Shandong Gold Mining Co., Ltd. - Proxy Solicitation & Information Statement 2023

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 your licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Shandong Gold Mining Co., Ltd. , you should at once hand this circular to the purchaser(s) or the transferee(s) or to the bank, licensed securities dealer, registered institution in securities or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or transferee(s).

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

==> picture [64 x 70] intentionally omitted <==

SHANDONG GOLD MINING CO., LTD. 山東黃金礦業股份有限公司

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

(Stock Code: 1787)

(1) RESOLUTION ON THE ACQUISITION OF MINERAL RIGHTS AND OTHER ASSETS IN YANSHAN MINE AREA OF

SHANDONG GOLD JINCHUANG GROUP CO., LTD. AND THE ENTERING INTO OF RELEVANT TRANSFER CONTRACT

(2) RESOLUTION ON THE COMPANY’S SATISFACTION OF THE CONDITIONS FOR PUBLIC ISSUANCE OF CORPORATE BONDS (3) RESOLUTION ON THE PLAN FOR THE PUBLIC ISSUANCE OF CORPORATE BONDS

(4) RESOLUTION ON PROPOSING AT THE GENERAL MEETING TO AUTHORIZE THE BOARD OF DIRECTORS AND ITS AUTHORIZED PERSONS WITH FULL DISCRETION TO HANDLE THE MATTERS RELATED TO THE PUBLIC ISSUANCE OF CORPORATE BONDS AND

(5) NOTICE OF 2023 FIFTH EXTRAORDINARY GENERAL MEETING

A notice convening the 2023 fifth extraordinary general meeting (the “ EGM ”) of Shandong Gold Mining Co., Ltd. (the “ Company ”) to be held at the conference room of the Company, No. 2503, Jingshi Road, Licheng District, Jinan, Shandong Province, the PRC at 10:00 a.m. on Tuesday, 12 September 2023 is set out on pages I-1 to I-3 of this circular.

The proxy form for use in connection with the EGM is enclosed herewith. The proxy form is also published on the website of The Stock Exchange of Hong Kong Limited (www.hkexnews.hk) and the Company’s website (http://www.sdhjgf.com.cn).

Any shareholder(s) of the Company (the “ Shareholders ”) entitled to attend and vote at the EGM are entitled to appoint one or more proxies to attend and vote on his behalf. A proxy need not be a shareholder of the Company. If you intend to appoint a proxy to attend the EGM and vote on your behalf, you are requested to complete the accompanying proxy form in accordance with the instructions printed thereon and return it by hand, by post or by facsimile to the Company’s H share registrar, Tricor Investor Services Limited at 17/F, Far East Finance Centre, 16 Harcourt Road, Hong Kong (for H Shareholders only) as soon as possible and in any event not later than 24 hours before the time appointed for the holding of the EGM (i.e. before 10:00 a.m. on Monday, 11 September 2023) or any adjournment thereof (as the case may be). Completion and return of the proxy form will not preclude you from attending and voting at the EGM or any adjournment hereof should you so wish.

25 August 2023

CONTENTS

		Page
DEFINITIONS	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM	THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
APPENDIX I	— NOTICE OF 2023 FIFTH EXTRAORDINARY GENERAL
	MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	I-1

— i —

DEFINITIONS

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

“Acquisition”

the acquisition of Target Assets Package;

“Asset Package Transfer Contract”
the Yanshan, Tuwu and Cishan Related Mineral Rights Asset Package Transfer Contract entered into between Penglai Mining and Jinchuang Group on 22 August 2023 in relation to Penglai Mining’s acquisition of the Target Assets Package from Jinchuang Group;
“A Share(s)”

the domestic share(s) issued by the Company to domestic investors with a nominal value of RMB1.00 each, which are listed on the SSE;

“A Shareholder(s)”

holder(s) of A Shares;

“Articles of Association”
the articles of association of the Company, as amended from time to time;
“Board” the board of Directors;
“Company”

Shandong Gold Mining Co., Ltd. (山東黃金礦業股份有限公司), a joint stock company incorporated in the PRC under the laws of the People’s Republic of China with limited liability on 31 January 2000, the H Shares and A Shares of which are listed on the Main Board of the Hong Kong Stock Exchange (Stock Code: 1787) and the SSE (Stock Code: 600547) respectively;

“Company Law”
the Company Law of the PRC;
“controlling shareholder(s)”
has the meaning ascribed thereto under the Hong Kong Listing Rules;
“Director(s)” director(s) of the Company;
“EGM”
the 2023 fifth extraordinary general meeting of the Company to be held at 10:00 a.m. on Tuesday, 12 September 2023 at the conference room of the Company, No. 2503, Jingshi Road, Licheng District, Jinan, Shandong Province, the PRC;
“Group”

the Company and its subsidiaries;

— 1 —

DEFINITIONS

“H Share(s)”

the overseas-listed foreign invested share(s) in the Company’s share capital, with a nominal value of RMB1.00 each, which are listed on the Hong Kong Stock Exchange;

“H Shareholder(s)”
holder(s) of H Shares;
“Hong Kong Listing Rules”

the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, as amended, supplemented or otherwise modified from time to time;

“Hong Kong Stock Exchange” The Stock Exchange of Hong Kong Limited;
“H Shares”
the overseas-listed foreign invested share(s) in the Company’ s share capital, with a nominal value of RMB1.0 each, which are listed on the Hong Kong Stock Exchange;
“Jinchuang Group” Shandong Gold Jinchuang Group Co., Ltd.* (山東黃金金創集團有限公司), a limited liability company established in the PRC;
“Penglai Mining” Shandong Gold Group Penglai Mining Co., Ltd.* (山東黃金集團蓬萊礦業有限公司), a limited liability company established in the PRC on 1 August 2003, which is a wholly-owned subsidiary of the Company;
“PRC”
the People’s Republic of China which, for the purpose of this circular, shall exclude Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan;
“RMB”
Renminbi, the lawful currency of the PRC;
“SDG Group Co.”

Shandong Gold Group Co., Ltd. (山東黃金集團有限公司), a limited liability company incorporated in the PRC on 16 July 1996. As of the date of this circular, SDG Group Co. is held as to 70%, 20% and 10% by Shandong Provincial People’s Government State-owned Assets Supervision and Administration Commission (山東省人民政府國有資產監督管理委員會), Shandong Guohui Investment Holding Group Co., Ltd. (山東國惠投資控股集團有限公司) and Shandong Caixin Assets Operation Co., Ltd.* (山東省財欣資產運營有限公司), respectively. Shandong Guohui Investment Holding Group Co., Ltd. is a limited liability company established in the PRC and is owned as to 100% by Shandong Provincial People’s Government State-owned Assets Supervision and Administration Commission;

— 2 —

DEFINITIONS

“Shareholder(s)”	A Shareholders and H Shareholders;
“SSE”	Shanghai Stock Exchange (上海證券交易所);
“SSE Listing Rules”	the Rules Governing the Listing of Stocks on the Shanghai
	Stock Exchange (上海證券交易所股票上市規則) as
	amended, supplemented or otherwise modified from time
	to time;
“Target Assets Package”	(i) the mining right of Yanshan Mine Area; (ii) the
	exploration right of Cishan; (iii) the exploration right of
	Tuwu; and (iv) other underlying assets, liabilities and
	personnel held by Jinchuang Group; and
“%”	per cent.

* For identification purpose only

— 3 —

LETTER FROM THE BOARD

==> picture [64 x 70] intentionally omitted <==

SHANDONG GOLD MINING CO., LTD. 山東黃金礦業股份有限公司

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

(Stock Code: 1787)

Executive Directors:

Mr. Liu Qin (Vice-chairman) Mr. Wang Shuhai Mr. Tang Qi

Non-executive Directors:

Registered office and headquarters in the PRC:

No. 2503, Jingshi Road Licheng District, Jinan Shandong Province The PRC

Mr. Li Hang (Chairman) Mr. Wang Lijun Ms. Wang Xiaoling

Independent Non-executive Directors:

Mr. Wang Yunmin Mr. Liew Fui Kiang Ms. Zhao Feng

Principal place of business in Hong Kong:

Rooms 4003-4006 China Resources Building No. 26 Harbour Road Wanchai Hong Kong

25 August 2023

To the Shareholders

Dear Sir or Madam,

(1) RESOLUTION ON THE ACQUISITION OF MINERAL RIGHTS AND OTHER ASSETS IN YANSHAN MINE AREA OF
SHANDONG GOLD JINCHUANG GROUP CO., LTD. AND
THE ENTERING INTO OF RELEVANT TRANSFER CONTRACT
(2) RESOLUTION ON THE COMPANY’S SATISFACTION OF
THE CONDITIONS FOR PUBLIC ISSUANCE OF CORPORATE BONDS
(3) RESOLUTION ON THE PLAN FOR THE PUBLIC ISSUANCE OF CORPORATE BONDS
(4) RESOLUTION ON PROPOSING AT THE GENERAL MEETING TO AUTHORIZE THE BOARD OF DIRECTORS AND ITS AUTHORIZED PERSONS WITH FULL DISCRETION TO HANDLE THE MATTERS RELATED TO THE PUBLIC ISSUANCE OF CORPORATE BONDS AND
(5) NOTICE OF 2023 FIFTH EXTRAORDINARY GENERAL MEETING

— 4 —

LETTER FROM THE BOARD

I. INTRODUCTION

On behalf of the Board, I invite you to attend the EGM to be held at the conference room of the Company, No. 2503, Jingshi Road, Licheng District, Jinan, Shandong Province, the PRC at 10:00 a.m. on Tuesday, 12 September 2023. The purpose of this circular is to issue the notices of EGM and provide you with all reasonably necessary information to enable you to make an informed decision as to the resolutions to be proposed at the EGM.

