connected transaction subscription of new shares proposed grant of ...

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of HongKong Limited take no responsibility for the contents of this announcement, make norepresentation as to its accuracy or completeness and expressly disclaim any liabilitywhatsoever for any loss howsoever arising from or in reliance upon the whole or anypart of the contents of this announcement.This announcement appears for information purpose only and does not constitute aninvitation or offer to acquire, purchase or subscribe for the securities of the Company.(Incorporated in Bermuda with limited liability)(Stock Code: 8306)CONNECTED TRANSACTIONSUBSCRIPTION OF NEW SHARESPROPOSED GRANT OF SPECIFIC MANDATEAPPLICATION FOR THE GRANT OF THE WHITEWASH WAIVERRESUMPTION OF TRADINGFinancial Adviser to the CompanySubscription of new SharesOn 29 August 2012 (after trading hours), the Company entered into the SubscriptionAgreement with the Subscriber pursuant to which the Subscriber has agreed tosubscribe for 3,750,000,000 Subscription Shares at HK$0.08 per Subscription Share(with a total subscription price of HK$300,000,000).The Subscription Shares represent approximately (i) 74.90% of the existing issuedshare capital of the Company; and (ii) 42.83% of the issued share capital of theCompany as enlarged by the Subscription Shares. The issue of the Subscription Shareswill be made under the Specific Mandate.1

The Board intends to apply the net proceeds from the Subscription of approximatelyHK$297.5 million for pursuing suitable acquisition and/or investment opportunity(ies)(which the Group has not identified any specific acquisition targets and/or investmentopportunities as at the date of this announcement and is currently actively exploring)that are complementary or offer synergy to the Group’s existing business or areconsidered to be advantageous to or in line with the long-term business strategiesof the Group. To the extent that such net proceeds allocated for acquisition and/orinvestment purposes is not required to be fully utilized, it would be used to fund thegeneral working capital of the Group.Implication of the GEM Listing RulesThe Subscriber (which is solely and beneficially owned by Mr Mei Wei), is asubstantial shareholder of the Company. Accordingly, the Subscriber is a connectedperson of the Company and the Subscription constitutes a non-exempt connectedtransaction for the Company under, and is subject to reporting, announcement andIndependent Shareholders’ approval requirements pursuant to the GEM Listing Rules.Implication of the Takeovers CodeThe Subscriber (together with its concert parties, including Mr Mei Wei) isbeneficially interested in 1,471,508,530 Shares as at the date of this announcement,representing approximately 29.39% of the existing entire issued share capital ofthe Company. Assuming completion of the Subscription and upon the allotmentand issue of the Subscription Shares to the Subscriber, the shareholding of theSubscriber (together with its concert parties) would be increased to approximately59.63% (assuming the subscription rights attaching to the Outstanding Options or theconversion rights attaching to the Outstanding CB were not exercised at all). This willrender the Subscriber (together with parties acting in concert with it) to be obliged tomake an unconditional mandatory general offer for all the Shares not already ownedor will be acquired by the Subscriber (together with its concert parties) under Rule26.1 of the Takeovers Code unless a waiver from strict compliance with Rule 26.1 hasbeen obtained from the Executive.The Subscriber will make an application to the Executive pursuant to Note 1 onDispensations from Rule 26 of the Takeovers Code for the Whitewash Waiver, thegrant of which will be subject to, among others, the approval of the IndependentShareholders taken by way of a poll at the SGM.The Executive may or may not grant the Whitewash Waiver. The Subscriptioncontemplated under the Subscription Agreement will not proceed if the WhitewashWaiver is not obtained by the Subscriber.2

GeneralAn Independent Board Committee (comprising all the independent non-executiveDirectors) has been formed to advise the Independent Shareholders as to the fairnessand reasonableness of the Subscription Agreement and the transactions contemplatedthereunder (including the allotment and issue of the Subscription Shares to theSubscriber pursuant to the Subscription) and the Whitewash Waiver. REORIENTFinancial Markets Limited has been appointed by the Independent Board Committeeas an independent financial adviser to advise the Independent Board Committee andthe Independent Shareholders in this regard.A circular containing, among other matters, further information on (i) the SubscriptionAgreement and the transactions contemplated thereunder (including the allotmentand issue of the Subscription Shares to the Subscriber pursuant to the Subscription),the proposed grant of the Specific Mandate, and the Whitewash Waiver; (ii)the recommendation of the Independent Board Committee to the IndependentShareholders; (iii) a letter from the Independent Financial Adviser containing itsadvice to the Independent Board Committee and the Independent Shareholders; and(iv) a notice of the SGM will be despatched to the Shareholders in accordance with theGEM Listing Rules and the Takeovers Code, and is expected to be despatched on orbefore 21 September 2012.Completion of the Subscription is conditional upon, among other matters, theSubscription Agreement becoming unconditional in all respects and havingbeen completed in accordance with its terms, and may or may not proceed.Shareholders of the Company and investors are advised to exercise caution whendealing in the securities of the Company and if they are in any doubt about theirposition, they should consult their professional advisers.Suspension and resumption of trading in SharesAt the request of the Company, trading in the Shares on GEM was suspended from9:00 a.m. on 30 August 2012 pending the release of this announcement. Applicationhas been made to the Stock Exchange for the resumption of trading in the Shares onGEM from 9:00 a.m. on 3 September 2012.3

