Elife Holdings Limited - Proxy Solicitation & Information Statement 2014

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 or registered institution in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Sino Resources Group Limited (the “Company”), you should at once hand this circular and the accompanying form of proxy to the purchaser(s) or the transferee(s), or to the bank, licensed securities dealer or other agent through whom the sale or the transfer was effected for transmission to the purchaser(s) or the transferee(s).

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

**SINO RESOURCES GROUP LIMITED (carrying on business in Hong Kong as Sino Gp Limited) 神州資源集團有限公司[*]**

(Incorporated in the Cayman Islands with limited liability) (Stock Code: 223)

(1) THE FIFTH SUPPLEMENTAL AGREEMENT IN RELATION TO THE ACQUISITION OF 70.97% ISSUED SHARE CAPITAL OF ZHAN SHENG INVESTMENTS LIMITED; (2) PROPOSED GRANT OF SPECIFIC MANDATE; (3) PROPOSED GRANT OF NEW GENERAL MANDATE; AND (4) NOTICE OF EGM

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

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普頓資本有限公司 PROTON CAPITAL LIMITED

A notice convening the extraordinary general meeting of the Company to be held at 3 p.m. on Friday, 14 February 2014 at Suite 2502, 25/F., 9 Queen’s Road Central, Central, Hong Kong or any adjournment thereof is set out on pages 42 to 45 of this circular. Whether or not you are able to attend the extraordinary general meeting, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the Company’s share registrar and transfer office in Hong Kong, Tricor Tengis Limited at 26/F., Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for the holding of the extraordinary general meeting or any adjourned meeting. Completion and delivery of the form of proxy will not preclude you from attending and voting in person at the extraordinary general meeting or any adjourned meeting should you so wish.

For identification purposes only

28 January 2014

	Page
Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Letter from the Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
The Fifth Supplemental Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Proposed Grant of Specific Mandate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Proposed Grant of New General Mandate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Listing Rules Implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
EGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Responsibility Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Letter from the Independent Board Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Letter from Proton Capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Notice of EGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

DEFINITIONS

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

“Acquisition” the acquisition by the Company of 70.97% of the issued share capital of Zhan Sheng pursuant to the Sales and Purchase Agreement;

“Associate” has the same meaning ascribed in the Listing Rules;
“Board” the board of directors of the Company for the time being or a duly authorised committee thereof;
“Business Day” a day (other than a Saturday and Sunday) on which banks in Hong Kong are open for business;
“BVI” the British Virgin Islands; “Company” Sino Resources Group Limited (carrying on business in Hong Kong as Sino Gp Limited), a company incorporated in the Cayman Islands with limited liability and whose Shares are listed on the Main Board of the Stock Exchange;
“Completion” the completion of the Acquisition in accordance with the terms of the Sale and Purchase Agreement;
“Completion Date” the third Business Day after the fulfillment or waiver (as the case may be) of the conditions precedent of the Sale and Purchase Agreement (or such other date as may be agreed among the parties to the Sale and Purchase Agreement), which was 31 August 2012;
“Consideration Adjustments” the First Year Consideration Adjustment, the Second Year Consideration Adjustment and the Third Year Consideration Adjustment under the Sale and Purchase Agreement;
“Consideration Shares” 251,833,333 Shares to be allotted and issued to the Vendor in partial settlement of the consideration pursuant to the Sale and Purchase Agreement;
“connected person(s)” has the meaning ascribed thereto under the Listing Rules;
“Directors”
the directors of the Company;
“Effective Date”
the third (3rd) Business Day after the fulfillment (or waiver) of all the conditions precedent of the Fifth Supplemental Agreement, or such other date as may be agreed in writing among the parties thereto;

DEFINITIONS

“EGM” the extraordinary general meeting of the Company to be held at 3 p.m. on Friday, 14 February 2014 at Suite 2502, 25/F., 9 Queen’s Road Central, Central, Hong Kong or any adjournment thereof, for the purpose of considering and, if thought fit, approving the Fifth Supplemental Agreement, the proposed grant of the Specific Mandate and the proposed grant of the New General Mandate;
“Existing Escrow Shares” 176,283,333 Shares (representing 70% of the Consideration Shares) held in escrow by the escrow agent(s) which will be released to the Vendor upon fulfilment of the Consideration Adjustments pursuant to the Sale and Purchase Agreement;
“Existing General Mandate” the general mandate approved and granted by the Shareholders to the Directors at the Last Annual General Meeting to allot, issue and deal with Shares not exceeding 20% of the aggregate nominal amount of the issued share capital of the Company as at the date of the Last Annual General Meeting;
“Fifth Supplemental Agreement” the fifth supplemental agreement in relation to certain amendments to the Sale and Purchase Agreement entered into among the Company, the Vendor, and Mr. Fung, Mr. Sun Hao, Ms. Wang and Mr. Lai (as Guarantors) on 11 December 2013;
“Group” the Company and its subsidiaries;
“Guarantor(s)” the guarantor(s) under the Sale and Purchase Agreement;
“HK$” Hong Kong dollars, the lawful currency of Hong Kong;
“Hubei Tiegang” 湖北鐵港貿易有限公司 (Hubei Tiegang Trading Company Limited*), a company incorporated in the PRC with limited liability;
“Hong Kong” the Hong Kong Special Administrative Region of the People’s Republic of China;
“Independent Board Committee” an independent committee of the Board comprising all of the three independent non-executive Directors formed for the purpose of advising the Independent Shareholders in respect of the proposed grant of the New General Mandate;
“Independent Shareholder(s)” the Shareholders other than the Directors (excluding the independent non-executive Directors) and the chief executive of the Company and their respective Associates;

DEFINITIONS

“Independent Third Party(ies)” third party(ies) independent of the Company and are not connected persons (as defined under the Listing Rules) of the Company;
“Last Annual General Meeting” the annual general meeting of the Company held on 12 August 2013;
“Last Trading Day” 11 December 2013; “Latest Practicable Date” 28 January 2014, being the latest practicable date prior to the printing of this circular for ascertaining certain information referred to in this circular;
“Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange;
“Miles Trading” Miles Trading Investment Limited, a company incorporated in Hong Kong and a wholly-owned subsidiary of Zhan Sheng for operating the Target Group’s agency business under the new business model, as discussed in the paragraph headed “Principal Terms of the Fifth Supplemental Agreement – 2. Consideration and Payment Method” in the “Letter from the Board” on page 11 of this circular.
“Mr. Fung” Mr. Fung Denny Kin Tak, who owns 29.03% of Zhan Sheng’s issued share capital and is a director of Zhan Sheng as at the date of this circular;
“Mr. Lai” Mr. Lai Kin Kong Nelson, an Independent Third Party and one of the shareholders of the Vendor as at the date of this circular;
“Mr. Yuen” Mr. Yuen Yuk Piu, an Independent Third Party as at the date of this circular;
“Ms. Wang” 王輝 (Ms. Wang Hui), who owns 22.5% of Hubei Tiegang’s equity interest as at the date of this circular;
“New Consideration Adjustments” 2014 Consideration Adjustment (as defined below) and 2015 Consideration Adjustment (as defined below);
“New Escrow Shares” the remaining 183,716,667 Shares to be allotted and issued to the Vendor at HK$0.139 each on the Effective Date and be held in escrow by the escrow agent(s) (equivalent to approximately HK$25,536,617 in aggregate) pursuant to the Fifth Supplemental Agreement;

DEFINITIONS

“New General Mandate” the new general mandate proposed to be granted to the Directors at the EGM to allot, issue and deal with the Shares and other securities representing not exceeding 20% of the aggregate nominal amount of the issued share capital of the Company as at the date of the EGM; “Promissory Note” the promissory note with initial principal amount of HK$20,295,000 (subject to adjustment) to be issued to the Vendor by the Company on the Effective Date pursuant to the Fifth Supplemental Agreement;

“PRC” the People’s Republic of China; “Proton Capital” or Proton Capital Limited, a licensed corporation to carry out “Independent Financial Type 1 (dealing in securities) and Type 6 (advising on Adviser” corporate finance) regulated activities under the SFO, being the independent financial adviser to the Independent Board Committee and the Independent Shareholders in relation to proposed grant of the New General Mandate;
“Sale and Purchase Agreement” the agreement dated 31 March 2012 entered into among the Company, the Vendor and the Guarantors, as amended and supplemented by the Supplemental Agreements;
“SFO” the Securities and Futures Ordinance, Chapter 571 of the Laws of Hong Kong;
“Share(s)” ordinary share(s) of HK$0.01 each in the share capital of the Company;
“Shareholder(s)” holder(s) of the Share(s); “Specific Mandate” the specific mandate proposed to be granted at the EGM convened by the Company to the Directors to allot, issue and otherwise deal with the New Escrow Shares, i.e. a total of 183,716,667 Shares;
“Supplemental Agreements” four supplemental agreements to the Sale and Purchase Agreement dated 24 April 2012, 31 May 2012, 29 June 2012 and 20 August 2012 respectively;
“Stock Exchange” The Stock Exchange of Hong Kong Limited; “Target Group” Zhan Sheng, World Grace, Zhuhai Tiegang and Hubei Tiegang; “Total Escrow Shares” the Existing Escrow Shares and the New Escrow Shares;

DEFINITIONS

“Vendor” Advanced Elation Holdings Limited, a company incorporated in the BVI with limited liability and as at the Latest Practicable Date, Mr. Lai and Mr. Sun Hao altogether own 100% of its issued share capital; “World Grace” World Grace Enterprises Limited (世悅企業有限公司), a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of Zhan Sheng; “Zhan Sheng” Zhan Sheng Investments Limited (展昇投資有限公司), a company incorporated in the BVI with limited liability and a 70.97% owned subsidiary of the Company; “Zhuhai Tiegang” 珠海鐵港商貿有限公司 (Zhuhai Tiegang Commercial Trading Company Limited*), a company to be incorporated in the PRC with limited liability and a wholly-owned subsidiary of World Grace; and “%” per cent.

LETTER FROM THE BOARD

**SINO RESOURCES GROUP LIMITED (carrying on business in Hong Kong as Sino Gp Limited) 神州資源集團有限公司[*]**

(Incorporated in the Cayman Islands with limited liability) (Stock Code: 223)

Executive Directors: Ms. Geng Ying (Chairman) Mr. Gao Feng Mr. Chiu Sui Keung Mr. Wang Xihua

Independent non-executive Directors: Mr. Cheng Wing Keung Raymond Mr. Lam Williamson Mr. Wong Hoi Kuen

Registered office: Cricket Square Hutchins Drive P.O. Box 2681 Grand Cayman KY1-1111, Cayman Islands

Principal place of business in Hong Kong: Suite 2502, 25/F 9 Queen’s Road Central Central, Hong Kong

28 January 2014

To the Shareholders

Dear Sir or Madam,

(1) THE FIFTH SUPPLEMENTAL AGREEMENT IN RELATION TO THE ACQUISITION OF 70.97% ISSUED SHARE CAPITAL OF ZHAN SHENG INVESTMENTS LIMITED; (2) PROPOSED GRANT OF SPECIFIC MANDATE; (3) PROPOSED GRANT OF NEW GENERAL MANDATE; AND (4) NOTICE OF EGM

INTRODUCTION

Reference is made to the announcement of the Company dated 12 December 2013 in relation to, among other things, the Fifth Supplemental Agreement in relation to certain amendments to the terms and conditions of the Sale and Purchase Agreement and the proposed grant of the Specific Mandate for the issue and allotment of 183,716,667 New Escrow Shares.

For identification purposes only

LETTER FROM THE BOARD

The purpose of this circular is to provide you with information relating to (i) the Fifth Supplemental Agreement; (ii) the information in relation to the Specific Mandate; (iii) the information in relation to the New General Mandate; and (iv) the notice of the EGM to be convened for the purpose of considering and, if thought fit, approving the resolutions in relation to the Fifth Supplemental Agreement, the proposed grant of the Specific Mandate and the proposed grant of the New General Mandate.

THE FIFTH SUPPLEMENTAL AGREEMENT

Background

Reference is made to the announcements of the Company dated 31 March 2012, 24 April 2012, 31 May 2012, 29 June 2012, 20 August 2012 and 31 August 2012 respectively.

As stated in the aforesaid announcements, upon the Completion of the Acquisition on 31 August 2012, the Company allotted and issued 251,833,333 Consideration Shares, 75,550,000 of which (representing 30% of the Consideration Shares) were released to the Vendor and the remaining 176,283,333 Existing Escrow Shares (representing 70% of the Consideration Shares) are held in escrow by the escrow agent(s) and will be released to the Vendor after the fulfillment of the Consideration Adjustment.