II. RESOLUTION ON THE ACQUISITION OF MINERAL RIGHTS AND OTHER ASSETS IN YANSHAN MINE AREA OF SHANDONG GOLD JINCHUANG GROUP CO., LTD. AND THE ENTERING INTO OF RELEVANT TRANSFER CONTRACT

Reference is made to the announcement of the Company dated 22 August 2023. On 22 August 2023 (after trading hours), Penglai Mining and Jinchuang Group entered into the Asset Package Transfer Contract, pursuant to which Jinchuang Group has agreed to sell and Penglai Mining has agreed to purchase the Target Assets Package held by Jinchuang Group, at a total consideration of RMB422,183,204.57.

(I) Asset Package Transfer Contract

The main terms of the Asset Package Transfer Contract are as follows:

Parties : 1. Penglai Mining; and

Jinchuang Group.

Target Assets Package : (i) the mining right of Yanshan Mine Area; (ii) the exploration right of Cishan; (iii) the exploration right of Tuwu; and (iv) other underlying assets, liabilities and personnel held by Jinchuang Group (for details, please refer to the section headed “Information of the Target Assets Package” below).

Penglai Mining also takes over the liabilities of Jinchuang Group in the asset package of RMB1,238,242,690.84, of which RMB1,226,527,131.16 is the debts of Jinchuang Group to SDG Group Co..

The ownership of the three mineral rights, including the mining right of Yanshan Mine Area, the exploration right of Tuwu and the exploration right of Cishan, and underlying assets to be transferred by Jinchuang Group is clear, and there is no mortgage, pledge and any other restrictions on the transfer thereof. There is no litigation, arbitration or judicial measures such as sealing up and freezing, nor other situation hindering the transfer of ownership.

— 5 —

LETTER FROM THE BOARD

Consideration and its : The price of Penglai Mining’s acquisition of the Target basis Assets Package held by Jinchuang Group was RMB422,183,204.57, which was determined on the basis of the appraised market value of the Target Assets Package in the amount of RMB405,818,216.57 as at the valuation base date (i.e. 31 January 2023) by Shenzhen Pengxin Asset Appraisal and Land and Property Valuation Co., Ltd.* (深圳市鵬信資產評估土地房地產估價有限公司), a company qualified to appraise assets for securities business, under the asset-based approach, plus value-added tax on mineral rights borne by Penglai Mining of RMB16,364,988.00 (except for mineral rights, other assets include tax), through negotiation between Penglai Mining and Jinchuang Group. The transaction of the Acquisition is priced in a fair and reasonable manner.
Payment terms
: Within 3 months from the date of signing the Asset Package Transfer Contract, Penglai Mining shall pay 30% of the consideration, namely RMB126,654,961.37. Penglai Mining shall pay the remaining 70% of the consideration, namely RMB295,528,243.20 by the end of June 2024.
- Before Penglai Mining makes the payment, Jinchuang Group shall issue relevant bills in accordance with tax policies and relevant national regulations.
Other terms
: Penglai Mining will employ a total of 102 individuals from Jinchuang Group.
Delivery : 1. After negotiation between both parties, within 30 days after the signing of the Asset Package Transfer Contract, Jinchuang Group will cooperate with Penglai Mining to complete the change and registration procedures with the relevant departments for the Target Assets Package held by Jinchuang Group;
1. Within 30 days after completing the relevant change procedures, Jinchuang Group shall transfer the Target Assets involved in the Asset Package Transfer Contract to Penglai Mining in its entirety for verification and acceptance by Penglai Mining;

* For identification purpose only

— 6 —

LETTER FROM THE BOARD

Both parties shall conduct delivery according to the status quo of the Target Assets Package. If the Target Assets are inconsistent with the asset valuation report, Penglai Mining evaluates the inconsistent assets and determines the final transaction price based on the appraised value; and
Upon completion of the delivery of the Target Assets Package and the signing of the delivery confirmation by both parties, Penglai Mining will bear the liabilities, daily maintenance and other related expenses of the Target Assets Package.
Conditions precedent : The Asset Package Transfer Contract shall be concluded with the seal of both parties and the signatures or seals of the legal representatives, and shall become effective on the date when all the following conditions have been fulfilled:
the Acquisition under the Asset Package Transfer Contract has been approved at the general meeting of Jinchuang Group and SDG Group Co. has approved the Acquisition under the Asset Package Transfer Contract; and
the Company has performed the approval procedures for the Acquisition under the Asset Package Transfer Contract in accordance with its articles of association.

(II) Tripartite Agreement on Debt Transfer

The debt transfer has been agreed in writing by the creditors and a tripartite agreement has been signed. The main terms are as follows: the creditors have agreed that Jinchuang Group will transfer its debts to Penglai Mining, and Penglai Mining will undertake the obligation of repayment to the creditors of Jinchuang Group, with the specific terms to be determined through negotiation between Penglai Mining and the creditors of Jinchuang Group at their own and to become into force from the effective date of the Asset Package Transfer Contract. The debts between Jinchuang Group and the creditors have been repaid.

— 7 —

LETTER FROM THE BOARD

INFORMATION OF THE TARGET ASSETS PACKAGE

According to the valuation report, the asset-based approach was adopted for the valuation. As at 31 January 2023, the carrying amount of total assets of the Target Assets Package was RMB1,032,816,800, and the appraised value was RMB1,644,060,900, representing an increase in value of RMB611,244,100, or 59.18%, over the carrying amount. The carrying amount of total liabilities of the Target Assets Package was RMB1,238,242,700, and the appraised value was RMB1,238,242,700, without any increase in value. In particular:

(1) Mining Right of the Yanshan Mine Area

Basic information on the mining right

Mining right holder: Shandong Gold Jinchuang Group Co., Ltd. Mining licence No.: C3700002011024120106351

Name of mine: Yanshan Mine Area of Shandong Gold Jinchuang Group Co., Ltd. Mining type: Gold ore Production scale: 60,000 tonnes/year Mining area: 6.4052km[2] Validity period: 5 years from 27 January 2016 to 27 January 2021 Issuing authority: Department of Natural Resources of Shandong Province

(i) Historical development of the mining right of Yanshan Mine Area

The mining license of Yanshan Mine Area was established first in October 1998 with certificate number of 3700009840089, which was valid from October 1998 to October 2002 and covers a mining area of 5.535km[2] . The holder of the mining right is Daliuhang Gold Mine of Penglai City (蓬萊市大柳行金礦).

After undergoing successive changes of renewal later, in January 2016 a new license was issued with mining certificate number of C3700002011024120106351, a mining area of 6.4052km[2] , and mining depth of 352.40m to –950m elevation, which was valid from 27 January 2016 to 27 January 2021 and has a production scale of 60,000 tonnes/year. The holder of the mining right is Jinchuang Group.

Jinchuang Group has applied to the Department of Natural Resources of Shandong Province to renew the mining right of the Yanshan Mine Area. According to the requirements of the Department of Natural Resources of Shandong Province for accelerating the plans of processing mining rights for the integration of gold resources in Yantai City, the mining right of Yanshan Mine Area belongs to the mineral rights to be integrated, the Department of Natural Resources will also process the registration of change of the mining right integration when the registration of change of the scope of the mining area is handled according to the integration plan, and the Department of Natural Resources of Shandong Province will issue a new mining license. Therefore, the mineral right of the Yanshan Mine Area has not been renewed as at the date of this circular.

— 8 —

LETTER FROM THE BOARD

(ii) Valuation of the mining right of Yanshan Mine Area

The appraised value of the mining right of Yanshan Mine Area is RMB126,708,500 as at 31 January 2023. The valuation method is the discounted cash flow method, and the main parameters of the valuation are as follows:

Mining area: 6.4052km[2] .

The ore amount of reserved gold mineral resources is 686,688 tonnes, and the amount of gold metal is 3,484kg with an average grade of 5.07g/t. The ore amount of reserved inferred resources of associated silver is 686,688 tonnes, and the amount of gold metal is 4,755kg with an average grade of 6.92g/t. The ore amount of reserved inferred resources of associated sulfur is 686,688 tonnes, the amount of pure sulfur is 21,314 tonnes with an average grade of 3.10%, equivalent to 60,897 tonnes of sulfur standard ore.

The ore amount of mineable reserves for phase I is 268,200 tonnes, the amount of gold metal is 1,344.79kg with an average gold grade of 5.01g/t and an average silver grade of 6.12g/t. The ore amount of mineable reserves for phase II is 294,600 tonnes, the amount of gold metal is 1,507.10kg with an average gold grade of 5.12g/t and an average silver grade of 6.25g/t. The loss rate for phase I is 7.6%, the mining recovery rate is 92.4%, and the dilution rate is 10.8%; the loss rate for phase II is 9.2%, the mining recovery rate is 90.8%, and the dilution rate is 13.6%. The ore dilution rate for phase I is 10.8%, and the ore dilution rate for phase II is 13.6%. The production capacity is 60,000 tonnes/year. The mine service life is 10.69 years, and the appraised service life is 10.69 years.

The recovery rate of gravity concentration gold beneficiation for phase I is 20%, the recovery rate of flotation gold beneficiation is 77.67%; the recovery rate of gravity concentration gold beneficiation for phase II is 20%, and the recovery rate of flotation gold beneficiation is 76.60%. The grade of gravity concentration gold concentrate is 80g/t, and the grade of flotation gold concentrate is 50g/t. The recovery rate of gravity concentration silver beneficiation is 8.23%, and the recovery rate of flotation silver beneficiation is 72.24%; the grade of gravity concentration gold concentrate containing silver is 70g/t, and the grade of flotation gold concentrate containing silver is 100g/t.

The average price of Au (99.95%) alloyed gold is RMB349.52/g, and the average price of Ag (T+D) alloyed silver is RMB3,941.48/kg without tax. The price coefficient of gravity concentration gold is 97%, and the price coefficient of flotation gold is 96%; the price coefficient of gravity concentration silver is 73%, and the price coefficient of flotation silver is 74%. The equivalent price of gold-containing gold concentrate is RMB339.03/g and RMB335.54/g; the price of silver-containing gold concentrate is RMB2,877.28/kg and RMB2,916.70/kg without tax.

