江西銅業股份有限公司 jiangxi copper company limited · a letter from the board is set out...

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult yourlicensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Jiangxi Copper Company Limited, you should at once handthis circular and the accompanying forms of proxy and reply slips to the purchaser or the transferee or to the bankor stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaseror transferee.

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, makes norepresentations as to its accuracy or completeness and expressly disclaims any liability whatsoever for any losshowsoever arising from or in reliance upon the whole or any part of the contents of this circular.

江西銅業股份有限公司JIANGXI COPPER COMPANY LIMITED

(a Sino-foreign joint venture joint stock limited company incorporated in the People’s Republic of China)

(Stock Code: 0358)

PROPOSED ISSUE OF NEW A SHARES

AND

DISCLOSEABLE AND CONNECTED TRANSACTION

Independent financial adviser to the independent board committee ofJiangxi Copper Company Limited

Goldbond Capital (Asia) Limited

A letter from the Board is set out on pages 1 to 18 of this circular. A letter from the Independent BoardCommittee is set out on page 19 of this circular.

A letter from Goldbond Capital (Asia) Limited, the independent financial adviser, containing its advice to the IndependentBoard Committee and the Independent Shareholders is set out on pages 20 to 35 of this circular.

Notices convening the extraordinary general meeting and the class meetings of the Company to be held at theConference Room of the Company, 15 Yejin Avenue, Guixi City, Jiangxi, the People’s Republic of China onThursday, 17 May 2007 is set out on pages 132 to 144 of this circular.

If you intend to attend the extraordinary general meeting and the class meetings of the Company, please completeand return the accompanying reply slips in accordance with the instructions printed thereon as soon as possibleand in any event by not later than 27 April 2007.

Whether or not you are able to attend the meetings, you are requested to complete and return the enclosed formsof proxy in accordance with the instructions printed thereon as soon as possible and in any event not less than24 hours before the time appointed for holding of the meeting or any adjournment thereof. Completion and returnof the forms of proxy will not preclude you from attending and voting in person at the meetings or any adjournmentthereof should you so wish.

2 April 2007

TABLE OF CONTENTS

— i —

Pages

Definitions ..................................................................................................................................................... iii

Letter from the Board .................................................................................................................................. 1

I. Introduction ............................................................................................................................. 1

II. Proposed Issue of New A Shares ......................................................................................... 2

III. The Acquisition Agreement .................................................................................................. 8

IV. Reason for and benefits of the Acquisition Agreement .................................................... 10

V. Information on the Targets .................................................................................................... 11

VI. Information on the Group ..................................................................................................... 15

VII. General .................................................................................................................................... 16

VIII. The Independent Board Committee ..................................................................................... 16

IX. The EGM and the Class Meetings ....................................................................................... 16

X. Poll Procedure ........................................................................................................................ 17

XI. Recommendation .................................................................................................................... 18

XII. Further information ................................................................................................................ 18

Letter from the Independent Board Committee ........................................................................................ 19

TABLE OF CONTENTS

— ii —

Pages

Letter from Goldbond Capital ..................................................................................................................... 20

Appendix I – Valuation Report on properties ........................................................................................... 36

Appendix II – Valuation Report on Plant and

Machinery of Chengmenshan Copper Mine .......................................................................................... 46

Appendix III – Valuation Report on Plant and

Machinery of Xiangsi Railway ............................................................................................................... 52

Appendix IV – Valuation Report on Plant and

Machinery of Copper Alloy Company ................................................................................................... 58

Appendix V – Valuation Report on Plant and

Machinery of Copper Product Company ............................................................................................... 64

Appendix VI – Valuation Report on Plant and

Machinery of JCC Dexing Transportation Company ........................................................................... 70

Appendix VII – Valuation Report on Plant and

Machinery of JCC Chemical Company .................................................................................................. 76

Appendix VIII – Valuation Report on the Mining Right

of Chengmenshan Copper Mine .............................................................................................................. 82

Appendix IX– General information ............................................................................................................ 125

Notice of Extraordinary General Meeting ................................................................................................. 132

Notice of A Share Class Meeting ............................................................................................................... 138

Notice of H Share Class Meeting ............................................................................................................... 141

DEFINITIONS

— iii —

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

“A Shares” Renminbi-denominated domestic shares in the ordinary share capital

of the Company, with a nominal value of RMB1.00 each, which are

listed on the Shanghai Stock Exchange

“A Share Issue” the issue of Consideration Shares by the Company to JCC and the

issue of Placing Shares to other institutional investors

“Acquisition” the acquisition of the Targets as contemplated under the Acquisition

Agreement

“Acquisition Agreement” the conditional sale and purchase agreement dated 16 March 2007

entered into between the Company and JCC in respect of the

Acquisition

“Announcement” the announcement of the Company dated 19 March 2007 in respect

of the A Share Issue and the Acquisition Agreement

“Appraisal Date” 30 June 2006, the date on which the appraised values of the relevant

net asset values of the Targets were determined

“Articles of Association” the articles of association of the Company

“associate(s)” has the meaning ascribed to it under the Listing Rules

“Beijing Jingwei” 北京經緯資產評估有限責任公司 (for identification purposes, in

English, Beijing Jingwei Assets Appraisal Co., Ltd.)

“Beijing Zhongzheng” 北京中証評估有限責任公司 (for identification purposes, in English,

Beijing Zhongzheng Appraisal Co., Ltd,), a PRC independent qualified

valuer

“Blister Copper” copper which has been cast after passing through a converter. Blister

copper is approximately 98.5% copper and take its name from

“blisters” that form on the surface

“Board” the board of Directors

“Class Meetings” the class meetings for holders of (i) A Shares (including the holders

of A Shares and A Shares with trading moratorium) and (ii) H Shares

respectively

DEFINITIONS

— iv —

“Chengmenshan Copper Mine” Chengmenshan Mine of Jiangxi Copper Company (城門山銅礦),

wholly owned by JCC

“Company” Jiangxi Copper Company Limited, a Sino-foreign joint venture joint

stock limited company incorporated in the PRC

“Completion Date” the date on which the sale and purchase of the Targets in accordance

with the Acquisition Agreement is completed

“connected person(s)” has the meaning ascribed to it under the Listing Rules

“Consideration Share(s)” not less than 44.63% of the total number of A Shares to be issued

under the A Share Issue as the consideration for the Acquisition

payable by the Company under the Acquisition Agreement

“Copper Alloy Company” Jiangxi Copper Alloy Company Limited (江西銅業合金材料有限

公司), a company established in the PRC and the registered capital

of which is owned as to 60% and 40% by the Company and JCC

respectively

“Copper Cathode” copper sheet which is 99.9% and above pure produced by either an

electrolytic refining process or by electrowinning

“Copper Concentrate” a product of the concentrator usually containing 20% to 30% copper.

It is a raw material for smelting

“Copper Product Company” Jiangxi Copper Products Company Limited (江西銅業銅材有限公

司), a company established in the PRC and the registered capital of

which is owned as to 60% and 40% by the Company and JCC

respectively

“CSRC” China Securities and Regulatory Commission

“Directors” director(s) of the Company

“EGM” an extraordinary general meeting of the Company to be convened to

consider, if thought fit, to approve the A Share Issue and the

Acquisition Agreement

“Goldbond Capital” Goldbond Capital (Asia) Limited, an independent financial adviser

to the Independent Board Committee and the Independent

Shareholders

DEFINITIONS

— v —

“Grant Sherman” Grant Sherman Appraisal Limited

“Group” the Company and its subsidiaries

“H Shares” overseas listed foreign invested shares of RMB1.00 each in the

capital of the Company, which are subscribed for and traded in HK$

and which are listed on the Stock Exchange and London Stock

Exchange Limited

“Independent Board Committee” an independent committee of the Board established for the purpose

of reviewing the transactions contemplated under the Acquisition

Agreement

“Independent Shareholders” the Shareholders other than JCC and its associates

“Independent Third Party(ies)” party(ies) who is/are independent of the Company and connected

persons of the Company

“JCC” Jiangxi Copper Corporation, a substantial shareholder of he Company,

holding approximately 42.31% of the total issued share capital of the

Company

“JCC Chemical Company” Jiangxi Copper Group Chemical Company Limited （江西銅業集團

化工有限公司）, a company established in the PRC and the registered

capital of which is owned as to 100% by JCC

“JCC Dexing Transportation Jiangxi Copper Group (Dexing) Transportation Company Limited,

Company” （江西銅業集團（德興）運輸有限公司）, a company established in

the PRC and the registered capital of which is owned as to 100% by

JCC

“JCC Group” JCC and its subsidiaries (other than the Group)

“Latest Practicable Date” 29 March 2007, being the latest practicable date prior to the printing

of this circular for ascertaining certain information referred to in this

circular

“Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange

“Long Stop Date” being the date falling one day before the six month period following

the A Share Issue having been approved by the CSRC

DEFINITIONS

— vi —

“Percentage Ratios” the percentage ratios under Rule 14.07 of the Listing Rules, other

than the equity capital ratio and profits ratio

“Placing” the proposed placing of new A Shares to institutional investors

“Placing Shares” the new A Shares to be issued and placed to investors under the

Placing

“PRC” the People’s Republic of China

“Scrap Copper” the waste produced in the copper industry and/or industrial waste

abandoned after being used with copper content

“Shanghai Listing Rules” the rules governing the listing of securities on the Shanghai Stock

Exchange

“Shareholder(s)” the holder(s) of the shares of the Company

“Share Reform Plan” the share reform plan pursuant to which the non-tradable A Shares

were converted into tradable A Shares with reference made to the

announcements of the Company dated 24 February 2006, 3 March

2006, 14 March 2006, 28 March 2006, 3 April 2006, 12 April 2006

and 13 April 2006

“Stock Exchange” The Stock Exchange of Hong Kong Limited

“Targets” the mining rights and the related operating assets and liabilities of

the Chengmenshan Copper Mine, operating assets and related

liabilities of the Xiangsi Railway, 40% equity interest of the Copper

Alloy Company, 40% equity interest of Copper Product Company,

100% equity interest of JCC Chemical Company and 100% equity

interest of the JCC Dexing Transportation Company

“Xiangsi Railway” the Xiangsi Railway especial line (香泗鐵路專用線) located in

Dexing, Jiangxi Province, running from Xiangtuan to Sizhou, owned

by JCC

“HK$ Hong Kong dollars, the lawful currency of Hong Kong

“RMB” Renminbi, the lawful currency of the PRC

Translation of Renminbi into Hong Kong dollars is based on the exchange rate of HK$1.00 = RMB1.00.

LETTER FROM THE BOARD

— 1 —



(Stock Code: 0358)

Board of Directors Legal address:

Executive Directors: 15 Yejin Avenue

Mr. Li Yihuang (Chairman) Guixi City

Ms. Qi Huaiying Jiangxi

Mr. He Changming People’s Republic of China

Mr. Wu Jinxing

Mr. Wang Chiwei Place of business in Hong Kong:

Mr. Gao Jianmin

Mr. Liang Qing Suite 4901, 49th Floor

Office Tower

Independent non-executive Directors: Convention Plaza

Mr. Kang Yi 1 Harbour Road

Mr. Tu Shutian Wanchai

Ms. Zhang Rui Hong Kong

Mr. Yin Hongshan

2 April 2007

To the Shareholders

Dear Sir or Madam,

PROPOSED ISSUE OF NEW A SHARES

AND


I. INTRODUCTION

On 19 March, 2007, the Board announced that the Company intends to apply to the CSRC and other

relevant PRC authorities for the approval of the issue of not more than 290,000,000 A Shares (including

the Consideration Shares and the Placing Shares) in the PRC and the listing of such A Shares on the

Shanghai Stock Exchange. The proposed A Share Issue will be conditional on, amongst other things,

(i) the approval of the Independent Shareholders by way of special resolution at the EGM and the Class

Meetings in accordance with the Articles of Association and the relevant requirements of the Listing

Rules; and (ii) the approvals for the issue of the A Shares from the relevant governmental authorities,

including but not limited to CSRC.


— 2 —

The Board also announced that on 16 March 2007, the Company entered into the Acquisition Agreement

with JCC, pursuant to which, the Company agreed to acquire the Targets from JCC for an aggregate

consideration of RMB1,785.3 million (subject to adjustment) which will be satisfied by the issue of

the Consideration Shares.

JCC is a substantial shareholder holding approximately 42.31% of the total issued share capital of the

Company, and therefore JCC is a connected person of the Company under the Listing Rules. The

entering into of the Acquisition Agreement constituted a discloseable and connected transaction of the

Company and is therefore subject to the requirements under Chapter 14 and 14A of the Listing Rules.

As the Percentage Ratios in connection with the Acquisition Agreement exceeded 2.5%, the Acquisition

Agreement is subject to the reporting, announcement and Independent Shareholders’ approval requirement

pursuant to Chapter 14A of the Listing Rules.

II. PROPOSED ISSUE OF NEW A SHARES

The Board announced that the Company intends to apply to the CSRC and other relevant PRC

authorities for the approval of the issue of not more than 290,000,000 A Shares, representing

approximately 19.23% of the total A Shares in issue, approximately 10.02% of the existing issued share

capital of the Company and approximately 9.11% of the issued share capital of the Company as

enlarged by the A Share Issue, in the PRC and the listing of such A Shares on the Shanghai Stock

Exchange. The A Shares shall comprise the Consideration Shares to be issued to JCC in consideration

of the Acquisition and the issue and Placing Shares to not more than nine institutional investors who

and their respective ultimate beneficial owners shall be Independent Third Parties under the Placing

in the PRC. As at the Latest Practicable Date, the Company conducted negotiations with various

potential investors, however, no agreement has been made between the Company and such potential

investors in respect of the Placing. Following completion of the A Share Issue, it is expected that there

will not be any new substantial shareholder (as defined under the Listing Rules) introduced as a result

of subscription of the Placing Shares. The proposed A Share Issue will be conditional on, amongst

other things, (i) the approval of the Independent Shareholders by way of special resolution at the EGM

and the Class Meetings in accordance with the Articles of Association and the relevant requirements

of the Listing Rules; and (ii) the approvals for the issue of the A Shares from the relevant governmental

authorities, including but not limited to CSRC. The Company intends to issue the Placing Shares and

the Consideration Shares on the same day. The approvals from Independent Shareholders on the A

Share Issue will be valid for one year after the date of the EGM and the Class Meetings, if the A Share

Issue cannot be completed within the prescribed period, the approval from Independent Shareholders

will lapse.

The Directors expect the number of the Consideration Shares to be issued to JCC will not be less than

44.63% of the total number of A Shares to be issued under the A Share Issue, and such Consideration

Shares to be issued to JCC will be utilised to satisfy the consideration of the Acquisition Agreement.

JCC will undertake not to transfer the Consideration Shares within 36 months from the completion

date of the Placing. In addition, the Company will require the placees not to dispose of the Placing

Shares for a period of 12 months from the date of completion of the Placing.


— 3 —

Assuming that (a) there is no further issue of Shares from the date hereof up to the date of completion

of the A Share Issue and (b) there are 290,000,000 A Shares issued under the A Share Issue, and (c)

129,427,000 Consideration Shares, being approximately 44.63% of the total number of A Shares are

issued to JCC as consideration, the shareholding structure of the Company before and after completion

of the A Share Issue will be as follows :-

Before completion of the A Share Issue After completion of the A Share Issue

Approximate Approximate

percentage of percentage of

Class of Shares / Number of issued share Class of Shares/ Number of issued share

Shareholders shares capital Shareholders shares capital

1 Total number of A Shares 1,507,556,200 52.07% 1. Total number of A Shares 1,797,556,200 56.44%

JCC 1,225,035,414 42.31% JCC 1,354,462,414 42.53%

Holders of A Shares with Holders of A Shares with

trading moratorium 1,920,786 0.07% trading moratorium 1,920,786 0.06%

Holders of A Shares 280,600,000 9.69% Holder of A Shares 441,173,000 13.85%

2 Total number of H Shares 1,387,482,000 47.93% 2. Total number of H Shares 1,387,482,000 43.56%

3. Total number of shares 2,895,038,200 100% 3. Total number of shares 3,185,038,200 100%

Following completion of the A Share Issue, there will not be a change of control of the Company.

Public float requirements under the Listing Rules will be maintained before and after completion of

the A Share Issue.

Resolutions to authorise the Board in determining, inter alia, the issue price, the actual number of A

Shares to be issued will be considered at the EGM and the Class Meetings. It is intended that the issue

price of the A Shares will not be less than 90% of the average trading price of the A Shares on the

Shanghai Stock Exchange for 20 trading days immediately before the date of the Announcement, i.e.

from 30 January 2007 to 5 March 2007, for reference purpose, 90% of average closing price of the

A Share during such period is approximatley RMB13.78 per A Share. In addition, the issue price will

be determined with reference to the following factors : (i) the issue price will not be lower than the

net asset value per Share as reported in the latest audited accounts of the Company, for reference

purpose, the audit net asset value per Share as at 31 December 2005 was RMB2.88 which is calculated

based on the existing 2,895,038,200 shares in issue; (ii) the funding requirements and arrangements

of the proposed projects of the Company; (iii) the trading price of A Shares in the secondary market,

price-to-earning ratio and the growth trend; and (iv) the result of negotiations with other relevant

parties. Therefore, the total amount of the proceeds of the A Share Issue is not able to be determined

at the moment, however, it is estimated that the proceeds from the A Share Issue will amount to

approximately RMB4,000,000,000 (including the value for issue of the Consideration Shares) and the

cash proceeds from the Placing is intended to be used to finance:


— 4 —

(i) the expansion of phase II of Chengmenshan Copper Mine;

(ii) the renovation of technology for mining method of Yongping Copper Mine;

(iii) the technology renovation of the Fujiawu Copper Mine;

(iv) the expansion of the processing capacity of Wushan Copper Mine to 5,000 tonnes per day;

(v) the expansion of copper recovering from slag;

(vi) the expansion of anode mud treatment and comprehensive utilization; and

(vii) the utilization of the heat recovered from smelting process.

Further announcement will be made after the number of A Shares under the A Share Issue and the

issue price of the A Shares are fixed. It is expected that the number of A Shares and the issue price

will be fixed after the obtaining of the approvals from the relevant governmental authorities. There

were no fund raising activities of the Company within 12 months immediately preceding the date of

the Announcement.

Summary of the material information relating to the projects to be funded by the proceeds from the

Placing are set out below. Please refer to the announcement of the Company published on the website

of the Shanghai Stock Exchange at http://www.sse.com.cn for further details of following projects.

Expansion of phase II of Chengmenshan Copper Mine

The Company intends to invest approximately RMB498.0 million to finance the expansion of phase

II of Chengmenshan Copper Mine with a view to increasing the handling capacity to 7,000 tonnes per

day.

After completion of the expansion, the annual production capacity of Chengmenshan Copper Mine will

reach 14,816.93 tonnes of Copper Concentrate, 25,814.42 tonnes of sulfur, 232 kg of gold and 15,142

kg of silver and 607,150 tonnes of sulfur concentrate (standard sulfur concentrate of 703,541.55

tonnes). The Company will invest 126.32 million for construction of environmental protection facilities.

It is expected that the expansion will commence in December 2007 and complete in December 2009.

Renovation of technology for mining method of Yongping Copper Mine

The Company intends to invest approximately RMB387.52 million to finance the renovation of

technology for mining method of Yongping Copper Mine to convert such mines from open pit mine

to mines comprising open pit mine and underground mine.


— 5 —

The proven total copper reserve of Yongping Copper Mine is 1,310,000 tonnes, with 14,950,000 tonnes

of pyrite ores. The average grade of copper and sulphur is 0.73% and 12.83% respectively. The ores

also contain associated gold and silver. Currently, the mine owns a large mining and ore-dressing

capacity of 10,000 tonnes per day. The open-pit mining method has been employed for over 20 years.

Following the pit expansion project in 2002, there still remains approximately 8 years in the steady

output cycle. The pit is estimated to be closed in 2015. The proven underground ore reserve of

Yongping Copper Mine is 65,800,000 tonnes at an average copper grade of 0.59%, representing

390,000 tonnes of copper metal. In order to fully utilize the geological resources outside the open pit,

maximise the output cycle and secure its capacity of 10,000 tonnes per day as well as take full play

of the existing scale merit and asset profitability, it is necessary to commence the project of shifting

from open-pit to mines comprising open pit and underground mine for Yongping Copper Mine as soon

as possible.

Upon completion of the project, a large-scale modern mine with a steady output cycle of 15 years,

a service period of 19 years and a capacity of 5,000 tonnes per day will be developed. Moreover, the

existing steady output cycle at 10,000 tonnes per day will be extended by 7 years (i.e., to 14 years

from 2006), taking full use of its existing assets for better scale merit and asset profitability. The project

is expected to bring desirable returns on an overall basis.

Technology renovation of the Fujiawu Copper Mine

The Company intends to invest approximately RMB300.56 million to finance the technology renovation

of Fujiawu Copper Mine so as to extend the mining period of Dexing Copper Mine of the Company

from 24 years to 40 years.

Upon acceptance and completion, the project will own a mining capacity of 150,000 tonnes of ores

per day. It can provide copper concentrates containing 22,265 tonnes of copper, 80 kilograms of gold,

1,988 kilograms of silver, 23,855 tonnes of sulphur as well as molybdenum concentrates containing

710 tonnes of molybdenum and 1,000 tonnes of electro-deposit copper per annum on the average. All

produced copper concentrates will be used as materials for production of Guixi Smelter of the

Company. The produced electro-deposit copper will be sold through the Company’s established

distributing network, with an estimated output-to-sales ratio of 100%.

Expansion of the processing capacity of Wushan Copper Mine to 5,000 tonnes per day

The Company intends to invest approximately RMB120.24 million to finance the expansion of the

processing capacity of Wushan Copper Mine by 5,000 tonnes per day.

Upon completion, the project in Wushan Copper Mine will increase the mining/ore-dressing capacity

by 2,000 tonnes to 5,000 tonnes per day. It can provide copper concentrates containing 12,814 tonnes

of copper, 218 kilograms of gold, 7,512 kilograms of silver, 171,000 tonnes of sulphur as well as

sulphur concentrates of 331,900 tonnes (containing 132,700 tonnes of sulphur). All the products will

be provided to Guixi Smelter of the Company, thus stabilising the Company’s self-supplying of copper

materials.


— 6 —

Expansion of copper recovering from slag


copper recovering operation of the Group, which will increase the production capacity and the recovery

ratio of recovering copper from slag.

Currently, Guixi Smelting Plant owns a workshop for copper recovery from electric furnace slag with

a smelting capability of 3,100 tonnes per day. Upon commencement of operation of the 300,000-tonne-

per-annum copper smelting project in 2007, furnace slag will be increased by 1,555 tonnes per day

in total, including 1,185 tonnes of flash furnace slag per day with 2% copper content, and 370 tonnes

of converter slag with 5% copper content. Hence, it is necessary to expand the existing copper recovery

workshop for the purposes of treatment of the increased slag, integration of production management

as well as saving investment and operation cost.

For treatment of the flash furnace slag, the Company’s 300,000-tonne-per-annum copper smelting

project abandons slag-cleaning furnace with low metal recovery rate and poor environment protection

while adopting the copper milling treatment. This will increase the rate of copper recovery in smelting

process by nearly 1% and each year, another 2000 tonnes of copper can be recovered from slag.

Meanwhile, the slag residue can be further used to recover iron concentrate and for cement additive,

thereby maximising the utilisation of invaluable national resources.

Upon achievement of the target output of the project, output of slag concentrate will be increased by

47,944.36 tonnes (with 24% copper content) each year. All such slag concentrate is to be used for flash

furnace smelting with a 100% sales-to-production ratio.

Expansion of anode mud treatment and comprehensive utilisation


capacity of the anode mud treatment operation of the Group so as to cope with the expected expansion

of the annual production capacity of the Group.

Anode mud is a mixture of various rare precious metals deposited on the bottom of the smelting tank

in the copper smelting process. Guixi Smelting Plant has an anode mud treatment system in place.

Since 1987 when it was put into production, the system has been upgraded for several times with a

current daily smelting capability of 4,450 tonnes of dry mud. In 2006, Guixi Smelting Plant produced

13 tonnes of gold bullion and 350 tonnes of silver bullion. As the phase I project of the 300,000-tonne

copper smelting project of the Company is about to be completed and put into operation, the output

of anode mud is expected to increase by 1,200 tonnes per annum (dry mud) from the current level.

When the phase II project is completed and put into operation, the output of anode mud is expected

to increase by 1,200 tonnes per annum (dry mud) from the current level. However, the current smelting

capability of Guixi Smelting Plant can no longer meet such needs. To cope with the 700,000-tonne-

per-annum copper smelting capability, it is necessary to optimise the existing anode mud treatment

facilitates and implement expansion projects so as to enhance the anode mud treatment ability in

addressing the needs from production of gold and silver and comprehensive utilization of resources.


— 7 —

Upon implementation of the phase I project, major products will include 8 tonnes of gold bullion (Au

99.99%) and 70 tonnes of silver bullion (Ag 99.99%) while following the implementation of the phase

I project, major products will include 15 tonnes of gold bullion (Au 99.99%) and 100 tonnes of silver

bullion (Ag 99.99%). As gold and silver products can be sold in both futures and spot markets, the

sales-to-production ratio of gold and silver products may reach 100%.

Utilization of the heat recovered from smelting process

The Company intends to invest approximately RMB272.61 million to finance the installation of the

off-gas recovery system to recover the waste comprising heat and steam pressure generated from the

smelting process of the Group.

Upon operation of the project, the heat recovered from smoke will be equivalent to 85,800 tonnes of

standard coal per annum while 1,053 tonnes of standard coal will be saved per annum from the

recovered steam pressure. The heat and steam generated from such process will be utilized by Guixi

Smelting Plant with a 100% sales-to-production ratio. The preliminary work concerning this project

is in progress.

The balance of the fund required for the above projects will be financed by bank borrowings and other

means. If there is any balance of the net proceeds from the Placing, such balance will be used as

additional working capital of the Company for its production operations.

Please refer to the announcement of the Company published on the website of the Shanghai Stock

Exchange at http://www.sse.com.cn for further details of the A Share Issue.


— 8 —

III. THE ACQUISITON AGREEMENT

On 16 March 2007, the Company entered into the Acquisition Agreement with JCC, pursuant to which,

the Company agreed to acquire certain assets and equity interests in certain group companies of the

JCC Group from JCC.

Particulars of the Acquisition Agreement

Date

16 March 2007

Parties

Purchaser : the Company

Vendor : JCC

Targets of the Acquisition

Pursuant to the Acquisition Agreement, the Company agreed to acquire and JCC agreed to sell the Targets

comprising the following assets and equity interests in certain group companies of the JCC Group:

1. the mining rights and the related operating assets and liabilities of the Chengmenshan Copper

Mine;

2. the operating assets and the related liabilities of the Xiangsi Railway;

3. 40% equity interest of the Copper Alloy Company;

4. 40% equity interest of the Copper Product Company;

5. 100% equity interest of the JCC Dexing Transportation Company; and

6. 100% equity interest of the JCC Chemical Company.

For details of the Targets, please refer to the paragraph headed “Information on the Targets” below.


