GC Construction Holdings Limited — Proxy Solicitation & Information Statement 2009

Sep 14, 2009

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

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

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.

福山國際能源集團有限公司

FUSHAN INTERNATIONAL ENERGY GROUP LIMITED

(Incorporated in Hong Kong with limited liability under the Hong Kong Companies Ordinance) (Stock Code: 639)

REFRESHMENT OF GENERAL MANDATE TO ISSUE AND ALLOT SHARES, PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL AND NOTICE OF EXTRAORDINARY GENERAL MEETING

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

First Shanghai Capital Limited

A letter from the Board is set out on pages 3 to 7 of this circular and a letter from the Independent Board Committee is set out on page 8 of this circular. A letter from the Independent Financial Adviser containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 9 to 15 of this circular.

A notice convening the extraordinary general meeting of the Company to be held at Falcon Room I Luk Kwok Hotel at 72 Gloucester Road, Wanchai, Hong Kong on Wednesday, 30 September 2009 at 11:00 a.m. is set out on pages 16 to 18 of this circular. Whether or not you are able to attend the meeting in person, please complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the Company’s share registrar, Tricor Tengis Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong as soon as practicable but in any event not less than 48 hours before the time appointed for the holding of the meeting. Completion and return of the accompanying from of proxy will not preclude you from attending and voting at the meeting should you so wish.

Hong Kong, 14 September 2009

CONTENTS

		Page
Definitions	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
**Letter from **	the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
**Letter from **	the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
**Letter from **	the Independent Financial Adviser . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Notice of EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		16

DEFINITIONS

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

• “Articles”

the articles of association of the Company as amended from time to time;

• “associates” has the meaning as defined in the Listing Rules;

• “Board” the board of Directors;

• “Company”

Fushan International Energy Group Limited, a company incorporated in Hong Kong with limited liability, the Shares of which are listed on the Stock Exchange;

• “Directors”

the directors of the Company;

• “EGM”

the extraordinary general meeting of the Company to be held at Falcon Room I Luk Kwok Hotel at 72 Gloucester Road, Wanchai, Hong Kong on Wednesday, 30 September 2009 at 11:00 a.m., to consider and approve, among others, the refreshment of the General Mandate and the proposed increase in the authorised share capital of the Company;

• “Existing General Mandate”

the general mandate approved by the Shareholders on 2 June 2009 authorising the Directors to allot and issue Shares up to 914,951,070 shares, which is equivalent to 20% of the issued share capital of the Company as at that date;

• “General Mandate”

the general mandate proposed to be sought at the EGM to authorise the Directors to allot, issue and deal with Shares not exceeding 20% of the issued share capital of the Company as at the date of the EGM;

• “Group”

the Company and its subsidiaries from time to time;

• “Hong Kong”

Hong Kong Special Administrative Region of the People’s Republic of China;

• “Independent Board Committee”

an independent committee of the Board comprising Mr. Kee Wah Sze, Mr. Choi Wai Yin and Mr. Chan Pat Lam, being the independent non-executive Directors to advise the Independent Shareholders in respect of the General Mandate;

– 1 –

DEFINITIONS

• “Independent Shareholders”

• Shareholder(s) other than the 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;

• “Independent Financial Adviser” First Shanghai Capital Limited, a licensed corporation under the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) to carry out type 6 (advising on corporate finance) regulated activity, being the independent financial adviser to the Independent Board Committee and the Independent Shareholders in relation to the refreshment of the General Mandate;

• “Latest Practicable Date”

• 11 September 2009, being the latest practicable date prior to the printing of this circular for ascertaining certain information for the purpose of inclusion in this circular;

• “Listing Rules”

• the Rules governing the Listing of Securities on the Stock Exchange;

• “Shareholder(s)”

• the holder(s) of the Shares;

• “Share(s)”

• the ordinary share(s) of HK$0.10 each in the share capital of the Company;

• “Stock Exchange”

• The Stock Exchange of Hong Kong Limited;

• “PRC”

• the People’s Republic of China and for the purpose of this circular shall exclude Hong Kong, the Macao Special administrative Region and Taiwan;

• “%”

• per cent.

