CWT International Limited — Proxy Solicitation & Information Statement 2007

Dec 11, 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 licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Sinofert Holdings Limited, you should at once hand this circular, together with the enclosed form of proxy, to the purchaser or transferee or to the bank, licensed securities dealer or other agent through whom the sale or transfer 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.

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SINOFERT HOLDINGS LIMITED

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(Incorporated in Bermuda with limited liability)

(Stock Code: 297)

DISCLOSEABLE AND CONNECTED TRANSACTIONS PROPOSED ACQUISITION OF INTEREST IN TIANJI JV AND PROPOSED ACQUISITION OF INTEREST IN SINOCHEM SHANDONG

CONTINUING CONNECTED TRANSACTION

Financial Adviser to Sinofert Holdings Limited

Citi

Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders

SOMERLEY LIMITED

A letter from the Independent Board Committee (as defined in this circular) is set out on pages 23 to 24 of this circular. A letter from Somerley Limited, the independent financial adviser, containing its advice to the Independent Board Committee and the Independent Shareholders (as defined in this circular) is set out on pages 25 to 38 of this circular.

A notice convening the SGM (as defined in this circular) to be held at Lounge, Mezzanine Floor, Grand Hyatt Hong Kong, 1 Harbour Road, Hong Kong on 28 December, 2007 at 10:00 a.m. (or immediately after the conclusion or adjournment of the special general meeting of the Company scheduled to be convened on the same day at 9:40 a.m. at the same venue, whichever is the later) is set out on pages 48 to 50 of this circular. Whether or not you are able to attend the meeting in person, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon as soon as possible and in any event not less than 48 hours before the time appointed for the holding of the SGM. Completion and return of the form of proxy shall not preclude you from attending and voting in person at the meeting or at any adjourned meeting should you so wish.

* For identification purpose only

12 December 2007

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
The Tianji Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
The Shandong Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Reasons for and Benefits of the Tianji Acquisition . . . . . . . . . . . . . . . . . . . . . .	11
Reasons for and Benefits of the Shandong Acquisition . . . . . . . . . . . . . . . . . . .	12
Continuing Connected Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
Implications under the Listing Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
Information on the Company, the Purchaser, Sinochem Corporation,
Tianji JV, Sinochem Shandong and Qinghai Salt Lake . . . . . . . . . . . . . . . . . .	15
Financial Effect of the Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	19
SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	20
Procedures for Demanding a Poll. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	21
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	21
Further Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	22
Letter from the Independent Board Committee. . . . . . . . . . . . . . . . . . . . . . . . . . .	23
Letter from Somerley. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	25
Appendix – General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	39
Notice of SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	48

– i –

DEFINITIONS

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

“Acquisitions”	the Tianji Acquisition and the Shandong Acquisition
“associate”	has the meaning given to it under the Listing Rules
“Board”	the board of Directors of the Company
“Bonds”	the HK$1,300,000,000 listed zero coupon convertible
	bonds due 2011 issued by the Company on 7 August 2006
“Bye-laws”	the bye-laws of the Company
“Citi”/“Citigroup”	Citigroup Global Markets Asia Limited
“Company”	Sinofert Holdings Limited, a company incorporated on 26
	May 1994 in Bermuda with limited liability, the ordinary
	shares of which are listed on the Stock Exchange
“connected person”	has the meaning given to its under the Listing Rules
“Continuing Connected	the transactions contemplated under Fertilizer Purchase
Transaction”	Framework Agreement
“Director(s)”	the director(s) of the Company (including its independent
	non-executive Directors)
“Fertilizer Purchase Framework	the framework agreement in respect of sale and purchase
Agreement”	of fertilizer products entered into between the Purchaser
	and Qinghai Salt Lake dated 26 November 2007
“Group”	the Company and its subsidiaries
“Hong Kong”	Hong Kong Special Administrative Region of the PRC
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“Independent Board Committee”	the committee of independent non-executive Directors of
	the Company formed to advise the Independent
	Shareholders in respect of the terms of the Acquisitions
	and Fertilizer Purchase Framework Agreement

– 1 –

DEFINITIONS

“Independent Financial Adviser”/ Somerley Limited, a corporation licensed to carry out “Somerley” Type 1 (dealing in securities), Type 4 (advising on securities), Type 6 (advising on corporate finance) and Type 9 (asset management) regulated activities under the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) having CE registration number AAJ067 and the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Acquisitions and the Fertilizer Purchase Framework Agreement

• “Independent Shareholder(s)” in respect of the Tianji Acquisition and the Shandong Acquisition, being Shareholder(s) of the Company other than Sinochem HK and its associates; and in respect of the Fertilizer Purchase Framework Agreement, being all Shareholders of the Company

• “Latest Practicable Date” 3 December 2007, being the latest practicable date for the purpose of ascertaining certain information contained in this circular

• “Listing Rules” the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited

• “Non-Competition Undertaking” the non-competition undertaking dated 6 June 2005 entered into by Sinochem Corporation in favour of the Company

• “Option” an option granted by Sinochem Corporation to the Company pursuant to the Non-Competition Undertaking for the acquisition of Sinochem Corporation’s interests in Qinghai Salt Lake, Tianji JV and Sinochem Shandong

• “PCS Barbados” PCS (Barbados) Investment Company Limited “Potashcorp” Potash Corporation of Saskatchewan Inc. and, as applicable, its direct and indirect subsidiaries

• “PRC” the People’s Republic of China, which for the purposes of this circular excludes Hong Kong, Macau and Taiwan

• “PRC GAAP” generally accepted accounting principals in the PRC

– 2 –

DEFINITIONS

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||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
|“Purchaser”|Sinochem|Fertilizer|Company|Limited,|a|company|
|incorporated|in|the|PRC,|and|an|indirect|wholly-owned|
|subsidiary|of|the|Company|
|“Qinghai|Salt|Lake”|(Qinghai|Salt|Lake|Potash|
|Co.|Ltd),|a|joint|stock|limited|liability|company|whose|
|shares|are|listed|on|the|Shenzhen|Stock|Exchange|under|
|stock|code|000792|
|“Qinghai|Salt|Lake|Industry|(Qinghai|Salt|Lake|
|Group”|Industry|Group|Co.|Ltd),|a|limited|liability|company|
|which|holds|approximately|30.6%|of|the|total|issued|
|share|capital|of|Qinghai|Salt|Lake|
|“RMB”|Renminbi,|the|lawful|currency|of|the|PRC|
|“SASAC”|State-owned|Assets|Supervision|and|Administration|
|Commission|of|the|State|Council|of|the|PRC|
|“SFO”|The Securities and Futures Ordinance (Chapter 571 of the|
|Laws|of|Hong|Kong)|
|“SGM”|the|special|general|meeting|of|the|Company|to|be|
|convened|to|consider|and,|if|thought|fit,|approve,|among|
|other|things,|the|Acquisitions|and|Fertilizer|Purchase|
|Framework Agreement and the transactions contemplated|
|thereunder|
|“Shandong|Acquisition”|the|proposed|acquisition|of|a|51%|equity|interest|in|
|Sinochem|Shandong|
|“Shandong|Acquisition|conditional|sale|and|purchase|agreement|dated|28|
|Agreement”|November|2007|between|Sinochem|Fertilizer|Company|
|Limited|(as|purchaser)|and|Sinochem|Corporation|(as|
|seller)|in|relation|to|the|Shandong|Acquisition|
|“Shareholder(s)”|shareholder(s)|of|the|Company|
|“Sinochem|Corporation”|(Sinochem|Corporation),|a|state-|
|owned|enterprise|established|in|the|PRC|formerly|known|
|as|China|National|Chemicals|Import|&|Export|
|Corporation|

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– 3 –

DEFINITIONS

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||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
|“Sinochem|HK”|Sinochem|Hong|Kong|(Group)|Company|Limited,|a|
|company|incorporated|in|Hong|Kong|with|limited|
|liability|which|is|wholly-owned|by|Sinochem|
|Corporation|
|“Sinochem|Shandong”|(Sinochem|Shandong|Chemical|
|Fertilizer|Company|Limited),|a|limited|liability|company|
|established|in|the|PRC|
|“Stock|Exchange”|The|Stock|Exchange|of|Hong|Kong|Limited|
|“Subscription|Agreement”|the|subscription|agreement|entered|into|between|
|Sinochem|HK,|PCS|Barbados|and|the|Company|dated|2|
|November|2007|
|“Tianji|Acquisition”|the|proposed|acquisition|of|a|40%|equity|interest|in|
|Tianji|JV|
|“Tianji|Acquisition|Agreement”|conditional|sale|and|purchase|agreement|dated|28|
|November|2007|between|Sinochem|Fertilizer|Company|
|Limited|(as|purchaser)|and|Sinochem|Corporation|(as|
|seller)|in|relation|to|the|Tianji|Acquisition|
|“Tianji|Coal”|(Tianji|Coal|and|Chemical|
|Engineering|Group|Company|Limited),|a|limited|liability|
|company|established|in|the|PRC|
|“Tianji|JV”|(Tianji|Sinochem|Gaoping|
|Chemical|Engineering|Company|Ltd.),|a|limited|liability|
|company|established|in|the|PRC|
|“Unites|States”|The|United|States|of|America|

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For the purpose of this circular, unless otherwise indicated, the exchange rate of HK$1.00 = RMB0.9503 has been used for currency translation. Such exchange rates are for the purposes of illustration only and do not constitute a representation that any amount in RMB or HK$ have been, could have been or may be converted at such or any other rates.

– 4 –

LETTER FROM THE BOARD

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SINOFERT HOLDINGS LIMITED

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(Incorporated in Bermuda with limited liability)

(Stock Code: 297)

Executive Directors: Du Ke Ping (Chief Executive Officer) Harry Yang

Non-Executive Directors: Liu De Shu (Chairman) Song Yu Qing (Deputy Chairman) Chen Guo Gang Stephen Francis Dowdle Wade Fetzer III Independent non-executive Directors: Tse Hau Yin, Aloysius Ko Ming Tung, Edward Tang Tin Sek

Registered Office: Clarendon House 2 Church Street Hamilton HM 11 Bermuda

Principal place of business: Units 4601-4610, 46th Floor Office Tower Convention Plaza 1 Harbour Road Wanchai Hong Kong

12 December 2007

To the Shareholders and, for information only, holders of share options and the Bonds of the Company

Dear Sir/Madam,

DISCLOSEABLE AND CONNECTED TRANSACTIONS PROPOSED ACQUISITION OF INTEREST IN TIANJI JV AND PROPOSED ACQUISITION OF INTEREST IN SINOCHEM SHANDONG

CONTINUING CONNECTED TRANSACTION

INTRODUCTION

As disclosed in the Company’s circular dated 13 June 2005, Sinochem Corporation has given the Non-competition Undertaking in favour of the Company, pursuant to which the Company was granted, among other things, the Option to acquire Sinochem Corporation’s interests in Qinghai Salt Lake, Tianji JV and Sinochem Shandong, each at a fair market value.

* For identification purpose only

– 5 –

LETTER FROM THE BOARD

On 28 November 2007, the Company announced that it exercised the Option in respect of the acquisition of Sinochem Corporation’s interests in Tianji JV and Sinochem Shandong respectively. On that day, the Purchaser, an indirect wholly-owned subsidiary of the Company, entered into the Tianji Acquisition Agreement and Shandong Acquisition Agreement respectively with Sinochem Corporation, pursuant to which the Purchaser conditionally agreed to acquire, and Sinochem Corporation conditionally agreed to sell, equity interests in Tianji JV and Sinochem Shandong respectively. The Tianji Acquisition and the Shandong Acquisition are not inter-conditional.

The Tianji Acquisition constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules. Furthermore, as Sinochem Corporation is a connected person of the Company by reason of it being a substantial shareholder of the Company, each of the Tianji Acquisition and the Shandong Acquisition constitutes a connected transaction of the Company, and are thus subject to the reporting, announcement and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules. If aggregated, the Tianji Acquisition and the Shandong Acquisition would constitute a discloseable and connected transaction of the Company.

The effectiveness and completion of the Shandong Acquisition are subject to satisfaction of certain conditions, including shareholders’ approval and governmental and regulatory approvals having been obtained. Following completion of the Shandong Acquisition, the Fertilizer Purchase Framework Agreement dated 26 November 2007 between the Purchaser and Qinghai Salt Lake will constitute a continuing connected transaction by virtue of Qinghai Salt Lake being an associate of Qinghai Salt Lake Industry Group, which is a substantial shareholder of Sinochem Shandong, in turn a subsidiary of the Company. The Fertilizer Purchase Framework Agreement is therefore subject to the reporting, announcement and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.