Following the Completion, Zhan Sheng has become a 70.97% owned subsidiary of the Company and holds the entire issued share capital of World Grace, which in turn owns 77.5% equity interest in Hubei Tiegang via Zhuhai Tiegang (a wholly-owned subsidiary of World Grace).

Despite the Completion, certain rights and obligations thereunder shall survive the Completion, including but not limited to the Consideration Adjustment and the distribution of Consideration Shares. Pursuant to the Sale and Purchase Agreement, the Company is required to pay RMB10,098,000 to Zhuhai Tiegang as capital injection and the Company injected a total of approximately US$150,000 to Zhuhai Tiegang. However, due to the prudent approach recently adopted by the Company for the operation of coal trading business in response to the continuous depression in the business environment for the PRC coal trading market, the Company has not injected the balance of the capital injection required into Hubei Tiegang. As a result, Hubei Tiegang failed to achieve the target of audited distributable profits in association with the First Year Consideration Adjustment (as defined below) in the First Year and the Second Year Consideration Adjustment (as defined below) in the Second Year due to the lack of sufficient working capital, and the Existing Escrow Shares were not released to the Vendor at all. Based on the development plan from the management of the Target Group, there may be improvement in the prospect of the Target Group in line with the overall economic environment and there may be new revenue sources introduced; hence, for the continued progress of Hubei Tiegang’s business operations and development, the parties thereto have determined to make amendments to the Sale and Purchase Agreement after an arm’s length negotiations, including but not limited to amendments to the consideration and payment method, the Consideration Adjustments and the distribution of the Consideration Shares, and entered into the Fifth Supplemental Agreement.

Mr. Yuen disposed of his Vendor’s shares as he started up a new business overseas while Mr. Lai, being Mr. Yuen’s personal acquaintance, is interested in investment in resources sector and decided to acquire the Vendor’s shares from Mr. Yuen after arm’s length negotiations. The said transfer of the Vendor’s shares took place on 5 December 2013. Since Mr. Yuen has ceased to be a shareholder of the Vendor, the parties to the Sale and Purchase Agreement agreed that Mr. Yuen shall cease to be one of the Guarantors and a party to the Sale and Purchase Agreement, while Mr. Lai shall enter into the Fifth Supplemental Agreement as an additional Guarantor under the Sale and Purchase Agreement.

LETTER FROM THE BOARD

The Vendor is an investment holding company incorporated in the BVI and held by Mr. Lai and Mr. Sun Hao as to 51% and 49% respectively. Mr. Lai is a Hong Kong resident and is a businessman in Hong Kong and the PRC while Mr. Sun Hao is a PRC resident and is a businessman in the PRC.

Save as aforesaid, there is no current business relationship between the Vendor and the Target Group. The Vendor had not referred or introduced business to the Target Group since the Completion on 31 August 2012 until recently in January 2014, by referral of the Vendor and under the new business model of the Target Group, the Target Group signed a two-year contract with a new customers purchasing imported cost sourced by the Target Group from Indonesia (the “ 14 Jan Contract ”). The Target Group does not rely on the Vendor to sustain its business, based on the fact that the revenue of the Target Group has been self-generated since the Completion on 31 August 2012.

Further, there has been no agreement between the Group and the Vendor on the referral or introduction of business to the Target Group since 31 August 2012. Nonetheless, the Directors are of the view that in case the Vendor takes the initiative to refer or introduce business to the Target Group in order to enhance the Target Group’s profitability and in turn be released of the Total Escrow Shares, the Vendor’s contribution to the Target Group’s performances will be beneficial to the Company and the Shareholders as a whole. As a matter of fact, upon signing of the Fifth Supplemental Agreement, the Vendor has started referring business to the Target Group as evidenced by the entering into of the Jan 14 Contract.

Current Shareholding Structure of the Target Group

Set out below is the shareholding structure of the Target Group as at the Latest Practicable Date:

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

The Company Mr. Fung
70.97% 29.03%
Zhan Sheng
100%
World Grace
100%
Miles Trading Zhuhai Tiegang Ms. Wang
77.5% 22.5%
Hubei Tiegang
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LETTER FROM THE BOARD

Principal Terms of the Fifth Supplemental Agreement

1. Change of a Guarantor under the Sale and Purchase Agreement

(a) Mr. Yuen shall cease to be one of the Guarantors under the Sale and Purchase Agreement and no longer hold any rights or be bound by any obligations thereunder; and
(b) Mr. Lai shall become one of the Guarantors under the Sale and Purchase Agreement and be entitled to and assume all the rights, obligations and liabilities of a Guarantor thereunder, which shall remain unchanged. The Guarantors together with the Vendor, jointly and severally, represent and warrant to the Company that certain representations, warranties and undertakings relating to the Target Group are true and accurate and not misleading as at the date of the Sale and Purchase Agreement and as at the Completion Date. The Company shall be entitled to claim against the Guarantors for all losses suffered or incurred by the Company as a consequence of any breach or inaccuracy of the representations, warranties and undertakings.

2. Consideration and Payment Method

Provisions in the Sale and Purchase Agreement

Pursuant to the Sale and Purchase Agreement, the aggregate consideration for the Acquisition payable by the Company to the Vendor shall be HK$77,550,000, which will be satisfied in the following manner:

(a) HK$2,000,000 paid in cash by the Company to the Vendor upon signing of the memorandum of understanding on 5 December 2011; and
(b) HK$75,550,000 shall be paid by the issuance and allotment of 251,833,333 Consideration Shares at the issue price of HK$0.30 each to the Vendor at the Completion. 30% of the Consideration Shares (that is 75,550,000 Consideration Shares) will be allotted, issued and immediately released to the Vendor on the Completion Date, and 70% of the Consideration Shares (that is 176,283,333 Consideration Shares) will be released to the Vendor after the fulfillment of Consideration Adjustment.

According to the Sale and Purchase Agreement, the Company, as the Purchaser, will be responsible for the payment of RMB10,098,000 to Zhuhai Tiegang as capital injection. Ms. Wang and Mr. Fung will re-invest the full amount of RMB10,098,000 in Hubei Tiegang for its business operation and development.

Amendments in the Fifth Supplemental Agreement

Pursuant to the Fifth Supplemental Agreement, the following amendments will be made to the aforesaid consideration and payment method:

LETTER FROM THE BOARD

Pursuant to the Sale and Purchase Agreement, the aggregate consideration for the Acquisition payable by the Company to the Vendor shall be HK$95,000,000, which will be satisfied in the following manner:

(a) HK$2,000,000 paid in cash by the Company to the Vendor upon signing of the memorandum of understanding on 5 December 2011; and
(b) Consideration Shares (the “ Amended Consideration Shares ”):
(i) 75,550,000 Shares shall be allotted, issued and distributed to the Vendor at HK$0.30 each immediately on the Completion Date (equivalent to HK$22,665,000 in aggregate);
(ii) the Existing Escrow Shares (i.e. 176,283,333 Shares) shall be allotted and issued to the Vendor at HK$0.30 each on the Completion Date and be held in escrow by the escrow agent(s), and the issue price of HK$0.30 shall be adjusted to HK$0.139 each (equivalent to approximately HK$24,503,383 in aggregate calculated based on the adjusted issue price); and
(iii) the remaining 183,716,667 Shares (the “ New Escrow Shares ”) shall be allotted and issued to the Vendor at HK$0.139 each on the Effective Date and be held in escrow by the escrow agent(s) (equivalent to approximately HK$25,536,617 in aggregate);

The Existing Escrow Shares in paragraph (ii) above and the New Escrow Shares in paragraph (iii), totalling 360,000,000 Shares, are collectively referred to as the “ Total Escrow Shares ”.

(c) Promissory Note: the Company shall issue to the Vendor the Promissory Note of HK$20,295,000 (subject to adjustment) on the Effective Date.

As advised by the Company’s reporting accountant, the adjustment of the issue price of the Existing Escrow Shares from HK$0.30 to HK$0.139 is a contractual arrangement. According to Hong Kong Financial Reporting Standard 3, the Consideration Shares are measured at fair value at the date of completion (i.e. 31 August 2012) and would not be subject to any changes in the future. Therefore, it is not necessary for the Company to adjust the issue price of the Existing Escrow Shares from an accounting perspective. In addition, in the absence of any change to the issue price, there will be no reduction of the share premium account of the Company and the Cayman Islands laws or regulations (if any) applicable to reduction of share premium account or change of share price is not applicable to the adjustment of the issue price.

Details for the terms of the Promissory Note are contained in the paragraph headed “Promissory Note” below.

Pursuant to the Fifth Supplemental Agreement, the Company is no longer obliged to make the capital injection of RMB10,098,000 into Zhuhai Tiegang. Save for the US$150,000 already injected into Zhuhai Tiegang, the Company currently has no plan for making any further capital injection into the Target Group.

LETTER FROM THE BOARD

Although meeting working capital requirements is crucial to the success of conducting coal trading business and the unconventional gas business, the abovesaid amendments in relation to the cancellation of the capital injection of RMB10,098,000 by the Company will not be detrimental to the Target Group. In the past, all sales orders of the Target Group were conducted on cash basis and thus required more working capital. Under the new business model, the Target Group will mainly focus on developing the agency business for imported coal. As demonstrated by the transactions contemplated under the Jan 14 Contract, the Target Group (supported by the Vendor) leverages on its business connections and experiences to match, negotiate, liaise and facilitate the coal trading transactions between PRC coal distributors (the “ Buyers ”) and overseas coal suppliers (the “ Sellers ”). As the Buyers are based in the PRC and usually do not have much international coal market information, they tend to rely on the service and information provided by coal agent in choosing and dealing with overseas Sellers. The Target Group shall be treated or deemed as an agent (subject to auditors’ review) between the Buyers and the Sellers. By entering into sales contracts with the Buyers and purchase contracts with the Sellers separately, the Target Group will profit on the pricing difference between the contracts. Such price difference (the “ Price Difference ”) may be treated as agency fee income subject to auditors’ review. As the Target Group’s new customers for the agency business will be mainly sizable coal distributors with reputable end-customer base (such as state-owned enterprises), the Buyers or their end-customers are able to provide letters of credit and the Sellers are willing to accept third party letters of credit directly issued by these reputable Buyers or their end-customers. As such, the Buyers will pay the Price Difference to the Target Group whilst they (or their end-customers) will settle the purchase price with the Sellers by letters of credit directly.

Although presently there is only one sales contract secured under the new business model, the customer under the Jan 14 Contract (the “ Customer ”) is in fact a coal distributor in the PRC and according to the Customer, it will further distribute the imported coal sourced through the Target Group to its existing customer base (such as state-owned enterprises), which currently comprises more than 20 end-customers that are state-owned enterprises and coal trading companies.

According to the purchase contract with the Indonesian coal supplier (the “ Supplier ”), the Supplier accepts letter of credits to be issued directly from the third party (i.e. the Customer) appointed by the Target Group for the settlement of the coal purchase price. On the other hand, the Customer and the Target Group have agreed that the difference of pricing as respectively stated under the Jan 14 Contract and the purchase contract with the Supplier (i.e. the Price Difference) will be settled by direct payment into the Target Group’s designated bank account. Hence, the new business model does not require substantial amount of working capital from the Target Group to purchase coal first and then deliver to the Buyers (or their end-customers), as the Target Group is deemed to be an agent to facilitate coal trading transactions between the Buyers and the Sellers and simply earns the pricing difference without bearing too much costs and risks associated with coal purchase and delivery.

Apart from the Jan 14 Contract, the Target Group is currently negotiating with another coal distributor in the PRC also referred by the Vendor for a sales contract of similar transaction terms. Moreover, with the extended business scope and introduction of other kinds of trading business, the Target Group shall benefit from more varieties in payment terms and higher financial flexibility. Furthermore, the Target Group may also seek external borrowings to meet its working capital requirements in addition to internally-generated funds. Based on the current developments under

LETTER FROM THE BOARD

the new business model and new customer base of the Target Group as detailed above, the Target Group shall have sufficient working capital for its operation without capital injection from the Company. The Board believes that the removal of the obligation for capital injection shall have no material impact to the Target Group’s operations and cash flow position, while it eliminates the immediate cash flow pressure at Company level which is in the interest of the Company and the Shareholders as a whole.

Basis of the Amendment to the Consideration

As explained above, there will be new revenue sources under the new business model of the Target Group other than the current business which is confined to domestic coal trading within the PRC.

Apart from other factors (e.g. slow recovery of coal trading industry and the amended terms under the Fifth Supplemental Agreement which provide more incentive to the Vendor to contribute to the Target Group’s business developments) mentioned above, as the Target Group has already secured the Jan 14 Contract and the corresponding purchase contract with the Supplier and benefits from less working capital requirements, costs and risks under the aforesaid kind of agency business when compared with the traditional coal trading business model as previously adopted, the Company holds an optimistic view on the Target Group’s future prospects based on the current conditions.

