Securities code: 000960 securities abbreviation: Yunnan Tin Co.Ltd(000960) Announcement No.: 2022-005 Yunnan Tin Co.Ltd(000960)
Announcement on hedging plan in 2022
The company and all members of the board of directors guarantee that the information disclosed is true, accurate and complete without false records, misleading statements or major omissions.
Important:
1. Hedging type: Yunnan Tin Co.Ltd(000960) (hereinafter referred to as ” Yunnan Tin Co.Ltd(000960) ” or “the company”) and its subsidiaries plan to carry out hedging business of tin, copper, zinc, lead, aluminum, gold, silver and iron ore for the company’s self-produced and supply chain business in combination with their own production and operation reality;
2. The maximum margin provided by the company for hedging business at any time point shall not exceed RMB 1496.825 million (including RMB 1449.2 million and USD 7.5 million – converted into RMB at the current exchange rate). 3. Special risk tip: the company’s hedging business can partially avoid the impact of spot price fluctuation on the company’s production and operation, which is conducive to the company’s stable operation, but there may also be market risk, capital risk, operational risk, system risk and policy risk. The company will actively implement risk control measures to prevent relevant risks. 1、 Overview of hedging business
(I) purpose and necessity of hedging
The company is mainly engaged in the mining, smelting, processing, sales and supply chain business of tin, copper, zinc and other non-ferrous metals. Since the prices of non-ferrous metal products, raw materials and commodities are vulnerable to macro situation, monetary policy, industrial supply and demand and many other factors, showing great fluctuations, in order to avoid the risks of non-ferrous metal price fluctuations on the company’s raw material procurement, product sales and supply chain business, At the same time, to reduce the impact and impact of price fluctuations on the company’s normal production and operation performance, the company plans to carry out hedging business for products, raw materials and supply chain commodities related to production and operation business in 2022.
(II) maximum margin amount of hedging business at any time point
The company uses its own funds in combination with the actual situation of the company’s own production and supply chain business to provide hedging business. The maximum amount of margin at any time point shall not exceed 1496.825 million yuan (including 1449.2 million yuan and 7.5 million US dollars – converted into RMB at the current exchange rate), which can be recycled within the hedging period.
(III) ways to carry out hedging business
Number of hedging plans (including the variety chain of self-produced and supply trading market valid capital sources, calculated according to the one-way opening)
Tin does not exceed 81070 tons. Last phase Institute and LME
Copper does not exceed 107250 tons, last phase Institute and LME
Zinc does not exceed 192670 tons, self owned funds Lead not more than 17800 tons, aluminum trading agent not more than 17800 tons in the previous period, and the credit amount of gold not more than 729 kg provided by institutions in 2022
No more than 615 tons of silver, previous period exchange, LBMA and Shanghai Gold Exchange
No more than 445000 tons of iron ore
stone
Principles of hedging business: strictly carry out hedging transactions based on spot demand and prohibit speculative transactions. The amount of futures positions shall not exceed the amount of spot transactions in the same period, the time of futures positions shall match the time of spot transactions, and the total amount of hedging positions for 12 consecutive months shall not exceed the amount of hedging in the corresponding period.
2、 Review procedure
On January 24, 2022, the 7th Meeting of the 8th board of directors deliberated and approved the 2022 annual hedging plan of Yunnan Yunnan Tin Co.Ltd(000960) Co., Ltd., and agreed that the company and its subsidiaries should carry out hedging business of products related to production, operation and supply chain in 2022.
The above matters need to be submitted to the general meeting of shareholders of the company for deliberation, and the hedging plan does not involve related party transactions. 3、 Risk analysis, risk control measures and feasibility analysis of hedging business
(I) analysis of possible risks in hedging business
Futures hedging can partially avoid the impact of sharp fluctuations in metal prices on the company, which is conducive to the normal operation of the company, but there may also be some risks:
1. Market risk: the futures market changes greatly, which may cause price fluctuation risk and cause futures hedging loss.
2. Capital risk: futures trading issues operation instructions according to the authority specified in the company’s relevant systems. If the investment amount is too large, there may be liquidity risk of funds, or even forced liquidation due to failure to replenish the margin in time, resulting in actual losses.
3. Operational risk: due to the strong professionalism and complexity of futures and forward trading, there may be trading losses due to defects in information system or internal control.
4. Systemic risk: the global economic impact leads to the risk of the financial system.
5. Credit risk: when the price fluctuates significantly against the counterparty, the counterparty may violate the relevant provisions of the contract, cancel the contract and cause losses to the company.
