江西銅業股份有限公司 JIANGXI COPPER COMPANY LIMITED · 1/23/2009 · A letter from the Independent Board Committee is set out on page 36 of this circular. A letter from

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your licensedsecurities dealer or registered institution in securities, bank manager, solicitor, professional accountant or other professionaladviser.

If you have sold or transferred all your shares in Jiangxi Copper Company Limited, you should at once hand thiscircular and the accompanying form of proxy form and reply slip to the purchaser or the transferee or to the bank orstockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibilityfor the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim anyliability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents ofthis circular.

江西銅業股份有限公司JIANGXI COPPER COMPANY LIMITED

(a Sino-foreign joint venture joint stock limited company incorporated in the People’s Republic of China)

(Stock Code: 0358)

CONTINUING CONNECTED TRANSACTIONSAND

PROPOSED MEANS OF RECEIPT OF CORPORATE COMMUNICATIONSAND

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

Independent financial adviser to the Independent Board Committee andIndependent Shareholders

A letter from the Board is set out on pages 1 to 35 of this circular. A letter from the Independent Board Committeeis set out on page 36 of this circular.

A letter from Piper Jaffray Asia Limited, the independent financial adviser, containing its advice to the IndependentBoard Committee and the Independent Shareholders is set out on pages 37 to 67 of this circular.

Notice convening the extraordinary general meeting of the Company to be held at the Conference Room of the Company,15 Yejin Avenue, Guixi City, Jiangxi, the People’s Republic of China at 10:00 a.m. on Thursday, 12 March 2009 is setout on pages 71 to 74 of this circular.

If you intend to attend the extraordinary general meeting of the company, please complete and return the accompanyingreply slip in accordance with the instructions printed thereon as soon as possible and in any event by not later than 20February 2009.

Whether or not you are able to attend the meeting, you are requested to complete and return the enclosed form of proxy inaccordance with the instructions printed thereon as soon as possible and in any event not less than 24 hours before the timeappointed for holding of the meeting or any adjournment thereof. Completion and return of the form of proxy will not precludeyou from attending and voting in person at the meeting or any adjournment thereof should you so wish.

23 January 2009

CONTENTS

— i —

Pages

Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii

Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

II. Agreement 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

III. Agreement 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

IV. The Financial Services Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

V. Continuing Connected Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

VI. Proposed Means of Receipt of Corporate Communications . . . . . . . . . . . . . . . . . . . . . . 24

VII. Proposed Amendments to the Articles of Association . . . . . . . . . . . . . . . . . . . . . . . . . . 25

VIII. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

IX. The Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

X. The EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

XI. Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

XII. Further Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

Letter from Piper Jaffray Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

Appendix — General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

Notice of Extraordinary General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71

DEFINITIONS

— ii —

In this circular, the following expressions have the following meanings unless the context otherwise requires:

“2007 Agreements” the Consolidated Industrial Services Agreement, Consolidated

Miscellaneous Services Agreement, Consolidated Supply

Agreement, Inter-group Consolidated Supply and Industrial

Services Agreement and JCC Group Consolidated Supply and

Industrial Services Agreement dated 24 January 2007

“2007 Announcement” the announcement of the Company dated 24 January 2007

“2007 Circular” the circular of the Company dated 15 February 2007

“2008 Circular” the circular of the Company dated 4 February 2008, in respect

of, inter alia, the Acquisition

“A Shares” Renminbi-denominated domestic shares in the ordinary share

capital of the Company, with a nominal value of RMB1.00 each,

which are listed on the Shanghai Stock Exchange

“Acquisition” the acquisition of equity interests of certain companies owned by

JCC Group under the acquisition agreement dated 16 January

2008

“Agreement 1” the consolidated supply and services agreement I dated 14 January

2009 entered into between JCC and the Company for, among

others, the supply of various materials, provision of industrial

services and miscellaneous services by JCC Group to the Group

“Agreement 2” the consolidated supply and services agreement II dated 14 January

2009 entered into between JCC and the Company for, among

others, the supply of various materials and provision of industrial

services by the Company to JCC Group

“Agreements” Agreement 1 and Agreement 2 entered into between the Company

and JCC and Financial Services Agreement entered into between

JCC Financial and JCC dated 14 January 2009

“Articles of Association” the articles of association of the Company as amended from time

to time

DEFINITIONS

— iii —

“associate(s)” has the meaning ascribed to it under the Listing Rules

“Blister Copper” copper which has been cast after passing through a converter.

Blister copper is approximately 98.5% copper and take its name

from “blisters” that form on the surface

“Board” the board of Directors

“BOCGI” Bank of China Group Investment Limited, a company incorporated

in Hong Kong with limited liability. To the best of the Directors’

knowledge, information and belief, having made all reasonable

enquiry, BOCGI and its ultimate beneficial owner are third party

independent of the Company and its subsidiaries and connected

persons of the Company and its subsidiaries

“CBRC” China Banking Regulatory Commission

“Company” Jiangxi Copper Company Limited, a Sino-foreign joint venture

joint stock limited company incorporated in the PRC

“connected person(s)” has the meaning ascribed to it under the Listing Rules

“Continuing Connected those continuing connected transactions contemplated under the

Transactions” Agreements

“Copper Cathode” copper sheet which contains 99.9% and above copper produced

by either an electrolytic refining process or by electrowinning

“Copper Concentrate” a product of the concentrator usually containing 20% to 30%

copper. It is a raw material for smelting

“Copper Product Company” Jiangxi Copper Products Company Limited（江西銅業銅材有限

公司）, a company established in the PRC and a wholly owned

subsidiary of the Company

DEFINITIONS

— iv —

“Corporate Communications” any document issued or to be issued by the Company for the

information or actions of Shareholders as defined in Rule 1.01

of the Listing Rules, including but not limited to, (a) the directors’

report, its annual accounts together with a copy of the auditors’

report and, where applicable, its summary financial report; (b) the

interim report and, where applicable, its summary interim report;

(c) a notice of meeting; (d) a listing document; (e) a circular; and

(f) a proxy form

“Directors” director(s) of the Company

“EGM” an extraordinary general meeting of the Company to be held at

10:00 a.m. on 12 March 2009 to consider the ordinary resolutions

to be proposed to approve the Agreements and the Proposed Caps

and the proposed means of receipt of Corporate Communications

and the special resolution to be proposed to approve the

amendments to the Articles of Association

“Financial Services” deposit services, settlement services, credit services and other

financial services

“Financial Services Agreement” the agreement dated 14 January 2009 entered into between JCC

and JCC Financial for, among others, the provision of Financial

Services by JCC Financial to the JCC Group

“Group” the Company and its subsidiaries from time to time

“H Share(s)” overseas listed foreign shares in the ordinary share capital of the

Company, with a nominal value of RMB1.00 each, which are

listed on the Stock Exchange and traded in Hong Kong dollars

“Independent Board Committee” an independent committee of the Board established for the purpose

of reviewing the Non-Exempt Continuing Connected Transactions

contemplated under the Agreements

“Independent Shareholders” Shareholders other than JCC and its associates

“Independent Third Party(ies)” party(ies) who and whose ultimate beneficial owners are third

parties independent of the Group and connected persons (as

defined under the Listing Rules) of the Group

DEFINITIONS

— v —

“JCC” Jiangxi Copper Corporation, a substantial shareholder of the

Company holding approximately 42.41% of the total issued share

capital of the Company

“JCC Financial” JCC Finance Company Limited （江西銅業集團財務有限公司）,

a subsidiary of the Company and a limited liability company

established in the PRC on 8 December 2006

“JCC Group” JCC and its subsidiaries (other than the Group) from time to time

“Latest Practicable Date” 21 January 2009, being the latest practicable date prior to the

printing of this circular for ascertaining certain information referred

to in this circular

“Listing Rules” the Rules Governing the Listing of Securities on the Stock

Exchange

“Non-Exempt Continuing those Continuing Connected Transactions of the Company not

Connected Transactions” being exempt from independent shareholders’ approval

requirements under the Listing Rules, namely, the transactions

contemplated under the Agreement 1, the Agreement 2 and the

credit services contemplated under the Financial Services

Agreement

“PBC” the People’s Bank of China

“Percentage Ratios” the percentage ratios under Rule 14.07 of the Listing Rules, other

than the equity capital ratio and profits ratio

“Piper Jaffray Asia” Piper Jaffray Asia Limited, an independent financial adviser to

the Independent Board Committee and the Independent

Shareholders

“PRC” the People’s Republic of China

“Proposed Cap(s)” the proposed maximum annual aggregate value(s) for each type

of the Non-Exempt Continuing Connected Transactions

DEFINITIONS

— vi —

“Scrap Copper” the waste produced in the copper industry and/or industrial waste

abandoned after being used with copper content

“SFO” the Securities and Futures Ordinance, Chapter 571 of the Laws

of Hong Kong

“Shanghai Listing Rules” the rules governing the listing of securities on the Shanghai Stock

Exchange

“Share(s)” ordinary share(s) of RMB1.00 each in the share capital of the

Company

“Shareholder(s)” the holder(s) of the Shares of the Company

“Stock Exchange” The Stock Exchange of Hong Kong Limited

“Supervisors” the members of the supervisory committee of the Company

“HK$” Hong Kong dollars, the lawful currency of Hong Kong

“RMB” Renminbi, the lawful currency of the PRC

Translation of Renminbi into Hong Kong dollars is based on the exchange rate of HK$1.00 = RMB0.877.

LETTER FROM THE BOARD

— 1 —



(Stock Code: 0358)

Board of Directors Legal address:

Executive Directors: 15 Yejin Avenue

Mr. Li Yihuang (Chairman) Guixi CityMr. Li Baomin Jiangxi

Mr. Wang Chiwei The People’s Republic of China

Mr. Long ZipingMr. Wu Jinxing Place of business in Hong Kong:

Mr. Gao Jianmin Suite 4901, 49th Floor

Mr. Liang Qing Office TowerConvention Plaza

Independent non-executive Directors: 1 Harbour Road

Mr. Wu Jianchang WanchaiMr. Yin Hongshan Hong Kong

Mr. Tu Shutian

Ms. Zhang Rui

23 January 2009

To the Shareholders

Dear Sir or Madam,

CONTINUING CONNECTED TRANSACTIONSAND

PROPOSED MEANS OF RECEIPT OF CORPORATE COMMUNICATIONSAND

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

I. INTRODUCTION

Reference is made to the 2007 Circular and the 2007 Announcement in respect of the 2007 Agreements

regarding the continuing connected transactions of the Company and the 2008 Circular in respect of,

inter alia, the Acquisition. Reference is also made to the announcements of the Company in respect

of, (i) inter alia, the Continuing Connected Transactions, the proposed means of receipt of Corporate

Communications and the proposed amendments to the Articles of Association dated 14 January 2009;

and (ii) the proposed means of receipt of Corporate Communications dated 16 January 2009 respectively.


— 2 —

In view of the fact that the Company has acquired certain companies from JCC following the

completion of Acquisition, certain continuing connected transactions between the Company and JCC

have been eliminated and hence the nature and the amount of continuing connected transactions has

been altered. Despite the elimination of certain continuing connected transactions, the Company and

JCC will continue to enter into certain transactions contemplated under the 2007 Agreements and

continuing connected transactions were created as a result of the Acquisition. In order to reflect the

continuing connected transactions between JCC and the Company following the Acquisition, the

Company entered into Agreement 1 and Agreement 2 on 14 January 2009 with a view to replace the

2007 Agreements.

In addition, JCC Financial became a subsidiary of the Company following completion of the Acquisition.

The Board announces that JCC Financial proposes to enter into new continuing connected transaction

in respect of the provision of certain financial services to the JCC Group. JCC Financial and JCC

entered into the Financial Services Agreement on 14 January 2009, pursuant to which JCC Financial

has agreed to provide the Financial Services to the JCC Group subject to the terms and condition

provided therein.

The purpose of this circular is to provide you with information regarding (i) the Agreements; (ii) the

proposed means of receipt of corporate communications; and (iii) the proposed amendments to the

Articles of Association.

II. AGREEMENT 1

The Company entered into the Agreement 1 on 14 January 2009 with JCC in relation to, among others,

the supply of various materials, provision of industrial services and miscellaneous services by JCC

Group to the Group. Save for (i) the provision of labour services under the miscellaneous services;

(ii) supply of auxiliary materials, namely, pigments; and (iii) supply of spare parts namely, switchboxes,

by JCC Group, all other transactions under the Agreement 1 are existing transactions under the 2007

Agreements. JCC Group will not provide the abovementioned services nor supply the abovementioned

materials and spare parts to the Group until after obtaining the approval from the Independent

Shareholders at the EGM. Immediately after the approval by the Independent Shareholders at the EGM,

the Agreement 1 shall become effective and the 2007 Agreements shall be terminated and cease to

have any effect.


— 3 —

Date

14 January 2009

Parties

1. the Company; and

2. JCC.

Particulars of the Agreement 1

Pursuant to the Agreement 1, JCC agreed to supply various materials and provide industrial services

and miscellaneous services to the Group for a term commencing from the date of EGM up to 31

December 2011.

Supply of various materials by JCC Group

Pursuant to the Agreement 1, JCC Group will provide to the Group certain materials required for the

production of the Group. These materials will mainly include the following:

a. Copper Concentrate and gold, silver and sulfur contents contained in Copper Concentrate;

b. Scrap Copper, Blister Copper and gold and silver contents contained in Scrap Copper and Blister

Copper (including those gold and silver contents contained in Blister Copper and Scrap Copper

processed by the Company);

c. auxiliary materials such as rubber products, emulsifiers, pigments and sacks for production use

and other auxiliary materials (such as loose stones, limestone, bamboo and scrap steel) which

are required for the production of the Group’s products; and

d. spare parts and additional parts such as mining spare parts, high manganese steel casting, iron-

casting, steel-casting, cold welding components, sand pumps, switchboxes and other spare parts

and additional parts (non standard items) which are required for the production of the Group’s

products.


— 4 —

Provision of industrial services by JCC Group

Pursuant to the Agreement 1, the following services will be provided by JCC Group to the Group for

a term commencing from the date of EGM up to 31 December 2011:

a. machinery and electrical equipment repair and maintenance services; and

b. construction services.

Provision of miscellaneous services by JCC Group

Pursuant to the Agreement 1, JCC has agreed to provide the following miscellaneous services to the

Group for a term commencing from the date of EGM up to 31 December 2011:

a. futures agency services;

b. sharing of public facilities;

c. provision of social services;

d. pension scheme and union operation;

e. environmental hygiene and greenery services;

f. education services;

g. labour services; and

h. off-site communication services.

Pursuant to the Agreement 1, if applicable, terms provided by JCC in relation to the supply of various

materials and the provision of services under the Agreement 1 will be no less favourable than terms

from Independent Third Parties (as the case may be) in respect of similar materials and services. In

addition, the Company will have the option to obtain such materials and services from Independent

Third Parties if it is in the interest of the Company after comparing terms from Independent Third

Parties.

Under the terms and conditions of the Agreement 1, the obligations of the Company and JCC shall

be performed by members of the Group and the JCC Group respectively.


— 5 —


Supply of Copper Concentrate and gold, silver and sulfur contents contained in Copper Concentrate

JCC agreed to supply the Group with Copper Concentrate and gold, silver and sulfur contents contained

in Copper Concentrate at market prices offered to Independent Third Parties. In addition, JCC agreed

to grant the Group the right of first refusal to purchase the Copper Concentrate from the JCC Group

at prices no less favourable than the prices that the Group can otherwise obtain in the market. The

Group shall pay 80% of the total amount of purchase of the various materials to the JCC Group within

7 days of receipt of such materials and the remaining 20% of the total amount of the materials to the

JCC Group upon satisfactory inspection of such materials.

Supply of Scrap Copper, Blister Copper and gold and silver contents contained in Scrap Copper and

Blister Copper

JCC agreed to supply the Group with Scrap Copper and Blister Copper at prices calculated based on

the actual purchase prices of Scrap Copper and Blister Copper per tonne paid by the JCC Group to

its suppliers, who are Independent Third Parties, plus related sourcing expenses including, among

others, transportation and miscellaneous costs and prepaid interests payable by the JCC Group per

tonne for the Scrap Copper and Blister Copper.

JCC agreed to supply the Group with gold and silver contents contained in Scrap Copper and Blister

Copper and the fees payable by the Company will be based on the actual volume of gold and silver

after extraction from such Scrap Copper and Blister Copper at prices equivalent to the actual purchase

prices of such gold and silver payable by the JCC Group to its suppliers. The prices for sale of gold

and silver contents in Scrap Copper and Blister Copper will be determined by the adoption of the

methods prescribed by the PRC Government. The Group shall pay 80% of the total amount of purchase

of the various materials to the JCC Group within 7 days of receipt of such materials and the remaining

20% of the total amount of the materials to the JCC Group upon satisfactory inspection of such

materials.

Supply of auxiliary materials which are required for the production of the Group’s products

JCC agreed to supply the Group with auxiliary materials such as rubber products, emulsifiers, pigments

and sacks for production use and other auxiliary materials (such as loose stones, limestone, bamboo

and scrap steel) which are required for the production of the Group at prices calculated based on the

market prices of such products. When there are no such prices, prices are charged with reference to

prices charged by the JCC Group to its members or cost plus relevant taxes payable to the PRC

government. The prices shall be payable by the Group to the JCC Group on a monthly basis.