THE SUBSCRIPTION AGREEMENT DATED 29 AUGUST 2012IssuerThe CompanySubscriberRuffy Investments Limited (a substantial shareholder of the Company)Number of Subscription SharesPursuant to the Subscription Agreement, the Subscriber has agreed to subscribe for3,750,000,000 new Shares, representing approximately (i) 74.90% of the existingissued share capital of the Company; and (ii) 42.83% of the issued share capital of theCompany as enlarged by the Subscription Shares.The aggregate nominal value of the Subscription Shares (with a par value of HK$0.0004each) is HK$1,500,000.Subscription PriceThe issue price per Subscription Share is HK$0.08, which represents:(i)a premium of approximately 23.08% over the closing price of HK$0.065 per Shareas quoted on the Stock Exchange on the Last Trading Day;(ii) a premium of approximately 34.68% over the average closing price of HK$0.0594per Share for the last ten trading days up to and including the Last Trading Day;(iii) a premium of approximately 39.62% over the average closing price ofapproximately HK$0.0573 per Share for the last thirty trading days up to andincluding the Last Trading Day;(iv) a premium of approximately 26.58% over the average closing price ofapproximately HK$0.0632 per Share for the last three months up to and includingthe Last Trading Day;(v)a premium of approximately 196.30% over the unaudited consolidated net tangibleasset value of the Company of approximately RMB0.022 (which is equivalent toapproximately HK$0.027) per Share as at 30 June 2012; and(vi) a discount of approximately 72.41% to the unaudited consolidated net assetvalue of the Company of approximately RMB0.236 (which is equivalent toapproximately HK$0.290) per Share as at 30 June 2012.4

The Subscription Price was determined after arm’s length negotiation between theCompany and the Subscriber with reference to the prevailing share price and the futureprospects of the Group. The Directors (other than the independent non-executiveDirectors whose views will be given after taken into account the advice from theIndependent Financial Adviser) consider that the issue price per Subscription Share isfair and reasonable.The total subscription monies amounted to HK$300,000,000. The Subscription Sharesare valued at HK$243,750,000 based on the closing price of HK$0.065 per Share as atthe Last Trading Day.Ranking of the Subscription SharesThe Subscription Shares, when issued and fully paid, will rank equally amongthemselves and with all other Shares in issue on the date of allotment and issue of theSubscription Shares.Disposal and lock-up restrictionThe Subscription Shares are not subject to any lock-up or other disposal restrictionunder the terms of the Subscription Agreement.No change in members or composition of the BoardNo agreement has been reached between the Company and the Subscriber to change themembers or composition of the Board as a result of the Subscription.Conditions PrecedentCompletion of the Subscription is conditional on, among others, the followingConditions Precedent being fulfilled or, if applicable, waived by the Longstop Date:(a)the granting by the Executive to the Subscriber of the Whitewash Waiver;(b) the passing of the necessary resolution by the Independent Shareholders at theSGM, voting by poll, to approve the Subscription Agreement and the transactionscontemplated thereunder (including the allotment and issue of the SubscriptionShares to the Subscriber pursuant to the Subscription), the proposed grant of theSpecific Mandate and the Whitewash Waiver;(c)(d)the Listing Committee of the Stock Exchange granting, and not having withdrawnor revoked up to completion of the Subscription, the listing of and permission todeal in the Subscription Shares on GEM (either unconditionally or subject to suchconditions as the Subscriber may reasonably agree);the Shares remaining listed and traded on GEM at all times from the date of theSubscription Agreement and up to the date of fulfilment of the last in time to befulfilled of the Conditions Precedent (other than this Condition Precedent); and5