The purpose of this circular is (a) to provide you with further information in respect of the Tianji Acquisition and the Shandong Acquisition; (b) to provide you with further information in respect of the Fertilizer Purchase Framework Agreement and the related proposed annual caps; (c) to set out the recommendations of the Independent Board Committee in respect of the Tianji Acquisition, the Shandong Acquisition, the Fertilizer Purchase Framework Agreement and the related proposed annual caps; (d) to set out the advice of Somerley to the Independent Board Committee and the Independent Shareholders in respect of the terms of the Tianji Acquisition, the Shandong Acquisition, the Fertilizer Purchase Framework Agreement and the related proposed annual caps; (e) to give you notice of the SGM to be held to consider and, if thought fit, approve the Tianji Acquisition, the Shandong Acquisition, the Fertilizer Purchase Framework Agreement and the related proposed annual caps; and (f) to provide you with such other information as is required under the Listing Rules.

– 6 –

LETTER FROM THE BOARD

THE TIANJI ACQUISITION

Date of the Tianji Acquisition Agreement

28 November 2007

Parties

Purchaser: the Purchaser Vendor: Sinochem Corporation

Interest to be acquired

The Purchaser has conditionally agreed to acquire from Sinochem Corporation a 40% equity interest in Tianji JV.

Board representation

Upon completion of the Tianji Acquisition, the Purchaser will have the rights to nominate and appoint directors and/or senior management of Tianji JV in accordance with the rights currently held by Sinochem Corporation in accordance with the articles of association of Tianji JV.

Consideration

The total consideration for the Tianji Acquisition is approximately RMB208.83 million (equivalent to approximately HK$219.75 million), which will be payable by the Purchaser in cash in 2 instalments.

The consideration was arrived at after arm’s length negotiations between Sinochem Corporation and the Company, taking into account by the Company the asset appraisal value of Sinochem Corporation’s 40% equity interest in Tianji JV as at 30 June 2007 (being approximately RMB186.40 million (equivalent to approximately HK$196.15 million)) from the asset appraisal report prepared by an independent third party institution specialized in asset appraisals and authorized by the Ministry of Finance of the PRC, the potential growth momentum of Tianji JV, its long term growth prospects, and the potential synergies arising from further vertical business integration through the Tianji Acquisition.

The consideration in respect of the Tianji Acquisition will be funded by internal cash resources of the Company.

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LETTER FROM THE BOARD

Effectiveness of the Tianji Acquisition Agreement

The Tianji Acquisition Agreement will become effective upon all necessary consents, permits and other approvals necessary for or in respect of the Tianji Acquisition having been obtained from the relevant governmental and regulatory authorities in the PRC, including, without limitation, approval from the SASAC.

Conditions of the Tianji Acquisition

The Tianji Acquisition is conditional upon the following conditions:

• (i) the Tianji Acquisition Agreement having become effective;

• (ii) the senior management committee of Sinochem Corporation having passed resolutions to approve the execution and performance of the Tianji Acquisition Agreement;

• (iii) the Independent Shareholders having passed all necessary resolutions to approve the Tianji Acquisition Agreement and the transactions contemplated thereunder at a general meeting of the Company in accordance with the Listing Rules; and

• (iv) other shareholders of Tianji JV having agreed to forego any right of first refusal in respect of Sinochem Corporation’s 40% equity interest in Tianji JV.

Sinochem Corporation has undertaken to use its best endeavours to procure Tianji JV and its related parties to render assistance to the Purchaser in respect of all necessary procedures involving the subject sale transfer, including without limitation, audit and equity interest registration.

Payment

The consideration payable to Sinochem Corporation shall be satisfied in 2 instalments in the following manner:

• (a) within 5 business days of signing of the Tianji Acquisition Agreement, the Purchaser shall pay 30% of the consideration ( First Tianji Payment ) to Sinochem Corporation in cash; and

• (b) within 3 months of the fulfilment or waiver of the conditions under the section headed “Conditions of the Tianji Acquisition”, and in any event no later than 1 year from the date of signing the Tianji Acquisition Agreement, the remaining 70% of the consideration shall be payable in cash.

The Company and the Purchaser have agreed with Sinochem Corporation to defer payment of the First Tianji Payment to on or before 14 December 2007.

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LETTER FROM THE BOARD

Completion

Upon payment of the consideration in full and the transfer and registration of the 40% equity interest in Tianji JV in the name of the Purchaser, the Tianji Acquisition Agreement shall be deemed completed.

Termination

If, due to reasons beyond the control of either party, the 40% equity interest in Tianji JV is not registered in the name of the Purchaser within 6 months of the satisfaction of the conditions under the section headed “Conditions of the Tianji Acquisition”, the Tianji Acquisition Agreement will automatically terminate. Sinochem Corporation shall refund the First Tianji Payment (together with interest calculated at prevailing deposit interest rates) to the Purchaser within 10 days of termination of the Tianji Acquisition Agreement.

If the conditions under the section headed “Conditions of the Tianji Acquisition” are not satisfied within 6 months from the date of signing of the Tianji Acquisition Agreement, either party has the right to terminate the Tianji Acquisition Agreement.

THE SHANDONG ACQUISITION

Date of the Shandong Acquisition Agreement

28 November 2007

Parties

Purchaser: the Purchaser Vendor: Sinochem Corporation

Interest to be acquired

The Purchaser has conditionally agreed to acquire from Sinochem Corporation a 51% equity interest in Sinochem Shandong.

Board representation

Upon completion of the Shandong Acquisition, the Purchaser will have the rights to nominate and appoint directors and/or senior management of Sinochem Shandong in accordance with the rights currently held by Sinochem Corporation in accordance with the articles of association of Sinochem Shandong.

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LETTER FROM THE BOARD

Consideration

The total consideration for the Shandong Acquisition is approximately RMB56.38 million (equivalent to approximately HK$59.33 million), which will be payable by the Purchaser in cash in 2 instalments.

The consideration was arrived at after arm’s length negotiations between Sinochem Corporation and the Company, taking into account by the Company the asset appraisal value of Sinochem Corporation’s 51% equity interest in Sinochem Shandong as at 30 June 2007 (being approximately RMB48.71 million (equivalent to HK$51.26 million)) from the asset appraisal report prepared by an independent third party institution specializing in asset appraisals and authorized by the Ministry of Finance of the PRC, the potential growth momentum of Sinochem Shandong, its long term growth prospects, and the potential synergies arising from further vertical business integration through the Shandong Acquisition.

The consideration in respect of the Shandong Acquisition will be funded by internal cash resources of the Company.

Effectiveness of the Shandong Acquisition Agreement

The Shandong Acquisition Agreement will become effective upon all necessary consents, permits and other approvals necessary for or in respect of the Shandong Acquisition having been obtained from the relevant governmental and regulatory authorities in the PRC, including, without limitation, approval from the SASAC.

Conditions of the Shandong Acquisition

The Shandong Acquisition is conditional upon the following conditions:

• (i) the Shandong Acquisition Agreement having become effective;

• (ii) the senior management committee of Sinochem Corporation having passed resolutions to approve the execution and performance of the Shandong Acquisition Agreement;

• (iii) the Independent Shareholders having passed all necessary resolutions to approve the Shandong Acquisition Agreement and the transactions contemplated thereunder at a general meeting of the Company in accordance with the Listing Rules; and

• (iv) other shareholders of Sinochem Shandong having agreed to forego any right of first refusal in respect of Sinochem Corporation’s 51% equity interest in Sinochem Shandong.

Sinochem Corporation has undertaken to use its best endeavours to procure Sinochem Shandong and its related parties to render assistance to the Purchaser in respect of all necessary procedures involving the subject sale transfer, including without limitation, audit and equity interest registration.

– 10 –

LETTER FROM THE BOARD

Payment

The consideration payable to Sinochem Corporation shall be satisfied in 2 instalments in the following manner:

• (a) within 5 days of signing of the Shandong Acquisition Agreement, the Purchaser shall pay 30% of the consideration ( First Shandong Payment ) to Sinochem Corporation in cash; and

• (b) within 3 months of the fulfilment or waiver of the conditions under the section headed “Conditions of the Shandong Acquisition”, and in any event no later than 1 year from the date of signing of the Shandong Acquisition Agreement, the remaining 70% of the consideration shall be payable in cash.

The Company and the Purchaser have agreed with Sinochem Corporation to defer payment of the First Shandong Payment to on or before 14 December 2007.

Completion

Upon payment of the consideration in full and the transfer and registration of the 51% equity interest in Sinochem Shandong in the name of the Purchaser, the Shandong Acquisition Agreement shall be deemed completed.

Termination

If, due to reasons beyond the control of either party, the 51% equity interest in Sinochem Shandong is not registered in the name of the Purchaser within 6 months of the satisfaction of the conditions under the section headed “Conditions of the Shandong Acquisition”, the Shandong Acquisition Agreement will automatically terminate. Sinochem Corporation shall refund the First Shandong Payment (together with interest calculated at prevailing deposit interest rates) to the Purchaser within 10 days of termination of the Shandong Acquisition Agreement.

If the conditions under the section headed “Conditions of the Shandong Acquisition” are not satisfied within 6 months from the date of signing of the Shandong Acquisition Agreement, either party has the right to terminate the Shandong Acquisition Agreement.

REASONS FOR AND BENEFITS OF THE TIANJI ACQUISITION

The Tianji Acquisition will be of strategic significance to the Company in the following aspects:

• (i) Capitalize on the size and growth of China’s fertilizer market. The combined effects of China’s rapid economic growth, rising demand for agricultural products and the government’s focus on boosting the agricultural industry will translate into a

– 11 –

LETTER FROM THE BOARD

continued rapid growth of fertilizer consumption in China. It is expected that China’s urea consumption for agricultural and industrial purposes will continue to grow at compound annual growth rates of 6% and 15% respectively in the years to come according to the China Nitrogen Fertilizer Industry Association;

• (ii) Implement the Company’s strategy to become an integrated fertilizer manufacturer. The Company aims to transform from a pure-play fertilizer trading company to a leading comprehensive agrochemical product/service provider in China. The Tianji Acquisition will enable the Company to obtain large-scale production capacity of nitrogenous fertilizers and further secure the supply to its downstream distribution network. The Company will combine its existing competitive advantages in downstream distribution with its newly acquired upstream nitrogenous fertilizer production through the Tianji Acquisition, and will benefit from the synergies arising from further vertical business integration in the future;

• (iii) Benefit from the future growth of Tianji JV. Tianji JV was established in August 2003 as a greenfield project with the main focus on the production of granular urea. Currently capital expenditure for the company’s 600,000 ton capacity manufacturing facilities has substantially been completed. Located in Jincheng, the so-called “Coal Capital of China”, Tianji JV enjoys the advantages of low-cost raw materials and advanced production technology. Tianji JV began operations in January 2007 and is in ramp-up to its full designed capacity. Revenues of Tianji JV for the six months ended 30 June 2007 reached RMB453.95 million (equivalent to approximately HK$477.69 million) and net assets amounted to RMB404.41 million (equivalent to approximately HK$425.56 million). Tianji JV only commenced operations in January 2007 and was therefore loss-making for the six months ended 30 June 2007. However, its financial performance is expected to improve due to production ramp-up, enhancement of operating efficiency and establishment of brand recognition. The Company also views the Tianji Acquisition as a move of strategic value which will enable the Company to benefit from the growth momentum of Tianji JV and create additional value for the shareholders of the Company.

REASONS FOR AND BENEFITS OF THE SHANDONG ACQUISITION

The Shandong Acquisition will be of strategic significance to the Company in the following aspects:

• (i) Capitalize on the size and growth of China’s fertilizer market. The combined effects of China’s rapid growth in economy, rising demand for agricultural products and the government’s focus on boosting the agricultural industry will translate into a continued rapid growth of fertilizer consumption in China. The Company understands that, due to increasing adoption of compound fertilizers in agriculture production, China’s compound fertilizer consumption is expected to continue to grow in the years to come;

– 12 –

LETTER FROM THE BOARD

• (ii) Implement the Company’s strategy to become an integrated fertilizer manufacturer. The Company aims to transform from a pure-play fertilizer trading company to a leading comprehensive agrochemical product/service provider in China. The Shandong Acquisition will enable the Company to obtain large-scale production capacity of compound fertilizers and further secure the supply to its downstream distribution network. The Company will combine its existing competitive advantages in downstream distribution with its newly acquired upstream compounded fertilizer production through the Shandong Acquisition, and will benefit from the synergies arising from further vertical business integration in the future;

• (iii) Benefit from future growth of Sinochem Shandong. Sinochem Shandong began operation in December 2004, with main products of compound fertilizers. Sinochem Shandong is located in Linyi, Shandong Province, one of China’s largest production bases for compound fertilizers, and enjoys geographical proximity to one of the largest consumption markets for compound fertilizers in China surrounding Shandong province. Sinochem Shandong also benefits from technological advantages from its newly built production facilities. Revenues of Sinochem Shandong for the six months ended 30 June 2007 reached RMB321.05 million (equivalent to approximately HK$337.84 million) and net assets amounted to RMB70.14 million (equivalent to approximately HK$73.81 million). Sinochem Shandong was loss-making in the year ended 31 December 2005 and the six months ended 30 June 2007. However, its financial performance is expected to improve due to enhancement of operating efficiency and establishment of brand recognition. The Company also views the acquisition of Sinochem Shandong as a move of strategic value which will enable the Company to benefit from the growth momentum of Sinochem Shandong to create additional value for the shareholders of the Company.