— 6 —

Supply of spare parts and additional parts which are required for the production of the Group’s

products

JCC agreed to supply the Group with spare parts and additional parts such as mining spare parts, high

manganese steel casting, iron-casting, steel-casting, cold welding components, sand pumps, switchboxes

and other spare parts and additional parts (non standard items), at prices calculated based on the market

prices of such products. When there are no such prices, prices are charged with reference to the prices

charged by the JCC Group to its members or cost plus relevant taxes payable to the PRC government.

The prices shall be payable by the Group to the JCC Group on a monthly basis.

Provision of industrial services

Machinery and electrical equipment repair and maintenance services

JCC agreed to provide machinery and electrical equipment repair and maintenance services to the

Group. The fees for these services will be determined with reference to the PRC Government prescribed

prices and are payable by the Group on a monthly basis. When there are no such prices or such prices

are not applicable or appropriate, prices are charged with reference to, in the following descending

order, (i) industrial pricing; (ii) the prices charged by the JCC Group to its members; and (iii) costs

plus relevant taxes payable to the PRC government.

Construction services

JCC agreed to provide construction services such as construction of factories, office buildings,

construction of waste dumps and installation of machinery and equipment to the Group. The fees for

these services are determined with reference to the PRC Government prescribed prices and shall be

payable by the Group in accordance with the progress of the constructions. When there are no such

prices or such prices are not applicable or appropriate, prices are charged with reference to, in the

following descending order, (i) market price; (ii) the prices charged by the JCC Group to its members;

and (iii) costs plus relevant taxes payable to the PRC government.

Provision of miscellaneous services

Futures agency services

JCC agreed to act as the agent of the Group for its future trading and hedging activities within the

PRC. It is required under the current rules and regulations in the PRC that only licensed representatives

are allowed to participate in the trading of futures and JCC is the licensed representative while the

Group does not possess such qualification. The Company agreed to pay the JCC Group for such agency

services at the lower of the current market rate and the rate charged by the JCC Group to its members

after the completion of each futures transaction.


— 7 —

Sharing of public facilities

JCC agreed to allow the Company to enjoy the public facilities in the residential community and the

production facilities areas. Regarding the public facilities in the residential community areas, the

Company agreed to reimburse the JCC Group on a monthly basis the actual cost for operating such

public facilities on a pro rata headcount basis. The actual cost of the public facilities includes

depreciation, maintenance, real estate tax, land tax and other related costs and expenses in the

residential community areas operated by the JCC Group. Regarding the public facilities in the

production areas, it is agreed that the Group will be responsible for the actual cost of the facilities

used by the Group for its production on a monthly basis. In respect of those common facilities in

production areas used by the Group and the JCC Group jointly, the Company has agreed to reimburse

the actual costs of the JCC Group on a pro rata basis with reference to their respective asset values

on a monthly basis.

Provision of social services

JCC agreed to provide social services to the employees of the Group such as employee welfare, medical

services, pre-school education, childcare services, catering services and coal gas supplies, at a price

equivalent to 18% of the total annual remuneration of all employees of the Group comprising (i) 17%

of the annual remuneration of all employees of the Group, which is a PRC Government prescribed

rate plus (ii) 1% of the annual remuneration of all employees of the Group which is determined based

on historical costs of catering services provided to employees of the Company at the JCC Group’s

canteens. The Group shall pay to the JCC Group the fees for the social services on a monthly basis.

Pension scheme and union operation

JCC agreed to continue to include the Group’s employees in the pension scheme administered by the

Jiangxi Provincial Government in respect of which the Company pays to JCC an annual contribution

calculated in accordance with the scale rate under the policy imposed by the PRC government and

Jiangxi provincial government. The existing rate under the policy imposed by the PRC government

and Jiangxi provincial government is 20% of the total annual employees’ remuneration of the Group.

The Group shall pay to the JCC Group the fees for the pension scheme and union operation on a

monthly basis.

Environmental hygiene and greenery services

JCC agreed to provide environmental hygiene and greenery services such as hygiene services at the

residential community area, highways and residential buildings and other public facilities and the

Company has agreed to reimburse the JCC Group on a monthly basis the actual cost for operating such

environmental hygiene and greenery services on a pro rata headcount basis.


— 8 —

Education services

JCC agreed to provide the Group’s employees the education services, such as staff education and

technical training courses, provided by the JCC Group at a fee based on the following:

a. for staff education, the JCC Group and the Group will contribute an amount equivalent to 1.5%

of the total salary of their respective employees as a funding to staff education in accordance

with the policy imposed by the PRC government. Should such amount be not sufficient to cover

the cost of such staff education, the JCC Group and the Group shall further contribute on a pro

rata headcount basis; and

b. for technical training courses, the students will be charged the costs of living and studying

materials while all other costs will be counted into the budgets for the technical training courses

previously determined for the year.

The Group shall pay to the JCC Group the fees for the educational services on a monthly basis.

Labour services

JCC agreed to provide labour services, such as loading and moving services of goods, to the Company.

The fees for these services are determined with reference to the market prices of such services and

shall be payable by the Company on a monthly basis. When there are no such prices, prices are charged

with reference to the labour market prices of such services plus actual costs of materials and relevant

taxes payable to the PRC government.

Off-site communication services

JCC agreed to provide off-site communication services, such as acting as the communication channel

with and delivery of documents and information to the relevant regulatory authorities at different

locations within the PRC, to the Company. The Company agreed to reimburse the JCC Group on a

monthly basis the actual cost such as salaries, bonuses, welfare, trainings, depreciations and other

administrative costs, for operating such services on a pro rata basis with reference to their respective

asset values.

The prices and fees payable by the Group for the purchase of the materials and receipt of services

abovementioned shall be satisfied by the internal resources of the Group.

Annual Caps

The amount of the relevant transactions under the 2007 Agreements for each of the two financial years

ended 31 December 2007 and 31 December 2008 were RMB328,597,000 and RMB738,881,000

respectively (equivalent to approximately HK$374,683,010 and HK$842,509,692 respectively).


— 9 —

The Group used to charge the JCC Group processing fee for being an agent of the JCC Group for

processing of Scrap Copper and Blister Copper supplied by the JCC Group into copper products such

as copper rod and wire and selling of such copper products on behalf of the JCC Group. In order to

rationalize the business processes of both the Group and the JCC Group, from July 2008, such

processing arrangement had been changed into a sales and purchase arrangement (the “New

Arrangement”) so that the Group would treat such same business process as purchase of Scrap Copper

and Blister Copper from the JCC Group and sale of copper products of its own.

The Proposed Caps regarding the Agreement 1 for the period from the date of EGM to 31 December

2009 and each of the two financial years ending 31 December 2010 and 31 December 2011 will not

exceed RMB2,651,942,000, RMB3,122,962,000, and RMB3,593,292,000 respectively (equivalent to

approximately HK$3,023,879,133, HK$3,560,960,091 and HK$4,097,254,276 respectively) and have

been determined with reference to (i) the amount of relevant transactions under the 2007 Agreement

for each of the two financial years ended 31 December 2007 and 31 December 2008; (ii) the expansion

of the production capacity of the Group; (iii) the expected increase in purchase of Scrap Copper and

Blister Copper from JCC Group as a result of the New Arrangement; (iv) the expected growth of the

Company from 1 January 2009 to 31 December 2011 in view of the economic growth in the PRC and

the growth in demand for copper and copper related products; (v) the possible price of copper and

copper related products in the market; (vi) the increase of salary of the staffs and employees of the

Group; and (vii) the market price of electricity, energy and their possible increases.

The Proposed Caps of the Agreement 1 will exceed 2.5% under the Percentage Ratios and therefore

is subject to the reporting, announcement and Independent Shareholders’ approval requirements under

Chapter 14A of the Listing Rules.

Reasons for and benefits of the entering into of the Agreement 1

The Copper Cathode production capacity of the Group reached approximately 700,000 tonnes in 2008

and is expected to reach approximately 800,000 tonnes, approximately 900,000 tonnes and over

900,000 tonnes in 2009, 2010 and 2011 respectively. In 2008, the Company had self-produced Copper

Concentrate of approximately 160,000 tonnes and self-produced Blister Copper of approximately

80,000 tonnes. Accordingly, the Group is required to seek other sources for the supply of raw copper

materials in a large quantity. By having sales offices and/or representative offices in various cities in

the PRC, the JCC Group has established an extensive network in sourcing and sales of copper raw

materials. By entering into the Agreement 1, the Group can rely on the extensive sales and sourcing

network of the JCC Group and in turn secure another source of supply of various materials which are

significant for the production and business operation of the Group. On the other hand, the Group would

minimize certain setup costs in increasing its network in sales and sourcing of raw copper materials.

The Group requires supporting industrial services such as repair and maintenance services and

construction services to carry out its regular operations. By appointing JCC to provide such services,

the Directors believe that it would facilitate the operation of the Group, in addition, minimize the costs

of the Group in setting up the personnel/crew to handle the repair and maintenance services and

construction services.


— 10 —

In addition, the Group requires various miscellaneous supporting services such as environmental and

greenery services and other social services for the benefit of its employees. By appointing JCC to

provide such services as set out in the Agreement 1, the Directors believe that it would facilitate the

operation of the Group, in addition, minimize the overhead costs of the Group in setting up, among

others, the team for providing the miscellaneous services.

The Directors have also confirmed that the terms of the Agreement 1 have been determined after arm’s

length negotiations between the parties thereto and will be no less favourable than the terms and

conditions the Group can otherwise obtain in the market, if applicable. The Directors are of the view

that the terms of the Agreement 1 are fair and reasonable so far as the Independent Shareholders are

concerned and that the Agreement 1 is on normal commercial terms and in the interest of the Company

and its Shareholders as a whole.

III. AGREEMENT 2

The Company entered into the Agreement 2 on 14 January 2009 with JCC in relation to, among others,

the supply of various materials and provision of industrial services by the Company to JCC Group.

Save for (i) the provision of vehicle repair services under the industrial services; (ii) the provision of

machinery and electrical equipment repair and maintenance services under the industrial services; and

(iii) the supply of materials, namely, lead concentrate, zinc concentrate and steel ball, by the Group,

all other transactions under the Agreement 2 are existing transactions under the 2007 Agreements. The

Group will not provide the abovementioned services nor supply the abovementioned materials to JCC

Group until after obtaining the approval from the Independent Shareholders at the EGM. Immediately

after the approval by the Independent Shareholders at the EGM, the Agreement 2 shall become effective

and the 2007 Agreements shall be terminated and cease to have any effect.

Date

14 January 2009

Parties

1. the Company; and

2. JCC.

Particulars of the Agreement 2

Pursuant to the Agreement 2, the Company has agreed to supply various materials and services to the

JCC Group for a term commencing from the date of EGM up to 31 December 2011.


— 11 —

Supply of materials by the Company

Pursuant to the Agreement 2, the Company will provide to the JCC Group certain materials, auxiliary

materials and spare parts required for the production of the JCC Group and industrial services. These

materials and auxiliary materials will mainly include the following:

a. Copper Cathode and copper rod and wire;

b. lead concentrate and zinc concentrate;

c. sulfuric acid and other products;

d. wastes generated from the production process of the Group such as scrap materials and slag

generated from the smelting and production process; and

e. auxiliary materials such as non-ferrous materials, chemical materials, diesel, steel, cement,

wires and cables.

Industrial Services to be provided by the Company

Pursuant to the Agreement 2, the following services will be provided by the Company to JCC Group

for a term commencing from the date of EGM up to 31 December 2011:

a. vehicle repair services;

b. machinery and electrical equipment repair and maintenance services;

c. water supply services;

d. electricity supply services; and

e. environmental hygiene and greenery services.

Pursuant to the Agreement 2, if applicable, terms regarding the supply of raw materials, auxiliary

materials and spare parts and the provision of industrial services to the JCC Group will be no more

favourable than terms to Independent Third Parties (as the case may be) in connection with similar

materials and services.

Under the terms and conditions of the Agreement 2, the obligations of the Company and JCC shall

be performed by members of the Group and the JCC Group respectively.


— 12 —


Supply of Copper Cathode and copper rod and wire

The Company has agreed to supply the JCC Group with Copper Cathode and copper rod and wire at

prices equivalent to the following:

1. for Copper Cathode, the price will be calculated as: = Q + R - S

Where:

Q = monthly average closing price of copper as quoted on the Shanghai Futures Exchange

for the month in which the orders are made;

R = premium per tonne above the standard rate for Copper Cathode, being the market rate

of premium for grade A Copper Cathode as registered under the Shanghai Futures

Exchange, of which the Copper Cathode produced by the Company is categorized;

and

S = 50% of the transportation cost for the delivery of Copper Cathode from the Company’s

production plant to the warehouse of the Shanghai Futures Exchange.

2. for copper rod and wire, the price will be calculated as: = T + U

Where:

T = monthly average closing price of copper as quoted on the Shanghai Futures Exchange

for the month in which the orders are made; and

U = processing fee payable by Independent Third Parties to the Company.

3. for lead concentrate and zinc concentrate, their prices shall be determined with reference to the

price of the Company charged to Independent Third Parties.

JCC Group shall pay 80% of the total amount of purchase of the materials to the Company within

7 days of receipt of such materials, and the remaining 20% of the total amount of the materials to

the Company upon satisfactory inspection of such materials.


— 13 —

Supply of sulfuric acid and other products, wastes generated from the production process of the

Group and auxiliary materials

The Company has agreed to supply by-products such as sulfuric acid and other products, waste products

and materials generated from the Group’s production and auxiliary materials at prices equivalent to

the following:

1. for sulfuric acid and other products, the prices will be calculated with reference to the prices

charged by the Company to Independent Third Party and shall be payable by JCC Group on

a monthly basis.

2. for wastes generated from the production process of the Group such as scrap materials and slag

generated from the smelting and production process, prices will be calculated with reference

to the prices charged by the Company on Independent Third Party and shall be payable by JCC

Group on a monthly basis. When there are no such prices, prices will be calculated based on

its costs plus relevant taxes payable to the PRC government and profit margin of the same or

similar industry as quoted by the PRC government.

3. for auxiliary materials such as non-ferrous materials, chemical materials, diesel, steel, cement,

wires and cables, the prices will be calculated with reference to the prices of the market in which

the material is being delivered and shall be payable by JCC Group on a monthly basis. When

there are no such prices, the prices will be calculated with reference to the price charged by

the Group to its members or cost plus relevant taxes payable to the PRC government.


Vehicle repair services

The Company has agreed to provide vehicle repair services to the JCC Group. The fees for these

services are determined with reference to the PRC government prescribed prices and shall be payable

by the JCC Group on a monthly basis. When there are no such prices or such prices are not applicable

or appropriate, prices are charged with reference to, in the following descending order, (i) industrial

pricing; (ii) the prices charged by the Company to its members; and (iii) costs plus relevant taxes

payable to the PRC government.


The Company agreed to provide machinery and electrical equipment repair and maintenance services

to the Group. The fees for these services will be determined with reference to the PRC Government

prescribed prices and shall be payable by the JCC Group on a monthly basis. When there are no such

prices or such prices are not applicable or appropriate, prices are charged with reference to, in the

following descending order, (i) industrial pricing; (ii) the prices charged by the Company to its

members; and (iii) costs plus relevant taxes payable to the PRC government.


— 14 —

Water supply service

The Company agreed to supply the JCC Group with water for industrial use at a fee payable on a

monthly basis calculated based on the actual costs plus relevant taxes payable to the PRC government.

Electricity supply services

The Company agreed to provide electricity transmission service to the JCC Group for industrial use

to the premises of the JCC Group at a fee payable on a monthly basis based on the actual costs plus

relevant taxes payable to the PRC government.


The Company agreed to provide environmental and hygiene services, including sweeping, cleaning and

maintenance and construction of greenery areas, to the JCC Group at a fee payable on a monthly basis

based on the actual costs (including the salary payable to cleaning workers according to the market

level and the relevant raw materials costs) and other unforeseeable expenses (including the salary raise

due to rise in price index, etc.).

Annual Caps

The amount of relevant transactions under the 2007 Agreements (which are similar to the transactions

contemplated under the Agreement 2) for each of the two financial years ended 31 December 2007

and 31 December 2008 were RMB167,783,000, and RMB143,188,000 respectively (equivalent to

approximately HK$191,314,709 and HK$163,270,239 respectively).

The Proposed Caps regarding the Agreement 2 for the period from the date of EGM to 31 December

2009 and each of the two financial years ending 31 December 2010 and 31 December 2011 will not

exceed RMB726,463,000, RMB904,819,000, and RMB1,096,005,000 respectively (equivalent to

approximately HK$828,350,057, HK$1,031,720,639 and HK$1,249,720,639 respectively) and have

been determined with reference to (i) the amount of related transactions under the 2007 Agreement

for each of the two financial years ended 31 December 2007 and 31 December 2008; (ii) the expected

increase in sale of copper rod and wire to the JCC Group as a result of the New Arrangement as

described in paragraph headed “Annual Caps” under section headed “II. The Agreement 1” above; (iii)

the expansion of the production capacity of the Group; (iv) the expected growth of the Company from

1 January 2009 to 31 December 2011 in view of the economic growth in the PRC and the growth in

demand for copper and copper related products; (v) the possible price of copper and copper related

products in the market; (vi) the market price of electricity and water and their possible increases; and

(vii) the possible increase in the supply of sulphuric acid to the JCC Group as a result of a possible

acquisition of a chemical fertilizer company by the JCC Group.