It appears that the new consideration of HK$95,000,000 is at a premium to the previous one of HK$90,000,000, however, the previous capital commitment of RMB10,098,000 was a fixed obligation to the Company, whilst the new Promissory Note has adjustable principal amount according to the actual achieved Consideration Adjustments which creates financial flexibility to the Company and is more justifiable as its amount is tied to the actual performance of the Target Group. Hence, in the event that the Target Group fails to meet the new Consideration Adjustments, the new consideration will be adjusted below HK$95,000,000. Therefore, the new consideration should be considered as an initial and maximum amount of consideration only, it is not a fixed premium over the previous one as the new consideration is adjustable attributable to the terms of the Promissory Note.

One of the principles for the entering into of the Fifth Supplemental Agreement was to amend the transaction terms to a more realistic and achievable extent which allows both the Company and the Vendor to continue pursuing the business of the Target Group. The lowered Consideration Adjustments based on net gross profit of the Target Group were determined after arm’s length negotiation under this principle and represent achievable targets as perceived by both the Company and the Vendor. It is crucial to arrive at such achievable targets in order to resolve the current deadlock between the Company and the Vendor and continue developing the Target Group’s business together.

It appears that the cash element of the consideration is increased with the removal of the capital commitment of RMB10,098,000 and the addition of the Promissory Note with initial principal amount of HK$20,295,000. However, as explained in previous context, the principal amount of the Promissory Note is adjustable and tied to the actual Consideration Adjustments achieved, which are more justifiable and offer higher financial flexibility to the Company than the fixed and non-adjustable capital commitment. Moreover, the capital commitment has to be injected into Hubei Tiegang disregard of the performance of the Target Group, while the Company could redeem the Promissory Note at any amount and at any time before maturity according to the Target Group’s actual performance.

LETTER FROM THE BOARD

Given the reasons above and other factors concerned, the Board is of the view that the new consideration and the terms under the Fifth Supplemental Agreement are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

3. Other Material Terms and Conditions

The amendments to the material terms and conditions of the Sale and Purchase Agreement in relation to Consideration Adjustment, the Vendor’s undertakings and Consideration Shares are as follows:

Provisions in the Sale and Purchase Agreement

The principal terms and conditions of the Sale and Purchase Agreement in relation to Consideration Adjustment, the Vendor’s undertakings and the Consideration Shares are as follows:

(i) The Vendor undertakes and guarantees to the Company that:
the audited distributable profit (the “ First Year Distributable Profit ”) after tax of Hubei Tiegang for the period commencing from the Completion Date and ending on 31 December 2012 (the “ First Year ”) prepared in accordance with the International Financial Reporting Standards (including the Hong Kong Accounting Standards) will not be less than RMB9,000,000 (equivalent to approximately HK$11,097,000) (the “ First Year Consideration Adjustment ”);
the audited distributable profits after tax of Hubei Tiegang for the period commencing from 1 January 2013 and ending on 31 December 2013 (the “ Second Year ”) prepared in accordance with the International Financial Reporting Standards (including the Hong Kong Accounting Standards) will not be less than RMB16,000,000 (equivalent to approximately HK$19,728,000) (the “ Second Year Consideration Adjustment ”); and
the audited distributable profits after tax of Hubei Tiegang for the period commencing from 1 January 2014 and ending on 31 December 2014 (the “ Third Year ”) prepared in accordance with the International Financial Reporting Standards (including the Hong Kong Accounting Standards) will not be less than RMB23,000,000 (equivalent to approximately HK$28,359,000) (the “ Third Year Consideration Adjustment ”);
(ii) In respect of the Consideration Adjustment, the audited consolidated accounts of Hubei Tiegang for the First Year, the Second Year and the Third Year shall be prepared according to the International Financial Reporting Standards (including the Hong Kong Accounting Standards). The Vendor shall assist the auditors of the Company and any person designated by the Company for the preparation of the audited consolidated accounts of Hubei Tiegang for the First Year, the Second Year and the Third Year within three months after the respective year ends of the First Year, the Second Year and the Third Year.

LETTER FROM THE BOARD

(iii) If Hubei Tiegang is able to achieve the respective targets of audited distributable profits in association with the First Year Consideration Adjustment, the Second Year Consideration Adjustment and/or the Third Year Consideration Adjustment (as the case may be), the Company shall, through the escrow agent, deliver a total of 176,283,333 Shares to the Vendor in the following manner:

	Number of Shares
Distribution Dates	to be delivered	Percentage
Within one month from the date of issue of the	33,053,125	18.75%
audited consolidated accounts of Hubei Tiegang
for the First Year (the “2013 Distribution
Date”)
Within one month from the date of issue of the	58,761,111	33.33%
audited consolidated accounts of Hubei Tiegang
for the Second Year (the “2014 Distribution
Date”)
Within one month from the date of issue of the	84,469,097	47.92%
audited consolidated accounts of Hubei Tiegang
for the Third Year (the “2015 Distribution
Date”)
Total:	176,283,333	100%

(iv) The Consideration Shares will be registered under the name of the Vendor on the Completion Date; whereas all original shares certificates of the 176,283,333 Shares shall be handed to the escrow agent of the Company in escrow, which shall only be released to the Vendor by the escrow agent of the Company under mutual instructions of the Company and the Vendor if and only if it is confirmed that Hubei Tiegang can achieve the respective targets of audited distributable profits in association with the First Year Consideration Adjustment, the Second Year Consideration Adjustment and the Third Year Consideration Adjustment. The Company and the Vendor will enter into an escrow agreement on or before the Completion Date.
(v) If Hubei Tiegang fails to meet the respective targets of audited distributable profits in association with the First Year Consideration Adjustment, the Second Year Consideration Adjustment and/or the Third Year Consideration Adjustment, the Vendor shall only be delivered in the same proportion of the Consideration Shares as the achievement proportion for the respective year. For instance, if the First Year Distributable Profit hits only 50% of the First Year Consideration Adjustment, the Vendor shall only be delivered 50% of the 33,053,125 Shares on the 2013 Distribution Date.

LETTER FROM THE BOARD

(vi) For the portions falling short of the First Year Consideration Adjustment or the Second Year Consideration Adjustment, the Vendor can make up the shortfall in the Second Year or the Third Year (as the case may be). If such complement can be substantiated and confirmed in the audited consolidated accounts for the Second Year or the Third Year, the Vendor may be complemented with such portion of Consideration Shares on the 2014 Distribution Date or the 2015 Distribution Date (as the case may be). For instance, if the First Year Distributable Profit hits only 50% of the First Year Consideration Adjustment, the Vendor can make up RMB4,500,000 (i.e. the shortfall for the First Year Consideration Adjustment), and be complemented with 50% of the 33,053,125 Shares that would have been delivered in the First Year.
(vii) Notwithstanding the provisions of the Sale and Purchase Agreement, the Vendor guarantees and undertakes to the Company that, in any event, the Vendor will not hold 20% or more of the interest in the share capital of the Company, either allotted according to the Sale and Purchase Agreement or purchased from a third party on the market. If the Vendor holds 20% or more of the interest in the share capital of the Company pursuant to any provision of the Sale and Purchase Agreement, the Vendor agrees and undertakes to unconditionally give up his entitlement to the 20% or more of the interest in the share capital of the Company under the Sale and Purchase Agreement.
(viii) After the 2015 Distribution Date, if the Vendor obtains part but not all Consideration Shares because of falling short of the First Year Consideration Adjustment, the Second Year Consideration Adjustment and the Third Year Consideration Adjustment, the remaining Consideration Shares involved will be cancelled and will not be sold to any person designated by the Company.

Amendments in the Fifth Supplemental Agreement

Pursuant to the Fifth Supplemental Agreement, the principal terms and conditions on the Consideration Adjustment, Vendor’s undertakings and the Consideration Shares shall be amended as follows:

(a) The Vendor undertakes and guarantees to the Company that:
(i) the net gross profit of the Target Group recorded in the management accounts prepared in accordance with the International Financial Reporting Standards (including Hong Kong Accounting Standards) for the period from 1 January 2014 to 31 December 2014 (“ Year 2014 ”) will not be less than HK$10,000,000 (the “ 2014 Consideration Adjustment ”); and
(ii) the net gross profit of the Target Group recorded in the management accounts prepared in accordance with the International Financial Reporting Standards (including Hong Kong Accounting Standards) for the period from 1 January 2015 to 31 December 2015 (“ Year 2015 ”) will not be less than HK$10,000,000 (the “ 2015 Consideration Adjustment ”).

LETTER FROM THE BOARD

The 2014 Consideration Adjustment and 2015 Consideration Adjustment were determined based on: (i) a prudent estimation of the overall business prospect of the Target Group having considered the new business model adopted and growth potentials of the Target Group; (ii) the development plan from the management of the Target Group; and (iii) the current economic environment and slow recovery of the coal trading market. In addition, the Company had also considered the transaction volume and gross profit margin under the new business model when arriving at the New Consideration Adjustments. As specified in the Jan 14 Contract, the Customer will source 470,000 tonnes of coal in 2014 and 480,000 tonnes of coal in 2015, at an initial price of USD80.75 per tonne (subject to change according to the monthly market price fluctuation). Given a gross profit margin of approximately 6% for such kind of agency business for imported coal, the New Consideration Adjustments are justifiable.

(b) In respect of the New Consideration Adjustment, the audited consolidated accounts and management accounts for Year 2014 and Year 2015 of the Target Group shall be prepared in accordance with the International Financial Reporting Standards (including Hong Kong Accounting Standards). The auditor of the Purchaser or its designated person shall complete the preparation of the audited consolidated accounts of the Target Group for Year 2014 and Year 2015 within three months upon the yearend of Year 2014 and Year 2015 respectively, and shall complete the preparation of the monthly management accounts of the Target Group within ten Business Days after each month end for Year 2014 and Year 2015.
(c) If the Target Group can meet the respective target(s) of 2014 Consideration Adjustment and/or 2015 Consideration Adjustment, the Vendor will be entitled to 180,000,000 shares for Year 2014 (the “ 2014 Distributable Shares ”) and 180,000,000 shares for Year 2015 (the “ 2015 Distributable Shares ”, together with the 2014 Distributable Shares, the “ Distributable Shares ”) which the Company will distribute to the Vendor for the month within ten Business Days after the management accounts of the Target Group has been submitted (the “ New Distribution Date ”). The amount of distributable Amended Consideration Shares is calculated as follows:

Year 2014

(Gross profit of the Target Group for the month/2014 Consideration Adjustment) x 180,000,000 Shares

If the accumulated number of Shares distributed to the Vendor by the Company for Year 2014 in aggregate falls short of the number of 2014 Distributable Shares, the outstanding 2014 Distributable Shares can be made up any time before the end of Year 2015. In any event, the number of Shares distributed to the Vendor by the Company for Year 2014 will not exceed the number of 2014 Distributable Shares.

LETTER FROM THE BOARD

Year 2015

(Gross profit of the Target Group for the month/2015 Consideration Adjustment) x 180,000,000 Shares

If the accumulated number of Shares distributed to the Vendor by the Company for Year 2015 in aggregate falls short of the number of 2015 Distributable Shares, the treatment of the outstanding 2015 Distributable Shares will be subject to item (e) below. In any event, the Shares distributed to the Vendor by the Company for Year 2015 will not exceed the number of 2015 Distributable Shares.

(d) As the Target Group now mainly focus on agency business for imported coal, its income will be deemed as agency fee and is unlikely to have any subsequent gross profit loss after its gross profit for the month has been recorded.
(e) 75,550,000 Consideration Shares and the Existing Escrow Shares (251,833,333 Consideration Shares in aggregate) shall be registered under the name of the Vendor or its nominee on the Completion Date of the transaction, and the New Escrow Shares shall be registered under the name of the Vendor or its nominee on the Effective Date. However, the original certificates of 360,000,000 Total Escrow Shares shall be delivered to the escrow agent for custody and distributed to the Vendor through the escrow agent by instruction jointly given by the Purchaser and the Vendor according to item (c) above. The escrow agreements to be set up between the Purchaser, the Vendor and the escrow agent in relation to the Existing Escrow Shares and the New Escrow Shares (the form and details of which to be agreed and approved by the escrow agent) will be signed on or before the Completion Date of the transaction and the Effective Date respectively.
(f) Where:
(i) the total gross profit as indicated in the audited consolidated accounts of the Target Group for Year 2014 is less than the total gross profit of the management accounts of the Target Group for Year 2014, the difference will be included in 2015 Consideration Adjustment since April 2015, which means the Shares distributable to the Vendor each month for the period from April 2015 to December 2015 will be calculated as follows:

(Gross profit of the Target Group for such month – difference in gross profit)/2015 Consideration Adjustment x 180,000,000 share

If the difference in the gross profit is higher than (or equal to) the gross profit for the month, no Shares will be distributed for the month. The difference in gross profit for the month that is yet to be deducted will be brought forward to the following month. The above calculation will be used to cover the Target Group’s gross profit in the subsequent months until the difference in gross profit is fully deducted.

