China Shenhua Energy : ENTERING INTO JOINT VENTURE FRAMEWORK AGREEMENT

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

The Board is pleased to announce that, on 28 August 2017, the Company and GD Power entered into the Joint Venture Framework Agreement.

Pursuant to the Joint Venture Framework Agreement, the Company and GD Power intend to establish a joint venture company. The Company proposes to contribute the equities and assets of the relevant coal-fired power generation companies directly and indirectly held by the Company, and GD Power proposes to contribute the equities and assets of the relevant coal-fired power generation companies directly and indirectly held by GD Power. After the completion of the transaction, GD Power will control the Joint Venture Company.

As at the date hereof, Shenhua Group Co holds 73.06% interest in the Company, and is the controlling shareholder of the Company. As approved by the Notice regarding the Reorganization of China Guodian Corporation and Shenhua Group Corporation Limited(Guo Zi Fa Gai Ge [2017] No. 146) issued by SASAC, Shenhua Group Co and Guodian Group will be reorganized. Shenhua Group will change its company name to China Energy Investment Corporation Limited, a tentative name subject to the industrial and commercial registration. China Energy Group will be the parent company after the reorganization, and merge with Guodian Group by way of merger by absorption of Guodian Group. After the completion of the Merger of the Group Companies, GD Power will become a subsidiary of China Energy Group. As such, GD Power is a connected person of the Company under the Hong Kong Listing Rules, and the Joint Venture Framework Agreement and the transaction contemplated thereunder constitute a connected transaction of the Company pursuant to Chapter 14A of the Hong Kong Listing Rules. It is expected that one or more of the applicable percentage ratios in respect of the transaction will exceed 5%, therefore, the Company shall comply with reporting, announcement and independent shareholders' approval requirements under the Hong Kong Listing Rules.

As details of the transaction have not been finalized, the type of notifiable transaction could not be confirmed. The Company will comply with requirements under Chapter 14 of the Hong Kong Listing Rules when relevant details are finalized.

Pending the issuance of auditors' reports and valuation reports, this transaction is subject to be further approved by the Board and the board of directors of GD Power. The Company will seek approval from the Independent Shareholders for the Joint Venture Framework Agreement and the transaction contemplated thereunder at a general meeting to be convened. According to the Hong Kong Listing Rules, Shenhua Group Co and its respective associates shall abstain from voting in respect of relevant resolutions.

The Company and the Independent Board Committee have reviewed the Joint Venture Framework Agreement and transaction contemplated thereunder. An independent financial adviser will be appointed by the Company to advise the Independent Board Committee and Independent Shareholders in accordance with the Hong Kong Listing Rules.

A circular containing, among other things, further details regarding the transaction contemplated under the Joint Venture Framework Agreement, a letter from the Independent Board Committee and an opinion of the independent financial adviser will be dispatched to the Shareholders. As it is expected that additional time will be required to prepare the relevant information to be included in the circular, the Company expects that the circular will be dispatched to the Shareholders on or before 15 November 2017.

The Company is a world-leading coal-based integrated energy company. The main business of the Group includes production and sales of coal and power, railway, port and ship transportation, and coal-to-olefins and other coal related chemical processing business.

Shenhua Group Co and its subsidiaries are principally engaged in the coal liquefaction, coal based chemical processing business, coal production and power generation business as well as investment and finance activities. Shenhua Group Co is the controlling shareholder of the Company. As at the date of this announcement, Shenhua Group Co holds 73.06% equity interest in the Company.

GD Power is principally engaged in the generation and sale of electricity and heating. In the year 2014, 2015 and 2016, the controlled installed capacity of GD Power was 40.836 million kW, 46.3035 million kW and 50.8815 million kW, respectively, and the accumulated power generation by the wholly-owned and controlling electricity companies of GD Power was 179.022 billion kWh, 168.657 billion kWh and 196.885 billion kWh. As at 30 June 2017, the controlled installed capacity of GD Power was 52.4594 million kW, including coal-fired power installed capacity of 33.7475 million kW, hydropower installed capacity of 13.1468 million kW, wind power installed capacity of 5.3531 million kW and solar power installed capacity of 212,000 kW. As at 31 December 2016, the audited total assets of GD Power was RMB271,266.95 million, the equity attributable to equity holders was RMB52,020.42 million. In 2016, the revenue was RMB58,416.05 million, and net profit attributable to the parent was RMB4,727.28 million. As at 30 June 2017, the unaudited total assets of GD Power was RMB274,619.21 million, equity attributable to equity holders was RMB 51,630.63 million. For the six months ended on 30 June 2017, the unaudited revenue was 28,743.87 million, and net profit attributable to the parent was RMB 1,772.53 million. As the date hereof, the controlling shareholder of GD Power is Guodian Group, and Guodian Group directly and indirectly holds 46.09% equity of GD Power. The ultimate controller of GD Power is SASAC. The shares of GD Power are listed on the Shanghai Stock Exchange.

The Company and GD Power intend to establish a joint venture company. The Company proposes to contribute the equities and assets of the relevant coal-fired power generation companies directly and indirectly held by the Company, and GD Power proposes to contribute the equities and assets of the relevant coal-fired power generation companies directly and indirectly held by GD Power. After the completion of the transaction, GD Power will control the Joint Venture Company.

On 28 August 2017, the Company and GD Power entered into the Joint Venture Framework Agreement.

The Company and GD Power intend to establish a joint venture company. The Company proposes to contribute the equities and assets of the relevant coal-fired power generation companies directly and indirectly held by the Company, and GD Power proposes to contribute the equities and assets of the relevant coal-fired power generation companies directly and indirectly held by GD Power. After the completion of the transaction, GD Power will control the Joint Venture Company.

The valuation of the Subject Assets has not been completed. According to the results estimated by CEA, which holds the qualification to provide valuation service for securities and futures business, on 30 June 2017 as the valuation reference date, the book value of the net assets and the estimated value of the net assets of the Shenhua Contributed Assets are totalled to RMB25,263.21 million and RMB29,273.93 million respectively. The estimated appreciated value is RMB4,010.73 million and the estimated appreciation rate is 15.88%. The book value of the net assets and the estimated value of the net assets of the GD Contributed Assets are totalled to RMB29,148.74 million and RMB37,372.78 million respectively. The estimated appreciated value is RMB8,224.05 million and the estimated appreciation rate is 28.21%. The actual transaction amount shall be determined by the parties through negotiation based on the valuation results of the Subject Assets filed with competent authorities.

The major clauses of the Joint Venture Framework Agreement are set out below:

28 August 2017

The Company GD Power

The Company and GD Power intend to establish a joint venture company. The Company proposes to contribute the equities and assets of the relevant coal-fired power generation companies directly and indirectly held by the Company, and GD Power proposes to contribute the equities and assets of the relevant coal-fired power generation companies directly and indirectly held by GD Power.