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LETTER FROM THE BOARD

福山國際能源集團有限公司 FUSHAN INTERNATIONAL ENERGY GROUP LIMITED

(Incorporated in Hong Kong with limited liability under the Hong Kong Companies Ordinance) (Stock Code: 639)

Executive Directors: Mr. Cao Zhong (Chairman) Mr. Wong Lik Ping (Vice-chairman) Mr. So Kwok Hoo Mr. Xue Kang Mr. Liu Qingshan

Registered Office: 12th Floor, Kwan Chart Tower No. 6 Tonnochy Road Wanchai Hong Kong

Non-Executive Directors: Mr. Chen Zhouping Mr. Leung Shun Sang, Tony Mr. Shi Jianping

Independent non-Executive Directors: Mr. Kee Wah Sze Mr. Choi Wai Yin Mr. Chan Pat Lam

14 September 2009

To the Shareholders

Dear Sir or Madam,

REFRESHMENT OF GENERAL MANDATES TO ISSUE AND ALLOT SHARES, PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL AND NOTICE OF EXTRAORDINARY GENERAL MEETING

INTRODUCTION

The purpose of this circular is:

• (i) to provide Shareholders with details of the proposed refreshment of the General Mandate and the proposed increase in the authorised share capital of the Company;

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LETTER FROM THE BOARD

• (ii) to set out the opinion of the Independent Financial Adviser to the Independent Board Committee of the Company and the Independent Shareholders on the proposed refreshment of the General Mandate;

• (iii) to set out the recommendation of the Independent Board Committee to the Independent Shareholders on the proposed refreshment of the General Mandate; and

• (iv) to give you notice of the EGM to consider and, if thought fit, to approve the refreshment of the General Mandate and the proposed increase in the authorised share capital of the Company.

REFRESHMENT OF THE GENERAL MANDATE

At the annual general meeting of the Company held on 2 June 2009, the Shareholders approved, among other things, an ordinary resolution to grant to the Directors the Existing General Mandate to issue, allot and deal with up to 914,951,070 Shares, which is equivalent to 20% of the then issued share capital of the Company on 2 June 2009.

In order to provide a flexible means for the Company to raise further funds through the issue of new Shares for its future business development, the Board proposes to refresh the general mandate to allow the Directors to issue and allot new Shares not exceeding 20% of the issued share capital of the Company as at the date of the EGM with the extension of any Shares repurchased by the Company under the repurchase mandate.

As the proposed refreshment to the General Mandate is being made prior to the Company’s next annual general meeting, pursuant to Rule 13.36(4) of the Listing Rules, the refreshment of the General Mandate will be subject to Independent Shareholders’ approval by way of poll at the EGM, where any controlling shareholders and their associates or, where there are no controlling shareholders, directors (excluding the independent non-executive Directors) and the chief executive of the Company shall abstain from voting in favour of the General Mandate. As at the Latest Practicable Date, the Company has no controlling shareholder for the purpose of the Listing Rules. As at the Latest Practicable Date, Mr. Cao Zhong, a chairman and an executive Director, was interested in 3,000,000 Shares, Mr. Wong Lik Ping, a vice-chairman and an executive Director, who together with his associates was interested in 673,171,900 Shares, Mr. So Kwok Hoo, an executive Director, was interested in 4,000,000 Shares, Mr. Liu Qingshan, an executive Director, who together with his associates was interested in 330,000 Shares, Mr. Shi Jianping, an non-executive Director, was interested in 2,454,000 Shares, will abstain from voting for the resolution in relation to the proposed refreshment of the General Mandate to be proposed at the EGM in accordance with Rule 13.36(4) of the Listing Rules respectively. Save for Mr. Cao Zhong, Mr. Wong Lik Ping, Mr. So Kwok Hoo, Mr. Liu Qingshan and Mr. Shi Jianping, no other Director or chief executive of the Company or their respective associates are interested in any Shares and will be required to abstain from voting at the EGM to approve the General Mandate.

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LETTER FROM THE BOARD

Based on the 4,994,955,352 Shares in issue as at the Latest Practicable Date and assuming that no further Shares are repurchased or issued prior to the EGM, subject to the passing of the relevant ordinary resolution to approve the General Mandate at the EGM, the Directors will be authorized to allot and issue up to a limit of 998,991,070 Shares under the General Mandate.

