ALUMINUM CORPORATION OF CHINA LIMITED 
Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, 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 announcement.
The Board announces that, Guizhou Branch, the People's Government of the Baiyun District of Guiyang, Guiyang Land Reserve Centre, and Guizhou Aluminum Plant entered into the Land Reserve Acquisition Cooperation Agreement on 13 November 2015. As the land of Guizhou Aluminum Plant occupied by the electrolytic aluminum plant area of Guizhou Branch would be transferred to the respective land resources and reserve authorities, pursuant to the Agreement, Guizhou Branch agreed to sell and Guiyang Land Reserve Centre agreed to acquire the assets such as buildings and structures located at the aluminum area of Guizhou Branch.
As the applicable percentage ratio (as defined in the Hong Kong Listing Rules) of the Disposal exceeds 5% but is less than 25%, the Disposal constitutes a discloseable transaction of the Company under Chapter 14 of the Hong Kong Listing Rules.
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INTRODUCTION
The Board announces that, Guizhou Branch, the People's Government of the Baiyun District of Guiyang, Guiyang Land Reserve Centre and Guizhou Aluminum Plant entered into the Land Reserve Acquisition Cooperation Agreement on 13 November 2015. As the land of Guizhou Aluminum Plant occupied by the electrolytic aluminum plant area of Guizhou Branch would be transferred to the respective land resources and reserve authorities, pursuant to the Agreement, Guizhou Branch agreed to sell and Guiyang Land Reserve Centre agreed to acquire the assets such as buildings and structures located at the aluminum area of Guizhou Branch.
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LAND RESERVE ACQUISITION COOPERATION AGREEMENT
The terms relating to the Disposal under the Land Reserve Acquisition Cooperation Agreement were as follows:
Date: 13 November 2015
Parties: Guizhou Branch (Seller of the Subject Assets);Guiyang Land Reserve Centre (Purchaser of the Subject Assets)
Note (1): Guizhou Aluminum Plant is a party to the Land Reserve Acquisition Cooperation Agreement, pursuant to which Guizhou Aluminum Plant agreed to surrender the land certificate (土地證) to Guiyang Land Reserve Centre.
(2): The People's Government of Baiyun District in Guiyang is also a party to the Land Reserve Acquisition Cooperation Agreement, pursuant to which the People's Government of Baiyun District in Guiyang is mainly responsible for project coordination.
Scope of the Subject Assets:Assets such as buildings and structures located at the electrolytic aluminum plant area of Guizhou Branch of the Company.
Consideration for the transfer of the Subject Assets:The People's Government of Baiyun District in Guiyang and Guiyang Land Reserve Centre engaged an independent third party as the appraisal firm, which adopted the asset based approach to evaluate the Subject Assets under the Disposal. Based on the appraisal results of the appraisal firm, Guiyang Land Reserve Centre offered RMB1.95 billion for the respective estimated value for the Subject Assets under the Disposal. Guizhou Branch and Guiyang Land Reserve Centre underwent negotiation on arm's length basis, and unanimously agreed that the consideration for the Subject Assets under the Disposal should be RMB1.95 billion.
Payment of the Consideration for the transfer:People's Government of Baiyun District in Guiyang, on behalf of Guiyang Land Reserve Centre, agreed to pay the consideration in the following way:
First installment: RMB600 million will be payable within 30 days after the Agreement becomes effective and before 31 December 2015;
Second installment: RMB200 million will be payable by the end of December 2017;
Third installment: RMB1,000 million will be payable by the end of June 2018;
Fourth installment: RMB150 million will be payable by the end of December 2018.
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INFORMATION OF THE SUBJECT ASSETS
The Subject Assets under the Disposal are mainly the buildings and structures at the electrolytic aluminum plant area of Guizhou Branch located at Baiyun District in Guiyang, which are buildings and structures mainly used for production and operation purposes.
As of 31 October 2015, the book value of the Subject Assets is RMB426 million.
As the Subject Assets are the premises for production and operation, they cannot generate cash flow on their own. With reference to the available financial information of the Company prepared in accordance with IFRS, for the financial years ended 31 December 2013 and 31 December 2014, there had been no net profit generated by the Subject Assets (before and after deducting taxation and extraordinary items).
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FINANCIAL EFFECT OF THE DISPOSAL AND THE USE OF PROCEEDS
The Company expects that the Disposal will record an estimated book value gain of approximately RMB1 billion. Such amount was arrived from the book value of the Subject Assets, which had already taken into account the estimated taxation payable (subject to the final determination by relevant PRC taxation authorities) relating to the Disposal. Shareholders should note that the actual gain from the Disposal shall be derived from the relevant figures on the date the Disposal is completed and is subject to audit. Hence, it may be different from the above amount. The Company intends to utilize the proceeds from the Disposal on the general working capital or future investment opportunities of the Company.
- REASONS FOR AND BENEFITS OF THE TRANSACTION
Guizhou Branch shall complete the transfer of the Subject Assets to Guiyang Land Reserve Centre within 30 days after the Land Reserve Acquisition Cooperation Agreement was signed.
The Land Reserve Acquisition Cooperation Agreement shall become effective after being signed by each of the parties with seal affixed upon the approval of the People's Government of Guiyang.
As the land of Guizhou Aluminum Plant occupied by the electrolytic aluminum plant area of Guizhou Branch have to be returned to the local land resources and reserve authorities, Guizhou Branch sells the buildings and structures on the land of Guizhou Aluminum Plant to Guiyang Lang Reserve Centre. Upon the completion of this transaction, the Company will have its cash flow increased, whilst the gearing ratio and operating cost will decrease, to ensure the sound and healthy development of the Company.
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