(e) as at the date of fulfilment or waiver of the last in time to be fulfilled of theConditions Precedent (other than this Condition Precedent) to completion of theSubscription Agreement, no legal proceedings shall have been brought by anyperson (other than any of the parties to the Subscription Agreement) in any courtof competent jurisdiction against any of the parties thereto challenging the legalityor validity of the Subscription Agreement or restraining any of the parties theretofrom proceeding to completion of the Subscription Agreement.Save for the Condition Precedent of (d) above which may be waived only by theSubscriber, none of the other Conditions Precedent may be waived by any party to theSubscription Agreement.If the Subscription Agreement has not become unconditional by the Longstop Date,all rights, obligations and liabilities of the parties under the Subscription Agreementin relation to the Subscription shall cease and terminate and none of the parties shallhave any claim against any other in respect of the Subscription save for any antecedentbreaches of the Subscription Agreement.CompletionCompletion of the Subscription shall take place on the Subscription Completion Date orsuch other time as the parties to the Subscription Agreement may agree.Mandate for the issue of the Subscription SharesThe Company will seek the grant of the Specific Mandate from the IndependentShareholders to cater for the allotment and issue of the Subscription Shares. The generalmandate to allot and issue Shares granted at the annual general meeting of the Companyheld on 7 May 2012 by the then Shareholders will not be utilized for the allotment andissue of the Subscription Shares.Application for listingThe Company will apply to the Listing Committee of the Stock Exchange for the listingof, and permission to deal in, the Subscription Shares on GEM.INFORMATION ON THE SUBSCRIBERThe Subscriber is a company incorporated in the British Virgin Islands on 10 September2007 and an investment holding company.The entire issued share capital of the Subscriber is solely and beneficially owned by itssole director, Mr Mei Wei. Mr Mei Wei is the brother of Mr Mei Ping, the chairman ofthe Company and an executive Director. As at the date of this announcement, Mr MeiPing does not have any interest in the securities of the Company.6

Except as disclosed above and for being the general manager of the mining divisionof the Group and a director of a wholly-owned subsidiary of the Company, Mr MeiWei has no other relationship with the Company or its subsidiaries or their respectiveassociates nor holds any position with any members of the Group as at the date of thisannouncement.Following completion of the Subscription, the Subscriber intends that the Group willcontinue to operate and develop its existing business.REASONS FOR THE SUBSCRIPTIONThe Company is an investment holding company and its principal subsidiaries areengaged in the mining, processing and trading of mineral resources.It is the intention of the Group to expand its business by way of investment in qualitycompanies in the PRC mining industry and/or increase the scale of its existing operation.To achieve these expansion strategies, the Group has from time to time been exploringinternal expansion alternatives as well as suitable acquisition and/or investmentopportunities that are complementary or offer synergy to the Group’s existing businessor are considered to be advantages to or in line with the long-term business strategies ofthe Group.Based on the unaudited condensed consolidated statement of financial position of theGroup as at 30 June 2012, the aggregate balance of the cash and bank balances andcurrent borrowings of the Group were approximately RMB29.7 million and RMB55.5million respectively. The Directors consider that it is necessary for the Group to increaseits capital for the Group to capture potential acquisition and investment opportunities asand when they arise and to meet its ongoing working capital requirements.In view of the above, the Board has considered various fund raising methods apartfrom the Subscription such as debt financing, placement of new Shares to independentinvestors as well as rights issue or open offer. As regards debt financing, havingconsidered that it would increase the gearing level of the Group and the interestexpenses incurred which would impose additional financial burden to the Group’sfuture cash flows, the Board considers that such fund raising method is currently notthe most appropriate method to the Group. In considering equity financing throughplacement of new Shares to independent investors, the Company has encountereddifficulties in engaging a placing agent which is believed to be due to relative smallmarket capitalization and the low trading volume of the Shares under the current marketsentiment. As regards the viability of a rights issue or an open offer, the Company hasfound it difficult to find an independent underwriter in Hong Kong which is interestedto underwrite a rights issue or open offer of the Company. The Directors considerthat even if such an independent underwriter were identified, the rights issue or openoffer would incur costly underwriting commission and the process would be relativelytime consuming. The Directors believe that the Company would have difficulties tocomplete a rights issue or an open offer, in particular at an issue price comparable to7

