the value consultation report on the mining rights of ... · 4. the product scheme is washed fine...

The Value Consultation Report

on the Mining Rights of Hongqinghe Mine

of

Inner Mongolia Yitai Guanglian Coal Chemical Co., Ltd.

Zhong Xin Zhong He Ping Zi [2017] No. 001

Beijing Zhongxin Zhonghe Mining Valuation Advisory Limited

18 August 2017

Contents

Part I Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Part II Body of the Value Consultation Report

1. Value consultation agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

2. Principal and mining rights owner . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

3. Value consultation object . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

4. Value consultation prerequisites and purposes . . . . . . . . . . . . . . . . . . . 9

5. Value consultation base date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

6. Value consultation basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

7. Value consultation principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

8. Value consultation process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

9. Overview of the mining rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

10. Geological features of the mining area . . . . . . . . . . . . . . . . . . . . . . . . 17

11. Value consultation method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

12. Explanation on main technical economic parameterschosen in the value consultation . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

13. Value consultation conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

14. Disclosure and instructions to related issues . . . . . . . . . . . . . . . . . . . . . 57

15. Schedules and annexes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

16. Submission date of value consultation report . . . . . . . . . . . . . . . . . . . . 61

17. Value consultants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

18. Seal and stamp by value consultation agency and value consultants . . . . . 62

Part III Schedules of the Value Consultation Report . . . . . . . . . . . . . . . . . . . . . . . 63

Part IV Annexes to the Value Consultation Report . . . . . . . . . . . . . . . . . . . . . . . . 64

Inner Mongolia Yitai Guanglian Coal Chemical Co., Ltd.The Value Consultation Report

On the Mining Rights of Hongqinghe Mine

Zhong Xin Zhong He Ping Zi [2017] No. 001

SUMMARY

Engaged by the Inner Mongolia Yitai Coal Co., Ltd., and observing pertinent national laws,regulations and policy documents and referring to pertinent regulations regarding mining rightsappraisal, and on principles of being independent, objective, impartial and scientific, and combinedwith actual conditions and adopting scientific and reasonable approaches, Beijing Zhongxin ZhongheMining Valuation Advisory Limited (北京中鑫眾和礦業權評估諮詢有限公司) has carried out theanalysis and appraisal on the value of the Mining Rights of Hongqinghe Mine of Inner MongoliaYitai Guanglian Coal Chemical Co., Ltd. (內蒙古伊泰廣聯煤化有限責任公司). Consultation statusand results of the value of the mining right are herein summarized as below:

I. Value consultation object: the Mining Rights of Hongqinghe Mine of Inner Mongolia YitaiGuanglian Coal Chemical Co., Ltd.

II. Value consultation prerequisites and purposes: From the whole development of InnerMongolia Yitai Guanglian Coal Chemical Co., Ltd. and the development strategy for the miningrights of Hongqinghe Mine and under the premise of observing national laws, regulations andpertinent policies, holding the principle of reasonable economic value of the company, andbased on current conditions of the mining rights of Hongqinghe Mine, taking all actualconditions into consideration and adopting more scientific and rational mining techniques andmethods, the capacity of the mining rights of Hongqinghe Mine, being 15 million tons/year, willbe enlarged to 30 million tons/year. The value consultation report for this project is to providethe principal with the value consultation conclusions for such mining rights under the model ofthe Development and Utilization Plan for the Mining Rights of Hongqinghe Mine – at a Scaleof 30 million tons/year, for the reference of the principal and concerned aspects.

III. Value consultation base date: 30 June 2017

IV. Value consultation method: Based on the existing geological data of and development plan forthe Mining Rights of Hongqinghe Mine, combined with actual conditions and adopting morescientific and rational mining techniques and methods, the existing capacity of such miningrights, being 15 million tons/year, will be enlarged to 30 million tons/year, and the model of theDevelopment and Utilization Plan for the Mining Rights of Hongqinghe Mine – at a Scale of 30million tons/year was established. According to the model, the discounted cash flow principlewas adopted in the analysis and calculation, and thus conclusions of value consultation of themining rights were drawn.

- 1 -

V. Value consultation report submission date: 18 August 2017

VI. Main technical economic parameters in the model of the Development and Utilization Planfor the Mining Rights of Hongqinghe Mine – at a Scale of 30 million tons/year:

1. Existing reserve: The mining area of Hongqinghe Mine of Inner Mongolia YitaiguanglianCoal Chemicals Co., Limited is defined as 140.759 km2, the mining elevation is +1,004m-500m, and the existing resource reserve in the defined mining area is 3,219,420,000 tons.In particular, the proved intrinsic economic resource (331) amounts to 1,012,500,000 tons;controlled intrinsic economic resource (332) amounts to 723,540,000 tons; the inferredintrinsic economic resource (333) amounts to 1,483,380,000 tons.

2. Exploitable reserve: The existing resource reserve on the value consultation base date was3,219,420,000 tons, consulted utility resource reserve was 2,918,010,400 tons, andconsulted utility exploitable reserve was 2,123,869,000 tons.

3. Production scale and service life: The production scale is 30 million tons/year, which willbe completed in two phases. The first phase will be constructed from May 2014 toOctober 2017. Currently, 85%, or RMB4,748 million, has been invested in the first phase.The second phase will be constructed from January 2020 to December 2021, and willreach full production capacity by 2022. The service life is 52.9 years (includingconstruction period).

4. The product scheme is washed fine coal and coal gangue.

5. Total investment in fixed assets for this project is RMB8,436 million, of which,investment of RMB5,595 million is for the first phase, and RMB4,748 million has beeninvested, while investment of RMB2,842 million is for the second phase.

6. Total unit cost is RMB112.14/ton, and unit management cost is RMB92.76/ton.

7. The selling price before tax, being RMB400/ton, was adopted for washed fine coal, andselling price before tax, being RMB120/ton, was adopted for coal gangue.

8. Discount rate: 8% was adopted.

VII. Value consultation conclusions: The consulted value of the mining rights of Hongqinghe Mineis RMB47.149 billion, and the price of exploitable reserve is RMB22.20/ton.

- 2 -

VIII. Declarations on related issues: This value consultation report and the conclusions herein arebased on the value consultation prerequisites and purposes for this project. The period ofvalidity of the conclusions in this value consultation report is one year, namely be effective ayear from the base date of the value consultation report.

Important Note: Above content is extracted from the Value Consultation Report on the Mining Rightsof Hongqinghe Mine of Inner Mongolia Yitai Guanglian Coal Chemical Co., Ltd. (Zhong Xin ZhongHe Ping Zi [2017] No. 001). For comprehensive information about this value consultation project,please read the whole report carefully.

Beijing Zhongxin Zhonghe Mining Valuation Advisory Limited

18 August 2017

- 3 -

Inner Mongolia Yitai Guanglian Coal Chemical Co., Ltd.The Value Consultation Report

On the Mining Rights of Hongqinghe Mine

Nei Xing Yi Kuang Ping Zi [2017] No. 001

Engaged by the Inner Mongolia Yitai Coal Co., Ltd., and observing pertinent national laws,regulations and policy documents and referring to pertinent regulations regarding mining rightsappraisal, and on principles of being independent, objective, impartial and scientific, and combinedwith actual conditions and adopting scientific and reasonable approaches, Beijing Zhongxin ZhongheMining Valuation Advisory Limited (北京中鑫眾和礦業權評估諮詢有限公司) has carried out theanalysis and appraisal on the value of the Mining Rights of Hongqinghe Mine of Inner MongoliaYitai Guanglian Coal Chemical Co., Ltd. (內蒙古伊泰廣聯煤化有限責任公司). Consultation statusand results of the value of the mining right are herein reported as below:

1. VALUE CONSULTATION AGENCY

Agency name: Beijing Zhongxin Zhonghe Mining Valuation Advisory Limited (北京中鑫眾和礦業權評估諮詢有限公司);

Address: Room 424, Guoying 1, Nanxiaojie, Xizhimen, Xicheng District, Beijing;

Creditability code: 911101028017306010;

Mine Exploration and Mining Rights Appraisal Qualification Certificate No.: Kuang Quan PingZi [1999] No. 005.

2. PRINCIPAL AND MINING RIGHTS OWNER

Principal: Inner Mongolia Yitai Coal Co., Ltd. (內蒙古伊泰煤炭股份有限公司)

Mining rights owner: Inner Mongolia Yitai Guanglian Coal Chemical Co., Ltd. (內蒙古伊泰廣聯煤化有限責任公司)

Mine name: the Mining Rights of Hongqinghe Mine of Inner Mongolia Yitai Guanglian CoalChemical Co., Ltd.

Economy type: Limited Liability Company

Address: Ejin Horo Banner, Erdos City

Legal representative: Zhang Zhenjin

Registered capital: RMB1,980,000,000

Business scope: Mineral product processing and sales (excluding franchise).

- 4 -

3. VALUE CONSULTATION OBJECT

Value consultation object is the Mining Rights of Hongqinghe Mine of Inner Mongolia YitaiGuanglian Coal Chemical Co., Ltd.

3.1 Current status

3.1.1 Application for the mining rights license for Hongqinghe Mine

In August 2006, Inner Mongolia Yitai Guanglian Coal Chemical Co., Ltd. obtainedthe exploration rights of 140.759 km2 within the Xinjie mining area at DongshengCoalfield, Erdos, Inner Mongolia; the mineral exploration license number was0100000610388. First extension: On 5 November 2008, the Ministry of Land andResources of the People’s Republic of China (Guo Tu Zi Kuang Hua Zi [2008] No.061) officially approved the defined mining area of Hongqinghe Mine, thereservation period of which was 3 years. Second extension: On 17 October 2013,the Ministry of Land and Resources of the People’s Republic of China agreed toextend above officially approval and the reservation period to 5 November 2015.Third extension: On 16 October 2015, the Ministry of Land and Resources of thePeople’s Republic of China agreed to extend above officially approval and thereservation period to 5 November 2017. As at 30 June 2017, the mining rightslicense for Hognqinghe Mine of Inner Mongolia Yitai Guanglian Coal Chemical Co.,Ltd. is still in the process of application.

3.1.2 Defined mining area of the mining rights of Hongqinghe Mine

The area of the mining rights of Hongqinghe Mine is subject to the defined miningarea in the official approval from the Ministry of Land and Resources of thePeople’s Republic of China (Guo Tu Zi Kuang Hua Zi [2008] No. 061 and Guo TuZi Kuang Hua Zi [2013] No. 054). The defined mining area is 12.93-19.25 km longand 8.66 km wide, and its acreage is 140.759 km2; the exploitation elevation is+1,004m-500m; the mining method is underground mining; the production capacityis 12 million tons/year; and the mineral to be explored is coal. The total 4 turnings inthe mining area are designated as below:

Turning No. Coordinate X Coordinate Y

1 4359908.37 37374987.062 4359911.48 37384781.033 4349499.04 37392443.434 4343556.64 37385163.20

- 5 -

The defined mining area of the mining rights of Hongqinghe Mine is set out below:

Defined mining area of the mining rights of Hongqinghe Mine

乃馬岱井田勘探區 Naimadai Well Field Exploration Area（探礦權範圍） (Exploration right area)

3.1.3 Mineral resource reserve of the mining rights of Hongqinghe Mine

According to the “File record and certification of mineral reserves appraisal of CoalExploration Report on Naimadai Well Field, Hongqinghe Area, Dongsheng CoalField, Inner Mongolia Autonomous Region” (Guo Tu Zi Chu Chu Zi [2007] No.324) and appraisal opinions issued by the Ministry of Land and Resources of thePeople’s Republic of China, as at September 2007, the resource/reserves obtainedwithin the well field of the mining rights of Hongqinghe Mine totaled 3.21942billion tons. Of which: proved quantity of intrinsic economic resource (331) totaled1.01250 billion tons, and controlled intrinsic economic resource (332) totaled 723.54million tons and inferred quantity of intrinsic economic resource (333) totaled1.48338 billion tons.

3.1.4 Disposition of the price of mining rights of Hongqinghe Mine

The price of the exploration right and the price of mining right are hereincollectively referred to as the price of mining rights.

Mongolia Yitai Guanglian Coal Chemical Co., Ltd. deployed the price of theexploration right in 2016. In accordance with the Notice of the Ministry of Land andResources of the People’s Republic of China on Receiving the Mineral ResourceExploration License ([2006] No. 0190), the price of such exploration right shall be

- 6 -

disposed of by fractionation method. 330.40 million tons of exploitable reserve wasdeployed (exploitable reserve disposable within the service life of 30 years), theprice was RMB457.4978 million. The remaining reserve and its price will bedisposed of subsequently according to relevant nation policies.

3.1.5 Construction of the mining rights of Hongqinghe Mine project

Based on the document “Reply of Approval for Carrying out Preliminary Work inHongqinghe (mine project at the scale of 15 million tons/year), Xinjie Mine Area,Inner Mongolia” (Neng Mei Han [2010] No. 54) issued by National EnergyAdministration of the P.R.C., Inner Mongolia Yitai Guanglian Coal Chemical Co.,Ltd. commenced the construction of the capacity of 15 million tons/year since May2014. Up to now, RMB4,748 million has been invested in the mine construction,approximately 85% having been completed. It is expected that the mining willcommence upon completion of overall construction in October 2017. As advised bythe mining rights owner and based on the knowledge of the value consultants, theconstruction of the mine has reserved room for capacity enlargement in respect ofmain building engineering, or is based on the capacity of 30 million tons/year.

3.2 Strategic plan for the development of the mining rights of Hongqinghe Mine project

3.2.1 General plan for mining area of Hongqinghe Mine

According to the “Reply of Approval for General Plan for Xinjie Mine Area, Erdos,Inner Mongolia Autonomous Region” (Fa Gai Neng Yuan [2010] No. 1911) issuedby the National Development and Reform Commission, the planned mining area ofHongqinghe is 181.44 km2. In accordance with the Verification Report on CoalResource Reserve of Naimadai Well Field and its Extended Area, Dongsheng CoalField, Inner Mongolia Autonomous Region (which was submitted to Beijing MineralConsultation Center (北京中礦聯諮詢中心) on 20 April 2012 for appraisal, whoissued appraisal opinions on 28 May 2012) prepared in March 2012, the expectedcoal resource reserve is 4.264 billion tons.

3.2.2 Coal resource allocation of the extended area of the mining rights of HongqingheMine

Inner Mongolia Yitai Guanglian Coal Chemical Co., Ltd. has been constantlypromoting the coal resource allocation of the extended area of the mining rights ofHongqinghe Mine for years, and has obtained the approval documents for coalresource allocation from the following administrative departments: the file from thepeople’s government of Ordos City (E Fu Zi [2014] No. 49), the file from theDevelopment and Reform Commission of the Inner Mongolia Autonomous Region(Nei Fa Gai Ban Fa Zi [2015] No. 140), the file from the Office of Land andResources of the Inner Mongolia Autonomous Region (Nei Guo Tu Zi Han [2015]

- 7 -

No. 562), etc. The extended area of the mining rights of Hongqinghe Mine is 13.18km long and approximately 4.5 km wide, with an acreage of 40.85 km2. Uponextension, the total area of the mining area is 181.44 km2. Engaged by InnerMongolia Yitai Guanglian Coal Chemical Co., Ltd., Inner Mongolia CoalConstruction Engineering (Group) Corporation constructed 6 mechanical coredrills in the extended area of Hongqinghe, and prepared the Verification Reporton Coal Resource Reserve of Naimadai Well Field and its Extended Area,Dongsheng Coal Field, Inner Mongolia Autonomous Region in March 2012. Suchreport was submitted to Beijing Mineral Consultation Center (北京中礦聯諮詢中心)on 20 April 2012 for appraisal, who issued appraisal opinions on 28 May 2012. Asat 31 December 2011, calculation was conducted on the resources/reserve of ten coalseams, namely 3-1 upper, 3-1, 4-1, 4-2, 5-1, 5-2, 6-1, 6-2, 6-3 and 6-4, in Naimadaiwell field. The coal resource reserve obtained totaled 4.264 billion tons, of which thecoal resource reserve of the mining rights of Hongqinghe Mine was 3.22 billion tons,the reserve of the extended area was 1.044 billion tons. The defined mining area andextended area of the mining rights of Hongqinghe Mine is set out below:

Defined mining area and extended area of the mining rights of Hongqinghe Mine

乃馬岱井田勘探區 Naimadai Well Field Exploration Area（探礦權範圍） (Exploration right area)擴大區 Extended area

- 8 -

3.2.3 Strategic plan for the development of the mining rights of Hongqinghe Mineproject

From the development strategy for the mining rights of Hongqinghe Mine projectand based on the principle that coal resource reserve matches production capacity, itis relatively scientific and reasonable to enlarge the capacity scale, before theextension, of the mining rights of Hongqinghe Mine, being 15 million tons/year, to30 million tons/year. The capacity scale of 30 million tons/year after the extension isscientific and reasonable, whereas the capacity of 15 million tons/year is not. Fromthe whole development strategy of Inner Mongolia Yitai Guanglian Coal ChemicalCo., Ltd., only developing the mining rights of Hongqinghe Mine at a capacity scaleof 30 million tons/year, regardless of before or after the extension, can give ascientific and reasonable view of the best profitability and overall economic value ofsuch mining rights.