— 9 —

Consideration

The aggregate consideration under the Acquisition Agreement amounted to approximately RMB1,785.3

million (subject to adjustments) (the “Consideration”) which was arrived at after arm’s length negotiations

between the Company and JCC with reference to the appraised values of the Targets prepared by

Beijing Zhongzheng, a PRC independent qualified valuer. The Directors confirmed that Beijing

Zhongzheng is a qualified valuer endorsed by the relevant PRC government regulatory bodies. In order

to comply with the relevant regulatory requirements of the PRC, the Company has appointed Beijing

Zhongzheng to conduct appraisals on the Targets and in order to comply with the Listing Rules, the

Company has appointed Grant Sherman to conduct valuation on the properties, plant and machinery

of the Targets. In addition, the Company has appointed Beijing Jingwei to prepare the valuation report

on the mining rights of the Chengmenshan Copper Mine. Valuation reports in respect of the properties,

plant and machinery of the Targets and the mining right of the Chengmenshan Copper Mine have been

included in this circular as appendices I to VIII. The Consideration composed of:

1. as to approximately RMB1,442.4 million for the acquisition of the mining rights and the related

operating assets and liabilities of the Chengmenshan Copper Mine;

2. as to approximately RMB86.2 million for the acquisition of the operating assets and the related

liabilities of the Xiangsi Railway;

3. as to approximately RMB83.6 million for the acquisition of 40% equity interest of the Copper

Alloy Company;

4. as to approximately RMB111.4 million for the acquisition of 40% equity interest of the Copper

Product Company;

5. as to approximately RMB17.3 million for the acquisition of 100% equity interest of the JCC

Dexing Transportation Company; and

6. as to approximately RMB44.5 million for the acquisition of 100% equity interest of the JCC

Chemical Company.

As mentioned above, the Consideration is subject to adjustments. The consideration for the acquisition

of each of the Targets will be adjusted with reference to the appraised values of such assets as confirmed

by the relevant governmental authorities. Further announcement will be made if there is substantial

adjustment to the Consideration.

The Consideration will be satisfied by the issue and allotment of the Consideration Shares to JCC.

Based on the existing plan of the A Share Issue, the issue of Consideration Shares shall be sufficient

to satisfy the Consideration. Should there be a shortfall in satisfying the Consideration, the Group will

pay such shortfall by internal resources of the Group, including but not limited to cash held by the

Company and/or bank borrowings.


— 10 —

The land of Changmenshan Copper Mine has not been included in the subject of the Acquisition.

Pursuant to the Acquisition Agreement, JCC undertook to the Company that, following completion

of the Acquisition, JCC shall lease the land of Chengmenshan Copper Mine to the Company at a rental

to be determined with reference to the valuation prepared by an independent valuer, subject to a

maximum amount of RMB13,258,500 per annum.

Conditions precedent to the Acquisition Agreement

Completion of the Acquisition Agreement is conditional upon, among others, the fulfilment of the

following conditions on or before the Long Stop Date or such later date as the parties to the Acquisition

Agreement may agree in writing:

(a) the obtaining of all necessary approvals from the supervision authorities of JCC in respect of

the Acquisition Agreement;

(b) the obtaining of all necessary approval(s) from the relevant PRC regulatory authorities in respect

of the transfer of the assets to the Company under the Acquisition Agreement;

(c) the obtaining of all necessary approvals from the Board and the approval of the Independent

Shareholders (i) at the EGM in respect of the Acquisition Agreement at which JCC and its

associates will abstain from voting and (ii) at the EGM and Class Meetings in respect of the

A Share Issue at which JCC and its associates will abstain from voting; and

(d) the obtaining of all necessary approval(s) from the relevant PRC regulatory authorities (including

but not limited to CSRC) in respect of the A Share Issue.

Neither the Company nor JCC has the right to waive any of the conditions mentioned above. As at

the Latest Practicable Date, none of the conditions mentioned above has been satisfied.

If the conditions to the Acquisition Agreement are not fulfilled on or before the Long Stop Date or

such other date as the parties may agree in writing, the Acquisition Agreement will lapse and all the

obligations and liabilities of the parties to the Acquisition Agreement will cease and terminate save

for any antecedent breach.

IV. REASONS FOR AND BENEFITS OF THE ACQUISITION AGREEMENT

According to the Share Reform Plan, JCC undertook that it will, within one year from the date of

completion of the Share Reform Plan, propose to the Company for the transfer or injection of certain

JCC’s assets which are relevant to the copper industry and are in line with the Company’s development

strategies to the Company to enhance the operational results of the Company and to minimize the

amount of connected transactions and competition between the Company and JCC. Pursuant to the

Share Reform Plan, JCC has proposed to the Company for the transfer or injection (where relevant)

of the Targets to the Company.


— 11 —

The executive Directors believe that the transfer or injection (where relevant) of the Targets to the

Company would (i) enhance the operational independency of the Group by reducing its reliance on

JCC for the provision of certain raw materials and complementary services required for the Group’s

production; and (ii) increase the competitiveness and enhance the economies of scale of the Group;

and (iii) minimize the continuing connected transactions of the Company. As such, the Directors

believe that the entering into of the Acquisition Agreement is beneficial to the Group. Although the

performance of the JCC Chemical Company in 2004 is better than that in 2005, the Directors believe

that the acquisition of JCC Chemical Company is also beneficial to the Company based on the fact

that the price of sulfuric acid is now in upward trend and such acquisition can minimize the continuing

connected transactions of the Company. Taking into account the Consideration was determined with

reference to the appraised values of the Targets, the executive Directors consider the terms of the

Acquisition Agreement are fair and reasonable and the entering into of the Acquisition Agreement is

in the interests of the Company and the Shareholders as a whole.

Upon completion of the Placing, the cash and bank balance of the Group will increase by the amount

equals to the net proceeds (after deducting all relevant costs and expenses) to be raised from the

Placing. In addition, the issue of the Consideration Shares will also increase the asset value of the

Group. Accordingly, the total assets and net assets of the Group will be enhanced as a result of the

increase in fixed assets and cash received from the Placing. However, since the issue price of the

Placing has not been determined yet, the impact on the Group’s net asset value per Share cannot be

ascertained at the moment.

As the Consideration is determined with reference to the appraised values of the Targets, no loss or

gain will arise from the Acquisition, and therefore, the Acquisition is expected to have no material

immediate effect on the profit and loss account of the Group.

V. INFORMATION ON THE TARGETS

The Chengmenshan Copper Mine

The Chengmenshan Copper Mine is a mine located near the Jiujiang City, Jiangxi Province, the PRC

and includes an operating open pit mine and a concentrator. Construction of the milling facilities of

1,200 tonnes per day was completed in July 2000 and the formal production of Chengmenshan Copper

Mine commenced in January 2002. The mining rights of Chengmenshan Copper Mine have a duration

of 10 years, commenced in 2004, and are renewable upon application to the relevant regulatory

authority. JCC had been granted the mining rights of Chengmenshan Mine at the consideration of

RMB202,885,100. Assets of Chengmenshan Mine were purchased over a period of time, accordingly,

there is no one-off original purchase cost available for such assets.


— 12 —

According to the document “江西省國土資源廳贛採字[2004]0818號《江西省國土資源廳採礦登記通

知書》”, the ore reserves of the area of the Chengmenshan Copper Mine under acquisition containing

1,531,164 tonnes of copper, 61.896 tonnes of gold and 2,426 tonnues of silver and 32,131,109 tonnes of

sulfur. In the year 2006, Chengmenshan Copper Mine produced 6,188 tonnes of copper concentrate, 30

kg of gold and 2,065 kg of silver and 95,332 tonnes of standard sulfur concentrate.

According to the valuation report prepared by Beijing Zhongzheng, the appraised net asset value of

the operating assets of Chengmenshan Copper Mine as at 30 June 2006 amounted to approximately

RMB1,442,410,400. The net asset value of the operating assets of Chengmenshan Copper Mine as at

30 June 2006 amounted to approximately RMB250 million and the following table sets out the net

profits attributable to the operating assets of Chengmenshan Copper Mine :

For the period

Financial year ended from 1 January

31 December to 30 June

2004 2005 2006

RMB’000 RMB’000 RMB’000

Net profits before taxation and extraordinary items 53,010 83,348 96,708

Net profits after taxation and extraordinary items 53,010 83,348 96,708

According to the valuation report prepared by Beijing Jingwei, text of which is set out in Appendix

VIII to this circular, the assessed value of mining right of the Chengmenshan Copper Mine as at 30

June 2006, being the base date for valuation, amounted to RMB1,359,602,700. According to the

valuation reports prepared by Grant Sherman, the value of (i) the properties and (ii) the plant and

machinery of Chengmenshan Copper Mine as at 28 February 2007 amounted to (i) RMB228,835,589

and (ii) RMB37,324,084 respectively.

The Xiangsi Railway

The Xiangsi Railway has been utilised by JCC to provide railway transportation services to the Group

from Xiangtun to Sizhou for materials such as products of the Group. The assets of the Xiangsi Railway

comprised mainly of property and equipment.

According to the valuation report prepared by Beijing Zhongzheng, the appraised net asset value of

the operating assets of the Xiangsi Railway as at 30 June 2006 amounted to approximately

RMB86,203,400. The net asset value of the operating assets of Xiangsi Railway as at 30 June 2006

amounted to approximately RMB51,594,900. Assets of Xiangsi Railway were purchased over a period

of time, accordingly, there is no one-off original purchase cost available for such assets.

According to the valuation reports prepared by Grant Sherman, the value of (i) the properties and (ii)

the plant and machinery of Xiangsi Railway as at 28 February 2007 amounted to (i) RMB70,100,164

and (ii) RMB11,460,259 respectively.


— 13 —

The Copper Alloy Company

The Copper Alloy Company is principally engaged in the manufacturing and processing of copper and

copper alloy rods and wires; providing after-sale service for its products. Copper alloy rods and wires

which are required materials for the manufacturing of cable and wire, enameled wires, Internet-used

wires, sliding-contact wires, and fine wires is an required material for the manufacturing of electronic

equipment and tele-communication products. Following completion of the Acquisition, the Copper

Alloy Company will become a wholly owned subsidiary of the Company. The Copper Alloy Company

was established in February 2005 and commenced operation in April 2006, accordingly, there is no

operation data available for Copper Alloy Company for the two years ended 31 December 2005. As

the Copper Alloy Company was established by the Company and JCC, accordingly, there is no orginial

purchase cost availabe for 40% equity interest of the Copper Alloy Company.

According to the valuation report prepared by Beijing Zhongzheng, the appraised net value of the

Copper Alloy Company as at 30 June 2006 amounted to approximately RMB208,928,600. The net asset

value of the Copper Alloy Company as at 30 June 2006 amounted to approximately RMB199,500,000.


the plant and machinery of the Copper Alloy Company as at 28 February 2007 amounted to (i)

RMB20,010,658 and (ii) RMB121,021,619 respectively.

The Copper Product Company

The Copper Product Company is principally engaged in the manufacturing and processing of copper

rod and wire and providing after-sale service for its products and other related services and businesses.

Following completion of the Acquisition, the Copper Product Company will become a wholly owned

subsidiary of the Company. As the Copper Product Company was established by the Company and

JCC, accordingly, there is no orginial puchase cost available for 40% equity interest of the Copper

Product Company.

The following table sets out the financial results of the Copper Product Company for the two financial

years ended 31 December 2005 and for the period from 1 January 2006 to 30 June 2006 :

For the period

Financial year from 1 January

ended 31 December to 30 June

2004 2005 2006

RMB’000 RMB’000 RMB’000

Net profits before taxation and extraordinary items 33,178 19,217 18,114

Net profits after taxation and extraordinary items 33,178 19,217 15,396


— 14 —

According to the valuation report prepared by Beijing Zhongzheng, the appraised value of the Copper

Product Company as at 30 June 2006 amounted to approximately RMB278,934,900. The net asset value

of the Copper Product Company as at 30 June 2006 amounted to approximately RMB266,249,000.


the plant and machinery of the Copper Product Company as at 28 February 2007 amounted to (i)


The JCC Dexing Transportation Company

The JCC Dexing Transportation Company is principally engaged in the business of (i) railway and

vehicle transportation services; (ii) vehicle production services; (iii) vehicle repair services; (iv)

machinery manufacturing; (v) loading and unloading services; and (vi) pressurized-fluid soft tube

processing and repair services, and has been providing services such as (i) railway and vehicle

transportation services; (ii) machinery and electrical equipment repair and maintenance services; and

(iii) vehicle repair services to the Group. The assets of the JCC Dexing Transportation Company are

mainly comprised current assets, property and equipment. Following completion of the Acquisition,

JCC Dexing Transportation Company will become a wholly owned subsidiary of the Company. As the

JCC Dexing Transportation Company was established by JCC, accordingly, there is no original

purchase cost available for the 100% equity interest of the JCC Dexing Transportation Company.

The following table sets out the financial results of the JCC Dexing Transportation Company for the

two financial years ended 31 December 2005 and for the period from 1 January 2006 to 30 June 2006:

For the period



2004 2005 2006

RMB’000 RMB’000 RMB’000

Net profits before taxation and extraordinary items 793.6 450 (699.2)

Net profits after taxation and extraordinary items 252.5 166 (1,305.4)

According to the valuation report prepared by Beijing Zhongzheng, the appraised value of the JCC

Dexing Transportation Company as at 30 June 2006 amounted to approximately RMB17,256,700. The

net asset value of the JCC Dexing Transportation Company as at 30 June 2006 amounted to approximately

RMB15,357,900.


the plant and machinery of the JCC Dexing Transportation Company as at 28 February 2007 amounted

to (i) RMB6,966,035 and (ii) RMB11,724,522 respectively.


— 15 —

The JCC Chemical Company

The JCC Chemical Company is principally engaged in the production and sale of sulphur related

products and processing of mineral concentrates, and was responsible for the processing of by-products

such as sulphuric acid and raw copper sulphate and other waste products and materials generated from

the Group’s production such as white dust, raw selenium and black cement copper supplied by the

Group. The principal product of the JCC Chemical Company is sulphuric acid. The assets of the JCC

Chemical Company comprised mainly equipment and property. Following completion of the Acquisition,

JCC Chemical Company will become a wholly owned subsidiary of the Company. As the JCC Chemical

Company was established by JCC, accordingly, there is no original purchase cost available for the

100% equity interest of the JCC Chemical Company.

As the JCC Chemical Company was registered in October 2004 and commenced its business in late

2005, there was no financial result for the financial year ended 31 December 2004. The following table

sets out the financial results of the JCC Chemical Company for the financial year ended 31 December

2005 and for the period from 1 January 2006 to 30 June 2006:

For the period



2005 2006

RMB’000 RMB’000

Net profits before taxation and extraordinary items 1,013 (457.56)

Net profits after taxation and extraordinary items 90 (457.56)

According to the valuation report prepared by Beijing Zhongzheng, the appraised value of the JCC

Chemical Company as at 30 June 2006 amounted to approximately RMB44,535,700. The net asset

value of the JCC Chemical Company as at 30 June 2006 amounted to approximately RMB41,161,800.


the plant and machinery of the JCC Chemical Company as at 28 February 2007 amounted to (i)


VI. INFORMATION ON THE GROUP

The Company is a Sino-foreign joint stock limited company incorporated in the PRC on 24 January

1997. The Company’s main scope of operations include: non-ferrous metal mines, rare and precious

metals, nonmetal mines; smelting, rolling processing and further processing of non-ferrous metals and

related by-products; sale and after sale services for self produced products, future business outside the

PRC together with related consulting services and business. The principal product of the Company

is Copper Cathode.


— 16 —

VII. GENERAL

JCC is an integrated enterprise in non-ferrous metals industry in the PRC. The principal business of

JCC covers copper mining, milling, smelting and processing operations. It is the largest copper

production base and the important sulfur, gold and sliver producer in the PRC. JCC also engages in

the business of supply of copper raw materials, including Scrap Copper, Blister Copper and Copper

Concentrate, which are the principal raw materials for the production of Copper Cathode.

JCC is a substantial shareholder holding approximately 42.31% of the total issued share capital of the

Company, and therefore JCC is a connected person of the Company under the Listing Rules. The

entering into of Acquisition Agreement constituted a discloseable and connected transaction of the

Company and is therefore subject to the requirements under Chapters 14 and 14A of the Listing Rules.

As the Percentage Ratios in connection with the Acquisition Agreement exceeded 2.5%, the Acquisition

Agreement is subject to the reporting, announcement and Independent Shareholders’ approval requirement

pursuant to Chapter 14A of the Listing Rules.

As the A Shares of the Company are listed on the Shanghai Stock Exchange, the Company is required,

in addition to the Listing Rules, to comply with the Shanghai Listing Rules. Under the Shanghai Listing

Rules, the Acquisition Agreement is subject to approval by the Independent Shareholders.

VIII. THE INDEPENDENT BOARD COMMITTEE

The Independent Board Committee comprising the independent non-executive Directors has been

formed for advising the Independent Shareholders on the A Share Issue and the terms and conditions

of the Acquisition Agreements.

Goldbond Capital has been appointed as independent financial adviser to the Independent Board

Committee and the Independent Shareholders on the same. The letter is set out in the section headed

“Letter from Goldbond Capital” of this circular.

IX. THE EGM AND CLASS MEETINGS

The EGM and the Class Meetings will be convened to consider and approve the resolutions in respect

of, among other things, the A Share Issue in accordance with the Articles of Association and the

relevant requirements of the Listing Rule, at such meetings, JCC and its associates will abstain from

voting. Ordinary resolution will be proposed to approve, among other things, the Acquisition Agreement

and the transactions contemplated thereunder at the EGM, at which JCC and its associates will abstain

from voting.

Notices convening the EGM and the Class Meetings to be held at the Conference Room of the

Company, 15 Yejin Avenue, Guixi City, Jiangxi, the PRC, on Thursday, 17 May 2007 is set out on

pages 132 to 144 of this circular.


— 17 —

Shareholders of the Company whose name appeared on the register of members of the

Company on 17 April 2007 are entitled to attend and vote at the EGM and the Class Meetings.

The register of members of the Company will be closed from 17 April 2007 to 17 May 2007,

both days inclusive, during such period no share transfer will be registered.

If you intend to attend the EGM and/or the Class Meetings, please complete and return the accompanying

reply slips in accordance with the instructions printed thereon as soon as possible and in any event

by not later than 27 April 2007.

Whether or not you are able to attend the meetings, you are requested to complete and return the

accompanying forms of proxy in accordance with the instructions printed thereon as soon as possible

and in any event not less than 24 hours before the time appointed for holding of the meetings or any

adjournment thereof. Completion and return of the forms of proxy will not preclude you from attending

and voting in person at the meetings or any adjournment thereof should you so wish.

X. POLL PROCEDURE

As at the Latest Practicable Date, JCC was interested in 42.31% of the total issued share capital of

the Company and a connected person of the Company. In view of the interest of JCC in the transactions

contemplated under the A Share Issue and the Acquisition Agreement, JCC and its associates will

abstain from voting at the EGM and the Class Meetings on the resolutions in respect of the A Share

Issue and the Acqusition Agreement. The votes to be taken at the EGM and the Class Meetings will

be taken by poll, the results of which will be announced after the EGM and the Class Meetings.

Under the Company’s Articles of Association, a poll can be demanded by:

(a) the chairman of the meeting;

(b) at least two shareholders present in person or by proxy for the time being entitled to vote at

the meeting;

(c) by any shareholder or shareholders (including proxy) holding individually or holding an aggregate

of 10 per cent or more of the shares carrying the right to vote at the meeting.

The Chairman will demand a poll at the EGM and the Class Meetings.


— 18 —

XI. RECOMMENDATION

Your attention is drawn to the letter from the Independent Board Committee set out on page 19 which

contains its recommendation to the Independent Shareholders on the A Share Issue and the terms of

the Acquisition Agreement, and the letter of advice from Goldbond Capital, the text of which is set

out on pages 20 to 35 of this circular containing its advice to the Independent Board Committee and

the Independent Shareholders. The Independent Shareholders are advised to read the aforesaid letters

before deciding as to how to vote on the resolutions approving the A Share Issue and Acquisition

Agreement.

XII. FURTHER INFORMATION

Your attention is drawn to the further information set out in the appendices to this circular.

Yours faithfully,

By Order of the Board

Li Yihuang

Chairman

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

— 19 —


(a sino-foreign joint venture joint stock limited company incorporated in the People’s Republic of China)

(Stock Code: 0358)

Legal address:15 Yejin AvenueGuixi CityJiangxiPeople’s Republic of China

2 April 2007

To the Independent Shareholders

Dear Sir or Madam,

PROPOSED ISSUE OF NEW A SHAREAND


We have been appointed as members of the Independent Board Committee to advise the Independent

Shareholders in respect of the terms of the A Share Issue and the Acquisition Agreement, details of which

are set out in the letter from the Board in the circular dated 2 April 2007 (the “Circular”) to the Shareholders,

of which this letter forms part. Terms defined in the Circular shall have the same meanings when used in

this letter unless the context otherwise requires.

Having taken into accounts the terms of the A Share Issue and the Acquisition Agreement and the advice

and recommendation of Goldbond Capital, we consider that the terms of the A Share Issue and the Acquisition

Agreement are fair and reasonable so far as the interests of the Independent Shareholders are concerned and

the A Share Issue and the Acquisition Agreement are conducted in the interests of the Company and the

Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the

resolutions which will be proposed to approve the A Share Issue at the EGM and the Class Meetings and

the Acquisition Agreement at the EGM.

Yours faithfully,

Mr. Kang Yi Mr. Tu Shutian

Ms. Zhang Rui Mr. Yin Hongshan

Independent Board Committee

LETTER FROM GOLDBOND CAPITAL

— 20 —

The following is the letter of advice from Goldbond Capital (Asia) Limited to the Independent Board

Committee and the Independent Shareholders prepared for the purpose of inclusion in this circular:


3902B, 39th Floor, Tower 1

Lippo Centre

89 Queensway

Hong Kong

2 April 2007

The Independent Board Committee and the Independent Shareholders

Dear Sirs,

PROPOSED ISSUE OF NEW A SHARES AND


INTRODUCTION

We refer to our appointment to advise the Independent Board Committee and the Independent Shareholders

in respect of the terms of the A Share Issue and the Acquisition Agreement, details of the terms of the A

Share Issue and the Acquisition Agreement are set out in the circular dated 2 April 2007 issued by the

Company (the “Circular”) to the Shareholders, of which this letter forms part. This letter contains our advice

to the Independent Board Committee and the Independent Shareholders as to whether the terms of the A Share

Issue and the Acquisition Agreement are fair and reasonable and in the interests of the Company and the

Shareholders as a whole. Unless the context requires otherwise, capitalized terms used in this letter shall have

the same meanings as those defined in the Circular.

In formulating our opinions and recommendations, we have relied on the statements, information, opinions,

and representations contained or referred to in the Circular, which have been provided to us by the Directors.

We have assumed that all statements, information, opinions and representations contained or referred to in

the Circular were true, complete and accurate in all aspects at the time they were made and given and continue

to be true in all respects as at the despatch date of the Circular. We have also assumed that all statements

of belief, opinion, assumptions and intention made by the Directors in the Circular were reasonably made

after due and careful enquiry and were based on honestly-held opinions. We have no reason to doubt the truth,

accuracy and completeness of the information and representations provided to us by the Directors and we

have been advised by the Directors that no material facts have been omitted from the information and

representations provided and referred to in the Circular.


— 21 —

We consider that we have been provided with sufficient information to enable us to reach an independent

view to justify our reliance on the accuracy of the information and representations contained in the Circular

and to provide a reasonable basis for our recommendations. We have no reason to suspect that any relevant

information has been withheld, nor are we aware of any facts or circumstances which would render the

information provided and the representations made to us to be untrue, inaccurate, or misleading. In addition,

we have taken all reasonable steps as required under Rule 13.80 of the Listing Rules to satisfy ourselves that

there is a reasonable basis for our advice as stated herein. We have not, however, carried out any independent

verification of the information provided to us by the Directors, nor have we conducted any independent

investigation into any related transactions referred to in the Circular, or into the businesses, affairs and

prospects of the Group.

We are a licensed securities dealer and corporate finance adviser under the Securities and Futures Ordinance

(Chapter 571 of the Laws of Hong Kong) and together with our affiliates provide a full range of financial

advisory and broking services, which, in the course of normal trading activities, we and our affiliates may

from time to time effect transactions and hold securities, including derivative securities, of the Company for

our own account or the accounts of our customers.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion regarding the terms of the A Share Issue and the Acquisition Agreement, we have

considered the following principal factors and reasons:

A. BACKGROUND OF THE A SHARE ISSUE AND THE ACQUISITION

1. The A Share Issue

As stated in the Letter, the Company intendeds to apply to the CSRC and other relevant PRC

authorities for the approval of the issue of not more than 290,000,000 A Shares, representing

about 19.23% of the total A Shares in issue, about 10.02% of the existing issued share capital

of the Company and about 9.11% of the issued share capital of the Company as enlarged by

the A Share Issue, in the PRC and the listing of such A Shares on the Shanghai Stock Exchange.

The A Shares will be comprised the Consideration Shares to be issued to JCC as consideration

of the Acquisition and the Placing Shares to be issued to not more than nine institutional

investors who are Independent Third Parties under the Placing in the PRC. The Company intends

to issue the Placing Shares and the Consideration Shares on the same day.


— 22 —

The Directors expect the number of the Consideration Shares to be issued to JCC will not be

less than 44.63% of the total number of A Shares to be issued under the A Share Issue, and

such Consideration Shares to be issued to JCC will be utilised to satisfy the consideration of

the Acquisition.

It is intended that the issue price of the A Shares will not be less than 90% of the average trading

price of the A Shares on the Shanghai Stock Exchange for 20 trading days immediately before

the date of the Announcement, i.e. from 30 January 2007 to 5 March 2007. In addition, the issue

price will be determined with reference to the following factors:

(i) the issue price will not be lower than the net asset value per Share as reported in the

latest audited accounts of the Company;

(ii) the funding requirements and arrangements of the proposed projects of the Company;

(iii) the trading price of the A Shares in the secondary market, price-to-earning ratio and the

growth trend; and

(iv) the result of negotiations with other relevant parties.

The total amount of proceeds of the A Share Issue is yet to be determined, however, it is

estimated that the proceeds from the A Share Issue will amount to about RMB4,000,000,000

(including the value of the Consideration Shares) and the cash proceeds from the Placing is

intended to be applied to finance:

(i) the expansion of phase II of the Chengmenshan Copper Mine;

(ii) the renovation of technology for mining method of the Yongping Copper Mine;

(iii) the technology renovation of the Fujiawu Copper Mine;

(iv) the expansion of the processing capacity of the Wushan Copper Mine by 5,000 tonnes

per day;

(v) the expansion of copper recovering from slag;

(vi) the expansion of anode mud treatment and comprehensive utilization; and

(vii) the utilization of the heat recovered from smelting process.


— 23 —

It is expected that the number of A Shares and the issue price will be fixed after the approvals

from the relevant governmental authorities has been obtained. Please refer to the letter from

the Board (the “Letter”) for further details regarding the abovementioned intended application

of the proceeds from the Placing.

