(Incorporated in the Cayman Islands with limited liability) (Stock Code: 8173)

Transcription

1 Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement. This announcement is for information purpose only and does not constitute an invitation or offer to acquire, purchase or subscribe for the securities of the Company. (Incorporated in the Cayman Islands with limited liability) (Stock Code: 8173) (I) PROPOSED CHANGE OF COMPANY NAME; (II) PROPOSED SHARE CONSOLIDATION; (III) PROPOSED CHANGE IN BOARD LOT SIZE; AND (IV) PROPOSED RIGHTS ISSUE ON THE BASIS OF EIGHT RIGHTS SHARES FOR EVERY ONE CONSOLIDATED SHARE HELD ON THE RECORD DATE Underwriter of the Rights Issue PROPOSED CHANGE OF COMPANY NAME The Board proposes to change the English name of the Company from Pan Asia Mining Limited to Union Asia Enterprise Holdings Limited, and to change the dual foreign name of the Company from to. The Change of Company Name is subject to the passing of a special resolution by the Shareholders to approve the Change of Company Name at the EGM and the new name being entered in the register of companies by the Registrar of Companies in Cayman Islands. PROPOSED SHARE CONSOLIDATION The Company intends to put forward a proposal to the Shareholders to effect the Share Consolidation which involves the consolidation of every eight (8) issued and unissued Shares of HK$0.01 each into one (1) Consolidated Share of HK$0.08 each. 1

2 PROPOSED CHANGE IN BOARD LOT SIZE The Shares are currently traded on the Stock Exchange in board lot size of 10,000 Shares. The Board proposes to change the board lot size for trading of the Shares on the Stock Exchange from 10,000 Shares to 40,000 Consolidated Shares conditional upon the Share Consolidation becoming effective. PROPOSED RIGHTS ISSUE Subject to the Share Consolidation becoming effective, the Company proposes to raise not less than approximately HK$283.3 million (before expenses) and not more than approximately HK$283.4 million (before expenses), by way of Rights Issue of not less than 2,529,776,120 Rights Shares and not more than 2,530,038,920 Rights Shares at the Subscription Price of HK$0.112 per Rights Share on the basis of eight (8) Rights Shares for every one (1) Consolidated Share held on the Record Date. The net proceeds from the Rights Issue after deducting the estimated expenses are estimated to be not less than approximately HK$270.0 million and not more than approximately HK$270.1 million. The Company intends to apply net proceeds from the Rights Issue as to (i) approximately HK$229.3 million for Early Partial Redemption of the Convertible Bonds; (ii) approximately HK$5.5 million for repayment of the Loan and payment of interest accrued thereon; and (iii) the remaining balance of not less than approximately HK$35.2 million and not more than approximately HK$35.3 million as general working capital for existing businesses of the Group. The Rights Issue is only available to the Qualifying Shareholders and will not be extended to the Non-Qualifying Shareholders. To qualify for the Rights Issue, all transfers of Consolidated Shares must be lodged for registration with the Registrar by 4:30 p.m. on Wednesday, 13 April The register of members of the Company will be closed from Thursday, 14 April 2016 to Wednesday, 20 April 2016, both dates inclusive, to determine the eligibility of the Rights Issue. The Rights Issue will be fully underwritten by the Underwriter, on the terms and subject to the conditions of the Underwriting Agreement, details of which are set out in the section headed Underwriting Agreement in this announcement. Shareholders and potential investors should note that the Rights Issue is subject to the satisfaction of certain conditions as described under the section headed Conditions of the Rights Issue in this announcement. In particular, it is conditional upon the Underwriting Agreement having become unconditional and the Underwriter not having terminated the Underwriting Agreement in accordance with the terms thereof. Accordingly, the Rights Issue may or may not proceed and the Shareholders and the public are reminded to exercise caution when dealing in the Shares or the Consolidated Shares (as the case may be) and/or nil-paid Rights Shares. 2

3 Shareholders should note that the Consolidated Shares will be dealt in on an exentitlement basis commencing from Tuesday, 12 April 2016 and that dealings in the Rights Shares in the nil-paid form will take place from 9:00 a.m. on Monday, 25 April 2016 to 4:00 p.m. on Tuesday, 3 May 2016 (both dates inclusive) while the conditions to which the Underwriting Agreement is subject to remain unfulfilled. Any Shareholder or other person dealing in the Shares or the Consolidated Shares (as the case may be) and/or nil-paid Rights Shares from the date of this announcement up to the date on which all the conditions of the Rights Issue are fulfilled will accordingly bear the risk that the Rights Issue may not become unconditional or may not proceed. Any Shareholder or other person contemplating any dealings in the Shares or the Consolidated Shares (as the case may be) and/or nil-paid Rights Shares, who is in any doubt about his/her/its position, is recommended to consult his/her/its own professional advisers. GEM LISTING RULES IMPLICATIONS In accordance with Rule 10.29(1) of the GEM Listing Rules, the Rights Issue must be made conditional on approval by the Shareholders in general meeting by a resolution on which any controlling Shareholders and their respective associates or, where there are no controlling Shareholders, the Directors (excluding the independent non-executive Directors) and the chief executive of the Company, and their respective associates shall abstain from voting in favour of the Rights Issue. As at the date of this announcement, the Company does not have any controlling Shareholder, whilst Mr. Koh Tat Lee, Michael ( Mr. Koh ) and his associates, being Ms. Eva Wong (spouse of Mr. Koh) and Kesterion (a company wholly owned by Ms. Eva Wong), in aggregate, hold 289,069,060 Shares, Mr. Liang Tong Wei ( Mr. Liang ) who holds 100,000,000 Shares and Mr. Cheung Hung Man ( Mr. Cheung ) who holds 44,235,000 Shares are required to abstain from voting in favour of the resolution(s) in relation to the Rights Issue at the EGM. Each of Mr. Koh and Mr. Cheung is an executive Director and Mr. Liang is a non-executive Director. GENERAL The Independent Board Committee comprising all the independent non-executive Directors, namely Mr. Chu Hung Lin, Victor, Mr. Tong Wan Sze, Mr. Fung Kwok Leung, Dr. Wan Ho Yuen, Terence, Mr. Li Kwok Chu and Mr. Lau Shu Yan, to advise the Independent Shareholders in connection with the Rights Issue, whether their terms are fair and reasonable and whether they are in the interests of the Company and the Shareholders as a whole, and to advise the Independent Shareholders on how to vote, taking into account the recommendations of the independent financial adviser. In this connection, the Company will appoint an independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in these regards. The Circular containing, inter alias, (i) further details of the Change of Company Name, Share Consolidation, Rights Issue and the Change in Board Lot Size, (ii) a letter of recommendation from the Independent Board Committee to the Independent Shareholders in respect of the Rights Issue, (iii) a letter of advice from the independent financial adviser to the Independent Board Committee and the Independent Shareholders on the Rights Issue; and (iv) a notice convening the EGM will be despatched by the Company to the Shareholders on or before Friday, 11 March

