(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

21 EXPECTED TIMETABLE Set out below is the expected timetable for the implementation of the Share Consolidation, the Rights Issue and the Change in Board Lot Size: Event 2016 Expected date of despatch of the Circular and the notice of the EGM Friday, 11 March Latest date and time for lodging transfers of Shares in 4:30 p.m. on order to be qualified for attendance and voting at the EGM Thursday, 31 March Closure of register of members of the Company for transfer of Shares to determine the right to attend and Friday, 1 April to vote at the EGM (both dates inclusive) friday, 8 April Latest time for return of proxy form of the EGM (not less than 48 hours prior to time of the EGM) :00 a.m. on Wednesday, 6 April Record date for attendance and voting at the EGM Friday, 8 April Expected date of the EGM :00 a.m. on Friday, 8 April Announcement of results of the EGM Friday, 8 April The following events are conditional on the fulfillment of the conditions for the implementation of the Share Consolidation. Effective date of the Share Consolidation Monday, 11 April Commencement of dealings in the Consolidated Shares :00 a.m. on Monday, 11 April Original counter for trading in Shares (in board lots of 10,000 Shares) (in the form of existing share certificates) temporarily closes :00 a.m. on Monday, 11 April Temporary counter for trading in Consolidated Shares, in board lots of 1,250 Consolidated Shares (in the form of existing share certificates) opens :00 a.m. on Monday, 11 April First day for the free exchange of existing certificates of the Shares into new share certificates of Consolidated Shares commences Monday, 11 April Last day of dealings in Consolidated Shares on a cum-entitlement basis in respect of the Rights Issue Monday, 11 April 21

22 Event 2016 First day of dealings in Consolidated Shares on an ex-entitlement basis in respect of the Rights Issue Tuesday, 12 April Latest time for lodging transfers of Consolidated Shares in order to qualify for the Rights Issue :30 p.m. on Wednesday, 13 April Register of members closes (both dates inclusive) Thursday, 14 April to to determine the entitlements to the Rights Issue Wednesday, 20 April Record Date for the Rights Issue Wednesday, 20 April Register of members re-opens Thursday, 21 April Despatch of the Prospectus Documents Thursday, 21 April Original counter for trading in Consolidated Shares in new board lots of 40,000 Consolidated Shares (in the form of new share certificates) re-opens :00 a.m. on Monday, 25 April Parallel trading in the Consolidated Shares (in the form of both existing share certificates and new share certificates) commences :00 a.m. on Monday, 25 April Designated broker starts to stand in the market to provide matching services for the sale and purchase of odd lots of Consolidated Shares :00 a.m. on Monday, 25 April First day and time of dealings in nil-paid Rights Shares :00 a.m. on Monday, 25 April Latest time for splitting nil-paid Rights Shares :30 p.m. on Wednesday, 27 April Last day and time of dealings in nil-paid Rights Shares :00 p.m. on Tuesday, 3 May Latest time for acceptance of and payment for the Rights Shares and application for excess Rights Shares :00 p.m. on Friday, 6 May Latest time for termination of the Underwriting Agreement :00 p.m. on Wednesday, 11 May Designated broker ceases to stand in the market to provide matching services for the sale and purchase of odd lots of Consolidated Shares :00 p.m. on Monday, 16 May 22

23 Event 2016 Temporary counter for trading in board lots of 1,250 Consolidated Shares (in the form of existing share certificates) closes :00 p.m. on Monday, 16 May Parallel trading in Consolidated Shares (in the form of new and existing certificates) ends :00 p.m. on Monday, 16 May Announcement of the results of the Rights Issue Tuesday, 17 May Despatch of share certificates for fully-paid Rights Shares and refund cheques (if any) Wednesday, 18 May Last day of free exchange of existing certificates for new certificates for Consolidated Shares Wednesday, 18 May Expected first day of dealings in the fully-paid Rights Shares :00 a.m. on Thursday, 19 May All times stated in this announcement refer to Hong Kong times. The latest time for acceptance of and payment for Rights Shares and application for excess Rights Shares will be postponed if there is a tropical cyclone warning signal no. 8 or above, or a black rainstorm warning i. in force in Hong Kong at any local time before 12:00 noon and no longer in force after 12:00 noon on the date of the Latest Time for Acceptance. Instead the latest time for acceptance of and payment for the Rights Shares and application for excess Rights Shares will be extended to 5:00 p.m. on the same business day; ii. in force in Hong Kong at any local time between 12:00 noon and 4:00 p.m. on the date of the Latest Time for Acceptance. Instead the latest time of acceptance of and payment for the Rights Shares and application for excess Right Shares will be rescheduled to 4:00 p.m. on the following Business Day which does not have either of those warnings in force at any time between 9:00 a.m. and 4:00 p.m.. If the Latest Time for Acceptance is postponed in accordance with the foregoing, the dates mentioned in the section headed Expected timetable in this announcement may be affected. An announcement will be made by the Company in such event as soon as possible. 23

