China Oriental : Announcements and Notices - 1)continuing Connected Transactions Between Jinxi Limited and Jin Zhao Lai 2)continuing Connected Transactions Between Jinxi Limited and Baojun Mining

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CHINA ORIENTAL GROUP COMPANY LIMITED

中 國 東 方 集 團 控 股 有 限 公 司 *

（ incorporated in Bermuda with limited liability）

（Stock code：581）

1. CONTINUING CONNECTED TRANSACTIONS BETWEEN JINXI LIMITED AND JIN ZHAO LAI
2. CONTINUING CONNECTED TRANSACTIONS BETWEEN JINXI LIMITED AND BAOJUN MINING

1. CONTINUING CONNECTED TRANSACTIONS BETWEEN JINXI LIMITED AND JIN ZHAO LAI

   Reference is made to the announcement of the Company dated 2 December 2014, pursuant to which, it was stated, inter alia, that the existing Jin Zhao Lai Framework Agreement expired on 31 December 2016.

   The Board hereby announces that on 6 January 2017, Jinxi Limited entered into the Renewal JZL Framework Agreement with Jin Zhao Lai for a further term of three years commencing from 1 January 2017 and expiring on 31 December 2019.

   It is expected that the proposed JZL Annual Cap for the continuing connected transactions contemplated under the Renewal JZL Framework Agreement for each of the three years ending 31 December 2017, 2018 and 2019 will not exceed RMB30,000,000, RMB30,000,000 and RMB30,000,000 respectively.

   The proposed JZL Annual Cap has been determined after taking into account of (i) the historical transaction figures under the existing Jin Zhao Lai Framework Agreement; (ii) the estimated demand of iron powder and related products by Jinxi Limited and/or its subsidiaries; (iii) the prevailing market price of iron powder and related products; and (iv) the anticipated market price of iron powder and related products during the terms of the Renewal JZL Framework Agreement.

   Jin Zhao Lai is currently wholly owned by Ms. Liu Cuihong. Ms. Liu Cuihong is the wife of Mr. Zhang Yugui and Mr. Zhang Yugui is a deemed connected person of the Company as he is the brother of Mr. Zhang Yuhai who is connected person of the Company by virtue of being a director of Jinxi Special Steel, Tianjin Juli and Xinhaiyuan, all being indirect non-wholly

   owned subsidiaries of the Company. Therefore, Ms. Liu Cuihong and accordingly Jin Zhao Lai are connected persons of the Company and the transactions contemplated under the Renewal JZL Framework Agreement constitute continuing connected transactions for the Company.

2. CONTINUING CONNECTED TRANSACTIONS BETWEEN JINXI LIMITED AND BAOJUN MINING

The Board hereby announces that on 6 January 2017, Jinxi Limited entered into the Baojun Framework Agreement with Baojun Mining for a term of three years commencing on 1 January 2017 and expiring on 31 December 2019.

It is expected that the proposed Baojun Annual Cap for the continuing connected transactions contemplated under the Baojun Framework Agreement for each of the three years ending 31 December 2017, 2018 and 2019 will not exceed RMB30,000,000, RMB30,000,000 and RMB30,000,000 respectively.

The proposed Baojun Annual Cap has been determined after taking into account of (i) the estimated demand of the iron powder and related products by Jinxi Limited and/or its subsidiaries; (ii) the prevailing market price of the iron powder and related products; and

(iii) the anticipated market price of the iron powder and related products during the term of the Baojun Framework Agreement.

Baojun Mining is currently 91% owned by Mr. Zhang Yugui. Mr. Zhang Yugui is a deemed connected person of the Company as he is the brother of Mr. Zhang Yuhai who is a connected person of the Company by virtue of being a director of Jinxi Special Steel, Tianjin Juli and Xinhaiyuan, all being indirect non-wholly owned subsidiaries of the Company. Therefore, Mr. Zhang Yugui and accordingly Baojun Mining are connected persons of the Company and the transactions contemplated under the Baojun Framework Agreement constitute continuing connected transactions for the Company.

IMPLICATION UNDER THE LISTING RULES

As each of the applicable percentage ratios (other than the profits ratio) in respect of the proposed JZL Annual Cap under the Renewal JZL Framework Agreement and the proposed Baojun Annual Cap under the Baojun Framework Agreement is on an annual basis less than 1% and the transaction is a connected transaction only because it involves connected person at the subsidiary level, the continuing connected transactions contemplated under the Renewal JZL Framework Agreement and the Baojun Framework Agreement are exempt from reporting, annual review, announcement and the independent shareholders' approval requirements under Rule 14A.76(1) of the Listing Rules.

