Aowei Holding Limited — Capital/Financing Update 2014

Aug 19, 2014

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

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HENGSHI MINING INVESTMENTS LIMITED 恒實礦業投資有限公司

(incorporated in the Cayman Islands with limited liability)

(Stock Code: 1370)

DISCLOSABLE TRANSACTION IN RELATION TO ACQUISITION OF YAOBEIGOU IRON ORE MINE ASSET OF YUCHENG PROCESSING PLANT

SUMMARY OF THE ACQUISITION

The Board announces that on 19 August 2014, Jiheng Mining, an indirect wholly-owned subsidiary of the Company, entered into an Asset Acquisition Agreement with Yucheng Processing Plant, pursuant to which Jiheng Mining will acquire Yaobeigou Iron Ore Mine from Yucheng Processing Plant at a total consideration of RMB217 million payable to Yucheng Processing Plant.

LISTING RULES IMPLICATIONS

As at the date of this announcement, as the applicable percentage ratio calculated pursuant to Rule 14.07 of the Listing Rules in respect of the Acquisition exceeds 5% but is less than 25%, the Acquisition constitutes a disclosable transaction of the Company under the requirements of Chapter 14 of the Listing Rules.

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On 19 August 2014, Jiheng Mining, an indirect wholly-owned subsidiary of the Company, entered into an Asset Acquisition Agreement with Yucheng Processing Plant, pursuant to which Jiheng Mining will acquire Yaobeigou Iron Ore Mine, which is legally owned by Yucheng Processing Plant, from Yucheng Processing Plant at a total consideration of RMB217 million payable to Yucheng Processing Plant. The principal terms of the Asset Acquisition Agreement are as follows:

THE ASSET ACQUISITION AGREEMENT

Date

19 August 2014

Parties

Purchaser: Jiheng Mining Seller: Yucheng Processing Plant

Assets to be acquired

The entire interests in relation to the ownership rights, management rights, usufruct and disposal rights of Yaobeigou Iron Ore Mine located in Zhijiazhuang Village of Yangjiazhuang Town, Laiyuan County, Hebei province, the PRC with the mining permit (No.: C1300002009122120047432), which is legally owned by Yucheng Processing Plant.

Consideration

The consideration is RMB217 million. The consideration of the Acquisition is determined after arm’s length negotiations between the parties and having comprehensively considered that the Yucheng Processing Plant, the seller, is in a state of cessation of operation over the past three financial years, that it did not generate any income or profit from actual operation and that the Acquisition would bring potential commercial interests to the Group, specifically including:

1. According to the Explanations of the Resources and Reserves in Yaobeigou Iron Ore Mine of Hebei Province Laiyuan County Yucheng Center Primary School issued by the Baoding Geological Engineering Exploration Institute of Hebei province commissioned by the Department of Land and Resources of Laiyuan County of Hebei province, resources with a minimum average iron-contained grade (Type 333 or above) of iron ore and mineralized body at a rate of 8% or above generally identified in Yaobeigou Iron Ore Mine and its surrounding areas, in aggregate, amounted to approximately 2.23 Mtpa, with an average grade of TFe 22.98%.

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1. Yaobeigou Iron Ore Mine is a mine border on Jiheng Mining. By the Acquisition, Jiheng Mining could apply to extend the mining borders and enlarge the open-pit mining area in order to obtain resources in a deeper position, which would allow a more comprehensive exploration of the existing resources of Zhijiazhuang Mine owned by Jiheng Mining. As a result, the utilization rate of Jiheng Mining’s existing resource would be further raised.

Payment

The Purchaser shall settle the total consideration of RMB217 million in two installments: (i) RMB160 million shall be paid within three business days following the date of signing of the Asset Acquisition Agreement; (ii) the remaining consideration (i.e. RMB57 million) shall be paid before 31 December 2014. The Company intends to finance the consideration of the Acquisition from internal resources (proceeds raised from Global Offering excluded) and bank borrowings.

Information of Yaobeigou Iron Ore Mine of Yucheng Processing Plant

Yucheng Processing Plant, an enterprise legally established by Mr. Qin Shouheng (秦守恒) in the PRC, is principally engaged in iron ore mining and processing and sales of mineral products business. Yaobeigou Iron Ore Mine is an underground mine with a mining area of 0.0029 km[2] legally owned by Yucheng Processing Plant, the production capacity of which is 10,000 tonnes per annum, with 42,000 tonnes of resources reserves (122b).