The Company is an investment holding company and the Group is principally engaged in the production and sales of coking coal products and side products. Notwithstanding that the proposed refreshment of the General Mandate is only approximately 3 months after the Existing General Mandate has been granted, the Directors consider that it is important for the Company to have more flexibility in raising fund so as to enable it to seize the investment opportunities that may arise. To this end, the Directors consider that even with the potential dilution effect of the shareholders’ interest by 16.67% if Shares are issued pursuant to the General Mandate, the refreshment of the General Mandate would allow the Company more flexibility in raising fund and expand and develop the business of the Company and thus it is in the interests of the Company and the Shareholders as a whole.

Capital-raising activities of the Company in the preceding 12 months

				Actual use of
				the proceeds as at
Date of			Intended use of	the Latest
announcement	Event	Net proceeds	proceeds	Practicable Date
21 July 2009	Subscription of	HK$1,718 million	For future acquisitions	Not yet utilized
	400,000,000		in the PRC and	as at the Latest
	new Shares		overseas, and capital	Practicable Date
			expenditures of the	(Note 2)
			Group_(Note 1)_

Notes:

1. As at the Latest Practicable Date, the intended use of the net proceeds of HK$1,718 million remained unchange.

2. As at the Latest Practicable Date, the Company had placed the proceeds on bank deposit.

Save for the above, the Company has not carried out other capital raising activities in the twelve months immediately preceding the date of this circular.

PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL

In order to accommodate future issues of Shares, as and when necessary, the Company proposes to increase its authorised share capital from HK$500,000,000 comprising 5,000,000,000 Shares to HK$1,000,000,000 comprising 10,000,000,000 Shares by the creation of additional 5,000,000,000 unissued Shares to rank pari passu in all respects with the existing Shares in the capital of the Company. As at the Latest Practicable Date, the authorised share capital of the Company was HK$500,000,000 divided into 5,000,000,000 Shares, of which 4,994,955,352 Shares had been issued and fully paid or credited as full paid.

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LETTER FROM THE BOARD

The proposed increase in the authorised share capital of the Company is conditional upon the passing of an ordinary resolution by the Shareholders at the EGM. No Shareholder is required to abstain from voting on the resolution approving the increase in the authorised share capital of the Company.

EGM

A notice of the EGM is set out on pages 16 to 18 of this circular. In accordance with the requirements of the Listing Rules, all votes to be taken at the EGM will be by poll. Pursuant to the requirements of Rule 13.36(4) of the Listing Rules, Mr. Cao Zhong, Mr. Wong Lik Ping, Mr. So Kwok Hoo, Mr. Liu Qingshan, Mr. Shi Jianping, being Directors, will abstain from voting for the resolution to be proposed at the EGM to approve the refreshment of the General Mandate.

A form of proxy for the EGM is enclosed herewith. Whether or not you intend to attend and vote at the EGM in person, you are requested to complete the form of proxy and return it to the Company’s share registrar in Hong Kong, Tricor Tengis Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong in accordance with the instructions printed thereon as soon as practicable but in any event no later than 48 hours before the time appointed for holding the EGM. Completion of the form of proxy will not preclude you from attending and voting at the EGM in person should you so wish.

RECOMMENDATION

Your attention is drawn to the letter from the Independent Board Committee set out on page 8 of this circular which contains its recommendation to the Independent Shareholders on the proposed refreshment of the General Mandate. Your attention is also drawn to the letter of advice from the Independent Financial Adviser as set out on pages 9 to 15 of this circular which contains, amongst other matters, its advice to the Independent Board Committee and the Independent Shareholders in relation to the General Mandate. Based on the advice from the Independent Financial Adviser and the Independent Board Committee, the Directors recommend the Independent Shareholders to approve the refreshment of the General Mandate.

The Directors also consider that the proposed increase in the authorised share capital of the Company is in the interests of the Company and the Shareholders as a whole, and accordingly, recommend all Shareholders to vote in favour of the relevant resolutions set out in the notice of the EGM.

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LETTER FROM THE BOARD

RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with respect to the Company. The information contained herein relating to the Company has been supplied by the Directors, who collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts not contained in this circular the omission of which would make any statement herein misleading insofar as it relates to the Company.