3.3 Specific area of the value consultation object

3.3.1 Area of the mining rights of Hongqinghe Mine after the extension

The area of the mining rights of Hongqinghe Mine after the extension totaled 181.44km2 with a total coal resource reserve of 4.264 billion tons. Currently, the areaextension of the mining rights of Hongqinghe Mine is underway, therefore this valueconsultation report does not include such to-be-extended area.

3.3.2 Defined mining area of the mining rights of Hongqinghe Mine

In accordance with the documents of Guo Tu Zi Kuang Hua Zi [2008] No. 061 andGuo Tu Zi Kuang Hua Zi [2013] No. 054) issued by the Ministry of Land andResources, the mining area of the mining rights of Hongqinghe Mine is defined byfour turnings, the exploitation elevation is +1,004m-500m, and the coal resourcereserve is 3.22 billion tons. Currently, the mining rights of Hongqinghe Mine is inthe process of application. This value consultation report adopts such defined area.

The appraisal area adopted in this value consultation is consistent with the definedmining area the expected reserve range.

4. VALUE CONSULTATION PREREQUISITES AND PURPOSES

From the whole development of Inner Mongolia Yitai Guanglian Coal Chemical Co., Ltd. andthe development strategy for the mining rights of Hongqinghe Mine and under the premise ofobserving national laws, regulations and pertinent policies, holding the principle of reasonableeconomic value of the company, and based on current conditions of the mining rights ofHongqinghe Mine, taking all actual conditions into consideration and adopting more scientificand rational mining techniques and methods, the capacity of the mining rights of Hongqinghe

- 9 -

Mine, being 15 million tons/year, will be enlarged to 30 million tons/year. The valueconsultation report for this project is to provide the principal with the value consultationconclusions for such mining rights under the model of the Development and Utilization Plan forthe Mining Rights of Hongqinghe Mine – at a Scale of 30 million tons/year, for the reference ofthe principal and concerned aspects.

5. VALUE CONSULTATION BASE DATE

The value consultation base date for the project is 30 June 2017 and all charges adopted in thisvalue consultation report are effective price standards on 30 June 2017 and the currency ofpricing is RMB.

6. VALUE CONSULTATION BASIS

6.1 Mineral Resources Law of the People’s Republic of China revised on 29 August 1996;

6.2 Procedures for the Administration of Registration of Mining of Mineral Resources (DecreeNo. 241 of the State Council of the People’s Republic of China);

6.3 Interim Measures for the Administration of Appraisal of Mining Rights (Guo Tu Zi Fa[2008] No. 174) issued by the Ministry of Land and Resources;

6.4 Interim Regulations for the Administration of the Granting and Assigning of MiningRights (Guo Tu Zi Fa [2008] No. 309) issued by the Ministry of Land and Resources;

6.5 Interim Measures for the Administration of Registration and Statistics of Mineral Reserves(Decree No. 23 of the Ministry of Land and Resources);

6.6 Evaluation Standard for Mining Rights of China, promulgated in August 2008 andimplemented on 1 September 2008;

6.7 Guiding Opinions on the Determination of Appraisal Parameters of Mining Rights,promulgated and implemented on 22 October 2008;

6.8 Notice on Strengthening the Administration of the Supervision and Approval of MineralResource Reserves (Guo Tu Zi Fa [2003] No. 136) issued by the Ministry of Land andResources;

6.9 Supplementary Notice of the Ministry of Finance and the Ministry of Land and Resourceson Relevant Issues Regarding the Compensation System on Acquisition of the ExplorationRights and the Mining Rights (Cai Jian [2008] No. 22) issued by the Ministry of Financeand the Ministry of Land and Resources;

- 10 -

6.10 The Mining Rights Evaluation Instruction (2004) and the Mining Rights EvaluationInstruction (Modified in 2006 – Method and Parameters of Mining Rights Evaluation withincome approach);

6.11 General Requirements for Solid Mineral Exploration (GB/T13908-2002);

6.12 Classification for Solid Mineral Resources/Reserves (GB/T17766-1999), from the StateAdministration for Quality and Technology Supervision in 1999;

6.13 Letter of Authorization for the Value Consultation of Mining Rights of Hongqinghe Mineof Inner Mongolia Yitai Guanglian Coal Chemical Co., Ltd.;

6.14 Yitai Guanglian Coal Chemical Co., Ltd. obtained official approval for designating minearea range for Hongqinghe Mine by the Ministry of Land and Resources of the People’sRepublic of China (Guo Tu Zi Kuang Hua Zi [2008] No.061) in 2008, the Letter ofApproval for extending the reservation period for designated mine area of HongqingheMine of Inner Mongolia Yitai Guanglian Coal Chemical Co., Ltd. (Guo Tu Zi Kuang HuaZi [2013] No.054) in 2013, which was extended to 5 November 2015, and the Letter ofApproval for extending the reservation period for designated mine area of HongqingheMine of Inner Mongolia Yitai Guanglian Coal Chemical Co., Ltd. (Guo Tu Zi Kuang HuaZi [2013] No.054) on 16 October 2015, which was extended to 5 November 2017;

6.15 Reply of Approval for General Plan for Xinjie Mine Area, Erdos, Inner MongoliaAutonomous Region” (Fa Gai Neng Yuan [2010] No. 1911) issued by the NationalDevelopment and Reform Commission;

6.16 Reply of Approval for Carrying out Preliminary Work in Hongqinghe (mine project at thescale of 15 million tons/year), Xinjie Mine Area, Inner Mongolia (Neng Mei Han [2010]No. 54) issued by National Energy Administration;

6.17 “File record and certification of mineral reserves appraisal of Coal Exploration Report onNaimadai Well Field, Hongqinghe Area, Dongsheng Coal Field, Inner MongoliaAutonomous Region” (Guo Tu Zi Chu Chu Zi [2007] No. 324) and appraisal opinionsissued by the Ministry of Land and Resources of the People’s Republic of China;

6.18 Coal Exploration Report on Naimadai Well Field, Hongqinghe Area, Dongsheng CoalField, Inner Mongolia Autonomous Region prepared by Inner Mongolia Coal ConstructionEngineering (Group) Corporation in November 2007;

6.19 Development and Utilization Plan for Mineral Resources in Hongqinghe Mine of InnerMongolia Yitai Guanglian Coal Chemical Co., Ltd. prepared by China Coal Technology &Engineering Group Nanjing Design & Research Institute in October 2012;

- 11 -

6.20 Letter on Submission of Experts’ Appraisal Opinions Regarding the Development andUtilization Plan for Mineral Resources in Hongqinghe Mine of Inner Mongolia YitaiGuanglian Coal Chemical Co., Ltd. (Zhong Mei Xie Hui Zi Xun Han [2013] No. 23)issued by China National Coal Association;

6.21 Explanation on Preliminary Design of Hongqinghe Mine of Inner Mongolia YitaiGuanglian Coal Chemical Co., Ltd. (Revised) – at a Scale of 30 million t/a (a net increaseof 15 million t/a) prepared by China Coal Technology & Engineering Group NanjingDesign & Research Institute in February 2014;

6.22 The simulation model of Development and Utilization Plan for the Mining Rights ofHongqinghe Mine – at a Scale of 30 million tons/year;

6.23 Other information provided by the principal.

7. VALUE CONSULTATION PRINCIPLES

The value consultation, in addition to following the principles of independence, objectivity andscientificity, has insisted on employing below principles given the specific characteristics of themining rights:

7.1 The principle of respecting the geological law and the resource economic law;

7.2 The principle of complying with the geologic specifications;

7.3 The principle of forecast;

7.4 The principle of supply and demand;

7.5 The principle of substitution;

7.6 The principle of change;

7.7 The principle of competition;

7.8 The principle of revenue ascending and descending;

7.9 The principle of the most effective use;

7.10 The principle of coordination;

7.11 The principle of revenue distribution;

7.12 The principle of balance.

- 12 -

8. VALUE CONSULTATION PROCESS

According to relevant requirements of national laws, regulations and policy documents, and incompliance with requests of the principal and the mining rights owner, our company hasorganized a value consultation team to implement the following value consultation proceduresregarding such mining rights.

8.1 Engagement phase

On 6 July 2017, our company was engaged by the Inner Mongolia Yitai Coal Co., Ltd. toconduct the value consultation for the mining rights of Hongqinghe Mine, and signed theengagement letter for the value consultation business.

8.2 Before-site working phase

From 13 July to 21 July 2017, based on the basic conditions of this value consultationbusiness, we established a value consultation team to formulate the plan for the valueconsultation business on the basis of communication with the business staff of theprincipal, and also prepare a list of documents required for value consultation for theprincipal.

8.3 On-site working phase

From 22 July to 6 August 2017, our value consultants collected materials on the site, andmade on-site inquiries and verification to get further informed of the overall application,construction and next-step development plan of such mining rights.

8.4 Value consultation analysis phase

From 7 August to 16 August 2017, the materials collected and information obtained wereanalyzed, sorted and consolidated. Based on the existing geological data of and thedevelopment plan for the mining rights of Hongqinghe Mine, combined with actualconditions and adopting more scientific and rational mining techniques and methods, theexisting capacity of such mining rights, being 15 million tons/year, will be enlarged to 30million tons/year, and the model of the Development and Utilization Plan for the MiningRights of Hongqinghe Mine – at a Scale of 30 million tons/year was established.According to the model, the discounted cash flow principle was adopted in the analysisand calculation, and thus the first draft of the preliminary conclusions of valueconsultation of such mining rights was completed. Upon the internal review by ourcompany and exchanging opinions with the principal, modifications and improvementwere made to the first draft.

- 13 -

8.5 Report submission phase

The Value Consultation Report on the Mining Rights of Hongqinghe Mine of InnerMongolia Yitai Guanglian Coal Chemical Co., Ltd. was submitted to the principal on 18August 2017.

9. OVERVIEW OF THE MINING RIGHTS

9.1 Location and transportation of the mining area

The well field of the mining rights of Hongqinghe Mine is located within the territory ofEjin Horo Banner, Erdos City, Inner Mongolia Autonomous Region; its administrativedivision belongs to the jurisdiction of Hongqinghe Town and Xinjie Town. Geographicalcoordinates are:

East longitude: 109°32’58”-109°45’13”;

North latitude: 39°13’05”-39°24’26”.

The industry field of the well field is about 35km away from the Ejin Horo BannerPrefecture (The A County), and 60km away from Dongsheng District. Bao-maoExpressway and National Highway 210 runs through the eastern border, about 9kmaway from the mining well. Therefore, the transportation there is convenient.

9.2 Natural geographic and economic conditions

Located in the eastern area of Ordos Plateau and with the low vegetation in the area, themining well belongs to desert and semi-desert area. The terrain is a slope that is high innorthwest while low in southeast, and the highest point is located in northeast of the No.4Team, Lanjiagebu Village, with elevation above sea level of 1,516.8m. The lowest point islocated within the eastern canal of Lamamiao River in southeastern border of theexploration area, with elevation above sea level of 1,298.9m. The maximum terrainaltitude difference is 217.9m.

Due to the influence of the Muus Desert, much of the ground is covered by aeolian sandand there are outcroppings only in the southern valley in Zhidan Group (K1zh) bedrock ofthe area, therefore the terrain is complex.

The well field is free from lakes, and river systems are undeveloped, only bedrock seepingwater streams is seen in the valley of the area. There is a slight increase in the quantity ofwater during rainy seasons, and water is converged into Dingdangmiao River as well aswest and east canals of Lamamiao River. Therefore, it belongs to seasonal river with flows

- 14 -

from the north and northwest to the southeast to Zhasake Reservoir (劄薩克水庫) andHongjiannao. Its water quantity is influenced by atmospheric precipitation, and the rainfallis abundant in summers and autumns while less in winters and springs.

It belongs to desert to semi-desert plateau continental climate with strong ray radiationplenty of sunlight, and great daily temperature difference. It is characterized by coldwinters and hot summers, and is windy in springs and dry in autumns.

According to data from Meteorology Office of Erdos City: the maximum temperature is+42.6°c, while the minimum temperature is -27.9°c and the average temperature is +7°c.The annual precipitation is 194.7-531.6mm and is averaged at 396.0mm and moreconcentrated in the three months of July, August and September. The annual evaporationis 2,297.4-2,833.0mm and is averaged at 2,534.2mm, 5-11 times the annual rainfall. Theaverage wind speed is 2.2-5.2m/s with the maximum wind speed of 14m/s, and isdominated by northwest winds. The frozen period is from October and unfreezing periodis in April in the next year, with maximum depth of frozen soil of 1.71m. The biggest duststorm day is 40d/a.

The region is sparsely populated and economically underdeveloped. Locals mainly engagein agriculture and poultry breeding, and part of the labor force engages in coal mining andtransportation industry.

9.3 Current mining situations of the mining area

Coal seams of the mining area are relatively thick flat-lying, Xinjie Mining Area isuntapped integrated coal field without producing mine field or small production coal minein the mining area, and only the planned mines are under construction.

Currently, the designed capacity of Erlintu Mine is 8 million t/a by development methodof inclined shaft. The well construction of main shaft and the air-return shaft have reachedto the bottom, auxiliary inclined shaft has been under construction and on-groundconstruction has yet to be constructed. The designed capacity of Chahasu Mine is 10million t/a by mixed development method, and the construction of the three shafts hasreached to the bottom and on-ground construction is in progress. The designed capacity ofMataihao Mine is 8 million t/a by development method of inclined shaft, the constructionof the three shafts has reached to the bottom and on-ground construction is undergoing.No preliminary work is done regarding the Manlai Mine.

- 15 -

9.4 Overview of past geological work

After the founding of the country, geological departments have explored in different levelsin Dongsheng Coalfield, geological work involving Naimadai Well and surrounding areasmainly includes:

9.4.1 In 1968, Team No.147 of Coal Geological Exploration 301 Group, coal field ofInner Mongolia entered Dongsheng area and started geological work including themapping of 1: 100,000 topographic map 11,450 km2 (including Naimadaiexploration area) and the construction of 36 drilling holes (no drilling holes inNaimadai exploration area), the project volume was 13,506.31m. In March 1970, theGeneral Survey Summary Report on Coal Resource in Dongsheng Area, the JurassicCoalfield of North Syncline of Ordos Platform was submitted.

9.4.2 In October 2005, Inner Mongolia Coal Construction Engineering (Group)Corporation carried out exploration in subarea of Honghaizi, northeastern area ofNaimadai exploration area. The exploration area was 113.90 km2, constructed 21drilling holes and the project volume was 14,242.43m. In March 2006, the GeneralSurvey Report on Coal Resource in Honghaizi District, Dongsheng Coalfield, InnerMongolia Autonomous Region was submitted, finding resource reserve of2,673,320,000 tons.

