Incident: Company announcement, 1) Mingal acquired 100% of CQT Gold's shares, 100% of CQT Holdings's shares, and exploration rights numbered EPM 15597 held by Conquest Mining through bidding. The overall transaction consideration was 52 million Australian dollars; 2) The company invested RMB 20 million to participate in the establishment of Hengxin Fund Management Company, accounting for 20% of the registered capital.

Outreach added a new Pajingo project, which may contribute nearly 600 million dollars in annual sales: 1) Mingal acquired the Australian Pajingo project at an overall transaction price of 52 million Australian dollars. The transaction consideration includes a cash payment of 42 million Australian dollars plus mining royalties; 2) After the transaction is completed, Mingal will hold 100% of CQT Gold's shares in Conquest Mining, 100% of CQT Holdings's shares, and indirectly hold 100% of NQM Gold 2 PtyLTD's shares through CQT Holdings; in addition, Mingal will directly own the exploration rights numbered EPM 15597 and by holding CQT Gold & by holding CQT Gold & Holdings shares have 16 mineral rights and the right to apply for mineral rights number EPM26209. 3) The Pajingo project is an active gold mine with rich resource reserves. The successful acquisition will add 574,000 ounces of gold metal, which may contribute nearly 600 million dollars in sales each year, and increase the company's gold metal reserves to 2,574 million ounces.

Termination of fixed increase financing and participation in the establishment of public funds: 1) Changes in the policy environment, termination of the 3.2 billion fixed increase: Due to changes in the financial industry regulatory policy and market environment, taking into account factors such as the current situation and actual situation in the capital market, and protection for the vast majority of small to medium shareholders, the company terminated the 3.2 billion fixed financial increase project. 2) The establishment of a public fund and financial platform added further support: the company and 8 sponsors including Li Yong jointly signed the “Hengxin Fund Management Co., Ltd. Founder Agreement” to jointly initiate the establishment of Hengxin Fund; the corporate financial platform is building a diversified collaborative development platform integrating real estate, mining and finance with a strategic layout of “industry+capital”, and actively participated in emerging venture capital businesses such as Qihoo 360 and registered networks.

Investment proposal: The company's gold mining business officially landed the first order. The company accurately grasped the development opportunities of the gold mining business, which will bring the company additional resource reserves and help the company expand and develop in the mining business. In addition to the company's commitment of 170 million profits from the mining business in 2016, we expect that the smooth progress of the Pajingo project will bring the company nearly 600 million dollars in annual sales, which in turn brings considerable profit growth potential; in the financial sector, although the 3.2 billion fixed increase came to an end due to changes in the policy environment, the company took over and participated in the establishment of Hengxin Fund and financial business development. Keep moving forward. We use gold ore reserves per ton to correspond to a market capitalization space of 16—200 million dollars. The company's previous 2 million ounces corresponded to 56.7 tons, and the original gold mine portion corresponds to a market value of 11 billion dollars. With this acquisition, the gold mine increased by 574,000 ounces, corresponding to 16.3 tons, and the corresponding increase in market value by 3 billion dollars. Furthermore, the RNAV valuation of the company's real estate business is about 4.5 billion yuan, and the financial venture capital business portion is valued at 1 billion dollars. We expect the company's reasonable valuation to be 19.5 billion (of course this valuation does not take into account the company's future expansion of gold mines and the value-added portion of land in first-tier cities) corresponding to a reasonable price of around 2,203 yuan, maintaining the “buy-A” rating.

Risk warning: performance falls short of expectations, gold prices fall