Chapter 1 General Provisions

Article 1: In order to safeguard the state’s ownership rights over resource-based assets and to strengthen and standardize the management of payments for exploration and mining rights made through equity contributions, this Regulation is formulated in accordance with the relevant provisions of the "State Council’s Approval on the Pilot Implementation Plan for Deepening the Reform of the Paid Use System for Coal Resources" (Guo Han [2006] No. 102) and the "Notice from the Ministry of Finance and the Ministry of Natural Resources on Issues Relating to Deepening the Reform of the Paid Acquisition System for Exploration and Mining Rights" (Cai Jian [2006] No. 694).

Article 2: The term “payment of exploration rights and mining rights fees by way of share conversion” as referred to in these Measures means that, where an exploration rights or mining rights holder genuinely faces difficulties in paying the exploration rights or mining rights fees to the state in cash, and on a voluntary basis, with prior approval, part or all of the fees may be paid in the form of shares. The number of shares converted shall be calculated based on the proportion of the fees payable relative to the net assets of the exploration rights or mining rights holder.

Article 3: These Measures apply to the management of equity interests formed by the payment of exploration and mining rights fees through shareholding, which are held by the Central Geological Exploration Fund (hereinafter referred to as the “Central Geologic Exploration Fund”).

Chapter 2: Application and Approval

Article 4: Where the conditions for paying the fees for exploration rights and mining rights by means of share conversion are met, the holders of such rights may submit an application in accordance with the approval and registration authority applicable to exploration and mining rights. For those subject to central-level approval and registration, the holders of exploration and mining rights may submit their applications through the competent authorities or directly to the Ministry of Finance and the Ministry of Natural Resources. For those subject to local-level approval and registration, the holders of exploration and mining rights may submit their applications to the Ministry of Finance and the Ministry of Natural Resources through the provincial finance departments and natural resources management authorities in their respective localities.

For those exploration and mining rights whose fees have already been approved by the Ministry of Finance and the Ministry of Natural Resources to be converted into state-owned capital, if the option is chosen to pay via share conversion, applications may be submitted through the originally approved channels.

Article 5: The application materials for paying the fees for exploration rights and mining rights by means of share conversion shall be submitted in duplicate, with the primary copy sent to the Ministry of Finance and a copy forwarded to the Ministry of Natural Resources. The application materials shall include:

(1) The official document applying to pay the exploration rights and mining rights fees by means of share conversion.

(2) Photocopies of the valid exploration licenses and mining licenses held by the holders of prospecting rights and mining rights.

(3) Documents confirming, approving, or filing the assessment results of prospecting rights and mining rights, as well as the assessment reports themselves.

(4) Supporting documents that meet the prescribed requirements.

(5) Supporting documents demonstrating that the investors of exploration rights and mining rights have agreed to pay the consideration for such rights in the form of equity shares and transfer them to the Central Geological Exploration Fund. For wholly state-owned enterprises, the supporting documents shall be issued by the state-owned asset supervision and administration agency fulfilling the duties of investor; for limited liability companies and joint-stock companies, the supporting documents shall be issued by the board of directors, the shareholders’ meeting, or the general meeting of shareholders.

(6) The plan for changes in the equity structure and shareholding proportions of the holders of prospecting rights and mining rights after the payment of the fees for such rights in the form of stock shares.

(7) The financial accounting statements for the previous year, audited by a qualified accounting firm.

(8) Photocopies of the business license, property registration certificate, and articles of association of the holders of prospecting rights and mining rights.

(9) Other relevant materials required by the Ministry of Finance and the Ministry of Natural Resources.

Article 6: For applications that meet the conditions for paying exploration and mining rights fees by converting them into shares and have all required documentation complete, the Ministry of Finance, in conjunction with the Ministry of Natural Resources, shall review the applications and issue a joint approval based on their respective responsibilities.

Chapter 3: Confirmation and Management of Equity Rights

Article 7: After receiving the joint approval from the Ministry of Finance and the Ministry of Natural Resources authorizing the payment of exploration and mining rights fees through equity conversion, the holders of such rights shall, in accordance with the provisions of the Company Law and other relevant laws and regulations, proactively contact the central geological exploration fund management agency to promptly handle matters such as amending the company’s articles of association, registering changes in ownership, and conducting accounting treatments.

Article 8: The central geological exploration fund management agency shall, in accordance with relevant state regulations, dispatch personnel to the boards of directors or shareholders’ meetings of enterprises that have paid for prospecting and mining rights through equity contributions, and shall perform their duties in compliance with the law. For major matters decided by the board of directors or the shareholders’ meeting, the central geological exploration fund management agency must seek approval from the Ministry of Finance and the Ministry of Natural Resources before making a decision after obtaining their opinions.

Article 9: The central geological exploration fund management agency, in accordance with instructions from the Ministry of Finance and the Ministry of Natural Resources, is responsible for handling specific tasks such as the transfer of equity holdings and the distribution of proceeds.

Article 10: All equity income held by the Central Geological Exploration Fund (including dividends, proceeds from liquidation, and other such income) shall be used exclusively to replenish the Central Geological Exploration Fund.

Chapter IV Supplementary Provisions

Article 11: This Measures shall be interpreted jointly by the Ministry of Finance and the Ministry of Natural Resources.

Article 12: These Measures shall take effect as of the date of their promulgation.