Yanzhou Coal Mining : CONTINUING CONNECTED TRANSACTION

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兗州煤業股份有限公司

YANZHOU COAL MINING COMPANY LIMITED

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

(Stock Code: 1171)

CONTINUING CONNECTED TRANSACTION

On 25 October 2019, HV Operations, a subsidiary of Yancoal Australia and an indirect subsidiary of the Company, entered into the 2019 Diesel Fuel Supply Agreement, pursuant to which HV Operations has agreed to purchase diesel fuel from GAO during the period from 1 November 2019 to 31 October 2022.

As at the date of this announcement, GAO is a subsidiary of Glencore plc, which is the holding company of Anotero Pty Ltd, a substantial shareholder of HV Operations, GAO is a connected person of the Company at the subsidiary level by virtue of being an associate of a substantial shareholder of the Company's indirect subsidiary.

As one or more of the applicable percentage ratios (as defined under Rule 14.07 of the Listing Rules) in respect of the maximum annual transaction amount to be paid by HV Operations to GAO for the purchase of diesel fuel pursuant to the 2019 Diesel Fuel Supply Agreement is more than 1% but all of the percentage ratios (other than the profits ratio) are less than 5%, pursuant to Rule 14A.76(2)(a) of the Listing Rules, the continuing connected transaction under the 2019 Diesel Fuel Supply Agreement are exempt from the circular and independent shareholders' approval requirements under Chapter 14A of the Hong Kong Listing Rules, but are subject to the reporting, announcement and annual review requirements.

1. ENTERING INTO THE 2019 DIESEL FUEL SUPPLY AGREEMENT

Background

On 25 October 2019, HV Operations entered into the 2019 Diesel Fuel Supply Agreement with GAO, pursuant to which HV Operations has agreed to purchase diesel fuel from GAO during the period from 1 November 2019 to 31 October 2022.

Date

25 October 2019

Parties

1. HV Operations (as the purchaser); and
2. GAO (as the seller)

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Major Terms

Pursuant to the 2019 Diesel Fuel Supply Agreement, HV Operations agrees to purchase, and GAO agrees to sell at a price agreed and applicable to the monthly quantity delivered as measured in accordance with the agreement. HV Operations will generate a purchase order prior to the month of delivery. GAO will deliver the volume of fuel in the purchase order by the date specified in that purchase order and HV Operations will make the payments after the delivery of the fuel. The basis for calculating the payments to be made is based on the volume delivered and the price determined following the tender process.

To ensure a fair and open tender process, an Independent Third Party has been engaged with extensive involvement in the commercial business-to-business diesel supply market to assist in the tender document preparation, submission evaluations and subsequent engagement with suppliers in negotiating the optimal outcome. A tender has been issued to several prospective suppliers. The negotiation process cycled three or four times with each supplier, including reviewing and verifying the accuracy and consistency of each submission made by the suppliers and ensuring that pricing is evaluated on consistent basis. Potential suppliers were determined and approved based on a variety of criteria, including reputation, reliability and the pricing submitted.

Term

Three years commencing from 1 November 2019 to 31 October 2022.

Historical Transaction Amounts

As the 2019 Diesel Fuel Supply Agreement was entered into on 25 October 2019, there was no historical transaction amount with GAO for the three years ended 31 December 2016, 2017 and 2018, as fuel was sourced from other non-connected suppliers.

Annual caps and reasons

The maximum transaction amount to be paid by HV Operations to GAO for the purchase of diesel fuel pursuant to the 2019 Diesel Fuel Supply Agreement during the term of the 2019 Diesel Fuel Supply Agreement are set out below:

Period / Year	1 November 2019 to 31	Year ending 31 December	Year ending 31 December
	December 2019	2020	2021
Caps	A$30 million	A$180 million	A$180 million

This annual cap was calculated by reference to (i) the tender price and (ii) the expected demand for diesel fuel from the Group during the term of the 2019 Diesel Fuel Supply Agreement.

Prior to 31 December 2021, the Company will comply with the relevant approval procedures under the relevant PRC laws and regulations and Chapter 14A of the Hong Kong Listing Rules, and set the transaction cap for the period between 1 January 2022 and 31 October 2022.

Reasons and benefits for entering into the 2019 Diesel Fuel Supply Agreement

The principal business activity of Yancoal Australia is the production of thermal and metallurgical coal for use in the power generation and steel industries in Asian markets. The 2019 Diesel Fuel Supply Agreement,

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which was entered into following a fair and open tender process as described above, will provide certainty in the supply to HV Operations' production and operations, so as to generate revenue for Yancoal Australia.

Implications of the Hong Kong Listing Rules

As at the date of this announcement, Yancoal Australia is a controlled subsidiary of the Company, HV Operations is 51% indirectly owned by Yancoal Australia and is thus an indirect subsidiary of the Company. As GAO is a subsidiary of Glencore plc, which is the holding company of Anotero Pty Ltd, a substantial shareholder of HV Operation, GAO is a connected person of the Company at the subsidiary level by virtue of being an associate of a substantial shareholder of the Company's indirect subsidiary. Accordingly, the 2019 Diesel Fuel Supply Agreement and the transactions contemplated thereunder constitute continuing connected transaction of the Company under Chapter 14A of the Hong Kong Listing Rules.