LETTER FROM THE BOARD

For the avoidance of doubt, the Vendor is able to receive the proportionate number of Distributable Shares if it is able to meet partially the New Consideration Adjustments and would not be required to return the Distributable Shares even if the financial targets in connection with the New Consideration Adjustments are not met in the end.

(ii) the total gross profit as indicated in the audited consolidated accounts of the Target Group for Year 2015 is less than the total gross profit of the management accounts of the Target Group for Year 2015, the difference will be payable to the Company by the Vendor in cash at the issue price (i.e. HK$0.139 per Share) of the Total Escrow Shares additionally distributed by the Purchaser within ten Business Days after the audited consolidated accounts for Year 2015 has been submitted:

Shares additionally distributed to the Vendor x HK$0.139 per Share

(g) After the audited consolidated accounts of the Target Group for Year 2015 has been submitted, and Shares are distributed to the Vendor by the Company pursuant to item(s) (c) and/or (e) above (if applicable), in the case that the Vendor fails to obtain all the Total Escrow Shares due to the failure in reaching the target of the New Consideration Adjustment, the Purchaser and the Vendor agreed in the Fifth Supplemental Agreement that the Company has the right to sell the Total Escrow Shares not distributed to the Vendor (the “ Outstanding Escrow Shares ”). Subsequent to the signing of the Fifth Supplemental Agreement, the parties entered into further negotiations as to the treatment of the Outstanding Escrow Shares and reached the consensus that the Outstanding Escrow Shares will be cancelled by the Company instead of being sold to the appointee of the Company. The Company will ensure full compliance with all applicable requirements under the Listing Rules, the Codes on Takeovers and Mergers and Shares Repurchases and other laws, rules and regulations in connection with the cancellation of the Outstanding Escrow Shares.

After arm’s length negotiations between the Company and the Vendor, the distribution of the Distributable Shares has been amended to a monthly basis from a yearly basis, having taking into account (i) the higher incentives provided to the Vendor for a monthly distribution method; (ii) the higher flexibility required for distribution of the Distributable Shares as a result of the more diversified business and enhanced development prospects of the Target Group contributed by the Vendor; and (iii) there is a mechanism under the Fifth Supplemental Agreement to protect the interests of the Company in the event that the ultimate audited total gross profit is less than that shown in the management accounts of the Target Group which may lead to more Distributable Shares distributed to the Vendor attributable to the monthly distribution method.

The Company will update the Shareholders as to the number of Distributable Shares released to the Vendor in accordance with the Fifth Supplemental Agreement on an annual basis in its subsequent annual reports.

LETTER FROM THE BOARD

4. Promissory Note

The Company undertakes to conditionally pay the initial principal amount of HK$20,295,000 (subject to adjustment below) under the Promissory Note, in whole or in part, within two years upon the issue of the Promissory Note (the “ Maturity Date ”) by following the instructions given by the holder (i.e. the Vendor) and the terms and conditions as stated below:

(a) The Promissory Note shall not bear any interest.
(b) At anytime before the Maturity Date, the Company may give the holder a written notice in advance of not less than three Business Days, specifying the date for early redemption and the redemption amount, for the early redemption of the entire or outstanding amount of the Promissory Note.
(c) Adjustments
(i) The initial principal amount of the Promissory Note will be adjusted with reference to the following indicators of the Target Group:
- respective targets in association with the 2014 Consideration Adjustment and the 2015 Consideration Adjustment; and
- The audited consolidated accounts of the Target Group for Year 2014 and Year 2015 prepared by the auditor of the Company or its designated person within three months upon the year end date of Year 2014 and Year 2015.
(ii) If the aggregated gross profit as indicated in the audited consolidated accounts of the Target Group for Year 2014 and Year 2015 (the “ Audited Gross Profit Aggregate for Both Years ”) is less than the aggregate targets in association with the New Consideration Adjustment, the Company will give to the holder a written notice in relation to the adjustment of the initial principal amount to the amount of the Audited Gross Profit Aggregate for Both Years (the “ Adjusted Principal Amount ”) within three Business Days after the audited consolidated accounts for Year 2015 has been submitted. Such notice shall be final and conclusive evidence to the Adjusted Principal Amount and the holder shall not disagree thereon.
(iii) The aggregate target under the 2014 Consideration Adjustment and 2015 Consideration Adjustment in the amount of HK$20,000,000 falls short of the initial principal amount of the Promissory Note by HK$295,000. Such extra amount is served as an incentive to encourage the Vendors to meet the aggregate target.
(iv) After the adjustment and without prejudice to the early redemption by the Company of the amount, in whole or in part, as mentioned in item (b), the Company shall only have to duly redeem and fully repay the Adjusted Principal Amount of the Promissory Note on the Maturity Date.

LETTER FROM THE BOARD

(d) The Promissory Note shall not be transferable. The holder shall not request the Company to redeem and repay the entire or any partial amount under the Promissory Note before the Maturity Date.

5. Effective Conditions

The Fifth Supplemental Agreement shall be subject to the following conditions precedent:

(a) the Company has obtained the relevant consent/approval/permit/waiver (if any) from the relevant regulatory institutions according to the Listing Rules, the laws and regulations and/or the requirements of relevant regulatory institutions that shall be obeyed by listing companies and has distributed announcement(s) and circular(s) to the Shareholders in relation to the amendments under the Fifth Supplemental Agreement and relevant transactions. The Board and the shareholders of the Company have passed and agreed by a resolution on the authorization to sign the Fifth Supplemental Agreement, and have approved the Company to implement the amendments contemplated under the Fifth Supplemental Agreement and the relevant transactions thereunder, which include but are not limited to the amendments on the issue price and the number of Consideration Shares, and the granting of a special limit on the issue and distribution of the Amended Consideration Shares;
(b) the Stock Exchange has approved the contents in the announcement(s) and the circular(s) distributed to the Shareholders by the Company in relation to the Fifth Supplemental Agreement;
(c) the Stock Exchange has approved the amendments in relation to the issue price and the number of the Amended Consideration Shares;
(d) the Listing Committee of the Stock Exchange has approved the due listing of and dealings in the New Escrow Shares and/or the Existing Escrow Shares (as the case may be); and
(e) the Stock Exchange has not indicated that, the transactions as contemplated under the Fifth Supplemental Agreement will be handled as: (i) a “reverse takeover” as stated in Rule 14.06 (6) of the Listing Rules in and/or (ii) a new listing application as stated in Rule 14.54 to the Listing Rules by the Company.

Condition (c) was inserted for the prudent purpose of catering for any additional requirements imposed by the Stock Exchange in respect of the proposed amendments as provided under the Fifth Supplemental Agreement. In the event that no such additional requirement is imposed by the Stock Exchange, the Company is prepared to waive this condition precedent.

If the above mentioned conditions precedent cannot be fulfilled on or before 31 January 2014, the Fifth Supplemental Agreement and any matters therein will be terminated automatically on that day unless the parties of the Fifth Supplemental Agreement agree in written form to extend the term.

Save for the above substantial amendments, all principal terms and conditions to the Sale and Purchase Agreement remain intact.

LETTER FROM THE BOARD

The Directors are of the view that the terms and conditions to and the transactions contemplated under the Fifth Supplemental Agreement are fair and reasonable and in the interests of the Company and Shareholders as a whole.

New Escrow Shares

The Existing Escrow Shares were allotted and issued to the Vendor on the Completion Date and delivered to the escrow agent for custody. Pursuant to the Fifth Supplemental Agreement, the issue price will be adjusted from HK$0.30 per Share to HK$0.139 per Share on the Effective Date. The New Escrow Shares will be issued at HK$0.139 per Share on the Effective Date, which represent:

(a) no premium or discount over the closing price of HK$0.139 per Share as quoted on the Stock Exchange on the Last Trading Day;
(b) a discount of approximately 7.33% over the average closing price of HK$0.15 per Share as quoted on the Stock Exchange for the last five trading days up to and including the Last Trading Day; and
(c) a premium of approximately 1.02% over the average closing price of HK$0.1376 per Share as quoted on the Stock Exchange for the last ten trading days up to and including the Last Trading Day.

The New Escrow Shares to be allotted and issued represent approximately 5.99% of the existing issued share capital of the Company as at the Latest Practicable Date and approximately 5.65% of the Company’s issued share capital as enlarged by the issue of the New Escrow Shares. The New Escrow Shares will be allotted and issued pursuant to the Specific Mandate to be granted by the Shareholders at the EGM.

An application will be made to the Listing Committee of the Stock Exchange for the listing of and permission to deal in the New Escrow Shares. The New Escrow Shares, when issued on the Effective Date, together with the Existing Escrow Shares, will all rank pari passu in all respects and have equal voting rights and rights to dividend as the existing Shares in issue.

LETTER FROM THE BOARD

Financial Information of the Target Group

The audited consolidated statement of comprehensive income of the Target Group for the year ended 31 March 2013 is set out below:

Turnover Cost of sales Sales tax and related expenses Gross profit/(loss) Other income Total administrative expenses_(Note) Net profit/(loss) for the year _Note:	HK$’000 36,929 (36,523) (51) 355 1 (1,160) (804)

Out of the total administrative expenses of approximately HK$1,160,000, approximately HK$559,000 represented one-off expenses attributable to a specific project, approximately HK$447,000 represented non-cash one-off expenses attributable to grant of share option and the remaining of HK$154,000 represented operational expenses which were incurred from ordinary course of business.

The audited consolidated statement of financial position of the Target Group as at 31 March 2013 is set out below:

Non-current assets Current assets Non-current liabilities Current liabilities Net asset / (liabilities) Share Capital Reserve Non-controlling Interests Total Equity	HK$’000 5 24,352 – (27,140) (2,783) 78 (3,075) 214 (2,783)

LETTER FROM THE BOARD

Reasons for and Benefits of Entering into the Fifth Supplemental Agreement

Reasons for Investing in the PRC Coal Trading Market

Despite the slow recovery of the PRC coal trading market, the Board considers it is justifiable to further invest in this business and amend the consideration for the Acquisition. Coupled with the new terms of the Fifth Supplemental Agreement is the new business model of the Target Group, which involves cross-border coal trading unlike the previous model which was limited to domestic coal trading within the PRC, this provides a new growth momentum to the Target Group’s coal trading business. Moreover, given the absence of capital injection into Hubei Tiegang, the management of the Target Group has been able to sustain business operation by leveraging on their established business connections and experience in PRC coal trading since the Completion, this has evidenced the solid fundamentals of the Target Group in conducting coal trading business. Having considered the above, the Board is of the view that further developments in the coal trading business should not be disregarded at the same time when the Company seeks other attractive business opportunities apart from coal trading.

Besides, having considered the Company’s established coal trading platform, the growth potentials in coal trading business under the new business model of the Target Group and the extra costs incurred by cancelling the Existing Escrow Shares and disposing of the Target Group, the Board does not consider that discontinuing the Target Group’s business will be in the interests of the Company and the Shareholders as a whole. In the event of continuing the Target Group’s business without releasing the Existing Escrow Shares to the Vendor, the Company will have to rely on internal resources to develop the Target Group’s business and forgo the potential business referrals and other contributions from the Vendor. After taking into account the above-mentioned alternatives, the Board is of the view that continuing the Target Group’s existing business under the new business model together with the amended terms of the transaction as stipulated under the Fifth Supplemental Agreement shall be more beneficial to the Company and the Shareholders as a whole.

Reasons for and Benefits of the Fifth Supplemental Agreement

As mentioned in the Company’s latest annual report and interim report for 2013, the Board has been taking a cautious and conservative approach towards the coal trading business segment, due to the unfavourable performance of the PRC coal trading market in the past reported periods. For the financial year ended 31 March 2013, the slowdown of coal demand and consumption with oversupply in the market resulted in fiercer competition and minimized profit margin. During the six months ended 30 September 2013, the coal inventory of power plants, cement plants and ports in China had maintained at a relatively high level, the PRC coal price dropped slightly and coal demand remained weak.

