Our Primary Strategic Investments are in MGX Resources Limited (“MGX”, previously known as Mount Gibson Iron Limited) (ASX: MGX), Metals X Limited (“Metals X”) (ASX: MLX), Dragon Gold Mining Limited (“Dragon Mining”, previously Dragon Mining Limited but after the reorganization proposal – change of the holding company of Dragon Mining group to a Hong Kong incorporated company completed in September 2026) (HKEX: 1712), Tanami Gold NL (“Tanami Gold”) (ASX: TAM) and Prodigy Gold NL (“Prodigy Gold”) (ASX: PRX), where APAC Resources owns 38.4%, 23.3%, 27.7%, 46.3% and 30.7% as at 30 June 2026 respectively.
The combined net attributable profits shared from MGX, Metals X, Dragon Mining, Tanami Gold and Prodigy Gold which are accounted for as the Group’s associates for FY25/26 was HK$261,653,000 (FY24/25: HK$38,097,000).
During the year, APAC Resources’ shareholding in Prodigy Gold rose from 29.6% as at 30 June 2025 to 30.7% as at 30 June 2026 due to subscription of the entitlement offer by Prodigy Gold (one new share for every one share held) and underwriting the shortfall offer at an issue price of A$0.002 per share. Meanwhile, in May 2026, APAC Resources announced to invest approximately A$33 million in Tanami Gold by taking up the subscription of Tanami Gold’s rights issue (one new share for every one share held) at an issue price of A$0.06 per share. Following the completion of transaction in June 2026, the Group’s shareholding in Tanami Gold remained unchanged at 46.3%.
MGX
APAC Resources owns 38.4% of MGX as at 30 June 2026.
MGX is undergoing a business transition from an iron ore producer to a gold developer, with the scheduled end of Koolan Island operation in 2026 and completed acquisition of 50% interest in the Central Tanami Project Joint Venture (“CTPJV”) in February 2026. MGX owns the Koolan Island mine off the Kimberley coast in the remote north-west of Western Australia and has entered into a binding agreement with Crestlink Koolan Pty Ltd to sell the Koolan Island operations and associated tenures for A$25 million, with a combination of upfront and deferred payments, and a future revenue share.
Due to a significant rockfall on the eastern footwall of the Main Pit at Koolan Island in October 2025, mining was suspended. The investment required to remediate the mine was not economically justified, especially noting that mining was scheduled to conclude around September 2026. The operations focused on the monetization of lower grade stockpiles, with processing and shipping of low-grade material now completed.
MGX generated A$3 million net cash flow in FY25/26 with the sales of 2,682,000 wet metric tonnes (“wmt”) of iron ore (869,000 wmt of average 63.7% Fe iron ore and 1,813,000 wmt of average 44.7% Fe iron ore). Completion of the remaining low grade iron ore shipments is scheduled for late July 2026. MGX’s cash and investment reserves was A$412 million at the end of FY25/26.
Metals X
APAC Resources owns 23.3% of Metals X as at 30 June 2026.
Metals X is focused on the Renison mine, including the development of the high-grade Area 5 deposit. In the twelve months ended June 2026, the Renison mine produced 5,644 tonnes of tin (net 50% basis), stable year-on-year. While production had been constrained by equipment availability and stope sequencing delays, the impacts have been offset by slightly higher milled grade.
Tin prices have rallied from circa US$34,000 per tonne in early July 2025 to circa US$54,600 per tonne in early August 2026. Demand for critical mineral stockpiling, supply challenges such as Indonesia illegal tin mine shut-downs and Myanmar shipment delays and speculative trading activities have all contributed to strong tin prices. We remain comfortable with the outlook for tin due to the lack of supply growth, growing demand for tin from the electrification trend, and growth from semiconductors and energy storage industries.
Dragon Mining
APAC Resources owns 27.7% of Dragon Mining as at 30 June 2026.
The principal activity of Dragon Mining is gold mining, processing and exploration in the Nordic region. Dragon Mining operates in Finland and Sweden. In Finland, the Vammala Production Centre consists of a conventional 300,000 tonnes per annum crushing, milling and flotation plant, the Jokisivu Gold mine and the Uunimäki Gold project. Annual production from Dragon Mining is in the range of 20,000 to 30,000 ounces of gold in concentrate depending on the grade of ore and gold concentrate feed. In Sweden, the operation is known as the Svartliden Production Centre, consisting of a 300,000 tonnes per annum carbon-in-leach processing plant and the Fäboliden Gold mine where a campaign of test-mining was completed in September 2020. On 22 September 2025, Dragon Mining raised net proceeds of approximately HK$172.8 million via a placement of over 31.6 million shares at HK$5.61 per share.