The original value of investment in fixed assets used in the valuation is RMB293,943,500, and the net value is RMB252,326,700. The total unit cost is RMB748.81/tonne; the unit operating cost is RMB307.30/tonne. The discount rate is 8.02%.

— 9 —

LETTER FROM THE BOARD

(iii) Payment of royalties for the mining right

On 6 January 2021, Jinchuang Group entered into the Shandong Province Mining Right Grant Contract with the Yantai Natural Resources and Planning Bureau, and on 26 October 2022, both parties entered into the Supplemental Agreement to the Mining Right Grant Contract. According to the valuation of Jinan Dashan Mining Consulting Co., Ltd. (濟南大山礦業諮詢有限公司), the proceeds from grant of the mining right was determined to be RMB40,127,600. The proceeds from grant of the mineral right shall be paid in installments. The first installment of proceeds from grant is RMB20,000,000, which was paid off by Jinchuang Group on 26 January 2021. The remaining part shall be paid in 5 installments, and Jinchuang Group shall pay them within 5 years from the date of signing the Supplemental Agreement. The first installment of remaining part of the proceeds from grant of the mining right of RMB4,127,600 was paid by Jinchuang Group on 18 January 2023, and the remaining four installments shall be paid by the holder of the mining right as to RMB4,000,000 before 27 January each year.

(iv) Production conditions for mineral mining

The production conditions for mineral mining of the mining right of Yanshan Mine Area are basically ready. According to the requirements of the Department of Natural Resources of Shandong Province for accelerating the plans of processing mining rights for the integration of gold resources in Yantai City, the mining right of Yanshan Mine Area belongs to the mineral rights to be integrated, and its renewal has not been processed so far. Therefore, no mining and production activities have been carried out from February 2021 to date. Upon completion of the Acquisition, Penglai Mining will integrate the mining right of Yanshan Mine Area, the exploration right of Tuwu and the exploration right of Cishan with its existing mineral rights, and conduct a unified mining planning after applying for new mining certificates and other relevant licenses.

(2) Exploration Right of Gold Mine in Cishan Mine Area, Penglai District, Yantai City, Shandong Province

Basic information on the exploration right

Exploration right holder: Shandong Gold Jinchuang Group Co., Ltd. License No.: T3700002016014010052171

Name of exploration project: Exploration right of gold mine in Cishan Mine Area, Penglai District, Yantai City, Shandong Province

Geographic location: Penglai District, Yantai City, Shandong Province

Map No.: J51E015005 Exploration area: 2.17km[2] Validity period: 10 April 2023 to 9 April 2028

Issuing authority: Department of Natural Resources of Shandong Province

— 10 —

LETTER FROM THE BOARD

(i) Historical development of the exploration right of Cishan Mine Area

In May 2015, the holder of the exploration right applied for splitting the exploration right of “Gold Mine in Yanshan – Shanglanzi Mine Area, Penglai City, Shandong Province (General Exploration) (山東省蓬萊市燕山－上嵐子礦區金礦詳查)” into three exploration rights, namely “Gold Mine in the Deep Level of Yanshan Mine Area, Penglai City, Shandong Province (General Exploration) (山東省蓬萊市燕山礦區深部金礦詳查)”, “Gold Mine in Cishan Mine Area, Penglai City, Shandong Province (General Exploration) (山東省蓬萊市磁山礦區金礦詳查)” and “Gold Mine in Shanglanzi Mine Area, Penglai City, Shandong Province (General Exploration) (山東省蓬萊市上嵐子礦區金礦詳查)”.

In January 2016, the resource exploration license of “Gold Mine in Cishan Mine Area, Penglai City, Shandong Province (General Exploration)” was issued with certificate number of T37120160102052171, and the holder of the exploration right is Jinchuang Group. The exploration area is 2.92km[2] , and the exploration unit is the Sixth Institute of Geology and Mineral Exploration of Shandong Province. The exploration period was from 21 January 2016 to 31 December 2016.

After three changes of renewal later, the holder of the exploration right obtained the renewed exploration right certificate on 10 April 2023, with the exploration license number of T3700002016014010052171. The license is delineated by 7 inflection points, with extreme geographic coordinates ranging from 121°2’22” to 121°3’49” east longitude and 37°33’60” to 37°35’16” north latitude. The exploration area is 2.17km[2] , and the validity period is from 10 April 2023 to 9 April 2028.

(ii) Valuation of the exploration right of Cishan Mine Area

The appraised value of the exploration right of Cishan Mine Area is RMB134,596,800 as at 31 January 2023. The valuation method is the discounted cash flow method, and the main parameters of the valuation are as follows:

The exploration area is 2.17km[2] . The ore amount of reserved gold mineral is 993,595 tonnes, and the amount of gold metal is 3,862kg with an average grade of 3.89g/t. The ore amount of associated silver is 967,278 tonnes, and the amount of metal is 8,064kg with an average grade of 8.34g/t; the ore amount of associated lead is 192,272 tonnes, and the amount of metal is 592 tonnes with an average grade of 0.31%; the ore amount of associated zinc is 170,860 tonnes, and the amount of metal is 501 tonnes with an average grade of 0.29%; the ore amount of associated sulfur is 967,278.00 tonnes, and the amount of pure sulfur is 42,889 tonnes with an average grade of 4.43%.

The ore amount of assessed utility mineable reserve is 776,036.74 tonnes, and the amount of gold metal is 3,057.15kg with an average gold grade of 3.94g/t; the amount of associated silver metal is 6,472.15kg with an average grade of 8.34g/t.

The mining recovery rate is 92.4%, the ore dilution rate is 15.4%, and the production scale is 99,000 tonnes/year. The mine service life is 9.27 years, the infrastructure period is 3.5 years, and the appraised service life is 12.77 years.

— 11 —

LETTER FROM THE BOARD

The product plan is gold-containing gold concentrate and silver-containing gold concentrate. The recovery rate of gravity concentration gold beneficiation is 20.00%, the recovery rate of flotation gold beneficiation is 76.62%; the grade of gravity concentration gold concentrate is 80g/t, and the grade of flotation gold concentrate is 50g/t. The recovery rate of gravity concentration silver beneficiation is 8.23%, and the recovery rate of flotation silver beneficiation is 72.24%; the grade of gravity concentration gold concentrate containing silver is 70g/t, and the grade of flotation gold concentrate containing silver is 100g/t.

(iii) Payment of royalties for the exploration right

Jinchuang Group has not yet paid the proceeds from grant of the exploration right of Cishan.

(3) Exploration Right of the Gold Mine at the Deep Level of Tuwu Gold Mine Area (General Exploration) in Penglai District, Yantai City, Shandong Province

Basic information on the exploration right

Exploration right holder: Shandong Shandong Gold Group Penglai Mining Co., Ltd. License No.: T3700002009034010025638

Name of exploration project: the gold mine at the deep level of Tuwu Gold Mine Area in Penglai District, Yantai City, Shandong Province (general exploration) Geographic location: Penglai District, Yantai City, Shandong Province Map No.: J51E015005 Exploration area: 0.27km[2] Validity period: 2 December 2022 to 1 December 2024 Issuing authority: Department of Natural Resources of Shandong Province

(i) Historical development of the exploration right of the gold mine at the deep level of Tuwu Gold Mine Area (general exploration)

The exploration right of the gold mine at the deep level of Tuwu Gold Mine Area (general exploration) was established first on 26 June 2007 with exploration license number of T3700000710315. The project name is “the gold mine at the deep level of Tuwu Gold Mine Area in Penglai City, Shandong Province (general exploration) (山東省蓬萊市土屋金礦區深部金礦詳查)”. The holder of the exploration right is Daliuhang Tuwu Gold Mine of Penglai City, which was valid from 26 June 2007 to 31 March 2009 and covers an exploration area of 0.38km[2] .

In July 2013, the holder of the exploration right was changed from Daliuhang Tuwu Gold Mine of Penglai City to Jinchuang Group.

— 12 —

LETTER FROM THE BOARD

After undergoing successive changes and reservations later, on 15 April 2022, a change was made to the exploration right that the holder of the exploration right was changed to Penglai Mining[Note] , which was valid from 15 April 2022 to 1 December 2022 and covers an area of 0.27km[2] . On 16 December 2022, Penglai Mining applied for reservation of the exploration right, which is valid from 2 December 2022 to 1 December 2024.

(ii) Valuation of the exploration right of the gold mine at the deep level of Tuwu Gold Mine Area (general exploration)

The appraised value of the exploration right of the gold mine at the deep level of Tuwu Gold Mine Area (general exploration) is RMB11,444,500 on 31 January 2023. The valuation method is the income equity method, and the main parameters of the valuation are as follows:

The exploration area is 0.27km[2] . The amount of reserved (332+333+333D) ore is 112,845 tonnes, and the amount of gold metal is 572kg with an average thickness of 0.97m and an average grade of 5.07g/t. The ore amount of associated silver (333) is 102,698 tonnes, and the amount of metal is 3,201kg with an average grade of 31.17g/t; the ore amount of associated sulfur (333) is 102,698 tonnes, the amount of pure sulfur is 8,144 tonnes with an average grade of 7.93%, equivalent to 23,269 tonnes of standard sulfur.

The ore amount of mineable reserve is 93,400 tonnes, the amount of gold metal is 483.24kg with an average gold grade of 5.17g/t; the amount of silver metal is 2,325.21kg with an average silver grade of 24.89g/t.

The mining recovery rate is 90.8%, the mine dilution rate is 13.6%, and the production scale is 60,000 tonnes/year.

The mine service life is 1.80 years, and the appraised service life is 1.80 years.

The recovery rate of gravity concentration gold beneficiation is 20%, the recovery rate of flotation gold beneficiation is 76.60%, the grade of gravity concentration concentrate is 80g/t, and the grade of flotation concentrate is 50g/t.

