Anhui Jinyan Kaolin New Materials Co., Ltd. — Proxy Solicitation & Information Statement 2007

Nov 1, 2007

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your 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 Minmetals Resources Limited, you should at once hand this circular to the purchaser(s) or the transferee(s) or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or transferee(s).

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

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(Incorporated in Hong Kong with limited liability) (Stock Code: 1208)

DISCLOSEABLE TRANSACTION

INVESTMENT IN QINGHAI PROVINCE INVESTMENT GROUP LIMITED

2 November 2007

CONTENTS

	Page
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
The Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Information about ACE, Pearl Bright and Qinghai Investment . . . . . . . . . . . . . .	12
Reasons for and benefits of entering into the Agreement . . . . . . . . . . . . . . . . . . . .	14
Principal business activities of the other parties to the Agreement . . . . . . . . . . .	14
Listing Rules implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
Additional information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15

DEFINITIONS

In this circular, unless the context otherwise requires, the following expressions shall have the following meanings:

“ACE”	Ace Honest Group Limited, a company incorporated
	in the British Virgin Islands, which is wholly-owned
	by Bright Island
“ACE Purchasers”	collectively, Shining and Patcham, and each of them,
	an “ACE Purchaser”
“ACE Sale Shares”	600 shares in ACE, representing the entire issued share
	capital of ACE, which are registered in the name of
	and owned by Bright Island
“Agreement”	the agreement for the acquisition of the entire issued
	share capital of each of ACE and Pearl Bright entered
	into between the ACE Purchasers, the Pearl Bright
	Purchasers, the Option Grantors, the Vendors and the
	Co-Warrantors and dated 25 September 2007
“Board”	The board of Directors
“Bright Island”	Bright Island Industries Limited, a company
	incorporated in the British Virgin Islands, which is
	wholly-owned by Simon Xinming Mu, an Independent
	Third Party
“Business Day”	a day on which banks in Hong Kong, Beijing, Zurich
	and New York are open for business
“Call Option”	the irrevocable option granted by the Option Grantors
	to the Vendors entitling the Vendors to purchase from
	the Option Grantors all the Call Option Shares
“Call Option Exercise Price”	the price payable by the Vendors to the Option
	Grantors consisting of (i) US$600 (equivalent to
	HK$4,680) in total, US$200 (equivalent to HK$1,560)
	to each Option Grantor, as the price for the purchase
	from the Option Grantors of all the Call Option Shares
	on exercise of the Call Option, and (ii) an amount in
	US dollars equal to the total amount of the Shareholder
	Loans (i.e. RMB510.25 million (equivalent to
	approximately HK$525.56 million)) to be calculated
	using the middle exchange rate applied by Bank of
	China on the date when the Call Option is exercised,
	as the price for the purchase of the Shareholder Loans

– 1 –

DEFINITIONS

“Call Option Period”

the period commencing on the Equity Contribution Completion Date and ending on the earlier of the following dates: (i) the 15th day of the date when Qinghai Commission or Qinghai Investment receives a written confirmation from China Securities Regulatory Commission (“ CSRC ”) that Qinghai Investment’s application for an initial public offering has been approved by CSRC’s Review Committee of Public Offering ( 發行審核委員會 ); and (ii) 31 December 2009

• “Call Option Shares” the entire issued share capital of each of the Call Option SPVs, which in turn together own 50% of the entire issued share capital of Pearl Bright

• “Call Option SPVs” collectively, Chief Solar, Wise Plenty and Marysky, and each of them, a “Call Option SPV”

• “Capital Increase Agreement” the capital increase agreement dated 15 June 2005 and executed between Qinghai Commission, ACE and Pearl Bright in respect of the increase in capital in Qinghai Investment

• “Chief Solar” Chief Solar International Limited, a company incorporated in the British Virgin Islands, which is a subsidiary of the Chief Solar Shareholders

• “Chief Solar Shareholders” Ms. Dai Lian and Ms. Yu Pui Pui Brenda, each being an Independent Third Party

