CStone Pharmaceuticals — Interim / Quarterly Report 2006

Oct 26, 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.

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 (“PRC”) with limited liability) (Stock Code: 1171)

Third Quarterly Report for the Year 2006

IMPORTANT NOTICE

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

The board of directors (the “Board”), the supervisory committee, the directors, the supervisors, and the senior management of Yanzhou Coal Mining Company Limited (the “Company”) confirm that this announcement does not contain any false information, misleading statements or material omissions, and accept joint and several responsibilities for the truthfulness, accuracy and completeness of the contents.

The Company’s chairman, Mr. Wang Xin, chief financial officer, Mr. Wu Yuxiang, and chief of the planning and finance department, Mr. Zhao Qingchun, confirm that the financial statements contained in the third quarterly report for the year 2006 (the “Report”) are true and complete.

The financial statements of the Company set out in the Report have not been audited.

Summary of the unaudited results for the third quarter ended 30th September, 2006:

• This Report is prepared in accordance with the Regulations on Disclosure of Information in Quarterly Reports for Listed Companies issued by China Securities Regulatory Commission.

• All financial information contained in this Report is prepared in accordance with the PRC Generally Accepted Accounting Principles. The Company has also provided the average coal sales price of the first three quarters of 2006 prepared on the same basis as its previous periodical reports as announced overseas. Please refer to the section headed “Brief analysis of general operating performance during the reporting period”. Shareholders of the Company and public investors should be aware of the different bases of calculation used in this Report and those in the interim and annual reports when trading in shares of the Company.

• Unless otherwise specified, the currency in this Report is denominated in Renminbi.

1

• In the third quarter of 2006, revenue from principal operations was RMB2,951.924 million, representing an increase of RMB291.983 million or 11.0% as compared with the corresponding period last financial year. Realised net profit was RMB448.007 million, representing an increase of RMB63.393 million or 16.5% as compared with the corresponding period last year.

• During the first three quarters of 2006, revenue from principal operations was RMB9,438.076 million, representing an increase of RMB101.490 million or 1.1% as compared with the corresponding period last financial year. Realised net profit was RMB1,795.710 million, representing an decrease of RMB245.527 million or 12.0% as compared with the corresponding period last financial year.

• The information contained in this Report is the same as that published on the Shanghai Stock Exchange, and this announcement is published simultaneously in the PRC and overseas.

1 GENERAL INFORMATION

1.1 General Information

General Information
Listed Stock			Shanghai	The Stock Exchange	New York
Exchange		Stock Exchange		of Hong Kong Limited	Stock Exchange, Inc.
Stock abbreviation		Yanzhou Mei Ye		–	–
Stock abbreviation
before the change			G Yanmei	–	–
Stock code			600188	1171	YZC
	Secretary		of
	the Board			Representative	of Securities Business
Name	Zhang Baocai				–
Contact address	298	Fushan South Road,
	Zoucheng, Shandong
	Province, PRC				–
Tel	0537-5382319				–
Fax	0537-5383311				–
E-mail	yzc@yanzhoucoal.com.cn				–
Financial Information
Major financial statistics and indexes
		At the end of this		At the end of
		reporting period		last financial year	Increase/decrease
			(Unaudited)	(audited)	(%)
Total assets (RMB)		21,894,916,939		21,088,180,197	3.8
Shareholders’ equity
(excluding minority interest)
(RMB)		18,012,769,235		17,141,627,255	5.1
Net assets per share (RMB)			3.66	3.49	5.1
Net assets per share after
adjustment (RMB)			3.65	3.47	5.2
					Increase/decrease
				From the beginning	(%) of this reporting
				of this year to the	period over the
				end of this reporting	corresponding
		Reporting period		period	period last year
			(Unaudited)	(Unaudited)
Net cash flow from operating
activities (RMB)			635,144,130	1,025,527,935	1,999.0
Earnings per share (RMB)			0.091	0.365	16.5
Return on net assets (%)			2.49	9.97	increased by
					0.18 percentage
Weighted average return
on net assets after
deducting extraordinary
gain and loss (%)			2.55	10.21	increased by
					0.23 percentage

1.2 Financial Information

1.2.1Major financial statistics and indexes

2

Extraordinary gain and loss Amount (For the nine months ended 30th September)

Non-operating income Non-operating expenses Impact on income tax

Total

Amount (RMB) (Unaudited) 6,167,282 -3,894,571 -1,715,060

557,651

1.2.2Statement of Income

Statement of Income For the Period ended 30th September, 2006

					Unit: RMB Yuan
		This reporting period		Corresponding period in last
		(For the third quarter		financial year	(For the third
Item		ended 30th September)		quarter ended 30th September)
		Consolidated	the Company	Consolidated	the Company
		(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)
Revenue from principal operations		2,951,924,165	2,951,924,165	2,659,940,792	2,659,940,792
Less:	Cost of principal operations	1,542,118,410	1,542,293,535	1,413,968,362	1,413,968,362
	Sales taxes and surcharges	70,739,947	70,739,947	62,314,354	62,314,354
Profit from principal operations		1,339,065,808	1,338,890,683	1,183,658,076	1,183,658,076
Add:	Profit from other operations	19,860,011	17,222,585	13,061,290	12,940,037
Less:	Operating expenses	215,446,182	216,279,330	178,676,188	180,553,734
	Administrative expenses	456,658,499	457,463,929	403,251,317	396,150,992
	Financial expenses	2,437,864	7,607,415	42,280,973	44,941,381
Operating profit		684,383,274	674,762,594	572,510,888	574,952,006
Add:	Investment income	5,781,995	15,826,601	6,221,862	3,495,241
	Non-operating income	1,542,249	1,542,249	181,604	176,604
Less:	Non-operating expenses	1,309,907	1,301,907	3,134,636	3,130,432
Total	profits	690,397,611	690,829,537	575,779,718	575,493,419
Less:	Income taxes	241,643,473	241,564,694	191,011,925	190,879,745
	Minority interest	747,047	–	154,119	–
Net profit		448,007,091	449,264,843	384,613,674	384,613,674