2. The Acquisition

On 16 March 2007, the Company entered into the Acquisition Agreement with JCC, pursuant

to which, the Company agreed to acquire the Targets from JCC for an aggregate Consideration

of RMB1,785.3 million (subject to adjustment) which will be satisfied by the issue of the

Consideration Shares. The Targets comprise assets and equity interests in certain group companies

of the JCC Group which include the followings:

1. the mining rights and the related operating assets and liabilities of the Chengmenshan

Copper Mine;

2. the operating assets and the related liabilities of the Xiangsi Railway;

3. 40% equity interest of the Copper Alloy Company;

4. 40% equity interest of the Copper Product Company;

5. 100% equity interest of the JCC Dexing Transportation Company; and

6. 100% equity interest of the JCC Chemical Company.

The aggregate consideration under the Acquisition Agreement was arrived at after arm’s length

negotiations between the Company and JCC with reference to the appraised values of the Targets

prepared by Beijing Zhongzheng, a PRC independent qualified valuer. The Consideration will

be satisfied by the issue and allotment of the Consideration Shares to JCC. Should there be a

shortfall in satisfying the Consideration, the Group will pay such shortfall in cash by internal

resources of the Group and/or bank borrowings. Please refer to the Letter for further details

regarding the Targets.


— 24 —

JCC is a substantial shareholder holding about 42.31% of the total issued share capital of the

Company, and therefore JCC is a connected person of the Company under the Listing Rules.

The entering into of the Acquisition Agreement constituted a discloseable and connected

transaction of the Company and is therefore subject to the requirements under Chapter 14 and

chapter 14A of the Listing Rules. As the Percentage Ratios in connection with the Acquisition

Agreement exceeded 2.5%, the Acquisition Agreement is subject to the reporting, announcement

and Independent Shareholders’ approval requirements pursuant to Chapter 14A of the Listing

Rules.

The Company will convene the EGM and the Class Meeting for the purpose of approving, among

others, the A Share Issue and the Acquisition Agreement and the transactions contemplated

thereunder by the Independent Shareholders. The Independent Board Committee has been

established to consider the terms of the A Share Issue and the Acquisition Agreement and to

advise the Independent Shareholders on how to vote. In this regard, we have been appointed

by the Company to advise the Independent Board Committee and the Independent Shareholders

as to whether the terms of the A Share Issue and the Acquisition Agreement are fair and

reasonable and in the interests of the Company and the Shareholders as a whole.

B. THE A SHARE ISSUE AND THE ACQUISITION AGREEMENT

1. Reasons for the A Share Issue

As state in the Letter, the Group has various expansion plans, including the Acquisitions to,

among others, increase the production capacity and improve the production process of the

Group. The funding required for such expansion plans amounts to about RMB3,748.0 million.

On the other hand, as stated in the 2006 interim report of the Company, as at 30 June 2006,

the Company had bank balances and cash of about RMB1,796.4 million and a gearing ratio of

about 36.03%, which is calculated by dividing total liabilities of the Company of about

RMB5,817.1 million by total assets of the Company of about RMB16,145.6 million as at 30

June 2006. As advised by the Directors, taking into account (i) the funding required for the

expansion plans; (ii) working capital available to the Group; (iii) current gearing ratio of the

Group; (iv) other means to raise funds and the effects of such means; (v) the A Share price is

currently at a relatively high point for the past few years; and (vi) the price of A Shares and

H Shares, the Directors consider the A Share Issue to be in the interests of the Shareholders

and the Company as a whole. In view of the above, we consider it is in the interests of the

Company and the Shareholders as a whole to issue the Consideration Shares and the Placing

Shares to satisfy all or part of the Consideration and to raise additional funds for the expansion

plans of the Company respectively.


— 25 —

As the A Share Issue only represents about 10.02% and 9.11% of the existing issued share capital

and issued share capital of the Company as enlarged by the A Share Issue, we consider that

the A Share Issue will not have significant dilution effect on the existing Shareholders. In view

of the benefits to be brought by the expansion plans on the Group as stated in the letter and

as advised by the Directors that such benefits is expected to improve the operational performance

of the Group in the long run, we consider the A Share Issue to be in the interests of the Company

and the Shareholders as a whole.

2. Reasons for the transactions under the Acquisition Agreement

The Company is a sino-foreign joint stock limited company incorporated in the PRC on 24

January 1997. The Company’s main scope of operations include (i) the operation of non-ferrous

metal mines, rare metals and non-metal mines; (ii) smelting, rolling processing and further

processing of non-ferrous metals and related by-products; (iii) sale and after sale services for

self-produced products; (iv) other business outside the PRC; and (v) related consulting services

and business. The principal product of the Company is Copper Cathode.

JCC is an integrated enterprise conducts business in the non-ferrous metals industry in the PRC.

The principal business of JCC includes copper mining, milling, smelting and processing operations.

It is the largest copper production base and a significant sulfur, gold and sliver producer in the

PRC. JCC also engages in the business of production of copper raw materials, including Scrap

Copper, Blister Copper and Copper Concentrate, which are the principal raw materials for the

production of Copper Cathode.

According to the Share Reform Plan, JCC undertook that it would, within one year from the

date of completion of the Share Reform Plan, propose to the Company for the transfer or

injection of certain JCC’s assets which are relevant to the copper industry and are in line with

the Company’s development strategies. Pursuant to the Share Reform Plan, JCC has proposed

to the Company for the transfer or injection (where relevant) of the Targets, which are all copper

industry related assets, to the Company.

As stated in the annual report of the Company for the year ended 31 December 2005 (the “2005

Annual Report”), “the Company is fully aware of its increasing dependency on external

resources along with its expansion” and “will adopt active measures to address the challenge

prudently. The Company will put more investment in resource development and utilisation” and

“expects to expand resource reserve and achieve a shift in growth mode.” In addition, “the

Company will follow up tightly with JCC for its undertaking to propose to the general meeting

of the Company to approve the assets injection or transfer from JCC in line with corporate

strategic targets, as undertaken by JCC within the year after completion of the Company’s share

reform plan.” Accordingly, the Directors are of the view that the acquisition of the Chengmenshan

Copper Mine is in line with the development strategy of the Company as stated in the 2005

Annual Report.


— 26 —

The Company has entered into certain agreements with JCC, the Copper Alloy Company and

the Copper Product Company in respect of the continuous supply of industrial services, materials,

processing and agency services and other miscellaneous and complementary services etc, which

constituted continuing connected transactions for the Company. Upon completion of the

Acquisition, the Targets will be wholly owned by the Company, and certain transactions between

the Company and JCC, the Copper Alloy Company and the Copper Product Company will no

longer constitute continuing connected transactions of the Company. Accordingly, the Group

could operate more independently from the JCC Group. In addition, the Group would also be

able to minimise the costs and expenses in association with such transactions as the Targets

would become wholly owned by the Company upon completion of the Acquisition. In view of

the above, the executive Directors believe that the Acquisition will strengthen the governance

and improve the financial results of the Company.

The Directors advised that in acquiring the Targets from JCC, the Company can also (i) enhance

its control over the Copper Alloy Company and the Copper Product Company; (ii) achieve

economies of scale; and (iii) enjoy the benefits of cost efficiency through further vertical

integration of production by owning facilities which are required to provide certain complementary

services required by the Group. Upon completion of the Acquisition, the Directors believe that

the Group can strengthen its position from acquiring raw materials for processing of final

products as well as obtaining the relevant required complementary services and consider that

the Acquisition will enhance the operational results of the Company.

As stated in the Letter, the Directors consider that the terms of the Acquisition Agreement are

fair and reasonable and the entering into of the Acquisition Agreement is in the interests of the

Company and the Shareholders as a whole. In view of the reasons above, we are of the view

that the entering into of the Acquisition Agreement with JCC is fair and reasonable and in the

interests of the Company and the Shareholders as a whole.


— 27 —

3. Basis of Consideration

Pursuant to the Acquisition Agreement, the aggregate consideration amounted to about

RMB1,785.3 million (subject to adjustments), which was determined with reference to the

appraised values of the Targets as at 30 June 2006 extracted from the valuation reports prepared

by Beijing Zhongzheng (the “PRC Valuation Reports”), a PRC independent qualified valuer,

prepared for the purpose of serving as a basis to determine the Consideration. The Consideration

will also be adjusted with reference to the appraised values of such assets to be confirmed by

the relevant governmental authorities. Set out below are the approximate considerations and

appraised values for each of the Targets.

Asset and company Consideration Appraised value

(RMB’ million) (RMB’ million)

Mining right

1. mining right of the Chengmenshan Copper Mine 1,359.6 1,359.6

Operating assets

2. related operating assets and liabilities of

the Chengmenshan Copper Mine 82.8 82.8

3. operating assets and the related liabilities of

the Xiangsi Railway 86.2 86.2

Equity interests

4. 40% equity interest of the Copper Alloy Company 83.5 83.5

(Note 1)

5. 40% equity interest of the Copper Product Company 111.4 111.4

(Note 2)

6. 100% equity interest of the JCC Dexing

Transportation Company 17.3 17.3

7. 100% equity interest of the JCC Chemical Company 44.5 44.5

Total 1,785.3 1,785.3

Notes:

1. The apprised value of the entire equity interest of the Copper Alloy Company amounted to about RMB208.9million.

2. The apprised value of the entire equity interest of the Copper Product Company amounted to about RMB278.4million.


— 28 —

As advised by Beijing Zhongzheng, the PRC Valuation Reports were principally prepared based

on the cost approach, which determines the value of an asset by assuming the value of such

asset is equal to the cost of reproducing or replacing it, less depreciation from physical

deterioration and functional and economic/ external obsolescence. As stated in the PRC Valuation

Reports, the valuation of the Targets prepared by Beijing Zhongzheng was conducted in

accordance with the relevant rules and regulations regarding asset valuation in the PRC.

When preparing the valuation report for the Chengmenshan Copper Mine, Beijing Zhongzheng

based on a valuation report prepared by Beijing Jingwei, a qualified independent valuer, which

as advised by the Directors, is an authorised mining right valuer in the PRC, to assess the value

of the mining right of the Chengmenshan Copper Mine. As stated in such valuation report, the

valuation of the mining right of the Chengmenshan Copper Mine prepared by Beijing Jingwei

was based on the comparable sales approach in accordance with the relevant PRC mining right

valuation rules and regulations.

As advised by the Directors, pursuant to the Interim Measures on the Management of Transfer

of the State-owned Property Rights of Enterprises (《企業國有產權轉讓管理暫行辦法》) effective

from 1 February 2004, the consideration for the transfer of State-owned assets shall be based

on the value appraised by a qualified valuer endorsed by or filed with the relevant PRC

government regulatory bodies. In view of the above and as confirmed by the Directors that

Beijing Zhongzheng and Beijing Jingwei are qualified valuers endorsed by or filed with the

relevant PRC government regulatory bodies, we consider that the Consideration, which is based

on the appraised value, is in line with our understanding of the above PRC regulation.


— 29 —

Grant Sherman, an independent qualified valuer in Hong Kong, has also prepared valuation

reports (the “Hong Kong Valuation Reports”) on the properties, machineries and equipment,

excluded the intangible assets such as the mining right of the Chengmenshan Copper Mine but

included the full value of the properties, machineries and equipment of the Copper Alloy

Company and the Copper Product Company, (the “Fixed Assets”) of the Targets as at 28

February 2007 based on valuation standards generally adopted in Hong Kong. Beijing Zhongzheng

is a shareholder of Grant Sherman. According to the Hong Kong Valuation Reports, the value

of such Fixed Assets, including properties with no commercial values due to the absence of

proper title proof and property transfer rights which amounted to about RMB9.1 million as stated

in the Hong Kong Valuation Reports, as at 28 February 2007 was about RMB741.9 million.

Details of the Hong Kong Valuation Reports are set out as in Appendices I to VII to the Circular.

The value of the Fixed Assets according to the PRC Valuation Reports amounted to about

RMB722.2 million, which was determined by extracting and adding the appraised values of the

Fixed Assets of each of the Targets as stated in the PRC Valuation Reports, as at 30 June 2006.

We noted that the value of the Fixed Assets according to the Hong Kong Valuation Reports

represent a premium of about 2.73% to the PRC Valuation Reports. However, Grant Sherman

and Beijing Zhongzheng confirmed that such difference was mainly due to the different valuation

dates of the PRC Valuation Reports and the Hong Kong Valuation Reports, and confirm that,

if the valuation dates of such reports were the same, the difference between the values of the

Fixed Assets according to the PRC Valuation Reports and the Hong Kong Valuation Reports

would be minimal, which we consider to be insignificant. Beijing Zhongzheng also advised that,

if adopting the same valuation standards, the difference in apprised values regarding the Targets

as at difference valuation dates will be mainly because of new investments, depreciations and

balance transfers from the construction in progress accounts to the fixed asset accounts, and

expects such difference in appraised values to be immaterial. In view of the above, we consider

it no worse off to the Shareholders for the Company to determine the Consideration base on

the PRC Valuation reports instead of the Hong Kong Valuation Reports.

We have performed searches on the information available on the Stock Exchange website and

identified connected transactions (the “Comparable Transactions”) in 2005 and 2006 involved

the acquisition of assets from connected parties by listed H share companies with market

capitalisation exceed HK$10,000 million as at 28 February 2007 and adopted the appraised

values as the basis to determine the relevant considerations. We compared the premium/ discount

of considerations to appraised values of the Comparable Transactions, and the following table

shows the approximate considerations, appraised values and the premium/ discount of

considerations to appraised values of the Comparable Transactions.


— 30 —

Premium/

Appraised value (discount) to the

Listed company Transaction date Consideration of the target appraised value*

(RMB million) (RMB million)

China Shipping

Development Co., Ltd. November 2006 2,470.0 2,462.0 0.3%

Anhui Conch Cement

Company Limited October 2006 302.6 316.4 (4.4%)

Yanzhou Coal Mining

Company Limited September 2006 733.3 748.3 (2.0%)

China Shenhua Energy

Company Limited March 2006 1,161.6 1,161.6 —

Shanghai Electric Group

Company Limited February 2006 378.6 380.2 (0.4%)

China Power International

Development Limited June 2005 560.0 502.0 11.6%

Yanzhou Coal Mining

Company Limited June 2005 584.0 584.0 —

PetroChina Co., Ltd. June 2005 20,741.3 20,741.3 —

The Company March 2007 1,785.4 1,785.4 —

* The premiums/ (discounts) are calculated by dividing the considerations by the appraised values.

As shown above, the ratios of considerations to appraised values range from a discount of about

4.4% to a premium of about 11.6%. Taking in account the Acquisition has a ratio of Consideration

to appraised value of 1, we consider the ratio of the Consideration to the appraised value for

the Acquisition to be within the range of the Comparable Transactions mentioned above and

therefore is fair and reasonable.

As (i) the determination of the consideration of an acquisition of State-owned assets is required

to be based on the value appraised by a qualified valuer endorsed by or filed with the relevant

PRC government regulatory bodies; (ii) the Directors advised that Beijing Zhongzheng and

Beijing Jingwei are qualified valuers endorsed by or filed with the relevant PRC government

regulatory bodies; (iii) the valuation reports prepared by Beijing Zhongzheng and Beijing

Jingwei were prepared in accordance with relevant rules and regulations in the PRC; and (iv)

the ratio of the Consideration to the appraised value for the Acquisition to be in line with the

Comparable Transactions mentioned above, we are of the view that the determination of the

Consideration with reference to the appraised values is fair and reasonable.


— 31 —

Pursuant to the Acquisition Agreement, upon Completion, JCC undertook to lease the land use

rights (the “Land Use Rights”) where the Chengmenshan Copper Mine, the Xiangsi Railway,

JCC Dexing Transportation Company and the JCC Chemical Company situated on to the

Company for a consideration not more than RMB13.3 million. As the consideration for renting

the Land Use Rights will be determined with reference to the valuation prepared by Jiangxi

Diyuan Appraising & Consulting Co., Ltd. (江西省地源評估咨詢有限責任公司), a qualified

land valuer, we consider such pricing basis regarding renting the Land Use Rights to be fair

and reasonable.

4. Issue price of the Consideration Shares and Placing Shares

The Consideration will be satisfied by the issue and allotment of the Consideration Shares,

which is expected to account for about 44.63% of the A Share Issue, to JCC. As stated in the

Letter, it is intended that the issue price of the A Share Issue will not be less than 90% of the

average trading price of the A Shares as quoted on the Shanghai Stock Exchange for the 20

trading days immediately before 20 March 2006, being the date of the publishing of the board

meeting announcement in relation to the A Share Issue and the Acquisition (the “Board Meeting

Announcement Date”), i.e. from 30 January 2007 to 5 March 2007, and for reference purpose,

90% of the average closing price of the A Share during such period is about RMB13.78 per

A Share. Trading in the A Shares was suspended from 6 March 2007 to 19 March 2007.

As advised by the Directors, pursuant to the Measures on the Management of Securities Issuings

by Listed Companies (《上市公司證券發行管理辦法》) effective from 8 May 2006, when listed

companies issue shares to not more than 10 specific parties by way of non-public offering, the

issue price of such shares to be issued shall not be less than 90% of the average trading price

for the 20 trading days immediately before the base date. As advised by the PRC legal adviser

of the Company, the base date is usually referred to as the publishing date of the board meeting

announcement regarding the approval of the non-public offering. In view of the above and taking

into account that the issue price of the A Share Issue will not be less than 90% of the average

trading price of the A Shares on the Shanghai Stock Exchange for 20 trading days immediately

before the Board Meeting Announcement Date, we consider that the issue price of the A Share

Issue is in line with our understanding of the above PRC regulation.


— 32 —

We have performed searches on the information available on the Shanghai Stock Exchange

website and identified offerings (the “Comparable Offerings”) conducted in 2007. For the

Comparable Offerings, we noted that the proposals for the Comparable Offerings were first

approved by the respective boards and shareholders of the listed companies. Then, the listed

companies would apply for CSRC’s approval regarding the Comparable Offerings. As advised

by the Directors, because of the time required to obtain the approval from CSRC, a minimum

offer price is usually approved by the board of a listed company before applying to CSRC. The

following table shows the publishing dates of the board meeting announcements (the “Base

Date”), the dates of the relevant placing documents and the minimum issue prices approved by

the relevant boards in connection with the Comparable Offerings.

Placing Minimum issue price

Listed company Base Date document date Stock code approved by the board

Note 1 Note 2 Note 3

China Railway Erju Co., Ltd. May 2006 January 2007 600528 Not less than the average trading price

Shaanxi Broadcast & TV Network May 2006 January 2007 600831 Not less than 90% of

Intermediary Co., Ltd the average trading price

Xiamen Tungsten Corp. May 2006 February 2007 600549 Not less than the average trading price

Tianjin Tasly Pharmaceutical Co., Ltd. June 2006 January 2007 600535 Not less than the average trading price

Beijing Urban Construction

Investments & Development Co., Ltd. July 2006 February 2007 600266 Not less than the average trading price

Hubei Xingfa Chemicals Group Co., Ltd. July 2006 February 2007 600141 Not less than 90% of

the average trading price

Shanghai Jielong Group Industry July 2006 February 2007 600836 Not less than 90% of

Gorporation Limited the average trading price

Anhui Liuguo Chemical Co., Ltd. August 2006 March 2007 600470 Not less than 90% of


Jiangsu Changjiang Electronics August 2006 February 2007 600584 Not less than 90% of

Technology Co., Ltd. the average trading price

Shangdong Pharmaceutical Glass Co., Ltd. August 2006 March 2007 600529 Not less than 90% of


China Cyts Tours Holding Co., Ltd. September 2006 January 2007 600138 Not less than 90% of


Notes:

1) The base date refers to the dates of publications of the relevant board meeting announcements pursuant towhich, among others, the Comparable Offerings and the related minimum issue prices of the ComparableOfferings were approved.

2) The placing documents set out the details regarding the corresponding placings conducted in 2007 including,but not limited to, the number of placing shares, the issue prices, the proceeds to be raised and the numberand names of placees.

3) Average trading price is calculated based on 20 trading days immediately before the Base Date.


— 33 —

As shown above, we noted that it is not uncommon for companies listed on the Shanghai Stock

Exchange to set minimum offer prices to be not less than 90% of the average trading price of

the 20 trading days immediately before the base date. Therefore, we are of the view that setting

the minimum offer price of the A Share Issue to be not less than 90% of the average trading

price of the A Shares as quoted on the Shanghai Stock Exchange for the 20 trading days

immediately before the Board Meeting Announcement Date is in line with the practices adopted

by the Comparable Offerings and therefore is fair and reasonable.

According to the Letter, it is intended that the Placing Shares, which is expected to account

for more than half of the Shares to be issued under the A Share Issue, assuming the number

of Consideration Shares to be issued will amount to about 44.63% of the A Share Issue, will

be issued to independent institutional investors. In addition, as stated in the Letter the issue price

of the A Share Issue will be determined with reference to, among others, (i) the trading price

of the A Shares in the secondary market; (ii) price-to-earning ratio of the Company; (iii) the

growth trend of the Company; and (iv) the result of negotiations with other relevant parties.

Assuming more than half of the Shares to be issued under the A Share Issue will be issued to

independent institutional investors, as advised by the Directors, the issue price of the A Share

Issue will be based on, among others, result of negotiations with the independent institutional

investors. On the other hand, as (i) the trading price in the secondary market; (ii) price-to-earning

ratio; and (iii) the growth trend are, among others, commonly adopted pricing basis for placings,

we consider the determination of the issue price of the A Share Issue based on such parameters

is in line with general market practice. In view of the above, we consider the pricing basis of

the A Share Issue as stated above to be fair and reasonable.

As (i) it is in the interests of the Company and the Shareholders as a whole to issue the

Consideration Shares and the Placing Shares to satisfy the Consideration and to raise additional

funding for the expansion plans of the Company; (ii) the issue price of the A Share Issue is

in line with our understanding of the relevant PRC regulation; and (iii) setting the minimum

offer price of the A Share Issue to be not less than 90% of the average trading price of the A

Shares on the Shanghai Stock Exchange for the 20 trading days immediately before the Board

Meeting Announcement Date is in line with the practices adopted by the Comparable Offerings,

we consider the issue of and the minimum issue price of the A Share Issue are fair and reasonable

and in the interests of the Company and the Shareholders as a whole.


— 34 —

5. Financial effects of the A Share Issue and the Acquisition Agreement

Net asset value

As stated in the Letter, it is estimated that the proceeds from the A Share Issue will amount

to about RMB4,000,000,000 (including the value of the Consideration Shares). Accordingly,

upon completion of the A Share Issue and the Acquisition, the equity, bank balances and cash,

current assets and fixed assets will increase, and therefore the A Share Issue will likely to have

a positive impact on the net asset value of the Group.

As stated in the Letter, the Consideration will be satisfied by the issue and allotment of the

Consideration Shares, and should there be a shortfall in satisfying the Consideration, the Group

will pay such shortfall by internal resources of the Group, including but not limited to cash held

by the Company and/or bank borrowings. Accordingly, the equity and the fixed assets will

increase whereas (if applicable) the cash balance will decrease, and therefore the Acquisition

will likely to have a positive impact on the net asset value of the Group.

Profit and loss accounts

As advised by the Directors, given the Chengmenshan Copper Mine and the Copper Product

Company had net profits after taxations and extraordinary items of about RMB96.7 million and

RMB15.4 million and the JCC Dexing Transportation Company and the JCC Chemical Company

had net losses after taxations and extraordinary items of about RMB1.3 million and RMB0.5

million for the six months ended 30 June 2006 respectively, the A Share Issue and the Acquisition

will likely have an overall positive impact on the profitability of the Company, which in turn,

will likely have an overall positive impact on the earning per Share as well.

Working capital

As the Placing Shares will be issued to the independent institutional investors for cash, upon

completion, the A Share Issue will likely to have a positive impact on the working capital of

the Group.

As mentioned above, the Company will settle the Consideration of the Acquisition by the issue

and allotment of the Consideration Shares to JCC and if the Consideration is satisfied by the

issue and allotment of the Consideration Shares fully, the Acquisition will have no material

impact on the working capital of the Group. In the event that there is a shortfall in satisfying

the Consideration, as the Group will pay such shortfall by internal resources of the Group,

including but not limited to cash held by the Company and/or bank borrowings, the working

capital of the Group may decrease by the amount of such shortfall as mentioned above.


— 35 —

RECOMMENDATION

Having considered:

_ the A Share Issue can generate the required funds for the expansion plans of the Company;

_ the Acquisition is in line with the development strategy of the Company as stated in the 2005 Annual

Report;

_ the Acquisition can reduce the continuing connected transactions between the Company and JCC and

strengthen the governance of the Company;

_ the transactions contemplated under the Acquisition Agreement can enhance the overall operational

results of the Group;

_ the determination of the consideration of an acquisition of State-owned assets is required to be based

on the value appraised by a qualified valuer endorsed by or filed with the relevant PRC government

regulatory bodies;

_ the appraised values of the Targets were prepared in accordance with relevant rules and regulations

in the PRC;

_ the ratio of the Consideration to the apprised value for the Acquisition is in line with the Comparable

Transactions;

_ the issue price of the A Share Issue is in line with our understanding of the relevant PRC regulation;

_ the setting of the minimum offer price of the A Share Issue to be not less than 90% of the average

trading price of the A Shares as quoted on the Shanghai Stock Exchange for the 20 trading days

immediately before the Board Meeting Announcement Date is in line with the practices adopted by

the Comparable Offerings;

_ the financial effects of the A Share lssue and the Acquisition on the Group; and

_ all of the other analyses, reasons and factors mentioned in this letter,

we consider that the transactions contemplated under the A Share Issue and the Acquisition Agreement are

fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the

Company and the Shareholders as a whole. Accordingly, we advise the Independent Board Committee to

recommend the Independent Shareholders to vote in favor of the resolutions to be proposed at the general

meeting of the Company to approve the A Share Issue and the Acquisition Agreement.

Yours faithfully,

For and on behalf of


Stacey Wong

Head of Corporate Finance

APPENDIX I VALUATION REPORT ON PROPERTIES

— 36 —

2 April 2007 Room 904 on 9/F,

Harbour Centre,

25 Harbour Road,

Wan Chai,

Hong Kong

The Board of Directors

Jiangxi Copper Company Limited

15 Yejin Avenue

Guixi City

Jiangxi Province

The People’s Republic of China

Dear Sirs,

In accordance with your instructions to value the properties interests being acquired by Jiangxi Copper

Company Limited (the “Company”), held by Jiangxi Copper Corporation (“JCC”) and its subsidiaries (“JCC

Group”) in the People’s Republic of China (the “PRC”), we confirm that we have carried out inspections,

made relevant enquiries and searches and obtained such further information as we consider necessary for the

purpose of providing you with our opinion of the market values of the property interests as at 28 February

2007.

Due to the nature of buildings and structures of the properties, there are no market sales comparables,

therefore, we have valued these property interests on the basis of Depreciated Replacement Cost (“DRC”).

DRC is based on an estimate of the Market Value for the existing use of the land, plus the current gross

replacement (reproduction) costs of the improvements, less allowances for physical deterioration and all

relevant forms of obsolescence and optimization.

Market value is defined as the estimated amount for which a property should exchange on the date of

valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing

wherein the parties had each acted knowledgeably, prudently, and without compulsion.