4 PROPOSED CHANGE OF COMPANY NAME The Board proposes to change the English name of the Company from Pan Asia Mining Limited to Union Asia Enterprise Holdings Limited, and to change the dual foreign name of the Company from to. Conditions for the Change of Company Name The Change of Company Name is subject to the following conditions: 1. the passing of a special resolution by the Shareholders at the EGM to approve the Change of Company Name; and 2. the Registrar of Companies in Cayman Islands approving the Change of the Company Name and the new name being entered in the register of companies by the Registrar of Companies in Cayman Islands. Subject to the satisfaction of the conditions set out above, the Change of Company Name will take effect from the date of entry of the new name of the Company on the register of companies maintained by the Registrar of Companies in Cayman Islands. Upon the Change of Company Name becoming effective, the Company will comply with the necessary filing procedures in Hong Kong. Reasons for the Change of Company Name The Board considers that the Change of Company Name will better reflect and emphasise the business focus of the Group. The proposed new name of the Company will provide the Company a better identification and strengthen the Company s corporate image. The Board believes that the Change of Company Name is in the interests of the Company and the Shareholders as a whole. Effects on the Change of Company Name The Change of Company Name will not affect any rights of the Shareholders. All existing share certificates of the Company in issue bearing the existing name of the Company will, upon the Change of Company Name becoming effective, continue to be effective and as documents of title to the shares of the Company and will remain valid for trading, settlement, registration and delivery purposes. Accordingly, there will not be any arrangement for the free exchange of the existing share certificate for new share certificates bearing the new name of the Company. Upon the Change of Company Name becoming effective, any new share certificates of the Company will be issued under the new name of the Company. 4

5 PROPOSED SHARE CONSOLIDATION The Company intends to put forward a proposal to the Shareholders to effect the Share Consolidation which involves the consolidation of every eight (8) issued and unissued Shares of HK$0.01 each into one (1) Consolidated Share of HK$0.08 each. Conditions of the Share Consolidation The Share Consolidation is conditional upon (i) passing of an ordinary resolution to approve the Share Consolidation by the Shareholders by way of poll at the EGM; and (ii) the Listing Committee of the Stock Exchange granting approval to the listing of, and permission to deal in, the Consolidated Shares. Shareholders should note that the Share Consolidation is not conditional on the completion of the Rights Issue. The Share Consolidation will become effective on the next Business Day immediately following the fulfillment of the above conditions. Effect of the Share Consolidation As at the date of this announcement, the authorised share capital of the Company is HK$2,500,000,000 divided into 250,000,000,000 Shares of HK$0.01 each, of which 2,529,776,120 Shares have been issued and are fully paid or credited as fully paid. Assuming that there is no change to the issued share capital of the Company between the date of this announcement and the date of the EGM, immediately after the Share Consolidation becoming effective, the authorised share capital of the Company will become HK$2,500,000,000 divided into 31,250,000,000 Consolidated Shares of HK$0.08 each, of which 316,222,015 Consolidated Shares will be in issue. Upon the Share Consolidation becoming effective, the Consolidated Shares will rank pari passu in all respects with each other. Fractional Consolidated Shares will not be issued by the Company to the Shareholders. Any fractional entitlements of the Consolidated Shares will be aggregated, sold and retained for the benefit of the Company, if feasible and applicable. Other than the relevant expenses, including but not limited to professional fees and printing charges incurred, the implementation of the Share Consolidation will have no effect on the consolidated net asset value of the Group, nor will it alter the underlying assets, business, operations, management or financial position of the Company or the interests of the Shareholders, save for any fractional Consolidated Shares to which Shareholders may be entitled. The Directors believe that the Share Consolidation will not have any material adverse effect on the financial position of the Group. Reasons for the Share Consolidation Pursuant to Rule of the GEM Listing Rules, where the market price of the securities of the issuer approaches the extremities of HK$0.01 or HK$9,995.00, the issuer may be required either to change the trading method or to proceed with a consolidation or splitting of its securities. In view of the recent trading price of the Shares, the Board proposes to implement the Share Consolidation. 5