CONTINUING CONNECTED TRANSACTION

Background

The Purchaser in its ordinary and usual course of business has purchased fertilizer products from Qinghai Salt Lake. Upon completion of the Shandong Acquisition, Qinghai Salt Lake will become a connected person of the Company by reason of Qinghai Salt Lake being an associate of Qinghai Salt Lake Industry Group, which is a substantial shareholder of Sinochem Shandong, in turn a subsidiary of the Company.

Details of the Fertilizer Purchase Framework Agreement

In its ordinary and usual course of business, the Purchaser entered into the Fertilizer Purchase Framework Agreement with Qinghai Salt Lake on 26 November 2007. The Fertilizer Purchase Framework Agreement will take effect from the beginning of the financial year 2008 and expire on 31 December 2010.

– 13 –

LETTER FROM THE BOARD

Pursuant to the Fertilizer Purchase Framework Agreement, Qinghai Salt Lake will supply, and the Purchaser will purchase, chemical and fertilizer products and materials. The price of the fertilizers shall be their fair market price in the PRC at the time the purchase order is placed, and shall be exclusive of the relevant transport fees. The Purchaser shall provide monthly to Qinghai Salt Lake a purchase plan setting out the quantity of potash fertilizer the Purchaser intends to purchase for the following month, and shall pay in advance to Qinghai Salt Lake a deposit equivalent to 50% of the purchase price for such quantity. The remaining purchase price shall be calculated based on the actual quantity of potash fertilizer purchased by the Purchaser in the relevant month, and the Purchaser shall pay to Qinghai Salt Lake such remaining purchase price before the 10th day of the following month.

The historical amounts of transactions between the Purchaser and Qinghai Salt Lake for the sale and purchase of potash fertilizer products for the two years ended 31 December 2006 and the six months ended 30 June 2007 were approximately RMB779,148,488 (equivalent to approximately HK$819,897,388), RMB870,339,564 (equivalent to approximately HK$915,857,691) and RMB479,152,316 (equivalent to approximately HK$504,211,634), respectively. The Company estimates that the maximum annual amount of purchases of potash fertilizers by the Purchaser under the Fertilizer Purchase Framework Agreement will be approximately RMB2,400,000,000 (equivalent to approximately HK$2,525,518,257), RMB2,880,000,000 (equivalent to approximately HK$3,030,621,909) and RMB4,200,000,000 (equivalent to approximately HK$4,419,656,950) for each of the three years ending 31 December 2010. Such estimates are calculated based on projected quantities of sales and the projected average price of the chemical and fertilizer products and materials to be purchased by the Purchaser for each of the relevant years, having regard to the anticipated growth of fertilizer consumption in the PRC in the future and the continuing expansion of the Group’s sales network.

Reasons for and benefits of the Fertilizer Purchase Framework Agreement

The Fertilizer Purchase Framework Agreement was entered into to establish a strategic partnership between the Purchaser, a substantial distributor of potash fertilizer in the PRC, and Qinghai Salt Lake, a substantial manufacturer of potash fertilizer in the PRC. The Fertilizer Purchase Framework Agreement will allow the Purchaser to obtain a steady supply of potash fertilizer, providing a platform for the Purchaser to maintain its status as a substantial distributor of potash fertilizer in the PRC and to further expand its business.

IMPLICATIONS UNDER THE LISTING RULES

The Tianji Acquisition Agreement constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules. The Shandong Acquisition Agreement does not constitute a notifiable transaction of the Company under Chapter 14 of the Listing Rules. Furthermore, as Sinochem Corporation is a connected person of the Company by reason of it being a substantial shareholder of the Company, each of the Tianji Acquisition Agreement and the Shandong Acquisition Agreement constitutes a connected transaction of the Company. Given that the relevant applicable percentage ratios set out in the Listing Rules for each of the

– 14 –

LETTER FROM THE BOARD

Tianji Acquisition and the Shandong Acquisition are more than 2.5% and the consideration is more than HK$10,000,000, each of the Tianji Acquisition and the Shandong Acquisition is subject to the reporting, announcement and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules. If aggregated, the Tianji Acquisition and the Shandong Acquisition would constitute a discloseable and connected transaction of the Company.

Given that the relevant applicable percentage ratios set out in the Listing Rules for determining the value for the Fertilizer Purchase Framework Agreement is expected to be 2.5% or above on an annual basis and the annual consideration is more than HK$10,000,000, the Fertilizer Purchase Framework Agreement falls within Rule 14A.35 of the Listing Rules, and is subject to the disclosure and approval requirements under Rules 14A.45, 14A.46 and 14A.48 and the annual review requirements under Rules 14A.37 and 14A.38 of the Listing Rules.

To the best of the knowledge, information and belief of the Directors, having made all reasonable enquiries, apart from Sinochem HK and its associates, no other shareholder of the Company will be required to abstain from voting on the resolutions to approve the Tianji Acquisition and the Shandong Acquisition at the SGM.

To the best of the knowledge, information and belief of the Directors, having made all reasonable enquiries, no shareholder has a material interest in the Continuing Connected Transaction and thus no shareholder is required to abstain from voting on the resolutions to approve the Fertilizer Purchase Framework Agreement and the relevant annual caps.

Upon completion of the Shandong Acquisition, whereupon Sinochem Shandong will become a subsidiary of the Company, the Shandong Loan (as defined below) will be treated as a connected transaction of the Company under the Listing Rules. However, as the Shandong Loan was made for the benefit of Sinochem Shandong on normal commercial terms and does not involve security over the assets of the Company or its subsidiaries (including Sinochem Shandong), the Shandong Loan is exempt from the reporting, announcement and independent shareholders’ approval requirements under Listing Rule 14A.65(4).

Citigroup is the financial adviser to the Company in respect of the Tianji Acquisition and the Shandong Acquisition.

INFORMATION ON THE COMPANY, THE PURCHASER, SINOCHEM CORPORATION, TIANJI JV, SINOCHEM SHANDONG AND QINGHAI SALT LAKE

The Company and the Purchaser

The Company is principally engaged in the production, procurement and sale of fertilizers and related products in the PRC. The main business comprises research and development, production, procurement and distribution of fertilizers and forms a vertically integrated business model combining upstream and downstream businesses. The Company aims to serve the agricultural industry in the PRC by introducing quality resources from overseas and to ensure agricultural safety in the PRC.

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LETTER FROM THE BOARD

The Company’s subsidiaries are also engaged in the production, import, export, distribution, wholesale and retail of fertilizer raw materials and products, as well as research and development and services in the field of fertilizer-related business and products.

The Purchaser is a wholly owned subsidiary of the Company and principally engages in fertilizer trading.

Sinochem Corporation

Established in 1950, Sinochem Corporation is a key state-controlled enterprise. It holds a 100% equity interest in Sinochem HK, which in turn owns approximately 50.06% of the Company.

Sinochem Corporation’s core business is as follows: petroleum, fertilizer, trade, distribution and logistics of chemicals, crude oil, fuel oil and natural rubber futures; overseas oil and gas exploitation and production, refinery, chemical mining and washing, fertilizer and chemicals production; hotel and real estate development and operation. Sinochem Corporation is one of the four major state-owned oil companies and the largest fertilizer importer and phosphorus and compound fertilizer manufacturer in the PRC. It is also a major sales and marketing service provider of chemical products in the PRC. Sinochem HK is an investment holding company wholly-owned by Sinochem Corporation and incorporated under the laws of Hong Kong with limited liability.

Tianji JV

Tianji JV was established in the PRC in August 2003, and currently has a registered capital of RMB500.00 million (equivalent to approximately HK$526.15 million), Tianji JV is currently owned as to 40% by Sinochem Corporation and as to 60% by Tianji Coal. Tianji Coal is in turn interested in 40% of Beijing Sinochem Tianji Distribution Company Limited, a subsidiary of the Company. Tianji Coal is therefore a connected person of the Company. Sinochem Corporation acquired its 40% equity interest in Tianji JV in September 2004 for a consideration of RMB200.00 million (equivalent to approximately HK$210.46 million).

Tianji JV is engaged in, among other things, the production and sales of urea granulate in the PRC. The manufacturing facilities of Tianji JV, which were completed and put into operation in January 2007, have the capacity to produce 600,000 tons of large granulated urea per year.

– 16 –

LETTER FROM THE BOARD

Based on the unaudited financial statements of Tianji JV, which were prepared under PRC GAAP, its unaudited consolidated profits or losses for the years ended 31 December 2005 and 31 December 2006 and the six months ended 30 June 2007 are as follows:

	Financial year	Financial year	Six months
	ended	ended	ended
	31 December	31 December	30 June
	2005	2006	2007
Unaudited consolidated	N/A	N/A	RMB(95.59) million
(loss) before taxation			(equivalent to
and minority interests			approximately
			HK$(100.59) million)
Unaudited consolidated	N/A	N/A	RMB(95.59) million
(loss) after taxation			(equivalent to
and minority interests			approximately
			HK$(100.59) million)

The consolidated net asset value of Tianji JV, based on its unaudited financial statements as at 30 June 2007, was RMB404.41 million (equivalent to approximately HK$425.56 million). No income and expenditure was recognised in the statements of operation in the two years ended 31 December 2006 as any income and expenditure incurred during the two years ended 31 December 2006 was deferred for recognition in statements of operation until the company commenced operation under PRC GAAP.

It is currently intended that following completion of the Tianji Acquisition, the Company’s interest in Tianji JV will be treated as an associated company and will be equity accounted for.

The Tianji Guarantee

Currently, Sinochem Corporation has provided to independent third party banks a guarantee of up to RMB440.00 million (equivalent to HK$463.01 million) in respect of loan facilities granted by such independent third party banks to Tianji JV ( Tianji Guarantee ). The Company and Sinochem Corporation are in discussions for the Company to assume the Tianji Guarantee as soon as practicable after completion of the Tianji Acquisition. The Company will comply with applicable Listing Rules requirements, as and when appropriate.

– 17 –

LETTER FROM THE BOARD

Sinochem Shandong

Sinochem Shandong was established in the PRC in March 2004, with a registered capital of RMB50.00 million (equivalent to approximately HK$52.61 million) (of which Sinochem Corporation contributed as to 60%, or RMB30.00 million (equivalent to approximately HK$31.57 million)). The registered capital of Sinochem Shandong was increased to RMB100.00 million (equivalent to approximately HK$105.23 million) in February 2005 (of which Sinochem Corporation contributed as to 80%, or RMB80.00 million (equivalent to approximately HK$84.18 million)). Sinochem Corporation has since sold 29% of its equity interests in Sinochem Shandong. Sinochem Shandong is currently owned as to 51% by Sinochem Corporation.

Since the completion of its first stage of construction at the end of 2004, Sinochem Shandong has been producing and selling nitrogen compound fertilizers in the PRC. The manufacturing facilities of Sinochem Shandong have the capacity to produce 600,000 tons of compound fertilizers per year.

Based on the unaudited financial statements of Sinochem Shandong, which were prepared under PRC GAAP, its unaudited consolidated profits or losses for the years ended 31 December 2005 and 31 December 2006 and the six months ended 30 June 2007 are as follows:

	Financial year	Financial year	Six months
	ended	ended	ended
	31 December	31 December	30 June
	2005	2006	2007
Unaudited	RMB(28.47) million	RMB6.42 million	RMB(5.11) million
consolidated (loss)/	(equivalent to	(equivalent to	(equivalent to
profit before	approximately	approximately	approximately
taxation and	HK$(29.96) million)	HK$6.76 million)	HK$(5.38) million)
minority interests
Unaudited	RMB(28.47) million	RMB5.05 million	RMB(6.45) million
consolidated (loss)/	(equivalent to	(equivalent to	(equivalent to
profit after	approximately	approximately	approximately
taxation and	HK$(29.96) million)	HK$5.31 million)	HK$(6.79) million)
minority interests

The consolidated net asset value of Sinochem Shandong, based on its unaudited financial statements as at 30 June 2007, was RMB70.14 million (equivalent to approximately HK$73.81 million).

