Aceso Life Science Group Limited — Proxy Solicitation & Information Statement 2013

Jan 30, 2013

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, 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 circular.

If you are in any doubt as to any aspect of this circular or as to the action you should take, you should consult a stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your Shares in Hao Tian Resources Group Limited , you should at once hand this circular, together with the enclosed form of proxy, to the purchaser or the transferee or to the bank or stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee.

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HAO TIAN RESOURCES GROUP LIMITED 昊天能源集團有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 00474)

VERY SUBSTANTIAL DISPOSAL VERY SUBSTANTIAL ACQUISITION AND NOTICE OF EXTRAORDINARY GENERAL MEETING

Financial Adviser to the Company

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A letter from the Board is set out on pages 7 to 35 of this circular.

A notice convening the EGM of the Company to be held at 3:00 p.m., on Friday, 22 February 2013, at The Training Room, 4/F., Sun Hung Kai Centre, 30 Harbour Road, Wanchai, Hong Kong is set out on pages N – 1 to N – 2 of this circular. Whether or not you are able to attend the EGM, you are requested to complete the enclosed form of proxy in accordance with the instructions printed thereon and return it to the branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited, Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for holding the EGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM should you so wish.

31 January 2013

CONTENTS

			Pages
DEFINITIONS	. . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM	THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		7
APPENDIX I	–	FINANCIAL INFORMATION OF THE GROUP. . . . . . . . . . .	I – 1
APPENDIX IIA	–	CONSOLIDATED FINANCIAL INFORMATION OF
		THE DISPOSAL GROUP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	IIA – 1
APPENDIX IIB	–	PRE-ACQUISITION FINANCIAL INFORMATION OF
		BAICHENG WENZHOU. . . . . . . . . . . . . . . . . . . . . . . . . . . . .	IIB – 1
APPENDIX III	–	INFORMATION OF UP ENERGY GROUP. . . . . . . . . . . . . . .	III – 1
APPENDIX IV	–	UNAUDITED PRO FORMA FINANCIAL INFORMATION OF
		THE REMAINING GROUP. . . . . . . . . . . . . . . . . . . . . . . . . .	IV – 1
APPENDIX VA	–	MANAGEMENT DISCUSSION AND ANALYSIS OF
		THE REMAINING GROUP. . . . . . . . . . . . . . . . . . . . . . . . . .	VA – 1
APPENDIX VB	–	MANAGEMENT DISCUSSION AND ANALYSIS OF
		UP ENERGY GROUP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VB – 1
APPENDIX VI	–	COMPETENT PERSON’S REPORT. . . . . . . . . . . . . . . . . . . . .	VI – 1
APPENDIX VII	–	GENERAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . .	VII – 1
NOTICE OF EXTRAORDINARY GENERAL MEETING. . . . . . . . . . . . . . . . . . . . . .			N – 1

– i –

DEFINITIONS

In this circular, the following expressions have the meanings set out below, unless the context requires otherwise:

• “Agreed Minimum

• Non-Current Assets”

means all of the non-current assets of the Disposal Group Companies as at the Audited Accounts Date as stated in the Audited Accounts, together with all movements of noncurrent assets of the Disposal Group Companies since the Audited Accounts Date up to 31 August 2012 (based on the unaudited management accounts of the Disposal Group);

• “associate(s)”

has the meaning ascribed to it in the Listing Rules;

• “Audited Accounts”

means (i) the audited accounts (including balance sheet, profit and loss statement, cash flow statement and statement of movement of equity) of each of the Target Company, Venture Path and West China for the 3 financial years ended on the Audited Accounts Date (or if such company was incorporated for a shorter period, since its date of incorporation) prepared in accordance with Hong Kong Financial Reporting Standards and (ii) the audited accounts (including balance sheet, profit and loss statement, cash flow statement and statement of movement of equity) of Baicheng Wenzhou for the 3 financial years ended on the Audited Accounts Date (or if such company was incorporated for a shorter period, since its date of incorporation) prepared in accordance with PRC Generally Accepted Accounting Principles, each of which was audited by a firm of independent certified public accountants in Hong Kong (for the Disposal Group Companies other than Baicheng Wenzhou) or the PRC (for Baicheng Wenzhou only);

• “Audited Accounts Date”

means (with respect to Baicheng Wenzhou) 31 December 2011, and (with respect to the Target Company, Venture Path and West China) 31 March 2012, respectively;

• “Baicheng Wenzhou”

means 拜城溫州礦業開發有限公司 (Baicheng Wenzhou Mining Development Co., Ltd.)**, an indirect whollyowned subsidiary of the Company established in the PRC which operates the Target Mine;

– 1 –

DEFINITIONS

“Board”	means the board of Directors;
“Business Day(s)”	means any day (excluding Saturday, Sunday, public
	holidays and any day on which a tropical cyclone warning
	no.8 or above or a “black” rainstorm warning signal is
	hoisted or remains hoisted in Hong Kong at any time
	between 9:00 a.m. and 12:00 noon and is not lowered or
	discontinued at or before 12:00 noon) on which licensed
	banks are generally open for business in Hong Kong;
“Company”	means Hao Tian Resources Group Limited (Stock Code:
	474), a company incorporated in the Cayman Islands with
	limited liability whose Shares are listed on the Main Board
	of the Stock Exchange;
“Competent Person”	a person satisfying the requirements of Rules 18.21 and
	18.22 of the Listing Rules;
“Competent Person’s Report”	the public report prepared by the Competent Person on the
	Target Mine in compliance with the requirements under
	Chapter 18 of the Listing Rules and the Australasian Code
	for Reporting of Exploration Results, Mineral Resources
	and Ore Reserves (2004 edition), as published by the Joint
	Ore Reserves Committee and amended from time to time;
“Completion”	completion of the Transaction in accordance with the terms
	and conditions of the S&P Agreement;
“Completion Date”	the fifth Business Day after the date on which the last of
	the conditions precedent of the S&P Agreement (other
	than those Conditions the fulfilment of which have been
	waived (with or without condition) by the Purchaser or the
	Company (as the case may be)) is fulfilled;
“Conditions”	the conditions precedent to the S&P Agreement taking
	effect as set out in the S&P Agreement;
“connected person(s)”	has the meaning ascribed thereto under the Listing Rules;

– 2 –

DEFINITIONS

“Designated Date”	means the date falling 547 days after the Completion Date;
“Director(s)”	means the director(s) of the Company;
“Disposal Group”	means the Target Company, Venture Path, West China and
	Baicheng Wenzhou, and “Disposal Group Company” shall
	mean any of them;
“EGM”	an extraordinary general meeting of the Company for the
	Shareholders to consider and, if thought fit, to approve,
	among others, the S&P Agreement and the Transaction;
“Group”	means the Company and its subsidiaries;
“HK$”	means Hong Kong dollars, the lawful currency of Hong
	Kong;
“Hong Kong”	means The Hong Kong Special Administrative Region of
	the PRC;
“Indicated Resource:	means that part of a mineral resource for which tonnage,
	densities, shape, physical characteristics, quality and
	mineral content can be estimated with a reasonable level of
	confidence;
“Latest Practicable Date”	28 January 2013, being the latest practicable date prior
	to the printing of this circular for ascertaining certain
	information contained herein;
“Listing Rules”	means The Rules Governing the Listing of Securities on the
	Stock Exchange;
“Outstanding Convertible	means the five-year zero coupon convertible notes due in
Notes”	January 2016 issued by Up Energy in two tranches with
	outstanding principal amounts of: (a) HK$2,286,851,037
	which will be convertible into 1,143,425,518 Up
	Energy Shares; and (b) HK$2,869,759,150 which will
	be convertible into 1,434,879,576 Up Energy Shares,
	respectively at the conversion price of HK$2.0 per share as
	at 30 September 2012;

– 3 –

DEFINITIONS

“Measured Resource”	means that part of a mineral resource for which tonnage,
	densities, shape, physical characteristics, quality and
	mineral content can be estimated with a high level of
	confidence;
“MOU”	means the non-legally binding memorandum of
	understanding (save for certain provisions in the MOU)
	dated 23 July 2012 entered into between the Company,
	the Target Company and the Purchaser in relation to the
	Transaction;
“PRC”	means The People’s Republic of China (which for the
	purpose of this circular excludes Hong Kong, Taiwan and
	Macau);
“Pro-Forma	means the unaudited pro-forma management accounts
Completion Accounts”	(including balance sheet, profit and loss statement, cash
	flow statement, statement of movement of equity and
	asset registers) of each member of the Disposal Group,
	on a consolidated and individual company basis, for the
	period commencing 1 September 2012 and ending on
	the Completion Date whereby for (i) each of the Target
	Company, Venture Path and West China, such accounts
	will be prepared in accordance with Hong Kong Financial
	Reporting Standards; and (ii) Baicheng Wenzhou, such
	accounts will be prepared in accordance with PRC
	Generally Accepted Accounting Principles;
“Purchaser”	means Up Energy Mining Limited (formerly known as Able
	Goal Group Limited), a wholly-owned subsidiary of Up
	Energy incorporated in the British Virgin Islands;
“Remaining Group”	means the Company and its subsidiaries immediately after
	disposal of the Disposal Group;
“Required Deposits”	means an amount not less than RMB4,662,823.71 as at
	the date of the S&P Agreement, being all non-refundable
	cash deposits and bonds (if any) paid by the Disposal
	Group Companies to the relevant government authorities
	for compliance with the prevailing environmental law
	applicable to the Target Mine;

– 4 –

DEFINITIONS

“RMB”	Renminbi yuan, the lawful currency of the PRC;
“ROMA”	Roma Oil and Mining Associates Limited;
“S&P Agreement”	the sales and purchase agreement dated 12 October 2012
	entered into between the Company, the Purchaser and Up
	Energy;
“Share(s)”	means ordinary share(s) in the share capital of the
	Company, with a par value of HK$0.05 each;
“Shareholder(s)”	means the shareholder(s) of the Company;
“Shareholder’s Loan”	means the interest-free shareholder’s loan whereby the
	principal amount of approximately HK$1,623,974,302 is
	indebted by the Target Company to the Company as at the
	Latest Practicable Date;
“Stock Exchange”	means The Stock Exchange of Hong Kong Limited;
“substantial shareholder(s)”	has the meaning ascribed to it under the Listing Rules;
“Target Company”	means Champ Universe Limited（冠宇有限公司）*, a
	wholly-owned subsidiary of the Company incorporated in
	the British Virgin Islands with limited liability;
“Target Mine”	means拜城溫州礦業開發有限公司一礦3號井(No.
	3 decline of Mine One of Baicheng Wenzhou Mining
	Development Co., Ltd)** located at Baicheng County, Aksu
	Prefecture, Xinjiang Uygur Autonomous Region, the PRC;
“Third Anniversary Date”	means the date of the third anniversary of the Completion
	Date;
“Total Consideration”	the total consideration for the Transaction, being
	HK$1,580,000,000, subject to adjustments pursuant to the
	terms of the S&P Agreement;

– 5 –

DEFINITIONS

“Transaction” the disposal of the entire equity interest of the Target Company and the assignment of the Shareholder’s Loan, by the Company to the Purchaser, subject to the terms and conditions of the S&P Agreement; “Up Energy” Up Energy Development Group Limited, (Stock Code: 307), a company incorporated in Bermuda with limited liability whose shares are listed on the Main Board of the Stock Exchange; “Up Energy Group” means Up Energy and its subsidiaries; “Up Energy Shares” means ordinary shares of HK$0.2 each in the issued share capital of Up Energy; “Venture Path” means Venture Path Limited, a wholly-owned subsidiary of the Company incorporated in the British Virgin Islands with limited liability; “West China” means West China Coal Mining Holdings Limited（西部煤 業控股有限公司）, an indirect wholly-owned subsidiary of the Company incorporated in Hong Kong; and “%” per cent.

• Chinese names are for identification purpose only

• ** English names are translated for identification purpose only

For illustrative purpose only, translation of the relevant currencies is based on the following exchange rates:

HK$1.00 to RMB0.82

Such translations should not be construed as a representation that the relevant amounts have been, could have been, or could be converted at that or any other rate or at all.

– 6 –

LETTER FROM THE BOARD

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HAO TIAN RESOURCES GROUP LIMITED 昊天能源集團有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 00474)

Board of Directors: Executive Directors Dr. Zhiliang Ou, J.P. (Australia) Mr. Xu Hai Ying

Independent Non-executive Directors Mr. Chan Ming Sun Jonathan Mr. Ma Lin Mr. Lam Kwan Sing

Company Secretary: Mr. Fok Chi Tak

Registered office: Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111, Cayman Islands

Principal Place of Business in Hong Kong: Rooms 4917-4932, 49/F., Sun Hung Kai Centre, 30 Harbour Road, Wanchai, Hong Kong

31 January 2013

To the Shareholders

Dear Sir or Madam,

VERY SUBSTANTIAL DISPOSAL VERY SUBSTANTIAL ACQUISITION AND NOTICE OF EXTRAORDINARY GENERAL MEETING

1. INTRODUCTION

On 29 October 2012, the Company announced that the Company (as Vendor), the Purchaser and Up Energy entered into the S&P Agreement on 12 October 2012 pursuant to which, amongst others, the Company conditionally agreed to dispose of and assign to the Purchaser, and the Purchaser conditionally agreed to purchase and accept the assignment of, the entire equity interest of the Target Company and all rights, title, benefit and interest of and in the Shareholder’s Loan for the Total Consideration, being HK$1,580,000,000.

– 7 –

LETTER FROM THE BOARD

The purpose of this circular is to:

• (i) provide the Shareholders with further details of the Transaction and the S&P Agreement and the information of the Target Mine;

• (ii) provide the Shareholders with further details of the financial information of the Disposal Group and Up Energy Group; and

• (iii) give notice of the EGM to the Shareholders.

2. BACKGROUND

On 23 July 2012, the Company entered into the MOU with the Target Company and the Purchaser in relation to the Transaction and on 14 September 2012 and 5 October 2012 respectively, the Company and the other parties to the MOU entered into supplemental MOUs, respectively to amend certain terms of the MOU, details of which are set out in the announcements of the Company dated 23 July 2012, 14 September 2012 and 5 October 2012.

On 12 October 2012, the Company (as vendor), the Purchaser and Up Energy entered into the S&P Agreement pursuant to which, amongst others, the Company conditionally agreed to dispose of and assign to the Purchaser, and the Purchaser conditionally agreed to purchase and accept the assignment of, the entire equity interest of the Target Company and all rights, title, benefit and interest of and in the Shareholder’s Loan for the Total Consideration, being HK$1,580,000,000, comprising of (i) HK$735,000,000 to be settled by allotment and issue to the Company 367,500,000 Up Energy Shares at an issue price of HK$2.00 per share; and (ii) the balance of HK$845,000,000 by way of cash payment to the Company upon Completion, subject to adjustments (with no cap or floor limit) as set out in the S&P Agreement. In addition to the Total Consideration, upon signing of the S&P Agreement, the Purchaser shall remit cash in an amount of HK$10,000,000 as cash deposit for the Transaction. As at the Latest Practicable Date, the Purchaser has remitted to the Company the said cash deposit.

As at the Latest Practicable Date, the Target Company is a direct wholly-owned subsidiary of the Company. The Target Company wholly owns Venture Path which wholly owns West China and Baicheng Wenzhou, and through Baicheng Wenzhou wholly owns and operates the Target Mine.

The Target Mine is an underground coal mine located at 39 km from Baicheng County and 209 km from Aksu City in the Xinjiang Uygur Autonomous Region, China. The licensed area of the Target Mine is 5.92 sq km which extends approximately 5.5 km from east to west and approximately 1.1 km from north to south. The Target Mine produced 208 kt of gas coal in 2009. The Target Mine, originally known as the No. 3 Pit of No. 1 Coal Mine Baicheng Wenzhou Mining Development Co. Ltd, was constructed in 1984 and produces coal for the thermal market.

– 8 –

LETTER FROM THE BOARD

3. THE S&P AGREEMENT

On 12 October 2012, the Company (as vendor), the Purchaser and Up Energy entered into the S&P Agreement in relation to the Transaction, a summary of the major terms of which is set out below.

Date

12 October 2012

Parties

• (i) The Company (as vendor);

• (ii) The Purchaser (a wholly-owned subsidiary of Up Energy, as purchaser); and

• (iii) Up Energy.

To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, the Purchaser, Up Energy and their respective ultimate beneficial owners are third parties independent of and not connected with the Company and its connected persons.

The Disposal Group and Target Mine

Upon Completion, the Company shall dispose of its entire interests in the Target Company (which is the shareholder of Venture Path, West China and Baicheng Wenzhou which in turn holds the entire interest of the Target Mine) to the Purchaser. Each of the members of the Disposal Group will cease to be a subsidiary of the Company and the results of the Disposal Group will cease to be consolidated with those of the Company.

Assignment of the Shareholder’s Loan

As at the Latest Practicable Date, the Target Company is indebted to the Company for the principal amount equal to HK$1,623,974,302 as interest-free Shareholder’s Loan. The Company has agreed to sell and assign to the Purchaser, and the Purchaser has agreed to purchase and accept the assignment of, the entire interests in the Target Company and all rights, title, benefit and interest of and in the Shareholder’s Loan on the terms and conditions set out in the S&P Agreement. Pursuant to the S&P Agreement, the Company undertakes to the Purchaser that prior to the Completion Date, it shall (i) assign current assets of the Disposal Group comprising of inventory in an amount of approximately HK$15 million,

– 9 –

LETTER FROM THE BOARD

trade receivables in an amount of approximately HK$1.4 million and other receivables in an amount of approximately HK$1.3 million (based on the unaudited management accounts of the Disposal Group) (other than the Required Deposits and cash at bank) to the Group with book value as consideration, and which consideration shall be set-off against and deducted from the Shareholder’s Loan on a dollar for dollar basis; and (ii) settle and discharge in full any and all outstanding financial indebtedness (excluding any intra-group advances, loans and borrowings amongst the Disposal Group Companies, the Shareholder’s Loan, and any other outstanding financial indebtedness owing by the Disposal Group to other persons which the Company and the Purchaser agree in writing prior to Completion that they shall remain unpaid) owed by each Disposal Group Company to any member of the Group. Hence, the amount of Shareholder’s Loan will be subject to possible adjustment on Completion. All taxation, costs and expenses of the assignment, novation and settlement shall be borne by the Company.

Immediately before Completion, the shareholding structure of the Disposal Group is set out below:

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----- Start of picture text -----

The Company
100%
Target Company
100%
Venture Path
100%
West China
100%
Baicheng Wenzhou
100%
Target Mine
----- End of picture text -----

– 10 –

LETTER FROM THE BOARD

Upon Completion (assuming the allotment and issue of the Consideration Shares), the shareholding structure of the Disposal Group is as set out below:

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----- Start of picture text -----

The Company
18.84%
Up Energy
100%
Purchaser
100%
Target Company
100%
Venture Path
100%
West China
100%
Baicheng Wenzhou
100%
Target Mine
----- End of picture text -----

– 11 –

LETTER FROM THE BOARD

Total Consideration and adjustments

The Total Consideration for the Transaction is HK$1,580,000,000, comprising of (i) HK$735,000,000 to be settled by allotment and issue to the Company of 367,500,000 Up Energy Shares at an issue price of HK$2.00 per share (the “ Consideration Shares ”); and (ii) the balance of HK$845,000,000 by way of cash payment to the Company upon Completion, subject to adjustments (with no cap or floor limit) as set out in the S&P Agreement (the “ Cash Component ”) and as detailed below.

The Total Consideration was based on normal commercial terms and determined after arm’s length negotiations between the Company and the Purchaser, with reference to the value of the Agreed Minimum Non-Current Assets of the Disposal Group (including twothirds of the Required Deposits) only and on the assumption that they remain in the Disposal Group at Completion and the net difference of the Disposal Group as at the Completion Date (computed by deducting (A) the amount of total liabilities (excluding the Shareholder’s Loan) from (B) the amount of total current assets plus one-third of the Required Deposits amount, as shown in the Pro-Forma Completion Account or the Audited Completion Account (as defined below)) shall equal to zero. The basis for determining the Total Consideration has already taken into account the possible assignment of the Disposal Group’s current assets (other than the Required Deposits and cash at bank) back to the Company.

If the net difference of the Disposal Group as at the Completion Date is a positive amount (meaning the aggregate amount of total current assets plus one-third of the Required Deposits amount is larger than the amount of total liabilities (excluding the Shareholder’s Loan)), the Cash Component shall be increased by an amount equal to the net difference of the Disposal Group as at Completion Date. In such case, the Purchaser shall pay to the Company cash as equivalent to the net difference of the Disposal Group as at the Completion Date. If the net difference of the Disposal Group as at the Completion Date is a negative amount (meaning the amount of total liabilities (excluding the Shareholder’s Loan) is larger than the aggregate amount of total current assets plus one-third of the Required Deposits amount), the Cash Component shall be reduced by an amount equal to the absolute value of the net difference of the Disposal Group as at the Completion Date. In such case, the Company shall pay to the Purchaser an amount in cash as equivalent to the absolute value of the net difference of the Disposal Group as at the Completion Date.

As at the Audited Accounts Date, the amount of the Agreed Minimum Non-Current Assets amounted to RMB31,122,554. The total current assets (including the Disposal Group’s current assets to be assigned to the Group but excluding the Required Deposits and cash at bank) and the total liabilities (excluding the Shareholder’s Loan) of the Disposal Group as at 30 September 2012 (based on the unaudited management accounts of the Disposal Group) amounted to approximately HK$21,506,000 and HK$50,669,000, respectively. Hence, it is unlikely that the Cash Component will be adjusted to a negative balance.

– 12 –

LETTER FROM THE BOARD

Consideration Shares

The issue price for the Consideration Shares of HK$2.00 per Consideration Share was arrived at by the Company and the Purchaser after arm’s length negotiations taking mainly into account, amongst others, the inclusion of the Target Mine into the assets portfolio of Up Energy after Completion and market comparables (including the current trading prices of listed mining companies) at prevailing market conditions, and which represents:

• (a) a premium of approximately 146.91% to the closing price of HK$0.81 per Up Energy Share as quoted on the Stock Exchange on the Latest Practicable Date;

• (b) a premium of 150% to the closing price of HK$0.80 per Up Energy Share as quoted on the Stock Exchange on 12 October 2012 (being the last trading day in Up Energy Shares prior to the suspension of trading in Up Energy Shares pending the issue of the announcement of Up Energy in relation to the Transaction);

• (c) a premium of approximately 153.16% to the closing price of HK$0.79 per Up Energy Share based on the daily closing prices as quoted on the Stock Exchange for the 5 trading days up to and including 12 October 2012;

• (d) a premium of approximately 151.57% over the closing price of HK$0.795 per Up Energy Share based on the daily closing prices as quoted on the Stock Exchange for the 10 trading days up to and including 12 October 2012; and

• (e) a discount of approximately 69.23% over the audited consolidated net asset value per Up Energy Share of approximately HK$6.50 as at 31 March 2012.

The issue price of the Consideration Shares and the Reference Price (as defined below) for the Top Up Consideration Shares (as defined below) was determined after arm’s length negotiations between the Company and the Purchaser with reference to the conversion price of the Outstanding Convertible Notes issued by Up Energy which will be due in January 2016.

A valuation of mining rights of the Target Mine was prepared by RHL Appraisal Ltd. for impairment review purposes only, and such valuation does not and is not intended to form a primary basis for determining the Total Consideration. In consideration of (i) it being in the Company’s interest to shift its business focus from the mining industry into the oil and gas industry for such reasons as detailed in the section below headed “Reasons for the Transaction” of this circular; and (ii) taking into account the fair value of the top up option (as detailed in the paragraph below headed “Top Up Consideration Shares”) and the Put Option (as detailed in the paragraph below headed “Put Option”) as contemplated in the Transaction, the Directors consider the Total Consideration to be fair and reasonable and in the interest of the Company and its shareholders as a whole.

– 13 –

LETTER FROM THE BOARD

Preparation of the Completion Accounts

The Company shall, as soon as practicable after Completion and within ten (10) Business Days after the Completion Date, deliver to the Purchaser the Pro-Forma Completion Accounts. The Pro-Forma Completion Accounts shall constitute the final completion accounts unless the Company receives a written notice from the Purchaser containing details of its disagreement with such accounts within ten (10) Business Days after the date of delivery of the Pro-Forma Completion Accounts.

If the Company and the Purchaser are unable to agree on the amount of adjustment to the Total Consideration within twenty-five (25) Business Days after the Completion Date, they shall jointly appoint Grant Thornton Jingdu Tianhua or if it does not take up the engagement within thirty (30) Business Days from the Completion Date, a firm of independent certified public accountants in Hong Kong agreed by the parties to the S&P Agreement to conduct audit on the Disposal Group for the period from 1 September 2012 up to the Completion Date, and procure audited accounts (including statement of financial position, statement of comprehensive income, statement of cash flows and statement of changes in equity) of the Disposal Group Companies which will be prepared under the same accounting standards as the Audited Accounts to be issued by such auditors (the “ Audited Completion Accounts ”).

Cash Deposit

In addition to the Total Consideration, upon signing of the S&P Agreement, the Purchaser shall remit cash in an amount of HK$10,000,000 (the “ Cash Deposit ”) as cash deposits for the Transaction which shall be applied as part payment of the Cash Component upon Completion.

In the event of fulfilment of all of the Conditions but the Purchaser and/or Up Energy fail to comply with any or all of the obligations as set out in the S&P Agreement on the Completion Date, the Company shall be entitled by notice in writing to terminate the S&P Agreement and to withhold and forfeit an amount from the Cash Deposit equivalent to the professional fees reasonably incurred by the Company in relation to the Transaction but not exceeding HK$7,000,000 (unless otherwise agreed in writing by the Purchaser and Up Energy), and shall return any remaining amount of the Cash Deposit to the Purchaser as soon as practicable.

– 14 –

LETTER FROM THE BOARD

In the event of fulfilment of all of the Conditions but the Company fails to comply with any or all of the obligations as set out in the S&P Agreement on the Completion Date, the Company shall return the entire amount of the Cash Deposit (excluding any accrued interest thereon) to the Purchaser, and shall in addition pay to the Purchaser an amount equivalent to the professional fees reasonably incurred by the Purchaser and Up Energy in relation to the Transaction but not exceeding HK$7,000,000 (unless otherwise agreed in writing by the Company).

In the event that the Transaction cannot proceed for reasons other than the inability of the Company or the counterparties to comply with the obligations under the S&P Agreement, the Company and the Purchaser will be responsible for their respective professional fees incurred and the Company will then return the full amount of the Cash Deposit to the Purchaser.

Top Up Consideration Shares

If the average closing price of the Up Energy Shares (the “ Shortfall Determinant Market Price ”) for the five (5) trading days immediately preceding and including the Third Anniversary Date (the “ Reference Date ”) is less than HK$2.00 (subject to adjustment following share consolidation or sub-division) (the “ Reference Price ”), Up Energy shall allot and issue such number of additional new Up Energy Shares to the Company (the “ Top Up Consideration Shares ”) calculated as follows:–

Number of Top Up Consideration Shares = ((Reference Price – Shortfall Determinant Market Price) x the aggregate number of Up Energy Shares standing in the Top Up Account (as defined below) and the Escrow Account (as defined below) as at the Third Anniversary Date) ÷ Shortfall Determinant Market Price

Provided that if the number of Top Up Consideration Shares to be issued pursuant to the above formula (the “ Original Number ”), together with the Up Energy Shares then held by the Company, shall exceed 19.99% of the enlarged issued share capital of Up Energy on the Reference Date, the number of Top Up Consideration Shares to be issued shall be reduced to such number (the “ Adjusted Number ”) which, together with the Up Energy Shares then held by the Company, shall equal 19.99% of the enlarged issued share capital of Up Energy, and the Purchaser shall pay compensation in cash to the Company in an amount equivalent to:

Amount of cash compensation (the “ Top Up Cash Compensation ”) = (Original Number – Adjusted Number) x Shortfall Determinant Market Price

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LETTER FROM THE BOARD

Put Option

If as at the Third Anniversary Date or (in the event of any allotment and issue of Top Up Consideration Shares) within thirty days after the Reference Date, there are Up Energy Shares standing in the Put Option Account (as defined below), the Company shall have the right (the “ Put Option ”) to request Up Energy to, and Up Energy shall be obliged to, arrange for the sale or disposal of all or part of Up Energy Shares standing in the Put Option Account as at the Third Anniversary Date (up to a maximum of 140,000,000 Up Energy Shares, subject to adjustment following share consolidation or sub-division) (the “ Put Option Shares ”) by way of placing through an independent qualified placing agent nominated by Up Energy at a price to be agreed between Up Energy and such placing agent (the “ Placing Price ”), with the proceeds from the placing paid to the Company.

If the Placing Price is less than HK$2.20 per Up Energy Share (subject to adjustment following share consolidation or sub-division) (the “ Ceiling Price ”), Up Energy shall pay cash compensation to the Company in such amount equal to:

Cash compensation = (Ceiling Price – Placing Price) x number of Put Option Shares

The Ceiling Price is a commercial term determined on an arm’s length basis between the Company and the Purchaser with reference to the conversion price of the Outstanding Convertible Notes issued by Up Energy which will be due in January 2016.

ROMA confirms that in compliance with the requirements of Chapter 18 of the Listing Rules, it has been engaged to prepare the Competent Person’s Report in relation to the Target Mine and the Competent Person is Mr. Brian J. Varndell, geological pannel member of ROMA. As confirmed by ROMA, the Competent Person satisfies the requirements of Rules 18.21 and 18.22 of the Listing Rules. To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, the said Competent Person and its respective ultimate beneficial owners are third parties independent of the Company and its connected persons.

The Competent Person’s Report prepared by the Competent Person is set out in Appendix VI to this circular.

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LETTER FROM THE BOARD

Conditions

Completion shall be subject to the fulfilment of all of the following Conditions on or before 5:00 p.m. on 30 June 2013 (or such other date as the parties may agree in writing) (the “ Long Stop Date ”) (other than those Conditions the fulfilment of which have been waived (with or without condition) by the Purchaser or the Company (as the case may be)):

• (a) the Purchaser having received a Competent Person’s Report issued from such Competent Person as designated by the Purchaser relating to the state and condition of the Target Mine;

• (b) the Company having received a Competent Person’s Report issued from such Competent Person as designated by the Company relating to the state and condition of the Target Mine;

• (c) the Purchaser having received a Valuation Report issued from such Competent Evaluator as designated by the Purchaser relating to the valuation of the Target Mine;

• (d) all necessary approvals and consent from the respective shareholders of Up Energy and the Company having been obtained in relation to the Transaction and/or acquisition of the Disposal Group and the Target Mine;

• (e) all requisite approvals, consent and authorisations required under all applicable laws and regulations and relevant authorities (including, without limitation, all applicable Bermuda, Cayman Islands, the PRC and Hong Kong laws and regulations and authorities), the Stock Exchange, the Bermuda Monetary Authority and the Listing Rules in relation to the Transaction and/or the acquisition of the Disposal Group and the Target Mine and implementation thereof and all other matters incidental thereto, and releases over all encumbrances created over the assets of the Disposal Group Companies and the entire issued share capital of the Target Company, having been duly obtained;

• (f) the Listing Committee of the Stock Exchange granting the listing of, and permission to deal in, the Consideration Shares and the Top Up Consideration Shares;

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LETTER FROM THE BOARD

• (g) the approval by 新疆維吾爾自治區煤炭工業管理局 (Coal Industry Administration Bureau of the Autonomous Region of Xinjiang) on the feasibility study of the proposed production increase to 900,000 tpa (the “ proposed increase ”) of the Disposal Group and the application for approval of the proposed increase in the Target Mine’s annual production (the “ Annual Production Approval ”) to be made by 阿克蘇地區發展和改革委員會 (the Reform and Development Commission of the Aksu Region of the PRC) being accepted for consideration by 新疆維吾爾自治區發展和改革委員會 (the Reform and Development Commission of the Autonomous Region of Xinjiang) (the “ Xinjiang NDRC ”);

• (h) the Purchaser having obtained credit approval for grant of loan of an amount not less than HK$545,000,000 from bank(s);

• (i) completion of legal due diligence review of the Disposal Group and the Target Mine to the satisfaction of the Purchaser;

• (j) the Purchaser having received a PRC legal opinion in respect of the Disposal Group, the Target Mine and all approvals and registrations required from the PRC authorities to complete the Transaction as a whole having been obtained, in form and substance satisfactory to the Purchaser;

• (k) certain representations, warranties, undertakings or indemnities made or given or deemed to have been made or given by the Company to the Purchaser being true, accurate and not misleading in any material respect at all times up to and including the Completion Date (both days inclusive) (which include (i) the mining rights owned by Baicheng Wenzhou relating to the operation of the Target Mine (“ Mining Rights ”) are validly existing in accordance with the PRC laws and are lawfully and validly owned by the Group free of all encumbrances; (ii) all necessary licenses, permits, approvals and consents required in connection with and necessary for mining of the coal mines constituting the Mining Rights of the Target Mine by the Group have been duly obtained; and (iii) all the mining rights premium, taxation and fees required in connection with and necessary for the obtaining and valid holding of the Mining Rights have been duly paid in full etc.); and

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LETTER FROM THE BOARD

• (l) certain representations, warranties, undertakings or indemnities made or given or deemed to have been made or given by the Purchaser to the Company being true, accurate and not misleading in any material respect at all times up to and including the Completion Date (both days inclusive) (which include (i) at the time of issue and allotment and at Completion, Up Energy is entitled to issue and allot the Consideration Shares and the Top Up Consideration Shares to the Company on the terms as set out in the S&P Agreement; and (ii) at Completion, there is no encumbrance on, over or affecting the Consideration Shares, and there will not be any encumbrance over the Top Up Consideration Shares upon their issuance, and no person has made any claim or to be entitled to any right over or affecting the Consideration Shares and the Top Up Consideration Shares; and (iii) at Completion, the Consideration Shares and the Top Up Consideration Shares, when issued, will be credited as fully paid-up and shall rank pari passu in all respects with the Up Energy Shares in issue etc.).

The same Competent Person’s Report will be prepared to satisfy the above Conditions (a) and (b).

At any time prior to 5:00 p.m. on the Long Stop Date, (i) the Purchaser shall be entitled by notice in writing to the Company, waive the fulfilment of any Condition set out in the above Conditions (g), (h), (i), (j) and (k) (in part or in whole) with or without condition as the Purchaser may in its sole and absolute discretion think fit; and (ii) the Company shall be entitled by notice in writing to the Purchaser, waive the fulfilment of the above Condition (l) (in part or in whole) with or without condition as the Company may in its sole and absolute discretion think fit.

In the event that any of the Conditions (other than those Conditions which have been waived by the Purchaser or the Company) are not fulfilled in full at or before 5:00 p.m. on the Long Stop Date, the S&P Agreement shall terminate and cease to be of effect, and the parties thereto shall not have any further rights and obligations thereunder (save for rights and obligations relating to refund of the Cash Deposit to the Purchaser and any antecedent breach of the S&P Agreement and claims for losses by the non-defaulting party(ies) against the defaulting party for such antecedent breach).

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LETTER FROM THE BOARD

As at the Latest Practicable Date, the Company has pledged the shares of the Disposal Group Companies to Cheer Hope Holdings Limited, a wholly-owned direct subsidiary of CCBI Investments Limited (the “ Relevant Bank ”) pursuant to the terms of an investment agreement (the “ Investment Agreement ”) entered into between the Company and the Relevant Bank on 6 September 2012 in connection with the issue of and subscription for the notes in the aggregate principal amount of up to US$40,000,000 due 2013. Details of the Investment Agreement and relevant share charges have been set out in the announcements of the Company dated 6 September 2012, 10 September 2012 and 4 October 2012. It is contemplated that the Company shall procure the relevant share charges to be released shortly before Completion for the purpose of Completion by using its internal resources to redeem the said notes.

Company’s Undertakings

The Company further undertakes to the Purchaser that:

• (a) at any time after Completion up to and including the date of the first anniversary of Completion (the “ Lock Up Period ”), it shall not, without Up Energy’s prior written consent, amongst others, to offer, accept subscription for, lend, sell, mortgage, pledge or charge, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant or agree to grant any option, right or warrant to purchase or subscribe for, make any short sale, lend or otherwise transfer or dispose of, either directly or indirectly, conditionally or unconditionally, any of the Consideration Shares or any interest therein or enter into any transaction with the same economic effect as any transaction described above; and

• (b) it shall, as soon as practicable after its receipt, deposit the Consideration Shares and the Top Up Consideration Shares (if any) issued to it in the designated securities account(s) maintained by a securities dealing firm jointly appointed by the Company and the Purchaser in the following manner:

• (i) as to 158,000,000 Consideration Shares to be deposited in a standalone securities account (the “ Escrow Account ”), where any transactions into and out of the Escrow Account shall be operated only on joint instructions from the Company and the Purchaser, and such joint operation shall continue until the date when the Annual Production Approval of the Xinjiang NDRC is obtained or when the transfer of Up Energy Shares by the Company to the Purchaser (details of which are set out below) is completed (whichever is applicable);

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LETTER FROM THE BOARD

• (ii) as to 69,500,000 Consideration Shares to be deposited in a standalone securities account (the “ Top Up Account ”) which will become open for withdrawal upon the expiry of the Lock-Up Period;

• (iii) as to 140,000,000 Consideration Shares and all the Top Up Consideration Shares (if any) to be deposited in another standalone securities account (the “ Put Option Account ”).

(the Escrow Account, the Top Up Account and the Put Option Account shall collectively be referred to as the “ Designated Securities Accounts ”).

The Consideration Shares (and the Top Up Consideration Shares (if any)) shall be accounted as investment in securities under non-current assets in the financial statements of the Group under Hong Kong Financial Reporting Standards. The Company shall at all times remain the sole legal and beneficial owner of all Up Energy Shares deposited or to be deposited in the Designated Securities Accounts, and shall enjoy full and unrestricted rights attaching to the Up Energy Shares, including but not limited to rights to dividends and distributions, voting rights, rights to participate in offering to shareholders of Up Energy such as rights issue or open offer, and subject to the terms of the S&P Agreement, the right to dispose of or create encumbrance on any Up Energy Shares so deposited.

The Company also undertakes that it shall use all reasonable endeavours to assist Up Energy, the Purchaser and the Disposal Group Companies to obtain the Annual Production Approval of the Xinjiang NDRC from the Completion Date until the Third Anniversary Date.

If the Annual Production Approval of the Xinjiang NDRC is not granted on or before the Designated Date, the Company shall transfer to the Purchaser (or to such other person or placing agent as the Purchaser may direct) 50% of such Up Energy Shares held and deposited in the Escrow Account at nominal consideration. If the Annual Production Approval of the Xinjiang NDRC is not granted on or before the Third Anniversary Date, in addition to the Up Energy Shares transferred to the Purchaser as stated above, the Company shall transfer to the Purchaser all of the remaining Up Energy Shares held and deposited in the Escrow Account at nominal consideration.

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LETTER FROM THE BOARD

Guarantor’s obligations

In addition to its obligations under the S&P Agreement, Up Energy also guarantees to the Company the due and punctual performance of all the obligations and liabilities of the Purchaser under or otherwise arising out of or in connection with the S&P Agreement and other related documents, and undertakes to keep the Company fully indemnified against all liabilities, losses, proceedings, claims, damages, costs and expenses which the Company may suffer or incur as a result of any failure or delay by the Purchaser in the performance of such obligations and liabilities.

Completion

Completion will take place on the fifth Business Day after the date on which the last of the Conditions of the S&P Agreement is fulfilled (other than those Conditions the fulfilment of which has been waived by the Purchaser or the Company (as the case may be)) pursuant to the terms of the S&P Agreement.

4. INFORMATION ON THE PURCHASER

The Purchaser is a wholly-owned subsidiary of Up Energy, a company listed on the Main Board of the Stock Exchange. Up Energy and its subsidiaries are principally engaged in the mining, washing and marketing of coking coal in the PRC.

To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, the Purchaser, Up Energy and their ultimate beneficial owner(s) are third parties independent of the Company and its connected persons.

Save for the Transaction, the Company has no previous transactions with the Purchaser, Up Energy and their ultimate beneficial owner(s) which would require to be aggregated with the Transaction pursuant to Rules 14.22 of the Listing Rules.

5. INFORMATION ON THE COMPANY

The Group is principally engaged in the mining, washing and marketing of coking coal in the PRC. The Group is also engaged in the design, manufacturing, and sales of packaging products, the major customers of which are internationally recognised branded and luxury consumer merchandise such as watches, pens, jewellery, gifts and accessories.

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LETTER FROM THE BOARD

6. INFORMATION ON THE DISPOSAL GROUP

As at the Latest Practicable Date, the Target Company is a direct wholly-owned subsidiary of the Company. The Target Company wholly owns Venture Path which wholly owns West China and Baicheng Wenzhou, and through Baicheng Wenzhou wholly owns and operates the Target Mine. Each member of the Disposal Group is an investment company and does not have any business operations except for the Target Mine.

The Target Mine has resumed production in late December 2011 after rectification of certain safety issues in response to the requests of the relevant PRC governmental authorities and completion of measures to improve the ventilation system. The new mining shafts of the Target Mine, which would increase annual production capacity to 900,000 tonnes, are pending approval from the government of the Xinjiang Uygur Autonomous Region.

The Target Company has one issued share of nominal value US$1.00. The registered capital of Venture Path, West China and Baicheng Wenzhou are US$50,000, HK$10,000 and RMB9,280,000, respectively.