• “Companies Ordinance” The Companies Ordinance (Chapter 32 of the Laws of Hong Kong)

• “Company” Minmetals Resources Limited (五礦資源有限公司 ), a company incorporated on 29 July 1988 in Hong Kong with limited liability, the shares of which are listed on the Stock Exchange

• “Completion” completion of the sale and purchase of the Sale Shares in accordance with the Agreement

• “Co-Warrantors” collectively, Simon Xinming Mu, Ying Xia and Bing Zhao, all being Independent Third Parties

• “Director(s)” the director(s) of the Company

– 2 –

DEFINITIONS

“Drakefell”	Drakefell International Limited, a company
	incorporated in the British Virgin Islands, which is an
	Independent Third Party, and the ultimate beneficial
	owner of which is also an Independent Third Party
“Equity Contribution	the date when all of the equity contributions required
Completion Date”	to be made to Qinghai Investment by ACE and Pearl
	Bright under the Capital Increase Agreement, precisely
	RMB2.041 billion (equivalent to approximately
	HK$2.102 billion), have been completed, no later than
	31 December 2007 but subject to procurement of the
	approval by the Ministry of Commerce on extension
	of the equity contribution deadline from 25 May 2007
	to 25 November 2007 or a later date
“Global Will”	Global Will Properties Limited, a company
	incorporated in the British Virgin Islands, which is
	wholly-owned by Ying Xia and Bing Zhao, each being
	an Independent Third Party
“Group”	the Company and its subsidiaries
“HK$”	Hong Kong dollar(s), the lawful currency of Hong
	Kong
“Hong Kong”	the Hong Kong Special Administrative Region of the
	PRC
“Independent Third Party”	a party who is a third party independent of the
	Company and connected persons of the Company and
	its subsidiaries
“Latest Practicable Date”	30 October 2007, being the latest practicable date prior
	to the printing of this circular for ascertaining certain
	information of this circular
“Listing Rules”	the Rules Governing the Listing of Securities on the
	Stock Exchange
“Marysky”	Marysky International Ltd, a company incorporated
	in the British Virgin Islands, which is an Independent
	Third Party and wholly-owned by Drakefell
“Option Grantors”	collectively, Chief Solar Shareholders, Topstart and
	Drakefell, and each of them, an “Option Grantor”

– 3 –

DEFINITIONS

“Patcham”	Patcham United Corp, a company incorporated in the
	British Virgin Islands, which is an Independent Third
	Party and wholly-owned by Drakefell
“Pearl Bright”	Pearl Bright Holdings Limited, a company
	incorporated in the British Virgin Islands, which is
	100%-owned by Global Will
“Pearl Bright Purchasers”	Rankhigh, Chief Solar, Wise Plenty and Marysky
“Pearl Bright Sale Shares”	600 shares in Pearl Bright, representing the entire
	issued share capital of Pearl Bright, which are
	registered in the name of and owned by Global Will
“PRC”	the People’s Republic of China (for the purpose of
	this circular, excluding Hong Kong, Taiwan and the
	Macau Special Administrative Region of the PRC)
“Purchasers”	collectively, Shining, Patcham, Rankhigh, Chief Solar,
	Wise Plenty and Marysky, and each of them, a
	“Purchaser”
“Qinghai Commission”	青海省政府國有資產監督管理委員會(Qinghai Province
	State-owned Asset Supervision and Administration
	Commission), an Independent Third Party
“Qinghai Investment”	青海省投資集團有限公司(Qinghai Province
	Investment Group Limited), a Sino-foreign equity joint
	venture established under the laws of the PRC on 24
	May 2006 and owned as to 40% by Qinghai
	Commission, 30% by ACE and 30% by Pearl Bright
“Rankhigh”	Rankhigh International Limited, a company
	incorporated in the British Virgin Islands, which is an
	Independent Third Party, and the ultimate beneficial
	owner of which is also an Independent Third Party
“RMB”	Renminbi, the lawful currency of the PRC
“Sale Shares”	the ACE Sale Shares and Pearl Bright Sale Shares