Yours faithfully By Order of the Board Cao Zhong Chairman

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

The following is the text of the letter of recommendation, prepared for the purpose of incorporation in the circular, from the Independent Board Committee to the Independent Shareholders regarding the refreshment of the General Mandate.

福山國際能源集團有限公司

FUSHAN INTERNATIONAL ENERGY GROUP LIMITED

(Incorporated in Hong Kong with limited liability under the Hong Kong Companies Ordinance)

(Stock Code: 639)

14 September 2009

To the Independent Shareholders

Dear Sir or Madam,

REFRESHMENT OF GENERAL MANDATE TO ISSUE AND ALLOT SHARES

We refer to the circular of the Company to the Shareholders dated 14 September 2009 (the “ Circular ”), in which this letter forms part. Unless the context requires otherwise, capitalised terms used in this letter will have the same meanings as defined in the Circular unless the context otherwise requires.

We have been appointed by the Board as the Independent Board Committee to advise the Independent Shareholders on whether the refreshment of the General Mandate is fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Group and the Shareholders as a whole.

We wish to draw your attention to the letter of advice from the Independent Financial Adviser as set out on pages 9 to 15 of the Circular and the letter from the Board as set out on pages 3 to 7 of the Circular.

Having considered, among other things, the factors and reasons considered by, and the opinion of the Independent Financial Adviser as stated in its letter of advice, we consider that the refreshment of the General Mandate is fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Group and the Shareholders as a whole.

Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolutions in relation to the General Mandate to be proposed at the EGM.

Yours faithfully, For and on behalf of the Independent Board Committee

Mr. Kee Wah Sze

Independent Non-executive director

Mr. Choi Wai Yin Mr. Chan Pat Lam Independent Non-executive director Independent Non-executive director

– 8 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the text of a letter received from the Independent Financial Adviser setting out its advice to the Independent Board Committee and the Independent Shareholders in respect of the refreshment of the General Mandate.

FIRST SHANGHAI CAPITAL LIMITED

19th Floor, Wing On House 71 Des Voeux Road Central Hong Kong

14 September 2009

To the Independent Board Committee and Independent Shareholders

Dear Sir or Madam,

REFRESHMENT OF GENERAL MANDATE TO ISSUE AND ALLOT SHARES

INTRODUCTION

We refer to our engagement to advise the Independent Board Committee and the Independent Shareholders in respect of the refreshment of the General Mandate, details of which are set out in the circular of the Company dated 14 September 2009 (the “ Circular ”) to the Shareholders, of which this letter forms a part. Unless the context otherwise requires, terms used in this letter shall have the same meanings as those defined in the Circular.

The Board proposes to seek the approval of the Independent Shareholders to refresh the General Mandate such that the Directors will be granted general authority to allot, issue and deal with new Shares not exceeding 20% of the aggregate nominal value of the issued share capital of the Company as at the date of the EGM. Pursuant to Rule 13.36(4)(a) of the Listing Rules, the refreshment of the General Mandate is subject to approval by the Independent Shareholders at the EGM by way of poll where 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 resolution approving the refreshment of the General Mandate. Save for Mr. Cao Zhong, a chairman and an executive Director, Mr. Wong Lik Ping (“Mr. Wong”), a vice-chairman and an executive Director, Mr. So Kwok Hoo, an executive Director, Mr. Liu Qingshan, an executive Director, and Mr. Shi Jianping, an non-executive Director, who were interested in the Shares as at the Latest Practicable Date, none of the Director, the chief executive of the Company and their respective associates are interested in any Shares and will be required to abstain from voting in favour of the relevant resolution at the EGM.

The Independent Board Committee, comprising the independent non-executive Directors, namely, Mr. Kee Wah Sze, Mr. Choi Wai Yin and Mr. Chan Pat Lam, has been established to advise and give recommendation to the Independent Shareholders regarding the refreshment of the General Mandate. We, First Shanghai Capital Limited, have been appointed as the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in this regard.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

BASIS OF OUR OPINION

In formulating our opinion, we have relied on the accuracy of the information and representations included in the Circular and provided to us by the Directors and the Group, and have assumed that all such information and representations made or referred to in the Circular and provided to us by the Directors and the Group were true at the time they were made and continued to be true at the date of the Circular and up to the date of the EGM. We have also assumed that all statements of belief, opinion and intention made by the Directors in the Circular were reasonably made after due enquiry. We have no reason to doubt the truth, accuracy and completeness of the information and representations provided to us by the Directors and have been advised by the Directors that no material facts have been withheld or omitted from the information provided and referred to in the Circular. We consider that we have reviewed sufficient information to reach an informed view and to justify reliance on the accuracy of the information contained in the Circular and to provide a reasonable basis for our advice. We have sought confirmation from the Directors that no material facts or information have been omitted from the information supplied and/or opinions expressed. We have not, however, conducted any independent verification of the information included in the Circular and provided to us by the Directors nor have we conducted any form of in-depth investigation into the business, affairs, financial position or prospects of the Group.