7. THE TARGET MINE

The contents of this section have been extracted from the Competent Person’s Report prepared by the Competent Person as contained in Appendix VI to this circular and must therefore be read in conjunction with and in the context of the Competent Person’s Report itself. Please refer to the Competent Person’s Report for a detailed discussion on all technical aspects of the Target Mine. The Competent Person’s Report is based on information made available to the Competent Person prior to 1 September 2012. The Company confirmed that no material changes have occurred since 1 September 2012.

The Target Mine is located 39 km north of Baicheng town and approximately 500 km southwest of the provincial capital Urumqi in the Xinjiang Uygur Autonomous Region, the PRC. The Target Mine is currently mining both coking and thermal coal from six, almost vertical, coal seams. The current mining licence provides for a production rate of 210,000 tonnes of raw coal a year, while the Company intends to apply for a licence to produce coal at a rate of 900,000 tonnes per annum. The Target Mine is covered by a mining licence (No. C6500002009101130052982) which was granted by the Department of Land and Resources of Baicheng County of Xinjiang Uygur Autonomous Region, on October 28, 2010. This licence covers 5.92 km[2] and extends approximately 5.5 km from east to west and approximately 1.1 km from north to south.

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LETTER FROM THE BOARD

Estimated Coal Resources and Reserves

In accordance with the Competent Person’s Report, the estimated coal resources and reserves of the Target Mine as of 1 September 2012 are summarized in the tables below:

Coal Resources

Measured Resource Indicated Resource TOTAL Coal Reserves Proved Reserves Probable Reserves TOTAL	Million tonnes 95.7 30.2
	125.9
	Million tonnes 59.9 20.6
	80.5

Notes:

1. The above reserve and resource estimates have taken into account the estimated coal reserves and resources of the Target Mine as of 1 September 2012 prepared by ROMA, an independent technical adviser and such estimates are prepared in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves.

According to the Company’s annual report for the year ended 31 March 2012, the Target Mine had coal resources and reserves of 111.3 milion tonnes and 38 million tonnes, respectively. The increase in the estimated coal reserves and resources of the Target Mine during the period from 1 April 2012 to 31 August 2012 as shown from the above tables was due to the fact that ROMA had adopted the resource estimates completed by Runge Asia Limited, trading as Minarco-MineConsult (“ Minarco ”) (2011) in the Company’s annual report for the year ended 31 March 2012 on the assumption that the signed off Minarco “JORC Compliant Report” dated 25 May 2011 was correct and ROMA had updated the resource estimation with the latest information on the accepted Minarco resource estimates

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LETTER FROM THE BOARD

for such annual report. The Company had subsequently instructed ROMA to re-estimate the resources on delivered data for the purpose of compiling the Competent Person’s Report. In processing the said re-estimates, ROMA was of the view that the seam thickness used by Minarco for one of the seams (Seam 5) was much too narrow, hence the Minarco average seam width of 5.2 m for Seam 5 was considerably less than the 8.0 m calculated and used by ROMA which corresponds with the 8.0 m calculated by the local Chinese geologist for their resource estimates. The differences in seam width for the other seams were minimal and within acceptable limits. The above changes in resource estimates resulted in the increase in estimated coal reserves and resources of the Target Mine. ROMA is of the view that their latest resource estimates are more realistic in relation to the actual circumstances of the coal deposit. In addition, the Target Mine is an operating coal mine, and there are no exploration or drilling activities conducted during the period from 1 April 2012 to 31 August 2012.

Further information in relation to the Target Mine will be provided in the Competent Person’s Report as set out in Appendix VI to this circular.

8. LATEST DEVELOPMENTS OF THE TARGET MINE SINCE OUR ACQUISITION ON 15 JUNE 2011

A feasibility study in relation to the Target Mine with detailed plans to increase annual production to 900 kt was completed and approved by 新疆維吾爾自治區煤炭工業管理局 (Coal Industry Administration Bureau of the Autonomous Region of Xinjiang) on 20 September 2012, hence the first part of Condition (g) (as set out on p.18 of this circular) has been fulfilled. The Annual Production Approval of the Xinjiang NDRC is subject to review and approval by various PRC government authorities and Baicheng Wenzhou has submitted the Annual Production Approval to 拜城縣發展和改革委員會 (the Reform and Development Commission of the Baicheng County of the PRC). Upon obtaining such approval from 拜城縣發展和改革委員會 (the Reform and Development Commission of the Baicheng County of the PRC), the Annual Production Approval has to be approved by 阿克蘇地區發展和改革委員會 (the Reform and Development Commission of the Aksu Region of the PRC) which will then be ultimately approved by 新疆維吾爾自治區發展 和改革委員會 (the Reform and Development Commission of the Autonomous Region of Xinjiang). Upon obtaining the Annual Production Approval of the Xinjiang NDRC, Baicheng Wenzhou shall commence the construction of new mining shafts with an annual production capacity of 900 kt and the requisite mining licenses relating to full production of 900 kt can be obtained approximately 6 to 12 months upon the completion of the said new mining shafts as disclosed in the Company’s circular of 25 May 2011 (the “ Previous Circular ”).

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LETTER FROM THE BOARD

Furthermore, in order to facilitate the grant of approval for the increase in the production capacity of the Target Mine, Baicheng Wenzhou has entered into a design contract with Coal Science and Engineering Group from the Wuhan Design and Research Institute of Xinjiang Branch （中煤科工集團武漢設計研究院新疆分院）on 20 April 2012 in relation to the construction of new mining shafts. As at the Latest Practicable Date, the capital expenditure incurred in relation to increasing the annual production of the Target Mine to 900kt amounted to RMB70,800,000 and the capital amount injected by the Company into Baicheng Wenzhou amounted to RMB89,340,000 which is included in the Shareholder’s Loan of approximately HK$1,623,974,302.

In addition, as disclosed in the Previous Circular, the Group will bear capital expenses of up to RMB296 million in relation to procurement of facilities and construction required for the Target Mine to achieve annual coal production of 900 kt, and in the event such capital expenses exceed RMB296 million Tai Rong Xin Ye International Power Generation Inc. (the “ Former Vendor ”) as the former vendor of the Target Mine, has undertaken to bear all further capital expenses as required for the Target Mine to achieve the said annual production of 900 kt. Upon completion of the Transaction, neither the Company nor the Former Vendor are required to procure injection of the said capital expenses into Baicheng Wenzhou.

9. INFORMATION OF MATERIAL MINES AND ASSETS OF UP ENERGY

As part of the Transaction, the Company will receive the Consideration Shares (i.e. 367.5 million Up Energy Shares, subject to adjustment under the S&P Agreement) as part of the Total Consideration which, on a technical level, constitutes an acquisition by the Company for the purpose of the Listing Rules. The Company has applied for a waiver from complying with the requirements of Rule 18.09(2), (3) and (4) of the Listing Rules and such waiver has been granted by the Stock Exchange. The Company has applied for such waiver on the basis that: (1) there is sufficient public information on Up Energy and related assets for the Shareholders’ reference based on the previous published announcements, circulars and annual/interim reports of Up Energy and updated information to be published by Up Energy pursuant to its continuing disclosure requirements under Rules 18.14 to 18.18 of the Listing Rules; and (2) in the context of the Transaction, a full competent person’s report (as required under Rule 18.09(2)) and valuation report (as required under Rule 18.09(3)) on Up Energy and its assets (including all its mining assets) would be of limited reference value to the Shareholders in view that the transaction structure links up the value of Consideration Shares with a pre-agreed trading price (but not the reserve nor the value of Up Energy’s mineral assets) and the Transaction is in essence a disposal of the Target Mine by the Company to the Purchaser.

Please refer to the information of Up Energy Group as contained in Appendix III to this circular for details of the material mines and assets of Up Energy.

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LETTER FROM THE BOARD

10. FINANCIAL INFORMATION OF THE TARGET COMPANY

Set out below is a summary of the consolidated results of the Target Company for the period ended 31 March 2011 and for the year ended 31 March 2012, prepared in accordance with the relevant accounting principles and financial regulations applicable to the Hong Kong Financial Reporting Standards:

	As at
	31 March	31 March
	2011	2012
	(unaudited)	(unaudited)
	(HK$)	(HK$)
	(Note 1)	(Note 2)
Total assets	250,000,008	1,685,079,000
Total liabilities	250,000,000	(1,645,715,000)
Net assets	8	39,364,000
	For the period/year ended
	31 March	31 March
	2011	2012
	(unaudited)	(unaudited)
	(HK$)	(HK$)
Turnover	–	2,861,000
Net loss before taxation	–	(16,719,000)
Net loss after taxation	–	(16,719,000)

Notes:

• (1) As at 31 March 2011, the Target Company has not yet acquired Venture Path. Hence, the reporting period of Target Company is from 6 August 2010 (date of incorporation) to 31 March 2011.

(2) As the Target Company acquired Venture Path on 15 June 2011, the results of the Target Company included the results of Venture Path and its subsidiaries for the period from 15 June 2011 to 31 March 2012.

In addition, set out below is a summary of the audited results of Baicheng Wenzhou, an indirect wholly-owned subsidiary of the Company established in the PRC which operates the Target Mine, for the years ended 31 December 2010 and 31 December 2011 respectively, prepared in accordance with the relevant accounting principles and financial regulations applicable to the PRC Financial Reporting Standards. The remaining companies of the Disposal Group are all investment holding companies during the said financial years.

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LETTER FROM THE BOARD

	As at
	31 December	31 December
	2010	2011
	(audited)	(audited)
	(RMB)	(RMB)
Total assets	34,922,275	135,893,372
Total liabilities	(30,602,470)	(140,945,993)
Net assets/(liabilities)	4,319,805	(5,052,621)
	For the year	ended
	31 December	31 December
	2010	2011
	(audited)	(audited)
	(RMB)	(RMB)
Turnover	17,199,573	816,160
Net loss before taxation and extraordinary items	(1,363,289)	(9,435,844)
Net loss after taxation and extraordinary items	(1,363,289)	(9,435,844)

There is no material difference between the generally accepted accounting principles relating to the auditor reports of each of the Disposal Group and Baicheng Wenzhou which are prepared in accordance with Hong Kong Financial Reporting Standards and PRC Financial Reporting Standards, respectively.

As shown from the above audited results of Baicheng Wenzhou, there is a significant drop in revenue of the Disposal Group in the year ended 31 December 2011 which is mainly due to: (i) disruption of normal operations of the Target Mine during the period from 28 January 2011 to 15 June 2011, being the period during which completion of change of the ownership of Baicheng Wenzhou from the previous owners (the “ Baicheng Wenzhou Owners ”) to the Former Vendor; and (ii) suspension in production of the Target Mine from July 2011 to early December 2011 pending rectification of certain safety issues in response to the requests of the relevant PRC governmental authorities and completion of measures to improve the ventilation system.

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LETTER FROM THE BOARD

As disclosed in the Previous Circular, the Former Vendor will provide a capital injection of approximately RMB30,257,000 into West China, which will in turn provide a capital injection in the same amount to Baicheng Wenzhou for the purpose of repaying outstanding shareholders’ loan owed by Baicheng Wenzhou to the Baicheng Wenzhou Owners as a condition precedent to completion of the sale and purchase of Baicheng Wenzhou between the Baicheng Wenzhou Owners and the Former Vendor. The proposed capital injection of RMB30,257,000 was not made by the Former Vendor into Baicheng Wenzhou as the Former Vendor had settled the relevant amount with the Baicheng Wenzhou Owners directly. Furthermore, as disclosed in the Previous Circular, the Company intended to procure a capital injection of approximately RMB20,463,000 into Baicheng Wenzhou after completion of the acquisition of the Target Mine to be used by Baicheng Wenzhou as general working capital. During the period from 15 June 2011 to 31 August 2012, the Company has injected a capital amount of RMB89,340,000 into Baicheng Wenzhou by way of shareholder’s loan.

11. FINANCIAL INFORMATION OF UP ENERGY

Set out below is a summary of the audited results of Up Energy for the years ended 31 March 2011 and 31 March 2012 respectively, prepared in accordance with the relevant accounting principles and financial regulations applicable to the Hong Kong Financial Reporting Standards:

	As	at
	31 March 2011	31 March 2012
	(audited)	(audited)
	(HK$’000)	(HK$’000)
Total assets	15,531,530	15,759,123
Total liabilities	(9,072,567)	(8,256,805)
Net assets	6,458,963	7,502,318
	For the year ended
	31 March 2011	31 March 2012
	(audited)	(audited)
	(HK$’000)	(HK$’000)
Turnover	26,121	5,078
Net Profit/(loss) before taxation	943,570	(97,690)
Net Profit/(loss) after taxation	943,654	(101,266)

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LETTER FROM THE BOARD

12. FINANCIAL EFFECTS OF THE TRANSACTION

Based on the audited financial information of the Disposal Group as at 30 September 2012, the Group would realize a book gain of approximately HK$77,498,000 from the Transaction. The book gain is calculated by reference to the Total Consideration on fair value of HK$1,683,521,000 (i.e. the sum of (i) fair value of 367,500,000 Consideration Shares based on the market price of HK$0.81 per share on 30 September 2012 which amount to HK$297,675,000; (ii) the fair value of the top up option and the Put Option which amount to HK$540,846,000 (the relevant valuation being carried out by RHL Appraisal Ltd. on a fair value basis by using The Black-Scholes Option Pricing Model which accords with the International Valuation Standards of the International Valuation Standards Council); and (iii) the Cash Component of HK$845,000,000) and deducting the carrying amount of assets and liabilities of the Disposal Group as at 30 September 2012 which amounted to approximately HK$1,645,734,000.

In calculating the said book gain resulting from the Transaction, the Company has taken into account the exchange reserve of recycled from equity to profit or loss upon the disposal arising when the assets and liabilities of Baicheng Wenzhou were translated into the presentation currency of the Group (i.e. Hong Kong dollars) which amounted to approximately HK$44,211,000 and the legal and professional fee directly attributable to the Transaction estimated by the Directors which is amounted to HK$4,500,000.

The Group’s total assets would be reduced by approximately 1.0%, from approximately HK$2,847.4 million to HK$2,820.0 million, and the Group’s total liabilities would be reduced by approximately 19.1%, from approximately HK$318.7 million to approximately HK$257.9 million assuming the Transaction had been completed on 30 September 2012. Furthermore, the Group’s net assets would be increased by approximately 1.3%, from approximately HK$2,528.8 million to HK$2,562.0 million and the Group’s cash and cash equivalents would be increased by approximately 4 times, from approximately HK$164.5 million to HK$984.0 million assuming the Transaction had been completed on 30 September 2012.

Although the issue price is significantly higher than the market price of the Up Energy Shares as at the Latest Practicable Date, the Company is of the view that the top up and Put Option mechanisms (including the issuance of the Top Up Consideration Shares and the Top Up Cash Compensation) as contemplated under the S&P Agreement can fully protect the interests of the Company for holding the Up Energy Shares at an issue price higher than its current market price and the cashflow of the Company will be increased significantly at Completion, hence, the Directors consider that the Total Consideration fairly reflects the value of the Target Mine and the Transaction is fair and reasonable and in the interest of the Company and its shareholders as a whole.

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LETTER FROM THE BOARD

13. EFFECT ON THE SHAREHOLDING STRUCTURE

The following table sets out the shareholding structure of Up Energy: (a) as at the Latest Practicable Date; (b) immediately after Completion and the issue and allotment of the Consideration Shares; and (c) immediately after Completion and the issue and allotment of the Consideration Shares and Top Up Consideration Shares, on the basis that save for the Consideration Shares and Top Up Consideration Shares, no new Up Energy Shares are issued from the date of this circular and up to the Completion Date and as at the Third Anniversary Date:

Name of Shareholders Up Energy Group Limited Exploratory Capital Limited The Company Other Shareholders Total	As at the Latest Practicable Date No. of Up Energy Shares % 473,566,949 29.92% 300,000,000 18.95% – – 809,292,839 51.13% 1,582,859,788 100.00%	Immediately after Completion and the allotment and issue of the Consideration Shares No. of Up Energy Shares % 473,566,949 24.28% 300,000,000 15.38% 367,500,000 18.84% 809,292,839 41.50% 1,950,359,788 100.00%	Immediately after Completion and the allotment and issue of the Consideration Shares and the maximum number of Top Up Consideration Shares (Note 1) No. of Up Energy Shares % 473,566,949 23.94% 300,000,000 15.16% 395,500,000 19.99% 809,292,839 40.91% 1,978,359,788 100.00%	Immediately after Completion and the allotment and issue of the Consideration Shares and the maximum number of Top Up Consideration Shares (Note 1) No. of Up Energy Shares % 473,566,949 23.94% 300,000,000 15.16% 395,500,000 19.99% 809,292,839 40.91% 1,978,359,788 100.00%
				100.00%

Note(1): This scenario is for illustration purposes only and based on the assumption that the top up option (subject to a cap of 19.99% of the enlarged issued capital of Up Energy) is exercised in full on Completion Date. The above shareholding structure of Up Energy is calculated based on the assumption that save for the Consideration Shares and Top Up Consideration Shares, no new Up Energy Shares are issued from the date of this circular and up to the Completion Date and as at the Third Anniversary Date. The actual number of the Top Up Consideration Shares to be issued and allotted will be based on the formula as stated in the above section headed “Top Up Consideration Shares” in this circular.

14. EFFECT ON BOARD STRUCTURE OF THE COMPANY

The Company does not expect any change in the composition of the Board as a result of the Transaction.

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LETTER FROM THE BOARD

15. REASONS FOR THE TRANSACTION

The Group is at present principally engaged in the mining, washing and marketing of coking coal in the PRC.

Since the Company’s acquisition of the Target Mine in 2011, the Company has been actively seeking potential target coal mines in the Xinjiang Uygur Autonomous Region for acquisition opportunities. The Company had, however, experienced difficulties in implementing the said acquisition plans, due to certain requests made and conditions imposed on the Company by relevant authorities in February 2012, including a condition that the Company expand its business scope into the coal chemical business prior to any further acquisition of coal mines. The Company considered it difficult to implement the coal mine acquisition plans and opted not to agree to the requests and conditions imposed as such requests included firm commitments requested from the Company to procure investment and development of coal chemical projects and businesses, which entailed commitments on production targets and coal chemical products to be produced, and the Company lacked requisite technical staff with relevant experience in the coal chemical industry. These difficulties have prompted the Company to continuously evaluate its business position and strategy and at the same time increased the Company’s awareness of opportunities in sectors other than coal mining. Having considered shifting its focus on coal mining in locations outside Xinjiang, the Company is of the view that there might be a high risk of merger and restructuring of the coal mining industry in other areas of the PRC. Furthermore, the Company is of the view that it is difficult for the Company to break into other PRC coal mining markets as most of them are dominated by a few large players. Hence, the oil and gas industry is a sector which has aroused the Company’s interest for it appeared to the Company that the Xinjiang regional government supports foreign enterprises’ investment in the local natural gas exploration industry by ensuring gas supply volume and offering favourable gas price. Government support of foreign enterprises’ investment in the oil and gas industries, including the Xinjiang oil and gas industries, has been expressed in various PRC governmental and regulatory directives, including the 鼓勵外商投資產業目錄 (Catalogue of Encouraged Industries for Foreign Investment) in 外商投資產業指導目錄（2011年修 訂）(Catalogue for the Guidance of Foreign Investment Industries (2011 Revision)) and 新疆維吾 爾自治區人民政府文件新政發[2011] 52號 (Notice 52 of 2011 issued by the People’s Government of the Xinjiang Uygur Autonomous Region).

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LETTER FROM THE BOARD

Consequently, the Company wishes to shift its business focus from the mining industry into the oil and gas industry and the Company has been seeking to identify and explore new business opportunities with a view to enhancing the value of the Company. As part of the Company’s strategy, the Company wishes to explore opportunities to expand into the natural gas and oil industry, hence the Company has been actively identifying and exploring new business opportunities in Xinjiang and Canada with a view to enhancing the value of the Company, including acquiring a potential target company specializing in the oil and gas industry in Canada. The said potential acquisition is at a preliminary stage as at the Latest Practicable Date and the Company has not entered into any letter of intent or agreement in relation to such potential acquisition. In addition, the Company has entered into a framework agreement with the Xinjiang Kuche County People’s Government（新疆庫車縣人民政府）on 7 November 2012 (which was supplemented by a supplemental agreement dated 12 November 2012) (collectively, known as the “ Framework Agreements ”) in relation to the construction of liquefied natural gas project and the construction of LNG distribution pipeline network and sales network in Kuche County as disclosed in the announcement of the Company on 14 November 2012.

Save for the framework agreement with Xinjiang Shaya County People’s Government in relation to the natural gas and oil field project as disclosed in the announcement of the Company on 3 July 2012 and the Framework Agreements, the Company has not entered into any letter of intent or agreement in relation to other potential investment opportunity as at the Latest Practicable Date.

In light of the above, in particular the Company’s strategy in shifting its business focus from coal mining into the oil and gas industry, the Directors, including the independent nonexecutive Directors, consider that it is in the Company’s interest to enter into the Transaction and the terms of the Transaction (including the Total Consideration and the payment methods thereof) are fair and reasonable and on normal commercial terms and in the interest of the Company and the Shareholders as a whole. As at the Latest Practicable Date, the Company intends to retain its existing plastic and paper boxes business.

16. APPLICATION OF SALES PROCEEDS

As at the Latest Practicable Date, as to approximately HK$1,200,000,000 of the sales proceeds from the Transaction will be applied for potential investment opportunities in relation to liquefied natural gas and oil exploration projects in the PRC and Canada, while any remaining balance of the sale proceeds will be used for general working capital.

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LETTER FROM THE BOARD

17. LISTING RULES IMPLICATIONS

As (i) the applicable percentage ratios of the Transaction exceed 75%; and (ii) the applicable percentage ratios relating to the Company’s holding of the Consideration Shares immediately after Completion exceed 100%, the Transaction constitutes both a very substantial disposal and a very substantial acquisition for the Company under Chapter 14 of the Listing Rules. Pursuant to Rule 14.49 of the Listing Rules, the Transaction is subject to the approval of the Shareholders at the EGM.

To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, neither the Purchaser nor any of its associates holds any Shares as at the Latest Practicable Date and no Shareholder has a material interest in the Transaction, and therefore no Shareholder is required to abstain from voting on the resolution to approve the Transaction at the EGM.

18. EGM

The EGM will be held at 3:00 p.m. on Friday, 22 February 2013, at The Training Room, 4/F., Sun Hung Kai Centre, 30 Harbour Road, Wanchai, Hong Kong to consider and if thought fit, approve among other matters, the S&P Agreement.

A notice convening the EGM is set out on pages N – 1 to N – 2 of this circular. Whether or not you are able to attend the EGM, you are requested to complete the enclosed form of proxy in accordance with the instructions printed thereon and return it to the branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited, Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for holding such meeting or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the meeting should you so wish.

The votes at the EGM shall be taken by poll.

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LETTER FROM THE BOARD

19. RECOMMENDATION

The Directors consider that (i) the terms of the S&P Agreement are on normal commercial terms and are fair and reasonable; and (ii) the entering into of the S&P Agreement is in the interests of the Company and Shareholders as a whole. Accordingly, the Board recommends the Shareholders to vote in favour of the resolution concerning the S&P Agreement to be proposed at the EGM.

20. ADDITIONAL MATTERS

As completion of the Transaction is subject to the fulfillment of a number of Conditions which are described in this circular, the Transaction may or may not be completed. Shareholders and potential investors should exercise caution when dealing in the Shares.

Your attention is drawn to the information set out in the appendices to this circular.

By Order of the Board Hao Tian Resources Group Limited Fok Chi Tak Company Secretary

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP

The Company is required to set out in this circular the Group’s financial information for the last three financial years and an interim period with respect to the profits and losses, financial record and position, set out as a comparative table and the latest published audited statement of financial position together with the notes on the annual financial statements for the last financial year for the Group.

The audited consolidated financial statements of the Group for the year ended 31 March 2012 has been set out in pages 32 to 121 of the annual report 2011/12 of the Company which was posted on 18 July 2012 on the Stock Exchange’s website (http://www.hkexnews.hk). Please see below link to the Company’s annual report 2011/12:

http://www.hkexnews.hk/listedco/listconews/SEHK/2012/0718/LTN20120718174.pdf

The audited consolidated financial statements of the Group for the year ended 31 March 2011 has been set out in pages 37 to 125 of the annual report 2010/11 of the Company which was posted on 5 July 2011 on the Stock Exchange’s website (http://www.hkexnews.hk). Please see below link to the Company’s annual report 2010/11:

http://www.hkexnews.hk/listedco/listconews/SEHK/2011/0705/LTN20110705509.pdf

The audited consolidated financial statements of the Group for the year ended 31 March 2010 has been set out in pages 35 to 123 of the annual report 2009/10 of the Company which was posted on 29 July 2010 on the Stock Exchange’s website (http://www.hkexnews.hk). Please see below link to the Company’s annual report 2009/10:

http://www.hkexnews.hk/listedco/listconews/SEHK/2010/0729/LTN20100729398.pdf

2. UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENT OF THE GROUP

The unaudited consolidated financial statements of the Group for the six months ended 30 September 2012 has been set out in pages 17 to 62 of the interim report 2012/13 of the Company which was posted on 7 December 2012 on the Stock Exchange’s website (http://www.hkexnews. hk). Please see below link to the Company’s interim report 2012/13:

http://www.hkexnews.hk/listedco/listconews/SEHK/2012/1207/LTN20121207150.pdf

I – 1

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

3. MANAGEMENT DISCUSSION AND ANALYSIS OF THE GROUP

Set out below is a summary of the management discussion and analysis of the performance of the Group for each of the three years ended 31 March 2010, 2011, 2012 and for the six months ended 30 September 2012 as extracted from the respective published audited and unaudited (as applicable) financial statements.

Industry Review

During 2011, despite the slowdown in GDP growth in the PRC, the coal mining industry was still able to gather growth momentum due to buoyant market demand, with crude steel production reaching 683 million tonnes, representing a year-on-year growth of 8.9%. The steel sector’s demand for quality coking coal will rise significantly after series of optimization and technical improvement. Despite the curb, though indirect, in coking coal prices due to the fall in demand from the real estate sector, increased fixed investment in the establishment of the PRC’s railway system shall provide support to coking coal prices, and alongside with the gradual upward movement in steel prices this year, coking coal prices are on a steady upward trend.

Business and Financial Review

On 7 September 2011, the Group executed a sale and purchase agreement for the disposal of the entire equity interest in 烏海市蒙港投資有限公司 (Wuhai Meng Kong Industrial Development Co., Ltd.) (“ Wuhai City Menggang ”) at a total consideration of RMB1.503 billion (equivalent to approximately HK$1,845,083,000). Wuhai City Menggang held the entire equity interest in Mine No.1 and No.4 and Tianyu coal washing plant through 烏海市天裕工貿有限公司 (Tianyu Gongmao Company Limited) (“ Tianyu Gongmao ”) and 烏海市天譽煤炭有限公司 (Tianyu Coal Company Limited), respectively. On 17 May 2012, the Group has completed the registration of transfer of the entire equity interests of Wuhai City Menggang to the purchaser with SAIC. Accordingly, during the year, no production was recorded from the coal mining business in Wuhai City, Inner Mongolia.

On 25 June 2012, the disposal of the entire equity interest in Wuhai City Menggang was completed and the Company had received the first payment RMB730,808,000 which is equivalent to 52% of the total consideration after the deduction of applicable PRC tax from the purchaser.

I – 2

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

The Group had successfully acquired the Target Mine in Xinjiang Uygur Autonomous Region on 15 June 2011 and has then resumed the preparatory work for production. However, the relevant PRC governmental authorities have issued notices to the Target Mine in July 2011 requiring its suspension and rectification of its production activities for addressing certain safety issues, including, inter alia, the implementation of measures regarding gas level in the Target Mine and the inadequacies of its ventilation system. The Company has rectified the safety issues of the Target Mine in response to the requests of the PRC governmental authorities. The improvement of ventilation system was inspected by the relevant PRC governmental authorities in mid-November 2011, and the Target Mine has resumed production in late December 2011. Moreover, new mining shafts with an annual production capacity of 900,000 tonnes are still pending approval by the Xinjiang Uygur Autonomous Region government. During the year ended 31 March 2012, the production of the Target Mine was approximately 13,000 tonnes, and the gain from the sale of raw coal from continuing operation was approximately RMB2,357,000 (equivalent to approximately HK$2,861,000).

For the six months ended 30 September 2012 under review, the production of the Target Mine was approximately 90,000 tonnes, and the turnover from the sale of raw coal from continuing operation was approximately RMB 9,706,000 (approximately equivalent to HK$11,893,000).

Packaging Box Business

For the year ended 31 March 2010, the packaging box segment revenue decreased by approximately 41.7% to HK$97.0 million (2009: HK$166.5 million). The decrease was attributable to the global economic downturn which caused our major customers in the United States and Europe to become more cautious in placing their orders. Segment loss amounted to approximately HK$20.9 million (2009: segment profit of HK$20.9 million), which includes a one-off impairment loss on goodwill of approximately HK$10.6 million previously recognised for the Group’s operations in France.

For the year ended 31 March 2011, as the global economic recovery drove demand for consumer goods and packaging boxes to increase. Accordingly, the Group’s packaging segment revenue during the year under review increased by approximately 25.8% to HK$122.1 million (2010: HK$97.0 million) as compared with the same period last year. The segment loss significantly decreased by approximately 59.0% to HK$8.6 million (2010: HK$20.9 million).

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APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

For the year ended 31 March 2012, the global economic recovery drove demand for high-end consumer good’s plastic boxes and paper boxes. However, the Euro-zone debt crisis slowed the growth momentum in the second half of the year. Accordingly, the Group’s packaging segment revenue increased by 14.8% to HK$140.2 million (2011: HK$122.1 million) as compared with last year. The gross profit margin improved significantly to approximately 25.2% (2011: 15.6%) while the gross profits increased to approximately HK$35.3 million (2011: HK$19.0 million) as a result of increased product sales and tightened control on production cost. As such, the segment result was turnaround profitability of which approximately HK$7.8 million was recorded when compared with a loss of approximately HK$8.6 million for the year ended 31 March 2011.

For the six months ended 30 September 2012, the economic downturn in European market caused decrease in demand for plastic boxes and paper boxes of luxury consumer goods. Revenue from packaging boxes segment declined by 13.6% to HK$61,628,000 (for the six months ended 30 September 2011: HK$71,362,000) as compared with the same period in last year. During the period under review, the gross profit margin reduced to approximately 10.7% (for the six months ended 30 September 2011: 26.5%) attributable to a decline in volume of orders, as well as an increase in labour costs, prices of raw materials and allowance for slow moving inventories. The total gross profit decreased to approximately HK$6,614,000 (for the six months ended 30 September 2011: HK$18,911,000).

Other Income, Gain and Loss, Change in Fair Value of Investments Held for Trading, Impairment Loss recognised in respect of Available-For-Sale Investments

For the year ended 31 March 2010, the Group recorded a total net gain of approximately HK$11.7 million (2009: loss of approximately HK$27.5 million) was recorded in other income, gain and loss, change in fair value of investments held for trading and impairment loss recognised in respect of available-for-sale investments as a result of the gradual recovery of global financial markets since the second quarter of 2009.

For the year ended 31 March 2011, a total net loss of approximately HK$0.8 million (2010: a gain of approximately HK$11.7 million) was recorded in other income, gain and loss, change in fair value of investments held for trading and impairment loss recognised in respect of available-for-sale investments. The loss was mainly attributable to (i) the decrease in gain on disposal of available-for-sale investments; (ii) the decrease in fair value of derivatives held for trading; and (iii) the net loss from foreign exchange.

I – 4

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

For the year ended 31 March 2012, the Group recorded a total net loss from continuing operations in other income, gain and loss and change in fair value of investments held for trading of approximately HK$0.4 million (2011: HK$0.8 million). The loss was mainly attributable to (i) the net loss from foreign exchange; (ii) loss on disposal of available-for-sale investments; and (iii) impairment loss on available-for-sale investments.

For the six months ended 30 September 2012, the Group recorded a net loss from continuing operations of approximately HK$42.0 million (for the six months ended 30 September 2011: net gain of approximately HK$1.8 million) in other income, other gains and losses. The losses were mainly attributable to: (i) impairment loss recognised in respect of available-for-sale investments; (ii) loss on disposal of available-for-sale investments; and (iii) fair value loss of financial assets designated as at fair value through profit and loss.

Change in Fair Value of Derivative Financial Instruments

For the year ended 31 March 2010, the Group recorded a non-operating expense of approximately HK$31.0 million arising from fair value adjustment in the embedded derivatives of convertible notes issued by the Company on 25 January 2010 for the acquisition of Wuhai City Menggang (the “ Acquisitions ”).

For the year ended 31 March 2011, the Group recorded a non-operating income of approximately HK$6.1 million arising from fair value adjustment in the embedded derivatives of convertible notes issued by the Company on 25 January 2010 (2010: a nonoperating expense of approximately HK$31.0 million).

For the year ended 31 March 2012, from continuing operations, the Group recorded a net non-operating income of approximately HK$180.8 million arising from fair value adjustment in the embedded derivatives of convertible notes issued by the Company (2011: HK$6.1 million).

For the six months ended 30 September 2012, the Group recorded a net non-operating income of approximately HK$43,000 from continuing operations arising from fair value adjustment in the embedded derivatives of convertible notes issued by the Company (for the six months ended 30 September 2011: gain of approximately HK$58.6 million).

Distribution and Selling Costs

For the year ended 31 March 2010, the Group’s distribution and selling costs as a percentage of turnover were approximately 2.4% (2009: 2.2%)

I – 5

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

For the year ended 31 March 2011, the Group’s distribution and selling costs were approximately HK$4.2 million (2010: HK$2.3 million), representing an increase of approximately HK$1.9 million or 78.7% as compared with the year ended 31 March 2010. The distribution and selling costs as a percentage of turnover was approximately 3.4% (2010: 2.4%) for the year ended 31 March 2011. The increase was mainly attributable to the plant moved to Dongguan from Shenzhen in the first half of the year and making the transportation cost slightly higher than before.

For the year ended 31 March 2012, distribution and selling costs from continuing operations were approximately HK$3.5 million (2011: HK$4.2 million), representing a decrease of approximately HK$0.7 million or 16.7% as compared with the year ended 31 March 2011. The decrease was due to the reduction in transportation cost as the packing box plant has been moved to Dongguan in 2010.

For the six months ended 30 September 2012, the Group’s distribution and selling costs from continuing operations were approximately HK$1.5 million (for the six months ended 30 September 2011: HK$1.9 million), representing a decrease of approximately HK$0.4 million or 21.1% as compared with the same period in 2011. The decrease was mainly due to the reduction in transportation cost from packaging box business.

Administrative Expenses

For the year ended 31 March 2010, the Group’s administrative expenses were approximately HK$28.3 million having been maintained at a similar level as for the year 2009 during which administrative expenses of HK$28.6 million were recorded.

For the year ended 31 March 2011, the Group’s administrative expenses were approximately HK$78.0 million (2010: HK$27.5 million), representing a substantial increase of approximately HK$50.5 million or 183.3% as compared with the same period in 2010. The increase as mainly attributable to: (i) a full year’s administrative expenses being recognised in Wuhai City Menggang group (2010: two months’ administrative expenses were recognised); (ii) the non-cash share based payments expenses arising from the amortization of a total 92,900,000 newly granted share options to eligible participants by the Company as disclosed in the announcement dated 1 April 2010, 1 September 2010 and 27 September 2010 during the year; (iii) the increase in directors’ remuneration and staff costs; and (iv) the increase in rental expenses in Hong Kong, litigation expense and land use tax in the PRC.

I – 6

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

For the year ended 31 March 2012, administrative expenses from continuing operations were approximately HK$74.2 million (2011: HK$63.0 million), representing an increase of approximately HK$11.2 million or 17.8% as compared with last year. The increase was mainly due to (i) non-cash share based payment expenses arising from the amortisation of the granted share options to eligible participants by the Company; and (ii) the inclusion of administrative expense from the Venture Path group, which the acquisition of the Target Mine was completed on 15 June 2011.

For the six months ended 30 September 2012, administrative expenses from continuing operations were approximately HK$41.7 million (for the six months ended 30 September 2011: HK$39.0 million), representing an increase of approximately HK$2.7 million or 6.9% as compared with the same period in 2011. The increase was mainly due to the full period administrative expenses incurred by the Target Mine since the acquisition of the Target Mine on 15 June 2011.

Loss on Redemption of Convertible Note/Re-measurement of Liability Component of Convertible Notes

For the year ended 31 March 2012, the Group recorded a loss of approximately HK$426.1 million on loss on redemption of convertible note/re-measurement of liability component of convertible notes (2011: Nil) as a result of (i) settlement by the Group of the entire outstanding amount of convertible notes by proceeds obtained from the disposal of the Wuhai City Menggang and it is represented by the difference between the carrying value of the liability component of convertible notes and its redemption amount; and (ii) debt extinguishment loss of redemption of convertible note.

Save as disclosed above, the Group did not have any loss on redemption of convertible note/re-measurement of liability component of convertible notes for the years ended 31 March 2010 and 2011 and for the six months ended 30 September 2012, respectively.

Impairment loss recognised in respect of Goodwill

As a result of the pessimistic market condition in Europe, the management expects demand for the Group’s products sold by the Group’s French Operations will be decreased in the near future, hence impairment on goodwill previously recognised of approximately HK$10.6 million is required.

I – 7

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

The goodwill arising from the Acquisitions of the coal mining business amounted to approximately HK$411.1 million, representing the excess of the cost of acquisition over the Group’s interest in the fair value of the identifiable assets and liabilities of the acquired subsidiaries. In accordance with HKFRS 3 “Business combinations” issued by the HKICPA, the cost of the acquisitions were determined based on the fair values of the consideration at the acquisition date, including convertible notes and the Shares which were determined by reference to the market value of the ordinary shares of the Company with adjustments to take into account the terms and conditions upon which shares were issued. The Group has performed an impairment test assessment on the carrying amount of the cash generating unit of the coal mining business based on value in use calculations.

The Directors expected the operation scale of the coal mining business after the Acquisitions would be further expanded by incorporating the resources of the Group, including the construction of coal washing plant. However, such expectations are not incorporated as assumptions in preparing the cash flow forecasts for impairment testing purpose as the actual economic benefit has not been realised as at 31 March 2010 and therefore not included in the value in use calculations. As the carrying amount of the cash generating unit of the coal mining business is significantly above its recoverable amount on such basis, the Group fully impaired the amount of goodwill of approximately HK$411.1 million at 31 March 2010.

Save as above, the Group did not have any impairment loss recognised in respect of goodwill for the years ended 31 March 2011 and 2012 and for the six months ended 30 September 2012.

Other Expenses

For the year ended 31 March 2011, the Group’s other expenses were approximately HK$7.7 million (2010: HK$0.8 million) which represented the direct labour costs, depreciation expense, consumables and other direct attributable costs related to the coal mining operation. The Group was in the process of various technical and quality improvements at the Group’s coal mines in the PRC to attain the safety standard in accordance with the new regulations imposed by the PRC authority.

For the year ended 31 March 2012, other expenses from continuing operations were approximately HK$19.1 million (2011: Nil) which represented legal and professional costs incurred for the acquisition of assets through purchase of subsidiaries and the disposal of Wuhai City Menggang as well as the wages, depreciation expense, consumables and other direct attributable costs incurred during the suspension period of the operation of the Target Mine.

I – 8

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

For the six months ended 30 September 2012, there were no other expenses incurred from continuing operations (for the six months ended 30 September 2011: HK$7.7 million).

Finance Costs

For the year ended 31 March 2010, the Group’s finance costs amounted to approximately HK$6.9 million (2009: HK$0.2 million). The increase was mainly due to the recognition of imputed interest expense (approximately HK$6.8 million) on the liability component of the convertible notes issued by the Company on 25 January 2010 for the Acquisitions. This imputed interest expense has no impact on the cashflow positions of the Group.

For the year ended 31 March 2011, the Group’s finance costs amounted to approximately HK$31.0 million (2010: HK$6.9 million). The increase was mainly due to the recognition of a full year’s imputed interest expenses on the liability component of the convertible notes issued by the Company on 25 January 2010 for the Acquisitions (2010: only two months’ imputed interests were recognised). This imputed interest expense has no impact on the cash flow positions of the Group.

For the year ended 31 March 2012, finance costs from continuing operations were approximately HK$49.0 million (2011: HK$30.5 million), which were mainly attributable to the recognition of imputed interest expenses on the liability component of the convertible notes.

For the six months ended 30 September 2012, finance costs from continuing operations were approximately HK$2.0 million (for the six months ended 30 September 2011: HK$23.6 million), representing a decrease of approximately HK$21.6 million or 91.5% as compared with the same period in 2011. The decrease was mainly due to the incurrence of interest expenses of convertible notes issued by the Company, which were redeemed in full for the six months ended 30 September 2012.

Taxation

For the year ended 31 March 2010, the Group’s income tax expenses was approximately HK$1.39 million (2009: HK$1.53 million), representing the result of income tax expense from Hong Kong and credit tax from the other jurisdictions.