9.4.3 In 2006, Inner Mongolia Coal Construction Engineering (Group) Corporation carriedout pre-exploration on coal resource in Nalinxili District, northwestern area ofNaimadai exploration area. The exploration area was 1,596.95 km2, constructed 35drilling holes and the project volume was 41,327.13m. In April 2007, the Pre-exploration Report on Coal Resource in sub-area of Nalinxili District in DongshengCoalfield, Inner Mongolia Autonomous Region was submitted.

9.4.4 In 2006, Inner Mongolia Coal Construction Engineering (Group) Corporation carriedout exploration construction in southern Chahasu Well, eastern area of Naimadaiexploration area. The exploration area was 79.20 km2, constructed 50 drilling holesand the project volume was 26,163.91m. In January 2007, the Coal ExplorationGeological Report on Southern Chahasu Well, Dongsheng Coalfield, Inner MongoliaAutonomous Region was submitted. The report was approved by the MineralResources Evaluation Center, Ministry of Land and Resources of the P.R.C., on 27March 2007 by archive of Guo Tu Zi Kuang Ping Zi [2007] No. 56.

9.4.5 In March 2007, Inner Mongolia Coal Construction Engineering (Group) Corporationcarried out exploration construction in Naimadai Well (within the scope of mineexploration right). The exploration area was 140.59 km2, constructed 250 drillingholes and the project volume was 223,097.77m. In October 2007, the ExplorationReport on Coal Resource of Naimadai Well, Hongqinghe Area, DongshengCoalfield, Inner Mongolia Autonomous Region was submitted. The report was

- 16 -

reviewed and approved by the Mineral Resources Evaluation Center, Ministry ofLand and Resources of the P.R.C., on 26 October 2007. Resource reserves obtainedin the Naimadai Well (within the scope of mine exploration right) totaled 3.21942billion tons. Of which: proved intrinsic economic resource (331) totaled 1.01250billion tons, and controlled intrinsic economic resource totaled (332) 723.54 milliontons and inferred intrinsic economic resource totaled (333) 1.48338 billion tons.

10. GEOLOGICAL FEATURES OF THE MINING AREA

10.1 Strata

Geological strata from old to new include: Yanchang Group of Upper Triassic (T3y),Yan’an Group of Middle and Lower Jurassic (J1-2y), Zhiluo Group of Middle Triassic ofJurassic (J2z), Anding Group of Middle Triassic of Jurassic (J2a), Zhidan Group of LowerCretaceous (K1zh) and the Quaternary System (Q). Now descriptions are as follows:

10.1.1 Yanchang Group of Upper Triassic (T3y)

This group is the sedimentary substrate of coal measure strata. No outcropping in thearea. Construction drilling holes only revealed the upper rock strata; the lithology isgray-green medium-coarse grained sandstone, partly with pebble, and mixed withgreen thin-layered sandy mudstone and siltstone. The sandstone is mainly composedof quartz, feldspar, containing dark-colored minerals. Large plates and trough crossbeddings are widely developed; they are typical deposits from meandering streamsystem. Drilling holes in the area (drilling holes of No. 24-2) revealed that themaximum thickness was 32.18m, without being penetrated.

10.1.2 Yan’an Group of Middle and Lower Jurassic (J1-2y)

This group is mainly coal-bearing strata with no outcropping in the area. Thelithology is mainly composed of grey-white sandstone of various size fractions, greyand dark grey sandy shale, mudstone and coal seams, and is developed in horizontalbeddings and wavy beddings.

The strata of Yan’an Group compose five coal measures of 2, 3, 4, 5 and 6. The totalthickness of coal-bearing strata is 171.24-240.37m, averaged at 208.80m. In parallelunconformable contact with the Yanchang Group of Underlying Strata.

- 17 -

This group (J1-2y), according to sedimentary cycle and lithological combinationcharacteristics, can be divided into three rock members. Detailed descriptions are asfollows:

A. The First Member (J1-2y1)

From the bottom boundary of Yan’an Group to the sandstone bottom boundaryof roof of Coal Measure 5, the thickness of this rock member is 79.51-149.63m, averaged at 118.66m. The rock member contains the coal measuresof 5 and 6, and 10 coal seams, namely coal seams of 5-1 and lower of 5-1, 5-2and lower of 5-2, 5-3, 6-1, 6-2, lower of 6-2, 6-3 and 6-4. Of which: there are6 minable coal seams, namely coal seams of 5-1, 5-2, 6-2, 6-3 and 6-4. Thereare 4 coal seams that cannot be mined: the lower of 5-1 and 5-2, 5-3 and lowerof 6-2. This rock member is in parallel unconformable contact with theYanchang Group of Underlying Strata (T3y).

B. The Second Member (J1-2y2)

Located in the middle of Yan’an Group, the boundary of the rock member isfrom the sandstone bottom boundaries of roof of Coal Measure 5 to thesandstone bottom boundaries of roof of Coal Measure 3, the thickness of thisrock member is 61.75-103.90m, averaged at 82.55m. The member contains 2coal measures of 3 and 4, and 5 coal seams, namely coal seams of upper of 3-1, 3-1, 3-2, 4-1 and 4-2. Of which: there are 4 minable coal measures, namelycoal seams of upper of 3-1, 3-1, 4-1 and 4-2. There is 1 coal seam that cannotbe mined, namely coal seam 3-2.

C. The Third Member (J1-2y3)

Located in the Upper of Yan’an Group, the rock member is from the sandstonebottom boundaries of roof of Coal Measure 3 to the roof boundary of Yan’anGroup, the thickness of this rock member is 0.20-53.90m, averaged at 13.45m.Contains 2 coal measures, and only contain No.2-2 coal seam within the well.It exists in the vicinity of the northeastern boundary of the well. The coal seamcan be seen from a total of 18 drilling holes in the area, and occurrence can beseen from 8 holes, the mineable thickness of coal seams is 0.80 (Drilling HoleNo.22-8) -1.85m (Drilling Hole No.4-9). They are all isolated points andcannot be mined.

10.1.3 Zhiluo Group of Middle Triassic of Jurassic (J2z)

The group is secondary coal-bearing stratum in the area, and does not contain coalwithin this well. No outcropping in the area. Drilling data revealed that lithologicalcombination is inter-bedded outputs of lime-green mudstone, sandy mudstone,

- 18 -

siltstone and fine-medium grained sandstone in the upper area and light grey, greyand white medium-coarse grained sandstone mixed with siltstone and sandymudstone in the lower area. There are coal stripes and stripes with carbon dust inthe sandstone. At the bottom, it tends to be common to find conglomerate, the gravelis generally composed of quartz and flint, has good roundness with its size rangingfrom 2-150mm. The thickness of this Group is 59.00-190.87m/118.87m, inconformity with the Yan’an Group of Underlying Strata.

10.1.4 Anding Group of Middle Triassic of Jurassic (J2a)

The lithological combination is purple fine, medium and coarse grained sandstonemixed with thin-layered purplish-red, lime-green mudstone and sandy mudstones.The thickness of the stratum of this Group is influenced by overlying Zhidan Group.It’s thick in the south while thin in the north and has greatly varied thickness, itsthickness gradually changes to 2.00-115.39m from the north to the south, averagedat 31.99m, in unconformity with the Zhiluo Group of Underlying Strata.

10.1.5 Ejinhoro Formation of Zhidan Group of Lower Cretaceous (K1zh)

There are outcrops in both sides of large gullies in southern area of the well. Thelithology is mainly grey green, light red and reddish conglomerate in the lower areawhile crimson mudstone, sandy mudstones mixed with fine sandstone in the upperarea, with large inclined beddings and cross beddings. The overall residual thicknessof the stratum generally tends to be thin in the west while thick in the east, and thickin the north while thin in the south, the stratum thickness is 277.68-716.23m, with anaverage of 541.70m, in angular unconformity with Middle Triassic of Jurassic ofUnderlying Strata (J2a).

10.1.6 The Quaternary System (Q)

Based on its formation, the stratum can be divided into: pluvial alluvialsediments(Q4al+pl), Aeolian sand (Q4eol), residual deposits and few secondaryloess (Q3-4). The thickness of Quaternary System stratum varies widely. Accordingto the drilling hole data, it’s generally at 0.00-33.72m, with an average of 7.67m. Itis in angular unconformity with all above older strata.

10.2 Structure

The mining field is located in the eastern area of the southern border of Dongshengcoalfield, its structural configuration accords with the tectonic structural configuration ofcoal-bearing strata in this area, and is generally monoclinal structure, slanting to the westand with general dip angle of 1-3°. There are certain changes in both the stratigraphic

- 19 -

occurrence along the stratum as well as its slanting direction, but without great changes;There is wide and gentle wavy rugged topography developed but no folds or igneousintrusion is found in the area.

The extended length of faults within the mining field is short, the maximum drop height is8m, and the geological structure of the well is of simple type.

10.3 Characters of coal seam and coal quality

10.3.1 Coal seam

Coal-bearing strata of mining field is middle and lower Jurassic Yan’ an Formation(J1-2y), containing five coal groups of 2, 3, 4, 5, 6. The total thickness of coal-bearing strata is 171.24-240.37m with 208.80m on average. There are totally 16 coalseams developed in this field, in total thickness of coal seam for 12.85-28.75m,averagely 20.48m, at coal-bearing coefficient of 9.8%, including 10 minable seams,with minable seam thickness of 9.90-25.40m, averagely 17.75m, minable coal-bearing coefficient of 8.5%. The total thickness of minable seam gradually increasesfrom southeast to northwest of the mining field, whose coal-bearing property atnorthwest is higher than that at the southeast. The mining field totally includes 16coal seams, where 3-1, 4-1 and 6-1 coal seams are overall minable; 4 coal seamsnamely 4-2, 5-1, 5-2 and 6-3 are mostly minable; 3 coal seams namely 3-1 upper, 6-2 and 6-4 are locally minable; 6 coal seams namely 2-2, 3-2, 5-1 lower, 5-2 lower,5-3, 6-2 lower, are non-accessible seams.

- 20 -

10.3.2 Minable seams

The mining field includes 10 minable seams, and characteristics of each minableseam are shown in table:

List of coal seam characteristics

CoalseamNo.

Coal seamthickness (m)

Mineablethickness (m)

Interlayerspacing (m) Occurrence

areakm2

Minableareakm2

Minabledegree

Degree ofstabilityMinimum-

maximumAverage

(point count)

Minimum-maximumAverage

(point count)

Minimum-maximum

Average(point count)

upper0.97-7.00

2.55 200.97-6.35

2.55 20 20.34 20.34 Locallyminable Unstable

0.80-27.7512.42 20

3-1

3-1

0.50-10.056.23 256

0.80-8.456.14 253 181.44 181.06 Overall

minableRelatively

stable25.45-73.00

47.07 2564-1

0.70-6.603.13 256

1.20-6.302.98 255 181.44 181.44 Overall

minable Stable0.25-26.95

8.75 2524-2

0.28-2.961.90 252

0.80-2.871.89 249 154.71 148.62 Mostly

minable Stable0.75 34.10

14.97 2455-1

0.20-2.451.14 249

0.80-2.151.25 163 173.28 120.47 Mostly

minableRelatively

stable1.45-25.72

10.05 2475-2

0.20-4.801.01 254

0.80-1.851.16 155 181.15 129.34 Mostly

minableRelatively

stable8.05-43.77

24.90 2546-1

0.40-8.453.09 256

0.80-7.102.82 250 181.44 168.27

Basically overallminable

Relatively stable

0.80-14.974.57 172

6-20.25-1.93

0.77 1720.80-1.51

1.03 53 144.18 45.47 Locallyminable Unstable

0.85-37.6818.63 168

6-30.25-7.4

1.59 2480.80-7.15

1.84 165 178.44 142.73 Mostlyminable

Relatively stable

0.80-15.667.10 1806-4

0.15-3.150.82 185

0.80-2.751.12 90 134.43 83.29 Locally

minable Unstable

(1) 3-1 upper coal seam: The coal seam is the upper layer of No. 3-1 coal seamafter bifurcation, only developing at east end along 22-8→24-8→23-2→24-3→28-1, in occurrence area of 20.34 km2, occurrence depth of 556.35-672.50m, 593.82m on average, at occurrence elevation of 764.14-677.82m,coal thickness of 0.97-7.00m, thickness of 2.55m on average, thickness ofminable coal seam for 0.97-6.35m, 2.55m on average. Minable area is 20.34km2. The coal seam gradually becomes thinner from bifurcation line toward the

- 21 -

northeast, with larger change. The lithology of coal seam roof is mostly sandymudstone and the lithology of seam floor is sandy mudstone, mudstone. Thestructure of this coal bed is simple, without dirt band.

3-1 upper coal seam belongs to locally minable and unstable coal seam.

(2) 3-1 coal seam: The seam is the best developed coal seam in the mining fieldwith overall occurrence. Occurrence depth is 583.55-861.90m, 718.60m onaverage. Occurrence elevation is 740.67-587.36m. Thickness of coal seam is0.50-10.05m, 6.23m on average. The minable thickness of coal seam is 0.80-8.45m, 6.14m on average. Minable area is 181.06 km2, accounting for 99.3%of the mining field area. The coal seam bifurcates toward east along 22-8→24-8→23-2→24-3→28-1 line into two coal seams (3-1 upper and 3-1), and thethickness of coal seam becomes smaller. The thickness of coal seam fromnortheast to southwest of mining field tends to gradually increase, especiallythe minable thickness of coal seam on No. 20-No. 14 exploratory lines inmiddle part of mining field is basically between 6-7m while the minablethickness of coal seam is generally around 7-8m on the No.14-No.7exploratory lines, indicating an obvious change rule of coal seam thickness.Lithology of coal seam roof is mostly sandy mudstone, and floor is mostlysandy mudstone and mudstone.

The coal seam structure is simple and generally does not contain dirt bandexcept individual visible coal points containing 1-3 layers of dirt band presentas lenses. It is 0.80 -27.75m far from 3-1 upper coal seam, 12.42m on average.

3-1 coal seam belongs to overall minable and relatively stable coal seam.

(3) 4-1 coal seam: The seam has over occurrence with occurrence depth of 635.40-898.04m, 768.40m on average. Occurrence elevation is 691.79-553.74m. Coalseam thickness is 0.70 – 6.60m, 3.13m on average. Minable coal seamthickness is 1.20-6.30m, 2.98m on average. The seam has only oneunrecoverable point at No. 22-7 drill hole in thickness of 0.70m as shown inFigure 3-2-3. The minable thickness of coal seam increases gradually from eastto west of the mining field, 2-4m or so, at the middle part of the mining field,and minable thickness of coal seam at the southwest is greater than that atnortheast. The coal seam thickness changes less in general with certainregularity. The lithology of coal seam roof is mostly sandy mudstone and silt-finestone, while coal seam floor is mostly sandy mudstone, mudstone andsiltstone. The coal bed structure is simple and generally does not contain dirtband except individual visible coal points containing 1-2 layers of dirt band,and its lithology is sandy mudstone and mudstone. It is 25.45- 73.00m far from3-1 coal seam, 47.07m on average.

- 22 -

4-1 coal seam belongs to stable and overall minable coal seam.

(4) 4-2 coal seam: The seam belongs to overall occurrence of mining field, inoccurrence depth of 648.20-920.03m, 778.91m on average. The coal seam is incombination with 4-1 coal seam through the drill hole at 0-4→1-4→2-6→4-13line, covering a combination area of 27.35 km2. The occurrence elevation ofcoal seam is 674.53-539.08m, the occurrence area is 154.71 km2. The minablethickness of coal seam is 0.80-2.87m, 1.89m on average, minable area is148.62 km2, accounting for 81% of the mining field area and 96% of theoccurrence area. In moving direction, the thickness of coal seam at the middlesection of the mining field is greater than that at both ends, and in tendency, itgradually increases from southeast to northeast of the mining field. It is notminable at No. 2-0, 1-0 and 0-0 drill holes (0.65-0.28m) along thesouthwestern border of the mining field. The lithology of coal seam roof issandy mudstone, mudstone, and coal seam floor is mostly, sandy mudstone.

