THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in Pan Asia Mining Limited 寰亞礦業有限公司 (the “Company”), you should at once hand this circular with the enclosed form of proxy to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser or transferee.

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

PAN ASIA MINING LIMITED 寰亞礦業有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 8173)

(I) PROPOSED CHANGE OF COMPANY NAME;
(II) PROPOSED SHARE CONSOLIDATION;
(III) PROPOSED CHANGE IN BOARD LOT SIZE;
(IV) PROPOSED RIGHTS ISSUE ON THE BASIS OF EIGHT
RIGHTS SHARES FOR EVERY ONE CONSOLIDATED SHARE HELD
ON THE RECORD DATE;
AND
(V) NOTICE OF EXTRAORDINARY GENERAL MEETING

Joint financial advisers to the Company

Freeman Corporate Finance Limited

Underwriter of the Rights Issue

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

高銀融資有限公司 GOLDIN FINANCIAL LIMITED

Capitalised terms used in this cover page shall have the same meanings as those defined in this circular.

A letter from the Board is set out on pages 11 to 39 of this circular. A letter from the Independent Board Committee is set out on page 40 of this circular. A letter from Goldin, the Independent Financial Adviser, containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 41 to 59 of this circular.

A notice convening the EGM to be held at Auberge Discovery Bay Hong Kong, 88 Siena Avenue, Discovery Bay, Lantau Island, Hong Kong at 8:00 a.m. on Friday, 8 April 2016 is set out on pages EGM-1 to EGM-4 of this circular. A form of proxy for use at the meeting is enclosed. Whether or not you intend to attend the meeting, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the branch share registrar of the Company in Hong Kong, Tricor Tengis Limited of Level 22, Hopewell Centre, 183 Queen's Road East, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for the holding of the meeting or any adjournment thereof. Completion and return of the form of proxy shall not preclude you from attending and voting in person at the meeting or any adjournment thereof should you so desire.

Shareholders should note that the Consolidated Shares will be dealt in on an ex-entitlement basis commencing from Tuesday, 12 April 2016 and that dealings in the Rights Shares in the nil-paid form will take place from 9:00 a.m. on Monday, 25 April 2016 to 4:00 p.m. on Tuesday, 3 May 2016 (both dates inclusive) while the conditions to which the Underwriting Agreement is subject to remain unfulfilled. Any Shareholder or other person dealing in the Shares or the Consolidated Shares (as the case may be) and/or nil-paid Rights Shares from the Latest Practicable Date up to the date on which all the conditions of the Rights Issue are fulfilled will accordingly bear the risk that the Rights Issue may not become unconditional or may not proceed. Any Shareholder or other person contemplating any dealings in the Shares or the Consolidated Shares (as the case may be) and/or nil-paid Rights Shares, who is in any doubt about his/her/its position, is recommended to consult his/her/its own professional advisers.

11 March 2016

CONTENTS

Page

CHARACTERISTICS OF GEM ... ii
DEFINITIONS ... 1
EXPECTED TIMETABLE ... 7
TERMINATION OF THE UNDERWRITING AGREEMENT ... 10
LETTER FROM THE BOARD ... 11
LETTER FROM THE INDEPENDENT BOARD COMMITTEE ... 40
LETTER FROM GOLDIN ... 41
APPENDIX I — FINANCIAL INFORMATION OF THE GROUP ... I-1
APPENDIX II — UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP ... II-1
APPENDIX III — GENERAL INFORMATION ... III-1
NOTICE OF THE EGM ... EGM-1

— i —

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 and no assurance is given that there will be a liquid market in the securities traded on GEM.

— ii —

DEFINITIONS

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

"Announcement"
the announcement of the Company dated 15 February 2016 relating to, among other things, the Change of Company Name, the Share Consolidation, the Rights Issue and the Change in Board Lot Size

"associates"
has the meaning ascribed to this term under the GEM Listing Rules

"Board"
the board of Directors

"Bondholders"
holders of the Convertible Bonds

"Bondholders' Undertaking"
the irrevocable and unconditional undertaking given by the Bondholders in favour of the Company and the Underwriter pursuant to which the Bondholders have undertaken, inter alia, (1) not to transfer or otherwise dispose of any interest in the Convertible Bonds; and (2) not to exercise the conversion rights attached to the Convertible Bonds from the date of Bondholders' Undertaking up to and including the Record Date

"Business Day(s)"
a day (other than a Saturday, Sunday or public holiday) on which licensed banks in Hong Kong are generally open for business throughout their normal business hours

"CCASS"
the Central Clearing and Settlement System established and operated by HKSCC

"Change in Board Lot Size"
the proposed change in board lot size of the Shares for trading on the Stock Exchange from 10,000 Shares to 40,000 Consolidated Shares

"Change of Company Name"
the proposed change of the English name of the Company from "Pan Asia Mining Limited" to "Union Asia Enterprise Holdings Limited", and to change the dual foreign name of the Company from "寰亞礦業有限公司" to "萬亞企業控股有限公司"

"Companies (Winding Up and Miscellaneous Provisions) Ordinance"
the Companies (Winding Up and Miscellaneous Provisions) Ordinance, Chapter 32 of the Laws of Hong Kong (as amended from time to time)

— 1 —

DEFINITIONS

"Company"
Pan Asia Mining Limited 寰亞礦業有限公司, a company incorporated in the Cayman Islands with limited liability, the issued shares of which are listed on GEM (Stock Code: 8173)

"connected person(s)"
has the meaning ascribed to this term under the GEM Listing Rules

"Consolidated Share(s)"
ordinary share(s) of HK$0.08 each in the issued share capital of the Company upon completion of the Share Consolidation

"Convertible Bonds"
5 years 2% convertible bonds due 2020 issued by the Company with outstanding principal amount of US$80,000,000 (equivalent to approximately HK$624 million) which is convertible into 1,248,000,000 Shares at the conversion price of HK$0.5 per Share

"Director(s)"
director(s) of the Company for the time being

"Early Partial Redemption"
early redemption of the Convertible Bonds in part for principal amount of US$30 million at 98% of the principal amount to be redeemed

"EGM"
the extraordinary general meeting of the Company to be convened and held for the Shareholders to consider and approve, among other things, the Change of Company Name, the Share Consolidation, the Rights Issue and the transactions contemplated thereunder

"Excess Application Form" or "EAF(s)"
the form(s) of application for excess Rights Shares, being in such final form to be agreed between the Company and the Underwriter

"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

"HK$"
Hong Kong Dollars, the lawful currency of Hong Kong

"HKSCC"
Hong Kong Securities Clearing Company Limited

— 2 —

DEFINITIONS

"Hong Kong"
the Hong Kong Special Administrative Region of the PRC

"Independent Board Committee"
the independent board committee of the Board comprising all of the independent non-executive Directors, established for the purpose of advising and giving recommendation to the Independent Shareholders on the terms of the Rights Issue

"Independent Financial Adviser" or "Goldin"
Goldin Financial Limited, a licensed corporation to carry on Type 6 (advising on corporate finance) regulated activity under the SFO, being the independent financial adviser appointed to advise the Independent Board Committee and the Independent Shareholders in respect of the Rights Issue

"Independent Shareholder(s)"
Shareholders other than those who are required to abstain from voting at the EGM under the GEM Listing Rules

"Independent Third Party(ies)"
third party (parties) independent of and not connected with the Company and its connected persons

"Kesterion"
Kesterion Investments Limited

"Last Trading Day"
15 February 2016, being the date of the Underwriting Agreement

"Latest Practicable Date"
9 March 2016, being the latest practicable date before the printing of this circular for the purpose of ascertaining certain information contained herein

"Latest Time for Acceptance"
4:00 p.m. on Friday, 6 May 2016 (or such later time or date as may be agreed between the Underwriter and the Company in writing as the latest time for acceptance of, and payment for, the Rights Shares as described in the Prospectus)

"Latest Time for Termination"
4:00 p.m. on Wednesday, 11 May 2016 (or such later time or date as may be agreed between the Underwriter and the Company in writing as the latest time to terminate the Underwriting Agreement)

"Listing Committee"
has the meaning ascribed to this term under the GEM Listing Rules

— 3 —

DEFINITIONS

"Loan" a loan of HK$5 million, bearing interest at a rate of 2% per month for a term of twelve months

"Non-Qualifying Shareholders" those Overseas Shareholder(s) to whom the Board, after making enquires, considers it necessary or expedient on account either of legal restrictions under the laws of the relevant place or the requirements of the relevant regulatory body or stock exchange in that place not to offer the Rights Shares to them

"Outstanding Options" share options granted by the Company under the Share Option Scheme which entitle the holders thereof to subscribe for up to an aggregate 262,800 Shares as at the date of the Underwriting Agreement

"Overseas Shareholders" the Shareholders with registered addresses (as shown in the register of members of the Company on the Record Date) which are outside Hong Kong

"PAL(s)" the renounceable provisional allotment letter(s) proposed to be issued to the Qualifying Shareholders in connection with the Rights Issue

"PRC" the People's Republic of China which, for the purpose of this circular, excludes Hong Kong, Taiwan and the Macau Special Administrative Region of the People's Republic of China

"Prospectus" the prospectus to be issued by the Company in relation to the Rights Issue

"Prospectus Documents" the Prospectus, the PAL(s) and the Excess Application Form(s) in respect of the Rights Shares to be issued by the Company in relation to the Rights Issue

"Prospectus Posting Date" Thursday, 21 April 2016 or such other date as the Underwriter may agree in writing with the Company for the despatch of the Prospectus Documents to the Qualifying Shareholders or the Prospectus to the Non-Qualifying Shareholders for information only (as the case may be)

— 4 —

DEFINITIONS

"Qualifying Shareholders"
the Shareholders, other than the Non-Qualifying Shareholders, whose names appear on the register of members of the Company on the Record Date

"Rights Share(s)"
not less than 2,529,776,120 Consolidated Shares and not more than 2,530,038,920 Consolidated Shares proposed to be offered to the Qualifying Shareholders under the Rights Issue for subscription on the basis of eight (8) Rights Shares for every one (1) Consolidated Share held on the Record Date and payable in full on acceptance pursuant to the terms and subject to the conditions set out in the Underwriting Agreement and to be set out in the Prospectus

"Rights Issue"
the proposed issue by way of rights issue to the Qualifying Shareholders for the Rights Shares at the Subscription Price on the terms and subject to the conditions set out in the Underwriting Agreement and to be set out in the Prospectus

"Record Date"
Wednesday, 20 April 2016 or such other date as may be agreed between the Company and the Underwriter for the determination of the entitlements under the Rights Issue

"Registrar"
the share registrar and transfer office of the Company in Hong Kong, Tricor Tengis Limited, at Level 22, Hopewell Centre, 183 Queen's Road East, Hong Kong

"SFO"
Securities and Futures Ordinance (Chapter 571, Laws of Hong Kong)

"Share(s)"
ordinary share(s) of HK$0.01 each in the share capital of the Company

"Shareholder(s)"
holder(s) of the Share(s)

"Share Consolidation"
the proposed consolidation of every eight (8) Shares of HK$0.01 each into one (1) Consolidated Share of HK$0.08 each

"Share Option Scheme"
the share option scheme adopted by the Shareholders on 25 April 2002 and expired on 24 April 2012

— 5 —

DEFINITIONS

"Shortfall Underwritten Shares" the Underwritten Shares not validly accepted by the Qualifying Shareholders and not taken by excess application on or before the Latest Time for Acceptance

"Stock Exchange" The Stock Exchange of Hong Kong Limited

"Subscription Price" the issue price of HK$0.112 per Rights Share at which the Rights Shares are proposed to be offered for subscription under the Rights Issue

"Takeovers Code" The Hong Kong Code on Takeovers and Mergers

"Underwriter" Freeman Securities Limited, a licensed corporation to carry on business in Type 1 (dealing in securities) regulated activity under the SFO

"Underwriting Agreement" the underwriting agreement dated 15 February 2016 entered into between the Company and the Underwriter in relation to the underwriting arrangement in respect of the Rights Issue

"Underwritten Shares" not less than 2,529,776,120 Rights Shares and not more than 2,530,038,920 Rights Shares being underwritten by the Underwriter pursuant to the terms of the Underwriting Agreement

"US$" United States dollar, the lawful currency of the United States

"%" per cent.

For the purpose of illustration only, the amounts denominated in US$ in this circular are translated into HK$ at the rate of US$1 = HK$7.8. Such translation should not be construed as a representation that the currency could actually be converted into HK$ at that rate or at all.

— 6 —

EXPECTED TIMETABLE

Set out below is the expected timetable for the implementation of the Share Consolidation, the Rights Issue and the Change in Board Lot Size:

Event
2016

Latest date and time for lodging transfers of Shares in order to be qualified for attendance and voting at the EGM 4:30 p.m. on Thursday, 31 March

Closure of register of members of the Company for transfer of Shares to determine the right to attend and vote at the EGM (both dates inclusive) Friday, 1 April to Friday, 8 April

Latest time for return of proxy form of the EGM (not less than 48 hours prior to time of the EGM) 8:00 a.m. on Wednesday, 6 April

Record date for attendance and voting at the EGM Friday, 8 April

Expected date and time of the EGM 8:00 a.m. on Friday, 8 April

Announcement of results of the EGM Friday, 8 April

The following events are conditional on the fulfillment of the conditions for the implementation of the Share Consolidation.

Effective date of the Share Consolidation Monday, 11 April

Commencement of dealings in the Consolidated Shares 9:00 a.m. on Monday, 11 April

Original counter for trading in Shares (in board lots of 10,000 Shares) (in the form of existing share certificates) temporarily closes 9:00 a.m. on Monday, 11 April

Temporary counter for trading in Consolidated Shares, in board lots of 1,250 Consolidated Shares (in the form of existing share certificates) opens 9:00 a.m. on Monday, 11 April

First day for the free exchange of existing certificates of the Shares into new share certificates of Consolidated Shares commences Monday, 11 April

Last day of dealings in Consolidated Shares on a cum-entitlement basis in respect of the Rights Issue Monday, 11 April

— 7 —

EXPECTED TIMETABLE

Event
2016

First day of dealings in Consolidated Shares on
an ex-entitlement basis in respect of the Rights Issue . . . . . . . . Tuesday, 12 April

Latest time for lodging transfers of Consolidated Shares
in order to qualify for the Rights Issue . . . . . . . . 4:30 p.m. on Wednesday, 13 April

Register of members closes (both dates inclusive)
to determine the entitlements to the Rights Issue . . . . . . . . Thursday, 14 April to
Wednesday, 20 April

Record Date for the Rights Issue . . . . . . . . . . . . . . . . . . . . Wednesday, 20 April

Despatch of the Prospectus Documents . . . . . . . . . . . . . . . . Thursday, 21 April

Original counter for trading in Consolidated Shares
in new board lots of 40,000 Consolidated Shares
(in the form of new share certificates) re-opens . . . . . 9:00 a.m. on Monday, 25 April

Parallel trading in the Consolidated Shares
(in the form of both existing share certificates and
new share certificates) commences . . . . . . . . . . . . . . 9:00 a.m. on Monday, 25 April

Designated broker starts to stand in the market to
provide matching services for the sale and
purchase of odd lots of Consolidated Shares . . . . . . 9:00 a.m. on Monday, 25 April

First day and time of dealings in nil-paid Rights Shares . . 9:00 a.m. on Monday, 25 April

Latest time for splitting nil-paid Rights Shares . . . . . 4:30 p.m. on Wednesday, 27 April

Last day and time of dealings in nil-paid Rights Shares . . . 4:00 p.m. on Tuesday, 3 May

Latest time for acceptance of and payment for the Rights
Shares and application for excess Rights Shares . . . . . . 4:00 p.m. on Friday, 6 May

Latest time for termination of
the Underwriting Agreement . . . . . . . . . . . . . . . 4:00 p.m. on Wednesday, 11 May

Designated broker ceases to stand in the market to
provide matching services for the sale and
purchase of odd lots of Consolidated Shares . . . . . . 4:00 p.m. on Monday, 16 May

— 8 —

EXPECTED TIMETABLE

Event
2016

Temporary counter for trading in board lots of
1,250 Consolidated Shares (in the form of
existing share certificates) closes 4:00 p.m. on Monday, 16 May

Parallel trading in Consolidated Shares
(in the form of new and existing certificates) ends 4:00 p.m. on Monday, 16 May

Announcement of the results of the Rights Issue Tuesday, 17 May

Despatch of share certificates for fully-paid
Rights Shares and refund cheques (if any) Wednesday, 18 May

Last day of free exchange of existing certificates for
new certificates for Consolidated Shares Wednesday, 18 May

Expected first day of dealings in
the fully-paid Rights Shares 9:00 a.m. on Thursday, 19 May

All times stated in this circular refer to Hong Kong times.

The latest time for acceptance of and payment for Rights Shares and application for excess Rights Shares will be postponed if there is a tropical cyclone warning signal no. 8 or above, or a 'black' rainstorm warning

i. in force in Hong Kong at any local time before 12:00 noon and no longer in force after 12:00 noon on the date of the Latest Time for Acceptance. Instead the latest time for acceptance of and payment for the Rights Shares and application for excess Rights Shares will be extended to 5:00 p.m. on the same business day;

ii. in force in Hong Kong at any local time between 12:00 noon and 4:00 p.m. on the date of the Latest Time for Acceptance. Instead the latest time of acceptance of and payment for the Rights Shares and application for excess Right Shares will be rescheduled to 4:00 p.m. on the following Business Day which does not have either of those warnings in force at any time between 9:00 a.m. and 4:00 p.m.

If the Latest Time for Acceptance is postponed in accordance with the foregoing, the dates mentioned in the section headed "Expected timetable" in this circular may be affected. An announcement will be made by the Company in such event as soon as possible.

— 9 —

TERMINATION OF THE UNDERWRITING AGREEMENT

If at any time on or before the Latest Time for Termination:

(A) the Underwriter shall become aware of the fact that, or shall have reasonable cause to believe that any of the representations, warranties and undertakings in the Underwriting Agreement was untrue, inaccurate, misleading or breached, and in each case the same is (in the reasonable opinion of the Underwriter) material in the context of the Rights Issue; or

(B) there shall be:

(i) any new law or regulation is enacted, or there is any change in existing laws or regulations or any change in the interpretation or application thereof by any court or other competent authority, whether in Hong Kong, Cayman Islands or elsewhere;

(ii) any change in local, national or international financial, political, industrial or economic conditions;

(iii) any change of an exceptional nature in local, national or international equity securities or currency markets;

(iv) any local, national or international outbreak or escalation of hostilities, insurrection or armed conflict;

(v) any moratorium, suspension or material restriction on trading in securities generally on the Stock Exchange;

(vi) any suspension in the trading of the Shares on the Stock Exchange for a continuous period of 7 trading days (as defined in the GEM Listing Rules); or

(vii) any change or development involving a prospective change in taxation or exchange controls in Hong Kong, Cayman Islands or elsewhere;

which is or are, in the reasonable opinion of the Underwriter:

(a) likely to have a material adverse effect on the business, financial position or prospects of the Group taken as a whole; or

(b) likely to have a material adverse effect on the success of the Rights Issue or the level of Rights Shares to be taken up; or

then the Underwriter may, by notice in writing given to the Company on or before the Latest Time for Termination, rescind the Underwriting Agreement and thereupon all obligations of the Underwriter thereunder shall cease and determine and no party shall have any claim against any other party in respect of any matter or thing arising out of or in connection with the Underwriting Agreement (save for any antecedent breaches thereof) and the Rights Issue shall not proceed.

— 10 —

LETTER FROM THE BOARD

PAN ASIA MINING LIMITED

袁亞礦業有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 8173)

Executive Directors:
Ms. Yip Man Yi (Chairman)
Mr. Cheung Hung Man (Chief Executive Officer)
Mr. Michael Koh Tat Lee
Mr. Shiu Chi Tak, Titus

Non-executive Directors:
Mr. Liang Tong Wei
Mr. Wong Chi Man

Independent Non-executive Directors:
Mr. Chu Hung Lin, Victor
Mr. Tong Wan Sze
Mr. Fung Kwok Leung
Dr. Wan Ho Yuen, Terence
Mr. Li Kwok Chu
Mr. Lau Shu Yan

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:
Units 3404-6, 34/F
AIA Tower
183 Electric Road
North Point, Hong Kong

11 March 2016

To the Shareholders

Dear Sir or Madam,

INTRODUCTION

Reference is made to the Announcement in relation to, among other things, the Change of Company Name, the Share Consolidation, the Rights Issue and the Change in Board Lot Size.

LETTER FROM THE BOARD

The purpose of this circular is to provide the Shareholders, among other things, (i) further details of the Change of Company Name, Share Consolidation, Rights Issue and the Change in Board Lot Size, (ii) a letter of recommendation from the Independent Board Committee to the Independent Shareholders in respect of the Rights Issue, (iii) a letter of advice from Goldin to the Independent Board Committee and the Independent Shareholders on the Rights Issue; and (iv) a notice convening the EGM.

PROPOSED CHANGE OF COMPANY NAME

The Board proposes to change the English name of the Company from "Pan Asia Mining Limited" to "Union Asia Enterprise Holdings Limited", and to change the dual foreign name of the Company from "寰亞礦業有限公司" to "萬亞企業控股有限公司".

Conditions for the Change of Company Name

The Change of Company Name is subject to the following conditions:

the passing of a special resolution by the Shareholders at the EGM to approve the Change of Company Name; and
the Registrar of Companies in Cayman Islands approving the Change of the Company Name and the new name being entered in the register of companies by the Registrar of Companies in Cayman Islands.

Subject to the satisfaction of the conditions set out above, the Change of Company Name will take effect from the date of entry of the new name of the Company on the register of companies maintained by the Registrar of Companies in Cayman Islands. Upon the Change of Company Name becoming effective, the Company will comply with the necessary filing procedures in Hong Kong.

Reasons for the Change of Company Name

The Board considers that the Change of Company Name will better reflect and emphasise the business focus of the Group. The proposed new name of the Company will provide the Company a better identification and strengthen the Company's corporate image. The Board believes that the Change of Company Name is in the interests of the Company and the Shareholders as a whole.

Effects on the Change of Company Name

The Change of Company Name will not affect any rights of the Shareholders. All existing share certificates of the Company in issue bearing the existing name of the Company will, upon the Change of Company Name becoming effective, continue to be effective and as documents of title to the shares of the Company and will remain valid for trading, settlement, registration and delivery purposes. Accordingly, there will not be any arrangement for the free exchange of the existing share certificate for new share certificates bearing the new name of the Company. Upon the Change of Company Name becoming effective, any new share certificates of the Company will be issued under the new name of the Company.

