China Coal Energy : ANNOUNCEMENT-UTILIZATION OF THE ...

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References are made to (i) the announcement of China Coal Energy Company Limited (the "Company") dated 24 August 2016 in relation to the utilization of the Proceeds from A-share issue for temporary replenishment of working capital; (ii) the announcement of the Company dated 14 July 2010, in relation to, among others, the change of investment project into Xiaohuigou Coal Mine Project involving using the Proceeds raised from A-share issue; (iii) poll results announcement of the first extraordinary general meeting (the "EGM") for the Year 2010 of the Company dated 3 September 2010; and (iv) poll results announcement of the first EGM for the Year 2007 of the Company dated 7 September 2007. Unless otherwise defined, capitalized terms used in this announcement shall have the same meanings as those defined in the above announcements.

1. UTILIZATION OF THE PROCEEDS FROM A-SHARE ISSUE FOR TEMPORARY REPLENISHMENT OF WORKING CAPITAL Overview of Utilization of the Proceeds

   Approved by the China Securities Regulatory Commission in document of "Notice of Approval Regarding the Initial Public Offer of China Coal Energy Limited" (Zheng Jian Xu Ke [2008] No. 99), the Company issued 1,525,333,400 A shares with the total amount of RMB25.671 billion raised capital and RMB25.320 billion was left after reduction of all issue fees.

   Plan to Use Part of the Idle Proceeds to Temporarily Supplement Working Capital

   Approved by the Company at the third meeting of the third session of the board of directors of the Company (the "Board") convened on 24 August 2016. The Company used the idle Proceeds of RMB3.3 billion for no longer than 12 months for temporary replenishment of the Company's working capital. The Company has been returned the above temporary replenishment of the Company's working capital to the special account for Proceeds on 21 August 2017.

   In the principle of maximizing the shareholders' interests, and subject to ensuring the capital demands contemplated to be invested in with the Proceeds without affecting the normal progress of the investment, in order to improve the efficiency of the use of Proceeds, reduce the financial expenses, and safeguard the interests of the Company and the investors, the Company has decided to further use idle Proceeds of RMB3.265 billion from Muduchaideng Coal Mine Project, together with RMB90 million from Nalin River No. 2 Coal Mine Project (in total of approximately RMB3.355 billion) for no longer than 12 months for temporary replenishment of the Company's working capital commencing from the date of review and approval by the sixth meeting in 2017 of the third session Board of Directors of the Company. In the next 12 months, according to the capital demands of investment projects financed by the Proceeds, the Company will timely return the Proceeds to satisfy the capital demands of investment projects by using sales receivables, loaning from financial institutions, and etc.

   Opinions

   The independent non-executive directors, the supervisory committee and the sponsors of the Company agreed with the above matters, which is of great benefit for the Company to improve efficiency of using the Proceeds and save financial expenses.

   The Board has approved the temporary utilization of part of the idle Proceeds to supplement the Company's working capital, considering that it is fair and reasonable and is in the interests of the Company and its shareholders as a whole.

2. CHANGE OF USE OF THE PART OF PROCEEDS FROM A-SHARE ISSUE IN INVESTMENT PROJECT

The Xiaohuigou Coal Mine Project has an annual production capacity of 3 million metric tons of coal. The main developing entity of the Xiaohuigou Coal Mine Project is Xiaohuigou Coal, which is a wholly-owned subsidiary of China Coal Pingshuo Group Company Limited (the "Pingshuo Company"), the Company's wholly-owned subsidiary. Xiaohuigou Coal's current registered capital is RMB618 million, where Pingshuo Company originally held 55% equity and the rest of 45 percent equity was obtained by acquisition in September 2016.

The Xiaohuigou Coal field is in the north-west to Qingxu County, which belongs to Taiyuan City, Shanxi Province. The designed recoverable reserves is 265.37 Mt. All formalities for mine construction have been completed. The Xiaohuigou Coal Mine Project has been started in July 2013, and as of the end of June 2017, the investment has been accumulated to RMB1.783 billion.

It was proposed that the Xiaohuigou Coal Mine Project would use RMB2.806 billion from the Proceeds of A-share issue, where RMB1.160 billion would be used by Pingshuo Company for acquisition of Xiaohuigou Coal and RMB367 million would be used together with other shareholders to Xiaohuigou Coal for capital increase purpose on a pro rata basis, RMB824 million would be used as subsequent construction funds of the project, and RMB455 million would be used as the consideration for Xiaohuigou Coal mining right. As the date of this announcement, the Company has paid RMB1.160 billion for the acquisition, RMB824 million for the subsequent construction of the project and RMB338 million for capital increase to Xiaohuigou Coal.

As at 30 June 2017, the balance of the Proceeds of the Xiaohuigou Coal Mine Project is RMB765 million, including RMB484 million from the Proceeds of the A-share issue and RMB281 million interests.

The original planned consideration for Xiaohuigou Coal mining right of Xiaohuigou Coal Mine Project is RMB455 million, while the mining license has been obtained after paying the exploration expenses. Furthermore, the subsequent construction funds of the project, RMB824 million, was calculated based on original 55 percent equity in Xiaohuigou Coal held by Pingshuo Company. Since Xiaohuigou Coal has become a wholly owned subsidiary controlled by Pingshuo Company, the subsequent construction funds of the project shall be provided based on 100 percent equity in Xiaohuigou Coal. In light of the above, in order to improve the efficiency of the use of Proceeds, considering the actual capital demands of Xiaohuigou Coal Mine Project and its actual process, the Company proposed to change the balance of the

Proceeds in relation to paying consideration of RMB455 million for Xiaohuigou Coal mining right together with the RMB281 million interests (in total of RMB736 million) into construction of Xiaohuigou Coal Mine Project by way of entrusted loans and etc.

The proposed change of use of the part of proceeds from A-share issue in investment project has been reviewed and approved by the sixth meeting in 2017 of the third session Board of Directors of the Company, which was held on 23 August 2017. The matter is required to be submitted to the Company's EGM for consideration and approval. A circular containing, among others, details of the change of use of the part of proceeds from A-share issue in investment project and the notice of the EGM will be sent to all Shareholders as soon as possible.

By Order of the Board

Chairman of the Board, Executive Director

Beijing, the PRC 23 August 2017

As at the date of this announcement, the executive directors of the Company are Li Yanjiang and Peng Yi; the non-executive directors of the Company are Liu Zhiyong, Du Ji'an and Xiang Xujia; and the independent non-executive directors of the Company are Zhang Ke, Zhang Chengjie, and Leung Chong Shun.

* For identification purpose only