Metallurgical of China : ANNOUNCEMENT - CONNECTED TRANSACTION - DISPOSAL OF ACCOUNTS RECEIVABLE

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 an part of the contents of this announcement.

ANNOUNCEMENT

CONNECTED TRANSACTION

DISPOSAL OF ACCOUNTS RECEIVABLE

The Board hereby announces that MCC Communication, a wholly-owned subsidiary of the Company, proposes to enter into the Transfer Agreement with Minmetals Securities, pursuant to which MCC Communication will dispose of the Initial Accounts Receivable with a book value of approximately RMB551 million to Minmetals Securities. The estimated consideration is approximately RMB540 million.

Minmetals Securities will, as the custodian, establish the Special Plan, with the Initial Accounts Receivable as its initial underlying assets of the Special Plan. The duration of the Special Plan is expected to be no more than three years. Minmetals Securities will be entitled to acquire the Additional Accounts Receivable from MCC Communication during a period of approximately two and a half years from the date of establishment of the Special Plan. The cumulative book value of the Accounts Receivable (including the Initial Accounts Receivable and the Additional Accounts Receivable) is estimated to be no more than RMB1,500 million, and the total consideration for the transfer of the Accounts Receivable is expected to be no more than RMB1,436 million.

China Minmetals, the indirect controlling shareholder of the Company, indirectly holding approximately 55.53% of the total issued shares of the Company, is a connected person of the Company. Minmetals Securities is a non-wholly owned subsidiary of China Minmetals, and is therefore also a connected person of the Company. As such, the Transaction constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules. As the applicable percentage ratios of the Transaction exceed 0.1% but less than 5%, the Transaction is subject to the reporting and announcement requirements, but exempt from the independent shareholders' approval requirement under Chapter 14A of the Listing Rules.

- 1 -

BACKGROUND

The Board hereby announces that MCC Communication, a wholly-owned subsidiary of the Company, proposes to enter into the Transfer Agreement with Minmetals Securities, pursuant to which MCC Communication will dispose of the Initial Accounts Receivable with a book value of approximately RMB551 million to Minmetals Securities. The estimated consideration is approximately RMB540 million.

Minmetals Securities will, as the custodian, establish the Special Plan, with the Initial Accounts Receivable as its initial underlying assets of the Special Plan. The duration of the Special Plan is expected to be no more than three years. Minmetals Securities will be entitled to acquire the Additional Accounts Receivable from MCC Communication during a period of approximately two and a half years from the date of establishment of the Special Plan. The cumulative book value of the Accounts Receivable (including the Initial Accounts Receivable and the Additional Accounts Receivable) is estimated to be no more than RMB1,500 million, and the total consideration for the transfer of the Accounts Receivable is expected to be no more than RMB1,436 million.

THE MAJOR TERMS OF THE TRANSFER AGREEMENT

Parties
Seller	:	MCC Communication
Buyer	:	Minmetals Securities

Accounts Receivable to be transferred

Pursuant to the Transfer Agreement, MCC Communication will transfer to Minmetals Securities the Accounts Receivable against the relevant payment obligors under the construction contracts entered into in its ordinary and usual course of business, including:

1. all titles, ancillary security interests and related interests (present and future, existing and contingent) of the Accounts Receivable held by MCC Communication;
2. all the repayments, due or to become due, attributable to the Accounts Receivable;
3. the proceeds from recovery, sale or otherwise disposal of the Accounts Receivable;
4. the rights to request, sue, recover and receive all the payments payable in relation to the Accounts Receivable (no matter whether such payments are payable by the payment obligors under the construction contracts); and

- 2 -

1. the interests arising from commitments in relation to the Accounts Receivable and enforcement rights of all the rights and legal remedies arising from the Accounts Receivable.

Details of the Accounts Receivable will be specified in the list of the Accounts Receivable to be provided by MCC Communication to Minmetals Securities.

