Newton Resources Ltd — Capital/Financing Update 2017

Oct 30, 2017

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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(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1231)

BUSINESS UPDATE – ENTERING INTO JOINT VENTURE AGREEMENT

This announcement is made by Newton Resources Ltd (the “ Company ”) to inform the shareholders and potential investors of the Company of the latest development of the business of the Company and its subsidiaries (collectively, the “ Group ”).

The board (the “ Board ”) of directors (the “ Directors ”) of the Company is pleased to announce that, on 30 October 2017, the Group entered into an agreement (the “ JV Agreement ”) with three parties in relation to the formation of a Sino-foreign equity joint venture (the “ JV ”), with a view to carrying out business activities and operations aiming to make contributions to environmental restoration and greening services in the People’s Republic of China (the “ PRC ”).

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

PARTIES TO THE JV AGREEMENT AND THEIR RESPECTIVE EQUITY INTERESTS IN THE JV

• (a) 內蒙古旭日塔拉文化產業發展有限責任公司 (“ Party A ”) (60%);

• (b) China Cheer Holdings Limited (“ China Cheer ”), a wholly-owned subsidiary of the Company (15%);

• (c) Greenheart Eco Management Company Limited (“ Party C ”) (15%); and

• (d) Noble Elegance Limited (“ Party D ”) (10%).

To the best of the knowledge, information and belief of the Directors having made all reasonable enquiries, as at the date of this announcement, Party A and Party D and their respective ultimate beneficial owners are third parties independent of the Company and its connected persons (as defined in the Rules Governing the Listing of Securities (the “ Listing Rules ”) on the Main Board of The Stock Exchange of Hong Kong Limited (the “ Stock Exchange ”)).

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As at the date of this announcement, Party C is an indirect wholly-owned subsidiary of Greenheart Group Limited, which is a company listed on the Stock Exchange and a subsidiary of Chow Tai Fook Enterprises Limited (“ CTF Enterprises ”). In addition, as at the date of this announcement, Dr. Cheng Kar Shun (“ Dr. Cheng ”), a non-executive Director, is a director of CTF Enterprises, which is a substantial shareholder (as defined in the Listing Rules) of the Company, and Mr. Wu Wai Leung, Danny (“ Mr. Wu ”), a nonexecutive Director and a director of China Cheer, is a director and the chief executive officer of Greenheart Group Limited. CTF Enterprises and Mr. Wu, both being connected persons (as defined in the Listing Rules) of the Company, are entitled to exercise or control the exercise of 30% or more of the voting power at any general meeting of Greenheart Group Limited as at the date of this announcement. Therefore, Greenheart Group Limited and Party C are close associates (as defined in the Listing Rules) of CTF Enterprises and Mr. Wu by virtue of their respective shareholding interests in Greenheart Group Limited, and are connected persons of the Company. Dr. Cheng and Mr. Wu had abstained from passing the relevant resolutions approving the JV Agreement and the transactions contemplated therein.

PROPOSED REGISTERED CAPITAL OF THE JV AND CONTRIBUTION BY THE PARTIES

The parties to the JV Agreement shall contribute to the proposed registered capital of the JV of Renminbi (“ RMB ”) 10 million in proportion to their respective equity interests in the JV. Accordingly, Party A, China Cheer, Party C and Party D shall inject RMB6 million, RMB1.5 million, RMB1.5 million and RMB1 million respectively into the JV.

The capital contribution by each party to the JV Agreement shall be made by way of cash within 30 days from the issue date of the business license of the JV.

PRINCIPAL BUSINESSES OF THE JV AND ROLES OF RESPECTIVE PARTIES IN THE JV

The JV will be in the form of a limited liability company in the PRC. The parties to the JV Agreement shall jointly appoint a committee which shall be responsible for the application to the relevant government authorities for the establishment of the JV and the relevant registration procedures.

Subject to approval by the relevant government authorities, the business scope of the JV will include, among others, provision of environmental restoration and greening services and related research, design, operation and technical advisory.

Party A will be responsible for promoting and developing the environmental restoration and greening business of the JV. China Cheer will be responsible for, among others, the provision of mining technology, project management and related services covering the recovery of residual coal and mine reclamation on environmental restoration and greening projects. Party C will be responsible for the provision of environmental restoration and greening services covering planning, construction and management after mine reclamation. Party D will be responsible for the provision of advisory services to customers of the JV regarding the environmental restoration and greening projects. The parties to the JV Agreement agree that the JV shall enter into service agreement(s) with relevant service provider(s) for the services required.

Subject to consent to extension from all parties to the JV Agreement, the term of the JV shall be 50 years from the issue date of the business license of the JV.

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BOARD COMPOSITION OF THE JV AND NOMINATION RIGHTS

The board of directors of the JV shall be formed on the issue date of the business license of the JV and consist of five members, including three members appointed by Party A, one member appointed by China Cheer and one member appointed by Party C. In respect of each resolution to be considered by the board of directors of the JV, each member of the board shall have one vote and no particular member shall have any casting vote.

REASONS FOR AND BENEFITS OF THE FORMATION OF THE JV

As mentioned in the interim report of the Company for the six months ended 30 June 2017, the Group has been exploring new investment and/or development opportunities in mining and related sectors with an aim to bring new business development and growth to the Group’s business portfolio and create value for the shareholders of the Company in the long run. In view of the green development initiatives in the PRC, it is anticipated that the demand and potential for environment restoration and greening services in the PRC would be on an increasing trend and thus the formation of the JV will offer an opportunity for the Group to diversify its business portfolio and gain a foothold in such environmental friendly mining-related industry. The entering into of the JV Agreement and the investment in the JV are in line with the Group’s business strategy, and are expected to create momentum for further growth.

The Directors are of the view that the entering into of the JV Agreement and the transactions contemplated thereunder are on normal commercial terms, and that the terms of the JV Agreement are fair and reasonable and in the interests of the Company and its shareholders as a whole. The Group intends to fund its capital contribution to the JV by internal resources.

The transactions contemplated under the JV Agreement constitute connected transactions of the Company which are exempt from all requirements under the Listing Rules.

By order of the Board Newton Resources Ltd Luk Yue Kan Company Secretary

Hong Kong, 30 October 2017

As at the date of this announcement, the executive Directors are Mr. Li Changfa and Mr. Luk Yue Kan; the non-executive Directors are Dr. Cheng Kar Shun and Mr. Wu Wai Leung, Danny; and the independent nonexecutive Directors are Mr. Tsui King Fai, Mr. Lee Kwan Hung and Mr. Shin Yick, Fabian.

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