Statement of Income

For the Period ended 30th September, 2006

Unit: RMB Yuan

			Unit: RMB Yuan	Unit: RMB Yuan
	From the beginning of this year		Corresponding period last
	to the end of this reporting period		financial year
	(For the nine months ended		(For the nine months ended
Item	30th September)		30th September)
	Consolidated	the Company	Consolidated	the Company
	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)
Revenue from principal operations	9,438,076,407	9,438,076,407	9,336,585,713	9,336,585,713
Less: Cost of principal operations	4,482,592,051	4,484,292,043	4,172,236,262	4,173,512,179
Sales taxes and surcharges	208,860,307	208,860,307	187,348,363	187,348,363
Profit from principal operations	4,746,624,049	4,744,924,057	4,977,001,088	4,975,725,171
Add: Profit from other operations	61,143,873	53,638,480	36,952,903	36,470,937
Less: Operating expenses	735,293,875	738,005,553	717,070,646	721,020,800
Administrative expenses	1,376,217,739	1,363,962,092	1,208,671,596	1,190,492,197
Financial expenses	(20,150,237 )	(8,933,145 )	37,856,588	37,925,853
Operating profit	2,716,406,545	2,705,528,037	3,050,355,161	3,062,757,258
Add: Investment income	4,723,534	15,572,987	9,040,516	(4,280,494 )
Non-operating income	6,167,282	6,164,782	458,900	433,900
Less: Non-operating expenses	3,894,571	3,886,571	5,211,607	5,034,683
Total profits	2,723,402,790	2,723,379,235	3,054,642,970	3,053,875,981
Less: Income taxes	926,704,379	926,411,424	1,012,963,545	1,012,639,214
Minority interest	988,352	–	442,658	–
Net profit	1,795,710,059	1,796,967,811	2,041,236,767	2,041,236,767

3

2 MANAGEMENT DISCUSSION AND ANALYSIS

1.3 Total number of shareholders and the top 10 shareholders with tradable shares without trading moratorium of the Company at the end of this reporting period

Total number of shareholders at the end of this reporting period

84,965

Top 10 shareholders holding tradable shares without trading moratorium

	Number of tradable shares
	without trading moratorium	Classes of shares
	at the end of this reporting	(A,B,H shares
Name of Shareholder	period (shares)	or others)
HKSCC Nominees Limited	1,955,159,730	H Shares
SITICO-JP Morgan Double-Interest-Balanced
Combined Security Investment Fund	7,170,250	A Shares
CREDIT SUISSE (HONG KONG) LIMITED	6,482,141	A Shares
Shanghai Stock Exchange 50 Exchange
Trading Open-End Index Securities
Investment Fund	3,937,888	A Shares
DongFeng Automobile Co., Ltd.	3,559,496	A Shares
National Social Security Fund 002 Group	2,810,025	A Shares
UBS LIMITED	2,364,897	A Shares
CITIGROUP GLOBAL MARKETS LIMITED	2,102,519	A Shares
Song Guifang	1,751,000	A Shares
Yi Fang Da 50 Index Securities Investment Fund	1,660,189	A Shares

• 2.1 Brief analysis of general operating performance during this reporting period

• (1) Brief analysis of general operating performance during this reporting period

During this reporting period, the Company’s revenue from principal operations was RMB2,951.924 million, representing an increase of RMB291.983 million or 11.0% as compared with the corresponding period in 2005. This was attributable to the increase of coal sales as compared with the corresponding period last year. The cost of principal operations was RMB1,542.118 million, representing an increase of RMB128.150 million or 9.1% over the corresponding period in 2005. This was mainly attributable to certain factors including the increase of materials investment caused by the increase in raw material price and frequent movement of mining workface as well as the increase in employees’ wages. Realised net profit was RMB448.007 million, representing an increase of RMB63.393 million or 16.5% as compared with the corresponding period last year.

During this reporting period, the Company’s raw coal production was 8.35 million tonnes, representing an increase of 0.99 million tonnes, or 13.5%, as compared with the corresponding period in 2005. The Company’s salable coal production was 7.91 million tonnes, representing an increase of 1.26 million tonnes, or 18.9%, as compared with the corresponding period in 2005.

The Company sold 7.76 million tonnes of coal, representing an increase of 0.95 million tones, or 14.0%, as compared with the corresponding period in 2005.

The railway assets specifically used for coal transportation (“railway assets”) realized transportation volume of 5.08 million tonnes, representing an increase of 0.72 million tones, or 16.5%, as compared with the corresponding period in 2005.

• (2) Brief analysis of general operating performance in the first three quarters

During the first three quarters, the Company’s revenue from principal operations was RMB9,438.076 million, representing an increase of RMB101.490 million or 1.1% over the corresponding period in 2005. Of the Company’s revenue, income from the sales of coal was RMB9,318.567 million, representing an increase of RMB110.183 million or 1.2% as compared with the corresponding period last year, which was mainly attributable to an increased revenue from the principal operations of RMB416.586 million due to the increase in sales volume but a decreased revenue from the principal operations of RMB306.403 million due to fall in sales price of coal.

The railway assets achieved railway transportation service income of RMB119.509 million, representing a decrease of RMB8.693 million or 6.8% as compared with the corresponding period in 2005. Such decrease was principally due to the decrease in the volume of coal deliveries where transportation expenses were calculated on ex-mine basis and were borne by the customers.