Pursuant to the Sale and Purchase Agreement, the Company undertook to pay RMB10,098,000 to Zhuhai Tiegang as capital injection. However, having considered the continuous depression in the business environment for the PRC coal trading market, and the pressure that would have been caused on the Company’s cash flow by injecting RMB10,098,000 in full to Zhuhai Tiegang, the Company only injected a total of approximately US$150,000 into Zhuhai Tiegang. As a result, the Target Group failed to achieve the target of audited distributable profits in association with the First Year Consideration Adjustment and the Second Year Consideration Adjustment due to the poor PRC coal trading market and tight cash flow. Accordingly, the Existing Escrow Shares were not released to the Vendor at all and in turn

LETTER FROM THE BOARD

the Vendor will have less incentive to refer or introduce business to the Target Group. It is expected that the above dilemma shall continue and the Third Year Consideration Adjustment shall not be achieved if the Company and the Vendor do not negotiate for a resolution.

The payment term in respect of the capital injection was agreed between the Vendor and the Company and was attached to the Sale and Purchase Agreement. In the event that the Company does not inject fund into Hubei Tiegang, it will constitute a breach of warranty or a breach of condition of the Sale and Purchase Agreement. Either way, the Vendor would have recourse to sue the Company for breach of contract and claim damages even though the non-breaching party will have to prove loss and the breach itself. But given that the fund to be injected into Hubei Tiegang is a substantial amount, the potential loss that results from this breach may also be substantial. As such, the Company will have to undertake the risk of being sued or claimed for compensation by the Vendor if the capital injection provision in the Sale and Purchase Agreement is not deleted.

As at the Latest Practicable Date, the Vendor has not claimed any compensation from the Company under the Sale and Purchase Agreement. However, in the event that the Vendor claims compensation against the Company for not paying up the capital commitment in full, it would be prejudicial to the Company and the Shareholders. By way of entering into of the Fifth Supplemental Agreement, such capital injection clause by the Company will be removed from the Sale and Purchase Agreement and the Company is therefore no longer required to fulfill the capital commitment, which will eliminate both the potential risk of compensation and the cash flow pressure.

Despite the current dilemma, both the Company and the Vendor would like to further pursue the business of the Target Group, which are in the interests of the Company and the Shareholders as a whole, when compared with terminating the transaction and cancelling the Existing Escrow Shares which in the end will only incur extra costs to the Company without any potential benefits to the Company’s future business performance and profitability.

In addition, given that the Total Escrow Shares (with issue price adjusted with reference to the recent share price performance of the Company) will not be released to the Vendor until the New Consideration Adjustment has been fulfilled and the principal amount of the Promissory Note will be subsequently adjusted to the actual Consideration Adjustment fulfilled, the revised terms under the Fifth Supplemental Agreement shall provide incentives and motivations to the Vendor to bring in more business to the Target Group.

The Board is of the view that the new terms under the Fifth Supplemental Agreement shall provide more incentives to the Vendor to contribute to the Target Group’s business developments in order to be released of the Total Escrow Shares, on the bases that: (i) the new issue price of HK$0.139 for the Total Escrow Shares is more comparable to the recent share price performance of the Company than the previous issue price of HK$0.30, the cost per Share is thus more reasonable from the Vendor’s point of view; (ii) the new Consideration Adjustments are more realistic and achievable; and (iii) the new business model involving diversification of the Target Group’s business scope and geographical coverage shall provide larger room for business referral by the Vendor.

LETTER FROM THE BOARD

The financial impact to the Group if the Company can continue the coal trading business of the Target Group is illustrated as follows:–

The adjustments under the Fifth Supplemental Agreement are as follows:

Note Derivative financial assets Share capital a Share premium b Promissory notes c	Dr. HK$’000 45,832 45,832	Cr. HK$’000 1,837 23,700 20,295
		45,832

Notes:

a) 183,716,667 Shares x HK$0.01 par value
b) 183,716,667 Shares x HK$0.129 premium per Share (issue price at HK$0.139)
c) Zero-interest 2-year Promissory Note as per the Fifth Supplemental Agreement

The above accounting entries are recognised at fair value at the date of completion under the Fifth Supplemental Agreement. The valuation reports will be obtained by the independent third party valuer. Thus, the amounts will be subjected to fair value changes and charged to comprehensive income statements.

The derivative financial assets and promissory notes are required to measure their fair value at each reporting period end. The valuation reports will be obtained by the independent third party valuer and the fair value changes will be charged to comprehensive income statements.

Having considered all the above, the Company and the Vendor had been negotiating in arm’s length to address the above dilemma and entered into the Fifth Supplemental Agreement. To the best knowledge, information and belief of the Board, the Board considers that the revised terms under the Fifth Supplemental Agreement to be beneficial to the Company, the Vendor and the Shareholders as a whole .

PROPOSED GRANT OF SPECIFIC MANDATE

In light of the aforesaid, the Company will propose at the EGM to approve the grant of the Specific Mandate for the allotment and issue of the 183,716,667 New Escrow Shares, which represent (i) approximately 5.99% of the existing 3,067,845,733 Shares of the Company as at the Latest Practicable Date; and (ii) approximately 5.65% of 3,251,562,400 Shares of the Company as enlarged by the issue of the New Escrow Shares.

LETTER FROM THE BOARD

The Existing Escrow Shares and the New Escrow Shares to be issued fully paid up are all ranking pari passu in all respects and have equal voting rights and rights to dividends as the existing ordinary Shares in issue. An application will be made by the Company to the Stock Exchange for the listing of, and permission to deal in the New Escrow Shares.

CHANGES IN SHAREHOLDING STRUCTURE OF THE COMPANY

The following illustrates the Company’s shareholding structure, assuming there is no further change to the share capital of the Company: (i) as at the date of this circular; and (ii) immediately upon the allotment and issue of the New Escrow Shares:

Shareholders The Vendor Mr. Gao Feng(3) Other Shareholders Total	As at the date of this circular Approximate Number of Shareholding Shares percentage 176,333,333(1) 5.75% 178,000,000 5.80% 2,713,512,400 88.45% 3,067,845,733 100.00%	Immediately after the issue of the New Escrow Shares Approximate Number of Shareholding Shares percentage 360,050,000(2) 11.07% 178,000,000 5.47% 2,713,512,400 83.46% 3,251,562,400 100.00%	Immediately after the issue of the New Escrow Shares Approximate Number of Shareholding Shares percentage 360,050,000(2) 11.07% 178,000,000 5.47% 2,713,512,400 83.46% 3,251,562,400 100.00%
			100.00%

Notes:

(1) Includes 176,283,333 Existing Escrow Shares.
(2) Includes 360,000,000 Total Escrow Shares.
(3) Mr. Gao Feng, being an executive Director, is beneficially interested in the entire issued share capital of ACE Channel Limited, which holds 178,000,000 Shares as at the Latest Practicable Date.

PROPOSED GRANT OF NEW GENERAL MANDATE

During the Last Annual General Meeting, the Shareholders approved, among other things, an ordinary resolution to grant the Existing General Mandate which enable the Directors to allot, issue and deal with Shares not exceeding 20% of the aggregate nominal amount of the issued share capital of the Company as at the date of the Last Annual General Meeting, being 494,964,746 Shares under the Existing General Mandate.

Reference is made to the announcements of the Company dated 23 September 2013, 4 October 2013, 28 November 2013 and 9 December 2013.

LETTER FROM THE BOARD

On 4 October 2013, the sale and purchase agreement dated 23 September 2013 in relation to the acquisition of 30% issued share capital of Global Mining Engineer Inc. entered into among the Company (as purchaser), GME Holdings Inc. (as vendor) and Mr. Poon Wan Yin (as vendor guarantor) was completed and the Company allotted and issued 175,182,000 consideration shares to the vendor pursuant to the said sale and purchase agreement and utilised 35.4% of the Existing General Mandate.

On 9 December 2013, the subscription agreement dated 28 November 2013 in relation to the subscription of 286,000,000 Shares under the Existing General Mandate was entered into between the Company and 貢智宏 (Gong Zhihong) (as subscriber) was completed. Following the completion of the said subscription agreement, 57.8% of the Existing General Mandate was utilised.

Due to the aforesaid, an aggregate of 93.2% of the Existing General Mandate has been utilised. Since the Last Annual General Meeting, the Existing General Mandate has not been refreshed.

The additional funds to be raised pursuant to the proposed New General Mandate will be utilised by the Group for its general working capital and as funds for future development of the existing businesses of the Group and other businesses when investment opportunities arise. Specifically, the additional funds may be utilised in the settlement of operating costs and expenses of the Group, the repayment of debts and interests, and the fulfilment of working capital requirements of the Group’s businesses that is essential for generating revenue. The Directors are of the view that having additional options and a higher flexibility in the choice of fund raising activities in the future is in the best interests of the Company. As at the Latest Practicable Date, (i) the Company did not have any concrete development and investment plans to utilise the New General Mandate save for those already disclosed; (ii) the Company did not have any intention or plans for any fund raising activities; and (iii) there were no identified targets regarding any potential acquisitions (other than those already disclosed) which are considered to be able to materialise based on the information currently available to the Directors.

The proposed grant of the New General Mandate will maintain the Group’s financial flexibility necessary for the Group to (i) capture investment opportunities for potential acquisitions and other future investment and fund raising opportunities that may arise in a timely manner; (ii) provide the Company with the ability and flexibility to respond to the market in time; and (iii) avoid uncertainties which may be associated with a specific mandate.

The provision of financial flexibility is not the sole purpose of the proposed New General Mandate. As meeting working capital requirements is crucial to the success of conducting the coal trading business and the unconventional gas business, the Directors consider the proposed grant to be necessary to strengthen the liquidity position of the Group in the coming months given that the existing coal trading business and the unconventional gas business of the Group are still in the growth stage and will therefore require a stronger cash flow to support revenue generating activities and further business developments.

Moreover, the Directors consider that capturing investment opportunities on a timely basis is critical in the implementation of the Group’s inorganic growth strategy because not only will it increase new sources of revenue but it will also create synergies among the Group’s existing businesses. Hence, the Directors consider it to be fair and reasonable and in the interests of the Company and the Shareholders as a whole to allocate funds from the New General Mandate to potential acquisitions should such investment opportunities arise.

LETTER FROM THE BOARD

In addition to the purposes of providing the Group with financial flexibility and liquidity, the proposed grant of the New General Mandate will also (i) avoid any undue delay caused by the granting of specific mandate if the Group wishes to carry out timely acquisitions; (ii) maintain a healthier debt-toequity ratio; and (iii) strengthen the capital base and the shareholder base of the Group by way of issuing new Shares under the New General Mandate.

Furthermore, equity financing (i) does not incur any interest payment obligations on the Group as compared with bank financing; (ii) provides the Company with an alternative means for fund raising which is vital in light of the tightened bank credit under the current market conditions; (iii) is less costly and time-consuming than raising funds by way of rights issue or open offer; and (iv) provides the Company with the capability to capture any capital raising or prospective investment opportunity as and when it arises.

For the above reasons stated herein, together with the fact that the next annual general meeting of the Company will not be held until around August 2014 which is approximately eight months from the Latest Practicable Date, the Directors believe the granting of the New General Mandate is in the interests of the Company and the Shareholders as a whole by providing the Company with financial liquidity and flexibility as well as funds to finance existing and new businesses which are necessary for the Group’s ongoing business development.

The Directors, having considered other alternative fund raising methods, are of the view that rights issue and open offer are more time consuming and more costly as compared to the issue of new Shares under the New General Mandate whereas debt financing will impose a heavier interest burden on the Group. Thus, the Directors consider that the benefits of the proposed New General Mandate outweigh the potential dilution effect on the shareholding held by the public Shareholders in the Company and the New General Mandate is in the interests of the Company and the Shareholders as a whole.

For a further discussion on the potential dilution effect, please refer to the section headed “Potential dilution to shareholding of the public Shareholders” below.

For the reasons stated above, it is proposed that the Directors be given, by way of an ordinary resolution, the New General Mandate to authorise them to allot, issue and deal with Shares and other securities representing not exceeding 20% of the aggregate nominal amount of the issued share capital of the Company as at the date of the EGM.

As at the Latest Practicable Date, the total number of Shares in issue was 3,067,845,733 Shares with a nominal value of HK$0.01 each. Upon passing the relevant resolution at the EGM and assuming no further Shares will be issued and/or repurchased by the Company between the Latest Practicable Date and the date of the EGM, the Company would be allowed pursuant to the New General Mandate to allot and issue up to 613,569,146 Shares, representing 20% of the existing 3,067,845,733 Shares as of the Latest Practicable Date. Any issue of new Shares is subject to approval of the Stock Exchange for the listing of, and permission to deal in, such new Shares.