Tanami Gold
APAC Resources owns 46.3% of Tanami Gold as at 30 June 2026.
Tanami Gold’s principal business activity is gold exploration. It holds 50% interest of the Central Tanami Project and has a cash balance of A$76 million after raising circa A$70 million via a renounceable rights issue in June 2026. In May 2021, Tanami Gold entered into a binding agreement with Northern Star Resources Limited (“Northen Star”) (ASX: NST) to establish a 50/50 joint venture (ie. the CTPJV) covering the Central Tanami Project. On 3 December 2025, MGX reported that it received approval from the Foreign Investment Review Board for an acquisition for Northern Star’s 50% interest in the CTPJV, and the transaction was completed in February 2026.
After the transaction, the CTPJV has advanced the exploration work at the Central Tanami Project, with continued resource definition drilling at Jims Gold Mine, and the preparation for construction off the underground exploration decline at the Groundrush Gold Mine, where the portal development is targeted for September 2026. The CTPJV also accelerated site activities with upgrades to existing utilities, camp infrastructure, recruitment of key personnel and advancement of key approvals.
Prodigy Gold
APAC Resources owns 30.7% of Prodigy Gold as at 30 June 2026.
Prodigy Gold is a gold exploration company listed on the Australian Securities Exchange. It holds a large footprint of exploration tenements in the Tanami region in the Northern Territory, Australia, and a JORC resource of 1.05 million ounces across its Hyperion, Tregony, Buccaneer and Old Pirate projects. Some of its tenements are held in joint venture with partners such as Newmont Corporation (ASX: NEM) and IGO Limited (ASX: IGO). At the end of June 2026, Prodigy Gold has a cash balance of A$3.1 million. The focus of Prodigy Gold for 2026 will be exploration on the Tanami North Project area and continue with its strategy to divest non-core assets.
Financial Assets at Fair Value through Profit or Loss
Financial assets at fair value through profit or loss comprise mainly the Group’s Resource Investment. As at 30 June 2026, within the Resource Investment, APAC Resources had significant investment in Shougang Fushan Resources Group Limited (“Shougang Fushan”) (HKEX: 639).
Significant Investment
Our investment in Shougang Fushan generated net fair value loss of HK$97,444,000 during the year with a carrying value of HK$301,398,000 as at 30 June 2026.
Shougang Fushan is a coking coal producer listed on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”). Its principal businesses are coking coal mining and the production and sales of coking coal products in China. It has three mines located in China with reserves of 49 million tonnes of raw coking coal at 31 December 2025 and during the six months ended 30 June 2026, Shougang Fushan produced 2.8 million tonnes of raw coking coal and sold 2.0 million tonnes of clean coking coal.
The market capitalisation of Shougang Fushan at the end of August 2026 is around HK$15.5 billion. During the six months ended 30 June 2026, Shougang Fushan generated revenue of HK$3,243 million and attributable profits of HK$748 million and had cash and time deposits of HK$9.0 billion at 30 June 2026.
Resource Investment
The investments in this segment comprise mostly minor and liquid holdings in various natural resource companies listed on major stock exchanges, including Australia, Canada, Hong Kong, the United Kingdom and the United States (“U.S.”). Our investments focus on select commodities within several commodity segments: energy, bulk commodities, base metals and precious metals.
Resource Investment posted a revenue of HK$5,738,069,000 (FY24/25: HK$2,953,645,000) and a net fair value gain of HK$1,404,829,000 in FY25/26 (FY24/25: HK$338,149,000), which after accounting for segment-related dividends and other investment income and expenses, resulted in a segment profit of HK$1,168,592,000 (FY24/25: HK$342,743,000).
As at 30 June 2026, the Group’s Resource Investment (financial assets at fair value through profit or loss) amounted to HK$2,762,336,000 (As at 30 June 2025: HK$1,970,043,000), representing approximately 41.9% (As at 30 June 2025: 43.1%) of the Group’s total assets. This amount excludes the Group’s available investment liquidity, which is held within the Group’s bank balances and cash, and short-term bank deposits of HK$1,354,588,000 as at 30 June 2026 (As at 30 June 2025: HK$645,297,000) and remains available for deployment by the Group’s in-house portfolio managers, subject to market conditions and suitable investment opportunities.