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APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

For the year ended 31 March 2011, the Group’s income tax expenses was approximately HK$0.04 million (2010: HK$1.39 million), representing the result of income tax expenses approximately HK$0.38 million from Hong Kong, the PRC and France and the credit adjustment of deferred tax approximately HK$0.34 million arising from the amortization of prepaid lease payment and mining rights in accordance with the tax regulations in the PRC during the year.

For the year ended 31 March 2012, the Group’s income tax expense from continuing operations of approximately HK$4.0 million (2011: HK$0.4 million) representing the result of income tax expense from Hong Kong of approximately HK$2.0 million and other jurisdiction of approximately HK$2.0 million.

For the six months ended 30 September 2012, the Group’s income tax expense from continuing operations of approximately HK$0.2 million (for the six months ended 30 September 2011: HK$0.5 million) representing the result of income tax expense from other jurisdiction.

Owner’s Attributable Loss

For the year ended 31 March 2010, the Group had recorded a loss of approximately HK$469.4 million (2009: loss of approximately HK$22.9 million), mainly due to (1) negative effect arising from fair value adjustment in embedded derivative of convertible notes (approximately HK$31.0 million) and recognition of imputed interest expense on the liability component of the convertible notes (approximately HK$6.8 million) issued by the Company on 25 January 2010 for the Acquisitions and (2) one-off impairment loss on goodwill arising from the Acquisitions and the French Operation (approximately HK$421.7 million) as discussed above. After deducting these non-operating and non-cashflow expenses, the adjusted loss for the year will then be approximately HK$9.9 million.

For the year ended 31 March 2011, the Group had recorded a loss of approximately HK$96.6 million (2010: loss of approximately HK$469.4 million), mainly due to no further impairment loss on goodwill was recognised for the year ended 31 March 2011 (2010: an approximately HK$421.7 million one-off impairment loss on goodwill arising from the Acquisitions).

For the year ended 31 March 2012, the Group recorded a loss of approximately HK$378.5 million (2011: HK$96.6 million). The basic and diluted loss per share was approximately HK12.98 cents (2011: HK4.8 cents). The increase was mainly due to the loss recognised on loss on redemption of convertible note/re-measurement of liability component of convertible notes.

I – 10

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

For the six months ended 30 September 2012, the net loss from continuing operations attributable to the owners in the period under review was approximately HK$82.6 million (for the six months ended 30 September 2011: profit of approximately HK$7.1 million), while a net loss from discontinued operation, which represented the Group’s InnerMongolia Mining Operation, was attributable to the owners in the same period which was approximately HK$3.0 million (for the six months ended 30 September 2011: loss of approximately HK$15.4 million). As a result, the total net loss from continuing operation and discontinued operation attributable to the owners in the period under review was approximately HK$85.6 million (for the six months ended 30 September 2011: net loss of approximately HK$8.3 million).

Liquidity, Capital Structure and Financial Resources

Set out below is a summary of the audited financial statement of the Group for each of the three years ended 31 March 2010, 2011, 2012 and for the six months ended 30 September 2012.

	As at	As at	As at	As at
	31 March	31 March	31 March	30 September
	2010	2011	2012	2012
	HK$’000	HK$’000	HK$’000	HK$’000
Total assets	2,502,224	2,744,900	4,314,591	2,847,447
Current Assets	401,001	111,451	2,603,747	1,017,931
Current liabilities	165,544	48,780	1,571,355	309,931
Working capital	235,457	62,671	1,032,392	708,000
Gearing ratio	15.1%	7.9%	14.8%	5.2%

The Group funds its operations from a combination of internal resources, equity fund raising, financial instruments and bank borrowing.

As at 31 March 2010, the Group had cash and cash equivalents of approximately HK$302.7 million (2009: HK$54.7 million). The Group’s working capital increased to approximately HK$235.5 million (2009: HK$108.6 million), mainly due to the additional fund raising from the placement of new shares for the Acquisitions in January 2010. Current ratio (a ratio of total current assets to total current liabilities) decreased by approximately 63.1% to 2.4 times (2009: 6.5 times). Gearing ratio (a ratio of total borrowings to total assets other than goodwill) as at 31 March 2010 was approximately 15.1% (2009: 0%), such increase was mainly due to the issuance of the convertible notes for the Acquisitions during the year.

I – 11

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

As at 31 March 2011, the Group had cash and cash equivalents of approximately HK$48.7 million (2010: HK$302.7 million). The Group’s working capital decreased to approximately HK$62.7 million (2010: HK$235.5 million), mainly due to capital expenditure for the construction of Tinayu Coal washing plant, civil and earthwork for Mine No. 4 and technical improvement of the Group’s Mine No. 1 in the PRC. Current ratio (a ratio of total current assets to total current liabilities) decreased by approximately 4.2% to 2.3 times (2010: 2.4 times). Gearing ratio (a ratio of total borrowings to total assets other than goodwill) as at 31 March 2011 was approximately 7.9% (2010: 15.1%), such decrease was mainly due to part of the convertible notes issued were converted and the repayment of bank loan during the year.

As at 31 March 2012, the Group had cash and cash equivalents of approximately HK$44.0 million (2011: HK$48.7 million). The Group’s net current assets increased to approximately HK$1,032.4 million (2011: HK$62.7 million). Such increase was mainly due to the non-current assets of Wuhai City Menggang group were classified as current assets as held for sale. Gearing ratio (a ratio of total borrowings to total assets) as at 31 March 2012 was approximately 14.8% (2011: 7.9%), such increase was mainly due to the new convertible bond issued on 15 June 2011 and the re-measurement of liability components of the convertible notes in reason of the Group will settle the entire outstanding amount of convertible notes by proceeds obtained from the disposal of the Wuhai City Menggang.

As at 30 September 2012, the Group had cash and cash equivalents of approximately HK$164.5 million (31 March 2012: HK$44.0 million). The Group’s working capital decreased to approximately HK$708.0 million (31 March 2012: HK$1,032.4 million). Such decrease was mainly due to the increase in available-for-sale investments by HK$167,170,000 during the period under review. Gearing ratio (a ratio of total borrowings to total assets) as at 30 September 2012 was approximately 5.2% (31 March 2012: 14.8%), such decrease was mainly due to redemption of all convertible notes of the Company during the period under review.

Borrowings

During the six months ended 30 September 2012, the Group obtained a loan of RMB27 million (equivalent to HK$33,053,000) from a rural credit cooperative unions. The loan is unsecured, bears interest rate at a fixed rate of 8.4133% per annum and is repayable on 7 July 2013.

Save as disclosed above, there was no other borrowing as at 31 March 2010, 2011 and 2012.

I – 12

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Pledged Assets

As at 31 March 2010, the Group has pledged its leasehold land and buildings with carrying values of approximately HK$12.6 million (2009: Nil) to secure the outstanding bank borrowing and approximately HK$3.1 million to secure the unutilised general banking facilities granted to the Group.

As at 31 March 2011, the Group has pledged its leasehold land and buildings with carrying value of approximately HK$3.0 million (31 March 2010: HK$3.1 million) to secure the unutilised general banking facilities granted to the Group and no other assets pledged at the day of reporting (31 March 2010: The Group had pledged its leasehold land and buildings with carrying values of approximately HK$12.6 million with a deposit placed with the third party amounted to RMB2.0 million (equivalent to approximately HK$2.3 million) to secure the outstanding bank borrowing).

As at 31 March 2012, the Group has pledged its leasehold land and buildings with carrying value of approximately HK$2.9 million (2011: HK$3.0 million) to secure the unutilised general banking facilities granted to the Group and no other assets pledged at the date of reporting.

As at 30 September 2012, the Group has pledged its leasehold land and buildings with carrying value of approximately HK$2.8 million to secure the unutilised general banking facilities granted to the Group and no other assets pledged at the date of reporting.

In addition, as at 30 September 2012, the Group had pledged its bank deposits of HK$6.4 million as deposit for land disturbance and environmental rehabilitation as required by the Xinjiang Uygur Autonomous Region Finance Department and Land Resource Department.

The Group had pledged its major subsidiaries’ equity interest to a financial institution to secure and subscribe for the notes in the aggregate principal amount of up to US$40,000,000 granted to the Group.

Save as disclosed as above, the Group had no other pledged assets.

I – 13

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Capital Commitment and Contingent Liabilities

As at 31 March 2010, there was capital commitment of approximately HK$108.3 million and HK$407.8 million in respect of addition of property, plant and equipment contracted for but not provided in the consolidated financial statements and authorised but not contracted for, respectively.

As at 31 March 2011, there was capital commitment of approximately HK$130.3 million (31 March 2010: HK$108.3 million) and HK$167.3 million (31 March 2010: HK$407.8 million) in respect of addition of property, plant and equipment contracted for but not provided in the consolidated financial statements and authorised but not contracted for, respectively.

As at 31 March 2012, there were capital commitments of approximately HK$89.6 million (2011: HK$130.3 million) and HK$189.0 million (2011: HK$167.3 million) in respect of addition of property, plant and equipment contracted for but not provided in the consolidated financial statements and authorised but not contracted for, respectively.

As at 30 September 2012, there were capital commitments of approximately HK$94.1 million (31 March 2012: HK$89.6 million) and HK$188.3 million (31 March 2012: HK$189.0 million) in respect of the addition of property, plant and equipment contracted for but not provided in the consolidated financial statements and authorised but not contracted for, respectively.

Save as disclosed above, the Group had no other material contingent liabilities.

Exposure to Fluctuations in Exchange Rates

The Group’s sales are denominated mainly in Hong Kong dollars (“ HKD ”), United States dollars (“ USD ”), Euro (“ EUR ”) and Renminbi (“ RMB ”). The Group’s purchases and expenses are mostly denominated in HKD and RMB, and some in EUR and USD. The Group has certain foreign currency bank balances, investments held for trading, available-for-sale investments and investment in foreign operations, which are exposed to foreign currency exchange risk. The Group currently does not have a foreign currency hedging policy. However, the management monitors foreign exchange exposure and will consider hedging significant foreign currency exposure should the need arises.

I – 14

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Employee Information

The Group had a total of approximately 1,363, 1,650, 1,200 and 1,000 employees as at 31 March 2010, 2011, 2012 and as at 30 September 2012, respectively in the PRC, Hong Kong and France. The Group provides a mandatory provident fund scheme for its employees in Hong Kong and the state-managed retirement benefit schemes for its employees in the PRC and France. The Group’s remuneration policies are formulated according to market practices, experiences, skills and performance of individual employee and will be reviewed annually.

The Group has also adopted a share option scheme. The summary of the share option scheme of the Group was set out in the published annual reports.

Purchase, Sales or Redemption of Securities

Neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company’s listed securities during the year ended 31 March 2010, 2011, 2012 and six months ended 30 September 2012.

Significant Investment, Materials Acquisitions and Disposals

On 7 September 2011, the Group entered into a sale and purchase agreement with an independent third party, Inner-Mongolia Shuangxin Resources Group Co., Ltd. Pursuant to this sale and purchase agreement, the Group agreed to dispose of the Wuhai City Menggang group. During the six months ended 30 September 2012, all of these conditions were fulfilled and the disposal was completed on 30 May 2012.

On 12 October 2012, the Group entered into a sale and purchase agreement with the independent third Parties, the Purchaser and Up Energy, pursuant to which the Group has conditionally agreed to dispose of its entire interest in the Target Company.

On 25 October 2012, a wholly-owned subsidiary of the Company entered into a sale and purchase agreement with Uprite Limited, a company incorporated in the British Virgin Islands, to acquire a yacht and the accompanying marine facilities at a total consideration of HK$65,000,000.

Save as disclosed above, the Group has no other significant investment, material acquisition and disposals.

I – 15

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Litigation

Pursuant to an equity transfer agreement dated 18 August 2007 between Wuhai City Menggang and the then equity-holders of Tianyu Gongmao (the “ Original Equity-holders ”), Wuhai City Menggang agreed to acquire the entire equity interest in Tianyu Gongmao from the Original Equity-holders at a cash consideration of RMB90 million, of which only RMB45 million has been paid by Wuhai City Menggang. Wuhai City Menggang did not settle the remaining consideration of RMB45 million because there was a dispute over the production capacity of Tianyu Gongmao.

A civil claim was brought by the Original Equity-holders to the PRC court against Wuhai City Menggang and pursuant to the first instance judgment handed down by the Wuhai City Intermediate People’s Court（烏海市中級人民法院）in April 2009, Wuhai City Menggang was ordered to pay the remaining consideration of RMB45 million and the breach of contract fixed damages of RMB9 million to the Original Equity-holders. Wuhai City Menggang appealed to the Inner Mongolia Autonomous Region Superior People’s Court（內 蒙古自治區高級人民法院）against the first instance judgment.

Upon the application of the Original Equity-holders, the Wuhai City Intermediate People’s Court（烏海市中級人民法院）handed down the Civil Judgment (Wu Zhong Fa (2008) Min Yi Chu Zi No. 30)（烏中法(2008)民一初字第30號）on 19 January 2009 to freeze the entire equity interests in Tianyu Gongmao held by Wuhai City Menggang pending the outcome of the case. Pursuant to such order, Wuhai City Menggang would not be allowed to transfer or pledge its interest in, or receive any dividend from Tianyu Gongmao. The operation of Wuhai City Menggang and its subsidiaries however was not affected by such order or the litigation.

On 26 January 2010, Inner Mongolia Autonomous Region Superior People’s Court （內蒙古自治區高級人民法院）handed down the second instance judgment to reject the appeal of Wuhai City Menggang and upheld the first instance judgment. Wuhai City Menggang settled the case with the Original Equity-holders by fulfilling the orders set out in the judgment in August 2010. As a result, the entire equity interest in Tianyu Gongmao held by Wuhai City Menggang, which were frozen upon the application of the original equity holders, have been released by the Wuhai City Intermediate People’s Court（烏海市中級人 民法院）on 26 August 2010.

As at 31 March 2011, the Group has settled the above-mentioned litigation and there is no any other litigation.

I – 16

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Future Prospects

The revenue for the packaging business segment for the year ended 31 March 2012 showed signs of market recovery. However, due to the ongoing debt problems in certain European countries, demand is uncertain in the near future. According to the International Monetary Fund, the world nominal gross domestic product is projected to grow at an average rate of about 5% per year from 2012 to 2015. The Company estimates that the demand for packaging products for watches, pens and jewellery will also increase in the same period. In light of the competitive strength of our direct and long business relationships with internationally recognized branded corporations and the high industry entry barriers, the Company expects to continue generating positive cash flows from operating activities.

Furthermore, the Company continuously evaluates its business position and strategy and at the same time increased the Company’s awareness of opportunities in sectors other than coal mining. Currently, the oil and gas industry is a sector which has aroused the Company’s interest for it appeared to the Company that the Xinjiang regional government supports foreign enterprises’ investment in the local natural gas exploration industry by ensuring gas supply volume and offering favourable gas price.

Consequently, the Company wishes to shift its business focus from the mining industry into the oil and gas industry and the Company has been seeking to identify and explore new business opportunities with a view to enhancing the value of the Company.

Working Capital

The Directors are of the opinion that, after taking into account the present internal financial resources, credit facilities available, and the proceeds from the Transaction, the Group has sufficient working capital to satisfy its requirements for at least the next 12 months from the date of publication of this circular in the absence of unforeseen circumstances.

I – 17

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Indebtedness

As at 30 November 2012, being the latest practicable date for the purpose of this indebtedness statement prior to the printing of this circular, the Group had outstanding indebtedness as follows:

Borrowings

• (i) The Group had an outstanding borrowing with a principal amount of RMB27.0 million (equivalent to HK$33.1 million) due to rural credit cooperative unions. The borrowing is unsecured, bears interest rate at a fixed rate of 8.4133% per annum and is repayable on 17 July 2013; and

• (ii) The Group had outstanding secured notes with a principal amount of US$16.0 million (equivalent to HK$124.8 million) due to an independent third party. The secured notes are secured by charge of equity interests of certain subsidiaries of the Group, bears interest rate at a fixed rate of 17% per annum and are repayable on 12 September 2013.

Pledged Assets

In addition to the charge of equity interests of certain subsidiaries of the Group for the secured notes, as at 30 November 2012, the Group had pledged its bank deposits of approximately HK$6.4 million as deposit for land disturbance and environmental rehabilitation as required by the Xinjiang Uygur Autonomous Region Finance Department and Land Resource Department.

Save as aforesaid or as otherwise disclosed herein, and apart from intra-group liabilities, the Group did not have any loan capital issued and outstanding or agreed to be issued, bank overdrafts, loans or other similar indebtedness, liabilities under acceptances or acceptance credits, debentures, mortgages, charges, hire purchases commitments, guarantees or other material contingent liabilities at the close of business on 30 November 2012.

I – 18

CONSOLIDATED FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX IIA

SUMMARY OF CONSOLIDATED FINANCIAL INFORMATION

Set out below are the consolidated financial information of the Target Company and its subsidiaries (collectively referred as the “ Disposal Group ”) for the period from 6 August 2010 (date of incorporation) to 31 March 2011, year ended 31 March 2012 and the six months ended 30 September 2011 and 2012 (the “ Consolidated Financial Information ”), which have been prepared in accordance with paragraph 68(2)(a)(i) of Chapter 14 of the Listing Rules and the basis set out in note 2 to the Consolidated Financial Information.

The auditor of the Disposal Group, Deloitte Touche Tohmatsu, has reviewed the Consolidated Financial Information in accordance with Hong Kong Standard on Review Engagements 2410 “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the Hong Kong Institute of Certified Public Accountants (the “ HKICPA ”) and concluded that nothing has come to their attention that causes them to believe that the Consolidated Financial Information of the Disposal Group is not prepared, in all material respects, in accordance with the basis of preparation set out in note 2 to the Consolidated Financial Information.

For the purpose of preparation of the Consolidated Financial Information of the Disposal Group to be included in this circular, the Directors have prepared such Consolidated Financial Information in accordance with paragraph 68(2)(a)(i) of Chapter 14 of the Listing Rules.

However, the Consolidated Financial Information does not contain sufficient explanatory notes to constitute a complete set of financial statements as defined in Hong Kong Accounting Standard 1 “Presentation of Financial Statements” or an interim financial report as defined in Hong Kong Accounting Standard 34 “Interim Financial Report” issued by the HKICPA.

IIA – 1

CONSOLIDATED FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX IIA

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE PERIOD FROM 6 AUGUST 2010 (DATE OF INCORPORATION) TO 31 MARCH 2011, YEAR ENDED 31 MARCH 2012 AND THE SIX MONTHS ENDED 30 SEPTEMBER 2011 AND 2012

Revenue Cost of sales Gross (loss) profit Other income Other expenses Administrative expenses Finance costs Loss before taxation Taxation Loss for the period/year Other comprehensive (expense) income: Exchange difference on translation Total comprehensive (expense) income for the period/year	Six months ended 30 September 2012 2011 HK$’000 HK$’000 (Unaudited) (Unaudited) 11,898 671 (14,531) (400) (2,633) 271 37 88 – (7,715) (8,865) (600) (695) – (12,156) (7,956) – – (12,156) (7,956) (5,441) 17,253 (17,597) 9,297	Year ended 31 March 2012 HK$’000 (Unaudited) 2,861 (1,451) 1,410 170 (16,675) (1,624) – (16,719) – (16,719) 49,652 32,933	From 6 August 2010 to 31 March 2011 HK$’000 (Unaudited) – –
			– – – – –
			– –
			–
			–
			–

IIA – 2

CONSOLIDATED FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX IIA

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

AT 31 MARCH 2011, 2012 AND 30 SEPTEMBER 2012

Non-current assets Property, plant and equipment Prepaid lease payments Mining rights Deposits for acquisition of subsidiaries Deposits Current assets Inventories Trade receivables Other receivables, deposits and prepayments Prepaid lease payments Bank balances and cash Current liabilities Trade payables Other payables, deposits received and accruals Amount due to ultimate holding company Borrowing Tax liabilities	At 30 September 2012 HK$’000 (Unaudited) 29,088 1,851 1,543,615 – 92,575 1,667,129 12,276 1,400 4,598 104 20,989 39,367 3,743 15,077 1,623,967 33,053 1,407 1,677,247	At 31 March 2012 2011 HK$’000 HK$’000 (Unaudited) (Unaudited) 29,022 – 1,886 – 1,551,983 – – 250,000 95,757 – 1,678,648 250,000 1,205 – 1,650 – 1,485 – 104 – 1,987 – 6,431 – 1,585 – 2,525 – 1,632,909 250,000 – – 1,407 – 1,638,426 250,000	At 31 March 2012 2011 HK$’000 HK$’000 (Unaudited) (Unaudited) 29,022 – 1,886 – 1,551,983 – – 250,000 95,757 – 1,678,648 250,000 1,205 – 1,650 – 1,485 – 104 – 1,987 – 6,431 – 1,585 – 2,525 – 1,632,909 250,000 – – 1,407 – 1,638,426 250,000
			250,000
			– – – – –
			–
			– – 250,000 – –
			250,000

IIA – 3

APPENDIX IIA

CONSOLIDATED FINANCIAL INFORMATION OF THE DISPOSAL GROUP

Net current liabilities Total assets less current liabilities Non-current liabilities Provision for restoration and environmental costs Net assets Capital and reserves Share capital Reserves Total equity	At 30 September 2012 HK$’000 (Unaudited) (1,637,880) 29,249 7,482 21,767 – 21,767 21,767	At 31 March 2012 2011 HK$’000 HK$’000 (Unaudited) (Unaudited) (1,631,995) (250,000) 46,653 – 7,289 – 39,364 – – – 39,364 – 39,364 –

IIA – 4

CONSOLIDATED FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX IIA

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FOR THE PERIOD FROM 6 AUGUST 2010 (DATE OF INCORPORATION) TO 31 MARCH 2011, YEAR ENDED 31 MARCH 2012 AND THE SIX MONTHS ENDED 30 SEPTEMBER 2011 AND 2012

At 6 August 2010 (date of incorporation) Loss for the period and total comprehensive expense for the period At 31 March 2011 Loss for the year Other comprehensive income for the year Total comprehensive income (expense) for the year Expenses borne by ultimate holding company At 31 March 2012 Loss for the period Other comprehensive expense for the period Total comprehensive expense for the period At 30 September 2012 At 1 April 2011 Loss for the period Other comprehensive income for the period Total comprehensive income (expense) for the period Expenses borne by ultimate holding company At 30 September 2011	Share capital HK$’000 (Unaudited) – – – – – – – – – – – – – – – – – –	Shareholders’s contribution reserve HK$’000 (Unaudited) – – – – – – 6,431 6,431 – – – 6,431 – – – – 5,575 5,575	Translation reserve HK$’000 (Unaudited) – – – – 49,652 49,652 – 49,652 – (5,441) (5,441) 44,211 – – 17,253 17,253 – 17,253	Accumulated losses HK$’000 (Unaudited) – – – (16,719) – (16,719) – (16,719) (12,156) – (12,156) (28,875) – (7,956) – (7,956) – (7,956)	Total HK$’000 (Unaudited) –
					–
					–
					(16,719) 49,652
					32,933 6,431
					39,364
					(12,156) (5,441)
					(17,597)
					21,767
					–
					(7,956) 17,253
					9,297 5,575
					14,872

IIA – 5

CONSOLIDATED FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX IIA

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE PERIOD FROM 6 AUGUST 2010 (DATE OF INCORPORATION) TO 31 MARCH 2011, YEAR ENDED 31 MARCH 2012 AND THE SIX MONTHS ENDED 30 SEPTEMBER 2011 AND 2012

OPERATING ACTIVITIES Loss before taxation Depreciation of property, plant and equipment Release of prepaid lease payments Amortisation of mining rights Unwinding of discounting effect on restoration and environmental costs Finance costs Interest income Operating cashflow before movements in working capital Increase in inventories Decrease (increase) in trade receivables Increase in other receivables, deposits and prepayments Increase in trade payables Increase (decrease) in other payables, deposits received and accruals NET CASH USED IN OPERATING ACTIVITIES INVESTING ACTIVITIES Interest received Purchase of property, plant and equipment Net cash from acquisition of assets through purchase of subsidiaries NET CASH USED IN INVESTING ACTIVITIES	Six months ended 30 September 2012 2011 HK$’000 HK$’000 (Unaudited) (Unaudited) (12,156) (7,956) 1,335 561 35 48 3,584 61 213 165 695 – (37) (88) (6,331) (7,209) (11,071) (169) 250 – (3,113) (2,059) 2,158 – 12,552 (1,465) (5,555) (10,902) 37 88 (1,487) (2,104) – 273 (1,450) (1,743)	Year ended 31 March 2012 HK$’000 (Unaudited) (16,719) 1,480 132 556 1,020 – (164) (13,695) (425) (1,650) (353) 1,585 (8,643) (23,181) 164 (10,698) 273 (10,261)	From 6 August 2010 to 31 March 2011 HK$’000 (Unaudited) – – – – – – –
			– – – – – –
			–
			– – –
			–

IIA – 6

CONSOLIDATED FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX IIA

FINANCING ACTIVITIES Interest paid Advance from ultimate holding company Capital contribution by ultimate holding company Repayment to ultimate holding company Borrowing raised NET CASH FROM FINANCING ACTIVITIES NET INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD/YEAR EFFECT OF FOREIGN EXCHANGE RATE CHANGES CASH AND CASH EQUIVALENTS AT END OF PERIOD/YEAR, represented by bank balances and cash	Six months ended 30 September 2012 2011 HK$’000 HK$’000 (Unaudited) (Unaudited) (695) – – 10,783 – 5,575 (6,326) – 33,053 – 26,032 16,358 19,027 3,713 1,987 – (25) – 20,989 3,713	Year ended 31 March 2012 HK$’000 (Unaudited) – 28,998 6,431 – – 35,429 1,987 – – 1,987	From 6 August 2010 to 31 March 2011 HK$’000 (Unaudited) – – – – –
			–
			– – –
			–

IIA – 7

CONSOLIDATED FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX IIA

NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION

FOR THE PERIOD FROM 6 AUGUST 2010 (DATE OF INCORPORATION) TO 31 MARCH 2011, YEAR ENDED 31 MARCH 2012 AND THE SIX MONTHS ENDED 30 SEPTEMBER 2011 AND 2012

1. General

Champ Universe Limited (the “Target Company”), a wholly owned subsidiary of Hao Tian Resources Group Limited (the “Company”), was incorporated in British Virgin Islands on 6 August 2010. On 15 June 2011, the Target Company acquired the entire equity interest in Venture Path Limited (“Venture Path”), which holds the entire interest in West China Coal Mining Holdings Limited (“West China”) and West China holds the entire interest in Baicheng Wenzhou Mining Development Co., Ltd. (“Baicheng Wenzhou”). The Target Company, Venture Path and West China are investment holding companies and Baicheng Wenzhou is principally engaged in exploration and mining of fine coal and lump coal in the People’s Republic of China.

On 12 October 2012, the Company and an independent third party, Up Energy Mining Limited (the “Purchaser”) entered into a sales and purchase agreement, pursuant to which the Company conditionally agreed to dispose of its entire equity interest in the Target Company (together with its subsidiaries collectively referred to as the “Disposal Group”) and to assign HK$1.6 billion shareholder’s loan (the “Transaction”).

2. Basis of preparation and presentation of the consolidated financial information

The consolidated financial information of the Disposal Group for the period from 6 August 2010 (date of incorporation) to 31 March 2011, year ended 31 March 2012 and six months ended 30 September 2011 and 2012 (“Consolidated Financial Information”) has been prepared in accordance with paragraph 68(2)(a)(i) of Chapter 14 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, and solely for the purpose of inclusion in the circular to be issued by the Company in connection with the Transaction.

IIA – 8

APPENDIX IIA

CONSOLIDATED FINANCIAL INFORMATION OF THE DISPOSAL GROUP

The Consolidated Financial Information has been prepared in accordance with the relevant accounting policies of the Company adopted in the preparation of its condensed consolidated financial statements for the six months ended 30 September 2012, which conform with Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants. The Consolidated Financial Information does not contain sufficient information to constitute a complete set of financial statements as defined in Hong Kong Accounting Standard 1 “Presentation of Financial Statements” or an interim financial report as defined in Hong Kong Accounting Standard 34 “Interim Financial Report” issued by the Hong Kong Institute of Certified Public Accountants.

The Consolidated Financial Information has been prepared on a going concern basis because the Company has agreed to provide adequate funds to enable the Disposal Group to meet in full its financial obligations up to the date of completion of the Transaction, while the Purchaser has agreed to provide adequate funds to enable the Disposal Group to meet in full its financial obligations in the foreseeable future if the Transaction is successfully completed.

IIA – 9

APPENDIX IIB

PRE-ACQUISITION FINANCIAL INFORMATION OF BAICHENG WENZHOU

The Target Company was incorporated on 6 August 2010 and acquired the entire equity interests in Venture Path and its subsidiaries on 15 June 2011. The financial information disclosed since the date of the incorporation of the Target Company up to 30 September 2012 in Appendix IIA of this circular covered a period of less than three financial years. Accordingly, the Directors have prepared the following financial information of Baicheng Wenzhou, the operating subsidiary of the Disposal Group for the two years ended 31 March 2011 and for the period from 1 April 2011 to 15 June 2011.

STATEMENTS OF COMPREHENSIVE INCOME OF BAICHENG WENZHOU

Revenue Costs of sales Gross (loss) profit Other income and loss Administrative expenses Finance costs Loss before taxation Taxation Loss for the period/year Other comprehensive income (expense): Exchange difference on translation Total comprehensive expense for the period/year	From 1 April 2011 to 15 June 2011 HK$’000 (Unaudited) – – – (1,994) (2,061) – (4,055) – (4,055) 393 (3,662)	Year ended 31 March 2011 2010 HK$’000 HK$’000 (Unaudited) (Unaudited) 16,674 27,056 (17,866) (19,384) (1,192) 7,672 2 6 (7,742) (10,676) (417) (450) (9,349) (3,448) – (697) (9,349) (4,145) (594) 532 (9,943) (3,613)

IIB – 1

PRE-ACQUISITION FINANCIAL INFORMATION OF BAICHENG WENZHOU

APPENDIX IIB

STATEMENT OF FINANCIAL POSITION OF BAICHENG WENZHOU

Non-current assets Property, plant equipment Prepaid lease payments Mining rights Deposits Current assets Inventories Trade and other receivables, deposits and prepayments Prepaid lease payments Bank balances and cash Current liabilities Trade and other payables Consideration payable for purchase of mining rights Amount due to a shareholder Tax liabilities	At 15 June 2011 HK$’000 (Unaudited) 19,251 1,774 14,165 5,988 41,178 780 1,132 178 258 2,348 3,992 – 40,332 1,359 45,683	At 31 March 2011 2010 HK$’000 HK$’000 (Unaudited) (Unaudited) 19,934 16,693 1,997 2,244 14,497 13,407 6,128 4,876 42,556 37,220 333 4,489 1,247 461 180 166 1,239 828 2,999 5,944 3,596 2,178 – 1,890 39,087 27,094 1,406 1,298 44,089 32,460	At 31 March 2011 2010 HK$’000 HK$’000 (Unaudited) (Unaudited) 19,934 16,693 1,997 2,244 14,497 13,407 6,128 4,876 42,556 37,220 333 4,489 1,247 461 180 166 1,239 828 2,999 5,944 3,596 2,178 – 1,890 39,087 27,094 1,406 1,298 44,089 32,460
			37,220
			4,489 461 166 828
			5,944
			2,178 1,890 27,094 1,298
			32,460

IIB – 2

APPENDIX IIB

PRE-ACQUISITION FINANCIAL INFORMATION OF BAICHENG WENZHOU

Net current liabilities Total assets less current liabilities Non-current liabilities Provision for restoration and environmental costs Net (liabilities) assets Capital and reserves Registered capital Reserves Total equity	At 15 June 2011 HK$’000 (Unaudited) (43,335) (2,157) 6,145 (8,302) 8,712 (17,014) (8,302)	At 31 March 2011 2010 HK$’000 HK$’000 (Unaudited) (Unaudited) (41,090) (26,516) 1,466 10,704 6,106 5,401 (4,640) 5,303 8,712 8,712 (13,352) (3,409) (4,640) 5,303

IIB – 3

PRE-ACQUISITION FINANCIAL INFORMATION OF BAICHENG WENZHOU

APPENDIX IIB

STATEMENT OF CHANGES IN EQUITY OF BAICHENG WENZHOU

At 1 April 2009 Loss for the year Other comprehensive income for the year Total comprehensive income (expense) for the year Appropriation of special reserve Utilisation of special reserve At 31 March 2010 Loss for the year Other comprehensive expense for the year Total comprehensive expense for the year Appropriation of special reserve Utilisation of special reserve At 31 March 2011 Loss for the period Other comprehensive income for the period Total comprehensive income (expense) for the period At 15 June 2011	Registered capital HK$’000 (Unaudited) 8,712 – – – – – 8,712 – – – – – 8,712 – – – 8,712	Capital reserve HK$’000 (Unaudited) 587 – – – – – 587 – – – – – 587 – – – 587	Special reserve HK$’000 (Unaudited) 4,768 – – – 3,654 (1,420) 7,002 – – – 1,558 (1,422) 7,138 – – – 7,138	Translation reserve HK$’000 (Unaudited) 1,720 – 532 532 – – 2,252 – (594) (594) – – 1,658 – 393 393 2,051	Accumulated losses HK$’000 (Unaudited) (6,871) (4,145) – (4,145) (3,654) 1,420 (13,250) (9,349) – (9,349) (1,558) 1,422 (22,735) (4,055) – (4,055) (26,790)	Total HK$’000 (Unaudited) 8,916
						(4,145) 532
						(3,613)
						– –
						5,303
						(9,349) (594)
						(9,943)
						– –
						(4,640)
						(4,055) 393
						(3,662)
						(8,302)

IIB – 4

PRE-ACQUISITION FINANCIAL INFORMATION OF BAICHENG WENZHOU

APPENDIX IIB

STATEMENTS OF CASH FLOWS OF BAICHENG WENZHOU

OPERATING ACTIVITIES Loss before taxation Depreciation of property, plant and equipment Release of prepaid lease payments Amortisation of mining rights Loss on disposal of property, plant and Equipment Unwinding of discounting effect on restoration and environmental costs Finance costs Reversal of bad and doubtful debts Interest income Operating cashflow before movements in working capital (Increase) decrease in inventories Decrease (increase) in trade and other receivables, deposits and prepayments Increase (decrease) in trade and other payables NET CASH USED IN OPERATING ACTIVITIES INVESTING ACTIVITIES Interest received Deposits paid Purchase of property, plant and equipment	From 1 April 2011 to 15 June 2011 HK$’000 (Unaudited) (4,055) 123 43 – 2,490 66 – (496) – (1,829) (447) 611 396 (1,269) – – (1,882)	Year ended 31 March 2011 2010 HK$’000 HK$’000 (Unaudited) (Unaudited) (9,349) (4,145) 778 609 169 166 38 62 – – 307 302 417 450 – – (2) (6) (7,642) (2,562) 4,156 (4,161) (786) (1,527) 1,418 (792) (2,854) (9,042) 2 6 (797) (3,643) (2,523) (721)

IIB – 5

PRE-ACQUISITION FINANCIAL INFORMATION OF BAICHENG WENZHOU

APPENDIX IIB

NET CASH USED IN INVESTING ACTIVITIES FINANCING ACTIVITIES Advance from a shareholder Settlement of outstanding consideration for purchase of mining rights NET CASH FROM FINANCING ACTIVITIES NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD/YEAR EFFECT OF FOREIGN EXCHANGE RATE CHANGES CASH AND CASH EQUIVALENTS AT END OF PERIOD/YEAR, represented by bank balances	From 1 April 2011 to 15 June 2011 HK$’000 (Unaudited) (1,882) 2,234 – 2,234 (917) 1,239 (64) 258	Year ended 31 March 2011 2010 HK$’000 HK$’000 (Unaudited) (Unaudited) (3,318) (4,358) 8,801 14,058 (2,307) (2,268) 6,494 11,790 322 (1,610) 828 2,433 89 5 1,239 828

IIB – 6

INFORMATION OF UP ENERGY GROUP

APPENDIX III

A. FINANCIAL INFORMATION OF UP ENERGY GROUP

1. Audited consolidated financial statements of Up Energy Group

The audited consolidated financial statements of Up Energy Group for the year ended 31 March 2012 has been set out in pages 65 to 136 of the annual report 2012 of Up Energy which was posted on 25 July 2012 on the Stock Exchange’s website (http://www.hkexnews. hk). Please also see below link to the annual report 2012:

http://www.hkexnews.hk/listedco/listconews/SEHK/2012/0725/LTN20120725233.pdf

The audited consolidated financial statements of Up Energy Group for the year ended 31 March 2011 has been set out in pages 34 to 104 of the annual report 2011 of Up Energy which was posted on 26 July 2011 on the Stock Exchange’s website (http://www.hkexnews.hk). Please also see below link to the annual report 2011:

http://www.hkexnews.hk/listedco/listconews/SEHK/2011/0726/LTN20110726163.pdf

The audited consolidated financial statements of Up Energy Group for the year ended 31 March 2010 has been set out in pages 22 to 112 of the annual report 2010 of Up Energy which was posted on 26 July 2010 on the Stock Exchange’s website (http://www.hkexnews.hk). Please also see below link to the annual report 2010:

http://www.hkexnews.hk/listedco/listconews/SEHK/2010/0726/LTN20100726170.pdf

2. Unaudited consolidated interim financial statement of Up Energy Group

The unaudited consolidated financial statements of Up Energy Group for the six months ended 30 September 2012 has been set out in pages 15 to 40 of the interim report 2012 of Up Energy which was posted on 27 November 2012 on the Stock Exchange’s website (http://www.hkexnews.hk). Please also see below link to the interim report 2012:

http://www.hkexnews.hk/listedco/listconews/SEHK/2012/1127/LTN20121127228.pdf

III – 1

INFORMATION OF UP ENERGY GROUP

APPENDIX III

B. INFORMATION OF MATERIAL MINES AND ASSETS OF UP ENERGY GROUP

The Up Energy Group has three coal mines in Fukang, Xinjiang of China, namely the Xiaohuangshan Mine, the Shizhuanggou Mine and the Quanshuigou Mine (the “ Up Energy Mines ”) which are scheduled to commence production successively starting from the fourth quarter of 2012 and the planned annual production capacity of coking coal is expected to reach a maximum of 4.5 Mt upon full operation. As at 31 March 2012, Up Energy Group had a total of 251.15 Mt of JORC-compliant measured, indicated and inferred coal resources and a total of 70.24 Mt of JORC-compliant proved and probable marketable coal reserves. In addition, the potential coal reserves of the Shizhuanggou Mine and Quanshuigou Mine are totaling to 51.94 Mt. As stated in the annual report 2012 of Up Energy, during the year ended 31 March 2012, construction progress of the three mines and the three downstream ancillary projects met the schedule set by Up Energy Group. During the third quarter of 2012, construction of remaining second phase and third phase shaft sinking and drifting project of the Xiaohuangshan Mine, together with the remaining groundlevel infrastructure will be completed. It is expected that the trial production will kick off in the fourth quarter in 2012. For the Shizhuanggou Mine, construction of remaining second and third phases shaft sinking and drifting project and the whole ground-level infrastructure will be finished and Up Energy Group expects that the trial production will start by the end of 2012. As for the Quanshuigou Mine, construction of the remaining first and second phases and a majority of third phase project will be completed and all the ground-level infrastructure will be finished. Trial run is scheduled to commence by the first quarter in 2013.

For further details of the Up Energy Mines, please refer to: (1) the competent person’s report dated 22 October 2010 on Up Energy Investment (China) Ltd. and its mining assets which was prepared by John T. Boyd Company as Competent Person in compliance with applicable JORC requirements and set out in Appendix V to the circular (the “ Tidetime Circular ”) issued by Tidetime Sun (Group) Limited (“ Tidetime ”) on 26 November 2010 in relation to Tidetime’s very substantial acquisition (please refer to the link of http://www.hkexnews.hk/listedco/listconews/ SEHK/2010/1125/LTN20101125605.pdf); (2) the valuation report dated 26 November 2010 on the PRC mining assets and facilities related to the mining operations of Up Energy Investment (China) Ltd. prepared by Jones Lang LaSalle Sallmanns Limited and set out in Appendix VI to the Tidetime Circular (please refer to the link above of the Tidetime Circular); and (3) the annual reports of Up Energy for the year 2011 and 2012 (please refer to the links stated above) and the interim report of Up Energy for the year 2011 (please refer to the link of http://www.hkexnews.hk/listedco/ listconews/SEHK/2011/1205/LTN20111205484.pdf).

III – 2

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX IV

(A) UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

Basis of preparation of the unaudited pro forma financial information of the Remaining Group

The unaudited pro forma financial information of the Remaining Group is prepared in accordance with paragraph 29 of Chapter 4 of the Listing Rules to illustrate the effect of the Transaction.

The unaudited consolidated statement of financial position of the Remaining Group is prepared based on the unaudited condensed consolidated statement of financial position of the Group as at 30 September 2012 as set out in the interim report of the Company for the six months ended 30 September 2012, after making pro forma adjustments relating to the Transaction, as if the Transaction had been completed on 30 September 2012.

The unaudited pro forma consolidated statement of comprehensive income and the unaudited pro forma condensed consolidated statement of cash flows of the Remaining Group are prepared based on the unaudited condensed consolidated statement of comprehensive income and the unaudited condensed consolidated statement of cash flows of the Group for the six months ended 30 September 2012 as extracted from the interim report of the Company, after making pro forma adjustments relating to the Transaction, as if the Transaction had been completed on 1 April 2012.

