Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, 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 announcement.

(a joint stock company incorporated in the People’s Republic of with limited liability) ( Stock code: 01893)

CONNECTED TRANSACTIONS

PROPOSED ACQUISITION OF SINOMA NIULI () CEMENT COMPANY LIMITED AND SINOMA NIULI () CEMENT COMPANY LIMITED

ACQUISITIONS

Sinoma Cement and Niuli entered into the Changde Acquisition Agreement on 8 February 2010, whereby Sinoma Cement has agreed to acquire a 22.87% equity interest of Hunan Niuli in Sinoma Changde for a cash consideration of RMB22,800,000 (equivalent to approximately HK$25,953,240). Upon completion of the Changde Acquisition Agreement, Sinoma Changde will be a wholly-owned subsidiary of Sinoma Cement.

Sinoma Cement and Hunan Niuli entered into the Xiangtan Acquisition Agreement on 8 February 2010, whereby Sinoma Cement has agreed to acquire a 24.85% equity interest of Hunan Niuli in Sinoma Xiangtan for a cash consideration of RMB58,430,000 (equivalent to approximately HK$66,510,869). Upon completion of the Xiangtan Acquisition Agreement, Sinoma Xiangtan will be a wholly-owned subsidiary of Sinoma Cement.

GENERAL

Sinoma Cement is a wholly-owned subsidiary of the Company. Hunan Niuli is the substantial shareholder of both Sinoma Changde and Sinoma Xiangtan, the subsidiaries of the Company, and therefore Hunan Niuli is a connected person of the Company under the Hong Kong Listing Rules. The Acquisitions constitute connected transactions of the Company under Chapter 14A of the Hong Kong Listing Rules.

As one or more of the applicable percentage ratios (as defined under Rule 14A.10 of the Hong Kong Listing Rules) in respect of aggregated transaction values of the Acquisitions exceed 0.1% but below 2.5%, the Acquisitions are subject to the reporting and announcement requirements under Rule 14A.45 to 14A.47 of the Hong Kong Listing Rules but exempt from the independent shareholders' approval requirement under Rule 14A.48 of the Hong Kong Listing Rules.

THE CHANGDE ACQUISITION AGREEMENT

Date

8 February 2010 1

Parties

(i) Sinoma Cement (ii) Hunan Niuli

Transaction

Pursuant to the Changde Acquisition Agreement, Sinoma Cement has agreed to acquire a 22.87% equity interest of Hunan Niuli in Sinoma Changde for a cash consideration of RMB22,800,000 (equivalent to approximately HK$25,953,240). Upon completion of the Changde Acquisition Agreement, Sinoma Changde will be a wholly-owned subsidiary of Sinoma Cement.

Consideration and method of payment

The consideration for the Changde Acquisition will be satisfied by Sinoma Cement in cash in the following manners:

(i) a deposit of RMB5,000,000 shall be paid into an escrow account jointly held by Sinoma Cement and Hunan Niuli within three days upon the execution of the Changde Acquisition Agreement and the first instalment of RMB 5,000,000 shall be paid by transferring the deposit from the escrow account to Hunan Niuli upon the completion of the change of business registration of Sinoma Changde in relation to the Changde Acquisition with the Administration for Industry and Commerce of the PRC, provided that such registration shall be completed on or before 8 March 2010;

(ii) a second instalment of RMB2,800,000 shall be paid within ten days upon the settlement of the inter-company account payables or receivables between Hunan Niuli and Sinoma Changde; and

(iii) a third instalment of RMB15,000,000 shall be paid within three business days upon Sinoma Changde has obtained the mining license for limestone mine at Xiangjiawan in , which shall be obtained on or before 30 June 2010.

The consideration was determined by Sinoma Cement and Hunan Niuli after arm’s-length negotiations by reference to the appraised net asset value of Sinoma Changde in the amount of RMB 138,241,200 (equivalent to approximately HK$157,359,958) as at the Valuation Date and (ii) the business prospects of Sinoma Changde. Such appraisal was prepared by the Valuer, an independent firm of qualified valuers, based on asset-based approach.

