Hongxing Coldchain (Hunan) Co., Ltd. — Proxy Solicitation & Information Statement 2003

May 13, 2003

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in GeoMaxima Energy Holdings Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected from transmission to the purchaser or transferee.

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

GeoMaxima Energy Holdings Limited

(incorporated in Bermuda with limited liability)

DISCLOSEABLE AND CONNECTED TRANSACTION INVOLVING DISPOSITION OF INTERESTS IN AN ASSOCIATED COMPANY

Independent financial adviser to the independent board committee of GeoMaxima Energy Holdings Limited

ALTUS CAPITAL LIMITED

A notice convening a special general meeting of the Company to be held at Room 2301, Office Tower, Convention Plaza, 1 Harbour Road, Wanchai, Hong Kong on Thursday, 19 June 2003 at 11:30 a.m. is set out on pages 20 and 21 of this circular. Whether or not you intend to attend the special general meeting, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the Company’s branch share registrar, Computershare Hong Kong Investor Services Limited, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for the holding of the special general meeting. Completion and return of the form of proxy will not preclude you from attending and voting in person at the special general meeting should you so wish.

13 May 2003

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
The Disposal Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Assets Involved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Completion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Information on Sky Global and the Joint Venture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Reasons for the Disposal and Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Special General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Letter from Altus Capital Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Appendix – General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	17
Notice of Special General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	20

DEFINITIONS

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

• “2002 Agreement”

the agreement entered into between Elite and Mr. Sun in relation to the purchase by Elite of 49 shares of Sky Global from Mr. Sun on 17 January 2002

• “Announcement” the announcement of the Company in relation to the Disposal dated 22 April 2003

• “Altus” Altus Capital Limited, a licensed corporation within the meaning of the SFO and the independent financial adviser to the Independent Board Committee

• “associates” has the meaning ascribed thereto under the Listing Rules

• “Board” the board of Directors

• “Business Day” a day (other than a Saturday) on which licensed banks are generally open for business in Hong Kong throughout their normal business hours

• “Company” GeoMaxima Energy Holdings Limited, a company incorporated in Bermuda with limited liability the issued Shares of which are listed on the Stock Exchange

• “Completion” completion of the sale and purchase of the Sale Shares and the Shareholder’s Loan in accordance with the terms and conditions of the Disposal Agreement

• “Consideration” the consideration payable by Mr. Sun to Elite under the Disposal Agreement in the aggregate amount of RMB135 million (or approximately HK$127 million).

• “Directors” directors of the Company

• “Disposal” the disposal of the Sale Shares and the Shareholder’s Loan by Elite to Mr. Sun under the Disposal Agreement

• “Disposal Agreement” the agreement for the sale and purchase of the Sale Shares and the Shareholder’s Loan, as amended from time to time

• “Elite” Elite Ascend Holdings Limited, a company incorporated in the British Virgin Islands with limited liability and a wholly owned subsidiary of the Company

– 1 –

DEFINITIONS

“Group”	the Company and its subsidiaries
“Hong Kong”	the Hong Kong Special Administrative Region of the PRC
“Independent Board Committee”	an independent committee of the Board comprising Mr. Yu En
	Guang and Mr. Zhang Xue Min to advise the Independent
	Shareholders as to the fairness and reasonableness of the Disposal
	Agreement and the transactions contemplated thereunder
“Independent Shareholders”	Shareholders other than Mr. Sun and his associates
“Joint Venture”	Jilin City Jimei Gas Co. Ltd., a company established in the PRC
	and is owned as to 63% by Sky Global and 37% by China Jilin
	City Natural Gas Company
“Latest Practicable Date”	9 May 2003, being the latest practicable date for the purpose of
	ascertaining certain information contained in this circular
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“Maxy”	Maxy Oil & Gas Limited, a company incorporated in Hong Kong
	with limited liability
“Mr. Sun”	Mr. Sun Tian Gang, a Director and controlling Shareholder
“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 PRC
“Sale Shares”	49 Shares, being 49% of the entire issued share capital of Sky
	Global
“SFO”	the Securities and Futures Ordinance (Cap. 571 of the Laws of
	Hong Kong)
“Share(s)”	share(s) of HK$0.01 each in the share capital of the Company
“Shareholder’s Loan”	the loan in the sum of RMB26 million indebted by Sky Global to
	Elite
“Shareholder(s)”	the shareholder(s) of the Company
“Shine Gem”	Jilin City Shine Gem Gas Pipeline Co. Ltd, a company established
	in the PRC and 53.6% of the equity interests of which is
	beneficially owned by Mr. Sun

– 2 –

DEFINITIONS

“Sky Global”	Sky Global Limited, a company incorporated in the British Virgin
	Islands with limited liability and an associated company of the
	Company
“Special General Meeting”	the special general meeting of the Shareholders to be convened
	and held to consider and, if thought fit, to approve the Disposal
	Agreement and the transactions contemplated thereunder
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“HK$”	Hong Kong dollars
“RMB”	Renminbi
“%”	per cent.

In this circular, the exchange rate of HK$1 to RMB1.06 has been used for reference only.