The unaudited pro forma financial information is based on the aforesaid historical data after giving effect to the pro forma adjustments described in the accompanying notes. Narrative description of the pro forma adjustments that are (i) directly attributable to the Transaction and (ii) factually supportable, is summarised in the accompanying notes.

The unaudited pro forma financial information has been prepared by the directors of the Company for illustrative purposes only and is based on a number of assumptions, estimates, uncertainties and currently available information. Because of its hypothetical nature, the unaudited pro forma financial information may not give a true picture of the results, cash flows, or financial position of the Group upon completion of the Transaction or any future period or any future date.

IV – 1

APPENDIX IV UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AT 30 SEPTEMBER 2012

NON-CURRENT ASSETS Property, plant and equipment Prepaid lease payments Investment property Mining rights Available-for-sale investments Derivative financial instruments Financial assets at fair value through profit or loss Deposits Deferred tax assets CURRENT ASSETS Inventories Trade and bills receivables Other receivables, deposits and prepayments Investments held for trading Prepaid lease payments Consideration receivable Tax recoverable Bank balances and cash	The Group as at 30 September 2012 Pro forma adjustment for the Transaction HK$’000 HK$’000 Note (a) Note (b) 49,025 (29,088) 1,851 (1,851) 976 1,543,615 (1,543,615) 118,089 297,675 – 540,846 23,180 92,575 (92,575) 205 1,829,516 31,247 (12,276) 20,071 (1,400) 12,457 (4,598) 87 104 (104) 784,570 4,889 164,506 845,000 (20,989) (4,500) 1,017,931	The Remaining Group as at 30 September 2012 HK$’000 19,937 – 976 – 415,764 540,846 23,180 – 205 1,000,908 18,971 18,671 7,859 87 – 784,570 4,889
		984,017
		1,819,064

IV – 2

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

CURRENT LIABILITIES Trade payables Other payables, deposits received and accruals Secured notes Borrowing Tax payable NET CURRENT ASSETS TOTAL ASSETS LESS CURRENT LIABILITIES NON-CURRENT LIABILITIES Retirement benefits obligations Provision for restoration and environmental costs NET ASSETS CAPITAL AND RESERVES Share capital Reserves TOTAL EQUITY	13,023 (3,743) 81,873 (15,077) 114,397 33,053 (33,053) 67,585 (1,407) 309,931 708,000 2,537,516 1,280 7,482 (7,482) 8,762 2,528,754 196,377 2,332,377 77,498 (44,211) 2,528,754 The Group as at 30 September 2012 Pro forma adjustment for the Transaction HK$’000 HK$’000 Note (a) Note (b)	9,280 66,796 114,397 – 66,178 256,651 1,562,413 2,563,321 1,280 – 1,280 2,562,041 196,377 The Remaining Group as at 30 September 2012 HK$’000
		2,365,664
		2,562,041

IV – 3

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2012

Continuing operations Revenue Cost of sales Gross profit Other income Other gains and losses Gain on disposal of subsidiaries Distribution and selling costs Administrative expenses Finance costs Loss before taxation Taxation Loss for the period from continuing operations Discontinued operation Loss for the period from discontinued operation Loss for the period Other comprehensive expense Exchange difference arising on translation of foreign operations Reclassification adjustments relating to foreign operation disposed of during the period Available-for-sale investments: – Fair value change during the period – Impairment loss recognised – Reclassified to profit or loss upon disposal Other comprehensive expense for the period Total comprehensive expense for the period	The Group for the six months ended 30 September 2012 Pro forma adjustments for the Transaction Pro forma adjustment Pro forma adjustment Pro forma adjustment HK$’000 HK$’000 HK$’000 HK$’000 Note (a) Note (c) Note (d) Note (e) 73,521 (11,898) (68,782) 14,531 4,739 1,111 (37) (43,152) (68,450) – 110,960 (1,472) (41,664) 8,865 (1,988) 695 (82,426) (172) (82,598) (2,988) (85,586) (15,186) 5,441 (110,316) (49,652) (15,533) (99,225) 11,890 99,225 3,234 (125,911) (211,497)	The Remaining Group for the six months ended 30 September 2012 HK$’000 61,623 (54,251)
		7,372 1,074 (111,602) 110,960 (1,472) (32,799) (1,293)
		(27,760) (172)
		(27,932)
		(2,988)
		(30,920)
		(9,745) (159,968) (114,758) 111,115 3,234
		(170,122)
		(201,042)

IV – 4

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2012

NET CASH USED IN OPERATING ACTIVITIES NET CASH FROM INVESTING ACTIVITIES Interest received Purchase of property, plant and equipment Purchase of available-for-sale investments Proceeds from disposal of property, plant and equipment Proceeds from disposal of available-for-sale investments Purchase of financial assets at fair value through profit or loss Net cash from disposal of subsidiaries	The Group for the six months ended 30 September 2012 Pro forma adjustments for the Transaction Pro forma adjustment Pro forma adjustment HK$’000 HK$’000 HK$’000 Note (a) Note (f) Note (g) (31,527) 5,555 110,960 (110,960) 522 (37) (18,585) 1,487 (132,576) 403 10,166 (50,000) 813,817 838,513 623,747	The Group for the six months ended 30 September 2012 Pro forma adjustments for the Transaction Pro forma adjustment Pro forma adjustment HK$’000 HK$’000 HK$’000 Note (a) Note (f) Note (g) (31,527) 5,555 110,960 (110,960) 522 (37) (18,585) 1,487 (132,576) 403 10,166 (50,000) 813,817 838,513 623,747	The Remaining Group for the six months ended 30 September 2012 HK$’000	The Remaining Group for the six months ended 30 September 2012 HK$’000
		110,960 (110,960)		(25,972)
			485 (17,098) (132,576) 403 10,166 (50,000) 1,652,330 1,463,710

IV – 5

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

NET CASH USED IN FINANCING ACTIVITIES Interest paid Borrowing raised Proceeds from issue of secured notes Repayment of convertible notes Cash withdrawal from bank deposits in special purpose bank account NET INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT 1 APRIL 2012 EFFECT OF FOREIGN EXCHANGE RATE CHANGES CASH AND CASH EQUIVALENTS AT 30 SEPTEMBER 2012, represented by bank balances and cash	The Group for the six months ended 30 September 2012 Pro forma adjustments for the Transaction Pro forma adjustment Pro forma adjustment HK$’000 HK$’000 HK$’000 Note (a) Note (f) Note (g) (695) 695 33,053 (33,053) 113,358 (639,349) 21,832 (471,801) 120,419 46,971 (2,884) 25 164,506	The Remaining Group for the six months ended 30 September 2012 HK$’000 – – 113,358 (639,349) 21,832 (504,159) 933,579 46,971 (2,859) 977,691

Notes:

• (a) Figures extracted from the unaudited condensed consolidated financial statements of the Group as set out in the interim report of the Company for the six months ended 30 September 2012.

• (b) The adjustment reflects the exclusion of the assets and liabilities of the Disposal Group other than amount due to the Company, and the recognition of available-for-sale investments, cash and derivative financial instruments as the consideration for the Transaction, assuming the Transaction had been taken place on 30 September 2012. Amount due to the Company will be assigned to the acquirer of the Disposal Group upon completion of the Transaction.

IV – 6

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

Gain on disposal of the Disposal Group is calculated as follows:

Fair value of the consideration (note i) Carrying amount of assets and liabilities of the Disposal Group, other than amount due to the Company as at 30 September 2012 (note ii) Legal and professional fee directly attributable to the Transaction (note iii) Reclassification of cumulative translation reserve upon disposal of the Disposal Group to profit or loss Gain on disposal of subsidiaries	HK$’000 1,683,521 (1,645,734) (4,500) 44,211 77,498

Notes:

• (i) The consideration will be satisfied by: (i) issue of 367,500,000 shares (“ Up Energy Shares ”) of Up Energy Development Group Limited (“ Up Energy ”). However, if as at the third anniversary of the completion date of the Transaction (“ Third Anniversary Date ”), the average closing price of the Up Energy Share for the five trading days immediately preceding and including the Third Anniversary Date (the “ Trading Price ”) is less than HK$2 per share, Up Energy shall allot and issue additional new Up Energy Share to the Company (the “ Top Up Option ”) based on a predetermined formula (details as disclosed in this circular), provided that if the number of Up Energy Shares issued pursuant to the Top Up Option (the “ Top Up Consideration Shares ”), together with the then Up Energy Shares held by the Company, shall exceed 19.99% of the enlarged issued share capital of Up Energy, the number of Top Up Consideration Shares to be issued shall be reduced to such number, which together with the then Up Energy Shares held by the Company, shall equal 19.99% of the enlarged issued share capital of Up Energy, and the Purchaser shall pay compensation in cash to the Company for the shortfall; (ii) HK$845,000,000 by way of cash payment; and (iii) put option granted to the Company (“ Put Option ”), pursuant to which, as at the Third Anniversary Date, the Company has the right to request Up Energy to arrange for the sale of the Up Energy Shares, up to a maximum of 140,000,000 shares by way of placing through an independent qualified placing agent nominated by Up Energy at a price to be agreed between Up Energy and such placing agent (the “ Placing Price ”). If the Placing Price is less than HK$2.2 per share, Up Energy shall pay the shortfall as cash compensation to the Company.

IV – 7

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

Fair value of the consideration, assuming the Transaction had been completed on 30 September 2012 was HK$1,683,521,000, which represents the sum of: (i) fair value of 367,500,000 Up Energy Shares of HK$297,675,000 which is classified as available-for-sale investments and is determined by reference to the market price of HK$0.81 per share on 30 September 2012; (ii) the fair value of the Top Up Option and Put Option of HK$540,846,000 which are classified as derivative financial instruments and are estimated by RHL Appraisal Ltd., an independent professional valuer, based on the Black-Scholes Option Pricing Model and estimated Trading Price and Placing Price; and (iii) cash of HK$845,000,000.

• (ii) The assets and liabilities of the Disposal Group other than amount due to the Company as at 30 September 2012, were extracted from the Consolidated Financial Information of the Disposal Group as set out in Appendix IIA to the Circular.

• (iii) The amount of legal and professional fee directly attributable to the Transaction is estimated by directors of the Company and assumed that they were settled by cash.

• (c) The adjustment reflects the exclusion of the results of the Disposal Group for the six months ended 30 September 2012, assuming the Transaction had been taken place on 1 April 2012. The results of the Disposal Group were extracted from Appendix IIA to the Circular.

• (d) The adjustment reflects the gain on disposal of the Disposal Group assuming the Transaction had been taken place on 1 April 2012. Gain on disposal of the Disposal Group is calculated as follows:

Fair value of the consideration (note i) Carrying amount of assets and liabilities of the Disposal Group, other than amount due to the Company, as at 1 April 2012 (note ii) Legal and professional fee directly attributable to the Transaction (note iii) Reclassification of cumulative translation reserve upon disposal of the Disposal Group to profit or loss Gain on disposal of subsidiaries Notes:	HK$’000 1,738,081 (1,672,273) (4,500) 49,652 110,960

• (i) Fair value of the consideration, assuming the Transaction had been completed on 1 April 2012 was HK$1,738,081,000, which represents the sum of: (i) fair value of 367,500,000 Up Energy Shares of HK$396,900,000 which is determined by reference to the market price of HK$1.08 per share on 1 April 2012; (ii) the fair value of the Top Up Option and Put Option of HK$496,181,000 which are estimated by RHL Appraisal Ltd., an independent professional valuer, based on the BlackScholes Option Pricing Model and estimated Trading Price and Placing Price; and (iii) cash of HK$845,000,000.

IV – 8

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

• (ii) The assets and liabilities of the Disposal Group other than amount due to the Company as at 1 April 2012 were assumed to be the same as amounts outstanding as at 31 March 2012 and were extracted from the Consolidated Financial Information of the Disposal Group as set out in Appendix IIA to the Circular.

• (iii) The amount of legal and professional fee directly attributable to the Transaction is estimated by directors of the Company and assumed that they were settled by cash.

• (e) The adjustment reflects the change in fair values of the Top Up Option, Put Option and the Up Energy Shares for the six months ended 30 September 2012, as if they were issued on 1 April 2012. The increase in aggregated fair value of Top Up Option and Put Option of HK$30,775,000 is mainly due to the decrease in market price of Up Energy and the change in fair value is recognised as fair value gain on derivative financial instruments; while the decrease in fair value of the Up Energy Shares of HK$99,225,000 is recognised as impairment loss in respect of available-for-sale investments. Net aggregate decrease of HK$68,450,000 is included as other gains and losses.

• (f) The adjustment reflects the exclusion of the cash flows of the Disposal Group other than those cash flows relating to repayment of advance to the Company because amount due to the Company was assigned to the acquirer as at 1 April 2012, assuming the Transaction had been taken place on 1 April 2012. The cash flows of the Disposal Group are extracted from the Consolidated Financial Information included in Appendix IIA to the Circular.

• (g) The adjustment reflect net cash inflow from the disposal of the Disposal Group, which composed of the cash proceeds from the disposal of the Disposal Group of HK$845,000,000 net of legal and professional fee of HK$4,500,000 and the cash and cash equivalents of the Disposal Group of HK$1,987,000, assuming the Transaction had been taken place on 1 April 2012.

• (h) The above pro forma adjustments will have no continuing effect on the Remaining Group in the subsequent reporting periods.

IV – 9

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

(B) ACCOUNTANTS’ REPORT ON UNAUDITED PRO FORMA FINANCIAL INFORMATION

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==> picture [80 x 39] intentionally omitted <==

TO THE DIRECTORS OF HAO TIAN RESOURCES GROUP LIMITED

We report on the unaudited pro forma financial information of Hao Tian Resources Group Limited (the “ Company ”) and its subsidiaries (hereinafter collectively referred to as the “ Group ”), which has been prepared by the directors of the Company for illustrative purposes only, to provide information about how the proposed disposal of the entire interest of Champ Universe Limited (together with its subsidiaries collectively referred to as the “ Disposal Group ”) might have affected the financial information presented, for inclusion in section A of Appendix IV to the circular dated 31 January 2013 (the “ Circular ”). The basis of preparation of the unaudited pro forma financial information is set out in section A of Appendix IV to the Circular.

Respective Responsibilities of Directors of the Company and Reporting Accountants

It is the responsibility solely of the directors of the Company to prepare the unaudited pro forma financial information in accordance with paragraph 29 of Chapter 4 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “ Listing Rules ”) and with reference to Accounting Guideline 7 “Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars” issued by the Hong Kong Institute of Certified Public Accountants.

It is our responsibility to form an opinion, as required by paragraph 29(7) of Chapter 4 of the Listing Rules, on the unaudited pro forma financial information and to report our opinion to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the unaudited pro forma financial information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

IV – 10

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

Basis of Opinion

We conducted our engagement in accordance with Hong Kong Standard on Investment Circular Reporting Engagements 300 “Accountants’ Reports on Pro Forma Financial Information in Investment Circulars” issued by the Hong Kong Institute of Certified Public Accountants. Our work consisted primarily of comparing the unadjusted financial information with source documents, considering the evidence supporting the adjustments and discussing the unaudited pro forma financial information with the directors of the Company. This engagement did not involve independent examination of any of the underlying financial information.

We planned and performed our work so as to obtain the information and explanations we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the unaudited pro forma financial information has been properly compiled by the directors of the Company on the basis stated, that such basis is consistent with the accounting policies of the Group and that the adjustments are appropriate for the purpose of the unaudited pro forma financial information as disclosed pursuant to paragraph 29(1) of Chapter 4 of the Listing Rules.

The unaudited pro forma financial information is for illustrative purpose only, based on the judgments and assumptions of the directors of the Company, and, because of its hypothetical nature, does not provide any assurance or indication that any event will take place in future and may not be indicative of the financial position of the Group as at 30 September 2012 or any future date or the results and cash flows of the Group for the six months ended 30 September 2012 or any future period.

IV – 11

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

Opinion

In our opinion:

• (a) the unaudited pro forma financial information has been properly compiled by the directors of the Company on the basis stated;

• (b) such basis is consistent with the accounting policies of the Group; and

• (c) the adjustments are appropriate for the purposes of the unaudited pro forma financial information as disclosed pursuant to paragraph 29(1) of Chapter 4 of the Listing Rules.

Deloitte Touche Tohmatsu

Certified Public Accountants

Hong Kong

• 31 January 2013

IV – 12

APPENDIX VA

MANAGEMENT DISCUSSION AND ANALYSIS OF THE REMAINING GROUP

As the Target Company acquired Venture Path on 15 June 2011, hence the Group is the same as the Remaining Group for the two years ended 31 March 2010 and 31 March 2011. For the management discussions and analysis of the Remaining Group for the two years ended 31 March 2010 and 31 March 2011, please refer to the management discussions and analysis of the Group for the two years ended 31 March 2010 and 31 March 2011 as set out in Appendix I of this circular.

MANAGEMENT DISCUSSION AND ANALYSIS OF THE REMAINING GROUP FOR THE YEAR ENDED 31 MARCH 2012 AND THE SIX MONTHS ENDED 30 SEPTEMBER 2012

Upon completion of the proposed disposal of the Disposal Group, the operation of the Remaining Group will principally be contributed by Winbox (BVI) Limited and its subsidiaries for the three years ended 31 March 2012 and the six months ended 30 September 2012.

FINANCIAL REVIEW

Revenue

The principal activities of the Remaining Group are manufacturing and sale of quality plastic and paper boxes for luxury consumer goods, and engagement in the mining and marketing of coking coal in the PRC.

Coal Mining Business

On 7 September 2011, the Group has entered into a sale and purchase agreement for the disposal of the entire equity interest in Wuhai City Menggang at a total consideration of RMB1.503 billion (equivalent to approximately HK$1,845,083,000). Wuhai City Menggang held the entire equity interest in Mine No.1 and No.4 and Tianyu coal washing plant through Tianyu Gongmao and Tianyu Coal Company Limited, respectively. On 17 May 2012, the Group completed the registration of transfer of the entire equity interest of Wuhai City Menggang with SAIC. Accordingly, during the year, no production was recorded from the coal mining business in Wuhai City, Inner Mongolia.

For the six months ended 30 September 2012, there was no coal revenue recognised from the Remaining Group.

VA – 1

APPENDIX VA

MANAGEMENT DISCUSSION AND ANALYSIS OF THE REMAINING GROUP

Packaging Box Business

The global economic recovery drove the demand for high-end consumer goods plastic boxes and paper boxes. However, the Euro-zone debt crisis slowed the growth momentum in the second half of year 2012. Accordingly, the Group’s packaging segment revenue increased by 14.8% to HK$140.2 million (2011: HK$122.1 million) as compared with last year. The gross profit margin has improved significantly by approximately 25.2% (2011: 15.6%) while the gross profit was increased to approximately HK$35.3 million (2011: HK$19.0 million) as a result of increased product sales and tightened control on production cost. As such, the segment result was turnaround profitability of which approximately HK$7.8 million was recorded when compared with a loss of approximately HK$8.6 million for year 2011.

For the six months ended 30 September 2012, the economic downturn in the European market caused decrease in demand for plastic boxes and paper boxes of luxury consumer goods. Revenue from the packaging boxes segment declined by 13.6% to HK$61,628,000 (for the six months ended 30 September 2011: HK$71,362,000) as compared with the same period in last year. For the six months ended 30 September 2012, the gross profit margin fell to approximately 10.7% (for the six months ended 30 September 2011: 26.5%), mainly attributable to a decline in volume of orders, as well as an increase in labour costs, prices of raw materials and allowance for slow moving inventories. The total gross profit decreased to approximately HK$6,614,000 (for the six months ended 30 September 2011: HK$18,911,000).

Other Income, Gain and Loss, and Change in Fair Value of Investments held for Trading

For the year ended 31 March 2012, the Group recorded a total net loss from continuing operations in other income, gain and loss and change in fair value of investments held for trading of approximately HK$0.4 million (2011: HK$0.8 million). The loss was mainly attributable to: (i) the net loss from foreign exchange; (ii) loss on disposal of available-for-sale investments; and (iii) impairment loss on available-for-sale investments.

For the six months ended 30 September 2012, the Remaining Group recorded a net loss from continuing operations of approximately HK$42.1 million (for the six months ended 30 September 2011: net gain of approximately HK$1.8 million) in other income, other gains and losses. The losses were mainly attributable to: (i) impairment loss recognised in respect of available-forsale investments; (ii) loss on disposal of available-for-sale investment; and (iii) fair value loss of financial assets designated as at fair value through profit and loss.

VA – 2

APPENDIX VA

MANAGEMENT DISCUSSION AND ANALYSIS OF THE REMAINING GROUP

Change in Fair Value of Derivative Financial Instruments

For the year ended 31 March 2012, the Group recorded a net non-operating income of approximately HK$180.8 million from continuing operations arising from fair value adjustment in the embedded derivatives of convertible notes issued by the Company (2011: HK$6.1 million).

For the six months ended 30 September 2012, the Remaining Group recorded a net nonoperating income of approximately HK$43,000 from continuing operations arising from fair value adjustment in the embedded derivatives of convertible notes issued by the Company (for the six months ended 30 September 2011: gain of approximately HK$58.6 million).

Distribution and Selling Costs

For the year ended 31 March 2012, distribution and selling costs from continuing operations were approximately HK$3.5 million (2011: HK$4.2 million), representing a decrease of approximately HK$0.7 million or 16.7% as compared with year 2011. The decrease was due to the reduction in transportation cost as the packing box plant was relocated to Dongguan in 2010.

For the six months ended 30 September 2012, the Remaining Group recorded distribution and selling costs from continuing operations of approximately HK$1.5 million (for the six months ended 30 September 2011: HK$1.9 million), representing a decrease of approximately HK$0.4 million or 21.1% as compared with the same period in 2011. The decrease was mainly due to the reduction in transportation cost from packaging box business.

Administrative Expenses

For the year ended 31 March 2012, administrative expenses from continuing operations were approximately HK$74.2 million (2011: HK$63.0 million), representing an increase of approximately HK$11.2 million or 17.8% as compared with year 2011. The increase was mainly due to non-cash share based payments expenses arising from the amortisation of the granted share options to eligible participants by the Company.

VA – 3

APPENDIX VA

MANAGEMENT DISCUSSION AND ANALYSIS OF THE REMAINING GROUP

For the six months ended 30 September 2012, the Remaining Group recorded administrative expenses from continuing operations of approximately HK$32.8 million (for the six months ended 30 September 2011: HK$39.0 million), representing a decrease of approximately HK$6.2 million or 15.9% as compared with the same period in 2011.

Loss on Redemption of Convertible Note/Re-measurement of Liability Component of Convertible Notes

For the year ended 31 March 2012, the Group recorded a loss of approximately HK$426.1 million on loss on redemption of convertible note/re-measurement of liability component of convertible notes (2011: Nil) as a result of (i) the Group’s plan to settle the entire outstanding amount of convertible notes by proceeds obtained from the disposal of the Wuhai City Menggang group, such amount representing the difference between the carrying value of the liability component of convertible notes and its redemption amount; and (ii) debt extinguishment loss of redemption of convertible note.

For the six months ended 30 September 2012, there was no loss recognised from the Remaining Group on redemption of convertible note/re-measurement of liability component of convertible notes.

Other Expenses

For the year ended 31 March 2012, other expenses from continuing operations were approximately HK$19.1 million (2011: Nil) which represented legal and professional costs incurred for the acquisition of assets through purchase of subsidiaries and the disposal of the Wuhai City Menggang group as well as the wages, depreciation expense and consumables.

For the six months ended 30 September 2012, there were no other expenses incurred from continuing operations (for the six months ended 30 September 2011: HK$7.7 million).

Finance Costs

For the year ended 31 March 2012, finance costs from continuing operations were approximately HK$49.0 million (2011: HK$30.5 million), which were mainly attributable to the recognition of imputed interest expenses on the liability component of the convertible notes.

VA – 4

APPENDIX VA

MANAGEMENT DISCUSSION AND ANALYSIS OF THE REMAINING GROUP

For the six months ended 30 September 2012, finance costs from continuing operations were approximately HK$1.3 million (for the six months ended 30 September 2011: HK$23.6 million), representing a decrease of approximately HK$22.3 million or 94.5% as compared with the same period in 2011. The decrease was mainly due to the incurrence of interest expenses of convertible notes issued by the Company, which were redeemed in full during the period under review.

Taxation

For the year ended 31 March 2012, the Group’s income tax expense from continuing operations was approximately HK$4.0 million (2011: HK$0.4 million) resulting from income tax expense from Hong Kong of approximately HK$2.0 million and other jurisdictions of approximately HK$2.0 million.

For the six months ended 30 September 2012, the Remaining Group’s income tax expense from continuing operations was approximately HK$0.2 million (for the six months ended 30 September 2011: HK$0.5 million) resulting from income tax expense from other jurisdictions.

Owner’s Attributable Loss

For the year ended 31 March 2012, the Group recorded a loss of approximately HK$378.5 million (2011: HK$96.6 million). The basic and diluted loss per share was approximately HK12.98 cents (2011: HK4.8 cents). The increase was mainly due to the loss recognised on loss on redemption of convertible note/re-measurement of liability component of convertible notes.

For the six months ended 30 September 2012, the net loss from continuing operations attributable to the owners from the Remaining Group was approximately HK$27.9 million (for the six months ended 30 September 2011: profit of approximately HK$7.1 million), while a net loss from discontinued operation, which represented the Group’s Inner-Mongolia Mining Operation, was attributable to the owners in the same period which was approximately HK$3.0 million (for the six months ended 30 September 2011: loss of approximately HK$15.4 million). As a result, the total net loss from continuing operation and discontinued operation attributable to the owners in the period under review from the Remaining Group was approximately HK$30.9 million (for the six months ended 30 September 2011: net loss of approximately HK$8.3 million).

VA – 5

MANAGEMENT DISCUSSION AND ANALYSIS OF THE REMAINING GROUP

APPENDIX VA

LIQUIDITY, CAPITAL STRUCTURE AND FINANCIAL RESOURCES

Set out below is a summary of the audited financial statement of the Remaining Group as at 31 March 2010, 2011, 2012 and as at 30 September 2012.

	As at	As at	As at	As at
	31 March	31 March	31 March	30 September
	2010	2011	2012	2012
	HK$’000	HK$’000	HK$’000	HK$’000
Total assets	2,502,224	2,744,900	4,314,591	2,819,972
Current Assets	401,001	111,451	2,603,747	1,819,064
Current liabilities	165,544	48,780	1,571,355	256,651
Working capital	235,457	62,671	1,032,392	1,562,413
Gearing ratio*	15.1%	7.9%	14.8%	4.1%

• A ratio of total borrowings to total assets other than goodwill

Cash and Bank Balance

As at 31 March 2010, 2011, 2012 and 30 September 2012, the Remaining Group’s aggregate cash and bank balances amounted to approximately HK$302.7 million, HK$48.7 million, HK$44.0 million and HK$984.0 million respectively, representing 75.5%, 43.7%, 1.7% and 54.2% of total current assets, respectively.

Borrowings

As at 31 March 2010, 2011, 2012 and 30 September 2012, the Remaining Group had no borrowings from banks or financial institutions.

Pledged Assets

The Group has pledged its leasehold land and buildings with carrying value of approximately HK$2.9 million and HK$2.8 million for the year ended 31 March 2012 and the six months ended 30 September 2012, respectively, to secure the unutilised general banking facilities granted to the Group and no other assets pledged at the date of reporting.

VA – 6

APPENDIX VA

MANAGEMENT DISCUSSION AND ANALYSIS OF THE REMAINING GROUP

The Company entered into the Investment Agreement with the Relevant Bank on 6 September 2012, pursuant to which, the Company agreed to issue notes in the aggregate principal amount of up to US$40,000,000 due 2013 (“ Notes ”) during a period of 3 months from 11 September 2012 (“ the First Completion Date ”), and on the First Completion Date, a note for the principal amount of US$16,000,000 had been issued. The Notes are secured, amongst others, (a) by an account charge executed by Brilliant Wise Limited, an indirect wholly-owned subsidiary of the Company, in favor of the Relevant Bank and the Company shall procure proceeds for the third installment received from 內蒙古雙欣資源集團有限公司 (Inner Mongolia Shuangxin Resources Group Co., Ltd.) under a sale and purchase agreement dated 7 September 2011 which shall be deposited in the account; (b) a share charge executed by various members of the Group over certain charged shares in favour of the Relevant Bank; (c) an equity pledge agreement executed in favour of the Relevant Bank in relation to the entire equity interest of Baicheng Wenzhou; and (d) if applicable, other account charge to be executed by members of the Group upon disposal or realization of asset.

Save as stated above, the Remaining Group does not have any other pledged assets.

CAPITAL COMMITMENT AND CONTINGENT LIABILITIES

As at 31 March 2012, there were capital commitments of approximately HK$89.6 million (2011: HK$130.3 million) and HK$189.0 million (2011: HK$167.3 million) in respect of addition of property, plant and equipment contracted for but not provided in the consolidated financial statements and authorised but not contracted for, respectively.

Save as disclosed above, the Remaining Group had no material contingent liabilities as at 30 September 2012.

Exposure to Fluctuations in Exchange Rates

The Group’s sales are denominated mainly in HKD, USD, EUR and RMB. The Group’s purchases and expenses are mostly denominated in HKD and RMB, and some in EUR and USD. The Group has certain foreign currency bank balances, investments held for trading, availablefor-sale investments and investment in foreign operations, which are exposed to foreign currency exchange risk. The Group currently does not have a foreign currency hedging policy. However, the management monitors foreign exchange exposure of the Group and will consider hedging significant foreign currency exposure should the need arise.

VA – 7

APPENDIX VA

MANAGEMENT DISCUSSION AND ANALYSIS OF THE REMAINING GROUP

Employee Information

As at 31 March 2012 and 30 September 2012, the Remaining Group had a total of approximately 1,200 and 800 employees in the PRC, Hong Kong and France, respectively. The Remaining Group provides a mandatory provident fund scheme for its employees in Hong Kong and the state-managed retirement benefit schemes for its employees in the PRC and France. The Group’s remuneration policies are formulated according to market practices, experiences, skills and performance of individual employee and will be reviewed every year.

The Group has also adopted a share option scheme.

Significant Investment, Materials Acquisitions and Disposals

On 7 September 2011, the Group entered into a sale and purchase agreement with an independent third party, Inner-Mongolia Shuangxin Resources Group Co., Ltd. Pursuant to the said sale and purchase agreement, the Group agreed to dispose of the Wuhai City Menggang group. During the six months ended 30 September 2012, all of these conditions were fulfilled and the disposal was completed on 30 May 2012.

On 12 October 2012, the Group entered into a sale and purchase agreement with an independent third party, Up Energy, pursuant to which the Group has conditionally agreed to dispose of its entire interest in the Target Company.

On 25 October 2012, a wholly-owned subsidiary of the Company entered into a sale and purchase agreement with Uprite Limited, a company incorporated in the British Virgin Islands, to acquire a yacht and the accompanying marine facilities at a total consideration of HK$65,000,000.

Save as disclosed above, the Group has no other significant investment, material acquisition and disposals.

VA – 8

APPENDIX VA

MANAGEMENT DISCUSSION AND ANALYSIS OF THE REMAINING GROUP

Future Prospects

The revenue for the packaging business segment for the year ended 31 March 2012 showed signs of market recovery. However, due to the ongoing debt problems in certain European countries, demand is uncertain in the near future. According to the International Monetary Fund, the world nominal gross domestic product is projected to grow at an average rate of about 5% per year from 2012 to 2015. The Company estimates that the demand for packaging products for watches, pens and jewellery will also increase in the same period. In light of the competitive strength of our direct and long business relationships with internationally recognized branded corporations and the high industry entry barriers, the Company expects to continue generating positive cash flows from operating activities.

Furthermore, the Company continuously evaluates its business position and strategy and monitors opportunities in sectors other than coal mining. Currently, the oil and gas industry is a sector which has aroused the Company’s interest as the Company is of the view that the Xinjiang regional government supports foreign enterprises’ investments in the local natural gas exploration industry, by ensuring gas supply volume and offering favourable gas price.

Consequently, the Company wishes to shift its business focus from the mining industry to the oil and gas industry and the Company has been seeking to identify and explore new business opportunities with a view to enhancing the value of the Company.

VA – 9

APPENDIX VB

MANAGEMENT DISCUSSION AND ANALYSIS OF UP ENERGY GROUP

(1) MANAGEMENT DISCUSSION AND ANALYSIS OF THE UP ENERGY GROUP

Set out below is a discussion and analysis of the Up Energy Group’s results of operation for each of the three years ended 31 March 2012 and the six months ended 30 September 2012. The information set out below is principally extracted from the “Management Discussion and Analysis” sections of the annual reports of Up Energy for year ended 31 March 2010, 2011 and 2012 and interim report of Up Energy for the six months ended 30 September 2012 respectively, in order to provide further information relating to the financial condition and results of operations of the Up Energy Group during the periods stated.

(a) Management discussion and analysis for the six months ended 30 September 2012

During the review period for the six months ended 30 September 2012, the Up Energy Group continued to develop its coal business plan in Xinjiang by focusing on the construction of the three coal mines and the development of the downstream phase one ancillary projects in Fukang of Xinjiang. It is currently expected that commercial production of these projects will commence successively starting from the first quarter of 2013 and the planned annual production capacity of the coal mines will reach a maximum of 4.5 Mt. On such basis, the Up Energy Group will then become one of the largest integrated energy groups with circulative economy business model in the coking industry in Northwestern China in terms of planned production capacity, which is expected to bring about significant positive impact on the Up Energy Group’s revenue and profit. The Up Energy Group has also started to identify coal mines in Xinjiang and overseas and will enter into acquisition agreement or arrangements as it sees fit with the aim of consolidating its leading position in the coking coal industry in Northwestern China.

Industry review

The Up Energy Group has three coal mines in Fukang, Xinjiang of China, namely the Xiaohuangshan Mine, the Shizhuanggou Mine and the Quanshuigou Mine. Xinjiang is an important market for the sales of coking coal and coke products of the Up Energy Group. Therefore, the operation environment of Xinjiang has a direct impact on the Up Energy Group’s coal business.

VB – 1

APPENDIX VB

MANAGEMENT DISCUSSION AND ANALYSIS OF UP ENERGY GROUP

• (1) Demand, Supply and Pricing Trend of Coking Coal in the Mainland

Affected by domestic macro-economic control and international economic conditions, the production and business operation of the steel industry in the Mainland has deteriorated since the fourth quarter of 2011. The prices of imported iron ore and coking coal have decreased drastically by 30-50%. The steel industry responded by cutting down production and lowering steel price. With excess supply, the domestic coking coal market suffered from recession. In the first quarter of 2012, steel factories in the Mainland lowered their purchase price to between RMB1,250 per tonne to RMB1,450 per tonne. In the second quarter of 2012, the steel factories reduced production, resulting in a weak demand for coking coal and a downward trend in price. The purchase price of coking coal fell further to a range from RMB1,100 to RMB1,300 per tonne. In the third quarter of 2012, while the domestic demand for steel remained relatively weak, the price of coking coal stabilised since the coking coal enterprises in the Mainland reduced their production and the supply of coking coal decreased.

Being relatively independent, the coking coal market in Xinjiang was less influenced by the downward economic trend. In the first quarter of 2012, there was no obvious change in the steel and coking coal industries. The average prices of coking coal and coke remained at high levels, namely, RMB900 and RMB1,700 respectively. Slowdown in infrastructure and investment since the second quarter led to a decreased demand for steel in Xinjiang, resulting in a decrease in the price of coking coal. The price has fallen by approximately RMB100 per tonne over the first three quarters. In 2012, the standards of safety management for the coal industry in Xinjiang were further raised. During the Twelfth Five-year Plan period, small-scale coal mines were further ordered to close down, suspend production, merger with others or shift to different line of production. The production of coking coal in Xinjiang thus decreased, which helped stabilizing the price of coking coal. In September 2012, the average price of different types of coal ranged from approximately RMB450 per tonne to RMB800 per tonne; while the average price of coking coal was about RMB1,400 per tonne. It is expected that the prices would start to rebound.

VB – 2

APPENDIX VB

MANAGEMENT DISCUSSION AND ANALYSIS OF UP ENERGY GROUP

• (2) Demand, Supply and Pricing Trend of Coking Coal in the International Market

The disastrous floods in Australia in early 2011 resulted in a significant shortage of coking coal that led to a price surge in the international coking coal market. In the first quarter of 2011, the international basis price of coking coal jumped to the second historical high of US$250 per tonne, and the price further increased to US$290 and US$315 per tonne in the second and third quarter, respectively.

After reaching the historical high of US$330 per tonne (FOB) in the second quarter of 2011, contract coking coal price has dropped for six consecutive quarters, contract coking coal price in the second quarter of 2012 has decreased by 37.6% as compared with the corresponding period last year. Coking coal price in the second quarter this year was US$206 per tonne (FOB), representing a decrease of 12.3% compared to that of the first quarter. The surge in international coal price in the second quarter of 2011 was due to the special background then existed. At that time, the torrential rain in Australia badly hit the production of coking coal of the largest coking coal producing and exporting country, resulting in a sharp decrease in the export volume of coking coal. After one year of recovery, the production of coking coal in Australia has gradually restored to normal, and the tense supply of coking coal in the international market has been eased significantly. Coking coal supply has experienced quarter-on-quarter growth. On the other hand, as steel enterprises worldwide (including China) reduced production significantly, international steel price has been declining since the fourth quarter of 2011. With declining demand and more abundant supply, recent spot price of quality coking coal has dropped below US$200 per tonne (FOB).

Business review

(1) Coal Resources and Reserves

As at 30 September 2012, the Up Energy Group had a total of 251.15 Mt of JORC-compliant measured, indicated and inferred coal resources and a total of 70.24 Mt of JORC-compliant proved and probable marketable coal reserves. In addition, the potential coal reserves of the Shizhuanggou Mine and Quanshuigou Mine amount to 51.94 Mt in total.

VB – 3

APPENDIX VB

MANAGEMENT DISCUSSION AND ANALYSIS OF UP ENERGY GROUP

As of 30 September 2012, the JORC-compliant measured, indicated and inferred coal resources as well as the JORC-compliant proved and probable marketable coal reserves of the Up Energy Group are categorized as follows:

Name Category Amount Total	Coal Resources Measured Indicated Inferred 148.516 61.199 41.437 251.152	Unit: Mt Marketable Coal Reserves Proved Probable 51.958 18.277
		70.235

(2) Additional Exploration Activities

During the review period for six months ended 30 September 2012, the Up Energy Group has continued the additional exploration activities in the northern mining area. The additional exploration activities are still in progress. After preliminary analysis of the holes drilled, there is no substantial change in the Up Energy Group’s coal resource and coal types.

The original exploration report of the Xiaohuangshan Mine has been completed and six more holes were drilled. A total of 3,382 metres were drilled. No. 156 Coalfield Geological Exploration Team of Xinjiang Uygur Autonomous Region Coalfield Geology Bureau has been summarizing findings from the drilling activities and the preliminary analysis showed that the Up Energy Group’s resource (China resource code) is expected to increase.

(3) Construction Progress of Coal Mines and Projects

Subject to objective conditions, construction progress of the three mines and the three downstream ancillary projects was slightly behind schedule during the review period for six months ended 30 September 2012.

In 2012, local governments in China strengthened the management of safe production to ensure the successful convocation of the 18th National Congress. Given the special circumstances of Xinjiang, the relevant government authorities imposed strict requirements on the management of safe production. Occasions of shutdown for inspection of coal mines have significantly increased compared to last year. Period available for construction became shorter and the progress of the coal mine project was delayed, especially during politically sensitive period, the China-Eurasia Expo, visits from state leaders, the 18th National Congress, etc. The Xiaohuangshan Mine is expected to commence trial production in the second quarter of 2013.

VB – 4

MANAGEMENT DISCUSSION AND ANALYSIS OF UP ENERGY GROUP

APPENDIX VB

Shizhuanggou Mine

The construction of 530-meters long vertical ventilation shaft, haulage crosscuts (road and rail) and shaft station of district rise of the shaft sinking and drifting project has completed, and the construction works of district rise are at the final stage.

For the ground-level infrastructure, the construction of 110kv electricity transmitting and transforming facilities (which occupy an area of 4,420 m[2] , and include civil engineering works, installation and testing of equipment, and setting up a 29 km double circuit wiring system), buildings at shaft entrance and material warehouse has completed. The administrative services complex and the hoist room of auxiliary inclined shaft are under construction, while equipment installation and testing are also carrying out in the said premises.

Testing and turning of equipment will be scheduled to carry out during the third quarter of 2013 in preparation for the trail production.

Quanshuigou Mine

The construction of 410-meters long vertical ventilation shaft, +680-meters shaft bottom station and underground chamber (transformer station, pump station and sump) and haulage crosscuts (road and rail) has completed. The preparation works for the district rise construction project are undergoing.

For the ground-level infrastructure, the construction of 35kv electricity transmitting and transforming facilities (which occupy an area of 698 m[2] , and include civil engineering works, installation and testing of equipment), construction of hoist room of auxiliary shaft and the installation and test run of hoist, the construction of material warehouse has completed. The main construction works of the mine office building, canteen, staff duty-shift quarters and the buildings at shaft entrance have reached the final stage.

Installation, testing and tuning of equipment will be scheduled to carry out during the third quarter of 2013 in preparing for the trail production.