In valuing the property interests, we have complied with all the requirements contained in Chapter 5 and

Practice Note 12 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong

Limited and The HKIS Valuation Standards on Properties (1st Edition 2005) published by The Hong Kong

Institute of Surveyors.


— 37 —

The valuations have been made on the assumption that the owner sells the property interest on the market

without the benefit of a deferred term contract, leaseback, joint venture, management agreement or any

similar arrangement which would serve to affect their value.

No allowance has been made in our valuation for any charges, mortgages or amounts owing on any of the

property valued nor for any expenses or taxation which may be incurred in effecting a sale. Unless otherwise

stated, it is assumed that all the interests are free from encumbrances, restrictions and outgoings of an

onerous nature which could affect its value.

In valuing the properties, we have assumed that the owner has free and uninterrupted rights to use the

properties for the whole of the unexpired term as granted and is entitled to transfer the properties with the

residual term without payment of any further premium to the government authorities or any third parties.

We have assumed that all consents, approvals and licenses from relevant government authorities for the

properties have been granted without any onerous conditions or undue time delay which might affect their

values. It is assumed that all applicable zoning and use regulations and restrictions have been complied with

unless nonconformity has been stated, defined, and considered in the appraisal report.

No environmental impact study has been ordered or made. Full compliance with applicable national,

provincial and local environmental regulations and laws is assumed unless otherwise stated, defined, and

considered in the report. It is also assumed that all required licenses, consents, or other legislative or

administrative authority from any local, provincial, or national government or private entity or organization

either have been or can be obtained or renewed for any use which the report covers.

We have been provided with copies of extracts of title documents relating to the properties. However, we

have not inspected the original documents to verify ownership or to verify any amendments which may not

appear on the copies handed to us. Due to the nature of the land registration system in the PRC, we are

unable to search the original documents to verify the existing title of the properties or any material

encumbrances that might be attached to the properties. In the preparation of our valuation report regarding

the properties in the PRC, we have relied to the considerable extent on the legal opinion provided by the

Company’s legal adviser, Beijing X.H. Law Firm on the PRC laws regarding the titles of the properties in

the PRC.

In the course of our valuation, we have relied on a considerable extent on the information provided by the

Company on such matters as property title, statutory notices, easements, tenure, occupation, site and floor

areas, identification of the properties and all other relevant matters. We have no reason to doubt the truth and

accuracy of the information provided to us by the Company. We were also advised by the Company that no

material facts have been omitted from the information supplied. All documents have been used as reference

only. All dimensions, measurements and areas are approximations.


— 38 —

We have inspected the exterior of the properties and, where possible, the interior of the properties in respect

of which we have been provided with such information as we have required for the purpose of our valuation.

However, no structural survey has been carried out and it was not possible to inspect the wood work and

other parts of the structure which were covered, unexposed or inaccessible. We are therefore, unable to

report that the properties are free of rot, infestation or any structural defect. No tests have been carried out

on any of the building services.

Unless otherwise stated, all monetary figures stated in this report are in Renminbi (RMB).

We enclose herewith a summary of valuations and valuation certificates.

Respectfully submitted,


GRANT SHERMAN APPRAISAL LIMITED

Peggy Y. Y. Lai

MRICS MHKIS RPS

Associate Director

Real Estate Group

Note: Ms Peggy Y.Y. Lai is a member of the Royal Institution of Chartered Surveyors, a member of the Hong Kong Institute ofSurveyors and Register Professional Surveyors in the General Practice Section, who has over 5 years experience in thevaluation of properties in Hong Kong, the PRC and the Asian Region.


— 39 —

SUMMARY OF VALUATION

Capital value in the

existing state as at

Property 28 February 2007

RMB

Property interests being acquired by Company and held by JCC Group in PRC

1. Various buildings and structures of JCC (“Chengmenshan”) located 228,835,589

at Lianmeng Village and Xinglian Village Jiujiang County Jiangxi Province


2 Various buildings and structures of Copper Alloy Company 20,010,658

located at Guixi City Jiangxi Province


3. Various buildings and structures of Copper Product Company 21,993,027

located at Guixi City Jiangxi Province


4. Various buildings and structures of JCC Chemical Company located 12,719,157

at Dexing City Jiangxi Province


5. Various buildings and structures of JCC Dexing Transportation Company 6,966,035

located at Dexing City Jiangxi Province


6. Various buildings and structures of JCC (“Xiangsi”) located 70,100,164

at Dexing City Jiangxi Province


Total: 360,624,630


— 40 —

VALUATION CERTIFICATE


Capital value inParticulars of existing state as at

Property Description and Tenure Occupancy 28 February 2007(RMB)

1. Various buildings andstructures of JCC(“Chengmenshan”)located at LianmengVillage and XinglianVillage Jiujiang CountyJiangxi ProvinceThe People’s Republicof China

The properties comprise variousbuildings and structures erected on asite with area of approximately1,528,082.13 sq. m.

The total gross floor area of thesebuildings and structures isapproximately 25,227 sq.m., mainlybuilt in various stages from 1958 to2005.

The land use rights of the propertiesbeing leased from JCC for anunspecified term.

The properties areoccupied by JCC as anoperational mine plant.

228,835,589(see note iii)

Notes:

i) The properties have 36 buildings and structures with a total floor area of approximately 25,227 sq.m. Among these, 7buildings with a total floor area of approximately 6,987 sq.m. without proper title proof.

ii) According to the PRC legal opinion, building ownership certificates were granted to the buildings with a total gross floor areaof 18,240 sq.m.

iii) We attribute “no commercial value” for those buildings without proper title proof due to the reason that the Company cannottransfer them. For reference purpose, the value of the buildings with an area of 6,987 sq.m. is RMB 5,383,349 under theassumption that the building ownership certificates has been granted.

iv) According to the PRC legal opinion, the land use rights of Chengmenshan, JCC Chemical Company, JCC DexingTransportation Company and Xiangsi being leased from JCC at the total annual rental not more than RMB13,258,500.


— 41 —





2. Various buildings andstructures of CopperAlloy Company locatedat Guixi City JiangxiProvinceThe People’s Republicof China

The properties comprise variousbuildings and structures erected on asite with area of approximately12,178 sq. m.

The total gross floor area of thesebuildings and structures isapproximately 7,228 sq.m. completedin 2006.

The land use rights of the propertieshas been leased from JCC Group for3 years commencing from January 1,2007 to December 31, 2009 at ayearly rent of RMB48,712.

The properties areoccupied by JiangxiCopper Alloy CompanyLimited for manufacturingand sale of copper alloyrods and wires.


Notes:

i) The properties have 4 buildings and structures with a total floor area of approximately 7,228 sq.m. Among these, 2 buildingswith a total floor area of approximately 310 sq.m. without proper title proof.

ii) According to the PRC legal opinion, building ownership certificates were granted to the buildings with a total gross floor areaof 6,918 sq.m.

iii) We attribute “no commercial value” for those buildings without proper title proof due to the reason that the Company cannottransfer them. For reference purpose, the value of the buildings with an area of 310 sq.m. is RMB 485,443 under theassumption that the building ownership certificates has been granted.

iv) According to the PRC legal opinion, the land use rights of the properties have been leased from JCC Group to Copper AlloyCompany for 3 years commencing from January 1, 2007 to December 31, 2009 at a yearly rent of RMB4 per sq.m.


— 42 —





3. Various buildings andstructures of CopperProduct Company locatedat Guixi City JiangxiProvinceThe People’s Republicof China

The properties comprise variousbuildings and structures erected on asite with area of approximately13,759 sq. m.


The land use rights of the propertieshave been leased from JCC Group for3 years commencing from January 1,2007 to December 31, 2009 at ayearly rent of RMB55,036.

The properties areoccupied by JiangxiCopper ProductsCompany Limitedformanufacturing and saleof copper alloy rods andwires.


Notes:

i) The properties have 6 buildings and structures with a total floor area of approximately 12,824 sq.m. Among these, 3 buildingswith a total floor area of approximately 2,787 sq.m. without proper title proof.

ii) According to the PRC legal opinion, building ownership certificates were granted to the buildings with a total gross floor areaof 10,037.39 sq.m.

iii) We attribute “no commercial value” for those buildings without proper title proof due to the reason that the Company cannottransfer them. For reference purpose, the value of the buildings with an area of 2,787 sq.m. is RMB 1,748,711 under theassumption that the building ownership certificates has been granted.

iv) According to the PRC legal opinion, the land use rights of the properties has been leased from JCC Group to Copper ProductCompany for 3 years commencing from January 1, 2007 to December 31, 2009 at a yearly rent of RMB4 per sq.m.


— 43 —





4. Various buildings andstructures of JCCChemical Companylocated at Dexing CityJiangxi ProvinceThe People’s Republicof China

The properties comprise variousbuildings and structures erected on asite with area of approximately103,977.2 sq. m.

The total gross floor area of thesebuildings and structures isapproximately 4,919 sq.m., mainlybuilt in 2005.

The land use rights of the propertiesbeing leased from JCC for anunspecified term

The properties areoccupied by JCCChemical Company forsales and research ofsulphur product.


Notes:

i) The properties have 15 buildings and structures with a total floor area of approximately 4,919 sq.m. Among these, 3buildings with a total floor area of approximately 222 sq.m. without proper title proof.

ii) According to the PRC legal opinion, building ownership certificates were granted to the buildings with a total gross floorarea of 4,697.81 sq.m.

iii) We attribute “no commercial value” for those buildings without proper title proof due to the reason that the Companycannot transfer them. For reference purpose, the value of the buildings with an area of 222 sq.m. is RMB 243,020 under theassumption that the building ownership certificates has been granted.



— 44 —





5. Various buildings andstructures of JCC DexingTransportation Companylocated at Dexing CityJiangxi ProvinceThe People’s Republicof China




The properties areoccupied by JCC DexingTransportation Companyfor manufacturing ofautomotive parts andcement production.

6,966,035

Notes:

i) The properties have 20 buildings and structures with a total floor area of approximately 4,810 sq.m..

ii) According to the PRC legal opinion, building ownership certificates were granted to the buildings with a total gross floor areaof 4,810 sq.m..

iii) According to the PRC legal opinion, the land use rights of Chengmenshan, JCC Chemical Company, JCC DexingTransportation Company and Xiangsi being leased from JCC at the total annual rental not more than RMB13,258,500.


— 45 —





6. Various buildings andstructures of JCC(“Xiangsi”) located atDexing City JiangxiProvinceThe People’s Republicof China




The properties areoccupied by XiangsiRailway formanufacturing ofautomotive parts andcement production.


Notes:

i) The properties have 12 buildings and structures with a total floor area of approximately 4,201 sq.m. Among these, 2 buildingswith a total floor area of approximately 1,438 sq.m. without proper title proof.

ii) According to the PRC legal opinion, building ownership certificates were granted to the buildings with a total gross floor areaof 2,763 sq.m..

iii) We attribute “no commercial value” for those buildings without proper title proof due to the reason that the Company cannottransfer them. For reference purpose, the value of the buildings with an area of 1,438sq.m. is RMB 1,250,601 under theassumption that the building ownership certificates has been granted.


APPENDIX II VALUATION REPORT ON PLANT AND MACHINERY OFCHENGMENSHAN COPPER MINE

— 46 —


Harbour Centre,

25 Harbour Road,

Wan Chai,

Hong Kong



15 Yejin Avenue

Guixi City

Jiangxi, China

Dear Sirs or Madams,

APPRAISAL SUMMARY LETTER

In accordance with your instructions, we have made an appraisal of the Machinery and Equipment (the

“Equipment”) exhibited to us as that of Chengmenshan Copper Mine 《城門山銅礦》(“Chengmenshan

Mine”), which will be acquired by Jiangxi Copper Company Limited.

This letter, which forms part of our appraisal report, identifies the Equipment, the scope and character of our

investigation, the premise of the value adopted, the valuation approaches adopted, and our conclusion of

value.

In valuing the Equipment, we have complied with the standards and ethics contained in the handbook of

Valuing Machinery and Equipment published by the American Society of Appraisers.

We confirm that we have carried out an inspection, made relevant inquiries and obtained such further

information as we consider necessary for the purpose of providing you with our opinion of the fair market

value on the premise of continued use of the Equipment as of February 28, 2007 (the “Appraisal Date”).

It is our understanding that this appraisal will be used for financing purposes.


— 47 —

INTRODUCTION

The mine is located in Jiujiang city, in the northern part of Jiangxi Province, the People Republic of China

(the “PRC”). Chengmenshan Mine is principally engaged in the mining of non-ferrous and non-metallic

ores, with an operating period of 20 years from June 2003. The mine contains 1.53 million tonnes of copper

and the duration of the mining right was 30 year (starting from 2004), which is extendable subject to

approval by the government.

The Equipment appraised mainly consists of grinders, feeders, transformers, elevators, electrical

installations, water pumps, air compressors, belt conveyors, ventilators, motor vehicles, and some associated

equipment including office equipment and electrical appliances.

The appraisal report comprises:

— a summary, arranged by category, showing the fair market value under the premise of continued use

of the Equipment;

— assumptions and limiting conditions; and

— a statement of general service conditions.

Excluded from this investigation were machinery and equipment held under hired purchase contract, land,

buildings and structures, building improvements, vehicles, furniture and fixture, office equipment, tools,

stocks, supplies, inventories, materials on hand, tangible assets of current nature and intangible assets that

might exist.

The Equipment is located at Chengmenshan in Jiujiang City, Jiangxi Province, the PRC.

PREMISE OF VALUE

The premise of value will be fair market value in continued use which is defined as the following:

Fair market value is defined as the estimated amount at which a property might be expected to exchange

between a willing buyer and a willing seller, neither being under compulsion, each having reasonable

knowledge of all relevant facts.

Fair market value in continued use is defined as the fair market value of a property based on continuation of

its existing use, assuming the asset could be sold in the open market for its existing use, and otherwise in

keeping with the market value definition regardless of whether or not the existing use represents the highest

and best use of the property.


— 48 —

Fair market value under the premise of continued use does not represent the amount that might be realized in

the event of piecemeal disposition of the property in the open market or from any alternative use to which it

may be put.

VALUATION METHODOLOGY

Before arriving at our opinion of value, we personally inspected the Equipment on 24-27 July 2006 and

studied the market conditions. To develop our opinion of value, we considered the three generally accepted

approaches to value: cost, market and income capitalization. The theory of these approaches is outlined as

follows:

The cost approach

The cost approach establishes value based on the cost of reproducing or replacing the Equipment, less

depreciation from physical deterioration, and functional and economic/external obsolescence.

Cost of Reproduction New is defined as the estimated amount required to reproduce the Equipment at one

time in like kind and materials in accordance with current market prices for materials, labor, and

manufactured equipment, contractors’ overhead and profit, and fees, but without provision for overtime,

bonuses for labor, or premiums for materials or equipment.

Cost of Replacement New is defined as the estimated amount required to replace the entire property at one

time with a modern new unit using the most current technology and construction materials that will

duplicate the production capacity and utility of an existing unit at current market prices for materials, labor,

and manufactured equipment, contractors’ overhead and profit, and fees, but without provision for overtime,


Physical Deterioration is the loss in value resulting from wear and tear in operation and exposure to the

elements.

Functional Obsolescence is the loss in value caused by conditions within the Equipment such as changes in

design, materials, or process that result in inadequacy, overcapacity, lack of utility, or excess operating costs.

Economic/External Obsolescence is an incurable loss in value caused by unfavorable conditions external to

the Equipment such as the local economy, economics of the industry, availability of financing, encroachment

of objectionable enterprises, loss of material and labor sources, lack of efficient transportation, shifting of

business centers, passage of new legislation, and changes in ordinances.

The cost approach generally provides a meaningful indication of the value of land improvements, special

buildings, special structures, and special machinery and equipment associated with a viable business or

justified by economic demand.


— 49 —

When market transactions of comparable Equipment are not available, when data cannot be extrapolated

from larger transactions, or when transactions are non-existent, under premise of continued use, assuming

adequate earnings the cost approach is the preferred valuation procedure.

The market approach

In the market approach, the value of the appraised Equipment is estimated through analysis of recent sales

of comparable items of the Equipment. It is employed in the valuation of the Equipment for which there is a

known used market. Under the premise of continued use assuming adequate earnings, consideration is given

to the cost to acquire similar items in the used-equipment market; an allowance then is made to reflect the

costs for freight and installation.

A variant of the direct market approach is the use of market relationship. Recent market prices for

Equipment in an asset classification are determined with respect to age and are compared with a benchmark

price, such as the cost of reproduction new. The ratio is applied to similar Equipment in the classification

when the secondary market for the subject equipment is too sparse to exhibit appropriate comparables.

The income capitalization approach

In the income capitalization approach, value is developed on the basis of capitalization of the net earnings

that would be generated if a specific stream of income can be attributed to an asset or a group of assets. This

approach is most applicable to investment and general-use properties where there is an established and

identifiable rental market.

In any appraisal study, all three approaches to value must be considered, as one or more may be applicable

to the subject Equipment. In some situations, elements of two or three approaches may be combined to reach

a value conclusion. For this appraisal, since the income generated by the Equipment could hardly be

separately identified, therefore, the income capitalization approach was not applied. The cost and market

approaches were the principal methods adopted to arrive at our opinion of value.



price, such as the cost of reproduction new.


— 50 —

INVESTIGATION AND ASSUMPTIONS

We have conducted inspections on all items of the Equipment on 24-27 July 2006. During our inspection,

we have noted that the Equipment was in good working condition and had been well maintained. As

discussed with the management of Chengmenshan Mine (the “Management”), we recognized the functions

of the Equipment during each production stage. A detailed maintenance records for the Equipment were

provided by Chengmenshan Mine. All major equipments were strictly following a company-specific

maintenance and overhaul schedule in order to assure effective production capacity.

In the course of our investigation, we accepted property records furnished by Chengmenshan Mine as

properly describing the Equipment. We visited the locations to verify the existence of the Equipment and to

gather information relating to its condition and utility. The balance of the information provided by

Chengmenshan Mine, after adjustments based on our observation, although not subject to a detailed

verification, was accepted as reasonably representing the facts.

When developing the cost of replacement new, we have considered the extent, character and utility of the

Equipment. We have also studied the market condition and obtain current market prices from relevant

machinery dealers when applicable. We have also make allowance for freight and installation. To arrive at

the fair market value, we have made deduction for depreciation and the functional/external obsolescence

they may present, if any.

Construction-in-progress are assets not fully constructed or installed. They have been valued at their

recorded cost basis as of the appraisal date.

Any deferred maintenance, physical wear and tear, operating malfunctions, lack of utility, or other

observable conditions distinguishing the Equipment from equipment of like kind in new condition were

noted and made part of our judgment in arriving at the value.

We did not investigate any financial data pertaining to the present or prospective earning capacity of the

operation in which the assets are used. It was assumed that prospective earnings would provide a reasonable

return on the appraised value of the assets, plus the value of any assets not included in the valuation, and

adequate net working capital.

We have not carried out a mechanical survey, nor have we inspected covered or inaccessible areas of the

Equipment. Also, no investigation was conducted as to whether the operation of specific pieces of

Equipment complied with the relevant environmental standards and ordinances; we have assumed that the

Equipment are and will continue to comply with the current environmental standards and ordinances. We

have made no allowance in our valuation for costs, if any, associated with the disposal or handling of

materials required to comply with current or pending environmental legislation.


— 51 —

CONCLUSION OF VALUE

Based on the investigation described, it is our opinion that as of February 28, 2007, the fair market value

under the premise in continued use for the Equipment is reasonably represented by the amount of

RENMINBI DOLLAR THIRTY-SEVEN MILLION THREE HUNDRED TWENTY FOUR

THOUSAND AND EIGHTY FOUR (RMB37,324,084) ONLY, the breakdown is shown below:

Fair Market Value

(RMB)

Machinery and Equipment 24,305,701

Motor Vehicles 11,953,494

Office Equipment 1,064,889

Construction-in-Progress —

37,324,084

For the purpose of this appraisal, we have reviewed the acquisition records and asset listings made available

to us by Chengmenshan Mine. We have relied to a considerable extent on such records and listings in

arriving at our opinion of value.

We have not investigated the title to or any liabilities against the Equipment.

We hereby certify that we have neither present nor a prospective interest in the Equipment or the value

reported.




Keith C.C. Yan, ASA

Managing Director

Note: Mr. Keith C.C. Yan is an Accredited Senior Appraiser (Business Valuation) with a membership in the American Society ofAppraisers, and he has been conducting business valuation in the Greater China region for various purposes since 1988.

APPENDIX III VALUATION REPORT ON PLANT AND MACHINERY OFXIANGSI RAILWAY

— 52 —


Harbour Centre,

25 Harbour Road,

Wan Chai,

Hong Kong



15 Yejin Avenue

Guixi City

Jiangxi, China




“Equipment”) exhibited to us as that of Xiangsi Railway 《香泗鐵路專用線》(“Xiangsi Railway”) of

Jiangxi Copper Corporation (“JCC”).



value.








— 53 —

INTRODUCTION

Xiangsi Railway is wholly-owned by JCC. The copper mine in Dexing city (“Dexing Mine”) is the main

mine of JCC and also the largest open-pit mine in China. Currently, Xiangsi Railway is well-equipped with

the most advanced technologies for mining and ores milling processes. Major products of the Dexing Mine

include copper concentrate 《銅精礦》, sulfur concentrate 《硫精礦》 and electrode copper 《電積銅》. In

addition, Jiangxi Copper Company Limited has successfully acquired Fujiawu 《富家塢》 mine after its

bankruptcy in 2001 so as to extend the mining right in Dexing.

The Equipment appraised mainly consists of trucks, electric shovels, drills, mills, air compressors, electrical

installations, and some associated equipment including office equipment and electrical appliances.



of the Equipment;






might exist.

The Equipment is located at 《泗洲鎮》and 《香屯站》in Dexing City, Jiangxi Province, the PRC.

PREMISE OF VALUE










— 54 —



may be put.





follows:

The cost approach













elements.











— 55 —




The market approach
























— 56 —




discussed with the management of Xiangsi Railway (the “Management”), we recognized the functions of the

Equipment during each production stage. A detailed maintenance records for the Equipment were provided

by Xiangsi Railway.

In the course of our investigation, we accepted property records furnished by Xiangsi Railway as properly

describing the Equipment. We visited the locations to verify the existence of the Equipment and to gather

information relating to its condition and utility. The balance of the information provided by Xiangsi

Railway, after adjustments based on our observation, although not subject to a detailed verification, was

accepted as reasonably representing the facts.






















— 57 —

CONCLUSION OF VALUE



RENMINBI DOLLAR ELEVEN MILLION FOUR HUNDRED SIXTY THOUSAND TWO

HUNDRED FIFTY NINE (RMB11,460,259), the breakdown is shown below:

Fair Market Value

(RMB)


Motor Vehicles —

Office Equipment 11,543


11,460,259


to us by Xiangsi Railway. We have relied to a considerable extent on such records and listings in arriving at

our opinion of value.



reported.




Keith C.C. Yan, ASA

Managing Director


APPENDIX IV VALUATION REPORT ON PLANT AND MACHINERY OFCOPPER ALLOY COMPANY

— 58 —


Harbour Centre,

25 Harbour Road,

Wan Chai,

Hong Kong



15 Yejin Avenue

Guixi City

Jiangxi, China




“Equipment”) exhibited to us as that of Jiangxi Copper Alloy Company Limited 《江西銅業銅合金材料有

限公司》(“Copper Alloy Company”) of Jiangxi Copper Corporation (“JCC”).



value.








— 59 —

INTRODUCTION

Copper Alloy Company, a joint venture company established by JCC and Jiangxi Copper Company Limited

《江西銅業股份有限公司》 (the “Company”), was found in February 2005 with a registered capital of

RMB199.5 million. The Company, whose H shares are listed on The Stock Exchange of Hong Kong Limited

(Stock code: 0358), is interested in 60 percent equity interest in Copper Alloy Company. Copper Alloy

Company is principally engaged in the manufacturing and sale of f8 - f18 copper and copper alloy rods and

wires, after-sale services, and the related technological advisory services and businesses. The production

capacity of Copper Alloy Company reached 220,000 tonnes of copper rods and wires per annum, which

played an important role in promoting JCC to become one of the largest enterprises in domestic copper rod

processing, production and sales sector.

The Equipment appraised mainly consists of machineries and equipment for the production line of copper

rods and wires.



of the Equipment;






might exist.

The Equipment is located in Guixi City, Jiangxi Province, the PRC.

PREMISE OF VALUE






— 60 —







may be put.





follows:

The cost approach













elements.








— 61 —







The market approach
























— 62 —




discussed with the management of Copper Alloy Company (the “Management”), we recognized the

functions of the Equipment during each production stage. A detailed maintenance records for the Equipment

were provided by Copper Alloy Company.

In the course of our investigation, we accepted property records furnished by Copper Alloy Company as


gather information relating to its condition and utility. The balance of the information provided by Copper

Alloy Company, after adjustments based on our observation, although not subject to a detailed verification,

was accepted as reasonably representing the facts.






















— 63 —

CONCLUSION OF VALUE



RENMINBI DOLLAR ONE HUNDRED TWENTY-ONE MILLION TWENTY ONE THOUSAND

SIX HUNDRED NINETEEN (RMB121,021,619), the breakdown is shown below:

Fair Market Value

(RMB)


Motor Vehicles —

Office Equipment —

Construction-in-Progress 3,667,226

121,021,619


to us by Copper Alloy Company. We have relied to a considerable extent on such records and listings in




reported.




Keith C.C. Yan, ASA

Managing Director


APPENDIX V VALUATION REPORT ON PLANT AND MACHINERY OFCOPPER PRODUCT COMPANY

— 64 —


Harbour Centre,

25 Harbour Road,

Wan Chai,

Hong Kong



15 Yejin Avenue

Guixi City

Jiangxi, China




“Equipment”) exhibited to us as that of Jiangxi Copper Products Company Limited 《江西銅業銅材有限

公司》(“Copper Products Company”) of Jiangxi Copper Corporation (“JCC”).



value.








— 65 —

INTRODUCTION

Copper Products Company, a joint venture company established by JCC and Jiangxi Copper Company

Limited《江西銅業股份有限公司》 (the “Company”), was found in March 2002 with a registered capital

of RMB225 million. The Company, whose H Shares are listed on The Stock Exchange of Hong Kong

Limited (Stock code: 0358), is interested in 60 percent equity interest in Copper Product Company. Copper

Product Company is principally engaged in the manufacturing and processing of copper alloy rods and

wires, sale of domestic products, after-sale services and the related technological advisory services and

businesses. For the year of 2005, Copper Product Company sold 159,000 tonnes of copper rods and wires,

representing a growth of 9.9 percent over the amount in 2004.

The Equipment appraised mainly consists of water pumps, blowers, dryers, heat exchangers, electrical

installations, and some associated equipment including office equipment and electrical appliances.



of the Equipment;






might exist.

The Equipment is located in Guixi City, Jiangxi Province, the PRC.

PREMISE OF VALUE










— 66 —



may be put.





follows:

The cost approach













elements.











— 67 —




The market approach
























— 68 —




discussed with the management of Copper Product Company (the “Management”), we recognized the


were provided by Copper Product Company.