The coal bed structure is simple and generally does not contain dirt bandexcept individual holes containing 1 layer of dirt band, and its lithology issandy mudstone, mudstone. It is 0.25-26.95m far from 4-1 coal seam, 8.75mon average, and the layer spacing changes greatly.

4-2 coal seam belongs to mostly minable and stable coal seam.

(5) 5-1 coal seam: The seam locates above the first rock member (J1-2y1) of

Yan’an formation, including occurrence area of 173.28 km2, occurrence depthof 658.95- 929.90m, averagely 793.83m. Occurrence elevation is 666.42-511.42m. Coal seam thickness is 0.20 -2.45m, 1.14m on average. The minablethickness of coal seam is 0.80-2.15m, 1.25m on average. It disappears at No.28-1 and 28-2 drill holes in south of the mining field center and No. 12-2, 10-10, 8-2, 10-2 and 8-8 drill holes in west and north of the mining field center.Minable regions are mainly distributed toward northeast of C exploratory line,covering a minable area of 120.47 km2, accounting for 70% of the occurrencearea and 66% of the mining field area. The coal seam thickness changesgreatly, gradually increasing from southwest to northeast of the mining field,which has certain regularity. Lithology of coal seam roof is post stone andmudstone, and floor is sandy mudstone and mudstone. The coal bed structure issimple and generally does not contain dirt band except individual holescontaining 1 layer of dirt band. It is 0.75-34.10m far from 4-2 coal seam,14.97m on average, and the layer spacing changes greatly.

5-1 coal seam belongs to mostly minable and relatively stable coal seam.

- 23 -

(6) 5-2 coal seam: locates above the first rock member (J1-2y1) of Yan’an

formation, visible in all drill holes except No. 21-3 and 19-4 drill holes atnorth of the mining field, including occurrence area of 181.15 km2, occurrencedepth of 664.35-942.98m, 806.33m on average. Occurrence elevation is658.57-492.49m. Coal seam thickness is 0.20-4.80m, 1.01m on average. Theminable thickness of coal seam is 0.80-1.85m, 1.16m on average. Minable areais 129.34 km2, accounting for 71% of occurrence area and 71% of the miningfield area. Coal seam thickness gradually increases from east to west of miningfield, minable areas are mainly distributed in northern mining field. Lithologyof coal seam roof is sandy mudstone, and floor is sandy mudstone andmudstone.

The coal bed structure is simple and generally does not contain dirt bandexcept individual holes containing 1-2 layers of dirt band. It is 1.45-25.72m farfrom 5-1 coal seam, 10.05m on average, and the layer spacing changesslightly.

5-2 coal seam belongs to relatively stable and mostly minable coal seam.

(7) 6-1 coal seam: The seam locates below the first rock member (J1-2y1) of

Yan’an formation, in overall development, with occurrence depth of 695.18-983.75m, averagely 833.95m. Occurrence elevation is 630.46-467.01m. Coalseam thickness is 0.40-8.45m, 3.09m on average. The minable thickness ofcoal seam is 0.80-7.10m, 2.82m on average. It is not minable at No. 21-5, 2-4,0-4, 1-4, 4-13 drill holes in the north of the mining field. Its minable area is168.27 km2, accounting for 92% of the mining field area. Coal thicknesschanges little along moving direction, and in tendency, it gradually increasesfrom east to southwest of the mining field. Lithology of coal seam roof issandy mudstone and mudstone, and floor is sandy mudstone, mudstone andsiltstone.

The coal seam structure is relatively simple. Coal seam at the north of Bexploratory line generally does not contain dirt band except individual drillholes containing 1 layer of dirt band while coal seam at the south generallycontains 1-2 layers of dirt band, and its lithology is mainly mudstone. It is8.05-43.77m far from 5-2 coal seam, 24.90m on average, and the layer spacingchanges slightly.

6-1 coal seam belongs to relatively stable and basically overall minable coalseam.


Yan’an formation, which is combined into 6-1 coal seam toward B exploratoryline and southern area, covering combination area of 29.88 km2. The

- 24 -

occurrence area of coal seam beyond combination is 144.18 km2, occurrencedepth is 701.85-965.48m, 817.42m on average. Occurrence elevation is 618.67-463.42m. Coal seam thickness is 0.25-1.93m, 0.77m on average. The minablethickness of coal seam is 0.80-1.51m, 1.03m on average. The change of coalseam thickness is unstable, without obvious regularity. The coal seam showstwo minable blocks at northwest and east of the mining field with minable areaof 45.47 km2, accounting for 32% of the occurrence area and 25% of themining field area. Lithology of coal seam roof is mostly sandy mudstone andmudstone, and floor is basically sandy mudstone.

The coal bed structure is simple and generally does not contain dirt bandexcept individual drill holes containing 1 layer of dirt band. It is 0.80-14.97mfar from 6-1 coal seam, 4.57m on average, and the layer spacing changesslightly.

6-2 coal seam belongs to locally minable and unstable coal seam.


Yan’an formation. The occurrence area of coal seam is 178.44 km2, occurrencedepth is 709.05-997.70m, 857.88m on average. Occurrence elevation is 613.52-435.99m. Coal seam thickness is 0.25-7.40m, 1.59m on average. The minablethickness of coal seam is 0.80-7.15m, 1.84m on average. The coal seamthickness gradually increases from the south to the north of the mining field intendency, without obvious regularity, and the changes are bigger. It disappearsat No. 24-2 and 28-2 drill holes, forming two non-accessible blocks in centraland southern mining field in an area of 31.85 km2. Its minable parts are mainlydistributed in north and northeast of the mining field, covering a minable areaof 142.73 km2, accounting for 80% of the occurrence area and 78% of themining field area. The lithology of coal seam roof is sandy mudstone, silt-finestone and mudstone, and floor is mudstone and sandy mudstone.

The coal bed structure is simple and generally does not contain dirt bandexcept a few holes containing 1-2 layers of dirt band. It is 0.85-37.68m farfrom 6-2 coal seam, 18.63m on average, and the layer spacing changes greatly.

6-3 coal seam belongs to mostly minable and relatively stable coal seam.


Yan’an formation. Coal seam occurrence regions are mainly at southeast, northand northwest of the mining field, in occurrence area of 134.43 km2,occurrence depth of 725.31-1,003.07m, 855.81m on average. Occurrenceelevation is 604.50-427.82m. Coal seam thickness is 0.15-3.15m, 0.82m onaverage. The minable thickness of coal seam is 0.80-2.75m, 1.12m on average.The minable area of this coal seam includes three parts: the first one is near the

- 25 -

southern border of the mining field, the second one is at the north and thenortheast of the mining field and the third one is distributed in the northwest ofthe mining field. The minable area of this coal seam is 83.29 km2, accountingfor 62% of occurrence area and 45% of the mining field area. The lithology ofthe coal seam roof is mostly sandy mudstone, silt-finestone and mudstone, andfloor is mostly sandy mudstone and silt-finestone.

The coal bed structure is simple and generally does not contain dirt bandexcept individual drill holes containing 1 layer of dirt band, the lithology ofwhich is generally mudstone and sandy mudstone. It is 0.80-15.66m far from6-3 coal seam, 7.10m on average, and there is no obvious changes in the layerspacing.

6-4 coal seam belongs to locally minable and unstable coal seam.

10.3.3 Coal types, coal quality and purpose

According to the Coal Exploration Report on Naimadai Well Field, HongqingheArea, Dongsheng Coal Field, Inner Mongolia Autonomous Region, HongqingheArea, Dongsheng Coal Field contains a total of 10 minable coal seams, the thicknessof minable coal seams is within 9.90-25.40m, 17.75m on average, with minable coal-bearing coefficient of 8.5%. In accordance with the National Coal ClassificationStandards of China (GB5751-86), the Vdaf in coal seams are generally below 37%with a few exceptions of more than 37%, the viscosity index is usually zero(individual is 2), therefore, each coal seam in this area mainly comprises non-cakingcoal with a small amount of long flame coal. The indicators for coal quality are setout below:

Table of indicators for coal quality

(1) Raw coal moisture (on average) ％ 6.53-7.26

(2) Raw coal ash (on average) ％ 6.47-10.29

(3) Sulfur coal (on average) ％ 0.42-0.69

(4) Raw coal volatiles (on average) ％ 34.1-35.53

(5) Raw coal calorific value (on average)Qgr.d MJ/kg 29.3-30.66

Qnet.ar MJ/kg 29.05

Each coal seam belongs to non-caking coals with specially low-middle ash, speciallylow sulfur, specially low phosphorus-low phosphorus, specially low chlorine class Iarsenic, middle and high volatiles, high thermal stability, rich oil and specially high-high calorific value, which are quality power coal.

- 26 -

The coal is applicable to thermal power, all kinds of industrial boilers, gasmanufacturing, etc. It can be used as roasting materials in building materials andchemical industry. The pulverized coal of 0.5mm below can be directly used as coalgasification; after formed with binder, it can be made for briquette, eggette andhoneycomb briquette. Low temperature carbonization shows that most of the coalseams are oil-rich coal, which can be considered to make coal oil or dimethyl etherfeed coal.

10.4 Hydro-geological conditions

Topography in mining field at large relative height difference, strongly cut, in gullydevelopment, has geomorphic feature of erosive low and middle hill landformcharacteristics strongly cut by erosion plateau. It is in the stage of gully developmentwith the highest point in the central area and low-lying at the south. The eastern andwestern canals of Dingdangmiao is at the east, eastern canal of Lamamiao River at themiddle area, and eastern canal of Duge Oboo at the west spread from northwest tosoutheast in direction. Restrained by terrain, water of each gully flows from the north orthe northwest to the southeast and then flows out from southern border of the mining fieldto Zhasakeshao River, and finally into Zagreb Isaac Reservoirs and Hongjian Mire.Perennial surface runoff is not available in all valleys, where water yield is affected byatmospheric precipitation, likely to form torrent for short time when intense fall and heavyrain suddenly happen.

The coal seams of this mining field are buried relatively deeply, about 560m deep, and thestable water-resisting layer is on the coal measures strata, therefore, the surface watersystem basically has no effect on underground mining.

Direct full water aquifer group in this area is primarily hole and fracture aquifers, wateryof direct full water aquifer group is poor, with poor supply condition, runoff condition,with poor atmospheric precipitation as the main source of supply; the floor of mainminable coal seam is below the local erosion basis, but terrain is conducive to naturaldrainage in this area, and not conducive to infiltration recharge of atmosphericprecipitation; There is no large surface water body in the mining field, andhydrogeological boundary is simple. Therefore, the direct full water aquifer group inthis area mainly comprises hole and fracture aquifers, belonging to medium type ofhydrogeological conditions, namely Class I-Class II Type II.

10.5 Engineering geological conditions

The overall quality of rocks in mining field is medium, roof and floor of coal seams areweak-half hard rocks, stability of rocks at roof and floor of coal seam is poorer, but theoverall stability of rock mass is good.

- 27 -

Engineering geology exploration type is Class III Type II: namely, medium-type depositof bedded rock type and engineering geological conditions.

10.6 Other mining technical conditions

10.6.1 Mine gas

The test results (see table 3-2-3) of gas samples from the 19 drilling holes within themining field (including 4 gas samples from test holes) show that gas content of CH4

and natural gas composition of CH4 are rare; The content of CH4 is 0~0.06ml/ginflammable, the content of natural gas composition of CH4 is 0~8.30%. Therefore,there is no CH4 zone; the content of CO2 is 0~11.78%, and the content of N2 is88.28~99.66%, therefore it belongs to CO2-N2 zone, namely gas weathering zoneand they are all low gas content coal seams.

10.6.2 Spontaneous combustion of coal

Oxygen consumption tests of coal seams are carried out in the minefield explorationregarding coal seams of 3-1, 4-1, 4-2, 5-1, 5-2, 6-1, 6-2, 6-3 and 6-4 of drilling holesof 1-2, 15-3, 18-2 and 15-11. Evidence has shown that they are all susceptible tospontaneous combustion.

As there will be some dispersed fine articles of pyrite in all of the coal seams, andpulverized coal in natural state is most likely to approximate 10%, indicating lowmetamorphic degree and low in ignition point. Mine fields that are in proximity allhave the tendency for spontaneous combustion. Therefore, all coal seams belong tocoal seams that are susceptible to spontaneous combustion.

10.6.3 Coal-dust explosion

Coal-dust explosion tests of coal seams are carried out regarding the coal seams of3-1, 4-1, 4-2, 5-1, 5-2, 6-1, 6-2, 6-3 and 6-4 of the 4 drilling holes of 1-2, 15-11, 18-2 and 15-3 respectively, and they are all susceptible to the risk of coal-dustexplosion.

10.7 Mining plan

10.7.1 Coal seam mining sequence

The mine contains ten minable coal seams. As layer spacing is small, it is notappropriate to carry out upward mining. The first minable coal seam 3-1 is a thickcoal seam. With two sets of combined mining faces, the design and productioncapacity of the mine can be guaranteed, with no need to consider upward mining.

- 28 -

Therefore, downward mining sequence will be adopted for all coal seams in themine, that is, the upper coal seam first and the lower seam second within the samecoal seam, and downward mining among different coal seams.

10.7.2 Classification of mining area

Level 1 coal seam 3 will be grouped into six mining areas. To the south of the shaftstation, the west of the south-wing roadway is the mining area 311, the east is themining area 312. To the north of the shaft station, the west of the north-wingroadway is the mining area 312, the east is the mining area 314. The north of thenorth-wing roadway is classified as the mining area 315, and to the north of northwind shaft till the north boundary of the mine is the mining area 316. Outside themine belongs to the reserve zone.

Level 2 and Level 3 coal seams are medium-thick and thin coal seams. Their miningareas are classified in principle based on the roadway, coal pillars of mining arealaneway and the boundary of the mine. The single production of working face isnow at a low level, but the recovery is 35 years later. Therefore, the classificationconsiders the room for development of combined mining equipment and technology.

10.7.3 Mining sequence

The sequence of Level 1 mining areas is mining area 311→312→313,314→315→316.

10.8 Coal mining method

The geological structure of the two mining areas to be first mined is simple with noigneous intrusion. There are ten minable coal seams in the mine, with a dip angle ofaround 1°. Of which, the coal seam 3-1, whose thickness ranges from 0.8-8.45m and isaveraged at 6.14m, is overall minable thick coal seam, coal seams 4-1, 4-2, 6-1 and 6-3are overall or mostly minable medium-thick coal seams, and coal seams 5-1, 5-2, 6-2 and6-4 are mostly or locally minable thin coal seams. Based on the analysis on the thicknessand nearly horizontal occurrence of coal seam, the advancing (or slanting) longwall coalmining method, retrusive recovery and full caving roof management method will beadopted for all coal seams. Moreover, full-seam mining comprehensive technique will beadopted.

As the service life of Level 1 of the mine is 35.2a, except for the coal seam 3-1 (thick coalseam) to be first mined, the full-seam mining comprehensive mechanical coal miningtechnique will be adopted for all other coal seams given the high recovery rate. As for themedium-thick (<2.0m) and thin coal seams, whether to adopt drum shearer combinedmining face or coal planer combined mining face will be determined based on the thendevelopment of equipment and technology.