The investment types of this segment consist of listed equities, unlisted equities and unlisted warrant. The Group’s investments may be realized, reallocated as and when appropriate depending on underlying investment thesis, market conditions, investment performance, valuation considerations and the Group’s funding requirements, and hence, investment period varies and the Group does not impose any mandatory holding period for its investments. It may range from shorter term trading positions of months to long-term holdings extending over years. The source of fundings of the investment portfolios comes from the Group’s internal resource and/or borrowings and are not funded through third-party capital or external mandates.
Investment Policy and Objectives
Our Resource Investment segment includes, among other investing strategies, the two resource portfolios announced in August 2016, with an additional natural resource-focused strategy subsequently established and focused on large caps and specialist opportunities. The objective of the portfolios is to generate risk-adjusted returns using the Company’s funds while maintaining liquidity and prudent risk management. These various portfolios are managed under the Resource Investment segment of the Company, which is separate from the Company’s large strategic stakes. Our portfolios have a global long-only mandate with no short selling of stocks and strict risk parameters on market capitalisation, liquidity, development stage (exploration through to production) and jurisdiction to manage risk. The permissible scope of investment comprises listed equities securities, unlisted equities securities (progressing with the listing process) and unlisted warrants/options (which may be exercised entitling allotment of listed equity securities). The Group generally does not engage in highly speculative investments and does not use derivatives for speculative purposes.
The Group is an established investment fund and commodity trading house which owns strategic interests in natural resource companies with the main business lines comprising of primary strategic investment, resource investment, and commodity trading business, focused primarily on metals, mining and energy and investment in financial assets. The Group considers that its investment strategies are consistent and align with its overall corporate strategy and principal businesses.
Investment Details and Performance by Investment Strategies
(A)
Small and Mid-Cap Resources Portfolio
This portfolio is ungeared, long-only and focused on investments in small and mid-cap companies involved in the exploration, development, and production of battery metals, base metals, precious metals, uranium, bulks, and other hard rock commodities. Managed by the same portfolio manager since its inception in October 2016, the portfolio has delivered a return of 84.3% in FY25/26, representing an outperformance of 50.8% against its benchmark return of 33.5% (a currency-adjusted equal weighting of the ASX 200 Smallcap Resources, FTSE AIM All Share Basic Resources and TSX Venture Composite indices).
During FY25/26, the portfolio generated a net fair value gain of HK$792,161,000, and as at 30 June 2026 the carrying value of the invested portion of the portfolio was HK$950,484,000, which makes up 14.4% of the Group’s total assets, but excludes uninvested cash holdings, which are part of the Group’s available investment liquidity (bank balances and cash, and short-term bank deposits) of HK$1,354,588,000 as at 30 June 2026.
Over its full investment lifetime from October 2016 to June 2026, the portfolio has delivered a cumulative return of 1,468%, generating a substantial outperformance of 1,398% against its benchmark return of 70%. Across all ten reporting periods since its inception, the portfolio has never recorded a negative year in absolute terms nor underperformed its benchmark, a remarkable track record given it is a long-only strategy in smaller high-beta names in an extremely cyclical sector.
A full breakdown of the Small and Mid-Cap Resources Portfolio’s annual performance against its benchmark since its inception is presented in the table below.
The portfolio’s performance for FY25/26 was driven by a heavy allocation to gold earlier in the period, an aggressive pivot to defensive cash levels as conflict erupted in the Middle East, and meaningful single-stock wins.
Gold remains in a structural uptrend, supported by persistent fiscal deficits, de-dollarisation, and steady central bank purchases, so the portfolio generally maintained a large weighting to the gold sector. Among producer holdings, the portfolio targets miners that are generating or inflecting into strong free cash flows, given the potential for strong market rerating. We recorded large investment gains from Kingsgate Consolidated (TSX: KCN), Orezone Gold (TSX: ORE), Bellevue Gold (ASX: BGL), and Robex Resources (ASX: RXR). Another investment sub-strategy targets highquality precious metals developers and generated significant alpha from Gold X2 Mining (TSX: AUXX), Talamore Mining (TSX: TALA), Thesis Gold (TSX: TAU), BMC Minerals (ASX: BMC), Hycroft Mining (NYSE: HYMC), and Seabridge Gold (NYSE: SA).
