Financial Report for the Year 2019 Report of the Board

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular. If you are in doubt as to any aspect of this circular or as to the action you should take, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountants or other professional adviser. If you have sold or transferred all your shares in Inner Mongolia Yitai Coal Co., Ltd., you should at once hand this circular and the proxy form dispatched to shareholders on 24 March 2020 and reply slip to the purchaser(s) or transferee(s) or to the bank, stockbroker or other agent through whom the sale or the transfer was effected for transmission to the purchaser(s) or transferee(s).

FINANCIAL REPORT FOR THE YEAR 2019 REPORT OF THE BOARD FOR THE YEAR 2019 REPORT OF THE SUPERVISORY COMMITTEE FOR THE YEAR 2019 PERFORMANCE REPORT OF THE INDEPENDENT DIRECTORS FOR THE YEAR 2019 PROFIT DISTRIBUTION PLAN FOR THE YEAR 2019 CAPITAL EXPENDITURE FOR THE YEAR 2020 APPOINTMENT OF FINANCIAL AUDIT INSTITUTIONS FOR THE YEAR 2020 APPOINTMENT OF INTERNAL CONTROL AUDIT INSTITUTION FOR THE YEAR 2020 PROVISION OF GUARANTEE FOR COMMERCIAL ACCEPTANCE BILL FINANCING BUSINESS OF ITS CERTAIN HOLDING SUBSIDIARIES PROVISION OF GUARANTEE FOR ITS HOLDING SUBSIDIARIES ENTRUSTED WEALTH MANAGEMENT WITH IDLE SELF-OWNED FUNDS GENERAL MANDATE TO THE BOARD FOR THE ISSUANCE OF H SHARES AND NOTICE OF ANNUAL GENERAL MEETING FOR THE YEAR 2019

A letter from the Board is set out on pages 3 to 32 of this circular. A notice convening the AGM to be held at 2:30 p.m. on Friday, 8 May 2020 is set out on pages 33 to 36 of this circular. A form of proxy and reply slip for use at the AGM have been dispatched to shareholders on 24 March 2020. Such form of proxy and reply slip are also published on the websites of The Stock Exchange of Hong Kong Limited (www.hkexnews.hk) and the Company (www.yitaicoal.com). Whether or not you are able to attend the AGM, you are requested to complete the form of proxy dispatched to shareholders on 24 March 2020 in accordance with the instruction printed thereon and return it to the H share registrar of the Company, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong as soon as possible but in any event not less than 24 hours before the time appointed for the holding of the AGM (i.e. 2:30 p.m. on Thursday, 7 May 2020) or 24 hours before the time appointed for the holding of any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the AGM or any adjournment thereof if you so wish. 17 April 2020

* For identification purpose only CONTENTS

Page

DEFINITIONS ...... 1

LETTER FROM THE BOARD ...... 3

NOTICE OF ANNUAL GENERAL MEETING ...... 33

- i - DEFINITIONS

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

“AGM” the annual general meeting of the Company for the year 2019 which will be held at 2:30 p.m. on Friday, 8 May 2020

“Articles of Association” Articles of Association of the Company

“Board” the board of directors of the Company

“Supervisory Committee” the supervisory committee of the Company

“Coal-to-oil Company” Inner Mongolia Yitai Coal-to-oil Co., Ltd. (內蒙古伊泰煤製油有限責任公司)

“Company” Inner Mongolia Yitai Coal Co., Ltd. (內蒙古伊泰煤炭股份有限公司), a joint stock limited company incorporated in the PRC on 23 September 1997, whose H shares are listed on the Hong Kong Stock Exchange (stock code: 3948) and whose B shares are listed on the Shanghai Stock Exchange (stock code: 900948)

“connected transactions” has the meaning ascribed to it under Chapter 14A of the Listing Rules

“CSRC” China Securities Regulatory Commission

“Director(s)” the director(s) of the Company

“General Mandate” authorize the Board to allot, issue and deal with, or conditionally or unconditionally agree to allot, issue or deal with the H shares up to 20% of the aggregate par value of the issued H shares of the Company on the day when this resolution is passed, and within such limit, to determine the number of H shares to be allotted or issued

“Hong Kong” the Hong Kong Special Administrative Region of the PRC

“Hong Kong Stock Exchange” The Stock Exchange of Hong Kong Limited

“Independent non-executive the independent non-executive director(s) of the Company Director(s)” or “Independent Director(s)”

- 1 - DEFINITIONS

“Listing Rules” the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited

“PRC” the People’s Republic of China, which for the purposes of this circular, excludes Hong Kong, the Macau Special Administrative Region of the People’s Republic of China and Taiwan

“RMB” RMB, the lawful currency of the PRC

“Shareholder(s)” the shareholder(s) of the Company

“Share(s)” share(s) of the Company

“subsidiary” or “subsidiaries” has the meaning ascribed to it under the Listing Rules

“Xinjiang Energy Company” Yitai Xinjiang Energy Co., Ltd. (伊泰新疆能源有限公司)

“Yili Energy Company” Yitai Yili Energy Co., Ltd. (伊泰伊犁能源有限公司)

“Yitai Chemical” Inner Mongolia Yitai Chemical Co., Ltd. (內蒙古伊泰化工有限責任公司)

“Yitai Group” Inner Mongolia Yitai Group Co., Ltd. (內蒙古伊泰集團有限公司), a limited liability company established in the PRC and one of the Company’s controlling Shareholder

“%” percent

- 2 - LETTER FROM THE BOARD

Executive Directors: Registered office: Mr. Zhang Jingquan Yitai Building, North Tianjiao Road Mr. Liu Chunlin Dongsheng District, Ordos Mr. Ge Yaoyong Inner Mongolia, the PRC Mr. Zhang Dongsheng Mr. Liu Jian Principal place of business in Hong Kong: Mr. Lv Guiliang 40/F, Sunlight Tower Mr. Lv Junjie 248 Queen’s Road East Wan Chai Independent non-executive Directors: Hong Kong Mr. Zhang Zhiming Mr. Huang Sujian Mr. Wong Hin Wing Ms. Du Yingfen

17 April 2020

To the Shareholders

Dear Sir or Madam,

* For identification purpose only

- 3 - LETTER FROM THE BOARD

1. INTRODUCTION

The purpose of this circular, of which this letter forms a part, is to give you the notice of the AGM and to provide you with all the information reasonably necessary to enable you to make an informed decision on whether to vote for or against the proposed resolutions at the AGM.

At the AGM, ordinary resolutions will be proposed to approve, among others: (i) financial report for the year 2019; (ii) report of the Board for the year 2019; (iii) report of the Supervisory Committee for the year 2019; (iv) performance report of the independent Directors for the year 2019; (v) profit distribution plan for the year 2019; (vi) capital expenditure for the year 2020; (vii) appointment of financial audit institutions for the year 2020; (viii) appointment of internal control audit institution for the year 2020; (ix) provision of guarantee for commercial acceptance bill financing business of its certain holding subsidiaries; (x) provision of guarantee for its holding subsidiaries; and (xi) entrusted wealth management with idle self-owned funds. Special resolution will be proposed to approve at the AGM, among others, (xii) general mandate to the Board for the issuance of H shares of the Company.

2. FINANCIAL REPORT FOR THE YEAR 2019

An ordinary resolution will be proposed at the AGM to approve the financial report of the Company for the year 2019. The financial report of the Company for the year 2019 has been dispatched to the Shareholders and also published on the website of the Hong Kong Stock Exchange (www.hkexnews.hk) and the website of the Company (www.yitaicoal.com).

3. REPORT OF THE BOARD FOR THE YEAR 2019

An ordinary resolution will be proposed at the AGM to approve the report of the Board for the year 2019. The full text of the report of the Board for the year 2019 is set out in the annual report of the Company which has been dispatched to the Shareholders and also published on the website of the Hong Kong Stock Exchange (www.hkexnews.hk) and the website of the Company (www.yitaicoal.com).

4. REPORT OF THE SUPERVISORY COMMITTEE FOR THE YEAR 2019

An ordinary resolution will be proposed at the AGM to approve the report of the Supervisory Committee for the year 2019. The full text of the report of the Supervisory Committee for the year 2019 is set out in the annual report of the Company which has been dispatched to the Shareholders and also published on the website of the Hong Kong Stock Exchange (www.hkexnews.hk) and the website of the Company (www.yitaicoal.com).

