CStone Pharmaceuticals — Share Issue/Capital Change 2001

May 10, 2001

The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) 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 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

with limited liability)

Placing of 170,000,000 New H Shares

Increase of Recommended Total Final Cash Dividend

On 9 May, 2001, Yanzhou Coal Mining Company Limited (the “Company”) entered into a placing agreement (the “Placing Agreement”) with SG Securities (HK) Limited (the “Placing Agent”) in relation to the placing (the “Placing”) on a fully underwritten basis of an aggregate of 170,000,000 overseas listed foreign invested shares of RMB1.00 each (“H Shares”) in the capital of the Company (the “Placing Shares”) at a price of HK$2.925 per H Share (the “Placing Price”).

The net proceeds of the Placing will be approximately HK$470 million. The proceeds will be used to finance the acquisition of Jining III coal mine.

The Placing Shares will be issued under the general mandate granted to the directors of the Company (the “Directors”) at the annual general meeting held on 16 June, 2000.

Further to the results announcement of the Company dated 20 April, 2001 and subject to the allotment and issue of the Placing Shares, the Directors will recommend at the forthcoming Annual General Meeting (scheduled to be held on 15 June, 2001) that the aggregate amount of final cash dividend be increased from RMB221.4 million (before tax) to RMB235.34 million (before tax). Accordingly, the final dividend per share of the Company would remain unchanged at RMB0.082 per share (before tax).

Trading in the H Shares was suspended at 3:20 p.m. on 9 May, 2001 upon request by the Company, Application has been made to the Stock Exchange for the resumption of trading of the H Shares at 10:00 a.m. on 10 May, 2001.

THE PLACING AGREEMENT

Date:	9 May, 2001
Parties:	(i) The Company
	(ii) The Placing Agent

Placing and Independence of the Placing Agent

The Placing Agent agrees as agent for the Company to procure, on a fully underwritten basis, institutional and other investors in [the United States and elsewhere who are independent of any promoter, supervisor, director, chief executive or substantial shareholder of the Company or any of its subsidiaries or any of their respective associates (as such term is defined in the Rules Governing the Listing of Securities on the Stock Exchange (the “Listing Rules”)) to subscribe for the Placing Shares. The Placing Agent is independent of and not connected with any promoter, supervisor, director, chief executive or substantial shareholder of the Company or any of its subsidiaries or any of their respective associates (as such term is defined in the Listing Rules).

Number of Placing Shares

170,000,000 H Shares, representing approximately 20.0 per cent. and 6.3 per cent. respectively of the existing H Shares in issue and the registered capital of the Company prior to the Placing and approximately 16.7 per cent. and 5.9 per cent. respectively of the H Shares in issue and the registered capital of the Company as enlarged by the new Placing Shares.

Placing Price

HK$2.925 per Placing Share, representing a discount of approximately 12.0 per cent. to the closing price of HK$3.325 per H Share on the Stock Exchange on 9 May, 2001 before suspension of trading of the H Shares on that date, being the date of the Placing Agreement. The Placing Price was agreed after arm’s length negotiation between the Company and the Placing Agent.

Conditions of the Placing

The Placing is conditional upon the Stock Exchange granting listing of and permission to deal in the Placing Shares and the Placing Agreement not having been terminated by the Placing Agent in accordance with the terms thereof, such as on the grounds of material breach of the representations, warranties and undertakings of the Company given in the Placing Agreement or the occurrence of certain force majeure events. The Placing Shares will only be allotted and issued subject to the condition that the placees will be entitled to participate in the Company’s 2000 final dividend.

Completion of the Placing

Completion is expected to take place on or before 14 May, 2001 or such other time or date as the Company and the Placing Agent shall agree.

Mandate to Issue the Placing Shares

The Placing Shares will be allotted and issued under the general mandate granted to the Directors at the last annual general meeting of the Company held on 16 June, 2000. The issue of the Placing Shares was approved by the China Securities Regulatory Commission on 9 August, 2000.

United States Selling Restrictions and Ranking

The Placing Shares have not been registered under the United States Securities Act (the “Securities Act”) and may not be offered or sold in the United States or to U.S. persons unless the Placing Shares are registered under the Securities Act, or an exemption from the registration requirements of the Securities Act is available.

The Placing Shares will rank pari passu in all respects with the existing H Shares in issue on the date of completion of the issue of Placing Shares under the Placing (the “Placing Completion”), including the right to receive all dividends and distributions declared, paid or made after the Placing Completion.

Reasons of the Placing

In view of current market conditions, the Directors consider that the Placing represents a good opportunity for the Company to raise further financing and also broaden the shareholder and capital base.

Use of Proceeds

The amount to be raised from the Placing will be approximately HK$470 million, after deducting the commission and expenses of the Placing.

The proceeds raised from the Placing will be used to finance the acquisition of Jining III coal mine from Yankuang Group Corporation Limited, the details of which have been disclosed in the circular of the Company to its shareholders dated 26 August, 2000.

Application for Listing

Application has been made to the Listing Committee of the Stock Exchange for listing of, and permission to deal in, the Placing Shares on the Stock Exchange.

Increase of Amount of Recommended Total Final Cash Dividend

As the Placing Completion is expected to take place on or before 14 May, 2001, the placees of the Placing Shares are expected to be registered before the date of closure of the H Share Register of the Company on 16 May, 2001 and to qualify for entitlement to the recommended final dividend of RMB0.082 per H Share as announced on 20 April, 2001. Subject to the allotment and issue of the Placing Shares, the Directors will recommend at the forthcoming Annual General Meeting (scheduled to be held on 15 June, 2001) that the aggregate amount of final cash dividend be increased from RMB221.4 million (before tax) to RMB235.34 million (before tax). Accordingly, the final dividend per share of the Company would remain unchanged at RMB0.082 per share (before tax).

Resumption of Trading

Trading in the H Shares was suspended at 3:20 p.m. on 9 May, 2001 upon request by the Company. Application has been made to the Stock Exchange for the resumption of trading of the H Shares at 10:00 a.m. on 10 May, 2001

By Order of the Board

Chen Guangshui

Company Secretary

Shangdong Province, the PRC, 9 May, 2001

Please also refer to the published version of this announcement in the SCMP dated 10/5/2001.