Pacific Basin Shipping Limited — M&A Activity 2008

Jan 10, 2008

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, 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 announcement.

This announcement is for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for any Shares in the Company.

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RISING DEVELOPMENT HOLDINGS LIMITED （麗盛集團控股有限公司）[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 1004)

VERY SUBSTANTIAL ACQUISITION AND RESUMPTION OF TRADING

THE ACQUISITION

The Board announces that on 21 December 2007, the Company and the Purchaser entered into the Agreement with the Vendors. Pursuant to the Agreement, the Purchaser has agreed to acquire from the Vendors the entire issued share capital of the Target Company, which will indirectly own 80% interest in the PRC Company upon completion of the Transfer, which in turn will be the beneficial and registered owner of 100% interest in the Rights, at a consideration of HK$1,137 million.

The Consideration is to be satisfied at Completion as to HK$300 million by cash and as to HK$837 million by the issue of the Convertible Notes by the Company to the Vendors and/or its nominees.

IMPLICATIONS OF THE LISTING RULES

As the applicable percentage ratio as defined in the Listing Rules of the Acquisition exceeds 100%, the Agreement constitutes a very substantial acquisition for the Company under the Listing Rules. The Agreement is conditional upon, among other things, the approval by the Shareholders at the SGM. A SGM will be held to consider and, if thought fit, approve, among other things the resolution in respect of the Acquisition. As no Shareholder has any material interest in the Acquisition, no Shareholder is required to abstain from voting in the SGM in respect of the resolution to approve the Acquisition.

• for identification purposes only

• # unofficial translation

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GENERAL

The Company will despatch to the Shareholders a circular containing, inter alia , further details of aforesaid transactions, including the valuation report of the Target Company and a notice convening the SGM in accordance with the requirements of the Listing Rules.

Shareholders and potential investors should note that the Acquisition, which is subject to a number of conditions precedent, may or may not be completed. Shareholders and potential investors are reminded to exercise caution when dealing in the Shares.

RESUMPTION OF TRADING

At the request of the Company, trading in the Shares on the Stock Exchange was suspended with effect from 9:30 a.m. on 24 December 2007 pending the release of this announcement. Application has been made by the Company to the Stock Exchange for the resumption of trading in the Shares with effect from 9:30 a.m. on 11 January 2008.

THE ACQUISITION

The Sale and Purchase Agreement

On 21 December 2007, the Company and the Purchaser entered into the Agreement and details of which are set out below:

Parties:

(1) Vendor 1 : Mr. Wang Hong Vendor 2 : Mr. Chen JianJun Vendor 3 : Mr. Zou QuanBo (jointly and severally the “Vendors”) (2) Purchaser : Perfect Fair Limited (3) Target : Oriental Harvest Development Limited (4) Listed Company : Rising Development Holdings Limited

To the best knowledge of the Directors having made reasonable enquiries, the Vendors are parties independent of and not connected with the Company and its connected persons. There is no prior transaction and relationship between the Vendors and the Company.

As at the date of this announcement, the Target Company is owned as to 10%, 40% and 50% by Mr. Wang Hong, Mr. Chen JianJun and Mr. Zou QuanBo respectively.

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The existing shareholding structure chart of the Target Group (assuming the Transfer is completed) is as follows:

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----- Start of picture text -----

Wang Hong Chen JianJun Zou QuanBo
10% 40% 50%
Target Company
100%
東晟企業管理顧問
（深圳）有限公司
Independent third
(Dongcheng Enterprise
party
Management Consultant
(Shenzhen) Limited) [#]
80% 20%
PRC Company
100%
The Rights
----- End of picture text -----

Assets to be acquired

Under the Agreement, the Purchaser has conditionally agreed to acquire from the Vendors the entire issued share capital of Target Company, the Target Company will indirectly own 80% interest in the PRC Company upon completion of the Transfer, which in turn will be the beneficial and registered owner of 100% interest of the Rights at a consideration of HK$1,137 million. The remaining 20% of interest in the PRC Company is held by a party independent of and not connected with the Company and its connected persons.

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The shareholding structure of the Target Group immediately after Completion is as follows:

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----- Start of picture text -----

Rising Development
Holdings Limited
100%
Perfect Fair Limited
100%
Target Company
100%
東晟企業管理顧問
（深圳）有限公司
Independent third
(Dongcheng Enterprise
party
Management Consultant
(Shenzhen) Limited) [#]
80% 20%
PRC Company
100%
The Rights
----- End of picture text -----

Further details of the Target Company and PRC Company are set out in the paragraph headed “Information on the Target Company” and “Information on PRC Company” below.