- 4 - LETTER FROM THE BOARD

5. PERFORMANCE REPORT OF THE INDEPENDENT DIRECTORS FOR THE YEAR 2019

The full text of the performance report of Independent non-executive Directors of the Company is set out below:

As the independent Directors of Inner Mongolia Yitai Coal Co., Ltd. (the “Company”), we, in strict compliance with the Company Law, the Securities Law, the Code of Corporate Governance for Listed Companies and the Guidelines on the Establishment of Independent Directorship of Listed Companies and other laws, administrative regulations, departmental rules, nominative documents and the Articles of Association of Inner Mongolia Yitai Coal Co., Ltd. and the Measures for Annual Reporting of Independent Directors, proactively and diligently performed our obligations to safeguard the legitimate interests of the Company and Shareholders. The performance in 2019 is presented as following:

I. Attendance and Voting

In 2019, the Company totally convened 11 Board meetings, and all independent Directors attended all the meetings without no one being absent or authorizing other independent Director to attend on his/her behalf. We are of the opinion that the convening and holding of the Board meetings of the Company is compliance with the statutory procedures and the resolutions are all based on the actual production and operation condition of the Company, and we voted in favor of all resolutions. The Company convened four shareholders’ general meetings with all independent Directors namely Yu Youguang, Zhang Zhiming, Huang Sujian, Wong Hin Wing and Du Yingfen, attended.

Attendance of the meetings is set out as follows:

Mandatory times of attendance in Times of Times of Times of Board meetings attendance in attendance by attendance by Attendance of Name of independent Director during the year person telecommunication proxy Times of absence general meetings Yu Youguang 5 5 4 0 0 2 Huang Sujian 11 11 9 0 0 4 Zhang Zhiming 11 11 9 0 0 4 Wong Hin Wing 11 11 9 0 0 4 Du Yingfen 6 6 5 0 0 2

II. Performance in the Special Committees of the Board

We serve as the chairman of each of the Audit Committee, the Nomination Committee, the Remuneration and Appraisal Committee under the Board. Each committee has specific work allocations and clear accountabilities and operates in high efficiency, and fully exerts its professional functions and provides scientific and professional advice for the decision-making of the Board. During the reporting period, the Audit Committee proactively guided the internal audit work. During the audit process, it diligently reviewed the Company’s financial report and expressed its opinion upon review, and proposed to the Board to engage an accounting firm;

- 5 - LETTER FROM THE BOARD

the Strategy Committee earnestly studied the macroeconomic condition and development trend in the industry, provided professional advice for the Board to make decisions on external investments and capital expenditure, etc., which effectively guaranteed the Company’s strategic direction; the Nomination Committee perfected the talent reserve of Directors and senior management, and reviewed the capabilities of performance and qualifications of the candidates of Directors and senior management, reviewed the structure, size and composition of the Board of the Company; assessed the independence of independent non-executive Directors and considered the training and continuous professional development of the Directors and senior management of the Company, making sure that the Board and senior management of the Company work smoothly; and the Remuneration and Appraisal Committee reviewed the remuneration policies and structure of all Directors and senior management of the Company, and made an annual appraisal on performance of the Directors and senior management of the Company. In 2019, the Audit Committee held 7 meetings in total, the Strategy Committee held 3 meetings in total, the Nomination Committee held 3 meetings, the Remuneration and Appraisal Committee held 1 meeting, and the Production Committee held 1 meeting.

III. Independent Opinions

In accordance with relevant requirement of the Guidelines on the Establishment of Independent Directorship of Listed Companies and the Independent Directorship issued by China Securities Regulatory Commission (hereinafter referred to as “CSRC”), we, as independent Directors of the Company, expressed our opinions of independence for and agreed relevant matters of the Company based on our independent judgment in 2019, as follows:

Session No. of the Board meeting Matter Opinion Proposal on the profit distribution plan for 2018 Approved Proposal on confirmation of the actual amounts arising in daily Approved related party transactions of the Company in 2018 Proposal on confirmation of the actual amounts arising in Approved continuing connected transactions of the Company in 2018 21st of seventh session Proposal on provision of guarantee by the Company to its holding Approved (21 March 2019) subsidiaries Proposal on entrusted wealth management with idle funds of the Approved Company Proposal on provision of entrusted loans by the Company to its Approved holding subsidiaries Proposal on change in accounting policies of the Company Approved

- 6 - LETTER FROM THE BOARD

Session No. of the Board meeting Matter Opinion Proposal on proposed preparation of financial statements and Approved engagement of the audit firm by the Company for the year 2019 in accordance with PRC Accounting Standards for Business 24th of seventh session Enterprises (5 June 2019) Proposal on appointment of internal control audit institution of the Approved Company for the year 2019 Proposal on change in independent Directors Approved 25th of seventh session Proposal on change in accounting policies of the Company Approved (29 August 2019) Proposal on the Resource Compensation Agreement entered into Approved 27th of seventh session between the Company and Inner Mongolia Jingtai Power (6 November 2019) Generation Co., Ltd. Proposal on nomination of the Director to temporarily perform the Approved obligations of the legal person, chairman and relevant specialized committees of the Board of the Company 28th of seventh session Proposal on appointment of general manager Approved (7 November 2019) Proposal on change in deputy general manager and chief engineer Approved of the Company Proposal on election of Directors of the Company Approved Proposal on proposed issuance of super short-term commercial Approved 29th of seventh session papers of the Company (9 December 2019) Proposal on acquisition of party properties of Yitai Property by the Approved Company

IV. Work Performance for Protecting Legitimate Interests of the Shareholders

1. We strictly implemented the Measures for Annual Reporting of Independent Directors, actively understood the Company’s production and operation development dynamics, maintained timely communication with the Company’s management, carefully reviewed relevant information of the Company and made several advice and recommendations to the Board.

2. We paid close attention to the Company’s financial management, related party transactions, investment projects and management of fund raising and other major issues, proactively obtained the information required for decision-making, actively participated in Board meetings, and earnestly reviewed materials of every proposal, particularly for those matters concerning minority interests including profit distribution and related party transactions, to make objective and impartial judgment, express opinions and exercise voting rights prudently.

- 7 - LETTER FROM THE BOARD

3. We continued to keep an eye on the Company’s information disclosure and urged the Company to strictly implement the relevant requirements of regulatory documents of the China Securities Regulatory Commission and the Shanghai Stock Exchange and the management system of the Company, making sure the information disclosure of the Company being true, accurate, complete, timely and fair.

4. Through strengthening learning, we understood and kept abreast of relevant laws, regulations, rules and policies, especially focused on the understanding of laws and regulations related to regulating the corporate governance structure and protecting the legitimate rights and interests of the public Shareholders, and actively participated in relevant trainings organized by securities regulatory authorities and the Company in various ways, continuously improved our ability to performance, forming an consciousness of voluntarily protecting the rights and interests of the public shareholders, providing better advice and recommendations for the Company’s scientific decision-making and risk prevention, promoting further standardized operation of the Company.

V. Miscellaneous

During the reporting period, no Board meeting was proposed to convene and no external audit firm and advisory firm was engaged independently. In 2020, we will continuously uphold the objective of being responsible for the Company and Shareholders, and cautiously, earnestly and diligently exercise the right and perform the obligations as the independent Directors in accordance with the laws and regulations, enhance the communications and collaboration with the Board, the Supervisory Committee and management, to make full use of our own expertise and working experience, providing more reasonable recommendations for the Company’s development, improving the scientific decision-making level of the Board of the Company, and play a positive role in promotion of the sustainable and healthy development of the Company.

The report is hereby given.

Independent Directors: Yu Youguang Zhang Zhiming Huang Sujian Wong Hin Wing Du Yingfen

6. PROFIT DISTRIBUTION PLAN FOR THE YEAR 2019

The Company proposed a cash dividend of RMB3.5 (tax inclusive) per 10 Shares to Shareholders, based on the total share capital of the Company of 3,254,007,000 Shares. The total dividend to be distributed is RMB1,138,902,450 (tax inclusive), representing 30.06% of the net profit attributable to the owner of the parent company of RMB3,789,312,908.34 as set out in the consolidated statements of the year 2019 of the Company. The distribution plan complies with the requirements of the Notice on the Further Implementation of Matters Relevant to Cash Dividend by Listed Companies 《關於進( 一步落實上市公司現金分紅有關事項的通知》) issued by the CSRC and the Guidance of Cash Dividend of Listed Companies in the Shanghai Stock Exchange 《上海證券交易所上市公司現金分( 紅指引》) issued by the Shanghai Stock Exchange.

- 8 - LETTER FROM THE BOARD

As at the end of 2019, the accumulative profit attributable to the Shareholders of the parent company amounted to RMB20,935,842,656.84, undistributed profit of RMB19,796,940,206.84 was carried over to the next period upon the profit distribution.

The dividend to be paid in U.S. Dollar to holders of B Shares is calculated in RMB based on the middle rate of U.S. Dollar against RMB as published by the People’s Bank of China on the first working day after the AGM at which the resolution on distribution of dividend is approved. The dividend to be paid in Hong Kong Dollar to holders of H shares is calculated in RMB based on the middle rate of Hong Kong Dollar against RMB as published by the People’s Bank of China on the first working day after the date of the AGM at which the resolution on distribution of dividend is approved.

The Company will convene the AGM for consideration and approval of relevant proposals, including the above proposal regarding final dividends for 2019. The above final dividends for 2019 will be paid on Monday, 15 June 2020.

