{"url_path":"/sec/chnr/10-k/2026/item-4","section_key":"item-4","section_title":"Item 4 **","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":12286,"has_tables":true,"body_markdown":"**ITEM 4.**\n**INFORMATION ON THE COMPANY**\n\n \n\n \n**A.**\n**History and Development\nof the Company**\n\n \n\nChina\nNatural Resources, Inc. was incorporated in the BVI on December 14, 1993, and is a company limited by shares incorporated under the BVI\nBusiness Companies Act. We are not a Chinese operating company but a BVI holding company with operations conducted by our subsidiaries\nestablished in the PRC. See, “Risk factors — Risks Relating Our Operations and the Doing Business in the PRC — 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 our ability to offer or continue to offer securities to investors and cause the value of such securities\nto significantly decline or be worthless.”\n\n \n\nPrior\nto the sale of PST Technology in July 2023, the Company operated in two reportable operating segments: wastewater treatment and exploration\nand mining. During 2021, the Company entered the rural wastewater treatment industry in the PRC by acquiring a 51% equity interest in\nits operating subsidiary Shanghai Onway. Additionally, the Company is engaged in metal exploration and mining activities in Inner Mongolia\nAutonomous Region of the PRC, including exploring for lead, silver and other nonferrous metal. After the sale of Precise Space-Time Technology\nLimited and the disposal of the wastewater treatment segment in July 2023, the Company is solely engaged in metal exploration and mining\nactivities in Inner Mongolia Autonomous Region of the PRC, including exploring for lead, silver and other nonferrous metal.\n\n \n\nIn\nFebruary 2023, the Company entered into a material definitive agreement with Feishang Group, the Company’s controlling shareholder,\nand Top Pacific, a non-affiliate, and Mr. Li Feilie and Mr. Yao Yuguang, to acquire Williams Minerals, which owns the mining permit for\na Zimbabwean lithium mine. In December 2023, the Company entered into an amendment agreement to the sale and purchase agreement dated\nas of February 27, 2023 by and among the Company, Feishang Group, the Company’s controlling shareholder, and Top Pacific, a non-affiliate,\nand Mr. Li Feilie and Mr. Yao Yuguang for the extension of the long stop date for closing the Acquisition from December 31, 2023 to December\n31, 2024. On December 31, 2024, the Company entered into the Amendment Agreement II to extend the long stop date for closing the acquisition\nfrom December 31, 2024 to December 31, 2025. On December 31, 2025, the Company entered into the Amendment Agreement III to further extend\nthe long stop date for closing the acquisition from December 31, 2025 to December 31, 2026.\n\n \n\nThe\nCompany is also actively exploring business opportunities in other non-natural resource sectors.\n\n \n\n \n\n27 \n\n \n\n**Acquisition of Williams Minerals**\n\n \n\nOn February 27, 2023, the\nCompany entered into a material definitive agreement (the “Zimbabwe SPA”) with Feishang Group and Top Pacific, as well as\nMr. Li Feilie and Mr. Yao Yuguang, to indirectly acquire all interests in Williams Minerals, which owns the mining permit for a Zimbabwean\nlithium mine. At the time of the entry into the Zimbabwe SPA, Feishang Group owned 70% of Williams Minerals, and Top Pacific, a non-affiliate,\nowned the remaining 30%. Under the Zimbabwe SPA, it is expected that the Company will indirectly acquire all interests in Williams Minerals\nin the second fiscal quarter of 2023, and that the Company’s “ownership” (which, as defined in the Zimbabwe SPA, relates\nto its legal possession and control) of the Zimbabwean lithium mine will vest cumulatively, region by region from 2024 through 2026, contingent\nupon the issuance of independent technical reports and the Company’s full settlement of the purchase consideration in cash and restricted\nshares. For each relevant region of the lithium mine, until the Company’s legal possession and control vests, the Sellers will maintain\nlegal possession and control, including the right of exploration, sale of lithium, and the revenue derived therefrom, as well as liability\nfor operational costs and third-party claims.\n\n \n\nSubject to the terms and conditions\nof the Zimbabwe SPA, the Company plans to issue restricted shares as 50% of the consideration for the Acquisition, with the remaining\n50% of the consideration comprised of a promissory note and/or cash, for maximum consideration of US$1.75 billion (3.5 million estimated\ntons of measured, indicated and inferred resources of lithium oxide (grade 1.06% or above in accordance with the standard under the Australasian\nCode for Reporting of Exploration Results, Mineral Resources and Ore Reserves) priced at US$500 per ton). The Company may issue restricted\nCHNR shares at a discount to the market price to secure a portion of the required capital. On April 14, 2023, the Company announced that\nit completed its due diligence investigation with satisfactory results and decided to proceed with the Acquisition. The Company paid an\naggregate of $35 million by way of promissory notes (instead of cash) as a deposit on April 21, 2023, and will pay an aggregate of $140\nmillion by way of promissory notes and/or cash as an initial installment.\n\n \n\nCompletion of the Acquisition\nis contingent upon the satisfaction of a number of conditions, including, among other things, the issuance of independent technical reports,\nthe actual quantity of qualified lithium oxide metal resources proven or estimated to exist in each mining area covered by the relevant\nreport, and the Company’s full settlement of the purchase consideration in cash and restricted shares. There is no guarantee that\nthe Acquisition will close or be completed at the anticipated valuation and terms, or at all.\n\n \n\nOn December 22, 2023, the\nCompany entered into an amendment agreement (the “Amendment Agreement”) to the sale and purchase agreement dated as of February\n27, 2023 by and among Feishang Group and Top Pacific (China) Limited (together, the “Sellers”), and the respective beneficial\nowner of the Sellers, Mr. Li Feilie and Mr. Yao Yuguang with the parties thereto. As the Sellers are still in the process of satisfying\nconditions precedent to the closing of the acquisition in accordance with the Zimbabwe SPA, including but not limited to obtaining requisite\ngovernmental approvals, the parties entered into the Amendment Agreement to extend the long stop date for closing the acquisition from\nDecember 31, 2023 to December 31, 2024. On December 31, 2024, the Company entered into the Amendment Agreement II to further extend the\nlong stop date for closing the acquisition from December 31, 2024 to December 31, 2025. On December 31, 2025, the Company entered into\nthe Amendment Agreement III to further extend the long stop date for closing the acquisition from December 31, 2025 to December 31, 2026.\n\n \n\nThe foregoing description\nof the Zimbabwe SPA, the Amendment Agreement, the Amendment Agreement II, and the Amendment Agreement III is only a summary and is qualified\nin its entirety by reference to the sale and purchase agreement dated February 27, 2023, the amendment agreement to the sale and purchase\nagreement dated December 22, 2023, the second amendment agreement to the sale and purchase agreement dated December 31, 2024 and the third\namendment agreement to the sale and purchase agreement dated December 31, 2025 by and among the Company, Feishang Group Limited, Top Pacific\n(China) Limited, Li Feilie, and Yao Yuguang, a copy of each of which is incorporated by reference as Exhibit 4.17, Exhibit 4.20, Exhibit\n4.23 and Exhibit 4.24 to this annual report.\n\n \n\n \n\n28 \n\n \n\n**Acquisition and Sale of PST Technology**\n\n \n\nWe diversified our business\nby entering the environmental protection sector, which provides compelling synergies with our current operations, through the acquisition\nof PST Technology. On July 27, 2021, the Company entered into a Sale and Purchase Agreement with Li Feilie, pursuant to which the Company\nissued three million restricted common shares, no par value, and transferred 120 million shares of FARL, as well as approximately CNY10.3\nmillion (US$1.47 million), to Feishang Group, in exchange for all outstanding shares of PST Technology and the transfer to the Company\nof approximately CNY130.0 million (US$18.58 million) of PST Technology’s outstanding debt previously owed to Mr. Li, which debt\nwas eliminated upon consolidation. PST Technology, through its wholly owned subsidiaries, owns a 51% equity interest in Shanghai Onway.\nShanghai Onway is principally engaged in the development of rural wastewater treatment technologies, the provision of equipment and materials\nfor rural wastewater treatment, undertaking EPC projects and public-private partnership (“PPP”) projects in relation to rural\nwastewater treatment, and the provision of consulting and professional technical services. The total value of the consideration that the\nCompany provided to Mr. Li was approximately CNY104.1 million (US$14.88 million), which amount was a 20% discount to the valuation (including\nthe assigned debt) of PST Technology provided by an independent valuation firm.\n\n \n\nOn July 28, 2023, the Company\nentered into a Sale and Purchase Agreement with Feishang Group Limited (“Feishang Group”). Pursuant to the agreement, the\nCompany agreed to sell 100% equity interest of PST Technology to Feishang Group, together with PST Technology’s outstanding payable\nowed to the Company, for consideration of approximately CNY95,761,119 comprising: (i) CNY -34,197,300, the fair value of 100% equity interest\nof PST Technology as determined by the independent valuation report dated July 28, 2023; (ii) CNY 129,958,419, the book value of PST Technology’s\noutstanding payable owed to the Company.\n\n \n\nPST Technology, through its\nwholly owned subsidiaries, owns a 51% equity interest in Shanghai Onway and Shanghai Onway’s subsidiaries which are principally\nengaged in the development of rural wastewater treatment technologies, the provision of equipment and materials for rural wastewater treatment,\nundertaking EPC and PPP projects in relation to rural wastewater treatment, and the provision of consulting and professional technical\nservices. After PST Technology’s disposition, the Company discontinued the operation in wastewater treatment segment and continues\nengaging in the exploration and mining business.