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

If you have sold or transferred all your shares in Pan Asia Mining Limited, you should at once hand this circular with the enclosed form of proxy to the purchaser or transferee or to the bank, licensed securities dealer or registered institution in securities or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company 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.

This circular is not and does not constitute an invitation or offer to acquire, purchase or subscribe for the shares or other securities of the Company.

This circular, for which the directors of the Company collectively and individually accept full responsibility, includes particulars given in compliance with the Rules Governing the Listing of Securities on the Growth Enterprise Market of The Stock Exchange of Hong Kong Limited 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 in this circular misleading.

PAN ASIA MINING LIMITED

寰亞礦業有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 8173)

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

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

吕江證券融資(香港)有限公司

CHANGJIANG CORPORATE FINANCE (HK) LIMITED

A letter from the Board is set out from pages 6 to 18 of this circular. A letter of recommendation from the Independent Board Committee to the Independent Shareholders is set out from pages 19 to 20 of this circular. A letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders is set out from pages 21 to 34 of this circular.

A notice convening the EGM to be held at Suite 3008, Tower One, Times Square, 1 Matheson Street, Causeway Bay, Hong Kong on 28 May 2013 at 4:00 p.m. is set out on pages 42 to 43 of this circular. A form of proxy is also enclosed. Whether or not you are able to attend and vote at the EGM in person, you are requested to complete and return the accompanying form of proxy in accordance with the instructions printed thereon to the branch registrar of the Company in Hong Kong, Tricor Tengis Limited, at 26th Floor, Tesbury Centre, 28 Queen's Road East, Hong Kong as soon as possible and in any event not later than 48 hours before the time appointed for holding the EGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from subsequently attending and voting at the EGM or any adjournment thereof, should you so wish. This circular will remain on the GEM website at www.hkgem.com on the "Latest Company Announcements" page for at least seven days from the date of its posting.

10 May 2013

CHARACTERISTICS OF GEM

GEM has been positioned as a market designed to accommodate companies to which a high investment risk may be attached than other companies listed on the Stock Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. The greater risk profile and other characteristics of GEM mean that it is a market more suited to professional and other sophisticated investors.

Given the emerging nature of companies listed on GEM, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the Main Board of the Stock Exchange and no assurance is given that there will be a liquid market in the securities traded on GEM.

CONTENTS

Page

Definitions 1
Letter from the Board 6
Letter from the Independent Board Committee 19
Letter from the Independent Financial Adviser 21
Appendix — General Information 35
Notice of EGM 42

ii -

DEFINITIONS

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

“Acquisition” the acquisition of the Sale Share by the Company pursuant to the Sale and Purchase Agreement;

“Adjustment” the adjustment of Consideration as described in the section headed “Letter from the Board — 2. the Sale and Purchase Agreement — Consideration” in this circular;

“associates” has the meaning ascribed to it under the GEM Listing Rules;

“Board” the board of Director(s);

“Business Day” a day (excluding a Saturday or Sunday) on which banks in Hong Kong are generally open for business;

“Company” Pan Asia Mining Limited, a company incorporated in Cayman Islands, the Shares of which are listed on the GEM;

“Completion” completion of the sale and purchase of the Sale Share;

“Completion Date” the day on which Completion takes place in accordance with the provisions of the Sale and Purchase Agreement;

“connected persons” has the meaning ascribed to it under the GEM Listing Rules;

“Consideration” HK$50,050,000 (subject to Adjustment), comprising the Initial Consideration and the Final Consideration;

“Consideration Shares” the new Shares to be allotted and issued at an issue price of HK$0.55 each by the Company credited as fully paid in favour of the Vendor (or its nominee(s) as it may direct) for the settlement of the Consideration under the Sale and Purchase Agreement;

“Convertible Bonds” the convertible bonds in the principle amount of US$655,128,205 issued by the Company to Kesterion Investments Limited on 18 December 2008, of which US$201,474,359 remain outstanding;

“Deed of Indemnity” the deed of indemnity to be entered into by the Vendor and the Vendor’s Guarantor in favour of the Company and the Purchaser before or upon Completion in relation to the tax liabilities of the Target Group prior to Completion and other liabilities as specified therein;

DEFINITIONS

“Director(s)”
the director(s) of the Company;

“EGM”
the extraordinary general meeting of the Company to be convened and held for the Independent Shareholders to consider and approve (among other things), if thought fit, the terms of the Acquisition as contemplated under the Sale and Purchase Agreement including the allotment and issue of the Consideration Shares and the grant of Specific Mandate;

“Encumbrances”
rights of pre-emption, options, liens, claims, equities, charges, mortgages, pledges, third-party rights or interests of any nature;

“Enlarged Group”
the Group and the Target Group and for the purposes of the appendix to this circular, references to “Enlarged Group” shall be construed to include the Group, the Target Company and the PRC Company only;

“Final Consideration”
the remainder of the Consideration (after Adjustment) minus the Initial Consideration;

“GEM”
the Growth Enterprise Market of the Stock Exchange;

“GEM Listing Rules”
the Rules Governing the Listing of Securities on the GEM;

“Group”
the Company and its subsidiaries;

“Guaranteed Period”
the period from 1 April 2013 to 31 March 2014 provided that if at any time prior to 31 March 2014, the consolidated profit after tax of the Target Group amounts to HK$3,700,000 or above, the Vendor and the Purchaser may agree to shorten the aforesaid period accordingly;

“HK$”
Hong Kong dollars, the lawful currency of Hong Kong;

“Hong Kong”
the Hong Kong Special Administrative Region of the PRC;

“Independent Board Committee”
an independent board committee of the Company constituted to consider the Acquisition and the allotment and issue of the Consideration Shares as contemplated under the Sale and Purchase Agreement and to advise and make recommendations to the Independent Shareholders as to how to vote at the EGM on the ordinary resolutions in respect thereof;

DEFINITIONS

“Independent Financial Adviser” or “Changjiang”

Changjiang Corporate Finance (HK) Limited, a licensed corporation to carry out type 6 (advising on corporate finance) regulated activities under the SFO and being the independent financial adviser appointed by the Company to advise the Independent Board Committee and Independent Shareholders in respect of the Acquisition and the allotment and issue of the Consideration Shares as contemplated under the Sale and Purchase Agreement;

“Independent Shareholders”

Shareholders other than the Vendor, the Vendor’s Guarantor and their respective associates and any Shareholder who has a material interest in the Acquisition and the allotment and issue of the Consideration Shares contemplated under the Sale and Purchase Agreement;

“Initial Consideration”

the initial consideration of HK$13,593,250;

“Latest Practicable Date”

9 May 2013, being the latest practicable date before the printing of this circular for ascertaining certain information contained herein;

“License”

the license to operate coal business (煤炭經營許可證) issued by Fujian Provincial Economic and Trade Commission to the PRC Company on 24 May 2010 with an initial validity period from 24 May 2010 to 24 May 2013, which has been extended to 30 July 2016;

“Long Stop Date”

30 September 2013 or such other date as may be agreed amongst the parties in writing;

“PRC”

the People’s Republic of China, but for the purposes of this circular only, excluding Hong Kong, Macau and Taiwan;

“PRC Company”

廈門耀中亞太貿易有限公司 (Xiamen Yaozhong Asia-Pacific Trading Co., Ltd.), a wholly foreign owned enterprise established in the PRC, which entire equity interest is owned by the Target Company;

“Profit”

the consolidated profit after tax of the Target Group for the Guaranteed Period as shown in the Target Group Audited Accounts and as described in the section headed “Letter from the Board — 2. The Sale and Purchase Agreement — Consideration” in this circular;

“Purchaser”

Black Sand Enterprises Limited, a company incorporated under the laws of Hong Kong, which is a wholly-owned subsidiary of the Company;

DEFINITIONS

"Sale and Purchase Agreement" the Sale and Purchase Agreement entered into among the Company, the Purchaser, the Vendor and the Vendor's Guarantor dated 27 March 2013 (as amended by a supplemental agreement dated 10 May 2013) in relation to the Acquisition;

"Sale Share" 1 share of HK$1.00 each in the share capital of the Target Company, representing the entire issued share capital of the Target Company as at the Latest Practicable Date and Completion;

"SFO" the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong);

"Share Options" the share options granted under two share option schemes adopted by the Company on 25 April 2002 and 30 July 2012 respectively;

"Shareholder(s)" person(s) whose name(s) appear on the register of members as registered holder(s) of Share(s);

"Shares" the shares of HK$0.50 each in the share capital of the Company which are listed and traded on the GEM;

"Specific Mandate" the specific mandate in relation to allotment and issue of the Consideration Shares to be sought from the Independent Shareholders at the EGM;

"Stock Exchange" The Stock Exchange of Hong Kong Limited;

"subsidiary" shall have the respective meanings assigned to those expressions by section 2 of the Companies Ordinance (Cap.32 of the Laws of Hong Kong), save that any reference therein to a company shall be deemed to include a reference to a body corporate incorporated or established outside Hong Kong or under any other ordinances of the laws of Hong Kong and to any unincorporated body of persons;

"Target Company" Brighton Asia Pacific Investment Holdings Limited (耀中亞太控股有限公司), a company incorporated under the laws of Hong Kong with limited liabilities, which is wholly-owned by the Vendor;

"Target Group" the Target Company and the PRC Company;

DEFINITIONS

“Target Group Audited Accounts”
an audited consolidated accounts of the Target Group to be prepared and issued by the auditors appointed by the Company in accordance with the accounting principles and practices generally accepted in Hong Kong so as to ascertain the Profit for the Guaranteed Period;

“Trading Day”
the day on which the Shares are traded on the Stock Exchange;

“US$”
the United States dollars, the lawful currency of the United States of America;

“Vendor”
Brighton Asia Pacific Investment Limited, a company incorporated under the laws of British Virgin Islands, which is wholly owned by the Vendor’s Guarantor;

“Vendor’s Guarantor”
Mr. Cheung Hung Man, who is an executive Director; and

“%”
per cent.