– 3 –

LETTER FROM THE BOARD

GeoMaxima Energy Holdings Limited

(incorporated in Bermuda with limited liability)

Directors:

Mr. Zhu Jia Zhen (Chairman)

Mr. Sun Tian Gang

Mr. Guo Ting

• Mr. Zhao Xin Xian

• Mr. Yu En Guang*

• Mr. Zhang Xue Min*

Head office and principal place of business in Hong Kong: Room 2301, Office Tower Convention Plaza 1 Harbour Road Wanchai Hong Kong

• Independent non-executive Directors

Registered office: Clarendon House 2 Church Street Hamilton HM 11 Bermuda

13 May 2003

To the Shareholders

Dear Sir and Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION INVOLVING DISPOSITION OF INTERESTS IN AN ASSOCIATED COMPANY

INTRODUCTION

The Board announced on 23 April 2003 that Elite entered into the Disposal Agreement with Mr. Sun in respect of the sale and purchase of the Sale Shares and the Shareholder’s Loan at an aggregate cash consideration of RMB135 million (or approximately HK$127 million) on 10 April 2003.

Mr. Sun, a Director and the beneficial owner of China GeoMaxima Co. Ltd., the controlling Shareholder, is interested in approximately 58.42% in the issued share capital of the Company. The Disposal therefore constitutes a connected transaction of the Company under the Listing Rules and is subject to approval by the Independent Shareholders at the Special General Meeting. The Disposal also constitutes a discloseable transaction of the Company under the Listing Rules. The Independent Board Committee has been formed to advise the Independent Shareholders as to the fairness and reasonableness of the terms of the Disposal Agreement and the transactions contemplated thereunder. Altus has been appointed to advise the Independent Board Committee in this regard.

– 4 –

LETTER FROM THE BOARD

The purpose of this circular is to provide you with among other things: (i) details of the Disposal Agreement, (ii) a letter of recommendation from the Independent Board Committee to the Independent Shareholders in relation to the Disposal Agreement and the transactions contemplated thereunder, (iii) a letter of advice from Altus to the Independent Board Committee to the Independent Shareholders in relation to the Disposal Agreement and the transactions contemplated thereunder and (iv) a notice of the Special General Meeting.

THE DISPOSAL AGREEMENT

Parties

Vendor: Elite, a wholly-owned subsidiary of the Company

Purchaser: Mr. Sun, a Director and the beneficial owner of China GeoMaxima Co., Ltd., the controlling Shareholder, who is interested in approximately 58.42% in the issued share capital of the Company. Mr. Sun is also the beneficial owner of 51% interests in the issued share capital of Sky Global.

ASSETS INVOLVED

The Sale Shares

49 shares of Sky Global, representing 49% equity interests in Sky Global which is an investment holding company incorporated in the British Virgin Islands with limited liability on 28 November 2001. The principal asset of Sky Global is its 63% equity interests in the Joint Venture.

The Shareholder’s Loan

The loan in the amount of approximately RMB26 million (or approximately HK$24.5 million) indebted by Sky Global to Elite. The Shareholder’s Loan was advanced by Elite, in proportion to its equity interests in Sky Global, to Sky Global for general working capital. The Shareholder’s Loan was interest free and repayable by Sky Global on demand by Elite. No guarantee was given by any person in favour of Elite in respect of the Shareholder’s Loan.

CONSIDERATION

The Consideration of RMB135 million (or approximately HK$127 million) was arrived at after arm’s length negotiations between the Group and Mr. Sun and has taken into account the unaudited consolidated net asset value of Sky Global attributable to the Group of approximately RMB108 million (or approximately HK$102 million) as at 31 December 2002. The Consideration represents a premium of approximately 1% over the unaudited consolidated net asset value of Sky Global (taking into account of the Shareholder’s Loan) attributable to the Group as at 31 December 2002 which is equivalent to approximately RMB1 million (or approximately HK$0.9 million). The Consideration will be satisfied by Mr. Sun in cash at the time of Completion.

– 5 –

LETTER FROM THE BOARD

CONDITION

The Disposal Agreement is subject to the fulfillment of the condition that the Disposal Agreement and the transactions contemplated thereunder being approved by the Independent Shareholders at the Special General Meeting.

COMPLETION

Completion shall take place on the next Business Day of the date on which the condition of the Disposal Agreement has been fulfilled. If the condition is not satisfied on or before 4:00 p.m. on 30 June 2003 or such later date as may be agreed by the Group and Mr. Sun, the Disposal Agreement shall cease and determine and none of the parties thereto shall have any obligations or liabilities under the Disposal Agreement, save for any antecedent breaches of the terms of the Disposal Agreement.

INFORMATION ON SKY GLOBAL AND THE JOINT VENTURE

Basic Information

Sky Global is an investment holding company incorporated in the British Virgin Islands with limited liability on 28 November 2001. The principal asset of Sky Global is its 63% equity interests in the Joint Venture. The balance of 37% equity interests in the Joint Venture is owned by China Jilin City Natural Gas Company, a party not connected with the directors, chief executive or substantial shareholders of the Company or any of its subsidiaries or any of their respective associates (as defined in the Listing Rules).

The Joint Venture is principally engaged in operation of a natural gas pipeline network in Jilin City of Jilin Province, the PRC.

For the year ended 31 December 2002, the post acquisition unaudited consolidated profit of Sky Global attributable to the Group was approximately RMB6.7 million. The unaudited consolidated net assets value of Sky Global attributable to the Group was approximately RMB108 million.