\n\n \n\n**Acquisition of FARL Shares**\n\n \n\nOn August 17, 2020, we acquired\n120 million shares of FARL, a company that is traded on the main board of the Hong Kong Stock Exchange under ticker 1738, representing\napproximately 8.7% of the outstanding equity of that company. On August 17, 2020, the Company entered into a sale and purchase agreement\nwith Feishang Group pursuant to which the Company issued 9,077,166 of the Company’s common shares, no par value, to Feishang Group,\nin exchange for 120 million shares of FARL, with an approximate aggregate value of HK$87,522,000 (determined at a price of HK$1.006 per\nshare, representing the average closing price of FARL on the five trading days before August 17, 2020, adjusted for a 27.5% discount based\non an independent valuation report). Feishang Group is the largest stockholder in the Company, and is wholly owned by Mr. Li Feilie, who\nalso beneficially owns 53.53% of the outstanding equity of FARL. The 120 million shares of FARL were transferred as part of the consideration\nfor the acquisition of all the outstanding shares of PST Technology. See, “Item 4.A. Information on the Company - History and Development\nof the Company — Acquisition and Sale of PST Technology.”\n\n \n\n**Exploration Activities in Inner Mongolia**\n\n \n\nIn November 2017, we acquired\nall of the issued and outstanding capital stock of Bayannaoer Mining for a purchase price of CNY716,900. Bayannaoer Mining holds an exploration\npermit issued by the Land and Resources Department of Inner Mongolia Autonomous Region covering the Moruogu Tong Mine, located in Wulatehouqi,\nBayannaoer City, Inner Mongolia. The exploration permit evidences Bayannaoer Mining’s right to explore for minerals at the Moruogu\nTong Mine. Initial results of the exploration program indicate the presence of lead and silver, with the prospect that further surveying\nand exploration may indicate the presence of other ores such as copper. We anticipate that our working capital and capital expenditures\nfor our exploration activities will be funded by non-interest-bearing loans from our affiliates and funds provided pursuant to the Cooperation\nAgreement. See “Item 4.B. – Information on The Company – Business Overview – Metal Exploration Activities”\nbelow for more information and a discussion of developments at the Moruogu Tong Mine.\n\n \n\n**Other Matters**\n\n \n\nWe made capital expenditures\nof CNY0.01 million, CNY3,680 and nil in 2023, 2024 and 2025, respectively. Our capital expenditures for 2023, 2024 and 2025 consisted\nprimarily of the purchase of property, plant and equipment for office use.\n\n \n\n \n\n29 \n\n \n\n**Recent Regulatory Development**\n\n \n\n**Cybersecurity Review**\n\n \n\nOn December 28, 2021, the\nCyberspace Administration of China (the “CAC”), and 12 other PRC government authorities jointly published the amended Cybersecurity\nReview Measures, which came into effect on February 15, 2022. The final Cybersecurity Review Measures provide that a “network platform\noperator” that possesses personal information of more than one million users and seeks a listing in a foreign country must apply\nfor a cybersecurity review. Any network product or service or any data processing activity that affects or may affect national security\nas deemed by member organizations of the cybersecurity review mechanism shall be reviewed under the Cybersecurity Review Measures after\nthe Cybersecurity Review Office reports it to the Central Cyberspace Affairs Commission for review, as per the procedure.\n\n \n\nWe and our PRC subsidiaries\ndo not carry out business in China through any self-owned network platform and hold personal information of less than one million individuals\nfrom PRC operations. We and our PRC subsidiaries have not been identified as critical information infrastructure operators by any PRC\nauthorities. The data collected from our China operations is mainly information related to our production, customers, suppliers and our\nemployees. We believe that we and our PRC subsidiaries do not commit any acts that threaten or endanger the national security of the PRC,\nand to our knowledge we and our PRC subsidiaries have not received or been subject to any investigation, notice, warning or sanction from\nany PRC authority with respect to national security issues arising from our business operations. As of the date of this annual report,\nwe do not believe that we need to proactively apply for the cybersecurity review required by the CAC. See, “Item 3.D. Risk Factors —\nRisks Relating to Our PRC Operations and Doing Business in the PRC — Failure to comply with PRC regulations and other legal\nobligations concerning data protection and cybersecurity may materially and adversely affect our business, as we routinely collect, store\nand use data during the conduct of our business.”\n\n \n\n**CSRC Filing Requirements**\n\n \n\nOn February 17, 2023, the\nCSRC promulgated Trial Administrative Measures of the Overseas Securities Offering and Listing by Domestic Companies, along with five\nsupporting guidelines, or the New Overseas Listing Rules. These regulations became effective on March 31, 2023. According to the New Overseas\nListing Rules, PRC domestic companies that seek to offer and list securities in overseas markets, either through direct or indirect means,\nare required to complete the filing procedure with the CSRC and report relevant information.\n\n \n\nThe New Overseas Listing Rules\nprovide that if the issuer meets the following criteria at the same time, the overseas securities offering and listing conducted by such\nissuer will be deemed as an indirect overseas offering subject to the filing procedures as set forth under the New Overseas Listing Rules:\n(i) 50% or more of the issuer’s operating revenue, total profit, total assets or net assets as documented in its audited combined\nfinancial statements for the most recent accounting year is accounted for by domestic companies; and (ii) the main parts of the issuer’s\nbusiness activities are conducted in the mainland China, or its main place(s) of business are located in the mainland China, or the senior\nmanagers in charge of its business operations and management are mostly Chinese citizens or domiciled in the mainland China.\n\n \n\nAccording to the New Overseas\nListing Rules, issuers shall file with the CSRC within three business days after the initial submission of the registration statement\nto the SEC for its nonpublic review and to report to the CSRC upon the completion of the reported offering. Moreover, the New Overseas\nListing Rules mandate that overseas-listed issuers conducting follow-on securities offerings in the same overseas market must file with\nthe CSRC within three business days after the completion of such offering. Additionally, issuers listed overseas are required to report\n“material events” to the CSRC within three business days following the occurrence and public announcement of such events.\nThese material events include change of control, voluntary delisting or being ordered to delist, and investigations or penalties by overseas\nsecurities regulatory bodies, among other things. Failure to fulfill these obligations to make timely filings or reports to the CSRC\nmay result in fines, legal or administrative sanctions and other adverse consequences and could materially and adversely affect our ability\nto raise funds in overseas markets. For details of the associated risks, see “Item 3.D. Risk Factors — Risks Relating to\nOur PRC Operations and Doing Business in the PRC — The filing with the CSRC or other PRC government authorities may be required\nin connection with our offshore offerings under PRC law, and, if required, we cannot predict whether or for how long we will be able\nto complete such filing.” We have been closely monitoring regulatory developments in China regarding any necessary approvals from\nthe CSRC, the CAC, or other PRC regulatory authorities required for overseas listings and securities offerings. As of the date of this\nannual report, we have not received any inquiry, notice, warning, sanctions or regulatory objection from the CSRC in this regard.\n\n \n\nOn February 24, 2023, the\nProvisions on Strengthening the Confidentiality and Archives Administration of Overseas Securities Issuance and Listing by Domestic Enterprises\nwas promulgated, or the Provision on Confidentiality, which became effective on March 31, 2023. Pursuant to the Provision on Confidentiality,\nwhere a domestic enterprise publicly discloses or provides documents and materials involving state secrets and working secrets of state\norgans, or Relevant Documents and Materials, to the relevant securities companies, securities service institutions, overseas regulatory\nauthorities and other entities and individuals, or provides or publicly discloses Relevant Documents and Materials through its overseas\nlisting subjects, it shall report to the competent department with the examination and approval authority for approval in accordance with\nthe law, and submit to the secrecy administration department of the same level for filing. Where a domestic enterprise provides accounting\narchives or copies of such archives to entities and individuals such as securities companies, securities service institutions and overseas\nregulatory authorities, it shall complete the corresponding procedures pursuant to relevant rules of the State. The working materials\nformed within the territory of the PRC by the securities companies and securities service institutions that provide corresponding services\nfor the overseas issuance and listing of domestic enterprises shall be kept within the territory of the PRC, and outbound transfers of\nsuch materials shall go through approval procedures in accordance with relevant rules of the State.