4

The Company’s cost of principal operations was RMB4,482.592 million, representing an increase of RMB310.356 million or 7.4% over the corresponding period in 2005. Of the Company’s costs, the cost of sales of coal products was RMB4,412.708 million, representing an increase of RMB314.256 million or 7.7% as compared with the corresponding period last year. The unit cost of coal sales was RMB180.02/tonne, representing an increase of RMB5.25/tonne or 3.0% as compared with the corresponding period last year, which was mainly attributable to (1) an increase of unit cost of coal sales by RMB3.70 as a result of certain factors including the increase of materials investment caused by the increase in raw material price and frequent movement of mining workface; (2) an increase of unit cost of coal sales by RMB6.31 as a result of the increase in employees’ wages; (3) a decrease of unit fixed cost by RMB2.37 as a result of the increase in coal output; and (4) the partial set-off of the said cost-increasing factors which resulted in the increase of unit cost of coal sales by the Company’s tightening of cost control measures.

The Company’s realised profit from principal operations decreased by RMB230.377 million or 4.6% to RMB4,746.624 million as compared with the corresponding period in 2005.

The Company’s realised net profit decreased by RMB245.527 million or 12.0% to RMB1,795.710 million as compared with the corresponding period in 2005.

The Company’s raw coal production increased by 0.28 million tones or 1.1% to 26.09 million tones as compared with the corresponding period in 2005.

The Company’s salable coal production increased by 1.16 million tones or 4.9% to 25.01million tonnes as compared with the corresponding period in 2005.

The Company’s realised sales volume of coal increased by 1.06 million tones or 4.5% to 24.51 million tones. Of the Company’s sales volume of coal, 19.91 million tonnes of coal were sold to the domestic market, representing an increase of 1.87 million tonnes or 10.4% as compared with the corresponding period in 2005; and 4.60 million tonnes were sold to the overseas market, representing a decrease of 0.81 million tones or 14.9% as compared with the corresponding period in 2005.

During the first three quarters, the Company’s sales volume of clean coal over the total sales volume of the Company is up to 57.1% from 55.4% in the corresponding period of last year. The change of sales mix is caused by the Company’s timely adjustment of products mix according to the market situation.

During the first three quarters, the railway assets realized transportation volume of 14.51 million tonnes, representing a decrease of 0.83 million tonnes, or 5.4%, as compared with the corresponding period in 2005.

• (3) Average coal sales price analysis of the first three quarters

The following table sets out average coal sales price calculated on the same basis as its previous periodical reports announced in the PRC during the first three quarters:

				Unit:	RMB/tonne
	Year	2006	Year	2005
		The first		The first
	The third	three	The third	three
	quarter	quarters	quarter	quarters	Year 2005
Average coal
sales price	374.58	380.16	385.65	392.66	385.92
Domestic sales	358.70	352.66	344.73	362.74	352.15
Export sales	446.82	499.16	507.80	492.46	503.47

During the first three quarters, the Company’s average coal sales price was RMB380.16/tonne, representing a decrease of RMB12.50/tonne or 3.2% as compared with the corresponding period in 2005. Of the average coal sales price, the average domestic coal sales price was RMB352.66/ tonne, representing a decrease of RMB10.08/tonne or 2.8% as compared with the corresponding period in 2005; while the average export coal sales price was RMB499.16/tonne, representing an increase of RMB6.70/tonne or 1.4% as compared with the corresponding period in 2005. The decrease in the Company’s average coal sales price was principally due to the decrease in the domestic coal sales prices.

In the third quarter of 2006, the Company’s average coal sales price was RMB374.58/tonne, representing a decrease of RMB8.16/tonne or 2.1% as compared with the average coal sales price of RMB382.74/tonne of the first half of 2006, which was mainly due to the fall in coal price for export market of the third quarter. The Company’s export coal during the first quarter was sold at the contract price for export coal of year 2005, which is higher than the contract price for export coal of year 2006.

5

The following table sets out the Company’s average coal sales prices calculated on the same basis as its previous periodical reports announced overseas during the first three quarters:

				Unit:	RMB/tonne
	Year	2006	Year	2005
		The first		The first
	The third	three	The third	three
	quarter	quarters	quarter	quarters	Year 2005
Average coal
sales price_(note)_	339.62	343.72	352.32	356.41	349.50
Domestic sales	338.94	331.65	326.93	343.96	333.74
Export sales	342.72	395.95	428.12	397.92	404.37

Note: The average coal sales price represents the invoice prices minus sale taxes, transportation costs from the Company to ports, port charges and miscellaneous fees for coal sales.

As calculated in accordance with the basis reflected in the Company’s previous periodical reports and as announced overseas, the average coal sales price in the first three quarters of 2006 was RMB343.72/tonne, representing a decrease of RMB12.69/tonne or 3.6% as compared with the corresponding period last year. Of the average coal sales price, the average domestic coal sales price was RMB331.65/tonne, representing a decrease of RMB12.31/tonne or 3.6% as compared with the corresponding period last year; and average export coal sales price was RMB395.95/ tonne, representing a decrease of RMB1.97/tonne or 0.5% as compared with the corresponding period last year.

• (4) Operation Information of Yancoal Australia Pty Limited

The Austar coalmine owned by Yancoal Australia Pty Limited (“Yancoal Australia Pty”), a whollyowned subsidiary of the Company, was put into commercial production in October 2006. As at 30th September, 2006, the accumulated raw coal production of Austar coalmine was 0.23 million tonnes, which formed during the development of a laneway prior to the commencement of production. For the first three quarters of 2006, the sales volume of coal of the Austar coalmine is 0.15 million tonnes, Yancoal Australia Pty realized sales income of RMB80.654 million, which is net sales income deducting sales taxes, freight and miscellaneous fees. And the other income of Yancoal Australia Pty is RMB5.816 million, cost of coal sales is RMB11.287 million, administrative expenses is RMB375.029 million and losses is RMB299.846 million.

In accordance with the PRC Generally Accepted Accounting Principles, Yancoal Australia Pty’s losses of RMB299.846 million realized during the first three quarters was listed as establishment expenditure in long-term deferred expenses, not calculated in losses.

2.1.1Information on principal operations or products which contributed 10% or more to the revenue from principal operations or profit from principal operations during the reporting period.

