China Silver Group Limited — Capital/Financing Update 2017

Feb 15, 2017

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.

This announcement appears for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for the securities of the Company.

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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)

PLACING OF NEW SHARES UNDER GENERAL MANDATE

Placing Agent

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PLACING OF NEW SHARES UNDER GENERAL MANDATE

The Board announced that on 15 February 2017, after trading hours, the Company entered into the Placing Agreement with the Placing Agent pursuant to which the Company appointed the Placing Agent as its agent to procure placees who are Independent Third Parties to subscribe up to 13,800,000 Placing Shares at a price of HK$1.51 per Placing Share on a best effort basis on the terms and subject to the condition of the Placing Agreement. On 15 February 2017, the Placing Agent has procured five Placees to subscribe 13,800,000 Placing Shares at the Placing Price.

The 13,800,000 Placing Shares represent (i) approximately 0.94% of the existing issued share capital of the Company of 1,463,346,589 Shares as at the date of this announcement; and (ii) approximately 0.93% of the issued share capital of the Company of 1,477,146,589 Shares as enlarged by the allotment and issue of the Placing Shares (assuming being fully placed).

Assuming that all the Placing Shares are fully placed, the maximum gross proceeds from the Placing will be approximately HK$21 million. It is expected that the net proceeds from the Placing (after deducting the placing commission payable to the Placing Agent and other expenses incurred in the Placing) will amount to approximately HK$20 million. The Company intends to apply the net proceeds from the Placing for general working capital.

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The Placing is conditional upon the Listing Committee of the Stock Exchange granting the listing of, and permission to deal in, the Placing Shares.

The Placing may or may not proceed. Shareholders and potential investors are advised to exercise caution when dealing in the Shares.

THE PLACING AGREEMENT

Date: 15 February 2017

Parties (i) Issuer: The Company (ii) Placing Agent: The Placing Agent

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, the Placing Agent and its ultimate beneficial owners are Independent Third Parties.

Principal terms of the Placing Agreement

Placing Shares: The Company appointed the Placing Agent as its agent to procure placees who are Independent Third Parties to subscribe up to 13,800,000 Placing Shares at a price of HK$1.51 per Placing Share on a best effort basis. The Company was informed that, on 15 February 2017, the Placing Agent has procured five Placees to subscribe for 13,800,000 Placing Shares at the Placing Price. The 13,800,000 Placing Shares represent (i) approximately 0.94% of the existing issued share capital of the Company of 1,463,346,589 Shares as at the date of this announcement; and (ii) approximately 0.93% of the issued share capital of the Company of 1,477,146,589 Shares as enlarged by the allotment and issue of the Placing Shares. The maximum aggregate nominal value of the Placing Shares under the Placing will be HK$138,000.

Placing Price: The price of HK$1.51 per Placing Share was determined after arm’s length negotiations between the Company and the Placing Agent with reference to the prevailing market price of the Shares on the Stock Exchange. The Placing Price represents:

• (a) a discount of approximately 9.04% to the closing price of HK$1.66 per Share as quoted on the Stock Exchange on 15 February 2017, being the Last Trading Day; and

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• (b) a discount of approximately 7.36% to the average closing price of approximately HK$1.63 per Share as quoted on the Stock Exchange for the last five consecutive trading days immediately prior to the Last Trading Day.

The Company will bear the costs and expenses in connection with the Placing and the net proceeds from the Placing is estimated to be approximately HK$20 million (assuming the Placing Shares are fully placed). As a result, the net price per Placing Share will be approximately HK$1.46.

• Placing Commission: The Placing Agent will receive a placing commission of 3.5% of the amount equal to the Placing Price multiplied by the number of the Placing Shares which the Placing Agent has procured the placees to subscribe for the Placing Shares. The placing commission was determined after arm’s length negotiations between the Company and the Placing Agent.

• Ranking of the The Placing Shares, when issued, will be fully paid up and will rank Placing Shares: pari passu in all respects with other Shares in issue at the date of allotment and issue of the Placing Shares and the Placing Shares, when issued, will be free from all liens, charges, encumbrances and third party rights together with all rights attaching to them as at the date of their allotment.

• Condition precedent to The Placing is conditional upon the Listing Committee granting the Completion: listing of, and permission to deal in, the Placing Shares.

