Chongqing Three Gorges Water Conservancy and Electric Power (Group) Co., Ltd. Announcement on the involvement of subsidiaries in litigation

Stock code: 600116 Stock abbreviation: Three Gorges Water Conservancy Number: Pro 2021-049

The Board of Directors and all Directors of the Company warrant that the contents of this announcement are free from any misrepresentation, misleading statement or material omission and accept sole and several liability for the truthfulness, accuracy and completeness of the contents.

Important Content Tips:

● The litigation stage of the case: The loan contract dispute between Chongqing Wujiang Industrial Group Trading Co., Ltd. (hereinafter referred to as "Wujiang Trading Company"), a wholly-owned subsidiary of Chongqing Three Gorges Water Conservancy and Power Group (Shares) Co., Ltd. (hereinafter referred to as "the Company"), and Jiayuan Mining Co., Ltd. of Xiushan County (hereinafter referred to as "Jiayuan Mining"), as well as Wu Hecai, Zhang Lirong and Wu Qi, who are jointly and severally responsible for liquidation, has been accepted and has not yet been heard.

● The status of the listed company as a party: Wujiang Trading Company is the plaintiff.

● The amount involved in the case: the principal and interest of the loan of 113.1237 million yuan, as well as the relevant penalty interest, compound interest, litigation costs, preservation fees, etc. involved in the case.

● Impact on the profit and loss of listed companies: As of September 17, 2021, the balance of principal and interest of borrowings under the Loan Contract between Wujiang Trading Company and Jiayuan Mining (Contract No. JT170031) totaled RMB113.1237 million, and a provision for bad debts was RMB27.75 million. As the above-mentioned litigation case has not yet been heard, it is not yet possible to judge its specific impact on the company's performance. Based on the principle of prudence, the Company expects that there will be a possibility that some of the receivables will not be recovered in the above matters, resulting in the risk of provision for bad debts, which may have a certain impact on the Company's performance for the current year.

I. The basic situation of this litigation case

On September 18, 2021, Wujiang Trading Company filed a lawsuit with the Chongqing No. 4 Intermediate People's Court over a loan contract dispute between it and Jiayuan Mining and the joint and several liquidators Wu Hecai, Zhang Lirong and Wu Qi, and on September 29, 2021, it received the Notice of Acceptance of the Case ([2021] Yu 04 Min Chu No. 466) delivered by the Chongqing No. 4 Intermediate People's Court. As of the date of this announcement, the case has not yet been heard.

(1) Litigants

Plaintiff: Chongqing Wujiang Industrial Group Trading Co., Ltd

Unified social credit code: 915001037659255158

Legal representative: Zhang Man

Address: Chongqing Xiushan County Logistics Park Wuling Yongkang Mechanical and Electrical City, a four-story 18th, 21st, 23rd

Entrusted litigation agents: Yang Hongxin, Chen Yadan, lawyers of Chongqing Baijun Law Firm

Defendant 1: Xiushan Jiayuan Mining Co., Ltd

Unified social credit code: 9150024175008328XN

Legal representative: Wu Hecai

Address: Baizhuang Village, Longchi Town, Xiushan County, Chongqing

Defendant 2: Wu Hecai, male, ID number: 433101 ********1514, lives at No. 50 Huancheng Road, Jishou City, Hunan Province

Defendant 3: Zhang Lirong, female, ID number: 433122 ********1044, lives at No. 50 Huancheng Road, Jishou City, Hunan Province

Defendant 4: Wu Qi, male, ID number: 433101 ********0016, lives at No. 50 Huancheng Road, Jishou City, Hunan Province

(2) The facts and reasons for the case

In 2017, the plaintiff, Wujiang Trading Company, and the defendant, Jiayuan Mining, signed the Loan Contract (Contract No.: JT170031), the Maximum Mortgage Contract (Contract No.: JT170032) and the Movable Property Mortgage Contract (Contract No.: JT170034). The contract stipulates: 1. Wujiang Trading Company provided Jiayuan Mining with a loan of RMB 240 million (paid as agreed), the loan term is 5 years, the borrowing interest rate is 6% per annum, and if the borrowing rate of the Chinese Min bank for more than five years is adjusted up and down during the borrowing period, the borrowing interest rate will be adjusted according to the absolute value of the upward and downward adjustment from the 1st of the following month (if the annual interest rate is less than 6% after adjustment, it will be implemented at 6%, and the unadjusted part will no longer be counted in the next adjustment). Jiayuan Mining mortgaged its mining rights, machinery and equipment from Jiayuan Manganese Ore. Jiayuan Mining violated the contract, Wujiang Trading Company has the right to require Jiayuan Mining to return all the principal and interest of the loan under the contract in advance, and if Jiayuan Company fails to repay the loan on time, it shall pay penalty interest on all the outstanding loan principal. For the interest on the loan that Jiayuan Company cannot pay on time, compound interest is calculated at the penalty interest rate. Jiayuan Mining shall bear all the costs of Wujiang Trading Company for the realization of the creditor's rights and corresponding security rights; 2. Jiayuan Mining shall provide a maximum mortgage guarantee for a series of claims of Wujiang Trading Company against Jiayuan Mining with its Jiayuan manganese mining right (mining license number: C500000201130120335) as collateral, with the maximum amount of the guaranteed claims being RMB321.7254 million, and the scope of the guarantee includes the principal of the claim, interest (including penalty interest and compound interest), liquidated damages, 3. Jiayuan Mining used all its hoist, non-explosion-proof rock drilling trolley and non-explosion-proof crawler bucket loader and other equipment as collateral to guarantee the aforementioned Loan Contract, and the scope of the guarantee was 240 million yuan borrowed under the Loan Contract and interest, liquidated damages, loss compensation and all costs for realizing the claim, and registered the movable property pledge.