– 4 –

DEFINITIONS

“Shareholder Loans”	the loans to be provided respectively and in equal
	proportion by (i) Chief Solar Shareholders to Chief
	Solar, (ii) Topstart to Wise Plenty, and (iii) Drakefell
	to Marysky, in a total amount equivalent to RMB510.25
	million (equivalent to approximately HK$525.56
	million), which shall be used by the Call Option SPVs
	respectively to fund Pearl Bright for the sole purpose
	of meeting Pearl Bright’s equity contribution
	obligations toward Qinghai Investment; each of them,
	a “Shareholder Loan”
“Shining”	Shining Boom Limited, a company incorporated in the
	British Virgin Islands, which is a wholly-owned
	subsidiary of the Company
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Topstart”	Topstart Limited, a company incorporated in the
	British Virgin Islands, which is a wholly-owned
	subsidiary of the Company
“US$”	United States dollar(s), the lawful currency of the
	United States of America
“Vendors”	collectively, Bright Island and Global Will, and each
	of them, a “Vendor”
“Wise Plenty”	Wise Plenty Limited, a company incorporated in the
	British Virgin Islands, which is wholly-owned by
	Topstart and an indirect wholly-owned subsidiary of
	the Company

Solely for convenience and except as otherwise noted, this Circular contains translations of US$ amounts into Hong Kong dollars at a rate of US$1.00=HK$7.80 and RMB amounts in Hong Kong dollars at a rate of RMB1.00=HK$1.03.

– 5 –

LETTER FROM THE BOARD

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(Incorporated in Hong Kong with limited liability)

(Stock Code: 1208)

Executive Directors:

Mr. Xu Huizhong Mr. Wang Lixin Mr. Ren Suotang

Non-executive Directors:

Mr. Zhou Zhongshu (Chairman) Ms. Shen Ling Mr. Zhang Shoulian Mr. Zong Qingsheng Mr. Cui Hushan

Registered office and principal place of business: 9th Floor, China Minmetals Tower 79 Chatham Road South Tsimshatsui Kowloon Hong Kong

Independent Non-executive Directors:

Mr. Liu Hongru Mr. Chan Wai Dune

Mr. Ting Leung Huel, Stephen

2 November 2007

To the shareholders of the Company,

Dear Sir/Madam,

DISCLOSEABLE TRANSACTION

INVESTMENT IN QINGHAI PROVINCE INVESTMENT GROUP LIMITED

INTRODUCTION

Reference is made to the announcement of the Company dated 12 October 2007. On 25 September 2007, the Group together with the other Purchasers, the other Option Grantors, the Vendors and the Co-Warrantors entered into the Agreement. Pursuant to the Agreement, Shining and Wise Plenty, both being wholly-owned subsidiaries of the Company have conditionally agreed to purchase from the Vendors 300 ACE Sale Shares and 100 Pearl Bright Sale Shares, representing 50% of the issued share capital in ACE and approximately 16.67% of the issued share capital in Pearl Bright, respectively.

– 6 –

LETTER FROM THE BOARD

Pursuant to the Agreement, Shareholder Loans in the total amount of RMB510.25 million (equivalent to approximately HK$525.56 million) will be provided respectively and in equal proportion by the Option Grantors to Call Option SPVs, which shall be used by the Call Option SPVs respectively to fund Pearl Bright for the sole purpose of meeting Pearl Bright’s equity contribution obligations toward Qinghai Investment.

Further, in consideration of the Vendors’ agreement to sell the Sale Shares to the Purchasers, each of the Option Grantors irrevocably grants to each of the Vendors the right to require each of the Option Grantors to sell to the Vendors all the Call Option Shares at the Call Option Exercise Price on and subject to the terms and conditions set out in the Agreement. The Vendors shall purchase the Call Option Shares in equal share upon the Vendors excising the Call Option at any time during the Call Option Period.

The purpose of this circular is to provide you with further details regarding the Agreement, the Shareholder Loans, the Call Option and other information in accordance with the Listing Rules.