In the course of our investigation, we accepted property records furnished by Copper Product Company as


gather information relating to its condition and utility. The balance of the information provided by Copper

Product Company, after adjustments based on our observation, although not subject to a detailed























— 69 —

CONCLUSION OF VALUE



RENMINBI DOLLAR ONE HUNDRED THIRTY FOUR MILLION SEVEN HUNDRED TWENTY

SEVEN THOUSAND TWO HUNDRED AND TEN (RMB134,727,210), the breakdown is shown below:

Fair Market Value

(RMB)


Motor Vehicles —


Construction-in-Progress 2,348,617

134,727,210


to us by Copper Product Company. We have relied to a considerable extent on such records and listings in




reported.




Keith C.C. Yan, ASA

Managing Director


APPENDIX VI VALUATION REPORT ON PLANT AND MACHINERY OF JCCDEXING TRANSPORTATION COMPANY

— 70 —


Harbour Centre,

25 Harbour Road,

Wan Chai,

Hong Kong



15 Yejin Avenue

Guixi City

Jiangxi, China



“Equipment”) exhibited to us as that of Jiangxi Copper Corporation (Dexing) Transportation Company

Limited 《江西銅業集團 (德興 )運輸有限公司》(“JCC Dexing Transportation Company”)of Jiangxi

Copper Corporation (“JCC”).



value.







INTRODUCTION

JCC Dexing Transportation Company was established in January 1997 with a registered capital of

RMB15.86 million. JCC Dexing Transportation Company is wholly-owned by JCC and principally engaged

in the motor vehicle transportation, manufacturing of automotive parts, cement production, manufacturing or

machineries, maintenance of automobiles, transportation and repairing of motor vehicles for dangerous

goods.


— 71 —

The Equipment appraised mainly consists of trucks, cranes, bulldozers, and some associated equipment

including office equipment, electrical appliances and motor vehicles.



of the Equipment;






might exist.

The Equipment is located in Dexing City, Jiangxi Province, the PRC.

PREMISE OF VALUE











may be put.


— 72 —





follows:

The cost approach













elements.














— 73 —

The market approach


























discussed with the management of JCC Dexing Transportation Company (the “Management”), we

recognized the functions of the Equipment during each production stage. A detailed maintenance records for

the Equipment were provided by JCC Dexing Transportation Company. All major equipments were strictly

following a company-specific maintenance and overhaul schedule in order to assure effective production

capacity.


— 74 —

In the course of our investigation, we accepted property records furnished by JCC Dexing Transportation

Company as properly describing the Equipment. We visited the locations to verify the existence of the

Equipment and to gather information relating to its condition and utility. The balance of the information

provided by JCC Dexing Transportation Company, after adjustments based on our observation, although not

subject to a detailed verification, was accepted as reasonably representing the facts.






















— 75 —

CONCLUSION OF VALUE



RENMINBI DOLLAR ELEVEN MILLION SEVEN HUNDRED FORTY TWO THOUSAND FIVE

HUNDRED TWENTY TWO (RMB11,742,522), the breakdown is shown below:

Fair Market Value

(RMB)


Motor Vehicles 7,297,861



11,742,522


to us by JCC Dexing Transportation Company. We have relied to a considerable extent on such records and

listings in arriving at our opinion of value.



reported.




Keith C.C. Yan, ASA

Managing Director


APPENDIX VII VALUATION REPORT ON PLANT AND MACHINERY OFJCC CHEMICAL COMPANY

— 76 —


Harbour Centre,

25 Harbour Road,

Wan Chai,

Hong Kong



15 Yejin Avenue

Guixi City

Jiangxi, China




“Equipment”) exhibited to us as that of Jiangxi Copper Chemical Company Limited 《江西銅業集團化工

有限公司》(“JCC Chemical Company”)of Jiangxi Copper Corporation (“JCC”).



value.








— 77 —

INTRODUCTION

JCC Chemical Company was found in October 2004 with a registered capital of RMB42.63 million. As at

the Appraisal Date, the entire equity interest of JCC Chemical Company was held by JCC. JCC Chemical

Company is principally engaged in the manufacturing and sale of sulfuric products, and the extended

treatment of mineral products. Major product of JCC Chemical Company was 98% sulfuric acid with a

design capacity of 100Kta per annum. JCC Chemical Company has successfully fulfilled the environmental

requirement for the discharge of harmful substances during the production process.

The Equipment appraised mainly consists of conveyors, heat recovery system, electrical installations, and

some associated equipment including office equipment and electrical appliances.



of the Equipment;






might exist.

The Equipment is located at《泗洲鎮》and《香屯站》in Dexing City, Jiangxi Province, the PRC.

PREMISE OF VALUE










— 78 —



may be put.





follows:

The cost approach













elements.











— 79 —




The market approach
























— 80 —




discussed with the management of JCC Chemical Company (the “Management”), we recognized the


were provided by JCC Chemical Company.

In the course of our investigation, we accepted property records furnished by JCC Chemical Company as


gather information relating to its condition and utility. The balance of the information provided by JCC

Chemical Company, after adjustments based on our observation, although not subject to a detailed























— 81 —

CONCLUSION OF VALUE



RENMINBI DOLLAR FIFTY FIVE MILLION NINE HUNDRED NINE THOUSAND ONE

HUNDRED SIXTY NINE (RMB55,909,169), the breakdown is shown below:

Fair Market Value

(RMB)


Motor Vehicles 133,890



55,909,169


to us by JCC Chemical Company. We have relied to a considerable extent on such records and listings in




reported.




Keith C.C. Yan, ASA

Managing Director


APPENDIX VIII VALUATION REPORT ON THE MINING RIGHTOF CHENGMENSHAN COPPER MINE

— 82 —

This valuation report is prepared in Chinese language and the English version is therefore a

translation only. Should there be any inconsistencies, the Chinese version shall prevail.

Mining Right Valuation Report on Chengmenshan Mine of Jiangxi Copper Corporation

Abstract

JWPBZ (2006) No. 250

Valuer: Beijing Jingwei Assets Appraisal Co., Ltd.

Valuation Principal: Jiangxi Copper Company Limited (the “Company”)

Valuation Object: Mining right of Chengmenshan Copper Mine of Jiangxi Copper Corporation (“JCC”)

Valuation Purpose: JCC plans to transfer its own mining right of Chengmenshan Copper Mine to the

Company, and the mining right shall be valued in accordance with relevant regulations of the State. In order

to achieve the above-mentioned purpose, we will make fair and rational value suggestions on

“Chengmenshan Mine Mining right of Jiangxi Copper Corporation” to the valuation principal under various

conditions and on the base day of valuation as stated in this valuation report through the valuation.

Valuation Base Date: 30 June, 2006

Valuation Period: From 10 July, 2006 to 20 August, 2006

Valuation Method: Comparable Sales

Valuation Conclusion: Based on the onsite investigation, local market analysis and appropriate valuation

methods and coefficients selected by the valuers according to principles and procedures of the mining right

valuation, we hereby determine that the valuation calculation period for “Mining right of Chengmenshan

Copper Mine of Jiangxi Copper Corporation” is 30 years, the proven ore reserves are 118,156,500 tonnes

and the valuation value is RMB1,359,602,700 (Say RMB one billion, three hundred and fifty-nine million,

six hundred and two thousand, and seven hundred yuan only). Although the existing mining right certificate

is for a period of 10 years since 2004, according to the representation of the directors of the Company, the

mining right may be extended to 30 years upon application to the relevant governmental authorities.

STATEMENTS ON THE VALUATION:

Valid period of the valuation conclusion is one year, i.e. it will be valid within one year since the base day of

valuation. The valuation conclusion will not be valid after one year unless it is revalued.

This report is only applicable for the above-mentioned valuation purpose and submission to relevant

regulatory organs by the principal. The use right of this valuation report shall belong to the principal and

shall not be provided or made public to others without the principal’s permission.


— 83 —

IMPORTANT NOTES:

The above-mentioned contents are extracted from the valuation report on mining right of Chengmenshan of

JCC. For details of the valuation project, please refer to the whole text of the mining right valuation.

Legal Representative: Liu Zhongzhen, certified Mining Right Assess or registered in the Ministry of Land

and Resources of the People’s Republic of China

Project Manager: Li Xiuzhi, certified Mining Right Assess or registered in the Ministry of Land and

Resources of the People’s Republic of China

Certified Mining Right Valuer: Liu Zhongzhen, Li Xiuzhi

Beijing Jingwei Assets Appraisal Co., Ltd.

20 August 2006

Text of the Valuation Report on Copper Mine Mining right of JCC


— 84 —

Mining Right Valuation Report on Chengmenshan Mine of Jiangxi Copper Corporation

JWPBZ (2006) No. 250

At the request of the Company, Beijing Jingwei Assets Appraisal Co., Ltd. has valued the Mining right of

Chengmenshan Copper of JCC which JCC plans to transfer through the accepted mining right valuation

methods in accordance with relevant regulations on mining right valuation of the State and in the light of

objective, independent, fair and scientific principles. Valuers of this company have made market surveys and

confirmations to the mining right of Chengmenshan of JCC, and estimated the market value represented by

the entrusted mining right of Chengmenshan of JCC for valuation on 30 June, 2006 according to necessary

valuation procedures. The valuation situation of the mining right and the valuation conclusion are reported

as follows:

1. VALUER

Valuer Name: Beijing Jingwei Assets Appraisal Co., Ltd.

Registered Address: Room 1502, Tower D, Shidaizhiguang Mingyuan, 45 North Street, Xizhimen,

Haidian District, Beijing

Professional qualification cretificates: “Assets Valuation Qualification Certificate” No.: 11020001

issued by the Ministry of Finance of the PRC;

“Qualification Certificate for Mineral Exploration Rights

and Mining right Valuation” No. KQPZ [1999] No. 001

issued by the Minstry of Land and Resources of the PRC;

Corporation Business License of the People’s Republic of

China: 1100002114168.

Legal Representative: Liu Zhongzhen (Certified Mining Right Assessor of PRC, Certified Public

Valuer of PRC)

The Valuer has 15 years of experience in valuation of assets and mining right in the PRC.

2. VALUATION PRINCIPAL AND MINING RIGHT OWNER

Valuation Principal: Jiangxi Copper Company Limited (the “Company”)

Mining Right Owner: Jiangxi Copper Corporation (“JCC”)


— 85 —

3. VALUATION PURPOSE

JCC plans to transfer its own mining right of Chengmenshan Copper Mine to the Company, and the

mining right shall be valued in accordance with relevant national regulations. In order to achieve the

above-mentioned purpose, we will make fair and rational value suggestions on Chengmenshan Mine

Mining Right of JCC to the valuation principal under various conditions and on the base day of

valuation as stated in this valuation report through the valuation.

4. VALUATION OBJECT AND SCOPE

The valuation object is the mining right of Chengmenshan Copper Mine of JCC.

Mining License No.: 3600000410854, mine type: copper mine; mining method: open cutting;

production scale: 3.96 million tonnes/year; mining area: 1.45 square kilometres; valid period: ten

years, from November 2004 to November 2014. Coordinates of the inflection points in the mining

areas are as follows:

No. X Coordinate Y Coordinate

1 3285666.00 39384366.60;

2 3285638.00 39384304.00;

3 3285400.00 39383888.00;

4 3285304.00 39383207.00;

5 3285373.00 39382887.00;

6 3285517.00 39382795.00;

7 3285797.00 39382803.00;

8 3286098.00 39382800.00;

9 3286453.00 39382900.00;

10 3286800.00 39383112.00;

11 3286800.00 39383323.00;

12 3286678.00 39383622.00;

13 3286624.00 39383847.00;

14 3286622.10 39383854.10;

15 3285671.70 39383844.30.

It is determined by 15 inflection points.

Mining depth: from 140 Metre down to -600 Metre


— 86 —

5. BASE DAY OF VALUATION

According to economic actions and relevant purposes of the valuation principal, the base day

determined in the project valuation was 30 June, 2006, and both the measurement and pricing

standards for the valuation report were objective and valid price standards on 30 June, 2006.

6. VALUATION BASIS

6.1 Mineral Resources Law of the People’s Republic of China promulgated by the Standing

Committee of the National People’s Congress (NPCSS);

6.2 Procedures for Administration of Registration of Mining of Mineral Resources promulgated

by the State Council;

6.3 Measures for Administration of Transfer of Mineral Exploration Right and Mining Rights

promulgated by the State Council;

6.4 Interim Regulations Concerning the Assignment and Transfer of the Mine Property Right

promulgated by the State Council;

6.5 Interim Measures for the Administration of Valuation of Mineral Exploration Right and

Mining Rights promulgated by the State Council;

6.6 Evaluation and Determination of Measures for Mineral Resource Reserves promulgated by the

State Council;

6.7 Guide to Mining Right Valuation (2004 Revision) promulgated by the State-owned Land

Resources Bureau;

6.8 Mining License (No. 3600000410854) promulgated by Department of Land and Resources of

Jiangxi Province;

6.9 Check Report on Chengmenshan Copper Resource Reserves of Jiujiang County of Jiangxi

Province (Jiangxi Provincial Dept. of Land and Resources, December 2003)

6.10 “Certification of Mineral Resource Reserves Review Record (11 December, 2003) in relation

to the Check Report on Chengmenshan Copper Resource Reserves of Jiujiang County of

Jiangxi Province of Ministry of Land and Resources GTZCBZ [2003] No.136

6.11 Pre-Feasibility Study Report on Chengmenshan Copper Mine (12000t/d) of Jiangxi Copper

Corporation prepared by Nanchang Engineering & Research Institute of Nonferrous Metals

(“NERNI”) (October 2003);


— 87 —

6.12 “Minutes of the Review Meeting on Pre-Feasibility Study Report on Chengmenshan Copper

Mine (12000t/d) of Jiangxi Copper Corporation (25 December, 2003);

6.13 Financial statements of Chengmenshan Copper Mine of Jiangxi Copper Corporation for 2004,

2005 and 2006.

6.14 Other relevant information verified, collected and investigated by the valuers on-site.

7. VALUATION PRINCIPLES

According to the features of the mining right, besides the independent, objective and scientific work

principles, the project valuation also conforms to the following principles:

7.1 Principles for geological rules and resource economics rules;

7.2 Principles for continuing operation of mining right assets;

7.3 Principles for compliance with geological survey specifications and mining and milling design

specifications.

8. VALUATION PROCESS

The valuation period is from 10 July, 2006 to 20 August, 2006.

8.1 The entrustment was accepted and relevant matters were discussed, and the valuation scheme

was formulated, and the valuation method was determined and rational valuation coefficients

were selected, and relevant information was collected and collated by the valuers from 10 July

2006 to 12 July, 2006.

8.2 The valuer Li Xiuzhi (a certified mining right valuer) of this company surveyed the open

mining site of Chengmenshan Copper Mine with the company of Mr. Yang Xi Lin, the Vice

Manager of Production Dept. of JCC, Mr. Huang Liangjin, Deputy Director of Chengmenshan

Copper Mine Production of JCC, and Mr. Yang Guocai of Chengmenshan Copper Production

Technology Office of JCC on 13 July, 2006. Chengmenshan Copper Mine has commenced

mining.

8.3 From 14 July, 2006 to 20 August, 2006, the valuers carried out specific evaluation and

estimation according to the established valuation method, prepared and submitted an initial

report on the mining right valuation, communicated opinions with the principal and finally

submitted the formal report on the mining right valuation.


— 88 —

9. OVERVIEW OF MINING RIGHT

9.1 Location and Transportation of the Mining Area

Under the jurisdiction of Chengmen Township of Jiujiang County, Chengmenshan Copper

Mine of Jiujiang County of Jiangxi Province is directly 18 kilometres southwest from Jiujiang

City of Jiangxi Province. Geological coordinates of the mining area are E 115º 47’ 21” -115º

48’ 47” and N 29º 40’ 48” -29º 41’ 36”.

There is a paved-way (cement pavement) leading to Shahe Street, Jiujiang County. Beginning

from Shahe Street, it is 17 kilometres north from Jiujiang City via Nanchang-Jiujiang Railway

and Nanchang-Jiujiang Expressway and is 118 kilometres from Nanchang. Jiujiang-Ruichang

Highway which is 3 kilometres from the north of the mining area is 18 kilometres east from

Jiujiang, and is 18 kilometres west from Ruichang. The mining area is 20 kilometres east from

Jiujiang City via Saicheng Lake, connecting with the Changjiang River. It is allowable for over

ten tonnes of ships to sail. Shahe-Daye Railway passes through 10 kilometres south of the

mining area, with convenient transportation (Please refer to the map on page 75 of this circular

for details)

9.2 Overview of Geology and Economy of the Mining Area

The landform of Chengmenshan Copper Mine features hills and lakes, with lakes (Saihu Lake

Chengmen Lake) along its three directions, and the only continent is on the southeast of the

mine. The mining area is high in the southeast and low in the northwest. Chengmenshan-

Cuoshan mountain body stretches southeast, with the highest elevation of 147.8M. The lowest

elevation of the lake bottom is 12.0-14.0m.

The mining area is warm and wet with frequent pecipitation, dry and cold in winter and hot and wet

in summer, and the climate is subtropical with four distinctive seasons. The historical temperature

ranges from -8.0°C to 40.2°C with the annual average temperature of 17.0°C ; the annual mean

rainfall is 1400mm and the annual mean evaporation is 1655 m.

With rich resources, the industrial and agricultural industries around the mine are well

developed. The four main mining industrial systems of nonferrous metals, building materials,

chemical and metallurgy have been established all over the city and mainly concentrated in

Jiujiang City.

The mining industry is subject to large and medium mine enterprises such as Wushan Copper

Mine, Dingjiashan Copper Mine, Xingzi Granite Mine, Xingzi Shale Mine, Jiangxi Yadong

Cement Corp. Ltd., Jiujiang General Company of Mining and Metallurgy, etc.


— 89 —

Jiujiang Power Plant which is 20 kilometres from the mining area has a generating capacity of

1250MW and has been linked to the Central China Grid, meeting the demand for the mine

construction and production. Both surface water and underground water of the mining area are

very rich, and underground limestone water is excellent in quality. Various types of water for

the mining area can be supplied on the site.


— 90 —

9.3 Overview of Geological Work of the Mining Area

In 1956, Team 806, East China Survey Bureau made a preliminary general survey on

Chengmenshan Mine and submitted some different scales of geological drawings and survey

reports. At the end of 1958, North-western Geological Team of Jiangxi Geology & Mineral

Resources Development Bureau found out that copper-sulphur mine was more promising than

iron mine when they evaluated the survey on the iron mine in Chengmenshan Mine. Thus, they

focused on evaluation of copper-sulphur in 1991 and finished the evaluation task at the end of

1964. They began to explore in 1965 and submitted the Report on Final Reserves of copper,

sulphur and iron mines of Jiujiang Chengmenshan of Jiangxi in April 1964.

In 1975, North-western Geological Team of Jiangxi Geology & Mineral Resources

Development Bureau constructed a crossing profile in the rock body and discovered the ore

body of porphyry copper (molybdenum) and thus the prospect of the mining area became

brighter. They continued to explore in 1976 and submitted the Geological Report on the

Detailed Exploration of Jiujiang Chengmenshan Mine of Jiangxi Province in August 1981. The

detailed exploration report was approved by the National Mineral Reserve Committee.

To plan the mining of Chengmenshan Copper Mining Area and dispose its mining right,

Jiangxi Provincial Land Resources Administration entrusted Jiangxi Provincial Northwest

Jiangxi Geologic Formation to prepare the review report on the proposed disposal of resources

reserves within the mining right. Based on the data collection and investigation on

Chengmenshan Copper Mine in October to December 2003, the Review Report on Reserves of

Chengmenshan Copper Mine of Jiujiang County Jiangxi Province was submitted.

On 11 December 2003, the Ministry of Land and Resources issued the supporting documents

relating to review on resources reserves in the Review Report on Reserves of Chengmenshan

Copper Mine of Jiujiang County Jiangxi Province (GTZCBZ No. [2003]136 ). The reviewed

and confirmed reserves are as follows:


— 91 —

The owned resources reserves of Chengmenshan Copper Mine as at 30 September 2003 were:

Resource reserve (tonne)

Category of Grade of Cu S Mo Zn TFe

resource resource New Ore Metal Ore Metal Ore Metal Ore Metal Ore Metal

Category reserve reserve category reserve reserve reserve reserve reserve reserve reserve reserve reserve reserve

Major products In-table B 111b 7400786 85899 7791317 2570908

C 111b 97747649 704575 50912140 12731741

D 122b 74594316 535798 53643006 10897499 319794 14775

B+C+D 179742751 1326272 112346463 26200148 319794 14775

Out of table B 2S11 3563450 21049

C 2S22 23481592 105836 9604282 395706 28384680 11456.3

D 2S22 20133882 68053 6238717 341902 37852124 16328.1 157714 1668 2788305 959382

B+C+D 47178924 194938 15842999 737608 66236804 27784.4 157714 1668 2788305 959382

By-products In-table D 122b 7680390 9954 74936006 5193353

Au Ag Te Ga Cd

Ore Metal Ore Metal Ore Metal Ore Metal Ore Metal

reserve reserve reserve reserve reserve reserve reserve reserve reserve reserve

Accompanied

products Out of table D 122b 240758161 61.896 240758161 2426.26 240758161 5013.26 240758161 3572.8 240758161 6065.69

9.4 Regional geological condition

Chengmenshan Copper Mining area is located at the southeast of Jiurui Mine Field, adjoining

Changjiang River in the north, Wushi Street in the south, Fengshan Cave in the west, and

Saihu Lake in the east.

The tectonic location belongs to Yangtze Peneplatform (I) Lower Yangtze-Qiantang Platform

Syneclise (II) Jiujiang Platform Subside (III) Ruichang-Jiujiang concaved pleats and severed

bands. Deposits are an important part of Daye - Jiujiang mineralized sub-zone for the iron-

copper mineralized zone of the Lower and Middle Reaches of the Changjiang River. Featuring

the three integration of skarn-type, porphyry-type and massive-sulfide-type, as well as the

characteristics of large-scale, wide variety of minerals, and complicated categories of minerals,

copper deposits in the mine field is formed due to the deep source hypabyssal — super

hypahyssal porphyry, with the orebodies mainly existed in rock body and carbonate contact

zone and the inside and outside of the contact zone.


— 92 —

9.5 Geological condition of the mining area

9.5.1 Stratigraphy

The old and new outcropped stratigraphy of the mining area from the south to the north

includes: the Middle Lojoping Formation and Upper Shamao Formation of Silurian

System, the Upper Wutong Formation of Devonian System, the Middle Huanglong

Formation of Carboniferous System, the Lower Liangshan Formation and Qixia

Formation and Maoshao Formation, and Upper Longtan Formation and Changxing

Formation of Permian System, the Lower Daye Formation and Middle Jialing River

Formation of Triassic System, as well as the fourth system spread across the lake area

and the surface of the mining area.

The Silurian System to the Triassic System of the mining area, except for the influence

of partial fracture and secondary fold, generally strikes 70°, and dips to the north-west

at angles of from 45-60°. As affected by the thrust of F1 fault at the south of F1 fault, a

part of the Wutong Formation of Devonian System and the Shamao Formation of

Silurian System are generally reversed or the stratigraphy are almost upright, with

certain part reversed on Huanglong Formation. Far away from rock body or tectonic

zone, stratigraphic succession has resumed again.

Closely related with mineralization, the Permian System and the Triassic System are

important ore-bearing wall rock and secondary ore-bearing wall rock respectively, with

metal reserves accounting for 45% and 5% of the mining area respectively.

9.5.2 Structure

Chengmenshan Copper Mining area is located at the near pitching end of the east part

of the north limb of Changshan - Chengmen Lake Anticline. The structure framework of

the mining area comprises the secondary cross folds and three Formations of NEE, NW,

and NNE fractures. Fracture structures and contact structures are also well-developed.


— 93 —

Folds: Secondary folds comprise two formations of north-east and north-west brachy-

anticline-syncline folds. The north-east brachy-anticline fold is fostered at the lower

plate of F1 fault with the Silurian System as the core and two limbs being from the

Devonian System to the Permian System. The axial surface is almost upright and the

two limbs are approximately symmetrical. Axis strikes 45°, and dips to the north-east at

an angle of 30. At the occurrence of folds, interstratified glide along Wutong Formation

and Huanglong Formation occurred, resulting in interstratified fracture zone, especially

the collapsed area generated at the top of the anticline structure, which is the favourable

area for ore fluid filling and replacement and an important component of the enriched

massive sulfide orebodies in the mining area. The north-west anticline and syncline are

mainly distributed between 15 line and 654 line, with the involved stratigraphy spread

from the Silurian System to the Triassic System at a fold angel of approximately 330.

While the north-west anticline inclines slightly, the syncline tilts and the axial surface is

almost upright. Due to the anticlinal arch, interstratified glide along Wutong Formation

and Huanglong Formation becomes more intensified, which is suitable for the intrusion

of rock body and activities of ore fluid. Therefore, the anticlinal crest and its

neighbouring orebodies become thick and the synclinal axis and its neighbouring

orebodies become weak.

Faults: The faults in the mining area are mostly developed in the NEE direction,

secondary in the NW to NWW direction and the NNE to north-east direction, totalling

15 faults. The NEE direction faults mainly include F1, F2 and F20. The NEE direction

faults are formed at the earliest, and the latter is the NW direction. The NEE faults are

formed at the latest, but make the orebodiesbasically conformable to stratigraphic

attitudes with focus on bedding faults.


— 94 —

9.5.3 Magmatite

Magmatite in the mining area represent the compound massif derived from the multi

intrusion of intermediate-acid hypergene — super hypergene during the Yanshan period.

With an outcropped area of 0.8 sq. km., it is irregular oval and dips to the northwest at

an angle of about 75. It intrudes into the clastic rock of the old Silurian System and part

of the Triassic System and the carbonate stratigraphy. For the injection along the

interstratified wall rock at the shallow, complicated arborescence contact zone is

formed. The categorizes of rock body constituting compound massif take granodiorite

porphyry and quartz porphyry as the main body. Granodiorite porphyry is mainly

disseminated at the east, south, part of the west district of the compound massif, which

is also scattered in quartz porphyry with an exposed area of 0.45 sq. km.. The exposed

shape of the surface is irregular semiring with the depth approximating to equal-axis

shape, indicating an upward trend. Semicircular boundary has intrusion contact with

clastic rock and carbonate stratigraphy, whereas the inner margin contacts with quartz

porphyry. Quartz porphyry is mainly distributed at the northwest and middle lake

district of the compound massif, with an exposed area of 0.5sq. km., representing “L”

shape of north-east and north-east-east and dipping to the west like barrel-shaped

output. Quartz porphyry contacts the Permian System - the Triassic System in the

northwest and granodiorite porphyry in the east, which is inclusive of a number of

granodiorite porphyry residuals. With the strong hidden explosion of underground after

the intrusion of quartz porphyry, various kinds of explosion-like rock bodies are formed

and mainly distributed at the northwest of the compound massif and the vicinity of the

contact zone of wall rock, with an area of approximately 0.1 sq. km.. Furthermore,

Quartz Anshan Porphyrite is distributed at Tianjingwa district, which becomes the

mineralized dikes due to nerve penetration into granodiorite porphyry and orebodies.