However, the two largest portfolio contributors - by a wide margin - were not gold, with EQ Resources (ASX: EQR) (tungsten) and Q2 Metals (TSX: QTWO) (lithium), which reported sector-leading share price appreciation over the course of FY25/26 of 609% and 529% respectively. EQ Resources (ASX: EQR) was the top value generator following APAC Resources helping to cornerstone placements at A$0.032 and A$0.05 per share to resolve short-term liquidity concerns, before new operationally-focused management helped turn around production at Mt Carbine and Barruecopardo to capitalise on an unprecedented tungsten price rally.
The other major single-stock winner was Q2 Metals (TSX: QTWO), which catapulted into a top five global lithium hard rock resource (and largest in North America by a wide margin) with a world-class maiden resource of 295 million tonnes at 1.36% Li2O at its Cisco project in Quebec. It also benefitted from a rebounding lithium price as demand caught up to oversupply from the prior cycle.
Overall, the portfolio maintained its 100% track record of positive annual returns and benchmark outperformance since its inception, and has now achieved an annualised Compound Annual Growth Rate (“CAGR”) return of 32.6% over its 9.75-year life (including 42.3% CAGR over the past seven reporting periods) and well above the benchmark CAGR of 5.6%.
(B)
Energy-biased Resources Portfolio
This portfolio is primarily focused on the oil, gas, power and renewables sectors. At the end of 2019, the mandate for this portfolio was expanded to include a broader range of energy investments outside of just oil and gas. In the last five years to 30 June 2026, the Energy-biased Resources Portfolio has generated a return on investment of 56%.
During FY25/26, this portfolio generated a net fair value gain of HK$20,709,000, and as at 30 June 2026 the carrying value of the invested portion of the portfolio was HK$141,580,000, which makes up 2.2% of the Group’s total assets, but excludes uninvested cash holdings, which are part of the Group’s available investment liquidity (bank balances and cash, and short-term bank deposits) of HK$1,354,588,000 as at 30 June 2026.
The investment choices in the Energy-biased Resources Portfolio are selected through a combination of fundamental bottom up valuation and analysis of the prospects for different sectors. During FY25/26, the investments were focused on companies that support base load power (predominantly natural gas in certain countries outside of North America, and uranium) and added select names that were leveraged specifically to the power demand part of the artificial intelligence (“AI”) data centre thematic. After holding a bearish view on oil in the first half of FY25/26, we pivoted to a growing oil exposure early in the second half of FY25/26 as the Iran War accelerated. During FY25/26, oil price gained 12%, a relatively muted move despite the ramifications of an extended closure of the Strait of Hormuz, although the timing for the end of FY25/26 coincided with the bottoming of the oil price after the Memorandum of Understanding was signed between Iran and the U.S. Since the end of FY25/26, oil prices have rebounded, although the geopolitics continue to generate a lot of headline related volatility and an unclear outlook for how the Strait of Hormuz might be reopened. Separately, the demand for power required to support AI Data Center development continues, although we are cautious on the increasingly negative public sentiment related to Data Center newbuilds, especially given the high valuations for companies leveraged to this thematic. Energy transition continues, particularly in select geographies like Europe and in segments like Energy Storage Systems, although we have yet to see a sustained recovery in share prices for companies in the renewable energy space due to a higher interest rate outlook, and logistical bottlenecks like permitting and interconnection delays.
(C)
Large-Cap Resources Portfolio
This portfolio is strategically focused on high-quality, large-capitalisation investments across the broader resources sector. For the twelve months ended 30 June 2026, the portfolio delivered an outstanding return of 62.6%, reflecting both disciplined portfolio positioning and the strong momentum and supportive conditions that characterized resource market during the year.
During FY25/26, the portfolio generated a net fair value gain of HK$587,801,000, and as at 30 June 2026 the carrying value of the invested portion of the portfolio was HK$964,240,000, which makes up 14.6% of the Group’s total assets, but excludes uninvested cash holdings, which are part of the Group’s available investment liquidity (bank balances and cash, and short-term bank deposits) of HK$1,354,588,000 as at 30 June 2026.
