Inner Mongolia Yitai Coal : CONNECTED TRANSACTION IN RELATION TO ACQUISITION OF PROPERTIES OF YITAI PROPERTY

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CONNECTED TRANSACTION

IN RELATION TO ACQUISITION OF PROPERTIES OF YITAI PROPERTY

The Board is pleased to announce that the Company and Yitai Property entered into the Sale and Purchase Agreement on 12 December 2019. Pursuant to the Sale and Purchase Agreement, Yitai Property agreed to dispose of, and the Company agreed to acquire the Properties of Yitai Real Estate at a consideration of RMB229.1549 million.

SALE AND PURCHASE AGREEMENT

The major terms of the Sale and Purchase Agreement are as follows:

Date	12 December 2019
Parties	(i) the Company (as the buyer); and
	(ii) Yitai Property (as the seller)
Target	The target of the Acquisition is two properties of Yitai Property.
	One of the properties is located at Building No. A-1, Yitai Huafu
	Shijia, Ruyihe Avenue, Xincheng District, Hohhot, with a total
	gross floor area of 4,485.24 square meters (the "Hohhot
	Property"); the other property is located at Nos. 11, 12 and 13,
	Building No. 1, Yitai Wanbo Plaza, 14 Yimei South Road,
	Dongsheng District, Ordos, with a total gross floor area of
	14,131.88 square meters (the "Ordos Property").

• For identification purposes only

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	Both the original construction cost (in original book value) and the
	book value of the Hohhot Property incurred by Yitai Property were
	RMB79,300,353.00. For the two financial years ended 31
	December 2018, the Hohhot Property had not been put to use.
	The original construction cost (in original book value) and the book
	value of the Ordos Property incurred by Yitai Property were
	RMB67,630,072.74 and RMB39,253,621.00 respectively. For the
	two financial years ended 31 December 2018, a property with an
	area of 4,873.88 square meters of the Ordos Property was leased to
	Inner Mongolia Yiheng Clean Energy Co., Ltd. by Yitai Property.
	The lease term started on 1 July 2018 and will end on 31 October
	2023 at an annual rent of RMB60,000, subject to a condition of a
	5% increment of rent per annum.
Consideration and Payment	According to the Sale and Purchase Agreement, the total
	consideration of the Acquisition is RMB229.1549 million,
	including the consideration of RMB127.8293 million to acquire
	the Hohhot Property, and the consideration of RMB101.3256
	million to acquire the Ordos Property. The Company shall pay the
	above total consideration in one lump sum to Yitai Property before
	30 December 2019. The consideration of the Acquisition is
	provided by the internal cash resources of the Company.
Delivery	Yitai Property shall deliver the Properties to the Company before
	30 December 2019.

BASIS OF DETERMINATION OF CONSIDERATION

The consideration of the Acquisition was determined after arm's length negotiation between the Company and Yitai Property in accordance with the fair market value of the properties located in the same lot and of the same size and layout as the Properties. According to the valuation report dated 10 December 2019 prepared by the Independent Valuer, as at 31 October 2019 (the valuation benchmark date), the appraised value of the Hohhot Property is RMB127.9850 million, and the appraised value of the Ordos Property is RMB101.3621 million. The total appraised value of the Properties is RMB229.3471 million.

REASONS FOR AND BENEFITS OF THE ACQUISITION

The Company acquired the Properties for office use. Among them, the Hohhot Property will be used by the Hohhot Office of Coal Transportation and Marketing Department of the Company for office use. Such property is conveniently located at an excellent location, saving travelling costs and time and indirectly improving work efficiency. Meanwhile, the layout of such property is reasonably designed for best meeting the needs for office use, and the Company has complete ancillary facilities

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in the vicinity to meet the needs of the Company in conducting social activities and business negotiations and cooperation. The Ordos Property will be used by some of the subsidiaries of the Company for office use. Such property is adjacent to the headquarters of the Company, and can substantially minimize time costs and enhance work efficiency.

In addition, Yitai Property, the developer of the Properties, has cooperated with the Company for many years. Hence, the post-sale services can be more assured compared with other developers to the Company.

IMPLICATIONS OF THE LISTING RULES

As at the date of this announcement, Mr. Zhang Donghai, a former executive Director of the Company, held 47.80% equity interests of Yitai Investment, and Yitai Property is a wholly-owned subsidiary of Yitai Investment. Therefore, Yitai Property constitutes a connected person of the Company. As such, the Sale and Purchase Agreement entered into between the Company and Yitai Property and the Acquisition contemplated thereunder constitute a connected transaction of the Company under Chapter 14A of the Listing Rules.

As the highest applicable percentage ratio in respect of the Acquisition contemplated under the Sale and Purchase Agreement calculated under the Listing Rules exceeds 0.1% but is less than 5%, the connected transaction shall be subject to the reporting, annual review and announcement requirements but exempt from the independent shareholders' approval requirement under Chapter 14A of the Listing Rules.

