10:43     MAANSHAN IRON<00323> - Announcement (2)                             

    structure manufacturing and installation business and the                 
    electrical and mechanical equipment installation business of              
    the Construction Company of RMB149,773,600 (approximately                 
    HK$141.2958 million) as at 31 January 2005 as appraised by                
    Jiangsu Talent Certified Public Accountants, an accounting firm           
    appointed by the Company and is independent of the Company and            
    Magang (Group) Holding Company Limited (the "Holding") and their          
    respective associates. Such amount is payable within 15 days              
    from the effective date of the agreement, to be financed by               
    internal funds of the Company. Pursuant to the "Rules Governing           
    the Listing of Shares on the Shanghai Stock Exchange" (*) and the Rules   
    Governing the Listing of                                                  
    Securities on The Stock Exchange of Hong Kong Limited (the "Stock         
    Exchange") (the "Listing Rules"), the Construction Company,               
    being a wholly-owned subsidiary of the controlling shareholder            
    of the Company, the Holding, is a connected party of the Company          
    and the transaction constitutes a connected transaction of the            
    Company. As the consideration of the connected transaction is             
    less than 5% of the latest audited net assets of the Company,             
    under the "Rules Governing the Listing of Shares on the Shanghai          
    Stock Exchange", the transaction shall be only subject to a               
    relevant resolution being passed by the Board of Directors and            
    immediate disclosure without having to obtain approval at the             
    Company's general meeting. Besides, as the total consideration            
    of the connected transaction represents more than 0.1% but less           
    than 2.5% of the respective applicable percentage ratios under            
    Rule 14.07 of the Listing Rules, the transaction shall be                 
    exempted from the approval by independent shareholders as                 
    required in Rule 14A.32 of the Listing Rules, but subject to              
    the reporting and announcement requirements under Rules 14A.45            
    and 14A.47. In compliance with Rule 14A.45 of the Listing Rules,          
    details of the transaction will be disclosed in the annual report         
    of the Company for the year ended 31 December 2005.                       
                                                                              
    At the twenty-third meeting of the fourth session of the Board            
    of Directors of the Company convened on 28 April 2005, all                
    directors made prudent discussion on the transaction. Four                
    connected directors including Mr. Gu Jianguo, Mr. Gu Zhanggen,            
    Mr. Shi Zhaogui and Mr. Zhao Jianming abstained from voting under         
    the requirement, and non-connected directors unanimously                  
    approved the resolution. Independent directors Madam Cheng                
    Shaoxiu (representing herself and Mr. Shi Jianjun and Mr. Chan            
    Yuk Sing) and Mr. Wu Junnian believed that the connected                  
    transaction was in the best interest of the Company and                   
    shareholders, that the consideration was fair and reasonable,             
    and that the transaction would not have any adverse effect on             
    the existing and future financial positions of the Company.               
    Therefore, the aforesaid independent directors agreed to approve          
    the resolution.                                                           
                                                                              
    B.      PROFILES OF THE COMPANY AND THE CONNECTED PARTY                   
                                                                              
    The Company is one of the largest iron and steel producers and            
    operators in the People's Republic of China (the "PRC"), and              
    is mainly engaged in the production and sale of iron and steel            
    products.                                                                 
                                                                              
    The connected party to the agreement, the Construction Company,           
    is a wholly-owned subsidiary established by the controlling               
    shareholder of the Company, the Holding. Based on the "Enterprise         
    Legal Person Business Licence" (Registered Number:                        
    3405001002436) issued by Maanshan Administration of Industry              
    and Commerce (*)to the Construction Company,                              
    the Construction Company is established as a company with limited         
    liability with registered capital of RMB178,100,000                       
    (approximately HK$168.02 million). Its registered address is              
    Majian Courtyard, Yushan Road, Maanshan City, Anhui Province              
    and its legal representative is Zhang