CStone Pharmaceuticals — Capital/Financing Update 2006

Jan 25, 2006

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

==> picture [40 x 42] intentionally omitted <==

兗州煤業股份有限公司 YANZHOU COAL MINING COMPANY LIMITED

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

(Stock Code: 1171)

Announcement on the Share Reform Plan by the Company’s Controlling Shareholder, Yankuang Group

On behalf of its controlling shareholder, Yankuang Group, the Company wishes to disclose the details of the consideration arrangement under the Share Reform Plan offered by Yankuang Group to the Holders of A Shares, in exchange for their consent to the conversion of all the non-tradable shares held by Yankuang Group into tradable A Shares. Yankuang Group proposes to offer 2.2 non-tradable shares to each Holder of A Shares for every ten (10) A Shares held by such Holder of A Shares whose names appeared on the register upon the close of business on the Record Date for the Share Reform Plan. Yankuang Group does not have any plan to offer similar consideration to the holders of H Shares (including the holders of American Depositary Receipts) of the Company.

This announcement is made pursuant to Rule 13.09(2) of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

At the request of the Company, trading in the H Shares on The Stock Exchange of Hong Kong Limited was suspended with effect from 9:30 a.m. on 23 January 2006 pending the release of this announcement. The Company has applied to The Stock Exchange of Hong Kong Limited for the resumption of trading in the H Shares with effect from 9:30 a.m. on 25 January 2006.

The board of directors (the “Board”) of Yanzhou Coal Mining Company Limited (the “Company”) hereby announces that, upon the authorization and acting on behalf of the only holder of non-tradable shares holding approximately 54.33% of the Company’s registered capital, namely Yankuang Group Corporation Limited (“Yankuang Group”), a notice has been issued to the holders of the domestic shares of the Company traded and listed on the Shanghai Stock Exchange (“A Shares”, and the holders of A Shares as “Holders of A Shares”) for a meeting of the holders of domestic shares of the Company to be held on 6 March 2006 (“Relevant Shareholders’ Meeting”), to seek approval by the Holders of A Shares to Yankuang Group’s proposal for the conversion of all the non-tradable shares held by the Yankuang Group into tradable A Shares (the “Share Reform Plan”). Yankuang Group does not have any plan to offer similar consideration to the holders of overseas-listed foreign shares (“H Shares”) (including the holders of American Depositary Receipts) of the Company.

A summary of the Share Reform Plan is set out below. The full version of the proposal and other relevant documents required under the regulatory rules of the Shanghai Stock Exchange are available on the website of the Shanghai Stock Exchange ( http://www.sse.com.cn ).

1. IMPORTANT NOTICE

The completion of the Share Reform Plan is subject to the following approvals:

• (1) the approval of the State-owned Assets Supervision and Administration Commission of the Shandong Province (“Shandong SASAC”) of the People’s Republic of China (the “PRC”);

• (2) the approval of at least two-thirds of all the shareholders with voting rights attending and voting at the Relevant Shareholders’ Meeting and the approval of at least two-thirds of the Holders of A Shares attending and voting at the Relevant Shareholders’ Meeting; and

• (3) the approval of the Ministry of Commerce of the PRC.

The decision or opinion given by the China Securities Regulatory Commission and Shanghai Stock Exchange does not represent their judgment on or assurance for the Share Reform Plan, the value of the Company’s shares or the return of the investors.

2. IMPORTANT ISSUES OF THE SHARE REFORM PLAN

2.1 Key Issue of the Share Reform Plan

For the purpose of implementing the Share Reform Plan, Yankuang Group proposes to offer as consideration to the Holders of A Shares whose names appear on the register of members of A Shares kept by the China Securities Depository and Clearing Corporation Limited, Shanghai Branch upon the close of trading on the Record Date (as defined below), namely the transfer of 2.2 non-tradable shares to each Holder of A Shares for every ten (10) A Shares held by such Holder of A Shares. On the first trading day following the completion of the Share Reform Plan, non-tradable shares of the Company previously held by Yankuang Group (inclusive of those transferred as referred to above) shall be granted the right of listing and trading on the Shanghai Stock Exchange.