6 The Share Consolidation will increase the nominal value of the Shares. It is expected that the Share Consolidation would bring about corresponding upward adjustments in the trading price of the Consolidated Shares which will enable the Company to comply with trading requirements of the GEM Listing Rules. The Board therefore believes that the Share Consolidation is in the interests of the Company and the Shareholders as a whole. Application for listing of the Consolidated Shares Application will be made to the Listing Committee of the Stock Exchange for the granting of the listing of, and permission to deal in, the Consolidated Shares. The Consolidated Shares will be identical in all respects and rank pari passu in all respects with each other as to all future dividends and distributions which are declared, made or paid. Subject to the granting of the listing of, and permission to deal in, the Consolidated Shares on the Stock Exchange, the Consolidated Shares will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the commencement date of dealings in the Consolidated Shares on the Stock Exchange or such other date as determined by HKSCC. Settlement of transactions between participants of the Stock Exchange on any trading day is required to take place in CCASS on the second settlement day thereafter. All activities under CCASS are subject to the General Rules of CCASS and CCASS operational procedures in effect from time to time. None of the Shares are listed or dealt in any other stock exchange other than the Stock Exchange, and at the time the Share Consolidation becoming effective, the Consolidated Shares in issue will not be listed or dealt in on any stock exchange other than the Stock Exchange, and no such listing or permission to deal is being or is proposed to be sought. Free exchange of Consolidated Shares certificates and trading arrangement Subject to the Share Consolidation becoming effective, Shareholders may, during the period from Monday, 11 April 2016 to Wednesday, 18 May 2016, submit share certificates for the existing Shares to the Registrar to exchange, at the expense of the Company, for new certificates of the Consolidated Shares. Thereafter, each share certificate for the existing Shares will be accepted for exchange only on payment of a fee of HK$2.50 (or such higher amount as may be from time to time be specified by the Stock Exchange) for each new share certificate issued for the Consolidated Shares or each share certificate for the existing Shares submitted for cancellation, whichever the number of certificates issued or cancelled is higher. With effect from Thursday, 19 May 2016, trading will only be in Consolidated Shares in the form of new share certificates, and the share certificates for the existing Shares will cease to be valid for trading and settlement purpose, but they will continue to be good evidence of legal title and may be exchanged for new share certificates for the Consolidated Shares. 6

7 Odd lots arrangement and matching services In order to facilitate the trading of odd lots (if any) of the Consolidated Shares, the Company will appoint an agent to provide matching services for sale and purchase of odd lots of Consolidated Shares at the relevant market price per Consolidated Share, on a best effort basis, to those Shareholders who wish to acquire odd lots of the Consolidated Shares to make up a full board lot, or to dispose of their holding of odd lots of the Consolidated Shares. Details of the odd lots matching arrangement will be set out in the Circular. Holders of odd lots of the Consolidated Shares should note that successful matching of the sale and purchase of odd lots of the Consolidated Shares are not warranted. Any Shareholder who is in any doubt about the odd lots arrangement, is recommended to consult his/her/its own professional advisers. PROPOSED CHANGE IN BOARD LOT SIZE The Shares are currently traded on the Stock Exchange in board lot size of 10,000 Shares. The Board proposes to change the board lot size for trading of the Shares on the Stock Exchange from 10,000 Shares to 40,000 Consolidated Shares conditional upon the Share Consolidation becoming effective. Based on the theoretical ex-entitlement price of approximately HK$ per Consolidated Share after the Rights Issue based on the theoretical closing price of HK$0.336 per Consolidated Share as quoted on the Stock Exchange on the Last Trading Day, the market value of each board lot of 40,000 Consolidated Shares was approximately HK$5,476, which will be greater than HK$2,000 and comply with the trading requirements under the GEM Listing Rules. Hence, the Board believes that the implementation of the Share Consolidation and the Change in Board Lot Size is in the interests of the Company and its Shareholders as a whole. The Change in Board Lot Size will not result in any change in the relative rights of the Shareholders. PROPOSED RIGHTS ISSUE The Company proposes to raise not less than approximately HK$283.3 million (before expenses) and not more than approximately HK$283.4 million (before expenses), by way of Rights Issue of not less than 2,529,776,120 Rights Shares and not more than 2,530,038,920 Rights Shares at the Subscription Price of HK$0.112 per Rights Share on the basis of eight (8) Rights Shares for every one (1) Consolidated Share held on the Record Date. The details are set out as follows: Issue statistics Basis of the Rights Issue: Subscription Price: Eight (8) Rights Shares for every one (1) Consolidated Share held on the Record Date HK$0.112 Number of Shares in issue as at the date of this announcement: 2,529,776,120 7

8 Issue statistics Number of Consolidated Shares in issue upon the Share Consolidation becoming effective: Number of Rights Shares: Number of Rights Shares underwritten by the Underwriter: Number of Shares in issue upon completion of the Rights Issue: 316,222,015 Consolidated Shares Not less than 2,529,776,120 Rights Shares (Note 1) and not more than 2,530,038,920 Rights Shares (Note 2) Not less than 2,529,776,120 Rights Shares (Note 1) and not more than 2,530,038,920 Rights Shares (Note 2) Not less than 2,845,998,135 (Note 1) and not more than 2,846,293,785 Shares (Note 2) Notes: (1) Calculated and based on the assumption that save for the Share Consolidation, there is no change to the issued share capital of the Company from the date of this announcement up to and including the Record Date. (2) Calculated and based on the assumption that save for the Share Consolidation, there is no change to the issued share capital of the Company other than as a result of the issue of Shares upon exercise of the Outstanding Options in full from the date of this announcement up to and including the Record Date. As at the date of this announcement, (i) there are Outstanding Options which entitle the holders thereof to subscribe for an aggregate of 262,800 Shares or 32,850 Consolidated Shares. Assuming the subscription rights attached to the Outstanding Options are exercised in full on or before the Record Date and the Share Consolidation becoming effective, an additional 262,800 Rights Shares will be issued; and (ii) the Company has in issue the Convertible Bonds with the outstanding principal amount of US$80,000,000 (equivalent to approximately HK$624 million) which is convertible into 1,248,000,000 Shares at the conversion price of HK$0.5 per Share. Pursuant to the Bondholders Undertaking, each of the Bondholders has irrevocably and unconditionally undertaken to the Company and the Underwriter that he/she/it will not exercise any of the conversion rights attached to the Convertible Bonds from the date thereof up to and including the Record Date, none of the Convertible Bonds is exercisable on or before the Record Date. 8