REASONS FOR AND BENEFITS OF THE ACQUISITION

The terms of the Asset Acquisition Agreement have been arrived at through arm’s length negotiations between Jiheng Mining and Yucheng Processing Plant. The Directors are of the view that the terms of the Asset Acquisition Agreement were entered into on the basis of normal commercial terms which are fair and reasonable and in the interest of the Company and its Shareholders as a whole. As abovementioned, Jiheng Mining can extend the mining borders through the Acquisition so that the resources obtained from Zhijiazhuang Mine of Jiheng Mining can be more fully utilized. Meanwhile, the application for an extension of the existing mining exploration permit after the Acquisition can bring additional resources to the Group, which is beneficial to the future business development of the Group.

As at the date of this announcement, as the applicable percentage ratio calculated pursuant to Rule 14.07 of the Listing Rules in respect of the Acquisition exceeds 5% but is less than 25%, the Acquisition constitutes a disclosable transaction of the Company under Chapter 14 of the Listing Rules.

To the best knowledge, information and belief of the Directors after making all reasonable enquiries, none of the Directors are in any way materially interested in the Acquisition. Yucheng Processing Plant and its ultimate beneficial owner are a third party independent of the Group and its connected persons.

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GENERAL INFORMATION

Information of the Company

The Company is based in Hebei province and is primarily engaged in the business of iron ore mining and processing. It currently owns and operates four iron ore mines, namely, Gufen Mine, Wang’ergou Mine, Shuanmazhuang Mine and Zhijiazhuang Mine, all of which are located in Laiyuan County, Hebei province.

Information of Jiheng Mining

Jiheng Mining was established in the PRC in August 2010 with a registered capital of RMB50 million. Upon establishment, Jiheng Mining was owned as to 50%, 30% and 20% by Laiyuan County Jiantou Mining Co., Ltd., Hebei Iron and Steel Group Laiyuan Nonferrous Metals Co., Ltd. and Laiyuan County Xinrui Mining Co., Ltd., respectively. After a series of historical share transfers, on 31 March 2014, the Company entered into an equity transfer agreement with Laiyuan Jiantou through Aowei Mining, an indirect wholly owned subsidiary of the Company, to acquire 10% equity interests in Jiheng Mining. Upon the completion of the aforesaid equity transfer, Jiheng Mining became a wholly-owned subsidiary of the Company. Jiheng Mining is principally engaged in iron ore mining and the selection and production of iron ore concentrates.

DEFINITIONS

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

“Acquisition”	the acquisition of Yaobeigou Iron Ore Mine of Yucheng
	Processing Plant by Jiheng Mining pursuant to the Asset
	Acquisition Agreement
“Asset Acquisition Agreement” the asset acquisition agreement entered into between Jiheng
	Mining and Yucheng Processing Plant on 19 August 2014
“Board”	the board of Directors
“Company”	Hengshi Mining Investments Limited, an exempted company
	with limited liability incorporated in the Cayman Islands
	whose issued shares are listed on The Stock Exchange of
	Hong Kong Limited
“Directors”	the directors of the Company
“Group”	the Company and its subsidiaries
“Jiheng Mining”	Laiyuan County Jiheng Mining Co., Ltd. (淶源縣冀恒礦業有
	限公司), a limited liability company established in the PRC
	on 16 August 2010 and an indirect wholly-owned subsidiary
	of the Company

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“Listing Rules “ Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited “Mtpa” million tonnes per annum “PRC” the People’s Republic of China which, for the purpose of this announcement, excludes the Hong Kong Special Administrative Region, the Macau Special Administrative Region and Taiwan “RMB” Renminbi, the lawful currency of the PRC “Shareholders “ holders of shares in the Company “Subsidiary” or “subsidiaries” has the meaning ascribed to it under the Listing Rules “TFe” total iron “Yucheng Processing Plant” Hebei Province Laiyuan County Yucheng Center Primary School Processing Plant (河北省淶源縣育城中心小學鐵選 廠), an enterprise lawfully established by Mr. Qin Shouheng (秦守恒) in Laiyuan County, Hebei Province, the PRC

By order of the Board Hengshi Mining Investments Limited Mr. Li Yanjun Chairman

Beijing, 19 August 2014

As at the date of this announcement, the executive directors of the Company are Mr. Li Yanjun, Mr. Li Ziwei, Mr. Xia Guoan, Mr. Sun Jianhua, Mr. Huang Kai and Mr. Tu Quanping and the independent non-executive directors of the Company are Mr. Ge Xinjian, Mr. Meng Likun and Mr. Kong Chi Mo.

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