MAJOR AND CONNECTED TRANSACTION ESTABLISHMENT OF A JOINT VENTURE

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1 Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement. China Nonferrous Mining Corporation Limited 中國有色礦業有限公司 (Incorporated in Hong Kong with limited liability under the Companies Ordinance) (Stock Code: 1258) MAJOR AND CONNECTED TRANSACTION ESTABLISHMENT OF A JOINT VENTURE ESTABLISHMENT OF A JOINT VENTURE The Board is pleased to announce that, on 18 April 2017, CNHKI, a whollyowned subsidiary of the Company, and YH Metal entered into the JV Agreement, pursuant to which a Joint Venture shall be established in the DRC for the purpose of construction of a smelter for fire-refining of blister copper with the annual capacity of 400,000 tonnes of copper concentrate. Upon completion of the procedures for incorporation of the Joint Venture, CNHKI and YH Metal will hold 60% and 40% of equity interest in the registered capital of USD20,000 in the Joint Venture, respectively. Therefore, the Joint Venture will become a subsidiary of the Company upon incorporation. In accordance with the JV Agreement, the total investment in the project amounts to approximately USD420 million, to which both parties contribution with their own funds and shareholder s loans (or provision of guarantee) shall represent 30% (approximately USD126 million) and 70% (approximately USD294 million), respectively. Their own funds and shareholder s loans (or provision of guarantee) shall be contributed by both parties in proportion to their respective shareholdings in the Joint Venture. LISTING RULES IMPLICATIONS As one or more of the applicable percentage ratios calculated pursuant to Rule of the Listing Rules in respect of the total contribution (including registered capital, own funds and shareholder s loans (or provision of guarantee)) by CNHKI under the JV Agreement exceed 25% but are less than 100%, the entering into of the JV Agreement and the transaction contemplated thereunder constitute a major transaction of the Company, which is subject to the reporting, announcement and shareholders approval requirements under Chapter 14 of the Listing Rules. 1

2 YH Metal is a wholly-owned subsidiary of Yunnan Copper Group, and Yunnan Copper Group is a substantial shareholder of Chambishi Copper Smelter Limited, a subsidiary of the Company, holding 40% of its issued share capital. Therefore, YH Metal is a connected person of the Company at subsidiary level. Accordingly, the establishment of the Joint Venture under the JV Agreement constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules. Directors (including independent non-executive Directors) have approved the JV Agreement and the transaction contemplated thereunder, and confirmed that the terms of the JV Agreement and the transaction contemplated thereunder are fair and reasonable, on normal or better commercial terms and in the interests of the Company and its shareholders as a whole. In light of the above, in accordance with Rule 14A.101 of the Listing Rules, the JV Agreement and the transaction contemplated thereunder are subject to the reporting and announcement requirements but are exempt from circular, independent financial advice and shareholders approval requirements under Chapter 14A of the Listing Rules. WRITTEN APPROVAL In accordance with Rule of the Listing Rules, a written Shareholders approval may be accepted in lieu of holding a general meeting. In so far as the Company is aware, none of the Shareholders has any material interests in the JV Agreement and the transaction contemplated thereunder. Therefore, if a general meeting is to be convened to approve the JV Agreement, none of the Shareholders is required to abstain from voting. As at the date of this announcement, CNMC indirectly holds 2,600,000,000 Shares, representing approximately 74.52% of the total issued shares of the Company through CNMD, its wholly-owned subsidiary. Since the Company will obtain a written approval from CNMD, upon receipt of the written approval, the Company will not convene a general meeting to approve the JV Agreement in accordance with Rule of the Listing Rules. A circular containing, amongst other things, further details on the JV Agreement and the transaction contemplated thereunder will be despatched to the Shareholders in due course for reference. 2

3 ESTABLISHMENT OF A JOINT VENTURE Reference is made to the announcement dated 14 November 2016 of the Company in relation to Possible Cooperation. On 18 April 2017, CNHKI, a wholly-owned subsidiary of the Company, and YH Metal entered into the JV Agreement, pursuant to which a Joint Venture shall be established in the DRC for the purpose of construction of a smelter for fire-refining of blister copper with the annual capacity of 400,000 tonnes of copper concentrate. Key Terms of JV Agreement Date 18 April 2017 Parties (i) CNHKI, a wholly-owned subsidiary of the Company; and (ii) YH Metal, a wholly-owned subsidiary of Yunnan Copper Group. Shareholding Structure and Contribution The registered capital of the Joint Venture is USD20,000, which shall be fully paid up by both parties in proportion to their respective shareholdings within 30 days after the incorporation of the Joint Venture. Details of the specific contributions and shareholdings are as follows: Shareholder Shares Value Shareholding (USD) CNHKI ,000 60% YH Metal 400 8,000 40% Total 1,000 20, % Pursuant to the JV Agreement, the total investment in the project amounts to approximately USD420 million, which was determined after arm s length negotiations by both parties based on the expenses required for the construction of a smelter for fire-refining of blister copper with the annual capacity of 400,000 tonnes of copper concentrate, including construction costs, construction-related interests and general working capital. 3

