CGN Mining Company Limited — Capital/Financing Update 2006

Apr 19, 2006

IMPORTANT

If you are in any doubt about 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 Vital BioTech Holdings Limited, you should at once hand this circular to the purchaser or the transferee or to the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser or transferee.

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.

==> picture [247 x 116] intentionally omitted <==

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1164)

DISCLOSEABLE TRANSACTION

ACQUISITION OF PROPERTY

18 April 2006

CONTENTS

	Pages
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1-2
Letter from the Board
– Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
– The Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4-5
– Reason for the Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
– General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Appendix – General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6-9

DEFINITIONS

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

“Acquisition”	the acquisition of the Property by Purchaser from the
	Vendor at a total consideration of HK$13,459,000;
“Agreement”	the provisional agreement dated 13 March 2006 and
	entered into between the Purchaser and the Vendor in
	relation to the Acquisition;
“Board”	the board of Directors;
“Company”	Vital BioTech Holdings Limited, a company
	incorporated in the Cayman Islands with limited
	liability and the issued Shares of which are listed on
	the Main Board of the Stock Exchange;
“Completion”	completion of the sale and purchase of the Property;
“Consideration”	the total consideration for the Acquisition, which
	amounts to HK$13,459,000 under the Agreement;
“Director(s)”	director(s) of the Company;
“Formal Agreement”	the formal sale and purchase agreement dated 28
	March 2006 made between the Purchaser and the
	Vendor in relation to the Acquisition, the major terms
	of which are substantially the same as those of the
	Agreement;
“Group”	the Company and its subsidiaries;
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong;
“Hong Kong”	the Hong Kong Special Administrative Region of the
	People’s Republic of China;
“Latest Practicable Date”	13 April 2006, being the latest practicable date for
	ascertaining certain information in this circular prior
	to the printing of this circular;
“Listing Rules”	the Rules Governing the Listing of Securities on the
	Stock Exchange;
“Property”	Office No. 7 on 31st Floor, Tower One, Lippo Centre,
	No. 89 Queensway, Hong Kong;

– 1 –

DEFINITIONS

“Purchaser”	Wide Triumph Limited, a wholly-owned subsidiary of
	the Company which is incorporated in Hong Kong;
“SFO”	Securities and Futures Ordinance (Chapter 571 of the
	Laws of Hong Kong);
“Share(s)”	ordinary share(s) of HK$0.01 each in the share capital
	of the Company;
“Shareholder(s)”	holder(s) of Shares;
“sq. ft.”	square feet;
“Stock Exchange”	The Stock Exchange of Hong Kong Limited;
“Vendor”	Golden Dragon Properties Development Limited, a
	company incorporated in Hong Kong; and
“%”	per cent.

– 2 –

LETTER FROM THE BOARD

==> picture [247 x 115] intentionally omitted <==

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1164)

Directors: Registered Office: Mr. Tao Lung (Chairman) Century Yard Mr. Huang Jianming (Chief Executive Officer) Cricket Square Mr. Shen Songqing Hutchins Drive Mr. Liu James Jin George Town Mr. Xu Xiaofan Grand Cayman Mr. Lui Tin Nang Cayman Islands Mr. Lee Kwong Yiu British West Indies Mr. Lo Wa Kei Roy*

* independent non-executive Directors

Head Office and Principal Place of Business in Hong Kong: 31st Floor Sunshine Plaza 353 Lockhart Road Wanchai Hong Kong

18 April 2006

To the Shareholders, and, for information only, holders of options

Dear Sir or Madam,

DISCLOSEABLE TRANSACTION

ACQUISITION OF PROPERTY

INTRODUCTION

On 28 March 2006, the Company announced that the Purchaser entered into the Agreement with the Vendor to purchase the Property at a total consideration of HK$13,459,000. The Property has a total gross floor area of approximately 1,565 sq. ft. and the consideration represents a per sq. ft. price of approximately HK$8,600 per sq. ft..

– 3 –

LETTER FROM THE BOARD

The Acquisition constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules. The purpose of this circular is to provide you with further information in relation to the Acquisition.