Conditions precedent

The completion of the Changde Acquisition Agreement will be conditional upon the fulfillment of, among other matters, the following conditions precedent:

(i) the due execution of the Changde Acquisition Agreement by the legal representative or authorised representative of each of the parties thereto;

(ii) the obtaining of the respective internal approvals from Hunan Niuli, Sinoma Changde and Sinoma Cement regarding the Changde Acquisition Agreement;

(iii) the approval of the Changde Acquisition Agreement by the Board and compliance with all the disclosure requirements under the Hong Kong Listing Rules; and

(iv) the obtaining of all necessary consents, permits or approvals from the relevant governmental authorities, including but not limited to, a waiver from strict compliance with public bidding process from the relevant 2 property trading center in relation to transactions contemplated under the Changde Acquisition Agreement.

FINANCIAL INFORMATION

The audited net asset value of Sinoma Changde as of 30 June 2009 prepared in accordance with PRC GAAP was approximately RMB141,671,164(equivalent to approximately HK$161,264,286).

For the two financial years ended 31 December 2007 and 2008, the audited net profit (loss) before and after taxation and extraordinary items of Sinoma Changde prepared in accordance with PRC GAAP were as follows:

For the year ended 31 For the year ended 31 December 2007 December 2008 RMB RMB Audited net profit (loss) before taxation and -1 (1,492,934.56) extraordinary items

Audited net profit (loss) after taxation and -2 (1,492,934.56) extraordinary items

SHAREHOLDING STRUCTURE OF SINOMA CHANGDE

The shareholding structure of Sinoma Changde before and upon the completion of the Changde Acquisition Agreement is set out below:

Before Completion

Sinoma Cement Hunan Niuli

77.13% 22.87%

Sinoma Changde

1 As Sinoma Changde was established on 8 November 2007, therefore, there was no audited net profit (loss) before taxation and extraordinary items. 2 As Sinoma Changde was established on 8 November 2007, therefore, there was no audited net profit (loss) after taxation and extraordinary items. 3

Upon Completion

Sinoma Cement

100%

Sinoma Changde

THE XIANGTAN ACQUISITION AGREEMENT

Date

8 February 2010

Parties

(i) Sinoma Cement (ii) Hunan Niuli

Transaction

Pursuant to the Xiangtan Acquisition Agreement, Sinoma Cement has agreed to acquire a 24.85% equity interest of Hunan Niuli in Sinoma Xiangtan for a cash consideration of RMB58,430,000 (equivalent to approximately HK$66,510,869). Upon completion of the Xiangtan Acquisition Agreement, Sinoma Xiangtan will be a wholly-owned subsidiary of Sinoma Cement.

Consideration The consideration for the Xiangtan Acquisition will be satisfied by Sinoma Cement in cash in the following manners:

(i) a deposit of RMB15,000,000 shall be paid into an escrow account jointly held by Sinoma Cement and Hunan Niuli within three days upon the execution of the Xiangtan Acquisition Agreement and the first instalment of RMB 15,000,000 shall be paid by transferring the deposit from the escrow account as well as making an additional payment of RMB 20,000,0003 to Hunan Niuli upon the completion of the change of business registration of Sinoma Xiangtan in relation to the Xiangtan Acquisition with the relevant Administration for Industry and Commerce of the PRC, provided that such registration shall be completed on or before 8 March 2010;

(ii) a second instalment of RMB10,430,000 shall be paid within ten days upon the settlement of the inter-company account payables or receivables between Hunan Niuli and Sinoma Xiangtan; and

3 Since Hunan Niuli previously owed a debt in the amount of RMB9,000,000 to Sinoma Cement, such debt shall be deducted from the additional payment of RMB20,000,000. Therefore, the actual additional payment paid by Sinoma Cement to Hunan Niuli will be RMB11,000,000. 4

(iii) a third instalment of RMB13,000,000 shall be paid within three business days upon Sinoma Xiangtan has obtained the mining license for limestone mine at Chaishan in , which shall be obtained on or before 30 June 2011.