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiry, each of Simon Xinming Mu, Ying Xia, Bing Zhou, Dai Lian, Yu Pui Pui Brenda, Bright Island, Global Will, Drakefell and Rankhigh (and where applicable, their ultimate beneficial owners) are Independent Third Parties.

THE AGREEMENT

Date

25 September 2007

Parties

ACE Purchasers: Shining and Patcham Pearl Bright Purchasers: Rankhigh, Chief Solar, Wise Plenty and Marysky Option Grantors: Chief Solar Shareholders, Topstart and Drakefell Vendors: Bright Island and Global Will Co-Warrantors: Simon Xinming Mu, Ying Xia and Bing Zhao

– 7 –

LETTER FROM THE BOARD

Subject Matters of the Agreement

Subject to the terms and conditions of the Agreement, the parties to the Agreement have agreed, among others:

• (1) Bright Island shall sell 300 ACE Sale Shares (representing 50% of the issued share capital in ACE) to Shining and 300 ACE Sale Shares to Patcham;

• (2) Global Will shall sell 300 Pearl Bright Sale Shares (representing 50% of the equity interest in Pearl Bright) to Rankhigh, 100 Pearl Bright Sale Shares (representing approximately 16.67% of the equity interest in Pearl Bright) to Chief Solar, 100 Pearl Bright Sale Shares to Wise Plenty, and 100 Pearl Bright Sale Shares to Marysky;

• (3) in consideration of the Vendors’ agreement to sell the Sale Shares to the Purchasers, the Option Grantors shall grant the Call Option to the Vendors;

• (4) the Option Grantors will provide in equal proportion Shareholder Loans in the total amount of RMB510.25 million (equivalent to approximately HK$525.56 million) to the Call Option SPVs, which shall be used by the Call Option SPVs respectively to fund Pearl Bright for the sole purpose of meeting Pearl Bright’s equity contribution obligations towards Qinghai Investment; and

• (5) each of the Vendors and Co-Warrantors has given certain warranties and undertakings to the Purchasers in the terms specified in the Agreement.

Under the Agreement, all warranties, representations, indemnities, covenants, agreements and obligations given or entered into by more than one person are given or entered into independently and separately except for those made by Bing Zhao and Ying Xia, as shareholders of Global Will.

Consideration

The aggregate cash consideration for the Sale Shares shall be US$1,200 (equivalent to HK$9,360), out of which:

• (1) Shining and Patcham shall each pay US$300 (equivalent to HK$2,340) to Bright Island for the purchase of 300 ACE Sale Shares each;

• (2) Rankhigh shall pay US$300 (equivalent to HK$2,340) to Global Will for the purchase of 300 Pearl Bright Sale Shares; and

• (3) Chief Solar, Wise Plenty and Marysky shall each pay US$100 (equivalent to HK$780) to Global Will for the purchase of 100 Pearl Bright Sale Shares each.

– 8 –

LETTER FROM THE BOARD

Basis of Consideration

The amounts payable by the Group under and in connection with the Agreement

are:

• (1) US$300 (equivalent to HK$2,340), being the consideration payable by Shining to Bright Island for the acquisition of 300 ACE Sale Shares;

• (2) US$100 (equivalent to HK$780), being the consideration payable by Wise Plenty to Global Will for the acquisition of 100 Pearl Bright Sale Shares;

• (3) RMB510.25 million (equivalent to approximately HK$525.56 million), being the equity contribution towards Qinghai Investment payable by Shining through ACE; and

• (4) approximately RMB170.08 million (equivalent to approximately HK$175.18 million), being the equity contribution towards Qinghai Investment payable by Wise Plenty through Pearl Bright, which shall be funded by the Shareholder Loan from Topstart to Wise Plenty.

The consideration payable by Shining and Wise Plenty for the acquisition of 300 ACE Sale Shares and 100 Pearl Bright Sale Shares, respectively, was determined based on the par value of the shares in the capital of ACE and Pearl Bright of US$1 each.

