Securities code: Yintai Gold Co.Ltd(000975) securities abbreviation: Yintai Gold Co.Ltd(000975) Announcement No.: 2022012
Yintai Gold Co.Ltd(000975)
Announcement on the derivatives investment business of the company’s holding subsidiaries
The company and all members of its board of directors guarantee that the information disclosed is true, accurate and complete without false records, misleading statements or major omissions.
In order to make full use of the financial derivatives market, effectively reduce the impact of market price fluctuations of precious metals and non-ferrous metals on the production, operation and trade of Yintai Gold Co.Ltd(000975) (hereinafter referred to as “the company”) and its holding subsidiaries, and ensure the relative stability of operating performance, Yintai Shenghong Supply Chain Management Co., Ltd. (hereinafter referred to as “Yintai Shenghong”), the holding subsidiary of the company, plans to continue to carry out derivatives investment business. The relevant information is described as follows:
1、 Description of legal voting procedures
On April 8, 2022, the 12th meeting of the 8th board of directors and the 7th Meeting of the 8th board of supervisors deliberated and adopted the proposal on the development of derivatives investment business by the company’s holding subsidiaries.
This business does not belong to related party transactions, and there is no need to perform the voting procedures of related party transactions.
The amount involved in this business does not meet the deliberation standard of the general meeting of shareholders of the company, so it is not necessary to submit it to the general meeting of shareholders of the company for deliberation.
2、 Contents of derivatives investment business
1. Business scope:
(1) Hedging
Hedging refers to the futures trading behavior for the purpose of avoiding price risk by operating the spot position in the opposite direction in the futures market and complementing the final profit and loss according to the principle of synchronization of futures and cash.
(2) Arbitrage transaction
Arbitrage trading generally refers to the trading behavior that participants in the futures market use the price difference between different months, different markets and different commodities to buy and sell two different types of futures contracts at the same time in order to obtain risk profits.
(3) One way transaction
One way trading is to make profit by using the fluctuation of the price of a single futures contract.
2. Trading varieties: Futures and option contracts of precious metals such as gold and silver and non-ferrous metals such as lead, zinc, copper, aluminum, tin, nickel and cobalt; And foreign exchange futures, options, forwards and swaps to avoid the foreign exchange fluctuation risk of the above trading varieties.
Securities code: Yintai Gold Co.Ltd(000975) securities abbreviation: Yintai Gold Co.Ltd(000975) Announcement No.: 2022012
3. Trading venues: Shanghai Futures Exchange, Shanghai gold exchange, New York Mercantile Exchange (Comex), London Metal Exchange (LME), London Bullion Market Association (LBMA), Singapore Stock Exchange, Hong Kong stock exchange, Shanghai International Energy Trading Center, Wuxi stainless steel electronic trading center, and financial institutions such as banks and Futures companies with high credit quality.
4. Transaction scale: the margin amount of derivatives investment business shall not exceed 500 million yuan (including equivalent foreign currency) at any time point, and the above amount can be recycled within the validity period.
5. Source of funds: self owned funds.
6. Period of validity: from the date of adoption by the board of directors to the date of adoption by the board of directors in 2022.
3、 Necessity of developing derivatives investment business
The company and its holding subsidiaries are mainly engaged in the mining and beneficiation of precious metals and non-ferrous metals and metal trade. With the increasing complexity of market economic activities and the complexity of factors affecting metal prices, structure, supply and demand, the profit space of single mining and trading model is reduced, and the extension and upgrading of business model is imperative. Hedging can effectively reduce the adverse impact of large price fluctuations on the company’s operation. While carrying out metal trade business, the company uses its own resources and platform advantages to engage in relevant derivatives investment business, which can reduce the risk of metal price fluctuation and obtain the extended income of metal trade, which is conducive to promoting the transformation and upgrading of business model, enhancing core competitiveness and realizing sustainable development.
4、 Preparation of the company’s holding subsidiaries for derivatives business
1. The company has formulated and strictly implemented the derivatives investment business management system and hedging business management system.
2. In order to strengthen the management of derivatives investment business, improve and perfect the operation procedures and ensure the realization of the company’s production and operation objectives, the company has established a derivatives decision-making committee, which is responsible for reviewing the company’s derivatives investment business. It is the highest leading body of the company’s derivatives investment business, and its members include the chairman, general manager, chief financial officer and other senior managers of the company and the heads of subordinate subsidiaries.
3. The financial business department of the company is the management organization of the company’s derivatives investment business, and the internal control department of the company is responsible for the risk control of derivatives investment business.