Consideration

The consideration of HK$1,137 million for the Acquisition (subject to adjustments as set out below) is to be satisfied at Completion as to HK$300 million by cash and as to HK$837 million by the issue of the Convertible Notes by the Company to the Vendors and/or their respective nominees in the proportion to the Vendors’ respective equity interests in the Target Company. Upon full conversion of the Convertible Notes to be issued to the Vendors and/or their respective nominees, an aggregate of 2,989,285,700 Conversion Shares will be issued to the Vendors subject to the conversion restrictions as set out below.

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The consideration for the Acquisition will be settled in the following manner:

• (a) A deposit of HK$227.4 million (refundable with interests of 2% per annum) has been paid by the Company to the Vendors as at the date of signing of the Agreement;

• (b) The remaining cash consideration of HK$72.6 million will be payable by the Company at Completion;

• (c) The remaining balance of the consideration of up to HK$837 million will be payable by the issue of the Convertible Notes by the Company to the Vendors (being HK$83.7 million to Mr. Wang Hong, HK$334.8 million to Mr. Chen JianJun and HK$418.5 million to Mr. Zou QuanBo) and/or their respective nominees at Completion.

The cash consideration of HK$300 million has been/will be financed by internal resources of the Group.

Adjustment to Consideration

The Consideration payable shall be adjusted downwards (but not upwards) as follows:

A = (HK$4,728 per tonne V2O5 equivalent of vanadium reserves) x (B – C) x 80%

Where:

• A = amount to be deducted from the Consideration

• B = 300,761 tonnes V2O5 equivalent of vanadium reserves

• C = the amount V2O5 equivalent of vanadium reserves of the Mine as indicated in the technical report prepared by a technical adviser to be appointed by the Purchaser in its sole discretion

The price per tonne as shown in the above adjustment formula is determined by dividing the valuation of the Rights of HK$1,580,000,000 (as referred to in the paragraph “Basis of the Consideration” below) over the guaranteed V2O5 equivalent vanadium reserves of 300,761 tonnes V2O5 equivalent and after allowed for the discount of Consideration to the attributable value in the Target Company of approximately 10% (as referred to in the paragraph “Basis of the Consideration” below).

PROVIDED THAT:

• (1) If C is greater than or equal to B, there shall be no adjustment to the Consideration; and

• (2) A shall first be deducted from the amount of cash payable and if A is more than HK$300,000,000, the Agreement will terminate at the option of the Purchaser.

Basis of Consideration

The consideration of HK$1,137 million was determined after arm’s length negotiations between the Company and the Vendors, and taking into consideration of (i) the preliminary estimated value of the Target Company by BMI based on market approach method (being the estimated amount for which an asset should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion) which is not less than HK$1,580 million; and (ii) 80% of the effective interest in the Target Company to be held by the Company; (iii) the total estimated vanadium reserve of the

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Rights of approximately 300,761 tonnes V2O5 equivalent determined by a geology survey institute (an Independent Third Party) in the PRC, namely 中國地質科學院礦產資源研究中心 (The Institute of Mineral Resources of Chinese Academy of Geological Sciences)[#] in December 2007; (iv) the adjustment clauses to the Consideration; and (v) the present price of the vanadium and the future outlook of the vanadium industry as discussed below.

After discussion with BMI, the Directors are of the view that the valuation approach does not fall under Rule 14.62 of the Listing Rules as the valuation report does not contain any profit forecast as defined under Rule 14.61 of the Listing Rules. The valuation report of the Rights will be included in the circular of the Company.

The Conversion Shares under the Sale and Purchase Agreement represent (a) approximately 82.2% of the existing issued share capital of the Company; and (b) approximately 45.1% of the issued share capital of the Company as enlarged by an aggregate of 2,989,285,700 Conversion Shares.

The Consideration represents a discount of 10% to the effective interests of 80% to be held by the Group in the preliminary estimated value of the Target Company amounting to approximately HK$1,580 million as mentioned above.