— 15 —

The Proposed Caps of the Agreement 2 will exceed 2.5% under the Percentage Ratios and therefore

is subject to the reporting, announcement and Independent Shareholders’ approval requirements under


Reasons for and benefits of the entering into of Agreement 2

By entering into of the Agreement 2, the Group will be able to generate additional income as a result

of provision of processing services and supply of certain products and wastages by the Group. The

provision of processing services and supply of certain products are in line with the principal business

activities of the Group. In addition, the Group is able to enhance the usage of wastages generated from

the production process to generate revenue for the Company and lower the costs of processing such

wastages, which complies with the environmental policies of the PRC government. In addition, such

provision of repair and maintenance services and supply of certain products and wastage has no adverse

impact on the operation of the Group. In addition, providing electricity transmission service to the JCC

Group and supplying water for industrial use to the premises of the JCC Group at cost would have

no adverse impact on the Company’s business operations and would enhance the economies of scale

of the Company.

The Directors have also confirmed that the terms of the Agreement 2 have been determined after arm’s

length negotiations between the parties thereto and will be no less favourable than the terms and

conditions the Group can otherwise obtain in the market, if applicable. The Directors are of the view

that the terms of the Agreement 2 are fair and reasonable so far as the Independent Shareholders are

concerned and that the Agreement 2 is on normal commercial terms and in the interest of the Company

and its Shareholders as a whole.

IV. THE FINANCIAL SERVICES AGREEMENT

Background Information

JCC Financial is a non-bank financial company approved by CBRC. JCC Financial was established

with a view to provide an efficient centralized financial management services for both the Group and

the JCC Group. Following completion of the Acquisition, the Company acquired 45% equity interest

of JCC Financial from JCC. JCC Financial is currently owned as to 80% by the Company and its wholly

owned subsidiary, and as to 20% by BOCGI. The operations of JCC Financial are subject to the on-

going supervision of the PBC and the CBRC.

The JCC Financial proposes to provide certain financial services to the JCC Group in order to optimize

the financial resources utilization and profitability of JCC Financial, which in turn benefit the Group

as a whole. The Financial Services Agreement was entered into in the ordinary course of business of

JCC Financial and on normal commercial terms. The Financial Services Agreement shall become

effective immediately after the approval by the Independent Shareholders at the EGM.


— 16 —

Date

14 January 2009

Parties

1. JCC Financial; and

2. JCC.

Particulars of the Financial Services Agreement

Pursuant to the Financial Services Agreement, JCC Financial agreed to provide the Financial Services

to the JCC Group for a term commencing from the date of EGM up to 31 December 2011. Such services

include:

a. cash deposit services;

b. settlement services;

c. credit services; and

d. other financial services.

Cash deposit Services

Under the Financial Services Agreement, JCC Financial has agreed to accept deposits from JCC at

interest rates with reference to the relevant rates quoted by the PBC. In the event the relevant rates

quoted by PBC are not applicable, JCC Financial shall pay interest at the rate not higher than that

quoted by other independent financial institutions (including banks and credit unions but excluding

other financial companies).

Since the deposit of cash with JCC Financial is for the benefit of the Group on normal commercial

terms or even more favourable where no security over the assets of the Group is granted, the Company

is exempt from all reporting, announcement and independent shareholders’ approval requirement under

Rule 14A.65 of the Listing Rules. In the view of the fact the provision of the cash deposit services

is exempt under Rule 14A.65(4) of the Listing Rules, the interest to be payable by JCC Financial for

the provision of cash deposit services to JCC Group will also be exempt under Rule 14A.65(4) of the

Listing Rules.


— 17 —

Settlement services

JCC Financial has agreed to provide JCC Group with settlement services approved by CBRC and PBC.

The services fees will be payable by the JCC Group on a quarterly basis and are charged with reference

to the relevant rates set by the PRC Government.

Given that JCC Financial will not itself advance any amount to settle the payable of JCC Group and

the amount involved under the settlement services will only be taken out from the cash deposited by

JCC Group to settle any amount payable to a third party by JCC Group, only the fees chargeable by

JCC Financial for provision of settlement services will be subject to the relevant requirements under


Credit Services

Pursuant to the Financial Services Agreement, JCC Financial will provide loans and financing services

to JCC Group. Interest rates for such loans set by JCC Financial will be subject to the relevant

guidelines and regulations of PBC and interest rates will be payable by the JCC Group on a monthly

or quarterly basis depending on the terms of the loan agreements to be entered into between the parties.

To comply with such guidelines and regulations, JCC Financial will set its interest rates in accordance

with standard rates promulgated by the PBC from time to time. The Directors believe that such interest

rates offered by the JCC Financial will be no more favourable to JCC Group than those provided by

other independent financial institutions or credit unions in the PRC.

Annual caps

Under the relevant PRC regulations, JCC Financial cannot provide loans to any parties outside the

Group and JCC Group, except that JCC Financial is allowed to provide funds to interbanks. The

historical maximum daily balance of outstanding loans (including interests), guarantees and discounted

notes by JCC Group with JCC Financial for each of the two years ended 31 December 2008 were

RMB1,495 million and RMB1,517 million respectively (equivalent to approximately HK$1,704,675,029

and HK$1,729,760,547 respectively).

The Proposed Cap regarding the maximum daily balance of outstanding loans (including interests),

and guarantees and discounted notes to be maintained by JCC Group with JCC Financial for the period

from the date of EGM to December 2009 and each of the two financial years ending 31 December

2010 and 31 December 2011 will not exceed RMB1,842 million, RMB3,192 million, and RMB4,542

million respectively (equivalent to approximately HK$2,100,342,075, HK$3,639,680,730 and

HK$5,179,019,384 respectively).


— 18 —

In arriving at the above annual caps, the Directors have considered the business development plan,

funding requirements and the intended source of funding of each member of the JCC Group. The

Directors are of the view that the Group has sufficient funds for provision of such loan and financing

services to the JCC Group as the proposed annual cap for 2009 is expected to be less than the amount

of deposits from members of the JCC Group and JCC is regarded as an appropriate borrower as it is

a state-owned entity. The provision of loan and financing services by JCC Financial is subject to the

requisite independent Shareholders’ approval; and the compliance with the relevant internal control

measures, procedures and guidelines of JCC Financial, details of which are set out in the section headed

“Risk control measures for all financial services under the Financial Services Agreement to JCC

Group” below.

The applicable percentage ratios of the aggregate annual caps are expected to be more than 2.5% under

the Listing Rules. The transactions in respect of credit services provided by JCC Financial to JCC

Group and the interest to be received by JCC Financial under the Financial Services Agreement

therefore constitute continuing connected transactions subject to reporting, announcement and

independent shareholders’ approval under Chapter 14A of the Listing Rules.

Other Financial Services

Pursuant to the Financial Services Agreement, JCC Financial has agreed to provide JCC Group with

other financial services which are subject to approval by CBRC from time to time, including, inter

alia, providing financial and financing consultancy services such as advising on corporate finance

matters, acquisitions and financial management systems. The fees for provision of other financial

services will be charged upon the JCC Financial has provided such services at the rate which is not

lower than that charged by other independent financial institutions in the PRC.

The applicable percentage ratios pursuant to the Listing Rules in respect of the service fees under the

settlement services and the other financial services in aggregate are expected to be less than 0.1% on

an annual basis. Therefore, the provision of such settlement services and other financial services by

JCC Financial will constitute de minimis continuing connected transactions exempt from all the

reporting, announcement and Independent Shareholders approval requirements under Rules 14A.45 to

14A.48 of the Listing Rules.


— 19 —

Risk control measures for all financial services under the Financial Services Agreement to JCC

Group

The Company and JCC Financial will adopt the following key measures to minimise the financial risks

from the provision of financial services to the JCC Group:

(i) After the completion of the Acquisition, the audit committee of the Company is in the process

of incorporating the risk management of JCC Financial in its overall risk management framework;

(ii) JCC Financial, a limited company, is a separate legal entity operating independently, has

separate account and is accountable for its own profits and losses with well-established corporate

governance mechanism and internal control system;

(iii) JCC Financial is authorised to be established by CBRC, which carries out stringent supervision

on the business of JCC Financial. JCC Financial also has to submit regulatory report to CBRC

on a monthly basis;

(iv) JCC Financial will give priority to all loans to the Group and will ensure that all the Group’s

existing financial and capital needs are met before it will make any loan to the JCC Group;

(v) JCC Financial will provide loan services, guarantees and purchase of discounted notes only to

identified companies within the JCC Group which are under sound management, with solid

financial background, good business operations and positive outlook of business development;

(vi) The Company will ensure strict adherence to comprehensive internal guidelines and procedures

in force regarding the control of financial risks;

(vii) The Company will process all applications for loan services, guarantees and purchase of

discounted notes to JCC Group with strict adherence to guidelines and procedures for loans to

JCC Group and such applications will have to be approved by credit approval committee of JCC

Financial according to type and size of credit services;

(viii) The Company will conduct risk assessments for all financial services transactions with the JCC

Group at various stages of the transactions — prior to the transactions, during the course of

the transactions and post transactions and quarterly with reviews by audit committee;

(ix) Under the guidance and supervision of CBRC, JCC Financial has established comprehensive

risk management system and internal control policies which effectively control risks associated

with loans and protect the assets of JCC Financial;


— 20 —

(x) Pursuant to Rule 8 of the “Measures for the Administration of Finance Companies of Enterprise

Groups” and Article 13 of the articles of association of JCC Financial, JCC has undertaken that

in the event of encountering emergency financial hardship by JCC Financial, JCC will increase

the capital of JCC Financial of such amount as required to resolve the financial hardship based

on the actual situation. Accordingly, JCC is deemed to have provided a blanket corporate

guarantee for all loans made to the JCC Group companies; and

(xi) The Company will ensure strict adherence to all applicable laws and regulations governing its

operations in providing financial services to the JCC Group.

The internal guidelines and procedures adopted by JCC Financial include the setting up of a risk

management committee and a credit approval committee.

The approval process of the risk management committee and the credit approval committee will not

be subject to any influence from JCC for the following reasons:

(a) Regulatory supervision — the carrying out of JCC Financial’s loan approval process and internal

controls are subject to CBRC’s review and supervision. CBRC requires JCC Financial to observe

independence when approving loans. Failure to do so is a breach of PRC rules and regulations

with severe penalties involved. Each individual involved in the loan approval process will be

held personally liable for any failure to comply strictly with the relevant rules and regulations;

(b) Independence of senior management and directors — members of the senior management of

JCC Financial are nominated by JCC Financial’s board of directors and the appointment of

senior management to JCC Financial is subject to the approval of CBRC. JCC has not exerted

and will not exert any influence or control over the appointment of the senior management and

directors of JCC Financial;

(c) Guidelines and procedures regarding loans to JCC Group which are approved and regularly

reviewed by the audit committee will be strictly followed by JCC Financial; and

(d) Operations of the risk management committee and the credit approval committee are subject

to review by audit committee.


— 21 —

Reasons for and benefits of the Financial Services Agreement

Based on the Group’s internal study on future business opportunities of financial business industry,

the Directors consider the provision of financial services by JCC Financial to JCC Group is in the

interests of the Company and its Shareholders as a whole, after taking into consideration the following

factors:

(i) Improvement of financial performance

Despite the fact that JCC financial recorded unaudited net profit as per its management account

for the year ended 31 December 2008, the Directors noticed the low return on total assets of

JCC Financial in 2008.

The Directors are of the view that JCC Financial will benefit from economies of scale and the

flexibility to better utilize a larger pool of funds as a result of the provision of financial services

to the JCC Group, which will improve JCC Financial’s financial performance and thus benefits

the Company and its shareholders as a whole.

(ii) Legislative restrictions and limitation in financial services provision

Under the relevant PRC regulations, JCC Financial can only provide financial services primarily

to those companies where JCC holds at least 20% shareholding interests or in which JCC has

control and companies within the Group, except that JCC Financial is allowed to provide funds

to interbanks.

As such, JCC Financial’s client base is restricted to two groups; namely, the Group and the JCC

Group. If JCC Financial is unable to provide financial services to the JCC Group, its client base

will be very much restricted, thereby affecting JCC Financial’s future business development and

profitability.

The Directors are of the view that it is common for group companies in the PRC to set up and

maintain a finance company to provide financial services to the group. Apart from JCC

Financial, JCC Group does not have its own finance company. This is because of the fact that

current PRC regulations governing finance companies in the PRC make it difficult for a group

of companies to have more than one finance company within the same group. In this connection,

JCC Financial will have ample opportunities to provide the various financial services JCC Group

may require from a finance company.


— 22 —

(iii) Diversification of operation risks

The Directors believe that a well-developed financial services business within the Group would

help the Group to diversify its operation risks since the provision of financial services is different

in nature from the Group’s copper businesses. In particular, (a) financial services business

normally has a different cyclical pattern compared to that of the copper sector; (b) it usually

serves the function as pooling of capital to mitigate financial risk encountered by individual

companies; and (c) by securitization of financial assets, the Group will be able to quickly convert

its financial assets such as loans receivables into liquid assets.

(iv) Broadening of client base with quality clients within the JCC Group

The Directors consider that many of the companies of the JCC Group are well-established and

well managed companies with good performance and will continue to benefit from various

government policies for state-owned enterprises. The Directors believe that providing financial

services to these selected quality companies within the JCC Group would allow the Company

to utilize its financial resources more efficiently at relatively lower credit risk.

(v) Experienced management team

JCC Financial has built up a management team with extensive professional knowledge and

experience, as well as sound management experiences with comprehensive risk control system

in financial business operations. The Directors believe that resumption of financial services to

the JCC Group will help to further strengthen the management team with even wider exposure

in financial business operations. This in turn benefits the Group in terms of lower risks and

higher returns from its financial business operations.

V. CONTINUING CONNECTED TRANSACTIONS

JCC is a substantial shareholder holding approximately 42.41% of the total issued share capital of the

Company and therefore JCC is a connected person of the Company under the Listing Rules.

The entering into of the Non-Exempt Continuing Connected Transactions contemplated under the

Agreements shall constitute continuing connected transaction of the Company and will therefore be

subject to the requirements under Chapter 14A of the Listing Rules. The Directors are of the view

that the Continuing Connected Transactions contemplated under the Agreements are entered into in

the ordinary and usual course of business of the Company and on normal commercial terms and are

fair and reasonable so far as the Shareholders are concerned.


— 23 —

As the maximum amount of the Non-Exempt Continuing Connected Transactions contemplated under

each of the Agreements will exceed 2.5% under any of the Percentage Ratios, therefore they are subject

to the reporting, announcement and Independent Shareholders’ approval requirement pursuant toChapter 14A of the Listing Rules. If during the period ending 31 December 2011, the aggregate annual

value of the Non-Exempt Continuing Connected Transactions contemplated under the Agreements

exceed the Proposed Caps or there is material change to the Agreements, the Company will takenecessary steps to ensure compliance with all applicable rules under Chapter 14A of the Listing Rules.

The transactions contemplated under the Agreement 1, Agreement 2 and the Financial ServicesAgreement involving amount exceeding the 2.5% of the Percentage Ratios will be subject to the

fulfillment of the following conditions:

(i) the obtaining of approvals from the Independent Shareholders at the EGM to approve, inter alia,

the Agreements and the transactions contemplated thereunder and the Proposed Caps for the

Agreements (as set out below), in which JCC and its associates will abstain from voting; and

(ii) the Shanghai Stock Exchange not indicating any objection to the transactions contemplated

under the Agreements.

If all the conditions for the Agreements set out above are not fulfilled by 31 March 2009, the

Agreements will lapse and all the obligations and liabilities of the parties to the Agreements will ceaseand terminate except any antecedent breach.

As disclosed above, the Company proposes to set the Proposed Caps for the transactions under theAgreements as follow:

Proposed Capsfor the periodfrom the date

of EGM to for the year ending31 December 31 December

Agreement 2009 2010 2011RMB’000 RMB’000 RMB’000

Agreement 1 2,651,942 3,122,962 3,593,292

Agreement 2 726,463 904,819 1,096,005

Credit services contemplated under theFinancial Services Agreement 1,842,000 3,192,000 4,542,000

The amount of the transactions to be received or payable by the relevant parties under each of theAgreements will not be netting off.

Before the EGM is being held, the relevant parties will continue to enter into the transactions underthe 2007 Agreements under the previous caps granted by the Independent Shareholders.


— 24 —

VI. PROPOSED MEANS OF RECEIPT OF CORPORATE COMMUNICATIONS

For the protection of environment and cost saving, the Company intends to offer its Shareholders the

choice to receive the Company’s Corporate Communications (i) by electronic means through the

Company’s website at www.jxcc.com and the Stock Exchange’s website at www.hkex.com.hk; or (ii)

in printed form, in English only, in Chinese only or in both English and Chinese.

In accordance with Rule 2.07A(2A) of the Listing Rules, to the extent that:

(1) the shareholders of the listed issuer have resolved in general meeting that the listed issuer may

send or supply corporate communications to shareholders by making them available on the listed

issuer’s own website; or

(2) the listed issuer’s constitutional documents contain provision to that effect,

a holder of the listed issuer’s securities in relation to whom the following conditions are met is taken

to have agreed that the listed issuer may send or supply corporate communications to him in that

manner, provided (i) the holder has been asked individually by the listed issuer to agree that the listed

issuer may send or supply corporate communications generally, or the corporate communication in

question, to him by means of the listed issuer’s own website; and (ii) the listed issuer has not received

a response indicating the holder’s objection within the period of 28 days beginning with the date on

which the listed issuer’s request was sent.