9 Save for the Outstanding Options and the Convertible Bonds, as at the date of this announcement, the Company has no other outstanding convertible securities, warrants, options, derivative or other securities convertible into or exchangeable for any Shares. The Company has no intention to issue or grant any warrants, options and/or convertible securities on or before the Record Date. Assuming that save for the Share Consolidation, there is no change to the issued share capital of the Company from the date of this announcement up to and including the Record Date, a total of 2,529,776,120 Rights Shares will be issued upon the completion of the Rights Issue, which represents 800.0% of the issued share capital of the Company immediately after the Share Consolidation and approximately 88.9% of the Company s issued share capital as enlarged by the issue of the Rights Shares. Assuming that save for the Share Consolidation, there is no change to the issued share capital of the Company other than as a result of the issue of Shares upon exercise of the Outstanding Options in full from the date of this announcement up to and including the Record Date, not more than 2,530,038,920 Rights Shares will be issued upon the completion of the Rights Issue, which represents 800.1% of the issued share capital of the Company immediately after the Share Consolidation and approximately 88.9% of the Company s issued share capital as enlarged by the issue of the Rights Shares and the issue of Shares upon exercise of the Outstanding Options in full. Subscription Price The Subscription Price is HK$0.112 per Rights Share, payable in full upon acceptance of the relevant provisional allotment of Rights Shares or when a transferee of nil-paid Rights Shares applies for the Rights Shares. The Subscription Price represents: (i) (ii) a discount of approximately 66.67% to the theoretical closing price of HK$0.336 per Consolidated Share, based on the closing price of HK$0.042 per Share as quoted on the Stock Exchange on the Last Trading Day and adjusted for the effect of the Share Consolidation; a discount of approximately 66.98% to the average theoretical closing prices of HK$ per Consolidated Share, based on the average closing price of HK$ per Share as quoted on the Stock Exchange for the last five consecutive trading days including and up to the Last Trading Day and adjusted for the effect of the Share Consolidation; and (iii) a discount of approximately 18.19% to the theoretical ex-entitlement price of approximately HK$ per Consolidated Share after the Rights Issue, based on the theoretical closing price of HK$0.336 per Consolidated Share as quoted on the Stock Exchange on the Last Trading Day and adjusted for the effect of the Share Consolidation. The Subscription Price was arrived at after arm s length negotiations between the Company and the Underwriter with reference to the prevailing market price of the existing Shares, the theoretical ex-entitlement price of the Consolidated Shares. 9

10 Apart from the aforesaid, in coming up with the current subscription ratio for the Rights Issue and the Subscription Price, the Company has also considered the following factors: (i) (ii) given the Group s high gearing ratio, the net liabilities position and the fund raising size of the Rights Issue of up to approximately HK$283.4 million (before expenses) was around 2.7 times of the market capitalization of the Company as at the Last Trading Day, it is the need for setting the Subscription Price at a relatively deep discount for inducing the Underwriter to provide underwriting services under the Rights Issue and attracting all of the Qualifying Shareholders to participate in the Rights Issue; the downward trend of the prevailing trading prices of the Shares in the past six months which decreased from HK$0.145 on 17 August 2015 to HK$0.042 on the Last Trading Day, representing a decrease of approximately 71.03%; (iii) in view of the uncertainties in the financial market in Hong Kong as a result of the uncertainties stemming from fluctuating market sentiment, capital flow, trend of interest rate, volatility in money supply in different major economies and different economic decisions made by different countries, the Directors consider that it will be difficult to attract the Qualifying Shareholders to reinvest in the Company through the Rights Issue if the Subscription Price was not set at a relatively deep discount to the historical trading prices of the Shares; (iv) under the Rights Issue, all the Qualifying Shareholders will be offered the same opportunity to maintain their proportionate interests in the Company and to participate in the growth and development of the Company. Should the Qualifying Shareholders participate in the Rights Issue, they will be subscribing the Rights Shares at a lower price as compared to the historical and prevailing market price of the Shares; (v) inherent dilutive nature of Rights Issue in general if the Qualifying Shareholders did not take up their entitlements under the Rights Issue in full. However, the Qualifying Shareholders have the first right to decide whether to accept their entitlements of the Rights Shares; and (vi) although the Rights Issue has an inherent dilutive nature, it is subject to Shareholders approval, which means that the Shareholders have a right to disapprove the Rights Issue and the Underwriter has also undertaken to the Company that none of the persons to be procured by the Underwriter to subscribe for the Underwritten Shares will be a substantial Shareholder as a result of the Rights Issue. In view of the above, the Board considers the terms of the Rights Issue, including the Subscription Price which has been set as a discount to the theoretical closing price of the Consolidated Shares on the Last Trading Day with an objective to encourage existing Shareholders to take up their entitlements so as to participate in the potential growth of the Company, to be fair and reasonable and in the best interests of the Company and the Shareholders as a whole. However, those Qualifying Shareholders who do not take up in full the Rights Shares to which they are entitled should note that their shareholdings in the Company will be diluted. If all the Qualifying Shareholders do not take up the Rights Shares to which they are entitled and the Underwriter takes up all the Rights Shares, the percentage 10

