Kinetic Development Group Limited — Capital/Financing Update 2024

Jul 2, 2024

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

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Kinetic Development Group Limited 力 量 發 展 集 團 有 限 公 司 (Incorporated in the Cayman Islands with limited liability) (Stock Code: 1277)

CONNECTED TRANSACTION SUPPLEMENTAL AGREEMENT TO 2022 LOAN AGREEMENT

SUPPLEMENTAL AGREEMENT TO 2022 LOAN AGREEMENT

Reference is made to the announcement of the Company dated 28 June 2022, in which it was disclosed that Guizhou Mining, an indirect wholly-owned subsidiary of the Company, as the Lender, and Guizhou Energy, as the Borrower, entered into the 2022 Loan Agreement on 28 June 2022, pursuant to which the Lender agreed to provide the Loan to the Borrower in the principal amount of up to RMB200 million (equivalent to approximately HK$216 million*) for a term of 2 years commencing from the Interest Calculation Date.

The Board announces that on 2 July 2024 (after trading hours), Guizhou Mining and Guizhou Energy entered into a Supplemental Agreement to the 2022 Loan Agreement, pursuant to which the parties agreed that the repayment date of the Loan be extended to 30 June 2025, with the interest rate to be raised to 2.5% above the one year loan prime rate (LPR) in the PRC in effect during the term of the Loan. Other than the above, the other terms and conditions of the 2022 Loan Agreement continue to be in full force and effect.

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LISTING RULES IMPLICATIONS

As of the date of this announcement, the Borrower is indirectly held as to 100% by Mr. Zhang Li, a substantial shareholder of the Company. The Borrower is an associate of Mr. Zhang Li thus a connected person of the Company under Chapter 14A of the Listing Rules. Accordingly, the transaction contemplated under the Supplemental Agreement constitutes a connected transaction of the Company under the Listing Rules.

As the applicable percentage ratios calculated under Rule 14.07 of the Listing Rules in respect of the Connected Transaction are more than 0.1% but less than 5%, the Connected Transaction is subject to the announcement, reporting and annual review requirements but exempt from the circular and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.

THE SUPPLEMENTAL AGREEMENT TO 2022 LOAN AGREEMENT

The principal terms of the Supplemental Agreement are set out below:

Date of Supplemental 2 July 2024 Agreement: Parties: (i) Guizhou Mining, as the Lender; (ii) Guizhou Energy, as the Borrower Subject matter: Pursuant to the Supplemental Agreement, the Lender agreed to extend the repayment date of the Loan to 30 June 2025, with the interest rate to be raised to 2.5% above the one year loan prime rate (LPR) in the PRC in effect during the term of the Loan.

Principal amount: Up to RMB200 million (equivalent to approximately HK$216 million*) Term of the Loan: From the Interest Calculation Date to 30 June 2025 Interest: Pursuant to the Supplemental Agreement, the Loan shall bear interest from and including the date of the Supplemental Agreement at 2.5% above the one year loan prime rate (LPR) in PRC in effect during the term of the Loan, which is higher than the interest of 1.5% above the one year loan prime charged under the 2022 Loan Agreement. The interest shall be paid together with the principal amount upon the expiry of the Supplemental Agreement.

Purpose: The Loan shall be used by the Borrower for the construction and operation of the Target Mine.

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Repayment:

The principal amount of the Loan together with all the outstanding interest accrued thereon shall be repayable in full by the Borrower to the Lender upon expiration of the term of the Loan.

During the term of the Loan, the Borrower may prepay the Loan provided that the Borrower shall notify the Lender five (5) business days in advance.

REASONS FOR AND BENEFITS OF ENTERING INTO THE SUPPLEMENTAL AGREEMENT

The terms and conditions of the Supplemental Agreement are negotiated on an arm’s length basis between the Lender and the Borrower. The Directors (including the independent non-executive Directors) consider that the Supplemental Agreement is entered into on normal commercial terms.

Taking into account that (i) the Loan has been funded from the Group’s temporarily idle funds, which would not affect the working capital or daily operations of the Group; (ii) the expected return to be generated from the Loan as extended by the Supplemental Agreement, taking into account the higher interest chargeable to the Borrower under the Supplemental Agreement than under the 2022 Loan Agreement, would increase the Group’s revenue, and (iii) entering into the Supplemental Agreement facilitates the Borrower’s continual development of the Target Mine which the Group intends to acquire subject to the requisite shareholder approvals, the Directors (including the independent non-executive Directors) believe that the transaction under the Supplemental Agreement is fair and reasonable and in the interests of the Company and its shareholders as a whole.

LISTING RULES IMPLICATIONS

As of the date of this announcement, the Borrower is indirectly held as to 100% by Mr. Zhang Li, a substantial shareholder of the Company. The Borrower is an associate of Mr. Zhang Li thus a connected person of the Company under Chapter 14A of the Listing Rules. Accordingly, the transaction contemplated under the Supplemental Agreement constitutes a connected transaction of the Company under the Listing Rules.

As the applicable percentage ratios calculated under Rule 14.07 of the Listing Rules in respect of the Connected Transaction are more than 0.1% but less than 5%, the Connected Transaction is subject to the announcement, reporting and annual review requirements but exempt from the circular and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.

Ms. Zhang Lin, a non-executive Director, being an associate to Mr. Zhang Li who has material interest under the Supplemental Agreement, had abstained from voting at the Board meeting approving the Supplemental Agreement and the transactions thereunder.