1

5. SUSPENSION AND RESUMPTION OF TRADING IN THE A SHARES AND H SHARES OF THE COMPANY

2.2 Undertakings and Warranties by the Yankuang Group

2.2.1 Undertakings

In connection with the Share Reform Plan, Yankuang Group undertakes:

• (1) Yankuang Group will perform its statutory undertakings and obligations in compliance with the requirements under any laws, regulations and rules.

• (2) The originally non-tradable shares held by Yankuang Group will be subject to a trading moratorium of 48 months from the date of the completion of the Share Reform Plan. In the event that Yankuang Group fails to fulfill this undertaking, all monies received from the disposal of any of such shares shall be paid to the account of the Company.

• (3) Yankuang Group will transfer some of those assets which are in line with the Company’s development strategies to the Company in 2006 to enhance the operational results of the Company and to minimize the connected transactions and competition between Yankuang Group and the Company.

• (4) Yankuang Group will be responsible for all the costs incurred in connection with the implementation of the Share Reform Plan.

• (5) Yankuang Group warrants that it will faithfully perform its undertakings and assume the relevant legal responsibilities. It will not transfer any shares held unless the transferee agrees to and is capable of assuming such responsibilities pursuant to the undertakings.

• (6) Yankuang Group will compensate the Holders of A Shares for any loss caused by its failure to fulfill the whole or part of the undertakings stated above.

2.2.2 Warranty provided by Yankuang Group for the performance of its undertakings and obligations:

Upon the approval of the Share Reform Plan obtained at the Relevant Shareholders’ Meeting, Yankuang Group will open a securities funding account in accordance with the relevant requirements. The performance of undertakings by Yankuang Group will also be supervised by the sponsor.

2.3 Changes in the Shareholding Structure

	Before completion of the Share Reform	Before completion of the Share Reform	Plan		After completion of the Share Reform	After completion of the Share Reform	Plan
			Percentage				Percentage
			of				of
		Number	registered			Number	registered
		of shares	share capital			of shares	share capital
1.	Total of unlisted			1.	Total of tradable shares
	non-tradable shares				with trading moratorium
	State-owned shares	2,672,000,000	54.33%		State-owned shares	2,608,640,000	53.04%
2.	Total of listed tradable	2,246,400,000	45.67%	2.	Total of tradable shares	2,309,760,000	46.96%
	shares				without trading moratorium
	A Shares	288,000,000	5.85%		A Shares	351,360,000	7.14%
	H Shares	1,958,400,000	39.82%		H Shares	1,958,400,000	39.82%
3.	Total number of shares	4,918,400,000	100.00%	3.	Total number of shares	4,918,400,000	100.00%

3.

TIMETABLE FOR THE RELEVANT SHAREHOLDERS’ MEETING

Record date for attending the Relevant Shareholders’ Meeting and ascertaining entitlement of Holders of A Shares to receive shares (the “Record Date”): 24 February 2006.

Date and time for holding of the Relevant Shareholders’ Meeting: 14:00 hours on 6 March 2006.

Time for Internet voting for the Relevant Shareholders’ Meeting: Between 9:30 to 11:30 hours and 13:00 to 15:00 hours on each trading day from 2 March 2006 to 6 March 2006.

4. SHAREHOLDERS ENTITLED TO ATTEND THE RELEVANT SHAREHOLDERS’ MEETING

Pursuant to the relevant laws, regulations and rules in relation to the Share Reform Plan, the Company’s shareholders eligible to attend the Relevant Shareholders’ Meeting include: Yankuang Group and the Holders of A Shares whose names appeared on the register of China Securities Depository and Clearing Corporation Limited, Shanghai Branch on the Record Date.