the Subscription Price (which is above the prevailing market price of the Shares), andis reasonably perceived to be less attractive to the general public Shareholders whencompared with rights issue or open offer with issue price lower than the prevailingmarket price.In light of the above, the Board is of the view that equity financing by way of theSubscription is the most appropriate mean of raising additional capital as (i) it is morepracticable and direct under a volatile market and the uncertain global market conditionscurrently prevailing; (ii) it is less costly and no interest burden is imposed; (iii) it is lesstime consuming; and (iv) the Subscription Price is higher than the prevailing marketprice of the Shares which would make other means of equity financing to be impractical.The Board is of the views that it is in the interest of the Group and the IndependentShareholders as a whole to raise funds by the Subscription, which allows the Groupto strengthen its capital position and equip the Group with the financial flexibility toachieve the Group’s business objectives and to issue the Subscription Shares at an issueprice higher than the prevailing market price of the Shares.In addition, the Subscription signifies the confidence of the Substantial Shareholder inthe existing and future development potentials of the Group. With the continuing supportof the Substantial Shareholder of the Company, this will ensure business stability andcontinuity of the Group which is crucial and beneficial to the long-term development ofthe Group.Overall, the Directors (excluding the independent non-executive Directors whoseviews will be given after taken into account the advice from the Independent FinancialAdviser) consider that the terms of the Subscription Agreement are fair and reasonableand in the interests of the Company and the Shareholders as a whole.USE OF PROCEEDSThe gross proceeds of the Subscription will amount to HK$300 million. The netproceeds from the Subscription, after the deduction of the professional and other relatedexpenses, are estimated to be approximately HK$297.5 million, representing a net issueprice of approximately HK$0.079 per Subscription Share.The Board intends to apply the net proceeds for pursuing suitable acquisition and/orinvestment opportunity(ies) (which the Group has not identified any specific acquisitiontargets and/or investment opportunities as at the date of this announcement and iscurrently actively exploring) that are complementary or offer synergy to the Group’sexisting business or are considered to be advantages to or in line with the long-termbusiness strategies of the Group. Appropriate announcement will be made by theCompany as and when appropriate and in accordance with the GEM Listing Rules if anyspecific acquisition and/or investment opportunity is identified. To the extent that suchnet proceeds allocated for acquisition and/or investment purposes is not required to befully utilized, it would be used to fund the general working capital of the Group.8

EFFECT ON THE SHAREHOLDING STRUCTUREAs at the date of this announcement:(1) the Company had an issued share capital of HK$2,002,615.8988 (representing atotal of 5,006,539,747 Shares);(2) there were Outstanding Options granted under the Share Option Scheme conferringrights to subscribe for an aggregate of 586,710,000 new Shares upon exercise ofthe subscription rights attaching thereto;(3) there were Outstanding CB conferring rights to subscribe for a maximum of1,736,537,245 new Shares upon exercise of the conversion rights attaching thereto;(4) apart from the Outstanding Options and the Outstanding CB, the Company has noother outstanding convertible securities, options, warrants or other derivatives inissue which are convertible or exchangeable into Shares;(5) the Subscriber was beneficially interested in the following securities of theCompany:(i)1,415,458,530 Shares; and(ii) 1,692,264,518 Shares which may fall to be allotted and issued upon exercisein full of the conversion rights attaching to the Outstanding CB held by theSubscriber;(6) Mr Mei Wei, being a party acting in concert with the Subscriber under theTakeovers Code, was:(i)deemed to be interested in the Shares and underlying Shares held by theSubscriber under Part XV of the SFO;(ii) personally interested in (a) 56,050,000 Shares; and (b) 363,510,000underlying Shares by virtue of options granted to him by the Company underthe Share Option Scheme;(7) save as disclosed in the preceding paragraphs (5) and (6) above, neither theSubscriber nor any person acting in concert with it owns or has control or directionover any voting rights or rights over the Shares or convertible securities, options,warrants or derivatives of the Company;9

(8) save as disclosed in the preceding paragraphs (5) and (6) above and the warrantsissued on 13 March 2012 by the Subscriber to Merry Intake Limited, a whollyowned subsidiary of CCB International Group Holdings Limited, conferring rightsto subscribe for 350,000,000 Shares held by the Subscriber at the initial exerciseprice of HK$0.12 per Share, there is no outstanding derivative in respect ofsecurities in the Company entered into by the Subscriber or any person acting inconcert with it;(9) save as disclosed in the preceding paragraphs (5) and (6) above, neither theSubscriber nor any person acting in concert with it holds any other shares,convertible securities, warrants or options of the Company, or any outstandingderivative in respect of the relevant securities (as defined in note 4 to Rule 22 ofthe Takeovers Code) of the Company;(10) there was no arrangement (whether by way of option, indemnity or otherwise) inrelation to shares of the Subscriber or of the Company which may be material tothe Subscription Agreement and/or the Whitewash Waiver;(11) there was no agreements or arrangements to which the Subscriber is a party whichrelated to the circumstances in which it may or may not invoke or seek to invokea pre-condition or a condition to the Subscription Agreement and the WhitewashWaiver, other than those set out in the section headed “Conditions Precedent”above;(12) the Subscriber or any party acting in concert with it has not received anyirrevocable commitment or arrangements to vote in favour of or against theresolutions in respect of the Subscription Agreement together with the transactionscontemplated thereunder and/or the Whitewash Waiver; and(13) neither the Subscriber nor any person acting in concert with it has borrowed or lentany relevant securities (as defined in note 4 to Rule 22 of the Takeovers Code) inthe Company.The effect of the Subscription on the shareholding structure of the Companyimmediately upon (i) completion of the Subscription; (ii) full exercise of thesubscription rights attaching to the Outstanding Options; and (iii) full exercise of theconversion rights attaching to the Outstanding CB is set out below (assuming thatthere is no change in (a) the shareholding structure of the Company; and (b) the terms10