The recovery rate of gravity concentration silver beneficiation is 8.23%, and the recovery rate of flotation silver beneficiation is 72.24%; the grade of gravity concentration gold concentrate containing silver is 70g/t, and the grade of flotation gold concentrate containing silver is 100g/t.

Note: In order to implement the “Approval of Shandong Provincial People’s Government on the Mineral Resource Integration Plan of Gold Mines Across 8 Districts (Cities) in Yantai City” 《山東省人民政府關於煙台市( 8個區（市）金礦礦產資源整合方案的批覆》) (Lu Zheng Zi [2021] No. 133) issued by the Shandong Provincial People’s Government on 26 July 2021 and the requirements of the governments at various levels of Yantai and Penglai in relation to the integration of gold mine mineral resources, in April 2022, the exploration right of the Tuwu Gold Mine of Jinchuang Group was changed under the name of Penglai Mining. Pursuant to the agreement between Penglai Mining and Jinchuang Group, the integration and transfer of the exploration right of the Tuwu Gold Mine is an act of asset entrustment during the transition period of resource integration. Penglai Mining is only the nominal holder and has not paid any transfer price for the exploration right, and the exploration right of the Tuwu Gold Mine still belongs to Jinchuang Group in essence. For details, please refer to the overseas regulatory announcement of the Company dated 31 March 2022 published on the website of the Hong Kong Stock Exchange.

— 13 —

LETTER FROM THE BOARD

The average price of Au (99.95%) alloyed gold is calculated at RMB386.17/g, and the average price of Ag (T+D) alloyed silver is RMB4,343.78/kg without tax. The price coefficient of gravity concentration gold is 97%, and the price coefficient of flotation gold is 96%. The price coefficient of gravity concentration silver is 73%, and the price coefficient of flotation silver is 74%. The equivalent price of gold-containing gold concentrate is RMB374.58/g and RMB370.72/g; the price of silver-containing gold concentrate is RMB3,170.96/kg and RMB3,214.39/kg without tax. The discount rate is 9.37%. The equity coefficient is 7.20%.

(iii) Payment of royalties for the exploration right

Jinchuang Group has not yet paid the proceeds from grant of the exploration right of Tuwu.

Please refer to the following valuation assumptions for the valuation of the mining right of Yanshan Mine Area, the exploration right of Cishan Mine Area and the exploration right of Tuwu Gold Mine Area and the reasons for using the income-based appraisal method for valuation:

Mining right of the Exploration right of Exploration right of the Yanshan Mine Area the Cishan Mine Area Tuwu Gold Mine Area
Valuation 1. It is assumed that the 1. It is assumed that the 1. It is assumed that the assumptions enterprise can smoothly exploration right used in the exploration right used in the renew the mining right; valuation can be successfully valuation can be successfully converted into mining right; converted into mining right;
1. It is assumed that the 2. It is assumed that the 2. It is assumed that the “Reserve Verification Report” “General Exploration Report” “General Exploration Report” used in this valuation can used in this valuation can used in this valuation can objectively reflect the objectively reflect the objectively reflect the endowment conditions of endowment conditions of endowment conditions of resource reserves in the resource reserves in the resource reserves in the exploration area, and the exploration area, and the exploration area, and the mineral resource reserves mineral resource reserves mineral resource reserves submitted and reviewed and submitted and reviewed and submitted and reviewed and accepted within the scope of accepted within the scope of accepted within the scope of the valuation are objective the valuation are objective the valuation are objective and credible; the resource and credible; the resource and credible; the resource reserves designed and utilized reserves designed and utilized reserves designed and utilized in the “Feasibility Study in the “Feasibility Study in the “Feasibility Study Report” on which the Report” on which the Report” on which the valuation is based can valuation is based can valuation is based can objectively reflect the objectively reflect the objectively reflect the resource reserves available in resource reserves available in resource reserves available in the exploration area in the the exploration area in the the exploration area in the future, and the resource future, and the resource future, and the resource reserves designed and utilized reserves designed and utilized reserves designed and utilized and the grade of the ore mined and the grade of the ore mined and the grade of the ore mined are objective and credible; are objective and credible; are objective and credible;

— 14 —

LETTER FROM THE BOARD

Mining right of the Yanshan Mine Area

Exploration right of the Cishan Mine Area

Exploration right of the Tuwu Gold Mine Area

It is assumed that the production mode, production scale and product structure of the Yanshan Mine Area designed according to the “Feasibility Study Report” can be implemented smoothly. Production remains unchanged and market supply and demand levels are benchmarked and continue to operate;
It is assumed that the 3. It is assumed that the production mode, production production mode, production scale, production schedule scale and product structure of and product structure of the phase II of Yanshan Mine mine designed according to Area and the mining right of the “Feasibility Study gold mine of Penglai Menlou Report” can be implemented Mining Co., Ltd.* (蓬萊市門 smoothly. Production remains 樓礦業有限公司) designed unchanged and market supply according to the “Feasibility and demand levels are Study Report” can be benchmarked and continue to implemented smoothly. operate; Production remains unchanged and market supply and demand levels are benchmarked and continue to operate;
It is assumed that geological 4. It is assumed that geological 4. It is assumed that geological exploration status as well as exploration status as well as exploration status as well as internal and external internal and external internal and external conditions of the valuation conditions of the valuation conditions of the valuation target will maintain its target will maintain its target will maintain its current status and will not current status and will not current status and will not change significantly; change significantly; change significantly;
The appraisal technics and 5. The appraisal technics and 5. The appraisal technics and economic parameters are economic parameters are economic parameters are determined with reference to determined with reference to determined with reference to the principle of the principle of the principle of production-sale balance; production-sale balance; production-sale balance;
The relevant policies, laws 6. The relevant policies, laws 6. The relevant policies, laws and regimes followed will and regimes followed will and regimes followed will maintain current status and maintain current status and maintain current status and will not change significantly, will not change significantly, will not change significantly, and the relevant social, and the relevant social, and the relevant social, political and economic political and economic political and economic environment as well as the environment as well as the environment as well as the technology and conditions of technology and conditions of technology and conditions of development followed will development followed will development followed will maintain current status and maintain current status and maintain current status and will not change significantly; will not change significantly; will not change significantly;
The prices, costs, fees, tax 7. The prices, costs, fees, tax 7. The prices, costs, fees, tax rate, interest rate and other rate, interest rate and other rate, interest rate and other elements related to the elements related to the elements related to the products will vary within the products will vary within the products will vary within the normal range in the profit normal range in the profit normal range in the profit period of the mine in future period of the mine in future period of the mine in future development; development; development;
The prices, costs, fees, tax 7. The prices, costs, fees, tax 7. rate, interest rate and other rate, interest rate and other elements related to the elements related to the products will vary within the products will vary within the normal range in the profit normal range in the profit period of the mine in future period of the mine in future development; development;

— 15 —

LETTER FROM THE BOARD

Mining right of the Yanshan Mine Area

It will not take into account the impact on its appraised value of other rights such as mortgages and guarantees that may be assumed in the future, or any other restrictions on the property rights, and any additional price that may be paid by a special counterparty;
There is no other significant impact caused by force majeure and unpredictable factors.
Reasons for According to the provisions of the using the China’s Mineral Rights income-based Evaluation Standards 《中國礦業( appraisal 權評估準則》), the valuation of method for mineral rights usually includes valuation three basic appraisal methods, namely the income-based appraisal method, the cost-based appraisal method and the market-based appraisal method.

The cost-based appraisal method is applicable to the valuation of exploration rights at the stage of presurvey and general exploration of mineral resources, but is not applicable to the valuation of exploration rights at the stage of general exploration with a lower level of exploration in large and medium-sized sedimentary deposits with stable deposits. The target entrusted for valuation is the mining right, and it is not appropriate to apply the cost-based appraisal method to the valuation of this mining right.

Exploration right of Exploration right of the the Cishan Mine Area Tuwu Gold Mine Area

It will not take into account 8. It will not take into account the impact on its appraised the impact on its appraised value of other rights such as value of other rights such as mortgages and guarantees mortgages and guarantees that may be assumed in the that may be assumed in the future, or any other future, or any other restrictions on the property restrictions on the property rights, and any additional rights, and any additional price that may be paid by a price that may be paid by a special counterparty; special counterparty;
There is no other significant impact caused by force majeure and unpredictable factors.
There is no other significant impact caused by force majeure and unpredictable factors.

According to the provisions of the China’s Mineral Rights Evaluation Standards 《中國礦業( 權評估準則》), the valuation of mineral rights usually includes three basic appraisal methods, namely the income-based appraisal method, the cost-based appraisal method and the market-based appraisal method.

The cost-based appraisal method is applicable to the valuation of exploration rights at the stage of presurvey and general exploration of mineral resources, but is not applicable to the valuation of exploration rights at the stage of general exploration with a lower level of exploration in large and medium-sized sedimentary deposits with stable deposits. The target entrusted for valuation has high degree of exploration, and it is not appropriate to apply the cost-based appraisal method to the valuation of this exploration right.

— 16 —

LETTER FROM THE BOARD

Mining right of the Yanshan Mine Area

According to specific conditions of the mining right entrusted for valuation, this valuation is to appraise the mining right of Yanshan Mine Area of Shandong Gold Jinchuang Group Co., Ltd., and it is not suitable for market-based valuation because there is no example of the transaction for the same valuation purpose.

The income-based valuation methods include income equity method and discounted cash flow method. The mine has prepared the Feasibility Study Report on the Mining Project in Yanshan Mine Area of Shandong Gold Jinchuang Group Co., Ltd., based on which this mining right has independent profitability and can be measured, its future income and risks can be measured in currency, and the main technical and economic parameters of its resource development and utilization can be determined by referring to the above-mentioned materials. Therefore, the appraisers believe that the mining right has met the requirements and conditions for valuation by using the discounted cash flow method.

According to the relevant provisions of the Mining Rights Evaluation Management Measures (Trial) and China’s Mineral Rights Evaluation Standards, it is determined that the discounted cash flow method is adopted in this valuation.