— 12 —

LETTER FROM THE BOARD

PROPOSED SHARE CONSOLIDATION

The Company intends to put forward a proposal to the Shareholders to effect the Share Consolidation which involves the consolidation of every eight (8) issued and unissued Shares of HK$0.01 each into one (1) Consolidated Share of HK$0.08 each.

Conditions of the Share Consolidation

The Share Consolidation is conditional upon (i) passing of an ordinary resolution to approve the Share Consolidation by the Shareholders by way of poll at the EGM; and (ii) the Listing Committee of the Stock Exchange granting approval to the listing of, and permission to deal in, the Consolidated Shares. Shareholders should note that the Share Consolidation is not conditional on the completion of the Rights Issue.

The Share Consolidation will become effective on the next Business Day immediately following the fulfillment of the above conditions.

Effect of the Share Consolidation

As at the Latest Practicable Date, the authorised share capital of the Company is HK$2,500,000,000 divided into 250,000,000,000 Shares of HK$0.01 each, of which 2,529,776,120 Shares have been issued and are fully paid or credited as fully paid.

Assuming that there is no change to the issued share capital of the Company between the Latest Practicable Date and the date of the EGM, immediately after the Share Consolidation becoming effective, the authorised share capital of the Company will become HK$2,500,000,000 divided into 31,250,000,000 Consolidated Shares of HK$0.08 each, of which 316,222,015 Consolidated Shares will be in issue.

Upon the Share Consolidation becoming effective, the Consolidated Shares will rank pari passu in all respects with each other. Fractional Consolidated Shares will not be issued by the Company to the Shareholders. Any fractional entitlements of the Consolidated Shares will be aggregated, sold and retained for the benefit of the Company, if feasible and applicable.

Other than the relevant expenses, including but not limited to professional fees and printing charges incurred, the implementation of the Share Consolidation will have no effect on the consolidated net asset value of the Group, nor will it alter the underlying assets, business, operations, management or financial position of the Company or the interests of the Shareholders, save for any fractional Consolidated Shares to which Shareholders may be entitled. The Directors believe that the Share Consolidation will not have any material adverse effect on the financial position of the Group.

— 13 —

LETTER FROM THE BOARD

Reasons for the Share Consolidation

Pursuant to Rule 17.76 of the GEM Listing Rules, where the market price of the securities of the issuer approaches the extremities of HK$0.01 or HK$9,995.00, the issuer may be required either to change the trading method or to proceed with a consolidation or splitting of its securities. In view of the recent trading price of the Shares, the Board proposes to implement the Share Consolidation.

The Share Consolidation will increase the nominal value of the Shares. It is expected that the Share Consolidation would bring about corresponding upward adjustments in the trading price of the Consolidated Shares which will enable the Company to comply with trading requirements of the GEM Listing Rules.

The Board therefore believes that the Share Consolidation is in the interests of the Company and the Shareholders as a whole.

Application for listing of the Consolidated Shares

Application will be made to the Listing Committee of the Stock Exchange for the granting of the listing of, and permission to deal in, the Consolidated Shares.

The Consolidated Shares will be identical in all respects and rank pari passu in all respects with each other as to all future dividends and distributions which are declared, made or paid. Subject to the granting of the listing of, and permission to deal in, the Consolidated Shares on the Stock Exchange, the Consolidated Shares will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the commencement date of dealings in the Consolidated Shares on the Stock Exchange or such other date as determined by HKSCC. Settlement of transactions between participants of the Stock Exchange on any trading day is required to take place in CCASS on the second settlement day thereafter. All activities under CCASS are subject to the General Rules of CCASS and CCASS operational procedures in effect from time to time.

None of the Shares are listed or dealt in any other stock exchange other than the Stock Exchange, and at the time the Share Consolidation becoming effective, the Consolidated Shares in issue will not be listed or dealt in on any stock exchange other than the Stock Exchange, and no such listing or permission to deal is being or is proposed to be sought.

Free exchange of Consolidated Shares' certificates and trading arrangement

Subject to the Share Consolidation becoming effective, Shareholders may, during the period from Monday, 11 April 2016 to Wednesday, 18 May 2016, submit share certificates for the existing Shares to the Registrar to exchange, at the expense of the Company, for new certificates of the Consolidated Shares. Thereafter, each share certificate for the existing Shares will be accepted for exchange only on payment of a fee of HK$2.50 (or such higher amount as may be from time to time be specified by the Stock Exchange) for each new share certificate issued for the Consolidated Shares or each share certificate for the existing Shares submitted for cancellation, whichever the number of

— 14 —

LETTER FROM THE BOARD

certificates issued or cancelled is higher. With effect from Thursday, 19 May 2016, trading will only be in Consolidated Shares in the form of new share certificates, and the share certificates for the existing Shares will cease to be valid for trading and settlement purpose, but they will continue to be good evidence of legal title and may be exchanged for new share certificates for the Consolidated Shares.

The new share certificates for the Consolidated Shares will be issued in blue colour in order to distinguish them from existing share certificates for the existing Shares which are in orange colour.

Odd lots arrangement and matching services

In order to facilitate the trading of odd lots (if any) of the Consolidated Shares, the Company has appointed Freeman Securities Limited to provide matching services for sale and purchase of odd lots of Consolidated Shares at the relevant market price per Consolidated Share, on a best effort basis, to those Shareholders who wish to acquire odd lots of the Consolidated Shares to make up a full board lot, or to dispose of their holding of odd lots of the Consolidated Shares. Shareholders who wish to take advantage of this facility should contact Ms. Hong Ming Kiu, May of Freeman Securities Limited at 1601, 16/F., China United Centre, 28 Marble Road, North Point, Hong Kong (telephone number: (852) 3513 8002) during office hours of such period. Holders of odd lots of the Consolidated Shares should note that successful matching of the sale and purchase of odd lots of the Consolidated Shares are not warranted. Any Shareholder who is in any doubt about the odd lots arrangement, is recommended to consult his/her/its own professional advisers.

PROPOSED CHANGE IN BOARD LOT SIZE

The Shares are currently traded on the Stock Exchange in board lot size of 10,000 Shares.

The Board proposes to change the board lot size for trading of the Shares on the Stock Exchange from 10,000 Shares to 40,000 Consolidated Shares conditional upon the Share Consolidation becoming effective. Based on the theoretical ex-entitlement price of approximately HK$0.1369 per Consolidated Share after the Rights Issue based on the theoretical closing price of HK$0.336 per Consolidated Share as quoted on the Stock Exchange on the Last Trading Day, the market value of each board lot of 40,000 Consolidated Shares was approximately HK$5,476, which will be greater than HK$2,000 and comply with the trading requirements under the GEM Listing Rules. Hence, the Board believes that the implementation of the Share Consolidation and the Change in Board Lot Size is in the interests of the Company and its Shareholders as a whole.

The Change in Board Lot Size will not result in any change in the relative rights of the Shareholders.

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LETTER FROM THE BOARD

PROPOSED RIGHTS ISSUE

The Company proposes to raise not less than approximately HK$283.3 million (before expenses) and not more than approximately HK$283.4 million (before expenses), by way of Rights Issue of not less than 2,529,776,120 Rights Shares and not more than 2,530,038,920 Rights Shares at the Subscription Price of HK$0.112 per Rights Share on the basis of eight (8) Rights Shares for every one (1) Consolidated Share held on the Record Date. The details are set out as follows:

Issue statistics

Basis of the Rights Issue:	Eight (8) Rights Shares for every one (1) Consolidated Share held on the Record Date
Subscription Price:	HK$0.112
Number of Shares in issue as at the Latest Practicable Date:	2,529,776,120
Number of Consolidated Shares in issue upon the Share Consolidation becoming effective:	316,222,015 Consolidated Shares
Number of Rights Shares:	Not less than 2,529,776,120 Rights Shares (Note 1) and not more than 2,530,038,920 Rights Shares (Note 2)
Number of Rights Shares underwritten by the Underwriter:	Not less than 2,529,776,120 Rights Shares (Note 1) and not more than 2,530,038,920 Rights Shares (Note 2)
Number of Consolidated Shares in issue upon completion of the Rights Issue:	Not less than 2,845,998,135 (Note 1) and not more than 2,846,293,785 Shares (Note 2)

Notes:

(1) Calculated and based on the assumption that save for the Share Consolidation, there is no change to the issued share capital of the Company from the Latest Practicable Date up to and including the Record Date.

LETTER FROM THE BOARD

(2) Calculated and based on the assumption that save for the Share Consolidation, there is no change to the issued share capital of the Company other than as a result of the issue of Shares upon exercise of the Outstanding Options in full from the Latest Practicable Date up to and including the Record Date.

As at the Latest Practicable Date,

(i) there are Outstanding Options which entitle the holders thereof to subscribe for an aggregate of 262,800 Shares or 32,850 Consolidated Shares. Assuming the subscription rights attached to the Outstanding Options are exercised in full on or before the Record Date and the Share Consolidation becoming effective, an additional 262,800 Rights Shares will be issued; and

(ii) the Company has in issue the Convertible Bonds with the outstanding principal amount of US$80,000,000 (equivalent to approximately HK$624 million) which is convertible into 1,248,000,000 Shares at the conversion price of HK$0.5 per Share. Pursuant to the Bondholders' Undertaking, each of the Bondholders has irrevocably and unconditionally undertaken to the Company and the Underwriter that he/she/it will not exercise any of the conversion rights attached to the Convertible Bonds from the date thereof up to and including the Record Date, none of the Convertible Bonds is exercisable on or before the Record Date.

Save for the Outstanding Options and the Convertible Bonds, as at the Latest Practicable Date, the Company has no other outstanding convertible securities, warrants, options, derivative or other securities convertible into or exchangeable for any Shares. The Company has no intention to issue or grant any warrants, options and/or convertible securities on or before the Record Date.

Assuming that save for the Share Consolidation, there is no change to the issued share capital of the Company from the Latest Practicable Date up to and including the Record Date, a total of 2,529,776,120 Rights Shares will be issued upon the completion of the Rights Issue, which represents 800.0% of the issued share capital of the Company immediately after the Share Consolidation and approximately 88.9% of the Company's issued share capital as enlarged by the issue of the Rights Shares.

Assuming that save for the Share Consolidation, there is no change to the issued share capital of the Company other than as a result of the issue of Shares upon exercise of the Outstanding Options in full from the Latest Practicable Date up to and including the Record Date, not more than 2,530,038,920 Rights Shares will be issued upon the completion of the Rights Issue, which represents 800.1% of the issued share capital of the Company immediately after the Share Consolidation and approximately 88.9% of the Company's issued share capital as enlarged by the issue of the Rights Shares and the issue of Shares upon exercise of the Outstanding Options in full.

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LETTER FROM THE BOARD

Subscription Price

The Subscription Price is HK$0.112 per Rights Share, payable in full upon acceptance of the relevant provisional allotment of Rights Shares or when a transferee of nil-paid Rights Shares applies for the Rights Shares. The Subscription Price represents:

(i) a discount of approximately 66.67% to the theoretical closing price of HK$0.336 per Consolidated Share, based on the closing price of HK$0.042 per Share as quoted on the Stock Exchange on the Last Trading Day and adjusted for the effect of the Share Consolidation;

(ii) a discount of approximately 66.98% to the average theoretical closing prices of HK$0.3392 per Consolidated Share, based on the average closing price of HK$0.0424 per Share as quoted on the Stock Exchange for the last five consecutive trading days including and up to the Last Trading Day and adjusted for the effect of the Share Consolidation;

(iii) a discount of approximately 18.19% to the theoretical ex-entitlement price of approximately HK$0.1369 per Consolidated Share after the Rights Issue, based on the theoretical closing price of HK$0.336 per Consolidated Share as quoted on the Stock Exchange on the Last Trading Day and adjusted for the effect of the Share Consolidation; and

(iv) a discount of approximately 58.82% to the theoretical closing price of HK$0.272 per Consolidated Share, based on the closing price of HK$0.034 per Share as quoted on the Stock Exchange on the Latest Practicable Date and adjusted for the effect of the Share Consolidation.

The Subscription Price was arrived at after arm's length negotiations between the Company and the Underwriter with reference to the prevailing market price of the existing Shares, the theoretical ex-entitlement price of the Consolidated Shares.

Apart from the aforesaid, in coming up with the current subscription ratio for the Rights Issue and the Subscription Price, the Company has also considered the following factors:

(i) given the Group's high gearing ratio, the net liabilities position and the fund raising size of the Rights Issue of up to approximately HK$283.4 million (before expenses) was around 2.7 times of the market capitalization of the Company as at the Last Trading Day, it is the need for setting the Subscription Price at a relatively deep discount for inducing the Underwriter to provide underwriting services under the Rights Issue and attracting all of the Qualifying Shareholders to participate in the Rights Issue;

(ii) the downward trend of the prevailing trading prices of the Shares in the past six months which decreased from HK$0.145 on 17 August 2015 to HK$0.042 on the Last Trading Day, representing a decrease of approximately 71.03%;

LETTER FROM THE BOARD

(iii) in view of the uncertainties in the financial market in Hong Kong as a result of the uncertainties stemming from fluctuating market sentiment, capital flow, trend of interest rate, volatility in money supply in different major economies and different economic decisions made by different countries, the Directors consider that it will be difficult to attract the Qualifying Shareholders to reinvest in the Company through the Rights Issue if the Subscription Price was not set at a relatively deep discount to the historical trading prices of the Shares;

(iv) under the Rights Issue, all the Qualifying Shareholders will be offered the same opportunity to maintain their proportionate interests in the Company and to participate in the growth and development of the Company. Should the Qualifying Shareholders participate in the Rights Issue, they will be subscribing the Rights Shares at a lower price as compared to the historical and prevailing market price of the Shares;

(v) inherent dilutive nature of Rights Issue in general if the Qualifying Shareholders did not take up their entitlements under the Rights Issue in full. However, the Qualifying Shareholders have the first right to decide whether to accept their entitlements of the Rights Shares; and

(vi) although the Rights Issue has an inherent dilutive nature, it is subject to Shareholders' approval, which means that the Shareholders have a right to disapprove the Rights Issue and the Underwriter has also undertaken to the Company that none of the persons to be procured by the Underwriter to subscribe for the Underwritten Shares will be a substantial Shareholder as a result of the Rights Issue.

In view of the above, the Board considers the terms of the Rights Issue, including the Subscription Price which has been set as a discount to the theoretical closing price of the Consolidated Shares on the Last Trading Day with an objective to encourage existing Shareholders to take up their entitlements so as to participate in the potential growth of the Company, to be fair and reasonable and in the best interests of the Company and the Shareholders as a whole. However, those Qualifying Shareholders who do not take up in full the Rights Shares to which they are entitled should note that their shareholdings in the Company will be diluted. If all the Qualifying Shareholders do not take up the Rights Shares to which they are entitled and the Underwriter takes up all the Rights Shares, the percentage of shareholding (assuming that there is no change to the issued share capital of the Company from the Last Trading Day up to and including the Record Date) of the existing public Shareholders will be reduced from 78.4% to approximately 8.7%, representing a dilution effect on the shareholding interests of approximately 88.9% as a result of the Rights Issue. Moreover, the dilution impact on shareholding after taking into account the monetary effect of the Rights Issue (estimated based on discount of the Subscription Price to the theoretical closing price of the Consolidated Shares on the Last Trading Day) was approximately 59.3%.

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LETTER FROM THE BOARD

The estimated net price per Rights Share after deducting the related expenses of the Rights Issue will be approximately HK$0.107.

Qualifying Shareholders

The Rights Issue is only available to the Qualifying Shareholders and will not be extended to the Non-Qualifying Shareholders. The Company will send the Prospectus Documents to the Qualifying Shareholders. To qualify for the Rights Issue, the Shareholders must at the close of business on the Record Date:

(i) be registered on the register of members of the Company; and
(ii) not be the Non-Qualifying Shareholders.

In order to be registered as members of the Company on the Record Date, the Shareholders must lodge any transfer of the Consolidated Shares (with the relevant share certificates) for registration with the Registrar by 4:30 p.m. on Wednesday, 13 April 2016. The address of the Registrar is at Level 22, Hopewell Centre, 183 Queen's Road East, Hong Kong.

Rights of the Overseas Shareholders

If, at the close of business on the Record Date, a Shareholder's address on the register of members of the Company is in a place outside Hong Kong, that Shareholder may not be eligible to take part in the Rights Issue as the Prospectus Documents will not be registered and/or filed under the applicable securities legislation of any jurisdictions other than Hong Kong. The Board will make enquiries to its lawyers as to whether the issue of Rights Shares to the Overseas Shareholders may contravene the applicable securities legislation of the relevant overseas places or the requirements of the relevant regulatory body or stock exchange pursuant to the GEM Listing Rules. If, after making such enquiry, the Board is of the opinion that it would be necessary or expedient not to offer the Rights Shares to such Overseas Shareholders, no provisional allotment of Rights Shares will be made to such Overseas Shareholders. Accordingly, the Rights Issue will not be extended to the Non-Qualifying Shareholders.

Based on the register of members of the Company as at the Latest Practicable Date, there was one Overseas Shareholder with its address registered in the Cayman Islands. Pursuant to Rule 17.41(1) of the GEM Listing Rules, the Board has made enquiries regarding the legal restrictions under the applicable securities legislation of the relevant jurisdiction and has obtained advice that the Rights Issue can be extended to the Overseas Shareholder in the Cayman Islands. The Company will continue to ascertain whether there is any Overseas Shareholders on the Record Date and will, if necessary, make further enquiries regarding the feasibility of extending the Rights Issue to such Overseas Shareholders on the Record Date and make relevant disclosures in the Prospectus.

The Company will send the Prospectus, for information only, to the Non-Qualifying Shareholders, without the PAL and EAF.

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LETTER FROM THE BOARD

The Company shall provisionally allot the Rights Shares which represent the entitlements of the Non-Qualifying Shareholders to a nominee of the Company in nil-paid form and the Company shall procure that such nominee shall endeavour to sell the rights as soon as practicable after dealings in nil-paid Rights Shares commence and in any event on or before the last day of dealings in nil-paid Rights Shares at a net premium (nil-paid). If and to the extent that such rights can be so sold, the nominee of the Company shall account to the Company for the net proceeds of sale (after deducting the expenses of sale, if any), on the basis that the net proceeds after deducting the expenses of sale (if any) attributable to the sale of the Rights Shares that would otherwise have been allotted to the Non-Qualifying Shareholders shall be distributed pro rata to their shareholdings as at the Record Date (but rounded down to the nearest cent) to the Non-Qualifying Shareholders provided that individual amounts of HK$100 or less shall be retained by the Company for its own benefit. Any of such nil-paid rights which are not sold as aforesaid will be dealt with as Rights Shares not taken up.

Overseas Shareholders should note that they may or may not be entitled to the Rights Issue. Accordingly, Overseas Shareholders should exercise caution when dealing in the securities of the Company.

Closure of register of members

The register of members of the Company will be closed from Friday, 1 April 2016 to Friday, 8 April 2016 (both dates inclusive) to determine the eligibility of the Shareholders to vote at the EGM. No transfer of Shares will be registered during such period.

The Company's register of members will also be closed from Thursday, 14 April 2016 to Wednesday, 20 April 2016 (both dates inclusive) to determine the entitlement to the Rights Issue. No transfer of Consolidated Shares will be registered during such period.

Basis of provisional allotment

The basis of the provisional allotment shall be eight (8) Rights Shares (in nil-paid form) for every one (1) Consolidated Share held by the Qualifying Shareholders at the close of business on the Record Date. Application for all or any part of a Qualifying Shareholder's provisional allotment should be made by completing the PAL and lodging the same with a remittance for the Rights Shares being applied for with the Registrar by the Latest Time for Acceptance.

Status of the Rights Shares

The Rights Shares (when allotted, fully paid and issued) will rank pari passu in all respects with the Consolidated Shares in issue on the date of allotment and issue of the Rights Shares. Holders of the fully-paid Rights Shares will be entitled to receive all future dividends and distributions which are declared, made or paid on or after the date of allotment and issue of the Rights Shares.

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LETTER FROM THE BOARD

Fractions of Rights Shares

On the basis of provisional allotment of eight (8) Rights Shares for every one (1) Consolidated Share held on the Record Date, no fractional entitlements to the Rights Shares will arise under the Rights Issue.

Certificates of the Rights Shares and refund cheques

Subject to fulfillment of the conditions of the Rights Issue, certificates for the fully-paid Rights Shares are expected to be despatched on or before Wednesday, 18 May 2016 to those entitled thereto by ordinary post at their own risk. If the Rights Issue is terminated, refund cheques are expected to be despatched on or before Wednesday, 18 May 2016 by ordinary post at the respective Shareholders' own risk.

Refund cheques in respect of wholly or partially unsuccessful applications for excess Rights Shares (if any) are also expected to be posted on or before Wednesday, 18 May 2016 by ordinary post to the applicants at their own risk.

Application for excess Rights Shares

Qualifying Shareholders will have the right to apply for any unsold provisional allotment of the Non-Qualifying Shareholders and any Rights Shares provisionally allotted but not accepted by the Qualifying Shareholders.

Application may be made by Qualifying Shareholders completing the EAF and lodging the same with a separate remittance for the excess Rights Shares being applied for. The Company will allocate the Rights Shares in excess of the entitlement at its discretion on a fair and equitable basis to the Qualifying Shareholders who have applied for excess Rights Shares. Shareholders who have been offered odd lots of the Rights Shares should note that there is no guarantee that such odd lots of the Rights Shares will be topped up to create whole board lots pursuant to applications for the excess Rights Shares. The Directors will allocate the excess Rights Shares at their discretion on a fair and equitable basis on the following principles:

(i) no preference will be given to applications for topping-up odd-lot holdings to whole-lot holdings as the giving of such preference may potentially be abused by certain investors by splitting their Shares and thereby receiving more Rights Shares than they would receive if such preference is not given, which is an unintended and undesirable result; and

(ii) subject to availability of excess Rights Shares, the excess Rights Shares will be allocated to the Qualifying Shareholders who have applied for excess application on a pro rata basis based on the excess Rights Shares applied for by them.

Any Rights Shares not applied for by the Qualifying Shareholders and not taken by excess application will be taken up by the Underwriter and sub-underwriter(s).