7. CAPITAL EXPENDITURE OF THE COMPANY FOR THE YEAR 2020

Based on future strategic development needs and the actual situation of production and management, the Company will carry out preparation steadily for important proposed projects and put more efforts to promote the projects under progress in 2020. Details about projects and capital expenditure planning in 2020 are as follows:

- 9 - LETTER FROM THE BOARD

2020 Capital Expenditure Plan of Inner Mongolia Yitai Coal Co., Ltd.

Capital Expenditure for 2020 Project (Unit: RMB’0,000) Supplementary payment of grant income on Jingtian mining rights by 75,528.57 Talahao Mine of Inner Mongolia Yitai Coal Co., Ltd. Grant income on mining rights of Inner Mongolia Yitai Jingyue 12,528.61 Suancigou Mining Co., Ltd. Grant income on mining rights of Nalinmiao Mine No. 2 of Inner 4,700.00 Mongolia Yitai Coal Co., Ltd. Grant income on mining rights of Baijialiang Mine of Inner Mongolia 1,913.73 Yitai Coal Co., Ltd. Al marla integrated coal project of Yitai Yili Mining Co., Ltd. 5,834.93 2 Mtpa indirect coal-to-liquids conversion pilot project of Inner 4,584.71 Mongolia Yitai Coal-to-oil Co., Ltd. 2 Mtpa coal-based poly-generation comprehensive project of Yitai 28,211.64 Xinjiang Energy Co., Ltd. 1 Mtpa coal-to-oil pilot project of Yitai Yili Energy Co., Ltd. 39,480.00 Environmental protection renovation project of Xiyingzi Collection and 24,630.14 Transportation Centre Wangqi to Huhe South station upline project of Inner Mongolia Yitai 2,698.00 Huzhun Railway Co., Ltd. Dama railway project 1,024.50 0.50 Mtpa Fischer-Tropsch alkane fine separation project of Inner 7,207.00 Mongolia Yitai Ningneng Fine Chemicals Co., Ltd. Production and operation investment 113,192.89 Total 321,534.72

Introductions on the projects are as follows:

(1) Talahao Mine Project

The project of Talahao Mine (塔拉壕煤礦) and the supporting coal preparation plant is located in Dongsheng District, Ordos, Inner Mongolia. The recoverable reserves of the mine is 518 million tons, the designed production capacity of the mine is 6 Mtpa. In addition, the supporting coal preparation plant of the same size will be constructed. The coal product will be transported outward mainly by railway to supply surrounding coalification factories and power plants.

- 10 - LETTER FROM THE BOARD

According to Article 2, Section 8 of the Opinions on the Full Implementation of the Marketization of Coal Resources Market Grant in the Autonomous Region (Nei Zheng Fa [2018] No. 22), regarding “the unallocated resources of the minefield, the holders of mining rights are willing to pay the grant income difference of mining rights, and the competent department of the autonomous region may, in accordance with the regulations, go through the relevant formalities”, and the Company has issued a letter of commitment to pay the supplementary grant income of mining rights in accordance with the new standard. The resources reserves of Talahao Mine is 867.38 million tonnes. According to the market benchmark price of the grant income of mining rights in Inner Mongolia Autonomous Region, Talahao is required to pay the supplementary grant income of mining rights of RMB3,776,428,700 (without eliminating the amount of pressure on existing construction projects). and pay 20% of the payment for the first tranche according to the requirements of Cai Zong [2017] No. 35 and Nei Cai Fei Shui Gui [2017] No. 24.

(2) Suancigou Mine

Inner Mongolia Yitai Jingyue Suancigou Mining Co., Ltd. was jointly established by the Company, Beijing Jingneng Thermal Power Co., Limited（北京京能電力股份有限公司）and Shanxi Yudean Energy Co., Ltd（山西粵電能源有限公司）on 18 September 2007. It has a registered capital of RMB1,080 million and is owned as to 52% by the Company.

According to the Public Use Certificate of the Grant Income on Mining Rights Evaluation Report (Nei Zi Ran Cai Shou Yi Zi [2020] No. 005), the estimated grant income on the additional resources of Suancigou Mine and the coal resources to be used beyond 30 years is RMB626.4307 million. Pursuant to the relevant provisions of the Notice of the Ministry of Finance and the Ministry of Land and Resources on Issuing the Interim Administrative Measures for the Collection of Grant Income on Mining Rights (Cai Zong [2017] No. 35), the Notice of Inner Mongolia Autonomous Region Finance Department and the Ministry of Land and Resources on Issuing the Implementation Administration Measures for the Collection of Grant Income on Mining Rights in Inner Mongolia Autonomous Region (Trial) (Nei Cai Fei Shui Gui [2017] No. 24), the payment for the first tranche is 20%.

(3) Nalinmiao Mine No. 2

Nalinmiao Mine No. 2 of Inner Mongolia Yitai Coal Co., Ltd. is located in Narisong Town, Jungar Banner, Ordos City. Nalinmiao Mine No. 2 is an integrated mine being technically improved. It started technical improvement after completing resource integration in October 2006, and was completed in April 2008 and began trial production. In December of the same year, it was officially put into production through inspection and acceptance.

The No. 31 corner resources area between Nalinmiao Mine No. 2 and Yidong Shiwanzi Mine is 1.39 square kilometers. Its verified resource reserve is 10.76 million tons. The Company will purchase such area at the grant price of approximately RMB47 million offered by the government.

- 11 - LETTER FROM THE BOARD

(4) Baijialiang Mine

Baijialiang Mine of Inner Mongolia Yitai Coal Co., Ltd. is located in the southeast of Dongsheng Coalfield, Inner Mongolia Autonomous Region. The mining area is about 4.2 km long from east to west, 2.8 km wide from north to south, and the total area is 6.4849 km2. Of which, the comprehensive mining area is 2.2134 km2, the area which has obtained the open-pit mining approval is 3.1474 km2 (including house mining goaf), and the main coal seam within the open-pit mining area is 4 coals (including house mining goaf). The average burial depth of the coal seam is 43.15 m.

The mining method of Baijialiang Coal Mine was changed from underground mining to open-pit mining. Its recoverable reserves increased, and the additional grant income was RMB24.1373 million, RMB5 million of which has been paid in advance, and the balance is RMB19.1373 million.

(5) Al marla integrated coal project of Yili Mining

In order to better develop coal resources in Yili area of Xinjiang, in March 2012, the Company invested and established Yitai Yili Mining Co., Ltd. (伊泰伊犁礦業有限公司), which is responsible for the exploration of coal resources and the integration of coal mines in the Yili area of Xinjiang. At present, Yili Mining is carrying out the integration of 0.9 Mtpa Al marla coal project and related preparatory work. In April 2018, the environmental protection department issued a filing document for the EIA (Environmental Impact Assessment) Report of 0.9 Mtpa Al marla coal project.

(6) 2 Mtpa indirect coal-to-liquids conversion pilot project of Inner Mongolia Yitai Coal-to- oil Co., Ltd.

The 2 Mtpa indirect coal-to-liquids conversion pilot project invested and constructed by Inner Mongolia Yitai Coal-to-oil Co., Ltd. (內蒙古伊泰煤製油有限責任公司), a holding subsidiary of the Company, is located in Dalu Industrial Park, Jungar Banner, Ordos City Inner Mongolia Autonomous Region. The proposed construction scale amounts to an annual output of 2 million tons of oil and other byproducts.

On 8 July 2016, the EIA Report on the project was approved by the Ministry of Environmental Protection; on 2 December 2016, the Reply of National Development and Reform Commission to Approval of 2 Mtpa Indirect Coal-to-liquids Conversion Pilot Project of Inner Mongolia Yitai Coal-to-oil Co., Ltd. (Fa Gai Neng Yuan [2016] No. 2540) was issued.

In 2018, as to the second phase of the 2 Mtpa indirect coal-to-liquids conversion pilot project of Coal-to-oil Company, the Company adjusted the product scheme and some process plans for the second phase of the project by focusing on the design optimization and taking into account of the implementation of the project, cooperation and construction of upper-stream facilities, investment and financing, product scheme adjustment and other factors.

- 12 - LETTER FROM THE BOARD

In 2019, 2 Mtpa indirect coal-to-liquids conversion pilot project phase II of Coal-to-oil Company carried out the feasibility analysis and product plan research report, etc. prepared and completed technical comparison and selection plans. The processing, manufacturing and technical improvement of key technical equipments is progressing as planned.

(7) 2 Mtpa coal-based poly-generation comprehensive project of Yitai Xinjiang Energy Co., Ltd.

The 2 Mtpa coal-based poly-generation comprehensive project invested and constructed by Yitai Xinjiang Energy Co., Ltd. (伊泰新疆能源有限公司), a holding subsidiary of the Company, is located in Fort Oasis Economic and Technological Development Zone, Urumqi, Xinjiang Uygur Autonomous Region. The main products include liquefied petroleum gas (LPG), naphtha and diesel oil. The byproducts consist of sulfur, mixing alcohol and ammonium sulfate. The project has been filed with in Xinjiang Uygur Autonomous Region Development and Reform Commission.