6. Policy risk: if the laws, regulations and policies of the futures market change significantly or the counterparty violates relevant laws and regulations, the contract may not be executed normally and bring losses to the company.
(II) preparation and risk control measures for futures hedging of the company
1. For the hedging business, the company has established a complete organization, formulated a set of strict futures hedging management system and relevant business operation processes and approval procedures, and appropriate risk control measures can ensure the effective operation of the business.
2. The company has a market operation center to carry out the management and operation of futures business, clarify the responsibilities of corresponding personnel, and allocate professionals such as investment decision-making, business operation and risk control; The company will strengthen the professional knowledge training of relevant personnel and improve the professional quality of hedging practitioners.
3. The company matches the hedging business with the company’s production and operation, strictly controls the hedging position and implements dynamic supervision.
4. In practice, the company will strictly control the capital scale of hedging, reasonably plan and use the margin, issue operation instructions in strict accordance with the provisions of the company’s measures for the management of futures hedging, and conduct corresponding operations according to the approval authority. The company will reasonably allocate funds for hedging business.
5. In the process of business operation, the company will strictly abide by the provisions of relevant national laws and regulations, prevent legal risks, and regularly supervise and inspect the standardization of hedging business, the effectiveness of internal control mechanism and the authenticity of information disclosure.
(III) feasibility analysis of hedging business
The company carries out hedging business to avoid the impact of market fluctuations on the company’s production and operation. The company is mainly engaged in the mining, smelting, processing and sales of tin, copper, zinc and other non-ferrous metals. The required raw materials are mainly tin concentrate, copper concentrate and zinc concentrate. The sharp fluctuation of relevant metal prices will have a great impact on the profitability of the company. At the same time, the company is also engaged in the supply chain business of related products. The time difference between purchase and sales will produce price difference risk, which needs to be controlled through hedging.
For the hedging business, the company has formulated the commodity futures hedging management system, and implemented risk prevention measures and prudent operation in strict accordance with the requirements of relevant laws and regulations and the company’s futures hedging management measures. Therefore, the board of Directors believes that carrying out hedging business in combination with the actual production and operation of the company can effectively avoid the relevant risks caused by price fluctuations, and the implementation of this business is feasible.
4、 Impact of hedging business on the company
The derivatives business varieties carried out by the company and its subsidiaries are traded on the open market outside China, with high transparency, active transaction, strong liquidity and low credit risk. The transaction price and settlement price can fully reflect the fair value of derivatives. Carrying out hedging business can effectively avoid the impact of metal price fluctuations on the company’s production and operation, which is conducive to steady operation, improve the company’s operation level and sustainable and healthy operation.
The company conducts corresponding accounting and disclosure of hedging business in accordance with accounting standards for Business Enterprises No. 22 – recognition and measurement of financial instruments, accounting standards for Business Enterprises No. 37 – presentation of financial instruments, accounting standards for Business Enterprises No. 24 – hedge accounting and other relevant provisions.
5、 Independent opinions of independent directors
1. The relevant approval procedures for the company to carry out hedging business by using the futures market comply with the provisions of the company law, the Listing Rules of Shenzhen Stock Exchange and other relevant laws and regulations and the articles of association. The company has formulated and strictly implemented the Yunnan Tin Co.Ltd(000960) futures hedging management measures. In addition, the company has established a futures hedging committee to further strengthen the management of futures hedging and continuously improve the operation process of futures hedging at home and abroad.
2. On the premise of ensuring normal production and operation, the company’s hedging business is mainly to avoid the risk of price fluctuation of raw materials and products, which is closely related to the company’s operation and does not damage the interests of the company and all shareholders.
3. As an effective tool to avoid the risk of price fluctuation, hedging business is conducive to give full play to the company’s competitive advantage by strengthening internal management, implementing risk prevention measures and improving business level. It is necessary for the company to carry out hedging business, which is conducive to ensuring the company’s operating benefits and reducing production and operation risks. Therefore, we unanimously agreed to submit the plan to the general meeting of shareholders for deliberation.
6、 Documents for future reference
1. Resolution of the 7th Meeting of the Yunnan Tin Co.Ltd(000960) 8th board of directors;
2. Resolution of the seventh meeting of the Yunnan Tin Co.Ltd(000960) eighth board of supervisors;
3. Independent opinions of Yunnan Tin Co.Ltd(000960) independent directors on matters related to the seventh meeting of the eighth board of directors.
It is hereby announced
Yunnan Tin Co.Ltd(000960) board of directors
January 25, 2002