of the exercise or conversion (as the case may be) of any of its outstanding optionsor convertible securities from the date of this announcement to immediately prior tocompletion of the Subscription):Assuming (i)Assuming (i)completion of theAssuming (i) completion of the Subscription (Note 3);completion of the Subscription (Note 3); (ii) full exercise ofSubscription; and (ii) full exercise of the subscription(ii) the subscription the subscription rights attachingrights attaching to the rights attaching to to the OutstandingOutstanding Options or the Outstanding Options (Note 4);the conversion rights Options (Note 4); and and (iii) full exerciseattaching to the (iii) the conversion of the conversionOutstanding CB were rights attaching to the rights attachingAs at the date of not exercised at all Outstanding CB were to the OutstandingShareholders this announcement (Note 3) not exercised at all CB (Note 6)(No. of Shares) (%) (No. of Shares) (%) (No. of Shares) (%) (No. of Shares) (%)Subscriber (Note 1) 1,415,458,530 28.27 5,165,458,530 58.99 5,165,458,530 55.29 6,857,723,048 61.89Mr Mei Wei(Note 1 and Note 2) 56,050,000 1.12 56,050,000 0.64 419,560,000 4.49 419,560,000 3.79(Note 5) (Note 5)Sub-total of theSubscriber and itsconcert parties: 1,471,508,530 29.39 5,221,508,530 59.63 5,585,018,530 59.78 7,277,283,048 65.68Director(s):Mr Ng Tang – – – – 3,000,000 0.03 3,000,000 0.03Mr Kang Hongbo 11,400,000 0.23 11,400,000 0.13 22,900,000 0.25 22,900,000 0.20Ms Han Qiong – – – – 4,000,000 0.04 4,000,000 0.04Public:Grantees of OutstandingOptions (other thanMr Mei Wei andthe Directors)(Note 7) – – – – 204,700,000 2.19 204,700,000 1.85Holders of Outstanding CB(other than the Subscriber)(Note 8) – – – – – – 44,272,727 0.40Other public Shareholders 3,523,631,217 70.38 3,523,631,217 40.24 3,523,631,217 37.71 3,523,631,217 31.80Total 5,006,539,747 100.00 8,756,539,747 100.00 9,343,249,747 100.00 11,079,786,992 100.0011

Note 1: The Subscriber, which is a substantial shareholder of the Company, is solely and beneficiallyowned by Mr Mei Wei. Mr Mei Wei is deemed to be interested in the Shares held by theSubscriber by virtue of Part XV of the SFO.Note 2: Mr Mei Wei is a party acting in concert with the Subscriber under the Takeovers Code.Note 3: Completion of the Subscription would involve the allotment and issue of an aggregate of3,750,000,000 new Shares to the Subscriber.Note 4: Full exercise of the subscription rights attaching to the Outstanding Options would result in amaximum of 586,710,000 new Shares being fallen to be allotted and issued to its holders.Note 5: These Shares comprise (i) 56,050,000 Shares held by Mr Mei Wei before exercising any of thesubscription rights attaching to the Outstanding Options granted to him; and (ii) 363,510,000 newShares which may fall to be allotted and issued to Mr Mei Wei upon his exercise in full of thesubscription rights attaching to such Outstanding Options.Note 6: Full exercise of the conversion rights attaching to the Outstanding CB would result in amaximum of 1,736,537,245 new Shares being allotted and issued to its respective holders (as to1,692,264,518 new Shares to the Subscriber and the remaining 44,272,727 to other holders of theOutstanding CB).Note 7: None of these grantees of the Outstanding Options is a director, chief executive or substantialshareholder of the Company, or any of their respective associates or parties acting in concert withthe Subscriber.Note 8: None of these holders of Outstanding CB is a director, chief executive or substantial shareholderof the Company, or any of their respective associates or parties acting in concert with theSubscriber.Note 9: The above table is for illustration purpose only.IMPLICATION OF THE GEM LISTING RULESGiven that the Subscriber is a substantial shareholder of the Company, the Subscriberis a connected person of the Company. Accordingly, the Subscription constitutesa non-exempt connected transaction for the Company and is subject to reporting,announcement and Independent Shareholders’ approval requirements under the GEMListing Rules.TAKEOVERS CODE IMPLICATIONSAs illustrated in the table under the section headed “Effect on the ShareholdingStructure” above, assuming successful completion of the Subscription, the allotment andissue of the Subscription Shares to the Subscriber would result in the shareholding of theSubscriber and parties acting in concert with it being increased:(a)from approximately 29.39% to approximately 59.63% (assuming the subscriptionrights attaching to the Outstanding Options or the conversion rights attaching tothe Outstanding CB were not exercised at all);12