11 of shareholding (assuming that there is no change to the issued share capital of the Company from the Last Trading Day up to and including the Record Date) of the existing public Shareholders will be reduced from 78.4% to approximately 8.7%, representing a dilution effect on the shareholding interests of approximately 88.9% as a result of the Rights Issue. Moreover, the dilution impact on shareholding after taking into account the monetary effect of the Rights Issue (estimated based on discount of the Subscription Price to the theoretical closing price of the Consolidated Shares on the Last Trading Day) was approximately 59.3%. The estimated net price per Rights Share after deducting the related expenses of the Rights Issue will be approximately HK$ Qualifying Shareholders The Rights Issue is only available to the Qualifying Shareholders and will not be extended to the Non-Qualifying Shareholders. The Company will send the Prospectus Documents to the Qualifying Shareholders. To qualify for the Rights Issue, the Shareholders must at the close of business on the Record Date: (i) (ii) be registered on the register of members of the Company; and not be the Non-Qualifying Shareholders. In order to be registered as members of the Company on the Record Date, the Shareholders must lodge any transfer of the Consolidated Shares (with the relevant share certificates) for registration with the Registrar by 4:30 p.m. on Wednesday, 13 April The address of the Registrar is at Level 22, Hopewell Centre, 183 Queen s Road East, Hong Kong. Rights of the Overseas Shareholders If, at the close of business on the Record Date, a Shareholder s address on the register of members of the Company is in a place outside Hong Kong, that Shareholder may not be eligible to take part in the Rights Issue as the Prospectus Documents will not be registered and/or filed under the applicable securities legislation of any jurisdictions other than Hong Kong. The Board will make enquiries to its lawyers as to whether the issue of Rights Shares to the Overseas Shareholders may contravene the applicable securities legislation of the relevant overseas places or the requirements of the relevant regulatory body or stock exchange pursuant to the GEM Listing Rules. If, after making such enquiry, the Board is of the opinion that it would be necessary or expedient not to offer the Rights Shares to such Overseas Shareholders, no provisional allotment of Rights Shares will be made to such Overseas Shareholders. Accordingly, the Rights Issue will not be extended to the Non-Qualifying Shareholders. The Company will send the Prospectus, for information only, to the Non-Qualifying Shareholders, without the PAL and EAF. The Company shall provisionally allot the Rights Shares which represent the entitlements of the Non-Qualifying Shareholders to a nominee of the Company in nil-paid form and the Company shall procure that such nominee shall endeavour to sell the rights as soon as practicable after dealings in nil-paid Rights Shares commence and in any event on or before 11

12 the last day of dealings in nil-paid Rights Shares at a net premium (nil-paid). If and to the extent that such rights can be so sold, the nominee of the Company shall account to the Company for the net proceeds of sale (after deducting the expenses of sale, if any), on the basis that the net proceeds after deducting the expenses of sale (if any) attributable to the sale of the Rights Shares that would otherwise have been allotted to the Non-Qualifying Shareholders shall be distributed pro rata to their shareholdings as at the Record Date (but rounded down to the nearest cent) to the Non-Qualifying Shareholders provided that individual amounts of HK$100 or less shall be retained by the Company for its own benefit. Any of such nil-paid rights which are not sold as aforesaid will be dealt with as Rights Shares not taken up. Overseas Shareholders should note that they may or may not be entitled to the Rights Issue. Accordingly, Overseas Shareholders should exercise caution when dealing in the securities of the Company. Closure of register of members The register of members of the Company will be closed from Friday, 1 April 2016 to Friday, 8 April 2016 (both dates inclusive) to determine the eligibility of the Shareholders to vote at the EGM. No transfer of Shares will be registered during such period. The Company s register of members will also be closed from Thursday, 14 April 2016 to Wednesday, 20 April 2016 (both dates inclusive) to determine the entitlement to the Rights Issue. No transfer of Consolidated Shares will be registered during such period. Basis of provisional allotment The basis of the provisional allotment shall be eight (8) Rights Shares (in nil-paid form) for every one (1) Consolidated Share held by the Qualifying Shareholders at the close of business on the Record Date. Application for all or any part of a Qualifying Shareholder s provisional allotment should be made by completing the PAL and lodging the same with a remittance for the Rights Shares being applied for with the Registrar by the Latest Time for Acceptance. Status of the Rights Shares The Rights Shares (when allotted, fully paid and issued) will rank pari passu in all respects with the Consolidated Shares in issue on the date of allotment and issue of the Rights Shares. Holders of the fully-paid Rights Shares will be entitled to receive all future dividends and distributions which are declared, made or paid on or after the date of allotment and issue of the Rights Shares. Fractions of Rights Shares On the basis of provisional allotment of eight (8) Rights Shares for every one (1) Consolidated Share held on the Record Date, no fractional entitlements to the Rights Shares will arise under the Rights Issue. 12

13 Certificates of the Rights Shares and refund cheques Subject to fulfillment of the conditions of the Rights Issue, certificates for the fully-paid Rights Shares are expected to be despatched on or before Wednesday, 18 May 2016 to those entitled thereto by ordinary post at their own risk. If the Rights Issue is terminated, refund cheques are expected to be despatched on or before Wednesday, 18 May 2016 by ordinary post at the respective Shareholders own risk. Refund cheques in respect of wholly or partially unsuccessful applications for excess Rights Shares (if any) are also expected to be posted on or before Wednesday, 18 May 2016 by ordinary post to the applicants at their own risk. Application for excess Rights Shares Qualifying Shareholders will have the right to apply for any unsold provisional allotment of the Non-Qualifying Shareholders and any Rights Shares provisionally allotted but not accepted by the Qualifying Shareholders. Application may be made by Qualifying Shareholders completing the EAF and lodging the same with a separate remittance for the excess Rights Shares being applied for. The Company will allocate the Rights Shares in excess of the entitlement at its discretion on a fair and equitable basis to the Qualifying Shareholders who have applied for excess Rights Shares. Shareholders who have been offered odd lots of the Rights Shares should note that there is no guarantee that such odd lots of the Rights Shares will be topped up to create whole board lots pursuant to applications for the excess Rights Shares. The Directors will allocate the excess Rights Shares at their discretion on a fair and equitable basis on the following principles: (i) (ii) no preference will be given to applications for topping-up odd-lot holdings to whole-lot holdings as the giving of such preference may potentially be abused by certain investors by splitting their Shares and thereby receiving more Rights Shares than they would receive if such preference is not given, which is an unintended and undesirable result; and subject to availability of excess Rights Shares, the excess Rights Shares will be allocated to the Qualifying Shareholders who have applied for excess application on a pro rata basis based on the excess Rights Shares applied for by them. Any Rights Shares not applied for by the Qualifying Shareholders and not taken by excess application will be taken up by the Underwriter and sub-underwriter(s). Investors with their Shares held by a nominee company should note that the Board will regard the nominee company (including HKSCC Nominees Limited) as a single Shareholder according to the register of members of the Company. Accordingly, the Shareholders should note that the aforesaid arrangement in relation to the allocation of the excess Rights Shares will not be extended to beneficial owners individually. Investors with their Shares held by a nominee company are advised to consider whether they would like to arrange for registration of the relevant Shares in the name of the beneficial owner(s) prior to the Record Date. Shareholders and investors should consult their professional advisers if they are in any doubt as to their status. 13