\n\n \n\n \n\n30 \n\n \n\n**Material Licenses and Permits**\n\n \n\nExcept as disclosed in “Item\n3.D. Risk Factors — Risk Related to Our PRC Operations and Doing Business in the PRC — We and our PRC subsidiaries are required\nto maintain a series of licenses, permits and approvals from PRC authorities to operate our business in the PRC, and failure to maintain\nor renew such licenses, permits or approvals in a timely manner could materially affect our business,” We believe that as of the\ndate of this annual report, we and our subsidiaries have received from the PRC authorities all requisite licenses, permissions, and approvals\nneeded to engage in the businesses currently conducted in the PRC, and no permission or approval has been denied. These licenses, permits\nand filings include, exploration and mining licenses, among others. Given the changes and developments of interpretation and implementation\nof relevant laws and regulations and the enforcement practice by relevant government authorities, we may be required to obtain additional\nlicenses, permits, or approvals or complete additional filings for our and our subsidiaries’ business operations in the future.\nIf we or any of our subsidiaries is found to be in violation of any existing or future PRC laws or regulations, or fail to obtain or maintain\nany of the required permits or approvals in a timely manner, or at all, the competent PRC regulatory authorities would have discretion\nto take action regarding such violations or failures. In addition, if we had inadvertently concluded that any approvals, permits, registrations\nor filings were not required, or if applicable laws, regulations or interpretations change in a way that requires us to obtain additional\napprovals, permits, registrations or filings in the future, we may be unable to obtain such necessary approvals, permits, registrations\nor filings in a timely manner, or at all. Such approvals, permits, registrations or filings may be rescinded even if obtained. Any such\ncircumstance may subject us to fines and other regulatory, civil or criminal liabilities, and we may be ordered by the competent government\nauthorities to suspend relevant operations, which will materially and adversely affect our business operations. For risks relating to\nlicenses and approvals required for our operations in China, see “Item 3.D. Risk Factors — Risk Related to Our PRC Operations\nand Doing Business in the PRC — We and our PRC subsidiaries are required to maintain a series of licenses, permits and approvals\nfrom PRC authorities to operate our business in the PRC, and failure to maintain or renew such licenses, permits or approvals in a timely\nmanner could materially affect our business.”\n\n \n\n**Implications of the Holding Foreign Companies\nAccountable Act**\n\n \n\nPursuant to the Holding Foreign\nCompanies Accountable Act, as amended by the Consolidated Appropriations Act, 2023, or the HFCAA, if the SEC determines that we have\nfiled audit reports issued by a registered public accounting firm that has not been subject to inspections by the PCAOB for two consecutive\nyears, the SEC will prohibit our shares from being traded on a national securities exchange or in the over-the-counter trading market\nin the United States. On December 16, 2021, the PCAOB issued a report on its determinations that it was unable to inspect or investigate\ncompletely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong, and our current auditor was subject\nto that determination. On December 15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination and removed\nmainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public\naccounting firms. Each year, the PCAOB will determine whether it can inspect and investigate completely audit firms in mainland China\nand Hong Kong, among other jurisdictions. If PCAOB determines in the future that it no longer has full access to inspect and investigate\ncompletely accounting firms in mainland China or Hong Kong and we continue to use an accounting firm headquartered in one of these jurisdictions\nto issue an audit report on our financial statements filed with the SEC, we would be identified as a Commission-Identified Issuer following\nthe filing of the annual report on Form 20-F for the relevant fiscal year. There can be no assurance that we would not be identified\nas a Commission-Identified Issuer for any future fiscal year, and if we were so identified for two consecutive years, we would become\nsubject to the prohibition on trading under the HFCAA and as a result, NASDAQ may determine to delist our securities. See “Item\n3.D. Risk Factors - Risks Relating to Our PRC Operations and Doing Business in the PRC - The PCAOB may determine that it is unable to\ninspect our auditor in relation to its audit work performed for our financial statements to its satisfaction, and the inability of the\nPCAOB to conduct inspections over our auditor may affect our investors’ ability to benefit from such inspections.”, “—\nRisk Factors - Risks Relating to Our PRC Operations and Doing Business in the PRC - Our common shares may be prohibited from trading\nin the United States under the HFCAA in the future if the PCAOB is unable to inspect or investigate completely auditors located in China.\nThe delisting of our common shares, or the threat of their being delisted, may materially and adversely affect the value of your investment.”\nand “— Risks Relating to Our PRC Operations and Doing Business in the PRC - Our 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 three consecutive years,\nor two consecutive years if proposed changes to the HFCAA are enacted. The delisting of our common shares, or the threat of their being\ndelisted, may materially and adversely affect the value of your investment.”\n\n \n\n \n**B.**\n**Business Overview**\n\n \n\nWe are dedicated to becoming\na leading multi-resources company in China, and is devoted to exploring the opportunities presented by other sectors as well, through\ncomplying with high international standards of corporate governance, continually expanding operations with profit growth potentials, enhancing\noverall cost effectiveness and productivity performance, collaborating with governments, communities and non-governmental organizations,\noptimizing our technical talent teams and innovation programs and maintaining responsible environmental practices.\n\n \n\n31 \n\n \n\n \n\nWe are committed to:\n\n \n\n·                      delivering superior long-term value to our shareholders;\n\n·                      providing a safe, healthy and fulfilling work environment for our employees while improving production efficiency and operating effectiveness;\n\n·                      contributing to the economic and social development of the regions where we operate; and\n\n·                      responsibly managing the environmental impact of all our operations.\n\n \n\nWe are principally engaged\nin exploration for lead, silver and other metals in the Inner Mongolia Autonomous Region of the PRC and exploration of attractive opportunities\nin other sectors. Our operating subsidiary, Bayannaoer City Feishang Mining Company Limited (“Bayannaoer Mining”) holds an\nexploration permit issued by the Land and Resources Department of Inner Mongolia Autonomous Region covering the Moruogu Tong Mine, located\nin Wulatehouqi, Bayannaoer City, Inner Mongolia. The exploration permit evidences Bayannaoer Mining’s right to explore for minerals\nat the Moruogu Tong Mine. Initial results of the exploration program indicate the presence of lead and silver, with the prospect that\nfurther surveying and exploration may indicate the presence of other ores such as copper. We are also actively seeking opportunities of\nexploration and mining of other metals outside of the PRC. See, “Corporate History and Structure — Acquisition of\nWilliams Minerals.”\n\n \n\nWe continuously pivot our\nbusiness by exploring new opportunities for growth or diversification. Between July 2021 and July 2023, we also engaged in the rural wastewater\ntreatment business in China through the acquisition of PST Technology, which held 51% equity interest of Shanghai Onway, a PRC company\nwhich is principally engaged in the development of rural wastewater treatment technologies, the provision of equipment and materials for\nrural wastewater treatment, undertaking EPC and PPP projects in relation to rural wastewater treatment, and the provision of consulting\nand professional technical services. We ceased the wastewater treatment business segment following the disposition of PST Technology in\nJuly 2023. See “Item 4.A. Information on the Company - History and Development of the Company — Acquisition and\nSale of PST Technology Limited.” \n\n \n\n**Metal Exploration Activities**\n\n \n\n**Lead, Silver and Copper Industry and\nMarket**\n\n \n\nLead (chemical element symbol\nPb) is a supple and ductile heavy metal that is denser than most common materials. In its pure state, lead is bluish-white and tarnishes\nto a dull gray color when exposed to air. It is extensively used in construction, plumbing, batteries, bullets and shot, weights, solders,\npewters, fusible alloys, white paints, leaded gasoline, and radiation shielding. Lead’s properties of high density, low melting\npoint, ductility and relative inertness to oxidation allow it to be used in a wide range of applications, of which use in lead-acid batteries\nis by far the most prevalent. The reactions in the battery between lead, lead dioxide, and sulfuric acid provide a reliable source of\nvoltage. Despite having lower energy density and charge-discharge efficiency than lithium-ion batteries, lead-acid batteries have stable\nelectromotive force when discharging and steady working voltage, while being significantly cheaper. These properties and their ability\nto supply high surge currents and operate under a wide range of temperatures make them useful in the automobile industry.