LETTER FROM THE BOARD

PAN ASIA MINING LIMITED 寰亞礦業有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 8173)

Executive Directors:
Mr. Koh Tat Lee, Michael
Mr. Eng Wee Meng
Mr. Cheung Hung Man

Non-executive Director:
Mr. Yin Mark Teh-min
Mr. Liang Tong Wei

Independent non-executive Directors:
Mr. Lai Kai Jin, Michael
Mr. Chu Hung Lin, Victor
Mr. Tong Wan Sze

Registered Office:
P.O. Box 309
Ugland House
South Church Street
George Town
Grand Cayman
Cayman Islands
British West Indies

Principal place of business in Hong Kong:
Suite 3008, Tower One,
Times Square
One Matheson Street
Causeway Bay, Hong Kong

10 May 2013

To the Shareholders

Dear Sir/Madam,

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

1. INTRODUCTION

The Company had, by the announcements dated 27 March 2013 and 10 May 2013, announced that the Company, the Purchaser, the Vendor and the Vendor's Guarantor had entered into the Sale and Purchase Agreement. Pursuant to the Sale and Purchase Agreement, 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 fully settled by the allotment and issue of the Consideration Shares.

LETTER FROM THE BOARD

In addition, given the Vendor is a company wholly owned by the Vendor's Guarantor, who is an executive Director of the Company, the Vendor and the Vendor's Guarantor are connected persons to the Company and therefore the entering into of the Sale and Purchase Agreement also constitutes a connected transaction for the Company. Since the relevant percentage ratios in respect of the Acquisition are less than 25% but the Consideration (subject to Adjustment) is more than HK$10,000,000, the entering into the Sale and Purchase Agreement shall be subject to reporting, announcement and the approval of the Independent Shareholders as required under Chapter 20 of the GEM Listing Rules.

The purpose of this circular is (i) to provide Shareholders with further details in relation to the Acquisition and the allotment and issue of the Consideration Shares as contemplated under the Sale and Purchase Agreement, and the Specific Mandate for the allotment and issue of the Consideration Shares; (ii) to set out the recommendations of the Independent Board Committee to the Independent Shareholders on the Acquisition and the allotment and issue of the Consideration Shares as contemplated under the Sale and Purchase Agreement; (iii) to set out the recommendations of the Company's independent financial adviser, Changjiang, to the Independent Board Committee and the Independent Shareholders; and (iv) to give notice of the EGM.

2. THE SALE AND PURCHASE AGREEMENT

The details of the Sale and Purchase Agreement are set out below:

Date

27 March 2013 (amended on 10 May 2013)

Parties

Company : Pan Asia Mining Limited

Purchaser : Black Sand Enterprises Limited, a wholly-owned subsidiary of the Company

Vendor : Brighton Asia Pacific Investment Limited, a company incorporated under the laws of British Virgin Islands, which is wholly owned by the Vendor's Guarantor

Vendors' Guarantor : Mr. Cheung Hung Man, who is an executive Director of the Company

Given the Vendor is a company wholly owned by the Vendor's Guarantor, who is an executive Director of the Company, the Vendor and the Vendor's Guarantor are connected persons to the Company.

LETTER FROM THE BOARD

The Acquisition of Sale Share

Subject to the terms and conditions of the Sale and Purchase Agreement, the Vendor shall sell as legal and beneficial owner and the Purchaser shall purchase the Sale Share, representing the entire issued share capital of the Target Company, upon Completion.

The Target Company is an investment holding company incorporated under the laws of Hong Kong, which holds the entire equity interest in the PRC Company, a wholly foreign owned enterprise established in the PRC.

The Sales Share shall be acquired by the Purchaser free from all Encumbrances and together with all rights now or hereafter attaching thereto including all rights to any dividend or other distribution declared, made or paid after the date of the Sale and Purchase Agreement.

Consideration

The Consideration for the Sale Share as set out in the Sale and Purchase Agreement dated 27 March 2013 and further amended by a supplemental agreement dated 10 May 2013 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 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 HK$1,000,000 or less, the Consideration shall be adjusted to HK$13,593,250.

To ascertain the Profit of the Target Group in the Guaranteed Period, the Target Group Audited Accounts for the Guaranteed Period will be prepared and issued by the auditors appointed by the Company in accordance with the accounting principles and practices generally accepted in Hong Kong within three months after the expiry of the Guaranteed Period (or such reasonably extended date as the Purchaser and the Company may agree).

For the avoidance of doubt, save and except for the Adjustment as illustrated above, no additional compensation will be provided by the Vendor to the Purchaser as to the future business performance of the Target Group after Completion.

The Company will make further announcement if the Profit of the Target Group for the Guaranteed Period is less than HK$3,700,000. In addition, the independent non-executive Directors will provide an opinion in the Company's next annual report and accounts as to whether the Profit has been fulfilled and whether any Adjustment has been made after receiving the Target Group Audited Accounts to ascertain the Profit.

LETTER FROM THE BOARD

The Consideration as set out in the Sale and Purchase Agreement dated 27 March 2013 and further amended by a supplemental agreement dated 10 May 2013 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, the Initial Consideration of HK$13,593,250 shall be paid by way of allotting and issuing 24,715,000 Consideration Shares; and
(b) within five (5) Business Days after the issue of the Target Group Audited Accounts, the Final Consideration (i.e. the remainder of 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.

The Company considered that the Consideration offered by the Vendor is reasonable because the price/earnings ("PE") ratio derived by dividing the Consideration by the Profit is in line or lower than the market PE ratios of other listed companies having coal business in operation. Further analysis details are contained in the letter from Independent Financial Adviser.

Besides, the Consideration (including the issue price of the Consideration Shares and the Adjustment) and the relevant settlement were agreed amongst the Company, the Purchaser, the Vendor and the Vendor's Guarantor, after arms' length negotiations after taking into account various relevant factors including the business nature of the Target Group, the License possessed by the Target Group, the latest financial position and results of the Target Group and the past stock price performance of the Company.

Consideration Shares

The issue price for the Consideration Shares of HK$0.55 per Consideration Share represents:

(a) a premium of approximately 10% from HK$0.50, being the closing price of the Shares on 9 May 2013, the Latest Practicable Date;
(b) a premium of approximately 1.85% from HK$0.540, being the closing price of the Shares on 27 March 2013, the last Trading Day immediately preceding the date of the Sale and Purchase Agreement;
(c) a premium of approximately 1.85% from HK$0.540, being the average closing price of the Shares for the last five (5) consecutive Trading Days prior to the date of the Sale and Purchase Agreement;
(d) a premium of approximately 0.55% from HK$0.547, being the average closing price of the Shares for the last ten (10) consecutive Trading Days prior to the date of the Sale and Purchase Agreement; and

LETTER FROM THE BOARD

(e) a discount of approximately 26.5% to the audited consolidated net asset value per Share of the Company as at 31 March 2012 of HK$0.748 per Share.

The 91,000,000 Consideration Shares, if fully allotted and issued, having an aggregated nominal value of HK$45,500,000, represents approximately 9.91% of the existing issued share capital of the Company as at the Latest Practicable Date and approximately 9.02% of the issued share capital of the Company as enlarged by the allotment and issue of the Consideration Shares (assuming there shall be no change of the issued share capital of the Company since the Latest Practicable Date up to the payment of the Final Consideration).

As at the Latest Practicable Date, the Company has 918,184,080 Shares in issue and 85,412,800 and 68,955,682 Shares required to be issued upon full exercise of all the Share Options and the Convertible Bonds respectively. The following table sets forth the shareholding structure of the Company based on shares in issue (i) as at the Latest Practicable Date; and (ii) immediately after the issue of the Consideration Shares upon the payment of the Initial Consideration at Completion (assuming there shall be no change of the issued share capital of the Company since the Latest Practicable Date up to the Completion Date); and (iii) immediately after the issue of the Consideration Shares upon the payment of the Final Consideration after the issue of the Target Group Audited Accounts (assuming there shall be no change of the issued share capital of the Company since the Latest Practicable Date up to payment of the Final Consideration (except for the issue of 24,715,000 Consideration Shares upon payment of the Initial Consideration) and there shall be no Adjustment made to the Consideration):

Name of Shareholders	(i) As at the Latest Practicable Date		(ii) Immediately after the issue of Consideration Shares upon payment of the Initial Consideration		(iii) Immediately after the issue of the Consideration Shares upon payment of the Final Consideration
	No. of Shares	Approximate %	No. of Shares	Approximate %	No. of Shares	Approximate %
Kesterion Investments Limited (Note 1)	272,558,400	29.68	272,558,400	28.91	272,558,400	27.01
Wong Eva	271,200	0.03	271,200	0.03	271,200	0.03
Sub-total:	272,829,600	29.71	272,829,600	28.94	272,829,600	27.03
Liang Tong Wei (Note 2)	100,000,000	10.89	100,000,000	10.61	100,000,000	9.91
Yin Mark Teh-min (Note 3)	57,600	0.01	57,600	0.01	57,600	0.01
The Vendor's Guarantor (and the Vendor or the nominee(s) as it may direct) (Note 4)	25,295,000	2.75	50,010,000	5.30	116,295,000	11.52
Public Shareholders	520,001,880	56.63	520,001,880	55.15	520,001,880	51.53
Total	918,184,080	100	942,899,080	100	1,009,184,080	100

LETTER FROM THE BOARD

Notes:

Eva Wong is the sole owner of Kesterion. Apart from the 272,558,400 issued shares, Kesterion also holds Convertible Bonds in the principal amount of US$201,474,359 convertible into 68,955,682 Shares or underlying Shares.

Pursuant to the security document dated 13 March 2013 entered into between Kesterion Investments Limited and China Shipbuilding Industrial Complete Equipment and Logistics Company Limited, a security over the 252,153,400 Shares and the Convertible Bonds held by Kesterion Investments Limited was created in favour of China Shipbuilding Industrial Complete Equipment and Logistics Company Limited.

Liang Tong Wei is a non-executive Director of the Company.
Yin Mark Teh-min is an independent non-executive Director of the Company.
As at the Latest Practicable Date, the Vendor's Guarantor is interested in 25,295,000 Shares.