14 Investors whose Shares are held by their nominee(s) and who would like to have their names registered on the register of members of the Company on the Record Date must lodge all necessary documents with the Registrar for completion of the relevant registration by 4:30 p.m. (Hong Kong time) on Wednesday, 13 April Application for listing of the Rights Shares The Company will apply to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Rights Shares (in both nil-paid and fully-paid forms). The trading board lot size of the Rights Shares (in both nil-paid and fully-paid forms) is 40,000 Consolidated Shares. No part of the securities of the Company is listed or dealt in or on which listing or permission to deal is being or is proposed to be sought on any other stock exchange. Subject to the granting of the listing of, and permission to deal in, the Rights Shares in both their nilpaid and fully-paid forms on the Stock Exchange and compliance with the stock admission requirements of HKSCC, the Rights Shares in both their nil-paid and fully-paid forms will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the commencement date of dealings in the Rights Shares in both their nilpaid and fully-paid forms on the Stock Exchange or such other date as determined by HKSCC. Settlement of transactions between participants of the Stock Exchange on any settlement day is required to take place in CCASS on the second settlement day thereafter. All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time. All necessary arrangements will be made to enable the Rights Shares in both their nil-paid and fully-paid forms to be admitted into CCASS. Dealings in the Rights Shares in both their nil-paid and fully-paid forms which are registered in the register of members of the Company in Hong Kong maintained by the Registrar will be subject to the payment of stamp duty, Stock Exchange trading fee, the Securities and Futures Commission transaction levy and other applicable fees and charges in Hong Kong. UNDERWRITING ARRANGEMENT Underwriting Agreement Date: Underwriter: Total number of Rights Shares: Total number of Rights Shares underwritten by the Underwriter: 15 February 2016 (after trading hours) Freeman Securities Limited Not less than 2,529,776,120 Rights Shares and not more than 2,530,038,920 Rights Shares all the Rights Shares, being not less than 2,529,776,120 Rights Shares and not more than 2,530,038,920 Rights Shares Underwriting commission: 3.0% 14

15 The Rights Issue is fully underwritten by the Underwriter. To the best of the Directors knowledge, information and belief, having made all reasonable enquiries, as at the date of this announcement, the Underwriter and its ultimate beneficial owners are Independent Third Parties. The Board considers the terms of the Underwriting Agreement including the commission rate accord with market practice and are fair and reasonable so far as the Company and the Shareholders are concerned. As at the date of this announcement, the Board had not received any information or irrevocable undertaking from its substantial Shareholder of its intention to take up its assured entitlements under the Rights Issue. Conditions of the Rights Issue The Rights Issue is conditional upon: (i) (ii) the passing of necessary resolution(s) at the EGM to approve the Rights Issue by the Independent Shareholders; the delivery to the Stock Exchange for authorisation and the registration with the Registrar of Companies in Hong Kong respectively one copy of each of the Prospectus Documents duly signed by two Directors (or by their agents duly authorised in writing) as having been approved by resolution of the Directors (and all other documents required to be attached thereto) and otherwise in compliance with the GEM Listing Rules and the Companies (Winding Up and Miscellaneous Provision) Ordinance not later than the Prospectus Posting Date; (iii) the posting of the Prospectus Documents to the Qualifying Shareholders on or before the Prospectus Posting Date; (iv) the Listing Committee of the Stock Exchange granting or agreeing to grant (subject to allotment) and not having withdrawn or revoked listing of and permission to deal in the Rights Shares in their nil-paid and fully-paid forms by no later than the first day of their dealings; (v) the delivery of the duly executed Bondholders Undertaking by all the Bondholders in respect of the entire outstanding Convertible Bonds to the Company and the Underwriter on or before the date of the Underwriting Agreement; (vi) compliance with and performance of all undertakings and obligations by all the Bondholders under and pursuant to the Bondholders Undertaking; (vii) the obligations of the Underwriter becoming unconditional and that the Underwriting Agreement is not terminated in accordance with its terms; (viii) the Share Consolidation has become effective; and 15

