Shandong Gold Mining : CONTINUING CONNECTED TRANSACTION PROCUREMENT AND SALE FRAMEWORK AGREEMENT EXCEEDING OF ANNUAL CAP FOR THE YEAR ENDED 31 DECEMBER 2020

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SHANDONG GOLD MINING CO., LTD.

ʆ؇රږᘤٰุ΅Ϟࠢʮ̡

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

(Stock Code: 1787)

CONTINUING CONNECTED TRANSACTION PROCUREMENT AND SALE FRAMEWORK AGREEMENT EXCEEDING OF ANNUAL CAP FOR THE YEAR ENDED 31 DECEMBER 2020

Reference is made to the announcement of Shandong Gold Mining Co., Ltd. (the "Company") dated 16 April 2020 (the "Announcement") in relation to the entering of the New Procurement and Sale Framework Agreement, pursuant to which, our Group may from time to time purchase from and sell to SDG Group Co. and/or its associates various types of supplies, products and services in support of the Group's ordinary course of business. Unless otherwise defined, capitalized terms used herein shall denote the same meanings as those defined in the Announcement.

EXCEEDING OF 2020 ANNUAL CAP

It has come to the attention of the Company that the historical amount for the procurements of supplies, products and services by our Group for the year ended 31 December 2020 was RMB2,895.4585 million ("2020 Transaction Amount") and therefore exceeds the annual cap for procurements of supplies, products and services by our Group for the year ended 31 December 2020 (the "2020 Annual Cap") of RMB2,700 million.

The 2020 Transaction Amount has exceeded the Annual Cap due to the global outbreak of the COVID-19 pandemic for which loose monetary policies were adopted in many countries. The gold price in 2020 witnessed a significant increase, bringing an increase in price for the gold purchased by SDG Capital Management in 2020, which enlarged the scale of connected transaction.

The above-mentioned connected transactions are necessary for the Company's daily production and operation, and aimed at ensuring the sustainable development of the Company's production and operation. The selection of the connected parties is based on our understanding of their operation and management, credit facilities and contract obligation fulfillment ability as well as the convenience of their geographical location, which is conducive to the reduction of procurement and sales costs as well as the widening of financing channels. The terms of the connected transaction are fair and reasonable without jeopardizing the interests of the Company and its minority shareholders. The connected transaction will not adversely affect the Company's ongoing operation, profitability and independence, nor will it result in dependence on the connected party.

REVISED ANNUAL CAPS

As stated in the Announcement, the Annual Cap for the financial year ended 31 December 2020 was RMB2,700 million. The Annual Cap was determined by reference to the following key factors:

• 1. historical amounts of the procurement and sale of supplies, products and services between members of our Group and SDG Group Co. and/or its associates. The total historical amount of procurement of supplies, products and services for the year ended 31 December 2020 of RMB2,895.45 million which include procurement of electricity from SDG Electricity Company were paid in the sum of RMB449.32 million, procurement of construction services for our PRC gold mines were paid in the sum of RMB153.56 million, procurement of gold were paid in the sum of RMB2,205.25 million and others (including training fees, property management fees, etc.) were paid in the sum of RMB87.33 million;

• 2. due to the volatility and uncertainties of market conditions and gold prices, the maximum historical amounts of procurement and sales of gold during the Track Record Period were taken into account when we determine the relevant annual caps for 2020;

• 3. the expected increase in our demand for the relevant supplies, products and services as we expand our business;

• 4. the demand for the relevant supplies, products and services will depend on various factors including changes in the macro-economic environment and market condition;

• 5. the expected increase in the average market price of the supplies, products and services

• in the year ended 31 December 2020.

In light of the 2020 Transaction Amount, the Company proposes that the Revised 2020 Annual Cap for the financial year ended 31 December 2020 is RMB2,895.4585 million (the "Revised 2020 Annual Cap").

Accordingly, the Directors (including the independent non-executive Directors) have (i) ratified the transactions under the New Procurement and Sales Framework Agreement and approved the Revised 2020 Annual Cap for the financial year ended 31 December 2020. The New Procurement and Sales Framework Agreement was entered into on normal commercial terms and the Directors (including the independent non-executive Directors) are of the view that the Revised 2020 Annual Cap is fair and reasonable and in the interests of the shareholders of the Company as a whole.

The terms and conditions of the New Procurement and Sales Framework Agreement, as detailed in the Announcement, remain unchanged.

The Directors, Mr. Li Guohong, Mr. Wang Lijun and Ms. Wang Xiaoling, also hold senior management positions in SDG Group, are deemed to have material interests in the continuing connected transactions contemplated under the New Procurement and Sale Framework Agreement and have abstained from voting on the relevant resolution of the Board. Save for the Directors mentioned above, none of the other Directors has or is deemed to have a material interest in the above transactions.