The Consideration Shares shall be allotted and issued by the Company to the Vendor (or the nominee(s) as it may direct) credited as fully paid, ranking pari passu in all respects with all the then issued Shares as at the issue date of the Consideration Shares. There is no restriction which applies to the subsequent sale of the Consideration Shares.

The Company will seek the Specific Mandate from the Independent Shareholders at the EGM for the allotment and issue of the Consideration Shares.

The Company will apply to the Listing Committee of the Stock Exchange for the listing of and permission to deal in the Consideration Shares.

Conditions Precedent

Completion of the Sale and Purchase Agreement is conditional upon the following conditions being fulfilled or waived, as the case may be:

(a) the passing of resolutions by the Independent Shareholders at the EGM by way of poll approving the Sale and Purchase Agreement and the transactions contemplated thereunder including the grant of the Specific Mandate for the allotment and issue of the Consideration Shares;

(b) the listing of and permission to deal in the Consideration Shares having been granted by the Stock Exchange and which has not been revoked as at the Completion Date;

(c) all the required approvals, authorizations, consents having been obtained from and all the required registrations and filing having been completed with (if applicable) the governmental authorities or regulatory bodies or any relevant third party in connection with the transactions contemplated under the Sale and Purchase Agreement;

11 -

LETTER FROM THE BOARD

(d) the Purchaser and the Company having completed and being reasonably satisfied with the due diligence on the business, financial and legal matters of the Target Group;

(e) a legal opinion with respect to the Sale and Purchase Agreement and the transactions contemplated therein and with respect to the Target Company having been issued by a qualified Hong Kong legal adviser engaged by the Company and delivered to the Company, which shall be in such substance to the reasonable satisfaction of the Company;

(f) a legal opinion with respect to the Sale and Purchase Agreement and the transactions contemplated therein and with respect to the company within the Target Group which is established in the PRC having been issued by a qualified PRC legal adviser engaged by the Company and delivered to the Company, which shall be in such substance to the reasonable satisfaction of the Company;

(g) a deed of indemnity in respect of the taxation and business matters of the Target Group prior to the Completion having been executed by the Vendor and the Vendor's Guarantor in favour of the Purchaser and the Company, which shall be in such substance as agreed by the Purchaser and the Company;

(h) since the date of the Sale and Purchase Agreement and up to the Completion Date:

(i) there being no adverse change in the business, assets, financial position and operation of the Target Group which any cautious investor may reasonably consider to be material to the Sale and Purchase Agreement and the transactions contemplated thereunder and would withdraw from the transactions accordingly;

(ii) there being no on-going or pending investigation, action, arbitration, claim or any other legal proceeding, whether initiated or threatened to be initiated by any court, adjudication board or tribunal or any governmental authority of competent jurisdiction, which any cautious investor may reasonably consider to be material to the Sale and Purchase Agreement and the transactions contemplated thereunder and would withdraw from the transactions accordingly; and

(iii) there being no proposed enactment, promulgation or enforcement by any authority of any ordinances, rules, orders, judgments, notices or awards, which prohibits, restricts or materially delays the execution or performance of the Sale and Purchase Agreement and the transactions contemplated thereunder by the Vendor and the Vendor's Guarantor;

(i) the Vendor and the Vendor's Guarantor having confirmed to the Purchaser and the Company in writing that the conditions precedent referred to in (c), (h) and (j) have been satisfied as at Completion;

12 -

LETTER FROM THE BOARD

(j) the warranties given by the Vendor and the Vendor's Guarantor under the Sale and Purchase Agreement remaining complete, true and not misleading in all material respects at all times between the date of the Sale and Purchase Agreement up to the Completion Date (both days inclusive);

(k) no event having occurred and no circumstance having existed since the date of the Sale and Purchase Agreement up to the Completion Date, the consequence of which may under reasonable circumstances be able to cause material adverse effect on the business, operation, assets or financial position of the Group; or which may prohibit, restrict or significantly delay the Purchaser or the Company from signing and performing the Sale and Purchase Agreement and the transactions thereunder; and

(l) the Purchaser and the Company having confirmed to the Vendor in writing that the condition precedent referred to in (k) above has been satisfied as at Completion.

The Vendor and the Vendor's Guarantor may waive the conditions precedent referred to in (k) and (l) above at their sole discretions at any time by notice in writing to the Purchaser and the Company.

If any of the conditions precedent has not been fulfilled or waived in accordance with the terms of the Sale and Purchase Agreement on or before the Long Stop Date (except that conditions precedent (i) and (l) can take place simultaneously with Completion), the Sale and Purchase Agreement shall automatically terminate and none of the parties shall have any claim against the other parties, save for any antecedent breach of the terms of the Sale and Purchase Agreement.

Completion shall take place on the Completion Date falling on the fifth Business Day (or such other date as the parties to the Sale and Purchase Agreement may agree) after all the conditions precedent under the Sale and Purchase Agreement having been fulfilled or waived (as the case may be) by the relevant parties.

Deed of Indemnity

On Completion, the Company, the Purchaser, the Vendor and the Vendor's Guarantor will enter into the Deed of Indemnity. Subject to terms contained in the Deed of Indemnity, the Vendor and the Vendor's Guarantor undertake to indemnify and keep indemnified the Company and the Purchaser from and against any tax liabilities in relation to the business activities and financial status of the Target Group prior to Completion and other liabilities as specified in the Deed of Indemnity.

LETTER FROM THE BOARD

Undertakings and Warranties

The Vendor’s Guarantor is the sole director of both the Target Company and the PRC Company. The Vendor’s Guarantor undertakes to the Purchaser and the Company that, unless the otherwise is agreed by the Company, he shall agree to be appointed as a director for both the Target Company and the PRC Company for a period ending not earlier than the expiry of the Guaranteed Period and he shall use his best endeavours to procure the achievement of the Profit for the Guaranteed Period being not less than HK$3,700,000. Immediately upon the Completion, the board of directors of the Target Company will comprise three directors, of which two will be nominated by the Purchaser and the Company.

The Vendor and the Vendor’s Guarantor jointly and severally warrant, amongst other usual warranties customary for this type of transactions, that the audited net asset value (based on book value) of the Target Group as at the Completion Date shall not be less than HK$8,000,000. The Company will make further announcement if such warranty cannot be satisfied and will include details in its next published annual report and accounts. The independent non-executive Directors of the Company will provide an opinion in the Company’s next published annual report and accounts as to whether the Vendor and the Vendor’s Guarantor have fulfilled such warranty. Failure in fulfilling such warranty by the Vendor and Vendor’s Guarantor will result in a breach of contract by them. Having considered the details as disclosed in the section headed “Letter from the Board — 3. Information of the Target Group — Financial information of the Target Group” below, the Company considers that the risk of Vendor and the Vendor’s Guarantor being unable to fulfill such warranty shall be minimal.

In consideration of the Company and the Purchaser entering into the Sale and Purchase Agreement, the Vendor’s Guarantor unconditionally and irrevocably guarantees as a primary obligor, the due and punctual performance by the Vendor of all its obligations and punctual discharge by the Vendor of all its liabilities under the Sale and Purchase Agreement.

3. INFORMATION ON THE TARGET GROUP

The Target Company is a company incorporated in Hong Kong with limited liability on 4 October 2010. It has an issued and paid-up capital of HK$1.00 comprising of 1 ordinary share of HK$1.00 each. It is an investment holding company having the entire equity interest in the PRC Company.

LETTER FROM THE BOARD

The PRC Company is a wholly owned foreign enterprise established in the PRC on 1 September 2009 with a paid up capital of HK$33,000,300. The PRC Company is principally engaged in trading of coal. It has been granted the License to operate coal business in PRC under which it is allowed to import coal into PRC. The License has an initially validity period from 24 May 2010 to 24 May 2013, which has been extended to 30 July 2016.

Financial information of the Target Group

According to the audited consolidated financial statements of the Target Group prepared in accordance with the accounting principles and practices generally accepted in Hong Kong, the turnover and net profit (before and after taxation) of the Target Group for the year ended 31 December 2012 and the period from 4 October 2010 to 31 December 2011 are as follows:

	For the year ended 31 December 2012 HK$ million	For the period from 4 October 2010 to 31 December 2011 HK$ million
Turnover	54.1	160.1
Audited combined loss before taxation	3.8	14.1
Audited combined loss after taxation	3.8	14.1

The audited net liabilities of the Target Group as at 31 December 2012 amount to approximately HK$17,200,000. The Vendor has agreed to waive a balance of approximately HK$26,000,000 receivable from the Target Company upon Completion. The effect of which will increase the net asset value of the Target Group to approximately HK$8,800,000 as at 31 December 2012. Total assets of the Target Group includes some properties under construction. The Company considers that the total assets to be acquired do not consist of mainly or solely of such properties.

Upon Completion, each of the Target Company and the PRC Company will become a subsidiary of the Company and the results of the Target Group will be consolidated into the Group's account.

4. INFORMATION ON THE GROUP

The Company is an investment holding company. The Group is principally engaged in exploration and exploitation of mineral resources and trading of metals, bunker fuel and natural resources.

LETTER FROM THE BOARD

5. REASONS FOR AND BENEFITS OF THE ACQUISITION

Taken into consideration of the aforesaid, the Directors (excluding the independent non-executive Directors whose opinion has been set out on pages 19 to 20 of this circular and excluding the Vendor's Guarantor who has material interest in the Sale and Purchase Agreement and has abstained from voting in the board meeting of the Company) are of the view that the terms of the Sale and Purchase Agreement are fair and reasonable and are on normal commercial terms, and the Acquisition and the allotment and issue of the Consideration Shares as contemplated under the Sale and Purchase Agreement are in the interest of the Company and the Shareholders as a whole.

