SEC Info - China Natural Resources Inc.

2021

2022

CNY

US$

Notes

Revenue

i 42,498

i 18,735

i 20,306

i 2,944

Cost of sales

( i 39,215

)

( i 18,494

)

( i 14,485

)

( i 2,100

)

Gross profit

i 3,283

i 241

i 5,821

i 844

Selling and distribution expenses

( i 758

)

( i 922

)

( i 700

)

( i 103

)

Administrative expenses

( i 18,853

)

( i 22,869

)

( i 36,749

)

( i 5,328

)

Other income/(losses)

i 1,616

( i 183

)

i 904

i 131

Fair value gain/(loss) on financial instruments, net

i 31,334

( i 38,349

)

i 1,007

i 146

Impairment (losses)/reversal on financial assets

( i 4,162

)

( i 3,330

)

i 1,073

i 156

Finance costs

( i 3,749

)

( i 4,359

)

( i 3,395

)

( i 492

)

Finance income

i 15,468

i 16,935

i 15,607

i 2,263

PROFIT/(LOSS) BEFORE INCOME TAX

i 24,179

( i 52,836

)

( i 16,432

)

( i 2,383

)

Income tax expense

( i 1,258

)

( i 2,135

)

( i 5,864

)

( i 850

)

PROFIT/(LOSS) FOR THE YEAR

i 22,921

( i 54,971

)

( i 22,296

)

( i 3,233

)

ATTRIBUTABLE TO:

Owners of the Company

i 24,336

( i 48,152

)

( i 24,623

)

( i 3,570

)

Non-controlling interests

( i 1,415

)

( i 6,819

)

i 2,327

i 337

(LOSS)/PROFIT for the year

i 22,921

( i 54,971

)

( i 22,296

)

( i 3,233

)

EARNINGS/(LOSS) PER SHARE ATTRIBUTABLE TO OWNERS
OF THE COMPANY:

Basic and diluted

- Earnings/(loss) per share

i 3.89

( i 5.91

)

( i 3.00

)

( i 0.44

)

F-4

CHINA NATURAL RESOURCES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands)

Year Ended December 31,

2021

2022

CNY

US$

PROFIT/(LOSS) FOR THE YEAR

i 22,921

( i 54,971

)

( i 22,296

)

( i 3,233

)

Other comprehensive income/(loss) that will be reclassified to profit or loss in subsequent periods:

Foreign currency translation adjustments of the subsidiaries

i 6,172

i 3,252

( i 8,094

)

( i 1,172

)

Other comprehensive (loss)/income that will not be reclassified to profit or loss in subsequent periods:

Foreign currency translation adjustments of the Company

( i 5,469

)

( i 10,909

)

i 9,593

i 1,391

Total other comprehensive income/(loss) for the year, net of tax

i 703

( i 7,657

)

i 1,499

i 219

TOTAL COMPREHENSIVE (LOSS)/ INCOME FOR THE YEAR

i 23,624

( i 62,628

)

( i 20,797

)

( i 3,014

)

Attributable to:

Owners of the Company

i 25,039

( i 55,809

)

( i 23,124

)

( i 3,351

)

Non-controlling interests

( i 1,415

)

( i 6,819

)

i 2,327

i 337

TOTAL COMPREHENSIVE (LOSS)/ INCOME FOR THE YEAR

i 23,624

( i 62,628

)

( i 20,797

)

( i 3,014

)

F-5

CHINA NATURAL RESOURCES, INC.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

AS OF DECEMBER 31, 2021 AND 2022

(Amounts in thousands)

2022

CNY

US$

Notes

ASSETS

NON-CURRENT ASSETS

Property, plant and equipment

i 715

i 424

i 61

Intangible assets

i 20,189

i 19,381

i 2,810

Right-of-use assets

i 2,351

i 2,993

i 434

Trade receivables

i 9,501

i 10,520

i 1,525

Contract assets

i 91,035

i 89,713

i 13,006

Deferred tax assets

i 66

—

Other non-current assets

i 10

i 4

i 1

TOTAL NON-CURRENT ASSETS

i 123,867

i 123,035

i 17,837

CURRENT ASSETS

Inventories

i 986

i 729

i 106

Trade receivables

i 41,526

i 46,760

i 6,779

Bills receivable

—

i 8,500

i 1,232

Contract assets

i 15,331

i 21,647

i 3,138

Prepayments

i 2,236

i 1,732

i 251

Other receivables

i 86,201

i 82,733

i 11,993

Other current assets

i 4,942

i 3,160

i 457

Cash and cash equivalents

i 58,359

i 31,695

i 4,595

TOTAL CURRENT ASSETS

i 209,581

i 196,956

i 28,551

TOTAL ASSETS

i 333,448

i 319,991

i 46,388

F-6

CHINA NATURAL RESOURCES, INC.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (CONTINUED)

AS OF DECEMBER 31, 2021 AND 2022

(Amounts in thousands)

2022

CNY

US$

Notes

LIABILITIES AND EQUITY

CURRENT LIABILITIES

Trade payables

i 21,118

i 20,326

i 2,946

Contract liabilities

i 690

i 100

Other payables and accruals

i 12,098

i 16,724

i 2,425

Income tax payable

i 9,254

i 10,732

i 1,556

Provisions

—

i 494

i 72

Dividends payable

i 5,048

—

Interest-bearing loans and borrowings

i 3,000

i 435

Derivative financial liabilities

i 1,710

i 824

i 119

Lease liabilities

i 981

i 1,317

i 190

Due to related companies

i 5,710

i 3,408

i 494

Due to the Shareholder

i 14,050

i 7,153

i 1,037

TOTAL CURRENT LIABILITIES

i 73,659

i 64,668

i 9,374

NON-CURRENT LIABILITIES

Deferred tax liabilities

i 2,544

i 5,276

i 765

Lease liabilities

i 1,208

i 1,598

i 232

Interest-bearing loans and borrowings

i 74,000

i 71,000

i 10,293

TOTAL NON-CURRENT LIABILITIES

i 77,752

i 77,874

i 11,290

TOTAL LIABILITIES

i 151,411

i 142,542

i 20,664

EQUITY

Issued capital

i 450,782

i 65,351

Other capital reserves

i 719,110

i 735,319

i 106,600

Accumulated losses

( i 1,084,387

)

( i 1,109,010

)

( i 160,775

)

Other comprehensive losses

( i 10,821

)

( i 9,322

)

( i 1,352

)

EQUITY ATTRIBUTABLE TO OWNERS
OF THE COMPANY

i 74,684

i 67,769

i 9,824

NON-CONTROLLING INTERESTS

i 107,353

i 109,680

i 15,900

TOTAL EQUITY

i 182,037

i 177,449

i 25,724

TOTAL LIABILITIES AND EQUITY

i 333,448

i 319,991

i 46,388

F-7

CHINA NATURAL RESOURCES, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands)

Attributable to Owners of the Company

Issued
capital

Other capital
reserves

Accumulated

losses

Other

comprehensive (loss)/income

Total

Non-controlling interests

Total equity

CNY

Balance as of January 1, 2020

i 340,875

i 763,729

( i 1,055,523

)

( i 3,867

)

i 45,214

i 120,487

i 165,701

Income/(loss) for the year

—

i 24,336

—

i 24,336

( i 1,415

)

i 22,921

Foreign currency translation adjustments

—

i 703

—

i 703

Total comprehensive income/(loss)

—

i 24,336

i 703

i 25,039

( i 1,415

)

i 23,624

Issuance of shares

i 78,216

i 24,258

—

i 102,474

—

i 102,474

Balance as of December 31, 2020

i 419,091

i 787,987

( i 1,031,187

)

( i 3,164

)

i 172,727

i 119,072

i 291,799

Balance as of January 1, 2021

i 419,091

i 787,987

( i 1,031,187

)

( i 3,164

)

i 172,727

i 119,072

i 291,799

Income/(loss) for the year

—

( i 48,152

)

—

( i 48,152

)

( i 6,819

)

( i 54,971

)

Foreign currency translation adjustments

—

( i 7,657

)

( i 7,657

)

—

( i 7,657

)

Total comprehensive loss

—

( i 48,152

)

( i 7,657

)

( i 55,809

)

( i 6,819

)

( i 62,628

)

Deemed distribution to the controlling shareholder

—

( i 75,651

)

—

( i 75,651

)

—

( i 75,651

)

Dividends declared

—

( i 5,048

)

—

( i 5,048

)

—

( i 5,048

)

Dividends paid to non-controlling shareholders

—

( i 4,900

)

( i 4,900

)

Issuance of shares

i 31,691

—

i 31,691

—

i 31,691

Equity-settled share-based payments

—

i 2,311

—

i 2,311

—

i 2,311

Others

—

i 4,463

—

i 4,463

—

i 4,463

Balance as of December 31, 2021

i 450,782

i 719,110

( i 1,084,387

)

( i 10,821

)

i 74,684

i 107,353

i 182,037

Balance as of January 1, 2022

i 450,782

i 719,110

( i 1,084,387

)

( i 10,821

)

i 74,684

i 107,353

i 182,037

Income/(loss) for the year

—

( i 24,623

)

—

( i 24,623

)

i 2,327

( i 22,296

)

Foreign currency translation adjustments

—

i 1,499

—

i 1,499

Total comprehensive (loss)/income

—

( i 24,623

)

i 1,499

( i 23,124

)

i 2,327

( i 20,797

)

Equity-settled share-based payments (Note 27)

—

i 16,209

—

i 16,209

—

i 16,209

Balance as of December 31, 2022

i 450,782

i 735,319

( i 1,109,010

)

( i 9,322

)

i 67,769

i 109,680

i 177,449

Balance as of December 31, 2022 (US$)

i 65,351

i 106,600

( i 160,775

)

( i 1,352

)

i 9,824

i 15,900

i 25,724

F-8

CHINA NATURAL RESOURCES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands)

Year Ended December 31,

2021

2022

CNY

US$

Notes

OPERATING ACTIVITIES

Profit/(loss) before income tax for the year

i 24,179

( i 52,836

)

( i 16,432

)

( i 2,383

)

Adjustments for:

Interest expenses

i 3,457

i 4,128

i 4,015

i 582

Interest income

( i 7,330

)

( i 7,358

)

( i 6,883

)

( i 998

)

Gain on disposal of property, plant and equipment

—

( i 5

)

( i 1

)

Consultants share option expenses

—

i 16,152

i 2,342

Expenses related to issuance of shares

—

i 1,579

—

Fair value (gain)/loss on financial instruments, net

( i 31,334

)

i 38,349

( i 1,007

)

( i 146

)

Depreciation of property, plant and equipment

i 565

i 510

i 304

i 44

Depreciation of right-of-use assets

i 1,663

i 1,366

i 1,413

i 205

Amortization of intangible assets

i 156

i 884

i 813

i 118

Impairment losses/(reversal) on trade receivables

i 4,544

i 3,840

( i 3,989

)

( i 578

)

Impairment losses on contract assets

i 172

i 357

i 171

i 25

Impairment losses on other receivables

—

i 239

i 2,745

i 397

Impairment reversal on amounts due from related companies

( i 554

)

( i 1,106

)

—

Changes in working capital

Inventories

( i 201

)

( i 148

)

i 257

i 37

Trade and bills receivables

i 26,263

i 6,580

( i 10,764

)

( i 1,560

)

Contract assets

( i 18,595

)

( i 780

)

( i 5,165

)

( i 749

)

Prepayments

i 406

( i 1,852

)

i 504

i 73

Other receivables

i 41

( i 930

)

i 321

i 47

Other current assets

( i 504

)

i 1,805

i 1,829

i 265

Trade payables

( i 38,471

)

( i 7,507

)

( i 792

)

( i 115

)

Other payables and accruals

( i 10,961

)

i 813

i 3,280

i 476

Provisions

—

i 494

i 72

Cash used in operations

( i 46,504

)

( i 12,067

)

( i 12,739

)

( i 1,847

)

Income tax paid

( i 22

)

( i 1

)

( i 47

)

( i 7

)

Net cash flows used in operating activities

( i 46,526

)

( i 12,068

)

( i 12,786

)

( i 1,854

)

INVESTING ACTIVITIES

Interest received

i 7,667

i 3,760

i 7,291

i 1,057

Additions of service concession right

( i 7,575

)

( i 68

)

—

Purchase of property, plant and equipment

( i 266

)

( i 28

)

( i 17

)

( i 2

)

Purchase of intangible assets

—

( i 5

)

( i 1

)

Prepayment for right-of-use assets

—

( i 55

)

( i 228

)

( i 33

)

Purchase of structured deposit products

( i 45,000

)

( i 60,000

)

—

Disposal of property, plant and equipment

i 6

i 9

i 1

Disposal of a subsidiary

—

( i 263

)

—

Loan to an unrelated company

—

( i 80,000

)

—

Repayment from loans due from related companies

—

i 125,000

—

Proceeds from maturity of structured deposit products

i 40,000

i 65,000

—

Net cash flows (used in)/from investing activities

( i 5,168

)

i 53,352

i 7,050

i 1,022

F-9

CHINA NATURAL RESOURCES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands)


			Year Ended December 31,
			2020			2021			2022			2022
			CNY			CNY			CNY			US$
	Notes


FINANCING ACTIVITIES
Proceeds from issuance of shares				—			i 41,996			—			—
Proceeds from bank loans				i 50,000			—			—			—
Repayments of bank loans				—			( i 3,000	)		( i 3,000	)		( i 435	)
Advances from related companies				i 4,082			i 360			—			—
Advances from the Shareholder				i 462			—			—			—
Repayment to related companies				—			( i 50,148	)		( i 2,765	)		( i 401	)
Repayments to the Shareholder				—			( i 7,149	)		( i 6,885	)		( i 998	)
Payment of principal portion of lease liabilities				( i 1,769	)		( i 1,463	)		( i 1,120	)		( i 162	)
Payment of interest expenses on lease liabilities				( i 80	)		( i 150	)		( i 133	)		( i 19	)
Deemed distribution to the controlling shareholder				—			( i 10,297	)		—			—
Payments related to issuance of shares				( i 72			—			—			—
Dividends paid to non-controlling shareholders				—			( i 4,900	)		—			—
Dividends paid to former non-controlling shareholders				—			—			( i 5,048	)		( i 732	)
Interest paid				( i 4,028	)		( i 4,035	)		( i 3,882	)		( i 563	)

Net cash flows from/(used in) financing activities				i 48,595			( i 38,786	)		( i 22,833	)		( i 3,310	)

NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS				( i 3,099	)		i 2,498			( i 28,569	)		( i 4,142	)

NET FOREIGN EXCHANGE DIFFERENCE				i 281			( i 719	)		i 1,905			i 277

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR				i 59,398			i 56,580			i 58,359			i 8,460

CASH AND CASH EQUIVALENTS AT END OF YEAR		17		i 56,580			i 58,359			i 31,695			i 4,595

F-10

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

ORGANIZATION AND PRINCIPAL ACTIVITIES

China Natural Resources, Inc. (“CHNR” or the “Company”) is a British Virgin Islands (“BVI”) holding company incorporated in 1993. The address of the principal executive office is Room 2205, 22/F, West Tower, Shun Tak Centre, 168-200 Connaught Road Central, Sheung Wan, Hong Kong. The Company’s principal activity is investment holding. The Company’s subsidiaries (collectively with CHNR, the “Group”) are primarily involved in the exploration and mining and wastewater treatment businesses in the People’s Republic of China (“PRC”).

CHNR’s principal shareholder is Feishang Group Limited (“Feishang Group” or the “Shareholder”), a BVI corporation. Mr. Li Feilie is the controlling shareholder of Feishang Group. In the opinion of the directors of the Company (the “Directors”), the ultimate parent of CHNR is Laitan Investment Limited, a BVI corporation.

As of the date of this report, the Company had direct and indirect interests in the following subsidiaries, the particulars of which are set out below:

Schedule of direct and indirect interests in subsidiaries

Place of
incorporation/

registration and
operations

Nominal value
of issued
common/
registered
share capital

Percentage

of equity
attributable to
the Company

Principal

activities

Name

Direct

Indirect

i China Coal Mining Investment Limited (“China Coal”)

i Hong Kong

i 100

—

i Investment holding

i FMH Corporate Services Inc.

i United States

i 100

—

i Dormant

i Feishang Dayun Coal Mining Limited

i Hong Kong

—

i 100

i Investment holding

i Feishang Mining Holdings Limited

i BVI

i 100

—

i Investment holding

i Feishang Yongfu Mining Limited

i Hong Kong

—

i 100

i Investment holding

i Newhold Investments Limited

i BVI

i 100

—

i Investment holding

i Pineboom Investments Limited

i BVI

i 100

—

i Investment holding

i Shenzhen Feishang Management and Consulting Co., Limited (“Feishang Management”)

i PRC/Mainland China

CNY i 10,000

—

i 100

i Provision of management and consulting services to other companies in the Group

i Silver Moon Technologies Limited

i BVI

i 80

—

i Dormant

i Sunwide Capital Limited

i BVI

i 100

—

i Dormant

i Yangpu Shuanghu Industrial Development Co., Limited

i PRC/Mainland China

CNY i 1,000

—

i 100

i Investment holding

i Yunnan Feishang Mining Co., Limited

i PRC/Mainland China

CNY i 50,000

—

i 100

i Investment holding

i Bayannaoer City Feishang Mining Company Limited

i PRC/Mainland China

CNY i 59,480

—

i 100

i Exploration and development of lead mines

i Precise Space-Time Technology Limited (“PST Technology”)

i Hong Kong

i HK$10

i 100

i Investment holding

i Shenzhen New Precise Space-Time Technology Co., Limited (“Shenzhen New PST”)

i PRC/Mainland China

i US$800

—

i 100

i Investment holding

i Shenzhen Qianhai Feishang Environmental Investment Co., Limited (“Shenzhen Qianhai”)

i PRC/Mainland China

CNY i 100,000

—

i 100

i Investment holding

i Shanghai Onway Environmental Development Co., Limited (“Shanghai Onway”)

i PRC/Mainland China

CNY i 20,408

—

i 51

i Provision of construction services, maintenance services and sales of equipment related to wastewater treatment

i Zhejiang Xinyu Environmental Technology Co., Limited

i PRC/Mainland China

CNY i 20,000

—

i 51

i Provision of construction service, maintenance service and sale of equipment related to wastewater treatment

i Shaoguan Angrui Environmental Technology Development Co., Limited (“Shaoguan Angrui”)

i PRC/Mainland China

CNY i 26,682

—

i 28

i Wastewater and refuse treatment under the service concession agreement

* Insignificant

** Shaoguan Angrui is a subsidiary of a non-wholly-owned subsidiary of the Company but is accounted for as a subsidiary by virtue of the Company's control over it.

The consolidated financial statements of the Group for the year ended December 31, 2022 were authorized for issuance in accordance with a resolution of the Directors executed on May 15, 2023.

F-11

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

/ i

2.1

BASIS OF PREPARATION

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRSs”) as issued by the International Accounting Standards Board (“IASB”).