16 (ix) compliance with and performance of all undertakings and obligations of the Company under the Underwriting Agreement and the representations and warranties given by the Company under the Underwriting Agreement remaining true, correct and not misleading in all material respects. The conditions precedents, save and except item (ix) above which can only be waived by the Underwriter, are incapable of being waived. If the conditions precedents are not satisfied and/ or waived (as the case may be) in whole or in part by the Company or by the Underwriter by 30 May 2016 or such other date as the Company and the Underwriter may agree, the Underwriting Agreement shall terminate and no party shall have any claim against any other party for costs, damages, compensation or otherwise save for any antecedent breaches. Termination of the Underwriting Agreement If at any time on or before the Latest Time for Termination: (A) the Underwriter shall become aware of the fact that, or shall have reasonable cause to believe that any of the representations, warranties and undertakings in the Underwriting Agreement was untrue, inaccurate, misleading or breached, and in each case the same is (in the reasonable opinion of the Underwriter) material in the context of the Rights Issue; or (B) there shall be: (i) (ii) any new law or regulation is enacted, or there is any change in existing laws or regulations or any change in the interpretation or application thereof by any court or other competent authority, whether in Hong Kong, Cayman Islands or elsewhere; any change in local, national or international financial, political, industrial or economic conditions; (iii) any change of an exceptional nature in local, national or international equity securities or currency markets; (iv) any local, national or international outbreak or escalation of hostilities, insurrection or armed conflict; (v) any moratorium, suspension or material restriction on trading in securities generally on the Stock Exchange; (vi) any suspension in the trading of the Shares on the Stock Exchange for a continuous period of 7 trading days (as defined in the GEM Listing Rules); or (vii) any change or development involving a prospective change in taxation or exchange controls in Hong Kong, Cayman Islands or elsewhere; 16

17 which is or are, in the reasonable opinion of the Underwriter: (a) (b) (c) likely to have a material adverse effect on the business, financial position or prospects of the Group taken as a whole; or likely to have a material adverse effect on the success of the Rights Issue or the level of Rights Shares to be taken up; or so material as to make it inappropriate, inadvisable or inexpedient to proceed further with the Rights Issue, then the Underwriter may, by notice in writing given to the Company on or before the Latest Time for Termination, rescind the Underwriting Agreement and thereupon all obligations of the Underwriter thereunder shall cease and determine and no party shall have any claim against any other party in respect of any matter or thing arising out of or in connection with the Underwriting Agreement (save for any antecedent breaches thereof) and the Rights Issue shall not proceed. REASONS FOR THE RIGHTS ISSUE AND USE OF PROCEEDS The Group is principally engaged in exploration and exploitation of mineral resources and trading of coals, metals, bunker fuel and beverages. The Rights Issue will also offer existing Shareholders the opportunity to participate in the future development of the Company on equal terms. The gross proceeds from the Rights Issue will be not less than approximately HK$283.3 million and not more than approximately HK$283.4 million. The net proceeds from the Rights Issue after deducting the estimated expenses are estimated to be not less than approximately HK$270.0 million and not more than approximately HK$270.1 million. The Company intends to apply net proceeds from the Rights Issue as to (i) approximately HK$229.3 million for Early Partial Redemption of the Convertible Bonds; (ii) approximately HK$5.5 million for repayment of the Loan and payment of interest accrued thereon; and (iii) the remaining balance of not less than approximately HK$35.2 million and not more than approximately HK$35.3 million as general working capital for existing businesses of the Group. Early Partial Redemption and repayment of the Loan and the payment of interest accrued thereon As disclosed in the interim report of the Company for the six months ended 30 September 2015 (the Interim Report 2016 ), the Company had outstanding 2% Convertible Bonds with outstanding principal amount of US$80,000,000 (equivalent to approximately HK$624 million) as at 30 September The Convertible Bonds was initially held by Kesterion. On 19 November 2015, Kesterion has transferred the Convertible Bonds to varies companies and individuals, each of them is an Independent Third Party. On 12 February 2016, a holder of the Convertible Bonds, Gloss Rise Limited ( Gloss Rise ), has agreed with the Company to accept 98% of the Convertible Bonds with principal amount of US$30 million as full repayment and waive of all accrued interest thereon, provided that such repayment is made on or before 30 June Gloss Rise acquired the Convertible Bonds with an aggregate amount 17

18 of US$40 million from Kesterion at the consideration of HK$59.9 million. As Kesterion considers that the reasons for its transfer of the Convertible Bonds to Gloss Rise at discount is commercially sensitive information, Kesterion would not like to disclose such information to the Company. Gloss Rise and its ultimate beneficial owners are Independent Third Parties. For the period from November 2015 up to the date of this announcement, the outstanding interest of the Convertible Bonds under the Early Partial Redemption is approximately HK$0.8 million. According to the terms of the Convertible Bonds, the Company has the right to early redeem the outstanding Convertible Bonds any time before the maturity date at 110% of the principal amount outstanding, representing an addition 10% premium over its principal amount. Since the Convertible Bonds are bearing 2% interest per annum, Early Partial Redemption will enable the Group to save the future interest expenses of approximately HK$21.1 million, representing approximately 9.0% of its principal amount. As such, the Early Partial Redemption will save the total payments by approximately HK$49.1 million, representing approximately 21.0% (including 2% redemption discount provided by Gloss Rise and addition 10% premium for early redemption) of its principal amount. Based on the Interim Report 2016, the Group had an unaudited net liabilities of approximately HK$206.1 million as at 30 September The Company considers the net liabilities position of the Group will be improved and turned into net assets position following the completion of the Early Partial Redemption. As also stated in the Interim Report 2016, the gearing ratio of the Group, calculated based on total non-current liabilities of approximately HK$455.3 million (31 March 2015: approximately HK$859.9 million) against total deficit of approximately HK$206.1 million (31 March 2015: approximately HK$625.0 million), increased from approximately % to % as at 30 September In view of the high gearing ratio of the Group, the Company has continuously sought ways to strengthen its capital structure by improving the gearing ratio and enhance its financial position for future strategic investments when suitable opportunities arise and to reduce the operating and finance costs of the Company and enhance Shareholders value. Additionally, the Directors have been exercising due and careful consideration when choosing the financing method available to the Group from time to time for the best interest of the Group. Given that the Group is in net liabilities position with high gearing ratio as at 30 September 2015 and the Group has been loss making for the past few years, it is uncertain whether the Company will have sufficient internal resources or can obtain any debt financing in time to fulfill the repayment obligation of the outstanding Convertible Bonds upon maturity. The Early Partial Redemption provides an opportunity for the Company to early redeem part of the outstanding amounts so as to reduce the possibility of any force repayment or litigating action against the Company when the outstanding Convertible Bonds falls due. In the event the Company defaults in repayment the outstanding Convertible Bonds upon maturity, the holders of the Convertible Bonds have the rights to file a winding-up petition against the Company and the trading in the Shares will be suspended afterwards. The court may appoint a provisional liquidator of the Company who may proposed a debt restructuring scheme by way of higher dilutive fund raising activities than the current proposed Rights Issue given the weak bargaining power of the Company in the then insolvency position. 18

