Shandong Gold Mining : Overseas Regulatory Announcement- SD Gold Announcement in relation to the provision for impairment of assets for the year 2020

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SHANDONG GOLD MINING CO., LTD.

ʆ؇රږᘤٰุ΅Ϟࠢʮ̡

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

(Stock Code: 1787)

OVERSEAS REGULATORY ANNOUNCEMENT

This announcement is made pursuant to Rule 13.10B of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

Set out below is the Announcement in relation to the provision for impairment of assets for the year 2020 published by Shandong Gold Mining Co., Ltd. (the "Company") on the website of the Shanghai Stock Exchange atwww.sse.com.cn, for information purpose only.

By order of the Board

Shandong Gold Mining Co., Ltd.

Li Guohong Chairman

Jinan, the PRC, 30 March 2021

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

Stock Code: 600547

Stock Abbreviation: Shandong GoldNumber: Lin 2021-023

SHANDONG GOLD MINING CO., LTD. ANNOUNCEMENT IN RELATION TO

THE PROVISION FOR IMPAIRMENT OF ASSETS FOR THE YEAR 2020

The Company and all members of its board of directors guarantee the truthfulness, accuracy and completeness of this announcement, and are jointly and severally liable for the false records, misleading statements or material omissions of this announcement.

The 4th meeting of the sixth session of the board of directors of Shandong Gold

Mining Co., Ltd. (the "Company") held on 30 M a r c h 2021 reviewed and passed the

Proposal on the Provision for Impairment of Assets for the Year 2020, the details of which are published as follows:

I. Overview of the Provision for Impairment of Assets

(I) Reasons for the provision for impairment of assets

To reflect the Company's financial condition and assets value more truthfully, accurately and objectively, the Company and its subsidiaries conducted a comprehensive inventory of various assets as at the end of 2020 in accordance with the Accounting

Standards for Business Enterprises and relevant accounting policies of the Company, and have evaluated and tested the impairment of assets and made corresponding impairment provisions for related assets. In particular, the Company conducted special tests on the recoverable amount of goodwill, and made provision for impairment of impaired assets.

(II) The scope of assets, total amount and reporting period to be included in for the provision for impairment of assets

After carrying out the inventory and assets impairment tests by the Company and its subsidiaries on assets with signs of possible impairment at the end of 2020, intangible assets, fixed assets, inventories, accounts receivable, other receivables and other current assets were found to be impaired.

In the financial statements for 2020 under the Chineseaccounting standards, the provisions made for impairment of various assets amounted to

RMB199,384,734.79, the breakdown of which is as follows:

Unit: RMB

II. Particulars of the Provision for Impairment of Assets

(I) Impact of the provision for impairment of assets on the Company

The amount of the provision for impairment of assets is RMB199,384,734.79, which has been fully included in the profit and loss of 2020, and therefore, the total profit in 2020 will be reduced by RMB199,384,734.79.

(II) Explanation of the provision for impairment of assets

1. Provision for impairment of assets

According to the Accounting Standards for Business Enterprises No. 8-Impairment of Assets (Cai Kuai (2006) No. 3), starting from the acquisition date, the Company allocates the book value of goodwill formed by business combinations not under the common control to the asset group or combination of asset groups that can benefit from the synergy of the business combinations under any reasonable method, and conducts annual impairment testing. If the recoverable amount of the asset group or combination of asset groups containing the goodwill allocated is lower than its book value, the corresponding impairment loss is recognized. The amount of the impairment loss is first reduced by the carrying amount of the goodwill allocated to the asset group or set of asset groups; and then by the carrying amount of each other asset on a pro rata basis.

According to the Assessment Report of the Recoverable Amount of the Asset

Groups Related to Goodwill of Fujian Zhenghe Yuanxin Mining Co., Ltd. Involved in the

Goodwill Impairment Test of Shandong Gold Mining Co., Ltd. (Zhong Feng Ping Bao Zi

(2021) No.30013), it is expected the recoverable amount of asset groups in the current period to be RMB360,131,300.00 The book value of Fujian Yuanxin's asset groups containing the general goodwill was RMB629,094,870.29. The recoverable amount of the combination of

asset groups was lower than its book value, and as such, it is needed to recognize the corresponding impairment loss. In 2019, a total of RMB108,477,670.29 to RMB0 was provided for impairment of goodwill of the asset group to which Fujian Yuanxin is allocated. In 2020, the carrying amount of other assets would continue to be written down on a pro rata basis: provision for impairment of intangible assets of

RMB153,988,051.61 and provision for impairment of fixed assets of

RMB6,497,848.39.