Conditions precedent of the Sale and Purchase Agreement

The Completion is subject to the following conditions precedent:

• (1) having obtained the approval by the Shareholders of the Agreement and the transactions contemplated thereunder (including but not limited to (i) the Acquisition; (ii) the issue of the Convertible Notes to the Vendors and/or their respective nominee; and (iii) the issue and allotment of the Conversion Shares upon the exercise of the conversion rights attached to the Convertible Notes as required by the Listing Rules);

• (2) having complied to the satisfaction of the Stock Exchange and where applicable, the SFC with all requirements under the Listing Rules and, where applicable, the Takeovers Codes in relation to the issue of the Convertible Notes and the issue and allotment of the Conversion Shares upon the exercise of the conversion rights under the Convertible Notes and other transactions contemplated in the Agreement;

• (3) the Shares remaining listed and traded on the Main Board of the Stock Exchange at all times from the date of the Agreement up to (and including) the completion of the transactions contemplated therein, save for any temporary suspension not exceeding twelve consecutive Business Days, or such longer period as may be required by the SFC or the Stock Exchange in connection with the review and approval of the documents relating to the Agreement by the SFC or the Stock Exchange prior to their release or publication, and no indication being received prior to the Completion from the SFC or the Stock Exchange to the effect that the listing of the Shares on the Main Board of the Stock Exchange shall or may be withdrawn or objected to;

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• (4) having obtained any necessary waiver, consent, approval, licence, authorisation, permission, order and exemption (if required) from the relevant governmental or regulatory authorities or other third parties which are necessary in connection with the execution and performance of the Agreement and any of the transactions contemplated under the Agreement, including but not limited to (where required) the Bermuda Monetary Authority granting its permission to the issue of the Convertible Notes and the issue and allotment of the Conversion Shares upon the exercise of the conversion rights attached to the Convertible Notes;

• (5) where required, the Listing Committee of the Stock Exchange having approved the issuance of the Convertible Notes;

• (6) the Transfer having been completed and 東晟企業管理顧問（深圳）有限公司 (Dongcheng Enterprise Management Consultant (Shenzhen) Limited)[#] , being wholly owned by the Target Company, becoming the registered and beneficial owner of 80% interest in the PRC Company;

• (7) the Listing Committee of the Stock Exchange having granted the listing of and permission to deal in the Conversion Shares (either unconditionally or subject only to conditions which the Vendors have no reasonable objection);

• (8) the Company having obtained a legal opinion in a form and substance acceptable to the Company prepared by British Virgin Islands lawyers acceptable to the Company confirming the shareholding structure of the Target Company;

• (9) the Company having obtained an official reserve report in a form and substance acceptable to the Company prepared and issued by a firm of independent valuers nominated by the Company and, where required, approved by the Stock Exchange showing the total vanadium reserves under the Rights at Completion will be not less than 294,416 tonnnes V2O5 equivalent;

• (10) the Company having obtained an official valuation report in a form and substance acceptable to the Company prepared and issued by a firm of independent valuers nominated by the Company showing the value of the Rights being not less than HK$1,422,000,000.00 (the “Valuation Report”);

• (11) the Company having obtained a legal opinion in a form and substance acceptable to the Company prepared by a PRC legal adviser acceptable to the Company on (i) the Transfer having been duly completed and all legal formality has been complied with; and (ii) the legality, validity and enforceability of the mining permit in respect of the Rights and the rights thereunder including but not limited to the PRC Company being a beneficial owner of 100% interests in the Rights and the related exploration and exploitation rights;

• (12) the Company having obtained a technical report in a form and substance acceptable to the Company prepared and issued by a firm of independent technical consultants nominated by the Company and, where required, approved by the Stock Exchange, showing that the total vanadium reserves in the Rights with no material deviation to the Reserve Report and Valuation Report;

• (13) the Vendors’ warranties being true and correct in all material respects as at Completion by reference to the facts and circumstances subsisting at that date; and

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• (14) the Purchaser being satisfied with the results of its legal and financial due diligence in respect of the Target Group by notifying the Vendors in writing.

In the event that the Conditions are not fulfilled or waived at the discretion of the Company on or before 30 June 2008 or such later date as the parties may agree in writing, the Agreement shall lapse and become null and void, and the parties shall be released from all their respective obligations thereunder.

Principal terms of the Convertible Notes

• Total principal amount : HK$837,000,000.00 Maturity date : The Convertible Notes is due and will mature on the third anniversary of the date of issuance of the Convertible Notes. Unless previously redeemed, purchased and cancelled or converted, all of outstanding Convertible Notes will be converted into ordinary shares of the Company on the maturity date.