Consideration and payment

MCC Communication and Minmetals Securities will determine the size of the Initial Accounts Receivable to be transferred based on the sale results of the asset-backed securities under the Special Plan. The book value of the Initial Accounts Receivable is approximately RMB551 million and the estimated consideration is approximately RMB540 million. Minmetals Securities shall pay the consideration of the Initial Accounts Receivable to MCC Communication on the date of establishment of the Special Plan in cash in one lump sum.

Minmetals Securities will be entitled to acquire the Additional Accounts Receivable from MCC Communication during a period of approximately two and a half years from the date of establishment of the Special Plan. The cumulative book value of the Accounts Receivable (including the Initial Accounts Receivable and the Additional Accounts Receivable) is estimated to be no more than RMB1,500 million, and the total consideration for the transfer of the Accounts Receivable is expected to be no more than RMB1,436 million.

The total consideration will be calculated by multiplying the book value of the Accounts Receivable by a discount rate, and such discount rate will be determined after arm's length negotiations between MCC Communication and Minmetals Securities with reference to the future recoverability of the Accounts Receivable.

Conditions precedent

The conditions precedent for the closing of the Transaction mainly include, among others, (a) the Special Plan having been successfully established, and (b) MCC Communication having delivered the documents of the Accounts Receivable to Minmetals Securities and issued a complete list of the Accounts Receivable.

Closing

At the same time as the consideration of the Accounts Receivable is paid by Minmetals Securities to MCC Communication, the parties shall sign a confirmation letter for closing, which shall be deemed as the confirmation by both parties of the closing of the Transaction.

- 3 -

FINANCIAL IMPACT OF THE TRANSACTION

It is estimated that the Group will recognize the financing cost of approximately RMB64 million in respect of the Transaction (including the financing cost of approximately RMB11 million recognized in respect of the transfer of the Initial Accounts Receivable and the financing cost of approximately RMB53 million recognized in respect of the transfer of the Additional Accounts Receivable), which is calculated based on the book value of the Accounts Receivable less the maximum total consideration of the Transaction. The final amount of financing cost of the Transaction shall be determined based on the final size and consideration of the Accounts Receivable to be transferred.

The proceeds from the Transaction will be used to repay the interest-bearing debts and replenish the working capital of MCC Communication.

REASONS FOR AND BENEFITS OF THE TRANSACTION

The Board is of the view that the Transaction will allow the Group to revitalize assets, control risks relating to accounts receivable, reduce the amount of accounts receivable, thus optimising the Group's asset structure, increasing liquidity, improving capital efficiency and financial position and further optimising the Group's financial statements.

The Directors (including the independent non-executive Directors) are of the view that the Transaction is entered into on normal commercial terms in the usual and ordinary course of business of the Group, and is fair and reasonable and in the interests of the Company and its shareholders as a whole. As Mr. Guo Wenqing, Mr. Zhang Zhaoxiang and Mr. Lin Jinzhen hold positions in China Minmetals or its subsidiaries, they have abstained from voting on the resolution of the Board to approve the Transaction.

LISTING RULES IMPLICATIONS

China Minmetals, the indirect controlling shareholder of the Company, indirectly holding approximately 55.53% of the total issued shares of the Company, is a connected person of the Company. Minmetals Securities is a non-wholly owned subsidiary of China Minmetals, and is therefore also a connected person of the Company. As such, the Transaction constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules. As the applicable percentage ratios of the Transaction exceed 0.1% but less than 5%, the Transaction is subject to the reporting and announcement requirements, but exempt from the independent shareholders' approval requirement under Chapter 14A of the Listing Rules.

- 4 -

GENERAL INFORMATION

The Group has strong capabilities in metallurgical engineering. It is a large multinational conglomerate operating in various specialized fields across different industries, with engineering contracting, property development, equipment manufacturing and resources development as its principal businesses.

The main business scope of MCC Communication covers real estate development; technology development, transfer, consultation, promotion and service; communication project investment management; general contracting for construction, specialty contracting; engineering consultation and supervision, tendering agency; import and export of commodities and technologies, import and export agency; rendering of labour services (excluding intermediary services); contracting of overseas communication construction projects and domestic international tendering projects; export of equipment and materials required for aforementioned overseas projects; dispatch of labour required for implementing aforementioned overseas projects; survey and design; quality inspection and test on building materials and projects; sales of machinery equipment; lease of machinery equipment; highway management and maintenance.

