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Zhihong Jia. Review of Kingold's Accomplishments in 2016 We achieved strong financial and operating results throughout 2016, highlighted by growth in demand for our 24-karat gold jewelry products that exceeded our expectations.We recently raised our annual guidance as a result of this demand to processing between 60 and 65 metric tons, compared with earlier guidance of between 50 and 60 metric tons.The Company achieved this as a result of continued expansion of many of the core tenets that led to the formation of Kingold, including the dominance of 24-karat gold and its role as both a luxury item and as a savings proxy and the continued urbanization of the Chinese population. We have grown to understand the changing nature of our customer base, which is predominantly retail establishments and wholesale distributors.Distributors and retailers have come to rely on our highly intricate designs to meet very specific customer requests, as well as our ability to deliver these products in a timely fashion.We have long-standing relationships that marry our expertise in gold-jewelry design with the ever-evolving needs of our end customers. During 2016, we also completed the sale our interest in the Shanghai Creative Industry Park, or the Kingold Jewelry Cultural Industry Park (the "Jewelry Park") to Wuhan Lianfuda Investment Management Co., Ltd. ("Wuhan Lianfuda") for RMB 1.14 billion (approximately US $171 million). We know the principles behind Wuhan Lianfuda very well and share their vision for the long-term potential of the Jewelry Park. We originally conceived the idea of the Jewelry Park as a method of expanding Kingold's exposure throughout China's growing jewelry market.We wanted to create a one-stop shop for all businesses in the industry to see as a central hub throughout the country, and simultaneously create a destination spot for customers.Over the course of three years, we expended a considerable amount of resources and time to move the project from inception to completion.As we got into this, we appreciated gold industry as our core business more and more and sale of the Jewelry Park was a way to return to our core business. We were ultimately pleased to sell the property at a time that was favorable from a return on investment perspective, but also furthered our ultimate goal to see the Jewelry Park develop into the special destination we all envisioned.We are excited to benefit from our role in creating this active market that truly will serve as a bridge between upstream and downstream jewelry companies. The ancillary benefit of our work on the Jewelry Park was that it greatly enhanced Kingold's exposure across the entire industry.As we move into 2017, we are dedicated to leveraging this increased exposure and focusing our capital and personal resources on expanding our core jewelry design and manufacturing business. Operational Plans in 2017- Development of Gold Jewelry Manufacturing Business Since Kingold began trading as a public company in 2010, we have achieved continued growth in the amount of gold the Company processes.Our business model is not complex: we derive our revenue from the sales of 24-karat jewelry and Chinese ornaments and from design and processing fees we receive from other jewelry companies that hire us and supply us with the gold to design and produce 24-karat jewelry and Chinese ornaments.These are a mix of rings, necklaces, pendants, earrings, bracelets, and range in complexity from very simple bands or chains to highly intricate designs.Some investors have inquired about potential scale, and how our business could continue to grow at a reasonable rate given that we do pride ourselves on the unique nature of our products. This is one of our Company's biggest challenges, that is balancing the need to generate favorable margins by providing a higher level of detail on certain projects while also utilizing our operational leverage to increase volume production. Kingold benefits from a senior group of designers who manage this process, and we rely on these individuals to meet our customers' demands and expectations.We are diligent in researching and developing new designs that we believe will fit the needs of our customers, and benefit from years of testing, launching, successes, and in some cases failure.How do you grow metric tons year over year while still maintaining that balance?It is a mix of experience, culture, and capacity.We have a large-scale production base that includes a 74,933 square foot factory, a dedicated design, sales, and marketing team, and trained employees. We have received ISO 9001 accreditation from the International Organization for Standardization attesting to our quality control systems.Our production lines include automated jewelry processing equipment and procedures that we can rapidly modify to accommodate new designs and styles.

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