The consolidated financial statements have been prepared on a historical cost basis, except for structured deposit, derivative financial liabilities and equity financial assets that have been measured at fair value. The consolidated financial statements are presented in Chinese Yuan (“CNY”) and all values are rounded to the nearest thousand, except when otherwise indicated. US$ indicates U.S. dollars.

The Group has prepared the financial statements on the basis that it will continue to operate as a going concern.

2.2

BASIS OF CONSOLIDATION

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries for the year ended December 31, 2022.

A subsidiary is an entity (including a structured entity), that is, directly or indirectly, controlled by the Company. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee (i.e., existing rights that give the Group the current ability to direct the relevant activities of the investee).

Generally, there is a presumption that a majority of voting rights results in control. When the Company has, directly or indirectly, less than a majority of the voting or similar right of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

(a)

the contractual arrangement with the other vote holders of the investee;

(b)

rights arising from other contractual arrangements; and

(c)

the Group’s voting rights and potential voting rights.

The financial statements of the subsidiaries are prepared for the same reporting period as the Company, using consistent accounting policies. The results of subsidiaries are consolidated from the date on which the Group obtains control and continue to be consolidated until the date that such control ceases.

Profit or loss and each component of other comprehensive income are attributed to owners of the Company and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

The Group reassesses whether it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control above. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.

If the Group loses control over a subsidiary, it derecognizes (i) the assets (including goodwill) and liabilities of the subsidiary, (ii) the carrying amount of any non-controlling interest and (iii) the cumulative translation differences recorded in equity; and recognizes (i) the fair value of the consideration received, (ii) the fair value of any investment retained and (iii) any resulting surplus or deficit in profit or loss. The Group’s share of components previously recognized in other comprehensive income is reclassified to profit or loss or retained earnings, as appropriate, on the same basis as would be required if the Group had directly disposed of the related assets or liabilities.

F-12

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

2.3

CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES

The Group has adopted the following revised IFRSs for the first time for the current year’s consolidated financial statements:

Amendments to IFRS 3	Reference to the Conceptual Framework
Amendments to IAS 16	Property, Plant and Equipment: Proceeds before Intended Use
Amendments to IAS 37	Onerous Contracts – Cost of Fulfilling a Contract
Annual Improvements to IFRSs 2018-2020	Amendments to IFRS 1, IFRS 9, Illustrative Examples accompanying IFRS 16, and IAS 41

The nature and the impact of the revised IFRSs that are applicable to the Group are described below:

(a)

Amendments to IFRS 3 replace a reference to the previous Framework for the Preparation and Presentation of Financial Statements with a reference to the Conceptual Framework for Financial Reporting (the “Conceptual Framework”) issued in March 2018 without significantly changing its requirements. The amendments also add to IFRS 3 an exception to its recognition principle for an entity to refer to the Conceptual Framework to determine what constitutes an asset or a liability. The exception specifies that, for liabilities and contingent liabilities that would be within the scope of IAS 37 or International Financial Reporting Interpretations Committee Interpretation (“IFRIC”) 21 if they were incurred separately rather than assumed in a business combination, an entity applying IFRS 3 should refer to IAS 37 or IFRIC 21 respectively instead of the Conceptual Framework. Furthermore, the amendments clarify that contingent assets do not qualify for recognition at the acquisition date. The Group has applied the amendments prospectively to business combinations that occurred on or after January 1, 2022. As there were no business combinations during the year, the amendments did not have any impact on the financial position and performance of the Group.

(b)

Amendments to IAS 16 prohibit an entity from deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, an entity recognizes the proceeds from selling any such items, and the cost of those items as determined by IAS 2 Inventories, in profit or loss. The Group has applied the amendments retrospectively to items of property, plant and equipment made available for use on or after January 1, 2021. Since there was no sale of items produced prior to the property, plant and equipment being available for use, the amendments did not have any impact on the financial position or performance of the Group.

(c)

Amendments to IAS 37 clarify that for the purpose of assessing whether a contract is onerous under IAS 37, the cost of fulfilling the contract comprises the costs that relate directly to the contract. Costs that relate directly to a contract include both the incremental costs of fulfilling that contract (e.g., direct labor and materials) and an allocation of other costs that relate directly to fulfilling that contract (e.g., an allocation of the depreciation charge for an item of property, plant and equipment used in fulfilling the contract as well as contract management and supervision costs). General and administrative costs do not relate directly to a contract and are excluded unless they are explicitly chargeable to the counterparty under the contract. The Group has applied the amendments prospectively to contracts for which it has not yet fulfilled all its obligations at January 1, 2022 and no onerous contracts were identified. Therefore, the amendments did not have any impact on the financial position or performance of the Group.

(d)

Annual Improvements to IFRSs 2018-2020 sets out amendments to IFRS 1, IFRS 9, Illustrative Examples accompanying IFRS 16, and IAS 41. Details of the amendments that are applicable to the Group are as follows:

•

IFRS 9 Financial Instruments clarifies the fees that an entity includes when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the original financial liability. These fees include only those paid or received between the borrower and the lender, including fees paid or received by either the borrower or lender on the other’s behalf. The Group has applied the amendment prospectively from January 1, 2022. As there was no modification or exchange of the Group’s financial liabilities during the year, the amendment did not have any impact on the financial position or performance of the Group.

F-13

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

2.4

ISSUED BUT NOT YET EFFECTIVE INTERNATIONAL FINANCIAL REPORTING STANDARDS

The Group has not applied the following new and revised IFRSs, that have been issued but are not yet effective, in these financial statements:

Amendments to IFRS 10 and IAS 28	Sale or Contribution of Assets between an Investor and Its Associate or Joint Venture³
Amendments to IFRS 16	Lease Liability in a Sale and Leaseback²
IFRS 17	Insurance Contracts¹
Amendments to IFRS 17	Insurance Contracts^1,4
Amendment to IFRS 17	Initial Application of IFRS 17 and IFRS 9 – Comparative Information⁵
Amendments to IAS 1	Classification of Liabilities as Current or Non-current (the “2020 Amendments”)²
Amendments to IAS 1	Non-current Liabilities with Covenants (the “2022 Amendments”) ²
Amendments to IAS 1 and IFRS Practice Statement 2	Disclosure of Accounting Policies¹
Amendments to IAS 8	Definition of Accounting Estimates¹
Amendments to IAS 12	Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction¹

———————

Effective for annual periods beginning on or after January 1, 2023

Effective for annual periods beginning on or after January 1, 2024

No mandatory effective date yet determined but available for adoption

As a consequence of the amendments to IFRS 17 issued in June 2020, IFRS 4 was amended to extend the temporary exemption that permits insurers to apply IAS 39 rather than IFRS 9 for annual periods beginning before January 1, 2023

An entity that chooses to apply the transition option relating to the classification overlay set out in this amendment shall apply it on initial application of IFRS 17

Further information about those IFRSs that are expected to be applicable to the Group is described below.

(a)

Amendments to IFRS 10 and IAS 28 address an inconsistency between the requirements in IFRS 10 and in IAS 28 in dealing with the sale or contribution of assets between an investor and its associate or joint venture. The amendments require a full recognition of a gain or loss resulting from a downstream transaction when the sale or contribution of assets between an investor and its associate or joint venture constitutes a business. For a transaction involving assets that do not constitute a business, a gain or loss resulting from the transaction is recognized in the investor’s profit or loss only to the extent of the unrelated investor’s interest in that associate or joint venture. The amendments are to be applied prospectively. The previous mandatory effective date of amendments to IFRS 10 and IAS 28 was removed by the IASB in December 2015 and a new mandatory effective date will be determined after the completion of a broader review of accounting for associates and joint ventures. However, the amendments are available for adoption now. The amendments are not expected to have any significant impact on the Group’s financial statements.

(b)

Amendments to IFRS 16 specify the requirements that a seller-lessee uses in measuring the lease liability arising in a sale and leaseback transaction to ensure the seller-lessee does not recognize any amount of the gain or loss that relates to the right of use it retains. The amendments are effective for annual periods beginning on or after January 1, 2024 and shall be applied retrospectively to sale and leaseback transactions entered into after the date of initial application of IFRS 16 (i.e., January 1, 2019). Earlier application is permitted. The amendments are not expected to have any significant impact on the Group’s financial statements.

F-14

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

2.4

ISSUED BUT NOT YET EFFECTIVE INTERNATIONAL FINANCIAL REPORTING STANDARDS (CONTINUED)

(c)

Amendments to IAS 1 Classification of Liabilities as Current or Non-current clarify the requirements for classifying liabilities as current or non-current, in particular the determination over whether an entity has a right to defer settlement of the liabilities for at least 12 months after the reporting period. Classification of a liability is unaffected by the likelihood that the entity will exercise its right to defer settlement of the liability. The amendments also clarify the situations that are considered a settlement of a liability. In 2022, the IASB issued the 2022 Amendments to further clarify that, among covenants of a liability arising from a loan arrangement, only those with which an entity must comply on or before the reporting date affect the classification of that liability as current or non-current. In addition, the 2022 Amendments require additional disclosures by an entity that classifies liabilities arising from loan arrangements as non-current when it has a right to defer settlement of those liabilities that are subject to the entity complying with future covenants within 12 months after the reporting period. The amendments are effective for annual periods beginning on or after January 1, 2024 and shall be applied retrospectively. Earlier application is permitted. An entity that applies the 2020 Amendments early is required to apply simultaneously the 2022 Amendments, and vice versa. The Group is currently assessing the impact of the amendments and whether existing loan agreements may require revision. Based on a preliminary assessment, the amendments are not expected to have any significant impact on the Group’s financial statements.

(d)

Amendments to IAS 1 Disclosure of Accounting Policies require entities to disclose their material accounting policy information rather than their significant accounting policies. Accounting policy information is material if, when considered together with other information included in an entity’s financial statements, it can reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements. Amendments to IFRS Practice Statement 2 provide non-mandatory guidance on how to apply the concept of materiality to accounting policy disclosures. Amendments to IAS 1 are effective for annual periods beginning on or after January 1, 2023 and earlier application is permitted. Since the guidance provided in the amendments to IFRS Practice Statement 2 is non-mandatory, an effective date for these amendments is not necessary. The Group is currently revisiting the accounting policy disclosures to ensure consistency with the amendments.

(e)

Amendments to IAS 8 clarify the distinction between changes in accounting estimates and changes in accounting policies. Accounting estimates are defined as monetary amounts in financial statements that are subject to measurement uncertainty. The amendments also clarify how entities use measurement techniques and inputs to develop accounting estimates. The amendments are effective for annual reporting periods beginning on or after January 1, 2023 and apply to changes in accounting policies and changes in accounting estimates that occur on or after the start of that period. Earlier application is permitted. The amendments are not expected to have any significant impact on the Group’s financial statements.

F-15

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

2.4

ISSUED BUT NOT YET EFFECTIVE INTERNATIONAL FINANCIAL REPORTING STANDARDS (CONTINUED)

(f)

Amendments to IAS 12 narrow the scope of the initial recognition exception in IAS 12 so that it no longer applies to transactions that give rise to equal taxable and deductible temporary differences, such as leases and decommissioning obligations. Therefore, entities are required to recognize a deferred tax asset (provided that sufficient taxable profit is available) and a deferred tax liability for temporary differences arising from these transactions. The amendments are effective for annual reporting periods beginning on or after January 1, 2023 and shall be applied to transactions related to leases and decommissioning obligations at the beginning of the earliest comparative period presented, with any cumulative effect recognized as an adjustment to the opening balance of retained profits or other component of equity as appropriate at that date. In addition, the amendments shall be applied prospectively to transactions other than leases and decommissioning obligations. Earlier application is permitted.

The Group did not apply the initial recognition exception and recognized a deferred tax asset and a deferred tax liability for temporary differences for transactions related to leases before the initial application of these amendments. The Group will continually recognize deferred tax for all temporary differences related to leases at the beginning of the earliest comparative period presented. During the year, the Group has performed a detailed assessment on the impact of amendments to IAS 12. The amendments are not expected to have any significant impact on the Group’s financial statements.

F-16

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

/ i

2.5

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a)

Business combinations and goodwill

Business combinations are accounted for using the acquisition method. The consideration transferred is measured at the acquisition date fair value which is the sum of the acquisition date fair values of assets transferred by the Group, liabilities assumed by the Group to the former owner of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree. For each business combination, the Group elects whether to measure the non-controlling interests in the acquiree that are present ownership interests and entitle their holders to a proportionate share of net assets in the event of liquidation at fair value or at the proportionate share of the acquiree’s identifiable net assets. All other components of non-controlling interests are measured at fair value. Acquisition-related costs are expensed as incurred.

The Group determines that it has acquired a business when the acquired set of activities and assets includes an input and a substantive process that together significantly contribute to the ability to create outputs.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as of the acquisition date. This includes the separation of embedded derivatives in host contracts of the acquiree.

If the business combination is achieved in stages, the previously held equity interest is remeasured at its acquisition date fair value and any resulting gain or loss is recognized in profit or loss.

Any contingent consideration to be transferred by the acquirer is recognized at fair value at the acquisition date. Contingent consideration classified as an asset or liability is measured at fair value with changes in fair value recognized in profit or loss. If the contingent consideration is not within the scope of IAS 39, it is measured in accordance with the appropriate IFRSs. Contingent consideration that is classified as equity is not remeasured and subsequent settlement is accounted for within equity.

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred, the amount recognized for non-controlling interests and any fair value of the Group’s previously held equity interests in the acquiree over the identifiable assets acquired and liabilities assumed. If the sum of this consideration and other items is lower than the fair value of the net assets of the subsidiary acquired, the difference is, after reassessment, recognized in profit or loss as a gain on bargain purchase.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. The Group performs its annual impairment test of goodwill as of December 31. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units, or groups of cash-generating units, that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those units or groups of units.

Impairment is determined by assessing the recoverable amount of the cash-generating unit (group of cash-generating units) to which the goodwill relates. Where the recoverable amount of the cash-generating unit (group of cash-generating units) is less than the carrying amount, an impairment loss is recognized. An impairment loss recognized for goodwill is not reversed in a subsequent period.

F-17

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

2.5

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(a)

Business combinations and goodwill (continued)

Where goodwill has been allocated to a cash-generating unit (or group of cash-generating units) and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on the disposal. Goodwill disposed of in these circumstances is measured based on the relative value of the operation disposed of and the portion of the cash-generating unit retained.

(b)

Fair value measurement

The Group measures equity investments and derivative financial liabilities at fair value at the end of each reporting period. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability, or in the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible by the Group. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest-level input that is significant to the fair value measurement as a whole:

Level 1 – based on quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 2 – based on valuation techniques for which the lowest-level input that is significant to the fair value

measurement is observable, either directly or indirectly

Level 3 – based on valuation techniques for which the lowest-level input that is significant to the fair value

measurement is unobservable

For assets and liabilities that are recognized in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by reassessing categorization (based on the lowest-level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

F-18

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

2.5

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(c)

Related parties

A party is considered to be related to the Group if:

(1)

the party is a person or a close member of that person’s family and that person

(i)

has control or joint control over the Group;

(ii)

has significant influence over the Group; or

(iii)

is a member of the key management personnel of the Group or of a parent of the Group;

(2)

the party is an entity where any of the following conditions applies:

(i)

the entity and the Group are members of the same group;

(ii)

one entity is an associate or joint venture of the other entity (or of a parent, subsidiary or fellow subsidiary of the other entity);

(iii)

the entity and the Group are joint ventures of the same third party;

(iv)

one entity is a joint venture of a third entity and the other entity is an associate of the third entity;

(v)

the entity is a post-employment benefit plan for the benefit of employees of either the Group or an entity related to the Group;

(vi)

the entity is controlled or jointly controlled by a person identified in (1);

(vii)

a person identified in (1)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity); and

(viii)

the entity, or any member of a group of which it is a part, provides key management personnel services to the Group or to the parent of the Group.

(d)

Property, plant and equipment and depreciation

Property, plant and equipment comprise buildings, machinery and equipment, motor vehicles and office and other equipment. The cost of an item of property, plant and equipment comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use.

Buildings, machinery and equipment, motor vehicles and office and other equipment are stated at cost less accumulated depreciation and any impairment losses. Expenditures for routine repairs and maintenance are expensed as incurred.

Depreciation for the following items is calculated on the straight-line basis over each asset’s estimated useful life down to the estimated residual value of each asset.

Estimated useful lives are as follows:

Schedule of estimated useful lives of property, plant and equipment
Buildings		i 8–35 years
Machinery and equipment		i 3–15 years
Motor vehicles		i 4–8 years
Office and other equipment		i 4–8 years

Residual values, useful lives and the depreciation method are reviewed and adjusted, if appropriate, at each reporting date.

F-19

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

2.5

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(d)

Property, plant and equipment and depreciation (continued)

Expenditure incurred after items of property, plant and equipment have been put into operation, such as repairs and maintenance, is normally charged to the statement of profit or loss in the period in which it is incurred. In situations where the recognition criteria are satisfied, the expenditure for a major inspection is capitalized in the carrying amount of the asset as a replacement. Where significant parts of property, plant and equipment are required to be replaced at intervals, the Group recognizes such parts as individual assets with specific useful lives and depreciates them accordingly.

An item of property, plant and equipment including any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on disposal or retirement recognized in the statement of profit or loss in the year the asset is derecognized is the difference between the net sales proceeds and the carrying amount of the relevant asset.

/ i

(e)

Intangible assets (other than goodwill)

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is the fair value at the date of acquisition. The useful lives of intangible assets are assessed to be finite. Intangible assets with finite lives are subsequently amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at each financial year end.

The following intangible assets are amortized from the date they are available for use and their estimated useful lives are as follows:

Schedule of estimated useful lives of intangible assets
Concession right		i 28 years
Patents		i 18 years
Computer software		i 5 years

The useful life of the patents of the Group is determined based on the shorter of their statutory validity periods and the expected benefit periods.

An intangible asset is derecognized on disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising upon derecognition (calculated as the difference between the net sale proceeds and the carrying amount of the relevant intangible asset) is included in the statement of profit or loss.

F-20

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

2.5

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

/ i

(f)

Leases

The Group assesses at contract inception whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

Group as a lessee

The Group applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Group recognizes lease liabilities for obligations to make lease payments and right-of-use assets representing the right to use the underlying assets.

At inception or on reassessment of a contract that contains a lease component and a non-lease component, the Group adopts the practical expedient not to separate the non-lease component and to account for the lease component and the associated non-lease component (e.g., property management services for leases of properties) as a single lease component.

(1) Right-of-use assets

Right-of-use assets are recognized at the commencement date of the lease (that is, the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and any impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease terms and the estimated useful lives of the assets as follows:

Schedule of estimated useful lives of right-of-use assets
Offices and warehouses		i 2– i 5 years
Motor vehicles		i 2– i 10 years

If ownership of the leased asset transfers to the Group by the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.

(2) Lease liabilities

Lease liabilities are recognized at the commencement date of the lease at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for termination of a lease, if the lease term reflects the Group exercising the option to terminate the lease. The variable lease payments that do not depend on an index or a rate are recognized as an expense in the period in which the event or condition that triggers the payment occurs.