\n\n \n\nLead is an internationally\ntraded commodity, the price of which is established on commodity markets throughout the world. During 2025, persistent geopolitical tensions\nprompted investors to increase allocations to commodities as a hedge against macroeconomic risks. In addition, tensions in the Middle\nEast, particularly between the United States and Iran, have escalated and may bring additional uncertainties to the global economy and\nto our business. Against this backdrop, industrial metals, including lead, benefited from renewed investor interest in hard assets, even\nthough their prices remained primarily driven by underlying industrial demand such as batteries and manufacturing. These dynamics supported\nan overall upward trend in lead prices over the year. Price movements during the year remained relatively contained, even as other base\nmetals like silver and copper experienced stronger upward momentum. This divergence indicates that lead is increasingly decoupling from\nthe broader base metals cycle, with its pricing driven more by internal structural dynamics, such as steady industrial consumption and\nbalanced supply-demand equilibrium, than by macro tailwinds. The SHFE lead price started the year at CNY16,870 (US$2,411) per ton. Lead\nprice displayed notable volatility from March 2025 to April 2025, rising sharply in mid-March before declining to a low in early April,\nconsistent with global market trends. It reached both its annual high of CNY17,840 (US$2,550) per ton and its annual low of CNY15,885\n(US$2,270) per ton in November 2025. The closing price at the end of 2025 was CNY17,355 (US$2,481) per ton, representing an annual increase\nof approximately 3.52%.\n\n \n\n The following table shows the world refined\nlead supply and usage over the past five years:\n\n \n\n  \n2021  \n2022  \n2023  \n2024  \n2025 \n\n  \n   \n   \n   \n   \n  \n\nWorld mine production (thousand tons) \n 4,509  \n 4,440  \n 4,459  \n 4,555  \n 4,537 \n\nWorld refined production (thousand tons) \n 13,367  \n 13,162  \n 13,590  \n 13,416  \n 13,654 \n\nWorld refined usage (thousand tons) \n 13,322  \n 13,342  \n 13,439  \n 13,354  \n 13,581 \n\nLondon Mercantile Exchange (“LME”) average price (US$/ton)* \n 2,304  \n 2,293  \n *  \n *  \n \n \n\n*\n \n\nSHFE average price (CNY/ton) \n 15,370  \n 15,930  \n 15,860  \n 16,765  \n 17,280 \n\n  \n    \n    \n    \n    \n   \n\n———————\n\n*Source: International Lead and Zinc Study Group, LME, SHFE.*\n\n**Certain data are not available.*\n\n \n\nSilver (chemical element symbol\nAg) is a soft, ductile, and malleable metal with the highest electrical conductivity, thermal conductivity and reflectivity of any metal.\nIt has a brilliant white metallic luster that can take a high polish and has similar physical and chemical properties with copper and\ngold. Most silver is produced as a byproduct during refining of copper, gold, lead, or zinc. Despite being more abundant than gold, silver\nhas long been valued as a precious metal and used in currency and as an investment medium (bullion coins) alongside gold. It is also used\nas an industrial metal in jewelry, silverware, medicine, electronics, brazing alloys, chemical equipment, catalysis, photography, etc.\n\n \n\n32 \n\n \n\n \n\nSilver is an internationally\ntraded commodity, the price of which is established on commodity markets throughout the world. Silver tends to trend in lockstep with\ngold, but it also has its own unique market trend because it has stronger industrial attributes compared with gold. During 2025, a persistent\nsilver supply deficit widened further amid robust global industrial demand and acute physical shortages. Silver's industrial applications\nsurged, driven by accelerated growth in photovoltaics, electric vehicles, and AI technologies. Silver’s 2025 price surge showed\na dynamic correlation with gold, initially riding gold's rising momentum. Silver accelerated with a steeper, more concentrated rally,\nfueled by explosive ETF inflows like US$1 billion into iShares Silver Trust in a single week (exceeding gold ETF flows) and heightened\noptions volatility. This was attributed to silver’s dual safe-haven appeal (like gold) plus unique physical tightness, normalizing\ninvestor allocations after years of underweight positioning. The price surge was triggered by a historic shortage in the London reference\nmarket and Chinese inventories at their lowest levels in a decade. During the year, the SHFE silver price opened at CNY7,506 (US$1,073)\nper kg at the beginning of 2025 and touched its annual low of CNY7,502 (US$1,073) per kg on the same day. From there, it maintained an\noverall upward trend throughout the year. In December 2025, prices jumped by more than 30%, reaching an annual high of CNY19,998 (US$2,858)\nper kg around the end of the month. The closing price at the end of 2025 was CNY17,074 (US$2,440) per kg, representing a strong annual\ngain of approximately 128.57%.\n\n \n\nThe following table shows the world silver supply\nand demand over the past five years:\n\n \n\n  \n2021  \n2022  \n2023  \n2024  \n2025 \n\n  \n   \n   \n   \n   \n  \n\nWorld mine production (million ounces) \n 830.8  \n 839.4  \n 812.7  \n 819.7  \n 835.0 \n\nWorld total supply (million ounces) \n 1023.1  \n 1,034.6  \n 997.8  \n 1,015.1  \n 1,030.6 \n\nWorld total demand (million ounces) \n 1,102.4  \n 1,284.2  \n 1,198.5  \n 1,164.1  \n 1,148.3 \n\nCOMEX average price (US$/oz) \n 23.4  \n 24.0  \n 24.1  \n *  \n * \n\nSHFE average price (CNY/kg) \n 4,845  \n 5,349  \n 6,012  \n 7,499  \n 18,037 \n\n  \n    \n    \n    \n    \n   \n\n———————\n\n*Source: Silver Institute, COMEX, SHFE.*\n\n**Certain data are not available.*\n\n** **\n\nCopper (chemical element symbol\nCu) is a ductile metal with excellent electric conductivity and is rather supple in its pure state and has a pinkish luster. Copper was\none of the first metals used by man. It is now primarily used as a heat conductor, an electrical conductor, a building material, and a\nconstituent of various metal alloys. Copper alloys have excellent mechanical properties and low resistivity, among which bronze and brass\nare the most important. Copper is also a durable metal that can be recycled many times without losing its mechanical properties. Copper’s\nproperties of high electrical and thermal conductivity, together with good workability, allow it to be used in a wide range of applications,\nof which wire and cable and other electrical uses are by far the most prevalent. The primary uses of copper are in electrical and electronic\nproducts, the building and construction industry and, to a lesser extent, industrial machinery and equipment, consumer and general products\nand transportation.\n\n \n\nCopper is an internationally\ntraded commodity, the price of which is established on commodity markets throughout the world. Traditionally, the price of copper is closely\nrelated to economic cycles and largely determined by supply and demand. Demand for copper in China and the U.S. plays a major role in\nglobal price determination. During 2025, China remained the world’s largest copper consumer despite limited domestic reserves, relying\non imports to satisfy demand fueled primarily by surging electrification trends, including AI data center expansion, large-scale infrastructure\nprojects, and energy transition initiatives. On the global supply side, a thin pipeline of new projects and repeated disruptions in major\nmines constrained output, supporting prices amid robust consumption. As for domestic trends, China’s refined copper usage fell while\nChina’s refined production rose, reflecting improved efficiency and output capacity. During 2025, the SHFE copper price generally\nfollowed an upward trajectory over the year, despite a temporary decline from mid-March 2025 to early April 2025, when it fell to its\nannual low of CNY71,320 (US$10,194) per ton. It rose from CNY73,310 (US$10,478) per ton in the beginning of the year and continued to\nclimb after the early April dip. It eventually reached its all-year high of CNY102,660 (US$14,673) per ton around the end of 2025. The\nclosing price at the end of 2025 was CNY98,240 (US$14,042) per ton, representing an annual increase of approximately 33.17%.\n\n \n\nThe following table shows the world refined copper\nproduction and usage over the past five years:\n\n  \n\n  \n2021  \n2022  \n2023  \n2024  \n2025 \n\n  \n   \n   \n   \n   \n  \n\nWorld mine production (thousand tons) \n 21,223  \n 21,917  \n 22,371  \n 22,958  \n 23,119 \n\nWorld refined production (thousand tons) \n 24,900  \n 25,278  \n 26,508  \n 27,397  \n 28,528 \n\nWorld refined usage (thousand tons) \n 25,259  \n 25,857  \n 26,604  \n 27,328  \n 28,164 \n\nChina’s refined production (thousand tons) \n 10,487  \n 11,063  \n 12,988  \n 13,640  \n 14,720 \n\nChina’s refined usage (thousand tons) \n 13,840  \n 14,027  \n 14,703  \n 15,321  \n 13,590 \n\nLME average price (US$/ton)* \n 9,721  \n 8,372  \n *  \n  *  \n  * \n\nSHFE average price (CNY/ton) \n 70,120  \n 66,120  \n 68,970  \n 73,800  \n 98,700 \n\n  \n    \n    \n    \n    \n   \n\n———————\n\n*Source: International Copper Study Group, LME, SHFE.*\n\n**Certain data are not available.*\n\n** **\n\n33 \n\n \n\n \n\n****\n\n**Overview of Bayannaoer\nMining**\n\n \n\nBayannaoer Mining was established\nin 2005 to engage in mineral exploration activities in Bayannaoer City, located in the Inner Mongolia Autonomous Region of the PRC. The\nregistered capital of Bayannaoer Mining is CNY59.48 million.\n\n \n\nIn 2005, Bayannaoer Mining\nobtained 11 exploration rights from the Land and Resources Department of Inner Mongolia Autonomous Region. Following completion of preliminary\nexploration activities and evaluation, management determined to retain exploration rights solely to the Moruogu Tong Mine; and, to date,\nhas received a series of license renewals. Total exploration expenses related to these 11 exploration rights (exclusive of capitalized\nexpenses that have not yet fully depreciated or amortized and administrative expenses) borne by Bayannaoer Mining incurred to date amount\nto approximately CNY35.60 million (US$5.09 million). The current exploration permit for the Moruogu Tong Mine runs until September 2026\nand covers a site area of 7.81 square kilometers.\n\n \n\nThe Moruogu Tong Mine is located\nin Wulatehouqi, Bayannaoer City, in the Inner Mongolia Autonomous Region of the PRC. In 2006, Bayannaoer Mining engaged the Land and Resources\nExploration and Development Institute of Inner Mongolia to carry out prospecting, including geophysical and drilling works. To date, exploration\nexpenses of approximately CNY23.54 million (US$3.36 million), inclusive of amounts paid by Jijincheng Mining, have been incurred for the\nMoruogu Tong Mine, which were paid for by Bayannaoer Mining with self-owned capital, loans from a related party, and funds received pursuant\nto its Cooperation Agreement with Jijincheng Mining of approximately CNY6.72 million (US$0.96 million).