• Interest : 1 per cent. per annum on the principal amount of the Convertible Notes outstanding

• Conversion rights : The holder(s) of the Convertible Notes will have the right at any time commencing on the Business Day after the date of issuance of the Convertible Notes but before the Maturity Date, to convert the whole or part of the principal amount of the Convertible Notes into the Shares, provided that the principal amount to be so converted shall be at least HK$1,000,000 on each such conversion, save that if at any time the outstanding principal amount of the Convertible Notes is less than 1,000,000, the whole (but not part only) of such outstanding principal amount of the Convertible Notes may be converted.

• Conversion restriction : The holder(s) of the Convertible Notes shall not have the right to convert the whole or part of the principal amount of the Convertible Notes into Shares to the extent that immediately after such conversion the holder(s) of the Convertible Notes together with parties acting in concert with it, taken together will, directly or indirectly, control or be interested in 30% or more of the voting rights of the Company which the holder(s) of the Convertible Notes would be obliged to make a general offer under Takeovers Code in force from time to time.

Further, the holder(s) of the Convertible Notes shall not have the right to convert the whole or part of the principal amount of the Convertible Notes into Shares to the extent that immediately after such conversion, there will not be sufficient public float of the Shares as required under the Listing Rules.

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The conversion restrictions will be valid for the entire term of the Convertible Notes.

• Conversion price : HK$0.28 per Share, subject to adjustment for general dilutive events such as subdivision or consolidation of Shares, bonus issues, rights issues and other dilutive events.

• Conversion Price Reset : The conversion price shall be adjusted once and for once only within the period during which the Convertible Notes remains outstanding to HK$0.20 in the event that the holder(s) of the Convertible Notes shall notify and prove to the satisfaction of the Company in writing that the average trading price of the Shares on the Stock Exchange for 10 consecutive trading days immediately prior to the relevant reset date is less than HK$0.20.

Conversion Shares

• : Assuming full conversion of the Convertible Notes, the Company will issue 2,989,285,700 new Shares at HK$0.28, representing (a) approximately 82.2% of the Company’s total issued share capital as at the date of this announcement; and (b) approximately 45.1% of the Company’s issued share capital as enlarged by the issuance of the Conversion Shares.

• The Conversion Shares will rank pari passu in all respects with the existing Shares in issue. The Company will apply to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Conversion Shares.

Transferability

• : The Convertible Notes may be assigned or transferred to any party or parties.

• The Company will undertake to the Stock Exchange that it will disclose to the Stock Exchange any dealings by any of the connected persons as defined in the Listing Rules from time to time in the Convertible Notes immediately upon the Company becoming aware of such dealings.

Voting rights

• : Holder(s) of the Convertible Notes (or any part thereof) will not be entitled to attend or vote at any Shareholders’ and/or warrantholders’ meetings of the Company by reason only of it being a holder of the Convertible Notes (or any part thereof).

• Listing and trading of : No application will be made for the listing of and permission to Convertible Notes deal in the Convertible Notes on the Stock Exchange or any other stock exchange.

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Initial conversion price of the Convertible Notes

The initial conversion price of the Convertible Notes of HK$0.28 per Conversion Share is determined after arm’s length negotiations between the Company and the Vendors taking account of the prevailing market prices of the Shares. The initial conversion price of HK$0.28 represents:

• (i) a discount of approximately 9.68% to the closing price of the Shares of HK$0.31 per Share as quoted on the Stock Exchange on 21 December 2007, being the last trading day of the Shares prior to the suspension in trading of the Shares and pending the release of this announcement;

• (ii) a discount of approximately 18.41% to the average of the closing prices of the Shares of approximately HK$0.3432 per Share as quoted on the Stock Exchange for the 5 consecutive trading days up to and including 21 December 2007; and

• (iii) a discount of approximately 21.08% to the average of the closing prices of the Shares of approximately HK$0.3548 per Share as quoted on the Stock Exchange for the 10 consecutive trading days up to and including 21 December 2007.

The Directors consider that the terms of the Convertible Notes are fair and reasonable so far as the Shareholders are concerned.

Information on the PRC Company

The PRC Company is a company incorporated in the PRC on 7 April 2004 with a registered capital of RMB2,800,000 which has been fully paid. The major asset owned by the PRC Company is the Mine.