The Board considered that it is of the interests of the Company and the Shareholders as a whole if

the holders of H Shares are given the choice to receive Corporate Communications and the Company

could send or supply Corporate Communication to the holders of H Shares by simply making them

available on the Company’s website (www.jxcc.com) and the Stock Exchange’s website

(www.hkex.com.hk) and has therefore resolved to propose resolutions to be approved by the shareholders

of the Company at the EGM that the holders of H Shares may be given the choice to receive Corporate

Communications in which (i) the Company may send or supply Corporate Communications to the

holders of H Shares of the Company in relation to whom certain conditions are met by making them

available on the Company’s website (www.jxcc.com) and the Stock Exchange’s website

(www.hkex.com.hk) or (ii) the holders of H Shares may choose to receive Corporate Communications

in printed forms (in English only, in Chinese only or in both English and Chinese). The Directors will

also propose to make certain amendments to the Articles of Association for the purpose of effecting

the publication and provision of the Corporate Communications to the holders of H Shares of the

Company through the Company’s website or the receipt by the holders of H Shares the Corporate

Communications in printed forms (in English only, in Chinese only or in both English and Chinese)

accordingly.

In order to give effect to the proposed means of receipt of Corporate Communications immediately

after the EGM, both the above resolution and the resolution approving the proposed amendments to

the Articles of Association have to be passed at the EGM.


— 25 —

The above arrangements are only available to holders of H Shares. Holders of A Shares shall receive

Corporate Communications by way of announcement or through the Company’s website or the

Shanghai Stock Exchange’s website.

The Company will make arrangements in due course to ask the holders of H Shares individually

whether he or she agrees that the Company may send or supply Corporate Communications generally

to him or her by means of the Company’s own website and the Stock Exchange’s website. Further

announcement will be made by the Company in accordance with Rule 2.07B of the Listing Rules stating

the proposed arrangements for the proposed means of receipt of Corporate Communications.

VII. PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

For the purpose of complying with the relevant amendments of the PRC laws and regulations, the

Directors proposed to amend the Articles of Association. As advised by the PRC legal advisers to the

Company, Beijing X. H. Law Firm, the execution of each article of the amended Articles of Association

will not contravene the PRC Companies Law and the Mandatory Provisions for Companies Listing

Overseas set forth in Zheng Wei Fa (1994) No. 21 issued on 27 August 1994 by the State Council

Securities Policy Committee and the State Commission for Restructuring the Economic System. The

proposed amendments to the Articles of Association shall come into effect upon (i) the passing of a

special resolution at the EGM to approve the amendments; and (ii) obtaining the approval from the

relevant PRC authorities.

The proposed amendments to the Articles of Association primarily deal with matters relating to the

scope of business of the Company, procedures in respect of the alteration of the Company’s registered

capital, proposals and regulations on the proceedings of Shareholders’ general meetings, powers of

independent directors, profit distribution and means of corporate communication with holders of H

shares.

Details of the proposed amendments to the Articles of Association are set out as follows:

1. Article 13

The existing Article 13:

“The scope of operations of the Company include: non-ferrous metal mines, rare metals, non-

metal mines; smelting, mangle processing and further processing of non-ferrous metals and

related by-products; sulfur chemical products related to the abovementioned operations, production

and processing of permanent gas; sale and after sale services for self-produced products together

with related inquiry services and businesses; participation in overseas futures hedging business.”


— 26 —

be amended to:

“The scope of operations of the Company include: mining, milling, smelting, further processing

and related technical services of non-ferrous metals and rare metals; smelting, mangle processing

and further processing of non-ferrous metal mines, rare metals, non-metal mines, non-ferrous

metals and related by-products; sulfur chemical products and its extended products and fine

chemical products related to the abovementioned operations; beneficiation pharmacy, rubber

products; production and processing of permanent gas; sale and after sale services for self-

produced products together with related inquiry services and businesses; design and construction

of mining and metallurgical projects; blasting, geotechnical projects, surveying, tunneling

projects.; geotechnical survey and works; main contractor for construction works; construction,

erection and repair works; repair and decoration for electrical and mechanical and civil engineering

works; casting of wear-resistant alloy products; manufacturing, further processing, erection,

repair and sale of mining and smelting specialized equipment; painting, insulation and anti-

corrosion works; cleansing of industrial equipment; erection, testing and repair of boilers and

special containers; passengers and freight transportation (including transportation of dangerous

goods); freight transportation agent, warehousing; vehicles repair; non-banking financial services;

participation in overseas futures hedging business.”

2. Article 28

The second paragraph of the existing Article 28:

“The Company shall notify its creditors within ten (10) days from the date of the Company’s

resolution for reduction of its registered capital and publish a public announcement in newspapers

for at least three times within thirty (30) days from the date of such resolution. A creditor has

the right within thirty (30) days of receipt of the written notice or, in the case of a creditor who

does not receive such notice, within ninety (90) days from the date of the first public announcement,

to require the Company to repay its debts or to provide corresponding guarantee for such debt.”

be amended to:

“The Company shall notify its creditors within ten (10) days from the date of the Company’s

resolution for reduction of its registered capital and publish a public announcement in newspapers

within thirty (30) days from the date of such resolution. A creditor has the right within thirty

(30) days of receipt of the written notice or, in the case of a creditor who does not receive such

notice, within forty-five (45) days from the date of the public announcement, to require the

Company to repay its debts or to provide corresponding guarantee for such debt.”


— 27 —

3. Article 53

Two new paragraphs be added as the second and third paragraphs of the existing Article 53:

“Controlling shareholder of the Company cannot expropriate the Company’s assets. In the event

that the controlling shareholder expropriates the capital of the Company or in any other means

expropriates the Company’s assets, the board of directors of the Company shall immediately

apply for freezing the shares of the Company held by the controlling shareholder. If the

controlling shareholder cannot repay in cash the capital of the Company expropriated by him

or restore the Company’s assets in a timely manner, the Company shall apply the shares of the

Company held by the controlling shareholder to repay the portion of the Company’s assets

expropriated by him.

The directors, supervisors and senior management of the Company have legal obligations to

safeguard the capital of the Company and cannot expropriate the Company’s assets or assist

or allow the controlling shareholder and his associated companies to expropriate the Company’s

assets.”

4. Article 56

Sub-paragraph (13) of the first paragraph of the existing Article 56:

“(13) to consider the motion put forward by the shareholders together representing 5 per cent.

or more of the shares of the Company carrying voting rights;”

be amended to:

“(13) to consider the motion put forward by the shareholders together representing 3 per cent.

or more of the shares of the Company carrying voting rights;”

5. Article 57

A new sub-paragraph be added as sub-paragraph (5) of the existing Article 57 and that the

original sub-paragraph (5) of that Article be re-numbered as sub-paragraph (6):

“(5) the aggregate amount of guarantees exceeds 50% of the latest audited net assets and the

absolute amount exceeds RMB50,000,000 on an accumulative basis in 12 consecutive

months;”


— 28 —

6. Article 61


“When the Company convenes shareholders’ annual general meeting, shareholders holding over

5% (including 5%) of the total number of shares of the Company carrying voting rights, shall

have the right to propose new motions to the Company in writing. The Company shall then place

the proposed motions on the agenda of the meeting if the proposed motions fall within matters

to be discussed at the shareholders’ annual general meeting.”

be amended to:

“Shareholders, individually or collectively, holding over three percent (3%) of the total number

of shares of the Company shall have the right to propose provisional motions to the convener

in writing 10 days prior to the shareholders’ general meeting. The convener shall within two

days of receipt of the provisional motions issue supplemental notice of the meeting to disclose

the contents of the provisional motions.”

7. Article 62


“Matters not yet stated in the notice cannot be resolved at the shareholders’ general meeting.”

be amended to:

“Save as provided in Article 61 of the Articles of Association, matters not yet stated in the notice

cannot be resolved at the shareholders’ general meeting.”

8. Article 64

The first paragraph of the existing Article 64:

“Notice of shareholders’ general meeting shall be served on the shareholders (whether or not

entitled to vote at the shareholders’ general meeting) by hand or by pre-paid mail to their

addresses as shown in the register of shareholders. For the holders of domestic shares, notice

of shareholders’ general meeting may be issued by way of public notice.”


— 29 —

be amended to:

“Notice of shareholders’ general meeting shall be served on the shareholders (whether or not

entitled to vote at the shareholders’ general meeting) according to the manner as prescribed in

Article 200 of the Articles of Association. In the case of delivering by hand or by pre-paid mail,

the notice shall be delivered to the addresses of the shareholders as shown in the register of

shareholders. For the holders of domestic shares, notice of shareholders’ general meeting may

be issued by way of public notice.”

9. Article 81

The first paragraph of the existing Article 81:

“The procedures for convening an extraordinary general meeting or a class meeting by the

shareholders are as follows:

(1) Two or more shareholders holding over 10% (including 10%) of the shares of the

Company carrying voting rights to vote at the meeting may execute one or several written

request with the same form and content to ask the board of directors of the Company

to convene an extraordinary general meeting or a class meeting and state the objects of

the meeting. The board of directors of the Company shall convene the extraordinary

general meeting or the class meeting as soon as possible upon receipt of the above written

request. The number of shares held by the shareholders as mentioned above shall be

determined as at the date of written request.

(2) If the board of directors of the Company does not issue the notice of meeting within 30

days from the date of receipt of the said written request, the shareholders who make such

request may themselves convene a meeting to be held within 4 months from the date of

receipt of the written request by the board of directors. The procedures for convening

meeting by those shareholders shall be same as those by directors, as nearly as possible.”


— 30 —

be amended to:

“The procedures for convening an extraordinary general meeting or a class meeting by the

shareholders are as follows:

(1) One or several shareholders holding over 10% (including 10%) of the shares of the

Company carrying voting rights to vote at the meeting over ninety (90) consecutive days

may execute one or several written request with the same form and content to ask the

board of directors of the Company to convene an extraordinary general meeting or a class

meeting and state the objects of the meeting. The board of directors shall give written

opinions of agreeing or disagreeing to hold the meeting within ten (10) days upon receipt

of the written request. The board of directors if agreeing to convene the meeting shall

give the notice of meeting within five (5) days after the resolution. Consent from the

relevant shareholders must be obtained for any amendment to the original proposal in

the notice.

(2) One or several shareholders holding over 10% of the shares of the Company are entitled

to submit a written request to the board of supervisors of convening an extraordinary

general meeting or a class meeting in the event that the board of directors disagrees to

convene a meeting or does not give written opinions within ten (10) days upon receipt

of the request. The board of supervisors shall give the notice of meeting within five (5)

days upon receipt of the request in case of agreeing to convene the meeting. Consent from

the relevant shareholders shall be obtained for any amendment to the original proposal

in the notice.

(3) The board of supervisors shall be deemed not to convene and preside over the meeting

in case of not giving the notice of meeting within the stipulated period, and one or several

shareholders holding over 10% of the shares of the Company over ninety (90) consecutive

days may convene the meeting within 4 months from the date of receipt of the written

request by the board of directors. The procedures for convening meeting by those

shareholders shall be same as those by directors, as nearly as possible.”

10. Article 112


“The independent directors shall seek the consent of more than half of the independent directors

in exercising their authorities under sections (2), (3), (4), (6) and (7) and shall seek the

unanimous approval of all the independent directors in exercising their authorities under section

(5).”


— 31 —

be amended to:

“The independent directors shall seek the consent of more than half of the independent directors

in exercising their authorities under sections (2) to (7).”

11. Article 154


“The Company shall send to the holders of overseas foreign listed shares a copy of the

abovementioned report not less than 21 days before the date of the shareholder’s annual general

meeting by pre-paid mail to their addresses as shown in the register of shareholders.”

be amended to:

“The Company shall provide the holders of overseas foreign listed shares with a copy of the

abovementioned report not less than 21 days before the date of the shareholder’s annual general

meeting in the manner as prescribed in Article 200 of the Articles of Association.”

12. Article 164

A new paragraph be added as the second paragraph of the existing Article 164:

“The profit distribution policy of the Company shall be maintained with certain continuity and

stability and in accordance with the relevant governing regulations as amended from time to

time.”

13. Article 177

The third paragraph of the existing Article 177:

“The Company shall within 14 days of receipt of the abovementioned written notice send a copy

of such notice to the relevant supervisory institutions. In the event that the notice contains the

statement as referred to in sub-paragraph (2) of the above paragraph, the Company shall also

place a copy of the said notice in the Company for Shareholders’ perusal, and send to the holders

of overseas foreign listed shares a copy of such notice by pre-paid mail to their addresses as

shown in the register of shareholders.”


— 32 —

be amended to:

“The Company shall within 14 days of receipt of the abovementioned written notice send a copy

of such notice to the relevant supervisory institutions. In the event that the notice contains the

statement as referred to in sub-paragraph (2) of the above paragraph, the Company shall also

place a copy of the said notice in the Company for Shareholders’ perusal, and provide the holders

of overseas foreign listed shares with a copy of such notice in the manner as prescribed in Article

200 of the Articles of Association.”

14. Article 184


“The contents of the resolutions about amalgamation and demerger of the Company shall be

compiled as a special document for shareholders’ perusal. Such document shall also be sent to

the holders of overseas foreign listed shares by mail.”

be amended to:

“The contents of the resolutions about amalgamation and demerger of the Company shall be

compiled as a special document for shareholders’ perusal. Such document shall also be provided

to the holders of overseas foreign listed shares in the manner as prescribed in Article 200 of

the Articles of Association.”

15. Article 200


“Save as otherwise provided in the Articles of Association, notice, information or written

statement from the Company shall be served on holders of overseas foreign listed shares by hand

or by pre-paid mail to each of their registered addresses.”

be amended to:

“The notification, communication or other written materials of the Company can be issued in

the following manner:

(1) by hand;

(2) by mail;

(3) by fax or electronic mail;


— 33 —

(4) by posting on the website of the Company and/or the specified website of the stock

exchange on which the shares of the Company are listed to the extent as permitted under

applicable laws, administrative regulations and the listing rules of the stock exchange on

which the shares of the Company are listed;

(5) by public announcements in newspapers and/or other specified mass media;

(6) by other means as accepted by the stock exchange on which the shares of the Company

are listed.

Holders of overseas foreign listed shares may by notice in writing request the Company to

provide notification, information or written statement in printed form or using electronic means

to obtain those corporate communications. If the holders of overseas foreign listed shares request

to obtain the corporate communications of the Company in printed form, they should also state

if they wish to receive the Chinese version, English version or both Chinese and English versions

of the printed copies. The Company shall according to the written request send the relevant

printed copies to the shareholders’ registered addresses by delivering in person or by pre-paid

mail. Holders of overseas foreign listed shares may also by reasonable notice in writing served

on the Company to change their choice as to the manner of receiving the abovementioned

corporate communications and as to the language version of the printed copies according to

appropriate procedures.

At the same time, the Company is also entitled to issue written notice to request holders of

overseas foreign listed shares to confirm to receive notification, corporate communications or

other written materials of the Company in printed form or by electronic means. If the Company

does not receive any written confirmation from the holders of overseas foreign listed shares on

or before the deadline set by the relevant laws, administrative regulations and the relevant listing

rules of the stock exchange on which the shares of the Company are listed, the holders of

overseas foreign listed shares shall be deemed to consent the Company to issue or provide the

Company’s corporate communications to them by its prescribed manner (includes but not

limited to publication on the website of the Company by electronic means) according to the

Articles of Association, relevant laws, administrative regulations and the relevant listing rules

of the stock exchange on which the shares of the Company are listed.”

The proposed amendments to the Articles of Association are prepared in Chinese language and the

English version is therefore a translation only. Should there be any inconsistencies, the Chinese version

shall prevail.


— 34 —

VIII. GENERAL

The Company is a Sino-foreign joint venture joint stock limited company incorporated in the PRC on

24 January 1997. The Company’s main scope of operations include: non-ferrous metal mines, rare

metals, non-metal mines; smelting, rolling processing and further processing of non-ferrous metals and

related by-products; sale and after sale services for self-produced products, future business outside the

PRC together with related consulting services and business. The principal product of the Company

is Copper Cathode.

JCC is an integrated enterprise in non-ferrous metals industry in the PRC and is under the supervision

of the State-owned Assets Supervision and Administration Commission of Jiangxi Province. The

principal business of JCC covers copper mining, milling, smelting and processing operations. It is the

largest copper production base and the important sulphur, gold and sliver producer in the PRC. JCC

also engages in the business of supply of copper raw materials, including Scrap Copper, Blister Copper

and Copper Concentrate, which are the principal raw materials for the production of Copper Cathode.




of the JCC Financial from JCC. The JCC Financial is owned as to 80% by the Company and its wholly

owned subsidiary, the Copper Product Company, and as to 20% by BOCGI. The operations of JCC

Financial are subject to the on-going supervision of the PBC and the CBRC.

IX. THE INDEPENDENT BOARD COMMITTEE

The Independent Board Committee comprising the independent non-executive Directors has been

formed for advising the Independent Shareholders on the terms and conditions of the Agreements and

the Proposed Caps.

Piper Jaffray Asia has been appointed as independent financial adviser to the Independent Board

Committee and the Independent Shareholders on the same. The letter is set out in the section headed

“Letter from Piper Jaffray Asia” of this circular.