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LETTER FROM THE BOARD

Investors with their Shares held by a nominee company should note that the Board will regard the nominee company (including HKSCC Nominees Limited) as a single Shareholder according to the register of members of the Company.

Accordingly, the Shareholders should note that the aforesaid arrangement in relation to the allocation of the excess Rights Shares will not be extended to beneficial owners individually. Investors with their Shares held by a nominee company are advised to consider whether they would like to arrange for registration of the relevant Shares in the name of the beneficial owner(s) prior to the Record Date. Shareholders and investors should consult their professional advisers if they are in any doubt as to their status.

Investors whose Shares are held by their nominee(s) and who would like to have their names registered on the register of members of the Company on the Record Date must lodge all necessary documents with the Registrar for completion of the relevant registration by 4:30 p.m. (Hong Kong time) on Wednesday, 13 April 2016.

Application for listing of the Rights Shares

The Company will apply to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Rights Shares (in both nil-paid and fully-paid forms). The trading board lot size of the Rights Shares (in both nil-paid and fully-paid forms) is 40,000 Consolidated Shares.

No part of the securities of the Company is listed or dealt in or on which listing or permission to deal is being or is proposed to be sought on any other stock exchange. Subject to the granting of the listing of, and permission to deal in, the Rights Shares in both their nil-paid and fully-paid forms on the Stock Exchange and compliance with the stock admission requirements of HKSCC, the Rights Shares in both their nil-paid and fully-paid forms will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the commencement date of dealings in the Rights Shares in both their nil-paid and fully-paid forms on the Stock Exchange or such other date as determined by HKSCC. Settlement of transactions between participants of the Stock Exchange on any settlement day is required to take place in CCASS on the second settlement day thereafter. All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time.

All necessary arrangements will be made to enable the Rights Shares in both their nil-paid and fully-paid forms to be admitted into CCASS.

Dealings in the Rights Shares in both their nil-paid and fully-paid forms which are registered in the register of members of the Company in Hong Kong maintained by the Registrar will be subject to the payment of stamp duty, Stock Exchange trading fee, the Securities and Futures Commission transaction levy and other applicable fees and charges in Hong Kong.

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LETTER FROM THE BOARD

UNDERWRITING ARRANGEMENT

Underwriting Agreement

Date: 15 February 2016 (after trading hours)

Underwriter: Freeman Securities Limited

Total number of Rights Shares: Not less than 2,529,776,120 Rights Shares and not more than 2,530,038,920 Rights Shares

Total number of Rights Shares underwritten by the Underwriter: all the Rights Shares, being not less than 2,529,776,120 Rights Shares and not more than 2,530,038,920 Rights Shares

Underwriting commission: 3.0%

The Rights Issue is fully underwritten by the Underwriter. To the best of the Directors' knowledge, information and belief, having made all reasonable enquiries, as at the Latest Practicable Date, the Underwriter and its ultimate beneficial owners are Independent Third Parties.

The Board considers the terms of the Underwriting Agreement including the commission rate accord with market practice and are fair and reasonable so far as the Company and the Shareholders are concerned.

As at the Latest Practicable Date, the Board had not received any information or irrevocable undertaking from its substantial Shareholder of its intention to take up its assured entitlements under the Rights Issue.

Conditions of the Rights Issue

The Rights Issue is conditional upon:

(i) the passing of necessary resolution(s) at the EGM to approve the Rights Issue by the Independent Shareholders;

(ii) the delivery to the Stock Exchange for authorisation and the registration with the Registrar of Companies in Hong Kong respectively one copy of each of the Prospectus Documents duly signed by two Directors (or by their agents duly authorised in writing) as having been approved by resolution of the Directors (and all other documents required to be attached thereto) and otherwise in compliance with the GEM Listing Rules and the Companies (Winding Up and Miscellaneous Provision) Ordinance not later than the Prospectus Posting Date;

(iii) the posting of the Prospectus Documents to the Qualifying Shareholders on or before the Prospectus Posting Date;

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(iv) the Listing Committee of the Stock Exchange granting or agreeing to grant (subject to allotment) and not having withdrawn or revoked listing of and permission to deal in the Rights Shares in their nil-paid and fully-paid forms by no later than the first day of their dealings;

(v) the delivery of the duly executed Bondholders' Undertaking by all the Bondholders in respect of the entire outstanding Convertible Bonds to the Company and the Underwriter on or before the date of the Underwriting Agreement;

(vi) compliance with and performance of all undertakings and obligations by all the Bondholders under and pursuant to the Bondholders' Undertaking;

(vii) the obligations of the Underwriter becoming unconditional and that the Underwriting Agreement is not terminated in accordance with its terms;

(viii) the Share Consolidation has become effective; and

(ix) compliance with and performance of all undertakings and obligations of the Company under the Underwriting Agreement and the representations and warranties given by the Company under the Underwriting Agreement remaining true, correct and not misleading in all material respects.

The conditions precedents, save and except item (ix) above which can only be waived by the Underwriter, are incapable of being waived. If the conditions precedents are not satisfied and/or waived (as the case may be) in whole or in part by the Company or by the Underwriter by 30 May 2016 or such other date as the Company and the Underwriter may agree, the Underwriting Agreement shall terminate and no party shall have any claim against any other party for costs, damages, compensation or otherwise save for any antecedent breaches.

As at the Latest Practicable Date, none of the above conditions have been fulfilled.

REASONS FOR THE RIGHTS ISSUE AND USE OF PROCEEDS

The Group is principally engaged in exploration and exploitation of mineral resources and trading of coals, metals, bunker fuel and beverages. The Rights Issue will also offer existing Shareholders the opportunity to participate in the future development of the Company on equal terms.

The gross proceeds from the Rights Issue will be not less than approximately HK$283.3 million and not more than approximately HK$283.4 million. The net proceeds from the Rights Issue after deducting the estimated expenses are estimated to be not less than approximately HK$270.0 million and not more than approximately HK$270.1 million. The Company intends to apply net proceeds from the Rights Issue as to (i) approximately HK$229.3 million for Early Partial Redemption of the Convertible Bonds; (ii) approximately HK$5.5 million for repayment of the Loan and payment of interest

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LETTER FROM THE BOARD

accrued thereon; and (iii) the remaining balance of not less than approximately HK$35.2 million and not more than approximately HK$35.3 million as general working capital for existing businesses of the Group.

Early Partial Redemption and repayment of the Loan and the payment of interest accrued thereon

As disclosed in the interim report of the Company for the six months ended 30 September 2015 (the "Interim Report 2016"), the Company had outstanding 2% Convertible Bonds with outstanding principal amount of US$80,000,000 (equivalent to approximately HK$624 million) as at 30 September 2015. The Convertible Bonds was initially held by Kesterion. On 19 November 2015, Kesterion has transferred the Convertible Bonds to various companies and individuals, each of them is an Independent Third Party. On 12 February 2016, a holder of the Convertible Bonds, Gloss Rise Limited ("Gloss Rise"), has agreed with the Company to accept 98% of the Convertible Bonds with principal amount of US$30 million as full repayment and waive of all accrued interest thereon, provided that such repayment is made on or before 30 June 2016. Gloss Rise acquired the Convertible Bonds with an aggregate amount of US$40 million from Kesterion at the consideration of HK$59.9 million. As Kesterion considers that the reasons for its transfer of the Convertible Bonds to Gloss Rise at discount is commercially sensitive information, Kesterion would not like to disclose such information to the Company. Gloss Rise and its ultimate beneficial owners are Independent Third Parties. For the period from November 2015 up to the Latest Practicable Date, the outstanding interest of the Convertible Bonds under the Early Partial Redemption is approximately HK$0.8 million. According to the terms of the Convertible Bonds, the Company has the right to early redeem the outstanding Convertible Bonds any time before the maturity date at 110% of the principal amount outstanding, representing an addition 10% premium over its principal amount. Since the Convertible Bonds are bearing 2% interest per annum, Early Partial Redemption will enable the Group to save the future interest expenses of approximately HK$21.1 million, representing approximately 9.0% of its principal amount. As such, the Early Partial Redemption will save the total payments by approximately HK$49.1 million, representing approximately 21.0% (including 2% redemption discount provided by Gloss Rise and addition 10% premium for early redemption) of its principal amount.

Based on the Interim Report 2016, the Group had an unaudited net liabilities of approximately HK$206.1 million as at 30 September 2015. The Company considers the net liabilities position of the Group will be improved and turned into net assets position following the completion of the Early Partial Redemption. As also stated in the Interim Report 2016, the gearing ratio of the Group, calculated based on total non-current liabilities of approximately HK$455.3 million (31 March 2015: approximately HK$859.9 million) against total deficit of approximately HK$206.1 million (31 March 2015: approximately HK$625.0 million), increased from approximately -137.6% to -220.9% as at 30 September 2015. In view of the high gearing ratio of the Group, the Company has continuously sought ways to strengthen its capital structure by improving the gearing ratio and enhance its financial position for future strategic investments when suitable opportunities arise and to reduce the operating and finance costs of the Company and enhance Shareholders' value. Additionally, the Directors have been exercising due and

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careful consideration when choosing the financing method available to the Group from time to time for the best interest of the Group.

Given that the Group is in net liabilities position with high gearing ratio as at 30 September 2015 and the Group has been loss making for the past few years, it is uncertain whether the Company will have sufficient internal resources or can obtain any debt financing in time to fulfill the repayment obligation of the outstanding Convertible Bonds upon maturity. The Early Partial Redemption provides an opportunity for the Company to early redeem part of the outstanding amounts so as to reduce the possibility of any force repayment or litigating action against the Company when the outstanding Convertible Bonds falls due. In the event the Company defaults in repayment the outstanding Convertible Bonds upon maturity, the holders of the Convertible Bonds have the rights to file a winding-up petition against the Company and the trading in the Shares will be suspended afterwards. The court may appoint a provisional liquidator of the Company who may proposed a debt restructuring scheme by way of higher dilutive fund raising activities than the current proposed Rights Issue given the weak bargaining power of the Company in the then insolvency position.

Also, on 16 December 2015, the Company has entered into a loan agreement with a money lending company (the "Lender"), a fellow subsidiary of the Underwriter, in relation to obtain a loan of HK$5 million to finance its general working capital. Since the Group is in tight cash position and recorded net cash outflow from operating activities for the six months ended 30 September 2015, it is uncertain whether the Company will have enough cash to repay the Loan and the payment of interest accrued thereon at its maturity date.

Therefore, the Board considers that early redemption of part of its outstanding Convertible Bonds and the repayment of the Loan can (i) save total payments (including the (a) outstanding and future interest payment and (b) principal and premium repayment) by approximately $21.0\%$ of the principal amount of the Early Partial Redemption; (ii) reduce the risk of breach of the contract for the Loan in the event the Company fails to obtain required funding by other financing methods to repay the outstanding amounts upon their maturity; (iii) improve the gearing position of the Group and strengthen the Group's capital base; and (iv) reduce the possibility of winding-up petition against the Company and the suspension of trading in the Shares if the Company defaults in repayment of the outstanding Convertible Bonds.

As at the Latest Practicable Date, save for the Early Partial Redemption, in the absence of unforeseen circumstances, including but not limited to the favourable early redemption terms provided by the holders of the outstanding Convertible Bonds, the Company does not have any plan to redeem the remaining outstanding Convertibles Bonds.

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General working capital for existing business of the Group

The Company estimates the funding needs for the operating activities of the Group for the next 12 months is approximately HK$35 million. Also, with reference to the interest rate of 2% per annum for the Convertible Bonds and the remaining principal amounts of approximately US$50,000,000 (equivalent to approximately HK$390 million) after taking into account the Early Partial Redemption was financed by the net proceeds of the Rights Issue, the Company is expected to incur interest payment of approximately HK$7.8 million for the next 12 months. Given the bank and cash balances of the Group was only approximately HK$2.3 million which is not sufficient for financing the business operation and development of the Group. Therefore, the Directors consider that it will be a merit for the Group to have additional working capital for its business operation and development.

The Board considers that it is prudent to finance the Group's long-term growth by long-term financing, preferably in the form of equity. The Board also believes that the Rights Issue will enable the Group to strengthen its capital base and to enhance its financial position. The Rights Issue will give the Qualifying Shareholders the opportunity to maintain their respective pro-rata shareholding interests in the Company and to continue to participate in the future development of the Group. Accordingly, the Board considers that fund raising through the Rights Issue is in the interests of the Company and the Shareholders as a whole.

The Board has considered other fund raising alternatives, including bank borrowings and issue of new shares or convertible securities. In comparison to a rights issue, (i) bank borrowings would result in additional interest burden and higher gearing ratio of the Group; (ii) issue of new shares or convertible securities would be difficult due to the current market condition and the Company has yet to identify suitable potential investors. In view of the above, the Board considers that raising funds by way of the Rights Issue is more efficient and beneficial to the Company and the Shareholders as a whole as compared to raising fund by any other means.

Based on current information available to the Group as stated above, the Company estimates that the net proceeds from the Rights Issue shall be sufficient for the Group's expected funding requirements for the next 12 months. In addition, as at the Latest Practicable Date, save for the Rights Issue, the Company did not have any immediate plan or was not contemplating to have further fund raising for at least the next twelve months for financing its business or investments and any other potential projects or transactions of the Company.

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LETTER FROM THE BOARD

WARNING OF THE RISKS OF DEALING IN THE SHARES OR THE CONSOLIDATED SHARES (AS THE CASE MAY BE) AND/OR NIL-PAID RIGHTS SHARES

Shareholders and potential investors should note that the Rights Issue is subject to the satisfaction of certain conditions as described under the section headed "Conditions of the Rights Issue" in this circular. In particular, it is conditional upon the Underwriting Agreement having become unconditional and the Underwriter not having terminated the Underwriting Agreement in accordance with the terms thereof. Accordingly, the Rights Issue may or may not proceed and the Shareholders and the public are reminded to exercise caution when dealing in the Shares or the Consolidated Shares (as the case may be) and/or nil-paid Rights Shares.

Shareholders should note that the Consolidated Shares will be dealt in on an ex-entitlement basis commencing from Tuesday, 12 April 2016 and that dealings in Rights Shares in the nil-paid form will take place from 9:00 a.m. on Monday, 25 April 2016 to 4:00 p.m. on Tuesday, 3 May 2016 (both dates inclusive) while the conditions to which the Underwriting Agreement is subject to remain unfulfilled. Any Shareholder or other person dealing in the Shares or the Consolidated Shares (as the case may be) and/or nil-paid Rights Shares from the Latest Practicable Date up to the date on which all the conditions of the Rights Issue are fulfilled will accordingly bear the risk that the Rights Issue may not become unconditional or may not proceed. Any Shareholder or other person contemplating any dealings in the Shares or the Consolidated Shares (as the case may be) and/or nil-paid Rights Shares, who is in any doubt about his/her/its position, is recommended to consult his/her/its own professional advisers.

— 29 —

LETTER FROM THE BOARD

EFFECTS ON SHAREHOLDING STRUCTURE

The existing and enlarged shareholding structures of the Company immediately before and after the completion of the Rights Issue are set out below:

Scenario 1:

Assuming that there is no change to the issued share capital of the Company from the Latest Practicable Date up to and including the Record Date:

Shareholders	As at the Latest Practicable Date		Immediately after the Share Consolidation becoming effective but before the completion of the Rights Issue		Upon completion of the Rights Issue
	No. of Shares	Approximately %	No. of Consolidated Shares	Approximately %	Assuming no Qualifying Shareholders take up their respective entitlements under the Rights Issue	No. of Consolidated Shares	Approximately %	Assuming full subscription by the Qualifying Shareholders as to their respective entitlements under the Rights Issue
Substantial Shareholders
Ms. Eva Wong (Note 1)	289,069,060	11.43	36,133,632	11.43	36,133,632	1.27	325,202,688	11.43
Directors
Mr. Liang Tong Wei	100,000,000	3.95	12,500,000	3.95	12,500,000	0.44	112,500,000	3.95
Mr. Cheung Hung Man	44,235,000	1.75	5,529,375	1.75	5,529,375	0.19	49,764,375	1.75
Other public Shareholders	1,982,472,060	78.37	247,809,008	78.37	247,809,008	8.71	2,230,281,072	78.37
The Underwriter and its associates, sub-underwriter(s) and subscriber(s) procured by the Underwriter (if any) (Note 2)	114,000,000	4.51	14,250,000	4.51	2,544,026,120	89.39	128,250,000	4.51
Total	2,529,776,120	100.00	316,222,015	100.00	2,845,998,135	100.00	2,845,998,135	100.00

LETTER FROM THE BOARD

Scenario 2:

Assuming that there is no change to the issued share capital of the Company other than as a result of the issue of Shares upon exercise of the Outstanding Options in full from the Latest Practicable Date up to and including the Record Date:

Shareholders	As at the Latest Practicable Date		Immediately after the Outstanding Options are exercised in full and up to the Record Date		Immediately after the Outstanding Options are exercised in full and the Share Consolidation becoming effective but before the completion of the Rights Issue		Assuming no Qualifying Shareholders take up their respective entitlements under the Rights Issue		Assuming full subscription by the Qualifying Shareholders as to their respective entitlements under the Rights Issue
	No. of Shares	Approximately %	No. of Shares	Approximately %	No. of Consolidated Share	Approximately %	No. of Consolidated Share	Approximately %	No. of Consolidated Share	Approximately %
Substantial Shareholders
Ms. Eva Wong (Note 1)	289,069,060	11.43	289,069,060	11.43	36,133,632	11.43	36,133,632	1.27	325,202,688	11.43
Directors
Mr. Liang Tong Wei	100,000,000	3.95	100,000,000	3.95	12,500,000	3.95	12,500,000	0.44	112,500,000	3.95
Mr. Cheung Hung Man	44,235,000	1.75	44,235,000	1.75	5,529,375	1.75	5,529,375	0.19	49,764,375	1.75
Other public Shareholders	1,982,472,060	78.37	1,982,472,060	78.36	247,809,008	78.36	247,809,008	8.71	2,230,281,072	78.36
Holders of the Outstanding Options	-	-	262,800	0.01	32,850	0.01	32,850	0.01	295,650	0.01
The Underwriter and its associates, sub-underwriter(s) and subscriber(s) procured by the Underwriter (if any) (Note 2)
	114,000,000	4.51	114,000,000	4.51	14,250,000	4.51	2,544,288,920	89.39	128,250,000	4.51
Total	2,529,776,120	100.00	2,530,038,920	100.00	316,254,865	100.00	2,846,293,785	100.00	2,846,293,785	100.00

Notes:

Ms. Eva Wong is interested in 288,797,860 Shares under controlled corporation, Kesterion, and as beneficial owner of 271,200 Shares. Accordingly, Ms. Eva Wong is deemed to have interests in such 289,069,060 Shares in total. Mr. Koh Tat Lee, Michael, an executive Director, is the spouse of Ms. Eva Wong and is therefore deemed to be interested in the 289,069,060 Shares held by Ms. Eva Wong under the SFO.
The Underwriter has undertaken to the Company in the Underwriting Agreement that (i) the Underwriter and parties acting in concert (within the meaning of the Takeovers Code) with it will not trigger a mandatory offer obligation under Rule 26 of Takeovers Code on the part of the Underwriter in respect of performing its obligations under the Underwriting Agreement; (ii) the Underwriter shall use its reasonable endeavours to ensure that the subscribers for Underwritten Shares shall be third parties independent of and not connected with or acting in concert with the Company and its connected persons and their respective associates; (iii) none of the persons to be procured by the Underwriter to subscribe for the Underwritten Shares will be a substantial shareholder of the Company holding 10% or more shareholding in the Company as a result of the subscription of the Underwritten Shares; and (iv) the Underwriter shall and shall cause the sub-underwriters to procure independent subscribers to take up such number of the Shortfall Underwritten Shares as necessary to ensure that the Company will comply with the public float requirement under the GEM Listing Rules upon completion of the Rights Issue.

LETTER FROM THE BOARD

Certain percentage figures included in the above tables have been subject to rounding adjustments. Accordingly, figures shown as totals may not be an arithmetic aggregation of the figures preceding them.

The Underwriter has sub-underwritten its underwriting commitment to 12 sub-underwriters, being 10 individuals and 2 securities brokerage firms. The list of sub-underwriters and the number of Rights Shares sub-underwritten to each of them are listed out as below:

Name	Number of Rights Shares sub-underwritten	% of the total issued share capital of the Company (upon completion of the Rights Issue
Kwong Kai Sing Benny	65,038,920	2.29%
Au Yeung Kai Wah	85,000,000	2.99%
Mak Shun Hei	85,000,000	2.99%
Ip Po Ki	85,000,000	2.99%
Kitchell Osman Bin	85,000,000	2.99%
Pak William Eui Won	85,000,000	2.99%
Yu Man Fung Alice	85,000,000	2.99%
Chow Kam Wah	85,000,000	2.99%
Shum Ming Choy	85,000,000	2.99%
Ip Cheuk Ho	85,000,000	2.99%
HEC Securities Limited	850,000,000	29.86%
Win Wind Securities Limited	850,000,000	29.86%

Each of the 12 sub-underwriters and its respective ultimate beneficial owners (if applicable) are third parties independent of and not connected with the Company and its connected persons.

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LETTER FROM THE BOARD

FUND RAISING ACTIVITY IN THE PAST 12 MONTHS

The Company has not conducted any equity fund raising activities in the past twelve months immediately preceding the Latest Practicable Date. Set out below is the details of the previous rights issue of the Company which was completed on 11 February 2015:

Date of announcement	Fund raising activity	Net proceeds raised (approximately)	Proposed use of net proceeds	Actual use of proceeds as at the Latest Practicable Date
23 November 2014
(completed on 11 February 2015)	Rights issue on the basis of 3 rights shares for every 10 shares at the subscription price of HK$0.5 per rights share with bonus issue of 2 bonus shares for every 3 rights shares taken up	HK$146.9 million	(i) approximately HK$132.6 million to finance part of its payment obligations under the settlement agreement to settle the various overdue payables; and

(ii) the remaining balance will be used for general working capital purpose | (i) approximately HK$128.7 million has been used for financing part of its payment obligations under the settlement agreement to settle the various overdue payables; and

(ii) the remaining balance has been used for general working capital purpose |

According to the prospectus of the Company dated 19 January 2015 in relation to the rights issue of 302,755,224 rights shares (the "Previous Rights Issue") with bonus issue of 201,836,816 bonus shares for all rights shares taken up under the Previous Rights Issue (the "Bonus Issue"), immediately prior to completion of the Previous Rights Issue and the Bonus Issue, public shareholders of the Company held 543,119,480 shares of the Company (the "Initial Public Shareholding"), representing approximately $53.81\%$ of the then total number of issued shares of the Company, being 1,009,184,080 shares.