- 29 -

12.9 Coal preparation technique

12.9.1 Determination of washing of all raw coal or washing of lump coal

There are two plans for the construction of the power coal preparation plants in InnerMongolia: First is “all raw coal below 200mm will be washed”, and the second is “200-13(25)mm lump coal will be washed”. In the Development and Utilization Plan, the planof “all raw coal below 200mm will be washed” is adopted. Major reasons are as follow:

(1) Washing of all raw coal is in line with the national policy on the coal industry. It isconducive to decreasing the ash and sulphur in raw coal more sharply, improvingcombustion efficiency, protecting the increasingly deteriorating natural environment,reducing ineffective railway transport, and deducing waste of transporting capacity.Hongqinghe coal preparation plant targets on the large power plants in North China,East China and South China, so the transportation distance is rather long. If all rawcoal is washed, some ineffective transport of gangue can be avoided, which canbring out good economic effects and social effects.

(2) Washing of all raw coal can effectively reduce the ash in the product, and thereforedecrease the impacts of high-ash zone and fault on the quality of commercial coal.The ash in the first and main coal seam 3-1 in Hongqinghe Mine is low, but it isonly an average level. As stated in Table 6-1-2, the ash in drilled coal in the coalseam 3-1 fluctuates from 2.68 to 22.24, that is to say, there exists both high-ash zoneand low-ash zone in the coal seam 3-1. If the coal is mined from the high-ash zone,all raw coal should be washed. In addition, in case of a default, the raw coal minedtherefrom contains a large proportion of gangue and ash, and will be unsalableunless washed.

(3) Washing of all raw coal can stabilize coal quality to better meet users’ needs andimprove the market competitiveness of the products. Upon washed, the indicators forproducts, such as ash and calorific value, can be more controllable and adjustable.As such, the coal preparation plant can produce the exact products needed by theusers, and then seize the initiative in the intense market competition. Compared withthe raw coal from coal mine in Northeast and East China, the raw coal mined fromHongqinghe Mine contains a higher proportion of moisture, and lower metamorphicgrade and lower calorific value. In order to improve the calorific value, the ashproportion in coal has to be reduced.

(4) A number of large coal preparation plants adjacent to Hongiqinghe Mine, such asShigetai Coal Preparation Plant, Buertai Coal Preparation Plant and Daliuta CoalPreparation Plant in Shendong Mining Area, all have all of raw coal washed.Bulianta Coal Preparation Plant and Shangwan Coal Preparation Plant are carryingout the design of supplementary construction of slack coal dressing system. As

- 30 -

proven by experience, the simultaneous construction of lump coal dressing systemand slack coal dressing system can reduce repetitive investment compared withconstruction in two phases, and system connection will be more reasonable.

12.9.2 Technique process

Based on the recommended coal dressing method, and upon comprehensive analysisand research, the principle technique process is determined as follows:

(1) Raw coal preparation system

Upon storage in the raw coal warehouse, the raw coal from the mine will besent to the screening and broken workshop for processing, where there are fiveraw coal sizing screens, one handpicking belt and two breakers. Upon sizing,handpicking and breaking, the raw coal will be divided into two size fractionsof 200-13mm and 13-0mm, which will be sent to the main workshop fordressing. Some 200-13mm and 13-0mm raw coal may directly enter theproduct warehouse without sizing, or may be directly broken to below 50mmsize faction as finished products.

(2) Lump coal sizing system

Upon 3mm wet desliming, the 200-13mm lump coal in the main workshop willenter dense-medium shallow-slot sizing to select lump fine coal and lumpgangue. Upon medium removal through fixed screen and vibrating screen, andmoisture removal, the 200-13mm lump fine coal can be directly for sale, orbroken to below 50mm through sizing breaker to be sold as slack fine coal.Upon medium removal through medium-removal screen and moisture removal,gangue can be comprehensively utilized for other purposes or discarded.

Upon further classification, most of the qualified medium screened from thelump fine coal through fixed screen will return to the lump coal qualifiedmedium bucket together with the qualified medium screened from the lumpfine coal through medium-removal screen, and the remaining qualified mediumwill enter magnetic separator for magnetic separation together with the dilutemedium screened from lump fine coal through medium-removal screen andfrom lump gangue through medium-removal screen. The magnetic concentratewill return to the lump coal qualified medium bucket, while the magneticseparation tailings will serve as wetting water for slack coal before deslimingin the slack coal dense-medium system.

- 31 -

(3) Slack coal dense-medium sizing system

Upon wet desliming of the 13-0mm slack coal in the main workshop through1.5mm slack coal desliming screen, the substance above the screen will entermixing tank to mix with qualified medium, and the slime water below thescreen will enter slime water bucket. The material in the mixing tank will bebumped into the two products dense-medium cyclone for sizing to get slackfine coal and slack gangue. The slack fine coal will be processed into washedslack coal products upon medium and moisture removal through sieve-bendscreen, linear vibrating screen and centrifuge, while the gangue will becombined with lump coal upon medium and moisture removal through sieve-bend screen and linear vibrating screen.

Upon further classification, most of the qualified medium screened from slackfine coal through sieve-bend screen will return to the slack coal qualifiedmedium bucket together with the qualified medium screened from slack finecoal through medium-removal screen and from slack gangue through medium-removal screen, and the remaining qualified medium will enter magneticseparator for magnetic separation together with the dilute medium screenedfrom slack fine coal through medium-removal screen and from slack ganguethrough medium-removal screen. The magnetic concentrate will return to theslack coal qualified medium bucket.

(4) Coarse slime sizing system

Upon sizing through 0.15mm sizing cyclone, the slime water screened fromslack coal through desliming screen, and the slack coal magnetic separationtailings at the bottom will enter spiral separator to get coarse fine slime andgangue. Upon moisture removal through vibrating sieve-bend screen andcoarse slime centrifuge, the coarse fine slime will be incorporated into slackfine coal. Upon moisture removal through high-frequency screen, the ganguewill be combined with the lump and slack gangue and then stored in thegangue warehouse. Slime water will go to concentrator for concentration.

(5) Slime water system

The slime water in the concentrator will be further concentrated after addingflocculating agent. Upon adding moisture-removed slime through filter press,the bottom current will be incorporated into slack fine coal. When gangue isheavily slimed, two-section concentration technique can be adopted. Thebottom current in the two-section concentrator will be handled through filterpress, and the overflow in the two-section concentrator will serve as circulatingwater for the spray water of desliming and medium-removal screens, and forthe supplementary water of medium bucket.

- 32 -

11. VALUE CONSULTATION METHOD

Based on the existing geological data of and development plan for the Mining Rights ofHongqinghe Mine, combined with actual conditions and adopting more scientific and rationalmining techniques and methods, the existing capacity of such mining rights, being 15 milliontons/year, will be enlarged to 30 million tons/year, and the model of the Development andUtilization Plan for the Mining Rights of Hongqinghe Mine – at a Scale of 30 million tons/yearwas established. According to the model, the discounted cash flow principle was adopted in theanalysis and calculation, and thus conclusions of value consultation of the mining rights weredrawn.

11.1 The newly-built simulation model of the Development and Utilization Plan for theMining Rights of Hongqinghe Mine – at a Scale of 30 million tons/year

Development and Utilization Plan for the Mining Rights of Hongqinghe Mine-at a Scale of 30 million tons/year

Simulation Model 2-1

Value consultation base date: 30 June 2017

Major indicators Parameter Descriptions

Gross resourcereserve

3,219.42 million tons According to the Verification Report onResource Reserve, appraisal opinions andfile record and certification of reserves

Mining recoveryrate (%)

75%/80%/85% By reference to the Development andUtilization Plan and Exploration Design

Backup coefficientof reserves

1.4 By reference to the Development andUtilization Plan and Exploration Design

Exploitable reserve 2,123.869 million tons By reference to the Development andUtilization Plan and Exploration Design

Production scaleand constructionphase

Total scale is 30 milliontons/year

By reference to the Development andUtilization Plan and Exploration Design

44 months for the firstphase, with the capacityreaching 15 million tons/year

24 months for the secondphase, with the capacityreaching 30 million tons/year

Service life 52.9 years (includingconstruction period)

- 33 -

Major indicators Parameter Descriptions

Product scheme Washed fine coal and coalgangue

By reference to the Development andUtilization Plan

Investment in fixedassets

Total investment isRMB8.436 billion

By reference to the original Developmentand Utilization Plan and Exploration Design

RMB5.595 billion for thefirst phase

RMB2.842 billion for thesecond phase

Land premium RMB0.624 billion Enterprise’s financial data

Product sellingprice (tax exclusive)

Washed fine coal: RMB400/ton

Coal gangue: RMB120/ton

Discount rate 8%

Development and Utilization Plan for the Mining Rights of Hongqinghe Mine– at a Scale of 30 million tons/year–Unit Cost Simulation Model 2-2

Parameter for determination of the (30 milliontons/year) simulation model

DescriptionsItem Unit cost (RMB/ton)

Raw materials 23.80 By reference to the Development andUtilization Plan and Exploration DesignFuel and power expenses 8.24

Salary and employeebenefits

8.24

Depreciation cost 9.40 Recalculated based on the EvaluationStandard for the Mining Rights of China

Repair costs 3.41 Recalculated based on fixed assetsmechanical equipment retention rate

Expenses for maintenanceof simple reproduction

8.00 By reference to Cai Jian [2004] No. 119

Where: Depreciation-natureexpenses for maintenance ofsimple reproduction

4.00

Updating-nature expensesfor maintenance of simplereproduction

4.00

- 34 -

Parameter for determination of the (30 milliontons/year) simulation model

DescriptionsItem Unit cost (RMB/ton)

Ground subsidencecompensation

2.64 By reference to the Development andUtilization Plan and Exploration Design

Security costs 15.00 By reference to Cai Qi [2012] No. 16

Laneway engineering fund 2.50 By reference to Cai Jian [2004] No. 119

Amortization expenses 2.12 Recalculated based on the EvaluationStandard for the Mining Rights of China

Other expenses 21.71 By reference to the Development andUtilization Plan and Exploration DesignSelling expenses 5.72

Finance costs 1.36 Recalculated based on the EvaluationStandard for the Mining Rights of China

Total cost expenses 112.14

Operating cost 92.76

11.2 Discounted cash flow method

Mining rights of Hongqinghe Mine is a newly built coal mine. The basis for adoption ofdiscounted cash flow method is as follows:

Complete geological materials: The Coal Exploration Report on Naimadai Well Field,Hongqinghe Area, Dongsheng Coal Field, Inner Mongolia Autonomous Region and itsappraisal opinions, file record and certification (hereinafter the “Mineral Resource ReserveMaterials”).

Definite development assumption model for the value consultation – Development andUtilization Plan for the Mining Rights of Hongqinghe Mine – at a Scale of 30 milliontons/year Simulation Model. Development scheme or design, namely capacity of 15million tons/year and 30 million tons/year, for the reference of the value consultation: theDevelopment and Utilization Plan for Mineral Resources in Hongqinghe Mine of InnerMongolia Yitai Guanglian Coal Chemical Co., Ltd. prepared by China Coal Technology &Engineering Group Nanjing Design & Research Institute in October 2012 (hereinafter the“Development and Utilization Plan”), and the Explanation on Preliminary Design ofHongqinghe Mine of Inner Mongolia Yitai Guanglian Coal Chemical Co., Ltd. (Revised) –at a Scale of 30 million t/a (a net increase of 15 million t/a) prepared by China CoalTechnology & Engineering Group Nanjing Design & Research Institute in February 2014(hereinafter the “Preliminary Design”). All the materials stated in this paragraph arecollectively referred to as the “Basis Materials for Technical Economic Parameters”.

- 35 -

Based on the value consultation prerequisites and purposes for this project and combinedwith the actual conditions of such mining rights, such mining rights has a scientific andreasonable size with independent profitability, and can be estimated that the futureearnings and risks can be measured in money. The materials required for the valueconsultation are complete and full, and the required technical economic parameters arerelatively complete, meeting the requirements of estimation by the method of discountedcash flow. In compliance with the Income Approach Evaluation Method andSpecifications and the Mining Right Evaluation Parameter Determination GuidingPrinciples, discounted cash flow method is determined for this value consultation andthe calculation formula is:

( )∑1 1

1)(

n

ttt i

COCIP= +

•=

Of which: P – Consulted value of the mining rights;

CI – Annual cash inflow;

CO – Annual cash outflow;

(CI – CO)t – Annual net cash flow;

i – Discount rate;

t – Year serial number (t =1,2,3,…,n);

n – Calculation of years.

12. EXPLANATION ON MAIN TECHNICAL ECONOMIC PARAMETERS CHOSEN INTHE VALUE CONSULTATION

12.1 Determination of exploitable reserve

12.1.1 Reserve having been approved through review and record

According to the Mineral Resource Reserve Materials, as at the base date for theappraisal of reserve in the mining rights, being September 2007, resource/reserveobtained within the well field totaled 3.21942 billion tons. Of which: provedintrinsic economic resource (331) totaled 1.01250 billion tons, and controlledintrinsic economic resource (332) totaled 723.54 million tons and inferred quantityof intrinsic economic resource (333) totaled 1.48338 billion tons. Details are set outin the table below:

- 36 -

Coal Mining Area Resources/Reserves Summary

Unit: 10,000 tons

Level

Coal seam

Provedintrinsiceconomic

resource (331)

Controlledintrinsiceconomic

resource (332)

Inferredintrinsiceconomic

resource (333) Total

3-1 upper coal 6,988 6,988

3-1 coal 33,105 23,202 52457 108,764

4-1 coal 27,709 18,824 10,046 56579

4-2 coal 18,230 7,085 5,746 31,061

5-1 coal 2,678 3,243 6,569 12,490

5-2 coal 2,696 2,248 9,467 14,411

6-1 coal 14,533 10,086 23,910 48,529

6-2 coal 5,498 5,498

6-3 coal 2,299 7,666 19,387 29,352

6-4 coal 8,270 8,270

Total 101,250 72,354 148,338 321,942

12.1.2 Resource reserve used in the value consultation

Referring to the Mining Rights Appraisal Guide (Modified in 2006), resourcereserves used in the value consultation means the basic data of minable reserve fromretained resource reserve on the base date of the value consultation, that used in thecalculations of the consultation – basic reserves in the value consultation calculationand basic reserves commuted from resources.

In the calculation of resource reserve used in the value consultation, the economicrationality analysis of the project should be carried out regarding the retainedresource reserve of the value consultation base date by combining the developmentand utilization plan of mining resources or (pre) feasibility study or the design of themine and then deal with them by classification:

For intrinsic economic resource included, if it is technically and economicallyfeasible, including infrastructure construction and production mine that the (pre-)feasibility studies, mine designs or the development and utilization plan of mineresources have been formulated and passed reviews, on analysis and comparison, ifthe project is proved to be economically rational, classify them as follows:

- 37 -

(1) Economic basic reserves that have technical and economic feasibility should beincluded in the estimation and calculation; reserve areas of (111b) and (122b)are technically and economically feasible and should be included in theconsultation calculation;

(2) Please refer to (pre-) feasibility studies, mine designs or the development andutilization plan of mine resources for amount of intrinsic economic resource(333). If the (pre-) feasibility studies, mine designs or the development andutilization plan of mine resources were not designed and used but the resourcereserve is within the effective period of the mining right, the value of thereliability coefficient is taken within the range of 0.5-0.8. In the developmentand utilization plan of mine resources, the (333) level resource reserve isdesigned and utilized, then take 0.7-0.9 as the reliability coefficient; for minefields with simple geological structure and stable occurrence in coal seams,take 0.9 as the reliability coefficient for (333) level resource reserve; for minefields without simple geological structure or stable occurrence in coal seams,take 0.7 as the reliability coefficient (333) level resource reserve. Forreliability coefficients for the (333) level intrinsic economic resource in thisvalue consultation, please see below table:

Table of Industry Resources/Reserves within Coal Mining Exploration

Unit: 10,000 tons

Mining level Coal seamGeological

resource

331 332 333 Industryresourcereserve111b 122b K 33K

Level 13-1 upper 6,988 0.70 4,891.60 4,891.60

3-1 108,764 33,105 23,202 0.85 44,588.50 100,895.50

Total 115,752 33,105 23,202 49,480.10 105,787.10

Level 2

4-1 56,579 27,709 18,824 0.90 9,041.4 55,574.40

4-2 31,061 18,230 7,085 0.85 4,884.10 30,199.10

5-1 12,490 2,678 3,243 0.75 4,926.80 10,847.80

5-2 14,411 2,558 2,227 0.75 7,100.30 11,885.30

Total 114,541 51,175 31,379 25,952.50 108,506.50

Level 3

6-1 48,529 14,533 10,086 0.80 19,128 43,747

6-2 5,498 0.70 3,848.60 3,848.60

6-3 29,352 2,076 7,507 0.75 14,540.30 24,123.30

6-4 8,270 0.70 5,789 5,789

Total 91,649 16,609 17,593 43,305.90 77,507.90

Total 321,942 101,250 72,354 118,738.40 291,801.04

- 38 -

Resource reserve used in value consultation=∑(Basic reserve included in the valueconsultation calculation+ Resource included in the value calculation × the reliabilitycoefficient of the corresponding resource level) =2,918,010,400 tons

After calculation, the resource reserve used in the value consultation of HongqingheMine of Inner Mongolia Yitai Guanglian Coal Chemical Co., Ltd. is 2,918,014,000tons.