Based on the preliminary indication from the Vendors, the PRC Company has finalised its exploration and currently, does not carry out any further exploration activities. The PRC Company has obtained the relevant exploitation rights licence, i.e. the mining permit (採礦許可證 612400510022) dated 13 August 2005, showing that the vanadium mine has a mining right with 3 year validation period from August 2005 to August 2008. According to the preliminary indications from the Vendors and the PRC legal advisers appointed by the Company, the Directors are of the view that there is no obstacle for the PRC Company to renew the relevant mining permit. In addition, one of the conditions precedent of the Agreement is that the Purchaser being satisfied with the results of its legal and financial due diligence in respect of the Target Group by notifying the Vendors in writing. As such, the Company will perform legal due diligence and seek PRC legal opinion to assure that there is no material obstacle regarding the extension of the mining permit before Completion.

The principal activity of the PRC Company is the exploitation of ore and production and sale of V2O5 equivalent (upon completion of building a refinery). As the principal activity of the PRC Company involves the exploitation of ore and does not include any exploration, a technical report will not be included in the circular as Rule 18.04 is only applicable if the activities include exploration for natural resources.

The PRC Company has already commenced the project of building Phase I of a refinery with the daily production capacity of 500 tonnes ores. It is expected that the Phase I of the refinery will be completed after ten months upon receiving the capital contribution from the shareholders of the PRC Company. Based on the existing business plan, it is the present intention of the Company that upon Completion, to

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procure the PRC Company to continue the building of Phase I of the refinery. The PRC Company proposed to further contribute approximately RMB60 million (80% of this amount is expected to be funded by the Company’s internal resources to the Target Company and the PRC Company after Completion and the remaining 20% is to be funded by the independent third party who holds 20% interest in the PRC Company) for the Phase I of the refinery. Upon completion of the Phase I of the refinery, the PRC Company will commence (a) the mining of ores from the Mine by itself or outsource the mining operations to some other professional exploitation mining companies; and (b) the production and sale of the V2O5 equivalent, which will be extracted from the ores explored from the Mine after the refining process. Depending on the market and business conditions, the PRC Company proposed to invest another RMB40 million (80% of this amount is expected to be funded by the Group’s internal resources and if considered necessary, future equity and/or debt financing of the Group and the remaining 20% is to be funded by the independent third party who holds 20% interest in the PRC Company) to construct the Phase II of the refinery and the completion of Phase II of the refinery will double the daily production capacity to 1,000 tonnes ores. As at the date of this announcement, the Company has no capital commitment at this stage.

Based on the reserve report dated December 2007 prepared by 中國地質科學院礦產資源研究中 心 (The Institute of Mineral Resources of Chinese Academy of Geological Sciences)[#] , a PRC independent geology survey institute, the vanadium reserves of the vanadium mine owned by the PRC Company are as follows:

Mineralized body no. I II III IV Total	Metallic Quantity Quantity of Ore of V2O5 (Tonnes) (Tonnes) 4,876,950 45,843 6,189,792 68,088 7,589,010 98,657 8,015,766 88,173 26,671,518 300,761	Metallic Quantity Quantity of Ore of V2O5 (Tonnes) (Tonnes) 4,876,950 45,843 6,189,792 68,088 7,589,010 98,657 8,015,766 88,173 26,671,518 300,761
		300,761

According to the management account of the PRC Company prepared under the generally accepted accounting principles of the PRC (“PRC GAAP”) provided by the Vendors, the net asset value (including capital reserve) of the PRC Company as at 31 December 2007 is approximately RMB7.53 million. Both the losses before and after tax of the PRC Company for the year ended 31 December 2007 are approximately RMB1.35 million and both the losses before and after tax of the PRC Company for the year ended 31 December 2006 are approximately RMB1.36 million.

Information on the Target Company

The Target Company is an investment holding company incorporated in the British Virgin Islands on 19 October 2006 and is currently wholly owned by the Vendors. Upon Completion, the Target Company will be consolidated into the accounts of the Company. As at the date of this announcement, save for its indirect 80% interest in the PRC Company through a wholly owned subsidiary namely 東晟企業管理 顧問（深圳）有限公司 (Dongcheng Enterprise Management Consultant (Shenzhen) Limited)[#] (“Dongcheng”) upon completion of the Transfer, the Target Company and Dongcheng does not engage in other material business or own other major assets.

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According to the consolidated management account of the Target Company prepared under the PRC GAAP and provided by the Vendors, the consolidated net asset value of the Target Company as at 31 December 2007 is approximately RMB16.97 million. Both the losses before and after tax of the Target Company from the incorporation date to 31 December 2007 are approximately RMB1.13 million.