6. IMPLICATIONS OF THE GEM LISTING RULES

In addition, given the Vendor is a company owned wholly by the Vendor's Guarantor, who is an executive Director of the Company, the Vendor and the Vendor's Guarantor are connected persons to the Company and therefore the Acquisition also constitutes a connected transaction for the Company. Since the relevant percentage ratios in respect of the Acquisition are less than 25% but the Consideration (subject to Adjustment) is more than HK$10,000,000, the entering into the Sale and Purchase Agreement shall be subject to reporting, announcement and the approval of the Independent Shareholders as required under Chapter 20 of the GEM Listing Rules.

7. THE INDEPENDENT BOARD COMMITTEE AND INDEPENDENT FINANCIAL ADVISER

The Independent Board Committee comprising all the independent non-executive Directors has been constituted to consider the terms of the Acquisition and the allotment and issue of the Consideration Shares as contemplated under the Sale and Purchase Agreement, and to advise and make recommendations to the Independent Shareholders as to how to vote at the EGM on the ordinary resolutions in relation thereto. Mr. Lai Kai Jin, Michael, Mr. Chu Hung Lin, Victor and Mr. Tong Wan Sze have been appointed by the Board to serve as members of the Independent Board Committee. No member of the Independent Board Committee has any material interest in the Acquisition and the allotment and issue of the Consideration Shares as contemplated under the Sale and Purchase Agreement. A letter from the Independent Board Committee is set out from pages 19 to 20 of this circular.

LETTER FROM THE BOARD

Changjiang has been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders on the fairness and reasonableness of the terms of the Acquisition and the allotment and issue of the Consideration Shares as contemplated under the Sale and Purchase Agreement. A letter from Changjiang is set out on pages 21 to 34 of this circular.

8. EGM

Set out from pages 42 to 43 of this circular is a notice convening the EGM, which will be held at the Suite 3008, Tower One, Times Square, 1 Matheson Street, Causeway Bay, Hong Kong on 28 May 2013 at 4:00 p.m., at which resolutions will be proposed to approve the Sale and Purchase Agreement and the transaction transactions contemplated therein including the issue of the Consideration Shares and the grant of the Specific Mandate for the allotment and issue of the Consideration Shares.

The form of proxy for use at the EGM is enclosed with this circular. Whether or not you are able to attend the EGM, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon and return it to the Company's branch share registrar in Hong Kong, Tricor Tengis Limited, at 26th Floor, Tesbury Centre, 28 Queen's Road East, Wanchai, Hong Kong, as soon as possible and in any event not later than 48 hours before the time appointed for the holding of the EGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment of it, if you so wish.

The Vendor and the Vendor's Guarantor confirmed that, as at the Latest Practicable Date, the Vendor's Guarantor was interested in 25,295,000 Shares of the Company, representing approximately $2.75\%$ of the total issued share capital of the Company, apart from the aforesaid interest, neither they nor their respective associates held any Shares of the Company. As the Vendor and the Vendor's Guarantor have material interest in the Sale and Purchase Agreement, the Vendor's Guarantor is required to abstain from voting at the EGM.

To the best of the Directors' knowledge, information and belief having made all reasonable enquiries, no Shareholder other than the Vendor's Guarantor will be required to abstain from voting on the resolutions to approve the Sale and Purchase Agreement and the transactions contemplated thereunder at the EGM.

In accordance with the GEM Listing Rules, the vote to be taken at the EGM shall be conducted by poll.

9. RECOMMENDATION

Your attention is drawn to the letter from the Independent Board Committee set out from pages 19 to 20 of this circular which contains its advice to the Independent Shareholders as to voting at the EGM regarding the Acquisition and the issue of the Consideration Shares as contemplated under the Sale and Purchase Agreement and to the letter received from the Independent Financial Adviser which contains its recommendation to the Independent Board

17 -

LETTER FROM THE BOARD

Committee and the Independent Shareholders as regards the Acquisition and the issue of the Consideration Shares as contemplated under the Sale and Purchase Agreement and the principal factors and reasons considered by it in arriving thereat.

The text of the letter from the Independent Financial Adviser is set out from pages 21 to 34 of this circular.

The Independent Board Committee, having taken into account the advice of the Independent Financial Adviser, considers that the Acquisition and the issue of the Consideration Shares as contemplated under the Sale and Purchase Agreement are fair and reasonable and is in the interests of the Company and the Shareholders as a whole.

Accordingly, the Directors (including members of the Independent Board Committee but excluding the Vendor's Guarantor who has material interest in the Sale and Purchase Agreement and has abstained from voting in the board of the Company) recommend the Independent Shareholders to vote in favour of the resolutions to approve the Sale and Purchase Agreement and the transaction as contemplated thereunder at the EGM and to approve the grant of the Specific Mandate for the allotment and issue of the Consideration Shares.

10. ADDITIONAL INFORMATION

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

Yours faithfully,

For and on behalf of

Pan Asia Mining Limited

Koh Tat Lee, Michael

Chairman

18 -

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

PAN ASIA MINING LIMITED 寰亞礦業有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 8173)

Independent Board Committee:

Mr. Lai Kai Jin, Michael

Mr. Chu Hung Lin, Victor

Mr. Tong Wan Sze

10 May 2013

To the Independent Shareholders

Dear Sir/Madam,

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

We refer to the circular (the "Circular") dated 10 May 2013 issued by the Company to its Shareholders of which this letter forms part. Terms defined in the Circular shall have the same meanings when used in this letter, unless the context otherwise requires. We have been appointed as members of the Independent Board Committee to advise the Independent Shareholders in respect of the Acquisition and the allotment and issue of the Consideration Shares as contemplated under the Sale and Purchase Agreement, details of which are described in the letter from the Board as set out in the Circular.

We also draw your attention to the advice of Changjiang, the independent financial adviser appointed in respect of the Acquisition and the allotment and issue of the Consideration Shares as contemplated under the Sale and Purchase Agreement, as set out on pages 21 to 34 to the Circular.

As your Independent Board Committee, we have discussed with the management of the Company the reasons for entering into the Sale and Purchase Agreement, and the allotment and issue of the Consideration Shares and the basis upon which its terms have been determined as described in the letter from the Board as set out in the Circular. We have also considered the key factors taken into account by Changjiang in arriving at its opinion regarding the terms of the Acquisition and the allotment and issue of the Consideration Shares as contemplated under the Sale and Purchase Agreement as set out in the letter from Changjiang in the Circular, which we urge you to read carefully.

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Having taken into account, amongst other things, the advice of Changjiang, the independent financial adviser to the Company, we consider that the terms of the Acquisition and the allotment and issue of the Consideration Shares as contemplated under the Sale and Purchase Agreement as described in the letter from the Board as set out in the Circular are fair and reasonable and are in the interests of the Company and its Shareholders as a whole.

Accordingly, we recommend you to vote in favour of the ordinary resolution to be proposed at the EGM to approve the Sale and Purchase Agreement and the transaction as contemplated thereunder including the allotment and issue of the Consideration Shares and the grant of the Specific Mandate for the allotment and issue of the Consideration Shares.

Yours faithfully,

Independent Board Committee
Mr. Lai Kai Jin, Michael
Mr. Chu Hung Lin, Victor
Mr. Tong Wan Sze
Independent Non-Executive Directors

20 -

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the text of the letter of advice from ChangJiang Corporate Finance (HK) Limited to the Independent Board Committee and the Independent Shareholders in relation to the Sale and Purchase Agreement and the transactions contemplated thereunder prepared for the purpose of incorporation in this circular.

10 May 2013

To the Independent Board Committee and the Independent Shareholders of Pan Asia Mining Limited

Dear Sirs,

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

I. INTRODUCTION

We refer to our appointment as the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect to the Acquisition and the allotment and issue of the Consideration Shares as contemplated under the Sale and Purchase Agreement, details of which are set out in the letter from the Board (the "Letter from the Board") contained in the circular dated 10 May 2013 issued by the Company to the Shareholders (the "Circular"), of which this letter forms part. Unless otherwise stated, terms defined in the Circular have the same meanings in this letter.

On 27 March 2013 and 10 May 2013, 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 fully settled by the allotment and issue of the Consideration Shares.

As the relevant percentage ratios in respect of the Acquisition exceeded 5% but are under 25%, the entering into of the Sale and Purchase Agreement constitutes a discloseable transaction for the Company pursuant to Rule 19.06(2) of the GEM Listing Rules. In addition, given the Vendor is a company owned wholly by the Vendor's Guarantor, who is an executive Director of the Company, the Vendor and the Vendor's Guarantor are connected persons to the

21 -

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Company and therefore the entering into of the Sale and Purchase Agreement also constitutes a connected transaction for the Company. Since the relevant percentage ratios in respect of the Acquisition are less than 25% but the Consideration (subject to Adjustment) is more than HK$10,000,000, the entering into the Sale and Purchase Agreement shall be subject to reporting, announcement and the approval of the Independent Shareholders as required under Chapter 20 of the GEM Listing Rules. An EGM will be convened to consider and, if thought fit, to approve the Sale and Purchase Agreement. Mr. Cheung Hung Man and his associates will abstain from voting at the EGM.

II. THE INDEPENDENT BOARD COMMITTEE

The Board currently consists of eight Directors, namely Mr. Koh Tat Lee, Michael, Mr. Eng Wee Meng, Mr. Cheung Hung Man as Executive Directors; Mr. Yin Mark Teh-min and Mr. Liang Tong Wei as Non-executive Directors; and Mr. Lai Kai Jin, Michael, Mr. Chu Hung Lin, Victor and Mr. Tong Wan Sze as independent non-executive Directors.

The Independent Board Committee comprising all the independent non-executive Directors has been constituted to consider the terms of the Acquisition and the allotment and issue of the Consideration Shares as contemplated under the Sale and Purchase Agreement, and to advise and make recommendations to the Independent Shareholders as to how to vote at the EGM on the ordinary resolutions in relation thereto. Mr. Lai Kai Jin, Michael, Mr. Chu Hung Lin, Victor and Mr. Tong Wan Sze have been appointed by the Board to serve as members of the Independent Board Committee. ChangJiang Corporate Finance (HK) Limited has been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders on the fairness and reasonableness of the terms of the Acquisition and the allotment and issue of the Consideration Shares as contemplated under the Sale and Purchase Agreement.