For details on estimation of the resource reserve used in the value consultation,please see Schedule II.

12.1.3 Minable reserve used in the value consultation

Minable reserve used in the value consultation = resource reserve used in the valueconsultation – allowable loss in the design – mining loss =(resource reserve used inthe value consultation – allowable loss in the design) × mining recovery rate

Allowable loss in the design: In the Development and Utilization Plan, the villageprotection barriers and coal pillars amounted to 52,030,000 tons, the quantity of coalpillars of industry square and main laneways and special mine railway for the field is170,350,000 tons. In this value consultation, we take above resource reserve asallowable loss in the design and deduct it, the quantity of the allowable loss in thedesign is 222,380,000 tons.

Mining recovery rate: In accordance with national standards of the P.R.C.,GB50399-2006 Design Specifications for Small Coal Mine of the Coal Industryand the Safety Procedure for Coal Mine (2006 Edition), the mining recovery rate ofunderground coal mining field is determined based on following indicators:

Thick coal seams: coal seams with thickness of more than 3.5m in undergroundmining should not be less than 75%;

Medium-thick coal seams: coal seams with thickness of 1.3-3.5m in undergroundmining should not be less than 80%;

Thin coal seams: coal seams with thickness of less than 1.3m in underground miningshould not be less than 85%.

Of which, coal seam 3-1 is thick coal seam, the mining recovery rate of the miningarea is 75%; the upper of coal seam 3-1 and coal seams of 4-1, 4-2, 6-1 and 6-3 aremedium-thick coal seams, the mining recovery rate of the mining area is 80%, theremaining coal seams are thin coal seams, and their mining recovery rate of the

- 39 -

mining area is 85%. In the value consultation report, the mining recovery rate of theDevelopment and Utilization Plan was adopted to determine the value. See the tablebelow for details:

Table of Minable Reserve Used in the Value Consultation

Unit: 10,000 tons

Mining level Coal seam

Industryresourcereserve

Permanentloss of

coal pillar Design Industrial sites and major laneway pillar

Miningloss

Minablereserve

Mine confines

Resources/Reserves

Industrysquare

Air shaftsite

Mainlaneway Subtotal

Level 1

3-1 upper 4,891.60 185.00 4,706.60 – – 131.00 131.00 915.10 3,660.50

3-1 100,895.50 1,502.00 99,393.50 1,035.00 642.00 3,829.00 5,506.00 23,471.90 70,415.60

Subtotal 105,787.10 1,687.00 104,100.10 1,035.00 642.00 3,960.00 5,637.00 24,387.00 74,076.10

Level 2

4-1 55,574.40 897.00 54,677.40 497.00 495.00 2,331.00 3,323.00 10,270.90 41,083.50

4-2 30,199.10 481.00 29,718.10 349.00 554.00 1,118.00 2,021.00 5,539.40 22,157.70

5-1 10,847.80 249.00 10,598.80 185.00 128.00 378.00 691.00 1,486.20 8,421.60

5-2 11,885.30 222.00 11,663.30 142.00 138.00 658.00 938.00 1,608.80 9,116.50

Subtotal 108,506.50 1,849.00 106,657.50 1,173.00 1,315.00 4,485.00 6,973.00 18,905.30 80,779.30

Level 3

6-1 43,747.00 817.00 42,930.00 427.00 185.00 1,758.00 2,370.00 8,112.00 32,448.00

6-2 3,848.60 85.00 3,763.60 – 101.00 124.00 225.00 530.80 3,007.80

6-3 24,123.30 602.00 23,521.30 10.00 404.00 1,029.00 1,443.00 4,415.70 17,662.60

6-4 5,789.00 163.00 5,626.00 75.00 104.00 208.00 387.00 785.90 4,453.20

Subtotal 77,507.90 1,667.00 75,840.90 512.00 794.00 3,119.00 4,425.00 13,844.30 57,571.60

Full-mine Total 291,801.40 5,203.00 286,598.40 2,720.00 2,751.00 11,564.00 17,035.00 57,136.50 212,426.90

Minable reserve used in the value consultation = resource reserve used in the valueconsultation – allowable loss in the design – mining loss = (resource reserve used inthe value consultation – allowable loss in the design) × mining recovery rate =2,124,269,000 tons

According to the Explanation on the Reserve Utilized provided by the enterprise, atotal of 0.4 million tons of resource reserve (engineering coal) was utilized from thebase date of reserve appraisal (being 30 September 2007) to the base date of thisvalue consultation.

After calculation, as at the base date of the value consultation, the minable reserveused in the value consultation of the mine is 2,124,269,000 tons.

(Detailed minable reserve estimation is attached in Schedule II)

- 40 -

12.2 Production scale and the service life of the mine

12.2.1 Capacity having been approved

According to a serial of approval documents including the Reply of Approval forDefining Mining Area (Guo Tu Zi Kuang Hua Zi [2008] No. 061) issued by theMinistry of Land and Resources,the production scale of the mining rights is 15million tons/year with a service life of 101.14 years. As such mining rights has alarge resource reserve, if adopting the capacity scale of 15 million tons/year, whichis small for a rather long service life of 101.14 years, it is not scientific andreasonable to explore such mining rights.

12.2.2 Strategic plan for the development of the mining rights of Hongqinghe Mineproject

From the development strategy for the mining rights of Hongqinghe Mine projectand based on the principle that coal resource reserve matches production capacity, itis relatively scientific and reasonable to enlarge the capacity scale, before theextension, of the mining rights of Hongqinghe Mine, being 15 million tons/year, to30 million tons/year. The capacity scale of 30 million tons/year after the extension isscientific and reasonable, whereas the capacity of 15 million tons/year is not. Fromthe whole development strategy of Inner Mongolia Yitai Guanglian Coal ChemicalCo., Ltd., only developing the mining rights of Hongqinghe Mine at a capacity scaleof 30 million tons/year, regardless of before or after the extension, can give ascientific and reasonable view of the best profitability and overall economic value ofsuch mining rights.

12.2.3 Production scale adopted in the value consultation

Based on the prerequisites and purposes for the value consultation and combinedwith the actual conditions of the project, the production scale of 30 million tons/yearis adopted in the value consultation.

Based on the principle that coal resource reserve matches production capacity, aservice life of over 50 years is reasonable for a large mine, which is in line with coalexploration design specifications. Therefore, in this value consultation report, theproduction scale of 30 million tons/year is adopted for such mining rights, whichwill be constructed in two phases. The first phase, with a production scale of 15million tons/year, commenced construction in May 2014, and is expected to reachproduction by the end of October 2017. Currently, 85%, or RMB4,748 million, hasbeen invested in the first phase. The second phase, with a production scale of 15million tons/year, will be constructed for two years from the beginning of January2020 to the end of December 2021, and will reach production capacity of 30 milliontons/year in 2022.

- 41 -

Based on minable reserves of the mine and annual production capacity, the servicelife of the mine is determined and calculated as follows:

T = Q / (A × K)

In the formula, T—Service life;

Q—Minable reserve;

A—Production scale;

K—Backup coefficient of reserve (1.4).

T = 212,386.9 ÷ (3000×1.4) ＝ 50.57 years

The mine will commence production in November 2017, and its production capacitywill be at 15 million tons/year during 2018 to 2021. The second phase will beconstructed from January 2020 to December 2021, and the mine will reach fullcapacity of 30 million tons/year by 2022. The service life is 52.9 years (includingconstruction period).

12.3 Product scheme and yield

Based on the Basis Materials for Technical Economic Parameters, the product scheme forthis project is washed fine coal and coal gangue. The product scheme adopted in this valueconsultation report is: main product is the washed fine coal and by-product is coal gangue.

Based on the Basis Materials for Technical Economic Parameters, the yield of washed finecoal and coal gangue in this project is 90.42% and 9.58%, respectively. The yield adoptedin this value consultation report is 90.42% for washed fine coal and 9.58% for coalgangue.

12.4 Selection of technical economic parameters

Based on the Basis Materials for Technical Economic Parameters and combined with otherdata collected by the consultants, through analysis and comparison, reasonable data isselected in the calculation of the value consultation. The detailed value obtaining processis as below:

- 42 -

12.4.1 Product selling price

(1) Coal quality of the mining rights of Hongqinghe Mine, product scheme andselling price basis

1 Coal quality of the mining rights of Hongqinghe Mine

Summary of all minable coal seams resources/reserves in the mining rights ofHongqinghe Mine

LevelCoal seam

Total

Acreage (m2) Reserve (10,000 tons)

3-1 upper 20,233,062.00 6,988.00

3-1 139,418,348.00 108,764.00

4-1 140,591,190.00 56,579.00

4-2 137,967,435.00 31,061.00

5-1 78,829,386.00 12,490.00

5-2 88,064,318.00 14,411.00

6-1 137,855,407.00 48,529.00

6-2 40,594,288.00 5,498.00

6-3 101,092,514.00 29,352.00

6-4 60,836,320.00 8,270.00

Total 321,942.00

Summary of major characteristics of coal quality at all minable coal seams of themining rights of Hongqinghe Mine

Coal seamNo. Flotation

Calorific value (MJ/kg) Coal seamNo. Flotation

Calorific value (MJ/kg)

Qgr.d Qnet.ar Qgr.d Qnet.ar

3-1上 Raw coal 26.79-32.2530.66(20)

25.96-31.3129.76(20)

5-2 Raw coal 19.55-32.4929.79(161)

18.91-31.5828.9(161)

Washed coal 31.15-32.7831.77(9)

30.17-31.8830.84(9)

Washed coal 28.78-32.931.93(73)

27.89-31.930.98(73)

3-1 Raw coal 25.1-32.4230.01(242)

24.35-31.729.11(242)

6-1 Raw coal 20.03-32.5729.96(246)

19.39-31.5529.08(246)

Washed coal 30.27-129.932.72(101)

29.38-12931.8(101)

Washed coal 30.59-33.3331.98(119)

29.59-32.7931.04(119)

- 43 -

Coal seamNo. Flotation

Calorific value (MJ/kg) Coal seamNo. Flotation

Calorific value (MJ/kg)

Qgr.d Qnet.ar Qgr.d Qnet.ar

4-1 Raw coal 20.86-32.1529.91(248)

20.21-31.229.01(248)

6-2 Raw coal 23.52-32.2729.69(73)

22.84-32.1928.84(73)

Washed coal 27.86-33.0531.94(116)

26.9-32.1530.99(116)

Washed coal 29.58-33.0331.84(34)

28.7-32.230.92(34)

4-2 Raw coal 19.86-32.6930.17(246)

19.2-31.7229.28(246)

6-3 Raw coal 20.74-32.4129.49(174)

20.11-32.4128.6(174)

Washed coal 30.39-32.9732.01(117)

29.5-32.0631.07(117)

Washed coal 30.15-33.0131.9(86)

29.24-32.4130.98(86)

5-1 Raw coal 24.46-32.5830.29(169)

23.7-31.6929.32(169)

6-4 Raw coal 19.56-32.3529.3(106)

18.91-31.4728.44(106)

Washed coal 30.31-32.8931.93(84)

29.29-31.8830.99(84)

Washed coal 30.18-32.7831.96(56)

29.26-31.9331.03(56)

Table of indicators for coal quality of Hongqinghe Mine

(1) Raw coal moisture (on average) % 6.53-7.26

(2) Raw coal ash (on average) % 6.47-10.29

(3) Sulfur coal (on average) % 0.42-0.69

(4) Raw coal volatiles (on average) % 34.1-35.53

(6) Raw coal calorific value (on average) Qgr.d MJ/kg 29.3-30.66

Qnet.ar MJ/kg 29.05

The Qnet.ar (on average) of coal quality of the mining rights of Hongqinghe Mine is29.05MJ/kg (6,943 kilocalorie/kg).

1 The product scheme is washed fine coal and coal gangue.

2 The selling price basis is ex-works selling price instead of ex-pit selling price.

- 44 -

(2) Market survey

1 Information inquired through sxcoal.com

Through acquiring information on sxcoal.com, the consultants identifiedthe selling price (tax inclusive) of the power coal in Ejin Horo Banner,Ordos, with Qnet.ar of 5,500 kilocalorie/kg, volatiles of 35%, ash of 12%and sulfur content of 0.5%, from January 2011 to June 2017, as set out inthe table below:

Price inquired through sxcoal.com

Unit: RMB/ton

Month

PriceMonth 2011 2012 2013 2014 2015 2016 2017

January 425 420 385.23 320 245 126.50 380

February 425 400 390 312.94 240 131.18 377.63

March 445 400 380.48 308.57 238.18 142.61 385

April 460 400 371.90 305 201.19 146.4 388.16

May 462 400 252.73 300.95 170.75 155 347.14

June 465 370 324.21 282 170 161.86 331.82

July 472 338.46 310 241.74 169.35 180

August 475 332.17 310 242.86 165 228.26

September 475 368.10 310 234.09 159.29 292.14

October 475 374.17 313.68 239.47 150.28 311.11

November 470 380 318.1 245 138.57 379.09

December 455 383.81 320 250 125 383.86

Average 369.09

- 45 -

鄂爾多斯呼倫貝爾包頭赤峰通遼烏海

Ordos Hulun Buir Baotou Chifeng Tongliao Wuhai

內蒙古鄂爾多斯地區動力煤價格 Price of power coal in Ordos, Inner Mongolia

產品名稱 Name of product

價格類型 Price type

發熱量 Calorific value

揮發分 Volatiles

灰分 Ash

硫分 Sulphur

坑口價 Ex-pit price

達拉特旗混煤 Dalad Banner mixed coal

東勝大塊精煤 Dongsheng big lump fine coal

東勝原煤 Dongsheng raw coal

伊金霍洛旗電煤 Ejin Horo Banner power coal

- 46 -

準格爾旗動力塊煤 Jungar Banner power lump coal

2 Information on coal selling price of neighboring cola mines

Upon market survey and based on the information on coal selling price inthis mining area previously collected, the value consultants analyzed andsorted out the ex-pit selling price of washed coal with a calorific value ofabout 6,000 kilocalorie/kg, details of which are set out in the table below:

Summary of washed coal selling price

Unit: RMB/ton

Year

2011 2012 2013 2014 2015 2016 2017Average

price

1 2 3 4 5 6 7 8

Sellingprice 450 420 390 330 270 360 370 370

(3) Analysis of coal price

1 Based on the coal quality of the mining rights of Hongqinghe Mine,product scheme and selling price basis and compared to the above twocases, and upon analysis and adjustment as for the difference ofadvantages in coal quality, product scheme and selling price basis, theselling price of the washed fine coal in Hongqinghe Mine ranges fromRMB400/ton to RMB450/ton.