Sinochem Shandong will become a subsidiary of the Company and its results will be consolidated into the accounts of the Company upon completion of the Shandong Acquisition.

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LETTER FROM THE BOARD

The Shandong Loan

Currently, Sinochem Corporation, through a wholly-owned subsidiary, has provided to and for the benefit of Sinochem Shandong a loan of RMB150.00 million (equivalent to approximately HK$157.84 million) (Shandong Loan) . It is expected that Sinochem Corporation will continue to provide the Shandong Loan to Sinochem Shandong subsequent to completion of the Shandong Acquisition.

Qinghai Salt Lake

Qinghai Salt Lake is a state-controlled joint stock limited liability company established in the PRC in 1997 whose shares are traded on the Shenzhen Stock Exchange. Its principal activities are the development, production and distribution of chlorine potassium. Other activities include the development, production and distribution of carnallite and low adopt carnallite and the development, processing and smelting of other mining products.

Qinghai Salt Lake is currently owned as to 30.06% by Qinghai Salt Lake Industry Group. As disclosed in the Company’s announcement dated 17 October 2007, the Purchaser has entered into an acquisition agreement with Sinochem Corporation pursuant to which the Purchaser agreed to purchase, and Sinochem Corporation agreed to sell, shares of Qinghai Salt Lake representing an approximate 18.49% interest in Qinghai Salt Lake.

FINANCIAL EFFECT OF THE ACQUISITIONS

Tianji Acquisition

Upon completion of the Tianji Acquisition, Tianji JV will be treated as an associated company and will be equity accounted for. The total consideration for Tianji Acquisition is approximately RMB208.83 million (equivalent to approximately HK$219.75 million). The consideration will be settled in cash. On the basis of equity accounting treatment, there will be a corresponding increase in the “Interest in Associates”, as shown in the Group’s consolidated balance sheet. The profit attributable to the shares held by the Company would contribute to the profit of the Company. As disclosed above, Tianji JV began operations in January 2007 and was therefore loss-making for the six months ended 30 June 2007. It is in ramp-up to its full designed capacity and its financial performance is expected to improve due to production ramp-up, enhancement of operating efficiency and establishment of brand recognition. Having considered the growth prospects of Tianji JV, the Directors are of the view that the Tianji Acquisition would have a positive impact on the future prospects and earnings of the Company in the long run. The Directors also believe that there will be no impact on the liabilities position of the Company.

– 19 –

LETTER FROM THE BOARD

Shandong Acquisition

Upon completion of the Shandong Acquisition, the Purchaser will hold 51% equity interests in Sinochem Shandong and Sinochem Shandong will be treated as a subsidiary of the Company and its financial results will be consolidated into the Company’s consolidated financial statements. The total consideration for Shandong Acquisition is approximately RMB56.38 million (equivalent to approximately HK$59.33 million). The consideration will be settled in cash. On the basis of consolidation accounting treatment, there will be corresponding adjustments in the “Assets and Liabilities”, as shown in the Group’s consolidated balance sheet. The profit of Sinochem Shandong would contribute to the profit of the Company. As disclosed above, Sinochem Shandong began operation in December 2004, with main products of compound fertilizers. Sinochem Shandong is located in Linyi, Shandong Province, one of China’s largest production bases for compound fertilizers, and enjoys geographical proximity to one of the largest consumption markets for compound fertilizers in China surrounding Shandong province. Sinochem Shandong also benefits from technological advantages from its newly built production facilities. Sinochem Shandong was loss-making in the year ended 31 December 2005 and the six months ended 30 June 2007. However, its financial performance is expected to improve due to enhancement of operating efficiency and establishment of brand recognition. Having considered the growth prospects of Sinochem Shandong, the Directors are of the view that the Shandong Acquisition would have a positive impact on the future prospects and earnings of the Company in the long run.

Upon completion, the total assets and total liabilities of the Group will increase since the assets and liabilities of Sinochem Shandong will be consolidated into the Group’s consolidated financial statements.

SGM

Your attention is drawn to pages 48 to 50 of this circular where you will find a notice of the SGM to be held at Lounge, Mezzanine Floor, Grand Hyatt Hong Kong, 1 Harbour Road, Hong Kong on 28 December 2007 at 10:00 a.m. (or immediately after the conclusion or adjournment of the special general meeting of the Company scheduled to be convened on the same day at 9:40 a.m. at the same venue, whichever is the later). An ordinary resolution will be proposed at the SGM to approve the terms of each of the Tianji Acquisition Agreement, the Shandong Acquisition Agreement, the Fertilizer Purchase Framework Agreement and the transactions contemplated thereunder. Voting on the resolutions will be by way of poll.

Sinochem HK, a wholly-owned subsidiary of Sinochem Corporation and the direct controlling shareholder of the Company, together with any of its associates will abstain from voting on the resolutions to be proposed at the SGM to approve the Tianji Acquisition Agreement, the Shandong Acquisition Agreement and the transactions contemplated thereunder. So far as the Company was aware having made all reasonable enquiries, Sinochem HK held the voting right in respect of approximately 50.06% of the Company’s issued ordinary share capital as at the Latest Practicable Date; and no voting trust or other agreement or arrangement or understanding has been entered into by or was binding upon Sinochem HK

– 20 –

LETTER FROM THE BOARD

and/or any of its associates and there was no other obligation or entitlement of Sinochem HK and/or any of its associates as at the Latest Practicable Date, whereby Sinochem HK and/or any of its associates has/have or may have temporarily or permanently passed control over the exercise of the voting rights in respect of its/their shares to a third party, either generally or on a case-by-case basis.

A form of proxy for use at the SGM is enclosed with this circular. Whether or not you are able to attend the SGM in person, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return it to the branch share registrar and transfer office of the Company in Hong Kong, Tricor Secretaries Limited, 26th Floor, Tesbury Centre, 28 Queen’s Road East, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding the SGM. Completion and return of the form of proxy shall not preclude you from attending and voting in person at the SGM should you so wish.

PROCEDURES FOR DEMANDING A POLL

Pursuant to the Bye-laws, at any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands unless voting by way of a poll is required by the Listing Rules or (before or on the declaration of the results of the show of hands or on the withdrawal of any other demand for poll) a poll is demanded (i) by the Chairman of the meeting; or (ii) by at least three Shareholders present in person or in the case of a Shareholder being a corporation by its duly authorised representative or by proxy for the time being entitled to vote at the meeting; or (iii) by a Shareholder or Shareholders present in person or in the case of a Shareholder being a corporation by its duly authorised representative or by proxy and representing not less than one-tenth of the total voting rights of all Shareholders having the right to vote at the meeting; or (iv) by a Shareholder or Shareholders present in person or in the case of a Shareholder being a corporation by its duly authorised representative or by proxy and holding shares in the Company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all shares conferring that right; or (v) if required by the Listing Rules, by any Director or Directors, who, individually or collectively, hold proxies in respect of shares representing five per cent. or more of the total voting rights of all Shareholders having the right to vote at such meeting.

RECOMMENDATION

The Directors (including the independent non-executive Directors) consider that the terms of each of the Tianji Acquisition Agreement, the Shandong Acquisition Agreement, the Fertilizer Purchase Framework Agreement and the maximum annual values in relation thereto are fair and reasonable, on normal commercial terms and the entering into of each of the Tianji Acquisition Agreement, the Shandong Acquisition Agreement, the Fertilizer Purchase Framework Agreement is in the interests of the Company and the Shareholders as a whole. The Directors therefore recommend the Shareholders to vote in favour of the resolution(s) regarding each of the Tianji Acquisition Agreement, the Shandong Acquisition Agreement, the Fertilizer Purchase Framework Agreement, the proposed maximum annual values in relation thereto and the transactions contemplated thereunder to be proposed at the SGM.

– 21 –

LETTER FROM THE BOARD

FURTHER INFORMATION

The Independent Board Committee has been appointed to advise the Independent Shareholders in respect of the Tianji Acquisition, the Shandong Acquisition and the Continuing Connected Transaction. Somerley has been appointed to advise the Independent Board Committee and the Independent Shareholders in such regard. Accordingly, your attention is drawn to the letter of advice from the Independent Board Committee set out on pages 23 to 24 of this circular, which contains its recommendation to the Independent Shareholders, and the letter from Somerley set out on pages 25 to 38 of this circular, which contains its advice to the Independent Board Committee and the Independent Shareholders.

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

Yours faithfully, By the order of the Board of Sinofert Holdings Limited Du Ke Ping Chief Executive Officer

– 22 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

==> picture [60 x 59] intentionally omitted <==

SINOFERT HOLDINGS LIMITED

---

(Incorporated in Bermuda with limited liability)

(Stock Code: 297)

Independent non-executive Directors: Tse Hau Yin, Aloysius Ko Ming Tung, Edward Tang Tin Sek

Principal place of business: Units 4601-4610, 46th Floor Office Tower Convention Plaza 1 Harbour Road Wanchai Hong Kong

Registered Office:

Clarendon House 2 Church Street Hamilton HM 11 Bermuda

12 December 2007

To the Independent Shareholders

Dear Sir/Madam,

DISCLOSEABLE AND CONNECTED TRANSACTIONS PROPOSED ACQUISITION OF INTEREST IN TIANJI JV AND

PROPOSED ACQUISITION OF INTEREST IN SINOCHEM SHANDONG

CONTINUING CONNECTED TRANSACTION

We refer to the circular to the Shareholders dated 12 December 2007 (Circular) of which this letter forms part. Terms defined in the Circular shall have the same meanings when used herein unless the context otherwise requires.

* For identification purpose only

– 23 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

The Independent Board Committee has been formed to advise the Independent Shareholders as to whether, in our opinion, the entering into of each of the Tianji Acquisition Agreement, the Shandong Acquisition Agreement, the Fertilizer Purchase Framework Agreement and the transactions contemplated thereunder are in the interests of the Company and its Shareholders as a whole and the terms of which are fair and reasonable so far as the Independent Shareholders are concerned. Somerley has been appointed to advise the Independent Board Committee and the Independent Shareholders. We wish to draw your attention to the “Letter from Somerley” as set out on pages 25 to 38 of the Circular. We have considered the terms and conditions of the Tianji Acquisition Agreement, the Shandong Acquisition Agreement, the Fertilizer Purchase Framework Agreement, the advice of Somerley and the other factors contained in the “Letter from the Board” as set out on pages 5 to 22 of the Circular.

In our opinion, the terms of the Tianji Acquisition Agreement, the Shandong Acquisition Agreement, the Fertilizer Purchase Framework Agreement and the maximum annual value in relation thereto are fair and reasonable so far as the Independent Shareholders are concerned and the Tianji Acquisition Agreement, the Shandong Acquisition Agreement, the Fertilizer Purchase Framework Agreement are in the best interests of the Company and the Shareholders as a whole. We also consider that the terms of the Fertilizer Purchase Framework Agreement and the maximum annual value of the Continuing Connected Transaction are fair and reasonable, on normal commercial terms and in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolution(s) to be proposed at the SGM to approve the Tianji Acquisition Agreement, the Shandong Acquisition Agreement and the Fertilizer Purchase Framework Agreement (including the maximum annual values of the transactions thereunder).

Yours faithfully,

Independent Board Committee of Sinofert Holdings Limited Tse Hau Yin, Aloysius Ko Ming Tung, Edward Tang Tin Sek

– 24 –

LETTER FROM SOMERLEY

The following is the letter of advice from Somerley to the Independent Board Committee and the Independent Shareholders, which has been prepared for the purpose of inclusion in this circular.

SOMERLEY LIMITED

10th Floor

The Hong Kong Club Building 3A Chater Road Central Hong Kong

12 December 2007

To: the Independent Board Committee and the Independent Shareholders

Dear Sirs,

DISCLOSEABLE AND CONNECTED TRANSACTIONS PROPOSED ACQUISITION OF INTEREST IN TIANJI JV AND PROPOSED ACQUISITION OF INTEREST IN SINOCHEM SHANDONG

CONTINUING CONNECTED TRANSACTION

INTRODUCTION

We refer to our appointment to advise the Independent Board Committee and the Independent Shareholders in connection with transactions contemplated under the Tianji Acquisition Agreement, the Shandong Acquisition Agreement and the Fertiliser Purchase Framework Agreement. Details of the three agreements are set out in the circular issued by the Company to the Shareholders dated 12 December 2007 (the “Circular”), of which this letter forms part. Unless the context otherwise requires, terms used in this letter have the same meanings as defined in the Circular.

