China Silver Group Limited — Capital/Financing Update 2015

May 5, 2015

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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CHINA SILVER GROUP LIMITED 中國白銀集團有限公司

(incorporated in the Cayman Islands with limited liability)

(Stock code: 815)

MEMORANDUM OF UNDERSTANDING IN RESPECT OF A PROPOSED ACQUISITION AND RESUMPTION OF TRADING

This announcement is made by the Company pursuant to Rule 13.09 of the Listing Rules and the Inside Information Provisions under Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong).

The Board would like to announce that on 3 May 2015, the Company entered into the MOU with the Vendor, pursuant to which the Company intended to purchase and the Vendor intended to sell the entire issued share capital of the Target Company for an aggregate consideration of HK$625,500,000. The Target Company owns the entire equity interest of SPCL in which SPCL owns 60% of the equity interest of SZPEC, which is a company established under the laws of the PRC and is principally engaged in the provision of electronic trading and deferred spot delivery services of petrochemical products and the associated trading data clearing, risk management and settlement custodian services.

The MOU is not intended to be legally binding (save for certain provisions such as the provisions on confidentiality, exclusivity, costs and governing law). If the Company proceeds with the Proposed Acquisition, it will enter into legally binding agreement(s) with the Vendor in respect of the Proposed Acquisition.

The Board wishes to emphasise that the Proposed Acquisition may or may not proceed and that the Company has not entered into any binding agreement in relation to the Proposed Acquisition as at the date of this announcement. If the Proposed Acquisition materialises, it will constitute a notifiable transaction for the Company under Chapter 14 of the Listing Rules.

Shareholders and potential investors of the Company are advised to exercise caution when dealing in the Shares. The Company will make further announcement in respect of the Proposed Acquisition as and when appropriate in accordance with the Listing Rules.

At the request of the Company, trading in the Shares on the Stock Exchange has been halted with effect from 9:00 am on 4 May 2015 pending the release of this announcement. Application will be made to the Stock Exchange for resumption of trading in the Shares with effect from 9:00 am on 6 May 2015.

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This announcement is made by the Company pursuant to Rule 13.09 of the Listing Rules and the Inside Information Provisions under Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong).

INTRODUCTION

The Board would like to announce that on 3 May 2015, the Company entered into the MOU with the Vendor, pursuant to which the Company intended to purchase and the Vendor intended to sell the entire issued share capital of the Target Company for an aggregate consideration of HK$625,500,000. The Target Company owns the entire equity interest of SPCL in which SPCL owns 60% of the equity interest of SZPEC, which is a company established under the laws of the PRC and is principally engaged in the provision of electronic trading and deferred spot delivery services of petrochemical products and the associated trading data clearing, risk management and settlement custodian services.

MEMORANDUM OF UNDERSTANDING

The principal terms of the MOU are as follows:

Date: 3 May 2015

Parties: (1) The Company (2) The Vendor

To the best of the knowledge, information and belief of the Directors having made all reasonable enquiries, the Vendor is a third party independent of the Company and its connected persons.

• Assets to be The Company intends to purchase and the Vendor intends to sell the entire acquired: issued share capital of the Target Company. The Target Company is a limited liability company incorporated in the British Virgin Islands and is principally engaged in investment holding. The Target Company owns the entire equity interest of SPCL which is principally engaged in investment holding. SPCL owns 60% of the equity interest of SZPEC, which is a company established under the laws of the PRC and is principally engaged in the provision of trading and deferred spot delivery services of petrochemical products and the associated trading data clearing, risk management and settlement custodian services.

Consideration: The aggregate consideration for the Proposed Acquisition shall be HK$625,500,000 (equivalent to approximately RMB500 million as converted at an exchange rate of HK$1.000:RMB1.251) and shall be satisfied by the Company as follows:

• (a) HK$112,365,000, payable in cash by the Company to the Vendor at the Completion; and

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• (b) HK$513,135,000 shall be satisfied by the Purchaser by the issue of 316,750,000 Shares at an issue price of HK$1.62 per share to the Vendor at the Completion.

The Consideration Shares shall at all times rank pari passu among themselves and with the Shares in issue as at the date of issue of the Consideration Shares.