In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in lease payments (e.g., a change to future lease payments resulting from a change in an index or rate) or a change in assessment of an option to purchase the underlying asset.

F-21

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

2.5

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(f)

Leases (continued)

Group as a lessee (continued)

(3) Short-term leases

The Group applies the short-term lease recognition exemption to its short-term leases of buildings (that is those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option).

Lease payments on short-term leases are recognized as an expense on a straight-line basis over the lease term.

/ i

(g)

Exploration and evaluation costs

Exploration and evaluation assets include topographical and geological surveys, exploratory drilling, sampling and trenching and activities in relation to commercial and technical feasibility studies, and expenditure incurred to secure further mineralization in existing bodies and to expand the capacity of a mine. Expenditure incurred prior to acquiring legal rights to explore an area is expensed as incurred.

Once the exploration right has been acquired, exploration and evaluation expenditures are charged to the statement of profit or loss as incurred, unless a future economic benefit is more likely than not to be realized. Exploration and evaluation assets acquired in a business combination are initially recognized at fair value. They are subsequently stated at cost less accumulated impairment.

When it can be reasonably ascertained that a mining property is capable of commercial production, exploration and evaluation costs are transferred to tangible or intangible assets according to the nature of the exploration and evaluation assets. If any project is abandoned during the evaluation stage, the total expenditure thereon will be written off.

(h)

Impairment of non-financial assets

Where an indication of impairment exists, or when annual impairment testing for an asset is required (other than inventories, financial assets, deferred tax assets and contract assets), the asset’s recoverable amount is estimated. An asset’s recoverable amount is the higher of the asset’s or cash-generating unit’s value in use and its fair value less costs of disposal, and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case the recoverable amount is determined for the cash-generating unit to which the asset belongs. In testing a cash-generating unit for impairment, a portion of the carrying amount of a corporate asset (e.g., a headquarters building) is allocated to an individual cash-generating unit if it can be allocated on a reasonable and consistent basis or, otherwise, to the smallest group of cash-generating units.

An impairment loss is recognized only if the carrying amount of an asset exceeds its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. An impairment loss is charged to the statement of profit or loss in the period in which it arises in those expense categories consistent with the function of the impaired asset.

An assessment is made at the end of each reporting period as to whether there is an indication that previously recognized impairment losses may no longer exist or may have decreased. If such an indication exists, the recoverable amount is estimated. A previously recognized impairment loss of an asset other than goodwill is reversed only if there has been a change in the estimates used to determine the recoverable amount of that asset, but not to an amount higher than the carrying amount that would have been determined (net of any depreciation/amortization) had no impairment loss been recognized for the asset in prior years. A reversal of such an impairment loss is credited to the statement of profit or loss in the period in which it arises.

F-22

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

2.5

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(i)

Investments and other financial assets

Initial recognition and measurement

Financial assets are classified, at initial recognition, as subsequently measured at amortized cost, fair value through other comprehensive income, and fair value through profit or loss.

The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Group’s business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient of not adjusting the effect of a significant financing component, the Group initially measures a financial asset at its fair value, plus in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient are measured at the transaction price determined under IFRS 15 in accordance with the policies set out in Note 2.5(aa) below.

In order for a financial asset to be classified and measured at amortized cost or fair value through other comprehensive income, it needs to give rise to cash flows that are solely payments of principal and interest (“SPPI”) on the principal amount outstanding. Financial assets with cash flows that are not SPPI are classified and measured at fair value through profit or loss, irrespective of the business model.

The Group’s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both. Financial assets classified and measured at amortized cost are held within a business model with the objective to hold financial assets in order to collect contractual cash flows, while financial assets classified and measured at fair value through other comprehensive income are held within a business model with the objective of both holding to collect contractual cash flows and selling. Financial assets which are not held within the aforementioned business models are classified and measured at fair value through profit or loss.

All regular way purchases and sales of financial assets are recognized on the trade date, that is, the date that the Group commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace.

Subsequent measurement

The subsequent measurement of financial assets depends on their classification as follows:

Financial assets at amortized cost (debt instruments)

Financial assets at amortized cost are subsequently measured using the effective interest method and are subject to impairment. Gains and losses are recognized in the statement of profit or loss when the asset is derecognized, modified or impaired.

Financial assets at fair value through other comprehensive income (debt instruments)

For debt investments at fair value through other comprehensive income, interest income, foreign exchange revaluation and impairment losses or reversals are recognized in the statement of profit or loss and computed in the same manner as for financial assets measured at amortized cost. The remaining fair value changes are recognized in other comprehensive income. Upon derecognition, the cumulative fair value change recognized in other comprehensive income is recycled to the statement of profit or loss.

F-23

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

2.5

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(i)

Investments and other financial assets (continued)

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with net changes in fair value recognized in the statement of profit or loss.

This category includes derivative instruments and equity investments which the Group had not irrevocably elected to classify at fair value through other comprehensive income. Dividends on equity investments classified as financial assets at fair value through profit or loss are also recognized as other income in the statement of profit or loss when the right of payment has been established, it is probable that the economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably.

(j)

Derecognition of financial assets

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognized (i.e., removed from the Group’s statement of financial position) when:

•

the rights to receive cash flows from the asset have expired; or

•

the Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a “pass-through” arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset but has transferred control of the asset.

When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if, and to what extent, it has retained the risk and rewards of ownership of the asset. When it has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the Group continues to recognize the transferred asset to the extent of the Group’s continuing involvement. In that case, the Group also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay.

(k)

Impairment of financial assets

The Group recognizes an allowance for expected credit losses (“ECLs”) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

F-24

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

2.5

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(k)

Impairment of financial assets (continued)

General approach

ECLs are recognized in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12 months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).

At each reporting date, the Group assesses whether the credit risk on a financial instrument has increased significantly since initial recognition. When making the assessment, the Group compares the risk of a default occurring on the financial instrument as of the reporting date with the risk of a default occurring on the financial instrument as of the date of initial recognition and considers reasonable and supportable information that is available without undue cost or effort, including historical and forward-looking information.

The Group considers a financial asset in default based on historical patterns and the credit risk management practices of the Group. However, in certain cases, the Group may also consider a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.

Financial assets at amortized cost excluding trade receivables and contract assets are subject to impairment under the general approach, and they are classified within the following stages for measurement of ECLs except for trade receivables and contract assets which apply the simplified approach as detailed below:

Stage 1 – Financial instruments for which credit risk has not increased significantly since initial recognition and for which the loss allowance is measured at an amount equal to 12-month ECLs

Stage 2 – Financial instruments for which credit risk has increased significantly since initial recognition but that are not credit-impaired financial assets and for which the loss allowance is measured at an amount equal to lifetime ECLs

Stage 3 – Financial assets that are credit-impaired at the reporting date (but that are not purchased or originated credit-impaired) and for which the loss allowance is measured at an amount equal to lifetime ECLs

Simplified approach

For trade receivables and contract assets including those containing a significant financing component, the Group applies the simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead recognizes a loss allowance based on lifetime ECLs at each reporting date. The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.

(l)

Financial liabilities

Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.

All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.

F-25

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

2.5

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(l)

Financial liabilities (continued)

The Group’s financial liabilities include trade payables, financial liabilities included in other payables and accruals, dividends payable, derivative financial liabilities, interest-bearing loans and borrowings, due to related companies and due to the shareholders.

Subsequent measurement

The subsequent measurement of financial liabilities depends on their classification as follows:

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.

Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by IFRS 9. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on liabilities held for trading are recognized in the statement of profit or loss. The net fair value gain or loss recognized in the statement of profit or loss does not include any interest charged on these financial liabilities.

Financial liabilities designated upon initial recognition as at fair value through profit or loss are designated at the initial date of recognition, and only if the criteria in IFRS 9 are satisfied. Gains or losses on liabilities designated at fair value through profit or loss are recognized in the statement of profit or loss, except for the gains or losses arising from the Group’s own credit risk which are presented in other comprehensive income with no subsequent reclassification to the statement of profit or loss. The net fair value gain or loss recognized in the statement of profit or loss does not include any interest charged on these financial liabilities.

Financial liabilities at amortized cost

After initial recognition, lease liabilities are subsequently measured at amortized cost, using the effective interest rate method unless the effect of discounting would be immaterial, in which case they are stated at cost. Gains and losses are recognized in the statement of profit or loss when the liabilities are derecognized as well as through the effective interest rate amortization process.

Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate. The effective interest rate amortization is included in finance costs in the statement of profit or loss.

(m)

Derecognition of financial liabilities

A financial liability is derecognized when the obligation under the liability is discharged or canceled, or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and a recognition of a new liability, and the difference between the respective carrying amounts is recognized in the statement of profit or loss.

(n)

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the statement of financial position if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.

F-26

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

2.5

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(o)

Inventories

Inventories include materials and spare parts and are stated at the lower of cost and net realizable values. Cost is determined on a weighted average cost basis and comprises costs of purchase and transportation costs. Net realizable values are based on the estimated selling expenses less any estimated cost to be incurred to completion and disposal.

(p)

Cash and cash equivalents

For the purpose of the statement of cash flows, cash and cash equivalents comprise cash on hand and demand deposits, and short-term highly liquid investments that are readily convertible into known amounts of cash, are subject to an insignificant risk of changes in value, and have a short-term maturity of generally within three months when acquired, less bank overdrafts which are repayable on demand and form an integral part of the Group’s cash management.

For the purpose of the statement of financial position, cash and cash equivalents comprise cash on hand and at banks, including term deposits, and assets similar in nature to cash, which are not restricted as to use.

(q)

Employee benefits

Pension obligations

The Group contributes on a monthly basis to various defined contribution retirement benefit plans administered by the PRC government. The relevant government agencies undertake to assume the retirement benefit obligation payable to all existing and future retired employees under these plans and the Group has no further obligation for post-retirement benefits beyond the contributions made. Further information is set out in Note 7 to the consolidated financial statements.

Housing funds

All full-time employees of the Group in mainland China are entitled to participate in various government-sponsored housing funds. The Group contributes on a monthly basis to these funds based on certain percentages of the salaries of the employees. The Group's liability with respect to these funds is limited to the contributions payable in each year.

(r)

Share-based payments

The Company operates a share option scheme for the purpose of providing incentives and rewards to employees (including directors) and advisors who contribute to the success of the Group's business and grants warrants for the Company’s shares for the purpose of paying fees to the placement agent who provided the professional services during the Company’s private placement. The employees and advisors (collectedly with placement agent, the “grantees”) of the Group receive remuneration in the form of share-based payments, whereby the grantees render services in exchange for equity instruments (“equity-settled transactions”).

The cost of equity-settled transactions with the grantees for grants in the years of 2021 and 2022 is measured by reference to the fair value at the date at which they are granted. The fair value is determined by an external valuer using a binomial model, further details of which are given in Note 27 to the consolidated financial statements.

F-27

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

2.5

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(r)

Share-based payments (continued)

The cost of equity-settled transactions is recognized in administrative expense, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled. The cumulative expense recognized for equity-settled transactions at the end of each reporting period until the vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest. The charge or credit to the statement of profit or loss for a period represents the movement in the cumulative expense recognized as at the beginning and end of that period.

Service and non-market performance conditions are not taken into account when determining the grant date fair value of awards, but the likelihood of the conditions being met is assessed as part of the Group’s best estimate of the number of equity instruments that will ultimately vest. Market performance conditions are reflected within the grant date fair value. Any other conditions attached to an award, but without an associated service requirement, are considered to be non-vesting conditions. Non-vesting conditions are reflected in the fair value of an award and lead to an immediate expensing of an award unless there are also service and/or performance conditions.

For awards that do not ultimately vest because non-market performance and/or service conditions have not been met, no expense is recognized. Where awards include a market or non-vesting condition, the transactions are treated as vesting irrespective of whether the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied.

Where the terms of an equity-settled award are modified, as a minimum an expense is recognized as if the terms had not been modified, if the original terms of the award are met. In addition, an expense is recognized for any modification that increases the total fair value of the share-based payments, or is otherwise beneficial to the employee as measured at the date of modification.

Where an equity-settled award is canceled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognized for the award is recognized immediately. This includes any award where non-vesting conditions within the control of either the Group or the employee are not met. However, if a new award is substituted for the canceled award, and is designated as a replacement award on the date that it is granted, the canceled and new awards are treated as if they were a modification of the original award, as described in the previous paragraph.

The dilutive effect of outstanding options is reflected as additional share dilution in the computation of earnings per share.

(s)

Borrowing costs

Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing costs directly relating to the acquisition, construction or production of a qualifying asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. The capitalization of such borrowing costs ceases when the asset is substantially ready for its intended use or sale. All other borrowing costs are expensed in the period in which they are incurred. Borrowing costs consist of interest and other costs that an entity incurred in connection with the borrowing funds.

F-28

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

2.5

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(t)

Income taxes

Income tax comprises current and deferred tax. Income tax relating to items recognized outside profit or loss is recognized outside profit or loss, either as other comprehensive income or loss, or directly in equity.

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantially enacted by the end of the reporting date, taking into consideration interpretations and practices prevailing in the countries in which the Group operates.

Deferred tax is provided, using the liability method, on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognized for all taxable temporary differences, except:

when the deferred tax liability arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

in respect of taxable temporary differences associated with investments in subsidiaries, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognized for all deductible temporary differences, and the carryforward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carryforward of unused tax credits and unused tax losses can be utilized, except:

where the deferred tax assets relating to the deductible temporary differences arise from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

in respect of deductible temporary differences associated with investments in subsidiaries, deferred tax assets are only recognized to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are reassessed at each reporting date and are recognized to the extent that it has become probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Deferred tax assets and deferred tax liabilities are offset if and only if the Group has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realize the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

F-29

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

2.5

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(u)

Foreign currencies

The functional currency of the Company is the Hong Kong dollars. The functional currency of substantially all the operations of the Group is the CNY, the national currency of the PRC. Transactions denominated in currencies other than the CNY recorded by the entities of the Group are initially recorded using their respective functional currency rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in other currencies have been translated into CNY at the functional currency rates of exchange prevailing at the end of the reporting period. The resulting exchange gains or losses are credited or charged to the consolidated statements of profit or loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the date of the initial transactions.

The consolidated financial statements of certain overseas subsidiary operations with a functional currency other than the CNY have been translated into CNY. The assets and liabilities of these entities have been translated using the exchange rates prevailing at the reporting date and their consolidated statements of profit or loss have been translated using the weighted average exchange rate for the year. Resulting translation adjustments are reported as a separate component of other comprehensive income.

On disposal of a foreign operation, the cumulative amount recognized in equity relating to that particular foreign operation is recognized in the consolidated statements of profit or loss.

(v)

Convenience translation

The consolidated financial statements are stated in CNY. The translation of amounts from CNY into US$ is supplementary information and is included solely for the convenience of the readers and has been made at the rate of exchange quoted by www.ofx.com on December 31, 2022 of i US$1.00 = CNY6.8979. No representation is made that the CNY amounts could have been, or could be, converted into US$ at that rate on December 31, 2022 or at any other date.

/ i

(w)

Provisions

A provision is recognized when a present obligation (legal or constructive) has arisen as a result of a past event and it is probable that a future outflow of resources will be required to settle the obligation, provided that a reliable estimate can be made of the amount of the obligation.

When the effect of discounting is material, the amount recognized for a provision is the present value at the end of the reporting period of the future expenditures expected to be required to settle the obligation. The increase in the discounted present value amount arising from the passage of time is included in finance costs in the statement of profit or loss.

(x)

Dividends

Final dividends are recognized as a liability when they are approved by the Directors in a general meeting.

Interim dividends are simultaneously proposed and declared, because the Company’s memorandum and articles of association grant the Directors the authority to declare interim dividends. Consequently, interim dividends are recognized immediately as a liability when they are proposed and declared.

F-30

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

2.5

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(y)

Government grants

Government grants are recognized at their fair value where there is reasonable assurance that the grant will be received, and all attaching conditions will be complied with. When the grant relates to an expense item, it is recognized as income on a systematic basis over the period in which the costs for which it is intended to compensate are expensed.

(z)

Service concession arrangement

The Group has entered into Public-Private Partnership (“PPP”) projects under Build-Operate-Transfer (“BOT”) arrangements with the governmental entity of Guangdong Shaoguan Wujiang District. The BOT arrangement is a service concession arrangement under IFRIC 12 Service Concession Arrangements, because the local government controls and regulates the services that the Group must provide with the infrastructure at a pre-determined service charge and, upon expiration of concession right agreements, the infrastructure has to be transferred to the local government at nil consideration.

Under this service concession arrangement:

- the grantor controls or regulates the services the Group must provide with the infrastructure, to whom it must provide them, and at what price; and

- the grantor controls, through ownership, beneficial entitlement or otherwise, any significant residual interest in the infrastructure at the end of the term of the arrangement, or the infrastructure is used for its entire useful life under the arrangements, or both the Group’s practical ability to sell or pledge the infrastructure is restricted and continuing right of use of the infrastructure is given to the grantor throughout the period of the arrangements.

A financial asset (receivable under a service concession arrangement) is recognized to the extent that (a) the Group has an unconditional right to receive cash or another financial asset from or at the direction of the grantor for the construction services rendered and/or the consideration paid and payable by the Group for the right to charge users of the public service; and (b) the grantor has little, if any, discretion to avoid payment, usually because the agreement is enforceable by law. The Group has an unconditional right to receive cash or another financial asset if nothing other than the passage of time is required before payment of the consideration is due and the grantor contractually guarantees to pay the Group (a) specified or determinable amounts or (b) the shortfall, if any, between amounts received from users of the public service and specified or determinable amounts, even if the payment is contingent on the Group ensuring that the infrastructure meets specified quality of efficiency requirements. The financial asset (receivable under service concession arrangement) is accounted for in accordance with the policy set out for loans and receivables under “(i) Investments and other financial assets”.

An intangible asset (concession right) is recognized to the extent that the Group receives a right to charge users of the public service, which is not an unconditional right to receive cash because the amounts are contingent on the extent that the public uses the service. The intangible asset (concession right) is accounted for in accordance with the policy set out for “(e) Intangible assets (other than goodwill)”.

Construction services

If the Group is paid partly with a financial asset and partly with an intangible asset, each component of the consideration is accounted for separately and the consideration received or receivable for both components will be recognized initially at the fair value of the consideration received or receivable.

Revenue relating to construction is accounted for in accordance with the policy set out for “Revenue from contracts with customers - Construction services” below.

F-31

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

2.5

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(z)

Service concession arrangement (continued)

Operating services

Revenue relating to operating services is accounted for in accordance with the policy for “(aa) Revenue recognition-Revenue from contracts with customers-Operation services of service concession arrangements” below. Costs for operating services are expensed in the period in which they are incurred.

(aa)

Revenue recognition

Revenue from contracts with customers

Revenue from contracts with customers is recognized when control of goods or services is transferred to the customers at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods or services.