9.5.4 Alteration of wall rock

Alteration of wall rock is complicated, two periods of which relating to mineralization

include the active period of granodiorite porphyry (the mineralized period of skarn

copper mine, mainly including skarnization, silicification, sericitization, chloritization

and argillization) and the active period of quartz porphyry (the mineralized period of

porphyry molybdenum and copper, mainly including potash feldspathization,

biotitization, silicification and sericitization). Different categories of mineralization and

the wall rock are accompanied by different alteration and zoning. From the center of the

compound massif to the outside, it can be divided into inter and outer contact zone and

seven sub-zones of altered faces. With its center on rock body, the inter zone is

distributed like surface-shape alteration. With its center on granodiorite porphyry

contact zone, the outer zone is distributed like clitellum-shape alteration.


— 95 —

9.6 Geological characteristics of deposits

Chengmenshan Mining Area is a copper-centered composite deposit integrated with large

amount of sulphur, zinc and molybdenum. The close paragenesis of copper, sulphur and zinc

constitutes compound orebodies. According to industrial indexes, the whole mining area

delineates eight categories of minerals including copper, copper-sulphur and copper-zinc, as

well as 226 inside and outside mineralized orebodies.

9.6.1 Characteristics of mineralized zones

By the categories of minerals and the features of spatial distribution, three mineralized

zones and five sub-zones constitute compound deposits with three integrations of the

rock-body-focused, down-to-upper, and inside-to-outside characteristics. Three

mineralized zones involve inter zone of rock body, contact zone and outer contact zone.

For five sub-zones, the inter zone of rock body can be divided into porphyry

molybdenum sub-zone and porphyry copper sub-zone. Skarn zinc-sulphur-copper sub-

zone (divided into east and west semicircular zone) and gossan sub-zone and massive

sulfide copper sub-zone can be sub-divided from contact zone to outer contact zone.

Porphyry copper sub-zone: the sub-zone is located at the top and boundary of rock

body,which is covered on the molybdenum sub-zone in the shape of a cap. The sub-zone

is under the control of the fracture of rock body,on which 10C orebodies lies like seat-

shape. The length of the10C orebodies is comparable to that of the whole sub-zone, and

other orebodies are like arborescence-shape at the margin of the mineralized zone,

being joined together with the orebodies of skarn copper sub-zone.

Skarn zinc-sulphur-copper sub-zone: located on the rock body and the contact zone of

Carbonate-Triassic System limestone, the sub-zone is under the control of the contact

structure. The sub-zone is divided into east and west semicircular zone. The east

semicircular zone, being skarn copper mine main zone, represents 60% of the total

copper reserve in the whole area. Under the control of granodiorite porphyry and

limestone contact zone, the east semicircular zone is distributed in the south, east and

north of the mining area, forming horseshoe-shape in a north-east direction. Located at

the west of rock body and under the control of quartz porphyry and granodiorite

porphyry and limestone contact zone, the west semicircular zone is arc, which pops out

to the west and is parallel to the east semicircular zone.

Gossan sub-zone: located on the skarn copper zone and the massive sulfide copper zone,

the sub-zone belongs to gossan cap of oxidation zone. The zone is a little smaller than

the skarn zone in length and width and well- developed at the positive landform district

on the phreatic water surface.


— 96 —

Massive sulfide copper sub-zone: the sub-zone is distributed at the outer contact zone of

the south of the mining area and controlled by Wutong Formation quartzite and

Huanglong Formation limestone pseudoconformity and F2 interstratified fracture and

F1 fault zone. The zone is approximately 2,000 meters long, dipping to the north-west

and stretching 400—600 meters in length. The zone has two orebodies like 0Cu and

1Cu. The former is controlled by F1 with small size. The latter is controlled by

pseudoconformity and F2 interstratified fracture zone and also the largest copper

orebody in the whole mining area.

9.6.2 Characteristics of copper orebodies

Chengmenshan Copper Mining Area has a total of 108 inside and outside copper

mineralized bodies,which can be sub-divided into 2 copper-sulphur-zinc mineralized

bodies, 22 copper-sulphur mineralized bodies, 2 copper-zinc orebodies and 82 single

copper orebodies based on the composition of categories of minerals~. Being separated

into principal orebodies and secondary orebodies by the scale, the copper orebodie

shave 20 principal inside copper orebodies with 10 orebodies of over 50,000 tonnes

numbering 1, 3, 5, 6, 7, 10, 12, 13, 15 and 21, as well as 71 numbered secondary

mineralized bodies.

The attitudes of the principal orebodies have 5 kinds of stratiform-shape, beanpod-

shape, lens-shape, belt-shape and seat-shape.

Stratiform-shape mineralized body: With 1Cu as the representative, the mineralized

body is controlled by Wutong quartzite and Huanglong limestone pseudoconformity and

F2 interstratified fracture zone. The mineralized body is approximately 1,950 meters

long, of which the principal industrial mineralized body is 1,120 meters long. With

substantial difference in the east and west attitudes along with stable west attitudes, the

mineralized body strikes 338 and dips at angles from 48-57 with the average of 52. Due

to the control of the secondary folds, the thickness of east section intumesces at the

anticline axis and changes significantly at the steep section of stratigraphy with

thickness of 18-54 meters, partial intumescence of 75 meters and average thickness of

36.7 meters. The east section dips at an average angle of 13 and the controlled measure

depth ranges from 20-360 meters with the average of 237 meters.


— 97 —

Beanpod-shape mineralized body: With 3Cu, 13Cu and 15Cu as the representative, this

kind of mineralized body is controlled by interstratified fracture zone (including various

lithologic interfaces like skarn and porphyry or limestone). The attitude approximates to

that of the original stratigraphy with medium pitching angle. The different fractured

extents of the structure of the contact zone differ on the thickness of the mineralized

body in direction just like beanpod-shape. The orebody extends largely from 750-880

meters, striking in a branch-compound direction and pinching out to both ends. It also

dips widely with average depth of 238-341 meters and a maximum extension of 570

meters. The orebody on the section usually pinches out downward, and becomes weak

and pinches out upward.

Lens-shape orebody With inclusive of other majority of orebodies in the mining area, it

has the similar control factors and attitude shapes with the beanpod-shape orebody. The

difference is that the orebody has small extension and depth. The two strike and dip like

the lens shape of middle intumescence and both ends diminishing. Except that the

orebodies like 5Cu, 6Cu and 7Cu are large-sized, other secondary orebodies are small-

sized.

Belt-shape orebody With 21Cu as the representative, the orebody is strictly controlled

by the west contact zone with the west-protruding arc belt-shape on its plane, striking

840 meters in length. The top part of the orebody dips to the southeast at angles from

48-85, with the south end being steep and the north end being lessened. The low part

dips to the north-west. The controlled measure depth ranges from 67-480 meters with

the average of 282 meters. The thickness ranges from 5-22 meters with a maximum

thickness of 35 meters and the average of 10 meters.

Seat-shape orebody: The mineralized body, being 10Cu orebody, is formed by

accumulation of the secondary sulfide enrichment on the basis of copper mineralized

porphyries. The east-west length is 880 meters and the south-north width is 740 meters.

The thickness is 76.3-2 meters with the average of 27.3 meters.

9.6.3 Ore characteristics

Ore textures: Including 5 classifications and 16 textures by the formation mode, mainly

comprising crystallized granular texture and metasomatic dissolution texture, seldom

pseudomorph, sub-graphic and graphic-vermicular structure.

Structure of ores: Mainly including 3 type: massive, disseminated and stringer vein-

disseminated, then loose, breccia, banded and quasi-banded, circular structure, etc.


— 98 —

Ore mineral composition: 1) Metallic minerals, which principally include pyrite,

chalcopyrite, chalcocite, blue chalcocite, bornite, covellite, enargite, erythroconite,

zincblende, galenite, molybdenite, arsenopyrite, malachite, azurite, magnetite, hematite,

native copper, etc. 2) Gangue minerals, which principally include quartz, garnetite,

calcite, feldspar, kaolinite, etc.

Ore chemical composition: Main beneficial elements include copper, sulphur,

association of zinc, molybdenum and ferrum. Accompanying beneficial elements

include gold and silver. Main harmful elements include arsenic, then fluorin and

magnesia. Content of fluorin and magnesia in ore concentrates range from 0.02 to

0.103% and 0.02 to 1.72% respectively, both falling below the quality criterion of ore

concentrate.

Ore natural type: Including oxidized ore, mixed ore and primary ore. Oxidized ore

(average oxidation rate of 37%) accounts for 7.2% of the total ore reserve of the whole

copper mine, and 8.9% of the total metal reserve. bedded ore (average oxidation rate of

19%) accounts for 29.4% of the total ore reserve of the whole copper mine, and 29.4%

of the total metal reserve; original ore (average oxidation rate of 5%) accounts for

63.3% of the total ore reserve of the whole copper mine, and 57.8% of the total metal

reserve.

Ore industrial type: Categorized as iron ore, copper-sulphur ore, sulphur ore, zinc ore

and molybdenum ore. Copper-sulphur ore is further categorized as copper-bearing

pyrite ore, copper-bearing skarn ore, copper-bearing porphyry ore, copper-bearing

breccia ore and copper-contained pyrite/magnetite ore, where copper-bearing pyrite ore,

copper-contained skarn ore and copper-bearing porphyry ore account for the most.

Copper-bearing pyrite ore is one of the most popular copper-sulphur ores, in which the

copper content and ore reserve account for 40.4% and 24.5% of the total reserve of the

whole mine respectively, representing an average copper content of 1.24%. Copper-

bearing skarn ore is also a major type of ores, in which the copper content and ore

reserve account for 34.4% and 42.4% of the total reserve of the whole mine

respectively, representing an average copper content of 0.61%. Copper-contained

porphyry ore accounts for 27.2% of the total ore reserve of the whole mine, in which

the copper content accounts for 19.8% of the copper reserve of the whole mine,

representing an average copper content of 0.55%.


— 99 —

9.7 Technical conditions for ore processing

Through dressability test, laboratory process test and pilot-plant test, the ore-dressing

characteristics of Chengmenshan Mine are: Pyrite in each type of ores is easy to dress, with

grade of pyrite concentrates higher than 46% and sulphur recovery ratio higher than 85%.

Copper minerals in primary ore in each type of ores are easy to dress, with copper recovery

ratio higher than 80%. Various type of ores can be processed in a mixed way, where normal

and simple process can deliver a good recovery ratio.

The ores in Chengmenshan Copper Mine is of “moderate hard” in terms of ore-dressing.

9.8 Hydrogeological condition characteristics of mineral deposit

Most ore body of Chengmenshan Mine is submerged below the erosion basis. A half of mining

area is located in seasonal lakes where karstic limestone is widely distributed and well-

developed, with an average karst ratio of 3.41% and fill ratio of 78%. Pit water inflow is

calculated at 7.1 x 104m3/d at -106 meters. Under dewatering conditions, the lake district may

be subject to surface collapse, chink or subsidence, thus constituting complicated

hydrogeological condition of the mining area. This necessitates developing and employing a

comprehensive solution to control surface water and groundwater according to such condition

to ensure smooth production of the mine.

9.9 Engineering geological condition characteristics of mineral deposit

In terms of geological structure development, the mine features various rocks with deep

weathered zone, well-developed karst, rich surface water and groundwater as well as thick

layer of lake clay settlement, which all have an adverse impact on production of the mine.

Both the southern F1 and F2 fractured fault zone and the southern rock formation are

consequent to the slope which may result in small-scaled plane shear destruction potentially

threatening the slope stability. Both limestone karstic sites of Maokou and Xixia located at east

and west of the mining area respectively contain rich groundwater, where as a result of

hydrodynamism, structural zone, contact zone, weathered zone, water-eroded cave deposits

may cause unfavourable engineering geological phenomena of slope unstability, mud flowing

and sand flowing which shall be attached with enough importance during mining.

9.10 Current development and utilization of the mine

Chengmenshan Copper Mine of JCC is under small-scale mining currently.


— 100 —

10. EVALUATION METHOD

According to A Guidebook on Valuation of Mining Right (2004 revised) and the Provisional

Management Methods for Valuation of Exploration Right and Extraction Right, Chengmenshan

Copper Mine of JCC is currently engaged in small-scale mining and has not yet reached the designed

production capacity. With regard to the reference transactions we gathered from the mining right

exchange market (i.e. the mining right of D Copper Mine in Yunan province and the mining right of T

Copper Mine in A province), comparable sales method is adopted for purpose of this valuation.

The theory of comparable sales advocates that in accordance with the substitution principle, the value

of a mining right is evaluated only after it is compared with reference to the mining right with similar

geology and environment that are recently exchanged on an open basis in terms of geology,

exploration and ore-dressing and other techniques and economic parameters for any difference

between them. The ultimate value of the subject mining right is an adjustment on the value of such

reference mining right.

The calculation formula is as follows:

n

Σ (px · µ · ω · t · ϕ · ι) ii = 1 PS =

n

Where: Ps – value of the subject mining right;

Px – concluded price of reference mining right;

µ – modified coefficient of extractable reserve;

ω – modified coefficient of grade ;

t – modified coefficient of production capacity;

ϕ – modified coefficient of price;

ι – modified coefficient of difference;

n - number of reference mining right.


— 101 —

11. BASIS OF ADOPTION OF MAJOR TECHNICAL PARAMETERS FOR THE SUBJECT

MINING RIGHT

11.1 For purpose of this valuation, ore reserve is adopted based on the geological reserve as

approved by The Ministry of Land and Resource in its “Certification of Mineral Resource

Reserves Review Record in relation to the Check Report on Chengmenshan Copper Resource

Reserves of Jiujiang County of Jiangxi Province of Ministry of Land and Resources GTZCBZ

[2003] No.136” dated 11 December 2003 (Check Report on Chengmenshan Copper Resource

Reserves of Jiujiang County of Jiangxi Province) was submitted by Jaingxi Provincial Land

and Resource Office in December 2003).

11.2 Adoption of other major technical indicators

Other major technical indicators are selected by reference to the designed technical indicators

specified in the “Pre-feasibility Study Report on Chengmenshan Copper Mine of Jiangxi

Copper Corporation (12000t/d)” prepared by Nanchang Engineering & Research Institute of

Nonferrous Metals, the production economic indicators employed by Chengmenshan Copper

Mine of JCC and the data available to our evaluators and reference mining right materials

gathered from the market.


— 102 —

12. SELECTION AND CALCULATION OF TECHNOLOGICAL PARAMETERS FOR THE

SUBJECT MINING RIGHT

12.1 Retained resource reserve

The following table gives the breakdown of retained resource reserve of Chengmenshan

Copper Mine as at 30 September 2003 according to “Check Report on Chengmenshan Copper

Resource Reserves of Jiujiang County of Jiangxi Province” and document GTZCBZ [2003]

No. 136 (Certification of Mineral Resource Reserves Review Record in relation to the Check

Report on Chengmenshan Copper Resource Reserves of Jiujiang County of Jiangxi Province

of Ministry of Land and Resources) issued by The Ministry of Land and Resources.

Reserve of resources (tonne)

Category of Grade of Cu S Mo Zn TFe

resource resource New Ore Metal Ore Metal Ore Metal Ore Metal Ore Metal

Class reserve reserve classification reserve reserve reserve reserve reserve reserve reserve reserve reserve reserve

Major In-table B 111b 7400786 85899 7791317 2570908

C 111b 97747649 704575 50912140 12731741

D 122b 74594316 535798 53643006 10897499 319794 14775

B+C+D 179742751 1326272 112346463 26200148 319794 14775

Out of table B 2S11 3563450 21049

C 2S22 23481592 105836 9604282 395706 28384680 11456.3

D 2S22 20133882 68053 6238717 341902 37852124 16328.1 157714 1668 2788305 959382

B+C+D 47178924 194938 15842999 737608 66236804 27784.4 157714 1668 2788305 959382

By-production In-table D 122b 7680390 9954 74936006 5193353

Au Ag Te Ga Cd

Ore Metal Ore Metal Ore Metal Ore Metal Ore Metal

reserve reserve reserve reserve reserve reserve reserve reserve reserve reserve

Associated ore Out of table D 122b 240758161 61.896 240758161 2426.26 240758161 5013.26 240758161 3572.8 240758161 6065.69

As revised in accordance with “Technological Requirement on Systematic Adjustment to Solid

Mineral Resource Reserve”, the reserve is as follows:

Proven (feasible) economic basic reserve (111b): copper ore of 105,148,400 tonnes with

copper metal of 790,474 tonnes; sulphur ore of 58,703,400 tonnes with sulphur metal of

15,302,649 tonnes


— 103 —

Indicated (pre-feasible) economic basic reserve (122b): copper ore of 82,274,700 tonnes with


16,090,852 tonnes; zinc ore of 319,800 tonnes with zinc metal of 14,775 tonnes; gold ore of

240,758,200 tonnes with gold metal of 618,960 tonnes; silver ore of 240,758,200 tonnes with

silver metal of 24,262,600 tonnes; Te ore of 240,758,200 tonnes with Te metal of 50,132,640

tonnes; gallium ore of 240,758,200 tonnes with gallium metal of 3,572.8 tonnes; cadmium ore

of 240,758,200 tonnes with cadmium metal of 60,656,900 tonnes. The average geological

grade of (111b) + (122b) copper is 0.713% while that of sulphur is 16.76%.

Proven submarginal economic resources (2S11): copper ore of 3,563,500 tonnes with copper

metal of 2,104,900 toones

Indicated submarginal economic resources (2S22): copper ore of 43,615,500 tonnes with


737,608 tonnes; molybdenum ore of 66,236,800 tonnes with molybdenum metal of

277,844,000 tonnes; zinc ore of 157,700 tonnes with zinc metal of 1,668 tonnes; total iron ore

of 2,788,300 tonnes with total iron metal of 959,382 tonnes

12.2 Utilisable resource reserve

In accordance with “Guide to Mining Right Valuation (2004 Revision)”, both economic and

marginal economic basic reserves shall be accounted for in valuing mining right while

submarginal economic reserve shall not in principle except for the designed or utilised reserve

which shall be converted by confidence factor. We understand from technicians of

Chengmenshan Copper Mine that submarginal economic resource reserves within the orefield

of Chengmenshan Copper Mine are not utilised in the production and nor are they designed for

utilisation in the “Pre-Feasibility Study Report on Chengmenshan Copper Mine (12000t/d) of

Jiangxi Copper Company Limited” prepared by Nanchang Engineering & Research Institute of

Nonferrous Metals. Therefore, resource reserve adopted in this valuation is the basic reserve as

confirmed in document GTZCBZ [2003] No. 136 (Certification of Mineral Resource Reserves

Review Record in relation to the Check Report on Chengmenshan Copper Resource Reserves

of Jiujiang County of Jiangxi Province of Ministry of Land and Resources) issued by The

Ministry of Land and Resources, i.e. copper ore (111b + 122b) of 187,423,100 tonnes

(105,148,400 tonnes + 82,274,700 tonnes respectively) including copper metal of 1,336,200

tonnes (790,500 tonnes + 545,700 tonnes respectively) and sulphur ore (111b + 122b) of

187,282,400 tonnes (58,703,400 tonnes + 128,579,000 tonnes respectively) including sulphur

metal of 31,393,500 tonnes (15,302,600 tonnes + 16,090,900 tonnes), totalling 374,705,500

tonnes of copper ore and sulphur ore.


— 104 —

According to the “major technical indications for mining and milling of Chengmenshan

Copper Mine of JCC Group” provided by Chengmenshan Copper of Jiangxi Copper

Corporation, in 2004 the utilised geologic ore reserve was 430,900 tonnes with copper metal

of 90,273,600 tonnes and sulphur metal of 717,448,500 tonnes; in 2005 the utilised geologic

ore reserve was 433,880 tonnes with copper metal of 8,469.34 tonnes and 60,960.14 tonnes of

sulphur metal; in the period from January to June 2006 the utilised geologic ore reserve was

229,020 tonnes with copper metal of 4,342.22 tonnes and 36,116.45 tonnes of sulphur metal.

In aggregation, from the year 2004 to June 2006, Chengmenshan Copper Mine has utilised

1,093,800 tonnes of geologic ore reserve with 21,838.92 tonnes of copper metal and

168,821.44 tonnes of sulphur matal.

Therefore, for purpose of this valuation, utilisable resource reserve as at 30 June 2006 (the

base date) is determined at 373,611,700 tonnes of ore reserve (374,705,500 tonnes - 1,093,800

tonnes) with copper metal of 1,314,400 tonnes (1,336,200 tonnes - 21,800 tonnes) and sulphur

metal of 31,224,700 tonnes (31,393,500 tonnes - 168,800 tonnes).

According to “Pre-Feasibility Study Report on Chengmenshan Copper Mine (12000t/d) of

Jiangxi Copper Company Limited” prepared by Nanchang Engineering & Research Institute of

Nonferrous Metals, polymetallic (associated) molybdenum, tellurium, cadmium and gallium

are less utilisable due to their low grades, and zinc will not be recovered as it is difficult to

separate from copper in ore-dressing test and is a harmful element during copper recovery

process.

12.3 Mining and ore-dressing plans

12.3.1 Mine Plan

Many orebodies are widely distributed in the mine area of Chengmenshan Copper Mine.

With various types of ore, the hydrological and engineering geological conditions of the

mine area are complicated. Hence, open pit mining is more favourable than

underground mining. In this regard, we determine that open pit mining and haul truck

transport system are employed to this ore deposit.


— 105 —

12.3.2 Ore-dressing plan

According to “Pre-Feasibility Study Report on Chengmenshan Copper Mine (12000t/d)

of JCC” prepared by NERIN in October 2003, ore-dressing process is designed as

follows: the out-of-the-mine ore, having been crushed at the primary ore crushing

station, is transported through the rubber conveyor to the raw ore pile at the milling

plant where it is unloaded through the apron feeder located in the underground traverse

to the adhesive tape conveyor again and then fed into the semi-autogenous grinder. The

semi-autogenous grinder discharges ore to vibrating screening, oversize materials of

which was returned to the semi-autogenous grinder while the undersize materials flows

into ore feeding bump sump of the cyclone. The bottom of cyclone flows into ball mill

where the ore is further discharged into the bump sump. Hence, the cyclone and ball

mill form a close circuit. After conditioning, cyclone overflows will be dressed and

selected. Copper is first dressed and then sulphur in copper tailings. Rough copper

concentrate is acquired from rough flotation and the 1st clean flotation. After regrinding

of rough copper concentrate and three times of fine flotation, final copper concentrate is

output. Before sulphur dressing, scavenged copper ore tailings are conducted to

thickener to lower PH value, and then pumped into the plant for sulphur dressing. Two

rough processes, one fine process and one scavenging process are employed during

desulphurization to output sulphur concentrates and final trailing (for details please

refer to Appendix 13 “Process Flow Diagram for Ore-dressing”).

12.4 Product Scheme

According to the Pre-feasibility Study Report on Chengmenshan Copper Mine of JCC (12,000t/d)

prepared by NERIN in October, 2003 and the actual production status of Chengmenshan Copper

Mine, the final products of Chengmenshan are copper concentrate , sulfur concentrate,and

comprehensive recovery of gold and silver. It is hard to utilize the low grade accompanied/

concomitant molybdenum, tellurium, cadmium and gallium; it is also difficult to separate zinc and

copper during an ore-dressing experiment. Since zinc is a harmful element for dressing, smelting

and recollecting copper, the recovery of zinc has been disregarded. There is 959,400 tons of TFe,

belonging to 2S22 reserves. In view of these factors, the product scheme adopted during the project

assessment is copper concentrate (18%), sulfur concentrate (45%) and comprehensive recovery of

gold and silver .


— 106 —

12.5 Production Scale

The production scale set out on the mining licence of Chengmenshan Copper Mine of JCC is

3,960,000 tons per year. Its designing production scale is 12000 tons per day(3,960,000 tons/

year) according to the Pre-feasibility Study Report on Chengmenshan Copper Mine of JCC

(12000t/d) prepared by NERIN in October, 2003. Pursuant to the principle that the reserve

scale of mine products, production scale of mine and the mine life should be consistent with

each other, we determine to adopt the production capability of 12,000 tons/day during the

project assessment. On continuous duty, the mine will operate 330 days per year, 3 shifts per

day and 8 hours per shift with annual handling capability of 3,900,000 tons ores.

12.6 Dilution rate of ore, loss rate of mining, recovery rate of ore dressing and grade of

concentrate

According to the Pre-feasibility Study Report on Chengmenshan Copper Mine of JCC (12000t/

d) prepared by NERIN in October of 2003 , the loss rate of mining and dilution rate of ore are

8% and 8% respectively. The designing indexes for ore dressing are as follows:

rate of Grade Recovery rate of ore dressing

Product recovery Cu S Au Ag Cu S Au Ag

% % % g/t g/t % % % %

Copper Concentrate 3.21 18 35 2.73 233 80 6.00 30 60

Sulfur concentrates 32.96 0.18 45 8.2 85

Tailing 63.83 0.18 2.19 11.8 9

Run-of-mine 100.00 0.72 18.77 0.29 12.47 100.00 100.00 100.00 100.00

Stemming from small scale exploitation, the actual production and technology indexes of

Chengmenshan Copper Mine cannot represent the corresponding levels of future large scale

mining. Therefore, during the project assessment, we adopt the designing indexes provided by

the Pre-feasibility Study Report on Chengmenshan Copper Mine of JCC (12000t/d) prepared

by NERIN, viz. the recovery rate of ore dressing for copper concentrate and sulphur

concentrate are 80% and 85% respectively, 8% loss rate of mining, 8% dilution rate of ore.

The grade, gold content, silver content and sulphur content of copper concentrate are 18%,

2.73g/t, 233.00g/t and 35% respectively. The grade of sulphur concentrate is 45%.


— 107 —

12.7 Proven Reserves

Proven reserves = assessed available resources reserves-designing loss-mining loss

= (assessed available resources reserves-designing loss) x rate of recovery

Since Chengmenshan Copper Mine operates based on open pit, its designing loss is zero. The

recovery rate in respect of mining is 92% (1-8%).

Proven reserves = 373,611,700 tons x 92%

= 343,722,800 tons

As at June 30,2006, the benchmark day of assessment, the assessed available proven reserves

for Chengmenshan Copper Mine is 343,722,800 tons.

12.8 Mine Life

12.8.1 The reasonable mine life is based on the following formulation:

T =Q

A x (1 – ρ)

Where: T represents the reasonable mine life

A represents the production scale

Q represents proven reserves

ρ represents dilution rate of ore

12.8.2 Corresponding parameters selection and calculated result

The proven reserve is 343,722,800 tons; production scale of mine is 3,960,000 tons per

year; dilution rate of ore is 8%.

Put them into the above formulation, we find T, the reasonable mine life, is 94.34 years.

According to the Assessment Guidance for Mining Right (the revised version 2004), the

mine life for mining right assessment projects should not be more than 30 years.

Segmentation assessment could be adopted when the mine life is above 30 years. The

calculation period for the project assessment is 30 years (excluding the expansion

period).


— 108 —

Based on the Pre-feasibility Study Report on Chengmenshan Copper Mine of JCC (12000t/d)

prepared by NERIN in October, 2003, the designing production scale is 3,960,000 tons per year.