2 Analysis of future coal selling price trend

Affected by the coal overcapacity in China in recent years, the coalselling price dropped sharply. Since 2014, due to the co-effect of nationalpolicy orientation for coal supply side reform and the market self-adjustment, the selling price of power coal across the country has risensignificantly during the second half of 2016 to June 2017, and isexpected to maintain a growing momentum in stability. Upon analysis, itis anticipated that the selling price of washed fine coal in the miningrights of Hongqinghe Mine will be above RMB400/ton.

- 47 -

(4) Product selling price chosen in the value consultation report

Through comprehensive comparison and analysis on the raw coal selling price,coal quality, product scheme, place of sales (whether ex-pit sales or not), etc.,and considering its change trends in the future, the value consultantsdetermined the value for selling price (tax exclusive) of the washed finecoal in this value consultation report at RMB400/ton, and based on the recentselling prices, determined the value for the selling price (tax exclusive) of coalgangue at RMB120/ton.

12.4.2 Intangible assets (land use rights)

Investment in intangible assets mainly deals with land use rights, and the land userights mainly involves the consideration of acreages taken by industry ground. Thismining rights construction land is in the course of application, and according to thefinancial data and written statement submitted by the mining rights owner, the landcosts for the mine construction is RMB623.8134 million.

12.4.3 Investment in fixed assets

Referring to the Basis Materials for Technical Economic Parameters, the productionscale of such mining rights is 30 million tons/year, and the total investment in fixedassets is RMB8,436 million, which will be injected in two phases, of whichRMB5,595 million will be invested for the first phase, and RMB2,842 million forthe second phase. See the table below for details:

Table of investment in fixed assets of the mining rights of Hongqinghe Mine(at a capacity scale of 30 million tons/year)

Unit: RMB0’000

Parameters in the BasisMaterials for TechnicalEconomic Parameters Value obtained in the value consultation report

No. Item

Developmentand

UtilizationPlan No. Item

First phaseinvestment

Secondphase

investment

1 Lanewayengineering

262,226.76 1 Lanewayengineering

181,584.70 80,642.06

2 Constructionengineering

96,983.58 2 Buildings 70,875.36 26,108.22

- 48 -

Parameters in the BasisMaterials for TechnicalEconomic Parameters Value obtained in the value consultation report

No. Item

Developmentand

UtilizationPlan No. Item

First phaseinvestment

Secondphase

investment

3 Purchase ofequipment

484,416.31 3 Mechanicalequipment

306,998.93 177,417.38

4 Total 843,626.65 4 Total 559,458.99 284,167.66

(1) Status of first phase investment

According to the financial data supplied by the principal, as at 30 June 2017,85%, or RMB4,748 million, has been invested in the construction of the mine.Addition RMB850 million is yet invested, and another four months are stillneeded for the construction. The mine is expected to reach production inOctober 2017.

(2) Second phase investment

Referring to the Basis Materials for Technical Economic Parameters and theDevelopment and Utilization Plan for the Mining Rights of Hongqinghe Mine– at a Scale of 30 million tons/year Simulation Model, the total investment forthe second phase is RMB2,842 million, which will take two years forconstruction from January 2020 to December 2021. The mine will reachproduction of 30 million tons/year in 2022. The investment will be evenlypoured into the project during the construction period.

12.4.4 Residual value recovery and renovation and revamping fund of fixed assets

Referring to the Mining Rights Transfer and Evaluation Application Instruction(CMVS20200-2010) and Guiding Opinions on the Determination of AppraisalParameters of Mining Rights, the renovation fund of laneway engineering is notconsidered as fixed asset investment but is directly listed into the operation costs inthe form of renovation fees for maintenance and safety. Stripping engineering forrenovation is counted and withdrawn in compliance with financial systems, nodepreciation is calculated and no residual value is left. Follow the fixed-price-principle when considering fund investment for the renovation of buildings andequipment, namely equal initial investment will be poured in the buildings andequipment in the next date (the next year or the next month) when its depreciation iscounted and withdrawn.

- 49 -

Referring to the Guiding Opinions on the Determination of Appraisal Parameters ofMining Rights, estimate the net residual value of fixed assets by multiplying theoriginal value of the fixed asset by the net residual value rate. Combining theinvestment characteristics of the mine, residual value ratio of fixed assets is unifiedas 5%. The residual value shall be recovered at the ending year of the depreciationlife of every kind of fixed assets; the ending net value of fixed assets of the period istaken as the residual value of recovered fixed assets.

Referring to the Mining Right Evaluation Instruction (Modified in 2006-IncomeApproach Mining Right Evaluation Method and Parameters) and according toregulations set out in Enterprise Accounting System, depreciation years for buildingsand production equipment are 20-40 years and 8-15 years respectively. Combiningthe characteristics of the buildings, production equipment and the service life of themine, this evaluation determined that the calculation of depreciation for buildings isbased on depreciation life of 35 years, while 13 years for production equipment.

12.4.5 Recovery of equipment input VAT deduction

According to pertinent regulations about the nation’s implementation of reform inVAT transformation, this value consultation estimates from the beginning ofproduction period of the mine the balance product output VAT deducted by the inputVAT of materials and power of the period. The balance input VAT of equipment atthe end of the current period after deduction is carried forward to the next period fordeduction. Deducted input VAT of equipment in various production periods iscalculated in the currency flow of corresponding deduction period, recovering thededucted input VAT of equipment.

12.4.6 Working capital

Working capital is all occupied turnover capital needed for maintaining normalproduction operation. This value consultation report refers to the Mining RightEvaluation Instruction (Modified in 2006), adopting the expanded indices evaluationmethod to estimate working capital, the fund ratio of fixed assets of the mine is 15%~20% of the investment for fixed assets; The investment amount for fixed assets ofthe mine is RMB8,436 million. This value consultation report has determined thatthe fund ratio of fixed assets is 18%. The working capital for the first productionyear is one-time investment and will be recovered in full at the end of the period.

12.4.7 Operating cost

Total cost expenses refer to the total costs and expenses paid for production andsales of the products within a certain period of time (usually one year) for a project.The operating cost is the balance of the total cost expenses after deduction of the

- 50 -

depreciation cost, amortization expenses, expenses for maintenance of simplereproduction with depreciation nature, laneway engineering fund and the financecosts (or interest expenditure).

The total cost expenses and the operating cost in this value consultation aredetermined through comprehensive analysis Referring to the Basis Materials forTechnical Economic Parameters and with reference to the Guideline Opinions onEvaluation Parameters of Mining Right, other relevant policies and rules, technicaleconomic norms and the materials possessed by the value consultation personnel.The determination of production cost and the expenses happened during such periodand parameters chosen are as follows:

(1) Fee of raw materials purchased: Referring to the Basis Materials for TechnicalEconomic Parameters, the original and auxiliary material for coal dressingcomprise explosives, non-electric detonator, detonating cord, drill steel, etc.,with the price excluding tax at RMB23.80/ton. The value consultation adoptsthe price excluding tax, being RMB23.80/ton.

(2) Fuel and power expenses: Referring to the Basis Materials for TechnicalEconomic Parameters, fuel and power expenses for coal dressing include theconsumption of water and electricity, etc., with the price excluding tax atRMB8.24/ton. The value consultation adopts the price excluding tax, beingRMB8.24/ton.

(3) Salary and benefit expenses: Referring to the Basis Materials for TechnicalEconomic Parameters, the salary and benefit expenses is RMB8.24/ton. Thevalue consultation adopts the RMB8.24/ton.

(4) Repair costs: Referring to the Basis Materials for Technical EconomicParameters, the repair costs is RMB3.41/ton. The value consultation adopts theRMB3.41/ton.

(5) Expenses for maintenance of simple reproduction and laneway engineeringfund: According to the document (Cai Jian [2004] No. 119), the chargingstandard for expenses for maintenance of simple reproduction is RMB10.5/ton,of which depreciation-nature expenses for maintenance of simple reproductionis charged at RMB4/ton, updating-nature expenses for maintenance of simplereproduction is charged at RMB4/ton, and laneway engineering fund is chargedat RMB2.5/ton. The total balance of the expenses for maintenance of simplereproduction charged according to the specified standard in this valueevaluation after deduction of the expenses for maintenance of simplereproduction with the depreciation nature of the ore shall be listed into the

- 51 -

operating cost as updating expenses (the updating-nature expenses formaintenance of simple reproduction). The laneway engineering fund shalllisted into the total costs.

(6) Laneway engineering expenses: Referring to the Basis Materials for TechnicalEconomic Parameters, in this value consultation, the expenses for maintenanceof simple reproduction, security costs and laneway engineering funds arehandled as follows in a unified way:

1 Mining system (pit-mined laneway engineering or open-mined strippingengineering) fixed assets are not depreciated according to its service year,but to charge the expenses for maintenance of simple reproduction,security costs and laneway engineering fund according to the as-minedoutput provided by the Financial Departments to be directly listed intothe total costs (correspondingly, the depreciation only reflects thebuildings and equipment depreciation).

2 The updating capital needed for the mining system (fixed assetexpenditures and cost expenditures needed for maintenance of simplereproduction) shall not be considered in the fixed assets investment way,but shall directly listed into the operating cost in the expenses updatingway (the expenses for maintenance of simple reproduction with updatingnature, overall security costs, exclusive of the laneway engineering fund).As for the coal mine, 50% of the expenses for maintenance of simplereproduction (the updating-nature expenses for maintenance of simplereproduction) and the overall security costs (exclusive of the lanewayengineering fund) according to the provisions of the financialdepartments shall be taken as the updating expenses and be listed intothe operating cost. The laneway engineering fund in this valueconsultation shall be disbursed from the laneway fund at an expense ofRMB2.5/ton according to the provisions.

(7) Security costs: With reference to the Mining Rights Transfer and EvaluationApplication Instruction (CMVS20200–2010) and Guiding Opinions on theDetermination of Appraisal Parameters of Mining Rights, the security costsshall be charged according to the finance and tax system and the provisions ofrelevant departments and shall be listed into the operating cost in full.Referring to the Basis Materials for Technical Economic Parameters, thesecurity costs of a normal production unit is RMB15.00/ton. The valueconsultation adopts the security costs at RMB15.00/ton.

- 52 -

(8) Depreciation cost is charged according to the classified depreciation years andthe ratio of residual value of the fixed assets in the Evaluation Standards forMining Rights. The period of depreciation of the house structure is confirmedat 35 years and the depreciation life of the mechanical equipment is confirmedat 13 years and the ratio of residual value is unified as 5%.

(9) Amortization expenses: Referring to the Basis Materials for TechnicalEconomic Parameters and the Accounting Standards for BusinessEnterprises, the intangible assets-land is amortized at 10 years. Since theland use formalities for such mining rights project are still in handling process,and according to the financial information supplied by the principal, theintangible asses-land use rights cost is RMB623.8134 million. In this valueconsultation, such intangible asses-land use rights cost is amortized at itsservice life.

(10) Other expenses: Referring to the Basis Materials for Technical EconomicParameters, other expenses of this mine unit are RMB44.35/ton, mainlyincluding labor insurance fee, unemployment insurance premium, labor uniondues and employee education fund, work-related injury insurance premium,medical insurance, housing fund, environmental governance and recovery fee,compensation for soil and water loss, business entertainment, consultation fee,intermediary fee, sewage fee, office allowance, travelling expenses, heatingfee, technological development expense, firefighting charge, greening fee,drainage fee, etc. In this value consultation report, other expenses are valued atRMB21.71/ton.

(11) Selling expenses: valued at RMB5.72/ton by reference to the data level in theBasis Materials for Technical Economic Parameters.

(12) Interest expenses: refers to the working capital loan interest. The normalannual working capital interest expenditure shall be credited according to 70%with a period of 1 year according to the working capital calculated accordingto the capital ratio of the fixed assets. According to relevant provisions of themining rights evaluation, the bank loan interest at the time of issuance of thereport shall apply. The current 1-year period loan annual interest rate of thebank shall be 4.35%.

The operating cost is obtained through using the total cost expenses deducting thedepreciation cost, expenses for maintenance of simple reproduction with depreciationnature, the amortization expenses and finance costs, etc. The annual operating cost inthe value consultation is confirmed as:

- 53 -

The annual operating cost for normal production = Total cost expenses –depreciation – expenses for maintenance of simple reproduction with depreciationnature – amortization expenses – laneway engineering fund – finance costs

12.5 Sales tax and surcharges

The mining sales tax and surcharges include the urban maintenance and construction tax,educational expenses and surcharges, local educational expenses and surcharges and theresources tax. The urban maintenance and construction tax, educational expenses andsurcharges, and local educational expenses and surcharges shall be based on value-addedtax. According to the Interim Provisions on Urban Maintenance and Construction Tax ofthe People’s Republic of China, the sales tax and surcharges shall be calculated as followsaccording to the approval by the tax authorities.

12.5.1 Value-added tax

According to the Interim Provisions on Value-added Tax of the People’s Republic ofChina (issued by the Decree No. 134 of the State Council of the People’s Republicof China on 13 December 1993 and passed through revision by 34th ExecutiveMeeting of the State Council on 5 November 2008), the tax rate of the mineralproducts is 17%. The value consultation confirmed that the output tax rate of thevalue-added tax of Hongqinghe Mine of Inner Mongolia Yitai Guanglian CoalChemical Co., Ltd. was 17% and the input tax rate of the value-added tax ofmaterials purchased and power costs was 17%.

According to the Notice on Several Problems of Value-added Tax Reform Carriedout in the Whole Country (Cai Shui [2008] No. 170) issued by the StateAdministration of Taxation of the Ministry of Finance, the input value-added tax ofthe mechanical equipment in the newly-added fixed assets is deductible.

The value-added tax payable is concluded by using the output tax deducting theinput tax. The output tax is based on the sales revenue with the tax rate of 17%. Theinput tax is based on materials, fuels and power costs with the tax rate of 17%. Thetax in normal production years (exclusive of the deduction years of the input tax ofthe mechanical equipment) is calculated as follows:

The computational formula of the value-added tax is as follows:

Output tax of value-added tax=sales revenue exclusive of tax ×output tax rate ofvalue-added tax

Input tax of value-added tax=(materials + power costs)×input tax rate of value-addedtax

- 54 -

12.5.2 Urban maintenance and construction tax

The urban maintenance and construction tax of the mine shall be calculated as 5% ofthe value-added tax payable.

12.5.3 Educational expenses and surcharges, and local educational expenses andsurcharges

The educational expenses and extra charge shall be calculated as 3% of the value-added tax payable in accordance with the Interim Provisions for the Collection ofEducational Expenses and Surcharges (徵收教育費附加的暫行規定).

The local educational expenses and surcharges of the Inner Mongolia AutonomousRegion shall be calculated as 2% of the value added tax payable.

12.5.4 Resources tax

According to the Notice of the State Administration of Taxation of the Ministry ofFinance on the Implementation of Coal Resource Tax Reform (Cai Shui [2014] No.72), and the Notice on Price-based Charging of Coal Resources Tax in InnerMongolia Autonomous Region issued by the Department of Finance and LocalTaxation Bureau of Inner Mongolia Autonomous Region, the tax standard applicableto the resources tax of the mine shall be 9%.

12.6 Income tax

The tax rate of the income tax shall be 25%.

12.7 Discount rate

Discount rate with reference to the Evaluation Standard for the Mining Rights of China =risk-free return rate + risk premium rate

The estimation of discount rate considers the impact of risk-free return rate and riskpremium rate. Risk-free premium rate refers to the safe return rate. In this project, thecoupon rate of the 5-year saving treasury bonds (certificated) as at the evaluation basedate, being 4.17%, is taken as the risk-free return rate.

The risk premium rate is confirmed by adopting the risk-based aggregation method andconcluded through accumulation of each risk premium confirmed. The main risk faced bythe mineral exploitation industry includes: survey and development phase, industry riskand financial operating risk. Namely,

- 55 -

Risk premium risk=survey and development phase risk return rate + industry risk returnrate + financial operating risk return rate.