PRINCIPAL FACTORS AND REASONS TAKEN INTO ACCOUNT

In formulating our opinion on the refreshment of the General Mandate, we have taken the following principal factors and reasons into consideration:

1. Background to and reasons for the refreshment of the General Mandate

At the annual general meeting of the Company (“AGM”) held on 2 June 2009, the Existing General Mandate was given to the Directors to allot, issue and deal with new Shares up to a maximum of 20% of the aggregate nominal value of the issued share capital of the Company as at the date of the AGM with the extension of any Shares repurchased by the Company under the repurchase mandate. As at the date of the AGM, 4,574,755,352 Shares were in issue and accordingly, a maximum of 914,951,070 new Shares can be issued under the Existing General Mandate assuming that no Shares are repurchased by the Company pursuant to the repurchase mandate. As at the Latest Practicable Date, the Company has issued 400,000,000 new shares under the Existing General Mandate and has not refreshed the Existing General Mandate and has not repurchased any Shares since the date of the AGM.

On 21 July 2009, Mr. Wong and China Merit Limited (the “Vendors”), the Company, and Deutsche Bank AG, Hong Kong Branch and Credit Suisse (Hong Kong) Limited (the “Placing Agents”) entered into a placing and subscription agreement (the “Placing and Subscription Agreement”) pursuant to which the Placing Agents had agreed to act as agent of the Vendors and on a fully underwritten basis to procure purchasers to acquire, and the Vendors had agreed to sell, 600,000,000 Shares at the placing price of HK$4.38 per Share (the “Placing”). Pursuant to the Placing and Subscription Agreement, the Vendors had conditionally

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

agreed to subscribe for 400,000,000 new Shares at the subscription price of HK$4.38 per Share (the “Subscription”). Details of the Placing and the Subscription are set out in the announcement of the Company dated 21 July 2009. The Subscription was completed on 28 July 2009 and 400,000,000 Shares had been issued under the Existing General Mandate. The Company raised a net proceed of approximately HK$1,718 million from the Subscription which will be applied mainly for future acquisitions in the PRC and overseas, and capital expenditures of the Group.

Following completion of the Subscription, about half of the Existing General Mandate has been utilized and only 514,951,070 Shares, representing approximately 10.3% of the issued share capital of the Company, could be issued under the Existing General Mandate as at the Latest Practicable Date assuming no Shares will be repurchased by the Company pursuant to the repurchase mandate. Accordingly, the Board proposes to refresh the General Mandate for the Directors to allot, issue and deal with Shares not exceeding 20% of the aggregate nominal value of the issued share capital of the Company as at the date of the EGM.

As referred to in the “Letter from the Board” in the Circular, notwithstanding that the proposed refreshment of the General Mandate is only approximately 3 months after the Existing General Mandate has been granted, the Directors consider that it is important for the Company to have more flexibility in raising fund so as to enable it to seize the investment opportunities that may arise, and the refreshment of the General Mandate would provide the Company with more flexibility in raising fund, expanding and developing the business of the Company. Accordingly, the Board proposes to the Shareholders an ordinary resolution to refresh the General Mandate such that the Directors can exercise the power of the Company to allot, issue and deal with new Shares up to a maximum of 20% of the aggregate nominal value of the issued share capital of the Company as at the date of the EGM with the extension of any Shares repurchased by the Company under the repurchase mandate.