\n\n \n\nPursuant to the Cooperation\nAgreement, Jijincheng Mining is responsible for engaging the exploration team for the northern part of Moruogu Tong Mine and providing\nthe required funding. During the field exploration process, Bayannaoer Mining did not have its own exploration equipment. The exploration\nequipment – drilling machines – used at the Moruogu Tong Mine was provided and operated by third-party contractors until drilling\nwork was done. Drilling machines at the mine were mainly powered by a diesel generator set, and a state power substation near the mine\narea. To date, the exploration program at the northern part of Moruogu Tong Mine has primarily involved the completion of mine geological\nsurveying and mapping at 1:2000 covering an area of 3.22 square kilometers, which included trenching exploration works totaling 2,291.88\ncubic meters in 16 trenches and 76 drilling holes (of which 55 predate the Collaboration Agreement) for a total of 22,272.86 meters. 1,641\ndifferent samples, including basic analysis samples, chemical analysis samples, spectra samples and aqueous analysis samples, etc., have\nbeen collected thus far during the exploration program.\n\n \n\n Initial results of the\nnorthern part exploration program indicate the presence of lead and silver, with the prospect that further surveying and exploration may\nindicate the presence of other ores such as copper. During 2021, activities at the Moruogu Tong Mine included the taking of five additional\nbasic analysis samples and ten additional combined analysis samples; in addition, the exploration report was completed and approved by\nthe government. The report reviews the geology of the mine and the previous exploration work, and evaluates the resources of 13 ore bodies\nin the mine, which are confirmed to contain lead and silver. At this stage of exploratory activities, we cannot predict whether sufficient\nore of acceptable quality will be found at the Moruogu Tong Mine to warrant further exploration and/or extraction.\n\n \n\nThe current exploration work\nstage of the northern part of Moruogu Tong Mine has been completed. The future amount for the exploration project, including drilling\nexpenses, site construction costs, grassland compensation fees and simple infrastructure construction costs in order to apply for a mining\nrights permit, is anticipated to be approximately CNY11.38 million (US$1.63 million). Bayannaoer Mining and Jijincheng Mining intend to\nseek other investors to play roles similar to those of Jijincheng Mining in order to proceed with the further exploration and analysis\nof the northern part of Moruogu Tong Mine, with an aim to apply for a mining rights permit. This exploration project is expected to be\nfinanced by funds received pursuant to the Cooperation Agreement and/or any new or similar cooperation agreement, and loans from a related\nparty. While the results of preliminary prospecting suggest that the northern part of Moruogu Tong Mine contains mineable quantities of\nlead and silver, until further exploration and analysis is completed, the Company cannot predict the nature and extent of minerals contained\nat the mine or the commercial viability of pursuing a plan of extraction. It is possible that further exploration and analysis will not\nconfirm initial findings and that continued activities in furtherance of mining operations will cease.\n\n \n\nExploration conducted in 2013\nrevealed geochemical anomalies associated with nickel and gold in the southern part of Moruogu Tong Mine but did not indicate any concentration.\nNo exploration work has been carried out since 2013 in the southern part of the mine area with nickel and gold anomalies. Bayannaoer Mining\nplans to accelerate exploration progress and increase capital expenditures by another six drilling holes of 600 meters deep with an expected\ninitial investment of CNY2.16 million in the southern part of the Moruogu Tong Mine to continue to explore the presence of nickel and\nother minerals.\n\n \n\n34 \n\n \n\n \n\n**Moruogu Tong Mine**\n\n \n\nThe Moruogu Tong Mine is a\nconcealed deposit or an underground mine, with minimum depth of about 40 meters below ground.\n\n \n\nThe main outcrop strata in\nand around the mine area are the third lithological member of Agulugou Formation of Zhaertaishan Group in the middle and upper Proterozoic,\nfollowed by the quaternary Holocene strata. There is no magmatic rock in the exploration area, and Permian granodiorite is found locally.\nIn addition, gabbro dike, diabase dike and quartz dike are found in the area. The geotectonic location of the mine area is in the north\nwing of the Wolf Mountain anticline, with frequent tectonic activities and multiple periods of magma intrusion. The strata of the mine\narea are damaged by transformation, and the fold structure is not complete. The outcrop strata in the mine area are relatively simple,\nwhich are a monoclinal structure with a northeast-to-southwest strike and a southeastern tilt.\n\n \n\nThe Moruogu Tong Mine is located\nin the fault bundle of the Huogeqi dome at the north wing of the Haorige Mountain syncline. Monoclinal structures predominates and the\nstrike is north-eastern. The lead ore (mineralized) bodies are produced in the third lithological member of Agulugou Formation, where\nquartzite and quartz schist with strong silicification are the main host rocks. The ore bodies are distributed in an area of 3,000 meters\nlong from east to west and 1,000 meters wide from south to north, and 14 lead ore bodies have been delineated with orebody numbers of\nI-1, I-2, II-1, II-2, II-3, III, IV-1, IV-2, IV-3, IV-4, IV-5, IV-6, IV-7, and V.\n\n \n\nThe Moruogu Tong Mine is mainly\na lead deposit associated with silver. The ore bodies occur in certain strata, whose genetic type belongs to air-exhaled sedimentary type,\nwith lead deposit then transformed by hydrothermal process. The ore mineral compositions mainly include galena, sphalerite, pyrite, chalcopyrite,\narsenopyrite and gangue mineral quartz, calcite, and mica, etc. The depth of the oxidized zone and mixed zone in this mine\narea is about 15 meters below ground. The primary zone is below 15 meters underground. The lead ore bodies delineated in this\ndeposit are all in the primary zone, and the natural type of the ore is primary lead sulfide ore. Because the main useful constituent\nof this deposit is lead, with an associated useful constituent of silver, it is classified as a lead and silver deposit.\n\n \n\nThe key industrial indicators of the deposit are\nas follows:\n\n \n\n \n•\nCutoff grade: Pb>0.3%;\n\n \n\n \n•\nMinimum industrial grade: Pb>0.7%;\n\n \n\n \n•\nMinimum minable thickness: >1.0m;\n\n \n\n \n•\nAverage grade of deposit: Pb>1.81%;\n\n \n\n \n•\nBand rejected thickness: >2m;\n\n \n\n \n•\nWhen the orebody thickness is less than the minable thickness and the grade is high, meter percentage can be used as an indicator: Pb>0.70 meter percentage; and\n\n \n\n \n•\nIndustrial grade of associated useful constituent: Ag>2g/t.\n\n \n\n \n\n35 \n\n \n\n \n\n**Cooperation Agreement**\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 by Jijincheng Mining for the exploration and operating expenses of the northern part of Moruogu Tong\nMine during the exploration stage such that Bayannaoer Mining is not required to make any further capital contribution for exploration\nactivities, and for the allocation of rights and responsibilities between Bayannaoer Mining and Jijincheng Mining. According to the Cooperation\nAgreement, Jijincheng Mining is also responsible for engaging the exploration team and directing their activities. Pursuant to the Cooperation\nAgreement: (i) Bayannaoer Mining contributed the existing exploration results for the northern part of Moruogu Tong Mine; (ii) Jijincheng\nMining provides 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 works conducted prior to commencement of the cooperative exploration project;\n(iv) Bayannaoer Mining and Jijincheng Mining will each receive a 50% interest in any newly discovered resources from the first 10\ndrilling holes in the cooperative exploration project; and (v) Bayannaoer Mining and Jijincheng Mining will receive 30% and 70% interests,\nrespectively, in any newly discovered resources from drilling works beyond the first 10 drilling holes in the cooperative exploration\nproject. Other details of the Cooperation Agreement, including allocations and distributions upon completion of exploration works, remain\nthe subject of continuing discussion between the parties. To date, the total exploration expenses paid by Jijincheng Mining amount to\napproximately CNY6.72 million (US$0.96 million).\n\n \n\nThe foregoing description\nof the Cooperation Agreement is only a summary and is qualified in its entirety by reference to the Cooperation Agreement, a copy of which\nhas been translated into English and incorporated by reference as Exhibit 4.5 to this annual report.** **\n\n \n\n \n\n \n\n36 \n\n \n\n \n\n \n\n**Geography**\n\n \n\nThe following map shows the geography of Bayannaoer\nMining’s exploration site and its surrounding areas:\n\n \n\n \n\nThe\nMoruogu Tong Mine of Bayannaoer Mining is located in Wulatehouqi, Bayannaoer City, in the Inner Mongolia Autonomous Region of the PRC.\nThe mine is approximately 45 kilometers to Chaogewenduer Town and 40 kilometers to Qingshan Town. The Qingxian Road passes through the\nsouthern part of the mine and transportation is very convenient. Connectivity to water, electric and other necessary services will be\naddressed at the time of mine construction and development. \n\n \n\n \n\n \n\n37 \n\n \n\n \n\n**Government Regulation of Mineral Exploration Activities**\n\n \n\nUnder the Mineral Resources\nLaw of the PRC, all mineral resources in the PRC are owned by the state. Exploration and mining rights granted by the state permit recipients\nto conduct exploration or mining activities in a specific mining area during the specified license period. Although Bayannaoer Mining\nbelieves its exploration licenses will continue to be renewed as necessary, there can be no assurance that such will be the case or that\nBayannaoer Mining will be able to obtain a mining license in the future and exploit the entire mineral resources of the Moruogu Tong Mine\nduring its license period. If Bayannaoer Mining fails to renew its exploration rights upon expiry or if it cannot obtain a mining license\nand effectively extract the resources within the license period, the operation and performance of Bayannaoer Mining will be adversely\naffected.