China Shenhua Energy : ANNOUNCEMENT ON PROGRESS OF THE WATERMARK PROJECT

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(a joint stock limited company incorporated in the People's Republic of China with limited liability)

(Stock Code: 01088)

VOLUNTARY ANNOUNCEMENT

ANNOUNCEMENT ON PROGRESS OF

THE WATERMARK PROJECT

This announcement is made by China Shenhua Energy Company Limited (the "Company" , together with its subsidiaries, the "Group") on a voluntary basis. The purpose of this announcement is to keep the shareholders and potential investors of the Company informed of the latest business development of the Group.

Reference is made to the voluntary announcements of the Company dated 6 August 2020, 29 July 2018, 12 July 2017 and 20 November 2008 in relation to the progress of the Watermark Project (the "Announcements"). Unless the context otherwise requires, terms used in this announcement shall have the same meanings as those defined in the Announcements.

Recently, Watermark Pty, a wholly-owned subsidiary of the Company, and the New South Wales Government of Australia signed the Agreements on Mining Rights and Disposal of Ecological Land (the "Agreements"), Pursuant to the Agreements, Watermark Pty will withdraw from the Watermark project development right after consultation with the New South Wales government to keep with the development trend of transitioning to clean energy and low-carbon while satisfying the environmental protection need and planning adjustment of New South Wales government in this land and transferred part of the ecological land to the New South Wales Government, while the New South Wales Government paid Watermark Pty AUD100 million.

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The main contents of the Agreements are as follows:

1. Withdrawal from Project Development Right. Watermark Pty shall return the Watermark Project Development Permit in writing to the New South Wales Government, apply to cancel the exploration right (No. EL7223) and withdraw the mining permit application.
2. Transfer of ecological land. Watermark Pty shall transfer the existing ecological land for non-agricultural uses of more than 6,000 hectares, to the New South Wales Local Land Services.
3. Exemption from original obligations. Watermark Pty's obligations to pay the purchase price of AUD200 million upon the grant of a mining lease as well as its environmental management obligations under the exploration rights and development permits as mentioned below in this announcement shall be waived. The New South Wales Government has accordingly refunded the exploration environmental deposits paid by Watermark Pty.
4. Payments. Upon the withdrawal from the project development right and transfer of the ecological land by Watermark Pty, the New South Wales government shall pay a total of AUD100 million (excluding taxes) to Watermark Pty.
5. Prohibition of local coal mining. The New South Wales government has pledged to prohibit future coal mining in the existing Watermark exploration areas through revamping the mining regulations.

The directors of the Company have confirmed that withdrawing from the Watermark project development right will not have material effect on the overall business development of the Company. At the same time, the Company and Watermark Pty will, as stipulated in the Agreements, continue to proceed with the completion procedures such as withdrawal of project rights and transfer of ecological land, and prudently handle other related work.

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Description of the Right of the Watermark Project

In 2008, the Company won the bid for the Watermark exploration area project and obtained the exploration license covering an area of approximately 195 km2. In 2017, the Watermark exploration area was adjusted to approximately 95 km2 after negotiation. In 2018, the license of Watermark exploration area was extended to 22 October 2021. In August 2020, Watermark Pty has submitted the mining lease application for the coal resources in the Watermark exploration area, to the Mining Exploration and Geoscience of the New South Wales Government. The open pit mining lease applied for covers an area of approximately 95 km2. The open pit mining area has a marketable reserve of approximately 196 million tonnes under the JORC standard, with a maximum lease duration of 21 years. According to the requirements in connection with the mining lease application, Watermark Pty shall pay AUD200 million for the mining lease within 30 days upon approval of the mining lease. For details of the right of the Watermark Project, please refer to the Announcements.

Shareholders and potential investors of the Company are advised to pay attention to investment risks and exercise in caution when dealing in the shares of the Company.

By Order of the Board

China Shenhua Energy Company Limited

Huang Qing

Secretary to the Board of Directors

Beijing, 21 April 2021

As at the date of this announcement, the Board comprises the following: Mr. Wang Xiangxi, Mr. Yang Jiping and Mr. Xu Mingjun as executive directors, Mr. Jia Jinzhong as non-executive director, Dr. Yuen Kwok Keung, Dr. Bai Chong-En and Dr. Chen Hanwen as independent non-executive directors, and Mr. Wang Xingzhong as employee director.

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