					Revenue from	Cost of principal
	Industries/products		principal operations			operations
					(RMB thousand)	(RMB thousand)	Gross profit ratio
					(Unaudited)	(Unaudited)	(%)
	Coal mining & preparation				2,906,516	1,513,726	45.5
	Including: connected transactions				246,117	132,165	43.9
2.1.2Seasonal or periodical factors for the			Company’s operation
		Applicable		√	Not applicable

• 2.1.3Breakdown of profits for the reporting period (material changes in the proportion of the total profits of the following items as compared with the previous reported period and the reasons thereof: profit from principal operations, profit from other operations, expenses, investment income, subsidy income and net non-operating income and expenses)

This reporting The previous period reporting period (RMB thousand) (RMB thousand) (Unaudited) (Unaudited) Profit from principal operations 1,339,066 3,407,558 Profit from other operations 19,860 41,284 Expenses 674,543 1,416,819 Investment income 5,782 -1,058 Net non-operating income and expenses 232 2,040 Total profits 690,398 2,033,005	In relation to total profit (%) This reporting The previous period reporting period increase/decrease (%) 193.96% 167.61% 15.72% 2.88% 2.03% 41.87% 97.70% 69.69% 40.19% 0.84% -0.05% – 0.03% 0.10% -70.00% 100.00% 100.00% 0.00%	In relation to total profit (%) This reporting The previous period reporting period increase/decrease (%) 193.96% 167.61% 15.72% 2.88% 2.03% 41.87% 97.70% 69.69% 40.19% 0.84% -0.05% – 0.03% 0.10% -70.00% 100.00% 100.00% 0.00%
		0.00%

6

The proportion of the profit from other operations and expenses to the total profits of the Company increased from 2.03% to 2.88% and from 69.69% to 97.70% respectively as compared with the previous reporting period. This was mainly attributable to the total profits of the Company was decreased as result of the decrease in revenue from principal operations and the increase in cost of principal operations while the profit from other operations and expenses were stable.

During this reporting period, the proportion of net non-operating income and expenses to the total profit of the Company decreased from 0.10% to 0.03% as compared with the previous reporting period. This was mainly due to the substantial decrease in the Company’s income from non-operations during this reporting period.

• 2.1.4Details and explanation on material changes in the principal operations and its composition as compared with the previous reporting period

• Applicable Not applicable√

• 2.1.5 Details and explanation on material changes in the profit generating ability (gross profit margin) of the principal operations as compared with the previous reporting period

• Applicable Not applicable√

• 2.2 Major events and their impact and analysis on the solutions Applicable√ Not applicable

Acquisition of equity interest of Yankuang Shanxi Neng Hua Company Limited

At the 6th meeting of the third session of the Board convened on 18th August, 2006, an agreement was approved for execution between the Company and Yankuang Group Corporation Limited (“Yankuang Group” or “Controlling Shareholder”) in relation to the acquisition of 98% equity interest of Yankuang Shanxi Neng Hua Company Limited. And the acquisition is to be reviewed and discussed at the second extraordinary general meeting which will be held on 10th November, 2006. Please refer to the “Announcement On Connected Transaction of Yanzhou Coal Mining Company Limited” published in the domestic China Securities Journal, Shanghai Securities News and Wen Wei Po, South China Morning Post in Hong Kong by the Company on 21st August, 2006 for details of the acquisition, as well as the circular dated 20 September 2006 regarding acquisition of equity interest of Yankuang Shanxi Neng Hua and amendment to the articles of association of the Company.

Adding New Operating Activities & Amendments to the Articles of Association of the Company

The proposal concerning adding new operating activities and amendments to Articles of Association of the Company, which was passed at the 6th meeting of the third session of the Board of the Company, is to be reviewed and discussed at the second extraordinary general meeting which will be held on 10th November, 2006. For details, please refer to “Announcement on Resolution of the 6th Meeting of the Third Session of the Board of Yanzhou Coal Mining Company Limited” published in the domestic China Securities Journal, Shanghai Securities News and Wen Wei Po, South China Morning Post in Hong Kong by the Company on 21st August, 2006, as well as the circular dated 20 September 2006 regarding acquisition of equity interest of Yankuang Shanxi Neng Hua and amendment to the articles of association of the Company.

Appointment of Secretary to the Board, Company Secretary, Authorized Representative and Nominating Director Candidate

At the 7th meeting of the third session of the Board held on 20th September, 2006, Mr. Zhang Baocai was appointed as secretary to the Board, Company Secretary and authorized representative, and was nominated as candidate for member director by the Board. Details of the appointment and nomination, please refer to “Announcement on Resolution of the 7th Meeting of the Third Session of the Board of Yanzhou Coal Mining Company Limited” published in the domestic China Securities Journal, Shanghai Securities News and Wen Wei Po, South China Morning Post in Hong Kong by the Company on 21st September, 2006.

Setting up Shanxi Yulin Yushuwan Coalmine Company Limited

Upon approval of the operation meeting by the general managers, “Contract for China-Foreign Joint Venture of Yulin Yushuwan Coalmine Company Limited” was entered into by the Company, Chia Tai Energy Chemical Limited (“Chia Tai Company”) and Yushen Coal Company Limited (“Yushen Company”) of Yulin City on 16th August, 2006. Shanxi Yulin Yushuwan Coalmine Company Limited (“Yushuwan Coalmine Company”) is to be mutually invested and established by the above three parties.

The registered capital of Yushuwan Coalmine Company is RMB480 million, of which the Company holds 41% equity interest by contributing capital of RMB196.8 million and the Company will account for the investment of Yushuwan Coalmine Company using equity method; Chia Tai Company holds 40% equity interest by contributing capital of RMB192 million; and Yushen Company holds 19% of equity interest by contributing capital of RMB91.2 million.

In view that the prephase project approving procedures and construction works was undertaken by Yushen Company, the Company and Chia Tai Company have paid RMB150 million to Yushen Company as compensation fee upon negotiation by the three parties, of which RMB75.93 million was paid by the Company in accordance with its corresponding equity proportion, and RMB74.07 was paid by Chia Tai Company.