Exploration right of the Cishan Mine Area

According to specific conditions of the exploration right entrusted for valuation, this valuation is to appraise the exploration right of the gold mine in Cishan Mine Area in Penglai District, Yantai City, Shandong Province, and it is not suitable for market-based valuation because there is no example of the transaction for the same valuation purpose.

The income-based valuation methods include income equity method and discounted cash flow method. The mine has prepared the Feasibility Study Report on the Mining Project of Gold Mine in Cishan Mine Area in Penglai City, Shandong Province, based on which this exploration right has independent profitability and can be measured, its future income and risks can be measured in currency, and the main technical and economic parameters of its resource development and utilization can be determined by referring to the above-mentioned materials. Therefore, the appraisers believe that this exploration right has met the requirements and conditions for valuation by using the discounted cash flow method.

Exploration right of the Tuwu Gold Mine Area

According to specific conditions of the exploration right entrusted for valuation, this valuation is to appraise the exploration right of the gold mine at the deep level of Tuwu Gold Mine Area (general exploration) in Penglai District, Yantai City, Shandong Province, and it is not suitable for market-based valuation because there is no example of the transaction for the same valuation purpose.

The income-based valuation methods include income equity method and discounted cash flow method. The exploration right has carried out systematic exploration work, and the General Exploration Report on the Gold Mine at the Deep Level of Tuwu Mine Area in Penglai City, Shandong Province submitted has been reviewed and filed by the original Shandong Provincial Department of Land and Resources. Corresponding parameters designed for the Feasibility Study Report on the Mining Project in Yanshan Mine Area of Shandong Gold Jinchuang Group Co., Ltd. (SDG Design and Consultancy Co., Ltd. (山金設計諮詢有限公司), November 2019) are basically available, but the resource reserves are small and the life is short, therefore the valuation is eligible for the income equity method.

According to the relevant provisions of China’s Mineral Rights Evaluation Standards, the income equity method is adopted in this valuation.

— 17 —

LETTER FROM THE BOARD

(4) Other Underlying Assets other than Mineral Rights

Items of other underlying assets Relevance to the transferred mineral rights

Other monetary funds

The deposits for land reclamation and environmental governance that are independently deposited are collected according to the actual deposit balance of the Yanshan Mine Area over the years

Prepayments Prepayments related to the mining right assets of the Yanshan Mine Area

Other receivables The compensation related to land demolition and relocation of the mining right in the Yanshan Mine Area advanced by Jinchuang Group Inventories Underground ore in Yanshan Mine Area and spare parts related to Yanshan Mine Area, etc. Fixed assets Fixed assets within the scope of Yanshan Mine Area Construction in progress Construction in progress within the scope of Yanshan Mine Area

(i) Current assets: The appraised value of monetary funds is RMB12,929,000, the appraised value of prepaid accounts is RMB845,141.24, the appraised value of other receivables is RMB1,504,920.00; the appraised value of inventories is RMB123,536,040.10;
(ii) Non-current assets: The appraised value of houses and buildings is RMB37,835,214.75, the appraised value of structures and other ancillary facilities is RMB233,896,493.46, the appraised value of sinking and driving engineering is RMB871,780,762.81, the appraised value of machinery and equipment is RMB73,459,341.96, the appraised value of electronic equipment is RMB29,940.28, and the appraised value of fixed assets to be disposed is RMB64,940.10;
(iii) Construction in progress: The appraised value of construction in progress is RMB8,035,073.15; and
(iv) Intangible assets: The appraised value of the land use right is RMB7,394,217.56.

— 18 —

LETTER FROM THE BOARD

(5) Liabilities

(i) Including the appraised value of accounts payable (mainly the project payment payable) of RMB3,110,528.01, the appraised value of employee salaries payable of RMB2,678,697.16, the appraised value of taxes payable of RMB46,832.50, the appraised value of other payables of RMB1,227,527,131.16 (mainly loan principal and interest of RMB1,226,527,131.16 and deposit payable to suppliers of RMB1,000,000.00), and the appraised value of estimated accrual on the books of land reclamation fees related to the Yanshan Mine Area of RMB4,879,502.01.

Unit: RMB

Creditor
Shandong Gold Group Co., Ltd.
Shandong Gold Group Co., Ltd.
Shandong Gold Group Co., Ltd.
Shandong Gold Group Co., Ltd.
Shandong Gold Group Co., Ltd.
Shandong Gold Group Co., Ltd.
Shandong Gold Group Co., Ltd.
Shandong Gold Group Co., Ltd.
Shandong Gold Group Co., Ltd.
Total amount:

Principal and
interest
Interest
rate
Commencement
date
Ending date
227,000,000.00
3.09%
12 October 2022
24 August 2025
170,000,000.00
4.18%
6 November 2020
13 August 2023_Note_
321,000,000.00
4.18%
18 November 2020
13 August 2023_Note_
142,000,000.00
4.18%
27 November 2020
13 August 2023_Note_
147,000,000.00
3.48%
29 March 2022
19 January 2025
38,882,631.16
4.00%
18 October 2021
13 October 2024
50,644,500.00
3.09%
28 October 2022
24 August 2025
50,000,000.00
3.48%
6 June 2022
19 January 2025
80,000,000.00
3.48%
8 August 2022
19 January 2025
1,226,527,131.16

Note: The above three loans due on 13 August 2023 have been adjusted to two loans, and the loan periods have been extended. One loan with principal and interest of RMB475,000,000.00 has a loan period up to 27 March 2026, and its interest rate is adjusted to 2.7%; the other loan with principal and interest of RMB158,000,000.00 has a loan period up to 13 February 2026, and its interest rate is adjusted to 2.7%.

Jinchuang Group guarantees that the amount of liabilities transferred to Penglai Mining is true, accurate and undisputed, and it guarantees that the transfer of the liabilities involved has been approved by all creditors.

REASONS FOR AND BENEFITS OF THE ACQUISITION

Three mineral rights including the mining right of Yanshan Mine Area, the exploration right of Tuwu and the exploration right of Cishan and the mineral rights under Penglai Mining to be acquired by Penglai Mining are located in the same mineralized zone, and the ore bodies are located in the same group of veins, which are the same veins or parallel veins. Penglai Mining would acquire the three mineral rights and underlying assets above, in order to actively implement the “Approval of Shandong Provincial People’s Government on the Mineral Resource Integration Plan of Gold Mines Across 8 Districts (Cities) in Yantai City” 《山東省人民政府關於煙台( 8個區（市）金礦礦產資源整合方案的批覆》) (Lu Zheng Zi [2021] No. 133) and the requirements under the “Optimised and Adjusted Mineral Resource

— 19 —

LETTER FROM THE BOARD

Integration Plan of Gold Mines in Penglai District of Yantai City 《煙台市蓬萊區金礦礦產資源整合優( 化調整方案》)” approved by the government of Penglai District of Yantai City, and to promote the integration of mineral rights.

Among the Target Assets Package held by Jinchuang Group in the acquisition by Penglai Mining, the assets other than the mineral rights are needed to support the reproduction of the Yanshan Mine Area, and are relevant to the transferred mineral rights at the same time. The transfer of assets affiliated to the mineral rights is an objective demand for subsequent improvement in the operating capacity and overall asset output capacity of the Yanshan Mine Area. Meanwhile, the liabilities in the Target Assets Package are closely related to the operation of the Yanshan Mine Area, and should be inherited by Penglai Mining. And the liabilities to be taken over can be used to offset the consideration payable by Penglai Mining in equal amounts when entering into the agreement, which would greatly reduce the amount of cash that Penglai Mining needs to pay promptly. After taking over the liabilities, Penglai Mining only needs to pay the asset transfer price of RMB422,183,204.57 (including the mineral rights value-added tax of RMB16,364,988.00) at the time of the Acquisition.

Gold resource reserves determine the future development potential and space of gold companies. The subject assets of this transaction have relatively large gold resource reserves. The production system of the acquired mineral right of Yanshan is relatively complete, and all shaft projects are in place. The implementation of this transaction will help further increase the Company’s gold resource reserves, expand its production scale, strengthen the scale effect, and enhance its core competitiveness. At the same time, major mineral right assets of the Target Assets Package are all located in the gold mineralized zone of Penglai District, Shandong Province, geographically close to the existing mineral rights of Penglai Mining and adjacent to the border, which can realize geographical concentration and integration of mineral rights. Upon completion of the integration in future, it will be conducive to leveraging the overall synergy effect of resource development and utilization, reducing the production and mining costs through centralized mining and utilization of existing beneficiation capacity, and improving the production scale and profitability of the Company.

According to the employment needs of Penglai Mining for integration of the Yanshan Mine Area, Jinchuang Group will transfer a total of 102 personnel affiliated to the Yanshan Mine Area to Penglai Mining. The specific personnel shall be subject to those listed in the Asset Transfer Contract. The transfer of relevant personnel of the Target Assets Package can ensure the normal operation of the mine systems during and after the transfer of the three mineral rights and underlying assets of Yanshan Mine Area, and guarantee the handover of data and operation and maintenance of equipment and facilities of the Yanshan Mine Area.

In terms of land use involved, upon completion of the Acquisition, it will be included in the overall consideration of development and utilization planning of the integration zone, and the layout of development and utilization will be adjusted as and where appropriate.

In addition, the implementation of the Acquisition can inject the main gold assets such as mines and gold mineral rights under the companies controlled by SDG Group Co. that currently meet the listing requirements into the Company, which will help to reduce the horizontal competition between SDG Group Co. and the Company, and further implement the regulatory requirements for listed companies.

The Directors (including all the independent non-executive Directors) are of the view that although the Acquisition is not in the ordinary course of business of the Group, its terms are on normal commercial terms or better and are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

— 20 —

LETTER FROM THE BOARD

INFORMATION OF THE RELEVANT PARTIES

Penglai Mining

Penglai Mining is a wholly-owned subsidiary of the Company established in the PRC on 1 August 2003. It is principally engaged in underground mining of gold mines, ore flotation, etc.