The Directors (including the independent non-executive Directors) consider that the 2019 Diesel Fuel Supply Agreement, the transactions contemplated thereunder and the proposed annual caps are: (i) on normal commercial terms or better and in the ordinary and usual course of business of the Group; (ii) fair and reasonable; and (iii) in the interests of the Company and the Shareholders as a whole.

As one or more of the applicable percentage ratios (as defined in Rule 14.07 of the Hong Kong Listing Rules) in respect of the maximum annual transaction amount to be paid by HV Operations to GAO for the purchase of diesel fuel pursuant to the 2019 Diesel Fuel Supply Agreement is more than 1% but all of the percentage ratios (other than the profits ratio) are less than 5%, pursuant to Rule 14A.76(2)(a) of the Hong Kong Listing Rules, the continuing connected transaction under the 2019 Diesel Fuel Supply Agreement are exempt from the circular and independent shareholders' approval requirements under Chapter 14A of the Hong Kong Listing Rules, but are subject to the reporting, announcement and annual review requirements.

1. GENERAL

The 2019 Diesel Fuel Supply Agreement, the transactions contemplated thereunder and the respective annual caps were approved at the twenty-eighth meeting of the seventh session of the Board held on 25 October 2019.

At the aforesaid Board meeting, none of the Directors was regarded as having a material interest in the abovementioned continuing connected transaction and therefore, none of the Directors has abstained from voting at the aforesaid Board meeting convened for the purpose of approving such transactions.

Information of the parties

The Company

The Company is principally engaged in the business of mining, preparation, processing and sales of coal and coal chemicals. The Company's main products are steam coal for use in large-scale power plants, coking coal for metallurgical production and prime quality low sulphur coal for use in pulverized coal injection.

HV Operations

HV Operations' principal business activity include managing the Hunter Valley Operations, an established large-scale open cut operation located at Lemington, New South Wales, Australia.

GAO

GAO's principal business activity is the supply of fuel needs of mining, agricultural and other customers. Its

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business extends into the wholesale fuel market supplying oil majors where required, as well as being a large supplier to independents and large volume end users. GAO is a member of Glencore plc, the shares of which are listed on the London Stock Exchange and the Johannesburg Stock Exchange. Glencore plc is one of the largest global diversified natural resource companies in the world..

III. DEFINITIONS
"2019 Diesel Fuel Supply Agreement"	the a diesel fuel supply agreement entered into
	between HV Operations and GAO on 25 October
	2019
"A shares"	domestic shares in the ordinary share capital of the
	Company, with a nominal value of RMB1.00 each,
	which are listed on the Shanghai Stock Exchange
"associate(s)"	has the meaning ascribed thereto under the Hong
	Kong Listing Rules
"A$"	Australian dollars, the lawful currency of Australia
"Board"	the board of Directors
"Company"	兗州煤業股份有限公司, Yanzhou Coal Mining
	Company Limited, a joint stock limited company
	established under the laws of the PRC in 1997, and
	the H Shares and A Shares of which are listed on the
	Hong Kong Stock Exchange and the Shanghai Stock
	Exchange, respectively
"connected person(s)"	has the meaning ascribed thereto under the Hong
	Kong Listing Rules
"controlling shareholder(s)"	has the meaning ascribed thereto under the Hong
	Kong Listing Rules
"Director(s)"	the director(s) of the Company
"GAO"	Glencore Australia Oil Pty Ltd, a subsidiary of
	Glencore plc, the controlling shareholder of Anotero
	Pty Ltd which constitutes a substantial shareholder
	of HV Operations
"Group"	the Company and its subsidiaries
"H Shares"	overseas listed foreign invested shares in the
	ordinary share capital of the Company with a
	nominal value of RMB1.00 each, which are listed on
	the Hong Kong Stock Exchange

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"Hong Kong Listing Rules"	the Rules Governing the Listing of Securities on the
	Hong Kong Stock Exchange
"Hong Kong Stock Exchange"	The Stock Exchange of Hong Kong Limited
"HV Operations"	HV Operations Pty Ltd, an indirect subsidiary of
	Yancoal Australia
"Independent Third Party"	any party who is not connected (within the meaning
	of the Hong Kong Listing Rules) with the Company,
	so far as the Directors are aware after having made
	reasonable enquiries
"percentage ratios"	has the same meaning ascribed thereto under the
	Hong Kong Listing Rules
"PRC"	the People's Republic of China
"RMB"	Renminbi, the lawful currency of the PRC
"Shareholder(s)"	the shareholder(s) of the Company
"subsidiary(ies)"	has the meaning ascribed thereto under the Hong
	Kong Listing Rules
"Yancoal Australia"	Yancoal Australia Limited, a controlled overseas
	subsidiary of the Company, the shares of which are
	listed on the Australian Stock Exchange (Stock
	Code: YAL) and the Hong Kong Stock Exchange
	(Stock Code: 03668)
"%"	percentage

By order of the Board

Yanzhou Coal Mining Company Limited

Li Xiyong

Chairman

Zoucheng, Shandong Province, the PRC

25 October 2019

As at the date of this announcement, the directors of the Company are Mr. Li Xiyong, Mr. Li Wei, Mr. Wu Xiangqian, Mr. Liu Jian, Mr. Guo Dechun, Mr. Zhao Qingchun and Mr. Guo Jun, and the independent non- executive Directors of the Company are Mr. Kong Xiangguo, Mr. Cai Chang, Mr. Poon Chiu Kwok and Mr. Qi 2.14 Anbang.

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