Performance was driven principally by meaningful exposure to precious metals, underpinned by our firmly positive long-term outlook for gold and silver. The portfolio benefited significantly from holdings in high-quality gold and silver developers, with Hycroft Mining (NYSE: HYMC) and NovaGold Resources (NYSE: NG) the leading contributors to returns. Established precious metals producers, including Coeur Mining (NYSE: CDE), IAMGOLD (NYSE: IAG) and Newmont (NYSE: NEM), also made important contributions to the portfolio’s strong overall performance.
Looking ahead, we will continue to position the portfolio towards sectors demonstrating cyclical strength while maintaining a selective and disciplined investment approach. Our focus remains on high-quality companies with compelling fundamentals and attractive risk-reward characteristics. We believe this approach leaves the portfolio well positioned to capture further opportunities across the resources and precious metals markets while maintaining prudent risk management.
(D)
Other Investments
In addition to these three portfolios, the remaining other investments (which is inclusive of the significant investment in Shougang Fushan) generated a net fair value gain of HK$4,030,000 in FY25/26, and as at 30 June 2026 the carrying value of the invested portion of the portfolio was HK$706,032,000, which makes up 10.7% of the Group’s total assets. Please refer to the section headed “Financial Assets at Fair Value Through Profit or Loss – Significant Investment” for further details of the performance of Shougang Fushan.
Investment Details and Performance by Commodity Exposure
(A)
Precious Metals
The Precious Metals segment (majority gold exposure) generated a net fair value gain of HK$962,693,000 (FY24/25: HK$510,007,000) in FY25/26. As at 30 June 2026, the carrying value of the Precious Metals segment was HK$1,384,924,000 (As at 30 June 2025: HK$1,045,084,000). Our largest gold investment in the Resource Investment segment is in Northern Star (ASX: NST) which generated a fair value gain of HK$7,626,000 with a carrying value as at 30 June 2026 of HK$103,061,000. We also own Westgold Resources (ASX: WGX) which generated a fair value gain of HK$31,782,000 with a carrying value as at 30 June 2026 of HK$75,963,000. Northern Star is the largest gold company in Australia and owns high-grade underground mines in Western Australia and Alaska. In FY25/26, its production was 1,552,000 ounces of gold, and it generated a net mine cash flow of A$443 million.
The gold price had a strong year in FY25/26 and went from circa US$3,300 per ounce to as high as circa US$4,600 per ounce in January 2026 before closing the year at circa US$4,000 per ounce. There is speculation that the strong gold price has been driven by central bank purchases, safe haven demand amid worries on geopolitical tensions. Yet at the back-end of FY25/26, the Middle East conflict driven inflation and a cautious U.S. Fed have led to market uncertainty on U.S. interest rate policy directions, which has cooled down the gold rally.
Beyond gold, the Group expanded its precious metals portfolio into Platinum Group Metals by acquiring 240,000 shares in Valterra Platinum (LSE: VALT), as disclosed in the announcement of the Company dated 18 July 2025. Valterra Platinum is a leading global platinum producer with operations across South Africa.
(B)
Bulk Commodities
The Bulk Commodities segment generated a net fair value loss of HK$60,276,000 (FY24/25: HK$96,039,000) in FY25/26. As at 30 June 2026, the carrying value was HK$414,938,000 (As at 30 June 2025: HK$492,600,000). Our largest investment in this segment during FY25/26 is in Shougang Fushan (HKEX: 639), which generated a fair value loss of HK$97,444,000 and had a carrying value as at 30 June 2026 of HK$301,398,000.
(C)
Base Metals
The Base Metals segment (a mix of copper, nickel, zinc, aluminum, tin and cobalt companies) delivered a net fair value gain of HK$121,140,000 (FY24/25: Loss of HK$2,286,000) and a carrying value of HK$353,673,000 in FY25/26 (As at 30 June 2025: HK$112,239,000). During the year, base metals prices were strong, with copper prices up 33%, nickel prices up 7%, and zinc prices up 30%. The Base Metals segment includes our investment in Lundin Mining Corp (TSE: LUN) which generated a fair value gain of HK$38,629,000 and had a carrying value as at 30 June 2026 of HK$28,567,000.