As at the Latest Practicable Date, there were 4,994,955,352 Shares in issue and 349,650,000 options (the “Options”) outstanding for the option holders to subscribe for 349,650,000 Shares. Among the Options, 68,600,000 options are exercisable before 25 April 2013 (the “Exercisable Option”) and 281,050,000 options are exercisable from 19 August 2011 to 19 August 2016, representing approximately 1.4% and 5.6% of the issued share capital of the Company as at the Latest Practicable Date, respectively. Subject to the approval of the Independent Shareholders for the refreshment of the General Mandate, and assuming that no Shares will be issued or repurchased by the Company and no Exercisable Options will be exercised between the Latest Practicable Date and the date of the EGM, the Directors would be allowed, after the refreshment of the General Mandate, to allot, issue and deal with 998,991,070 new Shares, not exceeding 20% of the aggregate nominal value of the issued share capital of the Company as at the date of the EGM without taking into account the extension by the number of Shares repurchased by the Company under the repurchase mandate.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

2. Terms of the General Mandate

As stated in the “Letter from the Board” in the Circular, an ordinary resolution will be proposed to refresh the General Mandate to allot, issue and deal with new Shares not exceeding 20% of the aggregate nominal value of the issued share capital of the Company as at the date of the EGM with the extension of any Shares repurchased by the Company under the repurchase mandate. In addition, the refreshed General Mandate will continue to be in force for a fixed period only, effective from the EGM until the earlier of (i) the conclusion of the next annual general meeting of the Company; or (ii) the expiration of the period within which the next general meeting of the Company is required by the Articles of the Company or the Companies Ordinance (Chapter 32 of the Laws of Hong Kong) to be held; or (iii) the revocation or variation of the authority given under such resolution by an ordinary resolution of the Shareholders in general meeting. Such duration is in compliance with the requirement of the Listing Rules and would be an effective mechanism enabling the Shareholders to review and monitor how the refreshed General Mandate is or has been exercised by the Directors. Besides, the Directors (excluding the independent non-executive Directors) and the chief executive of the Company and their respective associates shall abstain from voting in relation to the resolution to approve the refreshment of the General Mandate at the EGM.

We note that the terms of the refreshment of the General Mandate are in compliance with the Listing Rules and consider the terms thereof are fair and reasonable to the Company and in the interest of the Company and the Shareholders as a whole.

3. Current financial resources and financial flexibility

As disclosed in the annual report of the Company for the year ended 31 December 2008 (the “Annual Report”), the Group had audited cash and cash equivalent of approximately HK$760 million as at 31 December 2008. The cash and cash equivalent balance of the Group should have increased significantly as a result of the net proceeds of approximately HK$1,718 million raised from the Subscription which is intended to apply mainly for future acquisition in the PRC and overseas, and capital expenditure of the Group. According to the Annual Report, the Group had capital commitment of approximately HK$454 million as at 31 December 2008 mainly for the acquisition of property, plant and equipment.

The Group is principally engaged in the production and sales of coking coal products and side products. As set out in the Annual Report, the Group will proactively implement its merger and acquisition strategy, and has taken the initiative to negotiate with coal mine operations in relation to the merger and acquisition arrangement. Given the Existing General Mandate has been largely utilized, may any investment opportunities arise that would require the issuance of new Shares and specific mandate may have to be sought in this respect, the

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Directors are uncertain as to whether the requisite approval from the Shareholders could be obtained in a timely manner. In addition, the refreshment of the General Mandate will provide the Company more flexibility in raising fund and expand and develop the business of the Company.

In light of the above, we are of the opinion that the refreshment of the General Mandate would provide the Company with the necessary flexibility essential for fulfilling any possible funding needs to seize any investment opportunities that may arise from time to time. As such, we are of the view that the refreshment of the General Mandate will be in the interests of the Company and the Shareholders as a whole.

4. Other financing alternatives

As advised by the Company, apart from equity financing, the Group will also consider other financing alternatives such as debt financing and bank borrowings. However, the Group will consider the cost and other terms of the funding to decide the means of financing in order to maximum the benefit to the Shareholders. In addition, these alternatives may subject to lengthy due diligence and negotiations. The Directors advised us that they would exercise due and careful consideration when choosing the best method of financing for the Group.

We consider that the refreshment of the General Mandate will provide the Company with an additional financing alternative and it is reasonable for the Company to have the flexibility in deciding the financing methods for its future business development and the efficient use of its fund. Based on the above, we are of the view that the refreshment of the General Mandate is in the interests of the Company and the Shareholders as a whole.