If the above condition is not fulfilled on or before 3 March 2017 or such later date as the Company and the Placing Agent may agree in writing, the Placing shall cease and neither party shall have any claim against the other party in respect of the Placing.

• Completion: Completion is expected to take place on or before the third Business Day immediately after the date of the fulfillment of the closing condition or such other time or date as Company and the Placing Agent shall agree.

• Termination: The Placing Agent shall be entitled by notice to the Company given prior to 6:00 p.m. on the day immediately preceding the Completion Date to terminate the Placing Agreement if:

• (i) any event occurring or matter arising on or after the date of the Placing Agreement and prior to the date of Completion which if it had occurred or arisen before the date of the Placing Agreement would have rendered any of the undertakings, warranties and representations given by the Company untrue or incorrect in any material respect and such would have a material adverse impact or effect on the Placing and comes to the notice of the Placing Agent; or

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• (ii) there develops, occurs or comes into force:

• (a) any new law or regulation or any change in existing laws or regulations or the interpretation thereof which may in the reasonable opinion of the Placing Agent and in its reasonable discretion may materially and adversely affect the business or financial condition or prospects of the Company as a whole; or

• (b) any local, regional, national or international event or change (whether or not permanent or forming part of a series of events or changes occurring or continuing, on and/or after the date hereof) of a political, military, economic or other nature (whether or not ejusdem generis with the foregoing) which, in the reasonable opinion of the Placing Agent and in its reasonable discretion will, or may be expected to, have a material adverse effect on the Placing; or

• (c) any significant change (whether or not permanent) in local, regional, national or international market conditions (or in conditions affecting a sector of the market) which in the reasonable opinion of the Placing Agent and in its reasonable discretion has or may have a material adverse effect on the Placing; or

• (iii) there is any material adverse change in the business or in the financial or trading position of the Company taken as a whole (which is not previously disclosed by the Company to the public in writing) and in the reasonable opinion of the Placing Agent and in its reasonable discretion is material in the context of the Placing.

If a termination notice is given by the Placing Agent, the Placing Agreement shall terminate and be of no further effect and neither party shall be under any liability to the other party in respect of the Placing Agreement save for any rights or obligations which may have accrued under the Placing Agreement prior to such termination.

Application for listing:

An application will be made by the Company to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Placing Shares.

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Information of the Placees

Placees

Number of Placing Shares

OASIS MANAGEMENT (HK) LLC	7,390,000
ALPHALEX CAPITAL MANAGEMENT (HK) LTD	2,580,000
GLOBAL INVESTMENTS NOMINEES LIMITED	1,290,000
KASH CAPITAL LIMITED	1,290,000
TURRET INVESTMENTS PTY LTD	1,250,000

To the best of the knowledge, information and belief of the Directors having made all reasonable enquiries, the Placees and its respective ultimate beneficial owner(s) are Independent Third Parties.

General Mandate

No more than 13,800,000 Placing Shares will be allotted and issued under the General Mandate. Pursuant to the General Mandate, the total number of new Shares that the Directors are authorised to allot and issue is 286,669,317 new Shares (up to 20% of the issued share capital of the Company (with the number of issued Shares of 1,433,346,589) as at the date of the annual general meeting of the Company held on 24 May 2016). Up to the date of this announcement (and without taking into account the Placing Shares), 30,000,000 Shares of the General Mandate have been utilised as detailed in the announcement dated 14 September 2016. The total number of new Shares that can be allotted and issued under the General Mandate as at the date of this announcement is 256,669,317 new Shares. Upon Completion, 242,869,317 Shares of the General Mandate remains unutilised by the Company.

REASONS FOR THE PLACING AND THE USE OF PROCEEDS

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 products in the PRC.

The Group continues to seek new opportunities with the view to expand and diversify the Group’s businesses and to strive for best utilization of its resources in developing more profitable businesses. The Directors consider that the Placing offers a good opportunity to raise further capital of the Company thereby increasing the liquidity of the Shares as well as to strengthen the financial position of the Group. The Directors consider that the terms of Placing Agreement are fair and reasonable and the Placing is in the interests of the Company and its Shareholders as a whole.

Assuming that all the Placing Shares are fully placed, the maximum gross proceeds from the Placing will be approximately HK$21 million. It is expected that the net proceeds from the Placing (after deducting the placing commission payable to the Placing Agent and other expenses incurred in the Placing) will amount to approximately HK$20 million. The Company intends to apply the net proceeds from the Placing for general working capital.

