10:10 CHALCO<02600> - Announcement (2) (3) the working capital for phase I of the revised alumina project should be RMB250 million, in which RMB150 million should be advanced by way of cash by the shareholders on a pro rata basis. The difference in the sum of RMB100 million should be raised by external financings to be guaranteed by the shareholders on a pro rata basis, that is, as to RMB34 million by Guangxi Promoter, RMB33 million by the Company and RMB33 million by China Minmetals. In the meantime and pursuant to the same shareholders' resolutions on 16 January 2004, each of Guangxi Promoter, China Minmetals and the Company advanced RMB51 million, RMB49.5 million and RMB49.5 million, respectively, to the JV Co. as part of their contributions to the working capital. The Company made the advancement of RMB49.5 million by three payments, the first of such payment was made in February 2004 and the last payment in April 2004. As at the date of this announcement, the governmental approvals have not yet been granted and no steps have been taken to increase the total investment or to convert the advances made as capital contributions to the JV Co.. Listing Rules Implications In accordance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules"), the following persons are connected persons of the Company: (1) Guangxi Promoter (formerly known as Guangxi Development and Investment Co., Ltd. *) by reason of its being a promoter of the Company; and (2) the JV Co. by reason of its equity being held as to 34% by Guangxi Promoter. In addition, the JV Co. is an associate of Guangxi Promoter under the Listing Rules. Pursuant to the Listing Rules, transactions between Guangxi Promoter, its associate or the JV Co. and the Company are connected transactions. Formation of the JV Co. as an exempt connected transaction The formation of the JV Co. in February 2003 between the Company and Guangxi Promoter was a de minimus connected transaction which is exempted from disclosure pursuant to the then Rule 14.24(5)(b) of the Listing Rules. The previous board of Directors (including the independent non-executive Directors) of the Company was of the view that the formation of the JV Co. was in the interest of the Company and the agreement was entered into upon normal commercial terms. Advancement of funds as working capital The advancement of an aggregate of RMB49.5 million by the Company to the JV Co. as working capital was made by the Company by three payments, the first of such payment was made in February 2004. The making of advances by the Company to the JV Co. constituted financial assistance by the Company for the benefit of the JV Co.. However, as the financial assistance was provided in proportion to the Company's equity in the JV Co., the Company is of the view that such transaction was an exempt connected transactions for the purposes of then Rule 14.25(2)(b) of the Listing Rules. Proposed increase in the registered capital of the JV Co. Subject to approvals by the relevant administrative authorities, the total investment of the JV Co. will be increased from RMB10 million to RMB668 million with the existing shareholders including the Company contributing to the proposed increase on a pro rata basis. Approvals by the relevant authorities are still pending. The Company intends to convert its advances as part of its capital contribution to the JV Co.. Subject to approvals by the relevant administrative authorities of the proposed increase in total investment of the JV Co. and according to the Listing Rules, conversion of the advancement paid by the Company as capital contribution and any further contribution by the Company to the JV Co. are connected transactions which have to be disclosed in accordance with the requirements of the Listing Rules. Approvals by the relevant administrative authorities for the increase in total investment are still pending. The Directors will make appropriate announcement once the relevant approvals have been obtained and will comply with the disclosure requirement of the Listing Rules. General As at the date of this announcement, the Board of Directors comprises Mr. Xiao Yaqing, Mr. Xiong Weiping, Mr. Luo Jianchuan, Mr. Chen Jihua (executive Directors), Mr. Joseph C. Muscari, Mr. Chen Xiaozhou (non -executive Directors) and Mr. Chiu Chi Cheong, Clifton, Mr. Wang Dianzuo, Mr. Kang Yi (independent non-executive Directors). Made by the order of the Board of the Company the Directors of which individually and jointly accept responsibility for the accuracy of this announcement.