The amount of the equity contribution towards Qinghai Investment payable by the Group through Shining and Wise Plenty was determined based on the equity contribution required to be made to Qinghai Investment by ACE and Pearl Bright under the Capital Increase Agreement.

The total amount of US$400 (equivalent to HK$3,120) and appropriately RMB680.33 million (equivalent to approximately HK$700.74 million) will be financed via internal resources or external financing of the Group and part of the proceeds from the issue of the HK$1,000,000,000 zero coupon guarantee convertible bonds due 2011 by the Group in 2006.

Terms of the Shareholder Loans

The Shareholder Loans are unsecured and interest-free, and shall be drawn down in multiple instalments prior to the Equity Contribution Completion Date.

The Shareholder Loans shall be used for the sole purpose of funding the capital contribution to Qinghai Investment pursuant to the equity joint venture contract and articles of association of Qinghai Investment both dated 15 June 2005 and the Capital Increase Agreement or as agreed between all the investors of Qinghai Investment.

– 9 –

LETTER FROM THE BOARD

Any portion of the Shareholder Loans shall be repaid on the earliest occurrence of any one of the following event:

• (1) upon presentation of a petition for winding up of one or more of the Call Option SPVs and the Option Grantors or the passing of a resolution to wind up such company or companies; and

• (2) five Business Days after the Option Grantor’s receipt of the notice from the Vendors that the Vendors have elected to exercise the Call Option.

A promissory note will be issued and delivered by (i) Chief Solar to Chief Solar Shareholders, (ii) Wise Plenty to Topstart, and (iii) Marysky to Drakefell for each release of any part of the Shareholder Loans.

Conditions Precedent

Completion shall be subject to:

• (i) the board approval respectively by ACE Purchasers and Rankhigh, and

• (ii) signing of an escrow agent agreement on the escrow arrangement with respect to the share certificates of the Call Option Shares and other related documents.

The respective boards of directors of the Company and Shining approved the Agreement and the transactions contemplated thereunder on 10 October 2007. Completion took place on the same date.

Call Option

Pursuant to the Agreement, in consideration of the Vendors’ agreement to sell the Sale Shares to the Purchasers and payment of US$50 to each of the Option Grantors, each of the Option Grantors irrevocably grants to each of the Vendors the right to require each of the Option Grantors to sell to the Vendors all the Call Option Shares at the Call Option Exercise Price on and subject to the terms and conditions set out in the Agreement. Each of the Vendors shall purchase 50% of the Call Option Shares in respect of each Call Option SPV upon the Vendors exercising the Call Option at any time during the Call Option Period. The terms and conditions relating to the Call Option will come into effect on the Equity Contribution Completion Date.

Based on the amount of the Shareholder Loan to be advanced by Topstart to Pearl Bright through Wise Plenty under the Agreement and assuming that no part of the Shareholder Loan will be repaid by Wise Plenty to Topstart prior to the completion of the Call Option, the Call Option Exercise Price will amount to US$200 (equivalent to HK$1,560) and approximately RMB170.08 million (equivalent to approximately HK$175.18 million).

– 10 –

LETTER FROM THE BOARD

Equity Contribution and Exit

The equity contributions to be made by ACE and/or Pearl Bright to Qinghai Investment shall be subject to, among others, the obtaining of the board approval respectively by ACE Purchasers and Rankhigh; and/or the satisfactory completion of the due diligence on Qinghai Investment and its subsidiaries. During the period starting from the date of Completion and ending on the Equity Contribution Completion Date, ACE Purchasers may jointly elect to exit their investment in Qinghai Investment by delivering a written notice to Qinghai Commission and Qinghai Investment, in which circumstances Qinghai Investment may be dissolved or the shares that ACE and Pearl Bright respectively own in Qinghai Investment be bought by Qinghai Commission or any other third parties. Each of Rankhigh, Chief Solar and Chief Solar Shareholders has granted an irrevocable consent to any shareholder actions or board actions (at all levels) that might be required to effect such investment exit.