Conditions Precedent for the Proposed Acquisition:

Completion shall be conditional upon the fulfillment of certain conditions precedent, including:

• (a) the approval by the Board of directors and the shareholders of the Company of the SPA and the transactions contemplated thereunder, including but not limited to, the issue of the Consideration Shares;

• (b) the granting of the approval for the listing of, and permission to deal in, the Consideration Shares by the Listing Committee of the Stock Exchange and such approval not having been revoked;

• (c) the issue of a valuation report prepared by an independent professional valuer engaged by the Purchaser on SZPEC in respect of the valuation on its business and other assets (if applicable) in the form and substance reasonably satisfactory to the Company; and

• (d) the issue of audited consolidated/combined financial statements of the Target Company and SZPEC by an auditor appointed by the Purchaser for the two financial years ended 31 December 2013 and 31 December 2014 prepared in accordance with the Hong Kong Financial Reporting Standard.

The parties to the MOU will negotiate and cooperate in good faith to finalise and execute the SPA within the Exclusivity Period.

Long stop date:

The MOU shall become effective on the date of the MOU and shall terminate and be of no force on the earlier of (i) the date on which the SPA is to be executed; or (ii) 31 July 2015 or such later date as the parties to the MOU may otherwise agree in writing.

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Exclusivity:

The Vendor grants to the Company an exclusive right commencing on the date of the MOU and ending on 12 months after the date of the MOU (or such later date as the parties to the MOU may agree in writing) to finish due diligence and legal documentation for the Proposed Acquisition. During the Exclusivity Period, the Vendor is not allowed to transfer or enter into any agreement (whether legally binding or not) to transfer all or part of the share(s) of the Target Company, all or part of the equity interest of SPCL or SZPEC, or the business of the Target Company, SPCL or SZPEC to any party except the Company unless prior written consent is obtained from the Purchaser. The Vendor also undertakes that he would not engage in any discussion with any third party in respect of the sales and purchase of the share(s) of the Target Company (either in whole or in part), the equity interest of SPCL or SZPEC (either in whole or in part), or the business of the Target Company, SPCL or SZPEC, or any transaction or agreement which will result in the same effect.

The Vendor undertakes to pay all of the Company’s costs and expenses if the Vendor breaches the exclusivity provisions.

Binding effect:

Save for certain provisions such as the provisions on confidentiality, exclusivity, costs and governing law, the other terms of the MOU are not intended to be legally binding.

REASONS FOR AND BENEFITS OF THE PROPOSED ACQUISITION

The Company, together with its subsidiaries, are principally engaged in the manufacturing of silver and other non-ferrous metals for sale and the retailing of silver jewellery products in the PRC.

SZPEC has entered into an exclusive service agreement with Shenzhen Petrochemical Exchange (“SZPEX”) in Qianhai, Shenzhen, pursuant to which SZPEC was granted exclusive right to provide electronic trading and deferred spot delivery services of petrochemical products and the associated trading data clearing, risk management and settlement custodian services to SZPEX. SZPEC has been fully operational and providing services to SZPEX since 2014.

SZPEX was founded in September 2011 and registered in Qianhai with the approval of the Shenzhen Municipal People’s Government and was formally launched in January 2013. SZPEX is backed by shareholders such as China Petrochemical Corporation (“Sinopec”), China National Aviation Fuel Group Corporation and CCB International (SZ) Investment Co., Ltd. SZPEX is currently one of the only two authorised petrochemical trading exchanges in the PRC and the trading of petrochemical products has commenced since February 2014. Trading volume has been consistently growing since inception and is expected to accelerate over the next few years. Petrochemical products that can be traded on the said commodity exchange include crude oil, gasoline, diesel and oil index.

As mentioned in the annual report of the Company for the year ended 31 December 2014, the Company has been looking at different investment opportunities in the market. In March 2015, the Company announced that it will inject RMB20 million for setting up the Shanghai Huatong International Silver Exchange inside the China (Shanghai) Pilot Free Trade Zone Area which will be the first spot silver and platinum trading platform in the PRC that allows foreign investor to participate directly. Leveraging on its investment in the Shanghai Huatong International Silver Exchange, the Company will also explore potential business opportunities of the Target Company

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in provision of electronic trading data clearing and settlement custodian services in the silver trading market. This is in line with the Company’s strategy to develop through vertical integration and with a view to become one of the leading integrated silver enterprises in the world. With the established technology and expertise of the Target Company in the clearing, risk management and settlement custodian areas, the Company expects there will be considerable synergies upon the expansion of the Target Company’s business to cover other commodities and precious metal product markets.