7

Yushuwan Coalmine Company is responsible for the construction and operation of Yushuwan coalmine. Yushuwan Coalmine is located in Yushen coal mining area of Yulin City, Shanxi Province, with recoverable reserve of 1246 million tonnes and the main coal products are gas coal and thermal coal. Yushuwan Coalmine will be put into operation in 2007 with designed annual capacity of 8 million tonnes.

The proposal on setting up Yushuwan Coalmine Company was reviewed and approved at the 7th meeting of the third session of the Board of the Company. As at this reporting date, procedures relevant to setting up Yushuwan Coalmine Company are being handled.

Entrusted Loans and Guarantees to the Company’s Subsidiaries

Upon approval by the 8th meeting of the third session of the Board held on 25th October,2006, the Company intends to provide an entrusted loan of RMB500 million to the Company’s controlling subsidiary, Yanzhou Coal Yulin Neng Hua Company Limited. As at this reporting date, the entrusted loan approved by the Company totaled RMB1,300 million within last twelve consecutive months, representing 7.58% over the Company’s audited net asset of RMB17,142 million of the year 2005. All the entrusted loans were supplied to the company’s subsidiaries and the details are shown as following:

			Amount of
No.	Bank Entrusted	Borrower	Entrusted Loan	Approving Date & Procedures
1	Bank of China Jining Branch	Yan Mei Heze	RMB300 million	Approved by the operation meeting
		Neng Hua		of the general managers held on
		Company Limited		26th June, 2006
2	Bank of China Jining Branch	Yanzhou Coal	RMB500 million	Approved by the operation meeting
		Yulin Neng Hua		of the general managers held on
		Company Limited		11th September, 2006
3	Bank of China Jining Branch	Yanzhou Coal Yulin	RMB500 million	Approved by the 8th meeting of
		Neng Hua		the third session of the Board held
		Company Limited		on 25th October, 2006

Upon approval by the eighth meeting of the third session of the Board, the Company tends to extend loan guarantee of US$30 million for Yancoal Australia Pty to borrow US$30 million from local bank in Australian, and the loan will be used in mining equipment procurement for Austar coalmine. The Company will issue the interim announcement separately after signing the guarantee agreement. As at 25 October 2006, no guarantee was provided by the Company to others.

Acquisition of Mining Right of Zhaolou Coal mine

The Company acquired 95.67% equity interest in Yan Mei Heze Neng Hua Company Limited ( “Heze Neng Hua”) from Yankuang Group in December 2005. Pursuant to the related acquisition agreements, Heze Neng Hua has the right to purchase mining rights from Yankuang Group at any time within 12 months from the grant of the mining rights of Zhaolou coal mine to Yankuang Group.

Yankuang Group has been granted the mining right certificate of Zhaolou Coal Mine by the Ministry of Land and Resources on 28th June, 2006. The Company will make acquisition of the mining rights of Zhaolou coal mine pursuant to the terms of the relevant agreements, as and when appropriate. Construction works of Zhaolou coal mine are proceeding according to the plan, and are expected to be completed by the end of year 2007. The Company will make a public announcement on the acquisition pursuant to the relevant regulations at appropriate time.

Material Litigation and Arbitration

On 13th December 2004, the Company made an entrusted loan of RMB640 million to Shandong Xin Jia Industrial Company Limited (“Shandong Xin Jia”) through the Bank of China Jining Branch (the “Entrusted Loan”). Since Shandong Xin Jia failed to duly repay the principal and interest of the Entrusted Loan, the Higher People’s Court of Shandong Province appointed Shandong Yinxing Auction Company Limited and auctioned the 289 million shares held by Lianda Group Limited, the guarantor, in Huaxia Bank Company Limited (“Huaxia Shares”) in accordance with the relevant laws on 6th September, 2005 to repay the Company’s the principal, interest, penalty interest and relevant expenses of the Entrusted Loan. The final auction price was RMB3.5 per Huaxia Share and total final auction amount was RMB1,011.5 million.

The successful bidder of Huaxia Shares is going through qualification approval procedures of China Banking Regulatory Commission. Upon completing the qualification approval, the bidder will make payment of the auction amount and transferring procedures of Huaxia Shares, and the Company can call back the principal, interest, penalty interest and relevant expenses of the Entrusted Loan. As at this reporting date, the bidder is still undergoing the process of qualification approval. The Company and relevant parties are endeavoring to confirm the results of the qualification approval as soon as possible.

8

In view of the possibility that the bidder may not obtain the qualification approval by China Banking Regulatory Commission, the Company and the relevant parties have studied corresponding measures to call back the principal, interest, penalty interest and relevant expenses of the Entrusted Loan. Any significant progress concerning the entrusted loan will be promptly disclosed by the Company.

Save as disclosed above, the Company was not involved in any other significant litigation and arbitration during this reporting period.

On-going Connected Transactions During the Reporting Period

On-going connected transactions of the Company are mainly the on-going supplies of materials and services between the Company and the Controlling Shareholder including its associates.

• (1) On-going connected transactions of materials and services supply

During this reporting period, the total value of coal sales and materials supplied by the Company to the Controlling Shareholder was RMB354.869 million; while the total value of the maintenance services and engineering services provided by the Controlling Shareholder to the Company during the report period is RMB407.927 million.

The following table sets out the impact of services and material supplies by the Company to the Controlling Shareholder on the Company’s profit:

	Revenue from	Cost of Principle
	Principal Operation	Operations	Gross Profit
	(RMB thousand)	(RMB thousand)	(RMB thousand)
Coal and services facilitated to
the Controlling Shareholder	246,117	132,165	108,045

• (2) Pursuant to relevant agreements signed between the Company and the Controlling Shareholder, the employees’ endowment insurance schemes, the retired employees’ pension and other welfare expenditures of the Company will be managed by the Controlling Shareholder for free. During the reporting period, the Company paid a total sum of RMB203.394 million employees’ pensions and other welfare expenditures.

