1. Incidents: In the first half of 2016, the company released its 2016 semi-annual report. The company achieved operating income of 3,575 billion yuan in the first half of 2016, an increase of 37.27% over the previous year; realized net profit attributable to shareholders of the parent company of 80 million yuan, an increase of 10.88% over the previous year; realized net profit attributable to shareholders of the parent company after deduction of 98 million yuan, an increase of 233.86% over the previous year; and achieved earnings per share of 0.16 yuan, an increase of 14.29% over the previous year. 2. Our analysis and judgment (1) Large-scale production and sales volume drives the company's continuous growth. During the reporting period, the company's output continued to grow. In the first half of 2016, it produced 506.71 tons of electric silver, an increase of 46.62% over the previous year; produced 54,800 tons of lead, an increase of 11.16% over the previous year; and the comprehensive recycling of 797 kilograms of gold, an increase of 53.84% over the previous year. The sharp release in production, combined with the increasing price trend of silver, gold, and lead, benefiting from the increase in safe-haven demand, prompted the company's sales revenue for silver, lead electricity, and gold to increase by 89.43%, 16.92%, and 62.39% year-on-year respectively. As a result, the company's main non-ferrous metal smelting business revenue in the first half of the year increased by 60.62% year-on-year to 3.5 billion yuan. It is the continuous increase in the company's production volume that has become the core driving force for the company's continuous growth. As a result, the company's performance in the first half of 2016 increased by 10.88% year-on-year (2). During the reporting period, the company made great progress in implementing the “whole industry chain +” strategy to build a leading global enterprise in the silver industry. On the upstream side, the company acquired Tibetan gold and mining industry, extended the industrial chain to the exploration, mining and beneficiation business of upstream lead-zinc ore, greatly increased the company's lead-zinc ore resource reserves, locked in the company's raw material resources for silver smelting and processing, and transformed and upgraded to a non-ferrous metal resources+processing enterprise, enhancing the company's overall competitiveness. On the midstream side, the company continues to expand its silver production capacity. The IPO fundraising project “Silver Technology Upgrading and Technical Improvement Project” has been completed and put into operation, the first phase of the “50,000 tons/year lead/year lead, ice, and copper slag resource comprehensive utilization” project has been completed and put into operation. The construction of the wet process system for the phase II project is now nearing completion, and equipment has begun to enter the market, and is expected to be put into operation within the year. In addition, the company has also initiated fixed increase projects to build “2000 tons/year clean extraction and expansion of high purity silver”, “30,000 tons/year secondary antimony resource comprehensive utilization”, and “national enterprise technology center”. Once the project reaches the production company's silver production capacity, the company's silver production capacity will increase dramatically, and the company's core competitiveness of silver will take a qualitative leap forward. On the downstream side, the company's silver deep processing production line for silver handicrafts and silver daily consumer goods completed equipment installation and commissioning during the reporting period; the subsidiary “Find Gold and Silver Network” was launched, and the “Internet +” sales service model was launched. The company's entire silver industry chain goes hand in hand, and the timely introduction of employee stock ownership plans will also bind the interests of company owners and managers, accelerate the implementation of the company's “full industry chain +” strategy, and promote the transformation and upgrading of the company from a simple silver smelting and processing manufacturer to a comprehensive silver service provider covering the entire industry chain. 3. Investment recommendations benefit from the decline in global risk appetite and the increase in safe-haven demand. The medium term of precious metals is bullish, while the rising beta of silver will be greater than that of gold. Since the beginning of 2016, the price of comex silver has risen 42.56%. The upper, middle and lower reaches of the company go hand in hand to create a “whole industry chain +” strategy with silver as the core, and transform and upgrade to the world's leading integrated silver service provider. As a rare precious metals growth stock, the company will fully enjoy the rise in silver prices and the increase in production, making it the first flexible precious metals stock. The company's 2016-2017 EPS is expected to be 0.63 and 0.91 yuan, and the corresponding PE for 2016 and 2017 is 43x and 29x, maintaining the “recommended” rating. 4. Risk warning 1) Prices of non-ferrous metals such as silver have fallen sharply; 2) the release of production capacity in the company's fund-raising projects falls short of expectations; 3) the progress of the company's fixed increase project falls short of expectations.