III. BASIS OF OUR OPINION

As the independent financial adviser, we have taken all reasonable steps to satisfy and comply with the requirements under Rule 17.92 (together with the notes thereto). In formulating our opinion, we have relied on solely on the statements, information, opinions and representations contained or referred to in the Circular and the information and representations provided to us by the Company and/or its management staff (the "Management") and/or the Directors. We have assumed that all statements, information, opinions and representations contained or referred to in the Circular and all information and representations which have been provided by the Company and/or the Management and/or the Directors, for which it is/ they are solely and wholly responsible, were true and accurate at the time when they were made and continue to be so at the date hereof. We have no reason to believe that any information or representations relied on by us in forming our opinion is untrue, inaccurate or misleading, nor are we aware of any material facts the omission of which would render the information provided and the representations made to us untrue, inaccurate or misleading. We have assumed that all the opinions and representations for matters relating to the Company made or provided by the Directors and/or the Management contained in the Circular have been reasonably made after due and careful enquiry. We consider that we have reviewed sufficient

22 -

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

information to enable us to form a reasonable basis for our opinion. We have not, however, conducted any independent verification of the information provided, nor have we carried out any form of in-depth investigation into the business and affairs of the Company.

IV. PRINCIPAL FACTORS AND REASONS CONSIDERED IN RELATION TO THE ACQUISITION

Upon completion of the Sale and Purchase Agreement, the Company shall acquire the entire issued share of the Target Company for a consideration of HK$50,050,000 (subject to Adjustment). In formulating our opinion on the terms of the Acquisition and the allotment and issue of the Consideration Shares as contemplated under the Sale and Purchase Agreement, we have taken into consideration the following principal factors:

1. Principal activities of the Company and its recent financial results

The Company is an investment holding company. The Group is principally engaged in exploration and exploitation of mineral resources and trading of metals, bunker fuel and natural resources.

Set out below is a summary of the consolidated operating results and financial positions of the Company for the three years ended 31 March 2010, 2011 and 2012, extracted from the annual reports of the Company for the years ended 31 March 2012 ("2012 Annual Report") and 31 March 2011 ("2011 Annual Report"), and condensed operating results of the Company for the nine months ended 31 December 2011 and 2012, extracted from the third quarterly report for the period ended 31 December 2012:

Table A: Summary of recent financial results of the Company

	Year ended 31 March			Nine months ended 31 December
	2012 HK$000 (Audited)	2011 HK$000 (Audited)	2010 HK$000 (Audited)	2012 (Unaudited)	2011 (Unaudited)
Revenue
— Sale of coals	17,447	—	—	40,821	—
— Sale of metals	14,193	10,419	14,730	9,935	6,457
— Sale of bunker fuels	299,656	—	—	93,396	194,271
	331,296	10,419	14,730	144,152	200,728
Cost of sales	(328,918)	(10,406)	(14,591)	(143,135)	(199,796)
Gross profit	2,378	13	139	1,017	932
Loss from operations	(34,883)	(17,923)	(19,102)	(25,369)	(27,991)
Loss for the year/period	(7,458,904)	(90,602)	(127,455)	(95,147)	(88,164)

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

| | 2012
HK$'000 | 2011
HK$'000 | 2010
HK$'000 |
| --- | --- | --- | --- |
| Total assets | 1,259,612 | 8,667,956 | 8,444,243 |
| Total liabilities | 577,247 | 524,790 | 581,703 |
| Net assets | 682,365 | 8,143,166 | 7,862,540 |

For the year ended 31 March 2012

The Group recognized that customers purchasing metal ore also intake a significant amount of scrap metal as a source of raw material. In September 2011 the Group commenced trading of scrap metals in Singapore where it found geographic competitive advantages over Hong Kong in term of servicing customers from the region. Identified sources of supply in Singapore include local industrial plants, auto dismantlers, building dismantlers, demolition operations, and overseas suppliers from Middle East, Europe and United States of America. On the sales side, potential scrap metal customers were found in PRC, Taiwan, India, Japan, Korea and Philippines. The Group is striving to expand its business to these locations. Revenue from scrap metal trading amounted to approximately HK$14 million during the financial year.

In September 2011 the Group also commenced business in trading of bunker fuel. The Group recognized that being one of the busiest port in the world, Singapore has an enormous market of bunker fuel for transoceanic vessels. However, in view of the fluctuating international oil prices, the Group had cautiously entered into the market keeping no or minimal over-nights stock-in-transit.

During the financial year ended 31 March 2012 the Group had generated sales of approximately HK$300 million. In December 2011 the Group had also commenced the business of trading of coal. The first shipment of approximately 35,000 tons of steam coal from Indonesia to China was completed in February in 2012. During the financial year ended 31 March 2012, sales revenue of approximately HK$17 million was generated and duly received.

The 2 exploration permits valid from 23 December 2009 and covering an exploration area of approximately 41,094 hectares expired in December 2011 and the Group had submitted applications in November 2011 for the renewal of the 2 exploration permits. According to the exploration permit requirements, 10% of the exploration area had to be relinquished annually. After analyzing the original 41,094 hectares exploration area the Group voluntarily relinquished approximately 21.5% of the area which was mostly covered by coral reef cultures or was unlikely to have sufficient magnetite deposits for commercial exploitation.

According to Philippines laws, sea bed area covered by coral reef cultures were not allowed for mining operations. On 22 June 2012, renewal of the 2 exploration permits was approved with total exploration area of approximately 32,258 hectares (the "Renewed EP"). Upon expiration of the 2 Renewed EP in 2 years the Group was eligible to renew the 2 exploration permits for another 2 years.

24 -

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Group had been undergoing exploration activities in the mining tenements in The Philippines during the past few years. As at 31 March 2012, the Group had finished drilling of 262 boreholes. The drilling activities covered areas of approximately 1,300 hectares out of the total exploration area of 32,258 hectares under the Renewed EP.

On the other hand, the Group submitted an application to Mines and Geosciences Bureau (the "MGB") for the mineral production sharing agreement (the "MPSA") in respect of 5,000 hectares within the renewed exploration area on 15 June 2010. The acceptance of the application of the MPSA involves various phases including, among others, the evaluation of feasibility studies, environmental work plan and financial capability of the Group; the obtaining of area status and clearance; and public consultation by regional and central offices of the MGB and the Department of Environment and Natural Resources of the Philippines (the "DENR").

The Group's turnover amounted to approximately HK$331,296,000 (2011: approximately HK$10,419,000), increased by approximately HK$320,877,000 as compared to the same period in 2011. The significant increase in sales revenue arose from the new bunker fuel trading business. Gross profit amounted to approximately HK$2,378,000 (2011: approximately HK$13,000). Other operating loss amounted to approximately HK$7,955,000 (2011: approximately HK$367,000) which arose primarily from unrealized loss in market value of held-for-trading equity and debt securities. Loss for the year increased to approximately HK$7,458,904,000 as compared to approximately HK$90,602,000, as restated, of the same period in 2011 which was mainly attributable to the HK$7,342,417,000 impairment loss provision for the exploration and evaluation assets.

For the year ended 31 March 2011

During the year, the Group commenced application for the conversion of areas of approximately 5,000 hectares under the Exploration Permits into MPSA. As of the date of this circular the MPSA has not been granted to The Group.

In April 2010, the Group submitted an application for the third exploration permit covering an offshore area of approximately 3,022 hectares in Dulag, Leyte of the Philippines adjacent to the areas covered by the existing two Exploration Permits. The Group had fulfilled all requirements for the application. The application was then pending review and approval by the Mines and Geosciences Bureau of the DENR.

Turnover of trading and sales of metals was approximately HK$10,419,000 (2010: approximately HK$14,730,000), down by 29.27% as compared to the same period in 2010. Gross profit was approximately HK$13,000 (2010: gross profit of approximately HK$139,000). Loss for the year amounted to approximately HK$90,602,000 (2010: approximately HK$127,455,000), representing a 40.68% decrease compared with that of last year. The loss decrease was mainly due to the reduction of imputed finance costs from approximately HK$109,861,000 in 2010 to approximately HK$67,181,000 in 2011 mainly attributable to the conversion of convertible bonds in principal amounts of approximately US$363,910,256 during the year ended 31 March 2010. As at 31 March 2011, outstanding convertible bonds amount to approximately US$201,474,359.

25 -

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

For the nine months ended 31 December 2012

Following the entering into a strategic agreement with China Shipbuilding Industrial Complete Equipment and Logistics Co Ltd (“CSICEL”) (中船工業成套物流有限公司) in August in 2012, the Group had commenced supplying coal to CSICEL. During the quarter ended 31 December 2012 the first shipment of steam coal was completed and relevant sales revenue has been recognized in the 3rd quarter results.

The Group’s turnover during the nine month ended 31 December 2012 amounted to approximately HK$144,152,000 (2011: approximately HK$200,728,000) which was approximately HK$56,576,000 lower than that of the same period last year. Gross profit amounted to approximately HK$1,017,000 (2011: approximately HK$932,000). Other net income amounted to approximately HK$2,195,000 arising primarily from appreciation of fair value of marketable securities (2011: other net loss of approximately HK$8,897,000). Loss for the Period increased to approximately HK$95,147,000 (2011: approximately HK$88,164,000, as restated).

2. Reasons for the Acquisition

The Company is an investment holding company. The Group is principally engaged in exploration and exploitation of mineral resources and trading of metals, bunker fuel and natural resources.

The PRC Company is a wholly owned foreign enterprise established in the PRC on 1 September 2009 with a paid up capital of HK$33,000,300. The PRC Company is principally engaged in trading of coal. It has been awarded a license to operate coal business in PRC (煤炭經營資格證) (the “License”) under which it is allowed to import coal into PRC. The PRC Company has renewed the License and the validity has been extended to 30 July 2016.