• 2.3 Details and reasons for changes in accounting policies, accounting estimations, scope of consolidation and significant accounting errors

• Applicable Not applicable√

• 2.4 Explanations made by the Board and the Supervisory Committee under the situation that an audit report with non-standard opinion was issued Applicable Not applicable√

• 2.5 Caution and explanations for possible loss or material changes in net profit in the period from the beginning of this year to the end of the next reporting period as compared with the corresponding period last year Applicable Not applicable√

• 2.6 Subsequent changes on those already disclosed annual business plan or budget of the Company Applicable Not applicable√

9

2.7 Special undertakings made by original non-tradable shareholders during the non-tradable shares reform and the performance of the undertakings

Applicable√ Not applicable

Name of Shareholder

Yankuang Group Corporation Limited

Special Undertakings

• (1) The original non-tradable shares of the Company held by Yankuang Group should not go public for dealings within forty-eight months since the date of the execution of the revised share reform plan;

• (2) Yankuang Group will, in accordance with the relevant governmental procedure, assign part of its operations including coal and electricity operation together with new projects which are in line with the Company’s development strategies to the Company in 2 0 0 6 a n d s u p p o r t t h e C o m p a n y i n s u c h implementation of assignment to enhance the operating results of the Company and minimize the connected transactions and competitions between Yankuang Group and the Company. The Company will be invited to invest in coal liquefaction project which is being developed by Yankuang Group for co-development.

Performance of Undertakings

The original non-tradable shares of the Company held by Yankuang Group are not traded.

On 18th August, 2006, an agreement was entered into between the Company and Yankuang Group in relation to the acquisition of 98% equity interest of Yankuang Shanxi Neng Hua Company Limited b y t h e C o m p a n y f ro m Yankuang Group, which will be reviewed and discussed at the extraordinary general meeting provisionally convened on 10th November, 2006. Relevant prephase works for other projects assigned from Yankuang Group has been initiated, and the Company will make disclosures as and when appropriate in accordance with supervisory and managing regulations.

(3) All related expenses accrued The undertaking has b een by the non-tradable shares fulfilled. reform will be born by Yankuang Group.

3 DIRECTORS

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 and Mr. Dong Yunqing, and the independent non-executive Directors of the Company are Mr. Pu Hongjiu, Mr. Cui Jianmin, Mr. Wang Xiaojun and Mr. Wang Quanxi.

The full version of the Company’s balance sheet, income statement and cash flow statement for the three quarters ended at 30th September, 2006 are published on the website of The Stock Exchange of Hong Kong Limited at http://www.hkex.com.hk and Shanghai Stock Exchange at http://www.sse.com.cn.

By order of the Board of Directors of

Yanzhou Coal Mining Company Limited Wang Xin

Chairman of the Board

Shandong Province, PRC, 25th October, 2006

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

10

Yanzhou Coal Mining Co.,Ltd. BALANCE SHEET AT SEPTEMBER 30, 2006 Unit: RMB Yuan

	Yanzhou Coal Mining Co.,Ltd. BALANCE SHEET AT SEPTEMBER 30, 2006	Yanzhou Coal Mining Co.,Ltd. BALANCE SHEET AT SEPTEMBER 30, 2006	Unit: RMB Yuan	Unit: RMB Yuan
ASSETS	The Group		The Company
	September 30, 2006 (Unaudited)	December 31, 2005 (Audited)	September 30, 2006 (Unaudited)	December 31, 2005 (Audited)
CURRENT ASSETS Bank balances and cash Current investments Notes receivable Dividends receivable Accounts receivable Other receivables Prepayments Interest receivable Inventories Deferred expenses Other current assets TOTAL CURRENT ASSETS Long-term equity investments Including:Discrepancy on consolidation Long-term debt investments Total LONG-TERM INVESTMENTS FIXED ASSETS Fixed assets - cost Less: Accumulated depreciation Fixed assts - net book value Materials for constructing fixed assets Fixed assets under construction TOTAL FIXED ASSETS INTANGIBLE ASSETS AND OTHER ASSETS INTANGIBLE ASSETS LONG-TERM DEFERRED EXPENSES TOTAL INTANGIBLE ASSETS AND OTHER ASSETS TOTAL ASSETS	5,621,004,703 640,000,000 2,426,967,065 - 282,743,444 343,303,332 156,135,889 588,587,014 62,159,636 466,850,930 10,587,752,013 79,529,907 17,349,219 - 79,529,907 16,036,680,600 8,649,806,065 7,386,874,535 1,114,110,137 1,462,706,418 9,963,691,090 789,852,050 474,091,879 1,263,943,929 21,894,916,939	7,278,972,385 640,000,000 2,100,443,880 - 134,802,711 143,528,596 73,704,963 470,501,129 62,444,803 157,511,340 11,061,909,807 81,117,603 18,936,910 - 81,117,603 15,978,522,004 7,902,722,461 8,075,799,543 194,334,918 711,236,841 8,981,371,302 815,161,408 148,620,077 963,781,485 21,088,180,197	5,401,292,530 770,000,000 2,424,967,065 298,582 277,744,955 893,615,514 167,184,530 18,835,483 537,512,710 60,796,350 466,850,930 11,019,098,649 1,585,905,203 632,696,000 2,218,601,203 15,668,100,698 8,609,887,707 7,058,212,991 93,277,616 426,694,091 7,578,184,698 735,987,450 - 735,987,450 21,551,872,000	6,297,641,649 640,000,000 2,100,243,880 134,802,711 398,177,622 78,776,194 428,483,999 62,346,044 157,511,340 10,297,983,439 1,597,035,257 162,200,000 1,759,235,257 15,669,699,268 7,883,750,808 7,785,948,460 8,926,618 124,679,186 7,919,554,264 761,255,776 - 761,255,776 20,738,028,736

