OREANDA-NEWS. August 12, 2011. Reference is made to the Announcement regarding the approval of the split arrangement of Huajin Coking Coal, which is currently owned as to 50% by the Company and Shanxi Coking Coal Group, respectively, reported the press-centre of China Coal Energy.

The Board is pleased to announce that the Company entered into Split Agreement with Shanxi Coking Coal Group, Huajin Coking Coal, and China Coal Huajin (to be established).

Pursuant to the Split Agreement, Huajin Coking Coal will be split into two limited liability companies by way of split-off and both of the limited liability companies upon completion of the Split will be owned as to 50% by the Company and Shanxi Coking Coal Group, respectively. Upon completion of the Split, Huajin Coking Coal will continue to exist, while a new company, namely, China Coal Huajin (to be established), will be incorporated to hold the assets split from Huajin Coking Coal. The Split will be conducted based on the current shareholding held by the Company and Shanxi Coking Coal Group in Huajin Coking Coal. According to Split Agreement, upon completion of the Split Wangjialing Assets will be split from Huajin Coking Coal and will be held by China Coal Huajin (to be established), while Huajin Coke Assets will continue to be held by Huajin Coking Coal;  Huajin Coking Coal will continue to be owned as to 50% by Shanxi Coking Coal Group and the Company, respectively.

However, as Shanxi Coking Coal Group will actually control the board of Huajin Coking Coal upon completion of the Split, Huajin Coking Coal will cease to be a subsidiary of the Company; and China Coal Huajin (to be established) will be owned as to 50% by the Company and Shanxi Coking Coal Group, respectively, and the Company will actually control the board of China Coal
Huajin (to be established), China Coal Huajin (to be established) will be treated as a subsidiary of the Company. No consideration will be paid for the Split.

As one or more of the applicable percentage ratios (as defined under the Listing Rules) in relation to the transaction that Huajin Coking Coal ceasing to be the subsidiary of the Company under the Split exceed 5% but below 25%, such transaction constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules.

As at the date of this announcement, Shanxi Coking Coal Group holds 50% equity interest in Huajin Coking Coal, therefore a connected person of the Company under Chapter 14A of the Listing Rules by virtue of being a substantial shareholder of a subsidiary of the Company, such joint venture arrangement for establishing China Coal Huajin (to be established) arising from the Split constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules; as one or more of the applicable percentage ratios (as defined under the Listing Rules) in relation to the transaction under the joint venture arrangement for establishing China Coal Huajin (to be established) arising from the Split exceed 1% but below 5%, such transaction is subject to the reporting and announcement requirements but is exempt from shareholders’ approval requirement under Chapter 14A of the Listing Rules.