The Directors believe that integrating the business of the Group with that of the Target Group will strengthen the coal trading network and flow of the Group. The License enables the Group to directly import coal into PRC without passing through other importers and it allows the Group to improve gross profit margin of the coal trading business of the Group. Besides, the integration will also allow the Group to better position itself in PRC for further expansion and to grasp business opportunities in the future in coal business. As confirmed with the Company, all of the coal being traded has been sourced from Indonesia and sold to PRC through PRC importers possessing similar licences. We agree that, by acquiring the Target Group, the Group is able to import coal into PRC by itself and reach the end users. It follows that the Group will be able to grasp the profit margin that originally charged by these importers and enhance the Group’s profit margin in respect of the trading of coal.

26 -

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Taking into account that the Acquisition will increase the profit margin of the Group's trading of coal, we concur with the view of the Directors that the Acquisition is fair and reasonable and in the interests of the Company and its Shareholders as a whole.

3. Consideration

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;

(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.

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 which represents approximately a price-earning ratio ("PE ratio") of approximately 13.53x. 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 reduce by HK$1,350,250 per HK$100,000 shortfall from HK$3,700,000. It represents PE ratios of approximately 13.53x to 13.59x. 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 which represents a PE ratio of 13.59x or higher.

27 -

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

A marketability discount is applied to the valuation based on different valuation methods such as PE ratio, Price-to-book ratio (“PB ratio”), etc, because there is a lack of marketability of the Target Group. The Target Group is mainly engaged in trading of coal and it does not require a lot of tangible assets for its operation. PB ratio is particular suitable for comparison between companies of which substantial assets are required for their operation. We consider, therefore, PB ratio is not an appropriate method to consider the fair and reasonableness of the pricing of the Target Group.

To assess the fair and reasonableness of the pricing of the Target Group, we can conclude that the pricing is fair and reasonable if PE ratio of the Target Group is within the range of the shortlisted companies which are the pricings provided by the market.

The shortlisted coal business companies are selected under Capital IQ classification of coal and consumable fuels and listing in either Shanghai Stock Exchange or Shenzhen Stock Exchange. We examined their business in details from their annual reports and ensure that they have coal trading business which is similar to the Target Group to enhance the comparability between the Target Group and the shortlisted companies. We extracted the share price as of 27 March 2013 of the shortlisted companies from Bloomberg and derived the PE ratio. Among the shortlisted coal business companies 2 of them are not profitable during recent years and 2 of them actually do not involve the selling of coal. Details of the remaining 20 companies involving in the coal business are summarised in the following table:

Stock Name	Stock Code	Description of Company	PE ratio as at date of the Sale and Purchase Agreement
Anyuan Coal Industry Group Co., Ltd	600397	Anyuan Coal Industry Group Co., Ltd. engages in coal mining and processing; manufacturing and distributing glass products and passenger cars; and fuel processing businesses.	16.5
Anhui Hengyuan Coal Industry and Electricity Power Co., Ltd	600971	Anhui Hengyuan Coal Industry and Electricity Power Co., Ltd. operates in coal mining and processing.	16.0
Beijing Haohua Energy Resource Co., Ltd	601101	Beijing Haohua Energy Resource Co., Ltd. produces and sells coal. Its products are used in metallurgy, power generation, chemical and construction material industries.	15.8
Datong Coal Industry Co., Ltd	601001	Datong Coal Industry Co., Ltd. operates underground mining, preparation and sales of coal.	43.3

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Stock Name	Stock Code	Description of Company	PE ratio as at date of the Sale and Purchase Agreement
Gansu Jingyuan Coal Industry and Electricity Power Co., Ltd	000552	Gansu Jingyuan Coal Industry and Electricity Power Co., Ltd. explores, process and sells coal.	18.2
Guizhou Panjiang Refined Coal Company Ltd	600395	Guizhou Panjiang Refined Coal Company Ltd. operates in the coal mining and processing industry. The Company's products include raw coal, refined coal, blended coal, and other related products.	15.5
Henan Shenhuo Coal & Power Co., Ltd	000933	Henan Shenhuo Coal & Power Co., Ltd. operates in coal mining and processing businesses. The Company also generates and distributes electric power.	64.1
Huolinhe Opencut Coal Industry Corporation Limited	002128	Huolinhe Opencut Coal Industry Corporation Limited of Inner Mongolia is mainly involved in the production and selling of coal in China.	10.8
Inner Mongolia Pingzhuang Energy Co., Ltd	000780	Inner Mongolia PingZhuang Energy Resources Co., Ltd. is principally engaged in the mining and dressing, production, processing and distribution of coal. The Company is involved in the coal mining and dressing, the commission of coal sale, the sale of materials and the engineering construction business, among others.	20.7
Inner Mongolia Yitai Coal Co., Ltd	900948	Inner Mongolia Yitai Coal Co., Ltd. operates in coal mining, processing, and distribution. Through its subsidiaries, the Company also operates in hotel management, licorice planting, pharmaceutical manufacturing, and manages roadways.	8.7

29 -

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Stock Name	Stock Code	Description of Company	PE ratio as at date of the Sale and Purchase Agreement
Jizhong Energy Resources Co., Ltd	000937	Jizhong Energy Resources Co., Ltd. produces and markets coal products, generates electric power, and manufactures cement.	13.3
Pingdingshan Tianan Coal Mining Co., Ltd	601666	Pingdingshan Tianan Coal Mining Co., Ltd. operates underground coal mining, coal washing and processing. The company also provides ground transportation services.	16.3
SDIC Xinji Energy Company Ltd	601918	SDIC Xinji Energy Company Ltd. is involved in coal mining, coal processing, and power generation	12.5
Shanghai Ace Co., Ltd	600652	Shanghai Ace Co., Ltd. operates in coal mining and processing, manufactures computer software products and electric equipment. The Company also manufactures drinking fountain and gas station.	12.5
Shanghai Datun Energy Resources Co., Ltd	600508	Shanghai Datun Energy Resources Co., Ltd. explores, washes, and produces a variety of coal products for sales to the manufacturers of steel, gas, and electric power. Shanghai Datun also produces alumina, owns, manages, and operates coal-fired power plants, and provides coal railway transportation services.	11.4
Shanxi Lanhua Sci-Tech Venture Co., Ltd	600123	Shanxi Lanhua Sci-Tech Venture Co., Ltd. produces and markets coal and fertilizers.	11.4
Shanxi Lu’an Environmental Energy Development Co., Ltd	601699	Shanxi Lu’an Environmental Energy Development Co., Ltd. mines, processes, and markets low sulfur high quality coal. It also researches and develops coal and environment protection related technologies.	16.3

30 -

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Stock Name	Stock Code	Description of Company	PE ratio as at date of the Sale and Purchase Agreement
Shanxi Xishan Coal & Electricity Power Co., Ltd	000983	Shanxi Xishan Coal & Electricity Power Co., Ltd. mines and processes coal. It also generates electric power.	20.7
Yangquan Coal Industry Group Co Ltd	600348	Yangquan Coal Industry Group Co Ltd. produces, processes, and sells coal. It also generates electricity and heat. Yangquan Coal sells its products domestically and exports to other countries.	14.5
Zhengzhou Coal Industry & Electric Power Co., Ltd	600121	Zhengzhou Coal Industry & Electric Power Co., Ltd. (ZCE) produces and markets coal. It also generates and distributes electric power.	17.1
		Mean	18.8

The average PE ratio of these listed companies is approximately 18.8x which is much higher than the PE ratio based on the Profit for the Guaranteed Period of approximately 13.53x to 13.59x. In the event that Profit for the Guaranteed Period is lower than HK$1,000,000 the Consideration stays at the minimum of HK$13,593,250 which means that the PE ratio will be higher than 13.59x.

We note that the Vendor has agreed to waive a balance of approximately HK$26,000,000 receivable from the Target Company upon Completion. The effect of which will increase the net asset value of the Target Group as at 31 December 2012 to approximately HK$8,800,000. Besides, we reviewed the valuation report, including the assumptions and methodology, prepared by a Fujian Zhongxing Assets and Real Estate Appraisal Co., Ltd., independent valuer incorporated in PRC, fair value of the properties under construction held by the PRC Company as at 31 December 2012 is higher than the audited book value by approximately RMB4,320,000 (equivalent to approximately HK$5,400,000) The properties under construction located in Tong An district of Xiamen with 1,069.82 square metre. As a result the Directors are of the opinion that fair value of the net assets of the Target Group as at 31 December 2012 will not be less than approximately HK$14,200,000 which is higher than the minimum Consideration of HK$13,593,250. We concur with the Directors' view in respect of the Consideration and are of the opinion that the Consideration for the Acquisition is fair and reasonable.

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

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, the Initial Consideration of HK$13,593,250 shall be paid by way of allotting and issuing 24,715,000 Consideration Shares; and

(b) within five (5) Business Days after the issue of the Target Group Audited Accounts, the Final Consideration (i.e. the remainder of 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.

The issue price of HK$0.55 per Consideration Share represents:

(a) a premium of approximately 10% from HK$0.50, being the closing price of the Shares on 9 May 2013, the Latest Practicable Date;

(b) a premium of approximately 1.85% from HK$0.540, being the closing price of the Shares on 27 March 2013, the last Trading Day immediately preceding the date of the Sale and Purchase Agreement;

(c) a premium of approximately 1.85% from HK$0.540, being the average closing price of the Shares for the last five (5) consecutive Trading Days prior to the date of the Sale and Purchase Agreement; and

(d) a premium of approximately 0.55% from HK$0.547, being the average closing price of the Shares for the last ten (10) consecutive Trading Days prior to the date of the Sale and Purchase Agreement.

32 -

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The above chart showed the price of the Shares as from 28 March 2012 to the date of the Circular. It shows that the issue price of the Consideration Shares is during most of the time at a premium of the prevailing market prices. Therefore, we are of the opinion that the issue price of the Consideration Shares is fair and reasonable.

Upon the issue of Consideration Share, the shareholding interests of the existing public Shareholders will be diluted from approximately 56.63% to approximately 51.53% of the enlarged issued share capital of the Company. Taking into account the reasons for and the possible benefits of the Acquisition to the Company as abovementioned, the Consideration Share being fair and reasonable, we consider the issuance of Consideration Share with the aforementioned potential dilution effect to be acceptable as far as the Independent Shareholders are concerned.

