Solartech: 2012/2013 Interim Results

February 27, Solartech International Holdings Limited (11

3. TURNOVER AND SEGMENTAL INFORMATION

(a) Reportable segments



On 4 May 2010, the Group completed its acquisition of mining operation located in the State of Mongolia and became engaged in the mining business, details of which are set out in the Company’s announcements dated 30 November 2009 and 4 May 2010, and circular dated 9 April 2010. However, no active operation took place between the date of acquisition and 31 December 2012 and therefore the directors of the Company consider that the mining operation did not constitute a business segment as at 31 December 2011 and 2012 and for the periods then ended for the purpose of segment reporting.



10. MINING RIGHT

The mining right represents the right to conduct mining activities in the location of Nergui, Delgerkhangai soum, Dundgobi aimag, the State of Mongolia, for a period of 30 years, expiring on 23 November 2039. The mining operating license is issued by the Mineral Resources Authority of the State of Mongolia. It is extendable by 2 successive 20 years each.

11. EXPLORATION AND EVALUATION ASSETS

As at 31 December 2012, the amount represented exploration permits in the locations of Uguujit of Orkhontuul soum in Selenge province and Undur of Bugat soum in Gobi-Altai province, the State of Mongolia. These exploration permits were granted for an initial periods of 3 years. As at 31 December 2012, the residual valid period of the permits was within 4 months. In the opinion of the directors, in the event that the exploration and evaluation works have not been completed before the respective expiry dates of the exploration permits, the Group is confident that it can renew all exploration permits before the respective expiry dates.



MANAGEMENT DISCUSSION AND ANALYSIS



Mining

The investment environment in Mongolia was quite uncertain after its parliamentary election. The Foreign Investment Act and new acts which prohibit mineral exploration and mining operations in riverheads, reservoir preservation areas and forest regions have been implemented, and a new draft minerals act is also in the course of consultation for revision. The new minerals act is expected to establish new regulations governing the minerals industry. Considering the current economic conditions and the market environment, the Group is updating the feasibility report for the copper mine in Dundgobi Aimag, based on which our management would optimise its decision in relation to the development direction of this project in the future.

The drilling and surveying works for the copper mine in Bayan-Ulgii Aimag, Mongolia, which accounted for 10% of the equity interests for the Group, have not yet completed before last winter. These field works will continue to proceed after the weather becomes warm.

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