The New General Mandate will expire at the earliest of: (a) the conclusion of the next annual general meeting of the Company following the EGM; (b) the date by which the next annual general meeting is required by the articles of association of the Company or the applicable laws of the Cayman Islands to be held; or (c) when the authority given to the Directors thereunder is revoked or varied by ordinary resolution of the Shareholders in a general meeting prior to the next annual general meeting of the Company.

LETTER FROM THE BOARD

At the EGM, a resolution will be proposed to seek approval of the Independent Shareholders that the Directors be granted the New General Mandate to allot, issue and deal with Shares and other securities representing not exceeding 20% of the aggregate nominal amount of the issued share capital of the Company as at the date of the EGM.

FUND RAISING ACTIVITIES OF THE COMPANY FOR THE PAST TWELVE MONTHS

Set out below are the fund raising activities conducted by the Company during the past twelve months prior to the Latest Practicable Date:

Description of

Description of
fundraising	Date of	Net amount	Intended use of		Actual use of
activity	announcement	raised	proceeds as announced		Proceeds
Placing of new	21 June 2013	HK$32.46 million	–	general working	–	HK$32.46 million
Shares under a				capital and to		has been fully
general mandate				finance the possible		applied as general
				acquisition of the		working capital of
				entire issued share		the Group
				capital of Glacier
				Sun Limited
				as disclosed in
				the Company’s
				announcement dated
				9 May 2013 or
				future acquisitions
				when investment
				opportunities arise
Subscription for	28 November	HK$32.79 million	–	general working	–	HK$9.40 million
new Shares under	2013			capital purposes		has been fully
the Existing				and/or financing		applied as general
General Mandate				any potential		working capital of
				investment shall such		the Company
				opportunity arises in
				the future

LETTER FROM THE BOARD

POTENTIAL DILUTION TO SHAREHOLDING OF THE PUBLIC SHAREHOLDERS

The table below sets out the shareholding structure of the Company (i) as at the Latest Practicable Date; (ii) upon full utilisation of the New General Mandate (assuming no other Shares are issued or repurchased by the Company prior to the EGM); and (iii) upon full utilisation of the New General Mandate and immediately after the allotment and issue of the New Escrow Shares:

Shareholder The Vendor Mr. Gao Feng_(Note 1)_ Public Shareholders Maximum number of Shares that may be issued under the New General Mandate Total	Upon full utilisation of the New General Mandate (assuming no other Shares are As at the issued or repurchased by the Latest Practicable Date Company prior to the EGM) Approximate Approximate Number of shareholding Number of shareholding Shares percentage Shares percentage Shares % Shares % 176,333,333 5.75 176,333,333 4.79 178,000,000 5.80 178,000,000 4.84 2,713,512,400 88.45 2,713,512,400 73.70 – – 613,569,146 16.67 3,067,845,733 100.00 3,681,414,879 100.00	Upon full utilisation of the New General Mandate and immediately after the allotment and issue of the New Escrow Shares Approximate Number of shareholding Shares percentage Shares % 360,050,000 9.32 178,000,000 4.61 2,713,512,400 70.20 613,569,146 15.87 3,865,131,546 100.00	Upon full utilisation of the New General Mandate and immediately after the allotment and issue of the New Escrow Shares Approximate Number of shareholding Shares percentage Shares % 360,050,000 9.32 178,000,000 4.61 2,713,512,400 70.20 613,569,146 15.87 3,865,131,546 100.00
			100.00

Note:

Mr. Gao Feng, being an executive Director, is beneficially interested in the entire issued share capital of ACE Channel Limited, which holds 178,000,000 Shares as at the Latest Practicable Date.

INDEPENDENT ADVICE

The Independent Board Committee comprising Mr. Cheng Wing Keung Raymond, Mr. Lam Williamson and Mr. Wong Hoi Kuen, all of them being the independent non-executive Directors, has been formed to advise the Independent Shareholders, and Proton Capital has been appointed by the Company as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the grant of the New General Mandate.

LISTING RULES IMPLICATION

As at the date of this circular, Mr. Fung, a director of Zhan Sheng, holds 29.03% shareholding in Zhan Sheng and Ms. Wang holds 22.5% equity interest in Hubei Tiegang. Pursuant to Chapter 14A of the Listing Rules, Mr. Fung and Ms. Wang are connected persons of the Company whose guarantee provided under the Fifth Supplemental Agreement constitutes a financial assistance to the Company under Chapter

LETTER FROM THE BOARD

14A of the Listing Rules without pledge over the assets or relevant financial assets of the Company. Pursuant to Chapter 14A of the Listing Rules, the above said financial assistance is exempted from the reporting, announcement and Independent Shareholders’ approval requirements.

As the applicable percentage ratio exceeds 5% but less than 25% under the Listing Rules calculated based on the total consideration of HK$95,000,000 of the Acquisition as adjusted pursuant to the terms under the Fifth Supplemental Agreement, the Acquisition (as supplemented by the Fifth Supplemental Agreement) constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules.

Pursuant to Rule 13.36(4)(a) of the Listing Rules, any controlling Shareholders and their Associates or, where there are no controlling Shareholders, the Directors (excluding the independent non-executive Directors) and the chief executive of the Company and their respective Associates shall abstain from voting in favour of the relevant resolution regarding the grant of the New General Mandate to be proposed at the EGM.

As at the Latest Practicable Date, the Company had no controlling Shareholder. Mr. Gao Feng, being an executive Director, held the entire issued share capital of ACE Channel Limited which in turn was interested in 178,000,000 Shares. Mr. Gao and ACE Channel Limited hold approximately 5.80% of the existing issued share capital of the Company.

Each of Mr. Gao Feng and ACE Channel Limited will therefore be required to abstain from voting in favour of the relevant resolution regarding the grant of the New General Mandate at the EGM. Save for Mr. Gao Feng and ACE Channel Limited, none of the Directors (excluding the independent non-executive Directors) and the chief executive of the Company and their respective Associates held any Shares as at the Latest Practicable Date and shall abstain from voting in favour of the relevant resolution to be proposed at the EGM.

Mr. Hung Chen Richael, beneficially holding in aggregate 274,640,000 Shares, representing approximately 8.95% of the issued share capital of the Company as at the Latest Practicable Date, will be unable to exercise the voting rights of the said Shares on the resolution to be proposed at the EGM pursuant to an injunction order granted by the High Court of Hong Kong on 30 March 2010. For details of the said injunction order, please refer to the announcements of the Company dated 25 January 2010, 30 March 2010, 28 April 2010, 13 September 2010, 21 September 2010 and 6 October 2010.

Pursuant to Rule 13.39(4) of the Listing Rules, the votes of the Independent Shareholders in respect of the proposed grant of the New General Mandate at the EGM will be taken by way of poll. As at the Latest Practicable Date, the Directors (excluding the independent non-executive Directors) and the chief executive of the Company and their respective Associates had indicated that they have no intention to vote against the resolution regarding the proposed grant of the New General Mandate at the EGM.

RECOMMENDATION

Having considered the reasons set out herein, the Board considers that the Fifth Supplemental Agreement, the proposed grant of the Specific Mandate and the proposed grant of the New General Mandate are in the interests of the Company and the Shareholders as a whole and recommends the Shareholders and the Independent Shareholders (as the case may be) to vote in favour of the relevant resolutions to be proposed at the EGM.

LETTER FROM THE BOARD

Your attention is drawn to the letter from Proton Capital, which contains its advice to the Independent Board Committee and the Independent Shareholders with regard to the proposed grant of the New General Mandate. The text of the letter from Proton Capital is set out on pages 34 to 41 of this circular.

EGM

A notice convening the EGM to be held at 3 p.m. on Friday, 14 February 2014 at Suite 2502, 25/F., 9 Queen’s Road Central, Central, Hong Kong is set out on pages 42 to 45 of this circular. A form of proxy for use at the EGM is enclosed with this circular. Whether or not you intend to attend the EGM, you are requested to complete the enclosed form of proxy in accordance with the instructions printed thereon and return the same to the Company’s share registrar and transfer office in Hong Kong, Tricor Tengis Limited at 26/F., Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong not less than 48 hours before the time appointed for holding of the EGM or any adjournment thereof (as the case may be). Completion and delivery of the form of proxy will not preclude you from attending and voting at the EGM or any adjournment thereof (as the case may be) if you so wish.

As the Latest Practicable Date, the Vendor, Advanced Elation Holdings Limited, a party to the Fifth Supplemental Agreement and the registered owner of 251,833,333 Shares (out of which the Vendor is entitled to exercise the voting rights of 75,550,000 Shares while the remaining 176,283,333 Shares are held in escrow by the escrow agent), has a material interest in the Fifth Supplemental Agreement and the proposed grant of the Specific Mandate and is required to abstain from voting of the relevant resolutions at the EGM. Save for the aforesaid, to the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, no Shareholder has a material interest in the Fifth Supplemental Agreement, the proposed grant of the Specific Mandate and/or the proposed grant of the New General Mandate and no Shareholder shall require to be abstained from voting on any of the resolutions at the EGM.

RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

Yours faithfully, By order of the Board Sino Resources Group Limited (Carrying on business in Hong Kong as Sino Gp Limited) Geng Ying Chairman

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

**SINO RESOURCES GROUP LIMITED (carrying on business in Hong Kong as Sino Gp Limited) 神州資源集團有限公司[*]**

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 223)

28 January 2014

To the Independent Shareholders

Dear Sir or Madam,

PROPOSED GRANT OF NEW GENERAL MANDATE

We refer to the circular of the Company dated 28 January 2014 (the “ Circular ”) of which this letter forms part. Unless the context specifies otherwise, capitalised terms used herein have the same meanings as defined in the Circular.

We have been appointed by the Board to advise the Independent Shareholders as to whether the grant of the New General Mandate is in the interests of the Company and the Shareholders as a whole and the terms of which are fair and reasonable so far as the Company and the Independent Shareholders are concerned. Proton Capital has been appointed as the Independent Financial Adviser to advise us and you in this respect.

Having taken into account the advice of Proton Capital as set out in its letter of advice to us and you as set out on pages 34 to 41 of the Circular, we are of the view that the grant of the New General Mandate is in the interests of the Company and the Shareholders as a whole and the terms of which are fair and reasonable so far as the Company and the Independent Shareholders are concerned. Accordingly, we recommend the Independent Shareholders to vote in favour of the resolution to be proposed at the EGM to approve the grant of the New General Mandate.

Yours faithfully,

Independent Board Committee Cheng Wing Keung Raymond Lam Williamson Independent non-executive Directors

Wong Hoi Kuen

For identification purposes only

LETTER FROM PROTON CAPITAL

Set out below is the text of a letter received from Proton Capital, the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders regarding the grant of New General Mandate for the purpose of inclusion in this circular.

==> picture [32 x 35] intentionally omitted <==

普頓資本有限公司 PROTON CAPITAL LIMITED

Suite 06-07, 28/F. Shui On Centre 6-8 Harbour Road Wanchai, Hong Kong

28 January 2014

To: The independent board committee and the independent shareholders
of Sino Resources Group Limited

Dear Sirs,

PROPOSED GRANT OF NEW GENERAL MANDATE

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in connection with the grant of New General Mandate, details of which are set out in the letter from the Board (the “ Board Letter ”) contained in the circular dated 28 January 2014 issued by the Company to the Shareholders (the “ Circular ”), of which this letter forms part. Capitalised terms used in this letter shall have the same meanings as defined in the Circular unless the context requires otherwise.

As at the Latest Practicable Date, only a further of 33,782,746 Shares could be issued under the Existing General Mandate which was granted to the Directors at the Last Annual General Meeting. Therefore, the Board proposes to seek approval of the Independent Shareholders for the grant of New General Mandate such that the Directors will be granted the authority to allot, issue and deal with new Shares not exceeding 20% of the total issued share capital of the Company as at the date of passing the relevant resolution at the EGM.

Pursuant to Rule 13.36(4) of the Listing Rules, the granting of the New General Mandate requires the approval of the Independent Shareholders at the EGM at which any of the controlling shareholders (as defined in the Listing Rules) of the Company and their associates or, where there is no controlling shareholder, the Directors (excluding the independent non-executive Directors), the chief executive of the Company and their respective associates are required to abstain from voting in favour of the resolution proposed for the approval of such grant, and under Rule 13.39 of the Listing Rules, any vote of the shareholders at a general meeting must be taken by way of poll. As at the Latest Practicable Date, there was no controlling Shareholder. Mr. Gao Feng, being an executive Director, held the entire issued share capital of ACE Channel Limited which in turn was interested in 178,000,000 Shares. Mr. Gao Feng and ACE Channel Limited hold approximately 5.80% of the existing issued share capital of the Company. Each of Mr. Gao Feng and ACE Channel Limited will therefore be required to abstain from voting in favour of the relevant resolution regarding the grant of the New General Mandate at the EGM. Save for

LETTER FROM PROTON CAPITAL

Mr. Gao Feng and ACE Channel Limited, none of the Directors (excluding the independent non-executive Directors) and the chief executive of the Company and their respective Associates held any Shares as at the Latest Practicable Date and shall abstain from voting in favour of the relevant resolution to be proposed at the EGM. Mr. Hung Chen Richael, beneficially holding in aggregate 274,640,000 Shares, representing approximately 8.95% of the issued share capital of the Company as at the Latest Practicable Date, will be unable to exercise the voting rights of the said Shares on the resolution to be proposed at the EGM pursuant to an injunction order granted by the High Court of Hong Kong on 30 March 2010.