THE ACQUISITION

Date of the Agreement

Date of the Agreement : 13 March 2006 Date of the Formal Agreement : 28 March 2006 Purchaser : Wide Triumph Limited

Vendor : Golden Dragon Properties Development Limited

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiry, the Vendor and its ultimate owners are independent third parties not connected with the directors, chief executive and substantial shareholders (within the meaning ascribed to it in the Listing Rules) of the Company and its subsidiaries or any of their respective associates (within the meaning ascribed to it in the Listing Rules).

Property : Office No. 7 on 31st Floor, Tower One, Lippo Centre, No. 89 Queensway, Hong Kong

Consideration

The total consideration of HK$13,459,000 is payable to the Vendor for the Acquisition which was agreed on an arm’s length basis between the Vendor and the Purchaser and on normal commercial terms with reference to the recent transaction records of similar properties in nearby locality. The Consideration will be funded by the Group’s internal resources and banking financing which is expected to be in the proportion of approximately 50% and 50% respectively. The Consideration has been or shall be (as applicable) paid by cash as follows:

• (i) HK$672,950 being the initial deposit representing 5% of the Consideration paid on the signing of the Agreement;

• (ii) HK$672,950 being the further deposit representing 5% of the Consideration paid on the signing of the Formal Agreement; and

• (iii) the balance of HK$12,113,100 to be paid upon Completion on or before 15 May 2006.

– 4 –

LETTER FROM THE BOARD

The Board considers that the terms of the Acquisition including, among others, the Consideration and the terms of payment under the Acquisition to be fair and reasonable, on normal commercial terms and in the interests of the Company and its shareholders as a whole.

Completion

Completion is expected to take place on 15 May 2006 or such earlier date as agreed from time to time. The Purchaser will take vacant possession of the Property at the completion of the Acquisition.

REASON FOR THE ACQUISITION

The Property is an unit in a commercial building and has a total gross floor area of approximately 1,565 sq. ft.. The Property is acquired by the Group for its own use as the Property is located in prime commercial district with convenience transportation network to facilitate most of the employees and shareholders of the Company. The Company will use the Property to facilitate the management and administration function of the Group as well as to enhance the Company’s business presence in Hong Kong.

EFFECT OF THE ACQUISITION

Given that the Property is not a profit-generating asset, the Acquisition is not expected to materially affect the earnings of the Group save that the Group is expected to incur finance charges as a result of obtaining the banking facilities to finance the Acquisition. The Acquisition will not materially affect the asset value of the Group.

GENERAL

The Group is principally engaged in research and development, selling and manufacturing of pharmaceutical products and the Vendor is principally engaged in properties investment.

Your attention is also drawn to the information set out in the Appendix.

Yours faithfully, For and on behalf of the Board of

Vital BioTech Holdings Limited

Tao Lung

Chairman

– 5 –

APPENDIX

GENERAL INFORMATION

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular with regard to the Company and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, opinions expressed in this circular have been arrived at after due and careful consideration and there are no other facts not contained in this circular, the omission of which would make any statement contained herein misleading.

2. DISCLOSURE OF INTERESTS

(a) The Directors’ and chief executives’ interests and short position in the shares, underlying shares and debentures of the Company or any associated corporation

As at the Latest Practicable date, the interests and short positions of the Directors, chief executives of the Company and their associates in the shares, underlying shares and debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) which were 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), or which were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein, or pursuant to the Model Code for Securities Transactions by Directors of Listed Companies in the Listing Rules, to be notified to the Company and the Stock Exchange, were as follows:

– 6 –

APPENDIX

GENERAL INFORMATION

				Percentage
				shareholding
	Company/name		Number and class of	in the same
	of associated		securities	class of
Name of Director	corporation	Capacity	(Note 1)	securities
Mr. Tao Lung	Company	Beneficial owner	110,891,648 Shares (L)	7.19%
	Company	Interest of a	522,526,940 Shares (L)	33.89%
		controlled
		corporation_(Note 2)_
	Perfect Develop	Beneficial owner	4,000 ordinary shares	47.33%
	Holding Inc.		of US$0.01 each (L)
	(“Perfect
	Develop”)
Mr. Liu James Jin	Company	Beneficial owner	14,630,400 Shares (L)	0.95%
Mr. Shen Songqing	Company	Beneficial owner	12,160,000 Shares (L)	0.79%

Notes:

1. The letter “L” stands for the Director’s long position in such securities.

2. The interests in the shares are held by Perfect Develop. The issued share capital of Perfect Develop is beneficially owned as to 11.88% by Mr. Liu James Jin, 47.33% by Mr. Tao Lung and 34.66% by Mr. Huang Jianming. Accordingly, Mr. Tao Lung is deemed to be interested in all the Shares which Perfect Develop is interested by virtue of the SFO.