As Sinochem Corporation, through Sinochem HK is interested in 50.06% of the issued share capital of the Company as at the Latest Practicable Date, Sinochem Corporation and Sinochem HK are connected persons of the Company under the Listing Rules. Accordingly, both the Tianji Acquisition and the Shandong Acquisition constitute connected transactions for the Company and are subject to the Independent Shareholders’ approval under the Listing Rules. Sinochem HK and its associates will abstain from voting on the ordinary resolutions to be proposed at the SGM to approve the Tianji Acquisition Agreement and Shandong Acquisition Agreement and the transactions contemplated thereunder, which will be taken by way of poll.

– 25 –

LETTER FROM SOMERLEY

Upon completion of the Shandong Acquisition, Qinghai Salt Lake will become a connected person of the Company by reason of Qinghai Salt Lake being an associate of Qinghai Salt Lake Industry Group, which is a substantial shareholder of Sinochem Shandong, in turn a subsidiary of the Company. Accordingly, the transaction contemplated under the Fertiliser Purchase Framework Agreement constitute continuing connected transaction for the Company.

Since the Board expects that the relevant applicable percentage ratios in respect of the annual consideration for the Continuing Connected Transaction is to be 2.5% or above and will be more than HK$10,000,000, the Company must comply with the Independent Shareholders’ approval requirements described in Rule 14A.48 of the Listing Rules, in addition to the reporting and announcement requirements under Rules 14A.45 to 14A.47 of the Listing Rules. The Directors propose to seek Independent Shareholders’ approval of the Continuing Connected Transaction (including the relevant proposed caps) which will be conducted in the coming three financial years ending 31 December 2008, 2009 and 2010.

The Independent Board Committee, comprising all the three independent non-executive Directors, namely Messrs. Tse Hau Yin, Aloysius, Ko Ming Tung, Edward and Tang Tin Sek, has been established to consider the terms of the Tianji Acquisition Agreement, the Shandong Acquisition Agreement and the Fertiliser Purchase Framework Agreement and to make recommendations to the Independent Shareholders on how to vote on the relevant resolutions to be proposed at the SGM. We, Somerley, have been appointed to advise the Independent Board Committee and the Independent Shareholders in this regard.

In formulating our opinions and recommendations, we have relied on the information and facts supplied, and the opinions expressed, by the Directors and management of the Group and have assumed that they are true, accurate and complete and will remain true, accurate and complete up to the time of the SGM. We have also sought and received confirmation from the Directors that no material facts have been omitted from the information supplied and opinions expressed to us. We have no reason to believe that any material information has been withheld from us, or to doubt the truth or accuracy of the information provided. We have relied on such information and consider that the information we have received is sufficient for us to reach an informed view. We have not, however, conducted any independent investigation into the business and affairs of the Group, Tianji JV Sinochem Shandong or Qinghai Salt Lake.

– 26 –

LETTER FROM SOMERLEY

PRINCIPAL FACTORS AND REASONS CONSIDERED

In formulating our opinions, we have taken into consideration the following principal factors and reasons:

I. Information on the Group

The Group is the fertiliser flagship of its controlling Shareholder, Sinochem Corporation, which is one of the largest state-owned enterprises in the PRC. The Group has been focusing on the PRC fertilisers and agricultural related products sector and is a leading fertilisers enterprises in the PRC. Its principal activities are production, procurement and sale of fertilisers and related products in the PRC which form a vertically integrated business model combining upstream and downstream businesses. The Group sources a variety of fertilisers products and principal raw materials from both overseas and domestic suppliers for sales and production of phosphate based fertilisers and compound fertilisers with high nutrient content. Its products are sold through its own extensive sales and distribution network in the PRC as well as through independent distributors. The Group aims to serve the agricultural industry in the PRC by introducing quality resources from overseas and to ensure agricultural safety in the PRC. In order to strengthen and define its business operation in the fertilisers industry, the Group has acquired equity interests in several fertilisers production enterprises in the past two years.

According to the annual report of the Company for the year ended 31 December 2006, the Group experienced a growth in sales volume which lifted turnover by 9.76%. The Company realised net profit attributable to Shareholders of HK$896 million in 2006, representing an increase of 14.99% compared to HK$779 million in 2005.

During the first half of 2007, the PRC Government strengthened its macro-control efforts and yet continued to support the agricultural industry. The total agricultural product output in the PRC was further boosted, grain planting acreage was increased, and fertiliser demand grew at a steady pace. This has created a favourable business environment for the Group. Based on the interim report of the Company for the six months period ended 30 June 2007, the Company’s total sales volume was up by 28.51% over the corresponding period of 2006 which, with rising prices, has resulted in a growth of 39.17% in turnover when compared to the first half of 2006.

II. The Acquisitions

1. Background of and reasons for the Acquisitions

As disclosed in the Company’s circular dated 13 June 2005, Sinochem Corporation has given the Non-Competition Undertaking in favour of the Company, pursuant to which the Company was granted, among other things, the Option to acquire Sinochem Corporation’s interests in Qinghai Salt Lake, Tianji JV and Sinochem Shandong, each at a fair market value. The Company has recently exercised the Option to acquire 18.49%

– 27 –

LETTER FROM SOMERLEY

equity interest of Qinghai Salt Lake from Sinochem Corporation, details of which were set out in the Company’s circular dated 10 December 2007. The Company also decided to exercise its right to acquire Sinochem Corporation’s interest in Tianji JV and Sinochem Shandong and entered into the agreements for the Acquisitions on 28 November 2007.

As at 31 December 2005, the Group had equity interests in seven fertilisers production companies. The Group took steps to strengthen its production interests by making strategic investments in two other fertilisers production enterprises in 2006 as disclosed in the Company’s annual report for the year ended 31 December 2006. The Acquisitions enable the Company to obtain large-scale production capacity of nitrogenous fertilisers and compound fertilisers and further secure the supply to its downstream distribution network. By combining its existing competitive advantage in downstream distribution with the Acquisitions, the Company will be able to benefit from the synergies that arise from such further vertical business integrations.

The fertiliser market in the PRC has been growing fast under the combined effects of the PRC rapid economic development, rising demand for agricultural products and the positive state policies which include the abolition of agricultural tax and more generous government subsidies to grain-growers. According to the Conference of China Nitrogen Fertiliser Industry Association held in August 2007, the PRC’s urea consumption for agricultural and industrial purposes will continue to grow at compound annual growth rates of 6% and 15% respectively in the coming years. Under the PRC Government’s support to the agricultural industry as reflected in the 11th Five Year Plan of the PRC Government, the Board expects there would be increase in adoption of compound fertilisers in agricultural production since this could enhance agricultural productivity. The Acquisitions will therefore enable the Company to tap into the growth momentum of the fertiliser market in the PRC.

2. Information on Tianji JV and Sinochem Shandong

• (a) Business and financial information of Tianji JV

Tianji JV was established in the PRC in August 2003, but only commenced operation in January 2007 (see below). It has a registered capital of RMB500 million. It is currently owned as to 40% by Sinochem Corporation (which subscribed the equity interest in September 2004 for a consideration of RMB200 million) and as to 60% by Tianji Coal.

The principal activities of Tianji JV are the production and sale of granular urea in the PRC. Tianji JV is located in Jincheng, the “Coal Capital of China”, and enjoys the advantages of low-cost raw materials and advanced production technology. The business operations of Tianji JV commenced in January 2007, immediately following the completion of the installation of its manufacturing facilities. Tianji JV has an annual production capacity of 600,000 tonnes of large granulated urea.

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LETTER FROM SOMERLEY

Based on the unaudited financial statements of Tianji JV, which were prepared under PRC GAAP, its unaudited consolidated loss for its first period of operation for the six months ended 30 June 2007 were as follows:

				For the six
				months ended
				30 June
				2007
				(RMB million)
Revenue				453.95
Unaudited	consolidated	loss	before taxation and minority
interests				(95.59)
Unaudited	consolidated	loss	after taxation and minority
interests				(95.59)

Tianji JV commenced operations in January 2007 and all its pre-operating costs incurred of approximately RMB76 million were deferred for recognition in its financial statements until commencement of operation. Such pre-operating costs were one-off in nature and the Directors expect that the financial performance of Tianji JV will improve due to production ramp-up, enhancement of operating efficiency and establishment of brand recognition in the coming years.

As at 30 June 2007, Tianji JV had total assets of approximately RMB2,218.37 million, mainly consisting of its production plant having a net book value of approximately RMB1,864.68 million (representing approximately 84%). It also had total liabilities of RMB1,813.96 million including bank loans amounted to RMB1,426.0 million with a weighted average interest rate of 6.54%. Currently, Sinochem Corporation has provided a guarantee of up to RMB440 million in respect of loan facilities granted by independent third party banks to Tianji JV. The Company and Sinochem Corporation are in discussion for the Company to assume the Tianji Guarantee as soon as practicable after completion of the Tianji Acquisition. The Company will comply with applicable Listing Rules requirements, as and when appropriate. We consider it normal for the Company being the new shareholder of Tianji JV to provide a proportionate guarantee on loan facilities granted by banks to Tainji JV.

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LETTER FROM SOMERLEY

• (b) Business and financial information of Sinochem Shandong

Sinochem Shandong was established in the PRC in March 2004. It has a registered capital of RMB100 million and is currently owned as to 51% by Sinochem Corporation.

Sinochem Shandong commenced operations following the completion of its first stage of construction of production plant at the end of 2004. It has an annual production capacity of 600,000 tonnes of compound fertilisers. Sinochem Shandong produces and sells nitrogen compound fertilisers in the PRC. Sinochem Shandong is located in Linyi, Shandong Province, one of PRC’s largest production bases for compound fertilisers. Shandong province is one of the largest consumption markets for compound fertilisers in the PRC.

Based on the unaudited financial statements of Sinochem Shandong, which were prepared under PRC GAAP, its unaudited consolidated profits/loss for the years ended 31 December 2005 and 31 December 2006 and the six months ended 30 June 2006 and 30 June 2007 were as follows:

	For the year	For the year	For the six	For the six
	ended	ended	months	months
	31 December	31 December	ended	ended
	2005	2006	30 June 2006	30 June 2007
	(RMB million)	(RMB million)	(RMB million)	(RMB million)
Revenue	257.78	607.08	313.13	321.05
Unaudited consolidated
(loss)/profit before
taxation and
minority interests	(28.47)	6.42	9.32	(5.11)
Unaudited consolidated
(loss)/profit after
taxation and
minority interests	(28.47)	5.05	9.32	(6.45)

The revenue of Sinochem Shandong jumped by 135.50% in 2006 which lifted its profit after taxation and minority interests to RMB5.05 million in 2006 from a net loss of RMB28.47 million in 2005. In the first half of 2007, Sinochem Shandong put more resources into promoting its own brand and finance costs also increased during the period. Sinochem Shandong therefore recorded a net loss for the first six months of 2007 despite revenue grew by 2.53% when compared to the corresponding period in 2006. The Directors expect the financial performance of Sinochem Shandong will improve as a result of the enhancement of operating efficiency and establishment of brand recognition.

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LETTER FROM SOMERLEY

As at 30 June 2007, Sinochem Shandong had total assets of approximately RMB504.93 million, mainly consisting of buildings of RMB119.76 million and plant and machinery of RMB88.20 million. It also had total liabilities of RMB434.79 million including loans from Sinochem Corporation of RMB150.0 million, on which interest is charged at a fixed rate of 5.88% per annum. Sinochem Corporation has confirmed that it will continue to provide such financing to Sinochem Shandong subsequent to the completion of the Shandong Acquisition. We consider the continuing financial support from Sinochem Corporation to Sinochem Shandong is in the interest of Sinochem Shandong and its shareholders, including the Company upon completion of the Sinochem Shandong Acquisition. Sinochem Shandong also had bank borrowings of RMB135.0 million secured on the land use right, building, plant and machinery, with interest being charged at prevailing market rates up to 6.75% per annum.

3. Bases of consideration and valuation

(a) Consideration

The acquisition consideration of RMB208.83 million for the Tianji Acquisition and RMB56.38 million for the Shandong Acquisition will be payable in cash in two instalments, with 30% payable within 5 business days of signing of the respective acquisition agreements, and 70% payable within 3 months of the fulfilment or waiver of the conditions and in any event within one year from the date of signing the respective acquisition agreements. The Company and the Purchaser have agreed with Sinochem Corporation to defer payment of the first instalments under both the Tianji Acquisition Agreement and the Shandong Acquisition Agreement to on or before 14 December 2007.