2. Provision for impairment of inventories

According to the Accounting Standards for Business Enterprises No.1-Inventories

(Cai Kuai (2006) No.3), on the balance sheet date, the Company's inventories are

measured at the lower of cost or net realizable value. When its net realizable value is lower than its cost, a provision for inventory write-downs is made. If the factors affecting previous write-downs of inventories have disappeared, resulting in the net realizable value of inventories being higher than their carrying amount, the provision for inventory write-downs is reversed within the amount originally provided for, and the reversal is recognized in profit or loss for the period.

According to the test results, the Company should make provision for impairment of RMB140,300.00 for inventories.

3. Provision for impairment of financial i nstruments

According to the Accounting Standards for Business Enterprises No.22-

Recognition and Measurement of Financial Instruments (Cai Kuai (2017) No.7), the

Company recognizes the loss provisions based on expected credit losses. The Company calculates the probability-weighted amount of the present value of the difference between the cash flow of contract receivables and the cash flow expected to be received (weighted at the risk of default) taking into account of reasonable and supportable information such as past events, current status and the forecast of future economic conditions to recognize the expected credit losses.

After calculation, the Company should make the provision for impairment of financial instruments totaling RMB38,758,534.79, among which, the impairment provision for accounts receivable, other receivables and other current assets are RMB362,362.85,

RMB34,753,691.71 and RMB 3,642,480.23, respectively.

(III) The difference between this provision and the impairment provision under International Accounting Standards

There are differences between the financial report prepared in accordance with the

Chinese accounting standards and the financial report prepared in accordance with

International Financial Reporting Standards in two items, namely the fixed assets impairment provision and intangible assets impairment provision. The reasons for and amounts of the differences are as follows:

Under the Chinese accounting standards, the difference of the excess of the merger cost of the Company's acquisition of subsidiaries over the share of the fair value of the identifiable net assets of the acquiree obtained in the merger shall be treated as an asset and recognised as goodwill and initially measured at cost, which shall be separately presented in the consolidated financial statements. When preparing financial statements in accordance with International Financial Reporting Standards, the goodwill is allocated to the value of related assets based on the M&A assets value allocation report, resulting in different annual depreciation and amortization amounts of related assets and thus producing one of the above-mentioned differences.

Under the International Financial Reporting Standards in the current period, ss the

closing book value of fixed assets recognized by Fujian Zhenghe Yuanxin Mining Co.,

Ltd. based on the M&A asset value allocation report was not higher than the recoverable amount of fixed assets, no provision for impairment was required; as the closing book value of intangible assets recognized by the M&A asset value allocation report was higher than the recoverable amount of intangible assets, a provision for impairment of RMB153,639,073.74 was made.

III. The Explanation of the Rationality of the Provision for Impairment of

Assets by the Audit Committee under the Board of Directors

The Company's provision for impairment of assets for the year 2020 follows and conforms to the Accounting Standards for Business Enterprises and the Company's relevant systems, and such provision is well-founded and consistent with the Company's current operating status. Such provision is made based on the principle of prudence, which helps to more fairly reflect the Company's financial condition and assets value as at 31

December 2020 and makes the Company's accounting information more reasonable.

Therefore, it agrees to the provision for impairment of assets and submit the same to the board of directors for consideration.

IV. The Explanation of the Rationality of the Provision for Impairment of

Assets by the Board of Directors

The 4th meeting of the sixth session of the board of directors of the Company reviewed and passed the Proposal on the Provision for Impairment of Assets for the Year

2020. It is of the view that, the Company's provision for impairment of assets follows and conforms to the Accounting Standards for Business Enterprises and the Company's relevant systems, and such provision has been judged and tested for impairment according to the actual conditions and has been made based on the principle of prudence as well as the regulations and actual conditions, which helps to fairly reflect the Company's financial condition and assets value to ensure the fairness and rationality of the Company's accounting information.

V. Opinions of Independent Non-executive Directors

Independent non-executive directors of the Company hold the opinion that, the

Company's provision for impairment of assets follows and conforms to the Accounting

Standards for Business Enterprises and the Company's relevant systems, and the review procedures are legitimate and based on sufficient evidence. After the provision for assets impairment is made, the financial statements can more fairly reflect the Company's financial condition and assets value, which is in line with the Company's actual conditions and without any harm to the interest of the Company and all shareholders, especially the minority shareholders. Therefore, they agree to the Company's provision for impairment of assets.

VI. Opinions of the Supervisory Committee

The supervisory committee believes that the Company has made the provision for impairment of assets in accordance with relevant requirements of the Accounting Standards for Business Enterprises, and such provision fairly reflects the Company's financial condition and assets value and will not adversely affect its corporate governance and legal-compliance operations, and there will be no harm to the interest of the Company and all shareholders, especially the minority shareholders.

The announcement is hereby made.

The board of directors of

Shandong Gold Mining Co., Ltd.

30 March 2021