G-Resources Group Limited — Proxy Solicitation & Information Statement 2002

Nov 1, 2002

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt about this circular, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Paladin Limited, you should at once hand this circular together with the enclosed form of proxy to the purchaser or the transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee.

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

PALADIN LIMITED

(Incorporated in Bermuda with limited liability)

Directors:

Mr. Law Fong (Acting Chairman)

Ms. Hsin Yu Ping Mr. Zhou Shiji Mr. Oung Shih Hua, James[#]

Registered office: Cedar House 41 Cedar Avenue Hamilton HM NX Bermuda

Mr. Zhu Pei Qing*

Mr. Cao Dacheng*

• # Non-Executive Director

• Independent non-Executive Director

Head office and principal place of business: 45th Floor Office Tower Convention Plaza 1 Harbour Road Wanchai Hong Kong

30 October 2002

To Shareholders

Dear Sir or Madam,

GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES

INTRODUCTION

This circular is submitted to you in accordance with the requirements of the relevant rules set out in the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (“Listing Rules”) to regulated to repurchase by companies with primary listings on The Stock Exchange of Hong Kong Limited (“the Stock Exchange”) of their own securities on the Stock Exchange (“Share Buy Back Rules”).

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GENERAL MANDATE TO ISSUE SHARES

Approval is being sought from shareholders of Paladin Limited (the “Company”) to grant a general mandated to the directors of the Company (the “Directors”) to exercise the powers of the Company to allot and issue new shares in the capital of the Company amounting to up to 20% of the aggregate nominal amount of the share capital of the Company in issue by way of an ordinary resolution to be proposed at the annual general meeting of the Company convened for 15 December 2002 (“Annual General Meeting”). The Directors wish to state that they have no immediate plans to issue any new shares pursuant to such general mandate. In the event that it becomes desirable for the Company to issue any new shares, the Directors are given flexibility and discretion to allot and issue new shares amounting to up to 20% of the issued share capital of the Company as at the date of the passing of the relevant resolution and by adding to such mandate the number of shares of HK$0.50 each (“Shares”) repurchased by the Company pursuant to the Repurchase Mandate (as hereinafter defined).

GENERAL MANDATE TO REPURCHASE SHARES

At the Annual General Meeting, an ordinary resolution will be proposed to approve the granting of a general mandate to the Directors to exercise the powers of the Company to repurchase Shares representing up to a maximum of 10% of the aggregate nominal amount of the share capital of the Company in issue as at the date of the passing of the relevant resolution (the “Repurchase Mandate”).

An explanatory statement as required under the Share Buy Back Rules to provide the requisite information for your consideration of the Repurchase Mandate is set out in the appendix hereto.

RECOMMENDATION

The Directors consider that the general mandate to issue shares and the Repurchase Mandate are in the best interests of the Company and its shareholders and accordingly recommend all shareholders to vote in favour of the relevant ordinary resolutions to be proposed at the Annual General Meeting.

Yours faithfully, LAW FONG Acting Chairman

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EXPLANATORY STATEMENT

APPENDIX

This appendix serves as an explanatory statement, as required by the Share Buy Back Rules, to provide shareholders with all the information reasonably necessary to enable them to make an informed decision on whether to vote for or against the granting of the Repurchase Mandate.

1. SHARE CAPITAL

As at 30 October 2002 (the latest practicable date prior to the printing of this circular), the issued share capital of the Company comprised 528,271,615 Shares.

Subject to the passing of the Ordinary Resolutions and on the basis that no further Shares are issued or repurchased prior to the Annual General Meeting, the Company would be allowed under the Repurchase Mandate to repurchase a maximum of 52,827,161 Shares.

2. REASONS FOR REPURCHASES

Although the Directors have no present intention of repurchasing any existing Shares of the Company, the Directors believe that the Repurchase Mandate is in the best interests of the Company and its shareholders. Such repurchases may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the net assets and/or earnings per Share of the Company and will only be made when the Directors believe that such repurchases will benefit the Company and its shareholders.

3. FUNDING OF REPURCHASES

Repurchases would be funded entirely from the Company’s available cash flow or working capital facilities which will be funds legally available for the purpose as well as in accordance with its Memorandum of Association and Articles of Association and the laws of Bermuda.

There might be material adverse impact on the working capital or gearing position of the Company (as compared with the position disclosed in the audited consolidated accounts contained in the annual report for the year ended 30 June 2002) in the event that the proposed share repurchases were to be carried out in full at any time during the proposed repurchase period. However, the Directors do not propose to exercise the mandate to such extent as would, in the circumstances, have a material adverse effect on the working capital requirements of the Company or the gearing levels which in the opinion of the Directors are from time to time appropriate for the Company.

4. SHARE PRICES

The highest and lowest prices at which the Shares have traded on the Stock Exchange during each of previous twelve months before the printing of this circular were as follows:

	Highest	Lowest
	HK$	HK$
2001
October	0.120	0.100
November	–*	–*
December	0.092	0.092
2002
January	0.098	0.089
February	0.135	0.090
March	0.116	0.108
April	0.116	0.095
May	0.108	0.102
June	–*	–*
July	0.110	0.110
August	0.055	0.040
September	0.056	0.038

• There were no normal transactions during the month.

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EXPLANATORY STATEMENT

APPENDIX

5. UNDERTAKING

The Directors have undertaken to the Stock Exchange that, so far as the same may be applicable, they will exercise the powers of the Company to make repurchases pursuant to the Repurchase Mandate and in accordance with the Listing Rules and the applicable laws of Bermuda.

6. DISCLOSURE OF INTERESTS

None of the Directors nor, to the best of their knowledge having made all reasonable enquiries, any of their associates, have any present intention to sell any Shares to the Company under the Repurchase Mandate if such is approved by the shareholders.

No connected persons (as defined in the Listing Rules) have notified the Company that they have a present intention to sell Shares to the Company, or have undertaken not to do so, in the event that the Repurchase Mandate is approved by the shareholders.

7. HONG KONG CODES ON TAKEOVERS AND MERGERS

If on the exercise of the power to repurchase Shares pursuant to the Repurchase Mandate, a shareholder’s proportionate interest in the voting rights of the Company increases, such increase will be treated as an acquisition for the purposes of Rule 32 of the Code on Takeovers and Mergers (“Takeovers Code”). As a result, a shareholder or group of shareholders acting in concert, could obtain or consolidate control of the Company and become obliged to make a mandatory offer in accordance with Rule 26 of the Takeovers Code.

In the event that the Directors exercise in full the power of repurchase Shares which is proposed to be granted pursuant to the Repurchase Mandate, the only substantial shareholder of Five Star Investments Limited in the Company would be increased from approximately 50.70% to approximately 56.33% of the issued share capital of the Company and such increase would not give rise to an obligation on Five Star Investments Limited to make a mandatory offer under Rule 26 of the Takeovers Code and would not reduce the amount of Shares held by the public to less than 25%.

The Directors are not aware of any consequences which would arise under the Takeovers Code as a result of any repurchases pursuant to the general mandate.

8. SHARE REPURCHASES MADE BY THE COMPANY

The Company had not purchased any of its Shares (whether on the Stock Exchange or otherwise) in the six months preceding the date of this circular.

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