According to which, 3 years (36 months) construction period is required. However, the

Chengmenshan Copper Mine is still in small scale mining, remaining far below the designing

production scale. The production capabilities for 2004, 2005 and first 6 months of 2006 are 431,390

tons, 433,070 tons and 228,400 tons respectively. The daily production capability from 2004 to June

of 2006 is 1310-1380 tons per day, only accounting for 1/10 of the designing production capability.

Accordingly, the expansion period of Chengmenshan Copper Mine is fixed on 3 years during the

assessment of the project. The daily production capability during the expansion period is 1,350 tons

per day (annual production scale is 445,500 tons), which belongs to small scale mining. The

calculation period of assessment is from July of 2006 to June of 2039. On the completion of

expansion period, the production capabilities for the first and second year would reach 1,980,000 tons

and 3,960,000 tons respectively. Therefore, total 118,156,500 tons (44.55 x 3+198+29 x 396) of

proven reserves would be mined during this period.

12.9 Products selling price

The benchmark day of the project assessment is June 30, 2006. According to the financial

information and related notes of Chengmenshan Copper Mine for 2004 to 2006, the average

selling price of its products (tax exclusive) is :

Contained copper in copper concentrate: RMB26,100.08/tonne


— 109 —

13. PROFILE OF REFERENCE MINING RIGHT

We select the mining right of D Copper Mine in Yunan Province and T Copper Mine in Yunan

Province as reference mining right, both of which are successfully traded in 2006. We have obtained

the information regarding these two mines from industry referrals. They possess of approximately

same type of deposits and complete set of parameters with comparability, which will satisfy the

conditions of the Comparable Sales. Since the information obtained from the public means on the

mine type is not consistent with the mine type of Chengmenshan Copper Mine, we selected the

copper mine below for comparison.

The information below for comparison are not publicly available, they are obtained from industry

referrals. The use of information from non-public and industry referrals does not affect the validity

and reliability of using and referring such information by us.

13.1 Mining right for D Copper Mine in Yunan Province

D Copper Mine in Yunan Province is engaged in Copper mining. Its benchmark day for mining

right trading is May 31, 2006.

13.1.1 Location, Access and Geographical profile

D Copper Mine in Yunan Province is located in a county of Yunan Province. The mine

is 6 kilometers from such county and 264 kilometers from Yunan Province. It is quite

convenient in transportation.

The mining area is situated in altiplano region. It is mountainous in topography, with an

elevation range of 500-1850 meters and verified elevation range of 700-1400 meters.

Mountain ranges generally trend south-north with sharp fluctuation in physiography and

acute cutting shape. They belong to the Red River drainage areas. The elevation for the

lowest base level of erosion in deposit is 670 meters.

The area is in a subtropical zone. Annual precipitation generally ranges from 700-

1200mm and the rainy season is from June to September. The average annual

precipitation is 930.8mm. The temperature ranges from 1°C to 45°C with an average

temperature of 23°C. Featured with vertical zonation, it is hot in summer and autumn

and mild in winter and spring.

The mining area is sparsely populated. The residents plant primarily rice in the area,

together with subtropical economic crops such as sugar cane and mango. In respect of

industry, it involves mainly mineral development and sugar industry which is

supplementary to agriculture. Power infrastructures such as power grid have been

constructed, satisfying the demand for mine development basically. Currently, the

constructions of auxiliary living, production and water conservancy facilities have been

completed to meet the needs for production and daily life.


— 110 —

13.1.2 Geological Setting of the Mine Field

The mining area has a two strata structure, including the exposed basement and cover.

The basement is originated from the Lower Proterozoic Dahongshan group. It is made

of a suite of volcano-sedimentary rocks of light-middle metamorphism with rich iron

and copper. It is a kind of metamorphism rock from Palaeo-Marine Volcanism and

sediment. The cover is made of terrigenous clastic rocks of the Ganhaizi and Shezi

groups of Upper Triassic, which are widely distributed in the surrounding mountainous

area.

The mining area is divided into 7 mineralized zones (No.1-No.7). The D Copper Mine

refers to No.1 zone.

The No.1 zone is iron-copper mineralized zone and major copper mineralized zone of the

mining area. It is originated from garnet biotite hornblendite and metamorphosed sodium

tuff (morphed-sodic tuff) (Ptdm3) of middle-upper Manganghe groups. It consists of 7 ore-

body groups with iron and copper coexisting, including Ic→I3→Ib→I2→Ia→I1→I o from

top to bottom. Amongst them, I3,I2 andI1 are iron-copper ore-body groups, while Ic,Ib,Ia

andIo are copper-iron ore-body groups. The No.2 zone is the major iron mineralized zone

in Dahongshan mining area. It is originated from the metamorphosed sodium lava section

(Ptdh1) of lower Hongshan group. It comprises the following ore-bodies: II1, II2 (II2–1,

II2–2, II2–3, II2–4), II3 (II3–1a, II3–1b, II3–1c, II3–1d, II3–2, II3–3), II4, II5 (II5–1, II5–2,

II5–3, II5–4). The No.3 zone is iron-copper mineralizated zone. It is stemmed from garnet

amphibolite chlorite schist section (Ptdh2) of middle Hongshan group and consists of ore-

body III1, III2 (III2–1, III2–2, III2–3, III2–4) . The No.4 zone is iron mineralized zone. It is

derived from amphibolite metamorphosed sodium lava (Ptdh3) of lower Hongshan group

and consists of ore-body IV1 (IV1–1, IV1–2), IV2. The No.5 zone is iron mineralized zone.

It is derived from amphibolite metamorphosed sodium lava section (Ptdh3) of upper

Hongshan group and neighbouring F1 and F2 fault belts of mining area. It consists of ore-

body V1, V2, V3, V4. The No.6 zone is a lean iron mineralized zone. It is originated from

amphibolite metamorphosed sodium tuff (Ptdm2) of middle-lower Manganghe group and

consists of ore-body VI1 and VI2. The No.7 zone is a lean iron-copper mineralized zone. It

is originated from epidote amphibolite metamorphosed sodium lava section (Ptdm1) of

lower Manganghe group and consists of ore-body VII.

Copper exists in sulphides with chalcopyrite as its major minerals. Bornite and

chalcocite can also be found occasionally. Iron is hosted by oxides and iron carbonate.

Its main mineral is magnetite, together with some siderite and little hematite.

According to the ore type, it is divided into ores containing iron-copper and ores

containing copper-iron.


— 111 —

The I3, I2 and I1 ore-bodies in No.1 zone are ores containing iron-copper. Their major

minerals are chalcopyrite and magnetite, followed by bornite, siderite and pyrite .

Depending on the ore type, gangue minerals include mainly albite, quartz and biotite

while minor minerals include dolomite, chlorite and garnet. With granular structure and

separated structure of solid solution, the ores are constructed mainly with striated and

banded texture, supplemented with scattered specks, disseminated structure, vein and

massive structure. The copper minerals in copper rich ores are basically distributed in

lamellar structure, mixed with irregular discordant veinlets and conglomerations. The

chalcopyrite is distributed in the albites and dolomites in the form of particulates or

granules. The ore-body Ic, Ib, Ia, I o in No.1 zone are ores containing copper-iron.

Their major minerals are magnetite and siderite, followed by chalcopyrite, bornite and

pyrite . Gangue minerals include mainly albite, quartz, dolomite and biotite while minor

minerals include chlorite and garnet. Combined in different ways, they have formed

albite-quartz magnetite ore, dolomite-blackband ironstone magnetite ore, biotite-

dolomite siderite ore. The ores are medium-to-fine hypidiomorphic granular blastic

texture with disseminated, striped and banded structure. The magnetite and siderite are

disseminated in the form of symmetrical fine-to-medium granules or asymmetrical

stripes or bands.13.1.3 Resource Reserves.

13.1.3.1 Ensured Resource Reserves

According to the review record of minerals resource reserves of the Ministry of Land

and Resources, as at May 31, 2006, there are (111b) + (122b) + (331) + (332) + (333)of

the ensured resource reserves in a copper mine in Yunan Province, of which tonnage is

79,562,700 tonnes and metal contentare 640553.68 tonnes and the average geological

grade of which is 0.81%. The grade of the accompanying iron is 21.95%, the metal

content of the accompanying gold are 7749.93 kg with its average grade of 0.18g/tonne.

The metal content of the accompanying silver is 100637.87kg with its average grade of

1.86g/tonne.

Total ensured resource reserves of the symbiotic iron: tonnage is 10,886,300 tonnes

with its grade of 26.66%; the metal content of the accompanying copper, 17,670.14

tonnes, with its grade of 0.16%; the metal content of the accompanying gold,

19,593.00kg, with its grade of 6.39g/tonne; the metal content of the accompanying

silver, 7347.01kg, with its average grade of 1.45g/tonne.


— 112 —

13.1.3.2 Valuation of the Utilized Resource Reserves

According to the Guide to Valuation of Mining right (2004 Revision), measured

(researchable) economic basic reserves (111b) and indicated economic basic reserves

(122b) are all calculated for valuation according to the regulations. As to the measured

intrinsic economic resources (331) and indicated intrinsic economic resource (332), the

following conclusion is drawn after analysis: The mine has been utilized in the actual

mining process and the market quotation of copper is relatively considerable, and thus

mining is economic and rational. According to the regulations, 331 and 333 correspond

with 111b and 122b, all of which are calculated for valuation. It is unallowable to adjust

the confidence coefficient. The value of the inferred intrinsic economic resource (333)

is taken from the confidence coefficient scope of 0.5-0.8. The geological degree of the

mineral bed is high and the high grade of resource reserves are near the (333) resources,

and thus the (333) resource is calculated for valuation as the confidence coefficient of

0.8.

Valuation of the utilized resource reserves = Σ (basic reserves + all grades of resources

+ confidence coefficient)

Valuation of the utilized copper resource reserves = (111b) + (122b) + (331) + (332) +

(333) x 0.8

= 78,825,400 tonnes

Valuation of the utilized iron resource reserves = (111b) + (122b) + (331) + (332) +

(333) x 0.8

= 10,572,100 tonnes

Thus, in the mining right valuation of Copper Mine D in Yunan Province, the utilized

copper resource reserves are 78,825,400 tonnes, and the symbiotic iron resource

reserves are 10,572,100 tonnes, and the utilized resource reserves in the valuation are

89,397,600 tonnes in total.

13.1.3.3 Proven Reserves

The tonnage of the proven reserves of Copper Mine D in Yunan Province is 81,351,700

tonnes with the average grade of 0.81%.


— 113 —

13.1.4 Mining and Milling Methods and Product Schemes

In the light of the ore body occurrence and the mining technology conditions of Copper

D in Yunan Province, adopt the open stope method to fill after recovery. Adopt the flank

and deviated hole to explore. As to the milling process, select the process of floatation

and subsequent magnetic separation, grind the original mine to -200, and molybdenum

accounts for 70%, and then the copper concentrate through floatation is acquired after it

is roughly floated and swept once and finely floated twice. The rough iron concentrate

is acquired from the remaining mine floatation through rough floatation of weak

magnetic. The magnetic separation of rough concentrate is ground to -200, and

molybdenum accounts for 92%, and then the iron concentrate is acquired after it is

finely floated twice.

Product Schemes According to the production process, its products are copper

concentrate and iron concentrate, and gold, silver and sulphur are comprehensively

recycled. But the silver and sulphur content in the copper concentrate in the actual

products for sale do not conform to the valuation standards and are not valued. Thus,

the products applied to the valuation are copper concentrate, iron concentrate and the

comprehensive recovery of gold.

13.1.5 Production Scale

The production scale of the mining license of Copper Mine D in Yunan Province is

800,000 tonnes/year. Its project II was put into production in 2004. The actual mining

yield was 1,920,000 tonnes in 2004 and that was 2,440,000 tonnes in 2005. The

valuation of the utilized production scale is 2,500,000 tonnes/year.

13.1.6 Product Price

On the base day of transaction, the average sales price (pre-tax) of copper-bearing

copper concentrate with copper is RMB21,832.60/tonne.

13.17 Transaction price of mining price of Copper Mine D in Yunan Province

Transaction price of mining price of Copper Mine in Yunan Province is

RMB704,679,500 and RMB seven hundred and four million, six hundred and seventy-

nine thousand, five hundred only in words (the calculation term of valuation is 30 years,

and 71,703,300 tonnes of proven reserves are used, and the base date of transaction is

31 May, 2006.


— 114 —

13.2 Mining right of Copper Mine T in Yunan Province

The mining type of Copper Mine T in Yunan Province was a copper mine, and the base date of

transaction of mining right was 30 June, 2006.

13.2.1 Overview of Location and Geology

Copper Mine T in Yunan Province is located in City C of Yunan Province. The mining

area is 30km away from the urban area of City C, with convenient communications.

On the east, west and south of the mining eare are hills, and valleys are to its north, and

its surface water systems do not develop, enjoying damp and warm climate. The mine is

in the hills.

It is a north temperate monsoon climate area with average annual rainfall of 1510.8mm

which mainly concentrated from April to July. The average temperate is 16.04ºC.

Labour resources are rich, and agriculture of which rice is prevailing is highly

developed in the mining area. The mining area and its surroundings are abundant in

mineral resources which are subject to copper and they are also rich in sulphur, iron,

gold, silver, coal, manganese, limestone. Electric power is sufficient in the mining area.


— 115 —

13.2.2 Geological Overview of the Mine

Strata in the mining area are distributed from the upper Silurian System Maoshan

Formation to the lower Nanling Lake Section of Triassic System Qinglong Formation,

with the platform sediment which is subject to shallow-sea facies, and the main rock

characteristics are as follows: below the Devonian System are all clastic rocks

(sandstone and sandshale), and above it are mainly carbonates. Carboniferous System -

Permian System Qixia Formation is the main controlled seam position.

The bed of Copper Mine T consists of three ore blocks and 86 ore bodies which include

9 major ore bodies and 77 minor ore bodies. The ore bodies are produced in the contact

zone of granodiorite-porphyry body and favorable host rock and on the granodiorite-

porphyry body. Host rocks nearby the mine have also been mineralized, and

granodiorite-porphyry itself nearby to the contact zone has also been mineralized to an

ore body. The location of the ore body mostly inclines to the south, and the obliquity is

changed greatly. The ore body is layer-shaped, lens-shaped, bursa-shaped or haricot -

bean-shaped. Major ore bodies are medium in size.

Copper exists as sulfides, and the major mineral are chalcopyrite, the minor ones are

magnetite and pyrite.

Ore types mainly include copper-bearing pyrite ore, copper-bearing magnetite ore,

copper-bearing skarn ore, copper-bearing granodiorite-porphyry ore, copper-bearing

flinty rock ore , copper-bearing marble ore and copper-bearing shale ore.

Ore textures mainly include xenomorphic crystal, idiomorph texture, colloid texture,

poikilitic texture, and also include pressure texture, metasomatic relict texture, and netted

texture. Ore structures mainly include massive structure and disseminated structure, and also

include banded structure, mesh-vein structure and brecciated structure.

13.2.3 Resource Reserves

13.2.3.1 Ensured Resource Reserves

According to the review record of mineral resource reserves of the Ministry of

Land and Resources, as at 30 June, 2006, there are (111b) + (122b) + (332) +

(333)of the ensured resource reserves in Copper mine T in Yunan Province, of

which mineral content are 62,267,100 tonnes and metal contents are 752,167

tonnes, the average geological grade of which is 1.21%. The total symbiotic

sulphur minerals (111b) + (122b) + (333) are 61,353,600 tonnes, and the sulphur

content is 9, 711,500 tonnes with its average grade of 15.83%. The ore content of

the accompanying iron is 61,353,600 tonnes with its average grade of 20.20%;

the metal content of the accompanying gold is 26418.63 kg with its average

grade of 0.43kg/tonne. The metal content of the accompanying silver is 496.86

tonnes with its average geological grade of 8.10g/tonne. 13.2.3.2 Evaluation of

the Utilized Resource Reserves


— 116 —

13.2.3.2 Valuation of the utilized resource reserves

According to the Guide to Assessment of Mining right (2004 revision), measured

(researchable) economic basic reserves (111b) and indicated economic basic

reserves (122b) are all calculated according to the regulations. As to the

indicated intrinsic economic resource (332), the following conclusion is drawn

after analysis: The mine has been utilized in the actual mining process and the

market quotation of copper is relatively considerable, and thus mining is

economic and rational. According to the regulations, 332 and 333 correspond

with 111b and 122b, all of which are calculated for valuation. It is unallowable to

adjust the confidence coefficient. The value of the inferred intrinsic economic

resource (333) is taken from the confidence coefficient scope of 0.5-0.8. As the

geological degree of mineral bed is relatively low and there is no high grade of

resource reserves near the (333) resource, the (333) resource is calculated for

valuation as the confidence coefficient of 0.6.

Valuation of the utilized resource reserves = Σ (basic reserves + all grades of

resources + confidence coefficient)

Valuation of the utilized copper resource reserves= (111b) + (122b) + (332) +

(333) x 0.6 = 53,769,500 tonnes

13.2.3.3 Exploitable Ore Reserve

It is assessed that the exploitable ore reserve is 46.6837 million tonnes with an

average ore grade of 1.21%.

13.2.4 Mining and Milling Methods, and Product Solution

The mining methods are varied (such as Vacant Field Mining Method) according to the

ore body occurrence and the mining technological conditions of T Copper Mine of

Yunan Province. The milling technology is as follows: three-stage open-circuit ore

breaking, one-stage closed-circuit ore grinding, acquiring copper concentrate through

one-time rough floatation, twice fine floatation and twice sweeping by selecting copper

from the original mine; acquiring sulphur concentrate by selecting sulphur after

conditioning from the tailings of copper selecting; acquiring iron concentrate through

one-time rough floatation and one-time fine floatation by selecting iron from the

tailings; comprehensive recycle of gold and silver from the copper concentrate.

Product Solution: According to the production process, such products as copper

concentrate, iron concentrate and sulphur concentrate are produced, and gold, silver and

sulphur are recycled comprehensively.


— 117 —

13.2.5 Production Capacity

The annual production capacity is 2,200,000 tonnes under the Mining License for T

Copper Mine of Yunan Province. Therefore, it is assessed that the production capacity is

2,200,000 tonnes per year.

13.2.6 Product Price

The average selling price (tax excluded) of copper-bearing copper concentrate was

RMB 28629.00 yuan per tonne as at the trading base day.

13.2.7 Trading Price for Mining Right of T Copper Mine of Yunan Province

The trading price for the mining right of T Copper Mine of Yunan Province was RMB

509,126,200 yuan (i.e, RMB five hundred and ninety-one million twenty-six thousand

two hundred yuan) with an exploitable ore reserve of 46,683,700 tonnes as at the

trading date 30 June, 2006.

14. PARAMETER SELECTION AND CALCULATION

14.1 The exploitable ore reserve, average geologic grade, product price, production capacity and

traded price of the mining right to be assessed and the reference mining right are shown as in

the following table:

Mining

Right for

Mining Right T Copper Mining Right

No. Item for D Copper Mine to be Assessed

1 Production capacity

(in ten thousand tonnes per year) 250 220 396

2 Assessed exploitable reserve

(in ten thousand tonnes) 7170.33 4668.37 11815.65

3 Average geologic grade (%) 0.81 1.21 0.713

4 Price of copper concentrate

(RMB/tonne) 21832.60 28629.00 26100.08

5 Assessed price for the mining right

(in RMB ten thousand) 70467.95 50499.32


— 118 —

14.2 Adjustment Coefficient Calculation

14.2.1 Adjustment Coefficient of Exploitable Ore Reserve

Based on the formula: µ =Qs

Qx

In which: Qs – Exploitable reserve of the mining right to be assessed;

Qx – Exploitable reserve of the reference mining right;

Compared with Mining Right I:

µ =11815.65

= 1.64797170.33

Compared with Mining Right II:

µ =11815.65

= 2.5314668.37

14.2.2 Adjustment Coefficient of Grade

Based on the formula: ω =ars – abj

arx – abj

In which: ars — Geologic grade of the mining right to be assessed;

arx

— Geologic grade of the reference mining right;

abj — Cut-off grade;

The cut-off grade of copper mine is 0.2% under the Industrial Index of Mineral

Products.


— 119 —


ω =0.713 – 0.2

= 0.84100.81 – 0.2


ω =0.713 – 0.2

= 0.60071.054 – 0.2

14.2.3 Adjustment Coefficient of Price

Based on the formula: ϕ =Pss

Pxx

In which: Pss — Current price of copper concentrate for the mining right to be

assessed;

Pxx — Price of copper concentrate of the reference mining right;


ϕ =26100.08

= 1.195521832.60


ϕ =26100.08

= 0.911728629.00

14.2.4 Adjustment Coefficient of Production Capacity

Based on the formula: t =Tts

Ttx

In which: Tts — Production capacity of the mining right to be assessed;

Ttx — Production capacity of the reference mining right;


— 120 —


t =396.00

= 1.584250.00


t =396.00

= 1.80220.00

14.2.5 Adjustment Coefficient of Differences

According to the feature differences between the mining right to be assessed and the

reference mining right of D Copper Mine of Yunan Province and of the T Copper Mine

of Yunan Province , the values of these elements are assessed by experts based on on-

site survey and by referring to the geology statistical yearbook. The details are shown as

follows:

Mining Right Mining Right

Mining for D Copper for T Copper

Right to Mine of Mine of

Element Item Weight be Assessed Yunan Province Yunan Province

(%)

Transportation Highway type 35 2 3 5

Distance to national

highways 3 3 5

Distance to

railway stations 4 3 3

Subtotal 3 3 4.3333

Natural and Terrain 30 3 3 5

Economic

Environment

Climate 3 3 2

Income per capita 1 3 3

Water resource 5 5 5

Electricity supply 5 5 5

Subtotal 3.4 3.8 4


— 121 —

Geologic Embedding depth 35 3 3 4

Conditions

for Mining

and Milling

Type of ore deposit

prospection 1 3 3

Mining method 5 2 2

Mineral milling

performance 1 3 3

Subtotal 2.5 2.75 3

Total 2.945 3.1525 3.7667

Based on the formula: τ = As

Ax

In which: As — total assessment value of the difference elements for the mining

right to be assessed;

Ax — total assessment value of the difference elements for the reference

mining right;


t =2.945

= 0.93423.1525


t =2.945

= 0.78183.7667

14.3 Value Calculation of the Mining Right to be Assessed

(70467.95 x 1.6479 x 0.841 x 1.1955 x 1.584 x 0.9342)

Ps =+ (50499.32 x 2.531 x 0.6007 x 0.9117 x 1.8 x 0.7818)

2

= 1,359,602,700


— 122 —

15. CONCLUSION

Based on the investigation, understanding and analysis of the actual situation of the valuation object,

and after assessment and estimation by using a scientific valuation procedure and reasonable

valuation methods, we hereby evaluate that the valuation period for “Chengmenshan Copper Mine

Mining Right of Jiangxi Copper Corporation” is 30 years, the exploitable ore reserve is 118,156,500

tonnes and the assessed value is RMB 1,359,602,700 yuan (i.e., RMB thirteen billion fifty-nine

million six hundred and two thousand seven hundred yuan). Although the existing mining right

certificate is for a period of 10 years since 2004, according to the representation of the directors of

the Company, the mining right may be extended to 30 years upon application to the relevant

governmental authorities.

16. NOTES

16.1 Period of Validity of Valuation Results

The valuation base date of this report is 30 June, 2006. In accordance with the applicable laws

and regulations, the period of validity of the valuation results is one year, namely, the results

are valid within one year from the valuation base date. Should the valuation results be used

beyond the period of validity, Beijing Jingwei Property Appraisal Co., Ltd. takes no

responsibility for any loss whatsoever arising therefrom.

Should the number of assets be changed within the validity of the valuation results, the

assessed value shall be adjusted accordingly based on the valuation methods; should the price

standard of the assets be changed within the validity of the valuation results, which obviously

has an impact on the assessed value of the assets, the entrusting party shall hire a valuation

organization to reassess and determine the value on a timely basis; should the method of

adjusting asset price be simple and easy to operate, the entrusting party can make the

adjustment accordingly to the actual price of the assets.

16.2 Adjustment after Valuation Base Date

No other adjustment is made that affects the valuation results between the valuation base day

and the valuation report issuance day.

16.3 Division of Other Responsibilities

We only take responsibility for whether the valuation results of this project are in line with the

practice compliance, rather than asset pricing policy. Made for the purpose of this specific

valuation only, the valuation results of this project shall not be used for other purposes.


— 123 —

16.4 Valid Use Situation of Valuation Results

The valuation results for Chengmenshan Copper Mine mining right of Jiangxi Copper

Corporation shall only be used for the purpose of transferring the mining right of Jiangxi

Copper Corporation and for submitting to the valuation authorities for review. The right to use

this valuation report rests with the entrusting party, and it shall not be provided to others or

disclosed without permission from the entrusting party.

17. ASSUMPTIONS OF PROJECT VALUATION

17.1 The mining right valuation is based on the mineral resource reserve reviewed and recorded in

the document of the Ministry of Land and Resources PRC MLR Reserve Zi [2003] No. 136,

Certification of Review and Filing of Mineral Resource Reserve under Report on Reviewing

Mineral Resource Reserve of Chengmenshan Copper Mine of Jiujiang County, Jiangsu

Province (11 December, 2003).

17.2 The proposed future production capacity and product solution of the mine will remain

unchanged.

17.3 There will be no material change in the state’s industrial, financial and tax policies within the

forecast period.

17.4 The technology is based on current technology level.

17.5 The mining rght may be extended to 30 years.

17.6 The market supply will hold the line.

18. VALUATION REPORT DATE

20 August, 2006


— 124 —

19. PERSONS RESPONSIBLE FOR VALUATION

Legal representative: Liu Zhongzhen (Certified Mining Right Assessor registered

with the Ministry of Land and Resources of the PRC, Certified

Public Valuer of the PRC, with 15 years of experience in

valuation of assets and mining right in the PRC)

Project chief: Li Xiuzhi (Certified Mining Right Assessor registered with the

Ministry of Land and Resources of the PRC, Certified Public

Valuer of the PRC, with 10 years of experience in valuation of

assets and mining right in the PRC)

Certified Mining right Assessor: Liu Zhongzhen,Li Xiuzhi

20. VALUATION PERSONNEL

Liu Zhongzhen (Certified Mining Right Assessor registered with the Ministry of Land an Resources

of the PRC, Certified Public Valuer of PRC, with 15 years of experience in valuation of assets and

mining right in the PRC)

Li Yan (Certified Mining Right Assessor registered with the Ministry of Land an Resources of the

PRC, Certified Public Valuer of PRC, with 13 years of experience in valuation of assets and mining

right in the PRC)

Li Xiuzhi (Certified Mining Right Assessor registered in the Ministry of Land an Resources of the

PRC, Certified Public Valuer of PRC, with 10 years of experience in valuation of assets and mining

right in the PRC)

Deng Jufu (Accountant, with 5 years of experience in valuation of mining right in the PRC)

Beijing Jingwei Property Appraisal Co., Ltd.

20 August, 2006

APPENDIX IX GENERAL INFORMATION

— 125 —

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving

information with regard to the Company. The Directors collectively and individually accept full

responsibility for the accuracy of the information contained in this circular and confirm, having made

all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts the

omission of which would make any statement herein misleading.