Yanzhou Coal Mining Co.,Ltd. BALANCE SHEET AT SEPTEMBER 30, 2006

Unit: RMB Yuan

	Yanzhou Coal Mining Co.,Ltd. BALANCE SHEET AT SEPTEMBER 30, 2006	Yanzhou Coal Mining Co.,Ltd. BALANCE SHEET AT SEPTEMBER 30, 2006	Unit: RMB Yuan	Unit: RMB Yuan
LIABILITIES AND SHAREHOLDERS’ EQUITY	The Group		The Company
	September 30, 2006 (Unaudited)	December 31, 2005 (Audited)	September 30, 2006 (Unaudited)	December 31, 2005 (Audited)
CURRENT LIABILITIES Notes payable Accounts payable Advances from customers Salaries and wages payable Taxes payable Other payables Accured expenses Provision Dividend payable Long-term payable due within one year TOTAL CURRENT LIABILITIES LONG-TERM LIABILITIES Long-term loan Long-term payable TOTAL LONG-TERM LIABILITIES TOTAL LIABILITIES MINORITY INTEREST SHAREHOLDERS’ EQUITY Share capital Capital reserves Surplus reserves Including: Statutory common welfare fund Proposed Dividend Retained earnings Translation Reserve TOTAL SHAREHOLDERS’EQUITY TOTAL LIABILITIES AND SHAREHOLDERS’EQUITY	136,366,742 387,796,698 623,870,409 147,727,746 229,965,186 1,534,514,189 450,000 - 1,809 313,435,126 3,374,127,905 453,390,460 453,390,460 3,827,518,365 54,629,339 4,918,400,000 5,022,025,051 1,528,790,703 - 6,557,633,983 (14,080,502) 18,012,769,235 21,894,916,939	136,779,128 381,517,651 527,865,895 127,539,246 897,202,321 1,194,089,906 - - - 304,709,446 3,569,703,593 322,936,910 322,936,910 3,892,640,503 53,912,439 4,918,400,000 4,865,480,791 1,528,790,703 509,649,665 1,082,048,000 4,761,923,924 (15,016,163) 17,141,627,255 21,088,180,197	121,607,224 388,049,460 622,588,527 146,420,563 229,957,681 1,248,315,470 313,435,126 3,070,374,051 453,390,460 453,390,460 3,523,764,511 - 4,918,400,000 5,022,025,051 1,528,474,119 6,559,208,319 - 18,028,107,489 21,551,872,000	136,779,128 381,517,651 527,793,426 126,888,680 895,394,930 885,365,147 304,709,446 3,258,448,408 322,936,910 322,936,910 3,581,385,318 - 4,918,400,000 4,865,480,791 1,528,474,119 509,491,373 1,082,048,000 4,762,240,508 - 17,156,643,418 20,738,028,736

Yanzhou Coal Mining Co.,Ltd.

STATEMENT OF INCOME

FOR THE PERIOD ENDED SEPTEMBER 30, 2006

Unit: RMB Yuan

								Unit: RMB Yuan
		1 QUARTER ENDE	D SEPTEMBER 30			3 QUARTERS E	NDED SEPTEMBER 30
	The G	roup	The Co	mpany	The G	roup	The	Company
	2006 (Unaudited)	2005 (Unaudited)	2006 (Unaudited)	2005 (Unaudited)	2006 (Unaudited)	2005 (Unaudited)	2006 (Unaudited)	2005 (Unaudited)
Revenue from major operations Less:Cost of major operations Sales taxes and surcharges Profit from major operations Add:Profit from other operations Less:Operating expenses General and administrative expenses Financial expenses Operating profit Add:Investment income Subsidy income Non-operating income Less:Non-operating expenses Total profit Less:Income taxes Minority interest Net profit	2,951,924,165 1,542,118,410 70,739,947 1,339,065,808 19,860,011 215,446,182 456,658,499 2,437,864 684,383,274 5,781,995 - 1,542,249 1,309,907 690,397,611 241,643,473 747,047 448,007,091	2,659,940,792 1,413,968,362 62,314,354 1,183,658,076 13,061,290 178,676,188 403,251,317 42,280,973 572,510,888 6,221,862 - 181,604 3,134,636 575,779,718 191,011,925 154,119 384,613,674	2,951,924,165 1,542,293,535 70,739,947 1,338,890,683 17,222,585 216,279,330 457,463,929 7,607,415 674,762,594 15,826,601 - 1,542,249 1,301,907 690,829,537 241,564,694 - 449,264,843	2,659,940,792 1,413,968,362 62,314,354 1,183,658,076 12,940,037 180,553,734 396,150,992 44,941,381 574,952,006 3,495,241 - 176,604 3,130,432 575,493,419 190,879,745 384,613,674	9,438,076,407 4,482,592,051 208,860,307 4,746,624,049 61,143,873 735,293,875 1,376,217,739 (20,150,237) 2,716,406,545 4,723,534 6,167,282 3,894,571 2,723,402,790 926,704,379 988,352 1,795,710,059	9,336,585,713 4,172,236,262 187,348,363 4,977,001,088 36,952,903 717,070,646 1,208,671,596 37,856,588 3,050,355,161 9,040,516 - 458,900 5,211,607 3,054,642,970 1,012,963,545 442,658 2,041,236,767	9,438,076,407 4,484,292,043 208,860,307 4,744,924,057 53,638,480 738,005,553 1,363,962,092 (8,933,145) 2,705,528,037 15,572,987 6,164,782 3,886,571 2,723,379,235 926,411,424 1,796,967,811	9,336,585,713 4,173,512,179 187,348,363 4,975,725,171 36,470,937 721,020,800 1,190,492,197 37,925,853 3,062,757,258 (4,280,494) - 433,900 5,034,683 3,053,875,981 1,012,639,214 - 2,041,236,767