VB – 5

APPENDIX VB

MANAGEMENT DISCUSSION AND ANALYSIS OF UP ENERGY GROUP

The progress of the three downstream ancillary projects stated as below. The brick work of the cokery has completed, and the iron casting has been installed. The five major machinery parts of the cokery has assembled, and the hydraulic and electric system are being installed. With the aerial conveyors being connected, the major construction works of the coal preparation, quenching and coking coal selection and storage system have been completed, and major equipment, such as crusher, is now being installed. With the completion of the external pipe bridge, the major construction works of the chemical recovery system have been completed, and the major equipment, such as gas turbine and primary cooler, is now being installed. Major utilities and ancillary facilities structures (integrated water supply, electricity supply, boiler, soft water station, air compression station, tank yard, foam station, loading station, etc.) have also been completed, and major equipment are being installed to the buildings, such as air compressor, boiler and electricity compressor and transmitter. The construction of underground pipeline network has completed, and the installation of processing pipeline, power cable, etc, is now being organized. In preparing for trial production, it is expected that all system testing and tuning will be finished in the third quarter of 2013.

For the raw coal washing project, the construction of the major structures like concentrating plant (including surrounding fence and spherical mesh), contingent storage tank, medicine library, coal refuse storage, and laboratory building have been completed. Primary construction works of the selection and crushing plant and main washing plant have been finished. 21 sessions of aerial coal transportation corridor have been connected. All construction works of the underground pipeline network system have been finished, and the installation of power cable is now being organized. All production facilities have been procured and ordered. In preparing for trial production, it is expected that all system testing and tuning will be finished in the third quarter of 2013.

For the water recycling project, the design work has completed, and has built 10.5 km water pipe. Site formation works have been completed, and has already covered with road, water, electricity and telecommunication network. The administration office area is under construction, and all major equipment has been ordered. In preparing for trial production, it is expected that all system testing and tuning will be finished in the third quarter of 2013.

VB – 6

APPENDIX VB

MANAGEMENT DISCUSSION AND ANALYSIS OF UP ENERGY GROUP

On the other hand, the feasibility research on the Phase Two Project is in progress and the Up Energy Group are waiting for the approval from the administrative authorities. Upon completion of the Phase One Project, the Up Energy Group will step up the Phase Two Project.

(4) Coal Mine Acquisition in Xinjiang

In order to control and further develop the coal mine in Xinjiang, China, and to reinforce the Up Energy Group’s position as one of the largest integrated energy group in Northwestern China, the Up Energy Group has been actively looking for opportunities to merge and acquire mining properties.

On 23 July 2012, the Purchaser entered into a memorandum of understanding with the Company in relation to the proposed acquisition of the entire issued share capital of the Target Company. The Target Company through its direct and indirect wholly-owned subsidiaries, owns 100% interests in the Target Mine.

The Target Mine produces predominantly Gas Coal, along with 1/3 Coking Coal, 1/2 Caking Coal, and Weakly Caking Coal. Based on the technical report relating to the Target Mine as at 31 March 2012, the Target Mine has a coal field area of approximately 5.9178 square kilometres, with estimate coal resources and coal reserves are 111.30 Mt and 38.00 Mt. According to the mining licence dated 28 October 2009 granted by Department of Land and Resources Office of Xinjiang Uygur Autonomous Region, the Target Mine is permitted to produce 210,000 tonnes of coal per annum. Based on the valuation report relating to the Target Mine dated 31 December 2010, the fair market value of the Target Mine was estimated at HK$1.7 billion. The Up Energy Group believes that in addition to helping us achieving the aforesaid target, the Up Energy Group will also benefit from the synergies resulting from the operation of the Target Mine with its existing mines in the region in terms of management, distribution and transportation.

VB – 7

APPENDIX VB

MANAGEMENT DISCUSSION AND ANALYSIS OF UP ENERGY GROUP

On 12 October 2012, Up Energy, the Purchaser and the Company entered into a sale and purchase agreement in relation to the acquisition of the Target Company. Pursuant to the S&P Agreement, the consideration for the sale and purchase of sale share and the transfer of all rights, title, benefit and interest of and in the Shareholder’s Loan was HK$1.58 billion, subject to adjustments as set out in the S&P Agreement, of which HK$735 million shall be paid by way of issue and allotment to the Company (or its nominee(s)) of 367,500,000 ordinary shares of Up Energy at an issue price of HK$2.00 per share free from all encumbrances and credited as fully paid upon completion; and the balance of HK$845 million shall be paid to the Company in cash. The completion of the S&P Agreement is conditional upon the fulfillment of various conditions precedent. For more details, please refer to Up Energy’s announcement dated 1 November 2012.

(5) Acquisition of overseas coal mine

Although the Up Energy Group is based in Xinjiang, China, they have always been looking for opportunities to expand their business overseas. On 5 July 2012, Up Energy has entered into a memorandum of understanding with Kaisun Energy Group Limited and its subsidiary Saddleback Gold Corporation (the “ SGC ”), which sets out the basic terms and conditions for the proposed acquisition by Up Energy of SGC’s 52% equity interest in Kamarob, at the consideration of HK$394,648,800, and on further terms and conditions to be agreed. Kamarob is a company incorporated and registered in the Republic of Tajikistan, and is the license holding company of the Kaftar Hona Deposit in Tajikistan. Pursuant to the memorandum of understanding, the proposed acquisition will be subject to certain conditions precedent being fulfilled or waived on or prior to 31 December 2013 (or extended to a later date by agreement of the parties). Details of the sale and purchase agreement will be set out in the announcement to be issued by Up Energy as soon as the sale and purchase agreement is entered into.

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MANAGEMENT DISCUSSION AND ANALYSIS OF UP ENERGY GROUP

BUSINESS STRATEGIES

(1) Production Safety

Production safety is considered as important to coal mining operation by the Up Energy Group since its establishment. The Up Energy Group issued various comprehensive guidelines for safe operation internally and co-operated with thirdparty professional bodies externally. The Up Energy Group entered into various agreements in technological cooperation framework, technological co-operation and technological consultation with the Pingan Coal Mine and Gas (Methane) Engineering Research Limited (led by Mr. Yuan Liang, the Academician of the Chinese Academy of Engineering), the China University of Mining and Technology and other reputable universities and research institutions for providing a safe and efficient environment for shaft construction and future production through researches in safety of mine gas, pit water and advanced mining technologies. The Up Energy Group have established a relationship with Huainan Mining Industry (Group) Co., Ltd.（淮南礦業（集團）有 限公司）* on comprehensive operation, and has discussed with it the issue of safety liability.

• (2) Merger and Acquisition in Xinjiang and Overseas Countries

Merger and acquisition is crucial for the long-term development of a company. The Up Energy Group will adhere to the principle of low-cost expansion, pay close attention to the country’s policy to eliminate small coal mines and prudently identify merger and acquisition opportunities in Xinjiang which coincide with its business strategy and philosophy. Through gradual expansion of coal reserves and scale of mining activities, the Up Energy Group will be able to maintain its leading position in the coking coal industry in Northwestern China. The aforementioned proposed acquisition of the Target Company is an essential move towards consolidating the Up Energy Group’s leading position in northwestern China. In respect of merger and acquisition in overseas countries, management of the Up Energy Group regularly arranges overseas site visits and actively identifies investment opportunities in resource consolidation, merger and acquisition of coking coal and energy industries in foreign countries. Given the unfavorable market condition in China, the importance of overseas development should not be neglected. The Up Energy Group hopes to enter into a formal sale and purchase agreement in respect of the proposed acquisition of the interest in the Kaftar Hona deposit in Tajikistan as soon as practicable, so as to establish a firm foundation for the Up Energy Group’s overseas development in the future.

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MANAGEMENT DISCUSSION AND ANALYSIS OF UP ENERGY GROUP

APPENDIX VB

(3) Challenges Ahead

The Up Energy Group’s business may be subject to a variety of uncertainties and challenges in relation to operational, policy and market risks.

As for operational risks, mine exploration, mining operations and production are subject to a number of social and natural risks and hazards, the Up Energy Group may also encounter different unpredicted difficulties and technical issues. All these could delay the production and delivery of coal products, or may increase cost of mining or result in accidents in coal mines.

In respect of policy risks, the Up Energy Group is of no assurance that the central and local governments will not impose additional or more stringent laws and regulations governing mining operations and exploration activities. Changes in regulations and policies or failure to comply with the relevant laws and regulations in coal mining or coal production may adversely affect the Up Energy Group.

For market risks, as the Up Energy Group’s results of operations are highly dependent on coking coal price which tends to be cyclical and subject to fluctuations, the volatility and cyclicality in coal price is linked to various factors such as the Chinese economy, the global financial environment and the steel manufacturing industry. Negative trends in coal price may adversely affect the Up Energy Group’s operation, prospect, financial position and operating results.

Despite the risk factors which may be encountered during business operation, the Up Energy Group will strive to find the best solution to ensure smooth business development.

Looking ahead, the Up Energy Group will continue to adhere to its business concept of “increased value in circulation” by extending its production chain from coal exploration, mining, washing to coking and chemicals. Through investment in coking coal projects in upstream and downstream industry chain and chemical byproducts produced during the processing of coking coal, the Up Energy Group is able to enhance added value of coal products through effective utilization of coal resources with an aim to maximizing its profitability. The Up Energy Group is determined to become a leading professional and integrated energy group in the coking coal industry in northwestern China.

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MANAGEMENT DISCUSSION AND ANALYSIS OF UP ENERGY GROUP

APPENDIX VB

Financial review

Administrative Expenses

Administrative expenses decreased by 46% to HK$29,212,000 for the six months ended 30 September 2012 from HK$54,034,000 for the corresponding period in 2011, which primarily due to a decrease in legal and professional fee.

Result for Continuing Operation

The Up Energy Group’s loss before tax from continuing operation decreased by 48% to HK$27,448,000 for the six months ended 30 September 2012 from HK$52,714,000 for the corresponding period in 2011.

Finance Costs

Finance costs increased to HK$11,657,000 for the six months ended 30 September 2012 from HK$9,602,000 for the corresponding period in 2011. The increase was primarily due to foreign exchange loss for the six months ended 30 September 2012.

Income Tax Expense

The Up Energy Group recorded current income tax expenses of HK$918,000 and a deferred income tax credit of HK$277,000 for the six months ended 30 September 2012.

Result for the Period

The Up Energy Group’s result for the six months ended 30 September 2012 recorded a loss of HK$39,746,000 comparing to a loss of HK$62,117,000 for the corresponding period in 2011.

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MANAGEMENT DISCUSSION AND ANALYSIS OF UP ENERGY GROUP

APPENDIX VB

Capital Expenditure

During the review period for six months ended 30 September 2012, the additional property, plant and equipment mainly for mine development and processing facilities construction of the Up Energy Group approximately amounted to HK$435,788,000, which comprised by construction in process HK$419,323,000 and other capital expenditures HK$16,465,000.

Charges on Assets

Up Energy has entered into a share charge in connection with the issue of the convertible notes of Up Energy. Pursuant to the share charge, the charge is created over (i) entire issued share capital of Up Energy Investment (China) Ltd., (ii) the entire issued share capital of Up Energy International Ltd; and (iii) the entire issued share capital of Up Energy (Hong Kong) Limited. All of the companies are wholly owned subsidiaries of Up Energy.

Save as above, the Up Energy Group did not have any charges on assets as at 30 September 2012.

Liquidity and Financial Resources

As at 30 September 2012, the Up Energy Group’s current ratio was 3.0 (31 March 2012: 6.9), with current assets of approximately HK$652,366,000 (31 March 2012: HK$876,221,000) against current liabilities of approximately HK$214,227,000 (31 March 2012: HK$127,080,000). Cash and cash equivalents were approximately HK$536,997,000 (31 March 2012: HK$801,019,000). The Up Energy Group’s gearing ratio was 93% as at 30 September 2012 (31 March 2012: 108%). The Up Energy Group’s working capital is mainly financed through internal generated cash flows, borrowings and equity financing. There has not been any change in the Up Energy Group’s funding and treasury policies during the period, and the Up Energy Group continues to follow the practice of prudent cash management.

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MANAGEMENT DISCUSSION AND ANALYSIS OF UP ENERGY GROUP

APPENDIX VB

Treasury Policies

The Up Energy Group adopts a balance funding and treasury policies in cash and financial management. Cash is generally placed in short-term deposits mostly denominated in HKD, USD and RMB. The Up Energy Group’s financing requirements are regularly reviewed by the management.

Foreign Exchange Risk

Other than bank deposits made in HKD, USD and RMB, the Up Energy Group is not exposed to significant foreign currency exchange risks as their transactions and balances were substantially denominated in their respective functional currencies.

Cash Flow and Fair Value Interest Rate Risk

Except for cash and cash equivalents, the Up Energy Group has no other significant interest-bearing assets. The Up Energy Group’s income and operating cash flows are substantially independent of changes in market interest rates. The Up Energy Group does not anticipate significant impact on interest-bearing assets resulting from changes in interest rates because the interest rates of its bank deposits are not expected to change significantly.

Human Resources and Remuneration Policy

As at 30 September 2012, the Up Energy Group had a total of 298 employees (31 March 2012: 236) in the Mainland and Hong Kong. Employees’ remuneration packages are reviewed and determined by reference to the market pay and individual performance. The staff benefits include contributions to mandatory provident fund, medical scheme and share option scheme.

The Up Energy Group adopted a new share option scheme on 29 August, 2011 for the purpose to provide incentive and help the Up Energy Group in retaining its existing employees and recruiting additional employees and to provide them with a direct economics interest in attaining the long term business objectives of the Up Energy Group. During the relevant period, no share option was granted by Up Energy.

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MANAGEMENT DISCUSSION AND ANALYSIS OF UP ENERGY GROUP

(b) Management discussion and analysis of the year ended 31 March 2012

During the year ended 31 March 2012 (“ FY2012 ”), the Up Energy Group has discontinued most of its multi-media products and components trading operations, with an aim to focus on the development of its coal business plan in Xinjiang, that is to focus on the construction of the three coal mines and the downstream phase one ancillary projects in Fukang of Xinjiang. All the projects have not yet commenced operation as they are still under different construction stages. It is expected that commercial production of these projects will commence successively starting from the fourth quarter of 2012 and the planned annual production capacity of the coal mines will reach a maximum of 4.5 Mt. The Up Energy Group will then be one of the largest integrated energy groups with circulative economy business model in the coking industry in Northwestern China in terms of planned production capacity. The Up Energy Group’s revenue and profit are then expected to increase significantly. The Up Energy Group has made every endeavor during the year ended 31 March 2012 to ensure successful implementation of the projects.

Industry review

The Up Energy Group has three coal mines in Fukang, Xinjiang of China, namely the Xiaohuangshan Mine, the Shizhuanggou Mine and the Quanshuigou Mine. Xinjiang is an important market for the sales of coking coal and coke products of the Up Energy Group. Therefore, the operation environment of Xinjiang has a direct impact on the Up Energy Group’s coal business.

(1) Demand, Supply and Pricing Trend of Coking Coal in the Mainland

During the first quarter of 2011, the coking coal market in China was affected by the international market, whereby steel manufacturers in China significantly increased their purchase price of coking coal to a range from RMB1,580 to RMB1,780 per tonne. Production of steel manufacturers resumed to full capacity in the second quarter, thus bringing about an inelastic demand for coking coal and maintaining the price of which at a relative high level. Despite the falling demand for steel in China in the third quarter of 2011, there was a drop in the growth rate of coking coal supply due to the consolidation of coking coal producers in China. As a result, the price of coking coal fluctuated significantly within a certain range. However, rapid development in Xinjiang simulated the demand for steel products and the steel manufacturers had increased their investment in order to upgrade production capacity. The scarcity and uneven distribution of coking coal resources in Xinjiang, coupled with the problem of over demand, has led to a continuous growth in the price of coking coal.

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MANAGEMENT DISCUSSION AND ANALYSIS OF UP ENERGY GROUP

Since the development of coking coal industry in Xinjiang is still at the preliminary stage, the output decreased slightly because of the consolidation activities of, and regulatory measures imposed on local coal mines. As a result, the supply of coking coal was tight and Xinjiang has to purchase around 8 Mt of coking coal from other areas of China during the first three quarters in 2011. Coking coal price witnessed significant growth and the coking coal price in Xinjiang remained strong. In September 2011, the Xinjiang price of coking coal ranged from RMB680 to RMB920 per tonne, subject to the category of coking coal. Currently, the price of coke in Xinjiang is around RMB1,680 per tonne, which is expected to rise further in the future.

• (2) Demand, Supply and Pricing Trend of Coking Coal in the International Market

The disastrous floods in Australia in early 2011 resulted in a significant shortage of coking coal which led to a price surge in the international coking coal market. In the first quarter, the international basis price of coking coal jumped to the second historical high of US$250 per tonne, and the price further increased to US$290 and US$315 per tonne in the second and third quarter respectively.

Business review

• (1) Coal Resources and Reserves

As at 31 March 2012, the Up Energy Group had a total of 251.15 Mt of JORCcompliant measured, indicated and inferred coal resources and a total of 70.24 Mt of JORC-compliant proved and probable marketable coal reserves. In addition, the potential coal reserves of the Shizhuanggou Mine and Quanshuigou Mine are totalling to 51.94 Mt.

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MANAGEMENT DISCUSSION AND ANALYSIS OF UP ENERGY GROUP

As of 31 March 2012, the JORC-compliant measured, indicated and inferred coal resources as well as the JORC-compliant proved and probable marketable coal reserves of the Up Energy Group are categorized as follows:

Name Category Amount Total	Coal Resources Measured Indicated Inferred 148.516 61.199 41.437 251.152	Unit: Mt Marketable Coal Reserves Proved Probable 51.958 18.277
		70.235

(2) Additional Exploration Activities

During the period ended 31 March 2012, the original exploration report of the Xiaohuangshan Mine has been completed and six more new holes were drilled. A total of 3,382 metres were drilled. No. 156 Coalfield Geological Exploration Team of Xinjiang Uygur Autonomous Region Coalfield Geology Bureau has been summarising findings from the drilling activities and the preliminary analysis showed that the Up Energy Group’s resource is expected to be increased.

(3) Construction Progress of Coal Mines and Projects

During the fiscal year, construction progress of the three mines and the three downstream ancillary projects basically met the schedule set by the Up Energy Group. The phase one shaft sinking and drifting project of the Xiaohuangshan Mine, which includes the construction of main vertical shaft, auxiliary vertical shaft and vertical ventilation shaft, was completed. Certain construction of the phase two shaft sinking and drifting project has started, which includes shaft bottom, underground chamber, haulage crosscuts and main ventilation drift. Construction of ground-level infrastructure, such as 35kv electricity transmitting and transforming facilities, staff quarter, warehouse for explosives, road outside the mine area and water supply of the Xiaohuangshan Mine, has been finished.

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MANAGEMENT DISCUSSION AND ANALYSIS OF UP ENERGY GROUP

Construction of main inclined shaft, auxiliary inclined shaft and cross heading for the phase one shaft sinking and drifting project of the Shizhuanggou Mine was completed. Certain parts in the phase two shaft sinking and drifting project, namely shaft bottom, underground chamber were also completed. Ground-level infrastructure such as site grading, 10kv electricity transmitting and transforming facilities for ventilation shafts, warehouse for explosives, medical centre, concrete pouring for main building at shaft entrance, roads outside the mine area and water supply was completed.

For the Quanshuigou Mine, construction of main inclined shaft and auxiliary inclined shaft in the phase one shaft sinking and drifting project was basically completed. Ground-level infrastructure including the main body of 35kv electricity transformers, 35kv double circuit wiring system, 10kv electricity transmitting and transforming facilities, staff training centre, warehouse for explosives, road outside the mine area and water supply was completed.

With regard to the three downstream ancillary projects, construction of coal preparation, coking coal selection and quenching system, ancillary facilities as well as procurement of equipment of the coal coking project were all under good progress. Framework construction for the main body of precrushing chamber, coal blending plant and coking coal selection building of the coal preparation and selection systems were completed. 90% of cokery brick work for the coking coal quenching system was finished. Building of smoke vents at both sides of the cokery, high-rise chimney, main body of the high-rise coal tower, cokery platform, main body of the segregation platform, track for coking coal vehicles and main body of the pump station for quenching tanks were all completed. As for ancillary facilities, construction of storerooms for endurable materials and general materials were completed. Main body of integrated water supply system and 201 main electricity transforming station, office building for coking activities, centralised chemical laboratory and canteen were built.

For the raw coal washing project, construction of the main plant, storage tank and the laboratory building were finished. The building of main body of the concentrating plant was basically completed.

Further, 90% of the construction of the 10 km D300 pit water pipeline project of the water recycling project was completed, and the site grading and construction of the administration office building were finished.

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MANAGEMENT DISCUSSION AND ANALYSIS OF UP ENERGY GROUP

As the construction of the three mines and the phase one downstream ancillary projects is nearly completed, the Up Energy Group is actively preparing for the phase two project, with the coal gangue cogeneration project as its first focus. The project will use gangue to generate electricity for self-consumption.

Business prospect

(1) Supplementary Exploration

The Up Energy Group will launch a supplementary exploration on the Xiaohuangshan Mine and scheduled to finish eight additional drilling holes in the north of the original exploration M1 report in 2012. A total of 5,360 metres will be drilled by then.

(2) Construction Progress and Scheduled Date for Trial Production

The three coal mines of the Up Energy Group in Xinjiang are scheduled to commence production successively starting from the fourth quarter of 2012. Planned annual production capacity of coking coal is expected to reach a maximum of 4.5 Mt upon full operation.

During the third quarter of 2012, construction of remaining second phase and third phase shaft sinking and drifting project of the Xiaohuangshan Mine, together with the remaining ground-level infrastructure will be completed. It is expected that the trial production will kick off in the fourth quarter in 2012. For the Shizhuanggou Mine, construction of remaining second and third phases shaft sinking and drifting project and the whole ground-level infrastructure will be finished and the Up Energy Group expects that the trial production will start by the end of 2012. As for the Quanshuigou Mine, construction of the remaining first and second phases and a majority of third phase project will be completed and all the ground-level infrastructure will be finished. Trial run is scheduled to commence by the first quarter in 2013.

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MANAGEMENT DISCUSSION AND ANALYSIS OF UP ENERGY GROUP

Procurement of equipment with extended working cycle for the coal coking project has been completed in February 2012 and remaining equipment and materials procurement has been completed in June 2012. Equipment installation for systems of coal preparation, coking coal selection and quenching has been completed in June 2012 and the cokery will be ready for trial heating and examination. In addition, the installation of chemical recovery equipment will be completed. Equipment installation for ancillary facilities including air compression station, refrigerating station, soft water station, furnace, centralised chemical laboratory, integrated water supply, electricity supply and distribution, integrated tank yard, foam station, unloading station and biochemical sewage treatment facilities will be completed. The Up Energy Group expects to initiate the trial production of the coal coking project and the Xiaohuangshan Mine simultaneously.

As for the construction progress of the raw coal washing project in the coming year, procurement of equipment with extended working cycle has been completed in February 2012 and procurement of other equipment has been finished by May 2012. The installation of the preparation plant system, comprising a coal yard, an underground transportation network and equipment for selection and crushing, will be completed in the first half of the coming year. The equipment installation of the main processing system, including a coal transportation corridor and coal washing equipment, and the ancillary processing system, including a concentrating plant and a pressing plant, is expected to be completed in the first half of the coming year. Besides, equipment installation of the ancillary facilities, including an air compressing station, a centralised chemistry laboratory, water supply, electricity supply and distribution and a pharmacy storeroom will also be completed in the first half of 2013. The Up Energy Group expects that the trial run of the raw coal washing project will commence together with the Xiaohuangshan Mine.

For the water recycling project, procurement of equipment with extended working cycle, purifying system of the purification plant, construction and equipment installation of the filtering system have all been completed in the first half of 2012. For the ancillary processing system, construction and equipment installation of a sludge concentrating plant and water tanks will be completed. The Up Energy Group expects the water recycling project will begin trial operation in the fourth quarter in 2012.

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MANAGEMENT DISCUSSION AND ANALYSIS OF UP ENERGY GROUP

Phase One and Phase Two Projects

Since 2005, Up Energy has started its business from coal resources exploration, and gradually established a complete set of projects with the circulative economy business model which includes raw coal mining, raw coal washing, coal coking, cogenerating, coal mine gas utilizing. Currently there are three new coal mines and three downstream ancillary projects under construction. Up Energy plans to invest four correlated circulative business projects in the second phase.

(3) Enhancement of Strategic Co-operation

The Up Energy Group strives to identify strategic partners along the industry chain as well as from the financial sector in order to enhance its competitiveness in the coal industry. In 2011, the Up Energy Group entered into co-operation agreements with Pingan Coal Mine and Gas (Methane) Engineering Research Limited, China Construction Bank, Industrial and Commercial Bank of China and Baosteel Resources Company Limited. The scope of cooperation covers mine planning, finance, management and sharing of technology, etc. The Up Energy Group will continue to seek strategic partners for synergy effects so as to further enhance its competitiveness.

Business strategies

(1) Prospect of Coking Coal Industry in Xinjiang

The central government introduced a series of preference policies in Xinjiang recently and “Developing Xinjiang” has been upgraded as a national strategy. Xinjiang Uygur Autonomous Region continues to be the focus of investment of the central government. Fixed asset investment in Xinjiang during the period of “12th Five-Year Plan” would double that of the “11th Five-Year Plan”. Driven by these favourable policies, economic and social development of Xinjiang will witness rapid growth and demand for steel products will be stimulated by burgeoning construction activities in local infrastructure and property sector and flourishing industrial production activities. Steel manufacturers will increase their investment to boost production capacity, thereby fueling the demand for coke which serves as a critical ancillary material in steel production.

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APPENDIX VB

MANAGEMENT DISCUSSION AND ANALYSIS OF UP ENERGY GROUP

As a basic material for steel manufacturing, the growing demand for coking coal, coupled with its scarcity nature in Xinjiang, has led to a continuous tight supply. The situation of over-demand would be further worsened and the price of coking coal is expected to surge in the future. This provides a positive and favourable environment for the coking coal business of the Up Energy Group. Taking transportation costs into consideration, steel manufacturers in Xinjiang certainly prefer purchasing coking coal locally. As the Up Energy Group’s coal mines are adjacent to railways and expressways and are connected to provincial and national highways, the resulting transportation convenience and low transportation costs are favorable to both the Up Energy Group and its potential customers including the local steel manufacturers.

Xinjiang is rich in electricity and coal resources. The production capacity of PVC, the raw material of which is calcium carbide, is gradually shifted to Xinjiang and a number of PVC projects including new projects and rebuilding and expansion projects are ongoing. According to the future planning that PVC production enterprises located in Xinjiang made for the PVC production capacity, the production capacity of PVC will reach 520 Mt in 2015, doubling the figure in 2010. Therefore, the demand for gas coal char and gas coal will increase continuously in the future.

(2) Production Safety

Production safety is considered important to coal mining operation by the Up Energy Group since its establishment. The Up Energy Group issued various comprehensive guidelines for safe operation internally and co-operated with thirdparty professional bodies externally. The Up Energy Group entered into various agreements in technological cooperation framework, technological co-operation and technological consultation with the Pingan Coal Mine and Gas (Methane) Engineering Research Limited (lead by Mr. Yuan Liang, the Academician of the Chinese Academy of Engineering), the China University of Mining and Technology and other reputable universities and research institutions for providing a safe and efficient environment for shaft construction and future production through researches in safety of mine gas, pit water and advanced mining technologies.

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APPENDIX VB

MANAGEMENT DISCUSSION AND ANALYSIS OF UP ENERGY GROUP

(3) Merger and Acquisition in Xinjiang and Overseas Countries

Merger and acquisition is crucial for the long term development of a company. The Up Energy Group will adhere to the principle of low-cost expansion, pay close attention to the country’s policy to eliminate small coal mines and prudently identify merger and acquisition opportunities in Xinjiang which coincide with its business strategy and philosophy. Through gradual expansion of coal reserves and scale of mining activities, the Up Energy Group will be able to secure its leading position in the coking coal industry in northwestern China. In respect of merger and acquisition in overseas countries, management of the Up Energy Group regularly arranges overseas site visits and actively identifies investment opportunities in resource consolidation, merger and acquisition of coking coal and energy industries in foreign countries.

(4) Challenges ahead

The Up Energy Group’s business may be subject to a variety of uncertainties and challenges in relation to operational, policy and market risks.

As for operational risks, mine exploration, mining operations and production are subject to a number of social and natural risks and hazards, the Up Energy Group may also encounter different unpredicted difficulties and technical issues. All these could delay the production and delivery of coal products, or may increase cost of mining or result in accidents in coal mines.

In respect of policy risks, the Up Energy Group is of no assurance that the central and local governments will not impose additional or more stringent laws and regulations governing mining operations and exploration activities. Changes in regulations and policies or failure to comply with the relevant laws and regulations in coal mining or coal production may adversely affect the Up Energy Group.

For market risks, as the Up Energy Group’s results of operations are highly dependent on coking coal price which tends to be cyclical and subject to fluctuations, the volatility and cyclicality in coal price is linked to various factors such as the Chinese economy, the global financial environment and the steel manufacturing industry. Negative trends in coal price may adversely affect the Up Energy Group.

Despite the risk factors which may be encountered during business operation, the Up Energy Group will strive to find the best solution to ensure smooth business development.

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APPENDIX VB

MANAGEMENT DISCUSSION AND ANALYSIS OF UP ENERGY GROUP

Looking ahead, the Up Energy Group will continue to adhere to its business concept of “increased value in circulation” by extending its production chain from coal exploration, mining, washing to coking and chemicals. Through investment in coking coal projects in upstream and downstream industry chain and chemical byproducts produced during the processing of coking coal, the Up Energy Group is able to enhance added value of coal products through effective utilization of coal resources with an aim to maximize its profitability. The Up Energy Group is determined to become a leading professional and integrated energy group in the coking coal industry in Northwestern China.

Financial review

Other Income and Gains, Net

Other income and gains, net decreased by 63.4% from HK$11,750,000 for the year ended 31 March 2011 (“ FY2011 ”) to HK$4,305,000 in FY2012. The decrease was primarily attributable to a gain on disposal of a subsidiary of HK$11,731,000 recorded in FY2011. Meanwhile, a bank interest income which is amounting to HK$3,645,000 and sundry and other income of HK$660,000 were recorded in FY2012.

Gain on Bargain Purchase

On 18 January 2011, the Up Energy Group acquired the 100% issued shares of Up Energy Investment (China) Ltd. for a total consideration of HK$7.8 billion. The total consideration of HK$7.8 billion was satisfied by the Up Energy Group in the following manner: (a) HK$20 million cash; (b) the Up Energy Group issued two tranches of convertible notes, including the issue of the Tranche A convertible notes with a principal amount of HK$3,480,000,000 and the Tranche B convertible notes with a principal amount of HK$4,300,000,000.

The gain on bargain purchase represented the difference between the fair value of the net identifiable assets acquired and fair value of the cost of investment.

Administrative Expenses

Administrative expenses increased by 354% from HK$18,767,000 in FY2011 to HK$85,168,000 in FY2012, primarily due to an increase in directors’ remuneration, salaries, allowances, provident fund contributions, legal and professional fee, depreciation and amortization and office expenses.

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MANAGEMENT DISCUSSION AND ANALYSIS OF UP ENERGY GROUP

APPENDIX VB

Result for Continuing Operations

For the aforementioned reasons, the Up Energy Group’s loss from continuing operations increased by 1.47 times from HK$32,836,000 in FY2011 to HK$81,133,000 in FY2012.

Finance Costs

Finance costs increased from HK$8,448,000 in FY2011 to HK$16,568,000 in FY2012. The increase was primarily due to amortised interest expense on convertible notes in FY2012.

Income Tax Expense

The Up Energy Group recorded income tax expenses of HK$3,576,000 in FY2012 and deferred income tax credit for FY2011 was HK$84,000.

Result for the Year

The Up Energy Group’s result for the year recorded a loss of HK$101,266,000 in FY2012 comparing to a profit of HK$943,654,000 for FY2011.

Charges on Assets

Up Energy has entered into a share charge in connection with the issue of the convertible notes of Up Energy. Pursuant to the share charge, the charge is created over (i) entire issued share capital of Up Energy Investment (China) Ltd., (ii) the entire issued share capital of Up Energy International Ltd.; and (iii) the entire issued share capital of Up Energy (Hong Kong) Limited. All of the companies are wholly owned subsidiaries of Up Energy.

Save as above, the Up Energy Group did not have any charges on assets as at 31 March 2012.

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APPENDIX VB

MANAGEMENT DISCUSSION AND ANALYSIS OF UP ENERGY GROUP

Liquidity and Financial Resources

As at 31 March 2012, the Up Energy Group’s current ratio was 6.9 (2011: 17.3), with current assets of approximately HK$876,221,000 (2011: HK$1,344,377,000) against current liabilities of approximately HK$127,080,000 (2011: HK$77,710,000). Cash and cash equivalents were approximately HK$801,019,000 (2011: HK$1,257,526,000). The Up Energy Group’s gearing ratio was 108% as at 31 March 2012 (2011: 140%). The Up Energy Group’s working capital is mainly financed through internal generated cash flows, borrowings and equity financing. There has not been any change in the Up Energy Group’s funding and treasury policies during the year, and the Up Energy Group continues to follow the practice of prudent cash management.

Treasury Policies

The Up Energy Group adopts a balance funding and treasury policies in cash and financial management. Cash is generally placed in short-term deposits mostly denominated in HKD, USD and RMB. The Up Energy Group’s financing requirements are regularly reviewed by the management.

Foreign Exchange Risk

Other than bank deposits made in HKD, USD and RMB, the Up Energy Group is not exposed to significant foreign currency exchange risks as their transactions and balances were substantially denominated in their respective functional currencies.

Cash Flow and Fair Value Interest Rate Risk

Except for cash and cash equivalents, the Up Energy Group has no other significant interest-bearing assets. The Up Energy Group’s income and operating cash flows are substantially independent of changes in market interest rates. The Up Energy Group does not anticipate significant impact on interest-bearing assets resulting from changes in interest rates because the interest rates of its bank deposits are not expected to change significantly.

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MANAGEMENT DISCUSSION AND ANALYSIS OF UP ENERGY GROUP

APPENDIX VB

Human Resources

As at 31 March 2012, the Up Energy Group had a total of 236 employees (2011: 175) in PRC and Hong Kong. Employees’ remuneration packages are reviewed and determined by reference to the market pay and individual performance. The staff benefits include contributions to mandatory provident fund, medical scheme and share option scheme.

(c) Management discussion and analysis of the year ended 31 March 2011

Financial review

Turnover

Turnover from continuing operations decreased by 65%, from HK$74,454,000 for the year ended 31 March 2010 (“ FY2010 ”) to HK$26,077,000 in FY2011. This decrease was primarily due to keen competition and the lack of product variety in the multi-media product and component trading business.

Cost of Sales

Cost of sales from continuing operations decreased by 65%, from HK$73,860,000 in FY2010 to HK$25,718,000 in FY2011. This decrease was mainly due to the Up Energy Group’s corresponding decrease in sales volume.

Gross Profit

Gross profit from continuing operations decreased by 40%, from HK$594,000 in FY2010 to HK$359,000 in FY2011. Gross profit margin increased from 0.8% in FY2010 to 1.4% in FY2011. The change is due to different mix of products sold.

Other Income and Gains, Net

Other income and gains, net decreased by 19.7% from HK$14,631,000 in FY2010 to HK$11,751,000 in FY2011. The decrease was primarily attributable to realised and unrealised gains relating to trading securities of HK$12,490,000 and the net amount of bad debt recovery after deducting debt collection costs of HK$1,800,000 in FY2010. The gain on disposal of subsidiaries of HK$11,731,000 is recorded in FY 2011.

VB – 26

MANAGEMENT DISCUSSION AND ANALYSIS OF UP ENERGY GROUP

APPENDIX VB

Gain on Bargain Purchase

On 18 January 2011, the Up Energy Group acquired the 100% issued shares of Up Energy Investment (China) Ltd. for a total consideration of HK$7.8 billion. The total consideration of HK$7.8 billion was satisfied by the Up Energy Group in the following manner: (a) HK$20 million cash; (b) the Up Energy Group issued two tranches of convertible notes, including the issue of the Tranche A convertible notes with a principal amount of HK$3,480,000,000 and the Tranche B convertible notes with a principal amount of HK$4,300,000,000.

The gain on bargain purchase of HK$985,024,000 represented the difference between the fair value of the net identifiable assets acquired and fair value of the cost of investment.

Distribution Costs

Distribution costs increased by 131%, from HK$419,000 in FY2010 to HK$969,000 in FY2011, primarily due to increased entertainment, overseas travelling and telephone and fax and other distribution costs.

Administrative Expenses

Administrative expenses increased by 206% from HK$6,119,000 in FY2010 to HK$18,735,000 in FY2011, primarily due to an increase in directors’ remuneration, salaries, allowances, provident fund contributions, legal and professional fee and office expenses.

Finance Costs

Finance costs HK$5,000 in FY2010 to HK$8,448,000 in FY2011. The increase was primarily due to amortised interest expense on convertible notes in FY2011.

Profit before tax from continuing operations

For the aforementioned reasons, the Up Energy Group’s profit before tax from continuing operations increased by 109 times from HK$8,595,000 in FY2010 to HK$943,680,000 in FY2011.

VB – 27

MANAGEMENT DISCUSSION AND ANALYSIS OF UP ENERGY GROUP

APPENDIX VB

Income Tax Expense

The Up Energy Group recorded income tax expenses of HK$1,185,000 in FY2010 and their deferred income tax credit for FY2011 was HK$84,000.

Profit for the Year

The Up Energy Group’s profit for the year increased by HK$936,081,000, from HK$7,573,000 in FY2010 to HK$943,654,000 in FY2011. The increase was primarily due to the gain on bargain purchase of HK$985,024,000 in FY2011.

Charges on Assets

Up Energy has entered into a share charge in connection with the issue of the convertible notes of Up Energy. Pursuant to the share charge, the charge is created over (i) entire issued share capital of Up Energy Investment (China) Ltd., (ii) the entire issued share capital of Up Energy International Ltd; and (iii) the entire issued share capital of Up Energy (Hong Kong) Limited. All of the companies are wholly owned subsidiaries of Up Energy.

Save as above, the Up Energy Group did not have any charges on assets as at 31 March 2011.

Liquidity and financial resources

As at 31 March 2011, the Up Energy Group’s current ratio was 18.7 (2010: 3.0), with current assets of approximately HK$1,348,561,000 (2010: HK$58,643,000) against current liabilities of approximately HK$71,987,000 (2010: HK$19,353,000). Cash and cash equivalents were approximately HK$1,257,526,000 (2010: HK$22,420,000). The Up Energy Group’s gearing ratio was 140% as at 31 March 2011 (2010: 0). The Up Energy Group’s working capital is mainly financed through internal generated cash flows, borrowings and equity financing. There has not been any change in the Up Energy Group’s funding and treasury policies during the year, and the Up Energy Group continues to follow the practice of prudent cash management.

VB – 28

APPENDIX VB

MANAGEMENT DISCUSSION AND ANALYSIS OF UP ENERGY GROUP

The Up Energy Group adopts a balance funding and treasury policies in cash and financial management. Cash is generally placed in short-term deposits mostly denominated in HK$, USD and RMB. The Up Energy Group’s financing requirements are regularly reviewed by the management.

Foreign Exchange

Other than bank deposits made in HK$, USD and RMB, the Up Energy Group is not exposed to significant foreign currency exchange risks as their transactions and balances were substantially denominated in their respective functional currencies.

Cash Flow and Fair Value Interest Rate Risk

Except for cash and cash equivalents, the Up Energy Group has no other significant interest-bearing assets. The Up Energy Group’s income and operating cash flows are substantially independent of changes in market interest rates. The Up Energy Group does not anticipate significant impact on interest-bearing assets resulting from changes in interest rates because the interest rates of its bank deposits are not expected to change significantly.

Human Resources

As at 31 March 2011, the Up Energy Group had a total of 175 employees (2010: 29) in PRC and Hong Kong. Employees’ remuneration packages are reviewed and determined by reference to the market pay and individual performance. The staff benefits include contributions to mandatory provident fund, medical scheme and share option scheme.

VB – 29

APPENDIX VB

MANAGEMENT DISCUSSION AND ANALYSIS OF UP ENERGY GROUP

(d) Management discussion and analysis of the year ended 31 March 2010

Business and financial review

During the financial year under review, the Up Energy Group continued to face severe competition in the market. Although the overall turnover of the Up Energy Group was increased by approximately 170% as compared to last corresponding year, their two segments namely Multi-media Product Trading and Broadcasting and Content Production recorded an operating loss of approximately HK$2.4 million for the year, a slight increase to the operating loss (excluding the non-recurring items such as the compensation received from profit guarantee, gain on release of obligation and waiver of payables and impairment loss on certain broadcasting programmes) of HK$2.2 million in the last corresponding year. Nevertheless, due to the rebound of the stock market, the Up Energy Group has recorded a HK$12.5 million realized and unrealized profit from the holdings of their security portfolio. Also, the Up Energy Group has significantly reduced their overall distribution and administrative expenses to HK$7.6 million this year. Thus, the Up Energy Group has recorded a consolidated profit of HK$7.5 million for this year, representing an increase of approximately 290% increase as compared to previous year.