The Company

The Company was established by its promoters with approval from the Shandong Province Economic System Reform Commission (山東省經濟體制改革委員會) and the People’s Government of Shandong Province (山東省人民政府) in January 2000. The Company is an integrated gold company listed on the SSE and the Hong Kong Stock Exchange since 2003 and 2018, respectively and engaged in gold exploration, mining, processing, smelting and sales. It is one of the largest gold producers listed domestically and/or in Hong Kong that operates in the PRC, controlling and operating more than 10 gold mines with operation primarily located in Shandong Province. The Company has gradually expanded its business into the Inner Mongolia Autonomous Region, Gansu Province, Xinjiang Uyghur Autonomous Region, Fujian Province and Argentina, South America and Ghana, Africa.

Jinchuang Group

Jinchuang Group is a limited liability company established in China on 17 March 1987. Its business scope includes ore flotation, gold smelting and underground gold mining. As at the date of this circular, Jinchuang Group is 65% directly owned by SDG Group Co. and 35% owned by the Finance Bureau of Penglai District of Yantai City.

SDG Group Co.

As the controlling shareholder, SDG Group Co. was established in the PRC in July 1996. SDG Group Co. engages in gold mining related operations, including geological exploration and mining of gold, gold processing, gold smelting and technical services, and production and sales of specialized equipment and supplies and construction materials for gold mines. The gold resources of SDG Group Co. are mainly located in the PRC. As at the date of this circular, SDG Group Co. directly and indirectly holds approximately 45.58% of the Company’s issued share capital.

HONG KONG LISTING RULES IMPLICATIONS

As at the date of this circular, the Target Assets Package is owned by Jinchuang Group, which is an indirect non-wholly owned subsidiary of SDG Group Co. Therefore, the Acquisition, if materialized, will constitute a connected transaction of the Company under Chapter 14A of the Hong Kong Listing Rules. As one or more of the applicable percentage ratios exceeds 0.1% but all are less than 5%, the Acquisition is subject to the reporting and announcement requirements but is exempted from the circular and independent Shareholders’ approval requirement under Chapter 14A of the Hong Kong Listing Rules.

— 21 —

LETTER FROM THE BOARD

SSE LISTING RULES IMPLICATIONS

As the A Shares are listed on the SSE, the Company will continue to be subject to and regulated by the SSE Listing Rules and other applicable laws and regulations in the PRC if the A Shares remain listed. According to the SSE Listing Rules, the Acquisition constitutes a related party transaction of the Company and is subject to consideration and approval at the general meeting of the Company.

The Directors, Mr. Li Hang, Mr. Wang Lijun and Ms. Wang Xiaoling, also holding senior management positions in SDG Group Co., are deemed to have material interests in the Acquisition and have abstained from voting on the relevant resolution of the Board. Except for the Directors mentioned above, none of the other Directors had any material interests in the Acquisition and was required to abstain from voting on the Board resolution approving the same.

III. RESOLUTION ON THE COMPANY’S SATISFACTION OF THE CONDITIONS FOR PUBLIC ISSUANCE OF CORPORATE BONDS

In order to broaden financing channels, optimize the debt structure and meet strategic development needs, the Company intends to apply for the public issuance of corporate bonds to professional investors.

After reviewing the provisions for the public issuance of corporate bonds on a item-by-item basis as set out in the Securities Law of the People’s Republic of China (the “Securities Law”), the Company Law of the People’s Republic of China, the Administrative Measures for the Issuance and Trading of Corporate Bonds (the “Administrative Measures”), the Rules Governing the Listing of Corporate Bonds on the Shanghai Stock Exchange (the “Listing Rules”), and other relevant laws, rules and regulations as well as regulatory documents, the Company consideres that it fulfils the conditions for the public issuance of corporate bonds and is qualified for the public issuance of corporate bonds.

(I) Subparagraph (1) of paragraph 1 of Article 15 of the Securities Law and subparagraph (1) of paragraph 1 of Article 14 of the Administrative Measures stipulate that a company issuing corporate bonds to the public must “have a sound and well-operated organization”. The Company has a sound and well-operated organization and complies with such requirement.
(II) Subparagraph (2) of paragraph 1 of Article 15 of the Securities Law and subparagraph (2) of paragraph 1 of Article 14 of the Administrative Measures stipulate that a company issuing corporate bonds to the public “shall have an average distributable profit for the last three years sufficient to pay the interest on the corporate bonds for one year”. The average distributable profit of the Company for the last three years was RMB1,026 million, which was calculated on the basis of a reasonable interest rate, and the profit indicator complies with such requirement.
(III) Subparagraph (3) of paragraph 1 of Article 15 of the Securities Law stipulates that the public issuance of corporate bonds shall meet other conditions prescribed by the State Council; the Notice of the General Office of the State Council on the Implementation of the Revised Securities Law (Guo Ban Fa [2020] No. 5) stipulates that “An issuer applying for public issuance of corporate bonds shall, in addition to meeting the conditions prescribed by the Securities Law, have a reasonable asset-liability structure and normal cash flow”.

— 22 —

LETTER FROM THE BOARD

The Company’s gearing ratio has been maintained at a relatively reasonable level and has been relatively stable over the last three years, which is in line with the characteristics of the industry, and the Company’s operating cash flow realised from its daily business is relatively adequate, which is in compliance with the said requirement and also in compliance with subparagraph (3) of paragraph 1 of of Article 14 of the Administrative Measures.

(IV) Paragraph 2 of Article 15 of the Securities Law stipulates that “The proceeds from the public issuance of corporate bonds shall be used in accordance with the use of proceeds set out in the rules for issuance of corporate bonds; changes to the use of proceeds shall be resolved by the bondholders’ meeting. The proceeds from the public issuance of corporate bonds shall not be used to make up for losses or non-productive expenditures”. Article 13 of the Administrative Measures stipulates that “The proceeds from the public issuance of corporate bonds shall be used in accordance with the use of proceeds set out in the prospectus for issuance of corporate bonds; changes to the use of proceeds shall be resolved by the bondholders’ meeting. The proceeds from the public issuance of corporate bonds shall not be used to make up for losses or non-productive expenditures”.

The proceeds raised by the Company through the issuance of corporate bonds are intended to be used for lawful and compliant purposes such as repayment of corporate debts, replenishment of working capital, investment in project construction and equity investment, and will not be used to make up for losses and non-productive expenditures, which is in compliance with such requirement.

(V) The Company does not fall into any of the following circumstances prohibiting the public reissuance of corporate bonds as stipulated in Article 17 of the Securities Law and Article 15 of the Administrative Measures:
The facts of default or delay in payment of principal and interest on issued corporate bonds or other debts are still subsisting;
In violation of the Securities Law to change the use of proceeds from the public issuance of corporate bonds;
(VI) The issuance of the corporate bonds will be subject to the review by the SSE and the performance of the registration procedures by the China Securities Regulatory Commission, which is in compliance with subparagraph (2) of paragraph 1 of Rule 2.1 of the Listing Rules.
(VII) The issue target of the corporate bonds is professional institutional investors as required by relevant laws and regulations, which is in compliance with subparagraph (3) of paragraph 1 of Rule 2.1 of the Listing Rules.
(VIII) The trading mechanism and investor suitability management arrangements have been clearly defined for the issuance of corporate bonds, which is in compliance with Rule 2.2 of the Listing Rules.

This resolution shall be considered and approved by way of a special resolution at the general meeting of the Company.

— 23 —

LETTER FROM THE BOARD

IV. RESOLUTION ON THE PLAN FOR THE PUBLIC ISSUANCE OF CORPORATE BONDS

In order to further satisfy the capital requirements for the development of the Company’s business operations, ensure the long-term stable supply of capital for the Company’s development, further broaden the financing channels, leverage its sound capital market image and the cost advantages of direct financing, and reasonably match various financing channels, the Company intends to apply to the Shanghai Stock Exchange and the China Securities Regulatory Commission for the registration and issuance of corporate bonds (with the approval to be valid within 2 years), with a total amount of not exceeding RMB10 billion (inclusive of RMB10 billion). The issuance plan is set out below:

I. Overview of the Registration of the Corporate Bonds

(I) Registered Issue Size

The registered issue size of the bonds will not exceed RMB10 billion (inclusive of RMB10 billion).

(II) Par Value and Issue Price

The par value of the bonds is RMB100, and the bonds are issued at par.

(III) Issue Method

The bonds are issued publicly within China in one lot or by tranches after Shanghai Stock Exchange has reviewed the issuance and the registration with the China Securities Regulatory Commission has been completed.

(IV) Issue Target and Arrangement for Placement to Shareholders of the Company

The issue target of the bonds is professional investors. No preferential allotment of the bonds will be offered to the Shareholders of the Company.

(V) Term of the Bonds

The bonds have a term of not more than 25 years (inclusive of 25 years) (other than renewable corporate bonds), with a single term or a hybrid type with multiple terms. In the case of renewable corporate bonds, a basic term of not more than 10 years (inclusive of 10 years) may be agreed. At the end of the agreed basic term and at the end of each cycle, the Company is entitled to exercise the renewal option to extend one cycle as per agreed basic term. If the Company does not exercise the renewable option, the renewable corporate bonds will be due and shall be repaid in full. The specific term shall be determined within the foregoing range prior to the issuance of each tranche of bonds by the Board or its authorized persons as authorized at the general meeting in accordance with the Company’s capital demands and market conditions at the time of issuance.

— 24 —

LETTER FROM THE BOARD

(VI) Interest Rate and its Determination Method

The corporate bonds (other than renewable corporate bonds) may be issued at fixed or floating interest rates, and bear interest on an annual basis at simple rate rather than at compound rate. The coupon rate shall be determined by negotiation between the Company and the bookrunner in accordance with the relevant regulations within the interest rate inquiry range based on the result of the offline book-building inquiry. In the case of issuance by tranches, the coupon rate shall be determined separately according to the issuance tranches.