The acquisitions considerations were arrived at after arm’s length negotiations between Sinochem Corporation and the Company taking into account the valuations of Tianji JV and Sinochem Shandong under the asset appraisal report prepared by an independent third party institution specialised in asset appraisals and authorised by the Ministry of Finance of the PRC. The considerations also take into account Sinochem Corporation’s historical investments in Tianji JV and Sinochem Shandong and their long term growth prospects.

Based on the independent valuation reports, the 40% equity interests of Tianji JV has a value of RMB186.40 million. The acquisition consideration of RMB 208.83 million represents a premium of RMB22.43 million (12.03%) over such valuation. We consider that a premium, which is relatively small in absolute and percentage terms when compared to the current market capitalisation of the Company of approximately HK$40 billion, and its unaudited net asset value of HK$5,354 million as at 30 June 2007, is justified by the long term growth prospects of the fertiliser industry in the PRC and potential synergies arising from the further vertical integration of the Company through securing direct access to nitrogenous fertilisers and compound fertilisers for its downstream distribution network.

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LETTER FROM SOMERLEY

The acquisition consideration of Sinochem Shandong of RMB56.38 million represents a premium of RMB7.67 million (15.75%) over the value of Sinochem Shandong’s 51% equity interests of RMB48.71 million as appraised by the independent valuer. Again, we consider a premium, which is relatively small in absolute and percentage terms when compared to the size of the Company as discussed above, is justified in light of the long term growth prospects of Sinochem Shandong and the potential synergies arising from further vertical business integration of the Company as discussed above.

4. Conditions for the Acquisitions

The Tianji Acquisition and the Sinochem Shandong Acquisition are not interconditional on each other. However, both Acquisitions are conditional upon, among other things, the passing of all necessary resolutions by the Independent Shareholders, the obtaining of all necessary consents, permits and other approvals necessary for or in respect of the Acquisitions having been obtained from the relevant governmental and regulatory authorities in the PRC, including, without limitation, approval from the SASAC and the surrender by other shareholders of Tianji JV and Sinochem Shandong of any right of first refusal in respect of acquiring Sinochem Corporation’s equity interests in Tianji JV and Sinochem Shandong.

5. Financial effects of the Acquisitions on the Group

(i) Possible goodwill

A certain amount of goodwill is likely to arise from the Acquisitions. The actual amount of goodwill would be determined as being the difference between the considerations for the Acquisitions and the Purchaser’s share of the fair value of the identified assets, liabilities and contingent liabilities of Tianji JV and Sinochem Shandong on that date.

Tianji JV is expected to be accounted for as an associated company. The Group’s interest in Tianji JV will be subject to a regular impairment assessment. If the values of the Group’s interests in Tianji JV falls below its carrying amount at the date of impairment assessment, the Group’s interest in Tianji JV would be impaired and such impairment loss would be recognised as an expense in the Group’s profit and loss account.

After completion of Sinochem Shandong Acquisition, the Group will consolidate the assets and liabilities of Sinochem Shandong into its own accounts. Goodwill arises from Shandong Acquisition would be subject to regular impairment assessment and any impairment loss would be recognised as an expense in the Group’s profit and loss accounts.

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LETTER FROM SOMERLEY

• (ii) Effect on cash/borrowings

The total consideration of approximately RMB265 million is not expected to have a material effect on the cash resources of the Group, which at 30 June 2007 were approximately RMB134 million and there was a placement of new Shares as announced in July 2007 which raised a net proceed of approximately HK$2,324.6 million.

Tianji JV has borrowings of RMB1,426.0 million, of which RMB440 million will be guaranteed by the Group. However, we do not consider this material compared with the Group’s net assets of HK$5,354 million as at 30 June 2007 which was then further enlarged by the aforesaid placement of new Shares.

(iii) Earnings and cash flow

Both Tianji JV and Sinochem Shandong made losses for the six months ended 30 June 2007. As commented above, in the case of Tianji JV, the loss was significant but this is to be expected in a start up. In the case of Sinochem Shandong, the loss was small and the Directors inform us this was largely due to increase promotional spending which should pay off in due course.

III. Continuing Connected Transaction

1. Background of and reasons for the Continuing Connected Transaction

Qinghai Salt Lake has been engaged in the development, production and distribution of potassium chloride, carnallite and low adopt carnallite. Sinochem Fertiliser has been purchasing fertiliser products from Qinghai Salt Lake for several years. Upon completion of the Shandong Acquisition, Qinghai Salt Lake will become a connected person of the Company by reason of Qinghai Salt Lake being an associate of Qinghai Salt Lake Industry Group, which is a substantial shareholder of Sinochem Shandong, in turn a subsidiary of the Company. The continuing purchases of fertiliser products from Qinghai Salt Lake would constitute continuing connected transactions for the Company.

There are limited substantial suppliers of potassium chloride in the PRC and Qinghai Salt Lake is the clear market leader. Accordingly, the Directors consider the entering of Fertiliser Purchase Framework Agreement is in the interest of the Group to allow the Group to obtain a steady supply of potash fertiliser, providing a platform for the Group to maintain its status as a substantial distributor of potash fertiliser in the PRC and to further expand its business.

In light of the respective principal activities of the Group and Qinghai Salt Lake, we consider that the Fertiliser Purchase Framework Agreement has been entered into in the ordinary and usual course of business.

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LETTER FROM SOMERLEY

2. Principal terms of the Continuing Connected Transaction

Pursuant to the Fertiliser Purchase Framework Agreement, Qinghai Salt Lake will supply, and the Sinochem Fertiliser will purchase, chemical and fertiliser products and materials. The price of the fertilisers shall be their fair market price in the PRC at the time the purchase order is placed, and shall be exclusive of the relevant transportation fees.

Given the commodity nature of potash fertiliser products, we consider that the basis for determining the prices for the chemical and fertiliser products and material to be transacted under the Fertiliser Purchase Framework Agreement which are set with reference to fair market price in the PRC, are fair and reasonable.

3. Comparison with terms with independent third parties

As Qinghai Salt Lake is the major potash fertilisers manufacturer in the PRC, we are unable to identify transactions between Sinochem Fertiliser and independent suppliers in the PRC which are similar to the transactions under the Fertiliser Purchase Framework Agreement for our comparison. We have however, reviewed the terms offered by Qinghai Salt Lake to independent customers and noted that the terms under the Fertiliser Purchase Framework Agreement are no less favourable to Sinochem Fertiliser than those offered by Qinghai Salt Lake to independent third parties.

4. Annual caps

The Continuing Connected Transaction is subject to the Listing Rules requirements and conditions as more particularly discussed under the section headed “Reporting requirements and conditions of the Continuing Connected Transaction” below. In particular, the Continuing Connected Transaction is subject to the annual caps.

(a) Review of historical figures

The table below sets out the transaction value of the Continuing Connected Transaction for the two years ended 31 December 2006 and six months ended 30 June 2007 (“Track Record Period”):

			Six months
	Year ended 31 December		ended 30 June
	2005	2006	2007
Fertiliser Purchase
Framework Agreement	RMB779,148,488	RMB870,339,564	RMB479,152,316

The aggregate value for the purchase of fertiliser products from Qinghai Salt Lake in 2006 rose by 11.7% when compared to 2005. The purchases during the first half of 2007 represented about 55.1% of Sinochem Fertiliser’s total purchases from Qinghai Salt Lake in 2006. The growth was contributed by both the rise in selling price of potash fertiliser products in the PRC domestic market as well as the increase in the volume of potash fertiliser products purchased.

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LETTER FROM SOMERLEY

• (b) Assessment of the annual caps

In assessing the reasonableness of the proposed annual caps, we have discussed with the Directors the basis and assumptions underlying the projections of the annual caps.

Set out below are the annual caps being proposed for the Continuing Connected Transaction for each of the three years ending 31 December 2010:

Year ending 31 December 2008 2009 2010 Fertiliser Purchase Framework Agreement RMB2,400,000,000 RMB2,880,000,000 RMB4,200,000,000

The annual caps are calculated based on the projected production capacity of Qinghai Salt Lake, the projected quantities of sales and the projected average price per tonne of chemical and fertiliser products for each of the relevant years, having regard to the anticipated growth of fertiliser consumption in the PRC in the future and the continuing expansion of the Group’s sales network from its existing approximately 1,500 distribution centres to its targeted 2,000 distribution centres as disclosed in the Company’s interim report for the six months period ended 30 June 2007.

The proposed annual cap for 2008 of RMB2,400 million is likely to represent a substantial increase over the actual purchases for the year 2007. This is made up of expected increases in both quantity in view of the expansion in the Group’s own sales network and Qinghai Salt Lake’s enhancement in production capacity as well as average sales price for the products given the historical growth in the average market price of potassium chloride according to a report released by an independent market researcher in May 2006. The annual cap for 2009 and 2010 represent a year-on-year growth of 20% and 45.8% respectively. The relatively higher growth in 2010 is due to the planned expansion in the production capacity of Qinghai Salt Lake.

The expected annual output of Qinghai Salt Lake in 2007 is 1.9 million tonnes. It is expected that the annual output will reach 2 million tonnes, 2 million tonnes and 3 million tonnes in 2008, 2009 and 2010 respectively. With the growth of the distribution business of Sinochem Fertiliser and the increasing output of Qinghai Salt Lake, especially in 2010, the ongoing purchases from Qinghai Salt Lake are likely to increase accordingly.

The proposed annual caps for the Fertiliser Purchase Framework Agreement have also provided for a rise in the unit price of potash fertilisers in view of the substantial rise in the sales price of such products in 2007. We consider the proposed annual caps for the Fertiliser Purchase Framework Agreement provide reasonable buffers to cater for the possible increase in the purchase prices and the expected significant growth in the volumes of the fertiliser business in the next three years.

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LETTER FROM SOMERLEY

Having considered the basis on which the related proposed annual caps for the Continuing Connected Transaction are determined as described above, we are of the view that the related proposed annual caps for the Continuing Connected Transaction are fair and reasonable. The Continuing Connected Transaction is subject to annual review and confirmation of due compliances by the independent non-executive Directors and the Company’s auditors, detailed requirements are set out in the following paragraph. Such annual review will assist in safeguarding the interests of the Independent Shareholders.

5. Reporting requirements and conditions of the Continuing Connected Transaction

Pursuant to Rules 14A.37 to 14A.40 of the Listing Rules, the Continuing Connected Transaction is subject to the following annual review requirements:

• (a) each year the independent non-executive Directors must review the Continuing Connected Transaction and confirm in the annual report and accounts that the transactions have been entered into:

• (i) in the ordinary and usual course of business of the Group;

• (ii) either on normal commercial terms or, if there are not sufficient comparable transactions to judge whether they are on normal commercial terms, on terms no less favourable to the Group than terms available to or from (as appropriate) independent third parties; and

• (iii) in accordance with the relevant agreements governing them on terms that are fair and reasonable and in the interests of the Shareholders as a whole;

• (b) each year the auditors of the Company must provide a letter to the Board (with a copy provided to the Stock Exchange at least ten business days prior to the bulk printing of the Company’s annual report) confirming that the Continuing Connected Transaction:

• (i) has received the approval of the Board;

• (ii) is in accordance with the pricing policies of the Group;

• (iii) has been entered into in accordance with the relevant agreements governing the Continuing Connected Transaction; and

• (iv) has not exceeded the annual caps;

• (c) the Company shall allow, and shall procure the relevant counterparties to the Continuing Connected Transaction to allow, the Company’s auditors with sufficient access to their records for the purpose of the reporting on the Continuing Connected Transaction as set out in paragraph (b);

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LETTER FROM SOMERLEY

• (d) the Company shall promptly notify the Stock Exchange and publish an announcement in accordance with the Listing Rules if it knows or has reason to believe that the independent non-executive Directors and/or auditors of the Company will not be able to confirm the matters set out in paragraphs (a) and/or (b) respectively.

In light of the reporting requirements attached to the Continuing Connected Transaction, in particular, (i) the restriction of the value of the Continuing Connected Transaction by way of the annual caps; and (ii) the ongoing review by the independent non-executive Directors and auditors of the Company of the terms of the Continuing Connected Transaction and the annual caps not being exceeded, we are of the view that appropriate measures will be in place to govern the conduct of the Continuing Connected Transaction and safeguard the interests of the Independent Shareholders.

DISCUSSION AND ANALYSIS

The Company is the fertiliser flagship of its controlling Shareholder, Sinochem Corporation, which is one of the largest state-owned enterprises in the PRC. The Company has recently exercised an option to acquire an 18.49% interests in Qinghai Salt Lake from Sinochem Corporation at a cash consideration of approximately RMB6.7 billion. We consider the Acquisitions are logical extension of the Group’s policy to strengthen its representation in the fertiliser production base in the PRC. The Acquisitions allow the Group to have improved access to large-scale production capacity of nitrogenous and compound fertilisers and to further secure the supply to its downstream distribution network, enhancing the benefits of vertical integration.