24 EFFECTS ON SHAREHOLDING STRUCTURE The existing and enlarged shareholding structures of the Company immediately before and after the completion of the Rights Issue are set out below: Scenario 1: Assuming that 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: Shareholders As at the date of this announcement No. of Shares Approximately % Immediately after the Share Consolidation becoming effective but before the completion of the Rights Issue No. of Consolidated Shares Approximately % Upon completion of the Rights Issue Assuming no Qualifying Shareholders take up their respective entitlements under the Rights Issue No. of Consolidated Shares Approximately % Assuming full subscription by the Qualifying Shareholders as to their respective entitlements under the Rights Issue No. of Consolidated Shares Approximately % Substantial Shareholders Ms. Eva Wong (Note 1) 289,069, ,133, ,133, ,202, Directors Mr. Liang Tong Wei 100,000, ,500, ,500, ,500, Mr. Cheung Hung Man 44,235, ,529, ,529, ,764, Other public Shareholders 1,982,472, ,809, ,809, ,230,281, The Underwriter and its associates, sub-underwriter(s) and subscriber(s) procured by the Underwriter (if any) (Note 2) 114,000, ,250, ,544,026, ,250, Total 2,529,776, ,222, ,845,998, ,845,998,

25 Scenario 2: Assuming that 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: Upon completion of the Rights Issue Immediately after the Outstanding Options are Assuming full subscription Immediately after exercised in full and the Share Assuming no Qualifying by the Qualifying the Outstanding Options Consolidation becoming Shareholders take up Shareholders as to their As at the date are exercised in full and effective but before the completion their respective entitlements respective entitlements Shareholders of this announcement up to the Record Date of the Rights Issue under the Rights Issue under the Rights Issue No. of No. of No. of No. of Approximately No. of Approximately Consolidated Approximately Consolidated Approximately Consolidated Approximately Shares % Shares % Shares % Shares % Shares % Substantial Shareholders Ms. Eva Wong (Note 1) 289,069, ,069, ,133, ,133, ,202, Directors Mr. Liang Tong Wei 100,000, ,000, ,500, ,500, ,500, Mr. Cheung Hung Man 44,235, ,235, ,529, ,529, ,764, Other public Shareholders 1,982,472, ,982,472, ,809, ,809, ,230,281, Holders of the Outstanding Options 262, , , , The Underwriter and its associates, sub-underwriter(s) and subscriber(s) procured by the Underwriter (if any) (Note 2) 114,000, ,000, ,250, ,544,288, ,250, Total 2,529,776, ,530,038, ,254, ,846,293, ,846,293, Notes: 1. Ms. Eva Wong is interested in 288,797,860 Shares under controlled corporation, Kesterion, and as beneficial owner of 271,200 Shares. Accordingly, Ms. Eva Wong is deemed to have interests in such 289,069,060 Shares in total. Mr. Koh Tat Lee, Michael, an executive Director, is the spouse of Ms. Eva Wong and is therefore deemed to be interested in the 289,069,060 Shares held by Ms. Eva Wong under the SFO. 25