(b)(c)from approximately 29.39% to approximately 59.78% (assuming the subscriptionrights attaching to the Outstanding Options were exercised in full but theconversion rights attaching to the Outstanding CB were not exercised at all); andfrom approximately 29.39% to approximately 65.68% (assuming the subscriptionrights attaching to the Outstanding Options and the conversion rights attaching tothe Outstanding CB were both exercised in full).Consequently, this will render the Subscriber together with parties acting in concert withit to be obliged to make an unconditional mandatory general offer for all the Shares notalready owned or will be acquired by the Subscriber (together with its concert parties)under Rule 26.1 of the Takeovers Code unless a waiver from strict compliance with Rule26.1 has been obtained from the Executive.An application will be made by the Subscriber to the Executive for the grant of theWhitewash Waiver to waive the obligation of the Subscriber to make a mandatorygeneral offer for all the issued securities of the Company not already owned or agreed tobe acquired by the Subscriber (including the Subscription Shares) and parties acting inconcert with it which would otherwise arise as a result of the issue of the SubscriptionShares to the Subscriber pursuant to the Subscription Agreement as soon as possible.The Whitewash Waiver, if granted by the Executive, would be subject to the approval ofthe Independent Shareholders at the SGM by way of poll.The Subscriber, its associates and concert parties (including Mr Mei Wei) and thoseparties who are involved or interested in the Subscription Agreement together withthe transactions contemplated thereunder, the grant of the Specific Mandate and theWhitewash Waiver (basically only Independent Shareholders can vote) will abstainfrom voting on the resolutions to be proposed at the SGM to approve, among others,the Subscription Agreement and the transactions contemplated thereunder (includingthe allotment and issue of the Subscription Shares pursuant to the Subscription and theWhitewash Waiver).The Executive may or may not grant the Whitewash Waiver. The Subscriptioncontemplated under the Subscription Agreement will not proceed if the WhitewashWaiver is not granted to the Subscriber.The Subscriber and the parties acting in concert with it have confirmed to the Companythat they have not acquired any voting rights in the Company in the six-month periodprior to the date of the Subscription Agreement but subsequent to negotiations,discussions or the reaching of understandings or agreements with the Directors inrelation to the Subscription contemplated under the Subscription Agreement.13

FUND RAISING ACTIVITY OF THE COMPANY IN THE 12 MONTHSIMMEDIATELY PRECEDING THE DATE OF THIS ANNOUNCEMENTThe Company had not undertaken any fund raising exercise in the 12 monthsimmediately prior to the date of this announcement.GENERALAn Independent Board Committee (comprising all the independent non-executiveDirectors) has been formed to advise the Independent Shareholders (i) as to whetherthe Subscription Agreement and the transactions contemplated thereunder (includingthe allotment and issue of the Subscription Shares to the Subscriber pursuant to theSubscription), the proposed grant of the Specific Mandate and the Whitewash Waiverare on normal commercial terms, in the ordinary and usual course of business, fair andreasonable and in the interests of the Company and the Shareholders as a whole, and (ii)on how to vote, taking into account the recommendations of the Independent FinancialAdviser.In this connection, the Independent Financial Adviser has been appointed to advise theIndependent Board Committee and the Independent Shareholders. The appointmentof the Independent Financial Adviser has been approved by the Independent BoardCommittee. The Independent Board Committee will formally provide their views in thecircular to be sent to the Independent Shareholders after considering the advice of theIndependent Financial Adviser.A circular containing, among other matters, further information on (i) the SubscriptionAgreement and the transactions contemplated thereunder (including the allotment andissue of the Subscription Shares pursuant to the Subscription), the proposed grant ofthe Specific Mandate and the Whitewash Waiver); (ii) the recommendation of theIndependent Board Committee to the Independent Shareholders; (iii) a letter fromthe Independent Financial Adviser containing their advice to the Independent BoardCommittee and the Independent Shareholders; and (iv) a notice of the SGM will bedespatched to the Shareholders in accordance with the GEM Listing Rules and theTakeovers Code, and is expected to be despatched on or before 21 September 2012.Completion of the Subscription is conditional upon, among other matters, theSubscription Agreement becoming unconditional in all respects and having beencompleted in accordance with its terms, and may or may not proceed. Shareholdersof the Company and investors are advised to exercise caution when dealing in thesecurities of the Company and if they are in any doubt about their position, theyshould consult their professional advisers.SUSPENSION AND RESUMPTION OF TRADING IN SHARESAt the request of the Company, trading in the Shares on GEM was suspended from 9:00a.m. on 30 August 2012 pending the release of this announcement. Application has beenmade to the Stock Exchange for the resumption of trading in the Shares on GEM from9:00 a.m. on 3 September 2012.14