\n\n \n\nBayannaoer Mining’s\nexploration permit entitles it to undertake exploration activities in compliance with applicable laws and regulations, within the specific\narea covered by the license during the license period. Bayannaoer Mining is required to complete a prospecting report and a final appraisal\nand file with the relevant government authority before it can apply for mining rights and proceed to mine construction. A mining rights\npermit entitles the holder to undertake mining activities and infrastructure and ancillary work, in compliance with applicable laws and\nregulations, within the specific area covered by the license during the license period. Entities seeking mining rights are also obligated\nto pay natural resources fees in relation to sales of metal concentrates.\n\n \n\nThe competent department of\nenvironmental protection under the State Council shall supervise and manage environmental protection work throughout the country in a\nconsistent manner. The competent departments of environmental protection of the local governments at the county level or above shall supervise\nand manage environmental protection work within their respective administrative areas in a consistent manner.\n\n \n\nThe state practices classified\ncontrol over the environmental protection in construction projects based on the extent of environmental impact of construction projects\nin accordance with the following provisions:\n\n \n\n(1) an environmental impact\nreport shall be compiled for a construction project that may have a material impact on the environment, giving comprehensive assessment\nof their environmental impacts;\n\n \n\n(2) an environmental impact\nstatement shall be compiled for a construction project that may have a non-material impact on the environment, providing analysis or specialized\nassessment of their environmental impacts; and\n\n \n\n(3) a registration form shall\nbe filled out and submitted for a construction project that may have a minor impact on the environment and necessitates no environmental\nimpact evaluation.\n\n \n\nThe pollution prevention and\ncontrol facilities in construction projects shall be designed, built and commissioned along with the project simultaneously. The pollution\nprevention and control facilities shall meet the requirements specified in the approved documents regarding the environmental impact assessment\nand shall not be dismantled or left idle without authorization.\n\n \n\nThe State implements the pollution\ndischarge license management system in accordance with the law. Enterprises, public institutions and other producers and operators that\nimplement the pollution discharge license management shall discharge pollutants in accordance with the requirements of the pollution discharge\nlicense; those that fail to obtain the pollution discharge license shall not discharge pollutants. Where enterprises, public institutions\nand other producers and operators discharge pollutants in violation of the law without obtaining the pollutant discharge license refuse\nto stop such violations after suspension order has been delivered, besides the penalty in accordance with the provisions of the relevant\nlaws and regulations, the competent departments of environmental protection of the local governments at the county level or above and\nother departments responsible for supervision and management on environmental protection shall transfer the case to the public security\nauthority and impose a detention for not less than ten days and not more than 15 days on the persons directly in charge and other persons\ndirectly responsible; if the consequences of such violations are less severe, a detention for not less than five days and not more than\nten days shall be imposed.\n\n \n\nManagement believes that Bayannaoer\nMining is in material compliance with all applicable environmental protection requirements of the state.\n\n \n\n \n\n38 \n\n \n\n \n\n**DISCONTINUED SEGMENT - Rural Wastewater\nTreatment Activities**\n\n** **\n\n**Acquisition\nand Sale of PST Technology**\n\n** **\n\nWe\nno longer operate in the rural wastewater treatment segment following the sale of PST Technology in July 2023, which was one of our two\nreportable operating segments in addition to exploration and mining.\n\n \n\nWe\ndiversified our business by entering the environmental protection sector through the acquisition of PST Technology in 2021. PST Technology,\nthrough its wholly owned subsidiaries, owns a 51% equity interest in Shanghai Onway and Shanghai Onway’s subsidiaries which are\nprincipally engaged in the development of rural wastewater treatment technologies, the provision of equipment and materials for rural\nwastewater treatment, undertaking EPC and PPP projects in relation to rural wastewater treatment, and the provision of consulting and\nprofessional technical services. After PST Technology’s disposition, the Company discontinued the operation in wastewater treatment\nsegment and continue engaging in the exploration and mining business. For details, see “Corporate History and Structure — Acquisition\nand Sale of PST Technology.”\n\n \n\n**Overview of\nShanghai Onway**\n\n \n\nShanghai\nOnway is an environmental protection technology enterprise incorporated in July 2015 in the PRC. The registered capital of Shanghai Onway\nis approximately CNY20.41 million. It is currently 51% owned by Shenzhen Qianhai (an indirect wholly owned subsidiary of the Company prior\nto the sale of PST Technology in July 2023), 25% owned by Anxon Envirotech Pte. Ltd (a direct wholly owned subsidiary of AnnAik Limited,\nwhich is listed on the Singapore Stock Exchange under ticker “A52”), and 24% owned by Shanghai Xingyu Environment Engineering\nCo., Ltd. Shanghai Onway is principally engaged in the development of rural wastewater treatment technologies, the provision of equipment\nand materials for rural wastewater treatment, undertaking EPC and PPP projects in relation to rural wastewater treatment, and the provision\nof consulting and professional technical services.\n\n \n\nDuring\nits time as a subsidiary of the Company, Shanghai Onway had a team of well-regarded experts with deep industry experience in the field\nof wastewater treatment and carries out its rural wastewater treatment business using proprietary wastewater treatment technologies including\nfive patents, namely (i) bio-trickling filter packing frame with uniform water distribution and automatic reoxygenation effects; (ii)\nwastewater reinforced phosphorous removal packing and preparation method thereof; (iii) shore bank step combination formula non-point\nsource pollution control system; (iv) modularization ecological substrate composite biological chinampa with primary and secondary connector\nlink; and (v) water distributor.\n\n \n\nSince\nits incorporation, Shanghai Onway has leveraged its proprietary wastewater treatment technologies to undertake 258 EPC projects, mainly\nin Zhejiang province, Jiangsu province and Shanghai, among which 3 projects are currently in progress as of July 2023, the date on which\nShanghai Onway ceased to be our subsidiary. In July 2018, Shanghai Onway was awarded its maiden PPP project, Wujiang District Rural Domestic\nWaste and Wastewater Treatment Infrastructure, by the Housing and Urban-Rural Development Bureau (“HURDB”) of Wujiang District\nin Shaoguan City, Guangdong province of the PRC (the “Wujiang Project”). In 2021, 2022, and for the period from January 1,\n2023 to July 31, 2023, revenues derived from the EPC projects amounted to CNY12.39 million, CNY14.63 million, and CNY9.12 million respectively,\nand those derived from the Wujiang Project were CNY6.35 million, CNY5.51 million and CNY3.63 million, respectively.\n\n \n\n**Government Regulation\nand National Policy of Rural Wastewater Treatment Industry**\n\n \n\nThe\ndevelopment of the rural wastewater treatment industry is highly supported by national policies in the PRC. Some of the regulations and\npolicies are summarized below.\n\n \n\nIn\n2010, in order to promote domestic wastewater treatment in rural areas of the PRC, the Ministry of Housing and Urban-Rural Development\nissued the “Technical Guidelines for Rural Domestic Wastewater Treatment by Regions.” The document set out the characteristics,\ndischarge requirements and drainage systems of rural domestic wastewater in each region of the PRC, as well as rural domestic wastewater\ntreatment technologies (including parameters and schematic diagrams), selection of technologies, management of facilities and engineering\nexamples.\n\n \n\nIn\n2010, the Ministry of Environmental Protection issued the “Technical Specifications for Control of Domestic Pollution in Rural Areas”\nand the “Technical Policy on Prevention and Control of Domestic Pollution in Rural Areas.” The former document introduced\nseveral technologies for controlling rural domestic wastewater pollution, including source control, household biogas digesters, decentralized\nwastewater treatment with low energy consumption, centralized wastewater treatment, and rainwater collection and discharge. The latter\ndocument set out that the technical route of rural domestic pollution prevention and control should be based on source control, decentralized\ntreatment with some support of centralized treatment, and resource reutilization.\n\n \n\n39 \n\n \n\n \n\nIn\n2014, the Eighth Session of the Standing Committee of the Twelfth National People’s Congress of the PRC revised the “Environmental\nProtection Law of the People’s Republic of China.” The document sets out that governments at all levels in the PRC should\nallocate funds in their budgets to support environmental protection work, including protection of rural drinking water sources, treatment\nof domestic wastewater and other waste, prevention and control of pollution from livestock and poultry breeding, prevention and control\nof soil pollution and control of pollution from rural industries and mines.\n\n \n\nIn\n2014, the “Guiding Opinions of the General Office of the State Council on Improving the Rural Living Environment” proposed\nto accelerate comprehensive improvement of the rural environment focusing on the treatment of rural waste and wastewater. Where conditions\npermit, urban waste and wastewater treatment facilities and services may be extended to rural areas. For villages with large populations\nfar away from cities and towns, village-level centralized wastewater treatment facilities may be built, and for villages with small populations,\nhousehold wastewater treatment facilities may be built.