OREANDA-NEWS. August 02, 2011. As the Company proceeds with the environmental relocation, its production scale in Changshou New District will expand gradually and the demand for iron ore and coking coal for production will increase as well. In order to ensure stable and sufficient supply of raw materials such as iron ore and coking coal to meet the Company’s production need, relieve its pressure on funding requirement and reduce relevant cost in purchase of raw materials, the Board hereby announces that the Company and Chongqing (Hong Kong) entered into a Procurement Agreement for a term commencing on 1 July 2011 and expiring on 31 December 2013 for provision of overseas iron ore and coking coal by Chongqing (Hong Kong) to the Company, reported the press-centre of Chongqing Iron & Steel.

 As at the date of this announcement, Parent Company is interested in approximately 46.21 % of the issued share capital of the Company and is a controlling shareholder of the Company within the meaning of the Listing Rules. Parent Company holds 100% beneficial interest of Chongqing (Hong Kong). Accordingly, Chongqing (Hong Kong) is a connected person of the Company and the transactions under the Procurement Agreement constitute connected transactions for the Company under the Listing Rules. As each of the applicable percentage ratios for the aggregate amount of the transactions contemplated under Procurement Agreement, on an annual basis, is more than 5% and the respective Annual Caps exceeds HKD 10,000,000, the transactions contemplated under the Procurement Agreement constitute non-exempt continuing connected transactions under Rule 14A.35 of the Listing Rules and are subject to the requirements of reporting and announcement, Independent Shareholders’ approval and annual review under Rules 14A.35(3), 14A.35(4) and 14A.35(5) of the Listing Rules.

A circular including, among other things, details of the Procurement Agreement (including the Annual Caps) and the transactions contemplated thereunder, the recommendation letter from the Independent Board Committee, the letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders and, a notice convening the EGM to approve the Procurement Agreement (including the Annual Caps) and the transactions contemplated thereunder, is expected to be dispatched to the Shareholders on or before 12 August 2011 pursuant to Chapter 14A of the Listing Rules.

BACKGROUND
As the Company proceeds with the environmental relocation, its production scale in Changshou New District will expand gradually and the demand for iron ore and coking coal for production will increase as well. In order to ensure stable and sufficient supply of raw materials such as iron ore and coking coal to meet the Company’s production need, relieve its pressure on funding requirement and reduce relevant costs in purchase of raw materials, the Board hereby announces that on 26 July 2011, the Company and Chongqing (Hong Kong) entered into a Procurement Agreement for a term commencing on 1 July 2011 and expiring on 31 December 2013 for procurement of overseas iron ore and coking coal from Chongqing (Hong Kong).