At the same time, the defendants Wu Hecai, Zhang Lirong and Wu Qi signed the "Joint and Several Liability Guarantee", promising them to voluntarily provide joint and several liability guarantee guarantees for the principal, interest and liquidated damages of the loans owed by Jiayuan Mining.

Affected by the manganese-related policies in Chongqing Xiushan area, there is uncertainty in the continuing operation of Jiayuan Mining, which may have a significant adverse impact on the performance of repayment obligations, in order to safeguard its own rights and interests, Wujiang Trading Company sent the "Notice of Early Maturity of Loans" to the defendants on September 16, 2021 in accordance with the "Loan Contract", announcing that the principal and interest of the loan under the "Loan Contract" would be due immediately and requiring them to repay the money immediately.

As of September 17, 2021, under the above-mentioned Loan Contract, the defendant Jiayuan Mining still owed RMB112.1208 million in principal and RMB1.0029 million in interest.

(3) Litigation claims

1. Request that the defendant Jiayuan Mining be ordered to immediately repay the principal amount of the loan to the plaintiff Wujiang Trading Company of RMB112.1208 million;

2. Request that the defendant Jiayuan Mining be ordered to immediately repay the interest of the loan of RMB1,002,900 to the plaintiff Wujiang Trading Company as of September 17, 2021;

3. Request that the defendant Jiayuan Mining be ordered to immediately repay the penalty interest to the plaintiff Wujiang Trading Company, which is based on the outstanding principal of the loan of 112.1208 million yuan, and is calculated from September 18, 2021 to the date of payment of the principal from September 18, 2021, according to the standard of 50% (i.e. 9% annual interest rate) of the loan interest rate;

4. Request that the defendant Jiayuan Mining be ordered to immediately repay compound interest to the plaintiff Wujiang Trading Company, compound interest based on the interest owed on the loan of 1,002,900 yuan, according to the standard of 50% increase in the interest rate of the loan (i.e. 9% per annum), from September 18, 2021 to the date of interest payment, the interest is cleared with the principal;

5. Request that the defendant Jiayuan Mining be ordered to immediately pay the plaintiff Wujiang Trading Company 150,000 yuan in legal fees arising from the realization of the creditor's rights;

6. Request that the litigation costs, preservation fees, and preservation guarantee fees (if any) of this case be ordered to be borne by the defendant Jiayuan Mining;

7. Request that the defendants Wu Hecai, Zhang Lirong and Wu Qi be ordered to bear joint and several liability for the repayment of the first to sixth claims mentioned above;

8. Request that the plaintiff Wujiang Trading Company be ordered to enjoy the right of priority in reimbursement of the proceeds from the auction, sale or discounted proceeds of the mortgage provided by the defendant Jiayuan Mining (Jiayuan Manganese Mine Mining Right, Mining License Number: C5000002011102130120335) within the scope of the first to sixth claims mentioned above;

9. It is requested that the plaintiff Wujiang Trading Company be ordered to enjoy the right of priority in repayment of the proceeds from the auction, sale or discount of the movable property collateral (88 pieces of machinery and equipment of 34 categories) provided by the defendant Jiayuan Mining within the scope of the first to sixth claims mentioned above.

Second, the impact on the company's profit for the current period

As of September 17, 2021, the principal balance and interest of the loan under the Loan Contract between Wujiang Trading Company and Jiayuan Mining (Contract No. : JT170031) totaled RMB113.1237 million, and a provision for bad debts was RMB27.75 million.

As the above-mentioned litigation case has not yet been heard, it is not yet possible to judge its specific impact on the company's performance. Based on the principle of prudence, the Company expects that there will be a possibility that some of the receivables will not be recovered in the above matters, resulting in the risk of provision for bad debts, which may have a certain impact on the Company's performance for the current year. The company will fulfill its information disclosure obligations in a timely manner on the progress of the litigation matters in this announcement in accordance with the relevant provisions of the Shanghai Stock Exchange's "Stock Listing Rules" and other relevant provisions, and invites investors to pay attention to investment risks.

This is hereby announced.

Chongqing Three Gorges Water Conservancy and Electric Power (Group) Co., Ltd

Board of Directors

2September 30, 2019