The consideration was determined by Sinoma Cement and Hunan Niuli after arm’s-length negotiations by reference to (i) the appraised net asset value of Sinoma Xiangtan in the amount of RMB266,677,300 (equivalent to approximately HK$303,558,771) as at the Valuation Date and (ii) the business prospects of Sinoma Xiangtan. Such appraisal was prepared by the Valuer, an independent firm of qualified valuers, based on asset-based approach.

Conditions precedent

The completion of the Xiangtan Acquisition Agreement will be conditional upon the fulfillment of, among other matters, the following conditions precedent:

(i) the due execution of the Xiangtan Acquisition Agreement by the legal representative or authorised representative of each of the parties thereto

(ii) the obtaining of the respective internal approvals from Hunan Niuli, Sinoma Xiangtan and Sinoma Cement regarding the Xiangtan Acquisition Agreement;

(iii) the approval of the Xiangtan Acquisition Agreement by the Board and compliance with all the disclosure requirements under the Hong Kong Listing Rules; and

(iv) the obtaining of all necessary consents, permits or approvals from the relevant governmental authorities , including but not limited to, a waiver from strict compliance with public bidding process from the relevant property trading center in relation to transactions contemplated under the Xiangtan Acquisition Agreement.

FINANCIAL INFORMATION

The audited net asset value of Sinoma Xiangtan as of 30 June 2009 prepared in accordance with PRC GAAP was approximately RMB276,262,896 (equivalent to approximately HK$314,470,055).

For the two financial years ended 31 December 2007 and 2008, the audited net profit (loss) before and after taxation and extraordinary items of Sinoma Xiangtan prepared in accordance with PRC GAAP were as follows:

For the year ended 31 For the year ended 31 December 2007 December 2008 RMB RMB Audited net profit (loss) before taxation and -4 (1,710,330.02) extraordinary items

Audited net profit (loss) after taxation and -5 (1,710,330.02) extraordinary items

4 As Sinoma Xiangtan was established on 28 September 2007, therefore, there was no audited net profit (loss) before taxation and extraordinary items. 5 As Sinoma Xiangtan was established on 28 September 2007, therefore, there was no audited net profit (loss) after taxation and extraordinary items. 5 SHAREHOLDING STRUCTURE OF SINOMA XIANGTAN

The shareholding structure of Sinoma Xiangtan before and upon the completion of the Xiangtan Acquisition Agreement is set out below:

Before Completion

Sinoma Cement Hunan Niuli

75.15% 24.85%

Sinoma Xiangtan

Upon Completion

Sinoma Cement

100%

Sinoma Xiangtan

REASONS FOR THE ACQUISITIONS

The Company is of the view that the Acquisitions (i) will further enhance the Group's control on Sinoma Changde and Sinoma Xiangtan as well as its management efficiencies and (ii) is expected to generate higher returns to the Group in future.

The Directors (including the independent non-executive Directors) are of the view that the terms of the Changde Acquisition Agreement and the Xiangtan Acquisition Agreement are on normal commercial terms and are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

HONG KONG LISTING RULES IMPLICATIONS

Sinoma Cement is a wholly-owned subsidiary of the Company. Hunan Niuli is the substantial shareholders of

6 both Sinoma Changde and Sinoma Xiangtan, the subsidiaries of the Company, and therefore Hunan Niuli is a connected person of the Company under the Hong Kong Listing Rules. The Acquisitions constitute connected transactions of the Company under Chapter 14A of the Hong Kong Listing Rules.

As one or more of the applicable percentage ratios (as defined under Rule14A.10 of the Hong Kong Listing Rules) in respect of aggregated transaction values of the Acquisitions exceed 0.1% but below 2.5%, the Acquisitions are subject to the reporting and announcement requirements under Rule 14A.45 to 14A.47 of the Hong Kong Listing Rules but exempt from the independent shareholders' approval requirement under Rule 14A.48 of the Hong Kong Listing Rules.

To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiry, the Company confirms that there is no other transaction entered into between any member of the Group and Hunan Niuli or its associates within a 12-month period from the date of this announcement or otherwise related, which would be, together with the Acquisitions, regarded as a series of transactions and treated as if they are one transaction under Rule 14A.25 of the Hong Kong Listing Rules.