4. Possible financial effects of the Acquisition to the Group

4.1 Earnings

The earnings of the Target Group will be consolidated to the Group results from the date of completion of the Acquisition.

4.2 Net assets value

Fair value of the net assets value of the Target Group will also be consolidated to the Group from the date of Completion. Based on the fair value of the net assets of the Target Group as estimated by the Directors, the net assets of the Group will increase by not less than approximately HK$14,200,000 upon Completion.

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

V. RECOMMENDATION

Having considered the above principal factors and reasons, which include:

(1) the Acquisition is fair and reasonable and on normal commercial terms;
(2) the consideration is in the interests of the independent shareholders; and
(3) the possible financial effect of the Transaction.

We are of the view that the terms of the Sale and Purchase Agreement and the Acquisition contemplated thereunder are on normal commercial terms and are fair and reasonable and the entering into of the Sale and Purchase Agreement and the Acquisition contemplated thereunder are in the interests of the Company and the Shareholders as a whole.

Accordingly, we recommend the Independent Board Committee and the Independent Shareholders that the Independent Shareholders should vote in favour of the resolution to be proposed at the EGM to approve the Sale and Purchase Agreement and the Acquisition contemplated thereunder.

Yours faithfully,

For and on behalf of

ChangJiang Corporate Finance (HK) Limited

Ivan Chan
Managing Director

Sam Chan
Vice President

34 -

APPENDIX

GENERAL INFORMATION

1. RESPONSIBILITY STATEMENT

This circular, 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 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.

2. DISCLOSURE OF INTERESTS OF DIRECTORS

As at the Latest Practicable Date, the interests or short positions of the Directors and the chief executive of the Company in the Shares of the Company, underlying Shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) as notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were taken or deemed to have under such provisions of the SFO); or as recorded in the register required to be kept pursuant to section 352 of the SFO; or as otherwise notified to the Company and the Stock Exchange pursuant to Rules 5.46 to 5.67 of the GEM Listing Rules relating to securities transactions by the Directors, were as follows:

Interest and short positions in Shares, underlying Shares and debenture of the Company

Name of Directors	Capacity/Nature of interest	Number of Shares and/or underlying Shares held	Approximate percentage of the Company's issued share capital
Michael Koh Tat Lee	Interest of spouse (Note 1)	341,785,282 (L)	37.22
	Interest of spouse (Note 1)	321,109,082 (S) (Note 5)
Cheung Hung Man	Beneficial owner (Note 2)	116,295,000 (L)	12.67
Liang Tong Wei	Beneficial owner	100,000,000 (L)	10.89
Eng Wee Meng	Beneficial owner (Note 4)	1,400,000 (L)	0.15
Yin Mark Teh-min	Interest of spouse	50,000 (L)	0.01
	Beneficial owner (Note 3)	7,600 (L)	—
	Sub-total:	57,600	0.01

APPENDIX

GENERAL INFORMATION

(L) — Long position; (S) — Short position

Notes:

Ms. Wong Eva, being the wife of Mr. Michael Koh Tat Lee (“Mr. Koh”), is interested in 272,829,600 issued Shares and 68,955,682 underlying Shares being conversion shares convertible according to terms of the Convertible Bonds. Accordingly, Mr. Koh is deemed to be interested in such 341,785,282 Shares.
Mr. Cheung Hung Man (“Mr. Cheung”) is interested in 25,295,000 issued shares and another 91,000,000 shares to be issued to the Vendor, a company wholly-owned by Mr. Cheung (or the nominee(s) as the Vendor may direct) according to the terms of the Sale and Purchase Agreement.
Ms. Wong Shu Wah, Ceci, being the wife of Mr. Yin Mark Teh-min (“Mr. Yin”), is interested in 50,000 Shares. Accordingly, Mr. Yin is deemed to be interested in such 50,000 Shares. Mr. Yin also holds 7,600 Shares as beneficial owner. Therefore, Mr. Yin is interested in 57,600 Shares.
Mr. Eng Wee Meng was granted an option to subscribe 1,400,000 Shares on 27 March 2013 under the Share Option Scheme adopted by the Company on 30 July 2012.
Pursuant to the security document dated 13 March 2013 entered into between Kesterion Investments Limited (a company wholly-owned by Ms. Eva Wong) and China Shipbuilding Industrial Complete Equipment and Logistics Company Limited, a security over the 252,153,400 Shares and the Convertible Bonds held by Kesterion Investments Limited (upon the full conversion at a conversation price of HK$22.79 per conversion share, a total of 68,955,682 Shares shall be issued to Kesterion Investments Limited) was created in favour of China Shipbuilding Industrial Complete Equipment and Logistics Company Limited.

Save as disclosed above, as at the Latest Practicable Date, there are no short positions of the Directors (including proposed Directors) and the chief executive of the Company in the Shares, underlying Shares and debentures of the Company and its associated corporations that (i) were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); or (ii) were required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein; or (iii) were required, pursuant to Rule 5.46 of the GEM Listing Rules, to be notified to the Company and the Stock Exchange.

DISCLOSURE OF INTERESTS BY SUBSTANTIAL SHAREHOLDERS

As at the Latest Practicable Date, so far as is known to any Director or chief executive of the Company, the following persons (other than Directors or chief executive of the Company) had interest or short positions in the Shares, underlying Shares or debentures of the Company which would fall to be disclosed to the Company under the provisions Divisions 2 and 3 of Part XV of the SFO and required to be entered into the register maintained by the Company pursuant to Section 336 of the SFO, or, who was, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group.

APPENDIX

GENERAL INFORMATION

Interest and short positions of substantial shareholders in the Shares and underlying Shares of the Company:

Name of substantial shareholder	Capacity/Nature of interest	No. of Shares and/or underlying Shares held	Approximate Percentage of the shareholding
Kesterion Investments Limited	Beneficial owner	341,514,082 (L)
(Note 1)	37.19
	Beneficial owner	321,109,082 (S)
(Note 5)	34.97
Wong Eva	Interest of controlled corporation	341,514,082 (L)
(Note 2)	37.19
	Beneficial owner	271,200 (L)	0.03
	Sub-total:	341,785,282 (L)	37.22
Vendor	Beneficial owner	91,000,000 (L)
(Note 3)	9.91
Mr. Cheung Hung Man	Interest of controlled corporation	91,000,000 (L)
(Note 4)	9.91
	Beneficial owner	25,295,000 (L)
(Note 4)	2.76
	Sub-total:	116,295,000 (L)	12.67
China Shipbuilding
Industrial Complete
Equipment and
Logistics Company
Limited	Security Interest	321,109,082 (L)
(Note 5)	34.97

(L) — Long position; (S) — Short position

Notes:

Kesterion Investments Limited is interested in 272,558,400 Shares and the Convertible Bonds in the outstanding principle amounts of US$201,474,359, upon the full conversion at a conversation price of HK$22.79 per conversion share, a total of 68,955,682 Shares shall be issued to Kesterion Investments Limited. None of the Director is a director or an employee of Kesterion Investment Limited.
Kesterion Investments Limited is wholly-owned by Ms. Wong Eva, as such, Ms. Wong is deemed to be interested in 341,514,082 Shares and underlying Shares held by Kesterion Investments Limited.
A maximum of 91,000,000 Shares shall be issued to the Vendor (or the nominee(s) as it may direct) according to the terms of the Sale and Purchase Agreement. None of the Director is a director or an employee of the Vendor except Mr. Cheung Hung Man is the sole director of the Vendor.

APPENDIX

GENERAL INFORMATION

Mr. Cheung Hung Man ("Mr. Cheung") is interested in 25,295,000 issued Shares and another 91,000,000 Shares to be issued to the Vendor, a company wholly-owned by Mr. Cheung (or the nominee(s) as the Vendor may direct) according to the terms of the Sale and Purchase Agreement. Mr. Cheung is the sole director of the Vendor.
Pursuant to the security document dated 13 March 2013 entered into between Kesterion Investments Limited and China Shipbuilding Industrial Complete Equipment and Logistics Company Limited, a security over the 252,153,400 Shares and the Convertible Bonds held by Kesterion Investments Limited (upon the full conversion at a conversation price of HK$22.79 per conversion share, a total of 68,955,682 Shares shall be issued to Kesterion Investments Limited) was created in favour of China Shipbuilding Industrial Complete Equipment and Logistics Company Limited. None of the Directors is a director or an employee of China Shipbuilding Industrial Complete Equipment and Logistics Company Limited.

Save as disclosed above, the Directors of the Company are not aware, as at the Latest Practicable Date, of any person (not being a Director or chief executive of the Company) who had interest or short position in the Shares or underlying Shares which would fall to be disclosed under Divisions 2 and 3 of Part XV of the SFO and required to be entered into the register maintained by the Company pursuant to Section 336 of the SFO, or were expected, directly or indirectly to be interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of the Company or any other member of the Group.

4. DIRECTORS' SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had entered or proposed to enter into a service contract with any member of the Enlarged Group which is not determinable by the employer within one year without payment of compensation (other than statutory compensation).

5. EXPERT AND CONSENT

The following are the qualifications of the expert whose opinions or advice are contained in this circular:

Name	Qualification
Changjiang Corporate Finance (HK) Limited	a licensed corporation authorised to conduct type 6 (advising on corporate finance) regulated activity under the SFO

As at the Latest Practicable Date, Changjiang had given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter dated 10 May 2013 and reference to its name in the form and context in which it appears.

As at the Latest Practicable Date, Changjiang was not interested in any shareholding in any member of the Group or the right or option (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group, and had no direct or indirect interest in any assets which have been or proposed to be acquired or disposed of by or leased to any member of the Group since 31 March 2012, being the date to which the latest published audited accounts of the Company were made up.

