Tibet Huayu Mining provides $10 million interest-free loan for TALCO Gold and Antimony Mining Project in December 2017

In April 2017, Tajik Aluminium Company (TALCO or 塔铝国有公司) — a Tajik state-owned enterprise -- created a project company and wholly owned subsidiary known as CJSC TALCO Gold (“塔铝金业”封闭式股份公司). Then on December 15, 2017, TALCO and Tibet Huayu Mining Co., Ltd. (西藏华钰矿业股份有限公司) signed a joint venture agreement, in which Tibet Huayu Mining Co., Ltd. acquired a 50% ownership stake in CJSC TALCO Gold for $100 million. Tibet Huayu Mining Co., Ltd. provided a $90 million equity investment and a $10 million interest-free, long-term loan to facilitate the acquisition. The issuance of the interest-free loan was approved by Tibet Huayu Mining Co., Ltd. on January 28, 2018. Tibet Huayu Mining Co., Ltd. issued two additional loans to CJSC TALCO Gold in April 2018: a $300,000 loan (with a 5% interest rate and 5-year maturity) on April 4, 2018 and a $10 million loan (with a 5% interest rate) on April 6, 2018. On May 25, 2018, CJSC TALCO Gold (“塔铝金业”封闭式股份公司) — a special purpose vehicle and 50/50 joint venture between Tibet Huayu Mining Co., Ltd. (西藏华钰矿业股份有限公司) and Tajik Aluminium Company (TALCO or 塔铝国有公司) — announced plans to construct a $135 million mining and processing plant in the Aini District in Sughd Region on the Konchoch deposit. The plant was expected to produce 1.5 tons of gold and 16,000 tons of antimony annually. At the time, preliminary estimates suggested that the Konchoch deposit contained 55 tons of gold, 44 tons of silver, 184 tons of mercury, 268,000 tons of antimony and 205,000 tons of fluorite. CJSC TALCO Gold originally expected to complete the project by the end of 2019 and begin mining production in early 2020. Construction began on June 24, 2018, and the project’s groundbreaking ceremony was attended by President of Tajikistan Emomali Rahmon. Then, on June 18, 2019, Tibet Huayu Mining Co., Ltd. issued an additional, $30 million loan to CJSC TALCO Gold (with a 6% interest rate and 5-year maturity). The June 18, 2019 loan was ‘upsized’ by $10 million (to $40 million) on November 1, 2019 and by $20 million (to $60 million) on December 28, 2019. As of June 2020, construction work at the project site was 80% complete, but the delivery of equipment produced in Finland was delayed by coronavirus-related restrictions and TALCO announced that it could take another two months to finally get it shipped and running. Then, on August 31, 2020, Tibet Huayu Mining Co., Ltd. announced that it was considering providing a loan of no more than RMB 49 million ($7.16 million) to CJSC TALCO Gold. Tibet Huayu Mining Co., Ltd. approved the issuance of an additional $7 million loan to CJSC TALCO Gold (with a 6% interest rate and 5 year maturity) on December 22, 2020. Then, on August 25, 2021, Tibet Huayu Mining Co., Ltd. agreed to issue another loan to CJSC TALCO Gold worth $20 million. All of these loans issued by Tibet Huayu Mining Co., Ltd. to CJSC TALCO Gold were apparently provided with the proceeds from a Bank of China bond issuance. The TALCO Gold mine ultimately went into production on April 14, 2022. At the mine’s inauguration ceremony, CJSC TALCO Gold announced that it expected to produce up to 2.2 tons of gold and 21,000 tons of antimony annually, according to government officials. Then, on January 24, 2023, a trainload of mining output from CJSC TALCO Gold arrived in China.

Additional details

1. Talco Aluminum Company is a Tursunzoda-based state-owned company that is also partially owned Hasan Asadullozoda, the brother-in-law of President Emomali Rahmon. 2. Tibet Huayu Mining Co., Ltd. engages in the non-ferrous metal mining, mineral processing, and geological prospecting businesses. Its products include zinc concentrate, lead antimony concentrate, and copper concentrate. The company was founded on October 22, 2002 and is headquartered in Beijing, China. 3. Antimony is a flame-proof metal used in batteries. 4. The Chinese project title is 塔铝金业建设项目 or 塔吉克斯坦锑金冶炼厂or 中塔合资企业塔铝金业5000吨/天锑金采选项目. 5. As of June 30, 2022, Tibet Huayu Mining Co., Ltd. disclosed in a public filing that it had cumulatively provided loans worth $92,257,322.92 to CJSC TALCO Gold (see http://vip.stock.finance.sina.com.cn/corp/view/vCB_AllBulletinDetail.php?stockid=601020&id=8486271). This amount is inconsistent with the aggregate value of the 8 loans ($107.3 million) that Tibet Huayu Mining Co., Ltd. claims it issued to CJSC TALCO Gold between 2017 and 2021. This discrepancy warrants further investigation. 6. For Tibet Huayu Mining Co., Ltd's investment in the CJSC TALCO Gold joint venture, see linked Project ID#72667.

Number of official sources

9

Number of total sources

23