When the consideration in a contract includes a variable amount, the amount of consideration is estimated to be that to which the Group will be entitled in exchange for transferring the goods or services to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognized will not occur when the associated uncertainty with the variable consideration is subsequently resolved.

When the contract contains a financing component which provides the customer with a significant benefit of financing the transfer of goods or services to the customer for more than one year, revenue is measured at the present value of the amount receivable, discounted using the discount rate that would be reflected in a separate financing transaction between the Group and the customer at contract inception. When the contract contains a financing component which provides the Group with a significant financial benefit for more than one year, revenue recognized under the contract includes the interest expense accreted on the contract liability under the effective interest method. For a contract where the period between the payment by the customer and the transfer of the promised goods or services is one year or less, the transaction price is not adjusted for the effects of a significant financing component, using the practical expedient in IFRS 15.

The Group satisfies a performance obligation and recognizes revenue over time, if one of the following criteria is met:

– The customer simultaneously receives and consumes the benefits provided by the Group’s performance as the Group performs.

– The Group’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced.

– The Group’s performance does not create an asset with an alternate use to the Group and the Group has an enforceable right to payment for performance completed to date.

If none of the above conditions are met, the Group recognizes revenue at the point in time at which the performance obligation is satisfied.

The progress towards complete satisfaction of the performance obligation is measured based on the Group’s efforts or inputs to the satisfaction of the performance obligation, by reference to the surveyors’ assessment of work performed and the costs incurred up to the end of the reporting period as a percentage of total estimated costs for each contract.

When the Group provides more than one service in a service concession arrangement, the transaction price will be allocated to each performance obligation by reference to their relative stand-alone selling prices. In determining the transaction price, the Group adjusts the promised amount of consideration for the effect of a financing component if it is significant.

F-32

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

2.5

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(aa)

Revenue recognition (continued)

Revenue from contracts with customers (continued)

Construction services

The Group’s performance with respect to construction services creates or enhances an asset or work in progress that the customer controls as the asset is created or enhanced. The Group satisfies the performance obligation and recognizes revenue over time, by reference to completion of the specific transaction assessed on the basis of either the surveyors’ assessment of work performed for Engineering Procurement Construction (EPC) contracts or the costs incurred up to the end of the reporting period as a percentage of total estimated costs for certain contracts solely associated with equipment installation.

In some circumstances, the Group as subcontractor of the construction service may not be able to reasonably measure the outcome of a performance obligation in the early states of a contract. The Group recognizes revenue only to the extent of the costs incurred until such time that it can reasonably measure the outcome of the performance obligation.

The fair value of the construction services under a service concession arrangement is initially estimated at the date of the agreement based on a cost-plus-margin basis with reference to the prevailing market rate of gross margin applicable to similar construction services rendered

Operation services of service concession arrangements

Operation revenue from service concession arrangements is recognized over the period of time that the services are rendered, and the benefits are received and consumed simultaneously by the customers.

Sales of water treatment equipment

Revenue from the sales of water treatment equipment is recognized at the point in time when control of the asset is transferred to the customer. Control is generally transferred when: (i) the customer obtains the physical possession or the legal title of water treatment equipment; and (ii) the Group has a present right to payment and the collection of the consideration is probable.

Maintenance services

Revenue from maintenance services is recognized over the period of time that the services are rendered, and the benefits are received and consumed simultaneously by the customers.

Trading of copper ores

The Group purchased copper ores from third-party suppliers and then resells to a third-party trading company. The Group controlled the copper ores prior to selling them to customers. Revenue was recognized on a gross basis, and at the point in time when control of the asset was transferred to the customer, upon delivery of the copper ores to the customers.

F-33

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

2.5 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(aa)

Revenue recognition (continued)

Other income

Imputed finance income under a service concession arrangement is recognized on an accrual basis using the effective interest rate method by applying the rate that discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter period, when appropriate, to the net carrying amount of the financial asset.

Interest income is recognized on an accrual basis using the effective interest method by applying the rate that discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter period, when appropriate, to the net carrying amount of the financial asset.

(ab)

Contract assets and contract liabilities

Contract assets

A contract asset is the right to consideration in exchange for services or goods transferred to the customer. If the Group performs by transferring services or goods to a customer before the customer pays consideration or before payment is due, a contract asset is recognized for the earned consideration that is conditional.

Contract assets are subject to impairment assessment according to the policy set out for “(k) Impairment of financial assets” above.

Contract liabilities

A contract liability is the obligation to transfer services or goods to a customer from which the Group has received consideration (or from which an amount of consideration is unconditionally due) from the customer. If a customer pays consideration before the Group transfers services or goods to the customer, a contract liability is recognized when the payment is made or the payment is unconditionally due (whichever is earlier). Contract liabilities are recognized as revenue when the Group performs under the contract.

(ac)

Comparatives

Certain prior period amounts have been reclassified to conform to the current period presentation.

F-34

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

2.6

SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES

The preparation of the consolidated financial statements in conformity with IFRSs requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.

Judgments

In the process of applying the Group’s accounting policies, management has made the following judgments, apart from those involving estimations, which have the most significant effects on the amounts recognized in the financial statements.

Income taxes

The Group is subject to income taxes in Hong Kong and the PRC. The Group carefully evaluates tax implications of its transactions in accordance with prevailing tax regulations and makes tax provision accordingly. However, judgment is required in determining the Group’s provision for income taxes as there are many transactions and calculations, of which the ultimate tax determination is uncertain, during the ordinary course of business. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact on the income tax and deferred tax provision in the periods in which such determination is made. The carrying amounts of current tax payable carried as a liability in the consolidated statements of financial position as of December 31, 2021 and 2022 were CNY9,254 and CNY10,732 (US$1,556), respectively.

Estimation uncertainty

Contract asset and intangible asset under IFRIC 12 Service Concession Arrangements

The Group recognizes the consideration received or receivable in exchange for the construction services as a contract asset and an intangible asset under a service concession arrangement. However, if the Group is paid for the construction services partly by a cash consideration and partly by an intangible asset, it is necessary to separately account for each component of the operator’s consideration. Both components of consideration received or receivable initially are recognized at their respective fair values.

The segregation of the consideration for a service concession arrangement between the contract asset component and the intangible asset component, if any, requires the Group to make an estimate of a number of factors, which include, the fair value of the construction services, expected future water treatment volume of the relevant water treatment plant over its service concession period, future guaranteed receipts and unguaranteed receipts, and a discount rate in order to calculate the present value of those cash flows. These estimates, including revenue recognition of the contract asset and intangible asset components are determined by the Group’s management based on their experience and assessment of current and future market conditions. The carrying amounts of the intangible asset (“concession right”) and contract asset at the end of the reporting period are disclosed in Notes 12 and 15, respectively.

F-35

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

2.6

SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES (CONTINUED)

Estimation uncertainty (continued)

Provision for expected credit losses on financial assets at amortized cost and contract assets

The policy for provision for ECLs on contract assets and financial assets at amortized cost including trade receivables, other receivables and amounts due from related parties is based on an ECL model. A considerable amount of estimation is required in assessing the available information which includes past collection history, age of balances, customer type and forecasts of future economic conditions to estimate the ECLs. The amount of ECLs is sensitive to changes in circumstances and of forecast economic conditions. The Group’s historical credit loss experience and forecast of economic conditions may also not be representative of a customers’ actual default in the future. The information about the ECLs on the Group’s contract assets and financial assets at amortized cost is disclosed in Notes 14, 15 and 16.

/ i

SEGMENT INFORMATION

Operating segments are identified on the basis of internal reports about components of the Group that are regularly reviewed by the Group’s management and the Company’s Board of Directors for the purpose of resource allocation and performance assessment.

Management assesses the performance of operating segments based on profit or loss before income tax in related periods. The manner of assessment is consistent with that applied in these financial statements.

As of December 31, 2022, the Group’s two reportable operating segments are summarized below:

- Wastewater treatment segment, which consists of sales of assembled equipment, provision of construction service and participating in PPP projects as operator;

- Exploration and mining segment, which consists of the exploration of lead, silver and other metals in the Inner Mongolia Autonomous Region of the PRC and the trading of copper ores products;

Deferred tax assets, income tax payable and deferred tax liabilities are excluded from segment assets and segment liabilities. The Group had neither sales of products nor provisions of services between the operating segments.

F-36

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

SEGMENT INFORMATION (CONTINUED)

For the year ended December 31, 2020, the segment results were as follows:

Schedule of segment results

Year Ended December 31, 2020

Wastewater treatment

Exploration and mining

Corporate activities

Total

CNY

Revenues from external customers

i 35,631

i 6,867

—

i 42,498

Segment (loss)/profit before income tax

( i 112

)

( i 682

)

i 24,973

i 24,179

Income tax expense

( i 1,258

)

Profit for the year

i 22,921

Other items

Depreciation of property, plant and equipment

( i 500

)

( i 62

)

( i 3

)

( i 565

)

Depreciation of right-of-use assets

( i 687

)

—

( i 976

)

( i 1,663

)

Amortization of intangible assets

( i 156

)

—

( i 156

)

Impairment (losses)/reversal on financial assets

- Trade receivables

( i 4,544

)

—

( i 4,544

)

- Contract assets

( i 172

)

—

( i 172

)

- Amounts due from related companies

i 334

—

i 220

i 554

Fair value gain on financial instrument

—

i 31,334

Other income

i 1,415

i 200

i 1

i 1,616

Finance costs

( i 3,687

)

( i 1

)

( i 61

)

( i 3,749

)

Finance income

i 15,449

i 1

i 18

i 15,468

As of December 31, 2020

Segment assets

i 337,050

i 39

i 190,047

i 527,136

Unallocated assets:

Deferred tax assets

i 2,920

Total assets

i 530,056

Segment liabilities

i 116,140

i 3,013

i 90,066

i 209,219

Unallocated liabilities:

Deferred tax liabilities

i 10,426

Income tax payable

i 18,612

Total liabilities

i 238,257

F-37

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

SEGMENT INFORMATION (CONTINUED)

For the year ended December 31, 2021, the segment results were as follows:

Year Ended December 31, 2021

Wastewater treatment

Exploration and mining

Corporate activities

Total

CNY

Revenues from external customers

i 18,735

—

i 18,735

Segment (loss) before income tax

( i 7,216

)

( i 161

)

( i 45,459

)

( i 52,836

)

Income tax expense

( i 2,135

)

(Loss) for the year

( i 54,971

)

Other items

Depreciation of property, plant and equipment

( i 445

)

( i 62

)

( i 3

)

( i 510

)

Depreciation of right-of-use assets

( i 647

)

—

( i 719

)

( i 1,366

)

Amortization of intangible assets

( i 884

)

—

( i 884

)

Impairment (losses)/reversal on financial assets

- Trade receivables

( i 3,840

)

—

( i 3,840

)

- Contract assets

( i 357

)

—

( i 357

)

- Other receivables

—

( i 239

)

( i 239

)

- Amounts due from related companies

i 775

—

i 331

i 1,106

Fair value loss on financial instrument

—

( i 38,349

)

( i 38,349

)

Other income

( i 782

)

i 600

( i 1

)

( i 183

)

Finance costs

( i 4,192

)

( i 1

)

( i 166

)

( i 4,359

)

Finance income

i 13,537

i 1

i 3,397

i 16,935

As of December 31, 2021

Segment assets

i 390,895

i 321

i 22,166

i 413,382

Reconciliation:

Elimination of inter-segment receivables

( i 80,000

)

Unallocated assets:

Deferred tax assets

i 66

Total assets

i 333,448

Segment liabilities

i 113,124

i 3,294

i 103,195

i 219,613

Reconciliation:

Elimination of inter-segment payables

( i 80,000

)

Unallocated liabilities:

Deferred tax liabilities

i 2,544

Income tax payable

i 9,254

Total liabilities

i 151,411

F-38

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

SEGMENT INFORMATION (CONTINUED)

For the year ended December 31, 2022, the segment results were as follows:

Year Ended December 31, 2022

Wastewater treatment

Exploration and mining

Corporate activities

Total

CNY

Revenues from external customers

i 20,306

—

i 20,306

Segment profit/(loss) before income tax

i 9,758

( i 39

)

( i 26,151

)

( i 16,432

)

Income tax expense

( i 5,864

)

(Loss) for the year

( i 22,296

)

Other items

Depreciation of property, plant and equipment

( i 275

)

( i 28

)

( i 1

)

( i 304

)

Depreciation of right-of-use assets

( i 713

)

—

( i 700

)

( i 1,413

)

Amortization of intangible assets

( i 813

)

—

( i 813

)

Impairment (losses)/reversal on financial assets

- Trade receivables

i 3,989

—

i 3,989

- Contract assets

( i 171

)

—

( i 171

)

- Other receivables

—

( i 2,745

)

( i 2,745

)

Fair value gain on financial instrument

—

i 1,007

Consultants shares option expense

—

( i 16,152

)

( i 16,152

)

Other income

i 206

i 697

i 1

i 904

Finance costs

( i 3,582

)

( i 1

)

i 188

( i 3,395

)

Finance income

i 15,594

—

i 13

i 15,607

As of December 31, 2022

Segment assets

i 312,229

i 286

i 87,476

i 399,991

Reconciliation:

Elimination of inter-segment receivables

( i 80,000

)

Total assets

i 319,991

Segment liabilities

i 107,096

i 3,298

i 96,140

i 206,534

Reconciliation:

Elimination of inter-segment payables

( i 80,000

)

Unallocated liabilities:

Deferred tax liabilities

i 5,276

Income tax payable

i 10,732

Total liabilities

i 142,542

F-39

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

SEGMENT INFORMATION (CONTINUED)

For the year ended December 31, 2022, the segment results were as follows: (continued)

Year Ended December 31, 2022

Wastewater treatment

Exploration and mining

Corporate activities

Total

US$

Revenues from external customers

i 2,944

—

i 2,944

Segment profit/(loss) before income tax

i 1,414

( i 6

)

( i 3,791

)

( i 2,383

)

Income tax expense

( i 850

)

(Loss)/Profit for the year

( i 3,233

)

Other items

Depreciation of property, plant and equipment

( i 40

)

( i 4

)

—

( i 44

)

Depreciation of right-of-use assets

( i 104

)

—

( i 101

)

( i 205

)

Amortization of intangible assets

( i 118

)

—

( i 118

)

Impairment (losses)/reversal on financial assets

- Trade receivables

i 578

—

i 578

- Contract assets

( i 25

)

—

( i 25

)

- Other receivables

—

( i 397

)

( i 397

)

Fair value gain on financial instrument

—

i 146

Consultants shares option expense

—

( i 2,342

)

( i 2,342

)

Other income

i 30

i 101

—

i 131

Finance costs

( i 519

)

—

i 27

( i 492

)

Finance income

i 2,261

—

i 2

i 2,263

As of December 31, 2022

Segment assets

i 45,264

i 41

i 12,682

i 57,987

Reconciliation:

Elimination of inter-segment receivables

( i 11,599

)

Total assets

i 46,388

Segment liabilities

i 15,526

i 478

i 13,938

i 29,942

Reconciliation:

Elimination of inter-segment payables

( i 11,599

)

Unallocated liabilities:

Deferred tax liabilities

i 765

Income tax payable

i 1,556

Total liabilities

i 20,664

F-40

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

SEGMENT INFORMATION (CONTINUED)

Geographical information

(a) Non-current assets

Schedule of non-current assets

2022

CNY

US$

Mainland China

i 22,905

i 21,790

i 3,159

Hong Kong

i 360

i 1,012

i 147

Total

i 23,265

i 22,802

i 3,306

The non-current assets information above is based on the locations of the assets and excludes financial instruments and deferred tax assets.

Information about major customers

For the year ended December 31, 2020, revenue of approximately CNY i 24,405 and CNY i 6,867 were derived from services provided by the wastewater treatment segment to a single customer and sales by the exploration and mining segment to a single customer, respectively.

For the year ended December 31, 2021, revenue of approximately CNY i 6,439 and CNY i 5,915 were derived from the services under service concession arrangement and services under a construction contract provided to their respective single major customer by the wastewater treatment segment, respectively.

For the year ended December 31, 2022, revenue of approximately CNY i 5,512 (US$ i 799) and CNY i 3,842 (US$ i 557) were derived from services under service concession arrangement and the services under a construction contract provided to their respective single major customer by the wastewater treatment segment, respectively.

F-41

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

/ i

REVENUE FROM CONTRACTS WITH CUSTOMERS

Schedule of revenue from contracts with customers

Year Ended December 31, 2020

Wastewater treatment

Exploration and mining

Total

CNY

Segments

Type of goods or services

Sales of copper ores

—

i 6,867

Construction contract revenue

i 7,665

—

i 7,665

Operation and maintenance services

i 3,561

—

i 3,561

Operation services of service concession arrangement

i 2,295

—

i 2,295

Construction services of service concession arrangement

i 22,110

—

i 22,110

Total revenue from contracts with customers

i 35,631

i 6,867

i 42,498

Geographic market

Mainland China

i 35,631

i 6,867

i 42,498

Timing of revenue recognition

At a point in time

—

i 6,867

Over time

i 35,631

—

i 35,631

Total revenue from contracts with customers

i 35,631

i 6,867

i 42,498

Year Ended December 31, 2021

Wastewater treatment

Exploration and mining

Total

CNY

Segments

Type of goods or services

Construction contract revenue

i 12,203

—

i 12,203

Operation and maintenance services

i 183

—

i 183

Operation services of service concession arrangement

i 5,953

—

i 5,953

Construction services of service concession arrangement

i 396

—

i 396

Total revenue from contracts with customers

i 18,735

—

i 18,735

Geographic market

Mainland China

i 18,735

—

i 18,735

Timing of revenue recognition

Over time

i 18,735

—

i 18,735

Total revenue from contracts with customers

i 18,735

—

i 18,735

F-42

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

REVENUE FROM CONTRACTS WITH CUSTOMERS (CONTINUED)

Year Ended December 31, 2022

Wastewater treatment

Exploration and mining

Total

CNY

US$

Segments

Type of goods or services

Construction contract revenue

i 14,633

—

i 14,633

i 2,122

Sales of wastewater treatment equipment

i 161

—

i 161

i 23

Operation services of service concession arrangement

i 5,512

—

i 5,512

i 799

Total revenue from contracts with customers

i 20,306

—

i 20,306

i 2,944

Geographic market

Mainland China

i 20,306

—

i 20,306

i 2,944

Timing of revenue recognition

At a point in time

i 161

—

i 161

i 23

Over time

i 20,145

—

i 20,145

i 2,921

Total revenue from contracts with customers

i 20,306

—

i 20,306

i 2,944

(i) Disaggregated revenue information

As described in Note 2.5(aa) to the financial statements, revenue from construction contract revenue, operation and maintenance services, operation services of service concession arrangements, and construction services of service concession arrangements are recognized over time. Revenue from sales of water treatment equipment and copper ores is recognized at a point in time.

