Hephaestus Holdings Limited — M&A Activity 2013

May 10, 2013

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

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

PAN ASIA MINING LIMITED 宸亞礦業有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 8173)

SUPPLEMENTAL ANNOUNCEMENT

DISCLOSABLE AND CONNECTED TRANSACTION INVOLVING
ISSUE OF CONSIDERATION SHARES
UNDER SPECIFIC MANDATE

Reference is made to the announcement of the Company dated 27 March 2013 ("Announcement"). Capitalized terms used herein shall have the same meanings as those defined in the Announcement, unless the context otherwise required.

As disclosed in the Announcement, on 27 March 2013, after trading hours, the Company, the Purchaser, the Vendor and the Vendor's Guarantor had entered into the Sale and Purchase Agreement, pursuant to which the Purchaser, a wholly-owned subsidiary of the Company, has conditionally agreed to purchase and the Vendor has conditionally agreed to sell the Sale Share, representing the entire issued share capital of the Target Company, at the Consideration of HK$50,050,000 (subject to Adjustment), which shall be settled by the Company through allotting and issuing the Consideration Shares at an issue price of HK$0.55 per Consideration Share credited as fully paid.

Subsequent to the Sale and Purchase Agreement, on 10 May 2013, the Company, the Purchaser, the Vendor and the Vendor's Guarantor entered into a supplemental agreement ("Supplemental Agreement") to amend the Adjustment and settlement terms of the Consideration under the Sale and Purchase Agreement. The table below sets out the relevant original terms in the Sale and Purchase Agreement and the amended terms in the Supplemental Agreement:

Consideration Adjustment and Settlement Terms

	Original terms in the Sale and Purchase Agreement	Amended terms in the Supplemental Agreement
1.	The Consideration for the Sale Share is HK$50,050,000 subject to the Adjustment as stated below:

---

	(a) in the event that the Profit of the Target Group for the Guaranteed Period is not less than HK$ 3,700,000, the Consideration shall be HK$50,050,000;
	(b) in the event that the Profit of the Target Group for the Guaranteed Period is HK$3,000,000 or more but less than HK$3,700,000, the Consideration shall be adjusted to HK$40,700,000;	(b) in the event that the Profit of the Target Group for the Guaranteed Period is more than HK$1,000,000 but less than HK$3,700,000, the Consideration shall be reduced by HK$1,350,250 per HK$100,000 shortfall from HK$3,700,000. Any shortfall less than HK$100,000 will be rounded up to HK$100,000; and
	(c) in the event that the Profit of the Target Group for the Guaranteed Period is less than HK$3,000,000, the Consideration shall be adjusted to HK$31,350,000;	(c) in the event that the Profit of the Target Group for the Guaranteed Period is HK$1,000,000 or less, the Consideration shall be adjusted to HK$13,593,250.
2.	The Consideration shall be settled by the Purchaser and the Company by way of allotting and issuing up to a maximum of 91,000,000 Consideration Shares at an issue price of HK$0.55 per Consideration Share credited as fully paid by the Company to the Vendor (or its nominee(s) as it may direct) in the following manner:
	(a) upon Completion, an initial consideration of HK$31,350,000 shall be paid by way of allotting and issuing 57,000,000 Consideration Shares (the “Initial Consideration”); and	(a) upon Completion, an Initial Consideration of HK$13,593,250 shall be paid by way of allotting and issuing 24,715,000 Consideration Shares (the “Initial Consideration”); and
	(b) within five (5) Business Days after the issue of the Target Group Audited Accounts, the remaining of the Consideration (i.e. the Consideration (after Adjustment) minus the paid Initial Consideration), if any, shall be paid by way of allotting and issuing up to 34,000,000 Consideration Shares (“Final Consideration”).	(b) within five (5) Business Days after the issue of the Target Group Audited Accounts, the remaining of the Consideration (i.e. the Consideration (after Adjustment) minus the paid Initial Consideration), if any, shall be paid by way of allotting and issuing up to 66,285,000 Consideration Shares (“Final Consideration”).

Save for the above, all terms and conditions of the Sale and Purchase Agreement remain unchanged. The amended terms contained in the Supplemental Agreement have been arrived amongst the Company, the Purchaser, the Vendor and the Vendor's Guarantor, after arms'

---

length negotiations.

The Board is of the view that the amended terms in the Supplemental Agreement are more favourable to the Company as compared with the original ones in the Sale Purchase Agreement based on the reason that (i) the must-pay Initial Consideration under the Supplemental Agreement is reduced from HK$31,350,000 to HK$13,593,250; and (ii) the Supplemental Agreement introduces a mechanism with the effect to reduce the Final Consideration by HK$1,350,250 for every HK$100,000 shortfall from the targeted Profit of HK$3,700,000.

The Directors (excluding the independent non-executive Directors whose opinion will be subject to the advice of the independent financial adviser and excluding the Vendor's Guarantor who has material interest in the Sale and Purchase Agreement and has abstained from voting in the meeting of the Board) are of the view that the terms of the Sale and Purchase Agreement as amended by the Supplemental Agreement are fair and reasonable and are on normal commercial terms and the Acquisition contemplated thereunder are in the interest of the Company and the Shareholders as a whole.

By order of the Board
Pan Asia Mining Limited
KOH Tat Lee, Michael
Chairman

Hong Kong, 10 May 2013

As of the date of this announcement, the Board comprises three executive Directors, Mr. KOH Tat Lee, Michael, Mr. ENG Wee Meng and Mr. CHEUNG Hung Man, two non-executive Directors, Mr. YIN Mark Teh-min and Mr. LIANG Tong Wei, and three independent non-executive Directors, Mr. LAI Kai Jin, Michael, Mr. CHU Hung Lin, Victor and Mr. TONG Wan Sze.

This announcement, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the GEM 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 announcement 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 announcement misleading.

This announcement will remain on the page of "Latest Company Announcement" on the GEM website for at least seven days from the date of its posting.

3