Multi-media Product Trading:

The profitability of this business was not satisfactory although the customer orders increased during the year. Due to severe competition, the profit margin had been further squeezed. Gross profit has been reduced to 1% from 3% as compared to prior year. To preserve profitability, the Up Energy Group is trying to source, and to offer more product varieties to their customers. The management is in discussion with a number of potential customers who are willing to place orders with the Up Energy Group. The Up Energy Group also determined to seek for experienced personnel to strengthen the sourcing network. At the same time, The Up Energy Group is bargaining with the suppliers for higher discounts for bulk orders. The Up Energy Group is confident that their profit margin as well as the overall profitability of this segment can be improved in the near future.

VB – 30

MANAGEMENT DISCUSSION AND ANALYSIS OF UP ENERGY GROUP

APPENDIX VB

Broadcasting and Content Production:

In view of continuing intense competition and price pressure caused by similar products in the market, and due to the fact that the Up Energy Group has been reluctant to put in new resources, the turnover of this business has further shrunk to HK$19,000. The management has been considering to divest this non-performance business as soon as possible.

Prospect

As mentioned in Up Energy Group’s interim report, they have been reviewing the market condition and re-formulating our business strategy from time to time when appropriate. The Up Energy Group has therefore been considering to divest the nonperforming Broadcasting and Content Production business in the near future. The Up Energy Group has been trying to broaden the customer base and the product variety in their Multi-media product trading business to improve overall profitability. To further enhance shareholders’ value, the Up Energy Group must diversify its business. During the year, the Up Energy Group have been seeking potential acquisition opportunities, both in the same industry and in other new areas, which can bring positive value to the shareholders. The Up Energy Group hopes that in the near future, they can make one or two successful acquisitions which can improve their profitability in the long run. Depending on market condition, the Up Energy Group will consider different ways to further strengthen their capital base for future development and acquisitions.

Liquidity and financial resources

As at 31 March 2010, the Up Energy Group’s current ratio was 3.0 (2009: 2.4), with current assets of approximately HK$59 million (2009: HK$54 million) against current liabilities of approximately HK$19 million (2009: HK$23 million). Cash and cash equivalents were approximately HK$22 million (2009: HK$36 million). The Up Energy Group’s gearing ratio was zero as at 31 March 2010 (2009: 0).

The Up Energy Group’s working capital is mainly financed through internal generated cashflows, borrowings and equity financing. There has not been any change in the Up Energy Group’s funding and treasury policies during the year, and the Up Energy Group continues to follow the practice of prudent cash management.

VB – 31

MANAGEMENT DISCUSSION AND ANALYSIS OF UP ENERGY GROUP

APPENDIX VB

Treasury Policies

The Up Energy Group adopts a balance funding and treasury policies in cash and financial management. Cash is generally placed in short-term deposits mostly denominated in Hong Kong dollars and United States dollars. The Up Energy Group also uses part of its idle cash to invest in short-term securities. The Up Energy Group’s financing requirements are regularly reviewed by the management.

Exposure to Fluctuation in Foreign Exchange

The Up Energy Group’s certain assets are principally denominated in US dollars. Since Hong Kong dollars is pegged to US dollars, thus foreign exchange exposure on US dollars is considered as minimal. The Up Energy Group does not have a foreign currency hedging policy.

Charges on Assets and Contingent Liabilities

During the year, the Up Energy Group leased a motor vehicle under a finance lease arrangement which was expired in May 2009. Save as disclosed herein, the Up Energy Group did not have any charges on assets or have any material contingent liabilities as at 31 March 2010.

Human Resources

As at 31 March 2010, the Up Energy Group had a total of 29 employees (2009: 29). Employees’ remuneration packages are reviewed and determined by reference to the market pay and individual performance.

The staff benefits include contributions to mandatory provident fund, medical scheme and share option scheme.

VB – 32

COMPETENT PERSON’S REPORT

APPENDIX VI

==> picture [97 x 56] intentionally omitted <==

Unit 3806, 38/F, China Resources Building, 26 Harbour Road, Wan Chai, Hong Kong Tel (852) 2529 6878 Fax (852) 2529 6806 E-mail info@roma-international.com http://www.roma-international.com

15 October 2012

The Directors Rooms 4917-4932, 49/F., Sun Hung Kai Centre, 30 Harbour Road, Wanchai Hong Kong

Case Ref: AK/CR8071/JUL12

Dear Sirs/Madams,

Re: Competent Person’s Report concerning a coal mine in Baicheng Town, Xinjiang Uygur Autonomous Region, The People’s Republic of China

Hao Tian Resources Group Limited (“Company” or “Client”) commissioned Roma Oil and Mining Associates Limited (“ROMA”) to review the Baicheng Coal Mine (“Mine”, “Baicheng Mine” or “Project”) located at Baicheng Town, Xinjiang Uygur Autonomous Region, The People’s Republic of China.

The following is the independent Competent Person’s Report (“Report”) on the Project. This Report was compiled following the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (2004 edition) (the “JORC Code”) which is the code adopted by the Australasian Institute of Mining and Metallurgy (the “AusIMM”) and the standard is binding upon all AusIMM members.

Report Date: 15 October 2012 Effective Date: 1 September 2012

Yours faithfully, For and on behalf of

Roma Oil and Mining Associates Limited

Brian J. Varndell Emmanuel E. Mensah Competent Person, FAusIMM Peer Reviewer, MAusIMM Geological Panel Member Senior Geologist

Contributors: Michael Li, Maggie Lam, Childs Chow and Philip Jones

VI – 1

COMPETENT PERSON’S REPORT

APPENDIX VI

EXECUTIVE SUMMARY

The Baicheng Mine is located 39 km north of Baicheng Town and approximately 500 km south-west of the provincial capital Urumqi in the Xinjiang Uygur Autonomous Region, the People’s Republic of China.

This Mine is currently producing both coking and thermal coal from six, almost vertical, coal seams. The current mining licence provides for a production rate of 210,000 tonnes of raw coal per annum; however the Company intends to apply for a licence to mine the coal at a rate of 900,000 tonnes per annum. The increased coking coal produced by the Mine is intended to be sold to one or all of five coking plants currently being constructed at the nearby Baicheng Zhonghuagong Industrial Park located a few kilometres west of Baicheng town. The thermal coal produced by the Mine will also be sold locally to power plants supplying energy to the industrial park and expanded population. No beneficiation washing plant is currently planned to be constructed at the Mine so all production will be sold un-beneficiated at the “mine gate”.

There are approximately nineteen mines in the area successfully mining similar coal in a similar geological setting.

The resource tonnage estimates in this report were calculated by ROMA using methods that are compliant with the JORC Code (2004) for this style of coal deposit. However, although the available sampling data was collected to Chinese standards current at the time of sampling, no records exist to confirm that the sampling for chemical analysis met the JORC Code (2004) standards for QA/QC and security. As a result the ROMA resource estimates are of tonnes of coal only and do not include coal quality estimates. Experience gained from previous mining at the Baicheng Mine and nearby mines in the district mining the same coal seams strongly indicates that the projected mine production will continue to be approximately two thirds coking coal and one third high quality thermal coal.

VI – 2

COMPETENT PERSON’S REPORT

APPENDIX VI

The ROMA resource estimates for the six coal seams at Baicheng Mine are summarised in Table 1 below.

ABOVE 1800 mRL as currently licenced

==> picture [399 x 479] intentionally omitted <==

----- Start of picture text -----

Seam
Million Thickness
Tonnes (m) %Aad * %Vad * %Sad * Qar * Gri
Measured 51.8 4.91 17.00 35.76 0.38 27.81 67.9
Indicated 0.0 0.02 23.53 36.37 0.51 24.33 67.9
Total Measured &
Indicated 51.8 4.91 17.00 35.76 0.38 27.81 67.9
1800 mRL – 1500 mRL
Seam
Million Thickness
Tonnes (m) %Aad * %Vad * %Sad * Qar * Gri
Measured 43.9 5.33 18.13 35.20 0.35 27.12 67.1
Indicated 30.2 4.64 17.43 36.06 0.43 27.83 70.9
Total Measured &
Indicated 74.1 5.05 17.85 35.55 0.38 27.41 68.6
Total Remaining above 1500 mRL
Seam
Million Thickness
Tonnes (m) %Aad * %Vad * %Sad * Qar * Gri
Measured 95.7 5.10 17.52 35.50 0.37 27.49 67.5
Indicated 30.2 4.64 17.43 36.06 0.43 27.83 70.9
Total Measured &
Indicated 125.9 4.99 17.50 35.63 0.38 27.57 68.3
----- End of picture text -----*

Table 1-1: ROMA Resource Estimates for the Baicheng Mine.

• *Note: Coal qualities estimated by ROMA are not part of the resource estimate but provided as an approximate guide of the coal quality only.

VI – 3

COMPETENT PERSON’S REPORT

APPENDIX VI

ROMA concludes that the project that is the subject of this Report is sound geologically and potentially sounds economically as demonstrated by the current mining at Baicheng Mine and nearby mines extracting similar coal seams.

ROMA recommends that as soon as possible the coal seams exposed by underground workings should be sampled and mapped to at least JORC Code (2004) standards with adequate QA/QC procedures followed when taking samples for chemical analysis and this sampling and mapping should continue from the underground development as mining progresses.

A diamond drilling program to JORC Code (2004) standards from the surface is also recommended to in-fill the inadequately drill sampled seams at depth beyond the current workings to confirm coal continuity and thickness and coal quality continuity at depth.

Once this recommended regular annual underground sampling (with associated applicable diamond drilling where required) is completed regular JORC Code (2004) compliant resources and reserve estimates including coal qualities will be possible. Annual updates of resources and reserves will also be possible.

VI – 4

COMPETENT PERSON’S REPORT

APPENDIX VI

TABLE OF CONTENTS

1.	INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI – 9
	1.1.	Program Objectives. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI – 9
	1.2.	Purpose of the Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI – 9
	1.3.	Work Program. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI – 9
	1.4.	Statement of Independence of ROMA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI – 10
	1.5.	Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI – 10
	1.6.	Indemnities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI – 10
	1.7.	Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI – 10
	1.8.	Sources of Information and Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI – 11
	1.9.	Scope of Personal Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI – 12
2.	RELIANCE ON OTHER EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		VI – 12
3.	PROPERTY DESCRIPTION AND LOCATION. . . . . . . . . . . . . . . . . . . . . . . . . .		VI – 13
	3.1.	Location . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI – 13
	3.2.	Tenure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI – 14
	3.3.	Validation of Nature and Extent of the Issuer’s Title to the Property . . . . . . .	VI – 16
	3.4.	Location of the Property Boundaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI – 16
	3.5.	Terms of Royalties, Back-in rights, Payments or other agreements and
		encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI – 17
	3.6.	Environmental Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI – 17
	3.7.	Permits Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI – 17
	3.8.	Other Relevant Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI – 18
4.	ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE
	AND PHYSIOGRAPHY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		VI – 18
	4.1.	Topography, Elevation and Vegetation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI – 18
	4.2.	Means of Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI – 19
	4.3.	Climate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI – 20
	4.4.	Local Infrastructure and Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI – 20
	4.5.	Seismicity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI – 21
5.	EXPLORATION AND MINING HISTORY. . . . . . . . . . . . . . . . . . . . . . . . . . . . .		VI – 23
	5.1.	Previous Exploration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI – 23
	5.2.	Previous Mining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI – 24
		5.2.1. East Shaft Mining Area . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI – 25
		5.2.2. West Inclined Drift Mining Area . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI – 25
	5.3.	Current Mining Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI – 25
6.	GEOLOGICAL SETTING AND MINERALIZATION. . . . . . . . . . . . . . . . . . . . .		VI – 26
	6.1.	Regional and Mine Geology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI – 26
	6.2.	Structure of Deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI – 30
7.	COAL SEAMS AND COAL PROPERTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		VI – 31
8.	DRILLING AND UNDERGROUND SAMPLING. . . . . . . . . . . . . . . . . . . . . . . . .		VI – 33

VI – 5

COMPETENT PERSON’S REPORT

APPENDIX VI

9.	SAMPLE PREPARATION, ANALYSES AND SECURITY. . . . . . . . . . . . . . . . . VI – 34
	9.1. Sampling Method and Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI – 34
	9.2. Author’s Opinion on the Adequacy of Sample Preparation, Security and
	Analytical Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI – 34
10.	MINERAL PROCESSING AND METALLURGICAL TESTING. . . . . . . . . . . . VI – 34
11.	MINERAL RESOURCE ESTIMATES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI – 35
	11.1. Resource Classification (JORC Code). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI – 35
	11.2. Parameters and Methodology used by ROMA. . . . . . . . . . . . . . . . . . . . . . . . . VI – 36
	11.3. Bulk Density. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI – 36
	11.4. Mineral Resource Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI – 38
12.	MINERAL RESERVE ESTIMATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI – 44
	12.1. Basis for the Conversion to Coal Reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI – 44
	12.2. Reserve Statement by ROMA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI – 46
13.	MINING METHOD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI – 47
14.	BENEFICIATION METHOD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI – 48
15.	PROJECT INFRASTRUCTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI – 49
16.	MARKET STUDIES AND CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI – 50
17.	ENVIRONMENTAL STUDIES, PERMITTING AND SOCIAL OR
	COMMUNITY IMPACT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI – 51
	17.1. Environmental Studies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI – 51
18.	CAPITAL AND OPERATING COSTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI – 56
	18.1. Capital Cost (“Capex”) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI – 56
	18.2. Operating Costs (“Opex”). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI – 57
19.	ECONOMIC ANALYSIS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI – 58
20.	ADJACENT PROPERTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI – 58
21.	OTHER RELEVANT DATA AND INFORMATION . . . . . . . . . . . . . . . . . . . . . . . VI – 58
22.	INTERPRETATION AND CONCLUSIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI – 59
23.	RECOMMENDATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI – 61
24.	STATEMENT OF QUALIFICATION OF THE COMPETENT PERSON. . . . . . VI – 61
	24.1. Brian J. Varndell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI – 61
	24.2. Emmanuel Ekow Mensah . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI – 64
25.	REFERENCES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI – 65
26.	RISK ANALYSIS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI – 65
	26.1. Overall Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI – 66
	26.2. Project Risks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI – 66
	26.3. Summary of Risks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI – 69
27.	GLOSSARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI – 71

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APPENDIX VI

LIST OF TABLES

Table	1-1:	ROMA Resource Estimates for the Baicheng Mine. . . . . . . . . . . . . . . . . .	VI – 3
Table	3-1:	Details of Baicheng Mine’s Tenure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI – 14
Table	3-2:	Geographical coordinates of Baicheng Mine mining lease
		boundary corners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI – 16
Table	3-3:	Summary of taxes and levies applicable to Baicheng Mine . . . . . . . . . . . .	VI – 17
Table	3-4:	Licences required for Baicheng Mine to maintain mining operations . . . .	VI – 17
Table	4-1:	Climate data for Aksu . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI – 20
Table	4-2:	Earthquakes >4.0 within 200 km of the Project area since
		January 1, 1978 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI – 21
Table	5-1:	Historic production figures for Baicheng Mine . . . . . . . . . . . . . . . . . . . . .	VI – 25
Table	7-1:	Baicheng Mine Coal Seam Characteristics . . . . . . . . . . . . . . . . . . . . . . . .	VI – 32
Table	8-1:	Details of drill hole and underground sample points at Baicheng Mine. . .	VI – 33
Table	11-1:	Baicheng Mine Resource Model Parameters . . . . . . . . . . . . . . . . . . . . . . .	VI – 36
Table	11-2:	Standards followed for bulk density measurements as reported
		by Brigade 161 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI – 36
Table	11-3:	Bulk densities for each seam at Baicheng Mine as reported by Brigade
		161 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI – 37
Table	11-4:	ROMA Resource Estimates for Baicheng Mine at September 2012
		(above 1800 mRL) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI – 38
Table	11-5:	ROMA Resource Estimates for Baicheng Mine at September 2012
		(1800 mRL – 1500 mRL) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI – 39
Table	11-6:	ROMA Resource Estimates for Baicheng Mine at September 2012
		(Total remaining) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI – 40
Table	12-1:	EDI Estimated percentage mining losses due to pillars . . . . . . . . . . . . . . .	VI – 45
Table	12-2:	ROMA modifying factors and Reserve Estimates for Baicheng Mine . . . .	VI – 46
Table	18-1:	Baicheng Mine estimated Capex for the Mine, after EDI 2012 Report . . .	VI – 56
Table	18-2:	Baicheng Mine estimated Opex for the Mine, after EDI 2012 Report . . . .	VI – 57
Table	22-1:	ROMA Resource Estimates for the Baicheng Mine. . . . . . . . . . . . . . . . . .	VI – 60
Table	26-1:	Risk Assessment Guidelines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI – 66
Table	26-2:	Baicheng Project risk assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI – 70

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APPENDIX VI

LIST OF FIGURES

Figure	3-1:	Location of the Baicheng Mine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI – 13
Figure	3-2:	Location of Baicheng Mine Mining Licence . . . . . . . . . . . . . . . . . . . . . . . VI – 14
Figure	3-3:	Original Mining Licence for Baicheng Mine. . . . . . . . . . . . . . . . . . . . . . . VI – 15
Figure	3-4:	Tenure details shown at Baicheng Mine entrance . . . . . . . . . . . . . . . . . . . VI – 15
Figure	4-1:	Bitumen road between Baicheng Town and the Baicheng Mine . . . . . . . . VI – 19
Figure	4-2:	Gravel access road and vegetation within the Baicheng mining licence . . VI – 19
Figure	4-3:	Seismic hazard map for Asia. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI – 22
Figure	5-1:	Long section along Seam 5 at Baicheng Mine showing
		previous mining and current mining areas . . . . . . . . . . . . . . . . . . . . . . . VI – 24
Figure	6-1:	Regional Geology of the Baicheng Mine Area . . . . . . . . . . . . . . . . . . . . . VI – 27
Figure	6-2:	Geology of the Baicheng Mine mining licence . . . . . . . . . . . . . . . . . . . . . VI – 28
Figure	6-3:	Typical cross section through coal seams at the Baicheng Mine . . . . . . . . VI – 30
Figure	7-1:	Chinese Coal Classifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI – 32
Figure	11-1:	Baicheng Mine Seam 5 long section showing data points and
		colour coded by seam thickness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI – 41
Figure	11-2:	Baicheng Mine Seam 6 long section showing data points and
		colour coded by seam thickness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI – 41
Figure	11-3:	Baicheng Mine Seam 7 long section showing data points and
		colour coded by seam thickness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI – 42
Figure	11-4:	Baicheng Mine Seam 8 long section showing data points and
		colour coded by seam thickness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI – 42
Figure	11-5:	Baicheng Mine Seam 9 long section showing data points and
		colour coded by seam thickness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI – 43
Figure	11-6:	Baicheng Mine Seam 10 long section showing data points and
		colour coded by seam thickness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI – 43
Figure	13-1:	Long section showing apparent dip flexible shield mining method . . . . . . VI – 47
Figure	13-2:	Electric haulage system at Baicheng Mine . . . . . . . . . . . . . . . . . . . . . . . . VI – 48
Figure	15-1:	Accommodation blocks at Baicheng Mine . . . . . . . . . . . . . . . . . . . . . . . . VI – 49
Figure	16-1:	Location of Baicheng Zhonghuagong Industrial Park . . . . . . . . . . . . . . . . VI – 51

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APPENDIX VI

1. INTRODUCTION

Hao Tian Resources Group Limited (“Company” or “Client”) commissioned Roma Oil and Mining Associates Limited (“ROMA”) to review the Baicheng Coal Mine (“Mine” or “Baicheng Mine”) located at Baicheng Town, Xinjiang Uygur Autonomous Region, The People’s Republic of China.

1.1. Program Objectives

The objectives of the program were to review available data, participate in a site visit and provide the Company with both verbal feedback and this Competant Persons Report (“CPR”). The CPR and its coal resource estimates were made by ROMA according to the guidelines set out in the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (“The JORC Code”). The JORC Code is adopted by the Australasian Institute of Mining and Metallurgy (“AusIMM”) and the standard is binding upon all AusIMM members.

1.2. Purpose of the Report

The Report is intended only for the use of the person to whom it is addressed. ROMA assumes no responsibility whatsoever to any person other than the Company in respect of, or arising out of, the contents of this CPR. If others choose to rely in any way on the contents of this report they do so entirely at their own risk.

The title to this report shall not pass to the Company until all professional fees have been paid in full.

1.3. Work Program

ROMA’s work program involved two phases:

• Phase 1: review of information provided; a site visit of the Project operations located at Xinjiang Uygur Autonomous Region in The People’s Republic of China; discussions with Company personnel regarding the project and plans for the future; and collect and review further documents; and

• Phase 2: analysis of the data provided, compile the first draft of the Report, review additional data and finalise the Report.

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1.4. Statement of Independence of ROMA

Neither ROMA nor any of the authors of the Report have any material existing or contingent interest in the outcome of the Report, nor do they have any pecuniary or other interest that could be reasonably regarded as being capable of affecting their independence or that of ROMA.

ROMA has no prior association with the Company in relation to the mineral assets that are the subject of the Report. ROMA has no beneficial interest in the outcome of the technical assessment conducted in connection with the preparation of the Report which is being capable of affecting its independence. ROMA’s fee for preparing the Report is based on its normal professional daily rates plus reimbursement for incidental expenses. The payment of ROMA’s professional fee is not contingent upon the outcome of the Report.

1.5. Warranties

The Company has represented in writing to ROMA that full disclosure has been made of all material information and that, to the best of its knowledge and understanding, such information is complete, accurate and true.

1.6. Indemnities

The Company has provided ROMA with an indemnity under which ROMA is to be compensated for any liability and/or any additional work or expenditure resulting from any additional work required:

• which results from ROMA’s reliance on information provided by the Company which is inaccurate or incomplete; or

• which relates to any consequential extension workload through queries, questions or public hearings arising from the Report.

1.7. Consents

ROMA consents to the Report being included, in full, and the reference to ROMA’s name and names of the authors of the Report in the shareholders’ circular to be issued by the Company, in the form and context in which the technical assessment is provided, and not for any other purpose.

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APPENDIX VI

1.8. Sources of Information and Data

The following information sources were provided for review.

Reports:

• “Baicheng County Wenzhou Mining Development Co, Ltd No. 3 Pit of No. 1 Mine Reforming and Expansion Feasibility Study Report (900 ktpa)” Exploration Design Institute of Hami Mining Administration Bureau (“EDI”), January 2012.

• “Xinjiang Baicheng County Kueraken Mine Field No. 3 Pit of No. 1 Mine Independent Technical Review and Competent Person’s Report,” MinarcoMineConsult (“MMC”), May 2011.

• “Xinjiang Baicheng County Kueraken Mine Field No. 3 Pit of No. 1 Mine Exploration Report,” Xinjiang Coalfield Geological Bureau No. 161 Coalfield Geological Exploration Brigade (“Brigade 161”), May 2010.

Licences:

• Safety Production Permit (No. MK2008.096 Y1G1), by Xinjiang Coal Mine Safety Supervision Bureau, April 2008.

• Coal Production Permit (No. 206401020036), by Xinjiang Coal Industry Administration Bureau, 22 November 2006.

• Business Licence (No. 6500002390774), by Xinjiang ICAB, 9 January 2006.

• Mining Licence (No. C6500002009101130052982), by Department of Land and Resources of Xinjiang Uygur Autonomous Region, 28 October 2010.

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APPENDIX VI

1.9. Scope of Personal Inspection

ROMA personnel, Mr. Philip A. Jones and Mr. Childs Chow, conducted a site visit 1012 August 2012.

During the site visit the team inspected the Coal Mine Safety Product Inspection Center and Laboratory of Xinjiang Uygur Autonomous Region at Urumqi, mine surface infrastructure, underground mine workings, access roads and completed general inspections of the surrounding countryside. Open discussions were held with site personnel on technical aspects of the project.

2. RELIANCE ON OTHER EXPERTS

None of the Competent Person, authors or contributors of this Report have undertaken any legal due diligence on the Company’s mineral rights to the Baicheng Mine, as described in Section 3 of this Report. As such, they have relied on an opinion provided to the Company by the Baicheng Wenzhou Mining Development Co. Ltd (“BWMD”), a mining and processing company focusing on coal industry, based in Baicheng Town, Akesu Prefecture, Xinjiang Uygur Autonomous Region, China. BWMD has provided ongoing advice to the Company regarding the status of the Company’s subsidiaries and the state of Company’s rights, titles and interests in material assets, such as mineral rights. The most recent opinion is dated 27 August 2012 and the Company confirms that as at that date:

• each subsidiary of the Company is duly incorporated and holds all power and authority to conduct its business in China,

• all mineral rights of the Company are validly issued and registered,

• the mineral rights constitute good and valid title, enforceable against third parties and free of all encumbrances,

• each subsidiary of the Company holds all necessary surface rights, licences, consents and permits to carry on its current operations.

• BWMD’s opinions have been used to help complete this CPR.

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APPENDIX VI

3. PROPERTY DESCRIPTION AND LOCATION

3.1. Location

Baicheng Mine, which is the subject of this Report, is located 39 km north of Baicheng town, 209 km from Akesu City and approximately 500 km south-west of the provincial capital Urumqi in the Xinjiang Uygur Autonomous Region, the People’s Republic of China. The geographic coordinates of the Mine are:

• Longitude – 81º54’01”;

• North Latitude – 42º05’01”.

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Figure 3-1 Location of the Baicheng Mine

Baicheng Mine is covered by a Mining Licence (No. C6500002009101130052982) which was granted by the Department of Land and Resources of Baicheng County of Xinjiang Uygur Autonomous Region, on 28 October, 2010. This licence covers 5.92 km[2] and extends approximately 5.5 km from east to west and approximately 1.1 km from north to south.

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APPENDIX VI

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Figure 3-2 Location of Baicheng Mine Mining Licence

3.2. Tenure

==> picture [371 x 20] intentionally omitted <==

----- Start of picture text -----

Project Baicheng Mine
----- End of picture text -----

Project	Baicheng Mine
Licence Type	MiningLicence
Certificate No.	C6500002009101130052982
Holder	BaichengWenzhou MiningDevelopment Co. Ltd
Location	Baicheng
Name of mine	Xinjiang Baicheng County, Kueraken Mine Field, No.3 Pit of No.1 Mine
Mining Mineral	Coal
Mining Method	Underground mining
Production Scale	210,000 tpa
Licensed Area	5.9178 km2
Mining Elevation Range	2,315 – 1,800 m
Validity Period	28 October 2009 – 28 November 2017
Issue Date	28 October 2009
Issuer	Department of Land and Resources of Baicheng County, Xinjiang Uygur Autonomous Region

Table 3-1 Details of Baicheng Mine’s Tenure

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APPENDIX VI

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Figure 3-3 Original Mining Licence for Baicheng Mine

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Figure 3-4 Tenure details shown at Baicheng Mine entrance

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APPENDIX VI

3.3. Validation of Nature and Extent of the Issuer’s Title to the Property

ROMA was not required to validate the legal status of tenements and permits held by Baicheng Wenzhou Mining Development Co. Ltd. In addition, ROMA has not attempted to establish the legal status of the tenements within the Project area with respect to potential environmental and access restrictions.

3.4. Location of the Property Boundaries

The geographical co-ordinates of the vertices of the licence are as follows:

Mining Licence	Coordinates (WGS 84 Co-ordination System	Coordinates (WGS 84 Co-ordination System
Point	Northing	Easting
1	42º00’36”	81º52’04”
2	42º06’10”	81º52’05”
3	42º06’38”	81º56’03”
4	42º05’33”	81º56’05”

Table 3-2 Geographical coordinates of Baicheng Mine mining lease boundary corners

This mining licence covers sufficient area to permit the mining of all the coal resources described in this Report and also provide sufficient area for all the surface infrastructure including waste dumps necessary for the current and projected mining operations.

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APPENDIX VI

• 3.5. Terms of Royalties, Back-in rights, Payments or other agreements and encumbrances

It has been noted that the following taxes and levies are applicable to the Mine:

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----- Start of picture text -----

Items Amount
----- End of picture text -----

Items	Amount
Local Development Fund	25RMB/tonne
ROM Coal Weighing Charges	2RMB/tonne
Electricity Supply Fund	10RMB/tonne
RoadConstruction Tax	7RMB/tonne
Resource Tax	3RMB/tonne
ResourceCompensation Tax	Annually1% of total revenue
Stamp duty	Annually0.03% of sales contract
Value Added Tax	Monthly 17.00% of net profit

Table 3-3 Summary of taxes and levies applicable to Baicheng Mine

3.6. Environmental Liabilities

To the extent known, the only environmental liabilities to which the property is subject relate to temporary shut down or premature closure penalties and groundwater and soil contamination.

3.7. Permits Required

To the extent known, the Company confirms the validity of the following permits that must be acquired to conduct the work proposed for the property:

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----- Start of picture text -----

Type of Licence Date Granted Expiry Date
----- End of picture text -----

Type of Licence	DateGranted	Expiry Date
Business Licence	27 December 2004	3 July2014
Safety Production Licence	2 July2011	3 July2014
Coal Production Licence	22 December 2006	22 December 2016
Mining Licence	28 October 2009	28 November 2017
Mine Manager Licence	5 November 2008	n/a
Mine Manager Safety Licence	10 August 2011	9 August 2014

Table 3-4 Licences required for Baicheng Mine to maintain mining operations

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APPENDIX VI

3.8. Other Relevant Information

To the extent known, the Company confirms the following relevant and material information for the operation of the Project:

• There was no record of public opposition to the operations of the Mine. As such, the community presents no identified risk to the continuity of operations.

• There was no record of any non-governmental organisation impact on sustainability of mineral and/or exploration projects.

4. ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY

4.1. Topography, Elevation and Vegetation

The Project area lies along the foothills of the Tian Shan Mountains with the surface elevation ranging between 2,258 m and 2,443 m. The weathered sedimentary stratigraphy forms lines of ridges striking generally east-west and parallel to the mining licence long axis. These ridges are cut by the seasonal flowing Shushan River that cuts across the approximate centre of the mining licence from the north-east. As with all the rivers in the region, most of the water flow comes from snow melt off the nearby Tian Shan Range.

The mine area is covered by light scrub with the only trees, mainly poplars, growing along the watercourses and surrounding the mine buildings.

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APPENDIX VI

4.2. Means of Access

The mine is accessible along a 25 km bitumen road from Baicheng to the mining licence boundary from where the road becomes a well formed gravel road.

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Figure 4-1 Bitumen road between Baicheng Town and the Baicheng Mine.

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Figure 4-2 Gravel access road and vegetation within the Baicheng mining licence.

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APPENDIX VI

Sufficient water is available on site, both associated with the underground mining operations and from the ephemeral surface streams to meet all the needs of any current and projected mining and coal washing plant requirements as well as domestic uses. The State Environmental Protection Administration (SEPA, now Ministry of Environmental Protection (MEP)) requires that process water for coal mining is at least 70% recycled.

4.3. Climate

Baicheng Mine is located within a continental arid climate zone with very cold winters and hot summers and large diurnal temperature variations between daytime and night time. The average annual temperature is 18ºC with an average monthly maximum of about 31ºC in summer (July) and an average monthly minimum of about -13ºC in winter (January). The average annual rainfall is 245 mm, mainly falling in sporadic storms during summer.

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----- Start of picture text -----

Climate data for Akesu (1971 – 2000)
Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year
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	Climate data for Akesu (1971 – 2000)	Climate data for Akesu (1971 – 2000)	Climate data for Akesu (1971 – 2000)	Climate data for Akesu (1971 – 2000)	Climate data for Akesu (1971 – 2000)	Climate data for Akesu (1971 – 2000)	Climate data for Akesu (1971 – 2000)	Climate data for Akesu (1971 – 2000)	Climate data for Akesu (1971 – 2000)	Climate data for Akesu (1971 – 2000)	Climate data for Akesu (1971 – 2000)	Climate data for Akesu (1971 – 2000)	Climate data for Akesu (1971 – 2000)
Month	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec	Year
Avg. high ºC (ºF)	-0.9 (30.4)	4.6 (40.3)	12.9 (55.2)	21.9 (71.4)	26.6 (79.9)	29.6 (85.3)	31.2 (88.2)	30.2 (86.4)	25.9 (78.6)	18.9 (66.0)	9.1 (48.4)	0.8 (33.4)	17.57 (63.62)
Avg. low ºC (ºF)	-13.3 (8.1)	-7.8 (18.0)	0.1 (32.2)	7.6 (45.7)	12.1 (53.8)	14.8 (58.6)	16.6 (61.9)	15.6 (60.1)	10.8 (51.4)	3.7 (38.7)	-3.1 (26.4)	-10 (14)	3.93 (39.07)
Precipitation mm (inches)	1.6 (0.063)	2.4 (0.094)	3.5 (0.138)	2.5 (0.098)	8.9 (0.35)	14.0 (0.551)	16.0 (0.63)	14.1 (0.555)	6.2 (0.244)	2.3 (0.091)	0.5 (0.02)	2.4 (0.094)	74.4 (2.929)
Avg. precipitation days (≥0.1 mm)	2.3	2.2	1.6	1.5	3.1	5.3	6.6	6.3	3.3	1.1	0.7	1.9	35.9

Table 4-1 Climate data for Aksu

Source: Weather China (http://www.weather.com.cn/)

4.4. Local Infrastructure and Economy

The coal industry is one of the pillar industries for the Baicheng County economy. Baicheng County has 19 coal mines contributing to an annual production of approaching one million tonnes. Most of the coal is currently used to generate electricity for local industries and residents while some is sold for coking in Western China.

An extensive industrial park is currently being constructed immediately east of Baicheng City where at least four coking plants with a total annual capacity of four million tonnes of coke and a million tonne per annum steel mill are being constructed along with numerous other industries including glass and renewable energy.

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Apart from coal resources, Baicheng also produces a variety of agricultural crops including millet, corn and barley along irrigated river flood plains. These rivers are mainly fed by snow melting on the nearby Tian Shan Range during the summer months.

4.5. Seismicity

Baicheng Mine is located within an active earthquake belt. Although four intense earthquake of M6.25 – 7.25 have been recorded in the Project area since 1947, no serious damage occurred at the Mine. According to the Code for Seismic Design of Buildings (GB50011-2001), “seismic fortification intensity” of the site is “Ms VII”; meaning seismic peak ground acceleration is 0.15g.

Since 1 January 1978 there have been six earthquakes greater than magnitude 4 within 200 km of the project site.

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Table 4-2 Earthquakes > 4.0 within 200 km of the Project area since January 1, 1978 Source: US Geological Survey, (http://earthquake.usgs.gov/earthquakes/eqarchives/epic/epic_circ.php)

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APPENDIX VI

The seismic hazard map released by the USGS indicates that there is a moderate possibility of a serious earthquake within 50 years in the project area.

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Figure 4-3 Seismic hazard map for Asia Source: US Geological Survey, http://earthquake.usgs.gov/hazards/products/

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5. EXPLORATION AND MINING HISTORY

5.1. Previous Exploration

Since 1959, almost continuous coal exploration work has been conducted over the Baicheng area. This work can be divided into four stages.

1959-1960 – Akesu Geological Brigade 1 conducted exploration over the Project area including 3,924 m of drilling, 88 m of underground development, 234 m of shallow pits and 1,700 m[3] of trenching. A total of 1,143 samples of coal were collected for analysis. Brigade 1 reported a preliminary coal resource after this work.

1999-2001 – A total of 17 boreholes for 6,301 m in total length were drilled by the Xinjiang Coal Geology Bureau General Exploration Brigade. An updated resource was estimated after this drilling was completed.

2006 – The Comprehensive Exploration Team of Xinjiang Coal Field Geological Exploration mapped the underground development completed at the time and updated the resource estimates.

2009-2010 – A further seven diamond drill holes for a total length of 3,607 m were drilled by the Comprehensive Exploration Team of Xinjiang Coal Field Geological Exploration. These holes were all logged with geophysical probes including resistivity, density and calliper. All 18 of the drill holes completed to 2010 with acceptable core recovery for 102 coal samples, 39 bulk density samples collected in 2009 and 47 historic samples collected from underground development were used to produce another updated resource estimate.

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APPENDIX VI

5.2.1. East Shaft Mining Area

Mining of A5, A7, A8, A9 and A10 coal seams by shrink stoping commenced in 1984 with a licensed production capacity of 120,000tpa. Three shafts were sunk, a main shaft, an auxiliary inclined drift and a ventilation shaft. The main shaft was 187 m in depth with the collar elevation of 2310.7 m, the auxiliary inclined shaft has a collar elevation of 2285.5 m and is 132 m long at a dip of 24º.

The coal reserves in the original levels, above 2120 m elevation, had been mostly mined out.

5.2.2. West Inclined Drift Mining Area

Mining by shrinkage stoping of A5, A7, A8, A9 and A10 coal seams commenced in 1985 with a licensed production capacity of 90ktpa. Two shafts were developed, a 253 m main inclined drift dipping 22º and a vertical ventilation shaft.

The coal reserves above 2,175 m elevation have been mined out.

5.3. Current Mining Operations

The East Shaft Mining Area and the West Inclined Drift Mining Areas were amalgamated in 2007 and mining was focused on developing the resources above the 2120 m level. The mining method was also changed to the Apparent Dip Flexible Shields (“ADFS”) method to increase productivity. The production rates since the amalgamation to July 2012 are presented below:

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Year Production (kt)
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Year	Production(kt)
2008	146.7
2009	207.7
2010	86.6
2011	9.01
2012	99.28

Table 5-1 Historic production figures for Baicheng Mine

*Note: 2012 production to 30 June

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The production rate increased during the period of 2008 – 2009 as the Mine moved from its construction phase to full production. However in 2010 and 2011 the production rate drastically dropped off again due to further upgrades to meet new national safety standards and the handover to new ownership.

The East Shaft end of the mine is divided into three mining sections with crosscuts spaced at 210 m, 436 m and 453 m from the shaft providing access to the coal seams. Up to the second crosscut (i.e. 436 m), A5, A6, A7 and A9 seams have been mined out. The A8 seam has been mined throughout the mining area while A10 remains unmined.

At the West end four crosscuts spaced at 430 m, 450 m, and 460 m from the main shaft have been constructed as access to the coal seams from the west inclined drift. A haulway has been developed connecting with the East Main Shaft at the 2,120 m level along the A10 coal seam.

6. GEOLOGICAL SETTING AND MINERALIZATION

6.1. Regional and Mine Geology

Baicheng Mine is located within the Kuche-Baicheng Coalfield on the southern slope of Tianshan Fold Zone and the northern margin of Talimu Basin. The base of this fold zone is Upper Paleozoic, while the fold zone consists of Mesozoic and Neozoic terrestrial sedimentary facies and Triassic to Tertiary clastic sediments. No igneous intrusions have been identified within the region.

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The main coal bearing measures occur in the Jurassic Series within a monocline structure dipping to the north at 80º to 85º. The nearly vertical dip of the coal seams means that conventional longwall mining methods used in flat dipping coal seams is not appropriate.

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Figure 6-1 Regional Geology of the Baicheng Mine Area

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APPENDIX VI

The stratigraphy within the Baicheng Mine from oldest to youngest is outlined below:

• Haojiagou Formation (T3h) – Light green argillaceous shale interbedded with off-white gritstone 141 m thick, is exposed in the north of the mining area and forms a conformable contact with the underlying strata.

• Lower Section of Taliqike (J1t[1] ) – Thick beds of conglomerate, coarse sandstone, coal and thinly bedded siltstone or mudstone, 81 m thick. This section contains the A5, A6 and A7 coal seams and forms a conformable contact with the underlying strata.

• Upper Section of Taliqike (J1t[2] ) – Mainly grey and black mudstone, siltstone and coal seams (A8, A9, A10, A11, A12, A13 and A14), locally contains a layer of thin fine-grained sandstone, 87 m thick. Outcrops in the centre of the mining licence.

• Ahe Formation (J1a) – Pale pebbly coarse sandstone interbedded with greygreen fine sandstone lenses, >300 m thick. Outcropping in the south of the mining licence. Conformable with the underlying strata.

• Alluvial (Q3) – Sandy loam and clay with weathered rock fragments along river beds mainly in the centre of the mining licence.

• Diluvia (Q4) – Mainly gravel, weathered rock fragments, sand and loam along river flood plains.

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6.2. Structure of Deposit

The coal seams consistently dip 80º – 90º to the south with no faults or igneous intrusions identified.

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Figure 6-3: Typical cross section through coal seams at the Baicheng Mine

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APPENDIX VI

7. COAL SEAMS AND COAL PROPERTIES

Coal originates from the accumulation of dead tropical and subtropical plants that undergo physical and chemical alteration after settling in swampy areas, first forming peat which after becoming buried below further sediments, with increased heat and pressure, transforms into coal. In general, increasing burial pressure and heat increases the quality of the coal produced. This process takes several millions of years.

There are four general coal types of increasing quality; peat, lignite, bituminous and anthracite. Higher-ranking coal is denser, contains less moisture and gases and has a higher heat value than lower-ranking coals. The coal mined at Baicheng Mine is high ranking coal used as thermal coal and for coking.

Thermal or Steaming Coal

Thermal coal is used to generate heat to produce steam in power plants or used domestically for heating and cooking. The best thermal coals have a low ash content and high calorific value with low contaminant levels, mainly sulphur. Normally in China the total sulphur content of thermal coals is below 2.5% since high sulphur coals, once burnt, produce noxious and highly corrosive gases.