(D)
Energy
The Energy segment (mix of oil and gas, uranium, renewables and power) had a net fair value gain of HK$81,428,000 (FY24/25: Loss of HK$26,350,000) and a carrying value of HK$224,744,000 in FY25/26 (As at 30 June 2025: HK$163,539,000). Our significant energy investments include Kazatomprom (LSE: KAP), which generated a fair value gain of HK$16,056,000 and had a carrying value as at 30 June 2026 of HK$55,717,000.
(E)
Others
We also have a net fair value gain of HK$299,716,000 (FY24/25: Loss of HK$47,054,000) from the remaining commodity (rare earths, lithium and mineral sands among others) and non-commodity investments in FY25/26 and had a carrying value as at 30 June 2026 of HK$331,033,000 (As at 30 June 2025: HK$113,034,000).
Risk Management and Control Measures
The Company establishes and enforces rigorous risk management mechanisms over all investment activities under the Resource Investment segment. The investment portfolios are strictly managed with daily and weekly reviews of risks and investment thesis.
The Company’s risk control mechanism operates across several pillars of risk limits and specific metrics:
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Portfolio Diversification: Portfolio concentration is managed by capping exposure to any single company or single commodity, as a relative percentage of the overall investment portfolios.
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Limitation of Leverage: To prevent extreme volatility of the portfolios and avoid taking unnecessary debt exposure, the investment portfolios are strictly operated by existing cash balance and/or with borrowings on fully collateralized basis. The portfolios also operate at a long-only basis with no short selling of stocks.
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Liquidity and Market Capitalisation Threshold: Our portfolios have strict parameters on liquidity and market capitalisation and to ensure the transactions could be made smoothly without making a significant impact on the underlying stock prices.
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Limitation on operational and jurisdiction risks: Operational risks associated with development stage (exploration through to production) and jurisdiction (potential policy changes or local conflicts) of the Company’s investments are actively monitored and managed.
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Counterparty risk: Securities are dealt in and held through licensed corporations and authorised institutions only. Counterparties are assessed by reference to their regulatory status and licence conditions, financial standing, credit rating where available and the arrangements for the segregation of client assets.
Approval and Oversight Mechanism
The Company establishes and maintains a clear hierarchy of governance and oversight for all investment activities under the Resource Investment segment. Under the Board’s oversight, investment activities are undertaken and executed by the inhouse portfolio managers.
To maintain strict financial control, the Board has established defined delegated authority thresholds:
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Executive Delegation: Single trade execution limits are capped at a specific limit for the Chief Executive Officer and senior portfolio managers.
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Board Approval & Escalation: Any single investment transaction exceeding the specific limit, or any percentage ratio (as defined in Chapter 14 of the Rules Governing the Listing of Securities on the Stock Exchange (the “Listing Rules”)) for any investment transaction is 5% or more, or any transaction that deviates from the quantitative parameters set out in the Company’s securities investment policy, requires prior review and formal approval by the Board.
Portfolio performance, risk exposures, cash balances, and net asset value are monitored and reviewed on a daily on-going basis, with investment performance and major portfolio decisions reported periodically to the Board.
Commodity Business
We have an iron ore offtake at Koolan Island, where mining operations are scheduled to end in 2026, and we continue to look for new offtake opportunities across a range of commodities. For FY25/26, our Commodity Business generated a revenue of HK$743,763,000 (FY24/25: HK$340,757,000) and a segment profit of HK$66,331,000 (FY24/25: Loss of HK$8,046,000).
Principal Investment and Financial Services
The Principal Investment and Financial Services segment covers the income generated from loan receivables and for FY25/26, no financial assets are held under this segment. For FY25/26, this segment recognised a revenue of HK$937,000 (FY24/25: HK$12,374,000) and a segment loss of HK$1,201,000 (FY24/25: Profit of HK$7,172,000). Please refer to the section headed “Money Lending” for further details in this segment, including (i) business model, strategy and customer portfolio; (ii) risk management and internal control measures; and (iii) loan approval, monitoring and review procedures.
Money Lending
Business Model and Customer Profile The Group provides both secured and unsecured term loans to its customers under its Principal Investment and Financial Services segment. Money lending activities diversifies the income stream and business risks of the Group, and generates a stable return with the Group’s available financial resources on hand from time to time. The Group mainly financed its money lending business by its internal resources.
The Group does not set a specific target for the industry, business or level of annual revenue to corporate borrowers. The customers of the Group’s lending business were referred to the Group through its corporate or business networks. For FY25/26, customer of the Group’s lending business included a Hong Kong listed company for an unsecured loan.