At present, Xinjiang Energy Company continued to promote project approval, completed the protection of storage equipments, and strengthened project financing, contract maintenance as well as tax reduction and exemption.

(8) 1 Mtpa coal-to-oil pilot project of Yitai Yili Energy Co., Ltd.

The 1 Mtpa coal-to-oil pilot project invested and constructed by Yitai Yili Energy Co., Ltd. (伊泰伊犁能源有限公司), a holding subsidiary of the Company, is located in Yitai Yili Industrial Park, Qapqal Xibe Autonomous County, Xinjiang Yili Kazak Autonomous Prefecture. The proposed construction scale amounts to an annual output of 1.02 million tons of oil and other byproducts. The construction unit of the project is Yili Energy Company The General Office of National Development and Reform Commission issued the Reply to Implementation of Preliminary Work of 1 Mtpa Pilot Project of Yitai Yili Energy Co., Ltd. (Fa Gai Ban Neng Yuan [2014] No. 1578). According to the Reply, in order to promote the industrialization of domestic independent indirect coal-to-liquids conversion technology, further enhance the level of conversion efficiency and comprehensive utilization of coal resources and accelerate the quality upgrading process of petroleum products, we support the implementation of the preliminary work of the project.

The 1 Mtpa coal-to-oil project of Yili Energy Company obtained the National Development and Reform Commission’s Reply to the Approval on 1 Mtpa Coal-to-oil Project of Yitai Yili Energy Co., Ltd. (Fa Gai Neng Yuan [2017] No. 1393) on 26 July 2017 and the EIA Report of the project was also approved by the Ministry of Environmental Protection on 27 September 2017.

In 2018, Yili Energy Company actively carried out equipment protection and product scheme optimization, continued to promote project financing and introduction of strategic partners.

- 13 - LETTER FROM THE BOARD

In 2019, Yili Energy Company completed the protection of new equipments and engineering facilities, and promoted safety management in an orderly manner. Yili Energy Company took various measures to reduce investment costs, completed the feasibility report for some downstream projects and obtained approval from the local development and reform commission, and continued to work on the preparation of downstream project environmental assessment reports and project financing.

(9) Environmental protection renovation project of Xiyingzi Collection and Transportation Centre

The environmental protection renovation project of Xiyingzi Collection and Transportation Centre is located in Shagedu Town, Jungar Banner, Ordos City. The project was completed by transforming the original Xiyingzi Collection and Transportation Centre, which started in July 2019. The design production capacity of the Centre is 20 Mtpa. The project consists of a coal unloading system, coal conveying system, coal storage system, loading system and railways. The main construction content includes two automobile coal unloading pits, a belt trestle and transfer point, three 5,000-ton silos, a 300,000-ton coal storage workshop, two train loading stations, 35kv substation and transmission line, and reconstruction of 7 kilometers of railway. After the completion of the project, all the production in the Centre will adopt modern storage and shipping system, and all coal types will be under closed-off management, which will no longer cause coal dust pollution and completely solve the environmental pollution problem in the Centre.

As of 31 December 2019, the railway subgrade bridge and culvert project, ancillary works and power supply lines of Xiyingzi Collection and Transportation Centre have been basically completed, and the construction progress of the post-station engineering and storage and transportation system was more than half.

(10) Wangqi to Huhe South station upline project of Inner Mongolia Yitai Huzhun Railway Co., Ltd.

The second track of Huzhun Railway project invested and constructed by Inner Mongolia Yitai Huzhun Railway Co., Ltd. (內蒙古伊泰呼准鐵路有限公司), a holding subsidiary of the Company consists of the second track from Togtoh to Zhou Jiawan and the second track from Jialanying to Togtoh, the length of which are 55.47 km and 58.76 km respectively. Wangqi to Huhe South station upline project is a part of the second track of Huzhun Railway project, including Wangqi to Huhe South station upline and the rebuilding Jialanying to Huhe South station connecting line. The length of Wangqi to Huhe South station upline is 3.288 km, and the length of the rebuilding Jialanying to Huhe South station connecting line is 2.344 km. After the completion, the delivery of Huzhun Railway will be greatly increased and the double lines of Huzhun Railway will be directly connected with Hohhot South Station, which will avoid angle transportation, greatly improve delivery capacity and transport efficiency and reduce transportation costs. At that time, the function of outward transportation channel of Huzhun Railway will be fully realized, which will meet the demand of outward transportation of local coal. The Wangqi to Huhe South station upline has been successfully opened on 28 November 2019.

- 14 - LETTER FROM THE BOARD

(11) Dama Railway Project

Dama railway project was invested and constructed by Inner Mongolia Yitai Zhundong Railway Co., Ltd. (內蒙古伊泰准東鐵路有限責任公司), a holding subsidiary of the Company. The newly constructed railway section from Dalu west to Dafanpu west to Mazha is located within Jungar Banner, Ordos, Inner Mongolia. The railway track starts from the loaded track at Dafanpu west (newly built) and ends at Mazha station of Suzhun railway, the length of which is 58.89 km.

(12) 0.50 Mtpa Fischer-Tropsch alkane fine separation project of Inner Mongolia Yitai Ningneng Fine Chemicals Co., Ltd.

Inner Mongolia Yitai Ningneng Fine Chemicals Co., Ltd. (內蒙古伊泰寧能精細化工有限公司), a joint venture established by Inner Mongolia Yitai Chemical Co., Ltd. and Nanjing Ningneng Chemical Industry Investment Co., Ltd. (南京寧能化工產業投資有限公司), was incorporated on 28 December 2017, among which 51% shares owned by Inner Mongolia Yitai Chemical Co., Ltd. and 49% shares owned by Nanjing Ningneng Chemical Industry Investment Co., Ltd. The 0.50 Mtpa Fischer-Tropsch alkane fine separation project of Inner Mongolia Yitai Ningneng Fine Chemicals Co., Ltd. (內蒙古伊泰寧能精細化工有限公司) is located in the Jintai Fine Chemical Park, Duguitala Industrial Park of Hangjin Qi, Ordos, Inner Mongolia, covering an area of about 200 Mu, with an estimated investment of about RMB719 million. The project was filed on 18 January 2018 in the Development and Reform Bureau of Hangjinqi.

The Fischer-Tropsch alkane from the 1.20 Mtpa fine chemicals project of Yitai Chemical is an excellent raw material in production of products such as light liquid wax, heavy wax, n-hexane and n-heptane. The project converts the raw material into high-value-added fine chemistry by fine separation, in a view to achieve differentiated development of petroleum refining products, for the purpose of improving project economic efficiency.

In 2019, the 0.50 Mtpa Fischer-Tropsch alkane fine separation project of Inner Mongolia Yitai Ningneng Fine Chemicals Co., Ltd. completed all of the procedures for trial production, and passed the acceptance of trial production, and produced standard products on 5 October 2019 after successful run of the whole process.

- 15 - LETTER FROM THE BOARD

In summary, the Company’s capital expenditure plan for year 2020 is RMB3,215.3472 million, and the corresponding capital demand will be mainly solved through its own funds and bank loans. The capital expenditure plan for 2020 may vary with the development of business plans (including potential acquisitions), progress of capital projects, market conditions, prospects for future business conditions, and obtaining necessary permits and regulatory approvals.

8. APPOINTMENT OF FINANCIAL AUDIT INSTITUTIONS FOR THE YEAR 2020

An ordinary resolution will be proposed at the AGM to approve the re-appointment of Da Hua Certified Public Accountants (special general partnership) as financial audit institution of the Company for the year 2020, and the term of office will be one year from the date of consideration and approval at the AGM. The financial audit fee for the year 2020 is RMB3.7 million (tax inclusive).

9. APPOINTMENT OF INTERNAL CONTROL AUDIT INSTITUTION FOR THE YEAR 2020

An ordinary resolution will be proposed at the AGM to approve the re-appointment of Da Hua Certified Public Accountants (special general partnership) as internal control audit institution of the Company for the year 2020, and the term of office will be one year from the date of consideration and approval at the AGM. The internal control audit fee for the year 2020 is RMB0.85 million (tax inclusive).

10. PROVISION OF GUARANTEE FOR COMMERCIAL ACCEPTANCE BILL FINANCING BUSINESS OF ITS CERTAIN HOLDING SUBSIDIARIES

In the process of exchanging commercial bills, in order to better meet the needs of the bills holders for efficient, fast and low-cost financing, and to give full play to the commercial credit of core enterprises, the Company intends to carry out cooperation with financial institutions regarding commercial bill financing business, so to provide joint liability guarantees or pledge guarantees to certain of the wholly-owned subsidiaries and holding subsidiaries of the Company (as acceptors) when they handling the bill financing business as holders of commercial bills.