Purchase of Sky Global by the Group in 2002

Reference was made to an announcement made by the Company on 18 January 2002 in relation to the acquisition by the Group of 49% interests in the issued share capital of Sky Global, an investment holding company the principal asset of which is its 63% equity interests in the Joint Venture.

Pursuant to the 2002 Agreement, Elite agreed to purchase as purchaser and Mr. Sun agreed to sell as a beneficial owner 49 shares of Sky Global at a consideration of RMB100 million which was satisfied as to RMB50 million (or approximately HK$47.17 million) by cash and as to remaining RMB50 million (or approximately HK$47.17 million) by Elite procuring the Company to issue 44,083,936 new shares of the Company (representing approximately 1.48% of the then enlarged share capital), credited as fully paid, at HK$1.07 each to Mr. Sun. It was also agreed by Elite and Mr. Sun that Mr. Sun would procure Maxy, the then shareholder of the Joint Venture, to transfer its 63% equity interests in the Joint Venture to Sky Global before the completion of the 2002 Agreement. The 2002 Agreement was completed on 30 April 2002.

– 6 –

LETTER FROM THE BOARD

REASONS FOR THE DISPOSAL AND USE OF PROCEEDS

In the course of preparing the annual audit of accounts of the Group for the financial year ended 31 December 2002 and upon reviewing the records of the Joint Venture, the Board came to notice of the existence of a charge over the equity interests of the Joint Venture and the details of which are stated below.

On 26 May 1999, Shine Gem entered into a loan agreement (the “Loan Agreement”) with a number of banks and financial institutions (the “Lenders”) for the grant of credit facilities to Shine Gem to the extent of US$16.5 million. In support of the said credit facilities, Maxy, the then joint venture partner of the Joint Venture, executed a charge (“Charge”) over its 63% equity interests in the Joint Venture and a continuing guarantee in favour of the Lenders on the same date. Shine Gem is a company established in the PRC which is beneficially owned as to 10% by China Jilin City Natural Gas Company, as to 10% by Sinopec National Star Petroleum Corporation and as to 80% by GeoMaxima Energy Company, Limited. The issued share capital of GeoMaxima Energy Company, Limited is owned as to 33% by Mr. Qiu Xianghua, 16% by Mr. Sun and 51% by Maxy International Limited which in turn is wholly owned by Mr. Sun. Mr. Qiu Xianghua and China Jilin City Natural Gas Company are parties not connected with the directors, chief executive or substantial shareholders of the Company or any of its subsidiaries or any of their respective associates and Sinopec National Star Petroleum Corporation is a minority joint venture partner of Xinjiang Xingmei Oil Pipeline Co., Limited, a subsidiary of the Company established in the PRC. Shine Gem accordingly is an associate of Mr. Sun.

However, at the relevant time of the 2002 Agreement, the Company was not aware of the existence of the Charge notwithstanding that the Group conducted a due diligence exercise which included but not limited to obtaining a PRC legal opinion in relation to the business and the legal status of the Joint Venture. In the course of the due diligence exercise, no documents or records examined by the Group indicated the existence of the Charge. The Board considered that the due diligence exercise carried out by it at the relevant time of the 2002 Agreement was sufficient.

Further, under the 2002 Agreement, Mr. Sun has given warranties to the effect that all material information in relation to the Joint Venture has been fully disclosed to the Group and Sky Global and its then subsidiaries including Maxy have not given any guarantee of or security for any loan. In reliance upon such warranties and the result of the due diligence exercise conducted by the Group, the Group, at the relevant time of the 2002 Agreement, did not further enquire Mr. Sun whether any equity interests of the Joint Venture have been encumbered nor had the due diligence work carried out by the Group revealed the existence of the Charge.

Upon discovering the Charge and the Loan Agreement, the Board immediately enquired Mr. Sun about the Charge and requested an explanation from Mr. Sun. Mr. Sun indicated that the relationship between the Charge and the transaction under the 2002 Agreement was inadvertently overlooked by him and he therefore failed to draw the attention of the Board and the professional parties at the material time to the existence of the Charge. Nevertheless, the Group has obtained a Hong Kong legal opinion and a PRC legal opinion to the effect that the Group has valid title to the Sale Shares immediately after completion of the 2002 Agreement and the equity interests of the Joint Venture would however be subject to the Charge. Should Shine Gem fail to repay the credit facilities under the Loan Agreement and the Lenders enforce the Charge, Sky Global would rank after the Lenders in the proceeds of sale when the charged equity interests of the Joint Venture is realised.

– 7 –

LETTER FROM THE BOARD

In view of the existence of the Charge and despite Mr. Sun’s explanation as stated above, the Board (excluding Mr. Sun), after taking legal advice, considers that Mr. Sun should have to ratify the situation. In order to ratify the position and to protect the interests of the Group, Mr. Sun discussed with the Group and agreed to purchase the Sale Shares and the Shareholder’s Loans from Elite subject to the terms and conditions of the Disposal Agreement and to indemnify the Group in the event there are any claims or any action whatsoever taken against the Group under, arising out of, or in connection with the Loan Agreement or the Charge and such indemnity has no limitation period nor any cap in amount. Mr. Sun also agreed to bear all the costs and expenses in relation to the Disposal and the transaction under the 2002 Agreement.