DEFINITIONSIn this announcement, unless the context otherwise requires, the following expressionsshall have the following meanings when used herein:“acting in concert”“associate(s)”“Board”“Business Day”“Company”“Conditions Precedent”“connected person(s)”“Director(s)”“Executive”“GEM”“GEM Listing Rules”“Group”“Hong Kong”has the meaning ascribed to it by the TakeoversCode and the expression “concert part(ies)” shall beconstrued accordinglyhas the meaning ascribed to it under the GEM ListingRulesthe board of Directorsany day (excluding Saturday) on which licensed banksin Hong Kong are open for businessChina Nonferrous Metals Company Limited, anexempted company incorporated in Bermuda withlimited liability and whose issued shares are listed onGEMthe conditions precedent to completion of theSubscription as set out in the Subscription Agreementand summarized in this announcementhas the meaning ascribed to it under the GEM ListingRulesdirector(s) of the Companythe Executive Director of the Corporate FinanceDivision of the Securities and Futures Commission orany delegate of the Executive Directorthe Growth Enterprise Market operated by the StockExchangethe Rules Governing the Listing of Securities on GEMthe Company and its subsidiariesThe Hong Kong Special Administrative Region of thePRC15

“Independent BoardCommittee”“Independent FinancialAdviser”“Independent Shareholders”“Last Trading Day”“Listing Committee”“Longstop Date”a board comprising all the independent non-executiveDirectors (namely Mr Liu Yaosheng, Mr Chan Siu Lunand Mr Chen Mingxian) to make a recommendation(i) as to whether the Subscription Agreement andthe transactions contemplated thereunder (includingthe allotment and issue of the Subscription Shares tothe Subscriber pursuant to the Subscription) and theWhitewash Waiver are, or are not, fair and reasonable;and (ii) as to votingREORIENT Financial Markets Limited, a corporationlicensed to carry on Type 1 (dealing in securities),Type 4 (advising on securities), Type 6 (advisingon corporate finance), Type 7 (providing automatedtrading services) and Type 9 (asset management)regulated activities under the SFO, and the independentfinancial adviser to the Independent Board Committeeand the Independent Shareholders for giving adviceas to whether the Subscription Agreement and thetransactions contemplated thereunder (including theallotment and issue of the Subscription Shares tothe Subscriber pursuant to the Subscription) and theWhitewash Waiver are, or are not, fair and reasonableand as to votingShareholders, other than the Subscriber and itsassociates and/or their respective concert parties andthose parties who are involved or interested in theSubscription Agreement together with the transactionscontemplated thereunder (including and the allotmentand issue of the Subscription Shares to the Subscriberpursuant to the Subscription), the grant of the SpecificMandate and the Whitewash Waiver29 August 2012, being the last trading day for theShares before the suspension of trading in the Shareson the Stock Exchange pending the issue of thisannouncementthe listing sub-committee of the Stock Exchange30 October 2012 (or such other date as may be agreedby the Subscriber and the Company)16