26 2. The Underwriter has undertaken to the Company in the Underwriting Agreement that (i) the Underwriter and parties acting in concert (within the meaning of the Takeovers Code) with it will not trigger a mandatory offer obligation under Rule 26 of Takeovers Code on the part of the Underwriter in respect of performing its obligations under the Underwriting Agreement; (ii) the Underwriter shall use its reasonable endeavours to ensure that the subscribers for Underwritten Shares shall be third parties independent of and not connected with or acting in concert with the Company and its connected persons and their respective associates; (iii) none of the persons to be procured by the Underwriter to subscribe for the Underwritten Shares will be a substantial shareholder of the Company holding 10% or more shareholding in the Company as a result of the subscription of the Underwritten Shares; and (iv) the Underwriter shall and shall cause the sub-underwriters to procure independent subscribers to take up such number of the Shortfall Underwritten Shares as necessary to ensure that the Company will comply with the public float requirement under the GEM Listing Rules upon completion of the Rights Issue. As at the date of this announcement, the Underwriter has not identified/procured any sub-underwriters. 3. Certain percentage figures included in the above tables have been subject to rounding adjustments. Accordingly, figures shown as totals may not be an arithmetic aggregation of the figures preceding them. The Underwriter has sub-underwritten its underwriting commitment to 12 sub-underwriters, being 10 individuals and 2 securities brokerage firms. The list of sub-underwriters and the number of Rights Shares sub-underwritten to each of them are listed out as below: Name Number of Rights Shares sub-underwritten % of the total issued share capital of the Company (upon completion of the Rights Issue Kwong Kai Sing Benny 65,038, % Au Yeung Kai Wah 85,000, % Mak Shun Hei 85,000, % Ip Po Ki 85,000, % Kitchell Osman Bin 85,000, % Pak William Eui Won 85,000, % Yu Man Fung Alice 85,000, % Chow Kam Wah 85,000, % Shum Ming Choy 85,000, % Ip Cheuk Ho 85,000, % HEC Securities Limited 850,000, % Win Wind Securities Limited 850,000, % Each of the 12 sub-underwriters and its respective ultimate beneficial owners (if applicable) are third parties independent of and not connected with the Company and its connected persons. 26

27 FUND RAISING ACTIVITY IN THE PAST 12 MONTHS The Company has not conducted any equity fund raising activities in the past twelve months immediately preceding the date of this announcement. Set out below is the details of the previous rights issue of the Company which was completed on 11 February 2015: Date of announcement Fund raising activity Net proceeds raised (approximately) Proposed use of net proceeds Actual use of proceeds as at the date of this announcement 23 November 2014 (completed on 11 February 2015) Rights issue on the basis of 3 rights shares for every 10 shares at the subscription price of HK$0.5 per rights share with bonus issue of 2 bonus shares for every 3 rights shares taken up HK$146.9 million (i) approximately HK$132.6 million to finance part of its payment obligations under the settlement agreement to settle the various overdue payables; and (ii) the remaining balance will be used for general working capital purpose (i) approximately HK$128.7 million has been used for financing part of its payment obligations under the settlement agreement to settle the various overdue payables; and (ii) the remaining balance has been used for general working capital purpose According to the prospectus of the Company dated 19 January 2015 in relation to the rights issue of 302,755,224 rights shares (the Previous Rights Issue ) with bonus issue of 201,836,816 bonus shares for all rights shares taken up under the Previous Rights Issue (the Bonus Issue ), immediately prior to completion of the Previous Rights Issue and the Bonus Issue, public shareholders of the Company held 543,119,480 shares of the Company (the Initial Public Shareholding ), representing approximately 53.81% of the then total number of issued shares of the Company, being 1,009,184,080 shares. 27

28 A) The dilution effects of the Previous Rights Issue and the Rights Issue on the shareholding interest and their cumulative dilution effects are set out below: Issued share capital of the Company Initial Public Shareholding to the issued share capital of the Company Number of shares/ (Approximate %) Dilution effects on the shareholding interest (Approximate %) Cumulative dilution effects (Approximate %) Immediately prior to completion of the Previous Rights Issue and the Bonus Issue 1,009,184, ,119,480 (53.81%) N/A N/A Immediately after completion of the Previous Rights Issue and the Bonus Issue 1,513,776, ,119,480 (35.88%) Immediately after Completion of the Rights Issue (Note 1) 2,845,998,135 67,889,935 (2.39%) (Note 2) (Note 3) (Note 4) B) The dilution effects of the Previous Rights Issue and the Rights Issue on the share price and their cumulative dilution effects are set out below: Previous Rights Issue Subscription price HK$0.30 (adjusted for the effect of the Bonus Issue) Theoretical closing price on the last trading day Discount of the respective subscription price to theoretical closing price on the last trading day (a) Dilution effects on the shareholding Dilution effect on shareholding after taking into account the share Cumulative dilution effects on shareholding after taking interest price effect into account the (b) (c)=(a)x(b) price effect (Approximate %) (Approximate %) (Approximate %) (Approximate %) HK$ N/A Rights Issue HK$0.112 HK$ (Note 5) Notes: 1. Immediately after completion of the Rights Issue and assuming none of the Rights Shares are subscribed for by the Qualifying shareholders and no new Shares (other than the Rights Shares) are allotted and issued on or before completion of the Rights Issue. 2. Taking into account the Share Consolidation becoming effective. 28