Notwithstanding the Disposal, the Company has reserved its rights to take further legal action against Mr. Sun and may reassess the suitability of Mr. Sun to continue to act as a Director. Further announcement will be made to inform the investors and the Shareholders of the latest development of the Board’s decision within one month from the date of the Announcement.

After obtaining legal advice and considering the following reasons, the Board (excluding Mr. Sun) considers that Elite has the valid title to the Sale Shares and it shall be in the best interests of the Shareholders as a whole and the Company to proceed with the Disposal:

1. property development in Jilin, the city where the Joint Venture carried out its business, experienced a downturn in late 2002, which was not foreseen by the Company, due to the burst of property bubbles of the property market of Jilin, the PRC. As a result, the gas connection fee of the Joint Venture, which accounts for a substantial part of the Joint Venture’s profits, and the number of new project reduced substantially in the second half of 2002. Accordingly, the profit of the Joint Venture attributable to the Group reduced. Such reduction was evidenced by the fact that the unaudited post acquisition profit of the Joint Venture attributable to the Group for the two months ended 30 June 2002 amounted to approximately RMB5.2 million while the unaudited profit of the Joint Venture attributable to the Group for the second half of 2002 amounted only to approximately RMB1.5 million; and

2. it is unlikely that the Group can exert significant management influence over the Joint Venture given its percentage of equity interests in the Joint Venture.

The net proceeds of the Disposal will be applied as additional working capital of the Group.

SPECIAL GENERAL MEETING

The Disposal Agreement is subject to the approval by the Independent Shareholders at the Special General Meeting. Mr. Sun and his associates will abstain from voting at the Special General Meeting due to his interest in the Disposal. The Independent Board Committee comprising Mr. Yu En Guang and Mr. Zhang Xue Min has been formed to advise the Independent Shareholders as to the fairness and reasonableness of the Disposal Agreement and the transactions contemplated thereunder. Altus, the independent financial adviser, has been appointed to advise the Independent Board Committee in this regard.

– 8 –

LETTER FROM THE BOARD

Mr. Sun and his associates will abstain from voting in respect of the resolution to approve the Disposal Agreement and the transactions contemplated thereunder at the Special General Meeting due to his interest in the Disposal.

A form of proxy for use at the Special General Meeting is enclosed. Whether or not you intend to be present at the Special General Meeting, you are requested to complete this form of proxy and return it to be branch share registrar of the Company in Hong Kong, Computershare Hong Kong Investor Services Limited, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong in accordance with the instructions printed thereon no later than 48 hours before the time of the Special General Meeting. Completion and return of the form of proxy will not preclude you from attending and voting in person at the Special General Meeting should you so wish.

RECOMMENDATIONS

Having reviewed the advice from Altus, the Independent Board Committee considers that the terms of the Disposal Agreement are fair and reasonable and that the Disposal is in the interest of the Company and the Shareholders as a whole. Accordingly, the Independent Board Committee recommends the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the Special General Meeting to approve the Disposal Agreement and the transactions contemplated thereunder.

ADDITIONAL INFORMATION

Your attention is also drawn to the letter of recommendation from the Independent Board Committee to the Independent Shareholders in relation to the Disposal Agreement and the transactions contemplated thereunder, the letter of advice from Altus in relation to the Disposal Agreement and the transactions contemplated thereunder and the information set out in the appendices to this circular.

Yours faithfully, For and on behalf of

GeoMaxima Energy Holdings Limited Guo Ting

Director

– 9 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

GeoMaxima Energy Holdings Limited

(incorporated in Bermuda with limited liability)

13 May 2003

To the Independent Shareholders

Dear Sir and Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION INVOLVING DISPOSITION OF INTERESTS IN AN ASSOCIATED COMPANY

We refer to the circular of the Company dated 13 May 2003 (the “Circular”), of which this letter forms part. Terms defined in the Circular shall bear the same meanings when used herein unless the context requires otherwise.

We have been appointed to constitute the Independent Board Committee to consider the Disposal Agreement and the transactions contemplated thereunder and to advise the Independent Shareholders in respect of the Disposal Agreement and the transactions contemplated thereunder. Altus has been appointed as the independent financial adviser to advise us in this respect.

Your attention is drawn to the letter from the Board and the letter from Altus containing its advice to us as set out on pages 4 to 9 and pages 11 to 16 of this circular respectively.

Taking into account the advice from Altus, we consider that the terms of the Disposal Agreement are fair and reasonable so far as the interests of the Independent Shareholders are concerned and that the Disposal Agreement and the transactions contemplated thereunder are in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the Special General Meeting to approve the Disposal Agreement and the transactions contemplated thereunder.

Yours faithfully, Yu En Guang Zhang Xue Min Independent Board Committee

– 10 –

LETTER FROM ALTUS CAPITAL LIMITED

ALTUS CAPITAL LIMITED

8/F Hong Kong Diamond Exchange Building 8 Duddell Street, Central Hong Kong

Tel: 2522 6122 Fax: 2522 6992

13 May 2003

The Independent Board Committee of GeoMaxima Energy Holdings Limited Room 2301, Office Tower Convention Plaza 1 Harbour Road Wanchai Hong Kong

Dear Sirs,

DISCLOSEABLE AND CONNECTED TRANSACTION INVOLVING DISPOSITION OF INTERESTS IN AN ASSOCIATED COMPANY

INTRODUCTION

We refer to the circular (the “Circular”) dated 13 May 2003 issued to the Shareholders, of which this letter forms part, and our appointment as the independent financial adviser to the Independent Board Committee in respect of the Disposal, details of which are set out in the letter from the Board (“Letter”) in the Circular. Terms used in this letter shall have the same respective meanings as those defined in the Circular unless the context requires otherwise.