F-43

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

REVENUE FROM CONTRACTS WITH CUSTOMERS (CONTINUED)

(ii) Performance obligation

The amounts of transaction prices allocated to the remaining performance obligations (unsatisfied or partially unsatisfied) as of December 31 are as follows:

Schedule of the amounts of transaction prices allocated to the remaining performance obligations

December 31

2021

2022

CNY

US$

Amounts expected to be recognized as revenue:

Within one year

i 17,774

i 16,406

i 2,378

After one year

i 183,114

i 172,683

i 25,034

Amounts expected in Revenues

i 200,888

i 189,089

i 27,412

The amounts of transaction prices allocated to the remaining performance obligations which are expected to be recognized as revenue after one year relate to construction services, operation services and other services, of which the performance obligations are to be satisfied within 27 years. The amounts disclosed above do not include variable consideration which is constrained.

There were no revenues generated from the contract liabilities in the beginning of the periods for the years ended December 31, 2021 and 2022.

(iii) Significant financing components

The majority of the Group’s customers are town/village government entities or main contractors of governmental infrastructure projects whose time of payment for the service or goods received from the Group depends on the appropriation and approval of funds. Certain customers for construction services, sales of wastewater treatment equipment, and maintenance services will generally settle the amounts owed to the Group in a number of specified installments covering periods ranging from one year to five years. Therefore, the Group’s management considers the contracts with customers which are town/village government entities or main contractors of governmental infrastructure projects as containing a significant financing component. For each of the three years ended December 31, 2020, 2021, and 2022, the respective revenue considerations were adjusted for this financing component based on an imputed interest rate of i 4.75% per annum and the Group’s revenue was adjusted to CNY i 991, CNY i 1,631 and CNY i 408 (US$ i 59), respectively. The interest income related to the significant financing components is disclosed in Note 5 to the financial statements.

F-44

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

/ i

FINANCE INCOME AND COSTS

Schedule of finance income and costs

CNY

US$

Year Ended December 31,

2021

2022

Finance income

Interest income on loans to related parties/ a third party

i 6,455

i 6,780

i 6,792

i 985

Interest income on revenue contracts with significant financing component

i 3,161

i 2,313

i 2,104

i 305

Interest income from service concession arrangement

i 4,977

i 7,264

i 6,620

i 960

Interest income on structured deposits

i 660

i 328

—

Interest income on bank deposit

i 215

i 250

i 91

i 13

Finance income

i 15,468

i 16,935

i 15,607

i 2,263

Finance costs

Interest expenses on loans

i 4,028

i 4,035

i 3,882

i 563

Interest expense on lease liabilities

i 80

i 150

i 133

i 19

Other finance costs *

i 292

i 231

( i 620

)

( i 90

)

Less: interest expense capitalized into
intangible assets-concession right **

( i 651

)

( i 57

)

—

Finance costs

i 3,749

i 4,359

i 3,395

i 492

Finance costs from operations mainly represented bank charges and foreign currency exchange differences. The amounts of bank charges were CNY i 37, CNY i 38 and CNY i 42 (US$ i 6) and the foreign currency exchange losses/(gains) amounted to CNY i 255, CNY i 193 and CNY ( i 662) (US$( i 96)) for the years ended December 31, 2020, 2021 and 2022, respectively.

The borrowing costs have been capitalized at a rate of i i 5.05 / % per annum during the years ended December 31, 2020 and 2021.

F-45

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

/ i

PROFIT/(LOSS) BEFORE INCOME TAX

The Group’s profit/(loss) before tax is arrived at after (crediting)/charging:

Schedule of the profit/(loss) before tax is arrived at after (crediting)/charging

Year Ended December 31,

2021

2022

CNY

US$

Crediting:

Finance income (Note 5)

( i 15,468

)

( i 16,935

)

( i 15,607

)

( i 2,263

)

Charging:

Cost of sales

- Sales of copper ores

i 6,854

—

- Sales of water treatment equipment

—

i 94

i 14

- Construction service

i 6,479

i 12,876

i 8,580

i 1,244

- Operation and maintenance services

i 3,177

i 162

—

- Operation services related to service concession arrangements

i 3,878

i 5,067

i 5,811

i 842

- Construction services related to service concession arrangement

i 18,827

i 389

—

Cost of sales

i 39,215

i 18,494

i 14,485

i 2,100

Depreciation

- Property, plant and equipment (Note 11)

i 565

i 510

i 304

i 44

- Right-of-use assets (Note 13)

i 1,663

i 1,366

i 1,413

i 205

Amortization of intangible assets * (Note 12)

i 156

i 884

i 813

i 118

Expense relating to short-term leases (Note 13)

i 496

i 601

i 490

i 71

Impairment losses/(reversal) on financial assets:

- Trade receivables

i 4,544

i 3,840

( i 3,989

)

( i 578

)

- Contract assets

i 172

i 357

i 171

i 25

- Other receivables

—

i 239

i 2,745

i 397

- Amounts due from related companies

( i 554

)

( i 1,106

)

—

Fair value (gain)/loss on financial instruments:

- Financial assets at fair value through profit or loss

( i 31,334

)

i 45,816

—

- Derivative financial liabilities (Note 22 (b))

—

( i 7,467

)

( i 1,007

)

( i 146

)

Consultants share option expense (Note 27)

—

i 16,152

i 2,342

Issuance expense related to placement

—

i 1,579

—

Other (income)/losses

( i 1,616

)

i 183

( i 904

)

( i 131

)

Finance costs (Note 5)

i 3,749

i 4,359

i 3,395

i 492

Employee benefit expenses ** (Note 7)

i 11,412

i 11,496

i 10,587

i 1,535

The amortization of intangible assets allocated to cost of sales amounted to CNY i 115, CNY i 835 and CNY i 766 (US$ i 111) and administrative expenses amounted to CNY i 41, CNY i 49 and CNY i 47 (US$ i 7) on the face of the consolidated statements of profit or loss for the years ended December 31, 2020, 2021 and 2022.

The employee benefit expenses allocated to cost of sales amounted to CNY i 3,371, CNY i 2,772 and CNY i 1,418 (US$ i 206), selling and distribution expenses amounted to CNY i 238, CNY i 159, CNY i 111 (US$ i 16) and administrative expenses amounted to CNY i 7,803, CNY i 8,565 and CNY i 9,058 (US$ i 1,313) on the face of the consolidated statements of profit or loss for the years ended December 31, 2020, 2021 and 2022.

F-46

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

/ i

EMPLOYEE BENEFITS

The Group’s employee benefits comprise the following:

Schedule of employee benefits

Year Ended December 31,

2021

2022

CNY

US$

Wages, salaries and allowances

i 9,680

i 9,302

i 8,566

i 1,242

Housing funds (a)

i 331

i 415

i 215

i 31

Contribution to pension plans (a)

i 518

i 1,493

i 1,516

i 220

Welfare and other expenses

i 972

i 333

i 290

i 42

Less: employee benefit expenses capitalized into intangible assets-concession right

( i 89

)

( i 47

)

—

Total employee benefits

i 11,412

i 11,496

i 10,587

i 1,535

(a)

According to the Mainland China state regulations, the employees of the Group's subsidiaries which operate in Mainland China are required to participate in a central pension scheme operated by the local municipal government and government-sponsored housing funds. These subsidiaries are required to contribute a certain percentage of their payroll costs for those qualified urban employees to the central pension scheme as well as to housing funds.

Employee benefit expenses include remuneration payables to Directors and senior management as set out in Note 26(c).

F-47

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

/ i

8. INCOME TAX EXPENSE

The Company is incorporated in the BVI and conducts its primary business operations through its subsidiaries in the PRC. It also has intermediate holding companies in the BVI and Hong Kong. Under the current laws of the BVI, the Company and its subsidiaries incorporated in the BVI are not subject to tax on income or capital gains. The Hong Kong Profits Tax rate is 16.50%. The Company’s Hong Kong subsidiaries have both Hong Kong–sourced and non-Hong Kong–sourced income. The latter is not subject to Hong Kong Profits Tax and the related expenses are non-tax-deductible. For the Hong Kong–sourced income, no provision for Hong Kong Profits Tax was made as such operations sustained tax losses during the years ended December 31, 2020, 2021 and 2022. Furthermore, there are no withholding taxes in Hong Kong on the remittance of dividends.

China

Under the law of the PRC on corporate income tax and the Implementation Regulation of the Corporate Income Tax Law (collectively, the “CIT Law”), the Company’s PRC subsidiaries are generally subject to PRC corporate income tax at the statutory rate of 25% on their respective estimated assessable profits for the years ended December 31, 2020, 2021 and 2022. Certain PRC subsidiaries of the Company engaged in environmental protection projects were subject to tax at a preferential tax rate of 12.5% or fully exempted from income tax according to the preferential policy of the CIT law for the years ended December 31, 2020, 2021 and 2022.

Under the prevailing CIT Law and its relevant regulations, any dividends paid by the Company’s PRC subsidiaries from their earnings derived after January 1, 2008 to the Company’s Hong Kong subsidiaries are subject to PRC dividend withholding tax of 5% or 10%, depending on the applicability of the Sino-Hong Kong tax treaty.

The current and deferred components of income tax expense are as follows:

Schedule of current and deferred components of income tax expense

Year Ended December 31,

2021

2022

CNY

US$

Current income tax (benefit)/expense

( i 4,436

)

i 2,294

i 3,066

i 445

Deferred income tax expense/(benefit)

i 5,694

( i 159

)

i 2,798

i 405

Total

i 1,258

i 2,135

i 5,864

i 850

Profit/(loss) before income tax consists of the following:

Schedule of Profit/(loss) before income tax

Year Ended December 31,

2021

2022

CNY

US$

PRC

( i 1,214

)

( i 4,669

)

i 6,406

i 929

BVI

i 25,442

( i 48,106

)

( i 22,776

)

( i 3,303

)

Hong Kong

( i 49

)

( i 61

)

( i 62

)

( i 9

)

Total profit/(loss) before income tax for the year

i 24,179

( i 52,836

)

( i 16,432

)

( i 2,383

)

F-48

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

INCOME TAX EXPENSE (CONTINUED)

A reconciliation of the income taxes computed at the PRC statutory tax rate of 25% to the actual income tax expense is as follows:

Schedule of reconciliation of the income tax expenses

Year Ended December 31,

2021

2022

CNY

US$

Profit/(loss) before income tax for the year

i 24,179

( i 52,836

)

( i 16,432

)

( i 2,383

)

Tax at the statutory tax rate

i 25

Computed income tax expense/(benefit)

i 6,045

( i 13,209

)

( i 4,108

)

( i 596

)

Effect of different tax rates of the Company and certain subsidiaries

( i 1,186

)

i 6,937

i 5,699

i 826

Tax losses with no deferred tax assets recognized

i 1,067

i 1,770

i 420

i 61

Non-deductible expenses

i 196

i 122

i 983

i 143

Statutory income

( i 903

)

—

( i 201

)

( i 29

)

Deductible temporary differences with no deferred tax assets recognized

—

i 971

i 141

Utilization of previously unrecognized deductible temporary differences and tax losses

( i 50

)

( i 150

)

( i 1,774

)

( i 257

)

Write-off of unrecoverable deferred tax assets previously recognized

—

i 2,987

i 2,272

i 329

Preferential tax rate

i 2,038

i 2,215

i 14

i 2

Current and deferred tax rate differences

( i 488

)

—

Others

( i 5,461

i 1,463

i 1,588

i 230

Income tax expense

i 1,258

i 2,135

i 5,864

i 850

*	It mainly represents the reversal of a prior withholding CIT payable which is no longer required to be paid according to the prevailing CIT Law and penalties for overdue income tax payment.

The Company’s provision for income tax related to uncertain tax position including in the tax payables for the years ended December 31, 2021 and 2022 is as follows:

Schedule of provision for uncertain tax position

Year Ended December 31,

2022

CNY

US$

As of January 1

i 8,378

i 1,215

Additions based on tax positions

—

i 630

i 91

As of December 31

i 8,378

i 9,008

i 1,306

F-49

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

/ i

EARNINGS/(LOSS) PER SHARE

Basic earnings/(loss) per share is calculated by dividing the profit/(loss) for the period attributable to ordinary equity holders of the Company by the weighted average number of common shares outstanding during the period.

Diluted loss per share is calculated by dividing the profit/(loss) attributable to ordinary equity holders of the Company by the weighted average number of common shares outstanding during the period plus the weighted average number of common shares that would be issued on conversion of all outstanding dilutive securities into common shares.

Basic and diluted net earnings/(loss) per share for the years ended December 31, 2020, 2021 and 2022 are as follows:

Schedule of Basic and Diluted Earnings/(loss) per share

Year Ended December 31,

2021

2022

CNY

US$

Profit/(loss):

Profit/(loss) attributable to ordinary equity holders of the Company

i 24,336

( i 48,152

)

( i 24,623

)

( i 3,570

)

Weighted average number of ordinary shares in issue during the year

i 31,308,653

i 40,720,246

i 40,948,082

Weighted average number of ordinary shares for basic earnings per share ^*

i 6,261,731

i 8,144,050

i 8,189,617

Earnings/(loss) per share:

Basic earnings/(loss) per share

i 3.89

( i 5.91

)

( i 3.00

)

( i 0.44

)

The basic and diluted earnings/(loss) per ordinary share has been adjusted retrospectively for the Share Combination which became effective on April 3, 2023. Refer to Note 31 for further details.

The Company did not have any potential diluted shares for the year ended December 31, 2020. For the years ended December 31, 2021 and 2022, the effects of the outstanding warrants and share options were anti-dilutive and excluded from the computation of diluted loss per share. Accordingly, the diluted earnings/(loss) per share amounts are the same as the basic earnings/(loss) per share amounts for the periods presented.

/ i

10.

DIVIDEND

No dividend was paid or declared by the Company for the years ended December 31, 2020, 2021 and 2022. The Company’s subsidiary, Shenzhen Qianhai, declared a dividend amounting to CNY i 5,048 on June 22, 2021 to its prior shareholder, Shenzhen Qianhai Feishang Industrial Investment Co., Ltd. (“Qianhai Industrial”) and made the payment of the dividend on July 31, 2022 (Note 26 (b) (iv)).

F-50

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

/ i

11.

PROPERTY, PLANT AND EQUIPMENT

Schedule of Property Plant and Equipment

Buildings

Machinery and equipment

Motor vehicle

Office and other equipment

Total

CNY

Cost

i 46

i 1,231

i 2,528

i 700

i 4,505

Additions

—

i 28

Disposal

—

( i 28

)

( i 42

)

—

( i 70

)

Foreign exchange difference

—

( i 26

)

—

( i 26

)

i 46

i 1,177

i 2,486

i 728

i 4,437

Accumulated depreciation

( i 9

)

( i 1,159

)

( i 1,613

)

( i 521

)

( i 3,302

)

Depreciation charge

( i 3

)

( i 13

)

( i 441

)

( i 53

)

( i 510

)

Disposal

—

i 24

i 40

—

i 64

Foreign exchange difference

—

i 26

—

i 26

( i 12

)

( i 1,122

)

( i 2,014

)

( i 574

)

( i 3,722

)

Net book value

i 37

i 72

i 915

i 179

i 1,203

i 34

i 55

i 472

i 154

i 715

Cost

i 46

i 1,177

i 2,486

i 728

i 4,437

Additions

—

i 8

—

i 9

i 17

Disposal

—

( i 16

)

( i 93

)

( i 109

)

i 46

i 1,185

i 2,470

i 644

i 4,345

Accumulated depreciation

( i 12

)

( i 1,122

)

( i 2,014

)

( i 574

)

( i 3,722

)

Depreciation charge

( i 3

)

( i 22

)

( i 259

)

( i 20

)

( i 304

)

Disposal

—

i 15

i 90

i 105

( i 15

)

( i 1,144

)

( i 2,258

)

( i 504

)

( i 3,921

)

Net book value

i 31

i 41

i 212

i 140

i 424

As of December 31, 2022 (US$)

i 4

i 6

i 31

i 20

i 61

There was no impairment loss on property, plant and equipment for the years ended December 31, 2020, 2021 and 2022.

F-51

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

/ i

12.

INTANGIBLE ASSETS

Schedule of Intangible assets

Patent

Concession

right

Software

Total

CNY

Cost

i 22,878

—

i 274

i 23,152

Transfer in

—

i 20,430

—

i 20,430

i 22,878

i 20,430

i 274

i 43,582

Accumulated amortization and impairment

( i 22,388

)

—

( i 121

)

( i 22,509

)

Amortization charge

( i 105

)

( i 730

)

( i 49

)

( i 884

)

( i 22,493

)

( i 730

)

( i 170

)

( i 23,393

)

Net carrying amount

i 490

—

i 153

i 643

i 385

i 19,700

i 104

i 20,189

Cost

i 22,878

i 20,430

i 274

i 43,582

Additions

—

i 5

i 22,878

i 20,430

i 279

i 43,587

Accumulated amortization and impairment

( i 22,493

)

( i 730

)

( i 170

)

( i 23,393

)

Amortization charge

( i 36

)

( i 730

)

( i 47

)

( i 813

)

( i 22,529

)

( i 1,460

)

( i 217

)

( i 24,206

)

Net carrying amount

i 349

i 18,970

i 62

i 19,381

As of December 31, 2022 (US$)

i 51

i 2,750

i 9

i 2,810

As of December 31, 2021 and 2022, the Group’s concession rights and assets associated with the environmental water projects (comprising intangible asset, contract assets and trade receivables) with aggregate gross carrying amounts of CNY i 129,437 and CNY i 139,060 (US$ i 20,160), respectively, were pledged to secure bank loans from Bank of Communications with outstanding balances of CNY i 77,000 and CNY i 74,000 (US$ i 10,728), respectively. Please refer to Note 21 for further details.

There was i i i no / / impairment loss on intangible assets for the years ended December 31, 2020, 2021 and 2022.

F-52

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

/ i

13.

LEASES

(a) Right-of-use assets

The carrying amounts of the Group’s right-of-use assets and the movements during the years indicated are as follows:

Schedule of Right-of-use assets

Motor

vehicles

Offices and

warehouses

Total

CNY

i 408

i 3,152

i 3,560

Addition

—

i 157

Depreciation charge

( i 163

)

( i 1,203

)

( i 1,366

)

i 245

i 2,106

i 2,351

i 245

i 2,106

i 2,351

Addition

i 361

i 1,648

i 2,009

Depreciation charge

( i 181

)

( i 1,232

)

( i 1,413

)

Foreign currency translation difference

—

i 46

i 425

i 2,568

i 2,993

As of December 31, 2022 (US$)

i 62

i 372

i 434

There was i i no / impairment loss on right-of-use assets for the years ended December 31, 2020, 2021 and 2022.

(b) Lease liabilities

The carrying amount of lease liabilities and the movements during the years are as follows:

Schedule of Lease Liabilities

Motor

vehicles

Offices and warehouses

Total

CNY

i 502

i 3,048

i 3,550

Addition

—

i 102

Accretion of interest recognized during the year

i 17

i 133

i 150

Payments

( i 364

)

( i 1,249

)

( i 1,613

)

i 155

i 2,034

i 2,189

Analyzed into:

Current portion

i 155

i 826

i 981

Non-current portion

—

i 1,208

F-53

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

13.