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LETTER FROM THE BOARD

A) The dilution effects of the Previous Rights Issue and the Rights Issue on the shareholding interest and their cumulative dilution effects are set out below:

	Issued share capital of the Company	Initial Public Shareholding to the issued share capital of the Company Number of shares/ (Approximate %)	Dilution effects on the shareholding interest (Approximate %)	Cumulative dilution effects (Approximate %)
Immediately prior to completion of the Previous Rights Issue and the Bonus Issue	1,009,184,080	543,119,480 (53.81%)	N/A	N/A
Immediately after completion of the Previous Rights Issue and the Bonus Issue	1,513,776,120	543,119,480 (35.88%)	33.33	33.33
Immediately after Completion of the Rights Issue (Note 1)	2,845,998,135	67,889,935 (2.39%) (Note 2)	93.53 (Note 3)	95.57 (Note 4)

B) The dilution effects of the Previous Rights Issue and the Rights Issue on the share price and their cumulative dilution effects are set out below:

	Subscription price	Theoretical closing price on the last trading day	Discount of the respective subscription price to theoretical closing price on the last trading day (a) (Approximate %)	Dilution effects on the shareholding interest (b) (Approximate %)	Dilution effect on shareholding after taking into account the share price effect (c)=(a)x(b) (Approximate %)	Cumulative dilution effects on shareholding after taking into account the price effect (Approximate %)
Previous Rights Issue	HK$0.30 (adjusted for the effect of the Bonus Issue)	HK$0.34	11.76	33.33	3.92	N/A
Rights Issue	HK$0.112	HK$0.336	66.67	88.89	59.26	60.86 (Note 5)

Notes:
1. Immediately after completion of the Rights Issue and assuming none of the Rights Shares are subscribed for by the Qualifying shareholders and no new Shares (other than the Rights Shares) are allotted and issued on or before completion of the Rights Issue.

LETTER FROM THE BOARD

Taking into account the Share Consolidation becoming effective.
Immediately after completion of the Previous Rights Issue and the Bonus Issue, the Initial Public Shareholding accounted for approximately 35.88% of the issued share capital of the Company. Following the completion of the Rights Issue, the Initial Public Shareholding decreased to approximately 2.39% from approximately 35.88% which represents dilution effect of approximately 93.53%.
Immediately prior to completion of the Previous Rights Issue and the Bonus Issue, the Initial Public Shareholding accounted for approximately 53.81% of the issued share capital of the Company. Following the completion of the Previous Rights Issue and the Bonus Issue and the Rights Issue, the Initial Public Shareholding decreased to approximately 2.39% from approximately 53.81% which represents dilution effect of approximately 95.57%.
The share price after deducting the dilution effect on both of the shareholding and share price for the Previous Rights Issue and the Bonus Issue would be 100% - 3.92% = 96.08%. The share price after deducting the dilution effect on both of the shareholding and share price for the Rights Issue would be 100% - 59.26% = 40.74%. As such, the share price will be diluted to approximately 39.14%, representing cumulative dilution effects of approximately 60.86%.

Therefore, as stated as above, if the Initial Public Shareholding does not participate in the Previous Rights Issue and the Rights Issue, the cumulative dilution effects on their shareholding interests would be approximately 95.57%. The cumulative dilution effects on the share prices and the shareholding would be approximately 60.86%.

ADJUSTMENTS IN RELATION TO THE OUTSTANDING OPTIONS AND THE CONVERTIBLE BONDS

As at the Latest Practicable Date, there are (i) Outstanding Options granted under the Share Option Scheme entitling the holders thereof to subscribe for up to an aggregate of 262,800 Shares; and (ii) the Convertible Bonds with outstanding principal amount of US$80,000,000 (equivalent to approximately HK$624 million) which is convertible into 1,248,000,000 Shares at a prevailing conversion price of HK$0.5 per conversion share. The Rights Issue may cause adjustments to (i) the exercise price of the Outstanding Options and/or the number of Shares to be allotted and issued upon exercise of the Outstanding Options; and (ii) conversion price and/or the number of Shares to be allotted and issued upon exercise of the conversion rights attached to the Convertible Bonds. The Company will make further announcement in respect of such adjustments as and when appropriate.

GEM LISTING RULES IMPLICATIONS

In accordance with Rule 10.29(1) of the GEM Listing Rules, the Rights Issue must be made conditional on approval by the Shareholders in general meeting by a resolution on which any controlling Shareholders and their respective associates or, where there are no controlling Shareholders, the Directors (excluding the independent non-executive Directors) and the chief executive of the Company, and their respective associates shall abstain from voting in favour of the Rights Issue. As at the Latest Practicable Date, the Company does not have any controlling Shareholder, whilst Mr. Koh and his associates, Ms. Eva Wong (spouse of Mr. Koh) and Kesterion (a company wholly owned by Ms. Eva Wong), in aggregate, hold 289,069,060 Shares, Mr. Liang who hold 100,000,000 Shares and Mr. Cheung who hold 44,235,000 Shares are required to abstain from voting in

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LETTER FROM THE BOARD

favour of the resolution(s) in relation to the Rights Issue at the EGM. Each of Mr. Koh and Mr. Cheung is an executive Director and Mr. Liang is a non-executive Director.

For those Shareholders who hold Shares at the date of the EGM and have material interest in the Rights Issue are required to abstain from voting on the resolution in relation to the Rights Issue to be proposed at the EGM pursuant to Rule 2.26 of the GEM Listing Rules. Since part of the proceeds from the Rights Issue will be used to (i) repay the Loan from the Lender, a fellow subsidiary of the Underwriter; and (ii) early redeem the outstanding Convertible Bonds held by Gloss Rise, therefore, the Underwriter and Gloss Rise are considered to have material interest in the Rights Issue. Further, as at the Latest Practicable Date, Smart Jump Corporation ("Smart Jump"), a wholly-owned subsidiary of Freeman Financial Corporation Limited (stock code: 279, which is also the holding company of the Underwriter) holds 114,000,000 Shares, representing approximately 4.51% of the issued share capital of the Company. Both Smart Jump and the Underwriter are fellow subsidiaries. Should the Underwriter, Gloss Rise and their respective associates hold any Shares at the date of the EGM, each of them will be required to abstain from voting on the resolution in relation to the Rights Issue to be proposed at the EGM. As at the Latest Practicable Date, save as aforesaid disclosed each of the Underwriter, the Lender and Gloss Rise is not interested in any Share.

GENERAL

The Independent Board Committee comprising all the independent non-executive Directors, namely Mr. Chu Hung Lin, Victor, Mr. Tong Wan Sze, Mr. Fung Kwok Leung, Dr. Wan Ho Yuen, Terence, Mr. Li Kwok Chu and Mr. Lau Shu Yan, to advise the Independent Shareholders in connection with the Rights Issue, whether their terms are fair and reasonable and whether they are in the interests of the Company and the Shareholders as a whole, and to advise the Independent Shareholders on how to vote, taking into account the recommendations of the Independent Financial Adviser. Goldin Financial Limited has been appointed as an independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in these regards.

The EGM will be convened and held at 8:00 a.m. on Friday, 8 April 2016 at Auberge Discovery Bay Hong Kong, 88 Siena Avenue, Discovery Bay, Lantau Island, Hong Kong for the Shareholders and the Independent Shareholders (as the case may be) to consider, and if thought fit, to approve, among other things, the Change of Company Name, the Share Consolidation, the Rights Issue and the transactions contemplated thereunder.

The notice convening the EGM is set out on pages EGM-1 to EGM-4 of this circular. A form of proxy for use at the meeting is enclosed. Whether or not you intend to attend the meeting, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the branch share registrar of the Company in Hong Kong, Tricor Tengis Limited of Level 22, Hopewell Centre, 183 Queen's Road East, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for the holding of the meeting or any adjournment thereof. Completion and return of the form of proxy shall not preclude you from attending and voting in person at the meeting or any adjournment thereof should you so desire.

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LETTER FROM THE BOARD

RISK FACTORS

In compliance with the GEM Listing Rules, the Company sets out below the risk factors of the Group for the Shareholders' attention. The Directors believe that there are certain risks involved in the operations of the Group which includes, but does not limit to, the following:

(a) Risks relating to the Group and its business

Exploration and exploitation business

A subsidiary of the Group has been applying for conversion of part of the area of the existing Exploration Permits ("EP") into Mineral Production Sharing Agreement ("MPSA", a type of mining permit to exploit the iron ore mineral from the designated area) in the Philippines. As at the Latest Practicable Date, the MPSA has not been granted. If the MPSA is not granted upon expiry of the EP by December 2016, the current MPSA application may lapse and the subsidiary may be required to re-start the application of EP and then the application for conversion into MPSA.

The EPs are situated in the Philippines. Any amendment or addition to existing laws and regulations may affect future profitability of the operation after obtaining the MPSA. Besides, during the last 2 years, market price of iron ore has been decreasing and there is a risk that the market price will continue to decrease. The low market price will reduce rate of return of the exploitation operation.

Coal trading business

The Group operates primarily in Indonesia and China. Any amendment or addition to existing laws and regulations of any of these 2 countries or any reduction of demand in China may affect future profitability of the operation. Besides, international coal price has been softened a lot from its peak. Any further decrease in international market price will further reduce profit margin of the business. The Group has been actively seeking to secure appropriate coal supplies at reasonable cost. Before that is achieved there is a risk that the Group may not be able to operate the coal trading business at sufficient profit margin continuously under a low market price environment.

Beverage trading business

The Group has commenced beverage trading business for more than 3 years. The Group has been conducting the businesses in a very cautious manner. Tea and juice drinks are traded from Korea manufacturer to United States and bottled drinking spring water is traded from Canadian manufacturer to China. Any amendment or addition to existing laws and regulations of these 4 countries may affect future profitability of the operation.

Beverage business volume is subject to seasonal fluctuations. Besides, market competition in both China and US are very keen. There is a risk that the Group's distributors in China and US may not be able to differentiate and protect their price, market segment and brand against mass market competition.

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LETTER FROM THE BOARD

Metal trading business

The business is being carried out primarily in Singapore. Any amendment or addition to existing laws and regulations of the country may affect future profitability of the operation. Besides, international metal price has been fluctuating all the time. Any unfavourable market movement will reduce profitability of the operation.

High indebtedness level of the Group

The Group has a high level of indebtedness and a net liabilities position that could adversely affect its liquidity and profitability. The Group's ability to make scheduled repayments of the interests of outstanding Convertible Bonds will depend heavily upon its future operating performance and cash flow, which in turn will depend upon prevailing economic and political conditions and other factors. If the Group is unable to make scheduled repayments of its indebtedness or interest thereon as they become due, it may need to renegotiate such obligations with the lenders or to obtain additional equity or debt financing.

(b) Risks relating to politics, economics and regulations

The business operations of the Group are primarily based in Hong Kong, the PRC, Singapore and Philippines. Accordingly, the Group's operating results, financial position and prospects could be adversely affected by economic, political and legal developments in those territories. Any changes in the political and economic policies/environments of the those territories (including, but not limited to, government policies, political instability, expropriation, laws, labour activism, war, civil unrest, terrorism, and changes in interest rates, foreign exchange rates, taxation, environmental regulations and import and export duties and restrictions) may adversely affect the Group's business and results of operations as well as its ability to sustain its expansion strategies and thus future growth.

RECOMMENDATION

The Directors (including the independent non-executive Directors after taking into account of the advice of the Independent Financial Adviser) are of the opinion that the Rights Issue is fair and reasonable and is in the interest of the Company and the Shareholders as a whole. The Directors also believe that the Change of Company Name and the Share Consolidation are in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors (including the independent non-executive Directors after taking into account of the advice of the Independent Financial Adviser) recommend Shareholders to vote in favour of all resolutions to be proposed at the EGM.

Your attention is drawn to the letter from the Independent Board Committee containing its recommendation to the Independent Shareholders set out on page 40 of this circular and the letter from Goldin, the Independent Financial Adviser, containing its recommendation to the Independent Shareholders and the principal factors which it has considered in arriving at its recommendation with regard to the Rights Issue, as set out on pages 41 to 59 of this circular.

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LETTER FROM THE BOARD

ADDITIONAL INFORMATION

Your attention is drawn to the additional information set out in the appendices to this circular.

Yours faithfully,
By order of the Board
Pan Asia Mining Limited
Yip Man Yi
Chairman

— 39 —

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

PAN ASIA MINING LIMITED 衰亞礦業有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 8173)

11 March 2016

To the Independent Shareholders

Dear Sir or Madam,

PROPOSED RIGHTS ISSUE

We refer to the circular of the Company to the Shareholders dated 11 March 2016 (the "Circular") of which this letter forms part. Capitalised terms defined in the Circular shall have the same meanings when used herein unless the context otherwise requires.

We have been appointed by the Board as members to constitute the Independent Board Committee and to advise the Independent Shareholders in respect of the Rights Issue.

Goldin has been appointed to advise the Independent Board Committee and the Independent Shareholders as to whether the terms of the Rights Issue is fair and reasonable as far as the Independent Shareholders are concerned and whether it is in the interests of the Company and the Shareholders as a whole. Details of its recommendation, together with the principal factors and reasons taken into consideration in arriving at such recommendation, are set out on pages 41 to 59 of the Circular.

Your attention is also drawn to the letter from the Board set out on pages 11 to 39 of the Circular.

Having considered the factors and reasons considered by, and the opinion of, Goldin as set out in the "Letter from Goldin" in the Circular, we are of the opinion that the terms of the Rights Issue are fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Company and the Shareholders as a whole. We therefore recommend the Independent Shareholders to vote in favour of the resolution to be proposed at the EGM to approve the Rights Issue.

Yours faithfully,

For and on behalf of the Independent Board Committee

Mr. Chu Hung Lin, Victor
Dr. Wan Ho Yuen, Terence

Mr. Tong Wan Sze
Mr. Li Kwok Chu

Mr. Fung Kwok Leung
Mr. Lau Shu Yan

Independent non-executive Directors

— 40 —

LETTER FROM GOLDIN

The following is the full text of the letter from Goldin setting out the advice to the Independent Board Committee and the Independent Shareholders in respect of the Rights Issue, which has been prepared for the purpose of inclusion in this circular.

Goldin Financial Limited
Suites 2202-2209, 22/F
Two International Finance Centre
8 Finance Street
Central
Hong Kong
11 March 2016

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

Dear Sirs,

PROPOSED RIGHTS ISSUE ON THE BASIS OF EIGHT RIGHTS SHARES
FOR EVERY ONE CONSOLIDATED SHARE HELD
ON THE RECORD DATE

INTRODUCTION

We refer to our appointment as the independent financial adviser to the Independent Board Committee and the Independent Shareholders in relation to the Rights Issue, details of which are contained in the announcement of the Company dated 15 February 2016 (the "Announcement") and in the letter from the board (the "Letter from the Board") on page 11 to page 39 of the circular of the Company dated 11 March 2016 (the "Circular") to the Shareholders, of which this letter forms part. Capitalised terms used in this letter shall have the same meanings as defined in the Circular unless the context requires otherwise.

As stated in the Letter from the Board, the Company intends to put forward a proposal to the Shareholders to effect the Share Consolidation which involves the consolidation of every eight (8) issued and unissued Shares of HK$0.01 each into one (1) Consolidated Share of HK$0.08 each. The Share Consolidation is conditional upon (i) passing of an ordinary resolution to approve the Share Consolidation by the Shareholders by way of poll at the EGM; and (ii) the Listing Committee of the Stock Exchange granting approval to the listing of, and permission to deal in, the Consolidated Shares.

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LETTER FROM GOLDIN

extended to the Non-Qualifying Shareholders. The Company will send the Prospectus Documents to the Qualifying Shareholders. Details of the major terms and conditions of the Underwriting Agreement are set out in the section headed "Underwriting arrangement" in the Letter from the Board. The Rights Issue is subject to the satisfaction of certain conditions as described under the section headed "Conditions of the Rights Issue" in the Letter from the Board. In particular, it is subject to the Underwriter not terminating the Underwriting Agreement (see the section headed "Termination of the Underwriting Agreement" in the Circular) prior to the Latest Time for Termination. As such, the Rights Issue may or may not become unconditional and may or may not proceed.

THE INDEPENDENT BOARD COMMITTEE

We, Goldin, have been appointed by the Company as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in relation to the Rights Issue and to make a recommendation as to, among others, whether the terms of the Rights Issue are fair and reasonable so far as the Independent Shareholders are concerned, are in the interests of the Company and the Shareholders as a whole, and as to voting in respect of the relevant resolutions at the EGM. Our appointment has been approved by the Independent Board Committee.

BASIS OF OUR ADVICE

In formulating our opinion and recommendations, we have reviewed, inter alia, the Announcement, the Underwriting Agreement, the financial statements of the Company for the year ended 31 March 2015 (the "Annual Report 2015") and the unaudited financial information of the Group for the six months ended 30 September 2015 (the "Interim Report 2016") and the unaudited financial information of the Group for the three months ended 31 December 2015 (the "Q3 Report 2016"). We have also reviewed certain information provided by the management of the Company relating to the operations, financial condition and prospects of the Group. We have also (i) considered such other

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LETTER FROM GOLDIN

information, analyses and market data which we deemed relevant; and (ii) conducted verbal discussions with the management of the Company regarding the Rights Issue, the businesses and future outlook of the Group. We have assumed that such information and statements, and any representation made to us, which we have relied upon them in formulating our opinion, are true, accurate and complete in all material respects as of the date hereof and the Shareholders will be notified of any material changes (if any) as soon as possible.

The Directors jointly and severally accept full responsibility for the accuracy of the information contained in the Circular and confirm, having made all reasonable inquiries, that to the best of their knowledge, opinions expressed in the Circular have been arrived at after due and careful consideration and there are no other facts not contained in the Circular, the omission of which would make any statement herein or in the Circular misleading. We consider that we have been provided with, and we have reviewed, all currently available information and documents which are available under present circumstances to enable us to reach an informed view regarding the terms of, and reasons for entering into, the Underwriting Agreement and the Rights Issue to justify reliance on the accuracy of the information contained in the Circular so as to provide a reasonable basis of our opinion. We have no reasons to suspect that any material information has been withheld by the Directors or management of the Company, or is misleading, untrue or inaccurate. We have not, however, for the purpose of this exercise, conducted any independent detailed investigation or audit into the business or affairs or future prospects of the Group. Our opinion is necessarily based on financial, economic, market and other conditions in effect, and the information made available to us, at the Latest Practicable Date.

This letter is issued for the information for the Independent Board Committee and the Independent Shareholders solely in connection with their consideration of the Rights Issue, except for its inclusion in the Circular, is not to be quoted or referred to, in whole or in part, nor shall this letter be used for any other purposes, without our prior written consent.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In giving our recommendations on the Rights Issue to the Independent Board Committee and the Independent Shareholders, we have taken into account the following principal factors and reasons:

1. Background information of the Group

The Group is principally engaged in exploration and exploitation of mineral resources and trading of coals, metals, bunker fuel and beverages. Set out below are certain audited financial information of the Group for each of the two financial years ended 31 March 2014 and 2015 as extracted from the Annual Report 2015 and certain unaudited financial information of the Group for the six months ended 30 September 2014 and 2015, respectively, as extracted from the Interim Report 2016.

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Table 1: Financial highlights of the Group

	For the year ended	For the six months ended
31 March	30 September
2015 (audited)	2014 (audited)	2015 (unaudited)
HK$'000	HK$'000	HK$'000
Turnover	42,490	408,784
Profit/(Loss) for the year/period attributable to owners of the Company	(887,338)	(175,363)
		As at 31 March
	2015 (audited)	2014 (audited)
	HK$'000	HK$'000
Non-current assets		233,383
Current assets		217,928
Current liabilities		216,416
Non-current liabilities		859,918
Net current assets/(liabilities)		1,512
Net assets/(liabilities)		(625,023)

For the year ended 31 March 2015

For the year ended 31 March 2015, the Group recorded revenue of approximately HK$42.5 million, representing a significant decrease of approximately 89.6% as compared to approximately HK$408.8 million as recorded in the respective previous year. Based on the Annual Report 2015, the decrease in revenue was mainly attributable to the temporary suspension of coal and bunker fuel business. Accordingly to the Annual Report 2015, the coal business has been suspended since late 2014 as a result of the declining market price of coal and unsatisfactory operation results. The operation for bunker fuel business has been suspended since early 2014 due to disappointing operation results and such business segment has been undergoing business re-modelling.

For the year ended 31 March 2015, the Group recorded loss attributable to owners of the Company of approximately HK$887.3 million, which has deepened by approximately 405.9% as compared to the loss attributable to owners of the Company of approximately HK$175.4 million recorded in the respective previous year. Based on the Annual Report 2015, such increase in loss attributable to the owners of the Company for the year ended 31 March 2015 as compared with the

LETTER FROM GOLDIN

respective previous year was mainly attributable to the booking of an impairment of approximately HK$945.5 million of the fair value of the exploration and evaluation assets as at 31 March 2015.

As at 31 March 2015, the Group's net current assets amounted to approximately HK$1.5 million while the Group recorded net current liabilities of approximately HK$74.5 million as at 31 March 2014. The net liabilities of the Group amounted to approximately HK$625.0 million as at 31 March 2015 while the Group's has net assets of approximately HK$404.6 million as at 31 March 2014.

For the six months ended 30 September 2015

For the six months ended 30 June 2015, the Group recorded revenue of approximately HK$8.8 million, representing a decrease of approximately 57.9% compared to approximately HK$20.9 million recorded in the respective previous period. Based on the Interim Report 2016, the substantial decrease in the revenue for the six months ended 30 September 2015 was mainly attributable to (i) the decline in revenue from the Group's metals business which amounted to approximately HK$7.7 million, representing a decrease by approximately 50.6% from approximately HK$15.6 million as recorded in the respective previous period; and (ii) the decreased revenue from the Group's beverage business which recorded at approximately HK$1.1 million, representing a decrease of approximately 76.1% from approximately HK$4.6 million as recorded in the respective previous period.