As stated in the Letter, on 10 April 2003, Elite, a wholly owned subsidiary of the Company, entered into the Disposal Agreement with Mr. Sun. Pursuant to the Disposal Agreement, Elite agreed to sell and Mr. Sun agreed to purchase the Sale Shares and the Shareholder’s Loan at an aggregate cash consideration of RMB135 million (or about HK$127.4 million).

Pursuant to the Listing Rules, the Disposal constitutes a discloseable transaction for the Company. In addition, Mr. Sun is a Director and the beneficial owner of China GeoMaxima Co. Ltd., the controlling Shareholder who is interested in about 58.42% in the issued share capital of the Company, and thus is a connected person of the Company. As such, the Disposal also constitutes a connected transaction for the Company under the Listing Rules and is subject to the approval of the Independent Shareholders at the Special General Meeting. Mr. Sun and his associates will abstain from voting at the Special General Meeting due to his interest in the Disposal.

The Independent Board Committee comprising Mr. Yu En Guang and Mr. Zhang Xue Min has been formed to advise the Independent Shareholders as to the fairness and reasonableness of the Disposal Agreement. As the independent financial adviser to the Independent Board Committee, our role is to give

– 11 –

LETTER FROM ALTUS CAPITAL LIMITED

an independent opinion to the Independent Board Committee as to whether the terms of the Disposal Agreement are fair and reasonable so far as the Independent Shareholders are concerned.

BASIS OF OUR OPINION

In formulating our opinion, we have relied on the statements, information, opinions and representations contained or referred to in the Circular and the information and representations as provided to us by the Directors. We have assumed that all statements, information, opinions and representations contained or referred to in the Circular and all information and representations which have been provided by the Directors, for which they are solely and wholly responsible, are true and accurate at the time when they were made and continue to be so at the date hereof. We have also assumed that all statements of belief, opinions and intention made by the Directors in the Circular were reasonably made after due and careful enquiry. We have also sought and obtained confirmation from the Company that no material facts have been omitted from the information provided and referred to in the Circular.

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 Disposal and to justify our reliance on the accuracy of the information contained in the Circular so as to provide a reasonable basis of our opinion.

We have no reason to suspect that any material facts or information which is known to the Company have been omitted or withheld from the information supplied or opinions expressed in the Circular nor to doubt the truth and accuracy of the information and facts, or the reasonableness of the opinions expressed by the Company and the Directors which have been provided to us. We have not, however, conducted any independent verification on the information provided to us by the Directors, nor have we conducted any form of in-depth investigation into the businesses and affairs or the prospects of the Company and Sky Global or any of their respective subsidiaries and associates.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion as to the fairness and reasonableness of the terms of the Disposal Agreement, we have considered, among other things, the following principal factors:

Background

The Group is principally engaged in the operation of transportation and storage facilities for crude oil and operation of natural gas pipeline networks. On 17 January 2002, Elite entered into the 2002 Agreement with Mr. Sun in relation to the acquisition of 49% equity interest in Sky Global by Elite at a consideration of RMB100 million (or about HK$94.3 million). The consideration was satisfied as to RMB50 million by cash (or about HK$47.2 million) and RMB50 million (or about HK$47.2 million) by Elite procuring the Company to issue 44,083,936 new shares of the Company. Sky Global is an investment holding company and has not carried out any business since its incorporation save and except for transactions relating to and incidental to its becoming the immediate holding company of Maxy. The principal asset of Sky Global is its 63% equity interest in the Joint Venture. The balance of 37% equity

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LETTER FROM ALTUS CAPITAL LIMITED

interests in the Joint Venture is owned by China Jilin City Natural Gas Company, a party not connected with the directors, chief executive or substantial shareholders of the Company or any of its subsidiaries or any of their respective associates (as defined in the Listing Rules).

The Joint Venture is principally engaged in the operation of a natural gas pipeline network in Jilin City of Jilin Province, the PRC. For the year ended 31 December 2002, the post acquisition unaudited consolidated profit of Sky Global attributable to the Group was about RMB6.7 million (or about HK$6.3 million). The unaudited consolidated net assets value of Sky Global attributable to the Group was about RMB108.1 million (or about HK$102.0 million) as at 31 December 2002.

Reasons for the Disposal

(a) The Charge

We have discussed with the Company about the reasons for the Disposal. In the course of preparing the annual audit of accounts of the Group for the financial year ended 31 December 2002 and upon reviewing the records of the Joint Venture, the Board came to notice of the existence of the Charge over the 63% equity interests in the Joint Venture and a continuing guarantee in favour of the Lenders executed by Maxy in support for credit facilities granted by the Lenders to Shine Gem, details of which have been stated in the Letter.