4 Pursuant to the JV Agreement, the total investment in the project will be contributed by both parties with their own funds and shareholder s loans (or provision of guarantee): (1) Own funds: own funds represent 30% of the total investment in the project (i.e. USD126 million) and will be paid by CNHKI and YH Metal with their own funds in proportion to their respective shareholdings in the Joint Venture (i.e. CNHKI and YH Metal shall contribute approximately USD75.6 million and USD50.4 million with their own funds, respectively). The first installment of own funds contributed by both parties shall not be less than 25% of their due contributions and shall be paid up within 60 days from the date of incorporation of the Joint Venture, and the balance shall be paid up within 1 year from the date of incorporation of the Joint Venture; and (2) Shareholder s loans (or provision of guarantee): shareholder s loans (or provision of guarantee) represent 70% of the total investment in the project (i.e. USD294 million) and will be advanced by CNHKI and YH Metal by means of granting loans (or providing guarantee) to the Joint Venture in proportion to their respective shareholdings in the Joint Venture (i.e. CNHKI and YH Metal shall grant loans (or providing guarantee) amounting to approximately USD176.4 million and USD117.6 million, respectively). Such shareholder s loans will be funded by debt financing to be conducted by both parties with independent financial institutions based on prevailing market terms. Therefore, the terms of such shareholder s loans will also be based on and reflect the then prevailing market terms of such debt financing. Management of the Joint Venture The board of directors of the Joint Venture shall consist of five directors, of whom three shall be nominated by CNHKI and two by YH Metal. The roles of chairman and vice chairman of the board of directors of the Joint Venture shall be assumed by directors nominated by CNHKI and YH Metal, respectively. The general manager of the Joint Venture shall be recommended by YH Metal and appointed or removed by the board of directors of the Joint Venture. The chief accountant of the Joint Venture shall be recommended by CNHKI and nominated by the general manager, and appointed or removed by the board of directors of the Joint Venture. Deputy general managers and other senior management members of the Joint Venture shall be nominated by the general manager and appointed or removed by the board of directors of the Joint Venture. Pursuant to the JV Agreement, resolutions on certain significant matters under the JV Agreement, which require voting by the board of directors of the Joint Venture, shall be subject to the approval by more than two-thirds of the directors, and any such matter requiring voting at the shareholders meeting of the Joint Venture shall be subject to mutual approval by both parties. 4

5 Distribution of Dividend by the Joint Venture Joint Venture shall convene a general meeting to determine the distribution of dividend by way of a resolution at the general meeting. In principle, on the premise of satisfying normal operation of the Joint Venture, dividend shall be distributed on an annual basis if the Joint Venture has distributable profit, and the dividend to be distributed shall not be less than 80% of the profit available for distribution for the current year. REASONS FOR AND BENEFITS OF THE ESTABLISHMENT OF THE JOINT VENTURE The Company is of the view that the cooperation with Yunnan Copper Group in relation to this transaction is in line with the Company s business and commercial objectives and its strategy for development of central and southern Africa, and is conductive to the enhancement of size and competitiveness of the Group s copper business in the DRC and the long-term stable development of the Company. The terms of the JV Agreements were determined after arm s length negotiations by both parties. Directors (including independent non-executive Directors) have confirmed that the terms of the JV Agreement and the transaction contemplated thereunder are fair and reasonable, on normal or better commercial terms and in the interests of the Company and its shareholders as a whole. PARTICULARS OF RELEVANT PARTIES The Company is an investment holding company. The Group is principally engaged in exploration, mining, ore processing, leaching, smelting and sale of copper cathodes, blister copper and sulfuric acid in Zambia and the DRC. CNHKI is a company established in Hong Kong with limited liability and a whollyowned subsidiary of the Company, mainly engaged in minerals development and relevant trade. Yunnan Copper Group is a large state-owned enterprise group jointly owned by China Copper Corporation Limited* ( ), the State-owned Assets Supervision and Administration Commission of Yunnan Province, and Yunnan Industrial Investment Group* ( ), mainly engaged in production, sales and processing of nonferrous metals. YH Metal is a company established in Hong Kong with limited liability and a whollyowned subsidiary of Yunnan Copper Group, mainly engaged in sales, trading, financing and other businesses of nonferrous metal. 5