For the six months ended 30 September 2015, the Group recorded profit attributable to owners of the Company of approximately HK$157.2 million, while the Group recorded loss attributable to the owners of the Company of approximately HK$98.7 million for the six months ended 30 September 2014. According to the Interim Report 2016, the profit attributable to owners of the Company was mainly attributable to the one-off fair value gain on redemption of the convertible bonds liabilities of approximately HK$251.1 million. In the absence of such one-off fair value gain, the Group would have recorded a loss for the six months ended 30 September 2015.

As at 30 September 2015, the net current assets of the Group amounted to approximately HK$61.8 million and the net liabilities of the Group amounted to approximately HK$206.1 million, respectively.

2. Reasons for the Rights Issue and the use of proceeds

As stated in the Letter from the Board, the gross proceeds from the Rights Issue will be not less than approximately HK$283.3 million and not more than approximately HK$283.4 million. The net proceeds from the Rights Issue after deducting the estimated expenses are estimated to be not less than approximately HK$270.0 million and not more than approximately HK$270.1 million. The Company intends to apply the net proceeds from the Rights Issue as to (i) approximately HK$229.3 million for Early Partial Redemption of the Convertible Bonds; (ii) approximately HK$5.5 million for repayment of the Loans and payment of interest accrued thereon; and (iii) the remaining balance of not

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less than approximately HK$35.2 million and not more than approximately HK$35.3 million as general working capital for existing businesses of the Group.

2.1 Early Partial Redemption and the repayment of the Loan

Background to the Early Partial Redemption and the Loan

According to the Interim Report 2016, the Company had outstanding 2% Convertible Bonds in the principal amount of US$80,000,000 (equivalent to approximately HK$624 million) as at 30 September 2015. On 12 February 2016, Gloss Rise, being a holder of the Convertible Bonds, agreed with the Company to accept 98% of the Convertible Bonds with principal amount of US$30 million as full payment and waive of all interest accrued thereon. Pursuant to the terms of the Convertible Bonds, the Company has the right to early redeem the outstanding Convertible Bonds any time before the maturity date at a premium of 10.0% over the outstanding principal amount. As abovementioned, it is intended that approximately HK$229.3 million of the net proceeds from the Rights Issue would be applied by the Company for the Early Partial Redemption. As at the Latest Practicable Date, save for the Early Partial Redemption, the Company did not have any other plan to redeem the remaining outstanding Convertible Bonds in the absence of unforeseen favourable circumstances.

With respect to the Loan, on 16 December 2015, the Company entered into a loan agreement (the "Loan Agreement") with the Lender, being a fellow subsidiary of the Underwriter, in relation to the obtaining of a loan of HK$5.0 million to finance its general working capital. The Company intends to apply approximately HK$5.5 million for repayment of the Loan and payment of interest accrued thereon.

Potential benefits for the Early Partial Redemption and the repayment of the Loan

The recent financial condition of the Group has been generally under pressure. In addition to the successive loss making positions during the recent two years as discussed in the section above headed "1. Background information of the Group", based on the Interim Report 2016, the Group had net liabilities of approximately HK$206.1 million as at 30 September 2015 against the net liabilities of approximately HK$625.02 million as at 31 March 2015. The gearing ratio of the Group as at 30 September 2015 also remained high at approximately -220.9% (computed based on the total non-current liabilities and total deficit as at 30 September 2015 of approximately HK$455.3 million and approximately HK$206.1 million, respectively), representing a substantial increase from that of approximately -137.6% as at 31 March 2015 (computed based on the total non-current liabilities and total deficit as at 31 March 2015 of approximately HK$859.9 million and approximately HK$625.0 million, respectively). Furthermore, the bank and cash balances of the Group were approximately HK$2.3 million as at 30 September 2015, representing a significant decline of approximately 76.5% from that of approximately HK$9.8 million as at 31 March 2015. In view of the recent financial condition of the Group, the Company has been striving to strengthen its capital structure by improving the gearing ratio, enhance its financial position for future

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strategic investments when suitable opportunities arise, reduce the operating and finance costs of the Company as well as enhance the Shareholders' value.

The Early Partial Redemption potentially leads to a saving in the payment of the Group that would otherwise be required. Based on the interest of the Convertible Bonds of 2% per annum, Early Partial Redemption would allow the Group to save future interest expenses of approximately HK$21.1 million and subsequently total payment of approximately HK$49.1 million, representing approximately 21.0% of the principal amount of the underlying Convertible Bonds under the Early Partial Redemption.

In light of the aforesaid financial condition of the Group, it is uncertain as to the sufficiency of internal resources or availability of debt financing of the Group in time to fulfil the then repayment obligation of the outstanding Convertible Bonds upon maturity. In the event that the Company defaults in repayment of the outstanding Convertible Bonds upon maturity, the then holders of the Convertible Bonds would have the rights to file a winding-up petition against the Company, subsequently leading to suspension in trading in the Shares and potential appointment of provisional liquidator of the Company by the court. Given the weak bargaining power of the Company in the then insolvency position, relatively higher dilutive fund raising activities as compared to the Rights Issue may be proposed for debt restructuring purposes, which would further deteriorate the then Shareholders' value. By early redeeming part of the outstanding Convertible Bonds through the Early Partial Redemption, the possibility of the Company's potential defaults in repayment and hence any adverse consequences arising from it upon maturity of the Convertible Bonds, including but not limited to any forced repayment, winding-up petition and other litigating actions against the Company, would be mitigated.

On the other hand, due to the tight cash position of the Group as at 30 September 2015, it is also uncertain as to the sufficiency of cash available for the Group to repay the Loan and the interest accrued thereon at its maturity. Accordingly, the intended allocation of approximately HK$5.5 million of the net proceeds arising from the proposed Rights Issue could facilitate a full repayment of the Loan as well as the payment of interest accrued thereon, therefore reducing the risk of breach of the Loan Agreement in the event that the Company fails to obtain required funding by other financing methods.

In addition, in line with the ongoing aims of the Company, the resulting reduction in the repayment obligations as mentioned above contemplated under the outstanding Convertible Bonds, the Loans and the interest accrued thereon would help improve the exiting gearing position and strengthen the capital structure of the Group, ultimately enhancing the Shareholders' value in the future.

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2.2 General working capital for existing businesses of the Group

The Group is principally engaged in exploration and exploitation of mineral resources and trading of coals, metals, bunker fuel and beverages. According to the Annual Report 2015, performances of the existing businesses of the Group have been generally unsatisfactory during the reporting year with losses incurred for all segments. With respect to the segment of mineral resources, it is stated in the Annual Report 2015 that no exploration activity has been carried out during the reporting year as resources were mainly allocated to the application of converting part of the then exploration permits into a mineral production sharing agreement, which was expected to support the operation of the mining segment and bring economic benefits to the Group. As at the Latest Practicable Date, commercial operation of the mineral resources segment has not yet commenced. Operations of the bunker fuel segment and the coal segment were suspended respectively in early 2014 and late 2014 due to the decline in market price of coal and challenging industrial environments. Performances of the metal segment and the beverage segment, being the two revenue-generating segments of the Group, have been fluctuating in recent years. Despite the aforesaid, the management of the Company has been reviewing and reassessing the present operations with the objectives of improving operation results and resuming the suspended operations when and as appropriate. In addition, with reference to the Q3 Report 2016, the management of the Company are confident that the joining of the new Directors with new ideas and views in late 2015 would bring new opportunities to the Group by actively seeking new areas of growths and ways to increase the financial resources of the Group.

As stated in the Letter from the Board, the Company is expected to require funding of approximately HK$35 million to support its existing businesses and incur interest payment of approximately HK$7.8 million, respectively, in the next twelve months. In view of the tight bank and cash balances of the Group of approximately HK$2.3 million as at 30 September 2015, we concur with the views of the Directors that it is necessary for the Group to explore ways to obtain additional working capital in order to support its business operations and development in the future. Taking into consideration the Company's ongoing objectives and actions taken, including but not limited to the recent change in management and regular review and assessment of the operations, to improve the performance of the Group, we are of the view that the intended allocation of the net proceeds from the Rights Issue for working general capital purposes for the existing businesses, being an amount of not less than approximately HK$35.2 million and not more than approximately HK$35.3 million, is in line with the objectives of the Group and vital for the Company to turn around the temporary hardship of the Group.

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2.3 Fund raising alternatives

Upon enquiry with the management of the Company, we were given to understand that the Board has also considered other forms of fund raising activities, including but not limited to, bank borrowing and equity financing such as issue of new Shares and/or convertible securities. Having considered that bank borrowings would result in additional interest burden of the Group given the considerable size of loan principal, therefore worsening the existing gearing position of the Group, we concur with the views of the Directors that equity financing would be a prudent way to finance the business growth and development in the long run. With respect to issue of new Shares and/or convertible securities, the management of the Company considers it challenging to identify potential investors given the recent volatile market condition. Also, issue of new Shares and/or convertible securities would potentially result in immediate dilution of existing Shareholders' interests without offering them opportunities to participate in the enlargement of the capital base of the Company, whereas the Rights Issue is advantageous in the sense that it provides all Qualifying Shareholders with opportunities to maintain their respective pro-rata shareholding interests in the Company while retaining their participations in the future development of the Group. Furthermore, the Rights Issue will be fully underwritten by the Underwriter under the Underwriting Agreement, therefore providing the Company with a high certainty to raise necessary funds. In light of the above, we are of the view that the Rights Issue would be the most appropriate means for the Group to raise fund and is in the interests of the Company and the Shareholders as a whole.

Taking into consideration (i) the significant allocation of the net proceeds from the Rights Issue for the Early Partial Redemption, repayment of the Loan and payment of the interest accrued thereon is beneficial to the Group such that (a) total payment of approximately HK$49.1 million (representing approximately 21.0% of the principal amount of the underlying Convertible Bonds under the Early Partial Redemption) will be saved by the Group; (b) the possibility of the Company's potential defaults in payment and hence any adverse consequences arising from it upon the maturity of the Convertible Bonds will be mitigated; (c) the risk of breach of the Loan Agreement will be reduced; and (d) the gearing position of the Group will be improved and the capital structure of the Group will be strengthened; (ii) the allocation of the net proceeds from the Rights Issue for general working capital purpose for the existing businesses of the Group is in line with the Group's objective to improve its current operation performance against its current financial position; and (iii) the Rights Issue is the most appropriate means for the Group to raise fund among other fund raising alternatives; we are of the view that the Rights Issue is fair and reasonable and in the interests of the Company and the Shareholders as a whole.

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3. Principal terms of the Rights Issue

Basis of the Rights Issue	:	Eight (8) Rights Shares for every one (1) Consolidated Share held on the Record Date
Subscription Price	:	HK$0.112
Number of Shares in issue as at the Latest Practicable Date	:	2,529,776,120
Number of Consolidated Shares in issue upon the Share Consolidation becoming effective	:	316,222,015 Consolidated Shares
Number of Rights Shares	:	Not less than 2,529,776,120 Rights Shares (Note 1) and not more than 2,530,038,920 Rights Shares (Note 2)
Number of Rights Shares underwritten by the Underwriter	:	Not less than 2,529,776,120 Rights Shares (Note 1) and not more than 2,530,038,920 Rights Shares (Note 2)
Number of Consolidated Shares in issue upon completion of the Rights Issue	:	Not less than 2,845,998,135 (Note 1) and not more than 2,846,293,785 Shares (Note 2)

Notes:

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As stated in the Letter from the Board, Qualifying Shareholders will have the right to apply for any unsold provisional allotment of the Non-Qualifying Shareholders and any Rights Shares provisionally allotted but not accepted by the Qualifying Shareholders, by way of excess application. Application may be made by Qualifying Shareholders completing the EAF and lodging the same with a separate remittance for the excess Rights Shares being applied for. Any Rights Shares not applied for by the Qualifying Shareholders and not taken up by excess application will be taken up by the Underwriter and sub-underwriter(s).

The Subscription Price

(ii) a discount of approximately 66.98% to the average theoretical closing prices of HK$0.3392 per Consolidated Share, based on the average closing price of HK$0.0424 per Shares as quoted on the Stock Exchange for the last five consecutive trading days including and up to the Last Trading Day and adjusted for the effect of the Share Consolidation;

(iv) a discount of approximately 58.82% to the theoretical closing price of HK$0.272 per Consolidated Share based on the closing price of HK$0.034 per Share as quoted on the Stock Exchange on the Latest Practicable Date and adjusted for the effect of the Share Consolidation.

As stated in the Letter from the Board, the Subscription Price was arrived at after arm's length negotiations between the Company and the Underwriter with reference to, among others, (i) the prevailing market price of the existing Shares, (ii) the current financial position of the Group; and (iii) all Qualifying Shareholders are offered the same opportunity to maintain their proportionate interest in the Company and to participate in the potential growth of the Company. In addition to the aforesaid, having considered that the Subscription Price was set at a discount to the recent adjusted theoretical closing prices of the Consolidated Shares which would increase the attractiveness of the Rights Issue to the Qualifying Shareholders, we are of the view that the setting of the Subscription Price is fair and reasonable and in the interests of the Company and the Shareholders as a whole.

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Historical Share price performance

The following chart sets out the adjusted daily closing prices of the Consolidated Shares on the Stock Exchange for the period from 13 February 2015 (being the first trading day of the 12-month period prior to the Last Trading Day) up to and including the Latest Practicable Date (the "Review Period").

Chart 1 below shows the adjusted daily closing price of the Consolidated Shares as quoted on the Stock Exchange versus the Subscription Price and the Hang Seng Index ("HSI") during the Review Period:

Chart 1: Share price performance against the Subscription Price and the HSI during the Review Period

Source: The website of the Stock Exchange (www.hkex.com.hk) and the website of the Hang Seng Indexes (www.hsi.com.hk)

Note: Trading in the Shares was suspended on 20 November 2015 during the Review Period.

As shown in Chart 1 above, the adjusted closing price per Consolidated Share for the Review Period was trading within a range from an adjusted lowest closing price at HK$0.18 to an adjusted highest closing price of HK$3.84 with an adjusted average closing price per Consolidated Share of approximately HK$1.47. The Consolidated Shares were traded above the Subscription Price throughout the Review Period. The Subscription Price of HK$0.112 represents a discount of approximately 37.78% to the aforementioned adjusted lowest closing price per Consolidated Share, a discount of approximately 97.08% to the aforementioned adjusted highest closing price per Consolidated Share and a discount of approximately 92.38% to the adjusted average closing price per Consolidated Share during the Review Period respectively.

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As illustrated in Chart 1, the HSI from the beginning of April 2015 to the end of June 2015 was at its highest level during the Review Period while the adjusted closing price of the Consolidated Shares reached its highest level at the end of April 2015. We noted that the movement of the adjusted closing prices of the Consolidated Shares was generally in line with the trend of the HSI from the beginning of the Review Period up to the end of September 2015.

On 16 February 2016, being the first trading day of the Shares after the publication of the Announcement, the closing price of the Shares decreased from HK$0.042 to HK$0.029, with the lowest of HK$0.024. Subsequent to the Announcement, the Shares were then traded in a decreasing pattern up to the Latest Practicable Date. Save for the Announcement, the Company did not issue any other announcements which are price-sensitive in nature nor relate to any change in the financial position of the Group from the date of the Announcement up to the Latest Practicable Date. It is noted that the decreasing trend of the Shares are not in line with the movement of the HSI from the date after the publication of the Announcement up to the Latest Practicable Date. As such, we are of the view that the recent downward trend of the Shares was due to market uncertainty on the prospect of the Company following the publication of the Announcement.

Taking into consideration that, (i) the setting of the Subscription Price at a discount to the prevailing market price of the Consolidated Shares could enhance the attractiveness of the Rights Issue; and (ii) the Rights Issue is available to all Qualifying Shareholders by providing them with an equal opportunity to participate in the Rights Issue, we are of the view that the setting of the Subscription Price at a lower level is justifiable, fair and reasonable so far as the Independent Shareholders are concerned.

Historical trading volume of the Shares

Table 2 below shows the average daily trading volume of the Shares per month, and the respective percentages of the Shares' monthly trading volume as compared to the total number of issued Shares at the end of the respective month, during the Review Period:

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Table 2: Historical trading volume of the Shares

Month	Total no. of Shares trading volume	No. of trading days	Average daily trading volume	Total no. of outstanding Shares	Average daily trading volume over outstanding Shares Approximate %
2015
February (Starting from 13 February 2015)	106,776,200	9	11,864,022	1,593,776,120	0.74
March	804,716,988	22	36,578,045	1,593,776,120	2.30
April	1,221,361,218	19	64,282,169	1,593,776,120	4.03
May	764,047,467	19	40,213,025	1,905,776,120	2.11
June	766,089,833	22	34,822,265	2,217,776,120	1.57
July	504,926,900	22	22,951,223	2,217,776,120	1.03
August	1,007,928,800	21	47,996,610	2,529,776,120	1.90
September	514,957,800	20	25,747,890	2,529,776,120	1.02
October	1,481,153,200	20	74,057,660	2,529,776,120	2.93
November	1,078,219,500	21	51,343,786	2,529,776,120	2.03
December	619,916,800	22	28,178,036	2,529,776,120	1.11
2016
January	239,224,100	20	11,961,205	2,529,776,120	0.47
February	325,793,101	18	18,099,617	2,529,776,120	0.72
March (Up to the Latest Practicable Date)	396,793,000	7	56,684,714	2,529,776,120	2.24

Source: The website of the Stock Exchange (www.hkex.com.hk)
Note: Trading in the Shares was suspended on 20 November 2015 during the Review Period.

As illustrated from Table 2 above, we noted that the average daily trading volume of the Shares per month ranges from approximately 0.47% to 2.93% of the total number of Shares issued at the end of each respective month throughout the Review Period, except for the month of April which recorded an average daily trading volume of the Shares of approximately 4.03%. During April 2015, the overall stock market in Hong Kong and the PRC were booming and the trading in shares was extremely active. Such market sentiment is discussed in the above paragraph regarding the historical Share price performance and as illustrated in Chart 1. Apart from the aforementioned trading volume, it is observed that the trading volume of the Shares during the Review Period was relatively thin. Since the Shares were generally illiquid in the open market, we consider that it would be difficult to attract

LETTER FROM GOLDIN

the Qualifying Shareholders to participate in the Rights Issue if the Subscription Price was not set at a discount to the historical adjusted closing prices of the Consolidated Shares. Therefore, we consider that the setting of the Subscription Price at a lower level is reasonable and that the Subscription Price would attract the Qualifying Shareholders to maintain their respective shareholdings in the Company and to participate in the future growth of the Company.

Comparison of the Subscription Price

In accessing the fairness and reasonableness of the Subscription Price, we have reviewed all the proposed rights issue announced by companies listed on the Stock Exchange in a period of three calendar months prior to the Last Trading Day and up to the Latest Practicable Date i.e. from 15 November 2015 to 9 March 2016 and identified an exhaustive list of 16 proposed rights issue (the "Comparables") announced during the aforesaid period. We consider that a review period of three calendar months prior to the Last Trading Day and up to the Latest Practicable Date is appropriate to capture the recent market practice because the Comparables are considered for the purpose of taking a general reference for the recent market practice in relation to the subscription price under other proposed rights issue as compared to the relevant prevailing market share prices under the recent market conditions and sentiments.

Independent Shareholders should note that the Comparables are not identical to the Company in terms of principal business, operations and financial position, and that the determination of subscription prices of the rights issue exercises were made with reference to the arm's length commercial negotiation between the companies and the underwriters, the share price performance, financial positions of the companies and the then prevailing market condition. Set out below are the summary of the Comparables.

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Table 3: Summary of the Comparables

Company name	Stock code	Date of announcement	Basis of entitlement	Premium/ (Discount) of subscription price over/(to) the closing price on the last trading day		Premium/ (Discount) of subscription price over/(to) the theoretical ex-entitlement price		Commission rate
				Approximate %	Approximate %	%	%
DX. com Holdings Limited	8086	1 March 2016	1 for 1	(49.80)	(33.30)	3.00	50.00	Yes
IR Resources Limited	8186	24 February 2016	10 for 1	(87.00)	(37.50)	3.00	90.91	No
Synertone Communication Corporation	1613	5 February 2016	1 for 1	(67.11)	(50.50)	0.00	50.00	No
CMMB Vision Holdings Limited (Note 1)	471	29 January 2016	1 for 1	9.89	57.07	0.00	50.00	No
Hanny Holdings Limited	275	25 January 2016	8 for 1	(68.75)	(19.61)	3.00	88.89	Yes
China Oceanwide Holdings Limited	715	25 January 2016	1 for 2	0	0	0	33.33	Yes
Coolpad Group Limited	2369	22 January 2016	3 for 20	(14.73)	(13.39)	3.10	13.04	Yes
China Mobile Games and Cultural Investment Limited	8081	14 January 2016	5 for 1	(45.61)	(12.43)	3.00	83.33	Yes
China Hongqiao Group Limited	1378	8 January 2016	7 for 50	0	0	0	12.28	Yes
First Credit Finance Group Limited	8215	17 December 2015	9 for 1	(36.50)	(5.44)	2.50	90.00	Yes
Hanison Construction Holdings Limited	896	15 December 2015	1 for 2	(20.63)	(14.75)	2.00	33.33	Yes
GCL-Poly Energy Holdings Limited	3800	15 December 2015	1 for 5	(15.79)	(13.51)	2.50	16.67	Yes
GCL New Energy Holdings Limited	451	15 December 2015	3 for 8	(11.76)	(8.91)	2.50	27.27	Yes
Hao Wen Holdings Limited	8019	2 December 2015	6 for 1	(50.00)	(12.57)	1.50	85.71	No
China New Economy Fund Limited	80	23 November 2015	1 for 2	(11.32)	(7.84)	3.25	33.33	No
Lai Sun Development Company Limited	488	17 November 2015	1 for 2	(33.33)	(25.20)	2.00	33.33	Yes
			Maximum	9.89	57.07	3.25	90.91
			Minimum	(87.00)	(50.50)	0	12.28
			Median	(33.33)	(13.39)	2.50	33.33
			Average	(34.82)	(12.66)	2.36	49.43
The Company	8173	15 February 2016	8 for 1	(66.67)	(18.19)	3.00	88.89	Yes

Source: The website of the Stock Exchange (www.hkexnews.hk)

Note:

The effect of the bonus issue of bonus shares on the basis of one bonus share for every one rights share taken up under the rights issue is not included in the above analysis. For illustrative purposes only, the discount of subscription price to the closing price on the last trading day including the bonus issue is approximately $45.05\%$ .