I. Overview of guarantees

The Company intends to provide joint liability guarantees or pledge guarantees to certain of the wholly-owned subsidiaries and holding subsidiaries of the Company (as acceptors) when they handling the bill financing business as holders of commercial bills. The total amount of guarantees shall not exceed RMB1.8 billion, of which the guarantee amounts for wholly-owned subsidiaries is RMB300 million and the guarantee amount for holding subsidiaries is RMB1.5 billion. The guarantee shall only be provided when carrying out the bill financing business and only for the maturity of financing bills, and no guarantee shall be provided for the financing of the bill holders. The specific guarantee amount is:

- 16 - LETTER FROM THE BOARD

Unit: ’000 million Currency: RMB

Relationship Guarantee Name of the guaranteed company with the Company amount Inner Mongolia Yitai Baoshan Coal Co., Ltd. Wholly-owned subsidiary 1 Inner Mongolia Yitai Dadi Coal Co., Ltd. Wholly-owned subsidiary 2 Sub-total 3 Inner Mongolia Yitai Jingyue Suancigou Mining holding subsidiary 4 Co., Ltd. Inner Mongolia Yitai Huzhun Railway Co., Ltd. holding subsidiary 1 Inner Mongolia Yitai Coal-to-Oil Co., Ltd. holding subsidiary 1 Inner Mongolia Yitai Petrochemical Equipment holding subsidiary of a 0.2 Co., Ltd. holding subsidiary Yitai Yili Energy Co., Ltd. holding subsidiary 0.1 Yitai Yili Mining Co., Ltd. holding subsidiary 0.1 Yitai Xinjiang Energy Co., Ltd. holding subsidiary 0.1 Inner Mongolia Yitai Chemical Co., Ltd. holding subsidiary 5.5 Inner Mongolia Yitai Ningneng Fine Chemicals holding subsidiary of a 3 Co., Ltd. holding subsidiary Subtotal 15 Total 18

In the actual implementation process, the guarantee amounts among wholly-owned subsidiaries can be reallocated; the guarantee amounts among holding subsidiaries can be reallocated.

- 17 - LETTER FROM THE BOARD

II. Basic information of the guaranteed companies

(1) Basic information of the guaranteed companies is set out as follows:

Unit: 0’000 Currency: RMB

Name of the Relationship guaranteed Place of Legal with the Shareholding Registered company registration representative Business scope Company structure capital Inner Mongolia Nalin Taohai Ma Zhi Coal production and sales. General Wholly-owned Inner Mongolia Yitai 3,000 Yitai Baoshan Coal Town, Yijin business items: None. subsidiary. Coal Co., Ltd. Co., Ltd. Holo Banner, (100%) Ordos Inner Mongolia Daliuta Village, Zhang Xinping Coal production, transportation, Wholly-owned Inner Mongolia Yitai 26,272.347711 Yitai Dadi Coal Nalin Taohai washing, sales; mining materials subsidiary Coal Co., Ltd. Co., Ltd. Town, Yijin sales; installation (repair, test) of (100%) Holo Banner, electrical facilities; installation of Ordos mechanical and electrical equipment; geological disaster management; loading and unloading, handling; machinery and equipment leasing; mining engineering construction. Inner Mongolia Majiata Zhang Coal production and sales, mineral Holding Inner Mongolia Yitai 108,000 Yitai Jingyue Village, Hadai Mingliang product processing and sales (except subsidiary Coal Co., Ltd. (52%), Suancigou Mining Gaole franchise), machinery and equipment Beijing Jingneng Co., Ltd. Township, leasing, plant leasing, dredging Power Co., Ltd. Jungar Banner water purification, and sales of (24%), and Shanxi recycled water. Yudean Energy Co., Ltd. (24%)

- 18 - LETTER FROM THE BOARD

Name of the Relationship guaranteed Place of Legal with the Shareholding Registered company registration representative Business scope Company structure capital Inner Mongolia Room 401, Ji Yanlin Investment in the construction of Holding Inner Mongolia Yitai 362,859.80 Yitai Huzhun Yitai Building, railways and their auxiliary subsidiary Coal Co., Ltd. Railway Co., Ltd. North Tianjiao facilities; railway passenger and (72.66%), Yanzhou Road, freight transportation; railway Coal Mining Ordos Dongsheng dangerous goods transportation Neng Hua Co., Ltd. District (gasoline, diesel); raw coal washing (18.94%), Inner and sales; railway operation Mongolia Mengtai management and services and Buliangou Coal Co., freight extension services; rolling Ltd. (4.04%), Inner stock and line maintenance; Mongolia State-owned warehousing services; rental services Capital Management for railway equipment, platforms, Co., Ltd. (2.83%), sites, houses and auxiliary facilities; Datang Electric Power sales of railway materials and waste Fuel Co., Ltd. materials; sales of building materials (1.22%), and China and chemical products (excluding Railway Hohhot dangerous goods and precursor Railway Bureau drugs); technology development, Group Co., Ltd. technology transfer, technical (0.31%) services, technical consulting, technology training and consulting; catering services, accommodation services, own house rental.

- 19 - LETTER FROM THE BOARD

Name of the Relationship guaranteed Place of Legal with the Shareholding Registered company registration representative Business scope Company structure capital Inner Mongolia Dalu Town, Zhang Zhigong Production and sales of coal Holding Inner Mongolia Yitai 235,290 Yitai Coal-to-Oil Jungar Banner chemical products (diesel, gasoline, subsidiary Coal Co., Ltd. (51%), Co., Ltd. naphtha, lube base oil, stable light Inner Mongolia hydrocarbons, kerosene, liquid Mining Industry paraffin, coal-based Fischer-Tropsch Group Co., Ltd. wax, coal-based Fischer-Tropsch (39.5%), and Inner refined wax, coal-based Fischer- Mongolia Yitai Group Tropsch soft wax, coal-based Co., Ltd. (9.5%) Fischer-Tropsch mixed olefins, Fischer-Tropsch synthetic diesel component oils, coal-based Fischer- Tropsch synthetic liquid waxes, liquefied gas, Fischer-Tropsch synthetic vehicle diesel, n-paraffins, and isoparaffins) and their affiliate products (including deep processing steps of consolidation, granulation and powdering of coal-based Fischer-Tropsch wax and coal-based Fischer-Tropsch refined wax). Inner Mongolia Dalu Town, Zhang Zhigong Research, design, manufacture, Holding Inner Mongolia Yitai 49,906.206366 Yitai Petrochemical Jungar Banner maintenance, sales and service of subsidiary of a Coal-to-Oil Co., Ltd. Equipment Co., Ltd. coal chemical industry, coal-to-oil holding (64.26%), AVIC large-scale equipment and internal subsidiary Liming Jinxi parts, petrochemical equipment, Chemical Machinery chemical fertilizer equipment, (Group) Co., Ltd. tritium manufacturing equipment, oil (29.37%), and refining equipment, storage and Synfuels China Inc. transportation equipment, mechanical (6.38%) equipment, spare parts and various pressure vessels Sales of mechanical and electrical products, pump and valve products, standard fasteners, gaskets, and steel materials; maintenance of coal mine machinery and equipment.

- 20 - LETTER FROM THE BOARD

Name of the Relationship guaranteed Place of Legal with the Shareholding Registered company registration representative Business scope Company structure capital Yitai Yili Energy Yinan Wang Jintang Production and sales of coal Holding Inner Mongolia Yitai 157,000 Co., Ltd. (伊泰伊犁 Industrial Park, chemical products and relevant subsidiary Coal Co., Ltd. 能源有限公司) Chabuchaer auxiliary products, development and (90.2%) and Inner County, Yili, consulting services of coal Mongolia Yitai Group Xinjiang technology, development and Co., Ltd. (9.8%) consulting services of coal-related chemical technology. Yitai Yili Mining Yinan Zhao Dangniu Investment in coal mining industry. Holding Inner Mongolia Yitai 67,600 Co., Ltd. (伊泰伊犁 Industrial Park, subsidiary Coal Co., Ltd. 礦業有限公司) Chabuchaer (86.73%), Inner County Mongolia Yitai Group Co., Ltd. (9.42%) and China Development Fund Co. Ltd. (國開發展基金有限公司) (3.85%) Yitai Xinjiang Room 1512, Wang Yifei General business projects (except for Holding Inner Mongolia Yitai 136,000 Energy Co., Ltd. No.1 Weitai projects subject to special approvals subsidiary Coal Co., Ltd. (伊泰新疆能源有限 South Road, required by national laws and (90.2%) and Inner 公司) Urumqi regulations; the projects subject to Mongolia Yitai Group Economic and special approvals can only be Co., Ltd. (9.8%) Technological carried out upon receiving the Development approvals or administrative licenses Zone of measures from relevant departments, and the item specific projects operation period will be stipulated in the approvals or administrative licenses of measures from relevant departments) include: the production and sales of coal chemical products (the above projects subject to approvals according to laws, administrative regulations and the decisions of the State Council can’t be carried out without permission), coal chemical technology consultation services and coal technology consultation services, etc.