Coking or Metallurgical Coal

Coking is the process of having coal heated in a retort oven to approximately 1000ºC when the volatile organic substances and moisture and many of the impurities like sulphur in the coal are driven off as gas, steam and tar. What remains in the furnace is the nonvolatile matter called coke which is a very porous form of nearly pure carbon. Coke, when it burns, is very clean and very hot making an excellent fuel and reductant for smelting iron ore to make iron and steel. The best coal for coking has a high mechanical strength indicated by the caking index, homogenous lumpiness, low ash and sulfur content. Usually coals from different sources and seams are blended to precisely match the required specifications required at each coking plant.

The three commercial seams currently being mined at the Project have been named A5, A7, and A9. In general, these coals are black, lustrous and brightly banded with prominent bedding textures.

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A summary of each coal seam characteristics is reported below:

Coal Seam	Seam Thickness	Interval between seams	Aad	Vdaf	St,ad	Qnet,ar’	G	Remarks
	Min. – Max. Average (m)	Min. – Max. Average (m)	Min. – Max. Average (%)	Min. – Max. Average (%)	Min. – Max. Average (%)	Min. – Max. Average (MJ/Kg)	Min. – Max. Average
A5	2.06 – 10.72 7.83		6.7 – 24.3 13.2	28.4 – 42.9 32.8	0.09 – 0.35 0.16	25.5 – 32.6 29.1	17 – 60 46.0	No stone partings
		0.45 – 2.10 1.26
A6	1.45 – 3.5 2.34		20.4 – 21.8 21.1	34.0 – 34.9 34.5	0.63	25.4 – 28.2 26.8	54 – 84 69.0	No stone partings
		4.45 – 16.55 8.27
A7	1.85 – 7.02 2.95		4.5 – 28.7 17.3	33.2 – 39.2 36.8	0.21 – 0.91 0.47	20.6 – 33.4 28.0	31 – 98 85.3	No stone partings
		20.6 – 54.25 31.18
A8	0.40 – 3.79 1.58		8.1 – 36.7 17.6	31.1 – 42.5 37.0	0.27 – 1.32 0.63	21.3 – 31.7 28.1	67 – 95 88.1	No stone partings
		3.6 – 14.24 6.12
A9	0.61 – 5.32 1.40		7.4 – 30.8 20.9	33.6 – 42.3 37.7	0.00 – 0.56 0.41	20.3 – 33.9 25.0	19 – 100 81.5	No stone partings
		1.5 – 5.48 2.27
A10	0.52 – 4.75 2.14		6.0 – 30.7 22.1	37.2 – 39.9 38.3	0.09 – 1.26 0.54	20.3 – 30.4 24.1	80 – 95 86.4	Irregular splits with single stone parting especially in west end
Aad– Ash air dried basis raw coal Vdaf– Volatility air dried basis in float coal St,ad– Total Sulphur air dried basis raw coal Qnet,ar’– Calorific value raw coal, net as received basis G – Caking Index

Table 7-1 Baicheng Mine Coal Seam Characteristics

According to the Chinese coal classification system, coal seam A5 can be classified as 1/2 Medium Caking Coal while the remaining seams can be classified as Gas Coal and 1/3 Coking Coal.

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Figure 7-1 Chinese Coal Classifications

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APPENDIX VI

Seam 5 is sold as a thermal coal for domestic fuel and for power generation while the remaining coal seams are sold for blending in coke production.

8. DRILLING AND UNDERGROUND SAMPLING

In total 18 diamond drill holes and 70 underground sampling points were used to determine seam thicknesses and coal qualities. However coal samples were not collected for chemical analysis at all the underground sampling points as only coal seam thickness measurements were taken at many of these points, Table 8-1.

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Thickness Quality
Seam Measurements Analyses Drill Hole U/G Samples
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Seam	Thickness Measurements	Quality Analyses	Drill Hole	U/G Samples
A5	26	16	13	13
A6	7	2	3	4
A7	24	15	14	10
A8	27	9	17	10
A9	26	15	13	13
A10	34	14	14	20
Total	144	71	74	70

Table 8-1 Details of drill hole and underground sample points at Baicheng Mine

Although it is reported in the geological reports that these drill hole and underground samples for chemical analysis were all collected to the Chinese standards current at the time the samples were collected, no details of the QA/QC procedures followed are available. As a result any chemical analyses used could only be considered as Inferred according to the JORC Code (2004) and unsuitable for reserve estimation and mining and economic modelling. However, the Project management has advised ROMA that in the past all the coal produced from seam A5 was sold as thermal coal and seams A7 and A9 as blending coal for coking at the current spot prices available at the time of sale. The available assays, despite not being JORC (2004) compliant, confirm the assumptions on coal qualities.

The coal seam thickness measurements taken underground and from drill core have all been reported in the Chinese geological and resource/reserve reports as being collected to current Chinese standards and so have been assumed to be accurate by ROMA and used for resource estimates that comply with JORC (2004) requirements for reporting resource tonnage estimates. The underground seam thickness measurements are all True Thickness while the drill thicknesses are Apparent Thickness measurements that need to be adjusted by simple trigonometry to produce True Thickness measurements.

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APPENDIX VI

9. SAMPLE PREPARATION, ANALYSES AND SECURITY

9.1. Sampling Method and Approach

As mentioned previously in this report no documentation is available confirming that the samples collected for chemical analysis met JORC (2004) requirements of QA/QC to ensure that they were representative and unbiased. As a result, ROMA only estimated coal resource tonnages and relied on previous reported sales of the different seams to determine the coal classifications.

ROMA inspected several exposures of seams A5, A7 and A9 in the underground workings during their site visit and the coal inspected in each seam was generally of the type expected, although it is impossible to determine the exact coal classification by visual inspection alone.

9.2. Author’s Opinion on the Adequacy of Sample Preparation, Security and Analytical Procedures

ROMA believes that the standard of coal seam thickness measurements is sufficient to meet the requirements of the JORC Code (2004) for reporting Coal Resources; however the coal quality determinations do not meet the standards required by the JORC Code (2004).

10. MINERAL PROCESSING AND METALLURGICAL TESTING

To date the Project has sold unprocessed coal, ex-ROM, to brokers who then sell the shipments directly to either washing plants, coking plants and/or power plants depending on the quality of the coal. The only mining quality control has been to stockpile the Seam A5 coal for sale as thermal coal separate from the other two seams, A7 and A9, for sale as coking coal. The bulk mining method and underground transport system used at Baicheng does not easily allow more selective mining and quality control.

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APPENDIX VI

Once the coal reaches the surface it is screened to separate out much of the dilution waste mined with the coal and to produce separate fine and lump products. This screening process produces three coal products, namely:

• fine coal (size: 0-50 mm),

• lump coal (size: 50-150 mm), and

• lump coal (size: ≥150 mm)

The lump coal generally commands a higher price than the fine coal.

11. MINERAL RESOURCE ESTIMATES

11.1. Resource Classification (JORC Code)

The JORC Code states the three classifications on reporting resource based on the level of confidence:

• Inferred : Tonnage and mineral quality can be estimated with a low level of confidence. It is inferred from geological evidence and assumed but not verified geological and/or quality continuity. It is based on information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes which may be limited or uncertain quality and reliability.

• Indicated : Tonnage, densities, shape, physical characteristics, quality and mineral content can be estimated with a reasonable level of confidence. It is based on exploration, sampling and testing information gathered through appropriate techniques form locations such as outcrops, trenches, pits, workings and drill holes. The locations are too widely or inappropriately spaced to confirm geological and/or quality continuity but are spaced closely enough for continuity to be assumed.

• Measured : Tonnage, densities, shape, physical characteristics, quality and mineral content can be estimated with a high level of confidence. It is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. The locations are spaced closely enough to confirm geological and quality continuity.

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11.2. Parameters and Methodology used by ROMA

The coal resources at Baicheng were calculated by Phil Jones B.App.Sc. (Applied Geology), MAusIMM, MAIG, of ROMA using the data points provided by the Company and listed in Table 8-1 with MineMap© software. The resource model parameters are summarised in Table 11-1.

Models Used	Model 5	Model 6	Model 7	Model 8
	Model 9	Model 10
Model Limits	East		Elevation
	Min	Max	Min	Max
	571900	577500	1300	2400
Cell Dimensions	East	Number of cells	Elevation	Number of cells
	50	112	10	110
Modelled Qualities	Seam thickness (m)	Ash Content air dried (%Aad)	Volatility air dried (%Vad)	Sulphur air dried (%Sad)
	Calorific Value (Qar)	Caking Index (Gri)	Distance to nearest sample (D)	Number of samples in cell (N)
Algorithm	Inverse distance squared (ID2)

Table 11-1 Baicheng Mine Resource Model Parameters

Since the quality of the sampling and chemical analyses cannot be confirmed as being to the requirements of the JORC Code (2004) the modelled qualities are provided in this report as only a guide to the coal qualities. Only the tonnages for each seam are reported by ROMA as resource estimates.

11.3. Bulk Density

A total of 39 samples taken from the seven seams intersected by the seven diamond drill holes drilled by Brigade 161 between July and November 2009 were sent to the Xinjiang Uygur Autonomous Region Coal Mine Safety Product Testing Centre for bulk density determinations. The sampling, sample preparation and density measurements were taken following Chinese coal standards as follows:

DZ/T 0215-2002	Specifications for Coal Exploration
GB/T 482-2008	Sampling of Coal Seams
GB/T 6949-2010	Determination of Apparent Relative Density of Coal

Table 11-2 Standards followed for bulk density measurements as reported by Brigade 161

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The bulk densities reported for the seams are included in Table 11-3

Coal Seam	A5	A6	A7	A8	A9	A10
Density	1.32	1.32	1.33	1.34	1.33	1.32

Table 11-3 Bulk densities for each seam at Baicheng Mine as reported by Brigade 161

All modelled coal within 500 m of a sample point was considered to be Measured and modelled coal more than 500 m but within 1000 m of a sample point was considered Indicated according to the JORC Code (2004) for reporting coal resources.

ROMA estimated coal resources from the surface down to 1500 mRL, approximately 1,100 m depth. The mined stopes shown on long sections for each seam that were provided by the Company from “Xinjiang Baicheng County Kueraken Mine Field No. 3 Pit of No. 1 Mine Exploration Report,” Xinjiang Coalfield Geological Bureau No. 161 Coalfield Geological Exploration Brigade (“Brigade 161”), May 2010 were digitised to create a mined out regions for each seam. The cells within the mined out regions were not included in the ROMA resource estimates. The total remaining resource estimate was split at 1800 mRL which is the depth limit of the current mining licence. Before the Company can mine the resources below 1800 mRL, an extension to the current mining licence will need to be approved. This will require an approved Reserve Report and Feasibility Study carried out by independent approved Chinese consultants along with an approved mining plan and safety proposal for mining these resources.

The ROMA resource estimates are summarised in Table 11-4 to Table 11-6 and depicted in Figure 11-1 to Figure 11-6 as long sections of the modelled seams colour coded by seam thickness and showing the data points used to estimate resources.

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APPENDIX VI

11.4. Mineral Resource Statement

ABOVE 1800 mRL

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Seam
Million Thickness
Measured Tonnes (m) Ad Vdaf Std Qbd Gri D N
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Measured	Million Tonnes	Seam Thickness (m)	Ad	Vdaf	Std	Qbd	Gri	D	N
Seam 10	11.7	4.24	20.37	38.24	0.60	25.32	87.0	186	7.65
Seam 9	4.0	1.48	20.74	37.88	0.43	25.99	79.7	190	7.63
Seam 8	4.5	1.73	19.74	37.67	0.59	27.36	87.4	192	7.64
Seam 7	8.0	3.00	17.90	37.05	0.47	28.36	77.2	183	7.17
Seam 6	2.7	1.14	22.48	36.33	0.54	25.03	73.0	205	5.72
Seam 5	20.9	7.85	12.75	32.98	0.16	29.80	46.5	185	7.63
Total	51.8	4.91	17.00	35.76	0.38	27.81	67.9	187	7.46

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Seam
Million Thickness
Indicated Tonnes (m) Ad Vdaf Std Qbd Gri D N
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Indicated	Million Tonnes	Seam Thickness (m)	Ad	Vdaf	Std	Qbd	Gri	D	N
Seam 10	0.0	0.00	0.00	0.00	0.00	0.00	0.0	0	0.00
Seam 9	0.0	0.00	0.00	0.00	0.00	0.00	0.0	0	0.00
Seam 8	0.0	0.00	0.00	0.00	0.00	0.00	0.0	0	0.00
Seam 7	0.0	0.00	0.00	0.00	0.00	0.00	0.0	0	0.00
Seam 6	0.0	0.02	23.53	36.37	0.51	24.33	67.9	733	1.34
Seam 5	0.0	0.00	0.00	0.00	0.00	0.00	0.0	0	0.00
Total	0.0	0.02	23.53	36.37	0.51	24.33	67.9	733	1.34

Table 11-4 ROMA Resource Estimates for Baicheng Mine at September 2012 (above 1800 mRL)

*Note: Qualities are indicative only and not part of ROMA resource estimates.

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1800 mRL –1500 mRL

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Seam
Million Thickness
Measured Tonnes (m) Ad Vdaf Std Qbd Gri D N
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Measured	Million Tonnes	Seam Thickness (m)	Ad	Vdaf	Std	Qbd	Gri	D	N
Seam 10	7.3	4.42	20.59	38.17	0.52	25.14	85.8	375	6.64
Seam 9	2.7	1.55	20.78	37.83	0.41	25.88	82.5	372	6.64
Seam 8	3.7	1.95	21.74	38.27	0.60	26.69	86.8	362	6.59
Seam 7	8.1	3.62	18.62	36.94	0.47	27.05	80.8	343	6.84
Seam 6	2.7	1.32	24.54	36.82	0.52	24.13	74.6	340	5.70
Seam 5	19.5	8.09	15.08	32.21	0.15	28.56	47.6	332	7.22
Total	43.9	5.33	18.13	35.20	0.35	27.12	67.1	346	6.87

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Seam
Million Thickness
Indicated Tonnes (m) Ad Vdaf Std Qbd Gri D N
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Indicated	Million Tonnes	Seam Thickness (m)	Ad	Vdaf	Std	Qbd	Gri	D	N
Seam 10	8.4	4.20	20.87	38.23	0.63	25.32	87.4	647	5.58
Seam 9	2.9	1.49	20.15	38.07	0.41	26.30	81.6	645	5.59
Seam 8	3.1	1.69	19.35	37.26	0.59	27.46	87.3	640	5.65
Seam 7	4.3	2.97	17.52	37.35	0.46	28.61	74.4	632	4.53
Seam 6	1.3	0.88	22.95	35.99	0.54	24.80	68.1	651	3.25
Seam 5	10.1	8.04	12.42	32.73	0.19	30.55	47.8	626	4.53
Total	30.2	4.64	17.43	36.06	0.43	27.83	70.9	637	4.99

Table 11-5 ROMA Resource Estimates for Baicheng Mine at September 2012 (1800 mRL – 1500 mRL)

*Note: Qualities are indicative only and not part of ROMA resource estimates.

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Total Remaining

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Seam
Million Thickness
Measured Tonnes (m) Ad Vdaf Std Qbd Gri D N
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Measured	Million Tonnes	Seam Thickness (m)	Ad	Vdaf	Std	Qbd	Gri	D	N
Seam 10	19.0	4.31	20.45	38.21	0.57	25.25	86.6	257	7.27
Seam 9	6.6	1.50	20.75	37.86	0.42	25.95	80.8	261	7.24
Seam 8	8.2	1.82	20.58	37.92	0.60	27.08	87.1	263	7.20
Seam 7	16.1	3.28	18.23	37.00	0.47	27.77	78.8	256	7.02
Seam 6	5.4	1.23	23.43	36.56	0.53	24.62	73.8	267	5.71
Seam 5	40.4	7.96	13.86	32.61	0.16	29.21	47.0	255	7.43
Total	95.7	5.10	17.50	35.50	0.37	27.51	67.5	257	7.20

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Seam
Million Thickness
Indicated Tonnes (m) Ad Vdaf Std Qbd Gri D N
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Indicated	Million Tonnes	Seam Thickness (m)	Ad	Vdaf	Std	Qbd	Gri	D	N
Seam 10	8.4	4.20	20.87	38.23	0.63	25.32	87.4	647	5.58
Seam 9	2.9	1.49	20.15	38.07	0.41	26.30	81.6	645	5.59
Seam 8	3.1	1.69	19.35	37.26	0.59	27.46	87.3	640	5.65
Seam 7	4.3	2.97	17.52	37.35	0.46	28.61	74.4	632	4.53
Seam 6	1.3	0.75	23.04	36.05	0.54	24.73	68.1	663	2.97
Seam 5	10.1	8.04	12.42	32.73	0.19	30.55	47.8	626	4.53
Total	30.2	4.64	17.43	36.06	0.43	27.83	70.9	637	4.98

Table 11-6 ROMA Resource Estimates for Baicheng Mine at September 2012 (Total remaining)

*Note: Qualities are indicative only and not part of ROMA resource estimates.

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Figure 11-1 Baicheng Mine Seam 5 long section showing data points and colour coded by seam thickness
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Figure 11-3 Baicheng Mine Seam 7 long section showing data points and colour coded by seam thickness
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APPENDIX VI

12. MINERAL RESERVE ESTIMATES

Under the JORC Code, a coal resource refers to the in-situ coal that has reasonable potential to be mined economically and a coal reserve comprises that portion of a Measured and Indicated coal resource that is planned to be mined and sold to customers at reasonably assumed economic conditions and includes diluting materials and allowances for losses, which may occur when the material is mined or extracted. A Reserve is defined by studies at Pre-Feasibility or Feasibility level as appropriate that includes the application of Modifying Factors to determine a mine plan that is technically achievable and economically viable. These coal reserve estimates have been produced from the ROMA in-situ Measured and Indicated coal resource estimates by applying the modifying factors determined by the Exploration Design Institute of Hami Mining Administration Bureau (“EDI”) who were commissioned by the Company to generate a mine plan as part of an official feasibility study submitted to the government authorities for approval as part of their application for a modified mining licence to increase mine production to 900,000 tonnes of raw coal per annum.

For the purpose of converting the Measured and Indicated coal resources to coal reserves, ROMA developed criteria to assess the economic viability of each seam resource area based on mine plan feasibility studies by EDI, current market analysis, seam thickness and areal extent, and geological considerations. ROMA suggests that the company actively monitors the coal mining recovery and coal mining dilution factors and revise the coal reserve estimates according to the actual mining recovery and mining dilution factors actually achieved when appropriate.

The following sections explain the guidelines followed by ROMA when converting the coal resources to coal reserves:

12.1. Basis for the Conversion to Coal Reserve

To develop estimates of Proved, Probable and Possible reserves, ROMA used various criteria shown below to estimate reserves:

• Mining method – “Apparent Dip Flexible Shield Mining” as described in the Chinese Feasibility Study as the bulk mining method best suited for near vertical coal seams.

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• Mining loss as pillars – EDI estimated the coal losses due to pillars that need to remain un-mined to prevent rock falls during mining as follows:

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----- Start of picture text -----

Licence Stope Roadway
Boundary Boundary Riverbed Shaft Pillars Roof Pillars Internal Stope Support
Coal Seam Pillars (%) Pillars (%) Pillars (%) (%) (%) Pillars (%) Pillars (%) Total (%)
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Coal Seam	Licence Boundary Pillars (%)	Stope Boundary Pillars (%)	Riverbed Pillars (%)	Shaft Pillars (%)	Roof Pillars (%)	Internal Stope Pillars (%)	Roadway Support Pillars (%)	Total (%)
A5	0.3	3.5	6.6	4.2	2.9	0.7	2.5	21
A6	0.0	3.4	13.0	4.3	5.7	1.3	5.0	33
A7	0.3	3.3	6.3	4.0	2.8	0.6	0.0	17
A8	0.3	2.5	6.0	3.8	2.6	0.6	2.3	18
A9	0.3	3.2	6.0	3.8	2.6	0.6	2.3	19
A10	0.3	3.1	6.0	3.8	2.6	0.6	0.0	16
Total	0.3	3.3	6.6	4.0	2.9	0.7	1.6	19.4

Table 12-1 EDI Estimated percentage mining losses due to pillars

• Mining losses due to mining method – The “Apparent Dip Flexible Shield Mining” method is a labour intensive highly selective mining method that requires coal to be left unmined in areas such as the floor of the stope as chutes for loading haulage equipment and various rib pillars for stability. EDI estimated that in addition to the mining losses due to pillars a further 22% will be lost due to the mining method.

ROMA also estimated that up to 0.1 m of waste rock will also be mined from the two side walls as additional mining dilution. This waste will add to the tonnes mined increasing the ash content of the mined coal. ROMA therefore estimated the diluted ash content assuming that the included waste had an ash content of 80%.

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APPENDIX VI

12.2. Reserve Statement by ROMA

Using the criteria outlined above, the ROMA Reserve Estimate for Baicheng Mine is summarised in Table 12-2.

>1800 m – To depth limit of current mining licence	>1800 m – To depth limit of current mining licence	>1800 m – To depth limit of current mining licence	>1800 m – To depth limit of current mining licence	>1800 m – To depth limit of current mining licence	>1800 m – To depth limit of current mining licence	>1800 m – To depth limit of current mining licence	>1800 m – To depth limit of current mining licence
Coal Seam	Pillars	Recovery (%)*	Dillution (%)**	ROMA Proved Reserves (MT)	ROMA Probable Reserves (MT)	Ash Content (%)	Diluted Ash Content *(%)
A5	5.7	78	3	11.8	0.0	12.8	14.4
A6	1.2	78	17	1.2	0.0	22.5	31.0
A7	1.8	78	7	4.8	0.0	17.9	21.8
A8	1.1	78	12	2.7	0.0	19.7	26.0
A9	1.0	78	14	2.3	0.0	20.7	27.8
A10	2.5	78	5	7.1	0.0	20.4	23.1
Total	13.3	78	6	30.0	0.0	17.0	20.4

1500 – 1800 m – Up to 300 m below current mining licence limits	1500 – 1800 m – Up to 300 m below current mining licence limits	1500 – 1800 m – Up to 300 m below current mining licence limits	1500 – 1800 m – Up to 300 m below current mining licence limits	1500 – 1800 m – Up to 300 m below current mining licence limits	1500 – 1800 m – Up to 300 m below current mining licence limits	1500 – 1800 m – Up to 300 m below current mining licence limits	1500 – 1800 m – Up to 300 m below current mining licence limits
Coal Seam	Pillars	Recovery (%)*	Dillution (%)**	ROMA Proved Reserves (MT)	ROMA Probable Reserves (MT)	Ash Content (%)	Diluted Ash Content *(%)
A5	3.9	78	2	13.2	6.8	14.2	15.8
A6	0.9	78	18	1.6	0.8	24.0	32.4
A7	1.4	78	6	5.6	3.0	18.2	21.7
A8	0.8	78	11	2.5	2.1	20.6	26.5
A9	0.7	78	13	1.8	2.0	20.4	27.4
A10	1.7	78	5	5.1	5.9	20.7	23.4
Total	9.3	78	6	29.9	20.6	17.5	20.7

Table 12-2 ROMA modifying factors and Reserve Estimates for Baicheng Mine

Estimated by EDI, Estimated by ROMA assuming 0.1 m dilution on both side walls, **Assuming 80% ash content for diluting waste

Since these reserve estimates are derived from the resource estimates quoted previously, these reserve estimates are inclusive and not additional to these resource estimates.

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APPENDIX VI

Since the current mining licence only extends down to 1800 mRL the total reserve estimates have been split at this elevation. The Company advises ROMA that an extension of the mining licence to cover the additional extra reserves below this current level is procedural providing a satisfactory feasibility study carried out by an approved independent organisation along with mine safety and environmental impact study reports are submitted to the relevant authorities.

13. MINING METHOD

The current mining method is called Apparent Dip Flexible Shield Mining which is a bulk mining method best suited for near vertical coal seams. In this method, mining retreats along a seam with drilling and blasting taking place under mining support along an upper ventilation drive and broken coal is drawn from the bottom of the stope through draw points to be loaded on to tracked trucks or conveyor belts below, Figure 13-1.

==> picture [367 x 125] intentionally omitted <==

Figure 13-1 Long section showing apparent dip flexible shield mining method

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APPENDIX VI

This mining method is quite different to the more conventional Mechanised Longwall Retreat mining method used for mining more common, flat dipping coal seams. This method allows clean mining with minimal sidewall waste dilution but is slower, less productive and more expensive per tonne of coal mined than the Mechanised Longwall Retreat method.

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Figure 13-2 Electric haulage system at Baicheng Mine

14. BENEFICIATION METHOD

The Mine management has indicated to ROMA that a coal washing plant is planned to be built sometime in the future however no preparatory work has been completed to date to determine recoveries, product quality, operating and capital costs etc. This report assumes that all the coal produced by the mine will continue to be sold to other parties as mined at the ROM with the only beneficiation being two stages of screening to remove some of the side-wall waste dilution and to produce three screen sized products for sale.

The thermal and coking coal seams are mined and stockpiled separately.

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APPENDIX VI

15. PROJECT INFRASTRUCTURE

The current mine operating infrastructure is considered by ROMA to be adequate for the current mining operations producing the licensed 210,000 tonnes of mined coal per year. This infrastructure will need to be substantially upgraded when the mine production is increased to the projected annual production of 900,000 tonnes. ROMA believes that the mining licence area and coal seam dimensions, i.e. length, depth and width, are sufficient to support such an increased mining operation although the current licensed mining depth of 1800 mRL will need to be extended deeper to provide sufficient reserves for a long term mining operation.

Increasing the mine output will require more staff and the present accommodation is totally inadequate for a modern mine of any size. Mine management have indicated to ROMA that the current mine worker accommodation will be entirely replaced as part of the production upgrade.

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Figure 15-1 Accommodation blocks at Baicheng Mine

The current mining method, Apparent Dip Flexible Shield Mining, is entirely appropriate for the coal seams being mined considering their attitude and dimensions, however the current number of operating stopes is unlikely to produce coal at a sufficient rate to meet the projected mine output so additional working stopes, at least treble the current number, will need to be opened and kept operational to meet demand. Keeping additional operating stopes open will require more sophisticated scheduling of new development than is evident at the current operations.

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COMPETENT PERSON’S REPORT

ROMA considers that the underground transport drives are of sufficient dimensions to meet the projected demand however the electric tramming system will need to be largely replaced by a conveyor system that will take the coal directly to the surface up a decline rather than with the present shaft haulage system. The present electric haulage system coupled with the shaft system is slow and inefficient and incapable of meeting projected production rates. Using an inclined shaft for stope access and hauling coal to the surface will increase flexibility allowing access for larger equipment to ingress/egress and allow continuous development to access deeper levels thereby avoiding the need to close down production haulage in the vertical shaft to deepen it every time access is required to a new deeper level.

A Project Feasibility Study was recently completed for the Mine but final approval by government agencies is still pending. It is anticipated that the expansion will take approximately up to 5 years to complete of which exceeds the Chinese coal mining and coal industry requirements. As such, ROMA believes that it would be possible for the buyer to shorten the mine expansion schedule to less than 3 years by detailed mine design planning and larger labour force. According to the Feasibility Study the mine will be developed concurrently in three main mining panels: West, Central and East, at three levels +2000 m, 1750 m and 1500 m.

Before the increased mining rate can commence, provincial government approval is required as well as the mining licence to be updated, relevant technical reports approved (Feasibility Study, Safety, Environment Protection) and relevant construction reports obtained.

16. MARKET STUDIES AND CONTRACTS

ROMA has not conducted any market studies since it is expected that all the future coal produced at the mine will be sold to the five coking plants currently under construction or already in production at the Baicheng Zhonghuagong Industrial Park located a few kilometres west of Baicheng Town.

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APPENDIX VI

It is reported that all the coking plants, once commissioned, will produce 1.5 million tonnes of coke annually. These coking plants will require at least 2 million tonnes of suitable coking coal supply annually which is at least double the current capacity of all the operating coal mines in the Baicheng district.

==> picture [362 x 202] intentionally omitted <==

Figure 16-1 Location of Baicheng Zhonghuagong Industrial Park

17. ENVIRONMENTAL STUDIES, PERMITTING AND SOCIAL OR COMMUNITY IMPACT

17.1. Environmental Studies

Runge Limited commissioned Environmental Resources Management Shanghai in 2011 to conduct an Environmental, Health, Safety and Social (EHSS) compliance audit of the Mine and its associated facilities and they found that the mine does not comply with all the regulatory (EHSS) requirements.

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APPENDIX VI

ROMA notes the following potential safety and environmental issues that will need to be considered during mine production:

• Surface Land Subsidence and Sidewall Failures

As the coal seams are mostly surrounded by soft sedimentary lithologies like mudstones and siltstones and overlain in part by unconsolidated quaternary deposits, the stability of the rocks will be weakened by further mining. As a result the seam sidewalls may fret and collapse into the mine openings and land subsidence is possible along the outcrops of the coal seams. Collapsed areas underground pose a real danger to the miners and at the surface impact on the natural scenery. There is also potential for water to accumulate in the collapsed holes leading to an increasing risk of uncontrolled water in-rush and flooding of underground workings. Cracking in the subsidence areas may also allow air to make contact with in-situ coal increasing the risk of spontaneous combustion.

Mitigation:

1. Careful monitoring of surface and underground mine workings

2. Back-fill collapsed areas to seal cracks

3. Provide sufficient pillars to maintain sidewall rock stability

4. Wastewater Management

Domestic wastewater from the dormitories and canteen is processed in a septic tank before natural evaporation and being discharged directly into a nearby drain. Storm water continues to flow away naturally without any collection or treatment.

Mine water is partially recycled for dust suppression with the remainder passed through an onsite sedimentation tank before being discharged into the Shushan River. As no environmental monitoring has been conducted in the past, the compliance status of these wastewater streams cannot be confirmed.

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Mitigation:

1. Instigate a proper monitoring program to ensure the discharge water quality meets at least Class II limits of the Integrated Wastewater Discharge Standard (GB 8978-1996).

2. Mine and domestic water should be reused and recycled as much as possible to meet the industrial water reuse rate standard of 70%.

3. Wastewater should not be discharged into the Shushan River as it is in violation of the EIA law.

4. A much more rigorous waste water recycling, treatment and disposal regime would be required if a coal washing plant was ever commissioned.

5. Spontaneous Combustion and Coal Dust/Gas Explosion

All coal seams have a tendency to spontaneously combust when exposed to air and the more volatile and dusty coals have the potential for gas explosions. Both scenarios pose serious safety risks for all mine workers and have potential for major environmental damage.

Mitigation:

1. Provide adequate ventilation to flush out explosive gases and dust from underground mine workings.

2. Continuously monitor gas and dust levels and install adequate audio and visual alarms to indicate potentially dangerous levels in all underground workings.

3. Maintain adequate dust suppression sprays.

4. Limit the time mined coal is exposed to the air in stopes and underground development by careful mine scheduling.

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• Waste Disposal

The mine generates only limited gangue waste, chiefly when access drives are developed. Disposal of domestic and industrial solid waste must comply with the EIA report and Solid Waste Pollution Prevention and Control Law (2005).

Mitigation:

1. Mine waste must be dumped in a designated area and wherever possible used onsite for road maintenance and construction or building. All dumps must be surrounded by bund walls to prevent contaminated water run-off.

2. Proper burial of most of the domestic waste is required in a landfill site designated by the local EPB.

3. Oil and chemical contaminated rags and packaging need to be incinerated at high temperature so they should be collected and disposed of by a licensed hazardous waste disposal contractor according to the National Catalogue of Hazardous Wastes (2008).

4. Smoke Emissions

A total of five smoke stacks for coal fired boilers serve the main shaft, the miners’ washroom and the canteen along with numerous smaller domestic fires from workers’ accommodation onsite emit pollutants. Only the three stacks at the main shaft have simple dust removal facilities.

Mitigation:

1. Smoke scrubbers must be installed on all smoke stacks as required by the EIA.

2. Implement air monitoring programs and reporting to ensure compliance with EIA requirements.

3. Install energy efficient boilers and domestic heating to reduce the amount of coal burnt.

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• Fuel and Chemical Storage

Storage of fuel and chemicals used in the mine, such as diesel, machine oil and lubricants do not comply with the Safety Management Rules for Dangerous Chemical Materials (2002).

Mitigation:

1. Provide adequate secure spill control measures, identification labels or Materials Safety Data Sheet (MSDS) for all stored liquids.

3. Earthquake

The Mine is located within an active seismic belt. Since 1947 there have been four M6-7 earthquakes near the Mine. Buildings and other surface and underground mine infrastructure are of simple construction and may have low earthquake resistance. Mine worker safety and mine production may be compromised if a large earthquake occurs.

Mitigation:

1. All site buildings and other mine infrastructure, including underground, should be audited by a qualified engineer to determine their ability to withstand at least an M8.5 earthquake.

2. All buildings and infrastructure that fails the audit should be remedied or re-built as required.

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APPENDIX VI

• Traffic, Dust and Noise Pollution

Since the Mine is located well away from any residential areas and the road to the Industrial Park by-passes the town at Baicheng traffic, dust and noise pollution should not be a major concern.

The roads outside the mining licence are all bitumen sealed and wide enough to handle the expected traffic, including the coal trucks.

Mine site noise and dust, such as caused by mobile equipment and ventilation fans will not affect neighbouring communities.

Mitigation:

1. Although the mine site is sufficiently distant from residential communities to affect their ambience, it is recommended that the company continues to plant trees around the mine operations to help isolate the noise and dust generated by the mine operations.

18. CAPITAL AND OPERATING COSTS

18.1. Capital Cost (“Capex”)

The following Capex was estimated within the mine plan feasibility study prepared by EDI. The planned production capacity is 900,000 tonnes per annum and the Capex was estimated based on a number of operating assumptions as well as benchmarking the costs against near-by underground coal mining operations.

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----- Start of picture text -----

RMB USD
Development (million) (million) %
----- End of picture text -----

Development	RMB (million)	USD (million)	%
Underground MiningWorks	323.5	51.8	43
Construction Cost	74.2	11.9	10
Plant and Machinery	166.3	26.6	22
Installation Cost	46.8	7.49	6
Other Capital Costs	142.4	22.8	19
Total	753.2	120.6	100

Table 18-1 Baicheng Mine estimated Capex for the Mine, after EDI 2012 Report

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APPENDIX VI

According to EDI’s data provided to ROMA, the above Capex estimate included a large amount of precautionary equipment, facilities and engineering as a response to the relatively high gas content of Baicheng Mine coal seams. ROMA considers that providing proper management practices and safety procedures are implemented, the Capex estimate could be reduced to approximately 500 million (RMB) which would significantly improve the economic viability of the project.

As mentioned earlier in the report, ROM coal is being sold to the buyers at the gate of the Mine and thus no Capex cost were estimated for a coal washing facility or trucks for hauling purposes.

18.2. Operating Costs (“Opex”)

The mine plan also estimated the Opex of the Mine by utilizing the cost of nearby similar coal mines. Opex were estimated per unit of ROM coal produced at USD 34.02/ tonne. The table below demonstrates the overview of the Opex estimates:

==> picture [371 x 21] intentionally omitted <==

----- Start of picture text -----

Items RMB/tonne US$/tonne %
----- End of picture text -----

Items	RMB/tonne	US$/tonne	%
Materials	7.51	1.20	4
Electricity	11.99	1.92	6
Labour	64.55	10.32	32
Maintenance	8.5	1.36	4
Local Economic Development Fee	25.00	4.00	12
Mine Maintenance	8.98	1.44	4
Other Costs	54.17	8.66	24
Depreciation	24.03	3.84	11
Amortisation	7.16	1.15	3
Interest	0.73	0.12	0
Total	212.62	34.02	100.00

Table 18-2 Baicheng Mine estimated Opex for the Mine, after EDI 2012 Report

Overall, it is considered that the estimated aggregate Opex for the Mine is reasonable and that the Opex is in the range of those typically anticipated for this style of operation. However, actual operating costs for mining projects such as this Project may vary significantly from estimates due to geological and operating conditions encountered over the project life. Thus, ROMA recommends that upon commencement of production a revision of the Opex should be made in order to reflect the actual operating costs.

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APPENDIX VI

19. ECONOMIC ANALYSIS

The coking coal market in China is dependent almost entirely on the country’s iron and steel output. Over the last twenty years the Chinese iron and steel output has steadily grown so that it is now easily the world’s largest steel producer (683.3 million tonnes in 2011 = 46% of world’s production) and world’s largest net steel exporter. While China’s economy and general export markets continue to grow the prices for coking coal will remain high.

The Project’s coal is expected to be all be sold locally to one or all of the coking plants currently operating or under construction at the Baicheng Zhonghuagong Industrial Park located a few kilometres west of Baicheng Town. Once all the local coking plants are fully commissioned their consumption of coking coal will be at least double the current mine production of the mines currently operating in the Baicheng district. It is reasonable to expect that the local market for coking coal will be robust and prices to be equivalent at least to national levels. With the close proximity of these plants to the Mine, transport costs will be minimal so price competition with coal produced in mines further away is not likely to be a problem. According to the ROM coal sales contracts (dated at from May to July 2012) that were obtained from the Company by ROMA, the coal price (with value-added tax) for A5 seam ranges from RMB360/t to RMB370/t, and for A7 seam ranges from RMB490/t to RMB510/t.

The only major potential competition point may be coal quality. Since the coal produced to date by the Mine from the two main producing seams has met the specifications of the currently operating coking plant the coal quality should not be an issue.

Since almost a third of the coal produced at the Mine is thermal coal, additional markets will be required for this coal once mine production is increased to 900,000 tonnes annually. At least some of this increased production of thermal coal will be required for electric power generation to meet the energy requirements of the industrial park and increased local population.

20. ADJACENT PROPERTIES

The Baicheng area is host to 19 coal mines similar to the Project mine. Of these mines one are mining the same seams as found at the Project. No details on these other mines are available for inclusion in this report.

21. OTHER RELEVANT DATA AND INFORMATION

There is no other relevant data or information that would enhance the understanding of the reported resource estimates and project details.

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APPENDIX VI

22. INTERPRETATION AND CONCLUSIONS

The Xinjiang Baicheng County Kueraken Mine Field No.3 Pit of No.1 Mine has been mined extensively in the past on five of the six mineable coal seams with limited mining on the other seam. Mining is currently licenced at 210,000 tonnes per annum although this production rate has not been achieved over the last four years during an infrastructure upgrade and modernisation since the takeover of the smaller mines by the Company. A feasibility study is in progress to determine how production can be increased to 900,000 tonnes of raw coal per year. The increased coking coal produced by the mine is intended to be sold to one or all of five coking plants currently being constructed at the nearby Baicheng Zhonghuagong Industrial Park located a few kilometres west of Baicheng town. The thermal coal produced by the mine will also be sold locally to power plants supplying energy to the industrial park and expanded population. No beneficiation washing plant is currently planned to be constructed at the Mine so all production will be sold un-beneficiated at the “mine gate”.

There are approximately nineteen mines in the area successfully mining similar coal in a similar geological environment.

The resource tonnage estimates in this report were calculated by ROMA using methods that are compliant with the JORC Code (2004) for this style of coal deposit. However, although the available sampling data was collected to Chinese standards current at the time, no records exist to confirm that the sampling for chemical analysis met the JORC Code (2004) standards for QA/QC and security. As a result the ROMA resource estimates are of tonnes of coal only and do not include coal quality estimates. Experience gained from previous mining at the Mine and nearby mines in the district mining the same coal seams strongly indicate that the projected mine production will continue to be approximately two thirds coking coal and one third high quality thermal coal.

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APPENDIX VI

The ROMA resource estimates for the six coal seams at Baicheng Mine are summarised in Table 22-1 below.

ABOVE 1800 mRL as currently licenced

==> picture [399 x 331] intentionally omitted <==

----- Start of picture text -----

Million Seam
Tonnes Thickness (m) %Aad %Vad %Sad Qar Gri
Measured 51.8 4.91 17.00 35.76 0.38 27.81 67.9
Indicated 0.0 0.02 23.53 36.37 0.51 24.33 67.9
Total Measured &
Indicated 51.8 4.91 17.00 35.76 0.38 27.81 67.9
1800 mRL – 1500 mRL
Million Seam
Tonnes Thickness (m) %Aad %Vad %Sad Qar Gri
Measured 43.9 5.33 18.13 35.20 0.35 27.12 67.1
Indicated 30.2 4.64 17.43 36.06 0.43 27.83 70.9
Total Measured &
Indicated 74.1 5.05 17.85 35.55 0.38 27.41 68.6
Total Remaining above 1500 mRL
Million Seam
Tonnes Thickness (m) %Aad %Vad %Sad Qar Gri
Measured 95.7 5.10 17.52 35.50 0.37 27.49 67.5
Indicated 30.2 4.64 17.43 36.06 0.43 27.83 70.9
Total Measured &
Indicated 125.9 4.99 17.50 35.63 0.38 27.57 68.3
----- End of picture text -----*

Table 22-1 ROMA Resource Estimates for the Baicheng Mine.

*Note: Estimated by ROMA but not part of the resource estimate. Provided as a guide of the coal quality only.

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APPENDIX VI

It is Roma’s conclusion that the project that is the subject of this Report is sound geologically and potentially is sound economically as evidenced by current mining within the Project area and nearby operating mines on similar coal seams.