Upon discovering the Charge and the Loan Agreement, the Board immediately enquired Mr. Sun about the Charge and requested an explanation from Mr. Sun. Besides, the Group has obtained a Hong Kong legal opinion and a PRC legal opinion to the effect that Elite has the valid title to the Sale Shares immediately after completion of the 2002 Agreement and that the equity interests of the Joint Venture would however be subject to the Charge. According to the Hong Kong legal opinion, should the Lenders choose to enforce the Charge, then Sky Global would rank after the Lenders in the proceeds of sale when the equity interests of the Joint Venture were realised.

In view of the existence of the Charge and despite Mr. Sun’s explanation, the Board (excluding Mr. Sun), after taking legal advice, considers that Mr. Sun should have to ratify the situation. In order to ratify the position and to protect the interests of the Group, Mr. Sun discussed with the Group and agreed to purchase the Sale Shares and the Shareholder’s Loans from Elite subject to the terms and conditions of the Disposal Agreement and to indemnify the Group in the event there are any claims or any action whatsoever taken against the Group under, arising out of, or in connection with the Loan Agreement or the Charge and such indemnity has no limitation period nor any cap in amount. Mr. Sun also agreed to bear all the costs and expenses in relation to the Disposal and the transaction under the 2002 Agreement.

(b) Recent performance of the Joint Venture

Furthermore, according to the Company, the unaudited profit for the six months ended 30 June 2002 of the Joint Venture was about RMB16.8 million (or about HK$15.8 million) and the unaudited profit for the year ended 31 December 2002 was about RMB21.6 million (or about HK$20.4 million). As such, the unaudited post acquisition profit of the Joint Venture attributable to the Group for the two months ended 30 June 2002 was amounted to about RMB5.2 million (or

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LETTER FROM ALTUS CAPITAL LIMITED

about HK$4.9 million) while the unaudited profits of the Joint Venture attributable to the Group for the six months ended 31 December 2002 was amounted only to about RMB1.5 million (or about HK$1.4 million). According to the Company, such decrease in the profit of the Joint Venture was a result of the downturn of property development market in Jilin City, the city where the Joint Venture carries out its business, in late 2002 due to the burst of property bubbles of the property market of Jilin City. Gas connection fee, which is a one-off fee, constitutes about 61% of the gross profit of the Joint Venture for the year ended 31 December 2002. As a result of the downturn of the property market, which led to a reduction in the number of new projects, the gas connection fee of the Joint Venture, which accounts for a substantial part of the Joint Venture’s profits, was reduced substantially in the second half of 2002. Accordingly, the profit of the Joint Venture attributable to the Group was also reduced. We are of the view that the downturn of the property market has had a negative impact on the profitability of the Joint Venture.

(c) Lack of control of the Joint Venture

Besides, the Board (excluding Mr. Sun) considers that, since the Group is interested in only 49% of Sky Global, the Group is unlikely to exert significant management influence over the Joint Venture given its percentage of equity interests in the Joint Venture. In the past, the Group has acquired minority interests in other investments, such as the acquisition of a 32% effective equity interest in Lejion Gas Company Limited (“Lejion”) in Korla of Xinjiang Autonomous Region. However, the Group has eventually acquired a further 40% effective equity interest in Lejion, increasing its effective interest to 72%, as a result of improving prospects in Northwestern China. However in the case of Sky Global, in light of the Charge and the recent performance of the Joint Venture, the Board (excluding Mr. Sun) considers that the lack of control over Sky Global restricts the Group’s ability to improve on the performance of the underlying business.

(d) Availability of funds for future investment

Since the property development in Jilin City experienced downturn which has led to the decrease in the profit of the Joint Venture, the Board is of the opinion that the Joint Venture’s earnings will slow down with the uncertain property regulating measures in Jilin City. As such, the sale proceeds of RMB135 million (or about HK$127.4 million) will provide funding for the Group to invest in potential attractive projects when opportunities arise.

Taking into account (1) the fact that the Charge is over the 63% equity interests in the Joint Venture; (2) the performance of the Joint Venture for the six months ended 31 December 2002; (3) the lack of control over the Joint Venture; and (4) the availability of funds from the Disposal for developing the Group’s future business, the Board (excluding Mr. Sun), after obtaining legal advice, considers that it shall be in the best interests of the Shareholders as a whole and the Company to proceed with the Disposal and we are of the view that the Disposal is an appropriate and reasonable step to be taken by the Group.

Independent Shareholders are reminded that, in the event that the Group retains its investment in Sky Global, should Shine Gem fail to repay the credit facilities under the Loan Agreement and the Lenders enforce the Charge, Sky Global would rank after the Lenders in the proceeds of sale when the charged equity interests of the Joint Venture is realised. Although, according to the 2002 Agreement, Mr.

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LETTER FROM ALTUS CAPITAL LIMITED

Sun has agreed to indemnify the Group in the event there are any losses incurred by the Group due to misrepresentations, there is still a possibility that the Group will not recover its investment in Sky Global should the outstanding balance of the loan owed by Shine Gem is larger than the proceeds of sale of the 63% interests in the Joint Venture and to the extent that Mr. Sun will not be able to indemnify the loss for the Group.