The issue price of the Consideration Shares was determined after arm’s length negotiation between the Purchaser and the Vendor and having taken into account, among other things, the past trading price history of the Company, the recent volatility in the Company’s share price and the Hong Kong stock market, the valuation approach of the Target Company and the strategic implications of the Target Company to the Company’s future business.

The Directors consider that the terms of the MOU are fair and reasonable and that the Proposed Acquisition is in the interest of the Company and its shareholders as a whole.

GENERAL

The MOU is not intended to be legally binding (save for certain provisions such as the provisions on confidentiality, exclusivity, costs and governing law). If the Company proceeds with the Proposed Acquisition, it will enter into legally binding agreement(s) with the Vendor in respect of the Proposed Acquisition.

The Board wishes to emphasise that the Proposed Acquisition may or may not proceed and that the Company has not entered into any binding agreement in relation to the Proposed Acquisition as at the date of this announcement. If the Proposed Acquisition materialises, it will constitute a notifiable transaction for the Company under Chapter 14 of the Listing Rules.

Shareholders and potential investors of the Company are advised to exercise caution when dealing in the Shares. The Company will make further announcement in respect of the Proposed Acquisition as and when appropriate in accordance with the Listing Rules.

At the request of the Company, trading in the Shares on the Stock Exchange has been halted with effect from 9:00 am on 4 May 2015 pending the release of this announcement. Application will be made to the Stock Exchange for resumption of trading in the Shares with effect from 9:00 am on 6 May 2015.

DEFINITIONS

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

“Board” the board of Directors; “Completion” completion of the Proposed Acquisition; “Company” China Silver Group Limited, a company incorporated in the Cayman Islands, the shares of which are listed on the Stock Exchange (Stock Code: 815);

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“connected person(s)”	has the meaning ascribed to it under the Listing Rules;
“Consideration Shares”	the issue of 316,750,000 Shares at an issue price of HK$1.62 per
	share by the Company to the Vendor;
“Director(s)”	the director(s) of the Company;
“Exclusivity Period”	the period commencing on the date of the MOU and ending on 12
	months after the date of the MOU (or such later date as the parties
	to the MOU may agree in writing) to finish due diligence and legal
	documentation for the Proposed Acquisition;
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong;
“Listing Rules”	The Rules Governing the Listing of Securities on the Stock
	Exchange;
“MOU”	the memorandum of understanding dated 3 May 2015 entered into
	between the Company and the Vendor in relation to the Proposed
	Acquisition;
“PRC”	the People’s Republic of China, which for the purpose of
	this announcement, shall exclude Hong Kong, Macau Special
	Administrative Region of the PRC and Taiwan;
“Proposed Acquisition”	the proposed acquisition by the Company of the entire issued share
	capital of the Target Company;
“Share(s)”	ordinary share(s) of HK$0.01 each in the capital of the Company;
“SPA”	a formal sale and purchase agreement to be entered into between the
	Company and the Vendor in respect of the Proposed Acquisition;
“SPCL”	Sino Petrochemical Clearing Limited, a company incorporated
	in Hong Kong with limited liability and owns 60% of the equity
	interest of SZPEC;
“Stock Exchange”	The Stock Exchange of Hong Kong Limited;
“SZPEC”	Shenzhen Qianhai Petrochemical Exchange Clearing Service Co.,
	Ltd., a company established in the PRC with limited liability;
“Target Company”	Rich Metro Holdings Limited, a company incorporated in the British
	Virgin Islands with limited liability and owns the entire equity
	interest of SPCL;

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“Vendor”

Mr. Cheng Zai Zhong, who is a third party independent of the Company and its connected persons, and owns the entire issued share capital of the Target Company;

“%”

per cent.

By order of the Board China Silver Group Limited Chen Wantian Chairman

5 May 2015, Hong Kong

As at the date of this announcement, the executive Directors of the Company are Mr. Chen Wantian, Mr. Song Guosheng, Mr. Sung Kin Man and Mr. Chen Guoyu; and independent non-executive Directors are Mr. Guo Bin, Dr. Jiang Tao, Dr. Li Haitao and Dr. Zeng Yilong.

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