APPENDIX

GENERAL INFORMATION

6. DIRECTORS' INTERESTS IN ASSETS' CONTRACTS OR ARRANGEMENTS

As at the Latest Practicable Date, none of the Directors has any interest, direct or indirect, in any assets which since 31 March 2012, the date to which the latest published audited consolidated accounts of the Group were made up, have been acquired or disposed of by or leased to any member of the Enlarged Group or are proposed to be acquired or disposed of by or leased to any member of the Enlarged Group.

Save as disclosed in previous sections in this circular, as at the Latest Practicable Date, none of the Directors was materially interested in any contract or arrangement subsisting as at the date of this circular which is significant in relation to the businesses of the Enlarged Group.

7. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse change, actual or potential, in the financial or trading position of the Group since 31 March 2012, being the date to which the latest published audited consolidated accounts of the Group were made up.

8. COMPETING INTEREST

As at the date of this circular, none of the Directors and their respective associates was considered to have an interest in a business which competes or is likely to compete, either directly or indirectly, with the business of the Enlarged Group.

9. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours at the principal place of business of the Company in Hong Kong at Suite 3008, Tower One, Times Square, 1 Matheson Street, Causeway Bay, Hong Kong, during normal business hours on any weekday (except Saturdays, Sundays and public holidays) for a period of 14 days from the date of this circular:

(a) The letter from the Independent Board Committee as set out on pages 19 to 20 of this circular;

(b) the letter from Changjiang, the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders as set out on pages 21 to 34 of this circular;

(d) the supplemental agreement in respect of the Sale and Purchase Agreement entered into amongst the Purchaser, the Company, the Vendor and the Vendor's Guarantor dated 10 May 2013; and

(e) this circular.

APPENDIX

GENERAL INFORMATION

10. CORPORATE INFORMATION

Company Secretary
Mr. Chan Ming Cho, Joe, Fellow Certified Public Accountant

Registered Office
P.O. Box 309, Ugland House,
South Church Street, George Town,
Grand Cayman, Cayman Islands,
British West Indies

Head office and principal place of business in Hong Kong
Suite 3008, Tower One, Times Square,
1 Matheson Street, Causeway Bay,
Hong Kong

Share registrar and transfer office in Hong Kong
Tricor Tengis Limited
26th Floor, Tesbury Centre,
28 Queen’s Road East, Wanchai,
Hong Kong

Auditors
RSM Nelson Wheeler
29th Floor, Caroline Centre,
Lee Gardens Two,
28 Yun Ping Road,
Hong Kong

Authorised Representatives
Mr. Eng Wee Meng
Mr. Chan Ming Cho, Joe

Solicitors
King & Wood Mallesons
9/F, Hutchison House
10 Harcourt Road
Central
Hong Kong

Compliance officer
Mr. Eng Wee Meng

Principal Banker
The Hongkong and Shanghai Banking Corporation Limited
1 Queen’s Road, Central
Hong Kong

40 -

APPENDIX
GENERAL INFORMATION

11. MISCELLANEOUS

The English text of this circular shall prevail over the Chinese text in case of any inconsistency.

41 -

NOTICE OF EGM

PAN ASIA MINING LIMITED 寰亞礦業有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 8173)

NOTICE IS HEREBY GIVEN THAT an extraordinary general meeting (the “EGM”) of Pan Asia Mining Limited (the “Company”) will be held at Suite 3008, Tower One, Times Square, 1 Matheson Street, Causeway Bay, Hong Kong on 28 May 2013 at 4:00 p.m. to consider and, if thought fit, to pass with or without amendments, the following resolution:

ORDINARY RESOLUTION

1. “THAT:

(a) the conditional sale and purchase agreement dated 27 March 2013 (and amended on 10 May 2013) entered into amongst (i) Black Sand Enterprises Limited as purchaser (the “Purchaser”), a wholly-owned subsidiary of Pan Asia Mining Limited (the “Company”); (ii) the Company; (iii) Brighton Asia Pacific Investment Limited as vendor (the “Vendor”); and (iv) Mr. Cheung Hung Man as the guarantor of all obligations and liabilities of the Vendor under the agreement, in relation to the sale and purchase of the entire issued share capital of Brighton Asia Pacific Investment Limited (耀中亞太控股有限公司) (the “Acquisition”), at a consideration of HK$50,050,000 (subject to adjustment) (the “Sale and Purchase Agreement”, a copy of which has been produced at the meeting marked “A” and signed by the chairman of the meeting for identification purpose), be and is hereby approved and ratified, and THAT all the transactions contemplated under the Sale and Purchase Agreement be and are hereby approved (including but not limited to the allotment and issue to the Vendor (or the nominee(s) as it may direct) of up to 91,000,000 ordinary shares of HK$0.50 each in the share capital of the Company at the issue price of HK$0.55 each credited as fully paid up and ranking pari passu with the existing issued shares of the Company (“Consideration Shares”) pursuant to the Sale and Purchase Agreement); and

(b) the Directors be and are hereby authorised to sign, execute, perfect and deliver all such documents and deeds, and do all such actions which are in their opinion necessary, appropriate, desirable or expedient for the implementation and completion of the Sale and Purchase Agreement, the allotment and issue of the Consideration Shares to the Purchaser (or the nominee(s) as it may direct), all other transactions contemplated under or incidental to the Sale and Purchase Agreement and all other matters incidental thereto or in connection therewith and to agree to the variation and waiver of any of the matters relating thereto that are, in the opinion of the Directors, appropriate, desirable or expedient in the context of the Acquisition and are in the best interests of the Company and the shareholders of the Company as a whole.”

42 -

NOTICE OF EGM

“THAT conditional upon the passing of resolution (1) above and the completion of the Sale and Purchase Agreement, the Directors be hereby granted a specific mandate to exercise the powers of the Company to allot, issue and deal with the Consideration Shares.”

By Order of the Board
Mr. Koh Tat Lee, Michael
Chairman

Hong Kong, 10 May 2013

Notes:

Any member entitled to attend and vote at the meeting convened by the above notice is entitled to appoint one, or if such member is a holder of more than one Share, more proxies to attend and vote in his/her stead. Where a member appoints more than one proxy, the instrument of proxy shall state which proxy is entitled to vote on a poll. A proxy need not be a member of the Company. In addition, a proxy or proxies representing either a member of the Company who is an individual or a member of the Company which is a corporation shall be entitled to exercise the same powers on behalf of the member of the Company which he or they represent as such member of the Company could exercise. If more than one proxy is appointed, the appointment shall specify the number of Shares in respect of which each such proxy is appointed.
In order to be valid, the form of proxy must be deposited at the Company's branch share registrar in Hong Kong, Tricor Tengis Limited at 26th Floor, Tesbury Centre, 28 Queen's Road East, Wan Chai, Hong Kong together with a power of attorney or other authority, if any, under which it is signed or a notarially certified copy of that power of attorney as soon as possible and in any event not less than 48 hours before the time appointed for the holding of such meeting or any adjournment thereof.
The form of proxy shall be in writing under the hand of the appointor or his attorney duly authorised in writing or, if the appointor is a corporation, either under its seal or under the hand of an officer, attorney or other person authorised to sign the same. In the case of a form of proxy purporting to be signed on behalf of a corporation by an officer thereof it shall be assumed, unless the contrary appears, that such officer was duly authorised to sign such form of proxy on behalf of the corporation without further evidence of the fact.
Completion and return of a form of proxy will not preclude a member from attending in person and voting at the above meeting or any adjournment thereof, should he so wish, and in such event, the form of proxy shall be deemed to be revoked.
A form of proxy for use at the meeting is enclosed.
In case of joint holders of a share of the Company, any one of such holders may vote at the meeting either personally or by proxy in respect of such share as if he was solely entitled thereto. However, if more than one such joint holders are present at the meeting personally or by proxy, then one of such holders whose name stands first in the register of member of the Company shall alone be entitled to vote in respect of that share.
43 -

AI assistant

Hephaestus Holdings Limited — Proxy Solicitation & Information Statement 2013

51310_rns_2013-05-10_c35a9e88-1b48-4e57-9728-28b71943e92b.pdf

PAN ASIA MINING LIMITED

寰亞礦業有限公司

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

吕江證券融資(香港)有限公司

DEFINITIONS

PAN ASIA MINING LIMITED 寰亞礦業有限公司

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

1. INTRODUCTION

2. THE SALE AND PURCHASE AGREEMENT

Date

Parties

The Acquisition of Sale Share

Consideration

Consideration Shares

Deed of Indemnity

Undertakings and Warranties

3. INFORMATION ON THE TARGET GROUP

Financial information of the Target Group

4. INFORMATION ON THE GROUP

5. REASONS FOR AND BENEFITS OF THE ACQUISITION

6. IMPLICATIONS OF THE GEM LISTING RULES

7. THE INDEPENDENT BOARD COMMITTEE AND INDEPENDENT FINANCIAL ADVISER

8. EGM

9. RECOMMENDATION

10. ADDITIONAL INFORMATION

PAN ASIA MINING LIMITED 寰亞礦業有限公司

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

II. THE INDEPENDENT BOARD COMMITTEE

III. BASIS OF OUR OPINION

IV. PRINCIPAL FACTORS AND REASONS CONSIDERED IN RELATION TO THE ACQUISITION

1. Principal activities of the Company and its recent financial results

2. Reasons for the Acquisition

3. Consideration

4. Possible financial effects of the Acquisition to the Group

4.1 Earnings

4.2 Net assets value

V. RECOMMENDATION

1. RESPONSIBILITY STATEMENT

2. DISCLOSURE OF INTERESTS OF DIRECTORS

4. DIRECTORS' SERVICE CONTRACTS

5. EXPERT AND CONSENT

6. DIRECTORS' INTERESTS IN ASSETS' CONTRACTS OR ARRANGEMENTS

7. MATERIAL ADVERSE CHANGE

8. COMPETING INTEREST

9. DOCUMENTS AVAILABLE FOR INSPECTION

10. CORPORATE INFORMATION

11. MISCELLANEOUS

PAN ASIA MINING LIMITED 寰亞礦業有限公司

ORDINARY RESOLUTION

1. “THAT:

More from Hephaestus Holdings Limited

Hephaestus Holdings Limited Proxy Solicitation & Information Statement 2013