Basis of consideration

The Consideration for the 49% interest in Sky Global and the Shareholder’s Loan of RMB135 million (or about HK$127.4 million) was arrived at after arm’s length negotiation between the Group and Mr. Sun and has taken into account the unaudited consolidated net asset value of Sky Global attributable to the Group of about RMB108.1 million (or about HK$102.0 million). Taking into account of the Shareholder’s Loan, the Consideration represents a premium of about 1% to the unaudited consolidated net asset value of Sky Global amounting to RMB108.1 million (or about HK$102.0 million) as at 31 December 2002. Pursuant to the Disposal Agreement, the consideration of RMB135 million (or about HK$127.4 million) shall be payable in cash upon the Completion.

Taking into consideration that (1) Sky Global is a private company; (2) the 49% interests represents a minority interests in Sky Global; (3) the Charge and (4) the consideration represents a premium to the unaudited consolidated net assets of Sky Global, we are of the view that the consideration is fair and reasonable in so far as the Company and the Shareholders as a whole and the Disposal is in the interest of the Company and the Shareholders as a whole.

Estimated financial effects

(a) Net asset value

According to the annual report of the Company for the year ended 31 December 2002, the audited consolidated net assets of the Group was about RMB410.7 million (or about HK$387.5 million) as at 31 December 2002. As the Consideration represents a premium of about RMB1.6 million (or about HK$1.5 million) to the sum of the unaudited consolidated net asset value of Sky Global attributable to the Group of about RMB108.1 million (or about HK$102.0 million), the negative goodwill of about RMB0.8 million (or about HK$0.7 million) and the Shareholder’s Loan of about RMB26.1 million (or about HK$24.6 million), as at 31 December 2002, assuming the Disposal has been completed and the consideration has been paid in full, the pro forma consolidated net asset value of the Group as at 31 December 2002 would be increased to about RMB412.3 million (or about HK$389.0 million).

(b) Earnings

According to the Directors, a one-off gain of about RMB1.6 million (or about HK$1.5 million), representing the surplus of the Consideration over the sum of the unaudited consolidated net asset value of Sky Global attributable to the Group of about RMB108.1 million (or about HK$102.0 million), the negative goodwill of about RMB0.8 million (or about HK$0.7 million)

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LETTER FROM ALTUS CAPITAL LIMITED

and the Shareholder’s Loan of about RMB26.1 million (or about HK$24.6 million), is expected to arise from the Disposal upon Completion. The above gain will be recognised in the profit and loss accounts of the Group for the year ending 31 December 2003.

(c) Working capital

The Disposal will generate cash inflow of RMB135 million (or about HK$127.4 million) to the Group. As advised by the Directors, the proceeds from the Disposal are intended to be used as working capital of the Group and for future investment as opportunities arise. This will improve the current cashflow position of the Group.

CONCLUSION

Having taken into account the factors and reasons above, we are of the opinion that the Disposal and the terms of the Disposal Agreement are fair and reasonable so far as the Independent Shareholders are concerned. Accordingly, we advise the Independent Board Committee to recommend the Independent Shareholders to vote in favour of the ordinary resolution regarding the Disposal to be proposed at the Special General Meeting.

Yours faithfully, For and on behalf of Altus Capital Limited Kevin Chan Executive Director

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GENERAL INFORMATION

APPENDIX

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Group. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief there are no other facts the omission of which would make any statement herein misleading.

2. SHARE CAPITAL

The authorised and issued share capital of the Company as at the Latest Practicable Date were as follows:

Authorised: HK$ 10,000,000,000 Shares 100,000,000.00 Issued and to be issued 3,031,583,936 Shares 30,315,839.36

3. DISCLOSURE OF INTERESTS

As at the Latest Practicable Date, the interests of each Director and chief executive of the Company in the equity or debt securities of the Company or any associated corporation (within the meaning of the SFO) which (a) 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 the Director is taken or deemed to have under such provisions of the SFO); or (b) were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (c) were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies to be notified to the Company and the Stock Exchange were as follows:

		Number of Shares held	Number of Shares held
	Personal	Family	Corporate	Other
Name of Director	interests	interests	interests	interests	Total
Sun Tian Gang	108,363,936	–	1,662,795,650	–	1,771,159,586
Guo Ting	3,000,000	–	–	–	3,000,000

Note: 1,662,795,650 Shares were owned by China GeoMaxima Co., Ltd., a company wholly owned by Mr. Sun Tian Gang.

Save as disclosed in this circular, as at the Latest Practicable Date, none of Director and chief executive of the Company was interested in the equity or debt securities of the Company or any associated corporations (within the meaning of the SFO) which (a) were required to be notified to the Company and

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GENERAL INFORMATION

APPENDIX

the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which the Director is taken or deemed to have under such provisions of the SFO); or (b) were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (c) were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies to be notified to the Company and the Stock Exchange.

4. SUBSTANTIAL SHAREHOLDERS

So far as is known to the Directors, the following party, as at the Latest Practicable Date, other than a Director or chief executive of the Company, had an interest or short position in the Shares and underlying Shares which would fall to be disclosed to the Company under the provisions of the Division 2 and 3 of Part XV of the SFO, or who was directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meeting of any other member of the Group:

		Approximate percentage
Name	Number of Shares	of interests
China GeoMaxima Co., Ltd.	1,662,795,650	54.85%

Save as disclosed in this circular, the Directors are not aware of any person as at the Latest Practicable Date was interested, directly or indirectly, in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any member of the Group.

5. EXPERT

Altus is a licensed corporation within the meaning of the SFO.

Altus has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter and reference to its name in the form and context in which it appears.