Corporate Structure before and after Completion

The following diagrams depict the shareholding structure of Qinghai Investment before and immediately after the Completion, respectively:

Before the Completion

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

Bright lsland Global Will
100% 100%
ACE Pearl Bright
30% 30%
Qinghai Qinghai
Investment 40% Commission
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– 11 –

LETTER FROM THE BOARD

Immediately after the Completion

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

Shining Patcham Chief Solar Wise Plenty Marysky
50% 50% ~ 16.67% ~ 16.67% ~ 16.67%
ACE Pearl Bright Rankhigh
50%
30% 30%
Qinghai Qinghai
Investment Commission
40%
----- End of picture text -----

INFORMATION ABOUT ACE, PEARL BRIGHT AND QINGHAI INVESTMENT

Overview

Based on the due diligence conducted on ACE and Pearl Bright and the on-going due diligence on Qinghai Investment:

• (1) ACE is an investment holding company and it has no material asset other than its 30% equity interest in Qinghai Investment or material liabilities. No financial statements have been prepared for this company;

• (2) Pearl Bright is also an investment holding company and it has no material asset other than its 30% equity interest in Qinghai Investment or material liabilities. No financial statements have been prepared for this company; and

• (3) Qinghai Investment is a Sino-foreign equity joint venture established under the laws of the PRC on 24 May 2006 and its principal business activities are investment in industrial, energy resources, infrastructure and agricultural businesses. Its major assets include (i) aluminium smelters with an annual production capacity of 350,000 tonnes; (ii) hydro power plants with an annual capacity of 284,000 KW; (iii) 130 million tonnes of coal reserves; and (iv) aluminium fabrication plant under construction with an estimated annual production capacity of 200,000 tonnes. Qinghai Investment has a total registered capital of approximately RMB3.4 billion (equivalent to approximately HK$3.5 billion), the registered capital (by way of assets injection) contributed by Qinghai Commission for its 40% equity interest was approximately RMB1.359 billion (equivalent to approximately HK$1.400 billion). Each of ACE and Pearl Bright, is required to contribute in cash approximately RMB1.0205 billion (equivalent to approximately HK$1.0511 billion) for its 30% equity interest in Qinghai Investment.

– 12 –

LETTER FROM THE BOARD

Financial Information on Qinghai Investment

The following financial information is extracted from the audited consolidated financial statements of Qinghai Investment prepared in accordance with the PRC generally accepted accounting principles:

	As at 31 December	As at 31 December
	2005	2006
	RMB’000	RMB’000
Total asset value	10,056,984	10,362,921
Net asset value	1,449,927	1,157,171
	For the year ended
	31 December
	2005	2006
	RMB’000	RMB’000
Turnover	3,898,429	5,249,894
Profit before taxation and minority interest	330,616	408,229
Profit after taxation and minority interest	94,358	120,497

Upon Completion, Shining and Wise Plenty became the owners of 50% and approximately 16.67% of the equity interests in ACE and Pearl Bright, respectively. The Group’s interest in Qinghai Investment will be accounted for as an interest in an associated company in the Group’s consolidated financial statements. Shining and Wise Plenty in aggregate now have an indirect effective interest of 20% in Qinghai Investment. Based on the above, the net asset value for the year ended 31 December 2006 attributable to a 20% interest in Qinghai Investment is RMB231,434,200; the profit before taxation and minority interest for the years ended 31 December 2005 and 2006 attributable to a 20% interest in Qinghai Investment are RMB66,123,200 and RMB81,645,800 respectively; and the profit after taxation and minority interest for the years ended 31 December 2005 and 2006 attributable to a 20% interest in Qinghai Investment are RMB18,871,600 and RMB24,099,400 respectively.

Use of Investment

Qinghai Investment will use the capital to be contributed by ACE and Pearl Bright for expanding its production scale, improving its production facilities, optimising its investment structure, increasing its production level and other projects and other uses approved by its board of directors.