23. RECOMMENDATIONS

ROMA recommends that as soon as possible the exposed coal seams should be sampled and mapped to JORC Code (2004) standards with adequate QA/QC procedures followed and sample security when taking samples for chemical analysis. This sampling should be taken as close as possible on a 100 m grid as described in the “Chinese Sampling Procedures for Coal Seams (GB/T 482-2008)” within all the exposed seams to gain a proper understanding of variations in the coal thicknesses and qualities. This sampling and mapping should continue at the same density and quality from the underground development as mining progresses.

A diamond drilling program to JORC Code (2004) standards from the surface is also recommended on a no greater than 500 m grid to in-fill the inadequately drill sampled seams at depth beyond the current workings to confirm coal thickness and quality continuity in these areas. This drilling is required to replace the earlier drilling without adequate JORC (2004) compliant sampling records for future resource estimation including coal qualities.

Once this recommended underground sampling and diamond drilling is completed a JORC Code (2004) compliant Reserve including coal qualities and Project Feasibility study will be possible.

24. STATEMENT OF QUALIFICATION OF THE COMPETENT PERSON

24.1. Brian J. Varndell

I, Brian J. Varndell, hereby confirm that:

• I have carried out the assignment for Roma Oil & Mining Associates Limited, located at:

• Unit 3806, 38/F, China Resources Building, 26 Harbour Road, Wan Chai, Hong Kong Tel: (852) 2529 6878 Fax: (852) 2529 6808 Email: info@roma-international.com

• I am the author of this report titled “Competent Person’s Report – Coal Mine, Baicheng Town, Xinjiang, The People’s Republic of China.”

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• I obtained a B.Sc. (General Honours) (1970) from the University of London, UK and B.Sc. (Special Honours Geology) (1971) from the University of Rhodesia.

• I am a qualified geologist and a Fellow of the Australasian Institute of Mining and Metallurgy (the “AusIMM”).

• I have studied the revised Chapter 18 of the Hong Kong Listing Rules and understand the definitions of “competent person”. My past relevant experience, qualifications and my affiliation with professional associations have fulfilled the requirements to be a “competent person” as set out in the listing rules for the purpose of the Report:

HKEx Requirements of “Competent Person”

18.21

1. I have a minimum of five years experience relevant to the style of mineralization and type of deposit.

2. I am a fellow of the relevant Recognized Professional Organization, i.e. Australasian Institute of Mining and Metallurgy.

3. I take overall responsibility for the Competent Person’s Report.

18.22

1. I have no economic or beneficial interest (present or contingent) in any of the assets being reported on.

2. I have not been remunerated with a fee dependent on the findings of the Competent Person’s Report.

3. I am not an officer, employee or proposed officer of the issuer or any group, holding or associated company of the issuer.

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APPENDIX VI

• I have more than 40 years of experience as a geologist of which more than five years is relevant to the style of mineralization and type of deposit under consideration and to the activity which I am undertaking to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. I consent to the inclusion in the report of the matters based on my information in the form and context in which it appears.

• I have neither present nor prospective interests in the Company, the Project or the values reported herein.

• I am not aware of any material fact or material change with respect to the subject matter of the Report that is not reflected in the Report.

• I am a Geological Pannel Member of Roma Oil and Mining Associates Limited.

• The Report has been prepared consistent with the guidelines set by the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (“The JORC Code”) for Independent Expert Reports.

• As of the date of this certificate, to my best knowledge, information and belief, the Report contains all scientific and technical information that is required to be disclosed to make the Report accurate and not misleading.

Signed and dated 15 October 2012 at Hong Kong, China

Brian J. Varndell

Competent Person, FAusIMM Geological Pannel Member

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24.2. Emmanuel E. Mensah

I, Emmanuel E. Mensah, hereby confirm that:

• I have carried out the assignment for Roma Oil & Mining Associates Limited, located at:

• Unit 3806, 38/F, China Resources Building,

• 26 Harbour Road, Wan Chai, Hong Kong

• Tel: (852) 2529 6878 Fax: (852) 2529 6808 Email: emmanuelmensah@roma-international.com

• I am the peer reviewer of this report titled “Competent Person’s Report – Coal Mine, Baicheng Town, Xinjiang, The People’s Republic of China.”

• I hold a, Bachelor Degree in Geological Engineering from Kwame Nkrumah University of Science and Technology, Kumasi, Ghana.

• I have over ten years of experience as a geologist in exploration, prospect evaluation, project development, open pit mining, and resource estimation. I am also responsible for providing training to the geology teams.

• I am a Member of the Australasian Institute of Mining and Metallurgy.

• I have neither present nor prospective interests in the Company, the Project or the values reported herein.

• I am not aware of any material fact or material change with respect to the subject matter of the Report that is not reflected in the Report.

• I confirm that this Report has been prepared consistent with the guidelines set by the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (“The JORC Code”) for Independent Expert Reports.

Signed and dated 15 October 2012 at Hong Kong, China

Mr. Emmanuel E. Mensah

Peer Reviewer, MAusIMM Senior Geologist

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25. REFERENCES

“Baicheng County Wenzhou Mining Development Co, Ltd No. 3 Pit of No. 1 Mine Reforming and Expansion Feasibility Study Report (900 ktpa)” Exploration Design Institute of Hami Mining Administration Bureau (“EDI”), January 2012.

The Joint Ore Reserves Committee of The Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia (JORC). December 2004. Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves: The JORC Code (2004 Edition).

USGS. February 2012. Assessment of Potential Uncoventional Carboniferous-Permian Gas Resources of the Liaohe Basin Eastern Uplift, Liaoning Province, China, 2011. http://pubs.usgs. gov/fs/2012/3018/FS12-3018.pdf

“Xinjiang Baicheng County Kueraken Mine Field No. 3 Pit of No. 1 Mine” Independent Technical Review and Competent Person’s Report,” Minarco-MineConsult (“MMC”), May 2011.

“Xinjiang Baicheng County Kueraken Mine Field No. 3 Pit of No. 1 Mine Exploration Report,” Xinjiang Coalfield Geological Bureau No. 161 Coalfield Geological Exploration Brigade (“Brigade 161”), May 2010.

26. RISK ANALYSIS

The following risk analysis follows Guidance Note 7 of the Stock Exchange of Hong Kong. Risk has been classified from major to minor as follows:

Major Risk : the factor poses an immediate danger of a failure which, if uncorrected, will have a material effect (>15% to 20%) on the project cash flow and performance and could potentially lead to project failure.

Moderate Risk : the factor, if uncorrected, could have a significant effect (10% to 15%) on the project cash flow and performance unless mitigated by some corrective action.

Minor Risk : the factor, if uncorrected, will have little or no effect (<10%) on project cash flow and performance.

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26.1. Overall Risks

The likelihood of a risk event occurring within a nominal 7 year time frame has been considered as:

Likely : will probably occur

Possible : may occur

Unlikely : unlikely to occur

The degree or consequence of a risk and its likelihood are combined into an overall risk assessment, as shown below:

Likelihood of Risk (within 7years)	Consequence of Risk	Consequence of Risk	Consequence of Risk
	Minor	Moderate	Major
Likely	Medium	High	High
Possible	Low	Medium	High
Unlikely	Low	Low	Medium

Table 26-1: Risk Assessment Guidelines

26.2. Project Risks

The main risks pertaining to this project are as follows:

Resource Risk (Low to Medium)

All resource and reserve estimates are based on very limited sampling to represent a much larger quantity of coal contained within a deposit. Therefore all resource and reserve estimates carry a level of unreliability due to geological variability and limited sampling. The JORC Code (2004) ranks resource and reserve estimates according to reliability of the estimates. Only Measured Resources carry relatively small geological risks. At Baicheng only 76% of the estimated total resources for the mine are classified as Measured with the remainder Probable.

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Coal mining using the Apparent Dip Flexible Shield mining method works most efficiently in seams that have stable walls and are not displaced by faulting or folding. The mapping and drilling carried out on the property to date has not identified faults or folding that displaces the coal seams. If it is found that a significant number of faults or folds were missed by these investigations and the coal seams are found to be more fragmented than indicated by current geological interpretations the economics of mining these seams may be adversely impacted.

ROMA did not estimate the coal quality of the resources and reserves due to the lack of QA/QC information to confirm that samples collected by previous workers met JORC Code (2004) guidelines, and have based their assumed coal quality types expressed in this report on previous production and sales. If the quality of the coal varies significantly at depth, the revenue received from coal sales may be affected. ROMA believes however that this is unlikely since the variation in coal quality within a seam as mined in the past was not considered to be significant.

Geotechnical Risk (Low to Medium)

During the wet season water from the surface, especially from the Shushan River that cuts across the mining licence near the middle, and groundwater from other areas including accumulated water in abandoned previously mined stopes and open cuts could flow into the operating underground workings through faults and cracks risking flooding of the workings and also over time affect the stability of the wall rocks. Based on experience gained while mining to date, these risks are not considered to be exceptional for this Project compared to most other underground coal mines although mining near old mining stopes and below the Shushan river still needs to monitored carefully.

Coal Price Risk (Low to Medium)

The world economy is currently unstable resulting in widely fluctuating prices for all types of coal. Current prices for coals are generally high but no-one can confidently predict future coal prices and how these changes will impact the project. It is noted however that the project is within China which is a major consumer of the type of coals mined at the project and it is government policy to become self-sufficient in coal. The market for the coal types mined at the Baicheng Mine is in very high demand and with the construction of at least five coking plants and a steel smelter Baicheng Zhonghuagong Industrial Park it is expected that all the coking and thermal coal produced will be readily sold.

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Sovereign Risk (Low to Medium)

The Chinese mining regulations and laws have changed considerably over recent years and are expected to continue to evolve. Most of the changes have made mining regulations more transparent and assist foreign investment. The extent and direction of further changes to the mining regulations and laws and their impact on these projects cannot be estimated, however it is not expected that any changes in the government regulations will pose exceptional risk to the project.

Contamination of Local Water System Risk (Low to Medium)

The Project produces significant water as in-flow into the underground mine workings that is pumped to the surface and water is also used extensively around the site for domestic purposes, at the workshops and for dust suppression. The quantity and quality of water produced at the Project could cause problems in the local environment leading to possible litigation by local residents and the government if the Project’s water management does not meet the conditions set out in the government approved Environmental Impact Statement that forms part of the mining licence conditions.

Contamination of the local water system is possible from other mine activities such as leaching of contaminants from mine waste dumps, industrial waste from workshops and domestic waste.

ROMA considers that due to the isolated location of the project, the risk of serious water contamination that could adversely affect local residents or contravene government regulations is low to medium.

Underestimation of the Operation Costs Risk (Low to Medium)

The operating cost estimates used in the EDI feasibility study that is the basis of ROMA’s reserve estimates are based on a number of assumptions. ROMA considers that there is a low to medium risk that operating costs may exceed the assumed estimates due to unforeseen increases of operating costs including fuel, labour and general inflation that could adversely affect the Project’s profits.

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Spontaneous Combustion and Gas Explosion Risk (Moderate to High)

All coal seams in the Project have moderate to high tendency of spontaneous combustion due to their high volatility and friability. The Company makes every effort to eliminate this risk by minimising the time that broken coal underground is exposed to the air after blasting and all possible sources of ignition such as electrical arcing are eliminated or protected.

To prevent volatile gases such as methane and dust generated by the coal from igniting, the atmosphere in the mine workings are strictly monitored and ventilation maximised.

Natural Disasters (Low to Medium)

Since the project is located in an active seismic region, infrastructure damage and disruption to mine production is possible after an earthquake but the timing and magnitude of any potential significant earthquake cannot be estimated.

The Project area is within a relatively dry mild climatic region however rare storms and floods are possible.

ROMA considers that the possibility of a major natural disaster is low to medium.

26.3. Summary of Risks

A summary of the main Project risks are included, summarized and ranked by their importance as follows:

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Risk Issue Likelihood Consequence Likelihood Consequence Rating Risk
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Risk Issue Likelihood Consequence	Likelihood	Consequence Rating	Risk
Geological
Resource/Reserve tonnes and grades significantly not achieved beyond the limits implied by the JORC classifications	Unlikely	Major	Medium
Mine workings collapse	Unlikely	Major	Medium
Significant unexpected faulting or folding	Unlikely	Minor	Low
Unexpected groundwater ingress	Possible	Moderate	Medium

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Risk Issue Likelihood Consequence Likelihood Consequence Rating Risk
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Risk Issue Likelihood Consequence	Likelihood	Consequence Rating	Risk
Adverse Economic Conditions
Coal price	Possible	Moderate	Medium
Inflation increases	Possible	Minor	Low
Change in Interest Rates	Possible	Minor	Low
Loss of demand	Unlikely	Major	Medium
Industrial disruption	Possible	Minor	Low
Sovereign risk	Possible	Moderate	Medium
Environmental Damage or Event
Significant Unpredicted Surface Subsidence	Possible	Moderate	Medium
Ecological Damage	Unlikely	Minor	Low
Extra costs for environment restoration	Possible	Minor	Low
Contamination of local water system	Possible	Moderate	Medium
Flooding	Possible	Moderate	Medium
Significant seismic event	Possible	Moderate	Medium
Capital and Operating Costs
Project timing delays	Possible	Minor	Low
Capital cost increase	Possible	Moderate	Medium
Operating costs underestimated significantly	Unlikely	Major	Medium
Licensing and permitting	Possible	Moderate	Medium
Operational Risk
Underperformance of plant and machinery	Possible	Moderate	Medium
Adverse weather condition	Unlikely	Moderate	Low
Natural hazard	Unlikely	Moderate	Low
Lack of working force	Unlikely	Moderate	Low
Spontaneous combustion	Possible	Major	High
Gas Explosion	Possible	Major	High

Table 26-2: Baicheng Project risk assessment.

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27. GLOSSARY

The following web sites are recommended to the reader for information and definitions of terms used in this Report.

Geotech[®] Dictionary of Geologic Terms http://www.geotech.org/survey/geotech/dictiona.html

Webref[®] – A glossary – dictionary – collection of terms – terminology related to the field of geology http://www.webref.org/geology/geology.htm

GeologylinkR geologic glossary. http://college.cengage.com/geology/resources/geologylink/glossary.html

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Air Dried (Ad) Alluvial Anthracite Aquifer Ash content Basin	Only includes inherent moisture which refers to moisture present naturally within the coal prior to mining. Loose, unconsolidated (not solid rock) soil or sediments which are eroded, deposited, and reshaped by water in some form in a non-marine setting. Alluvium is typically made up of a variety of materials, including fine particles of silt and clay and larger particles of sand and gravel. A hard, compact variety of mineral coal that has a high lustre. An underground layer of water-bearing permeable rock or unconsolidated materials (gravel, sand, or silt) from which groundwater can be usefully extracted using water well. Material left after coal has combusted that does not burn. A large-scale structural formation created by tectonic warping downwards of previously flat strata. Basins appear on a geologic map as being roughly circular or elliptical with concentric layers. Because the strata dip toward the center, the exposed strata in a basin are progressively younger from outside-in, with the youngest rocks in the center.

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Bituminous Borehole Bulk Density Calorific Value (CV) Carboniferous Cenozoic Clastic Claystone Coal Processing Coal Seams Coalfield	A relatively soft coal containing a tarlike substance called bitumen. It is of higher quality than lignite coal but of poorer quality than anthracite. The generalized term for any hole bored in the ground for the purpose of collecting samples of rock, oil or gas at depth. The mass of many particles of the material divided by the total volume they occupy. The total volume includes particle volume, inter-particle void volume and internal pore volume. The calories or thermal units contained in one unit of a substance and released when the substance is burned. A geologic period that extends from about 359.2±2.5 Mya to about 299.0±0.8 Mya. The current era covering the period from 65.5 Mya to the present. Clastic rocks are composed of fragments of pre-existing rock. Geologists use the term clastic with reference to sedimentary rocks as well as to particles in sediment transport whether in suspension or as bed load, and in sediment deposits. A geological term used to describe a clastic sedimentary rock that is composed primarily of very fine clay-sized particles (less than 1/256 mm in diameter). Coal is processed in a variety of methods which is dependent on its usage. Coal can also be washed or cleaned to remove contaminants. Solid coal can also be converted into a gas or liquid fuel. Coal used for steel making is further processed into coke. A stratum or bed of coal thick enough to be economically mined. An area where coal has been identified and can be mined.

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Word	Definition
Coke Cretaceous Deposit Devonian Dip Dolomite Earthquake Belt Epoch Era Erosion Exploitation	When coking coals are subjected to intense heat (Carbonization), gasses (Volatiles) are driven off leaving a sponge like matrix of carbon referred to as Coke. A geologic period from circa 145.5±4 to 65.5±0.3 Mya. The geological process by which material is added to a landform or land mass. A geologic period and system of the Paleozoic Era spanning from the end of the Silurian Period, about 416.0±2.8 Mya to the beginning of the Carboniferous Period, about 359.2±2.5 Mya. The steepest angle of a tilted bed or feature relative to a horizontal plane, and is given by the number (0°-90°) as well as a letter (N,S,E,W) with rough direction in which the bed is dipping. A carbonate mineral composed of calcium magnesium carbonate CaMg(CO3)2. A narrow geographic zone on the Earth’s surface along which most earthquake activity occurs. A subdivision of the geologic timescale that is longer than an age and shorter than a period. A subdivision of the geologic timescale in which eons are divided into eras, which are in turn divided into periods, epochs and ages. The process by which soil and rock are removed from the Earth’s surface by natural processes such as wind or water flow, and then transported and deposited in other locations. The use or utilization of a natural resource, especially for profit.

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Word	Definition
Exploration Fault Fault Block Fine Grained Fold Formation Geographic Coordinate System Gravel Hydrology	The search for deposits of useful minerals of fossil fuels, also known as prospecting. It may include geologic reconnaissance, e.g., remote sensing, photogeology, geophysical and geochemical methods, and both surface and underground investigations. A planar fracture or discontinuity in a volume of rock, which has significant displacement. Large faults within the Earth’s crust result from the action of tectonic forces. Energy release associated with rapid movement on active faults is the cause of most earthquakes. A very large block of rock, sometimes hundreds of kilometres in extent, created by tectonic and localized stresses in the Earth’s crust. Large areas of bedrock are broken up into blocks by faults. Sediment or sedimentary rock in which the individual constituents are too small to distinguish with the unaided eye. A stack of originally flat and planar surfaces, such as sedimentary strata, that are bent or curved as a result of permanent deformation. Persistent bodies of igneous, sedimentary, or metamorphic rock, having easily recognizable boundaries that can be traced in the field. A coordinate system that enables every location on the Earth to be specified by a set of numbers. A common choice of coordinates is latitude, longitude and elevation. Composed of unconsolidated rock fragments that have a general particle size range (2-64 mm) and include size classes from granule-to boulder-sized fragments. The study of the movement, distribution, and quality of water on Earth and other planets.

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Interbedded Jointing Jurassic Kaolinite Lean Coal Lignite Limestone Lithology Logging Lustre	Layers or rock of a particular lithology that lie between or alternate with beds of a different lithology. A fracture in rock where the displacement associated with the opening of the fracture is greater than the displacement due to lateral movement in the plane of the fracture (up, down or sideways) of one side relative to the other. Typically, there is little to no lateral movement across joints. A geologic period that extends from about 199.6±0.6 to 145.5±4 Mya. A clay mineral, part of the group of industrial minerals, with the chemical composition Al2Si2O5(OH)4. It is a layered silicate mineral, with one tetrahedral sheet linked through oxygen atoms to one octahedral sheet of alumina octahedra. Highly metamorphosed bituminous coal with low volatility and moderate caking property. It can produce large lumps of coke with small fractures and strong resistance to crash. A soft brown fuel with characteristics that put it somewhere between coal and peat. It is considered the lowest rank of coal. A sedimentary rock composed largely of the minerals calcite and aragonite, which are different crystal forms of calcium carbonate (CaCO3). Many limestones are formed from skeletal fragments of marine organisms such as coral or foraminifera. A description of a rock’s physical characteristics visible at outcrop, in hand or core samples or with low magnification microscopy, such as colour, texture, grain size, or composition. Recording geological features of a rock specimen, usually drill core. A description of the way light interacts with the surface of a crystal, rock, or mineral.

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Magnitude Marker Bed Marshes Meagre Coal Mires Mesozoic Mudstone Normal Fault Ordovician Outcrop Paleozoic Parting	Measurement of the size or intensity of an earthquake. A bed of rock strata that are readily distinguishable by reason of physical characteristics and are traceable over large horizontal distances. A type of wetland that is dominated by herbaceous rather than woody plant species. A relatively soft coal containing a tarlike substance called bitumen. It is of higher quality than lignite coal but of poorer quality than anthracite coal. A boggy or marshy area. The geological period ranging from about 250 to about 65 Mya. A fine grained sedimentary rock whose original constituents were clays or muds. Grain size is up to 0.0625 mm with individual grains too small to be distinguished without a microscope. If the hanging wall drops relative to the footwall, a normal fault occurs. It is found in areas undergoing extension (stretching). The geologic period spanning 488.3±1.7 to 443.7±1.5 Mya. A visible exposure of bedrock on the surface of the Earth. The geologic era spanning from roughly 542 to 251 Mya. A visible thickness of rock found within a coal seam. Some partings may be included in a mining section planned for coal extraction while other thicker partings may be planned as material which will be mined separately as waste rock and not delivered with coal to process plants.

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Peak Ground Acceleration (PGA) Peat Permian Permo-Carboniferous Plate Convergence Plies (Splits) Pyrite Quaternary Raw Coal Reserve	A measure of earthquake acceleration on the ground and an important input parameter for earthquake engineering. Earthquake energy is dispersed in waves from the epicentre, causing ground movement horizontally and vertically. PGA records the acceleration (rate of change of speed) of these movements, while peak ground velocity is the greatest speed (rate of movement) reached by the ground, and peak displacement is the distance moved. An accumulation of partially decayed vegetation matter. Peat forms in wetland bogs and swamps. A geologic period spanning 299.0±0.8 to 251.0±0.4 Mya. The Permo-Carboniferous refers to the time period including the latter parts of the Carboniferous and early part of the Permian period. An actively deforming region where two (or more) tectonic plates or fragments of lithosphere move toward one another and collide. When a coal seam contains a rock parting the coal sections above and below the parting are often referred to as plies. An iron sulphide with the formula FeS2and the most common of the sulphide minerals. It has a metallic lustre and is pale brass-yellow. The most recent of the three periods of the Cenozoic Era in the geologic time scale, spanning 2.588±0.005 Mya to the present. Coal which has not been subjected to any means of beneficiation by screens, rotary breakers or processing plants. Natural resources that are economically feasible for extraction.

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Resource Run-of-Mine (ROM) Coal Sandstone Seasonal Streams Sediment Seismic Zone Silurian Shale Spontaneous combustion Stratigraphy Stratum Strike	An accumulation of natural minerals or rocks that can be reasonably expected to be exploited economically. The coal delivered from the mine that reports to the coal preparation plant. A sedimentary rock composed mainly of sand-sized minerals or rock grains. Most sandstone is composed of quartz and/or feldspar. A stream whose flow is not constant because it has water in its course only during certain seasons. Sediments are formed by the deposition of particles carried by a water flow or wind resulting in the formation of sedimentary rock. A region in which the rate of seismic activity remains fairly consistent. A geologic period and system that extends from the end of the Ordovician Period, about 443.7±1.5 Mya, to the beginning of the Devonian Period, about 416.0±2.8 Mya. Clastic sedimentary rock composed of mud sized particles. A type of combustion which occurs without an external ignition source. Stratigraphy, a branch of geology, studies rock layers and layering (stratification) of sedimentary and layered volcanic rocks. A layer of sedimentary rock or soil with internally consistent characteristics that distinguish it from other layers. The direction of a horizontal surface placed on inclined strata usually measured in degree from North.

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Sulphur Suture Surveying Syncline Tertiary Tidal Flat Topography Triassic Unconformity Vdaf (Volatility) Washing Plant Weathering	An abundant bright yellow crystalline element that is solid at room temperature. Chemically, sulphur can react as either an oxidant or reducing agent. Sulphide minerals are common in coal. When coal is burnt the sulphur can form noxious gases so low sulphur bearing coals are preferred. A joining together along a major fault zone, of separate terranes, tectonic units that have different plate tectonic, metamorphic and paleogeographic histories. It is often represented on the surface by an orogen or mountain range. The technique, profession, and science of accurately determining the terrestrial or three-dimensional position of points and the distances and angles between them. Fold, with younger layers closer to the centre of the structure unless overturned. A geologic period 65 to 2.6 Mya. A level muddy surface bordering an estuary, alternately submerged and exposed to the air by changing tidal levels. The description of surface shapes and features (especially their depiction in maps). A geologic period extending from about 250 to 200 Mya. A boundary separating two or more rocks of markedly different ages, marking a gap in the geologic record. Quantity of volatile gases given after coal has been heated during the coking process including hydrocarbons, such as propane, benzene, aromatics, oxides of sulphur and moisture. A coal beneficiation plant (CBP) washes coal of contaminating rock, preparing it for transport to market. The chemical and physical break down of rocks, soils and minerals through contact with the Earth’s atmosphere, biota and water.

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GENERAL INFORMATION

APPENDIX VII

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the 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 contained in this circular 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 circular misleading.

2. SHARE CAPITAL

The authorised and issued share capital of the Company as at the Latest Practicable Date were as follows:

As at Latest Practicable Date

Authorised share capital 10,000,000,000 Shares Issued and fully paid share capital 3,927,535,804 Shares	HK$ 500,000,000
	196,376,790

All the issued shares in the capital of the Company has a nominal value of HK0.05 each and rank pari passu with each other in all respects including the rights as to voting and dividends.

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GENERAL INFORMATION

APPENDIX VII

3. DISCLOSURE OF INTERESTS

(a) Directors’ and chief executives’ interests and short positions in the securities of the Company and its associated corporations

As at the Latest Practicable Date, the interests and short positions of the Directors and the chief executive of the Company in the Shares, underlying Shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) which were required (a) to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); or (b) pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (c) pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the “ Model Code ”), were as follows:

Long positions in ordinary Shares and underlying Shares of the Company:

				Number of		Approximate
			Number of	underlying		percentage of
Name of		Nature of	Shares of the	Shares of the		total issued
Director	Capacity	interest	Company held	Company held	Total	share capital
Li Shao Yu	Interest of	Corporate interest	1,141,804,853	–	1,160,804,853	29.56%
	controlled corporations		(Note 1)
	Beneficial owner	Personal interest	–	19,000,000
				(Note 2)

Notes:

1. Li Shao Yu has controlling interest in Hao Tian Group Holdings Limited, which, in turn, has controlling interest in TRXY Development (HK) Limited and Tai Rong Xin Ye International Power Generation Inc. TRXY Development (HK) Limited has also controlling interest in Real Power Holdings Limited.

2. These interests represented the interests in underlying Shares in respect of share options granted by the Company to these Directors as beneficial owners under the Share Option Scheme adopted on 16 May 2006.

Other than as disclosed above, as at the Latest Practicable Date, none of the Directors or their associates had any interests or short positions in any Shares, underlying Shares and debentures of, the Company or any of its associated corporations (within the meaning of Part XV of the SFO) as recorded in the register required to be kept under Section 352 of the SFO or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code.

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GENERAL INFORMATION

APPENDIX VII

(b) Substantial Shareholders’ Interests and Short Positions in Shares and Underlying Shares of the Company

As at the Latest Practicable Date, the following entities have interests or short positions of 5% or more in the Shares and underlying Shares of the Company which were recorded in the register of substantial shareholders maintained under Section 336 of the SFO or had otherwise notified to the Company:

		Number of
	Number of	underlying			Approximate
	Shares of	Shares of			percentage of
	the Company	the Company			the total issued
Name	held	held	Capital	Total	share capital
TRXY Development	359,655,351	–	Beneficial owner	882,055,912		22.46%
(HK) Limited
	522,400,561	–	Interest of
	(Note 1)		a controlled corporation
Real Power	522,400,561	–	Beneficial owner	522,400,561		13.30%
Holdings Limited
Tai Rong Xin Ye	259,748,941	–	Beneficial owner	259,748,941		6.61%
International Power
Generation Inc.
Hao Tian Group	1,141,804,853	–	Interest of controlled	1,141,804,853		29.07%
Holdings Limited			corporations	(Note 2)
Atlantis Capital	429,000,000	–	Beneficial owner	429,000,000		10.92%
Holdings Limited				(Note 3)
Liu Yang	429,000,000	–	Interest of a	429,000,000		10.92%
			controlled corporation	(Note 3)
Central Huijin	–	256,894,584	Interest of a	256,894,584		6.54%
Investment Ltd			controlled corporation	(Note 4)
China Construction	–	256,894,584	Interest of a	256,894,584		6.54%
Bank Corporation			controlled corporation	(Note 4)
Heritage International	234,000,000	–	Interest of a	234,000,000		5.96%
Holdings Limited			controlled corporation	(Note 5)
Coupeville Limited	234,000,000	–	Interest of a	234,000,000		5.96%
			controlled corporation	(Note 5)
Dollar Group Limited	234,000,000	–	Beneficial owner	234,000,000		5.96%
				(Note 5)

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APPENDIX VII

Notes:

1. Real Power Holdings Limited is beneficially owned as to 75% by TRXY Development (HK) Limited.

2. Hao Tian Group Holdings Limited has controlling interest in TRXY Development (HK) Limited and Tai Rong Xin Ye International Power Generation Inc. TRXY Development (HK) Limited has also controlling interest in Real Power Holdings Limited.

3. As at the Latest Practicable Date, Atlantis Capital Holdings Limited was beneficial owner of these shares in the Company, which, in turn, was wholly-owned by Liu Yang.

4. The two references to 256,894,584 shares related to the same block of shares. Big Wish Investments Limited was interested in the underlying Shares in the Company. Big Wish Investments Limited is a wholly-owned subsidiary of CCB International Asset Management Limited (“ CCBIAM ”) which was interested in the Shares in the Company, in return, CCBIAM is a wholly-owned subsidiary of CCB International (Holdings) Limited. CCB International (Holdings) Limited is a wholly-owned subsidiary of CCB Financial Holdings Limited which in turn is wholly-owned by CCB International Group Holdings Limited. CCB International Group Holdings Limited is a wholly-owned subsidiary of China Construction Bank Corporation which in turn 57.09% of its interest is owned by Central Huijin Investment Limited. Accordingly, CCBIAM, CCB International (Holdings) Limited, CCB Financial Holdings Limited, CCB International Group Holdings Limited, China Construction Bank Corporation and Central Huijin Investment Limited are deemed to be interested in these underlying Shares held in the Company by virtue of the provisions of the SFO.

5. The three references to 234,000,000 shares related to the same block of Shares. Heritage International Holdings Limited has controlling interest in Coupeville Limited, which, in return has also controlling interest in Dollar Group Limited.

Other than as disclosed above, as at the Latest Practicable Date, no person (other than Directors) has interests or short positions in the Shares or underlying Shares of the Company which were recorded in the register of substantial shareholders maintained under Section 336 of the SFO.

Other than as disclosed above, as at the Latest Practicable Date, none of the Directors or any proposed Director is a director or employee of a company which has an interest or short position in the Shares and underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of part XV of the SFO.

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APPENDIX VII

4. DIRECTORS’ OTHER INTERESTS

As at the Latest Practicable Date, so far as the Directors were aware, none of themselves or their respective associates had any interest in a business which competes or may compete with the business of the Group or any other conflicts of interests with the Group.

As at the Latest Practicable Date, none of the Directors had any interests, either direct or indirect, in any assets which have been acquired or disposed of by or leased to or are proposed to be acquired or disposed of by or leased to any member of the Group since 31 March 2012, being the date to which the latest published audited consolidated financial statements of the Group were made up.

There was no contract or arrangement entered into by any member of the Group subsisting at the Latest Practicable Date in which any Director is materially interested and which is significant to the business of the Group.

5. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse changes in the financial or trading position of the Group since 31 March 2012, the date to which the latest published audited consolidated accounts of the Group were made up.

6. LITIGATION

As at the Latest Practicable Date, so far as the Directors were aware, none of the members of the Group was engaged in any litigation or claim of material importance which was known to the Directors to be pending or threatened by or against any member of the Group as at the Latest Practicable Date.

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GENERAL INFORMATION

APPENDIX VII

7. CORPORATE INFORMATION

BOARD OF DIRECTORS Executive Directors

Dr. Zhiliang Ou, J.P. (Australia) Mr. Xu Hai Ying

Independent Non-executive Directors

Mr. Chan Ming Sun Jonathan Mr. Ma Lin Mr. Lam Kwan Sing

AUDIT COMMITTEE

Mr. Chan Ming Sun Jonathan (Chairman of Committee) Mr. Ma Lin Mr. Lam Kwan Sing

HONG KONG BRANCH SHARE REGISTRAR AND TRANSFER OFFICE

Computershare Hong Kong Investor Services Limited Shops 1712-1716, 17th Floor Hopewell Centre 183 Queen’s Road East Hong Kong

PRINCIPAL PLACE OF BUSINESS IN HONG KONG

Rooms 4917-4932, 49/F. Sun Hung Kai Centre 30 Harbour Road Wanchai Hong Kong

REMUNERATION COMMITTEE

Mr. Chan Ming Sun Jonathan (Chairman of Committee) Dr. Zhiliang Ou, J.P. (Australia) Mr. Lam Kwan Sing

NOMINATION COMMITTEE

Mr. Chan Ming Sun Jonathan (Chairman of Committee) Dr. Zhiliang Ou, J.P. (Australia) Mr. Lam Kwan Sing

EXECUTIVE COMMITTEE

Dr. Zhiliang Ou, J.P. (Australia) Mr. Xu Hai Ying

PRINCIPAL BANKER

The Hongkong and Shanghai Banking Corporation Limited 1 Queen’s Road Central Hong Kong

Hang Seng Bank Limited 83 Des Voeux Road Central Hong Kong

COMPANY SECRETARY

Mr. Fok Chi Tak

AUDITOR

REGISTERED OFFICE

Cricket Square Hutchins Drive P.O. Box 2681 Grand Cayman KY1-1111 Cayman Islands

Deloitte Touche Tohmatsu Certified Public Accountants 35/F One Pacific Place 88 Queensway Hong Kong

WEBSITE

PRINCIPAL SHARE REGISTRAR AND TRANSFER OFFICE IN CAYMAN ISLANDS

www.haotianhk.com

Royal Bank of Canada Trust Company (Cayman) Ltd 4th Floor, Royal Bank House 24 Shedden Road, George Town Grand Cayman KY1-1110 Cayman Islands

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APPENDIX VII

8. SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had any existing or proposed service contract with the Company or any member of the Group (excluding contracts expiring or determinable by the Group within one year without payment of compensation (other than statutory compensation)).

9. EXPERTS AND CONSENTS

The following are the qualifications of the experts who have provided its advice and reports (as the case may be), which are contained in this circular:

Name	Qualification
Deloitte Touche Tohmatsu (“Deloitte”)	Certified Public Accountants
Mr. Brian J. Varndell of ROMA	Competent Person

Deloitte and ROMA have given and have not withdrawn their written consents to the issue of this circular with the inclusion herein of their respective letters and reports and/or references to their names in the form and context in which they respectively appear.

As at the Latest Practicable Date, none of Deloitte and ROMA was beneficially interested in the share capital of any member of the Group, nor did they have any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group, nor did they have any interest either direct or indirect, in any assets which had been acquired or disposed of by or leased to or are proposed to be acquired or disposed of by or leased to any member of the Group since 31 March 2012, being the date to which the latest published audited consolidated financial statements of the Group were made up.

10. MATERIAL CONTRACTS

The following contracts had been entered into by the Group (not being contracts entered into in the ordinary course of business) within the two years immediately preceding the Latest Practicable Date and are or may be material:

• (a) The S&P Agreement;

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APPENDIX VII

• (b) On 9 September 2011, Brilliant Wise Ltd., Max Joyce Limited and Favour Mind Ltd. (collectively, the “ Vendors ”), 內蒙古雙欣資源集團有限公司 (Inner Mongolia Shuangxin Resources Group Co., Ltd.) and the Company (as guarantor) entered into the S&P Agreement on 7 September 2011 pursuant to which, amongst others, 內蒙 古雙欣資源集團有限公司 (Inner Mongolia Shuangxin Resources Group Co., Ltd.) conditionally agreed to acquire from the Vendors, and the Vendors conditionally agreed to dispose of, the entire equity interest of Wuhai City Menggang at a consideration of RMB1,503,000,000; and

• (c) On 25 October 2012, a wholly-owned subsidiary of the Company entered into a sale and purchase agreement with Uprite Limited, a company incorporated in the British Virgin Islands, to acquire a yacht and the accompanying marine facilities at a total consideration of HK$65,000,000.

Save as the aforesaid, no material contracts (not being contract entered into in the ordinary course of business) had been entered into by any member of the Group within the two years immediately preceding the Latest Practicable Date which are or may be material.

11. SECRETARY OF THE COMPANY

The secretary of the Company is Mr. Fok Chi Tak. Mr. Fok is a fellow member of the Hong Kong Institute of Certified Public Accountants and the Association of Chartered Certified Accountants. Mr. Fok is also a fellow member of the Institute of Chartered Secretaries and Administrators and the Hong Kong Institute of Chartered Secretaries.

12. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours at the Company’s principal place of business in Hong Kong from the date of this circular up to and including the date of EGM:

• (a) the memorandum and articles of association of the Company;

• (b) the annual reports of the Company for each of the three financial years ended 31 March 2012;

• (c) the financial information of the Disposal Group, the text of which is set out in Appendix IIA to this circular;

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APPENDIX VII

• (d) the financial information of Up Energy Group, the text of which is set out in Appendix III to this circular;

• (e) the report in respect of the unaudited pro forma financial information of the Remaining Group, the text of which is set out in Appendix IV to this circular;

• (f) the Competent Person’s Report prepared and issued by ROMA, the text of which is set out in Appendix VI to this circular;

• (g) the written consents referred to under the section headed “Experts and Consents” in this appendix;

• (h) the material contracts referred to in the paragraph headed “Material Contracts” in this appendix; and

• (i) a copy of this circular.

13. MISCELLANEOUS

• The principal place of business of the Company in Hong Kong is at Rooms 4917-4932, 49/F., Sun Hung Kai Centre, 30 Harbour Road, Wanchai, Hong Kong;

• The registered office of the Company is at Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111, Cayman Islands;

• The branch share registrar and transfer office of the Company in Hong Kong is Computershare Hong Kong Investor Services Limited at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong; and

• The English text of this circular and the accompanying form of proxy shall prevail over their respective Chinese texts in case of inconsistency.

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NOTICE OF EXTRAORDINARY GENERAL MEETING

==> picture [43 x 55] intentionally omitted <==

HAO TIAN RESOURCES GROUP LIMITED 昊天能源集團有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 00474)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that an extraordinary general meeting of Hao Tian Resources Group Limited (the “ Company ”) will be held at 3:00 p.m. on Friday 22 February 2013 at The Training Room, 4/F., Sun Hung Kai Centre, 30 Harbour Road, Wanchai, Hong Kong for the purposes of considering and, if thought fit, passing the following resolutions as ordinary resolutions of the Company, with or without amendments:

ORDINARY RESOLUTION

“ THAT :

1. (a) the sale and purchase agreement (the “ S&P Agreement ”), (a copy of which is produced to the meeting marked “A” and initialed by the chairman of the meeting for the purpose of identification) entered into between the Company (as vendor), Up Energy Mining Limited and Up Energy Development Group Limited, pursuant to which, amongst others, the Company conditionally agreed to dispose of and assign to Up Energy Mining Limited, and Up Energy Mining Limited conditionally agreed to purchase and accept the assignment of, the entire equity interest of Champ Universe Limited and all rights, title, benefit and interest of and in the shareholder’s loan at a total consideration of HK$1,580,000,000, and all transactions contemplated under the S&P Agreement and any other agreements or documents in connection therewith be and are hereby approved, confirmed and/or ratified; and

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NOTICE OF EXTRAORDINARY GENERAL MEETING

• (b) any one Director or the company secretary or any two Directors if the affixation of the common seal is necessary, be and is/are hereby authorised for and on behalf of the Company to take all steps necessary or expedient in their opinion to implement and/or give effect to the terms of the S&P Agreement and to complete the transactions contemplated thereunder, and to agree such variations, amendments or waivers thereof as are, in the opinion of such Director(s), in the interests of the Company.”

By order of the Board Hao Tian Resources Group Limited Fok Chi Tak Company Secretary

Hong Kong, 31 January 2013

Notes:

• (1) All the resolutions to be proposed at the extraordinary general meeting will be decided by poll.

• (2) A member of the Company entitled to attend and vote at the extraordinary general meeting is entitled to appoint one or, if he is the holder of two or more shares, more than one proxy to attend and, on a poll, to vote instead of him. A proxy need not be a member of the Company.

• (3) Where there are joint registered holders of any share, any one of such persons may vote at the extraordinary general meeting, either in person or by proxy, in respect of such share as if he were solely entitled thereto, but if more than one of such joint holders be present at the extraordinary general meeting personally or by proxy, that one of the said persons so present whose name stands first on the register in respect of such share, shall alone be entitled to vote in respect thereof.

• (4) To be valid, the form of proxy, together with the power of attorney or other authority, if any, under which it is signed or a notarially certified copy of such power or authority, must be deposited at the branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited, Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for holding the extraordinary general meeting or adjourned meeting. Completion and return of the form of proxy will not preclude members from attending and voting in person at the extraordinary general meeting.

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