As at the Latest Practicable Date, Altus had no shareholding in any member of the Group or the right to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

6. LITIGATION

As at the Latest Practicable Date, neither the Company nor any of its subsidiaries was engaged in any litigation or arbitration of material importance and no litigation or claim of material importance was known to the Directors to be pending or threatened against the Company or any of its subsidiaries.

7. SERVICE CONTRACTS

None of the Directors has any existing or proposed service contract with any member of the Group which is not expiring or determinable by the Group within one year without payment of compensation (other than statutory compensation).

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GENERAL INFORMATION

APPENDIX

8. MISCELLANEOUS

Save as disclosed herein, as at the Latest Practicable Date, none of the Directors were aware of any material adverse change in the financial or trading position of the Group since 31 December 2002, the date to which the latest published audited consolidated financial statements of the Group were made up.

Save as disclosed herein, as at the Latest Practicable Date, none of the Directors was materially interested in any contracts or arrangements which were subsisting at the Latest Practicable Date.

Save as disclosed herein, as at the Latest Practicable Date, none of Altus nor the Directors had any direct or indirect material interest in any assets acquired or disposed of by or leased to or by or proposed to be acquired or disposed of or leased to or by any member of the Group since 31 December 2002.

The company secretary of the Company is Mr. Wan Tze Fan Terence who is an associate member of the Hong Kong Society of Accountants.

The registered office of the Company is located at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda.

The head office and principal place of business of the Company in Hong Kong is at Room 2301, Office Tower, Convention Plaza, 1 Harbour Road, Wanchai, Hong Kong.

The branch share registrar of the Company in Hong Kong is Computershare Hong Kong Investor Services Limited at Shops 1712-16, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong.

9. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours at the head office and the principal place of business of the Company in Hong Kong at Room 2301, Office Tower, Convention Plaza, 1 Harbour Raod, Wanchai, Hong Kong up to and including 27 May 2003 and at the SGM:

• (a) the Disposal Agreement;

• (b) the letter of advice from Altus to the Independent Board Committee, the text of which is set out on pages 11 to 16 in this circular; and

• (c) the letter of recommendation from the Independent Board Committee to the Independent Shareholders, the text of which is set out on page 10 in this circular; and

• (d) the written consent from Altus as referred to in the paragraph headed “Expert” above.

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NOTICE OF SPECIAL GENERAL MEETING

GeoMaxima Energy Holdings Limited

(incorporated in Bermuda with limited liability)

NOTICE IS HEREBY GIVEN that a special general meeting of GeoMaxima Energy Holdings Limited (the “Company”) will be held at Room 2301, Office Tower, Convention Plaza, 1 Harbour Road, Wanchai, Hong Kong on Thursday, 19 June 2003 at 11:30 a.m. for the purpose of considering and, if thought fit, passing the following resolution which will be proposed as an ordinary resolution:

ORDINARY RESOLUTION

“ THAT

• (a) the agreement dated 10 April 2003 (the “Disposal Agreement”) and made between Elite Ascend Holdings Limited (the “Vendor”), a wholly owned subsidiary of the Company and Mr. Sun Tian Gang (the “Purchaser”) pursuant to which, the Vendor has agreed to sell and the Purchaser has agreed to purchase, 49 shares of US$1.00 each in the capital of Sky Global Limited and a shareholder’s loan in the amount of RMB26 million owed by Sky Global Limited to the Vendor (a copy of the Disposal Agreement has been produced to this meeting marked “A” and signed by the chairman of this meeting for the purpose of identification) and the transactions contemplated under the Disposal Agreement be and the same are hereby approved;

• (b) the Directors be and are hereby authorised to do all such things and execute all such documents as they in their absolute discretion deem fit or appropriate to give effect to the Disposal Agreement and the implementation of all transactions contemplated thereunder.”

By Order of the Board Guo Ting Director

Hong Kong, 13 May 2003

Registered office: Clarendon House 2 Church Street Hamilton HM 11 Bermuda

Head office and principal place

of business in Hong Kong:

Room 2301 Office Tower Convention Plaza 1 Harbour Road Wanchai Hong Kong

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NOTICE OF SPECIAL GENERAL MEETING

Notes:

1. A member of the Company entitled to attend and vote at the Special General Meeting is entitled to appoint one or more proxies to attend and, on a poll, vote in his stead in accordance with the Company’s bye-laws. A proxy need not be a member of the Company.

2. A form of proxy for use at the Special General Meeting is enclosed herewith.

3. Where there are joint registered holder of any Share, any one of such persons may vote at any meting, either personally or by proxy, in respect of such Share as if he were solely entitled thereto; but if more than one of such joint holders be present at any meeting personally or by proxy, that one of the said person as present whose name stands first on the register in respect such Share shall alone be entitled to vote in respect thereof.

4. To be valid, a form of proxy and the power of attorney or other authority (if any) under which it is signed or a certified copy thereof must be deposited at the branch share registrars of the Company in Hong Kong, Computershare Hong Kong Investor Services Limited at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, not less than 48 hours before the time appointed for holding the Special General Meeting or any adjournment thereof, as the case may be, and in default thereof the form of proxy and such power or authority shall not be treated as valid. Completion and return of a form of proxy will not preclude a member from attending in person and voting at the Special General Meeting or any adjournment thereof, should he so wish.

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