X. THE EGM

As at the Latest Practicable Date, JCC was interested in 42.41% of the total issued share capital of

the Company and is therefore a connected person of the Company. In view of the interest of the JCC

and its associates in the transactions contemplated under the Agreements, JCC and its associates will

abstain from voting at the EGM on the resolutions in respect of the Agreements and the Proposed Caps.

The votes to be taken at the EGM will be taken by poll, the results of which will be announced after

the EGM.


— 35 —

A notice convening the EGM to be held at the Conference Room of the Company, 15 Yejin Avenue,

Guixi City, Jiangxi, the PRC at 10:00 a.m. on Thursday, 12 March 2009 is set out on pages 71 to 74

of this circular.

Shareholders of the Company whose name appeared on the register of members of the Company on

10 February 2009 are entitled to attend and vote at the EGM. The register of members of the Company

will be closed from 10 February 2009 to 12 March 2009, both days inclusive, during such period no

share transfer will be registered.

If you intend to attend the EGM, please complete and return the accompanying reply slip in accordance

with the instructions printed thereon as soon as possible and in any event by not later than 20 February

2009.

Whether or not you are able to attend the meeting, you are requested to complete and return the

accompanying form of proxy in accordance with the instructions printed thereon to the Company’s

H Share Registrars, Hong Kong Registrars Limited, at Rooms 1806-1807, 18th Floor, Hopewell Centre,

183 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not less than 24

hours before the time appointed for holding of the meeting or any adjournment thereof. Completion

and return of the form of proxy will not preclude you from attending and voting in person at the meeting

or any adjournment thereof should you so wish.

XI. RECOMMENDATION

Your attention is drawn to the letter from the Independent Board Committee set out on page 36 which

contains its recommendation to the Independent Shareholders on the terms of the Agreements and the

Proposed Caps, and the letter of advice from Piper Jaffray Asia, the text of which is set out on pages

37 to 67 of this circular containing its advice to the Independent Board Committee and the Independent

Shareholders. The Independent Shareholders are advised to read the aforesaid letters before deciding

as to how to vote on the ordinary resolutions approving the Agreements and the Proposed Caps.

XII. FURTHER INFORMATION

Your attention is drawn to the further information set out in the appendix to this circular.

Yours faithfully,

By Order of the Board

Li Yihuang

Chairman

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

— 36 —



(Stock Code: 0358)

Legal address:15 Yejin AvenueGuixi CityJiangxiThe People’s Republic of China

23 January 2009

To the Independent Shareholders

Dear Sir or Madam,

CONTINUING CONNECTED TRANSACTIONS

We have been appointed as members of the Independent Board Committee to advise the Independent

Shareholders in respect of the Agreements with the Proposed Caps, details of which are set out in the letter

from the Board in the circular dated 23 January 2009 (the “Circular”) to the Shareholders, in which this letter

forms part. Terms defined in the Circular shall have the same meanings when used in this letter unless the

context otherwise requires.

Having taken into account terms of the Agreements and the advice and recommendation of Piper Jaffray Asia,

we consider that the terms of the Agreements with the Proposed Caps are fair and reasonable so far as the

interests of the Independent Shareholders are concerned and the Agreements are conducted in the interests

of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders

to vote in favour of the ordinary resolutions which will be proposed at the EGM to approve the Agreements

with the Proposed Caps.

Yours faithfully,

Wu Jianchang Yin Hongshan

Tu Shutian Zhang Rui

Independent Board Committee

LETTER FROM PIPER JAFFRAY ASIA

— 37 —

The following is the letter of advice from Piper Jaffray Asia Limited to the Independent Board Committee

and the Independent Shareholders prepared for the purpose of inclusion in this circular:

3902B, 39th Floor, Tower 1

Lippo Centre

89 Queensway

Hong Kong

23 January 2009

The Independent Board Committee and the Independent Shareholders

Dear Sirs,

CONTINUING CONNECTED TRANSACTIONS

INTRODUCTION

We refer to our appointment to advise the Independent Board Committee and the Independent Shareholders

in respect of the terms of the Non-Exempt Continuing Connected Transactions and the Proposed Caps. Details

of the terms of the Non-Exempt Continuing Connected Transactions and the Proposed Caps are set out in

the circular dated 23 January 2009 issued by the Company (the “Circular”) to the Shareholders, of which

this letter forms part. This letter contains our advice to the Independent Board Committee and the Independent

Shareholders as to whether the terms of the Non-Exempt Continuing Connected Transactions and the

Proposed Caps are fair and reasonable and in the interest of the Company and the Shareholders as a whole.

Unless the context requires otherwise, capitalized terms used in this letter shall have the same meanings as

those defined in the Circular.

In formulating our opinions and recommendations, we have relied on the statements, information, opinions,

and representations contained or referred to in the Circular, which have been provided to us by the Directors.

We have assumed that all statements, information, opinions and representations contained or referred to in

the Circular were true, complete and accurate in all aspects at the time they were made and given and continue

to be true in all respects as at the despatch date of the Circular. We have also assumed that all statements

of belief, opinion, assumptions and intention made by the Directors in the Circular were reasonably made

after due and careful enquiry and were based on honestly-held opinions. We have no reason to doubt the truth,

accuracy and completeness of the information and representations provided to us by the Directors and we

have been advised by the Directors that no material fact has been omitted from the information and

representations provided and referred to in the Circular.


— 38 —

We consider that we have been provided with sufficient information to enable us to reach an independent

view to justify our reliance on the accuracy of the information and representations contained in the Circular

and to provide a reasonable basis for our recommendations. We have no reason to suspect that any relevant

information has been withheld, nor are we aware of any facts or circumstances which would render the

information provided and the representations made to us to be untrue, inaccurate, or misleading. In addition,

we have taken all reasonable steps as required under Rule 13.80 of the Listing Rules to satisfy ourselves that

there is a reasonable basis for our advice as stated herein. We have not, however, carried out any independent

verification of the information provided to us by the Directors, nor have we conducted any independent

investigation into any related transactions referred to in the Circular, or into the businesses, affairs and

prospects of the Group.

We are a licensed securities dealer and corporate finance adviser under the Securities and Futures Ordinance

(Chapter 571 of the Laws of Hong Kong) and together with our affiliates provide a full range of financial

advisory and broking services, which, in the course of normal trading activities, we and our affiliates may

from time to time effect transactions and hold securities, including derivative securities, of the Company for

our own account or the accounts of our customers.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion regarding the terms of the Non-Exempt Continuing Connected Transactions and

the Proposed Caps, we have considered the following principal factors and reasons:

1. Background of the Continuing Connected Transactions

Reference is made to the 2007 Circular and the 2007 Announcement in respect of the 2007 Agreements

regarding the continuing connected transactions of the Company and the 2008 Circular in respect of,

inter alia, the Acquisition.

In view of the fact that the Company has acquired certain companies from JCC following the

completion of the Acquisition, certain continuing connected transactions between the Company and

JCC have been eliminated and hence the nature and the amount of continuing connected transactions

has been altered. Despite the elimination of certain continuing connected transactions, the Company

and JCC will continue to enter into certain transactions contemplated under the 2007 Agreements and

new continuing connected transactions were created as a result of the Acquisition. In order to reflect

the continuing connected transactions between JCC and the Company following the Acquisition, the

Company entered into Agreement 1 and Agreement 2 on 14 January 2009 with a view to replace the

2007 Agreements.

In addition, JCC Financial became a subsidiary of the Company following completion of the Acquisition.

The Board announces that JCC Financial proposes to enter into continuing connected transactions in

respect of the provision of certain financial services to the JCC Group.


— 39 —




of JCC Financial from JCC and therefore JCC Financial became a subsidiary of the Company. JCC

Financial is currently owned as to 80% by the Company and its wholly owned subsidiary, Jiangxi

Copper Product Company Limited, and as to 20% by BOCGI. The operations of JCC Financial are

subject to the on-going supervision of the PBC and the CBRC. JCC Financial and JCC entered into

the Financial Services Agreement on 14 January 2009, pursuant to which JCC Financial has agreed

to provide the Financial Services to the JCC Group subject to the terms and condition provided therein.

Under the terms of the Agreements, the obligations of the Company and JCC shall be performed by

members of the Group and the JCC Group respectively.

JCC is a substantial shareholder of the Company holding about 42.41% of the total issued share capital

of the Company and therefore is a connected person of the Company under the Listing Rules.

As advised by the Directors, as the Continuing Connected Transactions are carried out in the ordinary

and usual course of business of the Group and the Agreements were determined after arm’s length

negotiations between the parties thereto, the Directors believe that the entering into of the Agreements

is in the interest of the Company and the Shareholders as a whole.

The entering into of each of the Agreements constitutes continuing connected transactions of the

Company and therefore is subject to the requirements under Chapter 14A of the Listing Rules. As the

Proposed Caps of each of the Agreements will exceed 2.5% under the relevant Percentage Ratios, the

Non-Exempt Continuing Connected Transactions are subject to the reporting, announcement and

Independent Shareholders’ approval requirements pursuant to Chapter 14A of the Listing Rules.

The Company will convene the EGM for the purpose of approving, among others, the Agreements,

the Proposed Caps and the Non-Exempt Continuing Connected Transactions contemplated thereunder

by the Independent Shareholders. The Independent Board Committee has been established to consider

the terms of the Non-Exempt Continuing Connected Transactions and the Proposed Caps and to advise

the Independent Shareholders how to vote. In this connection, we have been appointed by the Company

to advise the Independent Board Committee and the Independent Shareholders as to whether the terms

of the Non-Exempt Continuing Connected Transactions and the Proposed Caps are in the ordinary and

usual course of business, on normal commercial terms, fair and reasonable and in the interest of the

Company and the Shareholders as a whole.


— 40 —

2. The Agreement 1

A. Particulars of the Agreement 1


Supply of Copper Concentrate and gold, silver and sulfur contents contained in Copper

Concentrate

JCC agreed to supply the Group with Copper Concentrate and gold, silver and sulfur contents

contained in Copper Concentrate at market prices offered to Independent Third Parties. In

addition, JCC agreed to grant the Group the right of first refusal to purchase the Copper

Concentrate from the JCC Group at prices no less favourable than the prices that the Group

can otherwise obtain in the market. The Group shall pay 80% of the total amount of purchase

of the various materials to the JCC Group within 7 days of receipt of such materials and the

remaining 20% of the total amount of the materials to the JCC Group upon satisfactory

inspection of such materials.

Supply of Scrap Copper, Blister Copper and gold and silver contents contained in Scrap

Copper and Blister Copper

JCC agreed to supply the Group with Scrap Copper and Blister Copper at prices calculated based

on the actual purchase prices of Scrap Copper and Blister Copper per tonne paid by the JCC

Group to its suppliers, who are Independent Third Parties, plus related sourcing expenses

including, among others, transportation and miscellaneous costs and prepaid interests payable

by the JCC Group per tonne for the Scrap Copper and Blister Copper.

JCC agreed to supply the Group with gold and silver contents contained in Scrap Copper and

Blister Copper and the fees payable by the Company will be based on the actual volume of gold

and silver after extraction from such Scrap Copper and Blister Copper at prices equivalent to

the actual purchase prices of such gold and silver payable by the JCC Group to its suppliers.

The prices for sale of gold and silver contents in Scrap Copper and Blister Copper will be

determined by the adoption of the methods prescribed by the PRC government. The Group shall

pay 80% of the total amount of purchase of the various materials to the JCC Group within 7

days of receipt of such materials and the remaining 20% of the total amount of the materials

to the JCC Group upon satisfactory inspection of such materials.


— 41 —

Supply of auxiliary materials which are required for the production of the Group’s products

JCC agreed to supply the Group with auxiliary materials such as rubber products, emulsifiers,

pigments and sacks for production use and other auxiliary materials (such as loose stones,

limestone, bamboo and scrap steel) which are required for the production of the Group at prices

calculated based on the market prices of such products. When there are no such prices, prices

are charged with reference to prices charged by the JCC Group to its members or cost plus

relevant taxes payable to the PRC government. The prices shall be payable by the Group to the

JCC Group monthly.

Supply of spare parts and additional parts which are required for the production of the

Group’s products

JCC agreed to supply the Group with spare parts and additional parts such as mining spare parts,

high manganese steel casting, iron-casting, steel-casting, cold welding components, sand pumps,

switchboxes and other spare parts and additional parts (non standard items), at prices calculated

based on the market prices of such products. When there are no such prices, prices are charged

with reference to the prices charged by the JCC Group to its members or cost plus relevant taxes

payable to the PRC government. The prices shall be payable by the Group to the JCC Group

monthly.

Provision of industrial services


JCC agreed to provide machinery and electrical equipment repair and maintenance services to

the Group. The fees for these services will be payable by the Group on a monthly basis,

determined with reference to the PRC government prescribed prices. When there are no such

prices or such prices are not applicable or appropriate, prices are charged with reference to, in

the following descending order, (i) industrial pricing; (ii) the prices charged by the JCC Group

to its members; and (iii) costs plus relevant taxes payable to the PRC government.

Construction services

JCC agreed to provide construction services such as construction of factories, office buildings,

construction of waste dumps and installation of machinery and equipment to the Group. The

fees for these services shall be payable by the Group in accordance with the progress of the

constructions, and are determined with reference to the PRC government prescribed prices.

When there are no such prices or such prices are not applicable or appropriate, prices are charged

with reference to, in the following descending order, (i) market price; (ii) the prices charged

by the JCC Group to its members; and (iii) costs plus relevant taxes payable to the PRC

government.


— 42 —

Provision of miscellaneous services

Futures agency services

JCC agreed to act as the agent of the Group for its future trading and hedging activities within

the PRC. It is required under the current rules and regulations in the PRC that only licensed

representatives are allowed to participate in the trading of futures and JCC is the licensed

representative while the Group does not possess such qualification. The Company agreed to pay

the JCC Group for such agency services at the lower of the current market rate and the rate

charged by the JCC Group to its members after the completion of each futures transaction.

Sharing of public facilities

JCC agreed to allow the Company to enjoy the public facilities in the residential community

and the production facilities areas. Regarding the public facilities in the residential community

areas, the Company agreed to reimburse the JCC Group on a monthly basis the actual cost for

operating such public facilities on a pro rata headcount basis. The actual cost of the public

facilities includes depreciation, maintenance, real estate tax, land tax and other related costs and

expenses in the residential community areas operated by the JCC Group. Regarding the public

facilities in the production areas, it is agreed that the Group will be responsible for the actual

cost of the facilities used by the Group for its production on a monthly basis. In respect of those

common facilities in production areas used by the Group and the JCC Group jointly, the

Company has agreed to reimburse the actual costs of the JCC Group on a pro rata basis with

reference to their respective asset values on a monthly basis.

Provision of social services

JCC agreed to provide social services to the employees of the Group such as employee welfare,

medical services, pre-school education, childcare services, catering services and coal gas supplies,

at a price equivalent to 18% of the total annual remuneration of all employees of the Group

comprising (i) 17% of the annual remuneration of all employees of the Group, which is a PRC

government prescribed rate plus (ii) 1% of the annual remuneration of all employees of the

Group which is determined based on historical costs of catering services provided to employees

of the Company at the JCC Group’s canteens. The Group shall pay to the JCC Group the fees

for the social services on a monthly basis.


— 43 —

Pension scheme and union operation

JCC agreed to continue to include the Group’s employees in the pension scheme administered

by the Jiangxi provincial government in respect of which the Company pays to JCC an annual

contribution calculated in accordance with the scale rate under the policy imposed by the PRC

government and Jiangxi provincial government. The existing rate under the policy imposed by

the PRC government and Jiangxi provincial government is 20% of the total annual employees’

remuneration of the Group. The Group shall pay to the JCC Group the fees for the pension

scheme and union operation on a monthly basis.


JCC agreed to provide environmental hygiene and greenery services such as hygiene services

at the residential community area, highways and residential buildings and other public facilities

and the Company has agreed to reimburse the JCC Group on a monthly basis the actual cost

for operating such environmental hygiene and greenery services on a pro rata headcount basis.

Education services

JCC agreed to provide the Group’s employees the education services, such as staff education

and technical training courses, provided by the JCC Group at a fee based on the following:

a. for staff education, the JCC Group and the Group will contribute an amount equivalent

to 1.5% of the total salary of their respective employees as a funding to staff education

in accordance with the policy imposed by the PRC government. Should such amount be

not sufficient to cover the cost of such staff education, the JCC Group and the Group

shall further contribute on a pro rata headcount basis; and

b. for technical training courses, the students will be charged the costs of living and studying

materials while all other costs will be counted into the budgets for the technical courses

previously determined for the year.

The Group shall pay to the JCC Group the fees for the educational services on a monthly basis.

Labour services

JCC agreed to provide labour services, such as loading and moving services of goods, to the

Company. The fees for these services shall be payable by the Company on a monthly basis,

determined with reference to the market prices of such services. When there are no such prices,

prices are charged with reference to the labour market prices of such services plus actual costs

of materials and relevant taxes payable to the PRC government.


— 44 —

Off-site communication services

JCC agreed to provide off-site communication services, such as acting as the communication

channel with and delivery of documents and information to the relevant regulatory authorities

at different locations within the PRC, to the Company. The Company agreed to reimburse the

JCC Group on a monthly basis the actual cost such as salaries, bonuses, welfare, trainings,

depreciations and other administrative costs, for operating such services on a pro rata basis with

reference to their respective asset values.

The prices and fees payable by the Group for the purchase of the materials and receipt of services

abovementioned shall be satisfied by the internal resources of the Group.