Tianji JV made a loss for its initial period of operation ended 30 June 2007 but this is to be expected with a start-up. We consider the prospects for Tianji JV good in light of the growing PRC’s urea consumption and hence increasing demand for its main product, large granulated urea. Sinochem Shandong made a small loss to 30 June 2007, mainly due to increased promotional expenditure and finance costs.

The considerations are slightly higher than the professional valuations of the assets of Tianji JV and Sinochem Shandong as at 30 June 2007 carried out by an independent third party institution specialised in asset appraisals and authorised by the Ministry of Finance of the PRC. We consider the premium is justified by the potential growth of Tianji JV and Sinochem Shandong in view of the prospects of fertiliser industry in the PRC. The considerations for the Acquisitions will be paid in full in cash by internal resources. The amounts involved are not substantial in the context of the Group’s overall financial resources and not expected to put a pressure on the Group’s cash flow or gearing.

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LETTER FROM SOMERLEY

Pursuant to the Fertiliser Purchase Framework Agreement, Qinghai Salt Lake will supply chemical and fertiliser products and materials to Sinochem Fertiliser. The selling price for the fertiliser products will be set based on fair market price in the PRC at the time the purchase order is placed. The Continuing Connected Transaction is subject to annual caps determined with reference to the projected production capacity of Qinghai Salt Lake, the projected quantities of sales and the projected average price per tonne of chemical and fertiliser products for each of the relevant years, having regard to the anticipated growth of fertiliser consumption in the PRC in the future and the continuing expansion of the Group’s sales network. The Continuing Connected Transaction is also subject to the annual review requirement stipulated under 14A.37 to 14A.40 of the Listing Rules.

RECOMMENDATIONS

Having taken into account the above principal factors and reasons, we consider that the Tianji Acquisition Agreement, the Shandong Acquisition Agreement and the Fertiliser Purchase Framework Agreement are on normal commercial terms and are entered into in the ordinary and usual course of business of the Group. We further consider that the terms of the Acquisitions and the Continuing Connected Transaction (including the annual caps) are fair and reasonable to the Independent Shareholders and in the interests of the Company and the Shareholders as a whole. Accordingly, we advise the Independent Board Committee to recommend, and we ourselves recommend, that the Independent Shareholders vote in favour of the ordinary resolutions to be proposed at the SGM to approve the Tianji Acquisition Agreement, the Shandong Acquisition Agreement, the Fertiliser Purchase Framework Agreement (including the annual caps) and the transactions contemplated thereunder.

Yours faithfully, for and on behalf of Somerley Limited M. N. Sabine Chairman

– 38 –

GENERAL INFORMATION

APPENDIX

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 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 herein misleading.

2. INTEREST IN SECURITIES

(a) Interests and short positions of Directors and chief executive in shares and debentures

As at the Latest Practicable Date, the Directors and chief executive of the Company had the following interests and short positions in the shares, underlying shares and debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO), and the details of any right to subscribe for shares in the Company, which had 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 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 of the Company referred to therein or which were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies contained in the Listing Rules, to be notified to the Company and the Stock Exchange:

	Number of		Approximate
	underlying		percentage of
	shares of	Other derivative	aggregate
	unlisted shares	interest in the	interests to total
	options	shares	issued share
Name of Director	beneficially held	beneficially held	capital
	(Note 1)
Liu De Shu	2,453,000	−	0.0395%
Song Yu Qing	1,838,000	−	0.0296%
Du Ke Ping	5,633,000	362,526 (Note 2)	0.0965%
Chen Guo Gang	1,838,000	−	0.0296%
Harry Yang	2,002,000	253,711 (Note 3)	0.0363%
Wade Fetzer III	256,000	−	0.0041%

– 39 –

GENERAL INFORMATION

APPENDIX

Note 1: The interests of the Directors and chief executive pursuant to unlisted physically settled equity derivatives are held through unlisted share options granted to them in their personal capacities under the share option schemes adopted by the Company on 26 August 2002 and 28 June 2007. Details of these options are as follows:

	Number of
	shares in
	which	Date of	Exercise
Name	interested*	grant	price	Exercise period
Liu De Shu	2,033,000	23-1-2006	HK$1.672	23-1-2008 to 22-1-2012	Note 1
	420,000	28-8-2007	HK$ 4.99	28-8-2009 to 27-8-2013	Note 2
Song Yu Qing	1,582,000	23-1-2006	HK$1.672	23-1-2008 to 22-1-2012	Note 1
	256,000	28-8-2007	HK$ 4.99	28-8-2009 to 27-8-2013	Note 2
Du Ke Ping	5,213,000	23-1-2006	HK$1.672	23-1-2008 to 22-1-2012	Note 1
	420,000	28-8-2007	HK$ 4.99	28-8-2009 to 27-8-2013	Note 2
Chen Guo	1,582,000	23-1-2006	HK$1.672	23-1-2008 to 22-1-2012	Note 1
Gang	256,000	28-8-2007	HK$ 4.99	28-8-2009 to 27-8-2013	Note 2
Harry Yang	1,582,000	23-1-2006	HK$1.672	23-1-2008 to 22-1-2012	Note 1
	420,000	28-8-2007	HK$ 4.99	28-8-2009 to 27-8-2013	Note 2
Wade Fetzer III	256,000	28-8-2007	HK$ 4.99	28-8-2009 to 27-8-2013	Note 2

• Note 1: During the period between 23 January 2008 and 22 January 2009, no more than two-thirds of the options can be exercised and the remaining options can be exercised during the period between 23 January 2009 and 22 January 2012.

• Note 2: The options shall in any event not be exercised between 28 August 2007 and 27 August 2009, but may thereafter be exercised in accordance with the terms of offer of the options.

• The total number of options held by each person is the same as the number of underlying shares in which that person is interested pursuant to the options.

• Note 2: Du Ke Ping has a derivative interest in respect of 362,526 shares in the Company within the meaning of Part XV of the SFO. That derivative interest represents Mr. Du’s entitlement to receive an equivalent value in cash of 362,526 shares in the Company subject to, among other things, satisfaction of certain performance targets.

• Note 3: Harry Yang has a derivative interest in respect of 253,711 shares in the Company within the meaning of Part XV of the SFO. That derivative interest represents Mr. Yang’s entitlement to receive an equivalent value in cash of 253,711 shares in the Company subject to, among other things, satisfaction of certain performance targets.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors and chief executive of the Company had any interest or short position in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) and the details of any right to subscribe for shares in the Company which had 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 the Director and the chief executive was 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 of the Company referred to therein or which were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies contained in the Listing Rules, to be notified to the Company and the Stock Exchange.

– 40 –

GENERAL INFORMATION

APPENDIX

(b) Notifiable interests and short positions of substantial shareholders and other persons in shares

As at the Latest Practicable Date, so far as was known to the Directors and chief executive of the Company, the following substantial shareholders of the Company within the meaning of the Listing Rules and other persons (in each case other than the Directors and chief executive of the Company) had an interest or a short position in shares or 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:

	Interests in shares	Interests in shares
		Approximate
	Number of	percentage of
	shares	total issued
Name of substantial shareholder	involved	shares
Sinochem Corporation (Note 1)	4,984,739,015	80.26%
Potashcorp (Note 2)	4,984,739,015	80.26%

Notes:

1. These shares represent the corporate interest of Sinochem Corporation held through its wholly-owned subsidiary, Sinochem HK. The interests consist of (a) 3,108,863,335 shares directly held by Sinochem HK and interest in 519,995,539 underlying shares agreed to be subscribed by Sinochem HK under the Subscription Agreement and (b) 1,161,589,966 shares held by Potashcorp through its wholly owned subsidiary PCS Barbados and interest in 194,290,175 underlying shares agreed to be subscribed by PCS Barbados under the Subscription Agreement in which Sinochem HK is deemed to have an interest under sections 317 and 318 of the SFO.

2. These shares represent the corporate interest of Potashcorp held through its wholly-owned subsidiary, PCS Barbados. The interests consist of (a) 1,161,589,966 shares directly held by PCS Barbados and interest in 194,290,175 underlying shares agreed to be subscribed by PCS Barbados under the Subscription Agreement and (b) 3,108,863,335 shares held by Sinochem HK and interest in 519,995,539 underlying shares agreed to be subscribed by Sinochem HK under the Subscription Agreement in which Potashcorp is deemed to have an interest under sections 317 and 318 of the SFO.

Save as disclosed above, as at the Latest Practicable Date, the Directors and chief executive of the Company were not aware of any substantial shareholder of the Company within the meaning of the Listing Rules or other person (in each case other than a Director or chief executive of the Company) who had, as at the Latest Practicable Date, an interest or a short position in shares or underlying shares which was required to be notified to the Company pursuant to Divisions 2 and 3 of Part XV of the SFO.

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GENERAL INFORMATION

APPENDIX

(c) Interests in 10% or more of shares in subsidiaries

As at the Latest Practicable Date, so far as was known to the Directors and chief executive of the Company, the following are the persons who (not being a member of the Group or a Director or chief executive of the Company) were, 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 the subsidiaries of the Company or in any options in respect of such capital:

==> picture [378 x 499] intentionally omitted <==

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|||||||||
|---|---|---|---|---|---|---|---|
|Approximate|
|Number|of|percentage|of|
|shares|held|or|the|existing|
|extent|of|issued|share|
|registered|capital|or|
|capital|in|registered|
|which|capital|of|the|
|Name|of|subsidiary|Name|of|shareholder|interested|subsidiary|
|RMB22,000,700|46.81%|
|(Fujian|Sinochem|Zhisheng|
|Chemical|Fertilizer|Company|(Yongan|Zhisheng|
|Limited)|Chemical|Company|
|Limited)|
|RMB4,500,000|45%|
|(Hubei|Sinochem|Dongfang|(Hubei|Dongfang|
|Chemical|Fertilizer|Company|Agricultural|Center)|
|Limited)|
|RMB31,000,000|38.75%|
|(Sinochem|Chongqing|Fuling|(Chongqing|Fuling|
|Chemical|Engineering|District|Finance|
|Company|Limited)|Bureau)|
|RMB580,000|29%|
|(Sinochem|Yantai|Crop|
|Nutrition|Co.,|Ltd)|(Yantai|City|Houdao|
|Fertilizer|Company|
|Limited)|
|RMB400,000|20%|
|(Sinochem|Yantai|Crop|(Yantai|Gang|Group|
|Nutrition|Co.,|Ltd)|Company|Limited)|

----- End of picture text -----

– 42 –

GENERAL INFORMATION

APPENDIX

==> picture [378 x 514] intentionally omitted <==

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

|||||||||
|---|---|---|---|---|---|---|---|
|Approximate|
|Number|of|percentage|of|
|shares|held|or|the|existing|
|extent|of|issued|share|
|registered|capital|or|
|capital|in|registered|
|which|capital|of|the|
|Name|of|subsidiary|Name|of|shareholder|interested|subsidiary|
|200,000|40%|
|(Guizhou|Kaiyang|(Chen|Yongliang)|
|Qinglongjiang|Company|
|Limited)|
|RMB4,415,268|43.16%|
|(Chongqing|Fuyin|Plastic|(Boshide|Plastic|
|Company|Limited)|Company|Limited)|
|247,500|49.5%|
|(Fengdou|Tengsheng|(Fengdou|Province|
|Agricultural|Material|Agricultural|Material|
|Company|Limited)|Supply|Station)|
|19,600,000|49%|
|(Fuling|Water|Power|
|(Chongqing|Fuling|Qilixin|Electricity|Investment|
|Tiegongshui|Transport|Group)|
|Company|Limited)|
|200,000|20%|
|(Chongqing|Tengsheng|(Chongqing|Fuling|
|Agricultural|Production|Xinlan|Chemical|
|Resources|Company|Limited)|Industrial|Company|
|Limited)|

----- End of picture text -----

Save as disclosed above, as at the Latest Practicable Date, the Directors and chief executive of the Company were not aware of any person (other than a member of the Group or a Director or chief executive of the Company) who was, as at the Latest Practicable Date, 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 the subsidiaries of the Company or in any options in respect of such capital.