An Independent Board Committee comprising Mr. Cheng Wing Keung Raymond, Mr. Williamson Lam and Mr. Wong Hoi Kuen (all being independent non-executive Directors) has been established to advise the Independent Shareholders on the grant of New General Mandate. We, Proton Capital Limited, have been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this respect.

BASIS OF OUR OPINION

In formulating our opinion to the Independent Board Committee and the Independent Shareholders, we have relied on the statements, information, opinions and representations contained or referred to in the Circular and the information and representations as provided to us by the Directors. We have assumed that all information and representations that have been provided by the Directors, for which they are solely and wholly responsible, are true and accurate at the time when they were made and continue to be so as at the Latest Practicable Date. We have also assumed that all statements of belief, opinion, expectation and intention made by the Directors in the Circular were reasonably made after due enquiry and careful consideration. We have no reason to suspect that any material facts or information have been withheld or to doubt the truth, accuracy and completeness of the information and facts contained in the Circular, or the reasonableness of the opinions expressed by the Company, its advisers and/or the Directors, which have been provided to us. We consider that we have taken sufficient and necessary steps on which to form a reasonable basis and an informed view for our opinion in compliance with Rule 13.80 of the Listing Rules.

The Directors have collectively and individually accepted full responsibility for the accuracy of the information contained in the Circular and have confirmed, that having made all reasonable enquiries, which to the best of their knowledge and belief, that the information contained in the Circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement in the Circular or the Circular misleading.

LETTER FROM PROTON CAPITAL

We consider that we have been provided with sufficient information to reach an informed view and to provide a reasonable basis for our opinion. We have not, however, conducted any independent indepth investigation into the business and affairs of the Company, or its subsidiaries or associates, nor have we considered the taxation implication on the Group or the Shareholders as a result of the grant of New General Mandate. Our opinion is necessarily based on the financial, economic, market and other conditions in effect and the information made available to us as at the Latest Practicable Date. Shareholders should note that subsequent developments (including any material change in market and economic conditions) may affect and/or change our opinion and we have no obligation to update this opinion to take into account events occurring after the Latest Practicable Date or to update, revise or reaffirm our opinion. Nothing contained in this letter should be construed as a recommendation to hold, sell or buy any Shares or any other securities of the Company.

Lastly, where information in this letter has been extracted from published or otherwise publicly available sources, the sole responsibility of Proton Capital is to ensure that such information has been correctly extracted from the relevant sources.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion in respect of the grant of New General Mandate, we have taken into consideration the following principal factors and reasons:

(1) Background of the grant of New General Mandate

The Company is principally engaged in investing and developing in unconventional gas business and coal and metals trading business.

The Directors were authorised to allot and issue up to 494,964,746 new Shares under the Existing General Mandate which was granted to the Directors at the Last Annual General Meeting.

On 4 October 2013, the sale and purchase agreement dated 23 September 2013 in relation to the acquisition of 30% issued share capital of Global Mining Engineer Inc. entered into among the Company (as purchaser), GME Holdings Inc. (as vendor) and Mr. Poon Wan Yin (as vendor guarantor) was completed and the Company allotted and issued 175,182,000 consideration shares (the “ Consideration Shares ”) to the vendor pursuant to the said sale and purchase agreement and utilised 35.39% of the Existing General Mandate (the “ October Acquisition ”).

On 9 December 2013, the subscription agreement dated 28 November 2013 in relation to the subscription of 286,000,000 Shares (the “ Subscription Shares ”) under the Existing General Mandate by the subscriber was entered into between the Company and Mr. Gong Zhihong (as subscriber) was completed (the “ Subscription ”). Following the completion of the said subscription agreement, 57.78% of the Existing General Mandate was utilised by the Subscription.

LETTER FROM PROTON CAPITAL

If the New General Mandate is not granted, only 33,782,746 new Shares may be further allotted and issued by the Directors under the Existing General Mandate. Given that the Existing General Mandate has been substantially utilised as a result of the October Acquisition and the Subscription, the Board proposes to seek approval of the Independent Shareholders for the grant of New General Mandate such that the Directors will be granted the authority to allot, issue and deal with new Shares not exceeding 20% of the total issued share capital of the Company as at the date of passing the relevant resolution at the EGM.

As at the Latest Practicable Date, the Company had 3,067,845,733 Shares in issue. On the basis that no Share would be issued and/or repurchased by the Company, no share option and warrants of the Company would be exercised and no convertible notes of the Company would be converted from the Latest Practicable Date up to the date of the EGM, the grant of New General Mandate would allow the Directors to allot, issue and deal with up to 613,569,146 new Shares, representing 20% of the total issued share capital of the Company as at the date of the EGM.

(2) Reasons for the grant of New General Mandate

As aforementioned, the Existing General Mandate has been substantially utilised by approximately 93.17% as a result of the October Acquisition and the Subscription. Accordingly, the Board proposes to seek approval of the Independent Shareholders for the grant of New General Mandate.

With reference to the Board Letter, the additional funds to be raised pursuant to the proposed New General Mandate will be utilised by the Group for its general working capital and as funds for future development of the existing businesses of the Group and other businesses when investment opportunities arise. Specifically, the additional funds may be utilised in the settlement of operating costs and expenses of the Group, the repayment of debts and interests, and the fulfilment of working capital requirements of the Group’s businesses that is essential for generating revenue. The Directors are of the view that having additional options and a higher flexibility in the choice of fund raising activities in the future is in the best interests of the Company. As at the Latest Practicable Date, (i) the Company did not have any concrete development and investment plans to utilise the New General Mandate save for those already disclosed; (ii) the Company did not have any intention or plans for any fund raising activities; and (iii) there were no identified targets regarding any potential acquisitions (other than those already disclosed) which are considered to be able to materialise based on the information currently available to the Directors.

According to the Company’s interim report for the six months ended 30 September 2013 and as further confirmed by the Directors, in view of the gloomy coal trading industry in the PRC, the Company will continue taking a conservative approach in its coal trading transactions. For the unconventional gas business, the Company is the course of completing the equipment installation and testing in order to commence full operation. In the future, the Board will continue identifying suitable investment opportunities in the resources and energy sector, in an attempt to maximize the Shareholders’ return by inorganic growth strategies. Whilst the Company will keep developing its existing businesses, it will also allocate resources and focus on negotiating for new business opportunities.

LETTER FROM PROTON CAPITAL

Given the foregoing, we are of the opinion that the grant of New General Mandate would provide the Company with the necessary flexibility and support to fulfil any possible funding needs for its business operation, future business development and/or investment decisions. Accordingly, we are of the view that the grant of New General Mandate is in the interests of the Company and the Shareholders as a whole.

(3) Fund raising activities in the past twelve months

Set out below are the fund raising activities conducted by the Company in the past twelve months prior to the Latest Practicable Date:

Description of
fund raising	Date of		Intended use of		Actual use
activity	announcement	Net amount raised	proceeds as announced		of	Proceeds
Placing of new	21 June 2013	HK$32.46 million	–	general working	–	HK$32.46 million
Shares under a				capital and to		has been fully
general mandate				finance the possible		applied as general
				acquisition of the		working capital of
				entire issued share		the Group
				capital of Glacier
				Sun Limited
				as disclosed in
				the Company’s
				announcement dated
				9 May 2013 or
				future acquisitions
				when investment
				opportunities arise
Subscription for	28 November 2013	HK$32.79 million	–	general working	–	HK$9.40 million
new Shares under				capital purposes		has been fully
the Existing General				and/or financing		applied as general
Mandate				any potential		working capital of
				investment shall		the Company
				such opportunity
				arises in the future	–	the remaining
						amount of
						HK$23.39 million
						has not yet been
						utilised as at the
						Latest Practicable
						Date

Save as and except for the above, the Company had not conducted any other fund raising activities in the past twelve months immediately prior to the Latest Practicable Date.

LETTER FROM PROTON CAPITAL

(4) Flexibility in financing

As advised by the Directors, the proposed grant of the New General Mandate will maintain the Group’s financial flexibility necessary for the Group to (i) capture investment opportunities for potential acquisitions and other future investment and fund raising opportunities that may arise in a timely manner; (ii) provide the Company with the ability and flexibility to respond to the market in time; and (iii) avoid uncertainties which may be associated with a specific mandate. In addition to the purposes of providing the Group with financial flexibility and liquidity, the proposed grant of the New General Mandate will also (i) avoid any undue delay caused by the granting of specific mandate if the Group wishes to carry out timely acquisitions; and (ii) maintain a healthier debt-to-equity ratio; and (iii) strengthen the capital base and the shareholder base of the Group by way of issuing new Shares under the New General Mandate.

As discussed in the foregoing, we consider that the grant of New General Mandate would provide the Company with the necessary flexibility and support to fulfil any possible funding needs for its business operation, future business development and/or investment decisions. The grant of New General Mandate would provide the Company with the flexibility as allowed under the Listing Rules to allot and issue new Shares for equity fund raising activities, such as placing of new Shares, or as consideration for potential investments in the future as and when such opportunities arise. Furthermore, the additional amount of equity which may be raised after the grant of New General Mandate would provide the Group with more financing options when assessing and negotiating potential investments in a timely manner. Given the above, we are of the opinion that the grant of New General Mandate is in the interests of the Company and the Shareholders as a whole.

(5) Other financing alternatives

We have enquired into the Directors and the Directors confirmed that apart from equity financing, the Group will also consider debt financing, such as bank borrowings and issue of bonds, to be other possible fund raising alternatives available to the Group. However, the Directors are of the view that the ability of the Group to obtain bank borrowings usually depends on the Group’s profitability, financial position and the then prevailing market condition. Furthermore, such alternative may be subject to lengthy due diligence and negotiations with banks. In light of also that debt financing will usually incur interest burden on the Group, the Directors consider debt financing to be relatively uncertain and time-consuming as compared to equity financing, such as placing of new Shares, for the Group to obtain additional funding. Furthermore, equity financing under the New General Mandate (i) does not incur any interest payment obligations on the Group as compared with bank financing; (ii) provides the Company with an alternative means for fund raising which is vital in light of the tightened bank credit under the current market conditions; (iii) is less costly and time-consuming than raising funds by way of rights issue or open offer; and (iv) provides the Company with the capability to capture any capital raising or prospective investment opportunity as and when it arises.

The Directors confirmed that they would exercise due and careful consideration when choosing the best financing method available to the Group. With this being the case, along with the fact that the grant of New General Mandate will provide the Company with an additional alternative and it is reasonable for the Company to have the flexibility in deciding the financing methods for its future business development, we are of the view that the grant of New General Mandate is in the interests of the Company and the Shareholders as a whole.

LETTER FROM PROTON CAPITAL

(6) Potential dilution to shareholding of the existing public Shareholders

The table below sets out the shareholding structure of the Company (i) as at the Latest Practicable Date; and (ii) upon full utilisation of the New General Mandate (assuming no other Shares are issued or repurchased by the Company prior to the EGM):

			Upon full utilisation of	Upon full utilisation of
			the New General Mandate
			(assuming no	other Shares
			are issued or	repurchased
	As at the Latest		by the Company prior
	Practicable Date		to the EGM)
	Number of Shares	%	Number of Shares	%
The Vendor	176,333,333	5.75	176,333,333	4.79
Mr. Gao Feng_(Note)_	178,000,000	5.80	178,000,000	4.84
Existing public Shareholders	2,713,512,400	88.45	2,713,512,400	73.70
Shares to be issued under
the New General Mandate	–	–	613,569,146	16.67
Total	3,067,845,733	100	3,681,414,879	100
Note:

Mr. Gao Feng, being the executive Director, is beneficially interested in the entire issued share capital of ACE Channel Limited, which holds 178,000,000 Shares as at the Latest Practicable Date.

The table above illustrates that the shareholdings of the existing public Shareholders would decrease from approximately 88.45% as at the Latest Practicable Date to approximately 73.70% upon full utilisation of the New General Mandate (assuming no other Shares are issued or repurchased by the Company prior to the EGM). Such potential dilution to the shareholdings of the existing public Shareholders represents a dilution of approximately 14.75 percentage point.