Outstanding loan receivables net of loss allowances as at 30 June 2026 amounted to Nil (As at 30 June 2025: HK$83,578,000). During the year, the Group has provided for net impairment losses on its loan receivables of approximately HK$1,683,000 (FY24/25: HK$4,267,000). Details of each of the loans outstanding as at 30 June 2026 are disclosed in note 19 to the consolidated financial statements.
Risk Management Policies
The Group adopts a thorough credit assessment and approval process, and will assess and approve each loan transaction on a case-by-case basis. The accounts department of the Group (the “Accounts Department”) is responsible for conducting a background check on the prospective borrower in compliance with the applicable laws and regulations, reviewing the background and financial strength of such borrower and where applicable, the guarantor, and enquiring the prospective borrower about the purpose of the loan and the expected source of funds for loan repayment. To support its analysis, the Group will obtain corporate documents, financial statements and search reports of the borrower and/or the guarantor, and thereafter, assess the credit risk of the loan and negotiate the terms thereof after considering (i) the background and financial position of the borrower or the guarantor (if applicable), including net asset value and gearing ratio; and (ii) the value of the securities, if any.
Each loan transaction will be approved by either the Board (based on materiality or any percentage ratio (as defined in Chapter 14 of the Listing Rules) for any loan transaction is 5% or more), or if the loan principal does not exceed the threshold set by the Board, by the executive committee of the Board.
The Accounts Department monitors the loan and interest repayment regularly and reviews the annual financial statements of the borrowers and guarantors (if applicable). It would promptly report to the chief executive or chief financial officer of the Group for any delay or default in repayment upon maturity, who would then formulate plans for loan collection, including but not limited to requesting for additional securities or initiating legal actions.
Loan Impairment Policies
The Company adopts expected credit loss allowances (“ECLs”) according to the requirements of Hong Kong Financial Reporting Standard 9 issued by the Hong Kong Institute of Certified Public Accountants. Accordingly, it shall review the recoverable amount of each loan at the end of each reporting period to ensure that adequate impairment losses are made. The Group applies a general approach on loan receivables to assess for the ECLs.
Assessment is done based on the Group’s historical credit loss experience, adjusted for factors that are specific to the borrower. In order to measure the ECLs of loan receivables, the Group will apply a credit rating for each of its borrowers by reference to each borrower’s past default records, current past due exposure, an analysis of its current financial position, likelihood or risk of a default, an assessment on any significant increase in credit risk, and fair value of collaterals (if any), and adjust for forward looking information that is available without undue cost or effort, such as the current and forecasted global economy and the general economic conditions of the industry in which the borrower operates.
The Group regularly monitors the effectiveness of the criteria used to identify whether there has been a significant increase in credit risk and revises them as appropriate to ensure that the criteria are capable of identifying any significant increase in credit risk before the loan amount becomes past due.
Forward Looking Observations
We are cautious on the global economic outlook in coming financial year, which is shaped by several unpredictable factors, including changes in U.S. trade policies, the direction of U.S. Federal Reserve interest rates, concerns regarding the sustainability of AI investment growth, and evolving geopolitical tensions, particularly the prolonged Middle East conflict. The latter remains highly influential to global energy markets and, hence, inflationary trends worldwide. Economic growth across major economies have moderated during the second quarter of FY25/26, with real GDP growth in both China and U.S. slowing by 0.7 and 0.6 percentage points quarter-on-quarter, respectively. This has heightened concerns about the resilience of the global economy in the face of any further economic disruptions.
While we remain bullish on the long term outlook for commodities, including precious metals which continue to benefit from expanding U.S. fiscal deficits and central bank buying, and base metals, which are essential to the rapid expansion of AI infrastructure, electrification, and energy transition, we have increased our cash weightings across our investment portfolios to manage the heightened market risks and volatility. At the same time, we continue to selectively invest in high-quality companies within our preferred commodities sectors that we believe can generate attractive long-term returns.
Our mining and energy investment portfolios are the platform for future mining and energy investments. Our largest investment MGX, has successfully transformed from an iron ore miner to a gold development company through its interest in the CTPJV, one of Australia’s highest quality undeveloped gold projects. The project hosts mineral resources of 2.8 million ounces of gold at an average grade of 2.8 grams per tonne.
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