As noted from Table 3 above, 13 out of 16 of the Comparables had set the subscription prices of their Rights Issues at a discount to the closing price of the relevant shares immediately before the announcements in respect of the rights

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issues were published, with a maximum discount of approximately 87.00%, a median of approximately 34.92% and with an average discount of approximately 35.89%. The discount represented by the Subscription Price to the adjusted closing price of the Consolidated Shares on the Last Trading Day of approximately 66.67% falls within the range of discounts of the Comparables although larger than the average discount of the Comparables. We consider that it is a common market practice for listed issuers in Hong Kong to conduct rights issue at a discount to the market price in order to enhance the attractiveness of the rights issue.

As stated in the Letter from the Board and as confirmed with the Directors, it is the Company's intention to deeper the discount to the Subscription Price offered to Qualifying Shareholders in order to encourage them to participate in the Rights Issue and the future development and growth of the Company.

Despite that the discount represented by the Subscription Price of HK$0.112 to the adjusted closing price of the Consolidated Shares on the Last Trading Day is higher than the average discount of the Comparables, taking into account (i) the discount represented by the Subscription Price to the closing price of the Consolidated Shares on the Last Trading Day is within the range of discounts of the Comparables; (ii) it is a common market practice for listed issuers in Hong Kong to conduct rights issue at a discount to the market price to enhance the attractiveness of the rights issue exercise; (iii) it is the Company's intention to deeper the discount to the Subscription Price to encourage Qualifying Shareholders to participate in the Rights Issue and the future growth of the Company; (iv) the recent worsening financial performance of the Group as evidenced by the significant decline in turnover in recent years and the continuous net liabilities position of the Group; (v) the application for excess application would allow the Qualifying Shareholders to subscribe for any Rights Shares not taken up before the Underwriters; and (vi) the underwriting commission for the Rights Issue falls within the range of the Comparables, we are of the view that the terms of the Rights Issue are fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Company and the Shareholders as a whole.

4. Underwriting arrangements

Pursuant to the Underwriting Agreement, the Company has agreed to pay the Underwriter an underwriting commission rate of 3.00% in respect of its underwriting of the Rights Issue. We noted from the analysis on the Comparables above that the underwriting commission charged by the respective underwriters of the Comparables ranges from nil to 3.25%, with a median of approximately 2.50% and an average of approximately 2.41% on the respective funds raised. Given that the commission rate of 3.00% charged by the Underwriter falls within the range of the Comparables, we are of the view that the underwriting commission paid to the Underwriter by the Company is in line with the general market practice and is fair and reasonable.

We have also reviewed other principal terms of the Underwriting Agreement including, but not limited to, the payments terms, the termination of the Underwriting Agreement and conditions of the Underwriting Agreement (details of which are set out in

LETTER FROM GOLDIN

the Letter from the Board) and we are not aware of any term which appears to be unusual. As such, we are of the view that the terms of the Underwriting Agreement are fair and reasonable so far as the Independent Shareholders are concerned.

5. Potential dilution effect on the interests of the Independent Shareholders

The changes in shareholding structure of the Company arising from the Rights Issue are set out in the paragraph headed "Effects on Shareholding Structure" in the Letter from the Board. All Qualifying Shareholders are entitled to subscribe for the Rights Shares. The shareholding interest of other public Shareholders will have a maximum dilution of approximately 88.89% from approximately 78.37% to approximately 8.71% immediately upon completion of the Rights Issue assuming no Qualifying Shareholders take up their respective entitlements under the Rights Issue, and from approximately 78.36% to approximately 8.71% immediately upon the completion of the Rights Issue and after the Outstanding Options are exercised in full assuming no Qualifying Shareholders take up their respective entitlements under the Rights Issue.

Further, we noted from the Comparables as shown in Table 3 under the section headed "3. Principal terms of the Rights Issue", that the maximum dilution to the existing shareholders as a result of the rights issue transactions ranged from approximately 12.28% to approximately 90.91%, with an average dilution rate of approximately 49.47%. As such, the maximum dilution of 88.89% to the existing public Shareholders as a result of the Rights Issue falls within the said market range.

Taking into account (i) all Qualifying Shareholders are offered an equal opportunity to subscribe for the Rights Shares and to participate in the growth and development of the Company; (ii) the Rights Issue would improve the current weakening financial position of the Group and strengthen the capital base of the Company, thereby enhance the Shareholder's value; and (iii) the inherent dilutive nature of rights issue in general if the existing shareholders do not subscribe for in full their assured entitlements, we are of the view that the potential dilution effect of the Rights Issue is acceptable.

6. Financial effects of the Rights Issue

Net tangible assets

According to the section headed "Unaudited Pro Forma Financial Information of the Group" set out in Appendix II to the Circular, assuming the Rights Issue had been completed on 30 September 2015, the unaudited consolidated net tangible liabilities attributable to owners of the Company was approximately HK$416.71 million as at 30 September 2015. Upon completion of the Rights Issue, the Group would record an unaudited pro forma adjusted consolidated net tangible liabilities attributable to owners of the Company of approximately HK$146.71 million (on the basis that a minimum of 2,529,776,120 Rights Shares are issued). The unaudited pro forma adjusted consolidated net tangible liabilities attributable to owners of the Company per Share immediately after completion of the Rights Issue would be approximately HK$0.05 (on the basis that a minimum of 2,529,776,120 Rights Shares are issued), demonstrating an improvement from the unaudited consolidated net tangible liabilities attributable to owners of the Company per Share of approximately HK$1.32 as recorded before the completion of the Rights Issue. Based on the foregoing, the Rights Issue would improve the Group's unaudited net tangible liabilities per Share.

— 58 —

LETTER FROM GOLDIN

Liquidity

According to the Interim Report 2016, the bank and cash balances of the Group as at 30 September 2015 was approximately HK$2.28 million. Upon completion of the Rights Issue, the bank and cash balances of the Group is expected to increase by the minimum estimated net proceeds of approximately HK$270.0 million based on the minimum of 2,529,776,120 Rights Shares to be issued. As such, the Rights Issue would have a positive effect on the net current assets and current ratio of the Company, thereby improving the financial position of the Group.

Gearing ratio

According to the Interim Report 2016, the gearing ratio of the Group, which was calculated based on total non-current liabilities of approximately HK$455.33 million against total deficit of approximately HK$206.11 million, was approximately -220.92%. Upon completion of the Rights Issue, the total non-current liabilities of the Group would be reduced as a result of the Early Partial Redemption of the Convertible Bonds whilst the capital base of the Group would be enlarged. As such, the gearing ratio of the Group is expected to improve accordingly upon completion of the Rights Issue.

Shareholders should note that the aforesaid analyses are for illustrative purpose only and do not purport to represent the financial position of the Group upon completion of the Rights Issue.

RECOMMENDATIONS

Based on the abovementioned principal factors and reasons for the entering into of the Rights Issue, we are of the view that, while the Underwriting Agreement and the Rights Issue are not entered into in the ordinary and usual course of business of the Company, the Rights Issue is on normal commercial terms, fair and reasonable so far as the Independent Shareholders are concerned, and are in the interests of the Company and the Independent Shareholders as a whole. Accordingly, we recommend the Independent Shareholders, as well as the Independent Board Committee to advise the Independent Shareholders, to vote in favour of the relevant resolutions to be proposed at the EGM to approve the Rights Issue.

Yours faithfully,

For and on behalf of

Goldin Financial Limited

Billy Tang

Director

Note: Mr. Billy Tang is a licensed person registered with the Securities and Futures Commission and a responsible officer of Goldin to carry out type 6 (advising on corporate finance) regulated activity under the SFO. He has over 10 years of experience in the corporate finance profession.

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

1. THREE-YEAR FINANCIAL INFORMATION

The financial information of the Group for each of the three financial years ended 31 March 2013, 2014, 2015 and six months ended 30 September 2015 were disclosed in the annual reports of the Company for the years ended 31 March 2013 (pages 30 to 88), 2014 (pages 31 to 110), 2015 (pages 28 to 114), the interim report of the Company for the six months ended 30 September 2015 (pages 5 to 30) and the third quarterly report of the Company for the nine months ended 31 December 2015 (pages 3 to 9). The aforementioned financial information of the Group has been published on both the website of the Stock Exchange (http://www.hkex.com.hk) and the website of the Company (http://www.pamining.com/). Please refer to the hyperlinks as stated below:

2013 annual report: http://www.hkexnews.hk/listedco/listconews/GEM/2013/0621/GLN20130621057.pdf

2014 annual report: http://www.hkexnews.hk/listedco/listconews/GEM/2014/0624/GLN20140624059.pdf

2015 annual report: http://www.hkexnews.hk/listedco/listconews/GEM/2015/0621/GLN20150621011.pdf

2016 interim report: http://www.hkexnews.hk/listedco/listconews/GEM/2015/1115/GLN20151115019.pdf

2016 third quarterly report: http://www.hkexnews.hk/listedco/listconews/GEM/2016/0205/GLN20160205109.pdf

2. INDEBTEDNESS STATEMENT

Borrowings

As at the close of business on 31 January 2016, being the latest practicable date for the purpose of this indebtedness statement, the Group had (i) bank loans and bank overdraft of approximately HK$25,541,000 were secured and guaranteed; (ii) finance lease payable of approximately HK$564,000 was secured; (iii) shareholder's loan of approximately HK$92,114,000 was unsecured; (iv) the outstanding convertible bond of approximately HK$428,649,000; and (v) the outstanding note payables of approximately HK$30,000,000.

Facilities

As at the close of business on 31 January 2016, the Group have a bank facilities of approximately HK$29,210,000.

Capital commitment

The Group had no capital commitment as at 31 January 2016.

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Disclaimer

Save as aforesaid or as otherwise disclosed herein, as at the close of business on 31 January 2016, and apart from intra-group liabilities, the Group did not have any loan capital issued and outstanding or agreed to be issued, or any outstanding bank overdrafts, loans or other similar indebtedness, liabilities under acceptances or acceptance credits, debentures, mortgages, charges, hire purchases commitments, guarantees or other material contingent liabilities.

3. WORKING CAPITAL

The Directors are of the opinion that, after taking into account the existing cash and bank balances and other internal resources available and the estimated net proceeds from the Rights Issue, the Group has sufficient working capital for its present requirements and for at least 12 months from the date of this circular in the absence of unforeseen circumstances.

4. MATERIAL ADVERSE CHANGE

The Directors are not aware of any material adverse change in the financial position or trading position of the Group since 31 March 2015, being the date to which the latest published audited financial statements of the Group was made up.

5. FINANCIAL AND TRADING PROSPECT OF THE GROUP

Minerals exploration & exploitation

Despite the processes of EP renewal and MPSA application takes more time than expected, the Company do not see any major hindrance preventing the award of the MPSA & renewed EP to the Group. The Company believes the unfavourable market conditions resulting the recent market price movements will be over in the near future. The Group will then enjoy the economic benefits brought by the MPSA to be awarded.

Beverage

Despite these were hiccups on the operation start up, the Company still believes the market of clean and worry-free drinking water in the PRC has enormous potential at least in a decade from now. Meanwhile the Group is re-formulating operation strategy of the drinking water business in the PRC.

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Others

Scrap metal processing has been subject to a lot of stringent environmental protection requirements in Singapore which lead to a low gross profit margin. The Group will continue to monitor the operation and review the business model regularly. Always in the Company's mind is the need of securing a quality coal source at reasonable cost. The Group has been finding and discussing with various coal mine owners. Once a reliable coal source is secured no matter through uptake agreement or acquisition of controlling stake of a coal mine, the Group will resume coal business in a different model.

6. FOREIGN EXCHANGE

The Group mainly operated in Hong Kong, the PRC, Singapore and Philippines. Most of its business transactions, assets and liabilities are principally denominated in the functional currencies of the Group entities except for certain receivables denominated in foreign currencies that exposed the Group to foreign currency risk. The Group currently does not have a foreign currency hedging policy in respect of foreign currency transactions, assets and liabilities. The Group monitors its foreign currency exposure closely and will consider hedging significant foreign currency exposure should the need arise.

— I-3 —

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

For illustrative purpose only, set out below is the unaudited pro forma adjusted consolidated net tangible assets of the Group ("Unaudited Pro Forma Financial Information") as if the Rights Issue has been completed on 30 September 2015. Although reasonable care has been exercised in preparing the Unaudited Pro Forma Financial Information, Shareholders who read the information below should bear in mind that these figures are inherently subject to adjustments and, because of its hypothetical nature, may not give a true picture of the Group's financial position had the Rights Issue been completed as at 30 September 2015 or any future dates.

I. UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

The unaudited pro forma financial information of the Group (the "Unaudited Pro Forma Financial Information") has been prepared in accordance with paragraph 7.31(1) of the Listing Rules set out below to illustrate the effect of the Rights Issue on the unaudited consolidated net tangible liabilities of the Group as if it had taken place on 30 September 2015.

The Unaudited Pro Forma Financial Information has been prepared for illustrative purposes only, and because of its hypothetical nature, it may not give a true picture of the consolidated net tangible assets of the Group attributable to owners of the Company had the Rights Issue been completed as at 30 September 2015 or at any future date.

The following Unaudited Pro Forma Financial Information of the adjusted consolidated net tangible liabilities of the Group attributable to owners of the Company is prepared based on the unaudited consolidated net tangible liabilities of the Group attributable to owners of the Company as at 30 September 2015 as extracted from the published interim report of the Group for the period ended 30 September 2015, with adjustment described below:

	Unaudited consolidated net tangible liabilities attributable to owners of the Company as at 30 September 2015 HK$'000 (Note 1)	Unaudited estimated net proceeds from the Rights Issue HK$'000 (Note 2)	Unaudited pro forma adjusted consolidated net tangible liabilities attributable to owners of the Company as at 30 September 2015 HK$'000	Unaudited consolidated net tangible liabilities attributable to owners of the Company per Share before the completion of the Rights Issue HK$ (Note 3)	Unaudited pro forma adjusted consolidated net tangible liabilities attributable to owners of the Company per Share immediately after completion of the Rights Issue HK$ (Note 4)
Based on 2,529,776,120 Rights Shares at subscription price of HK$0.112 per Rights Share ("Scenario 1")	(416,711)	270,000	(146,711)	(1.32)	(0.05)
Based on 2,530,038,920 Rights Shares at subscription price of HK$0.112 per Rights Share (including 262,800 Options Shares) ("Scenario 2")	(416,711)	270,100	(146,711)	(1.32)	(0.05)

— II-1 —

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

Notes:

1) The unaudited consolidated net tangible liabilities attributable to owners of the Company as at 30 September 2015 has been extracted from the published interim report of the Company for the six months ended 30 September 2015 after deducting goodwill of approximately HK$3,435,000, intangible assets of approximately HK$566,000, and exploration and evaluation assets of approximately HK$158,486,000.

2) The estimated net proceeds from the Rights Issue of

i) Approximately HK$270,000,000 are based on the minimum number of 2,529,776,120 Rights Shares to be issued at the Subscription Price of HK$0.112 per Rights Share (assuming no subscription rights attaching to the outstanding Share Options are exercised on or before the Record Date) and after deducting estimated expenses of approximately HK$13,300,000 attributable to the Rights Issue.

ii) Approximately HK$270,100,000 are based on the minimum number of 2,530,038,920 Rights Shares to be issued at the Subscription Price of HK$0.112 per Rights Share (assuming full exercise of the subscription rights attaching to the outstanding Share Options are exercised on or before the Record Date) and after deducting estimated expenses of approximately HK$13,300,000 attributable to the Rights Issue.

3) The unaudited pro forma adjusted consolidated net tangible liabilities of the Group per share attributable to the owners of the Company before the completion the Rights Issue is determined based on the unaudited pro forma adjusted consolidated net tangible liabilities of the Group attributable to the owners of the Company as at 30 September 2015 of approximately HK$416,711,000 as disclosed in note 1 above, divided by 316,222,015 Consolidated Shares (assuming the Share Consolidation became effective on 30 September 2015) in issue as at 30 September 2015.

4) For Scenario 1, the unaudited pro forma adjusted consolidated net tangible liabilities of the Group after the completion of the Rights Issue per share is determined based on the unaudited pro forma adjusted consolidated net tangible liabilities of the Group attributable to the owners of the Company as at 30 September 2015 for the Rights Issue of approximately HK$146,711,000 divided by 2,845,998,135 shares which comprise 316,222,015 consolidated shares (assuming the Share Consolidation became effective on 30 September 2015) in issue as at 30 September 2015 and 2,529,776,120 Rights Shares (assuming no subscription rights attaching to the outstanding Share Options are exercised on or before the Record Date) to be issued after the completion of the Rights Issue.

For Scenario 2, the unaudited pro forma adjusted consolidated net tangible liabilities of the Group after the completion of the Rights Issue per share is determined based on the unaudited pro forma adjusted consolidated net tangible liabilities of the Group attributable to the owners of the Company as at 30 September 2015 for the Rights Issue of approximately HK$146,711,000 divided by 2,846,260,935 shares which comprise 316,222,015 Consolidated Shares (assuming the Share Consolidation became effective on 30 September 2015) in issue as at 30 September 2015 and 2,530,038,920 Rights Shares (assuming all Share Options are being fully exercised on or before the Record Date) to be issued after the completion of the Rights Issue.

5) No adjustment has been made to reflect any trading results or other transactions of the Group subsequent to 30 September 2015.

— II-2 —

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

II. ACCOUNTANTS' REPORT ON UNAUDITED PRO FORMA INFORMATION OF THE GROUP

The following is the text of a report, prepared for the sole purpose of inclusion in this circular from the independent reporting accountants of the Company, Elite Partners CPA Limited, Certified Public Accountants, Hong Kong.

開元信德會計師事務所有限公司
ELITE PARTNERS CPA LIMITED
Certified Public Accountants

The Board of Directors
Pan Asia Mining Limited
Unit 3404-6,
Floor 34th, AIA Tower.
183 Electric Road,
North Point, Hong Kong

Dear Sirs,

We have completed our assurance engagement to report on the compilation of unaudited pro forma financial information of Pan Asia Mining Limited (the "Company") and its subsidiaries (collectively the "Group") by the directors for illustrative purposes only. The unaudited pro forma financial information consists of the unaudited pro forma net tangible liabilities statement as at 30 September 2015, and related notes as set out in Appendix II of the circular issued by the Company. The applicable criteria on the basis of which the directors have compiled the unaudited pro forma financial information are described in Appendix II of the circular.

The unaudited pro forma financial information has been compiled by the directors to illustrate the impact of the proposed rights issue on the Group's net tangible liabilities attributable to owners of the Company as at 30 September 2015 as if the transaction had taken place at 30 September 2015. As part of this process, information about the Group's net tangible liabilities has been extracted by the directors from the Group's financial statements for the period ended 30 September 2015, on which an interim report has been published.

Directors' Responsibilities for the Unaudited Pro Forma Financial Information

The directors are responsible for compiling the unaudited pro forma financial information in accordance with paragraph 7.31 of the Rules Governing the Listing of Securities on Growth Enterprise Market of the Stock Exchange (the "GEM Listing Rules") and with reference to AG 7 Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars issued by the Hong Kong Institute of Certified Public Accountants ("HKICPA").

— II-3 —

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

Reporting Accountants' Responsibilities

Our responsibility is to express an opinion, as required by paragraph 7.31 of the GEM Listing Rules, on the unaudited pro forma financial information and to report our opinion to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the unaudited pro forma financial information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

We conducted our engagement in accordance with Hong Kong Standard on Assurance Engagements (HKSAE) 3420 Assurance Engagements to Report on the Compilation of Pro Forma Financial Information Included in a Prospectus issued by the HKICPA. This standard requires that the reporting accountants comply with ethical requirements and plan and perform procedures to obtain reasonable assurance about whether the directors have compiled the unaudited pro forma financial information in accordance with paragraph 7.31 of the GEM Listing Rules and with reference to AG 7 Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars issued by the HKICPA.

For purposes of this engagement, we are not responsible for updating or reissuing any reports or opinions on any historical financial information used in compiling the unaudited pro forma financial information, nor have we, in the course of this engagement, performed an audit or review of the financial information used in compiling the unaudited pro forma financial information.

The purpose of unaudited pro forma financial information included in a prospectus is solely to illustrate the impact of a significant event or transaction on unadjusted financial information of the Group as if the event had occurred or the transaction had been undertaken at an earlier date selected for purposes of the illustration. Accordingly, we do not provide any assurance that the actual outcome of the event or transaction at 30 September 2015 would have been as presented.

A reasonable assurance engagement to report on whether the unaudited pro forma financial information has been properly compiled on the basis of the applicable criteria involves performing procedures to assess whether the applicable criteria used by the directors in the compilation of the unaudited pro forma financial information provide a reasonable basis for presenting the significant effects directly attributable to the event or transaction, and to obtain sufficient appropriate evidence about whether:

The related pro forma adjustments give appropriate effect to those criteria; and
The unaudited pro forma financial information reflects the proper application of those adjustments to the unadjusted financial information.

The procedures selected depend on the reporting accountants' judgement, having regard to the reporting accountants' understanding of the nature of the Group, the event or transaction in respect of which the unaudited pro forma financial information has been compiled, and other relevant engagement circumstances.

— II-4 —

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

The engagement also involves evaluating the overall presentation of the unaudited pro forma financial information.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

We make no comments regarding the reasonableness of the amount of net proceeds from the Rights Issue, the application of those net proceeds, or whether such use will actually take places as under "Reasons for the Rights Issue and use of proceeds" set out on pages 25 to 28 of the circular.

Opinion

In our opinion:

(a) the unaudited pro forma financial information has been properly compiled on the basis stated;

(b) such basis is consistent with the accounting policies of the Group; and

(c) the adjustments are appropriate for the purposes of the unaudited pro forma financial information as disclosed pursuant to paragraph 7.31(1) of the GEM Listing Rules.