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FUND RAISING DURING THE PAST TWELVE MONTHS

The following equity fund raising activity has been carried out by the Company in the twelve (12) months immediately prior to the date of this announcement:

Date of	Fund raising	Net proceeds	Intended use of net	Actual use of net
announcement	activity	raised	proceeds	proceeds
14 September	Issue of	Approximately	The net proceeds will	Approximately 70%
2016	30,000,000	HK$54	be applied for the	had been utilized for
	new ordinary	million	development of the	the development of
	Shares at		downstream silver	the downstream silver
	HK$1.80 each		exchange business	exchange business
			and general working	and approximately
			capital	30% (which are kept
				as bank deposits in
				the PRC/Hong Kong)
				remained unutilized
				and will be used as
				intended

EFFECT ON SHAREHOLDING OF THE PLACING

The shareholding structure of the Company before and after Completion, are as follows:

Chen Wantian_(Note) Luo Shandong Public Shareholders: The Placees Other public Shareholders Total _Note:	As at the date of this announcement No. of Shares Approximate per cent. 406,772,187 27.80 134,969,200 9.22 – – 921,605,202 62.98 1,463,346,589 100.00	Immediately after Completion No. of Shares Approximate per cent. 406,772,187 27.54 134,969,200 9.14 13,800,000 0.93 921,605,202 62.39 1,477,146,589 100.00

Chen Wantian, an executive Director and Chairman of the Company, is deemed to be interested in 405,722,187 Shares owned by Rich Union Enterprises Limited as the legal owner of the entire issued share capital of Rich Union Enterprises Limited and is personally interested in 1,050,000 Shares.

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GENERAL

The Placing may or may not proceed to Completion. Shareholders and potential investors are advised to exercise caution when dealing in the Shares.

DEFINITIONS

Terms or expressions used in this announcement shall, unless the context otherwise requires, have the meanings ascribed to them below:

“Board”	the board of Directors
“Business Day”	a day (other than a Saturday, a Sunday or a public holiday)
	on which licensed banks in Hong Kong are open for business
	throughout their normal business hours
“Company”	China Silver Group Limited (中國白銀集團有限公司), a company
	incorporated in the Cayman Islands with limited liability, the
	shares of which are listed on the Main Board of the Stock
	Exchange
“Completion”	completion of the Placing
“Completion Date”	on or before the third Business Day immediately after the date of
	the fulfillment of the condition of the Placing Agreement, or such
	other date or time as Company and the Placing Agent shall agree
“connected persons”	has the meaning ascribed to it under the Listing Rules
“Director(s)”	director(s) of the Company
“General Mandate”	the general mandate granted to the Directors to allot, issue and
	deal with up to 286,669,317 Shares, representing approximately
	20% of the issued share capital of the Company as at the annual
	general meeting of the Company held on 24 May 2016
“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 PRC
“Independent	party(ies) shall not be connected person(s) of the Company and
Third Party(ies)”	shall be third parties independent of and not connected with any
	connected persons of the Company
“Last Trading Day”	15 February 2017, being the last day on which the Shares
	were traded on the Stock Exchange prior to the issue of this
	announcement

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“Listing Committee”	the listing sub-committee of the board of directors of the Stock	the listing sub-committee of the board of directors of the Stock
	Exchange
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“Placee(s)”	party(ies) procured by the Placing Agent to subscribe for any of
	the Placing Shares
“Placing”	the placing of the Placing Shares to the Placee pursuant to the
	Placing Agreement
“Placing Agent”	SBI China Capital Financial Services Limited
“Placing Agreement”	the placing agreement dated	15 February 2017 entered into
	between the Company and the	Placing Agent in respect of the
	Placing
“Placing Price”	HK$1.51 per placing Share
“Placing Share(s)”	up to 13,800,000 new Shares, to	be allotted and issued pursuant to
	the terms and condition of the Placing Agreement
“PRC”	The People’s Republic of China
“Share(s)”	share(s) of HK$0.01 each in the	share capital of the Company
“Shareholder(s)”	holder(s) of the Shares(s)
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“%”	per cent.
		By Order of the Board
	CHINA SILVER GROUP LIMITED
		Chen Wantian
		Chairman

Hong Kong, 15 February 2017

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

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