LISTING RULES IMPLICATIONS

Any transactions between the Group and SDG Group Co., or its associates (as defined under Chapter 14A of the Listing Rules) will constitute connected transactions under Chapter 14A of the Listing Rules. As a result, the New Procurement and Sale Framework Agreement and the transactions contemplated thereunder constitute continuing connected transactions of the Company under the Listing Rules.

As the 2020 Transaction Amount exceeds the Annual Cap for the financial year ended 31 December 2020, and in light of the proposed Revised 2020 Annual Caps for the financial year ended 31 December 2020, pursuant to Rule 14A.54(1) of the Listing Rules the Company is required to re-comply with the reporting and announcement requirements under Chapter 14A of the Listing Rules.

As the percentage ratio(s) (as defined in Rule 14.07 of the Listing Rules) applicable to the Revised 2020 Annual Caps under the New Procurement and Sale Framework Agreement is more than 0.1% but less than 5%, the Revised 2020 Annual Caps are subject to the reporting and announcement requirements as set out in Rule 14A.35 of the Listing Rules but exempt from the independent shareholders' approval requirement under Rules 14A.36 to 14A.39 of the Listing Rules. The Company will disclose the relevant details in the next published annual report and accounts of the Company in accordance with the relevant requirements as set out in Rule 14A.71 of the Listing Rules.

As the Company's A Shares are listed on the Shanghai Stock Exchange, the Company will continue to be subject to and regulated by the SSE Listing Rules and other applicable laws and regulations in the PRC insofar as our A Shares remain listed. The requirements of the Hong Kong Listing Rules in relation to connected transactions are different from those of the SSE Listing Rules. In particular, the definition of connected person under the Hong Kong Listing Rules is different from the definition of related party under the SSE Listing Rules. Therefore, a connected transaction under the Hong Kong Listing Rules may or may not constitute a related party transaction under the SSE Listing Rules, and vice versa.

MEASURES ADOPTED BY THE COMPANY FOR FUTURE COMPLIANCE

The Directors consider that the failure to re-comply with the requirements under Rule 14A.54(1) of the Listing Rules on a timely basis in respect of transactions under the New Procurement and Sale Framework Agreement for the year ended 31 December 2020 was an inadvertent oversight and an isolated event. In order to avoid any similar incidents in the future, the directors and senior management of the Company will closely monitor and regularly verify the connected transactions and take timely measures to comply with the relevant disclosure obligations and obtain the approval of the independent directors in a timely manner as required by the Listing Rules. At the same time, the Company has taken necessary measures to strengthen the reporting mechanism and internal control procedures of the Company and its subsidiaries, and facilitate training for and communication among the management personnel in compliance with the requirements of the Listing Rules.

INFORMATION ABOUT THE COMPANY

The Company is an integrated gold company listed on the SSE and the Hong Kong Stock Exchange since 2003 and 2018, respectively and engaged in gold exploration, mining, processing, smelting and sales. It is one of the largest gold producers listed domestically and/ or in Hong Kong that operates in the PRC, controlling and operating more than 10 gold mines with operation primarily located in Shandong province. The Company has gradually expanded its business into the Inner Mongolia autonomous region, Gansu province, Fujian province, Xinjiang Uygur Autonomous Region and abroad, namely acquiring a 50% interest in the veladero mine in San Juan province of Argentina in June 2017 and acquiring 100% equity interest in Cardinal Resources Limited in Ghana.

INFORMATION ABOUT SDG GROUP

The Company was established by its promoters with approval from the Shandong Economic System Reform Committee (ʆ؇޲຾᏶᜗Փҷࠧ։ࡰึ) and the People's Government of Shandong Province (ʆ؇޲ɛ͏ִ݁) in January 2000. As of the date of this announcement, SDG Group Co. directly and indirectly holds approximately 45.08% of the Company's total issued share capital. As the Company's controlling Shareholder, SDG Group Co., was established in July 1996. SDG Group engages in gold mining related operations, including geological exploration and mining of gold, gold processing, gold smelting and technical services, and production and sales of specialized equipment and supplies and construction materials for gold mines. The gold resources of SDG Group are mainly located in the PRC.

By order of the Board Shandong Gold Mining Co., Ltd.

Li Guohong Chairman

Jinan, the People's Republic of China

30 March 2021

As at the date of this announcement, the executive directors of the Company are Mr. Liu Qin, Mr. Wang Shuhai and Mr. Tang Qi; the non-executive directors of the Company are Mr. Li Guohong, Mr. Wang Lijun and Ms. Wang Xiaoling; and the independent non-executive directors of the Company are Mr. Wang Yunmin, Mr. Liew Fui Kiang and Ms. Zhao Feng.