– 43 –

GENERAL INFORMATION

APPENDIX

3. DIRECTORS’ SERVICE CONTRACTS

Mr. Du Ke Ping, an executive Director and the Chief Executive Officer of the Company, has entered into a director’s service contract with the Company for a term of 3 years, with effect from 28 July 2005, subject to: (i) the service contract may be terminated prior to its expiry if either of Mr. Du or the Company serves two months’ prior notice to the other in writing; and (ii) the service contract may be terminated by the Company in the case of bankruptcy, disease and any other significant faults of a director as described in the service contract. Should the Company terminate the contract prior to its expiry, Mr. Du is entitled to receive a cash compensation equivalent to 11 months’ of his basic salary, save for circumstances described in item (ii) above.

Mr. Harry Yang, an executive Director and Deputy General Manager of the Company, has entered into a director’s service contract with the Company for a term of 3 years, with effect from 6 March 2006, subject to: (i) the service contract may be terminated prior to its expiry if either of Mr. Yang or the Company serves two months’ prior notice to the other in writing; or (ii) the service contract may be terminated by the Company in the case of bankruptcy, disease and any other significant faults of a director as described in the service contract. Should the Company terminate the contract prior to its expiry, Mr. Yang is entitled to receive a cash compensation equivalent to 11 months’ of his basic salary, save for circumstances described in item (ii) above.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors had entered into or proposed to enter into any service contract with the Company or any of its subsidiaries (excluding contracts expiring or determinable by the employer within one year without payment of compensation, other than statutory compensation).

4. COMPETING INTERESTS

As at the Latest Practicable Date, Mr. Du Ke Ping, an executive Director and the Chief Executive Officer of the Company, was also a director of Sinochem Shandong and Mr. Harry Yang, an executive Director and Deputy General Manager of the Company, was a director of US Agri-Chemicals Corporation. Sinochem Shandong and US Agri-Chemicals Corporation are held as to 51% and 100% by Sinochem Corporation respectively.

Sinochem Shandong and US Agri-Chemicals Corporation are members of the group comprising Sinochem Corporation and its subsidiaries (other than the Group) which continue to be engaged in the production of fertilizers. As at the Latest Practicable Date, Sinochem Shandong continued to be engaged in the production of fertilizer while US Agri-Chemicals Corporation has ceased its operation since November 2005. As at the Latest Practicable Date, four out of eleven of the directors of Sinochem Shandong are also directors or members of the senior management of the Group and the remaining directors of Sinochem Shandong did not hold any positions or assume any role in the Group. As at the Latest Practicable Date, save for Mr. Yang, none of the directors of US Agri-Chemicals Corporation held any positions or assumed any role in the Group.

– 44 –

APPENDIX

GENERAL INFORMATION

In order to limit the competition between the Group and Sinochem Shandong, Sinochem Corporation granted the Option to the Company which allows the Company to acquire Sinochem Corporation’s interests in Sinochem Shandong at a fair market value. In addition, fertilizer purchase and supply agreements were also entered into with Sinochem Shandong. On 28 November 2007, the Purchaser entered into a conditional acquisition agreement with Sinochem Corporation to acquire Sinochem Corporation’s interest in Sinochem Shandong. Following completion of the acquisition by the Company of Sinochem Corporation’s 51% equity interest in Sinochem Shandong, Sinochem Shandong will become a subsidiary of the Company and as such, the business of Sinochem Shandong will no longer be competing with the business of the Group.

Save as disclosed, as at the Latest Practicable Date, none of the Directors and their respective associates was interested in any business apart from the business of the Group, which competes or is likely to compete, either directly or indirectly, with the business of the Group.

5. OTHER ARRANGEMENTS INVOLVING DIRECTORS

As at the Latest Practicable Date:

• (a) none of the Directors was materially interested in any contract or arrangement subsisting at the date of this circular which is significant in relation to the business of the Group; and

• (b) none of the Directors had any direct or indirect interest in any assets which had been, since 31 December 2006 (the date to which the latest published audited financial statements of the Company were made up), acquired, disposed of by, or leased to any member of the Group, or were proposed to be acquired, disposed of by, or leased to any member of the Group.

6. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position of the Group since 31 December 2006, the date to which the latest published audited financial statements of the Company were made up.

7. 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 there was no litigation or claim of material importance known to the Directors to be pending or threatened by or against the Company or any member of the Group.

– 45 –

GENERAL INFORMATION

APPENDIX

8. EXPERT

• (a) The following is the qualification of the expert who has given its opinions or advice which are contained in this circular:

Name

Qualification

Somerley

a corporation licensed to carry out Type 1 (dealing in securities), Type 4 (advising on securities), Type 6 (advising on corporate finance) and Type 9 (asset management) regulated activities under the SFO

• (b) As at the Latest Practicable Date, Somerley had no shareholding in any member of the Group and did not have any right, whether legally enforceable or not, to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

• (c) As at the Latest Practicable Date, Somerley had no direct or indirect interest in any assets which had been, since 31 December 2006 (the date to which the latest published audited financial statements of the Company were made up), acquired, disposed of by, or leased to any member of the Group, or were proposed to be acquired, disposed of by, or leased to any member of the Group.

• (d) Somerley has given and has not withdrawn its written consent to the issue of this circular with inclusion of its letter and the reference to its name included herein in the form and context in which they respectively appear.

9. MISCELLANEOUS

• (a) The company secretary of the Company is Mr. Navin Aggarwal, solicitor of Hong Kong.

• (b) The qualified accountant of the Company is Ms. Tse Yin Hung, Bonnie, an associate member of the Hong Kong Institute of Certified Public Accountants.

• (c) The registered office of the Company is at Clarendon House, 2 Church Street, Hamilton, HM 11, Bermuda.

• (d) The principal place of business and head office of the Company in Hong Kong is at Unit 4601-4610, 46th Floor, Office Tower, Convention Plaza, 1 Harbour Road, Wanchai, Hong Kong.

• (e) The principal share registrar of the Company is The Bank of Bermuda Limited at 6 Front Street, Hamilton HM 11, Bermuda.

• (f) The branch share registrar and transfer office of the Company in Hong Kong is Tricor Secretaries Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Hong Kong.

– 46 –

GENERAL INFORMATION

APPENDIX

• (g) Sinochem Corporation, the parent company of Sinochem HK, is a state-owned enterprise, and does not have directors.

The registered office of Sinochem Corporation is at Central Tower, Chemsunny World Trade Centre, 28 Fuxingmen Nei Road, Beijing 100031, PRC.

10. GENERAL

In the event of inconsistency, the English text of this circular shall prevail over the Chinese text.

11. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection during normal business hours at the principal place of business of the Company at Units 4601-4610, 46th Floor, Office Tower, Convention Plaza, I Harbour Road, Wanchai, Hong Kong from the date of this circular up to and including 28 December 2007:

• (a) the Tianji Acquisition Agreement;

• (b) the Shandong Acquisition Agreement;

• (c) the Fertilizer Purchase Framework Agreement; and

• (d) the service contracts referred to in the section headed “DIRECTORS’ SERVICE CONTRACTS” in this appendix.

– 47 –

NOTICE OF SGM

==> picture [60 x 59] intentionally omitted <==

SINOFERT HOLDINGS LIMITED

*

(Incorporated in Bermuda with limited liability)

(Stock Code: 297)

NOTICE IS HEREBY GIVEN that a special general meeting of Sinofert Holdings Limited (the “ Company ”) will be held at Lounge, Mezzanine Floor, Grand Hyatt Hong Kong, 1 Harbour Road, Hong Kong on 28 December, 2007 at 10:00 a.m. (or immediately after the conclusion or adjournment of the special general meeting of the Company scheduled to be convened on the same day at 9:40 a.m. at the same venue, whichever is the later) for the purposes of considering and, if thought fit, passing, with or without modifications, the following resolutions as ordinary resolutions:

ORDINARY RESOLUTIONS

1. “ THAT :

• (a) the Tianji Acquisition Agreement (as defined and described in the circular to the shareholders of the Company dated 12 December 2007, a copy of which has been produced to the meeting marked “A” and signed by the Chairman of the meeting for the purpose of identification) and the execution thereof and implementation of all transactions thereunder be and are hereby approved, ratified and confirmed; and

• (b) the Directors of the Company be and are hereby authorised to sign, execute, perfect and deliver all such documents and do all such deeds, acts, matters and things as they may in their absolute discretion consider necessary or desirable for the purpose of or in connection with the implementation of the Tianji Acquisition Agreement and all transactions and other matters contemplated thereunder or ancillary thereto, to waive compliance from and/or agree to any amendment or supplement to any of the provisions of the Tianji Acquisition Agreement which in their opinion is not of a material nature and to effect or implement any other matters referred to in this resolution.”

• “ THAT :

• (a) the Shandong Acquisition Agreement (as defined and described in the circular to the shareholders of the Company dated 12 December 2007, a copy of which has been produced to the meeting marked “B” and signed by the Chairman of the meeting for the purpose of identification) and the execution thereof and implementation of all transactions thereunder be and are hereby approved, ratified and confirmed; and

* For identification purpose only

– 48 –

NOTICE OF SGM

• (b) the Directors of the Company be and are hereby authorised to sign, execute, perfect and deliver all such documents and do all such deeds, acts, matters and things as they may in their absolute discretion consider necessary or desirable for the purpose of or in connection with the implementation of the Shandong Acquisition Agreement and all transactions and other matters contemplated thereunder or ancillary thereto, to waive compliance from and/or agree to any amendment or supplement to any of the provisions of the Shandong Acquisition Agreement which in their opinion is not of a material nature and to effect or implement any other matters referred to in this resolution.”

• “ THAT :

• (a) the Fertilizer Purchase Framework Agreement (as defined and described in the circular to the shareholders of the Company dated 12 December 2007 (the “ Circular ”), a copy of which has been produced to the meeting marked “C” and signed by the Chairman of the meeting for the purpose of identification) and the execution thereof and implementation of all transactions thereunder be and are hereby approved, ratified and confirmed;

• (b) the proposed maximum aggregate annual values of the transactions under the Fertilizer Purchase Framework Agreement as described in the Circular be and are hereby approved; and

• (c) the Directors of the Company be and are hereby authorised to sign, execute, perfect and deliver all such documents and do all such deeds, acts, matters and things as they may in their absolute discretion consider necessary or desirable for the purpose of or in connection with the implementation of the Fertilizer Purchase Framework Agreement and all transactions and other matters contemplated thereunder or ancillary thereto, to waive compliance from and/or agree to any amendment or supplement to any of the provisions of the Fertilizer Purchase Framework Agreement which in their opinion is not of a material nature and to effect or implement any other matters referred to in this resolution.”

By Order of the Board

Sinofert Holdings Limited Navin Aggarwal Company Secretary

Hong Kong, 12 December 2007

– 49 –

NOTICE OF SGM

Head office and principal place of business in Hong Kong: Units 4601-4610, 46th Floor

Office Tower

Convention Plaza

1 Harbour Road

Wanchai

Hong Kong

Notes:

1. The register of members of the Company will be closed from 24 December 2007 to 28 December 2007, both days inclusive, during which period no transfer of shares of the Company will be registered. In order to qualify for voting at the special general meeting of the Company, all transfers of shares of the Company accompanied by the relevant share certificates must be lodged for registration with the Company’s branch share registrar in Hong Kong, Tricor Secretaries Limited, 26th Floor, Tesbury Centre, 28 Queen’s Road East, Hong Kong, by not later than 4:30 p.m. on 21 December 2007.

2. Any member of the Company entitled to attend and vote at the meeting is entitled to appoint one or more proxies to attend and vote instead of him. A proxy need not be a shareholder of the Company.

3. To be valid, a proxy form, together with the power of attorney or other authority (if any) under which it is signed, or a notorially certified copy of that power or authority, must be deposited at the branch share registrar and transfer office of the Company in Hong Kong, Tricor Secretaries Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Hong Kong not less than 48 hours before the time fixed for the holding of the meeting or any adjournment thereof.

4. Where there are joint holders of any ordinary share of the Company, any one of such holders may vote at the meeting, either personally or by proxy, in respect of such share as if he were solely entitled thereto, but if more than one of such holders be present at the meeting personally or by proxy, that one of such holders so present whose name stands first on the register of members of the Company in respect of such share shall alone be entitled to vote in respect thereof.

5. Voting of the ordinary resolutions set out in this notice will be by poll.

6. As at the date of this notice, the executive Directors of the Company are Mr. Du Ke Ping (Chief Executive Officer) and Mr. Harry Yang; the non-executive Directors are Mr. Liu De Shu (Chairman), Mr. Song Yu Qing (Deputy Chairman), Mr. Chen Guo Gang, Mr. Stephen Francis Dowdle and Mr. Wade Fetzer III; and the independent non-executive Directors are Mr. Tse Hau Yin, Aloysius, Mr. Ko Ming Tung, Edward and Mr. Tang Tin Sek.

– 50 –