29 3. Immediately after completion of the Previous Rights Issue and the Bonus Issue, the Initial Public Shareholding accounted for approximately 35.88% of the issued share capital of the Company. Following the completion of the Rights Issue, the Initial Public Shareholding decreased to approximately 2.39% from approximately 35.88% which represents dilution effect of approximately 93.53%. 4. Immediately prior to completion of the Previous Rights Issue and the Bonus Issue, the Initial Public Shareholding accounted for approximately 53.81% of the issued share capital of the Company. Following the completion of the Previous Rights Issue and the Bonus Issue and the Rights Issue, the Initial Public Shareholding decreased to approximately 2.39% from approximately 53.81% which represents dilution effect of approximately 95.57%. 5. The share price after deducting the dilution effect on both of the shareholding and share price for the Previous Rights Issue and the Bonus Issue would be 100% 3.92% = 96.08%. The share price after deducting the dilution effect on both of the shareholding and share price for the Rights Issue would be 100% 59.26% = 40.74%. As such, the share price will be diluted to approximately 39.14%, representing cumulative dilution effects of approximately 60.86%. Therefore, as stated as above, if the Initial Public Shareholding does not participate in the Previous Rights Issue and the Rights Issue, the cumulative dilution effects on their shareholding interests would be approximately 95.57%. The cumulative dilution effects on the share prices and the shareholding would be approximately 60.86%. ADJUSTMENTS IN RELATION TO THE OUTSTANDING OPTIONS AND THE CONVERTIBLE BONDS As at the date of this announcement, there are (i) Outstanding Options granted under the Share Option Scheme entitling the holders thereof to subscribe for up to an aggregate of 262,800 Shares; and (ii) the Convertible Bonds with outstanding principal amount of US$80,000,000 (equivalent to approximately HK$624 million) which is convertible into 1,248,000,000 Shares at a prevailing conversion price of HK$0.5 per conversion share. The Rights Issue may cause adjustments to (i) the exercise price of the Outstanding Options and/or the number of Shares to be allotted and issued upon exercise of the Outstanding Options; and (ii) conversion price and/or the number of Shares to be allotted and issued upon exercise of the conversion rights attached to the Convertible Bonds. The Company will make further announcement in respect of such adjustments as and when appropriate. 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 and his associates, 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 who hold 100,000,000 Shares and Mr. Cheung who hold 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. 29

30 For those Shareholders who hold Shares at the date of the EGM and have material interest in the Rights Issue are required to abstain from voting on the resolution in relation to the Rights Issue to be proposed at the EGM pursuant to Rule 2.26 of the GEM Listing Rules. Since part of the proceeds from the Rights Issue will be used to (i) repay the Loan from the Lender, a fellow subsidiary of the Underwriter; and (ii) early redeem the outstanding Convertible Bonds held by Gloss Rise, therefore, the Underwriter and Gloss Rise are considered to have material interest in the Rights Issue. Further, as at the date of this announcement, Smart Jump Corporation ( Smart Jump ), a wholly-owned subsidiary of Freeman Financial Corporation Limited (stock code: 279, which is also the holding company of the Underwriter) holds 114,000,000 Shares, representing approximately 4.51% of the issued share capital of the Company. Both Smart Jump and the Underwriter are fellow subsidiaries. Should the Underwriter, Gloss Rise and their respective associates hold any Shares at the date of the EGM, each of them will be required to abstain from voting on the resolution in relation to the Rights Issue to be proposed at the EGM. As at the date of this announcement, save as aforesaid disclosed each of the Underwriter, the Lender and Gloss Rise is not interested in any Share. 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. An EGM will be held for the purpose of considering and, if thought fit approving, among other things, the Change of Company Name, the Share Consolidation, the Rights Issue and the transactions contemplated thereunder. The Circular containing, inter alias, (i) further details of the 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