If the Company issues the renewable corporate bonds, it may be in the form of fixed interest rates, and bears interest on an annual basis at simple rate rather than at compound rate. If the Company elects to defer the payment of interest, each deferred interest will accrue during the deferral period at the current coupon rate. The coupon rate for the basic term of the renewable corporate bonds shall be determined by negotiation between the Company and the bookrunner in accordance with the relevant regulations within the interest rate inquiry range based on the result of the offline book-building inquiry, and shall be fixed within the basic term. If the Company chooses to renew the bonds, it shall be reset once for each subsequent renewal cycle, in a manner to be determined by the Company and the lead underwriter in accordance with the relevant national regulations. In the case of issuance by tranches, the coupon rate shall be determined separately according to the issuance tranches.

(VII) Method of Repayment of Principal and Interest

If the term of the bonds is more than 1 year, the bonds will bear interest on an annual basis at simple rate rather than at compound rate, which shall be payable annually. The principal shall be repaid in a lump sum at maturity, and the last tranche of interest shall be paid together with the principal. If the term of the bonds is less than 1 year (inclusive of 1 year), the principal and interest will be repaid in a lump sum at maturity.

(VIII)Terms of Guarantee

The bonds are unguaranteed.

(IX) Types of Issuance

The types of issuance include general corporate bonds, renewable bonds, green corporate bonds and other bonds. The specific type will be determined based on the Company’s needs.

— 25 —

LETTER FROM THE BOARD

(X) Use of Proceeds

The proceeds from the issuance of the bonds are intended to be used for repayment of interest-bearing liabilities, replenishment of working capital, project construction and operation, equity investment and other purposes permitted by applicable laws and regulations, with a view to achieving the objectives of adjusting the Company’s debt structure and supporting the Company’s business development. The specific use of the proceeds shall be proposed at the general meeting to authorize the Board or its authorized persons to determine in the light of the Company’s financial situation and capital requirements.

(XI) Proposed Place of Listing

Shanghai Stock Exchange.

(XII) Measures to Secure Repayment

In the case that the failure of repaying the principal and interest of the bonds on schedule or at maturity is foreseeable after the issuance of corporate bonds, one or more of the following measures will be adopted according to actual conditions of the Company and the market within the scope permitted by laws and regulations:

not to distribute profit to Shareholders;
to suspend the implementation of capital expenditure projects including significant external investments, acquisitions and mergers;
to reduce or freeze the salaries and bonuses of directors and senior management;
the main person in charge shall remain in his/her position.

(XIII)Underwriting

The issuance is underwritten by the underwriting syndicate organized by the lead underwriter by way of standby commitment underwriting.

(XIV) Validity of the Resolution

The validity period of the resolution on matters related to the issuance of the bonds shall be 24 months from the date of consideration and approval by the general meeting. If the Company obtains the approval documents from the regulatory authorities, the validity period of this resolution shall be from the date of consideration and approval by the general meeting to the expiry of the validity period of the approval documents from the regulatory authorities.

— 26 —

LETTER FROM THE BOARD

This resolution shall be considered and approved by way of a special resolution at the general meeting of the Company.

V. RESOLUTION ON PROPOSING AT THE GENERAL MEETING TO AUTHORIZE THE BOARD OF DIRECTORS AND ITS AUTHORIZED PERSONS WITH FULL DISCRETION TO HANDLE THE MATTERS RELATED TO THE PUBLIC ISSUANCE OF CORPORATE BONDS

The Board proposes at the general meeting to authorize the Board and its authorized persons to deal with all matters related to the issuance of bonds at its full discretion after the general meeting has approved the plan for the issuance, including but not limited to:

Within the scope permitted by laws, regulations and relevant requirements of securities regulators and on the basis of specific conditions of the Company and the market conditions, deciding on the specific issuance plan for the issuance and its amendments, adjusting the issue terms and other matters related to the issuance, including but not limited to the specific issue size, the term of the bonds, the type of bonds, the issue method, the coupon rate or its determination method, the timing of issue, whether to issue by tranches, the number of tranches and the size and term of each tranche, the issue price, whether to include options and redemption clauses, whether to set subordinated terms, the rating arrangement, the specific subscription method, the specific placement arrangement, measures to secure repayment, the term and method for repayment of principal and interest, the specific use of proceeds and amounts to be utilized and all other matters related to the issue of corporate bonds;
Determining and appointing the intermediaries for the public issuance of the corporate bonds and the bond trustee, signing the bond fiduciary management agreement, and formulating the rules of bondholders’ meeting;
Determining the establishment of designated account of the proceeds, for the purpose of receiving, depositing, transferring proceeds from the issuance and repaying the principal and interest, and signing the corresponding escrow agreements;
Dealing with reporting matters related to the issuance, and handle the listing matters and the repayment of principal and interest related to the issuance after its completion, including but not limited to formulating, approving, authorizing, signing, executing, amending and completing all necessary documents, contracts/agreements, covenants (including but not limited to the prospectus, the underwriting agreement, the bond fiduciary management agreement, the proceeds escrow agreement, the listing agreement, all announcements and other legal documents) related to the issuance and the listing, and disclosing relevant information in accordance with laws, regulations and other normative documents;
In the event that regulators have changed policies related to the issuance or market conditions have changed, authorizing the Board to make corresponding adjustments to the specific plan of the issuance and other matters in accordance with regulators’ new policies and opinions or new market conditions, or determining whether to proceed with the work related to the issuance on the basis of actual conditions, other than matters involving the reconsideration and voting of the general meeting in accordance with relevant laws and regulations and the Articles of Association;

— 27 —

LETTER FROM THE BOARD

In the case that the failure of repaying the principal and interest of the bonds on schedule or at maturity is foreseeable after the issuance of corporate bonds, adopting one or more of the following resolutions and taking appropriate measures according to actual conditions of the Company and the market within the scope permitted by laws and regulations:
1) not to distribute profit to Shareholders;
2) to suspend the implementation of capital expenditure projects including external investments, acquisitions and mergers;
3) to reduce or freeze the salaries and bonuses of directors and senior management;
4) the main person in charge shall remain in his/her position;
Dealing with other specific matters related to the issuance and the listing under the permission of laws and regulations;
The authorization stated above shall be valid for a period of 24 months from the date of consideration and approval at the general meeting. If the Company obtains the approval, permission, filing or registration of the issuance from the regulatory authorities (if applicable) during the validity period of the authorization, the Company may complete the issuance or partial issuance within the validity period confirmed under such approval, permission, filing, or registration (if applicable). For matters related to the issuance or partial issuance, the validity period of the above authorization shall be renewed up to the date on which the matters authorized above have been completed.

The Board proposes to authorize the general manager of the Company and his/her authorized persons as the authorized persons of the issuance, who are specifically responsible for dealing with matters related to the issuance under the resolutions of the general meeting and the authorization of the Board.

This resolution shall be considered and approved by way of a special resolution at the general meeting of the Company.

VI. EGM

The EGM is to be held at the conference room of the Company, No. 2503, Jingshi Road, Licheng District, Jinan, Shandong Province, the PRC at 10:00 a.m. on Tuesday, 12 September 2023. The notice of the EGM is set out in Appendix I to this circular.

Any Shareholder entitled to attend and vote at the EGM is entitled to appoint one or more proxies to attend and vote on his behalf. A proxy need not be a Shareholder. If you intend to appoint a proxy to attend the EGM and vote on your behalf, you are requested to complete the accompanying proxy form in accordance with the instructions printed thereon and return it by hand, by post or by facsimile, to the Company’s H share registrar, Tricor Investor Services Limited at 17/F, Far East Finance Centre, 16 Harcourt Road, Hong Kong (for H Shareholders only) as soon as possible and in any event not later than 24 hours before the time appointed for the holding of the EGM (i.e. before 10:00 a.m. on Monday,

— 28 —

LETTER FROM THE BOARD

11 September 2023) or any adjournment thereof (as the case may be). Completion and return of the proxy form will not preclude you from attending and voting at the EGM or any adjournment thereof should you so wish.

VII. CLOSURE OF REGISTER OF MEMBERS

For the purpose of ascertaining the Shareholders who are entitled to attend and vote at the EGM, the H Shares register of members of the Company will be closed from Thursday, 7 September 2023 to Tuesday, 12 September 2023, both dates inclusive, during which period no transfers of H Shares will be effected. H shareholders whose names appear on the H Shares register of members of the Company on Tuesday, 12 September 2023 are entitled to attend and vote at the EGM.

For the purpose of ascertaining the Shareholders who are entitled to attend and vote at the EGM, all transfer instruments accompanied by the relevant share certificates must be lodged by H Shareholders with the Company’s H Share Registrar, Tricor Investor Services Limited at 17/F, Far East Finance Centre, 16 Harcourt Road, Hong Kong no later than 4:30 p.m. on Wednesday, 6 September 2023.

VIII. VOTING

Pursuant to Rule 13.39(4) of the Hong Kong Listing Rules and Article 119 of the Articles of Association, unless the chairman makes a decision in the spirit of honesty and credibility and agrees that the resolution on relevant procedures or administrative matters shall be voted on by show of hands, voting for a general meeting shall be held by ballot.

Pursuant to Article 111 of the Articles of Association, Shareholders (including proxies) shall exercise their voting rights according to the number of voting shares they represent, with one vote for each share. Pursuant to Article 120 of the Articles of Association, on a poll taken at a meeting, a Shareholder (including proxy) entitled to two or more votes need not cast all his votes in the same way.

Pursuant to the SSE Listing Rules, any Shareholder who has a material interest in the Asset Package Transfer Contract shall abstain from voting on the relevant resolutions at the EGM. As at the date of this circular, SDG Group Co., being the controlling shareholder, directly or indirectly holds approximately 45.58% of the issued share capital of the Company and will be required to abstain from voting on the relevant resolutions at the EGM accordingly. Save for SDG Group Co. and its subsidiaries, as at the date of this circular, to the best knowledge of the Directors, no other Shareholder would be required to abstain from voting thereat as no other Shareholder has any interest in the Asset Package Transfer Contract.