\n\n \n\nIn\n2017, the “Thirteenth Five-Year Plan for Comprehensive Improvement of the National Rural Environment” highlighted the importance\nof protection of rural drinking water sources and treatment of domestic waste and wastewater. In 2018, the “Three-Year Action Plan\nfor the Improvement of Rural Living Environment” promoted the treatment of rural domestic wastewater using technologies with low\ncosts, low energy consumption, easy maintenance and high efficiency, and encouraged the adoption of ecological treatment technologies.\n\n \n\nIn\n2018, the Ministry of Ecology and Environment and the Ministry of Housing and Urban-Rural Development issued the “Notice on Accelerating\nthe Formulation of Rural Domestic Wastewater Discharge Standards by Regions.” Local governments were encouraged to speed up the\nformulation of standards for rural wastewater treatment and discharge according to local conditions. In 2019, the “Technical Standards\nfor Rural Domestic Wastewater Treatment Projects” issued by the Ministry of Housing and Urban-Rural Development optimized the specific\ntechnical parameters of rural wastewater treatment to adapt to the characteristics of rural wastewater in China.\n\n \n\nIn\n2020, a group of three standards were set up, namely the “Standard for Small Domestic Wastewater Treatment Equipment,” the\n“Evaluation Specification for Small Domestic Wastewater Treatment Equipment,” and the “Technical Regulations for Operation\nand Maintenance of Village Domestic Wastewater Treatment Facilities.” The first document set out some standardized information for\nsmall-scale domestic wastewater treatment equipment, including information registration, design, manufacturing, transportation and installation.\nThe second document set out a standardized evaluation process suitable for China’s national conditions for small-scale wastewater\ntreatment equipment, after considering the experience of such evaluation systems in developed countries and the relevant climatic, geographical\nand economic conditions of different regions in China. The third document set out the operation and maintenance standards on the operation\nand maintenance of facilities (collection systems and treatment facilities), operation and maintenance process, operation and maintenance\npersonnel, and operation and maintenance service organization, among other standards.\n\n \n\nIn\n2021, the “Guidelines on Accelerating the Modernization of Rural Houses and Villages” highlighted the importance of promoting\nrural domestic wastewater treatment in accordance with local conditions. Rural areas should adopt small-scale, ecological and decentralized\nwastewater treatment models and processes, set appropriate discharge standards, and promote local resource reutilization of rural domestic\nwastewater.\n\n \n\nIn\n2022, the “Opinions of the CPC Central Committee and the State Council on Completing the Key Work of Comprehensively Promoting Rural\nRevitalization in 2022” set out that a five-year campaign to improve rural living environment should continue to be carried out.\nToilets in rural areas should be upgraded based on the actual needs of farmers, and efforts should be coordinated to ensure water supply\nand sewage treatment. The treatment of domestic sewage in rural areas should be promoted on a case-by-case basis in accordance with local\nconditions. Priority should be given to sewage treatment in densely populated villages, and for those areas that are not suitable for\ncentralized treatment, miniaturized ecological treatment and sewage resource utilization should be promoted. Efforts to control black\nand odorous water bodies in rural areas should be accelerated. Household waste should be reduced and classified at source, and the construction\nof facilities for the comprehensive disposal and utilization of organic waste in villages should be strengthened to promote the use and\ntreatment of organic waste in situ.\n\n \n\n**Cybersecurity**\n\n \n\nAs\nan exploration company, we have limited digital operations and our business activity to date has been identifying, acquiring, and exploring\nmineral properties, and we have not yet adopted formal cybersecurity risk management programs or formal processes for assessing cybersecurity\nrisks. We understand the importance of managing material risks from cybersecurity threats and are committed, as part of our continuing\ngrowth, to implementing and maintaining an adequate information security program to manage such risks and safeguard our systems and data.\n\n \n\nWe\ncurrently manage our cybersecurity risk through a variety of practices that are applicable to all users of our information technology\nand information assets, including our employees and contractors. We use a combination of technology, policies, training, and monitoring\nto promote security awareness and prevent security incidents.\n\n \n\nWe\nbelieve we have limited exposure to cyber threats other than emails and project data storage. Financial transactions are enabled through\nwell-stablished financial institutions and accounting and employee information storage are outsourced to an external accounting firm.\n\n \n\nWe\nhave not, as of the date of this annual report, experienced a cybersecurity threat or incident in the last three years, that materially\naffected or is reasonably likely to affect our business, results of operations, or financial condition. However, there can be no guarantee\nthat we will not experience such an incident in the future. For more information,\n\n \n\nOur\nboard of directors oversees cybersecurity risk as part of its role of overseeing enterprise-wide risk.\n\n** **\n\n** **\n\n40 \n\n \n\n \n\n**Environmental,\nSocial and Governance (ESG) Initiatives**\n\n** **\n\nESG\nis an important imperative for us.  We have focused our ESG initiatives on the following areas:\n\n \n\n \n•\n*Environment*: We will pay close attention to the impacts of our operations on biodiversity, ecosystem services, water management, mine waste/ tailings, air, noise, energy, climate change (carbon footprint, greenhouse gas), hazardous substances, and mine closure;\n\n \n•\n*Social*: We will evaluate the impacts of our actions in the fields, such as human rights, land use, resettlement, vulnerable people, gender, labour practices, worker/community health & safety, security, artisanal miners, and mine closure / after use.\n\n \n•\n*Governance*: We will assess our activities from the perspectives of legal compliance, ethics, anti-bribery and corruption, and transparency.\n\n \n\nIn\nparticular, we will consider whether there are environmental, social or governance risks that may affect our ability to raise capital,\nobtain permits, work with communities, regulators and NGOs, and protect our assets from impairments. And then there may be opportunities\nfor us to reduce energy and water bills or carbon emissions, improve operational performance, enhance community and regulatory relationships\nand manage closure viability.\n\n \n\nAs\nan exploration company, we do not carry out any mining operation. However, we prioritize initiatives that not only align with our corporate\nvalues but also contribute to sustainable development, stakeholder trust, and long-term profitability. We will implement environmentally\nresponsible mining practices, such as reducing water and energy consumption, minimizing waste generation and rehabilitating mined areas\npost-extraction, to mitigate ecological degradation. We will also implement efficient water management strategies, including recycling\nand treating mine water, to minimize water usage and prevent contamination of local water sources. Furthermore, we will invest in community\ndevelopment projects that address pressing social needs, such as education, healthcare, infrastructure, and economic diversification.\nWe will also develop robust risk management frameworks to identify, assess and mitigate ESG-related risks associated with our operations.\n\n \n\n**Enforcement of Civil\nLiabilities**\n\n \n\n**British Virgin\nIslands**\n\n \n\nWe\nare incorporated in the BVI to take advantage of certain benefits associated with being a BVI business company, such as:\n\n \n\n \n•\npolitical and economic stability;\n\n \n•\nan effective judicial system;\n\n \n•\na favorable tax system;\n\n \n•\nthe absence of exchange control or currency restrictions; and\n\n \n•\nthe availability of professional and support services.\n\n \n\nHowever,\ncertain disadvantages accompany incorporation in the BVI. These disadvantages include:\n\n \n\n \n•\nthe BVI has a less developed body of securities laws as compared to the United States and these securities laws provide significantly less protection to investors; and\n\n \n•\nBVI companies do not have standing to sue before the federal courts of the United States.\n\n \n\nOur\nArticles provide that any differences between us and our shareholders or their executors, administrators or assigns relating to the intent,\nconstruction, incidences or consequences of our Articles or the BVI Business Companies Act (as amended), including any breach or alleged\nbreach of our Articles or the BVI Business Companies Act (as amended), or relating to our affairs, shall be resolved by arbitration before\ntwo arbitrators (unless the parties agree to arbitrate before one arbitrator), who shall jointly appoint an umpire.\n\n \n\nService\nof process upon us and upon our directors, all of whom reside outside the United States, may be difficult to obtain within the United\nStates. Furthermore, because all of our directors are located outside the United States in Hong Kong, and all of our assets and officers\nare located outside the United States in the PRC (other than Mr. Wong Wah On Edward, our Chairman and Chief Executive Officer, who is\nlocated in Hong Kong), any judgment obtained in the United States against us or any of our directors and officers may not be collectible\nwithin the United States.