceeding, claim, demand, costs, damages or expenses, including\nlegal expenses, whatsoever which they may incur as a result of any act or failure to act in carrying out their functions, other than such\nliability that they may incur by reason of their own actual fraud or wilful default. No such indemnified person shall be liable to our\ncompany for any loss or damage incurred by our company as a result of carrying out their functions unless that liability arises through\nthe actual fraud or wilful default of such indemnified person. We may provide contractual indemnification obligations under agreements\nwith our directors, officers and employees. These indemnification obligations could result in our incurring substantial expenditures to\ncover the cost of settlements or damage awards against directors, officers and employees, which we may be unable to recoup. These provisions\nand resultant costs may also discourage us from bringing a lawsuit against directors, officers and employees for breach of their fiduciary\nduties, and may similarly discourage the filing of derivative litigation by our shareholders against our directors, officers and employees\neven though such actions, if successful, might otherwise benefit the Company and our shareholders.\n\n \n\n**We may be classified as a passive foreign\ninvestment company, which could result in adverse U.S. federal income tax consequences to U.S. shareholders.**\n\n \n\nWe have not made a determination\nwhether we will or will not be a passive foreign investment company (“PFIC”) for U.S. federal income tax purposes in the current\ntax year or in subsequent tax years. Whether we are a PFIC is determined on a year-by-year basis, and we cannot assure you that we are\nnot and we will not be a PFIC for our future tax years. A non-U.S. corporation is generally a PFIC if either (i) at least 75% of its gross\nincome is passive income for a tax year or (ii) at least 50% of the value of its assets (based on an average of the quarterly values of\nthe assets during a tax year) are attributable to assets that produce or are held for the production of passive income. The market value\nof our assets may be determined to a large extent by the market price of our common shares. If we are treated as a PFIC for any tax year\nin which U.S. shareholders hold common shares, certain adverse U.S. federal income tax consequences could apply to such U.S. shareholders.\nFor further discussion of the implications of PFIC status, please refer to “Item 10.E. Additional Information – Taxation –\nUnited States Federal Income Taxation.”\n\n \n\n \n\n*It is not possible to foresee\nall risks that may affect us. Moreover, we cannot predict whether we will successfully effectuate our current business plans. Each prospective\npurchaser of our common shares is encouraged to carefully analyze the risks and merits of an investment in the common shares and should\ntake into consideration when making such analysis the Risk Factors discussed above, among others.*\n\n \n\n26"}