According to the reference value range and the value determination principles of theGuiding Opinions on the Determination of Appraisal Parameters of Mining Rights, thevaluing for all risks of this project is as follows:

No. Classification of risk premium rateValue range

(%)Consulted

value

1 Survey and development phase

（1） General survey 2.00-3.00

（2） Detailed survey 1.15-2.00

（3） Exploration and construction 0.35-1.15 0.85

（4） Production 0.15-0.65

2 Industry risk 1.00-2.00 1.60

3 Financial operating risk 1.00-1.50 1.38

Total 3.83

To sum up, the discount rate in this project is valued at 8%.

13. VALUE CONSULTATION CONCLUSIONS

13.1 Value consultation conclusions

Based on the Mineral Resource Reserve Materials and the Basis Materials for TechnicalEconomic Parameters supplied by the principal and combined with the actual conditions ofsuch mining rights, on the premise of the development model of Development andUtilization Plan for the Mining Rights of Hongqinghe Mine – at a Scale of 30 milliontons/year, and adopting scientific and reasonable value consultation procedures andmethods, the value consultants of this project proposed the value consultation conclusionsfor the mining rights of Hongqinghe Mine of Inner Mongolia Yitai Guanglian CoalChemical Co., Ltd. as follows: the consulted value of the mining rights of HongqingheMine (including coal resource reserve of 3.22 billion tons and exploitable reserve of 2.214billion tons) is RMB47.149 billion, and the price of exploitable reserve is RMB22.20/ton.

- 56 -

13.2 Analysis and explanation on the value consultation conclusions

(1) In this value consultation report, the consulted value of such mining rights isRMB47.149 billion, which represents the value of the entire 3.22 billion tons of coalresource reserve within the mining area of 140.759 km2 of such mining rights,excluding the value of the 1.044 billion tons of coal resource reserve within theextended mining area of 40.85km2.

(2) Upon completion of the area extension, the then value of such mining rights will bethe value of the entire reserve after the extension.

(3) As the area extension of such mining rights is still underway, as at the base date ofthis value consultation report, being 30 June 2017, the mining rights owner hasobtained the opinions from relevant administrative competent authorities onapproving the resource allocation, but has not obtained the final approvaldocument on the coal resource allocation. Pertinent coal resource price has notbeen deployed, therefore currently the mining rights owner has not obtained all thelegal rights of the extended area, including income right and disposition right.

14. DISCLOSURE AND INSTRUCTIONS TO RELATED ISSUES

14.1 Valid period of the value consultation conclusions

The consultation base date determined in this value consultation project is 30 June 2017and the valid period of the conclusions in the value consultation report is one year,commencing from 30 June 2017 to 29 June 2018. Extension of such period shall invalidatethe value consultation report and consultation conclusions.

14.2 Adjustment after the base date of value consultation

After the consultation base date of the value consultation report, upon occurrence of thefollowing material subsequent events affecting the conclusions in the value consultationreport, including the introduction of the national and local rules and regulations and theeconomic policies, change in interest rate and huge fluctuations in the market value of themineral products, etc., the conclusions in the value consultation report shall not be useddirectly, but used subject to readjustment to the value consultation report.

- 57 -

14.3 Distribution of other responsibilities

14.3.1 The value consultation report and its conclusions are only the professional analysisopinions of the value consultation agency and the consultants, which shall be usedfor reference by the principal and concerned aspects only, and shall not beresponsible for the pricing decision of such mining rights.

14.3.2 This value consultation conclusions reflect the scientific and reasonable valueanalysis conclusions made for the mining rights under special value consultationpurposes according to the open market principles and fail to consider the impact ofsuch force majeure events as the special transaction mode that may undertake arisingfrom mortgage of the mining rights, etc. and the price additionally paid, etc. on theprice of the mining rights. When the value consultation report and the valueconsultation conclusions are used in the above matters or the prerequisites andgoing-concern principles followed in the value consultation report change, the valueconsultation report and its conclusions invalidate.

14.3.3 This value consultation conclusions are to enlarge the capacity of the mining rightsof Hongqinghe Mine, being 15 million tons/year, to 30 million tons/year, from thewhole development of Inner Mongolia Yitai Guanglian Coal Chemical Co., Ltd. andthe development strategy for the mining rights of Hongqinghe Mine and under thepremise of observing national laws, regulations and pertinent policies, holding theprinciple of reasonable economic value of the company, and based on currentconditions of the mining rights of Hongqinghe Mine, taking all actual conditions intoconsideration and adopting more scientific and rational mining techniques andmethods. Moreover, the value analysis conclusions are further achieved for themining rights under the new model of Development and Utilization Plan for theMining Rights of Hongqinghe Mine – at a Scale of 30 million tons/year. TheDevelopment and Utilization Plan for the Mining Rights of Hongqinghe Mine – at aScale of 30 million tons/year model has been reviewed and approved by theprincipal, and also serves as the prerequisite for the value consultation report, whichis for the reference of the principal and concerned aspects only.

14.4 Range of application of the value consultation report

The value consultation conclusion for the mining rights of Hongqinghe Mine of InnerMongolia Yitai Guanglian Coal Chemical Co., Ltd. shall only be used by related partiesunder the value consultation prerequisites and purposes. The right of usage of the valueconsultation report shall be possessed by the principal. Without the approval of theprincipal, we will not arbitrarily provide or disclose to others.

- 58 -

14.5 Explanations on special matters

14.5.1 The value consultation report and the consultation conclusions are made under theindependent, objective and impartial principles. The value consultation agency andthe consultants joining this project have no interest relationship with the principaland the mining rights owner.

14.5.2 Relevant document materials (including such geological information of theownership certificate and the exploitation report, etc., the development andutilization plan and the review opinions, etc.) provided by the principal in thevalue consultation work is the basis for the preparation of this report. The providerof relevant document materials shall bear liability for the authenticity, legality andcompleteness of the relevant document materials.

14.5.3 As for the defective items which may affect the consultation conclusions and underthe circumstance that the principal and the mining rights owner fail to make anyspecial instructions and the value consultant has performed the value consultationprocedures, but still fails to know such issues, the value consultation agency and theconsultants shall not bear any related liabilities.

14.5.4 The consultation conclusions and the instruction to the affect items in this valueconsultation report

(1) The total exploitable reserve of the mining rights of Hongqinghe Mine is2,124.629 million tons (with a service life of 52.9 years), valuing the sum ofRMB17.149 billion, which is the value of the total exploitable reserve of suchmining rights.

(2) Instructions to the issues that may affect the consultation conclusions of thisvalue consultation report

Inner Mongolia Yitai Guanglian Coal Chemical Co., Ltd. has legally disposed theprice of exploration rights of Hongqinghe totaling the sum of RMB457.4978 millionand the exploitable reserve that has been disposed is 330.40 million tons. The priceof the remaining reserve has not been disposed.

We hereby require the principal and the report users to pay attention to the aboveissues and legally and reasonably use the value consultation report and itsconclusions. The value consultation agency and the value consultants shall notbear any liability thus incurred.

- 59 -

14.5.5 The value consultation report and the consultation conclusions shall not take themining rights owners’ full acquisition of the mineral resources of the coal mine forvalue as premise (the exploitable reserve of the mineral resources obtained by themining rights owner totaled 330.40 million tons and the price of the exploitablereserve of the remaining 1,793.869 million tons of mineral resources is still notdisposed), and shall only take the coal reserve of such mining rights available forexploitation as premise. The value consultation agency and the value consultantsrequire all the users of the value consultation report to pay attention that the price ofthe mining rights of Hongqinghe Mine is not still paid in full and we require allusers of the value consultation report and the value consultation conclusions tonotice and fully consider the impact of such factor on the value consultation reportand the consultation conclusions. The value consultation report and the valueconsultation conclusions shall only be used by all related parties for reference. Thevalue consultation agency and the value consultants shall not bear any liabilities forrelevant legal responsibilities incurred due to improper use. It is the responsibilitiesof the principal and related parties to correctly understand and reasonably use thevalue consultation report and value consultation conclusions.

14.5.6 The value consultation report conclusions are made by consultation and calculationof the current estimated resource reserves of the coal mine. Since the resources ofthe mine enterprise are not renewable, the mineral resources show the trend ofgradual decline with the enterprise’s exploitation and the mining right value of theenterprise also declines with the decline of the mineral resource reserve. As such,within the valid period of the value consultation report, since the existence of themine production, the actual value for sales of the remaining resource reserve of themine may be different from the consulted value concluded and calculated on thebase date of the value consultation. We hereby require the value consultation reportusers to pay attention to the specialty of the mining rights of the mine and thetimeliness of the value consultation report.

14.5.7 The value consultation report includes several attachments which constitute anintegral part of the value consultation report.

14.5.8 The value consultation report shall take effect upon being signed by the legalrepresentative of the value consultation agency and the value consultants and beingaffixed with the official seal of the value consultation agency.

14.5.9 The value consultation report shall be the property of the principal.

14.5.10 Except otherwise provided by the provisions of laws and regulations and otherwiseagreed by relevant parties, without the consent of the value consultation agency andthe value consultants of the project, the contents of the value consultation report inwhole or in part shall not be provided to any other company and individuals andshall not be extracted, quoted or disclosed to public media.

- 60 -

14.6 Value consultation assumptions and prerequisites

The consulted value stated herein refers to the scientific and reasonable value opinionsmade on the basis of the value consultation purposes, value consultation base date statedherein and the following basic assumptions:

14.6.1 Such mining rights are under the premise of the resource reserve, production mode,production scale, product structure and development technology level and marketsupply and demand level designated in the Development and Utilization Plan for theMining Rights of Hongqinghe Mine – at a Scale of 30 million tons/year, and thedefined mining area can be transferred into mining rights as expected, and theproduction scale can extend to 30 million tons/year from 15 million tons/year withinthe specified period. Under the premise of the above assumptions, the legal entity ofthe mining rights owner operates on an ongoing concern, and the mining rights keepexplored till the close of the pit.

14.6.2 The relevant policies, laws and systems followed have no major change but remaincurrent status and the related social, political and economic environment and thedevelopment technology and conditions, etc. followed have no major change butremain current status.

14.6.3 Such factors related to product price, cost expenses, tax rate and interest rate, etc.within the mining development earnings period change within the normal scope.

14.6.4 No other significant impact is caused due to force majeure events and unforeseeablefactors.

15. SCHEDULES AND ANNEXES

This appraisal report contains a total of eight schedules and fourteen annexes. See contents ofschedules and contents of annexes for details.

16. SUBMISSION DATE OF VALUE CONSULTATION REPORT

18 August 2017

17. VALUE CONSULTANTS

Project leader: Wang Bin

- 61 -

Value consultants: Wang Bin (Mining rights appraiser)

Liu Jianhua (Mining rights appraiser)

Shi Jinping (Mining rights appraisal and advisory expert)

18. SEAL AND STAMP BY VALUE CONSULTATION AGENCY

Beijing Zhongxin Zhonghe Mining Valuation Advisory Limited18 August 2017

- 62 -

Contents of Schedules

Schedule I Computation Table for Mining Rights Value Consultation;

Schedule II Reserve Calculation Table for Mining Rights Value Consultation;

Schedule III Sales Revenue Estimation Table for Mining Rights Value Consultation;

Schedule IV Operating Cost Estimation Table for Mining Rights Value Consultation;

Schedule V Unit Cost Estimation Table for Mining Rights Value Consultation;

Schedule VI Income Tax Computation Table for Mining Rights Value Consultation;

Schedule VIIFixed Assets Depreciation Computation Table for Mining Rights Value

Consultation;

Schedule VIIIFixed Asset Investment Estimation Table for Mining Rights Value

Consultation.

- 63 -

Contents of Annexes

Annex I Statement on application scope of the schedules and annex to the ValueConsultation Report on the Mining Rights of Hongqinghe Mine of InnerMongolia Yitai Guanlian Coal Chemical Co., Ltd.;

Annex II Business License of Beijing Zhongxin Zhonghe Mining Valuation AdvisoryLimited;

Annex III Exploration Rights and Mining Rights Appraisal Qualification Certificate ofBeijing Zhongxin Zhonghe Mining Valuation Advisory Limited;

Annex IV Registered Mining Rights Appraiser Qualification Certificate;

Annex V Letter of Attorney for Mining Rights Value Consultation, business license ofInner Mongolia Yitai Coal Co., Ltd. and business license of Inner Mongolia YitaiGuanlian Coal Chemical Co., Ltd.;

Annex VI Hongqinghe Mine of Inner Mongolia Yitai Guanlian Coal Chemical Co., Ltd.obtained the official reply for designating of mine area by Ministry of Land andResources of the People’s Republic of China (Guo Tu Zi Kuang Hua Zi [2008]No. 061) in 2008 and the letter of approval for extending the reservation periodfor designated mine area of Hongqinghe Mine of Inner Mongolia Yitai GuanlianCoal Chemical Co., Ltd. (Guo Tu Zi Kuang Hua Zi [2013] No. 054) in 2013;

Annex VII “File record and certification of mineral reserves appraisal of Report onDongsheng Coal Field, Inner Mongolia Autonomous Region” (Guo Tu Zi ChuChu Zi [2007] No. 324) and appraisal opinions issued by the Ministry of Landand Resources of the People’s Republic of China;

Annex VIII Coal Exploration Report on Naimadai Well Field, Hongqinghe Area, DongshengCoal Field, Inner Mongolia Autonomous Region prepared by Inner MongoliaCoal Construction Engineering (Group) General Corporation in October 2007(excerpt);

Annex IX Development and Utilization Plan for Mineral Resources in Hongqinghe Mine ofInner Mongolia Yitai Guanglian Coal Chemical Co., Ltd. prepared by China CoalTechnology & Engineering Group Nanjing Design & Research Institute inOctober 2012 (excerpt);

Annex X Letter on Submission of Experts’ Appraisal Opinions Regarding the Developmentand Utilization Plan for Mineral Resources in Hongqinghe Mine of InnerMongolia Yitai Guanglian Coal Chemical Co., Ltd. (Zhong Mei Xie Hui Zi XunHan [2013] No. 23) issued by China National Coal Association;

- 64 -

Annex XI Reply of Approval for General Plan for Xinjie Mine Area, Erdos, Inner MongoliaAutonomous Region (Fa Gai Neng Yuan [2010] No. 1911) issued by the NationalDevelopment and Reform Commission;

Annex XII Reply of Approval for Carrying out Preliminary Work in Hongqinghe (mineproject at the scale of 15 million tons/year), Xinjie Mine Area, Inner Mongolia(Neng Mei Han [2010] No. 54) issued by National Energy Administration;

Annex XIII Explanation on Preliminary Design of Hongqinghe Mine of Inner Mongolia YitaiGuanglian Coal Chemical Co., Ltd. (Revised) – at a Scale of 30 million t/a (a netincrease of 15 million t/a) prepared by China Coal Technology & EngineeringGroup Nanjing Design & Research Institute in February 2014 (excerpt);

Annex XIV Information on the payment of price of coal exploration rights of Naimadai WellField, Hongqinghe Area by Inner Mongolia Yitai Guanlian Coal Chemical Co.,Ltd. and other relevant information collected by the consultants, etc.

- 65 -

Annex I

The Value Consultation Reporton the Mining Rights of Hongqinghe Mine of

Inner Mongolia Yitai Guanglian Coal Chemical Co., Ltd.

Statement on Application Scope of Schedules and Annexes

This value consultation report on the mining rights contains the schedules and annexes. Theseschedules and annexes shall be used only by the principal. Without the company’s approval inwriting, the whole or any part of these schedules and annexes shall not be provided to any otherorganizations or individuals or be disclosed to any public media.

(page below is intentionally left blank)

Beijing Zhongxin Zhonghe Mining Valuation Advisory Limited18 August 2017

- 66 -

the value consultation report on the mining rights of ... · 4. the product scheme is washed fine...

Documents