\n\n \n\n \n\n41 \n\n \n\n \n\nThere\nis doubt as to the enforceability of civil liabilities under the Securities Act and the Exchange Act in original actions instituted in\nthe PRC. PRC courts may refuse to hear a claim based on a violation of U.S. securities laws, including because the PRC is not the most\nappropriate forum to bring such a claim. In addition, even if a PRC court agrees to hear a claim, it may determine that PRC law, and not\nU.S. law, is applicable to the claim. If U.S. law is found to be applicable, the content of applicable U.S. law may have to be proven\nin court as a fact, which can be a time-consuming and costly process. Certain matters of procedure will also be governed by PRC law. There\nis little binding case law in the PRC addressing the matters described above. Many of the same doubts apply to similar suits that may\nbe brought in the BVI or Hong Kong and as to the enforceability of any judgment rendered by a court in the BVI or Hong Kong. Moreover,\nwe have no assets in the BVI that may be used to satisfy a judgment rendered by a court located there.\n\n \n\nWe\nhave appointed Puglisi & Associates, located at 850 Library Avenue, Suite 204, Newark, Delaware 19711, as our agent upon whom process\nmay be served in any action brought against us under the securities laws of the United States.\n\n \n\n**PRC**\n\n \n\nWe have been advised by Commerce\n& Finance Law Offices, our PRC legal advisor, that there is uncertainty as to whether the courts of the PRC would enforce judgments\nof United States courts or British Virgin Islands courts obtained against us or these persons predicated upon the civil liability provisions\nof the United States federal and state securities laws. Commerce & Finance Law Offices has further advised us that the recognition\nand enforcement of foreign judgments are provided for under the PRC Civil Procedures Law. If a legally effective judgment or ruling made\nby a foreign court requires recognition and enforcement by the PRC People's Court, the parties may directly apply to the intermediate\npeople's court with jurisdiction for recognition and enforcement, or the foreign court may request recognition and enforcement by the\nPRC People's Court in accordance with the provisions of international treaties concluded or participated in by the country and the PRC,\nor in accordance with the principle of reciprocity. In addition, according to the PRC Civil Procedures Law, courts in the PRC will not\nenforce a foreign judgment if they decide that the judgment violates the basic principles of the PRC law or national sovereignty, security\nor public interest. As a result, it is uncertain whether and on what basis a PRC court would enforce a judgment rendered by a court in\nthe United States or in the British Virgin Islands. Under the PRC Civil Procedures Law, foreigners, foreign enterprises and organizations\nwho bring or respond to lawsuits in the PRC People's Court shall have the same litigation rights and obligations as citizens, legal persons\nand other organizations of the PRC. Where foreign courts impose restrictions on the civil litigation rights of citizens, legal persons\nand other organizations of the PRC, the People's courts of the PRC shall apply the principle of reciprocity to the civil litigation rights\nof citizens, enterprises and organizations of that country. In a foreign-related civil case accepted by the PRC People's Court, if the\ndefendant raises an objection to jurisdiction, and the following circumstances occur at the same time, it may rule to reject the suit\nand inform the plaintiff to file a suit in a more convenient foreign court: (1) The basic facts of the dispute do not occur within the\nterritory of the PRC, and it is obviously inconvenient for the PRC People’s Court to try the case and for the parties to participate\nin the proceedings; (2) There is no agreement between the parties to choose the jurisdiction of the PRC People's Court; (3) the case does\nnot fall under the exclusive jurisdiction of the PRC People's Court; (4) The case does not involve the sovereignty, security or public\ninterests of the PRC; (5) It is more convenient for foreign courts to hear cases.\n\n \n\n \n\n42 \n\n \n\n \n\n \n**C.**\n**Organizational Structure**\n\n \n\nCHNR is a holding company directly or indirectly\nowning the following subsidiaries, to the extent indicated (as of December 31, 2025):\n\n \n\nAll current operations are\nconducted by Bayannaoer Mining. See “Item 4.B. INFORMATION ON THE COMPANY – Business Overview” for further information\nregarding Bayannoer Mining.\n\n \n\n \n\n \n\n43 \n\n \n\n \n\n**Feishang Management**\n\n \n\nFeishang Management was incorporated\nin the PRC in October 2008. It is a wholly owned subsidiary of Yunnan Mining and is engaged in providing management and consulting services\nto the other companies in the Group. Feishang Management currently serves as a cost center for the Group.\n\n \n\n**Inactive Subsidiaries**\n\n \n\nThe following subsidiaries\nare not currently engaged in active operations but remain in good standing in their home jurisdictions and are poised to participate in\nfuture opportunities, should they arise:\n\n \n\n**China Coal**\n\n \n\nChina Coal was incorporated\nin Hong Kong in January 2008. It is a wholly owned subsidiary of CHNR.\n\n \n\n**Feishang Dayun**\n\n \n\nFeishang Dayun was incorporated\nin Hong Kong in June 2008. It is a wholly owned subsidiary of Pineboom.\n\n \n\n**Feishang Mining**\n\n \n\nFeishang Mining was incorporated in the BVI in\nSeptember 2004. It is a wholly owned subsidiary of CHNR.\n\n \n\n**Feishang Yongfu**\n\n \n\nFeishang Yongfu was incorporated\nin Hong Kong in June 2008. It is a wholly owned subsidiary of Newhold.\n\n \n\n**FMH Services**\n\n \n\nFMH Services is a Florida\ncompany incorporated in November 2007 in connection with a proposed transaction that was not consummated. FMH Services, which is\nwholly owned by CHNR, is currently dormant.\n\n \n\n \n\n**Newhold**\n\n \n\nNewhold was incorporated in the BVI in July 2008.\nIt is a wholly owned subsidiary of CHNR.\n\n \n\n**Pineboom**\n\n \n\nPineboom was incorporated in the BVI in May 2008.\nIt is a wholly owned subsidiary of CHNR.\n\n \n\n**Yangpu Shuanghu**\n\n \n\nYangpu Shuanghu was incorporated\nin the PRC in May 2004. It is a wholly owned subsidiary of Feishang Yongfu.\n\n \n\n**Yunnan Mining**\n\n \n\nYunnan Mining was incorporated in the PRC in June\n2007. It is a wholly owned subsidiary of Yangpu Shuanghu.\n\n \n\n \n**D.**\n**Property, Plant and Equipment**\n\n \n\nThe\nCompany’s administrative offices and its principal subsidiaries are located in Hong Kong, Shenzhen (Guangdong province) and Bayannaoer\nCity (Inner Mongolia Autonomous Region) in the PRC.\n\n \n\nOn\nApril 1, 2017, the Company signed an office sharing agreement with Anka Consultants Ltd. (“Anka”), a related party, which\nsuperseded all previously signed agreements between the parties, pursuant to which the Company shares 184 square meters of the total area\nof the office premises. The agreement also provides that the Company shares certain costs and expenses in connection with its use of the\noffice, in addition to certain accounting and secretarial services and day-to-day office administration services provided by Anka. On\nJuly 1, 2025, the Company signed a new office sharing agreement with Anka, pursuant to which the Company shares 110 square meters of the\ntotal area of the office premises for one year from July 1, 2025 to June 30, 2026. Anka’s current lease with the unrelated landlord\nis for three years, from June 16, 2025, to June 15, 2028. For the years ended December 31, 2023, 2024 and 2025, the Company’s\nshare of rental expenses and rates was approximately CNY730,149, CNY370,923 and CNY514,847 (US$73,587), respectively.\n\n \n\n \n\n44 \n\n \n\n \n\nOn\nJanuary 1, 2018, Feishang Management signed an office sharing agreement with Feishang Enterprise. On October 1, 2025, Feishang Management\nsigned a new contract with Feishang Enterprise for one year from October 1, 2025 to September 30, 2026, pursuant to which Feishang Management\nshared 40 square meters of the office premises. For the years ended December 31, 2023, 2024 and 2025, Feishang Management’s share\nof rental expenses was CNY165,600, CNY165,600 and CNY145,800 (US$20,839), respectively.\n\n \n\n*Bayannaoer Mining*\n\n \n\nThe offices and exploration\nsite of Bayannaoer Mining are located in Bayannaoer City, Inner Mongolia Autonomous Region in the PRC. The property, plant and equipment\nof Bayannaoer Mining mainly includes buildings, vehicles, office equipment and furniture, with a total net value as of December 31, 2025,\nof approximately CNY0.03 million (US$0.01 million). On May 1, 2024, Bayannaoer Mining signed an annual lease agreement with private individuals\npursuant to which Bayannaoer Mining leases office premises located at 8/F, Huaao Building, Shengli North Road in Bayannaoer City. On May\n1, 2025, the lease agreement was renewed for one year from May 1, 2025 to April 30, 2026. The office covers an area of 162 square meters,\nand annual rent is CNY24,300 (US$3,473).\n\n \n\nThe\nMoruogu Tong Mine exploration site is located in Northwestern Qingshan Town, Wulatehouqi in Bayannaoer City and covers an area of approximately\n7.81 square kilometers. As is typical in the PRC, the PRC government owns all of the land on which the exploration activities are carried\nout. Bayannaoer Mining assumed the rights to use the land when it obtained the exploration right from the Land and Resources Department\nof Inner Mongolia Autonomous Region in 2005. We are still in the exploration stage of mining the Moruogu Tong Mine, and have not yet produced\nany silver, lead or copper. To date, the exploration program has indicated the presence of lead and silver, with the prospect that further\nsurveying and exploration may indicate the presence of other ores such as copper.\n\n \n\nIn\nthe event we determine to pursue a mining permit and thereafter engage in mining at the Moruogu Tong Mine, we will be required, among\nother things, to construct and develop the mine, including roads and making provision for water and electricity at the mine site. There\nwill be significant capital expense for these and other projects. We intend to fund those capital expenditures from internal resource\nand/ or the proceeds of loans from our Related-Party Debtholders, if available, payments pursuant to the Cooperation Agreement and,\nto the extent deemed necessary, bank borrowings.\n\n \n\nSee “Item 4.B. INFORMATION\nON THE COMPANY – Business Overview – Government Regulation of Mineral Exploration Activities,” above, for a discussion\nof environmental laws affecting the Moruogu Tong Mine."}