Taking into account that the grant of New General Mandate (i) would provide an alternative to increase the amount of capital which may be raised under the New General Mandate; (ii) would provide more options of financing to the Group for further development of its business as well as in other potential future investment as and when such opportunities arise; and (iii) the shareholding interests of all the Shareholders in the Company will be diluted in proportion to their respective shareholdings upon any utilisation of the New General Mandate, we are of the opinion that the potential dilution to the shareholdings of the existing public Shareholders as just mentioned is acceptable.

LETTER FROM PROTON CAPITAL

RECOMMENDATION

Having taken into consideration the factors and reasons as stated above, we are of the opinion that the grant of New General Mandate is fair and reasonable so far as the Independent Shareholders are concerned and is in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Board Committee to advise the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the EGM to approve the grant of New General Mandate and we recommend the Independent Shareholders to vote in favour of the ordinary resolution in this regard.

Yours faithfully, For and on behalf of Proton Capital Limited Graham Lam

Managing Director – Corporate Finance

NOTICE OF EGM

**SINO RESOURCES GROUP LIMITED (carrying on business in Hong Kong as Sino Gp Limited) 神州資源集團有限公司[*]**

(Incorporated in the Cayman Islands with limited liability) (Stock Code: 223)

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (the “ EGM ”) of Sino Resources Group Limited (carrying on business in Hong Kong as Sino Gp Limited) (the “ Company ”) will be held at 3 p.m. on Friday, 14 February 2014 at Suite 2502, 25/F., 9 Queen’s Road Central, Central, Hong Kong for the purpose of considering and, if thought fit, passing the following resolutions as an ordinary resolutions:

ORDINARY RESOLUTIONS

“ THAT :
(a) the 5th Supplemental Agreement (the “ 5th Supplemental Agreement ”) dated 11 December 2013 entered into among the Company, Advanced Elation Holdings Limited (the “ Vendor ”), Mr. Fung Denny Kin Tak, Mr. Sun Hao, Mr. Lai Kin Kong Nelson and Ms. Wang Hui, in relation to, among others, the amendments to certain terms and conditions of the sale and purchase agreement dated 31 March 2012 entered into among the Company, the Vendor and the guarantors thereto (as amended or supplemented by the supplemental agreements (dated 24 April 2012, 31 May 2012, 29 June 2012 and 20 August 2012 respectively)) and all transactions contemplated thereunder (and specifically, all Outstanding Escrow Shares (as defined on page 18 of the circular (the “ Circular ”) issued by the Company on 28 January 2014) not distributed to the Vendor will be cancelled by the Company instead of being sold to the appointee of the Company as provided in the 5th Supplemental Agreement, details of which are set out in the Circular), be and is hereby approved, confirmed and ratified; and
(b) the directors of the Company (the “ Directors ”) be and are hereby authorised to take all actions and sign, execute and deliver all such agreements, deeds and documents for and on behalf of the Company as the Directors may consider necessary or desirable for the purpose of effecting or implementing the 5th Supplemental Agreement and the proposed amendments and the transactions contemplated thereunder.”
“ THAT :
(a) the issue and allotment of not more than 183,716,667 shares of the Company (the “ Shares ”) at the price of HK$0.139 each (the “ New Escrow Shares ”) pursuant to the 5th Supplemental Agreement, is hereby approved, confirmed and ratified; and
For identification purposes only

NOTICE OF EGM

(b) the Directors be and are hereby authorized, as a specific mandate, to allot, issue and otherwise deal with the New Escrow Shares which may be issued by the Company upon the implementation of the provisions under the 5th Supplemental Agreement.”
“ THAT :
(a) subject to paragraph (c) below, the exercise by the Directors during the Relevant Period (as hereinafter defined) of all the powers of the Company to allot, issue, grant, distribute and deal with new shares (the “Shares”) of HK$0.01 each in the share capital of the Company, and to make, issue or grant offers, agreements and options (including bonds, warrants and debentures convertible into Shares) which would or might require the exercise of such powers, subject to and in accordance with all applicable laws, be and is hereby generally and unconditionally approved;
(b) the approval in paragraph (a) above shall authorise the Directors during the Relevant Period (as hereinafter defined) to make, issue or grant offers, agreements and options (including bonds, warrants and debentures convertible into Shares) which would or might require the exercise of such powers after the end of the Relevant Period;
(c) the aggregate nominal amount of the share capital of the Company allotted, issued, granted, distributed or otherwise dealt with or agreed conditionally or unconditionally to be allotted, granted, distributed or otherwise dealt with (whether pursuant to an option or otherwise) by the Directors pursuant to the approval in paragraph (a) above, otherwise than pursuant to:
- (i) a Rights Issue (as hereinafter defined); or
- (ii) any issue of Shares upon the exercise of rights of subscription or conversion under terms of any warrants issued by the Company or any securities which are convertible into Shares; or
- (iii) the exercise of any option under the share option scheme or similar arrangement for the time being adopted for the grant or issue to officers and/or employees of the Company and/or any of its subsidiaries of Shares or rights to acquire Shares; or
- (iv) any issue of Shares in lieu of the whole or part of a dividend on Shares in accordance with the articles of association of the Company and other relevant regulations, shall not exceed 20% of the aggregate nominal amount of the share capital of the Company in issue as at the date of passing this resolution, and the said approval shall be limited accordingly; and
(d) for the purpose of this resolution:

“ Relevant Period ” means the period from the passing of this resolution until whichever is the earliest of:

NOTICE OF EGM

(i) the conclusion of the next annual general meeting of the Company;
(ii) the expiration of the period within which the next annual general meeting of the Company is required by the Company’s articles of association or the applicable laws of the Cayman Islands to be held; or
(iii) the revocation or variation of the authority given under this resolution by an ordinary resolution of the shareholders of the Company in general meeting.

“ Rights Issue ” means the allotment, issue or grant of Shares pursuant to an offer of Shares open for a period fixed by the Directors to holders of Shares or any class thereof on the register of members on a fixed record date in proportion to their then holdings of such Shares or class thereof (subject to such exclusions or other arrangements as the Directors may deem necessary or expedient in relation to fractional entitlements or having regard to any restrictions or obligations under the laws of, or the requirements of, any recognised regulatory body or stock exchange in any territory outside Hong Kong).”

By Order of the Board

Sino Resources Group Limited (Carrying on business in Hong Kong as Sino Gp Limited) Geng Ying Chairman

Hong Kong, 28 January 2014

Registered office: Cricket Square Hutchins Drive P.O. Box 2681 Grand Cayman KY1-1111, Cayman Islands

Principal place of business in Hong Kong: Suite 2502, 25/F. 9 Queen’s Road Central Central, Hong Kong

Notes:

A form of proxy for use at the EGM is being despatched to the shareholders of the Company together with a copy of this notice.
The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, either under its seal or under the hand of an officer or attorney duly authorised.
Any shareholder of the Company entitled to attend and vote at the EGM convened by the above notice shall be entitled to appoint one proxy or, if he is the holder of two or more Shares, more than one proxy to attend and vote instead of him. A proxy need not be a shareholder of the Company.

In order to be valid, the form of proxy, together with the power of attorney or other authority (if any) under which it is signed, or a notarially certified copy of such power or authority, must be deposited at the Company’s share registrar and transfer office in Hong Kong, Tricor Tengis Limited, at 26/F., Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong not less than 48 hours before the time appointed for holding the EGM or any adjournment thereof.

NOTICE OF EGM

Completion and return of the form of proxy will not preclude a shareholder of the Company from attending and voting in person at the EGM convened or any adjourned meeting and in such event, the form of proxy will be deemed to be revoked.
Where there are joint registered holders of any share of the Company, any one of such joint holders may vote, either in person or by proxy, in respect of such share as if he/she were solely entitled thereto, but if more than one of such joint holders are present at the EGM personally or by proxy, that one of the said persons so present whose name stands first on the register in respect of such shares shall alone be entitled to vote.
As at the date of this notice, the board of Directors of the Company comprises Ms. Geng Ying (Chairman), Mr. Gao Feng, Mr. Chiu Sui Keung and Mr. Wang Xihua as executive Directors, and Mr. Cheng Wing Keung Raymond, Mr. Lam Williamson and Mr. Wong Hoi Kuen as independent non-executive Directors.

AI assistant

Elife Holdings Limited — Proxy Solicitation & Information Statement 2014

49047_rns_2014-01-28_53c520bf-59da-40fc-b103-cfa7ac613a83.pdf

SINO RESOURCES GROUP LIMITED (carrying on business in Hong Kong as Sino Gp Limited) 神州資源集團有限公司[*]

(1) THE FIFTH SUPPLEMENTAL AGREEMENT IN RELATION TO THE ACQUISITION OF 70.97% ISSUED SHARE CAPITAL OF ZHAN SHENG INVESTMENTS LIMITED; (2) PROPOSED GRANT OF SPECIFIC MANDATE; (3) PROPOSED GRANT OF NEW GENERAL MANDATE; AND (4) NOTICE OF EGM

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

SINO RESOURCES GROUP LIMITED (carrying on business in Hong Kong as Sino Gp Limited) 神州資源集團有限公司[*]

INTRODUCTION

LETTER FROM THE BOARD

THE FIFTH SUPPLEMENTAL AGREEMENT

Background

LETTER FROM THE BOARD

Current Shareholding Structure of the Target Group

LETTER FROM THE BOARD

Principal Terms of the Fifth Supplemental Agreement

1. Change of a Guarantor under the Sale and Purchase Agreement

2. Consideration and Payment Method

Amendments in the Fifth Supplemental Agreement

LETTER FROM THE BOARD

LETTER FROM THE BOARD

Basis of the Amendment to the Consideration

LETTER FROM THE BOARD

3. Other Material Terms and Conditions

Provisions in the Sale and Purchase Agreement

LETTER FROM THE BOARD

LETTER FROM THE BOARD

Amendments in the Fifth Supplemental Agreement

LETTER FROM THE BOARD

Year 2014

LETTER FROM THE BOARD

Year 2015

LETTER FROM THE BOARD

LETTER FROM THE BOARD

4. Promissory Note

5. Effective Conditions

LETTER FROM THE BOARD

New Escrow Shares

LETTER FROM THE BOARD

Financial Information of the Target Group

LETTER FROM THE BOARD

Reasons for and Benefits of Entering into the Fifth Supplemental Agreement

Reasons for Investing in the PRC Coal Trading Market

Reasons for and Benefits of the Fifth Supplemental Agreement

LETTER FROM THE BOARD

LETTER FROM THE BOARD

PROPOSED GRANT OF SPECIFIC MANDATE

LETTER FROM THE BOARD

CHANGES IN SHAREHOLDING STRUCTURE OF THE COMPANY

PROPOSED GRANT OF NEW GENERAL MANDATE

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LETTER FROM THE BOARD

FUND RAISING ACTIVITIES OF THE COMPANY FOR THE PAST TWELVE MONTHS

Description of

POTENTIAL DILUTION TO SHAREHOLDING OF THE PUBLIC SHAREHOLDERS

INDEPENDENT ADVICE

LISTING RULES IMPLICATION

LETTER FROM THE BOARD

RECOMMENDATION

LETTER FROM THE BOARD

EGM

RESPONSIBILITY STATEMENT

SINO RESOURCES GROUP LIMITED (carrying on business in Hong Kong as Sino Gp Limited) 神州資源集團有限公司[*]

PROPOSED GRANT OF NEW GENERAL MANDATE

LETTER FROM PROTON CAPITAL

PROPOSED GRANT OF NEW GENERAL MANDATE

INTRODUCTION

LETTER FROM PROTON CAPITAL

BASIS OF OUR OPINION

LETTER FROM PROTON CAPITAL

PRINCIPAL FACTORS AND REASONS CONSIDERED

(1) Background of the grant of New General Mandate

LETTER FROM PROTON CAPITAL

(2) Reasons for the grant of New General Mandate

LETTER FROM PROTON CAPITAL

Elife Holdings Limited Proxy Solicitation & Information Statement 2014

**SINO RESOURCES GROUP LIMITED (carrying on business in Hong Kong as Sino Gp Limited) 神州資源集團有限公司[*]**

**SINO RESOURCES GROUP LIMITED (carrying on business in Hong Kong as Sino Gp Limited) 神州資源集團有限公司[*]**

**SINO RESOURCES GROUP LIMITED (carrying on business in Hong Kong as Sino Gp Limited) 神州資源集團有限公司[*]**

**SINO RESOURCES GROUP LIMITED (carrying on business in Hong Kong as Sino Gp Limited) 神州資源集團有限公司[*]**