Asia Coal 00835.HK 
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Coal mine

Saikhan Ovoo coal project

Coal Mining

As disclosed in the Company's annual report for the year ended 31st March 2017, full impairment loss of the mining right licenses has been recognised according to HKAS 36 "Impairment of Assets" in previous financial years.

After seeking the legal advice and assessing the viability of developing potential projects with the mining right licenses in light of the current challenging market and business condi tions in Mongolia, the Directors considered that it is not appropriate to reverse the impairment loss of the mining right licenses in the Period, because of the following:

- the Mining Prohibition Law (the "MPL") may significantly restrict the mining exploration activities of the Group;
- the compensation investigation of any enforcement is still in progress by the Minerals Authority of Mongolia (the "Authority") and the related departments, and accordingly, the amount and timing of any compensation cannot be determined;
- the legal and political environment of Mongolia remains uncertain; and
- there are no precedent cases of compensation paid by the Authority in respect of expropriated area of mining activities.

The Directors will continue to review the carrying amount of the mining right licenses and assess the recoverable amount by taking into account, among others, the overall market conditions for coal and any impact arising from the MPL. If the compensation amount and timing of receipt under the MPL could be accurately determined, the reversal of the impairment loss of the mining right licenses may be recognised as income immediately.