6 LISTING RULES IMPLICATIONS As one or more of the applicable percentage ratios calculated pursuant to Rule of the Listing Rules in respect of the total contribution (including registered capital, own funds and shareholder s loans (or provision of guarantee)) by CNHKI under the JV Agreement exceed 25% but are less than 100%, the entering into of the JV Agreement and the transaction contemplated thereunder constitute a major transaction of the Company, which is subject to the reporting, announcement and shareholders approval requirements under Chapter 14 of the Listing Rules. YH Metal is a wholly-owned subsidiary of Yunnan Copper Group, and Yunnan Copper Group is a substantial shareholder of Chambishi Copper Smelter Limited, a subsidiary of the Company, holding 40% of its issued share capital. Therefore, YH Metal is a connected person of the Company at subsidiary level. Accordingly, the establishment of the Joint Venture under the JV Agreement constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules. Directors (including independent non-executive Directors) have approved the JV Agreement and the transaction contemplated thereunder, and confirmed that the terms of the JV Agreement and the transaction contemplated thereunder are fair and reasonable, on normal or better commercial terms and in the interests of the Company and its shareholders as a whole. In light of the above, in accordance with Rule 14A.101 of the Listing Rules, the JV Agreement and the transaction contemplated thereunder are subject to the reporting and announcement requirements but are exempt from circular, independent financial advice and shareholders approval requirements under Chapter 14A of the Listing Rules. The JV Agreement and the transaction contemplated thereunder have been considered and approved by the Board. None of the Directors has any material interests in the JV Agreement and the transaction contemplated thereunder or is required to abstain from voting on the resolution of the Board in relation to the approval of the JV Agreement and the transaction contemplated thereunder. WRITTEN APPROVAL In accordance with Rule of the Listing Rules, a written Shareholders approval may be accepted in lieu of holding a general meeting. In so far as the Company is aware, none of the Shareholders has any material interests in the JV Agreement and the transaction contemplated thereunder. Therefore, if a general meeting is to be convened to approve the JV Agreement, none of the Shareholders is required to abstain from voting. As at the date of this announcement, CNMC indirectly holds 2,600,000,000 Shares, representing approximately 74.52% of the total issued shares of the Company through CNMD, its wholly-owned subsidiary. Since the Company will obtain a written approval from CNMD, upon receipt of the written approval, the Company will not convene a general meeting to approve the JV Agreement in accordance with Rule of the Listing Rules. 6

7 A circular containing, amongst other things, further details on the JV Agreement and the transaction contemplated thereunder will be despatched to the Shareholders in due course for reference. DEFINITIONS In this announcement, the following expressions shall have the following meanings unless the context requires otherwise: Board CNMC CNMD CNHKI Company connected person controlling shareholder Director(s) DRC Group the board of Directors China Nonferrous Metal Mining (Group) Co., Ltd* ( ), a state-owned enterprise incorporated under the laws of the PRC and an indirect controlling shareholder of the Company, which indirectly holds an aggregate of 2,600,000,000 shares of the Company, representing approximately 74.52% of issued shares of the Company as at the date of this announcement China Nonferrous Mining Development Limited ( *) a company incorporated in the British Virgin Islands, a wholly-owned subsidiary of CNMC and a controlling shareholder of the Company China Nonferrous Mining Hong Kong Investment Limited ( ), a company established in Hong Kong with limited liability and a wholly-owned subsidiary of the Company China Nonferrous Mining Corporation Limited ( ), a company incorporated in Hong Kong with limited liability, whose shares are listed on the Stock Exchange (stock code:1258) has the meaning ascribed thereto in the Listing Rules has the meaning ascribed thereto in the Listing Rules director(s) of the Company the Democratic Republic of the Congo the Company and its subsidiaries 7

8 Hong Kong Joint Venture JV Agreement Listing Rules percentage ratios PRC Shares Shareholders Stock Exchange subsidiary(ies) substantial shareholder USD YH Metal Hong Kong Special Administrative Region of the PRC Likasi Copper Smelter SAS, the joint venture to be established in the DRC by CNHKI and YH Metal in accordance with the JV Agreement the shareholder agreement dated 18 April 2017 entered into between CNHKI and YH Metal in relation to establishment of the Joint Venture the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, as amended, supplemented or otherwise modified from time to time percentage ratios as defined in Rule 14.04(9) of the Listing Rules the People s Republic of China, excluding, for the purpose of this announcement, Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan shares in the issued share capital of the Company holders of the Shares The Stock Exchange of Hong Kong Limited has the meaning ascribed thereto in the Listing Rules has the meaning ascribed thereto in the Listing Rules United States dollars, the current lawful currency of the United States of America Yunnan & Hongkong Metal Company Limited ( ), a company established in Hong Kong with limited liability and a wholly-owned subsidiary of Yunnan Copper Group 8

9 Yunnan Copper Group Zambia Yunnan Copper Industry (Group) Co., Ltd.*( ), a company incorporated in the PRC with limited liability, which is mainly engaged in production, sales and processing of nonferrous metals the Republic of Zambia % per cent 18 April 2017 By Order of the Board China Nonferrous Mining Corporation Limited Xinghu TAO Chairman As at the date of this announcement, the Board comprises Mr. Xinghu Tao, Mr. Xingeng Luo, Mr. Chunlai Wang, Mr. Wei Fan and Mr. Kaishou Xie as executive Directors; Mr. Diyong Yan as non-executive Director; and Mr. Chuanyao Sun, Mr. Jingwei Liu and Mr. Huanfei Guan as independent non-executive Directors. * Translation of Chinese or English terms for reference purposes only 9