Save as disclosed above, none of the Shareholders was required to abstain from voting on the resolutions at the EGM.

IX. RECOMMENDATION

The Board is of the view that the proposed resolutions at the EGM are fair and reasonable and in the best interests of the Company and its Shareholders as a whole. Accordingly, the Directors recommend the Shareholders to vote in favour of the resolutions to be proposed at the EGM.

— 29 —

LETTER FROM THE BOARD

X. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in satisfaction of the Hong Kong Listing Rules for the purpose of giving information with regard to the Company. The Directors after having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

Yours faithfully, By order of the Board Shandong Gold Mining Co., Ltd. Li Hang Chairman

— 30 —

NOTICE OF 2023 FIFTH EXTRAORDINARY GENERAL MEETING

APPENDIX I

==> picture [64 x 70] intentionally omitted <==

SHANDONG GOLD MINING CO., LTD. 山東黃金礦業股份有限公司

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

(Stock Code: 1787)

NOTICE OF 2023 FIFTH EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that the 2023 fifth extraordinary general meeting (“ EGM ”) of Shandong Gold Mining Co., Ltd. (the “ Company ”) will be held at the conference room of the Company, No. 2503, Jingshi Road, Licheng District, Jinan, Shandong Province, the PRC at 10:00 a.m. on Tuesday, 12 September 2023 for the purpose of considering and, if thought fit, passing the following resolutions:

ORDINARY RESOLUTION

To consider and approve the resolution on the acquisition of mineral rights and other assets in Yanshan Mine Area of Shandong Gold Jinchuang Group Co., Ltd. and the entering into of relevant transfer contract

SPECIAL RESOLUTIONS

To consider and approve the resolution on the Company’s satisfaction of the conditions for public issuance of corporate bonds
To consider and approve the resolution on the plan for the public issuance of corporate bonds
3.1 Registered issue size
3.2 Par value and issue price
3.3 Issue method
3.4 Issue target and arrangement for placement to shareholders of the Company
3.5 Term of the bonds
3.6 Interest rate and its determination method
3.7 Method of repayment of principal and interest
3.8 Terms of guarantee

— I-1 —

NOTICE OF 2023 FIFTH EXTRAORDINARY GENERAL MEETING

APPENDIX I

3.9 Types of issuance
3.10 Use of proceeds
3.11 Proposed place of listing
3.12 Measures to secure repayment
3.13 Underwriting
3.14 Validity of the resolution
To consider and approve the resolution on proposing at the general meeting to authorize the board of directors and its authorized persons with full discretion to handle the matters related to the public issuance of corporate bonds

By order of the Board Shandong Gold Mining Co., Ltd. Li Hang Chairman

Jinan, the PRC 25 August 2023

As at the date of this notice, the executive directors of the Company are Mr. Liu Qin, Mr. Wang Shuhai and Mr. Tang Qi; the non-executive directors of the Company are Mr. Li Hang, Mr. Wang Lijun and Ms. Wang Xiaoling; and the independent non-executive directors of the Company are Mr. Wang Yunmin, Mr. Liew Fui Kiang and Ms. Zhao Feng.

Notes:

Holders of the Company’s H Shares should note that the H Shares register of members of the Company will be closed from Thursday, 7 September 2023 to Tuesday, 12 September 2023 (both days inclusive). All transfer documents accompanied by the relevant share certificates must be lodged with the Company’s H share registrar, Tricor Investor Services Limited at 17/F, Far East Finance Centre, 16 Harcourt Road, Hong Kong no later than 4:30 p.m. on Wednesday, 6 September 2023. H Shareholders whose names appear on the H Shares register of members of the Company on Tuesday, 12 September 2023 are entitled to attend with their identity cards or passports and vote at the EGM. The record date and arrangements in respect of the holders of A Shares of the Company who are entitled to attend the EGM will be determined and announced separately in the PRC.
Any shareholder entitled to attend and vote at the EGM is entitled to appoint a proxy or more proxies (who need not be a shareholder of the Company) to attend the EGM and vote thereat in his stead. For any shareholder who appoints more than one proxy, the voting right can only be exercised by his/her proxies on a poll.
Any shareholder who intends to appoint a proxy to attend the EGM shall put it in writing, with the proxy form to be signed by the appointor or his attorney duly authorized in writing. If the appointor is a corporation, the proxy form must be affixed with its common seal, or signed by any of its directors or attorney duly authorized in writing. If the proxy form is signed by an attorney authorized by the appointor, the power of attorney or other authorization documents must be notarially certified. The notarially certified power of attorney or other authorization documents together with the proxy form must be delivered to the Company’s H share registrar, Tricor Investor Services Limited at 17/F, Far East Finance Centre, 16 Harcourt Road, Hong Kong (for H shareholders only) not later than 24 hours before the time appointed for the holding of the EGM (i.e. before 10:00 a.m. on Monday, 11 September 2023). Completion and return of the proxy form will not affect the rights of the shareholders to attend and vote at the EGM in person.

— I-2 —

APPENDIX I NOTICE OF 2023 FIFTH EXTRAORDINARY GENERAL MEETING

Proxies of holders of the Company’s H Shares shall bring along the proxy form, instrument(s) for appointing a proxy (if applicable) and the proxies’ identity cards or passports to attend the EGM.
According to Article 108 of the Articles of Association, an ordinary resolution shall be passed by more than half of the votes cast by the shareholders (including proxies) present at the general meeting, while a special resolution shall be passed by more than two-thirds of the votes cast by the shareholders (including proxies) present at the general meeting.
Directors, supervisors and senior management of the Company and the witnessing lawyers and other relevant personnel employed by the Company will attend the EGM.

— I-3 —

AI assistant

Shandong Gold Mining Co., Ltd. — Proxy Solicitation & Information Statement 2023

50168_rns_2023-08-24_80bc927d-762f-4039-be68-8d0cb7cc1173.pdf

SHANDONG GOLD MINING CO., LTD. 山東黃金礦業股份有限公司

(1) RESOLUTION ON THE ACQUISITION OF MINERAL RIGHTS AND OTHER ASSETS IN YANSHAN MINE AREA OF

SHANDONG GOLD MINING CO., LTD. 山東黃金礦業股份有限公司

Executive Directors:

Non-executive Directors:

Registered office and headquarters in the PRC:

Independent Non-executive Directors:

Principal place of business in Hong Kong:

To the Shareholders

I. INTRODUCTION

II. RESOLUTION ON THE ACQUISITION OF MINERAL RIGHTS AND OTHER ASSETS IN YANSHAN MINE AREA OF SHANDONG GOLD JINCHUANG GROUP CO., LTD. AND THE ENTERING INTO OF RELEVANT TRANSFER CONTRACT

(I) Asset Package Transfer Contract

LETTER FROM THE BOARD

(II) Tripartite Agreement on Debt Transfer

INFORMATION OF THE TARGET ASSETS PACKAGE

(1) Mining Right of the Yanshan Mine Area

Basic information on the mining right

(i) Historical development of the mining right of Yanshan Mine Area

(ii) Valuation of the mining right of Yanshan Mine Area

(iii) Payment of royalties for the mining right

(iv) Production conditions for mineral mining

Basic information on the exploration right

(i) Historical development of the exploration right of Cishan Mine Area

(ii) Valuation of the exploration right of Cishan Mine Area

(iii) Payment of royalties for the exploration right

Basic information on the exploration right

(i) Historical development of the exploration right of the gold mine at the deep level of Tuwu Gold Mine Area (general exploration)

(iii) Payment of royalties for the exploration right

Mining right of the Yanshan Mine Area

Exploration right of the Tuwu Gold Mine Area

Mining right of the Yanshan Mine Area

Exploration right of Exploration right of the the Cishan Mine Area Tuwu Gold Mine Area

LETTER FROM THE BOARD

Mining right of the Yanshan Mine Area

Exploration right of the Cishan Mine Area

Exploration right of the Tuwu Gold Mine Area

(4) Other Underlying Assets other than Mineral Rights

Items of other underlying assets Relevance to the transferred mineral rights

(5) Liabilities

REASONS FOR AND BENEFITS OF THE ACQUISITION

INFORMATION OF THE RELEVANT PARTIES

Penglai Mining

The Company

Jinchuang Group

SDG Group Co.

HONG KONG LISTING RULES IMPLICATIONS

SSE LISTING RULES IMPLICATIONS

III. RESOLUTION ON THE COMPANY’S SATISFACTION OF THE CONDITIONS FOR PUBLIC ISSUANCE OF CORPORATE BONDS

IV. RESOLUTION ON THE PLAN FOR THE PUBLIC ISSUANCE OF CORPORATE BONDS

I. Overview of the Registration of the Corporate Bonds

(I) Registered Issue Size

(II) Par Value and Issue Price

(III) Issue Method

(IV) Issue Target and Arrangement for Placement to Shareholders of the Company

(V) Term of the Bonds

(VI) Interest Rate and its Determination Method

(VII) Method of Repayment of Principal and Interest

(VIII)Terms of Guarantee

(IX) Types of Issuance

(X) Use of Proceeds

(XI) Proposed Place of Listing

(XII) Measures to Secure Repayment

(XIII)Underwriting

(XIV) Validity of the Resolution

VI. EGM

VII. CLOSURE OF REGISTER OF MEMBERS

VIII. VOTING

IX. RECOMMENDATION

X. RESPONSIBILITY STATEMENT

SHANDONG GOLD MINING CO., LTD. 山東黃金礦業股份有限公司

NOTICE OF 2023 FIFTH EXTRAORDINARY GENERAL MEETING

ORDINARY RESOLUTION

SPECIAL RESOLUTIONS

More from Shandong Gold Mining Co., Ltd.

Shandong Gold Mining Co., Ltd. Proxy Solicitation & Information Statement 2023