- 21 - LETTER FROM THE BOARD

Name of the Relationship guaranteed Place of Legal with the Shareholding Registered company registration representative Business scope Company structure capital Inner Mongolia Sini South Liu Shangli Production of light liquid paraffin, Holding Inner Mongolia Yitai 590,000 Yitai Chemical Road, 109 heavy liquid paraffin, sulfur, stable subsidiary Coal Co., Ltd. Co., Ltd. (內蒙古 National North light hydrocarbons, low aromatic (61.15%), Shanghai 伊泰化工有限責任 Road, Xini solvents, cetane modifiers, alcohol- Hanqing Enterprise 公司) Town, based liquid fuels, coal-based Management Hangjinqi Fischer-Tropsch synthetic diesel Partnership (limited component oils, liquefied petroleum partnership) (上海漢 gas, mixed olefins; sales of liquid 磬企業管理合夥企業 oxygen and liquid nitrogen without (有限合夥)) (32.2%) storage (trade of bills); construction and Inner Mongolia of production projects for 1#low Yitai Group Co., Ltd. aromatic solvent, 3#low aromatic (6.64%) solvent, light liquid paraffin, heavy liquid paraffin, cetane number improver, 85#Fischer-Tropsch synthetic wax, 95#Fischer-Tropsch synthetic wax, 105#Fischer-Tropsch synthetic wax, light synthetic lubricant, medium synthetic lubricant, heavy synthetic lubricant, propane, LPG, isopropanol, viscosity index improver, sulfur, mixed alcohol, ammonium sulfate and other chemical products. Blending, storage and sales of diesel oil (flash point (closed) exceeding 60°C); catering; accommodation; overhaul and maintenance of chemical equipment; project management services; and testing services.

- 22 - LETTER FROM THE BOARD

Name of the Relationship guaranteed Place of Legal with the Shareholding Registered company registration representative Business scope Company structure capital Inner Mongolia Dugui Tala Chu Zhenhui Production and sale of light liquid Holding Inner Mongolia Yitai 20,000 Yitai Ningneng Fine Industrial Park, paraffin, heavy liquid paraffin, n- subsidiary of a Chemical Co., Ltd. Chemicals Co., Ltd. Hangjin dodecane, n-tetradecane, isoparaffin, holding (內蒙古伊泰化工有限 (內蒙古伊泰寧能精 Banner, Ordos saturated acyclic hydrocarbon, oil subsidiary 責任公司) (51%) and 細化工有限公司) additives, pour point depressant, Nanjing Ningneng light white oil and industrial white Chemical Industry oil; processing and sales of chemical Investment Co., Ltd. raw materials and products (南京寧能化工產業投 (excluding hazardous chemicals); 資有限公司) (49%) international trade; import and export of goods and technology; road cargo transportation; domestic freight forwarding agent and international freight forwarding agent.

Note: The guaranteed parties also include the wholly-owned subsidiaries to be newly established after the consideration and approval of this resolution.

- 23 - LETTER FROM THE BOARD

(II) Major financial data of the Guaranteed Companies as at 31 December 2019

Unit: 0’000 Currency: RMB

Name of Total guaranteed Total Total current Total Operating company assets bank loans liabilities liabilities income Net assets Net profit Inner Mongolia Yitai Baoshan Coal Co., Ltd. (內蒙古伊泰寶山煤炭有限責任公司) 23,382.16 0 8,813.79 9,536.08 47,171.14 13,846.07 9,240.32 Inner Mongolia Yitai Dadi Coal Co. Ltd. (內蒙古伊泰大地煤炭有限責任公司) 42,747.50 0 13,859.41 13,938.33 16,585.04 28,809.18 2,636.83 Inner Mongolia Yitai Jingyue Suancigou Mining Co., Ltd. (內蒙古伊泰京粵酸刺溝礦業有限責任公司) 716,411.01 0 39,153.58 43,341.81 385,592.68 673,069.28 177,222.72 Inner Mongolia Yitai Huzhun Railway Co., Ltd. (內蒙古伊泰呼准鐵路有限公司) 1,335,500.26 318,213.29 236,527.29 501,756.42 223,339.52 833,743.84 51,236.97 Inner Mongolia Yitai Coal-to-Oil Co., Ltd. (內蒙古伊泰煤制油有限責任公司) 381,964.02 87,300 71,427.06 110,828.06 96,541.89 271,135.96 -3,247.16 Inner Mongolia Yitai Petrochemical Equipment Co., Ltd. (內蒙古伊泰石化裝備有限責任公司) 37,522.61 0 12,753.77 13,089.77 216.28 24,432.84 -3,630.75 Yitai Yili Energy Co., Ltd. (伊泰伊犁能源有限公司) 693,376.32 346,000 536,937.02 536,937.11 0 156,439.21 -339.84 Yitai Yili Mining Co., Ltd. (伊泰伊犁礦業有限公司) 130,320.26 38,250 30,670.93 65,020.93 0 65,299.32 0

- 24 - LETTER FROM THE BOARD

Name of Total guaranteed Total Total current Total Operating company assets bank loans liabilities liabilities income Net assets Net profit Yitai Xinjiang Energy Co., Ltd. (伊泰新疆能源有限公司) 664,024.44 157,000 429,624.88 529,670.73 0 134,353.71 5.25 Inner Mongolia Yitai Chemical Co., Ltd. (內蒙古伊泰化工有限責任公司) 1,818,447.92 1,044,600 263,302.82 1,202,488 522,358.14 615,959.91 14,675.64 Inner Mongolia Yitai Ningneng Fine Chemicals Co., Ltd. (內蒙古伊泰寧能精細化工有限公司) 79,856.53 0 66,743.81 66,743.81 20,500.14 13,112.73 -2,182.5

III. Main Terms of the Guarantee Contracts

The Company has not yet entered into any relevant guarantee agreement, and the specific guarantee amount, guarantee period and other terms will be within the scope of the guarantee limit, subject to the actual amount or term to be determined between the relevant entities and financial institutions and factoring companies.

The Board of the Company was authorized to organize and implement the aforesaid guarantees, and the legal representative or representative of the Company was authorized to be responsible for signing (or signing step by step) relevant guarantee agreements with financial institutions. Guarantees in excess of the above amount will not be implemented until consideration and approval at the Board meeting or general meeting in accordance with relevant requirements of the Company.

IV. Accumulated Amount of External Guarantees and Amount of Overdue Guarantees

As of 20 March 2020, the aggregate amount of the external guarantees provided by the Company is RMB14.547 billion, of which RMB1 billion was provided to Yitai Group and its holding subsidiaries, and RMB13.547 billion was provided to the holding subsidiaries, accounting for 2.86% and 38.79% of the latest audited net assets of the Company of RMB34,927 million, respectively. There was no external guarantee overdue of the Company.

- 25 - LETTER FROM THE BOARD

11. GUARANTEE TO THE HOLDING SUBSIDIARIES

For the reason of business development, the holding subsidiaries of the Company have to lend money from financial institutions or finance in other ways from time to time. The Company intends to provide joint liability guarantee for the loan or financing borrowed by the holding subsidiaries from the financial institutions so as to support the business development of the holding subsidiaries of the Company(including but not limited to collateral guarantee).

I. Provision of Guarantee

Unit: ’000 million Currency: RMB

Estimated guarantee Name of guaranteed parties amount Shanghai Lingang Yitai Supply Chain Co., Ltd. (上海臨港伊泰供應鏈有限公司) 5 Yitai Bohai Supply Chain Management Co., Ltd. (伊泰渤海供應鏈管理有限公司) 5 Yitai Bohai Energy Co., Ltd. (伊泰渤海能源有限責任公司) 5 Inner Mongolia Yitai Huzhun Railway Co., Ltd. (內蒙古伊泰呼准鐵路有限公司) 7.5 Yitai Xinjiang Energy Co., Ltd. (伊泰新疆能源有限公司) 10 Yitai Yili Energy Co., Ltd. (伊泰伊犁能源有限公司) 20 Inner Mongolia Yitai Coal-to-Oil Co., Ltd. (內蒙古伊泰煤制油有限責任公司) 20 Yitai Supply Chain Finance Services Co., Ltd. (伊泰供應鏈金融服務(深圳)有限公司) 10 Yitai Energy Investment (Shanghai) Co., Ltd. (伊泰能源投資（上海）有限公司) 5 Yitai Energy (Shanghai) Co., Ltd. (伊泰能源（上海）有限公司) 5 Inner Mongolia Yitai Ningneng Fine Chemicals Co., Ltd. (內蒙古伊泰寧能精細化工有限公司) 2 Total 94.5

- 26 - LETTER FROM THE BOARD

II. Basic Information of the Guaranteed Parties

Basic information of the guaranteed parties is set out as follows:

Unit: 0’000 Currency: RMB

Business Current Registered Name of guaranteed parties nature shareholding capital Shanghai Lingang Yitai Supply Coal sales 100% 5,000 Chain Co., Ltd. (上海臨港伊泰供應鏈有限公司) Yitai Bohai Supply Chain Coal sales 100% 5,000 Management Co., Ltd. (伊泰渤海供應鏈管理有限公司) Yitai Bohai Energy Co., Ltd. (伊泰 Coal 100% 5,000 渤海能源有限責任公司) transportation and sales Inner Mongolia Yitai Huzhun Railway 72.66% 362,859.80 Railway Co., Ltd. (內蒙古伊泰呼准 transportation 鐵路有限公司) Yitai Xinjiang Energy Co., Ltd. (伊 Coal chemical 90.2% 136,000 泰新疆能源有限公司) Yitai Yili Energy Co., Ltd. (伊泰伊 Coal chemical 90.2% 157,000 犁能源有限公司) Inner Mongolia Yitai Coal-to-Oil Coal chemical 51% 235,290 Co., Ltd. (內蒙古伊泰煤制油有限責任公司) Yitai Supply Chain Finance Services Supply chain 100% 10,000 Co., Ltd. (伊泰供應鏈金融服務 management （深圳）有限公司) Yitai Energy Investment (Shanghai) Energy 100% 5,000 Co., Ltd. (伊泰能源投資（上海）有限 investment 公司) Yitai Energy (Shanghai) Co., Ltd. Energy 100% 5,000 (伊泰能源（上海）有限公司) technology Inner Mongolia Yitai Ningneng Fine Coal chemical 51% 20,000 Chemicals Co., Ltd. (內蒙古伊泰寧能精細化工有限公司)

- 27 - LETTER FROM THE BOARD

III. Accumulated Amounts of External Guarantees and Amount of Overdue Guarantees

As of 20 March 2020, the aggregate amount of the external guarantees provided by the Company is RMB14.547 billion, of which RMB1 billion was provided to Yitai Group and its holding subsidiaries, and RMB13.547 billion was provided to the holding subsidiaries, accounting for 2.86% and 38.79% of the latest audited net assets of the Company of RMB34.927 billion, respectively. All of the above guarantees are in compliance with the requirements of the Articles of Association and relevant laws and there is no overdue or non- compliance guarantee.

The specific provisions on the loan and guarantee agreement will be contained in the relevant contracts or agreements to be concluded between the Company and financial institutions. In addition, the legal representative or authorized representative of the Company is authorized to sign relevant legal documents.

12. ENTRUSTED WEALTH MANAGEMENT WITH IDLE SELF-OWNED FUNDS

In order to increase the use efficiency of funds, on the premise of capital safety, lawful implementation and no impact on the normal production and operation, the Company plans to entrust commercial banks, trust companies, securities companies, fund companies, insurance companies, asset management companies and other financial institutions to conduct financial management for it, using no more than RMB1.5 billion idle self-owned funds, which can be used on a rolling basis. Both parties of the entrusted financial management are independent of each other, which will not constitute a connected transaction. Up to now, the balance of valid entrusted financial management is RMBnil.

I. Basic Introduction

The Company’s temporarily working capital will be used for the entrusted financial management, no performance guarantee will be required and there will be no impact on the daily operations of the Company.

II. Product Description

The Company plans to entrust commercial banks, trust companies, securities companies, fund companies, insurance companies, asset management companies and other financial institutions to conduct financial management for it, no investment in stocks and derivatives thereof, securities investment funds and other products with the purpose of securities investment will be made.

III. Amount and Term of Entrusted Financial Management

Depending on the amount of working capital, the Company plans to use no more than RMB1.5 billion idle self-owned funds for entrusted financial management, the term of which will be from the date of consideration and approval at the AGM to the conclusion of the AGM of 2020.

- 28 - LETTER FROM THE BOARD

IV. Description of Necessary Examination and Approval Procedures

According to the requirements of Rules Governing the Listing of Stocks on Shanghai Stock Exchange, the Listing Rules and the Articles of Association, the aforesaid matter shall be subject to the consideration and approval at the Shareholders' general meeting.

V. Risk Control

The Company will establish and perfect the approval and implementation procedures for the capital use so as to ensure its effective launch and standardized operation. During the period of entrusted financial management, the Company will keep in close contact with the entrusted entities, timely track the operation of the entrusted funds and take corresponding measures to control the investment risk in case it detects any risk factors possibly affecting the safety of the Company’s funds.

At the same time, the Company will disclose the information about the entrusted financial management in the periodical report according to the relevant requirements of the CSRC and Shanghai Stock Exchange during the reporting period.

VI. Influence on the Daily Operation of Company

The Company will make adequate forecasts and estimates of the risks and benefits associated with the wealth management products, as well as of the future capital demands. The relevant funds usage will not affect the needs for the Company’s daily business operation and development. Appropriate purchasing of wealth management products utilizing the idle self- owned funds of the Company will generate certain return on investment and improve the use efficiency of the idle self-owned funds of the Company and will not damage the interests of the Company’s Shareholders.

VII. Opinions of Independent Directors

On the premise of ensuring the safety and liquidity of capital, the entrusted wealth management utilizing the temporarily idle funds of the Company will improve the use efficiency of the idle self-owned funds, increase the earnings and further raise the overall revenue of the Company, all of which conform to the interests of the Company and all Shareholders. There is no damage to the interests of the Company and all Shareholders, especially minority Shareholders; the relevant approval procedures are consistent with the relevant provisions of the laws and regulations and the Articles of Association. Therefore, the Independent Directors rendered the independent opinion agreeing to the matters on entrusted wealth management.

- 29 - LETTER FROM THE BOARD

13. GENERAL MANDATE TO THE BOARD FOR THE ISSUANCE OF H SHARES

Based on the need of the ordinary production and operation of the Company, the Company proposed to the AGM to grant General Mandate to the Board under the following conditions, to determine the allotment, issuance of and dealing with the additional H Shares of the share capital of the Company. As at the date of this circular, the Company has issued 326,007,000 H Shares. Upon the passing of this resolution of General Mandate to issue Shares, and on the basis that no further H Shares are issued before the AGM, the Company may issue a maximum of 65,201,400 H Shares. Matters that will be considered are as follows:

(1) Authorize the Board to, under the General Mandate, allot, issue and deal with, or conditionally or unconditionally agree to allot, issue and deal with H shares of its aggregate par value up to 20% of the numbers of the same class of the issued H shares of the Company on the day when this resolution is passed at the AGM of the Company, and to determine the number of H shares to be allotted or issued subject to the precondition in paragraph 2 hereinafter and within the limit.

(2) Authorize the Board to exercise the General Mandate pursuant to applicable laws (including but not limited to the Company Law of the PRC and the Listing Rules) and to obtain all the approvals from government and/or regulatory authorities (if any) for exercise of the same.

(3) The General Mandate will remain effective from the date when it is passed at the AGM until the earliest of the date on which:

(1) the 2020 annual general meeting of the Company is concluded;

(2) the 12-month period following the passing of this resolution at the AGM expires;

(3) the General Mandate granted to the Board as set out in this resolution is revoked or amended by Shareholders by way of a special resolution at any general meeting.

(4) Authorize the Board to approve, execute and do, or procure to be executed and done, all such documents, deeds and things as it may consider necessary in connection with the allotment and issuance of any new Shares under the General Mandate above.

(5) Upon completion of the allotment and issuance of new Shares, authorize the Board to increase the registered capital of the Company and make corresponding amendments to the Articles of Association based on the method, class and number of the allotment and issuance of new Shares of the Company as well as the actual share structure of the Company upon completion of the allotment and issuance of new Shares.

- 30 - LETTER FROM THE BOARD

14. POLL PROCEDURE

Pursuant to Rule 13.39(4) of the Listing Rules, any vote of Shareholders at a general meeting must be taken by poll. Therefore, all the resolutions set out in the notice of the AGM shall be voted by poll while Shareholders may cast a vote either personally or by proxy.

As at the date of this circular, no Shareholder has to abstain from voting on any of the proposed resolutions. The results of the poll will be published on the websites of the Company and the Hong Kong Stock Exchange on the date of the AGM.

15. AGM

A notice convening the AGM to be held at 2:30 p.m. on Friday, 8 May 2020 is set out on pages 33 to 36 of this circular. A form of proxy and reply slip for use at the AGM have been dispatched to shareholders on 24 March 2020. Such form of proxy and reply slip are also published on the websites of the Hong Kong Stock Exchange (www.hkexnews.hk) and the Company (www.yitaicoal.com).

Whether or not you propose to attend the AGM, you are requested to complete and return the form of proxy dispatched to shareholders on 24 March 2020 in accordance with the instruction printed thereon and return it to the Hong Kong H Shares registrar of the Company, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong as soon as possible but in any event not less than 24 hours before the time appointed for the holding of the AGM (i.e. 2:30 p.m. on Thursday, 7 May 2020) or 24 hours before the time appointed for the holding of any adjournment thereof (as the case may be). Completion and return of the form of proxy will not preclude the Shareholders from attending and voting in person at the AGM or any adjournment thereof if they so wish.