4. The company’s personnel involved in derivatives trading have fully understood the characteristics and risks of the derivatives to be traded, and strictly implemented the operation and risk management system of derivatives business.
5、 Risk analysis and risk control measures of derivatives investment business
1. Market risks and Countermeasures
Securities code: Yintai Gold Co.Ltd(000975) securities abbreviation: Yintai Gold Co.Ltd(000975) Announcement No.: 2022012
As there are certain systemic risks in the financial derivatives market, it is necessary to make a reasonable and effective prediction of the price trend during the operation of derivatives business. Once the price forecast deviates, it may affect the effect of derivatives investment business.
The company strictly implements the established derivatives investment business management system and hedging business management system, and forms a reasonable judgment on the price trend through perfect internal decision-making procedures; The company matches the derivatives investment business with the company’s production and operation, and strictly controls the trading position; The company’s transaction team operates in strict accordance with the approved scheme, which is reviewed and supervised by the internal control department to ensure that the transaction risk is effectively controlled.
2. Capital risk and Countermeasures
The daily settlement system of trading margin may bring certain capital liquidity risk to the company, and the company may face or face the risk of being forced to close its position due to failure to make up the trading margin in time, resulting in actual losses.
The company will reasonably allocate funds for derivatives investment business, strictly control the capital scale of derivatives investment, and reasonably plan and use margin.
3. Credit risk and Countermeasures
In case of large-scale fluctuations in the transaction price that are unfavorable to the counterparty, the counterparty may violate the relevant provisions of the contract, cancel the contract and cause losses to the company.
The company will establish a customer’s credit management system, review the credit of the counterparty according to the relevant provisions and procedures of the company’s contract management measures before the transaction, and determine that the counterparty is capable of performing relevant contracts.
4. Technical risks and Countermeasures
Due to the abnormal operation of the trading system caused by uncontrollable or unpredictable system, network and communication failures, the trading instructions may be delayed, interrupted or data errors, which may cause losses to the company.
The company has set up trading, communication and information service facilities and systems that meet the requirements to ensure the normal operation of the trading system and the normal development of trading work.
6、 Fair value analysis of derivatives investment business
The company conducts recognition and measurement in accordance with the provisions on “fair value” in the accounting standards for Business Enterprises No. 22 – recognition and measurement of financial instruments. The trading places and varieties selected by the company for derivatives trading business have strong market liquidity, high price transparency and transaction activity. The transaction price and settlement price can fully reflect the fair value of derivatives. The company conducts fair value measurement and recognition every month.
7、 Accounting policy
Securities code: Yintai Gold Co.Ltd(000975) securities abbreviation: Yintai Gold Co.Ltd(000975) Announcement No.: 2022012
The accounting policies and accounting principles related to the company’s derivative investment business shall comply with the relevant provisions of accounting standards for Business Enterprises No. 22 – recognition and measurement of financial instruments, accounting standards for Business Enterprises No. 37 – presentation of financial instruments and their guidelines issued by the Ministry of finance. The hedging business carried out by the company shall be handled in accordance with the relevant provisions of the accounting standards for Business Enterprises No. 24 – hedge accounting, and the gains or losses arising from arbitrage transactions and one-way transactions shall be directly included in the current profits and losses.
8、 Subsequent information disclosure of derivatives investment
1. When the fair value impairment of the company’s traded derivatives and the changes in the value of assets (if any) used for risk hedging add up, resulting in a total loss or floating loss, the company shall timely disclose it in an interim announcement whenever the amount reaches 10% of the company’s latest audited net assets and the absolute amount exceeds RMB 10 million.
2. The company will disclose the information related to the derivatives investment that has been carried out in the periodic report.
9、 Opinions of independent directors
1. The holding subsidiaries of the company use the derivatives market to carry out derivatives investment business, which can effectively use the hedging and hedging functions of the derivatives market, reasonably reduce the adverse impact of the company and its holding subsidiaries on the company’s operation due to price fluctuations in the production of products and metal trade, effectively control the company’s operating risks and obtain extended benefits from bulk commodity trading;
2. The company has established relatively perfect management system for derivative investment business and management system for hedging business, forming a relatively complete risk management system;
3. The relevant approval procedures of the derivatives investment business comply with relevant laws, regulations and the articles of association.
To sum up, we agree that the company’s holding subsidiaries carry out derivatives investment business.
10、 Documents for future reference
1. Resolutions of the 12th meeting of the 8th board of directors of the company;
2. Resolutions of the 7th Meeting of the 8th board of supervisors of the company;
3. Opinions of independent directors.
It is hereby announced.
Yintai Gold Co.Ltd(000975) board of directors
April 8, 2002