– 13 –

LETTER FROM THE BOARD

REASONS FOR AND BENEFITS OF ENTERING INTO THE AGREEMENT

The Group is engaged in the trading of alumina and other non-ferrous metals, aluminium fabrication, copper fabrication and plica tubes production and port logistics services and other industrial operations. The Group’s strategy is to develop into a conglomerate with an integrated supply-chain covering resources, trading and fabrication of non-ferrous metals. The Directors believe that the Group’s investment in Qinghai Investment is a step forward for its integrated supply chain for aluminium business. It will help establish a long term and stable supply relationship with Qinghai Investment’s aluminium smelting business for the Group’s alumina sales. This investment is expected to also open the door for the Group’s future resources and business development opportunities in the Qinghai Province, PRC.

The terms of the Agreement have been determined through arm’s length negotiations between the parties and reflect normal commercial terms. The Directors (including the independent non-executive Directors) consider that the terms of the Agreement are fair and reasonable and in the interests of the Company and its shareholders as a whole.

The transaction has no material effect on the earnings and assets and liabilities of the Company.

PRINCIPAL BUSINESS ACTIVITIES OF THE OTHER PARTIES TO THE AGREEMENT

The principal business activity of each of Patcham, Rankhigh, Chief Solar, Marysky, Drakefell, Bright Island and Global Will is investment holding.

LISTING RULES IMPLICATIONS

The applicable percentage ratios set out in Rule 14.07 of the Listing Rules in respect of (a) the acquisition of 300 ACE Sale Shares and 100 Pearl Bright Sale Shares by Shining and Wise Plenty, respectively, which at Completion triggered the formation of a joint venture with Patcham and another joint venture with Rankhigh, Chief Solar and Marysky, respectively, and (b) the granting of the call option by Topstart to the Vendors, exceed 5% (but not more than 25%). As such, the entering into of the Agreement constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules.

ADDITIONAL INFORMATION

Your attention is also drawn to the additional information set out in the appendix to this circular.

Yours faithfully For and on behalf of the Board

Xu Huizhong

Executive Director and President

– 14 –

APPENDIX

1. RESPONSIBILITY

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Group. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts the omission of which would make any statement contained herein misleading.

2. DIRECTORS’ INTERESTS AND SHORT POSITIONS IN THE SHARES, UNDERLYING SHARES AND DEBENTURES

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 and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (the “ SFO ”) which were required 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 are taken or deemed to have under such provisions of the SFO), the Model Code for Securities Transactions by Directors of Listed Issuers (the “ Model Code ”) as set out in Appendix 10 of the Listing Rules and which were required to be entered in the register required to be kept under section 352 of the SFO were as follows:

Long position in the underlying shares of the Company

			Approximate
		Number of	percentage of
	Nature of	underlying	total number of
Name of director	interest	shares held	issued shares
		(Note (1))	(Note (2))
Zhou Zhongshu	Personal	3,000,000	0.15%
Xu Huizhong	Personal	2,600,000	0.13%
Wang Lixin	Personal	2,000,000	0.10%
Shen Ling	Personal	1,500,000	0.07%
Zhang Shoulian	Personal	1,500,000	0.07%
Zong Qingsheng	Personal	1,500,000	0.07%

Notes:

• (1) The Directors’ interests in the underlying shares are share options granted by the Company pursuant to the share option scheme adopted by the Company on 28 May 2004.

• (2) The calculation is based on the number of underlying shares as a percentage of the total number of issued shares of the Company (i.e. 2,052,021,654 shares) as at the Latest Practicable Date.

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APPENDIX

Save as disclosed above, as at the Latest Practicable Date, other than a nominee share in a subsidiary held by a Director in trust for the Company, none of the Directors or the chief executive of the Company or any of 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) which were required 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 are taken or deemed to have under such provisions of the SFO), the Model Code or which were required to be entered in the register required to be kept under section 352 of the SFO. In addition, save as disclosed above, none of the Directors or the chief executive of the Company nor their spouses or children under 18 years of age had been granted or had exercised any rights to subscribe for any equity or debt securities of the Company or any of its associated corporations (within the meaning of Part XV of the SFO).