31 DEFINITIONS Unless the context requires otherwise, capitalized terms in this announcement shall have the following meanings: associates Board Bondholders Bondholders Undertaking Business Day(s) CCASS Change in Board Lot Size Change of Company Name Circular Companies (Winding Up and Miscellaneous Provisions) Ordinance has the meaning ascribed to this term under the GEM Listing Rules the board of Directors holders of the Convertible Bonds the irrevocable and unconditional undertaking given by the Bondholders in favour of the Company and the Underwriter pursuant to which the Bondholders have undertaken, inter alia, (1) not to transfer or otherwise dispose of any interest in the Convertible Bonds; and (2) not to exercise the conversion rights attached to the Convertible Bonds from the date of Bondholders Undertaking up to and including the Record Date a day (other than a Saturday, Sunday or public holiday) on which licensed banks in Hong Kong are generally open for business throughout their normal business hours the Central Clearing and Settlement System established and operated by HKSCC the proposed change in board lot size of the Shares for trading on the Stock Exchange from 10,000 Shares to 40,000 Consolidated Shares the proposed change of 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 circular to be issued by the Company in relation to, among others, the Change of Company Name, the Share Consolidation, the Rights Issue and the Change in Board Lot Size the Companies (Winding Up and Miscellaneous Provisions) Ordinance, Chapter 32 of the Laws of Hong Kong (as amended form time to time) 31

32 Company connected person(s) Consolidated Share(s) Convertible Bonds Director(s) Early Partial Redemption EGM Excess Application Form or EAF(s) GEM GEM Listing Rules Group HK$ HKSCC Hong Kong Pan Asia Mining Limited, a company incorporated in the Cayman Islands with limited liability, the issued shares of which are listed on GEM (Stock Code: 8173) has the meaning ascribed to this term under the GEM Listing Rules ordinary share(s) of HK$0.08 each in the issued share capital of the Company upon completion of the Share Consolidation 5 years 2% convertible bonds due 2020 issued by the Company with 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 director(s) of the Company for the time being early redemption of the Convertible Bonds in part for principal amount of US$30 million at 98% of the principal amount to be redeemed the extraordinary general meeting of the Company to be convened and held for the Shareholders to consider and approve, among other things, the Change of Company Name, the Share Consolidation, the Rights Issue and the transactions contemplated thereunder the form(s) of application for excess Rights Shares, being in such final form to be agreed between the Company and the Underwriter the Growth Enterprise Market of the Stock Exchange the Rules Governing the Listing of Securities on the GEM of the Stock Exchange the Company and its subsidiaries Hong Kong Dollars, the lawful currency of Hong Kong Hong Kong Securities Clearing Company Limited the Hong Kong Special Administrative Region of the PRC 32

33 Independent Board Committee Independent Shareholder(s) Independent Third Party(ies) Kesterion Last Trading Day Latest Time for Acceptance Latest Time for Termination Listing Committee Loan Non-Qualifying Shareholders Outstanding Options Overseas Shareholders the independent board committee of the Board comprising all of the independent non-executive Directors, established for the purpose of advising and giving recommendation to the Independent Shareholders on the terms of the Rights Issue Shareholders other than those who are required to abstain from voting at the EGM under the GEM Listing Rules third party (parties) independent of and not connected with the Company and its connected persons Kesterion Investments Limited 15 February 2016, being the date of the Underwriting Agreement 4:00 p.m. on Friday, 6 May 2016 (or such later time or date as may be agreed between the Underwriter and the Company in writing as the latest time for acceptance of, and payment for, the Rights Shares as described in the Prospectus) 4:00 p.m. on Wednesday, 11 May 2016 (or such later time or date as may be agreed between the Underwriter and the Company in writing as the latest time to terminate the Underwriting Agreement) has the meaning ascribed to this term under the GEM Listing Rules a loan of HK$5 million, bearing interest at a rate of 2% per month for a term of twelve months those Overseas Shareholder(s) to whom the Board, after making enquires, considers it necessary or expedient on account either of legal restrictions under the laws of the relevant place or the requirements of the relevant regulatory body or stock exchange in that place not to offer the Rights Shares to them share options granted by the Company under the Share Option Scheme which entitle the holders thereof to subscribe for up to an aggregate 262,800 Shares as at the date of the Underwriting Agreement the Shareholders with registered addresses (as shown in the register of members of the Company on the Record Date) which are outside Hong Kong 33