Reference is made to the announcement of the Company dated 30 September 2016 regarding, amongst others, the continuing connected transactions under the Xinxuan Framework Agreement made between Jinxi Limited and Xinxuan Coal for a term of three years commencing on 30 September 2016 and expiring on 31 December 2018.

Since Mr. Zhang Yugui is the father of Mr. Zhang Xin, the continuing connected transactions contemplated under the Renewal JZL Framework Agreement, the Baojun Framework Agreement and the Xinxuan Framework Agreement need to be aggregated under Rule 14A.83 of Listing Rules. The highest applicable percentage ratio (other than the profits ratio) in respect Renewal JZL Framework Agreement, the Baojun Framework Agreement and the Xinxuan Framework Agreement when aggregated is on an annual basis more than 5%. By virtue of Rule 14A.101 of the Listing Rules, as (i) Jin Zhao Lai and Baojun Mining are connected persons of the Company at the subsidiary level; (ii) the transactions under the Renewal JZL Framework Agreement and the Baojun Framework Agreement are on normal commercial terms or better; (iii) the Board has approved the Renewal JZL Framework Agreement and the Baojun Framework Agreement; and (iv) the Directors, including all the independent non-executive Directors, have confirmed that the terms of the Renewal JZL Framework Agreement and the Baojun Framework Agreement are fair and reasonable, and the transactions contemplated under Renewal JZL Framework Agreement and the Baojun Framework Agreement are on normal commercial terms or better, and in the ordinary and usual course of business of the Group, and in the interests of the Company and its shareholders as a whole, the Renewal JZL Framework Agreement and the Baojun Framework Agreement and the transactions contemplated thereunder is therefore subject to the reporting and announcement requirements but exempt from the circular, independent financial advice and shareholders' approval requirements under Chapter 14A of the Listing Rules.

The Board (including independent non-executive Directors) are of the view that the Renewal JZL Framework Agreement and the Baojun Framework Agreement and the transactions contemplated respectively thereunder are entered into in the ordinary and usual course of the business of the Group on normal commercial terms or better and have been negotiated on an arm's length basis between Jinxi Limited (and for and on behalf of its subsidiaries), Jin Zhao Lai (and for and on behalf of their subsidiaries), and Baojun Mining (and for and on behalf of their subsidiaries) respectively and the terms thereof together with the JZL Annual Cap and Baojun Annual Cap are fair and reasonable and in the interest of the Company and its Shareholders as a whole.

(1) CONTINUING CONNECTED TRANSACTIONS BETWEEN JINXI LIMITED AND JIN ZHAO LAI

Reference is made to the announcement of the Company dated 2 December 2014, pursuant to which, it was stated, inter alia, that the existing Jin Zhao Lai Framework Agreement expired on 31 December 2016.

The Board hereby announces that on 6 January 2017, Jinxi Limited entered into the Renewal JZL Framework Agreement with Jin Zhao Lai for a further term of three years commencing from 1 January 2017 and expiring on 31 December 2019.

Principal Terms of the Renewal JZL Framework Agreement Date

6 January 2017

Parties

1. Jinxi Limited (as purchaser); and

2. Jin Zhao Lai (as supplier)

Subject Matter

Jinxi Limited and/or its subsidiaries has agreed to purchase from Jin Zhao Lai and/or its subsidiaries and Jin Zhao Lai and/or its subsidiaries has agreed to sell to Jinxi Limited and/or its subsidiaries iron powder and related products.

Term

From 1 January 2017 to 31 December 2019

Pricing Policy

The prices of iron powder and related products will be determined by reference to the prevailing market prices of iron powder and related products at the relevant time and on normal commercial terms or better and will not be higher than the prices of iron powder and related products sold by Jin Zhao Lai and/or its subsidiaries to other independent third party customers or obtained from independent third parties suppliers by Jinxi Limited and/or its subsidiaries and will be settled in cash by the Group upon delivery.

The management of the Group will review the aforesaid pricing policy on a regular basis and will separately negotiate with Jin Zhao Lai on normal commercial terms or better on the price of iron powder and related products pursuant to the regular review when the Group places order with Jin Zhao Lai. In light of this, the Directors consider that the aforesaid method and procedures for determining the price for the purchase of iron powder and related products can ensure that the continuing connected transactions contemplated under the Renewal JZL Framework Agreement will be conducted on normal commercial terms or better and not prejudicial to the interests of the Company and its Shareholders as a whole.