“Outstanding CB”“Outstanding Options”“PRC”“RMB”“SFO”“SGM”“Share(s)”“Shareholder(s)”“Share Option Scheme”“Specific Mandate”the convertible bonds due in 2015 issued by theCompany with the outstanding principal sum ofHK$382,038,194 as at the date of this announcement,which may be convertible into a maximum of1,736,537,245 new Shares at the conversion price ofHK$0.22 each upon exercise of the conversion rightsattaching thereto (of which HK$372,298,194 was dueto the Subscriber and convertible into a maximum of1,692,264,518 new Shares)the options granted by the Company to subscribe for anaggregate of 586,710,000 new Shares under the ShareOption Scheme, which were outstanding as at the dateof this announcementthe People’s Republic of ChinaReminbi, the lawful currency of the PRCSecurities and Futures Ordinance (Chapter 571 of theLaws of Hong Kong) as amended from time to timea special general meeting of the Company to beconvened and held to consider and, if thought fit,approve (among other matters) the SubscriptionAgreement and the transactions contemplatedthereunder (including the allotment and issue of theSubscription Shares to the Subscriber pursuant to theSubscription), the grant of the Specific Mandate andthe Whitewash Waiver (or any adjournment thereof)ordinary share(s) of HK$0.0004 each in the sharecapital of the Companyholder(s) of the Sharesthe share option scheme currently in force and adoptedby the Company on 16 February 2005a specific mandate to allot, issue or otherwise deal inadditional Shares to be sought from the IndependentShareholders to satisfy the allotment and issue of theSubscription Shares to the Subscriber upon completionof the Subscription17

“Stock Exchange”“Subscriber”“Subscription”The Stock Exchange of Hong Kong LimitedRuffy Investments Limited, a company incorporatedin the British Virgin Islands whose entire issued sharecapital is solely and beneficially owned by Mr MeiWeithe subscription of the Subscription Shares subject toand upon the terms and conditions of the SubscriptionAgreement“Subscription Agreement” the conditional subscription agreement dated 29August 2012 entered into between the Company andthe Subscriber in relation to the Subscription“SubscriptionCompletion Date”“Subscription Price”“Subscription Shares”“substantial shareholder”“Takeovers Code”“Whitewash Waiver”the third Business Day next following the date on whichthe last condition precedent set out in the SubscriptionAgreement are fulfilled or, as the case may be, waived(or such other date as the parties to the SubscriptionAgreement may mutually agree)HK$0.08 per Subscription Sharea total of 3,750,000,000 new Shares, for which theSubscriber will subscribe upon the terms and subject tothe conditions of the Subscription Agreementhas the meaning ascribed thereto in the GEM ListingRulesThe Hong Kong Code on Takeovers and Mergersa waiver from the Executive pursuant to Note 1 onDispensations from Rule 26 of the Takeovers Code inrespect of the obligations of the Subscriber and partiesacting in concert with it (including Mr Mei Wei) tomake a mandatory general offer for all the securitiesof the Company not already owned or acquired bythe Subscriber and parties acting in concert with itunder Rule 26 of the Takeovers Code which wouldotherwise arise as a result of the Subscriber subscribingfor the Subscription Shares under the terms of theSubscription Agreement18

“HK$ and cents”Hong Kong dollars and cents, the lawful currency ofHong Kong“%” per cent.Unless otherwise specified, translations of HK$ into RMB and RMB into HK$ in this announcement arebased on the rate of HK$1.23 to RMB1.00. No representation is made that any amounts in RMB and HK$can be or could have been converted at the relevant dates at the above rates or any other rates or at all.Hong Kong, 31 August 2012By order of the BoardChina Nonferrous Metals Company LimitedMei PingChairmanAs at the date of this announcement, the executive Directors of the Company are Mr MeiPing, Ms Xie Yi Ping, Dr Yu Heng Xiang, Mr Ng Tang, Mr Kang Hongbo and Ms HanQiong and the independent non-executive Directors are Mr Liu Yaosheng, Mr Chan SiuLun and Mr Chen Mingxian.This announcement, for which the Directors collectively and individually accept fullresponsibility, includes particulars given in compliance with the GEM Listing Rules forthe purposes of giving information with regard to the Company. The Directors, havingmade all reasonable enquiries, confirm that to the best of their knowledge and belief,the information contained in this announcement is accurate and complete in all materialrespects and not misleading or deceptive, and there are no other matters, the omissionof which would make any statement herein or this announcement misleading.The Directors jointly and severally accept full responsibility for the accuracy of theinformation contained in this announcement and confirm, having made all reasonableinquiries, that to the best of their knowledge, opinions expressed in this announcementhave been arrived at after due and careful consideration and there are no other facts notcontained in this announcement, the omission of which would make any statement in thisannouncement misleading.This announcement will be published on the GEM website at http://www.hkgem.comon the “Latest Company Announcement” page for at least 7 days from the date ofpublication and on the Company’s website www.cnm.com.hk.* For identification purpose only19