The Company has applied to the Shanghai Stock Exchange for a suspension of trading in the A Shares with effect from 23 January 2006 and will announce a “Statement on the Share Reform Plan” on 25 January 2006. Trading in the A Shares will remain suspended on the Shanghai Stock Exchange pending the release of an announcement containing the finalised terms of the Share Reform Plan by no later than 14 February 2006 and trading in the A Shares will resume on the day following the date of such announcement.

The Board will apply for a further suspension of trading in the A Shares on the Shanghai Stock Exchange with effect from the trading day immediately following the Record Date (24 February 2006). Trading in the A Shares is expected to resume on the first trading day immediately following the completion of the Share Reform Plan.

At the request of the Company, trading in the H Shares of the Company on The Stock Exchange of Hong Kong Limited was suspended with effect from 9:30 a.m. on 23 January 2006 pending the release of this announcement. The Company has applied for the resumption of trading in the H Shares of the Company on The Stock Exchange of Hong Kong Limited with effect from 9:30 a.m. on 25 January 2006.

2

6. RISK FACTORS

• 6.1 The Share Reform Plan is subject to the approvals of Shandong SASAC and the Ministry of Commerce of the PRC and may not be granted before the date for voting by the Holders of A Shares as currently scheduled. If such circumstances happen, the date for voting by the Holders of A Shares will be scheduled to a later date after the approvals of Shandong SASAC and the Ministry of Commerce of the PRC have been obtained.

• 6.2 The implementation of the Share Reform Plan is subject to the approval of more than two-thirds of all the shareholders attending and voting at the Relevant Shareholders’ Meeting and the approval of more than twothirds of the Holders of A Shares attending and voting at the Relevant Shareholders’ Meeting.

• If the above-mentioned approvals cannot be obtained, Yankuang Group may propose a motion for the Share Reform Plan again in accordance with the relevant laws and regulations of the PRC.

7. OPINION OF SPONSOR AND LEGAL ADVISORS

• 7.1 Guotai Junan Securities Company Limited, the sponsor of the Share Reform Plan, is of the opinion that the consideration offered by Yankuang Group to the Holders of A Shares in exchange for the conversion of all its non-tradable shares into tradable A Shares is fair and reasonable.

• 7.2 King & Wood of Beijing, the legal advisors of the Share Reform Plan, is of the opinion that: (1) the Company is a party qualified for participating in the Share Reform Plan; (2) Yankuang Group is a party qualified for proposing the Share Reform Plan; (3) the relevant procedures which have been adopted for the Share Reform Plan are in compliance with the existing laws and regulations and the contents and forms of the relevant legal documents are lawful and effective; (4) the Share Reform Plan and the relevant undertakings by Yankuang Group are in accordance with the requirements of the relevant laws, regulations, rules and standardized documents such as the “Administrative Measures on the Share Reform of Listed Companies” and the Articles of Association of the Company; (5) the Share Reform Plan only involves the change in the shareholdings of Yankuang Group and the Holders of A Shares and Yankuang Group has undertaken to pay all costs incurred in connection with the Share Reform Plan; and it is not aware of any state of affairs arising from the Share Reform Plan which will prejudice the interests of the holders of H Shares.

As at the date of this announcement, the directors of the Company are Mr. Wang Xin, Mr. Geng Jiahuai, Mr. Yang Deyu, Mr. Shi Xuerang, Mr. Chen Changchun, Mr. Wu Yuxiang, Mr. Wang Xinkun, Mr. Chen Guangshui and Mr. Dong Yunqing, and the independent non-executive directors of the Company are Mr. Pu Hongjiu, Mr. Cui Jianmin, Mr. Wang Xiaojun, Mr. Wang Quanxi.

By order of the Board of Directors of Yanzhou Coal Mining Company Limited Wang Xin Chairman of the Board

Zoucheng, Shandong Province, PRC, 24 January 2006

Please also refer to the published version of this announcement in South China Morning Post.

3