Save as disclosed above, as at the Latest Practicable date, none of the Directors and the chief executive of the Company had any interest and short positions in the shares, underlying shares and debentures of the Company or its associated corporations (within the meaning of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Division 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 which were required, pursuant to section 352 of the SFO, to be entered in the register maintained by the Company referred to therein, or which were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers contained in the Listing Rules, to be notified to the Company and the Stock Exchange.

(b) Substantial Shareholders’ interest and short positions in the shares, underlying shares of the Company

As at the Latest Practicable date, according to the register of members kept by the Company pursuant to section 336 of the SFO and so far as is known to, or can be ascertained after reasonable enquiry by the Directors, the following persons/entities, other than a director or chief executive of the Company, had 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, or, directly, or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote on all circumstances at general meetings of the Company:

– 7 –

APPENDIX

GENERAL INFORMATION

	Company/ Name			Approximate
	of Group		Number of shares	percentage of
Name	member	Capacity	(Note 1)	shareholding
Perfect Develop	Company	Beneficial owner	522,526,940 Shares (L)	33.89%
(Note 2)
Tiedemann	Company	Beneficial owner	77,860,000 Shares (L)	5.05%
Global				(Note 3)
Emerging
Markets L.P.

Notes:

1. The letter “L” denotes the person’s/entity’s long position in the shares.

2. The issued share capital of Perfect Develop is owned as to 47.33% by Mr. Tao Lung, 11.88% by Mr. Liu James Lin and 34.66% by Mr. Huang Jianming. Mr. Tao and Mr. Liu James Jin are the founders of the Group and the executive Directors, whose interests in the Company are set out in paragraph 2(a) above in this appendix.

3. As at the date of this circular, the interest held by Tiedemann Global Emerging Markets L.P. stated on the Stock Exchange website is 5.22%, which based on the issued share capital of the Company as at the filing period. The above ratio is based on the issued share capital of the Company as at the date of this circular.

Save as disclosed above, the Directors are not aware of any person as at the Latest Practicable date who had an interest or short positions in the shares, underlying shares and debentures 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 was directly or indirectly, interested in 10% or more of the nominal value of any class of shares capital carrying rights to vote in all circumstances at general meetings of the Company and any other member of the Group.

3. COMPETING INTERESTS

As at the Latest Practicable Date, none of the Directors and/or their respective associates had any interests in a business which competes or may compete with the business of the Group or had any other conflict of interests with the Group.

4. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, there was no existing service contract, excluding contract expiring or terminable by the employer within one year without payment of compensation (other than statutory compensation), between the Directors with the Company.

– 8 –

APPENDIX

GENERAL INFORMATION

5. LITIGATION

As at the Latest Practicable Date, neither the Company nor any member of the Group was engaged in any litigation or arbitration of material importance and no litigation or claim of material importance was known to the Directors to be pending or threatened by or against the Company or any member of the Group.

6. GENERAL

• (a) The registered office of the Company is at Century Yard, Cricket Square, Hutchins Drive, George Town, Grand Cayman, Cayman Islands, British West Indies and the head office and the principal place of business of the Company in Hong Kong is at 31st Floor, Sunshine Plaza, 353 Lockhart Road, Wanchai, Hong Kong.

• (b) The branch share registrar and transfer office of the Company in Hong Kong is Union Registrars Limited at Room 311-312, Two Exchange Square, Central, Hong Kong.

• (c) The qualified accountant and the company secretary of the Company is Mr. Leung Wai Pong, who is a Certified Public Accountant of the Hong Kong Institute of Certified Public Accountants and a Certified Practising Accountant (Aust.) of CPA Australia.

– 9 –