B. Reasons for the transactions under the Agreement 1

The Group generally produces Copper Cathode (the main product of the Group) with, among

others:

1. Copper Concentrate;

2. Scrap Copper and Blister Copper; and

3. copper anode, which is usually further processed from copper anode board and black

anode board.

As stated in the Letter, the production volume of the Group reached about 700,000 tonnes of

Copper Cathode in 2008, and such production volume is expected to reach approximately

800,000 tonnes, approximately 900,000 tonnes and over 900,000 tonnes in 2009, 2010 and 2011

respectively. In 2008, the Company had self-produced Copper Concentrate of approximately

160,000 tonnes and self-produced Blister Copper of approximately 80,000 tonnes. As advised

by the Directors, the Group relied on raw materials from other parties, apart from fully utilized

its own self-produced raw materials, in order to maximize its utilization of its production

capacity.

In view of the limited quantity of self-produced raw materials and the expanded production

capacity for the production of Copper Cathode, the Group is required to source raw materials,

namely Copper Concentrate, Scrap Copper, Blister Copper from other suppliers for production

of Copper Cathode in order to utilize the expanded production capacity and to increase the sales

volume and strengthen the market position of the Group. During the production process, the

Group requires auxiliary materials, spare parts and additional parts also to facilitate its operation,

and by purchasing such materials and parts from the nearby JCC Group, the Group could

minimize the relevant transportation costs for transporting such materials and parts.


— 45 —

By entering into the Agreement 1, the Group will have an additional supplier of materials such

as Copper Concentrate, Scrap Copper, Blister Copper, auxiliary materials, spare parts and

additional parts (the “Production Materials”) to facilitate its production and operation. In

addition, by entering into the Agreement 1, the Group will be given priority regarding the

purchase of the Production Materials from the JCC Group which the Directors consider to be

beneficial to the Group as it will enable the Group to secure a stable supply of the Production

Materials of significant amount and therefore can ensure that the production of the Group will

not be easily interrupted by unstable supply of the Production Materials. Moreover, as one of

the major players in the copper industry in the PRC with an extensive sourcing network

including sales offices and/or representative offices in various cities in the PRC, the JCC Group

can supply various kinds of materials in a rather large quantity to the Group. Accordingly, the

Group can source the Production Materials required in significant amount and therefore may

enjoy a reasonable bulk purchase discount by purchase through the JCC Group’s sourcing

channel and can minimize its sourcing costs such as transportation costs and administration costs

which the Group otherwise has to bear if sourcing such Production Materials from different and

smaller suppliers in smaller quantity. On the other hand, the Group would minimize certain setup

costs and human resources in developing its network and sourcing of raw copper materials.

Due to the close proximity between the relevant production premises of the Group and the JCC

Group, the Directors consider that the Group can obtain the Production Materials from the JCC

Group in a more responsive, cost effective and yet time efficient manner and therefore better

complement the production needs of the Group. In addition, considering the long working

relationship between the Group and the JCC Group, the Directors are confident that the JCC

Group can provide the Production Materials to the Group in a stable and quality manner.

For the supply of gold, silver, copper and sulfur contents, if applicable, contained in Copper

Concentrate, Scrap Copper, Blister Copper (the “Contents”) supplied by the JCC Group, as

gold, silver, copper and sulfur contents are being processed and extracted during the production

process, the Directors advised that it is fair and reasonable for the Group to purchase the

Contents which the processed and extracted products can then be sold in the market and generate

income for the Group

The Group requires various services as set out in the Agreement 1 to facilitate its core business

operation of the Group. The industrial services and miscellaneous services are not directly

related to the core business of the Group, but are essential to the Group for performing its core

business. By recruiting the industrial services and miscellaneous services from JCC, the Group

can focus on its core business operation while ensuring the industrial services and miscellaneous

services are carrying out smoothly to facilitate the core business operation of the Group. In

addition, it can minimize the overhead costs of the Group for setting up teams to provide such

services.


— 46 —

We were informed by the Directors that many of the miscellaneous services such as futures

agency services, sharing of public facilities, education services and off-site communication

services under the Agreement 1 are not readily available for the Group and can only be recruited

from the JCC Group, otherwise the Group would have to set up its own facilities and/or teams

for the provision of such services. In addition, due to the close proximity between the facilities

of the Group and the JCC Group, the Directors consider that the Group can obtain more

responsive, cost effective and yet time efficient services from the JCC Group when compared

with that from other service providers.

For the provision of administrative services on the pension scheme, as it is not directly related

to the core operation of the Group but is required by the PRC government, the Directors consider

the Group can reduce its administrative work by recruiting the JCC Group to handle such

administrative work.

In view of the reasons above, we are of the view that the entering into of the Agreement 1 with

the JCC Group is fair and reasonable and in the interest of the Company and the Shareholders

as a whole.

C. Pricing for the transactions under the Agreement 1

The table below sets out the pricing basis for the transactions conducted under the

Agreement 1:

Transaction Pricing basis

Supply of Copper Concentrate Market rate offered to Independent Third

Parties.

Supply of Scrap Copper and Actual purchase prices paid by the JCC Group

Blister Copper plus related sourcing expenses.

Supply of gold and silver contents Actual volume of gold and silver after

contained in the Copper extraction at prices equivalent to the actual

Concentrate, Scrap Copper purchase prices payable by the JCC Group to

and Blister Copper its suppliers. The price will be determined

by the adoption of the methods prescribed by

the PRC government.


— 47 —

Supply of auxiliary materials Market prices, and when there are no such

prices, prices are charged with reference to

prices charged by the JCC Group to its

members or costs plus relevant taxes payable

to the PRC government.

Supply of spare parts and Market prices, and when there are no such

additional parts prices or such prices are not applicable or

appropriate, prices are charged with reference

to prices charged by the JCC Group to its

members or costs plus relevant taxes payable

to the PRC government.

Machinery and electrical equipment The fees for these services will be determined

repair and maintenance services with reference to the PRC government

prescribed prices. When there are no such

prices or such prices are not applicable or


to, in the following descending order, (i)

industrial pricing; (ii) the prices charged by

the JCC Group to its members; and (iii) costs

plus relevant taxes payable to the PRC

government.

Construction services The fees for these services are determined

with reference to the PRC government

prescribed prices. When there are no such

prices or such prices are not applicable or


to, in the following descending order, (i)

market price; (ii) the prices charged by the

JCC Group to its members; and (iii) costs


government.

Futures agency services Lower of market rate and the rate charged by

the JCC Group to its members.


— 48 —

Sharing of public facilities in The Company agreed to reimburse the JCC

the residential community Group monthly the actual cost for operating

such public facilities on a pro rata headcount

basis. The actual cost of the public facilities

includes depreciation, maintenance, real

estate tax, land tax and other related costs

and expenses in the residential community

areas operated by the JCC Group.

Sharing of public facilities in Actual cost of the facilities used by the Group

the production facilities for its production. In respect of those common

facilities in production areas used by the

Group and the JCC Group jointly, the

Company has agreed to reimburse the actual

costs of the JCC Group on a pro rata basis

with reference to their respective asset values.

Social services 18% of the total annual remuneration of all

employees of the Group which include 1%

of the total annual remuneration of all

employees of the Group determined based

on historical costs of the provision of catering

services charged on top of the PRC

government prescribed rate (17%).

Pension scheme and union operation The PRC government prescribed rate.

Environmental hygiene Actual cost to the JCC Group for the provision

and greenery services of such environmental hygiene and greenery

services on a pro rata headcount basis.

Education services for the staff education Amount equivalent to 1.5% of the total salary

of their respective employees in accordance

with the policy imposed by the PRC

government. Should such amount be not

sufficient to cover the cost of such staff

education, the JCC Group and the Group

shall further contribute on a pro rata

headcount basis.


— 49 —

Education services for technical courses The students will be charged the costs of

living and studying materials while all other

costs will be counted into the budgets for the

technical courses previously determined for

the year.

Labour services The fees for these services are determined

with reference to the market prices of such

services. When there are no such prices,

prices are charged with reference to the labour

market prices of such services plus material

costs actually incurred and relevant taxes


Off-site communication services The Company agreed to reimburse the JCC

Group monthly the actual cost such as

salaries, bonuses, welfare, trainings,

depreciations and other administrative costs,

for operating such services on a pro rata

basis with reference to their respective asset

values.

Pursuant to the Agreement 1, if applicable, terms provided by JCC in relation to the supply of

the Production Materials and the Contents will be no less favorable than terms from Independent

Third Parties. Besides, the Company will have the option to obtain the Production Materials

and the Contents from Independent Third Parties.

We have reviewed samples of the above transactions in terms of the bases of pricing mechanisms

and the settlement terms and noted that they were reasonable and in line with the pricing

mechanisms as mentioned therein Agreement 1 and they were no less favorable than terms from

Independent Third Parties.

In view of the reasons above and taking into account that the fees for the Agreement 1 were

determined with reference to (i) the PRC government prescribed rate; (ii) market price; (iii)

prices to and from Independent Third Parties; (iv) prices quoted on Shanghai exchanges; (v)

industrial pricing; (vi) historical prices; (vii) prices charged by the JCC Group to its members;

(viii) costs plus relevant taxes; or (ix) a combination of certain pricing bases as mentioned above,

we consider the pricing bases of the Agreement 1 are fair and reasonable.


— 50 —

D. Basis of the Proposed Cap

As stated in the Letter, the amounts of the relevant transactions under the 2007 Agreements as

stated in the 2007 Circular for the two financial years ended 31 December 2007 and 31

December 2008 and the Proposed Caps for the Agreement 1 from the date of EGM up to 31

December 2009 and the two financial years ending 31 December 2010 and 31 December 2011

are as follows:

The transacted amounts The Proposed Caps

From

For the For the the date of

year ended year ended EGM up to For the year ending

31/12/2007 31/12/2008 31/12/2009 31/12/2010 31/12/2011

RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

328,597 738,881 2,651,942 3,122,962 3,593,292

As stated in the Letter, the Group used to charge the JCC Group processing fee for being an

agent of the JCC Group for processing of Scrap Copper and Blister Copper supplied by the JCC

Group into copper products such as copper rod and wire and selling of such copper products

on behalf of the JCC Group. In order to rationalize the business processes of both the Group

and the JCC Group, from July 2008, such processing arrangement had been changed into a sales

and purchase arrangement (the “New Arrangement”) so that the Group would treat such same

business process as purchase of Scrap Copper and Blister Copper from the JCC Group and sale

of copper products of its own.

As advised by the Directors, the Proposed Caps for the Agreement 1 were determined with

reference to (i) the amount of relevant transactions under the 2007 Agreement for each of the

two financial years ended 31 December 2007 and 31 December 2008; (ii) the expansion of the

production capacity of the Group; (iii) the expected increase in purchase of Scrap Copper and

Blister Copper from JCC Group as a result of the New Arrangement; (iv) the expected growth

of the Company from 1 January 2009 to 31 December 2011 in view of the steady economic

growth in the PRC and the expected growth in long term demand for copper and copper related

products; (v) the possible price of copper and copper related products in the market; (vi) the

increase of salary of the staffs and employees of the Group; and (vii) the possible increase in

the market prices of electricity and energy.

We noted that the expected increase in the purchase of Scrap Copper and Blister Copper as a

result of the New Arrangement represents a substantial portion of the Proposed Cap under the

Agreement 1.


— 51 —

In addition, according to the annual report of the Company for the year ended 31 December

2007 (the “2007 Annual Report”), the turnover of the Group increased at a compounded annual

growth rate (“CAGR”) of about 65.07% over the five years ended 31 December 2007. The

turnovers of the Group for such aforementioned periods are as follows:

Turnover of the Group

For the year ended 31 December

2003 2004 2005 2006 2007


5,560,547 10,829,832 13,428,684 24,582,665 41,280,618

YoY growth 95% 24% 83% 68%

Further, the production volume of Copper Cathode, which accounted for nearly 44% of the

revenue of the Group for the year ended 31 December 2007, of the Group is expected to increase

from about 700,000 tonnes in 2008 to approximately 800,000 and approximately 900,000 tonnes

in 2009 and 2010 respectively, which represents an average annual growth rate of about 13%.

According to interim report of the Company for six months ended 30 June 2008 and as advised

by the Directors, under the influence of the United States mortgage crisis, the global financial

crisis and other factors, the global economy spiraled into a downturn which affected copper

consumption. However, following the gradual downgrade of copper mines, with the production

of newly acquired mines falling behind schedule and consecutive strikes, the supply of Copper

Concentrates became tight and gave rise to a high copper price. The Directors expect that

although the global economic growth may not resume within a short period of time which

suppress the demand for copper, the economic growth in the PRC will remain steady and healthy

and in view of the shortage of Copper Concentrates supply around the world, copper price will

remain at a high level. The Group will capture such opportunity to advance its further development

and is expected to continue its growth in future. The Directors expect that the steady and healthy

growth of the PRC will lead to more business opportunities to the Group.

Although the miscellaneous services are not directly a part of the core business operation of

the Group, they are essential to the Group for performing its core business operation. As the

industrial services provided under the Agreement 1 are auxiliary services to the production of

the Group, and therefore the amount to be transacted under such services (i.e. the Proposed

Caps) will increase alongside with the increase in the production volume of the Group. In view

of the expected increase of the production volume of the Group, the Directors confirmed that

the expected growth of the production volume of the Group is in line with the increase in the

Proposed Caps of the miscellaneous services and industrial services under the Agreement 1.

We have reviewed the Company’s projection and the assumptions in respect of purchase of

various types of products and services under Agreement 1. Based on the above, we consider

that the Proposed Caps for the Agreement 1 are fair and reasonable and in the interest of the

Company and the Shareholders as a whole.


— 52 —

3. The Agreement 2

A. Particulars of the Agreement 2


Supply of Copper Cathode and copper rod and wire

The Company has agreed to supply the JCC Group with Copper Cathode and copper rod and

wire at prices equivalent to the following:

1. for Copper Cathode, the price will be calculated as: = Q + R - S

Where:

Q = monthly average closing price of copper as quoted on the Shanghai Futures

Exchange for the month in which the orders are made;

R = premium per tonne above the standard rate for Copper Cathode, being the

market rate of premium for A grade Copper Cathode as registered under

the Shanghai Futures Exchange, of which the Copper Cathode produced by

the Company is categorized; and

S = 50% of the transportation cost for the delivery of Copper Cathode from the

Company’s production plant to the warehouse of the Shanghai Futures

Exchange.

2. for copper rod and wire, the price will be calculated as: = T + U

Where:

T = monthly average closing price of copper as quoted on the Shanghai Futures

Exchange for the month in which the orders are made; and

U = processing fee payable by Independent Third Parties to the Company.

3. for lead concentrate and zinc concentrate, their prices shall be determined with reference

to the price of the Company charged to Independent Third Parties.

JCC Group shall pay 80% of the total amount of purchase of the materials to the Company within

7 days of receipt of such materials, and the remaining 20% of the total amount of the materials

to the Company upon satisfactory inspection of such materials.


— 53 —

Supply of sulfuric acid and other products, wastes generated from the production process of

the Group and auxiliary materials

The Company has agreed to supply by-products such as sulfuric acid and other products, waste

products and materials generated from the Group’s production and auxiliary materials at prices

equivalent to the following:

1. for sulfuric acid and other products, the prices will be calculated with reference to the

prices charged by the Company to Independent Third Party and shall be payable by JCC

Group on a monthly basis.

2. for wastes generated from the production process of the Group such as scrap materials

and slag generated from the smelting and production process, prices will be calculated

with reference to the prices charged by the Company on Independent Third Party and

shall be payable by JCC Group on a monthly basis. When there are no such prices, prices

will be calculated based on its costs plus relevant taxes payable to the PRC government

and profit margin of the same or similar industry as quoted by the PRC government.

3. for auxiliary materials such as non-ferrous materials, chemical materials, diesel, steel,

cement, wires and cables, the prices will be calculated with reference to the prices of

the market in which the material is being delivered and shall be payable by JCC Group

on a monthly basis. When there are no such prices, the prices will be calculated with

reference to the price charged by the Group to its members or cost plus relevant taxes



Vehicle repair services

The Company has agreed to provide vehicle repair services to the JCC Group. The fees for these

services shall be payable by the JCC Group on a monthly basis and are determined with

reference to the PRC government prescribed prices. When there are no such prices or such prices

are not applicable or appropriate, prices are charged with reference to, in the following descending

order, (i) industrial pricing; (ii) the prices charged by the Company to its members; and (iii)

costs plus relevant taxes payable to the PRC government.


— 54 —


The Company agreed to provide machinery and electrical equipment repair and maintenance

services to the Group. The fees for these services shall be payable by the JCC Group on a

monthly basis and will be determined with reference to the PRC government prescribed prices.

When there are no such prices or such prices are not applicable or appropriate, prices are charged

with reference to, in the following descending order, (i) industrial pricing; (ii) the prices charged

by the Company to its members; and (iii) costs plus relevant taxes payable to the PRC

government.

Water supply service

The Company agreed to supply the JCC Group with water for industrial use at a fee payable

on a monthly basis calculated based on the actual costs plus relevant taxes payable to the PRC

government.

Electricity supply services

The Company agreed to provide electricity transmission service to the JCC Group for industrial

use to the premises of the JCC Group at a fee payable on a monthly basis based on the actual

costs plus relevant taxes payable to the PRC government.


