11:19 ZHEJIANG GLASS<00739> - Announcement & Resumption (3) Line"); and (d) approximately RMB180 million to fund the construction of a production line for low-emissivity ("Low-E") coated glass with annual production capacity of approximately 2.6 million sq.m. ("Low-E Glass Production Line"). It will be proposed to the Shareholders at the EGM that the Board be authorised, subject to all relevant rules and regulations of the PRC (including but not limited to the listing rules of the Shanghai Stock Exchange), to (i) adjust the investment amount of the Proposed Projects according to their respective construction progress and the actual amount raised from the A Share Issue; and (ii) determine the priority of the Proposed Projects taking into account their respective necessity for the development of the Group's operation in the event that the net proceeds from the A Share Issue are not sufficient to finance all the Proposed Projects. The shortfall will be covered by bank borrowings or other sources or, alternatively, the projects may be carried out only when the Company has sufficient working capital to fund the relevant projects. If the amount of the net proceeds from the A Share Issue exceeds the amount required for the Proposed Projects, the balance will be used as working capital of the Company. 3. Information on the Proposed Projects (a) Soda Ash Production Line General As previously disclosed in the Company's annual report for the year 2003 and the interim report for the six months ended 30 June 2004, the Group intends to set up two production lines for the production of soda ash, which is one of the essential raw materials used for the production of the Group's glass products. The Soda Ash Production Line with an annual production capacity of approximately 900,000 tonnes is planned to be constructed as the first phase of the project. Upon completion of the Soda Ash Production Line, it will be carried on by Qinghai Soda Ash Company Limited, 90% interest of which is owned by the Company with the remaining 10% interest being owned by two independent third parties. The Company has been interested in 90% of the registered capital of Qinghai Soda Ash Company Limited since its establishment in July 2003. Investment amount The Company estimates that the total investment in the Soda Ash Production Line will be approximately RMB1,600 million, among which approximately RMB530 million will be funded from the net proceeds received by the Company from the A Share Issue. Benefits of the Soda Ash Production Line The Directors considers that the construction of the Soda Ash Production Line will be beneficial to the Group as it will ensure a stable supply of soda ash at a cost which is lower than that sourced externally. The market price of soda ash has increased significantly in the PRC during 2004. The Group paid approximately RMB1,300 per ton of soda ash in early 2004 while it paid approximately RMB1,800 per ton towards the end of 2004. The Group currently sources all its soda ash required for the manufacturing of its glass products externally from independent third parties. The Directors expect that the unit cost of soda ash manufactured under the Soda Ash Production Line for the manufacturing of the Group's glass products will be less than approximately RMB1,000 per ton, inclusive of transportation cost. It is expected that such reduction in the costs of production will in turn enhance the competitiveness of the Group in the glass industry. The Group's current demand for soda ash for its five existing float flat glass production lines is approximately 160,000 tonnes per annum. The Directors believe that the Group's demand for soda ash will continue to increase as more float flat glass production lines are to be set up in the next few years. As the production capacity of the Soda Ash Production Line exceeds the current and foreseeable future demand of the Group, the Group will also sell soda ash to the local PRC market to further enhance the revenue and profitability of the Group. (b) Ultra-thin Glass Production Line General The Group intends to set up a new production line with a daily melting capacity of 150 tonnes and an annual production capacity of 10.12