GENERAL INFORMATION ON THE PARTIES TO THE ACQUISITIONS

The Group

The Group is a leading provider of cement equipment and engineering services in the world. The Group is also a leading producer of non-metal materials in the PRC with significant market share for glass fiber and high-tech materials as well as for cement in selected regional markets.

Sinoma Cement

Sinoma Cement is principally engaged in production and sales of cement and cement products.

Hunan Niuli

Hunan Niuli is principally engaged in production and sales of cement and clinker.

Sinoma Changde

Sinoma Changde is principally engaged in production and sales of cement and clinker.

Sinoma Xiangtan

Sinoma Xiangtan is principally engaged in production and sales of cement and clinker.

DEFINITIONS

In this announcement, unless the context otherwise requires, the following terms shall have the meanings set out below:

“Acquisitions” collectively, the Changde Acquisition and the Xiangtan Acquisition

“Board” the board of directors of the Company

7 “Company” China National Materials Company Limited（中国中材股份有限 公司）, a joint stock limited company incorporated under the laws of the PRC and the H Shares of which are listed and traded on the Hong Kong Stock Exchange

"Changde the proposed acquisition in Sinoma Changde by Sinoma Cement Acquisition" under the Changde Acquisition Agreement

"Changde the agreement dated 8 February 2010 and entered into between Acquisition Sinoma Cement and Hunan Niuli in relation to the proposed Agreement acquisition of a 22.87% equity interest in Sinoma Changde from Hunan Niuli

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

“Group” the Company and its subsidiaries

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

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

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

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

"Hunan Niuli" Hunan Niuli Cement Company Limited. （湖南牛力水泥股份有 限公司）, a joint stock limited company incorporated under the laws of the PRC

"PRC" the People’s Republic of China and, for the purpose of this announcement, excludes Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan

“PRC GAAP” generally accepted accounting principles in the PRC

"RMB" , the lawful currency of the PRC

"Sinoma Cement" Sinoma Cement Co., Ltd. （中材水泥有限责任公司）, a limited liability company incorporated under the laws of the PRC and a wholly-owned subsidiary of the Company

"Sinoma Changde" Sinoma Niuli (Changde) Cement Co., Ltd. （常德中材牛力水泥 有限公司）, a limited liability company incorporated under the laws of the PRC and a non wholly-owned subsidiary of the Company as at the date of this announcement

"Sinoma Sinoma Niuli (Xiangtan) Cement Co., Ltd（湘潭中材牛力水泥 Xiangtan" 有限公司）, a limited liability company incorporated under the laws of the PRC and a non wholly-owned subsidiary of the Company as at the date of this announcement

8 “Shareholders” the shareholders of the Company

“Valuation Date” 30 June 2009, being the assessment date adopted by the Valuer in the valuation report

“Valuer” Lixin Assets Appraisal Co., Ltd（北京立信资产评估有 限公司）

"Xiangtan the proposed acquisition in Sinoma Xiangtan by Sinoma Cement Acquisition" under the Xiangtan Acquisition Agreement

"Xiangtan the agreement dated 8 February 2010 and entered into between Acquisition Sinoma Cement and Hunan Niuli in relation to the proposed Agreement” acquisition of a 24.85% equity interest in Sinoma Xiangtan from Hunan Niuli

Unless otherwise stated, the conversion of RMB into HK$ is based on the exchange rate of RMB1.00 = HK$1.1383. Such conversion should not be construed as a representation that the amount in question has been, could have been or could be, converted at any particular rate at all.

By order of the Board CHINA NATIONAL MATERIALS COMPANY LIMITED Tan Zhongming Chairman of the Board

Beijing, 8 February 2010

As at the date of this announcement, the executive Directors are Mr. Tan Zhongming, Mr. Zhou Yuxian and Mr. Li Xinhua, the non-executive Directors are Mr. Yu Shiliang, Mr. Liu Zhijiang and Mr. Chen Xiaozhou, and the independent non-executive Directors are Mr. Leung Chong Shun, Mr. Tong Anyan, Mr. Shi Chungui, Mr. Lu Zhengfei and Mr. Wang Shimin.

Please also refer to the published version of this announcementt on the Company’s website.

9