LEASES (CONTINUED)

(b)

Lease liabilities (continued)

Motor

vehicles

Offices and warehouses

Total

CNY

i 155

i 2,034

i 2,189

Addition

i 265

i 1,516

i 1,781

Accretion of interest recognized during the year

i 14

i 119

i 133

Payments

( i 112

)

( i 1,141

)

( i 1,253

)

Foreign currency translation difference

—

i 65

i 322

i 2,593

i 2,915

Analyzed into:

Current portion

i 48

i 1,269

i 1,317

Non-current portion

i 274

i 1,324

i 1,598

As of December 31, 2022 (US$)

i 47

i 375

i 422

Current portion (US$)

i 7

i 183

i 190

Non-current portion (US$)

i 40

i 192

i 232

(c)

Lease-related expenses

The amounts recognized in profit or loss in relation to leases are, as follows:

Schedule of Lease-related expenses

Year Ended December 31,

2021

2022

CNY

US$

Depreciation expense of right-of-use assets

i 1,663

i 1,366

i 1,413

i 205

Interest on lease liabilities

i 80

i 150

i 133

i 19

Expense relating to short-term leases

i 496

i 601

i 490

i 71

Total amounts recognized in profit or loss

i 2,239

i 2,117

i 2,036

i 295

(d)

The total cash outflow for leases is disclosed in Note 29(c) to the financial statements.

F-54

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

/ i

14.

TRADE RECEIVABLES

Schedule of Trade Receivables

2022

CNY

US$

Non-current

Trade receivables from construction contracts

i 17,033

i 13,128

i 1,904

Less: Impairment allowance

( i 7,532

)

( i 2,608

)

( i 379

)

Total of Non-current trade receivables

i 9,501

i 10,520

i 1,525

Current

Trade receivables from service concession agreement

i 11,252

i 22,927

i 3,324

Trade receivables from construction contracts

i 40,356

i 34,850

i 5,052

Less: Impairment allowance

( i 10,082

)

( i 11,017

)

( i 1,597

)

Total of current trade receivables

i 41,526

i 46,760

i 6,779

Total

i 51,027

i 57,280

i 8,304

The Group’s trade receivables arise from the provision of construction services for wastewater treatment projects, sale of wastewater treatment equipment, and operation service of the service concession arrangement. The majority of the Group’s customers are town/village government entities or main contractors of the governmental infrastructure projects whose time of payment for the service or goods received from the Group depend on the appropriation and approval of the fiscal funds. Accordingly, the Group granted various credit terms to different customers, depending on the nature and background of the customers and projects. The Group generally granted customers a credit period of one month to three months, except for some of the customers for construction services, sales of wastewater treatment equipment and maintenance services who will generally settle the amounts owed to the Group in a number of specified installments covering periods ranging from one year to five years. Apart from the trade receivables related to the service concession arrangement which bear no interest, the trade receivables of construction services, operation and maintenance services and sale of wastewater treatment equipment bear an imputed interest rate of i 4.75% per annum.

An aging analysis of the trade receivables as of the end of the reporting period, based on the invoice date and net of loss allowance, is as follows:

Schedule of Aging Analysis of Trade Receivables

2022

CNY

US$

Within 1 year

i 19,026

i 18,401

i 2,667

Between 1-2 years

i 5,106

i 13,896

i 2,015

Between 2-3 years

i 12,796

i 4,518

i 655

Over 3 years

i 14,099

i 20,465

i 2,967

Total

i 51,027

i 57,280

i 8,304

F-55

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

14.

TRADE RECEIVABLES (CONTINUED)

The movement in the loss allowance for trade receivables during the years indicated are as follows:

Schedule of the movement in the loss allowance for trade receivables

2022

CNY

US$

Beginning of the year

i 13,774

i 17,614

i 2,554

(Reversal)/provision for expected credit losses, net

i 3,840

( i 3,989

)

( i 578

)

End of the year

i 17,614

i 13,625

i 1,976

A decrease in the loss allowance of CNY i 3,992 (US$ i 579) (2021: increase CNY i 3,839) was the result of a net decrease (2021: a net increase) in the gross carrying amount after the settlement of trade receivables of construction contracts and origination of new trade receivables of construction contracts.

The Group elected to apply the simplified approach for providing impairment for ECLs prescribed by IFRS 9, which permits the use of the lifetime expected loss provision for all trade receivables. To measure the ECLs, trade receivables were grouped based on the shared credit risk characteristics and the days past due. The ECLs below also incorporate forward-looking information. The impairment as of December 31, 2021 and 2022 was determined as follows:

Schedule of impairment

Past due

Current

Within 1 year

1-2 years

2-3 years

Over 3 years

Total

As of December 31, 2021:

Expected credit loss rate:

i 6

i 26

i 13

i 48

i 26

Gross carrying amount (CNY)

i 3,670

i 16,311

i 6,865

i 14,712

i 27,083

i 68,641

Impairment allowances (CNY)

i 955

i 1,759

i 1,916

⁽ⁱ⁾

i 12,984

⁽ⁱⁱ⁾

i 17,614

As of December 31, 2022:

Expected credit loss rate:

i 0

i 9

i 29

i 34

i 19

Gross carrying amount (CNY)

—

i 18,406

i 15,195

i 6,399

i 30,905

i 70,905

Impairment allowances (CNY)

i 5

i 1,299

i 1,881

i 10,440

⁽ⁱⁱ⁾

i 13,625

Impairment allowances (US$)

i 1

i 188

i 273

i 1,514

i 1,976

(i)

The impairment allowances included CNY221 as of December 31, 2021, for specific trade receivables which were considered to be in default due to conditions which indicated that the Group was unlikely to receive the outstanding contractual amounts in full.

(ii)

The impairment allowances included an amount of CNY4,646 and CNY4,600 (US$667) as of December 31, 2021 and 2022, respectively, for specific trade receivables which were considered to be in default due to conditions which indicated that the Group was unlikely to receive the outstanding contractual amounts in full.

F-56

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

/ i

15.

CONTRACT ASSETS

Schedule of contract assets

2022

CNY

US$

Non-current

Service concession assets

(a)

i 91,062

i 89,740

i 13,010

Less: impairment allowance

( i 27

)

( i 27

)

( i 4

)

i 91,035

i 89,713

i 13,006

Current

Service concession assets

(a)

i 7,423

i 1,076

Other contract assets

(b)

i 8,443

i 14,930

i 2,164

Less: impairment allowance

( i 535

)

( i 706

)

( i 102

)

i 15,331

i 21,647

i 3,138

Total

i 106,366

i 111,360

i 16,144

(a)

Service concession assets bearing an imputed interest of 7% arose from the Group's revenue from construction service under a BOT arrangement rendered by the Group's subsidiary, Shaoguan Angrui. The facilities that the service concession arrangement relate to were under construction phases from June 2018 to January 2021 and commenced operation in January 2021.

The amounts for the service concession arrangement are not yet due for payment and will be settled by revenue to be generated during the operating periods of the service concession arrangement. Amounts billed will be transferred to trade receivables.

(b)

The balances as of December 31, 2021 and 2022 comprised contract assets arising from performance under a water treatment plant construction service contract. Such contracts include payment schedules that require progress payments over the service periods when milestones are reached.

F-57

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

15.

CONTRACT ASSETS (CONTINUED)

The movements in the provision for impairment of contract assets are as follows:

Schedule of the movements in the provision for impairment of contract assets

2022

CNY

US$

Beginning of the year

i 205

i 562

i 81

Provision for expected credit losses, net

i 357

i 171

i 25

End of the year

i 562

i 733

i 106

An impairment analysis is performed at each reporting date using the probability-of-default approach to measure ECL. The probability of default rates are estimated based on comparable entities with published credit ratings. The calculation reflects the probability-weighted outcome, the time value of money and reasonable and supportable information that is available at the reporting date about past events, current conditions and forward-looking credit risk information. As of December 31, 2021 and 2022, the assumed default rate ranged from i 0.03% to i 55.93% and from i 0.03% to i 43.51%, respectively.

/ i

16.

OTHER RECEIVABLES

Schedule of Other Receivables

2022

CNY

US$

Financial assets

Loans to unrelated companies (i)

i 83,600

i 12,120

Deposits

i 863

i 790

i 114

Others

i 1,000

i 145

Financials asset

i 85,463

i 85,390

i 12,379

Staff advance

i 697

i 237

i 34

Others

i 280

i 90

i 13

Total amount

i 977

i 327

i 47

Impairment allowance

( i 239

)

( i 2,984

)

( i 433

)

Total

i 86,201

i 82,733

i 11,993

(i)

The balance as of December 31, 2022 consisted of a loan in the amount of CNY i 80,000 (US$ i 11,599) and the corresponding interest receivable amounted to CNY i 3,600 (US$ i 521) from Shenzhen Qianhai, a subsidiary of the Company, to an unrelated company, Shenzhen Chaopeng Investment Co., Ltd. The loan was originally provided on June 30, 2021, and will mature in one year. On June 30, 2022, the loan was extended for another year to June 30, 2023. The loan is interest-bearing at a rate of 9% per annum and guaranteed by Shenzhen Feishang Investment Co., Limited, a company unrelated to the Group.

F-58

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

16.

OTHER RECEIVABLES (CONTINUED)

The movements in the loss allowance for other receivables during the years indicated are as follows:

Schedule of movements in the loss allowance for other receivables

2022

CNY

US$

Beginning of the year

—

i 239

i 36

Provision for expected credit losses, net

i 239

i 2,745

i 397

End of the year

i 239

i 2,984

i 433

For the financial assets included above, an impairment analysis is performed at each reporting date using the probability-of-default approach to measure ECL. The probability of default rates are estimated based on comparable companies with published credit ratings. The calculation reflects the probability weighted outcome, the time value of money and reasonable and supportable information that is available at the reporting date about past events, current conditions, and forward-looking credit risk information. As of December 31, 2022, the probability of default applied was 5.51% (0.45% as of December 31, 2021), and the loss given default was 62.26% (61.6% as of December 31, 2021).

F-59

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

/ i

17.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents are set out below as of December 31, 2021 and 2022:

Schedule of cash and cash equivalents

2022

CNY

US$

Cash and cash equivalents

- Cash on hand

i 74

i 71

i 10

- Cash at bank

i 58,285

i 31,154

i 4,514

- Short-term deposits

—

i 470

i 71

Total Cash and cash equivalent

i 58,359

i 31,695

i 4,595

The carrying amounts of the Group’s cash and cash equivalents are denominated in the following currencies:

Schedule of cash and cash equivalents denominated in different currencies

2022

CNY

US$

CNY

i 37,333

i 24,709

i 3,582

US$

i 20,011

i 6,255

i 907

HK$

i 1,015

i 731

i 106

i 58,359

i 31,695

i 4,595

Cash at banks earns interest at floating rates based on daily bank deposit rates. The bank balances and time deposits are deposited with creditworthy banks with no recent history of default.

As of December 31, 2022, the Group has pledged its short-term deposits to fulfil collateral requirements of a bank guarantee related to a new bidding associated with a potential business opportunity of construction projects.

F-60

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

/ i

18.

TRADE PAYABLES

Schedule of Trade Payables

2022

CNY

US$

Trade payables

i 21,118

i 20,326

i 2,946

The aging analysis of trade payables as of December 31, 2021 and 2022 is as follows:

Schedule of Aging Analysis of Trade Payables

2022

CNY

US$

Within 1 year

i 8,326

i 4,139

i 600

Between 1 and 2 years

i 10,030

i 5,438

i 788

Over 2 years

i 2,762

i 10,749

i 1,558

Total

i 21,118

i 20,326

i 2,946

Trade payables are mainly due to subcontractors of construction services and the vendors of labor service. The trade payables are non-interest-bearing and are normally settled within one year.

/ i

19.

OTHER PAYABLES AND ACCRUALS

Schedule of Other Payables and Accruals

2022

CNY

US$

Financial liabilities

Accrued expenses

i 5,398

i 6,444

i 934

Deposits from customers

i 505

i 305

i 44

Other payables (financial liabilities)

i 5,903

i 6,749

i 978

Accrued payroll

i 2,878

i 3,108

i 451

Penalties related to income tax

i 3,025

i 4,611

i 668

Taxes other than income tax payable (a)

i 285

i 1,885

i 274

Others

i 7

i 371

i 54

Others payables (non-financial liabilities)

i 6,195

i 9,975

i 1,447

Total

i 12,098

i 16,724

i 2,425

(a)

Taxes other than income taxes payable mainly comprise accruals for output value-added tax, city construction tax and education surcharge.

F-61

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

/ i

20.

PROVISIONS

Schedule of provisions
	Post-flood repair
		CNY

As of January 1, 2022		—
Additional provision		i 808
Amounts utilized during the year		( i 314	)

As of December 31, 2022		i 494
Current portion		i 494

As of December 31, 2022 (US$)		i 72
Current portion (US$)		i 72

In June 2022, the wastewater treatment infrastructure of the service concession arrangement operated by the Company’s subsidiary, Shaoguan Angrui was partially destroyed due to flooding. Shaoguan Angrui has committed to repair the infrastructure to restore the original production capacity of the infrastructure in the next year. A provision has been recognized for the expected expenditures associated with the repair.

/ i

21.

INTEREST-BEARING LOANS AND BORROWINGS

Schedule of Interest-bearing Loans and Borrowings

2022

CNY

US$

Interest rate

Maturity

Non-current interest-bearing loans

Bank loan-secured and guaranteed

i 5.05

i 2023 to 2038

i 74,000

i 71,000

i 10,293

Current interest-bearing loans

Bank loan-secured and guaranteed

i 5.05

i 2022 to 2023

i 3,000

i 435

Total

i 77,000

i 74,000

i 10,728

The bank loan is due to the Bank of Communications and denominated in CNY.

The loan is secured by collection right (including contract assets, intangible assets and trade receivables) in connection with the Group's service concession arrangement (Note 12, 14 and 15) and 80% equity interest of the Company's subsidiary, Shaoguan Angrui. The loan is also guaranteed by Shanghai Onway, the Company's subsidiary, and Feishang Enterprise Group Co., Ltd. (“Feishang Enterprise”), a related company of the Group.

i The outstanding balance as of December 31, 2022 is repayable in equal annual installments of CNY3,000 until December of 2023; CNY4,000 from 2024 to 2028; CNY5,000 from 2029 to 2034; CNY6,000 in 2035; and CNY5,000 from 2036 to 2038.

F-62

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

/ i

22.

FINANCIAL INSTRUMENTS

(a) Financial assets

Set out below is an overview of financial assets, other than cash and short-term deposits, held by the Group as of December 31, 2021 and 2022:

Schedule of financial assets

2022

CNY

US$

Debt instruments at amortized cost:

Trade receivables: current

i 41,526

i 46,760

i 6,779

Trade receivables: non-current

i 9,501

i 10,520

i 1,525

Financial assets included in other receivables

i 85,224

i 82,406

i 11,946

Financial assets at fair value through other comprehensive income:

Bills receivable

—

i 8,500

i 1,232

Total

i 136,251

i 148,186

i 21,482

Total current

i 126,750

i 137,666

i 19,957

Total non-current

i 9,501

i 10,520

i 1,525

F-63

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

22.

FINANCIAL INSTRUMENTS (CONTINUED)

(b) Financial liabilities

Set out below is an overview of financial liabilities of the Group as of December 31, 2021 and 2022:

Schedule of financial liabilities

December 31,

2022

CNY

US$

Derivatives not designated as hedging instruments:

Derivative financial liabilities (i)

i 1,710

i 824

i 119

Financial liabilities at amortized cost:

Trade payables

i 21,118

i 20,326

i 2,946

Financial liabilities in other payables and accruals

i 5,903

i 6,749

i 978

Dividends payable

i 5,048

—

Lease liabilities

i 2,189

i 2,915

i 422

Due to related companies

i 5,710

i 3,408

i 494

Due to the Shareholder

i 14,050

i 7,153

i 1,037

Interest-bearing loans and borrowings

i 77,000

i 74,000

i 10,729

Total

i 132,728

i 115,375

i 16,725

Total current

i 57,520

i 42,777

i 6,200

Total non-current

i 75,208

i 72,598

i 10,525

(i)

On January 20, 2021, the Company entered into a securities purchase agreement with certain institutional investors, pursuant to which the Company issued and sold on January 22, 2021, (i) in a registered direct offering, an aggregate of 3,960,000 of its common shares at a price of US$1.85 per share, and (ii) in a concurrent private placement, warrants initially exercisable for the purchase of an aggregate of 1,584,000 of its common shares with an initial exercise price of US$2.35 per share.

The Company recognized the warrants issued to the investors as derivative financial liabilities (not designated as hedging instruments) with a fair value of CNY i 9,246 (US$ i 1,427)* on the issue date as the investors have the right to exercise their warrants on a cashless basis. In accordance with IAS 32, a contract settled by a single net payment (generally referred to as net cash-settled or net equity-settled as the case may be) is a financial liability and not an equity instrument. The fair value gain of derivative financial liabilities for the years ended December 31, 2021 and 2022 was CNY i 7,467 and CNY i 1,007 (US$ i 146), respectively.

As the changes in equity from this private placement transaction are denominated in US$, the amount in US$ is the actual transaction amount and the corresponding amount in CNY was translated from US$ at the applicable exchange rate of the transaction date, January 22, 2021.

F-64

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

22.

FINANCIAL INSTRUMENTS (CONTINUED)

(c) Fair value

Set out below is a comparison, by class, of the carrying amounts and fair values of the Group’s financial instruments, other than those with carrying amounts that are reasonable approximations of fair values:

Schedule of the carrying amounts and fair values of the Group’s financial instruments other than those with carrying amounts

2022

CNY

US$

Carrying

amount

Fair

value

Carrying

amount

Fair

value

Carrying

amount

Fair

value

Financial liabilities

Interest-bearing loans and borrowings

i 77,000

i 79,003

i 74,000

i 77,636

i 10,728

i 11,255

The following table provides the fair value measurement hierarchy of the Group’s financial assets and financial liabilities as of December 31, 2021 and 2022:

Schedule of the fair value measurement hierarchy of the Group’s financial assets and financial liabilities

As of December 31, 2021

Fair value measurement using

Quoted prices in active markets

(Level 1)

Significant observable inputs

(Level 2)

Significant

unobservable inputs

(Level 3)

Total

CNY

Recurring fair value measurement:

Financial liabilities

Derivative financial liabilities

—

i 1,710

—

i 1,710

As of December 31, 2022

Fair value measurement using

Quoted prices in active markets

(Level 1)

Significant observable inputs

(Level 2)

Significant

unobservable inputs

(Level 3)

Total

CNY

Recurring fair value measurement:

Financial assets

Bills receivable

—

i 8,500

—

i 8,500

Financial liabilities

Derivative financial liabilities

—

i 824

—

i 824

F-65

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

22.