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GENERAL INFORMATION

The Group is principally engaged in the extraction and sales of coal products.

Guizhou Mining, the Lender, is principally engaged in the investment, management and sales of coal products, and the manufacturing and sales of mining equipment.

Guizhou Energy, the Borrower, is a limited liability company established in the PRC on 27 September 2011. Guizhou Energy is principally engaged in the management of mining assets investment, sales of mining products and the manufacturing and sales of mining machineries. Guizhou Energy is indirectly held as to 100% by Mr. Zhang Li, a substantial shareholder. As such, Guizhou Energy is a connected person of the Company and the Loan constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules.

DEFINITIONS

“2022 Loan Agreement” the loan agreement entered into between Guizhou Mining and Guizhou Energy on 28 June 2022, pursuant to which Guizhou Mining agreed to provide the Loan to Guizhou Energy in the principal amount of up to RMB200 million (equivalent to approximately HK$216 million*) for a term of 2 years commencing from the Interest Calculation Date; “Baosen District” Guizhou Liupanshui Baosen Exploration District** (貴州省六 盤水市寶森勘查區);

“Board”

“Board” the board of Directors; “Borrower” or “Guizhou Guizhou Liliang Energy Co., Ltd.** (貴州力量能源有限公司), Energy” a company incorporated in the PRC with limited liability on 27 September 2011; “Company” Kinetic Development Group Limited (formerly known as Kinetic Mines and Energy Limited), a company incorporated in the Cayman Islands with limited liability, the shares of which are listed on the main board of the Stock Exchange; “Connected person(s)” has the meaning ascribed to it under the Listing Rules; “Connected Transaction” the connected transaction under the Supplemental Agreement; “Director(s)” the director(s) of the Company; “Group” the Company and its subsidiaries; “HK$” Hong Kong dollars, the lawful currency of Hong Kong; “Hong Kong” the Hong Kong Special Administrative Region of the PRC;

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“Interest Calculation Date” the date on which the Loan is remitted to the bank account of the Borrower by the Lender;

“Lender” or “Guizhou	Guizhou Kinetic Mines Co., Ltd.** (貴州力量礦業有限公司),
Mining”	a company incorporated in the PRC with limited liability on
	21 December 2020;
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange;
“Loan”	a loan of up to RMB200 million (equivalent to approximately
	HK$216 million*) granted by the Lender to the Borrower
	pursuant to the 2022 Loan Agreement (as supplemented by the
	Supplemental Agreement);
“Mining Licence”	the mining licence (licence number: C5200002011111120120278)
	issued by the Department of Natural Resources of Guizhou
	Province of the PRC** (貴州省自然資源廳) with a validity
	period from December 2017 to August 2040;
“PRC”	the People’s Republic of China which, for the purpose of
	this announcement, excludes Hong Kong, the Macau Special
	Administrative Region of the PRC and Taiwan;
“RMB”	Renminbi, the lawful currency of the PRC;
“Shareholder(s)”	holder(s) of share(s) of USD0.001 each in the share capital of
	the Company;
“Stock Exchange”	The Stock Exchange of Hong Kong Limited;
“substantial shareholder”	has the meaning ascribed to this term under the Listing Rules;
“Supplemental Agreement”	a supplemental agreement to the 2022 Loan Agreement entered
	into between the Lender and the Borrower on 2 July 2024;
“Target Mine”	Guizhou Daxinan Mining Co., Ltd. Shuicheng County Tailin
	Coal Mine** (貴州大西南礦業有限公司水城縣猴場鄉泰
	麟煤礦), located in southwestern part of Guizhou Province,
	PRC, inclusive of the Mining Licence, the mineral assets and
	exploration rights consolidated from the Tailin Mine, Zhenxing
	Mine, the Xiaoyuantian Mine and Baosen District;
“Tailin Mine”	Guizhou Luzhong Mining Co., Ltd. Shuicheng County Tailin
	Coal Mine** (貴州魯中礦業有限公司水城縣猴場鄉泰麟煤礦);
“Xiaoyuantian Mine”	Zhijin County Zhenxing Coal Mine** (織金縣官寨鄉小圓田煤
	礦);

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“Zhenxing Mine”

Guizhou Luzhong Mining Co., Ltd. Zhijin County Zhenxing Coal Mine** (貴州魯中礦業有限公司織金縣城關鎮振興煤礦);

“%”

per cent.

• For the purposes of illustration only, any amount denominated in RMB in this announcement was translated into HK$ at the rate of RMB1 = HK$1.08. Such translations should not be construed as a presentation that the amounts in question have been, could have been or could be, converted at any particular rate at all.

• ** The English translation of the Chinese name(s) in this announcement, where indicated, is included for information purpose only, and should not be regarded as the official English name(s) of such Chinese name(s).

By order of the Board Kinetic Development Group Limited Ju Wenzhong Chairman and Executive Director

Hong Kong, 2 July 2024

As at the date of this announcement, the Board comprises seven Directors, of whom three are executive Directors, namely Mr. Ju Wenzhong (Chairman), Mr. Li Bo (Chief Executive Officer) and Mr. Ji Kunpeng; one is a non-executive Director, namely Ms. Zhang Lin; and three are independent non-executive Directors, namely Ms. Liu Peilian, Mr. Chen Liangnuan and Ms. Xue Hui.

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