Your faithfully,

Elite Partners CPA Limited

Certified Public Accountants

Hong Kong, 11 March 2016

Yip Kai Yin

Practising Certificate Number: P05131

— II-5 —

APPENDIX III

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 Prospectus 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. SHARE CAPITAL OF THE COMPANY

The authorised and issued share capital of the Company (i) as at the Latest Practicable Date; (ii) immediately following the Share Consolidation becoming effective (assuming that there is no change in the issued share capital of the Company other than the Share Consolidation from the Latest Practicable Date up to the Record Date); (iii) immediately following the completion of the Rights Issue (assuming that there is no change in the issued share capital of the Company other than the Share Consolidation from the Latest Practicable Date up to the Record Date) and (iv) immediately following completion of the Rights Issue (assuming that there is no change in the issued share capital of the Company other than the Share Consolidation and all Outstanding Options being exercised in full from the Latest Practicable Date up to the Record Date).

(i) As at the Latest Practicable Date

Authorised:	HK$
250,000,000,000	Shares of HK$0.01 each
	2,500,000,000.00
Issued and fully paid or credited as fully paid:	HK$
2,529,776,120	Shares of HK$0.01 each
	25,297,761.20

(ii) Immediately following the Share Consolidation becoming effective (assuming that there is no change in the issued share capital of the Company other than the Share Consolidation from the Latest Practicable Date up to the Record Date)

Authorised:	HK$
31,250,000,000	Consolidated Shares of HK$0.08 each
	2,500,000,000.00
Issued and fully paid or credited as fully paid:	HK$
316,222,015	Consolidated Shares of HK$0.08 each
	25,297,761.20

— III-1 —

APPENDIX III

GENERAL INFORMATION

(iii) Immediately following completion of the Rights Issue (assuming that there is no change in the issued share capital of the Company other than the Share Consolidation from the Latest Practicable Date up to the Record Date)

Authorised:		HK$
31,250,000,000	Consolidated Shares of HK$0.08 each	2,500,000,000.00
Issued and fully paid or credited as fully paid:		HK$
316,222,015	Consolidated Shares in issue immediately after the Shares Consolidation becoming effective	25,297,761.20
2,529,776,120	Rights Shares to be issued	202,382,089.60
2,845,998,135	Total	227,679,850.80

(iv) Immediately following completion of the Rights Issue (assuming that there is no change in the issued share capital of the Company other than the Share Consolidation and all Outstanding Options being exercised in full from the Latest Practicable Date up to the Record Date)

Authorised:		HK$
31,250,000,000	Consolidated Shares of HK$0.08 each	2,500,000,000.00
Issued and fully paid or credited as fully paid:		HK$
316,222,015	Consolidated Shares in issue immediately after the Shares Consolidation becoming effective	25,297,761.20
32,850	Shares to be allotted and issued upon exercise of the Outstanding Options in full	2,628.00
2,530,038,920	Rights Shares to be issued	202,403,113.60
2,846,293,785	Total	227,703,502.80

As at the Latest Practicable Date, save for the Outstanding Options and the Convertible Bonds, the Company had no outstanding convertible securities, options or warrants in issue which confer any right to subscribe for, convert or exchange into Shares or Consolidated Shares.

— III-2 —

APPENDIX III

GENERAL INFORMATION

Share Options

As at the Latest Practicable Date, there were 262,800 Outstanding Options granted by the Company under the Share Option Scheme to the eligible participants thereof at the consideration of HK$1 per grant to each holder of the Outstanding Options. The holders of the Outstanding Options were consultants of the Group who were eligible participants of the Share Option Scheme. Among the Outstanding Options, all of the 262,800 Shares were fall to be allotted and issued at the exercise price of HK$3.58 per Share. The exercise prices of the Outstanding Options and/or the number of Shares fall to be allotted and issued upon full exercise thereof may be subject to further adjustment as a result of the Share Consolidation and/or the Rights Issue. Details of the Outstanding Options as at the Latest Practicable Date were as follows:

Options granted to	Date of grant	Subscription price per Share	Exercise period	Number of Shares issuable upon exercise in full of the Share Options
Consultants	6 March 2007	HK$3.58	6 March 2007 to 5 March 2017	262,800

Save for disclosed above, no capital of any member of the Group was under option, or agreed conditionally or unconditionally to be put under option as at the Latest Practicable Date. All Shares, Consolidated Shares and Rights Shares, when allotted and issued, shall rank pari passu with each other and in all respects with each other in all respects with the existing shares in all respects including rights to dividends, voting and return of capital. There is no arrangement under which future dividends will be waived or agreed to be waived

The Shares in issue are listed on the Stock Exchange. No part of the share capital or any other securities of the Company is listed or dealt in on any stock exchange other than the Stock Exchange and no application is being made or is currently proposed or sought for the Shares or any other securities of the Company to be listed or dealt in on any other stock exchange.

— III-3 —

APPENDIX III

GENERAL INFORMATION

3. DISCLOSURE OF INTERESTS

Interests of Directors

As at Latest Practicable Date, the interests and short positions of the Directors and chief executive of the Company in the shares, underlying shares and debentures of the Company or its associated corporations (within the meaning of Part XV of the SFO) which (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 to be 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 directors were as follows:

Long positions in shares, underlying share and debentures of the Company or its associated corporations:

Name of Director or chief executive of the Company	Capacity	Number of shares and underlying shares of the Company held by each Director	Approximate percentage of the total issued share capital of the Company
Mr. Michael Koh Tat Lee	Interest of spouse (Note)	289,069,060	11.43
Mr. Liang Tong Wei	Beneficial owner	100,000,000	3.95
Mr. Cheung Hung Man	Beneficial owner	44,235,000	1.75

Note:
Ms. Eva Wong is interested in 288,797,860 Shares under controlled corporation, Kesterion, and as beneficial owner of 271,200 Shares. Accordingly, Ms. Eva Wong is deemed to have interests in such 289,069,060 Shares in total. Mr. Koh Tat Lee, Michael, an executive Director, is the spouse of Ms. Eva Wong and is therefore deemed to be interested in the 289,069,060 Shares held by Ms. Eva Wong under the SFO.

Save as disclosed above, as at the Latest Practicable date, none of the Directors or the chief executive of the Company had or was deemed to have any interests or short positions in the Shares, underlying Shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) (i) which 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 or short positions which they were taken or deemed to have under such provisions of the SFO); or (ii) which were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (iii) which were required to be notified to the Company and the Stock Exchange pursuant to Rule 5.46 to 5.67 of the GEM Listing Rules relating to securities transactions by director.

— III-4 —

APPENDIX III

GENERAL INFORMATION

Interest of substantial Shareholders

As at the Latest Practicable Date, according to the register kept by the Company pursuant to section 336 of SFO, and so far as is known to the Directors or chief executive of the Company, the following persons (other than a Director or a chief executive of the Company) had, or was deemed or taken to have, an interest or short position in the Shares or underlying Shares which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO or who were directly or indirectly interested in 10% or more of the issued voting shares capital of any other member of the Group:

Long positions in shares, underlying share and debentures of the Company or its associated corporations:

Name of holder of Shares/underlying shares of the Company	Capacity	Number of shares and underlying shares of the Company held	Approximate percentage of the total issued share capital of the Company
Ms. Eva Wong (Note 1)	Interest of controlled corporation and beneficial owner	289,069,060	11.43%
Kesterion (Note 1)	Beneficial owner	288,797,860	11.42%
Gloss Rise Limited (Note 2)	Beneficial owner	624,000,000	24.67%
Action Hero Investments Limited (Note 2)	Interest of controlled corporation	624,000,000	24.67%
Mr. Ng Chun Sang (Note 2)	Interest of controlled corporation	624,000,000	24.67%
eForce Holdings Limited (Note 3)	Beneficial owner	251,800,000	9.95%
Cobot Financial Limited (Note 4)	Security interest	312,000,000	12.33%
Pioneer Frontier Limited (Note 4)	Interest of controlled corporation	312,000,000	12.33%
Galileo Capital Group (BVI) Limited (Note 4)	Interest of controlled corporation	312,000,000	12.33%

— III-5 —

APPENDIX III

GENERAL INFORMATION

Name of holder of Shares/underlying shares of the Company	Capacity	Number of shares and underlying shares of the Company held	Approximate percentage of the total issued share capital of the Company
Sun International Resources Limited (Note 4)	Interest of controlled corporation	312,000,000	12.33%
First Cheer Holdings Limited (Note 4)	Interest of controlled corporation	312,000,000	12.33%
Sun Finance Company Limited (Note 5)	Security interest	312,000,000	12.33%
Peak Stand Holdings Limited (Note 5)	Interest of controlled corporation	312,000,000	12.33%
Sheen Light Holdings Limited (Note 5)	Interest of controlled corporation	312,000,000	12.33%
Eminent Crest Holdings Limited (Note 5)	Interest of controlled corporation	312,000,000	12.33%
Bravo Profit Holdings Limited (Note 5)	Interest of controlled corporation	312,000,000	12.33%
Cheng Family Investment Holdings Company Limited (Note 5)	Interest of controlled corporation	312,000,000	12.33%
Chau’s Holdings Company Limited (Note 5)	Interest of controlled corporation	312,000,000	12.33%
Mr. Chau Cheok Wa (Note 4 & 5)	Interest of controlled corporation	624,000,000	24.67%
Mr. Cheng Ting Kong (Note 4 & 5)	Interest of controlled corporation	624,000,000	24.67%

Notes:
1. Ms. Eva Wong is interested in 288,797,860 Shares under controlled corporation, Kesterion, and as beneficial owner of 271,200 Shares. Accordingly, Ms. Eva Wong is deemed to have interests in such 289,069,060 Shares in total.
2. This represents the principal amount of approximately US$40,000,000 of the outstanding Convertible Bonds, which upon conversion in full at the conversion price of HK$0.50 per conversion share will result in the allotment and issue of 624,000,000 Shares, which have been issued to Kesterion on 12 May 2015 and Kesterion transferred to Gloss Rise on 19

— III-6 —

APPENDIX III

GENERAL INFORMATION

November 2015. Gloss Rise is owned as to 85% by Action Hero Investments Limited ("Action Hero"). Action Hero is wholly owned by Mr. Ng Chun Sang.

This represents as a beneficial owner of 49,000,000 issued shares and the principal amount of approximately US$13,000,000 of the outstanding Convertible Bonds, which upon conversion in full at the conversion price of HK$0.50 per conversion share will result in the allotment and issue of 202,800,000 Shares, which have been issued to Kesterion on 12 May 2015 and Kesterion transferred to eForce Holdings Limited (stock code: 943), a company listed on the Main Board of the Stock Exchange on 19 November 2015.
The security charges entered into between Gloss Rise and Cobot Financial Limited ("Cobot") dated on 19 November 2015. Cobot is wholly owned by Pioneer Frontier Limited ("Pioneer"). Pioneer is wholly owned by Galileo Capital Group (BVI) Limited ("Galileo"). Galileo is wholly owned by Sun International Resources Limited ("Sun International"). Sun International is wholly owned by First Cheer Holdings Limited ("First Cheer"). First Cheer is owned as to 50% and 50% by Mr. Chau Cheok Wa and Mr. Cheng Ting Kong respectively.
The security charges entered into between Gloss Rise and Sun Financial Company Limited ("Sun Financial") dated on 19 November 2015. Sun Financial is owned as to 58%, 38% and 4% by Peak Stand Holdings Limited ("Peak Stand"), Eminent Crest Holdings Limited ("Eminent") and Sheen Light Holdings Limited ("Sheen Light") respectively. Peak Stand, Eminent and Sheen Light are wholly owned by Bravo Profit Holdings Limited ("Bravo"). Bravo is owned as to 50% and 50% by Cheng Family Investment Holdings Company Limited ("Cheng Family") and Chau's Holdings Company Limited ("Chau's Holding") respectively. Cheng Family is wholly owned by Mr. Cheng Ting Kong. Chau's Holding is wholly owned by Mr. Chau Cheok Wa.
The percentage holding is calculated based on the issued share capital of the Company as at the Latest Practicable Date comprising 2,529,776,120 Shares.

Save as disclosed in the preceding paragraph and so far as is known to the Directors or chief executive of the Company, there is no person (other than a Director or chief executive of the Company) who, as at the Latest Practicable Date, had an interest or short position in the Shares and underlying Shares which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO, or, was, directly or indirectly, interested in 10% or more of the issued voting shares capital of any other member of the Group.

OTHER INTERESTS OF THE DIRECTORS

As at the Latest Practicable Date:

a) none of the Directors had any interest, either direct or indirect, in any assets which have, since 31 March 2015 (being the date to which the latest published audited accounts of the Group were made up), been acquired or disposed of by or leased to any member of the Group, or are proposed to be acquired or disposed of by or leased to any member of the Group; and

b) none of the Directors was materially interested in any contract or arrangement entered into by any member of the Group which is subsisting as at the Latest Practicable Date and is significant in relation to the business of the Group.

— III-7 —

APPENDIX III

GENERAL INFORMATION

5. LITIGATION

As at the Latest Practicable Date, no litigation or claim of material importance is known to the Directors' to be pending or threatened against any member of the Group.

6. DIRECTORS' CONTRACTS

As at the Latest Practicable Date, none of the Directors of the Company had entered or proposed to entered into any service contracts with any member of the Group, excluding contracts expiring or determinable by the Group within one year without payment of any compensation (other than statutory compensation).

7. COMPETING INTERESTS

As at the Latest Practicable Date, none of the Directors or controlling shareholders or substantial shareholders of the Company or any of their respective close associates (as defined in the GEM Listing Rules) had any interest in a business which competes or may compete with the business of the Group nor does any of them has or may have any other conflicts of interest with the Group.

8. MATERIAL CONTRACTS

All material contracts (not being contracts entered into in the ordinary course of business) which were entered into by members of the Group within two years immediately preceding the issue of this circular are as follows:

(a) the Underwriting Agreement;

(b) the separate subscription agreements entered into between the Company and the independent private investors during the period from 2 October 2015 to 11 November 2015 in relation to the issue of 4.5% bonds in an aggregate principal amount of HK$30,000,000 for a term of 8 years;

(c) the option agreement dated 29 July 2015 entered into between Evotech (Asia) Pte Limited (as vendor) ("Evotech"), a wholly-owned subsidiary of the Company and Hock Seng Hoe Metal Company Pte Limited (as purchaser) ("Hock Seng Hoe"), pursuant to which Evotech granted an option to Hock Seng Hoe in relation to the disposal of the leasehold interest in a real property located in Singapore. The option agreement was terminated on 7 December 2015;

(d) the settlement agreement dated 21 November 2014 entered into between (i) the Company and certain of its subsidiaries and (ii) Magic Stone Fund (China) and Kesterion in respect of the complete and full settlement of the claims, liabilities and obligations arising from certain overdue trade contracts;

— III-8 —

APPENDIX III

GENERAL INFORMATION

(e) the underwriting agreement dated 22 September 2014 (as amended by a supplemental agreement on 21 November 2014) entered into between (i) the Company (as issuer) and (ii) Kesterion and Cheong Lee Securities Limited (as underwriters), in relation to the underwriting of not less than 302,755,224 rights shares and not more than 327,959,064 rights shares at the subscription price of HK$0.50 per rights share;

(f) the conditional debt restructuring agreement dated 22 September 2014 (as amended by a supplemental agreement on 21 November 2014) entered into between the Company and Kesterion in respect of the bond restructuring comprising (i) the amendment to the terms of the old convertible bonds in principal amount of US$201,474,359 (equivalent to approximately HK$1,571,500,000) (the "Old CBs") to grant the Company a right to redeem all the outstanding Old CBs at a redemption price of US$140,000,000 (equivalent to approximately HK$1,092,000,000), (ii) the redemption of such amended Old CBs pursuant to such redemption right; and (iii) the issue of the new convertible bonds in satisfaction and cancellation of the Old CBs; and

(g) the memorandum of understanding dated 11 August 2014 entered into between the Company and PT Sino International Mining Group (as vendor) in relation to a proposed acquisition of several companies which are principally engaged in coal mining business in Indonesia. The memorandum of understanding was terminated on 10 November 2014.

9. EXPERTS AND CONSENTS

The following is the qualification of the experts or professional advisers who have given opinion or advice contained in this circular:

Name	Qualification
Goldin Financial Limited	a licensed corporation to carry on Type 6 (advising on corporate finance regulated activity under the SFO
Elite Partners CPA Limited ("Elite")	Certified Public Accountants

As at the Latest Practicable Date, each of Goldin and Elite had no beneficial interest in the share capital of any member of the Group nor any right, whether legally enforceable or not, to subscribe for or to nominate persons to subscribe for securities in any member of the Group or have any interest, either directly or indirectly, in any assets which have been, since 31 March 2015, being the date to which the latest published audited consolidated accounts of the Group were made up, acquired or disposed of by or leased to or are proposed to be acquired or disposed of by or leased to any member of the Group.

— III-9 —

APPENDIX III

GENERAL INFORMATION

Each of Goldin and Elite has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its reports and/or its letters dated 11 March 2016 and/or references to its name and/or its advice in the form and context in which they respectively appear.

10. EXPENSES

The expenses in connection with the Rights Issue, including financial advisory fees, independent financial adviser fees, underwriting commission, printing, registration, translation, legal and accountancy charges are estimated to be approximately HK$13.3 million, which are payable by the Company.

11. CORPORATE INFORMATION AND PARTIES INVOLVED IN THE RIGHTS ISSUE

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
Units 3404-6, 34/F
AIA Tower
183 Electric Road
North Point
Hong Kong

Company secretary
Ms. Leung Pui Ki
(an associate member of the Institute of Chartered Secretaries and Administrators in the United Kingdom and the Hong Kong Institute of Chartered Secretaries)

Authorised representatives
Mr. Shiu Chi Tak, Titus
Units 3404-6, 34/F
AIA Tower
183 Electric Road
North Point
Hong Kong

Ms. Leung Pui Ki
Units 3404-6, 34/F
AIA Tower
183 Electric Road
North Point
Hong Kong

— III-10 —

APPENDIX III
GENERAL INFORMATION

Compliance officer
Ms. Yip Man Yi
Units 3404-6, 34/F
AIA Tower
183 Electric Road
North Point
Hong Kong

Share registrar and
transfer office in
Hong Kong
Tricor Tengis Limited
Level 22, Hopewell Centre
183 Queen's Road East
Hong Kong

Principal bankers
Bank of China (Hong Kong) Limited
1 Garden Road
Central
Hong Kong

Bank of Communication Co. Ltd
20 Pedder Street
Central
Hong Kong

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

Reporting accountants
Elite Partners CPA Limited
Certified Public Accountants
Suites 2B-4A, 20/F
Tower 5, China Hong Kong City
33 Canton Road
Tsim Sha Tsui
Kowloon
Hong Kong

— III-11 —

APPENDIX III
GENERAL INFORMATION

Financial advisers to the Company
Akron Corporate Finance Limited
17AB
Trust Tower
68 Johnston Road
Wanchai
Hong Kong

Freeman Corporate Finance Limited
Room 2301 23/F
China United Centre
28 Marble Road
North Point
Hong Kong

Legal advisers to the Company in relation to the Rights Issue
As to Hong Kong law
Tso Au Yim & Yeung
2nd Floor
Beautiful Group Tower
74-77 Connaught Road Central
Hong Kong

Ching & Solicitors
Suites 2201-03, 22nd Floor
China United Centre
28 Marble Road
North Point
Hong Kong

Underwriter
Freeman Securities Limited
Room 1601, 16/F
China United Centre
28 Marble Road
North Point
Hong Kong

— III-12 —

APPENDIX III
GENERAL INFORMATION

12. PARTICULARS OF THE DIRECTORS AND SENIOR MANAGEMENT

(a) Name and address of the Directors and senior management

Executive Directors

Name	Address
Ms. Yip Man Yi (Chairman)	Units 3404-6, 34/F
AIA Tower
183 Electric Road
North Point
Hong Kong
Mr. Cheung Hung Man
(Chief Executive Officer)	Units 3404-6, 34/F
AIA Tower
183 Electric Road
North Point
Hong Kong
Mr. Michael Koh Tat Lee	Units 3404-6, 34/F
AIA Tower
183 Electric Road
North Point
Hong Kong
Mr. Shiu Chi Tak, Titus	Units 3404-6, 34/F
AIA Tower
183 Electric Road
North Point
Hong Kong

Non-executive Directors

Name	Address
Mr. Liang Tong Wei	Units 3404-6, 34/F
AIA Tower
183 Electric Road
North Point
Hong Kong
Mr. Wong Chi Man	Units 3404-6, 34/F
AIA Tower
183 Electric Road
North Point
Hong Kong

— III-13 —

APPENDIX III
GENERAL INFORMATION

Independent Non-executive Directors

Name	Address
Mr. Chu Hung Lin, Victor	Units 3404-6, 34/F
AIA Tower
183 Electric Road
North Point
Hong Kong
Mr. Tong Wan Sze	Units 3404-6, 34/F
AIA Tower
183 Electric Road
North Point
Hong Kong
Mr. Fung Kwok Leung	Units 3404-6, 34/F
AIA Tower
183 Electric Road
North Point
Hong Kong
Dr. Wan Ho Yuen, Terence	Units 3404-6, 34/F
AIA Tower
183 Electric Road
North Point
Hong Kong
Mr. Li Kwok Chu	Units 3404-6, 34/F
AIA Tower
183 Electric Road
North Point
Hong Kong
Mr. Lau Shu Yan	Units 3404-6, 34/F
AIA Tower
183 Electric Road
North Point
Hong Kong

Senior management

Name	Address
Ms. Leung Pui Ki	Units 3404-6, 34/F
AIA Tower
183 Electric Road
North Point
Hong Kong

— III-14 —

APPENDIX III

GENERAL INFORMATION

(b) Profile of the Directors and senior management

Executive Directors

Ms. Yip Man Yi ("Ms. Yip"), aged 44, is an executive Director since 14 November 2015 and the chairman of the Company since 31 December 2015. Ms. Yip graduated from Seneca College of Applied Arts and Technology, Toronto, Canada and has over 18 years' experience in financial market and money market. Ms. Yip has worked with HSBC Market (Asia) Limited for Global Markets and company listed on the Main Board of the Stock Exchange who was actively involved in formulating investment strategy and was responsible for overseeing the management operations of various investment projects.

Ms. Yip also has experience in the management of listed company at Hong Kong. She was a chairman and an executive director and a member of the remuneration committee of Evershine Group Holdings Limited (formerly known as TLT Lottotainment Group Limited) (stock code: 8022), a company listed on the GEM of the Stock Exchange, for the period from 10 April 2012 to 2 October 2013. She was a managing director and an executive director of Unity Investments Holdings Limited (stock code: 913), a company listed on the Main Board of the Stock Exchange, for the period from 7 October 2013 to 29 November 2013.