FINANCIAL INSTRUMENTS (CONTINUED)

(c) Fair value (continued)

As of December 31, 2022

Fair value measurement using

Quoted prices in active markets

(Level 1)

Significant observable inputs

(Level 2)

Significant

unobservable inputs

(Level 3)

Total

US$

Recurring fair value measurement:

Financial assets

Bills receivable

—

i 1,232

—

i 1,232

Financial liabilities

Derivative financial liabilities

—

i 119

—

i 119

Level 2:

Bills receivable

The fair value valuation of bills receivable is based on directly or indirectly observable inputs (such as recent bill discount rate) through valuation techniques.

Derivative financial liabilities

The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation techniques maximize the use of relevant observable inputs and minimize the use of unobservable inputs. If all significant inputs required to fair value an instrument are observable, the instrument is included in Level 2.

There is no established public trading market for the warrants issued to investors on January 22, 2021. As of December 31, 2022, the Group measured the fair value of those warrants on a recurring basis using a binomial lattice pricing model with significant inputs including, among other relevant observable inputs, the underlying spot price of the Company’s common shares, exercise price, time to expiration, risk-free rate and equity volatility.

During the years ended 2021 and 2022, there were no transfers of fair value measurements between Level 1 and Level 2 and no transfers into or out of Level 3 for both financial assets and liabilities.

F-66

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

/ i

23.

FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The financial instruments of the Group primarily include cash and cash equivalents, trade receivables, bills receivable at fair value through other comprehensive income, other receivables, contract assets, trade payables, other payables, amounts due to related companies, amounts due to the Shareholder, derivative financial liabilities, and interest-bearing loans and borrowings.

The Group is exposed to credit risk, foreign currency risk, business and economic risk and liquidity risk. The Group has not used any derivatives and other instruments for hedging purposes. The Group does not hold or issue derivative financial liabilities for trading purposes. The Group reviews and agrees policies for managing each of these risks and they are summarized below.

(a)

Credit risk

Management has a credit policy in place and the exposures to credit risk are monitored on an ongoing basis. Debts are usually due within 30 to 90 days from the date of billing.

Trade receivables of the Group mainly represent receivables with respect to revenue from construction services for wastewater treatment plant and sales of wastewater treatment equipment, which are settled through progress billing, and operation services of service concession arrangement, which are settled on a quarterly basis. In addition, the Group has contract assets relating to the service concession arrangement and construction service.

As of December 31, 2021, and 2022, “Trade receivables” and “Contract assets” before allowances in the aggregate amounted to CNY i 175,569 and CNY i 182,998 (US$ i i 26,530 / ), respectively, of which CNY i 109,737 and CNY i 120,090 (US$ i i 17,410 / ) were due from the largest customer and CNY i 127,415 and CNY i 134,930 ($ i i 19,561 / ) were due from the five largest customers in the aggregate of the Group, respectively. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the consolidated statements of financial position. Since the counterparty to the BOT arrangement is a local government authority in the PRC, the Group considers credit risk is low as of December 31, 2021 and 2022. The Group does not hold any collateral over these balances.

Management groups financial instruments based on shared credit risk characteristics, such as instrument type and credit risk ratings for the purpose of determining significant increase in credit risk and calculation of impairment. The carrying amount of each financial asset in the consolidated statements of financial position represents the Group’s maximum exposure to credit risk in relation to its financial assets.

F-67

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

23.

FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

(a)

Credit risk (continued)

A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of that financial asset have occurred. Evidence that a financial asset is credit-impaired includes observable data about the following events:

- significant financial difficulty of the debtor;

- a breach of contract such as a default or past due event;

- it is probable that the debtor will enter bankruptcy or other financial reorganization

To manage credit risk arising from trade receivables and contract assets, the Group assesses the credit quality of the debtors, taking into account their financial position, historical settlement records, past experience and other factors. The Group applies the simplified approach to provide for ECLs prescribed by IFRS 9, which permits the use of lifetime expected loss provision for all trade receivables. The ECLs also incorporated forward-looking information

For financial assets assessed for impairment under the general approach, the Group established a policy to perform an assessment at the end of each reporting period of whether a financial instrument’s credit risk has increased significantly since initial recognition, by considering the change in the risk of default occurring over the remaining life of the financial instrument. The Group groups its other receivables into Stage 1, Stage 2 and Stage 3, as described below:

Stage 1 – When other receivables are first recognized, the Group recognized an allowance based on 12 months’ ECLs.

Stage 2 – When other receivables have shown a significant increase in credit risk since origination, the Group records an allowance for the lifetime ECLs.

Stage 3 – Other receivables are considered credit-impaired. The Group records an allowance for the lifetime ECLs.

Management also makes periodic collective assessments for other receivables and amounts due from related companies as well as individual assessments of the recoverability of other receivables based on historical settlement records, past experience and other factors. The Group classified other receivables and amounts due from related companies in Stage 1 and continuously monitored their credit risk. Management believes that there is no material credit risk inherent in the Group’s outstanding balance of other receivables as of December 31, 2021 and 2022.

The Group does not provide any guarantees that would expose the Group to credit risk. Further quantitative disclosures with respect to the Group’s exposure to credit risk arising from financial assets are set out in Notes 14, 15 and 16 to the financial statements.

Cash and cash equivalents

The Group maintains its cash and cash equivalents primarily with various PRC state-owned banks and Hong Kong based financial institutions, which management believes are of high credit quality. The Group performs periodic evaluations of the relative credit standing of those financial institutions.

F-68

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

23.

FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

(b)

Foreign currency risk

Foreign currency risk primarily arises from certain significant foreign currency deposits denominated in US$ and HK$ and related exposures are disclosed in Note 17. The Group treasury closely monitors the change of exchange rates on the international foreign currency market and takes these into consideration when investing in foreign currency deposits and borrowing loans.

The CNY is not freely convertible into foreign currencies. The State Administration for Foreign Exchange, under the authority of the People's Bank of China, controls the conversion of the CNY into foreign currencies. The value of the CNY is subject to changes in PRC government policies and to international economic and political developments affecting the supply and demand in the China Foreign Exchange Trading System market. All foreign exchange transactions continue to take place either through the People's Bank of China or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the People’s Bank of China.

As of December 31, 2022, the Group only had significant exposure to US$. If CNY had strengthened/weakened by 5% against US$ with all other variables held constant, the loss for the year would have been approximately CNY313 higher/lower (CNY1,001 higher/lower for the year ended December 31, 2021), mainly as a result of foreign exchange gains and losses arising from translation of US$-denominated deposits. Profit was less sensitive to the fluctuation in the CNY/US$ exchange rates in 2022 than in 2021, mainly due to the decrease in the US$ denominated cash deposits.

(c)

Interest rate risk

The fair value interest rate risk of the Group mainly arises from long-term loans at fixed rates (see Note 21). As fluctuation of the comparable interest rate (Loan Prime Rate of PRC market) with similar terms was relatively low, the Directors are of the opinion that the Group is not exposed to any significant fair value interest rate risk for its fixed interest rate borrowings held as of December 31, 2021 and 2022.

(d)

Business and economic risk

The Group's operations may be adversely affected by significant political, economic and social uncertainties in the PRC. Although the PRC government has been pursuing economic reform policies for more than 40 years, no assurance can be given that the PRC government will continue to pursue such policies or that such policies may not be significantly altered, especially in the event of a change in leadership, social or political disruption or unforeseen circumstances affecting the political, economic and social conditions in the PRC. There is also no guarantee that the PRC government’s pursuit of economic reforms will be consistent or effective.

F-69

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

23.

FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

(e)

Liquidity risk

The Group manages its liquidity risk by regularly monitoring its liquidity requirements and its compliance with debt covenants to ensure that it maintains sufficient cash and cash equivalents, as well as adequate time deposits, to meet its liquidity requirements in the short and long term.

The table below summarizes the maturity profile of the Group’s financial liabilities and lease liabilities based on contractual undiscounted payments:

Summary the maturity profile of financial liabilities and lease liabilities

December 31, 2021

On demand

Less than
1 year

1 to 5 years

More than
5 years

Total

CNY

Derivative financial liabilities

i 1,710

—

i 1,710

Trade payables

—

i 21,118

—

i 21,118

Financial liabilities in other payables and accruals

—

i 5,903

—

i 5,903

Due to related companies

—

i 5,710

—

i 5,710

Due to the Shareholder

—

i 14,050

—

i 14,050

Lease liabilities

—

i 1,047

i 1,354

—

i 2,401

Interest-bearing loans and
borrowings

—

i 6,882

i 28,792

i 78,139

i 113,813

Trade and other payables

i 1,710

i 54,710

i 30,146

i 78,139

i 164,705

F-70

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

23.

FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

(e)

Liquidity risk (continued)

December 31, 2022

On demand

Less than
1 year

1 to 5 years

More than
5 years

Total

CNY

Derivative financial liabilities

i 824

—

i 824

Trade payables

—

i 20,326

—

i 20,326

Financial liabilities in other payables and accruals

—

i 6,749

—

i 6,749

Due to related companies

—

i 3,408

—

i 3,408

Due to the Shareholder

—

i 7,153

—

i 7,153

Lease liabilities

—

i 1,387

i 1,691

i 243

i 3,321

Interest-bearing loans and
borrowings

—

i 6,729

i 29,005

i 71,197

i 106,931

Trade and other payables

i 824

i 45,752

i 30,696

i 71,440

i 148,712

December 31, 2022

On demand

Less than
1 year

1 to 5 years

More than
5 years

Total

US$

Derivative financial liabilities

i 119

—

i 119

Trade payables

—

i 2,946

—

i 2,946

Financial liabilities in other payables and accruals

—

i 978

—

i 978

Due to related companies

—

i 494

—

i 494

Due to the Shareholder

—

i 1,037

—

i 1,037

Lease liabilities

—

i 201

i 245

i 35

i 481

Interest-bearing loans and
borrowings

—

i 976

i 4,205

i 10,322

i 15,503

i 119

i 6,632

i 4,450

i 10,357

i 21,558

(f)

Capital management

The Group monitors capital on the basis of the debt to capital ratio (gearing ratio), which is calculated as interest-bearing debt divided by total capital. Interest-bearing debt mainly includes lease liabilities and interest-bearing loans and borrowings. Capital includes total equity and interest-bearing debt. The gearing ratio was i 30.31% as of December 31, 2021 and i 30.24% as of December 31, 2022, respectively.

F-71

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

/ i

24.

DEFERRED TAX ASSETS AND LIABILITIES

(a)

Deferred tax balance

Net deferred tax assets and liabilities recognized in the consolidated statements of financial position are as follows:

Schedule of net deferred tax assets and liabilities

As of

2022

CNY

US$

Deferred tax assets

i 3,291

i 488

i 71

Offset amount

( i 3,225

)

( i 488

)

( i 71

)

Deferred tax assets after offsetting

i 66

—

Deferred tax liabilities before offsetting

i 5,769

i 5,764

i 836

Offset amount

( i 3,225

)

( i 488

)

( i 71

)

Deferred tax liabilities after offsetting

i 2,544

i 5,276

i 765

(b)

Gross movement on the deferred tax account

The gross movement on the deferred income tax accounts is as follows:

Schedule of gross movement of the deferred tax account

2021

2022

CNY

US$

As of January 1

i 7,506

i 2,478

i 360

Credited to other capital reserve

( i 4,463

)

—

(Credited)/charged to the consolidated statements of profit or loss during the year (Note 8)

( i 159

)

i 2,798

i 405

Currency translation differences

( i 406

)

—

As of December 31

i 2,478

i 5,276

i 765

F-72

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

24.

DEFERRED TAX ASSETS AND LIABILITIES (CONTINUED)

(c)

Deferred tax assets

The components of deferred tax assets and their movements during the years indicated, without taking into consideration the offsetting of balances within the same tax jurisdictions, are as follows:

Schedule of deferred tax assets

Provision for loss allowance

Significant financing component of the contract with customers

Lease liabilities

Losses available for offsetting against future taxable profits

Total

CNY

i 3,772

i 1,238

i 614

—

i 5,624

(Charged)/credited to the consolidated statements of profit or loss during the year

( i 1,629

)

( i 698

)

( i 160

)

i 154

( i 2,333

)

As of December 31, 2021

i 2,143

i 540

i 454

i 154

i 3,291

As of January 1, 2022

i 2,143

i 540

i 454

i 154

i 3,291

Charged to the consolidated statements of profit or loss during the year

( i 2,136

)

( i 478

)

( i 35

)

( i 154

)

( i 2,803

)

As of December 31, 2022

i 7

i 62

i 419

—

i 488

As of December 31, 2022 US$

i 1

i 9

i 61

—

i 71

(d)

Deferred tax liabilities

The components of deferred tax liabilities and their movements during the years indicated, without taking into consideration the offsetting of balances within the same tax jurisdictions, are as follows:

Schedule of deferred tax liabilities

Financial asset at fair value through profit or loss

Temporary difference on assets recognized under IFRIC 12

Right-of-use assets

Total

CNY

i 9,964

i 2,546

i 620

i 13,130

(Credited)/charged to the consolidated statements of profit or loss during the year

( i 5,095

)

i 2,724

( i 121

)

( i 2,492

)

Credit to other capital reserves

( i 4,463

)

—

( i 4,463

)

Foreign exchange difference

( i 406

)

—

( i 406

)

As of December 31, 2021

—

i 5,270

i 499

i 5,769

As of January 1, 2022

—

i 5,270

i 499

i 5,769

Credited to the consolidated statements of profit or loss during the year

—

( i 5

)

( i 5

)

As of December 31, 2022

—

i 5,270

i 494

i 5,764

As of December 31, 2022 US$

—

i 764

i 72

i 836

F-73

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

24.

DEFERRED TAX ASSETS AND LIABILITIES (CONTINUED)

(e)

Deferred tax not recognized

As of December 31, 2021 and 2022, the total amounts of deductible temporary differences and unused tax losses for which no deferred tax assets were recognized with respect to certain deductible temporary differences and accumulated tax losses of the Company’s subsidiaries established in Mainland China and Hong Kong that can be carried forward against future taxable income are as follows

Schedule of deferred tax not recognized

2022

CNY

US$

Deductible temporary differences with no deferred tax assets recognized

i 13,148

i 21,929

i 3,179

Tax losses with no deferred tax assets recognized

i 16,536

i 16,073

i 2,330

Total

i 29,684

i 38,002

i 5,509

(f)

Expiration dates of the tax losses

The tax losses in Mainland China can be carried forward for five years to offset future taxable profit. The expiration dates of the unused tax losses of the subsidiaries established in Mainland China for which no deferred tax assets were recognized are summarized as follows:

Schedule of expiration dates of the tax losses

2022

CNY

US$

Year of expiration

2022

i 1,065

—

2023

i 2,318

i 336

2024

i 1,835

i 266

2025

i 4,237

i 2,476

i 359

2026

i 7,040

i 1,021

2027

—

i 2,302

i 333

Total

i 16,495

i 15,971

i 2,315

F-74

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

/ i

25.

EQUITY

(a)

Issued capital

Schedule of Issued Capital
	December 31,
	2021		2022		2022
	CNY		CNY		US$

Authorized:
10,000,000 preferred shares, no par value		—		—		—
200,000,000 common shares, no par value		—		—		—

Common shares issued and fully paid:
December 31, 2022: 40,948,082* (December 31, 2021: 40,948,082) common shares, no par value		i 450,782		i 450,782		i 65,351

*	The numbers of common shares above are before giving effect to the Share Combination which became effective on April 3, 2023. Refer to Note 31 for further details.

(b)

Other capital reserves

Schedule of other capital reserves
	Other capital reserves
	CNY		US$

As of January 1, 2021	i 787,987		i 114,236

Deemed distribution to the controlling shareholder	( i 75,651	)	( i 10,967	)
Equity-settled share-based payment	i 2,311		i 335
Others	i 4,463		i 647

As of December 31, 2021	i 719,110		i 104,251

As of January 1, 2022	i 719,110		i 104,251

Equity inventive share-based payment (Note 27)	i 16,209		i 2,342

As of December 31, 2022	i 735,319		i 106,600

Other capital reserves of the Company are mainly for equity-settled share-based compensation, the exercise of stock options, the exercise of warrants, the business combination and the deemed contribution from the Shareholder and related companies.

(c)

Dividend restrictions and reserves

Due to the Group's structure, the payment of dividends is subject to numerous controls imposed under PRC law, including foreign exchange control on the conversion of the local currency into U.S. dollars and other currencies.

In accordance with the relevant PRC regulations, appropriations of net income as reflected in its PRC statutory financial statements are to be allocated to each of the general reserve and enterprise expansion reserve, respectively, as determined by the resolution of the Board of Directors annually.

F-75

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

/ i

26.

RELATED PARTY BALANCES AND TRANSACTIONS

In addition to the transactions detailed elsewhere in the consolidated financial statements, the Group had the following transactions and balances with related companies:

(a)

Commercial transactions with related companies

Schedule of Commercial Transactions with Related Companies

Year Ended December 31,

2021

2022

CNY

US$

Interest income received from Feishang Enterprise ^(a)

(i)

i 6,792

i 3,396

—

CHNR’s share of office rental, rates and others to Anka Consultants Limited (“Anka”)^(b)

(ii)

i 1,368

i 1,343

i 1,175

i 170

Feishang Management's share of office rental to Feishang Enterprise ^(a)

(iii)

i 166

i 24

Shenzhen New PST’s share of office rental to Feishang Enterprise ^(a)

(iv)

i 90

i 13

(i)

The Company's subsidiary, Shanghai Onway, entered into a series of contracts to provide a loan amounting to CNY80,000 at an interest rate of 9% per annum to Feishang Enterprise from March 2, 2018 to June 30, 2021.

(ii)

The Company signed a contract with Anka to lease 184 square meters of office premises for two years, from July, 2018 to June 30, 2020, and extended it to June 30, 2024. The agreement also provides that the Company shares certain costs and expenses in connection with its use of the office, in addition to some of the accounting and secretarial services and day-to-day office administration services provided by Anka.

(iii)

On January 1, 2018, Feishang Management signed an office-sharing agreement with Feishang Enterprise. Pursuant to the agreement, Feishang Management shares 40 square meters of office premises for 33 months. Feishang Management signed a new contract with Feishang Enterprise in October 2022, which will expire on September 30, 2023.

(iv)

Shenzhen New PST signed a contract with Feishang Enterprise to lease 96 meters of office premises for 12-month period, from March 14, 2021 to March 13, 2022 and renewed the contract with same terms for another 12-month period from March 14, 2022 to March 13, 2023.

(a)

Feishang Enterprise is controlled by Mr. Li Feilie, who is the controlling shareholder of the Company.

(b)

Anka is jointly owned by Mr. Wong Wah On Edward and Mr. Tam Cheuk Ho, who are officers of the Company.

F-76

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

26.