		Yanzhou Coal Minin CASH FLOW STA FOR THE PERIOD ENDED SE	g Co.,Ltd. TEMENT PTEMBER 30, 2006	Unit: RMB Yuan
	1 QUARTER ENDED SE	PTEMBER 30,2006	9 MONTHS ENDED SEPT	EMBER 30, 2006
	The Group (Unaudited)	The Company (Unaudited)	The Group (Unaudited)	The Company (Unaudited)
1.CASH FLOW FROM OPERATING ACTIVITIES Cash received from sales of goods or rendering of services Taxes refunded Other cash received relating to operating activities Sub-total of cash inflows Cash paid for goods and services Cash paid to and on behalf of employees Taxes and surcharges paid Other cash paid relating to operating activities Sub-total of cash outflows NET CASH FLOW FROM OPERATING ACTIVITIES 2.CASH FLOW FROM INVESTING ACTIVITIES Cash received from return on investments Net cash received from investment income Net cash received from disposal of fixed assets and other lon decrease in restricted cash Sub-total of cash inflows Cash paid to acquire fixed assets and other long-term assets Cash paid to acquire investments Increase in restricted cash Sub-total of cash outflows NET CASH FLOW FROM INVESTING ACTIVITIES 3.CASH FLOW FROM FINANCING ACTIVITIES Cash received from equity investment Sub-total of cash inflows Repayments of borrowings Cash paid for interest expenses Dividends paid Dividends paid to minority shareholder of a subsidiary Sub-total of cash outflows NET CASH FLOW FROM FINANCING ACTIVITIES 4.EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH 5.NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	3,748,822,511 - 134,219,651 3,883,042,162 1,172,426,959 260,928,069 1,039,192,378 203,350,626 2,675,898,032 1,207,144,130 - 6,311,230 12,675,205 - 18,986,435 902,567,034 - 15,781,082 918,348,116 (899,361,681) - - 200,000,000 1,938,551 1,082,046,195 271,449 1,284,256,195 (1,284,256,195) - (976,473,746)	3,097,319,656 - 277,791,979 3,375,111,635 1,191,432,905 114,218,782 1,022,781,585 497,109,360 2,825,542,632 549,569,003 - 7,568,975 1,870,554 - 9,439,529 188,540,675 289,344,000 - 477,884,675 (468,445,146) - - 200,000,000 13,049,561 510,048,000 - 723,097,561 (723,097,561) - (641,973,704)	10,780,485,329 276,399,363 11,056,884,692 3,713,398,900 1,328,665,712 2,627,677,159 1,789,614,986 9,459,356,757 1,597,527,935 - 6,311,230 17,057,701 - 23,368,931 1,988,148,904 - 28,867,747 2,017,016,651 (1,993,647,720) - - 200,000,000 8,398,000 1,082,046,195 271,449 1,290,715,644 (1,290,715,644) (1,686,835,429)	10,128,516,952 418,192,082 10,546,709,034 3,733,012,054 1,147,492,614 2,608,022,438 2,227,691,613 9,716,218,719 830,490,315 - 7,568,975 6,248,017 - 13,816,992 400,426,865 610,944,000 - 1,011,370,865 (997,553,873) - - 200,000,000 19,237,561 510,048,000 - 729,285,561 (729,285,561) - (896,349,119)

Yanzhou Coal Mining Co.,Ltd. CASH FLOW STATEMENT FOR THE PERIOD ENDED SEPTEMBER 30, 2006

			Unit: RMB Yuan	Unit: RMB Yuan
SUPPLEMENTAL INFORMATION:	1 QUARTER ENDED SEPTEMBER 30,2006		9 MONTHS ENDED SEPTEMBER 30, 2006
	The Group (Unaudited)	The Company (Unaudited)	The Group (Unaudited)	The Company (Unaudited)
1.RECONCILIATION OF NET PROFIT TO NET CASH FLOW FROMOPERATING ACTIVITIES Net profit Add: Minority interest Impairment losses on assets Depreciation of fixed assets Provision for Wei Jian Fei Amortization of intangible assets and other assets Provision for Safety Work Expense Provision for Reform and Specific Development Fund Gains on disposal of fixed assets and other long-term assets Decrease(increase) in deferred expenses Increase(decrease) in long-deferred expenses Increase(decrease) in accrued expenses Financial expenses Gains arising from investments Increase in inventories Decrease (increase) in receivables under operating activities Increase in payables under operating activities NET CASH FLOW FROM OPERATING ACTIVITIES 2.NET INCREASE IN CASH AND CASH EQUIVALENTS: Cash at the end of the period Less: Cash at the beginning of the period Add: Restricted cash at the beginning of the period Less: Restricted cash at the end of the period NET INCREASE IN CASH AND CASH EQUIVALENTS:	448,007,091 747,047 - 239,590,684 50,080,224 8,457,334 66,773,632 41,733,520 (945,728) (27,464,894) 48,810,315 450,000 2,210,000 (5,781,995) (76,174,815) (97,944,693) 508,596,408 1,207,144,130 5,555,586,167 6,532,059,913 - - (976,473,746)	449,264,843 - - 241,772,349 50,080,224 8,416,302 66,773,632 41,733,520 (945,728) (26,487,184) - - 23,497,561 (15,826,601) (67,589,310) 167,437,947 (388,558,552) 549,569,003 5,401,292,530 6,043,266,234 - - (641,973,704)	1,795,710,059 988,352 747,083,602 156,544,260 25,309,358 208,725,680 130,453,550 (1,194,991) 285,167 (136,965,384) 450,000 8,398,000 (4,723,534) (118,498,271) (1,066,009,170) (149,028,743) 1,597,527,935 5,555,586,167 7,242,421,596 (1,686,835,429)	1,796,967,811 - - 736,743,406 156,544,260 25,268,326 208,725,680 130,453,550 (1,194,991) 1,549,693 - - 29,685,561 (15,572,987) (109,028,711) (1,051,511,656) (1,078,139,627) 830,490,315 5,401,292,530 6,297,641,649 (896,349,119)