The main business scope of Minmetals Securities covers securities brokerage; securities investment consulting; financial advisory on securities trading and securities investment activities, proprietary securities operations; securities asset management; margin trading; sales of securities investment fund; sales of financial products by proxy, and securities underwriting and sponsoring.

DEFINITIONS

In this announcement, the following expressions have the meanings set out below unless the context otherwise requires:

"Accounts Receivable"	the accounts receivable and related interests of MCC
	Communication against the relevant payment obligors
	under the construction contracts entered into in the
	ordinary and usual course of business, including
	the Initial Accounts Receivable and the Additional
	Accounts Receivable
"Additional Accounts	the additional accounts receivable that may be disposed
Receivable"	of by MCC Communication to Minmetals Securities
	upon completion of the transfer of the Initial Accounts
	Receivable pursuant to the Transfer Agreement
"Board"	the board of Directors of the Company

- 5 -

"China Minmetals"	China Minmetals Corporation* ( 中 國 五 礦 集 團 有
	限 公 司), a state wholly-owned enterprise established
	in the PRC under the direct control of the State-owned
	Assets Supervision and Administration Commission
	of the State Council and the indirect controlling
	shareholder of the Company
"Company"	Metallurgical Corporation of China Ltd.* ( 中 國 冶 金
	科 工 股 份 有 限 公 司), a joint stock limited company
	with limited liability incorporated under the laws of the
	PRC on 1 December 2008
"connected persons(s)"	has the meaning ascribed to it under the Listing Rules
"controlling shareholder(s)"	has the meaning ascribed to it under the Listing Rules
"Director(s)"	the director(s) of the Company
"Group"	the Company and its subsidiaries
"Hong Kong"	the Hong Kong Special Administrative Region of the
	PRC
"Initial Accounts	the first tranche of the accounts receivable with a book
Receivable"	value of approximately RMB551 million to be disposed
	of by MCC Communication to Minmetals Securities
	pursuant to the Transfer Agreement
"Listing Rules"	the Rules Governing the Listing of Securities on The
	Stock Exchange of Hong Kong Limited
"MCC Communication"	MCC Communication Construction Group Co., Ltd. *
	( 中 冶 交 通 建 設 集 團 有 限 公 司), a company with
	limited liability incorporated under the laws of the PRC
	and a wholly-owned subsidiary of the Company
"Minmetals Securities"	Minmetals Securities Co., Ltd. * (五礦證券有限公司),
	a company with limited liability incorporated under the
	laws of the PRC and a non-wholly owned subsidiary of
	China Minmetals
"PRC"	the People's Republic of China and for the sole purpose
	of this announcement, excluding Hong Kong, Macau
	Special Administrative Region and Taiwan

- 6 -

"RMB"	Renminbi, the lawful currency of the PRC
"Special Plan"	an asset-backed special plan to be established by
	Minmetals Securities as the custodian, with the
	Accounts Receivable as its underlying assets
"subsidiary(ies)"	has the meaning ascribed to it under the Listing Rules
"Transaction"	the disposal of the Accounts Receivable by MCC
	Communication to Minmetals Securities pursuant to the
	Transfer Agreement
"Transfer Agreement"	the "Agreement for the Transfer of Underlying Assets
	under the Accounts Receivable Assets-backed Special
	Plan of Minmetals Securities - MCC Communication "
	to be entered into between MCC Communication and
	Minmetals Securities
	By order of the Board
	Metallurgical Corporation of China Ltd.*
	Zeng Gang
	Joint Company Secretary
Beijing, the PRC
30 October 2019

As at the date of this announcement, the Board of the Company comprises two executive Directors: Mr. Guo Wenqing and Mr. Zhang Zhaoxiang; four independent non-executive Directors: Mr. Zhou Jichang, Mr. Yu Hailong, Mr. Ren Xudong and Mr. Chan Ka Keung, Peter; and one non-executive Director: Mr. Lin Jinzhen.

• For identification purpose only

- 7 -