5. Potential dilution to Independent Shareholders’ shareholdings

The table below sets out the shareholdings of the Company (i) as at the Latest Practicable Date; (ii) after full utilization of the refreshed General Mandate assuming that no further Shares are issued or repurchased by the Company following the Latest Practicable Date and prior to the date of the EGM but before the exercise of any Exercisable Options; and (iii) after full utilization of the refreshed General Mandate assuming that no further Shares are issued or repurchased by the

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Company following the Latest Practicable Date and prior to the date of the EGM and after the exercise in full of the Exercisable Options:

Fine Power Group Limited and its associates_(Note) Mr. Wong(Note) Mr. Xing Libin(Note)_ Other public Shareholders Exercise of the refreshed General Mandate Exercise of the Exercisable Options (other than those held by Mr. Wong) Total	As at the Latest Practicable Date Number of Shares Approximate % 1,000,000,000 20.02 673,171,900 13.48 638,770,536 12.79 2,683,012,916 53.71 – – – – 4,994,955,352 100.00	After full utilization of the refreshed General Mandate but before exercise of any Exercisable Options Number of Shares Approximate % 1,000,000,000 16.68 673,171,900 11.23 638,770,536 10.66 2,683,012,916 44.76 998,991,070 16.67 – – 5,993,946,422 100.00	After full utilization of the refreshed General Mandate and after full exercise of the Exercisable Options Number of Shares Approximate % 1,000,000,000 16.49 675,171,900 11.14 638,770,536 10.54 2,683,012,916 44.26 998,991,070 16.48 66,600,000 1.09 6,062,546,422 100.00	After full utilization of the refreshed General Mandate and after full exercise of the Exercisable Options Number of Shares Approximate % 1,000,000,000 16.49 675,171,900 11.14 638,770,536 10.54 2,683,012,916 44.26 998,991,070 16.48 66,600,000 1.09 6,062,546,422 100.00
				100.00

Note: Based on disclosure of interests as posted in the website of Stock Exchange as at the Latest Practicable Date.

As illustrated in the table above, after the full utilization of the refreshed General Mandate assuming that no further Shares are issued or repurchased by the Company following the Latest Practicable Date and prior to the date of the EGM, a total of 998,991,070 new Shares, representing 20% of the issued share capital of the Company as at the Latest Practicable Date, would be issued. Assuming no exercise of the Exercisable Options and after full utilization of the refreshed General Mandate with no further Shares being issued or repurchased by the Company following the Latest Practicable Date and prior to the date of the EGM, the aggregate shareholding of the other existing public Shareholders will be diluted from approximately 53.71% as at the Latest Practicable Date to approximately 44.76%. Assuming the full utilization of the refreshed General Mandate with no further Shares being issued or repurchased by the Company following the Latest Practicable Date and prior to the date of the EGM and after the exercise in full of the Exercisable Options, the aggregate shareholding of the other existing public Shareholders will be diluted from approximately 53.71% as at the Latest Practicable Date to approximately 44.26%.

Taking into account the benefits of the refreshment of the General Mandate as discussed above and the fact that the shareholding of all Shareholders will be diluted proportionately, we consider the above potential dilution of shareholding to be acceptable.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

RECOMMENDATION

Having considered the above principal factors and reasons for the refreshment of the General Mandate, we consider that the terms of the General Mandate are fair and reasonable so far as the Company and the Independent Shareholders are concerned and the refreshment of the General Mandate is in the interests of the Company and the Independent Shareholders as a whole. Accordingly, we advise the Independent Board Committee and the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the EGM to approve the refreshment of the General Mandate.

Yours faithfully, For and on behalf of First Shanghai Capital Limited Helen Zee Fanny Lee Managing Director Executive Director

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NOTICE OF EGM

福山國際能源集團有限公司

FUSHAN INTERNATIONAL ENERGY GROUP LIMITED

(Incorporated in Hong Kong with limited liability under the Hong Kong Companies Ordinance) (Stock Code: 639)

NOTICE IS HEREBY GIVEN that an extraordinary general meeting of Fushan International Energy Group Limited (the “ Company ”) will be held at Falcon Room I Luk Kwok Hotel at 72 Gloucester Road, Wanchai, Hong Kong on Wednesday, 30 September 2009 at 11:00 a.m. for the purpose of considering and, if thought fit, passing with or without amendments, the following resolutions as ordinary resolutions of the Company:

