Asian Metal:?Hello, Mr. Fan, thank you very much for accepting the interview of Asian Metal. Would you please give a brief introduction to your company?

Mr. Fan: Guangdong Gold Industry Precious Metals Co., Ltd. mainly engages in the smelting, refining and processing of gold and silver. As a member of Shanghai Gold Exchange, our company has the JINYE silver ingot registered at Shanghai Futures Exchange and Shanghai Gold Exchange, and was?accredited to the LBMA’s Good Delivery List for silver with effect from November 2018.

Our company produced about 180t of silver in 2017, and expected to see the same volume in 2018 with a monthly output of about 15t.

Asian Metal: Silver prices are at?absolutely low levels?now, and what do you think are the major factors affecting silver price trend at present?

Mr. Fan: The strong dollar was the main reason for depressed silver prices in 2018.?Four rate hikes?from the Federal Reserve, international trade frictions and other factors drove the?dollar index to keep?rising in 2018, causing silver prices to drop persistently.

Asian Metal:?Silver underperformed?gold in 2018. In your opinion, what are the major reasons for this and will this situation change in 2019?

Mr. Fan: In my opinion,?gold owns strong monetary?attribute, which is stronger during current economic downturn. Bearing relatively strong industrial attribute, silver is widely used in the industry, and its price is more closely related to the real economy. When the economy is sluggish and the overall performance of the precious metal market is not good, the price trend of silver is even more depressed.

If the economy improves in 2019, silver will outperform gold taking silver's industrial attribute into consideration. On the contrary, silver will continue to underperform gold.

Asian Metal: What about the fundamentals of supply and demand of silver in China in 2018? Will the market see new demand in the future?

Mr. Fan: Silver supply exceeded demand in domestic market in 2018. The supply generally kept stable, but the demand from electronic components, photovoltaic material, physical investment, silver jewelry and other industries decreased, leading to oversupply on the whole.

Affected by consecutively decreasing prices for silver, the demand for silver from physical investment keeps flat at the moment, but the demand is expected to rise if the silver market improves in 2019. The demand from the?photovoltaic material industry?is mainly affected by policies, and no new demand appears in other industries temporarily.

Asian Metal: With stricter environmental protection at present, do frequent environmental inspections have any impact on your operation?

Mr. Fan: Our production is?little affected by?environmental inspections as our current indicators are in line with environmental standards. But our production costs rise: on the one hand, treatment costs of wastewater and waste gas increase; on the other hand, prices for raw materials go up with those for hydrogen nitrate rising from about RMB1,200/t (USD175/t) to RMB1,800/t (USD263/t) and those for caustic soda increasing from about RMB2,000/t (USD292/t) to over RMB4,000/t (USD584/t).

Asian Metal: Could you please list some challenges faced by silver industry at present and enterprises' strategies to cope with them?

Mr. Fan: Firstly, silver producers only earn a little profit currently due to tight supply and continuously increasing prices for raw materials and higher processing costs; secondly, with very transparent silver prices, there is very little space for hedging; thirdly, private companies cannot compete with state-owned enterprises due to high financing costs; finally, many financial institutions like banks have participated in this field, so private enterprises have little competitive advantage in hedging and trading silver.

In my opinion, silver enterprises should focus on controlling costs, improving the recovery rate, and increasing the proportion of high value-added products.

Asian Metal: Could you share your analysis and expectation of the silver market in 2019?

Mr. Fan: I believe the silver market would improve with prices to rise in 2019. On the one hand, the dollar will not be likely to go stronger in 2019. The Fed initially anticipated in September?three rate rises?in 2019 but changed to two hikes in December, indicating?the dollar lacks upwardmomentum in 2019. On the other hand, according to the Central Economic Working Conference, larger scales of taxes and fees reduction will be implemented in 2019, so the economy in China is expected to recover to some extent and silver prices would rise in 2019.

Asian Metal: Could you talk about your development goals in the future?

Mr. Fan: We built a high purity silver production line this year and the grade of silver can reach 99.999%min even when 23 elements are subtracted on the basis of international standards. We will do more to produce and sell the product in 2019. Moreover, after being accredited to the LBMA’s Good Delivery List for silver with effect from November 2018, we wish to do more processing and trading for exports in 2019. Besides, we also look forward to making a breakthrough in the further processing of silver.

Asian Metal:?Thank you again for accepting the interview. Wish your company better development in the future.

Mr. Fan: Thank you!