Mr. Michael Koh Tat Lee ("Mr. Koh"), aged 49, is an executive Director since 30 November 2011. Mr. Koh is also the chairman of Black Sand Enterprises Limited and is a director in all subsidiaries and associated companies of the Company, except a subsidiary at Indonesia and the PRC. He holds a Master degree of Electrical Engineering and a Master degree of Industrial Engineering from Columbia University in the United States. Mr. Koh possesses more than 10 years of experience in the telecommunications industry and project management. He has worked at Bell South and AT&T in the United States and was promoted to technical director before he left AT&T. Mr. Koh was the vice president of First Pacific Company Limited (stock code: 0142). During his tenure at First Pacific Company Limited from year 1994 to 1997, Mr. Koh founded a private company called Tuntex Telecom in Taiwan and assumed the post of president for the period from year 1995 to 1997. Mr. Koh was an executive director of Get Holdings Limited (stock code: 8100, formerly known as M Dream Inworld Limited) and the chairman of Chinese Strategies Holdings Limited (stock code: 8089, formerly known as China Railway Logistics Limited and Proactive Technology Holdings Limited) before joining the Group.

Mr. Cheung Hung Man ("Mr. Cheung"), aged 49, is an executive Director and chief executive officer of the Company since 27 July 2012. Mr. Cheung is also the director of PT Yaozhong Resources, Brighton Asia Pacific Investment Holdings Limited and Xiamen Yaozhong Asia-Pacific Trading Company Limited, the indirectly wholly-owned subsidiaries of the Company. Mr. Cheung is primarily responsible for the coal trading business of the Group. Since 2009, Mr. Cheung has been the president and chief executive officer of PT Yaozhong Resources and

— III-15 —

APPENDIX III

GENERAL INFORMATION

Xiamen Yaozhong Asia-Pacific Trading Company Limited. In 2011, Mr. Cheung co-founded Shinegood Culture Museum and is currently a chairman of Shinegood Media Co., Ltd. Mr. Cheung is also a guest professor of Art College, Xiamen University. Before that, Mr. Cheung received a bachelor's degree in architecture from Quanzhou Huaqiao University in 1990. In 1993, Mr. Cheung became the deputy managing director of Wuyi Decoration Design Engineering Co., Ltd under Wuyi Group (Hong Kong) and was promoted to managing director in 2005. From 1993 to 2000, Mr. Cheung had completed over 100 engineering design projects and was awarded the title of China Senior Interior Designer in 2000.

Mr. Shiu Chi Tak ("Mr. Shiu"), aged 34, is an executive Director since 14 November 2015 and the authorized representative since 1 December 2015. Mr. Shiu holds a Master of Science Degree in Marketing Management, The Hong Kong Polytechnic University. He has practical experiences in corporate finance projects for listed companies in Hong Kong including corporate advisories, mergers and acquisitions and fund raising activities.

Non-executive Directors

Mr. Liang Tong Wei ("Mr. Liang"), aged 49, is a non-executive Director of the Company since 30 November 2011. He holds a bachelor degree of Industrial and Business Administration and Management from Foshan Radio and Television University (佛山市廣播電視大學) in the PRC. Mr. Liang possesses about 27 years of experiences in the business administration and management. He has worked at 佛山市奇槎色料廠 and 佛山市宏陶陶瓷集團有限公司 in the PRC and was promoted to sales general manager before he left 佛山市宏陶陶瓷集團有限公司. Mr. Liang has been the chairman and general manager of 佛山市三水宏源陶瓷企業有限公司 since 2004.

Mr. Wong Chi Man ("Mr. Wong"), aged 33, is a non-executive Director since 13 October 2015, is currently an associate director of a licensed securities dealer in Hong Kong. Mr. Wong has over 7 years of experience in the field of investment, finance and securities advisory. He holds a Master of Applied Finance degree from Monash University and a Bachelor degree in Commerce from Deakin University, Australia.

Independent non-executive Directors

Mr. Chu Hung Lin, Victor ("Mr. Chu"), aged 48, is an independent non-executive Director and a member of each of the audit committee and the remuneration committee of the Company since 1 June 2009 and a member of the nomination committee since 31 March 2012. Mr. Chu was designated as the chairman of the remuneration committee since 30 October 2014. Mr. Chu has a diversified experience in the industries of film production, land development, private pre-IPO investment and food and catering. During the period from January 2001 to June 2003, he was the deputy chairman and executive director of Kuangchi Science Limited (stock code: 439, formerly known as Climax International Company Limited), shares of which are listed on the Main Board of the Stock Exchange. Before

— III-16 —

APPENDIX III

GENERAL INFORMATION

joining the Company, Mr. Chu was actively involved in food and beverage business and was a shareholder and director of certain private companies.

Mr. Tong Wan Sze ("Mr. Tong"), aged 47, is an independent non-executive Director and the chairman of the audit committee of the Company since 29 December 2010. Mr. Tong has over 21 years of experience in overseeing financial management, merger and acquisition, investor relations and company secretarial matters. Before joining the Company, Mr. Tong was the Chief Financial Officer, Financial Controller and Company Secretary at several companies listed on the Main Board of the Stock Exchange and previously he was an auditor at Deloitte Touche Tohmatsu. He is a fellow of the Association of Chartered Certified Accountants and an associate of the Hong Kong Institute of Certified Public Accountants. Mr. Tong has obtained a Master degree in Business Administration from the University of Strathclyde in the United Kingdom.

Mr. Fung Kwok Leung ("Mr. Fung"), aged 50, is an independent non-executive Director and a member of the audit committee, the remuneration committee and the nomination committee of the Company since 30 October 2014. Mr. Fung is a practicing Certified Public Accountant, a fellow member of each of the Hong Kong Institute of Certified Public Accountants and Association of Chartered Certified Accountants and a Certified Tax Adviser of The Taxation Institute of Hong Kong. He holds an Honour Degree in Accountancy from the Hong Kong Polytechnic University. Mr. Fung worked for two of the "Big-Four" international accounting firms and several multi-national entities and listed companies. He has over 25 years of extensive experience in accounting, auditing, taxation, merger and acquisitions, corporate finance, rescue and advisory. Mr. Fung is one of the founders of JH CPA Alliance Limited, which was founded on 23 January 2009. In October 2013, he was appointed as a Standing Committee Member of The Returned Overseas Chinese Association, Nanshan, Shenzhen, People's Republic of China. In January 2014, he was further appointed as a Committee Member of The Chinese People's Political Consultative Conference, Nanshan, Shenzhen Committee.

Dr. Wan Ho Yuen, Terence ("Dr. Wan"), aged 48, is an independent non-executive Director since 14 November 2015 and a member of the audit committee, the remuneration committee and the nomination committee of the Company since 31 December 2015 and is currently the director of an accounting firm based in Hong Kong. Dr. Wan was an independent non-executive director of China National Culture Group Limited, a company listed on the Main Board of the Stock Exchange (formerly known as China Railsmedia Corporation Limited) (stock code: 745) from 17 January 2014 to 8 April 2015 and Dr. Wan is also an independent non-executive director of Tai Shing International (Holdings) Limited, a company listed on the GEM (stock code: 8103) since 31 December 2015. Dr. Wan obtained a bachelor of law degree from Tsing Hua University, the PRC in January 2004; and a doctorate degree of philosophy in business administration from Bulacan State University, Philippines in May 2006. Dr. Wan is a Certified Public Accountant (Practicing) of Hong Kong Institute of Certified Public Accountants. Dr. Wan has over 10 years of experiences in taxation advisory, business management and accounting with several professional accounting firms and companies.

— III-17 —

APPENDIX III

GENERAL INFORMATION

Mr. Li Kwok Chu ("Mr. Li") aged 59, is an independent non-executive Director and a member of the audit committee, the remuneration committee and the chairman of the nomination committee of the Company since 31 December 2015. Mr. Li is a chairman and chief executive officer of Pakco Group and he has rich experience in administration and management field. Prior to Mr. Li joining Pakco Group, he was the managing director of Pakco Security (HK) Limited. He was an independent non-executive director of Evershine Group Holdings Limited (formerly known as TLT Lottotainment Group Limited) (stock code: 8022), a company listed on the GEM of the Stock Exchange for the period from 16 March 2012 to 31 October 2013.

Mr. Lau Shu Yan ("Mr. Lau") aged 34, is an independent non-executive Director and a member of the audit committee, the remuneration committee and the nomination committee of the Company since 31 December 2015. Mr. Lau graduated from the University of Newcastle in United Kingdom with a bachelor's degree in Accounting and Financial Analysis. He is a Certified Public Accountant (Practicing) of the Hong Kong Institute of Certified Public Accountants and a member of the Association of Chartered Certified Accountants. Mr. Lau has over 10 years of experience in finance, auditing and accounting fields. Mr. Lau had previously worked in an international accounting firm and he is currently a partner of an audit firm. He was an independent non-executive director of Evershine Group Holdings Limited (formerly known as TLT Lottotainment Group Limited) (stock code: 8022), a company listed on the GEM of the Stock Exchange for the period from 11 July 2012 to 16 January 2014.

Senior management

Ms. Leung Pui Ki ("Ms. Leung"), aged 41, is the company secretary, the authorized representative and the process agent of the Company since 1 December 2015. Ms. Leung graduated from the University of Hertfordshire in the United Kingdom with a Bachelor degree in Business Administration. She is an associate member of the Institute of Chartered Secretaries and Administrators in the United Kingdom and an associate member of the Hong Kong Institute of Chartered Secretaries. Ms. Leung has over 15 years of experience in the company secretarial field.

AUDIT COMMITTEE

As at the Latest Practicable Date, the audit committee of the Board comprised six members of independent non-executive Directors, namely Mr. Chu Hung Lin, Victor, Mr. Tong Wan Sze, Mr. Fung Kwok Leung, Dr. Wan Ho Yuen, Terence, Mr. Li Kwok Chu and Mr. Lau Shu Yan. The audit committee of the Board is chaired by Mr. Tong Wan Sze. The background, directorship and past directorship (if any) of each of the members of the audit committee of the Board are set out in the section headed "12. Particulars of the Directors and Senior Management" in this appendix.

— III-18 —

APPENDIX III

GENERAL INFORMATION

The primary duties of the audit committee of the Company include, but are not limited to, the following: (a) to review and supervise the financial reporting and internal controls procedures of the Group; and (b) to review and approve the Company's annual reports and accounts, interim report and quarterly reports to the Board.

14. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection during normal business hours on any weekday (except public holidays) at the principal place of business of the Company in Hong Kong at Units 3404-6, 34/F, AIA Tower, 183 Electric Road, North Point Hong Kong from the date of this circular up to and including the date of the EGM:

a) the memorandum and articles of association of the Company;

b) the annual reports of the Company for the three years ended 31 March 2013, 2014 and 2015;

c) the interim report of the Company for the six months ended 30 September 2015 and third quarterly report of the Company for the nine months ended 31 December 2015;

d) the letter of recommendation from the Independent Board Committee, the text of which is set out on page 40 of this circular;

e) the letter of advice from Goldin, the text of which is set out on pages 41 to 59 of this circular;

f) the accountants' report on the unaudited pro forma financial information of the Group set out in Appendix II to this circular;

g) the letters of consent referred to under the paragraph headed "Experts and Consents" in this Appendix;

h) the material contracts disclosed in the paragraph under the heading "Material Contracts" in this Appendix; and

i) this circular.

15. MISCELLANEOUS

a) As at the Latest Practicable Date, there was no restriction affecting the remittance of profit or repatriation of capital of the Company into Hong Kong from outside Hong Kong.

b) the English text of this circular and the accompanying form of proxy shall prevail over the respective Chinese text in the case of inconsistency.

— III-19 —

NOTICE OF THE EGM

PAN ASIA MINING LIMITED 衷亞礦業有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 8173)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (the "EGM") of Pan Asia Mining Limited (the "Company") will be held at 8:00 a.m. on Friday, 8 April 2016 at Auberge Discovery Bay Hong Kong, 88 Siena Avenue, Discovery Bay, Lantau Island, Hong Kong or at any adjournment thereof, for the purpose of considering and, if thought fit, passing (with or without amendment) the following resolutions of the Company (unless otherwise indicated, capitalized terms used in this notice shall have the same meanings as those defined in the circular of the Company dated 11 March 2016):

ORDINARY RESOLUTIONS

"THAT subject to and condition upon the Listing Committee of The Stock Exchange of Hong Kong Limited (the "Stock Exchange") granting approval of the listing of, and permission to deal in, the Consolidated Shares (as defined below), with effect from the business day (as defined below) immediately following the business date on which this resolution is passed:

(a) every eight (8) issued and unissued shares of HK$0.01 each in the share capital of the Company be consolidated into one (1) share of HK$0.08 each (the "Consolidated Share") in the share capital of the Company (the "Share Consolidation");

(b) the Consolidated Shares shall rank pari passu in all respects with each other and have the same rights and privileges as regards dividend, capital, redemption, attendance at meetings, voting, etc. and be subject to the restrictions in respect of ordinary shares contained in the articles of association of the Company;

(c) all fractional Consolidated Shares will be disregarded and will not be issued to the holders of the existing shares of HK$0.01 each in the share capital of the Company but all fractional Consolidated Shares will be aggregated, sold and retained for the benefit of the Company, if possible and applicable; and

(d) the directors of the Company be and are hereby generally authorised to do all such acts, deeds and things and execute all such documents, including under the seal of the Company, where applicable, as they may consider necessary or expedient to complete, implement and give effect to any and all the arrangements set out in this resolution.

— EGM-1 —

NOTICE OF THE EGM

For the purpose of this resolution, “business day” means a day on which commercial banks in Hong Kong are generally open for business (other than Saturday, Sunday and public holiday).

“THAT conditional upon fulfilment or waiver (where applicable) of the conditions of the Underwriting Agreement (as defined below):

(a) the allotment and issue of not less than 2,529,776,120 Consolidated Shares and not more than 2,530,038,920 Consolidated Shares (the “Rights Shares”) by way of rights issue (the “Rights Issue”) at a subscription price of HK$0.112 per Rights Share on the basis of eight (8) Rights Shares for every one Consolidated Share to the qualifying holders of the Shares (the “Qualifying Shareholders”) of the Company whose names appear on the register of members of the Company on Wednesday, 20 April 2016 (or such later date as the Company and the Underwriter may agree to be the record date for such Rights Issue) (the “Record Date”) other than those shareholders with addresses on the Record Date are outside Hong Kong whom the Directors, after making relevant enquiry, consider their exclusion from the Rights Issue to be necessary or expedient on account either of the legal restrictions under the laws of the relevant place or the requirements of the relevant regulatory body or stock exchange in that place (the “Non-Qualifying Shareholders”) as described in further details in the Company’s circular dated 11 March 2016 and on and subject to such terms and conditions as may be determined by the Directors and otherwise pursuant to and subject to the fulfillment of the conditions set out in the underwriting agreement (the “Underwriting Agreement” including all supplemental agreement(s) relating thereto, if any) (a copy of which has been produced to this meeting marked “A” and signed by the chairman of this meeting for the purpose of identification) dated 15 February 2016 and made between the Company and Freeman Securities Limited as underwriter (the “Underwriter”), and the transactions contemplated thereunder, be and are hereby approved;

(b) any one Director be and is hereby authorised to allot and issue the Rights Shares pursuant to or in connection with the Rights Issue notwithstanding that the same may be offered, allotted or issued otherwise than pro rata to the Qualifying Shareholders and, in particular, the Directors may make such exclusions or other arrangements in relation to Non-Qualifying Shareholders as they deem necessary or expedient having regard to any restrictions or obligations under the laws of, or the requirements of any recognised regulatory body or any stock exchange in, any territory outside Hong Kong;

(c) the entering into of the Underwriting Agreement by the Company be and is hereby approved, confirmed and ratified and the performance of the transactions contemplated thereunder by the Company be and are hereby approved; and

— EGM-2 —

NOTICE OF THE EGM

(d) any one Director be and is hereby authorised to sign and execute such documents and do all such acts and things incidental to the Rights Issue or as he/she considers necessary, desirable or expedient in connection with the implementation of or giving effect to the Rights Issue, the Underwriting Agreement and the transactions contemplated thereunder or in this resolution."

SPECIAL RESOLUTION

"IT IS RESOLVED AS A SPECIAL RESOLUTION THAT subject to and conditional upon the necessary approval of the Registrar of Companies in the Cayman Islands being obtained, the English name of the Company be changed from "Pan Asia Mining Limited" to "Union Asia Enterprise Holdings Limited" and the dual foreign name of the Company be changed from "寰亞礦業有限公司" to "萬亞企業控股有限公司", and that the Directors be and are hereby authorized to do all such acts and things and execute such further documents and take all steps which, in their opinion may be necessary, desirable or expedient to implement and give effect to the aforesaid change of English name and dual foreign name of the Company and to attend to any necessary registration and/or filing for and on behalf of the Company."

By order of the Board

Pan Asia Mining Limited

Yip Man Yi

Chairman

Hong Kong, 11 March 2016

Notes:

Any shareholder entitled to attend and vote at the extraordinary general meeting shall be entitled to appoint another person as his/her proxy to attend and vote instead of him/her. A shareholder who is the holder of two or more shares may appoint more than one proxy to represent him/her and vote on his/her behalf. A proxy need not to be a shareholder of the Company.
In order to be valid, a form of proxy together with the power of attorney or other authority (if any) under which it is signed or a notarially certified copy thereof, must be deposited at the Company's branch share registrar in Hong Kong, Tricor Tengis Limited, at Level 22, Hopewell Centre, 183 Queen's Road East, Hong Kong not less than 48 hours before the time appointed for the extraordinary general meeting (or any adjournment thereof).
Completion and delivery of a form of proxy shall not preclude a shareholder from attending and voting in person at the extraordinary general meeting and in such event, the instrument appointing a proxy shall be deemed to be revoked.
Where there are joint holders of any shares, any one of such joint holder may vote, either in person or by proxy in respect of such shares as if he/she were solely entitled hereto; but if more than one of such joint holders be present at the extraordinary general meeting, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose seniority shall be determined by the order in which the names stand in the register of members of the Company.
A form of proxy for use at the extraordinary general meeting is attached herewith.

— EGM-3 —

NOTICE OF THE EGM

Any voting at the extraordinary general meeting shall be taken by poll.
The form of proxy shall be in writing under the hand of the appointer or his attorney duly authorized in writing or, if the appointer is a corporation, either under its seal or under the hand of an officer, attorney or other person authorized to sign the same.

As at the date of this notice, the board of directors of the Company comprises four executive Directors, Ms. Yip Man Yi, Mr. Cheung Hung Man, Mr. Michael Koh Tat Lee and Mr. Shiu Chi Tak, Titus, two non-executive Directors, Mr. Liang Tong Wei and Mr. Wong Chi Man, and six independent non-executive Directors, Mr. Chu Hung Lin, Victor, Mr. Tong Wan Sze, Mr. Fung Kwok Leung, Dr. Wan Ho Yuen, Terence, Mr. Li Kwok Chu and Mr. Lau Shu Yan.

— EGM-4 —

AI assistant

Hephaestus Holdings Limited — Proxy Solicitation & Information Statement 2016

51310_rns_2016-03-10_7e160b2b-497f-41fb-9c58-c6be0b659ed7.pdf

PAN ASIA MINING LIMITED 寰亞礦業有限公司

PAN ASIA MINING LIMITED

袁亞礦業有限公司

INTRODUCTION

PROPOSED CHANGE OF COMPANY NAME

Conditions for the Change of Company Name

Reasons for the Change of Company Name

Effects on the Change of Company Name

PROPOSED SHARE CONSOLIDATION

Conditions of the Share Consolidation

Effect of the Share Consolidation

Reasons for the Share Consolidation

Application for listing of the Consolidated Shares

Free exchange of Consolidated Shares' certificates and trading arrangement

Odd lots arrangement and matching services

PROPOSED CHANGE IN BOARD LOT SIZE

PROPOSED RIGHTS ISSUE

Issue statistics

Notes:

Subscription Price

Qualifying Shareholders

Rights of the Overseas Shareholders

Closure of register of members

Basis of provisional allotment

Status of the Rights Shares

Fractions of Rights Shares

Certificates of the Rights Shares and refund cheques

Application for excess Rights Shares

Application for listing of the Rights Shares

UNDERWRITING ARRANGEMENT

Underwriting Agreement

Conditions of the Rights Issue

REASONS FOR THE RIGHTS ISSUE AND USE OF PROCEEDS

Early Partial Redemption and repayment of the Loan and the payment of interest accrued thereon

General working capital for existing business of the Group

WARNING OF THE RISKS OF DEALING IN THE SHARES OR THE CONSOLIDATED SHARES (AS THE CASE MAY BE) AND/OR NIL-PAID RIGHTS SHARES

EFFECTS ON SHAREHOLDING STRUCTURE

Scenario 1:

Scenario 2:

Notes:

FUND RAISING ACTIVITY IN THE PAST 12 MONTHS

ADJUSTMENTS IN RELATION TO THE OUTSTANDING OPTIONS AND THE CONVERTIBLE BONDS

GEM LISTING RULES IMPLICATIONS

GENERAL

RISK FACTORS

(a) Risks relating to the Group and its business

Exploration and exploitation business

Coal trading business

Beverage trading business

Metal trading business

High indebtedness level of the Group

(b) Risks relating to politics, economics and regulations

RECOMMENDATION

ADDITIONAL INFORMATION

PAN ASIA MINING LIMITED 衰亞礦業有限公司

PROPOSED RIGHTS ISSUE

THE INDEPENDENT BOARD COMMITTEE

BASIS OF OUR ADVICE

PRINCIPAL FACTORS AND REASONS CONSIDERED

1. Background information of the Group

2. Reasons for the Rights Issue and the use of proceeds

2.1 Early Partial Redemption and the repayment of the Loan

Background to the Early Partial Redemption and the Loan

Potential benefits for the Early Partial Redemption and the repayment of the Loan

2.2 General working capital for existing businesses of the Group

2.3 Fund raising alternatives

3. Principal terms of the Rights Issue

The Subscription Price

Historical trading volume of the Shares

Comparison of the Subscription Price

4. Underwriting arrangements

5. Potential dilution effect on the interests of the Independent Shareholders

6. Financial effects of the Rights Issue

Net tangible assets

Liquidity

Gearing ratio

RECOMMENDATIONS

Hephaestus Holdings Limited Proxy Solicitation & Information Statement 2016