According to the management account of the Target Company prepared under the PRC GAAP and provided by the Vendors, the net deficiency of the Target Company as at 31 December 2007 is approximately RMB0.02 million. Both the losses before and after tax of the Target Company from the incorporation date to 31 December 2007 are approximately RMB0.02 million.

According to the management account of Dongcheng prepared under the PRC GAAP and provided by the Vendors, the net asset value of Dongcheng as at 31 December 2007 is approximately RMB9.46 million. Both the losses before and after tax of the Target Company from the incorporation date to 31 December 2007 are approximately RMB0.03 million.

The audited financial information of the Target Group will be included in the circular in respect of the Acquisition in accordance with the requirements of the Listing Rules. The Company expects that there will be adjustments to the consolidated accounts of the Target Group as and when the same is included in the circular to be dispatched applying accounting principles acceptable under the Listing Rules.

EFFECT ON THE SHAREHOLDING STRUCTURE

The following chart sets out the effects of the Conversion Shares on the shareholding structure of the Company based on the issued share capital and shareholding structure of the Company as at the date of this announcement and assuming Completion having taking place and conversion in full of the Convertible Notes into Conversion Shares at the conversion price of HK$0.28 per Share, without taking into account issue of new Shares, if any, after the date of this announcement and prior to Completion:

Oriental Day International Limited Vendors Public Shareholders Total	As at the date of this announcement Number of Approximate Shares (%) 1,915,065,000 52.66 0 0.00 1,721,275,000 47.34 3,636,340,000 100.00	Upon Completion and full conversion of the Convertible Notes at the conversion price of HK$0.28 (Notes 1 and 2) Number of Approximate Shares (%) 1,915,065,000 28.90 1,987,687,714 29.99 2,722,873,000 41.11 6,625,625,714 100.00	Upon Completion and full conversion of the Convertible Notes at the conversion price of HK$0.28 (Notes 1 and 2) Number of Approximate Shares (%) 1,915,065,000 28.90 1,987,687,714 29.99 2,722,873,000 41.11 6,625,625,714 100.00
			100.00

Notes:

1. No Conversion Shares will be issued to the holder(s) of the Convertible Notes if the holder(s) of the Convertible Notes together with parties acting in concert with it, taken together will, directly or indirectly, control or be interested in 30% or more of the voting rights of the Company.

2. As at the date of this announcement, the Company has no outstanding options, warrants, derivatives, convertible notes or other securities of the Company convertible into or giving rights to subscribe for Shares.

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Application will be made by the Company to the Stock Exchange for the approval of the listing of and the permission to deal in the Conversion Shares on the Stock Exchange.

Dilution effect on Shareholders

In view of the potential dilution effect on existing Shareholders on exercise of conversion rights attaching to the Convertible Notes, for so long as any of the Convertible Notes is outstanding, the Company will keep Shareholders informed of the level of dilution and details of conversion after issue of the Convertible Notes as follows:

• (i) the Company will make a monthly announcement (the “Monthly Announcement”) on the websites of the Stock Exchange and the Company. Such announcement will be made on or before the fifth Business Day following the end of each calendar month and will include the following details in a table form:

• (a) whether there is any conversion of the Convertible Notes during the relevant month. If there is a conversion, details thereof including the conversion date, number of new Shares issued, conversion price for each conversion. If there is no conversion during the relevant month, a negative statement to that effect;

• (b) the amount of outstanding Convertible Notes after the conversion, if any;

• (c) the total number of Shares issued pursuant to other transactions, including Shares issued pursuant to exercise of options under any share option scheme(s) of the Company;

• (d) the total issued share capital of the Company as at the commencement and the last day of the relevant month;

• (ii) in addition to the Monthly Announcement, if the cumulative amount of Conversion Shares issued pursuant to the conversion of the Convertible Notes reaches 5% of the issued share capital of the Company as disclosed in the last Monthly Announcement or any subsequent announcement made by the Company in respect of the Convertible Notes (as the case may be) (and thereafter in a multiple of such 5% threshold), the Company will make an announcement on the websites of the Stock Exchange and the Company including details as stated in (i) above for the period commencing from the date of the last Monthly Announcement or any subsequent announcement made by the Company in respect of the Convertible Notes (as the case may be), up to the date on which the total amount of Shares issued pursuant to the conversion amounts to 5% of the issued share capital of the Company as disclosed in the last Monthly Announcement or any subsequent announcement made by the Company in respect of the Convertible Notes (as the case may be); and

• (iii) if the Company forms the view that any issue of new Shares will trigger the disclosure requirements under Rule 13.09 of the Listing Rules, then the Company is obliged to make such disclosures regardless of the issue of any announcements in relation to the Convertible Notes as mentioned in (i) and (ii) above.