The Company agreed to provide environmental and hygiene services, including sweeping,

cleaning and maintenance and construction of greenery areas, to the JCC Group at a fee payable

on a monthly basis based on the actual costs (including the salary payable to cleaning workers

according to the market level and the relevant raw materials costs) and other unforeseeable

expenses (including the salary raise due to rise in price index, etc.).


— 55 —

B. Reasons for the transactions under the Agreement 2

Copper Cathode is one of the principal products of the Group, and therefore it is within the

ordinary course of business of the Group to supply Copper Cathode, copper rod and wire and

Copper Cathode related products and to provide processing services for Blister Copper and

Scrap Copper into Copper Cathode to the JCC Group. Accordingly, the Directors consider that

the supply of Copper Cathode and copper rod and wire and the provision of processing services

for Blister Copper and Scrap Copper into Copper Cathode is in the interests of the Group.

Sulfuric acid, other by-products and other wastes are generated from the production process of

the Group. As advised by the Directors, such products have pollution effect on the environment

and require additional processing before they can be disposed. However, by selling such

products to the JCC Group, the Group not only can minimize the relevant processing costs, but

also can generate additional income for the Group at the same time.

Both the Group and the JCC Group requires auxiliary materials and spare parts for their

respective production process. By purchasing in bulk by the Group and then supplying such

materials to the JCC Group, the Group can lower the average purchasing costs as bulk purchase

discounts may then be achieved by combining the purchases of both the Group and the JCC

Group and therefore consider to be beneficial to the Group.

In relation to the provision of vehicle repair services, machinery and electrical equipment repair

and maintenance services, water and electricity supply services, and environmental and hygiene

services to the JCC Group, as the Group has excess capacity to provide such services to the

JCC Group, therefore by providing such services to the JCC Group, the Group can better utilize

the capacity of the facilities and thereby achieve economies of scale while generating additional

income. Accordingly, the provision of electricity, water and steam supply services to the JCC

Group is beneficial to the overall operation of the Group and nonetheless, such provision of

such services to the JCC Group will have no adverse impact on the business operation of the

Group.

In view of the reasons above, we are of the view that the entering into of the Agreement 2 with

the JCC Group is in the interest of the Company and the Shareholders as a whole.


— 56 —

C. Pricing for the transactions under the Agreement 2

The table below sets out the pricing basis for the transactions conducted under the

Agreement 2:

Transaction Pricing basis

Supply of Copper Cathode Monthly average closing price of Copper

Cathode quoted on the Shanghai Futures

Exchange for the month in which the orders

are made plus premium above the standard

rate of Copper Cathode minus half of the

transportation costs for the delivery of Copper

Cathode to the warehouse of the Shanghai

Futures Exchange.

Supply of copper rod and wire Monthly average closing price of copper

quoted on the Shanghai Futures Exchange

for the month in which the orders are made

plus processing fees payable by Independent

Third Parties to the Company.

Supply of lead concentrate Pr ices charged by the Company to

and zinc concentrate Independent Third Party.

Supply of sulfuric acid Pr ices charged by the Company to

and other products Independent Third Party.

Wastes generated from Prices charged by the Group to Independent

the production process Third Parties. When there are no such prices,

prices will be calculated based on its costs


government and profit margin of the same or

similar industry as quoted by the PRC

government.


— 57 —

Supply of auxiliary materials Prices will be calculated with reference to

the prices of the market in which the material

is being delivered. When there are no such

prices, the prices will be calculated with

reference to the price charged by the Group

to its members or cost plus relevant taxes


Provision of vehicle repair services Fees will be determined with reference to the

PRC government prescribed prices. When

there are no such prices or such prices are

not applicable or appropriate, prices are

charged with reference to, in the following

descending order, (i) industrial pricing; (ii)

the prices charged by the Company to its

members; and (iii) costs plus relevant taxes


Provision of machinery and Fees will be determined with reference to the

electrical equipment repair PRC government prescribed prices. When

and maintenance services there are no such prices or such prices are

not applicable or appropriate, prices are

charged with reference to, in the following

descending order, (i) industrial pricing; (ii)

the prices charged by the Company to its

members; and (iii) costs plus relevant taxes


Provision of water services Fees based on the actual costs plus relevant


Provision of electricity supply services Fees based on the actual costs plus relevant


Provision of environmental Fees based on the actual costs (including the

and hygiene services salary payable to cleaning workers according

to the market level and the relevant raw

materials costs) and other unforeseeable

expenses (including the salary raise due to

rise in price index, etc.).


— 58 —

We have reviewed samples of the historical transactions of the Group in terms of the bases of

pricing mechanisms and the settlement terms for the services provided under the Agreement

2 and noted that they were reasonable and in line with the pricing mechanisms as mentioned

therein the Agreement 2 and they were no less favorable than terms to Independent Third Parties.

In view of the reasons above and taking into account that the fees for the Agreement 2 were

determined with reference to (i) the PRC government prescribed rate; (ii) market price; (iii)

prices to Independent Third Parties; (iv) prices quoted on Shanghai exchanges; (v) industrial

pricing; (vi) historical prices; (vii) prices charged by the Company to its members; (viii) costs

plus relevant taxes; or (ix) a combination of certain pricing bases as mentioned above, we

consider the pricing bases of the Agreement 2 are fair and reasonable.

D. Basis of the Proposed Cap

As stated in the Letter, the amounts of relevant transactions under the 2007 Agreement as stated

in the 2007 Circular for the two financial years ended 31 December 2007 and 31 December

2008 and the Proposed Caps for the Agreement 2 from the date of EGM up to 31 December

2009 and the two financial years ending 31 December 2010 and 31 December 2011 are as

follows:


From the

For the For the date of For the

year ended year ended EGM up to year ending

31/12/2007 31/12/2008 31/12/2009 31/12/2010 31/12/2011


167,783 143,188 726,463 904,819 1,096,005

As advised by the Directors, the Proposed Caps for the Agreement 2 were determined with

reference to (i) the amount of related transactions under the 2007 Agreement for each of the

two financial years ended 31 December 2007 and 31 December 2008; (ii) the expected increase

in sale of copper rod and wire to the JCC Group as a result of the New Arrangement as described

in sub-section headed “D. Basis of the Proposed Cap” under section headed “2. The Agreement

1” above; (iii) the expansion of the production capacity of the Group; (iv) the expected growth

of the Company from 1 January 2009 to 31 December 2011 in view of the economic growth

in the PRC and the growth in long term demand for copper and copper related products; (v)

the possible price of copper and copper related products in the market; (vi) the market price

of electricity and water and their possible increases; and (vii) the possible increase in the supply

of sulphuric acid to the JCC Group as a result of a possible acquisition of a chemical fertilizer

company by the JCC Group.

.


— 59 —

As mentioned above, the turnovers of the Group increased at a CAGR of about 65.07% over

the five years ended 31 December 2007. In addition, the annual production volume of Copper

Cathode of the Group is expected to increase from approximately 800,000 tonnes in 2009 to

approximately 900,000 and over 900,000 tonnes in 2010 and 2011 respectively, which represents

an average annual growth rate of about 13%. The Directors expect that the steady and healthy

growth of the PRC and the growing world economy will lead to more business opportunities

to the Group.

We noted that the yearly average monthly closing price of copper spot as quoted on the Shanghai

Futures Exchange was about RMB55,289 per tonne in 2008. Solely based on the transacted

amount under the 2007 Agreements as stated in the 2007 Circular for the financial year ended

31 December 2008 and taking into account the expected increase in the production volume and

the yearly average monthly closing price of copper spot, the transacted amount of the Agreement

2 for the year ending 31 December 2009 would have represented a substantial portion of the

Proposed Cap under the Agreement 2 for the year ending 31 December 2009. In addition, the

possible increase in the supply of sulphuric acid to the JCC Group as a result of a possible

acquisition of a chemical fertilizer company by the JCC Group also represents a significant

portion of the Proposed Cap under the Agreement 2. We have reviewed internal document and

discussed with the JCC Group and we understand that the proposed acquisition has been agreed

in principle by the Stated-owned Assets Supervision and Administration Commission of Jiangxi

Province in 2008 and it is the intention of the JCC Group to complete the proposed acquisition

in 2009. The Group has been supplying sulphuric acid to such chemical fertilizer company in

the past and is expected to continue supplying sulphuric acid to such company after acquisition.

The Directors also advised that the Proposed Caps for the industrial services under Agreement

2 were determined with reference to the increased prices for labour and energy services from

2006 to 2008 and expected that these prices will continue to increase during the three years

ending 31 December 2011.

We have reviewed the Company’s projection and the assumptions in respect of supply of various

types of products and services under Agreement 2. Based on the above, we consider that the

Proposed Caps for the Agreement 2 are fair and reasonable and in the interest of the Company

and the Shareholders as a whole.


— 60 —

4. The Financial Services Agreement

A. Particulars of the Financial Services Agreement

Cash deposit Services

Under the Financial Services Agreement, JCC Financial has agreed to accept deposits from JCC

at interest rates with reference to the relevant rates quoted by the PBC. In the event the relevant

rates quoted by the PBC are not applicable, JCC Financial shall pay interest at the rate not higher

than that quoted by other independent financial institutions (including banks and credit unions

but excluding other financial companies).

Since the deposit of cash with JCC Financial is for the benefit of the Group on normal

commercial terms or even more favourable where no security over the assets of the Group is

granted, the Company is exempt from all reporting, announcement and independent shareholders’

approval requirement under Rule 14A.65 of the Listing Rules. In the view of the fact the

provision of the cash deposit services is exempt under Rule 14A.65(4) of the Listing Rules, the

interest to be payable by JCC Financial for the provision of cash deposit services to JCC Group

will also be exempt under Rule 14A.65(4) of the Listing Rules.

Settlement and other financial services

JCC Financial has agreed to provide JCC Group with settlement services approved by CBRC

and PBC and other financial services which are subject to approval by CBRC from time to time.

The applicable percentage ratios pursuant to the Listing Rules in respect of the service fees under

the settlement services and the other financial services in aggregate is expected to be less than

0.1% on an annual basis. Therefore, the provision of such settlement services and other financial

services by JCC Financial will constitute de minimis continuing connected transactions exempt

from all the reporting, announcement and Independent Shareholders approval requirements

under Rules 14A.45 to 14A.48 of the Listing Rules.

Credit Services

Pursuant to the Financial Services Agreement, JCC Financial will provide loans and financing

services to JCC Group. Interest rates for such loans set by JCC Financial will be subject to the

relevant guidelines and regulations of PBC and interest rates will be payable by the JCC Group

on a monthly or quarterly basis depending on the terms of the loan agreements to be entered

into between the parties. To comply with such guidelines and regulations, JCC Financial will

set its interest rates in accordance with standard rates promulgated by the PBC from time to

time. The Directors believe that such interest rates offered by the JCC Financial will be no more

favourable to JCC Group than those provided by other independent financial institutions or

credit unions in the PRC.


— 61 —

B. Reasons for the credit services under the Financial Services Agreement

(i) Source and broadening of customer base and business

According to the China Enterprise Finance Company Year Book (2008 edition) “中國

企業集團財務公司年鑒（2008年卷）” (the “Year Book”) applicable to the year 2007,

JCC Financial recorded fund centralization ratio of 80% and ranked 18 among the 72

finance companies nationwide in terms of fund centralization ratio.

The Directors noted the low efficiency in the utilization of funds by JCC Financial.

According to the Year Book, the return on total assets ratio and return on net assets ratio

of the top twenty finance companies of the PRC ranged from 4.10% to 13.60% and from

25.80% to 115.24% respectively for the year ended 31 December 2007. The return on

total assets ratio and return on net assets ratio of JCC Financial was 2.61% and 9.71%

respectively for the same period, which were significantly lower than the respective ratios

of the top twenty finance companies.

In addition, JCC has a capital adequacy ratio of approximately 27% for the year ended

31 December 2007, according to the Year Book, which is much higher than the minimum

capital adequacy ratio of 10% imposed by PBC. The lower level of return on total assets

and return on net assets and higher level of capital adequacy ratio indicate a low level

of utilization of financial resources of JCC Financial.

The Directors are of the view that JCC Financial will increase the level of utilization of

funds through provision of credit services to the JCC Group. The Directors expect that

JCC Financial will improve its financial performance due to economies of scale as a result

of the expected increase in amount of deposits from the JCC Group and the increase in

utilization of funds as a result of the provision of credit services to the JCC Group, which

will benefit the Company and its shareholders as a whole. In addition, provision of credit

services to companies within the JCC Group would broaden customer base of JCC

Financial and allow the Company to utilize its resources more efficiently. On the basis

of low level of utilization of funds of JCC Financial and that information in respect of

background and creditworthiness of the members of the JCC Group is more readily

available to JCC Financial than other parties, we are of the view that the provision of

credit services to JCC Group would allow JCC Financial to better utilize its resources

and generate income to the Group.


— 62 —

(ii) Legislative restrictions and limitation

Under the relevant PRC regulations, JCC Financial can only provide financial services

primarily to those companies where JCC holds at least 20% shareholding interests or in

which JCC has control and companies within the Group, except that JCC Financial is

allowed to provide funds to interbanks.

As such, JCC Financial’s client base is restricted to two groups; namely, the Group and

the JCC Group. If JCC Financial is unable to provide credit services to the JCC Group

companies, its client base will be very much restricted, thereby affecting JCC Financial’s

future business development and profitability.

We note that it is common for group companies in the PRC to set up and maintain a

finance company to provide financial services, including credit services, to the group.

Apart from JCC Financial, JCC Group does not have its own finance company as the

current PRC regulations make it difficult for a group of companies to have more than

one finance company within the same group. In this connection, the Financial Services

Agreement provide a new source of business for JCC Financial to provide credit services

JCC Group may require from a finance company.

In view of the above-mentioned legislative restrictions and the constraints, we consider

that the provision of credit services by JCC Financial to JCC Group is in the interest of

the Company and its Shareholders as a whole.

C. Pricing for credit services under the Financial Services Agreement

As mentioned in paragraph headed “Credit Services” under the section headed “Particulars of

the Financial Services Agreement”, interest rates for loans set by JCC Financial will be subject

to the relevant guidelines and regulations of PBC. To comply with such guidelines and regulations,

JCC Financial will set its interest rates in accordance with standard rates promulgated by the

PBC from time to time. The current interest rates offered by JCC Financial ranged from 5.04%

to 5.76% per annum depending on the amount and term of loan, are equivalent to the rates set

by PBC and are in line with the market rates. The Directors believe that such interest rates

offered by the JCC Financial will be no more favourable to JCC Group than those provided

by other independent financial institutions or credit unions in the PRC.

We have reviewed the Financial Services Agreement and contracts with commercial banks

regarding the provision of credit services by JCC Financial and such services offered by

commercial banks in the market. We note that the rates charged are in line with the market rates

and they were no more favourable to the JCC Group than those provided by other independent

commercial banks in the PRC.


— 63 —

We have also checked with PBC’s web site in relation to the relevant lending rates and discussed

with the Company about the pricing basis. The lending rates quoted on the PBC’s web site are

as follows:

Item Interest rate per annum

(%)

Within six months 4.86

Six months to one year 5.31

One year to three years 5.40

Three years to five years 5.76

More than five years 5.94

Source: http://www.pbc.gov.cn as at 23 December 2008

We noted that the pricing basis is in line with PBC rates and market practices and we are satisfied

that the pricing basis is fair and reasonable and on normal commercial terms.

Risk control measures for all financial services, including credit services, under the Financial

Services Agreement to JCC Group

As disclosed in the “Letter from the Board”, the Company and JCC Financial will adopt the

following key measures to minimise the financial risks from the provision of financial services,

including credit services, to the JCC Group:

(i) After the completion of the Acquisition, the audit committee of the Company is in the

process of incorporating the risk management of JCC Financial in its overall risk

management framework;

(ii) JCC Financial, a limited company, is a separate legal entity operating independently, has

separate account and is accountable for its own profits and losses with well-established

corporate governance mechanism and internal control system;

(iii) JCC Financial is authorised to be established by CBRC, which carries out stringent

supervision on JCC Financial. It also has to submit regulatory report to CBRC on a

monthly basis;

(iv) JCC Financial will give priority to all loans to the Group and will ensure that all the

Group’s existing financial and capital needs are met before it will make any loan to the

JCC Group;


— 64 —

(v) JCC Financial will provide loan services, guarantees and purchase of discounted notes

only to identified companies within the JCC Group which are under sound management,

with solid financial background, good business operations and positive outlook of business

development;

(vi) The Company will ensure strict adherence to comprehensive internal guidelines and

procedures in force regarding the control of financial risks;

(vii) The Company will process all applications for loan and financing services to JCC Group

with strict adherence to guidelines and procedures for loans to JCC Group and such

applications will have to be approved by credit approval committee of JCC Financial

according to type and size of credit services;

(viii) The Company will conduct risk assessments for all financial services transactions with

the JCC Group at various stages of the transactions — prior to the transactions, during

the course of the transactions and post transactions and quarterly with reviews by audit

committee;

(ix) Under the guidance and supervision of CBRC, JCC Financial has established comprehensive

risk management system and internal control policies which effectively control risks

associated with loans and protect the assets of JCC Financial;

(x) Pursuant to Rule 8 of the “Measures for the Administration of Finance Companies of

Enterprise Groups” and Article 13 of the articles of association of JCC Financial, JCC

has undertaken that in the event of encountering emergency financial hardship by JCC

Financial, JCC will increase the capital of JCC Financial of such amount as required to

resolve the financial hardship based on the actual situation. Accordingly, JCC is deemed

to have provided a blanket corporate guarantee for all loans made to the JCC Group

companies; and

(xi) The Company will ensure strict adherence to all applicable laws and regulations governing

its operations in providing financial services to the JCC Group.