3. SUBSTANTIAL SHAREHOLDERS’ INTERESTS AND SHORT POSITIONS IN THE SHARES AND UNDERLYING SHARES OF THE COMPANY

So far as is known to any Directors or chief executive of the Company, as at the Latest Practicable Date, the following persons (who are not a Director or chief executive of the Company) had an interest or short position in the shares and underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or, who is, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group:

Long position in the shares of the Company

			Approximate
			percentage of
		Number of	total number of
Name	Capacity	shares held	issued shares
			(Note (1))
China Minmetals Corporation	Interest of controlled	1,284,467,826	62.60%
(“China Minmetals”)	corporations
	(Notes (2) & (3))
China Minmetals Non-ferrous	Interest of controlled	1,052,590,909	51.30%
Metals Company Limited	corporations
(“CMN”)	(Note (2))
Top Create Resources Limited	Beneficial owner	1,052,590,909	51.30%
(“Top Create”)	(Note (2))
China Minmetals H.K.	Interest of controlled	231,876,917	11.30%
(Holdings) Limited	corporations
(“Minmetals HK”)	(Note (3))
Coppermine Resources Limited	Beneficial owner	231,876,917	11.30%
(“Coppermine”)	(Note (3))

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APPENDIX

Notes:

• (1) The calculation is based on the number of shares held by each person (whether directly/indirectly interested or deemed to be interested) as a percentage of the total number of issued shares of HK$0.05 each (i.e. 2,052,021,654 shares) of the Company as at the Latest Practicable Date.

• (2) Top Create is a wholly-owned subsidiary of CMN which in turn is owned as to approximately 82.23% by China Minmetals. Accordingly, CMN and China Minmetals were by virtue of the SFO deemed to be interested in the 1,052,590,909 shares of HK$0.05 each of the Company held by Top Create as at the Latest Practicable Date.

• (3) Coppermine is a wholly-owned subsidiary of Minmetals HK which in turn is a wholly-owned subsidiary of China Minmetals. Accordingly, Minmetals HK and China Minmetals were by virtue of the SFO deemed to be interested in the 231,876,917 shares of HK$0.05 each of the Company held by Coppermine as at the Latest Practicable Date.

Save as disclosed above, so far as is known to any Directors or chief executive of the Company, as at the Latest Practicable Date, no other person (who is not a Director or chief executive of the Company) had an interest or short position in the shares and underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or, who is, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group.

4. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had a service contract with any member of the Group which was not determinable by the Group within one year without payment of compensation other than statutory compensation.

5. COMPETING INTEREST

As at the Latest Practicable Date, none of the Directors and his associates (as would be required to be disclosed under rule 8.10 of the Listing Rules if any of them was a controlling shareholder) was interested in any business apart from the business of the Group, which competes or is likely to compete, either directly or indirectly, with that of the Group.

6. LITIGATION

As at the Latest Practicable Date, no member of the Group was engaged in any litigation or claim1 of material importance and there was no litigation or claims of material importance was known to the Directors to be pending or threatened against any member of the Group.

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APPENDIX

7. OTHERS

• (a) The registered office and principal place of business of the Company is at 9th Floor, China Minmetals Tower, 79 Chatham Road South, Tsimshatsui, Kowloon, Hong Kong.

• (b) The qualified accountant of the Company is Mr. Chu Charn Fai who is a fellow member of the Association of Chartered Certified Accountants and a member of the Hong Kong Institute of Certified Public Accountants.

• (c) The company secretary of the Company is Ms. Leung Suet Kam, Lucia who is a fellow member of The Institute of Chartered Secretaries and Administrators in the United Kingdom and a fellow member of The Hong Kong Institute of Chartered Secretaries.

• (d) The share registrar of the Company is Computershare Hong Kong Investor Services Limited at 17th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong.

• (e) The English text of this circular shall prevail over the Chinese text in the case of inconsistency.

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