ARTGO Holdings (03313) has decided not to further invest in the renewal of the mining permit for Dejiang Mine.

ARTGO HOLDINGS (03313) announced that the company had previously disclosed in this announcement and in past reports that the renewal application for the mining license had been accepted by the relevant authorities in 2019, although the renewed mining license is still pending issuance. On December 29, 2024, the company received a notification from the authorities rejecting the renewal application. Subsequently, after the notification, the Group resubmitted the application for the renewal of the mining license. Since resubmitting the renewal application, the company's management has been monitoring the status of the mining license renewal. However, as of the date of this announcement, the approval for the renewal of the mining license is still pending review, and the company has not received any positive feedback on this matter. At the same time, the company's management has been continuously evaluating the commercial feasibility of renewing the mining license. After careful consideration, the Board of Directors decided not to allocate additional resources to pursue the renewal of the mining license, as it was deemed to not be in the best interest of the Group considering factors such as the Group's financial resources and the uncertainty of regulatory approval. As stated in the announcement, the renewal of the mining license would require the Group to pay a restoration bond for the relevant geological environment, and allocate additional financial and management resources to the Dejiang Mine to fulfill the geological commitments, including planning and implementing the scheme. Given the current financial situation of the Group and the need to prioritize cash for current operations and loan repayments, the company's management decided to use its financial resources in a more cautious manner. The Board believes that focusing on the operation of the Yongfeng Mine will be more beneficial, as the mine currently holds a valid mining license and has the potential to expand capacity to enhance the overall profitability of the Group. The Board believes that allocating the Group's financial resources to the Yongfeng Mine will bring better returns to the Group. Furthermore, the renewal procedure for the mining license must undergo government review and meet various conditions, including but not limited to the budget expected to be invested in the scheme to meet safety production and environmental protection requirements, which is deemed commercially unfavorable and would require further investment of significant manpower and capital. Therefore, considering the tightening industry standards and increasingly stringent enforcement regulations, the acceptance of the scheme and the fulfillment of all relevant conditions at predictable and controllable costs within a reasonable timeframe involve a considerable degree of uncertainty. The marble products industry in China has been negatively impacted by the slowdown in the commercial and residential property markets, as well as the overall decrease in construction activities in recent years. These factors have led to a decrease in demand for marble products, putting greater pressure on sales prices and profit margins. In the current business environment, the Group has decided to streamline its business portfolio to improve the overall operational efficiency of the Group as part of cost-saving measures. Given market challenges and uncertainties, the Board believes that it is not commercially feasible to further commit capital to seeking the renewal of the Dejiang Mine mining license with the Group's current resources. The Dejiang Mine has not generated any income in the past few years. Considering the impairment of the mining rights of the Dejiang Mine in 2024, the Group expects that no further investment in the renewal of the mining license or any decision not to renew it will have a significant adverse impact on the overall business and financial position of the Group. From an operational perspective, the sales of the marble products division of the Group will continue to operate normally and remain the main source of income. The Board will continue to allocate resources for these businesses and actively explore new business opportunities to enhance shareholder returns.