REASONS FOR THE ACQUISITION

The Company is an investment holding company and its subsidiaries are principally engaged in trading in equity securities, the manufacture and sale of fur garments and the sale of fur skins. The Directors have

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been seeking suitable investment opportunities from time to time to broaden the Group’s source of income.

Vanadium is a valuable metal and is commonly applied to produce alloy with steel, iron, aluminium and titanium. Vanadium alloy can be used in the production of catalysts, dying agents, electric cells, etc. In order to make products stronger, lighter, and safer and more fuel efficient there will be ever increasing demand for the metal and the need for significant increases in sustainable, cost effective vanadium production. Vanadium’s primary use is as a steel hardening agent. When used in the steelmaking process vanadium increases the strength and corrosion resistance of steel. The demand for vanadium, therefore, is strongly dependent on steel production rates.

Historically the price of vanadium has followed a spike-crash-shakeout pattern, with long periods of depressed prices followed by brief price spikes. Large vanadium producers are generally supply inelastic and they continue high levels of production through bust cycles. This creates excess supplies and depresses the market further. Following modest average annual growth of around 1% through the 1990s, world vanadium consumption has risen significantly since 2002, reflecting both higher world steel production and higher unit vanadium consumption as the share of high-strength steels in total steel output rises. Despite the set-back resulting from high prices in 2005, world demand for vanadium rose by 7.5% from 79,800 tonnes V2O5 equivalent in 2003 to a peak level of 98,900 tonnes in 2006.

The outlook for vanadium consumption through 2010 appears optimistic. World consumption may show short-term fluctuations in line with steel production, but is forecast to show underlying growth of 5–6% to reach 118,600 tonnes V2O5 equivalent in 2010. High-strength steels will continue to provide the main area of growth as increasing emphasis is placed on life-cycle costs in the construction industry, on reducing weight and improving fuel efficiency in the transport industry, and on the use of higherperformance materials to withstand aggressive environments in the oil and gas industry.

Due to the wide application of vanadium, the Directors consider that the Acquisition enables the Company to diversify into the promising mineral sector and will benefit the Company in the future.

Having considered the matters referred to in the paragraph “Basis of Consideration”, as set out above, the Directors consider that the terms and conditions of the Acquisition are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

The Agreement has no provision for the appointment by the Vendors or their nominees to be directors of the Company or any of its subsidiaries. The Company plans to recruit additional personnel with relevant qualification and experience in mining industry to oversee the Group’s investment in the Target Company.

RISK ASSOCIATED WITH THE ACQUISITION

When considering the terms of Acquisition, the Directors have taken into account the following risks associated with the Acquisition:

• (1) The price of vanadium is subject to the demand and supply of the domestic and international market which are affected by numerous factors beyond the Company’s control.

• (2) The renewal of the existing mining permit of the Mine held by the PRC Company which will be due in August 2008 is subject to the approval of the relevant government authorities.

• (3) The reserves estimated by the technical consultants may be inaccurate and have large deviation to the actual reserves which in turn may affect the valuation of the Rights.

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• (4) Mining and processing operations are subject to a number of operating risks and hazards which are beyond the Company’s control and may affect the production of the PRC Company.

IMPLICATIONS OF THE LISTING RULES

As the applicable percentage ratio as defined in the Listing Rules of the Acquisition exceeds 100%, the Agreement constitutes a very substantial acquisition for the Company under the Listing Rules. A SGM will be held to consider and, if thought fit, approve the resolution in respect of the Acquisition. As no Shareholder has any material interest in the Acquisition, no Shareholder is required to abstain from voting in the SGM in respect of the resolution to approve the Acquisition.

GENERAL

The Company will despatch to the Shareholders a circular containing, inter alia, further details of aforesaid transactions, including the valuation report of the Rights and a notice convening the SGM in accordance with the requirements of the Listing Rules.