19 Also, on 16 December 2015, the Company has entered into a loan agreement with a money lending company (the Lender ), a fellow subsidiary of the Underwriter, in relation to obtain a loan of HK$5 million to finance its general working capital. Since the Group is in tight cash position and recorded net cash outflow from operating activities for the six months ended 30 September 2015, it is uncertain whether the Company will have enough cash to repay the Loan and the payment of interest accrued thereon at its maturity date. Therefore, the Board considers that early redemption of part of its outstanding Convertible Bonds and the repayment of the Loan can (i) save total payments (including the (a) outstanding and future interest payment and (b) principal and premium repayment) by approximately 21.0% of the principal amount of the Early Partial Redemption; (ii) reduce the risk of breach of the contract for the Loan in the event the Company fails to obtain required funding by other financing methods to repay the outstanding amounts upon their maturity; (iii) improve the gearing position of the Group and strengthen the Group s capital base; and (iv) reduce the possibility of winding-up petition against the Company and the suspension of trading in the Shares if the Company defaults in repayment of the outstanding Convertible Bonds. As at the date of this announcement, save for the Early Partial Redemption, in the absence of unforeseen circumstances, including but not limited to the favourable early redemption terms provided by the holders of the outstanding Convertible Bonds, the Company does not have any plan to redeem the remaining outstanding Convertibles Bonds. General working capital for existing business of the Group The Company estimates the funding needs for the operating activities of the Group for the next 12 months is approximately HK$35 million. Also, with reference to the interest rate of 2% per annum for the Convertible Bonds and the remaining principal amounts of approximately US$50,000,000 (equivalent to approximately HK$390 million) after taking into account the Early Partial Redemption was financed by the net proceeds of the Rights Issue, the Company is expected to incur interest payment of approximately HK$7.8 million for the next 12 months. Given the bank and cash balances of the Group was only approximately HK$2.3 million which is not sufficient for financing the business operation and development of the Group. Therefore, the Directors consider that it will be a merit for the Group to have additional working capital for its business operation and development. The Board considers that it is prudent to finance the Group s long-term growth by long-term financing, preferably in the form of equity. The Board also believes that the Rights Issue will enable the Group to strengthen its capital base and to enhance its financial position. The Rights Issue will give the Qualifying Shareholders the opportunity to maintain their respective pro-rata shareholding interests in the Company and to continue to participate in the future development of the Group. Accordingly, the Board considers that fund raising through the Rights Issue is in the interests of the Company and the Shareholders as a whole. 19

20 The Board has considered other fund raising alternatives, including bank borrowings and issue of new shares or convertible securities. In comparison to a rights issue, (i) bank borrowings would result in additional interest burden and higher gearing ratio of the Group; (ii) issue of new shares or convertible securities would be difficult due to the current market condition and the Company has yet to identify suitable potential investors. In view of the above, the Board considers that raising funds by way of the Rights Issue is more efficient and beneficial to the Company and the Shareholders as a whole as compared to raising fund by any other means. Based on current information available to the Group as stated above, the Company estimates that the net proceeds from the Rights Issue shall be sufficient for the Group s expected funding requirements for the next 12 months. In addition, as at the date of this announcement, save for the Rights Issue, the Company did not have any immediate plan or was not contemplating to have further fund raising for at least the next twelve months for financing its business or investments and any other potential projects or transactions of the Company. WARNING OF THE RISKS OF DEALING IN THE SHARES OR THE CONSOLIDATED SHARES (AS THE CASE MAY BE) AND/OR NIL-PAID RIGHTS SHARES Shareholders and potential investors should note that the Rights Issue is subject to the satisfaction of certain conditions as described under the section headed Conditions of the Rights Issue in this announcement. In particular, it is conditional upon the Underwriting Agreement having become unconditional and the Underwriter not having terminated the Underwriting Agreement in accordance with the terms thereof. Accordingly, the Rights Issue may or may not proceed and the Shareholders and the public are reminded to exercise caution when dealing in the Shares or the Consolidated Shares (as the case may be) and/or nil-paid Rights Shares. Shareholders should note that the Consolidated Shares will be dealt in on an exentitlement basis commencing from Tuesday, 12 April 2016 and that dealings in Rights Shares in the nil-paid form will take place from 9:00 a.m. on Monday, 25 April 2016 to 4:00 p.m. on Tuesday, 3 May 2016 (both dates inclusive) while the conditions to which the Underwriting Agreement is subject to remain unfulfilled. Any Shareholder or other person dealing in the Shares or the Consolidated Shares (as the case may be) and/or nilpaid Rights Shares from the date of this announcement up to the date on which all the conditions of the Rights Issue are fulfilled will accordingly bear the risk that the Rights Issue may not become unconditional or may not proceed. Any Shareholder or other person contemplating any dealings in the Shares or the Consolidated Shares (as the case may be) and/or nil-paid Rights Shares, who is in any doubt about his/her/its position, is recommended to consult his/her/its own professional advisers. 20