The internal guidelines and procedures adopted by JCC Financial include the setting up of a

risk management committee and a credit approval committee.


— 65 —

As disclosed in the “Letter from the Board”, the approval process of the risk management

committee and the credit approval committee will not be subject to any influence from JCC for

the following reasons:

(i) Regulatory supervision — the carrying out of JCC Financial’s loan approval process and

internal controls are subject to CBRC’s review and supervision. CBRC requires JCC

Financial to observe independence when approving loans. Failure to do so is a breach

of PRC rules and regulations with severe penalties involved. Each individual involved

in the loan approval process will be held personally liable for any failure to comply

strictly with the relevant rules and regulations;

(ii) Independence of senior management and directors — members of the senior management

of JCC Financial are nominated by JCC Financial’s board of directors and the appointment

of senior management to JCC Financial is subject to the approval of CBRC. JCC has not

exerted and will not exert any influence or control over the appointment of the senior

management and directors of JCC Financial;

(iii) Guidelines and procedures regarding loans to JCC Group which are approved and

regularly reviewed by the audit committee will be strictly followed by JCC Financial;

and

(iv) Operations of the risk management committee and the credit approval committee are

subject to review by audit committee.

We have discussed with the Directors the rationale and procedures of relevant key internal

control measures, procedures and measures in minimizing the financial risks from the provision

of financial services, including credit services, by JCC Financial. We noted that internal control

measures and procedures in minimising risks adopted by the JCC Financial are in line with

guidelines and procedures promulgated by the CBRC. Taking into account the factors discussed

above, we consider that there will be proper mechanism in place for ensuring fairness and

reasonableness of the terms of the financial services, including credit services.


— 66 —

D. Basis of the Proposed Cap for credit services under the Financial Services Agreement

As stated in the Letter, the historical maximum daily balance of outstanding loans and financing

(including interests) to be maintained by JCC Group with JCC Financial for the period for the

two financial years ended 31 December 2007 and 31 December 2008 and the Proposed Caps

for credit services under the Financial Services Agreement are as follows:


From the

For the For the date of

year ended year ended EGM up to For the year ending

31/12/2007 31/12/2008 31/12/2009 31/12/2010 31/12/2011


1,495,000 1,517,000 1,842,000 3,192,000 4,542,000

Under the relevant PRC regulations, JCC Financial cannot provide loans to any parties outside

the Group and the JCC Group, except for inter-bank loans. We understand that the Directors

have considered the business development plan, funding requirements and the intended source

of funding of each member of the JCC Group. The Directors are of the view that the Group

has sufficient funds for provision of such loan and financing services to the JCC Group as the

proposed annual cap for 2009 is expected to be less than the amount of deposits from members

of the JCC Group and JCC is regarded as an appropriate borrower as it is a state-owned entity.

We note the rationale for the Proposed Caps for credit services under the Financial Services

Agreement are not more than the maximum amount allowed under relevant PRC requirements,

which is determined with reference to the amount of registered capital, deposits received and

loans borrowed by JCC Financial. We have discussed with the Directors the risk management

policies and procedures for provision of credit services by JCC Financial to the JCC Group.

Under such circumstances, we are satisfied that the provision of credit services under the

Financial Services Agreement will be in the interests of the Company and the Shareholders as

a whole and that the proposed annual caps for credit services under the Financial Services

Agreement are determined based on reasonable consideration.

We have discussed with the Company about the business development plan and reviewed the

funding requirement and intended source of funding of each member of the JCC Group. Based

on the above, we consider that the Proposed Caps for credit services under the Financial Services

Agreement are fair and reasonable and in the interest of the Company and the Shareholders as

a whole.


— 67 —

RECOMMENDATION

Having considered:

— the transactions contemplated under the Agreement 1 and the Agreement 2 are essential to the Group

for performing its core business operation;

— the transactions contemplated under the Agreement 1 are important in terms of securing a stable supply

of required materials for the production and facilitating the operation of the Group;

— the transactions contemplated under the Agreement 2 are beneficial to the Group as it can generate

additional income for the Group;

— the credit services under the Financial Services Agreement can enhance the utilization of the resources

of JCC Financial and generate income to the Group;

— the pricing policies of the Non-Exempt Continuing Connected Transactions under the Agreements are

fair and reasonable; and

— all of the other analyses, reasons and factors mentioned in this letter,

we consider that the Non-Exempt Continuing Connected Transactions contemplated under the Agreements

with the Proposed Caps are in the ordinary and usual course of business of the Company, on normal

commercial terms, fair and reasonable so far as the Independent Shareholders are concerned and the carrying

out of the Non-Exempt Continuing Connected Transactions is in the interest of the Company and the

Shareholders as a whole. Accordingly, we advise the Independent Board Committee to recommend the

Independent Shareholders to vote in favor of the ordinary resolutions to be proposed at the EGM to approve

the Agreements, the Proposed Caps and all the Non-Exempt Continuing Connected Transactions contemplated

therein.

Yours faithfully,

For and on behalf of

Piper Jaffray Asia Limited

Steven Chiu

Principal

APPENDIX GENERAL INFORMATION

— 68 —

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving

information with regard to the Company. The Directors collectively and individually accept full

responsibility for the accuracy of the information contained in this circular and confirm, having made

all reasonable enquiries, that to the best of their knowledge and belief there are no other facts the

omission of which would make any statement herein misleading.

2. DISCLOSURE OF INTERESTS

(i) Directors, Supervisors and chief executive of the Company

As at the Latest Practicable Date, neither the Directors nor the Supervisors nor the chief

executive of the Company had any interests and short positions in the Shares, underlying

Shares and debentures of the Company or any of its associated corporations (within the

meaning of Part XV of the SFO) which were required to be notified to the Company and the

Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and

short positions which they are taken or deemed to have under such provisions of the SFO); or

pursuant to section 352 of Part XV of the SFO, to be entered in the register referred to therein;

or pursuant to the Model Code for Securities Transactions by Directors of Listed Companies to

be notified to the Company and the Stock Exchange.

(ii) Material Interests

As at the Latest Practicable Date, none of the Directors or the Supervisors had any direct or

indirect interests in any assets which have since 31 December 2007 (being the date to which

the latest published audited financial statements of the Company were made up) been acquired

or disposed of by or leased to any member of the Group, or are proposed to be acquired or

disposed of by or leased to any member of the Group.

As at the Latest Practicable Date, none of the Directors or the Supervisors was materially

interested in any contract or arrangement entered into by any member of the Group subsisting

at the date of this circular which is significant in relation to the business of the Group.

As at the Latest Practicable Date, JCC had interest in the Shares of the Company which would

fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of

the SFO. Mr. Li Yihuang, an executive Director and Chairman of the Company, and Mr. Long

Ziping, an executive Director, are the legal representative and deputy general manager of JCC

respectively.


— 69 —

3. COMPETING INTERESTS

None of the Directors or the Supervisors and their respective associates had any interest in any

business which competes or may compete with the business of the Group.

4. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse change in the

financial or trading position of the Group since 31 December 2007, the date to which the latest

published audited financial statements of the Company were made up.

5. SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors or the Supervisors has entered into any

service contract with any member of the Group which does not expire or is not determinable by the

employer within one year without payment of compensation (other than statutory compensation).

6. EXPERT

(a) The following is the qualifications of Piper Jaffray Asia, which has given opinions or advices

which are contained in this circular:

Name Qualifications

Piper Jaffray Asia a corporation licensed under the SFO to conduct type 1

(dealing in securities) and type 6 (advising on corporate

finance) regulated activities under the SFO

(b) As at the Latest Practicable Date, Piper Jaffray Asia did not have any shareholding, direct or

indirect, in any member of the Group or any right (whether legally enforceable or not) to

subscribe for or to nominate persons to subscribe for securities in any member of the Group.

(c) Piper Jaffray Asia has given and has not withdrawn its written consent to the issue of this

circular with the inclusion of its letter and references to its names in the form and context in

which it is included.


— 70 —

(d) As at the Latst Practicable Date, Piper Jaffray Asia did not have any direct or indirect interests

in any assets which have since 31 December 2007 (being the date to which the latest published

audited financial statements of the Company were made up) been acquired or disposed of by or

leased to any member of the Group, or are proposed to be acquired or disposed of by or leased

to any member of the Group.

(e) The letter and recommendation from Piper Jaffray Asia is given as of the date of this circular

for incorporation herein.

7. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection during normal business hours on

any weekday (except Saturdays and public holidays) at 19th Floor, 8 Wyndham Street, Central, Hong

Kong from the date of this circular up to and including the date of the EGM:

(a) the letter from the Independent Board Committee, the text of which is set out on page 36 of

this circular;

(b) the letter from Piper Jaffray Asia, the text of which is set out on pages 37 to 67 of this circular;

(c) the written consent of Piper Jaffray Asia as referred to in paragraph 6 above;

(d) the Agreement 1;

(e) the Agreement 2; and

(f) Financial Services Agreement.

NOTICE OF EXTRAORDINARY GENERAL MEETING

— 71 —



(Stock Code: 0358)


NOTICE IS HEREBY GIVEN that an extraordinary general meeting of Jiangxi Copper Company Limited

(the “Company”) will be held at the Conference Room of the Company at 15 Yejin Avenue, Guixi City,

Jiangxi, the People’s Republic of China on Thursday, 12 March 2009 at 10:00 a.m. for the purpose of

considering and, if thought fit, passing the following resolutions as ordinary resolutions and special resolution

of the Company:

ORDINARY RESOLUTIONS

(1) “THAT

(i) the consolidated supply and services agreement I (the “Consolidated Supply and Services

Agreement I”) entered into between the Company and Jiangxi Copper Corporation (“JCC”) on

14 January 2009 in respect of the supply of various materials, provision of industrial services

and miscellaneous services by JCC and its subsidiaries from time to time (other than the Group

(as defined below)) to the Company and its subsidiaries from time to time (collectively, the

“Group”) (a copy of which marked “A” has been produced to the meeting and signed by the

chairman of the meeting for the purpose of identification) and the transactions contemplated

thereunder be and are hereby approved, ratified and confirmed;

(ii) the maximum limit of the amount involved under the Consolidated Supply and Services Agreement

I for the period from the date on which this resolution is passed to 31 December 2009 and the

two financial years ending 31 December 2010 and 31 December 2011 shall not exceed

RMB2,651,942,000, RMB3,122,962,000 and RMB3,593,292,000 respectively; and

(iii) any director of the Company be and is hereby authorized for and on behalf of the Company

to sign, seal, execute, perfect, deliver and do all such documents, deeds, acts, matters and things

as he may in his discretion consider necessary or desirable or expedient for the purpose of or

in connection with the Consolidated Supply and Services Agreement I and to make and agree

such variations of a non-material nature in or to the terms of the Consolidated Supply and

Services Agreement I as he may in his discretion consider to be desirable and in the interests

of the Company.”


— 72 —

(2) “THAT

(i) the consolidated supply and services agreement II (the “Consolidated Supply and Services

Agreement II”) entered into between the Company and Jiangxi Copper Corporation (“JCC”) on

14 January 2009 in respect of the supply of various materials and provision of industrial services

by the Company and its subsidiaries from time to time (collectively, the “Group”) to JCC and

its subsidiaries from time to time (other than the Group)(a copy of which marked “B” has been

produced to the meeting and signed by the chairman of the meeting for the purpose of

identification) and the transactions contemplated thereunder be and are hereby approved, ratified

and confirmed;

(ii) the maximum limit of the amount involved under the Consolidated Supply and Services Agreement

II for the period from the date on which this resolution is passed to 31 December 2009 and

the two financial years ending 31 December 2010 and 31 December 2011 shall not exceed

RMB726,463,000, RMB904,819,000 and RMB1,096,005,000 respectively; and




in connection with the Consolidated Supply and Services Agreement II and to make and agree

such variations of a non-material nature in or to the terms of the Consolidated Supply and

Services Agreement II as he may in his discretion consider to be desirable and in the interests

of the Company.”

(3) “THAT

(i) the financial services agreement (the “Financial Services Agreement”) entered into between JCC

Finance Company Limited （江西銅業集團財務有限公司）(“JCC Financial”) and Jiangxi Copper

Corporation (“JCC”) on 14 January 2009 in respect of the provision of financial services by

JCC Financial to JCC and its subsidiaries from time to time (other than the Company and its

subsidiaries)(a copy of which marked “C” has been produced to the meeting and signed by the

chairman of the meeting for the purpose of identification) and the transactions contemplated

thereunder be and are hereby approved, ratified and confirmed;

(ii) the maximum limit of the amount involved in the credit services contemplated under the

Financial Services Agreement for the period from the date on which this resolution is passed

to 31 December 2009 and the two financial years ending 31 December 2010 and 31 December

2011 shall not exceed RMB1,842,000,000, RMB3,192,000,000 and RMB4,542,000,000

respectively; and


— 73 —




in connection with the Financial Services Agreement and to make and agree such variations

of a non-material nature in or to the terms of the Financial Services Agreement as he may in

his discretion consider to be desirable and in the interests of the Company.”

(4) “THAT conditional upon Resolution No. 5 as set out in the notice of the extraordinary general meeting

of the Company dated 23 January 2009 convening this meeting being passed, the Company may send

or supply Corporate Communications to its shareholders of H Shares (in relation to whom the

conditions set out below are met) by making such Corporate Communications available on the

Company’s own website and the website of The Stock Exchange of Hong Kong Limited or in printed

forms (in English only, in Chinese only or in both English and Chinese) be and is hereby approved,

and any director of the Company be and is hereby authorized for and on behalf of the Company to

sign all such documents and/or do all such things and acts as the director may consider necessary or

expedient and in the interest of the Company for the purpose of effecting or otherwise in connection

with the Company’s proposed communication with its shareholders of H Shares through the Company’s

website and the website of The Stock Exchange of Hong Kong Limited or in printed forms.

The supply of Corporate Communications by making such Corporate Communications available on

the Company’s own website and the website of The Stock Exchange of Hong Kong Limited is subject

to the fulfillment of the following conditions:

(i) each holder of H Shares has been asked individually by the Company to agree that the Company

may send or supply Corporate Communications generally, or the Corporate Communication in

question, to him by means of the Company’s own website; and

(ii) the Company has not received a response indicating objection from the holder of H Shares within

a period of 28 days starting from the date on which the Company’s request was sent.

For purpose of this Resolution, “Corporate Communication(s)” means any document issued or to be

issued by the Company for the information or action of holders of any of its securities, including but

not limited to: (a) the directors’ report, its annual accounts together with a copy of the auditor’s report

and its summary financial report; (b) the interim report and its summary interim report; (c) a notice

of meeting; (d) a listing document; (e) a circular; and (f) a proxy form.”


— 74 —

SPECIAL RESOLUTION

(5) “THAT the proposed amendments to the Articles of Association of the Company (details of which

are set out in the section headed “Proposed Amendments to the Articles of Association” of the “Letter

from the Board” of the circular dispatched to shareholders of the Company on 23 January 2009) be

and are hereby considered and approved, and any one director or secretary to the board of directors

of the Company be and is hereby authorized to deal with on behalf of the Company the relevant filing,

amendments and registration (where necessary) procedures and other related issues arising from the

amendments to the Articles of Association of the Company.”

By Order of the board of directors of

Jiangxi Copper Company Limited

Pan Qifang

Company Secretary

23 January 2009

Guixi, Jiangxi Province, the People’s Republic of China

Notes:

(i) Any shareholder entitled to attend and vote at the meeting mentioned above is entitled to appoint one or more proxies to attendand vote at the meeting on his/her behalf in accordance with the Articles of Association of the Company. A proxy need notbe a shareholder of the Company.

(ii) In order to be valid, the proxy form and, if such proxy form is signed by a person under a power of attorney or other authorityon behalf of the appointer, a notarially certified copy of that power of attorney or authority shall be deposited at the legaladdress of the Company (in the case of proxy form of holder of domestic shares) or the Company’s H Share Registrars, HongKong Registrars Limited at Rooms 1806-1807, 18th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kongnot less than 24 hours before the time for holding the meeting or 24 hours before the time appointed for taking the poll.

(iii) Shareholders or their proxies shall produce their identity documents when attending the meeting.

(iv) Pursuant to the articles of association of the Company, the register of shareholders of the Company will be closed from Tuesday,10 February 2009 to Thursday, 12 March 2009 (both dates inclusive), during which period no share transfer will be registered.

(v) Shareholders whose names appear on the register of members of the Company on Tuesday, 10 February 2009 are entitled toattend and vote at the meeting.

(vi) Shareholders who intend to attend the meeting shall complete and lodge the reply slip for attending the meeting at theCompany’s legal address at 15 Yejin Avenue, Guixi City, Jiangxi, the People’s Republic of China on or before 20 February2009. The reply slip may be delivered to the Company by hand, by post or by fax (at fax no.: (86701) 377 7013).

(vii) The extraordinary general meeting is not expected to take more than half a day. Shareholders or their proxies attending theextraordinary general meeting shall be responsible for their own travel and accommodation expenses.

Documents

江西銅業股份有限公司 JIANGXI COPPER COMPANY LIMITED · 1/23/2009 · A letter from the Independent Board Committee is set out on page 36 of this circular. A letter from