34 PAL (s) PRC Prospectus Prospectus Documents Prospectus Posting Date Qualifying Shareholders Rights Share(s) Rights Issue Record Date Registrar the renounceable provisional allotment letter(s) proposed to be issued to the Qualifying Shareholders in connection with the Rights Issue the People s Republic of China which, for the purpose of this announcement, excludes Hong Kong, Taiwan and the Macau Special Administrative Region of the People s Republic of China the prospectus to be issued by the Company in relation to the Rights Issue the Prospectus, the PAL(s) and the Excess Application Form(s) in respect of the Rights Shares to be issued by the Company in relation to the Rights Issue Thursday, 21 April 2016 or such other date as the Underwriter may agree in writing with the Company for the despatch of the Prospectus Documents to the Qualifying Shareholders or the Prospectus to the Non-Qualifying Shareholders for information only (as the case may be) the Shareholders, other than the Non-Qualifying Shareholders, whose names appear on the register of members of the Company on the Record Date not less than 2,529,776,120 Consolidated Shares and not more than 2,530,038,920 Consolidated Shares proposed to be offered to the Qualifying Shareholders under the Rights Issue for subscription on the basis of eight (8) Rights Shares for every one (1) Consolidated Share held on the Record Date and payable in full on acceptance pursuant to the terms and subject to the conditions set out in the Underwriting Agreement and to be set out in the Prospectus the proposed issue by way of rights issue to the Qualifying Shareholders for the Rights Shares at the Subscription Price on the terms and subject to the conditions set out in the Underwriting Agreement and to be set out in the Prospectus Wednesday, 20 April 2016 or such other date as may be agreed between the Company and the Underwriter for the determination of the entitlements under the Rights Issue the share registrar and transfer office of the Company in Hong Kong,Tricor Tengis Limited, at Level 22, Hopewell Centre, 183 Queen s Road East, Hong Kong 34

35 SFO Share(s) Shareholder(s) Share Consolidation Securities and Futures Ordinance (Chapter 571, Laws of Hong Kong) ordinary share(s) of HK$0.01 each in the share capital of the Company holder(s) of the Share(s) the proposed consolidation of every eight (8) Shares of HK$0.01 each into one (1) Consolidated Share of HK$0.08 each Share Option Scheme the share option scheme adopted by the Shareholders on 25 April 2002 and expired on 24 April 2012 Shortfall Underwritten Shares Stock Exchange Subscription Price Takeovers Code Underwriter Underwriting Agreement the Underwritten Shares not validly accepted by the Qualifying Shareholders and not taken by excess application on or before the Latest Time for Acceptance The Stock Exchange of Hong Kong Limited the issue price of HK$0.112 per Rights Share at which the Rights Shares are proposed to be offered for subscription under the Rights Issue The Hong Kong Code on Takeovers and Mergers Freeman Securities Limited, a licensed corporation to carry on business in Type 1 (dealing in securities) regulated activity under the SFO the underwriting agreement dated 15 February 2016 entered into between the Company and the Underwriter in relation to the underwriting arrangement in respect of the Rights Issue 35

36 Underwritten Shares US$ not less than 2,529,776,120 Rights Shares and not more than 2,530,038,920 Rights Shares being underwritten by the Underwriter pursuant to the terms of the Underwriting Agreement United States dollar, the lawful currency of the United States % per cent. For the purpose of illustration only, the amounts denominated in US$ in this announcement are translated into HK$ at the rate of US$1 = HK$7.8. Such translation should not be construed as a representation that the currency could actually be converted into HK$ at that rate or at all. Hong Kong, 15 February 2016 By order of the Board Pan Asia Mining Limited Yip Man Yi Chairman As at the date of this announcement, the Board comprises four executive Directors, Ms. Yip Man Yi Mr. Cheung Hung Man, Mr. Michael Koh Tat Lee and Mr. Shiu Chi Tak, Titus, two non-executive Directors, Mr. Liang Tong Wei and Mr. Wong Chi Man, and six independent non-executive Directors, 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. This announcement, for which the Directors jointly and individually accept full responsibility, including the particulars given in compliance with the GEM Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief, the information in this announcement is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this announcement misleading. This announcement will remain on the page of Latest Company Announcement on the GEM website for at least 7 days from the date of its posting. 36