In order to ascertain the entitlements of the Shareholders to attend the AGM to be held at 2:30 p.m. on Friday, 8 May 2020, the register of members of H Shares of the Company will be closed from Wednesday, 8 April 2020 to Friday, 8 May 2020 (both days inclusive), during which period no transfer of H Shares will be effected. To be eligible to attend and vote at the AGM, all transfer documents must be lodged with the H Share Registrar, Computershare Hong Kong Investor Services Limited at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong for holders of H Shares no later than 4:30 p.m. on Tuesday, 7 April 2020.

The register of members of H Shares of the Company will be closed from Wednesday, 27 May 2020 to Monday, 1 June 2020 (both days inclusive), during which period no transfer of H Shares will be effected. In order to be entitled to the final dividend for the year ended 31 December 2019 (subject to the approval from the Shareholders), unregistered H Shareholders must deposit the transfer documents with the Company’s H share registrar, Computershare Hong Kong Investor Services Limited, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong no later than 4:30 p.m. on Tuesday, 26 May 2020.

Shareholders intending to attend the AGM must return the reply slip to the Company’s H share registrar, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong by hand or by post on or before Friday, 17 April 2020.

- 31 - LETTER FROM THE BOARD

16. RECOMMENDATION

The Board considers that the proposed resolutions above are in the best interests of the Company and the Shareholders as a whole, therefore, the Board recommends all qualified Shareholders vote in favor of the said resolutions at the AGM.

By order of the Board Inner Mongolia Yitai Coal Co., Ltd.* Zhang Jingquan Chairman

- 32 - NOTICE OF ANNUAL GENERAL MEETING

NOTICE OF ANNUAL GENERAL MEETING FOR THE YEAR 2019

NOTICE IS HEREBY GIVEN that an annual general meeting for the year 2019 (the “AGM”) of Inner Mongolia Yitai Coal Co., Ltd. (the “Company”) will be held at Room 1, Conference Center, Building of Inner Mongolia Yitai Coal Co., Ltd., Ordos, Inner Mongolia, the People’s Republic of China (the “PRC”) on Friday, 8 May 2020 at 2:30 p.m. for the purpose of considering, and if thought fit, passing the following resolutions (with or without modifications):

ORDINARY RESOLUTIONS

1. To consider and approve the financial report of the Company for the year 2019.

2. To consider and approve the report of the board of directors (the “Board” or the “Board of Directors”) of the Company for the year 2019.

3. To consider and approve the report of the supervisory committee of the Company for the year 2019.

4. To consider and approve the performance report of the independent directors of the Company for the year 2019.

5. To consider and approve the profit distribution plan of the Company for the year 2019.

6. To consider and approve the Company’s capital expenditure in 2020.

7. To consider and approve the appointment of financial audit institutions of the Company for the year 2020.

8. To consider and approve the appointment of internal control audit institution of the Company for the year 2020.

9. To consider and approve the provision of guarantee by the Company for commercial acceptance bill financing business of its certain holding subsidiaries.

10. To consider and approve the provision of guarantee by the Company for its holding subsidiaries.

* For identification purpose only

- 33 - NOTICE OF ANNUAL GENERAL MEETING

11. To consider and approve the entrusted wealth management with idle self-owned funds of the Company.

SPECIAL RESOLUTION

12. To consider and approve the resolution relating to the general mandate (the “General Mandate”) to the Board for the issuance of H shares.

Based on the need of the ordinary production and operation of the Company, the Company proposed to the AGM to grant General Mandate to the Board of Directors under the following conditions, to determine the allotment, issuance of and dealing with the additional H Shares of the share capital of the Company. As at the date of this notice, the Company has issued 326,007,000 H Shares. Upon the passing of this resolution in relation to the General Mandate to issue Shares, and on the basis that no further H Shares are issued before the AGM, the Company may issue a maximum of 65,201,400 H Shares. Matters that will be considered are as follows:

(1) Authorizing the Board of Directors to, under the General Mandate, allot, issue and deal with, or conditionally or unconditionally agree to allot, issue or deal with H shares of its the aggregate par value not exceeding 20% of the numbers of the issued H shares of the Company on the day when this resolution is passed at the AGM of the Company, and to determine the number of H shares to be allotted or issued subject to the precondition in paragraph (2) hereinafter and within such limit.

(2) Authorizing the Board of Directors to exercise the General Mandate pursuant to applicable laws (including but not limited to the Company Law of the PRC and the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited) and to obtain all the approvals from government and/or regulatory authorities (if any) for exercise of the same.

(3) The General Mandate will remain effective from the day when it is passed at the AGM until the earliest of the day on which:

(1) the annual general meeting of the Company for the year 2020 is concluded;

(2) the 12-month period following the passing of this resolution at the AGM expires;

(3) the General Mandate granted to the Board of Directors as set out in this resolution is revoked or amended by Shareholders of the Company by way of a special resolution at any general meeting.

(4) Authorizing the Board of Directors to approve, execute and do, or procure to be executed and done, all such documents, deeds and things as it may consider necessary in connection with the allotment and issuance of any new shares under the General Mandate above.

- 34 - NOTICE OF ANNUAL GENERAL MEETING

(5) Upon completion of the allotment and issuance of new shares, authorizing the Board of Directors to increase the registered capital of the Company and make appropriate amendments to the articles of association of the Company based on the method, class and number of the allotment and issuance of new shares of the Company as well as the actual share structure of the Company upon completion of the allotment and issuance of new shares.

By order of the Board Inner Mongolia Yitai Coal Co., Ltd. Zhang Jingquan Chairman

Inner Mongolia, the PRC, 24 March 2020

As at the date of this notice, the executive directors of the Company are Mr. Zhang Jingquan, Mr. Liu Chunlin, Mr. Ge Yaoyong, Mr. Zhang Dongsheng, Mr. Liu Jian, Mr. Lv Guiliang and Mr. Lv Junjie; and the independent non-executive directors of the Company are Mr. Zhang Zhiming, Mr. Huang Sujian, Mr. Wong Hin Wing and Ms. Du Yingfen.

Notes:

A. For further details on each of the proposed resolutions, please refer to the circular of the Company to be dispatched to Shareholders recently.

B. In order to ascertain the entitlements of the Shareholders to attend the AGM to be held at 2:30 p.m. on Friday, 8 May 2020, the register of members of H Shares of the Company will be closed from Wednesday, 8 April 2020 to Friday, 8 May 2020 (both days inclusive), during which period no transfer of H Shares of the Company will be effected. To be eligible to attend and vote at the AGM, all transfer documents must be lodged with the H Share Registrar, Computershare Hong Kong Investor Services Limited at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong for holders of H Shares no later than 4:30 p.m. on Tuesday, 7 April 2020.

The register of members of H Shares of the Company will be closed from Wednesday, 27 May 2020 to Monday, 1 June 2020 (both days inclusive), during which period no transfer of H Shares of the Company will be effected. In order to be entitled to the final dividend for the year ended 31 December 2019 (subject to the approval from the Shareholders of the Company), unregistered H Shareholders must deposit the transfer documents with the Company’s H share registrar, Computershare Hong Kong Investor Services Limited, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong no later than 4:30 p.m. on Tuesday, 26 May 2019.

C. Each holder of H Shares entitled to attend and vote at the AGM may, by completing the form of proxy of the Company, appoint one or more proxies to attend and vote at the AGM on his/her behalf. A proxy need not be a Shareholder of the Company. With respect to any Shareholder who has appointed more than one proxy, the proxy holders may only vote on a poll.

D. A proxy shall be appointed by a Shareholder by a written instrument signed by the appointor or his attorney duly authorized in writing. In case of a corporation, the same must be either under its common seal or under hand of its legal representative or duly authorized attorney(s). If the written instrument is signed by an attorney of the appointor, the power of attorney or other documents of authorization of such attorney shall be notarized.

- 35 - NOTICE OF ANNUAL GENERAL MEETING

E. To be valid, the form of proxy and the relevant notarized power of attorney (if any) and other relevant documents of authorization (if any) as mentioned in Note (C) above must be delivered to the Company’s H Share registrar, Computershare Hong Kong Investor Services Limited (address: 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong), not less than 24 hours before the time appointed for the AGM (i.e. 2:30 p.m. on Thursday, 7 May 2020) or 24 hours before the time appointed for the holding of any adjournment thereof (as the case may be). Completion and return of a form of proxy will not preclude a Shareholder from attending and voting in person at the meeting if he so desires.

F. A Shareholder or his proxy should produce proof of identity when attending the AGM. Where a Shareholder is a legal person, the legal representative of that Shareholder or the person authorized by its board of directors or other governing body shall produce a copy of the resolution of the board of directors or other governing body of such Shareholder appointing such person to attend the meeting.

G. The AGM is expected to last for not more than half a day. Shareholders who attend the AGM shall bear their own travelling and accommodation expenses.

- 36 -