Shareholders and potential investors should note that the Acquisition, which is subject to a number of conditions precedent, may or may not be completed. Shareholders and potential investors are reminded to exercise caution when dealing in the Shares.

RESUMPTION OF TRADING

At the request of the Company, trading in the Shares on the Stock Exchange was suspended with effect from 9:30 a.m. on 24 December 2007 pending the release of this announcement. Application has been made by the Company to the Stock Exchange for the resumption of trading in the Shares with effect from 9:30 a.m. on 11 January 2008.

DEFINITIONS

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

• “Acquisition” the acquisition of the entire issued share capital of Target Company pursuant to the terms and conditions of the Sale and Purchase Agreement

“Agreement” the sale and purchase agreement dated 21 December 2007 entered into between the Company and the Vendors

• “Assets Ratio” the assets ratio as defined under Rule 14.07(1) of the Listing Rules “associate(s)” has the meaning ascribed to it under the Listing Rules “BMI” BMI Appraisals Limited, an independent valuation firm “Board” the board of Directors

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“Business Day” a day (excluding Saturdays) on which banks are generally open for business in Hong Kong “BVI’’ the British Virgin Islands “Company” Rising Development Holdings Limited, a company incorporated in Bermuda with limited liability whose shares are listed on the Main Board of the Stock Exchange (Stock code: 1004) “Completion” the completion of the Acquisition “connected persons” has the meaning as ascribed in the Listing Rules “Consideration’’ the aggregate consideration of HK$1,137 million payable by the Company to the Vendors for the Acquisition, the particulars of which are set out in the paragraphs headed “Consideration’’ under the section “Sale and Purchase Agreement” above “Conversion Shares” an aggregate of 2,989,285,700 new Shares to be issued by the Company upon conversion in full by the holders of the Convertible Notes of the conversion rights attaching to the Convertible Notes at the initial conversion price of HK$0.28 per Share “Convertible Notes” the convertible notes in the principal amount of HK$837 million to be issued by the Company at Completion “Director(s)’’ the director(s) of the Company “Group” the Company and its subsidiaries “Listing Committee” the listing sub-committee of the Stock Exchange “Listing Rules’’ the Rules Governing the Listing of Securities on the Stock Exchange “Mine” 陝西省寧陝縣旬陽壩釩礦 (vanadium mine located in Xunyangba County, Ningshan Town, Shanxi Province) “PRC” the People’s Republic of China “PRC Company” 陝西久權礦業有限公司 (Shanxi Jiuquan Mining Company Limited)[#] , a company incorporated in the PRC on 7 April 2007 “Purchaser” Perfect Fair Limited, a company incorporated in the BVI and whollyowned by the Company “Rights” the mining, exploration and exploitation rights over the Mine;

# unofficial translation

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“Sale Shares”	the 10 shares of and in the Target Company held and beneficially owned
	by the Vendors, representing the entire issued share capital of the Target
	Company
“SFC”	the Securities and Futures Commission of Hong Kong
“SGM”	the special general meeting of the Company to be convened to approve
	the Acquisition
“Share(s)”	ordinary share(s) of HK$0.10 each in the share capital of the Company
“Shareholders”	the shareholder(s) of the Company
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Takeovers Codes”	the Codes on Takeovers and Mergers and Share Repurchases
“Target Company”	Oriental Harvest Development Limited, a company incorporated in the
	BVI on 19 October 2006 and will be interested in 80% equity capital of
	the PRC Company through a wholly owned subsidiary upon completion
	of the Transfer
“Target Group”	the Target Company and its subsidiaries upon completion of the Transfer
“Transfer”	the transfer of 80% equity capital of the PRC Company from an
	independent third party to Dongcheng
“V2O5”	Vanadium Oxide, a chemical compound commonly used for industrial
	purposes
“Vendors”	Mr. Wang Hong, Mr. Chen JianJun and Mr. Zou QuanBo
“HK$”	Hong Kong dollar(s), the lawful currency of Hong Kong
“RMB”	Renminbi, the lawful currency of PRC
“%’’	per cent.

By order of the Board Rising Development Holdings Limited Lai Leong Chairman

Hong Kong, 10 January 2008

As at the date of this announcement, the Board comprises three executive directors, namely Mr. Lai Leong, Mr. Lee Yuk Lun and Mr. Kong Shan, David and three independent non-executive directors, namely Mr. Fok Ho Yin, Thomas, Mr. Tso Hon Sai, Bosco and Mr. Tsui Ching Hung.

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