ORDINARY RESOLUTIONS

• (1) “ THAT :

• (a) subject to paragraph (c) of this Resolution, the exercise by the directors of the Company (“ Directors ”) during the Relevant Period (as hereinafter defined) of all the powers of the Company to allot, issue or otherwise deal with additional shares of the Company (“ Shares ”) or securities convertible into Shares, options, warrants or similar rights to subscribe for any Shares, and to make or grant offers, agreements, options and rights of exchange or conversion which might require the exercise of such powers, be and is hereby generally and unconditionally approved;

• (b) the approval given in paragraph (a) of this Resolution shall authorise the Directors during the Relevant Period to make or grant offers, agreements and options which might require the exercise of such powers after the end of the Relevant Period;

• (c) the aggregate nominal amount of share capital allotted or agreed conditionally or unconditionally to be allotted (whether pursuant to an option or otherwise) and issued by the Directors pursuant to the approval given in paragraph (a) of this Resolution, otherwise than pursuant to:

  • (i) a Rights Issue (as hereinafter defined);

  • (ii) the exercise of the rights of subscription or conversion attaching to any warrants issued by the Company or any securities which are convertible into Shares;

  • (iii) the exercise of any option scheme or similar arrangement for the time being adopted for the grant or issue to eligible persons of Shares or rights to acquire Shares; or

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NOTICE OF EGM

• (iv) any scrip dividend or similar arrangement providing for the allotment of Shares in lieu of the whole or part of a dividend on Shares pursuant to the Articles of Association (the “ Articles ”) of the Company from time to time,

shall not in total exceed 20% of the aggregate nominal amount of the share capital of the Company in issue at the date of the passing of 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 earlier of:

• (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 Articles of the Company or the Companies Ordinance (Chapter 32 of the Law of Hong Kong) to be held;

• (iii) the revocation or variation of the authority given under this Resolution by an ordinary resolution of the shareholders of the Company (the “ Shareholders ”) in general meeting; and

“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 whose names stand on the register of members of the Company on a fixed record date in proportion to their then holdings of such Shares at that date (subject to such exclusion 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 any stock exchange in any territory applicable to the Company).”

• (2) “ THAT , the authorised share capital of the Company be and is hereby increased from HK$500,000,000 to HK$1,000,000,000 by the creation of additional 5,000,000,000 unissued Shares to rank pari passu in all respects with the existing shares in the capital of the Company.”

By Order of the Board Cao Zhong Chairman

Hong Kong, 14 September 2009

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NOTICE OF EGM

Notes:

1. A form of proxy for use at the meeting is enclosed herewith.

2. The instrument appointing a proxy shall be in writing under the hand of the appointer or his/her attorney duly authorised in writing or, if the appointer is a corporation, either under its seal or under the hand of any officer, attorney or other person authorised to sign the same.

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

4. In order to be valid, a form of proxy in the prescribed form together with the power of attorney or other authority (if any) under which it is signed must be deposited at the Company’s share registrar in Hong Kong, Tricor Tengis Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong not less than 48 hours before the time fixed for holding the meeting.

5. Completion and return of the form of proxy will not preclude you from attending and voting in person at the meeting or at any adjourned meeting thereof (as the case may be) should you so wish, and in such an event, the form of proxy shall be deemed to be revoked.

6. Where there are joint registered holders of any share, any one of such joint holders may vote, either in person or by proxy, in respect of such shares as if he/she was solely entitled thereto, but if more than one of such joint holders are present at the meeting, whether in person or by proxy, the joint registered holder present whose name stands first on the register of members in respect of the shares shall be accepted to the exclusion of the votes of the other registered holders.

As at the date of this notice, the Board comprises Mr. Cao Zhong (Chairman), Mr. Wong Lik Ping (Vice-chairman), Mr. So Kwok Hoo, Mr. Xue Kang and Mr. Liu Qingshan as executive Directors; Mr. Chen Zhouping, Mr. Leung Shun Sang Tony and Mr. Shi Jianping as non-executive Directors; and Mr. Kee Wah Sze, Mr. Choi Wai Yin and Mr. Chan Pat Lam as independent non-executive Directors.

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