2. SHARE CAPITAL

The total registered capital of the Company as at the Latest Practicable Date were, and immediately

after completion of the A Share Issue will be as follows:-

(a) Share Capital as at the Latest Practicable Date

Class of Shares Number of Shares RMB

A Shares (including A Shares with

trading moratorium and

without trading moratorium) in issue 1,507,556,200 1,507,556,200

H Shares in issue 1,387,482,000 1,387,482,000

Total number of Shares : 2,895,038,200 2,895,038,200

(b) Share Capital immediately after completion of the A Share Issue

Class of Shares Number of Shares RMB

A Shares (including A Shares with

trading moratorium and

without trading moratorium) in issue 1,507,556,200 1,507,556,200

A Share to be issued under

the A Share Issue

(including the Consideration

Shares and Placing Shares) 290,000,000 290,000,000

Total number of A Shares 1,797,556,200 1,797,556,200

H Shares in issue 1,387,482,000 1,387,482,000

Total number of Shares : 3,185,038,200 3,185,038,200


— 126 —

3. DISCLOSURE OF INTERESTS

(i) Directors and Supervisors

As at the Latest Practicable Date, neither the Directors nor the Supervisors had any interests

and short positions in the shares, underlying shares and debentures of the Company or any

associated corporation (within the meaning of Part XV of the SFO) which were required to be

notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of

the SFO (including interests and short positions which they are taken or deemed to have under

such provisions of the SFO), or any interests and short positions recorded in the register

required to be kept under section 352 of the SFO, or otherwise notified to the Company and

the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of

Listed Companies.

(ii) Interest discloseable under the SFO

As at the Latest Practicable Date, so far as is known to any Directors or chief executive of the

Company, the following parties (other than Directors, Supervisors or chief executive of the

Company) had, or were deemed or taken to have an interest or short positions in the Shares

and underlying Shares which would fall to be disclosed to the Company under the provision of

Divisions 2 and 3 of Part XV of the SFO:

Approximate

percentage of Approximate

shareholding percentage of

Name of Number of in the relevant shareholding in

Substantial Class of Shares class of share the total issued

Shareholder Shares interested Capacity capital share capital

(Note 1)

JCC Domestic Shares 1,354,462,414(L) Beneficial owner 89.84% (L) 46.79%(L)

(Note 2)

Halibis Capital H Shares 109,515,000 (L) Investment Manager 7.89% (L) 3.78% (L)

Management

(Hong Kong) Limited

JPMorgan Chase & Co. H Shares 86,735,890 (L) Note 3 6.25% (L) 3.00% (L)

26,892,000 (P) 1.94% (P) 0.93% (P)


— 127 —

Note 1 “L” means long position of the relevant persons/entities in the shares. “S” means short position of therelevant persons/entities in the shares. “P” means interest in a lending pool.

Note 2 According to the corporate substantial shareholder notice filed by JCC on 20 March 2007, JCC is interestedin an aggregate of 1,354,462,414 A Shares. So far as the Directors are aware, the block of 1,354,462,414 AShares held by JCC comprised the 1,225,035,414 A Shares and 129,427,000 Consideration Shares. Asdisclosed in the Letter from the Board of this circular, the issue price and the number of A Shares to beissued under the A Share Issue and the issue price and the number of Consideration Shares have not beenfixed and the A Share Issue is subject to certain conditions, including but not limited to the approvals of theIndependent Shareholders and the relevant governmental authorities. The number of Consideration Sharesdisclosed in the corporate substantial shareholder notice is based on the assumption that that the number ofConsideration Shares will not be less than 44.63% of the total number of A Shares to be issued under the AShare Issue.

Mr. Li Yihuang, an executive Director and the Chairman of the Company, is the legal representative of JCC.

Note 3 According to the corporate substantial shareholder notice filed by JPMorgan Chase & Co. on 27 March2007, the H Shares were held in following capacities:

Number of H Shares Capacity

45,178,890 H Shares Beneficial owner14,665,000 H Shares Investment manager26,892,000 H Shares Custodian corporation/approved lending agent

So far as is known to any Director or chief executive of the Company, the parties, other than

member of the Group, directly of indirectly, interested in 10% or more of the voting power at

general meetings of the members of the Group as at the Latest Practicable Date were as

follows:-

Approximate

percentage of total

Name of Shareholder Name of subsidiary issued shares/equity interest

JCC Jiangxi Copper Products 40%

Company Limited

JCC Zhejiang Xiao Shan Tong Da 40%

Chemical Industry Limited

Liability Company

(浙江蕭山銅達化工有限公司)

Liang Shan Zhou State-owned Sichuan Kang Xi Copper 11.15%

Asset Operation Management Limited Liability Company

Limited Liability Company （四川康西銅業有限責任公司）

（山州國有資產

經營管理有限責任公司 )


— 128 —

Sichuan Minzu Investment Sichuan Kang Xi Copper 11.68%

Company Limited Liability Company

(四川省民族投資公司） (四川康西銅業有限責任公司)

Xichang Power Joint Stock Sichuan Kang Xi Copper 28.25%

Company Limited Limited Liability Company

(西昌電力股份有限公司 ) (四川康西銅業有限責任公司)

Daitong Gold and Shanxi Province Diaoquan 20.78%

Non-ferrous Metals Silver & Copper Mine

Company Limited Company Limited

（大同市黃金有色（山西省刁泉銀銅

金屬有限公司）礦業有限公司）

Shanxi Non-ferrous Shanxi Province Diaoquan 12.23%

Metals Industrial Silver & Copper Mine

Corporation Company Limited

（山西省有色金屬（山西省刁泉銀銅

工業總公司）礦業有限公司）

Xinda Gold & Silver Shanxi Province Diaoquan 13.27%

Development Centre Silver & Copper Mine

（鑫達金銀開發中心） Company Limited

（山西省刁泉銀銅

礦業有限公司）

Save as disclosed, as at the Latest Practicable Date, the Directors or chief executive of the

Company are not aware of any other person (other than Directors, Supervisors or chief

executive of the Company) who has an interest or short position in the Shares or underlying

shares of the Company which would fall to be disclosed to the Company under the provisions

of Divisions 2 and 3 of Part XV of the SFO, or who is interested in 10% or more of the

nominal value of any class of share capital carrying rights to vote in all circumstances at

general meeting of any other member of the Group.


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(iii) Material interests

None of the Directors or the Supervisors has any direct or indirect interest in any assets which

have since 31 December 2005 (being the date to which the latest published audited financial

statements of the Company were made up) been acquired or disposed of by or leased to any

member of the Group, or are proposed to be acquired or disposed of by or leased to any

member of the Group.

None of the Directors or the Supervisors is materially interested in any contract or

arrangement entered into by the Company subsisting at the date of this circular which is

significant in relation to the business of the Group.

4. COMPETITING INTERESTS

None of the Directors or the Supervisors and their respective associates had any interest in a business

which competes or may compete with the business of the Group.

5. MATERIAL ADVERSE CHANGES

As at the Latest Practicable Date, the Directors are not aware of any material adverse change in the

financial or trading position of the Group since 31 December 2005, the date to which the latest

published audited consolidated financial statements of the Company were made up.

6. SERVICE CONTRACT

Each of the executive Directors entered into a service contract with the Company for a term of three

years commencing from 15 June 2006 and up to the date of the annual general meeting of the

Company for the year 2008. Each of the independent non-executive Directors entered into an

appointment letter with the Company for a term of three years commencing from 15 June 2006 and

up to the date of the annual general meeting of the Company for the year 2008.

Save as disclosed, as at the Latest Practicable Date, none of the Directors or Supervisors has entered

into any service contracts with the Company or any of its subsidiaries which may not be terminated

by the employer within one year without payment other than statutory compensation.

7. LITIGATION

As at the Latest Practicable Date, no member of the Group is engaged in any litigation or arbitration

of material importance and there is no litigation or claim of material importance known to the

Directors to be pending or threatened against any member of the Group.


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8. EXPERT

(a) The followings are the qualifications of Goldbond Capital, Grant Sherman and Beijing Jingwei

which have given its their report, opinion or advice which are contained in this circular:

Name Qualifications

Goldbond Capital a corporation licensed under the SFO to conduct type 1 (dealing in

securities) and type 6 (advising on corporate finance) regulated

activities under the SFO

Grant Sherman professional surveyors and valuers

Beijing Jingwei qualified valuer in the PRC

(b) As at the Latest Practicable Date, none of Goldbond Capital, Grant Sherman and Beijing

Jingwei had any shareholding, direct or indirect, in any member of the Group or any right

(whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for

securities in any member of the Group.

(c) Goldbond Capital, Grant Sherman and Beijing Jingwei have given and have not withdrawn

their respective written consent to the issue of this circular with the inclusion of their

respective letters and references to their respective names in the form and context in which

they are included.

(d) Goldbond Capital, Grant Sherman and Beijing Jingwei do not have any interest, direct or

indirect, in any assets which have been acquired or disposed of by or leased to any member of

the Group, or which are proposed to be acquired or disposed of by or leased to any member of

the Group since 31 December 2005, the date to which the latest published audited financial

statements of the Company were made up.

(e) The letter and recommendation from Goldbond Capital and the letters and reports from Grant

Sherman are given as of the date of this circular for incorporation herein. The report from

Beijing Jingwei is given for incorporation in this circular.

9. GENERAL

The company secretaries of the Company are Mr. Pan Qifang and Mr. Tung Tat Chiu, Michael. Mr.

Pan Qifang is a senior economist in the PRC. Mr. Tung Tat Chiu, Michael is the principal of Tung &

Co., the Company’s Hong Kong legal advisers, and has over 10 years experience as a practicing

solicitor in Hong Kong.


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The Company has not appointed qualified accountant pursuant to Rule 3.24 of the Listing Rules. Mr.

Wu Jinxing, an executive Director, is currently the chief financial officer and in charge of the Finance

Department of the Company. Mr. Wu has over 20 years of experience in finance management and has

rich experiences in finance management. Mr. Wu was graduated from Zhejiang Metallurgical

Economic Professional School with major in accounting.

10. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours at 19th

Floor, 8 Wyndham Street, Central, Hong Kong from 2 April 2007 to 18 April (both days inclusive):

(a) the letter from the Independent Board Committee, the text of which is set out on page 19 of

this circular;

(b) the letter from Goldbond Capital, the text of which is set out on pages 20 to 35 of this circular;

(c) the written consent of Goldbond Capital, Grant Sherman and Beijing Jingwei as referred to

paragraph 8 above;

(d) the Acquisition Agreement;

(e) valuation report on properties, the text of which is set out in Appendix I to this circular;

(f) valuation report on plant and machinery of Chengmenshan Copper Mine, the text of which is

set out in Appendix II to this circular;

(g) valuation report on plant and machinery of Xiangxi Railway, the text of which is set out in

Appendix III to this circular;

(h) valuation report on plant and machinery of Copper Alloy Company, the text of which is set out

in Appendix IV to this circular;

(i) valuation report on plant and machinery of Copper Product Company, the text of which is set

out in Appendix V to this circular;

(j) valuation report on plant and machinery of JCC Dexing Transportation Company, the text of

which is set out in Appendix VI to this circular;

(k) valuation report on plant and machinery of JCC Chemical Copmany, the text of which is set

out in Appendix VII to this circular;

(l) valuation report on the mining right of Chengmenshan Copper Mine, the text of which is set

out in Appendix VIII to this circular; and

(m) the service contracts and the appointment letters referred to in paragraph 6 of this appendix.

NOTICE OF EXTRAORDINARY GENERAL MEETING

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(Stock Code: 0358)

NOTICE IS HEREBY GIVEN that an extraordinary general meeting of Jiangxi Copper Company Limited

(the “Company”) will be held at the Conference Room of the Company at 15 Yejin Avenue, Guixi City,

Jiangxi, the People’s Republic of China on Thursday, 17 May 2007 at 9:00 a.m. for the purpose of considering

and, if thought fit, passing the following resolutions as special resolutions and ordinary resolutions of the

Company:

SPECIAL RESOLUTIONS

1. “THAT

each of the following proposed items in respect of the issue of domestic-listed Renminbi denominated

ordinary shares (“A Shares”) (“A Share Issue”) in the People’s Republic of China (“PRC”) be and is

hereby individually approved, and shall be implemented subsequent to the granting of the approval

from the relevant governmental authorities in the PRC upon application:

(1) Class of shares to be issued and the nominal value: domestic-listed Renminbi denominated

ordinary shares of RMB1.00 each (A Shares).

(2) Number of A Shares to be issued: not exceeding 290,000,000 A Shares.

(3) Target subscribers and subscription method : not exceeding ten subscribers, including Jiangxi

Copper Corporation (“JCC”). The A Shares will be issued by way of settlement of consideration

and subscribed by cash.

(4) Proposed place for listing of the A Shares to be issued: Shanghai Stock Exchange.

(5) Determination of issue price: will not be less than 90% of the average trading price of the A

Shares on the Shanghai Stock Exchange for 20 trading days immediately before the date of the

issue of the announcement relating to the sixth meeting of the fourth session of the board of

directors of the Company (i.e. 20 March 2007). Authorization is hereby given to the directors

of the Company to determine the final issue price in accordance with the market conditions.


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(6) Method of issue : the A Shares will be issued (i) to JCC as consideration under the acquisition

agreement dated 16 March 2007 entered into between the Company and JCC (the “Agreement”),

and (ii) to institutional investors by placing.

(7) Use of proceeds of the A Share Issue : to satisfy the consideration under the Agreement and

to finance the following projects :-

(i) RMB498,000,000 to be invested to finance the expansion of the expansion of phase II

of Chengmenshan Copper Mine;

(ii) RMB387,520,000 to be invested to finance the renovation of technology for mining

method of Yongping Copper Mine;

(iii) RMB300,560,000 to be invested to finance the technology renovation of the Fujiawu

Copper Mine;

(iv) RMB120,240,000 to be invested to finance the expansion of the processing capacity of

Wushan Copper Mine to 5,000 tonnes per day;

(v) RMB189,530,000 to be invested in the expansion of copper recovering from slag;

(vi) RMB194,270,000 to be invested in the expansion of anode mud treatment and

comprehensive utilisation; and

(vii) RMB272,610,000 to be invested in the utilization of the heat recovered from smelting

process.

(8) Sharing of accumulated profits : the accumulated profits after completion of the A Share Issue

will be shared among the existing and prospective shareholders of the Company.

(9) Validity period of this resolution: one year after approval in this extraordinary general meeting.


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(10) The board of directors of the Company (the “Board”) (or the committee of the directors as may

be appointed by the Board) be and is hereby authorized with full power to deal with all matters

relating to the A Share Issue, including but not limited to the following matters (the term of

authorization is one year from the day of this extraordinary general meeting):

(i) to deal with the issue and listing with respect of the A Share Issue and other related

application procedures and other formalities;

(ii) to confirm the appropriate manner of issue, and to determine the final issue price and

issue quantity according to the market conditions and in compliance with the relevant

regulations upon sufficient negotiations with investors;

(iii) to approve each of the documents and contracts relating to the A Share Issue;

(iv) to make appropriate and necessary amendments to the relevant provisions of the articles

of association of the Company in order to reflect the changes in the registered capital

and shareholding structure of the Company as a result of the A Share Issue;

(v) to deal with the registration procedures in respect of the change in the registered capital

and the amendment in the articles of association of the Company upon completion of

the A Share Issue; and

(vi) to deal with all procedures relating to the A Share Issue according to laws including all

the procedures that are required to be followed under the laws, regulation and listing rules

of the places where shares of the Company are listed.”

ORDINARY RESOLUTIONS

2. “THAT

(a) the acquisition agreement entered into between the Company and Jiangxi Copper Corporation

(江西銅業集團公司) (“JCC”) dated 16 March 2007 (a copy of which marked “A” has been

produced to the meeting and signed by the chairman of the meeting for the purpose of

identification), pursuant to which JCC agreed to sell and the Company agreed to purchase the

mining rights and the related operating assets and liabilities of the Chengmenshan Copper Mine,

operating assets and related liabilities of the Xiangsi Railway, 40% equity interest of the Jiangxi

Copper Alloy Company Limited, 40% equity interest of Jiangxi Copper Products Company

Limited, 100% equity interest of Jiangxi Copper Group Chemical Company Limited and 100%

equity interest of the Jiangxi Copper Group (Dexing) Transportation Company Limited at the

aggregate consideration of RMB1,785,335,700 (subject to adjustment) (the “Agreement”) be

and is hereby approved, ratified and confirmed; and


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(b) the issuance of new A Shares (as defined in the special resolution No. 1 of the notice convening

this meeting) to JCC as payment for the consideration under the Agreement be and is hereby

approved; and

(c) the directors of the Company be and are hereby authorized for and on behalf of the Company

to sign, seal, execute, perfect, deliver and do all such documents, deeds, acts, matters and things

as they may in their discretion consider necessary or desirable or expedient for the purpose of

or in connection with the Agreement and to make and agree such variations of a non-material

nature in or to the terms of the Agreement as they may in their discretion consider to be desirable

and in the interests of the Company.”

3. “THAT the report relating to the private issue of shares involving material connected transaction of

the Company (非公開發行股票涉及重大關聯交易的報告) (the “Report”) (a copy of which marked

“B” has been produced to the meeting and signed by the chairman of the meeting for the purpose of

identification) which contains details of the A Share Issue (as defined in the special resolution No.

1 of the notice convening this meeting) and the details of the assets to be acquired and the transaction

under the Agreement (as defined in the ordinary resolution No. 2 of the notice convening this meeting)

be and is hereby approved and confirmed and the directors of the Company be and are hereby

authorized to do all things and acts and sign all documents which they consider desirable or expedient

to implement or give effect to any matters relating to or in connection with the Report.”

4. “ THAT the feasibility report for the use of proceeds from the A Share Issue (as defined in the

resolution No. 1 of the notice convening this meeting) (“Feasibility Report”) (a copy of which marked

“C” has been produced to the meeting and signed by the chairman of the meeting for the purpose of

identification) be and is hereby approved and confirmed. The proceeds from the A Share Issue will

be used to satisfy:

(1) the consideration under the Agreement (as defined in the ordinary resolution No. 3 of the notice

convening this meeting) including the followings :-

(a) the mining rights and the related operating assets and liabilities of the Chengmenshan

Copper Mine;

(b) operating assets and related liabilities of the Xiangsi Railway;

(c) 40% equity interest of Jiangxi Copper Alloy Company Limited;

(d) 40% equity interest of Jiangxi Copper Products Company Limited;

(e) 100% equity interest of Jiangxi Copper Group Chemical Company Limited; and

(f) 100% equity interest of the Jiangxi Copper Group (Dexing) Transportation Company

Limited;


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(2) the cash proceeds from the A Share Issue will be used to finance the following projects:-

(g) the expansion of phase II of Chengmenshan Copper Mine;

(h) the renovation of technology for mining method of Yongping Copper Mine;

(i) the technology renovation of the Fujiawu Copper Mine;

(j) the expansion of the processing capacity of Wushan Copper Mine to 5,000 tonnes per

day;

(k) the expansion of copper recovering from slag;

(l) the expansion of anode mud treatment and comprehensive utilisation; and

(m) the utilization of the heat recovered from smelting process,

and the directors of the Company be and are hereby authorized to do all things and acts and

sign all documents which they consider desirable or expedient to implement or give effect to

any matters relating to or in connection with the Feasibility Report.”

5. “THAT the use of the previous proceeds of the Company be end is hereby approved and confirmed.

The total proceeds from the issue of 230,000,000 A shares of the Company amounted to RMB510,140,000

(after deductions of expenses for underwriting, publicity campaigns and fee for issue on the internet

amounting to RMB11,960,000) was received on 28 December 2001. The net amount of RMB494,850,000

after deduction of issuing expenses amounting to RMB15,290,000, which was all received on 28

December 2001 and a specific report on capital verification as verified by Deloitte Touche Tohmatsu

Shanghai Certified Public Accountants Ltd. was issued. Subsequently, the proceeds was invested in

the third phase project of technological renovation of Guixi Smelter, the acquisition of the net operating

assets of Wushan Copper Mine from Jiangxi Copper Corporation and the technological renovation for

open-pit mining of Fujiawu Copper Mine. The use of proceeds was completed on 31 December 2002.

Details of the use of the proceeds are as follows:

Total planning Including: Progress as at

Project investment use of proceeds 31 December 2005

(RMB) (RMB)

The third phase project of technological

renovation of Guixi Smelter 1,500,000,000 260,050,000 Completed

Acquisition of Wushan Copper Mine 193,810,000 193,810,000 Completed

Development of Fujiawu Copper Mine 810,000,000 40,990,000 Not yet completed

Total 2,503,810,000 494,850,000 —”


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6. “THAT the waiver (the “Waiver”) for Jiangxi Copper Corporation (“JCC”) from its obligations which

may arise under the relevant rules and regulations under the laws of the People’s Republic of China

to make a mandatory general offer to the shareholders of the Company for all the issued shares of

the Company not already owned by it as a result of the issue of renminbi-denominated domestic shares

of RMB1.00 each (“A Shares”) in the ordinary share capital of Jiangxi Copper Company Limited (the

“Company”) to JCC as consideration under the acquisition agreement dated 16 March 2007 entered

into between the Company and JCC (“Consideration Shares”) be and is hereby approved and the

directors of the Company be and are hereby authorized to do all things and acts and sign all documents

which they consider desirable or expedient to implement or give effect to any matters relating to or

in connection with the Waiver.”

By order of the Board

Pan Qifang

Company Secretary

2 April 2007, Guixi City, Jiangxi, the PRC

Notes:

(a) Any shareholder entitled to attend and vote at the meeting mentioned above is entitled to appoint one or more proxies to attendand vote at the meeting on his/her behalf in accordance with the articles of association of the Company. A proxy need notbe a shareholder of the Company.

(b) In order to be valid, the proxy form of holders and, if such proxy form is signed by a person under a power of attorney orother authority on behalf of the appointer, a notarially certified copy of that power of attorney or authority shall be depositedat the Company’s legal address (in the case of the proxy form by holders of Domestic Shares) or at the Company’s H ShareRegistrars, Hong Kong Registrars Limited at 46/F, Hopewell Centre, 183 Queens’ Road East, Wanchai, Hong Kong (in thecase of proxy form of holder of H Shares) not less than 24 hours before the time for holding the meeting or 24 hours beforethe time appointed for taking the poll.

(c) Shareholders or their proxies shall produce their identification documents when attending the meeting.

(d) The register of members of the Company will be closed from 17 April 2007 to 17 May 2007 (both days inclusive), duringsuch period no transfer of shares will be registered.

(e) Shareholders whose names appear in the register of members of the Company on 17 April 2007 are entitled to attend andvote at the meeting.

(f) Shareholders who intend to attend the meeting shall complete and lodge the reply slip for attending the meeting at theCompany’s legal address at 15 Yejin Avenue, Guixi City, Jiangxi Province, the People’s Republic of China on or before 27April 2007. The reply slip may be delivered to the Company by hand, by post or by fax (fax no. (86) 701-3777013).

(g) The Extraordinary General Meeting is expected to last for less than half a day. Shareholders or their proxies attending theExtraordinary General Meeting shall be responsible for their own traveling and accommodation expenses.

NOTICE OF A SHARE CLASS MEETING

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(Stock Code: 0358)

NOTICE OF CLASS MEETING OF A SHARES

NOTICE IS HEREBY GIVEN that a class meeting of holders of A Shares (including A Shares with trading

moratorium and A Shares without trading moratorium) of Jiangxi Copper Company Limited (the “Company”)

will be held at the Conference Room of the Company at 15 Yejin Avenue, Guixi City, Jiangxi, the People’s

Republic of China on Thursday, 17 May 2007 at 9:30 a.m. or so soon thereafter as the Extraordinary General

Meeting of the Company to be convened on the same day at the same place shall have been concluded or

adjourned for the purpose of considering and, if thought fit, passing the following resolution which will be

proposed as special resolution of the Company:

SPECIAL RESOLUTION

1. ‘’THAT











(4) Proposed place for listing of the A Shares to be issued: Shanghai Stock Exchange.


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to finance the following projects :-






Copper Mine;







process.



(9) Validity period of this resolution: one year after approval in this class meeting.


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authorization is one year from the day of this meeting):

















Pan Qifang

Company Secretary

Notes:


(b) In order to be valid, the proxy form of holders and, if such proxy form is signed by a person under a power of attorney orother authority on behalf of the appointer, a notarially certified copy of that power of attorney or authority shall be depositedat the Company’s legal address (in the case of the proxy form by shareholders of domestic Shares) not less than 24 hoursbefore the time for holding the meeting or 24 hours before the time appointed for taking the poll.


(d) The A Share Class Meeting is expected to last for less than half a day. Shareholders or their proxies attending the A ShareClass Meeting shall be responsible for their own traveling and accommodation expenses.

NOTICE OF H SHARE CLASS MEETING

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(Stock Code: 0358)

NOTICE OF CLASS MEETING OF H SHARES

NOTICE IS HEREBY GIVEN that a class meeting of holders of H Shares of Jiangxi Copper Company

Limited (the “Company”) will be held at the Conference Room of the Company at 15 Yejin Avenue, Guixi

City, Jiangxi, the People’s Republic of China on Thursday, 17 May 2007 at 9:40 a.m. or so soon thereafter

as the A Share Class Meeting of the Company to be convened on the same day at the same place shall have

been concluded or adjourned for the purpose of considering and, if thought fit, passing the following

resolution which will be proposed as special resolution of the Company:

SPECIAL RESOLUTION

1. “THAT











(4) Proposed place for listing of the A Shares to be issued: Shanghai Stock Exchange;


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to finance the following projects:-






Copper Mine;







process.



(9) Validity period of this resolution: one year after approval in this class meeting.


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authorization is one year from the day of this meeting):

















Pan Qifang

Company Secretary


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Notes:


(b) In order to be valid, the proxy form of holders and, if such proxy form is signed by a person under a power of attorney orother authority on behalf of the appointer, a notarially certified copy of that power of attorney or authority shall be depositedat the Company’s H Share Registrars, Hong Kong Registrars Limited at 46/F, Hopewell Centre, 183 Queens’ Road East,Wanchai, Hong Kong not less than 24 hours before the time for holding the meeting or 24 hours before the time appointedfor taking the poll.


(d) The register of members of the Company will be closed from 17 April 2007 to 17 May 2007 (both days inclusive), duringsuch period no transfer of shares will be registered.

(e) Shareholders whose names appear in the register of members of the Company on 17 April 2007 are entitled to attend andvote at the meeting.

(f) Shareholders who intend to attend the meeting shall complete and lodge the reply slip for attending the meeting at theCompany’s legal address at 15 Yejin Avenue, Guixi City, Jiangxi Province, the People’s Republic of China on or before 27April 2007. The reply slip may be delivered to the Company by hand, by post or by fax (fax no. (86) 701-3777013).

(g) The H Share Class Meeting is expected to last for less than half a day. Shareholders or their proxies attending the H ShareClass Meeting shall be responsible for their own traveling and accommodation expenses.

江西銅業股份有限公司 jiangxi copper company limited · a letter from the board is set out...

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