CONFIRMATION FROM THE DIRECTORS

The Directors (including the independent non-executive Directors) have considered and approved the proposal in respect of the Acquisition. They are of the view that: (i) the Acquisition is on normal commercial terms or better terms and in the ordinary and usual course of business of the Group; (ii) the terms and conditions of the Acquisition are fair and reasonable; and (iii) the Acquisition is in the interests of the Company and the Shareholders as a whole.

The Directors including Mr. Liu Chunlin, Mr. Ge Yaoyong, Mr. Zhang Dongsheng, Mr. Liu Jian and Mr. Lv Guiliang were deemed to have material interests in this transaction, and they have abstained from voting on the resolution regarding this transaction accordingly. Save for the above persons, none of the other Directors has interests in such transactions.

GENERAL INFORMATION

Information on the Company

The Company is a joint stock limited company incorporated in the PRC on 23 September 1997, which is one of the largest coal enterprises in the PRC. The principal businesses of the Company include coal operations, transportation operations, coal related chemical operations and other operations.

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Information on Yitai Property

Yitai Property is a limited liability company incorporated in the PRC on 9 May 2006, and its principal businesses include real estate development as well as property sales and leasing. Yitai Property is a wholly-owned subsidiary of Yitai Investment, and Mr. Zhang Donghai, a former executive Director of the Company, who holds 47.80% equity interests in Yitai Investment, is its controlling shareholder.

DEFINITIONS

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

"Acquisition"	pursuant to the Sale and Purchase Agreement, Yitai Property agreed
	to dispose of and the Company agreed to acquire the Properties of
	Yitai Property at a total consideration of RMB229.1549 million
"Board"	the board of directors of the Company
"Company"	Inner Mongolia Yitai Coal Co., Ltd.* (內蒙古伊泰煤炭股份有限公
	司), a joint stock limited company incorporated in the PRC on 23
	September 1997, the H shares of which are listed and dealt in on
	the Main Board of the Stock Exchange under stock code 3948, and
	the B shares of which are listed on the Shanghai Stock Exchange
	under stock code 900948
"connected person(s)"	has the meaning ascribed to it under the Listing Rules
"connected transaction"	has the meaning ascribed to it under the Listing Rules
"controlling shareholder"	has the meaning ascribed to it under the Listing Rules
"Director(s)"	the director(s) of the Company
"Group"	the Company and its subsidiaries
"Independent Valuer"	Shanghai Orient Asset Appraisal Co., Ltd.（上海東洲資產評估有
	限公司）
"Listing Rules"	the Rules Governing the Listing of Securities on The Stock
	Exchange of Hong Kong Limited

• For identification purposes only

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"Properties"	two properties of Yitai Property. One of the properties is located at
	Building No. A-1, Yitai Huafu Shijia, Ruyihe Avenue, Xincheng
	District, Hohhot, with a total gross floor area of 4,485.24 square
	meters; the other property is located at Nos. 11, 12 and 13,
	Building No. 1,Yitai Wanbo Plaza, 14 Yimei South Road,
	Dongsheng District, Ordo, with a total gross floor area of
	14,131.88 square meters
"PRC"	the People's Republic of China, excluding, for the purposes of this
	announcement only, the Hong Kong Special Administrative Region,
	the Macau Special Administrative Region and Taiwan
"RMB"	Renminbi, the lawful currency of the PRC
"Sale and Purchase	two sets of property sale and purchase agreement entered into
Agreement"	between the Company and Yitai Property on 12 December 2019
	respectively, under which Yitai Property agreed to sell and the
	Company agreed to acquire the Properties of Yitai Property
"Shareholder(s)"	the shareholder(s) of the Company
"Stock Exchange"	The Stock Exchange of Hong Kong Limited
"Yitai Investment"	Ordos Yitai Investment Holdings Company Limited（鄂爾多斯市
	伊泰投資控股有限責任公司）, a limited liability company
	incorporated in the PRC on 6 May 2010
"Yitai Property"	Inner Mongolia Yitai Property Group Co., Ltd.（內蒙古伊泰置業
	集團有限責任公司）, a limited liability company incorporated in
	the PRC on 9 May 2006
"%"	percent
	By order of the Board
	Inner Mongolia Yitai Coal Co., Ltd.
	Liu Jian
	Executive Director

Inner Mongolia, the PRC, 12 December 2019

As at the date of this announcement, the executive directors of the Company are Mr. Liu Chunlin, Mr. Ge Yaoyong, Mr. Zhang Dongsheng, Mr. Liu Jian and Mr. Lv Guiliang; and the independent non- executive directors of the Company are Ms. Du Yingfen, Mr. Zhang Zhiming, Mr. Huang Sujian and Mr. Wong Hin Wing.

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