RELATED PARTY BALANCES AND TRANSACTIONS (CONTINUED)

(b)

Balances with related companies

The Group’s balances with related companies are unsecured and non-interest bearing. Feishang Enterprise and the Shareholder have provided letters stating their continuous financial support to the Group and that they will not recall any amounts due to them until the Group has sufficient liquidity to finance its operations. The balances are summarized as follows:

Schedule of Balances with Related Companies

2022

CNY

US$

Current:

Payable to related companies:

Feishang Enterprise^(a)

(i)

i 3,019

i 495

i 72

Anka Capital Limited (“Anka Capital”)^(b)

(iii)

i 2,691

i 2,913

i 422

i 5,710

i 3,408

i 494

Payable to the Shareholder:

Feishang Group^(a)

(ii)

i 14,050

i 7,153

i 1,037

i 14,050

i 7,153

i 1,037

Dividend payables to related companies:

Qianhai Industrial^(c)

(iv)

i 5,048

—

i 5,048

—

Lease liabilities to related parties:

Anka^(b)

i 372

i 1,022

i 148

i 372

i 1,022

i 148

(i)

(ii)

(iii)

The payable to Anka Capital represents the net amount of advances from Anka Capital. The balance is unsecured and interest-free. The balance is repayable when the Group is in a position to settle the amounts due without having a detrimental impact on the financial resources of the Group.

(iv)

The dividend payable to Qianhai Industrial represents the declared dividend that was approved at the shareholder meeting of Shenzhen Qianhai on June 22, 2021 prior to the acquisition of PST Technology and its subsidiaries by the Group. It was paid by Shenzhen Qianhai as of December 31, 2022.

(a)

Feishang Enterprise and Feishang Group are controlled by Mr. Li Feilie, who is the controlling shareholder of the Company.

(b)

Anka Capital and Anka are each jointly owned by Mr. Wong Wah On Edward and Mr. Tam Cheuk Ho, who are officers of the Company.

(c)

Qianhai Industrial is controlled by Mr. Li Feilie, who is the controlling shareholder of the Company.

F-77

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

26.

RELATED PARTY BALANCES AND TRANSACTIONS (CONTINUED)

(c)

Compensation of key management personnel of the Group

Schedule of Compensation of Key Management Personnel of the Group

Year Ended December 31,

2022

CNY

US$

Wages, salaries and allowances

i 1,154

i 1,171

i 170

Housing funds

i 17

i 16

i 2

Contribution to pension plans

i 68

i 65

i 9

i 1,239

i 1,252

i 181

The amounts disclosed in the table are the amounts recognized as expenses during the respective period related to key management personnel.

/ i

27. SHARE-BASED PAYMENTS

Warrants to the placement agent

The Company issued and sold an aggregate of i 3,960,000 of its common shares at a price of US$ i 1.85 per share to certain institutional investors on January 22, 2021 through a private placement. In a concurrent private placement, the Company issued the warrants:

(i)

to the institutional investors (the “investor warrants”), which gave the right to purchase an aggregate of i 1,584,000 common shares of the Company with an exercise price of US$ i 2.35 per share. The investor warrants are exercisable up to three years after January 22, 2021. The Company recognized the investor warrants issued as derivative financial liabilities as the investors have the right to exercise their warrants on a cashless basis according to the agreement clause, please refer to Note 22(b) for further details.

(ii)

to the placement agent (the “agent warrants”) as part of placement service fees, which gave the right to purchase an aggregate of i 396,000 common shares with an exercise price of US$ i 2.35 per share. The agent warrants are exercisable up to three years after July 21, 2021. There are no cash settlement alternatives. The Group does not have a past practice of cash settlement for the warrants. The Group accounts for the warrants as equity-settled share-based payment.

The fair value of the agent warrants is estimated at the grant date using a binomial option pricing model. The amount was allocated to the issuance of the common shares and the investor warrants according to their fair value at the date of issuance, and CNY i 1,862 (US$ i 287*) and CNY i 449 (US$ i 70*) were charged to share capital and administrative expenses respectively.

As the changes in equity from this private placement transaction are denominated in US$, all the amounts in US$ in this disclosure paragraph are actual transaction amounts and the corresponding amounts in CNY were translated from US$ at the applicable exchange rate on the transaction date, January 22, 2021.

F-78

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

27.

SHARE-BASED PAYMENT (CONTINUED)

Share options

On July 14, 2022, the Board of Directors of the Company approved to grant option awards for an aggregate of 8,100,000 common shares, without par value, of the Company (the “share options”) to certain individuals under the China Natural Resources, Inc. 2014 Equity Compensation Plan for certain strategic consultant services. The share options vested immediately upon grant and are exercisable up to three years from July 19, 2022. The exercise price for the options is $0.623 per share.

The fair value of the share options is estimated at the grant date using a binomial option pricing model, taking into account the terms and conditions on which the share options were granted. There are no cash settlement alternatives. The Group does not have a past practice of cash settlement for these share options. The Group accounts for share options 2022 as an equity-settled share-based payment and recognize administrative expenses associated with the consultant service reward with a corresponding increase in equity.

(a)

Expense arising from share-based payment transactions

The expense recognized during the year for above share-based payments is shown in the following table:

Schedule of expense arising from share-based payments

Year Ended December 31,

2022

CNY

US$

Issuance expense related to agent warrants

i 447

—

Consultants share option expense (Note 6)

—

i 16,152

i 2,342

Total

i 447

i 16,152

i 2,342

(b)

Movements during the year

The following table illustrates the number of, and movements in, agent warrants during the year:

Schedule of agent warrants
	Number of shares		Exercise price per share
			US$
Agent warrants
Outstanding at January, 2021		—		—
Granted during the year		i 396,000		i 2.35
Outstanding as of December 31, 2021		i 396,000		i 2.35
		—		—
Outstanding as of December 31, 2022		i 396,000		i 0.623	*

The remaining contractual life for the agent warrants as of December 31, 2022 and 2021, were i 1.06 years and i 2.06 years, respectively.

The exercise price was revised to $0.623 per share in July, 2022.

F-79

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

27.

SHARE-BASED PAYMENT (CONTINUED)

(b)

Movements during the year (continued)

The following table illustrates the number of, and movements in share options during the year:

Schedule of share options
	Number of shares		Exercise price per share
			US$
Share options
Outstanding at January, 2022		—		—
Granted during the year		i 8,100,000		i 0.623
Outstanding as of December 31, 2022		i 8,100,000		i 0.623

The remaining contractual life for the share option as of December 31, 2022 was i 2.53 years.

The share option numbers above are before giving effect to the Share Combination which became effective on April 3, 2023. Refer to Note 31 for further details.

(c)

Inputs to the models

The following tables list the inputs to the models used for agent warrants and share options for the years ended December 31, 2021 and 2022, respectively:

Schedule of inputs to the models for fair value
	Agent warrants		Share options
	2021		2022

Fair value at the measurement date (US$)		i 70		i 2,400
Fair value at the measurement date (CNY)		i 449		i 16,209
Expected volatility (%)		i 93.67		i 93.50
Risk-free interest rate (%)		i 0.19		i 3.16
Expected life (years)		i 2.50		i 3
Share price (US$)		i 0.901		i 0.623

The expected life of the agent warrants and share options is based on historical data and current expectations and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility over a period similar to the life of the options is indicative of future trends, which may not necessarily be the actual outcome.

F-80

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

/ i

28.

PARTLY OWNED SUBSIDIARY WITH MATERIAL NON-CONTROLLING INTERESTS

On July 27, 2021, the Company acquired i 100% of the equity interests of PST Technology which held i 51% equity interests in Shanghai Onway and its subsidiaries (“Shanghai Onway Group”), and Shanghai Onway Group became partly owned subsidiary with material non-controlling interests.

Financial information of Shanghai Onway Group which that has material non-controlling interests is provided below:

Proportion of equity interest held by non-controlling interests:

Schedule of equity interest held by non-controlling interests
Name	Country of incorporation and operation	2021			2022

Shanghai Onway Group	PRC/Mainland China		i 49	%		i 49	%

2020

2021

2022

CNY

US$

Profit/(loss) for the year allocated to non-controlling interests:

Shanghai Onway Group

( i 1,415

)

( i 6,819

)

i 2,327

i 337

Dividends paid to non-controlling interests:

Shanghai Onway Group

—

i 4,900

—

Accumulated balances of non-controlling interest:

Shanghai Onway Group

i 119,072

i 107,353

i 109,680

i 15,900

F-81

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

28.

PARTLY OWNED SUBSIDIARY WITH MATERIAL NON-CONTROLLING INTERESTS (CONTINUED)

The summarized financial information of the Shanghai Onway Group is provided below. This information is based on amounts before inter-company eliminations.


2020	Shanghai Onway Group
	CNY			US$
Revenue		i 35,631			i 5,606
Other (income)/losses		( i 38,362	)		( i 6,036	)
Loss for the year		( i 2,731	)		( i 430	)
Total comprehensive income loss for year		( i 2,731	)		( i 430	)


Current assets		i 192,437			i 30,277
Non-current assets		i 153,073			i 24,084
Current liabilities		( i 47,445	)		( i 7,465	)
Non-current liabilities		( i 34,542	)		( i 5,435	)


Net cash flows used in operating activities		( i 44,883	)		( i 7,062	)
Net cash flows from investing activities		( i 5,608	)		( i 882	)
Net cash flows used in financing activities		i 48,688			i 7,660

Net decrease in cash and cash equivalents		( i 1,803	)		( i 284	)


2021	Shanghai Onway Group
	CNY			US$

Revenue		i 18,735			i 2,948
Other (income)/losses		( i 32,312	)		( i 5,084	)
Loss for the year		( i 13,577	)		( i 2,136	)
Total comprehensive income loss for year		( i 13,577	)		( i 2,136	)


Current assets		i 187,619			i 29,519
Non-current assets		i 126,573			i 19,914
Current liabilities		( i 40,716	)		( i 6,406	)
Non-current liabilities		( i 40,259	)		( i 6,334	)


Net cash flows used in operating activities		( i 8,758	)		( i 1,378	)
Net cash flows from investing activities		( i 1,509	)		( i 237	)
Net cash flows used in financing activities		( i 3,972	)		( i 625	)

Net decrease in cash and cash equivalents		( i 14,239	)		( i 2,240	)

F-82

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

28.

PARTLY OWNED SUBSIDIARY WITH MATERIAL NON-CONTROLLING INTERESTS (CONTINUED)

Schedule of financial information
2022	Shanghai Onway Group
	CNY			US$

Revenue		i 20,306			i 2,944
Other (income)/losses		( i 15,504	)		( i 2,248	)
Profit for the year		i 4,802			i 696
Total comprehensive income loss for year		i 4,802			i 696


Current assets		i 197,468			i 28,625
Non-current assets		i 121,961			i 17,681
Current liabilities		( i 44,602	)		( i 6,466	)
Non-current liabilities		( i 77,524	)		( i 11,239	)


Net cash flows used in operating activities		( i 6,588	)		( i 956	)
Net cash flows from investing activities		i 157			i 23
Net cash flows used in financing activities		( i 7,743	)		( i 1,122	)

Net decrease in cash and cash equivalents		( i 14,174	)		( i 2,055	)

F-83

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

/ i

29.

NOTES TO THE CONSOLIDATED STATEMENTS OF CASH FLOWS

(a)

Major non-cash transactions

During the year, the Group had non-cash additions to right-of-use assets and lease liabilities of CNY i 1,781 (US$ i 258) (2021: CNY i 102) and CNY i 1,781 (US$ i 258) (2021: CNY i 102), respectively, with respect to lease arrangements for motor vehicles, offices and warehouses.

(b)

Changes in liabilities arising from financing activities

Schedule of changes in liabilities arising from financing activities

Year Ended December 31, 2021

Interest-bearing loans and borrowings

Dividends

payable

Due to related companies

Due to the Shareholder

Lease

liabilities

CNY

i 80,000

—

i 79,459

i 7,149

i 3,550

Changes from financing cash flows

( i 7,035

)

( i 4,900

)

i 49,788

( i 7,149

)

( i 1,613

)

New leases

—

i 102

Interest expenses

i 4,035

i 9,948

—

i 150

Other changes

—

( i 123,537

)

i 14,050

—

i 77,000

i 5,048

i 5,710

i 14,050

i 2,189

Year Ended December 31, 2022

Interest-bearing loans and borrowings

Dividends

payable

Due to related companies

Due to the Shareholder

Lease

liabilities

CNY

i 77,000

i 5,048

i 5,710

i 14,050

i 2,189

Changes from financing cash flows

( i 6,882

)

( i 5,048

)

( i 2,765

)

( i 6,885

)

( i 1,253

)

New leases

—

i 1,781

Interest expenses

i 3,882

—

i 133

Other changes

—

i 463

( i 12

)

i 65

i 74,000

—

i 3,408

i 7,153

i 2,915

Year Ended December 31, 2022

Interest-bearing loans and borrowings

Dividends

payable

Due to related companies

Due to the Shareholder

Lease

liabilities

US$

i 11,163

i 732

i 828

i 2,037

i 317

Changes from financing cash flows

( i 998

)

( i 732

)

( i 401

)

( i 998

)

( i 181

)

New leases

—

i 258

Interest expenses

i 563

—

i 19

Other changes

—

i 67

( i 2

)

i 9

i 10,728

—

i 494

i 1,037

i 422

F-84

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

29.

NOTES TO THE CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(c)

Total cash outflow for leases

Schedule of Cash Outflow for Leases
	2021			2022			2022
		CNY			CNY			US$

Within operating activities		( i 511	)		( i 250	)		( i 36	)
Within financing activities		( i 1,613	)		( i 1,253	)		( i 181	)
Total cash outflow for leases		( i 2,124	)		( i 1,503	)		( i 217	)

/ / i

30.

COMMITMENTS

There were i i no / capital commitments as of December 31, 2021 and 2022.

/ i

31.

SUBSEQUENT EVENTS

Entry into a Material Definitive Agreement

On February 27, 2023, the Company entered into a sale and purchase agreement (the “SPA”) with Feishang Group and Top Pacific (China) Limited (together, the “Sellers”), and the respective beneficial owner of the sellers, Mr. Li Feilie and Mr. Yao Yuguang, to acquire 100% equity interests of Greatfame Investments Limited, which owns 100% equity interest in Williams Minerals (Pvt) Ltd (“Williams Minerals”) (the “Acquisition”). Williams Minerals owns the mining permit for the Zimbabwean lithium mine. The consideration to be paid by the Company for the Acquisition will be calculated by multiplying the qualified measured, indicated and inferred resources quantity of lithium oxide proven to be in the mine by independent technical reports by a unit price of US$ i 500 per ton, less certain due diligence costs and expenses incurred by the Company for the issuance of the independent technical reports. At this time, the maximum consideration contemplated for the Acquisition is around US$ i 1.75 billion, based on an estimate of around i 3.5 million tons inferred resource of lithium oxide in the Zimbabwean mine by a Zimbabwean geological and geophysical report. On April 14, 2023, the Company issued a US$ i 35 million promissory note to the Seller as a commitment to proceed with the Acquisition.

Completion of the transaction as contemplated by the SPA is contingent upon the satisfaction of a number of conditions, including, among other things, the issuance of independent technical reports, the actual quantity of qualified lithium oxide metal resources proven or estimated to exist in each mining area covered by the relevant report, and the Company’s full settlement of the purchase consideration. There is no guarantee that the Acquisition will close or be completed at the anticipated valuation and terms, or at all.

The Five-to-One Share Combination

On March 31, 2023, the Board of Directors of the Company approved a five-to-one share combination of issued and outstanding common shares of the Company. The share combination was effective at the market opening on April 3, 2023, at which time the Company’s common shares began trading on the Nasdaq Capital Market on a combination-adjusted basis. The Company’s common shares continued to trade under the symbol “CHNR” but with a new CUSIP number, G2110U117. All outstanding options, warrants and other rights to purchase the Company’s common shares were adjusted proportionately as a result of the share combination. Therefore, the number of shares under the Company’s outstanding share options and warrants are adjusted to i 1,620,000 and i 396,000, and the exercise prices of all the outstanding options and warrants were adjusted to US$ i 3.115 accordingly on April 3, 2023.

F-85

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

/ i

32.

CONDENSED FINANCIAL INFORMATION OF THE COMPANY

The following is the condensed financial information of the Company on a non-consolidated basis:

(a)

Condensed statements of financial position

Schedule of Condensed statements of financial position

2022

CNY

US$

ASSETS

NON-CURRENT ASSETS

Right-of-use assets

i 360

i 1,012

i 147

TOTAL NON-CURRENT ASSETS

i 360

i 1,012

i 147

CURRENT ASSETS

Amounts due from subsidiaries

i 136,120

i 151,138

i 21,911

Cash and cash equivalents

i 17,017

i 5,447

i 790

TOTAL CURRENT ASSETS

i 153,137

i 156,585

i 22,701

TOTAL ASSETS

i 153,497

i 157,597

i 22,848

F-86

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

32.

CONDENSED FINANCIAL INFORMATION OF THE COMPANY (CONTINUED)

(a)

Condensed statements of financial position (continued)

2022

CNY

US$

LIABILITIES AND EQUITY

NON-CURRENT LIABILITIES

Lease liabilities

—

i 351

i 51

TOTAL NON-CURRENT LIABILITIES

—

i 351

i 51

CURRENT LIABILITIES

Other payables and accruals

i 4,335

i 5,543

i 804

Due to related companies

i 2,690

i 2,913

i 422

Lease liabilities

i 373

i 671

i 97

Derivative financial liabilities

i 1,710

i 824

i 119

TOTAL CURRENT LIABILITIES

i 9,108

i 9,951

i 1,442

TOTAL LIABILITIES

i 9,108

i 10,302

i 1,493

EQUITY

Issued capital

i 428,882

i 62,176

Other capital reserves

i 860,168

i 876,377

i 127,050

Accumulated losses

( i 1,118,038

)

( i 1,140,934

)

( i 165,403

)

Other comprehensive loss

( i 26,623

)

( i 17,030

)

( i 2,468

)

TOTAL EQUITY

i 144,389

i 147,295

i 21,355

TOTAL LIABILITIES AND EQUITY

i 153,497

i 157,597

i 22,848

F-87

CHINA NATURAL RESOURCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(Amounts in thousands, except share and per share data)

32.

CONDENSED FINANCIAL INFORMATION OF THE COMPANY (CONTINUED)

(b)

Condensed statements of profit or loss

Schedule of Condensed statements of profit or loss

Year Ended December 31,

2021

2022

CNY

US$

Administrative expenses

( i 5,243

)

( i 10,059

)

( i 24,123

)

( i 3,497

)

Finance costs

( i 38

)

( i 162

)

i 215

i 31

Interest income

—

i 5

i 1

Fair value gain/(loss) on financial instruments, net

i 31,334

( i 38,349

)

i 1,007

i 146

Profit/(loss) before income tax

i 26,053

( i 48,570

)

( i 22,896

)

( i 3,319

)

Income tax (expense)/benefit

( i 5,170

)

i 5,095

—

Profit/(loss) for the year

i 20,883

( i 43,475

)

( i 22,896

)

( i 3,319

)

(c)

Condensed statements of cash flows

Schedule of Condensed statements of cash flows

Year Ended December 31,